“A scorecard for bank performance: the Belgian Banking Industry.” Prof. Dr. André Thibeault, Corneel Defrancq and Jessie Vantieghem Vlerick Centre for Financial Services Point of Contact: [email protected] (+32 9 210 9860) Table of Contents THE KPMG – VLERICK PRIME FOUNDATION PARTNERSHIP .................................................................... 1 Acknowledgment .................................................................................................................................... 3 Executive Summary ................................................................................................................................. 5 Introduction ............................................................................................................................................ 7 Structure of the report ............................................................................................................................ 7 Chapter 1: Industry overview ................................................................................................................. 9 Contribution to the Belgian economy ............................................................................................... 10 Trends over time ........................................................................................................................... 10 Savings ratio of households .............................................................................................................. 14 Banking sector’s contribution compared with European peers ....................................................... 16 Internationalisation of the Belgian banking landscape .................................................................... 18 Chapter 2: The value chain ................................................................................................................... 19 Sample selection and segments description..................................................................................... 20 Sample Selection ........................................................................................................................... 20 ECB segmentation ......................................................................................................................... 20 Size segmentation ......................................................................................................................... 22 Fortis Bank SA/ NV-BNP Paribas Fortis ................................................................................................. 22 ING Belgium SA/NV-ING ........................................................................................................................ 22 BankScope segmentation.............................................................................................................. 23 Operational income to total assets ................................................................................................... 24 Net interest income to total assets................................................................................................... 27 Net commissions and fees to total assets......................................................................................... 32 Financial transactions to total assets ................................................................................................ 36 Operational expenses to total assets ................................................................................................ 40 Loan loss provisions to total assets................................................................................................... 45 Conclusion ......................................................................................................................................... 48 Chapter 3: The financial performance .................................................................................................. 51 Return on equity ............................................................................................................................... 53 Leverage ............................................................................................................................................ 57 Return on assets ............................................................................................................................... 61 Asset yield ......................................................................................................................................... 65 Profit margin ..................................................................................................................................... 69 Cost to income .................................................................................................................................. 73 Conclusion ......................................................................................................................................... 78 Chapter 4: The risk-return trade-off ..................................................................................................... 79 Chapter 5: What did we learn in this study? ........................................................................................ 83 References ............................................................................................................................................ 85 Appendices ............................................................................................................................................ 88 Appendix 1: The ratios ...................................................................................................................... 88 Appendix 2: The variables ................................................................................................................. 88 Appendix 3: A38 Code ....................................................................................................................... 89 Appendix 4: NACE BEL Code ............................................................................................................. 91 Appendix 5: List of abbreviations...................................................................................................... 92 Appendix 6: Contribution in terms of percentage of both the banks individually and per sector. .. 93 Appendix 7: The segmentation between universal and investment banks ...................................... 95 Appendix 8: The evolution of the natural logarithm of the total assets .......................................... 96 Appendix 9: Ratios for each bank individually .................................................................................. 98 Agricaisse - Caisse Coopérative de Dépôts et de Crédit Agricole ......................................................... 99 Banca Monte Paschi Belgio SA .............................................................................................................. 99 Bank J. Van Breda en Co NV .................................................................................................................. 99 Banque de la Poste-Bank van de Post ................................................................................................... 99 Deutsche Bank SA-Deutsche Bank NV .................................................................................................. 99 F. van Lanschot Bankiers Belgie .......................................................................................................... 100 Fortis Bank SA/ NV-BNP Paribas Fortis ............................................................................................... 100 ING Belgium SA/NV-ING ...................................................................................................................... 100 Onderling Beroepskrediet-OBK-Bank C.V.B.A. .................................................................................... 100 Société Générale Private Banking N.V. ............................................................................................... 100 Agricaisse - Caisse Coopérative de Dépôts et de Crédit Agricole ....................................................... 101 Banca Monte Paschi Belgio SA ............................................................................................................ 101 Bank J. Van Breda en Co NV ................................................................................................................ 101 Banque de la Poste-Bank van de Post ................................................................................................. 101 Deutsche Bank SA-Deutsche Bank NV ................................................................................................ 101 F. van Lanschot Bankiers Belgie .......................................................................................................... 102 Fortis Bank SA/ NV-BNP Paribas Fortis ............................................................................................... 102 ING Belgium SA/NV-ING ...................................................................................................................... 102 THE KPMG – VLERICK PRIME FOUNDATION PARTNERSHIP This report on the mapping of the Belgian banking industry is part of a 3-year project conducted in the format of a Prime Foundation Partnership between KPMG and the Vlerick Centre for Financial Services. The research