Prepared for the Future
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Prepared for the 2015 Annual Report future 2015 Annual Report Annual 2015 www.kbc.com WorldReginfo - 2a682bd1-46dd-407d-b16c-38c9f98d6530 KBC group passport Our area of operation Net result We are an integrated bank-insurance group, catering mainly for retail, (in millions of EUR) 2 639 private banking, SME and mid-cap clients. Our core markets are Belgium, the Czech Republic, Slovakia, Hungary and Bulgaria. We are also present in 765 Ireland and, to a limited extent, in several other countries to support 1 762 corporate clients from our core markets. Our clients, staff and network 1 015 2 218 Clients (estimate) 10 million Staff 38 450 (36 411 FTEs) Bank branches 1 560 Insurance network 441 agencies in Belgium, various distribution -344 2013 2014 2015 channels in Central and Eastern Europe Impact of liquidation of KBC Financial Holding Inc. Our long-term credit ratings (17-03-2016) Impact of goodwill impairment Fitch Moody’s Standard & Poor’s for a number of participating interests KBC Bank NV A- A1 A KBC Insurance NV A – A- Breakdown of net result by business unit (2015, in millions of EUR) KBC Group NV A- Baa1 BBB+ 1 564 Our core shareholders KBC Ancora 18.5% Cera 2.7% MRBB 11.5% Other core shareholders 7.6% 542 Data relates to year-end 2015, unless otherwise indicated. For definitions, please see the detailed tables and analyses in this report. Outlook/watch/review data for our ratings is given elsewhere in this report. In KBC 287 245 Insurance’s case, it is the financial strength rating. Belgium Czech International Group Business Republic Markets Centre Unit Business Business Unit Unit Common equity ratio at group level 3.5 million clients (Basel III, Danish compromise) 93 billion EUR in loans* 15.2% 0.6 million 14.4% 14.9% 111 billion EUR 4 million clients 14.3% in deposits* clients 6 billion EUR 13.3% 20 billion EUR in loans 12.8% in loans 5 billion EUR Ireland 24 billion EUR in deposits in deposits 0.6 million Belgium clients Czech Republic 0.9 billion EUR Slovakia in loans 0.7 billion EUR Hungary in deposits 0.2 million clients 14 billion EUR 1.6 million Bulgaria in loans clients 5 billion EUR 5 billion EUR in deposits in loans 2013 2014 2015 6 billion EUR in deposits Phased-in Fully loaded Clients: estimates. Loans: see the ‘Risk Management’ section; deposits: deposits from customers and debt securities (excluding repos). WorldReginfo - 2a682bd1-46dd-407d-b16c-38c9f98d6530 * Including the limited network of KBC Bank branches abroad. Our group in figures 2011 2012 2013 2014 2015 Consolidated balance sheet, end of period (in millions of EUR) Total assets 285 382 256 928 238 686 245 174 252 356 Loans and advances to customers 138 284 128 492 120 371 124 551 128 223 Securities 65 036 67 295 64 904 70 359 72 623 Deposits from customers and debt certificates 165 226 159 632 161 135 161 783 170 109 Technical provisions and liabilities under investment contracts, insurance 26 928 30 058 30 488 31 487 31 919 Total equity 16 772 15 879 14 514 16 521 15 811 Risk-weighted assets (Basel II to 2012, Basel III from 2013) 126 333 102 148 91 216 91 236 89 067 Consolidated income statement (in millions of EUR) Total income 7 310 7 733 7 448 6 720 7 148 Operating expenses -4 344 -4 248 -3 843 -3 818 -3 890 Impairment -2 123 -2 511 -1 927 -506 -747 Net result, group share 13 612 1 015 1 762 2 639 Belgium – – – 1 516 1 564 Czech Republic – – – 528 542 International Markets (Slovakia, Hungary, Bulgaria, Ireland) – – – -182 245 Group Centre – – – -100 287 Gender diversity Gender diversity in the workforce (percentage of women) 59% 58% 57% 57% 56% Gender diversity in the Board of Directors (percentage of women) 4% 10% 15% 22% 25% Environmental efficiency* Electricity consumption (in GJ per FTE; Belgium) 22.5 21.8 22.4 22.2 21.0 Gas and heating oil consumption (in GJ per FTE; Belgium) 13.3 13.2 16.8 13.3 14.3 Commuter and business travel (in km per FTE; Belgium) 15 394 15 151 14 334 14 141 13 632 Paper consumption (in tonnes per FTE; Belgium) 0.15 0.13 0.13 0.11 0.12 Water consumption (in m3 per FTE; Belgium) 8.7 9.0 9.5 9.5 9.8 Greenhouse gas emissions (in tonnes per FTE; Belgium) 2.3 1.9 2.6 2.3 2.1 KBC share Number of shares outstanding, end of period (in millions) 358.0 417.0 417.4 417.8 418.1 Parent shareholders’ equity per share, end of period (in EUR) 28.7 29.0 28.3 31.4 34.5 Average share price for the financial year (in EUR) 22.3 17.3 32.8 43.1 56.8 Share price at year-end (in EUR) 9.7 26.2 41.3 46.5 57.7 Gross dividend per share (in EUR) 0.01 1.00 0.00 2.00 0.00 Basic earnings per share (in EUR) -1.93 -1.09 1.03 3.32 3.80 Equity market capitalisation, end of period (in billions of EUR) 3.5 10.9 17.2 19.4 24.1 Financial ratios Return on equity -6% 1% 9% 14% 22% Cost/income ratio, banking 61% 64% 52% 58% 55% Combined ratio, non-life insurance 92% 95% 94% 94% 91% Credit cost ratio, banking 0.82% 0.71% 1.21% 0.42% 0.23% Common equity ratio (Basel III, Danish compromise method, phased-in/fully loaded) – – 13.3%/12.8% 14.4%/14.3% 15.2%/14.9% Total capital ratio (Basel III, Danish compromise method, phased-in/fully loaded) – – 18.4%/17.8% 18.9%/18.3% 19.8%/19.0% Net stable funding ratio (NSFR) – 105% 111% 123% 121% Liquidity coverage ratio (LCR) – 107% 131% 120% 127% Minimum requirement for own funds and eligible liabilities (MREL) – – – 12.5% 13.9% For definitions and comments, please see the analyses and ‘Glossary of ratios and terms’ in this report. The proposed dividend for 2015 is subject to the approval of the General Meeting of Shareholders. * We have slightly restated the reference figures for the environmental indicators to reflect the new way in which the number of FTEs is calculated. WorldReginfo - 2a682bd1-46dd-407d-b16c-38c9f98d6530 Table of Report of Consolidated financial contents the Board of Directors statements 6 KBC at a glance 150 Statutory auditor’s report 8 Statement by the Chairman of the Board of Directors 152 Consolidated income statement and the Chief Executive Officer 153 Consolidated statement of comprehensive income 10 Our business model and strategy 154 Consolidated balance sheet 56 Consolidated results in 2015 155 Consolidated statement of changes in equity 64 Our business units 156 Consolidated cashflow statement 82 Risk management 158 Notes on the accounting policies 114 Capital adequacy 158 Note 1 a: Statement of compliance 122 Corporate governance statement 159 Note 1 b: Summary of significant accounting policies 165 Notes on segment reporting 165 Note 2: Segment reporting based on the management structure 168 Notes to the income statement 168 Note 3: Net interest income 169 Note 4: Dividend income 169 Note 5: Net result from financial instruments at fair value through profit or loss 170 Note 6: Net realised result from available-for-sale assets 170 Note 7: Net fee and commission income 170 Note 8: Other net income 171 Note 9: Insurance results 172 Note 10: Earned premiums, life insurance 173 Note 11: Non-life insurance per class of business 174 Note 12: Operating expenses 174 Note 13: Personnel 175 Note 14: Impairment (income statement) 176 Note 15: Share in results of associated companies and joint ventures 176 Note 16: Income tax expense 177 Note 17: Earnings per share 178 Notes on the financial assets and liabilities on the balance sheet 178 Note 18: Financial assets and liabilities, breakdown by portfolio and product 180 Note 19: Financial assets and liabilities, breakdown by portfolio and geographic location 181 Note 20: Financial assets and liabilities, breakdown by portfolio and remaining term to maturity 181 Note 21: Financial assets, breakdown by portfolio and quality 183 Note 22: Maximum credit exposure and offsetting 185 Note 23: Fair value of financial assets and liabilities – general 2 Annual Report KBC 2015 WorldReginfo - 2a682bd1-46dd-407d-b16c-38c9f98d6530 Company annual accounts and additional information 187 Note 24: Financial assets and liabilities measured at fair value – fair value hierarchy 224 Company balance sheet, income statement and profit 189 Note 25: Financial assets and liabilities measured at fair appropriation value – transfers between levels 1 and 2 226 Notes to the company annual accounts 190 Note 26: Financial assets and liabilities measured at fair 229 Capital transactions and guarantee agreements with the value – focus on level 3 government in 2008 and 2009 192 Note 27: Changes in own credit risk 229 Glossary of ratios and terms 193 Note 28: Reclassification of financial assets and liabilities 235 Management certification 194 Note 29: Derivatives 235 Contact details and financial calendar 197 Notes on other balance sheet items 197 Note 30: Other assets 197 Note 31: Tax assets and tax liabilities 198 Note 32: Investments in associated companies and joint ventures 199 Note 33: Property and equipment and investment property 200 Note 34: Goodwill and other intangible assets 202 Note 35: Technical provisions, insurance 203 Note 36: Provisions for risks and charges 205 Note 37: Other liabilities 206 Note 38: Retirement benefit obligations 210 Note 39: Parent shareholders’ equity, non-voting core-capital securities and additional tier-1 instruments 211 Other notes 211 Note 40: Commitments and guarantees granted and received Welcome 212 Note 41: Leasing 213 Note 42: Related-party transactions 214 Note 43: Statutory auditor’s remuneration 214 Note 44: Subsidiaries, joint ventures and associated Statutory annual report: we have incorporated the content of the annual report required by law into the ‘Report of the Board of companies, at year-end 2015 Directors’, which also contains additional, non-compulsory information.