KBC Group N.V.

KBC reported second-quarter net profit of EUR 1,152 million and a return on tangible equity of 18%. Net interest income was EUR 1,805 million, fee and commission income was EUR 758 million, and net other income was EUR 50 million. Underlying loan impairments were EUR 53 million, equal to an 11 basis point credit cost ratio, while total impairments were EUR 135 million including EUR 42 million of modification losses in Hungary and EUR 28 million of software impairment. The CET1 ratio was 14.4%, the insurance solvency ratio was 231%, and the cost/income ratio was 39.8% excluding bank taxes. Management raised 2026 guidance to approximately EUR 7.05 billion of net interest income, approximately 11% total income growth, approximately 3.4% operating expense growth, approximately 40% cost/income ratio, and at least 6% loan growth. It also said bank taxes would be about EUR 730 million for the year and confirmed a EUR 1 per share interim dividend to be paid in November.

Johan Thijs described the quarter as an “excellent result” and emphasized that all countries performed well. He highlighted KBC’s diversified bancassurance model, strong customer inflows, rising lending and deposit volumes, and the role of Kate and digital tools in supporting both revenue and efficiency. He was upbeat on commercial momentum but cautious that some one-offs, especially the Hungary modification loss, could be revisited if policy changes.

Bartel Puelinckx focused on the financial mechanics behind the quarter and the guidance update. He said operating expenses were under control even with wage inflation, FX effects and integration costs from 365.bank, with like-for-like cost growth of 3.4% after excluding those effects. He also explained that the CET1 ratio reflected strong profit generation and RWA growth, that the modeled ECL buffer rose by EUR 13 million, and that the group had also taken a EUR 28 million software impairment. On capital management, he said the firm remains committed to returning surplus capital if it cannot be used for organic growth or opportunities, and noted the second SRT in June created an RWA saving of EUR 0.7 billion on a EUR 1.25 billion Belgian corporate portfolio.

Analysts focused on M&A, the Ethias file, capital deployment, NII sustainability, deposit competition, loan-to-deposit trends, and rising RWAs. Management said the Belgian government is moving ahead with a sale of a 20% stake in Belfius and will decide on Ethias by year-end; KBC would bid for Ethias at the right price, but if it does not happen the bank will continue organic growth and screen for other opportunities, including Romania, while saying it is not looking to enter Greece. On NII, management said the raised guidance assumes some slowdown in lending growth and that EUR 45 million from inflation-linked bonds will not repeat every quarter. It also said deposit competition is being managed rationally so far, that loan-to-deposit remains comfortable at 88% for the group, and that RWA growth will continue to be managed with portfolio actions including more SRTs.