Belgian banking and insurance group KBC unveiled forecast-beating underlying net profit in the first quarter, buoyed by a strong performance in retail banking and its dealing room operations.
Fee and commission income declined 7 per cent from last year, as the amount of assets the group managed fell compared to the final quarter of 2010, KBC said.
Deposits grew in the group's retail unit, especially in Belgium, where KBC also registered higher loan volumes. Loan volumes in central and eastern Europe were flat.
The bank said it recorded "exceptionally low" loan loss provisions across all its business units. The most significant drop was seen in merchant banking, including its Irish operations, where 2010 had seen "exceptional" losses.
The bank's Irish business contributed €13 million to group profit after a year to date loan impairment of €45 million.
In a presentation of its results this morning, KBC said non-performing loans rose to 11.1 per cent in the first quarter of the year, compared to 10.3 per cent in the preceding quarter. The bank said it was mainly related to the commercial portfolio.
Underlying net profit rose 22 per cent to €658 million, well above the €541 million forecast by poll of nine analysts.
"Our banking and insurance businesses in our Belgian and core Central and Eastern European home markets turned in a sound performance, while the merchant banking business unit bounced back, thanks to robust market activities," said chief executive Jan Vanhevel. The group said preparations for the partial listing of its Czech unit CSOB were on track but it gave no further details.
KBC agreed with the European Commission to divest its Czech unit CSOB and its private banking arm KBL, in exchange for receiving €7 billion in state aid at the height of the credit crisis, but the group has found it difficult to comply.
The €1.35 billion euro sale of KBL to Indian investment firm Hinduja fell through after KBC failed to gain regulatory approval.
KBC said there were now tens of possible buyers eyeing the unit. KBC's pro forma tier-1 ratio stood at approximately 13.7 per cent.
Reuters
