IFRS-based net profit reported for the quarter under review came to 531 million euros, compared with a net loss of 539 million euros in the previous quarter and a net loss of 1 579 million euros in the year-earlier quarter. This means the group has generated a total net profit of 372 million euros for the first nine months of 2012, as opposed to a net loss of 424 million euros for the corresponding period of 2011.
Excluding all exceptional and non-operating items, KBC ended the third quarter of 2012 with an underlying net profit of 406 million euros, compared with a net profit of 372 million euros in the previous quarter and a net loss of 248 million euros in the corresponding quarter of 2011. The underlying results for the first nine months of 2012 amounted to 1 233 million euros, compared to 937 million euros for the corresponding period in 2011.
Johan Thijs, Group CEO: "Good business performance, significant derisking and a further strengthening of our capital and liquidity position were the main features of the third quarter for KBC, a period in which we recorded 406 million euros in underlying net profit.
In terms of operating income, our underlying result went up by 10% on a comparable basis this quarter, driven by the good commercial performance of our strategic banking and insurance business model in our home markets in Belgium and Central and Eastern Europe. Net interest income continued to contract, although this was due primarily to the lower income from asset and liability management as well as the deconsolidation of various companies. Loans and deposits, on the other hand, continued to grow at a good rate in our core markets. Fee income was up and commercial insurance results remained good. The quarter also featured an excellent (hence low) combined ratio but slightly higher levels of loan loss impairments. These impairments are mainly the result of loan loss provisioning in Ireland.
We have also finalized the sale of KBL epb, Żagiel and KBC Lease Deutschland. In addition, we lowered our exposure to Southern European government bonds, and the volatility of our profit by further reducing exposure to CDOs. These actions have led to a further reduction in the risk profile of our company.
We have improved our already strong liquidity position, with a loan-to-deposit ratio of 82% at the end of September. We have covered all funding needs for 2012 and are looking forward to issuing covered bonds in the foreseeable future.
At the beginning of the fourth quarter we successfully placed 350 million worth of treasury shares in the market, pushing up our solvency ratios even further.
Our tier-1 capital ratio has risen further, bringing it to 15.3% in the third quarter of 2012. This ratio amounts to 16.8% on a pro forma basis when the sale of Kredyt Bank – which has been signed, but not yet closed – as well as the sale of the treasury shares are included. Our estimated common equity ratio under Basel III at the end of 2013 stands at 10.2% (fully loaded).
We are continuing our efforts to ensure that 4.67 billion euros in state aid (before any penalty) is reimbursed by the end of 2013, as set out in the plan agreed with the European Commission, with the aim of paying back a substantial part before the end of 2012.
At the beginning of October we announced our updated strategy for the group for 2013 and beyond. Our goal is to become more agile and efficient and thus more competitive. In doing so, we will not only adapt to changing client behaviour but will also meet the legitimate expectations from society as a whole, to the benefit of our clients, employees, shareholders and other stakeholders."