KBC's profit misses market forecast as it builds buffer against war hit
KBC's First-Quarter Financial Performance and Impact of Geopolitical Risks
By Jakob Van Calster and Mateusz Rabiega
Profit Results and Analyst Expectations
May 12 (Reuters) - KBC reported a first-quarter profit below market expectations on Tuesday, depressed by higher provisions and reserves set aside due to geopolitical challenges, as the Belgian bank joined European peers boosting their buffers amid the Iran war.
The lender's net profit was 557 million euros ($655 million) in the quarter, missing the 578 million euros analysts had expected in a company-compiled consensus, even as its net interest income soared 18% on the year.
Analyst Reactions
In a note to clients, RBC analysts said that an unchanged guidance also "dampens the excitement", even if NII beat expectations.
Stock Market Response
Shares opened 3% lower in Brussels, underperforming the wider European banking index which fell around 2.2%.
Increased Provisions and Loan Loss Impairments
CEO Statement on Reserve Increases
"Loan loss impairment charges for our lending book were slightly up on the level recorded in the previous quarter, and due to the geopolitical turmoil we increased the reserve for geopolitical and macroeconomic uncertainties by 75 million euros," the bank's CEO Johan Thijs said in a press release.
Loan Loss Impairment Details
Full loan loss impairment was 165 million euros in the first quarter, a more than 100-million-euro increase compared to last year, as the U.S.-Israeli war with Iran bogs down the global economy.
Impact on Economic Projections
"As a consequence, global and European economic growth projections have been revised downwards, while inflation expectations have moved higher," KBC said in a statement.
Additional Geopolitical Risks
The continued war in Ukraine, the aftermath of U.S. tariffs and rising tensions between U.S. President Donald Trump and Europe added to global risks, the lender said.
Currency and Reporting Notes
($1 = 0.8506 euros)
(Reporting by Jakob Van Calster and Mateusz Rabiega, editing by Milla Nissi-Prussak)
