KBC posts 27 pc rise in 2Q net profit
10 August 2007, BRUSSELS (AP) - Belgian bank KBC Group NV posted a 27 percent rise in second-quarter net profit on Friday, praising a favourable business climate from Europe's economic recovery and stressing its low exposure to current credit market volatility.
10 August 2007
BRUSSELS (AP) - Belgian bank KBC Group NV posted a 27 percent rise in second-quarter net profit on Friday, praising a favourable business climate from Europe's economic recovery and stressing its low exposure to current credit market volatility.
Net profit was EUR 936 million in the three months ending 30 June, up from EUR 736 million in the same period a year earlier, the bank said in a statement. Total income swelled to EUR 3.26 billion from EUR 2.96 billion a year ago.
The company - which has wide operations in eastern Europe and is buying Russian mortgage lender Absolut - said all business units put in a good performance and core income was strong.
Chief executive Andre Bergen insisted that the start of the third quarter was encouraging and the bank would not be hit hard as U.S. subprime mortgage losses start to hurt European lenders.
The European Central Bank has injected EUR 156 billion into the banking system since Thursday in an effort to soothe jittery global credit markets. German banking officials are also trying to shield Germany's IKB Deutsche Industriebank AG after it admitted large losses from the growing number of U.S. defaults on subprime loans made to people with poor credit.
KBC - Belgium's third largest bank by assets - did not risk more than EUR 10 million, even in a worst-case scenario, Bergen said.
"Vulnerability to current credit market volatility is very low," he said. "We are not a direct subprime mortgage lender and our indirect exposure to the market via credit-linked investments is small."
During the second quarter, KBC benefited from higher gains on investment securities in its insurance division and insurance claims returned to normal after it had to pay out for the storm that savaged Germany, Switzerland and other parts of Europe in January.
Profit from its Belgian business unit swelled by a half as Europe's economic comeback strengthened while it grew its business in central and eastern Europe. So far this year, KBC has spent EUR 1.4 billion on buying into new markets in Bulgaria, Romania, Serbia and Russia.
Loan loss charges are low, it said, and a limited number of corporate loan defaults were more than compensated by bad loan recoveries in other areas.
[Copyright AP 2007]
Subject: Belgian news