The bank-insurer generated a net profit of €745m in the second quarter of 2019 although trading and fair value income was heavily impacted by several factors including lower long-term interest rates, according to chief executive officer Johan Thijs (pictured).
KBC has reported sales of life insurance products in the second quarter of 2019, at €459m, were down 11% on the relatively high level recorded in the previous quarter, due to lower sales of both unit-linked life insurance – which include structured products (Class 23) – and guaranteed-interest products in Belgium.
Year-on-year, however, life sales increased by eight percent, driven entirely by higher sales of unit-linked products in Belgium, and to a lesser extent in Czech Republic.
Sales of unit-linked products accounted for 43% of total life insurance sales in the quarter under review.
For half-year 2019, life insurance sales (€975m) were up by six percent year-on-year, with increased sales of both guaranteed interest and unit-linked products.
In Belgium, KBC sold 12 structured products – split equally between structured funds and life insurance – worth an estimated €260m during the second quarter of 2019 (compared to €302m from 15 products in the same quarter of 2018), according to SRP data.
Thirty-one structures matured during the quarter. Of these, KBC Participation Timing European Exporters 1 delivered the best performance. The structured fund, which sold €68.6m at inception, returned 180% of the nominal invested after 6.6-years, or 9.26% per annum.
Five products, worth approximately CZK445m (€17.2m) were distributed in the Czech Republic during the second quarter (2Q2018: CZK1.7 billion from 10 products) while a further three products worth €23.2m were available to retail investors in Slovakia (2Q2018: €7m from four products).
Assets under management, at €210 billion, stabilised quarter-on-quarter, but decreased by two percent compared to the prior-year quarter. The mutual fund business saw net outflows in 2Q2019, mainly in investment advice.
Net fee and commission income, at €435m, was up six percent quarter-on-quarter and slightly down on the prior year quarter. Net F&C income from asset management services increased by two percent as a result of higher management fees from mutual funds and unit-linked life insurance products, partly offset by lower entry fees.
The lower figures for net gains from financial instruments at fair value were attributable, among others, to weak dealing room income; a negative change in asset and liability management (ALM) derivatives; lower net result on equity instruments (insurance) due to less favourable stock markets in 2Q2019 compared to 1Q2019; and a negative change in market, credit and funding value adjustments in the Czech Republic (mainly as a result of changes in the underlying market value of the derivatives portfolio due to lower long-term interest rates).
Securities (equity and debt instruments) registered €63.7 billion on the balance sheet on June 30 2019, level on the previous quarter and slightly down from the same quarter last year (€63.9m)
Click the link to view the KBC 2Q2019 results, presentation, and report.