KBC Group Shares Slump After Net Interest Income Disappoints

   By Mauro Orru 
 

Shares of KBC Group plunged in Tuesday morning trading after the Belgian financial-services company posted net interest income below analysts' forecasts for the first quarter.

At 0745 GMT, KBC Group shares traded 5.8% lower at EUR58.02.

Net interest income--the difference between what lenders earn from loans and pay for deposits, and a key profit driver for retail banks--climbed to 1.32 billion euros ($1.44 billion) in the three months to the end of March from EUR1.20 billion in last year's first quarter, thanks to better reinvestment yields in core countries and organic growth of loan and deposit volumes.

However, the result is below analysts' EUR1.37 billion estimate, according to a company-compiled consensus.

"The net interest income miss catches the eye," Jefferies analysts wrote in a note to clients.

Pressure on lending margins in core countries, higher funding cost of participations and the sale of the remaining Irish portfolio in February weighed on net interest income, KBC Group said.

"The challenging environment is not distracting us from taking important steps towards achieving our strategic goals," said Chief Executive Johan Thijs. "In the quarter under review we finalized the sale of substantially all of the remaining assets and liabilities of KBC Bank Ireland."

Net profit surged to EUR882 million from EUR452 million, above consensus of EUR743 million.

For the year, the group continues to target total income of roughly EUR11.15 billion, with about EUR5.7 billion in net interest income.

Write to Mauro Orru at mauro.orru@wsj.com; @MauroOrru94

(END) Dow Jones Newswires

May 16, 2023 04:06 ET (08:06 GMT)

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