KBC's Strong Quarter: Guidance Upgrade and Disciplined Capital Management
Q2 2026 results beat expectations, prompting an upgrade in income and loan growth guidance, while M&A optionality remains.
KBC.BR · Earnings Call · 2026-08-06
A Strong Quarter
I'm very happy to announce a very excellent result over the second quarter, totaling EUR 1,152 million. This is a return on tangible equity of 18%.
KBC Group delivered a stellar Q2 2026, with net profit of €1.152 billion and a RoTE of 18%. The result was broad-based, with strong inflows of core customer monies (€6 billion in the quarter) and record fee and insurance contributions. The Inflation linked bonds alone contributed €45 million to NII, although management cautioned not to extrapolate this. Loan growth was exceptionally strong at 2.8% in the quarter, leading to an upgraded full-year guidance.
Guidance Upgrade: From 'At Least' to 'Approximately'
The company upgraded its 2026 guidance significantly. Total income growth is now expected at ~11% (up from 9.9%), NII guidance was raised to ~€7.05 billion, and loan growth to at least 6%. Importantly, management shifted language from "at least" to "approximately", signalling more precision. As Johan Thijs noted: “The guidance now stands for the total income 11%, which compares to the previous guidance, 9.9%.” — Johan Thijs, Group CEO · 2026-08-06 This confidence is underpinned by continued transformation-result gains and loan growth across all geographies. However, margin pressure persists in Belgian mortgages, offset by strong corporate lending margins.
Capital, M&A, and the Greece Clarification
CET1 ratio stands at 14.4%, with a solvency ratio of 231%. The board announced an interim dividend of €1/share. On M&A, Ethias remains a live option, with the government expected to decide by year-end. Johan reaffirmed: “we will be a candidate. And for the right price, we will pursue that transaction.” — Johan Thijs, Group CEO · 2026-08-06 He also definitively denied any interest in Greece: “we have never made a statement that we would be interested in Greece, and I confirm today that we are not looking into entering Greece.” — Johan Thijs, Group CEO · 2026-08-06 The surplus capital policy remains unchanged: if no M&A happens, excess capital will be distributed.
Digital and AI: Kate's Continued Progress
Kate, the AI assistant, now handles ~80% autonomy in Belgium and is driving tangible efficiency gains. Management highlighted that Kate generated 488,000 sales leads in the quarter. This digital focus is a continuation of prior strategies, as noted in the February 2026 call: “we will continue to develop our front-end and our back-end connected via AI solutions.” — Johan Thijs, Chief Executive Officer (CEO) · 2026-02-12 The company's ability to absorb wage inflation through AI remains a key differentiator.
Risks and Outlook
While the quarter was exceptional, risks remain: the Hungary modification loss (€42M) could reverse, and the company warns of normalization in credit costs. However, current impairments are benign, with a credit cost ratio of only 11bps. The macro environment, including Middle East tensions, has not materially impacted the portfolio. KBC's disciplined approach to costs and capital positions it well for continued outperformance.