kbc group new segment reporting, pro forma figures 2005
TRANSCRIPT
KBC Group
New segment reporting,pro forma figures 2005
2
Changes in reporting: background information
KBC has restated its 2005 quarterly figures to comply with:
The retro-active application of ‘portfolio hedge accounting’ (carve-out’) in Q4 2005 1
Its new segment reporting approach
The retro-active application of the principles of ‘portfolio hedging’ includes that:
the financial impact of it (previously booked as a lump-sum amount in Q4 2005) is allocated to the relevant 2005 quarters (this has a negative impact of 40 m on the Q2 results, fully offset by the positive impact on the Q3 results (7 m) and the Q4 results (33 m)
The segment reporting changes are explained on the following slide
1 Restatement of the P&L lines ‘Net gains from financial instruments at fair value’ and ‘taxes’
REMINDER REMINDER
3
1 An exception has to be made for KBC Bank NV and KBC Insurance NV Belgium’s activities
Changes in segment reporting: background information
New business unit structure as major segment reporting criterion (i.e. Retail Belgium, CEE, European private banking, Merchant Banking, Group Centre)
Disclosure of area of activity results in a full P&L format (which was not the case before)
Full allocation of results of each subsidiary to a single segment 1
No further imputation of impact of capital ‘normalisation’ adjustments on segment bottom-line. In return, funding costs of goodwill related to equity participations will be allocated to the relevant segments
Further restatements of historical time series
Limitation of number of ‘Group Center’ items to: results of holding company non-allocated expenses of other entities that can be deemed holding-company
overheads (e.g., strategic consultancy fees, BoD expenses, ‘group-level’ operating provisions, etc.)
results of co-sourcing vehicles (such as e.g. Fin-Force - as a rule, expenditure is covered by service users, so, barring timing differences, impact on bottom line tends to be immaterial
results of equity holdings within investment portfolio of banking business
REMINDER REMINDER
4
New organisational structure
Europ.Private
Banking
Belgium Retail & PrivateBanc-
assurance
Merchant Banking
CEE
SloveniaBanc-
assurance
No majority control
Czech Rep.Banc-
assurance
SlovakiaBanc-
assurance
PolandBanc-
assurance
HungaryBanc-
assurance
KBC Group
REMINDER REMINDER
1
2
3
Group Centre functions& Shared Services
4
5
The new business unit structure will be used as major segment reporting criterion
5
FY05 earnings, Group total
Bank & Insurance,in millions of EUR 1Q05 2Q05 6M05 3Q05 9M05 4Q05 12M05
Net interest incomeGross earned premiumDividend incomeNet gains from FI at Fair ValueNet realized gains from AFSNet fee and commission incomeOther income
1 019729
34163168429215
1 043978135
6397
410118
2 0621 707
169225265839333
1 096810
25166
49452112
3 1582 516
194392314
1 290444
1 0611 034
41251144528130
4 2193 550
235642458
1 819574
Gross income 2 757 2 843 5 600 2 709 8 309 3 189 11 498
Operating expensesImpairmentsGross technical chargesCeded reinsurance resultShare in result associated companiesTaxes
-1 104-15
-612-1721
-257
-1 209-42
-852-1713
-192
-2 313-57
-1 464-3333
448
-1 177-3
-696-1019
-211
-3 490-54
-2 161-4414
-660
-1 424-49
-899-26
2-266
- 4 914-103
-3 059-6916
-925
Profit after tax 774 544 1 318 598 1 916 528 2 443
Minority interests -57 -48 -104 -48 -153 -41 -194
Net profit – share Group 717 496 1 213 550 1 763 486 2 249
Risk-weighted assets, bankingTotal equity Return on equityCost/income, bankingCombined ratio, non-life insurance
107 60813 316
24%51%92%
111 69314 383
20%57%94%
113 99015 262
19%58%95%
117 73015 751
18%60%96%
6
FY05 earnings, by segment
In millions of EUR
Retail, Belgium CEE Merchant
banking
European Private
Banking
Group Center Total
Net interest incomeGross earned premiumDividend incomeNet gains from FI at FVNet realized gains from AFSNet fee and commission incomeOther income
2 0822 358
102-320256830164
926870
3263
33276219
1 008293
95667
89231103
2586313
835
45057
-57-332124453332
4 2193 550
235642458
1 819574
Gross income 5 472 2 590 2 485 885 66 11 498
Operating expensesImpairmentsGross technical chargesCeded reinsurance resultShare in result associated companiesTaxes
-1 8342
-2 210-13
3-415
-1 318-88
-594-4222
-69
-1 07622
-181-30
1-340
-56823
-9003
-55
-119-621516
-13-46
- 4 914-103
-3 059-6916
-925
Profit after tax 1 005 501 882 199 -143 2 443
Minority interests -2 -92 -92 -7 0 -194
Net profit – share Group 1 003 409 789 192 -144 2 249
Share in group resultsReturn on allocated capitalReturn on equity
45%28%
18%31%
35%24%
9%28%
-6%-
100%
18%
7
Retail and Private bancassurance, Belgium
Bank & Insurance,in millions of EUR 1Q05 2Q05 6M05 3Q05 9M05 4Q05 12M05
Net interest incomeGross earned premiumDividend incomeNet gains from FI at Fair ValueNet realized gains from AFSNet fee and commission incomeOther income
501446
11-82110196
38
511667
72-193
37184
48
1 0121 114
83-275147380
86
538522
2-3227
20140
1 5501 635
85-307173582127
532722
17-1483
24837
2 0822 358
102-320256830164
Gross income 1 220 1 327 2 547 1 298 3 845 1 627 5 472
Operating expensesImpairmentsGross technical chargesCeded reinsurance resultShare in result associated companiesTaxes
-4111
-407-91
-112
-448-6
-63612
-65
-859-5
-1 043-82
-177
-4227
-495-22
-115
-1 2823
-1 538-10
4-292
-552-1
-672-2-1
-123
-1 8342
-2 210-13
3-415
Profit after tax 283 174 457 273 729 276 1 005
Minority interests -1 -1 -1 -1 -2 0 -2
Net profit – share Group 282 173 455 272 727 276 1 003
Risk-weighted assets, bankingAllocated capitalReturn on allocated capitalCost/income, bankingCombined ratio, non-life insurance
34 1533 43933%55%89%
34 8393 53119%77%98%
34 8393 53126%65%93%
35 8073 61830%55%95%
35 8073 61827%61%94%
36 1233 68130%63%98%
36 1233 68128%61%95%
8
Central & Eastern Europe
Bank & Insurance,in millions of EUR 1Q05 2Q05 6M05 3Q05 9M05 4Q05 12M05
Net interest incomeGross earned premiumDividend incomeNet gains from FI at Fair ValueNet realized gains from AFSNet fee and commission incomeOther income
220196
4832066
117
233231
279
26222
452427
6162
22128140
232207
-352107248
684634
3214
32200187
242236
149
07631
926870
3263
33276219
Gross income 705 632 1 337 618 1 955 635 2 590
Operating expensesImpairmentsGross technical chargesCeded reinsurance resultShare in result associated companiesTaxes
-2954
-133-99
-59
-316-12
-149-18
3-5
-611-8
-282-2713
-64
-333-34
-141-67
-10
-945-42
-423-3420
-75
-373-45
-172-825
-1 318-88
-594-4222
-69
Profit after tax 221 135 357 100 456 44 501
Minority interests -30 -22 -53 -23 -76 -15 -92
Net profit – share Group 191 113 304 76 380 29 409
Risk-weighted assets, banking Allocated capitalReturn on allocated capitalCost/income ratio, bankingCombined ratio, non-life insurance
16 4561 36562%50%98%
1 6 4531 37936%69%93%
16 4531 37949%59%96%
17 5471 45523%69%
104%
17 5471 45540%62%98%
18 1991 508
8%76%
100%
18 1991 50831%65%99%
9
CEE – Czech & Slovak Republics
Bank & Insurance,in millions of EUR 1Q05 2Q05 6M05 3Q05 9M05 4Q05 12M05
Net interest incomeGross earned premiumDividend incomeNet gains from FI at FVNet realized gains from AFSNet fee and commission incomeOther income
13057
446
453
111
13460
211
25213
264116
657
6104124
13562-424
75525
399178
28113
160149
14464
120
65538
544243
3101
19215187
Gross income 404 274 678 305 982 328 1 310
Operating expensesImpairmentsGross technical chargesCeded reinsurance resultShare in result associated companiesTaxes
-1338
-55-20
-53
-154-2
-81-30
-8
-2876
-136-50
-62
-131-23-34
-40
-27
-418-17
-170-90
-89
-194-27-31
-20
-7
-612-44
-201-11
0-96
Profit after tax 169 25 194 85 280 66 345
Minority interests, local 0 -1 -1 -1 -2 -4 -6
Net profit, local 168 25 193 85 278 62 340
Risk-weighted assets, banking Allocated capital Return on allocated capitalCost/income, bankingCombined ratio, non-life insurance
8 485670
97%36%98%
8 6216838%
69%99%
8 621683
52%48%98%
9 552749
39%49%98%
9 552749
47%49%98%
10 139792
27%67%
117%
10 139792
41%53%
103%
10
CEE – Poland
Bank & Insurance,in millions of EUR 1Q05 2Q05 6M05 3Q05 9M05 4Q05 12M05
Net interest incomeGross earned premiumDividend incomeNet gains from FI at FVNet realized gains from AFSNet fee and commission incomeOther income
52119
01616-52
69142
012
1-26
121261
02816-78
44124
111
4-14
6
166385
13820
-2114
60147
011-5-3-3
226532
14915
-2411
Gross income 200 228 428 174 602 206 809
Operating expensesImpairmentsGross technical chargesCeded reinsurance resultShare in result associated companiesTaxes
-83-2
-76-61
-4
-999
-82-15
-1-2
-1818
-158-21
0-6
-660
-78-30
17
-2488
-237-23
012
-962
-86-604
-3449
-323-29
015
Profit after tax 30 40 70 45 115 24 138
Minority interests, local 0 0 0 0 0 0 0
Net profit, local 30 40 70 45 115 24 138
Risk-weighted assets, bankingAllocated capitalReturn on allocated capitalCost/income ratio, bankingCombined ratio, non-life insurance
3 763383
25%72%
101%
3 407368
35%82%93%
3 407368
31%77%97%
3 354363
40%72%
104%
3 354363
34%76%99%
3 257361
18%83%95%
3 257361
30%78%
98%
11
CEE – Hungary
Bank & Insurance,in millions of EUR 1Q05 2Q05 6M05 3Q05 9M05 4Q05 12M05
Net interest incomeGross earned premiumDividend incomeNet gains from FI at FVNet realized gains from AFSNet fee and commission incomeOther income
5619
025
023
2
5622
025
017
4
11242
050
040
6
6421
023
021
3
17662
073
060
9
6019
024
027
5
23681
097
18714
Gross income 125 125 250 130 380 135 515
Operating expensesImpairmentsGross technical chargesCeded reinsurance resultShare in result associated companiesTaxes
-72-10-12
-11
-8
-78-16-15
-11
-4
-149-25-27
-11
-12
-88-5
-1701
-5
-238-30-44
-23
-17
-78-7
-14-10
-8
-316-37-58
-22
-26
Profit after tax 24 12 36 16 52 27 79
Minority interests, local 0 0 0 0 0 0 0
Net profit, local 24 12 36 16 52 27 79
Risk-weighted assets, bankingAllocated capital Return on allocated capitalCost/income ratio, bankingCombined ratio, non-life insurance
4 207311
21%65%83%
4 4253287%
73%88%
4 425328
14%69%86%
4 641343
12%77%
113%
4 641343
13%71%95%
4 803354
24%64%
102%
4 803354
16%69%97%
12
CEE – Other 1
Bank & Insurance,in millions of EUR 1Q05 2Q05 6M05 3Q05 9M05 4Q05 12M05
Net interest incomeGross earned premiumDividend incomeNet gains from FI at FVNet realized gains from AFSNet fee and commission incomeOther income
-1800
-30
-42
-2870
31-1-40
-4670
28-1-92
-111
-1-60
1014
-568
-122-11
16
-2350
-60
-2-9
-79 13 -117-2-17
(1)(2)(3)(3)(3)(3)(3)
Gross income -24 5 -19 8 -10 -35 -45
Operating expensesImpairmentsGross technical chargesCeded reinsurance resultShare in result associated companiesTaxes
-879086
14-430
039
64
390
1115
-48-6
-11054
-41-228
01720
-4-13-40
03
17
-46-15-12
01937
(4)(5)(2)
(6)
Profit after tax -1 58 57 -47 10 -72 -62
Minority interests -30 -21 -51 -23 -74 -11 -86 (7)
Net profit -31 36 5 -70 -64 -83 -148
Mainly:(1) The funding costs of the goodwill of the equity participations in CEE(2) NLB Vita, Slovenia (proportional consolidation)(3) Consolidation adjustments(4) Allocated group operating expenses(5) Impairments on goodwill of the equity participations in CEE(6) Contribution from NLB Bank, Slovenia (associated company)(7) Minorities on KBC level
13
Merchant Banking
In millions of EUR 1Q05 2Q05 6M05 3Q05 9M05 4Q05 12M05
Net interest incomeGross earned premiumDividend incomeNet gains from FI at FVNet realized gains from AFSNet fee and commission incomeOther income
266781699335820
2646639
1472
5523
531145
55246
35113
43
2647623
1573
5624
794220
77403
39169
67
2137318
263506236
1 008293
95667
89231103
Gross income 570 597 1 167 602 1 770 716 2 485
Operating expensesImpairmentsGross technical chargesCeded reinsurance resultShare in result associated companiesTaxes
-231-19-48
-60
-66
-252-22-42
-30
-83
-483-41-90
-90
-149
-25827
-48-30
-81
-741-14
-138-12
0-230
-33536
-43-18
1-110
-1 07622
-181-30
1-340
Profit after tax 201 194 395 240 635 246 882
Minority interests -22 -23 -45 -24 -69 -24 -92
Net profit – share Group 179 171 350 216 566 223 789
Risk-weighted assets, bankingAllocated capital Return on allocated capitalCost/income ratio, banking Combined ratio, non-life insurance
47 2483 29823%46%90%
50 2773 50322%47%92%
50 2773 50322%46%90%
51 0153 54826%48%88%
51 0153 54824%47%90%
54 3473 77526%55%
100%
54 3473 77524%49%92%
14
European Private Banking
In millions of EUR 1Q05 2Q05 6M05 3Q05 9M05 4Q05 12M05
Net interest incomeGross earned premiumDividend incomeNet gains from FI at FVNet realized gains from AFSNet fee and commission incomeOther income
4618
245
2100
24
4919
63819
1079
9537
98222
20733
7315
3-25
9114
7
16852115730
32240
9111
2-49
5129
16
2586313
835
45057
Gross income 238 247 485 196 681 204 885
Operating expensesImpairmentsGross technical chargesCeded reinsurance resultShare in result associated companiesTaxes
-135-1
-2401
-22
-155-4
-2601
-19
-289-5
-5002
-41
-14712
-22014
-4376
-7203
-37
-13116
-1801
-18
-56823
-9003
-55
Profit after tax 57 44 101 44 145 54 199
Minority interests -3 -2 -5 -1 -6 -2 -7
Net profit – share Group 54 42 96 43 140 52 192
Risk-weighted assets, bankingAllocated capital Return on allocated capitalCost/income ratio
9 749720
31%63%
10 122745
22%71%
10 122745
27%67%
9 618711
22%86%
9 618711
26%72%
8 772653
29%71%
8 772653
28%72%
15
Group Center 1
In millions of EUR 1Q05 2Q05 6M05 3Q05 9M05 4Q05 12M05
Net interest incomeGross earned premiumDividend incomeNet gains from FI at FVNet realized gains from AFSNet fee and commission incomeOther income
-15-91
184
1016
-15-616-936
315
-30-1517
9391231
-11-11
114
08
-7
-41-251823392023
-178316
139
-57-332124453332
Gross income 24 40 64 -5 59 7 66
Operating expensesImpairmentsGross technical chargesCeded reinsurance resultShare in result associated companiesTaxes
-32007
102
-382147
-19
-7011
1117
-17
-17-882
-29-9
-87-71013
-12-26
-32-55
53
-1-20
-119-621516
-13-46
Profit after tax 11 -3 8 -58 -50 -93 -143
Minority interests 0 0 -1 1 0 0 0
Net profit – share Group 11 -3 8 -58 -50 -93 -144
1 including intrasegment eliminations
Includes:• Results of Holding company (-109 m for FY05) and Gevaert (-32m)• Non-allocated operating expenses of KBC Bank and KBC Insurance that can be deemed
holding company overheads (-26 m)• Results of co-sourcing vehicles (-1 m)• Results of equity holdings within the investment portfolio of banking business (+25m)
16
Return on allocated capital per segment - methodology
ROAC = Net adjusted profit / average allocated capital
Example: CEE, FY 2005
Net profit, group share 409 m+ minority interests +92 m= Net profit after tax 501 m- Yield on excess capital (after tax) - 61 m= Net adjusted profit 440 m (1)
Allocated capital = 8% Tier 1 x RWA, banking+ 200% x capital required, insurance
Allocated capital, 31-12-2004 1 299 mAllocated capital, 31-12-2005 1 508 mAverage capital, 2005 1 403 m (2)
ROAC = (1) / (2) = 31%
17
Contact information
Investor Relations Office
Luc Cool, Head of IRLuc Albrecht, Financial Communications OfficerTamara Bollaerts, IR CoordinatorChristel Decorte, IR AssistantMarina Kanamori, CSR Communications OfficerNele Kindt, IR Analyst
E-mail: [email protected]
Surf to www.kbc.com for the latest update