BRUSSELS May 15 Belgian financial group KBC
reported a better-than-expected net profit in the first
quarter on Thursday, as higher client deposits as well as fee
and commission income outweighed the impact of a Hungarian
The group, which still owes 2 billion euros ($2.74
billion)excluding penalties of the 7 billion euros state aid in
received at the height of the credit crisis, said customer
deposits grew by 4 percent from the fourth quarter in Belgium.
They were also 1 percent higher in the Czech Republic and up
by 1 percent in its international business, comprising of
Bulgaria, Hungary, Ireland and Slovakia.
KBC's fee and commission income rose 4 percent from the
fourth quarter, as it gained higher fees from mutual funds and
The group's cost to income ratio in banking rose to 62
percent from 52 percent in the whole of 2013 as the group booked
a Hungarian banking tax for the full year.
The government of Prime Minister Viktor Orban, who was
re-elected to a second consecutive term in a vote in April, has
levied hefty crisis taxes on banks, energy and telecoms
companies to rein in the country's budget deficit.
These taxes and a 2011 government measure to help households
indebted in foreign currency, mainly in Swiss francs, have
inflicted huge losses on Hungary's banking sector in recent
Underlying net profit rose 7.8 percent in the first quarter
to 387 million euros, well above the 359 million expected in a
Reuters poll of five analysts.
KBC, which took a 775 million euros hit on its Irish loan
loss portfolio in the fourth quarter, said it had 15.1 billion
of outstanding loans in Ireland, down from 15.3 billion at the
end of the fourth quarter. Customer deposits in Ireland were up
11 percent from the fourth quarter.
($1 = 0.7294 Euros)
(Reporting by Robert-Jan Bartunek; editing by Philip