FINANCIALS: KBC Results 8-Aug; Awaiting A CEE Move?

KBC (KBCBB: A3/A-/A) 2Q24 results are due on 8-Aug; a range of political events across CEE continue to impact both current financials but also mgmt ambitions. The last quarter has, if anything, seen something of a hiatus so it’s as close to “business as usual” as you’ll see with this issuer, we feel. Expectations aren’t particularly high, and most peers have posted reasonably solid figures.

• Results last time had in line revenues and costs and a tiny loan loss charge drove pre-tax 10% ahead of consensus. Even with an extraordinary dividend, the equity market was less impressed, however, perhaps on the guidance for future payout levels and lack of upgraded guidance.
• KBC’s interest in building a significant CEE network has not progressed in the period, at least in part due to political instability, windfall taxes and rising valuations of banks in the region. Either way, M&A risk vs. a buyback is often a clear spread differentiator… the latter being lower risk, more often than not.
• Spreads have outperformed since last results, including through recent volatility, as has the equity but more marginally. So, there is at least some expectation inbuilt.
• Revenue estimates were pushed up 1-3% after 1Q24 with EPS up 3% for this year but lower for next, we presume as loan losses normalise from the current very low levels.

Results are due at 0600 (London time) with conf call at 0830 at: https://channel.royalcast.com/kbc/#!/kbc/20240808_1