KBC is under pressure on the stock market after the publication of its third quarter profit. Interest profit fell in the third quarter compared to the previous quarter. This is due to the government bond and savers’ search for a better interest rate.
It is the phenomenon of 2023: savers who want to benefit from the sharply increased interest rates after years of extremely low interest rates. Because the banks in our country were also in no hurry to adequately raise interest rates, Minister of Finance Vincent Van Peteghem (CD&V) launched a government bond that yielded a net 2.81 percent. According to KBC, this had a double effect: 6 billion euros of savings at KBC disappeared into the government bond and the bancassurer was forced to give many customers a higher interest rate through other savings products in an attempt to keep customers with them.
The pressure on banks to be more transparent about what interest rate a saver can expect and to offer savers the best formula is increasing. Political agreements were made about this on the margins of the budget discussions. The Belgian competition watchdog proposes in a new report to abolish the fidelity premium on the savings account or at least simplify the system.
There will also be an outflow next year
Banks should therefore take into account that the pressure on their interest income will increase. At KBC, net interest income (the difference between interest receipts and interest payments) fell by 2 percent in the third quarter compared to the second quarter. There was still an increase of 7 percent year on year. The interest margin decreased by 7 basis points to 2.04 percent compared to the previous quarter.
In absolute figures, KBC achieved a net profit of 877 million in the third quarter. Last quarter that was 966 million.
The pressure on interest income is prompting KBC to adjust its profit forecast for next year. The group expects interest profit to remain stable at around 5.4 billion in 2024 instead of increasing. The outflow of money into government bonds will also weigh on the results next year. The bank also expects savers to shift more money from current accounts to term deposits.
KBC will also have to pay a higher bank levy. The government decided to increase the banking tax and abolish the deductibility of bank taxes. Both measures together would cost the bank an additional 40 million. The increase in the contribution to the deposit guarantee system would cost 10 million.
On the stock exchange, KBC shares fell by just over 4 percent on Thursday morning.