Analyst Note| Johann Scholtz, CFA |
Narrow-moat KBC reported a net profit of EUR 601 million for the third quarter of 2021, 14% lower than the EUR 697 million it reported for the third quarter of 2020, but 20% ahead of the EUR 501 million the consensus of analysts collected by the company itself had penciled in for the quarter. The earnings beat was mostly due to KBC booking a net loan loss reversal for the quarter while consensus expected a charge for loan losses. Revenue growth was virtually flat year on year while expenses grew by 11% leading to a 9% decline in pre-provision profits. A EUR 81 million once off charge for staff redundancies in Ireland inflated the operating expenses for the quarter. Excluding the redundancy charge, expenses grew by 2% year on year. We keep our fair value estimate of EUR 62.50 per share and our narrow moat rating.