KBC Group reports second-quarter 2011 net profit of €333 million, compared to €149 million in Q2 2010. The Group has generated a net profit of €1.154 billion in the first half of 2011, almost double the corresponding figure for 1H2010.

KBC ended the second quarter of 2011 with a consolidated net profit of 333 million euros, compared with a net profit of 821 million euros in the previous quarter and 149 million euros in the year-earlier quarter. On a cumulative basis, this means that the KBC group has generated a net profit of 1 154 million euros in the first half of 2011, almost double the corresponding figure for 1H2010.

Disregarding one-off and exceptional items, the "underlying" net result for the quarter under review came to 528 million euros, compared with 658 million euros in 1Q2011 and 554 million euros in 2Q2010. The underlying result for the first half of 2011 amounted to 1 186 million euros, compared to 1 097 million euros for the corresponding period in 2010.

Jan Vanhevel, Group CEO: "The net result for the second quarter of 2011 amounted to 333 million euros – which when added to the first quarter result – brings the net result for the first half of 2011 to a very satisfying 1 154 million euros, almost twice as high as the figure in the corresponding period of 2010. This was due largely to sustained underlying revenues generated by our Belgium and Central & Eastern Europe Business Units, combined with well-controlled costs throughout the group. Loan loss impairment was up after the exceptionally low level in the first quarter and an impairment of 102 million euros after tax was also recorded on our Greek government bond portfolio, reducing the underlying result for this quarter. Our reported IFRS result also included some exceptional items, including a 0.1-billion-euro markdown on our CDO portfolio and a marked-to-market change of -0.1 billion euros in the value of our trading derivatives used for hedging purposes."

"In mid-July, we announced a substantial change to our strategic plan. The main change concerned replacing the originally intended IPO of a minority share in ČSOB Bank and K&H Bank by the sale of Kredyt Bank and Warta, our Polish subsidiaries. This adjustment has since been approved by the European Commission. We strongly believe this provides us with a solid basis for the future achievement of the goals set in our strategic refocusing exercise. Our bancassurance business model remains at the core of our strategy".

Financial highlights for 2Q2011 compared to 1Q2011:

• Continued high underlying net profit from day-to-day business even after impact of Greek sovereign bond impairment.
• Sustained level of net interest income. Modest increase in loan volume driven by mortgages.
• Slight decrease in net fee and commission income on account of somewhat lower AUM, given reduced investors’ risk appetite.
• Excellent combined ratio of 87% year-to-date, thanks to low claims. Lower life insurance sales due to lower sales of interest guaranteed products.
• Modest level of income generated by the dealing room.
• Underlying cost/income ratio at a good 56% year-to-date.
• Credit cost ratio at a low 0.32% year-to-date. Post-tax impairment of 102 million euros for Greece.
• Consistently strong liquidity position.
• Solvency: continued strong capital base: pro forma tier-1 ratio – including the effect of divestments for which a sale agreement has been signed to date – at approximately 14.3%.