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\u2022 The overall impact on the net result of fluctuations in the
\n
exchange rates of the main non-euro currencies was \u2013 on
\n
balance \u2013 limited to 13 million euros (mainly due to the
\n
appreciation of the Czech koruna, partly offset by the
\n
depreciation of the Hungarian forint).
\n
\n\n
Effects of changes in foreign exchange rates
\n
\n
KBC\u2019s functional and presentation currency is the euro. Monetary assets and liabilities denominated in foreign currency are
\n
translated into the functional currency at the spot rate on the balance sheet date. Negative and positive valuation
\n
differences, except for those relating to the funding of equity instruments and investments of consolidated companies in a
\n
foreign currency, are recognised in the income statement. Non-monetary items measured at historical cost are translated
\n
into the functional currency at the historical exchange rate that existed on the transaction date. Non-monetary items carried
\n
at fair value are translated at the spot rate on the date the fair value was determined. Translation differences are reported
\n
together with changes in fair value. Income and expense items in foreign currency are taken to the income statement at the
\n
exchange rate prevailing when they were recognised.
\n
\n
Valuation differences are accounted for either in the income statement or in other comprehensive income. Valuation
\n
differences that are initially accounted for in other comprehensive income and that relate to gains or losses that are
\n
subsequently recognised in the income statement are recycled to the income statement in the same period in which that
\n
item is accounted for in the income statement. The balance sheets of foreign subsidiaries are translated into the presentation
\n
currency at the spot rate on the reporting date (except for equity, which is translated at the historical rate). The income
\n
statement is translated at the average rate for the financial year as a best estimate of the exchange rate on the transaction
\n
date.
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfEffectOfChangesInForeignExchangeRatesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag870": { "value": "\n\n
Market risk in non-trading activities
\n
Market risk is the risk related to changes in the level or in the volatility of market prices. The process of managing our
\n
structural exposure to market risks in the non-trading activities includes interest rate risk, gap risk, basis risk, option
\n
risk (such as prepayment risk), currency risk, equity price risk, real estate price risk, credit spread risk and inflation
\n
risk. \u2018Structural exposure\u2019 encompasses all exposure inherent in our commercial activity or in our long-term positions
\n
(banking and insurance). Trading activities are therefore not included. This process is also known as Asset/Liability
\n
Management (ALM).
\n
Managing market risk in non-trading activities
\n
The management of ALM risk at KBC is the responsibility of
\n
the Executive Committee, supported by the CRO Services
\n
Management Committee and the Asset and Liability
\n
Committee (ALCO). The Executive Committee decides on the
\n
non-trading market risk framework, which sets out specific
\n
risk guidance.
\n
With the risk function, the ALM Council \u2013 chaired by the
\n
Treasury CRO \u2013 aims to establish, facilitate, promote and
\n
support the solid and efficient integration of all tasks
\n
assigned to the local and group risk departments that are
\n
accountable for monitoring non-trading market risk. The
\n
Council acts as a management meeting of the group-wide
\n
Extended Competence Centre for ALM & Liquidity Risk.
\n
The building blocks for managing market risk in
\n
non-trading activities
\n
\u2022 Risk identification: market risk related to non-trading
\n
exposures arises from:
\n
- Mismatches in the banking activities linked to the branch
\n
network\u2019s acquisition of working funds and the use of
\n
those funds (via lending, among other things);
\n
- Mismatches in the insurance activities between liabilities
\n
in the non-life and life businesses and the cover for these
\n
liabilities present in the investment portfolios held for this
\n
purpose;
\n
- The risks associated with holding an investment portfolio
\n
for the purpose of reinvesting shareholders\u2019 equity (the
\n
so-called strategic position);
\n
- The structural currency exposure stemming from the
\n
activities abroad (investments in foreign currency, results
\n
posted at branches or subsidiaries abroad, foreign
\n
exchange risk linked to the currency mismatch between
\n
the insurer\u2019s liabilities and its investments).
\n
The following tools are used in the risk identification
\n
process for the market risk non-trading: the New and
\n
Active Products Process (NAPP), the Climate Risk Impact
\n
Map, the risk scan, the risk signal and early warning
\n
process, the parameter reviews and materiality
\n
assessments based on in-depth analysis and deep dives.
\n
\u2022 Risk measurements: Group Risk and the local risk
\n
departments measure ALM risks and flag current and
\n
future risk positions. A common rulebook, which
\n
supplements the framework for technical aspects, and a
\n
shared group measurement infrastructure ensure that
\n
these risks are measured consistently throughout the
\n
group. This includes a broad range of risk measurement
\n
methods such as:
\n
- Basis-Point-Value (BPV) for interest rate risk;
\n
- Gap analysis for interest rate risk, gap risk and inflation
\n
risk;
\n
- Economic sensitivities for currency risk, equity price risk
\n
and real estate price risk;
\n
- Net interest income simulations over a multi-year period
\n
which are used in budgeting and risk processes.
\n
\u2022 Setting risk appetite: limits cover all material risks faced by
\n
the ALM function: interest rate risk, equity risk, real estate
\n
risk and foreign exchange risk for the consolidated entities
\n
are approved by the Board of Directors and limits for each
\n
local entity are approved by the Executive Committee.
\n
The treasury departments, acting as the first line of
\n
defence, measure and manage interest rate risk on a
\n
playing field defined by the risk appetite and the limits.
\n
They take into account measurement of prepayment and
\n
other option risks in the banking book and manage a
\n
balanced investment portfolio. Management of the
\n
positions implies that the treasury function uses derivatives
\n
to hedge against imbalances, due to interest rate and
\n
foreign exchange risks. To avoid profit and loss volatility
\n
that would result from the different accounting treatment
\n
of balance sheet investment items and derivatives, hedge
\n
accounting techniques are widely applied.
\n
\u2022 Risk analysis, response and follow-up: besides regulatory
\n
required reporting, structural reporting to the ALCO is
\n
performed. The reporting process includes a sign-off
\n
process to ensure data accuracy.
\n
\u2022 Stress testing: a balanced stress testing programme is
\n
prepared on a yearly basis and reported on a quarterly
\n
basis. This includes:
\n
- The back-testing of prepayments;
\n
- Net interest income simulations performed under a
\n
variety of market scenarios for interest rate risk. Net
\n
interest income impact and sensitivities are also used to
\n
measure basis risk;
\n
- Capital sensitivities arising from banking book positions
\n
that impact available regulatory capital (e.g., fair value
\n
through other comprehensive income) are used for
\n
spread risk, interest rate risk and equity risk.
\n

\n\n

\n\n

\n\n
Impact of geopolitical and emerging risks on
\n
non-trading market risk
\n
After the markets had learned to live with the aftermath of
\n
the coronavirus crisis, they were shocked by the Russian
\n
aggression against Ukraine. Although our Central Europe
\n
subsidiaries share some borders with Ukraine, KBC had
\n
limited investments in the belligerent countries and it did not
\n
materially impact the banking books.
\n
However, the increase in inflation and interest rates, which
\n
were already observed prior to the invasion, accelerated
\n
beyond expectations, fundamentally changing the
\n
challenges faced by the treasury department. The quest for
\n
decent returns on investments has been replaced by
\n
renewed risks for outflows. Moreover, credits sold in times of
\n
high interest rates bear a larger prepayment risk. Tested
\n
scenarios showed the risk is material, but manageable. At
\n
the end, the solid and well-balanced structure of our
\n
banking books, as well as a prudent approach in the
\n
management of non-maturity deposits, allowed KBC to
\n
contain the risks and keep the balance sheet healthy.
\n
The different sub-risk types, including more details and
\n
figures, are set out below.
\n
Interest rate risk and gap risk
\n
The main technique used to measure interest rate risks is the
\n
10 BPV method, which measures the extent to which the
\n
value of the portfolio would change if interest rates were to
\n
go up by ten basis points across the entire swap curve
\n
(negative figures indicate a decrease in the value of the
\n
portfolio). We also use other techniques such as gap
\n
analysis, the duration approach, scenario analysis and stress
\n
testing (both from a regulatory capital perspective and from
\n
a net income perspective).
\n
Impact of a parallel 10-basis-point increase in the swap
\n
1
\n
curve
\n
for the KBC group, impact on value
\n
2
\n
(in millions of EUR) 2022 2021
\n
Banking -36 -69
\n
Insurance 4 24
\n
Total -32 -45
\n
1 In accordance with market standards, sensitivity figures are based on a risk-free curve (swap curve).
\n
2 Full market value, regardless of accounting classification or impairment rules.
\n
We manage the ALM interest rate positions of the banking
\n
entities via a system of market-oriented internal pricing for
\n
products with a fixed maturity date, and via a replicating
\n
portfolio technique for products without a fixed maturity
\n
date (e.g., current and savings accounts).
\n
The bank takes interest rate positions mainly through
\n
government bonds, with a view to acquiring interest income,
\n
both in a bond portfolio used for reinvesting equity and in a
\n
bond portfolio financed with short-term funds and deposits.
\n
The table shows the bank\u2019s exposure to interest rate risk in
\n
terms of 10 BPV.
\n
Swap BPV (10 basis points) of the ALM book, banking activities*
\n
(in millions of EUR) 2022 2021
\n
Average for 1Q -75 -65
\n
Average for 2Q -66 -64
\n
Average for 3Q -70 -60
\n
Average for 4Q -36 -69
\n
As at 31 December -36 -69
\n
Maximum in year -75 -69
\n
Minimum in year -36 -60
\n
* Unaudited figures, except for those \u2018As at 31 December\u2019.
\n
In line with European Banking Authority guidelines, we
\n
conduct an outlier stress test at regular intervals by applying
\n
six different scenarios to the banking books (material
\n
currencies). The worst-case scenario is set off against tier-1
\n
capital. For the banking book at KBC group level, this risk
\n
came to -3% of tier-1 capital at year-end 2022. This is well
\n
below the 15% threshold, which is monitored by the European
\n
Central Bank.
\n
The following table shows the interest sensitivity gap of the
\n
ALM banking book. To determine the sensitivity gap, we
\n
break down the carrying value of assets (positive amount)
\n
and liabilities (negative amount) according to either the
\n
contractual repricing date or the maturity date, whichever is
\n
earlier, in order to obtain the length of time for which interest
\n
rates are fixed. We include derivative financial instruments,
\n
mainly to reduce exposure to interest rate movements, on the
\n
basis of their notional amount and repricing date.
\n

\n\n

\n\n

\n\n
Interest sensitivity gap of the ALM
\n
book (including derivatives), banking
\n
activities (in millions of EUR)*
\n
\u2264 1
\n
month
\n
1\u20133
\n
months
\n
3\u201312
\n
months
\n
1\u20135
\n
years
\n
5\u201310
\n
years
\n
> 10
\n
years
\n
Non-
\n
interest-
\n
bearing Total
\n
31-12-2022 -24 177 11 472 -10 910 7 621 6 314 21 9 659 0
\n
31-12-2021 1 745 -12 310 -8 919 5 529 5 687 1 104 7 164 0
\n
* Please note that the \u2018Non-interest bearing\u2019 bucket includes Cash at Central Banks and non-maturity deposits that are kept overnight. For 2022 this amounted in total to
\n
+27.8 billion euros and for 2021 this was +20.6 billion euros. In case allocated to the \u201c<1 month bucket\u201d we come to an overall positive gap in the first month
\n
The interest sensitivity gap shows our overall position in
\n
interest rate risk. Generally, assets reprice over a longer term
\n
than liabilities, which means that KBC\u2019s net interest income
\n
benefits from a normal (upward-sloping) yield curve. The
\n
economic value of the KBC Bank group is sensitive primarily
\n
to movements at the long-term end of the yield curve.
\n
An analysis of net interest income is performed by measuring
\n
the impact of different interest rate scenarios over a
\n
three-year period.
\n
Where the group\u2019s insurance activities are concerned, the
\n
fixed-income investments for the non-life reserves are
\n
invested with the aim of matching the projected payout
\n
patterns for claims, based on extensive actuarial analysis.
\n
The non-unit-linked life activities (class 21) combine a
\n
guaranteed interest rate with a discretionary participation
\n
feature (DPF) fixed by the insurer. The main risks to which the
\n
insurer is exposed as a result of such activities are a low-
\n
interest-rate risk (the risk that return on investments will drop
\n
below the guaranteed level) and the risk that the investment
\n
return will not be sufficient to give clients a competitive
\n
profit-sharing rate. The risk of low interest rates is managed
\n
via a cashflow-matching policy, which is applied to that
\n
portion of the life insurance portfolios covered by fixed-
\n
income securities. Unit-linked life insurance investments
\n
(class 23) are not dealt with here, since this activity does not
\n
entail any market risk for KBC.
\n
Expected cashflows (not discounted),
\n
life insurance activities (in millions of EUR)
\n
0\u20131
\n
year
\n
1\u20132
\n
years
\n
2-3
\n
years
\n
3-4
\n
years
\n
4-5
\n
years
\n
>5
\n
years Total
\n
31-12-2022
\n
Fixed-income assets backing liabilities, guaranteed
\n
component 1 233 1 489 855 1 048 844 8 738 14 208
\n
Equity 929
\n
Property 112
\n
Other (no maturity) 95
\n
Liabilities, guaranteed component 1 367 1 201 807 882 834 9 474 14 566
\n
Difference in time-sensitive expected cashflows -134 288 48 166 11 -737 -358
\n
Mean duration of assets 6.66 years
\n
Mean duration of liabilities 8.76 years
\n
31-12-2021
\n
Fixed-income assets backing liabilities, guaranteed
\n
component 1 371 1 281 1 385 847 1 044 8 856 14 784
\n
Equity 987
\n
Property 171
\n
Other (no maturity) 152
\n
Liabilities, guaranteed component 1 758 748 1 223 840 895 9 859 15 323
\n
Difference in time-sensitive expected cashflows - 387 534 162 7 148 -1 003 -539
\n
Mean duration of assets 6.97 years
\n
Mean duration of liabilities 9.93 years
\n
As mentioned above, the main interest rate risk for the insurer
\n
is a downside one. We adopt a liability-driven ALM approach
\n
focused on mitigating the interest rate risk in accordance
\n
with KBC\u2019s risk appetite. For the remaining interest rate risk,
\n
we adhere to a policy that takes into account the possible
\n
negative consequences of a sustained decline in interest
\n
rates, and have built up adequate supplementary reserves.
\n

\n\n

\n\n

\n\n
Breakdown of the reserves for non-unit-linked life insurance by guaranteed interest
\n
rate, insurance activities 31-12-2022 31-12-2021
\n
5.00% and higher 3% 3%
\n
More than 4.25% up to and including 4.99% 7% 7%
\n
More than 3.50% up to and including 4.25% 4% 4%
\n
More than 3.00% up to and including 3.50% 9% 9%
\n
More than 2.50% up to and including 3.00% 3% 3%
\n
2.50% and lower 72% 71%
\n
0.00% 2% 2%
\n
Total 100% 100%
\n
Credit spread risk
\n
We manage the credit spread risk for, inter alia, the sovereign
\n
portfolio by monitoring the extent to which the value of the
\n
sovereign bonds would change if credit spreads were to go
\n
up by 100 basis points across the entire curve.
\n
Exposure to sovereign bonds at year-end 2022, carrying value
\n
1
\n
(in millions of EUR)
\n
At amortised
\n
cost
\n
At fair value
\n
through other
\n
comprehen-
\n
sive income
\n
(FVOCI)
\n
Held
\n
for trading Total
\n
For compari-
\n
son purposes:
\n
total
\n
at year-end
\n
2021
\n
Economic
\n
impact of
\n
+100 basis
\n
points
\n
3
\n
KBC core countries
\n
Belgium 8 750 1 840 230 10 820 13 020 -553
\n
Czech Republic 11 316 1 126 1 159 13 601 12 481 -626
\n
Hungary 2 362 161 99 2 621 3 085 -77
\n
Slovakia 3 334 265 17 3 615 3 689 -173
\n
Bulgaria 1 795 530 28 2 353 1 722 -84
\n
Other countries
\n
France 4 463 1 032 25 5 520 6 546 -231
\n
Spain 2 023 558 0 2 581 2 717 -78
\n
Ireland 1 016 204 0 1 220 1 356 -53
\n
Poland 875 180 9 1 065 1 335 -27
\n
US 1 558 15 0 1 573 1 319 -55
\n
Italy 268 908 0 1 176 1 286 -36
\n
Rest
\n
2
\n
6 461 1 316 100 7 876 5 951 -379
\n
Total carrying value 44 219 8 135 1 667 54 021 54 507 \u2013
\n
Total nominal value 44 953 8 772 1 812 55 537 52 796 \u2013
\n
1 The table excludes exposure to some supranational entities not considered as sovereign, such as the European Investment Bank and the European Investment Fund. No material
\n
impairment on the government bonds in portfolio.
\n
2 Sum of countries whose individual exposure is less than 1 billion euros at year-end 2022.
\n
3 Theoretical economic impact in fair value terms of a parallel 100-basis-point upward shift in the spread over the entire maturity structure. Only a portion of this impact is
\n
reflected in profit or loss and/or equity. Figures relate to non-trading positions in sovereign bonds for the banking and insurance businesses (impact on trading book exposure
\n
was quite limited and amounted to 14 million euros, including supranational bonds, at year-end 2022).
\n
At year-end 2022, the carrying value of the total government
\n
bond portfolio measured at fair value through other
\n
comprehensive income (FVOCI) incorporated a revaluation
\n
reserve of -0.8 billion euros, before tax (-217 million euros for
\n
Belgium, -165 million euros for France, -59 million euros for the
\n
Czech Republic, -45 million euros for Hungary and -277
\n
million euros for the other countries combined).
\n
In addition to the sovereign portfolio, the KBC group holds a
\n
non-sovereign bond portfolio (banks, corporations,
\n
supranational bodies).
\n

\n\n

\n\n

\n\n
Exposure to non-sovereign bonds at year-end, by rating: economic impact of +100 basis points
\n
(in millions of EUR) 31-12-2022 31-12-2021
\n
Bonds rated AAA -108 -125
\n
Bonds rated AA+, AA, AA- -115 -133
\n
Bonds rated A+, A, A- -109 -126
\n
Bonds rated BBB+, BBB, BBB- -34 -46
\n
Non-investment grade and non-rated bonds -21 -31
\n
Total carrying value (excluding trading portfolio) 11 505 10 703
\n
Equity risk
\n
The main exposure to equity is within our insurance business,
\n
where the ALM strategies are based on a risk-return
\n
evaluation, taking into account the market risk attached to
\n
open equity positions. A large part of the equity portfolio is
\n
held as an economic hedge for long-term liabilities. Smaller
\n
equity portfolios are also held by other group entities, e.g.,
\n
KBC Bank and KBC Asset Management.
\n
Equity portfolio of the KBC group Banking activities Insurance activities Group
\n
(breakdown by sector, in %) 31-12-2022 31-12-2021 31-12-2022 31-12-2021 31-12-2022 31-12-2021
\n
Financials 69% 68% 20% 17% 27% 25%
\n
Consumer non-cyclical 0% 0% 11% 11% 9% 10%
\n
Communication 0% 0% 3% 2% 2% 1%
\n
Energy 0% 0% 0% 0% 0% 0%
\n
Industrials 12% 10% 42% 41% 38% 36%
\n
Utilities 0% 0% 0% 0% 0% 0%
\n
Consumer cyclical 4% 4% 21% 25% 19% 22%
\n
Materials 0% 0% 2% 2% 2% 2%
\n
Other and not specified 14% 17% 1% 1% 3% 3%
\n
Total 100% 100% 100% 100% 100% 100%
\n
In billions of EUR*
\n
0.22 0.26 1.33 1.46 1.55 1.72
\n
of which unlisted
\n
0.21 0.26 0.14 0.15 0.35 0.41
\n
* The main reason for the difference with \u2018Equity instruments\u2018 in Note 4.1 of the \u2018Consolidated financial statements\u2019 section is that shares in the trading book are excluded above,
\n
but included in the table in Note 4.1.
\n
Impact of a 25% drop in equity prices , impact on value
\n
(in millions of EUR) 2022 2021
\n
Banking activities -55 -64
\n
Insurance activities -333 -366
\n
Total -387 -429
\n
Non-trading equity exposure
\n
Net realised gains
\n
(in income statement)
\n
Net unrealised gains
\n
on year-end exposure
\n
(in equity)
\n
(in millions of EUR) 31-12-2022 31-12-2021 31-12-2022 31-12-2021
\n
Banking activities - - 12 29
\n
Insurance activities 176 123 199 555
\n
Total 176 123 211 584
\n

\n\n

\n\n

\n\n
Real estate risk
\n
The groups\u2019 real estate businesses hold a limited real estate
\n
investment portfolio. KBC Insurance also holds a diversified
\n
real estate portfolio, as an investment for non-life reserves
\n
and long-term life activities. The real estate exposure is
\n
viewed as a long-term hedge against inflation risks and as a
\n
way of optimising the risk/return profile of these portfolios.
\n
Impact of a 25% drop in real estate prices, impact on value (in millions of EUR) 2022 2021
\n
Bank portfolios -94 -97
\n
Insurance portfolios -78 -94
\n
Total -172 -191
\n
Inflation risk
\n
Inflation can impact a financial company indirectly in many
\n
ways, for instance via changes in interest rates or operational
\n
costs. Inflation in general therefore is not easily quantifiable
\n
as a market risk concept. However, certain financial products
\n
or instruments have a direct link with inflation and their value
\n
is directly impacted by a change in market expectations.
\n
KBC Bank uses indexed bonds as an opportunity to diversify
\n
its asset portfolio. At KBC Insurance, it relates specifically to
\n
workmen\u2019s compensation insurance, where particularly in the
\n
case of permanent or long-term disabilities an annuity
\n
benefit is paid to the insured person (with the annuity being
\n
linked to inflation by law). KBC Insurance partly mitigates the
\n
risks by investing in inflation-linked bonds and complements
\n
its inflation hedging programme by investing in real estate
\n
and shares, as these assets are traditionally correlated with
\n
inflation and do not have a maturity date.
\n
The banking business holds a 600-million-euro portfolio of
\n
indexed bonds. For the insurance activities, the undiscounted
\n
value of the inflation-sensitive cashflows was estimated at
\n
515 million euros, against which a 452-million-euro portfolio
\n
of indexed bonds at market value and 28.7 million euros in
\n
direct and indirect real estate were held.
\n
Foreign exchange risk
\n
We pursue a prudent policy as regards our structural
\n
currency exposure. Material foreign exchange exposures in
\n
the ALM books of banking entities with a trading book are
\n
transferred via internal deals to the trading book, where they
\n
are managed within the allocated trading limits. The foreign
\n
exchange exposure of banking entities without a trading
\n
book and of insurance and other entities has to be hedged, if
\n
material. However, non-euro-denominated equity holdings
\n
in the investment portfolio are not required to be hedged, as
\n
foreign exchange volatility is considered part of the
\n
investment return.
\n
KBC focuses on stabilising the common equity ratio against
\n
foreign exchange fluctuations.
\n
Impact of a 10% decrease in currency value* Banking Insurance
\n
(in millions of EUR) 31-12-2022 31-12-2021 31-12-2022 31-12-2021
\n
CZK
\n
-231 -243 -31 -30
\n
HUF -100 -107 -7 -5
\n
BGN -96 -42 -17 -19
\n
USD -1 3 -47 -56
\n
* Exposure for currencies where the impact exceeds 10 million euros in Banking or Insurance.
\n
Hedge accounting
\n
Assets and liabilities management uses derivatives to
\n
mitigate interest rate and foreign exchange risks. The aim of
\n
hedge accounting is to reduce the volatility in P&L resulting
\n
from the use of these derivatives.
\n
KBC decided not to apply hedge accounting to credit and
\n
equity risks. When the necessary criteria are met, it is applied
\n
to remove the accounting mismatch between the hedging
\n
instrument and the hedged item. For more information about
\n
hedge accounting, please see \u2018Notes on the accounting
\n
policies\u2019 in the \u2018Consolidated financial statements\u2019 section.
\n
Risk categories applying to hedge accounting
\n
Interest rates
\n
Hedging derivatives are used to mitigate an interest rate risk
\n
that arises from a difference in the interest rate profile of
\n
assets and their funding liabilities. The hedge accounting
\n
status of a hedge can be associated with either the asset or
\n
the liability item.
\n
Interest rate derivatives can be designated as:
\n
\u2022 Hedges of the fair value of recognised assets or liabilities.
\n
Changes in the fair value of derivatives that are
\n
designated and qualify as fair value hedges are recorded
\n
in profit or loss, together with any changes in the fair value
\n

\n\n

\n\n

\n\n
of the hedged asset or liability that are attributable to the
\n
hedged risk. The gain or loss relating to the ineffective
\n
portion is also recognised in profit or loss.
\n
\u2022 Hedges of the cashflow of recognised assets and liabilities
\n
which are either certain or highly probable forecasted
\n
transactions. The effective portion of changes in the fair
\n
value of derivatives that are designated and qualify as
\n
cashflow hedges is recognised in the cashflow hedge
\n
reserve within equity. The gain or loss relating to the
\n
ineffective portion is recognised directly in profit or loss.
\n
KBC uses macro hedge accounting strategies for
\n
homogeneous portfolios of smaller items, where the
\n
frequency of occurrence or the relatively small size of the
\n
average operation renders the one-to-one relationship
\n
sub-optimal. This is the case for inter alia mortgages, loans
\n
to SMEs or customer deposits. Macro hedge strategies may
\n
be dynamic and undergo frequent changes based on
\n
balancing the portfolio (\u2018open portfolio hedge\u2019), among other
\n
things.
\n
The micro hedge designation is used when large individual
\n
assets or liabilities are hedged. Typical assets are large
\n
corporate loans and bond acquisitions for which the credit
\n
spread profile is relevant. Liabilities can include KBC\u2019s own
\n
issues or specific long-term facilities offered by a central
\n
bank. Micro hedges are either fair-value or cashflow based.
\n
Foreign exchange
\n
KBC has strategic investments denominated in non-euro
\n
currencies. The net asset value of significant participations is
\n
partly funded in the local currency by deposits and foreign
\n
exchange derivatives, to ensure stability of the CET1 ratio. By
\n
using hedges of net investments in foreign operations, the
\n
foreign exchange component is reported in equity until
\n
realisation (unwinding of funding due to liquidation, dividend
\n
payments or other decreases in net asset value).
\n
KBC also has a limited portfolio of foreign-currency-
\n
denominated bonds that are funded through euro proceeds.
\n
These bonds are hedged by cross-currency interest rate
\n
swaps to create a synthetic EUR fixed-rate interest income.
\n
Cashflow hedge accounting (microhedge) is performed to
\n
mitigate foreign exchange volatility.
\n
Hedge effectiveness
\n
Hedge effectiveness is determined at the inception of the
\n
hedge relationship, as well as through periodic prospective
\n
and retrospective effectiveness assessments, to ensure that
\n
a relevant relationship between the hedged item and the
\n
hedging instrument exists and remains valid.
\n
Effectiveness testing
\n
For interest rates, several prospective and retrospective tests
\n
are performed to ensure the relationship between the
\n
hedged item and the hedging instrument qualifies for the
\n
hedge accounting strategy.
\n
Prospective tests are mostly based either on a sensitivity
\n
analysis (verifying if the basis point value of the hedged
\n
portfolio relative to the hedging instrument stays within the
\n
80-125% interval) or volume tests (if the principal amount of
\n
hedge-eligible items exceeds the notional volume of
\n
hedging instruments expected to be repriced or repaid in
\n
each specified time bucket).
\n
For macro cashflow hedges, extensive forward-looking
\n
analyses assess the sufficient likelihood that the future
\n
volume of hedged items will largely cover the volume of
\n
hedging instruments. A hedge ratio \u2013 measuring the
\n
proportion of a portfolio that is hedged by derivatives \u2013 is
\n
calculated for each hedging strategy.
\n
The retrospective effectiveness test of the hedge
\n
relationship is periodically carried out by comparing the
\n
change in fair value of the portfolio of hedging instruments
\n
relative to the change in fair value of the hedged eligible
\n
items imputable to the hedged risk over a given period (the
\n
ratio of fair value changes remains within the 80-125%
\n
interval).
\n
For foreign exchange hedging, effectiveness is ensured by
\n
adjusting the sum of the nominal amount of the funding
\n
deals and foreign exchange derivatives to the targeted
\n
hedge amount of the strategic participations. For foreign-
\n
currency-denominated bonds swapped into euro, the start
\n
date, maturity date and coupon dates are also matched.
\n
Sources of hedge ineffectiveness
\n
Ineffectiveness for interest rate swaps may occur due to:
\n
\u2022 Differences in relevant terms between the hedged item
\n
and the hedging instrument (it can include discrepancies
\n
in interest curves and in periodicity);
\n
\u2022 A reduction in volume of the hedged item that would fall
\n
under the volume of hedging instruments for any time
\n
bucket;
\n
\u2022 The credit value adjustment on the interest rate swap not
\n
being matched by the loan. However, hedging swaps are
\n
fully collateralised or traded through clearing houses and
\n
the credit value adjustment is limited.
\n
Regarding the hedge of the net investment in foreign
\n
currency, the interest rate component from the hedging
\n
instruments can be a source of inefficiency. The counterparty
\n
risk on the hedging instrument, even if collateralised, can
\n
also be a source of inefficiency.
\n
Discontinuation of hedge accounting
\n
Hedge accounting strategies failing the effectiveness tests
\n
are discontinued. A de-designated hedging instrument can
\n
be re-designated in a new hedge relationship. Effective
\n
hedge accounting strategies may also be discontinued for
\n
technical or strategic reasons. Any impact on profit and loss
\n

\n\n

\n\n

\n\n
arising from hedge ineffectiveness and discontinuation is
\n
reported to the ALCO.
\n
Capital sensitivity to market movements
\n
Available capital is impacted when the market is stressed.
\n
Stress can be triggered by a number of market parameters,
\n
including by swap rates or bond spreads that increase or by
\n
equity prices that fall. At KBC, we use this capital sensitivity
\n
as a common denominator to measure the vulnerability of
\n
the banking book to different market risk shocks. Common
\n
equity tier-1 (CET1) capital is sensitive to a parallel increase in
\n
bond spreads. This sensitivity is caused by investments in
\n
sovereign and corporate bonds whose spread component
\n
has not been hedged. The loss in available capital in the
\n
event of a fall in equity prices is caused primarily by positions
\n
in pension funds that would be hit by such a shock.
\n
CET1 sensitivity to main market drivers (under Danish compromise), KBC group (as % points of
\n
CET1 ratio), IFRS impact caused by:
\n
31-12-2022 31-12-2021
\n
+100-basis-point parallel shift in interest rates -0.1% 0.3%
\n
+100-basis-point parallel shift in spread -0.1% -0.2%
\n
-25% in equity prices -0.1% -0.3%
\n
Regulatory capital
\n
Regulatory capital for non-trading market activities totalled
\n
22 million euros. It is used to cover foreign exchange
\n
exposures only, as KBC does not have any commodity
\n
exposures. In line with regulations, other types of non-trading
\n
market risk are covered through pillar II assessments.
\n

\n\n

\n\n\n
Market risk in trading activities
\n
Market risk is the potential negative deviation from the expected value of a financial instrument (or portfolio of such
\n
instruments) due to changes in the level or in the volatility of market prices, e.g., interest rates, exchange rates and
\n
equity or commodity prices. KBC\u2019s market risk in trading activities comes from the mismatch that occurs between
\n
the portfolio arising from our bespoke client transactions and the more market-standard hedges carried out in the
\n
financial markets.
\n
Managing market risk
\n
The Competence Centre for Trading Market Risk is primarily
\n
responsible for defining the Trading Market Risk Management
\n
Framework. This framework elaborates on specific suitable
\n
measures, methods, tools, the control processes to be
\n
implemented, organisational aspects, IT systems, matters
\n
regarding information/communication, and the associated
\n
governance for market risk in the group\u2019s trading books. The
\n
focus of our trading activities is on interest-rate instruments,
\n
while activity on the foreign exchange markets and in
\n
relation to equity has traditionally been limited. These
\n
activities are carried out by our dealing rooms in Belgium, the
\n
Czech Republic, Hungary, Bulgaria and Slovakia, as well as
\n
via a minor presence in the UK and Asia. Wherever possible
\n
and practical, the residual trading positions of our foreign
\n
entities are systematically transferred to KBC Bank NV,
\n
reflecting that the group\u2019s trading activity is managed
\n
centrally both from a business and a risk management
\n
perspective. Consequently, KBC Bank NV holds about 98% of
\n
the trading-book-related regulatory capital of KBC Group
\n
NV.
\n
The building blocks for managing market risk
\n
\u2022 Risk identification: the risk function analyses the results of
\n
value and risk calculations, market developments, industry
\n
trends, new modelling insights, changes in regulations, etc.
\n
and draws up advice for the Group Markets Committee
\n
(GMC) with a view to changing or refining measurement
\n
methods, limits, hedging methods or positions.
\n
Furthermore, before a new or changed dealing room
\n
product or activity can be introduced, the risk function
\n
screens whether the risk aspects are correctly and
\n
sufficiently covered and provides risk advice that includes
\n
powers of veto and is part of the NAPP. Also, to identify
\n
climate risk drivers that are most material for trading
\n
market risk, an annual Climate Risk Impact Map is drafted
\n
and presented to the GMC.
\n
\u2022 Risk measurement: ownership of the definitions used for
\n
the group-wide measurement of trading market risk lies
\n
with the risk function. We measure risk via a number of
\n
parameters including nominal positions, concentrations,
\n
BPV, the so-called \u2018greeks\u2019 and scenario analysis. However,
\n
the primary tool we use for measuring and monitoring
\n
market risk exposures in the trading book is the Historical
\n
Value-at-risk (HVaR) method. VaR is defined as an estimate
\n
of the amount of economic value that might be lost on a
\n
given portfolio due to market risk over a defined holding
\n
period, with a given confidence level. We use the historical
\n
simulation method, which does not have to rely on
\n
assumptions regarding the distribution of price fluctuations
\n
or correlations, but is based on patterns of experience over
\n
the previous two years. Our HVaR model is used for both
\n
Management HVaR and for the calculation of regulatory
\n
capital. Regulatory HVaR is calculated using the relevant
\n
CRD IV standards (99% one-sided confidence interval,
\n
ten-day holding period). Management HVaR uses the
\n
same standards, except that a one-day holding period is
\n
used, as this is more intuitive for senior management and is
\n
also in line with P&L reporting, day-to-day management,
\n
stop losses and back-testing.
\n
\u2022 Setting and cascading risk appetite: the risk appetite for
\n
market risk in trading activities is set in line with the overall
\n
requirements as defined in our overarching risk
\n
management framework and is overseen by the GMC via a
\n
risk limit framework consisting of a hierarchy of limits and
\n
early warning indicators. These are defined down to desk
\n
level and, in addition to HVaR, include a series of
\n
secondary limits, with equity concentration limits, FX
\n
concentration limits and basis-point-value limits for
\n
interest rate risk and basis risk. The specific risk associated
\n
with a particular issuer or country is also subject to
\n
concentration limits. There are also scenario analysis limits
\n
and \u2013 where deemed appropriate \u2013 stress scenario limits
\n
involving multiple shifts of underlying risk factors.
\n
\u2022 Risk analysis, monitoring, reporting and follow-up: in
\n
addition to the more proactive elements described under
\n
\u2018Risk identification\u2019, this involves compiling the necessary
\n
external and internal reports, issuing advice on business
\n
proposals, and monitoring and advising on the risks
\n
attached to the positions. We monitor and follow up the
\n
risks attached to the positions on a daily basis by means of
\n
the risk limit framework. Another important aspect of this
\n
building block is prudent valuation. We perform a daily
\n
independent middle-office valuation of front-office
\n
positions. Whenever the independent nature or the
\n
reliability of the valuation process is not guaranteed, we
\n
perform a monthly parameter review. Where applicable,
\n
we make adjustments to the fair value to reflect close-out
\n

\n\n

\n\n

\n\n
costs, mark-to-model-related value adjustments,
\n
counterparty risk and liquidity risk. Risk monitoring is also
\n
carried out via internal assessments and a large variety of
\n
controls, including parameter reviews, daily reconciliation
\n
processes, analyses of the material impact of proxies and
\n
other periodic controls to ensure sound risk management.
\n
The GMC, which meets every month, receives an extensive
\n
Core Report as well as periodic and ad hoc memos and
\n
reports. The GMC also receives a dashboard halfway
\n
between the monthly meetings whose frequency is
\n
increased (up to daily, if needed) depending on market
\n
circumstances. The Executive Committee ratifies the
\n
minutes of the GMC meetings and also receives market-
\n
risk-related information and risk signals in its monthly
\n
Integrated Risk Report.
\n
\u2022 Stress testing: in addition to the risk limit framework, we
\n
conduct extensive stress tests on our positions on a weekly
\n
basis. Whereas the HVaR model captures potential losses
\n
under normal market conditions, stress tests show the
\n
impact of exceptional circumstances and events with a
\n
low degree of probability. The historical and hypothetical
\n
stress-test scenarios incorporate both market risk and the
\n
liquidity aspects of disruptions in the market. The stress
\n
tests are discussed at GMC meetings to enable the
\n
members to gain an insight into potential weaknesses in
\n
the positions held by the group. During 2022, our review of
\n
the stress tests (as regards their mix and checking that
\n
they remain up-to-date and relevant) resulted in the
\n
recalibration of the tenor basis shifts and the cross-
\n
currency basis shifts used in our interest rate hypothetical
\n
stress tests, with no other changes deemed necessary. For
\n
more details about stress testing, please refer to the
\n
relevant sub-section of the \u2018Market risk management\u2019
\n
section in KBC\u2019s Risk Report, which is available at
\n
www.kbc.com.
\n
Impact of geopolitical and emerging risks on
\n
trading market risk
\n
The high volatility and nervousness in the markets, amidst
\n
geopolitical tensions, high inflation figures, recession fears
\n
and the uncertainties surrounding the timing and extent of
\n
central banks\u2019 monetary tightening, has persisted throughout
\n
2022. Although this increased market activity and volatility
\n
has been conducive to the dealing room P&L, even the small
\n
mismatches and residual positions arising from the inexact
\n
(macro) hedging of the positions resulting from facilitating
\n
clients led to increased P&L volatility. Notwithstanding the
\n
actions taken by the dealing room to lower P&L volatility,
\n
market risk RWAs for trading activities at year-end 2022 were
\n
approximately 16% higher than at year-end 2021 due to the
\n
market turmoil increasing the market risk RWA derived from
\n
our Approved Internal Model (please refer to KBC\u2019s Risk
\n
Report, available at www.kbc.com for more information).
\n
However, KBC\u2019s low risk appetite for market risk in trading
\n
activities is illustrated by the fact that, despite this increase,
\n
the 2022 market risk RWA for trading activities remained at
\n
about 3% of KBC Group\u2019s total RWA.
\n
Risk analysis and quantification
\n
The table below shows the Management HVaR (99%
\n
confidence interval, one-day holding period, historical
\n
simulation) for the residual trading positions at all the dealing
\n
rooms of the KBC group that can be modelled by HVaR.
\n
Market risk (Management HVaR) (in millions of EUR) 2022 2021
\n
Average for 1Q 8 8
\n
Average for 2Q 9 8
\n
Average for 3Q 10 7
\n
Average for 4Q 9 7
\n
As at 31 December 7 7
\n
Maximum in year 12 11
\n
Minimum in year 6 4
\n
A breakdown of the risk factors (averaged over the full year) in KBC\u2019s HVaR model is shown in the table below. Please note that
\n
the equity risk stems from the equity desk, as well as from KBC Securities.
\n

\n\n

\n\n

\n\n
Breakdown by risk factor of trading HVaR for the KBC group (Management HVaR; in millions of EUR)
\n
Average for
\n
2022
\n
Average for
\n
2021
\n
Interest rate risk 8.6 7.6
\n
FX risk 1.3 1.1
\n
FX options risk 0.3 0.2
\n
Equity risk 0.8 0.9
\n
Diversification effect -2.1 -2.3
\n
Total HVaR 8.9 7. 5
\n
We test the reliability of the VaR model daily via a back-test,
\n
which compares the one-day VaR figure to daily P&L figures.
\n
This is done at the top level and can be drilled down to the
\n
different entities, desks and even to trader account level. For
\n
more details about back-testing, please refer to the relevant
\n
sub-section of the \u2018Market risk management\u2019 section in KBC\u2019s
\n
Risk Report, which is available at www.kbc.com.
\n
We have provided an overview of the derivative products
\n
under Note 4.8 of the \u2018Consolidated financial statements\u2019
\n
section.
\n
Regulatory capital
\n
The vast majority of regulatory capital requirements are
\n
calculated using our Approved Internal Model which, in
\n
addition to HVaR, uses SVaR, which is one of the CRD III
\n
Regulatory Capital charges that entered into effect at
\n
year-end 2011. The calculation of an SVaR measure is based
\n
on the normal VaR calculations and follows the same
\n
methodological assumptions, but is constructed as if the
\n
relevant market factors were experiencing a period of stress.
\n
The period of stress is calibrated at least once a year
\n
(checked monthly to ensure the period is still valid) by
\n
determining which 250-day period between 2006 and the
\n
(then) present day produces the severest losses for the
\n
relevant positions. Business lines not included in the internal
\n
model calculations are measured according to the
\n
Standardised approach.
\n
For more details about regulatory capital and how it
\n
developed between 2021 and 2022, please refer to KBC\u2019s Risk
\n
Report (available at www.kbc.com) which includes a
\n
breakdown of regulatory capital requirements for KBC
\n
Group\u2019s market risk per risk type.
\n

\n\n

\n\n

\n\n
Liquidity risk
\n
Liquidity risk is the risk that an organisation will be unable to meet its liabilities and obligations as they come due,
\n
without incurring higher-than-expected costs.
\n
Managing liquidity risk
\n
The principal objective of our liquidity management is to be
\n
able to fund the group and to enable the core business
\n
activities of the group to continue to generate revenue, even
\n
under adverse circumstances.
\n
The Group and Local Treasury functions act as the first line of
\n
defence and are responsible for KBC\u2019s overall liquidity and
\n
funding management. The Group Treasury function monitors
\n
and steers the liquidity profile on a daily basis and sets the
\n
policies and steering mechanisms for funding management
\n
(intra-group funding, funds transfer pricing). These policies
\n
ensure that local management has an incentive to work
\n
towards a sound funding profile. The Group Treasury function
\n
also actively monitors its collateral on a group-wide basis.
\n
The Risk function is the second line of defence. Given the
\n
specifics of the Treasury domain and in support of the Group
\n
CRO, a dedicated Treasury CRO was appointed who is
\n
accountable for the Treasury activities. The group-wide
\n
Extended Competence Centre for ALM & Liquidity Risk is in
\n
turn responsible for installing the principles for liquidity risk
\n
management, which are laid down in a group-wide Liquidity
\n
Risk Management Framework that defines the risk playing
\n
field.
\n
The building blocks for managing liquidity risk
\n
\u2022 Risk identification: the NAPP process, the Climate Risk
\n
Impact Map, the risk scan, stress testing and materiality
\n
assessments are important tools used for risk identification.
\n
An annual assessment of key risk drivers impacting liquidity
\n
is performed as well. When relevant, risk signals are
\n
presented in Treasury Risk Reports and Integrated Risk
\n
Reports.
\n
\u2022 Risk measurement: identified liquidity risks are measured
\n
by means of both regulatory metrics such as the Liquidity
\n
Coverage Ratio (LCR, which stood at 152%) and the Net
\n
Stable Funding Ratio (NSFR, which stood at 136%), and
\n
internal metrics on, for example, the funding mix and
\n
concentration and the composition of the liquid asset
\n
buffer. In the maturity analysis table below, KBC\u2019s structural
\n
liquidity risk is illustrated by grouping the assets and
\n
liabilities according to the remaining term to maturity
\n
(using the contractual maturity date). The difference
\n
between the cash inflows and outflows is referred to as the
\n
\u2018net funding gap\u2019.
\n
\u2022 Setting and cascading risk appetite: the Board of Directors
\n
sets the overall risk appetite objective for liquidity in close
\n
cooperation with the Executive Committee. The Group
\n
Asset and Liability Committee (GALCO) then translates this
\n
risk appetite for liquidity into liquidity risk measures and
\n
sets the limits for these measures.
\n
\u2022 Risk analysis, reporting and follow-up: to mitigate day-to-
\n
day liquidity risk, group-wide trends in funding liquidity and
\n
funding needs are monitored continuously by the Group
\n
Treasury function. A Liquidity Contingency Plan drafted by
\n
the Group Treasury function is in place to address possible
\n
liquidity crisis situations and is tested at least annually.
\n
\u2022 Stress testing: liquidity stress tests assess KBC\u2019s liquidity
\n
contingency risk by measuring how the liquidity buffer of
\n
the group\u2019s bank and insurance entities changes under
\n
extreme stressed scenarios. This buffer is based on
\n
assumptions regarding liquidity outflows and liquidity
\n
inflows resulting from actions to increase liquidity. The
\n
liquidity buffer has to be sufficient to cover liquidity needs
\n
over (i) a period that is required to restore market
\n
confidence in the group following a KBC-specific event, (ii)
\n
a period that is required for markets to stabilise after a
\n
general market event and (iii) a combined scenario, which
\n
takes a KBC-specific event and a general market event
\n
into account. This information is fed into the Liquidity
\n
Contingency Plan.
\n
Moreover, KBC has an Internal Liquidity Adequacy
\n
Assessment Process (ILAAP) in place to ensure it has robust
\n
strategies, policies, processes and systems for identifying,
\n
measuring, managing and monitoring liquidity risk and
\n
funding positions over all appropriate time horizons, in order
\n
to maintain adequate levels of liquidity buffers.
\n
Impact of geopolitical and emerging risks on
\n
liquidity risk
\n
Stressed or extreme market conditions can be triggered by
\n
crises such as the coronavirus pandemic or the Russian-
\n
Ukrainian conflict. KBC\u2019s liquidity position has been able to
\n
withstand these stresses and remains very strong.
\n
KBC participated in the targeted longer-term refinancing
\n
operation (TLTRO) in 2020 and 2021 for 24.5 billion euros,
\n
further supporting its LCR and NSFR figures. In 2022, KBC
\n
made a first partial repayment.
\n

\n\n

\n\n

\n\n
Maturity analysis
\n
Liquidity risk (excluding intercompany deals)*
\n
(in billions of EUR)
\n
<= 1
\n
month
\n
1\u20133
\n
months
\n
3\u201312
\n
months
\n
1\u20135
\n
years
\n
>5
\n
years
\n
On
\n
demand
\n
Not
\n
defined Total
\n
31-12-2022
\n
Total inflows 6 12 20 82 115 53 34 322
\n
Total outflows 38 20 29 24 5 178 29 322
\n
Professional funding 6 0 20 5 0 4 0 36
\n
Customer funding 19 9 8 12 3 174 0 226
\n
Debt certificates 8 11 1 7 1 0 0 28
\n
Other 4 0 0 0 0 0 29 33
\n
Liquidity gap (excl. undrawn commitments) -32
\n
-8 -9 58
\n
111
\n
-125
\n
5 0
\n
Undrawn commitments
\n
\u2013 \u2013 \u2013 \u2013
\n
\u2013
\n
\u2013
\n
-47
\n
-47
\n
Financial guarantees
\n
\u2013 \u2013 \u2013 \u2013
\n
\u2013
\n
\u2013
\n
-11
\n
-11
\n
Net funding gap (incl. undrawn commitments)
\n
-32 -8 -9 58
\n
111
\n
-125
\n
-53
\n
-58
\n
31-12-2021
\n
Total inflows 7 10 23 75 101 43 44 303
\n
Total outflows 20 19 10 41 4 178 31 303
\n
Professional funding 7 1 3 24 0 6 0 41
\n
Customer funding 5 11 3 10 2 172 0 203
\n
Debt certificates 4 7 4 6 2 0 0 24
\n
Other 4 0 0 0 0 0 31 35
\n
Liquidity gap (excl. undrawn commitments) -13 -9 13 34 96 -135 13 0
\n
Undrawn commitments \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 -43 -43
\n
Financial guarantees
\n
\u2013 \u2013 \u2013 \u2013
\n
\u2013
\n
\u2013
\n
-10
\n
-10
\n
Net funding gap (incl. undrawn commitments) -13 -9 13 34 96 -135 -41 -54
\n
* Cashflows exclude interest rate flows consistent with internal and regulatory liquidity reporting. Inflows/outflows that arise from margin calls posted/received for MtM positions
\n
in derivatives are reported in the \u2018Not defined\u2019 bucket. \u2018Professional funding\u2019 includes all deposits from credit institutions and investment firms, as well as all repos. Instruments
\n
are classified on the basis of their first callable date. Some instruments are reported at fair value (on a discounted basis), whereas others are reported on an undiscounted basis
\n
(in order to reconcile them with Note 4.1 of the \u2018Consolidated financial statements\u2019 section). Due to the uncertain nature of the maturity profile of undrawn commitments and
\n
financial guarantees, these instruments are reported in the \u2018Not defined\u2019 bucket. The \u2018Other\u2019 category under \u2018Total outflows\u2019 contains own equity, short positions, provisions for
\n
risks and charges, tax liabilities and other liabilities.
\n

\n\n

\n\n

\n
Note this structural liquidity gap does not include the
\n
concept of a Liquid Asset Buffer (i.e. the fact that KBC can
\n
monetise its liquid bonds at all times via repo or pledging).
\n
Rather, cash generating capacity from bonds is in this table
\n
only visible at final maturity of the bond. As a result, the net
\n
funding gaps shown in the first buckets in the table are a
\n
clear overestimation of the risk as in practice KBC would
\n
monetise its Liquid Asset Buffer (96 bln EUR at end of year
\n
2022 of which 49 bln EUR unencumbered central bank eligible
\n
assets and the remainder cash & withdrawable Central Bank
\n
receivables) for addressing these net outflows.
\n
Funding information
\n
We have a strong retail/mid-cap deposit base in our core
\n
markets, resulting in a stable funding mix. A significant
\n
portion of the funding is attracted from core customer
\n
segments and markets.
\n
Funding mix Information 31-12-2022 31-12-2021
\n
Funding from customers
\n
1
\n
Demand deposits, term deposits, savings deposits, other deposits,
\n
savings certificates and debt issues placed in the network
\n
79% 78%
\n
Debt issues placed with institu
\n
-
\n
tional investors
\n
Including covered bonds, tier-2 issues, KBC Group NV senior debt 6% 7%
\n
Net unsecured interbank funding Including TLTRO 7% 12%
\n
Net secured funding
\n
2
\n
Repo financing -3% -8%
\n
Certificates of deposit \u2013 3% 2%
\n
Total equity Including AT1 issues 7% 9%
\n
Total 100% 100%
\n
in billions of EUR
\n
287 258
\n
1 Some 83% of this funding relates to private individuals and SMEs at year-end 2022.
\n
2 Negative on account of KBC carrying out more reverse repo transactions than repo transactions.
\n
Liquid asset buffer
\n
At year-end 2022, the KBC group had 49 billion euros\u2019 worth
\n
of unencumbered central bank eligible assets, 40 billion
\n
euros of which in the form of liquid government bonds (81%).
\n
The remaining available liquid assets were mainly covered
\n
bonds (14%). Most of the liquid assets are expressed in our
\n
home market currencies. The funding from non-wholesale
\n
markets was accounted for by stable funding from core
\n
customer segments in our core markets.
\n

\n\n

\n\n
Note 6.7: Risk management and capital adequacy
\n
\n
Capital management is a key management process relating to all decisions on the level and composition of our capital, both for
\n
banking and for insurance. It covers all instruments that are positioned to absorb losses in going concern and/or gone concern
\n
situations. Capital management aims to achieve the best possible balance between regulatory requirements, investor
\n
expectations, rating agencies\u2019 views and management ambitions. Ultimate accountability for capital management lies with the
\n
Board of Directors.
\n
\n
Capital management entails a broad scope of activities covering strategic topics (such as defining policies, targets, etc.),
\n
frameworks and models (e.g., for regulatory capital, internal capital, cost of equity, measuring performance, etc.), planning and
\n
allocation (e.g., allocating capital to business, planning capital instrument issuances, forecasting capital ratios, etc.),
\n
implementation (e.g., dividends, capital transactions) and monitoring (including current solvency positions at various levels,
\n
compliance with group policies and regulatory requirements).
\n
\n
ICAAP (Internal Capital Adequacy Assessment Process) consists of numerous business and risk processes that together contribute
\n
to the aim of being adequately capitalised at all times in view of our risk profile and the quality of our risk management and
\n
control environment. In addition to the integrated approach at group level, KBC Insurance and its insurance and reinsurance
\n
subsidiaries conduct an Own Risk and Solvency Assessment (ORSA) on a regular basis, in accordance with Solvency II
\n
requirements.
\n
\n
We report the solvency of the group, the bank and the insurance company based on IFRS data and according to the rules
\n
imposed by the regulator.
\n
\u2022 For the KBC group and KBC Bank, this implies that we calculate our solvency ratios based on CRR/CRD. KBC began applying
\n
the transitional provisions for IFRS 9 and certain tier-2 instruments on 30 June 2020. KBC has received authorisation from the
\n
regulator to apply a risk weighting to the participation in KBC Insurance (Danish compromise method) at KBC group level. The
\n
KBC group and KBC Bank are subject to minimum solvency ratios.
\n
\u2022 In accordance with the regulatory requirement, the common equity ratio of the KBC group must be 11.30% (fully loaded) at year-
\n
end 2022. This includes the pillar 1 minimum requirement (4.5%), the pillar 2 requirement (1.86% set by the ECB following its
\n
supervisory review and evaluation process) and the buffer requirements (4.94% set by the local competent authorities in KBC\u2019s
\n
core markets). At year-end 2022, the fully loaded common equity ratio came to 15.3% (see the \u2018How do we manage our capital?\u2019
\n

\n\n

\n\n

\n\n
section for more information). At year-end 2022, the transitional common equity ratio came to 14.1%, which represented a
\n
capital buffer of 3.1% relative to the minimum requirement of 10.95%.
\n
\u2022 In accordance with the regulatory requirement, the common equity ratio of KBC Bank must be 10.92% (transactional) at year-
\n
end 2022. At year-end 2022, the transitional common equity ratio was 14.2%.
\n
\u2022 The solvency of KBC Insurance is calculated on the basis of Solvency II (the minimum requirement is 100%). At year-end 2022,
\n
the Solvency II ratio came to 203% relative to the minimum requirement of 100%.
\n
\n
Key solvency figures for the KBC group,
\n
\n
KBC Bank and KBC Insurance (in millions of EUR)
\n
KBC group
\n
(consolidated)
\n
CRR/CRD
\n
transitional
\n
KBC Bank
\n
(consolidated)
\n
CRR/CRD
\n
transitional
\n
KBC Insurance
\n
(consolidated)
\n
Solvency II
\n
\n
31-12-2022
\n
\n
31-12-2021
\n
31-12-2022
\n
\n
31-12-2021
\n
31-12-2022
\n
\n
31-12-2021
\n
Total regulatory capital, after profit appropriation
\n
18 742 20 733 17 516 17 964 3 721 4 075
\n
Tier
\n
-1 capital 16 974 18 998 15 749 16 210 3 220 3 574
\n
\n
Common equity 15 474 17 498 14 249 14 710 \u2013 \u2013
\n
Parent shareholders\u2019 equity (after deconsolidating KBC
\n
Insurance for the KBC group)
\n
16 982 17 708 15 618 14 912 2 157 3 991
\n
\n
Solvency adjustments -1 508 -210 -1 370 -202 1 063 -416
\n
\n
Additional going concern capital
\n
1
\n
1 500 1 500 1 500 1 500 \u2013 \u2013
\n
Tier
\n
-2 capital
\n
2
\n
1 767 1 735 1 768 1 754 500 500
\n
Total weighted risk volume (RWA)
\n
3
\n
109 966 104 362 100 285 94 836 \u2013 \u2013
\n
\n
Credit risks 84 988 80 687 84 988 80 687
\n
\u2013
\n
\n
\u2013
\n
\n
\n
Market risks 3 132 2 665 3 132 2 665
\n
\u2013
\n
\n
\u2013
\n
\n
\n
Operational risks 12 166 11 484 12 166 11 484
\n
\u2013
\n
\n
\u2013
\n
\n
\n
Insurance risks 9 133 9 133 \u2013 \u2013
\n
\u2013
\n
\n
\u2013
\n
\n
Holding-company activities and elimination of intragroup
\n
transactions
\n
548 392 \u2013 \u2013
\n
\u2013
\n
\n
\u2013
\n
\n
Solvency capital requirement (insurance)
\n
\u2013 \u2013 \u2013 \u2013 1 833 2 029
\n
Common equity ratio (group, bank)
\n
14.1% 16.8% 14.2% 15.5% \u2013 \u2013
\n
Solvency II ratio (insurance)
\n
\u2013 \u2013 \u2013 \u2013 203% 201%
\n
1 Includes perpetual subordinated loans with fully discretionary, non-cumulative interest payments. The securities also have a loss absorption mechanism (i.e. a temporary write-down trigger
\n
should the common equity tier-1 ratio fall below 5.125%). Also see Note 5.10.
\n
2 Includes subordinated loans with a fixed maturity date where principal and interest payments cannot be cancelled in a going concern.
\n
3 Supervision of the RWA internal models\u2019 compliance with the approval criteria as provided for in the standards imposed by the regulator does not come under the responsibility of the
\n
statutory auditor.
\n
\n
\n
\u2022 More detailed information is provided in the \u2018How do we manage our capital?\u2019 section of this report and in KBC\u2019s Risk Report.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. Based on internal management reports, the
\n
composition and quality of the loan portfolio is set out in detail in the \u2018How do we manage our risks?\u2019 section (under \u2018Credit
\n
risk\u2019). The information required in relation to risks (in accordance with IFRS 4 and IFRS 7) is provided in those parts of the \u2018How
\n
do we manage our risks?\u2019 section which have been audited by the statutory auditor and which constitute part of the financial
\n
statements.
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag869": { "value": "\n
Market risk in non-trading activities
\n
Market risk is the risk related to changes in the level or in the volatility of market prices. The process of managing our
\n
structural exposure to market risks in the non-trading activities includes interest rate risk, gap risk, basis risk, option
\n
risk (such as prepayment risk), currency risk, equity price risk, real estate price risk, credit spread risk and inflation
\n
risk. \u2018Structural exposure\u2019 encompasses all exposure inherent in our commercial activity or in our long-term positions
\n
(banking and insurance). Trading activities are therefore not included. This process is also known as Asset/Liability
\n
Management (ALM).
\n
Managing market risk in non-trading activities
\n
The management of ALM risk at KBC is the responsibility of
\n
the Executive Committee, supported by the CRO Services
\n
Management Committee and the Asset and Liability
\n
Committee (ALCO). The Executive Committee decides on the
\n
non-trading market risk framework, which sets out specific
\n
risk guidance.
\n
With the risk function, the ALM Council \u2013 chaired by the
\n
Treasury CRO \u2013 aims to establish, facilitate, promote and
\n
support the solid and efficient integration of all tasks
\n
assigned to the local and group risk departments that are
\n
accountable for monitoring non-trading market risk. The
\n
Council acts as a management meeting of the group-wide
\n
Extended Competence Centre for ALM & Liquidity Risk.
\n
The building blocks for managing market risk in
\n
non-trading activities
\n
\u2022 Risk identification: market risk related to non-trading
\n
exposures arises from:
\n
- Mismatches in the banking activities linked to the branch
\n
network\u2019s acquisition of working funds and the use of
\n
those funds (via lending, among other things);
\n
- Mismatches in the insurance activities between liabilities
\n
in the non-life and life businesses and the cover for these
\n
liabilities present in the investment portfolios held for this
\n
purpose;
\n
- The risks associated with holding an investment portfolio
\n
for the purpose of reinvesting shareholders\u2019 equity (the
\n
so-called strategic position);
\n
- The structural currency exposure stemming from the
\n
activities abroad (investments in foreign currency, results
\n
posted at branches or subsidiaries abroad, foreign
\n
exchange risk linked to the currency mismatch between
\n
the insurer\u2019s liabilities and its investments).
\n
The following tools are used in the risk identification
\n
process for the market risk non-trading: the New and
\n
Active Products Process (NAPP), the Climate Risk Impact
\n
Map, the risk scan, the risk signal and early warning
\n
process, the parameter reviews and materiality
\n
assessments based on in-depth analysis and deep dives.
\n
\u2022 Risk measurements: Group Risk and the local risk
\n
departments measure ALM risks and flag current and
\n
future risk positions. A common rulebook, which
\n
supplements the framework for technical aspects, and a
\n
shared group measurement infrastructure ensure that
\n
these risks are measured consistently throughout the
\n
group. This includes a broad range of risk measurement
\n
methods such as:
\n
- Basis-Point-Value (BPV) for interest rate risk;
\n
- Gap analysis for interest rate risk, gap risk and inflation
\n
risk;
\n
- Economic sensitivities for currency risk, equity price risk
\n
and real estate price risk;
\n
- Net interest income simulations over a multi-year period
\n
which are used in budgeting and risk processes.
\n
\u2022 Setting risk appetite: limits cover all material risks faced by
\n
the ALM function: interest rate risk, equity risk, real estate
\n
risk and foreign exchange risk for the consolidated entities
\n
are approved by the Board of Directors and limits for each
\n
local entity are approved by the Executive Committee.
\n
The treasury departments, acting as the first line of
\n
defence, measure and manage interest rate risk on a
\n
playing field defined by the risk appetite and the limits.
\n
They take into account measurement of prepayment and
\n
other option risks in the banking book and manage a
\n
balanced investment portfolio. Management of the
\n
positions implies that the treasury function uses derivatives
\n
to hedge against imbalances, due to interest rate and
\n
foreign exchange risks. To avoid profit and loss volatility
\n
that would result from the different accounting treatment
\n
of balance sheet investment items and derivatives, hedge
\n
accounting techniques are widely applied.
\n
\u2022 Risk analysis, response and follow-up: besides regulatory
\n
required reporting, structural reporting to the ALCO is
\n
performed. The reporting process includes a sign-off
\n
process to ensure data accuracy.
\n
\u2022 Stress testing: a balanced stress testing programme is
\n
prepared on a yearly basis and reported on a quarterly
\n
basis. This includes:
\n
- The back-testing of prepayments;
\n
- Net interest income simulations performed under a
\n
variety of market scenarios for interest rate risk. Net
\n
interest income impact and sensitivities are also used to
\n
measure basis risk;
\n
- Capital sensitivities arising from banking book positions
\n
that impact available regulatory capital (e.g., fair value
\n
through other comprehensive income) are used for
\n
spread risk, interest rate risk and equity risk.
\n

\n\n
Impact of geopolitical and emerging risks on
\n
non-trading market risk
\n
After the markets had learned to live with the aftermath of
\n
the coronavirus crisis, they were shocked by the Russian
\n
aggression against Ukraine. Although our Central Europe
\n
subsidiaries share some borders with Ukraine, KBC had
\n
limited investments in the belligerent countries and it did not
\n
materially impact the banking books.
\n
However, the increase in inflation and interest rates, which
\n
were already observed prior to the invasion, accelerated
\n
beyond expectations, fundamentally changing the
\n
challenges faced by the treasury department. The quest for
\n
decent returns on investments has been replaced by
\n
renewed risks for outflows. Moreover, credits sold in times of
\n
high interest rates bear a larger prepayment risk. Tested
\n
scenarios showed the risk is material, but manageable. At
\n
the end, the solid and well-balanced structure of our
\n
banking books, as well as a prudent approach in the
\n
management of non-maturity deposits, allowed KBC to
\n
contain the risks and keep the balance sheet healthy.
\n
The different sub-risk types, including more details and
\n
figures, are set out below.
\n
Interest rate risk and gap risk
\n
The main technique used to measure interest rate risks is the
\n
10 BPV method, which measures the extent to which the
\n
value of the portfolio would change if interest rates were to
\n
go up by ten basis points across the entire swap curve
\n
(negative figures indicate a decrease in the value of the
\n
portfolio). We also use other techniques such as gap
\n
analysis, the duration approach, scenario analysis and stress
\n
testing (both from a regulatory capital perspective and from
\n
a net income perspective).
\n
Impact of a parallel 10-basis-point increase in the swap
\n
1
\n
curve
\n
for the KBC group, impact on value
\n
2
\n
(in millions of EUR) 2022 2021
\n
Banking -36 -69
\n
Insurance 4 24
\n
Total -32 -45
\n
1 In accordance with market standards, sensitivity figures are based on a risk-free curve (swap curve).
\n
2 Full market value, regardless of accounting classification or impairment rules.
\n
We manage the ALM interest rate positions of the banking
\n
entities via a system of market-oriented internal pricing for
\n
products with a fixed maturity date, and via a replicating
\n
portfolio technique for products without a fixed maturity
\n
date (e.g., current and savings accounts).
\n
The bank takes interest rate positions mainly through
\n
government bonds, with a view to acquiring interest income,
\n
both in a bond portfolio used for reinvesting equity and in a
\n
bond portfolio financed with short-term funds and deposits.
\n
The table shows the bank\u2019s exposure to interest rate risk in
\n
terms of 10 BPV.
\n
Swap BPV (10 basis points) of the ALM book, banking activities*
\n
(in millions of EUR) 2022 2021
\n
Average for 1Q -75 -65
\n
Average for 2Q -66 -64
\n
Average for 3Q -70 -60
\n
Average for 4Q -36 -69
\n
As at 31 December -36 -69
\n
Maximum in year -75 -69
\n
Minimum in year -36 -60
\n
* Unaudited figures, except for those \u2018As at 31 December\u2019.
\n
In line with European Banking Authority guidelines, we
\n
conduct an outlier stress test at regular intervals by applying
\n
six different scenarios to the banking books (material
\n
currencies). The worst-case scenario is set off against tier-1
\n
capital. For the banking book at KBC group level, this risk
\n
came to -3% of tier-1 capital at year-end 2022. This is well
\n
below the 15% threshold, which is monitored by the European
\n
Central Bank.
\n
The following table shows the interest sensitivity gap of the
\n
ALM banking book. To determine the sensitivity gap, we
\n
break down the carrying value of assets (positive amount)
\n
and liabilities (negative amount) according to either the
\n
contractual repricing date or the maturity date, whichever is
\n
earlier, in order to obtain the length of time for which interest
\n
rates are fixed. We include derivative financial instruments,
\n
mainly to reduce exposure to interest rate movements, on the
\n
basis of their notional amount and repricing date.
\n

\n\n
Interest sensitivity gap of the ALM
\n
book (including derivatives), banking
\n
activities (in millions of EUR)*
\n
\u2264 1
\n
month
\n
1\u20133
\n
months
\n
3\u201312
\n
months
\n
1\u20135
\n
years
\n
5\u201310
\n
years
\n
> 10
\n
years
\n
Non-
\n
interest-
\n
bearing Total
\n
31-12-2022 -24 177 11 472 -10 910 7 621 6 314 21 9 659 0
\n
31-12-2021 1 745 -12 310 -8 919 5 529 5 687 1 104 7 164 0
\n
* Please note that the \u2018Non-interest bearing\u2019 bucket includes Cash at Central Banks and non-maturity deposits that are kept overnight. For 2022 this amounted in total to
\n
+27.8 billion euros and for 2021 this was +20.6 billion euros. In case allocated to the \u201c<1 month bucket\u201d we come to an overall positive gap in the first month
\n
The interest sensitivity gap shows our overall position in
\n
interest rate risk. Generally, assets reprice over a longer term
\n
than liabilities, which means that KBC\u2019s net interest income
\n
benefits from a normal (upward-sloping) yield curve. The
\n
economic value of the KBC Bank group is sensitive primarily
\n
to movements at the long-term end of the yield curve.
\n
An analysis of net interest income is performed by measuring
\n
the impact of different interest rate scenarios over a
\n
three-year period.
\n
Where the group\u2019s insurance activities are concerned, the
\n
fixed-income investments for the non-life reserves are
\n
invested with the aim of matching the projected payout
\n
patterns for claims, based on extensive actuarial analysis.
\n
The non-unit-linked life activities (class 21) combine a
\n
guaranteed interest rate with a discretionary participation
\n
feature (DPF) fixed by the insurer. The main risks to which the
\n
insurer is exposed as a result of such activities are a low-
\n
interest-rate risk (the risk that return on investments will drop
\n
below the guaranteed level) and the risk that the investment
\n
return will not be sufficient to give clients a competitive
\n
profit-sharing rate. The risk of low interest rates is managed
\n
via a cashflow-matching policy, which is applied to that
\n
portion of the life insurance portfolios covered by fixed-
\n
income securities. Unit-linked life insurance investments
\n
(class 23) are not dealt with here, since this activity does not
\n
entail any market risk for KBC.
\n
Expected cashflows (not discounted),
\n
life insurance activities (in millions of EUR)
\n
0\u20131
\n
year
\n
1\u20132
\n
years
\n
2-3
\n
years
\n
3-4
\n
years
\n
4-5
\n
years
\n
>5
\n
years Total
\n
31-12-2022
\n
Fixed-income assets backing liabilities, guaranteed
\n
component 1 233 1 489 855 1 048 844 8 738 14 208
\n
Equity 929
\n
Property 112
\n
Other (no maturity) 95
\n
Liabilities, guaranteed component 1 367 1 201 807 882 834 9 474 14 566
\n
Difference in time-sensitive expected cashflows -134 288 48 166 11 -737 -358
\n
Mean duration of assets 6.66 years
\n
Mean duration of liabilities 8.76 years
\n
31-12-2021
\n
Fixed-income assets backing liabilities, guaranteed
\n
component 1 371 1 281 1 385 847 1 044 8 856 14 784
\n
Equity 987
\n
Property 171
\n
Other (no maturity) 152
\n
Liabilities, guaranteed component 1 758 748 1 223 840 895 9 859 15 323
\n
Difference in time-sensitive expected cashflows - 387 534 162 7 148 -1 003 -539
\n
Mean duration of assets 6.97 years
\n
Mean duration of liabilities 9.93 years
\n
As mentioned above, the main interest rate risk for the insurer
\n
is a downside one. We adopt a liability-driven ALM approach
\n
focused on mitigating the interest rate risk in accordance
\n
with KBC\u2019s risk appetite. For the remaining interest rate risk,
\n
we adhere to a policy that takes into account the possible
\n
negative consequences of a sustained decline in interest
\n
rates, and have built up adequate supplementary reserves.
\n

\n\n
Breakdown of the reserves for non-unit-linked life insurance by guaranteed interest
\n
rate, insurance activities 31-12-2022 31-12-2021
\n
5.00% and higher 3% 3%
\n
More than 4.25% up to and including 4.99% 7% 7%
\n
More than 3.50% up to and including 4.25% 4% 4%
\n
More than 3.00% up to and including 3.50% 9% 9%
\n
More than 2.50% up to and including 3.00% 3% 3%
\n
2.50% and lower 72% 71%
\n
0.00% 2% 2%
\n
Total 100% 100%
\n
Credit spread risk
\n
We manage the credit spread risk for, inter alia, the sovereign
\n
portfolio by monitoring the extent to which the value of the
\n
sovereign bonds would change if credit spreads were to go
\n
up by 100 basis points across the entire curve.
\n
Exposure to sovereign bonds at year-end 2022, carrying value
\n
1
\n
(in millions of EUR)
\n
At amortised
\n
cost
\n
At fair value
\n
through other
\n
comprehen-
\n
sive income
\n
(FVOCI)
\n
Held
\n
for trading Total
\n
For compari-
\n
son purposes:
\n
total
\n
at year-end
\n
2021
\n
Economic
\n
impact of
\n
+100 basis
\n
points
\n
3
\n
KBC core countries
\n
Belgium 8 750 1 840 230 10 820 13 020 -553
\n
Czech Republic 11 316 1 126 1 159 13 601 12 481 -626
\n
Hungary 2 362 161 99 2 621 3 085 -77
\n
Slovakia 3 334 265 17 3 615 3 689 -173
\n
Bulgaria 1 795 530 28 2 353 1 722 -84
\n
Other countries
\n
France 4 463 1 032 25 5 520 6 546 -231
\n
Spain 2 023 558 0 2 581 2 717 -78
\n
Ireland 1 016 204 0 1 220 1 356 -53
\n
Poland 875 180 9 1 065 1 335 -27
\n
US 1 558 15 0 1 573 1 319 -55
\n
Italy 268 908 0 1 176 1 286 -36
\n
Rest
\n
2
\n
6 461 1 316 100 7 876 5 951 -379
\n
Total carrying value 44 219 8 135 1 667 54 021 54 507 \u2013
\n
Total nominal value 44 953 8 772 1 812 55 537 52 796 \u2013
\n
1 The table excludes exposure to some supranational entities not considered as sovereign, such as the European Investment Bank and the European Investment Fund. No material
\n
impairment on the government bonds in portfolio.
\n
2 Sum of countries whose individual exposure is less than 1 billion euros at year-end 2022.
\n
3 Theoretical economic impact in fair value terms of a parallel 100-basis-point upward shift in the spread over the entire maturity structure. Only a portion of this impact is
\n
reflected in profit or loss and/or equity. Figures relate to non-trading positions in sovereign bonds for the banking and insurance businesses (impact on trading book exposure
\n
was quite limited and amounted to 14 million euros, including supranational bonds, at year-end 2022).
\n
At year-end 2022, the carrying value of the total government
\n
bond portfolio measured at fair value through other
\n
comprehensive income (FVOCI) incorporated a revaluation
\n
reserve of -0.8 billion euros, before tax (-217 million euros for
\n
Belgium, -165 million euros for France, -59 million euros for the
\n
Czech Republic, -45 million euros for Hungary and -277
\n
million euros for the other countries combined).
\n
In addition to the sovereign portfolio, the KBC group holds a
\n
non-sovereign bond portfolio (banks, corporations,
\n
supranational bodies).
\n

\n\n
Exposure to non-sovereign bonds at year-end, by rating: economic impact of +100 basis points
\n
(in millions of EUR) 31-12-2022 31-12-2021
\n
Bonds rated AAA -108 -125
\n
Bonds rated AA+, AA, AA- -115 -133
\n
Bonds rated A+, A, A- -109 -126
\n
Bonds rated BBB+, BBB, BBB- -34 -46
\n
Non-investment grade and non-rated bonds -21 -31
\n
Total carrying value (excluding trading portfolio) 11 505 10 703
\n
Equity risk
\n
The main exposure to equity is within our insurance business,
\n
where the ALM strategies are based on a risk-return
\n
evaluation, taking into account the market risk attached to
\n
open equity positions. A large part of the equity portfolio is
\n
held as an economic hedge for long-term liabilities. Smaller
\n
equity portfolios are also held by other group entities, e.g.,
\n
KBC Bank and KBC Asset Management.
\n
Equity portfolio of the KBC group Banking activities Insurance activities Group
\n
(breakdown by sector, in %) 31-12-2022 31-12-2021 31-12-2022 31-12-2021 31-12-2022 31-12-2021
\n
Financials 69% 68% 20% 17% 27% 25%
\n
Consumer non-cyclical 0% 0% 11% 11% 9% 10%
\n
Communication 0% 0% 3% 2% 2% 1%
\n
Energy 0% 0% 0% 0% 0% 0%
\n
Industrials 12% 10% 42% 41% 38% 36%
\n
Utilities 0% 0% 0% 0% 0% 0%
\n
Consumer cyclical 4% 4% 21% 25% 19% 22%
\n
Materials 0% 0% 2% 2% 2% 2%
\n
Other and not specified 14% 17% 1% 1% 3% 3%
\n
Total 100% 100% 100% 100% 100% 100%
\n
In billions of EUR*
\n
0.22 0.26 1.33 1.46 1.55 1.72
\n
of which unlisted
\n
0.21 0.26 0.14 0.15 0.35 0.41
\n
* The main reason for the difference with \u2018Equity instruments\u2018 in Note 4.1 of the \u2018Consolidated financial statements\u2019 section is that shares in the trading book are excluded above,
\n
but included in the table in Note 4.1.
\n
Impact of a 25% drop in equity prices , impact on value
\n
(in millions of EUR) 2022 2021
\n
Banking activities -55 -64
\n
Insurance activities -333 -366
\n
Total -387 -429
\n
Non-trading equity exposure
\n
Net realised gains
\n
(in income statement)
\n
Net unrealised gains
\n
on year-end exposure
\n
(in equity)
\n
(in millions of EUR) 31-12-2022 31-12-2021 31-12-2022 31-12-2021
\n
Banking activities - - 12 29
\n
Insurance activities 176 123 199 555
\n
Total 176 123 211 584
\n

\n\n
Real estate risk
\n
The groups\u2019 real estate businesses hold a limited real estate
\n
investment portfolio. KBC Insurance also holds a diversified
\n
real estate portfolio, as an investment for non-life reserves
\n
and long-term life activities. The real estate exposure is
\n
viewed as a long-term hedge against inflation risks and as a
\n
way of optimising the risk/return profile of these portfolios.
\n
Impact of a 25% drop in real estate prices, impact on value (in millions of EUR) 2022 2021
\n
Bank portfolios -94 -97
\n
Insurance portfolios -78 -94
\n
Total -172 -191
\n
Inflation risk
\n
Inflation can impact a financial company indirectly in many
\n
ways, for instance via changes in interest rates or operational
\n
costs. Inflation in general therefore is not easily quantifiable
\n
as a market risk concept. However, certain financial products
\n
or instruments have a direct link with inflation and their value
\n
is directly impacted by a change in market expectations.
\n
KBC Bank uses indexed bonds as an opportunity to diversify
\n
its asset portfolio. At KBC Insurance, it relates specifically to
\n
workmen\u2019s compensation insurance, where particularly in the
\n
case of permanent or long-term disabilities an annuity
\n
benefit is paid to the insured person (with the annuity being
\n
linked to inflation by law). KBC Insurance partly mitigates the
\n
risks by investing in inflation-linked bonds and complements
\n
its inflation hedging programme by investing in real estate
\n
and shares, as these assets are traditionally correlated with
\n
inflation and do not have a maturity date.
\n
The banking business holds a 600-million-euro portfolio of
\n
indexed bonds. For the insurance activities, the undiscounted
\n
value of the inflation-sensitive cashflows was estimated at
\n
515 million euros, against which a 452-million-euro portfolio
\n
of indexed bonds at market value and 28.7 million euros in
\n
direct and indirect real estate were held.
\n
Foreign exchange risk
\n
We pursue a prudent policy as regards our structural
\n
currency exposure. Material foreign exchange exposures in
\n
the ALM books of banking entities with a trading book are
\n
transferred via internal deals to the trading book, where they
\n
are managed within the allocated trading limits. The foreign
\n
exchange exposure of banking entities without a trading
\n
book and of insurance and other entities has to be hedged, if
\n
material. However, non-euro-denominated equity holdings
\n
in the investment portfolio are not required to be hedged, as
\n
foreign exchange volatility is considered part of the
\n
investment return.
\n
KBC focuses on stabilising the common equity ratio against
\n
foreign exchange fluctuations.
\n
Impact of a 10% decrease in currency value* Banking Insurance
\n
(in millions of EUR) 31-12-2022 31-12-2021 31-12-2022 31-12-2021
\n
CZK
\n
-231 -243 -31 -30
\n
HUF -100 -107 -7 -5
\n
BGN -96 -42 -17 -19
\n
USD -1 3 -47 -56
\n
* Exposure for currencies where the impact exceeds 10 million euros in Banking or Insurance.
\n
Hedge accounting
\n
Assets and liabilities management uses derivatives to
\n
mitigate interest rate and foreign exchange risks. The aim of
\n
hedge accounting is to reduce the volatility in P&L resulting
\n
from the use of these derivatives.
\n
KBC decided not to apply hedge accounting to credit and
\n
equity risks. When the necessary criteria are met, it is applied
\n
to remove the accounting mismatch between the hedging
\n
instrument and the hedged item. For more information about
\n
hedge accounting, please see \u2018Notes on the accounting
\n
policies\u2019 in the \u2018Consolidated financial statements\u2019 section.
\n
Risk categories applying to hedge accounting
\n
Interest rates
\n
Hedging derivatives are used to mitigate an interest rate risk
\n
that arises from a difference in the interest rate profile of
\n
assets and their funding liabilities. The hedge accounting
\n
status of a hedge can be associated with either the asset or
\n
the liability item.
\n
Interest rate derivatives can be designated as:
\n
\u2022 Hedges of the fair value of recognised assets or liabilities.
\n
Changes in the fair value of derivatives that are
\n
designated and qualify as fair value hedges are recorded
\n
in profit or loss, together with any changes in the fair value
\n

\n\n
of the hedged asset or liability that are attributable to the
\n
hedged risk. The gain or loss relating to the ineffective
\n
portion is also recognised in profit or loss.
\n
\u2022 Hedges of the cashflow of recognised assets and liabilities
\n
which are either certain or highly probable forecasted
\n
transactions. The effective portion of changes in the fair
\n
value of derivatives that are designated and qualify as
\n
cashflow hedges is recognised in the cashflow hedge
\n
reserve within equity. The gain or loss relating to the
\n
ineffective portion is recognised directly in profit or loss.
\n
KBC uses macro hedge accounting strategies for
\n
homogeneous portfolios of smaller items, where the
\n
frequency of occurrence or the relatively small size of the
\n
average operation renders the one-to-one relationship
\n
sub-optimal. This is the case for inter alia mortgages, loans
\n
to SMEs or customer deposits. Macro hedge strategies may
\n
be dynamic and undergo frequent changes based on
\n
balancing the portfolio (\u2018open portfolio hedge\u2019), among other
\n
things.
\n
The micro hedge designation is used when large individual
\n
assets or liabilities are hedged. Typical assets are large
\n
corporate loans and bond acquisitions for which the credit
\n
spread profile is relevant. Liabilities can include KBC\u2019s own
\n
issues or specific long-term facilities offered by a central
\n
bank. Micro hedges are either fair-value or cashflow based.
\n
Foreign exchange
\n
KBC has strategic investments denominated in non-euro
\n
currencies. The net asset value of significant participations is
\n
partly funded in the local currency by deposits and foreign
\n
exchange derivatives, to ensure stability of the CET1 ratio. By
\n
using hedges of net investments in foreign operations, the
\n
foreign exchange component is reported in equity until
\n
realisation (unwinding of funding due to liquidation, dividend
\n
payments or other decreases in net asset value).
\n
KBC also has a limited portfolio of foreign-currency-
\n
denominated bonds that are funded through euro proceeds.
\n
These bonds are hedged by cross-currency interest rate
\n
swaps to create a synthetic EUR fixed-rate interest income.
\n
Cashflow hedge accounting (microhedge) is performed to
\n
mitigate foreign exchange volatility.
\n
Hedge effectiveness
\n
Hedge effectiveness is determined at the inception of the
\n
hedge relationship, as well as through periodic prospective
\n
and retrospective effectiveness assessments, to ensure that
\n
a relevant relationship between the hedged item and the
\n
hedging instrument exists and remains valid.
\n
Effectiveness testing
\n
For interest rates, several prospective and retrospective tests
\n
are performed to ensure the relationship between the
\n
hedged item and the hedging instrument qualifies for the
\n
hedge accounting strategy.
\n
Prospective tests are mostly based either on a sensitivity
\n
analysis (verifying if the basis point value of the hedged
\n
portfolio relative to the hedging instrument stays within the
\n
80-125% interval) or volume tests (if the principal amount of
\n
hedge-eligible items exceeds the notional volume of
\n
hedging instruments expected to be repriced or repaid in
\n
each specified time bucket).
\n
For macro cashflow hedges, extensive forward-looking
\n
analyses assess the sufficient likelihood that the future
\n
volume of hedged items will largely cover the volume of
\n
hedging instruments. A hedge ratio \u2013 measuring the
\n
proportion of a portfolio that is hedged by derivatives \u2013 is
\n
calculated for each hedging strategy.
\n
The retrospective effectiveness test of the hedge
\n
relationship is periodically carried out by comparing the
\n
change in fair value of the portfolio of hedging instruments
\n
relative to the change in fair value of the hedged eligible
\n
items imputable to the hedged risk over a given period (the
\n
ratio of fair value changes remains within the 80-125%
\n
interval).
\n
For foreign exchange hedging, effectiveness is ensured by
\n
adjusting the sum of the nominal amount of the funding
\n
deals and foreign exchange derivatives to the targeted
\n
hedge amount of the strategic participations. For foreign-
\n
currency-denominated bonds swapped into euro, the start
\n
date, maturity date and coupon dates are also matched.
\n
Sources of hedge ineffectiveness
\n
Ineffectiveness for interest rate swaps may occur due to:
\n
\u2022 Differences in relevant terms between the hedged item
\n
and the hedging instrument (it can include discrepancies
\n
in interest curves and in periodicity);
\n
\u2022 A reduction in volume of the hedged item that would fall
\n
under the volume of hedging instruments for any time
\n
bucket;
\n
\u2022 The credit value adjustment on the interest rate swap not
\n
being matched by the loan. However, hedging swaps are
\n
fully collateralised or traded through clearing houses and
\n
the credit value adjustment is limited.
\n
Regarding the hedge of the net investment in foreign
\n
currency, the interest rate component from the hedging
\n
instruments can be a source of inefficiency. The counterparty
\n
risk on the hedging instrument, even if collateralised, can
\n
also be a source of inefficiency.
\n
Discontinuation of hedge accounting
\n
Hedge accounting strategies failing the effectiveness tests
\n
are discontinued. A de-designated hedging instrument can
\n
be re-designated in a new hedge relationship. Effective
\n
hedge accounting strategies may also be discontinued for
\n
technical or strategic reasons. Any impact on profit and loss
\n

\n\n
arising from hedge ineffectiveness and discontinuation is
\n
reported to the ALCO.
\n
Capital sensitivity to market movements
\n
Available capital is impacted when the market is stressed.
\n
Stress can be triggered by a number of market parameters,
\n
including by swap rates or bond spreads that increase or by
\n
equity prices that fall. At KBC, we use this capital sensitivity
\n
as a common denominator to measure the vulnerability of
\n
the banking book to different market risk shocks. Common
\n
equity tier-1 (CET1) capital is sensitive to a parallel increase in
\n
bond spreads. This sensitivity is caused by investments in
\n
sovereign and corporate bonds whose spread component
\n
has not been hedged. The loss in available capital in the
\n
event of a fall in equity prices is caused primarily by positions
\n
in pension funds that would be hit by such a shock.
\n
CET1 sensitivity to main market drivers (under Danish compromise), KBC group (as % points of
\n
CET1 ratio), IFRS impact caused by:
\n
31-12-2022 31-12-2021
\n
+100-basis-point parallel shift in interest rates -0.1% 0.3%
\n
+100-basis-point parallel shift in spread -0.1% -0.2%
\n
-25% in equity prices -0.1% -0.3%
\n
Regulatory capital
\n
Regulatory capital for non-trading market activities totalled
\n
22 million euros. It is used to cover foreign exchange
\n
exposures only, as KBC does not have any commodity
\n
exposures. In line with regulations, other types of non-trading
\n
market risk are covered through pillar II assessments.
\n

\n\n
Market risk in trading activities
\n
Market risk is the potential negative deviation from the expected value of a financial instrument (or portfolio of such
\n
instruments) due to changes in the level or in the volatility of market prices, e.g., interest rates, exchange rates and
\n
equity or commodity prices. KBC\u2019s market risk in trading activities comes from the mismatch that occurs between
\n
the portfolio arising from our bespoke client transactions and the more market-standard hedges carried out in the
\n
financial markets.
\n
Managing market risk
\n
The Competence Centre for Trading Market Risk is primarily
\n
responsible for defining the Trading Market Risk Management
\n
Framework. This framework elaborates on specific suitable
\n
measures, methods, tools, the control processes to be
\n
implemented, organisational aspects, IT systems, matters
\n
regarding information/communication, and the associated
\n
governance for market risk in the group\u2019s trading books. The
\n
focus of our trading activities is on interest-rate instruments,
\n
while activity on the foreign exchange markets and in
\n
relation to equity has traditionally been limited. These
\n
activities are carried out by our dealing rooms in Belgium, the
\n
Czech Republic, Hungary, Bulgaria and Slovakia, as well as
\n
via a minor presence in the UK and Asia. Wherever possible
\n
and practical, the residual trading positions of our foreign
\n
entities are systematically transferred to KBC Bank NV,
\n
reflecting that the group\u2019s trading activity is managed
\n
centrally both from a business and a risk management
\n
perspective. Consequently, KBC Bank NV holds about 98% of
\n
the trading-book-related regulatory capital of KBC Group
\n
NV.
\n
The building blocks for managing market risk
\n
\u2022 Risk identification: the risk function analyses the results of
\n
value and risk calculations, market developments, industry
\n
trends, new modelling insights, changes in regulations, etc.
\n
and draws up advice for the Group Markets Committee
\n
(GMC) with a view to changing or refining measurement
\n
methods, limits, hedging methods or positions.
\n
Furthermore, before a new or changed dealing room
\n
product or activity can be introduced, the risk function
\n
screens whether the risk aspects are correctly and
\n
sufficiently covered and provides risk advice that includes
\n
powers of veto and is part of the NAPP. Also, to identify
\n
climate risk drivers that are most material for trading
\n
market risk, an annual Climate Risk Impact Map is drafted
\n
and presented to the GMC.
\n
\u2022 Risk measurement: ownership of the definitions used for
\n
the group-wide measurement of trading market risk lies
\n
with the risk function. We measure risk via a number of
\n
parameters including nominal positions, concentrations,
\n
BPV, the so-called \u2018greeks\u2019 and scenario analysis. However,
\n
the primary tool we use for measuring and monitoring
\n
market risk exposures in the trading book is the Historical
\n
Value-at-risk (HVaR) method. VaR is defined as an estimate
\n
of the amount of economic value that might be lost on a
\n
given portfolio due to market risk over a defined holding
\n
period, with a given confidence level. We use the historical
\n
simulation method, which does not have to rely on
\n
assumptions regarding the distribution of price fluctuations
\n
or correlations, but is based on patterns of experience over
\n
the previous two years. Our HVaR model is used for both
\n
Management HVaR and for the calculation of regulatory
\n
capital. Regulatory HVaR is calculated using the relevant
\n
CRD IV standards (99% one-sided confidence interval,
\n
ten-day holding period). Management HVaR uses the
\n
same standards, except that a one-day holding period is
\n
used, as this is more intuitive for senior management and is
\n
also in line with P&L reporting, day-to-day management,
\n
stop losses and back-testing.
\n
\u2022 Setting and cascading risk appetite: the risk appetite for
\n
market risk in trading activities is set in line with the overall
\n
requirements as defined in our overarching risk
\n
management framework and is overseen by the GMC via a
\n
risk limit framework consisting of a hierarchy of limits and
\n
early warning indicators. These are defined down to desk
\n
level and, in addition to HVaR, include a series of
\n
secondary limits, with equity concentration limits, FX
\n
concentration limits and basis-point-value limits for
\n
interest rate risk and basis risk. The specific risk associated
\n
with a particular issuer or country is also subject to
\n
concentration limits. There are also scenario analysis limits
\n
and \u2013 where deemed appropriate \u2013 stress scenario limits
\n
involving multiple shifts of underlying risk factors.
\n
\u2022 Risk analysis, monitoring, reporting and follow-up: in
\n
addition to the more proactive elements described under
\n
\u2018Risk identification\u2019, this involves compiling the necessary
\n
external and internal reports, issuing advice on business
\n
proposals, and monitoring and advising on the risks
\n
attached to the positions. We monitor and follow up the
\n
risks attached to the positions on a daily basis by means of
\n
the risk limit framework. Another important aspect of this
\n
building block is prudent valuation. We perform a daily
\n
independent middle-office valuation of front-office
\n
positions. Whenever the independent nature or the
\n
reliability of the valuation process is not guaranteed, we
\n
perform a monthly parameter review. Where applicable,
\n
we make adjustments to the fair value to reflect close-out
\n

\n\n
costs, mark-to-model-related value adjustments,
\n
counterparty risk and liquidity risk. Risk monitoring is also
\n
carried out via internal assessments and a large variety of
\n
controls, including parameter reviews, daily reconciliation
\n
processes, analyses of the material impact of proxies and
\n
other periodic controls to ensure sound risk management.
\n
The GMC, which meets every month, receives an extensive
\n
Core Report as well as periodic and ad hoc memos and
\n
reports. The GMC also receives a dashboard halfway
\n
between the monthly meetings whose frequency is
\n
increased (up to daily, if needed) depending on market
\n
circumstances. The Executive Committee ratifies the
\n
minutes of the GMC meetings and also receives market-
\n
risk-related information and risk signals in its monthly
\n
Integrated Risk Report.
\n
\u2022 Stress testing: in addition to the risk limit framework, we
\n
conduct extensive stress tests on our positions on a weekly
\n
basis. Whereas the HVaR model captures potential losses
\n
under normal market conditions, stress tests show the
\n
impact of exceptional circumstances and events with a
\n
low degree of probability. The historical and hypothetical
\n
stress-test scenarios incorporate both market risk and the
\n
liquidity aspects of disruptions in the market. The stress
\n
tests are discussed at GMC meetings to enable the
\n
members to gain an insight into potential weaknesses in
\n
the positions held by the group. During 2022, our review of
\n
the stress tests (as regards their mix and checking that
\n
they remain up-to-date and relevant) resulted in the
\n
recalibration of the tenor basis shifts and the cross-
\n
currency basis shifts used in our interest rate hypothetical
\n
stress tests, with no other changes deemed necessary. For
\n
more details about stress testing, please refer to the
\n
relevant sub-section of the \u2018Market risk management\u2019
\n
section in KBC\u2019s Risk Report, which is available at
\n
www.kbc.com.
\n
Impact of geopolitical and emerging risks on
\n
trading market risk
\n
The high volatility and nervousness in the markets, amidst
\n
geopolitical tensions, high inflation figures, recession fears
\n
and the uncertainties surrounding the timing and extent of
\n
central banks\u2019 monetary tightening, has persisted throughout
\n
2022. Although this increased market activity and volatility
\n
has been conducive to the dealing room P&L, even the small
\n
mismatches and residual positions arising from the inexact
\n
(macro) hedging of the positions resulting from facilitating
\n
clients led to increased P&L volatility. Notwithstanding the
\n
actions taken by the dealing room to lower P&L volatility,
\n
market risk RWAs for trading activities at year-end 2022 were
\n
approximately 16% higher than at year-end 2021 due to the
\n
market turmoil increasing the market risk RWA derived from
\n
our Approved Internal Model (please refer to KBC\u2019s Risk
\n
Report, available at www.kbc.com for more information).
\n
However, KBC\u2019s low risk appetite for market risk in trading
\n
activities is illustrated by the fact that, despite this increase,
\n
the 2022 market risk RWA for trading activities remained at
\n
about 3% of KBC Group\u2019s total RWA.
\n
Risk analysis and quantification
\n
The table below shows the Management HVaR (99%
\n
confidence interval, one-day holding period, historical
\n
simulation) for the residual trading positions at all the dealing
\n
rooms of the KBC group that can be modelled by HVaR.
\n
Market risk (Management HVaR) (in millions of EUR) 2022 2021
\n
Average for 1Q 8 8
\n
Average for 2Q 9 8
\n
Average for 3Q 10 7
\n
Average for 4Q 9 7
\n
As at 31 December 7 7
\n
Maximum in year 12 11
\n
Minimum in year 6 4
\n
A breakdown of the risk factors (averaged over the full year) in KBC\u2019s HVaR model is shown in the table below. Please note that
\n
the equity risk stems from the equity desk, as well as from KBC Securities.
\n

\n\n
Breakdown by risk factor of trading HVaR for the KBC group (Management HVaR; in millions of EUR)
\n
Average for
\n
2022
\n
Average for
\n
2021
\n
Interest rate risk 8.6 7.6
\n
FX risk 1.3 1.1
\n
FX options risk 0.3 0.2
\n
Equity risk 0.8 0.9
\n
Diversification effect -2.1 -2.3
\n
Total HVaR 8.9 7. 5
\n
We test the reliability of the VaR model daily via a back-test,
\n
which compares the one-day VaR figure to daily P&L figures.
\n
This is done at the top level and can be drilled down to the
\n
different entities, desks and even to trader account level. For
\n
more details about back-testing, please refer to the relevant
\n
sub-section of the \u2018Market risk management\u2019 section in KBC\u2019s
\n
Risk Report, which is available at www.kbc.com.
\n
We have provided an overview of the derivative products
\n
under Note 4.8 of the \u2018Consolidated financial statements\u2019
\n
section.
\n
Regulatory capital
\n
The vast majority of regulatory capital requirements are
\n
calculated using our Approved Internal Model which, in
\n
addition to HVaR, uses SVaR, which is one of the CRD III
\n
Regulatory Capital charges that entered into effect at
\n
year-end 2011. The calculation of an SVaR measure is based
\n
on the normal VaR calculations and follows the same
\n
methodological assumptions, but is constructed as if the
\n
relevant market factors were experiencing a period of stress.
\n
The period of stress is calibrated at least once a year
\n
(checked monthly to ensure the period is still valid) by
\n
determining which 250-day period between 2006 and the
\n
(then) present day produces the severest losses for the
\n
relevant positions. Business lines not included in the internal
\n
model calculations are measured according to the
\n
Standardised approach.
\n
For more details about regulatory capital and how it
\n
developed between 2021 and 2022, please refer to KBC\u2019s Risk
\n
Report (available at www.kbc.com) which includes a
\n
breakdown of regulatory capital requirements for KBC
\n
Group\u2019s market risk per risk type.
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag871": { "value": "\n
Liquidity risk
\n
Liquidity risk is the risk that an organisation will be unable to meet its liabilities and obligations as they come due,
\n
without incurring higher-than-expected costs.
\n
Managing liquidity risk
\n
The principal objective of our liquidity management is to be
\n
able to fund the group and to enable the core business
\n
activities of the group to continue to generate revenue, even
\n
under adverse circumstances.
\n
The Group and Local Treasury functions act as the first line of
\n
defence and are responsible for KBC\u2019s overall liquidity and
\n
funding management. The Group Treasury function monitors
\n
and steers the liquidity profile on a daily basis and sets the
\n
policies and steering mechanisms for funding management
\n
(intra-group funding, funds transfer pricing). These policies
\n
ensure that local management has an incentive to work
\n
towards a sound funding profile. The Group Treasury function
\n
also actively monitors its collateral on a group-wide basis.
\n
The Risk function is the second line of defence. Given the
\n
specifics of the Treasury domain and in support of the Group
\n
CRO, a dedicated Treasury CRO was appointed who is
\n
accountable for the Treasury activities. The group-wide
\n
Extended Competence Centre for ALM & Liquidity Risk is in
\n
turn responsible for installing the principles for liquidity risk
\n
management, which are laid down in a group-wide Liquidity
\n
Risk Management Framework that defines the risk playing
\n
field.
\n
The building blocks for managing liquidity risk
\n
\u2022 Risk identification: the NAPP process, the Climate Risk
\n
Impact Map, the risk scan, stress testing and materiality
\n
assessments are important tools used for risk identification.
\n
An annual assessment of key risk drivers impacting liquidity
\n
is performed as well. When relevant, risk signals are
\n
presented in Treasury Risk Reports and Integrated Risk
\n
Reports.
\n
\u2022 Risk measurement: identified liquidity risks are measured
\n
by means of both regulatory metrics such as the Liquidity
\n
Coverage Ratio (LCR, which stood at 152%) and the Net
\n
Stable Funding Ratio (NSFR, which stood at 136%), and
\n
internal metrics on, for example, the funding mix and
\n
concentration and the composition of the liquid asset
\n
buffer. In the maturity analysis table below, KBC\u2019s structural
\n
liquidity risk is illustrated by grouping the assets and
\n
liabilities according to the remaining term to maturity
\n
(using the contractual maturity date). The difference
\n
between the cash inflows and outflows is referred to as the
\n
\u2018net funding gap\u2019.
\n
\u2022 Setting and cascading risk appetite: the Board of Directors
\n
sets the overall risk appetite objective for liquidity in close
\n
cooperation with the Executive Committee. The Group
\n
Asset and Liability Committee (GALCO) then translates this
\n
risk appetite for liquidity into liquidity risk measures and
\n
sets the limits for these measures.
\n
\u2022 Risk analysis, reporting and follow-up: to mitigate day-to-
\n
day liquidity risk, group-wide trends in funding liquidity and
\n
funding needs are monitored continuously by the Group
\n
Treasury function. A Liquidity Contingency Plan drafted by
\n
the Group Treasury function is in place to address possible
\n
liquidity crisis situations and is tested at least annually.
\n
\u2022 Stress testing: liquidity stress tests assess KBC\u2019s liquidity
\n
contingency risk by measuring how the liquidity buffer of
\n
the group\u2019s bank and insurance entities changes under
\n
extreme stressed scenarios. This buffer is based on
\n
assumptions regarding liquidity outflows and liquidity
\n
inflows resulting from actions to increase liquidity. The
\n
liquidity buffer has to be sufficient to cover liquidity needs
\n
over (i) a period that is required to restore market
\n
confidence in the group following a KBC-specific event, (ii)
\n
a period that is required for markets to stabilise after a
\n
general market event and (iii) a combined scenario, which
\n
takes a KBC-specific event and a general market event
\n
into account. This information is fed into the Liquidity
\n
Contingency Plan.
\n
Moreover, KBC has an Internal Liquidity Adequacy
\n
Assessment Process (ILAAP) in place to ensure it has robust
\n
strategies, policies, processes and systems for identifying,
\n
measuring, managing and monitoring liquidity risk and
\n
funding positions over all appropriate time horizons, in order
\n
to maintain adequate levels of liquidity buffers.
\n
Impact of geopolitical and emerging risks on
\n
liquidity risk
\n
Stressed or extreme market conditions can be triggered by
\n
crises such as the coronavirus pandemic or the Russian-
\n
Ukrainian conflict. KBC\u2019s liquidity position has been able to
\n
withstand these stresses and remains very strong.
\n
KBC participated in the targeted longer-term refinancing
\n
operation (TLTRO) in 2020 and 2021 for 24.5 billion euros,
\n
further supporting its LCR and NSFR figures. In 2022, KBC
\n
made a first partial repayment.
\n

\n\n
Maturity analysis
\n
Liquidity risk (excluding intercompany deals)*
\n
(in billions of EUR)
\n
<= 1
\n
month
\n
1\u20133
\n
months
\n
3\u201312
\n
months
\n
1\u20135
\n
years
\n
>5
\n
years
\n
On
\n
demand
\n
Not
\n
defined Total
\n
31-12-2022
\n
Total inflows 6 12 20 82 115 53 34 322
\n
Total outflows 38 20 29 24 5 178 29 322
\n
Professional funding 6 0 20 5 0 4 0 36
\n
Customer funding 19 9 8 12 3 174 0 226
\n
Debt certificates 8 11 1 7 1 0 0 28
\n
Other 4 0 0 0 0 0 29 33
\n
Liquidity gap (excl. undrawn commitments) -32
\n
-8 -9 58
\n
111
\n
-125
\n
5 0
\n
Undrawn commitments
\n
\u2013 \u2013 \u2013 \u2013
\n
\u2013
\n
\u2013
\n
-47
\n
-47
\n
Financial guarantees
\n
\u2013 \u2013 \u2013 \u2013
\n
\u2013
\n
\u2013
\n
-11
\n
-11
\n
Net funding gap (incl. undrawn commitments)
\n
-32 -8 -9 58
\n
111
\n
-125
\n
-53
\n
-58
\n
31-12-2021
\n
Total inflows 7 10 23 75 101 43 44 303
\n
Total outflows 20 19 10 41 4 178 31 303
\n
Professional funding 7 1 3 24 0 6 0 41
\n
Customer funding 5 11 3 10 2 172 0 203
\n
Debt certificates 4 7 4 6 2 0 0 24
\n
Other 4 0 0 0 0 0 31 35
\n
Liquidity gap (excl. undrawn commitments) -13 -9 13 34 96 -135 13 0
\n
Undrawn commitments \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 -43 -43
\n
Financial guarantees
\n
\u2013 \u2013 \u2013 \u2013
\n
\u2013
\n
\u2013
\n
-10
\n
-10
\n
Net funding gap (incl. undrawn commitments) -13 -9 13 34 96 -135 -41 -54
\n
* Cashflows exclude interest rate flows consistent with internal and regulatory liquidity reporting. Inflows/outflows that arise from margin calls posted/received for MtM positions
\n
in derivatives are reported in the \u2018Not defined\u2019 bucket. \u2018Professional funding\u2019 includes all deposits from credit institutions and investment firms, as well as all repos. Instruments
\n
are classified on the basis of their first callable date. Some instruments are reported at fair value (on a discounted basis), whereas others are reported on an undiscounted basis
\n
(in order to reconcile them with Note 4.1 of the \u2018Consolidated financial statements\u2019 section). Due to the uncertain nature of the maturity profile of undrawn commitments and
\n
financial guarantees, these instruments are reported in the \u2018Not defined\u2019 bucket. The \u2018Other\u2019 category under \u2018Total outflows\u2019 contains own equity, short positions, provisions for
\n
risks and charges, tax liabilities and other liabilities.
\n

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\u2022 The increase in the balance sheet total in 2022 was also largely attributable to higher outstanding repos, demand deposits
\n
and time deposits, resulting in higher cash balances with central banks and higher loans and advances to customers. These
\n
were cancelled out in part by a higher loss on positions in portfolios hedged against interest rate risk (on both assets and
\n
liabilities) due to the substantial interest rate hikes in 2022 and lower positions in credit institutions and investment firms (on
\n
the liabilities side mainly due to the repayment of part of the amount borrowed under TLTRO III (-9.1 billion euros; see Note
\n
4.1)).
\n

\n\n
Impact of the most important acquisitions and disposals (in millions of EUR)
\n
\n
2022:
\n
Raiffeisenbank Bulgaria
\n
(KBC Bank Bulgaria)
\n
2021:
\n
NN\u2019s Bulgarian pension
\n
and life insurance
\n
business
\n
Percentage of shares bought or sold in the relevant year
\n
\n
purchase
\n
100.00%
\n
purchase
\n
100.00%
\n
Percentage of shares after deal
\n
100.00% 100.00%
\n
For business unit
\n
International Markets International Markets
\n
Deal date (month and year)
\n
June 2022 June 2021
\n
Results of the relevant company/business recognised in the
\n
group result as from: June 2022 August 2021
\n
Purchase price or sale price*
\n
1 009 78
\n
Cashflow for acquiring or selling companies less cash and cash equivalents acquired or sold
\n
-42 -71
\n
Amounts recognised for the purchased assets and liabilities (fair
\n
value)
\n
Situation on:
\n
7 July 2022 31 July 2021
\n
Cash and cash balances with central banks
\n
1 053 7
\n
Financial assets
\n
4 686 106
\n
\n
Amortised cost 4 521 1
\n
\n
Fair value through OCI 132 58
\n
\n
Fair value through profit or loss
\n
30 47
\n
\n
Hedging derivatives 4 0
\n
Tax assets
\n
2 0
\n
Investments in associated companies and joint ventures
\n
\n
2 0
\n
Property and equipment
\n
\n
35 1
\n
Goodwill and other intangible assets
\n
\n
15 0
\n
Other assets
\n
\n
20 5
\n
Cash and
\n
cash equivalents (included in the above assets) 1 053 7
\n
Financial liabilities
\n
5 150 36
\n
\n
Held for trading 19 0
\n
\n
Amortised cost 5 130 0
\n
Hedging derivatives
\n
\n
0 36
\n
Technical provisions, before reinsurance
\n
0 59
\n
Provisions for risks and
\n
charges 9 0
\n
Other liabilities
\n
21 3
\n
Cash and cash equivalents (included in the above liabilities)
\n
28 0
\n
* A further 58 million euros was paid for an additional tier-1 instrument issued by Raiffeisenbank Bulgaria, included in equity at nominal value.
\n

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\u2022 The \u2018Dividends\u2019 item in 2021 (1 433 million euros) includes the 2020 dividend of 0.44 euros and the interim dividend of 3.00
\n
euros per share (paid in November 2021). The \u2018Dividends\u2019 item in 2022 (3 585 million euros) includes the final dividend of 7.60
\n
euros per share (paid in May 2022) and the interim dividend of 1.00 euro per share (paid in November 2022).
\n
\u2022 We will propose to the General Meeting of Shareholders of 4 May 2023 a final dividend of 4.0 euros per share related to
\n
2022, comprising the interim dividend paid in November 2022 and a final dividend of 3 euros, payable in May 2023. See also
\n
\u2018We aim to achieve our ambitions within a stringent risk management framework\u2019 in the \u2018Report of the Board of Directors\u2019
\n
section.
\n

\n\n
Note 3.2: Dividend income
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
59 45
\n
Equity
\n
instruments MFVPL other than held for trading 35 28
\n
Equity instruments held for trading
\n
10 11
\n
Equity instruments at FVOCI
\n
15 6
\n

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"unit": "iso4217:EUR" } }, "Tag705": { "value": "-448000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashFlowsFromUsedInFinancingActivities", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2021-01-01T00:00:00/2022-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag623": { "value": "3424000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:IncreaseDecreaseInCashAndCashEquivalents", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag651": { "value": "14417000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:IncreaseDecreaseInCashAndCashEquivalents", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2021-01-01T00:00:00/2022-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag599": { "value": "63554000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalents", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag699": { "value": "47794000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalents", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2021-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag703": { "value": "503000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:EffectOfExchangeRateChangesOnCashAndCashEquivalents", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag693": { "value": "1343000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:EffectOfExchangeRateChangesOnCashAndCashEquivalents", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2021-01-01T00:00:00/2022-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag629": { "value": "67481000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalents", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag589": { "value": "63554000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalents", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag594": { "value": "6064000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:InterestExpense", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" }, "links": { "ftTyp_fact-footnote": { "ftGrp_default": [ "footnote1" ] } } }, "Tag588": { "value": "1869000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:InterestExpense", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2021-01-01T00:00:00/2022-01-01T00:00:00", "unit": "iso4217:EUR" }, "links": { "ftTyp_fact-footnote": { "ftGrp_default": [ "footnote1" ] } } }, "Tag718": { "value": "11226000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:RevenueFromInterest", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag607": { "value": "6320000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:RevenueFromInterest", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2021-01-01T00:00:00/2022-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag701": { "value": "59000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:DividendsReceived", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag622": { "value": "45000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:DividendsReceived", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2021-01-01T00:00:00/2022-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag633": { "value": "51427000000", "decimals": -6, "dimensions": { "concept": "kbc:CashCashBalancesWithCentralBanksAndOtherDemandDepositsWithCreditInstitutions", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag663": { "value": "40653000000", "decimals": -6, "dimensions": { "concept": "kbc:CashCashBalancesWithCentralBanksAndOtherDemandDepositsWithCreditInstitutions", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag597": { "value": "1237000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:LoansAndAdvancesToBanks", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag689": { "value": "3146000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:LoansAndAdvancesToBanks", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag590": { "value": "19903000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:ReverseRepurchaseAgreementsAndCashCollateralOnSecuritiesBorrowed", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag669": { "value": "24450000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:ReverseRepurchaseAgreementsAndCashCollateralOnSecuritiesBorrowed", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag724": { "value": "5085000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:DepositsFromBanks", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag619": { "value": "4695000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:DepositsFromBanks", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag656": { "value": "0", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalentsClassifiedAsPartOfDisposalGroupHeldForSale", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag647": { "value": "0", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalentsClassifiedAsPartOfDisposalGroupHeldForSale", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag664": { "value": "67481000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalents", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag613": { "value": "63554000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalents", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag700": { "value": "0", "decimals": -6, "dimensions": { "concept": "ifrs-full:RestrictedCashAndCashEquivalents", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag728": { "value": "0", "decimals": -6, "dimensions": { "concept": "ifrs-full:RestrictedCashAndCashEquivalents", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag600": { "value": "\n
\u2022 KBC uses the indirect method to report on cashflows from operating activities.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCashFlowsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag624": { "value": "\n
\u2022 Net cash from or used in operating activities:
\n
- In 2022, this item included the realised result and strong deposit growth (mainly customer deposits) and repos, partly
\n
offset by a growing home loan and term loan portfolio and repayment of part of the amount borrowed under TLTRO III
\n
(9.1 billion euros);
\n
- In 2021, this item included strong deposit growth, TLTRO III (with an additional drawdown of 2.5 billion euros), as well as
\n
the realised result;
\n
\u2022 Net cash from or used in investing activities:
\n
- In 2022, this item included additional investments in debt securities at amortised cost, as well as -42 million euros related
\n
to the acquisition of the Bulgarian operations of Raiffeisenbank (now renamed KBC Bank Bulgaria), -52 million euros
\n
related to the acquisition of a property company and +111 million euros related to the sale of KBC Verzekeringen Vastgoed
\n
Nederland BV.
\n
- In 2021, this item included investments in debt securities at amortised cost that had reached maturity, partly offset by
\n
new investments, as well as -71 million euros related to the acquisition of NN\u2019s Bulgarian pension and life insurance
\n
business;
\n
\u2022 Net cash from or used in financing activities:
\n
- In 2022, this item included the dividend payout (-3.6 billion euros), the issue or repayment of promissory notes and other
\n
debt securities. KBC Ifima, KBC Group NV, \u010cSOB Czech Republic and KBC Bank NV accounted for the bulk of the figure
\n
for 2022, which related primarily to 5.6 billion euros\u2019 worth of these instruments being issued and 4.9 billion euros being
\n
redeemed. This item also included the proceeds from or repayment of subordinated liabilities. KBC Group NV accounted
\n
for the bulk of the figure for 2022, which related primarily to instruments redeemed.
\n
- In 2021, this item included the dividend payout (-1.4 billion euros), the issue or repayment of promissory notes and other
\n
debt securities. KBC Ifima, KBC Group NV, \u010cSOB Czech Republic and KBC Bank NV accounted for the bulk of the figure
\n
for 2021, which related primarily to 2.9 billion euros\u2019 worth of these instruments being issued and 2.4 billion euros being
\n
redeemed. This item also included the proceeds from or repayment of subordinated liabilities. KBC Group NV accounted
\n
for the bulk of the figure for 2021, which related primarily to instruments issued.
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfCashFlowStatementExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag620": { "value": "9100000000", "decimals": -8, "dimensions": { "concept": "kbc:RepaymentsOfBorrowingsUnderTargetedLongerTermRefinancingOperations", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag639": { "value": "2500000000", "decimals": -8, "dimensions": { "concept": "kbc:BorrowingsUnderTargetedLongerTermRefinancingOperations", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2021-01-01T00:00:00/2022-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag617": { "value": "-42000000", "decimals": -6, "dimensions": { "concept": "kbc:AcquisitionOfSubsidiaryOrBusinessUnitNetOfCashAcquiredClassifiedAsInvestingActivities", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "ifrs-full:BusinessCombinationsAxis": "kbc:BulgarianOperationsOfRaiffeisenbankMember", "unit": "iso4217:EUR" } }, "Tag692": { "value": "-52000000", "decimals": -6, "dimensions": { "concept": "kbc:AcquisitionOfSubsidiaryOrBusinessUnitNetOfCashAcquiredClassifiedAsInvestingActivities", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "ifrs-full:BusinessCombinationsAxis": "kbc:AcquisitionOfPropertyCompanyMember", "unit": "iso4217:EUR" } }, "Tag653": { "value": "111000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashFlowsFromLosingControlOfSubsidiariesOrOtherBusinessesClassifiedAsInvestingActivities", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag682": { "value": "-71000000", "decimals": -6, "dimensions": { "concept": "kbc:AcquisitionOfSubsidiaryOrBusinessUnitNetOfCashAcquiredClassifiedAsInvestingActivities", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2021-01-01T00:00:00/2022-01-01T00:00:00", "ifrs-full:BusinessCombinationsAxis": "kbc:NNsBulgarianPensionAndLifeInsuranceBusinessMember", "unit": "iso4217:EUR" } }, "Tag630": { "value": "3600000000", "decimals": -8, "dimensions": { "concept": "ifrs-full:DividendsPaidClassifiedAsFinancingActivities", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag595": { "value": "5600000000", "decimals": -8, "dimensions": { "concept": "ifrs-full:ProceedsFromIssueOfBondsNotesAndDebentures", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag645": { "value": "4900000000", "decimals": -8, "dimensions": { "concept": "ifrs-full:RepaymentsOfBondsNotesAndDebentures", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag616": { "value": "This item also included the proceeds from or repayment of subordinated liabilities. KBC Group NV accountedfor the bulk of the figure for 2022, which related primarily to instruments redeemed.This item also included the proceeds from or repayment of subordinated liabilities. KBC Group NV accountedfor the bulk of the figure for 2021, which related primarily to instruments issued.\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
(in millions of EUR)
\n
Measured at
\n
amortised
\n
cost
\n
(AC)
\n
Held for
\n
trading (HFT)
\n
Designated at
\n
fair value (FVO)
\n
\n
Hedging
\n
derivatives
\n
Total
\n
Total pro forma
\n
excluding KBC
\n
Bank Bulgaria
\n
(formerly
\n
Raiffeisenbank
\n
Bulgaria)
\n
FINANCIAL
\n
LIABILITIES, 31-12-2022
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
24 819 0 0 0 24 819
\n
24 737
\n
of which deposits from banks repayable on demand
\n
\n
\n
\n
\n
\n
\n
\n
5 085 5 085
\n
Deposits from customers and debt
\n
securities (excl. repos)
\n
\n
251 496 44 1 205 0 252 746
\n
247 585
\n
\n
Demand deposits 122 053 0 0 0 122 053 117 401
\n
\n
Time deposits 22 280 44 73 0 22 397 21 960
\n
\n
Savings accounts 76 979 0 0 0 76 979 76 954
\n
\n
Special deposits 2 710 0 0 0 2 710 2 663
\n
\n
Other deposits 268 0 0 0 268 268
\n
Subtotal deposits from customers (excl. repos)
\n
224 290 44 73 0 224 407 219 246
\n
\n
Certificates of deposit 9 321 0 1 0 9 322 9 322
\n
\n
Savings certificates 104 0 0 0 104 104
\n
\n
Non-convertible bonds 15 621 0 1 006 0 16 627 16 627
\n
\n
Non-convertible subordinated liabilities 2 160 0 126 0 2 285 2 285
\n
Repos
\n
4
\n
11 091 7 0 0 11 097
\n
11 097
\n
\n
with credit institutions and investment firms 10 852 7 0 0 10 859 10 859
\n
\n
with customers 239 0 0 0 239 239
\n
Liabilities under investment contracts
\n
6
\n
0 0 12 002 0 12 002
\n
12 002
\n
Derivatives
\n
0 8 038 0 577 8 615
\n
8 605
\n
Short positions
\n
0 1 007 0 0 1 007
\n
1 007
\n
\n
In equity instruments 0 5 0 0 5 5
\n
\n
In debt securities 0 1 002 0 0 1 002 1 002
\n
Other
\n
5
\n
2 448 0 0 0 2 448
\n
2 370
\n
Total
\n
289 854 9 096 13 207 577 312 735
\n
307 403
\n
FINANCIAL LIABILITIES, 31
\n
-12-2021
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
38 047 0 0 0 38 047
\n
-
\n
of which deposits from banks repayable on demand 4 695 -
\n
Deposits from
\n
customers and debt securities (excl. repos)
\n
\n
224 759 21 1 312 0 226 093
\n
-
\n
\n
Demand deposits 112 097 0 0 0 112 097
\n
-
\n
\n
Time deposits 9 106 21 60 0 9 187
\n
-
\n
\n
Savings accounts 74 801 0 0 0 74 801
\n
-
\n
\n
Special deposits 2 962 0 0 0 2 962
\n
-
\n
\n
Other deposits 428 0 0 0 428
\n
-
\n
Subtotal deposits from customers (excl. repos)
\n
199 395 21 60 0 199 476
\n
-
\n
\n
Certificates of deposit 6 273 0 0 0 6 273
\n
-
\n
\n
Savings certificates 253 0 0 0 253
\n
-
\n
\n
Non-convertible bonds 15 892 0 1 118 0 17 011
\n
-
\n
\n
Non-convertible subordinated liabilities 2 946 0 134 0 3 080
\n
-
\n
Repos
\n
4
\n
3 293 2 0 0 3 295
\n
-
\n
\n
with credit institutions and investment firms 2 888 2 0 0 2 890
\n
-
\n
\n
with customers 405 0 0 0 405
\n
-
\n
Liabilities under investment
\n
contracts
\n
6
\n
0 0 13 603 0 13 603
\n
-
\n
Derivatives
\n
0 5 619 0 1 094 6 713
\n
-
\n
Short positions
\n
0 1 628 0 0 1 628
\n
-
\n
\n
In equity instruments 0 18 0 0 18
\n
-
\n
\n
In debt securities 0 1 611 0 0 1 611
\n
-
\n
Other
\n
5
\n
2 288 0 0 0 2 288
\n
-
\n
Total
\n
268 387 7 271 14 916 1 094 291 667
\n
-
\n
1 The carrying value comes close to the maximum credit exposure.
\n
2 The amount of the reverse repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out).
\n
3 Financial assets not included under \u2018Loans and advances to customers\u2019 as they are not directly related to commercial lending.
\n
4 The amount of the repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out), with the assets being partly reflected on the balance sheet
\n
and partly obtained through reverse repo transactions.
\n
5 Financial liabilities not included under deposits from customers as they are not directly related to commercial deposit acquisition.
\n
6 The difference between \u2018Investment contracts (insurance)\u2019 and \u2018Liabilities under investment contracts\u2019 is accounted for by the presentation of non-unbundled investment contracts that are
\n
included under \u2018Investment contracts (insurance)\u2019 on the financial assets side, but are included under \u2018Technical provisions (before reinsurance)\u2019 on the liabilities side.
\n

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\n\n

\n\n

\nIncludes perpetual subordinated loans with fully discretionary, non-cumulative interest payments. The securities also have a loss absorption mechanism (i.e. a temporary write-down triggershould the common equity tier-1 ratio fall below 5.125%). Also see Note 5.10. Includes subordinated loans with a fixed maturity date where principal and interest payments cannot be cancelled in a going concern.", "dimensions": { "concept": "ifrs-full:DisclosureOfSubordinatedLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag643": { "value": "1400000000", "decimals": -8, "dimensions": { "concept": "ifrs-full:DividendsPaidClassifiedAsFinancingActivities", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2021-01-01T00:00:00/2022-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag698": { "value": "2900000000", "decimals": -8, "dimensions": { "concept": "ifrs-full:ProceedsFromIssueOfBondsNotesAndDebentures", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2021-01-01T00:00:00/2022-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag592": { "value": "2400000000", "decimals": -8, "dimensions": { "concept": "ifrs-full:RepaymentsOfBondsNotesAndDebentures", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2021-01-01T00:00:00/2022-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tag755": { "value": "\n

\n
1.0 Notes on the accounting policies
\n
\n\n

\n

\n
Note 1.1: Statement of compliance
\n
\n
The consolidated financial statements of KBC Group NV, including all the notes, were authorised for issue on 16 March 2023
\n
by the Board of Directors. They have been prepared in accordance with the International Financial Reporting Standards as
\n
adopted for use in the European Union (\u2018endorsed IFRS\u2019) and present one year of comparative information. All amounts are
\n
shown in millions of euros and rounded to the million (unless otherwise stated).
\n
\n\n
No new IFRS standards became effective on 1 January 2022 that have significant consequences for KBC.
\n

\n\n
\n\n
The following IFRS standards were issued but not yet effective in 2022. KBC will apply these standards when they become
\n
mandatory.
\n
\u2022 IFRS 17: see Note 6.10.
\n
\u2022 Amendments to IAS 1 Presentation of Financial Statements: the amended IAS 1 requires that companies provide information
\n
about material accounting policies rather than a list of their main accounting policies. KBC will apply this amendment when
\n
it becomes mandatory, i.e. in the 2023 Annual Report.
\n
\u2022 Other: the IASB has published several limited amendments to existing IFRSs and IFRICs. They will be applied when they
\n
become mandatory, but their impact is currently estimated to be negligible.
\n

\n\n
\n
The loan portfolio accounts for the largest share of the financial assets. Based on internal management reports, the
\n
composition and quality of the loan portfolio is set out in detail in the \u2018How do we manage our risks?\u2019 section (under \u2018Credit
\n
risk\u2019). All parts of that particular section which have been audited by the statutory auditor are listed at the start of the section.
\n
\n
\n
As a bank-insurance group, KBC presents banking and insurance information in its financial statements on an integrated
\n
basis. Information relating specifically to our banking business and to our insurance business is provided separately in the
\n
respective annual reports of KBC Bank and KBC Insurance under \u2018Information on KBC Bank\u2019 and \u2018Information on KBC
\n
Insurance\u2019 at www.kbc.com/en/investor-relations.
\n

\n\n

\n\n

\n\n

\n

\n
Note 1.2: Summary of significant accounting policies
\n
\n\n

\n
General / Basic principle
\n
\n
The general accounting principles of KBC Group NV (\u2018KBC\u2019) are based on the International Financial Reporting Standards
\n
(IFRS), as adopted by the European Union, and on the IFRS Framework. The financial statements of KBC are prepared based
\n
on the going concern assumption. It presents each material class of similar items separately. Dissimilar items are presented
\n
separately unless they are immaterial, and items are only offset when explicitly required or permitted by the relevant IFRS.
\n

\n\n
\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n
Financial assets
\n
\n
KBC has applied all the requirements of IFRS 9 since 1 January 2018, except for hedge accounting transactions, which
\n
continue to be accounted for in accordance with IAS 39.
\n
\n

\n\n

\n
Financial assets \u2013 recognition and derecognition
\n
\n
Recognition: financial assets and liabilities are recognised in the balance sheet when KBC becomes party to the contractual
\n
provisions of the instruments. Regular-way purchases or sales of financial assets are recognised using settlement date
\n
accounting. All financial assets \u2013 except those measured at fair value through profit or loss \u2013 are measured initially at fair
\n
value plus transaction costs directly attributable to their acquisition.
\n
\n\n
Derecognition and modification: KBC derecognises a financial asset when the contractual cashflows from the asset expire
\n
or when KBC transfers its rights to receive contractual cashflows from the financial asset in a transaction in which substantially
\n
all the risks and rewards of ownership are transferred. If the terms and conditions change during the term of a financial asset,
\n
KBC assesses whether the new terms are substantially different from the original ones and whether the changes indicate that
\n
the rights to the cashflows from the instrument have expired. If it is concluded that the terms are substantially different, the
\n
transaction is accounted for as a financial asset derecognition, which means that the existing financial asset is removed from
\n
the balance sheet and that a new financial asset is recognised based on the revised terms. Conversely, when KBC assesses
\n
that the terms are not substantially different, the transaction is accounted for as a financial asset modification.
\n

\n\n
\n
Write-offs: KBC writes off the gross carrying value of financial assets (or the part of the gross carrying value) deemed
\n
uncollectable. This means that there is no reasonable expectation that KBC will recover any interest or principal in a timely
\n
manner. The timing of write-offs depends on several factors, including the portfolio, the existence and type of collateral, the
\n
settlement process in each jurisdiction, and local legislation. If a loan is uncollectable, the gross carrying value is written off
\n
directly against the corresponding impairment. Recoveries of amounts previously written off are recognised as reversals of
\n
impairments in the income statement. KBC differentiates between write-offs for financial reporting purposes (which are still
\n
subject to credit enforcement activities) and debt forgiveness. The latter entails the forfeiture of the legal right to recover all
\n
or part of the debt outstanding to the client.
\n
\n
Classification of equity instruments and debt instruments
\n
\n
On initial recognition of a financial asset, KBC first assesses the contractual terms of the instrument in order to classify it as
\n
an equity instrument or a debt instrument. An equity instrument is defined as any contract that evidences a residual interest
\n
in another entity\u2019s net assets. To satisfy this condition, KBC checks that the instrument does not include a contractual
\n
obligation requiring the issuer to deliver cash or exchange financial assets or financial liabilities with another entity under
\n
conditions that are potentially unfavourable to the issuer. Any instruments that do not meet the criteria to qualify as equity
\n
instruments are classified as debt instruments by KBC, with the exception of derivatives.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n
Classification and measurement \u2013 debt instruments
\n
\n
If KBC concludes that a financial asset is a debt instrument, then \u2013 upon initial recognition \u2013 it can be classified in one of the
\n
following categories:
\n
\u2022 Measured at fair value through profit or loss (FVPL);
\n
- Mandatorily measured at fair value through profit or loss (MFVPL) \u2013 this category includes held-for-trading instruments
\n
(HFT);
\n
- Designated upon initial recognition at fair value through profit or loss (FVO);
\n
- Measured at fair value through profit or loss \u2013 overlay approach (FVPL \u2013 overlay);
\n
\u2022 Measured at fair value through other comprehensive income (FVOCI);
\n
\u2022 Measured at amortised cost (AC).
\n
\n
Debt instruments have to be classified in the FVPL category where (i) they are not held within a business model whose
\n
objective is to hold assets in order to collect contractual cashflows or within a business model whose objective is achieved
\n
by both collecting contractual cashflows and selling financial assets or, alternatively, (ii) they are held within a business model
\n
but, on specified dates, the contractual terms of the instrument give rise to cashflows that are not solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
Furthermore, KBC may in some cases \u2013 on initial recognition \u2013 irrevocably designate a financial asset that otherwise meets
\n
the requirements to be measured at AC or at FVOCI as at fair value (FVO) if doing so eliminates or significantly reduces an
\n
accounting mismatch that would otherwise arise.
\n
\n
A debt instrument is measured at FVOCI only if it meets both of the following conditions and is not designated to be measured
\n
at FVO:
\n
\u2022 the asset is held within a business model whose objective is achieved by both collecting contractual cashflows and selling
\n
financial assets; and
\n
\u2022 the contractual terms of the financial asset give rise on specified dates to cashflows that are solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
A debt instrument is measured at AC only if it meets both of the following conditions and is not designated to be measured
\n
at FVO:
\n
\u2022 the asset is held within a business model whose objective is to hold assets in order to collect contractual cashflows; and
\n
\u2022 the contractual terms of the financial asset give rise on specified dates to cashflows that are solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
A debt instrument is categorised as \u2018FVPL \u2013 overlay\u2019 when it is held in respect of a business line that is connected with
\n
contracts in scope of IFRS 4 and if it is measured at fair value through profit or loss by applying IFRS 9, but would not have
\n
been measured at fair value through profit or loss in its entirety in accordance with IAS 39, and it is an instrument for which
\n
KBC has elected to use the overlay approach. More information on this approach is provided under \u2018Overlay approach\u2019
\n
further below.
\n

\n\n
\n
Business model assessment
\n
\n
The business model is assessed to determine whether debt instruments should be measured at AC or FVOCI. In performing
\n
the assessment, KBC reviews at portfolio level the objective of the business model in which an asset is held because this best
\n
reflects how the business is managed and how information is provided to management. The information considered includes:
\n
\u2022 the stated policies and objectives for the portfolio and how those policies operate in practice (in particular, whether
\n
management\u2019s strategy focuses on earning contractual interest income, maintaining a specific interest rate profile,
\n
matching the duration of the financial assets to that of the liabilities that fund those assets, or realising cashflows through
\n
the sale of the assets);
\n
\u2022 how the performance of the portfolio is evaluated and reported to KBC\u2019s Executive Committee and Board of Directors;
\n
\u2022 the risks that affect the performance of the business model (and the financial assets held within that model) and how those
\n
risks are managed;
\n
\u2022 how managers of the business are rewarded (for instance, whether remuneration is based on the fair value of the assets
\n
managed or the contractual cashflows collected); and
\n
\u2022 the frequency, volume and timing of sales in prior periods, the reasons for such sales and KBC\u2019s expectations of future sales
\n
activity. However, information about sales activity is not considered in isolation, but as part of an overall assessment of
\n
how KBC\u2019s stated objective for managing the financial assets is achieved and how cashflows are realised.
\n
\n\n
Financial assets that are held for trading or whose performance is evaluated on a fair value basis are measured at FVPL,
\n
because they are neither held for collecting contractual cashflows, nor held for both collecting contractual cashflows and
\n
selling financial assets.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n

\n
Assessment whether contractual cashflows are solely payments of principal and interest (SPPI)
\n
\n
For the purposes of this assessment, \u2018principal\u2019 is defined as the fair value of the financial asset on initial recognition. \u2018Interest\u2019
\n
is defined as consideration for the time value of money and for the credit risk associated with the principal amount
\n
outstanding during a particular period of time and for other basic lending risks and costs (e.g., liquidity risk and administrative
\n
costs), as well as profit margin. In assessing whether contractual cashflows are solely payments of principal and interest, KBC
\n
considers the contractual terms of the instrument, which entails assessing whether the financial asset contains a contractual
\n
term that could change the timing or amount of contractual cashflows such that the instrument would not meet this condition.
\n
In making the assessment, KBC considers:
\n
\u2022 contingent events that could change the amount and timing of cashflows;
\n
\u2022 leverage features;
\n
\u2022 prepayment and extension terms;
\n
\u2022 terms that limit KBC\u2019s claim to cashflows from specified assets (e.g., non-recourse asset arrangements); and
\n
\u2022 features that modify consideration of the time value of money (e.g., periodic resets of interest rates).
\n

\n\n\n
Reclassifications
\n
\n
Financial assets are not reclassified subsequent to their initial recognition except in a period after KBC changes its business
\n
model for managing financial assets, which can occur when KBC begins or ceases to perform an activity that is significant to
\n
its operations (e.g., when KBC acquires, disposes of, or terminates a business line). Reclassification takes place from the start
\n
of the reporting period immediately following the change.
\n

\n\n
\n\n

\n\n
Classification and measurement \u2013 equity instruments
\n
\n
Financial equity instruments are classified in one of the following categories:
\n
\u2022 mandatorily measured at fair value through profit or loss (MFVPL) \u2013 only includes equity instruments held for trading (HFT);
\n
\u2022 equity instruments elected to be measured at fair value through other comprehensive income (FVOCI);
\n
\u2022 equity instruments held in an activity connected with the insurance business, which KBC measures at fair value through
\n
profit or loss \u2013 overlay approach (FVPL \u2013 overlay).
\n
\n
KBC can classify equity instruments connected with the insurance business in the \u2018FVPL \u2013 overlay\u2019 category until the effective
\n
date of IFRS 17. Each equity instrument that KBC\u2019s insurance business classifies as \u2018FVPL \u2013 overlay\u2019 must meet both of the
\n
following criteria:
\n
\u2022 it is measured at fair value through profit or loss under IFRS 9, but would not have been measured at fair value through
\n
profit or loss in its entirety under IAS 39; and
\n
\u2022 it is not held in respect of an activity that is unconnected with insurance contracts.
\n
\n
More information on this approach is provided under \u2018Overlay approach\u2019 further below. In the banking business, there is a
\n
rebuttable presumption that all equity instruments are to be regarded as FVOCI if held for neither trading nor a contingent
\n
consideration in a business combination to which IFRS 3 applies. The election to include equity instruments in the FVOCI
\n
category is irrevocable on initial recognition and can be done on an investment-by-investment basis, which is interpreted by
\n
KBC as a share-by-share basis. Equity instruments categorised as FVOCI are subsequently measured at fair value, with all
\n
value changes recognised in other comprehensive income and without any recycling into the income statement, even when
\n
the investment is disposed of. The only exception applies to dividend income, which is recognised in the income statement
\n
under \u2018Dividend income\u2019.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n
Classification and measurement \u2013 derivatives (trading and hedging)
\n
\n
KBC can recognise derivative instruments either for trading purposes or as hedging derivatives. They can be accounted for
\n
as assets or liabilities depending on their current market value.
\n
\n
Trading derivatives
\n
\n
Derivatives are always measured at fair value and KBC draws distinctions as follows:
\n
\u2022 Derivatives that are held with the intent of hedging, but for which hedge accounting cannot be or is not applied (economic
\n
hedges): hedging instruments can be acquired with the intention of economically hedging an external exposure but without
\n
applying hedge accounting. The interest component of these derivatives is recognised under \u2018Net interest income\u2019, while
\n
all other fair value changes are recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\u2022 Derivatives held with no intent of hedging (trading derivatives): KBC entities can also contract derivatives without any
\n
intention to hedge a position economically. Such activity can relate to closing or selling an external position in the near
\n
term or for short-term profit-taking purposes. All fair value changes (including interest) on such derivatives are recognised
\n
under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\n
Hedging derivatives
\n
\n
Hedging derivatives are derivatives that are specifically designated in a hedge relationship. The process for accounting such
\n
derivatives is detailed in \u2018Hedge accounting\u2019.
\n

\n\n

\n\n

\n\n
\n\n

\n\n

\n
Financial assets \u2013 impairment
\n
\n
Definition of default
\n
\n
KBC defines defaulted financial assets in the same way as the definition for internal risk management purposes and in line
\n
with the guidance and standards of financial industry regulators. A financial asset is considered in default if any of the
\n
following conditions is fulfilled:
\n
\u2022 there is a significant deterioration in creditworthiness;
\n
\u2022 the asset is flagged as non-accrual;
\n
\u2022 the asset is forborne and meets the default criteria in accordance with the internal policies for forbearance (for example,
\n
when an additional forbearance measure is extended to a forborne asset that did not reach default status within two
\n
years of the first forbearance measure being granted, or when a forborne asset becomes more than 30 days past due
\n
within the two-year period);
\n
\u2022 KBC has filed for the borrower\u2019s bankruptcy;
\n
\u2022 the counterparty has filed for bankruptcy or sought similar protection measures;
\n
\u2022 the credit facility granted to the client has been terminated.
\n
\n
KBC applies a backstop for facilities whose status is \u201890 days or more past due\u2019. In this context, a backstop is used as a final
\n
control to ensure that all the assets that should have been designated as defaulted are properly identified.
\n
\n
Expected credit loss model (ECL model) \u2013 general
\n
\n\n
The ECL model is used to measure impairment of financial assets, apart from debt instruments and equity instruments
\n
connected with the insurance business, for which KBC has elected to apply the overlay approach. The impairment policy
\n
applying to these instruments is dealt with under \u2018Overlay approach\u2019 further below.
\n
\n
The scope of the ECL model is based on how financial assets are classified. The model is applicable to the following financial
\n
assets:
\n
\u2022 Financial assets measured at AC and at FVOCI;
\n
\u2022 Loan commitments and financial guarantees;
\n
\u2022 Finance lease receivables;
\n
\u2022 Trade and other receivables.
\n

\n\n
\n
No ECLs are calculated for investments in equity instruments.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n
Financial assets that are in scope of the ECL model carry impairment in an amount equal to the lifetime ECL if the credit risk
\n
increases significantly after initial recognition. Otherwise, the loss allowance is equal to the 12-month ECL (see below for more
\n
information on the significant increase in credit risk).
\n
\n
To distinguish the various stages with regard to quantifying ECL, KBC uses the internationally accepted terminology for
\n
\u2018Stage 1\u2019, \u2018Stage 2\u2019 and \u2018Stage 3\u2019 financial assets.
\n
Unless they are already credit impaired, all financial assets are classified in \u2018Stage 1\u2019 at the time of initial recognition and 12-
\n
month ECL is recognised. Once a significant increase in credit risk occurs after initial recognition, the asset is moved into
\n
\u2018Stage 2\u2019 and lifetime ECL is recognised. Once an asset meets the definition of default, it is moved into \u2018Stage 3\u2019.
\n\n
For trade receivables, IFRS 9 allows for a practical expedient. The ECL for trade receivables can be measured in an amount
\n
equal to their lifetime ECL. KBC applies this practical expedient to trade and other receivables.
\n

\n\n
Impairment gains and losses on financial assets are recognised under the \u2018Impairment\u2019 heading in the income statement.
\n
Financial assets that are measured at AC are presented in the balance sheet at their net carrying value, which is the gross
\n
carrying value less impairment. Debt instruments measured at FVOCI are presented in the balance sheet at their carrying
\n
value, which is their fair value on the reporting date. The adjustment for the ECL is recognised as a reclassification adjustment
\n
between the income statement and OCI.
\n
\n
Significant increase in credit risk since initial recognition
\n
\n
In accordance with the ECL model, financial assets attract lifetime ECL once their credit risk increases significantly after initial
\n
recognition. Therefore, the assessment of a significant increase in credit risk is important for the staging of financial assets.
\n
The assessment of a significant increase in credit risk is a relative assessment based on the credit risk that was assigned
\n
upon initial recognition. This is a multi-factor assessment and, therefore, KBC has developed a multi-tier approach.
\n
\n
Multi-tier approach (MTA) \u2013 bond portfolio
\n
\n
For the bond portfolio, the MTA consists of three tiers:
\n
\u2022 Low-credit exception: 12-month ECL is always recognised for bonds if they have a low credit risk on the reporting date (i.e.
\n
\u2018Stage 1\u2019). KBC uses this exception for investment grade bonds.
\n
\u2022 Internal rating: [only applicable if the first tier criterion is not met] this is a relative assessment that compares the probability
\n
of default (PD) upon initial recognition to that on the reporting date. KBC does the assessment at facility level for each
\n
reporting period. The relative change in PD that triggers staging is an increase of two PD notches.
\n
\u2022 Management assessment: lastly, management review and assess the significant increase in credit risk for financial assets
\n
at an individual (i.e. counterparty) and portfolio level, when it is concluded that idiosyncratic events are not adequately
\n
captured in the first two tiers of the MTA. Examples of idiosyncratic events are unexpected developments in the
\n
macroeconomic environment (e.g., due to the coronavirus crisis), uncertainties about geopolitical events (e.g., as a result
\n
of the war in Ukraine) and the secondary impact of material defaults (e.g., on the suppliers, clients and employees of a
\n
defaulted company).
\n
\n
If none of these triggers results in a move into \u2018Stage 2\u2019, the bond remains in \u2018Stage 1\u2019. A financial asset is considered as
\n
\u2018Stage 3\u2019 as soon as it meets the definition of default. The MTA is symmetrical, i.e. credit that has been moved into \u2018Stage 2\u2019
\n
or \u2018Stage 3\u2019 can revert to \u2018Stage 1\u2019 or \u2018Stage 2\u2019 if the tier criterion that triggered the migration is not met on a subsequent
\n
reporting date.
\n
\n
Loan portfolio
\n
\n
For the loan portfolio, KBC uses a five-tier approach. This MTA is a waterfall approach (i.e. if assessing the first tier does not
\n
result in a move into \u2018Stage 2\u2019, the second tier is assessed, and so on). In the end, if all tiers are assessed without triggering a
\n
migration to \u2018Stage 2\u2019, the financial asset remains in \u2018Stage 1\u2019.
\n
\u2022 Internal rating: this rating is used as the main criterion for assessing an increase in credit risk. It is a relative assessment that
\n
compares the PD upon initial recognition to that on the reporting date. KBC does the assessment at the level of the facility
\n
(i.e. contract) for each reporting period. The relative change in PD that triggers staging is an increase of two PD notches.
\n
\u2022 Forbearance: forborne financial assets are always considered as \u2018Stage 2\u2019 unless they are already defaulted, in which case
\n
they are moved into \u2018Stage 3\u2019.
\n
\u2022 Days past due: KBC uses the backstop defined in the directive. A financial asset that is more than 30 days past due is
\n
moved into \u2018Stage 2\u2019.
\n
\u2022 Internal rating backstop: KBC uses an absolute level of PD as a backstop for financial assets that have to be moved into
\n
\u2018Stage 2\u2019. This backstop corresponds to the highest PD (i.e. PD 9 based on KBC\u2019s internal rating) before a financial asset is
\n
considered defaulted.
\n
\u2022 Management assessment: lastly, management review and assess the significant increase in credit risk for financial assets
\n
at an individual (i.e. counterparty) and portfolio level, when it is concluded that idiosyncratic events are not adequately
\n
captured in the first four tiers of the MTA (see above for a number of examples).
\n
\n
A financial asset is considered as \u2018Stage 3\u2019 as soon as it meets the definition of default. The MTA is symmetrical, i.e. credit
\n
that has been moved into \u2018Stage 2\u2019 or \u2018Stage 3\u2019 can revert to \u2018Stage 1\u2019 or \u2018Stage 2\u2019 if the tier criterion that triggered the
\n
migration is not met on the reporting date.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Measurement of ECL
\n
\n
ECL is calculated as the product of probability of default (PD), estimated exposure at default (EAD) and loss given default
\n
(LGD).
\n
\n
ECL is calculated to reflect:
\n
\u2022 an unbiased, probability-weighted amount;
\n
\u2022 the time value of money; and
\n
\u2022 information about past events, current conditions and forecast economic conditions.
\n
\n
Lifetime ECL represents the sum of ECL over the lifetime of the financial asset discounted at the original effective interest
\n
rate.
\n
The 12-month ECL represents the portion of lifetime ECL resulting from a default in the 12-month period after the reporting
\n
date.
\n
\n
KBC uses specific IFRS 9 models for PD, EAD and LGD in order to calculate ECL. As much as possible and to promote efficiency,
\n
KBC uses modelling techniques similar to those developed for prudential purposes (i.e. Basel models). More information on
\n
the credit risk models developed by KBC is provided in the \u2018Internal Modelling\u2019 section of the Risk Report at www.kbc.com.
\n
.That said, KBC ensures that the Basel models are adapted so they comply with IFRS 9.
\n
\u2022 KBC removes the conservatism that is required by the regulator for Basel models;
\n
\u2022 KBC adjusts how macroeconomic parameters affect the outcome to ensure that the IFRS 9 models reflect a \u2018point-in-time\u2019
\n
estimate rather than one that is \u2018through the cycle\u2019 (as required by the regulator);
\n
\u2022 KBC applies forward-looking macroeconomic information in the models.
\n
\n
As regards loans that are in default, the ECL is also calculated as the product of the PD, EAD and LGD. In this specific case,
\n
however, the PD is set at 100%, the EAD is known given the default status and the LGD takes into account the net present
\n
value of the (un)recoverable amount.
\n
\n
KBC uses the IRB and Standardised models to assign the Basel PD, which then serves as input for IFRS 9 ECL calculations and
\n
staging. If there is no Basel PD model with a similar scope to the IFRS 9 model, the long-term observed default rate is used
\n
as the PD for all facilities in the portfolio. For low default portfolios, there may have been no or only a small number of defaults
\n
in the period being considered, in which case the PD is determined based on expert input and external ratings.
\n
\n
KBC considers forward-looking information in the calculation of ECL via macroeconomic variables and based on
\n
management\u2019s assessment of any idiosyncratic events. KBC\u2019s Chief Economist develops three different macroeconomic
\n
scenarios (base-case, up and down) for all the KBC Core Countries and sets a corresponding probability for each scenario.
\n
On a quarterly basis, KBC updates the economic scenarios and attributed weightings to be used for the ECL calculation
\n
according to the input of the Chief Economist. The incorporation of the macroeconomic variables included in these scenarios
\n
in the PD, EAD and LGD components of the ECL calculation is based on statistical correlation in historical datasets.
\n
\n
The maximum period for measurement of ECL is the maximum contractual period (including extensions), except for specific
\n
financial assets that include a drawn and an undrawn amount available on demand, and KBC\u2019s contractual ability to request
\n
repayment of the drawn amount and cancel the undrawn commitment does not limit the exposure to credit risk to the
\n
contractual period. Only for such assets can a measurement period extend beyond the contractual period.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n\n\n\n
\n

\n
\n

\n\n

\n\n

\n\n

\n\n

\n

\n
Purchased or originated credit impaired (POCI) assets
\n
\n
KBC defines POCI assets as financial assets in scope of the IFRS 9 impairment standard that are already defaulted at
\n
origination (i.e. they then meet the definition of default). POCI assets are initially recognised at an amount net of impairment
\n
and are measured at amortised cost using a credit-adjusted effective interest rate. In subsequent periods, any changes to
\n
the lifetime ECL are recognised in the income statement. Favourable changes are recognised as an impairment gain, even if
\n
the lifetime ECL on the reporting date is lower than the lifetime ECL at origination.
\n
\n\n
Significant judgements and uncertainties
\n
\n
Calculating ECL (and the significant increase in credit risk since initial recognition) requires significant judgement of various
\n
aspects, including the borrowers\u2019 financial position and repayment capabilities, the value and recoverability of collateral,
\n
projections and macroeconomic information. KBC applies a neutral, bias-free approach when dealing with uncertainties and
\n
making decisions based on significant judgements.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
\n

\n
\n
\n\n
Overlay approach
\n
\n
In accordance with the amendment to IFRS 4 issued in September 2016, KBC uses the overlay approach to overcome the
\n
temporary consequences of the different effective dates of IFRS 9 and IFRS 17 (replacing IFRS 4). Accordingly, KBC uses the
\n
overlay approach, which means that the extra volatility related to the adoption of IFRS 9 is reclassified from the income
\n
statement to OCI. The reclassified amounts are recognised in the overlay reserve in OCI. The overlay approach is applied to
\n
those financial assets of KBC\u2019s insurance business that are eligible. Eligibility is based on the following criteria:
\n
\u2022 Assets that are measured at FVPL under IFRS 9 that would not have been measured at FVPL in their entirety under IAS 39;
\n
\u2022 All assets except those held in respect of an activity that is unconnected with contracts within the scope of IFRS 4.
\n
A financial asset can be designated under the overlay approach until:
\n
\u2022 the instrument is derecognised;
\n
\u2022 it is no longer held in respect of an activity that is connected with insurance contracts;
\n
\u2022 KBC decides not to apply the overlay approach for that particular instrument at the beginning of any financial year; or
\n
\u2022 the effective date of IFRS 17.
\n
\n
Application of the overlay approach requires certain IAS 39 accounting policies for financial assets to be retained, namely:
\n
\u2022 Impairment of equity instruments: equity instruments held by KBC\u2019s insurance business were typically classified as \u2018available
\n
for sale\u2019 under IAS 39, whereas they are classified as FVPL under IFRS 9. Designation under the overlay approach requires
\n
the application of IAS 39 impairment rules to investments in equity instruments. In using the overlay approach, all fair value
\n
changes are recognised in the overlay reserve but, where the decline is significant compared to acquisition cost (more than
\n
30%) or prolonged (more than one year), the fair value loss is recognised in the income statement. Any further decrease is
\n
also recognised directly in the income statement, whereas increases are recognised in the overlay reserve.
\n
\u2022 Recognition of gains and losses in the income statement upon the disposal of equity instruments: by designating the equity
\n
instruments connected with KBC\u2019s insurance business under the overlay approach upon their sale, the accumulated overlay
\n
reserve in OCI is recycled to the income statement, ensuring the same results as under IAS 39.
\n

\n\n
\n\n
Cash, cash balances with central banks and other demand deposits with credit institutions
\n
\n
\u2018Cash\u2019 comprises cash on hand and demand deposits, e.g., cheques, petty cash and cash balances at central and other
\n
banks.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Financial liabilities
\n
\n
Financial instruments or their component parts are classified on initial recognition as liabilities or as equity in accordance with
\n
the substance of the contractual arrangements and the definitions of financial liabilities and equity instruments. A financial
\n
instrument is classified as a liability if:
\n
\u2022 KBC has a contractual obligation to deliver cash or another financial asset to the holder or to exchange another financial
\n
instrument with the holder under conditions that are potentially unfavourable to KBC; or
\n
\u2022 KBC has a contractual obligation to settle the financial instrument in a variable number of its own shares.
\n
\n
A financial instrument is classified as an equity instrument when neither condition is met. In that case, it is accounted for in
\n
the way set out under \u2018Equity\u2019.
\n
\n
Financial liabilities \u2013 recognition and derecognition
\n
\n
KBC recognises a financial liability when it becomes party to the contractual provisions of the relevant instrument. This is
\n
typically the date when the consideration in the form of cash or some other financial asset is received. Upon initial recognition,
\n
the financial liability is recognised at fair value less transaction costs directly attributable to issuance of the instrument,
\n
except for financial liabilities at fair value through profit or loss.
\n
\n
Financial liabilities are derecognised when they are extinguished, i.e. the obligation specified in the contract is discharged or
\n
cancelled, or it expires. KBC can also derecognise the financial liability and recognise a new one where an exchange takes
\n
place between KBC and the lenders of the financial liability, each with substantially different terms, or if there are substantial
\n
modifications to the terms of the existing financial liabilities. In assessing whether terms differ, KBC compares the discounted
\n
present value of cashflows under the new terms, including any fees paid net of any fees received and discounted using the
\n
original effective interest rate, and the discounted present value of the remaining cashflows of the original financial liability.
\n
If the difference is 10% or more, KBC derecognises the original financial liability and recognises a new one. Where the
\n
exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are
\n
recognised as part of the gain or loss on the extinguishment.
\n
\n\n

\n
Financial liabilities \u2013 classification and measurement
\n
\n
KBC classifies recognised financial liabilities in three different categories, as provided for by IFRS 9:
\n\n
\u2022 Financial liabilities held for trading (HFT). Held-for-trading liabilities are those incurred principally for generating a profit
\n
from short-term fluctuations in price or dealer\u2019s margin. A liability also qualifies as a trading liability if it belongs to a portfolio
\n
of financial instruments held for trading separately by the trading desk and for which there is a recent pattern of short-
\n
term profit-taking. Held-for-trading liabilities can include derivatives, short positions in debt and equity instruments, time
\n
deposits and debt certificates. Derivative liabilities are split by KBC into trading and hedging derivatives as in the case of
\n
derivative assets. Initially, held-for-trading liabilities are measured at fair value. At the end of the reporting period,
\n
derivative liabilities are measured at fair value. Fair value adjustments are always recorded in the income statement.
\n

\n\n
\u2022 Financial liabilities designated by the entity as liabilities at fair value through profit or loss upon initial recognition (FVO).
\n
Under IFRS 9, a financial liability or group of financial liabilities can be measured upon initial recognition at fair value,
\n
whereby fair value changes are recognised in the income statement except for fair value changes related to own credit
\n
risk, which are presented separately in OCI. The fair value designation is used by KBC for the following reasons:
\n
- managed on an FV basis: KBC designates a financial liability or a group of financial liabilities at fair value where it is
\n
managed and its performance is evaluated on a fair value basis. It is used to account for (unbundled) deposit
\n
components (i.e. financial liabilities that do not include a discretionary participation feature);
\n
- accounting mismatch: the fair value option can be used when doing so eliminates or significantly reduces a measurement
\n
or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognising gains and losses
\n
on them on different bases;
\n
- hybrid instruments: a financial instrument is regarded as hybrid when it contains one or more embedded derivatives that
\n
are not closely related to the host contract. The fair value option can be used when it is not possible to separate the
\n
non-closely-related embedded derivative from the host contract. In that case the entire hybrid instrument can be
\n
designated at fair value. This means that both the embedded derivative and the host contract are measured at fair
\n
value. KBC uses this option when structured products contain non-closely-related embedded derivatives, in which case
\n
both the host contract and the embedded derivative is measured at fair value.
\n
\u2022 Financial liabilities measured at amortised cost (AC). KBC classifies most of its financial liabilities under this category,
\n
including those used to fund trading activities where no trading intent is present in them (e.g., issued bonds). These financial
\n
liabilities are initially measured at cost, which is the fair value of the consideration received including transaction costs.
\n
Subsequently, they are measured at amortised cost, which is the amount at which the funding liability was initially
\n
recognised minus principal repayments, plus or minus the cumulative amortisation of any difference between that initial
\n
amount and the maturity amount. The difference between the amount made available and the nominal value is recorded
\n
on an accruals basis as an interest expense. Interest expenses accrued but not yet paid are recorded under accruals and
\n
deferrals.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n\n

\n
Financial liabilities \u2013 own credit risk
\n
\n
For financial liabilities designated at fair value, IFRS 9 requires the financial liability to be measured at fair value upon initial
\n
recognition. Any changes in fair value are subsequently recognised in the income statement, except for those relating to own
\n
credit risk, which are presented separately in OCI.
\n
Accordingly, movements in the fair value of the liability are presented in different places: changes in own credit risk are
\n
presented in OCI and all other fair value changes are presented in the income statement under \u2018Net result from financial
\n
instruments at fair value through profit or loss\u2019. Amounts recognised in OCI relating to own credit risk are not recycled to the
\n
income statement even if the liability is derecognised and the amounts realised. Although recycling is prohibited, KBC does
\n
transfer the amounts in OCI to retained earnings within equity upon derecognition. The only situation in which presentation
\n
of own credit risk in OCI is not applied is where this would create an accounting mismatch in the income statement. This could
\n
arise if there is a close economic relationship between the financial liability designated at fair value (for which the own credit
\n
risk is recognised in OCI), while all changes in fair value of the corresponding financial asset are measured and recognised at
\n
fair value through profit or loss. This is the case with unit-linked investment contracts, where changes in fair value of the
\n
liability position are fully offset by the asset position.
\n
\n\n
Financial liabilities \u2013 financial guarantee contract
\n
\n
A financial guarantee contract is one that requires KBC to make specified payments to reimburse holders for losses they incur
\n
because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt
\n
instrument. A financial guarantee contract is initially recognised at fair value and is subsequently measured at the higher of
\n
(a) the amount determined in accordance with the impairment provisions of IFRS 9 (see \u2018Financial assets \u2013 impairment\u2019) and
\n
(b) the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with the
\n
revenue recognition principle of IFRS 15.
\n
\n

\n\n

\n\n

\n\n
\n\n
Reverse repos and repos
\n
\n
A reverse repo is a transaction in which KBC purchases a financial asset and simultaneously enters into an agreement to sell
\n
the asset (or a similar asset) at a fixed price on a future date; this agreement is accounted for as a loan or advance, and the
\n
underlying asset is not recognised in the financial statements.
\n
\n
In a repo transaction, KBC sells a security and simultaneously agrees to repurchase it (or a substantially similar asset) at a
\n
fixed price on a future date. KBC continues to recognise the securities in their entirety because it retains substantially all of
\n
the risks and rewards of ownership. The cash consideration received is recognised as a financial asset and the financial
\n
liability is recognised for the obligation to pay the repurchase price.
\n

\n\n
\n\n
Offsetting
\n
\n
KBC offsets and presents only a net amount of a financial asset and financial liability in its balance sheet if and only if (i) it
\n
currently has a legally enforceable right to set off the recognised amounts and (ii) it intends either to settle on a net basis or
\n
to realise the asset and settle the liability simultaneously.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n
Fair value
\n
\n
KBC defines \u2018fair value\u2019 as \u2018the price that would be received for sale of an asset or paid to transfer a liability in an orderly
\n
transaction between market participants at the measurement date\u2019. Fair value is not the amount that an entity would receive
\n
or pay in a forced transaction, involuntary liquidation or distress sale. An imbalance between supply and demand (e.g., fewer
\n
buyers than sellers, thereby forcing prices down) is not the same as a forced transaction or distress sale.
\n
\n
Market value adjustments are recognised on all positions that are measured at fair value, with fair value changes being
\n
reported in the income statement or in OCI. They relate to close-out costs, adjustments for less-liquid positions or markets,
\n
mark-to-model-related valuation adjustments, counterparty risk (credit value adjustment) and funding costs:
\n
\u2022 Credit value adjustments (CVAs) are used when measuring derivatives to ensure that their market value is adjusted to
\n
reflect the credit risk of the counterparty. In making this adjustment, both the mark-to-market value of the contract and
\n
its expected future fair value are taken into account. These valuations are weighted based on the counterparty credit risk
\n
that is determined using a quoted credit default swap (CDS) spread, or, if there is no such spread, on the counterparty
\n
credit risk that is derived from bonds whose issuers are similar to the derivative counterparty in terms of rating, sector and
\n
geographical location. A debt value adjustment (DVA) is made for contracts where the counterparty is exposed to KBC. It
\n
is similar to a CVA, but the expected future negative fair value of the contracts is taken into consideration.
\n
\u2022 A funding value adjustment (FVA) is a correction made to the fair value of uncollateralised derivatives in order to ensure
\n
that the (future) funding costs or income attached to entering into and hedging such instruments are factored in when
\n
measuring their value.
\n

\n\n
\n\n

\n\n

\n\n

\n\n

\n\n
Hedge accounting
\n
\n
KBC has elected to apply the hedge accounting principles under IAS 39 (EU carve-out version). KBC designates certain
\n
derivatives held for risk management purposes, as well as certain non-derivative financial instruments, as hedging
\n
instruments in qualifying hedging relationships. On initial designation of the hedge, KBC formally documents the relationship
\n
between the hedging instrument(s) and hedged item(s), including the risk management objective and strategy in undertaking
\n
the hedge, together with the method that will be used to assess the effectiveness of the hedging relationship. KBC makes
\n
an assessment, both at inception of the hedge relationship and on an ongoing basis, of whether the hedging instrument(s)
\n
is/are expected to be highly effective in offsetting the changes in the fair value or cashflows of the respective hedged item(s)
\n
during the period for which the hedge is designated, and whether the actual results of each hedge are within a range of
\n
80-125%. KBC makes an assessment for a cashflow hedge of a forecast transaction of whether it is highly probable to occur
\n
and presents an exposure to variations in cashflows that could ultimately affect the income statement.
\n
\n
KBC uses the following hedge accounting techniques: cashflow hedges, fair value micro hedges, fair value hedges for a
\n
portfolio of interest rate risk, and hedges of net investments in foreign operations.
\n
\n
Cashflow hedges: if a derivative is designated as the hedging instrument in a hedge of the variability in cashflows attributable
\n
to a particular risk associated with a recognised asset, liability or highly probable forecast transaction that could affect the
\n
income statement, the effective portion of changes in the fair value of the derivative is recognised in OCI and presented in
\n
the hedging reserve (cashflow hedge) within OCI. Any ineffective portion of changes in the fair value of a derivative is
\n
immediately recognised in the income statement under \u2018Net result from financial instruments at fair value through profit or
\n
loss\u2019. The amount recognised in OCI is reclassified to the income statement (as a reclassification adjustment in the same
\n
period as the hedged cashflows affect the income statement) under \u2018Net interest income\u2019. If the hedging derivative expires
\n
or is sold, terminated or exercised, or the hedge no longer meets the criteria for cashflow hedge accounting, or the hedge
\n
designation is revoked, then hedge accounting is discontinued prospectively. Any cumulative gain or loss existing in OCI at
\n
that time remains in OCI and is recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019
\n
when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer
\n
expected to occur, the cumulative gain or loss that was reported in OCI is immediately recycled to the income statement
\n
under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\n
Fair value micro hedging: when a derivative is designated as the hedging instrument in a hedge of the change in fair value
\n
of a recognised asset or liability (portfolio of recognised assets or liabilities) or a firm commitment that could affect the income
\n
statement, changes in the fair value of the derivative are immediately recognised in the income statement together with
\n
changes in the fair value of the hedged item that are attributable to the hedged risk (in the same item in the income
\n
statement as the hedged item). However, accrued interest income from interest rate swaps is recognised in \u2018Net interest
\n
income\u2019. If the hedging derivative expires or is sold, terminated or exercised, or the hedge no longer meets the criteria for fair
\n
value hedge accounting, or the hedge designation is revoked, then hedge accounting is discontinued prospectively. Any
\n
adjustment up to the point of discontinuation that is made to a hedged item for which the effective interest method is used
\n
is amortised to the income statement as part of the recalculated effective interest rate of the item over its remaining life or
\n
recognised directly when the hedged item is derecognised.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Fair value hedges for a portfolio of interest-rate risk (macro hedging): the EU\u2019s macro hedging carve-out means that a group
\n
of derivatives (or proportions of them) can be viewed in combination and jointly designated as a hedging instrument, and
\n
removes some of the limitations on fair value hedge accounting relating to hedging core deposits and underhedging
\n
strategies. Under the EU carve-out, hedge accounting may be applied to core deposits and will be ineffective only when the
\n
revised estimate of the amount of cashflows in scheduled time buckets falls below the designated amount of that bucket.
\n
KBC uses interest rate swaps to hedge the interest rate risk for a portfolio of loans and for a portfolio of retail deposits.
\n
Interest rate swaps are measured at fair value, with fair-value changes being reported in the income statement. Accrued
\n
interest income from interest rate swaps is recognised in \u2018Net Interest Income\u2019. The hedged amount of loans is measured at
\n
fair value as well, with fair value changes being reported in the income statement. The fair value of the hedged amount is
\n
presented as a separate item on the assets or liabilities side of the balance sheet. If a hedge is ineffective, the cumulative
\n
fair value change in the hedged amount will be amortised to the income statement over the remaining lifetime of the hedged
\n
assets or will be immediately removed from the balance sheet if ineffectiveness is due to derecognition of the corresponding
\n
loans.
\n
\n
Hedge of net investments in foreign operations: when a derivative instrument or a non-derivative financial instrument is
\n
designated as the hedging instrument in a hedge of a net investment in a foreign operation having a different functional
\n
currency than the direct holding company of the foreign operation, the effective portion of changes in the fair value of the
\n
hedging instrument is recognised in the hedging reserve (investment in foreign operation) in OCI. Any ineffective portion of
\n
the changes in the fair value of the derivative is recognised immediately in the income statement. The amount recognised in
\n
OCI is reclassified to the income statement as a reclassification adjustment on disposal of the foreign operation (which
\n
includes a dividend distribution or capital decrease).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n\n

\n\n
Insurance contracts
\n
\n
General
\n
\n
The accounting policies for IFRS 4 (Insurance Contracts) apply to insurance contracts (including reinsurance contracts) that
\n
KBC issues and reinsurance contracts that it holds. They also apply to financial instruments with a discretionary participation
\n
feature held by KBC.
\n
A reinsurance contract is a type of insurance contract, given that all reinsurance contracts that transfer insurance risk are
\n
themselves insurance contracts.
\n
Some contracts that are accounted for as insurance contracts under local GAAP will no longer be considered insurance
\n
contracts under IFRS. Contracts that do not expose KBC to any insurance risk (e.g., pure investment without additional
\n
(insurance) benefits/cover) are treated as financial instruments, which can exist with or without a discretionary participation
\n
feature.
\n
Financial instruments without a discretionary participation feature and the deposit component of unit-linked insurance
\n
contracts will be recognised in accordance with deposit accounting principles, as they fall under the scope of IFRS 9.
\n
Deposit accounting applies to the deposit component of unit-linked insurance contracts (the insurance component is treated
\n
as an insurance contract according to IFRS 4).
\n
\n
KBC unbundles the components if both of the following conditions are met:
\n
\u2022 measurement of the deposit component is possible (including any embedded surrender options), i.e. without considering
\n
the insurance component;
\n
\u2022 the accounting policies do not otherwise require recognition of all the obligations and rights arising from deposit
\n
accounting.
\n
\n
Unbundling is prohibited if the deposit component cannot be measured separately.
\n
At KBC, insurance contracts other than unit-linked contracts are not unbundled into a deposit component and an insurance
\n
component. The insurance component of unit-linked contracts (see below), whether insurance contracts or investment
\n
contracts, is treated as an insurance contract. Unit-linked financial instruments without death benefits or a participation
\n
feature are classified as \u2018financial liabilities at fair value through profit or loss\u2019 (also referred to as deposit accounting) under
\n
IFRS 9 and are consequently measured at fair value.
\n
A unit-linked financial instrument classified at fair value through profit or loss represents the liability towards the policyholder,
\n
whose consideration received (i.e. deposit) is invested in an investment fund. The latter is classified as a financial asset
\n
\u2018Mandatorily measured at fair value through profit or loss\u2019 (in the \u2018Investment contracts (insurance)\u2019 line in Note 4.1). The
\n
valuation of the financial assets relating to unit-linked contracts is reflected in the adjustments to the related liabilities. Unit-
\n
linked contracts are policies whose value or return is determined based on investments or an index, and where the
\n
policyholder bears the risk.
\n
Changes in fair value (assets and liabilities), including any component that relates to changes in foreign exchange rates, are
\n
recognised in the income statement under \u2018Net result from financial instrument at fair value through profit or loss\u2019. The unit
\n
value is considered to be the fair value. Only the earned management fees and commissions are recognised using margin
\n
deposit accounting principles under \u2018Net fee and commission income\u2019 in the income statement.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Financial instruments with a discretionary participation and the insurance component of unit-linked contracts are treated as
\n
insurance contracts under IFRS 4. On the balance sheet date, the liabilities resulting from these financial instruments or
\n
insurance contracts are subjected to the liability adequacy test to see if they are adequate. If the carrying value of these
\n
liabilities is lower than their estimated future discounted cashflows, the deficiency will be recognised in the income statement
\n
against an increase in the corresponding liability.
\n
\n
A reinsurance asset is impaired if and only if:
\n
\u2022 there is objective evidence that, as a result of an event occurring after initial recognition of the reinsurance asset, KBC
\n
might not receive all amounts due under the terms of the contract;
\n
\u2022 that event has a reliably measurable impact on the amounts that KBC will receive from the reinsurer. If a reinsurance asset
\n
is impaired, KBC will reduce its carrying value accordingly and recognise that impairment loss in the income statement.
\n
\n
When IFRS 4 was adopted, KBC decided to follow its then local GAAP practices and did not introduce any of the following:
\n
\u2022 measurement of insurance liabilities on an undiscounted basis;
\n
\u2022 non-uniform accounting policies for the insurance contracts of subsidiaries. If these accounting policies are not uniform, an
\n
insurer may change them if the change does not make them more divergent and provided the other requirements of IFRS
\n
4 (Insurance Contracts) are met.
\n
\n
KBC believes that it applies sufficient prudence in the measurement of its insurance contracts. KBC does not recognise any
\n
provisions for possible future claims as a liability if those claims arise under insurance contracts that are not in existence at
\n
the reporting date, such as catastrophe provisions and equalisation provisions.
\n
\n
KBC removes an insurance liability (or part of an insurance liability) from the balance sheet if and only if it is extinguished, i.e.
\n
when the obligation specified in the contract is discharged or cancelled or expires.
\n
\n
Reinsurance assets are not offset against the related insurance liabilities, nor will income or expense from reinsurance
\n
contracts be offset against expense or income from the related insurance contracts.
\n
\n\n
Technical provisions \u2013 insurance contracts
\n
\n
The technical provisions comprise the estimates at balance sheet date of the liabilities of the company towards insured
\n
persons, beneficiaries and policyholders, including the translation differences on the technical provisions denominated in a
\n
foreign currency.
\n
\n
Provision for unearned premiums and unexpired risk (Non-life)
\n
\n
Provision for unearned premiums (Non-life)
\n
This provision comprises the portion of gross premiums to be allocated to a subsequent period in order to be able to cover
\n
claims, administrative costs and management costs of investments relating to the underlying policies. For the primary
\n
business, the provision for unearned premiums is in principle calculated separately for each contract on a daily basis, based
\n
on the gross premiums. For reinsurance business received, the provision for unearned premiums is calculated for each
\n
contract separately. It is based on information communicated by the ceding undertaking, supplemented by the company\u2019s
\n
own past experience of how risks change over time.
\n
\n
Provision for unexpired risk (Non-life)
\n
This item is an additional provision to supplement the provision for unearned premiums. It is set aside when the estimated
\n
total amount of claims and administrative costs relating to current contracts is expected to be higher in the following period
\n
than total unearned premiums and premiums receivable. For reinsurance business received, the contractual stipulations are
\n
examined and, where appropriate, the underlying provision restated.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n\n

\n\n
Life insurance provisions
\n
\n
This provision relates exclusively to life insurance activities, with the exception of the unit-linked life business. It comprises the
\n
actuarially estimated value of KBC\u2019s liabilities and the profit share already awarded, less the actuarially estimated value of
\n
the liabilities of the policyholders. The acquisition costs are not deducted from the provision.
\n
This item also includes the provision for unearned premiums and unexpired risk, the ageing provision, the provisions for
\n
annuities payable but not yet due (including internal claims settlement costs) for supplementary life insurance and the
\n
provisions for retirement and survivorship annuities.
\n
Valuation according to the prospective method is applied to (i) the provision for conventional non-unit-linked life insurance,
\n
(ii) universal non-unit-linked life insurance policies offering a guaranteed rate of interest on future premium payments, and
\n
(iii) the provision for non-statutory benefits for employees in respect of current annuities.
\n
Valuation according to the retrospective method is applied to the provisions for modern non-unit-linked universal life
\n
insurance and to the provision for non-statutory benefits for employees in respect of new supplementary premium payments.
\n
The provision is calculated separately for every insurance contract.
\n
\n
Provision for claims outstanding
\n
\n
For claims reported, the provision is measured separately in each case, taking into account the known facts in the claims file,
\n
on the basis of the amounts still due to the injured parties or beneficiaries, plus external costs of settling claims. Where
\n
benefits have to be paid in the form of an annuity, the amounts to be set aside for that purpose are calculated using
\n
recognised actuarial methods.
\n
For \u2018claims incurred but not reported\u2019 at balance sheet date, an IBNR (Incurred But Not Reported) provision is set aside. In the
\n
primary business, this IBNR provision is based on a lump sum per class of insurance depending upon past experience and the
\n
trend in the insured portfolio. For extraordinary events, additional amounts are added to the IBNR provision.
\n
For \u2018claims incurred but not enough reserved\u2019 at balance sheet date, an IBNER (Incurred But Not Enough Reserved) provision
\n
is set aside if the adequacy procedures demonstrate that the other claims provisions are insufficient to meet future liabilities.
\n
This provision contains amounts for claims which have already been reported but which, for technical reasons, could not yet
\n
be recorded in the claims file.
\n
A provision for the internal cost of settling claims is calculated at a percentage that is based on past experience.
\n
Additional provisions are also constituted as required by law (according to the Royal Decree of 17 November 1994 on the
\n
annual accounts of insurance undertakings), such as supplementary workmen\u2019s compensation provisions in Belgium.
\n

\n\n

\n\n

\n\n
\n\n
Leasing
\n
\n
All leases are required to be classified as either finance leases or operating leases. The classification under IFRS 16 is based
\n
on the extent to which risk and rewards incidental to ownership of leased assets lie with the lessor or the lessee. A finance
\n
lease transfers substantially all the risks and rewards incidental to ownership of an asset.
\n
This classification is crucial for positions as a lessor, but less important for positions as a lessee, since both classifications
\n
result in similar recognition and measurement of the lease on the balance sheet and in the income statement.
\n

\n\n
\n\n

\n\n
Equity
\n
\n
Equity represents the residual interest in KBC\u2019s total assets after deduction of all its liabilities (referred to as \u2018net assets\u2019) and
\n
encompasses all shares issued by KBC, reserves attributable to the holders of the shares and minority interests.
\n
\n
KBC classifies all issued financial instruments as equity or as a financial liability based on the substance of the contractual
\n
arrangements. The critical feature that distinguishes a financial liability from a share is whether KBC has an unconditional
\n
right to avoid delivering cash or another financial asset to settle a contractual obligation.
\n
Minority interests represent the equity in a subsidiary that is not attributable to the holders of KBC shares. When the
\n
proportion of the equity held by the minority interests changes, KBC adjusts the carrying value of the controlling and minority
\n
interests to reflect changes in their relative interests in the consolidated companies. KBC recognises in equity any difference
\n
between the amount by which the minority interests are adjusted and the fair value of the consideration paid or received,
\n
and allocates it to its controlling stake.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n

\n
Employee benefits
\n
\n\n

\n\n
Short-term employee benefits
\n
\n
Short-term employee benefits, such as salaries, paid absences, performance-related cash awards and social security
\n
contributions, are recognised over the period in which the employees provide the corresponding services. The related
\n
expenses are presented in the income statement as \u2018Operating expenses\u2019 under the \u2018Staff expenses\u2019 heading.
\n

\n\n

\n\n
\n
Post-employment benefits
\n
\n
KBC offers its employees\u2019 pension schemes in the form of defined contribution or defined benefit plans. Under the defined
\n
contribution plans, KBC\u2019s statutory or constructive obligation is limited to the amount that it agrees to contribute to the fund.
\n
The amount of the post-employment benefit to be received by the employee is determined by the amount of the
\n
contributions paid by KBC and the employee him or herself into the post-employment benefit plan, as well as by the
\n
investment returns arising from those contributions. The actuarial risk is borne by the employee.
\n
Conversely, under the defined benefit plans, KBC\u2019s obligation is to provide the agreed benefits to current and former
\n
employees and, in substance, the actuarial risk and investment risk fall on KBC. This means that if, from an actuarial or
\n
investment viewpoint, things turn out worse than expected, KBC\u2019s obligation may be increased.
\n
In Belgium, defined contribution plans have a legally guaranteed minimum return and the actual return can be lower than
\n
the legally required return. In addition, these plans have defined benefit plan features and KBC treats them as defined benefit
\n
plans.
\n
Liabilities under the defined benefit plans and the Belgian defined contribution plans (or pension liabilities) are included under
\n
\u2018Other liabilities\u2019 and relate to the obligations for retirement and survivor\u2019s pensions, early retirement benefits and similar
\n
pensions and annuities.
\n
The pension obligations for employees under the defined benefit plans are calculated using the projected-unit-credit
\n
method, with each period of service granting additional entitlement to pension benefits.
\n
Actuarial valuations are performed every reporting period. The defined benefit liabilities are discounted using rates
\n
equivalent to the yields on high-quality corporate bonds that are denominated in the currency in which the benefits will be
\n
paid and that have a maturity similar to the related pension liabilities.
\n\n
Changes in the net defined benefit liability/asset, apart from cash movements, are grouped into three main categories and
\n
recognised in operating expenses (service costs), interest expenses (net interest costs) and other comprehensive income
\n
(remeasurements).
\n

\n\n

\n\n

\n\n
\n\n

\n\n
Net fee and commission income
\n
\n
Most net fee and commission income falls under the scope of IFRS 15 (Revenue from Contracts with Customers), as it relates
\n
to the services that KBC provides to its clients and is outside the scope of other IFRS standards. For the recognition of revenue,
\n
KBC identifies the contract and defines the promises (performance obligations) in the transaction. Revenue is recognised only
\n
when KBC has satisfied the performance obligation.
\n
The revenue presented under \u2018Securities and asset management\u2019 falls under the scope of IFRS 15 and, in principle, entails
\n
KBC keeping assets in a trust for the beneficiary (\u2018fund\u2019) and being responsible for investing the amounts received from clients
\n
to their benefit. These transactions are straightforward, because KBC provides a series of distinct services which clients use
\n
at the same time when receiving the benefits. In return, KBC receives a monthly or quarterly management fee, which is
\n
calculated as a fixed percentage of the net asset value, or a subscription fee retained from the beneficiary. The fees do not
\n
include a variable component.
\n
Revenue reported as \u2018Margin on life insurance investment contracts without DPF\u2019 represents the amount realised on
\n
investment contracts without a discretionary participation feature, i.e. a fixed percentage or fixed amount is withheld from
\n
the client\u2019s payments, enabling the insurance company to cover its expenses.
\n
Payment services, where KBC charges clients for certain current-account transactions, domestic or foreign payments,
\n
payment services provided through ATMs, etc., are usually settled when the actual transaction is carried out, enabling the
\n
relevant fee to be recognised directly at that time.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n

\n\n
Government grants
\n
\n
Government grants are recognised when there is a reasonable assurance that the grant will be received and the conditions
\n
attached to it will be met. The grants are recognised in the income statement on a systematic basis to match the way that
\n
KBC recognises the expenses for which the grants are intended to compensate.
\n

\n\n
\n\n

\n\n
Levies
\n
\n
Public authorities can impose various levies on KBC. The size of the levies can depend on the amount of revenue (mainly
\n
interest income) generated by KBC, the amount of deposits accepted from clients, and the total balance sheet volume,
\n
including corrections based on certain, specific ratios. In accordance with IFRIC 21, levies are recognised when the obligating
\n
event that gives rise to recognition of the liability has occurred as stated in the relevant legislation. Depending on the
\n
obligating event, levies can be recognised at a single point in time or over time. Most of the levies imposed on KBC have to
\n
be recognised at a single point in time, which is mainly the beginning of the financial year. KBC recognises levies under
\n
\u2018Operating expenses\u2019.
\n

\n\n

\n\n
\n\n

\n
Income tax
\n
\n
Income tax consists of three items, namely taxes paid/payable over the reporting period, underprovisioning/overprovisioning
\n
in previous years, and changes in deferred tax assets/deferred tax liabilities. It is accounted for either in the income
\n
statement or in other comprehensive income, depending on where the items that triggered the tax are recorded. Income
\n
taxes that are initially accounted for in other comprehensive income and that relate to gains or losses that are subsequently
\n
recognised in the income statement are recycled to the income statement in the same period in which that item is accounted
\n
for in the income statement.
\n
\n
Deferred and current tax assets and liabilities are offset when there is both a legal right of offset and the intention to settle
\n
on a net basis or to realise the asset and settle the liability simultaneously.
\n
\n
Current tax assets/liabilities
\n
\n
Current tax for the period is measured at the amount expected to be paid to or recovered from the tax authorities, using the
\n
rates of tax in effect during the reporting period.
\n
\n\n
Deferred tax assets/liabilities
\n
\n
Deferred tax liabilities are recognised for all taxable temporary differences between the carrying value of an asset or liability
\n
and its tax base. They are measured using the tax rates that are substantively enacted at the reporting date and expected
\n
to be in effect on realisation of the assets or settlement of the liabilities to which they relate and that reflect the tax
\n
consequences following from the manner in which the entity expects to recover or settle the carrying value of the underlying
\n
asset or liability at the balance sheet date.
\n
Deferred tax assets are recognised for all deductible temporary differences between the carrying value of assets and
\n
liabilities and their tax base, as well as for the carry forward of unused tax losses and unused tax credits, to the extent that
\n
it is probable that taxable profit will be available against which the deductible temporary differences can be utilised. KBC
\n
calculates deferred tax assets for carry forward unused tax losses. When estimating the period over which tax losses can be
\n
set off against future taxable profits, KBC uses projections for a period of eight to ten years.
\n
Deferred tax assets/liabilities that relate to business combinations are recorded directly in goodwill.
\n
Deferred tax assets/liabilities are not discounted.
\n

\n\n

\n\n
\n\n

\n\n

\n\n
Property and equipment
\n
\n
Property and equipment are recognised initially at cost (including directly allocable acquisition costs). KBC subsequently
\n
measures property and equipment at the initial cost less accumulated depreciation and impairment. The rates of
\n
depreciation are determined on the basis of the estimated useful life of the assets and are applied according to the straight-
\n
line method from the moment the assets are available for use. Property and equipment are derecognised upon disposal or
\n
when the relevant asset is permanently withdrawn from use and no future economic benefits are expected from its disposal.
\n
Gains or losses upon derecognition are recognised in the income statement in the period in which derecognition occurs.
\n
Property and equipment are subject to impairment testing when there is an indication that the asset might have been
\n
impaired.
\n
Depreciation charges, impairment losses and gains or losses on disposal are recognised under \u2018Operating expenses\u2019 in the
\n
income statement, with the exception of assets that are leased under operating leases (KBC as a lessor), for which the costs
\n
are recognised in \u2018Other net income\u2019. Where a disposal falls within the definition of a discontinued operation, the net results
\n
are reported in a single line in the income statement (see \u2018Discontinued operations\u2019 below).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n\n
Investment property
\n
\n
Investment property is defined as a property built, purchased or acquired by KBC under a finance lease and is held to earn
\n
rentals or for the purpose of capital appreciation rather than being used by KBC for the provision of services or for
\n
administrative purposes.
\n
Investment property is initially recognised at cost (including directly attributable costs). KBC subsequently measures it at the
\n
initial cost less accumulated depreciation and impairment.
\n
The depreciation charge is recognised under \u2018Other net income\u2019 in the income statement.
\n

\n\n

\n\n
\n\n

\n\n

\n\n

\n\n

\n\n

\n
Intangible assets
\n
\n
Intangible assets include goodwill, software developed in-house, software developed externally and other intangible assets.
\n
Intangible assets can be (i) acquired as part of a business combination transaction (see \u2018Business combinations and goodwill\u2019
\n
below), (ii) acquired separately or (iii) developed internally.
\n
\n
Separately acquired intangible assets (mainly software developed externally) are initially recognised at cost. Internally
\n
developed intangible assets (mainly software developed in-house) are recognised only if they arise from development and
\n
KBC can demonstrate:
\n
\u2022 the technical feasibility of completing them;
\n
\u2022 an intention to complete for use or sale;
\n
\u2022 an ability to use or sell them;
\n
\u2022 how the intangible assets will generate future economic benefits;
\n
\u2022 the availability of adequate technical, financial and other resources to complete the development and to use or sell the
\n
intangible assets;
\n
\u2022 reliable measurement of the expenditure attributable to the intangible assets during their development.
\n
\n
Internally generated intangible assets are initially measured at the development costs directly attributable to the design and
\n
testing of the unique software controlled by KBC.
\n
Directly attributable costs capitalised as part of the software developed in-house include software development employee
\n
costs and directly attributable overheads.
\n
Research expenses, other development expenditure, costs associated with maintaining software and investment projects
\n
(large-scale projects introducing or replacing an important business objective or model) that do not meet the recognition
\n
criteria are recognised as an expense in the period they are incurred.
\n
\n\n
Intangible assets are subsequently carried at cost less accumulated amortisation and accumulated impairment losses.
\n
Amortisation begins when the asset is available for use as intended by management. Software is amortised as follows:
\n
\u2022 System software (initial purchased software forming an integral part with hardware) is amortised at the same rate as
\n
hardware.
\n
\u2022 Standard software and customised software developed by a third party or developed in-house are amortised over five
\n
years according to the straight-line method from the time the software is available for use.
\n
\u2022 Core systems (typically including deposit account processing, loan and credit processing, interfaces to the general ledger
\n
and reporting tools) are amortised over eight years according to the straight-line method.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n\n

\n\n

\n\n
Impairment of non-financial assets
\n
\n
When KBC prepares financial statements, it ensures that the carrying value of the non-financial asset does not exceed the
\n
amount that could be obtained from either using or selling it (\u2018recoverable amount\u2019). Property and equipment, investment
\n
property and software are subject to the impairment review only when there is objective evidence of impairment. Goodwill
\n
and intangible assets with an indefinite useful life are subject to impairment reviews at least annually and also reviewed for
\n
impairment indicators every quarter.
\n
Indications that an impairment loss is required may stem from either an internal source (e.g., the condition of the asset) or an
\n
external source (e.g., new technology or a significant decline in the asset\u2019s market value).
\n
When an impairment indicator is present, KBC reviews the asset\u2019s recoverable amount and the asset is impaired when its
\n
recoverable amount is lower than its carrying value at the reporting date. The recoverable amount is defined as the higher
\n
of the value in use and the fair value less cost to sell.
\n
Value in use is defined as the discounted future cashflows expected to be derived from an asset or a cash-generating unit.
\n
Impairment is borne at individual asset level, but when the individual asset does not generate cash inflows that are largely
\n
independent of those from other assets or groups of assets, the recoverable amount is determined for the so-called \u2018cash-
\n
generating unit\u2019 (CGU) to which the asset or group of assets belongs. In forming the CGUs, KBC applies its own judgement to
\n
define the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows
\n
from other assets or groups of assets. This process mainly applies to goodwill that has been recognised in relation to
\n
acquisitions.
\n
Impairment losses are recognised in the income statement for the period in which they occur. An impairment loss can be
\n
reversed if the condition that triggered it is no longer present, except for goodwill, which can never be reversed. Impairment
\n
gains are recognised in the income statement for the period in which they occur.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n\n
Provisions, contingent liabilities and contingent assets
\n
\n
Provisions are recognised on the reporting date if and only if the following criteria are met:
\n
\u2022 there is a present obligation (legal or constructive) due to a past event;
\n
\u2022 it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation;
\n
\u2022 a reliable estimate can be made of the amount of the obligation.
\n
\n
The amount recognised as a provision is the best estimate of the expenditure required to settle the obligation at balance
\n
sheet date. When the effect of time is material, the amount recognised as a provision is the net present value of the best
\n
estimate.
\n
Due to its inherent nature, a provision requires management judgement regarding the amount and timing of probable future
\n
economic outflows.
\n

\n\n

\n\n
\n\n
Consolidated financial statements / interim financial statements
\n
\n
All material entities (including structured entities) over which KBC exercises direct or indirect control as defined in IFRS 10 are
\n
consolidated according to the method of full consolidation. Changes in ownership interests (that do not result in a loss of
\n
control) are accounted for as equity transactions. They do not affect goodwill or profit or loss.
\n
\n
Subsidiaries that are not included in the consolidated financial statements because of immateriality are classified as equity
\n
instruments at fair value through other comprehensive income, with all fair value changes being reported in other
\n
comprehensive income, except for dividend income, which is recognised in the income statement. Material companies over
\n
which joint control is directly or indirectly exercised and material investments in associates (companies over which KBC has
\n
significant influence), are all accounted for using the equity method.
\n
\n
Consolidation threshold: subsidiaries are effectively included in the consolidated financial statements using the full
\n
consolidation method if at least two of the following materiality criteria are exceeded:
\n
\u2022 Group share in equity is 2 500 000 euros;
\n
\u2022 Group share in the result is 1 000 000 euros (absolute value);
\n
\u2022 Group share in the balance sheet total is 100 000 000 euros.
\n
\n
In order to prevent too many entities from being excluded, KBC checks that the combined balance sheet total of the entities
\n
excluded from consolidation does not amount to more than 1% of the consolidated balance sheet total.
\n

\n\n
\n\n

\n

\n
Business combinations and goodwill
\n
\n\n

\n\n
Business combinations are accounted for using the acquisition method. Under this method, the cost of an acquisition is
\n
measured as the aggregate of the consideration transferred (measured at acquisition-date fair value) and the amount of
\n
any minority interests in the acquired entity. For measurement of the minority interests, KBC can decide for each business
\n
combination separately whether to measure the minority interest at fair value or as their proportionate share of the acquired
\n
entity\u2019s net identifiable assets. The way the minority interest is measured on the acquisition date will have an impact on
\n
purchase accounting as a result of the determination of goodwill.
\n

\n\n

\n\n
\n\n

\n

\n\n
Goodwill is the excess of the cost of the acquisition over the acquirer\u2019s interest in the fair value of the identifiable assets
\n
acquired and liabilities and contingent liabilities assumed at the date of acquisition. In order to complete the acquisition
\n
accounting and determine the goodwill item, KBC applies a measurement period of 12 months. The classification of the
\n
financial assets acquired and financial liabilities assumed in the business combination is based on the facts and
\n
circumstances existing at the acquisition date (except for lease and insurance contracts, which are classified on the basis of
\n
the contractual terms and other factors at the inception of the relevant contract).
\n
Goodwill is presented under \u2018Goodwill and other intangible assets\u2019 and is carried at cost less impairment losses. Goodwill is
\n
not amortised, but is tested for impairment at least once a year or when there is objective evidence (external or internal) that
\n
it should be impaired. If the acquisition accounting is not complete because the 12-month measurement period has not
\n
elapsed, the goodwill is not considered as final and is only tested if there is objective evidence that the provisional goodwill
\n
is impaired.
\n
For the purpose of testing goodwill for impairment, it is allocated to each of KBC\u2019s cash-generating units that are expected
\n
to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquired entity are
\n
assigned to those units. An impairment loss is recognised if the carrying value of the cash-generating unit to which the
\n
goodwill belongs exceeds its recoverable amount. Impairment losses on goodwill cannot be reversed.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n

\n\n

\n\n
Effects of changes in foreign exchange rates
\n
\n
KBC\u2019s functional and presentation currency is the euro. Monetary assets and liabilities denominated in foreign currency are
\n
translated into the functional currency at the spot rate on the balance sheet date. Negative and positive valuation
\n
differences, except for those relating to the funding of equity instruments and investments of consolidated companies in a
\n
foreign currency, are recognised in the income statement. Non-monetary items measured at historical cost are translated
\n
into the functional currency at the historical exchange rate that existed on the transaction date. Non-monetary items carried
\n
at fair value are translated at the spot rate on the date the fair value was determined. Translation differences are reported
\n
together with changes in fair value. Income and expense items in foreign currency are taken to the income statement at the
\n
exchange rate prevailing when they were recognised.
\n
\n
Valuation differences are accounted for either in the income statement or in other comprehensive income. Valuation
\n
differences that are initially accounted for in other comprehensive income and that relate to gains or losses that are
\n
subsequently recognised in the income statement are recycled to the income statement in the same period in which that
\n
item is accounted for in the income statement. The balance sheets of foreign subsidiaries are translated into the presentation
\n
currency at the spot rate on the reporting date (except for equity, which is translated at the historical rate). The income
\n
statement is translated at the average rate for the financial year as a best estimate of the exchange rate on the transaction
\n
date.
\n

\n\n

\n\n
\n\n
Related-party transactions
\n
\n
A related party to KBC is either a party over which KBC has control or significant influence or a party that has control or
\n
significant influence over KBC. KBC defines its related parties as:
\n
\u2022 KBC subsidiaries, KBC associates and joint ventures, KBC Ancora, Cera and MRBB;
\n
\u2022 KBC key management staff (i.e. the Board of Directors and the Executive Committee of KBC Group NV).
\n
\n
Transactions with related parties must occur at arm\u2019s length.
\n

\n\n
\n\n

\n

\n
Non-current assets held for sale and disposal groups, liabilities associated with disposal groups and discontinued
\n
operations
\n
\n\n
Non-current assets held for sale and disposal groups, liabilities associated with disposal groups
\n
\n
Non-current assets or groups of assets and liabilities held for sale are those where the carrying value will be recovered by
\n
KBC through a sale transaction, which is expected to qualify as a sale within a year, rather than through continued use.
\n
Non-current assets and liabilities held for sale are reported separately from the other assets and liabilities in the balance
\n
sheet at the end of the reporting date.
\n

\n\n
\n\n
Discontinued operations
\n
\n
A discontinued operation refers to a part of KBC that has been disposed of or is classified as held for sale and:
\n
\u2022 represents a separate major line of business or geographical area of operations; or
\n
\u2022 is part of a single, coordinated plan to dispose of a separate major line of business or geographical area of operations; or
\n
\u2022 is a subsidiary acquired exclusively with a view to resale.
\n
\n
Results from discontinued operations are recognised separately in the income statement and in other comprehensive income
\n
and contain:
\n
\u2022 the post-tax profit or loss of discontinued operations; and
\n
\u2022 the post-tax gain or loss recognised on the measurement to fair value less the costs of the sale or disposal of the assets
\n
or group of assets.
\n

\n\n

\n\n
\n\n
Events after the reporting period
\n
\n
Events after the reporting date are defined as favourable or unfavourable events that occur between the reporting date and
\n
the date on which the financial statements are authorised for issue. There are two types of event after the reporting date:
\n
\u2022 those which provide evidence of conditions that existed on the reporting date (adjusting events);
\n
\u2022 those that are indicative of conditions that arose after the reporting date (non-adjusting events).
\n
\n
The impact of adjusting events has already been reflected in the financial position and financial performance for the current
\n
year. The impact and consequences of non-adjusting events are disclosed in the notes to the financial statements.
\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n\n
Main exchange rates used*
\n
\n
Exchange rate at 31-12-2022 Exchange rate average in 2022
\n
Change relative to
\n
Change relative to
\n
31-12-2021
\n
average in 2021
\n
\n
1 EUR = \u2026
\n
(positive: appreciation relative to EUR)
\n
1 EUR = \u2026
\n
(positive: appreciation relative to EUR)
\n
\u2026 currency
\n
(negative: depreciation relative to EUR)
\n
\u2026 currency
\n
(negative: depreciation relative to EUR)
\n
CZK
\n
24.116 3% 24.569 5%
\n
HUF
\n
400.87 -8% 391.79 -9%
\n
* Rounded figures.
\n

\n\n

\n\n
\n
\n
\n
\n\n
Note 1.3: Critical estimates and significant judgements
\n
\n
When preparing the consolidated financial statements and applying KBC\u2019s accounting policies, management is required to
\n
make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses.
\n
Some degree of uncertainty is inherent in almost all amounts reported. The estimates are based on the experience and
\n
assumptions that KBC\u2019s management believes are reasonable at the time the financial statements are being prepared.
\n
\n
Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods
\n
affected. Significant areas of estimation uncertainty, and critical judgements in applying accounting policies that have the
\n
most significant effect on the amounts recognised in the consolidated financial statements are found in, but not limited to,
\n
notes 1.4, 3.3, 3.7, 3.10, 4.2, 4.4\u20134.8, 5.2, 5.5\u20135.7, 5.9, 6.1 and 6.10.
\n
\n
See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n

\n\n
\n
\n\n

\n\n

\n\n
Note 1.4: Impact of the war in Ukraine and of the coronavirus crisis
\n
\n
\n
Overview
\n
In 2022, we fully reversed the reserves still outstanding (ECL) for the impact of the coronavirus crisis, totalling 289 million euros
\n
at year-end 2021 (see below). By contrast, we set aside a reserve for geopolitical and emerging risks of 429 million euros in
\n
2022 on the back of the Russian invasion of Ukraine and the associated direct and indirect economic consequences (see
\n
below).
\n
\n
\n
Impact of
\n
Impact of write-
\n
acquisition of
\n
ECL outstanding for coronavirus
\n
-
\n
Change in
\n
down of
\n
Reserve set aside
\n
Raiffeisenbank
\n
related, geopolitical and emerging
\n
coronavirus-
\n
coronavirus-
\n
for geopolitical
\n
Bulgaria (now
\n
Situation
\n
risks by country
\n
\n
Situation
\n
related ECL in
\n
related ECL in
\n
and emerging
\n
renamed KBC Bank
\n
at year-end
\n
(in millions of EUR)
\n
at year-end 2021
\n
2022
\n
2022
\n
risks in 2022
\n
Bulgaria) in 2022
\n
2022
\n
Belgium
\n
100 -100 - 145 - 145
\n
Czech Republic
\n
69 -67 -2 135 - 135
\n
Slovakia
\n
20 -18 -2 42 - 42
\n
Hungary
\n
37 -37 - 50 - 50
\n
Bulgaria
\n
12 -11 -1 23 16 39
\n
Other (including Ireland)
\n
51 -22 -29 18 0 18
\n
Total
\n
289 -255 -34 413 16 429
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
New reserve set aside for geopolitical and emerging risks
\n
The destabilisation of the global economy and surging commodity prices brought on by the war between Russia and Ukraine
\n
have exacerbated the inflationary shock initially caused by problems in the supply chains, tax incentives and the rapid post-
\n
pandemic reopening. The rising inflationary pressure and a tightening labour market increased the pressure on central banks
\n
to bring their monetary policy back to normal levels. The combination of higher, more persistent inflation and more stringent
\n
monetary policy is affecting growth expectations. A more detailed explanation of the macroeconomic environment is
\n
provided under \u2018In what environment do we operate?\u2019 in the \u2018Report of the Board of Directors\u2019 section. We have assessed
\n
the impact of the main macroeconomic and geopolitical risks on our loan portfolio in this regard. As a result, a reserve was
\n
set aside for geopolitical and emerging risks, which amounted to 429 million euros at year-end 2022 (with 223 million euros
\n
being provisioned in the first quarter, 45 million euros in the second quarter, 103 million euros in the third quarter and 42 million
\n
euros in the fourth quarter, as well as an additional amount of 16 million euros related to the acquisition of Raiffeisenbank
\n
Bulgaria, which has since been renamed KBC Bank Bulgaria). The calculation and composition of the reserve (recognised
\n
under \u2018Impairment\u2019) at year-end 2022 can be found in the table.
\n
Impairment
\n
recognised in the
\n
balance sheet
\n
Risk, situation at year-end 2022
\n
Background information
\n
(in millions of EUR)
\n
Direct group companies in
\n
None
\n
-
\n
Russia, Ukraine and Belarus
\n
\n
Direct exposure to Russia,
\n
The net exposure relating to KBC\u2019s transfer risk in respect of Russia, Ukraine and Belarus amounted
\n
29
\n
Ukraine and Belarus
\n
to 29 million euros at year-end 2022, owing chiefly to commercial exposure to Russian banks.
\n
Indirect impact of the conflict on
\n
We expect the conflict to have an impact, through various channels, on our corporate and SME
\n
39
\n
the loan portfolio
\n
\n
clients with important activities in Russia, Ukraine and Belarus and/or with a strong dependence on
\n
those markets for imports or exports (either directly or indirectly through a
\n
client or supplier) and/or
\n
with a specific vulnerability to disruptions in oil and/or gas supplies.
\n
\n
Our analysis shows that for 2.8 billion euros in \u2018Stage 1\u2019 positions, which are not (yet) included in the
\n
standard staging assessment, credit risk has incr
\n
eased considerably. The recalculation of ECL over
\n
the full remaining lifetime of those positions, instead of the 12
\n
-month horizon, resulted in an
\n
impairment of 39 million euros in 2022.
\n
Indirect impact ensuing from
\n
We have established that the following sub-segments in our portfolio are at risk:
\n
304
\n
other emerging risks
\n
\n
\u2022
\n
SMEs and other corporate entities in our client base active in economic sectors most affected
\n
by supply-chain problems and by rising commodity and energy prices, and who are already
\n
subject to a higher credit risk (for example, the automotive industry, chemicals and metals);
\n
\u2022
\n
Retail clients with a limited buffer to absorb the higher cost of living and/or to make higher
\n
repayments ensuing from rising interest rates.
\n
The analysis sho
\n
ws that for 11.3 billion euros in \u2018Stage 1\u2019 positions, which are not (yet) included in the
\n
standard staging assessment, credit risk has increased considerably
\n
. The recalculation of ECL over
\n
the full remaining lifetime of those positions, instead of 12 mont
\n
hs, resulted in an impairment of 304
\n
million euros in 2022.
\n
Impact of the macroeconomic
\n
The model-driven ECL for geopolitical and emerging risks came to 57 million euros in 2022. The
\n
57
\n
scenarios
\n
\n
probabilities applied to the base
\n
-case, optimistic and pessimistic macroeconomic scenarios were
\n
adjusted from 80%, 10% and 10% to 60%, 5% and 35%, respectively, creating an additional
\n
impairment of 57 million euros. More information on the scenarios is provided below.
\n
Acquisition of Raiffeisenbank
\n
The consolidation of the Bulgarian operations of Raiffeisenbank International implies an ECL of 16
\n
-
\n
Bulgaria
\n
\n
million euros (10 million for emerging risks and 6 million for the direct transfer risk), which does not
\n
affect the income statement. These amounts are already included in the previous rows of the table.
\n
Total at year-end 2022
\n
\n
429
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Impact of other measures
\n
\n
Surging energy prices and rising inflation have prompted initiatives aimed at supporting the purchasing power of families
\n
and the viability of companies. The governments in our core countries also expect the banking and insurance sector to
\n
support the economy:
\n
\u2022 In Hungary, the exceptional geopolitical and macroeconomic conditions indirectly translated into a modification loss of 63
\n
million euros in the mortgage loan and term loan portfolio (recognised in \u2018Impairment\u2019), mainly due to the extension of the
\n
interest cap regulation until 30 June 2023 and the expansion of the scope of loans protected by the interest cap. Moreover,
\n
in 2022 bank taxes (recognised in \u2018Operating expenses\u2019) in Hungary were adversely impacted by the inclusion of 10 million
\n
euros net (provisioned in the first quarter of 2022 and partly recovered in the fourth quarter of 2022) as a result of an
\n
extraordinary payment into the Deposit Guarantee Fund due to the revoking of the licence of Sberbank Hungary by the
\n
Hungarian National Bank in early March 2022, allowing the payment of compensation for clients\u2019 deposits of up to 100 000
\n
euros from the Deposit Guarantee Fund, and the booking of 78 million euros following the introduction of an additional
\n
sector tax for the banking and insurance sector.
\n
\u2022 In light of the energy crisis, private individuals in Belgium meeting specific conditions have been able to request a temporary
\n
suspension of principal repayments since 1 October 2022. This did not lead to a modification loss or any additional impact
\n
on the ECL, as interest payments are not suspended and the impact of the transfer to \u2018Stage 2\u2019 of clients who submitted
\n
an application was already included in the collective assessments described above. Furthermore, the deductibility of the
\n
bank tax will be partly abolished as from 2023 to increase the banking industry\u2019s solidarity contribution.
\n
\u2022 The government of the Czech Republic introduced a windfall tax, following which any excess profits will be taxed at 79%
\n
(19% standard business tax, 60% windfall tax), which will apply to major banks for the period 2023-2025.
\n
\n
Full reversal of the reserves set aside for the impact of the coronavirus crisis
\n
In 2022, we fully reversed the reserves still outstanding for the impact of the coronavirus crisis. This resulted in a decrease of
\n
289 million euros at year-end 2021 to 0 million euros at year-end 2022, including a reversal of 255 million euros through the
\n
income statement and the write-off of 34 million euros, due mainly to the sale of KBC Bank Ireland\u2019s non-performing loan
\n
portfolio (which did not affect the income statement). Please refer to the 2021 Annual Report, Note 1.4, for the calculation of
\n
coronavirus-related reserve at year-end 2021.
\n
We were able to fully reverse the reserve set aside for the impact of the coronavirus crisis, since the coronavirus-related risks
\n
still present in our loan portfolio are included in the regular impairment process based on common credit risk indicators
\n
(probability of default, overdue amounts and forbearance), as they are no longer concealed by the moratoria on loan
\n
repayments.
\n
\n
Overview of the impact of the coronavirus crisis and the war in Ukraine on our activities
\n
\n
The \u2018Report of the Board of Directors\u2019 section contains additional information on the impact of the coronavirus crisis and of
\n
the war in Ukraine on the activities and stakeholders of the group, concerning the following:
\n
\u2022 The macroeconomic context (see \u2018In what environment do we operate?\u2019 and \u2018Our business units\u2019)
\n
\u2022 Our clients (see \u2018The client is at the centre of our business culture\u2019)
\n
\u2022 Our employees (see \u2018Our employees, capital, network and relationships\u2019)
\n
\u2022 Our risk management (see \u2018How do we manage our risks?\u2019)
\n
\n
Overview of economic scenarios used
\n
Because of the economic uncertainty, we continue to work with three alternative scenarios: a base-case scenario, a more
\n
optimistic scenario and a more pessimistic scenario. The definition of each scenario reflects the latest developments
\n
regarding geopolitical and emerging risks and the economy, with the following probabilities assigned for year-end 2022: 60%
\n
for the base-case, 35% for the pessimistic and 5% for the optimistic scenario. The scenarios and probabilities applied are
\n
those used for the update at year-end 2022; obviously, the situation may have changed in the meantime.
\n
\n
Optimistic scenario
\n
(\u2018ceasefire\u2019 scenario)
\n
A long-term solution to the Russia-Ukraine
\n
conflict is on the horizon. The easing of certain
\n
sanctions by the West in the short term will
\n
mitigate the rise in energy and commodity prices,
\n
but policy (e.g., budgetary) remains consistently
\n
focused on the g
\n
reen transition and energy
\n
autonomy and the expansion of military capacity.
\n
Base-case scenario
\n
(\u2018mild recession' scenario)
\n
There will be no short-term solution to the Russia-
\n
Ukraine conflict. The West\u2019s sanctions will remain in
\n
effect for the foreseeable future. Although the rising
\n
energy and commodity
\n
prices are weighing on
\n
economic sentiment, no significant energy shortages
\n
are expected this or next winter. The negative
\n
impact on GDP growth is mitigated by supportive
\n
government policy. Monetary policy continues to
\n
normalise.
\n
Pessimistic scenario
\n
(\u2018deep recession\u2019 scenario)
\n
Further escalation of the Russia-Ukraine conflict
\n
will lead to further and stricter sanctions from the
\n
West, triggering further restrictions on Russia\u2019s
\n
energy and commodity exports, driving inflation
\n
even higher. Extreme shortages will lead to the
\n
rationing of en
\n
ergy and certain raw materials,
\n
\n
pushing the economy into a deep recession. The
\n
impact of the sharp deterioration of economic
\n
sentiment on GDP growth is partly offset by the
\n
highly supportive economic policy.
\n
\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n\n

\n\n
The following table gives the scenarios for three key indicators for each of our core countries for the coming years. After that,
\n
we take into account a gradual linear transition towards a stable situation.
\n
\n
Macroeconomic scenario \u2013 key indicators
\n
\n
\n
(used for situation at year-end 2022)
\n
\n
2022
\n
\n
\n
2023
\n
2024
\n
Scenario:
\n
\n
Optimistic Base case Pessimistic Optimistic Base case Pessimistic Optimistic Base case Pessimistic
\n
Real GDP growth
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Belgium
\n
3.1% 2.9% 2.6% 2.1% 0.2% -2.5% 1.9% 1.4% 0.9%
\n
Czech Republic
\n
2.5% 2.5% 2.2% 1.6% 0.8% -5.8% 3.7% 2.7% 1.0%
\n
Hungary
\n
5.9% 5.5% 4.8% 2.8% 0.0% -4.2% 3.8% 3.6% 2.4%
\n
Slovakia
\n
1.6% 1.4% 1.2% 1.2% 0.6% -5.4% 3.2% 2.8% 2.5%
\n
Bulgaria
\n
3.7% 2.8% 2.2% 3.0% 0.7% -2.5% 3.5% 3.5% 0.6%
\n
Unemployment rate
\n
\n
Belgium
\n
5.8% 6.0% 6.2% 5.6% 6.2% 6.8% 5.4% 6.0% 6.6%
\n
Czech Republic
\n
2.8% 2.8% 2.8% 2.7% 3.3% 6.0% 2.2% 2.9% 5.0%
\n
Hungary
\n
3.9% 4.1% 4.2% 3.8% 4.4% 6.5% 3.2% 3.8% 5.5%
\n
Slovakia
\n
6.2% 6.3% 8.0% 6.5% 7.0% 9.0% 6.3% 6.5% 8.0%
\n
Bulgaria
\n
4.3% 5.3% 6.2% 4.4% 6.0% 7.3% 4.3% 4.8% 6.4%
\n
House
\n
price index
\n
Belgium
\n
6.5% 5.0% 3.0% 4.0% 2.5% -3.0% 3.0% 2.0% -1.5%
\n
Czech Republic
\n
20.0% 17.5% 16.0% 5.0% 0.5% -5.0% 5.0% 2.5% -1.0%
\n
Hungary
\n
18.6% 16.0% 13.0% 10.0% 5.0% -3.0% 6.0% 3.5% 0.0%
\n
Slovakia
\n
18.0% 15.0% 12.0% 7.0% 2.5% -4.0% 5.0% 2.5% -1.0%
\n
Bulgaria
\n
13.0% 12.0% 8.0% 9.0% 7.0% -3.0% 4.0% 3.5% 0.0%
\n

\n\n

\n\n

\n\n
\n
\n
Note 1.5: Climate-related information
\n
\n
In line with the relevant ESMA recommendations, all notes and other sections in the Annual Report in which direct or indirect
\n
reference is made to the climate and climate-related risks are set out below.
\n
\n
In the \u2018Report of the Board of Directors\u2019:
\n
\u2022 See \u2018How do we create sustainable value?\u2019 in \u2018Our business model\u2019
\n
\u2022 See \u2018What are our main challenges?\u2019 in \u2018Our business model\u2019
\n
\u2022 See \u2018Our role in society\u2019 and \u2018Focus on the climate\u2019 (this section also sets out our climate targets and information on the EU
\n
Taxonomy) in \u2018Our strategy\u2019
\n
\u2022 See \u2018Our business units\u2019 for each country under \u2018Our role in society\u2019
\n
\u2022 See \u2018Climate-related and other ESG risks\u2019 in \u2018How do we manage our risks?\u2019
\n
\n
In the \u2018Consolidated financial statements\u2019 (in the notes below each table)
\n
\u2022 Note 3.7.1: Overview (insurance results)
\n
\u2022 Note 3.10: Impairment
\n
\u2022 Note 4.1: Financial assets and liabilities, breakdown by portfolio and product
\n
\u2022 Note 5.4: Property and equipment and investment property
\n
\u2022 Note 5.5: Goodwill and other intangible assets
\n
\u2022 Note 5.9: Retirement benefit obligations
\n
\u2022 Note 6.2: Leasing
\n

\n\n

\n\n

\n
2.0 Notes on segment reporting
\n
\n
\n\n

\n\n

\n
Note 2.1: Segment reporting based on the management structure
\n
\n
Detailed information on the group\u2019s management structure and the results per segment can be found in the \u2018Our business
\n
units\u2019 section (which has not been audited by the statutory auditor). Based on IFRS 8, KBC has identified the Executive
\n
Committee and Board of Directors as \u2018chief operating decision-makers\u2019, responsible for allocating the resources and
\n
assessing the performance of the different parts of the company. The operating segments are based on the internal financial
\n
reporting to those policy bodies and on the location of the company\u2019s activities, resulting in geographical segmentation.
\n
\n
The three operating segments are (essentially):
\n
\u2022 the Belgium Business Unit (all activities in Belgium);
\n
\u2022 the Czech Republic Business Unit (all activities in the Czech Republic);
\n
\u2022 the International Markets Business Unit (activities in Hungary, Slovakia and Bulgaria, reported together in accordance with
\n
IFRS 8.16). The situation for Ireland is described below and in Note 6.6.
\n
For reporting purposes, there is also a Group Centre (comprising the results of the holding company, items that have not
\n
been allocated to the other business units, and the results of companies to be divested).
\n
\n
Change with effect from 2022: the sale transactions for KBC Bank Ireland\u2019s loan assets and deposit book led us to transfer
\n
Ireland from the International Markets Business Unit to the Group Centre on 1 January 2022, without retroactive restatement
\n
of 2021. For the sake of comparison, however, Ireland is stated separately in the tables below (as part of the Group Centre in
\n
2022 and as part of the International Markets Business Unit in 2021).
\n
\n
Segment reporting
\n
\n
\u2022 The policy bodies analyse the performance of the segments based on a number of criteria, with the \u2018Result after tax\u2019 being
\n
the most important results indicator. The segment data is based entirely on IFRS data (with no adjustments).
\n
\u2022 In principle, we assign a group company in its entirety to one specific segment/business unit. Exceptions are only made for
\n
those items that cannot clearly be allocated to a specific segment, such as charges attached to the subordination of loans
\n
(such items are recognised under Group Centre).
\n
\u2022 We allocate the funding cost of participating interests to the Group Centre. Any funding cost in respect of leveraging at
\n
KBC Group NV level is also recognised under Group Centre.
\n
\u2022 Transactions among the different segments are reported at arm\u2019s length.
\n\n

\n\n

\n\n

\n
\u2022 We recognise \u2018Net interest income\u2019 in the segment information without dividing it up into \u2018Interest income\u2019 and \u2018Interest
\n
expense\u2019. This is permitted under IFRS because the bulk of the business units\u2019 income is in the form of interest, and
\n
management assesses and co-ordinates those business units primarily on the basis of net interest income.
\n

\n\n

\n\n

\n\n
\u2022 We do not provide any information on income from sales to external clients per group of products or services, since the
\n
information is prepared at consolidated level chiefly for each business unit, and not per client group or product group.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria (now renamed KBC Bank Bulgaria) in 2022 is provided in
\n
Note 6.6.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 2.2: Results by segment
\n
\n
(in millions of EUR)
\n
Belgium
\n
Business Unit
\n
Czech
\n
Republic
\n
Business Unit
\n
International
\n
Markets
\n
Business Unit
\n
Of which:
\n

\n

\n
Group Centre
\n
Of which:
\n
KBC Group
\n

\n
\n

\n
Hungary Slovakia Bulgaria
\n

\n
Ireland
\n

\n
INCOME STATEMENT FOR 2022
\n

\n

\n

\n

\n

\n

\n

\n

\n

\n

\n
Net interest income
\n
2 826 1 313 888
\n
424 235 229
\n
134
\n
240
\n
5 161
\n
Non
\n
-life insurance (before reinsurance) 488 208 174
\n
57 37 80
\n
11
\n
0
\n
881
\n

\n
Earned premiums 1 261 403 352 140 70 142 17 0 2 033
\n

\n
Technical charges -774 -195 -178 -83 -33 -62 -7 0 -1 153
\n
Life insurance (before
\n
reinsurance) -42 90 44
\n
11 13 20
\n
-1
\n
0
\n
92
\n

\n
Earned premiums 878 171 114 39 30 45 -1 0 1 163
\n

\n
Technical charges -920 -82 -70 -28 -17 -25 0 0 -1 071
\n
Ceded reinsurance result
\n
33 -9 -13
\n
-2 -3 -8
\n
-14
\n
0
\n
-2
\n
Dividend income
\n
54 1 1
\n
0 0 1
\n
4
\n
0
\n
59
\n
Net
\n
result from financial instruments at fair value through profit or loss 142 152 118
\n
77 41 1
\n
-7
\n
-3
\n
406
\n
Net realised result from debt instruments at fair value
\n
through OCI
\n
-2 -12 -6
\n
-5 0 0
\n
-3
\n
0
\n
-22
\n
Net fee and commission income
\n
1 265 213 376
\n
219 72 86
\n
-6
\n
-2
\n
1 847
\n
Other net income
\n
226 -174 -1
\n
-3 -3 5
\n
-10
\n
-8
\n
40
\n
TOTAL INC
\n
OME 4 989 1 784 1 582
\n
777 392 413
\n
108
\n
228
\n
8 463
\n
Operating expenses
\n
a
\n
-2 647 -927 -906
\n
-446 -253 -207
\n
-339
\n
-208
\n
-4 818
\n
Impairmen
\n
t -46 -61 -152
\n
-97 -21 -34
\n
-24
\n
-18
\n
-284
\n

\n
on financial assets at amortised cost and at fair value through OCI -35 -46 -78 -29 -19 -30 5 7 -154
\n
Share in results of associated companies and joint ventures
\n
-9 -1 0
\n
0 0 0
\n
0
\n
0
\n
-10
\n
RESULT BEFORE TAX
\n
2 287 794 524
\n
234 118 172
\n
-254
\n
3
\n
3 351
\n
Income tax expense
\n
-529 -115 -83
\n
-38 -28 -17
\n
119
\n
34
\n
-608
\n
Net post
\n
-tax result from discontinued operations 0 0 0
\n
0 0 0
\n
0
\n
0
\n
0
\n
RESULT AFTER TAX
\n
1 759 679 441
\n
195 90 155
\n
-135
\n
37
\n
2 743
\n
attri
\n
butable to minority interests 0 0 0
\n
0 0 0
\n
0
\n
0
\n
0
\n
attributable to equity holders of the parent
\n

\n

\n
1 759
\n

\n
679
\n

\n
441
\n

\n
195
\n

\n
90
\n

\n
155
\n

\n
-135
\n

\n
37
\n

\n
2 743
\n
a Of which non
\n
-cash expenses -58 -114 -89
\n
-40 -23 -26
\n
-120
\n
-31
\n
-381
\n

\n
Depreciation and amortisation of fixed assets -57 -114 -86 -38 -23 -24 -117 -26 -374
\n

\n
Other 0 0 -4 -2 0 -2 -3 -4 -7
\n
Acquisitions of non
\n
-current assets* 544 125 624 95
\n

\n
63
\n

\n
466
\n

\n
151 1
\n

\n
1 443
\n
* Non-current assets held for sale and disposal groups, investment property, property and equipment, investments in associated companies, and goodwill and other intangible assets.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
(in millions of EUR)
\n
Belgium
\n
Business Unit
\n
Czech
\n
Republic
\n
Business Unit
\n
International
\n
Markets
\n
Business Unit
\n
Of which:
\n
\n
\n
\n
Group Centre
\n
KBC Group
\n
\n
\n
\n
Hungary Slovakia Bulgaria Ireland
\n
\n
\n
INCOME STATEMENT FOR 2021
\n
\n
\n
\n
Net interest income
\n
2 533 972 962
\n
311 229 141 282
\n
-16 4 451
\n
Non
\n
-life insurance (before reinsurance) 460 142 160
\n
52 35 73 0
\n
19 782
\n
\n
Earned premiums 1 197 337 336 143 62 132 0 15 1 885
\n
\n
Technical charges -737 -194 -176 -91 -26 -59 0 4 -1 103
\n
Life insurance (before reinsurance)
\n
-55 61 39
\n
9 13 17 0
\n
-1 45
\n
\n
Earned premiums 903 182 111 40 31 39 0 -1 1 196
\n
\n
Technical charges -958 -121 -71 -31 -18 -23 0 0 -1 150
\n
Ceded reinsurance result
\n
36 17 -16
\n
-2 -7 -7 0
\n
-12 25
\n
Dividend income
\n
38 1 1
\n
0 0 0 0
\n
5 45
\n
Net result from financial instruments at fair
\n
value through profit or loss 224 95 23
\n
21 8 0 -5
\n
-198 145
\n
Net realised result from debt instruments at fair value
\n
through OCI
\n
2 -4 2
\n
2 0 0 0
\n
6 6
\n
Net fee and commission income
\n
1 320 214 305
\n
198 71 39 -3
\n
-3 1 836
\n
Other net income
\n
195 8 -7
\n
3 6 5 -21
\n
28 223
\n
TOTAL
\n
INCOME 4 754 1 506 1 469
\n
592 356 268 253
\n
-171 7 558
\n
Operating expenses
\n
a
\n
-2 436 -803 -1 048
\n
-335 -260 -140 -313
\n
-109 -4 396
\n
Impairmen
\n
t 303 126 -160
\n
9 15 -1 -183
\n
-7 261
\n
\n
on financial assets at amortised cost and at fair value through OCI 309 142 -110 22 16 2 -149 -7 334
\n
Share in results of associated companies and joint ventures
\n
-3 -3 0
\n
0 0 0 0
\n
0 -5
\n
RESULT BEFORE TAX
\n
2 618 827 262
\n
267 111 127 -243
\n
-288 3 418
\n
Income tax expense
\n
-621 -129 -135
\n
-40 -26 -13 -55
\n
81 -804
\n
Net post
\n
-tax result from discontinued operations 0 0 0
\n
0 0 0 0
\n
0 0
\n
RESULT AFTER TAX
\n
1 997 697 127
\n
226 85 114 -298
\n
-207 2 614
\n
attri
\n
butable to minority interests 0 0 0
\n
0 0 0 0
\n
0 0
\n
attributable to equity holders of the parent
\n
\n
\n
1 997
\n
\n
697
\n
\n
127
\n
\n
226
\n
\n
85
\n
\n
114
\n
\n
-298
\n
\n
-207
\n
\n
2 614
\n
a Of which non
\n
-cash expenses -48 -96 -119
\n
-38 -19 -16 -46
\n
-83 -346
\n
\n
Depreciation and amortisation of fixed assets -57 -97 -120 -38 -19 -16 -46 -82 -356
\n
\n
Other 10 1 1 1 0 0 0 -2 10
\n
Acquisitions of non
\n
-current assets* 456 183 252
\n
83 75 80 14
\n
110 1 001
\n
* Non-current assets held for sale and disposal groups, investment property, property and equipment, investments in associated companies, and goodwill and other intangible assets.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 2.3: Balance-sheet information by segment
\n
\n
The table below presents some of the main on-balance-sheet products by segment
\n
.
\n
\n
Czech
\n
Belgium
\n
Republic
\n
International
\n
Business
\n
Business
\n
Markets
\n
Group
\n
(in millions of EUR)
\n
Unit
\n
Unit
\n
Business Unit
\n
Of which:
\n
\n
\n
\n
Centre
\n
Of which:
\n
KBC Group
\n
\n
\n
\n
\n
Hungary Slovakia Bulgaria Ireland
\n
\n
Ireland
\n
\n
BALANCE SHEET
\n
\n
\n
\n
AT 31-12-2022
\n
Deposits from customers and
\n
155 971 51 069 29 962
\n
9 515 8 421 12 026 -
\n
15 743
\n
418
\n
252 746
\n
debt securities (excluding repos)
\n
\n
Demand deposits 72 947 25 321 23 367 7 303 5 697 10 368 - 418 418 122 053
\n
\n
Time deposits 8 896 9 211 4 291 1 291 1 414 1 586 - 0 0 22 397
\n
\n
Savings accounts 60 802 14 344 1 833 722 1 086 25 - 0 0 76 979
\n
\n
Debt securities 10 951 1 767 295 200 96 0 - 15 325 0 28 338
\n
\n
Other 2 375 427 176
\n
0
\n
\n
129
\n
\n
47
\n
- 0 0 2 978
\n
Loans and advances to
\n
customers (excluding reverse
\n
117 221 35 445 25 384
\n
5 879 10 796 8 709 -
\n
3
\n
3
\n
178 053
\n
repos)
\n
\n
Term loans 61 768 10 581 10 544 2 970 3 013 4 561 - 2 2 82 894
\n
\n
Mortgage loans 44 326 19 696 9 638 1 681 6 114 1 843 - 0 0 73 660
\n
\n
Other 11 127 5 168 5 202
\n
1 228
\n
\n
1 668
\n
\n
2 306
\n
- 1 1 21 498
\n
BALANCE SHEET
\n
\n
\n
\n
AT 31-12-2021
\n
Deposits from customers and
\n
-
\n
debt securities (excluding repos)
\n
142 282
\n
46 239
\n
24 652
\n
9 759
\n
7 696
\n
6 257
\n
940
\n
12 920
\n
226 093
\n
\n
Demand deposits
\n
64 458
\n
28 042
\n
19 598
\n
8 137
\n
5 443
\n
5 077
\n
940
\n
0
\n
-
\n
112 097
\n
\n
Time deposits
\n
4 784
\n
2 123
\n
2 281
\n
445
\n
656
\n
1 180
\n
0
\n
0
\n
-
\n
9 187
\n
\n
Savings accounts
\n
58 279
\n
14 226
\n
2 295
\n
977
\n
1 319
\n
0
\n
0
\n
0
\n
-
\n
74 801
\n
\n
Debt securities
\n
12 003
\n
1 376
\n
318
\n
200
\n
118
\n
0
\n
0
\n
12 920
\n
-
\n
26 617
\n
\n
Other
\n
2 758
\n
473
\n
160
\n
0
\n
160
\n
0
\n
0
\n
0
\n
-
\n
3 391
\n
Loans and advances to
\n
customers (excluding reverse
\n
-
\n
repos)
\n
108 251
\n
32 671
\n
18 805
\n
5 413
\n
9 417
\n
3 973
\n
3
\n
0
\n
\n
159 728
\n
\n
Term loans
\n
56 785
\n
9 609
\n
6 604
\n
2 409
\n
2 775
\n
1 418
\n
2
\n
0
\n
-
\n
72 998
\n
\n
Mortgage loans
\n
41 561
\n
18 303
\n
7 800
\n
1 812
\n
5 117
\n
870
\n
0
\n
0
\n
-
\n
67 665
\n
\n
Other
\n
9 905
\n
4 758
\n
4 402
\n
1 191
\n
1 524
\n
1 685
\n
1
\n
0
\n
-
\n
19 065
\n
\n
\u2022 The limited amounts for Ireland in 2021 and 2022 relate to the shift to the \u2018Non-current assets held for sale and
\n
disposal groups\u2019
\n
and \u2018Liabilities associated with disposal groups\u2019 balance sheet items due to the sale transactions (see Notes 5.11 and 6.6).
\n
\n
\u2022 The growth for Bulgaria in 2022 related chiefly to the acquisition of Raiffeisenbank Bulgaria; see Note 6.6 for more information.
\n
\n

\n\n

\n\n

\n\n

\n

\n
3.0 Notes to the income statement
\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
\n
Note 3.1: Net interest income
\n
(in millions of EUR)
\n
2022
\n
2021
\n
Total
\n
5 161 4 451
\n
Interest income
\n
11 226 6 320
\n
Interest income on financial instruments calculated using the effective interest rate
\n
method
\n
\n
Financial assets at amortised cost 7 973 4 797
\n
\n
Financial assets at fair value through OCI 251 286
\n
\n
Hedging derivatives 1 838 355
\n
\n
Financial liabilities (negative interest rate) 289 425
\n
\n
Other 130 25
\n
Interest income on
\n
other financial instruments
\n
\n
Financial assets MFVPL other than held for trading 35 24
\n
\n
Financial assets held for trading 710 407
\n
\n
Of which economic hedges 582 367
\n
\n
Other financial assets at fair value through profit or loss 0 0
\n
Interest expense
\n
-6 064 -1 869
\n
Interest expense on financial instruments calculated using the effective interest rate method
\n
\n
\n
Financial liabilities at amortised cost -2 320 -534
\n
\n
Hedging derivatives -1 972 -604
\n
\n
Financial assets (negative interest rate) -94 -253
\n
\n
Other -5 -7
\n
Interest expense on other financial instruments
\n
\n
\n
Financial liabilities held for trading -1 639 -459
\n
\n
Of which economic hedges -1 595 -414
\n
\n
Other financial liabilities at fair value through profit or loss -33 -11
\n
\n
Net interest expense relating to defined benefit plans -1 -1
\n
\n
\u2022 \u2018Financial liabilities (negative interest rate)\u2019 and \u2018Financial assets (negative interest rate)\u2019: these rates relate mainly to
\n
transactions with central banks, interbank and professional counterparties, corporate clients, and targeted long-term
\n
refinancing operations (TLTRO). More information on TLTRO can be found in Note 4.1.
\n
\u2022 The increase in interest income and interest expense from \u2018Hedging derivatives\u2019, \u2018Financial assets held for trading (of which
\n
economic hedges)\u2019 and \u2018Financial liabilities held for trading (of which economic hedges)\u2019 relates to a change in presentation of
\n
the negative interest on derivatives (at KBC Bank, in accordance with reporting on a solo basis (\u2018Schema A\u2019) under Belgian
\n
GAAP, resulting in an increase in both interest income and interest expense of 450 million euros in 2022), and to the overall
\n
increase in interest rates in 2022.
\n

\n
\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n\n
Note 3.2: Dividend income
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
59 45
\n
Equity
\n
instruments MFVPL other than held for trading 35 28
\n
Equity instruments held for trading
\n
10 11
\n
Equity instruments at FVOCI
\n
15 6
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Note 3.3: Net result from financial instruments at fair value through profit or loss
\n
\n
(in millions of EUR)
\n\n

\n\n
2022 2021
\n
Total
\n
406 145
\n
Total broken down by IFRS portfolio
\n
\n
Financial instruments MFVPL other than held for trading and overlay
\n
-1 949 1 172
\n
Trading instruments (including interest on non
\n
-ALM trading derivatives and fair value changes in all trading derivatives) 567 435
\n
Financial instruments to which the overlay approach is applied
\n
86 104
\n
\n
Gains or losses on sale
\n
\n
176 123
\n
\n
\n
Impairment
\n
-90
\n
-20
\n
\n
Other financial instruments at FVPL
\n
1 942 -1 186
\n
Foreign exchange trading
\n
-90 -272
\n
Fair value adjustments in hedge accounting
\n
-150 -108
\n
Hedge accounting broken down by type of hedge
\n
\n
Fair value micro hedges
\n
5 0
\n
\n
Changes in the fair value of the hedged items 624 -307
\n
\n
Changes in the fair value of the hedging derivatives -619 307
\n
Cashflow hedges
\n
-3 0
\n
\n
Changes in the fair value of the hedging derivatives, ineffective portion -3 0
\n
Hedges of net investments in foreign operations, ineffective portion
\n
0 0
\n
Portfolio hedge of interest rate risk
\n
0 5
\n
\n
Changes in the fair value of the hedged items -3 254 -815
\n
\n
Changes in the fair value of the hedging derivatives 3 254 820
\n
Discontinuation of hedge accounting for fair value hedges
\n
-75 -46
\n
Discontinuation of hedge accounting in the event of cashflow hedges
\n
-77 -66
\n
Total broken down by driver
\n
\n
Market value adjustments (MVA)
\n
80 67
\n
Change in the value of derivatives used for asset/liability management purposes
\n
-14 -197
\n
Financial instruments to which the overlay approach is applied and other
\n
96 113
\n
Dealing room
\n
245 162
\n

\n\n

\n\n
\n
\u2022 ALM hedging derivatives (recognised in hedge accounting): the interest component of these derivatives is recognised under
\n
\u2018Net interest income\u2019. Fair value changes in hedging derivatives, excluding those for which an effective cashflow hedge
\n
relationship exists, are recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019. Under fair
\n
value hedge accounting, changes in the fair value of hedged assets are also recognised under this heading, and offsetting
\n
takes place insofar as the hedge is effective. ALM hedging derivatives not recognised in hedge accounting (and therefore
\n
classified as trading instruments) are treated in the same way, except most of the related assets are not recognised at fair
\n
value (i.e. not marked-to-market).
\n
\u2022 Day 1 profit: when the transaction price in a non-active market differs from the fair value of other observable market
\n
transactions in the same instrument or from the fair value based on a valuation technique whose variables include only data
\n
from observable markets, the difference between the transaction price and the fair value (day 1 profit) is taken to profit or loss.
\n
If this is not the case (i.e. the variables do not include only data from observable markets), day 1 profit is reserved and is released
\n
in profit or loss during the life and until the maturity of the financial instrument. KBC has reserved these day 1 profits for limited
\n
amounts since January 2022.
\n
\u2022 Financial instruments to which the overlay approach is applied: see the comments under the consolidated income statement.
\n
\u2022 Foreign exchange trading includes all realised and unrealised foreign exchange results (when the monetary assets and liabilities
\n
are revalued), regardless of the IFRS portfolio, except for financial assets and liabilities measured at fair value through profit or
\n
loss, for which the revaluation is included in the fair value correction. Note that (unrealised) foreign exchange gains/losses on
\n
claims provisions (insurance) and on the financial instruments hedging the claims provisions are included under \u2018Technical
\n
charges\u2019. (Unrealised) foreign exchange gains/losses on the reinsurers\u2019 share of claims provisions and on the financial
\n
instruments hedging such provisions are included under \u2018Ceded reinsurance result\u2019.
\n
\u2022 Under IFRS 9, investment contracts (insurance) are included under \u2018Financial instruments mandatorily measured at fair value
\n
through profit or loss\u2019 in accordance with their \u2018managed on a FV basis\u2019 business model, whereas liabilities under investment
\n
contracts are included under \u2018Financial instruments at fair value through profit or loss\u2019. This resulted in amounts being offset
\n
against each other in \u2018Financial instruments MFVPL other than held for trading and overlay\u2019 and \u2018Financial instruments at fair
\n
value through profit or loss\u2019 in the above table (-1 893 million euros and +1 893 million euros in 2022 and +1 195 million euros and
\n
-1 195 million euros in 2021).
\n
\u2022 The effectiveness of the hedge is determined according to the following methods:
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
- For fair value micro hedging, we use the dollar offset method on a quarterly basis, with changes in the fair value of the hedged
\n
item offsetting changes in the fair value of the hedging instrument within a range of 80%\u2013125%.
\n
- For cashflow hedges, we compare the designated hedging instrument with a perfect hedge of the hedged cashflows on a
\n
prospective (by BPV measurement) and retrospective basis (by comparing the fair value of the designated hedging
\n
instrument with the perfect hedge). The effectiveness of both tests must fall within a range of 80%\u2013125%.
\n
- We use the rules set out in the European version of IAS 39 (carve-out) to assess the effectiveness of fair value hedges for a
\n
portfolio of interest rate risk. IFRS does not permit net positions to be reported as hedged items, but does allow hedging
\n
instruments to be designated as a hedge of a gross asset position (or a gross liabilities position, as the case may be).
\n
Specifically, we make sure that the volume of assets (or liabilities) in each maturity bucket is greater than the volume of
\n
hedging instruments allocated to the same bucket.
\n

\n\n
\n
Note 3.4: Net realised result from debt instruments at fair value through OCI
\n
\n
\u2022 In 2022, the realised result from debt instruments at fair value through OCI was impacted by a realised loss of -22 million euros
\n
on the sale of low-yielding bonds. The realised result from debt instruments at fair value through OCI was not material in 2021.
\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
\n\n

\n
Note 3.5: Net fee and commission income
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
1 847 1 836
\n
Fee and commission income
\n
2 804 2 692
\n
Fee and commission expense
\n
-957
\n
-856
\n
Breakdown by type
\n
\n
Asset management services
\n
1 175 1 196
\n
\n
Fee and commission income 1 230 1 274
\n
\n
Fee and commission expense -54 -78
\n
Banking services
\n
1 021 950
\n
\n
Fee and commission income 1 489 1 330
\n
\n
Fee and commission expense -468 -380
\n
Distribution
\n
-349 -311
\n
\n
Fee and commission income 85 87
\n
\n
Fee and commission expense -434 -398
\n
\n\n

\n\n
\u2022 The lion\u2019s share of the fees and commissions related to lending is recognised under \u2018Net interest income\u2019 (effective interest rate
\n
calculations).
\n

\n\n

\n\n
\u2022 The acquisition of Raiffeisenbank Bulgaria mainly impacted net commission income from banking services (see Note 6.6 for
\n
more details).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 3.6: Other net income
\n
\n
(in
\n
millions of EUR) 2022 2021
\n
Total
\n
40 223
\n
of which gains or losses on
\n
\n
\n
Sale of financial assets measured at amortised cost -79 6
\n
\n
Repurchase of financial liabilities measured at amortised cost 0 0
\n
Other, including:
\n
119 218
\n
\n
Income from operational leasing activities 106 98
\n
\n
Income from VAB Group 50 50
\n
\n
Gain on sale of KBC Tower in Antwerp - 13
\n
\n
Settlement of legal cases (excl. ICEC-Holding) 0
\n
\n
6
\n
\n
Provisioning for tracker mortgage review 0 -18
\n
\n
Badwill - 28
\n
\n
Gain on sale of real estate subsidiary (KBC Vastgoed Nederland) 68 -
\n
\n
Arbitration proceedings against ICEC-Holding -149 -
\n
\n
\u2022 In 2022, gains or losses on the sale of financial assets measured at amortised cost mainly concerned the realised loss on the
\n
exceptional sale of low-yielding bonds in Belgium, the Czech Republic and Hungary in particular.
\n
\u2022 Provisioning for the tracker mortgage review concerns KBC Bank Ireland, which \u2013 like all major lenders in Ireland at the time \u2013
\n
had offered tracker mortgages (i.e. between 2003 and 2008). In December 2015, the Central Bank of Ireland (CBI) requested
\n
the Irish banking industry, including KBC Bank Ireland, to undertake a broad and wide-ranging examination of tracker-
\n
mortgage related issues. The purpose of the tracker mortgage review was to identify cases where clients\u2019 contractual rights
\n
under the terms of their mortgage agreements had not been fully honoured and/or lenders had not fully complied with the
\n
various requirements and standards regarding disclosure and transparency for the client. In situations where client detriment
\n
was identified from this examination, KBC Bank Ireland had to provide appropriate redress and compensation in line with the
\n
CBI \u2018Principles for Redress\u2019. The bank recognised an additional provision of 18 million euros in 2021 in this respect.
\n
\u2022 Badwill: in 2021 we recognised 28 million euros in badwill for OTP Banka Slovensko (see Note 6.6 in the 2021 Annual Report).
\n
\u2022 Arbitration proceedings against ICEC-Holding, a.s. (significant adjusting post-balance-sheet event affecting the 2022 financial
\n
statements): on 17 February 2023, \u010cSOB in the Czech Republic received an arbitral award in the arbitration proceedings against
\n
ICEC-HOLDING, a.s. \u010cSOB was being sued in the arbitration proceedings as the legal successor of Investi\u010dn\u00ed a po\u0161tovn\u00ed banka
\n
(IPB), whose business activities were acquired by \u010cSOB in 2000. The proceedings were initiated by ICEC-Holding, a.s., in 2007.
\n
The plaintiff, ICEC-HOLDING, a.s., claims that IPB breached its contractual duties in 1999, entitling ICEC-HOLDING, a.s., to
\n
damages and a contractual penalty. The claim itself is not in any way related to \u010cSOB\u2019s business activities and is to be
\n
considered part of the IPB legacy. In the delivered arbitral award, the Court of Arbitration ordered \u010cSOB to pay ICEC-HOLDING,
\n
a.s., an amount of CZK 3.7 billion, along with the costs of the proceedings in the amount of CZK 5.0 million, payable within fifteen
\n
days of the delivery of the award. The plaintiff failed in the remainder of its claim and the arbitration panel ordered it to pay
\n
\u010cSOB the costs of the proceedings in the amount of CZK 17.4 million. \u010cSOB will consider possible further legal steps leading to
\n
the revision of this award. The payment of damages and contractual penalties will have an adverse financial impact on \u010cSOB
\n
and KBC Group. In accordance with IFRS, \u010cSOB is required to provision the full amount of CZK 3.7 billion in its 2022 income
\n
statement, impacting KBC Group\u2019s 2022 income statement to the extent of -149 million euros before tax (-121 million euros after
\n
tax). The common equity ratio (Danish compromise method, fully loaded) at the end of 2022 decreases from 15.4% to 15.3%.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 3.7: Insurance results
\n
\n
\u2022 As a bank-insurer, we present our financial information on an integrated basis (i.e. banking and insurance activities combined).
\n
Information on the banking and insurance businesses is provided separately in the annual reports of KBC Bank and KBC
\n
Insurance (available at www.kbc.com). This note provides information on the insurance results alone.
\n
\u2022 The figures include intragroup transactions between bank and insurance entities (the results for insurance contracts concluded
\n
between the group\u2019s bank and insurance entities, interest that insurance companies receive on their deposits with bank entities,
\n
commissions that insurance entities pay to bank branches for sales of insurance, etc.) in order to give a more accurate view of
\n
the profitability of the insurance business. A reconciliation of the earned premiums stated in the consolidated income statement
\n
and in Note 3.7.1 is presented in the table below the overview.
\n
\u2022 Of the items stated in Note 3.7.1, only \u2018Earned premiums, insurance (before reinsurance)\u2019, \u2018Technical charges, insurance (before
\n
reinsurance)\u2019 and \u2018Ceded reinsurance result\u2019 are presented on separate lines in the group\u2019s income statement (with a minor
\n
adjustment, as shown in the smaller table below the main table). As part of our integrated bank-insurance concept, all the
\n
other lines in the insurance schedule below \u2013 together with the group\u2019s banking activities \u2013 are included in the group\u2019s income
\n
statement and related notes.
\n
\u2022 Additional information on the insurance business is provided separately in Note 3.7, Note 5.6, Note 6.5 and Note 6.7, in the \u2018How
\n
do we manage our risks?\u2019 section and in the annual report of KBC Insurance (available at www.kbc.com).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Note 3.7.1: Overview
\n
\n
Non-
\n
technical
\n\n

\n\n
(in millions of EUR)
\n
Life
\n
Non-life
\n
account
\n
Total
\n
2022
\n
\n
Earned premiums, insurance
\n
(before reinsurance) 1 163 2 054 0 3 217
\n
\n
of which changes in the provision for unearned premiums -1 -71
\n
0
\n
\n
-72
\n
Technical charges, insurance (before reinsurance)
\n
-1 071 -1 154 0 -2 225
\n
\n
Claims paid -1 399 -1 029
\n
0
\n
-2 428
\n
\n
Change in technical provisions 419 -115
\n
0
\n
\n
304
\n
\n
Other technical result -91 -9
\n
0
\n
-100
\n
Net fee and commission income
\n
-4 -403 0 -407
\n
Ceded reinsurance result
\n
-3 1 0 -2
\n
General administrative expenses
\n
-152 -285 -3 -440
\n
\n
Internal claims settlement expenses -9 -65 0 -74
\n
\n
Indirect acquisition costs -32 -68 0 -100
\n
\n
Administrative expenses -110 -152 0 -263
\n
\n
Investment management fees 0 0 -3 -3
\n
Technical result
\n
-67 213 -3 143
\n
Investment income*
\n
383 112 38 534
\n
Technical
\n
-financial result 316 325 36 677
\n
Share in results of associated companies and joint ventures
\n
- - 0 0
\n
RESULT BEFORE TAX
\n
316 325 36 677
\n
Income tax expense
\n
- - - -117
\n
RESULT AFTER TAX
\n
- - - 560
\n
\n
attributable to minority interests - - - 0
\n
\n
attributable to equity holders of the parent - - - 560
\n
2021
\n
\n
Earned premiums, insurance (before reinsurance)
\n
1 196 1 905 0 3 101
\n
\n
of which changes in the provision for unearned premiums -1 -48 0 -49
\n
Technical charges, insurance (before reinsurance)
\n
-1 150 -1 106 0 -2 256
\n
\n
Claims paid -1 163 -872 0 -2 036
\n
\n
Change in technical provisions -1 -223 0 -224
\n
\n
Other technical result 14 -10 0 4
\n
Net fee and commission income
\n
-5 -367 0 -372
\n
Ceded reinsurance result
\n
-2 27 0 25
\n
General administrative expenses
\n
-149 -255 -2 -407
\n
\n
Internal claims settlement expenses -9 -59 0 -68
\n
\n
Indirect acquisition costs -31 -68 0 -98
\n
\n
Administrative expenses -109 -128 0 -238
\n
\n
Investment management fees 0 0 -2 -2
\n
Technical result
\n
-110 204 -2 91
\n
Investment income*
\n
382 92 69 543
\n
Technical
\n
-financial result 271 296 66 634
\n
Share in results of associated companies and joint ventures
\n
\u2013 \u2013 0 0
\n
RESULT BEFORE TAX
\n
271 296 66 634
\n
Income tax expense
\n
\u2013 \u2013 \u2013 -125
\n
RESULT AFTER TAX
\n
\u2013 \u2013 \u2013 508
\n
\n
attributable to minority interests \u2013 \u2013 \u2013 0
\n
\n
attributable to equity holders of the parent \u2013 \u2013 \u2013 508
\n
* Investment income (in millions of euros, for 2022 and 2021, respectively) comprises: \u2018Net interest income\u2019 (428, 398), \u2018Net dividend income\u2019 (39, 31), \u2018Net result from financial instruments at fair
\n
value through profit or loss\u2019 (91, 117), \u2018Other net income\u2019 (-9, 1), \u2018Net realised result from debt instruments at fair value through OCI\u2019 (-16, -2) and \u2018Impairment\u2019 (1, -3). The \u2018Non-technical account\u2019
\n
also includes the results from non-insurance subsidiaries, such as VAB group and ADD, and a number of real estate companies. They have been included in the note for the \u2018insurance business\u2019
\n
given that they are KBC Insurance subsidiaries (but as they cannot be recognised under \u2018Life\u2019 or \u2018Non-life\u2019, they are included under \u2018Non-technical account\u2019). The \u2018Non-technical account\u2019 also
\n
includes the investment income from equity (i.e. mainly interest income from bonds).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n\n

\n\n
\u2022 The figures relating to earned premiums do not include investment contracts without DPF, which largely correspond to unit-
\n
linked contracts. The margin on these products is recognised under \u2018Net fee and commission income\u2019.
\n
\u2022 \u2018Non-life technical charges\u2019 consist mainly of paid claims, changes in claims provisions, changes in the deficiency provision,
\n
recourse received, changes in recourse estimations and other technical charges. \u2018Life technical charges\u2019 consist primarily of
\n
paid claims, changes in claims provisions, changes in the life insurance provision, changes in the provision for (non-unbundled)
\n
unit-linked products, bonuses (profit-sharing), changes in the deficiency provision and other technical charges.
\n
\u2022 An overview of the insurer\u2019s investment portfolio can be found in the \u2018How do we manage our risks?\u2019 section (in the \u2018Investment
\n
portfolio of KBC group insurance entities\u2019 table, which constitutes part of the financial statements).
\n
\u2022 In the vast majority of cases, internal acquisition costs are recognised immediately in the income statement (i.e. not spread).
\n
\u2022 In 2022, the non-life technical result was negatively impacted by factors including extreme weather conditions, such as flooding
\n
and storms (especially in Belgium, having a gross impact of 107 million euros, which comes down to 53 million euros after
\n
reinsurance). In 2021, the non-life technical result was negatively impacted by factors including the tornado in the Czech
\n
Republic and even more so by heavy flooding in Belgium (the gross impact of the latter totalled 110 million euros, which comes
\n
down to 87 million euros after reinsurance, 45 million euros of which above the legal limit (i.e. the ceiling introduced in Belgian
\n
law on the intervention of insurers in the event of very large floods), but which is still within the limit agreed between the Belgian
\n
insurance sector and the Walloon government). In 2022, the Life and Non-life technical result benefited from a release of
\n
technical reserves in the Czech Republic (31 million euros and 10 million euros, respectively) resulting from a reassessment of the
\n
confidence level of technical provisions.
\n
\u2022 More information on the acquisition of certain life and pension insurance policies from NN in Bulgaria in 2021 is provided in Note
\n
6.6.
\n
\u2022 See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\n
Reconciliation of the earned premiums stated in the consolidated income statement
\n
and in Note 3.7.1 (in millions of EUR)
\n
2022
\n
2021
\n
Non
\n
-life insurance (before reinsurance) \u2013 Earned premiums
\n
In the consolidated income statement
\n
2 033 1 885
\n
Addition of premiums from intragroup transactions between bank and insurer
\n
21 20
\n
In Note 3.7.1
\n
2 054 1 905
\n
Life insurance (before reinsurance)
\n
\u2013 Earned premiums
\n
In the consolidated income statement
\n
1 163 1 196
\n
Addition of premiums from intragroup transactions between bank and insurer
\n
1 1
\n
In Note 3.7.1
\n
1 163 1 196
\n

\n\n

\n\n

\n\n
\n
\n
\n\n

\n\n
Note 3.7.2: Life insurance
\n
\n
2022 2021
\n
(in millions of EUR)
\n
Total
\n
1 163 1 196
\n
By
\n
IFRS category
\n
Insurance contracts
\n
884 900
\n
Investment contracts with DPF
\n
280 296
\n
By type
\n
\n
Accepted reinsurance
\n
0 0
\n
Primary business
\n
1 163 1 196
\n
Breakdown of primary business
\n
\n
Individual premiums
\n
816 831
\n
\n
Single premiums 44 61
\n
\n
Periodic premiums 773 770
\n
Premiums under group contracts
\n
347 365
\n
\n
Single premiums 26 50
\n
\n
Periodic premiums 321 315
\n
Total sales of life insurance (including investment contracts without DPF)
\n
\n
Unit
\n
-linked 1 089 942
\n
Guaranteed
\n
-rate 996 1 022
\n
Total
\n
2 085 1 964
\n
\n
\u2022 As required under IFRS, we use deposit accounting for a number of investment contracts without DPF. This means that the
\n
premium income and technical charges from these contracts are not recognised under \u2018Earned premiums\u2019 and \u2018Technical
\n
charges\u2019, but that the margins on them are reported under \u2018Net fee and commission income\u2019. Investment contracts without DPF
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n
are more or less the same as unit-linked contracts, which in 2021 accounted for premium income of 0.9 billion euros and in 2022
\n
for premium income of 1.1 billion euros. Premium income generated by investment contracts without DPF (under deposit
\n
accounting) is included in \u2018Total sales of life insurance\u2019, as presented in the lower part of the table. These sale volumes,
\n
therefore, comprise earned insurance premiums plus premiums from contracts that are subject to deposit accounting.
\n

\n\n

\n\n
\n
\n\n
Note 3.7.3: Non-life insurance
\n
\n
Technical insurance
\n
Operating
\n
Earned premiums
\n
charges
\n
expenses
\n
(before
\n
(before
\n
(before
\n
Ceded
\n
(in millions of EUR)
\n
reinsurance)
\n
reinsurance)
\n
reinsurance)
\n
reinsurance
\n
Total
\n
2022
\n
\n
Total
\n
2 054 -1 154 -688 1 213
\n
Accepted reinsurance
\n
30 -26 -10 18 12
\n
Primary business
\n
2 024 -1 128 -678 -17 201
\n
Accident & health (classes 1 & 2, excl. industrial accidents)
\n
128 -60 -41 0 27
\n
Industrial accidents (class 1)
\n
94 -95 -18 -1 -21
\n
Motor, third
\n
-party liability (class 10) 525 -321 -156 -2 45
\n
Motor, other classes (classes 3 & 7)
\n
360 -212 -124 -1 23
\n
Shipping, aviation, transport (classes 4, 5, 6, 7, 11 & 12)
\n
9 -2 -3 -2 2
\n
Fire and other damage to property (classes 8 & 9)
\n
622 -327 -231 -5 58
\n
General third
\n
-party liability (class 13) 156 -45 -51 -6 54
\n
Credit and suretyship (classes 14 & 15)
\n
0 0 0 0 0
\n
Miscellaneous pecuniary losses
\n
(class 16) 30 -13 -11 1 7
\n
Legal assistance (class 17)
\n
65 -40 -23 0 2
\n
Assistance (class 18)
\n
36 -11 -20 0 4
\n
2021
\n
\n
Total
\n
1 905 -1 106 -622 27 204
\n
Accepted reinsurance
\n
27 -11 -9 -3 4
\n
Primary business
\n
1 878 -1 095 -614 30 200
\n
Accident & health (classes 1 & 2, excl. industrial accidents)
\n
123 -53 -40 0 28
\n
Industrial accidents (class 1)
\n
89 -77 -16 0 -4
\n
Motor, third
\n
-party liability (class 10) 512 -305 -148 -4 55
\n
Motor, other classes (classes 3 & 7)
\n
320 -179 -108 3 36
\n
Shipping, aviation, transport (classes 4, 5, 6, 7, 11 & 12)
\n
7 -2 -2 -1 1
\n
Fire and other damage to property (classes 8 & 9)
\n
569 -343 -211 28 44
\n
General third
\n
-party liability (class 13) 142 -92 -46 1 6
\n
Credit and suretyship (classes 14 & 15)
\n
0 0 0 0 0
\n
Miscellaneous pecuniary losses (class 16)
\n
22 -9 -8 3 9
\n
Legal assistance (class 17)
\n
62 -28 -22 0 13
\n
Assistance (class 18)
\n
31 -6 -13 0 12
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n
Note 3.8: Operating expenses
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
-4 818 -4 396
\n
Staff expenses
\n
- 2 561 -2 457
\n
General administrative expenses
\n
-1 883 -1 583
\n
\n
ICT -558 -462
\n
\n
Facility expenses -224 -210
\n
\n
Marketing and communications -109 -86
\n
\n
Professional service fees -157 -125
\n
\n
Other -190 -175
\n
\n
Bank taxes -646 -525
\n
Depreciation and amortisation of fixed assets
\n
-374 -356
\n
\n
\u2022 The total expenses went up by 10% in 2022 compared to 2021.
\n
\u2022 The most important non-operating and/or exceptional items in this respect were the inclusion of the acquired Raiffeisenbank
\n
Bulgaria in the scope of consolidation and the associated integration expenses with effect from July 2022, the payment of a
\n
one-off coronavirus-related bonus to staff in 2021 and an exceptional profit bonus in 2022, one-off expenses related to the
\n
sale transactions in Ireland in 2022 and 2021, and exceptional additional bank taxes in Hungary in 2022. Excluding the non-
\n
operating and/or exceptional items and exchange rate effects, the total expenses went up by 7%, due mainly to indexation
\n
and wage drift and higher ICT costs.
\n
\u2022 For information on the average number of persons employed, see Note 3.9; information on the remuneration of members of the
\n
Executive Committee and the Board of Directors is provided under \u2018Remuneration report\u2019 in the \u2018Corporate governance
\n
statement\u2019 section; details of the statutory auditor\u2019s remuneration (PWC) are provided in Note 6.4.
\n\n
\u2022 Share-based employee benefits are included under \u2018Staff expenses\u2019: since 2000, KBC has launched several stock option plans
\n
for its employees. There were no longer any outstanding options at year-end 2021 and 2022.
\n

\n\n
\u2022 Information on the capital increase reserved for KBC group employees can be found in the \u2018Company annual accounts and
\n
additional information\u2019 section. In 2022, this resulted in the recognition of a limited employee benefit (2 million euros) as the
\n
issue price was lower than the market price. Information regarding the price of the KBC share can be found in the \u2018Report of
\n
the Board of Directors\u2019 section.
\n

\n\n

\n\n

\n\n
\n\n
Note 3.9: Personnel
\n
\n
(number)
\n
2022 2021
\n
Total average number of persons employed (in full
\n
-time equivalents) 37 946 37 194
\n
By legal entity
\n
\n
KBC Bank
\n
28 741 28 558
\n
KBC Insurance
\n
4 024 3 953
\n
KBC Group NV (holding company) and KBC Global Services NV (cost
\n
-sharing structure) 5 181 4 683
\n
By employee classification
\n
\n
\n
Blue
\n
-collar staff 389 383
\n
White
\n
-collar staff 37 306 36 558
\n
Senior management
\n
251 253
\n
\n
\u2022 The figures in the table are annual averages, which \u2013 in terms of scope \u2013 may differ from year-end figures that are provided
\n
elsewhere.
\n
\u2022 The 2022 figures contain the acquired Raiffeisenbank Bulgaria (now renamed KBC Bank Bulgaria) for six months and still contain
\n
KBC Bank Ireland, as the sale had not yet been finalised at year-end 2022.
\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n
Note 3.10: Impairment (income statement)
\n
\n
\n

\n\n

\n\n
2022 2021
\n
(in millions of EUR*)
\n
Total
\n
-284 261
\n
Impairment on financial assets at AC and at FVOCI
\n
-154 334
\n
(impairment on loans)
\n
By IFRS category
\n
\n
\n
Financial assets at amortised cost -155 330
\n
\n
Financial assets at fair value through OCI 1 4
\n
By product
\n
\n
\n
Loans and advances -177 315
\n
\n
Debt securities -2 3
\n
\n
Off-balance-sheet commitments and financial guarantees 25 15
\n
By type
\n
\n
\n
Stage 1 (12-month ECL) 5 74
\n
\n
Stage 2 (lifetime ECL) -106 449
\n
\n
Stage 3 (lifetime ECL) -60 -191
\n
\n
Purchased or originated credit impaired assets 8 2
\n
By business unit/country
\n
\n
\n
Belgium -35 309
\n
\n
Czech Republic -46 142
\n
\n
International Markets -78 -110
\n
\n
Slovakia -19 16
\n
\n
Hungary -29 22
\n
\n
Bulgaria -30 2
\n
\n
Ireland in 2021 - -149
\n
\n
Group Centre 5 -7
\n
\n
Of which Ireland in 2022 7 -
\n
Impairment on goodwill
\n
-5 -7
\n
Impairment on other
\n
-125 -65
\n
Intangible fixed assets (other than goodwill)
\n
-34 -35
\n
Property and
\n
equipment (including investment property) -18 -17
\n
Associated companies and joint ventures
\n
0 0
\n
Other
\n
-73 -13
\n
* Positive figures indicate a reversal and hence a positive impact on results
\n

\n\n

\n\n
\n
\n
\u2022 Impairment on loans:
\n
\u25e6 In 2022, this item included a full reversal of the remaining 255 million euros in coronavirus-related ECL (see Note 1.4), net
\n
provisioning of 413 million euros for geopolitical and emerging risks (see Note 1.4), net provisioning of 17 million euros related to
\n
the sale transactions in Ireland (see Note 6.6) and a net reversal of 21 million euros for several individual loans.
\n
\u25e6 In 2021, this item included a net reversal of collective coronavirus-related ECL totalling 494 million euros (see Note 1.4), net
\n
provisioning of 178 million euros related to the sale transactions in Ireland (see Note 6.6) and a net reversal of 18 million euros
\n
for several individual loans.
\n
\u2022 The impact of the extreme weather conditions, including flooding and storms, in 2022 and 2021 on (impairment on) loans was
\n
insignificant.
\n
\u2022 Impairment on other:
\n
\u25e6 In 2022, this item included an impairment of tangible and intangible assets relating to the sale transactions in Ireland,
\n
impairment of real estate and modification losses related to the provision of the interest cap regulation in Hungary.
\n
\u25e6 In 2021, this item included impairment of tangible and intangible assets relating to the sale transactions in Ireland and
\n
modification losses.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. Based on internal management reports, the
\n
composition and quality of the loan portfolio is set out in detail in the \u2018How do we manage our risks?\u2019 section (under \u2018Credit
\n
risk\u2019). All parts of that particular section which have been audited by the statutory auditor are listed at the start of the section.
\n
Among other things, this section also provides more information on impaired loans (Stage 3).
\n
\u2022 For information on total impairment recognised in the balance sheet, see Note 4.2.
\n
\u2022 More background information and methodology for KBC\u2019s ECL model is provided in the accounting policies under \u2018Financial
\n
assets \u2013 impairment\u2019 in Note 1.2.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
\u2022 KBC uses specific models for PD, EAD and LGD in order to calculate ECL. It is essential to take account of historical observations
\n
and forward-looking projections in this respect.
\n
- PD represents the probability of a counterparty defaulting in the next 12 months or during the entire term of the facility
\n
(depending on which IFRS 9 \u2018Stage\u2019 the facility is in). The PD is determined by the counterparty\u2019s internal (and, if applicable,
\n
external) credit rating. Variables used in PD models include financial ratios and behavioural parameters (arrears).
\n
- EAD represents the estimated outstanding debt at the time of default and depends on the existing outstanding debt and
\n
any changes permitted under the contract and normal repayments. Variables used in these models include product types
\n
and repayment schedules.
\n
- LGD is the estimated size of the loss relative to the outstanding debt at the time of default. LGD is presented as a percentage
\n
of the outstanding debt and is determined by historical amounts recovered on similar claims. Variables used in these models
\n
include collateral types and financial ratios.
\n
\u2022 On 31 December 2022, there were around 80 different IFRS 9 models. In addition to several group-wide models, we have
\n
separate PD, EAD and LGD models for each of our core countries. In accordance with the Basel grouping approach, we use
\n
the type of counterparty (private individuals, SMEs, companies, governments, etc.) to determine the scope of an IFRS 9 model.
\n
Each model allows for differentiation in terms of facility type (term loans, revolving facilities, etc.) and collateral type (mortgages,
\n
pledges on business assets, guarantees, etc.). Examples of IFRS 9 models include \u2018Banks\u2019, \u2018Belgian private persons \u2013 home
\n
loans\u2019, \u2018Czech corporates\u2019, \u2018Bulgarian corporates and SMEs\u2019 and \u2018Central governments\u2019. Detailed documentation is available
\n
for each PD, EAD and LGD model. The main models are subject to review by external auditors. The Basel models, which the IFRS
\n
9 models are based on, are subject to external control performed by the supervisory authorities.
\n\n

\n\n
\u2022 We create the models for the various portfolios using typical PD, EAD and LGD inputs, as well as macroeconomic variables to
\n
the extent that there is a statistical relationship. The macroeconomic variables are GDP growth, the unemployment rate, policy
\n
interest rates, the exchange rate, government bond yields, house prices and inflation. As a result of regular back-testing,
\n
models may change and macroeconomic variables may be reassessed. Note 1.4 presents the optimistic, pessimistic and base-
\n
case scenarios for the three key indicators (GDP growth, unemployment rate and house price index) for each of our core
\n
countries.
\n
\u2022 As set out under \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section, KBC considers ESG risks in
\n
its credit risk management processes. The vulnerability of individual clients to specific ESG risks may become apparent during
\n
the term of the loan in client-specific credit risk figures, such as credit risk ratings and collateral valuations affecting the ECL
\n
calculation. Especially in terms of climate risk, which may have considerable consequences for certain sectors in the longer
\n
term, the impact on our loan portfolio is not expected to occur within the time horizon considered for the ECL measurement.
\n
\u2022 Our ECL models are not able to adequately reflect all the specifics of the direct and indirect consequences of the war in Ukraine
\n
and the coronavirus crisis. Therefore, an expert-based calculation at portfolio level has been performed that takes due account
\n
of the macroeconomic situation (see Note 1.4).
\n
\u2022 We use three different forward-looking macroeconomic scenarios (with different probability weightings) to measure ECL. The
\n
weightings at year-end 2022 were 60% for the \u2018base\u2019 scenario, 5% for the \u2018up\u2019 scenario and 35% for the \u2018down\u2019 scenario. The
\n
forecast horizon is 30 years. For further information on the key macroeconomic parameters, see Note 1.4.
\n
\u2022 A sensitivity analysis of the impact of these multiple economic scenarios on the collectively assessed ECL (i.e. without the ECL
\n
for individually assessed loans of 1.6 billion euros at the end of 2022 and 1.7 billion euros at the end of 2021) shows that the \u2018base\u2019
\n
scenario generates an ECL of 1.0 billion euros (0.9 billion euros in 2021), which is 0.1 billion euros lower than for the \u2018down\u2019 scenario
\n
(0.1 billion euros in 2021) and 0.0 billion euros higher than for the \u2018up\u2019 scenario (0.1 billion euros in 2021). The assessed scenario-
\n
weighted collective ECL (that was recognised) amounted to 1.0 billion euros (0.9 billion euros in 2021). These amounts take into
\n
account the ECL relating to geopolitical and emerging risks at year-end 2022 (see Note 1.4).
\n
\n
100%
\n
100%
\n
100%
\n
Collectively assessed ECL by country (2022, in billions of EUR)
\n
\n
pessimistic
\n
base-case scenario
\n
optimistic scenario
\n
scenario
\n
Total
\n
1.0 1.0 1.1
\n
Belgium
\n
0.3 0.3 0.3
\n
Czech Republic
\n
0.3 0.3 0.4
\n
Slovakia
\n
0.1 0.1 0.1
\n
Hungary
\n
0.1 0.1 0.1
\n
Bulgaria
\n
0.2 0.1 0.2
\n
Rest
\n
0.0 0.0 0.0
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n
Note 3.11: Share in results of associated companies and joint ventures
\n
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
-10 -5
\n
Of which
\n
\n
Isabel NV
\n
2 2
\n
Joyn International NV
\n
-1 1
\n
Bancontact Payconiq Company NV
\n
1 1
\n
Payconiq International SA
\n
-6 -6
\n
Skip Pay, s.r.o.
\n
0 -3
\n
Batopin NV
\n
-3 -1
\n
IGLUU s.r.o.
\n
-1 0
\n
Immoscoop 2.0 BV
\n
-2 0
\n
\n
\u2022 Impairment on (goodwill on) associated companies and joint ventures is included in \u2018Impairment\u2019 (see Note 3.10). The share in
\n
results of associated companies and joint ventures does not therefore take this impairment into account.
\n

\n\n

\n\n

\n\n

\n\n
\n\n
Note 3.12: Income tax expense
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
-608 -804
\n
By type
\n
\n
Current taxes on income
\n
-525 -485
\n
Deferred taxes on
\n
income -83 -319
\n
Tax components
\n
\n
Result before tax
\n
3 351 3 418
\n
Income tax at the Belgian statutory rate
\n
25.00% 25.00%
\n
Income tax calculated
\n
-838 -855
\n
Plus/minus tax effects attributable to
\n
\n
\n
differences in tax rates, Belgium \u2013 abroad 131 106
\n
\n
tax-free income 130 86
\n
\n
adjustments related to prior years 4 -4
\n
\n
adjustments to deferred taxes due to change in tax rate -1 -1
\n
\n
unused tax losses and unused tax credits to reduce current tax expense 2 1
\n
\n
unused tax losses and unused tax credits to reduce deferred tax expense 28 2
\n
\n
reversal of previously recognised deferred tax assets due to tax losses 0 -59
\n
\n
other (including non-deductible expenses) -63 -81
\n
\n
\u2022 For information on tax assets and tax liabilities, see Note 5.2.
\n
\u2022 In 2021, the \u2018Reversal of previously recognised deferred tax assets due to tax losses\u2019 item includes the one-off negative impact
\n
of 51 million euros due to the derecognition of deferred tax assets as a result of the sale transactions in Ireland. Taxes in 2022
\n
were bolstered by a one-off recognition of 51 million euros in deferred tax assets, partly due to the increase in business tax in
\n
the UK from 19% to 25% and the recognition of a deferred tax asset in Ireland (see also Note 6.6).
\n
\u2022 Following the conversion of the Pillar 2 rules into a European Directive, KBC has conducted an initial analysis of the impact of
\n
these rules on its organisation. These new rules are expected to have limited impact on KBC and as a result of specific
\n
circumstances in certain entities the effective tax rate would fall to below 15%. A more detailed estimate will be prepared based
\n
on a more detailed interpretation of the top-up taxes and safe harbour rules in the countries with local KBC presence.
\n
\u2022 The table on the next page shows the country-by-country reporting.
\n

\n\n

\n\n

\n\n

\n\n
Revenues from
\n
intra-group
\n
Tangible assets
\n
Average
\n
Revenues
\n
transactions
\n
Income tax
\n
Income taxes
\n
other than
\n
Government
\n
number of
\n
from third-
\n
with other tax
\n
Result
\n
accrued \u2013
\n
paid on a
\n
Retained
\n
cash and cash
\n
grants
\n
(in millions of EUR)
\n
FTEs
\n
party sales
\n
\n
1
\n
jurisdictions
\n
2
\n
\n
before tax
\n
current year
\n
cash basis
\n
earnings
\n
equivalents
\n
3
\n
\n
received
\n
2022
\n
\n
KBC core countries
\n
\n
\n
Belgium
\n
13 959
\n
4 712
\n
598
\n
1 801
\n
-261
\n
-229
\n
12 423
\n
2 260
\n
0
\n
\n
Czech Republic
\n
10 166
\n
1 794
\n
-554
\n
816
\n
-157
\n
-128
\n
1 582
\n
548
\n
0
\n
\n
Slovakia
\n
3 685
\n
753
\n
-28
\n
229
\n
-40
\n
5
\n
643
\n
153
\n
0
\n
\n
Hungary
\n
3 241
\n
364
\n
4
\n
118
\n
-26
\n
-18
\n
-182
\n
185
\n
0
\n
\n
Bulgaria
\n
5 482
\n
401
\n
-8
\n
174
\n
-18
\n
-17
\n
-115
\n
209
\n
0
\n
Other countries
\n
\n
\n
China
\n
35
\n
1
\n
0
\n
0
\n
-1
\n
0
\n
0
\n
-3
\n
0
\n
\n
Germany
\n
22
\n
1
\n
0
\n
0
\n
-1
\n
-1
\n
0
\n
0
\n
0
\n
\n
France
\n
56
\n
5
\n
-2
\n
9
\n
-2
\n
-2
\n
1
\n
0
\n
0
\n
\n
Great Britain
\n
39
\n
17
\n
8
\n
16
\n
17
\n
17
\n
528
\n
-1
\n
0
\n
\n
Hong Kong
\n
36
\n
1
\n
0
\n
1
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
Ireland
\n
1 069
\n
341
\n
107
\n
130
\n
-9
\n
-9
\n
-1 665
\n
18
\n
\n
\n
Italy
\n
7
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
Luxembourg
\n
39
\n
59
\n
-125
\n
48
\n
-27
\n
7
\n
157
\n
137
\n
0
\n
\n
The Netherlands
\n
25
\n
4
\n
0
\n
1
\n
0
\n
0
\n
5
\n
40
\n
0
\n
\n
Romania
\n
0
\n
3
\n
0
\n
3
\n
0
\n
0
\n
20
\n
33
\n
0
\n
\n
Singapore
\n
43
\n
2
\n
0
\n
1
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
USA
\n
43
\n
4
\n
0
\n
2
\n
0
\n
0
\n
0
\n
-20
\n
0
\n
Total
\n
\n
37
\n
\n
946
\n
8 463
\n
0
\n
\n
\n
3 351
\n
-525
\n
\n
-376
\n
\n
\n
13 399
\n
3 560
\n
\n
\n
0
\n
2021
\n
\n
KBC core countries
\n
\n
\n
Belgium
\n
14 223
\n
4 259
\n
46
\n
2 018
\n
-356
\n
-333
\n
12 886
\n
2 130
\n
0
\n
\n
Czech Republic
\n
10 029
\n
1 508
\n
-53
\n
845
\n
-132
\n
-101
\n
2 051
\n
560
\n
0
\n
\n
Slovakia
\n
3 683
\n
572
\n
-8
\n
268
\n
-41
\n
-29
\n
651
\n
164
\n
0
\n
\n
Hungary
\n
3 513
\n
329
\n
7
\n
111
\n
-15
\n
-15
\n
-217
\n
203
\n
0
\n
\n
Bulgaria
\n
4 203
\n
259
\n
-13
\n
128
\n
-13
\n
-12
\n
-176
\n
193
\n
0
\n
\n
Ireland
\n
1 192
\n
343
\n
139
\n
-134
\n
-4
\n
-4
\n
-1 630
\n
47
\n
0
\n
Other countries
\n
\n
\n
China
\n
45
\n
9
\n
0
\n
3
\n
3
\n
3
\n
0
\n
1
\n
0
\n
\n
Germany
\n
23
\n
14
\n
0
\n
13
\n
8
\n
8
\n
0
\n
0
\n
0
\n
\n
France
\n
52
\n
50
\n
-2
\n
30
\n
21
\n
21
\n
1
\n
1
\n
0
\n
\n
Great Britain
\n
37
\n
46
\n
1
\n
13
\n
10
\n
10
\n
521
\n
1
\n
0
\n
\n
Hong Kong
\n
40
\n
8
\n
0
\n
1
\n
1
\n
1
\n
0
\n
1
\n
0
\n
\n
Italy
\n
8 0 0 -2 -2 -2 0 0 0
\n
\n
Luxembourg
\n
39
\n
75
\n
-117
\n
63
\n
-7
\n
10
\n
162
\n
142
\n
0
\n
\n
The Netherlands
\n
21
\n
35
\n
0
\n
30
\n
20
\n
20
\n
7
\n
74
\n
0
\n
\n
Romania
\n
0
\n
4
\n
0
\n
4
\n
0
\n
0
\n
17
\n
34
\n
0
\n
\n
Singapore
\n
39
\n
9
\n
0
\n
11
\n
9
\n
11
\n
0
\n
1
\n
0
\n
\n
USA
\n
\n
49
\n
39
\n
0
\n
17
\n
13
\n
15
\n
0
\n
17
\n
0
\n
Total
\n
\n
37 194
\n
7 558
\n
0
\n
3 418
\n
-485
\n
-398
\n
14 272
\n
3 568
\n
0
\n

\n\n
Countries with zero FTEs and whose figures are below 0.5 million euros (i.e. rounded to zero in the table) have been excluded.
\n
1 Corresponds to \u2018Total income\u2019 in the income statement.
\n
2 If this column contains a positive figure for a particular jurisdiction, it means that all group entities in that jurisdiction combined had more intra-group income than intra-group expenses
\n
compared with other tax jurisdictions. If the figure is negative, it means that all group entities in this jurisdiction combined had less intra-group income than intra-group expenses arising
\n
compared with other tax jurisdictions.
\n
3 Corresponds to \u2018Property and equipment and investment property\u2019 in the balance sheet.
\n

\n\n

\n\n

\n\n
Note 3.13: Earnings per share
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Result after tax, attributable to equity holders of the parent
\n
2 743 2 614
\n
Coupon on AT1 instruments
\n
-50 -50
\n
Net result used to determine basic earnings per share
\n
2 694 2 564
\n
Weighted average number of ordinary shares outstanding (millions of
\n
units) 417 417
\n
Basic earnings per share (EUR)
\n
6.46 6.15
\n
\n
\u2022 Diluted earnings per share are currently almost the same as basic earnings per share.
\n

\n\n

\n\n
4.0 Notes on the financial assets and liabilities on the balance sheet
\n
\n
\n
Sale of activities in Ireland: the financial assets and liabilities of KBC Bank Ireland that are part of the sale transaction(s) have
\n
been included under \u2018Non-current assets held for sale and disposal groups\u2019 and \u2018Liabilities associated with disposal groups\u2019 since
\n
the third quarter of 2021 (see Note 5.11 and Note 6.6 for more information) and have therefore not been included in the following
\n
tables.
\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.1: Financial assets and liabilities, breakdown by portfolio and product
\n
(in millions of EUR)
\n
Measured
\n
at
\n
amortised
\n
cost (AC)
\n
Measured
\n
at fair
\n
value
\n
through
\n
other
\n
compre-
\n
hensive
\n
income
\n
(FVOCI)
\n
Mandatorily
\n
measured at
\n
fair value
\n
through
\n
profit or loss
\n
(MFVPL) excl.
\n
HFT and
\n
overlay
\n
Measured at
\n
fair value \u2013
\n
overlay
\n
approach
\n
(overlay)
\n
Held for
\n
trading
\n
(HFT)
\n
Desig-
\n
nated at
\n
fair value
\n
1
\n
(FVO)
\n
Hedging
\n
Deriva-
\n
tives
\n
Total
\n
Total pro
\n
forma
\n
excluding
\n
KBC Bank
\n
Bulgaria
\n
(formerly
\n
Raiffeisen-
\n
bank
\n
Bulgaria)
\n
FINANCIAL ASSETS, 31-12-2022
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
4 240 0 13 0 1 0 0 4 254
\n
4 203
\n
of which loans and advances to banks repayable on
\n
demand and term loans to banks at not more than three
\n
months
\n
\n
1 237 1 237
\n
Loans and advances to customers (excluding reverse
\n
repos)
\n
177 427 0 625 0 0 0 0 178 053
\n
174 083
\n
Trade receivables
\n
2 818
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 818
\n
2 729
\n
Consumer credit
\n
6 222
\n
0
\n
430
\n
0
\n
0
\n
0
\n
0
\n
6 652
\n
5 977
\n
Mortgage loans
\n
73 465
\n
0
\n
196
\n
0
\n
0
\n
0
\n
0
\n
73 660
\n
72 891
\n
Term loans
\n
82 894
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
82 894
\n
80 744
\n
Finance lease
\n
6 368
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
6 368
\n
6 117
\n
Current account advances
\n
4 886
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 886
\n
4 885
\n
Other
\n
774
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
774
\n
740
\n
Reverse repos
\n
2
\n
\n
20 186
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 219
\n
20 219
\n
with credit institutions and investment firms
\n
20 018
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 050
\n
20 050
\n
with customers
\n
168
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
168
\n
168
\n
Equity instruments
\n
0
\n
315
\n
13
\n
1 237
\n
430
\n
0
\n
0
\n
1 994
\n
1 989
\n
Investment contracts (insurance)
\n
6
\n
\n
0
\n
0
\n
12 771
\n
0
\n
0
\n
0
\n
0
\n
12 771
\n
12 771
\n
Debt securities
\n
52 030
\n
11 813
\n
17
\n
0
\n
1 728
\n
0
\n
0
\n
65 588
\n
64 871
\n
Public bodies
\n
44 219
\n
8 135
\n
0
\n
0
\n
1 667
\n
0
\n
0
\n
54 021
\n
53 390
\n
Credit institutions and investment firms
\n
5 160
\n
1 621
\n
0
\n
0
\n
9
\n
0
\n
0
\n
6 790
\n
6 747
\n
Corporates
\n
2 651
\n
2 057
\n
17
\n
0
\n
53
\n
0
\n
0
\n
4 777
\n
4 733
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
6 279
\n
0
\n
542
\n
6 821
\n
6 813
\n
3
\n
\n
Other
\n
1 561
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
1 561
\n
1 561
\n
Total
\n
255 444
\n
12 128
\n
13 439
\n
1 237
\n
8 471
\n
0
\n
542
\n
291 262
\n
286 511
\n
FINANCIAL ASSETS, 31-12-2021
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
7 920 0 0 0 1 0 0 7 920
\n
-
\n
of which loans and advances to banks repayable on demand
\n
and term loans to banks at not more than three months
\n
3 146 -
\n
Loans and advances to customers (excl. reverse repos)
\n
159 167
\n
0
\n
560
\n
0
\n
0
\n
0
\n
0
\n
159 728
\n
-
\n
Trade receivables
\n
2 090
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 090
\n
-
\n
Consumer credit
\n
5 470
\n
0
\n
381
\n
0
\n
0
\n
0
\n
0
\n
5 851
\n
-
\n
Mortgage loans
\n
67 486
\n
0
\n
179
\n
0
\n
0
\n
0
\n
0
\n
67 665
\n
-
\n
Term loans
\n
72 998
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
72 998
\n
-
\n
Finance lease
\n
5 815
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
5 815
\n
-
\n
Current account advances
\n
4 819
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 819
\n
-
\n
Other
\n
490
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
490
\n
-
\n
2
\n
-
\n
\n
Reverse repos
\n
24 978
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 978
\n
with credit institutions and investment firms
\n
24 861
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 861
\n
-
\n
with customers
\n
117
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
117
\n
-
\n
Equity instruments
\n
0
\n
321
\n
8
\n
1 366
\n
448
\n
0
\n
0
\n
2 144
\n
-
\n
6
\n
-
\n
\n
Investment contracts (insurance)
\n
0
\n
0
\n
14 620
\n
0
\n
0
\n
0
\n
0
\n
14 620
\n
Debt securities
\n
47 172
\n
15 503
\n
17
\n
0
\n
2 958
\n
0
\n
0
\n
65 650
\n
-
\n
Public bodies
\n
41 475
\n
10 514
\n
0
\n
0
\n
2 517
\n
0
\n
0
\n
54 507
\n
-
\n
Credit institutions and investment firms
\n
3 310
\n
2 245
\n
0
\n
0
\n
357
\n
0
\n
0
\n
5 912
\n
-
\n
Corporates
\n
2 387
\n
2 744
\n
17
\n
0
\n
84
\n
0
\n
0
\n
5 232
\n
-
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
5 443
\n
0
\n
283
\n
5 727
\n
-
\n
3
\n
-
\n
\n
Other
\n
892
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
892
\n
Total
\n
240 128
\n
15 824
\n
15 205
\n
1 366
\n
8 850
\n
0
\n
283
\n
281 658
\n
-
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
(in millions of EUR)
\n
Measured at
\n
amortised
\n
cost
\n
(AC)
\n
Held for
\n
trading (HFT)
\n
Designated at
\n
fair value (FVO)
\n
\n
Hedging
\n
derivatives
\n
Total
\n
Total pro forma
\n
excluding KBC
\n
Bank Bulgaria
\n
(formerly
\n
Raiffeisenbank
\n
Bulgaria)
\n
FINANCIAL
\n
LIABILITIES, 31-12-2022
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
24 819 0 0 0 24 819
\n
24 737
\n
of which deposits from banks repayable on demand
\n
\n
\n
\n
\n
\n
\n
\n
5 085 5 085
\n
Deposits from customers and debt
\n
securities (excl. repos)
\n
\n
251 496 44 1 205 0 252 746
\n
247 585
\n
\n
Demand deposits 122 053 0 0 0 122 053 117 401
\n
\n
Time deposits 22 280 44 73 0 22 397 21 960
\n
\n
Savings accounts 76 979 0 0 0 76 979 76 954
\n
\n
Special deposits 2 710 0 0 0 2 710 2 663
\n
\n
Other deposits 268 0 0 0 268 268
\n
Subtotal deposits from customers (excl. repos)
\n
224 290 44 73 0 224 407 219 246
\n
\n
Certificates of deposit 9 321 0 1 0 9 322 9 322
\n
\n
Savings certificates 104 0 0 0 104 104
\n
\n
Non-convertible bonds 15 621 0 1 006 0 16 627 16 627
\n
\n
Non-convertible subordinated liabilities 2 160 0 126 0 2 285 2 285
\n
Repos
\n
4
\n
11 091 7 0 0 11 097
\n
11 097
\n
\n
with credit institutions and investment firms 10 852 7 0 0 10 859 10 859
\n
\n
with customers 239 0 0 0 239 239
\n
Liabilities under investment contracts
\n
6
\n
0 0 12 002 0 12 002
\n
12 002
\n
Derivatives
\n
0 8 038 0 577 8 615
\n
8 605
\n
Short positions
\n
0 1 007 0 0 1 007
\n
1 007
\n
\n
In equity instruments 0 5 0 0 5 5
\n
\n
In debt securities 0 1 002 0 0 1 002 1 002
\n
Other
\n
5
\n
2 448 0 0 0 2 448
\n
2 370
\n
Total
\n
289 854 9 096 13 207 577 312 735
\n
307 403
\n
FINANCIAL LIABILITIES, 31
\n
-12-2021
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
38 047 0 0 0 38 047
\n
-
\n
of which deposits from banks repayable on demand 4 695 -
\n
Deposits from
\n
customers and debt securities (excl. repos)
\n
\n
224 759 21 1 312 0 226 093
\n
-
\n
\n
Demand deposits 112 097 0 0 0 112 097
\n
-
\n
\n
Time deposits 9 106 21 60 0 9 187
\n
-
\n
\n
Savings accounts 74 801 0 0 0 74 801
\n
-
\n
\n
Special deposits 2 962 0 0 0 2 962
\n
-
\n
\n
Other deposits 428 0 0 0 428
\n
-
\n
Subtotal deposits from customers (excl. repos)
\n
199 395 21 60 0 199 476
\n
-
\n
\n
Certificates of deposit 6 273 0 0 0 6 273
\n
-
\n
\n
Savings certificates 253 0 0 0 253
\n
-
\n
\n
Non-convertible bonds 15 892 0 1 118 0 17 011
\n
-
\n
\n
Non-convertible subordinated liabilities 2 946 0 134 0 3 080
\n
-
\n
Repos
\n
4
\n
3 293 2 0 0 3 295
\n
-
\n
\n
with credit institutions and investment firms 2 888 2 0 0 2 890
\n
-
\n
\n
with customers 405 0 0 0 405
\n
-
\n
Liabilities under investment
\n
contracts
\n
6
\n
0 0 13 603 0 13 603
\n
-
\n
Derivatives
\n
0 5 619 0 1 094 6 713
\n
-
\n
Short positions
\n
0 1 628 0 0 1 628
\n
-
\n
\n
In equity instruments 0 18 0 0 18
\n
-
\n
\n
In debt securities 0 1 611 0 0 1 611
\n
-
\n
Other
\n
5
\n
2 288 0 0 0 2 288
\n
-
\n
Total
\n
268 387 7 271 14 916 1 094 291 667
\n
-
\n
1 The carrying value comes close to the maximum credit exposure.
\n
2 The amount of the reverse repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out).
\n
3 Financial assets not included under \u2018Loans and advances to customers\u2019 as they are not directly related to commercial lending.
\n
4 The amount of the repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out), with the assets being partly reflected on the balance sheet
\n
and partly obtained through reverse repo transactions.
\n
5 Financial liabilities not included under deposits from customers as they are not directly related to commercial deposit acquisition.
\n
6 The difference between \u2018Investment contracts (insurance)\u2019 and \u2018Liabilities under investment contracts\u2019 is accounted for by the presentation of non-unbundled investment contracts that are
\n
included under \u2018Investment contracts (insurance)\u2019 on the financial assets side, but are included under \u2018Technical provisions (before reinsurance)\u2019 on the liabilities side.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n\n
\u2022 \u2018Non-convertible bonds\u2019 comprise mainly KBC Bank, KBC Group, \u010cSOB and KBC IFIMA issues. They are usually recognised under
\n
\u2018Measured at amortised cost\u2019. However, if they contain closely related embedded derivatives, they are recorded under
\n
\u2018Designated at fair value\u2019 (see accounting policies). This item also includes three green bonds (for 500, 500 and 750 million euros
\n
each) and a social bond (for 750 million euros), which have been recognised at amortised cost.
\n
\u2022 More information on major new debt issues or redemptions is provided under the \u2018Consolidated cashflow statement\u2019.
\n
\u2022 \u2018Deposits from credit institutions and investment firms\u2019 include funding obtained from the ECB\u2019s TLTRO programme (15.4 billion
\n
euros at year-end 2022, 9.1 billion euros less than at year-end 2021 on account of redemptions). KBC calculates these deposits
\n
using the effective interest rate method, with the rate being adjusted should we fail to meet the conditions (similar to a floating
\n
rate instrument), as per paragraph B.5.4.5 of IFRS 9. KBC\u2019s management has reasonable assurance that KBC will comply with
\n
the conditions attached (including the level of lending to households and non-financial companies) and hence the interest has
\n
accordingly been recognised (a gross amount of 112 million euros in interest income (negative interest rate) in 2022 and 242
\n
million euros in 2021).
\n
\u2022 Transferred financial assets that continue to be recognised in their entirety: KBC regularly lends and/or sells securities with the
\n
commitment to buy them back at a later date (repo transactions). Securities lent or sold with such a commitment are transferred
\n
to the counterparty, and, in exchange, KBC receives cash or other financial assets. However, KBC retains the main risks and
\n
income relating to these securities, and, therefore, continues to recognise them on its balance sheet. In addition, a financial
\n
liability is recognised equalling the cash received.
\n
\n
Transferred financial assets that continue to be recognised in their entirety (carrying value, in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Transferred financial assets that continue to be recognised in their entirety: repo transactions and securities lent out
\n
17 425 13 762
\n
Held for
\n
trading 960 1 221
\n
Fair value through OCI
\n
860 1 474
\n
Amortised cost
\n
15 605 11 067
\n
Associated financial liability
\n
10 534 2 936
\n
Held for trading
\n
689 335
\n
Fair value through OCI
\n
609 362
\n
Amortised cost
\n
9 236 2 239
\n
\n
\u2022 It should be noted that KBC has more transferred financial assets on its balance sheet than repo transactions, due to the fact
\n
that the cash legs of certain repo transactions are offset against reverse repo transactions if they are carried out with the same
\n
counterparty, in the same currency and with the same maturity date. Moreover, there is a legally enforceable right, and an
\n
intention, to settle the transactions on a net basis or to realise the financial asset and settle the financial liability simultaneously.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria in 2022 is provided in Note 6.6.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. We report on estimated greenhouse gas emissions
\n
associated with lending and other activities and have defined objectives for reducing the greenhouse gas intensity of loans
\n
we have provided to the energy sector, electricity producers and the real estate sector, mortgage loans and loans provided
\n
for commercial residential real estate, as well as loans provided to the automotive industry and financial and operational car
\n
leasing (see Note 6.2), the agricultural sector, and cement, steel and aluminium producers. See \u2018Focus on climate\u2019 in the \u2018Report
\n
of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our Climate Report and
\n
\n
our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n\n

\n\n

\n\n

\n\n

\n\n

\n
Note 4.2: Financial assets and liabilities, breakdown by portfolio and quality
\n
\n\n

\n\n
Note 4.2.1: Impaired financial assets
\n
\n
\n
Carrying value before
\n
Carrying value after
\n
(in millions of EUR)
\n
impairment
\n
Impairment
\n
impairment
\n
31
\n
-12-2022
\n
*
\n
204 473 -2 619 201 853
\n
Financial assets at amortised cost: Loans and advances
\n
Stage 1 (12
\n
-month ECL) 163 846 -110 163 736
\n
Stage 2 (lifetime ECL)
\n
36 577 -635 35 941
\n
Stage 3 (lifetime ECL)
\n
3 616 -1 796 1 820
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
434
\n
-77
\n
357
\n
Financial assets at amortised cost: Debt securities
\n
52 048 -18 52 030
\n
Stage 1 (12
\n
-month ECL) 51 909 -7 51 903
\n
Stage 2 (lifetime ECL)
\n
130 -4 126
\n
Stage 3 (lifetime ECL)
\n
8 -7 1
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
Financial assets at fair value through OCI: Debt securities
\n
11 818 -4 11 813
\n
Stage 1 (12
\n
-month ECL) 11 753 -3 11 750
\n
Stage 2 (lifetime ECL)
\n
65 -2 63
\n
Stage 3 (lifetime ECL)
\n
0 0 0
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
31
\n
-12-2021
\n
*
\n
194 638 -2 573 192 065
\n
Financial assets at amortised cost: Loans and advances
\n
Stage 1 (12
\n
-month ECL) 167 426 -104 167 322
\n
Stage 2 (lifetime ECL)
\n
23 131 -507 22 624
\n
Stage 3 (lifetime ECL)
\n
3 493 -1 848 1 645
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
588
\n
-114
\n
474
\n
Financial assets at amortised cost: Debt securities
\n
47 181 -9 47 172
\n
Stage 1 (12
\n
-month ECL) 47 155 -5 47 150
\n
Stage 2
\n
(lifetime ECL) 24 -3 21
\n
Stage 3 (lifetime ECL)
\n
1 -1 1
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
Financial assets at fair value through OCI: Debt securities
\n
15 509 -6 15 503
\n
Stage 1 (12
\n
-month ECL) 15 418 -3 15 415
\n
Stage 2
\n
(lifetime ECL) 91 -3 88
\n
Stage 3 (lifetime ECL)
\n
0 0 0
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
* The carrying value after impairment in this note corresponds to the sum of the \u2018Loans and advances to credit institutions and investment firms (excl. reverse repos)\u2019, \u2018Loans and advances to
\n
customers (excl. reverse repos)\u2019 and \u2018Reverse repos\u2019 in Note 4.1 (in the \u2018Measured at amortised cost\u2019 column).
\n

\n\n

\n\n

\n\n

\n\n

\n\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\u2022 Acquisition of Raiffeisenbank Bulgaria (now renamed KBC Bank Bulgaria):
\n
\u25e6 The carrying value before impairment at year-end 2022 included 4.7 billion euros for KBC Bank Bulgaria, of which 4.1 billion
\n
euros in loans and advances (3.2, 0.8 and 0.1 billion euros in Stages 1, 2 and 3, respectively), 0.5 billion euros in debt securities
\n
at amortised cost and 0.1 billion euros in debt securities at fair value through OCI. KBC Bank Bulgaria\u2019s portfolios account
\n
for 1.8% of the entire KBC group.
\n
\u25e6 Impairment at year-end 2022 included 113 million euros for KBC Bank Bulgaria, of which 106 million euros in loans and
\n
advances (10, 30 and 66 million euros in Stages 1, 2 and 3, respectively), and 7 million euros in debt securities at amortised
\n
cost. These impairment valuations partly deviate from the methodology set out in the accounting policies (particularly as
\n
regards the forward-looking information, IFRS 9 models and criteria used to determine a significant increase in credit risk).
\n
The integration of KBC Bank Bulgaria in 2023 will also involve the alignment of the accounting policies at KBC Bank Bulgaria
\n
for determining impairment.
\n
\u2022 Carrying value before impairment of loans and advances at amortised cost: increase of 9.8 billion euros in 2022, due primarily
\n
to:
\n
\u25e6 The acquisition of Raiffeisenbank Bulgaria (see above).
\n
\u25e6 An organic net increase in the loan portfolio (mainly mortgage loans and term loans, in all countries).
\n
\u25e6 This increase was partly offset by a decrease of the carrying value before impairment of loans and advances (excluding
\n
reverse repos) and the reverse repos to credit institutions and investment firms.
\n
\u2022 Carrying value before impairment of loans and advances at amortised cost in \u2018Stage 2\u2019: increase of 13.4 billion euros in 2022,
\n
due primarily to:
\n
\u25e6 The migration to \u2018Stage 2\u2019 based on a collective approach of \u2018Stage 1\u2019 loans (see also Note 1.4) that have indirect exposure
\n
to Russia, Ukraine and Belarus (i.e. as a result of the military conflict; 2.8 billion euros) and/or are vulnerable to emerging
\n
risks (11.3 billion euros).
\n
\u25e6 The acquisition of Raiffeisenbank Bulgaria (see above).
\n
\u25e6 This was partly offset by the discontinuation of the collective \u2018Stage 2\u2019 transfer of loans vulnerable to coronavirus-related
\n
risks (3.1 billion euros in receivables that had been moved to \u2018Stage 2\u2019 at year-end 2021). The remaining coronavirus-related
\n
risks in our loan portfolio are included in the regular indicators used to assess considerable credit risk increases (probability
\n
of default, forbearance and the number of days past due), which are no longer concealed by the moratoria.
\n
\u25e6 Please note that the migration of loans from \u2018Stage 1\u2019 to \u2018Stage 2\u2019 based on the collective approach resulted in a net
\n
decrease of 3.6 billion euros of the carrying value before impairment of loans and advances at amortised cost in \u2018Stage 1\u2019,
\n
which was partly offset by the organic net increase in the loan portfolio and the acquisition of Raiffeisenbank Bulgaria.
\n
\u25e6 Also note that the migration predicted in the management overlay at the time is not reflected in the 2021 year-end figures,
\n
because it was determined based on a collective approach and, therefore, could not be individually linked to specific
\n
loans. Taking into account the impact of the management overlay on staging at year-end 2021, this would result in a
\n
carrying value before impairment of loans and advances of an estimated 165.4, 24.3 and 4.3 billion euros in Stages 1, 2 and
\n
3, respectively (or net migration of 1% of the total portfolio from \u2018Stage 1\u2019 to \u2018Stage 2\u2019 and 0.4% from \u2018Stage 1\u2019 and \u2018Stage 2\u2019
\n
to \u2018Stage 3\u2019).
\n
\u2022 Carrying value before impairment of debt securities at amortised cost: increase of 4.9 billion euros in 2022, almost entirely in
\n
\u2018Stage 1\u2019:
\n
\u25e6 More than half of this increase concerns (issues by) public bodies, one third concerns credit institutions and investment
\n
firms, and the remaining part concerns corporates, and related primarily to net investments.
\n
\u2022 Impairment: increase of 0.1 billion euros in 2022, due to:
\n
\u25e6 The acquisition of Raiffeisenbank Bulgaria (see above).
\n
\u25e6 For information on other changes, see Note 3.10.
\n
\u2022 See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\u2022 In 2022, \u2018Stage 2\u2019 and \u2018Stage 3\u2019 financial assets with a net carrying value of 471 million euros have been subject to modifications
\n
in the past that did not result in derecognition. The gross carrying value of \u2018Stage 1\u2019 financial assets subject to modifications in
\n
the past that did not result in derecognition came to 1 088 million euros in 2022. The corresponding figures for 2021 were 1 712
\n
million euros and 509 million euros, respectively. Modification gains or losses are recognised under impairment (see Note 3.10).
\n
\u2022 In 2022, financial assets at amortised cost with a gross carrying value of 80 million euros were written off, but were still subject
\n
to enforcement activities; the corresponding figure in 2021 was 72 million euros.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.2.2: Impairment details
\n
\n
\n
\n
Subject to lifetime ECL
\n
Stage 1
\n
Stage 2
\n
Stage 3
\n
(purchased or
\n
\n
Subject to 12-
\n
Subject to lifetime
\n
Subject to lifetime
\n
originated credit
\n
(in millions of EUR)
\n
month ECL
\n
ECL
\n
ECL
\n
impaired)
\n
Total
\n
2022
\n
\n
LOANS AND ADVANCES AT AMORTISED COST
\n
Impairment on 1 January
\n
104
\n
507
\n
1 848
\n
114
\n
2 573
\n
1
\n
-6 96 147 -8 230
\n
Movements with an impact on results
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) -22 158 60 0 197
\n
\n
Stage 2 (lifetime ECL) 4 -83 95 0 16
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 26 -54 -3 -31
\n
New financial assets
\n
2
\n
\n
40
\n
43
\n
10
\n
0
\n
93
\n
\n
Changes in risk parameters during the reporting period -16 -23 90 -5 48
\n
\n
Changes in the model or methodology -1 3 0 0 2
\n
Derecognised financial assets
\n
3
\n
-10 -26 -59 -1 -97
\n
\n
\n
Other -1 -2 4 0 2
\n
Movements without an impact on results
\n
12 32 -199 -29 -184
\n
\n
Derecognised financial assets
\n
3
\n
0 -1 -296 -7 -304
\n
Changes in the scope of consolidation
\n
14
\n
32
\n
88
\n
0
\n
133
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
\n
Other -2 1 9 -21 -13
\n
Impairment on 31 December
\n
110 635 1 796 77 2 619
\n
DEBT
\n
SECURITIES AT AMORTISED COST
\n
Impairment on 1 January
\n
5 3 1 0 9
\n
1
\n
2 0 1 0 3
\n
Movements with an impact on results
\n
Transfer of financial assets
\n
\n
\n
\n
\n
\n
\n
Stage 1 (12-month ECL) 0 0 0 0 0
\n
\n
Stage 2 (lifetime ECL) 0 -1 1 0 0
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
1 0 0 0 1
\n
\n
Changes in risk parameters during the reporting period 0 1 0 0 1
\n
Changes in the model or methodology
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
\n
Other 0 0 0 0 0
\n
Movements without an impact on results
\n
0 1 5 0 6
\n
\n
Derecognised financial assets
\n
3
\n
0 0 -1 0 -1
\n
\n
Changes in the scope of consolidation 0 1 6 0 7
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
Other
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Impairment on 31 December
\n
7 4 7 0 18
\n
DEBT SECURITIES AT FAIR VALUE THROUGH OCI
\n
\n
Impairment on 1 January
\n
3 3 0 0 6
\n
Movements with an impact on results
\n
1
\n
0 -1 0 0 -1
\n
\n
Transfer of financial assets
\n
Stage 1 (12-month ECL)
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Stage 2 (lifetime ECL)
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
0 0 0 0 0
\n
\n
Changes in risk parameters during the reporting period 0 -1 0 0 -1
\n
\n
Changes in the model or methodology 0 0 0 0 0
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
Other
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Movements without an impact on results
\n
0 0 0 0 0
\n
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
Changes in the scope of consolidation 0 0 0 0 0
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
\n
Other 0 0 0 0 0
\n
Impairment on 31 December
\n
3 2 0 0 4
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
2021
\n
LOANS AND ADVANCES AT AMORTISED COST
\n
Impairment on 1 January
\n
168 992 2 517 18 3 695
\n
Movements with an impact on results
\n
1
\n
-62 -454 242 -2 -276
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) -12 99 42 0 129
\n
\n
Stage 2 (lifetime ECL) 6 -116 80 0 -30
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL)
\n
0
\n
20
\n
-36
\n
0
\n
-16
\n
\n
New financial assets
\n
2
\n
25 14 7 0 45
\n
\n
Changes in risk parameters during the reporting period -57 -426 214 1 -269
\n
\n
Changes in the model or methodology 0 -1 0 0 -1
\n
\n
Derecognised financial assets
\n
3
\n
-24 -48 -84 -2 -158
\n
\n
Other 0 2 20 0 22
\n
Movements without an
\n
impact on results -2 -32 -911 98 -847
\n
3
\n
Derecognised financial assets
\n
\n
0
\n
0
\n
-286
\n
-12
\n
-299
\n
\n
Changes in the scope of consolidation 0 0 4 0 4
\n
\n
Transfers under IFRS 5 -3 -31 -540 0 -574
\n
\n
Other 1 0 -90 110 21
\n
Impairment on 31 December
\n
104 507 1 848 114 2 573
\n
DEBT SECURITIES AT AMORTISED COST
\n
\n
Impairment on 1 January
\n
6
\n
1
\n
2
\n
0
\n
9
\n
Movements with an impact on results
\n
1
\n
\n
-1
\n
2
\n
0
\n
0
\n
1
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) 0 0 0 0 0
\n
\n
Stage 2 (lifetime ECL) 0 0 0 0 0
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
1 0 0 0 1
\n
Changes in risk parameters during the reporting period
\n
-2
\n
3
\n
0
\n
0
\n
1
\n
\n
Changes in the model or methodology 0 0 0 0 0
\n
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 -1
\n
\n
Other 0 0 0 0 0
\n
Movements without an
\n
impact on results 0 0 -1 0 -1
\n
Derecognised financial assets
\n
3
\n
0 0 -1 0 -1
\n
\n
\n
Changes in the scope of consolidation 0 0 0 0 0
\n
Transfers under IFRS 5
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
Other 0 0 0 0 0
\n
Impairment on 31
\n
December 5 3 1 0 9
\n
DEBT SECURITIES AT FAIR VALUE THROUGH OCI
\n
\n
Impairment on 1 January
\n
6 3 0 0 9
\n
Movements with an impact on results
\n
1
\n
-3 0 0 0 -4
\n
Transfer of financial assets
\n
\n
\n
\n
\n
\n
\n
Stage 1 (12-month ECL) 0 0 0 0 0
\n
\n
Stage 2 (lifetime ECL) 0 -1 0 0 -1
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
0 0 0 0 0
\n
\n
Changes in risk parameters during the reporting period -3 0 0 0 -3
\n
\n
Changes in the model or methodology 0 0 0 0 0
\n
Derecognised financial assets
\n
3
\n
\n
-1
\n
0
\n
0
\n
0
\n
-1
\n
\n
Other 0 0 0 0 0
\n
Movements without an impact on
\n
results 0 0 0 0 0
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
\n
Changes in the scope of consolidation 0 0 0 0 0
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
\n
Other 0 0 0 0 0
\n
Impairment on 31 December
\n
3
\n
3
\n
0
\n
0
\n
6
\n
1 Amounts recovered in respect of loans that have already been written off are recycled to the income statement and recorded as \u2018Impairment on financial assets at amortised cost and at
\n
fair value through OCI\u2019. However, they have not been included in this table since they do not have any impact on impairment losses on the balance sheet.
\n
2 Also includes impairment related to new financial assets resulting from off-balance-sheet commitments and financial guarantees already given being called.
\n
3 Derecognition without an impact on results occurs when the impairment adjustment has already been made upfront (for example, at the moment of the sale agreement (disposals) or before
\n
the write-off). Derecognition with an impact on results occurs when the impairment adjustment takes place at the same time (for instance, in the case of debt forgiveness).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n
\u2022 The change in impairment in 2022 relates mainly to the reserve set aside to cover geopolitical and emerging risks and the full
\n
reversal of the remaining reserves set aside for the coronavirus crisis (see Note 1.4) and the changes in the scope of
\n
consolidation, partly offset by the elimination of the impairment on derecognised financial assets.
\n
\u2022 Changes in the scope of consolidation: relates mainly to the acquisition of Raiffeisenbank Bulgaria.
\n
\u2022 The vast majority of the staging is triggered by a collective management assessment and relative changes in PD (see the multi-
\n
tier approach outlined in Note1.2 under \u2018Significant increase in credit risk since initial recognition\u2019).
\n
\u2022 For information on provisions for commitments and financial guarantees, see Note 5.7.2.
\n
\u2022 For information regarding the impact of changes in impairment on the income statement, see Note 3.10.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. Based on internal management reports, the
\n
composition and quality of the loan portfolio is set out in detail in the \u2018How do we manage our risks?\u2019 section (under \u2018Credit
\n
risk\u2019). All parts of that particular section which have been audited by the statutory auditor are listed at the start of the section.
\n

\n\n

\n\n

\n\n

\n\n
\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.3: Maximum credit exposure and offsetting
\n
\n
Collateral and other
\n
Maximum credit
\n
credit enhancements
\n
(in millions of EUR)
\n
\n
exposure (A)
\n
received (B) Net (A-B)
\n
31
\n
-12-2022
\n
\n
\n
\n
Subject to impairment
\n
326 705 132 743 193 962
\n
\n
of which Stage 3 \u2018non-performing\u2019 (AC and FVOCI)
\n
2 106
\n
1 550
\n
556
\n
Debt securities
\n
63 843 98 63 745
\n
Loans and advances (excl. reverse
\n
repos) 181 668 99 415 82 252
\n
Reverse repos
\n
20 186 20 131 55
\n
Other financial assets
\n
1 561 0 1 561
\n
Off
\n
-balance-sheet liabilities 59 447 13 099 46 348
\n
\n
Irrevocable
\n
38 832
\n
6 741
\n
32 091
\n
\n
Revocable
\n
20 616
\n
6 358
\n
14 258
\n
Not
\n
subject to impairment 9 239 2 213 7 026
\n
Debt securities
\n
1 745 0 1 745
\n
Loans and advances (excl. reverse repos)
\n
639 593 46
\n
\n
of which designated upon initial recognition at fair value through profit or loss (FVO)
\n
0 0 0
\n
Reverse repos
\n
33 33 0
\n
Derivatives
\n
6 821 1 588 5 234
\n
Other financial assets
\n
0 0 0
\n
Off
\n
-balance-sheet liabilities 0 0 0
\n
Total
\n
335 944 134 956 200 987
\n
31
\n
-12-2021
\n
\n
\n
\n
Subject to impairment
\n
309 988 127 140 182 848
\n
\n
of which Stage 3 \u2018non-performing\u2019 (AC and FVOCI) 2 072 1 584 488
\n
Debt securities
\n
62 675 93 62 582
\n
Loans and advances (excl. reverse repos)
\n
167 087 90 770 76 317
\n
Reverse repos
\n
24 978 24 877 101
\n
Other financial assets
\n
892 0 892
\n
Off
\n
-balance-sheet liabilities 54 357 11 400 42 957
\n
\n
Irrevocable 36 957 6 031 30 926
\n
\n
Revocable 17 401 5 370 12 031
\n
Not subject to
\n
impairment 9 263 2 294 6 969
\n
Debt securities
\n
2 976 0 2 976
\n
Loans and advances (excl. reverse repos)
\n
561 545 16
\n
\n
of which designated upon initial recognition at fair value through profit or loss (FVO) 0 0 0
\n
Reverse repos
\n
0 0 0
\n
Derivatives
\n
5 727 1 749 3 977
\n
Other financial assets
\n
0 0 0
\n
Off
\n
-balance-sheet liabilities 0 0 0
\n
Total
\n
319 251 129 434 189 818
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
\u2022 Maximum credit exposure for a financial asset is the net carrying value. Besides the amounts on the balance sheet, maximum
\n
credit exposure also includes the undrawn portion of irrevocable credit lines, financial guarantees granted and other
\n
irrevocable commitments.
\n
\u2022 The main types of collateral and other credit enhancements received relate to mortgages on real estate (mainly collateral for
\n
mortgage loans), securities lent out (mainly as a collateral for reverse repos), off-balance-sheet financial guarantees received
\n
and collateral of movable property. Mortgage loans with an LTV (loan-to-value) greater than 100% are limited to 0.6 billion
\n
euros or 0.7% of the entire mortgage loan portfolio at year-end 2022.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. Based on internal management reports, the
\n
composition and quality of the loan portfolio is set out in detail in the \u2018How do we manage our risks?\u2019 section (under \u2018Credit
\n
risk\u2019). All parts of that particular section which have been audited by the statutory auditor are listed at the start of the section.
\n\n
\u2022 Collateral and credit enhancements received: recognised at market value and limited to the outstanding amount of the
\n
relevant loans.
\n

\n\n
\u2022 The maximum credit exposure for the KBC Bank Ireland financial assets has not been included in the above figures (see Note
\n
5.11 for more information).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n
Financial instruments subject to offsetting, enforceable master
\n
financial
\n
instruments set
\n
the balance
\n
Amounts not set off
\n
netting agreements and similar arrangements
\n
instruments
\n
off
\n
sheet
\n
in the balance sheet
\n
Net amount
\n
\n
Financial
\n
Cash
\n
Securities
\n
(in millions of EUR)
\n
\n
\n
\n
\n
instruments
\n
collateral
\n
collateral
\n
\n
\n
31
\n
-12-2022
\n
FINANCIAL ASSETS
\n
Derivatives
\n
32 380 25 559 6 821 4 485 1 302 67 968
\n
\n
Derivatives (excluding central clearing houses)
\n
6
\n
\n
601
\n
\n
0
\n
\n
6
\n
\n
601
\n
\n
4
\n
\n
485
\n
\n
1
\n
\n
302
\n
\n
67
\n
\n
748
\n
\n
\n
Derivatives with central clearing houses
\n
*
\n
\n
25
\n
\n
779
\n
\n
25
\n
\n
559
\n
\n
220
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
220
\n
\n
Reverse repos, securities borrowing and similar
\n
arrangements 25 694 5 475 20 219 0 0 20 210 8
\n
\n
Reverse repos
\n
25
\n
\n
694
\n
\n
5
\n
\n
475
\n
\n
20
\n
\n
219
\n
\n
0
\n
\n
0
\n
\n
20
\n
\n
210
\n
\n
8
\n
\n
\n
Securities borrowing
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
58 074 31 034 27 040 4 485 1 302 20 277 976
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
31 462 22 846 8 615 4 492 1 095 447 2 582
\n
Derivatives (excluding central clearing houses)
\n
8
\n
\n
329
\n
0
\n
8
\n
\n
329
\n
4
\n
\n
492
\n
1
\n
\n
095
\n
447
\n
2
\n
\n
296
\n
Derivatives with central clearing houses
\n
*
\n
\n
23
\n
\n
132
\n
22
\n
\n
846
\n
286
\n
0
\n
0
\n
0
\n
286
\n
Repos, securities lending and similar arrangements
\n
16 573 5 475 11 097 0 0 11 082 15
\n
\n
Repos
\n
16
\n
\n
573
\n
\n
5
\n
\n
475
\n
\n
11
\n
\n
097
\n
\n
0
\n
\n
0
\n
\n
11
\n
\n
082
\n
\n
15
\n
\n
\n
Securities lending
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
48 035 28 322 19 713 4 492 1 095 11 529 2 597
\n
31
\n
-12-2021
\n
FINANCIAL ASSETS
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
13 969 8 242 5 727 2 731 1 298 112 1 586
\n
\n
Derivatives (excluding central clearing houses) 5 619 0 5 619 2 731 1 298 112 1 478
\n
\n
Derivatives with central clearing houses
\n
*
\n
8 349 8 242 107 0 0 0 107
\n
Reverse repos, securities borrowing and similar
\n
arrangements 38 160 13 182 24 978 67 0 24 900 10
\n
\n
Reverse repos 38 160 13 182 24 978 67 0 24 900 10
\n
\n
Securities borrowing 0 0 0 0 0 0 0
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
52 129 21 425 30 704 2 798 1 298 25 012 1 596
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
16 084 9 372 6 713 3 015 1 793 640 1 265
\n
\n
Derivatives (excluding central clearing houses) 6 608 0 6 609 3 015 1 793 640 1 161
\n
\n
Derivatives with central clearing houses
\n
*
\n
9 476 9 372 104 0 0 0 104
\n
Repos, securities lending and similar arrangements
\n
16 477 13 182 3 295 160 0 3 135 1
\n
\n
Repos 16 477 13 182 3 295 160 0 3 135 1
\n
\n
Securities lending 0 0 0 0 0 0 0
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
32 562 22 554 10 008 3 174 1 793 3 774 1 266
\n
* For central clearing houses, the offsetting procedure refers to the amount of offsetting between derivatives and related cash collateral. Cash collateral with central clearing houses
\n
amounted to 2 712 million euros at year-end 2022 and 1 130 million euros at year-end 2021.
\n
\n
\u2022 The criteria for offsetting are met if KBC currently has a legally enforceable right to set off the recognised financial assets and
\n
financial liabilities and intends either to settle the transactions on a net basis, or to realise the financial asset and settle the
\n
financial liability simultaneously. Financial assets and financial liabilities that are set off relate to financial instruments that were
\n
traded on (central) clearing houses.
\n\n
\u2022 The amounts presented in the \u2018Financial instruments\u2019 column under the \u2018Amounts not set off in the balance sheet\u2019 heading are
\n
for financial instruments entered into under an enforceable master netting agreement or similar arrangement that does not
\n
meet the criteria defined in IAS 32. These amounts refer to situations in which offsetting can only be applied if one of the
\n
counterparties defaults, becomes insolvent or goes bankrupt. The same principle applies for financial instruments given or
\n
received as collateral. The value given in the table for non-cash collateral received (in the \u2018Securities collateral\u2019 column under
\n
the \u2018Amounts not set off in the balance sheet\u2019 heading) is the market value. This is the value that is used if one of the
\n
counterparties defaults, becomes insolvent or goes bankrupt.
\n

\n\n

\n\n

\n\n

\n\n
\n\n

\n\n

\n\n

\n

\n\n

\n\n
Note 4.4: Fair value of financial assets and liabilities \u2013 general
\n
\u2022 In line with European Banking Authority guidelines, we conduct an outlier stress test on a quarterly basis by applying six different
\n
scenarios to the banking books (material currencies). The worst-case scenario is set off against tier-1 capital. For the banking
\n
book at KBC group level, this risk came to -3% of tier-1 capital at year-end 2022. This -3% is well below the -15% Tier 1 threshold,
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
which is monitored by the ECB. Note that this -3% of tier-1 capital at year-end 2022 is equivalent to a -0.4% points impact on
\n
the end of year 2022 fully loaded CET1 ratio.
\n
\u2022 The table shows the changes in economic value of equity under six different interest rate scenarios. To test these six scenarios,
\n
we combine the shift in the yield curves with changes in maturities depending on clients\u2019 behaviour (e.g., interest-rate-driven
\n
prepayment behaviour) and use a run-off balance sheet where maturing items are not replaced. The bank also analyses the
\n
impact of different interest rate scenarios on its net interest income.
\n
\n
Changes of the economic value of equity
\n
Supervisory shock scenarios (in millions of EUR, material currencies)*
\n
End of 4Q2022
\n
End of 2Q2022
\n
1 Parallel up
\n
-491
\n
-1 163
\n
2 Parallel down
\n
370
\n
600
\n
3 Steepener
\n
-55
\n
-207
\n
4 Flattener
\n
-26
\n
-3
\n
5 Short rates up
\n
-179
\n
-343
\n
6 Short rates down
\n
102
\n
176
\n
\n
* Supervision of the underlying internal models\u2019 compliance with the approval criteria as provided for in the standards imposed by the regulator does not come under the responsibility of the statutory auditor.
\n
\u2022 Note that the above stress test covers the full balance sheet (full economic view), with compensating effects across the balance
\n
sheet, whereas the table below focuses on some parts of the balance sheet.
\n
\n
\u2022 Furthermore, taking into account 1) KBCs large stock of high-quality liquid assets (approximately 92 billion euros on average in
\n
2022), which consist of cash and bonds which can be repoed in the private market and at the central banks, 2) 48% of total
\n
customer deposits at KBC are covered by the Deposit Guarantee and 3) 83% of total customer deposits consisting of more
\n
stable retail & SME clients, the unrealised losses on the debt securities portfolio at amortised cost do not need to be realised
\n
for liquidity purposes and are therefore irrelevant from a capital perspective.
\n
\n
\n
\n
Fair value of financial instruments that are not measured at fair value
\n
Financial assets
\n
Financial liabilities
\n
in the balance sheet
\n
at amortised cost
\n
at amortised cost
\n
Carrying
\n
Fair
\n
Carrying
\n
Fair
\n
(in millions of EUR)
\n
value
\n
value
\n
value
\n
value
\n
31-12-2022
\n
FINANCIAL ASSETS
\n
\n
Loans and advances to credit institutions and investment firms (incl. reverse
\n
repos) 24 258 24 211 \u2013 \u2013
\n
Loans and advances to customers (incl. reverse repos)
\n
177 596 163 972 \u2013 \u2013
\n
Debt securities
\n
52 030 46 886 \u2013 \u2013
\n
Other
\n
1 561 1 561 \u2013 \u2013
\n
Total
\n
255 444 236 630 \u2013 \u2013
\n
\n
Level 1 \u2013 43 364 \u2013 \u2013
\n
\n
Level 2 \u2013 31 917 \u2013 \u2013
\n
\n
Level 3 \u2013 161 349 \u2013 \u2013
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms (incl. repos)
\n
\n
\u2013 \u2013 35 671 35 207
\n
Deposits from customers and debt securities (incl. repos)
\n
\n
\u2013 \u2013 251 735 250 485
\n
Liabilities under investment
\n
contracts \u2013 \u2013 0 0
\n
Other
\n
\u2013 \u2013 2 448 2 448
\n
Total
\n
\u2013 \u2013 289 854 288 140
\n
Level 1
\n
\u2013
\n
\u2013
\n
\u2013
\n
47
\n
Level 2
\n
\u2013
\n
\u2013
\n
\u2013
\n
111 093
\n
Level 3
\n
\u2013
\n
\u2013
\n
\u2013
\n
176 999
\n
31
\n
-12-2021
\n
FINANCIAL ASSETS
\n
\n
Loans and advances to credit institutions and investment firms (incl. reverse
\n
repos) 32 780 32 789 \u2013 \u2013
\n
Loans and advances to customers (incl. reverse repos)
\n
159 285 160 037 \u2013 \u2013
\n
Debt securities
\n
47 172 47 878 \u2013 \u2013
\n
Other
\n
892 892 \u2013 \u2013
\n
Total
\n
240 128 241 595 \u2013 \u2013
\n
Level 1
\n
\u2013
\n
44 062
\n
\u2013
\n
\u2013
\n
Level 2
\n
\u2013
\n
36 737
\n
\u2013
\n
\u2013
\n
Level 3
\n
\u2013
\n
160 797
\n
\u2013
\n
\u2013
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms (incl. repos)
\n
\n
\u2013 \u2013 40 935 41 003
\n
Deposits from customers and debt securities (incl. repos)
\n
\n
\u2013 \u2013 225 164 225 299
\n
Liabilities under investment
\n
contracts \u2013 \u2013 0 0
\n
Other
\n
\u2013 \u2013 2 288 2 286
\n
Total
\n
\u2013 \u2013 268 387 268 588
\n
\n
Level 1 \u2013 \u2013 \u2013 24
\n
\n
Level 2 \u2013 \u2013 \u2013 105 714
\n
\n
Level 3 \u2013 \u2013 \u2013 162 850
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n
\u2022 All internal valuation models are validated by an independent Risk Validation Unit. In addition, the Executive Committee has
\n
appointed a Group Valuation Committee (GVC) to ensure that KBC meets all the legal requirements for measuring financial
\n
assets and liabilities at fair value. The GVC monitors consistent implementation of the KBC Valuation Framework, which consists
\n
of various guidelines, including the Group Valuation Policy, the Group Market Value Adjustments Policy and the Group
\n
Parameter Review Policy. The GVC meets at least twice a quarter to approve significant changes in valuation methods
\n
(including, but not limited to, models, market data and inputs) or deviations from group policies for financial assets and liabilities
\n
measured at fair value. The committee is made up of members from Finance, Risk Management and the Middle Office. Valuation
\n
uncertainty measurements are made and reported to the GVC every six months. Certain fair values generated by valuation
\n
models are challenged by a team set up specifically for this purpose.
\n
\u2022 The fair value of mortgage and term loans not measured at fair value in the balance sheet (see table) is calculated by
\n
discounting contractual cashflows at the risk-free rate. This calculation is then adjusted for credit risk by taking account of
\n
margins obtained on similar, but recently issued, loans or by using a spread derived from the listed-bond spread. The fair value
\n
of the main portfolios takes account of prepayment risks and cap options. The fair value of time deposits is calculated by
\n
discounting contractual cashflows at the risk-free rate. The fair value of demand and savings deposits is presumed to be equal
\n
to their carrying value.
\n
\u2022 As a result of the first-time adoption of IFRS 9 on 1 January 2018, debt instruments with a total carrying value of 15 060 million
\n
euros have been reclassified from \u2018Available-for-sale assets\u2019 to \u2018Financial assets held at amortised cost\u2019. Due to this
\n
reclassification, changes in fair value (before tax) totalling -566 million euros were not recorded in the revaluation reserve in
\n
2022 (-199 million euros in 2021). The fair value of this reclassified portfolio (after redemptions) amounted to 4 668 million euros
\n
at year-end 2022 (5 753 million euros at year-end 2021).
\n
\u2022 The difference between the fair value and the carrying value of the financial instruments at amortised cost was caused by the
\n
substantial interest rate hikes in 2022. As a hold-to-collect business model is applied on the assets side, interim changes in fair
\n
value are less relevant. In addition, part of this difference has already been recorded under fair value hedges for a portfolio of
\n
interest rate risk, which is presented separately on the balance sheet (on both the assets and the liabilities side) in the
\n
\u2018Profit/loss on positions in portfolios hedged against interest rate risk\u2019 balance sheet item. Furthermore, there are ALM interest
\n
derivatives not recognised in hedge accounting.
\n

\n\n

\n\n
\n
\n
\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n

\n

\n

\n

\n

\n

\n

\n
Note 4.5: Financial assets and liabilities measured at fair value \u2013 fair value hierarchy
\n
\n
\n
Fair value hierarchy
\n
31-12-2022 31-12-2021
\n
(in millions of EUR)
\n
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
\n
FINANCIAL ASSETS AT FAIR VALUE
\n
\n
Mandatorily measured at fair value through profit or loss other than held for trading (including
\n
\n
overlay)
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 13 0 13 0 0 0 0
\n
reverse repos)
\n
Loans and advances to customers (incl. reverse repos)
\n
0 0 625 625 0 0 560 560
\n
Equity instruments
\n
1 131 0 118 1 250 1 323 0 52 1 374
\n
Investment contracts (insurance)
\n
12 638 134 0 12 771 14 365 254 0 14 620
\n
Debt securities
\n
12 0 5 17 14 0 3 17
\n
of which sovereign bonds
\n
\n
0
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 34 0 34 0 1 0 1
\n
reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Equity instruments
\n
429 0 0 430 448 0 0 448
\n
Debt securities
\n
1 480 244 4 1 728 1 522 1 432 4 2 958
\n
\n
of which sovereign bonds 1 444 223 0 1 667 1 441 1 076 0 2 517
\n
Derivatives
\n
3 5 547 729 6 279 1 4 482 961 5 443
\n
Other
\n
0 0 0 0 0 0 0 0
\n
Designated upon initial recognition at fair value through profit or loss (FVO)
\n
Loans and advances to credit institutions and
\n
0 0 0 0 0 0 0 0
\n
investment firms (incl. reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Debt securities
\n
0 0 0 0 0 0 0 0
\n
\n
of which sovereign bonds 0 0 0 0 0 0 0 0
\n
At fair value through OCI
\n
\n
\n
\n
\n
\n
\n
\n
\n
Equity instruments
\n
18 1 297 315 15 1 306 321
\n
Debt securities
\n
9 508 2 070 235 11 813 12 269 2 963 271 15 503
\n
\n
of which sovereign bonds
\n
\n
7 003 1 059 73 8 135 8 751
\n
\n
1 711
\n
\n
52
\n
\n
10 514
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0 542 0 542 0 283 0 283
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial assets at fair value
\n
25 219 8 585 2 014 35 818 29 956 9 416 2 157 41 529
\n
FINANCIAL LIABILITIES AT FAIR VALUE
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 7 0 7 0 2 0 2
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 44 0 44 0 21 0 21
\n
Derivatives
\n
2
\n
6 911
\n
1 125
\n
8 038
\n
1
\n
4 410
\n
1 209
\n
5 619
\n
Short positions
\n
884 123 0 1 007 1 582 47 0 1 628
\n
Designated at fair value
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 0 0 0 0 0 0 0
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 74 1 131 1 205 0 61 1 251 1 312
\n
Liabilities under investment contracts
\n
12 002 0 0 12 002 13 603 0 0 13 603
\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0
\n
479
\n
98
\n
577
\n
0
\n
696
\n
398
\n
1 094
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial liabilities at fair value
\n
12 887 7 638 2 355 22 881 15 185 5 238 2 857 23 280
\n
\n
\u2022 The fair value hierarchy prioritises the valuation techniques and the respective inputs into three levels.
\n
- The fair value hierarchy gives the highest priority to \u2018level 1 inputs\u2019. This means that, when there is an active market, quoted
\n
prices have to be used to measure the financial assets or liabilities at fair value. Level 1 inputs are prices that are readily and
\n
regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency (and that are
\n
quoted in active markets accessible to KBC). They represent actual and regularly occurring market transactions on an arm\u2019s
\n
length basis. The fair value is then based on a mark-to-market valuation derived from currently available transaction prices.
\n
No valuation technique (model) is involved.
\n
- If there are no price quotations available, the reporting entity establishes fair value using a model based on observable or
\n
unobservable inputs. The use of observable inputs must be maximised. Observable inputs are also referred to as \u2018level 2
\n
inputs\u2019 and reflect the assumptions market participants would use in pricing the asset or liability based on market data
\n
obtained from sources independent of the reporting entity. Examples of observable inputs are the risk-free rate, exchange
\n
rates, stock prices and implied volatility. Valuation techniques based on observable inputs include discounted cashflow
\n
analysis, or reference to the current or recent fair value of a similar instrument.
\n
- Unobservable inputs are also referred to as \u2018level 3 inputs\u2019 and reflect the reporting entity\u2019s own assumptions about the
\n
assumptions that market participants would use in pricing the asset or liability (including assumptions regarding the risks
\n
involved). Unobservable inputs reflect a market that is not active. For example, proxies and correlation factors can be
\n
considered to be unobservable in the market.
\n
\u2022 When the inputs used to measure the fair value of an asset or a liability can be categorised into different levels of the fair value
\n
hierarchy, the fair value measurement is classified in its entirety into the same level as the lowest level input that is significant
\n
to the entire fair value measurement. For example, if a fair value measurement uses observable inputs that require significant
\n
adjustment based on unobservable inputs, that measurement is a level 3 measurement.
\n
\u2022 The valuation methodology and the corresponding classification in the fair value hierarchy of the most commonly used financial
\n
instruments are summarised in the table. Whereas the majority of instruments of a certain type are within the level indicated in
\n
the table, a small portion may actually be classified in another level.
\n
\u2022 KBC follows the principle that transfers into and out of levels of the fair value hierarchy are made at the end of the reporting
\n
period. Transfers between the various levels are dealt with in more detail in Note 4.6 and Note 4.7.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Instrument type Products Valuation technique
\n
Liquid financial instruments
\n
FX spots, exchange traded financial futures, exchange traded options,
\n
Mark-to-market (quoted prices in active
\n
for which quoted prices are
\n
exchange traded stocks, exchange traded funds, liquid government
\n
markets), for bonds: BVAL or vendor
\n
data.
\n
\n
Level 1
\n
regularly available
\n
\n
bonds, other liquid bonds, liquid asset backed securities (ABS) in active
\n
markets
\n
Plain vanilla/liquid
\n
(Cross-currency) interest rate swaps (IRS), FX swaps, FX forwards, forward
\n
Discounted cashflow analysis based on
\n
derivatives
\n
\n
rate agreements (FRA), inflation swaps, dividend swaps and futures,
\n
discount and estimation curves (derived
\n
reverse floaters, bond future options, interest rate future opt
\n
ions, overnight
\n
from quoted deposit rates,
\n
\n
index swaps (OIS), FX resets
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Caps & floors, interest rate options, European stock options, European &
\n
Option pricing model based on
\n
American FX options, forward starting options, digital FX options, FX strips
\n
observable inputs (e.g., volatilities)
\n
\n
of simple options, European swaptions, European cancellable IRS,
\n
\n
compound options
\n
\n
Linear financial liabilities
\n
Deposits, simple cashflows, repo transactions
\n
Discounted cashflow analysis based on
\n
(without optional features)
\n
\u2013
\n
discount and estimation curves (derived
\n
cash instruments
\n
\n
from quoted deposit rates,
\n
\n
\n
Level 2
\n
FX swaps and (CC)IRS)
\n
\n
\n
Semi-liquid bonds/asset
\n
Semi-liquid bonds/asset backed securities
\n
BVAL, prices corroborated by alternative
\n
backed securities
\n
\n
observable market data, or using
\n
comparable spread method
\n
\n
\n
Debt instruments
\n
KBC IFIMA own issues (liabilities), mortgage bonds held by \u010cSOB
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
observable inputs
\n
\n
\n
Linear financial assets (cash
\n
Loans, commercial paper
\n
Discounted cashflow analysis based on
\n
instruments)
\n
\n
discount and estimation curves (derived
\n
from quoted deposit rates,
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Exotic derivatives
\n
Target profit forwards, flexible forwards, American & Asian stock options,
\n
Option pricing model based on
\n
Bermudan swaptions, digital interest rate options, quanto interest rate
\n
observable inputs (e.g., correlation)
\n
\n
options, digital stock options, composite stock options, barrier stock
\n
options, quanto digital FX options, FX
\n
Asian options, FX European barrier
\n
options, FX simple digital barrier options, FX touch rebates, inflation
\n
options, Bermudan cancellable IRS, constant maturity swaps (CMS), CMS
\n
spread swaps, CMS spread options, CMS interest rate caps/floors,
\n
(callable) ra
\n
nge accruals, outperformance options, auto-callable options,
\n
\n
Level 3
\n
lookback options, commodity swaps and forwards
\n
Illiquid credit-linked
\n
Collateralised debt obligations (notes)
\n
Valuation model based on correlation of
\n
instruments
\n
\n
probability of default of underlying assets
\n
\n
\n
Private equity investments
\n
Private equity and non-quoted participations
\n
Based on the valuation guidelines of the
\n
European Private Equity & Venture Capital
\n
Association
\n
\n
\n
Illiquid bonds/asset backed
\n
Illiquid (mortgage) bonds/asset backed securities that are indicatively
\n
BVAL, third-party pricing (e.g., lead
\n
securities
\n
\n
priced by a single pricing provider in an inactive market
\n
\n
manager), where prices
\n
cannot be
\n
\n
\n
corroborated due to a lack of
\n
available/reliable alternative market data
\n
\n
\n
Debt instruments
\n
KBC own issues (KBC IFIMA)
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
\n
unobservable inputs (indicative pricing by
\n
third parties for derivatives)
\n
\n
\n
Structured loans
\n
Government-regulated loans with leveraged interest rates and exotic
\n
Discounted cashflow analysis and
\n
early repayment
\n
schedules (K&H)
\n
valuation of related derivatives based on
\n
unobservable inputs
\n
\n
\n
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.6: Financial assets and liabilities measured at fair value \u2013 transfers between levels 1 and 2
\n
\n
\u2022 In 2022, KBC transferred 77 million euros\u2019 worth of financial assets and liabilities out of level 1 and into level 2, and 434 million
\n
euros\u2019 worth of financial assets and liabilities out of level 2 and into level 1. The corresponding figures for 2021 were 206 million
\n
euros and 294 million euros, respectively. Most of these reclassifications were carried out due to a change in the liquidity of
\n
government bonds and corporate bonds.
\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n
Note 4.7: Financial assets and liabilities measured at fair value \u2013 focus on level 3
\n
\n
\u2022 In 2022, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 65 million euros, primarily on account of new transactions, partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of unlisted shares rose by 66 million euros, due primarily to new
\n
transactions.
\n
- Financial assets at fair value through OCI: the fair value of debt instruments decreased by 36 million euros, primarily on
\n
account of instruments reaching maturity and changes in market inputs.
\n
- Financial assets held for trading: the fair value of derivatives decreased by 232 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities held for trading: the fair value of derivatives decreased by 83 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives decreased by 300 million euros due to changes
\n
in market inputs.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of issued debt instruments decreased by 120
\n
million euros, primarily on account of transactions reaching maturity and the sale of existing positions, only partly offset by
\n
new transactions.
\n
\u2022 In 2021, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 173 million euros, primarily on account of new transactions, only partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of debt instruments fell by 34 million euros, owing primarily to changes
\n
in market inputs.
\n
- Financial liabilities held for trading: the fair value of derivatives increased by 103 million euros, due mainly to changes in market
\n
inputs and new transactions, partly offset by sales. The fair value of issued debt instruments fell by 85 million euros, due mainly
\n
to instruments that had reached maturity.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives increased by 398 million euros due to
\n
reclassifications in level 3 owing to an optimisation of the classification method.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of debt instruments increased by 100 million
\n
euros, primarily on account of new issues, partly offset by sales.
\n
\u2022 Some level 3 assets are associated or economically hedged with identical level 3 liabilities, which means that KBC\u2019s exposure
\n
to unobservable inputs is lower than would appear from the gross figures. Most of the level 3 instruments are also valued using
\n
third-party pricing sources, with KBC not developing any unobservable inputs itself. The main unobservable inputs applied by
\n
KBC to the valuation of exotic derivatives include: mean reversion parameter on Bermudan swaptions, equity cross-correlations
\n
and volatilities for certain stock options, interest-rate correlations for CMS spread options, and the funding costs used to
\n
determine the forward equity prices as part of the valuation of certain equity derivatives. The change in fair value resulting from
\n
a change in these inputs to reflect reasonably possible alternative assumptions is insignificant.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.8: Derivatives
\n
\n
\u2022 In terms of volume of the notional amounts of the derivatives, approximately 77% are trading derivatives and approximately
\n
23% are hedging derivatives.
\n
\u2022 The majority of trading derivatives are effectively included in the trading book but are largely economically hedged (limited
\n
open positions) by other trading derivatives (such as derivative transactions initiated by commercial clients that are
\n
economically hedged) or by balance sheet positions (such as currency positions), which leads to large volumes of notional
\n
amounts but also to result-neutral revaluations on a net basis.
\n
\u2022 A limited number of trading derivatives are ALM derivatives included in the banking book, which are used to hedge economic
\n
risk. These are not subject to hedge accounting. Hedge accounting is applied to most of the ALM interest rate contracts. Only
\n
a limited number of the ALM derivatives for foreign currencies are included in hedge accounting.
\n
\n
\n
Note 4.8.1: Trading derivatives
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
\n
Carrying value
\n
Notional amounts*
\n
Carrying value
\n
Notional amounts*
\n
\n
Assets
\n
Liabilities
\n
Purchased
\n
Sold
\n
Assets
\n
Liabilities
\n
Purchased
\n
Sold
\n
Total
\n
6 279 8 038 567 205 568 302 5 443 5 619 491 716 503 818
\n
Interest rate contracts
\n
2 642 3 678 379 270 377 754 3 056 2 788 291 100 301 289
\n
of which interest rate swaps and
\n
2 429 3 542 368 144 371 294 2 731 2 669 278 999 294 056
\n
futures
\n
\n
of which options 214 136 11 126 6 460 325 119 12 101 7 232
\n
Foreign exchange contracts
\n
3 166 3 620 174 787 177 841 1 722 1 880 185 800 187 835
\n
of which currency and interest
\n
rate swaps, forward foreign
\n
3 081 3 509 171 878 172 361 1 668 1 830 182 613 183 020
\n
exchange transactions and
\n
futures
\n
\n
of which options 85 112 2 909 5 480 54 50 3 187 4 816
\n
Equity
\n
contracts 452 720 12 812 12 371 646 935 14 494 14 376
\n
\n
of which equity swaps 414 410 10 553 10 394 620 637 12 607 12 651
\n
\n
of which options 37 311 2 259 1 977 26 298 1 888 1 725
\n
Credit contracts
\n
0 0 0 0 0 0 4 4
\n
\n
of which credit default swaps 0 0 0 0 0 0 4 4
\n
Commodity and other contracts
\n
20 19 337 335 19 17 318 314
\n
* In this table, both legs of the derivatives are reported in the notional amounts.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.8.2: Hedging derivatives
\n
31-12-2022
\n
(in millions of EUR)
\n
Hedging instrument
\n
Hedged item
\n
Impact on equity
\n
\n
Notional amounts
\n
1
\n
\n
Carrying value
\n
Change in fair
\n
value of hedging
\n
items used as
\n
basis for
\n
recognising hedge
\n
ineffectiveness for
\n
the period
\n
2
\n
\n
Type
\n
Carrying value
\n
Change in fair
\n
value of hedged
\n
items used as
\n
basis for
\n
recognising
\n
hedge
\n
ineffectiveness
\n
for the period
\n
2
\n
\n
Ineffective
\n
portion
\n
recognised in
\n
profit or loss
\n
Effective
\n
portion
\n
recognised in
\n
OCI
\n
Hedging strategy
\n
Purchased
\n
Sold
\n
Assets
\n
Liabilities
\n
\n
\n
Total (including
\n
fair value
\n
changes)
\n
Of which
\n
accumulated
\n
fair value
\n
adjustments
\n
\n
\n
\n
Fair value micro hedge
\n
\n
Interest rate swaps
\n
22 753 22 753 185 102 -619
\n
Debt
\n
securities held at AC 4 007 -684 -323
\n
Currency and
\n
interest rate swaps
\n
0 0 0 0 0
\n
Loans and advances at AC
\n
683 70 -310
\n
\n
\n
Debt securities held at FVOCI
\n
1 342 -152 -176
\n
\n
\n
Debt securities issued at AC
\n
14 624 -1 334 1 432
\n
\n
\n
Deposits at AC
\n
0 0 0
\n
Total
\n
22 753 22 753 185 102 -619
\n
Total
\n
624 5 -
\n
Portfolio hedge of interest rate risk
\n
\n
Interest rate swaps
\n
123 930 123 930 209 261 3 172
\n
Debt securities held at AC
\n
359 -122 -123
\n
Currency and
\n
interest rate options
\n
1 762 0 101 0 82
\n
Loans and advances at AC
\n
104 980 -4 207 -3 769
\n
\n
\n
Debt securities held at FVOCI
\n
23 -6 -6
\n
\n
\n
Debt securities issued at AC
\n
0 0 0
\n
\n
\n
Deposits at AC
\n
14 574 -1 432 644
\n
Total
\n
125 692 123 930 310 261 3 254
\n
Total
\n
-3 254 0 -
\n
Cashflow hedge (micro hedge and portfolio hedge)
\n
\n
Interest rate swaps
\n
20 073 20 073 47 115 177
\n
\n
\n
Currency and
\n
interest rate swaps
\n
1 204 1 257 0 39 -13
\n
\n
\n
Total
\n
21 277 21 330 47 154 164
\n
Total
\n
-167 -3 -1 046
\n
Hedge of net
\n
investments in foreign operations
\n
Total
\n
3
\n
1 755 1 807 0 505 18
\n
Total
\n
-18 0 20
\n
1 In this table, both legs of the derivatives are reported in the notional amounts.
\n
2 Ineffectiveness is recognised in \u2018Net result from financial instruments at fair value through profit or loss\u2019 (also see Note 3.3).
\n
3 Hedging instruments in the form of foreign currency deposits.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
31-12-2021
\n
(in millions of EUR)
\n
Hedging instrument
\n
Hedged item
\n
Impact on equity
\n
\n
Notional amounts
\n
1
\n
\n
Carrying value
\n
Change in fair
\n
value of hedging
\n
items used as
\n
basis for
\n
recognising hedge
\n
ineffectiveness for
\n
the period
\n
2
\n
\n
Type
\n
Carrying value
\n
Change in fair
\n
value of hedged
\n
items used as
\n
basis for
\n
recognising
\n
hedge
\n
ineffectiveness
\n
for the period
\n
2
\n
\n
Ineffective
\n
portion
\n
recognised in
\n
profit or loss
\n
Effective
\n
portion
\n
recognised in
\n
OCI
\n
Hedging strategy
\n
Purchased
\n
Sold
\n
Assets
\n
Liabilities
\n
\n
\n
Total (including
\n
fair value
\n
changes)
\n
Of which
\n
accumulated
\n
fair value
\n
adjustments
\n
\n
\n
\n
Fair value micro hedge
\n
\n
Interest rate swaps
\n
22 027 22 027 98 407 307
\n
Debt securities held at AC
\n
3 576 -360 -394
\n
Currency and
\n
interest rate swaps
\n
0 0 0 0 0
\n
Loans and advances at AC
\n
857 391 -114
\n
\n
\n
Debt securities held at FVOCI
\n
1 900 25 -79
\n
\n
\n
Debt securities issued at AC
\n
15 998 98 282
\n
\n
\n
Deposits at AC
\n
0 0 -2
\n
Total
\n
22 027 22 027 98 407 307
\n
Total
\n
-307 0 -
\n
Portfolio hedge of interest rate risk
\n
\n
Interest rate swaps
\n
89 467 89 467 110 183 809
\n
Debt securities held at AC
\n
11 -1 -2
\n
Currency and
\n
interest rate options
\n
1 981 0 21 0 11
\n
Loans and advances at AC
\n
74 412 -504 -1 772
\n
\n
\n
Debt securities held at FVOCI
\n
13 -1 -1
\n
\n
\n
Debt securities issued at AC
\n
0 0 0
\n
\n
\n
Deposits at AC
\n
13 632 -862 960
\n
Total
\n
91 448 89 467 131 183 820
\n
Total
\n
-815 5 -
\n
Cashflow hedge (micro hedge and portfolio hedge)
\n
\n
Interest rate swaps
\n
21 249 21 249 24 502 177
\n
\n
\n
Currency and
\n
interest rate swaps
\n
711 721 26 0 19
\n
\n
\n
Total
\n
21 960 21 970 50 502 196
\n
Total
\n
-196 0 -1 197
\n
Hedge of net investments in foreign operations
\n
\n
Total
\n
3
\n
1 904 1 965 5 420 -109
\n
Total
\n
109 0 20
\n
1 In this table, both legs of the derivatives are reported in the notional amounts.
\n
2 Ineffectiveness is recognised in \u2018Net result from financial instruments at fair value through profit or loss\u2019 (also see Note 3.3).
\n
3 Hedging instruments in the form of foreign currency deposits.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\u2022 The sharp change in fair value of the hedging instruments and the hedged items in the fair value micro hedges and fair value
\n
hedges for a portfolio of interest rate risk for 2022 are attributable to the substantial increase in market interest rates.
\n
\u2022 The Treasury departments of the various entities manage the interest rate risk. To prevent rate movements from having a
\n
negative impact, the maturities of assets and liabilities are adjusted on the balance sheet using interest rate swaps and other
\n
derivatives.
\n
\u2022 As regards the relationship between risk management and hedge accounting policy, \u2018economic\u2019 management takes priority
\n
and risks are hedged in accordance with the general ALM framework. Only then is a decision made on which, if any, of these
\n
techniques will be used to limit any resulting accounting mismatch.
\n
\u2022 The balances remaining in the cashflow hedge reserve from any hedging relationships for which hedge accounting is no longer
\n
applied came to -166 million euros. The accumulated amount of fair value hedge adjustments remaining on the balance sheet
\n
for any hedged items that have ceased to be adjusted for hedging gains and losses amounted to -24 million euros. These
\n
adjustments are amortised to profit or loss.
\n
\u2022 The difference between the \u2018Profit/loss on positions in portfolios hedged against interest rate risk\u2019 balance sheet item and
\n
accumulated fair value adjustments following portfolio hedges of interest rate risk as included in Note 4.8.2 is attributable to
\n
accumulated fair value adjustments regarding discontinued fair value hedges not included in Note 4.8.2 but included in the
\n
balance sheet.
\n
\u2022 The accumulated fair value adjustments of the hedged assets involved in portfolio hedges of interest rate risk dropped in 2022
\n
due to the general increase in interest rates. The \u2018Profit/loss on positions in portfolios hedged against interest rate risk\u2019 balance
\n
sheet item on the liabilities side of the balance sheet also became more negative for the same reason.
\n
\u2022 Also see the paragraph on hedge accounting in the \u2018How do we manage our risks?\u2019 section and Note 3.3.
\n
\n
\n
Estimated cashflows from cashflow hedging derivatives per time bucket (in millions of EUR)
\n
Inflow
\n
Outflow
\n
Not more than three months
\n
7 -38
\n
More than three but not more than six months
\n
33 -95
\n
More than six months but not more than one year
\n
123 -274
\n
More than one but not more than two
\n
years 222 -514
\n
More than two but not more than five years
\n
505 -960
\n
More than five years
\n
545 -849
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n
5.0 Notes on other balance sheet items
\n
\n
\n\n

\n\n

\n\n

\n\n

\n\n
Note 5.1: Other assets
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
Total
\n
2 036 1 630
\n
Debtors arising out of direct insurance operations
\n
457 404
\n
Debtors arising out of reinsurance operations
\n
89 78
\n
Deposits with ceding companies
\n
8 10
\n
Prepaid charges and accrued income
\n
565 441
\n
Other
\n
917 696
\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
\n\n

\n\n

\n\n

\n\n
Note 5.2: Tax assets and tax liabilities
\n
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
CURRENT TAXES
\n
\n
Current tax assets
\n
174 179
\n
Current tax liabilities
\n
150 87
\n
DEFERRED TAXES
\n
1 005 769
\n
Deferred tax assets by type of temporary difference
\n
1 475 1 413
\n
Employee benefits
\n
78 82
\n
Losses carried forward
\n
186 247
\n
Tangible and intangible fixed assets
\n
77 126
\n
Provisions for risks and charges
\n
49 21
\n
Impairment for losses on loans and advances
\n
219 273
\n
Financial instruments at fair value through profit or loss and fair value hedges
\n
142 113
\n
Fair value changes, available-for-sale assets, financial instruments at FVOCI, cashflow hedges and hedges of net investments
\n
in foreign operations
\n
594 476
\n
Technical provisions
\n
42 30
\n
Other
\n
88 47
\n
Deferred tax liabilities by type of
\n
temporary difference 470 644
\n
Employee benefits
\n
99 37
\n
Losses carried forward
\n
0 0
\n
Tangible and intangible fixed assets
\n
41 34
\n
Provisions for risks and charges
\n
9 9
\n
Impairment for losses on loans and advances
\n
3 3
\n
Financial instruments at fair value
\n
through profit or loss and fair value hedges 131 132
\n
Fair value changes, available-for-sale assets, financial instruments at FVOCI, cashflow hedges and hedges of net investments
\n
in foreign operations
\n
44 292
\n
Technical provisions
\n
115 106
\n
Other
\n
29 33
\n
Recognised as a net amount in the balance sheet as follows:
\n
\n
Deferred tax assets
\n
1 138 1 117
\n
Deferred tax liabilities
\n
133 348
\n
Unused tax losses and unused tax credits
\n
151 177
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n
\u2022 Deferred tax assets are recognised to the extent that it is probable that, on the basis of realistic financial projections, taxable
\n
profit will be available against which the deductible temporary differences can be utilised in the foreseeable future (limited to
\n
a period of eight to ten years).
\n
\u2022 Unused tax losses and unused tax credits concern tax losses of group companies which are not capitalised due to insufficient
\n
proof of future taxable profit. Most tax losses and tax credits can be carried forward for 20 years or more.
\n
\u2022 The net change in deferred taxes (+236 million euros in 2022) breaks down as follows:
\n
\u25e6 The change in deferred tax assets of (+62 million euros) was accounted for chiefly by:
\n
- a net increase in deferred tax assets on account of changes in the revaluation reserve for financial instruments
\n
measured at fair value through OCI, cashflow hedges and hedges of net investments in foreign operations (+118 million
\n
euros);
\n
- a decrease in deferred tax assets via the income statement of 74 million euros, mainly due to the usage and write-offs
\n
of losses carried forward, partly offset by the one-off recognition of deferred tax assets, due in part to the increase in
\n
business tax in the UK from 19% to 25% and the recognition of deferred tax assets in Ireland (-61 million euros net) as a
\n
result of lower deferred tax assets on impairment for losses on loans and advances (-18 million euros) and on non-
\n
current assets (-12 million euros). In addition, the arbitration proceedings against ICEC-Holding (see Note 3.6) have led
\n
to an increase in deferred tax assets via the income statement of 28 million euros.
\n
- changes in technical provisions of +12 million euros;
\n
\u25e6 The change in deferred tax liabilities of -174 million euros was accounted for chiefly by:
\n
- a decrease in deferred tax liabilities on account of changes in the revaluation reserve for financial instruments
\n
measured at fair value through OCI, cashflow hedges and hedges of net investments in foreign operations (-249 million
\n
euros);
\n
- changes in defined benefit plans of +62 million euros and to a lesser extent the technical provisions (+9 million euros).
\n
\u2022 The deferred tax assets presented in the balance sheet are attributable primarily to KBC Bank, KBC Insurance, \u010cSOB in the
\n
Czech Republic and KBC Bank Ireland
\n

\n\n

\n\n

\n\n
.
\n
\n\n

\n\n

\n\n

\n\n
Note 5.3: Investments in associated companies and joint ventures
\n
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
Total
\n
32 37
\n
Overview of investments, including goodwill
\n
\n
Skip Pay, s.r.o.
\n
- 3
\n
IGLUU s.r.o.
\n
2 -
\n
Immoscoop 2.0 BV
\n
1 -
\n
Isabel NV
\n
12 11
\n
Joyn
\n
International NV 0 1
\n
Bancontact Payconiq Company NV
\n
7 6
\n
Payconiq International SA
\n
7 9
\n
Batopin NV
\n
1 4
\n
Other
\n
2 4
\n
Goodwill on associated companies and joint ventures
\n
\n
Gross amount
\n
0 0
\n
Accumulated impairment
\n
0 0
\n
Breakdown by type
\n
\n
Unlisted
\n
32 37
\n
Listed
\n
0 0
\n
Fair value of investments in listed associated companies and joint ventures
\n
0 0
\n
\n
\u2022 Associated companies are companies on whose management KBC exerts significant influence, without having direct or indirect
\n
full or joint control. In general, KBC has a 20% to 50% shareholding in such companies. Joint ventures are companies over which
\n
KBC exercises joint control.
\n
\u2022 Goodwill paid on associated companies and joint ventures is included in the nominal value of \u2018Investments in associated
\n
companies and joint ventures\u2019 shown on the balance sheet. An impairment test is performed and, if required, the necessary
\n
impairment losses on goodwill recognised (see table).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Note 5.4: Property and equipment and investment property
\n
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Property and equipment
\n
2 989 3 050
\n
Investment property
\n
571 518
\n
Rental income
\n
50 57
\n
Direct operating expenses from investments generating rental income
\n
15 15
\n
Direct operating expenses from investments not generating rental
\n
income 1 2
\n
MOVEMENTS TABLE
\n
Land and
\n
buildings
\n
IT
\n
equipment
\n
Other
\n
equipment
\n
Total property
\n
and equipment
\n
Investment property
\n
2022
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
1 479 117 1 454 3 050 518
\n
Acquisitions
\n
37 68 470 575 85
\n
Disposals
\n
-30 -1 -204 -235 -13
\n
Depreciation
\n
-120 -60 -25 -205 -31
\n
Other movements
\n
7 6 -209 -196 12
\n
Closing balance
\n
1 373 130 1 486 2 989 571
\n
\n
accumulated depreciation and impairment 1 570 446 876 2 892 376
\n
Fair value
\n
\u2013 \u2013 \u2013 \u2013 827
\n
2021
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
1 561 138 1 437 3 136 555
\n
Acquisitions
\n
113 43 448 603 15
\n
Disposals
\n
-57 -4 -205 -266 -17
\n
Depreciation
\n
-119 -64 -24 -207 -33
\n
Other movements
\n
-19 4 -201 -216 -2
\n
Closing balance
\n
1 479 117 1 454 3 050 518
\n
accumulated depreciation and impairment 1 487 446 832 2 766 412
\n
Fair value
\n
\u2013 \u2013 \u2013 \u2013 792
\n
\n\n
\u2022 Annual rates of depreciation: mainly 3% for buildings (including investment property), 33% for IT equipment, between 5% and
\n
33% for other equipment. No depreciation is charged for land.
\n

\n\n
\u2022 There was a small amount (around 0.4 billion euros) for commitments for the acquisition of property and equipment. There are
\n
no material restrictions on title, or on property and equipment pledged as security for liabilities.
\n
\u2022 Most investment property is valued by an independent expert on a regular basis and by in-house specialists on an annual
\n
basis, based primarily on the capitalisation of the estimated rental value and on unit prices of similar real property. Account is
\n
taken of all the market inputs available on the date of the assessment (including location and market situation, type of building
\n
and construction, state of repair, use, etc.).
\n
\u2022 Certain other investment property is valued annually by in-house specialists based on the current annual rental per building
\n
and expected rental movements and on an individual capitalisation rate per building.
\n
\u2022 The impact of the heavy flooding and other extreme weather conditions in 2022 and 2021 on property and equipment and
\n
investment property (in this case, our branch network) and on the associated impairment was insignificant. For more
\n
information, see \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\u2022 The impact of our own activities as a bank-insurer on the environment is very limited, especially when compared to industrial
\n
companies and our indirect impact through lending and other activities, and stems mainly from our buildings and vehicles
\n
(commuting). We nevertheless also calculate our own direct greenhouse gas impact and apply certain targets in that regard.
\n
See \u2018Focus on climate\u2019 in the \u2018Report of the Board of Directors\u2019 section for a more detailed explanation. More details can also
\n
be found in our Climate Report and our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n
Note 5.5: Goodwill and other intangible assets
\n
\n\n

\n\n
(in millions of EUR)
\n
Goodwill
\n
Software
\n
developed
\n
in-house
\n
Software
\n
developed
\n
externally
\n
Other
\n
Total
\n
2022
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
913 559 263 13 1 749
\n
Acquisitions
\n
438 262 73 9 783
\n
Disposals
\n
0 0 -1 -3 -4
\n
Amortisation
\n
0 -90 -78 -1 -169
\n
Other movements
\n
-6 -12 -8 -2 -28
\n
Closing balance
\n
1 346 719 250 16 2 331
\n
\n
accumulated amortisation and impairment 260 646 836 56 1 797
\n
2021
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
845 386 301 20 1 551
\n
Acquisitions
\n
56 234 84 9 383
\n
Disposals
\n
0 0 -12 -10 -21
\n
Amortisation
\n
0 -62 -85 -2 -149
\n
Other movements
\n
12 1 -24 -3 -14
\n
Closing balance
\n
913 559 263 13 1 749
\n
\n
accumulated amortisation and impairment 255 794 859 53 1 961
\n

\n\n

\n\n
\n\n
\u2022 Goodwill: includes the goodwill paid on companies included in the scope of consolidation and relating to the acquisition of
\n
activities. Goodwill paid on associated companies: included in the nominal value of \u2018Investments in associated companies\u2019
\n
shown on the balance sheet.
\n
\u2022 For goodwill in respect of recent acquisitions, see Note 6.6.
\n
\u2022 Impairment testing: a test was carried out to establish whether impairment on goodwill had to be recognised (see table and
\n
Note 3.10). This impairment test is performed at least once a year. We also carry out a high level assessment on a quarterly
\n
basis to see whether there is an indication of impairment. In the test, each entity is regarded as a separate cash-generating
\n
unit. Each entity has a specific risk profile and it is rare to have different profiles within a single entity.
\n
\u2022 Impairment on goodwill under IAS 36: recognised in profit or loss if the recoverable amount of an investment is lower than its
\n
carrying value. The recoverable amount is defined as the higher of the value in use (calculated based on discounted cashflow
\n
analysis) and the fair value (calculated based on multiple analysis, etc.) less costs to sell.
\n
\u2022 The main group companies to which goodwill relates are listed in the table. All of these companies have been valued using the
\n
discounted cashflow method. The discounted cashflow method calculates the recoverable amount of an investment as the
\n
present value of all future free cashflows of the business. This method is based on long-term projections about the company\u2019s
\n
business and the resulting cashflows (i.e. projections for a number of years ahead and the residual value of the business at the
\n
end of the specific projection period). These long-term projections are the result of an assessment of past and present
\n
performances combined with external sources of information on future performances in the respective markets and the global
\n
macroeconomic environment. Consequently, in cases where sustainability aspects and products/projects have been factored
\n
into the underlying financial projections, this will also affect the valuation. The ultimate growth rate is determined using a long-
\n
term average market growth rate. The present value of these future cashflows is calculated using a compound discount rate
\n
which is based on the capital asset pricing model (CAPM). A country-specific risk-free rate and a market-risk premium
\n
(multiplied by an activity beta) are also used in the calculation. KBC has developed two distinct discounted cashflow models,
\n
viz. a bank model and an insurance model. Free cashflows in both cases are the dividends that can be paid out to the
\n
company\u2019s shareholders, account taken of the minimum capital requirements.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Discount rates throughout the specific period
\n
of cashflow projections
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
K&H Bank
\n
173 188 17.3%-13.3% 11.4%-10.6%
\n
\u010cSOB (Czech Republic)
\n
259 251 13.9%-12.8% 10.6%-8.7%
\n
\u010cSOB Stavebn\u00ed sporitelna
\n
176 171 13.2%-12.8% 10.6%-8.8%
\n
United Bulgarian Bank and Raiffeisenbank Bulgaria
\n
(now KBC Bank Bulgaria)
\n
544 110 12.5%-12.2% 10.6%-9.2%
\n
DZI Insurance
\n
75 75 10.5%-8.1% 8.6%-7.2%
\n
KBC Commercial Finance
\n
21 21 9.9%-9.9% 8.8%-8.7%
\n
Pension Insurance Company UBB
\n
56 56 9.3%-9.1% -
\n
Rest
\n
42 42 \u2013 \u2013
\n
Total
\n
1 346 913 \u2013 \u2013
\n
\n
\u2022 The period to which the cashflow budgets and projections relate is 10 years in most cases. This longer period is used to take
\n
account of current strong growth in the Central and Eastern European countries, where the growth rate is expected to develop
\n
towards a more moderate level in the longer term.
\n
\u2022 The growth rate used to extrapolate the cashflow projections after that period is equal to the expected long-term growth rate
\n
of the gross domestic product. This rate depends on the country and varied between 3.2% and 4.7% in 2022 (between 1.2% and
\n
1.7% in 2021).
\n
\u2022 The discount rates applied have been raised considerably since last year, but on a net basis they only have a limited impact
\n
on valuations given the higher cashflow budgets resulting from improved net interest income.
\n
\u2022 No sensitivity analysis was carried out for entities where the recoverable amount exceeded the carrying value to such a large
\n
extent that no reasonably possible change in the key assumptions would result in the recoverable amount being less than or
\n
equal to the carrying value. The table gives an indication for the other entities of the change in key assumptions that would
\n
lead to their recoverable amount equalling their carrying value.
\n
\n
Change in key assumptions
\n
1
\n
\n
Increase in
\n
discount rate
\n
2
\n
\n
Decrease in
\n
terminal growth
\n
rate
\n
Increase in
\n
targeted solvency
\n
ratio
\n
3
\n
\n
Decrease in
\n
annual net profit
\n
Increase in annual
\n
impairment
\n
charges
\n
\u010cSOB Stavebn\u00ed sporitelna
\n
2.5% 8.0% 6.4% 12% -
\n
United Bulgarian Bank and Raiffeisenbank Bulgaria
\n
(now KBC Bank Bulgaria)
\n
0.6% 4.2% 1.0% 6% 38%
\n
Pension Insurance Company UBB
\n
4.0%
\n
-
\n
-
\n
47%
\n
-
\n
1 Needless to say account should be taken of the fact that a change in these assumptions could affect other assumptions used to calculate the recoverable amount.
\n
2 Based on a parallel shift and absolute increase in the discount rate curve. Discount rates are in the 15.7%-15.3% bracket for \u010cSOB Stavebn\u00ed sporitelna, the 13.1%-12.8% bracket for United
\n
Bulgarian Bank and KBC Bank Bulgaria, and in the 13.3%-13.1% bracket for Pension Insurance Company UBB.
\n
3 Absolute increase in the tier-1 capital ratio.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 5.6: Technical provisions, insurance
\n
\n
\n
(in millions of EUR)
\n
Gross
\n
Reinsurance
\n
Gross
\n
Reinsurance
\n
Technical provisions
\n
31-12-2022 31-12-2022 31-12-2021 31-12-2021
\n
Total
\n
18 484 192 18 967 191
\n
Insurance contracts, Non
\n
-life 4 154 180 3 967 181
\n
Provision for unearned premiums
\n
885 5 814 4
\n
Provision for claims outstanding
\n
3 025 175 2 908 176
\n
Provision for profit sharing and rebates
\n
2 0 3 0
\n
Other technical provisions
\n
242 0 242 0
\n
Insurance contracts, Life
\n
8 348 12 8 511 10
\n
Provision for unearned premiums
\n
19 1 18 1
\n
Life insurance provision
\n
7 945 8 8 080 8
\n
Provision for claims outstanding
\n
165 4 197 1
\n
Provision for profit sharing and rebates
\n
37 0 28 0
\n
Other
\n
technical provisions 181 0 187 0
\n
Investment contracts with DPF, Life
\n
5 982 0 6 489 0
\n
Life insurance provision
\n
5 918 0 6 418 0
\n
Provision for claims outstanding
\n
11 0 16 0
\n
Provision for profit sharing, rebates and other
\n
53 0 55 0
\n
Movements table
\n
2022 2022 2021 2021
\n
Insurance contracts, Non
\n
-life
\n
Opening balance
\n
3 967 181 3 676 137
\n
Movements reflected in earned premiums (income statement)
\n
71 1 48 2
\n
Movements reflected in technical charges (income statement)
\n
115 -3 222 41
\n
\n
Payments regarding claims of previous financial years -412 -42 -328 -22
\n
\n
Provision for new claims 610 37 625 66
\n
\n
Surplus/shortfall of claims provision for previous financial years -113 28 -112 2
\n
\n
Cost of profit sharing -1 0 0 0
\n
\n
Other movements with an impact on results 31 -26 38 -5
\n
Movements reflected in balance sheet
\n
\n
2
\n
\n
1
\n
22 1
\n
Closing
\n
balance 4 154 180 3 967 181
\n
Insurance contracts, Life
\n
\n
Opening balance
\n
8 511 10 8 315 8
\n
Movements reflected in earned premiums (income statement)
\n
1 0 1 0
\n
Movements reflected in technical charges (income statement)
\n
-175 2 71 2
\n
\n
New business (net of risk premium and charges) 590 0 633 0
\n
\n
Payments (including funding of risk premium) -844 0 -776 0
\n
\n
Accretion of interest 159 0 166 2
\n
\n
Cost of profit sharing 20 0 13 0
\n
\n
Provision for new claims and change in provision for claims outstanding -38 3 -3 0
\n
\n
Fair value adjustments of unit-linked contracts (not unbundled) -70 0 32 0
\n
\n
Other movements with an impact on results 7 0 6 1
\n
Movements reflected in balance sheet
\n
11 0 124 0
\n
Closing balance
\n
8 348 12 8 511 10
\n
Investment contracts with DPF, Life
\n
\n
Opening balance
\n
6 489 0 6 727 0
\n
Movements reflected in
\n
technical charges (income statement) -244 0 -70 0
\n
\n
New business (net of risk premium and charges) 266 0 281 0
\n
\n
Payments (including funding of risk premium) -593 0 -461 0
\n
\n
Accretion of interest 85 0 92 0
\n
\n
Cost of profit sharing 8 0 6 0
\n
\n
Provision for new claims and change in provision for claims outstanding -9 0 12 0
\n
\n
Fair value adjustments of unit-linked contracts (not unbundled) 0 0 0 0
\n
\n
Other movements with an impact on results 0 0 0 0
\n
Movements reflected in balance sheet
\n
-263 0 -168 0
\n
Closing balance
\n
5 982 0 6 489 0
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n
\u2022 Technical provisions relate to insurance contracts and investment contracts with a discretionary participation feature (DPF).
\n
\u2022 Liabilities under investment contracts without DPF are measured at fair value. These liabilities concern mainly unit-linked
\n
contracts, which are recognised under financial liabilities (see Note 4.1).
\n\n
\u2022 Technical provisions for life insurance are calculated using various assumptions. Judgement is required when making these
\n
assumptions and the assumptions used are based on various internal and external sources of information. At present, IFRS 4
\n
refers extensively to local accounting principles for the recognition of technical provisions. These provisions are generally
\n
calculated using the technical assumptions that were applicable at the inception of the insurance contract and are subject to
\n
liability adequacy tests. The key assumptions are:
\n
- mortality and morbidity rates, which are based on standard mortality tables and adapted where necessary to reflect the
\n
group\u2019s own experience;
\n
- expense assumptions, which are based on current expense levels and expense loadings;
\n
- the discount rate, which is generally equal to the technical interest rate, remains constant throughout the life of the policy,
\n
and in some cases is adjusted to take account of legal requirements and internal policy decisions.
\n
- It should be noted that assumptions may vary depending on the type of life insurance (e.g., conventional versus modern), the
\n
generation of contracts (mainly the time when the contract is entered into and the applicable terms and conditions) and the
\n
country (since we have insurance companies in five of our core markets), making it impossible to quantify these assumptions
\n
for the entire group. This is illustrated by the following two points: (i) The discount rate follows the historical market rate and
\n
since it concerns a life portfolio, most of which has existed for a long time and also has a long maturity, there are considerable
\n
differences within the portfolio. In Belgium alone, discount rates range from 4.75% for the oldest rates to 0.5% and lower for
\n
certain modern products. (ii) In terms of mortality risk, unisex mortality tables are used in Belgium, based on the standard
\n
\u2018MK/FK\u2019 mortality tables for products sold from 2012 on (before 2012, separate mortality tables were used for men and
\n
women). Corrections may still be made to these standard tables, with due consideration being given to the segmentation
\n
criteria of the relevant policies. As a result, the range of mortality tables used is extensive.
\n
\u2022 Assumptions for the technical provisions for claims outstanding are based on past claims experience relating to claim numbers,
\n
claim payments and claims handling costs, and adjusted to take account of such factors as anticipated market experience,
\n
claims inflation and external factors such as court awards and legislation. The technical provision for claims outstanding is
\n
generally not discounted except when long-term obligations and/or annuities (industrial accidents, guaranteed income and
\n
hospitalisation insurance) are involved.
\n
\u2022 In 2022, a reassessment of the confidence level of technical provisions resulted in a release of technical reserves in the Czech
\n
Republic (31 million euros in Life and 10 million euros in Non-Life technical result). In 2021, there were no changes in assumptions
\n
leading to a significant change in the valuation of insurance assets and liabilities.
\n

\n\n
\u2022 The \u2018Movements reflected in the balance sheet\u2019 item in 2021 also includes the impact of the life insurance business acquired
\n
from NN in Bulgaria (see Note 6.6).
\n
\u2022 See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\u2022 Information relating to IFRS 17 can be found in Note 6.10.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Note 5.7: Provisions for risks and charges
\n
\n\n
Note 5.7.1: Overview
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Total provisions for risks and charges
\n
418 282
\n
Provisions for off
\n
-balance-sheet commitments and financial guarantees 114 130
\n
Provisions for other risks and charges
\n
305 152
\n
\n
Provisions for restructuring 92 87
\n
\n
Provisions for taxes and pending legal disputes 192 45
\n
\n
Other 20 20
\n

\n\n
\n
\n
Note 5.7.2: Details of off-balance-sheet commitments and financial guarantees
\n
\n
\n
(in millions of EUR)
\n
Subject to 12-
\n
month ECL
\n
Subject to
\n
lifetime ECL
\n
Subject to
\n
lifetime ECL \u2013
\n
non-performing
\n
Total
\n
31
\n
-12-2022
\n
Provisions on 1 January
\n
19 21 91 130
\n
Movements with an impact on results
\n
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) -6 10 6 10
\n
\n
Stage 2 (lifetime ECL) 0 -5 7 2
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL)
\n
0 6 -2 4
\n
\n
New financial assets 8 4 0 12
\n
\n
Changes in risk parameters during the reporting period -1 1 -45 -45
\n
\n
Changes in the model or methodology 0 0 0 0
\n
\n
Derecognised financial assets -1 -1 -1 -3
\n
\n
Other 0 -5 0 -5
\n
Movements without an impact on results
\n
\n
\n
Derecognised financial assets 0 0 0 0
\n
\n
Changes in the scope of consolidation 1 2 3 6
\n
\n
Other 0 1 1 2
\n
Provisions on 31 December
\n
19 35 60 114
\n
31
\n
-12-2021
\n
Provisions on 1 January
\n
26 17 99 143
\n
Movements with an impact on results
\n
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) -2 4 0 2
\n
\n
Stage 2 (lifetime ECL) 0 -4 2 -1
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL)
\n
0 1 -1 0
\n
\n
New financial assets 6 1 1 8
\n
\n
Changes in risk parameters during the reporting period -9 2 -13 -20
\n
\n
Changes in the model or methodology 0 0 0 0
\n
\n
Derecognised financial assets -2 -1 0 -4
\n
\n
Other 0 0 0 0
\n
Movements without an impact on results
\n
\n
\n
Derecognised financial assets 0 0 0 0
\n
\n
Changes in the scope of consolidation 0 0 0 0
\n
\n
Other 1 1 2 4
\n
Provisions on 31 December
\n
19 21 91 130
\n
\n
\u2022 Also see Note 6.1.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Note 5.7.3: Details of provisions for other risks and charges
\n
\n
(in millions of EUR)
\n
Provisions for
\n
restructuring
\n
Provisions for taxes and
\n
pending legal disputes
\n
Other
\n
Total
\n
2022
\n
\n
\n
\n
\n
\n
Opening balance
\n
87 45 20 152
\n
Movements with an impact on results
\n
\n
\n
Amounts allocated 13 163 9 185
\n
\n
Amounts used -7 -11 -7 -26
\n
\n
Unused amounts reversed 0 -6 -2 -8
\n
Transfers out of/into liabilities associated
\n
with disposal groups
\n
0 0 0 0
\n
Changes in the scope of consolidation
\n
0 1 2 2
\n
Other
\n
0 1 -1 0
\n
Closing balance
\n
92 192 20 305
\n
2021
\n
\n
\n
\n
\n
\n
Opening balance
\n
7 32 27 66
\n
Movements with an impact on results
\n
\n
\n
Amounts allocated 84 28 9 120
\n
\n
Amounts used -4 -16 -15 -35
\n
\n
Unused amounts reversed -1 -1 -1 -3
\n
Transfers out of/into liabilities associated
\n
with disposal groups
\n
0 0 0 0
\n
Changes in the scope of consolidation
\n
0 2 0 2
\n
Other
\n
1 0 0 1
\n
Closing balance
\n
87 45 20 152
\n
\n
\u2022 The change in the restructuring provision in 2021 relates mainly to Ireland (see Note 6.6). For most of the other provisions
\n
recorded, no reasonable estimate can be made of when they will be used.
\n
\u2022 For details on \u2018Provisions for taxes and pending legal disputes\u2019 in 2022, see Note 3.6.
\n
\u2022 Other provisions included those set aside for miscellaneous risks.
\n\n

\n\n

\n
\u2022 Information relating to the main legal disputes pending: claims filed against KBC group companies are \u2013 in keeping with IFRS
\n
rules \u2013 treated on the basis of an assessment of whether they will lead to an outflow of resources (i.e. \u2018probable outflow\u2019,
\n
\u2018possible outflow\u2019 or \u2018remotely probable outflow\u2019). Provisions are set aside for \u2018probable outflow\u2019 cases (see \u2018Notes on the
\n
accounting policies\u2019). No provisions are constituted for \u2018possible outflow\u2019 cases, but information is provided in the financial
\n
statements if such cases might have a material impact on the balance sheet (i.e. when the claim could lead to a possible
\n
outflow of more than 50 million euros). All other claims (\u2018remotely probable outflow\u2019), of whatever magnitude, that represent a
\n
minor or no risk at all do not have to be reported. The most important cases are listed below. The information provided is limited
\n
in order not to prejudice the position of the group in ongoing litigation.
\n\n

\n\n
\u2022 Possible outflow: on 6 October 2011, Irving H. Picard, trustee (the \u2018trustee\u2019) for the liquidation of Bernard L. Madoff Investments
\n
Securities LLC (& Bernard L. Madoff), sued KBC Investments Ltd (a full subsidiary of KBC Bank) before the bankruptcy court in
\n
New York to claw back approximately 110 million US dollars\u2019 worth of transfers made to KBC entities by Madoff (through a feeder
\n
fund that KBC had lent to Harley International). This claim is just one of a whole set made by the trustee against several banks,
\n
hedge funds, feeder funds and investors (\u2018joint defense group\u2019). A lengthy litigation process was conducted on the basis of
\n
preliminary objections in respect of the applicability of the Bankruptcy Code\u2019s \u2018safe harbor\u2019 and \u2018good defenses\u2019 rules, as well
\n
as prudential limitations on U.S. courts\u2019 powers in international cases, to subsequent transferees (as is the case for KBC
\n
Investments Ltd), as detailed in previous disclosures. In June 2015, the Trustee stated his intention to amend the original claim
\n
which led to increase the amount claimed to USD 196 000 000. A court ruling dismissing the claim of the Trustee was issued on
\n
3 March 2017. The Trustee appealed and the appellate court (\u2018Court of Appeals for the Second Circuit\u2019) reversed the dismissal
\n
on 28 February 2019. A certiorari petition filed on 30 August 2019 was dismissed by the US Supreme Court on 2 June 2020. As a
\n
consequence the merits of the case are handled by the Bankruptcy Court. On 30 August 2021, in two other appeals by other
\n
defendants, the Court of Appeals for the Second Circuit reversed the burden of proof from an initial burden on the Trustee to
\n
adequately demonstrate the defendant\u2019s lack of good faith to a burden on the defendant to prove its good faith. On 1 August
\n
2022, the Bankruptcy Court issued a decision determining the structure of the proceedings. In this context, on 5 August 2022
\n
the Trustee amended his complaint by reducing his claim to a principal of USD 86 million. On 18 November 2022, KBC submitted
\n
a motion to dismiss the amended complaint for lack of specific jurisdiction of the US court. The final reply supporting its motion
\n
must be submitted on or before 10 March 2023. A hearing will then be held in April 2023. Despite the increased burden of proof,
\n
KBC still believes it has good and credible defenses, both procedurally and on the merits, including demonstrating its good
\n
faith. The procedure may still take several years.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 5.8: Other liabilities
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
Total
\n
2 568 2 520
\n
Retirement benefit obligations or other employee benefits
\n
93 184
\n
Deposits from reinsurers
\n
115 98
\n
Accrued charges (other than from interest expenses on financial liabilities)
\n
360 364
\n
Other
\n
2 000 1 874
\n
\n
\u2022 For more information on retirement benefit obligations, see Note 5.9 (note that the amount recognised under \u2018Retirement
\n
benefit obligations or other employee benefits\u2019 in Note 5.8 relates to a broader scope than the amounts presented in Note 5.9).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 5.9: Retirement benefit obligations
\n
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
DEFINED BENEFIT PLANS
\n
\n
Reconciliation of defined benefit obligations
\n
\n
\n
Defined benefit obligations at the beginning of the period
\n
3 335 3 387
\n
Current service cost
\n
129 134
\n
Interest cost
\n
26 8
\n
Actuarial gain or loss resulting from changes in demographic assumptions
\n
-10 -3
\n
Actuarial gain or loss resulting from changes in financial assumptions
\n
-814 -31
\n
Experience adjustments
\n
58 -16
\n
Past service cost
\n
0 -11
\n
Benefits paid
\n
-129 -120
\n
Other
\n
-14 -14
\n
Defined benefit obligations at the end of the period
\n
2 580 3 335
\n
Reconciliation of the fair value of plan assets
\n
\n
Fair value of plan assets at the beginning of the period
\n
3 244 2 849
\n
Actual return on
\n
plan assets -499 363
\n
Expected interest income on plan assets, calculated based on market yields on high quality corporate bonds 25 7
\n
Employer contributions
\n
94 90
\n
Plan participant contributions
\n
19 18
\n
Benefits paid
\n
-129 -120
\n
Other
\n
16 44
\n
Fair value of plan assets at the end of the period
\n
2 746 3 244
\n
\n
of which financial instruments issued by the group 0 24
\n
\n
of which property occupied by KBC 2 4
\n
Funded status
\n
\n
Plan assets in excess of defined benefit
\n
obligations 166 -90
\n
Reimbursement rights
\n
0 0
\n
Asset ceiling limit
\n
-12 -37
\n
Unfunded accrued/prepaid pension cost
\n
153 -128
\n
Movement in net liabilities or net assets
\n
\n
Unfunded accrued/prepaid pension cost at the beginning of the period
\n
-128 -537
\n
Amounts recognised in the income statement
\n
-112 -107
\n
Amounts recognised in other comprehensive income
\n
299 387
\n
Employer contributions
\n
94 90
\n
Other
\n
-1 40
\n
Unfunded accrued/prepaid pension cost at the end of the period
\n
153 -128
\n
Amounts recognised in the income statement
\n
-112 -107
\n
Current service cost
\n
-129 -134
\n
Interest cost
\n
-1 -2
\n
Plan participant contributions
\n
19 18
\n
Other
\n
0 11
\n
Changes to the amounts recognised in other comprehensive income
\n
299 387
\n
Actuarial gain or loss resulting from changes in demographic assumptions
\n
10 3
\n
Actuarial gain or loss resulting from changes in financial assumptions
\n
814 31
\n
Actuarial result on plan assets
\n
-524 356
\n
Experience adjustments
\n
-58 16
\n
Adjustments to asset ceiling limits
\n
25 -37
\n
Other
\n
31 19
\n
DEFINED CONTRIBUTION PLANS
\n
\n
\n
\n
\n
Expenses for defined contribution plans
\n
-21 -20
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n
\u2022 Retirement benefits that are actively accrued for the Belgium-based staff of KBC Bank, KBC Insurance and most of their Belgian
\n
subsidiaries are accrued exclusively through the KBC pension fund. Up until year-end 2018, employer-funded retirement
\n
benefits had accrued primarily through a defined benefit plan, where the benefit is calculated based on the final salary of
\n
employees before they retire, the number of years they had been in the plan and a formula that applies a progressive rate
\n
scale. A defined contribution plan was introduced on 1 January 2014 for all new employees and any employees who had chosen
\n
to switch to it. In this plan, a contribution is deposited based on the current monthly salary and the amounts deposited are
\n
paid out together with the (guaranteed) return on retirement. Both types of pension plan are managed by the KBC pension
\n
fund, which uses the services of KBC Asset Management for the investment strategy. In addition, there are a number of smaller,
\n
closed group insurance schemes from the past that will continue to be funded and are managed by the KBC pension fund.
\n
On 1 January 2019, a new defined contribution plan was introduced to replace the one introduced in 2014. All employees were
\n
again given the one-time option of switching from the defined benefit plan to the new defined contribution plan. At year-end
\n
2022, 55% of employees were active participants in the defined benefit plan and 45% in the defined contribution plan (the
\n
corresponding figures at year-end 2021 were 58% and 42%).
\n
\u2022 From 2021, the expected age of retirement of each employee and the expected wage inflation based on an inflation curve
\n
derived from the market value of inflation-linked bonds are taken into account in the calculation of the gross defined benefit
\n
obligations.
\n

\n\n

\n\n
\u2022 Since 1 January 2020, the insurance risks related to death and disability are fully reinsured through an external reinsurance
\n
programme.
\n
\u2022 As regards the management of the assets, the share of responsible investments came to around 67% at the end of December.
\n
The aim is for the KBC Pension Fund investment portfolio to be carbon-neutral by 2050. In 2021 and 2022, the first measurements
\n
were carried out to determine the greenhouse gas intensity (Scopes 1 and 2) of listed bonds and shares. The exercise will be
\n
repeated annually to allow for a quantitative follow-up of the target.
\n
\u2022 As part of the sale transaction in Ireland, the outstanding defined benefit plans were transferred from Ireland to KBC Bank
\n
Belgium. Net assets under this plan amounted to 24 million euros at year-end 2022.
\n
\u2022 As a result of the sharp increase in interest rates, the accrued benefits often exceed the current value of the liability of the
\n
guaranteed minimum under the defined contribution plan, and therefore sensitivity to interest rate changes is limited.
\n
\u2022 A new discount curve, supplied by an approved external supplier, was used for a model adjustment at the end of the year. If
\n
the same method had been used to determine the curve at the start of the year, the pension plan liability would have been 76
\n
million euros lower.
\n
\u2022 There are no significant defined benefit plans in the group\u2019s other core countries.
\n
\n
\n
\n
Additional information on retirement benefit obligations (in millions of EUR)
\n
2022 2021 2020 2019 2018
\n
Changes in main headings in the main table
\n
\n
Defined benefit obligations
\n
2 580 3 335 3 387 3 212 2 945
\n
Fair value of plan assets
\n
2 746 3 244 2 849 2 791 2 369
\n
Unfunded accrued/prepaid pension cost
\n
153 -128 -537 -457 -598
\n
Impact of changes in the assumptions used in the actuarial calculation of plan
\n
assets and retirement benefit obligations
\n
\n
Impact on plan assets
\n
0 0 0 0 0
\n
Impact on retirement benefit obligations*
\n
-825 -35 253 250 -35
\n
* Arising from defined benefit plans. A plus sign indicates an increase in the (absolute value of) the obligation, a minus sign a decrease.
\n
\n
\n
\n
\n\n

\n\n
Additional information on retirement benefit obligations: DEFINED BENEFIT PLANS, KBC pension fund
\n
\n
Composition (31
\n
-12-2022)
\n
Equity instruments 37%
\n
Bonds 46%
\n
Real estate 14%
\n
Cash 3%
\n
of which illiquid assets 18%
\n
Composition (31
\n
-12-2021)
\n
Equity instruments 38%
\n
Bonds 47%
\n
Real estate 13%
\n
Cash 2%
\n
of which illiquid assets 11%
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Contributions expected in 2023 (in millions of EUR)
\n
47
\n
Regulatory framework
\n
Pension plans are registered in collective labour agreements and incorporated into a set of regulations.
\n
Annual reporting of funding levels to supervisory authorities (FSMA/NBB). Any underfunding must be
\n
reported immediately to the supervisory authorities.
\n
\n
Risks for KBC
\n
Investment risk and inflation risk.
\n
\n
ALM policy
\n
The hedging portfolio hedges against interest rate risk and inflation risk using interest rate swaps.
\n
The return portfolio aims to generate an extra return.
\n
\n
Plan amendments
\n
A new version of the employer-funded defined contribution plan was introduced on 1 January 2019. All
\n
employees who had been signed up to the defined benefit plan were given the one-time option of
\n
switching to this new plan.
\n
\n
Curtailments and settlements
\n
\n
Not applicable.
\n
\n
Discounting method
\n
\n
Based on quotes for various time buckets of AA-rated corporate bonds. The derived bond yields are
\n
converted into a zero coupon curve.
\n
\n
Key actuarial assumptions
\n
\n
\n
Average discount rate 3.98%
\n
\n
Expected rate of salary increase 3.22%
\n
\n
Expected inflation rate 2.89%
\n
\n
Expected rate of increase in pensions \u2013
\n
\n
Weighted average duration of the obligations 10 years
\n
Impact of changes in the assumptions used in the
\n
actuarial calculation of the retirement benefit
\n
obligations
\n
\n
Increase in the retirement benefit obligations
\n
on 31-12-2022 consequent on:
\n
\n
\n
a decrease of 1% in the discount rate 11.73%
\n
\n
an increase of 1% in the expected inflation rate 9.22%
\n
an increase that is 1% higher than the expected real
\n
increase in salary
\n
12.21%
\n
\n
an increase of one year in life expectancy \u2013
\n
The impact of the following assumptions has not been
\n
calculated:
\n
\n
Decreasing mortality rates. Pension benefits are paid out
\n
in capital, so longevity risk is immaterial.
\n
Staff turnover rates: sensitivity to changes remains limited.
\n
\n
Additional information on retirement benefit obligations: DEFINED CONTRIBUTION PLANS, KBC pension fund
\n
\n
Contributions expected in 2023 (in
\n
millions of EUR) 42
\n
Regulatory framework
\n
Pursuant to the Belgian Supplementary Pensions Act, the employer must guarantee a minimum return of
\n
1.75% on employee and employer contributions.
\n
Risks for KBC
\n
Investment risk.
\n
Valuation
\n
Retirement benefit obligations are measured on the basis of the accrued benefits on the reporting date,
\n
making a projection of these benefits (at the rate of interest guaranteed by law) until the expected age
\n
of retirement, and discounting the resulting benefits.
\n
KBC offers two types of defined contribution plan: one that is financed through employee contributions
\n
and one through employer contributions. The valuation of retirement benefit obligations for the
\n
employer-funded defined contribution plan takes account of future contributions. However, it is not
\n
taken into account for the valuation of the employee-funded defined contribution plan, because the
\n
employer\u2019s obligation for that plan only relates to the guaranteed minimum interest rate.
\n
Discounting method
\n
Based on quotes for various time buckets of AA-rated corporate bonds. The derived bond yields are
\n
converted into a zero coupon curve.
\n
\n
Key actuarial assumptions
\n
\n
\n
Average discount rate 4.13%
\n
\n
Weighted average duration of the obligations 17 years
\n
Impact of changes in the assumptions used in the
\n
actuarial calculation of the retirement benefit
\n
obligations
\n
\n
Increase in the retirement benefit obligations
\n
on 31-12-2022 consequent on:
\n
\n
\n
a decrease of 1% in the discount rate 1.00%
\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n
Note 5.10: Parent shareholders\u2019 equity and additional tier-1 instruments
\n
\n\n
Quantities
\n
31-12-2022
\n
31-12-2021
\n
Ordinary shares
\n
417 169 414 416 883 592
\n
\n
of which ordinary shares that entitle the holder to a dividend payment
\n
417 169 414 416 883 592
\n
\n
of which treasury shares
\n
2 2
\n
Additional information
\n
\n
Par value per share (in EUR)
\n
3.51 3.51
\n
Number of shares issued but not fully paid up
\n
0 0
\n

\n\n
\n
\u2022 Ordinary shares: ordinary shares of no nominal value. All ordinary shares carry voting rights and each share represents one vote.
\n
No participation certificates or non-voting shares have been issued. The shares are listed on Euronext Brussels.
\n
\u2022 Capital increases: the number of KBC Group NV shares went up by 285 822 in 2022 and by 189 034 in 2021, due to new shares
\n
being issued following the capital increases reserved for staff. For more information, see the \u2018Company annual accounts and
\n
additional information\u2019 section.
\n
\u2022 Share buybacks: there were no buyback programmes in 2022 and 2021. Treasury shares: at year-end 2022, KBC group
\n
companies held 2 KBC shares in portfolio (the same number as in 2021. For information on the authorisation to increase capital
\n
and to repurchase own shares, see the \u2018Company annual accounts and additional information\u2019 section.
\n
\u2022 Additional tier-1 (AT1) instruments (these securities are classified as equity instruments under IAS 32 and the coupon is treated
\n
as a dividend):
\n
- In April 2018, KBC issued 1 billion euros in AT1 securities (a perpetual AT1 instrument with a seven year first-call date and a
\n
temporary write-down trigger should the common equity ratio fall below 5.125% and an initial coupon of 4.25% per annum,
\n
which is payable every six months).
\n
- In February 2019, KBC issued 500 million euros in AT1 securities (a perpetual AT1 instrument with a five year first-call date and
\n
a temporary write-down trigger should the common equity ratio fall below 5.125% and an initial coupon of 4.75% per annum,
\n
which is payable every six months).
\n

\n\n
\n\n

\n\n

\n\n

\n\n
Note 5.11: \u2018Non-current assets held for sale and disposal groups\u2019 and \u2018Liabilities associated with disposal groups\u2019
\n
(IFRS 5)
\n
\n
KBC Bank Ireland: Non-current assets held for sale and disposal groups
\n
and Liabilities associated with disposal groups (in millions of EUR)
\n
31-12-2022 31-12-2021
\n
ASSETS
\n
\n
\n
\n
Loans and advances to customers (excl. reverse repos)
\n
8 049 9 998
\n
\n
Consumer credit 18 32
\n
\n
Mortgage loans 7 938 9 871
\n
\n
Term loans 84 83
\n
\n
Current account advances 10 12
\n
Liabilities
\n
\n
\n
\n
Deposits from customers and debt securities (excl. repos)
\n
1 929 3 999
\n
\n
Demand deposits 303 481
\n
\n
Time deposits 494 949
\n
\n
Savings accounts 1 132 2 569
\n
Deposits from credit
\n
institutions and investment firms (excl. repos) 91 263
\n
\n
Of which repayable on demand 35 257
\n
\n
\u2022 At the end of August 2021, KBC Bank Ireland reached agreement on the disposal of a non-performing mortgage loan portfolio
\n
in a transaction financed by funds managed by CarVal Investors. The deal was finalised in early February 2022, which means
\n
that the relevant assets and liabilities are not included in the figures for year-end 2022 in the table.
\n
\u2022 In October 2021, KBC Bank Ireland also confirmed that it had entered into a legally binding agreement with Bank of Ireland
\n
relating to the sale of substantially all of KBC Bank Ireland\u2019s performing loan assets and its deposit book to Bank of Ireland
\n
Group (see Note 6.6 for more details). Since we consider all the requirements under IFRS 5 to have been met, these sales resulted
\n
in a shift to the \u2018Non-current assets held for sale and disposal groups\u2019 and \u2018Liabilities associated with disposal groups\u2019 items
\n
\u2022 Maximum credit exposure: the maximum credit risk associated with \u2018Non-current assets held for sale and disposal groups\u2019
\n
amounted to 8.0 billion euros, of which 7.9 billion euros in collateral and other credit enhancements received (10.0 billion euros
\n
and 9.8 billion euros, respectively, at year-end 2021).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
6.0 Other notes
\n
\n\n

\n\n

\n\n

\n\n

\n\n

\n
Note 6.1: Off-balance-sheet commitments and financial guarantees given and received
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
\n
Nominal
\n
amount
\n
Provision Net exposure
\n
Nominal
\n
amount
\n
Provision Net exposure
\n
Undrawn portion of credit lines
\n
granted
\n
Stage 1
\n
39 134 17 39 117 38 414 17 38 397
\n
Stage 2
\n
8 077 26 8 051 4 770 16 4 754
\n
Stage 3
\n
51 13 38 42 4 38
\n
Total
\n
47 262 56 47 206 43 226 37 43 189
\n
\n
of which irrevocable credit lines 26 618 27 26 591 25 802 14 25 788
\n
Financial guarantees given
\n
\n
Stage 1
\n
7 600 2 7 598 8 675 2 8 673
\n
Stage 2
\n
3 139 8 3 131 1 678 5 1 673
\n
Stage 3
\n
119 44 76 153 86 67
\n
Total
\n
10 858 54 10 805 10 506 93 10 413
\n
Other commitments given
\n
\n
Total
\n
1 440 4 1 436 756 1 755
\n
Total
\n
\n
Off-balance-sheet commitments and financial
\n
guarantees
\n
59 561 114 59 447 54 488 130 54 357
\n
\n
\u2022 Fair value of financial guarantees: based on the available market value.
\n\n
\u2022 The carrying value of financial assets pledged by KBC as collateral came to 59 753 million euros for liabilities and 5 291 million
\n
euros for contingent liabilities (66 386 million euros and 3 961 million euros, respectively, in 2021). At year-end 2022, some 16.6
\n
billion euros\u2019 worth of residential mortgage loans and cash collections were entered in the cover asset register for the special
\n
estate of the covered bond programme (16.6 billion euros at year-end 2021).
\n

\n\n
\u2022 There is an obligation to return collateral received (which may be sold or repledged in the absence of default by the owner; see
\n
table) in its original form, or possibly in cash. Collateral can be called in if loans are terminated for various reasons such as
\n
default or bankruptcy. In the event of bankruptcy, the collateral will be sold by the receiver. In other cases, the bank will organise
\n
the foreclosure itself or take possession of the collateral. Collateral received that relates to OTC derivatives is primarily cash,
\n
which is recognised by KBC on the balance sheet (and is not included in the table). More details are provided in Note 4.3.
\n
\u2022 Collateral acquired through foreclosure came to 4 million euros in 2022 (4 million euros in 2021).
\n
\u2022 The increase in \u2018Stage 2\u2019 relates to the collective stage transfer linked to \u2018Stage 1\u2019 loans (see also Note 1.4) that have indirect
\n
exposure to Russia, Ukraine and Belarus.
\n
\n
\n
\n
Collateral received (which may be sold or repledged
\n
in the absence of default by the owner) (in millions of EUR)
\n
Fair value of collateral received
\n
Fair value of collateral sold or
\n
repledged
\n
\n
31-12-2022 31-12-2021 31-12-2022 31-12-2021
\n
Financial assets
\n
30 126
\n
39 863
\n
7 792
\n
11 862
\n
Equity instruments
\n
16 11 2 1
\n
Debt securities
\n
29 876 39 633 7 790 11 860
\n
Loans and advances
\n
234 219 0 0
\n
Cash
\n
0 0 0 0
\n
Other
\n
0
\n
0
\n
0
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 6.2: Leasing
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Finance lease receivables
\n
\n
Gross investment in finance leases, receivable
\n
6 836 6 155
\n
\n
At not more than one year 1 378 1 504
\n
\n
At more than one but not more than five years 4 069 3 421
\n
\n
At more than five years 1 389 1 230
\n
Unearned future finance income on finance leases
\n
468 340
\n
Net investment in finance leases
\n
6 368 5 815
\n
\n
At not more than one year 1 226 1 427
\n
\n
At more than one but not more than five years 3 842 3 239
\n
\n
At more than five years 1 300 1 149
\n
of which unguaranteed residual values accruing to the benefit of the lessor
\n
36
\n
34
\n
\n
Accumulated
\n
impairment for uncollectable lease payments receivable 35 47
\n
Contingent rents recognised in the income statement
\n
111 83
\n
Operating lease receivables
\n
\n
Future aggregate minimum rentals receivable under non
\n
-cancellable operating leases 513 494
\n
Contingent rents recognised in the income statement
\n
0 0
\n
\n
\u2022 KBC acts only to a limited extent as a lessee in operational and financial leasing.
\n
\u2022 Finance leases: KBC offers finance lease products ranging from equipment and vehicle leasing to real estate leasing. In Belgium,
\n
finance leases are typically sold through KBC group\u2019s branch network, and that channel is becoming increasingly important in
\n
Central Europe, too.
\n
\u2022
\n
Operating leases: involve primarily full service car leases, which are sold through the KBC Bank and CBC Banque branch
\n
network and through an internal sales team. Full service car leasing activities are being further developed in Central Europe,
\n
too. The increased importance of leasing hybrid and all-electric vehicles supports the transition to green mobility, and the
\n
segment of (electric) company bicycles also continued to grow.
\n
\u2022 We report on estimated greenhouse gas emissions associated with lending, leasing and other activities and, in that context,
\n
have defined objectives for reducing the greenhouse gas intensity of our financial and operational car leasing. See \u2018Focus on
\n
climate\u2019 in the \u2018Report of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our
\n
Climate Report and our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n
Note 6.3: Related-party transactions
\n
\n
2022
\n
2021
\n

\n

\n\n

\n\n

\n\n
Transactions with related parties,
\n
excluding key management
\n
\n
(in millions of EUR)
\n
Subsidiaries
\n
Associated
\n
companies
\n
Joint
\n
ventures
\n
Other
\n
Total
\n
Subsidiaries
\n
Associated
\n
companies
\n
Joint
\n
ventures
\n
Other
\n
Total
\n
Assets
\n
147 107 33 0 287 144 111 42 142 439
\n
Loans and advances
\n
15 89 0 0 104 21 94 0 100 214
\n
Equity instruments (including investments
\n
in associated companies and joint
\n
ventures)
\n
131 19 33 0 184 124 17 42 0 183
\n
Other
\n
0 0 0 0 0 0 0 0 41 41
\n
Liabilities
\n
54 74 0 593 721 40 89 0 838 968
\n
Deposits
\n
54 10 0 590 654 40 20 0 831 891
\n
Other financial liabilities
\n
0 0 0 0 0 0 0 0 0 0
\n
Other
\n
1 63 0 3 67 1 69 0 8 77
\n
Income statement
\n
-1 -2 0 -1 -3 0 -3 0 0 -3
\n
Net interest income
\n
0 1 0 0 0 0 -1 0 0 -1
\n
\n
Interest income 0 2 0 0 2 0 0 0 0 0
\n
\n
Interest expense 0 -1 0 0 -1 0 -1 0 0 -1
\n
Earned premiums, insurance (before
\n
reinsurance)
\n
0 0 0 0 0 0 0 0 0 0
\n
Technical insurance charges (before
\n
reinsurance)
\n
0 0 0 0 0 0 0 0 0 0
\n
Dividend income
\n
4 1 0 4 9 5 2 0 4 11
\n
Net fee and commission income
\n
1 0 0 2 3 1 -1 0 2 3
\n
\n
Fee and commission income 1 0 0 2 3 1 0 0 2 3
\n
\n
Fee and commission expense 0 0 0 0 0 0 -1 0 0 -1
\n
Other net income
\n
1 -1 0 0 0 -3 -1 0 1 -3
\n
General administrative expenses
\n
-7 -2 0 -7 -16 -4 -2 0 -7 -13
\n
Undrawn portion of loan commitments,
\n
financial guarantees and other
\n
commitments
\n
\n
\n
\n
\n
Given by the group
\n
0 0 0 50 50 0 0 0 74 74
\n
Received by the group
\n
0 0 0 0 0 0 0 0 0 0
\n

\n\n

\n\n

\n\n
\n\n

\n\n
Transactions with key management (members of the Board of Directors and Executive Committee of
\n
KBC Group NV) (in millions of EUR)*
\n
2022
\n
2021
\n
Total*
\n
13 14
\n
Breakdown by type of remuneration
\n
\n
Short
\n
-term employee benefits 11 10
\n
Post
\n
-employment benefits 2 2
\n
\n
Defined benefit plans 0 0
\n
\n
Defined contribution plans 2 2
\n
Other long
\n
-term employee benefits 0 0
\n
Termination benefits
\n
0 2
\n
Share
\n
-based payments 0 0
\n
Stock options (units)
\n
\n
At the beginning of the period
\n
0 0
\n
Granted
\n
0 0
\n
Exercised
\n
0 0
\n
Composition
\n
-related changes 0 0
\n
At the end of the period
\n
0 0
\n
\n
Advances and loans granted to key management and partners 1 1
\n
* Remuneration to key management or partners of the consolidating company on the basis of their activity in that company, its subsidiaries and associated companies, including the
\n
amount of retirement pensions granted to former key management staff on that basis.
\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n
\u2022 The \u2018Subsidiaries\u2019 heading in the first table includes transactions with unconsolidated subsidiaries (transactions with
\n
consolidated subsidiaries have already been eliminated from the consolidated financial statements).
\n
\u2022 The \u2018Other\u2019 heading in the first table includes KBC Ancora, Cera and MRBB.
\n
\u2022 All related-party transactions occur at arm\u2019s length.
\n\n
\u2022 Key management comprises the members of the Board of Directors and Executive Committee of KBC Group NV. More detailed
\n
information on remuneration paid to key management staff is provided in the \u2018Corporate governance statement\u2019 section.
\n

\n\n
\u2022 There were no significant impairment charges vis-\u00e0-vis related parties.
\n

\n\n
\n
\n
\n
\n\n
Note 6.4: Statutory auditor\u2019s remuneration
\n
\n
Statutory auditor\u2019s remuneration (PwC, in EUR)
\n
2022 2021
\n
KBC Group NV and its subsidiaries
\n
\n
Standard audit services
\n
8 524 658 7 598 504
\n
Other
\n
services
\n
\n
Other certifications 892 844 749 213
\n
\n
Tax advice 0 0
\n
\n
Other non-audit assignments 2 225 94 705
\n
KBC Group NV (alone)
\n
\n
Standard audit services
\n
570 825 272 449
\n
Other services
\n
250 890 108 348
\n

\n\n

\n\n

\n

\n

\n

\n\n

\n\n

\n
Note 6.5: Subsidiaries, joint ventures and associated companies
\n
\n
\n
KBC Group: main companies included in the scope of consolidation at year
\n
-end 2022
\n
Company
\n
\n
\n
Registered office
\n
Company
\n
number
\n
Share of capital held
\n
at group level (in %)
\n
Business
\n
unit
\n
1
\n
\n
Activity
\n
KBC Bank (group)
\n
\n
KBC Bank NV
\n
\n
Brussels
\n
\u2013 BE 0462.920.226
\n
\n
100.00 BEL/GRP credit institution
\n
KBC Bank Bulgaria EAD (formerly Raiffeisenbank
\n
Bulgaria)
\n
2
\n
\n
Sofia
\n
\u2013 BG --
\n
\n
100.00 IMA credit institution
\n
CBC BANQUE SA
\n
\n
Namur
\n
\u2013 BE 0403.211.380
\n
\n
100.00 BEL credit institution
\n
\u010ceskoslovensk\u00e1 Obchodn\u00e1 Banka a.s.
\n
\n
Bratislava
\n
\u2013 SK --
\n
\n
100.00 IMA credit institution
\n
\u010ceskoslovensk\u00e1 Obchodn\u00ed Banka a.s.
\n
\n
Prague
\n
\u2013 CZ --
\n
\n
100.00 CZR credit institution
\n
KBC Asset Management NV
\n
\n
Brussels
\n
\u2013 BE 0469.444.267
\n
\n
100.00 BEL asset management
\n
KBC Autolease NV
\n
\n
Leuven
\n
\u2013 BE 0422.562.385
\n
\n
100.00 BEL leasing
\n
KBC Bank Ireland Plc
\n
2
\n
\n
Dublin
\n
\u2013 IE --
\n
\n
100.00 GRP credit institution
\n
KBC Commercial Finance NV
\n
\n
Brussels
\n
\u2013 BE 0403.278.488
\n
\n
100.00 BEL factoring
\n
KBC IFIMA SA
\n
\n
Luxembourg
\n
\u2013 LU --
\n
\n
100.00 GRP financing
\n
KBC Securities NV
\n
\n
Brussels
\n
\u2013 BE 0437.060.521
\n
\n
100.00 BEL stockbroker
\n
K&H Bank Zrt.
\n
\n
Budapest
\n
\u2013 HU --
\n
\n
100.00 IMA credit institution
\n
Loan Invest NV
\n
\n
Brussels
\n
\u2013 BE 0889.054.884
\n
\n
100.00 BEL securitisation
\n
United Bulgarian Bank AD
\n
\n
Sofia
\n
\u2013 BG --
\n
\n
99.91 IMA credit institution
\n
KBC Insurance (group)
\n
\n
KBC Insurance NV
\n
\n
Leuven
\n
\u2013 BE 0403.552.563
\n
\n
100.00 BEL/GRP insurance company
\n
ADD NV
\n
\n
Heverlee
\n
\u2013 BE 0406.080.305
\n
\n
100.00 BEL insurance broker
\n
KBC
\n
Group Re SA
\n
Luxembourg
\n
\u2013 LU --
\n
\n
100.00 GRP reinsurance company
\n
\u010cSOB Poji\u0161t\u2019ovna a.s.
\n
\n
Pardubice
\n
\u2013 CZ --
\n
\n
100.00 CZR insurance company
\n
\u010cSOB Poist\u2019ov\u0148a a.s.
\n
\n
Bratislava
\n
\u2013 SK --
\n
\n
100.00 IMA insurance company
\n
DZI (group)
\n
\n
Sofia
\n
\u2013 BG --
\n
\n
100.00 IMA insurance company
\n
Groep VAB NV
\n
\n
Zwijndrecht
\n
\u2013 BE 0456.920.676
\n
\n
100.00 BEL
\n
driving school/roadside
\n
assistance
\n
K&H Biztos\u00edt\u00f3 Zrt.
\n
\n
Budapest
\n
\u2013 HU --
\n
\n
100.00 IMA insurance company
\n
KBC group
\n
\n
Discai NV
\n
\n
Brussels
\n
\u2013 BE 0773.435.537
\n
\n
100.00 GRP software company
\n
KBC Group NV
\n
\n
Brussels
\n
\u2013 BE 0403.227.515
\n
\n
100.00 GRP
\n
bank-insurance holding
\n
company
\n
KBC Bank (group)
\n
\n
various locations
\n
--
\n
\n
100.00 various credit institution
\n
KBC Global Services NV
\n
\n
Brussels
\n
\u2013 BE 0772.332.707
\n
\n
100.00 GRP cost-sharing structure
\n
KBC Insurance (group)
\n
\n
various locations
\n
--
\n
\n
100.00 various insurance company
\n
1 BEL: Belgium Business Unit; CZR: Czech Republic Business Unit: IMA: International Markets Business Unit; GRP = Group Centre.
\n
2 See Note 6.6.
\n
\n
\n

\n

\n
\u2022 The KBC group\u2019s legal structure has one single entity \u2013 KBC Group NV \u2013 in control of two underlying companies, viz.
\n
KBC Bank NV and KBC Insurance NV, as well as companies such as Discai NV and KBC Global Services NV (see the \u2018Company
\n
annual accounts and additional information\u2019 section). KBC Bank and KBC Insurance have several subsidiaries and
\n
sub-subsidiaries. In addition, the main group companies are shown in the table. A complete list of group companies (included
\n
in or excluded from the scope of consolidation) is provided at www.kbc.com > About us > Our structure.
\n\n
\u2022 Companies eligible for consolidation are effectively included in the consolidated accounts if two of the following criteria are
\n
met: (i) the group\u2019s share in equity exceeds 2.5 million euros (ii) the group\u2019s share in the results exceeds 1 million euros (iii) the
\n
balance sheet total exceeds 100 million euros. The combined balance sheet total of the companies excluded from
\n
consolidation may not amount to more than 1% of the consolidated balance sheet total.
\n
\u2022 All (material) entities (including structured entities (SPVs)) over which the consolidating entity exercises, directly or indirectly,
\n
exclusive control are consolidated according the method of full consolidation. To assess whether or not structured entities have
\n
to be consolidated, KBC uses the principles set out in IFRS 10, as well as thresholds for inclusion in consolidation (see previous
\n
bullet point).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\u2022 Disclosures of interests in other entities (IFRS 12)
\n
- Significant judgements and assumptions
\n
\u25e6 In general, funds managed by KBC are not included in the scope of consolidation, as they do not meet the three criteria of
\n
control (power, exposure to a variable return and ability to use such power to affect those returns).
\n
\u25e6 Joint entities in which KBC does not hold 50% of the share capital are classified as joint ventures, since it has joint control
\n
over these entities based on shareholder agreements. Based on the Articles of Association and/or shareholder
\n
agreements, voting rights in (and therefore the control of) the joint venture are spread evenly across the different
\n
shareholders and decisions may only be taken by unanimity.
\n
- Interests in subsidiaries
\n
\u25e6 For the vast majority of the entities, the voting rights are materially equal to the ownership rights.
\n
\u25e6 Pursuant to the joint capital decision, specific pillar-II levels have been set to ensure that certain minimum capital ratios
\n
are respected, which impose certain restrictions on the repatriation of capital and distribution of dividends.
\n
\u25e6 With regard to Loan Invest NV, KBC is exposed to loan losses on the mortgage portfolio and, therefore, recognises
\n
impairment losses on them where necessary.
\n
- Interests in unconsolidated structured entities
\n
\u25e6 KBC Bank NV is arranger and dealer of a number of 40-billion-euro medium term notes programmes issued by 19
\n
unconsolidated structured entities established in Ireland for that purpose. Their primary business is to raise money by issuing
\n
notes in order to buy financial assets (such as securities, bonds and deposits) and to enter into related derivative and other
\n
contracts. They provide investment opportunities for clients by providing economies of scale, a diversification of credit risk
\n
and a high level of granularity. Each structured entity has a prospectus that was approved by the Central Bank of Ireland
\n
(available at www.kbc.be/prospectus/spv). However, the structured entities are not consolidated because they fail to
\n
meet the three criteria for consolidation (power, exposure to a variable return and ability to use such power to affect those
\n
returns). At year-end 2022, the assets under management at these entities amounted to 5.2 billion euros.
\n
\u25e6 Sponsored unconsolidated structured entities are defined as structured entities where KBC or one of its subsidiaries acts
\n
as arranger of the issuance programme, but where the decision-making power of the entities does not reside with KBC or
\n
one of its subsidiaries. As a result, these entities are not consolidated.
\n
\u25e6 In 2022, KBC had received income from unconsolidated structured entities in the form of management fees (24 million euros)
\n
and accounting fees (1 million euros).
\n
\u25e6 At year-end 2022, KBC held 2 billion euros\u2019 worth of notes issued by the unconsolidated structured entities. Its liabilities
\n
towards the unconsolidated structured entities amounted to 1.5 billion euros and comprised mainly time deposits (1.4 billion
\n
euros).
\n
\u25e6 Any potential decrease in the value of the notes is passed on to the end-client, which means it will have no impact on KBC.
\n
\u2022 At year-end 2022, no group companies were active in the extractive industry. As a result, no consolidated report on payments
\n
to governments has been prepared (see Art.3:8 \u00a7 1 of the Companies and Associations Code).
\n

\n\n

\n\n

\n\n

\n\n
Note 6.6: Main changes in the scope of consolidation
\n
\n
\u2022 2021: Acquisition of NN\u2019s Bulgarian pension and life insurance business
\n
- In July 2021, we completed the acquisition of NN\u2019s Bulgarian pension and life insurance business for a total consideration of
\n
77.7 million euros (the deal did not contain any contingent consideration arrangements). This acquisition comprises all the
\n
shares of NN Pension Insurance Company EAD in Bulgaria (which has been renamed Pension Insurance Company UBB EAD)
\n
and all the assets and liabilities of NN Insurance Co. Ltd. \u2013 Sofia Branch. This deal will enable UBB and DZI to further expand
\n
their cross-selling opportunities through their already established bank-insurance presence in the Bulgarian market, allowing
\n
them to serve more clients and to benefit from economies of scale and increased visibility.
\n
- The impact of the acquisition is included in the consolidated balance sheet figures. The results of the operations concerned
\n
have been fully consolidated in the income statement since 1 August 2021. In the last five months of 2021, the impact
\n
amounted to +5 million euros in total income (mainly net commission income), -4 million euros in operating expenses, and +1
\n
million euros in result after tax.
\n
- KBC recognised goodwill of 56 million euros in its consolidated financial statements for Pension Insurance Company UBB EAD.
\n
This is accounted for by this company\u2019s profitability (based on the results achieved in previous years and the business plan
\n
for the years ahead) and enables UBB and DZI to further expand their cross-selling opportunities through their already
\n
established bank-insurance presence in the Bulgarian market, allowing them to serve more clients and to benefit from
\n
economies of scale and increased visibility. KBC has not recorded any goodwill or badwill on the acquisition of all assets and
\n
liabilities of NN Insurance Co. Ltd. \u2013 Sofia Branch because the consideration was virtually identical to the net value of the
\n
assets and liabilities acquired (taking into account specific fair value adjustments). Goodwill is not deductible for tax
\n
purposes.
\n
- The deal had no impact on KBC Group NV\u2019s capital position.
\n
- The table below shows the fair value of the main assets and liabilities involved in the acquisition of the relevant NN activities.
\n
\n
\u2022 2022: Acquisition of Bulgarian activities from Raiffeisen Bank International (KBC Bank Bulgaria)
\n
- In July 2022, we finalised the agreement with Raiffeisen Bank International on the acquisition of 100% of the shares in
\n
Raiffeisenbank (Bulgaria) EAD for a total consideration of 1 009 million euros in cash (the deal did not contain any contingent
\n
consideration arrangements). The transaction also includes the subsidiaries Raiffeisen Leasing Bulgaria, Raiffeisen Asset
\n
Management (Bulgaria), Raiffeisen Insurance Broker and Raiffeisen Service. Raiffeisenbank (Bulgaria) EAD was renamed KBC
\n
Bank Bulgaria EAD, and the subsidiaries were also renamed. The bank had a market share in Bulgaria of an estimated 8% in
\n
terms of assets, a network of 122 bank branches, roughly 2 500 employees and 600 000 clients.
\n
- The transaction had not yet been finalised at year-end 2021 and was therefore not included in the consolidated balance
\n
sheet figures of year-end 2021, but it was included in the figures of year-end 2022. The results of KBC Bank Bulgaria have
\n
been fully consolidated in the income statement since the third quarter of 2022. The impact in the second half of 2022
\n
amounted to: +108 million euros in total income (mainly 70 million euros in net interest income and 36 million euros in net
\n
commission income), -51 million euros in operating expenses, -5 million euros in impairment and +47 million euros in result after
\n
tax. More information on the impact of the consolidation of KBC Bank Bulgaria on the financial assets and liabilities can be
\n
found in Note 4.1.
\n
- KBC recognised goodwill of 433 million euros in its consolidated financial statements, taking into account limited fair value
\n
adjustments. This is accounted for by the quality of the acquired entity, which is expressed in the qualitative loan portfolio
\n
and profitability (based on the results achieved in previous years and the business plan for the years ahead). It allows KBC to
\n
expand its client base and benefit from economies of scale (through considerable cost synergies for the office network and
\n
head office in Bulgaria and through revenue synergies, including from higher sales of DZI insurance products) and greater
\n
visibility as a result. The acquisition offers KBC the opportunity to earmark its surplus capital for a value-increasing transaction
\n
in a market that the group is highly familiar with. In principle, IFRS 3 (Business Combinations) allows the amount of goodwill to
\n
be adjusted during the 12-month measurement period starting from the acquisition date (IFRS 3.45). This means that the
\n
amount of goodwill is temporary and subject to change, although there are currently no indications that the goodwill
\n
calculation will be subject to any major adjustments. Goodwill is not deductible for tax purposes.
\n
- The transaction had an impact of -0.9 percentage points on KBC Group\u2019s common equity ratio in the third quarter of 2022.
\n
- KBC Bank Bulgaria will legally merge with United Bulgarian Bank (UBB) in 2023.
\n
- The table below shows the fair value of the main assets and liabilities involved in the acquisition of Raiffeisenbank Bulgaria.
\n

\n\n

\n\n

\n\n

\n\n
Impact of the most important acquisitions and disposals (in millions of EUR)
\n
\n
2022:
\n
Raiffeisenbank Bulgaria
\n
(KBC Bank Bulgaria)
\n
2021:
\n
NN\u2019s Bulgarian pension
\n
and life insurance
\n
business
\n
Percentage of shares bought or sold in the relevant year
\n
\n
purchase
\n
100.00%
\n
purchase
\n
100.00%
\n
Percentage of shares after deal
\n
100.00% 100.00%
\n
For business unit
\n
International Markets International Markets
\n
Deal date (month and year)
\n
June 2022 June 2021
\n
Results of the relevant company/business recognised in the
\n
group result as from: June 2022 August 2021
\n
Purchase price or sale price*
\n
1 009 78
\n
Cashflow for acquiring or selling companies less cash and cash equivalents acquired or sold
\n
-42 -71
\n
Amounts recognised for the purchased assets and liabilities (fair
\n
value)
\n
Situation on:
\n
7 July 2022 31 July 2021
\n
Cash and cash balances with central banks
\n
1 053 7
\n
Financial assets
\n
4 686 106
\n
\n
Amortised cost 4 521 1
\n
\n
Fair value through OCI 132 58
\n
\n
Fair value through profit or loss
\n
30 47
\n
\n
Hedging derivatives 4 0
\n
Tax assets
\n
2 0
\n
Investments in associated companies and joint ventures
\n
\n
2 0
\n
Property and equipment
\n
\n
35 1
\n
Goodwill and other intangible assets
\n
\n
15 0
\n
Other assets
\n
\n
20 5
\n
Cash and
\n
cash equivalents (included in the above assets) 1 053 7
\n
Financial liabilities
\n
5 150 36
\n
\n
Held for trading 19 0
\n
\n
Amortised cost 5 130 0
\n
Hedging derivatives
\n
\n
0 36
\n
Technical provisions, before reinsurance
\n
0 59
\n
Provisions for risks and
\n
charges 9 0
\n
Other liabilities
\n
21 3
\n
Cash and cash equivalents (included in the above liabilities)
\n
28 0
\n
* A further 58 million euros was paid for an additional tier-1 instrument issued by Raiffeisenbank Bulgaria, included in equity at nominal value.
\n

\n\n
\n
\u2022 Sale of activities in Ireland (not yet fully finalised at year-end 2022)
\n
- At the end of August 2021, KBC Bank Ireland reached agreement on the disposal of a non-performing mortgage loan portfolio
\n
of roughly 1.1 billion euros in a transaction financed by funds managed by CarVal Investors. The deal was finalised in early
\n
February 2022. The loans will be managed by Pepper Finance Corporation (Ireland) DAC as the legal title holder of the loans.
\n
Pepper is supervised by the Central Bank of Ireland.
\n
- The transaction had an impact on the income statement of -120 million euros in 2021 and +3 million euros in 2022 (see the
\n
detailed table below). The transaction created marginal capital growth with an impact on the common equity ratio of
\n
approximately 2 basis points and a decline in risk-weighted assets of 0.8 billion euros in 2021. The finalisation of the deal
\n
resulted in a decrease in the \u2018Non-current assets held for sale and disposal groups\u2019 balance sheet item of 0.6 billion euros in
\n
2022.
\n
- In October 2021, KBC Bank Ireland also confirmed that it had entered into a legally binding agreement with Bank of Ireland
\n
relating to the sale of substantially all of KBC Bank Ireland\u2019s performing loan assets and its deposit book to Bank of Ireland
\n
Group The latter will also acquire a small non-performing mortgage loan (and credit card balances) portfolio. The Irish
\n
Competition and Consumer Protection Commission (CCPC) approved the transaction in May 2022, and the Irish Minister for
\n
Finance gave his approval in early December 2022. The transaction was finalised on 3 February 2023. The acquisition, initially
\n
totalling approximately 6.4 billion euros, includes approximately 7.6 billion euros in performing mortgage loans, approximately
\n
0.1 billion euros in mainly performing commercial and consumer loans, approximately 0.2 billion euros in non-performing
\n
mortgage loans and approximately 1.8 billion euros in deposits.
\n
- The transaction had an impact on the income statement of -241 million euros in 2021 and -35 million euros in 2022 (see the
\n
detailed table below). In the first quarter of 2023, the transaction will have a positive impact of around 0.4 billion euros. When
\n

\n\n

\n\n

\n

\n\n
finalised, the transaction will also positively impact the common equity ratio by approximately 0.9 percentage points (due in
\n
part to a reduction in risk-weighted assets).
\n
- In 2022, Ireland was transferred from the International Markets Business Unit to the Group Centre (without retroactive
\n
restatement).
\n
\n
Impact of the transactions relating to Ireland on financial year 202
\n
1 and 2022:
\n
one-off items* (in millions of EUR)
\n
Sale transaction for
\n
non-performing loans
\n
Sale transaction for
\n
remaining loans and
\n
deposits and scheduled
\n
settlement
\n
Total
\n
2022
\n
\n
Total income
\n
6 1 6
\n
Operating expenses
\n
0 -32 -33
\n
Impairment
\n
-2 -38 -41
\n
\n
on financial assets at amortised cost and at fair value through OCI*
\n
-2 -15 -17
\n
\n
other
\n
0 -24 -24
\n
Income tax expense
\n
0 36 36
\n
RESULT AFTER TAX
\n
3 -35 -31
\n
2021
\n
\n
Total income
\n
0 -3 -3
\n
Operating expenses
\n
-7 -91 -97
\n
Impairment
\n
-129 -81 -210
\n
\n
on financial assets at amortised cost and at fair value through OCI* -129 -49 -178
\n
\n
other 0 -32 -32
\n
Income tax expense
\n
16 -67 -51
\n
RESULT AFTER TAX
\n
-120 -241 -361
\n
* The impairment is caused by a comparison between the sale price of the impaired loans and the net carrying value of the underlying loans.
\n

\n\n
\n
\n
\n
\n\n

\n\n
Note 6.7: Risk management and capital adequacy
\n
\n
Capital management is a key management process relating to all decisions on the level and composition of our capital, both for
\n
banking and for insurance. It covers all instruments that are positioned to absorb losses in going concern and/or gone concern
\n
situations. Capital management aims to achieve the best possible balance between regulatory requirements, investor
\n
expectations, rating agencies\u2019 views and management ambitions. Ultimate accountability for capital management lies with the
\n
Board of Directors.
\n
\n
Capital management entails a broad scope of activities covering strategic topics (such as defining policies, targets, etc.),
\n
frameworks and models (e.g., for regulatory capital, internal capital, cost of equity, measuring performance, etc.), planning and
\n
allocation (e.g., allocating capital to business, planning capital instrument issuances, forecasting capital ratios, etc.),
\n
implementation (e.g., dividends, capital transactions) and monitoring (including current solvency positions at various levels,
\n
compliance with group policies and regulatory requirements).
\n
\n
ICAAP (Internal Capital Adequacy Assessment Process) consists of numerous business and risk processes that together contribute
\n
to the aim of being adequately capitalised at all times in view of our risk profile and the quality of our risk management and
\n
control environment. In addition to the integrated approach at group level, KBC Insurance and its insurance and reinsurance
\n
subsidiaries conduct an Own Risk and Solvency Assessment (ORSA) on a regular basis, in accordance with Solvency II
\n
requirements.
\n
\n
We report the solvency of the group, the bank and the insurance company based on IFRS data and according to the rules
\n
imposed by the regulator.
\n
\u2022 For the KBC group and KBC Bank, this implies that we calculate our solvency ratios based on CRR/CRD. KBC began applying
\n
the transitional provisions for IFRS 9 and certain tier-2 instruments on 30 June 2020. KBC has received authorisation from the
\n
regulator to apply a risk weighting to the participation in KBC Insurance (Danish compromise method) at KBC group level. The
\n
KBC group and KBC Bank are subject to minimum solvency ratios.
\n
\u2022 In accordance with the regulatory requirement, the common equity ratio of the KBC group must be 11.30% (fully loaded) at year-
\n
end 2022. This includes the pillar 1 minimum requirement (4.5%), the pillar 2 requirement (1.86% set by the ECB following its
\n
supervisory review and evaluation process) and the buffer requirements (4.94% set by the local competent authorities in KBC\u2019s
\n
core markets). At year-end 2022, the fully loaded common equity ratio came to 15.3% (see the \u2018How do we manage our capital?\u2019
\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n
section for more information). At year-end 2022, the transitional common equity ratio came to 14.1%, which represented a
\n
capital buffer of 3.1% relative to the minimum requirement of 10.95%.
\n
\u2022 In accordance with the regulatory requirement, the common equity ratio of KBC Bank must be 10.92% (transactional) at year-
\n
end 2022. At year-end 2022, the transitional common equity ratio was 14.2%.
\n
\u2022 The solvency of KBC Insurance is calculated on the basis of Solvency II (the minimum requirement is 100%). At year-end 2022,
\n
the Solvency II ratio came to 203% relative to the minimum requirement of 100%.
\n
\n
Key solvency figures for the KBC group,
\n
\n
KBC Bank and KBC Insurance (in millions of EUR)
\n
KBC group
\n
(consolidated)
\n
CRR/CRD
\n
transitional
\n
KBC Bank
\n
(consolidated)
\n
CRR/CRD
\n
transitional
\n
KBC Insurance
\n
(consolidated)
\n
Solvency II
\n
\n
31-12-2022
\n
\n
31-12-2021
\n
31-12-2022
\n
\n
31-12-2021
\n
31-12-2022
\n
\n
31-12-2021
\n
Total regulatory capital, after profit appropriation
\n
18 742 20 733 17 516 17 964 3 721 4 075
\n
Tier
\n
-1 capital 16 974 18 998 15 749 16 210 3 220 3 574
\n
\n
Common equity 15 474 17 498 14 249 14 710 \u2013 \u2013
\n
Parent shareholders\u2019 equity (after deconsolidating KBC
\n
Insurance for the KBC group)
\n
16 982 17 708 15 618 14 912 2 157 3 991
\n
\n
Solvency adjustments -1 508 -210 -1 370 -202 1 063 -416
\n
\n
Additional going concern capital
\n
1
\n
1 500 1 500 1 500 1 500 \u2013 \u2013
\n
Tier
\n
-2 capital
\n
2
\n
1 767 1 735 1 768 1 754 500 500
\n
Total weighted risk volume (RWA)
\n
3
\n
109 966 104 362 100 285 94 836 \u2013 \u2013
\n
\n
Credit risks 84 988 80 687 84 988 80 687
\n
\u2013
\n
\n
\u2013
\n
\n
\n
Market risks 3 132 2 665 3 132 2 665
\n
\u2013
\n
\n
\u2013
\n
\n
\n
Operational risks 12 166 11 484 12 166 11 484
\n
\u2013
\n
\n
\u2013
\n
\n
\n
Insurance risks 9 133 9 133 \u2013 \u2013
\n
\u2013
\n
\n
\u2013
\n
\n
Holding-company activities and elimination of intragroup
\n
transactions
\n
548 392 \u2013 \u2013
\n
\u2013
\n
\n
\u2013
\n
\n
Solvency capital requirement (insurance)
\n
\u2013 \u2013 \u2013 \u2013 1 833 2 029
\n
Common equity ratio (group, bank)
\n
14.1% 16.8% 14.2% 15.5% \u2013 \u2013
\n
Solvency II ratio (insurance)
\n
\u2013 \u2013 \u2013 \u2013 203% 201%
\n
1 Includes perpetual subordinated loans with fully discretionary, non-cumulative interest payments. The securities also have a loss absorption mechanism (i.e. a temporary write-down trigger
\n
should the common equity tier-1 ratio fall below 5.125%). Also see Note 5.10.
\n
2 Includes subordinated loans with a fixed maturity date where principal and interest payments cannot be cancelled in a going concern.
\n
3 Supervision of the RWA internal models\u2019 compliance with the approval criteria as provided for in the standards imposed by the regulator does not come under the responsibility of the
\n
statutory auditor.
\n
\n
\n
\u2022 More detailed information is provided in the \u2018How do we manage our capital?\u2019 section of this report and in KBC\u2019s Risk Report.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. Based on internal management reports, the
\n
composition and quality of the loan portfolio is set out in detail in the \u2018How do we manage our risks?\u2019 section (under \u2018Credit
\n
risk\u2019). The information required in relation to risks (in accordance with IFRS 4 and IFRS 7) is provided in those parts of the \u2018How
\n
do we manage our risks?\u2019 section which have been audited by the statutory auditor and which constitute part of the financial
\n
statements.
\n

\n\n

\n\n
\n
\n\n
Note 6.8: Post-balance-sheet events
\n
\n
Significant non-adjusting events between balance sheet date and the date on which the financial statements were approved
\n
for publication by the Board of Directors (16 March 2023):
\n
\u2022 3 February 2023: completion of the sale of the Irish portfolios to Bank of Ireland Group. see Note 6.6 for more information.
\n
\n
Significant adjusting post-balance-sheet events between balance sheet date and the date on which the financial statements
\n
were approved for publication by the Board of Directors (16 March 2023):
\n
\u2022 see Note 3.6.
\n

\n\n

\n\n

\n\n
Note 6.9: General information on the company
\n
\n
\u2022 Name KBC Group.
\n
\u2022 Incorporated: 9 February 1935 as the Kredietbank; the present name dates from 2 March 2005.
\n
\u2022 Country of incorporation: Belgium.
\n
\u2022 Registered office: Havenlaan 2, 1080 Brussels, Belgium.
\n
\u2022 VAT: BE 0403.227.515.
\n
\u2022 RLP: Brussels.
\n
\u2022 Website: https://www.kbc.com
\n
\u2022 E-mail address reserved for shareholders and bondholders: IR4U@kbc.be
\n
\u2022 Legal form:
\n
naamloze genoteerde vennootschap
\n
(listed company with limited liability) under Belgian law. The company is a
\n
mixed financial holding company that is subject to the prudential supervision of the National Bank of Belgium and the European
\n
Central Bank.
\n
\u2022 Life: undefined.
\n
\u2022 Object (Article 2 of the Articles of Association, which are available at www.kbc.com):
\n
The company has as its object the direct or indirect ownership and management of shareholdings in other companies,
\n
including but not restricted to credit institutions, insurance companies and other financial institutions.
\n
The company also has as object to provide services to third parties, either for its own account or for the account of others,
\n
including to companies in which the company has an interest \u2013 either directly or indirectly \u2013 and to (potential) clients of those
\n
companies.
\n
The object of the company is also to acquire in the broadest sense of the word (including by means of purchase, hire and
\n
lease), to maintain and to operate resources, and to make these resources available in the broadest sense of the word
\n
(including through letting and granting rights of use) to the beneficiaries referred to in the second paragraph.
\n
In addition, the company may function as an intellectual property company responsible for, among other things, the
\n
development, acquisition, management, protection and maintenance of intellectual property rights, as well as for making
\n
these rights available, granting rights of use in respect of these rights and/or transferring these rights.
\n
The company may also perform all commercial, financial and industrial transactions that may be useful or expedient for
\n
achieving the object of the company and that are directly or indirectly related to this object. The company may also by means
\n
of subscription, contribution, participation or in any other form whatsoever participate in all companies, businesses or
\n
institutions that have a similar, related or complementary activity.
\n
In general, the company may, both in Belgium and abroad, perform all acts which may contribute to the achievement of its
\n
object.
\n
\u2022 Documents open to public inspection: the Articles of Association of the company can be found at the Registry of the Dutch-
\n
speaking division of the Brussels Business Court and at www.kbc.com and www.notaris.be/statuten. The financial statements,
\n
the annual report and the statutory auditor\u2019s reports regarding the financial statements are filed with the National Bank of
\n
Belgium and are available at www.kbc.com. The annual report can also be obtained from the company\u2019s registered office and
\n
will be sent to those requesting it. Extracts of minutes concerning decisions on the appointment and the termination of the
\n
offices of members of the Executive Committee and the Board of Directors are published in the appendices to the Belgian
\n
Official Gazette. Financial reports about the company are published in the financial press and/or on www.kbc.com. Convening
\n
notices of general meetings of shareholders are published in the Belgian Official Gazette, in at least one national newspaper,
\n
in the media and on www.kbc.com.
\n
\u2022 For information on the general meeting of shareholders and the right of shareholders to take part in such meetings, see Article
\n
23 et seq. of the Articles of Association, which are available at www.kbc.com.
\n

\n\n

\n\n

\n\n
Note 6.10: IFRS 17
\n
\n
Background information
\n
\n
\u2022
\n
In May 2017, the IASB issued IFRS 17 (Insurance Contracts), a new accounting standard for insurance contracts covering
\n
recognition and measurement, presentation and disclosure. On 1 January 2023, IFRS 17 replaced IFRS 4 (Insurance Contrac
\n
ts)
\n
that was issued in 2005. IFRS 17 applies to all types of insurance contracts, regardless of the type of entities that issue t
\n
hem, as
\n
well as to financial instruments with discretionary participation features. The overall objective of IFRS 17 is to prov
\n
ide an
\n
accounting model for insurance contracts that is more useful and consistent for insurers. In contrast to the requirements in
\n
IFRS
\n
4, which are largely based on grandfathering previous local accounting policies, IFRS 17 provides a comprehensive model
\n
for
\n
insurance contracts, covering all relevant accounting aspects. The core of IFRS 17 is the general model (the \u2018Building Block
\n
Approach\u2019 or \u2018BBA\u2019), supplemented by a specific adaptation for contracts with direct participation features (the \u2018Variable Fee
\n
\n
Approach\u2019 or \u2018VFA\u2019) and a simplified approach (the \u2018Premium Allocation Approach\u2019 or \u2018PAA\u2019) mainly for short-duration contracts.
\n
\n
\u2022
\n
Where necessary, the interpretation of IFRS 17 was gradually adjusted when new information became available from external
\n
or in-
\n
house sources. Changes to the original standard, which were published by the IASB in June 2020, are also taken into
\n
account. On 23 November 2021, the EU published a Regulation endorsing IFRS 17 (Insurance Contracts), including the
\n
amendments to the origin
\n
al IFRS 17 and a solution for the annual cohort requirement for certain types of insurance contracts,
\n
for use in the European Union. KBC will not apply the European optional exemption from the annual cohort requirement.
\n
\n
Main differences between IFRS 4 and IFRS 17
\n
\n
\u2022 For Non-
\n
life insurance, income continues to be recognised primarily in earned premiums, and discounting under IFRS 17
\n
represents the main difference in claims provisions. The undiscounted claims provisions under IFRS 4 are replaced by a
\n
discounted best estimate of future cashflows under IFRS 17, plus a risk adjustment for uncertainty (i.e. a safety margin).
\n
\u2022 Under IFRS 4, the premiums received for Life insurance are recognised as earned premiums. Under IFRS 17, the premiums receive
\n
d
\n
are broken d
\n
own into their various components. The savings component (as part of the premium received) is no longer
\n
recognised in the income statement. Income is spread over the term of the contract based on the services provided and claims
\n
and expenses expected durin
\n
g the period. While earnings per product are the same as earnings per product under IFRS 4, the
\n
earnings are recognised differently over time.
\n
\u2022 The IFRS 4 actuarial reserves for Life insurance are replaced by a discounted best estimate of future cashflows u
\n
nder IFRS 17,
\n
plus a risk adjustment for uncertainty (i.e. a safety margin) and a contractual service margin (CSM, similar to unearned profit).
\n
\u2022 Technical charges under IFRS 4 are presented in a more transparent way under IFRS 17, by presenting the insuranc
\n
e service
\n
result \u2013 comprising insurance revenue and insurance service expenses \u2013
\n
separately from insurance finance income or expenses
\n
(IFIE). Finance income or expenses is a new concept under IFRS 17 resulting from the discounting of insurance liabilities.
\n
\u2022
\n
When facts and circumstances suggest doubtful contracts, under IFRS 17 the expected losses concerned are recognised
\n
immediately in the income statement.
\n
\u2022 While IFRS 17 generally does not affect insurance business profitability, the timing of recognition o
\n
f the result may vary, especially
\n
for long-
\n
term life insurance. Since changes in estimates (for instance, based on updated mortality tables) are absorbed in the
\n
CSM and therefore recognised in the result over time, we expect to see less volatility in the result.
\n
\u2022 Following the introduction of IFRS 17, \u2018Financial assets at fair value \u2013
\n
overlay approach\u2019 has been abolished. KBC Insurance has
\n
chosen to reclassify its shares held in portfolio based on this overlay approach to FVOCI equity instruments (without r
\n
ecycling).
\n
As a result, only the dividend income will now be recognised in the income statement.
\n
\u2022 IFRS 17 does not affect:
\n
- KBC Insurance\u2019s Solvency II ratio;
\n
- KBC Group\u2019s common equity ratio (Danish compromise method): at consolidated group level, KBC Insura
\n
nce is treated as an
\n
investee and measured at historical carrying value;
\n
- KBC Group\u2019s dividend policy.
\n

\n\n

\n\n

\n\n
Uniform measurement principles
\n
\n
\u2022 IFRS 17 introduces uniform measurement principles for insurance liabilities, which factor in insurance contract features. At KBC,
\n
the Building Block Approach (BBA) and Variable Fee Approach (VFA) measurement models are used for long-term life insurance
\n
contracts; the Premium Allocation Approach (PAA) measurement model is used for short-term non-life insurance contracts and
\n
for reinsurance (including ceded), provided they meet the PAA eligibility criteria. Certain investment contracts (primarily in
\n
Belgium) are included under IFRS 9 instead of IFRS 17.
\n
\u2022 As required under IFRS 17, the curves used to discount cashflows that vary based on the underlying items (mainly for life
\n
insurance) based on the top-down approach (using a risk-free rate, adjusted with a spread based on a reference portfolio of
\n
assets and excluding the part not related to the insurance liabilities for discounting), while the bottom-up approach (i.e. risk-
\n
free rate + illiquidity premium) is used to discount cashflows that do not vary based on the underlying items (mainly for non-life
\n
insurance).
\n
\u2022 Under IFRS 17, insurance liabilities are measured at the current rate, which means that the impact of the time value of money is
\n
revalued at the current rate each closing period. A choice needs to be made whether to recognise the impact of the changes
\n
in the current rate in the income statement or in other comprehensive income (OCI). In its accounting policies, KBC has chosen
\n
to disaggregate insurance finance income or expenses (IFIE) between the income statement and OCI. This means that the
\n
interest expense on the insurance liability over the reporting period is recorded in the income statement \u2013 this interest expense
\n
is determined based on the locked-in rate (i.e. the interest rate curve applicable at inception of the IFRS 17 contract) \u2013 and that
\n
the impact of changes in the market rate over the reporting period is recorded in OCI.
\n
\u2022 The IFRS 17 insurance and reinsurance assets and liabilities represent all rights and obligations arising from a portfolio of
\n
contracts as a single insurance contract asset or liability. A division is made under IFRS 17 between insurance contracts issued
\n
(i.e. direct business and accepted reinsurance) and reinsurance contracts held (i.e. ceded reinsurance). To correctly present the
\n
insurance liabilities and ceded reinsurance receivables, an adjustment is applied by offsetting the outstanding insurance and
\n
reinsurance payables and receivables (for instance, premiums receivable and fees payable) against the Liability for Remaining
\n
Coverage (LRC)/Asset for Remaining Coverage (ARC).
\n
\u2022 The risk adjustment for non-financial risks is the compensation the entity needs to bear the uncertainty of the amount and the
\n
timing of cashflows arising from non-financial risks. It is a buffer on top of the best estimate of future cashflows that represents
\n
a 50% probability that future liabilities can be met. Life insurance liabilities are characterised by long-term cashflows based on
\n
biometric parameters. The risk adjustment is defined as the difference between the Value at Risk (VaR) and the best estimate
\n
of future cashflows in the context of meeting the liabilities. Non-financial risks included in the VaR model are mortality risk,
\n
longevity risk, illness/disability risk, lapse risk, expense risk and revision risk. The correlations between the different types of risk
\n
have been drawn from the Solvency II correlation matrix. Since the risk adjustment for non-life insurance liabilities is only
\n
calculated for damages suffered, only the reserve risk is taken into account. A Value at Risk method is used, as is the case for
\n
life insurance liabilities. The risk adjustment for non-life is calculated at a confidence level of 90% and the risk adjustment for
\n
life is set at a confidence level of 75%.
\n
\u2022 When transitioning from IFRS 4 to IFRS 17, KBC applies the Full Retrospective Approach (FRA)
\n
for recent years for which the
\n
required historical data is available that allows KBC to make these FRA transition calculations. Applying the FRA for non-recent
\n
years is impracticable due to either a lack of historical data (data and hypotheses) or high costs associated with making
\n
information from the past available for FRA transition calculations, where these costs outweigh the benefits. Where the FRA is
\n
impracticable, the Fair Value Approach (FVA) is predominantly used to determine the CSM on the transition date. The Modified
\n
Retrospective Approach (MRA) is rarely applied as this transition approach is overly complex and the costs do not outweigh
\n
the benefits. KBC calculates a fair value according to IFRS 13 based on the IFRS 17 cashflows and subsequently adjusts a few
\n
assumptions or parameters. The adjustments relate to the inclusion in the IFRS 13 fair value of total expenses, i.e. including non-
\n
directly attributable expenses, and to the inclusion of a risk premium that covers not only non-financial risk but also operational
\n
risk, lapse risk, system and integration expenses and capital funding costs. All past years are combined into a single cohort for
\n
the FVA transition calculations. The FVA CSM ensues from cost and risk margin differences under IFRS 17 and IFRS 13
\n
measurement approaches. T
\n
he OCI amount on the transition date under the FVA is determined in accordance with the
\n
transition exemptions provided in IFRS 17.
\n

\n\n

\n\n

\n\n
Level of aggregation
\n
\n
\u2022 IFRS 17 calculations are performed at an aggregated level and take into account:
\n
- IFRS 17 portfolios (an aggregation of contracts with similar risks that are managed together)
\n
- Annual cohorts (the year in which the policy was taken out)
\n
- Group of contracts (having the same profitability expectation at inception)
\n
\u2022 The IFRS 17 Life group portfolios allow KBC to report at the level of guaranteed-interest (class 21), unit-linked (class 23) and
\n
hybrid products. For Non-life, reports are prepared at the level of property, liability and personal insurance. New production is
\n
aggregated in annual cohorts. Contracts are allocated to a group of contracts that have the same profitability characteristics
\n
upon initial recognition (i.e. at inception of the policy).
\n
\n
\n
Impact of the first-time adoption of IFRS 17
\n
\n
\u2022 The table shows which IFRS 4 or IFRS 9 insurance-related assets and liabilities are or are not measured under IFRS 17 at year-
\n
end 2021:
\n
\u25e6 Assets and liabilities that will not be measured under IFRS 17 are included under IFRS 9 (Financial Instruments).
\n
\u25e6 Assets and liabilities that are covered by IFRS 17 are subject to differences in presentation (movements between assets and
\n
liabilities, which do not affect equity) and valuation differences. The latter may affect equity through retained earnings or the
\n
revaluation reserves (Insurance finance income or expense through OCI, after reinsurance).
\n
\n
Impact of the transition to IFRS 17
\n
\n
(in millions of EUR)
\n
Situation
\n
as at
\n
31-12-
\n
2021
\n
(IFRS 4)
\n
Not measured
\n
under
\n
IFRS 17
\n
\n
Measured
\n
under
\n
IFRS 17
\n
Presentation
\n
change
\n
Measure-
\n
ment change
\n
(impact
\n
on equity)
\n
Situation as
\n
at 01-01-
\n
2022
\n
(IFRS 17)
\n
Reported
\n
under IFRS 4
\n
Reported
\n
under IFRS 17
\n
\n
Reported as assets
\n
\n
Reported as assets
\n
1 824 1 097 726 -684 -29 1 111
\n
Reinsurers\u2019 share in technical
\n
provisions, insurance
\n
\n
Ceded reinsurance assets 191 0 191 -149 -29 13
\n
\n
Other assets
\n
\n
Other assets 1 633* 1 097 535 -535 0 1 097
\n
Reported as liabilities
\n
\n
Reported as liabilities
\n
35 090 15 943 19 147 -691 1 456 35 855
\n
Technical provisions, before
\n
reinsurance
\n
\n
Insurance contract obligations 18 967 197 18 770 -511 1 456 19 912
\n
\n
Non-life
\n
\n
Non-life 3 967 0 3 967 -501 -401 3 065
\n
\n
Life
\n
\n
Life 15 000 197 14 803 -10 1 857 16 847
\n
Liabilities under investment
\n
contracts (measured under
\n
IFRS 9)
\n
Liabilities under investment
\n
contracts (measured under
\n
IFRS 9)
\n
13 603 13 464 139 57 0 13 661
\n
\n
Other liabilities
\n
\n
Other liabilities 2 520 2 283 237 -237 0 2 283
\n
Impact of transition to IFRS 17 (excluding reclassification of financial assets (IFRS 9) as a result of the transition to IFR
\n
S 17)
\n
Impact on equity before tax
\n
- - - - -1 485 -
\n
\n
on retained earnings - - - - -1 419 -
\n
\n
on revaluation reserves - - - - -65 -
\n
Impact on equity after tax
\n
- - - - -1 102 -
\n
\n
on retained earnings - - - - -1 054 -
\n
\n
on revaluation reserves - - - - -48 -
\n
Impact of
\n
reclassification of financial assets (IFRS 9) as a result of the transition to IFRS 17
\n
Impact on equity before tax
\n
- - - - 574 -
\n
\n
on retained earnings - - - - 71 -
\n
\n
on revaluation reserves - - - - 503 -
\n
Impact on equity after tax
\n
- - - - 428 -
\n
\n
on retained earnings - - - - 71 -
\n
\n
on revaluation reserves - - - - 357 -
\n
Total impact of transition to IFRS 17 (including reclassification of financial assets (IFRS 9) as a result of the transition
\n
to IFRS 17)
\n
Total impact on
\n
equity after tax - - - - -673 -
\n
\n
on retained earnings - - - - -983 -
\n
\n
on revaluation reserves - - - - 309 -
\n
* The difference with the 1 630 million euros on the balance sheet at year-end 2021 is due to the addition of insurance-related items included in other balance sheet items.
\n

\n\n

\n\n

\n\n
Conclusions:
\n
\u25e6 The full net impact (after tax) of the transition to IFRS 17, including the reclassification of financial assets (IFRS 9) came to -673
\n
million euros, as a result of:
\n
\u25e6 IFRS 17 valuation differences: the negative impact on equity (-1 485 million euros before tax; -1 102 million euros after tax)
\n
caused by the transition to IFRS 17 is attributable to the life business, partly offset by non-life.
\n
- Life (impact of -1 857 million euros before tax): is measured mainly on the basis of the Building Block Approach, which
\n
results in an increase in insurance liabilities
\n
.
\n
Higher insurance liabilities are largely accounted for by the application of
\n
a different discount rate (under IFRS 4 liabilities are discounted using the higher guaranteed rate, whereas under
\n
IFRS 17 they are discounted using the lower current rate at transition).
\n
- Non-life (impact of +372 million euros before tax): the decrease in insurance liabilities is mainly attributable to the use
\n
of the Premium Allocation Approach. The lower insurance liabilities are accounted for by a combination of the
\n
application of a best estimate under IFRS 17 and the impact of discounting (not applied under IFRS 4).
\n
\u25e6 The first-time adoption of IFRS 17 also permits a reclassification of financial assets available to the insurance companies
\n
in order to avoid an accounting mismatch between assets and liabilities. As a result, bonds in the amount of 5 234 million
\n
euros were transferred from \u2018Financial assets at amortised cost\u2019 to \u2018Financial assets at fair value through OCI\u2019, whereas
\n
bonds in the opposite direction amounted to 2 235 million euros. This translated into a positive net impact after tax of
\n
428 million euros on equity. As a general principle, KBC has decided to classify bonds used to hedge life insurance
\n
liabilities as FVOCI, and bonds used to hedge non-life insurance liabilities as amortised cost (90%) and FVOCI (10%).
\n
\u25e6 The first-time adoption of IFRS 17 also resulted in the abolition of \u2018Financial assets at fair value \u2013 overlay approach\u2019 (see
\n
above), leading to a transfer of shares in the amount of 1 366 million euros to \u2018Financial assets at fair value through OCI\u2019
\n
(FVOCI). The transfer does not have a net impact on equity, but it does result in a shift from \u2018Retained earnings\u2019 (-71 million
\n
euros, pertaining to impairment recognised in the past) and the \u2018Revaluation reserve (FVPL equity instruments) \u2013 overlay
\n
approach\u2019 (496 million euros) to the \u2018Revaluation reserve (FVOCI equity instruments)\u2019.
\n
\u25e6 Liabilities that will not be measured under IFRS 17 are mainly investment contracts in Belgium, which will be included under
\n
IFRS 9 (Financial Instruments) (no changes compared with IFRS 4).
\n
\u25e6 Differences in presentation: these pertain to the adjustment applied by offsetting the outstanding insurance payables and
\n
receivables (for instance, premiums receivable and fees payable) against the Liability for Remaining Coverage (LRC) or the
\n
Asset for Remaining Coverage (ARC).
\n
\u25e6 The CSM release model is based on coverage units in the group of contracts (GoC). The number of coverage units is the
\n
volume of services the insurer provides under the contracts in that GoC, which is determined by taking into account, for each
\n
contract, the total payments a policyholder receives under a contract and the expected period of cover. The CSM amount
\n
included in the income statement is the number of coverage units allocated to the current period for the insurance cover
\n
provided in the current period.
\n
\u25e6 The number of coverage units is reassessed at the end of every reporting period in order to reflect the most up-to-date
\n
contract assumptions. KBC has chosen to present the time value of money on coverage units. Discounting the coverage units
\n
helps achieve a more stable allocation of the CSM to the income statement. KBC applies \u2018multivariate coverage units\u2019 for
\n
contracts under which multiple services are provided, i.e. insurance cover, investment return services and investment
\n
management services, and charges the following items:
\n
o Coverage units are determined based on individual payment components.
\n
o Each component is assigned a weight to reflect an appropriate service level.
\n
These weights appropriately reflect the CSM release based on the volume of work carried out for each service.
\n
\u25e6 Contracts under which the insurer provides cover, i.e. where the insurer runs risks, fall within the IFRS 17 contract boundaries.
\n
Tacit renewals of non-life insurance policies and contracts with a future period of cover fall outside the IFRS 17 contract
\n
boundaries.
\n
\u25e6 On the transition date, ceded reinsurance assets and insurance contract obligations amounted to 13 million euros and 19 912
\n
million euros, respectively. More information can be found in the table. On the transition date, total insurance contract
\n
obligations excluding PAA consisted of contracts subject to the Fair Value Approach (FVA) (16 388 million euros), the Full
\n
Retroactive Approach (FRA) (586 million euros) and the Modified Retrospective Approach (MRA) (199 million euros).
\n

\n\n

\n\n

\n\n

\n\n

\n\n
Overview of ceded reinsurance assets and insurance contract obligations, in millions of EUR, 01-01-2022
\n
Total
\n
PAA
\n
BBA
\n
VFA
\n
Ceded reinsurance assets
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
By portfolio
\n
13 13 - -
\n
\n
- Life -18 -18 - -
\n
\n
- Non-life 32 32 - -
\n
Insurance contract obligations
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
By
\n
portfolio, profitability label, product and business unit
\n
\n
19 912
\n
\n
2 739
\n
\n
16 157
\n
\n
1 016
\n
Total Life
\n
16 847 60 15 771 1 016
\n
By profitability label
\n
\n
\n
- Profitable contracts 16 466 - - -
\n
\n
- Doubtful contracts 0 - - -
\n
\n
- Onerous contracts 381 - - -
\n
By product
\n
\n
\n
- Unit-linked contracts 899 0 0 899
\n
\n
- Non-unit-linked contracts 15 700 60 15 640 0
\n
\n
- Hybrid contracts 248 0 131 117
\n
By business unit
\n
\n
- Belgium 14 906 59 14 847 0
\n
- Czech Republic 1 157 0 630 527
\n
- International Markets 784 1 294 489
\n
- Group Centre 0 0 0 0
\n
Total Non
\n
-life 3 065 2 679 386 0
\n
By profitability label
\n
\n
\n
\n
- Profitable contracts
\n
\n
2 802 - - -
\n
\n
- Doubtful contracts
\n
\n
183 - - -
\n
\n
- Onerous contracts
\n
\n
80 - - -
\n
By product
\n
\n
\n
- Personal insurance 1 096 710 386 -
\n
\n
- Liabilities 1 385 1 385 0 -
\n
\n
- Property, incl. other 583 583 0 -
\n
By business unit
\n
\n
\n
- Belgium 2 470 2 084 386 0
\n
\n
- Czech Republic 305 305 0 0
\n
\n
- International Markets 276 276 0 0
\n
\n
- Group Centre 14 14 0 0
\n
By component
\n
\n
\n
19 912
\n
\n
2 739
\n
\n
16 157
\n
\n
1 016
\n
LRC
\n
17 447 428 16 023 996
\n
\n
- Best estimate 15 383 - 14 540 844
\n
\n
- Risk adjustment 178 - 170 9
\n
\n
- CSM 1 383 - 1 240 142
\n
\n
- Loss component 76 - 74 2
\n
\n
- LRC PAA 428 428 - -
\n
LIC
\n
2 465 2 312 134 19
\n
\n
- Best estimate 2 193 2 044 130 19
\n
\n
- Risk adjustment 272 268 4 0
\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfNotesAndOtherExplanatoryInformationExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag789": { "value": "\n

\n

\n
Note 1.1: Statement of compliance
\n
\n
The consolidated financial statements of KBC Group NV, including all the notes, were authorised for issue on 16 March 2023
\n
by the Board of Directors. They have been prepared in accordance with the International Financial Reporting Standards as
\n
adopted for use in the European Union (\u2018endorsed IFRS\u2019) and present one year of comparative information. All amounts are
\n
shown in millions of euros and rounded to the million (unless otherwise stated).
\n
\n\n
No new IFRS standards became effective on 1 January 2022 that have significant consequences for KBC.
\n

\n\n
\n\n
The following IFRS standards were issued but not yet effective in 2022. KBC will apply these standards when they become
\n
mandatory.
\n
\u2022 IFRS 17: see Note 6.10.
\n
\u2022 Amendments to IAS 1 Presentation of Financial Statements: the amended IAS 1 requires that companies provide information
\n
about material accounting policies rather than a list of their main accounting policies. KBC will apply this amendment when
\n
it becomes mandatory, i.e. in the 2023 Annual Report.
\n
\u2022 Other: the IASB has published several limited amendments to existing IFRSs and IFRICs. They will be applied when they
\n
become mandatory, but their impact is currently estimated to be negligible.
\n

\n\n
\n
The loan portfolio accounts for the largest share of the financial assets. Based on internal management reports, the
\n
composition and quality of the loan portfolio is set out in detail in the \u2018How do we manage our risks?\u2019 section (under \u2018Credit
\n
risk\u2019). All parts of that particular section which have been audited by the statutory auditor are listed at the start of the section.
\n
\n
\n
As a bank-insurance group, KBC presents banking and insurance information in its financial statements on an integrated
\n
basis. Information relating specifically to our banking business and to our insurance business is provided separately in the
\n
respective annual reports of KBC Bank and KBC Insurance under \u2018Information on KBC Bank\u2019 and \u2018Information on KBC
\n
Insurance\u2019 at www.kbc.com/en/investor-relations.
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag730": { "value": "The consolidated financial statements of KBC Group NV, including all the notes, were authorised for issue on 16 March 2023by the Board of Directors.", "dimensions": { "concept": "ifrs-full:DisclosureOfAuthorisationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag768": { "value": "KBC Group", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag798": { "value": "They have been prepared in accordance with the International Financial Reporting Standards asadopted for use in the European Union (\u2018endorsed IFRS\u2019) and present one year of comparative information.", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag732": { "value": "\n
No new IFRS standards became effective on 1 January 2022 that have significant consequences for KBC.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfInitialApplicationOfStandardsOrInterpretations", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag744": { "value": "\n
The following IFRS standards were issued but not yet effective in 2022. KBC will apply these standards when they become
\n
mandatory.
\n
\u2022 IFRS 17: see Note 6.10.
\n
\u2022 Amendments to IAS 1 Presentation of Financial Statements: the amended IAS 1 requires that companies provide information
\n
about material accounting policies rather than a list of their main accounting policies. KBC will apply this amendment when
\n
it becomes mandatory, i.e. in the 2023 Annual Report.
\n
\u2022 Other: the IASB has published several limited amendments to existing IFRSs and IFRICs. They will be applied when they
\n
become mandatory, but their impact is currently estimated to be negligible.
\n

\n", "dimensions": { "concept": "ifrs-full:ExplanationOfNotAppliedNewStandardsOrInterpretations", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag756": { "value": "bank-insurance group", "dimensions": { "concept": "ifrs-full:DescriptionOfNatureOfEntitysOperationsAndPrincipalActivities", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag786": { "value": "\n

\n

\n
Note 1.2: Summary of significant accounting policies
\n
\n\n

\n
General / Basic principle
\n
\n
The general accounting principles of KBC Group NV (\u2018KBC\u2019) are based on the International Financial Reporting Standards
\n
(IFRS), as adopted by the European Union, and on the IFRS Framework. The financial statements of KBC are prepared based
\n
on the going concern assumption. It presents each material class of similar items separately. Dissimilar items are presented
\n
separately unless they are immaterial, and items are only offset when explicitly required or permitted by the relevant IFRS.
\n

\n\n
\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n
Financial assets
\n
\n
KBC has applied all the requirements of IFRS 9 since 1 January 2018, except for hedge accounting transactions, which
\n
continue to be accounted for in accordance with IAS 39.
\n
\n

\n\n

\n
Financial assets \u2013 recognition and derecognition
\n
\n
Recognition: financial assets and liabilities are recognised in the balance sheet when KBC becomes party to the contractual
\n
provisions of the instruments. Regular-way purchases or sales of financial assets are recognised using settlement date
\n
accounting. All financial assets \u2013 except those measured at fair value through profit or loss \u2013 are measured initially at fair
\n
value plus transaction costs directly attributable to their acquisition.
\n
\n\n
Derecognition and modification: KBC derecognises a financial asset when the contractual cashflows from the asset expire
\n
or when KBC transfers its rights to receive contractual cashflows from the financial asset in a transaction in which substantially
\n
all the risks and rewards of ownership are transferred. If the terms and conditions change during the term of a financial asset,
\n
KBC assesses whether the new terms are substantially different from the original ones and whether the changes indicate that
\n
the rights to the cashflows from the instrument have expired. If it is concluded that the terms are substantially different, the
\n
transaction is accounted for as a financial asset derecognition, which means that the existing financial asset is removed from
\n
the balance sheet and that a new financial asset is recognised based on the revised terms. Conversely, when KBC assesses
\n
that the terms are not substantially different, the transaction is accounted for as a financial asset modification.
\n

\n\n
\n
Write-offs: KBC writes off the gross carrying value of financial assets (or the part of the gross carrying value) deemed
\n
uncollectable. This means that there is no reasonable expectation that KBC will recover any interest or principal in a timely
\n
manner. The timing of write-offs depends on several factors, including the portfolio, the existence and type of collateral, the
\n
settlement process in each jurisdiction, and local legislation. If a loan is uncollectable, the gross carrying value is written off
\n
directly against the corresponding impairment. Recoveries of amounts previously written off are recognised as reversals of
\n
impairments in the income statement. KBC differentiates between write-offs for financial reporting purposes (which are still
\n
subject to credit enforcement activities) and debt forgiveness. The latter entails the forfeiture of the legal right to recover all
\n
or part of the debt outstanding to the client.
\n
\n
Classification of equity instruments and debt instruments
\n
\n
On initial recognition of a financial asset, KBC first assesses the contractual terms of the instrument in order to classify it as
\n
an equity instrument or a debt instrument. An equity instrument is defined as any contract that evidences a residual interest
\n
in another entity\u2019s net assets. To satisfy this condition, KBC checks that the instrument does not include a contractual
\n
obligation requiring the issuer to deliver cash or exchange financial assets or financial liabilities with another entity under
\n
conditions that are potentially unfavourable to the issuer. Any instruments that do not meet the criteria to qualify as equity
\n
instruments are classified as debt instruments by KBC, with the exception of derivatives.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n
Classification and measurement \u2013 debt instruments
\n
\n
If KBC concludes that a financial asset is a debt instrument, then \u2013 upon initial recognition \u2013 it can be classified in one of the
\n
following categories:
\n
\u2022 Measured at fair value through profit or loss (FVPL);
\n
- Mandatorily measured at fair value through profit or loss (MFVPL) \u2013 this category includes held-for-trading instruments
\n
(HFT);
\n
- Designated upon initial recognition at fair value through profit or loss (FVO);
\n
- Measured at fair value through profit or loss \u2013 overlay approach (FVPL \u2013 overlay);
\n
\u2022 Measured at fair value through other comprehensive income (FVOCI);
\n
\u2022 Measured at amortised cost (AC).
\n
\n
Debt instruments have to be classified in the FVPL category where (i) they are not held within a business model whose
\n
objective is to hold assets in order to collect contractual cashflows or within a business model whose objective is achieved
\n
by both collecting contractual cashflows and selling financial assets or, alternatively, (ii) they are held within a business model
\n
but, on specified dates, the contractual terms of the instrument give rise to cashflows that are not solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
Furthermore, KBC may in some cases \u2013 on initial recognition \u2013 irrevocably designate a financial asset that otherwise meets
\n
the requirements to be measured at AC or at FVOCI as at fair value (FVO) if doing so eliminates or significantly reduces an
\n
accounting mismatch that would otherwise arise.
\n
\n
A debt instrument is measured at FVOCI only if it meets both of the following conditions and is not designated to be measured
\n
at FVO:
\n
\u2022 the asset is held within a business model whose objective is achieved by both collecting contractual cashflows and selling
\n
financial assets; and
\n
\u2022 the contractual terms of the financial asset give rise on specified dates to cashflows that are solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
A debt instrument is measured at AC only if it meets both of the following conditions and is not designated to be measured
\n
at FVO:
\n
\u2022 the asset is held within a business model whose objective is to hold assets in order to collect contractual cashflows; and
\n
\u2022 the contractual terms of the financial asset give rise on specified dates to cashflows that are solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
A debt instrument is categorised as \u2018FVPL \u2013 overlay\u2019 when it is held in respect of a business line that is connected with
\n
contracts in scope of IFRS 4 and if it is measured at fair value through profit or loss by applying IFRS 9, but would not have
\n
been measured at fair value through profit or loss in its entirety in accordance with IAS 39, and it is an instrument for which
\n
KBC has elected to use the overlay approach. More information on this approach is provided under \u2018Overlay approach\u2019
\n
further below.
\n

\n\n
\n
Business model assessment
\n
\n
The business model is assessed to determine whether debt instruments should be measured at AC or FVOCI. In performing
\n
the assessment, KBC reviews at portfolio level the objective of the business model in which an asset is held because this best
\n
reflects how the business is managed and how information is provided to management. The information considered includes:
\n
\u2022 the stated policies and objectives for the portfolio and how those policies operate in practice (in particular, whether
\n
management\u2019s strategy focuses on earning contractual interest income, maintaining a specific interest rate profile,
\n
matching the duration of the financial assets to that of the liabilities that fund those assets, or realising cashflows through
\n
the sale of the assets);
\n
\u2022 how the performance of the portfolio is evaluated and reported to KBC\u2019s Executive Committee and Board of Directors;
\n
\u2022 the risks that affect the performance of the business model (and the financial assets held within that model) and how those
\n
risks are managed;
\n
\u2022 how managers of the business are rewarded (for instance, whether remuneration is based on the fair value of the assets
\n
managed or the contractual cashflows collected); and
\n
\u2022 the frequency, volume and timing of sales in prior periods, the reasons for such sales and KBC\u2019s expectations of future sales
\n
activity. However, information about sales activity is not considered in isolation, but as part of an overall assessment of
\n
how KBC\u2019s stated objective for managing the financial assets is achieved and how cashflows are realised.
\n
\n\n
Financial assets that are held for trading or whose performance is evaluated on a fair value basis are measured at FVPL,
\n
because they are neither held for collecting contractual cashflows, nor held for both collecting contractual cashflows and
\n
selling financial assets.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n

\n
Assessment whether contractual cashflows are solely payments of principal and interest (SPPI)
\n
\n
For the purposes of this assessment, \u2018principal\u2019 is defined as the fair value of the financial asset on initial recognition. \u2018Interest\u2019
\n
is defined as consideration for the time value of money and for the credit risk associated with the principal amount
\n
outstanding during a particular period of time and for other basic lending risks and costs (e.g., liquidity risk and administrative
\n
costs), as well as profit margin. In assessing whether contractual cashflows are solely payments of principal and interest, KBC
\n
considers the contractual terms of the instrument, which entails assessing whether the financial asset contains a contractual
\n
term that could change the timing or amount of contractual cashflows such that the instrument would not meet this condition.
\n
In making the assessment, KBC considers:
\n
\u2022 contingent events that could change the amount and timing of cashflows;
\n
\u2022 leverage features;
\n
\u2022 prepayment and extension terms;
\n
\u2022 terms that limit KBC\u2019s claim to cashflows from specified assets (e.g., non-recourse asset arrangements); and
\n
\u2022 features that modify consideration of the time value of money (e.g., periodic resets of interest rates).
\n

\n\n\n
Reclassifications
\n
\n
Financial assets are not reclassified subsequent to their initial recognition except in a period after KBC changes its business
\n
model for managing financial assets, which can occur when KBC begins or ceases to perform an activity that is significant to
\n
its operations (e.g., when KBC acquires, disposes of, or terminates a business line). Reclassification takes place from the start
\n
of the reporting period immediately following the change.
\n

\n\n
\n\n

\n\n
Classification and measurement \u2013 equity instruments
\n
\n
Financial equity instruments are classified in one of the following categories:
\n
\u2022 mandatorily measured at fair value through profit or loss (MFVPL) \u2013 only includes equity instruments held for trading (HFT);
\n
\u2022 equity instruments elected to be measured at fair value through other comprehensive income (FVOCI);
\n
\u2022 equity instruments held in an activity connected with the insurance business, which KBC measures at fair value through
\n
profit or loss \u2013 overlay approach (FVPL \u2013 overlay).
\n
\n
KBC can classify equity instruments connected with the insurance business in the \u2018FVPL \u2013 overlay\u2019 category until the effective
\n
date of IFRS 17. Each equity instrument that KBC\u2019s insurance business classifies as \u2018FVPL \u2013 overlay\u2019 must meet both of the
\n
following criteria:
\n
\u2022 it is measured at fair value through profit or loss under IFRS 9, but would not have been measured at fair value through
\n
profit or loss in its entirety under IAS 39; and
\n
\u2022 it is not held in respect of an activity that is unconnected with insurance contracts.
\n
\n
More information on this approach is provided under \u2018Overlay approach\u2019 further below. In the banking business, there is a
\n
rebuttable presumption that all equity instruments are to be regarded as FVOCI if held for neither trading nor a contingent
\n
consideration in a business combination to which IFRS 3 applies. The election to include equity instruments in the FVOCI
\n
category is irrevocable on initial recognition and can be done on an investment-by-investment basis, which is interpreted by
\n
KBC as a share-by-share basis. Equity instruments categorised as FVOCI are subsequently measured at fair value, with all
\n
value changes recognised in other comprehensive income and without any recycling into the income statement, even when
\n
the investment is disposed of. The only exception applies to dividend income, which is recognised in the income statement
\n
under \u2018Dividend income\u2019.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n
Classification and measurement \u2013 derivatives (trading and hedging)
\n
\n
KBC can recognise derivative instruments either for trading purposes or as hedging derivatives. They can be accounted for
\n
as assets or liabilities depending on their current market value.
\n
\n
Trading derivatives
\n
\n
Derivatives are always measured at fair value and KBC draws distinctions as follows:
\n
\u2022 Derivatives that are held with the intent of hedging, but for which hedge accounting cannot be or is not applied (economic
\n
hedges): hedging instruments can be acquired with the intention of economically hedging an external exposure but without
\n
applying hedge accounting. The interest component of these derivatives is recognised under \u2018Net interest income\u2019, while
\n
all other fair value changes are recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\u2022 Derivatives held with no intent of hedging (trading derivatives): KBC entities can also contract derivatives without any
\n
intention to hedge a position economically. Such activity can relate to closing or selling an external position in the near
\n
term or for short-term profit-taking purposes. All fair value changes (including interest) on such derivatives are recognised
\n
under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\n
Hedging derivatives
\n
\n
Hedging derivatives are derivatives that are specifically designated in a hedge relationship. The process for accounting such
\n
derivatives is detailed in \u2018Hedge accounting\u2019.
\n

\n\n

\n\n

\n\n
\n\n

\n\n

\n
Financial assets \u2013 impairment
\n
\n
Definition of default
\n
\n
KBC defines defaulted financial assets in the same way as the definition for internal risk management purposes and in line
\n
with the guidance and standards of financial industry regulators. A financial asset is considered in default if any of the
\n
following conditions is fulfilled:
\n
\u2022 there is a significant deterioration in creditworthiness;
\n
\u2022 the asset is flagged as non-accrual;
\n
\u2022 the asset is forborne and meets the default criteria in accordance with the internal policies for forbearance (for example,
\n
when an additional forbearance measure is extended to a forborne asset that did not reach default status within two
\n
years of the first forbearance measure being granted, or when a forborne asset becomes more than 30 days past due
\n
within the two-year period);
\n
\u2022 KBC has filed for the borrower\u2019s bankruptcy;
\n
\u2022 the counterparty has filed for bankruptcy or sought similar protection measures;
\n
\u2022 the credit facility granted to the client has been terminated.
\n
\n
KBC applies a backstop for facilities whose status is \u201890 days or more past due\u2019. In this context, a backstop is used as a final
\n
control to ensure that all the assets that should have been designated as defaulted are properly identified.
\n
\n
Expected credit loss model (ECL model) \u2013 general
\n
\n\n
The ECL model is used to measure impairment of financial assets, apart from debt instruments and equity instruments
\n
connected with the insurance business, for which KBC has elected to apply the overlay approach. The impairment policy
\n
applying to these instruments is dealt with under \u2018Overlay approach\u2019 further below.
\n
\n
The scope of the ECL model is based on how financial assets are classified. The model is applicable to the following financial
\n
assets:
\n
\u2022 Financial assets measured at AC and at FVOCI;
\n
\u2022 Loan commitments and financial guarantees;
\n
\u2022 Finance lease receivables;
\n
\u2022 Trade and other receivables.
\n

\n\n
\n
No ECLs are calculated for investments in equity instruments.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n
Financial assets that are in scope of the ECL model carry impairment in an amount equal to the lifetime ECL if the credit risk
\n
increases significantly after initial recognition. Otherwise, the loss allowance is equal to the 12-month ECL (see below for more
\n
information on the significant increase in credit risk).
\n
\n
To distinguish the various stages with regard to quantifying ECL, KBC uses the internationally accepted terminology for
\n
\u2018Stage 1\u2019, \u2018Stage 2\u2019 and \u2018Stage 3\u2019 financial assets.
\n
Unless they are already credit impaired, all financial assets are classified in \u2018Stage 1\u2019 at the time of initial recognition and 12-
\n
month ECL is recognised. Once a significant increase in credit risk occurs after initial recognition, the asset is moved into
\n
\u2018Stage 2\u2019 and lifetime ECL is recognised. Once an asset meets the definition of default, it is moved into \u2018Stage 3\u2019.
\n\n
For trade receivables, IFRS 9 allows for a practical expedient. The ECL for trade receivables can be measured in an amount
\n
equal to their lifetime ECL. KBC applies this practical expedient to trade and other receivables.
\n

\n\n
Impairment gains and losses on financial assets are recognised under the \u2018Impairment\u2019 heading in the income statement.
\n
Financial assets that are measured at AC are presented in the balance sheet at their net carrying value, which is the gross
\n
carrying value less impairment. Debt instruments measured at FVOCI are presented in the balance sheet at their carrying
\n
value, which is their fair value on the reporting date. The adjustment for the ECL is recognised as a reclassification adjustment
\n
between the income statement and OCI.
\n
\n
Significant increase in credit risk since initial recognition
\n
\n
In accordance with the ECL model, financial assets attract lifetime ECL once their credit risk increases significantly after initial
\n
recognition. Therefore, the assessment of a significant increase in credit risk is important for the staging of financial assets.
\n
The assessment of a significant increase in credit risk is a relative assessment based on the credit risk that was assigned
\n
upon initial recognition. This is a multi-factor assessment and, therefore, KBC has developed a multi-tier approach.
\n
\n
Multi-tier approach (MTA) \u2013 bond portfolio
\n
\n
For the bond portfolio, the MTA consists of three tiers:
\n
\u2022 Low-credit exception: 12-month ECL is always recognised for bonds if they have a low credit risk on the reporting date (i.e.
\n
\u2018Stage 1\u2019). KBC uses this exception for investment grade bonds.
\n
\u2022 Internal rating: [only applicable if the first tier criterion is not met] this is a relative assessment that compares the probability
\n
of default (PD) upon initial recognition to that on the reporting date. KBC does the assessment at facility level for each
\n
reporting period. The relative change in PD that triggers staging is an increase of two PD notches.
\n
\u2022 Management assessment: lastly, management review and assess the significant increase in credit risk for financial assets
\n
at an individual (i.e. counterparty) and portfolio level, when it is concluded that idiosyncratic events are not adequately
\n
captured in the first two tiers of the MTA. Examples of idiosyncratic events are unexpected developments in the
\n
macroeconomic environment (e.g., due to the coronavirus crisis), uncertainties about geopolitical events (e.g., as a result
\n
of the war in Ukraine) and the secondary impact of material defaults (e.g., on the suppliers, clients and employees of a
\n
defaulted company).
\n
\n
If none of these triggers results in a move into \u2018Stage 2\u2019, the bond remains in \u2018Stage 1\u2019. A financial asset is considered as
\n
\u2018Stage 3\u2019 as soon as it meets the definition of default. The MTA is symmetrical, i.e. credit that has been moved into \u2018Stage 2\u2019
\n
or \u2018Stage 3\u2019 can revert to \u2018Stage 1\u2019 or \u2018Stage 2\u2019 if the tier criterion that triggered the migration is not met on a subsequent
\n
reporting date.
\n
\n
Loan portfolio
\n
\n
For the loan portfolio, KBC uses a five-tier approach. This MTA is a waterfall approach (i.e. if assessing the first tier does not
\n
result in a move into \u2018Stage 2\u2019, the second tier is assessed, and so on). In the end, if all tiers are assessed without triggering a
\n
migration to \u2018Stage 2\u2019, the financial asset remains in \u2018Stage 1\u2019.
\n
\u2022 Internal rating: this rating is used as the main criterion for assessing an increase in credit risk. It is a relative assessment that
\n
compares the PD upon initial recognition to that on the reporting date. KBC does the assessment at the level of the facility
\n
(i.e. contract) for each reporting period. The relative change in PD that triggers staging is an increase of two PD notches.
\n
\u2022 Forbearance: forborne financial assets are always considered as \u2018Stage 2\u2019 unless they are already defaulted, in which case
\n
they are moved into \u2018Stage 3\u2019.
\n
\u2022 Days past due: KBC uses the backstop defined in the directive. A financial asset that is more than 30 days past due is
\n
moved into \u2018Stage 2\u2019.
\n
\u2022 Internal rating backstop: KBC uses an absolute level of PD as a backstop for financial assets that have to be moved into
\n
\u2018Stage 2\u2019. This backstop corresponds to the highest PD (i.e. PD 9 based on KBC\u2019s internal rating) before a financial asset is
\n
considered defaulted.
\n
\u2022 Management assessment: lastly, management review and assess the significant increase in credit risk for financial assets
\n
at an individual (i.e. counterparty) and portfolio level, when it is concluded that idiosyncratic events are not adequately
\n
captured in the first four tiers of the MTA (see above for a number of examples).
\n
\n
A financial asset is considered as \u2018Stage 3\u2019 as soon as it meets the definition of default. The MTA is symmetrical, i.e. credit
\n
that has been moved into \u2018Stage 2\u2019 or \u2018Stage 3\u2019 can revert to \u2018Stage 1\u2019 or \u2018Stage 2\u2019 if the tier criterion that triggered the
\n
migration is not met on the reporting date.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Measurement of ECL
\n
\n
ECL is calculated as the product of probability of default (PD), estimated exposure at default (EAD) and loss given default
\n
(LGD).
\n
\n
ECL is calculated to reflect:
\n
\u2022 an unbiased, probability-weighted amount;
\n
\u2022 the time value of money; and
\n
\u2022 information about past events, current conditions and forecast economic conditions.
\n
\n
Lifetime ECL represents the sum of ECL over the lifetime of the financial asset discounted at the original effective interest
\n
rate.
\n
The 12-month ECL represents the portion of lifetime ECL resulting from a default in the 12-month period after the reporting
\n
date.
\n
\n
KBC uses specific IFRS 9 models for PD, EAD and LGD in order to calculate ECL. As much as possible and to promote efficiency,
\n
KBC uses modelling techniques similar to those developed for prudential purposes (i.e. Basel models). More information on
\n
the credit risk models developed by KBC is provided in the \u2018Internal Modelling\u2019 section of the Risk Report at www.kbc.com.
\n
.That said, KBC ensures that the Basel models are adapted so they comply with IFRS 9.
\n
\u2022 KBC removes the conservatism that is required by the regulator for Basel models;
\n
\u2022 KBC adjusts how macroeconomic parameters affect the outcome to ensure that the IFRS 9 models reflect a \u2018point-in-time\u2019
\n
estimate rather than one that is \u2018through the cycle\u2019 (as required by the regulator);
\n
\u2022 KBC applies forward-looking macroeconomic information in the models.
\n
\n
As regards loans that are in default, the ECL is also calculated as the product of the PD, EAD and LGD. In this specific case,
\n
however, the PD is set at 100%, the EAD is known given the default status and the LGD takes into account the net present
\n
value of the (un)recoverable amount.
\n
\n
KBC uses the IRB and Standardised models to assign the Basel PD, which then serves as input for IFRS 9 ECL calculations and
\n
staging. If there is no Basel PD model with a similar scope to the IFRS 9 model, the long-term observed default rate is used
\n
as the PD for all facilities in the portfolio. For low default portfolios, there may have been no or only a small number of defaults
\n
in the period being considered, in which case the PD is determined based on expert input and external ratings.
\n
\n
KBC considers forward-looking information in the calculation of ECL via macroeconomic variables and based on
\n
management\u2019s assessment of any idiosyncratic events. KBC\u2019s Chief Economist develops three different macroeconomic
\n
scenarios (base-case, up and down) for all the KBC Core Countries and sets a corresponding probability for each scenario.
\n
On a quarterly basis, KBC updates the economic scenarios and attributed weightings to be used for the ECL calculation
\n
according to the input of the Chief Economist. The incorporation of the macroeconomic variables included in these scenarios
\n
in the PD, EAD and LGD components of the ECL calculation is based on statistical correlation in historical datasets.
\n
\n
The maximum period for measurement of ECL is the maximum contractual period (including extensions), except for specific
\n
financial assets that include a drawn and an undrawn amount available on demand, and KBC\u2019s contractual ability to request
\n
repayment of the drawn amount and cancel the undrawn commitment does not limit the exposure to credit risk to the
\n
contractual period. Only for such assets can a measurement period extend beyond the contractual period.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n\n\n
\n

\n
\n

\n\n

\n\n

\n\n

\n\n

\n

\n
Purchased or originated credit impaired (POCI) assets
\n
\n
KBC defines POCI assets as financial assets in scope of the IFRS 9 impairment standard that are already defaulted at
\n
origination (i.e. they then meet the definition of default). POCI assets are initially recognised at an amount net of impairment
\n
and are measured at amortised cost using a credit-adjusted effective interest rate. In subsequent periods, any changes to
\n
the lifetime ECL are recognised in the income statement. Favourable changes are recognised as an impairment gain, even if
\n
the lifetime ECL on the reporting date is lower than the lifetime ECL at origination.
\n
\n\n
Significant judgements and uncertainties
\n
\n
Calculating ECL (and the significant increase in credit risk since initial recognition) requires significant judgement of various
\n
aspects, including the borrowers\u2019 financial position and repayment capabilities, the value and recoverability of collateral,
\n
projections and macroeconomic information. KBC applies a neutral, bias-free approach when dealing with uncertainties and
\n
making decisions based on significant judgements.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
\n

\n
\n
\n\n
Overlay approach
\n
\n
In accordance with the amendment to IFRS 4 issued in September 2016, KBC uses the overlay approach to overcome the
\n
temporary consequences of the different effective dates of IFRS 9 and IFRS 17 (replacing IFRS 4). Accordingly, KBC uses the
\n
overlay approach, which means that the extra volatility related to the adoption of IFRS 9 is reclassified from the income
\n
statement to OCI. The reclassified amounts are recognised in the overlay reserve in OCI. The overlay approach is applied to
\n
those financial assets of KBC\u2019s insurance business that are eligible. Eligibility is based on the following criteria:
\n
\u2022 Assets that are measured at FVPL under IFRS 9 that would not have been measured at FVPL in their entirety under IAS 39;
\n
\u2022 All assets except those held in respect of an activity that is unconnected with contracts within the scope of IFRS 4.
\n
A financial asset can be designated under the overlay approach until:
\n
\u2022 the instrument is derecognised;
\n
\u2022 it is no longer held in respect of an activity that is connected with insurance contracts;
\n
\u2022 KBC decides not to apply the overlay approach for that particular instrument at the beginning of any financial year; or
\n
\u2022 the effective date of IFRS 17.
\n
\n
Application of the overlay approach requires certain IAS 39 accounting policies for financial assets to be retained, namely:
\n
\u2022 Impairment of equity instruments: equity instruments held by KBC\u2019s insurance business were typically classified as \u2018available
\n
for sale\u2019 under IAS 39, whereas they are classified as FVPL under IFRS 9. Designation under the overlay approach requires
\n
the application of IAS 39 impairment rules to investments in equity instruments. In using the overlay approach, all fair value
\n
changes are recognised in the overlay reserve but, where the decline is significant compared to acquisition cost (more than
\n
30%) or prolonged (more than one year), the fair value loss is recognised in the income statement. Any further decrease is
\n
also recognised directly in the income statement, whereas increases are recognised in the overlay reserve.
\n
\u2022 Recognition of gains and losses in the income statement upon the disposal of equity instruments: by designating the equity
\n
instruments connected with KBC\u2019s insurance business under the overlay approach upon their sale, the accumulated overlay
\n
reserve in OCI is recycled to the income statement, ensuring the same results as under IAS 39.
\n

\n\n
\n\n
Cash, cash balances with central banks and other demand deposits with credit institutions
\n
\n
\u2018Cash\u2019 comprises cash on hand and demand deposits, e.g., cheques, petty cash and cash balances at central and other
\n
banks.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Financial liabilities
\n
\n
Financial instruments or their component parts are classified on initial recognition as liabilities or as equity in accordance with
\n
the substance of the contractual arrangements and the definitions of financial liabilities and equity instruments. A financial
\n
instrument is classified as a liability if:
\n
\u2022 KBC has a contractual obligation to deliver cash or another financial asset to the holder or to exchange another financial
\n
instrument with the holder under conditions that are potentially unfavourable to KBC; or
\n
\u2022 KBC has a contractual obligation to settle the financial instrument in a variable number of its own shares.
\n
\n
A financial instrument is classified as an equity instrument when neither condition is met. In that case, it is accounted for in
\n
the way set out under \u2018Equity\u2019.
\n
\n
Financial liabilities \u2013 recognition and derecognition
\n
\n
KBC recognises a financial liability when it becomes party to the contractual provisions of the relevant instrument. This is
\n
typically the date when the consideration in the form of cash or some other financial asset is received. Upon initial recognition,
\n
the financial liability is recognised at fair value less transaction costs directly attributable to issuance of the instrument,
\n
except for financial liabilities at fair value through profit or loss.
\n
\n
Financial liabilities are derecognised when they are extinguished, i.e. the obligation specified in the contract is discharged or
\n
cancelled, or it expires. KBC can also derecognise the financial liability and recognise a new one where an exchange takes
\n
place between KBC and the lenders of the financial liability, each with substantially different terms, or if there are substantial
\n
modifications to the terms of the existing financial liabilities. In assessing whether terms differ, KBC compares the discounted
\n
present value of cashflows under the new terms, including any fees paid net of any fees received and discounted using the
\n
original effective interest rate, and the discounted present value of the remaining cashflows of the original financial liability.
\n
If the difference is 10% or more, KBC derecognises the original financial liability and recognises a new one. Where the
\n
exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are
\n
recognised as part of the gain or loss on the extinguishment.
\n
\n\n

\n
Financial liabilities \u2013 classification and measurement
\n
\n
KBC classifies recognised financial liabilities in three different categories, as provided for by IFRS 9:
\n\n
\u2022 Financial liabilities held for trading (HFT). Held-for-trading liabilities are those incurred principally for generating a profit
\n
from short-term fluctuations in price or dealer\u2019s margin. A liability also qualifies as a trading liability if it belongs to a portfolio
\n
of financial instruments held for trading separately by the trading desk and for which there is a recent pattern of short-
\n
term profit-taking. Held-for-trading liabilities can include derivatives, short positions in debt and equity instruments, time
\n
deposits and debt certificates. Derivative liabilities are split by KBC into trading and hedging derivatives as in the case of
\n
derivative assets. Initially, held-for-trading liabilities are measured at fair value. At the end of the reporting period,
\n
derivative liabilities are measured at fair value. Fair value adjustments are always recorded in the income statement.
\n

\n\n
\u2022 Financial liabilities designated by the entity as liabilities at fair value through profit or loss upon initial recognition (FVO).
\n
Under IFRS 9, a financial liability or group of financial liabilities can be measured upon initial recognition at fair value,
\n
whereby fair value changes are recognised in the income statement except for fair value changes related to own credit
\n
risk, which are presented separately in OCI. The fair value designation is used by KBC for the following reasons:
\n
- managed on an FV basis: KBC designates a financial liability or a group of financial liabilities at fair value where it is
\n
managed and its performance is evaluated on a fair value basis. It is used to account for (unbundled) deposit
\n
components (i.e. financial liabilities that do not include a discretionary participation feature);
\n
- accounting mismatch: the fair value option can be used when doing so eliminates or significantly reduces a measurement
\n
or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognising gains and losses
\n
on them on different bases;
\n
- hybrid instruments: a financial instrument is regarded as hybrid when it contains one or more embedded derivatives that
\n
are not closely related to the host contract. The fair value option can be used when it is not possible to separate the
\n
non-closely-related embedded derivative from the host contract. In that case the entire hybrid instrument can be
\n
designated at fair value. This means that both the embedded derivative and the host contract are measured at fair
\n
value. KBC uses this option when structured products contain non-closely-related embedded derivatives, in which case
\n
both the host contract and the embedded derivative is measured at fair value.
\n
\u2022 Financial liabilities measured at amortised cost (AC). KBC classifies most of its financial liabilities under this category,
\n
including those used to fund trading activities where no trading intent is present in them (e.g., issued bonds). These financial
\n
liabilities are initially measured at cost, which is the fair value of the consideration received including transaction costs.
\n
Subsequently, they are measured at amortised cost, which is the amount at which the funding liability was initially
\n
recognised minus principal repayments, plus or minus the cumulative amortisation of any difference between that initial
\n
amount and the maturity amount. The difference between the amount made available and the nominal value is recorded
\n
on an accruals basis as an interest expense. Interest expenses accrued but not yet paid are recorded under accruals and
\n
deferrals.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n\n

\n
Financial liabilities \u2013 own credit risk
\n
\n
For financial liabilities designated at fair value, IFRS 9 requires the financial liability to be measured at fair value upon initial
\n
recognition. Any changes in fair value are subsequently recognised in the income statement, except for those relating to own
\n
credit risk, which are presented separately in OCI.
\n
Accordingly, movements in the fair value of the liability are presented in different places: changes in own credit risk are
\n
presented in OCI and all other fair value changes are presented in the income statement under \u2018Net result from financial
\n
instruments at fair value through profit or loss\u2019. Amounts recognised in OCI relating to own credit risk are not recycled to the
\n
income statement even if the liability is derecognised and the amounts realised. Although recycling is prohibited, KBC does
\n
transfer the amounts in OCI to retained earnings within equity upon derecognition. The only situation in which presentation
\n
of own credit risk in OCI is not applied is where this would create an accounting mismatch in the income statement. This could
\n
arise if there is a close economic relationship between the financial liability designated at fair value (for which the own credit
\n
risk is recognised in OCI), while all changes in fair value of the corresponding financial asset are measured and recognised at
\n
fair value through profit or loss. This is the case with unit-linked investment contracts, where changes in fair value of the
\n
liability position are fully offset by the asset position.
\n
\n\n
Financial liabilities \u2013 financial guarantee contract
\n
\n
A financial guarantee contract is one that requires KBC to make specified payments to reimburse holders for losses they incur
\n
because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt
\n
instrument. A financial guarantee contract is initially recognised at fair value and is subsequently measured at the higher of
\n
(a) the amount determined in accordance with the impairment provisions of IFRS 9 (see \u2018Financial assets \u2013 impairment\u2019) and
\n
(b) the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with the
\n
revenue recognition principle of IFRS 15.
\n
\n

\n\n

\n\n

\n\n
\n\n
Reverse repos and repos
\n
\n
A reverse repo is a transaction in which KBC purchases a financial asset and simultaneously enters into an agreement to sell
\n
the asset (or a similar asset) at a fixed price on a future date; this agreement is accounted for as a loan or advance, and the
\n
underlying asset is not recognised in the financial statements.
\n
\n
In a repo transaction, KBC sells a security and simultaneously agrees to repurchase it (or a substantially similar asset) at a
\n
fixed price on a future date. KBC continues to recognise the securities in their entirety because it retains substantially all of
\n
the risks and rewards of ownership. The cash consideration received is recognised as a financial asset and the financial
\n
liability is recognised for the obligation to pay the repurchase price.
\n

\n\n
\n\n
Offsetting
\n
\n
KBC offsets and presents only a net amount of a financial asset and financial liability in its balance sheet if and only if (i) it
\n
currently has a legally enforceable right to set off the recognised amounts and (ii) it intends either to settle on a net basis or
\n
to realise the asset and settle the liability simultaneously.
\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n
Fair value
\n
\n
KBC defines \u2018fair value\u2019 as \u2018the price that would be received for sale of an asset or paid to transfer a liability in an orderly
\n
transaction between market participants at the measurement date\u2019. Fair value is not the amount that an entity would receive
\n
or pay in a forced transaction, involuntary liquidation or distress sale. An imbalance between supply and demand (e.g., fewer
\n
buyers than sellers, thereby forcing prices down) is not the same as a forced transaction or distress sale.
\n
\n
Market value adjustments are recognised on all positions that are measured at fair value, with fair value changes being
\n
reported in the income statement or in OCI. They relate to close-out costs, adjustments for less-liquid positions or markets,
\n
mark-to-model-related valuation adjustments, counterparty risk (credit value adjustment) and funding costs:
\n
\u2022 Credit value adjustments (CVAs) are used when measuring derivatives to ensure that their market value is adjusted to
\n
reflect the credit risk of the counterparty. In making this adjustment, both the mark-to-market value of the contract and
\n
its expected future fair value are taken into account. These valuations are weighted based on the counterparty credit risk
\n
that is determined using a quoted credit default swap (CDS) spread, or, if there is no such spread, on the counterparty
\n
credit risk that is derived from bonds whose issuers are similar to the derivative counterparty in terms of rating, sector and
\n
geographical location. A debt value adjustment (DVA) is made for contracts where the counterparty is exposed to KBC. It
\n
is similar to a CVA, but the expected future negative fair value of the contracts is taken into consideration.
\n
\u2022 A funding value adjustment (FVA) is a correction made to the fair value of uncollateralised derivatives in order to ensure
\n
that the (future) funding costs or income attached to entering into and hedging such instruments are factored in when
\n
measuring their value.
\n

\n\n
\n\n

\n\n

\n\n

\n\n

\n\n
Hedge accounting
\n
\n
KBC has elected to apply the hedge accounting principles under IAS 39 (EU carve-out version). KBC designates certain
\n
derivatives held for risk management purposes, as well as certain non-derivative financial instruments, as hedging
\n
instruments in qualifying hedging relationships. On initial designation of the hedge, KBC formally documents the relationship
\n
between the hedging instrument(s) and hedged item(s), including the risk management objective and strategy in undertaking
\n
the hedge, together with the method that will be used to assess the effectiveness of the hedging relationship. KBC makes
\n
an assessment, both at inception of the hedge relationship and on an ongoing basis, of whether the hedging instrument(s)
\n
is/are expected to be highly effective in offsetting the changes in the fair value or cashflows of the respective hedged item(s)
\n
during the period for which the hedge is designated, and whether the actual results of each hedge are within a range of
\n
80-125%. KBC makes an assessment for a cashflow hedge of a forecast transaction of whether it is highly probable to occur
\n
and presents an exposure to variations in cashflows that could ultimately affect the income statement.
\n
\n
KBC uses the following hedge accounting techniques: cashflow hedges, fair value micro hedges, fair value hedges for a
\n
portfolio of interest rate risk, and hedges of net investments in foreign operations.
\n
\n
Cashflow hedges: if a derivative is designated as the hedging instrument in a hedge of the variability in cashflows attributable
\n
to a particular risk associated with a recognised asset, liability or highly probable forecast transaction that could affect the
\n
income statement, the effective portion of changes in the fair value of the derivative is recognised in OCI and presented in
\n
the hedging reserve (cashflow hedge) within OCI. Any ineffective portion of changes in the fair value of a derivative is
\n
immediately recognised in the income statement under \u2018Net result from financial instruments at fair value through profit or
\n
loss\u2019. The amount recognised in OCI is reclassified to the income statement (as a reclassification adjustment in the same
\n
period as the hedged cashflows affect the income statement) under \u2018Net interest income\u2019. If the hedging derivative expires
\n
or is sold, terminated or exercised, or the hedge no longer meets the criteria for cashflow hedge accounting, or the hedge
\n
designation is revoked, then hedge accounting is discontinued prospectively. Any cumulative gain or loss existing in OCI at
\n
that time remains in OCI and is recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019
\n
when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer
\n
expected to occur, the cumulative gain or loss that was reported in OCI is immediately recycled to the income statement
\n
under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\n
Fair value micro hedging: when a derivative is designated as the hedging instrument in a hedge of the change in fair value
\n
of a recognised asset or liability (portfolio of recognised assets or liabilities) or a firm commitment that could affect the income
\n
statement, changes in the fair value of the derivative are immediately recognised in the income statement together with
\n
changes in the fair value of the hedged item that are attributable to the hedged risk (in the same item in the income
\n
statement as the hedged item). However, accrued interest income from interest rate swaps is recognised in \u2018Net interest
\n
income\u2019. If the hedging derivative expires or is sold, terminated or exercised, or the hedge no longer meets the criteria for fair
\n
value hedge accounting, or the hedge designation is revoked, then hedge accounting is discontinued prospectively. Any
\n
adjustment up to the point of discontinuation that is made to a hedged item for which the effective interest method is used
\n
is amortised to the income statement as part of the recalculated effective interest rate of the item over its remaining life or
\n
recognised directly when the hedged item is derecognised.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Fair value hedges for a portfolio of interest-rate risk (macro hedging): the EU\u2019s macro hedging carve-out means that a group
\n
of derivatives (or proportions of them) can be viewed in combination and jointly designated as a hedging instrument, and
\n
removes some of the limitations on fair value hedge accounting relating to hedging core deposits and underhedging
\n
strategies. Under the EU carve-out, hedge accounting may be applied to core deposits and will be ineffective only when the
\n
revised estimate of the amount of cashflows in scheduled time buckets falls below the designated amount of that bucket.
\n
KBC uses interest rate swaps to hedge the interest rate risk for a portfolio of loans and for a portfolio of retail deposits.
\n
Interest rate swaps are measured at fair value, with fair-value changes being reported in the income statement. Accrued
\n
interest income from interest rate swaps is recognised in \u2018Net Interest Income\u2019. The hedged amount of loans is measured at
\n
fair value as well, with fair value changes being reported in the income statement. The fair value of the hedged amount is
\n
presented as a separate item on the assets or liabilities side of the balance sheet. If a hedge is ineffective, the cumulative
\n
fair value change in the hedged amount will be amortised to the income statement over the remaining lifetime of the hedged
\n
assets or will be immediately removed from the balance sheet if ineffectiveness is due to derecognition of the corresponding
\n
loans.
\n
\n
Hedge of net investments in foreign operations: when a derivative instrument or a non-derivative financial instrument is
\n
designated as the hedging instrument in a hedge of a net investment in a foreign operation having a different functional
\n
currency than the direct holding company of the foreign operation, the effective portion of changes in the fair value of the
\n
hedging instrument is recognised in the hedging reserve (investment in foreign operation) in OCI. Any ineffective portion of
\n
the changes in the fair value of the derivative is recognised immediately in the income statement. The amount recognised in
\n
OCI is reclassified to the income statement as a reclassification adjustment on disposal of the foreign operation (which
\n
includes a dividend distribution or capital decrease).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n\n

\n\n
Insurance contracts
\n
\n
General
\n
\n
The accounting policies for IFRS 4 (Insurance Contracts) apply to insurance contracts (including reinsurance contracts) that
\n
KBC issues and reinsurance contracts that it holds. They also apply to financial instruments with a discretionary participation
\n
feature held by KBC.
\n
A reinsurance contract is a type of insurance contract, given that all reinsurance contracts that transfer insurance risk are
\n
themselves insurance contracts.
\n
Some contracts that are accounted for as insurance contracts under local GAAP will no longer be considered insurance
\n
contracts under IFRS. Contracts that do not expose KBC to any insurance risk (e.g., pure investment without additional
\n
(insurance) benefits/cover) are treated as financial instruments, which can exist with or without a discretionary participation
\n
feature.
\n
Financial instruments without a discretionary participation feature and the deposit component of unit-linked insurance
\n
contracts will be recognised in accordance with deposit accounting principles, as they fall under the scope of IFRS 9.
\n
Deposit accounting applies to the deposit component of unit-linked insurance contracts (the insurance component is treated
\n
as an insurance contract according to IFRS 4).
\n
\n
KBC unbundles the components if both of the following conditions are met:
\n
\u2022 measurement of the deposit component is possible (including any embedded surrender options), i.e. without considering
\n
the insurance component;
\n
\u2022 the accounting policies do not otherwise require recognition of all the obligations and rights arising from deposit
\n
accounting.
\n
\n
Unbundling is prohibited if the deposit component cannot be measured separately.
\n
At KBC, insurance contracts other than unit-linked contracts are not unbundled into a deposit component and an insurance
\n
component. The insurance component of unit-linked contracts (see below), whether insurance contracts or investment
\n
contracts, is treated as an insurance contract. Unit-linked financial instruments without death benefits or a participation
\n
feature are classified as \u2018financial liabilities at fair value through profit or loss\u2019 (also referred to as deposit accounting) under
\n
IFRS 9 and are consequently measured at fair value.
\n
A unit-linked financial instrument classified at fair value through profit or loss represents the liability towards the policyholder,
\n
whose consideration received (i.e. deposit) is invested in an investment fund. The latter is classified as a financial asset
\n
\u2018Mandatorily measured at fair value through profit or loss\u2019 (in the \u2018Investment contracts (insurance)\u2019 line in Note 4.1). The
\n
valuation of the financial assets relating to unit-linked contracts is reflected in the adjustments to the related liabilities. Unit-
\n
linked contracts are policies whose value or return is determined based on investments or an index, and where the
\n
policyholder bears the risk.
\n
Changes in fair value (assets and liabilities), including any component that relates to changes in foreign exchange rates, are
\n
recognised in the income statement under \u2018Net result from financial instrument at fair value through profit or loss\u2019. The unit
\n
value is considered to be the fair value. Only the earned management fees and commissions are recognised using margin
\n
deposit accounting principles under \u2018Net fee and commission income\u2019 in the income statement.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Financial instruments with a discretionary participation and the insurance component of unit-linked contracts are treated as
\n
insurance contracts under IFRS 4. On the balance sheet date, the liabilities resulting from these financial instruments or
\n
insurance contracts are subjected to the liability adequacy test to see if they are adequate. If the carrying value of these
\n
liabilities is lower than their estimated future discounted cashflows, the deficiency will be recognised in the income statement
\n
against an increase in the corresponding liability.
\n
\n
A reinsurance asset is impaired if and only if:
\n
\u2022 there is objective evidence that, as a result of an event occurring after initial recognition of the reinsurance asset, KBC
\n
might not receive all amounts due under the terms of the contract;
\n
\u2022 that event has a reliably measurable impact on the amounts that KBC will receive from the reinsurer. If a reinsurance asset
\n
is impaired, KBC will reduce its carrying value accordingly and recognise that impairment loss in the income statement.
\n
\n
When IFRS 4 was adopted, KBC decided to follow its then local GAAP practices and did not introduce any of the following:
\n
\u2022 measurement of insurance liabilities on an undiscounted basis;
\n
\u2022 non-uniform accounting policies for the insurance contracts of subsidiaries. If these accounting policies are not uniform, an
\n
insurer may change them if the change does not make them more divergent and provided the other requirements of IFRS
\n
4 (Insurance Contracts) are met.
\n
\n
KBC believes that it applies sufficient prudence in the measurement of its insurance contracts. KBC does not recognise any
\n
provisions for possible future claims as a liability if those claims arise under insurance contracts that are not in existence at
\n
the reporting date, such as catastrophe provisions and equalisation provisions.
\n
\n
KBC removes an insurance liability (or part of an insurance liability) from the balance sheet if and only if it is extinguished, i.e.
\n
when the obligation specified in the contract is discharged or cancelled or expires.
\n
\n
Reinsurance assets are not offset against the related insurance liabilities, nor will income or expense from reinsurance
\n
contracts be offset against expense or income from the related insurance contracts.
\n
\n\n
Technical provisions \u2013 insurance contracts
\n
\n
The technical provisions comprise the estimates at balance sheet date of the liabilities of the company towards insured
\n
persons, beneficiaries and policyholders, including the translation differences on the technical provisions denominated in a
\n
foreign currency.
\n
\n
Provision for unearned premiums and unexpired risk (Non-life)
\n
\n
Provision for unearned premiums (Non-life)
\n
This provision comprises the portion of gross premiums to be allocated to a subsequent period in order to be able to cover
\n
claims, administrative costs and management costs of investments relating to the underlying policies. For the primary
\n
business, the provision for unearned premiums is in principle calculated separately for each contract on a daily basis, based
\n
on the gross premiums. For reinsurance business received, the provision for unearned premiums is calculated for each
\n
contract separately. It is based on information communicated by the ceding undertaking, supplemented by the company\u2019s
\n
own past experience of how risks change over time.
\n
\n
Provision for unexpired risk (Non-life)
\n
This item is an additional provision to supplement the provision for unearned premiums. It is set aside when the estimated
\n
total amount of claims and administrative costs relating to current contracts is expected to be higher in the following period
\n
than total unearned premiums and premiums receivable. For reinsurance business received, the contractual stipulations are
\n
examined and, where appropriate, the underlying provision restated.
\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n\n

\n\n
Life insurance provisions
\n
\n
This provision relates exclusively to life insurance activities, with the exception of the unit-linked life business. It comprises the
\n
actuarially estimated value of KBC\u2019s liabilities and the profit share already awarded, less the actuarially estimated value of
\n
the liabilities of the policyholders. The acquisition costs are not deducted from the provision.
\n
This item also includes the provision for unearned premiums and unexpired risk, the ageing provision, the provisions for
\n
annuities payable but not yet due (including internal claims settlement costs) for supplementary life insurance and the
\n
provisions for retirement and survivorship annuities.
\n
Valuation according to the prospective method is applied to (i) the provision for conventional non-unit-linked life insurance,
\n
(ii) universal non-unit-linked life insurance policies offering a guaranteed rate of interest on future premium payments, and
\n
(iii) the provision for non-statutory benefits for employees in respect of current annuities.
\n
Valuation according to the retrospective method is applied to the provisions for modern non-unit-linked universal life
\n
insurance and to the provision for non-statutory benefits for employees in respect of new supplementary premium payments.
\n
The provision is calculated separately for every insurance contract.
\n
\n
Provision for claims outstanding
\n
\n
For claims reported, the provision is measured separately in each case, taking into account the known facts in the claims file,
\n
on the basis of the amounts still due to the injured parties or beneficiaries, plus external costs of settling claims. Where
\n
benefits have to be paid in the form of an annuity, the amounts to be set aside for that purpose are calculated using
\n
recognised actuarial methods.
\n
For \u2018claims incurred but not reported\u2019 at balance sheet date, an IBNR (Incurred But Not Reported) provision is set aside. In the
\n
primary business, this IBNR provision is based on a lump sum per class of insurance depending upon past experience and the
\n
trend in the insured portfolio. For extraordinary events, additional amounts are added to the IBNR provision.
\n
For \u2018claims incurred but not enough reserved\u2019 at balance sheet date, an IBNER (Incurred But Not Enough Reserved) provision
\n
is set aside if the adequacy procedures demonstrate that the other claims provisions are insufficient to meet future liabilities.
\n
This provision contains amounts for claims which have already been reported but which, for technical reasons, could not yet
\n
be recorded in the claims file.
\n
A provision for the internal cost of settling claims is calculated at a percentage that is based on past experience.
\n
Additional provisions are also constituted as required by law (according to the Royal Decree of 17 November 1994 on the
\n
annual accounts of insurance undertakings), such as supplementary workmen\u2019s compensation provisions in Belgium.
\n

\n\n

\n\n

\n\n
\n\n
Leasing
\n
\n
All leases are required to be classified as either finance leases or operating leases. The classification under IFRS 16 is based
\n
on the extent to which risk and rewards incidental to ownership of leased assets lie with the lessor or the lessee. A finance
\n
lease transfers substantially all the risks and rewards incidental to ownership of an asset.
\n
This classification is crucial for positions as a lessor, but less important for positions as a lessee, since both classifications
\n
result in similar recognition and measurement of the lease on the balance sheet and in the income statement.
\n

\n\n
\n\n

\n\n
Equity
\n
\n
Equity represents the residual interest in KBC\u2019s total assets after deduction of all its liabilities (referred to as \u2018net assets\u2019) and
\n
encompasses all shares issued by KBC, reserves attributable to the holders of the shares and minority interests.
\n
\n
KBC classifies all issued financial instruments as equity or as a financial liability based on the substance of the contractual
\n
arrangements. The critical feature that distinguishes a financial liability from a share is whether KBC has an unconditional
\n
right to avoid delivering cash or another financial asset to settle a contractual obligation.
\n
Minority interests represent the equity in a subsidiary that is not attributable to the holders of KBC shares. When the
\n
proportion of the equity held by the minority interests changes, KBC adjusts the carrying value of the controlling and minority
\n
interests to reflect changes in their relative interests in the consolidated companies. KBC recognises in equity any difference
\n
between the amount by which the minority interests are adjusted and the fair value of the consideration paid or received,
\n
and allocates it to its controlling stake.
\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n

\n
Employee benefits
\n
\n\n

\n\n
Short-term employee benefits
\n
\n
Short-term employee benefits, such as salaries, paid absences, performance-related cash awards and social security
\n
contributions, are recognised over the period in which the employees provide the corresponding services. The related
\n
expenses are presented in the income statement as \u2018Operating expenses\u2019 under the \u2018Staff expenses\u2019 heading.
\n

\n\n

\n\n
\n
Post-employment benefits
\n
\n
KBC offers its employees\u2019 pension schemes in the form of defined contribution or defined benefit plans. Under the defined
\n
contribution plans, KBC\u2019s statutory or constructive obligation is limited to the amount that it agrees to contribute to the fund.
\n
The amount of the post-employment benefit to be received by the employee is determined by the amount of the
\n
contributions paid by KBC and the employee him or herself into the post-employment benefit plan, as well as by the
\n
investment returns arising from those contributions. The actuarial risk is borne by the employee.
\n
Conversely, under the defined benefit plans, KBC\u2019s obligation is to provide the agreed benefits to current and former
\n
employees and, in substance, the actuarial risk and investment risk fall on KBC. This means that if, from an actuarial or
\n
investment viewpoint, things turn out worse than expected, KBC\u2019s obligation may be increased.
\n
In Belgium, defined contribution plans have a legally guaranteed minimum return and the actual return can be lower than
\n
the legally required return. In addition, these plans have defined benefit plan features and KBC treats them as defined benefit
\n
plans.
\n
Liabilities under the defined benefit plans and the Belgian defined contribution plans (or pension liabilities) are included under
\n
\u2018Other liabilities\u2019 and relate to the obligations for retirement and survivor\u2019s pensions, early retirement benefits and similar
\n
pensions and annuities.
\n
The pension obligations for employees under the defined benefit plans are calculated using the projected-unit-credit
\n
method, with each period of service granting additional entitlement to pension benefits.
\n
Actuarial valuations are performed every reporting period. The defined benefit liabilities are discounted using rates
\n
equivalent to the yields on high-quality corporate bonds that are denominated in the currency in which the benefits will be
\n
paid and that have a maturity similar to the related pension liabilities.
\n\n
Changes in the net defined benefit liability/asset, apart from cash movements, are grouped into three main categories and
\n
recognised in operating expenses (service costs), interest expenses (net interest costs) and other comprehensive income
\n
(remeasurements).
\n

\n\n

\n\n

\n\n
\n\n

\n\n
Net fee and commission income
\n
\n
Most net fee and commission income falls under the scope of IFRS 15 (Revenue from Contracts with Customers), as it relates
\n
to the services that KBC provides to its clients and is outside the scope of other IFRS standards. For the recognition of revenue,
\n
KBC identifies the contract and defines the promises (performance obligations) in the transaction. Revenue is recognised only
\n
when KBC has satisfied the performance obligation.
\n
The revenue presented under \u2018Securities and asset management\u2019 falls under the scope of IFRS 15 and, in principle, entails
\n
KBC keeping assets in a trust for the beneficiary (\u2018fund\u2019) and being responsible for investing the amounts received from clients
\n
to their benefit. These transactions are straightforward, because KBC provides a series of distinct services which clients use
\n
at the same time when receiving the benefits. In return, KBC receives a monthly or quarterly management fee, which is
\n
calculated as a fixed percentage of the net asset value, or a subscription fee retained from the beneficiary. The fees do not
\n
include a variable component.
\n
Revenue reported as \u2018Margin on life insurance investment contracts without DPF\u2019 represents the amount realised on
\n
investment contracts without a discretionary participation feature, i.e. a fixed percentage or fixed amount is withheld from
\n
the client\u2019s payments, enabling the insurance company to cover its expenses.
\n
Payment services, where KBC charges clients for certain current-account transactions, domestic or foreign payments,
\n
payment services provided through ATMs, etc., are usually settled when the actual transaction is carried out, enabling the
\n
relevant fee to be recognised directly at that time.
\n

\n\n

\n\n

\n\n

\n

\n

\n

\n\n
Government grants
\n
\n
Government grants are recognised when there is a reasonable assurance that the grant will be received and the conditions
\n
attached to it will be met. The grants are recognised in the income statement on a systematic basis to match the way that
\n
KBC recognises the expenses for which the grants are intended to compensate.
\n

\n\n
\n\n

\n\n
Levies
\n
\n
Public authorities can impose various levies on KBC. The size of the levies can depend on the amount of revenue (mainly
\n
interest income) generated by KBC, the amount of deposits accepted from clients, and the total balance sheet volume,
\n
including corrections based on certain, specific ratios. In accordance with IFRIC 21, levies are recognised when the obligating
\n
event that gives rise to recognition of the liability has occurred as stated in the relevant legislation. Depending on the
\n
obligating event, levies can be recognised at a single point in time or over time. Most of the levies imposed on KBC have to
\n
be recognised at a single point in time, which is mainly the beginning of the financial year. KBC recognises levies under
\n
\u2018Operating expenses\u2019.
\n

\n\n

\n\n
\n\n

\n
Income tax
\n
\n
Income tax consists of three items, namely taxes paid/payable over the reporting period, underprovisioning/overprovisioning
\n
in previous years, and changes in deferred tax assets/deferred tax liabilities. It is accounted for either in the income
\n
statement or in other comprehensive income, depending on where the items that triggered the tax are recorded. Income
\n
taxes that are initially accounted for in other comprehensive income and that relate to gains or losses that are subsequently
\n
recognised in the income statement are recycled to the income statement in the same period in which that item is accounted
\n
for in the income statement.
\n
\n
Deferred and current tax assets and liabilities are offset when there is both a legal right of offset and the intention to settle
\n
on a net basis or to realise the asset and settle the liability simultaneously.
\n
\n
Current tax assets/liabilities
\n
\n
Current tax for the period is measured at the amount expected to be paid to or recovered from the tax authorities, using the
\n
rates of tax in effect during the reporting period.
\n
\n\n
Deferred tax assets/liabilities
\n
\n
Deferred tax liabilities are recognised for all taxable temporary differences between the carrying value of an asset or liability
\n
and its tax base. They are measured using the tax rates that are substantively enacted at the reporting date and expected
\n
to be in effect on realisation of the assets or settlement of the liabilities to which they relate and that reflect the tax
\n
consequences following from the manner in which the entity expects to recover or settle the carrying value of the underlying
\n
asset or liability at the balance sheet date.
\n
Deferred tax assets are recognised for all deductible temporary differences between the carrying value of assets and
\n
liabilities and their tax base, as well as for the carry forward of unused tax losses and unused tax credits, to the extent that
\n
it is probable that taxable profit will be available against which the deductible temporary differences can be utilised. KBC
\n
calculates deferred tax assets for carry forward unused tax losses. When estimating the period over which tax losses can be
\n
set off against future taxable profits, KBC uses projections for a period of eight to ten years.
\n
Deferred tax assets/liabilities that relate to business combinations are recorded directly in goodwill.
\n
Deferred tax assets/liabilities are not discounted.
\n

\n\n

\n\n
\n\n

\n\n

\n\n
Property and equipment
\n
\n
Property and equipment are recognised initially at cost (including directly allocable acquisition costs). KBC subsequently
\n
measures property and equipment at the initial cost less accumulated depreciation and impairment. The rates of
\n
depreciation are determined on the basis of the estimated useful life of the assets and are applied according to the straight-
\n
line method from the moment the assets are available for use. Property and equipment are derecognised upon disposal or
\n
when the relevant asset is permanently withdrawn from use and no future economic benefits are expected from its disposal.
\n
Gains or losses upon derecognition are recognised in the income statement in the period in which derecognition occurs.
\n
Property and equipment are subject to impairment testing when there is an indication that the asset might have been
\n
impaired.
\n
Depreciation charges, impairment losses and gains or losses on disposal are recognised under \u2018Operating expenses\u2019 in the
\n
income statement, with the exception of assets that are leased under operating leases (KBC as a lessor), for which the costs
\n
are recognised in \u2018Other net income\u2019. Where a disposal falls within the definition of a discontinued operation, the net results
\n
are reported in a single line in the income statement (see \u2018Discontinued operations\u2019 below).
\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n\n
Investment property
\n
\n
Investment property is defined as a property built, purchased or acquired by KBC under a finance lease and is held to earn
\n
rentals or for the purpose of capital appreciation rather than being used by KBC for the provision of services or for
\n
administrative purposes.
\n
Investment property is initially recognised at cost (including directly attributable costs). KBC subsequently measures it at the
\n
initial cost less accumulated depreciation and impairment.
\n
The depreciation charge is recognised under \u2018Other net income\u2019 in the income statement.
\n

\n\n

\n\n
\n\n

\n\n

\n\n

\n\n

\n\n

\n
Intangible assets
\n
\n
Intangible assets include goodwill, software developed in-house, software developed externally and other intangible assets.
\n
Intangible assets can be (i) acquired as part of a business combination transaction (see \u2018Business combinations and goodwill\u2019
\n
below), (ii) acquired separately or (iii) developed internally.
\n
\n
Separately acquired intangible assets (mainly software developed externally) are initially recognised at cost. Internally
\n
developed intangible assets (mainly software developed in-house) are recognised only if they arise from development and
\n
KBC can demonstrate:
\n
\u2022 the technical feasibility of completing them;
\n
\u2022 an intention to complete for use or sale;
\n
\u2022 an ability to use or sell them;
\n
\u2022 how the intangible assets will generate future economic benefits;
\n
\u2022 the availability of adequate technical, financial and other resources to complete the development and to use or sell the
\n
intangible assets;
\n
\u2022 reliable measurement of the expenditure attributable to the intangible assets during their development.
\n
\n
Internally generated intangible assets are initially measured at the development costs directly attributable to the design and
\n
testing of the unique software controlled by KBC.
\n
Directly attributable costs capitalised as part of the software developed in-house include software development employee
\n
costs and directly attributable overheads.
\n
Research expenses, other development expenditure, costs associated with maintaining software and investment projects
\n
(large-scale projects introducing or replacing an important business objective or model) that do not meet the recognition
\n
criteria are recognised as an expense in the period they are incurred.
\n
\n\n
Intangible assets are subsequently carried at cost less accumulated amortisation and accumulated impairment losses.
\n
Amortisation begins when the asset is available for use as intended by management. Software is amortised as follows:
\n
\u2022 System software (initial purchased software forming an integral part with hardware) is amortised at the same rate as
\n
hardware.
\n
\u2022 Standard software and customised software developed by a third party or developed in-house are amortised over five
\n
years according to the straight-line method from the time the software is available for use.
\n
\u2022 Core systems (typically including deposit account processing, loan and credit processing, interfaces to the general ledger
\n
and reporting tools) are amortised over eight years according to the straight-line method.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n\n

\n\n

\n\n
Impairment of non-financial assets
\n
\n
When KBC prepares financial statements, it ensures that the carrying value of the non-financial asset does not exceed the
\n
amount that could be obtained from either using or selling it (\u2018recoverable amount\u2019). Property and equipment, investment
\n
property and software are subject to the impairment review only when there is objective evidence of impairment. Goodwill
\n
and intangible assets with an indefinite useful life are subject to impairment reviews at least annually and also reviewed for
\n
impairment indicators every quarter.
\n
Indications that an impairment loss is required may stem from either an internal source (e.g., the condition of the asset) or an
\n
external source (e.g., new technology or a significant decline in the asset\u2019s market value).
\n
When an impairment indicator is present, KBC reviews the asset\u2019s recoverable amount and the asset is impaired when its
\n
recoverable amount is lower than its carrying value at the reporting date. The recoverable amount is defined as the higher
\n
of the value in use and the fair value less cost to sell.
\n
Value in use is defined as the discounted future cashflows expected to be derived from an asset or a cash-generating unit.
\n
Impairment is borne at individual asset level, but when the individual asset does not generate cash inflows that are largely
\n
independent of those from other assets or groups of assets, the recoverable amount is determined for the so-called \u2018cash-
\n
generating unit\u2019 (CGU) to which the asset or group of assets belongs. In forming the CGUs, KBC applies its own judgement to
\n
define the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows
\n
from other assets or groups of assets. This process mainly applies to goodwill that has been recognised in relation to
\n
acquisitions.
\n
Impairment losses are recognised in the income statement for the period in which they occur. An impairment loss can be
\n
reversed if the condition that triggered it is no longer present, except for goodwill, which can never be reversed. Impairment
\n
gains are recognised in the income statement for the period in which they occur.
\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n\n
Provisions, contingent liabilities and contingent assets
\n
\n
Provisions are recognised on the reporting date if and only if the following criteria are met:
\n
\u2022 there is a present obligation (legal or constructive) due to a past event;
\n
\u2022 it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation;
\n
\u2022 a reliable estimate can be made of the amount of the obligation.
\n
\n
The amount recognised as a provision is the best estimate of the expenditure required to settle the obligation at balance
\n
sheet date. When the effect of time is material, the amount recognised as a provision is the net present value of the best
\n
estimate.
\n
Due to its inherent nature, a provision requires management judgement regarding the amount and timing of probable future
\n
economic outflows.
\n

\n\n

\n\n
\n\n
Consolidated financial statements / interim financial statements
\n
\n
All material entities (including structured entities) over which KBC exercises direct or indirect control as defined in IFRS 10 are
\n
consolidated according to the method of full consolidation. Changes in ownership interests (that do not result in a loss of
\n
control) are accounted for as equity transactions. They do not affect goodwill or profit or loss.
\n
\n
Subsidiaries that are not included in the consolidated financial statements because of immateriality are classified as equity
\n
instruments at fair value through other comprehensive income, with all fair value changes being reported in other
\n
comprehensive income, except for dividend income, which is recognised in the income statement. Material companies over
\n
which joint control is directly or indirectly exercised and material investments in associates (companies over which KBC has
\n
significant influence), are all accounted for using the equity method.
\n
\n
Consolidation threshold: subsidiaries are effectively included in the consolidated financial statements using the full
\n
consolidation method if at least two of the following materiality criteria are exceeded:
\n
\u2022 Group share in equity is 2 500 000 euros;
\n
\u2022 Group share in the result is 1 000 000 euros (absolute value);
\n
\u2022 Group share in the balance sheet total is 100 000 000 euros.
\n
\n
In order to prevent too many entities from being excluded, KBC checks that the combined balance sheet total of the entities
\n
excluded from consolidation does not amount to more than 1% of the consolidated balance sheet total.
\n

\n\n
\n\n

\n

\n
Business combinations and goodwill
\n
\n\n

\n\n
Business combinations are accounted for using the acquisition method. Under this method, the cost of an acquisition is
\n
measured as the aggregate of the consideration transferred (measured at acquisition-date fair value) and the amount of
\n
any minority interests in the acquired entity. For measurement of the minority interests, KBC can decide for each business
\n
combination separately whether to measure the minority interest at fair value or as their proportionate share of the acquired
\n
entity\u2019s net identifiable assets. The way the minority interest is measured on the acquisition date will have an impact on
\n
purchase accounting as a result of the determination of goodwill.
\n

\n\n

\n\n
\n\n

\n

\n\n
Goodwill is the excess of the cost of the acquisition over the acquirer\u2019s interest in the fair value of the identifiable assets
\n
acquired and liabilities and contingent liabilities assumed at the date of acquisition. In order to complete the acquisition
\n
accounting and determine the goodwill item, KBC applies a measurement period of 12 months. The classification of the
\n
financial assets acquired and financial liabilities assumed in the business combination is based on the facts and
\n
circumstances existing at the acquisition date (except for lease and insurance contracts, which are classified on the basis of
\n
the contractual terms and other factors at the inception of the relevant contract).
\n
Goodwill is presented under \u2018Goodwill and other intangible assets\u2019 and is carried at cost less impairment losses. Goodwill is
\n
not amortised, but is tested for impairment at least once a year or when there is objective evidence (external or internal) that
\n
it should be impaired. If the acquisition accounting is not complete because the 12-month measurement period has not
\n
elapsed, the goodwill is not considered as final and is only tested if there is objective evidence that the provisional goodwill
\n
is impaired.
\n
For the purpose of testing goodwill for impairment, it is allocated to each of KBC\u2019s cash-generating units that are expected
\n
to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquired entity are
\n
assigned to those units. An impairment loss is recognised if the carrying value of the cash-generating unit to which the
\n
goodwill belongs exceeds its recoverable amount. Impairment losses on goodwill cannot be reversed.
\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n

\n\n

\n\n
Effects of changes in foreign exchange rates
\n
\n
KBC\u2019s functional and presentation currency is the euro. Monetary assets and liabilities denominated in foreign currency are
\n
translated into the functional currency at the spot rate on the balance sheet date. Negative and positive valuation
\n
differences, except for those relating to the funding of equity instruments and investments of consolidated companies in a
\n
foreign currency, are recognised in the income statement. Non-monetary items measured at historical cost are translated
\n
into the functional currency at the historical exchange rate that existed on the transaction date. Non-monetary items carried
\n
at fair value are translated at the spot rate on the date the fair value was determined. Translation differences are reported
\n
together with changes in fair value. Income and expense items in foreign currency are taken to the income statement at the
\n
exchange rate prevailing when they were recognised.
\n
\n
Valuation differences are accounted for either in the income statement or in other comprehensive income. Valuation
\n
differences that are initially accounted for in other comprehensive income and that relate to gains or losses that are
\n
subsequently recognised in the income statement are recycled to the income statement in the same period in which that
\n
item is accounted for in the income statement. The balance sheets of foreign subsidiaries are translated into the presentation
\n
currency at the spot rate on the reporting date (except for equity, which is translated at the historical rate). The income
\n
statement is translated at the average rate for the financial year as a best estimate of the exchange rate on the transaction
\n
date.
\n

\n\n

\n\n
\n\n
Related-party transactions
\n
\n
A related party to KBC is either a party over which KBC has control or significant influence or a party that has control or
\n
significant influence over KBC. KBC defines its related parties as:
\n
\u2022 KBC subsidiaries, KBC associates and joint ventures, KBC Ancora, Cera and MRBB;
\n
\u2022 KBC key management staff (i.e. the Board of Directors and the Executive Committee of KBC Group NV).
\n
\n
Transactions with related parties must occur at arm\u2019s length.
\n

\n\n
\n\n

\n

\n
Non-current assets held for sale and disposal groups, liabilities associated with disposal groups and discontinued
\n
operations
\n
\n\n
Non-current assets held for sale and disposal groups, liabilities associated with disposal groups
\n
\n
Non-current assets or groups of assets and liabilities held for sale are those where the carrying value will be recovered by
\n
KBC through a sale transaction, which is expected to qualify as a sale within a year, rather than through continued use.
\n
Non-current assets and liabilities held for sale are reported separately from the other assets and liabilities in the balance
\n
sheet at the end of the reporting date.
\n

\n\n
\n\n
Discontinued operations
\n
\n
A discontinued operation refers to a part of KBC that has been disposed of or is classified as held for sale and:
\n
\u2022 represents a separate major line of business or geographical area of operations; or
\n
\u2022 is part of a single, coordinated plan to dispose of a separate major line of business or geographical area of operations; or
\n
\u2022 is a subsidiary acquired exclusively with a view to resale.
\n
\n
Results from discontinued operations are recognised separately in the income statement and in other comprehensive income
\n
and contain:
\n
\u2022 the post-tax profit or loss of discontinued operations; and
\n
\u2022 the post-tax gain or loss recognised on the measurement to fair value less the costs of the sale or disposal of the assets
\n
or group of assets.
\n

\n\n

\n\n
\n\n
Events after the reporting period
\n
\n
Events after the reporting date are defined as favourable or unfavourable events that occur between the reporting date and
\n
the date on which the financial statements are authorised for issue. There are two types of event after the reporting date:
\n
\u2022 those which provide evidence of conditions that existed on the reporting date (adjusting events);
\n
\u2022 those that are indicative of conditions that arose after the reporting date (non-adjusting events).
\n
\n
The impact of adjusting events has already been reflected in the financial position and financial performance for the current
\n
year. The impact and consequences of non-adjusting events are disclosed in the notes to the financial statements.
\n

\n\n

\n\n

\n\n
Main exchange rates used*
\n
\n
Exchange rate at 31-12-2022 Exchange rate average in 2022
\n
Change relative to
\n
Change relative to
\n
31-12-2021
\n
average in 2021
\n
\n
1 EUR = \u2026
\n
(positive: appreciation relative to EUR)
\n
1 EUR = \u2026
\n
(positive: appreciation relative to EUR)
\n
\u2026 currency
\n
(negative: depreciation relative to EUR)
\n
\u2026 currency
\n
(negative: depreciation relative to EUR)
\n
CZK
\n
24.116 3% 24.569 5%
\n
HUF
\n
400.87 -8% 391.79 -9%
\n
* Rounded figures.
\n

\n\n

\n\n

\n\n

\n
Note 2.1: Segment reporting based on the management structure
\n
\n
Detailed information on the group\u2019s management structure and the results per segment can be found in the \u2018Our business
\n
units\u2019 section (which has not been audited by the statutory auditor). Based on IFRS 8, KBC has identified the Executive
\n
Committee and Board of Directors as \u2018chief operating decision-makers\u2019, responsible for allocating the resources and
\n
assessing the performance of the different parts of the company. The operating segments are based on the internal financial
\n
reporting to those policy bodies and on the location of the company\u2019s activities, resulting in geographical segmentation.
\n
\n
The three operating segments are (essentially):
\n
\u2022 the Belgium Business Unit (all activities in Belgium);
\n
\u2022 the Czech Republic Business Unit (all activities in the Czech Republic);
\n
\u2022 the International Markets Business Unit (activities in Hungary, Slovakia and Bulgaria, reported together in accordance with
\n
IFRS 8.16). The situation for Ireland is described below and in Note 6.6.
\n
For reporting purposes, there is also a Group Centre (comprising the results of the holding company, items that have not
\n
been allocated to the other business units, and the results of companies to be divested).
\n
\n
Change with effect from 2022: the sale transactions for KBC Bank Ireland\u2019s loan assets and deposit book led us to transfer
\n
Ireland from the International Markets Business Unit to the Group Centre on 1 January 2022, without retroactive restatement
\n
of 2021. For the sake of comparison, however, Ireland is stated separately in the tables below (as part of the Group Centre in
\n
2022 and as part of the International Markets Business Unit in 2021).
\n
\n
Segment reporting
\n
\n
\u2022 The policy bodies analyse the performance of the segments based on a number of criteria, with the \u2018Result after tax\u2019 being
\n
the most important results indicator. The segment data is based entirely on IFRS data (with no adjustments).
\n
\u2022 In principle, we assign a group company in its entirety to one specific segment/business unit. Exceptions are only made for
\n
those items that cannot clearly be allocated to a specific segment, such as charges attached to the subordination of loans
\n
(such items are recognised under Group Centre).
\n
\u2022 We allocate the funding cost of participating interests to the Group Centre. Any funding cost in respect of leveraging at
\n
KBC Group NV level is also recognised under Group Centre.
\n
\u2022 Transactions among the different segments are reported at arm\u2019s length.
\n\n

\n\n

\n\n

\n
\u2022 We recognise \u2018Net interest income\u2019 in the segment information without dividing it up into \u2018Interest income\u2019 and \u2018Interest
\n
expense\u2019. This is permitted under IFRS because the bulk of the business units\u2019 income is in the form of interest, and
\n
management assesses and co-ordinates those business units primarily on the basis of net interest income.
\n

\n\n

\n\n

\n\n
\u2022 We do not provide any information on income from sales to external clients per group of products or services, since the
\n
information is prepared at consolidated level chiefly for each business unit, and not per client group or product group.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria (now renamed KBC Bank Bulgaria) in 2022 is provided in
\n
Note 6.6.
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfSummaryOfSignificantAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag749": { "value": "\n

\n
General / Basic principle
\n
\n
The general accounting principles of KBC Group NV (\u2018KBC\u2019) are based on the International Financial Reporting Standards
\n
(IFRS), as adopted by the European Union, and on the IFRS Framework. The financial statements of KBC are prepared based
\n
on the going concern assumption. It presents each material class of similar items separately. Dissimilar items are presented
\n
separately unless they are immaterial, and items are only offset when explicitly required or permitted by the relevant IFRS.
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag737": { "value": "The financial statements of KBC are prepared basedon the going concern assumption. It presents each material class of similar items separately.", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag762": { "value": "\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n
Financial assets
\n
\n
KBC has applied all the requirements of IFRS 9 since 1 January 2018, except for hedge accounting transactions, which
\n
continue to be accounted for in accordance with IAS 39.
\n
\n

\n\n

\n
Financial assets \u2013 recognition and derecognition
\n
\n
Recognition: financial assets and liabilities are recognised in the balance sheet when KBC becomes party to the contractual
\n
provisions of the instruments. Regular-way purchases or sales of financial assets are recognised using settlement date
\n
accounting. All financial assets \u2013 except those measured at fair value through profit or loss \u2013 are measured initially at fair
\n
value plus transaction costs directly attributable to their acquisition.
\n
\n\n
Derecognition and modification: KBC derecognises a financial asset when the contractual cashflows from the asset expire
\n
or when KBC transfers its rights to receive contractual cashflows from the financial asset in a transaction in which substantially
\n
all the risks and rewards of ownership are transferred. If the terms and conditions change during the term of a financial asset,
\n
KBC assesses whether the new terms are substantially different from the original ones and whether the changes indicate that
\n
the rights to the cashflows from the instrument have expired. If it is concluded that the terms are substantially different, the
\n
transaction is accounted for as a financial asset derecognition, which means that the existing financial asset is removed from
\n
the balance sheet and that a new financial asset is recognised based on the revised terms. Conversely, when KBC assesses
\n
that the terms are not substantially different, the transaction is accounted for as a financial asset modification.
\n

\n\n
\n
Write-offs: KBC writes off the gross carrying value of financial assets (or the part of the gross carrying value) deemed
\n
uncollectable. This means that there is no reasonable expectation that KBC will recover any interest or principal in a timely
\n
manner. The timing of write-offs depends on several factors, including the portfolio, the existence and type of collateral, the
\n
settlement process in each jurisdiction, and local legislation. If a loan is uncollectable, the gross carrying value is written off
\n
directly against the corresponding impairment. Recoveries of amounts previously written off are recognised as reversals of
\n
impairments in the income statement. KBC differentiates between write-offs for financial reporting purposes (which are still
\n
subject to credit enforcement activities) and debt forgiveness. The latter entails the forfeiture of the legal right to recover all
\n
or part of the debt outstanding to the client.
\n
\n
Classification of equity instruments and debt instruments
\n
\n
On initial recognition of a financial asset, KBC first assesses the contractual terms of the instrument in order to classify it as
\n
an equity instrument or a debt instrument. An equity instrument is defined as any contract that evidences a residual interest
\n
in another entity\u2019s net assets. To satisfy this condition, KBC checks that the instrument does not include a contractual
\n
obligation requiring the issuer to deliver cash or exchange financial assets or financial liabilities with another entity under
\n
conditions that are potentially unfavourable to the issuer. Any instruments that do not meet the criteria to qualify as equity
\n
instruments are classified as debt instruments by KBC, with the exception of derivatives.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n
Classification and measurement \u2013 debt instruments
\n
\n
If KBC concludes that a financial asset is a debt instrument, then \u2013 upon initial recognition \u2013 it can be classified in one of the
\n
following categories:
\n
\u2022 Measured at fair value through profit or loss (FVPL);
\n
- Mandatorily measured at fair value through profit or loss (MFVPL) \u2013 this category includes held-for-trading instruments
\n
(HFT);
\n
- Designated upon initial recognition at fair value through profit or loss (FVO);
\n
- Measured at fair value through profit or loss \u2013 overlay approach (FVPL \u2013 overlay);
\n
\u2022 Measured at fair value through other comprehensive income (FVOCI);
\n
\u2022 Measured at amortised cost (AC).
\n
\n
Debt instruments have to be classified in the FVPL category where (i) they are not held within a business model whose
\n
objective is to hold assets in order to collect contractual cashflows or within a business model whose objective is achieved
\n
by both collecting contractual cashflows and selling financial assets or, alternatively, (ii) they are held within a business model
\n
but, on specified dates, the contractual terms of the instrument give rise to cashflows that are not solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
Furthermore, KBC may in some cases \u2013 on initial recognition \u2013 irrevocably designate a financial asset that otherwise meets
\n
the requirements to be measured at AC or at FVOCI as at fair value (FVO) if doing so eliminates or significantly reduces an
\n
accounting mismatch that would otherwise arise.
\n
\n
A debt instrument is measured at FVOCI only if it meets both of the following conditions and is not designated to be measured
\n
at FVO:
\n
\u2022 the asset is held within a business model whose objective is achieved by both collecting contractual cashflows and selling
\n
financial assets; and
\n
\u2022 the contractual terms of the financial asset give rise on specified dates to cashflows that are solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
A debt instrument is measured at AC only if it meets both of the following conditions and is not designated to be measured
\n
at FVO:
\n
\u2022 the asset is held within a business model whose objective is to hold assets in order to collect contractual cashflows; and
\n
\u2022 the contractual terms of the financial asset give rise on specified dates to cashflows that are solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
A debt instrument is categorised as \u2018FVPL \u2013 overlay\u2019 when it is held in respect of a business line that is connected with
\n
contracts in scope of IFRS 4 and if it is measured at fair value through profit or loss by applying IFRS 9, but would not have
\n
been measured at fair value through profit or loss in its entirety in accordance with IAS 39, and it is an instrument for which
\n
KBC has elected to use the overlay approach. More information on this approach is provided under \u2018Overlay approach\u2019
\n
further below.
\n

\n\n
\n
Business model assessment
\n
\n
The business model is assessed to determine whether debt instruments should be measured at AC or FVOCI. In performing
\n
the assessment, KBC reviews at portfolio level the objective of the business model in which an asset is held because this best
\n
reflects how the business is managed and how information is provided to management. The information considered includes:
\n
\u2022 the stated policies and objectives for the portfolio and how those policies operate in practice (in particular, whether
\n
management\u2019s strategy focuses on earning contractual interest income, maintaining a specific interest rate profile,
\n
matching the duration of the financial assets to that of the liabilities that fund those assets, or realising cashflows through
\n
the sale of the assets);
\n
\u2022 how the performance of the portfolio is evaluated and reported to KBC\u2019s Executive Committee and Board of Directors;
\n
\u2022 the risks that affect the performance of the business model (and the financial assets held within that model) and how those
\n
risks are managed;
\n
\u2022 how managers of the business are rewarded (for instance, whether remuneration is based on the fair value of the assets
\n
managed or the contractual cashflows collected); and
\n
\u2022 the frequency, volume and timing of sales in prior periods, the reasons for such sales and KBC\u2019s expectations of future sales
\n
activity. However, information about sales activity is not considered in isolation, but as part of an overall assessment of
\n
how KBC\u2019s stated objective for managing the financial assets is achieved and how cashflows are realised.
\n
\n\n
Financial assets that are held for trading or whose performance is evaluated on a fair value basis are measured at FVPL,
\n
because they are neither held for collecting contractual cashflows, nor held for both collecting contractual cashflows and
\n
selling financial assets.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n

\n
Assessment whether contractual cashflows are solely payments of principal and interest (SPPI)
\n
\n
For the purposes of this assessment, \u2018principal\u2019 is defined as the fair value of the financial asset on initial recognition. \u2018Interest\u2019
\n
is defined as consideration for the time value of money and for the credit risk associated with the principal amount
\n
outstanding during a particular period of time and for other basic lending risks and costs (e.g., liquidity risk and administrative
\n
costs), as well as profit margin. In assessing whether contractual cashflows are solely payments of principal and interest, KBC
\n
considers the contractual terms of the instrument, which entails assessing whether the financial asset contains a contractual
\n
term that could change the timing or amount of contractual cashflows such that the instrument would not meet this condition.
\n
In making the assessment, KBC considers:
\n
\u2022 contingent events that could change the amount and timing of cashflows;
\n
\u2022 leverage features;
\n
\u2022 prepayment and extension terms;
\n
\u2022 terms that limit KBC\u2019s claim to cashflows from specified assets (e.g., non-recourse asset arrangements); and
\n
\u2022 features that modify consideration of the time value of money (e.g., periodic resets of interest rates).
\n

\n\n\n
Reclassifications
\n
\n
Financial assets are not reclassified subsequent to their initial recognition except in a period after KBC changes its business
\n
model for managing financial assets, which can occur when KBC begins or ceases to perform an activity that is significant to
\n
its operations (e.g., when KBC acquires, disposes of, or terminates a business line). Reclassification takes place from the start
\n
of the reporting period immediately following the change.
\n

\n\n
\n\n

\n\n
Classification and measurement \u2013 equity instruments
\n
\n
Financial equity instruments are classified in one of the following categories:
\n
\u2022 mandatorily measured at fair value through profit or loss (MFVPL) \u2013 only includes equity instruments held for trading (HFT);
\n
\u2022 equity instruments elected to be measured at fair value through other comprehensive income (FVOCI);
\n
\u2022 equity instruments held in an activity connected with the insurance business, which KBC measures at fair value through
\n
profit or loss \u2013 overlay approach (FVPL \u2013 overlay).
\n
\n
KBC can classify equity instruments connected with the insurance business in the \u2018FVPL \u2013 overlay\u2019 category until the effective
\n
date of IFRS 17. Each equity instrument that KBC\u2019s insurance business classifies as \u2018FVPL \u2013 overlay\u2019 must meet both of the
\n
following criteria:
\n
\u2022 it is measured at fair value through profit or loss under IFRS 9, but would not have been measured at fair value through
\n
profit or loss in its entirety under IAS 39; and
\n
\u2022 it is not held in respect of an activity that is unconnected with insurance contracts.
\n
\n
More information on this approach is provided under \u2018Overlay approach\u2019 further below. In the banking business, there is a
\n
rebuttable presumption that all equity instruments are to be regarded as FVOCI if held for neither trading nor a contingent
\n
consideration in a business combination to which IFRS 3 applies. The election to include equity instruments in the FVOCI
\n
category is irrevocable on initial recognition and can be done on an investment-by-investment basis, which is interpreted by
\n
KBC as a share-by-share basis. Equity instruments categorised as FVOCI are subsequently measured at fair value, with all
\n
value changes recognised in other comprehensive income and without any recycling into the income statement, even when
\n
the investment is disposed of. The only exception applies to dividend income, which is recognised in the income statement
\n
under \u2018Dividend income\u2019.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n
Classification and measurement \u2013 derivatives (trading and hedging)
\n
\n
KBC can recognise derivative instruments either for trading purposes or as hedging derivatives. They can be accounted for
\n
as assets or liabilities depending on their current market value.
\n
\n
Trading derivatives
\n
\n
Derivatives are always measured at fair value and KBC draws distinctions as follows:
\n
\u2022 Derivatives that are held with the intent of hedging, but for which hedge accounting cannot be or is not applied (economic
\n
hedges): hedging instruments can be acquired with the intention of economically hedging an external exposure but without
\n
applying hedge accounting. The interest component of these derivatives is recognised under \u2018Net interest income\u2019, while
\n
all other fair value changes are recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\u2022 Derivatives held with no intent of hedging (trading derivatives): KBC entities can also contract derivatives without any
\n
intention to hedge a position economically. Such activity can relate to closing or selling an external position in the near
\n
term or for short-term profit-taking purposes. All fair value changes (including interest) on such derivatives are recognised
\n
under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\n
Hedging derivatives
\n
\n
Hedging derivatives are derivatives that are specifically designated in a hedge relationship. The process for accounting such
\n
derivatives is detailed in \u2018Hedge accounting\u2019.
\n

\n\n

\n\n

\n\n
\n\n

\n\n

\n
Financial assets \u2013 impairment
\n
\n
Definition of default
\n
\n
KBC defines defaulted financial assets in the same way as the definition for internal risk management purposes and in line
\n
with the guidance and standards of financial industry regulators. A financial asset is considered in default if any of the
\n
following conditions is fulfilled:
\n
\u2022 there is a significant deterioration in creditworthiness;
\n
\u2022 the asset is flagged as non-accrual;
\n
\u2022 the asset is forborne and meets the default criteria in accordance with the internal policies for forbearance (for example,
\n
when an additional forbearance measure is extended to a forborne asset that did not reach default status within two
\n
years of the first forbearance measure being granted, or when a forborne asset becomes more than 30 days past due
\n
within the two-year period);
\n
\u2022 KBC has filed for the borrower\u2019s bankruptcy;
\n
\u2022 the counterparty has filed for bankruptcy or sought similar protection measures;
\n
\u2022 the credit facility granted to the client has been terminated.
\n
\n
KBC applies a backstop for facilities whose status is \u201890 days or more past due\u2019. In this context, a backstop is used as a final
\n
control to ensure that all the assets that should have been designated as defaulted are properly identified.
\n
\n
Expected credit loss model (ECL model) \u2013 general
\n
\n\n
The ECL model is used to measure impairment of financial assets, apart from debt instruments and equity instruments
\n
connected with the insurance business, for which KBC has elected to apply the overlay approach. The impairment policy
\n
applying to these instruments is dealt with under \u2018Overlay approach\u2019 further below.
\n
\n
The scope of the ECL model is based on how financial assets are classified. The model is applicable to the following financial
\n
assets:
\n
\u2022 Financial assets measured at AC and at FVOCI;
\n
\u2022 Loan commitments and financial guarantees;
\n
\u2022 Finance lease receivables;
\n
\u2022 Trade and other receivables.
\n

\n\n
\n
No ECLs are calculated for investments in equity instruments.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n
Financial assets that are in scope of the ECL model carry impairment in an amount equal to the lifetime ECL if the credit risk
\n
increases significantly after initial recognition. Otherwise, the loss allowance is equal to the 12-month ECL (see below for more
\n
information on the significant increase in credit risk).
\n
\n
To distinguish the various stages with regard to quantifying ECL, KBC uses the internationally accepted terminology for
\n
\u2018Stage 1\u2019, \u2018Stage 2\u2019 and \u2018Stage 3\u2019 financial assets.
\n
Unless they are already credit impaired, all financial assets are classified in \u2018Stage 1\u2019 at the time of initial recognition and 12-
\n
month ECL is recognised. Once a significant increase in credit risk occurs after initial recognition, the asset is moved into
\n
\u2018Stage 2\u2019 and lifetime ECL is recognised. Once an asset meets the definition of default, it is moved into \u2018Stage 3\u2019.
\n\n
For trade receivables, IFRS 9 allows for a practical expedient. The ECL for trade receivables can be measured in an amount
\n
equal to their lifetime ECL. KBC applies this practical expedient to trade and other receivables.
\n

\n\n
Impairment gains and losses on financial assets are recognised under the \u2018Impairment\u2019 heading in the income statement.
\n
Financial assets that are measured at AC are presented in the balance sheet at their net carrying value, which is the gross
\n
carrying value less impairment. Debt instruments measured at FVOCI are presented in the balance sheet at their carrying
\n
value, which is their fair value on the reporting date. The adjustment for the ECL is recognised as a reclassification adjustment
\n
between the income statement and OCI.
\n
\n
Significant increase in credit risk since initial recognition
\n
\n
In accordance with the ECL model, financial assets attract lifetime ECL once their credit risk increases significantly after initial
\n
recognition. Therefore, the assessment of a significant increase in credit risk is important for the staging of financial assets.
\n
The assessment of a significant increase in credit risk is a relative assessment based on the credit risk that was assigned
\n
upon initial recognition. This is a multi-factor assessment and, therefore, KBC has developed a multi-tier approach.
\n
\n
Multi-tier approach (MTA) \u2013 bond portfolio
\n
\n
For the bond portfolio, the MTA consists of three tiers:
\n
\u2022 Low-credit exception: 12-month ECL is always recognised for bonds if they have a low credit risk on the reporting date (i.e.
\n
\u2018Stage 1\u2019). KBC uses this exception for investment grade bonds.
\n
\u2022 Internal rating: [only applicable if the first tier criterion is not met] this is a relative assessment that compares the probability
\n
of default (PD) upon initial recognition to that on the reporting date. KBC does the assessment at facility level for each
\n
reporting period. The relative change in PD that triggers staging is an increase of two PD notches.
\n
\u2022 Management assessment: lastly, management review and assess the significant increase in credit risk for financial assets
\n
at an individual (i.e. counterparty) and portfolio level, when it is concluded that idiosyncratic events are not adequately
\n
captured in the first two tiers of the MTA. Examples of idiosyncratic events are unexpected developments in the
\n
macroeconomic environment (e.g., due to the coronavirus crisis), uncertainties about geopolitical events (e.g., as a result
\n
of the war in Ukraine) and the secondary impact of material defaults (e.g., on the suppliers, clients and employees of a
\n
defaulted company).
\n
\n
If none of these triggers results in a move into \u2018Stage 2\u2019, the bond remains in \u2018Stage 1\u2019. A financial asset is considered as
\n
\u2018Stage 3\u2019 as soon as it meets the definition of default. The MTA is symmetrical, i.e. credit that has been moved into \u2018Stage 2\u2019
\n
or \u2018Stage 3\u2019 can revert to \u2018Stage 1\u2019 or \u2018Stage 2\u2019 if the tier criterion that triggered the migration is not met on a subsequent
\n
reporting date.
\n
\n
Loan portfolio
\n
\n
For the loan portfolio, KBC uses a five-tier approach. This MTA is a waterfall approach (i.e. if assessing the first tier does not
\n
result in a move into \u2018Stage 2\u2019, the second tier is assessed, and so on). In the end, if all tiers are assessed without triggering a
\n
migration to \u2018Stage 2\u2019, the financial asset remains in \u2018Stage 1\u2019.
\n
\u2022 Internal rating: this rating is used as the main criterion for assessing an increase in credit risk. It is a relative assessment that
\n
compares the PD upon initial recognition to that on the reporting date. KBC does the assessment at the level of the facility
\n
(i.e. contract) for each reporting period. The relative change in PD that triggers staging is an increase of two PD notches.
\n
\u2022 Forbearance: forborne financial assets are always considered as \u2018Stage 2\u2019 unless they are already defaulted, in which case
\n
they are moved into \u2018Stage 3\u2019.
\n
\u2022 Days past due: KBC uses the backstop defined in the directive. A financial asset that is more than 30 days past due is
\n
moved into \u2018Stage 2\u2019.
\n
\u2022 Internal rating backstop: KBC uses an absolute level of PD as a backstop for financial assets that have to be moved into
\n
\u2018Stage 2\u2019. This backstop corresponds to the highest PD (i.e. PD 9 based on KBC\u2019s internal rating) before a financial asset is
\n
considered defaulted.
\n
\u2022 Management assessment: lastly, management review and assess the significant increase in credit risk for financial assets
\n
at an individual (i.e. counterparty) and portfolio level, when it is concluded that idiosyncratic events are not adequately
\n
captured in the first four tiers of the MTA (see above for a number of examples).
\n
\n
A financial asset is considered as \u2018Stage 3\u2019 as soon as it meets the definition of default. The MTA is symmetrical, i.e. credit
\n
that has been moved into \u2018Stage 2\u2019 or \u2018Stage 3\u2019 can revert to \u2018Stage 1\u2019 or \u2018Stage 2\u2019 if the tier criterion that triggered the
\n
migration is not met on the reporting date.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Measurement of ECL
\n
\n
ECL is calculated as the product of probability of default (PD), estimated exposure at default (EAD) and loss given default
\n
(LGD).
\n
\n
ECL is calculated to reflect:
\n
\u2022 an unbiased, probability-weighted amount;
\n
\u2022 the time value of money; and
\n
\u2022 information about past events, current conditions and forecast economic conditions.
\n
\n
Lifetime ECL represents the sum of ECL over the lifetime of the financial asset discounted at the original effective interest
\n
rate.
\n
The 12-month ECL represents the portion of lifetime ECL resulting from a default in the 12-month period after the reporting
\n
date.
\n
\n
KBC uses specific IFRS 9 models for PD, EAD and LGD in order to calculate ECL. As much as possible and to promote efficiency,
\n
KBC uses modelling techniques similar to those developed for prudential purposes (i.e. Basel models). More information on
\n
the credit risk models developed by KBC is provided in the \u2018Internal Modelling\u2019 section of the Risk Report at www.kbc.com.
\n
.That said, KBC ensures that the Basel models are adapted so they comply with IFRS 9.
\n
\u2022 KBC removes the conservatism that is required by the regulator for Basel models;
\n
\u2022 KBC adjusts how macroeconomic parameters affect the outcome to ensure that the IFRS 9 models reflect a \u2018point-in-time\u2019
\n
estimate rather than one that is \u2018through the cycle\u2019 (as required by the regulator);
\n
\u2022 KBC applies forward-looking macroeconomic information in the models.
\n
\n
As regards loans that are in default, the ECL is also calculated as the product of the PD, EAD and LGD. In this specific case,
\n
however, the PD is set at 100%, the EAD is known given the default status and the LGD takes into account the net present
\n
value of the (un)recoverable amount.
\n
\n
KBC uses the IRB and Standardised models to assign the Basel PD, which then serves as input for IFRS 9 ECL calculations and
\n
staging. If there is no Basel PD model with a similar scope to the IFRS 9 model, the long-term observed default rate is used
\n
as the PD for all facilities in the portfolio. For low default portfolios, there may have been no or only a small number of defaults
\n
in the period being considered, in which case the PD is determined based on expert input and external ratings.
\n
\n
KBC considers forward-looking information in the calculation of ECL via macroeconomic variables and based on
\n
management\u2019s assessment of any idiosyncratic events. KBC\u2019s Chief Economist develops three different macroeconomic
\n
scenarios (base-case, up and down) for all the KBC Core Countries and sets a corresponding probability for each scenario.
\n
On a quarterly basis, KBC updates the economic scenarios and attributed weightings to be used for the ECL calculation
\n
according to the input of the Chief Economist. The incorporation of the macroeconomic variables included in these scenarios
\n
in the PD, EAD and LGD components of the ECL calculation is based on statistical correlation in historical datasets.
\n
\n
The maximum period for measurement of ECL is the maximum contractual period (including extensions), except for specific
\n
financial assets that include a drawn and an undrawn amount available on demand, and KBC\u2019s contractual ability to request
\n
repayment of the drawn amount and cancel the undrawn commitment does not limit the exposure to credit risk to the
\n
contractual period. Only for such assets can a measurement period extend beyond the contractual period.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n\n
\n

\n
\n

\n\n

\n\n

\n\n

\n\n

\n

\n
Purchased or originated credit impaired (POCI) assets
\n
\n
KBC defines POCI assets as financial assets in scope of the IFRS 9 impairment standard that are already defaulted at
\n
origination (i.e. they then meet the definition of default). POCI assets are initially recognised at an amount net of impairment
\n
and are measured at amortised cost using a credit-adjusted effective interest rate. In subsequent periods, any changes to
\n
the lifetime ECL are recognised in the income statement. Favourable changes are recognised as an impairment gain, even if
\n
the lifetime ECL on the reporting date is lower than the lifetime ECL at origination.
\n
\n\n
Significant judgements and uncertainties
\n
\n
Calculating ECL (and the significant increase in credit risk since initial recognition) requires significant judgement of various
\n
aspects, including the borrowers\u2019 financial position and repayment capabilities, the value and recoverability of collateral,
\n
projections and macroeconomic information. KBC applies a neutral, bias-free approach when dealing with uncertainties and
\n
making decisions based on significant judgements.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
\n

\n
\n
\n\n
Overlay approach
\n
\n
In accordance with the amendment to IFRS 4 issued in September 2016, KBC uses the overlay approach to overcome the
\n
temporary consequences of the different effective dates of IFRS 9 and IFRS 17 (replacing IFRS 4). Accordingly, KBC uses the
\n
overlay approach, which means that the extra volatility related to the adoption of IFRS 9 is reclassified from the income
\n
statement to OCI. The reclassified amounts are recognised in the overlay reserve in OCI. The overlay approach is applied to
\n
those financial assets of KBC\u2019s insurance business that are eligible. Eligibility is based on the following criteria:
\n
\u2022 Assets that are measured at FVPL under IFRS 9 that would not have been measured at FVPL in their entirety under IAS 39;
\n
\u2022 All assets except those held in respect of an activity that is unconnected with contracts within the scope of IFRS 4.
\n
A financial asset can be designated under the overlay approach until:
\n
\u2022 the instrument is derecognised;
\n
\u2022 it is no longer held in respect of an activity that is connected with insurance contracts;
\n
\u2022 KBC decides not to apply the overlay approach for that particular instrument at the beginning of any financial year; or
\n
\u2022 the effective date of IFRS 17.
\n
\n
Application of the overlay approach requires certain IAS 39 accounting policies for financial assets to be retained, namely:
\n
\u2022 Impairment of equity instruments: equity instruments held by KBC\u2019s insurance business were typically classified as \u2018available
\n
for sale\u2019 under IAS 39, whereas they are classified as FVPL under IFRS 9. Designation under the overlay approach requires
\n
the application of IAS 39 impairment rules to investments in equity instruments. In using the overlay approach, all fair value
\n
changes are recognised in the overlay reserve but, where the decline is significant compared to acquisition cost (more than
\n
30%) or prolonged (more than one year), the fair value loss is recognised in the income statement. Any further decrease is
\n
also recognised directly in the income statement, whereas increases are recognised in the overlay reserve.
\n
\u2022 Recognition of gains and losses in the income statement upon the disposal of equity instruments: by designating the equity
\n
instruments connected with KBC\u2019s insurance business under the overlay approach upon their sale, the accumulated overlay
\n
reserve in OCI is recycled to the income statement, ensuring the same results as under IAS 39.
\n

\n\n
\n\n
Cash, cash balances with central banks and other demand deposits with credit institutions
\n
\n
\u2018Cash\u2019 comprises cash on hand and demand deposits, e.g., cheques, petty cash and cash balances at central and other
\n
banks.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Financial liabilities
\n
\n
Financial instruments or their component parts are classified on initial recognition as liabilities or as equity in accordance with
\n
the substance of the contractual arrangements and the definitions of financial liabilities and equity instruments. A financial
\n
instrument is classified as a liability if:
\n
\u2022 KBC has a contractual obligation to deliver cash or another financial asset to the holder or to exchange another financial
\n
instrument with the holder under conditions that are potentially unfavourable to KBC; or
\n
\u2022 KBC has a contractual obligation to settle the financial instrument in a variable number of its own shares.
\n
\n
A financial instrument is classified as an equity instrument when neither condition is met. In that case, it is accounted for in
\n
the way set out under \u2018Equity\u2019.
\n
\n
Financial liabilities \u2013 recognition and derecognition
\n
\n
KBC recognises a financial liability when it becomes party to the contractual provisions of the relevant instrument. This is
\n
typically the date when the consideration in the form of cash or some other financial asset is received. Upon initial recognition,
\n
the financial liability is recognised at fair value less transaction costs directly attributable to issuance of the instrument,
\n
except for financial liabilities at fair value through profit or loss.
\n
\n
Financial liabilities are derecognised when they are extinguished, i.e. the obligation specified in the contract is discharged or
\n
cancelled, or it expires. KBC can also derecognise the financial liability and recognise a new one where an exchange takes
\n
place between KBC and the lenders of the financial liability, each with substantially different terms, or if there are substantial
\n
modifications to the terms of the existing financial liabilities. In assessing whether terms differ, KBC compares the discounted
\n
present value of cashflows under the new terms, including any fees paid net of any fees received and discounted using the
\n
original effective interest rate, and the discounted present value of the remaining cashflows of the original financial liability.
\n
If the difference is 10% or more, KBC derecognises the original financial liability and recognises a new one. Where the
\n
exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are
\n
recognised as part of the gain or loss on the extinguishment.
\n
\n\n

\n
Financial liabilities \u2013 classification and measurement
\n
\n
KBC classifies recognised financial liabilities in three different categories, as provided for by IFRS 9:
\n\n
\u2022 Financial liabilities held for trading (HFT). Held-for-trading liabilities are those incurred principally for generating a profit
\n
from short-term fluctuations in price or dealer\u2019s margin. A liability also qualifies as a trading liability if it belongs to a portfolio
\n
of financial instruments held for trading separately by the trading desk and for which there is a recent pattern of short-
\n
term profit-taking. Held-for-trading liabilities can include derivatives, short positions in debt and equity instruments, time
\n
deposits and debt certificates. Derivative liabilities are split by KBC into trading and hedging derivatives as in the case of
\n
derivative assets. Initially, held-for-trading liabilities are measured at fair value. At the end of the reporting period,
\n
derivative liabilities are measured at fair value. Fair value adjustments are always recorded in the income statement.
\n

\n\n
\u2022 Financial liabilities designated by the entity as liabilities at fair value through profit or loss upon initial recognition (FVO).
\n
Under IFRS 9, a financial liability or group of financial liabilities can be measured upon initial recognition at fair value,
\n
whereby fair value changes are recognised in the income statement except for fair value changes related to own credit
\n
risk, which are presented separately in OCI. The fair value designation is used by KBC for the following reasons:
\n
- managed on an FV basis: KBC designates a financial liability or a group of financial liabilities at fair value where it is
\n
managed and its performance is evaluated on a fair value basis. It is used to account for (unbundled) deposit
\n
components (i.e. financial liabilities that do not include a discretionary participation feature);
\n
- accounting mismatch: the fair value option can be used when doing so eliminates or significantly reduces a measurement
\n
or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognising gains and losses
\n
on them on different bases;
\n
- hybrid instruments: a financial instrument is regarded as hybrid when it contains one or more embedded derivatives that
\n
are not closely related to the host contract. The fair value option can be used when it is not possible to separate the
\n
non-closely-related embedded derivative from the host contract. In that case the entire hybrid instrument can be
\n
designated at fair value. This means that both the embedded derivative and the host contract are measured at fair
\n
value. KBC uses this option when structured products contain non-closely-related embedded derivatives, in which case
\n
both the host contract and the embedded derivative is measured at fair value.
\n
\u2022 Financial liabilities measured at amortised cost (AC). KBC classifies most of its financial liabilities under this category,
\n
including those used to fund trading activities where no trading intent is present in them (e.g., issued bonds). These financial
\n
liabilities are initially measured at cost, which is the fair value of the consideration received including transaction costs.
\n
Subsequently, they are measured at amortised cost, which is the amount at which the funding liability was initially
\n
recognised minus principal repayments, plus or minus the cumulative amortisation of any difference between that initial
\n
amount and the maturity amount. The difference between the amount made available and the nominal value is recorded
\n
on an accruals basis as an interest expense. Interest expenses accrued but not yet paid are recorded under accruals and
\n
deferrals.
\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n\n

\n
Financial liabilities \u2013 own credit risk
\n
\n
For financial liabilities designated at fair value, IFRS 9 requires the financial liability to be measured at fair value upon initial
\n
recognition. Any changes in fair value are subsequently recognised in the income statement, except for those relating to own
\n
credit risk, which are presented separately in OCI.
\n
Accordingly, movements in the fair value of the liability are presented in different places: changes in own credit risk are
\n
presented in OCI and all other fair value changes are presented in the income statement under \u2018Net result from financial
\n
instruments at fair value through profit or loss\u2019. Amounts recognised in OCI relating to own credit risk are not recycled to the
\n
income statement even if the liability is derecognised and the amounts realised. Although recycling is prohibited, KBC does
\n
transfer the amounts in OCI to retained earnings within equity upon derecognition. The only situation in which presentation
\n
of own credit risk in OCI is not applied is where this would create an accounting mismatch in the income statement. This could
\n
arise if there is a close economic relationship between the financial liability designated at fair value (for which the own credit
\n
risk is recognised in OCI), while all changes in fair value of the corresponding financial asset are measured and recognised at
\n
fair value through profit or loss. This is the case with unit-linked investment contracts, where changes in fair value of the
\n
liability position are fully offset by the asset position.
\n
\n\n
Financial liabilities \u2013 financial guarantee contract
\n
\n
A financial guarantee contract is one that requires KBC to make specified payments to reimburse holders for losses they incur
\n
because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt
\n
instrument. A financial guarantee contract is initially recognised at fair value and is subsequently measured at the higher of
\n
(a) the amount determined in accordance with the impairment provisions of IFRS 9 (see \u2018Financial assets \u2013 impairment\u2019) and
\n
(b) the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with the
\n
revenue recognition principle of IFRS 15.
\n
\n

\n\n

\n\n

\n\n
\n\n
Reverse repos and repos
\n
\n
A reverse repo is a transaction in which KBC purchases a financial asset and simultaneously enters into an agreement to sell
\n
the asset (or a similar asset) at a fixed price on a future date; this agreement is accounted for as a loan or advance, and the
\n
underlying asset is not recognised in the financial statements.
\n
\n
In a repo transaction, KBC sells a security and simultaneously agrees to repurchase it (or a substantially similar asset) at a
\n
fixed price on a future date. KBC continues to recognise the securities in their entirety because it retains substantially all of
\n
the risks and rewards of ownership. The cash consideration received is recognised as a financial asset and the financial
\n
liability is recognised for the obligation to pay the repurchase price.
\n

\n\n
\n\n
Offsetting
\n
\n
KBC offsets and presents only a net amount of a financial asset and financial liability in its balance sheet if and only if (i) it
\n
currently has a legally enforceable right to set off the recognised amounts and (ii) it intends either to settle on a net basis or
\n
to realise the asset and settle the liability simultaneously.
\n

\n\n

\n\n

\n

\n\n
Fair value
\n
\n
KBC defines \u2018fair value\u2019 as \u2018the price that would be received for sale of an asset or paid to transfer a liability in an orderly
\n
transaction between market participants at the measurement date\u2019. Fair value is not the amount that an entity would receive
\n
or pay in a forced transaction, involuntary liquidation or distress sale. An imbalance between supply and demand (e.g., fewer
\n
buyers than sellers, thereby forcing prices down) is not the same as a forced transaction or distress sale.
\n
\n
Market value adjustments are recognised on all positions that are measured at fair value, with fair value changes being
\n
reported in the income statement or in OCI. They relate to close-out costs, adjustments for less-liquid positions or markets,
\n
mark-to-model-related valuation adjustments, counterparty risk (credit value adjustment) and funding costs:
\n
\u2022 Credit value adjustments (CVAs) are used when measuring derivatives to ensure that their market value is adjusted to
\n
reflect the credit risk of the counterparty. In making this adjustment, both the mark-to-market value of the contract and
\n
its expected future fair value are taken into account. These valuations are weighted based on the counterparty credit risk
\n
that is determined using a quoted credit default swap (CDS) spread, or, if there is no such spread, on the counterparty
\n
credit risk that is derived from bonds whose issuers are similar to the derivative counterparty in terms of rating, sector and
\n
geographical location. A debt value adjustment (DVA) is made for contracts where the counterparty is exposed to KBC. It
\n
is similar to a CVA, but the expected future negative fair value of the contracts is taken into consideration.
\n
\u2022 A funding value adjustment (FVA) is a correction made to the fair value of uncollateralised derivatives in order to ensure
\n
that the (future) funding costs or income attached to entering into and hedging such instruments are factored in when
\n
measuring their value.
\n

\n\n
\n\n

\n\n

\n\n

\n\n

\n\n
Hedge accounting
\n
\n
KBC has elected to apply the hedge accounting principles under IAS 39 (EU carve-out version). KBC designates certain
\n
derivatives held for risk management purposes, as well as certain non-derivative financial instruments, as hedging
\n
instruments in qualifying hedging relationships. On initial designation of the hedge, KBC formally documents the relationship
\n
between the hedging instrument(s) and hedged item(s), including the risk management objective and strategy in undertaking
\n
the hedge, together with the method that will be used to assess the effectiveness of the hedging relationship. KBC makes
\n
an assessment, both at inception of the hedge relationship and on an ongoing basis, of whether the hedging instrument(s)
\n
is/are expected to be highly effective in offsetting the changes in the fair value or cashflows of the respective hedged item(s)
\n
during the period for which the hedge is designated, and whether the actual results of each hedge are within a range of
\n
80-125%. KBC makes an assessment for a cashflow hedge of a forecast transaction of whether it is highly probable to occur
\n
and presents an exposure to variations in cashflows that could ultimately affect the income statement.
\n
\n
KBC uses the following hedge accounting techniques: cashflow hedges, fair value micro hedges, fair value hedges for a
\n
portfolio of interest rate risk, and hedges of net investments in foreign operations.
\n
\n
Cashflow hedges: if a derivative is designated as the hedging instrument in a hedge of the variability in cashflows attributable
\n
to a particular risk associated with a recognised asset, liability or highly probable forecast transaction that could affect the
\n
income statement, the effective portion of changes in the fair value of the derivative is recognised in OCI and presented in
\n
the hedging reserve (cashflow hedge) within OCI. Any ineffective portion of changes in the fair value of a derivative is
\n
immediately recognised in the income statement under \u2018Net result from financial instruments at fair value through profit or
\n
loss\u2019. The amount recognised in OCI is reclassified to the income statement (as a reclassification adjustment in the same
\n
period as the hedged cashflows affect the income statement) under \u2018Net interest income\u2019. If the hedging derivative expires
\n
or is sold, terminated or exercised, or the hedge no longer meets the criteria for cashflow hedge accounting, or the hedge
\n
designation is revoked, then hedge accounting is discontinued prospectively. Any cumulative gain or loss existing in OCI at
\n
that time remains in OCI and is recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019
\n
when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer
\n
expected to occur, the cumulative gain or loss that was reported in OCI is immediately recycled to the income statement
\n
under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\n
Fair value micro hedging: when a derivative is designated as the hedging instrument in a hedge of the change in fair value
\n
of a recognised asset or liability (portfolio of recognised assets or liabilities) or a firm commitment that could affect the income
\n
statement, changes in the fair value of the derivative are immediately recognised in the income statement together with
\n
changes in the fair value of the hedged item that are attributable to the hedged risk (in the same item in the income
\n
statement as the hedged item). However, accrued interest income from interest rate swaps is recognised in \u2018Net interest
\n
income\u2019. If the hedging derivative expires or is sold, terminated or exercised, or the hedge no longer meets the criteria for fair
\n
value hedge accounting, or the hedge designation is revoked, then hedge accounting is discontinued prospectively. Any
\n
adjustment up to the point of discontinuation that is made to a hedged item for which the effective interest method is used
\n
is amortised to the income statement as part of the recalculated effective interest rate of the item over its remaining life or
\n
recognised directly when the hedged item is derecognised.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Fair value hedges for a portfolio of interest-rate risk (macro hedging): the EU\u2019s macro hedging carve-out means that a group
\n
of derivatives (or proportions of them) can be viewed in combination and jointly designated as a hedging instrument, and
\n
removes some of the limitations on fair value hedge accounting relating to hedging core deposits and underhedging
\n
strategies. Under the EU carve-out, hedge accounting may be applied to core deposits and will be ineffective only when the
\n
revised estimate of the amount of cashflows in scheduled time buckets falls below the designated amount of that bucket.
\n
KBC uses interest rate swaps to hedge the interest rate risk for a portfolio of loans and for a portfolio of retail deposits.
\n
Interest rate swaps are measured at fair value, with fair-value changes being reported in the income statement. Accrued
\n
interest income from interest rate swaps is recognised in \u2018Net Interest Income\u2019. The hedged amount of loans is measured at
\n
fair value as well, with fair value changes being reported in the income statement. The fair value of the hedged amount is
\n
presented as a separate item on the assets or liabilities side of the balance sheet. If a hedge is ineffective, the cumulative
\n
fair value change in the hedged amount will be amortised to the income statement over the remaining lifetime of the hedged
\n
assets or will be immediately removed from the balance sheet if ineffectiveness is due to derecognition of the corresponding
\n
loans.
\n
\n
Hedge of net investments in foreign operations: when a derivative instrument or a non-derivative financial instrument is
\n
designated as the hedging instrument in a hedge of a net investment in a foreign operation having a different functional
\n
currency than the direct holding company of the foreign operation, the effective portion of changes in the fair value of the
\n
hedging instrument is recognised in the hedging reserve (investment in foreign operation) in OCI. Any ineffective portion of
\n
the changes in the fair value of the derivative is recognised immediately in the income statement. The amount recognised in
\n
OCI is reclassified to the income statement as a reclassification adjustment on disposal of the foreign operation (which
\n
includes a dividend distribution or capital decrease).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.1: Financial assets and liabilities, breakdown by portfolio and product
\n
(in millions of EUR)
\n
Measured
\n
at
\n
amortised
\n
cost (AC)
\n
Measured
\n
at fair
\n
value
\n
through
\n
other
\n
compre-
\n
hensive
\n
income
\n
(FVOCI)
\n
Mandatorily
\n
measured at
\n
fair value
\n
through
\n
profit or loss
\n
(MFVPL) excl.
\n
HFT and
\n
overlay
\n
Measured at
\n
fair value \u2013
\n
overlay
\n
approach
\n
(overlay)
\n
Held for
\n
trading
\n
(HFT)
\n
Desig-
\n
nated at
\n
fair value
\n
1
\n
(FVO)
\n
Hedging
\n
Deriva-
\n
tives
\n
Total
\n
Total pro
\n
forma
\n
excluding
\n
KBC Bank
\n
Bulgaria
\n
(formerly
\n
Raiffeisen-
\n
bank
\n
Bulgaria)
\n
FINANCIAL ASSETS, 31-12-2022
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
4 240 0 13 0 1 0 0 4 254
\n
4 203
\n
of which loans and advances to banks repayable on
\n
demand and term loans to banks at not more than three
\n
months
\n
\n
1 237 1 237
\n
Loans and advances to customers (excluding reverse
\n
repos)
\n
177 427 0 625 0 0 0 0 178 053
\n
174 083
\n
Trade receivables
\n
2 818
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 818
\n
2 729
\n
Consumer credit
\n
6 222
\n
0
\n
430
\n
0
\n
0
\n
0
\n
0
\n
6 652
\n
5 977
\n
Mortgage loans
\n
73 465
\n
0
\n
196
\n
0
\n
0
\n
0
\n
0
\n
73 660
\n
72 891
\n
Term loans
\n
82 894
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
82 894
\n
80 744
\n
Finance lease
\n
6 368
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
6 368
\n
6 117
\n
Current account advances
\n
4 886
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 886
\n
4 885
\n
Other
\n
774
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
774
\n
740
\n
Reverse repos
\n
2
\n
\n
20 186
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 219
\n
20 219
\n
with credit institutions and investment firms
\n
20 018
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 050
\n
20 050
\n
with customers
\n
168
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
168
\n
168
\n
Equity instruments
\n
0
\n
315
\n
13
\n
1 237
\n
430
\n
0
\n
0
\n
1 994
\n
1 989
\n
Investment contracts (insurance)
\n
6
\n
\n
0
\n
0
\n
12 771
\n
0
\n
0
\n
0
\n
0
\n
12 771
\n
12 771
\n
Debt securities
\n
52 030
\n
11 813
\n
17
\n
0
\n
1 728
\n
0
\n
0
\n
65 588
\n
64 871
\n
Public bodies
\n
44 219
\n
8 135
\n
0
\n
0
\n
1 667
\n
0
\n
0
\n
54 021
\n
53 390
\n
Credit institutions and investment firms
\n
5 160
\n
1 621
\n
0
\n
0
\n
9
\n
0
\n
0
\n
6 790
\n
6 747
\n
Corporates
\n
2 651
\n
2 057
\n
17
\n
0
\n
53
\n
0
\n
0
\n
4 777
\n
4 733
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
6 279
\n
0
\n
542
\n
6 821
\n
6 813
\n
3
\n
\n
Other
\n
1 561
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
1 561
\n
1 561
\n
Total
\n
255 444
\n
12 128
\n
13 439
\n
1 237
\n
8 471
\n
0
\n
542
\n
291 262
\n
286 511
\n
FINANCIAL ASSETS, 31-12-2021
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
7 920 0 0 0 1 0 0 7 920
\n
-
\n
of which loans and advances to banks repayable on demand
\n
and term loans to banks at not more than three months
\n
3 146 -
\n
Loans and advances to customers (excl. reverse repos)
\n
159 167
\n
0
\n
560
\n
0
\n
0
\n
0
\n
0
\n
159 728
\n
-
\n
Trade receivables
\n
2 090
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 090
\n
-
\n
Consumer credit
\n
5 470
\n
0
\n
381
\n
0
\n
0
\n
0
\n
0
\n
5 851
\n
-
\n
Mortgage loans
\n
67 486
\n
0
\n
179
\n
0
\n
0
\n
0
\n
0
\n
67 665
\n
-
\n
Term loans
\n
72 998
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
72 998
\n
-
\n
Finance lease
\n
5 815
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
5 815
\n
-
\n
Current account advances
\n
4 819
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 819
\n
-
\n
Other
\n
490
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
490
\n
-
\n
2
\n
-
\n
\n
Reverse repos
\n
24 978
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 978
\n
with credit institutions and investment firms
\n
24 861
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 861
\n
-
\n
with customers
\n
117
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
117
\n
-
\n
Equity instruments
\n
0
\n
321
\n
8
\n
1 366
\n
448
\n
0
\n
0
\n
2 144
\n
-
\n
6
\n
-
\n
\n
Investment contracts (insurance)
\n
0
\n
0
\n
14 620
\n
0
\n
0
\n
0
\n
0
\n
14 620
\n
Debt securities
\n
47 172
\n
15 503
\n
17
\n
0
\n
2 958
\n
0
\n
0
\n
65 650
\n
-
\n
Public bodies
\n
41 475
\n
10 514
\n
0
\n
0
\n
2 517
\n
0
\n
0
\n
54 507
\n
-
\n
Credit institutions and investment firms
\n
3 310
\n
2 245
\n
0
\n
0
\n
357
\n
0
\n
0
\n
5 912
\n
-
\n
Corporates
\n
2 387
\n
2 744
\n
17
\n
0
\n
84
\n
0
\n
0
\n
5 232
\n
-
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
5 443
\n
0
\n
283
\n
5 727
\n
-
\n
3
\n
-
\n
\n
Other
\n
892
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
892
\n
Total
\n
240 128
\n
15 824
\n
15 205
\n
1 366
\n
8 850
\n
0
\n
283
\n
281 658
\n
-
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
(in millions of EUR)
\n
Measured at
\n
amortised
\n
cost
\n
(AC)
\n
Held for
\n
trading (HFT)
\n
Designated at
\n
fair value (FVO)
\n
\n
Hedging
\n
derivatives
\n
Total
\n
Total pro forma
\n
excluding KBC
\n
Bank Bulgaria
\n
(formerly
\n
Raiffeisenbank
\n
Bulgaria)
\n
FINANCIAL
\n
LIABILITIES, 31-12-2022
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
24 819 0 0 0 24 819
\n
24 737
\n
of which deposits from banks repayable on demand
\n
\n
\n
\n
\n
\n
\n
\n
5 085 5 085
\n
Deposits from customers and debt
\n
securities (excl. repos)
\n
\n
251 496 44 1 205 0 252 746
\n
247 585
\n
\n
Demand deposits 122 053 0 0 0 122 053 117 401
\n
\n
Time deposits 22 280 44 73 0 22 397 21 960
\n
\n
Savings accounts 76 979 0 0 0 76 979 76 954
\n
\n
Special deposits 2 710 0 0 0 2 710 2 663
\n
\n
Other deposits 268 0 0 0 268 268
\n
Subtotal deposits from customers (excl. repos)
\n
224 290 44 73 0 224 407 219 246
\n
\n
Certificates of deposit 9 321 0 1 0 9 322 9 322
\n
\n
Savings certificates 104 0 0 0 104 104
\n
\n
Non-convertible bonds 15 621 0 1 006 0 16 627 16 627
\n
\n
Non-convertible subordinated liabilities 2 160 0 126 0 2 285 2 285
\n
Repos
\n
4
\n
11 091 7 0 0 11 097
\n
11 097
\n
\n
with credit institutions and investment firms 10 852 7 0 0 10 859 10 859
\n
\n
with customers 239 0 0 0 239 239
\n
Liabilities under investment contracts
\n
6
\n
0 0 12 002 0 12 002
\n
12 002
\n
Derivatives
\n
0 8 038 0 577 8 615
\n
8 605
\n
Short positions
\n
0 1 007 0 0 1 007
\n
1 007
\n
\n
In equity instruments 0 5 0 0 5 5
\n
\n
In debt securities 0 1 002 0 0 1 002 1 002
\n
Other
\n
5
\n
2 448 0 0 0 2 448
\n
2 370
\n
Total
\n
289 854 9 096 13 207 577 312 735
\n
307 403
\n
FINANCIAL LIABILITIES, 31
\n
-12-2021
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
38 047 0 0 0 38 047
\n
-
\n
of which deposits from banks repayable on demand 4 695 -
\n
Deposits from
\n
customers and debt securities (excl. repos)
\n
\n
224 759 21 1 312 0 226 093
\n
-
\n
\n
Demand deposits 112 097 0 0 0 112 097
\n
-
\n
\n
Time deposits 9 106 21 60 0 9 187
\n
-
\n
\n
Savings accounts 74 801 0 0 0 74 801
\n
-
\n
\n
Special deposits 2 962 0 0 0 2 962
\n
-
\n
\n
Other deposits 428 0 0 0 428
\n
-
\n
Subtotal deposits from customers (excl. repos)
\n
199 395 21 60 0 199 476
\n
-
\n
\n
Certificates of deposit 6 273 0 0 0 6 273
\n
-
\n
\n
Savings certificates 253 0 0 0 253
\n
-
\n
\n
Non-convertible bonds 15 892 0 1 118 0 17 011
\n
-
\n
\n
Non-convertible subordinated liabilities 2 946 0 134 0 3 080
\n
-
\n
Repos
\n
4
\n
3 293 2 0 0 3 295
\n
-
\n
\n
with credit institutions and investment firms 2 888 2 0 0 2 890
\n
-
\n
\n
with customers 405 0 0 0 405
\n
-
\n
Liabilities under investment
\n
contracts
\n
6
\n
0 0 13 603 0 13 603
\n
-
\n
Derivatives
\n
0 5 619 0 1 094 6 713
\n
-
\n
Short positions
\n
0 1 628 0 0 1 628
\n
-
\n
\n
In equity instruments 0 18 0 0 18
\n
-
\n
\n
In debt securities 0 1 611 0 0 1 611
\n
-
\n
Other
\n
5
\n
2 288 0 0 0 2 288
\n
-
\n
Total
\n
268 387 7 271 14 916 1 094 291 667
\n
-
\n
1 The carrying value comes close to the maximum credit exposure.
\n
2 The amount of the reverse repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out).
\n
3 Financial assets not included under \u2018Loans and advances to customers\u2019 as they are not directly related to commercial lending.
\n
4 The amount of the repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out), with the assets being partly reflected on the balance sheet
\n
and partly obtained through reverse repo transactions.
\n
5 Financial liabilities not included under deposits from customers as they are not directly related to commercial deposit acquisition.
\n
6 The difference between \u2018Investment contracts (insurance)\u2019 and \u2018Liabilities under investment contracts\u2019 is accounted for by the presentation of non-unbundled investment contracts that are
\n
included under \u2018Investment contracts (insurance)\u2019 on the financial assets side, but are included under \u2018Technical provisions (before reinsurance)\u2019 on the liabilities side.
\n

\n\n

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\n\n

\n\n

\n\n

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\n\n

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\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

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\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n\n
\u2022 \u2018Non-convertible bonds\u2019 comprise mainly KBC Bank, KBC Group, \u010cSOB and KBC IFIMA issues. They are usually recognised under
\n
\u2018Measured at amortised cost\u2019. However, if they contain closely related embedded derivatives, they are recorded under
\n
\u2018Designated at fair value\u2019 (see accounting policies). This item also includes three green bonds (for 500, 500 and 750 million euros
\n
each) and a social bond (for 750 million euros), which have been recognised at amortised cost.
\n
\u2022 More information on major new debt issues or redemptions is provided under the \u2018Consolidated cashflow statement\u2019.
\n
\u2022 \u2018Deposits from credit institutions and investment firms\u2019 include funding obtained from the ECB\u2019s TLTRO programme (15.4 billion
\n
euros at year-end 2022, 9.1 billion euros less than at year-end 2021 on account of redemptions). KBC calculates these deposits
\n
using the effective interest rate method, with the rate being adjusted should we fail to meet the conditions (similar to a floating
\n
rate instrument), as per paragraph B.5.4.5 of IFRS 9. KBC\u2019s management has reasonable assurance that KBC will comply with
\n
the conditions attached (including the level of lending to households and non-financial companies) and hence the interest has
\n
accordingly been recognised (a gross amount of 112 million euros in interest income (negative interest rate) in 2022 and 242
\n
million euros in 2021).
\n
\u2022 Transferred financial assets that continue to be recognised in their entirety: KBC regularly lends and/or sells securities with the
\n
commitment to buy them back at a later date (repo transactions). Securities lent or sold with such a commitment are transferred
\n
to the counterparty, and, in exchange, KBC receives cash or other financial assets. However, KBC retains the main risks and
\n
income relating to these securities, and, therefore, continues to recognise them on its balance sheet. In addition, a financial
\n
liability is recognised equalling the cash received.
\n
\n
Transferred financial assets that continue to be recognised in their entirety (carrying value, in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Transferred financial assets that continue to be recognised in their entirety: repo transactions and securities lent out
\n
17 425 13 762
\n
Held for
\n
trading 960 1 221
\n
Fair value through OCI
\n
860 1 474
\n
Amortised cost
\n
15 605 11 067
\n
Associated financial liability
\n
10 534 2 936
\n
Held for trading
\n
689 335
\n
Fair value through OCI
\n
609 362
\n
Amortised cost
\n
9 236 2 239
\n
\n
\u2022 It should be noted that KBC has more transferred financial assets on its balance sheet than repo transactions, due to the fact
\n
that the cash legs of certain repo transactions are offset against reverse repo transactions if they are carried out with the same
\n
counterparty, in the same currency and with the same maturity date. Moreover, there is a legally enforceable right, and an
\n
intention, to settle the transactions on a net basis or to realise the financial asset and settle the financial liability simultaneously.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria in 2022 is provided in Note 6.6.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. We report on estimated greenhouse gas emissions
\n
associated with lending and other activities and have defined objectives for reducing the greenhouse gas intensity of loans
\n
we have provided to the energy sector, electricity producers and the real estate sector, mortgage loans and loans provided
\n
for commercial residential real estate, as well as loans provided to the automotive industry and financial and operational car
\n
leasing (see Note 6.2), the agricultural sector, and cement, steel and aluminium producers. See \u2018Focus on climate\u2019 in the \u2018Report
\n
of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our Climate Report and
\n
\n
our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag761": { "value": "\n

\n\n

\n\n

\n\n

\n

\n

\n
Financial assets
\n
\n
KBC has applied all the requirements of IFRS 9 since 1 January 2018, except for hedge accounting transactions, which
\n
continue to be accounted for in accordance with IAS 39.
\n
\n

\n\n

\n
Financial assets \u2013 recognition and derecognition
\n
\n
Recognition: financial assets and liabilities are recognised in the balance sheet when KBC becomes party to the contractual
\n
provisions of the instruments. Regular-way purchases or sales of financial assets are recognised using settlement date
\n
accounting. All financial assets \u2013 except those measured at fair value through profit or loss \u2013 are measured initially at fair
\n
value plus transaction costs directly attributable to their acquisition.
\n
\n\n
Derecognition and modification: KBC derecognises a financial asset when the contractual cashflows from the asset expire
\n
or when KBC transfers its rights to receive contractual cashflows from the financial asset in a transaction in which substantially
\n
all the risks and rewards of ownership are transferred. If the terms and conditions change during the term of a financial asset,
\n
KBC assesses whether the new terms are substantially different from the original ones and whether the changes indicate that
\n
the rights to the cashflows from the instrument have expired. If it is concluded that the terms are substantially different, the
\n
transaction is accounted for as a financial asset derecognition, which means that the existing financial asset is removed from
\n
the balance sheet and that a new financial asset is recognised based on the revised terms. Conversely, when KBC assesses
\n
that the terms are not substantially different, the transaction is accounted for as a financial asset modification.
\n

\n\n
\n
Write-offs: KBC writes off the gross carrying value of financial assets (or the part of the gross carrying value) deemed
\n
uncollectable. This means that there is no reasonable expectation that KBC will recover any interest or principal in a timely
\n
manner. The timing of write-offs depends on several factors, including the portfolio, the existence and type of collateral, the
\n
settlement process in each jurisdiction, and local legislation. If a loan is uncollectable, the gross carrying value is written off
\n
directly against the corresponding impairment. Recoveries of amounts previously written off are recognised as reversals of
\n
impairments in the income statement. KBC differentiates between write-offs for financial reporting purposes (which are still
\n
subject to credit enforcement activities) and debt forgiveness. The latter entails the forfeiture of the legal right to recover all
\n
or part of the debt outstanding to the client.
\n
\n
Classification of equity instruments and debt instruments
\n
\n
On initial recognition of a financial asset, KBC first assesses the contractual terms of the instrument in order to classify it as
\n
an equity instrument or a debt instrument. An equity instrument is defined as any contract that evidences a residual interest
\n
in another entity\u2019s net assets. To satisfy this condition, KBC checks that the instrument does not include a contractual
\n
obligation requiring the issuer to deliver cash or exchange financial assets or financial liabilities with another entity under
\n
conditions that are potentially unfavourable to the issuer. Any instruments that do not meet the criteria to qualify as equity
\n
instruments are classified as debt instruments by KBC, with the exception of derivatives.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n
Classification and measurement \u2013 debt instruments
\n
\n
If KBC concludes that a financial asset is a debt instrument, then \u2013 upon initial recognition \u2013 it can be classified in one of the
\n
following categories:
\n
\u2022 Measured at fair value through profit or loss (FVPL);
\n
- Mandatorily measured at fair value through profit or loss (MFVPL) \u2013 this category includes held-for-trading instruments
\n
(HFT);
\n
- Designated upon initial recognition at fair value through profit or loss (FVO);
\n
- Measured at fair value through profit or loss \u2013 overlay approach (FVPL \u2013 overlay);
\n
\u2022 Measured at fair value through other comprehensive income (FVOCI);
\n
\u2022 Measured at amortised cost (AC).
\n
\n
Debt instruments have to be classified in the FVPL category where (i) they are not held within a business model whose
\n
objective is to hold assets in order to collect contractual cashflows or within a business model whose objective is achieved
\n
by both collecting contractual cashflows and selling financial assets or, alternatively, (ii) they are held within a business model
\n
but, on specified dates, the contractual terms of the instrument give rise to cashflows that are not solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
Furthermore, KBC may in some cases \u2013 on initial recognition \u2013 irrevocably designate a financial asset that otherwise meets
\n
the requirements to be measured at AC or at FVOCI as at fair value (FVO) if doing so eliminates or significantly reduces an
\n
accounting mismatch that would otherwise arise.
\n
\n
A debt instrument is measured at FVOCI only if it meets both of the following conditions and is not designated to be measured
\n
at FVO:
\n
\u2022 the asset is held within a business model whose objective is achieved by both collecting contractual cashflows and selling
\n
financial assets; and
\n
\u2022 the contractual terms of the financial asset give rise on specified dates to cashflows that are solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
A debt instrument is measured at AC only if it meets both of the following conditions and is not designated to be measured
\n
at FVO:
\n
\u2022 the asset is held within a business model whose objective is to hold assets in order to collect contractual cashflows; and
\n
\u2022 the contractual terms of the financial asset give rise on specified dates to cashflows that are solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
A debt instrument is categorised as \u2018FVPL \u2013 overlay\u2019 when it is held in respect of a business line that is connected with
\n
contracts in scope of IFRS 4 and if it is measured at fair value through profit or loss by applying IFRS 9, but would not have
\n
been measured at fair value through profit or loss in its entirety in accordance with IAS 39, and it is an instrument for which
\n
KBC has elected to use the overlay approach. More information on this approach is provided under \u2018Overlay approach\u2019
\n
further below.
\n

\n\n
\n
Business model assessment
\n
\n
The business model is assessed to determine whether debt instruments should be measured at AC or FVOCI. In performing
\n
the assessment, KBC reviews at portfolio level the objective of the business model in which an asset is held because this best
\n
reflects how the business is managed and how information is provided to management. The information considered includes:
\n
\u2022 the stated policies and objectives for the portfolio and how those policies operate in practice (in particular, whether
\n
management\u2019s strategy focuses on earning contractual interest income, maintaining a specific interest rate profile,
\n
matching the duration of the financial assets to that of the liabilities that fund those assets, or realising cashflows through
\n
the sale of the assets);
\n
\u2022 how the performance of the portfolio is evaluated and reported to KBC\u2019s Executive Committee and Board of Directors;
\n
\u2022 the risks that affect the performance of the business model (and the financial assets held within that model) and how those
\n
risks are managed;
\n
\u2022 how managers of the business are rewarded (for instance, whether remuneration is based on the fair value of the assets
\n
managed or the contractual cashflows collected); and
\n
\u2022 the frequency, volume and timing of sales in prior periods, the reasons for such sales and KBC\u2019s expectations of future sales
\n
activity. However, information about sales activity is not considered in isolation, but as part of an overall assessment of
\n
how KBC\u2019s stated objective for managing the financial assets is achieved and how cashflows are realised.
\n
\n\n
Financial assets that are held for trading or whose performance is evaluated on a fair value basis are measured at FVPL,
\n
because they are neither held for collecting contractual cashflows, nor held for both collecting contractual cashflows and
\n
selling financial assets.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n

\n
Assessment whether contractual cashflows are solely payments of principal and interest (SPPI)
\n
\n
For the purposes of this assessment, \u2018principal\u2019 is defined as the fair value of the financial asset on initial recognition. \u2018Interest\u2019
\n
is defined as consideration for the time value of money and for the credit risk associated with the principal amount
\n
outstanding during a particular period of time and for other basic lending risks and costs (e.g., liquidity risk and administrative
\n
costs), as well as profit margin. In assessing whether contractual cashflows are solely payments of principal and interest, KBC
\n
considers the contractual terms of the instrument, which entails assessing whether the financial asset contains a contractual
\n
term that could change the timing or amount of contractual cashflows such that the instrument would not meet this condition.
\n
In making the assessment, KBC considers:
\n
\u2022 contingent events that could change the amount and timing of cashflows;
\n
\u2022 leverage features;
\n
\u2022 prepayment and extension terms;
\n
\u2022 terms that limit KBC\u2019s claim to cashflows from specified assets (e.g., non-recourse asset arrangements); and
\n
\u2022 features that modify consideration of the time value of money (e.g., periodic resets of interest rates).
\n

\n\n\n
Reclassifications
\n
\n
Financial assets are not reclassified subsequent to their initial recognition except in a period after KBC changes its business
\n
model for managing financial assets, which can occur when KBC begins or ceases to perform an activity that is significant to
\n
its operations (e.g., when KBC acquires, disposes of, or terminates a business line). Reclassification takes place from the start
\n
of the reporting period immediately following the change.
\n

\n\n
\n\n

\n\n
Classification and measurement \u2013 equity instruments
\n
\n
Financial equity instruments are classified in one of the following categories:
\n
\u2022 mandatorily measured at fair value through profit or loss (MFVPL) \u2013 only includes equity instruments held for trading (HFT);
\n
\u2022 equity instruments elected to be measured at fair value through other comprehensive income (FVOCI);
\n
\u2022 equity instruments held in an activity connected with the insurance business, which KBC measures at fair value through
\n
profit or loss \u2013 overlay approach (FVPL \u2013 overlay).
\n
\n
KBC can classify equity instruments connected with the insurance business in the \u2018FVPL \u2013 overlay\u2019 category until the effective
\n
date of IFRS 17. Each equity instrument that KBC\u2019s insurance business classifies as \u2018FVPL \u2013 overlay\u2019 must meet both of the
\n
following criteria:
\n
\u2022 it is measured at fair value through profit or loss under IFRS 9, but would not have been measured at fair value through
\n
profit or loss in its entirety under IAS 39; and
\n
\u2022 it is not held in respect of an activity that is unconnected with insurance contracts.
\n
\n
More information on this approach is provided under \u2018Overlay approach\u2019 further below. In the banking business, there is a
\n
rebuttable presumption that all equity instruments are to be regarded as FVOCI if held for neither trading nor a contingent
\n
consideration in a business combination to which IFRS 3 applies. The election to include equity instruments in the FVOCI
\n
category is irrevocable on initial recognition and can be done on an investment-by-investment basis, which is interpreted by
\n
KBC as a share-by-share basis. Equity instruments categorised as FVOCI are subsequently measured at fair value, with all
\n
value changes recognised in other comprehensive income and without any recycling into the income statement, even when
\n
the investment is disposed of. The only exception applies to dividend income, which is recognised in the income statement
\n
under \u2018Dividend income\u2019.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n
Classification and measurement \u2013 derivatives (trading and hedging)
\n
\n
KBC can recognise derivative instruments either for trading purposes or as hedging derivatives. They can be accounted for
\n
as assets or liabilities depending on their current market value.
\n
\n
Trading derivatives
\n
\n
Derivatives are always measured at fair value and KBC draws distinctions as follows:
\n
\u2022 Derivatives that are held with the intent of hedging, but for which hedge accounting cannot be or is not applied (economic
\n
hedges): hedging instruments can be acquired with the intention of economically hedging an external exposure but without
\n
applying hedge accounting. The interest component of these derivatives is recognised under \u2018Net interest income\u2019, while
\n
all other fair value changes are recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\u2022 Derivatives held with no intent of hedging (trading derivatives): KBC entities can also contract derivatives without any
\n
intention to hedge a position economically. Such activity can relate to closing or selling an external position in the near
\n
term or for short-term profit-taking purposes. All fair value changes (including interest) on such derivatives are recognised
\n
under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\n
Hedging derivatives
\n
\n
Hedging derivatives are derivatives that are specifically designated in a hedge relationship. The process for accounting such
\n
derivatives is detailed in \u2018Hedge accounting\u2019.
\n

\n\n

\n\n

\n\n
\n\n

\n\n

\n
Financial assets \u2013 impairment
\n
\n
Definition of default
\n
\n
KBC defines defaulted financial assets in the same way as the definition for internal risk management purposes and in line
\n
with the guidance and standards of financial industry regulators. A financial asset is considered in default if any of the
\n
following conditions is fulfilled:
\n
\u2022 there is a significant deterioration in creditworthiness;
\n
\u2022 the asset is flagged as non-accrual;
\n
\u2022 the asset is forborne and meets the default criteria in accordance with the internal policies for forbearance (for example,
\n
when an additional forbearance measure is extended to a forborne asset that did not reach default status within two
\n
years of the first forbearance measure being granted, or when a forborne asset becomes more than 30 days past due
\n
within the two-year period);
\n
\u2022 KBC has filed for the borrower\u2019s bankruptcy;
\n
\u2022 the counterparty has filed for bankruptcy or sought similar protection measures;
\n
\u2022 the credit facility granted to the client has been terminated.
\n
\n
KBC applies a backstop for facilities whose status is \u201890 days or more past due\u2019. In this context, a backstop is used as a final
\n
control to ensure that all the assets that should have been designated as defaulted are properly identified.
\n
\n
Expected credit loss model (ECL model) \u2013 general
\n
\n\n
The ECL model is used to measure impairment of financial assets, apart from debt instruments and equity instruments
\n
connected with the insurance business, for which KBC has elected to apply the overlay approach. The impairment policy
\n
applying to these instruments is dealt with under \u2018Overlay approach\u2019 further below.
\n
\n
The scope of the ECL model is based on how financial assets are classified. The model is applicable to the following financial
\n
assets:
\n
\u2022 Financial assets measured at AC and at FVOCI;
\n
\u2022 Loan commitments and financial guarantees;
\n
\u2022 Finance lease receivables;
\n
\u2022 Trade and other receivables.
\n

\n\n
\n
No ECLs are calculated for investments in equity instruments.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n
Financial assets that are in scope of the ECL model carry impairment in an amount equal to the lifetime ECL if the credit risk
\n
increases significantly after initial recognition. Otherwise, the loss allowance is equal to the 12-month ECL (see below for more
\n
information on the significant increase in credit risk).
\n
\n
To distinguish the various stages with regard to quantifying ECL, KBC uses the internationally accepted terminology for
\n
\u2018Stage 1\u2019, \u2018Stage 2\u2019 and \u2018Stage 3\u2019 financial assets.
\n
Unless they are already credit impaired, all financial assets are classified in \u2018Stage 1\u2019 at the time of initial recognition and 12-
\n
month ECL is recognised. Once a significant increase in credit risk occurs after initial recognition, the asset is moved into
\n
\u2018Stage 2\u2019 and lifetime ECL is recognised. Once an asset meets the definition of default, it is moved into \u2018Stage 3\u2019.
\n\n
For trade receivables, IFRS 9 allows for a practical expedient. The ECL for trade receivables can be measured in an amount
\n
equal to their lifetime ECL. KBC applies this practical expedient to trade and other receivables.
\n

\n\n
Impairment gains and losses on financial assets are recognised under the \u2018Impairment\u2019 heading in the income statement.
\n
Financial assets that are measured at AC are presented in the balance sheet at their net carrying value, which is the gross
\n
carrying value less impairment. Debt instruments measured at FVOCI are presented in the balance sheet at their carrying
\n
value, which is their fair value on the reporting date. The adjustment for the ECL is recognised as a reclassification adjustment
\n
between the income statement and OCI.
\n
\n
Significant increase in credit risk since initial recognition
\n
\n
In accordance with the ECL model, financial assets attract lifetime ECL once their credit risk increases significantly after initial
\n
recognition. Therefore, the assessment of a significant increase in credit risk is important for the staging of financial assets.
\n
The assessment of a significant increase in credit risk is a relative assessment based on the credit risk that was assigned
\n
upon initial recognition. This is a multi-factor assessment and, therefore, KBC has developed a multi-tier approach.
\n
\n
Multi-tier approach (MTA) \u2013 bond portfolio
\n
\n
For the bond portfolio, the MTA consists of three tiers:
\n
\u2022 Low-credit exception: 12-month ECL is always recognised for bonds if they have a low credit risk on the reporting date (i.e.
\n
\u2018Stage 1\u2019). KBC uses this exception for investment grade bonds.
\n
\u2022 Internal rating: [only applicable if the first tier criterion is not met] this is a relative assessment that compares the probability
\n
of default (PD) upon initial recognition to that on the reporting date. KBC does the assessment at facility level for each
\n
reporting period. The relative change in PD that triggers staging is an increase of two PD notches.
\n
\u2022 Management assessment: lastly, management review and assess the significant increase in credit risk for financial assets
\n
at an individual (i.e. counterparty) and portfolio level, when it is concluded that idiosyncratic events are not adequately
\n
captured in the first two tiers of the MTA. Examples of idiosyncratic events are unexpected developments in the
\n
macroeconomic environment (e.g., due to the coronavirus crisis), uncertainties about geopolitical events (e.g., as a result
\n
of the war in Ukraine) and the secondary impact of material defaults (e.g., on the suppliers, clients and employees of a
\n
defaulted company).
\n
\n
If none of these triggers results in a move into \u2018Stage 2\u2019, the bond remains in \u2018Stage 1\u2019. A financial asset is considered as
\n
\u2018Stage 3\u2019 as soon as it meets the definition of default. The MTA is symmetrical, i.e. credit that has been moved into \u2018Stage 2\u2019
\n
or \u2018Stage 3\u2019 can revert to \u2018Stage 1\u2019 or \u2018Stage 2\u2019 if the tier criterion that triggered the migration is not met on a subsequent
\n
reporting date.
\n
\n
Loan portfolio
\n
\n
For the loan portfolio, KBC uses a five-tier approach. This MTA is a waterfall approach (i.e. if assessing the first tier does not
\n
result in a move into \u2018Stage 2\u2019, the second tier is assessed, and so on). In the end, if all tiers are assessed without triggering a
\n
migration to \u2018Stage 2\u2019, the financial asset remains in \u2018Stage 1\u2019.
\n
\u2022 Internal rating: this rating is used as the main criterion for assessing an increase in credit risk. It is a relative assessment that
\n
compares the PD upon initial recognition to that on the reporting date. KBC does the assessment at the level of the facility
\n
(i.e. contract) for each reporting period. The relative change in PD that triggers staging is an increase of two PD notches.
\n
\u2022 Forbearance: forborne financial assets are always considered as \u2018Stage 2\u2019 unless they are already defaulted, in which case
\n
they are moved into \u2018Stage 3\u2019.
\n
\u2022 Days past due: KBC uses the backstop defined in the directive. A financial asset that is more than 30 days past due is
\n
moved into \u2018Stage 2\u2019.
\n
\u2022 Internal rating backstop: KBC uses an absolute level of PD as a backstop for financial assets that have to be moved into
\n
\u2018Stage 2\u2019. This backstop corresponds to the highest PD (i.e. PD 9 based on KBC\u2019s internal rating) before a financial asset is
\n
considered defaulted.
\n
\u2022 Management assessment: lastly, management review and assess the significant increase in credit risk for financial assets
\n
at an individual (i.e. counterparty) and portfolio level, when it is concluded that idiosyncratic events are not adequately
\n
captured in the first four tiers of the MTA (see above for a number of examples).
\n
\n
A financial asset is considered as \u2018Stage 3\u2019 as soon as it meets the definition of default. The MTA is symmetrical, i.e. credit
\n
that has been moved into \u2018Stage 2\u2019 or \u2018Stage 3\u2019 can revert to \u2018Stage 1\u2019 or \u2018Stage 2\u2019 if the tier criterion that triggered the
\n
migration is not met on the reporting date.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Measurement of ECL
\n
\n
ECL is calculated as the product of probability of default (PD), estimated exposure at default (EAD) and loss given default
\n
(LGD).
\n
\n
ECL is calculated to reflect:
\n
\u2022 an unbiased, probability-weighted amount;
\n
\u2022 the time value of money; and
\n
\u2022 information about past events, current conditions and forecast economic conditions.
\n
\n
Lifetime ECL represents the sum of ECL over the lifetime of the financial asset discounted at the original effective interest
\n
rate.
\n
The 12-month ECL represents the portion of lifetime ECL resulting from a default in the 12-month period after the reporting
\n
date.
\n
\n
KBC uses specific IFRS 9 models for PD, EAD and LGD in order to calculate ECL. As much as possible and to promote efficiency,
\n
KBC uses modelling techniques similar to those developed for prudential purposes (i.e. Basel models). More information on
\n
the credit risk models developed by KBC is provided in the \u2018Internal Modelling\u2019 section of the Risk Report at www.kbc.com.
\n
.That said, KBC ensures that the Basel models are adapted so they comply with IFRS 9.
\n
\u2022 KBC removes the conservatism that is required by the regulator for Basel models;
\n
\u2022 KBC adjusts how macroeconomic parameters affect the outcome to ensure that the IFRS 9 models reflect a \u2018point-in-time\u2019
\n
estimate rather than one that is \u2018through the cycle\u2019 (as required by the regulator);
\n
\u2022 KBC applies forward-looking macroeconomic information in the models.
\n
\n
As regards loans that are in default, the ECL is also calculated as the product of the PD, EAD and LGD. In this specific case,
\n
however, the PD is set at 100%, the EAD is known given the default status and the LGD takes into account the net present
\n
value of the (un)recoverable amount.
\n
\n
KBC uses the IRB and Standardised models to assign the Basel PD, which then serves as input for IFRS 9 ECL calculations and
\n
staging. If there is no Basel PD model with a similar scope to the IFRS 9 model, the long-term observed default rate is used
\n
as the PD for all facilities in the portfolio. For low default portfolios, there may have been no or only a small number of defaults
\n
in the period being considered, in which case the PD is determined based on expert input and external ratings.
\n
\n
KBC considers forward-looking information in the calculation of ECL via macroeconomic variables and based on
\n
management\u2019s assessment of any idiosyncratic events. KBC\u2019s Chief Economist develops three different macroeconomic
\n
scenarios (base-case, up and down) for all the KBC Core Countries and sets a corresponding probability for each scenario.
\n
On a quarterly basis, KBC updates the economic scenarios and attributed weightings to be used for the ECL calculation
\n
according to the input of the Chief Economist. The incorporation of the macroeconomic variables included in these scenarios
\n
in the PD, EAD and LGD components of the ECL calculation is based on statistical correlation in historical datasets.
\n
\n
The maximum period for measurement of ECL is the maximum contractual period (including extensions), except for specific
\n
financial assets that include a drawn and an undrawn amount available on demand, and KBC\u2019s contractual ability to request
\n
repayment of the drawn amount and cancel the undrawn commitment does not limit the exposure to credit risk to the
\n
contractual period. Only for such assets can a measurement period extend beyond the contractual period.
\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n

\n
\n

\n\n

\n\n

\n\n

\n\n

\n

\n
Purchased or originated credit impaired (POCI) assets
\n
\n
KBC defines POCI assets as financial assets in scope of the IFRS 9 impairment standard that are already defaulted at
\n
origination (i.e. they then meet the definition of default). POCI assets are initially recognised at an amount net of impairment
\n
and are measured at amortised cost using a credit-adjusted effective interest rate. In subsequent periods, any changes to
\n
the lifetime ECL are recognised in the income statement. Favourable changes are recognised as an impairment gain, even if
\n
the lifetime ECL on the reporting date is lower than the lifetime ECL at origination.
\n
\n\n
Significant judgements and uncertainties
\n
\n
Calculating ECL (and the significant increase in credit risk since initial recognition) requires significant judgement of various
\n
aspects, including the borrowers\u2019 financial position and repayment capabilities, the value and recoverability of collateral,
\n
projections and macroeconomic information. KBC applies a neutral, bias-free approach when dealing with uncertainties and
\n
making decisions based on significant judgements.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
\n

\n
\n
\n\n
Overlay approach
\n
\n
In accordance with the amendment to IFRS 4 issued in September 2016, KBC uses the overlay approach to overcome the
\n
temporary consequences of the different effective dates of IFRS 9 and IFRS 17 (replacing IFRS 4). Accordingly, KBC uses the
\n
overlay approach, which means that the extra volatility related to the adoption of IFRS 9 is reclassified from the income
\n
statement to OCI. The reclassified amounts are recognised in the overlay reserve in OCI. The overlay approach is applied to
\n
those financial assets of KBC\u2019s insurance business that are eligible. Eligibility is based on the following criteria:
\n
\u2022 Assets that are measured at FVPL under IFRS 9 that would not have been measured at FVPL in their entirety under IAS 39;
\n
\u2022 All assets except those held in respect of an activity that is unconnected with contracts within the scope of IFRS 4.
\n
A financial asset can be designated under the overlay approach until:
\n
\u2022 the instrument is derecognised;
\n
\u2022 it is no longer held in respect of an activity that is connected with insurance contracts;
\n
\u2022 KBC decides not to apply the overlay approach for that particular instrument at the beginning of any financial year; or
\n
\u2022 the effective date of IFRS 17.
\n
\n
Application of the overlay approach requires certain IAS 39 accounting policies for financial assets to be retained, namely:
\n
\u2022 Impairment of equity instruments: equity instruments held by KBC\u2019s insurance business were typically classified as \u2018available
\n
for sale\u2019 under IAS 39, whereas they are classified as FVPL under IFRS 9. Designation under the overlay approach requires
\n
the application of IAS 39 impairment rules to investments in equity instruments. In using the overlay approach, all fair value
\n
changes are recognised in the overlay reserve but, where the decline is significant compared to acquisition cost (more than
\n
30%) or prolonged (more than one year), the fair value loss is recognised in the income statement. Any further decrease is
\n
also recognised directly in the income statement, whereas increases are recognised in the overlay reserve.
\n
\u2022 Recognition of gains and losses in the income statement upon the disposal of equity instruments: by designating the equity
\n
instruments connected with KBC\u2019s insurance business under the overlay approach upon their sale, the accumulated overlay
\n
reserve in OCI is recycled to the income statement, ensuring the same results as under IAS 39.
\n

\n\n
\n\n
Cash, cash balances with central banks and other demand deposits with credit institutions
\n
\n
\u2018Cash\u2019 comprises cash on hand and demand deposits, e.g., cheques, petty cash and cash balances at central and other
\n
banks.
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag746": { "value": "\n

\n\n

\n\n

\n

\n

\n
Financial assets
\n
\n
KBC has applied all the requirements of IFRS 9 since 1 January 2018, except for hedge accounting transactions, which
\n
continue to be accounted for in accordance with IAS 39.
\n
\n

\n\n

\n
Financial assets \u2013 recognition and derecognition
\n
\n
Recognition: financial assets and liabilities are recognised in the balance sheet when KBC becomes party to the contractual
\n
provisions of the instruments. Regular-way purchases or sales of financial assets are recognised using settlement date
\n
accounting. All financial assets \u2013 except those measured at fair value through profit or loss \u2013 are measured initially at fair
\n
value plus transaction costs directly attributable to their acquisition.
\n
\n\n
Derecognition and modification: KBC derecognises a financial asset when the contractual cashflows from the asset expire
\n
or when KBC transfers its rights to receive contractual cashflows from the financial asset in a transaction in which substantially
\n
all the risks and rewards of ownership are transferred. If the terms and conditions change during the term of a financial asset,
\n
KBC assesses whether the new terms are substantially different from the original ones and whether the changes indicate that
\n
the rights to the cashflows from the instrument have expired. If it is concluded that the terms are substantially different, the
\n
transaction is accounted for as a financial asset derecognition, which means that the existing financial asset is removed from
\n
the balance sheet and that a new financial asset is recognised based on the revised terms. Conversely, when KBC assesses
\n
that the terms are not substantially different, the transaction is accounted for as a financial asset modification.
\n

\n\n
\n
Write-offs: KBC writes off the gross carrying value of financial assets (or the part of the gross carrying value) deemed
\n
uncollectable. This means that there is no reasonable expectation that KBC will recover any interest or principal in a timely
\n
manner. The timing of write-offs depends on several factors, including the portfolio, the existence and type of collateral, the
\n
settlement process in each jurisdiction, and local legislation. If a loan is uncollectable, the gross carrying value is written off
\n
directly against the corresponding impairment. Recoveries of amounts previously written off are recognised as reversals of
\n
impairments in the income statement. KBC differentiates between write-offs for financial reporting purposes (which are still
\n
subject to credit enforcement activities) and debt forgiveness. The latter entails the forfeiture of the legal right to recover all
\n
or part of the debt outstanding to the client.
\n
\n
Classification of equity instruments and debt instruments
\n
\n
On initial recognition of a financial asset, KBC first assesses the contractual terms of the instrument in order to classify it as
\n
an equity instrument or a debt instrument. An equity instrument is defined as any contract that evidences a residual interest
\n
in another entity\u2019s net assets. To satisfy this condition, KBC checks that the instrument does not include a contractual
\n
obligation requiring the issuer to deliver cash or exchange financial assets or financial liabilities with another entity under
\n
conditions that are potentially unfavourable to the issuer. Any instruments that do not meet the criteria to qualify as equity
\n
instruments are classified as debt instruments by KBC, with the exception of derivatives.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n
Classification and measurement \u2013 debt instruments
\n
\n
If KBC concludes that a financial asset is a debt instrument, then \u2013 upon initial recognition \u2013 it can be classified in one of the
\n
following categories:
\n
\u2022 Measured at fair value through profit or loss (FVPL);
\n
- Mandatorily measured at fair value through profit or loss (MFVPL) \u2013 this category includes held-for-trading instruments
\n
(HFT);
\n
- Designated upon initial recognition at fair value through profit or loss (FVO);
\n
- Measured at fair value through profit or loss \u2013 overlay approach (FVPL \u2013 overlay);
\n
\u2022 Measured at fair value through other comprehensive income (FVOCI);
\n
\u2022 Measured at amortised cost (AC).
\n
\n
Debt instruments have to be classified in the FVPL category where (i) they are not held within a business model whose
\n
objective is to hold assets in order to collect contractual cashflows or within a business model whose objective is achieved
\n
by both collecting contractual cashflows and selling financial assets or, alternatively, (ii) they are held within a business model
\n
but, on specified dates, the contractual terms of the instrument give rise to cashflows that are not solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
Furthermore, KBC may in some cases \u2013 on initial recognition \u2013 irrevocably designate a financial asset that otherwise meets
\n
the requirements to be measured at AC or at FVOCI as at fair value (FVO) if doing so eliminates or significantly reduces an
\n
accounting mismatch that would otherwise arise.
\n
\n
A debt instrument is measured at FVOCI only if it meets both of the following conditions and is not designated to be measured
\n
at FVO:
\n
\u2022 the asset is held within a business model whose objective is achieved by both collecting contractual cashflows and selling
\n
financial assets; and
\n
\u2022 the contractual terms of the financial asset give rise on specified dates to cashflows that are solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
A debt instrument is measured at AC only if it meets both of the following conditions and is not designated to be measured
\n
at FVO:
\n
\u2022 the asset is held within a business model whose objective is to hold assets in order to collect contractual cashflows; and
\n
\u2022 the contractual terms of the financial asset give rise on specified dates to cashflows that are solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
A debt instrument is categorised as \u2018FVPL \u2013 overlay\u2019 when it is held in respect of a business line that is connected with
\n
contracts in scope of IFRS 4 and if it is measured at fair value through profit or loss by applying IFRS 9, but would not have
\n
been measured at fair value through profit or loss in its entirety in accordance with IAS 39, and it is an instrument for which
\n
KBC has elected to use the overlay approach. More information on this approach is provided under \u2018Overlay approach\u2019
\n
further below.
\n

\n\n
\n
Business model assessment
\n
\n
The business model is assessed to determine whether debt instruments should be measured at AC or FVOCI. In performing
\n
the assessment, KBC reviews at portfolio level the objective of the business model in which an asset is held because this best
\n
reflects how the business is managed and how information is provided to management. The information considered includes:
\n
\u2022 the stated policies and objectives for the portfolio and how those policies operate in practice (in particular, whether
\n
management\u2019s strategy focuses on earning contractual interest income, maintaining a specific interest rate profile,
\n
matching the duration of the financial assets to that of the liabilities that fund those assets, or realising cashflows through
\n
the sale of the assets);
\n
\u2022 how the performance of the portfolio is evaluated and reported to KBC\u2019s Executive Committee and Board of Directors;
\n
\u2022 the risks that affect the performance of the business model (and the financial assets held within that model) and how those
\n
risks are managed;
\n
\u2022 how managers of the business are rewarded (for instance, whether remuneration is based on the fair value of the assets
\n
managed or the contractual cashflows collected); and
\n
\u2022 the frequency, volume and timing of sales in prior periods, the reasons for such sales and KBC\u2019s expectations of future sales
\n
activity. However, information about sales activity is not considered in isolation, but as part of an overall assessment of
\n
how KBC\u2019s stated objective for managing the financial assets is achieved and how cashflows are realised.
\n
\n\n
Financial assets that are held for trading or whose performance is evaluated on a fair value basis are measured at FVPL,
\n
because they are neither held for collecting contractual cashflows, nor held for both collecting contractual cashflows and
\n
selling financial assets.
\n

\n\n

\n\n

\n\n

\n\n

\n

\n
Assessment whether contractual cashflows are solely payments of principal and interest (SPPI)
\n
\n
For the purposes of this assessment, \u2018principal\u2019 is defined as the fair value of the financial asset on initial recognition. \u2018Interest\u2019
\n
is defined as consideration for the time value of money and for the credit risk associated with the principal amount
\n
outstanding during a particular period of time and for other basic lending risks and costs (e.g., liquidity risk and administrative
\n
costs), as well as profit margin. In assessing whether contractual cashflows are solely payments of principal and interest, KBC
\n
considers the contractual terms of the instrument, which entails assessing whether the financial asset contains a contractual
\n
term that could change the timing or amount of contractual cashflows such that the instrument would not meet this condition.
\n
In making the assessment, KBC considers:
\n
\u2022 contingent events that could change the amount and timing of cashflows;
\n
\u2022 leverage features;
\n
\u2022 prepayment and extension terms;
\n
\u2022 terms that limit KBC\u2019s claim to cashflows from specified assets (e.g., non-recourse asset arrangements); and
\n
\u2022 features that modify consideration of the time value of money (e.g., periodic resets of interest rates).
\n

\n\n
Hedge accounting
\n
\n
KBC has elected to apply the hedge accounting principles under IAS 39 (EU carve-out version). KBC designates certain
\n
derivatives held for risk management purposes, as well as certain non-derivative financial instruments, as hedging
\n
instruments in qualifying hedging relationships. On initial designation of the hedge, KBC formally documents the relationship
\n
between the hedging instrument(s) and hedged item(s), including the risk management objective and strategy in undertaking
\n
the hedge, together with the method that will be used to assess the effectiveness of the hedging relationship. KBC makes
\n
an assessment, both at inception of the hedge relationship and on an ongoing basis, of whether the hedging instrument(s)
\n
is/are expected to be highly effective in offsetting the changes in the fair value or cashflows of the respective hedged item(s)
\n
during the period for which the hedge is designated, and whether the actual results of each hedge are within a range of
\n
80-125%. KBC makes an assessment for a cashflow hedge of a forecast transaction of whether it is highly probable to occur
\n
and presents an exposure to variations in cashflows that could ultimately affect the income statement.
\n
\n
KBC uses the following hedge accounting techniques: cashflow hedges, fair value micro hedges, fair value hedges for a
\n
portfolio of interest rate risk, and hedges of net investments in foreign operations.
\n
\n
Cashflow hedges: if a derivative is designated as the hedging instrument in a hedge of the variability in cashflows attributable
\n
to a particular risk associated with a recognised asset, liability or highly probable forecast transaction that could affect the
\n
income statement, the effective portion of changes in the fair value of the derivative is recognised in OCI and presented in
\n
the hedging reserve (cashflow hedge) within OCI. Any ineffective portion of changes in the fair value of a derivative is
\n
immediately recognised in the income statement under \u2018Net result from financial instruments at fair value through profit or
\n
loss\u2019. The amount recognised in OCI is reclassified to the income statement (as a reclassification adjustment in the same
\n
period as the hedged cashflows affect the income statement) under \u2018Net interest income\u2019. If the hedging derivative expires
\n
or is sold, terminated or exercised, or the hedge no longer meets the criteria for cashflow hedge accounting, or the hedge
\n
designation is revoked, then hedge accounting is discontinued prospectively. Any cumulative gain or loss existing in OCI at
\n
that time remains in OCI and is recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019
\n
when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer
\n
expected to occur, the cumulative gain or loss that was reported in OCI is immediately recycled to the income statement
\n
under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\n
Fair value micro hedging: when a derivative is designated as the hedging instrument in a hedge of the change in fair value
\n
of a recognised asset or liability (portfolio of recognised assets or liabilities) or a firm commitment that could affect the income
\n
statement, changes in the fair value of the derivative are immediately recognised in the income statement together with
\n
changes in the fair value of the hedged item that are attributable to the hedged risk (in the same item in the income
\n
statement as the hedged item). However, accrued interest income from interest rate swaps is recognised in \u2018Net interest
\n
income\u2019. If the hedging derivative expires or is sold, terminated or exercised, or the hedge no longer meets the criteria for fair
\n
value hedge accounting, or the hedge designation is revoked, then hedge accounting is discontinued prospectively. Any
\n
adjustment up to the point of discontinuation that is made to a hedged item for which the effective interest method is used
\n
is amortised to the income statement as part of the recalculated effective interest rate of the item over its remaining life or
\n
recognised directly when the hedged item is derecognised.
\n

\n\n
Fair value hedges for a portfolio of interest-rate risk (macro hedging): the EU\u2019s macro hedging carve-out means that a group
\n
of derivatives (or proportions of them) can be viewed in combination and jointly designated as a hedging instrument, and
\n
removes some of the limitations on fair value hedge accounting relating to hedging core deposits and underhedging
\n
strategies. Under the EU carve-out, hedge accounting may be applied to core deposits and will be ineffective only when the
\n
revised estimate of the amount of cashflows in scheduled time buckets falls below the designated amount of that bucket.
\n
KBC uses interest rate swaps to hedge the interest rate risk for a portfolio of loans and for a portfolio of retail deposits.
\n
Interest rate swaps are measured at fair value, with fair-value changes being reported in the income statement. Accrued
\n
interest income from interest rate swaps is recognised in \u2018Net Interest Income\u2019. The hedged amount of loans is measured at
\n
fair value as well, with fair value changes being reported in the income statement. The fair value of the hedged amount is
\n
presented as a separate item on the assets or liabilities side of the balance sheet. If a hedge is ineffective, the cumulative
\n
fair value change in the hedged amount will be amortised to the income statement over the remaining lifetime of the hedged
\n
assets or will be immediately removed from the balance sheet if ineffectiveness is due to derecognition of the corresponding
\n
loans.
\n
\n
Hedge of net investments in foreign operations: when a derivative instrument or a non-derivative financial instrument is
\n
designated as the hedging instrument in a hedge of a net investment in a foreign operation having a different functional
\n
currency than the direct holding company of the foreign operation, the effective portion of changes in the fair value of the
\n
hedging instrument is recognised in the hedging reserve (investment in foreign operation) in OCI. Any ineffective portion of
\n
the changes in the fair value of the derivative is recognised immediately in the income statement. The amount recognised in
\n
OCI is reclassified to the income statement as a reclassification adjustment on disposal of the foreign operation (which
\n
includes a dividend distribution or capital decrease).
\n

\n\n

\n\n

\n\n

\n
\u2022 We recognise \u2018Net interest income\u2019 in the segment information without dividing it up into \u2018Interest income\u2019 and \u2018Interest
\n
expense\u2019. This is permitted under IFRS because the bulk of the business units\u2019 income is in the form of interest, and
\n
management assesses and co-ordinates those business units primarily on the basis of net interest income.
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInterestIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag735": { "value": "\n

\n\n

\n

\n

\n
Financial assets
\n
\n
KBC has applied all the requirements of IFRS 9 since 1 January 2018, except for hedge accounting transactions, which
\n
continue to be accounted for in accordance with IAS 39.
\n
\n

\n\n

\n
Financial assets \u2013 recognition and derecognition
\n
\n
Recognition: financial assets and liabilities are recognised in the balance sheet when KBC becomes party to the contractual
\n
provisions of the instruments. Regular-way purchases or sales of financial assets are recognised using settlement date
\n
accounting. All financial assets \u2013 except those measured at fair value through profit or loss \u2013 are measured initially at fair
\n
value plus transaction costs directly attributable to their acquisition.
\n
\n\n
Derecognition and modification: KBC derecognises a financial asset when the contractual cashflows from the asset expire
\n
or when KBC transfers its rights to receive contractual cashflows from the financial asset in a transaction in which substantially
\n
all the risks and rewards of ownership are transferred. If the terms and conditions change during the term of a financial asset,
\n
KBC assesses whether the new terms are substantially different from the original ones and whether the changes indicate that
\n
the rights to the cashflows from the instrument have expired. If it is concluded that the terms are substantially different, the
\n
transaction is accounted for as a financial asset derecognition, which means that the existing financial asset is removed from
\n
the balance sheet and that a new financial asset is recognised based on the revised terms. Conversely, when KBC assesses
\n
that the terms are not substantially different, the transaction is accounted for as a financial asset modification.
\n

\n\n
\n
Write-offs: KBC writes off the gross carrying value of financial assets (or the part of the gross carrying value) deemed
\n
uncollectable. This means that there is no reasonable expectation that KBC will recover any interest or principal in a timely
\n
manner. The timing of write-offs depends on several factors, including the portfolio, the existence and type of collateral, the
\n
settlement process in each jurisdiction, and local legislation. If a loan is uncollectable, the gross carrying value is written off
\n
directly against the corresponding impairment. Recoveries of amounts previously written off are recognised as reversals of
\n
impairments in the income statement. KBC differentiates between write-offs for financial reporting purposes (which are still
\n
subject to credit enforcement activities) and debt forgiveness. The latter entails the forfeiture of the legal right to recover all
\n
or part of the debt outstanding to the client.
\n
\n
Classification of equity instruments and debt instruments
\n
\n
On initial recognition of a financial asset, KBC first assesses the contractual terms of the instrument in order to classify it as
\n
an equity instrument or a debt instrument. An equity instrument is defined as any contract that evidences a residual interest
\n
in another entity\u2019s net assets. To satisfy this condition, KBC checks that the instrument does not include a contractual
\n
obligation requiring the issuer to deliver cash or exchange financial assets or financial liabilities with another entity under
\n
conditions that are potentially unfavourable to the issuer. Any instruments that do not meet the criteria to qualify as equity
\n
instruments are classified as debt instruments by KBC, with the exception of derivatives.
\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n
Classification and measurement \u2013 debt instruments
\n
\n
If KBC concludes that a financial asset is a debt instrument, then \u2013 upon initial recognition \u2013 it can be classified in one of the
\n
following categories:
\n
\u2022 Measured at fair value through profit or loss (FVPL);
\n
- Mandatorily measured at fair value through profit or loss (MFVPL) \u2013 this category includes held-for-trading instruments
\n
(HFT);
\n
- Designated upon initial recognition at fair value through profit or loss (FVO);
\n
- Measured at fair value through profit or loss \u2013 overlay approach (FVPL \u2013 overlay);
\n
\u2022 Measured at fair value through other comprehensive income (FVOCI);
\n
\u2022 Measured at amortised cost (AC).
\n
\n
Debt instruments have to be classified in the FVPL category where (i) they are not held within a business model whose
\n
objective is to hold assets in order to collect contractual cashflows or within a business model whose objective is achieved
\n
by both collecting contractual cashflows and selling financial assets or, alternatively, (ii) they are held within a business model
\n
but, on specified dates, the contractual terms of the instrument give rise to cashflows that are not solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
Furthermore, KBC may in some cases \u2013 on initial recognition \u2013 irrevocably designate a financial asset that otherwise meets
\n
the requirements to be measured at AC or at FVOCI as at fair value (FVO) if doing so eliminates or significantly reduces an
\n
accounting mismatch that would otherwise arise.
\n
\n
A debt instrument is measured at FVOCI only if it meets both of the following conditions and is not designated to be measured
\n
at FVO:
\n
\u2022 the asset is held within a business model whose objective is achieved by both collecting contractual cashflows and selling
\n
financial assets; and
\n
\u2022 the contractual terms of the financial asset give rise on specified dates to cashflows that are solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
A debt instrument is measured at AC only if it meets both of the following conditions and is not designated to be measured
\n
at FVO:
\n
\u2022 the asset is held within a business model whose objective is to hold assets in order to collect contractual cashflows; and
\n
\u2022 the contractual terms of the financial asset give rise on specified dates to cashflows that are solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
A debt instrument is categorised as \u2018FVPL \u2013 overlay\u2019 when it is held in respect of a business line that is connected with
\n
contracts in scope of IFRS 4 and if it is measured at fair value through profit or loss by applying IFRS 9, but would not have
\n
been measured at fair value through profit or loss in its entirety in accordance with IAS 39, and it is an instrument for which
\n
KBC has elected to use the overlay approach. More information on this approach is provided under \u2018Overlay approach\u2019
\n
further below.
\n

\n\n
\n
Business model assessment
\n
\n
The business model is assessed to determine whether debt instruments should be measured at AC or FVOCI. In performing
\n
the assessment, KBC reviews at portfolio level the objective of the business model in which an asset is held because this best
\n
reflects how the business is managed and how information is provided to management. The information considered includes:
\n
\u2022 the stated policies and objectives for the portfolio and how those policies operate in practice (in particular, whether
\n
management\u2019s strategy focuses on earning contractual interest income, maintaining a specific interest rate profile,
\n
matching the duration of the financial assets to that of the liabilities that fund those assets, or realising cashflows through
\n
the sale of the assets);
\n
\u2022 how the performance of the portfolio is evaluated and reported to KBC\u2019s Executive Committee and Board of Directors;
\n
\u2022 the risks that affect the performance of the business model (and the financial assets held within that model) and how those
\n
risks are managed;
\n
\u2022 how managers of the business are rewarded (for instance, whether remuneration is based on the fair value of the assets
\n
managed or the contractual cashflows collected); and
\n
\u2022 the frequency, volume and timing of sales in prior periods, the reasons for such sales and KBC\u2019s expectations of future sales
\n
activity. However, information about sales activity is not considered in isolation, but as part of an overall assessment of
\n
how KBC\u2019s stated objective for managing the financial assets is achieved and how cashflows are realised.
\n
\n\n
Financial assets that are held for trading or whose performance is evaluated on a fair value basis are measured at FVPL,
\n
because they are neither held for collecting contractual cashflows, nor held for both collecting contractual cashflows and
\n
selling financial assets.
\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n

\n
Assessment whether contractual cashflows are solely payments of principal and interest (SPPI)
\n
\n
For the purposes of this assessment, \u2018principal\u2019 is defined as the fair value of the financial asset on initial recognition. \u2018Interest\u2019
\n
is defined as consideration for the time value of money and for the credit risk associated with the principal amount
\n
outstanding during a particular period of time and for other basic lending risks and costs (e.g., liquidity risk and administrative
\n
costs), as well as profit margin. In assessing whether contractual cashflows are solely payments of principal and interest, KBC
\n
considers the contractual terms of the instrument, which entails assessing whether the financial asset contains a contractual
\n
term that could change the timing or amount of contractual cashflows such that the instrument would not meet this condition.
\n
In making the assessment, KBC considers:
\n
\u2022 contingent events that could change the amount and timing of cashflows;
\n
\u2022 leverage features;
\n
\u2022 prepayment and extension terms;
\n
\u2022 terms that limit KBC\u2019s claim to cashflows from specified assets (e.g., non-recourse asset arrangements); and
\n
\u2022 features that modify consideration of the time value of money (e.g., periodic resets of interest rates).
\n

\n\n\n
Reclassifications
\n
\n
Financial assets are not reclassified subsequent to their initial recognition except in a period after KBC changes its business
\n
model for managing financial assets, which can occur when KBC begins or ceases to perform an activity that is significant to
\n
its operations (e.g., when KBC acquires, disposes of, or terminates a business line). Reclassification takes place from the start
\n
of the reporting period immediately following the change.
\n

\n\n
\n\n

\n\n
Classification and measurement \u2013 equity instruments
\n
\n
Financial equity instruments are classified in one of the following categories:
\n
\u2022 mandatorily measured at fair value through profit or loss (MFVPL) \u2013 only includes equity instruments held for trading (HFT);
\n
\u2022 equity instruments elected to be measured at fair value through other comprehensive income (FVOCI);
\n
\u2022 equity instruments held in an activity connected with the insurance business, which KBC measures at fair value through
\n
profit or loss \u2013 overlay approach (FVPL \u2013 overlay).
\n
\n
KBC can classify equity instruments connected with the insurance business in the \u2018FVPL \u2013 overlay\u2019 category until the effective
\n
date of IFRS 17. Each equity instrument that KBC\u2019s insurance business classifies as \u2018FVPL \u2013 overlay\u2019 must meet both of the
\n
following criteria:
\n
\u2022 it is measured at fair value through profit or loss under IFRS 9, but would not have been measured at fair value through
\n
profit or loss in its entirety under IAS 39; and
\n
\u2022 it is not held in respect of an activity that is unconnected with insurance contracts.
\n
\n
More information on this approach is provided under \u2018Overlay approach\u2019 further below. In the banking business, there is a
\n
rebuttable presumption that all equity instruments are to be regarded as FVOCI if held for neither trading nor a contingent
\n
consideration in a business combination to which IFRS 3 applies. The election to include equity instruments in the FVOCI
\n
category is irrevocable on initial recognition and can be done on an investment-by-investment basis, which is interpreted by
\n
KBC as a share-by-share basis. Equity instruments categorised as FVOCI are subsequently measured at fair value, with all
\n
value changes recognised in other comprehensive income and without any recycling into the income statement, even when
\n
the investment is disposed of. The only exception applies to dividend income, which is recognised in the income statement
\n
under \u2018Dividend income\u2019.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n
Classification and measurement \u2013 derivatives (trading and hedging)
\n
\n
KBC can recognise derivative instruments either for trading purposes or as hedging derivatives. They can be accounted for
\n
as assets or liabilities depending on their current market value.
\n
\n
Trading derivatives
\n
\n
Derivatives are always measured at fair value and KBC draws distinctions as follows:
\n
\u2022 Derivatives that are held with the intent of hedging, but for which hedge accounting cannot be or is not applied (economic
\n
hedges): hedging instruments can be acquired with the intention of economically hedging an external exposure but without
\n
applying hedge accounting. The interest component of these derivatives is recognised under \u2018Net interest income\u2019, while
\n
all other fair value changes are recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\u2022 Derivatives held with no intent of hedging (trading derivatives): KBC entities can also contract derivatives without any
\n
intention to hedge a position economically. Such activity can relate to closing or selling an external position in the near
\n
term or for short-term profit-taking purposes. All fair value changes (including interest) on such derivatives are recognised
\n
under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\n
Hedging derivatives
\n
\n
Hedging derivatives are derivatives that are specifically designated in a hedge relationship. The process for accounting such
\n
derivatives is detailed in \u2018Hedge accounting\u2019.
\n

\n\n

\n\n

\n\n
\n\n

\n\n

\n
Financial assets \u2013 impairment
\n
\n
Definition of default
\n
\n
KBC defines defaulted financial assets in the same way as the definition for internal risk management purposes and in line
\n
with the guidance and standards of financial industry regulators. A financial asset is considered in default if any of the
\n
following conditions is fulfilled:
\n
\u2022 there is a significant deterioration in creditworthiness;
\n
\u2022 the asset is flagged as non-accrual;
\n
\u2022 the asset is forborne and meets the default criteria in accordance with the internal policies for forbearance (for example,
\n
when an additional forbearance measure is extended to a forborne asset that did not reach default status within two
\n
years of the first forbearance measure being granted, or when a forborne asset becomes more than 30 days past due
\n
within the two-year period);
\n
\u2022 KBC has filed for the borrower\u2019s bankruptcy;
\n
\u2022 the counterparty has filed for bankruptcy or sought similar protection measures;
\n
\u2022 the credit facility granted to the client has been terminated.
\n
\n
KBC applies a backstop for facilities whose status is \u201890 days or more past due\u2019. In this context, a backstop is used as a final
\n
control to ensure that all the assets that should have been designated as defaulted are properly identified.
\n
\n
Expected credit loss model (ECL model) \u2013 general
\n
\n\n
The ECL model is used to measure impairment of financial assets, apart from debt instruments and equity instruments
\n
connected with the insurance business, for which KBC has elected to apply the overlay approach. The impairment policy
\n
applying to these instruments is dealt with under \u2018Overlay approach\u2019 further below.
\n
\n
The scope of the ECL model is based on how financial assets are classified. The model is applicable to the following financial
\n
assets:
\n
\u2022 Financial assets measured at AC and at FVOCI;
\n
\u2022 Loan commitments and financial guarantees;
\n
\u2022 Finance lease receivables;
\n
\u2022 Trade and other receivables.
\n

\n\n
\n
No ECLs are calculated for investments in equity instruments.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n
Financial assets that are in scope of the ECL model carry impairment in an amount equal to the lifetime ECL if the credit risk
\n
increases significantly after initial recognition. Otherwise, the loss allowance is equal to the 12-month ECL (see below for more
\n
information on the significant increase in credit risk).
\n
\n
To distinguish the various stages with regard to quantifying ECL, KBC uses the internationally accepted terminology for
\n
\u2018Stage 1\u2019, \u2018Stage 2\u2019 and \u2018Stage 3\u2019 financial assets.
\n
Unless they are already credit impaired, all financial assets are classified in \u2018Stage 1\u2019 at the time of initial recognition and 12-
\n
month ECL is recognised. Once a significant increase in credit risk occurs after initial recognition, the asset is moved into
\n
\u2018Stage 2\u2019 and lifetime ECL is recognised. Once an asset meets the definition of default, it is moved into \u2018Stage 3\u2019.
\n\n
For trade receivables, IFRS 9 allows for a practical expedient. The ECL for trade receivables can be measured in an amount
\n
equal to their lifetime ECL. KBC applies this practical expedient to trade and other receivables.
\n

\n\n
Impairment gains and losses on financial assets are recognised under the \u2018Impairment\u2019 heading in the income statement.
\n
Financial assets that are measured at AC are presented in the balance sheet at their net carrying value, which is the gross
\n
carrying value less impairment. Debt instruments measured at FVOCI are presented in the balance sheet at their carrying
\n
value, which is their fair value on the reporting date. The adjustment for the ECL is recognised as a reclassification adjustment
\n
between the income statement and OCI.
\n
\n
Significant increase in credit risk since initial recognition
\n
\n
In accordance with the ECL model, financial assets attract lifetime ECL once their credit risk increases significantly after initial
\n
recognition. Therefore, the assessment of a significant increase in credit risk is important for the staging of financial assets.
\n
The assessment of a significant increase in credit risk is a relative assessment based on the credit risk that was assigned
\n
upon initial recognition. This is a multi-factor assessment and, therefore, KBC has developed a multi-tier approach.
\n
\n
Multi-tier approach (MTA) \u2013 bond portfolio
\n
\n
For the bond portfolio, the MTA consists of three tiers:
\n
\u2022 Low-credit exception: 12-month ECL is always recognised for bonds if they have a low credit risk on the reporting date (i.e.
\n
\u2018Stage 1\u2019). KBC uses this exception for investment grade bonds.
\n
\u2022 Internal rating: [only applicable if the first tier criterion is not met] this is a relative assessment that compares the probability
\n
of default (PD) upon initial recognition to that on the reporting date. KBC does the assessment at facility level for each
\n
reporting period. The relative change in PD that triggers staging is an increase of two PD notches.
\n
\u2022 Management assessment: lastly, management review and assess the significant increase in credit risk for financial assets
\n
at an individual (i.e. counterparty) and portfolio level, when it is concluded that idiosyncratic events are not adequately
\n
captured in the first two tiers of the MTA. Examples of idiosyncratic events are unexpected developments in the
\n
macroeconomic environment (e.g., due to the coronavirus crisis), uncertainties about geopolitical events (e.g., as a result
\n
of the war in Ukraine) and the secondary impact of material defaults (e.g., on the suppliers, clients and employees of a
\n
defaulted company).
\n
\n
If none of these triggers results in a move into \u2018Stage 2\u2019, the bond remains in \u2018Stage 1\u2019. A financial asset is considered as
\n
\u2018Stage 3\u2019 as soon as it meets the definition of default. The MTA is symmetrical, i.e. credit that has been moved into \u2018Stage 2\u2019
\n
or \u2018Stage 3\u2019 can revert to \u2018Stage 1\u2019 or \u2018Stage 2\u2019 if the tier criterion that triggered the migration is not met on a subsequent
\n
reporting date.
\n
\n
Loan portfolio
\n
\n
For the loan portfolio, KBC uses a five-tier approach. This MTA is a waterfall approach (i.e. if assessing the first tier does not
\n
result in a move into \u2018Stage 2\u2019, the second tier is assessed, and so on). In the end, if all tiers are assessed without triggering a
\n
migration to \u2018Stage 2\u2019, the financial asset remains in \u2018Stage 1\u2019.
\n
\u2022 Internal rating: this rating is used as the main criterion for assessing an increase in credit risk. It is a relative assessment that
\n
compares the PD upon initial recognition to that on the reporting date. KBC does the assessment at the level of the facility
\n
(i.e. contract) for each reporting period. The relative change in PD that triggers staging is an increase of two PD notches.
\n
\u2022 Forbearance: forborne financial assets are always considered as \u2018Stage 2\u2019 unless they are already defaulted, in which case
\n
they are moved into \u2018Stage 3\u2019.
\n
\u2022 Days past due: KBC uses the backstop defined in the directive. A financial asset that is more than 30 days past due is
\n
moved into \u2018Stage 2\u2019.
\n
\u2022 Internal rating backstop: KBC uses an absolute level of PD as a backstop for financial assets that have to be moved into
\n
\u2018Stage 2\u2019. This backstop corresponds to the highest PD (i.e. PD 9 based on KBC\u2019s internal rating) before a financial asset is
\n
considered defaulted.
\n
\u2022 Management assessment: lastly, management review and assess the significant increase in credit risk for financial assets
\n
at an individual (i.e. counterparty) and portfolio level, when it is concluded that idiosyncratic events are not adequately
\n
captured in the first four tiers of the MTA (see above for a number of examples).
\n
\n
A financial asset is considered as \u2018Stage 3\u2019 as soon as it meets the definition of default. The MTA is symmetrical, i.e. credit
\n
that has been moved into \u2018Stage 2\u2019 or \u2018Stage 3\u2019 can revert to \u2018Stage 1\u2019 or \u2018Stage 2\u2019 if the tier criterion that triggered the
\n
migration is not met on the reporting date.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Measurement of ECL
\n
\n
ECL is calculated as the product of probability of default (PD), estimated exposure at default (EAD) and loss given default
\n
(LGD).
\n
\n
ECL is calculated to reflect:
\n
\u2022 an unbiased, probability-weighted amount;
\n
\u2022 the time value of money; and
\n
\u2022 information about past events, current conditions and forecast economic conditions.
\n
\n
Lifetime ECL represents the sum of ECL over the lifetime of the financial asset discounted at the original effective interest
\n
rate.
\n
The 12-month ECL represents the portion of lifetime ECL resulting from a default in the 12-month period after the reporting
\n
date.
\n
\n
KBC uses specific IFRS 9 models for PD, EAD and LGD in order to calculate ECL. As much as possible and to promote efficiency,
\n
KBC uses modelling techniques similar to those developed for prudential purposes (i.e. Basel models). More information on
\n
the credit risk models developed by KBC is provided in the \u2018Internal Modelling\u2019 section of the Risk Report at www.kbc.com.
\n
.That said, KBC ensures that the Basel models are adapted so they comply with IFRS 9.
\n
\u2022 KBC removes the conservatism that is required by the regulator for Basel models;
\n
\u2022 KBC adjusts how macroeconomic parameters affect the outcome to ensure that the IFRS 9 models reflect a \u2018point-in-time\u2019
\n
estimate rather than one that is \u2018through the cycle\u2019 (as required by the regulator);
\n
\u2022 KBC applies forward-looking macroeconomic information in the models.
\n
\n
As regards loans that are in default, the ECL is also calculated as the product of the PD, EAD and LGD. In this specific case,
\n
however, the PD is set at 100%, the EAD is known given the default status and the LGD takes into account the net present
\n
value of the (un)recoverable amount.
\n
\n
KBC uses the IRB and Standardised models to assign the Basel PD, which then serves as input for IFRS 9 ECL calculations and
\n
staging. If there is no Basel PD model with a similar scope to the IFRS 9 model, the long-term observed default rate is used
\n
as the PD for all facilities in the portfolio. For low default portfolios, there may have been no or only a small number of defaults
\n
in the period being considered, in which case the PD is determined based on expert input and external ratings.
\n
\n
KBC considers forward-looking information in the calculation of ECL via macroeconomic variables and based on
\n
management\u2019s assessment of any idiosyncratic events. KBC\u2019s Chief Economist develops three different macroeconomic
\n
scenarios (base-case, up and down) for all the KBC Core Countries and sets a corresponding probability for each scenario.
\n
On a quarterly basis, KBC updates the economic scenarios and attributed weightings to be used for the ECL calculation
\n
according to the input of the Chief Economist. The incorporation of the macroeconomic variables included in these scenarios
\n
in the PD, EAD and LGD components of the ECL calculation is based on statistical correlation in historical datasets.
\n
\n
The maximum period for measurement of ECL is the maximum contractual period (including extensions), except for specific
\n
financial assets that include a drawn and an undrawn amount available on demand, and KBC\u2019s contractual ability to request
\n
repayment of the drawn amount and cancel the undrawn commitment does not limit the exposure to credit risk to the
\n
contractual period. Only for such assets can a measurement period extend beyond the contractual period.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n
Purchased or originated credit impaired (POCI) assets
\n
\n
KBC defines POCI assets as financial assets in scope of the IFRS 9 impairment standard that are already defaulted at
\n
origination (i.e. they then meet the definition of default). POCI assets are initially recognised at an amount net of impairment
\n
and are measured at amortised cost using a credit-adjusted effective interest rate. In subsequent periods, any changes to
\n
the lifetime ECL are recognised in the income statement. Favourable changes are recognised as an impairment gain, even if
\n
the lifetime ECL on the reporting date is lower than the lifetime ECL at origination.
\n
\n\n
Significant judgements and uncertainties
\n
\n
Calculating ECL (and the significant increase in credit risk since initial recognition) requires significant judgement of various
\n
aspects, including the borrowers\u2019 financial position and repayment capabilities, the value and recoverability of collateral,
\n
projections and macroeconomic information. KBC applies a neutral, bias-free approach when dealing with uncertainties and
\n
making decisions based on significant judgements.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Hedge accounting
\n
\n
KBC has elected to apply the hedge accounting principles under IAS 39 (EU carve-out version). KBC designates certain
\n
derivatives held for risk management purposes, as well as certain non-derivative financial instruments, as hedging
\n
instruments in qualifying hedging relationships. On initial designation of the hedge, KBC formally documents the relationship
\n
between the hedging instrument(s) and hedged item(s), including the risk management objective and strategy in undertaking
\n
the hedge, together with the method that will be used to assess the effectiveness of the hedging relationship. KBC makes
\n
an assessment, both at inception of the hedge relationship and on an ongoing basis, of whether the hedging instrument(s)
\n
is/are expected to be highly effective in offsetting the changes in the fair value or cashflows of the respective hedged item(s)
\n
during the period for which the hedge is designated, and whether the actual results of each hedge are within a range of
\n
80-125%. KBC makes an assessment for a cashflow hedge of a forecast transaction of whether it is highly probable to occur
\n
and presents an exposure to variations in cashflows that could ultimately affect the income statement.
\n
\n
KBC uses the following hedge accounting techniques: cashflow hedges, fair value micro hedges, fair value hedges for a
\n
portfolio of interest rate risk, and hedges of net investments in foreign operations.
\n
\n
Cashflow hedges: if a derivative is designated as the hedging instrument in a hedge of the variability in cashflows attributable
\n
to a particular risk associated with a recognised asset, liability or highly probable forecast transaction that could affect the
\n
income statement, the effective portion of changes in the fair value of the derivative is recognised in OCI and presented in
\n
the hedging reserve (cashflow hedge) within OCI. Any ineffective portion of changes in the fair value of a derivative is
\n
immediately recognised in the income statement under \u2018Net result from financial instruments at fair value through profit or
\n
loss\u2019. The amount recognised in OCI is reclassified to the income statement (as a reclassification adjustment in the same
\n
period as the hedged cashflows affect the income statement) under \u2018Net interest income\u2019. If the hedging derivative expires
\n
or is sold, terminated or exercised, or the hedge no longer meets the criteria for cashflow hedge accounting, or the hedge
\n
designation is revoked, then hedge accounting is discontinued prospectively. Any cumulative gain or loss existing in OCI at
\n
that time remains in OCI and is recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019
\n
when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer
\n
expected to occur, the cumulative gain or loss that was reported in OCI is immediately recycled to the income statement
\n
under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\n
Fair value micro hedging: when a derivative is designated as the hedging instrument in a hedge of the change in fair value
\n
of a recognised asset or liability (portfolio of recognised assets or liabilities) or a firm commitment that could affect the income
\n
statement, changes in the fair value of the derivative are immediately recognised in the income statement together with
\n
changes in the fair value of the hedged item that are attributable to the hedged risk (in the same item in the income
\n
statement as the hedged item). However, accrued interest income from interest rate swaps is recognised in \u2018Net interest
\n
income\u2019. If the hedging derivative expires or is sold, terminated or exercised, or the hedge no longer meets the criteria for fair
\n
value hedge accounting, or the hedge designation is revoked, then hedge accounting is discontinued prospectively. Any
\n
adjustment up to the point of discontinuation that is made to a hedged item for which the effective interest method is used
\n
is amortised to the income statement as part of the recalculated effective interest rate of the item over its remaining life or
\n
recognised directly when the hedged item is derecognised.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Fair value hedges for a portfolio of interest-rate risk (macro hedging): the EU\u2019s macro hedging carve-out means that a group
\n
of derivatives (or proportions of them) can be viewed in combination and jointly designated as a hedging instrument, and
\n
removes some of the limitations on fair value hedge accounting relating to hedging core deposits and underhedging
\n
strategies. Under the EU carve-out, hedge accounting may be applied to core deposits and will be ineffective only when the
\n
revised estimate of the amount of cashflows in scheduled time buckets falls below the designated amount of that bucket.
\n
KBC uses interest rate swaps to hedge the interest rate risk for a portfolio of loans and for a portfolio of retail deposits.
\n
Interest rate swaps are measured at fair value, with fair-value changes being reported in the income statement. Accrued
\n
interest income from interest rate swaps is recognised in \u2018Net Interest Income\u2019. The hedged amount of loans is measured at
\n
fair value as well, with fair value changes being reported in the income statement. The fair value of the hedged amount is
\n
presented as a separate item on the assets or liabilities side of the balance sheet. If a hedge is ineffective, the cumulative
\n
fair value change in the hedged amount will be amortised to the income statement over the remaining lifetime of the hedged
\n
assets or will be immediately removed from the balance sheet if ineffectiveness is due to derecognition of the corresponding
\n
loans.
\n
\n
Hedge of net investments in foreign operations: when a derivative instrument or a non-derivative financial instrument is
\n
designated as the hedging instrument in a hedge of a net investment in a foreign operation having a different functional
\n
currency than the direct holding company of the foreign operation, the effective portion of changes in the fair value of the
\n
hedging instrument is recognised in the hedging reserve (investment in foreign operation) in OCI. Any ineffective portion of
\n
the changes in the fair value of the derivative is recognised immediately in the income statement. The amount recognised in
\n
OCI is reclassified to the income statement as a reclassification adjustment on disposal of the foreign operation (which
\n
includes a dividend distribution or capital decrease).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
\u2022 We recognise \u2018Net interest income\u2019 in the segment information without dividing it up into \u2018Interest income\u2019 and \u2018Interest
\n
expense\u2019. This is permitted under IFRS because the bulk of the business units\u2019 income is in the form of interest, and
\n
management assesses and co-ordinates those business units primarily on the basis of net interest income.
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceIncomeAndCostsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag792": { "value": "\n

\n

\n

\n
Financial assets
\n
\n
KBC has applied all the requirements of IFRS 9 since 1 January 2018, except for hedge accounting transactions, which
\n
continue to be accounted for in accordance with IAS 39.
\n
\n

\n\n

\n
Financial assets \u2013 recognition and derecognition
\n
\n
Recognition: financial assets and liabilities are recognised in the balance sheet when KBC becomes party to the contractual
\n
provisions of the instruments. Regular-way purchases or sales of financial assets are recognised using settlement date
\n
accounting. All financial assets \u2013 except those measured at fair value through profit or loss \u2013 are measured initially at fair
\n
value plus transaction costs directly attributable to their acquisition.
\n
\n\n
Derecognition and modification: KBC derecognises a financial asset when the contractual cashflows from the asset expire
\n
or when KBC transfers its rights to receive contractual cashflows from the financial asset in a transaction in which substantially
\n
all the risks and rewards of ownership are transferred. If the terms and conditions change during the term of a financial asset,
\n
KBC assesses whether the new terms are substantially different from the original ones and whether the changes indicate that
\n
the rights to the cashflows from the instrument have expired. If it is concluded that the terms are substantially different, the
\n
transaction is accounted for as a financial asset derecognition, which means that the existing financial asset is removed from
\n
the balance sheet and that a new financial asset is recognised based on the revised terms. Conversely, when KBC assesses
\n
that the terms are not substantially different, the transaction is accounted for as a financial asset modification.
\n

\n\n
\n
Write-offs: KBC writes off the gross carrying value of financial assets (or the part of the gross carrying value) deemed
\n
uncollectable. This means that there is no reasonable expectation that KBC will recover any interest or principal in a timely
\n
manner. The timing of write-offs depends on several factors, including the portfolio, the existence and type of collateral, the
\n
settlement process in each jurisdiction, and local legislation. If a loan is uncollectable, the gross carrying value is written off
\n
directly against the corresponding impairment. Recoveries of amounts previously written off are recognised as reversals of
\n
impairments in the income statement. KBC differentiates between write-offs for financial reporting purposes (which are still
\n
subject to credit enforcement activities) and debt forgiveness. The latter entails the forfeiture of the legal right to recover all
\n
or part of the debt outstanding to the client.
\n
\n
Classification of equity instruments and debt instruments
\n
\n
On initial recognition of a financial asset, KBC first assesses the contractual terms of the instrument in order to classify it as
\n
an equity instrument or a debt instrument. An equity instrument is defined as any contract that evidences a residual interest
\n
in another entity\u2019s net assets. To satisfy this condition, KBC checks that the instrument does not include a contractual
\n
obligation requiring the issuer to deliver cash or exchange financial assets or financial liabilities with another entity under
\n
conditions that are potentially unfavourable to the issuer. Any instruments that do not meet the criteria to qualify as equity
\n
instruments are classified as debt instruments by KBC, with the exception of derivatives.
\n

\n\n

\n\n

\n

\n\n
Classification and measurement \u2013 debt instruments
\n
\n
If KBC concludes that a financial asset is a debt instrument, then \u2013 upon initial recognition \u2013 it can be classified in one of the
\n
following categories:
\n
\u2022 Measured at fair value through profit or loss (FVPL);
\n
- Mandatorily measured at fair value through profit or loss (MFVPL) \u2013 this category includes held-for-trading instruments
\n
(HFT);
\n
- Designated upon initial recognition at fair value through profit or loss (FVO);
\n
- Measured at fair value through profit or loss \u2013 overlay approach (FVPL \u2013 overlay);
\n
\u2022 Measured at fair value through other comprehensive income (FVOCI);
\n
\u2022 Measured at amortised cost (AC).
\n
\n
Debt instruments have to be classified in the FVPL category where (i) they are not held within a business model whose
\n
objective is to hold assets in order to collect contractual cashflows or within a business model whose objective is achieved
\n
by both collecting contractual cashflows and selling financial assets or, alternatively, (ii) they are held within a business model
\n
but, on specified dates, the contractual terms of the instrument give rise to cashflows that are not solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
Furthermore, KBC may in some cases \u2013 on initial recognition \u2013 irrevocably designate a financial asset that otherwise meets
\n
the requirements to be measured at AC or at FVOCI as at fair value (FVO) if doing so eliminates or significantly reduces an
\n
accounting mismatch that would otherwise arise.
\n
\n
A debt instrument is measured at FVOCI only if it meets both of the following conditions and is not designated to be measured
\n
at FVO:
\n
\u2022 the asset is held within a business model whose objective is achieved by both collecting contractual cashflows and selling
\n
financial assets; and
\n
\u2022 the contractual terms of the financial asset give rise on specified dates to cashflows that are solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
A debt instrument is measured at AC only if it meets both of the following conditions and is not designated to be measured
\n
at FVO:
\n
\u2022 the asset is held within a business model whose objective is to hold assets in order to collect contractual cashflows; and
\n
\u2022 the contractual terms of the financial asset give rise on specified dates to cashflows that are solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
A debt instrument is categorised as \u2018FVPL \u2013 overlay\u2019 when it is held in respect of a business line that is connected with
\n
contracts in scope of IFRS 4 and if it is measured at fair value through profit or loss by applying IFRS 9, but would not have
\n
been measured at fair value through profit or loss in its entirety in accordance with IAS 39, and it is an instrument for which
\n
KBC has elected to use the overlay approach. More information on this approach is provided under \u2018Overlay approach\u2019
\n
further below.
\n

\n\n
\n
Business model assessment
\n
\n
The business model is assessed to determine whether debt instruments should be measured at AC or FVOCI. In performing
\n
the assessment, KBC reviews at portfolio level the objective of the business model in which an asset is held because this best
\n
reflects how the business is managed and how information is provided to management. The information considered includes:
\n
\u2022 the stated policies and objectives for the portfolio and how those policies operate in practice (in particular, whether
\n
management\u2019s strategy focuses on earning contractual interest income, maintaining a specific interest rate profile,
\n
matching the duration of the financial assets to that of the liabilities that fund those assets, or realising cashflows through
\n
the sale of the assets);
\n
\u2022 how the performance of the portfolio is evaluated and reported to KBC\u2019s Executive Committee and Board of Directors;
\n
\u2022 the risks that affect the performance of the business model (and the financial assets held within that model) and how those
\n
risks are managed;
\n
\u2022 how managers of the business are rewarded (for instance, whether remuneration is based on the fair value of the assets
\n
managed or the contractual cashflows collected); and
\n
\u2022 the frequency, volume and timing of sales in prior periods, the reasons for such sales and KBC\u2019s expectations of future sales
\n
activity. However, information about sales activity is not considered in isolation, but as part of an overall assessment of
\n
how KBC\u2019s stated objective for managing the financial assets is achieved and how cashflows are realised.
\n
\n\n
Financial assets that are held for trading or whose performance is evaluated on a fair value basis are measured at FVPL,
\n
because they are neither held for collecting contractual cashflows, nor held for both collecting contractual cashflows and
\n
selling financial assets.
\n

\n\n

\n\n

\n

\n

\n\n

\n

\n
Assessment whether contractual cashflows are solely payments of principal and interest (SPPI)
\n
\n
For the purposes of this assessment, \u2018principal\u2019 is defined as the fair value of the financial asset on initial recognition. \u2018Interest\u2019
\n
is defined as consideration for the time value of money and for the credit risk associated with the principal amount
\n
outstanding during a particular period of time and for other basic lending risks and costs (e.g., liquidity risk and administrative
\n
costs), as well as profit margin. In assessing whether contractual cashflows are solely payments of principal and interest, KBC
\n
considers the contractual terms of the instrument, which entails assessing whether the financial asset contains a contractual
\n
term that could change the timing or amount of contractual cashflows such that the instrument would not meet this condition.
\n
In making the assessment, KBC considers:
\n
\u2022 contingent events that could change the amount and timing of cashflows;
\n
\u2022 leverage features;
\n
\u2022 prepayment and extension terms;
\n
\u2022 terms that limit KBC\u2019s claim to cashflows from specified assets (e.g., non-recourse asset arrangements); and
\n
\u2022 features that modify consideration of the time value of money (e.g., periodic resets of interest rates).
\n

\n\n\n
Reclassifications
\n
\n
Financial assets are not reclassified subsequent to their initial recognition except in a period after KBC changes its business
\n
model for managing financial assets, which can occur when KBC begins or ceases to perform an activity that is significant to
\n
its operations (e.g., when KBC acquires, disposes of, or terminates a business line). Reclassification takes place from the start
\n
of the reporting period immediately following the change.
\n

\n\n
\n\n

\n\n
Classification and measurement \u2013 equity instruments
\n
\n
Financial equity instruments are classified in one of the following categories:
\n
\u2022 mandatorily measured at fair value through profit or loss (MFVPL) \u2013 only includes equity instruments held for trading (HFT);
\n
\u2022 equity instruments elected to be measured at fair value through other comprehensive income (FVOCI);
\n
\u2022 equity instruments held in an activity connected with the insurance business, which KBC measures at fair value through
\n
profit or loss \u2013 overlay approach (FVPL \u2013 overlay).
\n
\n
KBC can classify equity instruments connected with the insurance business in the \u2018FVPL \u2013 overlay\u2019 category until the effective
\n
date of IFRS 17. Each equity instrument that KBC\u2019s insurance business classifies as \u2018FVPL \u2013 overlay\u2019 must meet both of the
\n
following criteria:
\n
\u2022 it is measured at fair value through profit or loss under IFRS 9, but would not have been measured at fair value through
\n
profit or loss in its entirety under IAS 39; and
\n
\u2022 it is not held in respect of an activity that is unconnected with insurance contracts.
\n
\n
More information on this approach is provided under \u2018Overlay approach\u2019 further below. In the banking business, there is a
\n
rebuttable presumption that all equity instruments are to be regarded as FVOCI if held for neither trading nor a contingent
\n
consideration in a business combination to which IFRS 3 applies. The election to include equity instruments in the FVOCI
\n
category is irrevocable on initial recognition and can be done on an investment-by-investment basis, which is interpreted by
\n
KBC as a share-by-share basis. Equity instruments categorised as FVOCI are subsequently measured at fair value, with all
\n
value changes recognised in other comprehensive income and without any recycling into the income statement, even when
\n
the investment is disposed of. The only exception applies to dividend income, which is recognised in the income statement
\n
under \u2018Dividend income\u2019.
\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n
Classification and measurement \u2013 derivatives (trading and hedging)
\n
\n
KBC can recognise derivative instruments either for trading purposes or as hedging derivatives. They can be accounted for
\n
as assets or liabilities depending on their current market value.
\n
\n
Trading derivatives
\n
\n
Derivatives are always measured at fair value and KBC draws distinctions as follows:
\n
\u2022 Derivatives that are held with the intent of hedging, but for which hedge accounting cannot be or is not applied (economic
\n
hedges): hedging instruments can be acquired with the intention of economically hedging an external exposure but without
\n
applying hedge accounting. The interest component of these derivatives is recognised under \u2018Net interest income\u2019, while
\n
all other fair value changes are recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\u2022 Derivatives held with no intent of hedging (trading derivatives): KBC entities can also contract derivatives without any
\n
intention to hedge a position economically. Such activity can relate to closing or selling an external position in the near
\n
term or for short-term profit-taking purposes. All fair value changes (including interest) on such derivatives are recognised
\n
under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\n
Hedging derivatives
\n
\n
Hedging derivatives are derivatives that are specifically designated in a hedge relationship. The process for accounting such
\n
derivatives is detailed in \u2018Hedge accounting\u2019.
\n

\n\n

\n\n

\n\n
\n\n

\n\n

\n
Financial assets \u2013 impairment
\n
\n
Definition of default
\n
\n
KBC defines defaulted financial assets in the same way as the definition for internal risk management purposes and in line
\n
with the guidance and standards of financial industry regulators. A financial asset is considered in default if any of the
\n
following conditions is fulfilled:
\n
\u2022 there is a significant deterioration in creditworthiness;
\n
\u2022 the asset is flagged as non-accrual;
\n
\u2022 the asset is forborne and meets the default criteria in accordance with the internal policies for forbearance (for example,
\n
when an additional forbearance measure is extended to a forborne asset that did not reach default status within two
\n
years of the first forbearance measure being granted, or when a forborne asset becomes more than 30 days past due
\n
within the two-year period);
\n
\u2022 KBC has filed for the borrower\u2019s bankruptcy;
\n
\u2022 the counterparty has filed for bankruptcy or sought similar protection measures;
\n
\u2022 the credit facility granted to the client has been terminated.
\n
\n
KBC applies a backstop for facilities whose status is \u201890 days or more past due\u2019. In this context, a backstop is used as a final
\n
control to ensure that all the assets that should have been designated as defaulted are properly identified.
\n
\n
Expected credit loss model (ECL model) \u2013 general
\n
\n\n
The ECL model is used to measure impairment of financial assets, apart from debt instruments and equity instruments
\n
connected with the insurance business, for which KBC has elected to apply the overlay approach. The impairment policy
\n
applying to these instruments is dealt with under \u2018Overlay approach\u2019 further below.
\n
\n
The scope of the ECL model is based on how financial assets are classified. The model is applicable to the following financial
\n
assets:
\n
\u2022 Financial assets measured at AC and at FVOCI;
\n
\u2022 Loan commitments and financial guarantees;
\n
\u2022 Finance lease receivables;
\n
\u2022 Trade and other receivables.
\n

\n\n
\n
No ECLs are calculated for investments in equity instruments.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n
Financial assets that are in scope of the ECL model carry impairment in an amount equal to the lifetime ECL if the credit risk
\n
increases significantly after initial recognition. Otherwise, the loss allowance is equal to the 12-month ECL (see below for more
\n
information on the significant increase in credit risk).
\n
\n
To distinguish the various stages with regard to quantifying ECL, KBC uses the internationally accepted terminology for
\n
\u2018Stage 1\u2019, \u2018Stage 2\u2019 and \u2018Stage 3\u2019 financial assets.
\n
Unless they are already credit impaired, all financial assets are classified in \u2018Stage 1\u2019 at the time of initial recognition and 12-
\n
month ECL is recognised. Once a significant increase in credit risk occurs after initial recognition, the asset is moved into
\n
\u2018Stage 2\u2019 and lifetime ECL is recognised. Once an asset meets the definition of default, it is moved into \u2018Stage 3\u2019.
\n\n
For trade receivables, IFRS 9 allows for a practical expedient. The ECL for trade receivables can be measured in an amount
\n
equal to their lifetime ECL. KBC applies this practical expedient to trade and other receivables.
\n

\n\n
Impairment gains and losses on financial assets are recognised under the \u2018Impairment\u2019 heading in the income statement.
\n
Financial assets that are measured at AC are presented in the balance sheet at their net carrying value, which is the gross
\n
carrying value less impairment. Debt instruments measured at FVOCI are presented in the balance sheet at their carrying
\n
value, which is their fair value on the reporting date. The adjustment for the ECL is recognised as a reclassification adjustment
\n
between the income statement and OCI.
\n
\n
Significant increase in credit risk since initial recognition
\n
\n
In accordance with the ECL model, financial assets attract lifetime ECL once their credit risk increases significantly after initial
\n
recognition. Therefore, the assessment of a significant increase in credit risk is important for the staging of financial assets.
\n
The assessment of a significant increase in credit risk is a relative assessment based on the credit risk that was assigned
\n
upon initial recognition. This is a multi-factor assessment and, therefore, KBC has developed a multi-tier approach.
\n
\n
Multi-tier approach (MTA) \u2013 bond portfolio
\n
\n
For the bond portfolio, the MTA consists of three tiers:
\n
\u2022 Low-credit exception: 12-month ECL is always recognised for bonds if they have a low credit risk on the reporting date (i.e.
\n
\u2018Stage 1\u2019). KBC uses this exception for investment grade bonds.
\n
\u2022 Internal rating: [only applicable if the first tier criterion is not met] this is a relative assessment that compares the probability
\n
of default (PD) upon initial recognition to that on the reporting date. KBC does the assessment at facility level for each
\n
reporting period. The relative change in PD that triggers staging is an increase of two PD notches.
\n
\u2022 Management assessment: lastly, management review and assess the significant increase in credit risk for financial assets
\n
at an individual (i.e. counterparty) and portfolio level, when it is concluded that idiosyncratic events are not adequately
\n
captured in the first two tiers of the MTA. Examples of idiosyncratic events are unexpected developments in the
\n
macroeconomic environment (e.g., due to the coronavirus crisis), uncertainties about geopolitical events (e.g., as a result
\n
of the war in Ukraine) and the secondary impact of material defaults (e.g., on the suppliers, clients and employees of a
\n
defaulted company).
\n
\n
If none of these triggers results in a move into \u2018Stage 2\u2019, the bond remains in \u2018Stage 1\u2019. A financial asset is considered as
\n
\u2018Stage 3\u2019 as soon as it meets the definition of default. The MTA is symmetrical, i.e. credit that has been moved into \u2018Stage 2\u2019
\n
or \u2018Stage 3\u2019 can revert to \u2018Stage 1\u2019 or \u2018Stage 2\u2019 if the tier criterion that triggered the migration is not met on a subsequent
\n
reporting date.
\n
\n
Loan portfolio
\n
\n
For the loan portfolio, KBC uses a five-tier approach. This MTA is a waterfall approach (i.e. if assessing the first tier does not
\n
result in a move into \u2018Stage 2\u2019, the second tier is assessed, and so on). In the end, if all tiers are assessed without triggering a
\n
migration to \u2018Stage 2\u2019, the financial asset remains in \u2018Stage 1\u2019.
\n
\u2022 Internal rating: this rating is used as the main criterion for assessing an increase in credit risk. It is a relative assessment that
\n
compares the PD upon initial recognition to that on the reporting date. KBC does the assessment at the level of the facility
\n
(i.e. contract) for each reporting period. The relative change in PD that triggers staging is an increase of two PD notches.
\n
\u2022 Forbearance: forborne financial assets are always considered as \u2018Stage 2\u2019 unless they are already defaulted, in which case
\n
they are moved into \u2018Stage 3\u2019.
\n
\u2022 Days past due: KBC uses the backstop defined in the directive. A financial asset that is more than 30 days past due is
\n
moved into \u2018Stage 2\u2019.
\n
\u2022 Internal rating backstop: KBC uses an absolute level of PD as a backstop for financial assets that have to be moved into
\n
\u2018Stage 2\u2019. This backstop corresponds to the highest PD (i.e. PD 9 based on KBC\u2019s internal rating) before a financial asset is
\n
considered defaulted.
\n
\u2022 Management assessment: lastly, management review and assess the significant increase in credit risk for financial assets
\n
at an individual (i.e. counterparty) and portfolio level, when it is concluded that idiosyncratic events are not adequately
\n
captured in the first four tiers of the MTA (see above for a number of examples).
\n
\n
A financial asset is considered as \u2018Stage 3\u2019 as soon as it meets the definition of default. The MTA is symmetrical, i.e. credit
\n
that has been moved into \u2018Stage 2\u2019 or \u2018Stage 3\u2019 can revert to \u2018Stage 1\u2019 or \u2018Stage 2\u2019 if the tier criterion that triggered the
\n
migration is not met on the reporting date.
\n

\n\n

\n\n

\n\n

\n\n

\n\n
Measurement of ECL
\n
\n
ECL is calculated as the product of probability of default (PD), estimated exposure at default (EAD) and loss given default
\n
(LGD).
\n
\n
ECL is calculated to reflect:
\n
\u2022 an unbiased, probability-weighted amount;
\n
\u2022 the time value of money; and
\n
\u2022 information about past events, current conditions and forecast economic conditions.
\n
\n
Lifetime ECL represents the sum of ECL over the lifetime of the financial asset discounted at the original effective interest
\n
rate.
\n
The 12-month ECL represents the portion of lifetime ECL resulting from a default in the 12-month period after the reporting
\n
date.
\n
\n
KBC uses specific IFRS 9 models for PD, EAD and LGD in order to calculate ECL. As much as possible and to promote efficiency,
\n
KBC uses modelling techniques similar to those developed for prudential purposes (i.e. Basel models). More information on
\n
the credit risk models developed by KBC is provided in the \u2018Internal Modelling\u2019 section of the Risk Report at www.kbc.com.
\n
.That said, KBC ensures that the Basel models are adapted so they comply with IFRS 9.
\n
\u2022 KBC removes the conservatism that is required by the regulator for Basel models;
\n
\u2022 KBC adjusts how macroeconomic parameters affect the outcome to ensure that the IFRS 9 models reflect a \u2018point-in-time\u2019
\n
estimate rather than one that is \u2018through the cycle\u2019 (as required by the regulator);
\n
\u2022 KBC applies forward-looking macroeconomic information in the models.
\n
\n
As regards loans that are in default, the ECL is also calculated as the product of the PD, EAD and LGD. In this specific case,
\n
however, the PD is set at 100%, the EAD is known given the default status and the LGD takes into account the net present
\n
value of the (un)recoverable amount.
\n
\n
KBC uses the IRB and Standardised models to assign the Basel PD, which then serves as input for IFRS 9 ECL calculations and
\n
staging. If there is no Basel PD model with a similar scope to the IFRS 9 model, the long-term observed default rate is used
\n
as the PD for all facilities in the portfolio. For low default portfolios, there may have been no or only a small number of defaults
\n
in the period being considered, in which case the PD is determined based on expert input and external ratings.
\n
\n
KBC considers forward-looking information in the calculation of ECL via macroeconomic variables and based on
\n
management\u2019s assessment of any idiosyncratic events. KBC\u2019s Chief Economist develops three different macroeconomic
\n
scenarios (base-case, up and down) for all the KBC Core Countries and sets a corresponding probability for each scenario.
\n
On a quarterly basis, KBC updates the economic scenarios and attributed weightings to be used for the ECL calculation
\n
according to the input of the Chief Economist. The incorporation of the macroeconomic variables included in these scenarios
\n
in the PD, EAD and LGD components of the ECL calculation is based on statistical correlation in historical datasets.
\n
\n
The maximum period for measurement of ECL is the maximum contractual period (including extensions), except for specific
\n
financial assets that include a drawn and an undrawn amount available on demand, and KBC\u2019s contractual ability to request
\n
repayment of the drawn amount and cancel the undrawn commitment does not limit the exposure to credit risk to the
\n
contractual period. Only for such assets can a measurement period extend beyond the contractual period.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n
Purchased or originated credit impaired (POCI) assets
\n
\n
KBC defines POCI assets as financial assets in scope of the IFRS 9 impairment standard that are already defaulted at
\n
origination (i.e. they then meet the definition of default). POCI assets are initially recognised at an amount net of impairment
\n
and are measured at amortised cost using a credit-adjusted effective interest rate. In subsequent periods, any changes to
\n
the lifetime ECL are recognised in the income statement. Favourable changes are recognised as an impairment gain, even if
\n
the lifetime ECL on the reporting date is lower than the lifetime ECL at origination.
\n
\n\n
Significant judgements and uncertainties
\n
\n
Calculating ECL (and the significant increase in credit risk since initial recognition) requires significant judgement of various
\n
aspects, including the borrowers\u2019 financial position and repayment capabilities, the value and recoverability of collateral,
\n
projections and macroeconomic information. KBC applies a neutral, bias-free approach when dealing with uncertainties and
\n
making decisions based on significant judgements.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Hedge accounting
\n
\n
KBC has elected to apply the hedge accounting principles under IAS 39 (EU carve-out version). KBC designates certain
\n
derivatives held for risk management purposes, as well as certain non-derivative financial instruments, as hedging
\n
instruments in qualifying hedging relationships. On initial designation of the hedge, KBC formally documents the relationship
\n
between the hedging instrument(s) and hedged item(s), including the risk management objective and strategy in undertaking
\n
the hedge, together with the method that will be used to assess the effectiveness of the hedging relationship. KBC makes
\n
an assessment, both at inception of the hedge relationship and on an ongoing basis, of whether the hedging instrument(s)
\n
is/are expected to be highly effective in offsetting the changes in the fair value or cashflows of the respective hedged item(s)
\n
during the period for which the hedge is designated, and whether the actual results of each hedge are within a range of
\n
80-125%. KBC makes an assessment for a cashflow hedge of a forecast transaction of whether it is highly probable to occur
\n
and presents an exposure to variations in cashflows that could ultimately affect the income statement.
\n
\n
KBC uses the following hedge accounting techniques: cashflow hedges, fair value micro hedges, fair value hedges for a
\n
portfolio of interest rate risk, and hedges of net investments in foreign operations.
\n
\n
Cashflow hedges: if a derivative is designated as the hedging instrument in a hedge of the variability in cashflows attributable
\n
to a particular risk associated with a recognised asset, liability or highly probable forecast transaction that could affect the
\n
income statement, the effective portion of changes in the fair value of the derivative is recognised in OCI and presented in
\n
the hedging reserve (cashflow hedge) within OCI. Any ineffective portion of changes in the fair value of a derivative is
\n
immediately recognised in the income statement under \u2018Net result from financial instruments at fair value through profit or
\n
loss\u2019. The amount recognised in OCI is reclassified to the income statement (as a reclassification adjustment in the same
\n
period as the hedged cashflows affect the income statement) under \u2018Net interest income\u2019. If the hedging derivative expires
\n
or is sold, terminated or exercised, or the hedge no longer meets the criteria for cashflow hedge accounting, or the hedge
\n
designation is revoked, then hedge accounting is discontinued prospectively. Any cumulative gain or loss existing in OCI at
\n
that time remains in OCI and is recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019
\n
when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer
\n
expected to occur, the cumulative gain or loss that was reported in OCI is immediately recycled to the income statement
\n
under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\n
Fair value micro hedging: when a derivative is designated as the hedging instrument in a hedge of the change in fair value
\n
of a recognised asset or liability (portfolio of recognised assets or liabilities) or a firm commitment that could affect the income
\n
statement, changes in the fair value of the derivative are immediately recognised in the income statement together with
\n
changes in the fair value of the hedged item that are attributable to the hedged risk (in the same item in the income
\n
statement as the hedged item). However, accrued interest income from interest rate swaps is recognised in \u2018Net interest
\n
income\u2019. If the hedging derivative expires or is sold, terminated or exercised, or the hedge no longer meets the criteria for fair
\n
value hedge accounting, or the hedge designation is revoked, then hedge accounting is discontinued prospectively. Any
\n
adjustment up to the point of discontinuation that is made to a hedged item for which the effective interest method is used
\n
is amortised to the income statement as part of the recalculated effective interest rate of the item over its remaining life or
\n
recognised directly when the hedged item is derecognised.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Fair value hedges for a portfolio of interest-rate risk (macro hedging): the EU\u2019s macro hedging carve-out means that a group
\n
of derivatives (or proportions of them) can be viewed in combination and jointly designated as a hedging instrument, and
\n
removes some of the limitations on fair value hedge accounting relating to hedging core deposits and underhedging
\n
strategies. Under the EU carve-out, hedge accounting may be applied to core deposits and will be ineffective only when the
\n
revised estimate of the amount of cashflows in scheduled time buckets falls below the designated amount of that bucket.
\n
KBC uses interest rate swaps to hedge the interest rate risk for a portfolio of loans and for a portfolio of retail deposits.
\n
Interest rate swaps are measured at fair value, with fair-value changes being reported in the income statement. Accrued
\n
interest income from interest rate swaps is recognised in \u2018Net Interest Income\u2019. The hedged amount of loans is measured at
\n
fair value as well, with fair value changes being reported in the income statement. The fair value of the hedged amount is
\n
presented as a separate item on the assets or liabilities side of the balance sheet. If a hedge is ineffective, the cumulative
\n
fair value change in the hedged amount will be amortised to the income statement over the remaining lifetime of the hedged
\n
assets or will be immediately removed from the balance sheet if ineffectiveness is due to derecognition of the corresponding
\n
loans.
\n
\n
Hedge of net investments in foreign operations: when a derivative instrument or a non-derivative financial instrument is
\n
designated as the hedging instrument in a hedge of a net investment in a foreign operation having a different functional
\n
currency than the direct holding company of the foreign operation, the effective portion of changes in the fair value of the
\n
hedging instrument is recognised in the hedging reserve (investment in foreign operation) in OCI. Any ineffective portion of
\n
the changes in the fair value of the derivative is recognised immediately in the income statement. The amount recognised in
\n
OCI is reclassified to the income statement as a reclassification adjustment on disposal of the foreign operation (which
\n
includes a dividend distribution or capital decrease).
\n

\n\n

\n\n

\n\n

\n\n

\n
\u2022 We recognise \u2018Net interest income\u2019 in the segment information without dividing it up into \u2018Interest income\u2019 and \u2018Interest
\n
expense\u2019. This is permitted under IFRS because the bulk of the business units\u2019 income is in the form of interest, and
\n
management assesses and co-ordinates those business units primarily on the basis of net interest income.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceCostsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag748": { "value": "\n

\n
Financial assets \u2013 recognition and derecognition
\n
\n
Recognition: financial assets and liabilities are recognised in the balance sheet when KBC becomes party to the contractual
\n
provisions of the instruments. Regular-way purchases or sales of financial assets are recognised using settlement date
\n
accounting. All financial assets \u2013 except those measured at fair value through profit or loss \u2013 are measured initially at fair
\n
value plus transaction costs directly attributable to their acquisition.
\n
\n\n
Derecognition and modification: KBC derecognises a financial asset when the contractual cashflows from the asset expire
\n
or when KBC transfers its rights to receive contractual cashflows from the financial asset in a transaction in which substantially
\n
all the risks and rewards of ownership are transferred. If the terms and conditions change during the term of a financial asset,
\n
KBC assesses whether the new terms are substantially different from the original ones and whether the changes indicate that
\n
the rights to the cashflows from the instrument have expired. If it is concluded that the terms are substantially different, the
\n
transaction is accounted for as a financial asset derecognition, which means that the existing financial asset is removed from
\n
the balance sheet and that a new financial asset is recognised based on the revised terms. Conversely, when KBC assesses
\n
that the terms are not substantially different, the transaction is accounted for as a financial asset modification.
\n

\n\n
\n
Write-offs: KBC writes off the gross carrying value of financial assets (or the part of the gross carrying value) deemed
\n
uncollectable. This means that there is no reasonable expectation that KBC will recover any interest or principal in a timely
\n
manner. The timing of write-offs depends on several factors, including the portfolio, the existence and type of collateral, the
\n
settlement process in each jurisdiction, and local legislation. If a loan is uncollectable, the gross carrying value is written off
\n
directly against the corresponding impairment. Recoveries of amounts previously written off are recognised as reversals of
\n
impairments in the income statement. KBC differentiates between write-offs for financial reporting purposes (which are still
\n
subject to credit enforcement activities) and debt forgiveness. The latter entails the forfeiture of the legal right to recover all
\n
or part of the debt outstanding to the client.
\n
\n
Classification of equity instruments and debt instruments
\n
\n
On initial recognition of a financial asset, KBC first assesses the contractual terms of the instrument in order to classify it as
\n
an equity instrument or a debt instrument. An equity instrument is defined as any contract that evidences a residual interest
\n
in another entity\u2019s net assets. To satisfy this condition, KBC checks that the instrument does not include a contractual
\n
obligation requiring the issuer to deliver cash or exchange financial assets or financial liabilities with another entity under
\n
conditions that are potentially unfavourable to the issuer. Any instruments that do not meet the criteria to qualify as equity
\n
instruments are classified as debt instruments by KBC, with the exception of derivatives.
\n

\n\n
The ECL model is used to measure impairment of financial assets, apart from debt instruments and equity instruments
\n
connected with the insurance business, for which KBC has elected to apply the overlay approach. The impairment policy
\n
applying to these instruments is dealt with under \u2018Overlay approach\u2019 further below.
\n
\n
The scope of the ECL model is based on how financial assets are classified. The model is applicable to the following financial
\n
assets:
\n
\u2022 Financial assets measured at AC and at FVOCI;
\n
\u2022 Loan commitments and financial guarantees;
\n
\u2022 Finance lease receivables;
\n
\u2022 Trade and other receivables.
\n

\n\n
For trade receivables, IFRS 9 allows for a practical expedient. The ECL for trade receivables can be measured in an amount
\n
equal to their lifetime ECL. KBC applies this practical expedient to trade and other receivables.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag734": { "value": "\n
Derecognition and modification: KBC derecognises a financial asset when the contractual cashflows from the asset expire
\n
or when KBC transfers its rights to receive contractual cashflows from the financial asset in a transaction in which substantially
\n
all the risks and rewards of ownership are transferred. If the terms and conditions change during the term of a financial asset,
\n
KBC assesses whether the new terms are substantially different from the original ones and whether the changes indicate that
\n
the rights to the cashflows from the instrument have expired. If it is concluded that the terms are substantially different, the
\n
transaction is accounted for as a financial asset derecognition, which means that the existing financial asset is removed from
\n
the balance sheet and that a new financial asset is recognised based on the revised terms. Conversely, when KBC assesses
\n
that the terms are not substantially different, the transaction is accounted for as a financial asset modification.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerecognitionOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag802": { "value": "\n
Classification and measurement \u2013 debt instruments
\n
\n
If KBC concludes that a financial asset is a debt instrument, then \u2013 upon initial recognition \u2013 it can be classified in one of the
\n
following categories:
\n
\u2022 Measured at fair value through profit or loss (FVPL);
\n
- Mandatorily measured at fair value through profit or loss (MFVPL) \u2013 this category includes held-for-trading instruments
\n
(HFT);
\n
- Designated upon initial recognition at fair value through profit or loss (FVO);
\n
- Measured at fair value through profit or loss \u2013 overlay approach (FVPL \u2013 overlay);
\n
\u2022 Measured at fair value through other comprehensive income (FVOCI);
\n
\u2022 Measured at amortised cost (AC).
\n
\n
Debt instruments have to be classified in the FVPL category where (i) they are not held within a business model whose
\n
objective is to hold assets in order to collect contractual cashflows or within a business model whose objective is achieved
\n
by both collecting contractual cashflows and selling financial assets or, alternatively, (ii) they are held within a business model
\n
but, on specified dates, the contractual terms of the instrument give rise to cashflows that are not solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
Furthermore, KBC may in some cases \u2013 on initial recognition \u2013 irrevocably designate a financial asset that otherwise meets
\n
the requirements to be measured at AC or at FVOCI as at fair value (FVO) if doing so eliminates or significantly reduces an
\n
accounting mismatch that would otherwise arise.
\n
\n
A debt instrument is measured at FVOCI only if it meets both of the following conditions and is not designated to be measured
\n
at FVO:
\n
\u2022 the asset is held within a business model whose objective is achieved by both collecting contractual cashflows and selling
\n
financial assets; and
\n
\u2022 the contractual terms of the financial asset give rise on specified dates to cashflows that are solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
A debt instrument is measured at AC only if it meets both of the following conditions and is not designated to be measured
\n
at FVO:
\n
\u2022 the asset is held within a business model whose objective is to hold assets in order to collect contractual cashflows; and
\n
\u2022 the contractual terms of the financial asset give rise on specified dates to cashflows that are solely payments of principal
\n
and interest on the principal amount outstanding.
\n
\n
A debt instrument is categorised as \u2018FVPL \u2013 overlay\u2019 when it is held in respect of a business line that is connected with
\n
contracts in scope of IFRS 4 and if it is measured at fair value through profit or loss by applying IFRS 9, but would not have
\n
been measured at fair value through profit or loss in its entirety in accordance with IAS 39, and it is an instrument for which
\n
KBC has elected to use the overlay approach. More information on this approach is provided under \u2018Overlay approach\u2019
\n
further below.
\n

\n\n

\n\n
Classification and measurement \u2013 equity instruments
\n
\n
Financial equity instruments are classified in one of the following categories:
\n
\u2022 mandatorily measured at fair value through profit or loss (MFVPL) \u2013 only includes equity instruments held for trading (HFT);
\n
\u2022 equity instruments elected to be measured at fair value through other comprehensive income (FVOCI);
\n
\u2022 equity instruments held in an activity connected with the insurance business, which KBC measures at fair value through
\n
profit or loss \u2013 overlay approach (FVPL \u2013 overlay).
\n
\n
KBC can classify equity instruments connected with the insurance business in the \u2018FVPL \u2013 overlay\u2019 category until the effective
\n
date of IFRS 17. Each equity instrument that KBC\u2019s insurance business classifies as \u2018FVPL \u2013 overlay\u2019 must meet both of the
\n
following criteria:
\n
\u2022 it is measured at fair value through profit or loss under IFRS 9, but would not have been measured at fair value through
\n
profit or loss in its entirety under IAS 39; and
\n
\u2022 it is not held in respect of an activity that is unconnected with insurance contracts.
\n
\n
More information on this approach is provided under \u2018Overlay approach\u2019 further below. In the banking business, there is a
\n
rebuttable presumption that all equity instruments are to be regarded as FVOCI if held for neither trading nor a contingent
\n
consideration in a business combination to which IFRS 3 applies. The election to include equity instruments in the FVOCI
\n
category is irrevocable on initial recognition and can be done on an investment-by-investment basis, which is interpreted by
\n
KBC as a share-by-share basis. Equity instruments categorised as FVOCI are subsequently measured at fair value, with all
\n
value changes recognised in other comprehensive income and without any recycling into the income statement, even when
\n
the investment is disposed of. The only exception applies to dividend income, which is recognised in the income statement
\n
under \u2018Dividend income\u2019.
\n

\n\n

\n\n

\n\n

\n\n
Classification and measurement \u2013 derivatives (trading and hedging)
\n
\n
KBC can recognise derivative instruments either for trading purposes or as hedging derivatives. They can be accounted for
\n
as assets or liabilities depending on their current market value.
\n
\n
Trading derivatives
\n
\n
Derivatives are always measured at fair value and KBC draws distinctions as follows:
\n
\u2022 Derivatives that are held with the intent of hedging, but for which hedge accounting cannot be or is not applied (economic
\n
hedges): hedging instruments can be acquired with the intention of economically hedging an external exposure but without
\n
applying hedge accounting. The interest component of these derivatives is recognised under \u2018Net interest income\u2019, while
\n
all other fair value changes are recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\u2022 Derivatives held with no intent of hedging (trading derivatives): KBC entities can also contract derivatives without any
\n
intention to hedge a position economically. Such activity can relate to closing or selling an external position in the near
\n
term or for short-term profit-taking purposes. All fair value changes (including interest) on such derivatives are recognised
\n
under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\n
Hedging derivatives
\n
\n
Hedging derivatives are derivatives that are specifically designated in a hedge relationship. The process for accounting such
\n
derivatives is detailed in \u2018Hedge accounting\u2019.
\n

\n\n

\n\n

\n\n

\n
Financial liabilities \u2013 classification and measurement
\n
\n
KBC classifies recognised financial liabilities in three different categories, as provided for by IFRS 9:
\n\n
\u2022 Financial liabilities held for trading (HFT). Held-for-trading liabilities are those incurred principally for generating a profit
\n
from short-term fluctuations in price or dealer\u2019s margin. A liability also qualifies as a trading liability if it belongs to a portfolio
\n
of financial instruments held for trading separately by the trading desk and for which there is a recent pattern of short-
\n
term profit-taking. Held-for-trading liabilities can include derivatives, short positions in debt and equity instruments, time
\n
deposits and debt certificates. Derivative liabilities are split by KBC into trading and hedging derivatives as in the case of
\n
derivative assets. Initially, held-for-trading liabilities are measured at fair value. At the end of the reporting period,
\n
derivative liabilities are measured at fair value. Fair value adjustments are always recorded in the income statement.
\n

\n\n
\u2022 Financial liabilities designated by the entity as liabilities at fair value through profit or loss upon initial recognition (FVO).
\n
Under IFRS 9, a financial liability or group of financial liabilities can be measured upon initial recognition at fair value,
\n
whereby fair value changes are recognised in the income statement except for fair value changes related to own credit
\n
risk, which are presented separately in OCI. The fair value designation is used by KBC for the following reasons:
\n
- managed on an FV basis: KBC designates a financial liability or a group of financial liabilities at fair value where it is
\n
managed and its performance is evaluated on a fair value basis. It is used to account for (unbundled) deposit
\n
components (i.e. financial liabilities that do not include a discretionary participation feature);
\n
- accounting mismatch: the fair value option can be used when doing so eliminates or significantly reduces a measurement
\n
or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognising gains and losses
\n
on them on different bases;
\n
- hybrid instruments: a financial instrument is regarded as hybrid when it contains one or more embedded derivatives that
\n
are not closely related to the host contract. The fair value option can be used when it is not possible to separate the
\n
non-closely-related embedded derivative from the host contract. In that case the entire hybrid instrument can be
\n
designated at fair value. This means that both the embedded derivative and the host contract are measured at fair
\n
value. KBC uses this option when structured products contain non-closely-related embedded derivatives, in which case
\n
both the host contract and the embedded derivative is measured at fair value.
\n
\u2022 Financial liabilities measured at amortised cost (AC). KBC classifies most of its financial liabilities under this category,
\n
including those used to fund trading activities where no trading intent is present in them (e.g., issued bonds). These financial
\n
liabilities are initially measured at cost, which is the fair value of the consideration received including transaction costs.
\n
Subsequently, they are measured at amortised cost, which is the amount at which the funding liability was initially
\n
recognised minus principal repayments, plus or minus the cumulative amortisation of any difference between that initial
\n
amount and the maturity amount. The difference between the amount made available and the nominal value is recorded
\n
on an accruals basis as an interest expense. Interest expenses accrued but not yet paid are recorded under accruals and
\n
deferrals.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag790": { "value": "\n
Financial assets that are held for trading or whose performance is evaluated on a fair value basis are measured at FVPL,
\n
because they are neither held for collecting contractual cashflows, nor held for both collecting contractual cashflows and
\n
selling financial assets.
\n

\n\n
\u2022 Financial liabilities held for trading (HFT). Held-for-trading liabilities are those incurred principally for generating a profit
\n
from short-term fluctuations in price or dealer\u2019s margin. A liability also qualifies as a trading liability if it belongs to a portfolio
\n
of financial instruments held for trading separately by the trading desk and for which there is a recent pattern of short-
\n
term profit-taking. Held-for-trading liabilities can include derivatives, short positions in debt and equity instruments, time
\n
deposits and debt certificates. Derivative liabilities are split by KBC into trading and hedging derivatives as in the case of
\n
derivative assets. Initially, held-for-trading liabilities are measured at fair value. At the end of the reporting period,
\n
derivative liabilities are measured at fair value. Fair value adjustments are always recorded in the income statement.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradingIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag776": { "value": "\n
Reclassifications
\n
\n
Financial assets are not reclassified subsequent to their initial recognition except in a period after KBC changes its business
\n
model for managing financial assets, which can occur when KBC begins or ceases to perform an activity that is significant to
\n
its operations (e.g., when KBC acquires, disposes of, or terminates a business line). Reclassification takes place from the start
\n
of the reporting period immediately following the change.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForReclassificationOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag745": { "value": "\n
Classification and measurement \u2013 equity instruments
\n
\n
Financial equity instruments are classified in one of the following categories:
\n
\u2022 mandatorily measured at fair value through profit or loss (MFVPL) \u2013 only includes equity instruments held for trading (HFT);
\n
\u2022 equity instruments elected to be measured at fair value through other comprehensive income (FVOCI);
\n
\u2022 equity instruments held in an activity connected with the insurance business, which KBC measures at fair value through
\n
profit or loss \u2013 overlay approach (FVPL \u2013 overlay).
\n
\n
KBC can classify equity instruments connected with the insurance business in the \u2018FVPL \u2013 overlay\u2019 category until the effective
\n
date of IFRS 17. Each equity instrument that KBC\u2019s insurance business classifies as \u2018FVPL \u2013 overlay\u2019 must meet both of the
\n
following criteria:
\n
\u2022 it is measured at fair value through profit or loss under IFRS 9, but would not have been measured at fair value through
\n
profit or loss in its entirety under IAS 39; and
\n
\u2022 it is not held in respect of an activity that is unconnected with insurance contracts.
\n
\n
More information on this approach is provided under \u2018Overlay approach\u2019 further below. In the banking business, there is a
\n
rebuttable presumption that all equity instruments are to be regarded as FVOCI if held for neither trading nor a contingent
\n
consideration in a business combination to which IFRS 3 applies. The election to include equity instruments in the FVOCI
\n
category is irrevocable on initial recognition and can be done on an investment-by-investment basis, which is interpreted by
\n
KBC as a share-by-share basis. Equity instruments categorised as FVOCI are subsequently measured at fair value, with all
\n
value changes recognised in other comprehensive income and without any recycling into the income statement, even when
\n
the investment is disposed of. The only exception applies to dividend income, which is recognised in the income statement
\n
under \u2018Dividend income\u2019.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag767": { "value": "\n

\n\n
Classification and measurement \u2013 derivatives (trading and hedging)
\n
\n
KBC can recognise derivative instruments either for trading purposes or as hedging derivatives. They can be accounted for
\n
as assets or liabilities depending on their current market value.
\n
\n
Trading derivatives
\n
\n
Derivatives are always measured at fair value and KBC draws distinctions as follows:
\n
\u2022 Derivatives that are held with the intent of hedging, but for which hedge accounting cannot be or is not applied (economic
\n
hedges): hedging instruments can be acquired with the intention of economically hedging an external exposure but without
\n
applying hedge accounting. The interest component of these derivatives is recognised under \u2018Net interest income\u2019, while
\n
all other fair value changes are recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\u2022 Derivatives held with no intent of hedging (trading derivatives): KBC entities can also contract derivatives without any
\n
intention to hedge a position economically. Such activity can relate to closing or selling an external position in the near
\n
term or for short-term profit-taking purposes. All fair value changes (including interest) on such derivatives are recognised
\n
under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\n
Hedging derivatives
\n
\n
Hedging derivatives are derivatives that are specifically designated in a hedge relationship. The process for accounting such
\n
derivatives is detailed in \u2018Hedge accounting\u2019.
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag803": { "value": "\n
Classification and measurement \u2013 derivatives (trading and hedging)
\n
\n
KBC can recognise derivative instruments either for trading purposes or as hedging derivatives. They can be accounted for
\n
as assets or liabilities depending on their current market value.
\n
\n
Trading derivatives
\n
\n
Derivatives are always measured at fair value and KBC draws distinctions as follows:
\n
\u2022 Derivatives that are held with the intent of hedging, but for which hedge accounting cannot be or is not applied (economic
\n
hedges): hedging instruments can be acquired with the intention of economically hedging an external exposure but without
\n
applying hedge accounting. The interest component of these derivatives is recognised under \u2018Net interest income\u2019, while
\n
all other fair value changes are recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\u2022 Derivatives held with no intent of hedging (trading derivatives): KBC entities can also contract derivatives without any
\n
intention to hedge a position economically. Such activity can relate to closing or selling an external position in the near
\n
term or for short-term profit-taking purposes. All fair value changes (including interest) on such derivatives are recognised
\n
under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\n
Hedging derivatives
\n
\n
Hedging derivatives are derivatives that are specifically designated in a hedge relationship. The process for accounting such
\n
derivatives is detailed in \u2018Hedge accounting\u2019.
\n

\n\n

\n\n

\n\n
Hedge accounting
\n
\n
KBC has elected to apply the hedge accounting principles under IAS 39 (EU carve-out version). KBC designates certain
\n
derivatives held for risk management purposes, as well as certain non-derivative financial instruments, as hedging
\n
instruments in qualifying hedging relationships. On initial designation of the hedge, KBC formally documents the relationship
\n
between the hedging instrument(s) and hedged item(s), including the risk management objective and strategy in undertaking
\n
the hedge, together with the method that will be used to assess the effectiveness of the hedging relationship. KBC makes
\n
an assessment, both at inception of the hedge relationship and on an ongoing basis, of whether the hedging instrument(s)
\n
is/are expected to be highly effective in offsetting the changes in the fair value or cashflows of the respective hedged item(s)
\n
during the period for which the hedge is designated, and whether the actual results of each hedge are within a range of
\n
80-125%. KBC makes an assessment for a cashflow hedge of a forecast transaction of whether it is highly probable to occur
\n
and presents an exposure to variations in cashflows that could ultimately affect the income statement.
\n
\n
KBC uses the following hedge accounting techniques: cashflow hedges, fair value micro hedges, fair value hedges for a
\n
portfolio of interest rate risk, and hedges of net investments in foreign operations.
\n
\n
Cashflow hedges: if a derivative is designated as the hedging instrument in a hedge of the variability in cashflows attributable
\n
to a particular risk associated with a recognised asset, liability or highly probable forecast transaction that could affect the
\n
income statement, the effective portion of changes in the fair value of the derivative is recognised in OCI and presented in
\n
the hedging reserve (cashflow hedge) within OCI. Any ineffective portion of changes in the fair value of a derivative is
\n
immediately recognised in the income statement under \u2018Net result from financial instruments at fair value through profit or
\n
loss\u2019. The amount recognised in OCI is reclassified to the income statement (as a reclassification adjustment in the same
\n
period as the hedged cashflows affect the income statement) under \u2018Net interest income\u2019. If the hedging derivative expires
\n
or is sold, terminated or exercised, or the hedge no longer meets the criteria for cashflow hedge accounting, or the hedge
\n
designation is revoked, then hedge accounting is discontinued prospectively. Any cumulative gain or loss existing in OCI at
\n
that time remains in OCI and is recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019
\n
when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer
\n
expected to occur, the cumulative gain or loss that was reported in OCI is immediately recycled to the income statement
\n
under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\n
Fair value micro hedging: when a derivative is designated as the hedging instrument in a hedge of the change in fair value
\n
of a recognised asset or liability (portfolio of recognised assets or liabilities) or a firm commitment that could affect the income
\n
statement, changes in the fair value of the derivative are immediately recognised in the income statement together with
\n
changes in the fair value of the hedged item that are attributable to the hedged risk (in the same item in the income
\n
statement as the hedged item). However, accrued interest income from interest rate swaps is recognised in \u2018Net interest
\n
income\u2019. If the hedging derivative expires or is sold, terminated or exercised, or the hedge no longer meets the criteria for fair
\n
value hedge accounting, or the hedge designation is revoked, then hedge accounting is discontinued prospectively. Any
\n
adjustment up to the point of discontinuation that is made to a hedged item for which the effective interest method is used
\n
is amortised to the income statement as part of the recalculated effective interest rate of the item over its remaining life or
\n
recognised directly when the hedged item is derecognised.
\n

\n\n

\n\n

\n\n

\n\n

\n\n
Fair value hedges for a portfolio of interest-rate risk (macro hedging): the EU\u2019s macro hedging carve-out means that a group
\n
of derivatives (or proportions of them) can be viewed in combination and jointly designated as a hedging instrument, and
\n
removes some of the limitations on fair value hedge accounting relating to hedging core deposits and underhedging
\n
strategies. Under the EU carve-out, hedge accounting may be applied to core deposits and will be ineffective only when the
\n
revised estimate of the amount of cashflows in scheduled time buckets falls below the designated amount of that bucket.
\n
KBC uses interest rate swaps to hedge the interest rate risk for a portfolio of loans and for a portfolio of retail deposits.
\n
Interest rate swaps are measured at fair value, with fair-value changes being reported in the income statement. Accrued
\n
interest income from interest rate swaps is recognised in \u2018Net Interest Income\u2019. The hedged amount of loans is measured at
\n
fair value as well, with fair value changes being reported in the income statement. The fair value of the hedged amount is
\n
presented as a separate item on the assets or liabilities side of the balance sheet. If a hedge is ineffective, the cumulative
\n
fair value change in the hedged amount will be amortised to the income statement over the remaining lifetime of the hedged
\n
assets or will be immediately removed from the balance sheet if ineffectiveness is due to derecognition of the corresponding
\n
loans.
\n
\n
Hedge of net investments in foreign operations: when a derivative instrument or a non-derivative financial instrument is
\n
designated as the hedging instrument in a hedge of a net investment in a foreign operation having a different functional
\n
currency than the direct holding company of the foreign operation, the effective portion of changes in the fair value of the
\n
hedging instrument is recognised in the hedging reserve (investment in foreign operation) in OCI. Any ineffective portion of
\n
the changes in the fair value of the derivative is recognised immediately in the income statement. The amount recognised in
\n
OCI is reclassified to the income statement as a reclassification adjustment on disposal of the foreign operation (which
\n
includes a dividend distribution or capital decrease).
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag736": { "value": "\n

\n\n

\n
Financial assets \u2013 impairment
\n
\n
Definition of default
\n
\n
KBC defines defaulted financial assets in the same way as the definition for internal risk management purposes and in line
\n
with the guidance and standards of financial industry regulators. A financial asset is considered in default if any of the
\n
following conditions is fulfilled:
\n
\u2022 there is a significant deterioration in creditworthiness;
\n
\u2022 the asset is flagged as non-accrual;
\n
\u2022 the asset is forborne and meets the default criteria in accordance with the internal policies for forbearance (for example,
\n
when an additional forbearance measure is extended to a forborne asset that did not reach default status within two
\n
years of the first forbearance measure being granted, or when a forborne asset becomes more than 30 days past due
\n
within the two-year period);
\n
\u2022 KBC has filed for the borrower\u2019s bankruptcy;
\n
\u2022 the counterparty has filed for bankruptcy or sought similar protection measures;
\n
\u2022 the credit facility granted to the client has been terminated.
\n
\n
KBC applies a backstop for facilities whose status is \u201890 days or more past due\u2019. In this context, a backstop is used as a final
\n
control to ensure that all the assets that should have been designated as defaulted are properly identified.
\n
\n
Expected credit loss model (ECL model) \u2013 general
\n
\n\n
The ECL model is used to measure impairment of financial assets, apart from debt instruments and equity instruments
\n
connected with the insurance business, for which KBC has elected to apply the overlay approach. The impairment policy
\n
applying to these instruments is dealt with under \u2018Overlay approach\u2019 further below.
\n
\n
The scope of the ECL model is based on how financial assets are classified. The model is applicable to the following financial
\n
assets:
\n
\u2022 Financial assets measured at AC and at FVOCI;
\n
\u2022 Loan commitments and financial guarantees;
\n
\u2022 Finance lease receivables;
\n
\u2022 Trade and other receivables.
\n

\n\n
\n
No ECLs are calculated for investments in equity instruments.
\n

\n\n

\n\n

\n\n

\n

\n
Financial assets that are in scope of the ECL model carry impairment in an amount equal to the lifetime ECL if the credit risk
\n
increases significantly after initial recognition. Otherwise, the loss allowance is equal to the 12-month ECL (see below for more
\n
information on the significant increase in credit risk).
\n
\n
To distinguish the various stages with regard to quantifying ECL, KBC uses the internationally accepted terminology for
\n
\u2018Stage 1\u2019, \u2018Stage 2\u2019 and \u2018Stage 3\u2019 financial assets.
\n
Unless they are already credit impaired, all financial assets are classified in \u2018Stage 1\u2019 at the time of initial recognition and 12-
\n
month ECL is recognised. Once a significant increase in credit risk occurs after initial recognition, the asset is moved into
\n
\u2018Stage 2\u2019 and lifetime ECL is recognised. Once an asset meets the definition of default, it is moved into \u2018Stage 3\u2019.
\n\n
For trade receivables, IFRS 9 allows for a practical expedient. The ECL for trade receivables can be measured in an amount
\n
equal to their lifetime ECL. KBC applies this practical expedient to trade and other receivables.
\n

\n\n
Impairment gains and losses on financial assets are recognised under the \u2018Impairment\u2019 heading in the income statement.
\n
Financial assets that are measured at AC are presented in the balance sheet at their net carrying value, which is the gross
\n
carrying value less impairment. Debt instruments measured at FVOCI are presented in the balance sheet at their carrying
\n
value, which is their fair value on the reporting date. The adjustment for the ECL is recognised as a reclassification adjustment
\n
between the income statement and OCI.
\n
\n
Significant increase in credit risk since initial recognition
\n
\n
In accordance with the ECL model, financial assets attract lifetime ECL once their credit risk increases significantly after initial
\n
recognition. Therefore, the assessment of a significant increase in credit risk is important for the staging of financial assets.
\n
The assessment of a significant increase in credit risk is a relative assessment based on the credit risk that was assigned
\n
upon initial recognition. This is a multi-factor assessment and, therefore, KBC has developed a multi-tier approach.
\n
\n
Multi-tier approach (MTA) \u2013 bond portfolio
\n
\n
For the bond portfolio, the MTA consists of three tiers:
\n
\u2022 Low-credit exception: 12-month ECL is always recognised for bonds if they have a low credit risk on the reporting date (i.e.
\n
\u2018Stage 1\u2019). KBC uses this exception for investment grade bonds.
\n
\u2022 Internal rating: [only applicable if the first tier criterion is not met] this is a relative assessment that compares the probability
\n
of default (PD) upon initial recognition to that on the reporting date. KBC does the assessment at facility level for each
\n
reporting period. The relative change in PD that triggers staging is an increase of two PD notches.
\n
\u2022 Management assessment: lastly, management review and assess the significant increase in credit risk for financial assets
\n
at an individual (i.e. counterparty) and portfolio level, when it is concluded that idiosyncratic events are not adequately
\n
captured in the first two tiers of the MTA. Examples of idiosyncratic events are unexpected developments in the
\n
macroeconomic environment (e.g., due to the coronavirus crisis), uncertainties about geopolitical events (e.g., as a result
\n
of the war in Ukraine) and the secondary impact of material defaults (e.g., on the suppliers, clients and employees of a
\n
defaulted company).
\n
\n
If none of these triggers results in a move into \u2018Stage 2\u2019, the bond remains in \u2018Stage 1\u2019. A financial asset is considered as
\n
\u2018Stage 3\u2019 as soon as it meets the definition of default. The MTA is symmetrical, i.e. credit that has been moved into \u2018Stage 2\u2019
\n
or \u2018Stage 3\u2019 can revert to \u2018Stage 1\u2019 or \u2018Stage 2\u2019 if the tier criterion that triggered the migration is not met on a subsequent
\n
reporting date.
\n
\n
Loan portfolio
\n
\n
For the loan portfolio, KBC uses a five-tier approach. This MTA is a waterfall approach (i.e. if assessing the first tier does not
\n
result in a move into \u2018Stage 2\u2019, the second tier is assessed, and so on). In the end, if all tiers are assessed without triggering a
\n
migration to \u2018Stage 2\u2019, the financial asset remains in \u2018Stage 1\u2019.
\n
\u2022 Internal rating: this rating is used as the main criterion for assessing an increase in credit risk. It is a relative assessment that
\n
compares the PD upon initial recognition to that on the reporting date. KBC does the assessment at the level of the facility
\n
(i.e. contract) for each reporting period. The relative change in PD that triggers staging is an increase of two PD notches.
\n
\u2022 Forbearance: forborne financial assets are always considered as \u2018Stage 2\u2019 unless they are already defaulted, in which case
\n
they are moved into \u2018Stage 3\u2019.
\n
\u2022 Days past due: KBC uses the backstop defined in the directive. A financial asset that is more than 30 days past due is
\n
moved into \u2018Stage 2\u2019.
\n
\u2022 Internal rating backstop: KBC uses an absolute level of PD as a backstop for financial assets that have to be moved into
\n
\u2018Stage 2\u2019. This backstop corresponds to the highest PD (i.e. PD 9 based on KBC\u2019s internal rating) before a financial asset is
\n
considered defaulted.
\n
\u2022 Management assessment: lastly, management review and assess the significant increase in credit risk for financial assets
\n
at an individual (i.e. counterparty) and portfolio level, when it is concluded that idiosyncratic events are not adequately
\n
captured in the first four tiers of the MTA (see above for a number of examples).
\n
\n
A financial asset is considered as \u2018Stage 3\u2019 as soon as it meets the definition of default. The MTA is symmetrical, i.e. credit
\n
that has been moved into \u2018Stage 2\u2019 or \u2018Stage 3\u2019 can revert to \u2018Stage 1\u2019 or \u2018Stage 2\u2019 if the tier criterion that triggered the
\n
migration is not met on the reporting date.
\n

\n\n

\n\n

\n\n
Measurement of ECL
\n
\n
ECL is calculated as the product of probability of default (PD), estimated exposure at default (EAD) and loss given default
\n
(LGD).
\n
\n
ECL is calculated to reflect:
\n
\u2022 an unbiased, probability-weighted amount;
\n
\u2022 the time value of money; and
\n
\u2022 information about past events, current conditions and forecast economic conditions.
\n
\n
Lifetime ECL represents the sum of ECL over the lifetime of the financial asset discounted at the original effective interest
\n
rate.
\n
The 12-month ECL represents the portion of lifetime ECL resulting from a default in the 12-month period after the reporting
\n
date.
\n
\n
KBC uses specific IFRS 9 models for PD, EAD and LGD in order to calculate ECL. As much as possible and to promote efficiency,
\n
KBC uses modelling techniques similar to those developed for prudential purposes (i.e. Basel models). More information on
\n
the credit risk models developed by KBC is provided in the \u2018Internal Modelling\u2019 section of the Risk Report at www.kbc.com.
\n
.That said, KBC ensures that the Basel models are adapted so they comply with IFRS 9.
\n
\u2022 KBC removes the conservatism that is required by the regulator for Basel models;
\n
\u2022 KBC adjusts how macroeconomic parameters affect the outcome to ensure that the IFRS 9 models reflect a \u2018point-in-time\u2019
\n
estimate rather than one that is \u2018through the cycle\u2019 (as required by the regulator);
\n
\u2022 KBC applies forward-looking macroeconomic information in the models.
\n
\n
As regards loans that are in default, the ECL is also calculated as the product of the PD, EAD and LGD. In this specific case,
\n
however, the PD is set at 100%, the EAD is known given the default status and the LGD takes into account the net present
\n
value of the (un)recoverable amount.
\n
\n
KBC uses the IRB and Standardised models to assign the Basel PD, which then serves as input for IFRS 9 ECL calculations and
\n
staging. If there is no Basel PD model with a similar scope to the IFRS 9 model, the long-term observed default rate is used
\n
as the PD for all facilities in the portfolio. For low default portfolios, there may have been no or only a small number of defaults
\n
in the period being considered, in which case the PD is determined based on expert input and external ratings.
\n
\n
KBC considers forward-looking information in the calculation of ECL via macroeconomic variables and based on
\n
management\u2019s assessment of any idiosyncratic events. KBC\u2019s Chief Economist develops three different macroeconomic
\n
scenarios (base-case, up and down) for all the KBC Core Countries and sets a corresponding probability for each scenario.
\n
On a quarterly basis, KBC updates the economic scenarios and attributed weightings to be used for the ECL calculation
\n
according to the input of the Chief Economist. The incorporation of the macroeconomic variables included in these scenarios
\n
in the PD, EAD and LGD components of the ECL calculation is based on statistical correlation in historical datasets.
\n
\n
The maximum period for measurement of ECL is the maximum contractual period (including extensions), except for specific
\n
financial assets that include a drawn and an undrawn amount available on demand, and KBC\u2019s contractual ability to request
\n
repayment of the drawn amount and cancel the undrawn commitment does not limit the exposure to credit risk to the
\n
contractual period. Only for such assets can a measurement period extend beyond the contractual period.
\n

\n\n

\n\n

\n\n

\n

\n
Purchased or originated credit impaired (POCI) assets
\n
\n
KBC defines POCI assets as financial assets in scope of the IFRS 9 impairment standard that are already defaulted at
\n
origination (i.e. they then meet the definition of default). POCI assets are initially recognised at an amount net of impairment
\n
and are measured at amortised cost using a credit-adjusted effective interest rate. In subsequent periods, any changes to
\n
the lifetime ECL are recognised in the income statement. Favourable changes are recognised as an impairment gain, even if
\n
the lifetime ECL on the reporting date is lower than the lifetime ECL at origination.
\n
\n\n
Significant judgements and uncertainties
\n
\n
Calculating ECL (and the significant increase in credit risk since initial recognition) requires significant judgement of various
\n
aspects, including the borrowers\u2019 financial position and repayment capabilities, the value and recoverability of collateral,
\n
projections and macroeconomic information. KBC applies a neutral, bias-free approach when dealing with uncertainties and
\n
making decisions based on significant judgements.
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag757": { "value": "\n

\n
Financial assets \u2013 impairment
\n
\n
Definition of default
\n
\n
KBC defines defaulted financial assets in the same way as the definition for internal risk management purposes and in line
\n
with the guidance and standards of financial industry regulators. A financial asset is considered in default if any of the
\n
following conditions is fulfilled:
\n
\u2022 there is a significant deterioration in creditworthiness;
\n
\u2022 the asset is flagged as non-accrual;
\n
\u2022 the asset is forborne and meets the default criteria in accordance with the internal policies for forbearance (for example,
\n
when an additional forbearance measure is extended to a forborne asset that did not reach default status within two
\n
years of the first forbearance measure being granted, or when a forborne asset becomes more than 30 days past due
\n
within the two-year period);
\n
\u2022 KBC has filed for the borrower\u2019s bankruptcy;
\n
\u2022 the counterparty has filed for bankruptcy or sought similar protection measures;
\n
\u2022 the credit facility granted to the client has been terminated.
\n
\n
KBC applies a backstop for facilities whose status is \u201890 days or more past due\u2019. In this context, a backstop is used as a final
\n
control to ensure that all the assets that should have been designated as defaulted are properly identified.
\n
\n
Expected credit loss model (ECL model) \u2013 general
\n
\n\n
The ECL model is used to measure impairment of financial assets, apart from debt instruments and equity instruments
\n
connected with the insurance business, for which KBC has elected to apply the overlay approach. The impairment policy
\n
applying to these instruments is dealt with under \u2018Overlay approach\u2019 further below.
\n
\n
The scope of the ECL model is based on how financial assets are classified. The model is applicable to the following financial
\n
assets:
\n
\u2022 Financial assets measured at AC and at FVOCI;
\n
\u2022 Loan commitments and financial guarantees;
\n
\u2022 Finance lease receivables;
\n
\u2022 Trade and other receivables.
\n

\n\n
\n
No ECLs are calculated for investments in equity instruments.
\n

\n\n

\n

\n
Financial assets that are in scope of the ECL model carry impairment in an amount equal to the lifetime ECL if the credit risk
\n
increases significantly after initial recognition. Otherwise, the loss allowance is equal to the 12-month ECL (see below for more
\n
information on the significant increase in credit risk).
\n
\n
To distinguish the various stages with regard to quantifying ECL, KBC uses the internationally accepted terminology for
\n
\u2018Stage 1\u2019, \u2018Stage 2\u2019 and \u2018Stage 3\u2019 financial assets.
\n
Unless they are already credit impaired, all financial assets are classified in \u2018Stage 1\u2019 at the time of initial recognition and 12-
\n
month ECL is recognised. Once a significant increase in credit risk occurs after initial recognition, the asset is moved into
\n
\u2018Stage 2\u2019 and lifetime ECL is recognised. Once an asset meets the definition of default, it is moved into \u2018Stage 3\u2019.
\n\n
For trade receivables, IFRS 9 allows for a practical expedient. The ECL for trade receivables can be measured in an amount
\n
equal to their lifetime ECL. KBC applies this practical expedient to trade and other receivables.
\n

\n\n
Impairment gains and losses on financial assets are recognised under the \u2018Impairment\u2019 heading in the income statement.
\n
Financial assets that are measured at AC are presented in the balance sheet at their net carrying value, which is the gross
\n
carrying value less impairment. Debt instruments measured at FVOCI are presented in the balance sheet at their carrying
\n
value, which is their fair value on the reporting date. The adjustment for the ECL is recognised as a reclassification adjustment
\n
between the income statement and OCI.
\n
\n
Significant increase in credit risk since initial recognition
\n
\n
In accordance with the ECL model, financial assets attract lifetime ECL once their credit risk increases significantly after initial
\n
recognition. Therefore, the assessment of a significant increase in credit risk is important for the staging of financial assets.
\n
The assessment of a significant increase in credit risk is a relative assessment based on the credit risk that was assigned
\n
upon initial recognition. This is a multi-factor assessment and, therefore, KBC has developed a multi-tier approach.
\n
\n
Multi-tier approach (MTA) \u2013 bond portfolio
\n
\n
For the bond portfolio, the MTA consists of three tiers:
\n
\u2022 Low-credit exception: 12-month ECL is always recognised for bonds if they have a low credit risk on the reporting date (i.e.
\n
\u2018Stage 1\u2019). KBC uses this exception for investment grade bonds.
\n
\u2022 Internal rating: [only applicable if the first tier criterion is not met] this is a relative assessment that compares the probability
\n
of default (PD) upon initial recognition to that on the reporting date. KBC does the assessment at facility level for each
\n
reporting period. The relative change in PD that triggers staging is an increase of two PD notches.
\n
\u2022 Management assessment: lastly, management review and assess the significant increase in credit risk for financial assets
\n
at an individual (i.e. counterparty) and portfolio level, when it is concluded that idiosyncratic events are not adequately
\n
captured in the first two tiers of the MTA. Examples of idiosyncratic events are unexpected developments in the
\n
macroeconomic environment (e.g., due to the coronavirus crisis), uncertainties about geopolitical events (e.g., as a result
\n
of the war in Ukraine) and the secondary impact of material defaults (e.g., on the suppliers, clients and employees of a
\n
defaulted company).
\n
\n
If none of these triggers results in a move into \u2018Stage 2\u2019, the bond remains in \u2018Stage 1\u2019. A financial asset is considered as
\n
\u2018Stage 3\u2019 as soon as it meets the definition of default. The MTA is symmetrical, i.e. credit that has been moved into \u2018Stage 2\u2019
\n
or \u2018Stage 3\u2019 can revert to \u2018Stage 1\u2019 or \u2018Stage 2\u2019 if the tier criterion that triggered the migration is not met on a subsequent
\n
reporting date.
\n
\n
Loan portfolio
\n
\n
For the loan portfolio, KBC uses a five-tier approach. This MTA is a waterfall approach (i.e. if assessing the first tier does not
\n
result in a move into \u2018Stage 2\u2019, the second tier is assessed, and so on). In the end, if all tiers are assessed without triggering a
\n
migration to \u2018Stage 2\u2019, the financial asset remains in \u2018Stage 1\u2019.
\n
\u2022 Internal rating: this rating is used as the main criterion for assessing an increase in credit risk. It is a relative assessment that
\n
compares the PD upon initial recognition to that on the reporting date. KBC does the assessment at the level of the facility
\n
(i.e. contract) for each reporting period. The relative change in PD that triggers staging is an increase of two PD notches.
\n
\u2022 Forbearance: forborne financial assets are always considered as \u2018Stage 2\u2019 unless they are already defaulted, in which case
\n
they are moved into \u2018Stage 3\u2019.
\n
\u2022 Days past due: KBC uses the backstop defined in the directive. A financial asset that is more than 30 days past due is
\n
moved into \u2018Stage 2\u2019.
\n
\u2022 Internal rating backstop: KBC uses an absolute level of PD as a backstop for financial assets that have to be moved into
\n
\u2018Stage 2\u2019. This backstop corresponds to the highest PD (i.e. PD 9 based on KBC\u2019s internal rating) before a financial asset is
\n
considered defaulted.
\n
\u2022 Management assessment: lastly, management review and assess the significant increase in credit risk for financial assets
\n
at an individual (i.e. counterparty) and portfolio level, when it is concluded that idiosyncratic events are not adequately
\n
captured in the first four tiers of the MTA (see above for a number of examples).
\n
\n
A financial asset is considered as \u2018Stage 3\u2019 as soon as it meets the definition of default. The MTA is symmetrical, i.e. credit
\n
that has been moved into \u2018Stage 2\u2019 or \u2018Stage 3\u2019 can revert to \u2018Stage 1\u2019 or \u2018Stage 2\u2019 if the tier criterion that triggered the
\n
migration is not met on the reporting date.
\n

\n\n
Measurement of ECL
\n
\n
ECL is calculated as the product of probability of default (PD), estimated exposure at default (EAD) and loss given default
\n
(LGD).
\n
\n
ECL is calculated to reflect:
\n
\u2022 an unbiased, probability-weighted amount;
\n
\u2022 the time value of money; and
\n
\u2022 information about past events, current conditions and forecast economic conditions.
\n
\n
Lifetime ECL represents the sum of ECL over the lifetime of the financial asset discounted at the original effective interest
\n
rate.
\n
The 12-month ECL represents the portion of lifetime ECL resulting from a default in the 12-month period after the reporting
\n
date.
\n
\n
KBC uses specific IFRS 9 models for PD, EAD and LGD in order to calculate ECL. As much as possible and to promote efficiency,
\n
KBC uses modelling techniques similar to those developed for prudential purposes (i.e. Basel models). More information on
\n
the credit risk models developed by KBC is provided in the \u2018Internal Modelling\u2019 section of the Risk Report at www.kbc.com.
\n
.That said, KBC ensures that the Basel models are adapted so they comply with IFRS 9.
\n
\u2022 KBC removes the conservatism that is required by the regulator for Basel models;
\n
\u2022 KBC adjusts how macroeconomic parameters affect the outcome to ensure that the IFRS 9 models reflect a \u2018point-in-time\u2019
\n
estimate rather than one that is \u2018through the cycle\u2019 (as required by the regulator);
\n
\u2022 KBC applies forward-looking macroeconomic information in the models.
\n
\n
As regards loans that are in default, the ECL is also calculated as the product of the PD, EAD and LGD. In this specific case,
\n
however, the PD is set at 100%, the EAD is known given the default status and the LGD takes into account the net present
\n
value of the (un)recoverable amount.
\n
\n
KBC uses the IRB and Standardised models to assign the Basel PD, which then serves as input for IFRS 9 ECL calculations and
\n
staging. If there is no Basel PD model with a similar scope to the IFRS 9 model, the long-term observed default rate is used
\n
as the PD for all facilities in the portfolio. For low default portfolios, there may have been no or only a small number of defaults
\n
in the period being considered, in which case the PD is determined based on expert input and external ratings.
\n
\n
KBC considers forward-looking information in the calculation of ECL via macroeconomic variables and based on
\n
management\u2019s assessment of any idiosyncratic events. KBC\u2019s Chief Economist develops three different macroeconomic
\n
scenarios (base-case, up and down) for all the KBC Core Countries and sets a corresponding probability for each scenario.
\n
On a quarterly basis, KBC updates the economic scenarios and attributed weightings to be used for the ECL calculation
\n
according to the input of the Chief Economist. The incorporation of the macroeconomic variables included in these scenarios
\n
in the PD, EAD and LGD components of the ECL calculation is based on statistical correlation in historical datasets.
\n
\n
The maximum period for measurement of ECL is the maximum contractual period (including extensions), except for specific
\n
financial assets that include a drawn and an undrawn amount available on demand, and KBC\u2019s contractual ability to request
\n
repayment of the drawn amount and cancel the undrawn commitment does not limit the exposure to credit risk to the
\n
contractual period. Only for such assets can a measurement period extend beyond the contractual period.
\n

\n\n

\n

\n
Purchased or originated credit impaired (POCI) assets
\n
\n
KBC defines POCI assets as financial assets in scope of the IFRS 9 impairment standard that are already defaulted at
\n
origination (i.e. they then meet the definition of default). POCI assets are initially recognised at an amount net of impairment
\n
and are measured at amortised cost using a credit-adjusted effective interest rate. In subsequent periods, any changes to
\n
the lifetime ECL are recognised in the income statement. Favourable changes are recognised as an impairment gain, even if
\n
the lifetime ECL on the reporting date is lower than the lifetime ECL at origination.
\n
\n\n
Significant judgements and uncertainties
\n
\n
Calculating ECL (and the significant increase in credit risk since initial recognition) requires significant judgement of various
\n
aspects, including the borrowers\u2019 financial position and repayment capabilities, the value and recoverability of collateral,
\n
projections and macroeconomic information. KBC applies a neutral, bias-free approach when dealing with uncertainties and
\n
making decisions based on significant judgements.
\n

\n\n

\n\n

\n\n

\n\n
Impairment of non-financial assets
\n
\n
When KBC prepares financial statements, it ensures that the carrying value of the non-financial asset does not exceed the
\n
amount that could be obtained from either using or selling it (\u2018recoverable amount\u2019). Property and equipment, investment
\n
property and software are subject to the impairment review only when there is objective evidence of impairment. Goodwill
\n
and intangible assets with an indefinite useful life are subject to impairment reviews at least annually and also reviewed for
\n
impairment indicators every quarter.
\n
Indications that an impairment loss is required may stem from either an internal source (e.g., the condition of the asset) or an
\n
external source (e.g., new technology or a significant decline in the asset\u2019s market value).
\n
When an impairment indicator is present, KBC reviews the asset\u2019s recoverable amount and the asset is impaired when its
\n
recoverable amount is lower than its carrying value at the reporting date. The recoverable amount is defined as the higher
\n
of the value in use and the fair value less cost to sell.
\n
Value in use is defined as the discounted future cashflows expected to be derived from an asset or a cash-generating unit.
\n
Impairment is borne at individual asset level, but when the individual asset does not generate cash inflows that are largely
\n
independent of those from other assets or groups of assets, the recoverable amount is determined for the so-called \u2018cash-
\n
generating unit\u2019 (CGU) to which the asset or group of assets belongs. In forming the CGUs, KBC applies its own judgement to
\n
define the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows
\n
from other assets or groups of assets. This process mainly applies to goodwill that has been recognised in relation to
\n
acquisitions.
\n
Impairment losses are recognised in the income statement for the period in which they occur. An impairment loss can be
\n
reversed if the condition that triggered it is no longer present, except for goodwill, which can never be reversed. Impairment
\n
gains are recognised in the income statement for the period in which they occur.
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag741": { "value": "\n
Significant judgements and uncertainties
\n
\n
Calculating ECL (and the significant increase in credit risk since initial recognition) requires significant judgement of various
\n
aspects, including the borrowers\u2019 financial position and repayment capabilities, the value and recoverability of collateral,
\n
projections and macroeconomic information. KBC applies a neutral, bias-free approach when dealing with uncertainties and
\n
making decisions based on significant judgements.
\n

\n\n
Technical provisions \u2013 insurance contracts
\n
\n
The technical provisions comprise the estimates at balance sheet date of the liabilities of the company towards insured
\n
persons, beneficiaries and policyholders, including the translation differences on the technical provisions denominated in a
\n
foreign currency.
\n
\n
Provision for unearned premiums and unexpired risk (Non-life)
\n
\n
Provision for unearned premiums (Non-life)
\n
This provision comprises the portion of gross premiums to be allocated to a subsequent period in order to be able to cover
\n
claims, administrative costs and management costs of investments relating to the underlying policies. For the primary
\n
business, the provision for unearned premiums is in principle calculated separately for each contract on a daily basis, based
\n
on the gross premiums. For reinsurance business received, the provision for unearned premiums is calculated for each
\n
contract separately. It is based on information communicated by the ceding undertaking, supplemented by the company\u2019s
\n
own past experience of how risks change over time.
\n
\n
Provision for unexpired risk (Non-life)
\n
This item is an additional provision to supplement the provision for unearned premiums. It is set aside when the estimated
\n
total amount of claims and administrative costs relating to current contracts is expected to be higher in the following period
\n
than total unearned premiums and premiums receivable. For reinsurance business received, the contractual stipulations are
\n
examined and, where appropriate, the underlying provision restated.
\n

\n\n
Life insurance provisions
\n
\n
This provision relates exclusively to life insurance activities, with the exception of the unit-linked life business. It comprises the
\n
actuarially estimated value of KBC\u2019s liabilities and the profit share already awarded, less the actuarially estimated value of
\n
the liabilities of the policyholders. The acquisition costs are not deducted from the provision.
\n
This item also includes the provision for unearned premiums and unexpired risk, the ageing provision, the provisions for
\n
annuities payable but not yet due (including internal claims settlement costs) for supplementary life insurance and the
\n
provisions for retirement and survivorship annuities.
\n
Valuation according to the prospective method is applied to (i) the provision for conventional non-unit-linked life insurance,
\n
(ii) universal non-unit-linked life insurance policies offering a guaranteed rate of interest on future premium payments, and
\n
(iii) the provision for non-statutory benefits for employees in respect of current annuities.
\n
Valuation according to the retrospective method is applied to the provisions for modern non-unit-linked universal life
\n
insurance and to the provision for non-statutory benefits for employees in respect of new supplementary premium payments.
\n
The provision is calculated separately for every insurance contract.
\n
\n
Provision for claims outstanding
\n
\n
For claims reported, the provision is measured separately in each case, taking into account the known facts in the claims file,
\n
on the basis of the amounts still due to the injured parties or beneficiaries, plus external costs of settling claims. Where
\n
benefits have to be paid in the form of an annuity, the amounts to be set aside for that purpose are calculated using
\n
recognised actuarial methods.
\n
For \u2018claims incurred but not reported\u2019 at balance sheet date, an IBNR (Incurred But Not Reported) provision is set aside. In the
\n
primary business, this IBNR provision is based on a lump sum per class of insurance depending upon past experience and the
\n
trend in the insured portfolio. For extraordinary events, additional amounts are added to the IBNR provision.
\n
For \u2018claims incurred but not enough reserved\u2019 at balance sheet date, an IBNER (Incurred But Not Enough Reserved) provision
\n
is set aside if the adequacy procedures demonstrate that the other claims provisions are insufficient to meet future liabilities.
\n
This provision contains amounts for claims which have already been reported but which, for technical reasons, could not yet
\n
be recorded in the claims file.
\n
A provision for the internal cost of settling claims is calculated at a percentage that is based on past experience.
\n
Additional provisions are also constituted as required by law (according to the Royal Decree of 17 November 1994 on the
\n
annual accounts of insurance undertakings), such as supplementary workmen\u2019s compensation provisions in Belgium.
\n

\n\n
Impairment of non-financial assets
\n
\n
When KBC prepares financial statements, it ensures that the carrying value of the non-financial asset does not exceed the
\n
amount that could be obtained from either using or selling it (\u2018recoverable amount\u2019). Property and equipment, investment
\n
property and software are subject to the impairment review only when there is objective evidence of impairment. Goodwill
\n
and intangible assets with an indefinite useful life are subject to impairment reviews at least annually and also reviewed for
\n
impairment indicators every quarter.
\n
Indications that an impairment loss is required may stem from either an internal source (e.g., the condition of the asset) or an
\n
external source (e.g., new technology or a significant decline in the asset\u2019s market value).
\n
When an impairment indicator is present, KBC reviews the asset\u2019s recoverable amount and the asset is impaired when its
\n
recoverable amount is lower than its carrying value at the reporting date. The recoverable amount is defined as the higher
\n
of the value in use and the fair value less cost to sell.
\n
Value in use is defined as the discounted future cashflows expected to be derived from an asset or a cash-generating unit.
\n
Impairment is borne at individual asset level, but when the individual asset does not generate cash inflows that are largely
\n
independent of those from other assets or groups of assets, the recoverable amount is determined for the so-called \u2018cash-
\n
generating unit\u2019 (CGU) to which the asset or group of assets belongs. In forming the CGUs, KBC applies its own judgement to
\n
define the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows
\n
from other assets or groups of assets. This process mainly applies to goodwill that has been recognised in relation to
\n
acquisitions.
\n
Impairment losses are recognised in the income statement for the period in which they occur. An impairment loss can be
\n
reversed if the condition that triggered it is no longer present, except for goodwill, which can never be reversed. Impairment
\n
gains are recognised in the income statement for the period in which they occur.
\n

\n\n
Note 1.3: Critical estimates and significant judgements
\n
\n
When preparing the consolidated financial statements and applying KBC\u2019s accounting policies, management is required to
\n
make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses.
\n
Some degree of uncertainty is inherent in almost all amounts reported. The estimates are based on the experience and
\n
assumptions that KBC\u2019s management believes are reasonable at the time the financial statements are being prepared.
\n
\n
Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods
\n
affected. Significant areas of estimation uncertainty, and critical judgements in applying accounting policies that have the
\n
most significant effect on the amounts recognised in the consolidated financial statements are found in, but not limited to,
\n
notes 1.4, 3.3, 3.7, 3.10, 4.2, 4.4\u20134.8, 5.2, 5.5\u20135.7, 5.9, 6.1 and 6.10.
\n
\n
See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n

\n\n
\u2022 Technical provisions for life insurance are calculated using various assumptions. Judgement is required when making these
\n
assumptions and the assumptions used are based on various internal and external sources of information. At present, IFRS 4
\n
refers extensively to local accounting principles for the recognition of technical provisions. These provisions are generally
\n
calculated using the technical assumptions that were applicable at the inception of the insurance contract and are subject to
\n
liability adequacy tests. The key assumptions are:
\n
- mortality and morbidity rates, which are based on standard mortality tables and adapted where necessary to reflect the
\n
group\u2019s own experience;
\n
- expense assumptions, which are based on current expense levels and expense loadings;
\n
- the discount rate, which is generally equal to the technical interest rate, remains constant throughout the life of the policy,
\n
and in some cases is adjusted to take account of legal requirements and internal policy decisions.
\n
- It should be noted that assumptions may vary depending on the type of life insurance (e.g., conventional versus modern), the
\n
generation of contracts (mainly the time when the contract is entered into and the applicable terms and conditions) and the
\n
country (since we have insurance companies in five of our core markets), making it impossible to quantify these assumptions
\n
for the entire group. This is illustrated by the following two points: (i) The discount rate follows the historical market rate and
\n
since it concerns a life portfolio, most of which has existed for a long time and also has a long maturity, there are considerable
\n
differences within the portfolio. In Belgium alone, discount rates range from 4.75% for the oldest rates to 0.5% and lower for
\n
certain modern products. (ii) In terms of mortality risk, unisex mortality tables are used in Belgium, based on the standard
\n
\u2018MK/FK\u2019 mortality tables for products sold from 2012 on (before 2012, separate mortality tables were used for men and
\n
women). Corrections may still be made to these standard tables, with due consideration being given to the segmentation
\n
criteria of the relevant policies. As a result, the range of mortality tables used is extensive.
\n
\u2022 Assumptions for the technical provisions for claims outstanding are based on past claims experience relating to claim numbers,
\n
claim payments and claims handling costs, and adjusted to take account of such factors as anticipated market experience,
\n
claims inflation and external factors such as court awards and legislation. The technical provision for claims outstanding is
\n
generally not discounted except when long-term obligations and/or annuities (industrial accidents, guaranteed income and
\n
hospitalisation insurance) are involved.
\n
\u2022 In 2022, a reassessment of the confidence level of technical provisions resulted in a release of technical reserves in the Czech
\n
Republic (31 million euros in Life and 10 million euros in Non-Life technical result). In 2021, there were no changes in assumptions
\n
leading to a significant change in the valuation of insurance assets and liabilities.
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag743": { "value": "\n
Overlay approach
\n
\n
In accordance with the amendment to IFRS 4 issued in September 2016, KBC uses the overlay approach to overcome the
\n
temporary consequences of the different effective dates of IFRS 9 and IFRS 17 (replacing IFRS 4). Accordingly, KBC uses the
\n
overlay approach, which means that the extra volatility related to the adoption of IFRS 9 is reclassified from the income
\n
statement to OCI. The reclassified amounts are recognised in the overlay reserve in OCI. The overlay approach is applied to
\n
those financial assets of KBC\u2019s insurance business that are eligible. Eligibility is based on the following criteria:
\n
\u2022 Assets that are measured at FVPL under IFRS 9 that would not have been measured at FVPL in their entirety under IAS 39;
\n
\u2022 All assets except those held in respect of an activity that is unconnected with contracts within the scope of IFRS 4.
\n
A financial asset can be designated under the overlay approach until:
\n
\u2022 the instrument is derecognised;
\n
\u2022 it is no longer held in respect of an activity that is connected with insurance contracts;
\n
\u2022 KBC decides not to apply the overlay approach for that particular instrument at the beginning of any financial year; or
\n
\u2022 the effective date of IFRS 17.
\n
\n
Application of the overlay approach requires certain IAS 39 accounting policies for financial assets to be retained, namely:
\n
\u2022 Impairment of equity instruments: equity instruments held by KBC\u2019s insurance business were typically classified as \u2018available
\n
for sale\u2019 under IAS 39, whereas they are classified as FVPL under IFRS 9. Designation under the overlay approach requires
\n
the application of IAS 39 impairment rules to investments in equity instruments. In using the overlay approach, all fair value
\n
changes are recognised in the overlay reserve but, where the decline is significant compared to acquisition cost (more than
\n
30%) or prolonged (more than one year), the fair value loss is recognised in the income statement. Any further decrease is
\n
also recognised directly in the income statement, whereas increases are recognised in the overlay reserve.
\n
\u2022 Recognition of gains and losses in the income statement upon the disposal of equity instruments: by designating the equity
\n
instruments connected with KBC\u2019s insurance business under the overlay approach upon their sale, the accumulated overlay
\n
reserve in OCI is recycled to the income statement, ensuring the same results as under IAS 39.
\n

\n", "dimensions": { "concept": "kbc:DescriptionOfAccountingPolicyForOverlayApproachExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag770": { "value": "\n
Cash, cash balances with central banks and other demand deposits with credit institutions
\n
\n
\u2018Cash\u2019 comprises cash on hand and demand deposits, e.g., cheques, petty cash and cash balances at central and other
\n
banks.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag777": { "value": "\n

\n\n

\n
Financial liabilities
\n
\n
Financial instruments or their component parts are classified on initial recognition as liabilities or as equity in accordance with
\n
the substance of the contractual arrangements and the definitions of financial liabilities and equity instruments. A financial
\n
instrument is classified as a liability if:
\n
\u2022 KBC has a contractual obligation to deliver cash or another financial asset to the holder or to exchange another financial
\n
instrument with the holder under conditions that are potentially unfavourable to KBC; or
\n
\u2022 KBC has a contractual obligation to settle the financial instrument in a variable number of its own shares.
\n
\n
A financial instrument is classified as an equity instrument when neither condition is met. In that case, it is accounted for in
\n
the way set out under \u2018Equity\u2019.
\n
\n
Financial liabilities \u2013 recognition and derecognition
\n
\n
KBC recognises a financial liability when it becomes party to the contractual provisions of the relevant instrument. This is
\n
typically the date when the consideration in the form of cash or some other financial asset is received. Upon initial recognition,
\n
the financial liability is recognised at fair value less transaction costs directly attributable to issuance of the instrument,
\n
except for financial liabilities at fair value through profit or loss.
\n
\n
Financial liabilities are derecognised when they are extinguished, i.e. the obligation specified in the contract is discharged or
\n
cancelled, or it expires. KBC can also derecognise the financial liability and recognise a new one where an exchange takes
\n
place between KBC and the lenders of the financial liability, each with substantially different terms, or if there are substantial
\n
modifications to the terms of the existing financial liabilities. In assessing whether terms differ, KBC compares the discounted
\n
present value of cashflows under the new terms, including any fees paid net of any fees received and discounted using the
\n
original effective interest rate, and the discounted present value of the remaining cashflows of the original financial liability.
\n
If the difference is 10% or more, KBC derecognises the original financial liability and recognises a new one. Where the
\n
exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are
\n
recognised as part of the gain or loss on the extinguishment.
\n
\n\n

\n
Financial liabilities \u2013 classification and measurement
\n
\n
KBC classifies recognised financial liabilities in three different categories, as provided for by IFRS 9:
\n\n
\u2022 Financial liabilities held for trading (HFT). Held-for-trading liabilities are those incurred principally for generating a profit
\n
from short-term fluctuations in price or dealer\u2019s margin. A liability also qualifies as a trading liability if it belongs to a portfolio
\n
of financial instruments held for trading separately by the trading desk and for which there is a recent pattern of short-
\n
term profit-taking. Held-for-trading liabilities can include derivatives, short positions in debt and equity instruments, time
\n
deposits and debt certificates. Derivative liabilities are split by KBC into trading and hedging derivatives as in the case of
\n
derivative assets. Initially, held-for-trading liabilities are measured at fair value. At the end of the reporting period,
\n
derivative liabilities are measured at fair value. Fair value adjustments are always recorded in the income statement.
\n

\n\n
\u2022 Financial liabilities designated by the entity as liabilities at fair value through profit or loss upon initial recognition (FVO).
\n
Under IFRS 9, a financial liability or group of financial liabilities can be measured upon initial recognition at fair value,
\n
whereby fair value changes are recognised in the income statement except for fair value changes related to own credit
\n
risk, which are presented separately in OCI. The fair value designation is used by KBC for the following reasons:
\n
- managed on an FV basis: KBC designates a financial liability or a group of financial liabilities at fair value where it is
\n
managed and its performance is evaluated on a fair value basis. It is used to account for (unbundled) deposit
\n
components (i.e. financial liabilities that do not include a discretionary participation feature);
\n
- accounting mismatch: the fair value option can be used when doing so eliminates or significantly reduces a measurement
\n
or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognising gains and losses
\n
on them on different bases;
\n
- hybrid instruments: a financial instrument is regarded as hybrid when it contains one or more embedded derivatives that
\n
are not closely related to the host contract. The fair value option can be used when it is not possible to separate the
\n
non-closely-related embedded derivative from the host contract. In that case the entire hybrid instrument can be
\n
designated at fair value. This means that both the embedded derivative and the host contract are measured at fair
\n
value. KBC uses this option when structured products contain non-closely-related embedded derivatives, in which case
\n
both the host contract and the embedded derivative is measured at fair value.
\n
\u2022 Financial liabilities measured at amortised cost (AC). KBC classifies most of its financial liabilities under this category,
\n
including those used to fund trading activities where no trading intent is present in them (e.g., issued bonds). These financial
\n
liabilities are initially measured at cost, which is the fair value of the consideration received including transaction costs.
\n
Subsequently, they are measured at amortised cost, which is the amount at which the funding liability was initially
\n
recognised minus principal repayments, plus or minus the cumulative amortisation of any difference between that initial
\n
amount and the maturity amount. The difference between the amount made available and the nominal value is recorded
\n
on an accruals basis as an interest expense. Interest expenses accrued but not yet paid are recorded under accruals and
\n
deferrals.
\n

\n\n

\n\n

\n\n

\n\n

\n
Financial liabilities \u2013 own credit risk
\n
\n
For financial liabilities designated at fair value, IFRS 9 requires the financial liability to be measured at fair value upon initial
\n
recognition. Any changes in fair value are subsequently recognised in the income statement, except for those relating to own
\n
credit risk, which are presented separately in OCI.
\n
Accordingly, movements in the fair value of the liability are presented in different places: changes in own credit risk are
\n
presented in OCI and all other fair value changes are presented in the income statement under \u2018Net result from financial
\n
instruments at fair value through profit or loss\u2019. Amounts recognised in OCI relating to own credit risk are not recycled to the
\n
income statement even if the liability is derecognised and the amounts realised. Although recycling is prohibited, KBC does
\n
transfer the amounts in OCI to retained earnings within equity upon derecognition. The only situation in which presentation
\n
of own credit risk in OCI is not applied is where this would create an accounting mismatch in the income statement. This could
\n
arise if there is a close economic relationship between the financial liability designated at fair value (for which the own credit
\n
risk is recognised in OCI), while all changes in fair value of the corresponding financial asset are measured and recognised at
\n
fair value through profit or loss. This is the case with unit-linked investment contracts, where changes in fair value of the
\n
liability position are fully offset by the asset position.
\n
\n\n
Financial liabilities \u2013 financial guarantee contract
\n
\n
A financial guarantee contract is one that requires KBC to make specified payments to reimburse holders for losses they incur
\n
because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt
\n
instrument. A financial guarantee contract is initially recognised at fair value and is subsequently measured at the higher of
\n
(a) the amount determined in accordance with the impairment provisions of IFRS 9 (see \u2018Financial assets \u2013 impairment\u2019) and
\n
(b) the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with the
\n
revenue recognition principle of IFRS 15.
\n
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag800": { "value": "\n

\n
Financial liabilities
\n
\n
Financial instruments or their component parts are classified on initial recognition as liabilities or as equity in accordance with
\n
the substance of the contractual arrangements and the definitions of financial liabilities and equity instruments. A financial
\n
instrument is classified as a liability if:
\n
\u2022 KBC has a contractual obligation to deliver cash or another financial asset to the holder or to exchange another financial
\n
instrument with the holder under conditions that are potentially unfavourable to KBC; or
\n
\u2022 KBC has a contractual obligation to settle the financial instrument in a variable number of its own shares.
\n
\n
A financial instrument is classified as an equity instrument when neither condition is met. In that case, it is accounted for in
\n
the way set out under \u2018Equity\u2019.
\n
\n
Financial liabilities \u2013 recognition and derecognition
\n
\n
KBC recognises a financial liability when it becomes party to the contractual provisions of the relevant instrument. This is
\n
typically the date when the consideration in the form of cash or some other financial asset is received. Upon initial recognition,
\n
the financial liability is recognised at fair value less transaction costs directly attributable to issuance of the instrument,
\n
except for financial liabilities at fair value through profit or loss.
\n
\n
Financial liabilities are derecognised when they are extinguished, i.e. the obligation specified in the contract is discharged or
\n
cancelled, or it expires. KBC can also derecognise the financial liability and recognise a new one where an exchange takes
\n
place between KBC and the lenders of the financial liability, each with substantially different terms, or if there are substantial
\n
modifications to the terms of the existing financial liabilities. In assessing whether terms differ, KBC compares the discounted
\n
present value of cashflows under the new terms, including any fees paid net of any fees received and discounted using the
\n
original effective interest rate, and the discounted present value of the remaining cashflows of the original financial liability.
\n
If the difference is 10% or more, KBC derecognises the original financial liability and recognises a new one. Where the
\n
exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are
\n
recognised as part of the gain or loss on the extinguishment.
\n
\n\n

\n
Financial liabilities \u2013 classification and measurement
\n
\n
KBC classifies recognised financial liabilities in three different categories, as provided for by IFRS 9:
\n\n
\u2022 Financial liabilities held for trading (HFT). Held-for-trading liabilities are those incurred principally for generating a profit
\n
from short-term fluctuations in price or dealer\u2019s margin. A liability also qualifies as a trading liability if it belongs to a portfolio
\n
of financial instruments held for trading separately by the trading desk and for which there is a recent pattern of short-
\n
term profit-taking. Held-for-trading liabilities can include derivatives, short positions in debt and equity instruments, time
\n
deposits and debt certificates. Derivative liabilities are split by KBC into trading and hedging derivatives as in the case of
\n
derivative assets. Initially, held-for-trading liabilities are measured at fair value. At the end of the reporting period,
\n
derivative liabilities are measured at fair value. Fair value adjustments are always recorded in the income statement.
\n

\n\n
\u2022 Financial liabilities designated by the entity as liabilities at fair value through profit or loss upon initial recognition (FVO).
\n
Under IFRS 9, a financial liability or group of financial liabilities can be measured upon initial recognition at fair value,
\n
whereby fair value changes are recognised in the income statement except for fair value changes related to own credit
\n
risk, which are presented separately in OCI. The fair value designation is used by KBC for the following reasons:
\n
- managed on an FV basis: KBC designates a financial liability or a group of financial liabilities at fair value where it is
\n
managed and its performance is evaluated on a fair value basis. It is used to account for (unbundled) deposit
\n
components (i.e. financial liabilities that do not include a discretionary participation feature);
\n
- accounting mismatch: the fair value option can be used when doing so eliminates or significantly reduces a measurement
\n
or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognising gains and losses
\n
on them on different bases;
\n
- hybrid instruments: a financial instrument is regarded as hybrid when it contains one or more embedded derivatives that
\n
are not closely related to the host contract. The fair value option can be used when it is not possible to separate the
\n
non-closely-related embedded derivative from the host contract. In that case the entire hybrid instrument can be
\n
designated at fair value. This means that both the embedded derivative and the host contract are measured at fair
\n
value. KBC uses this option when structured products contain non-closely-related embedded derivatives, in which case
\n
both the host contract and the embedded derivative is measured at fair value.
\n
\u2022 Financial liabilities measured at amortised cost (AC). KBC classifies most of its financial liabilities under this category,
\n
including those used to fund trading activities where no trading intent is present in them (e.g., issued bonds). These financial
\n
liabilities are initially measured at cost, which is the fair value of the consideration received including transaction costs.
\n
Subsequently, they are measured at amortised cost, which is the amount at which the funding liability was initially
\n
recognised minus principal repayments, plus or minus the cumulative amortisation of any difference between that initial
\n
amount and the maturity amount. The difference between the amount made available and the nominal value is recorded
\n
on an accruals basis as an interest expense. Interest expenses accrued but not yet paid are recorded under accruals and
\n
deferrals.
\n

\n\n

\n\n

\n
Financial liabilities \u2013 own credit risk
\n
\n
For financial liabilities designated at fair value, IFRS 9 requires the financial liability to be measured at fair value upon initial
\n
recognition. Any changes in fair value are subsequently recognised in the income statement, except for those relating to own
\n
credit risk, which are presented separately in OCI.
\n
Accordingly, movements in the fair value of the liability are presented in different places: changes in own credit risk are
\n
presented in OCI and all other fair value changes are presented in the income statement under \u2018Net result from financial
\n
instruments at fair value through profit or loss\u2019. Amounts recognised in OCI relating to own credit risk are not recycled to the
\n
income statement even if the liability is derecognised and the amounts realised. Although recycling is prohibited, KBC does
\n
transfer the amounts in OCI to retained earnings within equity upon derecognition. The only situation in which presentation
\n
of own credit risk in OCI is not applied is where this would create an accounting mismatch in the income statement. This could
\n
arise if there is a close economic relationship between the financial liability designated at fair value (for which the own credit
\n
risk is recognised in OCI), while all changes in fair value of the corresponding financial asset are measured and recognised at
\n
fair value through profit or loss. This is the case with unit-linked investment contracts, where changes in fair value of the
\n
liability position are fully offset by the asset position.
\n
\n\n
Financial liabilities \u2013 financial guarantee contract
\n
\n
A financial guarantee contract is one that requires KBC to make specified payments to reimburse holders for losses they incur
\n
because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt
\n
instrument. A financial guarantee contract is initially recognised at fair value and is subsequently measured at the higher of
\n
(a) the amount determined in accordance with the impairment provisions of IFRS 9 (see \u2018Financial assets \u2013 impairment\u2019) and
\n
(b) the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with the
\n
revenue recognition principle of IFRS 15.
\n
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag784": { "value": "\n
Financial liabilities \u2013 financial guarantee contract
\n
\n
A financial guarantee contract is one that requires KBC to make specified payments to reimburse holders for losses they incur
\n
because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt
\n
instrument. A financial guarantee contract is initially recognised at fair value and is subsequently measured at the higher of
\n
(a) the amount determined in accordance with the impairment provisions of IFRS 9 (see \u2018Financial assets \u2013 impairment\u2019) and
\n
(b) the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with the
\n
revenue recognition principle of IFRS 15.
\n
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialGuaranteesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag752": { "value": "\n
Reverse repos and repos
\n
\n
A reverse repo is a transaction in which KBC purchases a financial asset and simultaneously enters into an agreement to sell
\n
the asset (or a similar asset) at a fixed price on a future date; this agreement is accounted for as a loan or advance, and the
\n
underlying asset is not recognised in the financial statements.
\n
\n
In a repo transaction, KBC sells a security and simultaneously agrees to repurchase it (or a substantially similar asset) at a
\n
fixed price on a future date. KBC continues to recognise the securities in their entirety because it retains substantially all of
\n
the risks and rewards of ownership. The cash consideration received is recognised as a financial asset and the financial
\n
liability is recognised for the obligation to pay the repurchase price.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRepurchaseAndReverseRepurchaseAgreementsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag772": { "value": "\n
Offsetting
\n
\n
KBC offsets and presents only a net amount of a financial asset and financial liability in its balance sheet if and only if (i) it
\n
currently has a legally enforceable right to set off the recognised amounts and (ii) it intends either to settle on a net basis or
\n
to realise the asset and settle the liability simultaneously.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForOffsettingOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag778": { "value": "\n
Fair value
\n
\n
KBC defines \u2018fair value\u2019 as \u2018the price that would be received for sale of an asset or paid to transfer a liability in an orderly
\n
transaction between market participants at the measurement date\u2019. Fair value is not the amount that an entity would receive
\n
or pay in a forced transaction, involuntary liquidation or distress sale. An imbalance between supply and demand (e.g., fewer
\n
buyers than sellers, thereby forcing prices down) is not the same as a forced transaction or distress sale.
\n
\n
Market value adjustments are recognised on all positions that are measured at fair value, with fair value changes being
\n
reported in the income statement or in OCI. They relate to close-out costs, adjustments for less-liquid positions or markets,
\n
mark-to-model-related valuation adjustments, counterparty risk (credit value adjustment) and funding costs:
\n
\u2022 Credit value adjustments (CVAs) are used when measuring derivatives to ensure that their market value is adjusted to
\n
reflect the credit risk of the counterparty. In making this adjustment, both the mark-to-market value of the contract and
\n
its expected future fair value are taken into account. These valuations are weighted based on the counterparty credit risk
\n
that is determined using a quoted credit default swap (CDS) spread, or, if there is no such spread, on the counterparty
\n
credit risk that is derived from bonds whose issuers are similar to the derivative counterparty in terms of rating, sector and
\n
geographical location. A debt value adjustment (DVA) is made for contracts where the counterparty is exposed to KBC. It
\n
is similar to a CVA, but the expected future negative fair value of the contracts is taken into consideration.
\n
\u2022 A funding value adjustment (FVA) is a correction made to the fair value of uncollateralised derivatives in order to ensure
\n
that the (future) funding costs or income attached to entering into and hedging such instruments are factored in when
\n
measuring their value.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag780": { "value": "\n

\n\n
Hedge accounting
\n
\n
KBC has elected to apply the hedge accounting principles under IAS 39 (EU carve-out version). KBC designates certain
\n
derivatives held for risk management purposes, as well as certain non-derivative financial instruments, as hedging
\n
instruments in qualifying hedging relationships. On initial designation of the hedge, KBC formally documents the relationship
\n
between the hedging instrument(s) and hedged item(s), including the risk management objective and strategy in undertaking
\n
the hedge, together with the method that will be used to assess the effectiveness of the hedging relationship. KBC makes
\n
an assessment, both at inception of the hedge relationship and on an ongoing basis, of whether the hedging instrument(s)
\n
is/are expected to be highly effective in offsetting the changes in the fair value or cashflows of the respective hedged item(s)
\n
during the period for which the hedge is designated, and whether the actual results of each hedge are within a range of
\n
80-125%. KBC makes an assessment for a cashflow hedge of a forecast transaction of whether it is highly probable to occur
\n
and presents an exposure to variations in cashflows that could ultimately affect the income statement.
\n
\n
KBC uses the following hedge accounting techniques: cashflow hedges, fair value micro hedges, fair value hedges for a
\n
portfolio of interest rate risk, and hedges of net investments in foreign operations.
\n
\n
Cashflow hedges: if a derivative is designated as the hedging instrument in a hedge of the variability in cashflows attributable
\n
to a particular risk associated with a recognised asset, liability or highly probable forecast transaction that could affect the
\n
income statement, the effective portion of changes in the fair value of the derivative is recognised in OCI and presented in
\n
the hedging reserve (cashflow hedge) within OCI. Any ineffective portion of changes in the fair value of a derivative is
\n
immediately recognised in the income statement under \u2018Net result from financial instruments at fair value through profit or
\n
loss\u2019. The amount recognised in OCI is reclassified to the income statement (as a reclassification adjustment in the same
\n
period as the hedged cashflows affect the income statement) under \u2018Net interest income\u2019. If the hedging derivative expires
\n
or is sold, terminated or exercised, or the hedge no longer meets the criteria for cashflow hedge accounting, or the hedge
\n
designation is revoked, then hedge accounting is discontinued prospectively. Any cumulative gain or loss existing in OCI at
\n
that time remains in OCI and is recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019
\n
when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer
\n
expected to occur, the cumulative gain or loss that was reported in OCI is immediately recycled to the income statement
\n
under \u2018Net result from financial instruments at fair value through profit or loss\u2019.
\n
\n
Fair value micro hedging: when a derivative is designated as the hedging instrument in a hedge of the change in fair value
\n
of a recognised asset or liability (portfolio of recognised assets or liabilities) or a firm commitment that could affect the income
\n
statement, changes in the fair value of the derivative are immediately recognised in the income statement together with
\n
changes in the fair value of the hedged item that are attributable to the hedged risk (in the same item in the income
\n
statement as the hedged item). However, accrued interest income from interest rate swaps is recognised in \u2018Net interest
\n
income\u2019. If the hedging derivative expires or is sold, terminated or exercised, or the hedge no longer meets the criteria for fair
\n
value hedge accounting, or the hedge designation is revoked, then hedge accounting is discontinued prospectively. Any
\n
adjustment up to the point of discontinuation that is made to a hedged item for which the effective interest method is used
\n
is amortised to the income statement as part of the recalculated effective interest rate of the item over its remaining life or
\n
recognised directly when the hedged item is derecognised.
\n

\n\n

\n\n

\n\n
Fair value hedges for a portfolio of interest-rate risk (macro hedging): the EU\u2019s macro hedging carve-out means that a group
\n
of derivatives (or proportions of them) can be viewed in combination and jointly designated as a hedging instrument, and
\n
removes some of the limitations on fair value hedge accounting relating to hedging core deposits and underhedging
\n
strategies. Under the EU carve-out, hedge accounting may be applied to core deposits and will be ineffective only when the
\n
revised estimate of the amount of cashflows in scheduled time buckets falls below the designated amount of that bucket.
\n
KBC uses interest rate swaps to hedge the interest rate risk for a portfolio of loans and for a portfolio of retail deposits.
\n
Interest rate swaps are measured at fair value, with fair-value changes being reported in the income statement. Accrued
\n
interest income from interest rate swaps is recognised in \u2018Net Interest Income\u2019. The hedged amount of loans is measured at
\n
fair value as well, with fair value changes being reported in the income statement. The fair value of the hedged amount is
\n
presented as a separate item on the assets or liabilities side of the balance sheet. If a hedge is ineffective, the cumulative
\n
fair value change in the hedged amount will be amortised to the income statement over the remaining lifetime of the hedged
\n
assets or will be immediately removed from the balance sheet if ineffectiveness is due to derecognition of the corresponding
\n
loans.
\n
\n
Hedge of net investments in foreign operations: when a derivative instrument or a non-derivative financial instrument is
\n
designated as the hedging instrument in a hedge of a net investment in a foreign operation having a different functional
\n
currency than the direct holding company of the foreign operation, the effective portion of changes in the fair value of the
\n
hedging instrument is recognised in the hedging reserve (investment in foreign operation) in OCI. Any ineffective portion of
\n
the changes in the fair value of the derivative is recognised immediately in the income statement. The amount recognised in
\n
OCI is reclassified to the income statement as a reclassification adjustment on disposal of the foreign operation (which
\n
includes a dividend distribution or capital decrease).
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag795": { "value": "\n

\n\n
Insurance contracts
\n
\n
General
\n
\n
The accounting policies for IFRS 4 (Insurance Contracts) apply to insurance contracts (including reinsurance contracts) that
\n
KBC issues and reinsurance contracts that it holds. They also apply to financial instruments with a discretionary participation
\n
feature held by KBC.
\n
A reinsurance contract is a type of insurance contract, given that all reinsurance contracts that transfer insurance risk are
\n
themselves insurance contracts.
\n
Some contracts that are accounted for as insurance contracts under local GAAP will no longer be considered insurance
\n
contracts under IFRS. Contracts that do not expose KBC to any insurance risk (e.g., pure investment without additional
\n
(insurance) benefits/cover) are treated as financial instruments, which can exist with or without a discretionary participation
\n
feature.
\n
Financial instruments without a discretionary participation feature and the deposit component of unit-linked insurance
\n
contracts will be recognised in accordance with deposit accounting principles, as they fall under the scope of IFRS 9.
\n
Deposit accounting applies to the deposit component of unit-linked insurance contracts (the insurance component is treated
\n
as an insurance contract according to IFRS 4).
\n
\n
KBC unbundles the components if both of the following conditions are met:
\n
\u2022 measurement of the deposit component is possible (including any embedded surrender options), i.e. without considering
\n
the insurance component;
\n
\u2022 the accounting policies do not otherwise require recognition of all the obligations and rights arising from deposit
\n
accounting.
\n
\n
Unbundling is prohibited if the deposit component cannot be measured separately.
\n
At KBC, insurance contracts other than unit-linked contracts are not unbundled into a deposit component and an insurance
\n
component. The insurance component of unit-linked contracts (see below), whether insurance contracts or investment
\n
contracts, is treated as an insurance contract. Unit-linked financial instruments without death benefits or a participation
\n
feature are classified as \u2018financial liabilities at fair value through profit or loss\u2019 (also referred to as deposit accounting) under
\n
IFRS 9 and are consequently measured at fair value.
\n
A unit-linked financial instrument classified at fair value through profit or loss represents the liability towards the policyholder,
\n
whose consideration received (i.e. deposit) is invested in an investment fund. The latter is classified as a financial asset
\n
\u2018Mandatorily measured at fair value through profit or loss\u2019 (in the \u2018Investment contracts (insurance)\u2019 line in Note 4.1). The
\n
valuation of the financial assets relating to unit-linked contracts is reflected in the adjustments to the related liabilities. Unit-
\n
linked contracts are policies whose value or return is determined based on investments or an index, and where the
\n
policyholder bears the risk.
\n
Changes in fair value (assets and liabilities), including any component that relates to changes in foreign exchange rates, are
\n
recognised in the income statement under \u2018Net result from financial instrument at fair value through profit or loss\u2019. The unit
\n
value is considered to be the fair value. Only the earned management fees and commissions are recognised using margin
\n
deposit accounting principles under \u2018Net fee and commission income\u2019 in the income statement.
\n

\n\n

\n\n

\n\n

\n
Financial instruments with a discretionary participation and the insurance component of unit-linked contracts are treated as
\n
insurance contracts under IFRS 4. On the balance sheet date, the liabilities resulting from these financial instruments or
\n
insurance contracts are subjected to the liability adequacy test to see if they are adequate. If the carrying value of these
\n
liabilities is lower than their estimated future discounted cashflows, the deficiency will be recognised in the income statement
\n
against an increase in the corresponding liability.
\n
\n
A reinsurance asset is impaired if and only if:
\n
\u2022 there is objective evidence that, as a result of an event occurring after initial recognition of the reinsurance asset, KBC
\n
might not receive all amounts due under the terms of the contract;
\n
\u2022 that event has a reliably measurable impact on the amounts that KBC will receive from the reinsurer. If a reinsurance asset
\n
is impaired, KBC will reduce its carrying value accordingly and recognise that impairment loss in the income statement.
\n
\n
When IFRS 4 was adopted, KBC decided to follow its then local GAAP practices and did not introduce any of the following:
\n
\u2022 measurement of insurance liabilities on an undiscounted basis;
\n
\u2022 non-uniform accounting policies for the insurance contracts of subsidiaries. If these accounting policies are not uniform, an
\n
insurer may change them if the change does not make them more divergent and provided the other requirements of IFRS
\n
4 (Insurance Contracts) are met.
\n
\n
KBC believes that it applies sufficient prudence in the measurement of its insurance contracts. KBC does not recognise any
\n
provisions for possible future claims as a liability if those claims arise under insurance contracts that are not in existence at
\n
the reporting date, such as catastrophe provisions and equalisation provisions.
\n
\n
KBC removes an insurance liability (or part of an insurance liability) from the balance sheet if and only if it is extinguished, i.e.
\n
when the obligation specified in the contract is discharged or cancelled or expires.
\n
\n
Reinsurance assets are not offset against the related insurance liabilities, nor will income or expense from reinsurance
\n
contracts be offset against expense or income from the related insurance contracts.
\n
\n\n
Technical provisions \u2013 insurance contracts
\n
\n
The technical provisions comprise the estimates at balance sheet date of the liabilities of the company towards insured
\n
persons, beneficiaries and policyholders, including the translation differences on the technical provisions denominated in a
\n
foreign currency.
\n
\n
Provision for unearned premiums and unexpired risk (Non-life)
\n
\n
Provision for unearned premiums (Non-life)
\n
This provision comprises the portion of gross premiums to be allocated to a subsequent period in order to be able to cover
\n
claims, administrative costs and management costs of investments relating to the underlying policies. For the primary
\n
business, the provision for unearned premiums is in principle calculated separately for each contract on a daily basis, based
\n
on the gross premiums. For reinsurance business received, the provision for unearned premiums is calculated for each
\n
contract separately. It is based on information communicated by the ceding undertaking, supplemented by the company\u2019s
\n
own past experience of how risks change over time.
\n
\n
Provision for unexpired risk (Non-life)
\n
This item is an additional provision to supplement the provision for unearned premiums. It is set aside when the estimated
\n
total amount of claims and administrative costs relating to current contracts is expected to be higher in the following period
\n
than total unearned premiums and premiums receivable. For reinsurance business received, the contractual stipulations are
\n
examined and, where appropriate, the underlying provision restated.
\n

\n\n

\n\n

\n\n

\n\n

\n\n
Life insurance provisions
\n
\n
This provision relates exclusively to life insurance activities, with the exception of the unit-linked life business. It comprises the
\n
actuarially estimated value of KBC\u2019s liabilities and the profit share already awarded, less the actuarially estimated value of
\n
the liabilities of the policyholders. The acquisition costs are not deducted from the provision.
\n
This item also includes the provision for unearned premiums and unexpired risk, the ageing provision, the provisions for
\n
annuities payable but not yet due (including internal claims settlement costs) for supplementary life insurance and the
\n
provisions for retirement and survivorship annuities.
\n
Valuation according to the prospective method is applied to (i) the provision for conventional non-unit-linked life insurance,
\n
(ii) universal non-unit-linked life insurance policies offering a guaranteed rate of interest on future premium payments, and
\n
(iii) the provision for non-statutory benefits for employees in respect of current annuities.
\n
Valuation according to the retrospective method is applied to the provisions for modern non-unit-linked universal life
\n
insurance and to the provision for non-statutory benefits for employees in respect of new supplementary premium payments.
\n
The provision is calculated separately for every insurance contract.
\n
\n
Provision for claims outstanding
\n
\n
For claims reported, the provision is measured separately in each case, taking into account the known facts in the claims file,
\n
on the basis of the amounts still due to the injured parties or beneficiaries, plus external costs of settling claims. Where
\n
benefits have to be paid in the form of an annuity, the amounts to be set aside for that purpose are calculated using
\n
recognised actuarial methods.
\n
For \u2018claims incurred but not reported\u2019 at balance sheet date, an IBNR (Incurred But Not Reported) provision is set aside. In the
\n
primary business, this IBNR provision is based on a lump sum per class of insurance depending upon past experience and the
\n
trend in the insured portfolio. For extraordinary events, additional amounts are added to the IBNR provision.
\n
For \u2018claims incurred but not enough reserved\u2019 at balance sheet date, an IBNER (Incurred But Not Enough Reserved) provision
\n
is set aside if the adequacy procedures demonstrate that the other claims provisions are insufficient to meet future liabilities.
\n
This provision contains amounts for claims which have already been reported but which, for technical reasons, could not yet
\n
be recorded in the claims file.
\n
A provision for the internal cost of settling claims is calculated at a percentage that is based on past experience.
\n
Additional provisions are also constituted as required by law (according to the Royal Decree of 17 November 1994 on the
\n
annual accounts of insurance undertakings), such as supplementary workmen\u2019s compensation provisions in Belgium.
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInsuranceContracts", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag739": { "value": "\n
Insurance contracts
\n
\n
General
\n
\n
The accounting policies for IFRS 4 (Insurance Contracts) apply to insurance contracts (including reinsurance contracts) that
\n
KBC issues and reinsurance contracts that it holds. They also apply to financial instruments with a discretionary participation
\n
feature held by KBC.
\n
A reinsurance contract is a type of insurance contract, given that all reinsurance contracts that transfer insurance risk are
\n
themselves insurance contracts.
\n
Some contracts that are accounted for as insurance contracts under local GAAP will no longer be considered insurance
\n
contracts under IFRS. Contracts that do not expose KBC to any insurance risk (e.g., pure investment without additional
\n
(insurance) benefits/cover) are treated as financial instruments, which can exist with or without a discretionary participation
\n
feature.
\n
Financial instruments without a discretionary participation feature and the deposit component of unit-linked insurance
\n
contracts will be recognised in accordance with deposit accounting principles, as they fall under the scope of IFRS 9.
\n
Deposit accounting applies to the deposit component of unit-linked insurance contracts (the insurance component is treated
\n
as an insurance contract according to IFRS 4).
\n
\n
KBC unbundles the components if both of the following conditions are met:
\n
\u2022 measurement of the deposit component is possible (including any embedded surrender options), i.e. without considering
\n
the insurance component;
\n
\u2022 the accounting policies do not otherwise require recognition of all the obligations and rights arising from deposit
\n
accounting.
\n
\n
Unbundling is prohibited if the deposit component cannot be measured separately.
\n
At KBC, insurance contracts other than unit-linked contracts are not unbundled into a deposit component and an insurance
\n
component. The insurance component of unit-linked contracts (see below), whether insurance contracts or investment
\n
contracts, is treated as an insurance contract. Unit-linked financial instruments without death benefits or a participation
\n
feature are classified as \u2018financial liabilities at fair value through profit or loss\u2019 (also referred to as deposit accounting) under
\n
IFRS 9 and are consequently measured at fair value.
\n
A unit-linked financial instrument classified at fair value through profit or loss represents the liability towards the policyholder,
\n
whose consideration received (i.e. deposit) is invested in an investment fund. The latter is classified as a financial asset
\n
\u2018Mandatorily measured at fair value through profit or loss\u2019 (in the \u2018Investment contracts (insurance)\u2019 line in Note 4.1). The
\n
valuation of the financial assets relating to unit-linked contracts is reflected in the adjustments to the related liabilities. Unit-
\n
linked contracts are policies whose value or return is determined based on investments or an index, and where the
\n
policyholder bears the risk.
\n
Changes in fair value (assets and liabilities), including any component that relates to changes in foreign exchange rates, are
\n
recognised in the income statement under \u2018Net result from financial instrument at fair value through profit or loss\u2019. The unit
\n
value is considered to be the fair value. Only the earned management fees and commissions are recognised using margin
\n
deposit accounting principles under \u2018Net fee and commission income\u2019 in the income statement.
\n

\n\n

\n
Financial instruments with a discretionary participation and the insurance component of unit-linked contracts are treated as
\n
insurance contracts under IFRS 4. On the balance sheet date, the liabilities resulting from these financial instruments or
\n
insurance contracts are subjected to the liability adequacy test to see if they are adequate. If the carrying value of these
\n
liabilities is lower than their estimated future discounted cashflows, the deficiency will be recognised in the income statement
\n
against an increase in the corresponding liability.
\n
\n
A reinsurance asset is impaired if and only if:
\n
\u2022 there is objective evidence that, as a result of an event occurring after initial recognition of the reinsurance asset, KBC
\n
might not receive all amounts due under the terms of the contract;
\n
\u2022 that event has a reliably measurable impact on the amounts that KBC will receive from the reinsurer. If a reinsurance asset
\n
is impaired, KBC will reduce its carrying value accordingly and recognise that impairment loss in the income statement.
\n
\n
When IFRS 4 was adopted, KBC decided to follow its then local GAAP practices and did not introduce any of the following:
\n
\u2022 measurement of insurance liabilities on an undiscounted basis;
\n
\u2022 non-uniform accounting policies for the insurance contracts of subsidiaries. If these accounting policies are not uniform, an
\n
insurer may change them if the change does not make them more divergent and provided the other requirements of IFRS
\n
4 (Insurance Contracts) are met.
\n
\n
KBC believes that it applies sufficient prudence in the measurement of its insurance contracts. KBC does not recognise any
\n
provisions for possible future claims as a liability if those claims arise under insurance contracts that are not in existence at
\n
the reporting date, such as catastrophe provisions and equalisation provisions.
\n
\n
KBC removes an insurance liability (or part of an insurance liability) from the balance sheet if and only if it is extinguished, i.e.
\n
when the obligation specified in the contract is discharged or cancelled or expires.
\n
\n
Reinsurance assets are not offset against the related insurance liabilities, nor will income or expense from reinsurance
\n
contracts be offset against expense or income from the related insurance contracts.
\n
\n\n
Technical provisions \u2013 insurance contracts
\n
\n
The technical provisions comprise the estimates at balance sheet date of the liabilities of the company towards insured
\n
persons, beneficiaries and policyholders, including the translation differences on the technical provisions denominated in a
\n
foreign currency.
\n
\n
Provision for unearned premiums and unexpired risk (Non-life)
\n
\n
Provision for unearned premiums (Non-life)
\n
This provision comprises the portion of gross premiums to be allocated to a subsequent period in order to be able to cover
\n
claims, administrative costs and management costs of investments relating to the underlying policies. For the primary
\n
business, the provision for unearned premiums is in principle calculated separately for each contract on a daily basis, based
\n
on the gross premiums. For reinsurance business received, the provision for unearned premiums is calculated for each
\n
contract separately. It is based on information communicated by the ceding undertaking, supplemented by the company\u2019s
\n
own past experience of how risks change over time.
\n
\n
Provision for unexpired risk (Non-life)
\n
This item is an additional provision to supplement the provision for unearned premiums. It is set aside when the estimated
\n
total amount of claims and administrative costs relating to current contracts is expected to be higher in the following period
\n
than total unearned premiums and premiums receivable. For reinsurance business received, the contractual stipulations are
\n
examined and, where appropriate, the underlying provision restated.
\n

\n\n

\n\n

\n\n
Life insurance provisions
\n
\n
This provision relates exclusively to life insurance activities, with the exception of the unit-linked life business. It comprises the
\n
actuarially estimated value of KBC\u2019s liabilities and the profit share already awarded, less the actuarially estimated value of
\n
the liabilities of the policyholders. The acquisition costs are not deducted from the provision.
\n
This item also includes the provision for unearned premiums and unexpired risk, the ageing provision, the provisions for
\n
annuities payable but not yet due (including internal claims settlement costs) for supplementary life insurance and the
\n
provisions for retirement and survivorship annuities.
\n
Valuation according to the prospective method is applied to (i) the provision for conventional non-unit-linked life insurance,
\n
(ii) universal non-unit-linked life insurance policies offering a guaranteed rate of interest on future premium payments, and
\n
(iii) the provision for non-statutory benefits for employees in respect of current annuities.
\n
Valuation according to the retrospective method is applied to the provisions for modern non-unit-linked universal life
\n
insurance and to the provision for non-statutory benefits for employees in respect of new supplementary premium payments.
\n
The provision is calculated separately for every insurance contract.
\n
\n
Provision for claims outstanding
\n
\n
For claims reported, the provision is measured separately in each case, taking into account the known facts in the claims file,
\n
on the basis of the amounts still due to the injured parties or beneficiaries, plus external costs of settling claims. Where
\n
benefits have to be paid in the form of an annuity, the amounts to be set aside for that purpose are calculated using
\n
recognised actuarial methods.
\n
For \u2018claims incurred but not reported\u2019 at balance sheet date, an IBNR (Incurred But Not Reported) provision is set aside. In the
\n
primary business, this IBNR provision is based on a lump sum per class of insurance depending upon past experience and the
\n
trend in the insured portfolio. For extraordinary events, additional amounts are added to the IBNR provision.
\n
For \u2018claims incurred but not enough reserved\u2019 at balance sheet date, an IBNER (Incurred But Not Enough Reserved) provision
\n
is set aside if the adequacy procedures demonstrate that the other claims provisions are insufficient to meet future liabilities.
\n
This provision contains amounts for claims which have already been reported but which, for technical reasons, could not yet
\n
be recorded in the claims file.
\n
A provision for the internal cost of settling claims is calculated at a percentage that is based on past experience.
\n
Additional provisions are also constituted as required by law (according to the Royal Decree of 17 November 1994 on the
\n
annual accounts of insurance undertakings), such as supplementary workmen\u2019s compensation provisions in Belgium.
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForReinsuranceExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag747": { "value": "\n
Leasing
\n
\n
All leases are required to be classified as either finance leases or operating leases. The classification under IFRS 16 is based
\n
on the extent to which risk and rewards incidental to ownership of leased assets lie with the lessor or the lessee. A finance
\n
lease transfers substantially all the risks and rewards incidental to ownership of an asset.
\n
This classification is crucial for positions as a lessor, but less important for positions as a lessee, since both classifications
\n
result in similar recognition and measurement of the lease on the balance sheet and in the income statement.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag788": { "value": "\n

\n\n
Equity
\n
\n
Equity represents the residual interest in KBC\u2019s total assets after deduction of all its liabilities (referred to as \u2018net assets\u2019) and
\n
encompasses all shares issued by KBC, reserves attributable to the holders of the shares and minority interests.
\n
\n
KBC classifies all issued financial instruments as equity or as a financial liability based on the substance of the contractual
\n
arrangements. The critical feature that distinguishes a financial liability from a share is whether KBC has an unconditional
\n
right to avoid delivering cash or another financial asset to settle a contractual obligation.
\n
Minority interests represent the equity in a subsidiary that is not attributable to the holders of KBC shares. When the
\n
proportion of the equity held by the minority interests changes, KBC adjusts the carrying value of the controlling and minority
\n
interests to reflect changes in their relative interests in the consolidated companies. KBC recognises in equity any difference
\n
between the amount by which the minority interests are adjusted and the fair value of the consideration paid or received,
\n
and allocates it to its controlling stake.
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIssuedCapitalExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag759": { "value": "\n
Equity
\n
\n
Equity represents the residual interest in KBC\u2019s total assets after deduction of all its liabilities (referred to as \u2018net assets\u2019) and
\n
encompasses all shares issued by KBC, reserves attributable to the holders of the shares and minority interests.
\n
\n
KBC classifies all issued financial instruments as equity or as a financial liability based on the substance of the contractual
\n
arrangements. The critical feature that distinguishes a financial liability from a share is whether KBC has an unconditional
\n
right to avoid delivering cash or another financial asset to settle a contractual obligation.
\n
Minority interests represent the equity in a subsidiary that is not attributable to the holders of KBC shares. When the
\n
proportion of the equity held by the minority interests changes, KBC adjusts the carrying value of the controlling and minority
\n
interests to reflect changes in their relative interests in the consolidated companies. KBC recognises in equity any difference
\n
between the amount by which the minority interests are adjusted and the fair value of the consideration paid or received,
\n
and allocates it to its controlling stake.
\n

\n\n
Business combinations are accounted for using the acquisition method. Under this method, the cost of an acquisition is
\n
measured as the aggregate of the consideration transferred (measured at acquisition-date fair value) and the amount of
\n
any minority interests in the acquired entity. For measurement of the minority interests, KBC can decide for each business
\n
combination separately whether to measure the minority interest at fair value or as their proportionate share of the acquired
\n
entity\u2019s net identifiable assets. The way the minority interest is measured on the acquisition date will have an impact on
\n
purchase accounting as a result of the determination of goodwill.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTransactionsWithNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag760": { "value": "\n

\n\n

\n

\n
Employee benefits
\n
\n\n

\n\n
Short-term employee benefits
\n
\n
Short-term employee benefits, such as salaries, paid absences, performance-related cash awards and social security
\n
contributions, are recognised over the period in which the employees provide the corresponding services. The related
\n
expenses are presented in the income statement as \u2018Operating expenses\u2019 under the \u2018Staff expenses\u2019 heading.
\n

\n\n

\n\n
\n
Post-employment benefits
\n
\n
KBC offers its employees\u2019 pension schemes in the form of defined contribution or defined benefit plans. Under the defined
\n
contribution plans, KBC\u2019s statutory or constructive obligation is limited to the amount that it agrees to contribute to the fund.
\n
The amount of the post-employment benefit to be received by the employee is determined by the amount of the
\n
contributions paid by KBC and the employee him or herself into the post-employment benefit plan, as well as by the
\n
investment returns arising from those contributions. The actuarial risk is borne by the employee.
\n
Conversely, under the defined benefit plans, KBC\u2019s obligation is to provide the agreed benefits to current and former
\n
employees and, in substance, the actuarial risk and investment risk fall on KBC. This means that if, from an actuarial or
\n
investment viewpoint, things turn out worse than expected, KBC\u2019s obligation may be increased.
\n
In Belgium, defined contribution plans have a legally guaranteed minimum return and the actual return can be lower than
\n
the legally required return. In addition, these plans have defined benefit plan features and KBC treats them as defined benefit
\n
plans.
\n
Liabilities under the defined benefit plans and the Belgian defined contribution plans (or pension liabilities) are included under
\n
\u2018Other liabilities\u2019 and relate to the obligations for retirement and survivor\u2019s pensions, early retirement benefits and similar
\n
pensions and annuities.
\n
The pension obligations for employees under the defined benefit plans are calculated using the projected-unit-credit
\n
method, with each period of service granting additional entitlement to pension benefits.
\n
Actuarial valuations are performed every reporting period. The defined benefit liabilities are discounted using rates
\n
equivalent to the yields on high-quality corporate bonds that are denominated in the currency in which the benefits will be
\n
paid and that have a maturity similar to the related pension liabilities.
\n\n
Changes in the net defined benefit liability/asset, apart from cash movements, are grouped into three main categories and
\n
recognised in operating expenses (service costs), interest expenses (net interest costs) and other comprehensive income
\n
(remeasurements).
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag785": { "value": "\n

\n

\n
Employee benefits
\n
\n\n

\n\n
Short-term employee benefits
\n
\n
Short-term employee benefits, such as salaries, paid absences, performance-related cash awards and social security
\n
contributions, are recognised over the period in which the employees provide the corresponding services. The related
\n
expenses are presented in the income statement as \u2018Operating expenses\u2019 under the \u2018Staff expenses\u2019 heading.
\n

\n\n

\n\n
\n
Post-employment benefits
\n
\n
KBC offers its employees\u2019 pension schemes in the form of defined contribution or defined benefit plans. Under the defined
\n
contribution plans, KBC\u2019s statutory or constructive obligation is limited to the amount that it agrees to contribute to the fund.
\n
The amount of the post-employment benefit to be received by the employee is determined by the amount of the
\n
contributions paid by KBC and the employee him or herself into the post-employment benefit plan, as well as by the
\n
investment returns arising from those contributions. The actuarial risk is borne by the employee.
\n
Conversely, under the defined benefit plans, KBC\u2019s obligation is to provide the agreed benefits to current and former
\n
employees and, in substance, the actuarial risk and investment risk fall on KBC. This means that if, from an actuarial or
\n
investment viewpoint, things turn out worse than expected, KBC\u2019s obligation may be increased.
\n
In Belgium, defined contribution plans have a legally guaranteed minimum return and the actual return can be lower than
\n
the legally required return. In addition, these plans have defined benefit plan features and KBC treats them as defined benefit
\n
plans.
\n
Liabilities under the defined benefit plans and the Belgian defined contribution plans (or pension liabilities) are included under
\n
\u2018Other liabilities\u2019 and relate to the obligations for retirement and survivor\u2019s pensions, early retirement benefits and similar
\n
pensions and annuities.
\n
The pension obligations for employees under the defined benefit plans are calculated using the projected-unit-credit
\n
method, with each period of service granting additional entitlement to pension benefits.
\n
Actuarial valuations are performed every reporting period. The defined benefit liabilities are discounted using rates
\n
equivalent to the yields on high-quality corporate bonds that are denominated in the currency in which the benefits will be
\n
paid and that have a maturity similar to the related pension liabilities.
\n\n
Changes in the net defined benefit liability/asset, apart from cash movements, are grouped into three main categories and
\n
recognised in operating expenses (service costs), interest expenses (net interest costs) and other comprehensive income
\n
(remeasurements).
\n

\n\n

\n\n
Provisions, contingent liabilities and contingent assets
\n
\n
Provisions are recognised on the reporting date if and only if the following criteria are met:
\n
\u2022 there is a present obligation (legal or constructive) due to a past event;
\n
\u2022 it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation;
\n
\u2022 a reliable estimate can be made of the amount of the obligation.
\n
\n
The amount recognised as a provision is the best estimate of the expenditure required to settle the obligation at balance
\n
sheet date. When the effect of time is material, the amount recognised as a provision is the net present value of the best
\n
estimate.
\n
Due to its inherent nature, a provision requires management judgement regarding the amount and timing of probable future
\n
economic outflows.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag738": { "value": "\n

\n\n
Short-term employee benefits
\n
\n
Short-term employee benefits, such as salaries, paid absences, performance-related cash awards and social security
\n
contributions, are recognised over the period in which the employees provide the corresponding services. The related
\n
expenses are presented in the income statement as \u2018Operating expenses\u2019 under the \u2018Staff expenses\u2019 heading.
\n

\n\n

\n\n
Changes in the net defined benefit liability/asset, apart from cash movements, are grouped into three main categories and
\n
recognised in operating expenses (service costs), interest expenses (net interest costs) and other comprehensive income
\n
(remeasurements).
\n

\n\n

\n\n
Levies
\n
\n
Public authorities can impose various levies on KBC. The size of the levies can depend on the amount of revenue (mainly
\n
interest income) generated by KBC, the amount of deposits accepted from clients, and the total balance sheet volume,
\n
including corrections based on certain, specific ratios. In accordance with IFRIC 21, levies are recognised when the obligating
\n
event that gives rise to recognition of the liability has occurred as stated in the relevant legislation. Depending on the
\n
obligating event, levies can be recognised at a single point in time or over time. Most of the levies imposed on KBC have to
\n
be recognised at a single point in time, which is mainly the beginning of the financial year. KBC recognises levies under
\n
\u2018Operating expenses\u2019.
\n

\n\n

\nDepreciation charges, impairment losses and gains or losses on disposal are recognised under \u2018Operating expenses\u2019 in theincome statement, with the exception of assets that are leased under operating leases (KBC as a lessor), for which the costsare recognised in \u2018Other net income\u2019.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForExpensesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag801": { "value": "\n
Short-term employee benefits
\n
\n
Short-term employee benefits, such as salaries, paid absences, performance-related cash awards and social security
\n
contributions, are recognised over the period in which the employees provide the corresponding services. The related
\n
expenses are presented in the income statement as \u2018Operating expenses\u2019 under the \u2018Staff expenses\u2019 heading.
\n

\n\n
Levies
\n
\n
Public authorities can impose various levies on KBC. The size of the levies can depend on the amount of revenue (mainly
\n
interest income) generated by KBC, the amount of deposits accepted from clients, and the total balance sheet volume,
\n
including corrections based on certain, specific ratios. In accordance with IFRIC 21, levies are recognised when the obligating
\n
event that gives rise to recognition of the liability has occurred as stated in the relevant legislation. Depending on the
\n
obligating event, levies can be recognised at a single point in time or over time. Most of the levies imposed on KBC have to
\n
be recognised at a single point in time, which is mainly the beginning of the financial year. KBC recognises levies under
\n
\u2018Operating expenses\u2019.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTaxesOtherThanIncomeTaxExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag754": { "value": "\n

\n\n
Net fee and commission income
\n
\n
Most net fee and commission income falls under the scope of IFRS 15 (Revenue from Contracts with Customers), as it relates
\n
to the services that KBC provides to its clients and is outside the scope of other IFRS standards. For the recognition of revenue,
\n
KBC identifies the contract and defines the promises (performance obligations) in the transaction. Revenue is recognised only
\n
when KBC has satisfied the performance obligation.
\n
The revenue presented under \u2018Securities and asset management\u2019 falls under the scope of IFRS 15 and, in principle, entails
\n
KBC keeping assets in a trust for the beneficiary (\u2018fund\u2019) and being responsible for investing the amounts received from clients
\n
to their benefit. These transactions are straightforward, because KBC provides a series of distinct services which clients use
\n
at the same time when receiving the benefits. In return, KBC receives a monthly or quarterly management fee, which is
\n
calculated as a fixed percentage of the net asset value, or a subscription fee retained from the beneficiary. The fees do not
\n
include a variable component.
\n
Revenue reported as \u2018Margin on life insurance investment contracts without DPF\u2019 represents the amount realised on
\n
investment contracts without a discretionary participation feature, i.e. a fixed percentage or fixed amount is withheld from
\n
the client\u2019s payments, enabling the insurance company to cover its expenses.
\n
Payment services, where KBC charges clients for certain current-account transactions, domestic or foreign payments,
\n
payment services provided through ATMs, etc., are usually settled when the actual transaction is carried out, enabling the
\n
relevant fee to be recognised directly at that time.
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFeeAndCommissionIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag750": { "value": "\n
Net fee and commission income
\n
\n
Most net fee and commission income falls under the scope of IFRS 15 (Revenue from Contracts with Customers), as it relates
\n
to the services that KBC provides to its clients and is outside the scope of other IFRS standards. For the recognition of revenue,
\n
KBC identifies the contract and defines the promises (performance obligations) in the transaction. Revenue is recognised only
\n
when KBC has satisfied the performance obligation.
\n
The revenue presented under \u2018Securities and asset management\u2019 falls under the scope of IFRS 15 and, in principle, entails
\n
KBC keeping assets in a trust for the beneficiary (\u2018fund\u2019) and being responsible for investing the amounts received from clients
\n
to their benefit. These transactions are straightforward, because KBC provides a series of distinct services which clients use
\n
at the same time when receiving the benefits. In return, KBC receives a monthly or quarterly management fee, which is
\n
calculated as a fixed percentage of the net asset value, or a subscription fee retained from the beneficiary. The fees do not
\n
include a variable component.
\n
Revenue reported as \u2018Margin on life insurance investment contracts without DPF\u2019 represents the amount realised on
\n
investment contracts without a discretionary participation feature, i.e. a fixed percentage or fixed amount is withheld from
\n
the client\u2019s payments, enabling the insurance company to cover its expenses.
\n
Payment services, where KBC charges clients for certain current-account transactions, domestic or foreign payments,
\n
payment services provided through ATMs, etc., are usually settled when the actual transaction is carried out, enabling the
\n
relevant fee to be recognised directly at that time.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag797": { "value": "\n
Government grants
\n
\n
Government grants are recognised when there is a reasonable assurance that the grant will be received and the conditions
\n
attached to it will be met. The grants are recognised in the income statement on a systematic basis to match the way that
\n
KBC recognises the expenses for which the grants are intended to compensate.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGovernmentGrants", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag781": { "value": "\n

\n
Income tax
\n
\n
Income tax consists of three items, namely taxes paid/payable over the reporting period, underprovisioning/overprovisioning
\n
in previous years, and changes in deferred tax assets/deferred tax liabilities. It is accounted for either in the income
\n
statement or in other comprehensive income, depending on where the items that triggered the tax are recorded. Income
\n
taxes that are initially accounted for in other comprehensive income and that relate to gains or losses that are subsequently
\n
recognised in the income statement are recycled to the income statement in the same period in which that item is accounted
\n
for in the income statement.
\n
\n
Deferred and current tax assets and liabilities are offset when there is both a legal right of offset and the intention to settle
\n
on a net basis or to realise the asset and settle the liability simultaneously.
\n
\n
Current tax assets/liabilities
\n
\n
Current tax for the period is measured at the amount expected to be paid to or recovered from the tax authorities, using the
\n
rates of tax in effect during the reporting period.
\n
\n\n
Deferred tax assets/liabilities
\n
\n
Deferred tax liabilities are recognised for all taxable temporary differences between the carrying value of an asset or liability
\n
and its tax base. They are measured using the tax rates that are substantively enacted at the reporting date and expected
\n
to be in effect on realisation of the assets or settlement of the liabilities to which they relate and that reflect the tax
\n
consequences following from the manner in which the entity expects to recover or settle the carrying value of the underlying
\n
asset or liability at the balance sheet date.
\n
Deferred tax assets are recognised for all deductible temporary differences between the carrying value of assets and
\n
liabilities and their tax base, as well as for the carry forward of unused tax losses and unused tax credits, to the extent that
\n
it is probable that taxable profit will be available against which the deductible temporary differences can be utilised. KBC
\n
calculates deferred tax assets for carry forward unused tax losses. When estimating the period over which tax losses can be
\n
set off against future taxable profits, KBC uses projections for a period of eight to ten years.
\n
Deferred tax assets/liabilities that relate to business combinations are recorded directly in goodwill.
\n
Deferred tax assets/liabilities are not discounted.
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag740": { "value": "\n
Deferred tax assets/liabilities
\n
\n
Deferred tax liabilities are recognised for all taxable temporary differences between the carrying value of an asset or liability
\n
and its tax base. They are measured using the tax rates that are substantively enacted at the reporting date and expected
\n
to be in effect on realisation of the assets or settlement of the liabilities to which they relate and that reflect the tax
\n
consequences following from the manner in which the entity expects to recover or settle the carrying value of the underlying
\n
asset or liability at the balance sheet date.
\n
Deferred tax assets are recognised for all deductible temporary differences between the carrying value of assets and
\n
liabilities and their tax base, as well as for the carry forward of unused tax losses and unused tax credits, to the extent that
\n
it is probable that taxable profit will be available against which the deductible temporary differences can be utilised. KBC
\n
calculates deferred tax assets for carry forward unused tax losses. When estimating the period over which tax losses can be
\n
set off against future taxable profits, KBC uses projections for a period of eight to ten years.
\n
Deferred tax assets/liabilities that relate to business combinations are recorded directly in goodwill.
\n
Deferred tax assets/liabilities are not discounted.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag783": { "value": "\n

\n\n

\n\n
Property and equipment
\n
\n
Property and equipment are recognised initially at cost (including directly allocable acquisition costs). KBC subsequently
\n
measures property and equipment at the initial cost less accumulated depreciation and impairment. The rates of
\n
depreciation are determined on the basis of the estimated useful life of the assets and are applied according to the straight-
\n
line method from the moment the assets are available for use. Property and equipment are derecognised upon disposal or
\n
when the relevant asset is permanently withdrawn from use and no future economic benefits are expected from its disposal.
\n
Gains or losses upon derecognition are recognised in the income statement in the period in which derecognition occurs.
\n
Property and equipment are subject to impairment testing when there is an indication that the asset might have been
\n
impaired.
\n
Depreciation charges, impairment losses and gains or losses on disposal are recognised under \u2018Operating expenses\u2019 in the
\n
income statement, with the exception of assets that are leased under operating leases (KBC as a lessor), for which the costs
\n
are recognised in \u2018Other net income\u2019. Where a disposal falls within the definition of a discontinued operation, the net results
\n
are reported in a single line in the income statement (see \u2018Discontinued operations\u2019 below).
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag771": { "value": "\n

\n\n
Property and equipment
\n
\n
Property and equipment are recognised initially at cost (including directly allocable acquisition costs). KBC subsequently
\n
measures property and equipment at the initial cost less accumulated depreciation and impairment. The rates of
\n
depreciation are determined on the basis of the estimated useful life of the assets and are applied according to the straight-
\n
line method from the moment the assets are available for use. Property and equipment are derecognised upon disposal or
\n
when the relevant asset is permanently withdrawn from use and no future economic benefits are expected from its disposal.
\n
Gains or losses upon derecognition are recognised in the income statement in the period in which derecognition occurs.
\n
Property and equipment are subject to impairment testing when there is an indication that the asset might have been
\n
impaired.
\n
Depreciation charges, impairment losses and gains or losses on disposal are recognised under \u2018Operating expenses\u2019 in the
\n
income statement, with the exception of assets that are leased under operating leases (KBC as a lessor), for which the costs
\n
are recognised in \u2018Other net income\u2019. Where a disposal falls within the definition of a discontinued operation, the net results
\n
are reported in a single line in the income statement (see \u2018Discontinued operations\u2019 below).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Note 5.4: Property and equipment and investment property
\n
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Property and equipment
\n
2 989 3 050
\n
Investment property
\n
571 518
\n
Rental income
\n
50 57
\n
Direct operating expenses from investments generating rental income
\n
15 15
\n
Direct operating expenses from investments not generating rental
\n
income 1 2
\n
MOVEMENTS TABLE
\n
Land and
\n
buildings
\n
IT
\n
equipment
\n
Other
\n
equipment
\n
Total property
\n
and equipment
\n
Investment property
\n
2022
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
1 479 117 1 454 3 050 518
\n
Acquisitions
\n
37 68 470 575 85
\n
Disposals
\n
-30 -1 -204 -235 -13
\n
Depreciation
\n
-120 -60 -25 -205 -31
\n
Other movements
\n
7 6 -209 -196 12
\n
Closing balance
\n
1 373 130 1 486 2 989 571
\n
\n
accumulated depreciation and impairment 1 570 446 876 2 892 376
\n
Fair value
\n
\u2013 \u2013 \u2013 \u2013 827
\n
2021
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
1 561 138 1 437 3 136 555
\n
Acquisitions
\n
113 43 448 603 15
\n
Disposals
\n
-57 -4 -205 -266 -17
\n
Depreciation
\n
-119 -64 -24 -207 -33
\n
Other movements
\n
-19 4 -201 -216 -2
\n
Closing balance
\n
1 479 117 1 454 3 050 518
\n
accumulated depreciation and impairment 1 487 446 832 2 766 412
\n
Fair value
\n
\u2013 \u2013 \u2013 \u2013 792
\n
\n\n
\u2022 Annual rates of depreciation: mainly 3% for buildings (including investment property), 33% for IT equipment, between 5% and
\n
33% for other equipment. No depreciation is charged for land.
\n

\n\n
\u2022 There was a small amount (around 0.4 billion euros) for commitments for the acquisition of property and equipment. There are
\n
no material restrictions on title, or on property and equipment pledged as security for liabilities.
\n
\u2022 Most investment property is valued by an independent expert on a regular basis and by in-house specialists on an annual
\n
basis, based primarily on the capitalisation of the estimated rental value and on unit prices of similar real property. Account is
\n
taken of all the market inputs available on the date of the assessment (including location and market situation, type of building
\n
and construction, state of repair, use, etc.).
\n
\u2022 Certain other investment property is valued annually by in-house specialists based on the current annual rental per building
\n
and expected rental movements and on an individual capitalisation rate per building.
\n
\u2022 The impact of the heavy flooding and other extreme weather conditions in 2022 and 2021 on property and equipment and
\n
investment property (in this case, our branch network) and on the associated impairment was insignificant. For more
\n
information, see \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\u2022 The impact of our own activities as a bank-insurer on the environment is very limited, especially when compared to industrial
\n
companies and our indirect impact through lending and other activities, and stems mainly from our buildings and vehicles
\n
(commuting). We nevertheless also calculate our own direct greenhouse gas impact and apply certain targets in that regard.
\n
See \u2018Focus on climate\u2019 in the \u2018Report of the Board of Directors\u2019 section for a more detailed explanation. More details can also
\n
be found in our Climate Report and our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag793": { "value": "\n
Property and equipment
\n
\n
Property and equipment are recognised initially at cost (including directly allocable acquisition costs). KBC subsequently
\n
measures property and equipment at the initial cost less accumulated depreciation and impairment. The rates of
\n
depreciation are determined on the basis of the estimated useful life of the assets and are applied according to the straight-
\n
line method from the moment the assets are available for use. Property and equipment are derecognised upon disposal or
\n
when the relevant asset is permanently withdrawn from use and no future economic benefits are expected from its disposal.
\n
Gains or losses upon derecognition are recognised in the income statement in the period in which derecognition occurs.
\n
Property and equipment are subject to impairment testing when there is an indication that the asset might have been
\n
impaired.
\n
Depreciation charges, impairment losses and gains or losses on disposal are recognised under \u2018Operating expenses\u2019 in the
\n
income statement, with the exception of assets that are leased under operating leases (KBC as a lessor), for which the costs
\n
are recognised in \u2018Other net income\u2019. Where a disposal falls within the definition of a discontinued operation, the net results
\n
are reported in a single line in the income statement (see \u2018Discontinued operations\u2019 below).
\n

\n\n
Investment property
\n
\n
Investment property is defined as a property built, purchased or acquired by KBC under a finance lease and is held to earn
\n
rentals or for the purpose of capital appreciation rather than being used by KBC for the provision of services or for
\n
administrative purposes.
\n
Investment property is initially recognised at cost (including directly attributable costs). KBC subsequently measures it at the
\n
initial cost less accumulated depreciation and impairment.
\n
The depreciation charge is recognised under \u2018Other net income\u2019 in the income statement.
\n

\n\n
Intangible assets are subsequently carried at cost less accumulated amortisation and accumulated impairment losses.
\n
Amortisation begins when the asset is available for use as intended by management. Software is amortised as follows:
\n
\u2022 System software (initial purchased software forming an integral part with hardware) is amortised at the same rate as
\n
hardware.
\n
\u2022 Standard software and customised software developed by a third party or developed in-house are amortised over five
\n
years according to the straight-line method from the time the software is available for use.
\n
\u2022 Core systems (typically including deposit account processing, loan and credit processing, interfaces to the general ledger
\n
and reporting tools) are amortised over eight years according to the straight-line method.
\n

\n\n
\u2022 Annual rates of depreciation: mainly 3% for buildings (including investment property), 33% for IT equipment, between 5% and
\n
33% for other equipment. No depreciation is charged for land.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag763": { "value": "\n

\n\n
Investment property
\n
\n
Investment property is defined as a property built, purchased or acquired by KBC under a finance lease and is held to earn
\n
rentals or for the purpose of capital appreciation rather than being used by KBC for the provision of services or for
\n
administrative purposes.
\n
Investment property is initially recognised at cost (including directly attributable costs). KBC subsequently measures it at the
\n
initial cost less accumulated depreciation and impairment.
\n
The depreciation charge is recognised under \u2018Other net income\u2019 in the income statement.
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentPropertyExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag787": { "value": "\n

\n\n

\n\n

\n\n

\n\n

\n
Intangible assets
\n
\n
Intangible assets include goodwill, software developed in-house, software developed externally and other intangible assets.
\n
Intangible assets can be (i) acquired as part of a business combination transaction (see \u2018Business combinations and goodwill\u2019
\n
below), (ii) acquired separately or (iii) developed internally.
\n
\n
Separately acquired intangible assets (mainly software developed externally) are initially recognised at cost. Internally
\n
developed intangible assets (mainly software developed in-house) are recognised only if they arise from development and
\n
KBC can demonstrate:
\n
\u2022 the technical feasibility of completing them;
\n
\u2022 an intention to complete for use or sale;
\n
\u2022 an ability to use or sell them;
\n
\u2022 how the intangible assets will generate future economic benefits;
\n
\u2022 the availability of adequate technical, financial and other resources to complete the development and to use or sell the
\n
intangible assets;
\n
\u2022 reliable measurement of the expenditure attributable to the intangible assets during their development.
\n
\n
Internally generated intangible assets are initially measured at the development costs directly attributable to the design and
\n
testing of the unique software controlled by KBC.
\n
Directly attributable costs capitalised as part of the software developed in-house include software development employee
\n
costs and directly attributable overheads.
\n
Research expenses, other development expenditure, costs associated with maintaining software and investment projects
\n
(large-scale projects introducing or replacing an important business objective or model) that do not meet the recognition
\n
criteria are recognised as an expense in the period they are incurred.
\n
\n\n
Intangible assets are subsequently carried at cost less accumulated amortisation and accumulated impairment losses.
\n
Amortisation begins when the asset is available for use as intended by management. Software is amortised as follows:
\n
\u2022 System software (initial purchased software forming an integral part with hardware) is amortised at the same rate as
\n
hardware.
\n
\u2022 Standard software and customised software developed by a third party or developed in-house are amortised over five
\n
years according to the straight-line method from the time the software is available for use.
\n
\u2022 Core systems (typically including deposit account processing, loan and credit processing, interfaces to the general ledger
\n
and reporting tools) are amortised over eight years according to the straight-line method.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n
Goodwill is the excess of the cost of the acquisition over the acquirer\u2019s interest in the fair value of the identifiable assets
\n
acquired and liabilities and contingent liabilities assumed at the date of acquisition. In order to complete the acquisition
\n
accounting and determine the goodwill item, KBC applies a measurement period of 12 months. The classification of the
\n
financial assets acquired and financial liabilities assumed in the business combination is based on the facts and
\n
circumstances existing at the acquisition date (except for lease and insurance contracts, which are classified on the basis of
\n
the contractual terms and other factors at the inception of the relevant contract).
\n
Goodwill is presented under \u2018Goodwill and other intangible assets\u2019 and is carried at cost less impairment losses. Goodwill is
\n
not amortised, but is tested for impairment at least once a year or when there is objective evidence (external or internal) that
\n
it should be impaired. If the acquisition accounting is not complete because the 12-month measurement period has not
\n
elapsed, the goodwill is not considered as final and is only tested if there is objective evidence that the provisional goodwill
\n
is impaired.
\n
For the purpose of testing goodwill for impairment, it is allocated to each of KBC\u2019s cash-generating units that are expected
\n
to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquired entity are
\n
assigned to those units. An impairment loss is recognised if the carrying value of the cash-generating unit to which the
\n
goodwill belongs exceeds its recoverable amount. Impairment losses on goodwill cannot be reversed.
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag731": { "value": "\n

\n\n

\n\n

\n\n

\n
Intangible assets
\n
\n
Intangible assets include goodwill, software developed in-house, software developed externally and other intangible assets.
\n
Intangible assets can be (i) acquired as part of a business combination transaction (see \u2018Business combinations and goodwill\u2019
\n
below), (ii) acquired separately or (iii) developed internally.
\n
\n
Separately acquired intangible assets (mainly software developed externally) are initially recognised at cost. Internally
\n
developed intangible assets (mainly software developed in-house) are recognised only if they arise from development and
\n
KBC can demonstrate:
\n
\u2022 the technical feasibility of completing them;
\n
\u2022 an intention to complete for use or sale;
\n
\u2022 an ability to use or sell them;
\n
\u2022 how the intangible assets will generate future economic benefits;
\n
\u2022 the availability of adequate technical, financial and other resources to complete the development and to use or sell the
\n
intangible assets;
\n
\u2022 reliable measurement of the expenditure attributable to the intangible assets during their development.
\n
\n
Internally generated intangible assets are initially measured at the development costs directly attributable to the design and
\n
testing of the unique software controlled by KBC.
\n
Directly attributable costs capitalised as part of the software developed in-house include software development employee
\n
costs and directly attributable overheads.
\n
Research expenses, other development expenditure, costs associated with maintaining software and investment projects
\n
(large-scale projects introducing or replacing an important business objective or model) that do not meet the recognition
\n
criteria are recognised as an expense in the period they are incurred.
\n
\n\n
Intangible assets are subsequently carried at cost less accumulated amortisation and accumulated impairment losses.
\n
Amortisation begins when the asset is available for use as intended by management. Software is amortised as follows:
\n
\u2022 System software (initial purchased software forming an integral part with hardware) is amortised at the same rate as
\n
hardware.
\n
\u2022 Standard software and customised software developed by a third party or developed in-house are amortised over five
\n
years according to the straight-line method from the time the software is available for use.
\n
\u2022 Core systems (typically including deposit account processing, loan and credit processing, interfaces to the general ledger
\n
and reporting tools) are amortised over eight years according to the straight-line method.
\n

\n\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForResearchAndDevelopmentExpenseExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag766": { "value": "\n

\n\n

\n\n

\n
Intangible assets
\n
\n
Intangible assets include goodwill, software developed in-house, software developed externally and other intangible assets.
\n
Intangible assets can be (i) acquired as part of a business combination transaction (see \u2018Business combinations and goodwill\u2019
\n
below), (ii) acquired separately or (iii) developed internally.
\n
\n
Separately acquired intangible assets (mainly software developed externally) are initially recognised at cost. Internally
\n
developed intangible assets (mainly software developed in-house) are recognised only if they arise from development and
\n
KBC can demonstrate:
\n
\u2022 the technical feasibility of completing them;
\n
\u2022 an intention to complete for use or sale;
\n
\u2022 an ability to use or sell them;
\n
\u2022 how the intangible assets will generate future economic benefits;
\n
\u2022 the availability of adequate technical, financial and other resources to complete the development and to use or sell the
\n
intangible assets;
\n
\u2022 reliable measurement of the expenditure attributable to the intangible assets during their development.
\n
\n
Internally generated intangible assets are initially measured at the development costs directly attributable to the design and
\n
testing of the unique software controlled by KBC.
\n
Directly attributable costs capitalised as part of the software developed in-house include software development employee
\n
costs and directly attributable overheads.
\n
Research expenses, other development expenditure, costs associated with maintaining software and investment projects
\n
(large-scale projects introducing or replacing an important business objective or model) that do not meet the recognition
\n
criteria are recognised as an expense in the period they are incurred.
\n
\n\n
Intangible assets are subsequently carried at cost less accumulated amortisation and accumulated impairment losses.
\n
Amortisation begins when the asset is available for use as intended by management. Software is amortised as follows:
\n
\u2022 System software (initial purchased software forming an integral part with hardware) is amortised at the same rate as
\n
hardware.
\n
\u2022 Standard software and customised software developed by a third party or developed in-house are amortised over five
\n
years according to the straight-line method from the time the software is available for use.
\n
\u2022 Core systems (typically including deposit account processing, loan and credit processing, interfaces to the general ledger
\n
and reporting tools) are amortised over eight years according to the straight-line method.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n
Note 5.5: Goodwill and other intangible assets
\n
\n\n

\n\n
(in millions of EUR)
\n
Goodwill
\n
Software
\n
developed
\n
in-house
\n
Software
\n
developed
\n
externally
\n
Other
\n
Total
\n
2022
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
913 559 263 13 1 749
\n
Acquisitions
\n
438 262 73 9 783
\n
Disposals
\n
0 0 -1 -3 -4
\n
Amortisation
\n
0 -90 -78 -1 -169
\n
Other movements
\n
-6 -12 -8 -2 -28
\n
Closing balance
\n
1 346 719 250 16 2 331
\n
\n
accumulated amortisation and impairment 260 646 836 56 1 797
\n
2021
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
845 386 301 20 1 551
\n
Acquisitions
\n
56 234 84 9 383
\n
Disposals
\n
0 0 -12 -10 -21
\n
Amortisation
\n
0 -62 -85 -2 -149
\n
Other movements
\n
12 1 -24 -3 -14
\n
Closing balance
\n
913 559 263 13 1 749
\n
\n
accumulated amortisation and impairment 255 794 859 53 1 961
\n

\n\n

\n\n
\n\n
\u2022 Goodwill: includes the goodwill paid on companies included in the scope of consolidation and relating to the acquisition of
\n
activities. Goodwill paid on associated companies: included in the nominal value of \u2018Investments in associated companies\u2019
\n
shown on the balance sheet.
\n
\u2022 For goodwill in respect of recent acquisitions, see Note 6.6.
\n
\u2022 Impairment testing: a test was carried out to establish whether impairment on goodwill had to be recognised (see table and
\n
Note 3.10). This impairment test is performed at least once a year. We also carry out a high level assessment on a quarterly
\n
basis to see whether there is an indication of impairment. In the test, each entity is regarded as a separate cash-generating
\n
unit. Each entity has a specific risk profile and it is rare to have different profiles within a single entity.
\n
\u2022 Impairment on goodwill under IAS 36: recognised in profit or loss if the recoverable amount of an investment is lower than its
\n
carrying value. The recoverable amount is defined as the higher of the value in use (calculated based on discounted cashflow
\n
analysis) and the fair value (calculated based on multiple analysis, etc.) less costs to sell.
\n
\u2022 The main group companies to which goodwill relates are listed in the table. All of these companies have been valued using the
\n
discounted cashflow method. The discounted cashflow method calculates the recoverable amount of an investment as the
\n
present value of all future free cashflows of the business. This method is based on long-term projections about the company\u2019s
\n
business and the resulting cashflows (i.e. projections for a number of years ahead and the residual value of the business at the
\n
end of the specific projection period). These long-term projections are the result of an assessment of past and present
\n
performances combined with external sources of information on future performances in the respective markets and the global
\n
macroeconomic environment. Consequently, in cases where sustainability aspects and products/projects have been factored
\n
into the underlying financial projections, this will also affect the valuation. The ultimate growth rate is determined using a long-
\n
term average market growth rate. The present value of these future cashflows is calculated using a compound discount rate
\n
which is based on the capital asset pricing model (CAPM). A country-specific risk-free rate and a market-risk premium
\n
(multiplied by an activity beta) are also used in the calculation. KBC has developed two distinct discounted cashflow models,
\n
viz. a bank model and an insurance model. Free cashflows in both cases are the dividends that can be paid out to the
\n
company\u2019s shareholders, account taken of the minimum capital requirements.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Discount rates throughout the specific period
\n
of cashflow projections
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
K&H Bank
\n
173 188 17.3%-13.3% 11.4%-10.6%
\n
\u010cSOB (Czech Republic)
\n
259 251 13.9%-12.8% 10.6%-8.7%
\n
\u010cSOB Stavebn\u00ed sporitelna
\n
176 171 13.2%-12.8% 10.6%-8.8%
\n
United Bulgarian Bank and Raiffeisenbank Bulgaria
\n
(now KBC Bank Bulgaria)
\n
544 110 12.5%-12.2% 10.6%-9.2%
\n
DZI Insurance
\n
75 75 10.5%-8.1% 8.6%-7.2%
\n
KBC Commercial Finance
\n
21 21 9.9%-9.9% 8.8%-8.7%
\n
Pension Insurance Company UBB
\n
56 56 9.3%-9.1% -
\n
Rest
\n
42 42 \u2013 \u2013
\n
Total
\n
1 346 913 \u2013 \u2013
\n
\n
\u2022 The period to which the cashflow budgets and projections relate is 10 years in most cases. This longer period is used to take
\n
account of current strong growth in the Central and Eastern European countries, where the growth rate is expected to develop
\n
towards a more moderate level in the longer term.
\n
\u2022 The growth rate used to extrapolate the cashflow projections after that period is equal to the expected long-term growth rate
\n
of the gross domestic product. This rate depends on the country and varied between 3.2% and 4.7% in 2022 (between 1.2% and
\n
1.7% in 2021).
\n
\u2022 The discount rates applied have been raised considerably since last year, but on a net basis they only have a limited impact
\n
on valuations given the higher cashflow budgets resulting from improved net interest income.
\n
\u2022 No sensitivity analysis was carried out for entities where the recoverable amount exceeded the carrying value to such a large
\n
extent that no reasonably possible change in the key assumptions would result in the recoverable amount being less than or
\n
equal to the carrying value. The table gives an indication for the other entities of the change in key assumptions that would
\n
lead to their recoverable amount equalling their carrying value.
\n
\n
Change in key assumptions
\n
1
\n
\n
Increase in
\n
discount rate
\n
2
\n
\n
Decrease in
\n
terminal growth
\n
rate
\n
Increase in
\n
targeted solvency
\n
ratio
\n
3
\n
\n
Decrease in
\n
annual net profit
\n
Increase in annual
\n
impairment
\n
charges
\n
\u010cSOB Stavebn\u00ed sporitelna
\n
2.5% 8.0% 6.4% 12% -
\n
United Bulgarian Bank and Raiffeisenbank Bulgaria
\n
(now KBC Bank Bulgaria)
\n
0.6% 4.2% 1.0% 6% 38%
\n
Pension Insurance Company UBB
\n
4.0%
\n
-
\n
-
\n
47%
\n
-
\n
1 Needless to say account should be taken of the fact that a change in these assumptions could affect other assumptions used to calculate the recoverable amount.
\n
2 Based on a parallel shift and absolute increase in the discount rate curve. Discount rates are in the 15.7%-15.3% bracket for \u010cSOB Stavebn\u00ed sporitelna, the 13.1%-12.8% bracket for United
\n
Bulgarian Bank and KBC Bank Bulgaria, and in the 13.3%-13.1% bracket for Pension Insurance Company UBB.
\n
3 Absolute increase in the tier-1 capital ratio.
\n

\n\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag753": { "value": "\n

\n\n

\n
Intangible assets
\n
\n
Intangible assets include goodwill, software developed in-house, software developed externally and other intangible assets.
\n
Intangible assets can be (i) acquired as part of a business combination transaction (see \u2018Business combinations and goodwill\u2019
\n
below), (ii) acquired separately or (iii) developed internally.
\n
\n
Separately acquired intangible assets (mainly software developed externally) are initially recognised at cost. Internally
\n
developed intangible assets (mainly software developed in-house) are recognised only if they arise from development and
\n
KBC can demonstrate:
\n
\u2022 the technical feasibility of completing them;
\n
\u2022 an intention to complete for use or sale;
\n
\u2022 an ability to use or sell them;
\n
\u2022 how the intangible assets will generate future economic benefits;
\n
\u2022 the availability of adequate technical, financial and other resources to complete the development and to use or sell the
\n
intangible assets;
\n
\u2022 reliable measurement of the expenditure attributable to the intangible assets during their development.
\n
\n
Internally generated intangible assets are initially measured at the development costs directly attributable to the design and
\n
testing of the unique software controlled by KBC.
\n
Directly attributable costs capitalised as part of the software developed in-house include software development employee
\n
costs and directly attributable overheads.
\n
Research expenses, other development expenditure, costs associated with maintaining software and investment projects
\n
(large-scale projects introducing or replacing an important business objective or model) that do not meet the recognition
\n
criteria are recognised as an expense in the period they are incurred.
\n
\n\n
Intangible assets are subsequently carried at cost less accumulated amortisation and accumulated impairment losses.
\n
Amortisation begins when the asset is available for use as intended by management. Software is amortised as follows:
\n
\u2022 System software (initial purchased software forming an integral part with hardware) is amortised at the same rate as
\n
hardware.
\n
\u2022 Standard software and customised software developed by a third party or developed in-house are amortised over five
\n
years according to the straight-line method from the time the software is available for use.
\n
\u2022 Core systems (typically including deposit account processing, loan and credit processing, interfaces to the general ledger
\n
and reporting tools) are amortised over eight years according to the straight-line method.
\n

\n\n

\n\n

\n\n
(in millions of EUR)
\n
Goodwill
\n
Software
\n
developed
\n
in-house
\n
Software
\n
developed
\n
externally
\n
Other
\n
Total
\n
2022
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
913 559 263 13 1 749
\n
Acquisitions
\n
438 262 73 9 783
\n
Disposals
\n
0 0 -1 -3 -4
\n
Amortisation
\n
0 -90 -78 -1 -169
\n
Other movements
\n
-6 -12 -8 -2 -28
\n
Closing balance
\n
1 346 719 250 16 2 331
\n
\n
accumulated amortisation and impairment 260 646 836 56 1 797
\n
2021
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
845 386 301 20 1 551
\n
Acquisitions
\n
56 234 84 9 383
\n
Disposals
\n
0 0 -12 -10 -21
\n
Amortisation
\n
0 -62 -85 -2 -149
\n
Other movements
\n
12 1 -24 -3 -14
\n
Closing balance
\n
913 559 263 13 1 749
\n
\n
accumulated amortisation and impairment 255 794 859 53 1 961
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag742": { "value": "\n

\n
Intangible assets
\n
\n
Intangible assets include goodwill, software developed in-house, software developed externally and other intangible assets.
\n
Intangible assets can be (i) acquired as part of a business combination transaction (see \u2018Business combinations and goodwill\u2019
\n
below), (ii) acquired separately or (iii) developed internally.
\n
\n
Separately acquired intangible assets (mainly software developed externally) are initially recognised at cost. Internally
\n
developed intangible assets (mainly software developed in-house) are recognised only if they arise from development and
\n
KBC can demonstrate:
\n
\u2022 the technical feasibility of completing them;
\n
\u2022 an intention to complete for use or sale;
\n
\u2022 an ability to use or sell them;
\n
\u2022 how the intangible assets will generate future economic benefits;
\n
\u2022 the availability of adequate technical, financial and other resources to complete the development and to use or sell the
\n
intangible assets;
\n
\u2022 reliable measurement of the expenditure attributable to the intangible assets during their development.
\n
\n
Internally generated intangible assets are initially measured at the development costs directly attributable to the design and
\n
testing of the unique software controlled by KBC.
\n
Directly attributable costs capitalised as part of the software developed in-house include software development employee
\n
costs and directly attributable overheads.
\n
Research expenses, other development expenditure, costs associated with maintaining software and investment projects
\n
(large-scale projects introducing or replacing an important business objective or model) that do not meet the recognition
\n
criteria are recognised as an expense in the period they are incurred.
\n
\n\n
Intangible assets are subsequently carried at cost less accumulated amortisation and accumulated impairment losses.
\n
Amortisation begins when the asset is available for use as intended by management. Software is amortised as follows:
\n
\u2022 System software (initial purchased software forming an integral part with hardware) is amortised at the same rate as
\n
hardware.
\n
\u2022 Standard software and customised software developed by a third party or developed in-house are amortised over five
\n
years according to the straight-line method from the time the software is available for use.
\n
\u2022 Core systems (typically including deposit account processing, loan and credit processing, interfaces to the general ledger
\n
and reporting tools) are amortised over eight years according to the straight-line method.
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag764": { "value": "\n

\n\n
Impairment of non-financial assets
\n
\n
When KBC prepares financial statements, it ensures that the carrying value of the non-financial asset does not exceed the
\n
amount that could be obtained from either using or selling it (\u2018recoverable amount\u2019). Property and equipment, investment
\n
property and software are subject to the impairment review only when there is objective evidence of impairment. Goodwill
\n
and intangible assets with an indefinite useful life are subject to impairment reviews at least annually and also reviewed for
\n
impairment indicators every quarter.
\n
Indications that an impairment loss is required may stem from either an internal source (e.g., the condition of the asset) or an
\n
external source (e.g., new technology or a significant decline in the asset\u2019s market value).
\n
When an impairment indicator is present, KBC reviews the asset\u2019s recoverable amount and the asset is impaired when its
\n
recoverable amount is lower than its carrying value at the reporting date. The recoverable amount is defined as the higher
\n
of the value in use and the fair value less cost to sell.
\n
Value in use is defined as the discounted future cashflows expected to be derived from an asset or a cash-generating unit.
\n
Impairment is borne at individual asset level, but when the individual asset does not generate cash inflows that are largely
\n
independent of those from other assets or groups of assets, the recoverable amount is determined for the so-called \u2018cash-
\n
generating unit\u2019 (CGU) to which the asset or group of assets belongs. In forming the CGUs, KBC applies its own judgement to
\n
define the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows
\n
from other assets or groups of assets. This process mainly applies to goodwill that has been recognised in relation to
\n
acquisitions.
\n
Impairment losses are recognised in the income statement for the period in which they occur. An impairment loss can be
\n
reversed if the condition that triggered it is no longer present, except for goodwill, which can never be reversed. Impairment
\n
gains are recognised in the income statement for the period in which they occur.
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag799": { "value": "\n

\n\n
Provisions, contingent liabilities and contingent assets
\n
\n
Provisions are recognised on the reporting date if and only if the following criteria are met:
\n
\u2022 there is a present obligation (legal or constructive) due to a past event;
\n
\u2022 it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation;
\n
\u2022 a reliable estimate can be made of the amount of the obligation.
\n
\n
The amount recognised as a provision is the best estimate of the expenditure required to settle the obligation at balance
\n
sheet date. When the effect of time is material, the amount recognised as a provision is the net present value of the best
\n
estimate.
\n
Due to its inherent nature, a provision requires management judgement regarding the amount and timing of probable future
\n
economic outflows.
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag794": { "value": "\n
Consolidated financial statements / interim financial statements
\n
\n
All material entities (including structured entities) over which KBC exercises direct or indirect control as defined in IFRS 10 are
\n
consolidated according to the method of full consolidation. Changes in ownership interests (that do not result in a loss of
\n
control) are accounted for as equity transactions. They do not affect goodwill or profit or loss.
\n
\n
Subsidiaries that are not included in the consolidated financial statements because of immateriality are classified as equity
\n
instruments at fair value through other comprehensive income, with all fair value changes being reported in other
\n
comprehensive income, except for dividend income, which is recognised in the income statement. Material companies over
\n
which joint control is directly or indirectly exercised and material investments in associates (companies over which KBC has
\n
significant influence), are all accounted for using the equity method.
\n
\n
Consolidation threshold: subsidiaries are effectively included in the consolidated financial statements using the full
\n
consolidation method if at least two of the following materiality criteria are exceeded:
\n
\u2022 Group share in equity is 2 500 000 euros;
\n
\u2022 Group share in the result is 1 000 000 euros (absolute value);
\n
\u2022 Group share in the balance sheet total is 100 000 000 euros.
\n
\n
In order to prevent too many entities from being excluded, KBC checks that the combined balance sheet total of the entities
\n
excluded from consolidation does not amount to more than 1% of the consolidated balance sheet total.
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag775": { "value": "\n

\n

\n
Business combinations and goodwill
\n
\n\n

\n\n
Business combinations are accounted for using the acquisition method. Under this method, the cost of an acquisition is
\n
measured as the aggregate of the consideration transferred (measured at acquisition-date fair value) and the amount of
\n
any minority interests in the acquired entity. For measurement of the minority interests, KBC can decide for each business
\n
combination separately whether to measure the minority interest at fair value or as their proportionate share of the acquired
\n
entity\u2019s net identifiable assets. The way the minority interest is measured on the acquisition date will have an impact on
\n
purchase accounting as a result of the determination of goodwill.
\n

\n\n

\n\n
\n\n

\n

\n\n
Goodwill is the excess of the cost of the acquisition over the acquirer\u2019s interest in the fair value of the identifiable assets
\n
acquired and liabilities and contingent liabilities assumed at the date of acquisition. In order to complete the acquisition
\n
accounting and determine the goodwill item, KBC applies a measurement period of 12 months. The classification of the
\n
financial assets acquired and financial liabilities assumed in the business combination is based on the facts and
\n
circumstances existing at the acquisition date (except for lease and insurance contracts, which are classified on the basis of
\n
the contractual terms and other factors at the inception of the relevant contract).
\n
Goodwill is presented under \u2018Goodwill and other intangible assets\u2019 and is carried at cost less impairment losses. Goodwill is
\n
not amortised, but is tested for impairment at least once a year or when there is objective evidence (external or internal) that
\n
it should be impaired. If the acquisition accounting is not complete because the 12-month measurement period has not
\n
elapsed, the goodwill is not considered as final and is only tested if there is objective evidence that the provisional goodwill
\n
is impaired.
\n
For the purpose of testing goodwill for impairment, it is allocated to each of KBC\u2019s cash-generating units that are expected
\n
to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquired entity are
\n
assigned to those units. An impairment loss is recognised if the carrying value of the cash-generating unit to which the
\n
goodwill belongs exceeds its recoverable amount. Impairment losses on goodwill cannot be reversed.
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsAndGoodwillExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag774": { "value": "\n

\n\n
Business combinations are accounted for using the acquisition method. Under this method, the cost of an acquisition is
\n
measured as the aggregate of the consideration transferred (measured at acquisition-date fair value) and the amount of
\n
any minority interests in the acquired entity. For measurement of the minority interests, KBC can decide for each business
\n
combination separately whether to measure the minority interest at fair value or as their proportionate share of the acquired
\n
entity\u2019s net identifiable assets. The way the minority interest is measured on the acquisition date will have an impact on
\n
purchase accounting as a result of the determination of goodwill.
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag769": { "value": "\n
Goodwill is the excess of the cost of the acquisition over the acquirer\u2019s interest in the fair value of the identifiable assets
\n
acquired and liabilities and contingent liabilities assumed at the date of acquisition. In order to complete the acquisition
\n
accounting and determine the goodwill item, KBC applies a measurement period of 12 months. The classification of the
\n
financial assets acquired and financial liabilities assumed in the business combination is based on the facts and
\n
circumstances existing at the acquisition date (except for lease and insurance contracts, which are classified on the basis of
\n
the contractual terms and other factors at the inception of the relevant contract).
\n
Goodwill is presented under \u2018Goodwill and other intangible assets\u2019 and is carried at cost less impairment losses. Goodwill is
\n
not amortised, but is tested for impairment at least once a year or when there is objective evidence (external or internal) that
\n
it should be impaired. If the acquisition accounting is not complete because the 12-month measurement period has not
\n
elapsed, the goodwill is not considered as final and is only tested if there is objective evidence that the provisional goodwill
\n
is impaired.
\n
For the purpose of testing goodwill for impairment, it is allocated to each of KBC\u2019s cash-generating units that are expected
\n
to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquired entity are
\n
assigned to those units. An impairment loss is recognised if the carrying value of the cash-generating unit to which the
\n
goodwill belongs exceeds its recoverable amount. Impairment losses on goodwill cannot be reversed.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag782": { "value": "\n

\n\n
Effects of changes in foreign exchange rates
\n
\n
KBC\u2019s functional and presentation currency is the euro. Monetary assets and liabilities denominated in foreign currency are
\n
translated into the functional currency at the spot rate on the balance sheet date. Negative and positive valuation
\n
differences, except for those relating to the funding of equity instruments and investments of consolidated companies in a
\n
foreign currency, are recognised in the income statement. Non-monetary items measured at historical cost are translated
\n
into the functional currency at the historical exchange rate that existed on the transaction date. Non-monetary items carried
\n
at fair value are translated at the spot rate on the date the fair value was determined. Translation differences are reported
\n
together with changes in fair value. Income and expense items in foreign currency are taken to the income statement at the
\n
exchange rate prevailing when they were recognised.
\n
\n
Valuation differences are accounted for either in the income statement or in other comprehensive income. Valuation
\n
differences that are initially accounted for in other comprehensive income and that relate to gains or losses that are
\n
subsequently recognised in the income statement are recycled to the income statement in the same period in which that
\n
item is accounted for in the income statement. The balance sheets of foreign subsidiaries are translated into the presentation
\n
currency at the spot rate on the reporting date (except for equity, which is translated at the historical rate). The income
\n
statement is translated at the average rate for the financial year as a best estimate of the exchange rate on the transaction
\n
date.
\n

\n\n

\n\n
Main exchange rates used*
\n
\n
Exchange rate at 31-12-2022 Exchange rate average in 2022
\n
Change relative to
\n
Change relative to
\n
31-12-2021
\n
average in 2021
\n
\n
1 EUR = \u2026
\n
(positive: appreciation relative to EUR)
\n
1 EUR = \u2026
\n
(positive: appreciation relative to EUR)
\n
\u2026 currency
\n
(negative: depreciation relative to EUR)
\n
\u2026 currency
\n
(negative: depreciation relative to EUR)
\n
CZK
\n
24.116 3% 24.569 5%
\n
HUF
\n
400.87 -8% 391.79 -9%
\n
* Rounded figures.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag791": { "value": "KBC\u2019s functional and presentation currency is the euro. Monetary assets and liabilities denominated in foreign currency aretranslated into the functional currency at the spot rate on the balance sheet date.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag779": { "value": "\n
Related-party transactions
\n
\n
A related party to KBC is either a party over which KBC has control or significant influence or a party that has control or
\n
significant influence over KBC. KBC defines its related parties as:
\n
\u2022 KBC subsidiaries, KBC associates and joint ventures, KBC Ancora, Cera and MRBB;
\n
\u2022 KBC key management staff (i.e. the Board of Directors and the Executive Committee of KBC Group NV).
\n
\n
Transactions with related parties must occur at arm\u2019s length.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTransactionsWithRelatedPartiesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag758": { "value": "\n

\n

\n
Non-current assets held for sale and disposal groups, liabilities associated with disposal groups and discontinued
\n
operations
\n
\n\n
Non-current assets held for sale and disposal groups, liabilities associated with disposal groups
\n
\n
Non-current assets or groups of assets and liabilities held for sale are those where the carrying value will be recovered by
\n
KBC through a sale transaction, which is expected to qualify as a sale within a year, rather than through continued use.
\n
Non-current assets and liabilities held for sale are reported separately from the other assets and liabilities in the balance
\n
sheet at the end of the reporting date.
\n

\n\n
\n\n
Discontinued operations
\n
\n
A discontinued operation refers to a part of KBC that has been disposed of or is classified as held for sale and:
\n
\u2022 represents a separate major line of business or geographical area of operations; or
\n
\u2022 is part of a single, coordinated plan to dispose of a separate major line of business or geographical area of operations; or
\n
\u2022 is a subsidiary acquired exclusively with a view to resale.
\n
\n
Results from discontinued operations are recognised separately in the income statement and in other comprehensive income
\n
and contain:
\n
\u2022 the post-tax profit or loss of discontinued operations; and
\n
\u2022 the post-tax gain or loss recognised on the measurement to fair value less the costs of the sale or disposal of the assets
\n
or group of assets.
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag765": { "value": "\n
Non-current assets held for sale and disposal groups, liabilities associated with disposal groups
\n
\n
Non-current assets or groups of assets and liabilities held for sale are those where the carrying value will be recovered by
\n
KBC through a sale transaction, which is expected to qualify as a sale within a year, rather than through continued use.
\n
Non-current assets and liabilities held for sale are reported separately from the other assets and liabilities in the balance
\n
sheet at the end of the reporting date.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag796": { "value": "\n
Discontinued operations
\n
\n
A discontinued operation refers to a part of KBC that has been disposed of or is classified as held for sale and:
\n
\u2022 represents a separate major line of business or geographical area of operations; or
\n
\u2022 is part of a single, coordinated plan to dispose of a separate major line of business or geographical area of operations; or
\n
\u2022 is a subsidiary acquired exclusively with a view to resale.
\n
\n
Results from discontinued operations are recognised separately in the income statement and in other comprehensive income
\n
and contain:
\n
\u2022 the post-tax profit or loss of discontinued operations; and
\n
\u2022 the post-tax gain or loss recognised on the measurement to fair value less the costs of the sale or disposal of the assets
\n
or group of assets.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag729": { "value": "\n
Events after the reporting period
\n
\n
Events after the reporting date are defined as favourable or unfavourable events that occur between the reporting date and
\n
the date on which the financial statements are authorised for issue. There are two types of event after the reporting date:
\n
\u2022 those which provide evidence of conditions that existed on the reporting date (adjusting events);
\n
\u2022 those that are indicative of conditions that arose after the reporting date (non-adjusting events).
\n
\n
The impact of adjusting events has already been reflected in the financial position and financial performance for the current
\n
year. The impact and consequences of non-adjusting events are disclosed in the notes to the financial statements.
\n

\n", "dimensions": { "concept": "kbc:DescriptionOfAccountingPolicyForEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag773": { "value": "\n

\n\n

\n\n
Note 1.4: Impact of the war in Ukraine and of the coronavirus crisis
\n
\n
\n
Overview
\n
In 2022, we fully reversed the reserves still outstanding (ECL) for the impact of the coronavirus crisis, totalling 289 million euros
\n
at year-end 2021 (see below). By contrast, we set aside a reserve for geopolitical and emerging risks of 429 million euros in
\n
2022 on the back of the Russian invasion of Ukraine and the associated direct and indirect economic consequences (see
\n
below).
\n
\n
\n
Impact of
\n
Impact of write-
\n
acquisition of
\n
ECL outstanding for coronavirus
\n
-
\n
Change in
\n
down of
\n
Reserve set aside
\n
Raiffeisenbank
\n
related, geopolitical and emerging
\n
coronavirus-
\n
coronavirus-
\n
for geopolitical
\n
Bulgaria (now
\n
Situation
\n
risks by country
\n
\n
Situation
\n
related ECL in
\n
related ECL in
\n
and emerging
\n
renamed KBC Bank
\n
at year-end
\n
(in millions of EUR)
\n
at year-end 2021
\n
2022
\n
2022
\n
risks in 2022
\n
Bulgaria) in 2022
\n
2022
\n
Belgium
\n
100 -100 - 145 - 145
\n
Czech Republic
\n
69 -67 -2 135 - 135
\n
Slovakia
\n
20 -18 -2 42 - 42
\n
Hungary
\n
37 -37 - 50 - 50
\n
Bulgaria
\n
12 -11 -1 23 16 39
\n
Other (including Ireland)
\n
51 -22 -29 18 0 18
\n
Total
\n
289 -255 -34 413 16 429
\n

\n\n

\n\n

\n\n

\n\n

\n\n
New reserve set aside for geopolitical and emerging risks
\n
The destabilisation of the global economy and surging commodity prices brought on by the war between Russia and Ukraine
\n
have exacerbated the inflationary shock initially caused by problems in the supply chains, tax incentives and the rapid post-
\n
pandemic reopening. The rising inflationary pressure and a tightening labour market increased the pressure on central banks
\n
to bring their monetary policy back to normal levels. The combination of higher, more persistent inflation and more stringent
\n
monetary policy is affecting growth expectations. A more detailed explanation of the macroeconomic environment is
\n
provided under \u2018In what environment do we operate?\u2019 in the \u2018Report of the Board of Directors\u2019 section. We have assessed
\n
the impact of the main macroeconomic and geopolitical risks on our loan portfolio in this regard. As a result, a reserve was
\n
set aside for geopolitical and emerging risks, which amounted to 429 million euros at year-end 2022 (with 223 million euros
\n
being provisioned in the first quarter, 45 million euros in the second quarter, 103 million euros in the third quarter and 42 million
\n
euros in the fourth quarter, as well as an additional amount of 16 million euros related to the acquisition of Raiffeisenbank
\n
Bulgaria, which has since been renamed KBC Bank Bulgaria). The calculation and composition of the reserve (recognised
\n
under \u2018Impairment\u2019) at year-end 2022 can be found in the table.
\n
Impairment
\n
recognised in the
\n
balance sheet
\n
Risk, situation at year-end 2022
\n
Background information
\n
(in millions of EUR)
\n
Direct group companies in
\n
None
\n
-
\n
Russia, Ukraine and Belarus
\n
\n
Direct exposure to Russia,
\n
The net exposure relating to KBC\u2019s transfer risk in respect of Russia, Ukraine and Belarus amounted
\n
29
\n
Ukraine and Belarus
\n
to 29 million euros at year-end 2022, owing chiefly to commercial exposure to Russian banks.
\n
Indirect impact of the conflict on
\n
We expect the conflict to have an impact, through various channels, on our corporate and SME
\n
39
\n
the loan portfolio
\n
\n
clients with important activities in Russia, Ukraine and Belarus and/or with a strong dependence on
\n
those markets for imports or exports (either directly or indirectly through a
\n
client or supplier) and/or
\n
with a specific vulnerability to disruptions in oil and/or gas supplies.
\n
\n
Our analysis shows that for 2.8 billion euros in \u2018Stage 1\u2019 positions, which are not (yet) included in the
\n
standard staging assessment, credit risk has incr
\n
eased considerably. The recalculation of ECL over
\n
the full remaining lifetime of those positions, instead of the 12
\n
-month horizon, resulted in an
\n
impairment of 39 million euros in 2022.
\n
Indirect impact ensuing from
\n
We have established that the following sub-segments in our portfolio are at risk:
\n
304
\n
other emerging risks
\n
\n
\u2022
\n
SMEs and other corporate entities in our client base active in economic sectors most affected
\n
by supply-chain problems and by rising commodity and energy prices, and who are already
\n
subject to a higher credit risk (for example, the automotive industry, chemicals and metals);
\n
\u2022
\n
Retail clients with a limited buffer to absorb the higher cost of living and/or to make higher
\n
repayments ensuing from rising interest rates.
\n
The analysis sho
\n
ws that for 11.3 billion euros in \u2018Stage 1\u2019 positions, which are not (yet) included in the
\n
standard staging assessment, credit risk has increased considerably
\n
. The recalculation of ECL over
\n
the full remaining lifetime of those positions, instead of 12 mont
\n
hs, resulted in an impairment of 304
\n
million euros in 2022.
\n
Impact of the macroeconomic
\n
The model-driven ECL for geopolitical and emerging risks came to 57 million euros in 2022. The
\n
57
\n
scenarios
\n
\n
probabilities applied to the base
\n
-case, optimistic and pessimistic macroeconomic scenarios were
\n
adjusted from 80%, 10% and 10% to 60%, 5% and 35%, respectively, creating an additional
\n
impairment of 57 million euros. More information on the scenarios is provided below.
\n
Acquisition of Raiffeisenbank
\n
The consolidation of the Bulgarian operations of Raiffeisenbank International implies an ECL of 16
\n
-
\n
Bulgaria
\n
\n
million euros (10 million for emerging risks and 6 million for the direct transfer risk), which does not
\n
affect the income statement. These amounts are already included in the previous rows of the table.
\n
Total at year-end 2022
\n
\n
429
\n

\n\n

\n\n

\n\n

\n\n

\n\n
Impact of other measures
\n
\n
Surging energy prices and rising inflation have prompted initiatives aimed at supporting the purchasing power of families
\n
and the viability of companies. The governments in our core countries also expect the banking and insurance sector to
\n
support the economy:
\n
\u2022 In Hungary, the exceptional geopolitical and macroeconomic conditions indirectly translated into a modification loss of 63
\n
million euros in the mortgage loan and term loan portfolio (recognised in \u2018Impairment\u2019), mainly due to the extension of the
\n
interest cap regulation until 30 June 2023 and the expansion of the scope of loans protected by the interest cap. Moreover,
\n
in 2022 bank taxes (recognised in \u2018Operating expenses\u2019) in Hungary were adversely impacted by the inclusion of 10 million
\n
euros net (provisioned in the first quarter of 2022 and partly recovered in the fourth quarter of 2022) as a result of an
\n
extraordinary payment into the Deposit Guarantee Fund due to the revoking of the licence of Sberbank Hungary by the
\n
Hungarian National Bank in early March 2022, allowing the payment of compensation for clients\u2019 deposits of up to 100 000
\n
euros from the Deposit Guarantee Fund, and the booking of 78 million euros following the introduction of an additional
\n
sector tax for the banking and insurance sector.
\n
\u2022 In light of the energy crisis, private individuals in Belgium meeting specific conditions have been able to request a temporary
\n
suspension of principal repayments since 1 October 2022. This did not lead to a modification loss or any additional impact
\n
on the ECL, as interest payments are not suspended and the impact of the transfer to \u2018Stage 2\u2019 of clients who submitted
\n
an application was already included in the collective assessments described above. Furthermore, the deductibility of the
\n
bank tax will be partly abolished as from 2023 to increase the banking industry\u2019s solidarity contribution.
\n
\u2022 The government of the Czech Republic introduced a windfall tax, following which any excess profits will be taxed at 79%
\n
(19% standard business tax, 60% windfall tax), which will apply to major banks for the period 2023-2025.
\n
\n
Full reversal of the reserves set aside for the impact of the coronavirus crisis
\n
In 2022, we fully reversed the reserves still outstanding for the impact of the coronavirus crisis. This resulted in a decrease of
\n
289 million euros at year-end 2021 to 0 million euros at year-end 2022, including a reversal of 255 million euros through the
\n
income statement and the write-off of 34 million euros, due mainly to the sale of KBC Bank Ireland\u2019s non-performing loan
\n
portfolio (which did not affect the income statement). Please refer to the 2021 Annual Report, Note 1.4, for the calculation of
\n
coronavirus-related reserve at year-end 2021.
\n
We were able to fully reverse the reserve set aside for the impact of the coronavirus crisis, since the coronavirus-related risks
\n
still present in our loan portfolio are included in the regular impairment process based on common credit risk indicators
\n
(probability of default, overdue amounts and forbearance), as they are no longer concealed by the moratoria on loan
\n
repayments.
\n
\n
Overview of the impact of the coronavirus crisis and the war in Ukraine on our activities
\n
\n
The \u2018Report of the Board of Directors\u2019 section contains additional information on the impact of the coronavirus crisis and of
\n
the war in Ukraine on the activities and stakeholders of the group, concerning the following:
\n
\u2022 The macroeconomic context (see \u2018In what environment do we operate?\u2019 and \u2018Our business units\u2019)
\n
\u2022 Our clients (see \u2018The client is at the centre of our business culture\u2019)
\n
\u2022 Our employees (see \u2018Our employees, capital, network and relationships\u2019)
\n
\u2022 Our risk management (see \u2018How do we manage our risks?\u2019)
\n
\n
Overview of economic scenarios used
\n
Because of the economic uncertainty, we continue to work with three alternative scenarios: a base-case scenario, a more
\n
optimistic scenario and a more pessimistic scenario. The definition of each scenario reflects the latest developments
\n
regarding geopolitical and emerging risks and the economy, with the following probabilities assigned for year-end 2022: 60%
\n
for the base-case, 35% for the pessimistic and 5% for the optimistic scenario. The scenarios and probabilities applied are
\n
those used for the update at year-end 2022; obviously, the situation may have changed in the meantime.
\n
\n
Optimistic scenario
\n
(\u2018ceasefire\u2019 scenario)
\n
A long-term solution to the Russia-Ukraine
\n
conflict is on the horizon. The easing of certain
\n
sanctions by the West in the short term will
\n
mitigate the rise in energy and commodity prices,
\n
but policy (e.g., budgetary) remains consistently
\n
focused on the g
\n
reen transition and energy
\n
autonomy and the expansion of military capacity.
\n
Base-case scenario
\n
(\u2018mild recession' scenario)
\n
There will be no short-term solution to the Russia-
\n
Ukraine conflict. The West\u2019s sanctions will remain in
\n
effect for the foreseeable future. Although the rising
\n
energy and commodity
\n
prices are weighing on
\n
economic sentiment, no significant energy shortages
\n
are expected this or next winter. The negative
\n
impact on GDP growth is mitigated by supportive
\n
government policy. Monetary policy continues to
\n
normalise.
\n
Pessimistic scenario
\n
(\u2018deep recession\u2019 scenario)
\n
Further escalation of the Russia-Ukraine conflict
\n
will lead to further and stricter sanctions from the
\n
West, triggering further restrictions on Russia\u2019s
\n
energy and commodity exports, driving inflation
\n
even higher. Extreme shortages will lead to the
\n
rationing of en
\n
ergy and certain raw materials,
\n
\n
pushing the economy into a deep recession. The
\n
impact of the sharp deterioration of economic
\n
sentiment on GDP growth is partly offset by the
\n
highly supportive economic policy.
\n
\n

\n\n

\n\n

\n\n

\n\n

\n\n
The following table gives the scenarios for three key indicators for each of our core countries for the coming years. After that,
\n
we take into account a gradual linear transition towards a stable situation.
\n
\n
Macroeconomic scenario \u2013 key indicators
\n
\n
\n
(used for situation at year-end 2022)
\n
\n
2022
\n
\n
\n
2023
\n
2024
\n
Scenario:
\n
\n
Optimistic Base case Pessimistic Optimistic Base case Pessimistic Optimistic Base case Pessimistic
\n
Real GDP growth
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Belgium
\n
3.1% 2.9% 2.6% 2.1% 0.2% -2.5% 1.9% 1.4% 0.9%
\n
Czech Republic
\n
2.5% 2.5% 2.2% 1.6% 0.8% -5.8% 3.7% 2.7% 1.0%
\n
Hungary
\n
5.9% 5.5% 4.8% 2.8% 0.0% -4.2% 3.8% 3.6% 2.4%
\n
Slovakia
\n
1.6% 1.4% 1.2% 1.2% 0.6% -5.4% 3.2% 2.8% 2.5%
\n
Bulgaria
\n
3.7% 2.8% 2.2% 3.0% 0.7% -2.5% 3.5% 3.5% 0.6%
\n
Unemployment rate
\n
\n
Belgium
\n
5.8% 6.0% 6.2% 5.6% 6.2% 6.8% 5.4% 6.0% 6.6%
\n
Czech Republic
\n
2.8% 2.8% 2.8% 2.7% 3.3% 6.0% 2.2% 2.9% 5.0%
\n
Hungary
\n
3.9% 4.1% 4.2% 3.8% 4.4% 6.5% 3.2% 3.8% 5.5%
\n
Slovakia
\n
6.2% 6.3% 8.0% 6.5% 7.0% 9.0% 6.3% 6.5% 8.0%
\n
Bulgaria
\n
4.3% 5.3% 6.2% 4.4% 6.0% 7.3% 4.3% 4.8% 6.4%
\n
House
\n
price index
\n
Belgium
\n
6.5% 5.0% 3.0% 4.0% 2.5% -3.0% 3.0% 2.0% -1.5%
\n
Czech Republic
\n
20.0% 17.5% 16.0% 5.0% 0.5% -5.0% 5.0% 2.5% -1.0%
\n
Hungary
\n
18.6% 16.0% 13.0% 10.0% 5.0% -3.0% 6.0% 3.5% 0.0%
\n
Slovakia
\n
18.0% 15.0% 12.0% 7.0% 2.5% -4.0% 5.0% 2.5% -1.0%
\n
Bulgaria
\n
13.0% 12.0% 8.0% 9.0% 7.0% -3.0% 4.0% 3.5% 0.0%
\n

\n\n

\n\n

\n", "dimensions": { "concept": "kbc:DisclosureOfImpactOfWarInUkraineAndOfCoronavirusCrisisExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag733": { "value": "\n

\n\n
Note 1.4: Impact of the war in Ukraine and of the coronavirus crisis
\n
\n
\n
Overview
\n
In 2022, we fully reversed the reserves still outstanding (ECL) for the impact of the coronavirus crisis, totalling 289 million euros
\n
at year-end 2021 (see below). By contrast, we set aside a reserve for geopolitical and emerging risks of 429 million euros in
\n
2022 on the back of the Russian invasion of Ukraine and the associated direct and indirect economic consequences (see
\n
below).
\n
\n
\n
Impact of
\n
Impact of write-
\n
acquisition of
\n
ECL outstanding for coronavirus
\n
-
\n
Change in
\n
down of
\n
Reserve set aside
\n
Raiffeisenbank
\n
related, geopolitical and emerging
\n
coronavirus-
\n
coronavirus-
\n
for geopolitical
\n
Bulgaria (now
\n
Situation
\n
risks by country
\n
\n
Situation
\n
related ECL in
\n
related ECL in
\n
and emerging
\n
renamed KBC Bank
\n
at year-end
\n
(in millions of EUR)
\n
at year-end 2021
\n
2022
\n
2022
\n
risks in 2022
\n
Bulgaria) in 2022
\n
2022
\n
Belgium
\n
100 -100 - 145 - 145
\n
Czech Republic
\n
69 -67 -2 135 - 135
\n
Slovakia
\n
20 -18 -2 42 - 42
\n
Hungary
\n
37 -37 - 50 - 50
\n
Bulgaria
\n
12 -11 -1 23 16 39
\n
Other (including Ireland)
\n
51 -22 -29 18 0 18
\n
Total
\n
289 -255 -34 413 16 429
\n

\n\n

\n\n

\n\n
New reserve set aside for geopolitical and emerging risks
\n
The destabilisation of the global economy and surging commodity prices brought on by the war between Russia and Ukraine
\n
have exacerbated the inflationary shock initially caused by problems in the supply chains, tax incentives and the rapid post-
\n
pandemic reopening. The rising inflationary pressure and a tightening labour market increased the pressure on central banks
\n
to bring their monetary policy back to normal levels. The combination of higher, more persistent inflation and more stringent
\n
monetary policy is affecting growth expectations. A more detailed explanation of the macroeconomic environment is
\n
provided under \u2018In what environment do we operate?\u2019 in the \u2018Report of the Board of Directors\u2019 section. We have assessed
\n
the impact of the main macroeconomic and geopolitical risks on our loan portfolio in this regard. As a result, a reserve was
\n
set aside for geopolitical and emerging risks, which amounted to 429 million euros at year-end 2022 (with 223 million euros
\n
being provisioned in the first quarter, 45 million euros in the second quarter, 103 million euros in the third quarter and 42 million
\n
euros in the fourth quarter, as well as an additional amount of 16 million euros related to the acquisition of Raiffeisenbank
\n
Bulgaria, which has since been renamed KBC Bank Bulgaria). The calculation and composition of the reserve (recognised
\n
under \u2018Impairment\u2019) at year-end 2022 can be found in the table.
\n
Impairment
\n
recognised in the
\n
balance sheet
\n
Risk, situation at year-end 2022
\n
Background information
\n
(in millions of EUR)
\n
Direct group companies in
\n
None
\n
-
\n
Russia, Ukraine and Belarus
\n
\n
Direct exposure to Russia,
\n
The net exposure relating to KBC\u2019s transfer risk in respect of Russia, Ukraine and Belarus amounted
\n
29
\n
Ukraine and Belarus
\n
to 29 million euros at year-end 2022, owing chiefly to commercial exposure to Russian banks.
\n
Indirect impact of the conflict on
\n
We expect the conflict to have an impact, through various channels, on our corporate and SME
\n
39
\n
the loan portfolio
\n
\n
clients with important activities in Russia, Ukraine and Belarus and/or with a strong dependence on
\n
those markets for imports or exports (either directly or indirectly through a
\n
client or supplier) and/or
\n
with a specific vulnerability to disruptions in oil and/or gas supplies.
\n
\n
Our analysis shows that for 2.8 billion euros in \u2018Stage 1\u2019 positions, which are not (yet) included in the
\n
standard staging assessment, credit risk has incr
\n
eased considerably. The recalculation of ECL over
\n
the full remaining lifetime of those positions, instead of the 12
\n
-month horizon, resulted in an
\n
impairment of 39 million euros in 2022.
\n
Indirect impact ensuing from
\n
We have established that the following sub-segments in our portfolio are at risk:
\n
304
\n
other emerging risks
\n
\n
\u2022
\n
SMEs and other corporate entities in our client base active in economic sectors most affected
\n
by supply-chain problems and by rising commodity and energy prices, and who are already
\n
subject to a higher credit risk (for example, the automotive industry, chemicals and metals);
\n
\u2022
\n
Retail clients with a limited buffer to absorb the higher cost of living and/or to make higher
\n
repayments ensuing from rising interest rates.
\n
The analysis sho
\n
ws that for 11.3 billion euros in \u2018Stage 1\u2019 positions, which are not (yet) included in the
\n
standard staging assessment, credit risk has increased considerably
\n
. The recalculation of ECL over
\n
the full remaining lifetime of those positions, instead of 12 mont
\n
hs, resulted in an impairment of 304
\n
million euros in 2022.
\n
Impact of the macroeconomic
\n
The model-driven ECL for geopolitical and emerging risks came to 57 million euros in 2022. The
\n
57
\n
scenarios
\n
\n
probabilities applied to the base
\n
-case, optimistic and pessimistic macroeconomic scenarios were
\n
adjusted from 80%, 10% and 10% to 60%, 5% and 35%, respectively, creating an additional
\n
impairment of 57 million euros. More information on the scenarios is provided below.
\n
Acquisition of Raiffeisenbank
\n
The consolidation of the Bulgarian operations of Raiffeisenbank International implies an ECL of 16
\n
-
\n
Bulgaria
\n
\n
million euros (10 million for emerging risks and 6 million for the direct transfer risk), which does not
\n
affect the income statement. These amounts are already included in the previous rows of the table.
\n
Total at year-end 2022
\n
\n
429
\n

\n\n

\n\n

\n\n
Impact of other measures
\n
\n
Surging energy prices and rising inflation have prompted initiatives aimed at supporting the purchasing power of families
\n
and the viability of companies. The governments in our core countries also expect the banking and insurance sector to
\n
support the economy:
\n
\u2022 In Hungary, the exceptional geopolitical and macroeconomic conditions indirectly translated into a modification loss of 63
\n
million euros in the mortgage loan and term loan portfolio (recognised in \u2018Impairment\u2019), mainly due to the extension of the
\n
interest cap regulation until 30 June 2023 and the expansion of the scope of loans protected by the interest cap. Moreover,
\n
in 2022 bank taxes (recognised in \u2018Operating expenses\u2019) in Hungary were adversely impacted by the inclusion of 10 million
\n
euros net (provisioned in the first quarter of 2022 and partly recovered in the fourth quarter of 2022) as a result of an
\n
extraordinary payment into the Deposit Guarantee Fund due to the revoking of the licence of Sberbank Hungary by the
\n
Hungarian National Bank in early March 2022, allowing the payment of compensation for clients\u2019 deposits of up to 100 000
\n
euros from the Deposit Guarantee Fund, and the booking of 78 million euros following the introduction of an additional
\n
sector tax for the banking and insurance sector.
\n
\u2022 In light of the energy crisis, private individuals in Belgium meeting specific conditions have been able to request a temporary
\n
suspension of principal repayments since 1 October 2022. This did not lead to a modification loss or any additional impact
\n
on the ECL, as interest payments are not suspended and the impact of the transfer to \u2018Stage 2\u2019 of clients who submitted
\n
an application was already included in the collective assessments described above. Furthermore, the deductibility of the
\n
bank tax will be partly abolished as from 2023 to increase the banking industry\u2019s solidarity contribution.
\n
\u2022 The government of the Czech Republic introduced a windfall tax, following which any excess profits will be taxed at 79%
\n
(19% standard business tax, 60% windfall tax), which will apply to major banks for the period 2023-2025.
\n
\n
Full reversal of the reserves set aside for the impact of the coronavirus crisis
\n
In 2022, we fully reversed the reserves still outstanding for the impact of the coronavirus crisis. This resulted in a decrease of
\n
289 million euros at year-end 2021 to 0 million euros at year-end 2022, including a reversal of 255 million euros through the
\n
income statement and the write-off of 34 million euros, due mainly to the sale of KBC Bank Ireland\u2019s non-performing loan
\n
portfolio (which did not affect the income statement). Please refer to the 2021 Annual Report, Note 1.4, for the calculation of
\n
coronavirus-related reserve at year-end 2021.
\n
We were able to fully reverse the reserve set aside for the impact of the coronavirus crisis, since the coronavirus-related risks
\n
still present in our loan portfolio are included in the regular impairment process based on common credit risk indicators
\n
(probability of default, overdue amounts and forbearance), as they are no longer concealed by the moratoria on loan
\n
repayments.
\n
\n
Overview of the impact of the coronavirus crisis and the war in Ukraine on our activities
\n
\n
The \u2018Report of the Board of Directors\u2019 section contains additional information on the impact of the coronavirus crisis and of
\n
the war in Ukraine on the activities and stakeholders of the group, concerning the following:
\n
\u2022 The macroeconomic context (see \u2018In what environment do we operate?\u2019 and \u2018Our business units\u2019)
\n
\u2022 Our clients (see \u2018The client is at the centre of our business culture\u2019)
\n
\u2022 Our employees (see \u2018Our employees, capital, network and relationships\u2019)
\n
\u2022 Our risk management (see \u2018How do we manage our risks?\u2019)
\n
\n
Overview of economic scenarios used
\n
Because of the economic uncertainty, we continue to work with three alternative scenarios: a base-case scenario, a more
\n
optimistic scenario and a more pessimistic scenario. The definition of each scenario reflects the latest developments
\n
regarding geopolitical and emerging risks and the economy, with the following probabilities assigned for year-end 2022: 60%
\n
for the base-case, 35% for the pessimistic and 5% for the optimistic scenario. The scenarios and probabilities applied are
\n
those used for the update at year-end 2022; obviously, the situation may have changed in the meantime.
\n
\n
Optimistic scenario
\n
(\u2018ceasefire\u2019 scenario)
\n
A long-term solution to the Russia-Ukraine
\n
conflict is on the horizon. The easing of certain
\n
sanctions by the West in the short term will
\n
mitigate the rise in energy and commodity prices,
\n
but policy (e.g., budgetary) remains consistently
\n
focused on the g
\n
reen transition and energy
\n
autonomy and the expansion of military capacity.
\n
Base-case scenario
\n
(\u2018mild recession' scenario)
\n
There will be no short-term solution to the Russia-
\n
Ukraine conflict. The West\u2019s sanctions will remain in
\n
effect for the foreseeable future. Although the rising
\n
energy and commodity
\n
prices are weighing on
\n
economic sentiment, no significant energy shortages
\n
are expected this or next winter. The negative
\n
impact on GDP growth is mitigated by supportive
\n
government policy. Monetary policy continues to
\n
normalise.
\n
Pessimistic scenario
\n
(\u2018deep recession\u2019 scenario)
\n
Further escalation of the Russia-Ukraine conflict
\n
will lead to further and stricter sanctions from the
\n
West, triggering further restrictions on Russia\u2019s
\n
energy and commodity exports, driving inflation
\n
even higher. Extreme shortages will lead to the
\n
rationing of en
\n
ergy and certain raw materials,
\n
\n
pushing the economy into a deep recession. The
\n
impact of the sharp deterioration of economic
\n
sentiment on GDP growth is partly offset by the
\n
highly supportive economic policy.
\n
\n

\n\n

\n\n

\n\n
The following table gives the scenarios for three key indicators for each of our core countries for the coming years. After that,
\n
we take into account a gradual linear transition towards a stable situation.
\n
\n
Macroeconomic scenario \u2013 key indicators
\n
\n
\n
(used for situation at year-end 2022)
\n
\n
2022
\n
\n
\n
2023
\n
2024
\n
Scenario:
\n
\n
Optimistic Base case Pessimistic Optimistic Base case Pessimistic Optimistic Base case Pessimistic
\n
Real GDP growth
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Belgium
\n
3.1% 2.9% 2.6% 2.1% 0.2% -2.5% 1.9% 1.4% 0.9%
\n
Czech Republic
\n
2.5% 2.5% 2.2% 1.6% 0.8% -5.8% 3.7% 2.7% 1.0%
\n
Hungary
\n
5.9% 5.5% 4.8% 2.8% 0.0% -4.2% 3.8% 3.6% 2.4%
\n
Slovakia
\n
1.6% 1.4% 1.2% 1.2% 0.6% -5.4% 3.2% 2.8% 2.5%
\n
Bulgaria
\n
3.7% 2.8% 2.2% 3.0% 0.7% -2.5% 3.5% 3.5% 0.6%
\n
Unemployment rate
\n
\n
Belgium
\n
5.8% 6.0% 6.2% 5.6% 6.2% 6.8% 5.4% 6.0% 6.6%
\n
Czech Republic
\n
2.8% 2.8% 2.8% 2.7% 3.3% 6.0% 2.2% 2.9% 5.0%
\n
Hungary
\n
3.9% 4.1% 4.2% 3.8% 4.4% 6.5% 3.2% 3.8% 5.5%
\n
Slovakia
\n
6.2% 6.3% 8.0% 6.5% 7.0% 9.0% 6.3% 6.5% 8.0%
\n
Bulgaria
\n
4.3% 5.3% 6.2% 4.4% 6.0% 7.3% 4.3% 4.8% 6.4%
\n
House
\n
price index
\n
Belgium
\n
6.5% 5.0% 3.0% 4.0% 2.5% -3.0% 3.0% 2.0% -1.5%
\n
Czech Republic
\n
20.0% 17.5% 16.0% 5.0% 0.5% -5.0% 5.0% 2.5% -1.0%
\n
Hungary
\n
18.6% 16.0% 13.0% 10.0% 5.0% -3.0% 6.0% 3.5% 0.0%
\n
Slovakia
\n
18.0% 15.0% 12.0% 7.0% 2.5% -4.0% 5.0% 2.5% -1.0%
\n
Bulgaria
\n
13.0% 12.0% 8.0% 9.0% 7.0% -3.0% 4.0% 3.5% 0.0%
\n

\n\n

\n\n
2022 2021
\n
Total
\n
406 145
\n
Total broken down by IFRS portfolio
\n
\n
Financial instruments MFVPL other than held for trading and overlay
\n
-1 949 1 172
\n
Trading instruments (including interest on non
\n
-ALM trading derivatives and fair value changes in all trading derivatives) 567 435
\n
Financial instruments to which the overlay approach is applied
\n
86 104
\n
\n
Gains or losses on sale
\n
\n
176 123
\n
\n
\n
Impairment
\n
-90
\n
-20
\n
\n
Other financial instruments at FVPL
\n
1 942 -1 186
\n
Foreign exchange trading
\n
-90 -272
\n
Fair value adjustments in hedge accounting
\n
-150 -108
\n
Hedge accounting broken down by type of hedge
\n
\n
Fair value micro hedges
\n
5 0
\n
\n
Changes in the fair value of the hedged items 624 -307
\n
\n
Changes in the fair value of the hedging derivatives -619 307
\n
Cashflow hedges
\n
-3 0
\n
\n
Changes in the fair value of the hedging derivatives, ineffective portion -3 0
\n
Hedges of net investments in foreign operations, ineffective portion
\n
0 0
\n
Portfolio hedge of interest rate risk
\n
0 5
\n
\n
Changes in the fair value of the hedged items -3 254 -815
\n
\n
Changes in the fair value of the hedging derivatives 3 254 820
\n
Discontinuation of hedge accounting for fair value hedges
\n
-75 -46
\n
Discontinuation of hedge accounting in the event of cashflow hedges
\n
-77 -66
\n
Total broken down by driver
\n
\n
Market value adjustments (MVA)
\n
80 67
\n
Change in the value of derivatives used for asset/liability management purposes
\n
-14 -197
\n
Financial instruments to which the overlay approach is applied and other
\n
96 113
\n
Dealing room
\n
245 162
\n

\n\n
(in millions of EUR)
\n
Life
\n
Non-life
\n
account
\n
Total
\n
2022
\n
\n
Earned premiums, insurance
\n
(before reinsurance) 1 163 2 054 0 3 217
\n
\n
of which changes in the provision for unearned premiums -1 -71
\n
0
\n
\n
-72
\n
Technical charges, insurance (before reinsurance)
\n
-1 071 -1 154 0 -2 225
\n
\n
Claims paid -1 399 -1 029
\n
0
\n
-2 428
\n
\n
Change in technical provisions 419 -115
\n
0
\n
\n
304
\n
\n
Other technical result -91 -9
\n
0
\n
-100
\n
Net fee and commission income
\n
-4 -403 0 -407
\n
Ceded reinsurance result
\n
-3 1 0 -2
\n
General administrative expenses
\n
-152 -285 -3 -440
\n
\n
Internal claims settlement expenses -9 -65 0 -74
\n
\n
Indirect acquisition costs -32 -68 0 -100
\n
\n
Administrative expenses -110 -152 0 -263
\n
\n
Investment management fees 0 0 -3 -3
\n
Technical result
\n
-67 213 -3 143
\n
Investment income*
\n
383 112 38 534
\n
Technical
\n
-financial result 316 325 36 677
\n
Share in results of associated companies and joint ventures
\n
- - 0 0
\n
RESULT BEFORE TAX
\n
316 325 36 677
\n
Income tax expense
\n
- - - -117
\n
RESULT AFTER TAX
\n
- - - 560
\n
\n
attributable to minority interests - - - 0
\n
\n
attributable to equity holders of the parent - - - 560
\n
2021
\n
\n
Earned premiums, insurance (before reinsurance)
\n
1 196 1 905 0 3 101
\n
\n
of which changes in the provision for unearned premiums -1 -48 0 -49
\n
Technical charges, insurance (before reinsurance)
\n
-1 150 -1 106 0 -2 256
\n
\n
Claims paid -1 163 -872 0 -2 036
\n
\n
Change in technical provisions -1 -223 0 -224
\n
\n
Other technical result 14 -10 0 4
\n
Net fee and commission income
\n
-5 -367 0 -372
\n
Ceded reinsurance result
\n
-2 27 0 25
\n
General administrative expenses
\n
-149 -255 -2 -407
\n
\n
Internal claims settlement expenses -9 -59 0 -68
\n
\n
Indirect acquisition costs -31 -68 0 -98
\n
\n
Administrative expenses -109 -128 0 -238
\n
\n
Investment management fees 0 0 -2 -2
\n
Technical result
\n
-110 204 -2 91
\n
Investment income*
\n
382 92 69 543
\n
Technical
\n
-financial result 271 296 66 634
\n
Share in results of associated companies and joint ventures
\n
\u2013 \u2013 0 0
\n
RESULT BEFORE TAX
\n
271 296 66 634
\n
Income tax expense
\n
\u2013 \u2013 \u2013 -125
\n
RESULT AFTER TAX
\n
\u2013 \u2013 \u2013 508
\n
\n
attributable to minority interests \u2013 \u2013 \u2013 0
\n
\n
attributable to equity holders of the parent \u2013 \u2013 \u2013 508
\n
* Investment income (in millions of euros, for 2022 and 2021, respectively) comprises: \u2018Net interest income\u2019 (428, 398), \u2018Net dividend income\u2019 (39, 31), \u2018Net result from financial instruments at fair
\n
value through profit or loss\u2019 (91, 117), \u2018Other net income\u2019 (-9, 1), \u2018Net realised result from debt instruments at fair value through OCI\u2019 (-16, -2) and \u2018Impairment\u2019 (1, -3). The \u2018Non-technical account\u2019
\n
also includes the results from non-insurance subsidiaries, such as VAB group and ADD, and a number of real estate companies. They have been included in the note for the \u2018insurance business\u2019
\n
given that they are KBC Insurance subsidiaries (but as they cannot be recognised under \u2018Life\u2019 or \u2018Non-life\u2019, they are included under \u2018Non-technical account\u2019). The \u2018Non-technical account\u2019 also
\n
includes the investment income from equity (i.e. mainly interest income from bonds).
\n

\n\n

\n

\n

\n\n

\n\n

\n\n
\u2022 The figures relating to earned premiums do not include investment contracts without DPF, which largely correspond to unit-
\n
linked contracts. The margin on these products is recognised under \u2018Net fee and commission income\u2019.
\n
\u2022 \u2018Non-life technical charges\u2019 consist mainly of paid claims, changes in claims provisions, changes in the deficiency provision,
\n
recourse received, changes in recourse estimations and other technical charges. \u2018Life technical charges\u2019 consist primarily of
\n
paid claims, changes in claims provisions, changes in the life insurance provision, changes in the provision for (non-unbundled)
\n
unit-linked products, bonuses (profit-sharing), changes in the deficiency provision and other technical charges.
\n
\u2022 An overview of the insurer\u2019s investment portfolio can be found in the \u2018How do we manage our risks?\u2019 section (in the \u2018Investment
\n
portfolio of KBC group insurance entities\u2019 table, which constitutes part of the financial statements).
\n
\u2022 In the vast majority of cases, internal acquisition costs are recognised immediately in the income statement (i.e. not spread).
\n
\u2022 In 2022, the non-life technical result was negatively impacted by factors including extreme weather conditions, such as flooding
\n
and storms (especially in Belgium, having a gross impact of 107 million euros, which comes down to 53 million euros after
\n
reinsurance). In 2021, the non-life technical result was negatively impacted by factors including the tornado in the Czech
\n
Republic and even more so by heavy flooding in Belgium (the gross impact of the latter totalled 110 million euros, which comes
\n
down to 87 million euros after reinsurance, 45 million euros of which above the legal limit (i.e. the ceiling introduced in Belgian
\n
law on the intervention of insurers in the event of very large floods), but which is still within the limit agreed between the Belgian
\n
insurance sector and the Walloon government). In 2022, the Life and Non-life technical result benefited from a release of
\n
technical reserves in the Czech Republic (31 million euros and 10 million euros, respectively) resulting from a reassessment of the
\n
confidence level of technical provisions.
\n
\u2022 More information on the acquisition of certain life and pension insurance policies from NN in Bulgaria in 2021 is provided in Note
\n
6.6.
\n
\u2022 See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\n
Reconciliation of the earned premiums stated in the consolidated income statement
\n
and in Note 3.7.1 (in millions of EUR)
\n
2022
\n
2021
\n
Non
\n
-life insurance (before reinsurance) \u2013 Earned premiums
\n
In the consolidated income statement
\n
2 033 1 885
\n
Addition of premiums from intragroup transactions between bank and insurer
\n
21 20
\n
In Note 3.7.1
\n
2 054 1 905
\n
Life insurance (before reinsurance)
\n
\u2013 Earned premiums
\n
In the consolidated income statement
\n
1 163 1 196
\n
Addition of premiums from intragroup transactions between bank and insurer
\n
1 1
\n
In Note 3.7.1
\n
1 163 1 196
\n

\n\n

\n\n

\n\n
\n
\n
\n\n

\n\n
Note 3.7.2: Life insurance
\n
\n
2022 2021
\n
(in millions of EUR)
\n
Total
\n
1 163 1 196
\n
By
\n
IFRS category
\n
Insurance contracts
\n
884 900
\n
Investment contracts with DPF
\n
280 296
\n
By type
\n
\n
Accepted reinsurance
\n
0 0
\n
Primary business
\n
1 163 1 196
\n
Breakdown of primary business
\n
\n
Individual premiums
\n
816 831
\n
\n
Single premiums 44 61
\n
\n
Periodic premiums 773 770
\n
Premiums under group contracts
\n
347 365
\n
\n
Single premiums 26 50
\n
\n
Periodic premiums 321 315
\n
Total sales of life insurance (including investment contracts without DPF)
\n
\n
Unit
\n
-linked 1 089 942
\n
Guaranteed
\n
-rate 996 1 022
\n
Total
\n
2 085 1 964
\n
\n
\u2022 As required under IFRS, we use deposit accounting for a number of investment contracts without DPF. This means that the
\n
premium income and technical charges from these contracts are not recognised under \u2018Earned premiums\u2019 and \u2018Technical
\n
charges\u2019, but that the margins on them are reported under \u2018Net fee and commission income\u2019. Investment contracts without DPF
\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n
are more or less the same as unit-linked contracts, which in 2021 accounted for premium income of 0.9 billion euros and in 2022
\n
for premium income of 1.1 billion euros. Premium income generated by investment contracts without DPF (under deposit
\n
accounting) is included in \u2018Total sales of life insurance\u2019, as presented in the lower part of the table. These sale volumes,
\n
therefore, comprise earned insurance premiums plus premiums from contracts that are subject to deposit accounting.
\n

\n\n

\n\n
\n
\n\n
Note 3.7.3: Non-life insurance
\n
\n
Technical insurance
\n
Operating
\n
Earned premiums
\n
charges
\n
expenses
\n
(before
\n
(before
\n
(before
\n
Ceded
\n
(in millions of EUR)
\n
reinsurance)
\n
reinsurance)
\n
reinsurance)
\n
reinsurance
\n
Total
\n
2022
\n
\n
Total
\n
2 054 -1 154 -688 1 213
\n
Accepted reinsurance
\n
30 -26 -10 18 12
\n
Primary business
\n
2 024 -1 128 -678 -17 201
\n
Accident & health (classes 1 & 2, excl. industrial accidents)
\n
128 -60 -41 0 27
\n
Industrial accidents (class 1)
\n
94 -95 -18 -1 -21
\n
Motor, third
\n
-party liability (class 10) 525 -321 -156 -2 45
\n
Motor, other classes (classes 3 & 7)
\n
360 -212 -124 -1 23
\n
Shipping, aviation, transport (classes 4, 5, 6, 7, 11 & 12)
\n
9 -2 -3 -2 2
\n
Fire and other damage to property (classes 8 & 9)
\n
622 -327 -231 -5 58
\n
General third
\n
-party liability (class 13) 156 -45 -51 -6 54
\n
Credit and suretyship (classes 14 & 15)
\n
0 0 0 0 0
\n
Miscellaneous pecuniary losses
\n
(class 16) 30 -13 -11 1 7
\n
Legal assistance (class 17)
\n
65 -40 -23 0 2
\n
Assistance (class 18)
\n
36 -11 -20 0 4
\n
2021
\n
\n
Total
\n
1 905 -1 106 -622 27 204
\n
Accepted reinsurance
\n
27 -11 -9 -3 4
\n
Primary business
\n
1 878 -1 095 -614 30 200
\n
Accident & health (classes 1 & 2, excl. industrial accidents)
\n
123 -53 -40 0 28
\n
Industrial accidents (class 1)
\n
89 -77 -16 0 -4
\n
Motor, third
\n
-party liability (class 10) 512 -305 -148 -4 55
\n
Motor, other classes (classes 3 & 7)
\n
320 -179 -108 3 36
\n
Shipping, aviation, transport (classes 4, 5, 6, 7, 11 & 12)
\n
7 -2 -2 -1 1
\n
Fire and other damage to property (classes 8 & 9)
\n
569 -343 -211 28 44
\n
General third
\n
-party liability (class 13) 142 -92 -46 1 6
\n
Credit and suretyship (classes 14 & 15)
\n
0 0 0 0 0
\n
Miscellaneous pecuniary losses (class 16)
\n
22 -9 -8 3 9
\n
Legal assistance (class 17)
\n
62 -28 -22 0 13
\n
Assistance (class 18)
\n
31 -6 -13 0 12
\n

\n\n

\n\n
2022 2021
\n
(in millions of EUR*)
\n
Total
\n
-284 261
\n
Impairment on financial assets at AC and at FVOCI
\n
-154 334
\n
(impairment on loans)
\n
By IFRS category
\n
\n
\n
Financial assets at amortised cost -155 330
\n
\n
Financial assets at fair value through OCI 1 4
\n
By product
\n
\n
\n
Loans and advances -177 315
\n
\n
Debt securities -2 3
\n
\n
Off-balance-sheet commitments and financial guarantees 25 15
\n
By type
\n
\n
\n
Stage 1 (12-month ECL) 5 74
\n
\n
Stage 2 (lifetime ECL) -106 449
\n
\n
Stage 3 (lifetime ECL) -60 -191
\n
\n
Purchased or originated credit impaired assets 8 2
\n
By business unit/country
\n
\n
\n
Belgium -35 309
\n
\n
Czech Republic -46 142
\n
\n
International Markets -78 -110
\n
\n
Slovakia -19 16
\n
\n
Hungary -29 22
\n
\n
Bulgaria -30 2
\n
\n
Ireland in 2021 - -149
\n
\n
Group Centre 5 -7
\n
\n
Of which Ireland in 2022 7 -
\n
Impairment on goodwill
\n
-5 -7
\n
Impairment on other
\n
-125 -65
\n
Intangible fixed assets (other than goodwill)
\n
-34 -35
\n
Property and
\n
equipment (including investment property) -18 -17
\n
Associated companies and joint ventures
\n
0 0
\n
Other
\n
-73 -13
\n
* Positive figures indicate a reversal and hence a positive impact on results
\n

\n\n
\u2022 We create the models for the various portfolios using typical PD, EAD and LGD inputs, as well as macroeconomic variables to
\n
the extent that there is a statistical relationship. The macroeconomic variables are GDP growth, the unemployment rate, policy
\n
interest rates, the exchange rate, government bond yields, house prices and inflation. As a result of regular back-testing,
\n
models may change and macroeconomic variables may be reassessed. Note 1.4 presents the optimistic, pessimistic and base-
\n
case scenarios for the three key indicators (GDP growth, unemployment rate and house price index) for each of our core
\n
countries.
\n
\u2022 As set out under \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section, KBC considers ESG risks in
\n
its credit risk management processes. The vulnerability of individual clients to specific ESG risks may become apparent during
\n
the term of the loan in client-specific credit risk figures, such as credit risk ratings and collateral valuations affecting the ECL
\n
calculation. Especially in terms of climate risk, which may have considerable consequences for certain sectors in the longer
\n
term, the impact on our loan portfolio is not expected to occur within the time horizon considered for the ECL measurement.
\n
\u2022 Our ECL models are not able to adequately reflect all the specifics of the direct and indirect consequences of the war in Ukraine
\n
and the coronavirus crisis. Therefore, an expert-based calculation at portfolio level has been performed that takes due account
\n
of the macroeconomic situation (see Note 1.4).
\n
\u2022 We use three different forward-looking macroeconomic scenarios (with different probability weightings) to measure ECL. The
\n
weightings at year-end 2022 were 60% for the \u2018base\u2019 scenario, 5% for the \u2018up\u2019 scenario and 35% for the \u2018down\u2019 scenario. The
\n
forecast horizon is 30 years. For further information on the key macroeconomic parameters, see Note 1.4.
\n
\u2022 A sensitivity analysis of the impact of these multiple economic scenarios on the collectively assessed ECL (i.e. without the ECL
\n
for individually assessed loans of 1.6 billion euros at the end of 2022 and 1.7 billion euros at the end of 2021) shows that the \u2018base\u2019
\n
scenario generates an ECL of 1.0 billion euros (0.9 billion euros in 2021), which is 0.1 billion euros lower than for the \u2018down\u2019 scenario
\n
(0.1 billion euros in 2021) and 0.0 billion euros higher than for the \u2018up\u2019 scenario (0.1 billion euros in 2021). The assessed scenario-
\n
weighted collective ECL (that was recognised) amounted to 1.0 billion euros (0.9 billion euros in 2021). These amounts take into
\n
account the ECL relating to geopolitical and emerging risks at year-end 2022 (see Note 1.4).
\n
\n
100%
\n
100%
\n
100%
\n
Collectively assessed ECL by country (2022, in billions of EUR)
\n
\n
pessimistic
\n
base-case scenario
\n
optimistic scenario
\n
scenario
\n
Total
\n
1.0 1.0 1.1
\n
Belgium
\n
0.3 0.3 0.3
\n
Czech Republic
\n
0.3 0.3 0.4
\n
Slovakia
\n
0.1 0.1 0.1
\n
Hungary
\n
0.1 0.1 0.1
\n
Bulgaria
\n
0.2 0.1 0.2
\n
Rest
\n
0.0 0.0 0.0
\n

\n\n

\n
Note 4.2: Financial assets and liabilities, breakdown by portfolio and quality
\n
\n\n

\n\n
Note 4.2.1: Impaired financial assets
\n
\n
\n
Carrying value before
\n
Carrying value after
\n
(in millions of EUR)
\n
impairment
\n
Impairment
\n
impairment
\n
31
\n
-12-2022
\n
*
\n
204 473 -2 619 201 853
\n
Financial assets at amortised cost: Loans and advances
\n
Stage 1 (12
\n
-month ECL) 163 846 -110 163 736
\n
Stage 2 (lifetime ECL)
\n
36 577 -635 35 941
\n
Stage 3 (lifetime ECL)
\n
3 616 -1 796 1 820
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
434
\n
-77
\n
357
\n
Financial assets at amortised cost: Debt securities
\n
52 048 -18 52 030
\n
Stage 1 (12
\n
-month ECL) 51 909 -7 51 903
\n
Stage 2 (lifetime ECL)
\n
130 -4 126
\n
Stage 3 (lifetime ECL)
\n
8 -7 1
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
Financial assets at fair value through OCI: Debt securities
\n
11 818 -4 11 813
\n
Stage 1 (12
\n
-month ECL) 11 753 -3 11 750
\n
Stage 2 (lifetime ECL)
\n
65 -2 63
\n
Stage 3 (lifetime ECL)
\n
0 0 0
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
31
\n
-12-2021
\n
*
\n
194 638 -2 573 192 065
\n
Financial assets at amortised cost: Loans and advances
\n
Stage 1 (12
\n
-month ECL) 167 426 -104 167 322
\n
Stage 2 (lifetime ECL)
\n
23 131 -507 22 624
\n
Stage 3 (lifetime ECL)
\n
3 493 -1 848 1 645
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
588
\n
-114
\n
474
\n
Financial assets at amortised cost: Debt securities
\n
47 181 -9 47 172
\n
Stage 1 (12
\n
-month ECL) 47 155 -5 47 150
\n
Stage 2
\n
(lifetime ECL) 24 -3 21
\n
Stage 3 (lifetime ECL)
\n
1 -1 1
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
Financial assets at fair value through OCI: Debt securities
\n
15 509 -6 15 503
\n
Stage 1 (12
\n
-month ECL) 15 418 -3 15 415
\n
Stage 2
\n
(lifetime ECL) 91 -3 88
\n
Stage 3 (lifetime ECL)
\n
0 0 0
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
* The carrying value after impairment in this note corresponds to the sum of the \u2018Loans and advances to credit institutions and investment firms (excl. reverse repos)\u2019, \u2018Loans and advances to
\n
customers (excl. reverse repos)\u2019 and \u2018Reverse repos\u2019 in Note 4.1 (in the \u2018Measured at amortised cost\u2019 column).
\n

\n\n

\n\n

\n\n
\u2022 Acquisition of Raiffeisenbank Bulgaria (now renamed KBC Bank Bulgaria):
\n
\u25e6 The carrying value before impairment at year-end 2022 included 4.7 billion euros for KBC Bank Bulgaria, of which 4.1 billion
\n
euros in loans and advances (3.2, 0.8 and 0.1 billion euros in Stages 1, 2 and 3, respectively), 0.5 billion euros in debt securities
\n
at amortised cost and 0.1 billion euros in debt securities at fair value through OCI. KBC Bank Bulgaria\u2019s portfolios account
\n
for 1.8% of the entire KBC group.
\n
\u25e6 Impairment at year-end 2022 included 113 million euros for KBC Bank Bulgaria, of which 106 million euros in loans and
\n
advances (10, 30 and 66 million euros in Stages 1, 2 and 3, respectively), and 7 million euros in debt securities at amortised
\n
cost. These impairment valuations partly deviate from the methodology set out in the accounting policies (particularly as
\n
regards the forward-looking information, IFRS 9 models and criteria used to determine a significant increase in credit risk).
\n
The integration of KBC Bank Bulgaria in 2023 will also involve the alignment of the accounting policies at KBC Bank Bulgaria
\n
for determining impairment.
\n
\u2022 Carrying value before impairment of loans and advances at amortised cost: increase of 9.8 billion euros in 2022, due primarily
\n
to:
\n
\u25e6 The acquisition of Raiffeisenbank Bulgaria (see above).
\n
\u25e6 An organic net increase in the loan portfolio (mainly mortgage loans and term loans, in all countries).
\n
\u25e6 This increase was partly offset by a decrease of the carrying value before impairment of loans and advances (excluding
\n
reverse repos) and the reverse repos to credit institutions and investment firms.
\n
\u2022 Carrying value before impairment of loans and advances at amortised cost in \u2018Stage 2\u2019: increase of 13.4 billion euros in 2022,
\n
due primarily to:
\n
\u25e6 The migration to \u2018Stage 2\u2019 based on a collective approach of \u2018Stage 1\u2019 loans (see also Note 1.4) that have indirect exposure
\n
to Russia, Ukraine and Belarus (i.e. as a result of the military conflict; 2.8 billion euros) and/or are vulnerable to emerging
\n
risks (11.3 billion euros).
\n
\u25e6 The acquisition of Raiffeisenbank Bulgaria (see above).
\n
\u25e6 This was partly offset by the discontinuation of the collective \u2018Stage 2\u2019 transfer of loans vulnerable to coronavirus-related
\n
risks (3.1 billion euros in receivables that had been moved to \u2018Stage 2\u2019 at year-end 2021). The remaining coronavirus-related
\n
risks in our loan portfolio are included in the regular indicators used to assess considerable credit risk increases (probability
\n
of default, forbearance and the number of days past due), which are no longer concealed by the moratoria.
\n
\u25e6 Please note that the migration of loans from \u2018Stage 1\u2019 to \u2018Stage 2\u2019 based on the collective approach resulted in a net
\n
decrease of 3.6 billion euros of the carrying value before impairment of loans and advances at amortised cost in \u2018Stage 1\u2019,
\n
which was partly offset by the organic net increase in the loan portfolio and the acquisition of Raiffeisenbank Bulgaria.
\n
\u25e6 Also note that the migration predicted in the management overlay at the time is not reflected in the 2021 year-end figures,
\n
because it was determined based on a collective approach and, therefore, could not be individually linked to specific
\n
loans. Taking into account the impact of the management overlay on staging at year-end 2021, this would result in a
\n
carrying value before impairment of loans and advances of an estimated 165.4, 24.3 and 4.3 billion euros in Stages 1, 2 and
\n
3, respectively (or net migration of 1% of the total portfolio from \u2018Stage 1\u2019 to \u2018Stage 2\u2019 and 0.4% from \u2018Stage 1\u2019 and \u2018Stage 2\u2019
\n
to \u2018Stage 3\u2019).
\n
\u2022 Carrying value before impairment of debt securities at amortised cost: increase of 4.9 billion euros in 2022, almost entirely in
\n
\u2018Stage 1\u2019:
\n
\u25e6 More than half of this increase concerns (issues by) public bodies, one third concerns credit institutions and investment
\n
firms, and the remaining part concerns corporates, and related primarily to net investments.
\n
\u2022 Impairment: increase of 0.1 billion euros in 2022, due to:
\n
\u25e6 The acquisition of Raiffeisenbank Bulgaria (see above).
\n
\u25e6 For information on other changes, see Note 3.10.
\n
\u2022 See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\u2022 In 2022, \u2018Stage 2\u2019 and \u2018Stage 3\u2019 financial assets with a net carrying value of 471 million euros have been subject to modifications
\n
in the past that did not result in derecognition. The gross carrying value of \u2018Stage 1\u2019 financial assets subject to modifications in
\n
the past that did not result in derecognition came to 1 088 million euros in 2022. The corresponding figures for 2021 were 1 712
\n
million euros and 509 million euros, respectively. Modification gains or losses are recognised under impairment (see Note 3.10).
\n
\u2022 In 2022, financial assets at amortised cost with a gross carrying value of 80 million euros were written off, but were still subject
\n
to enforcement activities; the corresponding figure in 2021 was 72 million euros.
\n

\n\n
Note 4.2.2: Impairment details
\n
\n
\n
\n
Subject to lifetime ECL
\n
Stage 1
\n
Stage 2
\n
Stage 3
\n
(purchased or
\n
\n
Subject to 12-
\n
Subject to lifetime
\n
Subject to lifetime
\n
originated credit
\n
(in millions of EUR)
\n
month ECL
\n
ECL
\n
ECL
\n
impaired)
\n
Total
\n
2022
\n
\n
LOANS AND ADVANCES AT AMORTISED COST
\n
Impairment on 1 January
\n
104
\n
507
\n
1 848
\n
114
\n
2 573
\n
1
\n
-6 96 147 -8 230
\n
Movements with an impact on results
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) -22 158 60 0 197
\n
\n
Stage 2 (lifetime ECL) 4 -83 95 0 16
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 26 -54 -3 -31
\n
New financial assets
\n
2
\n
\n
40
\n
43
\n
10
\n
0
\n
93
\n
\n
Changes in risk parameters during the reporting period -16 -23 90 -5 48
\n
\n
Changes in the model or methodology -1 3 0 0 2
\n
Derecognised financial assets
\n
3
\n
-10 -26 -59 -1 -97
\n
\n
\n
Other -1 -2 4 0 2
\n
Movements without an impact on results
\n
12 32 -199 -29 -184
\n
\n
Derecognised financial assets
\n
3
\n
0 -1 -296 -7 -304
\n
Changes in the scope of consolidation
\n
14
\n
32
\n
88
\n
0
\n
133
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
\n
Other -2 1 9 -21 -13
\n
Impairment on 31 December
\n
110 635 1 796 77 2 619
\n
DEBT
\n
SECURITIES AT AMORTISED COST
\n
Impairment on 1 January
\n
5 3 1 0 9
\n
1
\n
2 0 1 0 3
\n
Movements with an impact on results
\n
Transfer of financial assets
\n
\n
\n
\n
\n
\n
\n
Stage 1 (12-month ECL) 0 0 0 0 0
\n
\n
Stage 2 (lifetime ECL) 0 -1 1 0 0
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
1 0 0 0 1
\n
\n
Changes in risk parameters during the reporting period 0 1 0 0 1
\n
Changes in the model or methodology
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
\n
Other 0 0 0 0 0
\n
Movements without an impact on results
\n
0 1 5 0 6
\n
\n
Derecognised financial assets
\n
3
\n
0 0 -1 0 -1
\n
\n
Changes in the scope of consolidation 0 1 6 0 7
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
Other
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Impairment on 31 December
\n
7 4 7 0 18
\n
DEBT SECURITIES AT FAIR VALUE THROUGH OCI
\n
\n
Impairment on 1 January
\n
3 3 0 0 6
\n
Movements with an impact on results
\n
1
\n
0 -1 0 0 -1
\n
\n
Transfer of financial assets
\n
Stage 1 (12-month ECL)
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Stage 2 (lifetime ECL)
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
0 0 0 0 0
\n
\n
Changes in risk parameters during the reporting period 0 -1 0 0 -1
\n
\n
Changes in the model or methodology 0 0 0 0 0
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
Other
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Movements without an impact on results
\n
0 0 0 0 0
\n
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
Changes in the scope of consolidation 0 0 0 0 0
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
\n
Other 0 0 0 0 0
\n
Impairment on 31 December
\n
3 2 0 0 4
\n

\n\n
2021
\n
LOANS AND ADVANCES AT AMORTISED COST
\n
Impairment on 1 January
\n
168 992 2 517 18 3 695
\n
Movements with an impact on results
\n
1
\n
-62 -454 242 -2 -276
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) -12 99 42 0 129
\n
\n
Stage 2 (lifetime ECL) 6 -116 80 0 -30
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL)
\n
0
\n
20
\n
-36
\n
0
\n
-16
\n
\n
New financial assets
\n
2
\n
25 14 7 0 45
\n
\n
Changes in risk parameters during the reporting period -57 -426 214 1 -269
\n
\n
Changes in the model or methodology 0 -1 0 0 -1
\n
\n
Derecognised financial assets
\n
3
\n
-24 -48 -84 -2 -158
\n
\n
Other 0 2 20 0 22
\n
Movements without an
\n
impact on results -2 -32 -911 98 -847
\n
3
\n
Derecognised financial assets
\n
\n
0
\n
0
\n
-286
\n
-12
\n
-299
\n
\n
Changes in the scope of consolidation 0 0 4 0 4
\n
\n
Transfers under IFRS 5 -3 -31 -540 0 -574
\n
\n
Other 1 0 -90 110 21
\n
Impairment on 31 December
\n
104 507 1 848 114 2 573
\n
DEBT SECURITIES AT AMORTISED COST
\n
\n
Impairment on 1 January
\n
6
\n
1
\n
2
\n
0
\n
9
\n
Movements with an impact on results
\n
1
\n
\n
-1
\n
2
\n
0
\n
0
\n
1
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) 0 0 0 0 0
\n
\n
Stage 2 (lifetime ECL) 0 0 0 0 0
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
1 0 0 0 1
\n
Changes in risk parameters during the reporting period
\n
-2
\n
3
\n
0
\n
0
\n
1
\n
\n
Changes in the model or methodology 0 0 0 0 0
\n
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 -1
\n
\n
Other 0 0 0 0 0
\n
Movements without an
\n
impact on results 0 0 -1 0 -1
\n
Derecognised financial assets
\n
3
\n
0 0 -1 0 -1
\n
\n
\n
Changes in the scope of consolidation 0 0 0 0 0
\n
Transfers under IFRS 5
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
Other 0 0 0 0 0
\n
Impairment on 31
\n
December 5 3 1 0 9
\n
DEBT SECURITIES AT FAIR VALUE THROUGH OCI
\n
\n
Impairment on 1 January
\n
6 3 0 0 9
\n
Movements with an impact on results
\n
1
\n
-3 0 0 0 -4
\n
Transfer of financial assets
\n
\n
\n
\n
\n
\n
\n
Stage 1 (12-month ECL) 0 0 0 0 0
\n
\n
Stage 2 (lifetime ECL) 0 -1 0 0 -1
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
0 0 0 0 0
\n
\n
Changes in risk parameters during the reporting period -3 0 0 0 -3
\n
\n
Changes in the model or methodology 0 0 0 0 0
\n
Derecognised financial assets
\n
3
\n
\n
-1
\n
0
\n
0
\n
0
\n
-1
\n
\n
Other 0 0 0 0 0
\n
Movements without an impact on
\n
results 0 0 0 0 0
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
\n
Changes in the scope of consolidation 0 0 0 0 0
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
\n
Other 0 0 0 0 0
\n
Impairment on 31 December
\n
3
\n
3
\n
0
\n
0
\n
6
\n
1 Amounts recovered in respect of loans that have already been written off are recycled to the income statement and recorded as \u2018Impairment on financial assets at amortised cost and at
\n
fair value through OCI\u2019. However, they have not been included in this table since they do not have any impact on impairment losses on the balance sheet.
\n
2 Also includes impairment related to new financial assets resulting from off-balance-sheet commitments and financial guarantees already given being called.
\n
3 Derecognition without an impact on results occurs when the impairment adjustment has already been made upfront (for example, at the moment of the sale agreement (disposals) or before
\n
the write-off). Derecognition with an impact on results occurs when the impairment adjustment takes place at the same time (for instance, in the case of debt forgiveness).
\n

\n\n
\u2022 The change in impairment in 2022 relates mainly to the reserve set aside to cover geopolitical and emerging risks and the full
\n
reversal of the remaining reserves set aside for the coronavirus crisis (see Note 1.4) and the changes in the scope of
\n
consolidation, partly offset by the elimination of the impairment on derecognised financial assets.
\n
\u2022 Changes in the scope of consolidation: relates mainly to the acquisition of Raiffeisenbank Bulgaria.
\n
\u2022 The vast majority of the staging is triggered by a collective management assessment and relative changes in PD (see the multi-
\n
tier approach outlined in Note1.2 under \u2018Significant increase in credit risk since initial recognition\u2019).
\n
\u2022 For information on provisions for commitments and financial guarantees, see Note 5.7.2.
\n
\u2022 For information regarding the impact of changes in impairment on the income statement, see Note 3.10.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. Based on internal management reports, the
\n
composition and quality of the loan portfolio is set out in detail in the \u2018How do we manage our risks?\u2019 section (under \u2018Credit
\n
risk\u2019). All parts of that particular section which have been audited by the statutory auditor are listed at the start of the section.
\n

\n\n

\n

\n\n

\n\n
Note 4.4: Fair value of financial assets and liabilities \u2013 general
\n
\u2022 In line with European Banking Authority guidelines, we conduct an outlier stress test on a quarterly basis by applying six different
\n
scenarios to the banking books (material currencies). The worst-case scenario is set off against tier-1 capital. For the banking
\n
book at KBC group level, this risk came to -3% of tier-1 capital at year-end 2022. This -3% is well below the -15% Tier 1 threshold,
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
which is monitored by the ECB. Note that this -3% of tier-1 capital at year-end 2022 is equivalent to a -0.4% points impact on
\n
the end of year 2022 fully loaded CET1 ratio.
\n
\u2022 The table shows the changes in economic value of equity under six different interest rate scenarios. To test these six scenarios,
\n
we combine the shift in the yield curves with changes in maturities depending on clients\u2019 behaviour (e.g., interest-rate-driven
\n
prepayment behaviour) and use a run-off balance sheet where maturing items are not replaced. The bank also analyses the
\n
impact of different interest rate scenarios on its net interest income.
\n
\n
Changes of the economic value of equity
\n
Supervisory shock scenarios (in millions of EUR, material currencies)*
\n
End of 4Q2022
\n
End of 2Q2022
\n
1 Parallel up
\n
-491
\n
-1 163
\n
2 Parallel down
\n
370
\n
600
\n
3 Steepener
\n
-55
\n
-207
\n
4 Flattener
\n
-26
\n
-3
\n
5 Short rates up
\n
-179
\n
-343
\n
6 Short rates down
\n
102
\n
176
\n
\n
* Supervision of the underlying internal models\u2019 compliance with the approval criteria as provided for in the standards imposed by the regulator does not come under the responsibility of the statutory auditor.
\n
\u2022 Note that the above stress test covers the full balance sheet (full economic view), with compensating effects across the balance
\n
sheet, whereas the table below focuses on some parts of the balance sheet.
\n
\n
\u2022 Furthermore, taking into account 1) KBCs large stock of high-quality liquid assets (approximately 92 billion euros on average in
\n
2022), which consist of cash and bonds which can be repoed in the private market and at the central banks, 2) 48% of total
\n
customer deposits at KBC are covered by the Deposit Guarantee and 3) 83% of total customer deposits consisting of more
\n
stable retail & SME clients, the unrealised losses on the debt securities portfolio at amortised cost do not need to be realised
\n
for liquidity purposes and are therefore irrelevant from a capital perspective.
\n
\n
\n
\n
Fair value of financial instruments that are not measured at fair value
\n
Financial assets
\n
Financial liabilities
\n
in the balance sheet
\n
at amortised cost
\n
at amortised cost
\n
Carrying
\n
Fair
\n
Carrying
\n
Fair
\n
(in millions of EUR)
\n
value
\n
value
\n
value
\n
value
\n
31-12-2022
\n
FINANCIAL ASSETS
\n
\n
Loans and advances to credit institutions and investment firms (incl. reverse
\n
repos) 24 258 24 211 \u2013 \u2013
\n
Loans and advances to customers (incl. reverse repos)
\n
177 596 163 972 \u2013 \u2013
\n
Debt securities
\n
52 030 46 886 \u2013 \u2013
\n
Other
\n
1 561 1 561 \u2013 \u2013
\n
Total
\n
255 444 236 630 \u2013 \u2013
\n
\n
Level 1 \u2013 43 364 \u2013 \u2013
\n
\n
Level 2 \u2013 31 917 \u2013 \u2013
\n
\n
Level 3 \u2013 161 349 \u2013 \u2013
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms (incl. repos)
\n
\n
\u2013 \u2013 35 671 35 207
\n
Deposits from customers and debt securities (incl. repos)
\n
\n
\u2013 \u2013 251 735 250 485
\n
Liabilities under investment
\n
contracts \u2013 \u2013 0 0
\n
Other
\n
\u2013 \u2013 2 448 2 448
\n
Total
\n
\u2013 \u2013 289 854 288 140
\n
Level 1
\n
\u2013
\n
\u2013
\n
\u2013
\n
47
\n
Level 2
\n
\u2013
\n
\u2013
\n
\u2013
\n
111 093
\n
Level 3
\n
\u2013
\n
\u2013
\n
\u2013
\n
176 999
\n
31
\n
-12-2021
\n
FINANCIAL ASSETS
\n
\n
Loans and advances to credit institutions and investment firms (incl. reverse
\n
repos) 32 780 32 789 \u2013 \u2013
\n
Loans and advances to customers (incl. reverse repos)
\n
159 285 160 037 \u2013 \u2013
\n
Debt securities
\n
47 172 47 878 \u2013 \u2013
\n
Other
\n
892 892 \u2013 \u2013
\n
Total
\n
240 128 241 595 \u2013 \u2013
\n
Level 1
\n
\u2013
\n
44 062
\n
\u2013
\n
\u2013
\n
Level 2
\n
\u2013
\n
36 737
\n
\u2013
\n
\u2013
\n
Level 3
\n
\u2013
\n
160 797
\n
\u2013
\n
\u2013
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms (incl. repos)
\n
\n
\u2013 \u2013 40 935 41 003
\n
Deposits from customers and debt securities (incl. repos)
\n
\n
\u2013 \u2013 225 164 225 299
\n
Liabilities under investment
\n
contracts \u2013 \u2013 0 0
\n
Other
\n
\u2013 \u2013 2 288 2 286
\n
Total
\n
\u2013 \u2013 268 387 268 588
\n
\n
Level 1 \u2013 \u2013 \u2013 24
\n
\n
Level 2 \u2013 \u2013 \u2013 105 714
\n
\n
Level 3 \u2013 \u2013 \u2013 162 850
\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n
\u2022 All internal valuation models are validated by an independent Risk Validation Unit. In addition, the Executive Committee has
\n
appointed a Group Valuation Committee (GVC) to ensure that KBC meets all the legal requirements for measuring financial
\n
assets and liabilities at fair value. The GVC monitors consistent implementation of the KBC Valuation Framework, which consists
\n
of various guidelines, including the Group Valuation Policy, the Group Market Value Adjustments Policy and the Group
\n
Parameter Review Policy. The GVC meets at least twice a quarter to approve significant changes in valuation methods
\n
(including, but not limited to, models, market data and inputs) or deviations from group policies for financial assets and liabilities
\n
measured at fair value. The committee is made up of members from Finance, Risk Management and the Middle Office. Valuation
\n
uncertainty measurements are made and reported to the GVC every six months. Certain fair values generated by valuation
\n
models are challenged by a team set up specifically for this purpose.
\n
\u2022 The fair value of mortgage and term loans not measured at fair value in the balance sheet (see table) is calculated by
\n
discounting contractual cashflows at the risk-free rate. This calculation is then adjusted for credit risk by taking account of
\n
margins obtained on similar, but recently issued, loans or by using a spread derived from the listed-bond spread. The fair value
\n
of the main portfolios takes account of prepayment risks and cap options. The fair value of time deposits is calculated by
\n
discounting contractual cashflows at the risk-free rate. The fair value of demand and savings deposits is presumed to be equal
\n
to their carrying value.
\n
\u2022 As a result of the first-time adoption of IFRS 9 on 1 January 2018, debt instruments with a total carrying value of 15 060 million
\n
euros have been reclassified from \u2018Available-for-sale assets\u2019 to \u2018Financial assets held at amortised cost\u2019. Due to this
\n
reclassification, changes in fair value (before tax) totalling -566 million euros were not recorded in the revaluation reserve in
\n
2022 (-199 million euros in 2021). The fair value of this reclassified portfolio (after redemptions) amounted to 4 668 million euros
\n
at year-end 2022 (5 753 million euros at year-end 2021).
\n
\u2022 The difference between the fair value and the carrying value of the financial instruments at amortised cost was caused by the
\n
substantial interest rate hikes in 2022. As a hold-to-collect business model is applied on the assets side, interim changes in fair
\n
value are less relevant. In addition, part of this difference has already been recorded under fair value hedges for a portfolio of
\n
interest rate risk, which is presented separately on the balance sheet (on both the assets and the liabilities side) in the
\n
\u2018Profit/loss on positions in portfolios hedged against interest rate risk\u2019 balance sheet item. Furthermore, there are ALM interest
\n
derivatives not recognised in hedge accounting.
\n

\n\n

\n\n
\n
\n
\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n

\n

\n

\n

\n

\n

\n

\n
Note 4.5: Financial assets and liabilities measured at fair value \u2013 fair value hierarchy
\n
\n
\n
Fair value hierarchy
\n
31-12-2022 31-12-2021
\n
(in millions of EUR)
\n
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
\n
FINANCIAL ASSETS AT FAIR VALUE
\n
\n
Mandatorily measured at fair value through profit or loss other than held for trading (including
\n
\n
overlay)
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 13 0 13 0 0 0 0
\n
reverse repos)
\n
Loans and advances to customers (incl. reverse repos)
\n
0 0 625 625 0 0 560 560
\n
Equity instruments
\n
1 131 0 118 1 250 1 323 0 52 1 374
\n
Investment contracts (insurance)
\n
12 638 134 0 12 771 14 365 254 0 14 620
\n
Debt securities
\n
12 0 5 17 14 0 3 17
\n
of which sovereign bonds
\n
\n
0
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 34 0 34 0 1 0 1
\n
reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Equity instruments
\n
429 0 0 430 448 0 0 448
\n
Debt securities
\n
1 480 244 4 1 728 1 522 1 432 4 2 958
\n
\n
of which sovereign bonds 1 444 223 0 1 667 1 441 1 076 0 2 517
\n
Derivatives
\n
3 5 547 729 6 279 1 4 482 961 5 443
\n
Other
\n
0 0 0 0 0 0 0 0
\n
Designated upon initial recognition at fair value through profit or loss (FVO)
\n
Loans and advances to credit institutions and
\n
0 0 0 0 0 0 0 0
\n
investment firms (incl. reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Debt securities
\n
0 0 0 0 0 0 0 0
\n
\n
of which sovereign bonds 0 0 0 0 0 0 0 0
\n
At fair value through OCI
\n
\n
\n
\n
\n
\n
\n
\n
\n
Equity instruments
\n
18 1 297 315 15 1 306 321
\n
Debt securities
\n
9 508 2 070 235 11 813 12 269 2 963 271 15 503
\n
\n
of which sovereign bonds
\n
\n
7 003 1 059 73 8 135 8 751
\n
\n
1 711
\n
\n
52
\n
\n
10 514
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0 542 0 542 0 283 0 283
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial assets at fair value
\n
25 219 8 585 2 014 35 818 29 956 9 416 2 157 41 529
\n
FINANCIAL LIABILITIES AT FAIR VALUE
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 7 0 7 0 2 0 2
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 44 0 44 0 21 0 21
\n
Derivatives
\n
2
\n
6 911
\n
1 125
\n
8 038
\n
1
\n
4 410
\n
1 209
\n
5 619
\n
Short positions
\n
884 123 0 1 007 1 582 47 0 1 628
\n
Designated at fair value
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 0 0 0 0 0 0 0
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 74 1 131 1 205 0 61 1 251 1 312
\n
Liabilities under investment contracts
\n
12 002 0 0 12 002 13 603 0 0 13 603
\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0
\n
479
\n
98
\n
577
\n
0
\n
696
\n
398
\n
1 094
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial liabilities at fair value
\n
12 887 7 638 2 355 22 881 15 185 5 238 2 857 23 280
\n
\n
\u2022 The fair value hierarchy prioritises the valuation techniques and the respective inputs into three levels.
\n
- The fair value hierarchy gives the highest priority to \u2018level 1 inputs\u2019. This means that, when there is an active market, quoted
\n
prices have to be used to measure the financial assets or liabilities at fair value. Level 1 inputs are prices that are readily and
\n
regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency (and that are
\n
quoted in active markets accessible to KBC). They represent actual and regularly occurring market transactions on an arm\u2019s
\n
length basis. The fair value is then based on a mark-to-market valuation derived from currently available transaction prices.
\n
No valuation technique (model) is involved.
\n
- If there are no price quotations available, the reporting entity establishes fair value using a model based on observable or
\n
unobservable inputs. The use of observable inputs must be maximised. Observable inputs are also referred to as \u2018level 2
\n
inputs\u2019 and reflect the assumptions market participants would use in pricing the asset or liability based on market data
\n
obtained from sources independent of the reporting entity. Examples of observable inputs are the risk-free rate, exchange
\n
rates, stock prices and implied volatility. Valuation techniques based on observable inputs include discounted cashflow
\n
analysis, or reference to the current or recent fair value of a similar instrument.
\n
- Unobservable inputs are also referred to as \u2018level 3 inputs\u2019 and reflect the reporting entity\u2019s own assumptions about the
\n
assumptions that market participants would use in pricing the asset or liability (including assumptions regarding the risks
\n
involved). Unobservable inputs reflect a market that is not active. For example, proxies and correlation factors can be
\n
considered to be unobservable in the market.
\n
\u2022 When the inputs used to measure the fair value of an asset or a liability can be categorised into different levels of the fair value
\n
hierarchy, the fair value measurement is classified in its entirety into the same level as the lowest level input that is significant
\n
to the entire fair value measurement. For example, if a fair value measurement uses observable inputs that require significant
\n
adjustment based on unobservable inputs, that measurement is a level 3 measurement.
\n
\u2022 The valuation methodology and the corresponding classification in the fair value hierarchy of the most commonly used financial
\n
instruments are summarised in the table. Whereas the majority of instruments of a certain type are within the level indicated in
\n
the table, a small portion may actually be classified in another level.
\n
\u2022 KBC follows the principle that transfers into and out of levels of the fair value hierarchy are made at the end of the reporting
\n
period. Transfers between the various levels are dealt with in more detail in Note 4.6 and Note 4.7.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Instrument type Products Valuation technique
\n
Liquid financial instruments
\n
FX spots, exchange traded financial futures, exchange traded options,
\n
Mark-to-market (quoted prices in active
\n
for which quoted prices are
\n
exchange traded stocks, exchange traded funds, liquid government
\n
markets), for bonds: BVAL or vendor
\n
data.
\n
\n
Level 1
\n
regularly available
\n
\n
bonds, other liquid bonds, liquid asset backed securities (ABS) in active
\n
markets
\n
Plain vanilla/liquid
\n
(Cross-currency) interest rate swaps (IRS), FX swaps, FX forwards, forward
\n
Discounted cashflow analysis based on
\n
derivatives
\n
\n
rate agreements (FRA), inflation swaps, dividend swaps and futures,
\n
discount and estimation curves (derived
\n
reverse floaters, bond future options, interest rate future opt
\n
ions, overnight
\n
from quoted deposit rates,
\n
\n
index swaps (OIS), FX resets
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Caps & floors, interest rate options, European stock options, European &
\n
Option pricing model based on
\n
American FX options, forward starting options, digital FX options, FX strips
\n
observable inputs (e.g., volatilities)
\n
\n
of simple options, European swaptions, European cancellable IRS,
\n
\n
compound options
\n
\n
Linear financial liabilities
\n
Deposits, simple cashflows, repo transactions
\n
Discounted cashflow analysis based on
\n
(without optional features)
\n
\u2013
\n
discount and estimation curves (derived
\n
cash instruments
\n
\n
from quoted deposit rates,
\n
\n
\n
Level 2
\n
FX swaps and (CC)IRS)
\n
\n
\n
Semi-liquid bonds/asset
\n
Semi-liquid bonds/asset backed securities
\n
BVAL, prices corroborated by alternative
\n
backed securities
\n
\n
observable market data, or using
\n
comparable spread method
\n
\n
\n
Debt instruments
\n
KBC IFIMA own issues (liabilities), mortgage bonds held by \u010cSOB
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
observable inputs
\n
\n
\n
Linear financial assets (cash
\n
Loans, commercial paper
\n
Discounted cashflow analysis based on
\n
instruments)
\n
\n
discount and estimation curves (derived
\n
from quoted deposit rates,
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Exotic derivatives
\n
Target profit forwards, flexible forwards, American & Asian stock options,
\n
Option pricing model based on
\n
Bermudan swaptions, digital interest rate options, quanto interest rate
\n
observable inputs (e.g., correlation)
\n
\n
options, digital stock options, composite stock options, barrier stock
\n
options, quanto digital FX options, FX
\n
Asian options, FX European barrier
\n
options, FX simple digital barrier options, FX touch rebates, inflation
\n
options, Bermudan cancellable IRS, constant maturity swaps (CMS), CMS
\n
spread swaps, CMS spread options, CMS interest rate caps/floors,
\n
(callable) ra
\n
nge accruals, outperformance options, auto-callable options,
\n
\n
Level 3
\n
lookback options, commodity swaps and forwards
\n
Illiquid credit-linked
\n
Collateralised debt obligations (notes)
\n
Valuation model based on correlation of
\n
instruments
\n
\n
probability of default of underlying assets
\n
\n
\n
Private equity investments
\n
Private equity and non-quoted participations
\n
Based on the valuation guidelines of the
\n
European Private Equity & Venture Capital
\n
Association
\n
\n
\n
Illiquid bonds/asset backed
\n
Illiquid (mortgage) bonds/asset backed securities that are indicatively
\n
BVAL, third-party pricing (e.g., lead
\n
securities
\n
\n
priced by a single pricing provider in an inactive market
\n
\n
manager), where prices
\n
cannot be
\n
\n
\n
corroborated due to a lack of
\n
available/reliable alternative market data
\n
\n
\n
Debt instruments
\n
KBC own issues (KBC IFIMA)
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
\n
unobservable inputs (indicative pricing by
\n
third parties for derivatives)
\n
\n
\n
Structured loans
\n
Government-regulated loans with leveraged interest rates and exotic
\n
Discounted cashflow analysis and
\n
early repayment
\n
schedules (K&H)
\n
valuation of related derivatives based on
\n
unobservable inputs
\n
\n
\n
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.6: Financial assets and liabilities measured at fair value \u2013 transfers between levels 1 and 2
\n
\n
\u2022 In 2022, KBC transferred 77 million euros\u2019 worth of financial assets and liabilities out of level 1 and into level 2, and 434 million
\n
euros\u2019 worth of financial assets and liabilities out of level 2 and into level 1. The corresponding figures for 2021 were 206 million
\n
euros and 294 million euros, respectively. Most of these reclassifications were carried out due to a change in the liquidity of
\n
government bonds and corporate bonds.
\n

\n\n

\n

\n

\n\n
Note 4.7: Financial assets and liabilities measured at fair value \u2013 focus on level 3
\n
\n
\u2022 In 2022, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 65 million euros, primarily on account of new transactions, partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of unlisted shares rose by 66 million euros, due primarily to new
\n
transactions.
\n
- Financial assets at fair value through OCI: the fair value of debt instruments decreased by 36 million euros, primarily on
\n
account of instruments reaching maturity and changes in market inputs.
\n
- Financial assets held for trading: the fair value of derivatives decreased by 232 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities held for trading: the fair value of derivatives decreased by 83 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives decreased by 300 million euros due to changes
\n
in market inputs.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of issued debt instruments decreased by 120
\n
million euros, primarily on account of transactions reaching maturity and the sale of existing positions, only partly offset by
\n
new transactions.
\n
\u2022 In 2021, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 173 million euros, primarily on account of new transactions, only partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of debt instruments fell by 34 million euros, owing primarily to changes
\n
in market inputs.
\n
- Financial liabilities held for trading: the fair value of derivatives increased by 103 million euros, due mainly to changes in market
\n
inputs and new transactions, partly offset by sales. The fair value of issued debt instruments fell by 85 million euros, due mainly
\n
to instruments that had reached maturity.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives increased by 398 million euros due to
\n
reclassifications in level 3 owing to an optimisation of the classification method.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of debt instruments increased by 100 million
\n
euros, primarily on account of new issues, partly offset by sales.
\n
\u2022 Some level 3 assets are associated or economically hedged with identical level 3 liabilities, which means that KBC\u2019s exposure
\n
to unobservable inputs is lower than would appear from the gross figures. Most of the level 3 instruments are also valued using
\n
third-party pricing sources, with KBC not developing any unobservable inputs itself. The main unobservable inputs applied by
\n
KBC to the valuation of exotic derivatives include: mean reversion parameter on Bermudan swaptions, equity cross-correlations
\n
and volatilities for certain stock options, interest-rate correlations for CMS spread options, and the funding costs used to
\n
determine the forward equity prices as part of the valuation of certain equity derivatives. The change in fair value resulting from
\n
a change in these inputs to reflect reasonably possible alternative assumptions is insignificant.
\n

\n\n

\n\n
Note 4.8: Derivatives
\n
\n
\u2022 In terms of volume of the notional amounts of the derivatives, approximately 77% are trading derivatives and approximately
\n
23% are hedging derivatives.
\n
\u2022 The majority of trading derivatives are effectively included in the trading book but are largely economically hedged (limited
\n
open positions) by other trading derivatives (such as derivative transactions initiated by commercial clients that are
\n
economically hedged) or by balance sheet positions (such as currency positions), which leads to large volumes of notional
\n
amounts but also to result-neutral revaluations on a net basis.
\n
\u2022 A limited number of trading derivatives are ALM derivatives included in the banking book, which are used to hedge economic
\n
risk. These are not subject to hedge accounting. Hedge accounting is applied to most of the ALM interest rate contracts. Only
\n
a limited number of the ALM derivatives for foreign currencies are included in hedge accounting.
\n
\n
\n
Note 4.8.1: Trading derivatives
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
\n
Carrying value
\n
Notional amounts*
\n
Carrying value
\n
Notional amounts*
\n
\n
Assets
\n
Liabilities
\n
Purchased
\n
Sold
\n
Assets
\n
Liabilities
\n
Purchased
\n
Sold
\n
Total
\n
6 279 8 038 567 205 568 302 5 443 5 619 491 716 503 818
\n
Interest rate contracts
\n
2 642 3 678 379 270 377 754 3 056 2 788 291 100 301 289
\n
of which interest rate swaps and
\n
2 429 3 542 368 144 371 294 2 731 2 669 278 999 294 056
\n
futures
\n
\n
of which options 214 136 11 126 6 460 325 119 12 101 7 232
\n
Foreign exchange contracts
\n
3 166 3 620 174 787 177 841 1 722 1 880 185 800 187 835
\n
of which currency and interest
\n
rate swaps, forward foreign
\n
3 081 3 509 171 878 172 361 1 668 1 830 182 613 183 020
\n
exchange transactions and
\n
futures
\n
\n
of which options 85 112 2 909 5 480 54 50 3 187 4 816
\n
Equity
\n
contracts 452 720 12 812 12 371 646 935 14 494 14 376
\n
\n
of which equity swaps 414 410 10 553 10 394 620 637 12 607 12 651
\n
\n
of which options 37 311 2 259 1 977 26 298 1 888 1 725
\n
Credit contracts
\n
0 0 0 0 0 0 4 4
\n
\n
of which credit default swaps 0 0 0 0 0 0 4 4
\n
Commodity and other contracts
\n
20 19 337 335 19 17 318 314
\n
* In this table, both legs of the derivatives are reported in the notional amounts.
\n

\n\n
Note 4.8.2: Hedging derivatives
\n
31-12-2022
\n
(in millions of EUR)
\n
Hedging instrument
\n
Hedged item
\n
Impact on equity
\n
\n
Notional amounts
\n
1
\n
\n
Carrying value
\n
Change in fair
\n
value of hedging
\n
items used as
\n
basis for
\n
recognising hedge
\n
ineffectiveness for
\n
the period
\n
2
\n
\n
Type
\n
Carrying value
\n
Change in fair
\n
value of hedged
\n
items used as
\n
basis for
\n
recognising
\n
hedge
\n
ineffectiveness
\n
for the period
\n
2
\n
\n
Ineffective
\n
portion
\n
recognised in
\n
profit or loss
\n
Effective
\n
portion
\n
recognised in
\n
OCI
\n
Hedging strategy
\n
Purchased
\n
Sold
\n
Assets
\n
Liabilities
\n
\n
\n
Total (including
\n
fair value
\n
changes)
\n
Of which
\n
accumulated
\n
fair value
\n
adjustments
\n
\n
\n
\n
Fair value micro hedge
\n
\n
Interest rate swaps
\n
22 753 22 753 185 102 -619
\n
Debt
\n
securities held at AC 4 007 -684 -323
\n
Currency and
\n
interest rate swaps
\n
0 0 0 0 0
\n
Loans and advances at AC
\n
683 70 -310
\n
\n
\n
Debt securities held at FVOCI
\n
1 342 -152 -176
\n
\n
\n
Debt securities issued at AC
\n
14 624 -1 334 1 432
\n
\n
\n
Deposits at AC
\n
0 0 0
\n
Total
\n
22 753 22 753 185 102 -619
\n
Total
\n
624 5 -
\n
Portfolio hedge of interest rate risk
\n
\n
Interest rate swaps
\n
123 930 123 930 209 261 3 172
\n
Debt securities held at AC
\n
359 -122 -123
\n
Currency and
\n
interest rate options
\n
1 762 0 101 0 82
\n
Loans and advances at AC
\n
104 980 -4 207 -3 769
\n
\n
\n
Debt securities held at FVOCI
\n
23 -6 -6
\n
\n
\n
Debt securities issued at AC
\n
0 0 0
\n
\n
\n
Deposits at AC
\n
14 574 -1 432 644
\n
Total
\n
125 692 123 930 310 261 3 254
\n
Total
\n
-3 254 0 -
\n
Cashflow hedge (micro hedge and portfolio hedge)
\n
\n
Interest rate swaps
\n
20 073 20 073 47 115 177
\n
\n
\n
Currency and
\n
interest rate swaps
\n
1 204 1 257 0 39 -13
\n
\n
\n
Total
\n
21 277 21 330 47 154 164
\n
Total
\n
-167 -3 -1 046
\n
Hedge of net
\n
investments in foreign operations
\n
Total
\n
3
\n
1 755 1 807 0 505 18
\n
Total
\n
-18 0 20
\n
1 In this table, both legs of the derivatives are reported in the notional amounts.
\n
2 Ineffectiveness is recognised in \u2018Net result from financial instruments at fair value through profit or loss\u2019 (also see Note 3.3).
\n
3 Hedging instruments in the form of foreign currency deposits.
\n

\n\n
31-12-2021
\n
(in millions of EUR)
\n
Hedging instrument
\n
Hedged item
\n
Impact on equity
\n
\n
Notional amounts
\n
1
\n
\n
Carrying value
\n
Change in fair
\n
value of hedging
\n
items used as
\n
basis for
\n
recognising hedge
\n
ineffectiveness for
\n
the period
\n
2
\n
\n
Type
\n
Carrying value
\n
Change in fair
\n
value of hedged
\n
items used as
\n
basis for
\n
recognising
\n
hedge
\n
ineffectiveness
\n
for the period
\n
2
\n
\n
Ineffective
\n
portion
\n
recognised in
\n
profit or loss
\n
Effective
\n
portion
\n
recognised in
\n
OCI
\n
Hedging strategy
\n
Purchased
\n
Sold
\n
Assets
\n
Liabilities
\n
\n
\n
Total (including
\n
fair value
\n
changes)
\n
Of which
\n
accumulated
\n
fair value
\n
adjustments
\n
\n
\n
\n
Fair value micro hedge
\n
\n
Interest rate swaps
\n
22 027 22 027 98 407 307
\n
Debt securities held at AC
\n
3 576 -360 -394
\n
Currency and
\n
interest rate swaps
\n
0 0 0 0 0
\n
Loans and advances at AC
\n
857 391 -114
\n
\n
\n
Debt securities held at FVOCI
\n
1 900 25 -79
\n
\n
\n
Debt securities issued at AC
\n
15 998 98 282
\n
\n
\n
Deposits at AC
\n
0 0 -2
\n
Total
\n
22 027 22 027 98 407 307
\n
Total
\n
-307 0 -
\n
Portfolio hedge of interest rate risk
\n
\n
Interest rate swaps
\n
89 467 89 467 110 183 809
\n
Debt securities held at AC
\n
11 -1 -2
\n
Currency and
\n
interest rate options
\n
1 981 0 21 0 11
\n
Loans and advances at AC
\n
74 412 -504 -1 772
\n
\n
\n
Debt securities held at FVOCI
\n
13 -1 -1
\n
\n
\n
Debt securities issued at AC
\n
0 0 0
\n
\n
\n
Deposits at AC
\n
13 632 -862 960
\n
Total
\n
91 448 89 467 131 183 820
\n
Total
\n
-815 5 -
\n
Cashflow hedge (micro hedge and portfolio hedge)
\n
\n
Interest rate swaps
\n
21 249 21 249 24 502 177
\n
\n
\n
Currency and
\n
interest rate swaps
\n
711 721 26 0 19
\n
\n
\n
Total
\n
21 960 21 970 50 502 196
\n
Total
\n
-196 0 -1 197
\n
Hedge of net investments in foreign operations
\n
\n
Total
\n
3
\n
1 904 1 965 5 420 -109
\n
Total
\n
109 0 20
\n
1 In this table, both legs of the derivatives are reported in the notional amounts.
\n
2 Ineffectiveness is recognised in \u2018Net result from financial instruments at fair value through profit or loss\u2019 (also see Note 3.3).
\n
3 Hedging instruments in the form of foreign currency deposits.
\n

\n\n
\u2022 The sharp change in fair value of the hedging instruments and the hedged items in the fair value micro hedges and fair value
\n
hedges for a portfolio of interest rate risk for 2022 are attributable to the substantial increase in market interest rates.
\n
\u2022 The Treasury departments of the various entities manage the interest rate risk. To prevent rate movements from having a
\n
negative impact, the maturities of assets and liabilities are adjusted on the balance sheet using interest rate swaps and other
\n
derivatives.
\n
\u2022 As regards the relationship between risk management and hedge accounting policy, \u2018economic\u2019 management takes priority
\n
and risks are hedged in accordance with the general ALM framework. Only then is a decision made on which, if any, of these
\n
techniques will be used to limit any resulting accounting mismatch.
\n
\u2022 The balances remaining in the cashflow hedge reserve from any hedging relationships for which hedge accounting is no longer
\n
applied came to -166 million euros. The accumulated amount of fair value hedge adjustments remaining on the balance sheet
\n
for any hedged items that have ceased to be adjusted for hedging gains and losses amounted to -24 million euros. These
\n
adjustments are amortised to profit or loss.
\n
\u2022 The difference between the \u2018Profit/loss on positions in portfolios hedged against interest rate risk\u2019 balance sheet item and
\n
accumulated fair value adjustments following portfolio hedges of interest rate risk as included in Note 4.8.2 is attributable to
\n
accumulated fair value adjustments regarding discontinued fair value hedges not included in Note 4.8.2 but included in the
\n
balance sheet.
\n
\u2022 The accumulated fair value adjustments of the hedged assets involved in portfolio hedges of interest rate risk dropped in 2022
\n
due to the general increase in interest rates. The \u2018Profit/loss on positions in portfolios hedged against interest rate risk\u2019 balance
\n
sheet item on the liabilities side of the balance sheet also became more negative for the same reason.
\n
\u2022 Also see the paragraph on hedge accounting in the \u2018How do we manage our risks?\u2019 section and Note 3.3.
\n
\n
\n
Estimated cashflows from cashflow hedging derivatives per time bucket (in millions of EUR)
\n
Inflow
\n
Outflow
\n
Not more than three months
\n
7 -38
\n
More than three but not more than six months
\n
33 -95
\n
More than six months but not more than one year
\n
123 -274
\n
More than one but not more than two
\n
years 222 -514
\n
More than two but not more than five years
\n
505 -960
\n
More than five years
\n
545 -849
\n

\n\n
Note 5.2: Tax assets and tax liabilities
\n
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
CURRENT TAXES
\n
\n
Current tax assets
\n
174 179
\n
Current tax liabilities
\n
150 87
\n
DEFERRED TAXES
\n
1 005 769
\n
Deferred tax assets by type of temporary difference
\n
1 475 1 413
\n
Employee benefits
\n
78 82
\n
Losses carried forward
\n
186 247
\n
Tangible and intangible fixed assets
\n
77 126
\n
Provisions for risks and charges
\n
49 21
\n
Impairment for losses on loans and advances
\n
219 273
\n
Financial instruments at fair value through profit or loss and fair value hedges
\n
142 113
\n
Fair value changes, available-for-sale assets, financial instruments at FVOCI, cashflow hedges and hedges of net investments
\n
in foreign operations
\n
594 476
\n
Technical provisions
\n
42 30
\n
Other
\n
88 47
\n
Deferred tax liabilities by type of
\n
temporary difference 470 644
\n
Employee benefits
\n
99 37
\n
Losses carried forward
\n
0 0
\n
Tangible and intangible fixed assets
\n
41 34
\n
Provisions for risks and charges
\n
9 9
\n
Impairment for losses on loans and advances
\n
3 3
\n
Financial instruments at fair value
\n
through profit or loss and fair value hedges 131 132
\n
Fair value changes, available-for-sale assets, financial instruments at FVOCI, cashflow hedges and hedges of net investments
\n
in foreign operations
\n
44 292
\n
Technical provisions
\n
115 106
\n
Other
\n
29 33
\n
Recognised as a net amount in the balance sheet as follows:
\n
\n
Deferred tax assets
\n
1 138 1 117
\n
Deferred tax liabilities
\n
133 348
\n
Unused tax losses and unused tax credits
\n
151 177
\n

\n\n
\u2022 Deferred tax assets are recognised to the extent that it is probable that, on the basis of realistic financial projections, taxable
\n
profit will be available against which the deductible temporary differences can be utilised in the foreseeable future (limited to
\n
a period of eight to ten years).
\n
\u2022 Unused tax losses and unused tax credits concern tax losses of group companies which are not capitalised due to insufficient
\n
proof of future taxable profit. Most tax losses and tax credits can be carried forward for 20 years or more.
\n
\u2022 The net change in deferred taxes (+236 million euros in 2022) breaks down as follows:
\n
\u25e6 The change in deferred tax assets of (+62 million euros) was accounted for chiefly by:
\n
- a net increase in deferred tax assets on account of changes in the revaluation reserve for financial instruments
\n
measured at fair value through OCI, cashflow hedges and hedges of net investments in foreign operations (+118 million
\n
euros);
\n
- a decrease in deferred tax assets via the income statement of 74 million euros, mainly due to the usage and write-offs
\n
of losses carried forward, partly offset by the one-off recognition of deferred tax assets, due in part to the increase in
\n
business tax in the UK from 19% to 25% and the recognition of deferred tax assets in Ireland (-61 million euros net) as a
\n
result of lower deferred tax assets on impairment for losses on loans and advances (-18 million euros) and on non-
\n
current assets (-12 million euros). In addition, the arbitration proceedings against ICEC-Holding (see Note 3.6) have led
\n
to an increase in deferred tax assets via the income statement of 28 million euros.
\n
- changes in technical provisions of +12 million euros;
\n
\u25e6 The change in deferred tax liabilities of -174 million euros was accounted for chiefly by:
\n
- a decrease in deferred tax liabilities on account of changes in the revaluation reserve for financial instruments
\n
measured at fair value through OCI, cashflow hedges and hedges of net investments in foreign operations (-249 million
\n
euros);
\n
- changes in defined benefit plans of +62 million euros and to a lesser extent the technical provisions (+9 million euros).
\n
\u2022 The deferred tax assets presented in the balance sheet are attributable primarily to KBC Bank, KBC Insurance, \u010cSOB in the
\n
Czech Republic and KBC Bank Ireland
\n

\n\n

\n

\n
Note 5.5: Goodwill and other intangible assets
\n
\n\n

\n\n
(in millions of EUR)
\n
Goodwill
\n
Software
\n
developed
\n
in-house
\n
Software
\n
developed
\n
externally
\n
Other
\n
Total
\n
2022
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
913 559 263 13 1 749
\n
Acquisitions
\n
438 262 73 9 783
\n
Disposals
\n
0 0 -1 -3 -4
\n
Amortisation
\n
0 -90 -78 -1 -169
\n
Other movements
\n
-6 -12 -8 -2 -28
\n
Closing balance
\n
1 346 719 250 16 2 331
\n
\n
accumulated amortisation and impairment 260 646 836 56 1 797
\n
2021
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
845 386 301 20 1 551
\n
Acquisitions
\n
56 234 84 9 383
\n
Disposals
\n
0 0 -12 -10 -21
\n
Amortisation
\n
0 -62 -85 -2 -149
\n
Other movements
\n
12 1 -24 -3 -14
\n
Closing balance
\n
913 559 263 13 1 749
\n
\n
accumulated amortisation and impairment 255 794 859 53 1 961
\n

\n\n

\n\n
\n\n
\u2022 Goodwill: includes the goodwill paid on companies included in the scope of consolidation and relating to the acquisition of
\n
activities. Goodwill paid on associated companies: included in the nominal value of \u2018Investments in associated companies\u2019
\n
shown on the balance sheet.
\n
\u2022 For goodwill in respect of recent acquisitions, see Note 6.6.
\n
\u2022 Impairment testing: a test was carried out to establish whether impairment on goodwill had to be recognised (see table and
\n
Note 3.10). This impairment test is performed at least once a year. We also carry out a high level assessment on a quarterly
\n
basis to see whether there is an indication of impairment. In the test, each entity is regarded as a separate cash-generating
\n
unit. Each entity has a specific risk profile and it is rare to have different profiles within a single entity.
\n
\u2022 Impairment on goodwill under IAS 36: recognised in profit or loss if the recoverable amount of an investment is lower than its
\n
carrying value. The recoverable amount is defined as the higher of the value in use (calculated based on discounted cashflow
\n
analysis) and the fair value (calculated based on multiple analysis, etc.) less costs to sell.
\n
\u2022 The main group companies to which goodwill relates are listed in the table. All of these companies have been valued using the
\n
discounted cashflow method. The discounted cashflow method calculates the recoverable amount of an investment as the
\n
present value of all future free cashflows of the business. This method is based on long-term projections about the company\u2019s
\n
business and the resulting cashflows (i.e. projections for a number of years ahead and the residual value of the business at the
\n
end of the specific projection period). These long-term projections are the result of an assessment of past and present
\n
performances combined with external sources of information on future performances in the respective markets and the global
\n
macroeconomic environment. Consequently, in cases where sustainability aspects and products/projects have been factored
\n
into the underlying financial projections, this will also affect the valuation. The ultimate growth rate is determined using a long-
\n
term average market growth rate. The present value of these future cashflows is calculated using a compound discount rate
\n
which is based on the capital asset pricing model (CAPM). A country-specific risk-free rate and a market-risk premium
\n
(multiplied by an activity beta) are also used in the calculation. KBC has developed two distinct discounted cashflow models,
\n
viz. a bank model and an insurance model. Free cashflows in both cases are the dividends that can be paid out to the
\n
company\u2019s shareholders, account taken of the minimum capital requirements.
\n

\n\n

\n\n
Discount rates throughout the specific period
\n
of cashflow projections
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
K&H Bank
\n
173 188 17.3%-13.3% 11.4%-10.6%
\n
\u010cSOB (Czech Republic)
\n
259 251 13.9%-12.8% 10.6%-8.7%
\n
\u010cSOB Stavebn\u00ed sporitelna
\n
176 171 13.2%-12.8% 10.6%-8.8%
\n
United Bulgarian Bank and Raiffeisenbank Bulgaria
\n
(now KBC Bank Bulgaria)
\n
544 110 12.5%-12.2% 10.6%-9.2%
\n
DZI Insurance
\n
75 75 10.5%-8.1% 8.6%-7.2%
\n
KBC Commercial Finance
\n
21 21 9.9%-9.9% 8.8%-8.7%
\n
Pension Insurance Company UBB
\n
56 56 9.3%-9.1% -
\n
Rest
\n
42 42 \u2013 \u2013
\n
Total
\n
1 346 913 \u2013 \u2013
\n
\n
\u2022 The period to which the cashflow budgets and projections relate is 10 years in most cases. This longer period is used to take
\n
account of current strong growth in the Central and Eastern European countries, where the growth rate is expected to develop
\n
towards a more moderate level in the longer term.
\n
\u2022 The growth rate used to extrapolate the cashflow projections after that period is equal to the expected long-term growth rate
\n
of the gross domestic product. This rate depends on the country and varied between 3.2% and 4.7% in 2022 (between 1.2% and
\n
1.7% in 2021).
\n
\u2022 The discount rates applied have been raised considerably since last year, but on a net basis they only have a limited impact
\n
on valuations given the higher cashflow budgets resulting from improved net interest income.
\n
\u2022 No sensitivity analysis was carried out for entities where the recoverable amount exceeded the carrying value to such a large
\n
extent that no reasonably possible change in the key assumptions would result in the recoverable amount being less than or
\n
equal to the carrying value. The table gives an indication for the other entities of the change in key assumptions that would
\n
lead to their recoverable amount equalling their carrying value.
\n
\n
Change in key assumptions
\n
1
\n
\n
Increase in
\n
discount rate
\n
2
\n
\n
Decrease in
\n
terminal growth
\n
rate
\n
Increase in
\n
targeted solvency
\n
ratio
\n
3
\n
\n
Decrease in
\n
annual net profit
\n
Increase in annual
\n
impairment
\n
charges
\n
\u010cSOB Stavebn\u00ed sporitelna
\n
2.5% 8.0% 6.4% 12% -
\n
United Bulgarian Bank and Raiffeisenbank Bulgaria
\n
(now KBC Bank Bulgaria)
\n
0.6% 4.2% 1.0% 6% 38%
\n
Pension Insurance Company UBB
\n
4.0%
\n
-
\n
-
\n
47%
\n
-
\n
1 Needless to say account should be taken of the fact that a change in these assumptions could affect other assumptions used to calculate the recoverable amount.
\n
2 Based on a parallel shift and absolute increase in the discount rate curve. Discount rates are in the 15.7%-15.3% bracket for \u010cSOB Stavebn\u00ed sporitelna, the 13.1%-12.8% bracket for United
\n
Bulgarian Bank and KBC Bank Bulgaria, and in the 13.3%-13.1% bracket for Pension Insurance Company UBB.
\n
3 Absolute increase in the tier-1 capital ratio.
\n

\n\n

\n\n
Note 5.6: Technical provisions, insurance
\n
\n
\n
(in millions of EUR)
\n
Gross
\n
Reinsurance
\n
Gross
\n
Reinsurance
\n
Technical provisions
\n
31-12-2022 31-12-2022 31-12-2021 31-12-2021
\n
Total
\n
18 484 192 18 967 191
\n
Insurance contracts, Non
\n
-life 4 154 180 3 967 181
\n
Provision for unearned premiums
\n
885 5 814 4
\n
Provision for claims outstanding
\n
3 025 175 2 908 176
\n
Provision for profit sharing and rebates
\n
2 0 3 0
\n
Other technical provisions
\n
242 0 242 0
\n
Insurance contracts, Life
\n
8 348 12 8 511 10
\n
Provision for unearned premiums
\n
19 1 18 1
\n
Life insurance provision
\n
7 945 8 8 080 8
\n
Provision for claims outstanding
\n
165 4 197 1
\n
Provision for profit sharing and rebates
\n
37 0 28 0
\n
Other
\n
technical provisions 181 0 187 0
\n
Investment contracts with DPF, Life
\n
5 982 0 6 489 0
\n
Life insurance provision
\n
5 918 0 6 418 0
\n
Provision for claims outstanding
\n
11 0 16 0
\n
Provision for profit sharing, rebates and other
\n
53 0 55 0
\n
Movements table
\n
2022 2022 2021 2021
\n
Insurance contracts, Non
\n
-life
\n
Opening balance
\n
3 967 181 3 676 137
\n
Movements reflected in earned premiums (income statement)
\n
71 1 48 2
\n
Movements reflected in technical charges (income statement)
\n
115 -3 222 41
\n
\n
Payments regarding claims of previous financial years -412 -42 -328 -22
\n
\n
Provision for new claims 610 37 625 66
\n
\n
Surplus/shortfall of claims provision for previous financial years -113 28 -112 2
\n
\n
Cost of profit sharing -1 0 0 0
\n
\n
Other movements with an impact on results 31 -26 38 -5
\n
Movements reflected in balance sheet
\n
\n
2
\n
\n
1
\n
22 1
\n
Closing
\n
balance 4 154 180 3 967 181
\n
Insurance contracts, Life
\n
\n
Opening balance
\n
8 511 10 8 315 8
\n
Movements reflected in earned premiums (income statement)
\n
1 0 1 0
\n
Movements reflected in technical charges (income statement)
\n
-175 2 71 2
\n
\n
New business (net of risk premium and charges) 590 0 633 0
\n
\n
Payments (including funding of risk premium) -844 0 -776 0
\n
\n
Accretion of interest 159 0 166 2
\n
\n
Cost of profit sharing 20 0 13 0
\n
\n
Provision for new claims and change in provision for claims outstanding -38 3 -3 0
\n
\n
Fair value adjustments of unit-linked contracts (not unbundled) -70 0 32 0
\n
\n
Other movements with an impact on results 7 0 6 1
\n
Movements reflected in balance sheet
\n
11 0 124 0
\n
Closing balance
\n
8 348 12 8 511 10
\n
Investment contracts with DPF, Life
\n
\n
Opening balance
\n
6 489 0 6 727 0
\n
Movements reflected in
\n
technical charges (income statement) -244 0 -70 0
\n
\n
New business (net of risk premium and charges) 266 0 281 0
\n
\n
Payments (including funding of risk premium) -593 0 -461 0
\n
\n
Accretion of interest 85 0 92 0
\n
\n
Cost of profit sharing 8 0 6 0
\n
\n
Provision for new claims and change in provision for claims outstanding -9 0 12 0
\n
\n
Fair value adjustments of unit-linked contracts (not unbundled) 0 0 0 0
\n
\n
Other movements with an impact on results 0 0 0 0
\n
Movements reflected in balance sheet
\n
-263 0 -168 0
\n
Closing balance
\n
5 982 0 6 489 0
\n

\n\n

\n\n

\n

\n\n
\u2022 Technical provisions relate to insurance contracts and investment contracts with a discretionary participation feature (DPF).
\n
\u2022 Liabilities under investment contracts without DPF are measured at fair value. These liabilities concern mainly unit-linked
\n
contracts, which are recognised under financial liabilities (see Note 4.1).
\n\n
\u2022 Technical provisions for life insurance are calculated using various assumptions. Judgement is required when making these
\n
assumptions and the assumptions used are based on various internal and external sources of information. At present, IFRS 4
\n
refers extensively to local accounting principles for the recognition of technical provisions. These provisions are generally
\n
calculated using the technical assumptions that were applicable at the inception of the insurance contract and are subject to
\n
liability adequacy tests. The key assumptions are:
\n
- mortality and morbidity rates, which are based on standard mortality tables and adapted where necessary to reflect the
\n
group\u2019s own experience;
\n
- expense assumptions, which are based on current expense levels and expense loadings;
\n
- the discount rate, which is generally equal to the technical interest rate, remains constant throughout the life of the policy,
\n
and in some cases is adjusted to take account of legal requirements and internal policy decisions.
\n
- It should be noted that assumptions may vary depending on the type of life insurance (e.g., conventional versus modern), the
\n
generation of contracts (mainly the time when the contract is entered into and the applicable terms and conditions) and the
\n
country (since we have insurance companies in five of our core markets), making it impossible to quantify these assumptions
\n
for the entire group. This is illustrated by the following two points: (i) The discount rate follows the historical market rate and
\n
since it concerns a life portfolio, most of which has existed for a long time and also has a long maturity, there are considerable
\n
differences within the portfolio. In Belgium alone, discount rates range from 4.75% for the oldest rates to 0.5% and lower for
\n
certain modern products. (ii) In terms of mortality risk, unisex mortality tables are used in Belgium, based on the standard
\n
\u2018MK/FK\u2019 mortality tables for products sold from 2012 on (before 2012, separate mortality tables were used for men and
\n
women). Corrections may still be made to these standard tables, with due consideration being given to the segmentation
\n
criteria of the relevant policies. As a result, the range of mortality tables used is extensive.
\n
\u2022 Assumptions for the technical provisions for claims outstanding are based on past claims experience relating to claim numbers,
\n
claim payments and claims handling costs, and adjusted to take account of such factors as anticipated market experience,
\n
claims inflation and external factors such as court awards and legislation. The technical provision for claims outstanding is
\n
generally not discounted except when long-term obligations and/or annuities (industrial accidents, guaranteed income and
\n
hospitalisation insurance) are involved.
\n
\u2022 In 2022, a reassessment of the confidence level of technical provisions resulted in a release of technical reserves in the Czech
\n
Republic (31 million euros in Life and 10 million euros in Non-Life technical result). In 2021, there were no changes in assumptions
\n
leading to a significant change in the valuation of insurance assets and liabilities.
\n

\n\n
\u2022 The \u2018Movements reflected in the balance sheet\u2019 item in 2021 also includes the impact of the life insurance business acquired
\n
from NN in Bulgaria (see Note 6.6).
\n
\u2022 See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\u2022 Information relating to IFRS 17 can be found in Note 6.10.
\n

\n\n

\n\n

\n
Note 5.7: Provisions for risks and charges
\n
\n\n
Note 5.7.1: Overview
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Total provisions for risks and charges
\n
418 282
\n
Provisions for off
\n
-balance-sheet commitments and financial guarantees 114 130
\n
Provisions for other risks and charges
\n
305 152
\n
\n
Provisions for restructuring 92 87
\n
\n
Provisions for taxes and pending legal disputes 192 45
\n
\n
Other 20 20
\n

\n\n
\n
\n
Note 5.7.2: Details of off-balance-sheet commitments and financial guarantees
\n
\n
\n
(in millions of EUR)
\n
Subject to 12-
\n
month ECL
\n
Subject to
\n
lifetime ECL
\n
Subject to
\n
lifetime ECL \u2013
\n
non-performing
\n
Total
\n
31
\n
-12-2022
\n
Provisions on 1 January
\n
19 21 91 130
\n
Movements with an impact on results
\n
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) -6 10 6 10
\n
\n
Stage 2 (lifetime ECL) 0 -5 7 2
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL)
\n
0 6 -2 4
\n
\n
New financial assets 8 4 0 12
\n
\n
Changes in risk parameters during the reporting period -1 1 -45 -45
\n
\n
Changes in the model or methodology 0 0 0 0
\n
\n
Derecognised financial assets -1 -1 -1 -3
\n
\n
Other 0 -5 0 -5
\n
Movements without an impact on results
\n
\n
\n
Derecognised financial assets 0 0 0 0
\n
\n
Changes in the scope of consolidation 1 2 3 6
\n
\n
Other 0 1 1 2
\n
Provisions on 31 December
\n
19 35 60 114
\n
31
\n
-12-2021
\n
Provisions on 1 January
\n
26 17 99 143
\n
Movements with an impact on results
\n
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) -2 4 0 2
\n
\n
Stage 2 (lifetime ECL) 0 -4 2 -1
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL)
\n
0 1 -1 0
\n
\n
New financial assets 6 1 1 8
\n
\n
Changes in risk parameters during the reporting period -9 2 -13 -20
\n
\n
Changes in the model or methodology 0 0 0 0
\n
\n
Derecognised financial assets -2 -1 0 -4
\n
\n
Other 0 0 0 0
\n
Movements without an impact on results
\n
\n
\n
Derecognised financial assets 0 0 0 0
\n
\n
Changes in the scope of consolidation 0 0 0 0
\n
\n
Other 1 1 2 4
\n
Provisions on 31 December
\n
19 21 91 130
\n
\n
\u2022 Also see Note 6.1.
\n

\n\n

\n
\u2022 Information relating to the main legal disputes pending: claims filed against KBC group companies are \u2013 in keeping with IFRS
\n
rules \u2013 treated on the basis of an assessment of whether they will lead to an outflow of resources (i.e. \u2018probable outflow\u2019,
\n
\u2018possible outflow\u2019 or \u2018remotely probable outflow\u2019). Provisions are set aside for \u2018probable outflow\u2019 cases (see \u2018Notes on the
\n
accounting policies\u2019). No provisions are constituted for \u2018possible outflow\u2019 cases, but information is provided in the financial
\n
statements if such cases might have a material impact on the balance sheet (i.e. when the claim could lead to a possible
\n
outflow of more than 50 million euros). All other claims (\u2018remotely probable outflow\u2019), of whatever magnitude, that represent a
\n
minor or no risk at all do not have to be reported. The most important cases are listed below. The information provided is limited
\n
in order not to prejudice the position of the group in ongoing litigation.
\n\n

\n\n
\u2022 Possible outflow: on 6 October 2011, Irving H. Picard, trustee (the \u2018trustee\u2019) for the liquidation of Bernard L. Madoff Investments
\n
Securities LLC (& Bernard L. Madoff), sued KBC Investments Ltd (a full subsidiary of KBC Bank) before the bankruptcy court in
\n
New York to claw back approximately 110 million US dollars\u2019 worth of transfers made to KBC entities by Madoff (through a feeder
\n
fund that KBC had lent to Harley International). This claim is just one of a whole set made by the trustee against several banks,
\n
hedge funds, feeder funds and investors (\u2018joint defense group\u2019). A lengthy litigation process was conducted on the basis of
\n
preliminary objections in respect of the applicability of the Bankruptcy Code\u2019s \u2018safe harbor\u2019 and \u2018good defenses\u2019 rules, as well
\n
as prudential limitations on U.S. courts\u2019 powers in international cases, to subsequent transferees (as is the case for KBC
\n
Investments Ltd), as detailed in previous disclosures. In June 2015, the Trustee stated his intention to amend the original claim
\n
which led to increase the amount claimed to USD 196 000 000. A court ruling dismissing the claim of the Trustee was issued on
\n
3 March 2017. The Trustee appealed and the appellate court (\u2018Court of Appeals for the Second Circuit\u2019) reversed the dismissal
\n
on 28 February 2019. A certiorari petition filed on 30 August 2019 was dismissed by the US Supreme Court on 2 June 2020. As a
\n
consequence the merits of the case are handled by the Bankruptcy Court. On 30 August 2021, in two other appeals by other
\n
defendants, the Court of Appeals for the Second Circuit reversed the burden of proof from an initial burden on the Trustee to
\n
adequately demonstrate the defendant\u2019s lack of good faith to a burden on the defendant to prove its good faith. On 1 August
\n
2022, the Bankruptcy Court issued a decision determining the structure of the proceedings. In this context, on 5 August 2022
\n
the Trustee amended his complaint by reducing his claim to a principal of USD 86 million. On 18 November 2022, KBC submitted
\n
a motion to dismiss the amended complaint for lack of specific jurisdiction of the US court. The final reply supporting its motion
\n
must be submitted on or before 10 March 2023. A hearing will then be held in April 2023. Despite the increased burden of proof,
\n
KBC still believes it has good and credible defenses, both procedurally and on the merits, including demonstrating its good
\n
faith. The procedure may still take several years.
\n

\n\n

\n\n

\n\n
Note 5.9: Retirement benefit obligations
\n
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
DEFINED BENEFIT PLANS
\n
\n
Reconciliation of defined benefit obligations
\n
\n
\n
Defined benefit obligations at the beginning of the period
\n
3 335 3 387
\n
Current service cost
\n
129 134
\n
Interest cost
\n
26 8
\n
Actuarial gain or loss resulting from changes in demographic assumptions
\n
-10 -3
\n
Actuarial gain or loss resulting from changes in financial assumptions
\n
-814 -31
\n
Experience adjustments
\n
58 -16
\n
Past service cost
\n
0 -11
\n
Benefits paid
\n
-129 -120
\n
Other
\n
-14 -14
\n
Defined benefit obligations at the end of the period
\n
2 580 3 335
\n
Reconciliation of the fair value of plan assets
\n
\n
Fair value of plan assets at the beginning of the period
\n
3 244 2 849
\n
Actual return on
\n
plan assets -499 363
\n
Expected interest income on plan assets, calculated based on market yields on high quality corporate bonds 25 7
\n
Employer contributions
\n
94 90
\n
Plan participant contributions
\n
19 18
\n
Benefits paid
\n
-129 -120
\n
Other
\n
16 44
\n
Fair value of plan assets at the end of the period
\n
2 746 3 244
\n
\n
of which financial instruments issued by the group 0 24
\n
\n
of which property occupied by KBC 2 4
\n
Funded status
\n
\n
Plan assets in excess of defined benefit
\n
obligations 166 -90
\n
Reimbursement rights
\n
0 0
\n
Asset ceiling limit
\n
-12 -37
\n
Unfunded accrued/prepaid pension cost
\n
153 -128
\n
Movement in net liabilities or net assets
\n
\n
Unfunded accrued/prepaid pension cost at the beginning of the period
\n
-128 -537
\n
Amounts recognised in the income statement
\n
-112 -107
\n
Amounts recognised in other comprehensive income
\n
299 387
\n
Employer contributions
\n
94 90
\n
Other
\n
-1 40
\n
Unfunded accrued/prepaid pension cost at the end of the period
\n
153 -128
\n
Amounts recognised in the income statement
\n
-112 -107
\n
Current service cost
\n
-129 -134
\n
Interest cost
\n
-1 -2
\n
Plan participant contributions
\n
19 18
\n
Other
\n
0 11
\n
Changes to the amounts recognised in other comprehensive income
\n
299 387
\n
Actuarial gain or loss resulting from changes in demographic assumptions
\n
10 3
\n
Actuarial gain or loss resulting from changes in financial assumptions
\n
814 31
\n
Actuarial result on plan assets
\n
-524 356
\n
Experience adjustments
\n
-58 16
\n
Adjustments to asset ceiling limits
\n
25 -37
\n
Other
\n
31 19
\n
DEFINED CONTRIBUTION PLANS
\n
\n
\n
\n
\n
Expenses for defined contribution plans
\n
-21 -20
\n

\n\n
\u2022 Retirement benefits that are actively accrued for the Belgium-based staff of KBC Bank, KBC Insurance and most of their Belgian
\n
subsidiaries are accrued exclusively through the KBC pension fund. Up until year-end 2018, employer-funded retirement
\n
benefits had accrued primarily through a defined benefit plan, where the benefit is calculated based on the final salary of
\n
employees before they retire, the number of years they had been in the plan and a formula that applies a progressive rate
\n
scale. A defined contribution plan was introduced on 1 January 2014 for all new employees and any employees who had chosen
\n
to switch to it. In this plan, a contribution is deposited based on the current monthly salary and the amounts deposited are
\n
paid out together with the (guaranteed) return on retirement. Both types of pension plan are managed by the KBC pension
\n
fund, which uses the services of KBC Asset Management for the investment strategy. In addition, there are a number of smaller,
\n
closed group insurance schemes from the past that will continue to be funded and are managed by the KBC pension fund.
\n
On 1 January 2019, a new defined contribution plan was introduced to replace the one introduced in 2014. All employees were
\n
again given the one-time option of switching from the defined benefit plan to the new defined contribution plan. At year-end
\n
2022, 55% of employees were active participants in the defined benefit plan and 45% in the defined contribution plan (the
\n
corresponding figures at year-end 2021 were 58% and 42%).
\n
\u2022 From 2021, the expected age of retirement of each employee and the expected wage inflation based on an inflation curve
\n
derived from the market value of inflation-linked bonds are taken into account in the calculation of the gross defined benefit
\n
obligations.
\n

\n\n
Additional information on retirement benefit obligations: DEFINED BENEFIT PLANS, KBC pension fund
\n
\n
Composition (31
\n
-12-2022)
\n
Equity instruments 37%
\n
Bonds 46%
\n
Real estate 14%
\n
Cash 3%
\n
of which illiquid assets 18%
\n
Composition (31
\n
-12-2021)
\n
Equity instruments 38%
\n
Bonds 47%
\n
Real estate 13%
\n
Cash 2%
\n
of which illiquid assets 11%
\n

\n\n
Contributions expected in 2023 (in millions of EUR)
\n
47
\n
Regulatory framework
\n
Pension plans are registered in collective labour agreements and incorporated into a set of regulations.
\n
Annual reporting of funding levels to supervisory authorities (FSMA/NBB). Any underfunding must be
\n
reported immediately to the supervisory authorities.
\n
\n
Risks for KBC
\n
Investment risk and inflation risk.
\n
\n
ALM policy
\n
The hedging portfolio hedges against interest rate risk and inflation risk using interest rate swaps.
\n
The return portfolio aims to generate an extra return.
\n
\n
Plan amendments
\n
A new version of the employer-funded defined contribution plan was introduced on 1 January 2019. All
\n
employees who had been signed up to the defined benefit plan were given the one-time option of
\n
switching to this new plan.
\n
\n
Curtailments and settlements
\n
\n
Not applicable.
\n
\n
Discounting method
\n
\n
Based on quotes for various time buckets of AA-rated corporate bonds. The derived bond yields are
\n
converted into a zero coupon curve.
\n
\n
Key actuarial assumptions
\n
\n
\n
Average discount rate 3.98%
\n
\n
Expected rate of salary increase 3.22%
\n
\n
Expected inflation rate 2.89%
\n
\n
Expected rate of increase in pensions \u2013
\n
\n
Weighted average duration of the obligations 10 years
\n
Impact of changes in the assumptions used in the
\n
actuarial calculation of the retirement benefit
\n
obligations
\n
\n
Increase in the retirement benefit obligations
\n
on 31-12-2022 consequent on:
\n
\n
\n
a decrease of 1% in the discount rate 11.73%
\n
\n
an increase of 1% in the expected inflation rate 9.22%
\n
an increase that is 1% higher than the expected real
\n
increase in salary
\n
12.21%
\n
\n
an increase of one year in life expectancy \u2013
\n
The impact of the following assumptions has not been
\n
calculated:
\n
\n
Decreasing mortality rates. Pension benefits are paid out
\n
in capital, so longevity risk is immaterial.
\n
Staff turnover rates: sensitivity to changes remains limited.
\n
\n
Additional information on retirement benefit obligations: DEFINED CONTRIBUTION PLANS, KBC pension fund
\n
\n
Contributions expected in 2023 (in
\n
millions of EUR) 42
\n
Regulatory framework
\n
Pursuant to the Belgian Supplementary Pensions Act, the employer must guarantee a minimum return of
\n
1.75% on employee and employer contributions.
\n
Risks for KBC
\n
Investment risk.
\n
Valuation
\n
Retirement benefit obligations are measured on the basis of the accrued benefits on the reporting date,
\n
making a projection of these benefits (at the rate of interest guaranteed by law) until the expected age
\n
of retirement, and discounting the resulting benefits.
\n
KBC offers two types of defined contribution plan: one that is financed through employee contributions
\n
and one through employer contributions. The valuation of retirement benefit obligations for the
\n
employer-funded defined contribution plan takes account of future contributions. However, it is not
\n
taken into account for the valuation of the employee-funded defined contribution plan, because the
\n
employer\u2019s obligation for that plan only relates to the guaranteed minimum interest rate.
\n
Discounting method
\n
Based on quotes for various time buckets of AA-rated corporate bonds. The derived bond yields are
\n
converted into a zero coupon curve.
\n
\n
Key actuarial assumptions
\n
\n
\n
Average discount rate 4.13%
\n
\n
Weighted average duration of the obligations 17 years
\n
Impact of changes in the assumptions used in the
\n
actuarial calculation of the retirement benefit
\n
obligations
\n
\n
Increase in the retirement benefit obligations
\n
on 31-12-2022 consequent on:
\n
\n
\n
a decrease of 1% in the discount rate 1.00%
\n

\n\n

\n
Note 6.1: Off-balance-sheet commitments and financial guarantees given and received
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
\n
Nominal
\n
amount
\n
Provision Net exposure
\n
Nominal
\n
amount
\n
Provision Net exposure
\n
Undrawn portion of credit lines
\n
granted
\n
Stage 1
\n
39 134 17 39 117 38 414 17 38 397
\n
Stage 2
\n
8 077 26 8 051 4 770 16 4 754
\n
Stage 3
\n
51 13 38 42 4 38
\n
Total
\n
47 262 56 47 206 43 226 37 43 189
\n
\n
of which irrevocable credit lines 26 618 27 26 591 25 802 14 25 788
\n
Financial guarantees given
\n
\n
Stage 1
\n
7 600 2 7 598 8 675 2 8 673
\n
Stage 2
\n
3 139 8 3 131 1 678 5 1 673
\n
Stage 3
\n
119 44 76 153 86 67
\n
Total
\n
10 858 54 10 805 10 506 93 10 413
\n
Other commitments given
\n
\n
Total
\n
1 440 4 1 436 756 1 755
\n
Total
\n
\n
Off-balance-sheet commitments and financial
\n
guarantees
\n
59 561 114 59 447 54 488 130 54 357
\n
\n
\u2022 Fair value of financial guarantees: based on the available market value.
\n\n
\u2022 The carrying value of financial assets pledged by KBC as collateral came to 59 753 million euros for liabilities and 5 291 million
\n
euros for contingent liabilities (66 386 million euros and 3 961 million euros, respectively, in 2021). At year-end 2022, some 16.6
\n
billion euros\u2019 worth of residential mortgage loans and cash collections were entered in the cover asset register for the special
\n
estate of the covered bond programme (16.6 billion euros at year-end 2021).
\n

\n\n
\u2022 There is an obligation to return collateral received (which may be sold or repledged in the absence of default by the owner; see
\n
table) in its original form, or possibly in cash. Collateral can be called in if loans are terminated for various reasons such as
\n
default or bankruptcy. In the event of bankruptcy, the collateral will be sold by the receiver. In other cases, the bank will organise
\n
the foreclosure itself or take possession of the collateral. Collateral received that relates to OTC derivatives is primarily cash,
\n
which is recognised by KBC on the balance sheet (and is not included in the table). More details are provided in Note 4.3.
\n
\u2022 Collateral acquired through foreclosure came to 4 million euros in 2022 (4 million euros in 2021).
\n
\u2022 The increase in \u2018Stage 2\u2019 relates to the collective stage transfer linked to \u2018Stage 1\u2019 loans (see also Note 1.4) that have indirect
\n
exposure to Russia, Ukraine and Belarus.
\n
\n
\n
\n
Collateral received (which may be sold or repledged
\n
in the absence of default by the owner) (in millions of EUR)
\n
Fair value of collateral received
\n
Fair value of collateral sold or
\n
repledged
\n
\n
31-12-2022 31-12-2021 31-12-2022 31-12-2021
\n
Financial assets
\n
30 126
\n
39 863
\n
7 792
\n
11 862
\n
Equity instruments
\n
16 11 2 1
\n
Debt securities
\n
29 876 39 633 7 790 11 860
\n
Loans and advances
\n
234 219 0 0
\n
Cash
\n
0 0 0 0
\n
Other
\n
0
\n
0
\n
0
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfAssetsAndLiabilitiesWithSignificantRiskOfMaterialAdjustmentExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag751": { "value": "\n
Note 1.4: Impact of the war in Ukraine and of the coronavirus crisis
\n
\n
\n
Overview
\n
In 2022, we fully reversed the reserves still outstanding (ECL) for the impact of the coronavirus crisis, totalling 289 million euros
\n
at year-end 2021 (see below). By contrast, we set aside a reserve for geopolitical and emerging risks of 429 million euros in
\n
2022 on the back of the Russian invasion of Ukraine and the associated direct and indirect economic consequences (see
\n
below).
\n
\n
\n
Impact of
\n
Impact of write-
\n
acquisition of
\n
ECL outstanding for coronavirus
\n
-
\n
Change in
\n
down of
\n
Reserve set aside
\n
Raiffeisenbank
\n
related, geopolitical and emerging
\n
coronavirus-
\n
coronavirus-
\n
for geopolitical
\n
Bulgaria (now
\n
Situation
\n
risks by country
\n
\n
Situation
\n
related ECL in
\n
related ECL in
\n
and emerging
\n
renamed KBC Bank
\n
at year-end
\n
(in millions of EUR)
\n
at year-end 2021
\n
2022
\n
2022
\n
risks in 2022
\n
Bulgaria) in 2022
\n
2022
\n
Belgium
\n
100 -100 - 145 - 145
\n
Czech Republic
\n
69 -67 -2 135 - 135
\n
Slovakia
\n
20 -18 -2 42 - 42
\n
Hungary
\n
37 -37 - 50 - 50
\n
Bulgaria
\n
12 -11 -1 23 16 39
\n
Other (including Ireland)
\n
51 -22 -29 18 0 18
\n
Total
\n
289 -255 -34 413 16 429
\n

\n\n
New reserve set aside for geopolitical and emerging risks
\n
The destabilisation of the global economy and surging commodity prices brought on by the war between Russia and Ukraine
\n
have exacerbated the inflationary shock initially caused by problems in the supply chains, tax incentives and the rapid post-
\n
pandemic reopening. The rising inflationary pressure and a tightening labour market increased the pressure on central banks
\n
to bring their monetary policy back to normal levels. The combination of higher, more persistent inflation and more stringent
\n
monetary policy is affecting growth expectations. A more detailed explanation of the macroeconomic environment is
\n
provided under \u2018In what environment do we operate?\u2019 in the \u2018Report of the Board of Directors\u2019 section. We have assessed
\n
the impact of the main macroeconomic and geopolitical risks on our loan portfolio in this regard. As a result, a reserve was
\n
set aside for geopolitical and emerging risks, which amounted to 429 million euros at year-end 2022 (with 223 million euros
\n
being provisioned in the first quarter, 45 million euros in the second quarter, 103 million euros in the third quarter and 42 million
\n
euros in the fourth quarter, as well as an additional amount of 16 million euros related to the acquisition of Raiffeisenbank
\n
Bulgaria, which has since been renamed KBC Bank Bulgaria). The calculation and composition of the reserve (recognised
\n
under \u2018Impairment\u2019) at year-end 2022 can be found in the table.
\n
Impairment
\n
recognised in the
\n
balance sheet
\n
Risk, situation at year-end 2022
\n
Background information
\n
(in millions of EUR)
\n
Direct group companies in
\n
None
\n
-
\n
Russia, Ukraine and Belarus
\n
\n
Direct exposure to Russia,
\n
The net exposure relating to KBC\u2019s transfer risk in respect of Russia, Ukraine and Belarus amounted
\n
29
\n
Ukraine and Belarus
\n
to 29 million euros at year-end 2022, owing chiefly to commercial exposure to Russian banks.
\n
Indirect impact of the conflict on
\n
We expect the conflict to have an impact, through various channels, on our corporate and SME
\n
39
\n
the loan portfolio
\n
\n
clients with important activities in Russia, Ukraine and Belarus and/or with a strong dependence on
\n
those markets for imports or exports (either directly or indirectly through a
\n
client or supplier) and/or
\n
with a specific vulnerability to disruptions in oil and/or gas supplies.
\n
\n
Our analysis shows that for 2.8 billion euros in \u2018Stage 1\u2019 positions, which are not (yet) included in the
\n
standard staging assessment, credit risk has incr
\n
eased considerably. The recalculation of ECL over
\n
the full remaining lifetime of those positions, instead of the 12
\n
-month horizon, resulted in an
\n
impairment of 39 million euros in 2022.
\n
Indirect impact ensuing from
\n
We have established that the following sub-segments in our portfolio are at risk:
\n
304
\n
other emerging risks
\n
\n
\u2022
\n
SMEs and other corporate entities in our client base active in economic sectors most affected
\n
by supply-chain problems and by rising commodity and energy prices, and who are already
\n
subject to a higher credit risk (for example, the automotive industry, chemicals and metals);
\n
\u2022
\n
Retail clients with a limited buffer to absorb the higher cost of living and/or to make higher
\n
repayments ensuing from rising interest rates.
\n
The analysis sho
\n
ws that for 11.3 billion euros in \u2018Stage 1\u2019 positions, which are not (yet) included in the
\n
standard staging assessment, credit risk has increased considerably
\n
. The recalculation of ECL over
\n
the full remaining lifetime of those positions, instead of 12 mont
\n
hs, resulted in an impairment of 304
\n
million euros in 2022.
\n
Impact of the macroeconomic
\n
The model-driven ECL for geopolitical and emerging risks came to 57 million euros in 2022. The
\n
57
\n
scenarios
\n
\n
probabilities applied to the base
\n
-case, optimistic and pessimistic macroeconomic scenarios were
\n
adjusted from 80%, 10% and 10% to 60%, 5% and 35%, respectively, creating an additional
\n
impairment of 57 million euros. More information on the scenarios is provided below.
\n
Acquisition of Raiffeisenbank
\n
The consolidation of the Bulgarian operations of Raiffeisenbank International implies an ECL of 16
\n
-
\n
Bulgaria
\n
\n
million euros (10 million for emerging risks and 6 million for the direct transfer risk), which does not
\n
affect the income statement. These amounts are already included in the previous rows of the table.
\n
Total at year-end 2022
\n
\n
429
\n

\n\n
Impact of other measures
\n
\n
Surging energy prices and rising inflation have prompted initiatives aimed at supporting the purchasing power of families
\n
and the viability of companies. The governments in our core countries also expect the banking and insurance sector to
\n
support the economy:
\n
\u2022 In Hungary, the exceptional geopolitical and macroeconomic conditions indirectly translated into a modification loss of 63
\n
million euros in the mortgage loan and term loan portfolio (recognised in \u2018Impairment\u2019), mainly due to the extension of the
\n
interest cap regulation until 30 June 2023 and the expansion of the scope of loans protected by the interest cap. Moreover,
\n
in 2022 bank taxes (recognised in \u2018Operating expenses\u2019) in Hungary were adversely impacted by the inclusion of 10 million
\n
euros net (provisioned in the first quarter of 2022 and partly recovered in the fourth quarter of 2022) as a result of an
\n
extraordinary payment into the Deposit Guarantee Fund due to the revoking of the licence of Sberbank Hungary by the
\n
Hungarian National Bank in early March 2022, allowing the payment of compensation for clients\u2019 deposits of up to 100 000
\n
euros from the Deposit Guarantee Fund, and the booking of 78 million euros following the introduction of an additional
\n
sector tax for the banking and insurance sector.
\n
\u2022 In light of the energy crisis, private individuals in Belgium meeting specific conditions have been able to request a temporary
\n
suspension of principal repayments since 1 October 2022. This did not lead to a modification loss or any additional impact
\n
on the ECL, as interest payments are not suspended and the impact of the transfer to \u2018Stage 2\u2019 of clients who submitted
\n
an application was already included in the collective assessments described above. Furthermore, the deductibility of the
\n
bank tax will be partly abolished as from 2023 to increase the banking industry\u2019s solidarity contribution.
\n
\u2022 The government of the Czech Republic introduced a windfall tax, following which any excess profits will be taxed at 79%
\n
(19% standard business tax, 60% windfall tax), which will apply to major banks for the period 2023-2025.
\n
\n
Full reversal of the reserves set aside for the impact of the coronavirus crisis
\n
In 2022, we fully reversed the reserves still outstanding for the impact of the coronavirus crisis. This resulted in a decrease of
\n
289 million euros at year-end 2021 to 0 million euros at year-end 2022, including a reversal of 255 million euros through the
\n
income statement and the write-off of 34 million euros, due mainly to the sale of KBC Bank Ireland\u2019s non-performing loan
\n
portfolio (which did not affect the income statement). Please refer to the 2021 Annual Report, Note 1.4, for the calculation of
\n
coronavirus-related reserve at year-end 2021.
\n
We were able to fully reverse the reserve set aside for the impact of the coronavirus crisis, since the coronavirus-related risks
\n
still present in our loan portfolio are included in the regular impairment process based on common credit risk indicators
\n
(probability of default, overdue amounts and forbearance), as they are no longer concealed by the moratoria on loan
\n
repayments.
\n
\n
Overview of the impact of the coronavirus crisis and the war in Ukraine on our activities
\n
\n
The \u2018Report of the Board of Directors\u2019 section contains additional information on the impact of the coronavirus crisis and of
\n
the war in Ukraine on the activities and stakeholders of the group, concerning the following:
\n
\u2022 The macroeconomic context (see \u2018In what environment do we operate?\u2019 and \u2018Our business units\u2019)
\n
\u2022 Our clients (see \u2018The client is at the centre of our business culture\u2019)
\n
\u2022 Our employees (see \u2018Our employees, capital, network and relationships\u2019)
\n
\u2022 Our risk management (see \u2018How do we manage our risks?\u2019)
\n
\n
Overview of economic scenarios used
\n
Because of the economic uncertainty, we continue to work with three alternative scenarios: a base-case scenario, a more
\n
optimistic scenario and a more pessimistic scenario. The definition of each scenario reflects the latest developments
\n
regarding geopolitical and emerging risks and the economy, with the following probabilities assigned for year-end 2022: 60%
\n
for the base-case, 35% for the pessimistic and 5% for the optimistic scenario. The scenarios and probabilities applied are
\n
those used for the update at year-end 2022; obviously, the situation may have changed in the meantime.
\n
\n
Optimistic scenario
\n
(\u2018ceasefire\u2019 scenario)
\n
A long-term solution to the Russia-Ukraine
\n
conflict is on the horizon. The easing of certain
\n
sanctions by the West in the short term will
\n
mitigate the rise in energy and commodity prices,
\n
but policy (e.g., budgetary) remains consistently
\n
focused on the g
\n
reen transition and energy
\n
autonomy and the expansion of military capacity.
\n
Base-case scenario
\n
(\u2018mild recession' scenario)
\n
There will be no short-term solution to the Russia-
\n
Ukraine conflict. The West\u2019s sanctions will remain in
\n
effect for the foreseeable future. Although the rising
\n
energy and commodity
\n
prices are weighing on
\n
economic sentiment, no significant energy shortages
\n
are expected this or next winter. The negative
\n
impact on GDP growth is mitigated by supportive
\n
government policy. Monetary policy continues to
\n
normalise.
\n
Pessimistic scenario
\n
(\u2018deep recession\u2019 scenario)
\n
Further escalation of the Russia-Ukraine conflict
\n
will lead to further and stricter sanctions from the
\n
West, triggering further restrictions on Russia\u2019s
\n
energy and commodity exports, driving inflation
\n
even higher. Extreme shortages will lead to the
\n
rationing of en
\n
ergy and certain raw materials,
\n
\n
pushing the economy into a deep recession. The
\n
impact of the sharp deterioration of economic
\n
sentiment on GDP growth is partly offset by the
\n
highly supportive economic policy.
\n
\n

\n\n
The following table gives the scenarios for three key indicators for each of our core countries for the coming years. After that,
\n
we take into account a gradual linear transition towards a stable situation.
\n
\n
Macroeconomic scenario \u2013 key indicators
\n
\n
\n
(used for situation at year-end 2022)
\n
\n
2022
\n
\n
\n
2023
\n
2024
\n
Scenario:
\n
\n
Optimistic Base case Pessimistic Optimistic Base case Pessimistic Optimistic Base case Pessimistic
\n
Real GDP growth
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Belgium
\n
3.1% 2.9% 2.6% 2.1% 0.2% -2.5% 1.9% 1.4% 0.9%
\n
Czech Republic
\n
2.5% 2.5% 2.2% 1.6% 0.8% -5.8% 3.7% 2.7% 1.0%
\n
Hungary
\n
5.9% 5.5% 4.8% 2.8% 0.0% -4.2% 3.8% 3.6% 2.4%
\n
Slovakia
\n
1.6% 1.4% 1.2% 1.2% 0.6% -5.4% 3.2% 2.8% 2.5%
\n
Bulgaria
\n
3.7% 2.8% 2.2% 3.0% 0.7% -2.5% 3.5% 3.5% 0.6%
\n
Unemployment rate
\n
\n
Belgium
\n
5.8% 6.0% 6.2% 5.6% 6.2% 6.8% 5.4% 6.0% 6.6%
\n
Czech Republic
\n
2.8% 2.8% 2.8% 2.7% 3.3% 6.0% 2.2% 2.9% 5.0%
\n
Hungary
\n
3.9% 4.1% 4.2% 3.8% 4.4% 6.5% 3.2% 3.8% 5.5%
\n
Slovakia
\n
6.2% 6.3% 8.0% 6.5% 7.0% 9.0% 6.3% 6.5% 8.0%
\n
Bulgaria
\n
4.3% 5.3% 6.2% 4.4% 6.0% 7.3% 4.3% 4.8% 6.4%
\n
House
\n
price index
\n
Belgium
\n
6.5% 5.0% 3.0% 4.0% 2.5% -3.0% 3.0% 2.0% -1.5%
\n
Czech Republic
\n
20.0% 17.5% 16.0% 5.0% 0.5% -5.0% 5.0% 2.5% -1.0%
\n
Hungary
\n
18.6% 16.0% 13.0% 10.0% 5.0% -3.0% 6.0% 3.5% 0.0%
\n
Slovakia
\n
18.0% 15.0% 12.0% 7.0% 2.5% -4.0% 5.0% 2.5% -1.0%
\n
Bulgaria
\n
13.0% 12.0% 8.0% 9.0% 7.0% -3.0% 4.0% 3.5% 0.0%
\n

\n\n

\n\n
2022 2021
\n
Total
\n
406 145
\n
Total broken down by IFRS portfolio
\n
\n
Financial instruments MFVPL other than held for trading and overlay
\n
-1 949 1 172
\n
Trading instruments (including interest on non
\n
-ALM trading derivatives and fair value changes in all trading derivatives) 567 435
\n
Financial instruments to which the overlay approach is applied
\n
86 104
\n
\n
Gains or losses on sale
\n
\n
176 123
\n
\n
\n
Impairment
\n
-90
\n
-20
\n
\n
Other financial instruments at FVPL
\n
1 942 -1 186
\n
Foreign exchange trading
\n
-90 -272
\n
Fair value adjustments in hedge accounting
\n
-150 -108
\n
Hedge accounting broken down by type of hedge
\n
\n
Fair value micro hedges
\n
5 0
\n
\n
Changes in the fair value of the hedged items 624 -307
\n
\n
Changes in the fair value of the hedging derivatives -619 307
\n
Cashflow hedges
\n
-3 0
\n
\n
Changes in the fair value of the hedging derivatives, ineffective portion -3 0
\n
Hedges of net investments in foreign operations, ineffective portion
\n
0 0
\n
Portfolio hedge of interest rate risk
\n
0 5
\n
\n
Changes in the fair value of the hedged items -3 254 -815
\n
\n
Changes in the fair value of the hedging derivatives 3 254 820
\n
Discontinuation of hedge accounting for fair value hedges
\n
-75 -46
\n
Discontinuation of hedge accounting in the event of cashflow hedges
\n
-77 -66
\n
Total broken down by driver
\n
\n
Market value adjustments (MVA)
\n
80 67
\n
Change in the value of derivatives used for asset/liability management purposes
\n
-14 -197
\n
Financial instruments to which the overlay approach is applied and other
\n
96 113
\n
Dealing room
\n
245 162
\n

\n\n

\n\n

\n\n
(in millions of EUR)
\n
Life
\n
Non-life
\n
account
\n
Total
\n
2022
\n
\n
Earned premiums, insurance
\n
(before reinsurance) 1 163 2 054 0 3 217
\n
\n
of which changes in the provision for unearned premiums -1 -71
\n
0
\n
\n
-72
\n
Technical charges, insurance (before reinsurance)
\n
-1 071 -1 154 0 -2 225
\n
\n
Claims paid -1 399 -1 029
\n
0
\n
-2 428
\n
\n
Change in technical provisions 419 -115
\n
0
\n
\n
304
\n
\n
Other technical result -91 -9
\n
0
\n
-100
\n
Net fee and commission income
\n
-4 -403 0 -407
\n
Ceded reinsurance result
\n
-3 1 0 -2
\n
General administrative expenses
\n
-152 -285 -3 -440
\n
\n
Internal claims settlement expenses -9 -65 0 -74
\n
\n
Indirect acquisition costs -32 -68 0 -100
\n
\n
Administrative expenses -110 -152 0 -263
\n
\n
Investment management fees 0 0 -3 -3
\n
Technical result
\n
-67 213 -3 143
\n
Investment income*
\n
383 112 38 534
\n
Technical
\n
-financial result 316 325 36 677
\n
Share in results of associated companies and joint ventures
\n
- - 0 0
\n
RESULT BEFORE TAX
\n
316 325 36 677
\n
Income tax expense
\n
- - - -117
\n
RESULT AFTER TAX
\n
- - - 560
\n
\n
attributable to minority interests - - - 0
\n
\n
attributable to equity holders of the parent - - - 560
\n
2021
\n
\n
Earned premiums, insurance (before reinsurance)
\n
1 196 1 905 0 3 101
\n
\n
of which changes in the provision for unearned premiums -1 -48 0 -49
\n
Technical charges, insurance (before reinsurance)
\n
-1 150 -1 106 0 -2 256
\n
\n
Claims paid -1 163 -872 0 -2 036
\n
\n
Change in technical provisions -1 -223 0 -224
\n
\n
Other technical result 14 -10 0 4
\n
Net fee and commission income
\n
-5 -367 0 -372
\n
Ceded reinsurance result
\n
-2 27 0 25
\n
General administrative expenses
\n
-149 -255 -2 -407
\n
\n
Internal claims settlement expenses -9 -59 0 -68
\n
\n
Indirect acquisition costs -31 -68 0 -98
\n
\n
Administrative expenses -109 -128 0 -238
\n
\n
Investment management fees 0 0 -2 -2
\n
Technical result
\n
-110 204 -2 91
\n
Investment income*
\n
382 92 69 543
\n
Technical
\n
-financial result 271 296 66 634
\n
Share in results of associated companies and joint ventures
\n
\u2013 \u2013 0 0
\n
RESULT BEFORE TAX
\n
271 296 66 634
\n
Income tax expense
\n
\u2013 \u2013 \u2013 -125
\n
RESULT AFTER TAX
\n
\u2013 \u2013 \u2013 508
\n
\n
attributable to minority interests \u2013 \u2013 \u2013 0
\n
\n
attributable to equity holders of the parent \u2013 \u2013 \u2013 508
\n
* Investment income (in millions of euros, for 2022 and 2021, respectively) comprises: \u2018Net interest income\u2019 (428, 398), \u2018Net dividend income\u2019 (39, 31), \u2018Net result from financial instruments at fair
\n
value through profit or loss\u2019 (91, 117), \u2018Other net income\u2019 (-9, 1), \u2018Net realised result from debt instruments at fair value through OCI\u2019 (-16, -2) and \u2018Impairment\u2019 (1, -3). The \u2018Non-technical account\u2019
\n
also includes the results from non-insurance subsidiaries, such as VAB group and ADD, and a number of real estate companies. They have been included in the note for the \u2018insurance business\u2019
\n
given that they are KBC Insurance subsidiaries (but as they cannot be recognised under \u2018Life\u2019 or \u2018Non-life\u2019, they are included under \u2018Non-technical account\u2019). The \u2018Non-technical account\u2019 also
\n
includes the investment income from equity (i.e. mainly interest income from bonds).
\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n\n

\n\n
\u2022 The figures relating to earned premiums do not include investment contracts without DPF, which largely correspond to unit-
\n
linked contracts. The margin on these products is recognised under \u2018Net fee and commission income\u2019.
\n
\u2022 \u2018Non-life technical charges\u2019 consist mainly of paid claims, changes in claims provisions, changes in the deficiency provision,
\n
recourse received, changes in recourse estimations and other technical charges. \u2018Life technical charges\u2019 consist primarily of
\n
paid claims, changes in claims provisions, changes in the life insurance provision, changes in the provision for (non-unbundled)
\n
unit-linked products, bonuses (profit-sharing), changes in the deficiency provision and other technical charges.
\n
\u2022 An overview of the insurer\u2019s investment portfolio can be found in the \u2018How do we manage our risks?\u2019 section (in the \u2018Investment
\n
portfolio of KBC group insurance entities\u2019 table, which constitutes part of the financial statements).
\n
\u2022 In the vast majority of cases, internal acquisition costs are recognised immediately in the income statement (i.e. not spread).
\n
\u2022 In 2022, the non-life technical result was negatively impacted by factors including extreme weather conditions, such as flooding
\n
and storms (especially in Belgium, having a gross impact of 107 million euros, which comes down to 53 million euros after
\n
reinsurance). In 2021, the non-life technical result was negatively impacted by factors including the tornado in the Czech
\n
Republic and even more so by heavy flooding in Belgium (the gross impact of the latter totalled 110 million euros, which comes
\n
down to 87 million euros after reinsurance, 45 million euros of which above the legal limit (i.e. the ceiling introduced in Belgian
\n
law on the intervention of insurers in the event of very large floods), but which is still within the limit agreed between the Belgian
\n
insurance sector and the Walloon government). In 2022, the Life and Non-life technical result benefited from a release of
\n
technical reserves in the Czech Republic (31 million euros and 10 million euros, respectively) resulting from a reassessment of the
\n
confidence level of technical provisions.
\n
\u2022 More information on the acquisition of certain life and pension insurance policies from NN in Bulgaria in 2021 is provided in Note
\n
6.6.
\n
\u2022 See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\n
Reconciliation of the earned premiums stated in the consolidated income statement
\n
and in Note 3.7.1 (in millions of EUR)
\n
2022
\n
2021
\n
Non
\n
-life insurance (before reinsurance) \u2013 Earned premiums
\n
In the consolidated income statement
\n
2 033 1 885
\n
Addition of premiums from intragroup transactions between bank and insurer
\n
21 20
\n
In Note 3.7.1
\n
2 054 1 905
\n
Life insurance (before reinsurance)
\n
\u2013 Earned premiums
\n
In the consolidated income statement
\n
1 163 1 196
\n
Addition of premiums from intragroup transactions between bank and insurer
\n
1 1
\n
In Note 3.7.1
\n
1 163 1 196
\n

\n\n

\n\n

\n\n
\n
\n
\n\n

\n\n
Note 3.7.2: Life insurance
\n
\n
2022 2021
\n
(in millions of EUR)
\n
Total
\n
1 163 1 196
\n
By
\n
IFRS category
\n
Insurance contracts
\n
884 900
\n
Investment contracts with DPF
\n
280 296
\n
By type
\n
\n
Accepted reinsurance
\n
0 0
\n
Primary business
\n
1 163 1 196
\n
Breakdown of primary business
\n
\n
Individual premiums
\n
816 831
\n
\n
Single premiums 44 61
\n
\n
Periodic premiums 773 770
\n
Premiums under group contracts
\n
347 365
\n
\n
Single premiums 26 50
\n
\n
Periodic premiums 321 315
\n
Total sales of life insurance (including investment contracts without DPF)
\n
\n
Unit
\n
-linked 1 089 942
\n
Guaranteed
\n
-rate 996 1 022
\n
Total
\n
2 085 1 964
\n
\n
\u2022 As required under IFRS, we use deposit accounting for a number of investment contracts without DPF. This means that the
\n
premium income and technical charges from these contracts are not recognised under \u2018Earned premiums\u2019 and \u2018Technical
\n
charges\u2019, but that the margins on them are reported under \u2018Net fee and commission income\u2019. Investment contracts without DPF
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n
are more or less the same as unit-linked contracts, which in 2021 accounted for premium income of 0.9 billion euros and in 2022
\n
for premium income of 1.1 billion euros. Premium income generated by investment contracts without DPF (under deposit
\n
accounting) is included in \u2018Total sales of life insurance\u2019, as presented in the lower part of the table. These sale volumes,
\n
therefore, comprise earned insurance premiums plus premiums from contracts that are subject to deposit accounting.
\n

\n\n

\n\n
\n
\n\n
Note 3.7.3: Non-life insurance
\n
\n
Technical insurance
\n
Operating
\n
Earned premiums
\n
charges
\n
expenses
\n
(before
\n
(before
\n
(before
\n
Ceded
\n
(in millions of EUR)
\n
reinsurance)
\n
reinsurance)
\n
reinsurance)
\n
reinsurance
\n
Total
\n
2022
\n
\n
Total
\n
2 054 -1 154 -688 1 213
\n
Accepted reinsurance
\n
30 -26 -10 18 12
\n
Primary business
\n
2 024 -1 128 -678 -17 201
\n
Accident & health (classes 1 & 2, excl. industrial accidents)
\n
128 -60 -41 0 27
\n
Industrial accidents (class 1)
\n
94 -95 -18 -1 -21
\n
Motor, third
\n
-party liability (class 10) 525 -321 -156 -2 45
\n
Motor, other classes (classes 3 & 7)
\n
360 -212 -124 -1 23
\n
Shipping, aviation, transport (classes 4, 5, 6, 7, 11 & 12)
\n
9 -2 -3 -2 2
\n
Fire and other damage to property (classes 8 & 9)
\n
622 -327 -231 -5 58
\n
General third
\n
-party liability (class 13) 156 -45 -51 -6 54
\n
Credit and suretyship (classes 14 & 15)
\n
0 0 0 0 0
\n
Miscellaneous pecuniary losses
\n
(class 16) 30 -13 -11 1 7
\n
Legal assistance (class 17)
\n
65 -40 -23 0 2
\n
Assistance (class 18)
\n
36 -11 -20 0 4
\n
2021
\n
\n
Total
\n
1 905 -1 106 -622 27 204
\n
Accepted reinsurance
\n
27 -11 -9 -3 4
\n
Primary business
\n
1 878 -1 095 -614 30 200
\n
Accident & health (classes 1 & 2, excl. industrial accidents)
\n
123 -53 -40 0 28
\n
Industrial accidents (class 1)
\n
89 -77 -16 0 -4
\n
Motor, third
\n
-party liability (class 10) 512 -305 -148 -4 55
\n
Motor, other classes (classes 3 & 7)
\n
320 -179 -108 3 36
\n
Shipping, aviation, transport (classes 4, 5, 6, 7, 11 & 12)
\n
7 -2 -2 -1 1
\n
Fire and other damage to property (classes 8 & 9)
\n
569 -343 -211 28 44
\n
General third
\n
-party liability (class 13) 142 -92 -46 1 6
\n
Credit and suretyship (classes 14 & 15)
\n
0 0 0 0 0
\n
Miscellaneous pecuniary losses (class 16)
\n
22 -9 -8 3 9
\n
Legal assistance (class 17)
\n
62 -28 -22 0 13
\n
Assistance (class 18)
\n
31 -6 -13 0 12
\n

\n\n

\n\n

\n\n

\n\n
2022 2021
\n
(in millions of EUR*)
\n
Total
\n
-284 261
\n
Impairment on financial assets at AC and at FVOCI
\n
-154 334
\n
(impairment on loans)
\n
By IFRS category
\n
\n
\n
Financial assets at amortised cost -155 330
\n
\n
Financial assets at fair value through OCI 1 4
\n
By product
\n
\n
\n
Loans and advances -177 315
\n
\n
Debt securities -2 3
\n
\n
Off-balance-sheet commitments and financial guarantees 25 15
\n
By type
\n
\n
\n
Stage 1 (12-month ECL) 5 74
\n
\n
Stage 2 (lifetime ECL) -106 449
\n
\n
Stage 3 (lifetime ECL) -60 -191
\n
\n
Purchased or originated credit impaired assets 8 2
\n
By business unit/country
\n
\n
\n
Belgium -35 309
\n
\n
Czech Republic -46 142
\n
\n
International Markets -78 -110
\n
\n
Slovakia -19 16
\n
\n
Hungary -29 22
\n
\n
Bulgaria -30 2
\n
\n
Ireland in 2021 - -149
\n
\n
Group Centre 5 -7
\n
\n
Of which Ireland in 2022 7 -
\n
Impairment on goodwill
\n
-5 -7
\n
Impairment on other
\n
-125 -65
\n
Intangible fixed assets (other than goodwill)
\n
-34 -35
\n
Property and
\n
equipment (including investment property) -18 -17
\n
Associated companies and joint ventures
\n
0 0
\n
Other
\n
-73 -13
\n
* Positive figures indicate a reversal and hence a positive impact on results
\n

\n\n

\n\n

\n\n
\u2022 We create the models for the various portfolios using typical PD, EAD and LGD inputs, as well as macroeconomic variables to
\n
the extent that there is a statistical relationship. The macroeconomic variables are GDP growth, the unemployment rate, policy
\n
interest rates, the exchange rate, government bond yields, house prices and inflation. As a result of regular back-testing,
\n
models may change and macroeconomic variables may be reassessed. Note 1.4 presents the optimistic, pessimistic and base-
\n
case scenarios for the three key indicators (GDP growth, unemployment rate and house price index) for each of our core
\n
countries.
\n
\u2022 As set out under \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section, KBC considers ESG risks in
\n
its credit risk management processes. The vulnerability of individual clients to specific ESG risks may become apparent during
\n
the term of the loan in client-specific credit risk figures, such as credit risk ratings and collateral valuations affecting the ECL
\n
calculation. Especially in terms of climate risk, which may have considerable consequences for certain sectors in the longer
\n
term, the impact on our loan portfolio is not expected to occur within the time horizon considered for the ECL measurement.
\n
\u2022 Our ECL models are not able to adequately reflect all the specifics of the direct and indirect consequences of the war in Ukraine
\n
and the coronavirus crisis. Therefore, an expert-based calculation at portfolio level has been performed that takes due account
\n
of the macroeconomic situation (see Note 1.4).
\n
\u2022 We use three different forward-looking macroeconomic scenarios (with different probability weightings) to measure ECL. The
\n
weightings at year-end 2022 were 60% for the \u2018base\u2019 scenario, 5% for the \u2018up\u2019 scenario and 35% for the \u2018down\u2019 scenario. The
\n
forecast horizon is 30 years. For further information on the key macroeconomic parameters, see Note 1.4.
\n
\u2022 A sensitivity analysis of the impact of these multiple economic scenarios on the collectively assessed ECL (i.e. without the ECL
\n
for individually assessed loans of 1.6 billion euros at the end of 2022 and 1.7 billion euros at the end of 2021) shows that the \u2018base\u2019
\n
scenario generates an ECL of 1.0 billion euros (0.9 billion euros in 2021), which is 0.1 billion euros lower than for the \u2018down\u2019 scenario
\n
(0.1 billion euros in 2021) and 0.0 billion euros higher than for the \u2018up\u2019 scenario (0.1 billion euros in 2021). The assessed scenario-
\n
weighted collective ECL (that was recognised) amounted to 1.0 billion euros (0.9 billion euros in 2021). These amounts take into
\n
account the ECL relating to geopolitical and emerging risks at year-end 2022 (see Note 1.4).
\n
\n
100%
\n
100%
\n
100%
\n
Collectively assessed ECL by country (2022, in billions of EUR)
\n
\n
pessimistic
\n
base-case scenario
\n
optimistic scenario
\n
scenario
\n
Total
\n
1.0 1.0 1.1
\n
Belgium
\n
0.3 0.3 0.3
\n
Czech Republic
\n
0.3 0.3 0.4
\n
Slovakia
\n
0.1 0.1 0.1
\n
Hungary
\n
0.1 0.1 0.1
\n
Bulgaria
\n
0.2 0.1 0.2
\n
Rest
\n
0.0 0.0 0.0
\n

\n\n

\n\n

\n\n

\n
Note 4.2: Financial assets and liabilities, breakdown by portfolio and quality
\n
\n\n

\n\n
Note 4.2.1: Impaired financial assets
\n
\n
\n
Carrying value before
\n
Carrying value after
\n
(in millions of EUR)
\n
impairment
\n
Impairment
\n
impairment
\n
31
\n
-12-2022
\n
*
\n
204 473 -2 619 201 853
\n
Financial assets at amortised cost: Loans and advances
\n
Stage 1 (12
\n
-month ECL) 163 846 -110 163 736
\n
Stage 2 (lifetime ECL)
\n
36 577 -635 35 941
\n
Stage 3 (lifetime ECL)
\n
3 616 -1 796 1 820
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
434
\n
-77
\n
357
\n
Financial assets at amortised cost: Debt securities
\n
52 048 -18 52 030
\n
Stage 1 (12
\n
-month ECL) 51 909 -7 51 903
\n
Stage 2 (lifetime ECL)
\n
130 -4 126
\n
Stage 3 (lifetime ECL)
\n
8 -7 1
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
Financial assets at fair value through OCI: Debt securities
\n
11 818 -4 11 813
\n
Stage 1 (12
\n
-month ECL) 11 753 -3 11 750
\n
Stage 2 (lifetime ECL)
\n
65 -2 63
\n
Stage 3 (lifetime ECL)
\n
0 0 0
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
31
\n
-12-2021
\n
*
\n
194 638 -2 573 192 065
\n
Financial assets at amortised cost: Loans and advances
\n
Stage 1 (12
\n
-month ECL) 167 426 -104 167 322
\n
Stage 2 (lifetime ECL)
\n
23 131 -507 22 624
\n
Stage 3 (lifetime ECL)
\n
3 493 -1 848 1 645
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
588
\n
-114
\n
474
\n
Financial assets at amortised cost: Debt securities
\n
47 181 -9 47 172
\n
Stage 1 (12
\n
-month ECL) 47 155 -5 47 150
\n
Stage 2
\n
(lifetime ECL) 24 -3 21
\n
Stage 3 (lifetime ECL)
\n
1 -1 1
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
Financial assets at fair value through OCI: Debt securities
\n
15 509 -6 15 503
\n
Stage 1 (12
\n
-month ECL) 15 418 -3 15 415
\n
Stage 2
\n
(lifetime ECL) 91 -3 88
\n
Stage 3 (lifetime ECL)
\n
0 0 0
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
* The carrying value after impairment in this note corresponds to the sum of the \u2018Loans and advances to credit institutions and investment firms (excl. reverse repos)\u2019, \u2018Loans and advances to
\n
customers (excl. reverse repos)\u2019 and \u2018Reverse repos\u2019 in Note 4.1 (in the \u2018Measured at amortised cost\u2019 column).
\n

\n\n

\n\n

\n\n

\n\n

\n\n
\u2022 Acquisition of Raiffeisenbank Bulgaria (now renamed KBC Bank Bulgaria):
\n
\u25e6 The carrying value before impairment at year-end 2022 included 4.7 billion euros for KBC Bank Bulgaria, of which 4.1 billion
\n
euros in loans and advances (3.2, 0.8 and 0.1 billion euros in Stages 1, 2 and 3, respectively), 0.5 billion euros in debt securities
\n
at amortised cost and 0.1 billion euros in debt securities at fair value through OCI. KBC Bank Bulgaria\u2019s portfolios account
\n
for 1.8% of the entire KBC group.
\n
\u25e6 Impairment at year-end 2022 included 113 million euros for KBC Bank Bulgaria, of which 106 million euros in loans and
\n
advances (10, 30 and 66 million euros in Stages 1, 2 and 3, respectively), and 7 million euros in debt securities at amortised
\n
cost. These impairment valuations partly deviate from the methodology set out in the accounting policies (particularly as
\n
regards the forward-looking information, IFRS 9 models and criteria used to determine a significant increase in credit risk).
\n
The integration of KBC Bank Bulgaria in 2023 will also involve the alignment of the accounting policies at KBC Bank Bulgaria
\n
for determining impairment.
\n
\u2022 Carrying value before impairment of loans and advances at amortised cost: increase of 9.8 billion euros in 2022, due primarily
\n
to:
\n
\u25e6 The acquisition of Raiffeisenbank Bulgaria (see above).
\n
\u25e6 An organic net increase in the loan portfolio (mainly mortgage loans and term loans, in all countries).
\n
\u25e6 This increase was partly offset by a decrease of the carrying value before impairment of loans and advances (excluding
\n
reverse repos) and the reverse repos to credit institutions and investment firms.
\n
\u2022 Carrying value before impairment of loans and advances at amortised cost in \u2018Stage 2\u2019: increase of 13.4 billion euros in 2022,
\n
due primarily to:
\n
\u25e6 The migration to \u2018Stage 2\u2019 based on a collective approach of \u2018Stage 1\u2019 loans (see also Note 1.4) that have indirect exposure
\n
to Russia, Ukraine and Belarus (i.e. as a result of the military conflict; 2.8 billion euros) and/or are vulnerable to emerging
\n
risks (11.3 billion euros).
\n
\u25e6 The acquisition of Raiffeisenbank Bulgaria (see above).
\n
\u25e6 This was partly offset by the discontinuation of the collective \u2018Stage 2\u2019 transfer of loans vulnerable to coronavirus-related
\n
risks (3.1 billion euros in receivables that had been moved to \u2018Stage 2\u2019 at year-end 2021). The remaining coronavirus-related
\n
risks in our loan portfolio are included in the regular indicators used to assess considerable credit risk increases (probability
\n
of default, forbearance and the number of days past due), which are no longer concealed by the moratoria.
\n
\u25e6 Please note that the migration of loans from \u2018Stage 1\u2019 to \u2018Stage 2\u2019 based on the collective approach resulted in a net
\n
decrease of 3.6 billion euros of the carrying value before impairment of loans and advances at amortised cost in \u2018Stage 1\u2019,
\n
which was partly offset by the organic net increase in the loan portfolio and the acquisition of Raiffeisenbank Bulgaria.
\n
\u25e6 Also note that the migration predicted in the management overlay at the time is not reflected in the 2021 year-end figures,
\n
because it was determined based on a collective approach and, therefore, could not be individually linked to specific
\n
loans. Taking into account the impact of the management overlay on staging at year-end 2021, this would result in a
\n
carrying value before impairment of loans and advances of an estimated 165.4, 24.3 and 4.3 billion euros in Stages 1, 2 and
\n
3, respectively (or net migration of 1% of the total portfolio from \u2018Stage 1\u2019 to \u2018Stage 2\u2019 and 0.4% from \u2018Stage 1\u2019 and \u2018Stage 2\u2019
\n
to \u2018Stage 3\u2019).
\n
\u2022 Carrying value before impairment of debt securities at amortised cost: increase of 4.9 billion euros in 2022, almost entirely in
\n
\u2018Stage 1\u2019:
\n
\u25e6 More than half of this increase concerns (issues by) public bodies, one third concerns credit institutions and investment
\n
firms, and the remaining part concerns corporates, and related primarily to net investments.
\n
\u2022 Impairment: increase of 0.1 billion euros in 2022, due to:
\n
\u25e6 The acquisition of Raiffeisenbank Bulgaria (see above).
\n
\u25e6 For information on other changes, see Note 3.10.
\n
\u2022 See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\u2022 In 2022, \u2018Stage 2\u2019 and \u2018Stage 3\u2019 financial assets with a net carrying value of 471 million euros have been subject to modifications
\n
in the past that did not result in derecognition. The gross carrying value of \u2018Stage 1\u2019 financial assets subject to modifications in
\n
the past that did not result in derecognition came to 1 088 million euros in 2022. The corresponding figures for 2021 were 1 712
\n
million euros and 509 million euros, respectively. Modification gains or losses are recognised under impairment (see Note 3.10).
\n
\u2022 In 2022, financial assets at amortised cost with a gross carrying value of 80 million euros were written off, but were still subject
\n
to enforcement activities; the corresponding figure in 2021 was 72 million euros.
\n

\n\n

\n\n

\n\n
Note 4.2.2: Impairment details
\n
\n
\n
\n
Subject to lifetime ECL
\n
Stage 1
\n
Stage 2
\n
Stage 3
\n
(purchased or
\n
\n
Subject to 12-
\n
Subject to lifetime
\n
Subject to lifetime
\n
originated credit
\n
(in millions of EUR)
\n
month ECL
\n
ECL
\n
ECL
\n
impaired)
\n
Total
\n
2022
\n
\n
LOANS AND ADVANCES AT AMORTISED COST
\n
Impairment on 1 January
\n
104
\n
507
\n
1 848
\n
114
\n
2 573
\n
1
\n
-6 96 147 -8 230
\n
Movements with an impact on results
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) -22 158 60 0 197
\n
\n
Stage 2 (lifetime ECL) 4 -83 95 0 16
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 26 -54 -3 -31
\n
New financial assets
\n
2
\n
\n
40
\n
43
\n
10
\n
0
\n
93
\n
\n
Changes in risk parameters during the reporting period -16 -23 90 -5 48
\n
\n
Changes in the model or methodology -1 3 0 0 2
\n
Derecognised financial assets
\n
3
\n
-10 -26 -59 -1 -97
\n
\n
\n
Other -1 -2 4 0 2
\n
Movements without an impact on results
\n
12 32 -199 -29 -184
\n
\n
Derecognised financial assets
\n
3
\n
0 -1 -296 -7 -304
\n
Changes in the scope of consolidation
\n
14
\n
32
\n
88
\n
0
\n
133
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
\n
Other -2 1 9 -21 -13
\n
Impairment on 31 December
\n
110 635 1 796 77 2 619
\n
DEBT
\n
SECURITIES AT AMORTISED COST
\n
Impairment on 1 January
\n
5 3 1 0 9
\n
1
\n
2 0 1 0 3
\n
Movements with an impact on results
\n
Transfer of financial assets
\n
\n
\n
\n
\n
\n
\n
Stage 1 (12-month ECL) 0 0 0 0 0
\n
\n
Stage 2 (lifetime ECL) 0 -1 1 0 0
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
1 0 0 0 1
\n
\n
Changes in risk parameters during the reporting period 0 1 0 0 1
\n
Changes in the model or methodology
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
\n
Other 0 0 0 0 0
\n
Movements without an impact on results
\n
0 1 5 0 6
\n
\n
Derecognised financial assets
\n
3
\n
0 0 -1 0 -1
\n
\n
Changes in the scope of consolidation 0 1 6 0 7
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
Other
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Impairment on 31 December
\n
7 4 7 0 18
\n
DEBT SECURITIES AT FAIR VALUE THROUGH OCI
\n
\n
Impairment on 1 January
\n
3 3 0 0 6
\n
Movements with an impact on results
\n
1
\n
0 -1 0 0 -1
\n
\n
Transfer of financial assets
\n
Stage 1 (12-month ECL)
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Stage 2 (lifetime ECL)
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
0 0 0 0 0
\n
\n
Changes in risk parameters during the reporting period 0 -1 0 0 -1
\n
\n
Changes in the model or methodology 0 0 0 0 0
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
Other
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Movements without an impact on results
\n
0 0 0 0 0
\n
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
Changes in the scope of consolidation 0 0 0 0 0
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
\n
Other 0 0 0 0 0
\n
Impairment on 31 December
\n
3 2 0 0 4
\n

\n\n

\n\n

\n\n
2021
\n
LOANS AND ADVANCES AT AMORTISED COST
\n
Impairment on 1 January
\n
168 992 2 517 18 3 695
\n
Movements with an impact on results
\n
1
\n
-62 -454 242 -2 -276
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) -12 99 42 0 129
\n
\n
Stage 2 (lifetime ECL) 6 -116 80 0 -30
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL)
\n
0
\n
20
\n
-36
\n
0
\n
-16
\n
\n
New financial assets
\n
2
\n
25 14 7 0 45
\n
\n
Changes in risk parameters during the reporting period -57 -426 214 1 -269
\n
\n
Changes in the model or methodology 0 -1 0 0 -1
\n
\n
Derecognised financial assets
\n
3
\n
-24 -48 -84 -2 -158
\n
\n
Other 0 2 20 0 22
\n
Movements without an
\n
impact on results -2 -32 -911 98 -847
\n
3
\n
Derecognised financial assets
\n
\n
0
\n
0
\n
-286
\n
-12
\n
-299
\n
\n
Changes in the scope of consolidation 0 0 4 0 4
\n
\n
Transfers under IFRS 5 -3 -31 -540 0 -574
\n
\n
Other 1 0 -90 110 21
\n
Impairment on 31 December
\n
104 507 1 848 114 2 573
\n
DEBT SECURITIES AT AMORTISED COST
\n
\n
Impairment on 1 January
\n
6
\n
1
\n
2
\n
0
\n
9
\n
Movements with an impact on results
\n
1
\n
\n
-1
\n
2
\n
0
\n
0
\n
1
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) 0 0 0 0 0
\n
\n
Stage 2 (lifetime ECL) 0 0 0 0 0
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
1 0 0 0 1
\n
Changes in risk parameters during the reporting period
\n
-2
\n
3
\n
0
\n
0
\n
1
\n
\n
Changes in the model or methodology 0 0 0 0 0
\n
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 -1
\n
\n
Other 0 0 0 0 0
\n
Movements without an
\n
impact on results 0 0 -1 0 -1
\n
Derecognised financial assets
\n
3
\n
0 0 -1 0 -1
\n
\n
\n
Changes in the scope of consolidation 0 0 0 0 0
\n
Transfers under IFRS 5
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
Other 0 0 0 0 0
\n
Impairment on 31
\n
December 5 3 1 0 9
\n
DEBT SECURITIES AT FAIR VALUE THROUGH OCI
\n
\n
Impairment on 1 January
\n
6 3 0 0 9
\n
Movements with an impact on results
\n
1
\n
-3 0 0 0 -4
\n
Transfer of financial assets
\n
\n
\n
\n
\n
\n
\n
Stage 1 (12-month ECL) 0 0 0 0 0
\n
\n
Stage 2 (lifetime ECL) 0 -1 0 0 -1
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
0 0 0 0 0
\n
\n
Changes in risk parameters during the reporting period -3 0 0 0 -3
\n
\n
Changes in the model or methodology 0 0 0 0 0
\n
Derecognised financial assets
\n
3
\n
\n
-1
\n
0
\n
0
\n
0
\n
-1
\n
\n
Other 0 0 0 0 0
\n
Movements without an impact on
\n
results 0 0 0 0 0
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
\n
Changes in the scope of consolidation 0 0 0 0 0
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
\n
Other 0 0 0 0 0
\n
Impairment on 31 December
\n
3
\n
3
\n
0
\n
0
\n
6
\n
1 Amounts recovered in respect of loans that have already been written off are recycled to the income statement and recorded as \u2018Impairment on financial assets at amortised cost and at
\n
fair value through OCI\u2019. However, they have not been included in this table since they do not have any impact on impairment losses on the balance sheet.
\n
2 Also includes impairment related to new financial assets resulting from off-balance-sheet commitments and financial guarantees already given being called.
\n
3 Derecognition without an impact on results occurs when the impairment adjustment has already been made upfront (for example, at the moment of the sale agreement (disposals) or before
\n
the write-off). Derecognition with an impact on results occurs when the impairment adjustment takes place at the same time (for instance, in the case of debt forgiveness).
\n

\n\n

\n\n

\n\n
\u2022 The change in impairment in 2022 relates mainly to the reserve set aside to cover geopolitical and emerging risks and the full
\n
reversal of the remaining reserves set aside for the coronavirus crisis (see Note 1.4) and the changes in the scope of
\n
consolidation, partly offset by the elimination of the impairment on derecognised financial assets.
\n
\u2022 Changes in the scope of consolidation: relates mainly to the acquisition of Raiffeisenbank Bulgaria.
\n
\u2022 The vast majority of the staging is triggered by a collective management assessment and relative changes in PD (see the multi-
\n
tier approach outlined in Note1.2 under \u2018Significant increase in credit risk since initial recognition\u2019).
\n
\u2022 For information on provisions for commitments and financial guarantees, see Note 5.7.2.
\n
\u2022 For information regarding the impact of changes in impairment on the income statement, see Note 3.10.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. Based on internal management reports, the
\n
composition and quality of the loan portfolio is set out in detail in the \u2018How do we manage our risks?\u2019 section (under \u2018Credit
\n
risk\u2019). All parts of that particular section which have been audited by the statutory auditor are listed at the start of the section.
\n

\n\n

\n\n
Note 4.4: Fair value of financial assets and liabilities \u2013 general
\n
\u2022 In line with European Banking Authority guidelines, we conduct an outlier stress test on a quarterly basis by applying six different
\n
scenarios to the banking books (material currencies). The worst-case scenario is set off against tier-1 capital. For the banking
\n
book at KBC group level, this risk came to -3% of tier-1 capital at year-end 2022. This -3% is well below the -15% Tier 1 threshold,
\n

\n\n
which is monitored by the ECB. Note that this -3% of tier-1 capital at year-end 2022 is equivalent to a -0.4% points impact on
\n
the end of year 2022 fully loaded CET1 ratio.
\n
\u2022 The table shows the changes in economic value of equity under six different interest rate scenarios. To test these six scenarios,
\n
we combine the shift in the yield curves with changes in maturities depending on clients\u2019 behaviour (e.g., interest-rate-driven
\n
prepayment behaviour) and use a run-off balance sheet where maturing items are not replaced. The bank also analyses the
\n
impact of different interest rate scenarios on its net interest income.
\n
\n
Changes of the economic value of equity
\n
Supervisory shock scenarios (in millions of EUR, material currencies)*
\n
End of 4Q2022
\n
End of 2Q2022
\n
1 Parallel up
\n
-491
\n
-1 163
\n
2 Parallel down
\n
370
\n
600
\n
3 Steepener
\n
-55
\n
-207
\n
4 Flattener
\n
-26
\n
-3
\n
5 Short rates up
\n
-179
\n
-343
\n
6 Short rates down
\n
102
\n
176
\n
\n
* Supervision of the underlying internal models\u2019 compliance with the approval criteria as provided for in the standards imposed by the regulator does not come under the responsibility of the statutory auditor.
\n
\u2022 Note that the above stress test covers the full balance sheet (full economic view), with compensating effects across the balance
\n
sheet, whereas the table below focuses on some parts of the balance sheet.
\n
\n
\u2022 Furthermore, taking into account 1) KBCs large stock of high-quality liquid assets (approximately 92 billion euros on average in
\n
2022), which consist of cash and bonds which can be repoed in the private market and at the central banks, 2) 48% of total
\n
customer deposits at KBC are covered by the Deposit Guarantee and 3) 83% of total customer deposits consisting of more
\n
stable retail & SME clients, the unrealised losses on the debt securities portfolio at amortised cost do not need to be realised
\n
for liquidity purposes and are therefore irrelevant from a capital perspective.
\n
\n
\n
\n
Fair value of financial instruments that are not measured at fair value
\n
Financial assets
\n
Financial liabilities
\n
in the balance sheet
\n
at amortised cost
\n
at amortised cost
\n
Carrying
\n
Fair
\n
Carrying
\n
Fair
\n
(in millions of EUR)
\n
value
\n
value
\n
value
\n
value
\n
31-12-2022
\n
FINANCIAL ASSETS
\n
\n
Loans and advances to credit institutions and investment firms (incl. reverse
\n
repos) 24 258 24 211 \u2013 \u2013
\n
Loans and advances to customers (incl. reverse repos)
\n
177 596 163 972 \u2013 \u2013
\n
Debt securities
\n
52 030 46 886 \u2013 \u2013
\n
Other
\n
1 561 1 561 \u2013 \u2013
\n
Total
\n
255 444 236 630 \u2013 \u2013
\n
\n
Level 1 \u2013 43 364 \u2013 \u2013
\n
\n
Level 2 \u2013 31 917 \u2013 \u2013
\n
\n
Level 3 \u2013 161 349 \u2013 \u2013
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms (incl. repos)
\n
\n
\u2013 \u2013 35 671 35 207
\n
Deposits from customers and debt securities (incl. repos)
\n
\n
\u2013 \u2013 251 735 250 485
\n
Liabilities under investment
\n
contracts \u2013 \u2013 0 0
\n
Other
\n
\u2013 \u2013 2 448 2 448
\n
Total
\n
\u2013 \u2013 289 854 288 140
\n
Level 1
\n
\u2013
\n
\u2013
\n
\u2013
\n
47
\n
Level 2
\n
\u2013
\n
\u2013
\n
\u2013
\n
111 093
\n
Level 3
\n
\u2013
\n
\u2013
\n
\u2013
\n
176 999
\n
31
\n
-12-2021
\n
FINANCIAL ASSETS
\n
\n
Loans and advances to credit institutions and investment firms (incl. reverse
\n
repos) 32 780 32 789 \u2013 \u2013
\n
Loans and advances to customers (incl. reverse repos)
\n
159 285 160 037 \u2013 \u2013
\n
Debt securities
\n
47 172 47 878 \u2013 \u2013
\n
Other
\n
892 892 \u2013 \u2013
\n
Total
\n
240 128 241 595 \u2013 \u2013
\n
Level 1
\n
\u2013
\n
44 062
\n
\u2013
\n
\u2013
\n
Level 2
\n
\u2013
\n
36 737
\n
\u2013
\n
\u2013
\n
Level 3
\n
\u2013
\n
160 797
\n
\u2013
\n
\u2013
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms (incl. repos)
\n
\n
\u2013 \u2013 40 935 41 003
\n
Deposits from customers and debt securities (incl. repos)
\n
\n
\u2013 \u2013 225 164 225 299
\n
Liabilities under investment
\n
contracts \u2013 \u2013 0 0
\n
Other
\n
\u2013 \u2013 2 288 2 286
\n
Total
\n
\u2013 \u2013 268 387 268 588
\n
\n
Level 1 \u2013 \u2013 \u2013 24
\n
\n
Level 2 \u2013 \u2013 \u2013 105 714
\n
\n
Level 3 \u2013 \u2013 \u2013 162 850
\n

\n\n

\n\n

\n

\n\n

\n\n
\u2022 All internal valuation models are validated by an independent Risk Validation Unit. In addition, the Executive Committee has
\n
appointed a Group Valuation Committee (GVC) to ensure that KBC meets all the legal requirements for measuring financial
\n
assets and liabilities at fair value. The GVC monitors consistent implementation of the KBC Valuation Framework, which consists
\n
of various guidelines, including the Group Valuation Policy, the Group Market Value Adjustments Policy and the Group
\n
Parameter Review Policy. The GVC meets at least twice a quarter to approve significant changes in valuation methods
\n
(including, but not limited to, models, market data and inputs) or deviations from group policies for financial assets and liabilities
\n
measured at fair value. The committee is made up of members from Finance, Risk Management and the Middle Office. Valuation
\n
uncertainty measurements are made and reported to the GVC every six months. Certain fair values generated by valuation
\n
models are challenged by a team set up specifically for this purpose.
\n
\u2022 The fair value of mortgage and term loans not measured at fair value in the balance sheet (see table) is calculated by
\n
discounting contractual cashflows at the risk-free rate. This calculation is then adjusted for credit risk by taking account of
\n
margins obtained on similar, but recently issued, loans or by using a spread derived from the listed-bond spread. The fair value
\n
of the main portfolios takes account of prepayment risks and cap options. The fair value of time deposits is calculated by
\n
discounting contractual cashflows at the risk-free rate. The fair value of demand and savings deposits is presumed to be equal
\n
to their carrying value.
\n
\u2022 As a result of the first-time adoption of IFRS 9 on 1 January 2018, debt instruments with a total carrying value of 15 060 million
\n
euros have been reclassified from \u2018Available-for-sale assets\u2019 to \u2018Financial assets held at amortised cost\u2019. Due to this
\n
reclassification, changes in fair value (before tax) totalling -566 million euros were not recorded in the revaluation reserve in
\n
2022 (-199 million euros in 2021). The fair value of this reclassified portfolio (after redemptions) amounted to 4 668 million euros
\n
at year-end 2022 (5 753 million euros at year-end 2021).
\n
\u2022 The difference between the fair value and the carrying value of the financial instruments at amortised cost was caused by the
\n
substantial interest rate hikes in 2022. As a hold-to-collect business model is applied on the assets side, interim changes in fair
\n
value are less relevant. In addition, part of this difference has already been recorded under fair value hedges for a portfolio of
\n
interest rate risk, which is presented separately on the balance sheet (on both the assets and the liabilities side) in the
\n
\u2018Profit/loss on positions in portfolios hedged against interest rate risk\u2019 balance sheet item. Furthermore, there are ALM interest
\n
derivatives not recognised in hedge accounting.
\n

\n\n

\n\n
\n
\n
\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n

\n

\n

\n

\n

\n

\n

\n
Note 4.5: Financial assets and liabilities measured at fair value \u2013 fair value hierarchy
\n
\n
\n
Fair value hierarchy
\n
31-12-2022 31-12-2021
\n
(in millions of EUR)
\n
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
\n
FINANCIAL ASSETS AT FAIR VALUE
\n
\n
Mandatorily measured at fair value through profit or loss other than held for trading (including
\n
\n
overlay)
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 13 0 13 0 0 0 0
\n
reverse repos)
\n
Loans and advances to customers (incl. reverse repos)
\n
0 0 625 625 0 0 560 560
\n
Equity instruments
\n
1 131 0 118 1 250 1 323 0 52 1 374
\n
Investment contracts (insurance)
\n
12 638 134 0 12 771 14 365 254 0 14 620
\n
Debt securities
\n
12 0 5 17 14 0 3 17
\n
of which sovereign bonds
\n
\n
0
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 34 0 34 0 1 0 1
\n
reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Equity instruments
\n
429 0 0 430 448 0 0 448
\n
Debt securities
\n
1 480 244 4 1 728 1 522 1 432 4 2 958
\n
\n
of which sovereign bonds 1 444 223 0 1 667 1 441 1 076 0 2 517
\n
Derivatives
\n
3 5 547 729 6 279 1 4 482 961 5 443
\n
Other
\n
0 0 0 0 0 0 0 0
\n
Designated upon initial recognition at fair value through profit or loss (FVO)
\n
Loans and advances to credit institutions and
\n
0 0 0 0 0 0 0 0
\n
investment firms (incl. reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Debt securities
\n
0 0 0 0 0 0 0 0
\n
\n
of which sovereign bonds 0 0 0 0 0 0 0 0
\n
At fair value through OCI
\n
\n
\n
\n
\n
\n
\n
\n
\n
Equity instruments
\n
18 1 297 315 15 1 306 321
\n
Debt securities
\n
9 508 2 070 235 11 813 12 269 2 963 271 15 503
\n
\n
of which sovereign bonds
\n
\n
7 003 1 059 73 8 135 8 751
\n
\n
1 711
\n
\n
52
\n
\n
10 514
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0 542 0 542 0 283 0 283
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial assets at fair value
\n
25 219 8 585 2 014 35 818 29 956 9 416 2 157 41 529
\n
FINANCIAL LIABILITIES AT FAIR VALUE
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 7 0 7 0 2 0 2
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 44 0 44 0 21 0 21
\n
Derivatives
\n
2
\n
6 911
\n
1 125
\n
8 038
\n
1
\n
4 410
\n
1 209
\n
5 619
\n
Short positions
\n
884 123 0 1 007 1 582 47 0 1 628
\n
Designated at fair value
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 0 0 0 0 0 0 0
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 74 1 131 1 205 0 61 1 251 1 312
\n
Liabilities under investment contracts
\n
12 002 0 0 12 002 13 603 0 0 13 603
\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0
\n
479
\n
98
\n
577
\n
0
\n
696
\n
398
\n
1 094
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial liabilities at fair value
\n
12 887 7 638 2 355 22 881 15 185 5 238 2 857 23 280
\n
\n
\u2022 The fair value hierarchy prioritises the valuation techniques and the respective inputs into three levels.
\n
- The fair value hierarchy gives the highest priority to \u2018level 1 inputs\u2019. This means that, when there is an active market, quoted
\n
prices have to be used to measure the financial assets or liabilities at fair value. Level 1 inputs are prices that are readily and
\n
regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency (and that are
\n
quoted in active markets accessible to KBC). They represent actual and regularly occurring market transactions on an arm\u2019s
\n
length basis. The fair value is then based on a mark-to-market valuation derived from currently available transaction prices.
\n
No valuation technique (model) is involved.
\n
- If there are no price quotations available, the reporting entity establishes fair value using a model based on observable or
\n
unobservable inputs. The use of observable inputs must be maximised. Observable inputs are also referred to as \u2018level 2
\n
inputs\u2019 and reflect the assumptions market participants would use in pricing the asset or liability based on market data
\n
obtained from sources independent of the reporting entity. Examples of observable inputs are the risk-free rate, exchange
\n
rates, stock prices and implied volatility. Valuation techniques based on observable inputs include discounted cashflow
\n
analysis, or reference to the current or recent fair value of a similar instrument.
\n
- Unobservable inputs are also referred to as \u2018level 3 inputs\u2019 and reflect the reporting entity\u2019s own assumptions about the
\n
assumptions that market participants would use in pricing the asset or liability (including assumptions regarding the risks
\n
involved). Unobservable inputs reflect a market that is not active. For example, proxies and correlation factors can be
\n
considered to be unobservable in the market.
\n
\u2022 When the inputs used to measure the fair value of an asset or a liability can be categorised into different levels of the fair value
\n
hierarchy, the fair value measurement is classified in its entirety into the same level as the lowest level input that is significant
\n
to the entire fair value measurement. For example, if a fair value measurement uses observable inputs that require significant
\n
adjustment based on unobservable inputs, that measurement is a level 3 measurement.
\n
\u2022 The valuation methodology and the corresponding classification in the fair value hierarchy of the most commonly used financial
\n
instruments are summarised in the table. Whereas the majority of instruments of a certain type are within the level indicated in
\n
the table, a small portion may actually be classified in another level.
\n
\u2022 KBC follows the principle that transfers into and out of levels of the fair value hierarchy are made at the end of the reporting
\n
period. Transfers between the various levels are dealt with in more detail in Note 4.6 and Note 4.7.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Instrument type Products Valuation technique
\n
Liquid financial instruments
\n
FX spots, exchange traded financial futures, exchange traded options,
\n
Mark-to-market (quoted prices in active
\n
for which quoted prices are
\n
exchange traded stocks, exchange traded funds, liquid government
\n
markets), for bonds: BVAL or vendor
\n
data.
\n
\n
Level 1
\n
regularly available
\n
\n
bonds, other liquid bonds, liquid asset backed securities (ABS) in active
\n
markets
\n
Plain vanilla/liquid
\n
(Cross-currency) interest rate swaps (IRS), FX swaps, FX forwards, forward
\n
Discounted cashflow analysis based on
\n
derivatives
\n
\n
rate agreements (FRA), inflation swaps, dividend swaps and futures,
\n
discount and estimation curves (derived
\n
reverse floaters, bond future options, interest rate future opt
\n
ions, overnight
\n
from quoted deposit rates,
\n
\n
index swaps (OIS), FX resets
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Caps & floors, interest rate options, European stock options, European &
\n
Option pricing model based on
\n
American FX options, forward starting options, digital FX options, FX strips
\n
observable inputs (e.g., volatilities)
\n
\n
of simple options, European swaptions, European cancellable IRS,
\n
\n
compound options
\n
\n
Linear financial liabilities
\n
Deposits, simple cashflows, repo transactions
\n
Discounted cashflow analysis based on
\n
(without optional features)
\n
\u2013
\n
discount and estimation curves (derived
\n
cash instruments
\n
\n
from quoted deposit rates,
\n
\n
\n
Level 2
\n
FX swaps and (CC)IRS)
\n
\n
\n
Semi-liquid bonds/asset
\n
Semi-liquid bonds/asset backed securities
\n
BVAL, prices corroborated by alternative
\n
backed securities
\n
\n
observable market data, or using
\n
comparable spread method
\n
\n
\n
Debt instruments
\n
KBC IFIMA own issues (liabilities), mortgage bonds held by \u010cSOB
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
observable inputs
\n
\n
\n
Linear financial assets (cash
\n
Loans, commercial paper
\n
Discounted cashflow analysis based on
\n
instruments)
\n
\n
discount and estimation curves (derived
\n
from quoted deposit rates,
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Exotic derivatives
\n
Target profit forwards, flexible forwards, American & Asian stock options,
\n
Option pricing model based on
\n
Bermudan swaptions, digital interest rate options, quanto interest rate
\n
observable inputs (e.g., correlation)
\n
\n
options, digital stock options, composite stock options, barrier stock
\n
options, quanto digital FX options, FX
\n
Asian options, FX European barrier
\n
options, FX simple digital barrier options, FX touch rebates, inflation
\n
options, Bermudan cancellable IRS, constant maturity swaps (CMS), CMS
\n
spread swaps, CMS spread options, CMS interest rate caps/floors,
\n
(callable) ra
\n
nge accruals, outperformance options, auto-callable options,
\n
\n
Level 3
\n
lookback options, commodity swaps and forwards
\n
Illiquid credit-linked
\n
Collateralised debt obligations (notes)
\n
Valuation model based on correlation of
\n
instruments
\n
\n
probability of default of underlying assets
\n
\n
\n
Private equity investments
\n
Private equity and non-quoted participations
\n
Based on the valuation guidelines of the
\n
European Private Equity & Venture Capital
\n
Association
\n
\n
\n
Illiquid bonds/asset backed
\n
Illiquid (mortgage) bonds/asset backed securities that are indicatively
\n
BVAL, third-party pricing (e.g., lead
\n
securities
\n
\n
priced by a single pricing provider in an inactive market
\n
\n
manager), where prices
\n
cannot be
\n
\n
\n
corroborated due to a lack of
\n
available/reliable alternative market data
\n
\n
\n
Debt instruments
\n
KBC own issues (KBC IFIMA)
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
\n
unobservable inputs (indicative pricing by
\n
third parties for derivatives)
\n
\n
\n
Structured loans
\n
Government-regulated loans with leveraged interest rates and exotic
\n
Discounted cashflow analysis and
\n
early repayment
\n
schedules (K&H)
\n
valuation of related derivatives based on
\n
unobservable inputs
\n
\n
\n
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.6: Financial assets and liabilities measured at fair value \u2013 transfers between levels 1 and 2
\n
\n
\u2022 In 2022, KBC transferred 77 million euros\u2019 worth of financial assets and liabilities out of level 1 and into level 2, and 434 million
\n
euros\u2019 worth of financial assets and liabilities out of level 2 and into level 1. The corresponding figures for 2021 were 206 million
\n
euros and 294 million euros, respectively. Most of these reclassifications were carried out due to a change in the liquidity of
\n
government bonds and corporate bonds.
\n

\n\n

\n\n

\n\n

\n

\n

\n\n
Note 4.7: Financial assets and liabilities measured at fair value \u2013 focus on level 3
\n
\n
\u2022 In 2022, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 65 million euros, primarily on account of new transactions, partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of unlisted shares rose by 66 million euros, due primarily to new
\n
transactions.
\n
- Financial assets at fair value through OCI: the fair value of debt instruments decreased by 36 million euros, primarily on
\n
account of instruments reaching maturity and changes in market inputs.
\n
- Financial assets held for trading: the fair value of derivatives decreased by 232 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities held for trading: the fair value of derivatives decreased by 83 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives decreased by 300 million euros due to changes
\n
in market inputs.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of issued debt instruments decreased by 120
\n
million euros, primarily on account of transactions reaching maturity and the sale of existing positions, only partly offset by
\n
new transactions.
\n
\u2022 In 2021, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 173 million euros, primarily on account of new transactions, only partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of debt instruments fell by 34 million euros, owing primarily to changes
\n
in market inputs.
\n
- Financial liabilities held for trading: the fair value of derivatives increased by 103 million euros, due mainly to changes in market
\n
inputs and new transactions, partly offset by sales. The fair value of issued debt instruments fell by 85 million euros, due mainly
\n
to instruments that had reached maturity.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives increased by 398 million euros due to
\n
reclassifications in level 3 owing to an optimisation of the classification method.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of debt instruments increased by 100 million
\n
euros, primarily on account of new issues, partly offset by sales.
\n
\u2022 Some level 3 assets are associated or economically hedged with identical level 3 liabilities, which means that KBC\u2019s exposure
\n
to unobservable inputs is lower than would appear from the gross figures. Most of the level 3 instruments are also valued using
\n
third-party pricing sources, with KBC not developing any unobservable inputs itself. The main unobservable inputs applied by
\n
KBC to the valuation of exotic derivatives include: mean reversion parameter on Bermudan swaptions, equity cross-correlations
\n
and volatilities for certain stock options, interest-rate correlations for CMS spread options, and the funding costs used to
\n
determine the forward equity prices as part of the valuation of certain equity derivatives. The change in fair value resulting from
\n
a change in these inputs to reflect reasonably possible alternative assumptions is insignificant.
\n

\n\n

\n\n

\n\n

\n\n
Note 4.8: Derivatives
\n
\n
\u2022 In terms of volume of the notional amounts of the derivatives, approximately 77% are trading derivatives and approximately
\n
23% are hedging derivatives.
\n
\u2022 The majority of trading derivatives are effectively included in the trading book but are largely economically hedged (limited
\n
open positions) by other trading derivatives (such as derivative transactions initiated by commercial clients that are
\n
economically hedged) or by balance sheet positions (such as currency positions), which leads to large volumes of notional
\n
amounts but also to result-neutral revaluations on a net basis.
\n
\u2022 A limited number of trading derivatives are ALM derivatives included in the banking book, which are used to hedge economic
\n
risk. These are not subject to hedge accounting. Hedge accounting is applied to most of the ALM interest rate contracts. Only
\n
a limited number of the ALM derivatives for foreign currencies are included in hedge accounting.
\n
\n
\n
Note 4.8.1: Trading derivatives
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
\n
Carrying value
\n
Notional amounts*
\n
Carrying value
\n
Notional amounts*
\n
\n
Assets
\n
Liabilities
\n
Purchased
\n
Sold
\n
Assets
\n
Liabilities
\n
Purchased
\n
Sold
\n
Total
\n
6 279 8 038 567 205 568 302 5 443 5 619 491 716 503 818
\n
Interest rate contracts
\n
2 642 3 678 379 270 377 754 3 056 2 788 291 100 301 289
\n
of which interest rate swaps and
\n
2 429 3 542 368 144 371 294 2 731 2 669 278 999 294 056
\n
futures
\n
\n
of which options 214 136 11 126 6 460 325 119 12 101 7 232
\n
Foreign exchange contracts
\n
3 166 3 620 174 787 177 841 1 722 1 880 185 800 187 835
\n
of which currency and interest
\n
rate swaps, forward foreign
\n
3 081 3 509 171 878 172 361 1 668 1 830 182 613 183 020
\n
exchange transactions and
\n
futures
\n
\n
of which options 85 112 2 909 5 480 54 50 3 187 4 816
\n
Equity
\n
contracts 452 720 12 812 12 371 646 935 14 494 14 376
\n
\n
of which equity swaps 414 410 10 553 10 394 620 637 12 607 12 651
\n
\n
of which options 37 311 2 259 1 977 26 298 1 888 1 725
\n
Credit contracts
\n
0 0 0 0 0 0 4 4
\n
\n
of which credit default swaps 0 0 0 0 0 0 4 4
\n
Commodity and other contracts
\n
20 19 337 335 19 17 318 314
\n
* In this table, both legs of the derivatives are reported in the notional amounts.
\n

\n\n

\n\n

\n\n
Note 4.8.2: Hedging derivatives
\n
31-12-2022
\n
(in millions of EUR)
\n
Hedging instrument
\n
Hedged item
\n
Impact on equity
\n
\n
Notional amounts
\n
1
\n
\n
Carrying value
\n
Change in fair
\n
value of hedging
\n
items used as
\n
basis for
\n
recognising hedge
\n
ineffectiveness for
\n
the period
\n
2
\n
\n
Type
\n
Carrying value
\n
Change in fair
\n
value of hedged
\n
items used as
\n
basis for
\n
recognising
\n
hedge
\n
ineffectiveness
\n
for the period
\n
2
\n
\n
Ineffective
\n
portion
\n
recognised in
\n
profit or loss
\n
Effective
\n
portion
\n
recognised in
\n
OCI
\n
Hedging strategy
\n
Purchased
\n
Sold
\n
Assets
\n
Liabilities
\n
\n
\n
Total (including
\n
fair value
\n
changes)
\n
Of which
\n
accumulated
\n
fair value
\n
adjustments
\n
\n
\n
\n
Fair value micro hedge
\n
\n
Interest rate swaps
\n
22 753 22 753 185 102 -619
\n
Debt
\n
securities held at AC 4 007 -684 -323
\n
Currency and
\n
interest rate swaps
\n
0 0 0 0 0
\n
Loans and advances at AC
\n
683 70 -310
\n
\n
\n
Debt securities held at FVOCI
\n
1 342 -152 -176
\n
\n
\n
Debt securities issued at AC
\n
14 624 -1 334 1 432
\n
\n
\n
Deposits at AC
\n
0 0 0
\n
Total
\n
22 753 22 753 185 102 -619
\n
Total
\n
624 5 -
\n
Portfolio hedge of interest rate risk
\n
\n
Interest rate swaps
\n
123 930 123 930 209 261 3 172
\n
Debt securities held at AC
\n
359 -122 -123
\n
Currency and
\n
interest rate options
\n
1 762 0 101 0 82
\n
Loans and advances at AC
\n
104 980 -4 207 -3 769
\n
\n
\n
Debt securities held at FVOCI
\n
23 -6 -6
\n
\n
\n
Debt securities issued at AC
\n
0 0 0
\n
\n
\n
Deposits at AC
\n
14 574 -1 432 644
\n
Total
\n
125 692 123 930 310 261 3 254
\n
Total
\n
-3 254 0 -
\n
Cashflow hedge (micro hedge and portfolio hedge)
\n
\n
Interest rate swaps
\n
20 073 20 073 47 115 177
\n
\n
\n
Currency and
\n
interest rate swaps
\n
1 204 1 257 0 39 -13
\n
\n
\n
Total
\n
21 277 21 330 47 154 164
\n
Total
\n
-167 -3 -1 046
\n
Hedge of net
\n
investments in foreign operations
\n
Total
\n
3
\n
1 755 1 807 0 505 18
\n
Total
\n
-18 0 20
\n
1 In this table, both legs of the derivatives are reported in the notional amounts.
\n
2 Ineffectiveness is recognised in \u2018Net result from financial instruments at fair value through profit or loss\u2019 (also see Note 3.3).
\n
3 Hedging instruments in the form of foreign currency deposits.
\n

\n\n

\n\n

\n\n
31-12-2021
\n
(in millions of EUR)
\n
Hedging instrument
\n
Hedged item
\n
Impact on equity
\n
\n
Notional amounts
\n
1
\n
\n
Carrying value
\n
Change in fair
\n
value of hedging
\n
items used as
\n
basis for
\n
recognising hedge
\n
ineffectiveness for
\n
the period
\n
2
\n
\n
Type
\n
Carrying value
\n
Change in fair
\n
value of hedged
\n
items used as
\n
basis for
\n
recognising
\n
hedge
\n
ineffectiveness
\n
for the period
\n
2
\n
\n
Ineffective
\n
portion
\n
recognised in
\n
profit or loss
\n
Effective
\n
portion
\n
recognised in
\n
OCI
\n
Hedging strategy
\n
Purchased
\n
Sold
\n
Assets
\n
Liabilities
\n
\n
\n
Total (including
\n
fair value
\n
changes)
\n
Of which
\n
accumulated
\n
fair value
\n
adjustments
\n
\n
\n
\n
Fair value micro hedge
\n
\n
Interest rate swaps
\n
22 027 22 027 98 407 307
\n
Debt securities held at AC
\n
3 576 -360 -394
\n
Currency and
\n
interest rate swaps
\n
0 0 0 0 0
\n
Loans and advances at AC
\n
857 391 -114
\n
\n
\n
Debt securities held at FVOCI
\n
1 900 25 -79
\n
\n
\n
Debt securities issued at AC
\n
15 998 98 282
\n
\n
\n
Deposits at AC
\n
0 0 -2
\n
Total
\n
22 027 22 027 98 407 307
\n
Total
\n
-307 0 -
\n
Portfolio hedge of interest rate risk
\n
\n
Interest rate swaps
\n
89 467 89 467 110 183 809
\n
Debt securities held at AC
\n
11 -1 -2
\n
Currency and
\n
interest rate options
\n
1 981 0 21 0 11
\n
Loans and advances at AC
\n
74 412 -504 -1 772
\n
\n
\n
Debt securities held at FVOCI
\n
13 -1 -1
\n
\n
\n
Debt securities issued at AC
\n
0 0 0
\n
\n
\n
Deposits at AC
\n
13 632 -862 960
\n
Total
\n
91 448 89 467 131 183 820
\n
Total
\n
-815 5 -
\n
Cashflow hedge (micro hedge and portfolio hedge)
\n
\n
Interest rate swaps
\n
21 249 21 249 24 502 177
\n
\n
\n
Currency and
\n
interest rate swaps
\n
711 721 26 0 19
\n
\n
\n
Total
\n
21 960 21 970 50 502 196
\n
Total
\n
-196 0 -1 197
\n
Hedge of net investments in foreign operations
\n
\n
Total
\n
3
\n
1 904 1 965 5 420 -109
\n
Total
\n
109 0 20
\n
1 In this table, both legs of the derivatives are reported in the notional amounts.
\n
2 Ineffectiveness is recognised in \u2018Net result from financial instruments at fair value through profit or loss\u2019 (also see Note 3.3).
\n
3 Hedging instruments in the form of foreign currency deposits.
\n

\n\n

\n\n

\n\n
\u2022 The sharp change in fair value of the hedging instruments and the hedged items in the fair value micro hedges and fair value
\n
hedges for a portfolio of interest rate risk for 2022 are attributable to the substantial increase in market interest rates.
\n
\u2022 The Treasury departments of the various entities manage the interest rate risk. To prevent rate movements from having a
\n
negative impact, the maturities of assets and liabilities are adjusted on the balance sheet using interest rate swaps and other
\n
derivatives.
\n
\u2022 As regards the relationship between risk management and hedge accounting policy, \u2018economic\u2019 management takes priority
\n
and risks are hedged in accordance with the general ALM framework. Only then is a decision made on which, if any, of these
\n
techniques will be used to limit any resulting accounting mismatch.
\n
\u2022 The balances remaining in the cashflow hedge reserve from any hedging relationships for which hedge accounting is no longer
\n
applied came to -166 million euros. The accumulated amount of fair value hedge adjustments remaining on the balance sheet
\n
for any hedged items that have ceased to be adjusted for hedging gains and losses amounted to -24 million euros. These
\n
adjustments are amortised to profit or loss.
\n
\u2022 The difference between the \u2018Profit/loss on positions in portfolios hedged against interest rate risk\u2019 balance sheet item and
\n
accumulated fair value adjustments following portfolio hedges of interest rate risk as included in Note 4.8.2 is attributable to
\n
accumulated fair value adjustments regarding discontinued fair value hedges not included in Note 4.8.2 but included in the
\n
balance sheet.
\n
\u2022 The accumulated fair value adjustments of the hedged assets involved in portfolio hedges of interest rate risk dropped in 2022
\n
due to the general increase in interest rates. The \u2018Profit/loss on positions in portfolios hedged against interest rate risk\u2019 balance
\n
sheet item on the liabilities side of the balance sheet also became more negative for the same reason.
\n
\u2022 Also see the paragraph on hedge accounting in the \u2018How do we manage our risks?\u2019 section and Note 3.3.
\n
\n
\n
Estimated cashflows from cashflow hedging derivatives per time bucket (in millions of EUR)
\n
Inflow
\n
Outflow
\n
Not more than three months
\n
7 -38
\n
More than three but not more than six months
\n
33 -95
\n
More than six months but not more than one year
\n
123 -274
\n
More than one but not more than two
\n
years 222 -514
\n
More than two but not more than five years
\n
505 -960
\n
More than five years
\n
545 -849
\n

\n\n

\n\n

\n\n
Note 5.2: Tax assets and tax liabilities
\n
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
CURRENT TAXES
\n
\n
Current tax assets
\n
174 179
\n
Current tax liabilities
\n
150 87
\n
DEFERRED TAXES
\n
1 005 769
\n
Deferred tax assets by type of temporary difference
\n
1 475 1 413
\n
Employee benefits
\n
78 82
\n
Losses carried forward
\n
186 247
\n
Tangible and intangible fixed assets
\n
77 126
\n
Provisions for risks and charges
\n
49 21
\n
Impairment for losses on loans and advances
\n
219 273
\n
Financial instruments at fair value through profit or loss and fair value hedges
\n
142 113
\n
Fair value changes, available-for-sale assets, financial instruments at FVOCI, cashflow hedges and hedges of net investments
\n
in foreign operations
\n
594 476
\n
Technical provisions
\n
42 30
\n
Other
\n
88 47
\n
Deferred tax liabilities by type of
\n
temporary difference 470 644
\n
Employee benefits
\n
99 37
\n
Losses carried forward
\n
0 0
\n
Tangible and intangible fixed assets
\n
41 34
\n
Provisions for risks and charges
\n
9 9
\n
Impairment for losses on loans and advances
\n
3 3
\n
Financial instruments at fair value
\n
through profit or loss and fair value hedges 131 132
\n
Fair value changes, available-for-sale assets, financial instruments at FVOCI, cashflow hedges and hedges of net investments
\n
in foreign operations
\n
44 292
\n
Technical provisions
\n
115 106
\n
Other
\n
29 33
\n
Recognised as a net amount in the balance sheet as follows:
\n
\n
Deferred tax assets
\n
1 138 1 117
\n
Deferred tax liabilities
\n
133 348
\n
Unused tax losses and unused tax credits
\n
151 177
\n

\n\n

\n\n

\n\n
\u2022 Deferred tax assets are recognised to the extent that it is probable that, on the basis of realistic financial projections, taxable
\n
profit will be available against which the deductible temporary differences can be utilised in the foreseeable future (limited to
\n
a period of eight to ten years).
\n
\u2022 Unused tax losses and unused tax credits concern tax losses of group companies which are not capitalised due to insufficient
\n
proof of future taxable profit. Most tax losses and tax credits can be carried forward for 20 years or more.
\n
\u2022 The net change in deferred taxes (+236 million euros in 2022) breaks down as follows:
\n
\u25e6 The change in deferred tax assets of (+62 million euros) was accounted for chiefly by:
\n
- a net increase in deferred tax assets on account of changes in the revaluation reserve for financial instruments
\n
measured at fair value through OCI, cashflow hedges and hedges of net investments in foreign operations (+118 million
\n
euros);
\n
- a decrease in deferred tax assets via the income statement of 74 million euros, mainly due to the usage and write-offs
\n
of losses carried forward, partly offset by the one-off recognition of deferred tax assets, due in part to the increase in
\n
business tax in the UK from 19% to 25% and the recognition of deferred tax assets in Ireland (-61 million euros net) as a
\n
result of lower deferred tax assets on impairment for losses on loans and advances (-18 million euros) and on non-
\n
current assets (-12 million euros). In addition, the arbitration proceedings against ICEC-Holding (see Note 3.6) have led
\n
to an increase in deferred tax assets via the income statement of 28 million euros.
\n
- changes in technical provisions of +12 million euros;
\n
\u25e6 The change in deferred tax liabilities of -174 million euros was accounted for chiefly by:
\n
- a decrease in deferred tax liabilities on account of changes in the revaluation reserve for financial instruments
\n
measured at fair value through OCI, cashflow hedges and hedges of net investments in foreign operations (-249 million
\n
euros);
\n
- changes in defined benefit plans of +62 million euros and to a lesser extent the technical provisions (+9 million euros).
\n
\u2022 The deferred tax assets presented in the balance sheet are attributable primarily to KBC Bank, KBC Insurance, \u010cSOB in the
\n
Czech Republic and KBC Bank Ireland
\n

\n\n

\n\n

\n\n

\n

\n
Note 5.5: Goodwill and other intangible assets
\n
\n\n

\n\n
(in millions of EUR)
\n
Goodwill
\n
Software
\n
developed
\n
in-house
\n
Software
\n
developed
\n
externally
\n
Other
\n
Total
\n
2022
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
913 559 263 13 1 749
\n
Acquisitions
\n
438 262 73 9 783
\n
Disposals
\n
0 0 -1 -3 -4
\n
Amortisation
\n
0 -90 -78 -1 -169
\n
Other movements
\n
-6 -12 -8 -2 -28
\n
Closing balance
\n
1 346 719 250 16 2 331
\n
\n
accumulated amortisation and impairment 260 646 836 56 1 797
\n
2021
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
845 386 301 20 1 551
\n
Acquisitions
\n
56 234 84 9 383
\n
Disposals
\n
0 0 -12 -10 -21
\n
Amortisation
\n
0 -62 -85 -2 -149
\n
Other movements
\n
12 1 -24 -3 -14
\n
Closing balance
\n
913 559 263 13 1 749
\n
\n
accumulated amortisation and impairment 255 794 859 53 1 961
\n

\n\n

\n\n
\n\n
\u2022 Goodwill: includes the goodwill paid on companies included in the scope of consolidation and relating to the acquisition of
\n
activities. Goodwill paid on associated companies: included in the nominal value of \u2018Investments in associated companies\u2019
\n
shown on the balance sheet.
\n
\u2022 For goodwill in respect of recent acquisitions, see Note 6.6.
\n
\u2022 Impairment testing: a test was carried out to establish whether impairment on goodwill had to be recognised (see table and
\n
Note 3.10). This impairment test is performed at least once a year. We also carry out a high level assessment on a quarterly
\n
basis to see whether there is an indication of impairment. In the test, each entity is regarded as a separate cash-generating
\n
unit. Each entity has a specific risk profile and it is rare to have different profiles within a single entity.
\n
\u2022 Impairment on goodwill under IAS 36: recognised in profit or loss if the recoverable amount of an investment is lower than its
\n
carrying value. The recoverable amount is defined as the higher of the value in use (calculated based on discounted cashflow
\n
analysis) and the fair value (calculated based on multiple analysis, etc.) less costs to sell.
\n
\u2022 The main group companies to which goodwill relates are listed in the table. All of these companies have been valued using the
\n
discounted cashflow method. The discounted cashflow method calculates the recoverable amount of an investment as the
\n
present value of all future free cashflows of the business. This method is based on long-term projections about the company\u2019s
\n
business and the resulting cashflows (i.e. projections for a number of years ahead and the residual value of the business at the
\n
end of the specific projection period). These long-term projections are the result of an assessment of past and present
\n
performances combined with external sources of information on future performances in the respective markets and the global
\n
macroeconomic environment. Consequently, in cases where sustainability aspects and products/projects have been factored
\n
into the underlying financial projections, this will also affect the valuation. The ultimate growth rate is determined using a long-
\n
term average market growth rate. The present value of these future cashflows is calculated using a compound discount rate
\n
which is based on the capital asset pricing model (CAPM). A country-specific risk-free rate and a market-risk premium
\n
(multiplied by an activity beta) are also used in the calculation. KBC has developed two distinct discounted cashflow models,
\n
viz. a bank model and an insurance model. Free cashflows in both cases are the dividends that can be paid out to the
\n
company\u2019s shareholders, account taken of the minimum capital requirements.
\n

\n\n

\n\n

\n\n

\n\n
Discount rates throughout the specific period
\n
of cashflow projections
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
K&H Bank
\n
173 188 17.3%-13.3% 11.4%-10.6%
\n
\u010cSOB (Czech Republic)
\n
259 251 13.9%-12.8% 10.6%-8.7%
\n
\u010cSOB Stavebn\u00ed sporitelna
\n
176 171 13.2%-12.8% 10.6%-8.8%
\n
United Bulgarian Bank and Raiffeisenbank Bulgaria
\n
(now KBC Bank Bulgaria)
\n
544 110 12.5%-12.2% 10.6%-9.2%
\n
DZI Insurance
\n
75 75 10.5%-8.1% 8.6%-7.2%
\n
KBC Commercial Finance
\n
21 21 9.9%-9.9% 8.8%-8.7%
\n
Pension Insurance Company UBB
\n
56 56 9.3%-9.1% -
\n
Rest
\n
42 42 \u2013 \u2013
\n
Total
\n
1 346 913 \u2013 \u2013
\n
\n
\u2022 The period to which the cashflow budgets and projections relate is 10 years in most cases. This longer period is used to take
\n
account of current strong growth in the Central and Eastern European countries, where the growth rate is expected to develop
\n
towards a more moderate level in the longer term.
\n
\u2022 The growth rate used to extrapolate the cashflow projections after that period is equal to the expected long-term growth rate
\n
of the gross domestic product. This rate depends on the country and varied between 3.2% and 4.7% in 2022 (between 1.2% and
\n
1.7% in 2021).
\n
\u2022 The discount rates applied have been raised considerably since last year, but on a net basis they only have a limited impact
\n
on valuations given the higher cashflow budgets resulting from improved net interest income.
\n
\u2022 No sensitivity analysis was carried out for entities where the recoverable amount exceeded the carrying value to such a large
\n
extent that no reasonably possible change in the key assumptions would result in the recoverable amount being less than or
\n
equal to the carrying value. The table gives an indication for the other entities of the change in key assumptions that would
\n
lead to their recoverable amount equalling their carrying value.
\n
\n
Change in key assumptions
\n
1
\n
\n
Increase in
\n
discount rate
\n
2
\n
\n
Decrease in
\n
terminal growth
\n
rate
\n
Increase in
\n
targeted solvency
\n
ratio
\n
3
\n
\n
Decrease in
\n
annual net profit
\n
Increase in annual
\n
impairment
\n
charges
\n
\u010cSOB Stavebn\u00ed sporitelna
\n
2.5% 8.0% 6.4% 12% -
\n
United Bulgarian Bank and Raiffeisenbank Bulgaria
\n
(now KBC Bank Bulgaria)
\n
0.6% 4.2% 1.0% 6% 38%
\n
Pension Insurance Company UBB
\n
4.0%
\n
-
\n
-
\n
47%
\n
-
\n
1 Needless to say account should be taken of the fact that a change in these assumptions could affect other assumptions used to calculate the recoverable amount.
\n
2 Based on a parallel shift and absolute increase in the discount rate curve. Discount rates are in the 15.7%-15.3% bracket for \u010cSOB Stavebn\u00ed sporitelna, the 13.1%-12.8% bracket for United
\n
Bulgarian Bank and KBC Bank Bulgaria, and in the 13.3%-13.1% bracket for Pension Insurance Company UBB.
\n
3 Absolute increase in the tier-1 capital ratio.
\n

\n\n

\n\n

\n\n

\n\n
Note 5.6: Technical provisions, insurance
\n
\n
\n
(in millions of EUR)
\n
Gross
\n
Reinsurance
\n
Gross
\n
Reinsurance
\n
Technical provisions
\n
31-12-2022 31-12-2022 31-12-2021 31-12-2021
\n
Total
\n
18 484 192 18 967 191
\n
Insurance contracts, Non
\n
-life 4 154 180 3 967 181
\n
Provision for unearned premiums
\n
885 5 814 4
\n
Provision for claims outstanding
\n
3 025 175 2 908 176
\n
Provision for profit sharing and rebates
\n
2 0 3 0
\n
Other technical provisions
\n
242 0 242 0
\n
Insurance contracts, Life
\n
8 348 12 8 511 10
\n
Provision for unearned premiums
\n
19 1 18 1
\n
Life insurance provision
\n
7 945 8 8 080 8
\n
Provision for claims outstanding
\n
165 4 197 1
\n
Provision for profit sharing and rebates
\n
37 0 28 0
\n
Other
\n
technical provisions 181 0 187 0
\n
Investment contracts with DPF, Life
\n
5 982 0 6 489 0
\n
Life insurance provision
\n
5 918 0 6 418 0
\n
Provision for claims outstanding
\n
11 0 16 0
\n
Provision for profit sharing, rebates and other
\n
53 0 55 0
\n
Movements table
\n
2022 2022 2021 2021
\n
Insurance contracts, Non
\n
-life
\n
Opening balance
\n
3 967 181 3 676 137
\n
Movements reflected in earned premiums (income statement)
\n
71 1 48 2
\n
Movements reflected in technical charges (income statement)
\n
115 -3 222 41
\n
\n
Payments regarding claims of previous financial years -412 -42 -328 -22
\n
\n
Provision for new claims 610 37 625 66
\n
\n
Surplus/shortfall of claims provision for previous financial years -113 28 -112 2
\n
\n
Cost of profit sharing -1 0 0 0
\n
\n
Other movements with an impact on results 31 -26 38 -5
\n
Movements reflected in balance sheet
\n
\n
2
\n
\n
1
\n
22 1
\n
Closing
\n
balance 4 154 180 3 967 181
\n
Insurance contracts, Life
\n
\n
Opening balance
\n
8 511 10 8 315 8
\n
Movements reflected in earned premiums (income statement)
\n
1 0 1 0
\n
Movements reflected in technical charges (income statement)
\n
-175 2 71 2
\n
\n
New business (net of risk premium and charges) 590 0 633 0
\n
\n
Payments (including funding of risk premium) -844 0 -776 0
\n
\n
Accretion of interest 159 0 166 2
\n
\n
Cost of profit sharing 20 0 13 0
\n
\n
Provision for new claims and change in provision for claims outstanding -38 3 -3 0
\n
\n
Fair value adjustments of unit-linked contracts (not unbundled) -70 0 32 0
\n
\n
Other movements with an impact on results 7 0 6 1
\n
Movements reflected in balance sheet
\n
11 0 124 0
\n
Closing balance
\n
8 348 12 8 511 10
\n
Investment contracts with DPF, Life
\n
\n
Opening balance
\n
6 489 0 6 727 0
\n
Movements reflected in
\n
technical charges (income statement) -244 0 -70 0
\n
\n
New business (net of risk premium and charges) 266 0 281 0
\n
\n
Payments (including funding of risk premium) -593 0 -461 0
\n
\n
Accretion of interest 85 0 92 0
\n
\n
Cost of profit sharing 8 0 6 0
\n
\n
Provision for new claims and change in provision for claims outstanding -9 0 12 0
\n
\n
Fair value adjustments of unit-linked contracts (not unbundled) 0 0 0 0
\n
\n
Other movements with an impact on results 0 0 0 0
\n
Movements reflected in balance sheet
\n
-263 0 -168 0
\n
Closing balance
\n
5 982 0 6 489 0
\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n
\u2022 Technical provisions relate to insurance contracts and investment contracts with a discretionary participation feature (DPF).
\n
\u2022 Liabilities under investment contracts without DPF are measured at fair value. These liabilities concern mainly unit-linked
\n
contracts, which are recognised under financial liabilities (see Note 4.1).
\n\n
\u2022 Technical provisions for life insurance are calculated using various assumptions. Judgement is required when making these
\n
assumptions and the assumptions used are based on various internal and external sources of information. At present, IFRS 4
\n
refers extensively to local accounting principles for the recognition of technical provisions. These provisions are generally
\n
calculated using the technical assumptions that were applicable at the inception of the insurance contract and are subject to
\n
liability adequacy tests. The key assumptions are:
\n
- mortality and morbidity rates, which are based on standard mortality tables and adapted where necessary to reflect the
\n
group\u2019s own experience;
\n
- expense assumptions, which are based on current expense levels and expense loadings;
\n
- the discount rate, which is generally equal to the technical interest rate, remains constant throughout the life of the policy,
\n
and in some cases is adjusted to take account of legal requirements and internal policy decisions.
\n
- It should be noted that assumptions may vary depending on the type of life insurance (e.g., conventional versus modern), the
\n
generation of contracts (mainly the time when the contract is entered into and the applicable terms and conditions) and the
\n
country (since we have insurance companies in five of our core markets), making it impossible to quantify these assumptions
\n
for the entire group. This is illustrated by the following two points: (i) The discount rate follows the historical market rate and
\n
since it concerns a life portfolio, most of which has existed for a long time and also has a long maturity, there are considerable
\n
differences within the portfolio. In Belgium alone, discount rates range from 4.75% for the oldest rates to 0.5% and lower for
\n
certain modern products. (ii) In terms of mortality risk, unisex mortality tables are used in Belgium, based on the standard
\n
\u2018MK/FK\u2019 mortality tables for products sold from 2012 on (before 2012, separate mortality tables were used for men and
\n
women). Corrections may still be made to these standard tables, with due consideration being given to the segmentation
\n
criteria of the relevant policies. As a result, the range of mortality tables used is extensive.
\n
\u2022 Assumptions for the technical provisions for claims outstanding are based on past claims experience relating to claim numbers,
\n
claim payments and claims handling costs, and adjusted to take account of such factors as anticipated market experience,
\n
claims inflation and external factors such as court awards and legislation. The technical provision for claims outstanding is
\n
generally not discounted except when long-term obligations and/or annuities (industrial accidents, guaranteed income and
\n
hospitalisation insurance) are involved.
\n
\u2022 In 2022, a reassessment of the confidence level of technical provisions resulted in a release of technical reserves in the Czech
\n
Republic (31 million euros in Life and 10 million euros in Non-Life technical result). In 2021, there were no changes in assumptions
\n
leading to a significant change in the valuation of insurance assets and liabilities.
\n

\n\n
\u2022 The \u2018Movements reflected in the balance sheet\u2019 item in 2021 also includes the impact of the life insurance business acquired
\n
from NN in Bulgaria (see Note 6.6).
\n
\u2022 See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\u2022 Information relating to IFRS 17 can be found in Note 6.10.
\n

\n\n

\n\n

\n\n

\n\n

\n
Note 5.7: Provisions for risks and charges
\n
\n\n
Note 5.7.1: Overview
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Total provisions for risks and charges
\n
418 282
\n
Provisions for off
\n
-balance-sheet commitments and financial guarantees 114 130
\n
Provisions for other risks and charges
\n
305 152
\n
\n
Provisions for restructuring 92 87
\n
\n
Provisions for taxes and pending legal disputes 192 45
\n
\n
Other 20 20
\n

\n\n
\n
\n
Note 5.7.2: Details of off-balance-sheet commitments and financial guarantees
\n
\n
\n
(in millions of EUR)
\n
Subject to 12-
\n
month ECL
\n
Subject to
\n
lifetime ECL
\n
Subject to
\n
lifetime ECL \u2013
\n
non-performing
\n
Total
\n
31
\n
-12-2022
\n
Provisions on 1 January
\n
19 21 91 130
\n
Movements with an impact on results
\n
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) -6 10 6 10
\n
\n
Stage 2 (lifetime ECL) 0 -5 7 2
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL)
\n
0 6 -2 4
\n
\n
New financial assets 8 4 0 12
\n
\n
Changes in risk parameters during the reporting period -1 1 -45 -45
\n
\n
Changes in the model or methodology 0 0 0 0
\n
\n
Derecognised financial assets -1 -1 -1 -3
\n
\n
Other 0 -5 0 -5
\n
Movements without an impact on results
\n
\n
\n
Derecognised financial assets 0 0 0 0
\n
\n
Changes in the scope of consolidation 1 2 3 6
\n
\n
Other 0 1 1 2
\n
Provisions on 31 December
\n
19 35 60 114
\n
31
\n
-12-2021
\n
Provisions on 1 January
\n
26 17 99 143
\n
Movements with an impact on results
\n
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) -2 4 0 2
\n
\n
Stage 2 (lifetime ECL) 0 -4 2 -1
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL)
\n
0 1 -1 0
\n
\n
New financial assets 6 1 1 8
\n
\n
Changes in risk parameters during the reporting period -9 2 -13 -20
\n
\n
Changes in the model or methodology 0 0 0 0
\n
\n
Derecognised financial assets -2 -1 0 -4
\n
\n
Other 0 0 0 0
\n
Movements without an impact on results
\n
\n
\n
Derecognised financial assets 0 0 0 0
\n
\n
Changes in the scope of consolidation 0 0 0 0
\n
\n
Other 1 1 2 4
\n
Provisions on 31 December
\n
19 21 91 130
\n
\n
\u2022 Also see Note 6.1.
\n

\n\n

\n\n

\n\n

\n
\u2022 Information relating to the main legal disputes pending: claims filed against KBC group companies are \u2013 in keeping with IFRS
\n
rules \u2013 treated on the basis of an assessment of whether they will lead to an outflow of resources (i.e. \u2018probable outflow\u2019,
\n
\u2018possible outflow\u2019 or \u2018remotely probable outflow\u2019). Provisions are set aside for \u2018probable outflow\u2019 cases (see \u2018Notes on the
\n
accounting policies\u2019). No provisions are constituted for \u2018possible outflow\u2019 cases, but information is provided in the financial
\n
statements if such cases might have a material impact on the balance sheet (i.e. when the claim could lead to a possible
\n
outflow of more than 50 million euros). All other claims (\u2018remotely probable outflow\u2019), of whatever magnitude, that represent a
\n
minor or no risk at all do not have to be reported. The most important cases are listed below. The information provided is limited
\n
in order not to prejudice the position of the group in ongoing litigation.
\n\n

\n\n
\u2022 Possible outflow: on 6 October 2011, Irving H. Picard, trustee (the \u2018trustee\u2019) for the liquidation of Bernard L. Madoff Investments
\n
Securities LLC (& Bernard L. Madoff), sued KBC Investments Ltd (a full subsidiary of KBC Bank) before the bankruptcy court in
\n
New York to claw back approximately 110 million US dollars\u2019 worth of transfers made to KBC entities by Madoff (through a feeder
\n
fund that KBC had lent to Harley International). This claim is just one of a whole set made by the trustee against several banks,
\n
hedge funds, feeder funds and investors (\u2018joint defense group\u2019). A lengthy litigation process was conducted on the basis of
\n
preliminary objections in respect of the applicability of the Bankruptcy Code\u2019s \u2018safe harbor\u2019 and \u2018good defenses\u2019 rules, as well
\n
as prudential limitations on U.S. courts\u2019 powers in international cases, to subsequent transferees (as is the case for KBC
\n
Investments Ltd), as detailed in previous disclosures. In June 2015, the Trustee stated his intention to amend the original claim
\n
which led to increase the amount claimed to USD 196 000 000. A court ruling dismissing the claim of the Trustee was issued on
\n
3 March 2017. The Trustee appealed and the appellate court (\u2018Court of Appeals for the Second Circuit\u2019) reversed the dismissal
\n
on 28 February 2019. A certiorari petition filed on 30 August 2019 was dismissed by the US Supreme Court on 2 June 2020. As a
\n
consequence the merits of the case are handled by the Bankruptcy Court. On 30 August 2021, in two other appeals by other
\n
defendants, the Court of Appeals for the Second Circuit reversed the burden of proof from an initial burden on the Trustee to
\n
adequately demonstrate the defendant\u2019s lack of good faith to a burden on the defendant to prove its good faith. On 1 August
\n
2022, the Bankruptcy Court issued a decision determining the structure of the proceedings. In this context, on 5 August 2022
\n
the Trustee amended his complaint by reducing his claim to a principal of USD 86 million. On 18 November 2022, KBC submitted
\n
a motion to dismiss the amended complaint for lack of specific jurisdiction of the US court. The final reply supporting its motion
\n
must be submitted on or before 10 March 2023. A hearing will then be held in April 2023. Despite the increased burden of proof,
\n
KBC still believes it has good and credible defenses, both procedurally and on the merits, including demonstrating its good
\n
faith. The procedure may still take several years.
\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 5.9: Retirement benefit obligations
\n
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
DEFINED BENEFIT PLANS
\n
\n
Reconciliation of defined benefit obligations
\n
\n
\n
Defined benefit obligations at the beginning of the period
\n
3 335 3 387
\n
Current service cost
\n
129 134
\n
Interest cost
\n
26 8
\n
Actuarial gain or loss resulting from changes in demographic assumptions
\n
-10 -3
\n
Actuarial gain or loss resulting from changes in financial assumptions
\n
-814 -31
\n
Experience adjustments
\n
58 -16
\n
Past service cost
\n
0 -11
\n
Benefits paid
\n
-129 -120
\n
Other
\n
-14 -14
\n
Defined benefit obligations at the end of the period
\n
2 580 3 335
\n
Reconciliation of the fair value of plan assets
\n
\n
Fair value of plan assets at the beginning of the period
\n
3 244 2 849
\n
Actual return on
\n
plan assets -499 363
\n
Expected interest income on plan assets, calculated based on market yields on high quality corporate bonds 25 7
\n
Employer contributions
\n
94 90
\n
Plan participant contributions
\n
19 18
\n
Benefits paid
\n
-129 -120
\n
Other
\n
16 44
\n
Fair value of plan assets at the end of the period
\n
2 746 3 244
\n
\n
of which financial instruments issued by the group 0 24
\n
\n
of which property occupied by KBC 2 4
\n
Funded status
\n
\n
Plan assets in excess of defined benefit
\n
obligations 166 -90
\n
Reimbursement rights
\n
0 0
\n
Asset ceiling limit
\n
-12 -37
\n
Unfunded accrued/prepaid pension cost
\n
153 -128
\n
Movement in net liabilities or net assets
\n
\n
Unfunded accrued/prepaid pension cost at the beginning of the period
\n
-128 -537
\n
Amounts recognised in the income statement
\n
-112 -107
\n
Amounts recognised in other comprehensive income
\n
299 387
\n
Employer contributions
\n
94 90
\n
Other
\n
-1 40
\n
Unfunded accrued/prepaid pension cost at the end of the period
\n
153 -128
\n
Amounts recognised in the income statement
\n
-112 -107
\n
Current service cost
\n
-129 -134
\n
Interest cost
\n
-1 -2
\n
Plan participant contributions
\n
19 18
\n
Other
\n
0 11
\n
Changes to the amounts recognised in other comprehensive income
\n
299 387
\n
Actuarial gain or loss resulting from changes in demographic assumptions
\n
10 3
\n
Actuarial gain or loss resulting from changes in financial assumptions
\n
814 31
\n
Actuarial result on plan assets
\n
-524 356
\n
Experience adjustments
\n
-58 16
\n
Adjustments to asset ceiling limits
\n
25 -37
\n
Other
\n
31 19
\n
DEFINED CONTRIBUTION PLANS
\n
\n
\n
\n
\n
Expenses for defined contribution plans
\n
-21 -20
\n

\n\n

\n\n

\n\n
\u2022 Retirement benefits that are actively accrued for the Belgium-based staff of KBC Bank, KBC Insurance and most of their Belgian
\n
subsidiaries are accrued exclusively through the KBC pension fund. Up until year-end 2018, employer-funded retirement
\n
benefits had accrued primarily through a defined benefit plan, where the benefit is calculated based on the final salary of
\n
employees before they retire, the number of years they had been in the plan and a formula that applies a progressive rate
\n
scale. A defined contribution plan was introduced on 1 January 2014 for all new employees and any employees who had chosen
\n
to switch to it. In this plan, a contribution is deposited based on the current monthly salary and the amounts deposited are
\n
paid out together with the (guaranteed) return on retirement. Both types of pension plan are managed by the KBC pension
\n
fund, which uses the services of KBC Asset Management for the investment strategy. In addition, there are a number of smaller,
\n
closed group insurance schemes from the past that will continue to be funded and are managed by the KBC pension fund.
\n
On 1 January 2019, a new defined contribution plan was introduced to replace the one introduced in 2014. All employees were
\n
again given the one-time option of switching from the defined benefit plan to the new defined contribution plan. At year-end
\n
2022, 55% of employees were active participants in the defined benefit plan and 45% in the defined contribution plan (the
\n
corresponding figures at year-end 2021 were 58% and 42%).
\n
\u2022 From 2021, the expected age of retirement of each employee and the expected wage inflation based on an inflation curve
\n
derived from the market value of inflation-linked bonds are taken into account in the calculation of the gross defined benefit
\n
obligations.
\n

\n\n

\n\n

\n\n
Additional information on retirement benefit obligations: DEFINED BENEFIT PLANS, KBC pension fund
\n
\n
Composition (31
\n
-12-2022)
\n
Equity instruments 37%
\n
Bonds 46%
\n
Real estate 14%
\n
Cash 3%
\n
of which illiquid assets 18%
\n
Composition (31
\n
-12-2021)
\n
Equity instruments 38%
\n
Bonds 47%
\n
Real estate 13%
\n
Cash 2%
\n
of which illiquid assets 11%
\n

\n\n

\n\n

\n\n
Contributions expected in 2023 (in millions of EUR)
\n
47
\n
Regulatory framework
\n
Pension plans are registered in collective labour agreements and incorporated into a set of regulations.
\n
Annual reporting of funding levels to supervisory authorities (FSMA/NBB). Any underfunding must be
\n
reported immediately to the supervisory authorities.
\n
\n
Risks for KBC
\n
Investment risk and inflation risk.
\n
\n
ALM policy
\n
The hedging portfolio hedges against interest rate risk and inflation risk using interest rate swaps.
\n
The return portfolio aims to generate an extra return.
\n
\n
Plan amendments
\n
A new version of the employer-funded defined contribution plan was introduced on 1 January 2019. All
\n
employees who had been signed up to the defined benefit plan were given the one-time option of
\n
switching to this new plan.
\n
\n
Curtailments and settlements
\n
\n
Not applicable.
\n
\n
Discounting method
\n
\n
Based on quotes for various time buckets of AA-rated corporate bonds. The derived bond yields are
\n
converted into a zero coupon curve.
\n
\n
Key actuarial assumptions
\n
\n
\n
Average discount rate 3.98%
\n
\n
Expected rate of salary increase 3.22%
\n
\n
Expected inflation rate 2.89%
\n
\n
Expected rate of increase in pensions \u2013
\n
\n
Weighted average duration of the obligations 10 years
\n
Impact of changes in the assumptions used in the
\n
actuarial calculation of the retirement benefit
\n
obligations
\n
\n
Increase in the retirement benefit obligations
\n
on 31-12-2022 consequent on:
\n
\n
\n
a decrease of 1% in the discount rate 11.73%
\n
\n
an increase of 1% in the expected inflation rate 9.22%
\n
an increase that is 1% higher than the expected real
\n
increase in salary
\n
12.21%
\n
\n
an increase of one year in life expectancy \u2013
\n
The impact of the following assumptions has not been
\n
calculated:
\n
\n
Decreasing mortality rates. Pension benefits are paid out
\n
in capital, so longevity risk is immaterial.
\n
Staff turnover rates: sensitivity to changes remains limited.
\n
\n
Additional information on retirement benefit obligations: DEFINED CONTRIBUTION PLANS, KBC pension fund
\n
\n
Contributions expected in 2023 (in
\n
millions of EUR) 42
\n
Regulatory framework
\n
Pursuant to the Belgian Supplementary Pensions Act, the employer must guarantee a minimum return of
\n
1.75% on employee and employer contributions.
\n
Risks for KBC
\n
Investment risk.
\n
Valuation
\n
Retirement benefit obligations are measured on the basis of the accrued benefits on the reporting date,
\n
making a projection of these benefits (at the rate of interest guaranteed by law) until the expected age
\n
of retirement, and discounting the resulting benefits.
\n
KBC offers two types of defined contribution plan: one that is financed through employee contributions
\n
and one through employer contributions. The valuation of retirement benefit obligations for the
\n
employer-funded defined contribution plan takes account of future contributions. However, it is not
\n
taken into account for the valuation of the employee-funded defined contribution plan, because the
\n
employer\u2019s obligation for that plan only relates to the guaranteed minimum interest rate.
\n
Discounting method
\n
Based on quotes for various time buckets of AA-rated corporate bonds. The derived bond yields are
\n
converted into a zero coupon curve.
\n
\n
Key actuarial assumptions
\n
\n
\n
Average discount rate 4.13%
\n
\n
Weighted average duration of the obligations 17 years
\n
Impact of changes in the assumptions used in the
\n
actuarial calculation of the retirement benefit
\n
obligations
\n
\n
Increase in the retirement benefit obligations
\n
on 31-12-2022 consequent on:
\n
\n
\n
a decrease of 1% in the discount rate 1.00%
\n

\n\n

\n\n

\n\n

\n
Note 6.1: Off-balance-sheet commitments and financial guarantees given and received
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
\n
Nominal
\n
amount
\n
Provision Net exposure
\n
Nominal
\n
amount
\n
Provision Net exposure
\n
Undrawn portion of credit lines
\n
granted
\n
Stage 1
\n
39 134 17 39 117 38 414 17 38 397
\n
Stage 2
\n
8 077 26 8 051 4 770 16 4 754
\n
Stage 3
\n
51 13 38 42 4 38
\n
Total
\n
47 262 56 47 206 43 226 37 43 189
\n
\n
of which irrevocable credit lines 26 618 27 26 591 25 802 14 25 788
\n
Financial guarantees given
\n
\n
Stage 1
\n
7 600 2 7 598 8 675 2 8 673
\n
Stage 2
\n
3 139 8 3 131 1 678 5 1 673
\n
Stage 3
\n
119 44 76 153 86 67
\n
Total
\n
10 858 54 10 805 10 506 93 10 413
\n
Other commitments given
\n
\n
Total
\n
1 440 4 1 436 756 1 755
\n
Total
\n
\n
Off-balance-sheet commitments and financial
\n
guarantees
\n
59 561 114 59 447 54 488 130 54 357
\n
\n
\u2022 Fair value of financial guarantees: based on the available market value.
\n\n
\u2022 The carrying value of financial assets pledged by KBC as collateral came to 59 753 million euros for liabilities and 5 291 million
\n
euros for contingent liabilities (66 386 million euros and 3 961 million euros, respectively, in 2021). At year-end 2022, some 16.6
\n
billion euros\u2019 worth of residential mortgage loans and cash collections were entered in the cover asset register for the special
\n
estate of the covered bond programme (16.6 billion euros at year-end 2021).
\n

\n\n
\u2022 There is an obligation to return collateral received (which may be sold or repledged in the absence of default by the owner; see
\n
table) in its original form, or possibly in cash. Collateral can be called in if loans are terminated for various reasons such as
\n
default or bankruptcy. In the event of bankruptcy, the collateral will be sold by the receiver. In other cases, the bank will organise
\n
the foreclosure itself or take possession of the collateral. Collateral received that relates to OTC derivatives is primarily cash,
\n
which is recognised by KBC on the balance sheet (and is not included in the table). More details are provided in Note 4.3.
\n
\u2022 Collateral acquired through foreclosure came to 4 million euros in 2022 (4 million euros in 2021).
\n
\u2022 The increase in \u2018Stage 2\u2019 relates to the collective stage transfer linked to \u2018Stage 1\u2019 loans (see also Note 1.4) that have indirect
\n
exposure to Russia, Ukraine and Belarus.
\n
\n
\n
\n
Collateral received (which may be sold or repledged
\n
in the absence of default by the owner) (in millions of EUR)
\n
Fair value of collateral received
\n
Fair value of collateral sold or
\n
repledged
\n
\n
31-12-2022 31-12-2021 31-12-2022 31-12-2021
\n
Financial assets
\n
30 126
\n
39 863
\n
7 792
\n
11 862
\n
Equity instruments
\n
16 11 2 1
\n
Debt securities
\n
29 876 39 633 7 790 11 860
\n
Loans and advances
\n
234 219 0 0
\n
Cash
\n
0 0 0 0
\n
Other
\n
0
\n
0
\n
0
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:ExplanationOfAssumptionAboutFutureWithSignificantRiskOfResultingInMaterialAdjustments", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag29": { "value": "\n

\n
2.0 Notes on segment reporting
\n
\n
\n\n

\n\n

\n
Note 2.1: Segment reporting based on the management structure
\n
\n
Detailed information on the group\u2019s management structure and the results per segment can be found in the \u2018Our business
\n
units\u2019 section (which has not been audited by the statutory auditor). Based on IFRS 8, KBC has identified the Executive
\n
Committee and Board of Directors as \u2018chief operating decision-makers\u2019, responsible for allocating the resources and
\n
assessing the performance of the different parts of the company. The operating segments are based on the internal financial
\n
reporting to those policy bodies and on the location of the company\u2019s activities, resulting in geographical segmentation.
\n
\n
The three operating segments are (essentially):
\n
\u2022 the Belgium Business Unit (all activities in Belgium);
\n
\u2022 the Czech Republic Business Unit (all activities in the Czech Republic);
\n
\u2022 the International Markets Business Unit (activities in Hungary, Slovakia and Bulgaria, reported together in accordance with
\n
IFRS 8.16). The situation for Ireland is described below and in Note 6.6.
\n
For reporting purposes, there is also a Group Centre (comprising the results of the holding company, items that have not
\n
been allocated to the other business units, and the results of companies to be divested).
\n
\n
Change with effect from 2022: the sale transactions for KBC Bank Ireland\u2019s loan assets and deposit book led us to transfer
\n
Ireland from the International Markets Business Unit to the Group Centre on 1 January 2022, without retroactive restatement
\n
of 2021. For the sake of comparison, however, Ireland is stated separately in the tables below (as part of the Group Centre in
\n
2022 and as part of the International Markets Business Unit in 2021).
\n
\n
Segment reporting
\n
\n
\u2022 The policy bodies analyse the performance of the segments based on a number of criteria, with the \u2018Result after tax\u2019 being
\n
the most important results indicator. The segment data is based entirely on IFRS data (with no adjustments).
\n
\u2022 In principle, we assign a group company in its entirety to one specific segment/business unit. Exceptions are only made for
\n
those items that cannot clearly be allocated to a specific segment, such as charges attached to the subordination of loans
\n
(such items are recognised under Group Centre).
\n
\u2022 We allocate the funding cost of participating interests to the Group Centre. Any funding cost in respect of leveraging at
\n
KBC Group NV level is also recognised under Group Centre.
\n
\u2022 Transactions among the different segments are reported at arm\u2019s length.
\n\n

\n\n

\n\n

\n
\u2022 We recognise \u2018Net interest income\u2019 in the segment information without dividing it up into \u2018Interest income\u2019 and \u2018Interest
\n
expense\u2019. This is permitted under IFRS because the bulk of the business units\u2019 income is in the form of interest, and
\n
management assesses and co-ordinates those business units primarily on the basis of net interest income.
\n

\n\n

\n\n

\n\n
\u2022 We do not provide any information on income from sales to external clients per group of products or services, since the
\n
information is prepared at consolidated level chiefly for each business unit, and not per client group or product group.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria (now renamed KBC Bank Bulgaria) in 2022 is provided in
\n
Note 6.6.
\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 2.2: Results by segment
\n
\n
(in millions of EUR)
\n
Belgium
\n
Business Unit
\n
Czech
\n
Republic
\n
Business Unit
\n
International
\n
Markets
\n
Business Unit
\n
Of which:
\n

\n

\n
Group Centre
\n
Of which:
\n
KBC Group
\n

\n
\n

\n
Hungary Slovakia Bulgaria
\n

\n
Ireland
\n

\n
INCOME STATEMENT FOR 2022
\n

\n

\n

\n

\n

\n

\n

\n

\n

\n

\n
Net interest income
\n
2 826 1 313 888
\n
424 235 229
\n
134
\n
240
\n
5 161
\n
Non
\n
-life insurance (before reinsurance) 488 208 174
\n
57 37 80
\n
11
\n
0
\n
881
\n

\n
Earned premiums 1 261 403 352 140 70 142 17 0 2 033
\n

\n
Technical charges -774 -195 -178 -83 -33 -62 -7 0 -1 153
\n
Life insurance (before
\n
reinsurance) -42 90 44
\n
11 13 20
\n
-1
\n
0
\n
92
\n

\n
Earned premiums 878 171 114 39 30 45 -1 0 1 163
\n

\n
Technical charges -920 -82 -70 -28 -17 -25 0 0 -1 071
\n
Ceded reinsurance result
\n
33 -9 -13
\n
-2 -3 -8
\n
-14
\n
0
\n
-2
\n
Dividend income
\n
54 1 1
\n
0 0 1
\n
4
\n
0
\n
59
\n
Net
\n
result from financial instruments at fair value through profit or loss 142 152 118
\n
77 41 1
\n
-7
\n
-3
\n
406
\n
Net realised result from debt instruments at fair value
\n
through OCI
\n
-2 -12 -6
\n
-5 0 0
\n
-3
\n
0
\n
-22
\n
Net fee and commission income
\n
1 265 213 376
\n
219 72 86
\n
-6
\n
-2
\n
1 847
\n
Other net income
\n
226 -174 -1
\n
-3 -3 5
\n
-10
\n
-8
\n
40
\n
TOTAL INC
\n
OME 4 989 1 784 1 582
\n
777 392 413
\n
108
\n
228
\n
8 463
\n
Operating expenses
\n
a
\n
-2 647 -927 -906
\n
-446 -253 -207
\n
-339
\n
-208
\n
-4 818
\n
Impairmen
\n
t -46 -61 -152
\n
-97 -21 -34
\n
-24
\n
-18
\n
-284
\n

\n
on financial assets at amortised cost and at fair value through OCI -35 -46 -78 -29 -19 -30 5 7 -154
\n
Share in results of associated companies and joint ventures
\n
-9 -1 0
\n
0 0 0
\n
0
\n
0
\n
-10
\n
RESULT BEFORE TAX
\n
2 287 794 524
\n
234 118 172
\n
-254
\n
3
\n
3 351
\n
Income tax expense
\n
-529 -115 -83
\n
-38 -28 -17
\n
119
\n
34
\n
-608
\n
Net post
\n
-tax result from discontinued operations 0 0 0
\n
0 0 0
\n
0
\n
0
\n
0
\n
RESULT AFTER TAX
\n
1 759 679 441
\n
195 90 155
\n
-135
\n
37
\n
2 743
\n
attri
\n
butable to minority interests 0 0 0
\n
0 0 0
\n
0
\n
0
\n
0
\n
attributable to equity holders of the parent
\n

\n

\n
1 759
\n

\n
679
\n

\n
441
\n

\n
195
\n

\n
90
\n

\n
155
\n

\n
-135
\n

\n
37
\n

\n
2 743
\n
a Of which non
\n
-cash expenses -58 -114 -89
\n
-40 -23 -26
\n
-120
\n
-31
\n
-381
\n

\n
Depreciation and amortisation of fixed assets -57 -114 -86 -38 -23 -24 -117 -26 -374
\n

\n
Other 0 0 -4 -2 0 -2 -3 -4 -7
\n
Acquisitions of non
\n
-current assets* 544 125 624 95
\n

\n
63
\n

\n
466
\n

\n
151 1
\n

\n
1 443
\n
* Non-current assets held for sale and disposal groups, investment property, property and equipment, investments in associated companies, and goodwill and other intangible assets.
\n

\n\n

\n\n

\n\n

\n\n

\n\n
(in millions of EUR)
\n
Belgium
\n
Business Unit
\n
Czech
\n
Republic
\n
Business Unit
\n
International
\n
Markets
\n
Business Unit
\n
Of which:
\n
\n
\n
\n
Group Centre
\n
KBC Group
\n
\n
\n
\n
Hungary Slovakia Bulgaria Ireland
\n
\n
\n
INCOME STATEMENT FOR 2021
\n
\n
\n
\n
Net interest income
\n
2 533 972 962
\n
311 229 141 282
\n
-16 4 451
\n
Non
\n
-life insurance (before reinsurance) 460 142 160
\n
52 35 73 0
\n
19 782
\n
\n
Earned premiums 1 197 337 336 143 62 132 0 15 1 885
\n
\n
Technical charges -737 -194 -176 -91 -26 -59 0 4 -1 103
\n
Life insurance (before reinsurance)
\n
-55 61 39
\n
9 13 17 0
\n
-1 45
\n
\n
Earned premiums 903 182 111 40 31 39 0 -1 1 196
\n
\n
Technical charges -958 -121 -71 -31 -18 -23 0 0 -1 150
\n
Ceded reinsurance result
\n
36 17 -16
\n
-2 -7 -7 0
\n
-12 25
\n
Dividend income
\n
38 1 1
\n
0 0 0 0
\n
5 45
\n
Net result from financial instruments at fair
\n
value through profit or loss 224 95 23
\n
21 8 0 -5
\n
-198 145
\n
Net realised result from debt instruments at fair value
\n
through OCI
\n
2 -4 2
\n
2 0 0 0
\n
6 6
\n
Net fee and commission income
\n
1 320 214 305
\n
198 71 39 -3
\n
-3 1 836
\n
Other net income
\n
195 8 -7
\n
3 6 5 -21
\n
28 223
\n
TOTAL
\n
INCOME 4 754 1 506 1 469
\n
592 356 268 253
\n
-171 7 558
\n
Operating expenses
\n
a
\n
-2 436 -803 -1 048
\n
-335 -260 -140 -313
\n
-109 -4 396
\n
Impairmen
\n
t 303 126 -160
\n
9 15 -1 -183
\n
-7 261
\n
\n
on financial assets at amortised cost and at fair value through OCI 309 142 -110 22 16 2 -149 -7 334
\n
Share in results of associated companies and joint ventures
\n
-3 -3 0
\n
0 0 0 0
\n
0 -5
\n
RESULT BEFORE TAX
\n
2 618 827 262
\n
267 111 127 -243
\n
-288 3 418
\n
Income tax expense
\n
-621 -129 -135
\n
-40 -26 -13 -55
\n
81 -804
\n
Net post
\n
-tax result from discontinued operations 0 0 0
\n
0 0 0 0
\n
0 0
\n
RESULT AFTER TAX
\n
1 997 697 127
\n
226 85 114 -298
\n
-207 2 614
\n
attri
\n
butable to minority interests 0 0 0
\n
0 0 0 0
\n
0 0
\n
attributable to equity holders of the parent
\n
\n
\n
1 997
\n
\n
697
\n
\n
127
\n
\n
226
\n
\n
85
\n
\n
114
\n
\n
-298
\n
\n
-207
\n
\n
2 614
\n
a Of which non
\n
-cash expenses -48 -96 -119
\n
-38 -19 -16 -46
\n
-83 -346
\n
\n
Depreciation and amortisation of fixed assets -57 -97 -120 -38 -19 -16 -46 -82 -356
\n
\n
Other 10 1 1 1 0 0 0 -2 10
\n
Acquisitions of non
\n
-current assets* 456 183 252
\n
83 75 80 14
\n
110 1 001
\n
* Non-current assets held for sale and disposal groups, investment property, property and equipment, investments in associated companies, and goodwill and other intangible assets.
\n

\n\n

\n\n

\n\n

\n\n
Note 2.3: Balance-sheet information by segment
\n
\n
The table below presents some of the main on-balance-sheet products by segment
\n
.
\n
\n
Czech
\n
Belgium
\n
Republic
\n
International
\n
Business
\n
Business
\n
Markets
\n
Group
\n
(in millions of EUR)
\n
Unit
\n
Unit
\n
Business Unit
\n
Of which:
\n
\n
\n
\n
Centre
\n
Of which:
\n
KBC Group
\n
\n
\n
\n
\n
Hungary Slovakia Bulgaria Ireland
\n
\n
Ireland
\n
\n
BALANCE SHEET
\n
\n
\n
\n
AT 31-12-2022
\n
Deposits from customers and
\n
155 971 51 069 29 962
\n
9 515 8 421 12 026 -
\n
15 743
\n
418
\n
252 746
\n
debt securities (excluding repos)
\n
\n
Demand deposits 72 947 25 321 23 367 7 303 5 697 10 368 - 418 418 122 053
\n
\n
Time deposits 8 896 9 211 4 291 1 291 1 414 1 586 - 0 0 22 397
\n
\n
Savings accounts 60 802 14 344 1 833 722 1 086 25 - 0 0 76 979
\n
\n
Debt securities 10 951 1 767 295 200 96 0 - 15 325 0 28 338
\n
\n
Other 2 375 427 176
\n
0
\n
\n
129
\n
\n
47
\n
- 0 0 2 978
\n
Loans and advances to
\n
customers (excluding reverse
\n
117 221 35 445 25 384
\n
5 879 10 796 8 709 -
\n
3
\n
3
\n
178 053
\n
repos)
\n
\n
Term loans 61 768 10 581 10 544 2 970 3 013 4 561 - 2 2 82 894
\n
\n
Mortgage loans 44 326 19 696 9 638 1 681 6 114 1 843 - 0 0 73 660
\n
\n
Other 11 127 5 168 5 202
\n
1 228
\n
\n
1 668
\n
\n
2 306
\n
- 1 1 21 498
\n
BALANCE SHEET
\n
\n
\n
\n
AT 31-12-2021
\n
Deposits from customers and
\n
-
\n
debt securities (excluding repos)
\n
142 282
\n
46 239
\n
24 652
\n
9 759
\n
7 696
\n
6 257
\n
940
\n
12 920
\n
226 093
\n
\n
Demand deposits
\n
64 458
\n
28 042
\n
19 598
\n
8 137
\n
5 443
\n
5 077
\n
940
\n
0
\n
-
\n
112 097
\n
\n
Time deposits
\n
4 784
\n
2 123
\n
2 281
\n
445
\n
656
\n
1 180
\n
0
\n
0
\n
-
\n
9 187
\n
\n
Savings accounts
\n
58 279
\n
14 226
\n
2 295
\n
977
\n
1 319
\n
0
\n
0
\n
0
\n
-
\n
74 801
\n
\n
Debt securities
\n
12 003
\n
1 376
\n
318
\n
200
\n
118
\n
0
\n
0
\n
12 920
\n
-
\n
26 617
\n
\n
Other
\n
2 758
\n
473
\n
160
\n
0
\n
160
\n
0
\n
0
\n
0
\n
-
\n
3 391
\n
Loans and advances to
\n
customers (excluding reverse
\n
-
\n
repos)
\n
108 251
\n
32 671
\n
18 805
\n
5 413
\n
9 417
\n
3 973
\n
3
\n
0
\n
\n
159 728
\n
\n
Term loans
\n
56 785
\n
9 609
\n
6 604
\n
2 409
\n
2 775
\n
1 418
\n
2
\n
0
\n
-
\n
72 998
\n
\n
Mortgage loans
\n
41 561
\n
18 303
\n
7 800
\n
1 812
\n
5 117
\n
870
\n
0
\n
0
\n
-
\n
67 665
\n
\n
Other
\n
9 905
\n
4 758
\n
4 402
\n
1 191
\n
1 524
\n
1 685
\n
1
\n
0
\n
-
\n
19 065
\n
\n
\u2022 The limited amounts for Ireland in 2021 and 2022 relate to the shift to the \u2018Non-current assets held for sale and
\n
disposal groups\u2019
\n
and \u2018Liabilities associated with disposal groups\u2019 balance sheet items due to the sale transactions (see Notes 5.11 and 6.6).
\n
\n
\u2022 The growth for Bulgaria in 2022 related chiefly to the acquisition of Raiffeisenbank Bulgaria; see Note 6.6 for more information.
\n
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag30": { "value": "\n

\n
Note 2.1: Segment reporting based on the management structure
\n
\n
Detailed information on the group\u2019s management structure and the results per segment can be found in the \u2018Our business
\n
units\u2019 section (which has not been audited by the statutory auditor). Based on IFRS 8, KBC has identified the Executive
\n
Committee and Board of Directors as \u2018chief operating decision-makers\u2019, responsible for allocating the resources and
\n
assessing the performance of the different parts of the company. The operating segments are based on the internal financial
\n
reporting to those policy bodies and on the location of the company\u2019s activities, resulting in geographical segmentation.
\n
\n
The three operating segments are (essentially):
\n
\u2022 the Belgium Business Unit (all activities in Belgium);
\n
\u2022 the Czech Republic Business Unit (all activities in the Czech Republic);
\n
\u2022 the International Markets Business Unit (activities in Hungary, Slovakia and Bulgaria, reported together in accordance with
\n
IFRS 8.16). The situation for Ireland is described below and in Note 6.6.
\n
For reporting purposes, there is also a Group Centre (comprising the results of the holding company, items that have not
\n
been allocated to the other business units, and the results of companies to be divested).
\n
\n
Change with effect from 2022: the sale transactions for KBC Bank Ireland\u2019s loan assets and deposit book led us to transfer
\n
Ireland from the International Markets Business Unit to the Group Centre on 1 January 2022, without retroactive restatement
\n
of 2021. For the sake of comparison, however, Ireland is stated separately in the tables below (as part of the Group Centre in
\n
2022 and as part of the International Markets Business Unit in 2021).
\n
\n
Segment reporting
\n
\n
\u2022 The policy bodies analyse the performance of the segments based on a number of criteria, with the \u2018Result after tax\u2019 being
\n
the most important results indicator. The segment data is based entirely on IFRS data (with no adjustments).
\n
\u2022 In principle, we assign a group company in its entirety to one specific segment/business unit. Exceptions are only made for
\n
those items that cannot clearly be allocated to a specific segment, such as charges attached to the subordination of loans
\n
(such items are recognised under Group Centre).
\n
\u2022 We allocate the funding cost of participating interests to the Group Centre. Any funding cost in respect of leveraging at
\n
KBC Group NV level is also recognised under Group Centre.
\n
\u2022 Transactions among the different segments are reported at arm\u2019s length.
\n\n

\n\n

\n\n

\n
\u2022 We recognise \u2018Net interest income\u2019 in the segment information without dividing it up into \u2018Interest income\u2019 and \u2018Interest
\n
expense\u2019. This is permitted under IFRS because the bulk of the business units\u2019 income is in the form of interest, and
\n
management assesses and co-ordinates those business units primarily on the basis of net interest income.
\n

\n\n

\n\n

\n\n
\u2022 We do not provide any information on income from sales to external clients per group of products or services, since the
\n
information is prepared at consolidated level chiefly for each business unit, and not per client group or product group.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria (now renamed KBC Bank Bulgaria) in 2022 is provided in
\n
Note 6.6.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag26": { "value": "Belgium", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag28": { "value": "\n

\n\n
Note 2.2: Results by segment
\n
\n
(in millions of EUR)
\n
Belgium
\n
Business Unit
\n
Czech
\n
Republic
\n
Business Unit
\n
International
\n
Markets
\n
Business Unit
\n
Of which:
\n

\n

\n
Group Centre
\n
Of which:
\n
KBC Group
\n

\n
\n

\n
Hungary Slovakia Bulgaria
\n

\n
Ireland
\n

\n
INCOME STATEMENT FOR 2022
\n

\n

\n

\n

\n

\n

\n

\n

\n

\n

\n
Net interest income
\n
2 826 1 313 888
\n
424 235 229
\n
134
\n
240
\n
5 161
\n
Non
\n
-life insurance (before reinsurance) 488 208 174
\n
57 37 80
\n
11
\n
0
\n
881
\n

\n
Earned premiums 1 261 403 352 140 70 142 17 0 2 033
\n

\n
Technical charges -774 -195 -178 -83 -33 -62 -7 0 -1 153
\n
Life insurance (before
\n
reinsurance) -42 90 44
\n
11 13 20
\n
-1
\n
0
\n
92
\n

\n
Earned premiums 878 171 114 39 30 45 -1 0 1 163
\n

\n
Technical charges -920 -82 -70 -28 -17 -25 0 0 -1 071
\n
Ceded reinsurance result
\n
33 -9 -13
\n
-2 -3 -8
\n
-14
\n
0
\n
-2
\n
Dividend income
\n
54 1 1
\n
0 0 1
\n
4
\n
0
\n
59
\n
Net
\n
result from financial instruments at fair value through profit or loss 142 152 118
\n
77 41 1
\n
-7
\n
-3
\n
406
\n
Net realised result from debt instruments at fair value
\n
through OCI
\n
-2 -12 -6
\n
-5 0 0
\n
-3
\n
0
\n
-22
\n
Net fee and commission income
\n
1 265 213 376
\n
219 72 86
\n
-6
\n
-2
\n
1 847
\n
Other net income
\n
226 -174 -1
\n
-3 -3 5
\n
-10
\n
-8
\n
40
\n
TOTAL INC
\n
OME 4 989 1 784 1 582
\n
777 392 413
\n
108
\n
228
\n
8 463
\n
Operating expenses
\n
a
\n
-2 647 -927 -906
\n
-446 -253 -207
\n
-339
\n
-208
\n
-4 818
\n
Impairmen
\n
t -46 -61 -152
\n
-97 -21 -34
\n
-24
\n
-18
\n
-284
\n

\n
on financial assets at amortised cost and at fair value through OCI -35 -46 -78 -29 -19 -30 5 7 -154
\n
Share in results of associated companies and joint ventures
\n
-9 -1 0
\n
0 0 0
\n
0
\n
0
\n
-10
\n
RESULT BEFORE TAX
\n
2 287 794 524
\n
234 118 172
\n
-254
\n
3
\n
3 351
\n
Income tax expense
\n
-529 -115 -83
\n
-38 -28 -17
\n
119
\n
34
\n
-608
\n
Net post
\n
-tax result from discontinued operations 0 0 0
\n
0 0 0
\n
0
\n
0
\n
0
\n
RESULT AFTER TAX
\n
1 759 679 441
\n
195 90 155
\n
-135
\n
37
\n
2 743
\n
attri
\n
butable to minority interests 0 0 0
\n
0 0 0
\n
0
\n
0
\n
0
\n
attributable to equity holders of the parent
\n

\n

\n
1 759
\n

\n
679
\n

\n
441
\n

\n
195
\n

\n
90
\n

\n
155
\n

\n
-135
\n

\n
37
\n

\n
2 743
\n
a Of which non
\n
-cash expenses -58 -114 -89
\n
-40 -23 -26
\n
-120
\n
-31
\n
-381
\n

\n
Depreciation and amortisation of fixed assets -57 -114 -86 -38 -23 -24 -117 -26 -374
\n

\n
Other 0 0 -4 -2 0 -2 -3 -4 -7
\n
Acquisitions of non
\n
-current assets* 544 125 624 95
\n

\n
63
\n

\n
466
\n

\n
151 1
\n

\n
1 443
\n
* Non-current assets held for sale and disposal groups, investment property, property and equipment, investments in associated companies, and goodwill and other intangible assets.
\n

\n\n

\n\n
(in millions of EUR)
\n
Belgium
\n
Business Unit
\n
Czech
\n
Republic
\n
Business Unit
\n
International
\n
Markets
\n
Business Unit
\n
Of which:
\n
\n
\n
\n
Group Centre
\n
KBC Group
\n
\n
\n
\n
Hungary Slovakia Bulgaria Ireland
\n
\n
\n
INCOME STATEMENT FOR 2021
\n
\n
\n
\n
Net interest income
\n
2 533 972 962
\n
311 229 141 282
\n
-16 4 451
\n
Non
\n
-life insurance (before reinsurance) 460 142 160
\n
52 35 73 0
\n
19 782
\n
\n
Earned premiums 1 197 337 336 143 62 132 0 15 1 885
\n
\n
Technical charges -737 -194 -176 -91 -26 -59 0 4 -1 103
\n
Life insurance (before reinsurance)
\n
-55 61 39
\n
9 13 17 0
\n
-1 45
\n
\n
Earned premiums 903 182 111 40 31 39 0 -1 1 196
\n
\n
Technical charges -958 -121 -71 -31 -18 -23 0 0 -1 150
\n
Ceded reinsurance result
\n
36 17 -16
\n
-2 -7 -7 0
\n
-12 25
\n
Dividend income
\n
38 1 1
\n
0 0 0 0
\n
5 45
\n
Net result from financial instruments at fair
\n
value through profit or loss 224 95 23
\n
21 8 0 -5
\n
-198 145
\n
Net realised result from debt instruments at fair value
\n
through OCI
\n
2 -4 2
\n
2 0 0 0
\n
6 6
\n
Net fee and commission income
\n
1 320 214 305
\n
198 71 39 -3
\n
-3 1 836
\n
Other net income
\n
195 8 -7
\n
3 6 5 -21
\n
28 223
\n
TOTAL
\n
INCOME 4 754 1 506 1 469
\n
592 356 268 253
\n
-171 7 558
\n
Operating expenses
\n
a
\n
-2 436 -803 -1 048
\n
-335 -260 -140 -313
\n
-109 -4 396
\n
Impairmen
\n
t 303 126 -160
\n
9 15 -1 -183
\n
-7 261
\n
\n
on financial assets at amortised cost and at fair value through OCI 309 142 -110 22 16 2 -149 -7 334
\n
Share in results of associated companies and joint ventures
\n
-3 -3 0
\n
0 0 0 0
\n
0 -5
\n
RESULT BEFORE TAX
\n
2 618 827 262
\n
267 111 127 -243
\n
-288 3 418
\n
Income tax expense
\n
-621 -129 -135
\n
-40 -26 -13 -55
\n
81 -804
\n
Net post
\n
-tax result from discontinued operations 0 0 0
\n
0 0 0 0
\n
0 0
\n
RESULT AFTER TAX
\n
1 997 697 127
\n
226 85 114 -298
\n
-207 2 614
\n
attri
\n
butable to minority interests 0 0 0
\n
0 0 0 0
\n
0 0
\n
attributable to equity holders of the parent
\n
\n
\n
1 997
\n
\n
697
\n
\n
127
\n
\n
226
\n
\n
85
\n
\n
114
\n
\n
-298
\n
\n
-207
\n
\n
2 614
\n
a Of which non
\n
-cash expenses -48 -96 -119
\n
-38 -19 -16 -46
\n
-83 -346
\n
\n
Depreciation and amortisation of fixed assets -57 -97 -120 -38 -19 -16 -46 -82 -356
\n
\n
Other 10 1 1 1 0 0 0 -2 10
\n
Acquisitions of non
\n
-current assets* 456 183 252
\n
83 75 80 14
\n
110 1 001
\n
* Non-current assets held for sale and disposal groups, investment property, property and equipment, investments in associated companies, and goodwill and other intangible assets.
\n

\n\n

\n\n

\n\n

\n\n

\n
\n
Note 3.1: Net interest income
\n
(in millions of EUR)
\n
2022
\n
2021
\n
Total
\n
5 161 4 451
\n
Interest income
\n
11 226 6 320
\n
Interest income on financial instruments calculated using the effective interest rate
\n
method
\n
\n
Financial assets at amortised cost 7 973 4 797
\n
\n
Financial assets at fair value through OCI 251 286
\n
\n
Hedging derivatives 1 838 355
\n
\n
Financial liabilities (negative interest rate) 289 425
\n
\n
Other 130 25
\n
Interest income on
\n
other financial instruments
\n
\n
Financial assets MFVPL other than held for trading 35 24
\n
\n
Financial assets held for trading 710 407
\n
\n
Of which economic hedges 582 367
\n
\n
Other financial assets at fair value through profit or loss 0 0
\n
Interest expense
\n
-6 064 -1 869
\n
Interest expense on financial instruments calculated using the effective interest rate method
\n
\n
\n
Financial liabilities at amortised cost -2 320 -534
\n
\n
Hedging derivatives -1 972 -604
\n
\n
Financial assets (negative interest rate) -94 -253
\n
\n
Other -5 -7
\n
Interest expense on other financial instruments
\n
\n
\n
Financial liabilities held for trading -1 639 -459
\n
\n
Of which economic hedges -1 595 -414
\n
\n
Other financial liabilities at fair value through profit or loss -33 -11
\n
\n
Net interest expense relating to defined benefit plans -1 -1
\n
\n
\u2022 \u2018Financial liabilities (negative interest rate)\u2019 and \u2018Financial assets (negative interest rate)\u2019: these rates relate mainly to
\n
transactions with central banks, interbank and professional counterparties, corporate clients, and targeted long-term
\n
refinancing operations (TLTRO). More information on TLTRO can be found in Note 4.1.
\n
\u2022 The increase in interest income and interest expense from \u2018Hedging derivatives\u2019, \u2018Financial assets held for trading (of which
\n
economic hedges)\u2019 and \u2018Financial liabilities held for trading (of which economic hedges)\u2019 relates to a change in presentation of
\n
the negative interest on derivatives (at KBC Bank, in accordance with reporting on a solo basis (\u2018Schema A\u2019) under Belgian
\n
GAAP, resulting in an increase in both interest income and interest expense of 450 million euros in 2022), and to the overall
\n
increase in interest rates in 2022.
\n

\n
\n

\n\n

\n\n

\n\n

\n\n
\u2022 The lion\u2019s share of the fees and commissions related to lending is recognised under \u2018Net interest income\u2019 (effective interest rate
\n
calculations).
\n

\n\n

\n\n
Transactions with related parties,
\n
excluding key management
\n
\n
(in millions of EUR)
\n
Subsidiaries
\n
Associated
\n
companies
\n
Joint
\n
ventures
\n
Other
\n
Total
\n
Subsidiaries
\n
Associated
\n
companies
\n
Joint
\n
ventures
\n
Other
\n
Total
\n
Assets
\n
147 107 33 0 287 144 111 42 142 439
\n
Loans and advances
\n
15 89 0 0 104 21 94 0 100 214
\n
Equity instruments (including investments
\n
in associated companies and joint
\n
ventures)
\n
131 19 33 0 184 124 17 42 0 183
\n
Other
\n
0 0 0 0 0 0 0 0 41 41
\n
Liabilities
\n
54 74 0 593 721 40 89 0 838 968
\n
Deposits
\n
54 10 0 590 654 40 20 0 831 891
\n
Other financial liabilities
\n
0 0 0 0 0 0 0 0 0 0
\n
Other
\n
1 63 0 3 67 1 69 0 8 77
\n
Income statement
\n
-1 -2 0 -1 -3 0 -3 0 0 -3
\n
Net interest income
\n
0 1 0 0 0 0 -1 0 0 -1
\n
\n
Interest income 0 2 0 0 2 0 0 0 0 0
\n
\n
Interest expense 0 -1 0 0 -1 0 -1 0 0 -1
\n
Earned premiums, insurance (before
\n
reinsurance)
\n
0 0 0 0 0 0 0 0 0 0
\n
Technical insurance charges (before
\n
reinsurance)
\n
0 0 0 0 0 0 0 0 0 0
\n
Dividend income
\n
4 1 0 4 9 5 2 0 4 11
\n
Net fee and commission income
\n
1 0 0 2 3 1 -1 0 2 3
\n
\n
Fee and commission income 1 0 0 2 3 1 0 0 2 3
\n
\n
Fee and commission expense 0 0 0 0 0 0 -1 0 0 -1
\n
Other net income
\n
1 -1 0 0 0 -3 -1 0 1 -3
\n
General administrative expenses
\n
-7 -2 0 -7 -16 -4 -2 0 -7 -13
\n
Undrawn portion of loan commitments,
\n
financial guarantees and other
\n
commitments
\n
\n
\n
\n
\n
Given by the group
\n
0 0 0 50 50 0 0 0 74 74
\n
Received by the group
\n
0 0 0 0 0 0 0 0 0 0
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag31": { "value": "\n
Note 2.2: Results by segment
\n
\n
(in millions of EUR)
\n
Belgium
\n
Business Unit
\n
Czech
\n
Republic
\n
Business Unit
\n
International
\n
Markets
\n
Business Unit
\n
Of which:
\n

\n

\n
Group Centre
\n
Of which:
\n
KBC Group
\n

\n
\n

\n
Hungary Slovakia Bulgaria
\n

\n
Ireland
\n

\n
INCOME STATEMENT FOR 2022
\n

\n

\n

\n

\n

\n

\n

\n

\n

\n

\n
Net interest income
\n
2 826 1 313 888
\n
424 235 229
\n
134
\n
240
\n
5 161
\n
Non
\n
-life insurance (before reinsurance) 488 208 174
\n
57 37 80
\n
11
\n
0
\n
881
\n

\n
Earned premiums 1 261 403 352 140 70 142 17 0 2 033
\n

\n
Technical charges -774 -195 -178 -83 -33 -62 -7 0 -1 153
\n
Life insurance (before
\n
reinsurance) -42 90 44
\n
11 13 20
\n
-1
\n
0
\n
92
\n

\n
Earned premiums 878 171 114 39 30 45 -1 0 1 163
\n

\n
Technical charges -920 -82 -70 -28 -17 -25 0 0 -1 071
\n
Ceded reinsurance result
\n
33 -9 -13
\n
-2 -3 -8
\n
-14
\n
0
\n
-2
\n
Dividend income
\n
54 1 1
\n
0 0 1
\n
4
\n
0
\n
59
\n
Net
\n
result from financial instruments at fair value through profit or loss 142 152 118
\n
77 41 1
\n
-7
\n
-3
\n
406
\n
Net realised result from debt instruments at fair value
\n
through OCI
\n
-2 -12 -6
\n
-5 0 0
\n
-3
\n
0
\n
-22
\n
Net fee and commission income
\n
1 265 213 376
\n
219 72 86
\n
-6
\n
-2
\n
1 847
\n
Other net income
\n
226 -174 -1
\n
-3 -3 5
\n
-10
\n
-8
\n
40
\n
TOTAL INC
\n
OME 4 989 1 784 1 582
\n
777 392 413
\n
108
\n
228
\n
8 463
\n
Operating expenses
\n
a
\n
-2 647 -927 -906
\n
-446 -253 -207
\n
-339
\n
-208
\n
-4 818
\n
Impairmen
\n
t -46 -61 -152
\n
-97 -21 -34
\n
-24
\n
-18
\n
-284
\n

\n
on financial assets at amortised cost and at fair value through OCI -35 -46 -78 -29 -19 -30 5 7 -154
\n
Share in results of associated companies and joint ventures
\n
-9 -1 0
\n
0 0 0
\n
0
\n
0
\n
-10
\n
RESULT BEFORE TAX
\n
2 287 794 524
\n
234 118 172
\n
-254
\n
3
\n
3 351
\n
Income tax expense
\n
-529 -115 -83
\n
-38 -28 -17
\n
119
\n
34
\n
-608
\n
Net post
\n
-tax result from discontinued operations 0 0 0
\n
0 0 0
\n
0
\n
0
\n
0
\n
RESULT AFTER TAX
\n
1 759 679 441
\n
195 90 155
\n
-135
\n
37
\n
2 743
\n
attri
\n
butable to minority interests 0 0 0
\n
0 0 0
\n
0
\n
0
\n
0
\n
attributable to equity holders of the parent
\n

\n

\n
1 759
\n

\n
679
\n

\n
441
\n

\n
195
\n

\n
90
\n

\n
155
\n

\n
-135
\n

\n
37
\n

\n
2 743
\n
a Of which non
\n
-cash expenses -58 -114 -89
\n
-40 -23 -26
\n
-120
\n
-31
\n
-381
\n

\n
Depreciation and amortisation of fixed assets -57 -114 -86 -38 -23 -24 -117 -26 -374
\n

\n
Other 0 0 -4 -2 0 -2 -3 -4 -7
\n
Acquisitions of non
\n
-current assets* 544 125 624 95
\n

\n
63
\n

\n
466
\n

\n
151 1
\n

\n
1 443
\n
* Non-current assets held for sale and disposal groups, investment property, property and equipment, investments in associated companies, and goodwill and other intangible assets.
\n

\n\n

\n\n

\n\n

\n
\n
Note 3.1: Net interest income
\n
(in millions of EUR)
\n
2022
\n
2021
\n
Total
\n
5 161 4 451
\n
Interest income
\n
11 226 6 320
\n
Interest income on financial instruments calculated using the effective interest rate
\n
method
\n
\n
Financial assets at amortised cost 7 973 4 797
\n
\n
Financial assets at fair value through OCI 251 286
\n
\n
Hedging derivatives 1 838 355
\n
\n
Financial liabilities (negative interest rate) 289 425
\n
\n
Other 130 25
\n
Interest income on
\n
other financial instruments
\n
\n
Financial assets MFVPL other than held for trading 35 24
\n
\n
Financial assets held for trading 710 407
\n
\n
Of which economic hedges 582 367
\n
\n
Other financial assets at fair value through profit or loss 0 0
\n
Interest expense
\n
-6 064 -1 869
\n
Interest expense on financial instruments calculated using the effective interest rate method
\n
\n
\n
Financial liabilities at amortised cost -2 320 -534
\n
\n
Hedging derivatives -1 972 -604
\n
\n
Financial assets (negative interest rate) -94 -253
\n
\n
Other -5 -7
\n
Interest expense on other financial instruments
\n
\n
\n
Financial liabilities held for trading -1 639 -459
\n
\n
Of which economic hedges -1 595 -414
\n
\n
Other financial liabilities at fair value through profit or loss -33 -11
\n
\n
Net interest expense relating to defined benefit plans -1 -1
\n
\n
\u2022 \u2018Financial liabilities (negative interest rate)\u2019 and \u2018Financial assets (negative interest rate)\u2019: these rates relate mainly to
\n
transactions with central banks, interbank and professional counterparties, corporate clients, and targeted long-term
\n
refinancing operations (TLTRO). More information on TLTRO can be found in Note 4.1.
\n
\u2022 The increase in interest income and interest expense from \u2018Hedging derivatives\u2019, \u2018Financial assets held for trading (of which
\n
economic hedges)\u2019 and \u2018Financial liabilities held for trading (of which economic hedges)\u2019 relates to a change in presentation of
\n
the negative interest on derivatives (at KBC Bank, in accordance with reporting on a solo basis (\u2018Schema A\u2019) under Belgian
\n
GAAP, resulting in an increase in both interest income and interest expense of 450 million euros in 2022), and to the overall
\n
increase in interest rates in 2022.
\n

\n
\n

\n\n

\n\n

\n\n
Transactions with related parties,
\n
excluding key management
\n
\n
(in millions of EUR)
\n
Subsidiaries
\n
Associated
\n
companies
\n
Joint
\n
ventures
\n
Other
\n
Total
\n
Subsidiaries
\n
Associated
\n
companies
\n
Joint
\n
ventures
\n
Other
\n
Total
\n
Assets
\n
147 107 33 0 287 144 111 42 142 439
\n
Loans and advances
\n
15 89 0 0 104 21 94 0 100 214
\n
Equity instruments (including investments
\n
in associated companies and joint
\n
ventures)
\n
131 19 33 0 184 124 17 42 0 183
\n
Other
\n
0 0 0 0 0 0 0 0 41 41
\n
Liabilities
\n
54 74 0 593 721 40 89 0 838 968
\n
Deposits
\n
54 10 0 590 654 40 20 0 831 891
\n
Other financial liabilities
\n
0 0 0 0 0 0 0 0 0 0
\n
Other
\n
1 63 0 3 67 1 69 0 8 77
\n
Income statement
\n
-1 -2 0 -1 -3 0 -3 0 0 -3
\n
Net interest income
\n
0 1 0 0 0 0 -1 0 0 -1
\n
\n
Interest income 0 2 0 0 2 0 0 0 0 0
\n
\n
Interest expense 0 -1 0 0 -1 0 -1 0 0 -1
\n
Earned premiums, insurance (before
\n
reinsurance)
\n
0 0 0 0 0 0 0 0 0 0
\n
Technical insurance charges (before
\n
reinsurance)
\n
0 0 0 0 0 0 0 0 0 0
\n
Dividend income
\n
4 1 0 4 9 5 2 0 4 11
\n
Net fee and commission income
\n
1 0 0 2 3 1 -1 0 2 3
\n
\n
Fee and commission income 1 0 0 2 3 1 0 0 2 3
\n
\n
Fee and commission expense 0 0 0 0 0 0 -1 0 0 -1
\n
Other net income
\n
1 -1 0 0 0 -3 -1 0 1 -3
\n
General administrative expenses
\n
-7 -2 0 -7 -16 -4 -2 0 -7 -13
\n
Undrawn portion of loan commitments,
\n
financial guarantees and other
\n
commitments
\n
\n
\n
\n
\n
Given by the group
\n
0 0 0 50 50 0 0 0 74 74
\n
Received by the group
\n
0 0 0 0 0 0 0 0 0 0
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag32": { "value": "\n

\n\n
(in millions of EUR)
\n
Belgium
\n
Business Unit
\n
Czech
\n
Republic
\n
Business Unit
\n
International
\n
Markets
\n
Business Unit
\n
Of which:
\n
\n
\n
\n
Group Centre
\n
KBC Group
\n
\n
\n
\n
Hungary Slovakia Bulgaria Ireland
\n
\n
\n
INCOME STATEMENT FOR 2021
\n
\n
\n
\n
Net interest income
\n
2 533 972 962
\n
311 229 141 282
\n
-16 4 451
\n
Non
\n
-life insurance (before reinsurance) 460 142 160
\n
52 35 73 0
\n
19 782
\n
\n
Earned premiums 1 197 337 336 143 62 132 0 15 1 885
\n
\n
Technical charges -737 -194 -176 -91 -26 -59 0 4 -1 103
\n
Life insurance (before reinsurance)
\n
-55 61 39
\n
9 13 17 0
\n
-1 45
\n
\n
Earned premiums 903 182 111 40 31 39 0 -1 1 196
\n
\n
Technical charges -958 -121 -71 -31 -18 -23 0 0 -1 150
\n
Ceded reinsurance result
\n
36 17 -16
\n
-2 -7 -7 0
\n
-12 25
\n
Dividend income
\n
38 1 1
\n
0 0 0 0
\n
5 45
\n
Net result from financial instruments at fair
\n
value through profit or loss 224 95 23
\n
21 8 0 -5
\n
-198 145
\n
Net realised result from debt instruments at fair value
\n
through OCI
\n
2 -4 2
\n
2 0 0 0
\n
6 6
\n
Net fee and commission income
\n
1 320 214 305
\n
198 71 39 -3
\n
-3 1 836
\n
Other net income
\n
195 8 -7
\n
3 6 5 -21
\n
28 223
\n
TOTAL
\n
INCOME 4 754 1 506 1 469
\n
592 356 268 253
\n
-171 7 558
\n
Operating expenses
\n
a
\n
-2 436 -803 -1 048
\n
-335 -260 -140 -313
\n
-109 -4 396
\n
Impairmen
\n
t 303 126 -160
\n
9 15 -1 -183
\n
-7 261
\n
\n
on financial assets at amortised cost and at fair value through OCI 309 142 -110 22 16 2 -149 -7 334
\n
Share in results of associated companies and joint ventures
\n
-3 -3 0
\n
0 0 0 0
\n
0 -5
\n
RESULT BEFORE TAX
\n
2 618 827 262
\n
267 111 127 -243
\n
-288 3 418
\n
Income tax expense
\n
-621 -129 -135
\n
-40 -26 -13 -55
\n
81 -804
\n
Net post
\n
-tax result from discontinued operations 0 0 0
\n
0 0 0 0
\n
0 0
\n
RESULT AFTER TAX
\n
1 997 697 127
\n
226 85 114 -298
\n
-207 2 614
\n
attri
\n
butable to minority interests 0 0 0
\n
0 0 0 0
\n
0 0
\n
attributable to equity holders of the parent
\n
\n
\n
1 997
\n
\n
697
\n
\n
127
\n
\n
226
\n
\n
85
\n
\n
114
\n
\n
-298
\n
\n
-207
\n
\n
2 614
\n
a Of which non
\n
-cash expenses -48 -96 -119
\n
-38 -19 -16 -46
\n
-83 -346
\n
\n
Depreciation and amortisation of fixed assets -57 -97 -120 -38 -19 -16 -46 -82 -356
\n
\n
Other 10 1 1 1 0 0 0 -2 10
\n
Acquisitions of non
\n
-current assets* 456 183 252
\n
83 75 80 14
\n
110 1 001
\n
* Non-current assets held for sale and disposal groups, investment property, property and equipment, investments in associated companies, and goodwill and other intangible assets.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
\n
Note 3.1: Net interest income
\n
(in millions of EUR)
\n
2022
\n
2021
\n
Total
\n
5 161 4 451
\n
Interest income
\n
11 226 6 320
\n
Interest income on financial instruments calculated using the effective interest rate
\n
method
\n
\n
Financial assets at amortised cost 7 973 4 797
\n
\n
Financial assets at fair value through OCI 251 286
\n
\n
Hedging derivatives 1 838 355
\n
\n
Financial liabilities (negative interest rate) 289 425
\n
\n
Other 130 25
\n
Interest income on
\n
other financial instruments
\n
\n
Financial assets MFVPL other than held for trading 35 24
\n
\n
Financial assets held for trading 710 407
\n
\n
Of which economic hedges 582 367
\n
\n
Other financial assets at fair value through profit or loss 0 0
\n
Interest expense
\n
-6 064 -1 869
\n
Interest expense on financial instruments calculated using the effective interest rate method
\n
\n
\n
Financial liabilities at amortised cost -2 320 -534
\n
\n
Hedging derivatives -1 972 -604
\n
\n
Financial assets (negative interest rate) -94 -253
\n
\n
Other -5 -7
\n
Interest expense on other financial instruments
\n
\n
\n
Financial liabilities held for trading -1 639 -459
\n
\n
Of which economic hedges -1 595 -414
\n
\n
Other financial liabilities at fair value through profit or loss -33 -11
\n
\n
Net interest expense relating to defined benefit plans -1 -1
\n
\n
\u2022 \u2018Financial liabilities (negative interest rate)\u2019 and \u2018Financial assets (negative interest rate)\u2019: these rates relate mainly to
\n
transactions with central banks, interbank and professional counterparties, corporate clients, and targeted long-term
\n
refinancing operations (TLTRO). More information on TLTRO can be found in Note 4.1.
\n
\u2022 The increase in interest income and interest expense from \u2018Hedging derivatives\u2019, \u2018Financial assets held for trading (of which
\n
economic hedges)\u2019 and \u2018Financial liabilities held for trading (of which economic hedges)\u2019 relates to a change in presentation of
\n
the negative interest on derivatives (at KBC Bank, in accordance with reporting on a solo basis (\u2018Schema A\u2019) under Belgian
\n
GAAP, resulting in an increase in both interest income and interest expense of 450 million euros in 2022), and to the overall
\n
increase in interest rates in 2022.
\n

\n
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\u2022 The lion\u2019s share of the fees and commissions related to lending is recognised under \u2018Net interest income\u2019 (effective interest rate
\n
calculations).
\n

\n\n

\n\n

\n\n

\n\n
Transactions with related parties,
\n
excluding key management
\n
\n
(in millions of EUR)
\n
Subsidiaries
\n
Associated
\n
companies
\n
Joint
\n
ventures
\n
Other
\n
Total
\n
Subsidiaries
\n
Associated
\n
companies
\n
Joint
\n
ventures
\n
Other
\n
Total
\n
Assets
\n
147 107 33 0 287 144 111 42 142 439
\n
Loans and advances
\n
15 89 0 0 104 21 94 0 100 214
\n
Equity instruments (including investments
\n
in associated companies and joint
\n
ventures)
\n
131 19 33 0 184 124 17 42 0 183
\n
Other
\n
0 0 0 0 0 0 0 0 41 41
\n
Liabilities
\n
54 74 0 593 721 40 89 0 838 968
\n
Deposits
\n
54 10 0 590 654 40 20 0 831 891
\n
Other financial liabilities
\n
0 0 0 0 0 0 0 0 0 0
\n
Other
\n
1 63 0 3 67 1 69 0 8 77
\n
Income statement
\n
-1 -2 0 -1 -3 0 -3 0 0 -3
\n
Net interest income
\n
0 1 0 0 0 0 -1 0 0 -1
\n
\n
Interest income 0 2 0 0 2 0 0 0 0 0
\n
\n
Interest expense 0 -1 0 0 -1 0 -1 0 0 -1
\n
Earned premiums, insurance (before
\n
reinsurance)
\n
0 0 0 0 0 0 0 0 0 0
\n
Technical insurance charges (before
\n
reinsurance)
\n
0 0 0 0 0 0 0 0 0 0
\n
Dividend income
\n
4 1 0 4 9 5 2 0 4 11
\n
Net fee and commission income
\n
1 0 0 2 3 1 -1 0 2 3
\n
\n
Fee and commission income 1 0 0 2 3 1 0 0 2 3
\n
\n
Fee and commission expense 0 0 0 0 0 0 -1 0 0 -1
\n
Other net income
\n
1 -1 0 0 0 -3 -1 0 1 -3
\n
General administrative expenses
\n
-7 -2 0 -7 -16 -4 -2 0 -7 -13
\n
Undrawn portion of loan commitments,
\n
financial guarantees and other
\n
commitments
\n
\n
\n
\n
\n
Given by the group
\n
0 0 0 50 50 0 0 0 74 74
\n
Received by the group
\n
0 0 0 0 0 0 0 0 0 0
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExpenseExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag27": { "value": "\n
Note 2.3: Balance-sheet information by segment
\n
\n
The table below presents some of the main on-balance-sheet products by segment
\n
.
\n
\n
Czech
\n
Belgium
\n
Republic
\n
International
\n
Business
\n
Business
\n
Markets
\n
Group
\n
(in millions of EUR)
\n
Unit
\n
Unit
\n
Business Unit
\n
Of which:
\n
\n
\n
\n
Centre
\n
Of which:
\n
KBC Group
\n
\n
\n
\n
\n
Hungary Slovakia Bulgaria Ireland
\n
\n
Ireland
\n
\n
BALANCE SHEET
\n
\n
\n
\n
AT 31-12-2022
\n
Deposits from customers and
\n
155 971 51 069 29 962
\n
9 515 8 421 12 026 -
\n
15 743
\n
418
\n
252 746
\n
debt securities (excluding repos)
\n
\n
Demand deposits 72 947 25 321 23 367 7 303 5 697 10 368 - 418 418 122 053
\n
\n
Time deposits 8 896 9 211 4 291 1 291 1 414 1 586 - 0 0 22 397
\n
\n
Savings accounts 60 802 14 344 1 833 722 1 086 25 - 0 0 76 979
\n
\n
Debt securities 10 951 1 767 295 200 96 0 - 15 325 0 28 338
\n
\n
Other 2 375 427 176
\n
0
\n
\n
129
\n
\n
47
\n
- 0 0 2 978
\n
Loans and advances to
\n
customers (excluding reverse
\n
117 221 35 445 25 384
\n
5 879 10 796 8 709 -
\n
3
\n
3
\n
178 053
\n
repos)
\n
\n
Term loans 61 768 10 581 10 544 2 970 3 013 4 561 - 2 2 82 894
\n
\n
Mortgage loans 44 326 19 696 9 638 1 681 6 114 1 843 - 0 0 73 660
\n
\n
Other 11 127 5 168 5 202
\n
1 228
\n
\n
1 668
\n
\n
2 306
\n
- 1 1 21 498
\n
BALANCE SHEET
\n
\n
\n
\n
AT 31-12-2021
\n
Deposits from customers and
\n
-
\n
debt securities (excluding repos)
\n
142 282
\n
46 239
\n
24 652
\n
9 759
\n
7 696
\n
6 257
\n
940
\n
12 920
\n
226 093
\n
\n
Demand deposits
\n
64 458
\n
28 042
\n
19 598
\n
8 137
\n
5 443
\n
5 077
\n
940
\n
0
\n
-
\n
112 097
\n
\n
Time deposits
\n
4 784
\n
2 123
\n
2 281
\n
445
\n
656
\n
1 180
\n
0
\n
0
\n
-
\n
9 187
\n
\n
Savings accounts
\n
58 279
\n
14 226
\n
2 295
\n
977
\n
1 319
\n
0
\n
0
\n
0
\n
-
\n
74 801
\n
\n
Debt securities
\n
12 003
\n
1 376
\n
318
\n
200
\n
118
\n
0
\n
0
\n
12 920
\n
-
\n
26 617
\n
\n
Other
\n
2 758
\n
473
\n
160
\n
0
\n
160
\n
0
\n
0
\n
0
\n
-
\n
3 391
\n
Loans and advances to
\n
customers (excluding reverse
\n
-
\n
repos)
\n
108 251
\n
32 671
\n
18 805
\n
5 413
\n
9 417
\n
3 973
\n
3
\n
0
\n
\n
159 728
\n
\n
Term loans
\n
56 785
\n
9 609
\n
6 604
\n
2 409
\n
2 775
\n
1 418
\n
2
\n
0
\n
-
\n
72 998
\n
\n
Mortgage loans
\n
41 561
\n
18 303
\n
7 800
\n
1 812
\n
5 117
\n
870
\n
0
\n
0
\n
-
\n
67 665
\n
\n
Other
\n
9 905
\n
4 758
\n
4 402
\n
1 191
\n
1 524
\n
1 685
\n
1
\n
0
\n
-
\n
19 065
\n
\n
\u2022 The limited amounts for Ireland in 2021 and 2022 relate to the shift to the \u2018Non-current assets held for sale and
\n
disposal groups\u2019
\n
and \u2018Liabilities associated with disposal groups\u2019 balance sheet items due to the sale transactions (see Notes 5.11 and 6.6).
\n
\n
\u2022 The growth for Bulgaria in 2022 related chiefly to the acquisition of Raiffeisenbank Bulgaria; see Note 6.6 for more information.
\n
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.1: Financial assets and liabilities, breakdown by portfolio and product
\n
(in millions of EUR)
\n
Measured
\n
at
\n
amortised
\n
cost (AC)
\n
Measured
\n
at fair
\n
value
\n
through
\n
other
\n
compre-
\n
hensive
\n
income
\n
(FVOCI)
\n
Mandatorily
\n
measured at
\n
fair value
\n
through
\n
profit or loss
\n
(MFVPL) excl.
\n
HFT and
\n
overlay
\n
Measured at
\n
fair value \u2013
\n
overlay
\n
approach
\n
(overlay)
\n
Held for
\n
trading
\n
(HFT)
\n
Desig-
\n
nated at
\n
fair value
\n
1
\n
(FVO)
\n
Hedging
\n
Deriva-
\n
tives
\n
Total
\n
Total pro
\n
forma
\n
excluding
\n
KBC Bank
\n
Bulgaria
\n
(formerly
\n
Raiffeisen-
\n
bank
\n
Bulgaria)
\n
FINANCIAL ASSETS, 31-12-2022
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
4 240 0 13 0 1 0 0 4 254
\n
4 203
\n
of which loans and advances to banks repayable on
\n
demand and term loans to banks at not more than three
\n
months
\n
\n
1 237 1 237
\n
Loans and advances to customers (excluding reverse
\n
repos)
\n
177 427 0 625 0 0 0 0 178 053
\n
174 083
\n
Trade receivables
\n
2 818
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 818
\n
2 729
\n
Consumer credit
\n
6 222
\n
0
\n
430
\n
0
\n
0
\n
0
\n
0
\n
6 652
\n
5 977
\n
Mortgage loans
\n
73 465
\n
0
\n
196
\n
0
\n
0
\n
0
\n
0
\n
73 660
\n
72 891
\n
Term loans
\n
82 894
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
82 894
\n
80 744
\n
Finance lease
\n
6 368
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
6 368
\n
6 117
\n
Current account advances
\n
4 886
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 886
\n
4 885
\n
Other
\n
774
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
774
\n
740
\n
Reverse repos
\n
2
\n
\n
20 186
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 219
\n
20 219
\n
with credit institutions and investment firms
\n
20 018
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 050
\n
20 050
\n
with customers
\n
168
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
168
\n
168
\n
Equity instruments
\n
0
\n
315
\n
13
\n
1 237
\n
430
\n
0
\n
0
\n
1 994
\n
1 989
\n
Investment contracts (insurance)
\n
6
\n
\n
0
\n
0
\n
12 771
\n
0
\n
0
\n
0
\n
0
\n
12 771
\n
12 771
\n
Debt securities
\n
52 030
\n
11 813
\n
17
\n
0
\n
1 728
\n
0
\n
0
\n
65 588
\n
64 871
\n
Public bodies
\n
44 219
\n
8 135
\n
0
\n
0
\n
1 667
\n
0
\n
0
\n
54 021
\n
53 390
\n
Credit institutions and investment firms
\n
5 160
\n
1 621
\n
0
\n
0
\n
9
\n
0
\n
0
\n
6 790
\n
6 747
\n
Corporates
\n
2 651
\n
2 057
\n
17
\n
0
\n
53
\n
0
\n
0
\n
4 777
\n
4 733
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
6 279
\n
0
\n
542
\n
6 821
\n
6 813
\n
3
\n
\n
Other
\n
1 561
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
1 561
\n
1 561
\n
Total
\n
255 444
\n
12 128
\n
13 439
\n
1 237
\n
8 471
\n
0
\n
542
\n
291 262
\n
286 511
\n
FINANCIAL ASSETS, 31-12-2021
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
7 920 0 0 0 1 0 0 7 920
\n
-
\n
of which loans and advances to banks repayable on demand
\n
and term loans to banks at not more than three months
\n
3 146 -
\n
Loans and advances to customers (excl. reverse repos)
\n
159 167
\n
0
\n
560
\n
0
\n
0
\n
0
\n
0
\n
159 728
\n
-
\n
Trade receivables
\n
2 090
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 090
\n
-
\n
Consumer credit
\n
5 470
\n
0
\n
381
\n
0
\n
0
\n
0
\n
0
\n
5 851
\n
-
\n
Mortgage loans
\n
67 486
\n
0
\n
179
\n
0
\n
0
\n
0
\n
0
\n
67 665
\n
-
\n
Term loans
\n
72 998
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
72 998
\n
-
\n
Finance lease
\n
5 815
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
5 815
\n
-
\n
Current account advances
\n
4 819
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 819
\n
-
\n
Other
\n
490
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
490
\n
-
\n
2
\n
-
\n
\n
Reverse repos
\n
24 978
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 978
\n
with credit institutions and investment firms
\n
24 861
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 861
\n
-
\n
with customers
\n
117
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
117
\n
-
\n
Equity instruments
\n
0
\n
321
\n
8
\n
1 366
\n
448
\n
0
\n
0
\n
2 144
\n
-
\n
6
\n
-
\n
\n
Investment contracts (insurance)
\n
0
\n
0
\n
14 620
\n
0
\n
0
\n
0
\n
0
\n
14 620
\n
Debt securities
\n
47 172
\n
15 503
\n
17
\n
0
\n
2 958
\n
0
\n
0
\n
65 650
\n
-
\n
Public bodies
\n
41 475
\n
10 514
\n
0
\n
0
\n
2 517
\n
0
\n
0
\n
54 507
\n
-
\n
Credit institutions and investment firms
\n
3 310
\n
2 245
\n
0
\n
0
\n
357
\n
0
\n
0
\n
5 912
\n
-
\n
Corporates
\n
2 387
\n
2 744
\n
17
\n
0
\n
84
\n
0
\n
0
\n
5 232
\n
-
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
5 443
\n
0
\n
283
\n
5 727
\n
-
\n
3
\n
-
\n
\n
Other
\n
892
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
892
\n
Total
\n
240 128
\n
15 824
\n
15 205
\n
1 366
\n
8 850
\n
0
\n
283
\n
281 658
\n
-
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
(in millions of EUR)
\n
Measured at
\n
amortised
\n
cost
\n
(AC)
\n
Held for
\n
trading (HFT)
\n
Designated at
\n
fair value (FVO)
\n
\n
Hedging
\n
derivatives
\n
Total
\n
Total pro forma
\n
excluding KBC
\n
Bank Bulgaria
\n
(formerly
\n
Raiffeisenbank
\n
Bulgaria)
\n
FINANCIAL
\n
LIABILITIES, 31-12-2022
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
24 819 0 0 0 24 819
\n
24 737
\n
of which deposits from banks repayable on demand
\n
\n
\n
\n
\n
\n
\n
\n
5 085 5 085
\n
Deposits from customers and debt
\n
securities (excl. repos)
\n
\n
251 496 44 1 205 0 252 746
\n
247 585
\n
\n
Demand deposits 122 053 0 0 0 122 053 117 401
\n
\n
Time deposits 22 280 44 73 0 22 397 21 960
\n
\n
Savings accounts 76 979 0 0 0 76 979 76 954
\n
\n
Special deposits 2 710 0 0 0 2 710 2 663
\n
\n
Other deposits 268 0 0 0 268 268
\n
Subtotal deposits from customers (excl. repos)
\n
224 290 44 73 0 224 407 219 246
\n
\n
Certificates of deposit 9 321 0 1 0 9 322 9 322
\n
\n
Savings certificates 104 0 0 0 104 104
\n
\n
Non-convertible bonds 15 621 0 1 006 0 16 627 16 627
\n
\n
Non-convertible subordinated liabilities 2 160 0 126 0 2 285 2 285
\n
Repos
\n
4
\n
11 091 7 0 0 11 097
\n
11 097
\n
\n
with credit institutions and investment firms 10 852 7 0 0 10 859 10 859
\n
\n
with customers 239 0 0 0 239 239
\n
Liabilities under investment contracts
\n
6
\n
0 0 12 002 0 12 002
\n
12 002
\n
Derivatives
\n
0 8 038 0 577 8 615
\n
8 605
\n
Short positions
\n
0 1 007 0 0 1 007
\n
1 007
\n
\n
In equity instruments 0 5 0 0 5 5
\n
\n
In debt securities 0 1 002 0 0 1 002 1 002
\n
Other
\n
5
\n
2 448 0 0 0 2 448
\n
2 370
\n
Total
\n
289 854 9 096 13 207 577 312 735
\n
307 403
\n
FINANCIAL LIABILITIES, 31
\n
-12-2021
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
38 047 0 0 0 38 047
\n
-
\n
of which deposits from banks repayable on demand 4 695 -
\n
Deposits from
\n
customers and debt securities (excl. repos)
\n
\n
224 759 21 1 312 0 226 093
\n
-
\n
\n
Demand deposits 112 097 0 0 0 112 097
\n
-
\n
\n
Time deposits 9 106 21 60 0 9 187
\n
-
\n
\n
Savings accounts 74 801 0 0 0 74 801
\n
-
\n
\n
Special deposits 2 962 0 0 0 2 962
\n
-
\n
\n
Other deposits 428 0 0 0 428
\n
-
\n
Subtotal deposits from customers (excl. repos)
\n
199 395 21 60 0 199 476
\n
-
\n
\n
Certificates of deposit 6 273 0 0 0 6 273
\n
-
\n
\n
Savings certificates 253 0 0 0 253
\n
-
\n
\n
Non-convertible bonds 15 892 0 1 118 0 17 011
\n
-
\n
\n
Non-convertible subordinated liabilities 2 946 0 134 0 3 080
\n
-
\n
Repos
\n
4
\n
3 293 2 0 0 3 295
\n
-
\n
\n
with credit institutions and investment firms 2 888 2 0 0 2 890
\n
-
\n
\n
with customers 405 0 0 0 405
\n
-
\n
Liabilities under investment
\n
contracts
\n
6
\n
0 0 13 603 0 13 603
\n
-
\n
Derivatives
\n
0 5 619 0 1 094 6 713
\n
-
\n
Short positions
\n
0 1 628 0 0 1 628
\n
-
\n
\n
In equity instruments 0 18 0 0 18
\n
-
\n
\n
In debt securities 0 1 611 0 0 1 611
\n
-
\n
Other
\n
5
\n
2 288 0 0 0 2 288
\n
-
\n
Total
\n
268 387 7 271 14 916 1 094 291 667
\n
-
\n
1 The carrying value comes close to the maximum credit exposure.
\n
2 The amount of the reverse repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out).
\n
3 Financial assets not included under \u2018Loans and advances to customers\u2019 as they are not directly related to commercial lending.
\n
4 The amount of the repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out), with the assets being partly reflected on the balance sheet
\n
and partly obtained through reverse repo transactions.
\n
5 Financial liabilities not included under deposits from customers as they are not directly related to commercial deposit acquisition.
\n
6 The difference between \u2018Investment contracts (insurance)\u2019 and \u2018Liabilities under investment contracts\u2019 is accounted for by the presentation of non-unbundled investment contracts that are
\n
included under \u2018Investment contracts (insurance)\u2019 on the financial assets side, but are included under \u2018Technical provisions (before reinsurance)\u2019 on the liabilities side.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n\n
\u2022 \u2018Non-convertible bonds\u2019 comprise mainly KBC Bank, KBC Group, \u010cSOB and KBC IFIMA issues. They are usually recognised under
\n
\u2018Measured at amortised cost\u2019. However, if they contain closely related embedded derivatives, they are recorded under
\n
\u2018Designated at fair value\u2019 (see accounting policies). This item also includes three green bonds (for 500, 500 and 750 million euros
\n
each) and a social bond (for 750 million euros), which have been recognised at amortised cost.
\n
\u2022 More information on major new debt issues or redemptions is provided under the \u2018Consolidated cashflow statement\u2019.
\n
\u2022 \u2018Deposits from credit institutions and investment firms\u2019 include funding obtained from the ECB\u2019s TLTRO programme (15.4 billion
\n
euros at year-end 2022, 9.1 billion euros less than at year-end 2021 on account of redemptions). KBC calculates these deposits
\n
using the effective interest rate method, with the rate being adjusted should we fail to meet the conditions (similar to a floating
\n
rate instrument), as per paragraph B.5.4.5 of IFRS 9. KBC\u2019s management has reasonable assurance that KBC will comply with
\n
the conditions attached (including the level of lending to households and non-financial companies) and hence the interest has
\n
accordingly been recognised (a gross amount of 112 million euros in interest income (negative interest rate) in 2022 and 242
\n
million euros in 2021).
\n
\u2022 Transferred financial assets that continue to be recognised in their entirety: KBC regularly lends and/or sells securities with the
\n
commitment to buy them back at a later date (repo transactions). Securities lent or sold with such a commitment are transferred
\n
to the counterparty, and, in exchange, KBC receives cash or other financial assets. However, KBC retains the main risks and
\n
income relating to these securities, and, therefore, continues to recognise them on its balance sheet. In addition, a financial
\n
liability is recognised equalling the cash received.
\n
\n
Transferred financial assets that continue to be recognised in their entirety (carrying value, in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Transferred financial assets that continue to be recognised in their entirety: repo transactions and securities lent out
\n
17 425 13 762
\n
Held for
\n
trading 960 1 221
\n
Fair value through OCI
\n
860 1 474
\n
Amortised cost
\n
15 605 11 067
\n
Associated financial liability
\n
10 534 2 936
\n
Held for trading
\n
689 335
\n
Fair value through OCI
\n
609 362
\n
Amortised cost
\n
9 236 2 239
\n
\n
\u2022 It should be noted that KBC has more transferred financial assets on its balance sheet than repo transactions, due to the fact
\n
that the cash legs of certain repo transactions are offset against reverse repo transactions if they are carried out with the same
\n
counterparty, in the same currency and with the same maturity date. Moreover, there is a legally enforceable right, and an
\n
intention, to settle the transactions on a net basis or to realise the financial asset and settle the financial liability simultaneously.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria in 2022 is provided in Note 6.6.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. We report on estimated greenhouse gas emissions
\n
associated with lending and other activities and have defined objectives for reducing the greenhouse gas intensity of loans
\n
we have provided to the energy sector, electricity producers and the real estate sector, mortgage loans and loans provided
\n
for commercial residential real estate, as well as loans provided to the automotive industry and financial and operational car
\n
leasing (see Note 6.2), the agricultural sector, and cement, steel and aluminium producers. See \u2018Focus on climate\u2019 in the \u2018Report
\n
of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our Climate Report and
\n
\n
our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.4: Fair value of financial assets and liabilities \u2013 general
\n
\u2022 In line with European Banking Authority guidelines, we conduct an outlier stress test on a quarterly basis by applying six different
\n
scenarios to the banking books (material currencies). The worst-case scenario is set off against tier-1 capital. For the banking
\n
book at KBC group level, this risk came to -3% of tier-1 capital at year-end 2022. This -3% is well below the -15% Tier 1 threshold,
\n

\n\n

\n\n

\n\n
which is monitored by the ECB. Note that this -3% of tier-1 capital at year-end 2022 is equivalent to a -0.4% points impact on
\n
the end of year 2022 fully loaded CET1 ratio.
\n
\u2022 The table shows the changes in economic value of equity under six different interest rate scenarios. To test these six scenarios,
\n
we combine the shift in the yield curves with changes in maturities depending on clients\u2019 behaviour (e.g., interest-rate-driven
\n
prepayment behaviour) and use a run-off balance sheet where maturing items are not replaced. The bank also analyses the
\n
impact of different interest rate scenarios on its net interest income.
\n
\n
Changes of the economic value of equity
\n
Supervisory shock scenarios (in millions of EUR, material currencies)*
\n
End of 4Q2022
\n
End of 2Q2022
\n
1 Parallel up
\n
-491
\n
-1 163
\n
2 Parallel down
\n
370
\n
600
\n
3 Steepener
\n
-55
\n
-207
\n
4 Flattener
\n
-26
\n
-3
\n
5 Short rates up
\n
-179
\n
-343
\n
6 Short rates down
\n
102
\n
176
\n
\n
* Supervision of the underlying internal models\u2019 compliance with the approval criteria as provided for in the standards imposed by the regulator does not come under the responsibility of the statutory auditor.
\n
\u2022 Note that the above stress test covers the full balance sheet (full economic view), with compensating effects across the balance
\n
sheet, whereas the table below focuses on some parts of the balance sheet.
\n
\n
\u2022 Furthermore, taking into account 1) KBCs large stock of high-quality liquid assets (approximately 92 billion euros on average in
\n
2022), which consist of cash and bonds which can be repoed in the private market and at the central banks, 2) 48% of total
\n
customer deposits at KBC are covered by the Deposit Guarantee and 3) 83% of total customer deposits consisting of more
\n
stable retail & SME clients, the unrealised losses on the debt securities portfolio at amortised cost do not need to be realised
\n
for liquidity purposes and are therefore irrelevant from a capital perspective.
\n
\n
\n
\n
Fair value of financial instruments that are not measured at fair value
\n
Financial assets
\n
Financial liabilities
\n
in the balance sheet
\n
at amortised cost
\n
at amortised cost
\n
Carrying
\n
Fair
\n
Carrying
\n
Fair
\n
(in millions of EUR)
\n
value
\n
value
\n
value
\n
value
\n
31-12-2022
\n
FINANCIAL ASSETS
\n
\n
Loans and advances to credit institutions and investment firms (incl. reverse
\n
repos) 24 258 24 211 \u2013 \u2013
\n
Loans and advances to customers (incl. reverse repos)
\n
177 596 163 972 \u2013 \u2013
\n
Debt securities
\n
52 030 46 886 \u2013 \u2013
\n
Other
\n
1 561 1 561 \u2013 \u2013
\n
Total
\n
255 444 236 630 \u2013 \u2013
\n
\n
Level 1 \u2013 43 364 \u2013 \u2013
\n
\n
Level 2 \u2013 31 917 \u2013 \u2013
\n
\n
Level 3 \u2013 161 349 \u2013 \u2013
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms (incl. repos)
\n
\n
\u2013 \u2013 35 671 35 207
\n
Deposits from customers and debt securities (incl. repos)
\n
\n
\u2013 \u2013 251 735 250 485
\n
Liabilities under investment
\n
contracts \u2013 \u2013 0 0
\n
Other
\n
\u2013 \u2013 2 448 2 448
\n
Total
\n
\u2013 \u2013 289 854 288 140
\n
Level 1
\n
\u2013
\n
\u2013
\n
\u2013
\n
47
\n
Level 2
\n
\u2013
\n
\u2013
\n
\u2013
\n
111 093
\n
Level 3
\n
\u2013
\n
\u2013
\n
\u2013
\n
176 999
\n
31
\n
-12-2021
\n
FINANCIAL ASSETS
\n
\n
Loans and advances to credit institutions and investment firms (incl. reverse
\n
repos) 32 780 32 789 \u2013 \u2013
\n
Loans and advances to customers (incl. reverse repos)
\n
159 285 160 037 \u2013 \u2013
\n
Debt securities
\n
47 172 47 878 \u2013 \u2013
\n
Other
\n
892 892 \u2013 \u2013
\n
Total
\n
240 128 241 595 \u2013 \u2013
\n
Level 1
\n
\u2013
\n
44 062
\n
\u2013
\n
\u2013
\n
Level 2
\n
\u2013
\n
36 737
\n
\u2013
\n
\u2013
\n
Level 3
\n
\u2013
\n
160 797
\n
\u2013
\n
\u2013
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms (incl. repos)
\n
\n
\u2013 \u2013 40 935 41 003
\n
Deposits from customers and debt securities (incl. repos)
\n
\n
\u2013 \u2013 225 164 225 299
\n
Liabilities under investment
\n
contracts \u2013 \u2013 0 0
\n
Other
\n
\u2013 \u2013 2 288 2 286
\n
Total
\n
\u2013 \u2013 268 387 268 588
\n
\n
Level 1 \u2013 \u2013 \u2013 24
\n
\n
Level 2 \u2013 \u2013 \u2013 105 714
\n
\n
Level 3 \u2013 \u2013 \u2013 162 850
\n

\n\n

\n\n
\u2022 All internal valuation models are validated by an independent Risk Validation Unit. In addition, the Executive Committee has
\n
appointed a Group Valuation Committee (GVC) to ensure that KBC meets all the legal requirements for measuring financial
\n
assets and liabilities at fair value. The GVC monitors consistent implementation of the KBC Valuation Framework, which consists
\n
of various guidelines, including the Group Valuation Policy, the Group Market Value Adjustments Policy and the Group
\n
Parameter Review Policy. The GVC meets at least twice a quarter to approve significant changes in valuation methods
\n
(including, but not limited to, models, market data and inputs) or deviations from group policies for financial assets and liabilities
\n
measured at fair value. The committee is made up of members from Finance, Risk Management and the Middle Office. Valuation
\n
uncertainty measurements are made and reported to the GVC every six months. Certain fair values generated by valuation
\n
models are challenged by a team set up specifically for this purpose.
\n
\u2022 The fair value of mortgage and term loans not measured at fair value in the balance sheet (see table) is calculated by
\n
discounting contractual cashflows at the risk-free rate. This calculation is then adjusted for credit risk by taking account of
\n
margins obtained on similar, but recently issued, loans or by using a spread derived from the listed-bond spread. The fair value
\n
of the main portfolios takes account of prepayment risks and cap options. The fair value of time deposits is calculated by
\n
discounting contractual cashflows at the risk-free rate. The fair value of demand and savings deposits is presumed to be equal
\n
to their carrying value.
\n
\u2022 As a result of the first-time adoption of IFRS 9 on 1 January 2018, debt instruments with a total carrying value of 15 060 million
\n
euros have been reclassified from \u2018Available-for-sale assets\u2019 to \u2018Financial assets held at amortised cost\u2019. Due to this
\n
reclassification, changes in fair value (before tax) totalling -566 million euros were not recorded in the revaluation reserve in
\n
2022 (-199 million euros in 2021). The fair value of this reclassified portfolio (after redemptions) amounted to 4 668 million euros
\n
at year-end 2022 (5 753 million euros at year-end 2021).
\n
\u2022 The difference between the fair value and the carrying value of the financial instruments at amortised cost was caused by the
\n
substantial interest rate hikes in 2022. As a hold-to-collect business model is applied on the assets side, interim changes in fair
\n
value are less relevant. In addition, part of this difference has already been recorded under fair value hedges for a portfolio of
\n
interest rate risk, which is presented separately on the balance sheet (on both the assets and the liabilities side) in the
\n
\u2018Profit/loss on positions in portfolios hedged against interest rate risk\u2019 balance sheet item. Furthermore, there are ALM interest
\n
derivatives not recognised in hedge accounting.
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfDepositsFromCustomersExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag839": { "value": "\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
\n
Note 3.1: Net interest income
\n
(in millions of EUR)
\n
2022
\n
2021
\n
Total
\n
5 161 4 451
\n
Interest income
\n
11 226 6 320
\n
Interest income on financial instruments calculated using the effective interest rate
\n
method
\n
\n
Financial assets at amortised cost 7 973 4 797
\n
\n
Financial assets at fair value through OCI 251 286
\n
\n
Hedging derivatives 1 838 355
\n
\n
Financial liabilities (negative interest rate) 289 425
\n
\n
Other 130 25
\n
Interest income on
\n
other financial instruments
\n
\n
Financial assets MFVPL other than held for trading 35 24
\n
\n
Financial assets held for trading 710 407
\n
\n
Of which economic hedges 582 367
\n
\n
Other financial assets at fair value through profit or loss 0 0
\n
Interest expense
\n
-6 064 -1 869
\n
Interest expense on financial instruments calculated using the effective interest rate method
\n
\n
\n
Financial liabilities at amortised cost -2 320 -534
\n
\n
Hedging derivatives -1 972 -604
\n
\n
Financial assets (negative interest rate) -94 -253
\n
\n
Other -5 -7
\n
Interest expense on other financial instruments
\n
\n
\n
Financial liabilities held for trading -1 639 -459
\n
\n
Of which economic hedges -1 595 -414
\n
\n
Other financial liabilities at fair value through profit or loss -33 -11
\n
\n
Net interest expense relating to defined benefit plans -1 -1
\n
\n
\u2022 \u2018Financial liabilities (negative interest rate)\u2019 and \u2018Financial assets (negative interest rate)\u2019: these rates relate mainly to
\n
transactions with central banks, interbank and professional counterparties, corporate clients, and targeted long-term
\n
refinancing operations (TLTRO). More information on TLTRO can be found in Note 4.1.
\n
\u2022 The increase in interest income and interest expense from \u2018Hedging derivatives\u2019, \u2018Financial assets held for trading (of which
\n
economic hedges)\u2019 and \u2018Financial liabilities held for trading (of which economic hedges)\u2019 relates to a change in presentation of
\n
the negative interest on derivatives (at KBC Bank, in accordance with reporting on a solo basis (\u2018Schema A\u2019) under Belgian
\n
GAAP, resulting in an increase in both interest income and interest expense of 450 million euros in 2022), and to the overall
\n
increase in interest rates in 2022.
\n

\n
\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n\n
Note 3.2: Dividend income
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
59 45
\n
Equity
\n
instruments MFVPL other than held for trading 35 28
\n
Equity instruments held for trading
\n
10 11
\n
Equity instruments at FVOCI
\n
15 6
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Note 3.3: Net result from financial instruments at fair value through profit or loss
\n
\n
(in millions of EUR)
\n\n

\n\n
2022 2021
\n
Total
\n
406 145
\n
Total broken down by IFRS portfolio
\n
\n
Financial instruments MFVPL other than held for trading and overlay
\n
-1 949 1 172
\n
Trading instruments (including interest on non
\n
-ALM trading derivatives and fair value changes in all trading derivatives) 567 435
\n
Financial instruments to which the overlay approach is applied
\n
86 104
\n
\n
Gains or losses on sale
\n
\n
176 123
\n
\n
\n
Impairment
\n
-90
\n
-20
\n
\n
Other financial instruments at FVPL
\n
1 942 -1 186
\n
Foreign exchange trading
\n
-90 -272
\n
Fair value adjustments in hedge accounting
\n
-150 -108
\n
Hedge accounting broken down by type of hedge
\n
\n
Fair value micro hedges
\n
5 0
\n
\n
Changes in the fair value of the hedged items 624 -307
\n
\n
Changes in the fair value of the hedging derivatives -619 307
\n
Cashflow hedges
\n
-3 0
\n
\n
Changes in the fair value of the hedging derivatives, ineffective portion -3 0
\n
Hedges of net investments in foreign operations, ineffective portion
\n
0 0
\n
Portfolio hedge of interest rate risk
\n
0 5
\n
\n
Changes in the fair value of the hedged items -3 254 -815
\n
\n
Changes in the fair value of the hedging derivatives 3 254 820
\n
Discontinuation of hedge accounting for fair value hedges
\n
-75 -46
\n
Discontinuation of hedge accounting in the event of cashflow hedges
\n
-77 -66
\n
Total broken down by driver
\n
\n
Market value adjustments (MVA)
\n
80 67
\n
Change in the value of derivatives used for asset/liability management purposes
\n
-14 -197
\n
Financial instruments to which the overlay approach is applied and other
\n
96 113
\n
Dealing room
\n
245 162
\n

\n\n

\n\n
\n
\u2022 ALM hedging derivatives (recognised in hedge accounting): the interest component of these derivatives is recognised under
\n
\u2018Net interest income\u2019. Fair value changes in hedging derivatives, excluding those for which an effective cashflow hedge
\n
relationship exists, are recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019. Under fair
\n
value hedge accounting, changes in the fair value of hedged assets are also recognised under this heading, and offsetting
\n
takes place insofar as the hedge is effective. ALM hedging derivatives not recognised in hedge accounting (and therefore
\n
classified as trading instruments) are treated in the same way, except most of the related assets are not recognised at fair
\n
value (i.e. not marked-to-market).
\n
\u2022 Day 1 profit: when the transaction price in a non-active market differs from the fair value of other observable market
\n
transactions in the same instrument or from the fair value based on a valuation technique whose variables include only data
\n
from observable markets, the difference between the transaction price and the fair value (day 1 profit) is taken to profit or loss.
\n
If this is not the case (i.e. the variables do not include only data from observable markets), day 1 profit is reserved and is released
\n
in profit or loss during the life and until the maturity of the financial instrument. KBC has reserved these day 1 profits for limited
\n
amounts since January 2022.
\n
\u2022 Financial instruments to which the overlay approach is applied: see the comments under the consolidated income statement.
\n
\u2022 Foreign exchange trading includes all realised and unrealised foreign exchange results (when the monetary assets and liabilities
\n
are revalued), regardless of the IFRS portfolio, except for financial assets and liabilities measured at fair value through profit or
\n
loss, for which the revaluation is included in the fair value correction. Note that (unrealised) foreign exchange gains/losses on
\n
claims provisions (insurance) and on the financial instruments hedging the claims provisions are included under \u2018Technical
\n
charges\u2019. (Unrealised) foreign exchange gains/losses on the reinsurers\u2019 share of claims provisions and on the financial
\n
instruments hedging such provisions are included under \u2018Ceded reinsurance result\u2019.
\n
\u2022 Under IFRS 9, investment contracts (insurance) are included under \u2018Financial instruments mandatorily measured at fair value
\n
through profit or loss\u2019 in accordance with their \u2018managed on a FV basis\u2019 business model, whereas liabilities under investment
\n
contracts are included under \u2018Financial instruments at fair value through profit or loss\u2019. This resulted in amounts being offset
\n
against each other in \u2018Financial instruments MFVPL other than held for trading and overlay\u2019 and \u2018Financial instruments at fair
\n
value through profit or loss\u2019 in the above table (-1 893 million euros and +1 893 million euros in 2022 and +1 195 million euros and
\n
-1 195 million euros in 2021).
\n
\u2022 The effectiveness of the hedge is determined according to the following methods:
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
- For fair value micro hedging, we use the dollar offset method on a quarterly basis, with changes in the fair value of the hedged
\n
item offsetting changes in the fair value of the hedging instrument within a range of 80%\u2013125%.
\n
- For cashflow hedges, we compare the designated hedging instrument with a perfect hedge of the hedged cashflows on a
\n
prospective (by BPV measurement) and retrospective basis (by comparing the fair value of the designated hedging
\n
instrument with the perfect hedge). The effectiveness of both tests must fall within a range of 80%\u2013125%.
\n
- We use the rules set out in the European version of IAS 39 (carve-out) to assess the effectiveness of fair value hedges for a
\n
portfolio of interest rate risk. IFRS does not permit net positions to be reported as hedged items, but does allow hedging
\n
instruments to be designated as a hedge of a gross asset position (or a gross liabilities position, as the case may be).
\n
Specifically, we make sure that the volume of assets (or liabilities) in each maturity bucket is greater than the volume of
\n
hedging instruments allocated to the same bucket.
\n

\n\n
\n
Note 3.4: Net realised result from debt instruments at fair value through OCI
\n
\n
\u2022 In 2022, the realised result from debt instruments at fair value through OCI was impacted by a realised loss of -22 million euros
\n
on the sale of low-yielding bonds. The realised result from debt instruments at fair value through OCI was not material in 2021.
\n

\n\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag826": { "value": "\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
\n
Note 3.1: Net interest income
\n
(in millions of EUR)
\n
2022
\n
2021
\n
Total
\n
5 161 4 451
\n
Interest income
\n
11 226 6 320
\n
Interest income on financial instruments calculated using the effective interest rate
\n
method
\n
\n
Financial assets at amortised cost 7 973 4 797
\n
\n
Financial assets at fair value through OCI 251 286
\n
\n
Hedging derivatives 1 838 355
\n
\n
Financial liabilities (negative interest rate) 289 425
\n
\n
Other 130 25
\n
Interest income on
\n
other financial instruments
\n
\n
Financial assets MFVPL other than held for trading 35 24
\n
\n
Financial assets held for trading 710 407
\n
\n
Of which economic hedges 582 367
\n
\n
Other financial assets at fair value through profit or loss 0 0
\n
Interest expense
\n
-6 064 -1 869
\n
Interest expense on financial instruments calculated using the effective interest rate method
\n
\n
\n
Financial liabilities at amortised cost -2 320 -534
\n
\n
Hedging derivatives -1 972 -604
\n
\n
Financial assets (negative interest rate) -94 -253
\n
\n
Other -5 -7
\n
Interest expense on other financial instruments
\n
\n
\n
Financial liabilities held for trading -1 639 -459
\n
\n
Of which economic hedges -1 595 -414
\n
\n
Other financial liabilities at fair value through profit or loss -33 -11
\n
\n
Net interest expense relating to defined benefit plans -1 -1
\n
\n
\u2022 \u2018Financial liabilities (negative interest rate)\u2019 and \u2018Financial assets (negative interest rate)\u2019: these rates relate mainly to
\n
transactions with central banks, interbank and professional counterparties, corporate clients, and targeted long-term
\n
refinancing operations (TLTRO). More information on TLTRO can be found in Note 4.1.
\n
\u2022 The increase in interest income and interest expense from \u2018Hedging derivatives\u2019, \u2018Financial assets held for trading (of which
\n
economic hedges)\u2019 and \u2018Financial liabilities held for trading (of which economic hedges)\u2019 relates to a change in presentation of
\n
the negative interest on derivatives (at KBC Bank, in accordance with reporting on a solo basis (\u2018Schema A\u2019) under Belgian
\n
GAAP, resulting in an increase in both interest income and interest expense of 450 million euros in 2022), and to the overall
\n
increase in interest rates in 2022.
\n

\n
\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n\n
Note 3.2: Dividend income
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
59 45
\n
Equity
\n
instruments MFVPL other than held for trading 35 28
\n
Equity instruments held for trading
\n
10 11
\n
Equity instruments at FVOCI
\n
15 6
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Note 3.3: Net result from financial instruments at fair value through profit or loss
\n
\n
(in millions of EUR)
\n\n

\n\n
2022 2021
\n
Total
\n
406 145
\n
Total broken down by IFRS portfolio
\n
\n
Financial instruments MFVPL other than held for trading and overlay
\n
-1 949 1 172
\n
Trading instruments (including interest on non
\n
-ALM trading derivatives and fair value changes in all trading derivatives) 567 435
\n
Financial instruments to which the overlay approach is applied
\n
86 104
\n
\n
Gains or losses on sale
\n
\n
176 123
\n
\n
\n
Impairment
\n
-90
\n
-20
\n
\n
Other financial instruments at FVPL
\n
1 942 -1 186
\n
Foreign exchange trading
\n
-90 -272
\n
Fair value adjustments in hedge accounting
\n
-150 -108
\n
Hedge accounting broken down by type of hedge
\n
\n
Fair value micro hedges
\n
5 0
\n
\n
Changes in the fair value of the hedged items 624 -307
\n
\n
Changes in the fair value of the hedging derivatives -619 307
\n
Cashflow hedges
\n
-3 0
\n
\n
Changes in the fair value of the hedging derivatives, ineffective portion -3 0
\n
Hedges of net investments in foreign operations, ineffective portion
\n
0 0
\n
Portfolio hedge of interest rate risk
\n
0 5
\n
\n
Changes in the fair value of the hedged items -3 254 -815
\n
\n
Changes in the fair value of the hedging derivatives 3 254 820
\n
Discontinuation of hedge accounting for fair value hedges
\n
-75 -46
\n
Discontinuation of hedge accounting in the event of cashflow hedges
\n
-77 -66
\n
Total broken down by driver
\n
\n
Market value adjustments (MVA)
\n
80 67
\n
Change in the value of derivatives used for asset/liability management purposes
\n
-14 -197
\n
Financial instruments to which the overlay approach is applied and other
\n
96 113
\n
Dealing room
\n
245 162
\n

\n\n

\n\n
\n
\u2022 ALM hedging derivatives (recognised in hedge accounting): the interest component of these derivatives is recognised under
\n
\u2018Net interest income\u2019. Fair value changes in hedging derivatives, excluding those for which an effective cashflow hedge
\n
relationship exists, are recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019. Under fair
\n
value hedge accounting, changes in the fair value of hedged assets are also recognised under this heading, and offsetting
\n
takes place insofar as the hedge is effective. ALM hedging derivatives not recognised in hedge accounting (and therefore
\n
classified as trading instruments) are treated in the same way, except most of the related assets are not recognised at fair
\n
value (i.e. not marked-to-market).
\n
\u2022 Day 1 profit: when the transaction price in a non-active market differs from the fair value of other observable market
\n
transactions in the same instrument or from the fair value based on a valuation technique whose variables include only data
\n
from observable markets, the difference between the transaction price and the fair value (day 1 profit) is taken to profit or loss.
\n
If this is not the case (i.e. the variables do not include only data from observable markets), day 1 profit is reserved and is released
\n
in profit or loss during the life and until the maturity of the financial instrument. KBC has reserved these day 1 profits for limited
\n
amounts since January 2022.
\n
\u2022 Financial instruments to which the overlay approach is applied: see the comments under the consolidated income statement.
\n
\u2022 Foreign exchange trading includes all realised and unrealised foreign exchange results (when the monetary assets and liabilities
\n
are revalued), regardless of the IFRS portfolio, except for financial assets and liabilities measured at fair value through profit or
\n
loss, for which the revaluation is included in the fair value correction. Note that (unrealised) foreign exchange gains/losses on
\n
claims provisions (insurance) and on the financial instruments hedging the claims provisions are included under \u2018Technical
\n
charges\u2019. (Unrealised) foreign exchange gains/losses on the reinsurers\u2019 share of claims provisions and on the financial
\n
instruments hedging such provisions are included under \u2018Ceded reinsurance result\u2019.
\n
\u2022 Under IFRS 9, investment contracts (insurance) are included under \u2018Financial instruments mandatorily measured at fair value
\n
through profit or loss\u2019 in accordance with their \u2018managed on a FV basis\u2019 business model, whereas liabilities under investment
\n
contracts are included under \u2018Financial instruments at fair value through profit or loss\u2019. This resulted in amounts being offset
\n
against each other in \u2018Financial instruments MFVPL other than held for trading and overlay\u2019 and \u2018Financial instruments at fair
\n
value through profit or loss\u2019 in the above table (-1 893 million euros and +1 893 million euros in 2022 and +1 195 million euros and
\n
-1 195 million euros in 2021).
\n
\u2022 The effectiveness of the hedge is determined according to the following methods:
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
- For fair value micro hedging, we use the dollar offset method on a quarterly basis, with changes in the fair value of the hedged
\n
item offsetting changes in the fair value of the hedging instrument within a range of 80%\u2013125%.
\n
- For cashflow hedges, we compare the designated hedging instrument with a perfect hedge of the hedged cashflows on a
\n
prospective (by BPV measurement) and retrospective basis (by comparing the fair value of the designated hedging
\n
instrument with the perfect hedge). The effectiveness of both tests must fall within a range of 80%\u2013125%.
\n
- We use the rules set out in the European version of IAS 39 (carve-out) to assess the effectiveness of fair value hedges for a
\n
portfolio of interest rate risk. IFRS does not permit net positions to be reported as hedged items, but does allow hedging
\n
instruments to be designated as a hedge of a gross asset position (or a gross liabilities position, as the case may be).
\n
Specifically, we make sure that the volume of assets (or liabilities) in each maturity bucket is greater than the volume of
\n
hedging instruments allocated to the same bucket.
\n

\n\n
\n
Note 3.4: Net realised result from debt instruments at fair value through OCI
\n
\n
\u2022 In 2022, the realised result from debt instruments at fair value through OCI was impacted by a realised loss of -22 million euros
\n
on the sale of low-yielding bonds. The realised result from debt instruments at fair value through OCI was not material in 2021.
\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag834": { "value": "\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
\n
Note 3.1: Net interest income
\n
(in millions of EUR)
\n
2022
\n
2021
\n
Total
\n
5 161 4 451
\n
Interest income
\n
11 226 6 320
\n
Interest income on financial instruments calculated using the effective interest rate
\n
method
\n
\n
Financial assets at amortised cost 7 973 4 797
\n
\n
Financial assets at fair value through OCI 251 286
\n
\n
Hedging derivatives 1 838 355
\n
\n
Financial liabilities (negative interest rate) 289 425
\n
\n
Other 130 25
\n
Interest income on
\n
other financial instruments
\n
\n
Financial assets MFVPL other than held for trading 35 24
\n
\n
Financial assets held for trading 710 407
\n
\n
Of which economic hedges 582 367
\n
\n
Other financial assets at fair value through profit or loss 0 0
\n
Interest expense
\n
-6 064 -1 869
\n
Interest expense on financial instruments calculated using the effective interest rate method
\n
\n
\n
Financial liabilities at amortised cost -2 320 -534
\n
\n
Hedging derivatives -1 972 -604
\n
\n
Financial assets (negative interest rate) -94 -253
\n
\n
Other -5 -7
\n
Interest expense on other financial instruments
\n
\n
\n
Financial liabilities held for trading -1 639 -459
\n
\n
Of which economic hedges -1 595 -414
\n
\n
Other financial liabilities at fair value through profit or loss -33 -11
\n
\n
Net interest expense relating to defined benefit plans -1 -1
\n
\n
\u2022 \u2018Financial liabilities (negative interest rate)\u2019 and \u2018Financial assets (negative interest rate)\u2019: these rates relate mainly to
\n
transactions with central banks, interbank and professional counterparties, corporate clients, and targeted long-term
\n
refinancing operations (TLTRO). More information on TLTRO can be found in Note 4.1.
\n
\u2022 The increase in interest income and interest expense from \u2018Hedging derivatives\u2019, \u2018Financial assets held for trading (of which
\n
economic hedges)\u2019 and \u2018Financial liabilities held for trading (of which economic hedges)\u2019 relates to a change in presentation of
\n
the negative interest on derivatives (at KBC Bank, in accordance with reporting on a solo basis (\u2018Schema A\u2019) under Belgian
\n
GAAP, resulting in an increase in both interest income and interest expense of 450 million euros in 2022), and to the overall
\n
increase in interest rates in 2022.
\n

\n
\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n\n
Note 3.2: Dividend income
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
59 45
\n
Equity
\n
instruments MFVPL other than held for trading 35 28
\n
Equity instruments held for trading
\n
10 11
\n
Equity instruments at FVOCI
\n
15 6
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Note 3.3: Net result from financial instruments at fair value through profit or loss
\n
\n
(in millions of EUR)
\n\n

\n\n
2022 2021
\n
Total
\n
406 145
\n
Total broken down by IFRS portfolio
\n
\n
Financial instruments MFVPL other than held for trading and overlay
\n
-1 949 1 172
\n
Trading instruments (including interest on non
\n
-ALM trading derivatives and fair value changes in all trading derivatives) 567 435
\n
Financial instruments to which the overlay approach is applied
\n
86 104
\n
\n
Gains or losses on sale
\n
\n
176 123
\n
\n
\n
Impairment
\n
-90
\n
-20
\n
\n
Other financial instruments at FVPL
\n
1 942 -1 186
\n
Foreign exchange trading
\n
-90 -272
\n
Fair value adjustments in hedge accounting
\n
-150 -108
\n
Hedge accounting broken down by type of hedge
\n
\n
Fair value micro hedges
\n
5 0
\n
\n
Changes in the fair value of the hedged items 624 -307
\n
\n
Changes in the fair value of the hedging derivatives -619 307
\n
Cashflow hedges
\n
-3 0
\n
\n
Changes in the fair value of the hedging derivatives, ineffective portion -3 0
\n
Hedges of net investments in foreign operations, ineffective portion
\n
0 0
\n
Portfolio hedge of interest rate risk
\n
0 5
\n
\n
Changes in the fair value of the hedged items -3 254 -815
\n
\n
Changes in the fair value of the hedging derivatives 3 254 820
\n
Discontinuation of hedge accounting for fair value hedges
\n
-75 -46
\n
Discontinuation of hedge accounting in the event of cashflow hedges
\n
-77 -66
\n
Total broken down by driver
\n
\n
Market value adjustments (MVA)
\n
80 67
\n
Change in the value of derivatives used for asset/liability management purposes
\n
-14 -197
\n
Financial instruments to which the overlay approach is applied and other
\n
96 113
\n
Dealing room
\n
245 162
\n

\n\n

\n\n
\n
\u2022 ALM hedging derivatives (recognised in hedge accounting): the interest component of these derivatives is recognised under
\n
\u2018Net interest income\u2019. Fair value changes in hedging derivatives, excluding those for which an effective cashflow hedge
\n
relationship exists, are recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019. Under fair
\n
value hedge accounting, changes in the fair value of hedged assets are also recognised under this heading, and offsetting
\n
takes place insofar as the hedge is effective. ALM hedging derivatives not recognised in hedge accounting (and therefore
\n
classified as trading instruments) are treated in the same way, except most of the related assets are not recognised at fair
\n
value (i.e. not marked-to-market).
\n
\u2022 Day 1 profit: when the transaction price in a non-active market differs from the fair value of other observable market
\n
transactions in the same instrument or from the fair value based on a valuation technique whose variables include only data
\n
from observable markets, the difference between the transaction price and the fair value (day 1 profit) is taken to profit or loss.
\n
If this is not the case (i.e. the variables do not include only data from observable markets), day 1 profit is reserved and is released
\n
in profit or loss during the life and until the maturity of the financial instrument. KBC has reserved these day 1 profits for limited
\n
amounts since January 2022.
\n
\u2022 Financial instruments to which the overlay approach is applied: see the comments under the consolidated income statement.
\n
\u2022 Foreign exchange trading includes all realised and unrealised foreign exchange results (when the monetary assets and liabilities
\n
are revalued), regardless of the IFRS portfolio, except for financial assets and liabilities measured at fair value through profit or
\n
loss, for which the revaluation is included in the fair value correction. Note that (unrealised) foreign exchange gains/losses on
\n
claims provisions (insurance) and on the financial instruments hedging the claims provisions are included under \u2018Technical
\n
charges\u2019. (Unrealised) foreign exchange gains/losses on the reinsurers\u2019 share of claims provisions and on the financial
\n
instruments hedging such provisions are included under \u2018Ceded reinsurance result\u2019.
\n
\u2022 Under IFRS 9, investment contracts (insurance) are included under \u2018Financial instruments mandatorily measured at fair value
\n
through profit or loss\u2019 in accordance with their \u2018managed on a FV basis\u2019 business model, whereas liabilities under investment
\n
contracts are included under \u2018Financial instruments at fair value through profit or loss\u2019. This resulted in amounts being offset
\n
against each other in \u2018Financial instruments MFVPL other than held for trading and overlay\u2019 and \u2018Financial instruments at fair
\n
value through profit or loss\u2019 in the above table (-1 893 million euros and +1 893 million euros in 2022 and +1 195 million euros and
\n
-1 195 million euros in 2021).
\n
\u2022 The effectiveness of the hedge is determined according to the following methods:
\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
- For fair value micro hedging, we use the dollar offset method on a quarterly basis, with changes in the fair value of the hedged
\n
item offsetting changes in the fair value of the hedging instrument within a range of 80%\u2013125%.
\n
- For cashflow hedges, we compare the designated hedging instrument with a perfect hedge of the hedged cashflows on a
\n
prospective (by BPV measurement) and retrospective basis (by comparing the fair value of the designated hedging
\n
instrument with the perfect hedge). The effectiveness of both tests must fall within a range of 80%\u2013125%.
\n
- We use the rules set out in the European version of IAS 39 (carve-out) to assess the effectiveness of fair value hedges for a
\n
portfolio of interest rate risk. IFRS does not permit net positions to be reported as hedged items, but does allow hedging
\n
instruments to be designated as a hedge of a gross asset position (or a gross liabilities position, as the case may be).
\n
Specifically, we make sure that the volume of assets (or liabilities) in each maturity bucket is greater than the volume of
\n
hedging instruments allocated to the same bucket.
\n

\n\n
\n
Note 3.4: Net realised result from debt instruments at fair value through OCI
\n
\n
\u2022 In 2022, the realised result from debt instruments at fair value through OCI was impacted by a realised loss of -22 million euros
\n
on the sale of low-yielding bonds. The realised result from debt instruments at fair value through OCI was not material in 2021.
\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
\n\n

\n
Note 3.5: Net fee and commission income
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
1 847 1 836
\n
Fee and commission income
\n
2 804 2 692
\n
Fee and commission expense
\n
-957
\n
-856
\n
Breakdown by type
\n
\n
Asset management services
\n
1 175 1 196
\n
\n
Fee and commission income 1 230 1 274
\n
\n
Fee and commission expense -54 -78
\n
Banking services
\n
1 021 950
\n
\n
Fee and commission income 1 489 1 330
\n
\n
Fee and commission expense -468 -380
\n
Distribution
\n
-349 -311
\n
\n
Fee and commission income 85 87
\n
\n
Fee and commission expense -434 -398
\n
\n\n

\n\n
\u2022 The lion\u2019s share of the fees and commissions related to lending is recognised under \u2018Net interest income\u2019 (effective interest rate
\n
calculations).
\n

\n\n

\n\n
\u2022 The acquisition of Raiffeisenbank Bulgaria mainly impacted net commission income from banking services (see Note 6.6 for
\n
more details).
\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 3.6: Other net income
\n
\n
(in
\n
millions of EUR) 2022 2021
\n
Total
\n
40 223
\n
of which gains or losses on
\n
\n
\n
Sale of financial assets measured at amortised cost -79 6
\n
\n
Repurchase of financial liabilities measured at amortised cost 0 0
\n
Other, including:
\n
119 218
\n
\n
Income from operational leasing activities 106 98
\n
\n
Income from VAB Group 50 50
\n
\n
Gain on sale of KBC Tower in Antwerp - 13
\n
\n
Settlement of legal cases (excl. ICEC-Holding) 0
\n
\n
6
\n
\n
Provisioning for tracker mortgage review 0 -18
\n
\n
Badwill - 28
\n
\n
Gain on sale of real estate subsidiary (KBC Vastgoed Nederland) 68 -
\n
\n
Arbitration proceedings against ICEC-Holding -149 -
\n
\n
\u2022 In 2022, gains or losses on the sale of financial assets measured at amortised cost mainly concerned the realised loss on the
\n
exceptional sale of low-yielding bonds in Belgium, the Czech Republic and Hungary in particular.
\n
\u2022 Provisioning for the tracker mortgage review concerns KBC Bank Ireland, which \u2013 like all major lenders in Ireland at the time \u2013
\n
had offered tracker mortgages (i.e. between 2003 and 2008). In December 2015, the Central Bank of Ireland (CBI) requested
\n
the Irish banking industry, including KBC Bank Ireland, to undertake a broad and wide-ranging examination of tracker-
\n
mortgage related issues. The purpose of the tracker mortgage review was to identify cases where clients\u2019 contractual rights
\n
under the terms of their mortgage agreements had not been fully honoured and/or lenders had not fully complied with the
\n
various requirements and standards regarding disclosure and transparency for the client. In situations where client detriment
\n
was identified from this examination, KBC Bank Ireland had to provide appropriate redress and compensation in line with the
\n
CBI \u2018Principles for Redress\u2019. The bank recognised an additional provision of 18 million euros in 2021 in this respect.
\n
\u2022 Badwill: in 2021 we recognised 28 million euros in badwill for OTP Banka Slovensko (see Note 6.6 in the 2021 Annual Report).
\n
\u2022 Arbitration proceedings against ICEC-Holding, a.s. (significant adjusting post-balance-sheet event affecting the 2022 financial
\n
statements): on 17 February 2023, \u010cSOB in the Czech Republic received an arbitral award in the arbitration proceedings against
\n
ICEC-HOLDING, a.s. \u010cSOB was being sued in the arbitration proceedings as the legal successor of Investi\u010dn\u00ed a po\u0161tovn\u00ed banka
\n
(IPB), whose business activities were acquired by \u010cSOB in 2000. The proceedings were initiated by ICEC-Holding, a.s., in 2007.
\n
The plaintiff, ICEC-HOLDING, a.s., claims that IPB breached its contractual duties in 1999, entitling ICEC-HOLDING, a.s., to
\n
damages and a contractual penalty. The claim itself is not in any way related to \u010cSOB\u2019s business activities and is to be
\n
considered part of the IPB legacy. In the delivered arbitral award, the Court of Arbitration ordered \u010cSOB to pay ICEC-HOLDING,
\n
a.s., an amount of CZK 3.7 billion, along with the costs of the proceedings in the amount of CZK 5.0 million, payable within fifteen
\n
days of the delivery of the award. The plaintiff failed in the remainder of its claim and the arbitration panel ordered it to pay
\n
\u010cSOB the costs of the proceedings in the amount of CZK 17.4 million. \u010cSOB will consider possible further legal steps leading to
\n
the revision of this award. The payment of damages and contractual penalties will have an adverse financial impact on \u010cSOB
\n
and KBC Group. In accordance with IFRS, \u010cSOB is required to provision the full amount of CZK 3.7 billion in its 2022 income
\n
statement, impacting KBC Group\u2019s 2022 income statement to the extent of -149 million euros before tax (-121 million euros after
\n
tax). The common equity ratio (Danish compromise method, fully loaded) at the end of 2022 decreases from 15.4% to 15.3%.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 3.7: Insurance results
\n
\n
\u2022 As a bank-insurer, we present our financial information on an integrated basis (i.e. banking and insurance activities combined).
\n
Information on the banking and insurance businesses is provided separately in the annual reports of KBC Bank and KBC
\n
Insurance (available at www.kbc.com). This note provides information on the insurance results alone.
\n
\u2022 The figures include intragroup transactions between bank and insurance entities (the results for insurance contracts concluded
\n
between the group\u2019s bank and insurance entities, interest that insurance companies receive on their deposits with bank entities,
\n
commissions that insurance entities pay to bank branches for sales of insurance, etc.) in order to give a more accurate view of
\n
the profitability of the insurance business. A reconciliation of the earned premiums stated in the consolidated income statement
\n
and in Note 3.7.1 is presented in the table below the overview.
\n
\u2022 Of the items stated in Note 3.7.1, only \u2018Earned premiums, insurance (before reinsurance)\u2019, \u2018Technical charges, insurance (before
\n
reinsurance)\u2019 and \u2018Ceded reinsurance result\u2019 are presented on separate lines in the group\u2019s income statement (with a minor
\n
adjustment, as shown in the smaller table below the main table). As part of our integrated bank-insurance concept, all the
\n
other lines in the insurance schedule below \u2013 together with the group\u2019s banking activities \u2013 are included in the group\u2019s income
\n
statement and related notes.
\n
\u2022 Additional information on the insurance business is provided separately in Note 3.7, Note 5.6, Note 6.5 and Note 6.7, in the \u2018How
\n
do we manage our risks?\u2019 section and in the annual report of KBC Insurance (available at www.kbc.com).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Note 3.7.1: Overview
\n
\n
Non-
\n
technical
\n\n

\n\n
(in millions of EUR)
\n
Life
\n
Non-life
\n
account
\n
Total
\n
2022
\n
\n
Earned premiums, insurance
\n
(before reinsurance) 1 163 2 054 0 3 217
\n
\n
of which changes in the provision for unearned premiums -1 -71
\n
0
\n
\n
-72
\n
Technical charges, insurance (before reinsurance)
\n
-1 071 -1 154 0 -2 225
\n
\n
Claims paid -1 399 -1 029
\n
0
\n
-2 428
\n
\n
Change in technical provisions 419 -115
\n
0
\n
\n
304
\n
\n
Other technical result -91 -9
\n
0
\n
-100
\n
Net fee and commission income
\n
-4 -403 0 -407
\n
Ceded reinsurance result
\n
-3 1 0 -2
\n
General administrative expenses
\n
-152 -285 -3 -440
\n
\n
Internal claims settlement expenses -9 -65 0 -74
\n
\n
Indirect acquisition costs -32 -68 0 -100
\n
\n
Administrative expenses -110 -152 0 -263
\n
\n
Investment management fees 0 0 -3 -3
\n
Technical result
\n
-67 213 -3 143
\n
Investment income*
\n
383 112 38 534
\n
Technical
\n
-financial result 316 325 36 677
\n
Share in results of associated companies and joint ventures
\n
- - 0 0
\n
RESULT BEFORE TAX
\n
316 325 36 677
\n
Income tax expense
\n
- - - -117
\n
RESULT AFTER TAX
\n
- - - 560
\n
\n
attributable to minority interests - - - 0
\n
\n
attributable to equity holders of the parent - - - 560
\n
2021
\n
\n
Earned premiums, insurance (before reinsurance)
\n
1 196 1 905 0 3 101
\n
\n
of which changes in the provision for unearned premiums -1 -48 0 -49
\n
Technical charges, insurance (before reinsurance)
\n
-1 150 -1 106 0 -2 256
\n
\n
Claims paid -1 163 -872 0 -2 036
\n
\n
Change in technical provisions -1 -223 0 -224
\n
\n
Other technical result 14 -10 0 4
\n
Net fee and commission income
\n
-5 -367 0 -372
\n
Ceded reinsurance result
\n
-2 27 0 25
\n
General administrative expenses
\n
-149 -255 -2 -407
\n
\n
Internal claims settlement expenses -9 -59 0 -68
\n
\n
Indirect acquisition costs -31 -68 0 -98
\n
\n
Administrative expenses -109 -128 0 -238
\n
\n
Investment management fees 0 0 -2 -2
\n
Technical result
\n
-110 204 -2 91
\n
Investment income*
\n
382 92 69 543
\n
Technical
\n
-financial result 271 296 66 634
\n
Share in results of associated companies and joint ventures
\n
\u2013 \u2013 0 0
\n
RESULT BEFORE TAX
\n
271 296 66 634
\n
Income tax expense
\n
\u2013 \u2013 \u2013 -125
\n
RESULT AFTER TAX
\n
\u2013 \u2013 \u2013 508
\n
\n
attributable to minority interests \u2013 \u2013 \u2013 0
\n
\n
attributable to equity holders of the parent \u2013 \u2013 \u2013 508
\n
* Investment income (in millions of euros, for 2022 and 2021, respectively) comprises: \u2018Net interest income\u2019 (428, 398), \u2018Net dividend income\u2019 (39, 31), \u2018Net result from financial instruments at fair
\n
value through profit or loss\u2019 (91, 117), \u2018Other net income\u2019 (-9, 1), \u2018Net realised result from debt instruments at fair value through OCI\u2019 (-16, -2) and \u2018Impairment\u2019 (1, -3). The \u2018Non-technical account\u2019
\n
also includes the results from non-insurance subsidiaries, such as VAB group and ADD, and a number of real estate companies. They have been included in the note for the \u2018insurance business\u2019
\n
given that they are KBC Insurance subsidiaries (but as they cannot be recognised under \u2018Life\u2019 or \u2018Non-life\u2019, they are included under \u2018Non-technical account\u2019). The \u2018Non-technical account\u2019 also
\n
includes the investment income from equity (i.e. mainly interest income from bonds).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n\n

\n\n
\u2022 The figures relating to earned premiums do not include investment contracts without DPF, which largely correspond to unit-
\n
linked contracts. The margin on these products is recognised under \u2018Net fee and commission income\u2019.
\n
\u2022 \u2018Non-life technical charges\u2019 consist mainly of paid claims, changes in claims provisions, changes in the deficiency provision,
\n
recourse received, changes in recourse estimations and other technical charges. \u2018Life technical charges\u2019 consist primarily of
\n
paid claims, changes in claims provisions, changes in the life insurance provision, changes in the provision for (non-unbundled)
\n
unit-linked products, bonuses (profit-sharing), changes in the deficiency provision and other technical charges.
\n
\u2022 An overview of the insurer\u2019s investment portfolio can be found in the \u2018How do we manage our risks?\u2019 section (in the \u2018Investment
\n
portfolio of KBC group insurance entities\u2019 table, which constitutes part of the financial statements).
\n
\u2022 In the vast majority of cases, internal acquisition costs are recognised immediately in the income statement (i.e. not spread).
\n
\u2022 In 2022, the non-life technical result was negatively impacted by factors including extreme weather conditions, such as flooding
\n
and storms (especially in Belgium, having a gross impact of 107 million euros, which comes down to 53 million euros after
\n
reinsurance). In 2021, the non-life technical result was negatively impacted by factors including the tornado in the Czech
\n
Republic and even more so by heavy flooding in Belgium (the gross impact of the latter totalled 110 million euros, which comes
\n
down to 87 million euros after reinsurance, 45 million euros of which above the legal limit (i.e. the ceiling introduced in Belgian
\n
law on the intervention of insurers in the event of very large floods), but which is still within the limit agreed between the Belgian
\n
insurance sector and the Walloon government). In 2022, the Life and Non-life technical result benefited from a release of
\n
technical reserves in the Czech Republic (31 million euros and 10 million euros, respectively) resulting from a reassessment of the
\n
confidence level of technical provisions.
\n
\u2022 More information on the acquisition of certain life and pension insurance policies from NN in Bulgaria in 2021 is provided in Note
\n
6.6.
\n
\u2022 See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\n
Reconciliation of the earned premiums stated in the consolidated income statement
\n
and in Note 3.7.1 (in millions of EUR)
\n
2022
\n
2021
\n
Non
\n
-life insurance (before reinsurance) \u2013 Earned premiums
\n
In the consolidated income statement
\n
2 033 1 885
\n
Addition of premiums from intragroup transactions between bank and insurer
\n
21 20
\n
In Note 3.7.1
\n
2 054 1 905
\n
Life insurance (before reinsurance)
\n
\u2013 Earned premiums
\n
In the consolidated income statement
\n
1 163 1 196
\n
Addition of premiums from intragroup transactions between bank and insurer
\n
1 1
\n
In Note 3.7.1
\n
1 163 1 196
\n

\n\n

\n\n

\n\n
\n
\n
\n\n

\n\n
Note 3.7.2: Life insurance
\n
\n
2022 2021
\n
(in millions of EUR)
\n
Total
\n
1 163 1 196
\n
By
\n
IFRS category
\n
Insurance contracts
\n
884 900
\n
Investment contracts with DPF
\n
280 296
\n
By type
\n
\n
Accepted reinsurance
\n
0 0
\n
Primary business
\n
1 163 1 196
\n
Breakdown of primary business
\n
\n
Individual premiums
\n
816 831
\n
\n
Single premiums 44 61
\n
\n
Periodic premiums 773 770
\n
Premiums under group contracts
\n
347 365
\n
\n
Single premiums 26 50
\n
\n
Periodic premiums 321 315
\n
Total sales of life insurance (including investment contracts without DPF)
\n
\n
Unit
\n
-linked 1 089 942
\n
Guaranteed
\n
-rate 996 1 022
\n
Total
\n
2 085 1 964
\n
\n
\u2022 As required under IFRS, we use deposit accounting for a number of investment contracts without DPF. This means that the
\n
premium income and technical charges from these contracts are not recognised under \u2018Earned premiums\u2019 and \u2018Technical
\n
charges\u2019, but that the margins on them are reported under \u2018Net fee and commission income\u2019. Investment contracts without DPF
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n
are more or less the same as unit-linked contracts, which in 2021 accounted for premium income of 0.9 billion euros and in 2022
\n
for premium income of 1.1 billion euros. Premium income generated by investment contracts without DPF (under deposit
\n
accounting) is included in \u2018Total sales of life insurance\u2019, as presented in the lower part of the table. These sale volumes,
\n
therefore, comprise earned insurance premiums plus premiums from contracts that are subject to deposit accounting.
\n

\n\n

\n\n
\n
\n\n
Note 3.7.3: Non-life insurance
\n
\n
Technical insurance
\n
Operating
\n
Earned premiums
\n
charges
\n
expenses
\n
(before
\n
(before
\n
(before
\n
Ceded
\n
(in millions of EUR)
\n
reinsurance)
\n
reinsurance)
\n
reinsurance)
\n
reinsurance
\n
Total
\n
2022
\n
\n
Total
\n
2 054 -1 154 -688 1 213
\n
Accepted reinsurance
\n
30 -26 -10 18 12
\n
Primary business
\n
2 024 -1 128 -678 -17 201
\n
Accident & health (classes 1 & 2, excl. industrial accidents)
\n
128 -60 -41 0 27
\n
Industrial accidents (class 1)
\n
94 -95 -18 -1 -21
\n
Motor, third
\n
-party liability (class 10) 525 -321 -156 -2 45
\n
Motor, other classes (classes 3 & 7)
\n
360 -212 -124 -1 23
\n
Shipping, aviation, transport (classes 4, 5, 6, 7, 11 & 12)
\n
9 -2 -3 -2 2
\n
Fire and other damage to property (classes 8 & 9)
\n
622 -327 -231 -5 58
\n
General third
\n
-party liability (class 13) 156 -45 -51 -6 54
\n
Credit and suretyship (classes 14 & 15)
\n
0 0 0 0 0
\n
Miscellaneous pecuniary losses
\n
(class 16) 30 -13 -11 1 7
\n
Legal assistance (class 17)
\n
65 -40 -23 0 2
\n
Assistance (class 18)
\n
36 -11 -20 0 4
\n
2021
\n
\n
Total
\n
1 905 -1 106 -622 27 204
\n
Accepted reinsurance
\n
27 -11 -9 -3 4
\n
Primary business
\n
1 878 -1 095 -614 30 200
\n
Accident & health (classes 1 & 2, excl. industrial accidents)
\n
123 -53 -40 0 28
\n
Industrial accidents (class 1)
\n
89 -77 -16 0 -4
\n
Motor, third
\n
-party liability (class 10) 512 -305 -148 -4 55
\n
Motor, other classes (classes 3 & 7)
\n
320 -179 -108 3 36
\n
Shipping, aviation, transport (classes 4, 5, 6, 7, 11 & 12)
\n
7 -2 -2 -1 1
\n
Fire and other damage to property (classes 8 & 9)
\n
569 -343 -211 28 44
\n
General third
\n
-party liability (class 13) 142 -92 -46 1 6
\n
Credit and suretyship (classes 14 & 15)
\n
0 0 0 0 0
\n
Miscellaneous pecuniary losses (class 16)
\n
22 -9 -8 3 9
\n
Legal assistance (class 17)
\n
62 -28 -22 0 13
\n
Assistance (class 18)
\n
31 -6 -13 0 12
\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag807": { "value": "\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
\n
Note 3.1: Net interest income
\n
(in millions of EUR)
\n
2022
\n
2021
\n
Total
\n
5 161 4 451
\n
Interest income
\n
11 226 6 320
\n
Interest income on financial instruments calculated using the effective interest rate
\n
method
\n
\n
Financial assets at amortised cost 7 973 4 797
\n
\n
Financial assets at fair value through OCI 251 286
\n
\n
Hedging derivatives 1 838 355
\n
\n
Financial liabilities (negative interest rate) 289 425
\n
\n
Other 130 25
\n
Interest income on
\n
other financial instruments
\n
\n
Financial assets MFVPL other than held for trading 35 24
\n
\n
Financial assets held for trading 710 407
\n
\n
Of which economic hedges 582 367
\n
\n
Other financial assets at fair value through profit or loss 0 0
\n
Interest expense
\n
-6 064 -1 869
\n
Interest expense on financial instruments calculated using the effective interest rate method
\n
\n
\n
Financial liabilities at amortised cost -2 320 -534
\n
\n
Hedging derivatives -1 972 -604
\n
\n
Financial assets (negative interest rate) -94 -253
\n
\n
Other -5 -7
\n
Interest expense on other financial instruments
\n
\n
\n
Financial liabilities held for trading -1 639 -459
\n
\n
Of which economic hedges -1 595 -414
\n
\n
Other financial liabilities at fair value through profit or loss -33 -11
\n
\n
Net interest expense relating to defined benefit plans -1 -1
\n
\n
\u2022 \u2018Financial liabilities (negative interest rate)\u2019 and \u2018Financial assets (negative interest rate)\u2019: these rates relate mainly to
\n
transactions with central banks, interbank and professional counterparties, corporate clients, and targeted long-term
\n
refinancing operations (TLTRO). More information on TLTRO can be found in Note 4.1.
\n
\u2022 The increase in interest income and interest expense from \u2018Hedging derivatives\u2019, \u2018Financial assets held for trading (of which
\n
economic hedges)\u2019 and \u2018Financial liabilities held for trading (of which economic hedges)\u2019 relates to a change in presentation of
\n
the negative interest on derivatives (at KBC Bank, in accordance with reporting on a solo basis (\u2018Schema A\u2019) under Belgian
\n
GAAP, resulting in an increase in both interest income and interest expense of 450 million euros in 2022), and to the overall
\n
increase in interest rates in 2022.
\n

\n
\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n\n
Note 3.2: Dividend income
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
59 45
\n
Equity
\n
instruments MFVPL other than held for trading 35 28
\n
Equity instruments held for trading
\n
10 11
\n
Equity instruments at FVOCI
\n
15 6
\n

\n\n

\n\n

\n\n

\n\n

\n\n\n
4.0 Notes on the financial assets and liabilities on the balance sheet
\n
\n
\n
Sale of activities in Ireland: the financial assets and liabilities of KBC Bank Ireland that are part of the sale transaction(s) have
\n
been included under \u2018Non-current assets held for sale and disposal groups\u2019 and \u2018Liabilities associated with disposal groups\u2019 since
\n
the third quarter of 2021 (see Note 5.11 and Note 6.6 for more information) and have therefore not been included in the following
\n
tables.
\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.1: Financial assets and liabilities, breakdown by portfolio and product
\n
(in millions of EUR)
\n
Measured
\n
at
\n
amortised
\n
cost (AC)
\n
Measured
\n
at fair
\n
value
\n
through
\n
other
\n
compre-
\n
hensive
\n
income
\n
(FVOCI)
\n
Mandatorily
\n
measured at
\n
fair value
\n
through
\n
profit or loss
\n
(MFVPL) excl.
\n
HFT and
\n
overlay
\n
Measured at
\n
fair value \u2013
\n
overlay
\n
approach
\n
(overlay)
\n
Held for
\n
trading
\n
(HFT)
\n
Desig-
\n
nated at
\n
fair value
\n
1
\n
(FVO)
\n
Hedging
\n
Deriva-
\n
tives
\n
Total
\n
Total pro
\n
forma
\n
excluding
\n
KBC Bank
\n
Bulgaria
\n
(formerly
\n
Raiffeisen-
\n
bank
\n
Bulgaria)
\n
FINANCIAL ASSETS, 31-12-2022
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
4 240 0 13 0 1 0 0 4 254
\n
4 203
\n
of which loans and advances to banks repayable on
\n
demand and term loans to banks at not more than three
\n
months
\n
\n
1 237 1 237
\n
Loans and advances to customers (excluding reverse
\n
repos)
\n
177 427 0 625 0 0 0 0 178 053
\n
174 083
\n
Trade receivables
\n
2 818
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 818
\n
2 729
\n
Consumer credit
\n
6 222
\n
0
\n
430
\n
0
\n
0
\n
0
\n
0
\n
6 652
\n
5 977
\n
Mortgage loans
\n
73 465
\n
0
\n
196
\n
0
\n
0
\n
0
\n
0
\n
73 660
\n
72 891
\n
Term loans
\n
82 894
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
82 894
\n
80 744
\n
Finance lease
\n
6 368
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
6 368
\n
6 117
\n
Current account advances
\n
4 886
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 886
\n
4 885
\n
Other
\n
774
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
774
\n
740
\n
Reverse repos
\n
2
\n
\n
20 186
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 219
\n
20 219
\n
with credit institutions and investment firms
\n
20 018
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 050
\n
20 050
\n
with customers
\n
168
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
168
\n
168
\n
Equity instruments
\n
0
\n
315
\n
13
\n
1 237
\n
430
\n
0
\n
0
\n
1 994
\n
1 989
\n
Investment contracts (insurance)
\n
6
\n
\n
0
\n
0
\n
12 771
\n
0
\n
0
\n
0
\n
0
\n
12 771
\n
12 771
\n
Debt securities
\n
52 030
\n
11 813
\n
17
\n
0
\n
1 728
\n
0
\n
0
\n
65 588
\n
64 871
\n
Public bodies
\n
44 219
\n
8 135
\n
0
\n
0
\n
1 667
\n
0
\n
0
\n
54 021
\n
53 390
\n
Credit institutions and investment firms
\n
5 160
\n
1 621
\n
0
\n
0
\n
9
\n
0
\n
0
\n
6 790
\n
6 747
\n
Corporates
\n
2 651
\n
2 057
\n
17
\n
0
\n
53
\n
0
\n
0
\n
4 777
\n
4 733
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
6 279
\n
0
\n
542
\n
6 821
\n
6 813
\n
3
\n
\n
Other
\n
1 561
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
1 561
\n
1 561
\n
Total
\n
255 444
\n
12 128
\n
13 439
\n
1 237
\n
8 471
\n
0
\n
542
\n
291 262
\n
286 511
\n
FINANCIAL ASSETS, 31-12-2021
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
7 920 0 0 0 1 0 0 7 920
\n
-
\n
of which loans and advances to banks repayable on demand
\n
and term loans to banks at not more than three months
\n
3 146 -
\n
Loans and advances to customers (excl. reverse repos)
\n
159 167
\n
0
\n
560
\n
0
\n
0
\n
0
\n
0
\n
159 728
\n
-
\n
Trade receivables
\n
2 090
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 090
\n
-
\n
Consumer credit
\n
5 470
\n
0
\n
381
\n
0
\n
0
\n
0
\n
0
\n
5 851
\n
-
\n
Mortgage loans
\n
67 486
\n
0
\n
179
\n
0
\n
0
\n
0
\n
0
\n
67 665
\n
-
\n
Term loans
\n
72 998
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
72 998
\n
-
\n
Finance lease
\n
5 815
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
5 815
\n
-
\n
Current account advances
\n
4 819
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 819
\n
-
\n
Other
\n
490
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
490
\n
-
\n
2
\n
-
\n
\n
Reverse repos
\n
24 978
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 978
\n
with credit institutions and investment firms
\n
24 861
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 861
\n
-
\n
with customers
\n
117
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
117
\n
-
\n
Equity instruments
\n
0
\n
321
\n
8
\n
1 366
\n
448
\n
0
\n
0
\n
2 144
\n
-
\n
6
\n
-
\n
\n
Investment contracts (insurance)
\n
0
\n
0
\n
14 620
\n
0
\n
0
\n
0
\n
0
\n
14 620
\n
Debt securities
\n
47 172
\n
15 503
\n
17
\n
0
\n
2 958
\n
0
\n
0
\n
65 650
\n
-
\n
Public bodies
\n
41 475
\n
10 514
\n
0
\n
0
\n
2 517
\n
0
\n
0
\n
54 507
\n
-
\n
Credit institutions and investment firms
\n
3 310
\n
2 245
\n
0
\n
0
\n
357
\n
0
\n
0
\n
5 912
\n
-
\n
Corporates
\n
2 387
\n
2 744
\n
17
\n
0
\n
84
\n
0
\n
0
\n
5 232
\n
-
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
5 443
\n
0
\n
283
\n
5 727
\n
-
\n
3
\n
-
\n
\n
Other
\n
892
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
892
\n
Total
\n
240 128
\n
15 824
\n
15 205
\n
1 366
\n
8 850
\n
0
\n
283
\n
281 658
\n
-
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
(in millions of EUR)
\n
Measured at
\n
amortised
\n
cost
\n
(AC)
\n
Held for
\n
trading (HFT)
\n
Designated at
\n
fair value (FVO)
\n
\n
Hedging
\n
derivatives
\n
Total
\n
Total pro forma
\n
excluding KBC
\n
Bank Bulgaria
\n
(formerly
\n
Raiffeisenbank
\n
Bulgaria)
\n
FINANCIAL
\n
LIABILITIES, 31-12-2022
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
24 819 0 0 0 24 819
\n
24 737
\n
of which deposits from banks repayable on demand
\n
\n
\n
\n
\n
\n
\n
\n
5 085 5 085
\n
Deposits from customers and debt
\n
securities (excl. repos)
\n
\n
251 496 44 1 205 0 252 746
\n
247 585
\n
\n
Demand deposits 122 053 0 0 0 122 053 117 401
\n
\n
Time deposits 22 280 44 73 0 22 397 21 960
\n
\n
Savings accounts 76 979 0 0 0 76 979 76 954
\n
\n
Special deposits 2 710 0 0 0 2 710 2 663
\n
\n
Other deposits 268 0 0 0 268 268
\n
Subtotal deposits from customers (excl. repos)
\n
224 290 44 73 0 224 407 219 246
\n
\n
Certificates of deposit 9 321 0 1 0 9 322 9 322
\n
\n
Savings certificates 104 0 0 0 104 104
\n
\n
Non-convertible bonds 15 621 0 1 006 0 16 627 16 627
\n
\n
Non-convertible subordinated liabilities 2 160 0 126 0 2 285 2 285
\n
Repos
\n
4
\n
11 091 7 0 0 11 097
\n
11 097
\n
\n
with credit institutions and investment firms 10 852 7 0 0 10 859 10 859
\n
\n
with customers 239 0 0 0 239 239
\n
Liabilities under investment contracts
\n
6
\n
0 0 12 002 0 12 002
\n
12 002
\n
Derivatives
\n
0 8 038 0 577 8 615
\n
8 605
\n
Short positions
\n
0 1 007 0 0 1 007
\n
1 007
\n
\n
In equity instruments 0 5 0 0 5 5
\n
\n
In debt securities 0 1 002 0 0 1 002 1 002
\n
Other
\n
5
\n
2 448 0 0 0 2 448
\n
2 370
\n
Total
\n
289 854 9 096 13 207 577 312 735
\n
307 403
\n
FINANCIAL LIABILITIES, 31
\n
-12-2021
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
38 047 0 0 0 38 047
\n
-
\n
of which deposits from banks repayable on demand 4 695 -
\n
Deposits from
\n
customers and debt securities (excl. repos)
\n
\n
224 759 21 1 312 0 226 093
\n
-
\n
\n
Demand deposits 112 097 0 0 0 112 097
\n
-
\n
\n
Time deposits 9 106 21 60 0 9 187
\n
-
\n
\n
Savings accounts 74 801 0 0 0 74 801
\n
-
\n
\n
Special deposits 2 962 0 0 0 2 962
\n
-
\n
\n
Other deposits 428 0 0 0 428
\n
-
\n
Subtotal deposits from customers (excl. repos)
\n
199 395 21 60 0 199 476
\n
-
\n
\n
Certificates of deposit 6 273 0 0 0 6 273
\n
-
\n
\n
Savings certificates 253 0 0 0 253
\n
-
\n
\n
Non-convertible bonds 15 892 0 1 118 0 17 011
\n
-
\n
\n
Non-convertible subordinated liabilities 2 946 0 134 0 3 080
\n
-
\n
Repos
\n
4
\n
3 293 2 0 0 3 295
\n
-
\n
\n
with credit institutions and investment firms 2 888 2 0 0 2 890
\n
-
\n
\n
with customers 405 0 0 0 405
\n
-
\n
Liabilities under investment
\n
contracts
\n
6
\n
0 0 13 603 0 13 603
\n
-
\n
Derivatives
\n
0 5 619 0 1 094 6 713
\n
-
\n
Short positions
\n
0 1 628 0 0 1 628
\n
-
\n
\n
In equity instruments 0 18 0 0 18
\n
-
\n
\n
In debt securities 0 1 611 0 0 1 611
\n
-
\n
Other
\n
5
\n
2 288 0 0 0 2 288
\n
-
\n
Total
\n
268 387 7 271 14 916 1 094 291 667
\n
-
\n
1 The carrying value comes close to the maximum credit exposure.
\n
2 The amount of the reverse repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out).
\n
3 Financial assets not included under \u2018Loans and advances to customers\u2019 as they are not directly related to commercial lending.
\n
4 The amount of the repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out), with the assets being partly reflected on the balance sheet
\n
and partly obtained through reverse repo transactions.
\n
5 Financial liabilities not included under deposits from customers as they are not directly related to commercial deposit acquisition.
\n
6 The difference between \u2018Investment contracts (insurance)\u2019 and \u2018Liabilities under investment contracts\u2019 is accounted for by the presentation of non-unbundled investment contracts that are
\n
included under \u2018Investment contracts (insurance)\u2019 on the financial assets side, but are included under \u2018Technical provisions (before reinsurance)\u2019 on the liabilities side.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n\n
\u2022 \u2018Non-convertible bonds\u2019 comprise mainly KBC Bank, KBC Group, \u010cSOB and KBC IFIMA issues. They are usually recognised under
\n
\u2018Measured at amortised cost\u2019. However, if they contain closely related embedded derivatives, they are recorded under
\n
\u2018Designated at fair value\u2019 (see accounting policies). This item also includes three green bonds (for 500, 500 and 750 million euros
\n
each) and a social bond (for 750 million euros), which have been recognised at amortised cost.
\n
\u2022 More information on major new debt issues or redemptions is provided under the \u2018Consolidated cashflow statement\u2019.
\n
\u2022 \u2018Deposits from credit institutions and investment firms\u2019 include funding obtained from the ECB\u2019s TLTRO programme (15.4 billion
\n
euros at year-end 2022, 9.1 billion euros less than at year-end 2021 on account of redemptions). KBC calculates these deposits
\n
using the effective interest rate method, with the rate being adjusted should we fail to meet the conditions (similar to a floating
\n
rate instrument), as per paragraph B.5.4.5 of IFRS 9. KBC\u2019s management has reasonable assurance that KBC will comply with
\n
the conditions attached (including the level of lending to households and non-financial companies) and hence the interest has
\n
accordingly been recognised (a gross amount of 112 million euros in interest income (negative interest rate) in 2022 and 242
\n
million euros in 2021).
\n
\u2022 Transferred financial assets that continue to be recognised in their entirety: KBC regularly lends and/or sells securities with the
\n
commitment to buy them back at a later date (repo transactions). Securities lent or sold with such a commitment are transferred
\n
to the counterparty, and, in exchange, KBC receives cash or other financial assets. However, KBC retains the main risks and
\n
income relating to these securities, and, therefore, continues to recognise them on its balance sheet. In addition, a financial
\n
liability is recognised equalling the cash received.
\n
\n
Transferred financial assets that continue to be recognised in their entirety (carrying value, in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Transferred financial assets that continue to be recognised in their entirety: repo transactions and securities lent out
\n
17 425 13 762
\n
Held for
\n
trading 960 1 221
\n
Fair value through OCI
\n
860 1 474
\n
Amortised cost
\n
15 605 11 067
\n
Associated financial liability
\n
10 534 2 936
\n
Held for trading
\n
689 335
\n
Fair value through OCI
\n
609 362
\n
Amortised cost
\n
9 236 2 239
\n
\n
\u2022 It should be noted that KBC has more transferred financial assets on its balance sheet than repo transactions, due to the fact
\n
that the cash legs of certain repo transactions are offset against reverse repo transactions if they are carried out with the same
\n
counterparty, in the same currency and with the same maturity date. Moreover, there is a legally enforceable right, and an
\n
intention, to settle the transactions on a net basis or to realise the financial asset and settle the financial liability simultaneously.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria in 2022 is provided in Note 6.6.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. We report on estimated greenhouse gas emissions
\n
associated with lending and other activities and have defined objectives for reducing the greenhouse gas intensity of loans
\n
we have provided to the energy sector, electricity producers and the real estate sector, mortgage loans and loans provided
\n
for commercial residential real estate, as well as loans provided to the automotive industry and financial and operational car
\n
leasing (see Note 6.2), the agricultural sector, and cement, steel and aluminium producers. See \u2018Focus on climate\u2019 in the \u2018Report
\n
of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our Climate Report and
\n
\n
our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Note 4.2: Financial assets and liabilities, breakdown by portfolio and quality
\n
\n\n

\n\n
Note 4.2.1: Impaired financial assets
\n
\n
\n
Carrying value before
\n
Carrying value after
\n
(in millions of EUR)
\n
impairment
\n
Impairment
\n
impairment
\n
31
\n
-12-2022
\n
*
\n
204 473 -2 619 201 853
\n
Financial assets at amortised cost: Loans and advances
\n
Stage 1 (12
\n
-month ECL) 163 846 -110 163 736
\n
Stage 2 (lifetime ECL)
\n
36 577 -635 35 941
\n
Stage 3 (lifetime ECL)
\n
3 616 -1 796 1 820
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
434
\n
-77
\n
357
\n
Financial assets at amortised cost: Debt securities
\n
52 048 -18 52 030
\n
Stage 1 (12
\n
-month ECL) 51 909 -7 51 903
\n
Stage 2 (lifetime ECL)
\n
130 -4 126
\n
Stage 3 (lifetime ECL)
\n
8 -7 1
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
Financial assets at fair value through OCI: Debt securities
\n
11 818 -4 11 813
\n
Stage 1 (12
\n
-month ECL) 11 753 -3 11 750
\n
Stage 2 (lifetime ECL)
\n
65 -2 63
\n
Stage 3 (lifetime ECL)
\n
0 0 0
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
31
\n
-12-2021
\n
*
\n
194 638 -2 573 192 065
\n
Financial assets at amortised cost: Loans and advances
\n
Stage 1 (12
\n
-month ECL) 167 426 -104 167 322
\n
Stage 2 (lifetime ECL)
\n
23 131 -507 22 624
\n
Stage 3 (lifetime ECL)
\n
3 493 -1 848 1 645
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
588
\n
-114
\n
474
\n
Financial assets at amortised cost: Debt securities
\n
47 181 -9 47 172
\n
Stage 1 (12
\n
-month ECL) 47 155 -5 47 150
\n
Stage 2
\n
(lifetime ECL) 24 -3 21
\n
Stage 3 (lifetime ECL)
\n
1 -1 1
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
Financial assets at fair value through OCI: Debt securities
\n
15 509 -6 15 503
\n
Stage 1 (12
\n
-month ECL) 15 418 -3 15 415
\n
Stage 2
\n
(lifetime ECL) 91 -3 88
\n
Stage 3 (lifetime ECL)
\n
0 0 0
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
* The carrying value after impairment in this note corresponds to the sum of the \u2018Loans and advances to credit institutions and investment firms (excl. reverse repos)\u2019, \u2018Loans and advances to
\n
customers (excl. reverse repos)\u2019 and \u2018Reverse repos\u2019 in Note 4.1 (in the \u2018Measured at amortised cost\u2019 column).
\n

\n\n

\n\n

\n\n

\n\n

\n\n\n

\n\n

\n\n
\u2022 Acquisition of Raiffeisenbank Bulgaria (now renamed KBC Bank Bulgaria):
\n
\u25e6 The carrying value before impairment at year-end 2022 included 4.7 billion euros for KBC Bank Bulgaria, of which 4.1 billion
\n
euros in loans and advances (3.2, 0.8 and 0.1 billion euros in Stages 1, 2 and 3, respectively), 0.5 billion euros in debt securities
\n
at amortised cost and 0.1 billion euros in debt securities at fair value through OCI. KBC Bank Bulgaria\u2019s portfolios account
\n
for 1.8% of the entire KBC group.
\n
\u25e6 Impairment at year-end 2022 included 113 million euros for KBC Bank Bulgaria, of which 106 million euros in loans and
\n
advances (10, 30 and 66 million euros in Stages 1, 2 and 3, respectively), and 7 million euros in debt securities at amortised
\n
cost. These impairment valuations partly deviate from the methodology set out in the accounting policies (particularly as
\n
regards the forward-looking information, IFRS 9 models and criteria used to determine a significant increase in credit risk).
\n
The integration of KBC Bank Bulgaria in 2023 will also involve the alignment of the accounting policies at KBC Bank Bulgaria
\n
for determining impairment.
\n
\u2022 Carrying value before impairment of loans and advances at amortised cost: increase of 9.8 billion euros in 2022, due primarily
\n
to:
\n
\u25e6 The acquisition of Raiffeisenbank Bulgaria (see above).
\n
\u25e6 An organic net increase in the loan portfolio (mainly mortgage loans and term loans, in all countries).
\n
\u25e6 This increase was partly offset by a decrease of the carrying value before impairment of loans and advances (excluding
\n
reverse repos) and the reverse repos to credit institutions and investment firms.
\n
\u2022 Carrying value before impairment of loans and advances at amortised cost in \u2018Stage 2\u2019: increase of 13.4 billion euros in 2022,
\n
due primarily to:
\n
\u25e6 The migration to \u2018Stage 2\u2019 based on a collective approach of \u2018Stage 1\u2019 loans (see also Note 1.4) that have indirect exposure
\n
to Russia, Ukraine and Belarus (i.e. as a result of the military conflict; 2.8 billion euros) and/or are vulnerable to emerging
\n
risks (11.3 billion euros).
\n
\u25e6 The acquisition of Raiffeisenbank Bulgaria (see above).
\n
\u25e6 This was partly offset by the discontinuation of the collective \u2018Stage 2\u2019 transfer of loans vulnerable to coronavirus-related
\n
risks (3.1 billion euros in receivables that had been moved to \u2018Stage 2\u2019 at year-end 2021). The remaining coronavirus-related
\n
risks in our loan portfolio are included in the regular indicators used to assess considerable credit risk increases (probability
\n
of default, forbearance and the number of days past due), which are no longer concealed by the moratoria.
\n
\u25e6 Please note that the migration of loans from \u2018Stage 1\u2019 to \u2018Stage 2\u2019 based on the collective approach resulted in a net
\n
decrease of 3.6 billion euros of the carrying value before impairment of loans and advances at amortised cost in \u2018Stage 1\u2019,
\n
which was partly offset by the organic net increase in the loan portfolio and the acquisition of Raiffeisenbank Bulgaria.
\n
\u25e6 Also note that the migration predicted in the management overlay at the time is not reflected in the 2021 year-end figures,
\n
because it was determined based on a collective approach and, therefore, could not be individually linked to specific
\n
loans. Taking into account the impact of the management overlay on staging at year-end 2021, this would result in a
\n
carrying value before impairment of loans and advances of an estimated 165.4, 24.3 and 4.3 billion euros in Stages 1, 2 and
\n
3, respectively (or net migration of 1% of the total portfolio from \u2018Stage 1\u2019 to \u2018Stage 2\u2019 and 0.4% from \u2018Stage 1\u2019 and \u2018Stage 2\u2019
\n
to \u2018Stage 3\u2019).
\n
\u2022 Carrying value before impairment of debt securities at amortised cost: increase of 4.9 billion euros in 2022, almost entirely in
\n
\u2018Stage 1\u2019:
\n
\u25e6 More than half of this increase concerns (issues by) public bodies, one third concerns credit institutions and investment
\n
firms, and the remaining part concerns corporates, and related primarily to net investments.
\n
\u2022 Impairment: increase of 0.1 billion euros in 2022, due to:
\n
\u25e6 The acquisition of Raiffeisenbank Bulgaria (see above).
\n
\u25e6 For information on other changes, see Note 3.10.
\n
\u2022 See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\u2022 In 2022, \u2018Stage 2\u2019 and \u2018Stage 3\u2019 financial assets with a net carrying value of 471 million euros have been subject to modifications
\n
in the past that did not result in derecognition. The gross carrying value of \u2018Stage 1\u2019 financial assets subject to modifications in
\n
the past that did not result in derecognition came to 1 088 million euros in 2022. The corresponding figures for 2021 were 1 712
\n
million euros and 509 million euros, respectively. Modification gains or losses are recognised under impairment (see Note 3.10).
\n
\u2022 In 2022, financial assets at amortised cost with a gross carrying value of 80 million euros were written off, but were still subject
\n
to enforcement activities; the corresponding figure in 2021 was 72 million euros.
\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.2.2: Impairment details
\n
\n
\n
\n
Subject to lifetime ECL
\n
Stage 1
\n
Stage 2
\n
Stage 3
\n
(purchased or
\n
\n
Subject to 12-
\n
Subject to lifetime
\n
Subject to lifetime
\n
originated credit
\n
(in millions of EUR)
\n
month ECL
\n
ECL
\n
ECL
\n
impaired)
\n
Total
\n
2022
\n
\n
LOANS AND ADVANCES AT AMORTISED COST
\n
Impairment on 1 January
\n
104
\n
507
\n
1 848
\n
114
\n
2 573
\n
1
\n
-6 96 147 -8 230
\n
Movements with an impact on results
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) -22 158 60 0 197
\n
\n
Stage 2 (lifetime ECL) 4 -83 95 0 16
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 26 -54 -3 -31
\n
New financial assets
\n
2
\n
\n
40
\n
43
\n
10
\n
0
\n
93
\n
\n
Changes in risk parameters during the reporting period -16 -23 90 -5 48
\n
\n
Changes in the model or methodology -1 3 0 0 2
\n
Derecognised financial assets
\n
3
\n
-10 -26 -59 -1 -97
\n
\n
\n
Other -1 -2 4 0 2
\n
Movements without an impact on results
\n
12 32 -199 -29 -184
\n
\n
Derecognised financial assets
\n
3
\n
0 -1 -296 -7 -304
\n
Changes in the scope of consolidation
\n
14
\n
32
\n
88
\n
0
\n
133
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
\n
Other -2 1 9 -21 -13
\n
Impairment on 31 December
\n
110 635 1 796 77 2 619
\n
DEBT
\n
SECURITIES AT AMORTISED COST
\n
Impairment on 1 January
\n
5 3 1 0 9
\n
1
\n
2 0 1 0 3
\n
Movements with an impact on results
\n
Transfer of financial assets
\n
\n
\n
\n
\n
\n
\n
Stage 1 (12-month ECL) 0 0 0 0 0
\n
\n
Stage 2 (lifetime ECL) 0 -1 1 0 0
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
1 0 0 0 1
\n
\n
Changes in risk parameters during the reporting period 0 1 0 0 1
\n
Changes in the model or methodology
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
\n
Other 0 0 0 0 0
\n
Movements without an impact on results
\n
0 1 5 0 6
\n
\n
Derecognised financial assets
\n
3
\n
0 0 -1 0 -1
\n
\n
Changes in the scope of consolidation 0 1 6 0 7
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
Other
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Impairment on 31 December
\n
7 4 7 0 18
\n
DEBT SECURITIES AT FAIR VALUE THROUGH OCI
\n
\n
Impairment on 1 January
\n
3 3 0 0 6
\n
Movements with an impact on results
\n
1
\n
0 -1 0 0 -1
\n
\n
Transfer of financial assets
\n
Stage 1 (12-month ECL)
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Stage 2 (lifetime ECL)
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
0 0 0 0 0
\n
\n
Changes in risk parameters during the reporting period 0 -1 0 0 -1
\n
\n
Changes in the model or methodology 0 0 0 0 0
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
Other
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Movements without an impact on results
\n
0 0 0 0 0
\n
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
Changes in the scope of consolidation 0 0 0 0 0
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
\n
Other 0 0 0 0 0
\n
Impairment on 31 December
\n
3 2 0 0 4
\n

\n\n

\n\n

\n\n

\n\n

\n\n
2021
\n
LOANS AND ADVANCES AT AMORTISED COST
\n
Impairment on 1 January
\n
168 992 2 517 18 3 695
\n
Movements with an impact on results
\n
1
\n
-62 -454 242 -2 -276
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) -12 99 42 0 129
\n
\n
Stage 2 (lifetime ECL) 6 -116 80 0 -30
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL)
\n
0
\n
20
\n
-36
\n
0
\n
-16
\n
\n
New financial assets
\n
2
\n
25 14 7 0 45
\n
\n
Changes in risk parameters during the reporting period -57 -426 214 1 -269
\n
\n
Changes in the model or methodology 0 -1 0 0 -1
\n
\n
Derecognised financial assets
\n
3
\n
-24 -48 -84 -2 -158
\n
\n
Other 0 2 20 0 22
\n
Movements without an
\n
impact on results -2 -32 -911 98 -847
\n
3
\n
Derecognised financial assets
\n
\n
0
\n
0
\n
-286
\n
-12
\n
-299
\n
\n
Changes in the scope of consolidation 0 0 4 0 4
\n
\n
Transfers under IFRS 5 -3 -31 -540 0 -574
\n
\n
Other 1 0 -90 110 21
\n
Impairment on 31 December
\n
104 507 1 848 114 2 573
\n
DEBT SECURITIES AT AMORTISED COST
\n
\n
Impairment on 1 January
\n
6
\n
1
\n
2
\n
0
\n
9
\n
Movements with an impact on results
\n
1
\n
\n
-1
\n
2
\n
0
\n
0
\n
1
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) 0 0 0 0 0
\n
\n
Stage 2 (lifetime ECL) 0 0 0 0 0
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
1 0 0 0 1
\n
Changes in risk parameters during the reporting period
\n
-2
\n
3
\n
0
\n
0
\n
1
\n
\n
Changes in the model or methodology 0 0 0 0 0
\n
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 -1
\n
\n
Other 0 0 0 0 0
\n
Movements without an
\n
impact on results 0 0 -1 0 -1
\n
Derecognised financial assets
\n
3
\n
0 0 -1 0 -1
\n
\n
\n
Changes in the scope of consolidation 0 0 0 0 0
\n
Transfers under IFRS 5
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
Other 0 0 0 0 0
\n
Impairment on 31
\n
December 5 3 1 0 9
\n
DEBT SECURITIES AT FAIR VALUE THROUGH OCI
\n
\n
Impairment on 1 January
\n
6 3 0 0 9
\n
Movements with an impact on results
\n
1
\n
-3 0 0 0 -4
\n
Transfer of financial assets
\n
\n
\n
\n
\n
\n
\n
Stage 1 (12-month ECL) 0 0 0 0 0
\n
\n
Stage 2 (lifetime ECL) 0 -1 0 0 -1
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
0 0 0 0 0
\n
\n
Changes in risk parameters during the reporting period -3 0 0 0 -3
\n
\n
Changes in the model or methodology 0 0 0 0 0
\n
Derecognised financial assets
\n
3
\n
\n
-1
\n
0
\n
0
\n
0
\n
-1
\n
\n
Other 0 0 0 0 0
\n
Movements without an impact on
\n
results 0 0 0 0 0
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
\n
Changes in the scope of consolidation 0 0 0 0 0
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
\n
Other 0 0 0 0 0
\n
Impairment on 31 December
\n
3
\n
3
\n
0
\n
0
\n
6
\n
1 Amounts recovered in respect of loans that have already been written off are recycled to the income statement and recorded as \u2018Impairment on financial assets at amortised cost and at
\n
fair value through OCI\u2019. However, they have not been included in this table since they do not have any impact on impairment losses on the balance sheet.
\n
2 Also includes impairment related to new financial assets resulting from off-balance-sheet commitments and financial guarantees already given being called.
\n
3 Derecognition without an impact on results occurs when the impairment adjustment has already been made upfront (for example, at the moment of the sale agreement (disposals) or before
\n
the write-off). Derecognition with an impact on results occurs when the impairment adjustment takes place at the same time (for instance, in the case of debt forgiveness).
\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n
\u2022 The change in impairment in 2022 relates mainly to the reserve set aside to cover geopolitical and emerging risks and the full
\n
reversal of the remaining reserves set aside for the coronavirus crisis (see Note 1.4) and the changes in the scope of
\n
consolidation, partly offset by the elimination of the impairment on derecognised financial assets.
\n
\u2022 Changes in the scope of consolidation: relates mainly to the acquisition of Raiffeisenbank Bulgaria.
\n
\u2022 The vast majority of the staging is triggered by a collective management assessment and relative changes in PD (see the multi-
\n
tier approach outlined in Note1.2 under \u2018Significant increase in credit risk since initial recognition\u2019).
\n
\u2022 For information on provisions for commitments and financial guarantees, see Note 5.7.2.
\n
\u2022 For information regarding the impact of changes in impairment on the income statement, see Note 3.10.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. Based on internal management reports, the
\n
composition and quality of the loan portfolio is set out in detail in the \u2018How do we manage our risks?\u2019 section (under \u2018Credit
\n
risk\u2019). All parts of that particular section which have been audited by the statutory auditor are listed at the start of the section.
\n

\n\n

\n\n

\n\n

\n\n
\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.3: Maximum credit exposure and offsetting
\n
\n
Collateral and other
\n
Maximum credit
\n
credit enhancements
\n
(in millions of EUR)
\n
\n
exposure (A)
\n
received (B) Net (A-B)
\n
31
\n
-12-2022
\n
\n
\n
\n
Subject to impairment
\n
326 705 132 743 193 962
\n
\n
of which Stage 3 \u2018non-performing\u2019 (AC and FVOCI)
\n
2 106
\n
1 550
\n
556
\n
Debt securities
\n
63 843 98 63 745
\n
Loans and advances (excl. reverse
\n
repos) 181 668 99 415 82 252
\n
Reverse repos
\n
20 186 20 131 55
\n
Other financial assets
\n
1 561 0 1 561
\n
Off
\n
-balance-sheet liabilities 59 447 13 099 46 348
\n
\n
Irrevocable
\n
38 832
\n
6 741
\n
32 091
\n
\n
Revocable
\n
20 616
\n
6 358
\n
14 258
\n
Not
\n
subject to impairment 9 239 2 213 7 026
\n
Debt securities
\n
1 745 0 1 745
\n
Loans and advances (excl. reverse repos)
\n
639 593 46
\n
\n
of which designated upon initial recognition at fair value through profit or loss (FVO)
\n
0 0 0
\n
Reverse repos
\n
33 33 0
\n
Derivatives
\n
6 821 1 588 5 234
\n
Other financial assets
\n
0 0 0
\n
Off
\n
-balance-sheet liabilities 0 0 0
\n
Total
\n
335 944 134 956 200 987
\n
31
\n
-12-2021
\n
\n
\n
\n
Subject to impairment
\n
309 988 127 140 182 848
\n
\n
of which Stage 3 \u2018non-performing\u2019 (AC and FVOCI) 2 072 1 584 488
\n
Debt securities
\n
62 675 93 62 582
\n
Loans and advances (excl. reverse repos)
\n
167 087 90 770 76 317
\n
Reverse repos
\n
24 978 24 877 101
\n
Other financial assets
\n
892 0 892
\n
Off
\n
-balance-sheet liabilities 54 357 11 400 42 957
\n
\n
Irrevocable 36 957 6 031 30 926
\n
\n
Revocable 17 401 5 370 12 031
\n
Not subject to
\n
impairment 9 263 2 294 6 969
\n
Debt securities
\n
2 976 0 2 976
\n
Loans and advances (excl. reverse repos)
\n
561 545 16
\n
\n
of which designated upon initial recognition at fair value through profit or loss (FVO) 0 0 0
\n
Reverse repos
\n
0 0 0
\n
Derivatives
\n
5 727 1 749 3 977
\n
Other financial assets
\n
0 0 0
\n
Off
\n
-balance-sheet liabilities 0 0 0
\n
Total
\n
319 251 129 434 189 818
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n
Financial instruments subject to offsetting, enforceable master
\n
financial
\n
instruments set
\n
the balance
\n
Amounts not set off
\n
netting agreements and similar arrangements
\n
instruments
\n
off
\n
sheet
\n
in the balance sheet
\n
Net amount
\n
\n
Financial
\n
Cash
\n
Securities
\n
(in millions of EUR)
\n
\n
\n
\n
\n
instruments
\n
collateral
\n
collateral
\n
\n
\n
31
\n
-12-2022
\n
FINANCIAL ASSETS
\n
Derivatives
\n
32 380 25 559 6 821 4 485 1 302 67 968
\n
\n
Derivatives (excluding central clearing houses)
\n
6
\n
\n
601
\n
\n
0
\n
\n
6
\n
\n
601
\n
\n
4
\n
\n
485
\n
\n
1
\n
\n
302
\n
\n
67
\n
\n
748
\n
\n
\n
Derivatives with central clearing houses
\n
*
\n
\n
25
\n
\n
779
\n
\n
25
\n
\n
559
\n
\n
220
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
220
\n
\n
Reverse repos, securities borrowing and similar
\n
arrangements 25 694 5 475 20 219 0 0 20 210 8
\n
\n
Reverse repos
\n
25
\n
\n
694
\n
\n
5
\n
\n
475
\n
\n
20
\n
\n
219
\n
\n
0
\n
\n
0
\n
\n
20
\n
\n
210
\n
\n
8
\n
\n
\n
Securities borrowing
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
58 074 31 034 27 040 4 485 1 302 20 277 976
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
31 462 22 846 8 615 4 492 1 095 447 2 582
\n
Derivatives (excluding central clearing houses)
\n
8
\n
\n
329
\n
0
\n
8
\n
\n
329
\n
4
\n
\n
492
\n
1
\n
\n
095
\n
447
\n
2
\n
\n
296
\n
Derivatives with central clearing houses
\n
*
\n
\n
23
\n
\n
132
\n
22
\n
\n
846
\n
286
\n
0
\n
0
\n
0
\n
286
\n
Repos, securities lending and similar arrangements
\n
16 573 5 475 11 097 0 0 11 082 15
\n
\n
Repos
\n
16
\n
\n
573
\n
\n
5
\n
\n
475
\n
\n
11
\n
\n
097
\n
\n
0
\n
\n
0
\n
\n
11
\n
\n
082
\n
\n
15
\n
\n
\n
Securities lending
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
48 035 28 322 19 713 4 492 1 095 11 529 2 597
\n
31
\n
-12-2021
\n
FINANCIAL ASSETS
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
13 969 8 242 5 727 2 731 1 298 112 1 586
\n
\n
Derivatives (excluding central clearing houses) 5 619 0 5 619 2 731 1 298 112 1 478
\n
\n
Derivatives with central clearing houses
\n
*
\n
8 349 8 242 107 0 0 0 107
\n
Reverse repos, securities borrowing and similar
\n
arrangements 38 160 13 182 24 978 67 0 24 900 10
\n
\n
Reverse repos 38 160 13 182 24 978 67 0 24 900 10
\n
\n
Securities borrowing 0 0 0 0 0 0 0
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
52 129 21 425 30 704 2 798 1 298 25 012 1 596
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
16 084 9 372 6 713 3 015 1 793 640 1 265
\n
\n
Derivatives (excluding central clearing houses) 6 608 0 6 609 3 015 1 793 640 1 161
\n
\n
Derivatives with central clearing houses
\n
*
\n
9 476 9 372 104 0 0 0 104
\n
Repos, securities lending and similar arrangements
\n
16 477 13 182 3 295 160 0 3 135 1
\n
\n
Repos 16 477 13 182 3 295 160 0 3 135 1
\n
\n
Securities lending 0 0 0 0 0 0 0
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
32 562 22 554 10 008 3 174 1 793 3 774 1 266
\n
* For central clearing houses, the offsetting procedure refers to the amount of offsetting between derivatives and related cash collateral. Cash collateral with central clearing houses
\n
amounted to 2 712 million euros at year-end 2022 and 1 130 million euros at year-end 2021.
\n
\n
\u2022 The criteria for offsetting are met if KBC currently has a legally enforceable right to set off the recognised financial assets and
\n
financial liabilities and intends either to settle the transactions on a net basis, or to realise the financial asset and settle the
\n
financial liability simultaneously. Financial assets and financial liabilities that are set off relate to financial instruments that were
\n
traded on (central) clearing houses.
\n\n
\u2022 The amounts presented in the \u2018Financial instruments\u2019 column under the \u2018Amounts not set off in the balance sheet\u2019 heading are
\n
for financial instruments entered into under an enforceable master netting agreement or similar arrangement that does not
\n
meet the criteria defined in IAS 32. These amounts refer to situations in which offsetting can only be applied if one of the
\n
counterparties defaults, becomes insolvent or goes bankrupt. The same principle applies for financial instruments given or
\n
received as collateral. The value given in the table for non-cash collateral received (in the \u2018Securities collateral\u2019 column under
\n
the \u2018Amounts not set off in the balance sheet\u2019 heading) is the market value. This is the value that is used if one of the
\n
counterparties defaults, becomes insolvent or goes bankrupt.
\n

\n\n

\n\n

\n\n

\n\n
\n\n

\n\n

\n\n

\n

\n\n

\n\n
Note 4.4: Fair value of financial assets and liabilities \u2013 general
\n
\u2022 In line with European Banking Authority guidelines, we conduct an outlier stress test on a quarterly basis by applying six different
\n
scenarios to the banking books (material currencies). The worst-case scenario is set off against tier-1 capital. For the banking
\n
book at KBC group level, this risk came to -3% of tier-1 capital at year-end 2022. This -3% is well below the -15% Tier 1 threshold,
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
which is monitored by the ECB. Note that this -3% of tier-1 capital at year-end 2022 is equivalent to a -0.4% points impact on
\n
the end of year 2022 fully loaded CET1 ratio.
\n
\u2022 The table shows the changes in economic value of equity under six different interest rate scenarios. To test these six scenarios,
\n
we combine the shift in the yield curves with changes in maturities depending on clients\u2019 behaviour (e.g., interest-rate-driven
\n
prepayment behaviour) and use a run-off balance sheet where maturing items are not replaced. The bank also analyses the
\n
impact of different interest rate scenarios on its net interest income.
\n
\n
Changes of the economic value of equity
\n
Supervisory shock scenarios (in millions of EUR, material currencies)*
\n
End of 4Q2022
\n
End of 2Q2022
\n
1 Parallel up
\n
-491
\n
-1 163
\n
2 Parallel down
\n
370
\n
600
\n
3 Steepener
\n
-55
\n
-207
\n
4 Flattener
\n
-26
\n
-3
\n
5 Short rates up
\n
-179
\n
-343
\n
6 Short rates down
\n
102
\n
176
\n
\n
* Supervision of the underlying internal models\u2019 compliance with the approval criteria as provided for in the standards imposed by the regulator does not come under the responsibility of the statutory auditor.
\n
\u2022 Note that the above stress test covers the full balance sheet (full economic view), with compensating effects across the balance
\n
sheet, whereas the table below focuses on some parts of the balance sheet.
\n
\n
\u2022 Furthermore, taking into account 1) KBCs large stock of high-quality liquid assets (approximately 92 billion euros on average in
\n
2022), which consist of cash and bonds which can be repoed in the private market and at the central banks, 2) 48% of total
\n
customer deposits at KBC are covered by the Deposit Guarantee and 3) 83% of total customer deposits consisting of more
\n
stable retail & SME clients, the unrealised losses on the debt securities portfolio at amortised cost do not need to be realised
\n
for liquidity purposes and are therefore irrelevant from a capital perspective.
\n
\n
\n
\n
Fair value of financial instruments that are not measured at fair value
\n
Financial assets
\n
Financial liabilities
\n
in the balance sheet
\n
at amortised cost
\n
at amortised cost
\n
Carrying
\n
Fair
\n
Carrying
\n
Fair
\n
(in millions of EUR)
\n
value
\n
value
\n
value
\n
value
\n
31-12-2022
\n
FINANCIAL ASSETS
\n
\n
Loans and advances to credit institutions and investment firms (incl. reverse
\n
repos) 24 258 24 211 \u2013 \u2013
\n
Loans and advances to customers (incl. reverse repos)
\n
177 596 163 972 \u2013 \u2013
\n
Debt securities
\n
52 030 46 886 \u2013 \u2013
\n
Other
\n
1 561 1 561 \u2013 \u2013
\n
Total
\n
255 444 236 630 \u2013 \u2013
\n
\n
Level 1 \u2013 43 364 \u2013 \u2013
\n
\n
Level 2 \u2013 31 917 \u2013 \u2013
\n
\n
Level 3 \u2013 161 349 \u2013 \u2013
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms (incl. repos)
\n
\n
\u2013 \u2013 35 671 35 207
\n
Deposits from customers and debt securities (incl. repos)
\n
\n
\u2013 \u2013 251 735 250 485
\n
Liabilities under investment
\n
contracts \u2013 \u2013 0 0
\n
Other
\n
\u2013 \u2013 2 448 2 448
\n
Total
\n
\u2013 \u2013 289 854 288 140
\n
Level 1
\n
\u2013
\n
\u2013
\n
\u2013
\n
47
\n
Level 2
\n
\u2013
\n
\u2013
\n
\u2013
\n
111 093
\n
Level 3
\n
\u2013
\n
\u2013
\n
\u2013
\n
176 999
\n
31
\n
-12-2021
\n
FINANCIAL ASSETS
\n
\n
Loans and advances to credit institutions and investment firms (incl. reverse
\n
repos) 32 780 32 789 \u2013 \u2013
\n
Loans and advances to customers (incl. reverse repos)
\n
159 285 160 037 \u2013 \u2013
\n
Debt securities
\n
47 172 47 878 \u2013 \u2013
\n
Other
\n
892 892 \u2013 \u2013
\n
Total
\n
240 128 241 595 \u2013 \u2013
\n
Level 1
\n
\u2013
\n
44 062
\n
\u2013
\n
\u2013
\n
Level 2
\n
\u2013
\n
36 737
\n
\u2013
\n
\u2013
\n
Level 3
\n
\u2013
\n
160 797
\n
\u2013
\n
\u2013
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms (incl. repos)
\n
\n
\u2013 \u2013 40 935 41 003
\n
Deposits from customers and debt securities (incl. repos)
\n
\n
\u2013 \u2013 225 164 225 299
\n
Liabilities under investment
\n
contracts \u2013 \u2013 0 0
\n
Other
\n
\u2013 \u2013 2 288 2 286
\n
Total
\n
\u2013 \u2013 268 387 268 588
\n
\n
Level 1 \u2013 \u2013 \u2013 24
\n
\n
Level 2 \u2013 \u2013 \u2013 105 714
\n
\n
Level 3 \u2013 \u2013 \u2013 162 850
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n
\u2022 All internal valuation models are validated by an independent Risk Validation Unit. In addition, the Executive Committee has
\n
appointed a Group Valuation Committee (GVC) to ensure that KBC meets all the legal requirements for measuring financial
\n
assets and liabilities at fair value. The GVC monitors consistent implementation of the KBC Valuation Framework, which consists
\n
of various guidelines, including the Group Valuation Policy, the Group Market Value Adjustments Policy and the Group
\n
Parameter Review Policy. The GVC meets at least twice a quarter to approve significant changes in valuation methods
\n
(including, but not limited to, models, market data and inputs) or deviations from group policies for financial assets and liabilities
\n
measured at fair value. The committee is made up of members from Finance, Risk Management and the Middle Office. Valuation
\n
uncertainty measurements are made and reported to the GVC every six months. Certain fair values generated by valuation
\n
models are challenged by a team set up specifically for this purpose.
\n
\u2022 The fair value of mortgage and term loans not measured at fair value in the balance sheet (see table) is calculated by
\n
discounting contractual cashflows at the risk-free rate. This calculation is then adjusted for credit risk by taking account of
\n
margins obtained on similar, but recently issued, loans or by using a spread derived from the listed-bond spread. The fair value
\n
of the main portfolios takes account of prepayment risks and cap options. The fair value of time deposits is calculated by
\n
discounting contractual cashflows at the risk-free rate. The fair value of demand and savings deposits is presumed to be equal
\n
to their carrying value.
\n
\u2022 As a result of the first-time adoption of IFRS 9 on 1 January 2018, debt instruments with a total carrying value of 15 060 million
\n
euros have been reclassified from \u2018Available-for-sale assets\u2019 to \u2018Financial assets held at amortised cost\u2019. Due to this
\n
reclassification, changes in fair value (before tax) totalling -566 million euros were not recorded in the revaluation reserve in
\n
2022 (-199 million euros in 2021). The fair value of this reclassified portfolio (after redemptions) amounted to 4 668 million euros
\n
at year-end 2022 (5 753 million euros at year-end 2021).
\n
\u2022 The difference between the fair value and the carrying value of the financial instruments at amortised cost was caused by the
\n
substantial interest rate hikes in 2022. As a hold-to-collect business model is applied on the assets side, interim changes in fair
\n
value are less relevant. In addition, part of this difference has already been recorded under fair value hedges for a portfolio of
\n
interest rate risk, which is presented separately on the balance sheet (on both the assets and the liabilities side) in the
\n
\u2018Profit/loss on positions in portfolios hedged against interest rate risk\u2019 balance sheet item. Furthermore, there are ALM interest
\n
derivatives not recognised in hedge accounting.
\n

\n\n

\n\n
\n
\n
\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n

\n

\n

\n

\n

\n

\n

\n
Note 4.5: Financial assets and liabilities measured at fair value \u2013 fair value hierarchy
\n
\n
\n
Fair value hierarchy
\n
31-12-2022 31-12-2021
\n
(in millions of EUR)
\n
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
\n
FINANCIAL ASSETS AT FAIR VALUE
\n
\n
Mandatorily measured at fair value through profit or loss other than held for trading (including
\n
\n
overlay)
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 13 0 13 0 0 0 0
\n
reverse repos)
\n
Loans and advances to customers (incl. reverse repos)
\n
0 0 625 625 0 0 560 560
\n
Equity instruments
\n
1 131 0 118 1 250 1 323 0 52 1 374
\n
Investment contracts (insurance)
\n
12 638 134 0 12 771 14 365 254 0 14 620
\n
Debt securities
\n
12 0 5 17 14 0 3 17
\n
of which sovereign bonds
\n
\n
0
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 34 0 34 0 1 0 1
\n
reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Equity instruments
\n
429 0 0 430 448 0 0 448
\n
Debt securities
\n
1 480 244 4 1 728 1 522 1 432 4 2 958
\n
\n
of which sovereign bonds 1 444 223 0 1 667 1 441 1 076 0 2 517
\n
Derivatives
\n
3 5 547 729 6 279 1 4 482 961 5 443
\n
Other
\n
0 0 0 0 0 0 0 0
\n
Designated upon initial recognition at fair value through profit or loss (FVO)
\n
Loans and advances to credit institutions and
\n
0 0 0 0 0 0 0 0
\n
investment firms (incl. reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Debt securities
\n
0 0 0 0 0 0 0 0
\n
\n
of which sovereign bonds 0 0 0 0 0 0 0 0
\n
At fair value through OCI
\n
\n
\n
\n
\n
\n
\n
\n
\n
Equity instruments
\n
18 1 297 315 15 1 306 321
\n
Debt securities
\n
9 508 2 070 235 11 813 12 269 2 963 271 15 503
\n
\n
of which sovereign bonds
\n
\n
7 003 1 059 73 8 135 8 751
\n
\n
1 711
\n
\n
52
\n
\n
10 514
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0 542 0 542 0 283 0 283
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial assets at fair value
\n
25 219 8 585 2 014 35 818 29 956 9 416 2 157 41 529
\n
FINANCIAL LIABILITIES AT FAIR VALUE
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 7 0 7 0 2 0 2
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 44 0 44 0 21 0 21
\n
Derivatives
\n
2
\n
6 911
\n
1 125
\n
8 038
\n
1
\n
4 410
\n
1 209
\n
5 619
\n
Short positions
\n
884 123 0 1 007 1 582 47 0 1 628
\n
Designated at fair value
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 0 0 0 0 0 0 0
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 74 1 131 1 205 0 61 1 251 1 312
\n
Liabilities under investment contracts
\n
12 002 0 0 12 002 13 603 0 0 13 603
\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0
\n
479
\n
98
\n
577
\n
0
\n
696
\n
398
\n
1 094
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial liabilities at fair value
\n
12 887 7 638 2 355 22 881 15 185 5 238 2 857 23 280
\n
\n
\u2022 The fair value hierarchy prioritises the valuation techniques and the respective inputs into three levels.
\n
- The fair value hierarchy gives the highest priority to \u2018level 1 inputs\u2019. This means that, when there is an active market, quoted
\n
prices have to be used to measure the financial assets or liabilities at fair value. Level 1 inputs are prices that are readily and
\n
regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency (and that are
\n
quoted in active markets accessible to KBC). They represent actual and regularly occurring market transactions on an arm\u2019s
\n
length basis. The fair value is then based on a mark-to-market valuation derived from currently available transaction prices.
\n
No valuation technique (model) is involved.
\n
- If there are no price quotations available, the reporting entity establishes fair value using a model based on observable or
\n
unobservable inputs. The use of observable inputs must be maximised. Observable inputs are also referred to as \u2018level 2
\n
inputs\u2019 and reflect the assumptions market participants would use in pricing the asset or liability based on market data
\n
obtained from sources independent of the reporting entity. Examples of observable inputs are the risk-free rate, exchange
\n
rates, stock prices and implied volatility. Valuation techniques based on observable inputs include discounted cashflow
\n
analysis, or reference to the current or recent fair value of a similar instrument.
\n
- Unobservable inputs are also referred to as \u2018level 3 inputs\u2019 and reflect the reporting entity\u2019s own assumptions about the
\n
assumptions that market participants would use in pricing the asset or liability (including assumptions regarding the risks
\n
involved). Unobservable inputs reflect a market that is not active. For example, proxies and correlation factors can be
\n
considered to be unobservable in the market.
\n
\u2022 When the inputs used to measure the fair value of an asset or a liability can be categorised into different levels of the fair value
\n
hierarchy, the fair value measurement is classified in its entirety into the same level as the lowest level input that is significant
\n
to the entire fair value measurement. For example, if a fair value measurement uses observable inputs that require significant
\n
adjustment based on unobservable inputs, that measurement is a level 3 measurement.
\n
\u2022 The valuation methodology and the corresponding classification in the fair value hierarchy of the most commonly used financial
\n
instruments are summarised in the table. Whereas the majority of instruments of a certain type are within the level indicated in
\n
the table, a small portion may actually be classified in another level.
\n
\u2022 KBC follows the principle that transfers into and out of levels of the fair value hierarchy are made at the end of the reporting
\n
period. Transfers between the various levels are dealt with in more detail in Note 4.6 and Note 4.7.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Instrument type Products Valuation technique
\n
Liquid financial instruments
\n
FX spots, exchange traded financial futures, exchange traded options,
\n
Mark-to-market (quoted prices in active
\n
for which quoted prices are
\n
exchange traded stocks, exchange traded funds, liquid government
\n
markets), for bonds: BVAL or vendor
\n
data.
\n
\n
Level 1
\n
regularly available
\n
\n
bonds, other liquid bonds, liquid asset backed securities (ABS) in active
\n
markets
\n
Plain vanilla/liquid
\n
(Cross-currency) interest rate swaps (IRS), FX swaps, FX forwards, forward
\n
Discounted cashflow analysis based on
\n
derivatives
\n
\n
rate agreements (FRA), inflation swaps, dividend swaps and futures,
\n
discount and estimation curves (derived
\n
reverse floaters, bond future options, interest rate future opt
\n
ions, overnight
\n
from quoted deposit rates,
\n
\n
index swaps (OIS), FX resets
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Caps & floors, interest rate options, European stock options, European &
\n
Option pricing model based on
\n
American FX options, forward starting options, digital FX options, FX strips
\n
observable inputs (e.g., volatilities)
\n
\n
of simple options, European swaptions, European cancellable IRS,
\n
\n
compound options
\n
\n
Linear financial liabilities
\n
Deposits, simple cashflows, repo transactions
\n
Discounted cashflow analysis based on
\n
(without optional features)
\n
\u2013
\n
discount and estimation curves (derived
\n
cash instruments
\n
\n
from quoted deposit rates,
\n
\n
\n
Level 2
\n
FX swaps and (CC)IRS)
\n
\n
\n
Semi-liquid bonds/asset
\n
Semi-liquid bonds/asset backed securities
\n
BVAL, prices corroborated by alternative
\n
backed securities
\n
\n
observable market data, or using
\n
comparable spread method
\n
\n
\n
Debt instruments
\n
KBC IFIMA own issues (liabilities), mortgage bonds held by \u010cSOB
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
observable inputs
\n
\n
\n
Linear financial assets (cash
\n
Loans, commercial paper
\n
Discounted cashflow analysis based on
\n
instruments)
\n
\n
discount and estimation curves (derived
\n
from quoted deposit rates,
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Exotic derivatives
\n
Target profit forwards, flexible forwards, American & Asian stock options,
\n
Option pricing model based on
\n
Bermudan swaptions, digital interest rate options, quanto interest rate
\n
observable inputs (e.g., correlation)
\n
\n
options, digital stock options, composite stock options, barrier stock
\n
options, quanto digital FX options, FX
\n
Asian options, FX European barrier
\n
options, FX simple digital barrier options, FX touch rebates, inflation
\n
options, Bermudan cancellable IRS, constant maturity swaps (CMS), CMS
\n
spread swaps, CMS spread options, CMS interest rate caps/floors,
\n
(callable) ra
\n
nge accruals, outperformance options, auto-callable options,
\n
\n
Level 3
\n
lookback options, commodity swaps and forwards
\n
Illiquid credit-linked
\n
Collateralised debt obligations (notes)
\n
Valuation model based on correlation of
\n
instruments
\n
\n
probability of default of underlying assets
\n
\n
\n
Private equity investments
\n
Private equity and non-quoted participations
\n
Based on the valuation guidelines of the
\n
European Private Equity & Venture Capital
\n
Association
\n
\n
\n
Illiquid bonds/asset backed
\n
Illiquid (mortgage) bonds/asset backed securities that are indicatively
\n
BVAL, third-party pricing (e.g., lead
\n
securities
\n
\n
priced by a single pricing provider in an inactive market
\n
\n
manager), where prices
\n
cannot be
\n
\n
\n
corroborated due to a lack of
\n
available/reliable alternative market data
\n
\n
\n
Debt instruments
\n
KBC own issues (KBC IFIMA)
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
\n
unobservable inputs (indicative pricing by
\n
third parties for derivatives)
\n
\n
\n
Structured loans
\n
Government-regulated loans with leveraged interest rates and exotic
\n
Discounted cashflow analysis and
\n
early repayment
\n
schedules (K&H)
\n
valuation of related derivatives based on
\n
unobservable inputs
\n
\n
\n
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.6: Financial assets and liabilities measured at fair value \u2013 transfers between levels 1 and 2
\n
\n
\u2022 In 2022, KBC transferred 77 million euros\u2019 worth of financial assets and liabilities out of level 1 and into level 2, and 434 million
\n
euros\u2019 worth of financial assets and liabilities out of level 2 and into level 1. The corresponding figures for 2021 were 206 million
\n
euros and 294 million euros, respectively. Most of these reclassifications were carried out due to a change in the liquidity of
\n
government bonds and corporate bonds.
\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n
Note 4.7: Financial assets and liabilities measured at fair value \u2013 focus on level 3
\n
\n
\u2022 In 2022, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 65 million euros, primarily on account of new transactions, partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of unlisted shares rose by 66 million euros, due primarily to new
\n
transactions.
\n
- Financial assets at fair value through OCI: the fair value of debt instruments decreased by 36 million euros, primarily on
\n
account of instruments reaching maturity and changes in market inputs.
\n
- Financial assets held for trading: the fair value of derivatives decreased by 232 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities held for trading: the fair value of derivatives decreased by 83 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives decreased by 300 million euros due to changes
\n
in market inputs.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of issued debt instruments decreased by 120
\n
million euros, primarily on account of transactions reaching maturity and the sale of existing positions, only partly offset by
\n
new transactions.
\n
\u2022 In 2021, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 173 million euros, primarily on account of new transactions, only partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of debt instruments fell by 34 million euros, owing primarily to changes
\n
in market inputs.
\n
- Financial liabilities held for trading: the fair value of derivatives increased by 103 million euros, due mainly to changes in market
\n
inputs and new transactions, partly offset by sales. The fair value of issued debt instruments fell by 85 million euros, due mainly
\n
to instruments that had reached maturity.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives increased by 398 million euros due to
\n
reclassifications in level 3 owing to an optimisation of the classification method.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of debt instruments increased by 100 million
\n
euros, primarily on account of new issues, partly offset by sales.
\n
\u2022 Some level 3 assets are associated or economically hedged with identical level 3 liabilities, which means that KBC\u2019s exposure
\n
to unobservable inputs is lower than would appear from the gross figures. Most of the level 3 instruments are also valued using
\n
third-party pricing sources, with KBC not developing any unobservable inputs itself. The main unobservable inputs applied by
\n
KBC to the valuation of exotic derivatives include: mean reversion parameter on Bermudan swaptions, equity cross-correlations
\n
and volatilities for certain stock options, interest-rate correlations for CMS spread options, and the funding costs used to
\n
determine the forward equity prices as part of the valuation of certain equity derivatives. The change in fair value resulting from
\n
a change in these inputs to reflect reasonably possible alternative assumptions is insignificant.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.8: Derivatives
\n
\n
\u2022 In terms of volume of the notional amounts of the derivatives, approximately 77% are trading derivatives and approximately
\n
23% are hedging derivatives.
\n
\u2022 The majority of trading derivatives are effectively included in the trading book but are largely economically hedged (limited
\n
open positions) by other trading derivatives (such as derivative transactions initiated by commercial clients that are
\n
economically hedged) or by balance sheet positions (such as currency positions), which leads to large volumes of notional
\n
amounts but also to result-neutral revaluations on a net basis.
\n
\u2022 A limited number of trading derivatives are ALM derivatives included in the banking book, which are used to hedge economic
\n
risk. These are not subject to hedge accounting. Hedge accounting is applied to most of the ALM interest rate contracts. Only
\n
a limited number of the ALM derivatives for foreign currencies are included in hedge accounting.
\n
\n
\n
Note 4.8.1: Trading derivatives
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
\n
Carrying value
\n
Notional amounts*
\n
Carrying value
\n
Notional amounts*
\n
\n
Assets
\n
Liabilities
\n
Purchased
\n
Sold
\n
Assets
\n
Liabilities
\n
Purchased
\n
Sold
\n
Total
\n
6 279 8 038 567 205 568 302 5 443 5 619 491 716 503 818
\n
Interest rate contracts
\n
2 642 3 678 379 270 377 754 3 056 2 788 291 100 301 289
\n
of which interest rate swaps and
\n
2 429 3 542 368 144 371 294 2 731 2 669 278 999 294 056
\n
futures
\n
\n
of which options 214 136 11 126 6 460 325 119 12 101 7 232
\n
Foreign exchange contracts
\n
3 166 3 620 174 787 177 841 1 722 1 880 185 800 187 835
\n
of which currency and interest
\n
rate swaps, forward foreign
\n
3 081 3 509 171 878 172 361 1 668 1 830 182 613 183 020
\n
exchange transactions and
\n
futures
\n
\n
of which options 85 112 2 909 5 480 54 50 3 187 4 816
\n
Equity
\n
contracts 452 720 12 812 12 371 646 935 14 494 14 376
\n
\n
of which equity swaps 414 410 10 553 10 394 620 637 12 607 12 651
\n
\n
of which options 37 311 2 259 1 977 26 298 1 888 1 725
\n
Credit contracts
\n
0 0 0 0 0 0 4 4
\n
\n
of which credit default swaps 0 0 0 0 0 0 4 4
\n
Commodity and other contracts
\n
20 19 337 335 19 17 318 314
\n
* In this table, both legs of the derivatives are reported in the notional amounts.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.8.2: Hedging derivatives
\n
31-12-2022
\n
(in millions of EUR)
\n
Hedging instrument
\n
Hedged item
\n
Impact on equity
\n
\n
Notional amounts
\n
1
\n
\n
Carrying value
\n
Change in fair
\n
value of hedging
\n
items used as
\n
basis for
\n
recognising hedge
\n
ineffectiveness for
\n
the period
\n
2
\n
\n
Type
\n
Carrying value
\n
Change in fair
\n
value of hedged
\n
items used as
\n
basis for
\n
recognising
\n
hedge
\n
ineffectiveness
\n
for the period
\n
2
\n
\n
Ineffective
\n
portion
\n
recognised in
\n
profit or loss
\n
Effective
\n
portion
\n
recognised in
\n
OCI
\n
Hedging strategy
\n
Purchased
\n
Sold
\n
Assets
\n
Liabilities
\n
\n
\n
Total (including
\n
fair value
\n
changes)
\n
Of which
\n
accumulated
\n
fair value
\n
adjustments
\n
\n
\n
\n
Fair value micro hedge
\n
\n
Interest rate swaps
\n
22 753 22 753 185 102 -619
\n
Debt
\n
securities held at AC 4 007 -684 -323
\n
Currency and
\n
interest rate swaps
\n
0 0 0 0 0
\n
Loans and advances at AC
\n
683 70 -310
\n
\n
\n
Debt securities held at FVOCI
\n
1 342 -152 -176
\n
\n
\n
Debt securities issued at AC
\n
14 624 -1 334 1 432
\n
\n
\n
Deposits at AC
\n
0 0 0
\n
Total
\n
22 753 22 753 185 102 -619
\n
Total
\n
624 5 -
\n
Portfolio hedge of interest rate risk
\n
\n
Interest rate swaps
\n
123 930 123 930 209 261 3 172
\n
Debt securities held at AC
\n
359 -122 -123
\n
Currency and
\n
interest rate options
\n
1 762 0 101 0 82
\n
Loans and advances at AC
\n
104 980 -4 207 -3 769
\n
\n
\n
Debt securities held at FVOCI
\n
23 -6 -6
\n
\n
\n
Debt securities issued at AC
\n
0 0 0
\n
\n
\n
Deposits at AC
\n
14 574 -1 432 644
\n
Total
\n
125 692 123 930 310 261 3 254
\n
Total
\n
-3 254 0 -
\n
Cashflow hedge (micro hedge and portfolio hedge)
\n
\n
Interest rate swaps
\n
20 073 20 073 47 115 177
\n
\n
\n
Currency and
\n
interest rate swaps
\n
1 204 1 257 0 39 -13
\n
\n
\n
Total
\n
21 277 21 330 47 154 164
\n
Total
\n
-167 -3 -1 046
\n
Hedge of net
\n
investments in foreign operations
\n
Total
\n
3
\n
1 755 1 807 0 505 18
\n
Total
\n
-18 0 20
\n
1 In this table, both legs of the derivatives are reported in the notional amounts.
\n
2 Ineffectiveness is recognised in \u2018Net result from financial instruments at fair value through profit or loss\u2019 (also see Note 3.3).
\n
3 Hedging instruments in the form of foreign currency deposits.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
31-12-2021
\n
(in millions of EUR)
\n
Hedging instrument
\n
Hedged item
\n
Impact on equity
\n
\n
Notional amounts
\n
1
\n
\n
Carrying value
\n
Change in fair
\n
value of hedging
\n
items used as
\n
basis for
\n
recognising hedge
\n
ineffectiveness for
\n
the period
\n
2
\n
\n
Type
\n
Carrying value
\n
Change in fair
\n
value of hedged
\n
items used as
\n
basis for
\n
recognising
\n
hedge
\n
ineffectiveness
\n
for the period
\n
2
\n
\n
Ineffective
\n
portion
\n
recognised in
\n
profit or loss
\n
Effective
\n
portion
\n
recognised in
\n
OCI
\n
Hedging strategy
\n
Purchased
\n
Sold
\n
Assets
\n
Liabilities
\n
\n
\n
Total (including
\n
fair value
\n
changes)
\n
Of which
\n
accumulated
\n
fair value
\n
adjustments
\n
\n
\n
\n
Fair value micro hedge
\n
\n
Interest rate swaps
\n
22 027 22 027 98 407 307
\n
Debt securities held at AC
\n
3 576 -360 -394
\n
Currency and
\n
interest rate swaps
\n
0 0 0 0 0
\n
Loans and advances at AC
\n
857 391 -114
\n
\n
\n
Debt securities held at FVOCI
\n
1 900 25 -79
\n
\n
\n
Debt securities issued at AC
\n
15 998 98 282
\n
\n
\n
Deposits at AC
\n
0 0 -2
\n
Total
\n
22 027 22 027 98 407 307
\n
Total
\n
-307 0 -
\n
Portfolio hedge of interest rate risk
\n
\n
Interest rate swaps
\n
89 467 89 467 110 183 809
\n
Debt securities held at AC
\n
11 -1 -2
\n
Currency and
\n
interest rate options
\n
1 981 0 21 0 11
\n
Loans and advances at AC
\n
74 412 -504 -1 772
\n
\n
\n
Debt securities held at FVOCI
\n
13 -1 -1
\n
\n
\n
Debt securities issued at AC
\n
0 0 0
\n
\n
\n
Deposits at AC
\n
13 632 -862 960
\n
Total
\n
91 448 89 467 131 183 820
\n
Total
\n
-815 5 -
\n
Cashflow hedge (micro hedge and portfolio hedge)
\n
\n
Interest rate swaps
\n
21 249 21 249 24 502 177
\n
\n
\n
Currency and
\n
interest rate swaps
\n
711 721 26 0 19
\n
\n
\n
Total
\n
21 960 21 970 50 502 196
\n
Total
\n
-196 0 -1 197
\n
Hedge of net investments in foreign operations
\n
\n
Total
\n
3
\n
1 904 1 965 5 420 -109
\n
Total
\n
109 0 20
\n
1 In this table, both legs of the derivatives are reported in the notional amounts.
\n
2 Ineffectiveness is recognised in \u2018Net result from financial instruments at fair value through profit or loss\u2019 (also see Note 3.3).
\n
3 Hedging instruments in the form of foreign currency deposits.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\u2022 The sharp change in fair value of the hedging instruments and the hedged items in the fair value micro hedges and fair value
\n
hedges for a portfolio of interest rate risk for 2022 are attributable to the substantial increase in market interest rates.
\n
\u2022 The Treasury departments of the various entities manage the interest rate risk. To prevent rate movements from having a
\n
negative impact, the maturities of assets and liabilities are adjusted on the balance sheet using interest rate swaps and other
\n
derivatives.
\n
\u2022 As regards the relationship between risk management and hedge accounting policy, \u2018economic\u2019 management takes priority
\n
and risks are hedged in accordance with the general ALM framework. Only then is a decision made on which, if any, of these
\n
techniques will be used to limit any resulting accounting mismatch.
\n
\u2022 The balances remaining in the cashflow hedge reserve from any hedging relationships for which hedge accounting is no longer
\n
applied came to -166 million euros. The accumulated amount of fair value hedge adjustments remaining on the balance sheet
\n
for any hedged items that have ceased to be adjusted for hedging gains and losses amounted to -24 million euros. These
\n
adjustments are amortised to profit or loss.
\n
\u2022 The difference between the \u2018Profit/loss on positions in portfolios hedged against interest rate risk\u2019 balance sheet item and
\n
accumulated fair value adjustments following portfolio hedges of interest rate risk as included in Note 4.8.2 is attributable to
\n
accumulated fair value adjustments regarding discontinued fair value hedges not included in Note 4.8.2 but included in the
\n
balance sheet.
\n
\u2022 The accumulated fair value adjustments of the hedged assets involved in portfolio hedges of interest rate risk dropped in 2022
\n
due to the general increase in interest rates. The \u2018Profit/loss on positions in portfolios hedged against interest rate risk\u2019 balance
\n
sheet item on the liabilities side of the balance sheet also became more negative for the same reason.
\n
\u2022 Also see the paragraph on hedge accounting in the \u2018How do we manage our risks?\u2019 section and Note 3.3.
\n
\n
\n
Estimated cashflows from cashflow hedging derivatives per time bucket (in millions of EUR)
\n
Inflow
\n
Outflow
\n
Not more than three months
\n
7 -38
\n
More than three but not more than six months
\n
33 -95
\n
More than six months but not more than one year
\n
123 -274
\n
More than one but not more than two
\n
years 222 -514
\n
More than two but not more than five years
\n
505 -960
\n
More than five years
\n
545 -849
\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag827": { "value": "\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
\n
Note 3.1: Net interest income
\n
(in millions of EUR)
\n
2022
\n
2021
\n
Total
\n
5 161 4 451
\n
Interest income
\n
11 226 6 320
\n
Interest income on financial instruments calculated using the effective interest rate
\n
method
\n
\n
Financial assets at amortised cost 7 973 4 797
\n
\n
Financial assets at fair value through OCI 251 286
\n
\n
Hedging derivatives 1 838 355
\n
\n
Financial liabilities (negative interest rate) 289 425
\n
\n
Other 130 25
\n
Interest income on
\n
other financial instruments
\n
\n
Financial assets MFVPL other than held for trading 35 24
\n
\n
Financial assets held for trading 710 407
\n
\n
Of which economic hedges 582 367
\n
\n
Other financial assets at fair value through profit or loss 0 0
\n
Interest expense
\n
-6 064 -1 869
\n
Interest expense on financial instruments calculated using the effective interest rate method
\n
\n
\n
Financial liabilities at amortised cost -2 320 -534
\n
\n
Hedging derivatives -1 972 -604
\n
\n
Financial assets (negative interest rate) -94 -253
\n
\n
Other -5 -7
\n
Interest expense on other financial instruments
\n
\n
\n
Financial liabilities held for trading -1 639 -459
\n
\n
Of which economic hedges -1 595 -414
\n
\n
Other financial liabilities at fair value through profit or loss -33 -11
\n
\n
Net interest expense relating to defined benefit plans -1 -1
\n
\n
\u2022 \u2018Financial liabilities (negative interest rate)\u2019 and \u2018Financial assets (negative interest rate)\u2019: these rates relate mainly to
\n
transactions with central banks, interbank and professional counterparties, corporate clients, and targeted long-term
\n
refinancing operations (TLTRO). More information on TLTRO can be found in Note 4.1.
\n
\u2022 The increase in interest income and interest expense from \u2018Hedging derivatives\u2019, \u2018Financial assets held for trading (of which
\n
economic hedges)\u2019 and \u2018Financial liabilities held for trading (of which economic hedges)\u2019 relates to a change in presentation of
\n
the negative interest on derivatives (at KBC Bank, in accordance with reporting on a solo basis (\u2018Schema A\u2019) under Belgian
\n
GAAP, resulting in an increase in both interest income and interest expense of 450 million euros in 2022), and to the overall
\n
increase in interest rates in 2022.
\n

\n
\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n\n
Note 3.2: Dividend income
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
59 45
\n
Equity
\n
instruments MFVPL other than held for trading 35 28
\n
Equity instruments held for trading
\n
10 11
\n
Equity instruments at FVOCI
\n
15 6
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.1: Financial assets and liabilities, breakdown by portfolio and product
\n
(in millions of EUR)
\n
Measured
\n
at
\n
amortised
\n
cost (AC)
\n
Measured
\n
at fair
\n
value
\n
through
\n
other
\n
compre-
\n
hensive
\n
income
\n
(FVOCI)
\n
Mandatorily
\n
measured at
\n
fair value
\n
through
\n
profit or loss
\n
(MFVPL) excl.
\n
HFT and
\n
overlay
\n
Measured at
\n
fair value \u2013
\n
overlay
\n
approach
\n
(overlay)
\n
Held for
\n
trading
\n
(HFT)
\n
Desig-
\n
nated at
\n
fair value
\n
1
\n
(FVO)
\n
Hedging
\n
Deriva-
\n
tives
\n
Total
\n
Total pro
\n
forma
\n
excluding
\n
KBC Bank
\n
Bulgaria
\n
(formerly
\n
Raiffeisen-
\n
bank
\n
Bulgaria)
\n
FINANCIAL ASSETS, 31-12-2022
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
4 240 0 13 0 1 0 0 4 254
\n
4 203
\n
of which loans and advances to banks repayable on
\n
demand and term loans to banks at not more than three
\n
months
\n
\n
1 237 1 237
\n
Loans and advances to customers (excluding reverse
\n
repos)
\n
177 427 0 625 0 0 0 0 178 053
\n
174 083
\n
Trade receivables
\n
2 818
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 818
\n
2 729
\n
Consumer credit
\n
6 222
\n
0
\n
430
\n
0
\n
0
\n
0
\n
0
\n
6 652
\n
5 977
\n
Mortgage loans
\n
73 465
\n
0
\n
196
\n
0
\n
0
\n
0
\n
0
\n
73 660
\n
72 891
\n
Term loans
\n
82 894
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
82 894
\n
80 744
\n
Finance lease
\n
6 368
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
6 368
\n
6 117
\n
Current account advances
\n
4 886
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 886
\n
4 885
\n
Other
\n
774
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
774
\n
740
\n
Reverse repos
\n
2
\n
\n
20 186
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 219
\n
20 219
\n
with credit institutions and investment firms
\n
20 018
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 050
\n
20 050
\n
with customers
\n
168
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
168
\n
168
\n
Equity instruments
\n
0
\n
315
\n
13
\n
1 237
\n
430
\n
0
\n
0
\n
1 994
\n
1 989
\n
Investment contracts (insurance)
\n
6
\n
\n
0
\n
0
\n
12 771
\n
0
\n
0
\n
0
\n
0
\n
12 771
\n
12 771
\n
Debt securities
\n
52 030
\n
11 813
\n
17
\n
0
\n
1 728
\n
0
\n
0
\n
65 588
\n
64 871
\n
Public bodies
\n
44 219
\n
8 135
\n
0
\n
0
\n
1 667
\n
0
\n
0
\n
54 021
\n
53 390
\n
Credit institutions and investment firms
\n
5 160
\n
1 621
\n
0
\n
0
\n
9
\n
0
\n
0
\n
6 790
\n
6 747
\n
Corporates
\n
2 651
\n
2 057
\n
17
\n
0
\n
53
\n
0
\n
0
\n
4 777
\n
4 733
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
6 279
\n
0
\n
542
\n
6 821
\n
6 813
\n
3
\n
\n
Other
\n
1 561
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
1 561
\n
1 561
\n
Total
\n
255 444
\n
12 128
\n
13 439
\n
1 237
\n
8 471
\n
0
\n
542
\n
291 262
\n
286 511
\n
FINANCIAL ASSETS, 31-12-2021
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
7 920 0 0 0 1 0 0 7 920
\n
-
\n
of which loans and advances to banks repayable on demand
\n
and term loans to banks at not more than three months
\n
3 146 -
\n
Loans and advances to customers (excl. reverse repos)
\n
159 167
\n
0
\n
560
\n
0
\n
0
\n
0
\n
0
\n
159 728
\n
-
\n
Trade receivables
\n
2 090
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 090
\n
-
\n
Consumer credit
\n
5 470
\n
0
\n
381
\n
0
\n
0
\n
0
\n
0
\n
5 851
\n
-
\n
Mortgage loans
\n
67 486
\n
0
\n
179
\n
0
\n
0
\n
0
\n
0
\n
67 665
\n
-
\n
Term loans
\n
72 998
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
72 998
\n
-
\n
Finance lease
\n
5 815
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
5 815
\n
-
\n
Current account advances
\n
4 819
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 819
\n
-
\n
Other
\n
490
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
490
\n
-
\n
2
\n
-
\n
\n
Reverse repos
\n
24 978
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 978
\n
with credit institutions and investment firms
\n
24 861
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 861
\n
-
\n
with customers
\n
117
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
117
\n
-
\n
Equity instruments
\n
0
\n
321
\n
8
\n
1 366
\n
448
\n
0
\n
0
\n
2 144
\n
-
\n
6
\n
-
\n
\n
Investment contracts (insurance)
\n
0
\n
0
\n
14 620
\n
0
\n
0
\n
0
\n
0
\n
14 620
\n
Debt securities
\n
47 172
\n
15 503
\n
17
\n
0
\n
2 958
\n
0
\n
0
\n
65 650
\n
-
\n
Public bodies
\n
41 475
\n
10 514
\n
0
\n
0
\n
2 517
\n
0
\n
0
\n
54 507
\n
-
\n
Credit institutions and investment firms
\n
3 310
\n
2 245
\n
0
\n
0
\n
357
\n
0
\n
0
\n
5 912
\n
-
\n
Corporates
\n
2 387
\n
2 744
\n
17
\n
0
\n
84
\n
0
\n
0
\n
5 232
\n
-
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
5 443
\n
0
\n
283
\n
5 727
\n
-
\n
3
\n
-
\n
\n
Other
\n
892
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
892
\n
Total
\n
240 128
\n
15 824
\n
15 205
\n
1 366
\n
8 850
\n
0
\n
283
\n
281 658
\n
-
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
(in millions of EUR)
\n
Measured at
\n
amortised
\n
cost
\n
(AC)
\n
Held for
\n
trading (HFT)
\n
Designated at
\n
fair value (FVO)
\n
\n
Hedging
\n
derivatives
\n
Total
\n
Total pro forma
\n
excluding KBC
\n
Bank Bulgaria
\n
(formerly
\n
Raiffeisenbank
\n
Bulgaria)
\n
FINANCIAL
\n
LIABILITIES, 31-12-2022
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
24 819 0 0 0 24 819
\n
24 737
\n
of which deposits from banks repayable on demand
\n
\n
\n
\n
\n
\n
\n
\n
5 085 5 085
\n
Deposits from customers and debt
\n
securities (excl. repos)
\n
\n
251 496 44 1 205 0 252 746
\n
247 585
\n
\n
Demand deposits 122 053 0 0 0 122 053 117 401
\n
\n
Time deposits 22 280 44 73 0 22 397 21 960
\n
\n
Savings accounts 76 979 0 0 0 76 979 76 954
\n
\n
Special deposits 2 710 0 0 0 2 710 2 663
\n
\n
Other deposits 268 0 0 0 268 268
\n
Subtotal deposits from customers (excl. repos)
\n
224 290 44 73 0 224 407 219 246
\n
\n
Certificates of deposit 9 321 0 1 0 9 322 9 322
\n
\n
Savings certificates 104 0 0 0 104 104
\n
\n
Non-convertible bonds 15 621 0 1 006 0 16 627 16 627
\n
\n
Non-convertible subordinated liabilities 2 160 0 126 0 2 285 2 285
\n
Repos
\n
4
\n
11 091 7 0 0 11 097
\n
11 097
\n
\n
with credit institutions and investment firms 10 852 7 0 0 10 859 10 859
\n
\n
with customers 239 0 0 0 239 239
\n
Liabilities under investment contracts
\n
6
\n
0 0 12 002 0 12 002
\n
12 002
\n
Derivatives
\n
0 8 038 0 577 8 615
\n
8 605
\n
Short positions
\n
0 1 007 0 0 1 007
\n
1 007
\n
\n
In equity instruments 0 5 0 0 5 5
\n
\n
In debt securities 0 1 002 0 0 1 002 1 002
\n
Other
\n
5
\n
2 448 0 0 0 2 448
\n
2 370
\n
Total
\n
289 854 9 096 13 207 577 312 735
\n
307 403
\n
FINANCIAL LIABILITIES, 31
\n
-12-2021
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
38 047 0 0 0 38 047
\n
-
\n
of which deposits from banks repayable on demand 4 695 -
\n
Deposits from
\n
customers and debt securities (excl. repos)
\n
\n
224 759 21 1 312 0 226 093
\n
-
\n
\n
Demand deposits 112 097 0 0 0 112 097
\n
-
\n
\n
Time deposits 9 106 21 60 0 9 187
\n
-
\n
\n
Savings accounts 74 801 0 0 0 74 801
\n
-
\n
\n
Special deposits 2 962 0 0 0 2 962
\n
-
\n
\n
Other deposits 428 0 0 0 428
\n
-
\n
Subtotal deposits from customers (excl. repos)
\n
199 395 21 60 0 199 476
\n
-
\n
\n
Certificates of deposit 6 273 0 0 0 6 273
\n
-
\n
\n
Savings certificates 253 0 0 0 253
\n
-
\n
\n
Non-convertible bonds 15 892 0 1 118 0 17 011
\n
-
\n
\n
Non-convertible subordinated liabilities 2 946 0 134 0 3 080
\n
-
\n
Repos
\n
4
\n
3 293 2 0 0 3 295
\n
-
\n
\n
with credit institutions and investment firms 2 888 2 0 0 2 890
\n
-
\n
\n
with customers 405 0 0 0 405
\n
-
\n
Liabilities under investment
\n
contracts
\n
6
\n
0 0 13 603 0 13 603
\n
-
\n
Derivatives
\n
0 5 619 0 1 094 6 713
\n
-
\n
Short positions
\n
0 1 628 0 0 1 628
\n
-
\n
\n
In equity instruments 0 18 0 0 18
\n
-
\n
\n
In debt securities 0 1 611 0 0 1 611
\n
-
\n
Other
\n
5
\n
2 288 0 0 0 2 288
\n
-
\n
Total
\n
268 387 7 271 14 916 1 094 291 667
\n
-
\n
1 The carrying value comes close to the maximum credit exposure.
\n
2 The amount of the reverse repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out).
\n
3 Financial assets not included under \u2018Loans and advances to customers\u2019 as they are not directly related to commercial lending.
\n
4 The amount of the repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out), with the assets being partly reflected on the balance sheet
\n
and partly obtained through reverse repo transactions.
\n
5 Financial liabilities not included under deposits from customers as they are not directly related to commercial deposit acquisition.
\n
6 The difference between \u2018Investment contracts (insurance)\u2019 and \u2018Liabilities under investment contracts\u2019 is accounted for by the presentation of non-unbundled investment contracts that are
\n
included under \u2018Investment contracts (insurance)\u2019 on the financial assets side, but are included under \u2018Technical provisions (before reinsurance)\u2019 on the liabilities side.
\n

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\n\n

\n\n

\n\n

\n\n

\n\n\n
\u2022 \u2018Non-convertible bonds\u2019 comprise mainly KBC Bank, KBC Group, \u010cSOB and KBC IFIMA issues. They are usually recognised under
\n
\u2018Measured at amortised cost\u2019. However, if they contain closely related embedded derivatives, they are recorded under
\n
\u2018Designated at fair value\u2019 (see accounting policies). This item also includes three green bonds (for 500, 500 and 750 million euros
\n
each) and a social bond (for 750 million euros), which have been recognised at amortised cost.
\n
\u2022 More information on major new debt issues or redemptions is provided under the \u2018Consolidated cashflow statement\u2019.
\n
\u2022 \u2018Deposits from credit institutions and investment firms\u2019 include funding obtained from the ECB\u2019s TLTRO programme (15.4 billion
\n
euros at year-end 2022, 9.1 billion euros less than at year-end 2021 on account of redemptions). KBC calculates these deposits
\n
using the effective interest rate method, with the rate being adjusted should we fail to meet the conditions (similar to a floating
\n
rate instrument), as per paragraph B.5.4.5 of IFRS 9. KBC\u2019s management has reasonable assurance that KBC will comply with
\n
the conditions attached (including the level of lending to households and non-financial companies) and hence the interest has
\n
accordingly been recognised (a gross amount of 112 million euros in interest income (negative interest rate) in 2022 and 242
\n
million euros in 2021).
\n
\u2022 Transferred financial assets that continue to be recognised in their entirety: KBC regularly lends and/or sells securities with the
\n
commitment to buy them back at a later date (repo transactions). Securities lent or sold with such a commitment are transferred
\n
to the counterparty, and, in exchange, KBC receives cash or other financial assets. However, KBC retains the main risks and
\n
income relating to these securities, and, therefore, continues to recognise them on its balance sheet. In addition, a financial
\n
liability is recognised equalling the cash received.
\n
\n
Transferred financial assets that continue to be recognised in their entirety (carrying value, in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Transferred financial assets that continue to be recognised in their entirety: repo transactions and securities lent out
\n
17 425 13 762
\n
Held for
\n
trading 960 1 221
\n
Fair value through OCI
\n
860 1 474
\n
Amortised cost
\n
15 605 11 067
\n
Associated financial liability
\n
10 534 2 936
\n
Held for trading
\n
689 335
\n
Fair value through OCI
\n
609 362
\n
Amortised cost
\n
9 236 2 239
\n
\n
\u2022 It should be noted that KBC has more transferred financial assets on its balance sheet than repo transactions, due to the fact
\n
that the cash legs of certain repo transactions are offset against reverse repo transactions if they are carried out with the same
\n
counterparty, in the same currency and with the same maturity date. Moreover, there is a legally enforceable right, and an
\n
intention, to settle the transactions on a net basis or to realise the financial asset and settle the financial liability simultaneously.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria in 2022 is provided in Note 6.6.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. We report on estimated greenhouse gas emissions
\n
associated with lending and other activities and have defined objectives for reducing the greenhouse gas intensity of loans
\n
we have provided to the energy sector, electricity producers and the real estate sector, mortgage loans and loans provided
\n
for commercial residential real estate, as well as loans provided to the automotive industry and financial and operational car
\n
leasing (see Note 6.2), the agricultural sector, and cement, steel and aluminium producers. See \u2018Focus on climate\u2019 in the \u2018Report
\n
of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our Climate Report and
\n
\n
our Sustainability Report at www.kbc.com.
\n

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\n

\n

\n
Note 4.5: Financial assets and liabilities measured at fair value \u2013 fair value hierarchy
\n
\n
\n
Fair value hierarchy
\n
31-12-2022 31-12-2021
\n
(in millions of EUR)
\n
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
\n
FINANCIAL ASSETS AT FAIR VALUE
\n
\n
Mandatorily measured at fair value through profit or loss other than held for trading (including
\n
\n
overlay)
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 13 0 13 0 0 0 0
\n
reverse repos)
\n
Loans and advances to customers (incl. reverse repos)
\n
0 0 625 625 0 0 560 560
\n
Equity instruments
\n
1 131 0 118 1 250 1 323 0 52 1 374
\n
Investment contracts (insurance)
\n
12 638 134 0 12 771 14 365 254 0 14 620
\n
Debt securities
\n
12 0 5 17 14 0 3 17
\n
of which sovereign bonds
\n
\n
0
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 34 0 34 0 1 0 1
\n
reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Equity instruments
\n
429 0 0 430 448 0 0 448
\n
Debt securities
\n
1 480 244 4 1 728 1 522 1 432 4 2 958
\n
\n
of which sovereign bonds 1 444 223 0 1 667 1 441 1 076 0 2 517
\n
Derivatives
\n
3 5 547 729 6 279 1 4 482 961 5 443
\n
Other
\n
0 0 0 0 0 0 0 0
\n
Designated upon initial recognition at fair value through profit or loss (FVO)
\n
Loans and advances to credit institutions and
\n
0 0 0 0 0 0 0 0
\n
investment firms (incl. reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Debt securities
\n
0 0 0 0 0 0 0 0
\n
\n
of which sovereign bonds 0 0 0 0 0 0 0 0
\n
At fair value through OCI
\n
\n
\n
\n
\n
\n
\n
\n
\n
Equity instruments
\n
18 1 297 315 15 1 306 321
\n
Debt securities
\n
9 508 2 070 235 11 813 12 269 2 963 271 15 503
\n
\n
of which sovereign bonds
\n
\n
7 003 1 059 73 8 135 8 751
\n
\n
1 711
\n
\n
52
\n
\n
10 514
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0 542 0 542 0 283 0 283
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial assets at fair value
\n
25 219 8 585 2 014 35 818 29 956 9 416 2 157 41 529
\n
FINANCIAL LIABILITIES AT FAIR VALUE
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 7 0 7 0 2 0 2
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 44 0 44 0 21 0 21
\n
Derivatives
\n
2
\n
6 911
\n
1 125
\n
8 038
\n
1
\n
4 410
\n
1 209
\n
5 619
\n
Short positions
\n
884 123 0 1 007 1 582 47 0 1 628
\n
Designated at fair value
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 0 0 0 0 0 0 0
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 74 1 131 1 205 0 61 1 251 1 312
\n
Liabilities under investment contracts
\n
12 002 0 0 12 002 13 603 0 0 13 603
\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0
\n
479
\n
98
\n
577
\n
0
\n
696
\n
398
\n
1 094
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial liabilities at fair value
\n
12 887 7 638 2 355 22 881 15 185 5 238 2 857 23 280
\n
\n
\u2022 The fair value hierarchy prioritises the valuation techniques and the respective inputs into three levels.
\n
- The fair value hierarchy gives the highest priority to \u2018level 1 inputs\u2019. This means that, when there is an active market, quoted
\n
prices have to be used to measure the financial assets or liabilities at fair value. Level 1 inputs are prices that are readily and
\n
regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency (and that are
\n
quoted in active markets accessible to KBC). They represent actual and regularly occurring market transactions on an arm\u2019s
\n
length basis. The fair value is then based on a mark-to-market valuation derived from currently available transaction prices.
\n
No valuation technique (model) is involved.
\n
- If there are no price quotations available, the reporting entity establishes fair value using a model based on observable or
\n
unobservable inputs. The use of observable inputs must be maximised. Observable inputs are also referred to as \u2018level 2
\n
inputs\u2019 and reflect the assumptions market participants would use in pricing the asset or liability based on market data
\n
obtained from sources independent of the reporting entity. Examples of observable inputs are the risk-free rate, exchange
\n
rates, stock prices and implied volatility. Valuation techniques based on observable inputs include discounted cashflow
\n
analysis, or reference to the current or recent fair value of a similar instrument.
\n
- Unobservable inputs are also referred to as \u2018level 3 inputs\u2019 and reflect the reporting entity\u2019s own assumptions about the
\n
assumptions that market participants would use in pricing the asset or liability (including assumptions regarding the risks
\n
involved). Unobservable inputs reflect a market that is not active. For example, proxies and correlation factors can be
\n
considered to be unobservable in the market.
\n
\u2022 When the inputs used to measure the fair value of an asset or a liability can be categorised into different levels of the fair value
\n
hierarchy, the fair value measurement is classified in its entirety into the same level as the lowest level input that is significant
\n
to the entire fair value measurement. For example, if a fair value measurement uses observable inputs that require significant
\n
adjustment based on unobservable inputs, that measurement is a level 3 measurement.
\n
\u2022 The valuation methodology and the corresponding classification in the fair value hierarchy of the most commonly used financial
\n
instruments are summarised in the table. Whereas the majority of instruments of a certain type are within the level indicated in
\n
the table, a small portion may actually be classified in another level.
\n
\u2022 KBC follows the principle that transfers into and out of levels of the fair value hierarchy are made at the end of the reporting
\n
period. Transfers between the various levels are dealt with in more detail in Note 4.6 and Note 4.7.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Instrument type Products Valuation technique
\n
Liquid financial instruments
\n
FX spots, exchange traded financial futures, exchange traded options,
\n
Mark-to-market (quoted prices in active
\n
for which quoted prices are
\n
exchange traded stocks, exchange traded funds, liquid government
\n
markets), for bonds: BVAL or vendor
\n
data.
\n
\n
Level 1
\n
regularly available
\n
\n
bonds, other liquid bonds, liquid asset backed securities (ABS) in active
\n
markets
\n
Plain vanilla/liquid
\n
(Cross-currency) interest rate swaps (IRS), FX swaps, FX forwards, forward
\n
Discounted cashflow analysis based on
\n
derivatives
\n
\n
rate agreements (FRA), inflation swaps, dividend swaps and futures,
\n
discount and estimation curves (derived
\n
reverse floaters, bond future options, interest rate future opt
\n
ions, overnight
\n
from quoted deposit rates,
\n
\n
index swaps (OIS), FX resets
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Caps & floors, interest rate options, European stock options, European &
\n
Option pricing model based on
\n
American FX options, forward starting options, digital FX options, FX strips
\n
observable inputs (e.g., volatilities)
\n
\n
of simple options, European swaptions, European cancellable IRS,
\n
\n
compound options
\n
\n
Linear financial liabilities
\n
Deposits, simple cashflows, repo transactions
\n
Discounted cashflow analysis based on
\n
(without optional features)
\n
\u2013
\n
discount and estimation curves (derived
\n
cash instruments
\n
\n
from quoted deposit rates,
\n
\n
\n
Level 2
\n
FX swaps and (CC)IRS)
\n
\n
\n
Semi-liquid bonds/asset
\n
Semi-liquid bonds/asset backed securities
\n
BVAL, prices corroborated by alternative
\n
backed securities
\n
\n
observable market data, or using
\n
comparable spread method
\n
\n
\n
Debt instruments
\n
KBC IFIMA own issues (liabilities), mortgage bonds held by \u010cSOB
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
observable inputs
\n
\n
\n
Linear financial assets (cash
\n
Loans, commercial paper
\n
Discounted cashflow analysis based on
\n
instruments)
\n
\n
discount and estimation curves (derived
\n
from quoted deposit rates,
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Exotic derivatives
\n
Target profit forwards, flexible forwards, American & Asian stock options,
\n
Option pricing model based on
\n
Bermudan swaptions, digital interest rate options, quanto interest rate
\n
observable inputs (e.g., correlation)
\n
\n
options, digital stock options, composite stock options, barrier stock
\n
options, quanto digital FX options, FX
\n
Asian options, FX European barrier
\n
options, FX simple digital barrier options, FX touch rebates, inflation
\n
options, Bermudan cancellable IRS, constant maturity swaps (CMS), CMS
\n
spread swaps, CMS spread options, CMS interest rate caps/floors,
\n
(callable) ra
\n
nge accruals, outperformance options, auto-callable options,
\n
\n
Level 3
\n
lookback options, commodity swaps and forwards
\n
Illiquid credit-linked
\n
Collateralised debt obligations (notes)
\n
Valuation model based on correlation of
\n
instruments
\n
\n
probability of default of underlying assets
\n
\n
\n
Private equity investments
\n
Private equity and non-quoted participations
\n
Based on the valuation guidelines of the
\n
European Private Equity & Venture Capital
\n
Association
\n
\n
\n
Illiquid bonds/asset backed
\n
Illiquid (mortgage) bonds/asset backed securities that are indicatively
\n
BVAL, third-party pricing (e.g., lead
\n
securities
\n
\n
priced by a single pricing provider in an inactive market
\n
\n
manager), where prices
\n
cannot be
\n
\n
\n
corroborated due to a lack of
\n
available/reliable alternative market data
\n
\n
\n
Debt instruments
\n
KBC own issues (KBC IFIMA)
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
\n
unobservable inputs (indicative pricing by
\n
third parties for derivatives)
\n
\n
\n
Structured loans
\n
Government-regulated loans with leveraged interest rates and exotic
\n
Discounted cashflow analysis and
\n
early repayment
\n
schedules (K&H)
\n
valuation of related derivatives based on
\n
unobservable inputs
\n
\n
\n
\n

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\n\n

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\n\n

\n\n

\n\n

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\n\n

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\n

\n

\n\n
Note 4.7: Financial assets and liabilities measured at fair value \u2013 focus on level 3
\n
\n
\u2022 In 2022, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 65 million euros, primarily on account of new transactions, partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of unlisted shares rose by 66 million euros, due primarily to new
\n
transactions.
\n
- Financial assets at fair value through OCI: the fair value of debt instruments decreased by 36 million euros, primarily on
\n
account of instruments reaching maturity and changes in market inputs.
\n
- Financial assets held for trading: the fair value of derivatives decreased by 232 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities held for trading: the fair value of derivatives decreased by 83 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives decreased by 300 million euros due to changes
\n
in market inputs.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of issued debt instruments decreased by 120
\n
million euros, primarily on account of transactions reaching maturity and the sale of existing positions, only partly offset by
\n
new transactions.
\n
\u2022 In 2021, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 173 million euros, primarily on account of new transactions, only partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of debt instruments fell by 34 million euros, owing primarily to changes
\n
in market inputs.
\n
- Financial liabilities held for trading: the fair value of derivatives increased by 103 million euros, due mainly to changes in market
\n
inputs and new transactions, partly offset by sales. The fair value of issued debt instruments fell by 85 million euros, due mainly
\n
to instruments that had reached maturity.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives increased by 398 million euros due to
\n
reclassifications in level 3 owing to an optimisation of the classification method.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of debt instruments increased by 100 million
\n
euros, primarily on account of new issues, partly offset by sales.
\n
\u2022 Some level 3 assets are associated or economically hedged with identical level 3 liabilities, which means that KBC\u2019s exposure
\n
to unobservable inputs is lower than would appear from the gross figures. Most of the level 3 instruments are also valued using
\n
third-party pricing sources, with KBC not developing any unobservable inputs itself. The main unobservable inputs applied by
\n
KBC to the valuation of exotic derivatives include: mean reversion parameter on Bermudan swaptions, equity cross-correlations
\n
and volatilities for certain stock options, interest-rate correlations for CMS spread options, and the funding costs used to
\n
determine the forward equity prices as part of the valuation of certain equity derivatives. The change in fair value resulting from
\n
a change in these inputs to reflect reasonably possible alternative assumptions is insignificant.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsHeldForTradingExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag821": { "value": "\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
\n
Note 3.1: Net interest income
\n
(in millions of EUR)
\n
2022
\n
2021
\n
Total
\n
5 161 4 451
\n
Interest income
\n
11 226 6 320
\n
Interest income on financial instruments calculated using the effective interest rate
\n
method
\n
\n
Financial assets at amortised cost 7 973 4 797
\n
\n
Financial assets at fair value through OCI 251 286
\n
\n
Hedging derivatives 1 838 355
\n
\n
Financial liabilities (negative interest rate) 289 425
\n
\n
Other 130 25
\n
Interest income on
\n
other financial instruments
\n
\n
Financial assets MFVPL other than held for trading 35 24
\n
\n
Financial assets held for trading 710 407
\n
\n
Of which economic hedges 582 367
\n
\n
Other financial assets at fair value through profit or loss 0 0
\n
Interest expense
\n
-6 064 -1 869
\n
Interest expense on financial instruments calculated using the effective interest rate method
\n
\n
\n
Financial liabilities at amortised cost -2 320 -534
\n
\n
Hedging derivatives -1 972 -604
\n
\n
Financial assets (negative interest rate) -94 -253
\n
\n
Other -5 -7
\n
Interest expense on other financial instruments
\n
\n
\n
Financial liabilities held for trading -1 639 -459
\n
\n
Of which economic hedges -1 595 -414
\n
\n
Other financial liabilities at fair value through profit or loss -33 -11
\n
\n
Net interest expense relating to defined benefit plans -1 -1
\n
\n
\u2022 \u2018Financial liabilities (negative interest rate)\u2019 and \u2018Financial assets (negative interest rate)\u2019: these rates relate mainly to
\n
transactions with central banks, interbank and professional counterparties, corporate clients, and targeted long-term
\n
refinancing operations (TLTRO). More information on TLTRO can be found in Note 4.1.
\n
\u2022 The increase in interest income and interest expense from \u2018Hedging derivatives\u2019, \u2018Financial assets held for trading (of which
\n
economic hedges)\u2019 and \u2018Financial liabilities held for trading (of which economic hedges)\u2019 relates to a change in presentation of
\n
the negative interest on derivatives (at KBC Bank, in accordance with reporting on a solo basis (\u2018Schema A\u2019) under Belgian
\n
GAAP, resulting in an increase in both interest income and interest expense of 450 million euros in 2022), and to the overall
\n
increase in interest rates in 2022.
\n

\n
\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n\n
Note 3.2: Dividend income
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
59 45
\n
Equity
\n
instruments MFVPL other than held for trading 35 28
\n
Equity instruments held for trading
\n
10 11
\n
Equity instruments at FVOCI
\n
15 6
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.1: Financial assets and liabilities, breakdown by portfolio and product
\n
(in millions of EUR)
\n
Measured
\n
at
\n
amortised
\n
cost (AC)
\n
Measured
\n
at fair
\n
value
\n
through
\n
other
\n
compre-
\n
hensive
\n
income
\n
(FVOCI)
\n
Mandatorily
\n
measured at
\n
fair value
\n
through
\n
profit or loss
\n
(MFVPL) excl.
\n
HFT and
\n
overlay
\n
Measured at
\n
fair value \u2013
\n
overlay
\n
approach
\n
(overlay)
\n
Held for
\n
trading
\n
(HFT)
\n
Desig-
\n
nated at
\n
fair value
\n
1
\n
(FVO)
\n
Hedging
\n
Deriva-
\n
tives
\n
Total
\n
Total pro
\n
forma
\n
excluding
\n
KBC Bank
\n
Bulgaria
\n
(formerly
\n
Raiffeisen-
\n
bank
\n
Bulgaria)
\n
FINANCIAL ASSETS, 31-12-2022
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
4 240 0 13 0 1 0 0 4 254
\n
4 203
\n
of which loans and advances to banks repayable on
\n
demand and term loans to banks at not more than three
\n
months
\n
\n
1 237 1 237
\n
Loans and advances to customers (excluding reverse
\n
repos)
\n
177 427 0 625 0 0 0 0 178 053
\n
174 083
\n
Trade receivables
\n
2 818
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 818
\n
2 729
\n
Consumer credit
\n
6 222
\n
0
\n
430
\n
0
\n
0
\n
0
\n
0
\n
6 652
\n
5 977
\n
Mortgage loans
\n
73 465
\n
0
\n
196
\n
0
\n
0
\n
0
\n
0
\n
73 660
\n
72 891
\n
Term loans
\n
82 894
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
82 894
\n
80 744
\n
Finance lease
\n
6 368
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
6 368
\n
6 117
\n
Current account advances
\n
4 886
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 886
\n
4 885
\n
Other
\n
774
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
774
\n
740
\n
Reverse repos
\n
2
\n
\n
20 186
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 219
\n
20 219
\n
with credit institutions and investment firms
\n
20 018
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 050
\n
20 050
\n
with customers
\n
168
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
168
\n
168
\n
Equity instruments
\n
0
\n
315
\n
13
\n
1 237
\n
430
\n
0
\n
0
\n
1 994
\n
1 989
\n
Investment contracts (insurance)
\n
6
\n
\n
0
\n
0
\n
12 771
\n
0
\n
0
\n
0
\n
0
\n
12 771
\n
12 771
\n
Debt securities
\n
52 030
\n
11 813
\n
17
\n
0
\n
1 728
\n
0
\n
0
\n
65 588
\n
64 871
\n
Public bodies
\n
44 219
\n
8 135
\n
0
\n
0
\n
1 667
\n
0
\n
0
\n
54 021
\n
53 390
\n
Credit institutions and investment firms
\n
5 160
\n
1 621
\n
0
\n
0
\n
9
\n
0
\n
0
\n
6 790
\n
6 747
\n
Corporates
\n
2 651
\n
2 057
\n
17
\n
0
\n
53
\n
0
\n
0
\n
4 777
\n
4 733
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
6 279
\n
0
\n
542
\n
6 821
\n
6 813
\n
3
\n
\n
Other
\n
1 561
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
1 561
\n
1 561
\n
Total
\n
255 444
\n
12 128
\n
13 439
\n
1 237
\n
8 471
\n
0
\n
542
\n
291 262
\n
286 511
\n
FINANCIAL ASSETS, 31-12-2021
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
7 920 0 0 0 1 0 0 7 920
\n
-
\n
of which loans and advances to banks repayable on demand
\n
and term loans to banks at not more than three months
\n
3 146 -
\n
Loans and advances to customers (excl. reverse repos)
\n
159 167
\n
0
\n
560
\n
0
\n
0
\n
0
\n
0
\n
159 728
\n
-
\n
Trade receivables
\n
2 090
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 090
\n
-
\n
Consumer credit
\n
5 470
\n
0
\n
381
\n
0
\n
0
\n
0
\n
0
\n
5 851
\n
-
\n
Mortgage loans
\n
67 486
\n
0
\n
179
\n
0
\n
0
\n
0
\n
0
\n
67 665
\n
-
\n
Term loans
\n
72 998
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
72 998
\n
-
\n
Finance lease
\n
5 815
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
5 815
\n
-
\n
Current account advances
\n
4 819
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 819
\n
-
\n
Other
\n
490
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
490
\n
-
\n
2
\n
-
\n
\n
Reverse repos
\n
24 978
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 978
\n
with credit institutions and investment firms
\n
24 861
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 861
\n
-
\n
with customers
\n
117
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
117
\n
-
\n
Equity instruments
\n
0
\n
321
\n
8
\n
1 366
\n
448
\n
0
\n
0
\n
2 144
\n
-
\n
6
\n
-
\n
\n
Investment contracts (insurance)
\n
0
\n
0
\n
14 620
\n
0
\n
0
\n
0
\n
0
\n
14 620
\n
Debt securities
\n
47 172
\n
15 503
\n
17
\n
0
\n
2 958
\n
0
\n
0
\n
65 650
\n
-
\n
Public bodies
\n
41 475
\n
10 514
\n
0
\n
0
\n
2 517
\n
0
\n
0
\n
54 507
\n
-
\n
Credit institutions and investment firms
\n
3 310
\n
2 245
\n
0
\n
0
\n
357
\n
0
\n
0
\n
5 912
\n
-
\n
Corporates
\n
2 387
\n
2 744
\n
17
\n
0
\n
84
\n
0
\n
0
\n
5 232
\n
-
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
5 443
\n
0
\n
283
\n
5 727
\n
-
\n
3
\n
-
\n
\n
Other
\n
892
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
892
\n
Total
\n
240 128
\n
15 824
\n
15 205
\n
1 366
\n
8 850
\n
0
\n
283
\n
281 658
\n
-
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
(in millions of EUR)
\n
Measured at
\n
amortised
\n
cost
\n
(AC)
\n
Held for
\n
trading (HFT)
\n
Designated at
\n
fair value (FVO)
\n
\n
Hedging
\n
derivatives
\n
Total
\n
Total pro forma
\n
excluding KBC
\n
Bank Bulgaria
\n
(formerly
\n
Raiffeisenbank
\n
Bulgaria)
\n
FINANCIAL
\n
LIABILITIES, 31-12-2022
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
24 819 0 0 0 24 819
\n
24 737
\n
of which deposits from banks repayable on demand
\n
\n
\n
\n
\n
\n
\n
\n
5 085 5 085
\n
Deposits from customers and debt
\n
securities (excl. repos)
\n
\n
251 496 44 1 205 0 252 746
\n
247 585
\n
\n
Demand deposits 122 053 0 0 0 122 053 117 401
\n
\n
Time deposits 22 280 44 73 0 22 397 21 960
\n
\n
Savings accounts 76 979 0 0 0 76 979 76 954
\n
\n
Special deposits 2 710 0 0 0 2 710 2 663
\n
\n
Other deposits 268 0 0 0 268 268
\n
Subtotal deposits from customers (excl. repos)
\n
224 290 44 73 0 224 407 219 246
\n
\n
Certificates of deposit 9 321 0 1 0 9 322 9 322
\n
\n
Savings certificates 104 0 0 0 104 104
\n
\n
Non-convertible bonds 15 621 0 1 006 0 16 627 16 627
\n
\n
Non-convertible subordinated liabilities 2 160 0 126 0 2 285 2 285
\n
Repos
\n
4
\n
11 091 7 0 0 11 097
\n
11 097
\n
\n
with credit institutions and investment firms 10 852 7 0 0 10 859 10 859
\n
\n
with customers 239 0 0 0 239 239
\n
Liabilities under investment contracts
\n
6
\n
0 0 12 002 0 12 002
\n
12 002
\n
Derivatives
\n
0 8 038 0 577 8 615
\n
8 605
\n
Short positions
\n
0 1 007 0 0 1 007
\n
1 007
\n
\n
In equity instruments 0 5 0 0 5 5
\n
\n
In debt securities 0 1 002 0 0 1 002 1 002
\n
Other
\n
5
\n
2 448 0 0 0 2 448
\n
2 370
\n
Total
\n
289 854 9 096 13 207 577 312 735
\n
307 403
\n
FINANCIAL LIABILITIES, 31
\n
-12-2021
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
38 047 0 0 0 38 047
\n
-
\n
of which deposits from banks repayable on demand 4 695 -
\n
Deposits from
\n
customers and debt securities (excl. repos)
\n
\n
224 759 21 1 312 0 226 093
\n
-
\n
\n
Demand deposits 112 097 0 0 0 112 097
\n
-
\n
\n
Time deposits 9 106 21 60 0 9 187
\n
-
\n
\n
Savings accounts 74 801 0 0 0 74 801
\n
-
\n
\n
Special deposits 2 962 0 0 0 2 962
\n
-
\n
\n
Other deposits 428 0 0 0 428
\n
-
\n
Subtotal deposits from customers (excl. repos)
\n
199 395 21 60 0 199 476
\n
-
\n
\n
Certificates of deposit 6 273 0 0 0 6 273
\n
-
\n
\n
Savings certificates 253 0 0 0 253
\n
-
\n
\n
Non-convertible bonds 15 892 0 1 118 0 17 011
\n
-
\n
\n
Non-convertible subordinated liabilities 2 946 0 134 0 3 080
\n
-
\n
Repos
\n
4
\n
3 293 2 0 0 3 295
\n
-
\n
\n
with credit institutions and investment firms 2 888 2 0 0 2 890
\n
-
\n
\n
with customers 405 0 0 0 405
\n
-
\n
Liabilities under investment
\n
contracts
\n
6
\n
0 0 13 603 0 13 603
\n
-
\n
Derivatives
\n
0 5 619 0 1 094 6 713
\n
-
\n
Short positions
\n
0 1 628 0 0 1 628
\n
-
\n
\n
In equity instruments 0 18 0 0 18
\n
-
\n
\n
In debt securities 0 1 611 0 0 1 611
\n
-
\n
Other
\n
5
\n
2 288 0 0 0 2 288
\n
-
\n
Total
\n
268 387 7 271 14 916 1 094 291 667
\n
-
\n
1 The carrying value comes close to the maximum credit exposure.
\n
2 The amount of the reverse repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out).
\n
3 Financial assets not included under \u2018Loans and advances to customers\u2019 as they are not directly related to commercial lending.
\n
4 The amount of the repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out), with the assets being partly reflected on the balance sheet
\n
and partly obtained through reverse repo transactions.
\n
5 Financial liabilities not included under deposits from customers as they are not directly related to commercial deposit acquisition.
\n
6 The difference between \u2018Investment contracts (insurance)\u2019 and \u2018Liabilities under investment contracts\u2019 is accounted for by the presentation of non-unbundled investment contracts that are
\n
included under \u2018Investment contracts (insurance)\u2019 on the financial assets side, but are included under \u2018Technical provisions (before reinsurance)\u2019 on the liabilities side.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n\n
\u2022 \u2018Non-convertible bonds\u2019 comprise mainly KBC Bank, KBC Group, \u010cSOB and KBC IFIMA issues. They are usually recognised under
\n
\u2018Measured at amortised cost\u2019. However, if they contain closely related embedded derivatives, they are recorded under
\n
\u2018Designated at fair value\u2019 (see accounting policies). This item also includes three green bonds (for 500, 500 and 750 million euros
\n
each) and a social bond (for 750 million euros), which have been recognised at amortised cost.
\n
\u2022 More information on major new debt issues or redemptions is provided under the \u2018Consolidated cashflow statement\u2019.
\n
\u2022 \u2018Deposits from credit institutions and investment firms\u2019 include funding obtained from the ECB\u2019s TLTRO programme (15.4 billion
\n
euros at year-end 2022, 9.1 billion euros less than at year-end 2021 on account of redemptions). KBC calculates these deposits
\n
using the effective interest rate method, with the rate being adjusted should we fail to meet the conditions (similar to a floating
\n
rate instrument), as per paragraph B.5.4.5 of IFRS 9. KBC\u2019s management has reasonable assurance that KBC will comply with
\n
the conditions attached (including the level of lending to households and non-financial companies) and hence the interest has
\n
accordingly been recognised (a gross amount of 112 million euros in interest income (negative interest rate) in 2022 and 242
\n
million euros in 2021).
\n
\u2022 Transferred financial assets that continue to be recognised in their entirety: KBC regularly lends and/or sells securities with the
\n
commitment to buy them back at a later date (repo transactions). Securities lent or sold with such a commitment are transferred
\n
to the counterparty, and, in exchange, KBC receives cash or other financial assets. However, KBC retains the main risks and
\n
income relating to these securities, and, therefore, continues to recognise them on its balance sheet. In addition, a financial
\n
liability is recognised equalling the cash received.
\n
\n
Transferred financial assets that continue to be recognised in their entirety (carrying value, in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Transferred financial assets that continue to be recognised in their entirety: repo transactions and securities lent out
\n
17 425 13 762
\n
Held for
\n
trading 960 1 221
\n
Fair value through OCI
\n
860 1 474
\n
Amortised cost
\n
15 605 11 067
\n
Associated financial liability
\n
10 534 2 936
\n
Held for trading
\n
689 335
\n
Fair value through OCI
\n
609 362
\n
Amortised cost
\n
9 236 2 239
\n
\n
\u2022 It should be noted that KBC has more transferred financial assets on its balance sheet than repo transactions, due to the fact
\n
that the cash legs of certain repo transactions are offset against reverse repo transactions if they are carried out with the same
\n
counterparty, in the same currency and with the same maturity date. Moreover, there is a legally enforceable right, and an
\n
intention, to settle the transactions on a net basis or to realise the financial asset and settle the financial liability simultaneously.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria in 2022 is provided in Note 6.6.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. We report on estimated greenhouse gas emissions
\n
associated with lending and other activities and have defined objectives for reducing the greenhouse gas intensity of loans
\n
we have provided to the energy sector, electricity producers and the real estate sector, mortgage loans and loans provided
\n
for commercial residential real estate, as well as loans provided to the automotive industry and financial and operational car
\n
leasing (see Note 6.2), the agricultural sector, and cement, steel and aluminium producers. See \u2018Focus on climate\u2019 in the \u2018Report
\n
of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our Climate Report and
\n
\n
our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n

\n

\n

\n

\n

\n

\n

\n
Note 4.5: Financial assets and liabilities measured at fair value \u2013 fair value hierarchy
\n
\n
\n
Fair value hierarchy
\n
31-12-2022 31-12-2021
\n
(in millions of EUR)
\n
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
\n
FINANCIAL ASSETS AT FAIR VALUE
\n
\n
Mandatorily measured at fair value through profit or loss other than held for trading (including
\n
\n
overlay)
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 13 0 13 0 0 0 0
\n
reverse repos)
\n
Loans and advances to customers (incl. reverse repos)
\n
0 0 625 625 0 0 560 560
\n
Equity instruments
\n
1 131 0 118 1 250 1 323 0 52 1 374
\n
Investment contracts (insurance)
\n
12 638 134 0 12 771 14 365 254 0 14 620
\n
Debt securities
\n
12 0 5 17 14 0 3 17
\n
of which sovereign bonds
\n
\n
0
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 34 0 34 0 1 0 1
\n
reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Equity instruments
\n
429 0 0 430 448 0 0 448
\n
Debt securities
\n
1 480 244 4 1 728 1 522 1 432 4 2 958
\n
\n
of which sovereign bonds 1 444 223 0 1 667 1 441 1 076 0 2 517
\n
Derivatives
\n
3 5 547 729 6 279 1 4 482 961 5 443
\n
Other
\n
0 0 0 0 0 0 0 0
\n
Designated upon initial recognition at fair value through profit or loss (FVO)
\n
Loans and advances to credit institutions and
\n
0 0 0 0 0 0 0 0
\n
investment firms (incl. reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Debt securities
\n
0 0 0 0 0 0 0 0
\n
\n
of which sovereign bonds 0 0 0 0 0 0 0 0
\n
At fair value through OCI
\n
\n
\n
\n
\n
\n
\n
\n
\n
Equity instruments
\n
18 1 297 315 15 1 306 321
\n
Debt securities
\n
9 508 2 070 235 11 813 12 269 2 963 271 15 503
\n
\n
of which sovereign bonds
\n
\n
7 003 1 059 73 8 135 8 751
\n
\n
1 711
\n
\n
52
\n
\n
10 514
\n

\n\n

\n\n

\n\n

\n\n

\n\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0 542 0 542 0 283 0 283
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial assets at fair value
\n
25 219 8 585 2 014 35 818 29 956 9 416 2 157 41 529
\n
FINANCIAL LIABILITIES AT FAIR VALUE
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 7 0 7 0 2 0 2
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 44 0 44 0 21 0 21
\n
Derivatives
\n
2
\n
6 911
\n
1 125
\n
8 038
\n
1
\n
4 410
\n
1 209
\n
5 619
\n
Short positions
\n
884 123 0 1 007 1 582 47 0 1 628
\n
Designated at fair value
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 0 0 0 0 0 0 0
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 74 1 131 1 205 0 61 1 251 1 312
\n
Liabilities under investment contracts
\n
12 002 0 0 12 002 13 603 0 0 13 603
\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0
\n
479
\n
98
\n
577
\n
0
\n
696
\n
398
\n
1 094
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial liabilities at fair value
\n
12 887 7 638 2 355 22 881 15 185 5 238 2 857 23 280
\n
\n
\u2022 The fair value hierarchy prioritises the valuation techniques and the respective inputs into three levels.
\n
- The fair value hierarchy gives the highest priority to \u2018level 1 inputs\u2019. This means that, when there is an active market, quoted
\n
prices have to be used to measure the financial assets or liabilities at fair value. Level 1 inputs are prices that are readily and
\n
regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency (and that are
\n
quoted in active markets accessible to KBC). They represent actual and regularly occurring market transactions on an arm\u2019s
\n
length basis. The fair value is then based on a mark-to-market valuation derived from currently available transaction prices.
\n
No valuation technique (model) is involved.
\n
- If there are no price quotations available, the reporting entity establishes fair value using a model based on observable or
\n
unobservable inputs. The use of observable inputs must be maximised. Observable inputs are also referred to as \u2018level 2
\n
inputs\u2019 and reflect the assumptions market participants would use in pricing the asset or liability based on market data
\n
obtained from sources independent of the reporting entity. Examples of observable inputs are the risk-free rate, exchange
\n
rates, stock prices and implied volatility. Valuation techniques based on observable inputs include discounted cashflow
\n
analysis, or reference to the current or recent fair value of a similar instrument.
\n
- Unobservable inputs are also referred to as \u2018level 3 inputs\u2019 and reflect the reporting entity\u2019s own assumptions about the
\n
assumptions that market participants would use in pricing the asset or liability (including assumptions regarding the risks
\n
involved). Unobservable inputs reflect a market that is not active. For example, proxies and correlation factors can be
\n
considered to be unobservable in the market.
\n
\u2022 When the inputs used to measure the fair value of an asset or a liability can be categorised into different levels of the fair value
\n
hierarchy, the fair value measurement is classified in its entirety into the same level as the lowest level input that is significant
\n
to the entire fair value measurement. For example, if a fair value measurement uses observable inputs that require significant
\n
adjustment based on unobservable inputs, that measurement is a level 3 measurement.
\n
\u2022 The valuation methodology and the corresponding classification in the fair value hierarchy of the most commonly used financial
\n
instruments are summarised in the table. Whereas the majority of instruments of a certain type are within the level indicated in
\n
the table, a small portion may actually be classified in another level.
\n
\u2022 KBC follows the principle that transfers into and out of levels of the fair value hierarchy are made at the end of the reporting
\n
period. Transfers between the various levels are dealt with in more detail in Note 4.6 and Note 4.7.
\n

\n\n

\n\n

\n\n

\n\n

\n\n
Instrument type Products Valuation technique
\n
Liquid financial instruments
\n
FX spots, exchange traded financial futures, exchange traded options,
\n
Mark-to-market (quoted prices in active
\n
for which quoted prices are
\n
exchange traded stocks, exchange traded funds, liquid government
\n
markets), for bonds: BVAL or vendor
\n
data.
\n
\n
Level 1
\n
regularly available
\n
\n
bonds, other liquid bonds, liquid asset backed securities (ABS) in active
\n
markets
\n
Plain vanilla/liquid
\n
(Cross-currency) interest rate swaps (IRS), FX swaps, FX forwards, forward
\n
Discounted cashflow analysis based on
\n
derivatives
\n
\n
rate agreements (FRA), inflation swaps, dividend swaps and futures,
\n
discount and estimation curves (derived
\n
reverse floaters, bond future options, interest rate future opt
\n
ions, overnight
\n
from quoted deposit rates,
\n
\n
index swaps (OIS), FX resets
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Caps & floors, interest rate options, European stock options, European &
\n
Option pricing model based on
\n
American FX options, forward starting options, digital FX options, FX strips
\n
observable inputs (e.g., volatilities)
\n
\n
of simple options, European swaptions, European cancellable IRS,
\n
\n
compound options
\n
\n
Linear financial liabilities
\n
Deposits, simple cashflows, repo transactions
\n
Discounted cashflow analysis based on
\n
(without optional features)
\n
\u2013
\n
discount and estimation curves (derived
\n
cash instruments
\n
\n
from quoted deposit rates,
\n
\n
\n
Level 2
\n
FX swaps and (CC)IRS)
\n
\n
\n
Semi-liquid bonds/asset
\n
Semi-liquid bonds/asset backed securities
\n
BVAL, prices corroborated by alternative
\n
backed securities
\n
\n
observable market data, or using
\n
comparable spread method
\n
\n
\n
Debt instruments
\n
KBC IFIMA own issues (liabilities), mortgage bonds held by \u010cSOB
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
observable inputs
\n
\n
\n
Linear financial assets (cash
\n
Loans, commercial paper
\n
Discounted cashflow analysis based on
\n
instruments)
\n
\n
discount and estimation curves (derived
\n
from quoted deposit rates,
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Exotic derivatives
\n
Target profit forwards, flexible forwards, American & Asian stock options,
\n
Option pricing model based on
\n
Bermudan swaptions, digital interest rate options, quanto interest rate
\n
observable inputs (e.g., correlation)
\n
\n
options, digital stock options, composite stock options, barrier stock
\n
options, quanto digital FX options, FX
\n
Asian options, FX European barrier
\n
options, FX simple digital barrier options, FX touch rebates, inflation
\n
options, Bermudan cancellable IRS, constant maturity swaps (CMS), CMS
\n
spread swaps, CMS spread options, CMS interest rate caps/floors,
\n
(callable) ra
\n
nge accruals, outperformance options, auto-callable options,
\n
\n
Level 3
\n
lookback options, commodity swaps and forwards
\n
Illiquid credit-linked
\n
Collateralised debt obligations (notes)
\n
Valuation model based on correlation of
\n
instruments
\n
\n
probability of default of underlying assets
\n
\n
\n
Private equity investments
\n
Private equity and non-quoted participations
\n
Based on the valuation guidelines of the
\n
European Private Equity & Venture Capital
\n
Association
\n
\n
\n
Illiquid bonds/asset backed
\n
Illiquid (mortgage) bonds/asset backed securities that are indicatively
\n
BVAL, third-party pricing (e.g., lead
\n
securities
\n
\n
priced by a single pricing provider in an inactive market
\n
\n
manager), where prices
\n
cannot be
\n
\n
\n
corroborated due to a lack of
\n
available/reliable alternative market data
\n
\n
\n
Debt instruments
\n
KBC own issues (KBC IFIMA)
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
\n
unobservable inputs (indicative pricing by
\n
third parties for derivatives)
\n
\n
\n
Structured loans
\n
Government-regulated loans with leveraged interest rates and exotic
\n
Discounted cashflow analysis and
\n
early repayment
\n
schedules (K&H)
\n
valuation of related derivatives based on
\n
unobservable inputs
\n
\n
\n
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n
Note 4.7: Financial assets and liabilities measured at fair value \u2013 focus on level 3
\n
\n
\u2022 In 2022, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 65 million euros, primarily on account of new transactions, partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of unlisted shares rose by 66 million euros, due primarily to new
\n
transactions.
\n
- Financial assets at fair value through OCI: the fair value of debt instruments decreased by 36 million euros, primarily on
\n
account of instruments reaching maturity and changes in market inputs.
\n
- Financial assets held for trading: the fair value of derivatives decreased by 232 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities held for trading: the fair value of derivatives decreased by 83 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives decreased by 300 million euros due to changes
\n
in market inputs.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of issued debt instruments decreased by 120
\n
million euros, primarily on account of transactions reaching maturity and the sale of existing positions, only partly offset by
\n
new transactions.
\n
\u2022 In 2021, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 173 million euros, primarily on account of new transactions, only partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of debt instruments fell by 34 million euros, owing primarily to changes
\n
in market inputs.
\n
- Financial liabilities held for trading: the fair value of derivatives increased by 103 million euros, due mainly to changes in market
\n
inputs and new transactions, partly offset by sales. The fair value of issued debt instruments fell by 85 million euros, due mainly
\n
to instruments that had reached maturity.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives increased by 398 million euros due to
\n
reclassifications in level 3 owing to an optimisation of the classification method.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of debt instruments increased by 100 million
\n
euros, primarily on account of new issues, partly offset by sales.
\n
\u2022 Some level 3 assets are associated or economically hedged with identical level 3 liabilities, which means that KBC\u2019s exposure
\n
to unobservable inputs is lower than would appear from the gross figures. Most of the level 3 instruments are also valued using
\n
third-party pricing sources, with KBC not developing any unobservable inputs itself. The main unobservable inputs applied by
\n
KBC to the valuation of exotic derivatives include: mean reversion parameter on Bermudan swaptions, equity cross-correlations
\n
and volatilities for certain stock options, interest-rate correlations for CMS spread options, and the funding costs used to
\n
determine the forward equity prices as part of the valuation of certain equity derivatives. The change in fair value resulting from
\n
a change in these inputs to reflect reasonably possible alternative assumptions is insignificant.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialAssetsHeldForTradingExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag813": { "value": "\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
\n
Note 3.1: Net interest income
\n
(in millions of EUR)
\n
2022
\n
2021
\n
Total
\n
5 161 4 451
\n
Interest income
\n
11 226 6 320
\n
Interest income on financial instruments calculated using the effective interest rate
\n
method
\n
\n
Financial assets at amortised cost 7 973 4 797
\n
\n
Financial assets at fair value through OCI 251 286
\n
\n
Hedging derivatives 1 838 355
\n
\n
Financial liabilities (negative interest rate) 289 425
\n
\n
Other 130 25
\n
Interest income on
\n
other financial instruments
\n
\n
Financial assets MFVPL other than held for trading 35 24
\n
\n
Financial assets held for trading 710 407
\n
\n
Of which economic hedges 582 367
\n
\n
Other financial assets at fair value through profit or loss 0 0
\n
Interest expense
\n
-6 064 -1 869
\n
Interest expense on financial instruments calculated using the effective interest rate method
\n
\n
\n
Financial liabilities at amortised cost -2 320 -534
\n
\n
Hedging derivatives -1 972 -604
\n
\n
Financial assets (negative interest rate) -94 -253
\n
\n
Other -5 -7
\n
Interest expense on other financial instruments
\n
\n
\n
Financial liabilities held for trading -1 639 -459
\n
\n
Of which economic hedges -1 595 -414
\n
\n
Other financial liabilities at fair value through profit or loss -33 -11
\n
\n
Net interest expense relating to defined benefit plans -1 -1
\n
\n
\u2022 \u2018Financial liabilities (negative interest rate)\u2019 and \u2018Financial assets (negative interest rate)\u2019: these rates relate mainly to
\n
transactions with central banks, interbank and professional counterparties, corporate clients, and targeted long-term
\n
refinancing operations (TLTRO). More information on TLTRO can be found in Note 4.1.
\n
\u2022 The increase in interest income and interest expense from \u2018Hedging derivatives\u2019, \u2018Financial assets held for trading (of which
\n
economic hedges)\u2019 and \u2018Financial liabilities held for trading (of which economic hedges)\u2019 relates to a change in presentation of
\n
the negative interest on derivatives (at KBC Bank, in accordance with reporting on a solo basis (\u2018Schema A\u2019) under Belgian
\n
GAAP, resulting in an increase in both interest income and interest expense of 450 million euros in 2022), and to the overall
\n
increase in interest rates in 2022.
\n

\n
\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n\n
Note 3.2: Dividend income
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
59 45
\n
Equity
\n
instruments MFVPL other than held for trading 35 28
\n
Equity instruments held for trading
\n
10 11
\n
Equity instruments at FVOCI
\n
15 6
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.1: Financial assets and liabilities, breakdown by portfolio and product
\n
(in millions of EUR)
\n
Measured
\n
at
\n
amortised
\n
cost (AC)
\n
Measured
\n
at fair
\n
value
\n
through
\n
other
\n
compre-
\n
hensive
\n
income
\n
(FVOCI)
\n
Mandatorily
\n
measured at
\n
fair value
\n
through
\n
profit or loss
\n
(MFVPL) excl.
\n
HFT and
\n
overlay
\n
Measured at
\n
fair value \u2013
\n
overlay
\n
approach
\n
(overlay)
\n
Held for
\n
trading
\n
(HFT)
\n
Desig-
\n
nated at
\n
fair value
\n
1
\n
(FVO)
\n
Hedging
\n
Deriva-
\n
tives
\n
Total
\n
Total pro
\n
forma
\n
excluding
\n
KBC Bank
\n
Bulgaria
\n
(formerly
\n
Raiffeisen-
\n
bank
\n
Bulgaria)
\n
FINANCIAL ASSETS, 31-12-2022
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
4 240 0 13 0 1 0 0 4 254
\n
4 203
\n
of which loans and advances to banks repayable on
\n
demand and term loans to banks at not more than three
\n
months
\n
\n
1 237 1 237
\n
Loans and advances to customers (excluding reverse
\n
repos)
\n
177 427 0 625 0 0 0 0 178 053
\n
174 083
\n
Trade receivables
\n
2 818
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 818
\n
2 729
\n
Consumer credit
\n
6 222
\n
0
\n
430
\n
0
\n
0
\n
0
\n
0
\n
6 652
\n
5 977
\n
Mortgage loans
\n
73 465
\n
0
\n
196
\n
0
\n
0
\n
0
\n
0
\n
73 660
\n
72 891
\n
Term loans
\n
82 894
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
82 894
\n
80 744
\n
Finance lease
\n
6 368
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
6 368
\n
6 117
\n
Current account advances
\n
4 886
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 886
\n
4 885
\n
Other
\n
774
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
774
\n
740
\n
Reverse repos
\n
2
\n
\n
20 186
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 219
\n
20 219
\n
with credit institutions and investment firms
\n
20 018
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 050
\n
20 050
\n
with customers
\n
168
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
168
\n
168
\n
Equity instruments
\n
0
\n
315
\n
13
\n
1 237
\n
430
\n
0
\n
0
\n
1 994
\n
1 989
\n
Investment contracts (insurance)
\n
6
\n
\n
0
\n
0
\n
12 771
\n
0
\n
0
\n
0
\n
0
\n
12 771
\n
12 771
\n
Debt securities
\n
52 030
\n
11 813
\n
17
\n
0
\n
1 728
\n
0
\n
0
\n
65 588
\n
64 871
\n
Public bodies
\n
44 219
\n
8 135
\n
0
\n
0
\n
1 667
\n
0
\n
0
\n
54 021
\n
53 390
\n
Credit institutions and investment firms
\n
5 160
\n
1 621
\n
0
\n
0
\n
9
\n
0
\n
0
\n
6 790
\n
6 747
\n
Corporates
\n
2 651
\n
2 057
\n
17
\n
0
\n
53
\n
0
\n
0
\n
4 777
\n
4 733
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
6 279
\n
0
\n
542
\n
6 821
\n
6 813
\n
3
\n
\n
Other
\n
1 561
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
1 561
\n
1 561
\n
Total
\n
255 444
\n
12 128
\n
13 439
\n
1 237
\n
8 471
\n
0
\n
542
\n
291 262
\n
286 511
\n
FINANCIAL ASSETS, 31-12-2021
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
7 920 0 0 0 1 0 0 7 920
\n
-
\n
of which loans and advances to banks repayable on demand
\n
and term loans to banks at not more than three months
\n
3 146 -
\n
Loans and advances to customers (excl. reverse repos)
\n
159 167
\n
0
\n
560
\n
0
\n
0
\n
0
\n
0
\n
159 728
\n
-
\n
Trade receivables
\n
2 090
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 090
\n
-
\n
Consumer credit
\n
5 470
\n
0
\n
381
\n
0
\n
0
\n
0
\n
0
\n
5 851
\n
-
\n
Mortgage loans
\n
67 486
\n
0
\n
179
\n
0
\n
0
\n
0
\n
0
\n
67 665
\n
-
\n
Term loans
\n
72 998
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
72 998
\n
-
\n
Finance lease
\n
5 815
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
5 815
\n
-
\n
Current account advances
\n
4 819
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 819
\n
-
\n
Other
\n
490
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
490
\n
-
\n
2
\n
-
\n
\n
Reverse repos
\n
24 978
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 978
\n
with credit institutions and investment firms
\n
24 861
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 861
\n
-
\n
with customers
\n
117
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
117
\n
-
\n
Equity instruments
\n
0
\n
321
\n
8
\n
1 366
\n
448
\n
0
\n
0
\n
2 144
\n
-
\n
6
\n
-
\n
\n
Investment contracts (insurance)
\n
0
\n
0
\n
14 620
\n
0
\n
0
\n
0
\n
0
\n
14 620
\n
Debt securities
\n
47 172
\n
15 503
\n
17
\n
0
\n
2 958
\n
0
\n
0
\n
65 650
\n
-
\n
Public bodies
\n
41 475
\n
10 514
\n
0
\n
0
\n
2 517
\n
0
\n
0
\n
54 507
\n
-
\n
Credit institutions and investment firms
\n
3 310
\n
2 245
\n
0
\n
0
\n
357
\n
0
\n
0
\n
5 912
\n
-
\n
Corporates
\n
2 387
\n
2 744
\n
17
\n
0
\n
84
\n
0
\n
0
\n
5 232
\n
-
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
5 443
\n
0
\n
283
\n
5 727
\n
-
\n
3
\n
-
\n
\n
Other
\n
892
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
892
\n
Total
\n
240 128
\n
15 824
\n
15 205
\n
1 366
\n
8 850
\n
0
\n
283
\n
281 658
\n
-
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
(in millions of EUR)
\n
Measured at
\n
amortised
\n
cost
\n
(AC)
\n
Held for
\n
trading (HFT)
\n
Designated at
\n
fair value (FVO)
\n
\n
Hedging
\n
derivatives
\n
Total
\n
Total pro forma
\n
excluding KBC
\n
Bank Bulgaria
\n
(formerly
\n
Raiffeisenbank
\n
Bulgaria)
\n
FINANCIAL
\n
LIABILITIES, 31-12-2022
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
24 819 0 0 0 24 819
\n
24 737
\n
of which deposits from banks repayable on demand
\n
\n
\n
\n
\n
\n
\n
\n
5 085 5 085
\n
Deposits from customers and debt
\n
securities (excl. repos)
\n
\n
251 496 44 1 205 0 252 746
\n
247 585
\n
\n
Demand deposits 122 053 0 0 0 122 053 117 401
\n
\n
Time deposits 22 280 44 73 0 22 397 21 960
\n
\n
Savings accounts 76 979 0 0 0 76 979 76 954
\n
\n
Special deposits 2 710 0 0 0 2 710 2 663
\n
\n
Other deposits 268 0 0 0 268 268
\n
Subtotal deposits from customers (excl. repos)
\n
224 290 44 73 0 224 407 219 246
\n
\n
Certificates of deposit 9 321 0 1 0 9 322 9 322
\n
\n
Savings certificates 104 0 0 0 104 104
\n
\n
Non-convertible bonds 15 621 0 1 006 0 16 627 16 627
\n
\n
Non-convertible subordinated liabilities 2 160 0 126 0 2 285 2 285
\n
Repos
\n
4
\n
11 091 7 0 0 11 097
\n
11 097
\n
\n
with credit institutions and investment firms 10 852 7 0 0 10 859 10 859
\n
\n
with customers 239 0 0 0 239 239
\n
Liabilities under investment contracts
\n
6
\n
0 0 12 002 0 12 002
\n
12 002
\n
Derivatives
\n
0 8 038 0 577 8 615
\n
8 605
\n
Short positions
\n
0 1 007 0 0 1 007
\n
1 007
\n
\n
In equity instruments 0 5 0 0 5 5
\n
\n
In debt securities 0 1 002 0 0 1 002 1 002
\n
Other
\n
5
\n
2 448 0 0 0 2 448
\n
2 370
\n
Total
\n
289 854 9 096 13 207 577 312 735
\n
307 403
\n
FINANCIAL LIABILITIES, 31
\n
-12-2021
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
38 047 0 0 0 38 047
\n
-
\n
of which deposits from banks repayable on demand 4 695 -
\n
Deposits from
\n
customers and debt securities (excl. repos)
\n
\n
224 759 21 1 312 0 226 093
\n
-
\n
\n
Demand deposits 112 097 0 0 0 112 097
\n
-
\n
\n
Time deposits 9 106 21 60 0 9 187
\n
-
\n
\n
Savings accounts 74 801 0 0 0 74 801
\n
-
\n
\n
Special deposits 2 962 0 0 0 2 962
\n
-
\n
\n
Other deposits 428 0 0 0 428
\n
-
\n
Subtotal deposits from customers (excl. repos)
\n
199 395 21 60 0 199 476
\n
-
\n
\n
Certificates of deposit 6 273 0 0 0 6 273
\n
-
\n
\n
Savings certificates 253 0 0 0 253
\n
-
\n
\n
Non-convertible bonds 15 892 0 1 118 0 17 011
\n
-
\n
\n
Non-convertible subordinated liabilities 2 946 0 134 0 3 080
\n
-
\n
Repos
\n
4
\n
3 293 2 0 0 3 295
\n
-
\n
\n
with credit institutions and investment firms 2 888 2 0 0 2 890
\n
-
\n
\n
with customers 405 0 0 0 405
\n
-
\n
Liabilities under investment
\n
contracts
\n
6
\n
0 0 13 603 0 13 603
\n
-
\n
Derivatives
\n
0 5 619 0 1 094 6 713
\n
-
\n
Short positions
\n
0 1 628 0 0 1 628
\n
-
\n
\n
In equity instruments 0 18 0 0 18
\n
-
\n
\n
In debt securities 0 1 611 0 0 1 611
\n
-
\n
Other
\n
5
\n
2 288 0 0 0 2 288
\n
-
\n
Total
\n
268 387 7 271 14 916 1 094 291 667
\n
-
\n
1 The carrying value comes close to the maximum credit exposure.
\n
2 The amount of the reverse repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out).
\n
3 Financial assets not included under \u2018Loans and advances to customers\u2019 as they are not directly related to commercial lending.
\n
4 The amount of the repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out), with the assets being partly reflected on the balance sheet
\n
and partly obtained through reverse repo transactions.
\n
5 Financial liabilities not included under deposits from customers as they are not directly related to commercial deposit acquisition.
\n
6 The difference between \u2018Investment contracts (insurance)\u2019 and \u2018Liabilities under investment contracts\u2019 is accounted for by the presentation of non-unbundled investment contracts that are
\n
included under \u2018Investment contracts (insurance)\u2019 on the financial assets side, but are included under \u2018Technical provisions (before reinsurance)\u2019 on the liabilities side.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n\n
\u2022 \u2018Non-convertible bonds\u2019 comprise mainly KBC Bank, KBC Group, \u010cSOB and KBC IFIMA issues. They are usually recognised under
\n
\u2018Measured at amortised cost\u2019. However, if they contain closely related embedded derivatives, they are recorded under
\n
\u2018Designated at fair value\u2019 (see accounting policies). This item also includes three green bonds (for 500, 500 and 750 million euros
\n
each) and a social bond (for 750 million euros), which have been recognised at amortised cost.
\n
\u2022 More information on major new debt issues or redemptions is provided under the \u2018Consolidated cashflow statement\u2019.
\n
\u2022 \u2018Deposits from credit institutions and investment firms\u2019 include funding obtained from the ECB\u2019s TLTRO programme (15.4 billion
\n
euros at year-end 2022, 9.1 billion euros less than at year-end 2021 on account of redemptions). KBC calculates these deposits
\n
using the effective interest rate method, with the rate being adjusted should we fail to meet the conditions (similar to a floating
\n
rate instrument), as per paragraph B.5.4.5 of IFRS 9. KBC\u2019s management has reasonable assurance that KBC will comply with
\n
the conditions attached (including the level of lending to households and non-financial companies) and hence the interest has
\n
accordingly been recognised (a gross amount of 112 million euros in interest income (negative interest rate) in 2022 and 242
\n
million euros in 2021).
\n
\u2022 Transferred financial assets that continue to be recognised in their entirety: KBC regularly lends and/or sells securities with the
\n
commitment to buy them back at a later date (repo transactions). Securities lent or sold with such a commitment are transferred
\n
to the counterparty, and, in exchange, KBC receives cash or other financial assets. However, KBC retains the main risks and
\n
income relating to these securities, and, therefore, continues to recognise them on its balance sheet. In addition, a financial
\n
liability is recognised equalling the cash received.
\n
\n
Transferred financial assets that continue to be recognised in their entirety (carrying value, in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Transferred financial assets that continue to be recognised in their entirety: repo transactions and securities lent out
\n
17 425 13 762
\n
Held for
\n
trading 960 1 221
\n
Fair value through OCI
\n
860 1 474
\n
Amortised cost
\n
15 605 11 067
\n
Associated financial liability
\n
10 534 2 936
\n
Held for trading
\n
689 335
\n
Fair value through OCI
\n
609 362
\n
Amortised cost
\n
9 236 2 239
\n
\n
\u2022 It should be noted that KBC has more transferred financial assets on its balance sheet than repo transactions, due to the fact
\n
that the cash legs of certain repo transactions are offset against reverse repo transactions if they are carried out with the same
\n
counterparty, in the same currency and with the same maturity date. Moreover, there is a legally enforceable right, and an
\n
intention, to settle the transactions on a net basis or to realise the financial asset and settle the financial liability simultaneously.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria in 2022 is provided in Note 6.6.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. We report on estimated greenhouse gas emissions
\n
associated with lending and other activities and have defined objectives for reducing the greenhouse gas intensity of loans
\n
we have provided to the energy sector, electricity producers and the real estate sector, mortgage loans and loans provided
\n
for commercial residential real estate, as well as loans provided to the automotive industry and financial and operational car
\n
leasing (see Note 6.2), the agricultural sector, and cement, steel and aluminium producers. See \u2018Focus on climate\u2019 in the \u2018Report
\n
of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our Climate Report and
\n
\n
our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n

\n

\n

\n

\n

\n

\n

\n
Note 4.5: Financial assets and liabilities measured at fair value \u2013 fair value hierarchy
\n
\n
\n
Fair value hierarchy
\n
31-12-2022 31-12-2021
\n
(in millions of EUR)
\n
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
\n
FINANCIAL ASSETS AT FAIR VALUE
\n
\n
Mandatorily measured at fair value through profit or loss other than held for trading (including
\n
\n
overlay)
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 13 0 13 0 0 0 0
\n
reverse repos)
\n
Loans and advances to customers (incl. reverse repos)
\n
0 0 625 625 0 0 560 560
\n
Equity instruments
\n
1 131 0 118 1 250 1 323 0 52 1 374
\n
Investment contracts (insurance)
\n
12 638 134 0 12 771 14 365 254 0 14 620
\n
Debt securities
\n
12 0 5 17 14 0 3 17
\n
of which sovereign bonds
\n
\n
0
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 34 0 34 0 1 0 1
\n
reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Equity instruments
\n
429 0 0 430 448 0 0 448
\n
Debt securities
\n
1 480 244 4 1 728 1 522 1 432 4 2 958
\n
\n
of which sovereign bonds 1 444 223 0 1 667 1 441 1 076 0 2 517
\n
Derivatives
\n
3 5 547 729 6 279 1 4 482 961 5 443
\n
Other
\n
0 0 0 0 0 0 0 0
\n
Designated upon initial recognition at fair value through profit or loss (FVO)
\n
Loans and advances to credit institutions and
\n
0 0 0 0 0 0 0 0
\n
investment firms (incl. reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Debt securities
\n
0 0 0 0 0 0 0 0
\n
\n
of which sovereign bonds 0 0 0 0 0 0 0 0
\n
At fair value through OCI
\n
\n
\n
\n
\n
\n
\n
\n
\n
Equity instruments
\n
18 1 297 315 15 1 306 321
\n
Debt securities
\n
9 508 2 070 235 11 813 12 269 2 963 271 15 503
\n
\n
of which sovereign bonds
\n
\n
7 003 1 059 73 8 135 8 751
\n
\n
1 711
\n
\n
52
\n
\n
10 514
\n

\n\n

\n\n

\n\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0 542 0 542 0 283 0 283
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial assets at fair value
\n
25 219 8 585 2 014 35 818 29 956 9 416 2 157 41 529
\n
FINANCIAL LIABILITIES AT FAIR VALUE
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 7 0 7 0 2 0 2
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 44 0 44 0 21 0 21
\n
Derivatives
\n
2
\n
6 911
\n
1 125
\n
8 038
\n
1
\n
4 410
\n
1 209
\n
5 619
\n
Short positions
\n
884 123 0 1 007 1 582 47 0 1 628
\n
Designated at fair value
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 0 0 0 0 0 0 0
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 74 1 131 1 205 0 61 1 251 1 312
\n
Liabilities under investment contracts
\n
12 002 0 0 12 002 13 603 0 0 13 603
\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0
\n
479
\n
98
\n
577
\n
0
\n
696
\n
398
\n
1 094
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial liabilities at fair value
\n
12 887 7 638 2 355 22 881 15 185 5 238 2 857 23 280
\n
\n
\u2022 The fair value hierarchy prioritises the valuation techniques and the respective inputs into three levels.
\n
- The fair value hierarchy gives the highest priority to \u2018level 1 inputs\u2019. This means that, when there is an active market, quoted
\n
prices have to be used to measure the financial assets or liabilities at fair value. Level 1 inputs are prices that are readily and
\n
regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency (and that are
\n
quoted in active markets accessible to KBC). They represent actual and regularly occurring market transactions on an arm\u2019s
\n
length basis. The fair value is then based on a mark-to-market valuation derived from currently available transaction prices.
\n
No valuation technique (model) is involved.
\n
- If there are no price quotations available, the reporting entity establishes fair value using a model based on observable or
\n
unobservable inputs. The use of observable inputs must be maximised. Observable inputs are also referred to as \u2018level 2
\n
inputs\u2019 and reflect the assumptions market participants would use in pricing the asset or liability based on market data
\n
obtained from sources independent of the reporting entity. Examples of observable inputs are the risk-free rate, exchange
\n
rates, stock prices and implied volatility. Valuation techniques based on observable inputs include discounted cashflow
\n
analysis, or reference to the current or recent fair value of a similar instrument.
\n
- Unobservable inputs are also referred to as \u2018level 3 inputs\u2019 and reflect the reporting entity\u2019s own assumptions about the
\n
assumptions that market participants would use in pricing the asset or liability (including assumptions regarding the risks
\n
involved). Unobservable inputs reflect a market that is not active. For example, proxies and correlation factors can be
\n
considered to be unobservable in the market.
\n
\u2022 When the inputs used to measure the fair value of an asset or a liability can be categorised into different levels of the fair value
\n
hierarchy, the fair value measurement is classified in its entirety into the same level as the lowest level input that is significant
\n
to the entire fair value measurement. For example, if a fair value measurement uses observable inputs that require significant
\n
adjustment based on unobservable inputs, that measurement is a level 3 measurement.
\n
\u2022 The valuation methodology and the corresponding classification in the fair value hierarchy of the most commonly used financial
\n
instruments are summarised in the table. Whereas the majority of instruments of a certain type are within the level indicated in
\n
the table, a small portion may actually be classified in another level.
\n
\u2022 KBC follows the principle that transfers into and out of levels of the fair value hierarchy are made at the end of the reporting
\n
period. Transfers between the various levels are dealt with in more detail in Note 4.6 and Note 4.7.
\n

\n\n

\n\n

\n\n
Instrument type Products Valuation technique
\n
Liquid financial instruments
\n
FX spots, exchange traded financial futures, exchange traded options,
\n
Mark-to-market (quoted prices in active
\n
for which quoted prices are
\n
exchange traded stocks, exchange traded funds, liquid government
\n
markets), for bonds: BVAL or vendor
\n
data.
\n
\n
Level 1
\n
regularly available
\n
\n
bonds, other liquid bonds, liquid asset backed securities (ABS) in active
\n
markets
\n
Plain vanilla/liquid
\n
(Cross-currency) interest rate swaps (IRS), FX swaps, FX forwards, forward
\n
Discounted cashflow analysis based on
\n
derivatives
\n
\n
rate agreements (FRA), inflation swaps, dividend swaps and futures,
\n
discount and estimation curves (derived
\n
reverse floaters, bond future options, interest rate future opt
\n
ions, overnight
\n
from quoted deposit rates,
\n
\n
index swaps (OIS), FX resets
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Caps & floors, interest rate options, European stock options, European &
\n
Option pricing model based on
\n
American FX options, forward starting options, digital FX options, FX strips
\n
observable inputs (e.g., volatilities)
\n
\n
of simple options, European swaptions, European cancellable IRS,
\n
\n
compound options
\n
\n
Linear financial liabilities
\n
Deposits, simple cashflows, repo transactions
\n
Discounted cashflow analysis based on
\n
(without optional features)
\n
\u2013
\n
discount and estimation curves (derived
\n
cash instruments
\n
\n
from quoted deposit rates,
\n
\n
\n
Level 2
\n
FX swaps and (CC)IRS)
\n
\n
\n
Semi-liquid bonds/asset
\n
Semi-liquid bonds/asset backed securities
\n
BVAL, prices corroborated by alternative
\n
backed securities
\n
\n
observable market data, or using
\n
comparable spread method
\n
\n
\n
Debt instruments
\n
KBC IFIMA own issues (liabilities), mortgage bonds held by \u010cSOB
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
observable inputs
\n
\n
\n
Linear financial assets (cash
\n
Loans, commercial paper
\n
Discounted cashflow analysis based on
\n
instruments)
\n
\n
discount and estimation curves (derived
\n
from quoted deposit rates,
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Exotic derivatives
\n
Target profit forwards, flexible forwards, American & Asian stock options,
\n
Option pricing model based on
\n
Bermudan swaptions, digital interest rate options, quanto interest rate
\n
observable inputs (e.g., correlation)
\n
\n
options, digital stock options, composite stock options, barrier stock
\n
options, quanto digital FX options, FX
\n
Asian options, FX European barrier
\n
options, FX simple digital barrier options, FX touch rebates, inflation
\n
options, Bermudan cancellable IRS, constant maturity swaps (CMS), CMS
\n
spread swaps, CMS spread options, CMS interest rate caps/floors,
\n
(callable) ra
\n
nge accruals, outperformance options, auto-callable options,
\n
\n
Level 3
\n
lookback options, commodity swaps and forwards
\n
Illiquid credit-linked
\n
Collateralised debt obligations (notes)
\n
Valuation model based on correlation of
\n
instruments
\n
\n
probability of default of underlying assets
\n
\n
\n
Private equity investments
\n
Private equity and non-quoted participations
\n
Based on the valuation guidelines of the
\n
European Private Equity & Venture Capital
\n
Association
\n
\n
\n
Illiquid bonds/asset backed
\n
Illiquid (mortgage) bonds/asset backed securities that are indicatively
\n
BVAL, third-party pricing (e.g., lead
\n
securities
\n
\n
priced by a single pricing provider in an inactive market
\n
\n
manager), where prices
\n
cannot be
\n
\n
\n
corroborated due to a lack of
\n
available/reliable alternative market data
\n
\n
\n
Debt instruments
\n
KBC own issues (KBC IFIMA)
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
\n
unobservable inputs (indicative pricing by
\n
third parties for derivatives)
\n
\n
\n
Structured loans
\n
Government-regulated loans with leveraged interest rates and exotic
\n
Discounted cashflow analysis and
\n
early repayment
\n
schedules (K&H)
\n
valuation of related derivatives based on
\n
unobservable inputs
\n
\n
\n
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n
Note 4.7: Financial assets and liabilities measured at fair value \u2013 focus on level 3
\n
\n
\u2022 In 2022, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 65 million euros, primarily on account of new transactions, partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of unlisted shares rose by 66 million euros, due primarily to new
\n
transactions.
\n
- Financial assets at fair value through OCI: the fair value of debt instruments decreased by 36 million euros, primarily on
\n
account of instruments reaching maturity and changes in market inputs.
\n
- Financial assets held for trading: the fair value of derivatives decreased by 232 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities held for trading: the fair value of derivatives decreased by 83 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives decreased by 300 million euros due to changes
\n
in market inputs.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of issued debt instruments decreased by 120
\n
million euros, primarily on account of transactions reaching maturity and the sale of existing positions, only partly offset by
\n
new transactions.
\n
\u2022 In 2021, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 173 million euros, primarily on account of new transactions, only partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of debt instruments fell by 34 million euros, owing primarily to changes
\n
in market inputs.
\n
- Financial liabilities held for trading: the fair value of derivatives increased by 103 million euros, due mainly to changes in market
\n
inputs and new transactions, partly offset by sales. The fair value of issued debt instruments fell by 85 million euros, due mainly
\n
to instruments that had reached maturity.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives increased by 398 million euros due to
\n
reclassifications in level 3 owing to an optimisation of the classification method.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of debt instruments increased by 100 million
\n
euros, primarily on account of new issues, partly offset by sales.
\n
\u2022 Some level 3 assets are associated or economically hedged with identical level 3 liabilities, which means that KBC\u2019s exposure
\n
to unobservable inputs is lower than would appear from the gross figures. Most of the level 3 instruments are also valued using
\n
third-party pricing sources, with KBC not developing any unobservable inputs itself. The main unobservable inputs applied by
\n
KBC to the valuation of exotic derivatives include: mean reversion parameter on Bermudan swaptions, equity cross-correlations
\n
and volatilities for certain stock options, interest-rate correlations for CMS spread options, and the funding costs used to
\n
determine the forward equity prices as part of the valuation of certain equity derivatives. The change in fair value resulting from
\n
a change in these inputs to reflect reasonably possible alternative assumptions is insignificant.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialLiabilitiesHeldForTradingExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag837": { "value": "\n

\n\n

\n
\n
Note 3.1: Net interest income
\n
(in millions of EUR)
\n
2022
\n
2021
\n
Total
\n
5 161 4 451
\n
Interest income
\n
11 226 6 320
\n
Interest income on financial instruments calculated using the effective interest rate
\n
method
\n
\n
Financial assets at amortised cost 7 973 4 797
\n
\n
Financial assets at fair value through OCI 251 286
\n
\n
Hedging derivatives 1 838 355
\n
\n
Financial liabilities (negative interest rate) 289 425
\n
\n
Other 130 25
\n
Interest income on
\n
other financial instruments
\n
\n
Financial assets MFVPL other than held for trading 35 24
\n
\n
Financial assets held for trading 710 407
\n
\n
Of which economic hedges 582 367
\n
\n
Other financial assets at fair value through profit or loss 0 0
\n
Interest expense
\n
-6 064 -1 869
\n
Interest expense on financial instruments calculated using the effective interest rate method
\n
\n
\n
Financial liabilities at amortised cost -2 320 -534
\n
\n
Hedging derivatives -1 972 -604
\n
\n
Financial assets (negative interest rate) -94 -253
\n
\n
Other -5 -7
\n
Interest expense on other financial instruments
\n
\n
\n
Financial liabilities held for trading -1 639 -459
\n
\n
Of which economic hedges -1 595 -414
\n
\n
Other financial liabilities at fair value through profit or loss -33 -11
\n
\n
Net interest expense relating to defined benefit plans -1 -1
\n
\n
\u2022 \u2018Financial liabilities (negative interest rate)\u2019 and \u2018Financial assets (negative interest rate)\u2019: these rates relate mainly to
\n
transactions with central banks, interbank and professional counterparties, corporate clients, and targeted long-term
\n
refinancing operations (TLTRO). More information on TLTRO can be found in Note 4.1.
\n
\u2022 The increase in interest income and interest expense from \u2018Hedging derivatives\u2019, \u2018Financial assets held for trading (of which
\n
economic hedges)\u2019 and \u2018Financial liabilities held for trading (of which economic hedges)\u2019 relates to a change in presentation of
\n
the negative interest on derivatives (at KBC Bank, in accordance with reporting on a solo basis (\u2018Schema A\u2019) under Belgian
\n
GAAP, resulting in an increase in both interest income and interest expense of 450 million euros in 2022), and to the overall
\n
increase in interest rates in 2022.
\n

\n
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfTradingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag832": { "value": "\n

\n
\n
Note 3.1: Net interest income
\n
(in millions of EUR)
\n
2022
\n
2021
\n
Total
\n
5 161 4 451
\n
Interest income
\n
11 226 6 320
\n
Interest income on financial instruments calculated using the effective interest rate
\n
method
\n
\n
Financial assets at amortised cost 7 973 4 797
\n
\n
Financial assets at fair value through OCI 251 286
\n
\n
Hedging derivatives 1 838 355
\n
\n
Financial liabilities (negative interest rate) 289 425
\n
\n
Other 130 25
\n
Interest income on
\n
other financial instruments
\n
\n
Financial assets MFVPL other than held for trading 35 24
\n
\n
Financial assets held for trading 710 407
\n
\n
Of which economic hedges 582 367
\n
\n
Other financial assets at fair value through profit or loss 0 0
\n
Interest expense
\n
-6 064 -1 869
\n
Interest expense on financial instruments calculated using the effective interest rate method
\n
\n
\n
Financial liabilities at amortised cost -2 320 -534
\n
\n
Hedging derivatives -1 972 -604
\n
\n
Financial assets (negative interest rate) -94 -253
\n
\n
Other -5 -7
\n
Interest expense on other financial instruments
\n
\n
\n
Financial liabilities held for trading -1 639 -459
\n
\n
Of which economic hedges -1 595 -414
\n
\n
Other financial liabilities at fair value through profit or loss -33 -11
\n
\n
Net interest expense relating to defined benefit plans -1 -1
\n
\n
\u2022 \u2018Financial liabilities (negative interest rate)\u2019 and \u2018Financial assets (negative interest rate)\u2019: these rates relate mainly to
\n
transactions with central banks, interbank and professional counterparties, corporate clients, and targeted long-term
\n
refinancing operations (TLTRO). More information on TLTRO can be found in Note 4.1.
\n
\u2022 The increase in interest income and interest expense from \u2018Hedging derivatives\u2019, \u2018Financial assets held for trading (of which
\n
economic hedges)\u2019 and \u2018Financial liabilities held for trading (of which economic hedges)\u2019 relates to a change in presentation of
\n
the negative interest on derivatives (at KBC Bank, in accordance with reporting on a solo basis (\u2018Schema A\u2019) under Belgian
\n
GAAP, resulting in an increase in both interest income and interest expense of 450 million euros in 2022), and to the overall
\n
increase in interest rates in 2022.
\n

\n
\n

\n\n

\n\n

\n\n

\n\n

\n
Note 3.3: Net result from financial instruments at fair value through profit or loss
\n
\n
(in millions of EUR)
\n\n

\n\n
2022 2021
\n
Total
\n
406 145
\n
Total broken down by IFRS portfolio
\n
\n
Financial instruments MFVPL other than held for trading and overlay
\n
-1 949 1 172
\n
Trading instruments (including interest on non
\n
-ALM trading derivatives and fair value changes in all trading derivatives) 567 435
\n
Financial instruments to which the overlay approach is applied
\n
86 104
\n
\n
Gains or losses on sale
\n
\n
176 123
\n
\n
\n
Impairment
\n
-90
\n
-20
\n
\n
Other financial instruments at FVPL
\n
1 942 -1 186
\n
Foreign exchange trading
\n
-90 -272
\n
Fair value adjustments in hedge accounting
\n
-150 -108
\n
Hedge accounting broken down by type of hedge
\n
\n
Fair value micro hedges
\n
5 0
\n
\n
Changes in the fair value of the hedged items 624 -307
\n
\n
Changes in the fair value of the hedging derivatives -619 307
\n
Cashflow hedges
\n
-3 0
\n
\n
Changes in the fair value of the hedging derivatives, ineffective portion -3 0
\n
Hedges of net investments in foreign operations, ineffective portion
\n
0 0
\n
Portfolio hedge of interest rate risk
\n
0 5
\n
\n
Changes in the fair value of the hedged items -3 254 -815
\n
\n
Changes in the fair value of the hedging derivatives 3 254 820
\n
Discontinuation of hedge accounting for fair value hedges
\n
-75 -46
\n
Discontinuation of hedge accounting in the event of cashflow hedges
\n
-77 -66
\n
Total broken down by driver
\n
\n
Market value adjustments (MVA)
\n
80 67
\n
Change in the value of derivatives used for asset/liability management purposes
\n
-14 -197
\n
Financial instruments to which the overlay approach is applied and other
\n
96 113
\n
Dealing room
\n
245 162
\n

\n\n

\n\n
\n
\u2022 ALM hedging derivatives (recognised in hedge accounting): the interest component of these derivatives is recognised under
\n
\u2018Net interest income\u2019. Fair value changes in hedging derivatives, excluding those for which an effective cashflow hedge
\n
relationship exists, are recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019. Under fair
\n
value hedge accounting, changes in the fair value of hedged assets are also recognised under this heading, and offsetting
\n
takes place insofar as the hedge is effective. ALM hedging derivatives not recognised in hedge accounting (and therefore
\n
classified as trading instruments) are treated in the same way, except most of the related assets are not recognised at fair
\n
value (i.e. not marked-to-market).
\n
\u2022 Day 1 profit: when the transaction price in a non-active market differs from the fair value of other observable market
\n
transactions in the same instrument or from the fair value based on a valuation technique whose variables include only data
\n
from observable markets, the difference between the transaction price and the fair value (day 1 profit) is taken to profit or loss.
\n
If this is not the case (i.e. the variables do not include only data from observable markets), day 1 profit is reserved and is released
\n
in profit or loss during the life and until the maturity of the financial instrument. KBC has reserved these day 1 profits for limited
\n
amounts since January 2022.
\n
\u2022 Financial instruments to which the overlay approach is applied: see the comments under the consolidated income statement.
\n
\u2022 Foreign exchange trading includes all realised and unrealised foreign exchange results (when the monetary assets and liabilities
\n
are revalued), regardless of the IFRS portfolio, except for financial assets and liabilities measured at fair value through profit or
\n
loss, for which the revaluation is included in the fair value correction. Note that (unrealised) foreign exchange gains/losses on
\n
claims provisions (insurance) and on the financial instruments hedging the claims provisions are included under \u2018Technical
\n
charges\u2019. (Unrealised) foreign exchange gains/losses on the reinsurers\u2019 share of claims provisions and on the financial
\n
instruments hedging such provisions are included under \u2018Ceded reinsurance result\u2019.
\n
\u2022 Under IFRS 9, investment contracts (insurance) are included under \u2018Financial instruments mandatorily measured at fair value
\n
through profit or loss\u2019 in accordance with their \u2018managed on a FV basis\u2019 business model, whereas liabilities under investment
\n
contracts are included under \u2018Financial instruments at fair value through profit or loss\u2019. This resulted in amounts being offset
\n
against each other in \u2018Financial instruments MFVPL other than held for trading and overlay\u2019 and \u2018Financial instruments at fair
\n
value through profit or loss\u2019 in the above table (-1 893 million euros and +1 893 million euros in 2022 and +1 195 million euros and
\n
-1 195 million euros in 2021).
\n
\u2022 The effectiveness of the hedge is determined according to the following methods:
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
- For fair value micro hedging, we use the dollar offset method on a quarterly basis, with changes in the fair value of the hedged
\n
item offsetting changes in the fair value of the hedging instrument within a range of 80%\u2013125%.
\n
- For cashflow hedges, we compare the designated hedging instrument with a perfect hedge of the hedged cashflows on a
\n
prospective (by BPV measurement) and retrospective basis (by comparing the fair value of the designated hedging
\n
instrument with the perfect hedge). The effectiveness of both tests must fall within a range of 80%\u2013125%.
\n
- We use the rules set out in the European version of IAS 39 (carve-out) to assess the effectiveness of fair value hedges for a
\n
portfolio of interest rate risk. IFRS does not permit net positions to be reported as hedged items, but does allow hedging
\n
instruments to be designated as a hedge of a gross asset position (or a gross liabilities position, as the case may be).
\n
Specifically, we make sure that the volume of assets (or liabilities) in each maturity bucket is greater than the volume of
\n
hedging instruments allocated to the same bucket.
\n

\n\n
\n
Note 3.4: Net realised result from debt instruments at fair value through OCI
\n
\n
\u2022 In 2022, the realised result from debt instruments at fair value through OCI was impacted by a realised loss of -22 million euros
\n
on the sale of low-yielding bonds. The realised result from debt instruments at fair value through OCI was not material in 2021.
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceCostExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag817": { "value": "\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Note 3.3: Net result from financial instruments at fair value through profit or loss
\n
\n
(in millions of EUR)
\n\n

\n\n
2022 2021
\n
Total
\n
406 145
\n
Total broken down by IFRS portfolio
\n
\n
Financial instruments MFVPL other than held for trading and overlay
\n
-1 949 1 172
\n
Trading instruments (including interest on non
\n
-ALM trading derivatives and fair value changes in all trading derivatives) 567 435
\n
Financial instruments to which the overlay approach is applied
\n
86 104
\n
\n
Gains or losses on sale
\n
\n
176 123
\n
\n
\n
Impairment
\n
-90
\n
-20
\n
\n
Other financial instruments at FVPL
\n
1 942 -1 186
\n
Foreign exchange trading
\n
-90 -272
\n
Fair value adjustments in hedge accounting
\n
-150 -108
\n
Hedge accounting broken down by type of hedge
\n
\n
Fair value micro hedges
\n
5 0
\n
\n
Changes in the fair value of the hedged items 624 -307
\n
\n
Changes in the fair value of the hedging derivatives -619 307
\n
Cashflow hedges
\n
-3 0
\n
\n
Changes in the fair value of the hedging derivatives, ineffective portion -3 0
\n
Hedges of net investments in foreign operations, ineffective portion
\n
0 0
\n
Portfolio hedge of interest rate risk
\n
0 5
\n
\n
Changes in the fair value of the hedged items -3 254 -815
\n
\n
Changes in the fair value of the hedging derivatives 3 254 820
\n
Discontinuation of hedge accounting for fair value hedges
\n
-75 -46
\n
Discontinuation of hedge accounting in the event of cashflow hedges
\n
-77 -66
\n
Total broken down by driver
\n
\n
Market value adjustments (MVA)
\n
80 67
\n
Change in the value of derivatives used for asset/liability management purposes
\n
-14 -197
\n
Financial instruments to which the overlay approach is applied and other
\n
96 113
\n
Dealing room
\n
245 162
\n

\n\n

\n\n
\n
\u2022 ALM hedging derivatives (recognised in hedge accounting): the interest component of these derivatives is recognised under
\n
\u2018Net interest income\u2019. Fair value changes in hedging derivatives, excluding those for which an effective cashflow hedge
\n
relationship exists, are recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019. Under fair
\n
value hedge accounting, changes in the fair value of hedged assets are also recognised under this heading, and offsetting
\n
takes place insofar as the hedge is effective. ALM hedging derivatives not recognised in hedge accounting (and therefore
\n
classified as trading instruments) are treated in the same way, except most of the related assets are not recognised at fair
\n
value (i.e. not marked-to-market).
\n
\u2022 Day 1 profit: when the transaction price in a non-active market differs from the fair value of other observable market
\n
transactions in the same instrument or from the fair value based on a valuation technique whose variables include only data
\n
from observable markets, the difference between the transaction price and the fair value (day 1 profit) is taken to profit or loss.
\n
If this is not the case (i.e. the variables do not include only data from observable markets), day 1 profit is reserved and is released
\n
in profit or loss during the life and until the maturity of the financial instrument. KBC has reserved these day 1 profits for limited
\n
amounts since January 2022.
\n
\u2022 Financial instruments to which the overlay approach is applied: see the comments under the consolidated income statement.
\n
\u2022 Foreign exchange trading includes all realised and unrealised foreign exchange results (when the monetary assets and liabilities
\n
are revalued), regardless of the IFRS portfolio, except for financial assets and liabilities measured at fair value through profit or
\n
loss, for which the revaluation is included in the fair value correction. Note that (unrealised) foreign exchange gains/losses on
\n
claims provisions (insurance) and on the financial instruments hedging the claims provisions are included under \u2018Technical
\n
charges\u2019. (Unrealised) foreign exchange gains/losses on the reinsurers\u2019 share of claims provisions and on the financial
\n
instruments hedging such provisions are included under \u2018Ceded reinsurance result\u2019.
\n
\u2022 Under IFRS 9, investment contracts (insurance) are included under \u2018Financial instruments mandatorily measured at fair value
\n
through profit or loss\u2019 in accordance with their \u2018managed on a FV basis\u2019 business model, whereas liabilities under investment
\n
contracts are included under \u2018Financial instruments at fair value through profit or loss\u2019. This resulted in amounts being offset
\n
against each other in \u2018Financial instruments MFVPL other than held for trading and overlay\u2019 and \u2018Financial instruments at fair
\n
value through profit or loss\u2019 in the above table (-1 893 million euros and +1 893 million euros in 2022 and +1 195 million euros and
\n
-1 195 million euros in 2021).
\n
\u2022 The effectiveness of the hedge is determined according to the following methods:
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
- For fair value micro hedging, we use the dollar offset method on a quarterly basis, with changes in the fair value of the hedged
\n
item offsetting changes in the fair value of the hedging instrument within a range of 80%\u2013125%.
\n
- For cashflow hedges, we compare the designated hedging instrument with a perfect hedge of the hedged cashflows on a
\n
prospective (by BPV measurement) and retrospective basis (by comparing the fair value of the designated hedging
\n
instrument with the perfect hedge). The effectiveness of both tests must fall within a range of 80%\u2013125%.
\n
- We use the rules set out in the European version of IAS 39 (carve-out) to assess the effectiveness of fair value hedges for a
\n
portfolio of interest rate risk. IFRS does not permit net positions to be reported as hedged items, but does allow hedging
\n
instruments to be designated as a hedge of a gross asset position (or a gross liabilities position, as the case may be).
\n
Specifically, we make sure that the volume of assets (or liabilities) in each maturity bucket is greater than the volume of
\n
hedging instruments allocated to the same bucket.
\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.1: Financial assets and liabilities, breakdown by portfolio and product
\n
(in millions of EUR)
\n
Measured
\n
at
\n
amortised
\n
cost (AC)
\n
Measured
\n
at fair
\n
value
\n
through
\n
other
\n
compre-
\n
hensive
\n
income
\n
(FVOCI)
\n
Mandatorily
\n
measured at
\n
fair value
\n
through
\n
profit or loss
\n
(MFVPL) excl.
\n
HFT and
\n
overlay
\n
Measured at
\n
fair value \u2013
\n
overlay
\n
approach
\n
(overlay)
\n
Held for
\n
trading
\n
(HFT)
\n
Desig-
\n
nated at
\n
fair value
\n
1
\n
(FVO)
\n
Hedging
\n
Deriva-
\n
tives
\n
Total
\n
Total pro
\n
forma
\n
excluding
\n
KBC Bank
\n
Bulgaria
\n
(formerly
\n
Raiffeisen-
\n
bank
\n
Bulgaria)
\n
FINANCIAL ASSETS, 31-12-2022
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
4 240 0 13 0 1 0 0 4 254
\n
4 203
\n
of which loans and advances to banks repayable on
\n
demand and term loans to banks at not more than three
\n
months
\n
\n
1 237 1 237
\n
Loans and advances to customers (excluding reverse
\n
repos)
\n
177 427 0 625 0 0 0 0 178 053
\n
174 083
\n
Trade receivables
\n
2 818
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 818
\n
2 729
\n
Consumer credit
\n
6 222
\n
0
\n
430
\n
0
\n
0
\n
0
\n
0
\n
6 652
\n
5 977
\n
Mortgage loans
\n
73 465
\n
0
\n
196
\n
0
\n
0
\n
0
\n
0
\n
73 660
\n
72 891
\n
Term loans
\n
82 894
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
82 894
\n
80 744
\n
Finance lease
\n
6 368
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
6 368
\n
6 117
\n
Current account advances
\n
4 886
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 886
\n
4 885
\n
Other
\n
774
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
774
\n
740
\n
Reverse repos
\n
2
\n
\n
20 186
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 219
\n
20 219
\n
with credit institutions and investment firms
\n
20 018
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 050
\n
20 050
\n
with customers
\n
168
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
168
\n
168
\n
Equity instruments
\n
0
\n
315
\n
13
\n
1 237
\n
430
\n
0
\n
0
\n
1 994
\n
1 989
\n
Investment contracts (insurance)
\n
6
\n
\n
0
\n
0
\n
12 771
\n
0
\n
0
\n
0
\n
0
\n
12 771
\n
12 771
\n
Debt securities
\n
52 030
\n
11 813
\n
17
\n
0
\n
1 728
\n
0
\n
0
\n
65 588
\n
64 871
\n
Public bodies
\n
44 219
\n
8 135
\n
0
\n
0
\n
1 667
\n
0
\n
0
\n
54 021
\n
53 390
\n
Credit institutions and investment firms
\n
5 160
\n
1 621
\n
0
\n
0
\n
9
\n
0
\n
0
\n
6 790
\n
6 747
\n
Corporates
\n
2 651
\n
2 057
\n
17
\n
0
\n
53
\n
0
\n
0
\n
4 777
\n
4 733
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
6 279
\n
0
\n
542
\n
6 821
\n
6 813
\n
3
\n
\n
Other
\n
1 561
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
1 561
\n
1 561
\n
Total
\n
255 444
\n
12 128
\n
13 439
\n
1 237
\n
8 471
\n
0
\n
542
\n
291 262
\n
286 511
\n
FINANCIAL ASSETS, 31-12-2021
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
7 920 0 0 0 1 0 0 7 920
\n
-
\n
of which loans and advances to banks repayable on demand
\n
and term loans to banks at not more than three months
\n
3 146 -
\n
Loans and advances to customers (excl. reverse repos)
\n
159 167
\n
0
\n
560
\n
0
\n
0
\n
0
\n
0
\n
159 728
\n
-
\n
Trade receivables
\n
2 090
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 090
\n
-
\n
Consumer credit
\n
5 470
\n
0
\n
381
\n
0
\n
0
\n
0
\n
0
\n
5 851
\n
-
\n
Mortgage loans
\n
67 486
\n
0
\n
179
\n
0
\n
0
\n
0
\n
0
\n
67 665
\n
-
\n
Term loans
\n
72 998
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
72 998
\n
-
\n
Finance lease
\n
5 815
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
5 815
\n
-
\n
Current account advances
\n
4 819
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 819
\n
-
\n
Other
\n
490
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
490
\n
-
\n
2
\n
-
\n
\n
Reverse repos
\n
24 978
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 978
\n
with credit institutions and investment firms
\n
24 861
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 861
\n
-
\n
with customers
\n
117
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
117
\n
-
\n
Equity instruments
\n
0
\n
321
\n
8
\n
1 366
\n
448
\n
0
\n
0
\n
2 144
\n
-
\n
6
\n
-
\n
\n
Investment contracts (insurance)
\n
0
\n
0
\n
14 620
\n
0
\n
0
\n
0
\n
0
\n
14 620
\n
Debt securities
\n
47 172
\n
15 503
\n
17
\n
0
\n
2 958
\n
0
\n
0
\n
65 650
\n
-
\n
Public bodies
\n
41 475
\n
10 514
\n
0
\n
0
\n
2 517
\n
0
\n
0
\n
54 507
\n
-
\n
Credit institutions and investment firms
\n
3 310
\n
2 245
\n
0
\n
0
\n
357
\n
0
\n
0
\n
5 912
\n
-
\n
Corporates
\n
2 387
\n
2 744
\n
17
\n
0
\n
84
\n
0
\n
0
\n
5 232
\n
-
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
5 443
\n
0
\n
283
\n
5 727
\n
-
\n
3
\n
-
\n
\n
Other
\n
892
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
892
\n
Total
\n
240 128
\n
15 824
\n
15 205
\n
1 366
\n
8 850
\n
0
\n
283
\n
281 658
\n
-
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
(in millions of EUR)
\n
Measured at
\n
amortised
\n
cost
\n
(AC)
\n
Held for
\n
trading (HFT)
\n
Designated at
\n
fair value (FVO)
\n
\n
Hedging
\n
derivatives
\n
Total
\n
Total pro forma
\n
excluding KBC
\n
Bank Bulgaria
\n
(formerly
\n
Raiffeisenbank
\n
Bulgaria)
\n
FINANCIAL
\n
LIABILITIES, 31-12-2022
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
24 819 0 0 0 24 819
\n
24 737
\n
of which deposits from banks repayable on demand
\n
\n
\n
\n
\n
\n
\n
\n
5 085 5 085
\n
Deposits from customers and debt
\n
securities (excl. repos)
\n
\n
251 496 44 1 205 0 252 746
\n
247 585
\n
\n
Demand deposits 122 053 0 0 0 122 053 117 401
\n
\n
Time deposits 22 280 44 73 0 22 397 21 960
\n
\n
Savings accounts 76 979 0 0 0 76 979 76 954
\n
\n
Special deposits 2 710 0 0 0 2 710 2 663
\n
\n
Other deposits 268 0 0 0 268 268
\n
Subtotal deposits from customers (excl. repos)
\n
224 290 44 73 0 224 407 219 246
\n
\n
Certificates of deposit 9 321 0 1 0 9 322 9 322
\n
\n
Savings certificates 104 0 0 0 104 104
\n
\n
Non-convertible bonds 15 621 0 1 006 0 16 627 16 627
\n
\n
Non-convertible subordinated liabilities 2 160 0 126 0 2 285 2 285
\n
Repos
\n
4
\n
11 091 7 0 0 11 097
\n
11 097
\n
\n
with credit institutions and investment firms 10 852 7 0 0 10 859 10 859
\n
\n
with customers 239 0 0 0 239 239
\n
Liabilities under investment contracts
\n
6
\n
0 0 12 002 0 12 002
\n
12 002
\n
Derivatives
\n
0 8 038 0 577 8 615
\n
8 605
\n
Short positions
\n
0 1 007 0 0 1 007
\n
1 007
\n
\n
In equity instruments 0 5 0 0 5 5
\n
\n
In debt securities 0 1 002 0 0 1 002 1 002
\n
Other
\n
5
\n
2 448 0 0 0 2 448
\n
2 370
\n
Total
\n
289 854 9 096 13 207 577 312 735
\n
307 403
\n
FINANCIAL LIABILITIES, 31
\n
-12-2021
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
38 047 0 0 0 38 047
\n
-
\n
of which deposits from banks repayable on demand 4 695 -
\n
Deposits from
\n
customers and debt securities (excl. repos)
\n
\n
224 759 21 1 312 0 226 093
\n
-
\n
\n
Demand deposits 112 097 0 0 0 112 097
\n
-
\n
\n
Time deposits 9 106 21 60 0 9 187
\n
-
\n
\n
Savings accounts 74 801 0 0 0 74 801
\n
-
\n
\n
Special deposits 2 962 0 0 0 2 962
\n
-
\n
\n
Other deposits 428 0 0 0 428
\n
-
\n
Subtotal deposits from customers (excl. repos)
\n
199 395 21 60 0 199 476
\n
-
\n
\n
Certificates of deposit 6 273 0 0 0 6 273
\n
-
\n
\n
Savings certificates 253 0 0 0 253
\n
-
\n
\n
Non-convertible bonds 15 892 0 1 118 0 17 011
\n
-
\n
\n
Non-convertible subordinated liabilities 2 946 0 134 0 3 080
\n
-
\n
Repos
\n
4
\n
3 293 2 0 0 3 295
\n
-
\n
\n
with credit institutions and investment firms 2 888 2 0 0 2 890
\n
-
\n
\n
with customers 405 0 0 0 405
\n
-
\n
Liabilities under investment
\n
contracts
\n
6
\n
0 0 13 603 0 13 603
\n
-
\n
Derivatives
\n
0 5 619 0 1 094 6 713
\n
-
\n
Short positions
\n
0 1 628 0 0 1 628
\n
-
\n
\n
In equity instruments 0 18 0 0 18
\n
-
\n
\n
In debt securities 0 1 611 0 0 1 611
\n
-
\n
Other
\n
5
\n
2 288 0 0 0 2 288
\n
-
\n
Total
\n
268 387 7 271 14 916 1 094 291 667
\n
-
\n
1 The carrying value comes close to the maximum credit exposure.
\n
2 The amount of the reverse repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out).
\n
3 Financial assets not included under \u2018Loans and advances to customers\u2019 as they are not directly related to commercial lending.
\n
4 The amount of the repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out), with the assets being partly reflected on the balance sheet
\n
and partly obtained through reverse repo transactions.
\n
5 Financial liabilities not included under deposits from customers as they are not directly related to commercial deposit acquisition.
\n
6 The difference between \u2018Investment contracts (insurance)\u2019 and \u2018Liabilities under investment contracts\u2019 is accounted for by the presentation of non-unbundled investment contracts that are
\n
included under \u2018Investment contracts (insurance)\u2019 on the financial assets side, but are included under \u2018Technical provisions (before reinsurance)\u2019 on the liabilities side.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n\n
\u2022 \u2018Non-convertible bonds\u2019 comprise mainly KBC Bank, KBC Group, \u010cSOB and KBC IFIMA issues. They are usually recognised under
\n
\u2018Measured at amortised cost\u2019. However, if they contain closely related embedded derivatives, they are recorded under
\n
\u2018Designated at fair value\u2019 (see accounting policies). This item also includes three green bonds (for 500, 500 and 750 million euros
\n
each) and a social bond (for 750 million euros), which have been recognised at amortised cost.
\n
\u2022 More information on major new debt issues or redemptions is provided under the \u2018Consolidated cashflow statement\u2019.
\n
\u2022 \u2018Deposits from credit institutions and investment firms\u2019 include funding obtained from the ECB\u2019s TLTRO programme (15.4 billion
\n
euros at year-end 2022, 9.1 billion euros less than at year-end 2021 on account of redemptions). KBC calculates these deposits
\n
using the effective interest rate method, with the rate being adjusted should we fail to meet the conditions (similar to a floating
\n
rate instrument), as per paragraph B.5.4.5 of IFRS 9. KBC\u2019s management has reasonable assurance that KBC will comply with
\n
the conditions attached (including the level of lending to households and non-financial companies) and hence the interest has
\n
accordingly been recognised (a gross amount of 112 million euros in interest income (negative interest rate) in 2022 and 242
\n
million euros in 2021).
\n
\u2022 Transferred financial assets that continue to be recognised in their entirety: KBC regularly lends and/or sells securities with the
\n
commitment to buy them back at a later date (repo transactions). Securities lent or sold with such a commitment are transferred
\n
to the counterparty, and, in exchange, KBC receives cash or other financial assets. However, KBC retains the main risks and
\n
income relating to these securities, and, therefore, continues to recognise them on its balance sheet. In addition, a financial
\n
liability is recognised equalling the cash received.
\n
\n
Transferred financial assets that continue to be recognised in their entirety (carrying value, in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Transferred financial assets that continue to be recognised in their entirety: repo transactions and securities lent out
\n
17 425 13 762
\n
Held for
\n
trading 960 1 221
\n
Fair value through OCI
\n
860 1 474
\n
Amortised cost
\n
15 605 11 067
\n
Associated financial liability
\n
10 534 2 936
\n
Held for trading
\n
689 335
\n
Fair value through OCI
\n
609 362
\n
Amortised cost
\n
9 236 2 239
\n
\n
\u2022 It should be noted that KBC has more transferred financial assets on its balance sheet than repo transactions, due to the fact
\n
that the cash legs of certain repo transactions are offset against reverse repo transactions if they are carried out with the same
\n
counterparty, in the same currency and with the same maturity date. Moreover, there is a legally enforceable right, and an
\n
intention, to settle the transactions on a net basis or to realise the financial asset and settle the financial liability simultaneously.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria in 2022 is provided in Note 6.6.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. We report on estimated greenhouse gas emissions
\n
associated with lending and other activities and have defined objectives for reducing the greenhouse gas intensity of loans
\n
we have provided to the energy sector, electricity producers and the real estate sector, mortgage loans and loans provided
\n
for commercial residential real estate, as well as loans provided to the automotive industry and financial and operational car
\n
leasing (see Note 6.2), the agricultural sector, and cement, steel and aluminium producers. See \u2018Focus on climate\u2019 in the \u2018Report
\n
of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our Climate Report and
\n
\n
our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n

\n

\n

\n

\n

\n

\n

\n
Note 4.5: Financial assets and liabilities measured at fair value \u2013 fair value hierarchy
\n
\n
\n
Fair value hierarchy
\n
31-12-2022 31-12-2021
\n
(in millions of EUR)
\n
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
\n
FINANCIAL ASSETS AT FAIR VALUE
\n
\n
Mandatorily measured at fair value through profit or loss other than held for trading (including
\n
\n
overlay)
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 13 0 13 0 0 0 0
\n
reverse repos)
\n
Loans and advances to customers (incl. reverse repos)
\n
0 0 625 625 0 0 560 560
\n
Equity instruments
\n
1 131 0 118 1 250 1 323 0 52 1 374
\n
Investment contracts (insurance)
\n
12 638 134 0 12 771 14 365 254 0 14 620
\n
Debt securities
\n
12 0 5 17 14 0 3 17
\n
of which sovereign bonds
\n
\n
0
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 34 0 34 0 1 0 1
\n
reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Equity instruments
\n
429 0 0 430 448 0 0 448
\n
Debt securities
\n
1 480 244 4 1 728 1 522 1 432 4 2 958
\n
\n
of which sovereign bonds 1 444 223 0 1 667 1 441 1 076 0 2 517
\n
Derivatives
\n
3 5 547 729 6 279 1 4 482 961 5 443
\n
Other
\n
0 0 0 0 0 0 0 0
\n
Designated upon initial recognition at fair value through profit or loss (FVO)
\n
Loans and advances to credit institutions and
\n
0 0 0 0 0 0 0 0
\n
investment firms (incl. reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Debt securities
\n
0 0 0 0 0 0 0 0
\n
\n
of which sovereign bonds 0 0 0 0 0 0 0 0
\n
At fair value through OCI
\n
\n
\n
\n
\n
\n
\n
\n
\n
Equity instruments
\n
18 1 297 315 15 1 306 321
\n
Debt securities
\n
9 508 2 070 235 11 813 12 269 2 963 271 15 503
\n
\n
of which sovereign bonds
\n
\n
7 003 1 059 73 8 135 8 751
\n
\n
1 711
\n
\n
52
\n
\n
10 514
\n

\n\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0 542 0 542 0 283 0 283
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial assets at fair value
\n
25 219 8 585 2 014 35 818 29 956 9 416 2 157 41 529
\n
FINANCIAL LIABILITIES AT FAIR VALUE
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 7 0 7 0 2 0 2
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 44 0 44 0 21 0 21
\n
Derivatives
\n
2
\n
6 911
\n
1 125
\n
8 038
\n
1
\n
4 410
\n
1 209
\n
5 619
\n
Short positions
\n
884 123 0 1 007 1 582 47 0 1 628
\n
Designated at fair value
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 0 0 0 0 0 0 0
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 74 1 131 1 205 0 61 1 251 1 312
\n
Liabilities under investment contracts
\n
12 002 0 0 12 002 13 603 0 0 13 603
\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0
\n
479
\n
98
\n
577
\n
0
\n
696
\n
398
\n
1 094
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial liabilities at fair value
\n
12 887 7 638 2 355 22 881 15 185 5 238 2 857 23 280
\n
\n
\u2022 The fair value hierarchy prioritises the valuation techniques and the respective inputs into three levels.
\n
- The fair value hierarchy gives the highest priority to \u2018level 1 inputs\u2019. This means that, when there is an active market, quoted
\n
prices have to be used to measure the financial assets or liabilities at fair value. Level 1 inputs are prices that are readily and
\n
regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency (and that are
\n
quoted in active markets accessible to KBC). They represent actual and regularly occurring market transactions on an arm\u2019s
\n
length basis. The fair value is then based on a mark-to-market valuation derived from currently available transaction prices.
\n
No valuation technique (model) is involved.
\n
- If there are no price quotations available, the reporting entity establishes fair value using a model based on observable or
\n
unobservable inputs. The use of observable inputs must be maximised. Observable inputs are also referred to as \u2018level 2
\n
inputs\u2019 and reflect the assumptions market participants would use in pricing the asset or liability based on market data
\n
obtained from sources independent of the reporting entity. Examples of observable inputs are the risk-free rate, exchange
\n
rates, stock prices and implied volatility. Valuation techniques based on observable inputs include discounted cashflow
\n
analysis, or reference to the current or recent fair value of a similar instrument.
\n
- Unobservable inputs are also referred to as \u2018level 3 inputs\u2019 and reflect the reporting entity\u2019s own assumptions about the
\n
assumptions that market participants would use in pricing the asset or liability (including assumptions regarding the risks
\n
involved). Unobservable inputs reflect a market that is not active. For example, proxies and correlation factors can be
\n
considered to be unobservable in the market.
\n
\u2022 When the inputs used to measure the fair value of an asset or a liability can be categorised into different levels of the fair value
\n
hierarchy, the fair value measurement is classified in its entirety into the same level as the lowest level input that is significant
\n
to the entire fair value measurement. For example, if a fair value measurement uses observable inputs that require significant
\n
adjustment based on unobservable inputs, that measurement is a level 3 measurement.
\n
\u2022 The valuation methodology and the corresponding classification in the fair value hierarchy of the most commonly used financial
\n
instruments are summarised in the table. Whereas the majority of instruments of a certain type are within the level indicated in
\n
the table, a small portion may actually be classified in another level.
\n
\u2022 KBC follows the principle that transfers into and out of levels of the fair value hierarchy are made at the end of the reporting
\n
period. Transfers between the various levels are dealt with in more detail in Note 4.6 and Note 4.7.
\n

\n\n
Instrument type Products Valuation technique
\n
Liquid financial instruments
\n
FX spots, exchange traded financial futures, exchange traded options,
\n
Mark-to-market (quoted prices in active
\n
for which quoted prices are
\n
exchange traded stocks, exchange traded funds, liquid government
\n
markets), for bonds: BVAL or vendor
\n
data.
\n
\n
Level 1
\n
regularly available
\n
\n
bonds, other liquid bonds, liquid asset backed securities (ABS) in active
\n
markets
\n
Plain vanilla/liquid
\n
(Cross-currency) interest rate swaps (IRS), FX swaps, FX forwards, forward
\n
Discounted cashflow analysis based on
\n
derivatives
\n
\n
rate agreements (FRA), inflation swaps, dividend swaps and futures,
\n
discount and estimation curves (derived
\n
reverse floaters, bond future options, interest rate future opt
\n
ions, overnight
\n
from quoted deposit rates,
\n
\n
index swaps (OIS), FX resets
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Caps & floors, interest rate options, European stock options, European &
\n
Option pricing model based on
\n
American FX options, forward starting options, digital FX options, FX strips
\n
observable inputs (e.g., volatilities)
\n
\n
of simple options, European swaptions, European cancellable IRS,
\n
\n
compound options
\n
\n
Linear financial liabilities
\n
Deposits, simple cashflows, repo transactions
\n
Discounted cashflow analysis based on
\n
(without optional features)
\n
\u2013
\n
discount and estimation curves (derived
\n
cash instruments
\n
\n
from quoted deposit rates,
\n
\n
\n
Level 2
\n
FX swaps and (CC)IRS)
\n
\n
\n
Semi-liquid bonds/asset
\n
Semi-liquid bonds/asset backed securities
\n
BVAL, prices corroborated by alternative
\n
backed securities
\n
\n
observable market data, or using
\n
comparable spread method
\n
\n
\n
Debt instruments
\n
KBC IFIMA own issues (liabilities), mortgage bonds held by \u010cSOB
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
observable inputs
\n
\n
\n
Linear financial assets (cash
\n
Loans, commercial paper
\n
Discounted cashflow analysis based on
\n
instruments)
\n
\n
discount and estimation curves (derived
\n
from quoted deposit rates,
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Exotic derivatives
\n
Target profit forwards, flexible forwards, American & Asian stock options,
\n
Option pricing model based on
\n
Bermudan swaptions, digital interest rate options, quanto interest rate
\n
observable inputs (e.g., correlation)
\n
\n
options, digital stock options, composite stock options, barrier stock
\n
options, quanto digital FX options, FX
\n
Asian options, FX European barrier
\n
options, FX simple digital barrier options, FX touch rebates, inflation
\n
options, Bermudan cancellable IRS, constant maturity swaps (CMS), CMS
\n
spread swaps, CMS spread options, CMS interest rate caps/floors,
\n
(callable) ra
\n
nge accruals, outperformance options, auto-callable options,
\n
\n
Level 3
\n
lookback options, commodity swaps and forwards
\n
Illiquid credit-linked
\n
Collateralised debt obligations (notes)
\n
Valuation model based on correlation of
\n
instruments
\n
\n
probability of default of underlying assets
\n
\n
\n
Private equity investments
\n
Private equity and non-quoted participations
\n
Based on the valuation guidelines of the
\n
European Private Equity & Venture Capital
\n
Association
\n
\n
\n
Illiquid bonds/asset backed
\n
Illiquid (mortgage) bonds/asset backed securities that are indicatively
\n
BVAL, third-party pricing (e.g., lead
\n
securities
\n
\n
priced by a single pricing provider in an inactive market
\n
\n
manager), where prices
\n
cannot be
\n
\n
\n
corroborated due to a lack of
\n
available/reliable alternative market data
\n
\n
\n
Debt instruments
\n
KBC own issues (KBC IFIMA)
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
\n
unobservable inputs (indicative pricing by
\n
third parties for derivatives)
\n
\n
\n
Structured loans
\n
Government-regulated loans with leveraged interest rates and exotic
\n
Discounted cashflow analysis and
\n
early repayment
\n
schedules (K&H)
\n
valuation of related derivatives based on
\n
unobservable inputs
\n
\n
\n
\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.6: Financial assets and liabilities measured at fair value \u2013 transfers between levels 1 and 2
\n
\n
\u2022 In 2022, KBC transferred 77 million euros\u2019 worth of financial assets and liabilities out of level 1 and into level 2, and 434 million
\n
euros\u2019 worth of financial assets and liabilities out of level 2 and into level 1. The corresponding figures for 2021 were 206 million
\n
euros and 294 million euros, respectively. Most of these reclassifications were carried out due to a change in the liquidity of
\n
government bonds and corporate bonds.
\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n
Note 4.7: Financial assets and liabilities measured at fair value \u2013 focus on level 3
\n
\n
\u2022 In 2022, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 65 million euros, primarily on account of new transactions, partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of unlisted shares rose by 66 million euros, due primarily to new
\n
transactions.
\n
- Financial assets at fair value through OCI: the fair value of debt instruments decreased by 36 million euros, primarily on
\n
account of instruments reaching maturity and changes in market inputs.
\n
- Financial assets held for trading: the fair value of derivatives decreased by 232 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities held for trading: the fair value of derivatives decreased by 83 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives decreased by 300 million euros due to changes
\n
in market inputs.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of issued debt instruments decreased by 120
\n
million euros, primarily on account of transactions reaching maturity and the sale of existing positions, only partly offset by
\n
new transactions.
\n
\u2022 In 2021, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 173 million euros, primarily on account of new transactions, only partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of debt instruments fell by 34 million euros, owing primarily to changes
\n
in market inputs.
\n
- Financial liabilities held for trading: the fair value of derivatives increased by 103 million euros, due mainly to changes in market
\n
inputs and new transactions, partly offset by sales. The fair value of issued debt instruments fell by 85 million euros, due mainly
\n
to instruments that had reached maturity.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives increased by 398 million euros due to
\n
reclassifications in level 3 owing to an optimisation of the classification method.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of debt instruments increased by 100 million
\n
euros, primarily on account of new issues, partly offset by sales.
\n
\u2022 Some level 3 assets are associated or economically hedged with identical level 3 liabilities, which means that KBC\u2019s exposure
\n
to unobservable inputs is lower than would appear from the gross figures. Most of the level 3 instruments are also valued using
\n
third-party pricing sources, with KBC not developing any unobservable inputs itself. The main unobservable inputs applied by
\n
KBC to the valuation of exotic derivatives include: mean reversion parameter on Bermudan swaptions, equity cross-correlations
\n
and volatilities for certain stock options, interest-rate correlations for CMS spread options, and the funding costs used to
\n
determine the forward equity prices as part of the valuation of certain equity derivatives. The change in fair value resulting from
\n
a change in these inputs to reflect reasonably possible alternative assumptions is insignificant.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.8: Derivatives
\n
\n
\u2022 In terms of volume of the notional amounts of the derivatives, approximately 77% are trading derivatives and approximately
\n
23% are hedging derivatives.
\n
\u2022 The majority of trading derivatives are effectively included in the trading book but are largely economically hedged (limited
\n
open positions) by other trading derivatives (such as derivative transactions initiated by commercial clients that are
\n
economically hedged) or by balance sheet positions (such as currency positions), which leads to large volumes of notional
\n
amounts but also to result-neutral revaluations on a net basis.
\n
\u2022 A limited number of trading derivatives are ALM derivatives included in the banking book, which are used to hedge economic
\n
risk. These are not subject to hedge accounting. Hedge accounting is applied to most of the ALM interest rate contracts. Only
\n
a limited number of the ALM derivatives for foreign currencies are included in hedge accounting.
\n
\n
\n
Note 4.8.1: Trading derivatives
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
\n
Carrying value
\n
Notional amounts*
\n
Carrying value
\n
Notional amounts*
\n
\n
Assets
\n
Liabilities
\n
Purchased
\n
Sold
\n
Assets
\n
Liabilities
\n
Purchased
\n
Sold
\n
Total
\n
6 279 8 038 567 205 568 302 5 443 5 619 491 716 503 818
\n
Interest rate contracts
\n
2 642 3 678 379 270 377 754 3 056 2 788 291 100 301 289
\n
of which interest rate swaps and
\n
2 429 3 542 368 144 371 294 2 731 2 669 278 999 294 056
\n
futures
\n
\n
of which options 214 136 11 126 6 460 325 119 12 101 7 232
\n
Foreign exchange contracts
\n
3 166 3 620 174 787 177 841 1 722 1 880 185 800 187 835
\n
of which currency and interest
\n
rate swaps, forward foreign
\n
3 081 3 509 171 878 172 361 1 668 1 830 182 613 183 020
\n
exchange transactions and
\n
futures
\n
\n
of which options 85 112 2 909 5 480 54 50 3 187 4 816
\n
Equity
\n
contracts 452 720 12 812 12 371 646 935 14 494 14 376
\n
\n
of which equity swaps 414 410 10 553 10 394 620 637 12 607 12 651
\n
\n
of which options 37 311 2 259 1 977 26 298 1 888 1 725
\n
Credit contracts
\n
0 0 0 0 0 0 4 4
\n
\n
of which credit default swaps 0 0 0 0 0 0 4 4
\n
Commodity and other contracts
\n
20 19 337 335 19 17 318 314
\n
* In this table, both legs of the derivatives are reported in the notional amounts.
\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.8.2: Hedging derivatives
\n
31-12-2022
\n
(in millions of EUR)
\n
Hedging instrument
\n
Hedged item
\n
Impact on equity
\n
\n
Notional amounts
\n
1
\n
\n
Carrying value
\n
Change in fair
\n
value of hedging
\n
items used as
\n
basis for
\n
recognising hedge
\n
ineffectiveness for
\n
the period
\n
2
\n
\n
Type
\n
Carrying value
\n
Change in fair
\n
value of hedged
\n
items used as
\n
basis for
\n
recognising
\n
hedge
\n
ineffectiveness
\n
for the period
\n
2
\n
\n
Ineffective
\n
portion
\n
recognised in
\n
profit or loss
\n
Effective
\n
portion
\n
recognised in
\n
OCI
\n
Hedging strategy
\n
Purchased
\n
Sold
\n
Assets
\n
Liabilities
\n
\n
\n
Total (including
\n
fair value
\n
changes)
\n
Of which
\n
accumulated
\n
fair value
\n
adjustments
\n
\n
\n
\n
Fair value micro hedge
\n
\n
Interest rate swaps
\n
22 753 22 753 185 102 -619
\n
Debt
\n
securities held at AC 4 007 -684 -323
\n
Currency and
\n
interest rate swaps
\n
0 0 0 0 0
\n
Loans and advances at AC
\n
683 70 -310
\n
\n
\n
Debt securities held at FVOCI
\n
1 342 -152 -176
\n
\n
\n
Debt securities issued at AC
\n
14 624 -1 334 1 432
\n
\n
\n
Deposits at AC
\n
0 0 0
\n
Total
\n
22 753 22 753 185 102 -619
\n
Total
\n
624 5 -
\n
Portfolio hedge of interest rate risk
\n
\n
Interest rate swaps
\n
123 930 123 930 209 261 3 172
\n
Debt securities held at AC
\n
359 -122 -123
\n
Currency and
\n
interest rate options
\n
1 762 0 101 0 82
\n
Loans and advances at AC
\n
104 980 -4 207 -3 769
\n
\n
\n
Debt securities held at FVOCI
\n
23 -6 -6
\n
\n
\n
Debt securities issued at AC
\n
0 0 0
\n
\n
\n
Deposits at AC
\n
14 574 -1 432 644
\n
Total
\n
125 692 123 930 310 261 3 254
\n
Total
\n
-3 254 0 -
\n
Cashflow hedge (micro hedge and portfolio hedge)
\n
\n
Interest rate swaps
\n
20 073 20 073 47 115 177
\n
\n
\n
Currency and
\n
interest rate swaps
\n
1 204 1 257 0 39 -13
\n
\n
\n
Total
\n
21 277 21 330 47 154 164
\n
Total
\n
-167 -3 -1 046
\n
Hedge of net
\n
investments in foreign operations
\n
Total
\n
3
\n
1 755 1 807 0 505 18
\n
Total
\n
-18 0 20
\n
1 In this table, both legs of the derivatives are reported in the notional amounts.
\n
2 Ineffectiveness is recognised in \u2018Net result from financial instruments at fair value through profit or loss\u2019 (also see Note 3.3).
\n
3 Hedging instruments in the form of foreign currency deposits.
\n

\n\n

\n\n

\n\n

\n\n

\n\n
31-12-2021
\n
(in millions of EUR)
\n
Hedging instrument
\n
Hedged item
\n
Impact on equity
\n
\n
Notional amounts
\n
1
\n
\n
Carrying value
\n
Change in fair
\n
value of hedging
\n
items used as
\n
basis for
\n
recognising hedge
\n
ineffectiveness for
\n
the period
\n
2
\n
\n
Type
\n
Carrying value
\n
Change in fair
\n
value of hedged
\n
items used as
\n
basis for
\n
recognising
\n
hedge
\n
ineffectiveness
\n
for the period
\n
2
\n
\n
Ineffective
\n
portion
\n
recognised in
\n
profit or loss
\n
Effective
\n
portion
\n
recognised in
\n
OCI
\n
Hedging strategy
\n
Purchased
\n
Sold
\n
Assets
\n
Liabilities
\n
\n
\n
Total (including
\n
fair value
\n
changes)
\n
Of which
\n
accumulated
\n
fair value
\n
adjustments
\n
\n
\n
\n
Fair value micro hedge
\n
\n
Interest rate swaps
\n
22 027 22 027 98 407 307
\n
Debt securities held at AC
\n
3 576 -360 -394
\n
Currency and
\n
interest rate swaps
\n
0 0 0 0 0
\n
Loans and advances at AC
\n
857 391 -114
\n
\n
\n
Debt securities held at FVOCI
\n
1 900 25 -79
\n
\n
\n
Debt securities issued at AC
\n
15 998 98 282
\n
\n
\n
Deposits at AC
\n
0 0 -2
\n
Total
\n
22 027 22 027 98 407 307
\n
Total
\n
-307 0 -
\n
Portfolio hedge of interest rate risk
\n
\n
Interest rate swaps
\n
89 467 89 467 110 183 809
\n
Debt securities held at AC
\n
11 -1 -2
\n
Currency and
\n
interest rate options
\n
1 981 0 21 0 11
\n
Loans and advances at AC
\n
74 412 -504 -1 772
\n
\n
\n
Debt securities held at FVOCI
\n
13 -1 -1
\n
\n
\n
Debt securities issued at AC
\n
0 0 0
\n
\n
\n
Deposits at AC
\n
13 632 -862 960
\n
Total
\n
91 448 89 467 131 183 820
\n
Total
\n
-815 5 -
\n
Cashflow hedge (micro hedge and portfolio hedge)
\n
\n
Interest rate swaps
\n
21 249 21 249 24 502 177
\n
\n
\n
Currency and
\n
interest rate swaps
\n
711 721 26 0 19
\n
\n
\n
Total
\n
21 960 21 970 50 502 196
\n
Total
\n
-196 0 -1 197
\n
Hedge of net investments in foreign operations
\n
\n
Total
\n
3
\n
1 904 1 965 5 420 -109
\n
Total
\n
109 0 20
\n
1 In this table, both legs of the derivatives are reported in the notional amounts.
\n
2 Ineffectiveness is recognised in \u2018Net result from financial instruments at fair value through profit or loss\u2019 (also see Note 3.3).
\n
3 Hedging instruments in the form of foreign currency deposits.
\n

\n\n

\n\n

\n\n

\n\n

\n\n
\u2022 The sharp change in fair value of the hedging instruments and the hedged items in the fair value micro hedges and fair value
\n
hedges for a portfolio of interest rate risk for 2022 are attributable to the substantial increase in market interest rates.
\n
\u2022 The Treasury departments of the various entities manage the interest rate risk. To prevent rate movements from having a
\n
negative impact, the maturities of assets and liabilities are adjusted on the balance sheet using interest rate swaps and other
\n
derivatives.
\n
\u2022 As regards the relationship between risk management and hedge accounting policy, \u2018economic\u2019 management takes priority
\n
and risks are hedged in accordance with the general ALM framework. Only then is a decision made on which, if any, of these
\n
techniques will be used to limit any resulting accounting mismatch.
\n
\u2022 The balances remaining in the cashflow hedge reserve from any hedging relationships for which hedge accounting is no longer
\n
applied came to -166 million euros. The accumulated amount of fair value hedge adjustments remaining on the balance sheet
\n
for any hedged items that have ceased to be adjusted for hedging gains and losses amounted to -24 million euros. These
\n
adjustments are amortised to profit or loss.
\n
\u2022 The difference between the \u2018Profit/loss on positions in portfolios hedged against interest rate risk\u2019 balance sheet item and
\n
accumulated fair value adjustments following portfolio hedges of interest rate risk as included in Note 4.8.2 is attributable to
\n
accumulated fair value adjustments regarding discontinued fair value hedges not included in Note 4.8.2 but included in the
\n
balance sheet.
\n
\u2022 The accumulated fair value adjustments of the hedged assets involved in portfolio hedges of interest rate risk dropped in 2022
\n
due to the general increase in interest rates. The \u2018Profit/loss on positions in portfolios hedged against interest rate risk\u2019 balance
\n
sheet item on the liabilities side of the balance sheet also became more negative for the same reason.
\n
\u2022 Also see the paragraph on hedge accounting in the \u2018How do we manage our risks?\u2019 section and Note 3.3.
\n
\n
\n
Estimated cashflows from cashflow hedging derivatives per time bucket (in millions of EUR)
\n
Inflow
\n
Outflow
\n
Not more than three months
\n
7 -38
\n
More than three but not more than six months
\n
33 -95
\n
More than six months but not more than one year
\n
123 -274
\n
More than one but not more than two
\n
years 222 -514
\n
More than two but not more than five years
\n
505 -960
\n
More than five years
\n
545 -849
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag815": { "value": "\n

\n\n

\n
Note 3.3: Net result from financial instruments at fair value through profit or loss
\n
\n
(in millions of EUR)
\n\n

\n\n
2022 2021
\n
Total
\n
406 145
\n
Total broken down by IFRS portfolio
\n
\n
Financial instruments MFVPL other than held for trading and overlay
\n
-1 949 1 172
\n
Trading instruments (including interest on non
\n
-ALM trading derivatives and fair value changes in all trading derivatives) 567 435
\n
Financial instruments to which the overlay approach is applied
\n
86 104
\n
\n
Gains or losses on sale
\n
\n
176 123
\n
\n
\n
Impairment
\n
-90
\n
-20
\n
\n
Other financial instruments at FVPL
\n
1 942 -1 186
\n
Foreign exchange trading
\n
-90 -272
\n
Fair value adjustments in hedge accounting
\n
-150 -108
\n
Hedge accounting broken down by type of hedge
\n
\n
Fair value micro hedges
\n
5 0
\n
\n
Changes in the fair value of the hedged items 624 -307
\n
\n
Changes in the fair value of the hedging derivatives -619 307
\n
Cashflow hedges
\n
-3 0
\n
\n
Changes in the fair value of the hedging derivatives, ineffective portion -3 0
\n
Hedges of net investments in foreign operations, ineffective portion
\n
0 0
\n
Portfolio hedge of interest rate risk
\n
0 5
\n
\n
Changes in the fair value of the hedged items -3 254 -815
\n
\n
Changes in the fair value of the hedging derivatives 3 254 820
\n
Discontinuation of hedge accounting for fair value hedges
\n
-75 -46
\n
Discontinuation of hedge accounting in the event of cashflow hedges
\n
-77 -66
\n
Total broken down by driver
\n
\n
Market value adjustments (MVA)
\n
80 67
\n
Change in the value of derivatives used for asset/liability management purposes
\n
-14 -197
\n
Financial instruments to which the overlay approach is applied and other
\n
96 113
\n
Dealing room
\n
245 162
\n

\n\n

\n\n
\n
\u2022 ALM hedging derivatives (recognised in hedge accounting): the interest component of these derivatives is recognised under
\n
\u2018Net interest income\u2019. Fair value changes in hedging derivatives, excluding those for which an effective cashflow hedge
\n
relationship exists, are recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019. Under fair
\n
value hedge accounting, changes in the fair value of hedged assets are also recognised under this heading, and offsetting
\n
takes place insofar as the hedge is effective. ALM hedging derivatives not recognised in hedge accounting (and therefore
\n
classified as trading instruments) are treated in the same way, except most of the related assets are not recognised at fair
\n
value (i.e. not marked-to-market).
\n
\u2022 Day 1 profit: when the transaction price in a non-active market differs from the fair value of other observable market
\n
transactions in the same instrument or from the fair value based on a valuation technique whose variables include only data
\n
from observable markets, the difference between the transaction price and the fair value (day 1 profit) is taken to profit or loss.
\n
If this is not the case (i.e. the variables do not include only data from observable markets), day 1 profit is reserved and is released
\n
in profit or loss during the life and until the maturity of the financial instrument. KBC has reserved these day 1 profits for limited
\n
amounts since January 2022.
\n
\u2022 Financial instruments to which the overlay approach is applied: see the comments under the consolidated income statement.
\n
\u2022 Foreign exchange trading includes all realised and unrealised foreign exchange results (when the monetary assets and liabilities
\n
are revalued), regardless of the IFRS portfolio, except for financial assets and liabilities measured at fair value through profit or
\n
loss, for which the revaluation is included in the fair value correction. Note that (unrealised) foreign exchange gains/losses on
\n
claims provisions (insurance) and on the financial instruments hedging the claims provisions are included under \u2018Technical
\n
charges\u2019. (Unrealised) foreign exchange gains/losses on the reinsurers\u2019 share of claims provisions and on the financial
\n
instruments hedging such provisions are included under \u2018Ceded reinsurance result\u2019.
\n
\u2022 Under IFRS 9, investment contracts (insurance) are included under \u2018Financial instruments mandatorily measured at fair value
\n
through profit or loss\u2019 in accordance with their \u2018managed on a FV basis\u2019 business model, whereas liabilities under investment
\n
contracts are included under \u2018Financial instruments at fair value through profit or loss\u2019. This resulted in amounts being offset
\n
against each other in \u2018Financial instruments MFVPL other than held for trading and overlay\u2019 and \u2018Financial instruments at fair
\n
value through profit or loss\u2019 in the above table (-1 893 million euros and +1 893 million euros in 2022 and +1 195 million euros and
\n
-1 195 million euros in 2021).
\n
\u2022 The effectiveness of the hedge is determined according to the following methods:
\n

\n\n

\n\n

\n\n

\n\n
- For fair value micro hedging, we use the dollar offset method on a quarterly basis, with changes in the fair value of the hedged
\n
item offsetting changes in the fair value of the hedging instrument within a range of 80%\u2013125%.
\n
- For cashflow hedges, we compare the designated hedging instrument with a perfect hedge of the hedged cashflows on a
\n
prospective (by BPV measurement) and retrospective basis (by comparing the fair value of the designated hedging
\n
instrument with the perfect hedge). The effectiveness of both tests must fall within a range of 80%\u2013125%.
\n
- We use the rules set out in the European version of IAS 39 (carve-out) to assess the effectiveness of fair value hedges for a
\n
portfolio of interest rate risk. IFRS does not permit net positions to be reported as hedged items, but does allow hedging
\n
instruments to be designated as a hedge of a gross asset position (or a gross liabilities position, as the case may be).
\n
Specifically, we make sure that the volume of assets (or liabilities) in each maturity bucket is greater than the volume of
\n
hedging instruments allocated to the same bucket.
\n

\n\n
\n
Note 3.4: Net realised result from debt instruments at fair value through OCI
\n
\n
\u2022 In 2022, the realised result from debt instruments at fair value through OCI was impacted by a realised loss of -22 million euros
\n
on the sale of low-yielding bonds. The realised result from debt instruments at fair value through OCI was not material in 2021.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.1: Financial assets and liabilities, breakdown by portfolio and product
\n
(in millions of EUR)
\n
Measured
\n
at
\n
amortised
\n
cost (AC)
\n
Measured
\n
at fair
\n
value
\n
through
\n
other
\n
compre-
\n
hensive
\n
income
\n
(FVOCI)
\n
Mandatorily
\n
measured at
\n
fair value
\n
through
\n
profit or loss
\n
(MFVPL) excl.
\n
HFT and
\n
overlay
\n
Measured at
\n
fair value \u2013
\n
overlay
\n
approach
\n
(overlay)
\n
Held for
\n
trading
\n
(HFT)
\n
Desig-
\n
nated at
\n
fair value
\n
1
\n
(FVO)
\n
Hedging
\n
Deriva-
\n
tives
\n
Total
\n
Total pro
\n
forma
\n
excluding
\n
KBC Bank
\n
Bulgaria
\n
(formerly
\n
Raiffeisen-
\n
bank
\n
Bulgaria)
\n
FINANCIAL ASSETS, 31-12-2022
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
4 240 0 13 0 1 0 0 4 254
\n
4 203
\n
of which loans and advances to banks repayable on
\n
demand and term loans to banks at not more than three
\n
months
\n
\n
1 237 1 237
\n
Loans and advances to customers (excluding reverse
\n
repos)
\n
177 427 0 625 0 0 0 0 178 053
\n
174 083
\n
Trade receivables
\n
2 818
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 818
\n
2 729
\n
Consumer credit
\n
6 222
\n
0
\n
430
\n
0
\n
0
\n
0
\n
0
\n
6 652
\n
5 977
\n
Mortgage loans
\n
73 465
\n
0
\n
196
\n
0
\n
0
\n
0
\n
0
\n
73 660
\n
72 891
\n
Term loans
\n
82 894
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
82 894
\n
80 744
\n
Finance lease
\n
6 368
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
6 368
\n
6 117
\n
Current account advances
\n
4 886
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 886
\n
4 885
\n
Other
\n
774
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
774
\n
740
\n
Reverse repos
\n
2
\n
\n
20 186
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 219
\n
20 219
\n
with credit institutions and investment firms
\n
20 018
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 050
\n
20 050
\n
with customers
\n
168
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
168
\n
168
\n
Equity instruments
\n
0
\n
315
\n
13
\n
1 237
\n
430
\n
0
\n
0
\n
1 994
\n
1 989
\n
Investment contracts (insurance)
\n
6
\n
\n
0
\n
0
\n
12 771
\n
0
\n
0
\n
0
\n
0
\n
12 771
\n
12 771
\n
Debt securities
\n
52 030
\n
11 813
\n
17
\n
0
\n
1 728
\n
0
\n
0
\n
65 588
\n
64 871
\n
Public bodies
\n
44 219
\n
8 135
\n
0
\n
0
\n
1 667
\n
0
\n
0
\n
54 021
\n
53 390
\n
Credit institutions and investment firms
\n
5 160
\n
1 621
\n
0
\n
0
\n
9
\n
0
\n
0
\n
6 790
\n
6 747
\n
Corporates
\n
2 651
\n
2 057
\n
17
\n
0
\n
53
\n
0
\n
0
\n
4 777
\n
4 733
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
6 279
\n
0
\n
542
\n
6 821
\n
6 813
\n
3
\n
\n
Other
\n
1 561
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
1 561
\n
1 561
\n
Total
\n
255 444
\n
12 128
\n
13 439
\n
1 237
\n
8 471
\n
0
\n
542
\n
291 262
\n
286 511
\n
FINANCIAL ASSETS, 31-12-2021
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
7 920 0 0 0 1 0 0 7 920
\n
-
\n
of which loans and advances to banks repayable on demand
\n
and term loans to banks at not more than three months
\n
3 146 -
\n
Loans and advances to customers (excl. reverse repos)
\n
159 167
\n
0
\n
560
\n
0
\n
0
\n
0
\n
0
\n
159 728
\n
-
\n
Trade receivables
\n
2 090
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 090
\n
-
\n
Consumer credit
\n
5 470
\n
0
\n
381
\n
0
\n
0
\n
0
\n
0
\n
5 851
\n
-
\n
Mortgage loans
\n
67 486
\n
0
\n
179
\n
0
\n
0
\n
0
\n
0
\n
67 665
\n
-
\n
Term loans
\n
72 998
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
72 998
\n
-
\n
Finance lease
\n
5 815
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
5 815
\n
-
\n
Current account advances
\n
4 819
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 819
\n
-
\n
Other
\n
490
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
490
\n
-
\n
2
\n
-
\n
\n
Reverse repos
\n
24 978
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 978
\n
with credit institutions and investment firms
\n
24 861
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 861
\n
-
\n
with customers
\n
117
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
117
\n
-
\n
Equity instruments
\n
0
\n
321
\n
8
\n
1 366
\n
448
\n
0
\n
0
\n
2 144
\n
-
\n
6
\n
-
\n
\n
Investment contracts (insurance)
\n
0
\n
0
\n
14 620
\n
0
\n
0
\n
0
\n
0
\n
14 620
\n
Debt securities
\n
47 172
\n
15 503
\n
17
\n
0
\n
2 958
\n
0
\n
0
\n
65 650
\n
-
\n
Public bodies
\n
41 475
\n
10 514
\n
0
\n
0
\n
2 517
\n
0
\n
0
\n
54 507
\n
-
\n
Credit institutions and investment firms
\n
3 310
\n
2 245
\n
0
\n
0
\n
357
\n
0
\n
0
\n
5 912
\n
-
\n
Corporates
\n
2 387
\n
2 744
\n
17
\n
0
\n
84
\n
0
\n
0
\n
5 232
\n
-
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
5 443
\n
0
\n
283
\n
5 727
\n
-
\n
3
\n
-
\n
\n
Other
\n
892
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
892
\n
Total
\n
240 128
\n
15 824
\n
15 205
\n
1 366
\n
8 850
\n
0
\n
283
\n
281 658
\n
-
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
(in millions of EUR)
\n
Measured at
\n
amortised
\n
cost
\n
(AC)
\n
Held for
\n
trading (HFT)
\n
Designated at
\n
fair value (FVO)
\n
\n
Hedging
\n
derivatives
\n
Total
\n
Total pro forma
\n
excluding KBC
\n
Bank Bulgaria
\n
(formerly
\n
Raiffeisenbank
\n
Bulgaria)
\n
FINANCIAL
\n
LIABILITIES, 31-12-2022
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
24 819 0 0 0 24 819
\n
24 737
\n
of which deposits from banks repayable on demand
\n
\n
\n
\n
\n
\n
\n
\n
5 085 5 085
\n
Deposits from customers and debt
\n
securities (excl. repos)
\n
\n
251 496 44 1 205 0 252 746
\n
247 585
\n
\n
Demand deposits 122 053 0 0 0 122 053 117 401
\n
\n
Time deposits 22 280 44 73 0 22 397 21 960
\n
\n
Savings accounts 76 979 0 0 0 76 979 76 954
\n
\n
Special deposits 2 710 0 0 0 2 710 2 663
\n
\n
Other deposits 268 0 0 0 268 268
\n
Subtotal deposits from customers (excl. repos)
\n
224 290 44 73 0 224 407 219 246
\n
\n
Certificates of deposit 9 321 0 1 0 9 322 9 322
\n
\n
Savings certificates 104 0 0 0 104 104
\n
\n
Non-convertible bonds 15 621 0 1 006 0 16 627 16 627
\n
\n
Non-convertible subordinated liabilities 2 160 0 126 0 2 285 2 285
\n
Repos
\n
4
\n
11 091 7 0 0 11 097
\n
11 097
\n
\n
with credit institutions and investment firms 10 852 7 0 0 10 859 10 859
\n
\n
with customers 239 0 0 0 239 239
\n
Liabilities under investment contracts
\n
6
\n
0 0 12 002 0 12 002
\n
12 002
\n
Derivatives
\n
0 8 038 0 577 8 615
\n
8 605
\n
Short positions
\n
0 1 007 0 0 1 007
\n
1 007
\n
\n
In equity instruments 0 5 0 0 5 5
\n
\n
In debt securities 0 1 002 0 0 1 002 1 002
\n
Other
\n
5
\n
2 448 0 0 0 2 448
\n
2 370
\n
Total
\n
289 854 9 096 13 207 577 312 735
\n
307 403
\n
FINANCIAL LIABILITIES, 31
\n
-12-2021
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
38 047 0 0 0 38 047
\n
-
\n
of which deposits from banks repayable on demand 4 695 -
\n
Deposits from
\n
customers and debt securities (excl. repos)
\n
\n
224 759 21 1 312 0 226 093
\n
-
\n
\n
Demand deposits 112 097 0 0 0 112 097
\n
-
\n
\n
Time deposits 9 106 21 60 0 9 187
\n
-
\n
\n
Savings accounts 74 801 0 0 0 74 801
\n
-
\n
\n
Special deposits 2 962 0 0 0 2 962
\n
-
\n
\n
Other deposits 428 0 0 0 428
\n
-
\n
Subtotal deposits from customers (excl. repos)
\n
199 395 21 60 0 199 476
\n
-
\n
\n
Certificates of deposit 6 273 0 0 0 6 273
\n
-
\n
\n
Savings certificates 253 0 0 0 253
\n
-
\n
\n
Non-convertible bonds 15 892 0 1 118 0 17 011
\n
-
\n
\n
Non-convertible subordinated liabilities 2 946 0 134 0 3 080
\n
-
\n
Repos
\n
4
\n
3 293 2 0 0 3 295
\n
-
\n
\n
with credit institutions and investment firms 2 888 2 0 0 2 890
\n
-
\n
\n
with customers 405 0 0 0 405
\n
-
\n
Liabilities under investment
\n
contracts
\n
6
\n
0 0 13 603 0 13 603
\n
-
\n
Derivatives
\n
0 5 619 0 1 094 6 713
\n
-
\n
Short positions
\n
0 1 628 0 0 1 628
\n
-
\n
\n
In equity instruments 0 18 0 0 18
\n
-
\n
\n
In debt securities 0 1 611 0 0 1 611
\n
-
\n
Other
\n
5
\n
2 288 0 0 0 2 288
\n
-
\n
Total
\n
268 387 7 271 14 916 1 094 291 667
\n
-
\n
1 The carrying value comes close to the maximum credit exposure.
\n
2 The amount of the reverse repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out).
\n
3 Financial assets not included under \u2018Loans and advances to customers\u2019 as they are not directly related to commercial lending.
\n
4 The amount of the repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out), with the assets being partly reflected on the balance sheet
\n
and partly obtained through reverse repo transactions.
\n
5 Financial liabilities not included under deposits from customers as they are not directly related to commercial deposit acquisition.
\n
6 The difference between \u2018Investment contracts (insurance)\u2019 and \u2018Liabilities under investment contracts\u2019 is accounted for by the presentation of non-unbundled investment contracts that are
\n
included under \u2018Investment contracts (insurance)\u2019 on the financial assets side, but are included under \u2018Technical provisions (before reinsurance)\u2019 on the liabilities side.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n\n
\u2022 \u2018Non-convertible bonds\u2019 comprise mainly KBC Bank, KBC Group, \u010cSOB and KBC IFIMA issues. They are usually recognised under
\n
\u2018Measured at amortised cost\u2019. However, if they contain closely related embedded derivatives, they are recorded under
\n
\u2018Designated at fair value\u2019 (see accounting policies). This item also includes three green bonds (for 500, 500 and 750 million euros
\n
each) and a social bond (for 750 million euros), which have been recognised at amortised cost.
\n
\u2022 More information on major new debt issues or redemptions is provided under the \u2018Consolidated cashflow statement\u2019.
\n
\u2022 \u2018Deposits from credit institutions and investment firms\u2019 include funding obtained from the ECB\u2019s TLTRO programme (15.4 billion
\n
euros at year-end 2022, 9.1 billion euros less than at year-end 2021 on account of redemptions). KBC calculates these deposits
\n
using the effective interest rate method, with the rate being adjusted should we fail to meet the conditions (similar to a floating
\n
rate instrument), as per paragraph B.5.4.5 of IFRS 9. KBC\u2019s management has reasonable assurance that KBC will comply with
\n
the conditions attached (including the level of lending to households and non-financial companies) and hence the interest has
\n
accordingly been recognised (a gross amount of 112 million euros in interest income (negative interest rate) in 2022 and 242
\n
million euros in 2021).
\n
\u2022 Transferred financial assets that continue to be recognised in their entirety: KBC regularly lends and/or sells securities with the
\n
commitment to buy them back at a later date (repo transactions). Securities lent or sold with such a commitment are transferred
\n
to the counterparty, and, in exchange, KBC receives cash or other financial assets. However, KBC retains the main risks and
\n
income relating to these securities, and, therefore, continues to recognise them on its balance sheet. In addition, a financial
\n
liability is recognised equalling the cash received.
\n
\n
Transferred financial assets that continue to be recognised in their entirety (carrying value, in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Transferred financial assets that continue to be recognised in their entirety: repo transactions and securities lent out
\n
17 425 13 762
\n
Held for
\n
trading 960 1 221
\n
Fair value through OCI
\n
860 1 474
\n
Amortised cost
\n
15 605 11 067
\n
Associated financial liability
\n
10 534 2 936
\n
Held for trading
\n
689 335
\n
Fair value through OCI
\n
609 362
\n
Amortised cost
\n
9 236 2 239
\n
\n
\u2022 It should be noted that KBC has more transferred financial assets on its balance sheet than repo transactions, due to the fact
\n
that the cash legs of certain repo transactions are offset against reverse repo transactions if they are carried out with the same
\n
counterparty, in the same currency and with the same maturity date. Moreover, there is a legally enforceable right, and an
\n
intention, to settle the transactions on a net basis or to realise the financial asset and settle the financial liability simultaneously.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria in 2022 is provided in Note 6.6.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. We report on estimated greenhouse gas emissions
\n
associated with lending and other activities and have defined objectives for reducing the greenhouse gas intensity of loans
\n
we have provided to the energy sector, electricity producers and the real estate sector, mortgage loans and loans provided
\n
for commercial residential real estate, as well as loans provided to the automotive industry and financial and operational car
\n
leasing (see Note 6.2), the agricultural sector, and cement, steel and aluminium producers. See \u2018Focus on climate\u2019 in the \u2018Report
\n
of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our Climate Report and
\n
\n
our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n
Note 4.4: Fair value of financial assets and liabilities \u2013 general
\n
\u2022 In line with European Banking Authority guidelines, we conduct an outlier stress test on a quarterly basis by applying six different
\n
scenarios to the banking books (material currencies). The worst-case scenario is set off against tier-1 capital. For the banking
\n
book at KBC group level, this risk came to -3% of tier-1 capital at year-end 2022. This -3% is well below the -15% Tier 1 threshold,
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
which is monitored by the ECB. Note that this -3% of tier-1 capital at year-end 2022 is equivalent to a -0.4% points impact on
\n
the end of year 2022 fully loaded CET1 ratio.
\n
\u2022 The table shows the changes in economic value of equity under six different interest rate scenarios. To test these six scenarios,
\n
we combine the shift in the yield curves with changes in maturities depending on clients\u2019 behaviour (e.g., interest-rate-driven
\n
prepayment behaviour) and use a run-off balance sheet where maturing items are not replaced. The bank also analyses the
\n
impact of different interest rate scenarios on its net interest income.
\n
\n
Changes of the economic value of equity
\n
Supervisory shock scenarios (in millions of EUR, material currencies)*
\n
End of 4Q2022
\n
End of 2Q2022
\n
1 Parallel up
\n
-491
\n
-1 163
\n
2 Parallel down
\n
370
\n
600
\n
3 Steepener
\n
-55
\n
-207
\n
4 Flattener
\n
-26
\n
-3
\n
5 Short rates up
\n
-179
\n
-343
\n
6 Short rates down
\n
102
\n
176
\n
\n
* Supervision of the underlying internal models\u2019 compliance with the approval criteria as provided for in the standards imposed by the regulator does not come under the responsibility of the statutory auditor.
\n
\u2022 Note that the above stress test covers the full balance sheet (full economic view), with compensating effects across the balance
\n
sheet, whereas the table below focuses on some parts of the balance sheet.
\n
\n
\u2022 Furthermore, taking into account 1) KBCs large stock of high-quality liquid assets (approximately 92 billion euros on average in
\n
2022), which consist of cash and bonds which can be repoed in the private market and at the central banks, 2) 48% of total
\n
customer deposits at KBC are covered by the Deposit Guarantee and 3) 83% of total customer deposits consisting of more
\n
stable retail & SME clients, the unrealised losses on the debt securities portfolio at amortised cost do not need to be realised
\n
for liquidity purposes and are therefore irrelevant from a capital perspective.
\n
\n
\n
\n
Fair value of financial instruments that are not measured at fair value
\n
Financial assets
\n
Financial liabilities
\n
in the balance sheet
\n
at amortised cost
\n
at amortised cost
\n
Carrying
\n
Fair
\n
Carrying
\n
Fair
\n
(in millions of EUR)
\n
value
\n
value
\n
value
\n
value
\n
31-12-2022
\n
FINANCIAL ASSETS
\n
\n
Loans and advances to credit institutions and investment firms (incl. reverse
\n
repos) 24 258 24 211 \u2013 \u2013
\n
Loans and advances to customers (incl. reverse repos)
\n
177 596 163 972 \u2013 \u2013
\n
Debt securities
\n
52 030 46 886 \u2013 \u2013
\n
Other
\n
1 561 1 561 \u2013 \u2013
\n
Total
\n
255 444 236 630 \u2013 \u2013
\n
\n
Level 1 \u2013 43 364 \u2013 \u2013
\n
\n
Level 2 \u2013 31 917 \u2013 \u2013
\n
\n
Level 3 \u2013 161 349 \u2013 \u2013
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms (incl. repos)
\n
\n
\u2013 \u2013 35 671 35 207
\n
Deposits from customers and debt securities (incl. repos)
\n
\n
\u2013 \u2013 251 735 250 485
\n
Liabilities under investment
\n
contracts \u2013 \u2013 0 0
\n
Other
\n
\u2013 \u2013 2 448 2 448
\n
Total
\n
\u2013 \u2013 289 854 288 140
\n
Level 1
\n
\u2013
\n
\u2013
\n
\u2013
\n
47
\n
Level 2
\n
\u2013
\n
\u2013
\n
\u2013
\n
111 093
\n
Level 3
\n
\u2013
\n
\u2013
\n
\u2013
\n
176 999
\n
31
\n
-12-2021
\n
FINANCIAL ASSETS
\n
\n
Loans and advances to credit institutions and investment firms (incl. reverse
\n
repos) 32 780 32 789 \u2013 \u2013
\n
Loans and advances to customers (incl. reverse repos)
\n
159 285 160 037 \u2013 \u2013
\n
Debt securities
\n
47 172 47 878 \u2013 \u2013
\n
Other
\n
892 892 \u2013 \u2013
\n
Total
\n
240 128 241 595 \u2013 \u2013
\n
Level 1
\n
\u2013
\n
44 062
\n
\u2013
\n
\u2013
\n
Level 2
\n
\u2013
\n
36 737
\n
\u2013
\n
\u2013
\n
Level 3
\n
\u2013
\n
160 797
\n
\u2013
\n
\u2013
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms (incl. repos)
\n
\n
\u2013 \u2013 40 935 41 003
\n
Deposits from customers and debt securities (incl. repos)
\n
\n
\u2013 \u2013 225 164 225 299
\n
Liabilities under investment
\n
contracts \u2013 \u2013 0 0
\n
Other
\n
\u2013 \u2013 2 288 2 286
\n
Total
\n
\u2013 \u2013 268 387 268 588
\n
\n
Level 1 \u2013 \u2013 \u2013 24
\n
\n
Level 2 \u2013 \u2013 \u2013 105 714
\n
\n
Level 3 \u2013 \u2013 \u2013 162 850
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n
\u2022 All internal valuation models are validated by an independent Risk Validation Unit. In addition, the Executive Committee has
\n
appointed a Group Valuation Committee (GVC) to ensure that KBC meets all the legal requirements for measuring financial
\n
assets and liabilities at fair value. The GVC monitors consistent implementation of the KBC Valuation Framework, which consists
\n
of various guidelines, including the Group Valuation Policy, the Group Market Value Adjustments Policy and the Group
\n
Parameter Review Policy. The GVC meets at least twice a quarter to approve significant changes in valuation methods
\n
(including, but not limited to, models, market data and inputs) or deviations from group policies for financial assets and liabilities
\n
measured at fair value. The committee is made up of members from Finance, Risk Management and the Middle Office. Valuation
\n
uncertainty measurements are made and reported to the GVC every six months. Certain fair values generated by valuation
\n
models are challenged by a team set up specifically for this purpose.
\n
\u2022 The fair value of mortgage and term loans not measured at fair value in the balance sheet (see table) is calculated by
\n
discounting contractual cashflows at the risk-free rate. This calculation is then adjusted for credit risk by taking account of
\n
margins obtained on similar, but recently issued, loans or by using a spread derived from the listed-bond spread. The fair value
\n
of the main portfolios takes account of prepayment risks and cap options. The fair value of time deposits is calculated by
\n
discounting contractual cashflows at the risk-free rate. The fair value of demand and savings deposits is presumed to be equal
\n
to their carrying value.
\n
\u2022 As a result of the first-time adoption of IFRS 9 on 1 January 2018, debt instruments with a total carrying value of 15 060 million
\n
euros have been reclassified from \u2018Available-for-sale assets\u2019 to \u2018Financial assets held at amortised cost\u2019. Due to this
\n
reclassification, changes in fair value (before tax) totalling -566 million euros were not recorded in the revaluation reserve in
\n
2022 (-199 million euros in 2021). The fair value of this reclassified portfolio (after redemptions) amounted to 4 668 million euros
\n
at year-end 2022 (5 753 million euros at year-end 2021).
\n
\u2022 The difference between the fair value and the carrying value of the financial instruments at amortised cost was caused by the
\n
substantial interest rate hikes in 2022. As a hold-to-collect business model is applied on the assets side, interim changes in fair
\n
value are less relevant. In addition, part of this difference has already been recorded under fair value hedges for a portfolio of
\n
interest rate risk, which is presented separately on the balance sheet (on both the assets and the liabilities side) in the
\n
\u2018Profit/loss on positions in portfolios hedged against interest rate risk\u2019 balance sheet item. Furthermore, there are ALM interest
\n
derivatives not recognised in hedge accounting.
\n

\n\n

\n\n
\n
\n
\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n

\n

\n

\n

\n

\n

\n

\n
Note 4.5: Financial assets and liabilities measured at fair value \u2013 fair value hierarchy
\n
\n
\n
Fair value hierarchy
\n
31-12-2022 31-12-2021
\n
(in millions of EUR)
\n
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
\n
FINANCIAL ASSETS AT FAIR VALUE
\n
\n
Mandatorily measured at fair value through profit or loss other than held for trading (including
\n
\n
overlay)
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 13 0 13 0 0 0 0
\n
reverse repos)
\n
Loans and advances to customers (incl. reverse repos)
\n
0 0 625 625 0 0 560 560
\n
Equity instruments
\n
1 131 0 118 1 250 1 323 0 52 1 374
\n
Investment contracts (insurance)
\n
12 638 134 0 12 771 14 365 254 0 14 620
\n
Debt securities
\n
12 0 5 17 14 0 3 17
\n
of which sovereign bonds
\n
\n
0
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 34 0 34 0 1 0 1
\n
reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Equity instruments
\n
429 0 0 430 448 0 0 448
\n
Debt securities
\n
1 480 244 4 1 728 1 522 1 432 4 2 958
\n
\n
of which sovereign bonds 1 444 223 0 1 667 1 441 1 076 0 2 517
\n
Derivatives
\n
3 5 547 729 6 279 1 4 482 961 5 443
\n
Other
\n
0 0 0 0 0 0 0 0
\n
Designated upon initial recognition at fair value through profit or loss (FVO)
\n
Loans and advances to credit institutions and
\n
0 0 0 0 0 0 0 0
\n
investment firms (incl. reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Debt securities
\n
0 0 0 0 0 0 0 0
\n
\n
of which sovereign bonds 0 0 0 0 0 0 0 0
\n
At fair value through OCI
\n
\n
\n
\n
\n
\n
\n
\n
\n
Equity instruments
\n
18 1 297 315 15 1 306 321
\n
Debt securities
\n
9 508 2 070 235 11 813 12 269 2 963 271 15 503
\n
\n
of which sovereign bonds
\n
\n
7 003 1 059 73 8 135 8 751
\n
\n
1 711
\n
\n
52
\n
\n
10 514
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0 542 0 542 0 283 0 283
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial assets at fair value
\n
25 219 8 585 2 014 35 818 29 956 9 416 2 157 41 529
\n
FINANCIAL LIABILITIES AT FAIR VALUE
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 7 0 7 0 2 0 2
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 44 0 44 0 21 0 21
\n
Derivatives
\n
2
\n
6 911
\n
1 125
\n
8 038
\n
1
\n
4 410
\n
1 209
\n
5 619
\n
Short positions
\n
884 123 0 1 007 1 582 47 0 1 628
\n
Designated at fair value
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 0 0 0 0 0 0 0
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 74 1 131 1 205 0 61 1 251 1 312
\n
Liabilities under investment contracts
\n
12 002 0 0 12 002 13 603 0 0 13 603
\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0
\n
479
\n
98
\n
577
\n
0
\n
696
\n
398
\n
1 094
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial liabilities at fair value
\n
12 887 7 638 2 355 22 881 15 185 5 238 2 857 23 280
\n
\n
\u2022 The fair value hierarchy prioritises the valuation techniques and the respective inputs into three levels.
\n
- The fair value hierarchy gives the highest priority to \u2018level 1 inputs\u2019. This means that, when there is an active market, quoted
\n
prices have to be used to measure the financial assets or liabilities at fair value. Level 1 inputs are prices that are readily and
\n
regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency (and that are
\n
quoted in active markets accessible to KBC). They represent actual and regularly occurring market transactions on an arm\u2019s
\n
length basis. The fair value is then based on a mark-to-market valuation derived from currently available transaction prices.
\n
No valuation technique (model) is involved.
\n
- If there are no price quotations available, the reporting entity establishes fair value using a model based on observable or
\n
unobservable inputs. The use of observable inputs must be maximised. Observable inputs are also referred to as \u2018level 2
\n
inputs\u2019 and reflect the assumptions market participants would use in pricing the asset or liability based on market data
\n
obtained from sources independent of the reporting entity. Examples of observable inputs are the risk-free rate, exchange
\n
rates, stock prices and implied volatility. Valuation techniques based on observable inputs include discounted cashflow
\n
analysis, or reference to the current or recent fair value of a similar instrument.
\n
- Unobservable inputs are also referred to as \u2018level 3 inputs\u2019 and reflect the reporting entity\u2019s own assumptions about the
\n
assumptions that market participants would use in pricing the asset or liability (including assumptions regarding the risks
\n
involved). Unobservable inputs reflect a market that is not active. For example, proxies and correlation factors can be
\n
considered to be unobservable in the market.
\n
\u2022 When the inputs used to measure the fair value of an asset or a liability can be categorised into different levels of the fair value
\n
hierarchy, the fair value measurement is classified in its entirety into the same level as the lowest level input that is significant
\n
to the entire fair value measurement. For example, if a fair value measurement uses observable inputs that require significant
\n
adjustment based on unobservable inputs, that measurement is a level 3 measurement.
\n
\u2022 The valuation methodology and the corresponding classification in the fair value hierarchy of the most commonly used financial
\n
instruments are summarised in the table. Whereas the majority of instruments of a certain type are within the level indicated in
\n
the table, a small portion may actually be classified in another level.
\n
\u2022 KBC follows the principle that transfers into and out of levels of the fair value hierarchy are made at the end of the reporting
\n
period. Transfers between the various levels are dealt with in more detail in Note 4.6 and Note 4.7.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Instrument type Products Valuation technique
\n
Liquid financial instruments
\n
FX spots, exchange traded financial futures, exchange traded options,
\n
Mark-to-market (quoted prices in active
\n
for which quoted prices are
\n
exchange traded stocks, exchange traded funds, liquid government
\n
markets), for bonds: BVAL or vendor
\n
data.
\n
\n
Level 1
\n
regularly available
\n
\n
bonds, other liquid bonds, liquid asset backed securities (ABS) in active
\n
markets
\n
Plain vanilla/liquid
\n
(Cross-currency) interest rate swaps (IRS), FX swaps, FX forwards, forward
\n
Discounted cashflow analysis based on
\n
derivatives
\n
\n
rate agreements (FRA), inflation swaps, dividend swaps and futures,
\n
discount and estimation curves (derived
\n
reverse floaters, bond future options, interest rate future opt
\n
ions, overnight
\n
from quoted deposit rates,
\n
\n
index swaps (OIS), FX resets
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Caps & floors, interest rate options, European stock options, European &
\n
Option pricing model based on
\n
American FX options, forward starting options, digital FX options, FX strips
\n
observable inputs (e.g., volatilities)
\n
\n
of simple options, European swaptions, European cancellable IRS,
\n
\n
compound options
\n
\n
Linear financial liabilities
\n
Deposits, simple cashflows, repo transactions
\n
Discounted cashflow analysis based on
\n
(without optional features)
\n
\u2013
\n
discount and estimation curves (derived
\n
cash instruments
\n
\n
from quoted deposit rates,
\n
\n
\n
Level 2
\n
FX swaps and (CC)IRS)
\n
\n
\n
Semi-liquid bonds/asset
\n
Semi-liquid bonds/asset backed securities
\n
BVAL, prices corroborated by alternative
\n
backed securities
\n
\n
observable market data, or using
\n
comparable spread method
\n
\n
\n
Debt instruments
\n
KBC IFIMA own issues (liabilities), mortgage bonds held by \u010cSOB
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
observable inputs
\n
\n
\n
Linear financial assets (cash
\n
Loans, commercial paper
\n
Discounted cashflow analysis based on
\n
instruments)
\n
\n
discount and estimation curves (derived
\n
from quoted deposit rates,
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Exotic derivatives
\n
Target profit forwards, flexible forwards, American & Asian stock options,
\n
Option pricing model based on
\n
Bermudan swaptions, digital interest rate options, quanto interest rate
\n
observable inputs (e.g., correlation)
\n
\n
options, digital stock options, composite stock options, barrier stock
\n
options, quanto digital FX options, FX
\n
Asian options, FX European barrier
\n
options, FX simple digital barrier options, FX touch rebates, inflation
\n
options, Bermudan cancellable IRS, constant maturity swaps (CMS), CMS
\n
spread swaps, CMS spread options, CMS interest rate caps/floors,
\n
(callable) ra
\n
nge accruals, outperformance options, auto-callable options,
\n
\n
Level 3
\n
lookback options, commodity swaps and forwards
\n
Illiquid credit-linked
\n
Collateralised debt obligations (notes)
\n
Valuation model based on correlation of
\n
instruments
\n
\n
probability of default of underlying assets
\n
\n
\n
Private equity investments
\n
Private equity and non-quoted participations
\n
Based on the valuation guidelines of the
\n
European Private Equity & Venture Capital
\n
Association
\n
\n
\n
Illiquid bonds/asset backed
\n
Illiquid (mortgage) bonds/asset backed securities that are indicatively
\n
BVAL, third-party pricing (e.g., lead
\n
securities
\n
\n
priced by a single pricing provider in an inactive market
\n
\n
manager), where prices
\n
cannot be
\n
\n
\n
corroborated due to a lack of
\n
available/reliable alternative market data
\n
\n
\n
Debt instruments
\n
KBC own issues (KBC IFIMA)
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
\n
unobservable inputs (indicative pricing by
\n
third parties for derivatives)
\n
\n
\n
Structured loans
\n
Government-regulated loans with leveraged interest rates and exotic
\n
Discounted cashflow analysis and
\n
early repayment
\n
schedules (K&H)
\n
valuation of related derivatives based on
\n
unobservable inputs
\n
\n
\n
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.6: Financial assets and liabilities measured at fair value \u2013 transfers between levels 1 and 2
\n
\n
\u2022 In 2022, KBC transferred 77 million euros\u2019 worth of financial assets and liabilities out of level 1 and into level 2, and 434 million
\n
euros\u2019 worth of financial assets and liabilities out of level 2 and into level 1. The corresponding figures for 2021 were 206 million
\n
euros and 294 million euros, respectively. Most of these reclassifications were carried out due to a change in the liquidity of
\n
government bonds and corporate bonds.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n
Note 4.7: Financial assets and liabilities measured at fair value \u2013 focus on level 3
\n
\n
\u2022 In 2022, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 65 million euros, primarily on account of new transactions, partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of unlisted shares rose by 66 million euros, due primarily to new
\n
transactions.
\n
- Financial assets at fair value through OCI: the fair value of debt instruments decreased by 36 million euros, primarily on
\n
account of instruments reaching maturity and changes in market inputs.
\n
- Financial assets held for trading: the fair value of derivatives decreased by 232 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities held for trading: the fair value of derivatives decreased by 83 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives decreased by 300 million euros due to changes
\n
in market inputs.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of issued debt instruments decreased by 120
\n
million euros, primarily on account of transactions reaching maturity and the sale of existing positions, only partly offset by
\n
new transactions.
\n
\u2022 In 2021, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 173 million euros, primarily on account of new transactions, only partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of debt instruments fell by 34 million euros, owing primarily to changes
\n
in market inputs.
\n
- Financial liabilities held for trading: the fair value of derivatives increased by 103 million euros, due mainly to changes in market
\n
inputs and new transactions, partly offset by sales. The fair value of issued debt instruments fell by 85 million euros, due mainly
\n
to instruments that had reached maturity.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives increased by 398 million euros due to
\n
reclassifications in level 3 owing to an optimisation of the classification method.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of debt instruments increased by 100 million
\n
euros, primarily on account of new issues, partly offset by sales.
\n
\u2022 Some level 3 assets are associated or economically hedged with identical level 3 liabilities, which means that KBC\u2019s exposure
\n
to unobservable inputs is lower than would appear from the gross figures. Most of the level 3 instruments are also valued using
\n
third-party pricing sources, with KBC not developing any unobservable inputs itself. The main unobservable inputs applied by
\n
KBC to the valuation of exotic derivatives include: mean reversion parameter on Bermudan swaptions, equity cross-correlations
\n
and volatilities for certain stock options, interest-rate correlations for CMS spread options, and the funding costs used to
\n
determine the forward equity prices as part of the valuation of certain equity derivatives. The change in fair value resulting from
\n
a change in these inputs to reflect reasonably possible alternative assumptions is insignificant.
\n

\n\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag825": { "value": "\n

\n
Note 3.3: Net result from financial instruments at fair value through profit or loss
\n
\n
(in millions of EUR)
\n\n

\n\n
2022 2021
\n
Total
\n
406 145
\n
Total broken down by IFRS portfolio
\n
\n
Financial instruments MFVPL other than held for trading and overlay
\n
-1 949 1 172
\n
Trading instruments (including interest on non
\n
-ALM trading derivatives and fair value changes in all trading derivatives) 567 435
\n
Financial instruments to which the overlay approach is applied
\n
86 104
\n
\n
Gains or losses on sale
\n
\n
176 123
\n
\n
\n
Impairment
\n
-90
\n
-20
\n
\n
Other financial instruments at FVPL
\n
1 942 -1 186
\n
Foreign exchange trading
\n
-90 -272
\n
Fair value adjustments in hedge accounting
\n
-150 -108
\n
Hedge accounting broken down by type of hedge
\n
\n
Fair value micro hedges
\n
5 0
\n
\n
Changes in the fair value of the hedged items 624 -307
\n
\n
Changes in the fair value of the hedging derivatives -619 307
\n
Cashflow hedges
\n
-3 0
\n
\n
Changes in the fair value of the hedging derivatives, ineffective portion -3 0
\n
Hedges of net investments in foreign operations, ineffective portion
\n
0 0
\n
Portfolio hedge of interest rate risk
\n
0 5
\n
\n
Changes in the fair value of the hedged items -3 254 -815
\n
\n
Changes in the fair value of the hedging derivatives 3 254 820
\n
Discontinuation of hedge accounting for fair value hedges
\n
-75 -46
\n
Discontinuation of hedge accounting in the event of cashflow hedges
\n
-77 -66
\n
Total broken down by driver
\n
\n
Market value adjustments (MVA)
\n
80 67
\n
Change in the value of derivatives used for asset/liability management purposes
\n
-14 -197
\n
Financial instruments to which the overlay approach is applied and other
\n
96 113
\n
Dealing room
\n
245 162
\n

\n\n

\n\n
\n
\u2022 ALM hedging derivatives (recognised in hedge accounting): the interest component of these derivatives is recognised under
\n
\u2018Net interest income\u2019. Fair value changes in hedging derivatives, excluding those for which an effective cashflow hedge
\n
relationship exists, are recognised under \u2018Net result from financial instruments at fair value through profit or loss\u2019. Under fair
\n
value hedge accounting, changes in the fair value of hedged assets are also recognised under this heading, and offsetting
\n
takes place insofar as the hedge is effective. ALM hedging derivatives not recognised in hedge accounting (and therefore
\n
classified as trading instruments) are treated in the same way, except most of the related assets are not recognised at fair
\n
value (i.e. not marked-to-market).
\n
\u2022 Day 1 profit: when the transaction price in a non-active market differs from the fair value of other observable market
\n
transactions in the same instrument or from the fair value based on a valuation technique whose variables include only data
\n
from observable markets, the difference between the transaction price and the fair value (day 1 profit) is taken to profit or loss.
\n
If this is not the case (i.e. the variables do not include only data from observable markets), day 1 profit is reserved and is released
\n
in profit or loss during the life and until the maturity of the financial instrument. KBC has reserved these day 1 profits for limited
\n
amounts since January 2022.
\n
\u2022 Financial instruments to which the overlay approach is applied: see the comments under the consolidated income statement.
\n
\u2022 Foreign exchange trading includes all realised and unrealised foreign exchange results (when the monetary assets and liabilities
\n
are revalued), regardless of the IFRS portfolio, except for financial assets and liabilities measured at fair value through profit or
\n
loss, for which the revaluation is included in the fair value correction. Note that (unrealised) foreign exchange gains/losses on
\n
claims provisions (insurance) and on the financial instruments hedging the claims provisions are included under \u2018Technical
\n
charges\u2019. (Unrealised) foreign exchange gains/losses on the reinsurers\u2019 share of claims provisions and on the financial
\n
instruments hedging such provisions are included under \u2018Ceded reinsurance result\u2019.
\n
\u2022 Under IFRS 9, investment contracts (insurance) are included under \u2018Financial instruments mandatorily measured at fair value
\n
through profit or loss\u2019 in accordance with their \u2018managed on a FV basis\u2019 business model, whereas liabilities under investment
\n
contracts are included under \u2018Financial instruments at fair value through profit or loss\u2019. This resulted in amounts being offset
\n
against each other in \u2018Financial instruments MFVPL other than held for trading and overlay\u2019 and \u2018Financial instruments at fair
\n
value through profit or loss\u2019 in the above table (-1 893 million euros and +1 893 million euros in 2022 and +1 195 million euros and
\n
-1 195 million euros in 2021).
\n
\u2022 The effectiveness of the hedge is determined according to the following methods:
\n

\n\n

\n\n
- For fair value micro hedging, we use the dollar offset method on a quarterly basis, with changes in the fair value of the hedged
\n
item offsetting changes in the fair value of the hedging instrument within a range of 80%\u2013125%.
\n
- For cashflow hedges, we compare the designated hedging instrument with a perfect hedge of the hedged cashflows on a
\n
prospective (by BPV measurement) and retrospective basis (by comparing the fair value of the designated hedging
\n
instrument with the perfect hedge). The effectiveness of both tests must fall within a range of 80%\u2013125%.
\n
- We use the rules set out in the European version of IAS 39 (carve-out) to assess the effectiveness of fair value hedges for a
\n
portfolio of interest rate risk. IFRS does not permit net positions to be reported as hedged items, but does allow hedging
\n
instruments to be designated as a hedge of a gross asset position (or a gross liabilities position, as the case may be).
\n
Specifically, we make sure that the volume of assets (or liabilities) in each maturity bucket is greater than the volume of
\n
hedging instruments allocated to the same bucket.
\n

\n\n
\n
Note 3.4: Net realised result from debt instruments at fair value through OCI
\n
\n
\u2022 In 2022, the realised result from debt instruments at fair value through OCI was impacted by a realised loss of -22 million euros
\n
on the sale of low-yielding bonds. The realised result from debt instruments at fair value through OCI was not material in 2021.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.1: Financial assets and liabilities, breakdown by portfolio and product
\n
(in millions of EUR)
\n
Measured
\n
at
\n
amortised
\n
cost (AC)
\n
Measured
\n
at fair
\n
value
\n
through
\n
other
\n
compre-
\n
hensive
\n
income
\n
(FVOCI)
\n
Mandatorily
\n
measured at
\n
fair value
\n
through
\n
profit or loss
\n
(MFVPL) excl.
\n
HFT and
\n
overlay
\n
Measured at
\n
fair value \u2013
\n
overlay
\n
approach
\n
(overlay)
\n
Held for
\n
trading
\n
(HFT)
\n
Desig-
\n
nated at
\n
fair value
\n
1
\n
(FVO)
\n
Hedging
\n
Deriva-
\n
tives
\n
Total
\n
Total pro
\n
forma
\n
excluding
\n
KBC Bank
\n
Bulgaria
\n
(formerly
\n
Raiffeisen-
\n
bank
\n
Bulgaria)
\n
FINANCIAL ASSETS, 31-12-2022
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
4 240 0 13 0 1 0 0 4 254
\n
4 203
\n
of which loans and advances to banks repayable on
\n
demand and term loans to banks at not more than three
\n
months
\n
\n
1 237 1 237
\n
Loans and advances to customers (excluding reverse
\n
repos)
\n
177 427 0 625 0 0 0 0 178 053
\n
174 083
\n
Trade receivables
\n
2 818
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 818
\n
2 729
\n
Consumer credit
\n
6 222
\n
0
\n
430
\n
0
\n
0
\n
0
\n
0
\n
6 652
\n
5 977
\n
Mortgage loans
\n
73 465
\n
0
\n
196
\n
0
\n
0
\n
0
\n
0
\n
73 660
\n
72 891
\n
Term loans
\n
82 894
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
82 894
\n
80 744
\n
Finance lease
\n
6 368
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
6 368
\n
6 117
\n
Current account advances
\n
4 886
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 886
\n
4 885
\n
Other
\n
774
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
774
\n
740
\n
Reverse repos
\n
2
\n
\n
20 186
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 219
\n
20 219
\n
with credit institutions and investment firms
\n
20 018
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 050
\n
20 050
\n
with customers
\n
168
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
168
\n
168
\n
Equity instruments
\n
0
\n
315
\n
13
\n
1 237
\n
430
\n
0
\n
0
\n
1 994
\n
1 989
\n
Investment contracts (insurance)
\n
6
\n
\n
0
\n
0
\n
12 771
\n
0
\n
0
\n
0
\n
0
\n
12 771
\n
12 771
\n
Debt securities
\n
52 030
\n
11 813
\n
17
\n
0
\n
1 728
\n
0
\n
0
\n
65 588
\n
64 871
\n
Public bodies
\n
44 219
\n
8 135
\n
0
\n
0
\n
1 667
\n
0
\n
0
\n
54 021
\n
53 390
\n
Credit institutions and investment firms
\n
5 160
\n
1 621
\n
0
\n
0
\n
9
\n
0
\n
0
\n
6 790
\n
6 747
\n
Corporates
\n
2 651
\n
2 057
\n
17
\n
0
\n
53
\n
0
\n
0
\n
4 777
\n
4 733
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
6 279
\n
0
\n
542
\n
6 821
\n
6 813
\n
3
\n
\n
Other
\n
1 561
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
1 561
\n
1 561
\n
Total
\n
255 444
\n
12 128
\n
13 439
\n
1 237
\n
8 471
\n
0
\n
542
\n
291 262
\n
286 511
\n
FINANCIAL ASSETS, 31-12-2021
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
7 920 0 0 0 1 0 0 7 920
\n
-
\n
of which loans and advances to banks repayable on demand
\n
and term loans to banks at not more than three months
\n
3 146 -
\n
Loans and advances to customers (excl. reverse repos)
\n
159 167
\n
0
\n
560
\n
0
\n
0
\n
0
\n
0
\n
159 728
\n
-
\n
Trade receivables
\n
2 090
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 090
\n
-
\n
Consumer credit
\n
5 470
\n
0
\n
381
\n
0
\n
0
\n
0
\n
0
\n
5 851
\n
-
\n
Mortgage loans
\n
67 486
\n
0
\n
179
\n
0
\n
0
\n
0
\n
0
\n
67 665
\n
-
\n
Term loans
\n
72 998
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
72 998
\n
-
\n
Finance lease
\n
5 815
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
5 815
\n
-
\n
Current account advances
\n
4 819
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 819
\n
-
\n
Other
\n
490
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
490
\n
-
\n
2
\n
-
\n
\n
Reverse repos
\n
24 978
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 978
\n
with credit institutions and investment firms
\n
24 861
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 861
\n
-
\n
with customers
\n
117
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
117
\n
-
\n
Equity instruments
\n
0
\n
321
\n
8
\n
1 366
\n
448
\n
0
\n
0
\n
2 144
\n
-
\n
6
\n
-
\n
\n
Investment contracts (insurance)
\n
0
\n
0
\n
14 620
\n
0
\n
0
\n
0
\n
0
\n
14 620
\n
Debt securities
\n
47 172
\n
15 503
\n
17
\n
0
\n
2 958
\n
0
\n
0
\n
65 650
\n
-
\n
Public bodies
\n
41 475
\n
10 514
\n
0
\n
0
\n
2 517
\n
0
\n
0
\n
54 507
\n
-
\n
Credit institutions and investment firms
\n
3 310
\n
2 245
\n
0
\n
0
\n
357
\n
0
\n
0
\n
5 912
\n
-
\n
Corporates
\n
2 387
\n
2 744
\n
17
\n
0
\n
84
\n
0
\n
0
\n
5 232
\n
-
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
5 443
\n
0
\n
283
\n
5 727
\n
-
\n
3
\n
-
\n
\n
Other
\n
892
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
892
\n
Total
\n
240 128
\n
15 824
\n
15 205
\n
1 366
\n
8 850
\n
0
\n
283
\n
281 658
\n
-
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
(in millions of EUR)
\n
Measured at
\n
amortised
\n
cost
\n
(AC)
\n
Held for
\n
trading (HFT)
\n
Designated at
\n
fair value (FVO)
\n
\n
Hedging
\n
derivatives
\n
Total
\n
Total pro forma
\n
excluding KBC
\n
Bank Bulgaria
\n
(formerly
\n
Raiffeisenbank
\n
Bulgaria)
\n
FINANCIAL
\n
LIABILITIES, 31-12-2022
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
24 819 0 0 0 24 819
\n
24 737
\n
of which deposits from banks repayable on demand
\n
\n
\n
\n
\n
\n
\n
\n
5 085 5 085
\n
Deposits from customers and debt
\n
securities (excl. repos)
\n
\n
251 496 44 1 205 0 252 746
\n
247 585
\n
\n
Demand deposits 122 053 0 0 0 122 053 117 401
\n
\n
Time deposits 22 280 44 73 0 22 397 21 960
\n
\n
Savings accounts 76 979 0 0 0 76 979 76 954
\n
\n
Special deposits 2 710 0 0 0 2 710 2 663
\n
\n
Other deposits 268 0 0 0 268 268
\n
Subtotal deposits from customers (excl. repos)
\n
224 290 44 73 0 224 407 219 246
\n
\n
Certificates of deposit 9 321 0 1 0 9 322 9 322
\n
\n
Savings certificates 104 0 0 0 104 104
\n
\n
Non-convertible bonds 15 621 0 1 006 0 16 627 16 627
\n
\n
Non-convertible subordinated liabilities 2 160 0 126 0 2 285 2 285
\n
Repos
\n
4
\n
11 091 7 0 0 11 097
\n
11 097
\n
\n
with credit institutions and investment firms 10 852 7 0 0 10 859 10 859
\n
\n
with customers 239 0 0 0 239 239
\n
Liabilities under investment contracts
\n
6
\n
0 0 12 002 0 12 002
\n
12 002
\n
Derivatives
\n
0 8 038 0 577 8 615
\n
8 605
\n
Short positions
\n
0 1 007 0 0 1 007
\n
1 007
\n
\n
In equity instruments 0 5 0 0 5 5
\n
\n
In debt securities 0 1 002 0 0 1 002 1 002
\n
Other
\n
5
\n
2 448 0 0 0 2 448
\n
2 370
\n
Total
\n
289 854 9 096 13 207 577 312 735
\n
307 403
\n
FINANCIAL LIABILITIES, 31
\n
-12-2021
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
38 047 0 0 0 38 047
\n
-
\n
of which deposits from banks repayable on demand 4 695 -
\n
Deposits from
\n
customers and debt securities (excl. repos)
\n
\n
224 759 21 1 312 0 226 093
\n
-
\n
\n
Demand deposits 112 097 0 0 0 112 097
\n
-
\n
\n
Time deposits 9 106 21 60 0 9 187
\n
-
\n
\n
Savings accounts 74 801 0 0 0 74 801
\n
-
\n
\n
Special deposits 2 962 0 0 0 2 962
\n
-
\n
\n
Other deposits 428 0 0 0 428
\n
-
\n
Subtotal deposits from customers (excl. repos)
\n
199 395 21 60 0 199 476
\n
-
\n
\n
Certificates of deposit 6 273 0 0 0 6 273
\n
-
\n
\n
Savings certificates 253 0 0 0 253
\n
-
\n
\n
Non-convertible bonds 15 892 0 1 118 0 17 011
\n
-
\n
\n
Non-convertible subordinated liabilities 2 946 0 134 0 3 080
\n
-
\n
Repos
\n
4
\n
3 293 2 0 0 3 295
\n
-
\n
\n
with credit institutions and investment firms 2 888 2 0 0 2 890
\n
-
\n
\n
with customers 405 0 0 0 405
\n
-
\n
Liabilities under investment
\n
contracts
\n
6
\n
0 0 13 603 0 13 603
\n
-
\n
Derivatives
\n
0 5 619 0 1 094 6 713
\n
-
\n
Short positions
\n
0 1 628 0 0 1 628
\n
-
\n
\n
In equity instruments 0 18 0 0 18
\n
-
\n
\n
In debt securities 0 1 611 0 0 1 611
\n
-
\n
Other
\n
5
\n
2 288 0 0 0 2 288
\n
-
\n
Total
\n
268 387 7 271 14 916 1 094 291 667
\n
-
\n
1 The carrying value comes close to the maximum credit exposure.
\n
2 The amount of the reverse repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out).
\n
3 Financial assets not included under \u2018Loans and advances to customers\u2019 as they are not directly related to commercial lending.
\n
4 The amount of the repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out), with the assets being partly reflected on the balance sheet
\n
and partly obtained through reverse repo transactions.
\n
5 Financial liabilities not included under deposits from customers as they are not directly related to commercial deposit acquisition.
\n
6 The difference between \u2018Investment contracts (insurance)\u2019 and \u2018Liabilities under investment contracts\u2019 is accounted for by the presentation of non-unbundled investment contracts that are
\n
included under \u2018Investment contracts (insurance)\u2019 on the financial assets side, but are included under \u2018Technical provisions (before reinsurance)\u2019 on the liabilities side.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n\n
\u2022 \u2018Non-convertible bonds\u2019 comprise mainly KBC Bank, KBC Group, \u010cSOB and KBC IFIMA issues. They are usually recognised under
\n
\u2018Measured at amortised cost\u2019. However, if they contain closely related embedded derivatives, they are recorded under
\n
\u2018Designated at fair value\u2019 (see accounting policies). This item also includes three green bonds (for 500, 500 and 750 million euros
\n
each) and a social bond (for 750 million euros), which have been recognised at amortised cost.
\n
\u2022 More information on major new debt issues or redemptions is provided under the \u2018Consolidated cashflow statement\u2019.
\n
\u2022 \u2018Deposits from credit institutions and investment firms\u2019 include funding obtained from the ECB\u2019s TLTRO programme (15.4 billion
\n
euros at year-end 2022, 9.1 billion euros less than at year-end 2021 on account of redemptions). KBC calculates these deposits
\n
using the effective interest rate method, with the rate being adjusted should we fail to meet the conditions (similar to a floating
\n
rate instrument), as per paragraph B.5.4.5 of IFRS 9. KBC\u2019s management has reasonable assurance that KBC will comply with
\n
the conditions attached (including the level of lending to households and non-financial companies) and hence the interest has
\n
accordingly been recognised (a gross amount of 112 million euros in interest income (negative interest rate) in 2022 and 242
\n
million euros in 2021).
\n
\u2022 Transferred financial assets that continue to be recognised in their entirety: KBC regularly lends and/or sells securities with the
\n
commitment to buy them back at a later date (repo transactions). Securities lent or sold with such a commitment are transferred
\n
to the counterparty, and, in exchange, KBC receives cash or other financial assets. However, KBC retains the main risks and
\n
income relating to these securities, and, therefore, continues to recognise them on its balance sheet. In addition, a financial
\n
liability is recognised equalling the cash received.
\n
\n
Transferred financial assets that continue to be recognised in their entirety (carrying value, in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Transferred financial assets that continue to be recognised in their entirety: repo transactions and securities lent out
\n
17 425 13 762
\n
Held for
\n
trading 960 1 221
\n
Fair value through OCI
\n
860 1 474
\n
Amortised cost
\n
15 605 11 067
\n
Associated financial liability
\n
10 534 2 936
\n
Held for trading
\n
689 335
\n
Fair value through OCI
\n
609 362
\n
Amortised cost
\n
9 236 2 239
\n
\n
\u2022 It should be noted that KBC has more transferred financial assets on its balance sheet than repo transactions, due to the fact
\n
that the cash legs of certain repo transactions are offset against reverse repo transactions if they are carried out with the same
\n
counterparty, in the same currency and with the same maturity date. Moreover, there is a legally enforceable right, and an
\n
intention, to settle the transactions on a net basis or to realise the financial asset and settle the financial liability simultaneously.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria in 2022 is provided in Note 6.6.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. We report on estimated greenhouse gas emissions
\n
associated with lending and other activities and have defined objectives for reducing the greenhouse gas intensity of loans
\n
we have provided to the energy sector, electricity producers and the real estate sector, mortgage loans and loans provided
\n
for commercial residential real estate, as well as loans provided to the automotive industry and financial and operational car
\n
leasing (see Note 6.2), the agricultural sector, and cement, steel and aluminium producers. See \u2018Focus on climate\u2019 in the \u2018Report
\n
of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our Climate Report and
\n
\n
our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n
Note 4.4: Fair value of financial assets and liabilities \u2013 general
\n
\u2022 In line with European Banking Authority guidelines, we conduct an outlier stress test on a quarterly basis by applying six different
\n
scenarios to the banking books (material currencies). The worst-case scenario is set off against tier-1 capital. For the banking
\n
book at KBC group level, this risk came to -3% of tier-1 capital at year-end 2022. This -3% is well below the -15% Tier 1 threshold,
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
which is monitored by the ECB. Note that this -3% of tier-1 capital at year-end 2022 is equivalent to a -0.4% points impact on
\n
the end of year 2022 fully loaded CET1 ratio.
\n
\u2022 The table shows the changes in economic value of equity under six different interest rate scenarios. To test these six scenarios,
\n
we combine the shift in the yield curves with changes in maturities depending on clients\u2019 behaviour (e.g., interest-rate-driven
\n
prepayment behaviour) and use a run-off balance sheet where maturing items are not replaced. The bank also analyses the
\n
impact of different interest rate scenarios on its net interest income.
\n
\n
Changes of the economic value of equity
\n
Supervisory shock scenarios (in millions of EUR, material currencies)*
\n
End of 4Q2022
\n
End of 2Q2022
\n
1 Parallel up
\n
-491
\n
-1 163
\n
2 Parallel down
\n
370
\n
600
\n
3 Steepener
\n
-55
\n
-207
\n
4 Flattener
\n
-26
\n
-3
\n
5 Short rates up
\n
-179
\n
-343
\n
6 Short rates down
\n
102
\n
176
\n
\n
* Supervision of the underlying internal models\u2019 compliance with the approval criteria as provided for in the standards imposed by the regulator does not come under the responsibility of the statutory auditor.
\n
\u2022 Note that the above stress test covers the full balance sheet (full economic view), with compensating effects across the balance
\n
sheet, whereas the table below focuses on some parts of the balance sheet.
\n
\n
\u2022 Furthermore, taking into account 1) KBCs large stock of high-quality liquid assets (approximately 92 billion euros on average in
\n
2022), which consist of cash and bonds which can be repoed in the private market and at the central banks, 2) 48% of total
\n
customer deposits at KBC are covered by the Deposit Guarantee and 3) 83% of total customer deposits consisting of more
\n
stable retail & SME clients, the unrealised losses on the debt securities portfolio at amortised cost do not need to be realised
\n
for liquidity purposes and are therefore irrelevant from a capital perspective.
\n
\n
\n
\n
Fair value of financial instruments that are not measured at fair value
\n
Financial assets
\n
Financial liabilities
\n
in the balance sheet
\n
at amortised cost
\n
at amortised cost
\n
Carrying
\n
Fair
\n
Carrying
\n
Fair
\n
(in millions of EUR)
\n
value
\n
value
\n
value
\n
value
\n
31-12-2022
\n
FINANCIAL ASSETS
\n
\n
Loans and advances to credit institutions and investment firms (incl. reverse
\n
repos) 24 258 24 211 \u2013 \u2013
\n
Loans and advances to customers (incl. reverse repos)
\n
177 596 163 972 \u2013 \u2013
\n
Debt securities
\n
52 030 46 886 \u2013 \u2013
\n
Other
\n
1 561 1 561 \u2013 \u2013
\n
Total
\n
255 444 236 630 \u2013 \u2013
\n
\n
Level 1 \u2013 43 364 \u2013 \u2013
\n
\n
Level 2 \u2013 31 917 \u2013 \u2013
\n
\n
Level 3 \u2013 161 349 \u2013 \u2013
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms (incl. repos)
\n
\n
\u2013 \u2013 35 671 35 207
\n
Deposits from customers and debt securities (incl. repos)
\n
\n
\u2013 \u2013 251 735 250 485
\n
Liabilities under investment
\n
contracts \u2013 \u2013 0 0
\n
Other
\n
\u2013 \u2013 2 448 2 448
\n
Total
\n
\u2013 \u2013 289 854 288 140
\n
Level 1
\n
\u2013
\n
\u2013
\n
\u2013
\n
47
\n
Level 2
\n
\u2013
\n
\u2013
\n
\u2013
\n
111 093
\n
Level 3
\n
\u2013
\n
\u2013
\n
\u2013
\n
176 999
\n
31
\n
-12-2021
\n
FINANCIAL ASSETS
\n
\n
Loans and advances to credit institutions and investment firms (incl. reverse
\n
repos) 32 780 32 789 \u2013 \u2013
\n
Loans and advances to customers (incl. reverse repos)
\n
159 285 160 037 \u2013 \u2013
\n
Debt securities
\n
47 172 47 878 \u2013 \u2013
\n
Other
\n
892 892 \u2013 \u2013
\n
Total
\n
240 128 241 595 \u2013 \u2013
\n
Level 1
\n
\u2013
\n
44 062
\n
\u2013
\n
\u2013
\n
Level 2
\n
\u2013
\n
36 737
\n
\u2013
\n
\u2013
\n
Level 3
\n
\u2013
\n
160 797
\n
\u2013
\n
\u2013
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms (incl. repos)
\n
\n
\u2013 \u2013 40 935 41 003
\n
Deposits from customers and debt securities (incl. repos)
\n
\n
\u2013 \u2013 225 164 225 299
\n
Liabilities under investment
\n
contracts \u2013 \u2013 0 0
\n
Other
\n
\u2013 \u2013 2 288 2 286
\n
Total
\n
\u2013 \u2013 268 387 268 588
\n
\n
Level 1 \u2013 \u2013 \u2013 24
\n
\n
Level 2 \u2013 \u2013 \u2013 105 714
\n
\n
Level 3 \u2013 \u2013 \u2013 162 850
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n
\u2022 All internal valuation models are validated by an independent Risk Validation Unit. In addition, the Executive Committee has
\n
appointed a Group Valuation Committee (GVC) to ensure that KBC meets all the legal requirements for measuring financial
\n
assets and liabilities at fair value. The GVC monitors consistent implementation of the KBC Valuation Framework, which consists
\n
of various guidelines, including the Group Valuation Policy, the Group Market Value Adjustments Policy and the Group
\n
Parameter Review Policy. The GVC meets at least twice a quarter to approve significant changes in valuation methods
\n
(including, but not limited to, models, market data and inputs) or deviations from group policies for financial assets and liabilities
\n
measured at fair value. The committee is made up of members from Finance, Risk Management and the Middle Office. Valuation
\n
uncertainty measurements are made and reported to the GVC every six months. Certain fair values generated by valuation
\n
models are challenged by a team set up specifically for this purpose.
\n
\u2022 The fair value of mortgage and term loans not measured at fair value in the balance sheet (see table) is calculated by
\n
discounting contractual cashflows at the risk-free rate. This calculation is then adjusted for credit risk by taking account of
\n
margins obtained on similar, but recently issued, loans or by using a spread derived from the listed-bond spread. The fair value
\n
of the main portfolios takes account of prepayment risks and cap options. The fair value of time deposits is calculated by
\n
discounting contractual cashflows at the risk-free rate. The fair value of demand and savings deposits is presumed to be equal
\n
to their carrying value.
\n
\u2022 As a result of the first-time adoption of IFRS 9 on 1 January 2018, debt instruments with a total carrying value of 15 060 million
\n
euros have been reclassified from \u2018Available-for-sale assets\u2019 to \u2018Financial assets held at amortised cost\u2019. Due to this
\n
reclassification, changes in fair value (before tax) totalling -566 million euros were not recorded in the revaluation reserve in
\n
2022 (-199 million euros in 2021). The fair value of this reclassified portfolio (after redemptions) amounted to 4 668 million euros
\n
at year-end 2022 (5 753 million euros at year-end 2021).
\n
\u2022 The difference between the fair value and the carrying value of the financial instruments at amortised cost was caused by the
\n
substantial interest rate hikes in 2022. As a hold-to-collect business model is applied on the assets side, interim changes in fair
\n
value are less relevant. In addition, part of this difference has already been recorded under fair value hedges for a portfolio of
\n
interest rate risk, which is presented separately on the balance sheet (on both the assets and the liabilities side) in the
\n
\u2018Profit/loss on positions in portfolios hedged against interest rate risk\u2019 balance sheet item. Furthermore, there are ALM interest
\n
derivatives not recognised in hedge accounting.
\n

\n\n

\n\n
\n
\n
\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n

\n

\n

\n

\n

\n

\n

\n
Note 4.5: Financial assets and liabilities measured at fair value \u2013 fair value hierarchy
\n
\n
\n
Fair value hierarchy
\n
31-12-2022 31-12-2021
\n
(in millions of EUR)
\n
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
\n
FINANCIAL ASSETS AT FAIR VALUE
\n
\n
Mandatorily measured at fair value through profit or loss other than held for trading (including
\n
\n
overlay)
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 13 0 13 0 0 0 0
\n
reverse repos)
\n
Loans and advances to customers (incl. reverse repos)
\n
0 0 625 625 0 0 560 560
\n
Equity instruments
\n
1 131 0 118 1 250 1 323 0 52 1 374
\n
Investment contracts (insurance)
\n
12 638 134 0 12 771 14 365 254 0 14 620
\n
Debt securities
\n
12 0 5 17 14 0 3 17
\n
of which sovereign bonds
\n
\n
0
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 34 0 34 0 1 0 1
\n
reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Equity instruments
\n
429 0 0 430 448 0 0 448
\n
Debt securities
\n
1 480 244 4 1 728 1 522 1 432 4 2 958
\n
\n
of which sovereign bonds 1 444 223 0 1 667 1 441 1 076 0 2 517
\n
Derivatives
\n
3 5 547 729 6 279 1 4 482 961 5 443
\n
Other
\n
0 0 0 0 0 0 0 0
\n
Designated upon initial recognition at fair value through profit or loss (FVO)
\n
Loans and advances to credit institutions and
\n
0 0 0 0 0 0 0 0
\n
investment firms (incl. reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Debt securities
\n
0 0 0 0 0 0 0 0
\n
\n
of which sovereign bonds 0 0 0 0 0 0 0 0
\n
At fair value through OCI
\n
\n
\n
\n
\n
\n
\n
\n
\n
Equity instruments
\n
18 1 297 315 15 1 306 321
\n
Debt securities
\n
9 508 2 070 235 11 813 12 269 2 963 271 15 503
\n
\n
of which sovereign bonds
\n
\n
7 003 1 059 73 8 135 8 751
\n
\n
1 711
\n
\n
52
\n
\n
10 514
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0 542 0 542 0 283 0 283
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial assets at fair value
\n
25 219 8 585 2 014 35 818 29 956 9 416 2 157 41 529
\n
FINANCIAL LIABILITIES AT FAIR VALUE
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 7 0 7 0 2 0 2
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 44 0 44 0 21 0 21
\n
Derivatives
\n
2
\n
6 911
\n
1 125
\n
8 038
\n
1
\n
4 410
\n
1 209
\n
5 619
\n
Short positions
\n
884 123 0 1 007 1 582 47 0 1 628
\n
Designated at fair value
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 0 0 0 0 0 0 0
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 74 1 131 1 205 0 61 1 251 1 312
\n
Liabilities under investment contracts
\n
12 002 0 0 12 002 13 603 0 0 13 603
\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0
\n
479
\n
98
\n
577
\n
0
\n
696
\n
398
\n
1 094
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial liabilities at fair value
\n
12 887 7 638 2 355 22 881 15 185 5 238 2 857 23 280
\n
\n
\u2022 The fair value hierarchy prioritises the valuation techniques and the respective inputs into three levels.
\n
- The fair value hierarchy gives the highest priority to \u2018level 1 inputs\u2019. This means that, when there is an active market, quoted
\n
prices have to be used to measure the financial assets or liabilities at fair value. Level 1 inputs are prices that are readily and
\n
regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency (and that are
\n
quoted in active markets accessible to KBC). They represent actual and regularly occurring market transactions on an arm\u2019s
\n
length basis. The fair value is then based on a mark-to-market valuation derived from currently available transaction prices.
\n
No valuation technique (model) is involved.
\n
- If there are no price quotations available, the reporting entity establishes fair value using a model based on observable or
\n
unobservable inputs. The use of observable inputs must be maximised. Observable inputs are also referred to as \u2018level 2
\n
inputs\u2019 and reflect the assumptions market participants would use in pricing the asset or liability based on market data
\n
obtained from sources independent of the reporting entity. Examples of observable inputs are the risk-free rate, exchange
\n
rates, stock prices and implied volatility. Valuation techniques based on observable inputs include discounted cashflow
\n
analysis, or reference to the current or recent fair value of a similar instrument.
\n
- Unobservable inputs are also referred to as \u2018level 3 inputs\u2019 and reflect the reporting entity\u2019s own assumptions about the
\n
assumptions that market participants would use in pricing the asset or liability (including assumptions regarding the risks
\n
involved). Unobservable inputs reflect a market that is not active. For example, proxies and correlation factors can be
\n
considered to be unobservable in the market.
\n
\u2022 When the inputs used to measure the fair value of an asset or a liability can be categorised into different levels of the fair value
\n
hierarchy, the fair value measurement is classified in its entirety into the same level as the lowest level input that is significant
\n
to the entire fair value measurement. For example, if a fair value measurement uses observable inputs that require significant
\n
adjustment based on unobservable inputs, that measurement is a level 3 measurement.
\n
\u2022 The valuation methodology and the corresponding classification in the fair value hierarchy of the most commonly used financial
\n
instruments are summarised in the table. Whereas the majority of instruments of a certain type are within the level indicated in
\n
the table, a small portion may actually be classified in another level.
\n
\u2022 KBC follows the principle that transfers into and out of levels of the fair value hierarchy are made at the end of the reporting
\n
period. Transfers between the various levels are dealt with in more detail in Note 4.6 and Note 4.7.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Instrument type Products Valuation technique
\n
Liquid financial instruments
\n
FX spots, exchange traded financial futures, exchange traded options,
\n
Mark-to-market (quoted prices in active
\n
for which quoted prices are
\n
exchange traded stocks, exchange traded funds, liquid government
\n
markets), for bonds: BVAL or vendor
\n
data.
\n
\n
Level 1
\n
regularly available
\n
\n
bonds, other liquid bonds, liquid asset backed securities (ABS) in active
\n
markets
\n
Plain vanilla/liquid
\n
(Cross-currency) interest rate swaps (IRS), FX swaps, FX forwards, forward
\n
Discounted cashflow analysis based on
\n
derivatives
\n
\n
rate agreements (FRA), inflation swaps, dividend swaps and futures,
\n
discount and estimation curves (derived
\n
reverse floaters, bond future options, interest rate future opt
\n
ions, overnight
\n
from quoted deposit rates,
\n
\n
index swaps (OIS), FX resets
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Caps & floors, interest rate options, European stock options, European &
\n
Option pricing model based on
\n
American FX options, forward starting options, digital FX options, FX strips
\n
observable inputs (e.g., volatilities)
\n
\n
of simple options, European swaptions, European cancellable IRS,
\n
\n
compound options
\n
\n
Linear financial liabilities
\n
Deposits, simple cashflows, repo transactions
\n
Discounted cashflow analysis based on
\n
(without optional features)
\n
\u2013
\n
discount and estimation curves (derived
\n
cash instruments
\n
\n
from quoted deposit rates,
\n
\n
\n
Level 2
\n
FX swaps and (CC)IRS)
\n
\n
\n
Semi-liquid bonds/asset
\n
Semi-liquid bonds/asset backed securities
\n
BVAL, prices corroborated by alternative
\n
backed securities
\n
\n
observable market data, or using
\n
comparable spread method
\n
\n
\n
Debt instruments
\n
KBC IFIMA own issues (liabilities), mortgage bonds held by \u010cSOB
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
observable inputs
\n
\n
\n
Linear financial assets (cash
\n
Loans, commercial paper
\n
Discounted cashflow analysis based on
\n
instruments)
\n
\n
discount and estimation curves (derived
\n
from quoted deposit rates,
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Exotic derivatives
\n
Target profit forwards, flexible forwards, American & Asian stock options,
\n
Option pricing model based on
\n
Bermudan swaptions, digital interest rate options, quanto interest rate
\n
observable inputs (e.g., correlation)
\n
\n
options, digital stock options, composite stock options, barrier stock
\n
options, quanto digital FX options, FX
\n
Asian options, FX European barrier
\n
options, FX simple digital barrier options, FX touch rebates, inflation
\n
options, Bermudan cancellable IRS, constant maturity swaps (CMS), CMS
\n
spread swaps, CMS spread options, CMS interest rate caps/floors,
\n
(callable) ra
\n
nge accruals, outperformance options, auto-callable options,
\n
\n
Level 3
\n
lookback options, commodity swaps and forwards
\n
Illiquid credit-linked
\n
Collateralised debt obligations (notes)
\n
Valuation model based on correlation of
\n
instruments
\n
\n
probability of default of underlying assets
\n
\n
\n
Private equity investments
\n
Private equity and non-quoted participations
\n
Based on the valuation guidelines of the
\n
European Private Equity & Venture Capital
\n
Association
\n
\n
\n
Illiquid bonds/asset backed
\n
Illiquid (mortgage) bonds/asset backed securities that are indicatively
\n
BVAL, third-party pricing (e.g., lead
\n
securities
\n
\n
priced by a single pricing provider in an inactive market
\n
\n
manager), where prices
\n
cannot be
\n
\n
\n
corroborated due to a lack of
\n
available/reliable alternative market data
\n
\n
\n
Debt instruments
\n
KBC own issues (KBC IFIMA)
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
\n
unobservable inputs (indicative pricing by
\n
third parties for derivatives)
\n
\n
\n
Structured loans
\n
Government-regulated loans with leveraged interest rates and exotic
\n
Discounted cashflow analysis and
\n
early repayment
\n
schedules (K&H)
\n
valuation of related derivatives based on
\n
unobservable inputs
\n
\n
\n
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.6: Financial assets and liabilities measured at fair value \u2013 transfers between levels 1 and 2
\n
\n
\u2022 In 2022, KBC transferred 77 million euros\u2019 worth of financial assets and liabilities out of level 1 and into level 2, and 434 million
\n
euros\u2019 worth of financial assets and liabilities out of level 2 and into level 1. The corresponding figures for 2021 were 206 million
\n
euros and 294 million euros, respectively. Most of these reclassifications were carried out due to a change in the liquidity of
\n
government bonds and corporate bonds.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n
Note 4.7: Financial assets and liabilities measured at fair value \u2013 focus on level 3
\n
\n
\u2022 In 2022, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 65 million euros, primarily on account of new transactions, partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of unlisted shares rose by 66 million euros, due primarily to new
\n
transactions.
\n
- Financial assets at fair value through OCI: the fair value of debt instruments decreased by 36 million euros, primarily on
\n
account of instruments reaching maturity and changes in market inputs.
\n
- Financial assets held for trading: the fair value of derivatives decreased by 232 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities held for trading: the fair value of derivatives decreased by 83 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives decreased by 300 million euros due to changes
\n
in market inputs.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of issued debt instruments decreased by 120
\n
million euros, primarily on account of transactions reaching maturity and the sale of existing positions, only partly offset by
\n
new transactions.
\n
\u2022 In 2021, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 173 million euros, primarily on account of new transactions, only partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of debt instruments fell by 34 million euros, owing primarily to changes
\n
in market inputs.
\n
- Financial liabilities held for trading: the fair value of derivatives increased by 103 million euros, due mainly to changes in market
\n
inputs and new transactions, partly offset by sales. The fair value of issued debt instruments fell by 85 million euros, due mainly
\n
to instruments that had reached maturity.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives increased by 398 million euros due to
\n
reclassifications in level 3 owing to an optimisation of the classification method.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of debt instruments increased by 100 million
\n
euros, primarily on account of new issues, partly offset by sales.
\n
\u2022 Some level 3 assets are associated or economically hedged with identical level 3 liabilities, which means that KBC\u2019s exposure
\n
to unobservable inputs is lower than would appear from the gross figures. Most of the level 3 instruments are also valued using
\n
third-party pricing sources, with KBC not developing any unobservable inputs itself. The main unobservable inputs applied by
\n
KBC to the valuation of exotic derivatives include: mean reversion parameter on Bermudan swaptions, equity cross-correlations
\n
and volatilities for certain stock options, interest-rate correlations for CMS spread options, and the funding costs used to
\n
determine the forward equity prices as part of the valuation of certain equity derivatives. The change in fair value resulting from
\n
a change in these inputs to reflect reasonably possible alternative assumptions is insignificant.
\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag829": { "value": "\n

\n
Note 3.5: Net fee and commission income
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
1 847 1 836
\n
Fee and commission income
\n
2 804 2 692
\n
Fee and commission expense
\n
-957
\n
-856
\n
Breakdown by type
\n
\n
Asset management services
\n
1 175 1 196
\n
\n
Fee and commission income 1 230 1 274
\n
\n
Fee and commission expense -54 -78
\n
Banking services
\n
1 021 950
\n
\n
Fee and commission income 1 489 1 330
\n
\n
Fee and commission expense -468 -380
\n
Distribution
\n
-349 -311
\n
\n
Fee and commission income 85 87
\n
\n
Fee and commission expense -434 -398
\n
\n\n

\n\n
\u2022 The lion\u2019s share of the fees and commissions related to lending is recognised under \u2018Net interest income\u2019 (effective interest rate
\n
calculations).
\n

\n\n

\n\n
\u2022 The acquisition of Raiffeisenbank Bulgaria mainly impacted net commission income from banking services (see Note 6.6 for
\n
more details).
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfFeeAndCommissionIncomeExpenseExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag830": { "value": "\n

\n\n

\n\n
Note 3.6: Other net income
\n
\n
(in
\n
millions of EUR) 2022 2021
\n
Total
\n
40 223
\n
of which gains or losses on
\n
\n
\n
Sale of financial assets measured at amortised cost -79 6
\n
\n
Repurchase of financial liabilities measured at amortised cost 0 0
\n
Other, including:
\n
119 218
\n
\n
Income from operational leasing activities 106 98
\n
\n
Income from VAB Group 50 50
\n
\n
Gain on sale of KBC Tower in Antwerp - 13
\n
\n
Settlement of legal cases (excl. ICEC-Holding) 0
\n
\n
6
\n
\n
Provisioning for tracker mortgage review 0 -18
\n
\n
Badwill - 28
\n
\n
Gain on sale of real estate subsidiary (KBC Vastgoed Nederland) 68 -
\n
\n
Arbitration proceedings against ICEC-Holding -149 -
\n
\n
\u2022 In 2022, gains or losses on the sale of financial assets measured at amortised cost mainly concerned the realised loss on the
\n
exceptional sale of low-yielding bonds in Belgium, the Czech Republic and Hungary in particular.
\n
\u2022 Provisioning for the tracker mortgage review concerns KBC Bank Ireland, which \u2013 like all major lenders in Ireland at the time \u2013
\n
had offered tracker mortgages (i.e. between 2003 and 2008). In December 2015, the Central Bank of Ireland (CBI) requested
\n
the Irish banking industry, including KBC Bank Ireland, to undertake a broad and wide-ranging examination of tracker-
\n
mortgage related issues. The purpose of the tracker mortgage review was to identify cases where clients\u2019 contractual rights
\n
under the terms of their mortgage agreements had not been fully honoured and/or lenders had not fully complied with the
\n
various requirements and standards regarding disclosure and transparency for the client. In situations where client detriment
\n
was identified from this examination, KBC Bank Ireland had to provide appropriate redress and compensation in line with the
\n
CBI \u2018Principles for Redress\u2019. The bank recognised an additional provision of 18 million euros in 2021 in this respect.
\n
\u2022 Badwill: in 2021 we recognised 28 million euros in badwill for OTP Banka Slovensko (see Note 6.6 in the 2021 Annual Report).
\n
\u2022 Arbitration proceedings against ICEC-Holding, a.s. (significant adjusting post-balance-sheet event affecting the 2022 financial
\n
statements): on 17 February 2023, \u010cSOB in the Czech Republic received an arbitral award in the arbitration proceedings against
\n
ICEC-HOLDING, a.s. \u010cSOB was being sued in the arbitration proceedings as the legal successor of Investi\u010dn\u00ed a po\u0161tovn\u00ed banka
\n
(IPB), whose business activities were acquired by \u010cSOB in 2000. The proceedings were initiated by ICEC-Holding, a.s., in 2007.
\n
The plaintiff, ICEC-HOLDING, a.s., claims that IPB breached its contractual duties in 1999, entitling ICEC-HOLDING, a.s., to
\n
damages and a contractual penalty. The claim itself is not in any way related to \u010cSOB\u2019s business activities and is to be
\n
considered part of the IPB legacy. In the delivered arbitral award, the Court of Arbitration ordered \u010cSOB to pay ICEC-HOLDING,
\n
a.s., an amount of CZK 3.7 billion, along with the costs of the proceedings in the amount of CZK 5.0 million, payable within fifteen
\n
days of the delivery of the award. The plaintiff failed in the remainder of its claim and the arbitration panel ordered it to pay
\n
\u010cSOB the costs of the proceedings in the amount of CZK 17.4 million. \u010cSOB will consider possible further legal steps leading to
\n
the revision of this award. The payment of damages and contractual penalties will have an adverse financial impact on \u010cSOB
\n
and KBC Group. In accordance with IFRS, \u010cSOB is required to provision the full amount of CZK 3.7 billion in its 2022 income
\n
statement, impacting KBC Group\u2019s 2022 income statement to the extent of -149 million euros before tax (-121 million euros after
\n
tax). The common equity ratio (Danish compromise method, fully loaded) at the end of 2022 decreases from 15.4% to 15.3%.
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag820": { "value": "\n

\n\n
Note 3.6: Other net income
\n
\n
(in
\n
millions of EUR) 2022 2021
\n
Total
\n
40 223
\n
of which gains or losses on
\n
\n
\n
Sale of financial assets measured at amortised cost -79 6
\n
\n
Repurchase of financial liabilities measured at amortised cost 0 0
\n
Other, including:
\n
119 218
\n
\n
Income from operational leasing activities 106 98
\n
\n
Income from VAB Group 50 50
\n
\n
Gain on sale of KBC Tower in Antwerp - 13
\n
\n
Settlement of legal cases (excl. ICEC-Holding) 0
\n
\n
6
\n
\n
Provisioning for tracker mortgage review 0 -18
\n
\n
Badwill - 28
\n
\n
Gain on sale of real estate subsidiary (KBC Vastgoed Nederland) 68 -
\n
\n
Arbitration proceedings against ICEC-Holding -149 -
\n
\n
\u2022 In 2022, gains or losses on the sale of financial assets measured at amortised cost mainly concerned the realised loss on the
\n
exceptional sale of low-yielding bonds in Belgium, the Czech Republic and Hungary in particular.
\n
\u2022 Provisioning for the tracker mortgage review concerns KBC Bank Ireland, which \u2013 like all major lenders in Ireland at the time \u2013
\n
had offered tracker mortgages (i.e. between 2003 and 2008). In December 2015, the Central Bank of Ireland (CBI) requested
\n
the Irish banking industry, including KBC Bank Ireland, to undertake a broad and wide-ranging examination of tracker-
\n
mortgage related issues. The purpose of the tracker mortgage review was to identify cases where clients\u2019 contractual rights
\n
under the terms of their mortgage agreements had not been fully honoured and/or lenders had not fully complied with the
\n
various requirements and standards regarding disclosure and transparency for the client. In situations where client detriment
\n
was identified from this examination, KBC Bank Ireland had to provide appropriate redress and compensation in line with the
\n
CBI \u2018Principles for Redress\u2019. The bank recognised an additional provision of 18 million euros in 2021 in this respect.
\n
\u2022 Badwill: in 2021 we recognised 28 million euros in badwill for OTP Banka Slovensko (see Note 6.6 in the 2021 Annual Report).
\n
\u2022 Arbitration proceedings against ICEC-Holding, a.s. (significant adjusting post-balance-sheet event affecting the 2022 financial
\n
statements): on 17 February 2023, \u010cSOB in the Czech Republic received an arbitral award in the arbitration proceedings against
\n
ICEC-HOLDING, a.s. \u010cSOB was being sued in the arbitration proceedings as the legal successor of Investi\u010dn\u00ed a po\u0161tovn\u00ed banka
\n
(IPB), whose business activities were acquired by \u010cSOB in 2000. The proceedings were initiated by ICEC-Holding, a.s., in 2007.
\n
The plaintiff, ICEC-HOLDING, a.s., claims that IPB breached its contractual duties in 1999, entitling ICEC-HOLDING, a.s., to
\n
damages and a contractual penalty. The claim itself is not in any way related to \u010cSOB\u2019s business activities and is to be
\n
considered part of the IPB legacy. In the delivered arbitral award, the Court of Arbitration ordered \u010cSOB to pay ICEC-HOLDING,
\n
a.s., an amount of CZK 3.7 billion, along with the costs of the proceedings in the amount of CZK 5.0 million, payable within fifteen
\n
days of the delivery of the award. The plaintiff failed in the remainder of its claim and the arbitration panel ordered it to pay
\n
\u010cSOB the costs of the proceedings in the amount of CZK 17.4 million. \u010cSOB will consider possible further legal steps leading to
\n
the revision of this award. The payment of damages and contractual penalties will have an adverse financial impact on \u010cSOB
\n
and KBC Group. In accordance with IFRS, \u010cSOB is required to provision the full amount of CZK 3.7 billion in its 2022 income
\n
statement, impacting KBC Group\u2019s 2022 income statement to the extent of -149 million euros before tax (-121 million euros after
\n
tax). The common equity ratio (Danish compromise method, fully loaded) at the end of 2022 decreases from 15.4% to 15.3%.
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag822": { "value": "\n
Note 3.6: Other net income
\n
\n
(in
\n
millions of EUR) 2022 2021
\n
Total
\n
40 223
\n
of which gains or losses on
\n
\n
\n
Sale of financial assets measured at amortised cost -79 6
\n
\n
Repurchase of financial liabilities measured at amortised cost 0 0
\n
Other, including:
\n
119 218
\n
\n
Income from operational leasing activities 106 98
\n
\n
Income from VAB Group 50 50
\n
\n
Gain on sale of KBC Tower in Antwerp - 13
\n
\n
Settlement of legal cases (excl. ICEC-Holding) 0
\n
\n
6
\n
\n
Provisioning for tracker mortgage review 0 -18
\n
\n
Badwill - 28
\n
\n
Gain on sale of real estate subsidiary (KBC Vastgoed Nederland) 68 -
\n
\n
Arbitration proceedings against ICEC-Holding -149 -
\n
\n
\u2022 In 2022, gains or losses on the sale of financial assets measured at amortised cost mainly concerned the realised loss on the
\n
exceptional sale of low-yielding bonds in Belgium, the Czech Republic and Hungary in particular.
\n
\u2022 Provisioning for the tracker mortgage review concerns KBC Bank Ireland, which \u2013 like all major lenders in Ireland at the time \u2013
\n
had offered tracker mortgages (i.e. between 2003 and 2008). In December 2015, the Central Bank of Ireland (CBI) requested
\n
the Irish banking industry, including KBC Bank Ireland, to undertake a broad and wide-ranging examination of tracker-
\n
mortgage related issues. The purpose of the tracker mortgage review was to identify cases where clients\u2019 contractual rights
\n
under the terms of their mortgage agreements had not been fully honoured and/or lenders had not fully complied with the
\n
various requirements and standards regarding disclosure and transparency for the client. In situations where client detriment
\n
was identified from this examination, KBC Bank Ireland had to provide appropriate redress and compensation in line with the
\n
CBI \u2018Principles for Redress\u2019. The bank recognised an additional provision of 18 million euros in 2021 in this respect.
\n
\u2022 Badwill: in 2021 we recognised 28 million euros in badwill for OTP Banka Slovensko (see Note 6.6 in the 2021 Annual Report).
\n
\u2022 Arbitration proceedings against ICEC-Holding, a.s. (significant adjusting post-balance-sheet event affecting the 2022 financial
\n
statements): on 17 February 2023, \u010cSOB in the Czech Republic received an arbitral award in the arbitration proceedings against
\n
ICEC-HOLDING, a.s. \u010cSOB was being sued in the arbitration proceedings as the legal successor of Investi\u010dn\u00ed a po\u0161tovn\u00ed banka
\n
(IPB), whose business activities were acquired by \u010cSOB in 2000. The proceedings were initiated by ICEC-Holding, a.s., in 2007.
\n
The plaintiff, ICEC-HOLDING, a.s., claims that IPB breached its contractual duties in 1999, entitling ICEC-HOLDING, a.s., to
\n
damages and a contractual penalty. The claim itself is not in any way related to \u010cSOB\u2019s business activities and is to be
\n
considered part of the IPB legacy. In the delivered arbitral award, the Court of Arbitration ordered \u010cSOB to pay ICEC-HOLDING,
\n
a.s., an amount of CZK 3.7 billion, along with the costs of the proceedings in the amount of CZK 5.0 million, payable within fifteen
\n
days of the delivery of the award. The plaintiff failed in the remainder of its claim and the arbitration panel ordered it to pay
\n
\u010cSOB the costs of the proceedings in the amount of CZK 17.4 million. \u010cSOB will consider possible further legal steps leading to
\n
the revision of this award. The payment of damages and contractual penalties will have an adverse financial impact on \u010cSOB
\n
and KBC Group. In accordance with IFRS, \u010cSOB is required to provision the full amount of CZK 3.7 billion in its 2022 income
\n
statement, impacting KBC Group\u2019s 2022 income statement to the extent of -149 million euros before tax (-121 million euros after
\n
tax). The common equity ratio (Danish compromise method, fully loaded) at the end of 2022 decreases from 15.4% to 15.3%.
\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.1: Financial assets and liabilities, breakdown by portfolio and product
\n
(in millions of EUR)
\n
Measured
\n
at
\n
amortised
\n
cost (AC)
\n
Measured
\n
at fair
\n
value
\n
through
\n
other
\n
compre-
\n
hensive
\n
income
\n
(FVOCI)
\n
Mandatorily
\n
measured at
\n
fair value
\n
through
\n
profit or loss
\n
(MFVPL) excl.
\n
HFT and
\n
overlay
\n
Measured at
\n
fair value \u2013
\n
overlay
\n
approach
\n
(overlay)
\n
Held for
\n
trading
\n
(HFT)
\n
Desig-
\n
nated at
\n
fair value
\n
1
\n
(FVO)
\n
Hedging
\n
Deriva-
\n
tives
\n
Total
\n
Total pro
\n
forma
\n
excluding
\n
KBC Bank
\n
Bulgaria
\n
(formerly
\n
Raiffeisen-
\n
bank
\n
Bulgaria)
\n
FINANCIAL ASSETS, 31-12-2022
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
4 240 0 13 0 1 0 0 4 254
\n
4 203
\n
of which loans and advances to banks repayable on
\n
demand and term loans to banks at not more than three
\n
months
\n
\n
1 237 1 237
\n
Loans and advances to customers (excluding reverse
\n
repos)
\n
177 427 0 625 0 0 0 0 178 053
\n
174 083
\n
Trade receivables
\n
2 818
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 818
\n
2 729
\n
Consumer credit
\n
6 222
\n
0
\n
430
\n
0
\n
0
\n
0
\n
0
\n
6 652
\n
5 977
\n
Mortgage loans
\n
73 465
\n
0
\n
196
\n
0
\n
0
\n
0
\n
0
\n
73 660
\n
72 891
\n
Term loans
\n
82 894
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
82 894
\n
80 744
\n
Finance lease
\n
6 368
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
6 368
\n
6 117
\n
Current account advances
\n
4 886
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 886
\n
4 885
\n
Other
\n
774
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
774
\n
740
\n
Reverse repos
\n
2
\n
\n
20 186
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 219
\n
20 219
\n
with credit institutions and investment firms
\n
20 018
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 050
\n
20 050
\n
with customers
\n
168
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
168
\n
168
\n
Equity instruments
\n
0
\n
315
\n
13
\n
1 237
\n
430
\n
0
\n
0
\n
1 994
\n
1 989
\n
Investment contracts (insurance)
\n
6
\n
\n
0
\n
0
\n
12 771
\n
0
\n
0
\n
0
\n
0
\n
12 771
\n
12 771
\n
Debt securities
\n
52 030
\n
11 813
\n
17
\n
0
\n
1 728
\n
0
\n
0
\n
65 588
\n
64 871
\n
Public bodies
\n
44 219
\n
8 135
\n
0
\n
0
\n
1 667
\n
0
\n
0
\n
54 021
\n
53 390
\n
Credit institutions and investment firms
\n
5 160
\n
1 621
\n
0
\n
0
\n
9
\n
0
\n
0
\n
6 790
\n
6 747
\n
Corporates
\n
2 651
\n
2 057
\n
17
\n
0
\n
53
\n
0
\n
0
\n
4 777
\n
4 733
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
6 279
\n
0
\n
542
\n
6 821
\n
6 813
\n
3
\n
\n
Other
\n
1 561
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
1 561
\n
1 561
\n
Total
\n
255 444
\n
12 128
\n
13 439
\n
1 237
\n
8 471
\n
0
\n
542
\n
291 262
\n
286 511
\n
FINANCIAL ASSETS, 31-12-2021
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
7 920 0 0 0 1 0 0 7 920
\n
-
\n
of which loans and advances to banks repayable on demand
\n
and term loans to banks at not more than three months
\n
3 146 -
\n
Loans and advances to customers (excl. reverse repos)
\n
159 167
\n
0
\n
560
\n
0
\n
0
\n
0
\n
0
\n
159 728
\n
-
\n
Trade receivables
\n
2 090
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 090
\n
-
\n
Consumer credit
\n
5 470
\n
0
\n
381
\n
0
\n
0
\n
0
\n
0
\n
5 851
\n
-
\n
Mortgage loans
\n
67 486
\n
0
\n
179
\n
0
\n
0
\n
0
\n
0
\n
67 665
\n
-
\n
Term loans
\n
72 998
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
72 998
\n
-
\n
Finance lease
\n
5 815
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
5 815
\n
-
\n
Current account advances
\n
4 819
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 819
\n
-
\n
Other
\n
490
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
490
\n
-
\n
2
\n
-
\n
\n
Reverse repos
\n
24 978
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 978
\n
with credit institutions and investment firms
\n
24 861
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 861
\n
-
\n
with customers
\n
117
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
117
\n
-
\n
Equity instruments
\n
0
\n
321
\n
8
\n
1 366
\n
448
\n
0
\n
0
\n
2 144
\n
-
\n
6
\n
-
\n
\n
Investment contracts (insurance)
\n
0
\n
0
\n
14 620
\n
0
\n
0
\n
0
\n
0
\n
14 620
\n
Debt securities
\n
47 172
\n
15 503
\n
17
\n
0
\n
2 958
\n
0
\n
0
\n
65 650
\n
-
\n
Public bodies
\n
41 475
\n
10 514
\n
0
\n
0
\n
2 517
\n
0
\n
0
\n
54 507
\n
-
\n
Credit institutions and investment firms
\n
3 310
\n
2 245
\n
0
\n
0
\n
357
\n
0
\n
0
\n
5 912
\n
-
\n
Corporates
\n
2 387
\n
2 744
\n
17
\n
0
\n
84
\n
0
\n
0
\n
5 232
\n
-
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
5 443
\n
0
\n
283
\n
5 727
\n
-
\n
3
\n
-
\n
\n
Other
\n
892
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
892
\n
Total
\n
240 128
\n
15 824
\n
15 205
\n
1 366
\n
8 850
\n
0
\n
283
\n
281 658
\n
-
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
(in millions of EUR)
\n
Measured at
\n
amortised
\n
cost
\n
(AC)
\n
Held for
\n
trading (HFT)
\n
Designated at
\n
fair value (FVO)
\n
\n
Hedging
\n
derivatives
\n
Total
\n
Total pro forma
\n
excluding KBC
\n
Bank Bulgaria
\n
(formerly
\n
Raiffeisenbank
\n
Bulgaria)
\n
FINANCIAL
\n
LIABILITIES, 31-12-2022
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
24 819 0 0 0 24 819
\n
24 737
\n
of which deposits from banks repayable on demand
\n
\n
\n
\n
\n
\n
\n
\n
5 085 5 085
\n
Deposits from customers and debt
\n
securities (excl. repos)
\n
\n
251 496 44 1 205 0 252 746
\n
247 585
\n
\n
Demand deposits 122 053 0 0 0 122 053 117 401
\n
\n
Time deposits 22 280 44 73 0 22 397 21 960
\n
\n
Savings accounts 76 979 0 0 0 76 979 76 954
\n
\n
Special deposits 2 710 0 0 0 2 710 2 663
\n
\n
Other deposits 268 0 0 0 268 268
\n
Subtotal deposits from customers (excl. repos)
\n
224 290 44 73 0 224 407 219 246
\n
\n
Certificates of deposit 9 321 0 1 0 9 322 9 322
\n
\n
Savings certificates 104 0 0 0 104 104
\n
\n
Non-convertible bonds 15 621 0 1 006 0 16 627 16 627
\n
\n
Non-convertible subordinated liabilities 2 160 0 126 0 2 285 2 285
\n
Repos
\n
4
\n
11 091 7 0 0 11 097
\n
11 097
\n
\n
with credit institutions and investment firms 10 852 7 0 0 10 859 10 859
\n
\n
with customers 239 0 0 0 239 239
\n
Liabilities under investment contracts
\n
6
\n
0 0 12 002 0 12 002
\n
12 002
\n
Derivatives
\n
0 8 038 0 577 8 615
\n
8 605
\n
Short positions
\n
0 1 007 0 0 1 007
\n
1 007
\n
\n
In equity instruments 0 5 0 0 5 5
\n
\n
In debt securities 0 1 002 0 0 1 002 1 002
\n
Other
\n
5
\n
2 448 0 0 0 2 448
\n
2 370
\n
Total
\n
289 854 9 096 13 207 577 312 735
\n
307 403
\n
FINANCIAL LIABILITIES, 31
\n
-12-2021
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
38 047 0 0 0 38 047
\n
-
\n
of which deposits from banks repayable on demand 4 695 -
\n
Deposits from
\n
customers and debt securities (excl. repos)
\n
\n
224 759 21 1 312 0 226 093
\n
-
\n
\n
Demand deposits 112 097 0 0 0 112 097
\n
-
\n
\n
Time deposits 9 106 21 60 0 9 187
\n
-
\n
\n
Savings accounts 74 801 0 0 0 74 801
\n
-
\n
\n
Special deposits 2 962 0 0 0 2 962
\n
-
\n
\n
Other deposits 428 0 0 0 428
\n
-
\n
Subtotal deposits from customers (excl. repos)
\n
199 395 21 60 0 199 476
\n
-
\n
\n
Certificates of deposit 6 273 0 0 0 6 273
\n
-
\n
\n
Savings certificates 253 0 0 0 253
\n
-
\n
\n
Non-convertible bonds 15 892 0 1 118 0 17 011
\n
-
\n
\n
Non-convertible subordinated liabilities 2 946 0 134 0 3 080
\n
-
\n
Repos
\n
4
\n
3 293 2 0 0 3 295
\n
-
\n
\n
with credit institutions and investment firms 2 888 2 0 0 2 890
\n
-
\n
\n
with customers 405 0 0 0 405
\n
-
\n
Liabilities under investment
\n
contracts
\n
6
\n
0 0 13 603 0 13 603
\n
-
\n
Derivatives
\n
0 5 619 0 1 094 6 713
\n
-
\n
Short positions
\n
0 1 628 0 0 1 628
\n
-
\n
\n
In equity instruments 0 18 0 0 18
\n
-
\n
\n
In debt securities 0 1 611 0 0 1 611
\n
-
\n
Other
\n
5
\n
2 288 0 0 0 2 288
\n
-
\n
Total
\n
268 387 7 271 14 916 1 094 291 667
\n
-
\n
1 The carrying value comes close to the maximum credit exposure.
\n
2 The amount of the reverse repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out).
\n
3 Financial assets not included under \u2018Loans and advances to customers\u2019 as they are not directly related to commercial lending.
\n
4 The amount of the repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out), with the assets being partly reflected on the balance sheet
\n
and partly obtained through reverse repo transactions.
\n
5 Financial liabilities not included under deposits from customers as they are not directly related to commercial deposit acquisition.
\n
6 The difference between \u2018Investment contracts (insurance)\u2019 and \u2018Liabilities under investment contracts\u2019 is accounted for by the presentation of non-unbundled investment contracts that are
\n
included under \u2018Investment contracts (insurance)\u2019 on the financial assets side, but are included under \u2018Technical provisions (before reinsurance)\u2019 on the liabilities side.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n\n
\u2022 \u2018Non-convertible bonds\u2019 comprise mainly KBC Bank, KBC Group, \u010cSOB and KBC IFIMA issues. They are usually recognised under
\n
\u2018Measured at amortised cost\u2019. However, if they contain closely related embedded derivatives, they are recorded under
\n
\u2018Designated at fair value\u2019 (see accounting policies). This item also includes three green bonds (for 500, 500 and 750 million euros
\n
each) and a social bond (for 750 million euros), which have been recognised at amortised cost.
\n
\u2022 More information on major new debt issues or redemptions is provided under the \u2018Consolidated cashflow statement\u2019.
\n
\u2022 \u2018Deposits from credit institutions and investment firms\u2019 include funding obtained from the ECB\u2019s TLTRO programme (15.4 billion
\n
euros at year-end 2022, 9.1 billion euros less than at year-end 2021 on account of redemptions). KBC calculates these deposits
\n
using the effective interest rate method, with the rate being adjusted should we fail to meet the conditions (similar to a floating
\n
rate instrument), as per paragraph B.5.4.5 of IFRS 9. KBC\u2019s management has reasonable assurance that KBC will comply with
\n
the conditions attached (including the level of lending to households and non-financial companies) and hence the interest has
\n
accordingly been recognised (a gross amount of 112 million euros in interest income (negative interest rate) in 2022 and 242
\n
million euros in 2021).
\n
\u2022 Transferred financial assets that continue to be recognised in their entirety: KBC regularly lends and/or sells securities with the
\n
commitment to buy them back at a later date (repo transactions). Securities lent or sold with such a commitment are transferred
\n
to the counterparty, and, in exchange, KBC receives cash or other financial assets. However, KBC retains the main risks and
\n
income relating to these securities, and, therefore, continues to recognise them on its balance sheet. In addition, a financial
\n
liability is recognised equalling the cash received.
\n
\n
Transferred financial assets that continue to be recognised in their entirety (carrying value, in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Transferred financial assets that continue to be recognised in their entirety: repo transactions and securities lent out
\n
17 425 13 762
\n
Held for
\n
trading 960 1 221
\n
Fair value through OCI
\n
860 1 474
\n
Amortised cost
\n
15 605 11 067
\n
Associated financial liability
\n
10 534 2 936
\n
Held for trading
\n
689 335
\n
Fair value through OCI
\n
609 362
\n
Amortised cost
\n
9 236 2 239
\n
\n
\u2022 It should be noted that KBC has more transferred financial assets on its balance sheet than repo transactions, due to the fact
\n
that the cash legs of certain repo transactions are offset against reverse repo transactions if they are carried out with the same
\n
counterparty, in the same currency and with the same maturity date. Moreover, there is a legally enforceable right, and an
\n
intention, to settle the transactions on a net basis or to realise the financial asset and settle the financial liability simultaneously.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria in 2022 is provided in Note 6.6.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. We report on estimated greenhouse gas emissions
\n
associated with lending and other activities and have defined objectives for reducing the greenhouse gas intensity of loans
\n
we have provided to the energy sector, electricity producers and the real estate sector, mortgage loans and loans provided
\n
for commercial residential real estate, as well as loans provided to the automotive industry and financial and operational car
\n
leasing (see Note 6.2), the agricultural sector, and cement, steel and aluminium producers. See \u2018Focus on climate\u2019 in the \u2018Report
\n
of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our Climate Report and
\n
\n
our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.3: Maximum credit exposure and offsetting
\n
\n
Collateral and other
\n
Maximum credit
\n
credit enhancements
\n
(in millions of EUR)
\n
\n
exposure (A)
\n
received (B) Net (A-B)
\n
31
\n
-12-2022
\n
\n
\n
\n
Subject to impairment
\n
326 705 132 743 193 962
\n
\n
of which Stage 3 \u2018non-performing\u2019 (AC and FVOCI)
\n
2 106
\n
1 550
\n
556
\n
Debt securities
\n
63 843 98 63 745
\n
Loans and advances (excl. reverse
\n
repos) 181 668 99 415 82 252
\n
Reverse repos
\n
20 186 20 131 55
\n
Other financial assets
\n
1 561 0 1 561
\n
Off
\n
-balance-sheet liabilities 59 447 13 099 46 348
\n
\n
Irrevocable
\n
38 832
\n
6 741
\n
32 091
\n
\n
Revocable
\n
20 616
\n
6 358
\n
14 258
\n
Not
\n
subject to impairment 9 239 2 213 7 026
\n
Debt securities
\n
1 745 0 1 745
\n
Loans and advances (excl. reverse repos)
\n
639 593 46
\n
\n
of which designated upon initial recognition at fair value through profit or loss (FVO)
\n
0 0 0
\n
Reverse repos
\n
33 33 0
\n
Derivatives
\n
6 821 1 588 5 234
\n
Other financial assets
\n
0 0 0
\n
Off
\n
-balance-sheet liabilities 0 0 0
\n
Total
\n
335 944 134 956 200 987
\n
31
\n
-12-2021
\n
\n
\n
\n
Subject to impairment
\n
309 988 127 140 182 848
\n
\n
of which Stage 3 \u2018non-performing\u2019 (AC and FVOCI) 2 072 1 584 488
\n
Debt securities
\n
62 675 93 62 582
\n
Loans and advances (excl. reverse repos)
\n
167 087 90 770 76 317
\n
Reverse repos
\n
24 978 24 877 101
\n
Other financial assets
\n
892 0 892
\n
Off
\n
-balance-sheet liabilities 54 357 11 400 42 957
\n
\n
Irrevocable 36 957 6 031 30 926
\n
\n
Revocable 17 401 5 370 12 031
\n
Not subject to
\n
impairment 9 263 2 294 6 969
\n
Debt securities
\n
2 976 0 2 976
\n
Loans and advances (excl. reverse repos)
\n
561 545 16
\n
\n
of which designated upon initial recognition at fair value through profit or loss (FVO) 0 0 0
\n
Reverse repos
\n
0 0 0
\n
Derivatives
\n
5 727 1 749 3 977
\n
Other financial assets
\n
0 0 0
\n
Off
\n
-balance-sheet liabilities 0 0 0
\n
Total
\n
319 251 129 434 189 818
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
\u2022 Maximum credit exposure for a financial asset is the net carrying value. Besides the amounts on the balance sheet, maximum
\n
credit exposure also includes the undrawn portion of irrevocable credit lines, financial guarantees granted and other
\n
irrevocable commitments.
\n
\u2022 The main types of collateral and other credit enhancements received relate to mortgages on real estate (mainly collateral for
\n
mortgage loans), securities lent out (mainly as a collateral for reverse repos), off-balance-sheet financial guarantees received
\n
and collateral of movable property. Mortgage loans with an LTV (loan-to-value) greater than 100% are limited to 0.6 billion
\n
euros or 0.7% of the entire mortgage loan portfolio at year-end 2022.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. Based on internal management reports, the
\n
composition and quality of the loan portfolio is set out in detail in the \u2018How do we manage our risks?\u2019 section (under \u2018Credit
\n
risk\u2019). All parts of that particular section which have been audited by the statutory auditor are listed at the start of the section.
\n\n
\u2022 Collateral and credit enhancements received: recognised at market value and limited to the outstanding amount of the
\n
relevant loans.
\n

\n\n
\u2022 The maximum credit exposure for the KBC Bank Ireland financial assets has not been included in the above figures (see Note
\n
5.11 for more information).
\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n
Financial instruments subject to offsetting, enforceable master
\n
financial
\n
instruments set
\n
the balance
\n
Amounts not set off
\n
netting agreements and similar arrangements
\n
instruments
\n
off
\n
sheet
\n
in the balance sheet
\n
Net amount
\n
\n
Financial
\n
Cash
\n
Securities
\n
(in millions of EUR)
\n
\n
\n
\n
\n
instruments
\n
collateral
\n
collateral
\n
\n
\n
31
\n
-12-2022
\n
FINANCIAL ASSETS
\n
Derivatives
\n
32 380 25 559 6 821 4 485 1 302 67 968
\n
\n
Derivatives (excluding central clearing houses)
\n
6
\n
\n
601
\n
\n
0
\n
\n
6
\n
\n
601
\n
\n
4
\n
\n
485
\n
\n
1
\n
\n
302
\n
\n
67
\n
\n
748
\n
\n
\n
Derivatives with central clearing houses
\n
*
\n
\n
25
\n
\n
779
\n
\n
25
\n
\n
559
\n
\n
220
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
220
\n
\n
Reverse repos, securities borrowing and similar
\n
arrangements 25 694 5 475 20 219 0 0 20 210 8
\n
\n
Reverse repos
\n
25
\n
\n
694
\n
\n
5
\n
\n
475
\n
\n
20
\n
\n
219
\n
\n
0
\n
\n
0
\n
\n
20
\n
\n
210
\n
\n
8
\n
\n
\n
Securities borrowing
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
58 074 31 034 27 040 4 485 1 302 20 277 976
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
31 462 22 846 8 615 4 492 1 095 447 2 582
\n
Derivatives (excluding central clearing houses)
\n
8
\n
\n
329
\n
0
\n
8
\n
\n
329
\n
4
\n
\n
492
\n
1
\n
\n
095
\n
447
\n
2
\n
\n
296
\n
Derivatives with central clearing houses
\n
*
\n
\n
23
\n
\n
132
\n
22
\n
\n
846
\n
286
\n
0
\n
0
\n
0
\n
286
\n
Repos, securities lending and similar arrangements
\n
16 573 5 475 11 097 0 0 11 082 15
\n
\n
Repos
\n
16
\n
\n
573
\n
\n
5
\n
\n
475
\n
\n
11
\n
\n
097
\n
\n
0
\n
\n
0
\n
\n
11
\n
\n
082
\n
\n
15
\n
\n
\n
Securities lending
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
48 035 28 322 19 713 4 492 1 095 11 529 2 597
\n
31
\n
-12-2021
\n
FINANCIAL ASSETS
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
13 969 8 242 5 727 2 731 1 298 112 1 586
\n
\n
Derivatives (excluding central clearing houses) 5 619 0 5 619 2 731 1 298 112 1 478
\n
\n
Derivatives with central clearing houses
\n
*
\n
8 349 8 242 107 0 0 0 107
\n
Reverse repos, securities borrowing and similar
\n
arrangements 38 160 13 182 24 978 67 0 24 900 10
\n
\n
Reverse repos 38 160 13 182 24 978 67 0 24 900 10
\n
\n
Securities borrowing 0 0 0 0 0 0 0
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
52 129 21 425 30 704 2 798 1 298 25 012 1 596
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
16 084 9 372 6 713 3 015 1 793 640 1 265
\n
\n
Derivatives (excluding central clearing houses) 6 608 0 6 609 3 015 1 793 640 1 161
\n
\n
Derivatives with central clearing houses
\n
*
\n
9 476 9 372 104 0 0 0 104
\n
Repos, securities lending and similar arrangements
\n
16 477 13 182 3 295 160 0 3 135 1
\n
\n
Repos 16 477 13 182 3 295 160 0 3 135 1
\n
\n
Securities lending 0 0 0 0 0 0 0
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
32 562 22 554 10 008 3 174 1 793 3 774 1 266
\n
* For central clearing houses, the offsetting procedure refers to the amount of offsetting between derivatives and related cash collateral. Cash collateral with central clearing houses
\n
amounted to 2 712 million euros at year-end 2022 and 1 130 million euros at year-end 2021.
\n
\n
\u2022 The criteria for offsetting are met if KBC currently has a legally enforceable right to set off the recognised financial assets and
\n
financial liabilities and intends either to settle the transactions on a net basis, or to realise the financial asset and settle the
\n
financial liability simultaneously. Financial assets and financial liabilities that are set off relate to financial instruments that were
\n
traded on (central) clearing houses.
\n\n
\u2022 The amounts presented in the \u2018Financial instruments\u2019 column under the \u2018Amounts not set off in the balance sheet\u2019 heading are
\n
for financial instruments entered into under an enforceable master netting agreement or similar arrangement that does not
\n
meet the criteria defined in IAS 32. These amounts refer to situations in which offsetting can only be applied if one of the
\n
counterparties defaults, becomes insolvent or goes bankrupt. The same principle applies for financial instruments given or
\n
received as collateral. The value given in the table for non-cash collateral received (in the \u2018Securities collateral\u2019 column under
\n
the \u2018Amounts not set off in the balance sheet\u2019 heading) is the market value. This is the value that is used if one of the
\n
counterparties defaults, becomes insolvent or goes bankrupt.
\n

\n\n

\n\n

\n\n

\n\n
\n\n

\n\n

\n\n

\n

\n\n

\n\n
Note 4.4: Fair value of financial assets and liabilities \u2013 general
\n
\u2022 In line with European Banking Authority guidelines, we conduct an outlier stress test on a quarterly basis by applying six different
\n
scenarios to the banking books (material currencies). The worst-case scenario is set off against tier-1 capital. For the banking
\n
book at KBC group level, this risk came to -3% of tier-1 capital at year-end 2022. This -3% is well below the -15% Tier 1 threshold,
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
which is monitored by the ECB. Note that this -3% of tier-1 capital at year-end 2022 is equivalent to a -0.4% points impact on
\n
the end of year 2022 fully loaded CET1 ratio.
\n
\u2022 The table shows the changes in economic value of equity under six different interest rate scenarios. To test these six scenarios,
\n
we combine the shift in the yield curves with changes in maturities depending on clients\u2019 behaviour (e.g., interest-rate-driven
\n
prepayment behaviour) and use a run-off balance sheet where maturing items are not replaced. The bank also analyses the
\n
impact of different interest rate scenarios on its net interest income.
\n
\n
Changes of the economic value of equity
\n
Supervisory shock scenarios (in millions of EUR, material currencies)*
\n
End of 4Q2022
\n
End of 2Q2022
\n
1 Parallel up
\n
-491
\n
-1 163
\n
2 Parallel down
\n
370
\n
600
\n
3 Steepener
\n
-55
\n
-207
\n
4 Flattener
\n
-26
\n
-3
\n
5 Short rates up
\n
-179
\n
-343
\n
6 Short rates down
\n
102
\n
176
\n
\n
* Supervision of the underlying internal models\u2019 compliance with the approval criteria as provided for in the standards imposed by the regulator does not come under the responsibility of the statutory auditor.
\n
\u2022 Note that the above stress test covers the full balance sheet (full economic view), with compensating effects across the balance
\n
sheet, whereas the table below focuses on some parts of the balance sheet.
\n
\n
\u2022 Furthermore, taking into account 1) KBCs large stock of high-quality liquid assets (approximately 92 billion euros on average in
\n
2022), which consist of cash and bonds which can be repoed in the private market and at the central banks, 2) 48% of total
\n
customer deposits at KBC are covered by the Deposit Guarantee and 3) 83% of total customer deposits consisting of more
\n
stable retail & SME clients, the unrealised losses on the debt securities portfolio at amortised cost do not need to be realised
\n
for liquidity purposes and are therefore irrelevant from a capital perspective.
\n
\n
\n
\n
Fair value of financial instruments that are not measured at fair value
\n
Financial assets
\n
Financial liabilities
\n
in the balance sheet
\n
at amortised cost
\n
at amortised cost
\n
Carrying
\n
Fair
\n
Carrying
\n
Fair
\n
(in millions of EUR)
\n
value
\n
value
\n
value
\n
value
\n
31-12-2022
\n
FINANCIAL ASSETS
\n
\n
Loans and advances to credit institutions and investment firms (incl. reverse
\n
repos) 24 258 24 211 \u2013 \u2013
\n
Loans and advances to customers (incl. reverse repos)
\n
177 596 163 972 \u2013 \u2013
\n
Debt securities
\n
52 030 46 886 \u2013 \u2013
\n
Other
\n
1 561 1 561 \u2013 \u2013
\n
Total
\n
255 444 236 630 \u2013 \u2013
\n
\n
Level 1 \u2013 43 364 \u2013 \u2013
\n
\n
Level 2 \u2013 31 917 \u2013 \u2013
\n
\n
Level 3 \u2013 161 349 \u2013 \u2013
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms (incl. repos)
\n
\n
\u2013 \u2013 35 671 35 207
\n
Deposits from customers and debt securities (incl. repos)
\n
\n
\u2013 \u2013 251 735 250 485
\n
Liabilities under investment
\n
contracts \u2013 \u2013 0 0
\n
Other
\n
\u2013 \u2013 2 448 2 448
\n
Total
\n
\u2013 \u2013 289 854 288 140
\n
Level 1
\n
\u2013
\n
\u2013
\n
\u2013
\n
47
\n
Level 2
\n
\u2013
\n
\u2013
\n
\u2013
\n
111 093
\n
Level 3
\n
\u2013
\n
\u2013
\n
\u2013
\n
176 999
\n
31
\n
-12-2021
\n
FINANCIAL ASSETS
\n
\n
Loans and advances to credit institutions and investment firms (incl. reverse
\n
repos) 32 780 32 789 \u2013 \u2013
\n
Loans and advances to customers (incl. reverse repos)
\n
159 285 160 037 \u2013 \u2013
\n
Debt securities
\n
47 172 47 878 \u2013 \u2013
\n
Other
\n
892 892 \u2013 \u2013
\n
Total
\n
240 128 241 595 \u2013 \u2013
\n
Level 1
\n
\u2013
\n
44 062
\n
\u2013
\n
\u2013
\n
Level 2
\n
\u2013
\n
36 737
\n
\u2013
\n
\u2013
\n
Level 3
\n
\u2013
\n
160 797
\n
\u2013
\n
\u2013
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms (incl. repos)
\n
\n
\u2013 \u2013 40 935 41 003
\n
Deposits from customers and debt securities (incl. repos)
\n
\n
\u2013 \u2013 225 164 225 299
\n
Liabilities under investment
\n
contracts \u2013 \u2013 0 0
\n
Other
\n
\u2013 \u2013 2 288 2 286
\n
Total
\n
\u2013 \u2013 268 387 268 588
\n
\n
Level 1 \u2013 \u2013 \u2013 24
\n
\n
Level 2 \u2013 \u2013 \u2013 105 714
\n
\n
Level 3 \u2013 \u2013 \u2013 162 850
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\u2022 All internal valuation models are validated by an independent Risk Validation Unit. In addition, the Executive Committee has
\n
appointed a Group Valuation Committee (GVC) to ensure that KBC meets all the legal requirements for measuring financial
\n
assets and liabilities at fair value. The GVC monitors consistent implementation of the KBC Valuation Framework, which consists
\n
of various guidelines, including the Group Valuation Policy, the Group Market Value Adjustments Policy and the Group
\n
Parameter Review Policy. The GVC meets at least twice a quarter to approve significant changes in valuation methods
\n
(including, but not limited to, models, market data and inputs) or deviations from group policies for financial assets and liabilities
\n
measured at fair value. The committee is made up of members from Finance, Risk Management and the Middle Office. Valuation
\n
uncertainty measurements are made and reported to the GVC every six months. Certain fair values generated by valuation
\n
models are challenged by a team set up specifically for this purpose.
\n
\u2022 The fair value of mortgage and term loans not measured at fair value in the balance sheet (see table) is calculated by
\n
discounting contractual cashflows at the risk-free rate. This calculation is then adjusted for credit risk by taking account of
\n
margins obtained on similar, but recently issued, loans or by using a spread derived from the listed-bond spread. The fair value
\n
of the main portfolios takes account of prepayment risks and cap options. The fair value of time deposits is calculated by
\n
discounting contractual cashflows at the risk-free rate. The fair value of demand and savings deposits is presumed to be equal
\n
to their carrying value.
\n
\u2022 As a result of the first-time adoption of IFRS 9 on 1 January 2018, debt instruments with a total carrying value of 15 060 million
\n
euros have been reclassified from \u2018Available-for-sale assets\u2019 to \u2018Financial assets held at amortised cost\u2019. Due to this
\n
reclassification, changes in fair value (before tax) totalling -566 million euros were not recorded in the revaluation reserve in
\n
2022 (-199 million euros in 2021). The fair value of this reclassified portfolio (after redemptions) amounted to 4 668 million euros
\n
at year-end 2022 (5 753 million euros at year-end 2021).
\n
\u2022 The difference between the fair value and the carrying value of the financial instruments at amortised cost was caused by the
\n
substantial interest rate hikes in 2022. As a hold-to-collect business model is applied on the assets side, interim changes in fair
\n
value are less relevant. In addition, part of this difference has already been recorded under fair value hedges for a portfolio of
\n
interest rate risk, which is presented separately on the balance sheet (on both the assets and the liabilities side) in the
\n
\u2018Profit/loss on positions in portfolios hedged against interest rate risk\u2019 balance sheet item. Furthermore, there are ALM interest
\n
derivatives not recognised in hedge accounting.
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfRepurchaseAndReverseRepurchaseAgreementsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag809": { "value": "\n

\n\n
Note 3.7: Insurance results
\n
\n
\u2022 As a bank-insurer, we present our financial information on an integrated basis (i.e. banking and insurance activities combined).
\n
Information on the banking and insurance businesses is provided separately in the annual reports of KBC Bank and KBC
\n
Insurance (available at www.kbc.com). This note provides information on the insurance results alone.
\n
\u2022 The figures include intragroup transactions between bank and insurance entities (the results for insurance contracts concluded
\n
between the group\u2019s bank and insurance entities, interest that insurance companies receive on their deposits with bank entities,
\n
commissions that insurance entities pay to bank branches for sales of insurance, etc.) in order to give a more accurate view of
\n
the profitability of the insurance business. A reconciliation of the earned premiums stated in the consolidated income statement
\n
and in Note 3.7.1 is presented in the table below the overview.
\n
\u2022 Of the items stated in Note 3.7.1, only \u2018Earned premiums, insurance (before reinsurance)\u2019, \u2018Technical charges, insurance (before
\n
reinsurance)\u2019 and \u2018Ceded reinsurance result\u2019 are presented on separate lines in the group\u2019s income statement (with a minor
\n
adjustment, as shown in the smaller table below the main table). As part of our integrated bank-insurance concept, all the
\n
other lines in the insurance schedule below \u2013 together with the group\u2019s banking activities \u2013 are included in the group\u2019s income
\n
statement and related notes.
\n
\u2022 Additional information on the insurance business is provided separately in Note 3.7, Note 5.6, Note 6.5 and Note 6.7, in the \u2018How
\n
do we manage our risks?\u2019 section and in the annual report of KBC Insurance (available at www.kbc.com).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Note 3.7.1: Overview
\n
\n
Non-
\n
technical
\n\n

\n\n
(in millions of EUR)
\n
Life
\n
Non-life
\n
account
\n
Total
\n
2022
\n
\n
Earned premiums, insurance
\n
(before reinsurance) 1 163 2 054 0 3 217
\n
\n
of which changes in the provision for unearned premiums -1 -71
\n
0
\n
\n
-72
\n
Technical charges, insurance (before reinsurance)
\n
-1 071 -1 154 0 -2 225
\n
\n
Claims paid -1 399 -1 029
\n
0
\n
-2 428
\n
\n
Change in technical provisions 419 -115
\n
0
\n
\n
304
\n
\n
Other technical result -91 -9
\n
0
\n
-100
\n
Net fee and commission income
\n
-4 -403 0 -407
\n
Ceded reinsurance result
\n
-3 1 0 -2
\n
General administrative expenses
\n
-152 -285 -3 -440
\n
\n
Internal claims settlement expenses -9 -65 0 -74
\n
\n
Indirect acquisition costs -32 -68 0 -100
\n
\n
Administrative expenses -110 -152 0 -263
\n
\n
Investment management fees 0 0 -3 -3
\n
Technical result
\n
-67 213 -3 143
\n
Investment income*
\n
383 112 38 534
\n
Technical
\n
-financial result 316 325 36 677
\n
Share in results of associated companies and joint ventures
\n
- - 0 0
\n
RESULT BEFORE TAX
\n
316 325 36 677
\n
Income tax expense
\n
- - - -117
\n
RESULT AFTER TAX
\n
- - - 560
\n
\n
attributable to minority interests - - - 0
\n
\n
attributable to equity holders of the parent - - - 560
\n
2021
\n
\n
Earned premiums, insurance (before reinsurance)
\n
1 196 1 905 0 3 101
\n
\n
of which changes in the provision for unearned premiums -1 -48 0 -49
\n
Technical charges, insurance (before reinsurance)
\n
-1 150 -1 106 0 -2 256
\n
\n
Claims paid -1 163 -872 0 -2 036
\n
\n
Change in technical provisions -1 -223 0 -224
\n
\n
Other technical result 14 -10 0 4
\n
Net fee and commission income
\n
-5 -367 0 -372
\n
Ceded reinsurance result
\n
-2 27 0 25
\n
General administrative expenses
\n
-149 -255 -2 -407
\n
\n
Internal claims settlement expenses -9 -59 0 -68
\n
\n
Indirect acquisition costs -31 -68 0 -98
\n
\n
Administrative expenses -109 -128 0 -238
\n
\n
Investment management fees 0 0 -2 -2
\n
Technical result
\n
-110 204 -2 91
\n
Investment income*
\n
382 92 69 543
\n
Technical
\n
-financial result 271 296 66 634
\n
Share in results of associated companies and joint ventures
\n
\u2013 \u2013 0 0
\n
RESULT BEFORE TAX
\n
271 296 66 634
\n
Income tax expense
\n
\u2013 \u2013 \u2013 -125
\n
RESULT AFTER TAX
\n
\u2013 \u2013 \u2013 508
\n
\n
attributable to minority interests \u2013 \u2013 \u2013 0
\n
\n
attributable to equity holders of the parent \u2013 \u2013 \u2013 508
\n
* Investment income (in millions of euros, for 2022 and 2021, respectively) comprises: \u2018Net interest income\u2019 (428, 398), \u2018Net dividend income\u2019 (39, 31), \u2018Net result from financial instruments at fair
\n
value through profit or loss\u2019 (91, 117), \u2018Other net income\u2019 (-9, 1), \u2018Net realised result from debt instruments at fair value through OCI\u2019 (-16, -2) and \u2018Impairment\u2019 (1, -3). The \u2018Non-technical account\u2019
\n
also includes the results from non-insurance subsidiaries, such as VAB group and ADD, and a number of real estate companies. They have been included in the note for the \u2018insurance business\u2019
\n
given that they are KBC Insurance subsidiaries (but as they cannot be recognised under \u2018Life\u2019 or \u2018Non-life\u2019, they are included under \u2018Non-technical account\u2019). The \u2018Non-technical account\u2019 also
\n
includes the investment income from equity (i.e. mainly interest income from bonds).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n\n

\n\n
\u2022 The figures relating to earned premiums do not include investment contracts without DPF, which largely correspond to unit-
\n
linked contracts. The margin on these products is recognised under \u2018Net fee and commission income\u2019.
\n
\u2022 \u2018Non-life technical charges\u2019 consist mainly of paid claims, changes in claims provisions, changes in the deficiency provision,
\n
recourse received, changes in recourse estimations and other technical charges. \u2018Life technical charges\u2019 consist primarily of
\n
paid claims, changes in claims provisions, changes in the life insurance provision, changes in the provision for (non-unbundled)
\n
unit-linked products, bonuses (profit-sharing), changes in the deficiency provision and other technical charges.
\n
\u2022 An overview of the insurer\u2019s investment portfolio can be found in the \u2018How do we manage our risks?\u2019 section (in the \u2018Investment
\n
portfolio of KBC group insurance entities\u2019 table, which constitutes part of the financial statements).
\n
\u2022 In the vast majority of cases, internal acquisition costs are recognised immediately in the income statement (i.e. not spread).
\n
\u2022 In 2022, the non-life technical result was negatively impacted by factors including extreme weather conditions, such as flooding
\n
and storms (especially in Belgium, having a gross impact of 107 million euros, which comes down to 53 million euros after
\n
reinsurance). In 2021, the non-life technical result was negatively impacted by factors including the tornado in the Czech
\n
Republic and even more so by heavy flooding in Belgium (the gross impact of the latter totalled 110 million euros, which comes
\n
down to 87 million euros after reinsurance, 45 million euros of which above the legal limit (i.e. the ceiling introduced in Belgian
\n
law on the intervention of insurers in the event of very large floods), but which is still within the limit agreed between the Belgian
\n
insurance sector and the Walloon government). In 2022, the Life and Non-life technical result benefited from a release of
\n
technical reserves in the Czech Republic (31 million euros and 10 million euros, respectively) resulting from a reassessment of the
\n
confidence level of technical provisions.
\n
\u2022 More information on the acquisition of certain life and pension insurance policies from NN in Bulgaria in 2021 is provided in Note
\n
6.6.
\n
\u2022 See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\n
Reconciliation of the earned premiums stated in the consolidated income statement
\n
and in Note 3.7.1 (in millions of EUR)
\n
2022
\n
2021
\n
Non
\n
-life insurance (before reinsurance) \u2013 Earned premiums
\n
In the consolidated income statement
\n
2 033 1 885
\n
Addition of premiums from intragroup transactions between bank and insurer
\n
21 20
\n
In Note 3.7.1
\n
2 054 1 905
\n
Life insurance (before reinsurance)
\n
\u2013 Earned premiums
\n
In the consolidated income statement
\n
1 163 1 196
\n
Addition of premiums from intragroup transactions between bank and insurer
\n
1 1
\n
In Note 3.7.1
\n
1 163 1 196
\n

\n\n

\n\n

\n\n
\n
\n
\n\n

\n\n
Note 3.7.2: Life insurance
\n
\n
2022 2021
\n
(in millions of EUR)
\n
Total
\n
1 163 1 196
\n
By
\n
IFRS category
\n
Insurance contracts
\n
884 900
\n
Investment contracts with DPF
\n
280 296
\n
By type
\n
\n
Accepted reinsurance
\n
0 0
\n
Primary business
\n
1 163 1 196
\n
Breakdown of primary business
\n
\n
Individual premiums
\n
816 831
\n
\n
Single premiums 44 61
\n
\n
Periodic premiums 773 770
\n
Premiums under group contracts
\n
347 365
\n
\n
Single premiums 26 50
\n
\n
Periodic premiums 321 315
\n
Total sales of life insurance (including investment contracts without DPF)
\n
\n
Unit
\n
-linked 1 089 942
\n
Guaranteed
\n
-rate 996 1 022
\n
Total
\n
2 085 1 964
\n
\n
\u2022 As required under IFRS, we use deposit accounting for a number of investment contracts without DPF. This means that the
\n
premium income and technical charges from these contracts are not recognised under \u2018Earned premiums\u2019 and \u2018Technical
\n
charges\u2019, but that the margins on them are reported under \u2018Net fee and commission income\u2019. Investment contracts without DPF
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n
are more or less the same as unit-linked contracts, which in 2021 accounted for premium income of 0.9 billion euros and in 2022
\n
for premium income of 1.1 billion euros. Premium income generated by investment contracts without DPF (under deposit
\n
accounting) is included in \u2018Total sales of life insurance\u2019, as presented in the lower part of the table. These sale volumes,
\n
therefore, comprise earned insurance premiums plus premiums from contracts that are subject to deposit accounting.
\n

\n\n

\n\n
\n
\n\n
Note 3.7.3: Non-life insurance
\n
\n
Technical insurance
\n
Operating
\n
Earned premiums
\n
charges
\n
expenses
\n
(before
\n
(before
\n
(before
\n
Ceded
\n
(in millions of EUR)
\n
reinsurance)
\n
reinsurance)
\n
reinsurance)
\n
reinsurance
\n
Total
\n
2022
\n
\n
Total
\n
2 054 -1 154 -688 1 213
\n
Accepted reinsurance
\n
30 -26 -10 18 12
\n
Primary business
\n
2 024 -1 128 -678 -17 201
\n
Accident & health (classes 1 & 2, excl. industrial accidents)
\n
128 -60 -41 0 27
\n
Industrial accidents (class 1)
\n
94 -95 -18 -1 -21
\n
Motor, third
\n
-party liability (class 10) 525 -321 -156 -2 45
\n
Motor, other classes (classes 3 & 7)
\n
360 -212 -124 -1 23
\n
Shipping, aviation, transport (classes 4, 5, 6, 7, 11 & 12)
\n
9 -2 -3 -2 2
\n
Fire and other damage to property (classes 8 & 9)
\n
622 -327 -231 -5 58
\n
General third
\n
-party liability (class 13) 156 -45 -51 -6 54
\n
Credit and suretyship (classes 14 & 15)
\n
0 0 0 0 0
\n
Miscellaneous pecuniary losses
\n
(class 16) 30 -13 -11 1 7
\n
Legal assistance (class 17)
\n
65 -40 -23 0 2
\n
Assistance (class 18)
\n
36 -11 -20 0 4
\n
2021
\n
\n
Total
\n
1 905 -1 106 -622 27 204
\n
Accepted reinsurance
\n
27 -11 -9 -3 4
\n
Primary business
\n
1 878 -1 095 -614 30 200
\n
Accident & health (classes 1 & 2, excl. industrial accidents)
\n
123 -53 -40 0 28
\n
Industrial accidents (class 1)
\n
89 -77 -16 0 -4
\n
Motor, third
\n
-party liability (class 10) 512 -305 -148 -4 55
\n
Motor, other classes (classes 3 & 7)
\n
320 -179 -108 3 36
\n
Shipping, aviation, transport (classes 4, 5, 6, 7, 11 & 12)
\n
7 -2 -2 -1 1
\n
Fire and other damage to property (classes 8 & 9)
\n
569 -343 -211 28 44
\n
General third
\n
-party liability (class 13) 142 -92 -46 1 6
\n
Credit and suretyship (classes 14 & 15)
\n
0 0 0 0 0
\n
Miscellaneous pecuniary losses (class 16)
\n
22 -9 -8 3 9
\n
Legal assistance (class 17)
\n
62 -28 -22 0 13
\n
Assistance (class 18)
\n
31 -6 -13 0 12
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.1: Financial assets and liabilities, breakdown by portfolio and product
\n
(in millions of EUR)
\n
Measured
\n
at
\n
amortised
\n
cost (AC)
\n
Measured
\n
at fair
\n
value
\n
through
\n
other
\n
compre-
\n
hensive
\n
income
\n
(FVOCI)
\n
Mandatorily
\n
measured at
\n
fair value
\n
through
\n
profit or loss
\n
(MFVPL) excl.
\n
HFT and
\n
overlay
\n
Measured at
\n
fair value \u2013
\n
overlay
\n
approach
\n
(overlay)
\n
Held for
\n
trading
\n
(HFT)
\n
Desig-
\n
nated at
\n
fair value
\n
1
\n
(FVO)
\n
Hedging
\n
Deriva-
\n
tives
\n
Total
\n
Total pro
\n
forma
\n
excluding
\n
KBC Bank
\n
Bulgaria
\n
(formerly
\n
Raiffeisen-
\n
bank
\n
Bulgaria)
\n
FINANCIAL ASSETS, 31-12-2022
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
4 240 0 13 0 1 0 0 4 254
\n
4 203
\n
of which loans and advances to banks repayable on
\n
demand and term loans to banks at not more than three
\n
months
\n
\n
1 237 1 237
\n
Loans and advances to customers (excluding reverse
\n
repos)
\n
177 427 0 625 0 0 0 0 178 053
\n
174 083
\n
Trade receivables
\n
2 818
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 818
\n
2 729
\n
Consumer credit
\n
6 222
\n
0
\n
430
\n
0
\n
0
\n
0
\n
0
\n
6 652
\n
5 977
\n
Mortgage loans
\n
73 465
\n
0
\n
196
\n
0
\n
0
\n
0
\n
0
\n
73 660
\n
72 891
\n
Term loans
\n
82 894
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
82 894
\n
80 744
\n
Finance lease
\n
6 368
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
6 368
\n
6 117
\n
Current account advances
\n
4 886
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 886
\n
4 885
\n
Other
\n
774
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
774
\n
740
\n
Reverse repos
\n
2
\n
\n
20 186
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 219
\n
20 219
\n
with credit institutions and investment firms
\n
20 018
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 050
\n
20 050
\n
with customers
\n
168
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
168
\n
168
\n
Equity instruments
\n
0
\n
315
\n
13
\n
1 237
\n
430
\n
0
\n
0
\n
1 994
\n
1 989
\n
Investment contracts (insurance)
\n
6
\n
\n
0
\n
0
\n
12 771
\n
0
\n
0
\n
0
\n
0
\n
12 771
\n
12 771
\n
Debt securities
\n
52 030
\n
11 813
\n
17
\n
0
\n
1 728
\n
0
\n
0
\n
65 588
\n
64 871
\n
Public bodies
\n
44 219
\n
8 135
\n
0
\n
0
\n
1 667
\n
0
\n
0
\n
54 021
\n
53 390
\n
Credit institutions and investment firms
\n
5 160
\n
1 621
\n
0
\n
0
\n
9
\n
0
\n
0
\n
6 790
\n
6 747
\n
Corporates
\n
2 651
\n
2 057
\n
17
\n
0
\n
53
\n
0
\n
0
\n
4 777
\n
4 733
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
6 279
\n
0
\n
542
\n
6 821
\n
6 813
\n
3
\n
\n
Other
\n
1 561
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
1 561
\n
1 561
\n
Total
\n
255 444
\n
12 128
\n
13 439
\n
1 237
\n
8 471
\n
0
\n
542
\n
291 262
\n
286 511
\n
FINANCIAL ASSETS, 31-12-2021
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
7 920 0 0 0 1 0 0 7 920
\n
-
\n
of which loans and advances to banks repayable on demand
\n
and term loans to banks at not more than three months
\n
3 146 -
\n
Loans and advances to customers (excl. reverse repos)
\n
159 167
\n
0
\n
560
\n
0
\n
0
\n
0
\n
0
\n
159 728
\n
-
\n
Trade receivables
\n
2 090
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 090
\n
-
\n
Consumer credit
\n
5 470
\n
0
\n
381
\n
0
\n
0
\n
0
\n
0
\n
5 851
\n
-
\n
Mortgage loans
\n
67 486
\n
0
\n
179
\n
0
\n
0
\n
0
\n
0
\n
67 665
\n
-
\n
Term loans
\n
72 998
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
72 998
\n
-
\n
Finance lease
\n
5 815
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
5 815
\n
-
\n
Current account advances
\n
4 819
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 819
\n
-
\n
Other
\n
490
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
490
\n
-
\n
2
\n
-
\n
\n
Reverse repos
\n
24 978
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 978
\n
with credit institutions and investment firms
\n
24 861
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 861
\n
-
\n
with customers
\n
117
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
117
\n
-
\n
Equity instruments
\n
0
\n
321
\n
8
\n
1 366
\n
448
\n
0
\n
0
\n
2 144
\n
-
\n
6
\n
-
\n
\n
Investment contracts (insurance)
\n
0
\n
0
\n
14 620
\n
0
\n
0
\n
0
\n
0
\n
14 620
\n
Debt securities
\n
47 172
\n
15 503
\n
17
\n
0
\n
2 958
\n
0
\n
0
\n
65 650
\n
-
\n
Public bodies
\n
41 475
\n
10 514
\n
0
\n
0
\n
2 517
\n
0
\n
0
\n
54 507
\n
-
\n
Credit institutions and investment firms
\n
3 310
\n
2 245
\n
0
\n
0
\n
357
\n
0
\n
0
\n
5 912
\n
-
\n
Corporates
\n
2 387
\n
2 744
\n
17
\n
0
\n
84
\n
0
\n
0
\n
5 232
\n
-
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
5 443
\n
0
\n
283
\n
5 727
\n
-
\n
3
\n
-
\n
\n
Other
\n
892
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
892
\n
Total
\n
240 128
\n
15 824
\n
15 205
\n
1 366
\n
8 850
\n
0
\n
283
\n
281 658
\n
-
\n

\n\n

\n\n
\n
(in millions of EUR)
\n
Measured at
\n
amortised
\n
cost
\n
(AC)
\n
Held for
\n
trading (HFT)
\n
Designated at
\n
fair value (FVO)
\n
\n
Hedging
\n
derivatives
\n
Total
\n
Total pro forma
\n
excluding KBC
\n
Bank Bulgaria
\n
(formerly
\n
Raiffeisenbank
\n
Bulgaria)
\n
FINANCIAL
\n
LIABILITIES, 31-12-2022
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
24 819 0 0 0 24 819
\n
24 737
\n
of which deposits from banks repayable on demand
\n
\n
\n
\n
\n
\n
\n
\n
5 085 5 085
\n
Deposits from customers and debt
\n
securities (excl. repos)
\n
\n
251 496 44 1 205 0 252 746
\n
247 585
\n
\n
Demand deposits 122 053 0 0 0 122 053 117 401
\n
\n
Time deposits 22 280 44 73 0 22 397 21 960
\n
\n
Savings accounts 76 979 0 0 0 76 979 76 954
\n
\n
Special deposits 2 710 0 0 0 2 710 2 663
\n
\n
Other deposits 268 0 0 0 268 268
\n
Subtotal deposits from customers (excl. repos)
\n
224 290 44 73 0 224 407 219 246
\n
\n
Certificates of deposit 9 321 0 1 0 9 322 9 322
\n
\n
Savings certificates 104 0 0 0 104 104
\n
\n
Non-convertible bonds 15 621 0 1 006 0 16 627 16 627
\n
\n
Non-convertible subordinated liabilities 2 160 0 126 0 2 285 2 285
\n
Repos
\n
4
\n
11 091 7 0 0 11 097
\n
11 097
\n
\n
with credit institutions and investment firms 10 852 7 0 0 10 859 10 859
\n
\n
with customers 239 0 0 0 239 239
\n
Liabilities under investment contracts
\n
6
\n
0 0 12 002 0 12 002
\n
12 002
\n
Derivatives
\n
0 8 038 0 577 8 615
\n
8 605
\n
Short positions
\n
0 1 007 0 0 1 007
\n
1 007
\n
\n
In equity instruments 0 5 0 0 5 5
\n
\n
In debt securities 0 1 002 0 0 1 002 1 002
\n
Other
\n
5
\n
2 448 0 0 0 2 448
\n
2 370
\n
Total
\n
289 854 9 096 13 207 577 312 735
\n
307 403
\n
FINANCIAL LIABILITIES, 31
\n
-12-2021
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
38 047 0 0 0 38 047
\n
-
\n
of which deposits from banks repayable on demand 4 695 -
\n
Deposits from
\n
customers and debt securities (excl. repos)
\n
\n
224 759 21 1 312 0 226 093
\n
-
\n
\n
Demand deposits 112 097 0 0 0 112 097
\n
-
\n
\n
Time deposits 9 106 21 60 0 9 187
\n
-
\n
\n
Savings accounts 74 801 0 0 0 74 801
\n
-
\n
\n
Special deposits 2 962 0 0 0 2 962
\n
-
\n
\n
Other deposits 428 0 0 0 428
\n
-
\n
Subtotal deposits from customers (excl. repos)
\n
199 395 21 60 0 199 476
\n
-
\n
\n
Certificates of deposit 6 273 0 0 0 6 273
\n
-
\n
\n
Savings certificates 253 0 0 0 253
\n
-
\n
\n
Non-convertible bonds 15 892 0 1 118 0 17 011
\n
-
\n
\n
Non-convertible subordinated liabilities 2 946 0 134 0 3 080
\n
-
\n
Repos
\n
4
\n
3 293 2 0 0 3 295
\n
-
\n
\n
with credit institutions and investment firms 2 888 2 0 0 2 890
\n
-
\n
\n
with customers 405 0 0 0 405
\n
-
\n
Liabilities under investment
\n
contracts
\n
6
\n
0 0 13 603 0 13 603
\n
-
\n
Derivatives
\n
0 5 619 0 1 094 6 713
\n
-
\n
Short positions
\n
0 1 628 0 0 1 628
\n
-
\n
\n
In equity instruments 0 18 0 0 18
\n
-
\n
\n
In debt securities 0 1 611 0 0 1 611
\n
-
\n
Other
\n
5
\n
2 288 0 0 0 2 288
\n
-
\n
Total
\n
268 387 7 271 14 916 1 094 291 667
\n
-
\n
1 The carrying value comes close to the maximum credit exposure.
\n
2 The amount of the reverse repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out).
\n
3 Financial assets not included under \u2018Loans and advances to customers\u2019 as they are not directly related to commercial lending.
\n
4 The amount of the repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out), with the assets being partly reflected on the balance sheet
\n
and partly obtained through reverse repo transactions.
\n
5 Financial liabilities not included under deposits from customers as they are not directly related to commercial deposit acquisition.
\n
6 The difference between \u2018Investment contracts (insurance)\u2019 and \u2018Liabilities under investment contracts\u2019 is accounted for by the presentation of non-unbundled investment contracts that are
\n
included under \u2018Investment contracts (insurance)\u2019 on the financial assets side, but are included under \u2018Technical provisions (before reinsurance)\u2019 on the liabilities side.
\n

\n\n
\u2022 \u2018Non-convertible bonds\u2019 comprise mainly KBC Bank, KBC Group, \u010cSOB and KBC IFIMA issues. They are usually recognised under
\n
\u2018Measured at amortised cost\u2019. However, if they contain closely related embedded derivatives, they are recorded under
\n
\u2018Designated at fair value\u2019 (see accounting policies). This item also includes three green bonds (for 500, 500 and 750 million euros
\n
each) and a social bond (for 750 million euros), which have been recognised at amortised cost.
\n
\u2022 More information on major new debt issues or redemptions is provided under the \u2018Consolidated cashflow statement\u2019.
\n
\u2022 \u2018Deposits from credit institutions and investment firms\u2019 include funding obtained from the ECB\u2019s TLTRO programme (15.4 billion
\n
euros at year-end 2022, 9.1 billion euros less than at year-end 2021 on account of redemptions). KBC calculates these deposits
\n
using the effective interest rate method, with the rate being adjusted should we fail to meet the conditions (similar to a floating
\n
rate instrument), as per paragraph B.5.4.5 of IFRS 9. KBC\u2019s management has reasonable assurance that KBC will comply with
\n
the conditions attached (including the level of lending to households and non-financial companies) and hence the interest has
\n
accordingly been recognised (a gross amount of 112 million euros in interest income (negative interest rate) in 2022 and 242
\n
million euros in 2021).
\n
\u2022 Transferred financial assets that continue to be recognised in their entirety: KBC regularly lends and/or sells securities with the
\n
commitment to buy them back at a later date (repo transactions). Securities lent or sold with such a commitment are transferred
\n
to the counterparty, and, in exchange, KBC receives cash or other financial assets. However, KBC retains the main risks and
\n
income relating to these securities, and, therefore, continues to recognise them on its balance sheet. In addition, a financial
\n
liability is recognised equalling the cash received.
\n
\n
Transferred financial assets that continue to be recognised in their entirety (carrying value, in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Transferred financial assets that continue to be recognised in their entirety: repo transactions and securities lent out
\n
17 425 13 762
\n
Held for
\n
trading 960 1 221
\n
Fair value through OCI
\n
860 1 474
\n
Amortised cost
\n
15 605 11 067
\n
Associated financial liability
\n
10 534 2 936
\n
Held for trading
\n
689 335
\n
Fair value through OCI
\n
609 362
\n
Amortised cost
\n
9 236 2 239
\n
\n
\u2022 It should be noted that KBC has more transferred financial assets on its balance sheet than repo transactions, due to the fact
\n
that the cash legs of certain repo transactions are offset against reverse repo transactions if they are carried out with the same
\n
counterparty, in the same currency and with the same maturity date. Moreover, there is a legally enforceable right, and an
\n
intention, to settle the transactions on a net basis or to realise the financial asset and settle the financial liability simultaneously.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria in 2022 is provided in Note 6.6.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. We report on estimated greenhouse gas emissions
\n
associated with lending and other activities and have defined objectives for reducing the greenhouse gas intensity of loans
\n
we have provided to the energy sector, electricity producers and the real estate sector, mortgage loans and loans provided
\n
for commercial residential real estate, as well as loans provided to the automotive industry and financial and operational car
\n
leasing (see Note 6.2), the agricultural sector, and cement, steel and aluminium producers. See \u2018Focus on climate\u2019 in the \u2018Report
\n
of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our Climate Report and
\n
\n
our Sustainability Report at www.kbc.com.
\n

\n\n
Note 5.6: Technical provisions, insurance
\n
\n
\n
(in millions of EUR)
\n
Gross
\n
Reinsurance
\n
Gross
\n
Reinsurance
\n
Technical provisions
\n
31-12-2022 31-12-2022 31-12-2021 31-12-2021
\n
Total
\n
18 484 192 18 967 191
\n
Insurance contracts, Non
\n
-life 4 154 180 3 967 181
\n
Provision for unearned premiums
\n
885 5 814 4
\n
Provision for claims outstanding
\n
3 025 175 2 908 176
\n
Provision for profit sharing and rebates
\n
2 0 3 0
\n
Other technical provisions
\n
242 0 242 0
\n
Insurance contracts, Life
\n
8 348 12 8 511 10
\n
Provision for unearned premiums
\n
19 1 18 1
\n
Life insurance provision
\n
7 945 8 8 080 8
\n
Provision for claims outstanding
\n
165 4 197 1
\n
Provision for profit sharing and rebates
\n
37 0 28 0
\n
Other
\n
technical provisions 181 0 187 0
\n
Investment contracts with DPF, Life
\n
5 982 0 6 489 0
\n
Life insurance provision
\n
5 918 0 6 418 0
\n
Provision for claims outstanding
\n
11 0 16 0
\n
Provision for profit sharing, rebates and other
\n
53 0 55 0
\n
Movements table
\n
2022 2022 2021 2021
\n
Insurance contracts, Non
\n
-life
\n
Opening balance
\n
3 967 181 3 676 137
\n
Movements reflected in earned premiums (income statement)
\n
71 1 48 2
\n
Movements reflected in technical charges (income statement)
\n
115 -3 222 41
\n
\n
Payments regarding claims of previous financial years -412 -42 -328 -22
\n
\n
Provision for new claims 610 37 625 66
\n
\n
Surplus/shortfall of claims provision for previous financial years -113 28 -112 2
\n
\n
Cost of profit sharing -1 0 0 0
\n
\n
Other movements with an impact on results 31 -26 38 -5
\n
Movements reflected in balance sheet
\n
\n
2
\n
\n
1
\n
22 1
\n
Closing
\n
balance 4 154 180 3 967 181
\n
Insurance contracts, Life
\n
\n
Opening balance
\n
8 511 10 8 315 8
\n
Movements reflected in earned premiums (income statement)
\n
1 0 1 0
\n
Movements reflected in technical charges (income statement)
\n
-175 2 71 2
\n
\n
New business (net of risk premium and charges) 590 0 633 0
\n
\n
Payments (including funding of risk premium) -844 0 -776 0
\n
\n
Accretion of interest 159 0 166 2
\n
\n
Cost of profit sharing 20 0 13 0
\n
\n
Provision for new claims and change in provision for claims outstanding -38 3 -3 0
\n
\n
Fair value adjustments of unit-linked contracts (not unbundled) -70 0 32 0
\n
\n
Other movements with an impact on results 7 0 6 1
\n
Movements reflected in balance sheet
\n
11 0 124 0
\n
Closing balance
\n
8 348 12 8 511 10
\n
Investment contracts with DPF, Life
\n
\n
Opening balance
\n
6 489 0 6 727 0
\n
Movements reflected in
\n
technical charges (income statement) -244 0 -70 0
\n
\n
New business (net of risk premium and charges) 266 0 281 0
\n
\n
Payments (including funding of risk premium) -593 0 -461 0
\n
\n
Accretion of interest 85 0 92 0
\n
\n
Cost of profit sharing 8 0 6 0
\n
\n
Provision for new claims and change in provision for claims outstanding -9 0 12 0
\n
\n
Fair value adjustments of unit-linked contracts (not unbundled) 0 0 0 0
\n
\n
Other movements with an impact on results 0 0 0 0
\n
Movements reflected in balance sheet
\n
-263 0 -168 0
\n
Closing balance
\n
5 982 0 6 489 0
\n

\n\n
\u2022 Technical provisions relate to insurance contracts and investment contracts with a discretionary participation feature (DPF).
\n
\u2022 Liabilities under investment contracts without DPF are measured at fair value. These liabilities concern mainly unit-linked
\n
contracts, which are recognised under financial liabilities (see Note 4.1).
\n\n
\u2022 Technical provisions for life insurance are calculated using various assumptions. Judgement is required when making these
\n
assumptions and the assumptions used are based on various internal and external sources of information. At present, IFRS 4
\n
refers extensively to local accounting principles for the recognition of technical provisions. These provisions are generally
\n
calculated using the technical assumptions that were applicable at the inception of the insurance contract and are subject to
\n
liability adequacy tests. The key assumptions are:
\n
- mortality and morbidity rates, which are based on standard mortality tables and adapted where necessary to reflect the
\n
group\u2019s own experience;
\n
- expense assumptions, which are based on current expense levels and expense loadings;
\n
- the discount rate, which is generally equal to the technical interest rate, remains constant throughout the life of the policy,
\n
and in some cases is adjusted to take account of legal requirements and internal policy decisions.
\n
- It should be noted that assumptions may vary depending on the type of life insurance (e.g., conventional versus modern), the
\n
generation of contracts (mainly the time when the contract is entered into and the applicable terms and conditions) and the
\n
country (since we have insurance companies in five of our core markets), making it impossible to quantify these assumptions
\n
for the entire group. This is illustrated by the following two points: (i) The discount rate follows the historical market rate and
\n
since it concerns a life portfolio, most of which has existed for a long time and also has a long maturity, there are considerable
\n
differences within the portfolio. In Belgium alone, discount rates range from 4.75% for the oldest rates to 0.5% and lower for
\n
certain modern products. (ii) In terms of mortality risk, unisex mortality tables are used in Belgium, based on the standard
\n
\u2018MK/FK\u2019 mortality tables for products sold from 2012 on (before 2012, separate mortality tables were used for men and
\n
women). Corrections may still be made to these standard tables, with due consideration being given to the segmentation
\n
criteria of the relevant policies. As a result, the range of mortality tables used is extensive.
\n
\u2022 Assumptions for the technical provisions for claims outstanding are based on past claims experience relating to claim numbers,
\n
claim payments and claims handling costs, and adjusted to take account of such factors as anticipated market experience,
\n
claims inflation and external factors such as court awards and legislation. The technical provision for claims outstanding is
\n
generally not discounted except when long-term obligations and/or annuities (industrial accidents, guaranteed income and
\n
hospitalisation insurance) are involved.
\n
\u2022 In 2022, a reassessment of the confidence level of technical provisions resulted in a release of technical reserves in the Czech
\n
Republic (31 million euros in Life and 10 million euros in Non-Life technical result). In 2021, there were no changes in assumptions
\n
leading to a significant change in the valuation of insurance assets and liabilities.
\n

\n\n
\u2022 The \u2018Movements reflected in the balance sheet\u2019 item in 2021 also includes the impact of the life insurance business acquired
\n
from NN in Bulgaria (see Note 6.6).
\n
\u2022 See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\u2022 Information relating to IFRS 17 can be found in Note 6.10.
\n

\n\n
Note 6.10: IFRS 17
\n
\n
Background information
\n
\n
\u2022
\n
In May 2017, the IASB issued IFRS 17 (Insurance Contracts), a new accounting standard for insurance contracts covering
\n
recognition and measurement, presentation and disclosure. On 1 January 2023, IFRS 17 replaced IFRS 4 (Insurance Contrac
\n
ts)
\n
that was issued in 2005. IFRS 17 applies to all types of insurance contracts, regardless of the type of entities that issue t
\n
hem, as
\n
well as to financial instruments with discretionary participation features. The overall objective of IFRS 17 is to prov
\n
ide an
\n
accounting model for insurance contracts that is more useful and consistent for insurers. In contrast to the requirements in
\n
IFRS
\n
4, which are largely based on grandfathering previous local accounting policies, IFRS 17 provides a comprehensive model
\n
for
\n
insurance contracts, covering all relevant accounting aspects. The core of IFRS 17 is the general model (the \u2018Building Block
\n
Approach\u2019 or \u2018BBA\u2019), supplemented by a specific adaptation for contracts with direct participation features (the \u2018Variable Fee
\n
\n
Approach\u2019 or \u2018VFA\u2019) and a simplified approach (the \u2018Premium Allocation Approach\u2019 or \u2018PAA\u2019) mainly for short-duration contracts.
\n
\n
\u2022
\n
Where necessary, the interpretation of IFRS 17 was gradually adjusted when new information became available from external
\n
or in-
\n
house sources. Changes to the original standard, which were published by the IASB in June 2020, are also taken into
\n
account. On 23 November 2021, the EU published a Regulation endorsing IFRS 17 (Insurance Contracts), including the
\n
amendments to the origin
\n
al IFRS 17 and a solution for the annual cohort requirement for certain types of insurance contracts,
\n
for use in the European Union. KBC will not apply the European optional exemption from the annual cohort requirement.
\n
\n
Main differences between IFRS 4 and IFRS 17
\n
\n
\u2022 For Non-
\n
life insurance, income continues to be recognised primarily in earned premiums, and discounting under IFRS 17
\n
represents the main difference in claims provisions. The undiscounted claims provisions under IFRS 4 are replaced by a
\n
discounted best estimate of future cashflows under IFRS 17, plus a risk adjustment for uncertainty (i.e. a safety margin).
\n
\u2022 Under IFRS 4, the premiums received for Life insurance are recognised as earned premiums. Under IFRS 17, the premiums receive
\n
d
\n
are broken d
\n
own into their various components. The savings component (as part of the premium received) is no longer
\n
recognised in the income statement. Income is spread over the term of the contract based on the services provided and claims
\n
and expenses expected durin
\n
g the period. While earnings per product are the same as earnings per product under IFRS 4, the
\n
earnings are recognised differently over time.
\n
\u2022 The IFRS 4 actuarial reserves for Life insurance are replaced by a discounted best estimate of future cashflows u
\n
nder IFRS 17,
\n
plus a risk adjustment for uncertainty (i.e. a safety margin) and a contractual service margin (CSM, similar to unearned profit).
\n
\u2022 Technical charges under IFRS 4 are presented in a more transparent way under IFRS 17, by presenting the insuranc
\n
e service
\n
result \u2013 comprising insurance revenue and insurance service expenses \u2013
\n
separately from insurance finance income or expenses
\n
(IFIE). Finance income or expenses is a new concept under IFRS 17 resulting from the discounting of insurance liabilities.
\n
\u2022
\n
When facts and circumstances suggest doubtful contracts, under IFRS 17 the expected losses concerned are recognised
\n
immediately in the income statement.
\n
\u2022 While IFRS 17 generally does not affect insurance business profitability, the timing of recognition o
\n
f the result may vary, especially
\n
for long-
\n
term life insurance. Since changes in estimates (for instance, based on updated mortality tables) are absorbed in the
\n
CSM and therefore recognised in the result over time, we expect to see less volatility in the result.
\n
\u2022 Following the introduction of IFRS 17, \u2018Financial assets at fair value \u2013
\n
overlay approach\u2019 has been abolished. KBC Insurance has
\n
chosen to reclassify its shares held in portfolio based on this overlay approach to FVOCI equity instruments (without r
\n
ecycling).
\n
As a result, only the dividend income will now be recognised in the income statement.
\n
\u2022 IFRS 17 does not affect:
\n
- KBC Insurance\u2019s Solvency II ratio;
\n
- KBC Group\u2019s common equity ratio (Danish compromise method): at consolidated group level, KBC Insura
\n
nce is treated as an
\n
investee and measured at historical carrying value;
\n
- KBC Group\u2019s dividend policy.
\n

\n\n
Uniform measurement principles
\n
\n
\u2022 IFRS 17 introduces uniform measurement principles for insurance liabilities, which factor in insurance contract features. At KBC,
\n
the Building Block Approach (BBA) and Variable Fee Approach (VFA) measurement models are used for long-term life insurance
\n
contracts; the Premium Allocation Approach (PAA) measurement model is used for short-term non-life insurance contracts and
\n
for reinsurance (including ceded), provided they meet the PAA eligibility criteria. Certain investment contracts (primarily in
\n
Belgium) are included under IFRS 9 instead of IFRS 17.
\n
\u2022 As required under IFRS 17, the curves used to discount cashflows that vary based on the underlying items (mainly for life
\n
insurance) based on the top-down approach (using a risk-free rate, adjusted with a spread based on a reference portfolio of
\n
assets and excluding the part not related to the insurance liabilities for discounting), while the bottom-up approach (i.e. risk-
\n
free rate + illiquidity premium) is used to discount cashflows that do not vary based on the underlying items (mainly for non-life
\n
insurance).
\n
\u2022 Under IFRS 17, insurance liabilities are measured at the current rate, which means that the impact of the time value of money is
\n
revalued at the current rate each closing period. A choice needs to be made whether to recognise the impact of the changes
\n
in the current rate in the income statement or in other comprehensive income (OCI). In its accounting policies, KBC has chosen
\n
to disaggregate insurance finance income or expenses (IFIE) between the income statement and OCI. This means that the
\n
interest expense on the insurance liability over the reporting period is recorded in the income statement \u2013 this interest expense
\n
is determined based on the locked-in rate (i.e. the interest rate curve applicable at inception of the IFRS 17 contract) \u2013 and that
\n
the impact of changes in the market rate over the reporting period is recorded in OCI.
\n
\u2022 The IFRS 17 insurance and reinsurance assets and liabilities represent all rights and obligations arising from a portfolio of
\n
contracts as a single insurance contract asset or liability. A division is made under IFRS 17 between insurance contracts issued
\n
(i.e. direct business and accepted reinsurance) and reinsurance contracts held (i.e. ceded reinsurance). To correctly present the
\n
insurance liabilities and ceded reinsurance receivables, an adjustment is applied by offsetting the outstanding insurance and
\n
reinsurance payables and receivables (for instance, premiums receivable and fees payable) against the Liability for Remaining
\n
Coverage (LRC)/Asset for Remaining Coverage (ARC).
\n
\u2022 The risk adjustment for non-financial risks is the compensation the entity needs to bear the uncertainty of the amount and the
\n
timing of cashflows arising from non-financial risks. It is a buffer on top of the best estimate of future cashflows that represents
\n
a 50% probability that future liabilities can be met. Life insurance liabilities are characterised by long-term cashflows based on
\n
biometric parameters. The risk adjustment is defined as the difference between the Value at Risk (VaR) and the best estimate
\n
of future cashflows in the context of meeting the liabilities. Non-financial risks included in the VaR model are mortality risk,
\n
longevity risk, illness/disability risk, lapse risk, expense risk and revision risk. The correlations between the different types of risk
\n
have been drawn from the Solvency II correlation matrix. Since the risk adjustment for non-life insurance liabilities is only
\n
calculated for damages suffered, only the reserve risk is taken into account. A Value at Risk method is used, as is the case for
\n
life insurance liabilities. The risk adjustment for non-life is calculated at a confidence level of 90% and the risk adjustment for
\n
life is set at a confidence level of 75%.
\n
\u2022 When transitioning from IFRS 4 to IFRS 17, KBC applies the Full Retrospective Approach (FRA)
\n
for recent years for which the
\n
required historical data is available that allows KBC to make these FRA transition calculations. Applying the FRA for non-recent
\n
years is impracticable due to either a lack of historical data (data and hypotheses) or high costs associated with making
\n
information from the past available for FRA transition calculations, where these costs outweigh the benefits. Where the FRA is
\n
impracticable, the Fair Value Approach (FVA) is predominantly used to determine the CSM on the transition date. The Modified
\n
Retrospective Approach (MRA) is rarely applied as this transition approach is overly complex and the costs do not outweigh
\n
the benefits. KBC calculates a fair value according to IFRS 13 based on the IFRS 17 cashflows and subsequently adjusts a few
\n
assumptions or parameters. The adjustments relate to the inclusion in the IFRS 13 fair value of total expenses, i.e. including non-
\n
directly attributable expenses, and to the inclusion of a risk premium that covers not only non-financial risk but also operational
\n
risk, lapse risk, system and integration expenses and capital funding costs. All past years are combined into a single cohort for
\n
the FVA transition calculations. The FVA CSM ensues from cost and risk margin differences under IFRS 17 and IFRS 13
\n
measurement approaches. T
\n
he OCI amount on the transition date under the FVA is determined in accordance with the
\n
transition exemptions provided in IFRS 17.
\n

\n\n
Level of aggregation
\n
\n
\u2022 IFRS 17 calculations are performed at an aggregated level and take into account:
\n
- IFRS 17 portfolios (an aggregation of contracts with similar risks that are managed together)
\n
- Annual cohorts (the year in which the policy was taken out)
\n
- Group of contracts (having the same profitability expectation at inception)
\n
\u2022 The IFRS 17 Life group portfolios allow KBC to report at the level of guaranteed-interest (class 21), unit-linked (class 23) and
\n
hybrid products. For Non-life, reports are prepared at the level of property, liability and personal insurance. New production is
\n
aggregated in annual cohorts. Contracts are allocated to a group of contracts that have the same profitability characteristics
\n
upon initial recognition (i.e. at inception of the policy).
\n
\n
\n
Impact of the first-time adoption of IFRS 17
\n
\n
\u2022 The table shows which IFRS 4 or IFRS 9 insurance-related assets and liabilities are or are not measured under IFRS 17 at year-
\n
end 2021:
\n
\u25e6 Assets and liabilities that will not be measured under IFRS 17 are included under IFRS 9 (Financial Instruments).
\n
\u25e6 Assets and liabilities that are covered by IFRS 17 are subject to differences in presentation (movements between assets and
\n
liabilities, which do not affect equity) and valuation differences. The latter may affect equity through retained earnings or the
\n
revaluation reserves (Insurance finance income or expense through OCI, after reinsurance).
\n
\n
Impact of the transition to IFRS 17
\n
\n
(in millions of EUR)
\n
Situation
\n
as at
\n
31-12-
\n
2021
\n
(IFRS 4)
\n
Not measured
\n
under
\n
IFRS 17
\n
\n
Measured
\n
under
\n
IFRS 17
\n
Presentation
\n
change
\n
Measure-
\n
ment change
\n
(impact
\n
on equity)
\n
Situation as
\n
at 01-01-
\n
2022
\n
(IFRS 17)
\n
Reported
\n
under IFRS 4
\n
Reported
\n
under IFRS 17
\n
\n
Reported as assets
\n
\n
Reported as assets
\n
1 824 1 097 726 -684 -29 1 111
\n
Reinsurers\u2019 share in technical
\n
provisions, insurance
\n
\n
Ceded reinsurance assets 191 0 191 -149 -29 13
\n
\n
Other assets
\n
\n
Other assets 1 633* 1 097 535 -535 0 1 097
\n
Reported as liabilities
\n
\n
Reported as liabilities
\n
35 090 15 943 19 147 -691 1 456 35 855
\n
Technical provisions, before
\n
reinsurance
\n
\n
Insurance contract obligations 18 967 197 18 770 -511 1 456 19 912
\n
\n
Non-life
\n
\n
Non-life 3 967 0 3 967 -501 -401 3 065
\n
\n
Life
\n
\n
Life 15 000 197 14 803 -10 1 857 16 847
\n
Liabilities under investment
\n
contracts (measured under
\n
IFRS 9)
\n
Liabilities under investment
\n
contracts (measured under
\n
IFRS 9)
\n
13 603 13 464 139 57 0 13 661
\n
\n
Other liabilities
\n
\n
Other liabilities 2 520 2 283 237 -237 0 2 283
\n
Impact of transition to IFRS 17 (excluding reclassification of financial assets (IFRS 9) as a result of the transition to IFR
\n
S 17)
\n
Impact on equity before tax
\n
- - - - -1 485 -
\n
\n
on retained earnings - - - - -1 419 -
\n
\n
on revaluation reserves - - - - -65 -
\n
Impact on equity after tax
\n
- - - - -1 102 -
\n
\n
on retained earnings - - - - -1 054 -
\n
\n
on revaluation reserves - - - - -48 -
\n
Impact of
\n
reclassification of financial assets (IFRS 9) as a result of the transition to IFRS 17
\n
Impact on equity before tax
\n
- - - - 574 -
\n
\n
on retained earnings - - - - 71 -
\n
\n
on revaluation reserves - - - - 503 -
\n
Impact on equity after tax
\n
- - - - 428 -
\n
\n
on retained earnings - - - - 71 -
\n
\n
on revaluation reserves - - - - 357 -
\n
Total impact of transition to IFRS 17 (including reclassification of financial assets (IFRS 9) as a result of the transition
\n
to IFRS 17)
\n
Total impact on
\n
equity after tax - - - - -673 -
\n
\n
on retained earnings - - - - -983 -
\n
\n
on revaluation reserves - - - - 309 -
\n
* The difference with the 1 630 million euros on the balance sheet at year-end 2021 is due to the addition of insurance-related items included in other balance sheet items.
\n

\n\n
Conclusions:
\n
\u25e6 The full net impact (after tax) of the transition to IFRS 17, including the reclassification of financial assets (IFRS 9) came to -673
\n
million euros, as a result of:
\n
\u25e6 IFRS 17 valuation differences: the negative impact on equity (-1 485 million euros before tax; -1 102 million euros after tax)
\n
caused by the transition to IFRS 17 is attributable to the life business, partly offset by non-life.
\n
- Life (impact of -1 857 million euros before tax): is measured mainly on the basis of the Building Block Approach, which
\n
results in an increase in insurance liabilities
\n
.
\n
Higher insurance liabilities are largely accounted for by the application of
\n
a different discount rate (under IFRS 4 liabilities are discounted using the higher guaranteed rate, whereas under
\n
IFRS 17 they are discounted using the lower current rate at transition).
\n
- Non-life (impact of +372 million euros before tax): the decrease in insurance liabilities is mainly attributable to the use
\n
of the Premium Allocation Approach. The lower insurance liabilities are accounted for by a combination of the
\n
application of a best estimate under IFRS 17 and the impact of discounting (not applied under IFRS 4).
\n
\u25e6 The first-time adoption of IFRS 17 also permits a reclassification of financial assets available to the insurance companies
\n
in order to avoid an accounting mismatch between assets and liabilities. As a result, bonds in the amount of 5 234 million
\n
euros were transferred from \u2018Financial assets at amortised cost\u2019 to \u2018Financial assets at fair value through OCI\u2019, whereas
\n
bonds in the opposite direction amounted to 2 235 million euros. This translated into a positive net impact after tax of
\n
428 million euros on equity. As a general principle, KBC has decided to classify bonds used to hedge life insurance
\n
liabilities as FVOCI, and bonds used to hedge non-life insurance liabilities as amortised cost (90%) and FVOCI (10%).
\n
\u25e6 The first-time adoption of IFRS 17 also resulted in the abolition of \u2018Financial assets at fair value \u2013 overlay approach\u2019 (see
\n
above), leading to a transfer of shares in the amount of 1 366 million euros to \u2018Financial assets at fair value through OCI\u2019
\n
(FVOCI). The transfer does not have a net impact on equity, but it does result in a shift from \u2018Retained earnings\u2019 (-71 million
\n
euros, pertaining to impairment recognised in the past) and the \u2018Revaluation reserve (FVPL equity instruments) \u2013 overlay
\n
approach\u2019 (496 million euros) to the \u2018Revaluation reserve (FVOCI equity instruments)\u2019.
\n
\u25e6 Liabilities that will not be measured under IFRS 17 are mainly investment contracts in Belgium, which will be included under
\n
IFRS 9 (Financial Instruments) (no changes compared with IFRS 4).
\n
\u25e6 Differences in presentation: these pertain to the adjustment applied by offsetting the outstanding insurance payables and
\n
receivables (for instance, premiums receivable and fees payable) against the Liability for Remaining Coverage (LRC) or the
\n
Asset for Remaining Coverage (ARC).
\n
\u25e6 The CSM release model is based on coverage units in the group of contracts (GoC). The number of coverage units is the
\n
volume of services the insurer provides under the contracts in that GoC, which is determined by taking into account, for each
\n
contract, the total payments a policyholder receives under a contract and the expected period of cover. The CSM amount
\n
included in the income statement is the number of coverage units allocated to the current period for the insurance cover
\n
provided in the current period.
\n
\u25e6 The number of coverage units is reassessed at the end of every reporting period in order to reflect the most up-to-date
\n
contract assumptions. KBC has chosen to present the time value of money on coverage units. Discounting the coverage units
\n
helps achieve a more stable allocation of the CSM to the income statement. KBC applies \u2018multivariate coverage units\u2019 for
\n
contracts under which multiple services are provided, i.e. insurance cover, investment return services and investment
\n
management services, and charges the following items:
\n
o Coverage units are determined based on individual payment components.
\n
o Each component is assigned a weight to reflect an appropriate service level.
\n
These weights appropriately reflect the CSM release based on the volume of work carried out for each service.
\n
\u25e6 Contracts under which the insurer provides cover, i.e. where the insurer runs risks, fall within the IFRS 17 contract boundaries.
\n
Tacit renewals of non-life insurance policies and contracts with a future period of cover fall outside the IFRS 17 contract
\n
boundaries.
\n
\u25e6 On the transition date, ceded reinsurance assets and insurance contract obligations amounted to 13 million euros and 19 912
\n
million euros, respectively. More information can be found in the table. On the transition date, total insurance contract
\n
obligations excluding PAA consisted of contracts subject to the Fair Value Approach (FVA) (16 388 million euros), the Full
\n
Retroactive Approach (FRA) (586 million euros) and the Modified Retrospective Approach (MRA) (199 million euros).
\n

\n\n

\n\n

\n\n
Overview of ceded reinsurance assets and insurance contract obligations, in millions of EUR, 01-01-2022
\n
Total
\n
PAA
\n
BBA
\n
VFA
\n
Ceded reinsurance assets
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
By portfolio
\n
13 13 - -
\n
\n
- Life -18 -18 - -
\n
\n
- Non-life 32 32 - -
\n
Insurance contract obligations
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
By
\n
portfolio, profitability label, product and business unit
\n
\n
19 912
\n
\n
2 739
\n
\n
16 157
\n
\n
1 016
\n
Total Life
\n
16 847 60 15 771 1 016
\n
By profitability label
\n
\n
\n
- Profitable contracts 16 466 - - -
\n
\n
- Doubtful contracts 0 - - -
\n
\n
- Onerous contracts 381 - - -
\n
By product
\n
\n
\n
- Unit-linked contracts 899 0 0 899
\n
\n
- Non-unit-linked contracts 15 700 60 15 640 0
\n
\n
- Hybrid contracts 248 0 131 117
\n
By business unit
\n
\n
- Belgium 14 906 59 14 847 0
\n
- Czech Republic 1 157 0 630 527
\n
- International Markets 784 1 294 489
\n
- Group Centre 0 0 0 0
\n
Total Non
\n
-life 3 065 2 679 386 0
\n
By profitability label
\n
\n
\n
\n
- Profitable contracts
\n
\n
2 802 - - -
\n
\n
- Doubtful contracts
\n
\n
183 - - -
\n
\n
- Onerous contracts
\n
\n
80 - - -
\n
By product
\n
\n
\n
- Personal insurance 1 096 710 386 -
\n
\n
- Liabilities 1 385 1 385 0 -
\n
\n
- Property, incl. other 583 583 0 -
\n
By business unit
\n
\n
\n
- Belgium 2 470 2 084 386 0
\n
\n
- Czech Republic 305 305 0 0
\n
\n
- International Markets 276 276 0 0
\n
\n
- Group Centre 14 14 0 0
\n
By component
\n
\n
\n
19 912
\n
\n
2 739
\n
\n
16 157
\n
\n
1 016
\n
LRC
\n
17 447 428 16 023 996
\n
\n
- Best estimate 15 383 - 14 540 844
\n
\n
- Risk adjustment 178 - 170 9
\n
\n
- CSM 1 383 - 1 240 142
\n
\n
- Loss component 76 - 74 2
\n
\n
- LRC PAA 428 428 - -
\n
LIC
\n
2 465 2 312 134 19
\n
\n
- Best estimate 2 193 2 044 130 19
\n
\n
- Risk adjustment 272 268 4 0
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfInsuranceContractsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag808": { "value": "\n
Note 3.7: Insurance results
\n
\n
\u2022 As a bank-insurer, we present our financial information on an integrated basis (i.e. banking and insurance activities combined).
\n
Information on the banking and insurance businesses is provided separately in the annual reports of KBC Bank and KBC
\n
Insurance (available at www.kbc.com). This note provides information on the insurance results alone.
\n
\u2022 The figures include intragroup transactions between bank and insurance entities (the results for insurance contracts concluded
\n
between the group\u2019s bank and insurance entities, interest that insurance companies receive on their deposits with bank entities,
\n
commissions that insurance entities pay to bank branches for sales of insurance, etc.) in order to give a more accurate view of
\n
the profitability of the insurance business. A reconciliation of the earned premiums stated in the consolidated income statement
\n
and in Note 3.7.1 is presented in the table below the overview.
\n
\u2022 Of the items stated in Note 3.7.1, only \u2018Earned premiums, insurance (before reinsurance)\u2019, \u2018Technical charges, insurance (before
\n
reinsurance)\u2019 and \u2018Ceded reinsurance result\u2019 are presented on separate lines in the group\u2019s income statement (with a minor
\n
adjustment, as shown in the smaller table below the main table). As part of our integrated bank-insurance concept, all the
\n
other lines in the insurance schedule below \u2013 together with the group\u2019s banking activities \u2013 are included in the group\u2019s income
\n
statement and related notes.
\n
\u2022 Additional information on the insurance business is provided separately in Note 3.7, Note 5.6, Note 6.5 and Note 6.7, in the \u2018How
\n
do we manage our risks?\u2019 section and in the annual report of KBC Insurance (available at www.kbc.com).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Note 3.7.1: Overview
\n
\n
Non-
\n
technical
\n\n

\n\n
(in millions of EUR)
\n
Life
\n
Non-life
\n
account
\n
Total
\n
2022
\n
\n
Earned premiums, insurance
\n
(before reinsurance) 1 163 2 054 0 3 217
\n
\n
of which changes in the provision for unearned premiums -1 -71
\n
0
\n
\n
-72
\n
Technical charges, insurance (before reinsurance)
\n
-1 071 -1 154 0 -2 225
\n
\n
Claims paid -1 399 -1 029
\n
0
\n
-2 428
\n
\n
Change in technical provisions 419 -115
\n
0
\n
\n
304
\n
\n
Other technical result -91 -9
\n
0
\n
-100
\n
Net fee and commission income
\n
-4 -403 0 -407
\n
Ceded reinsurance result
\n
-3 1 0 -2
\n
General administrative expenses
\n
-152 -285 -3 -440
\n
\n
Internal claims settlement expenses -9 -65 0 -74
\n
\n
Indirect acquisition costs -32 -68 0 -100
\n
\n
Administrative expenses -110 -152 0 -263
\n
\n
Investment management fees 0 0 -3 -3
\n
Technical result
\n
-67 213 -3 143
\n
Investment income*
\n
383 112 38 534
\n
Technical
\n
-financial result 316 325 36 677
\n
Share in results of associated companies and joint ventures
\n
- - 0 0
\n
RESULT BEFORE TAX
\n
316 325 36 677
\n
Income tax expense
\n
- - - -117
\n
RESULT AFTER TAX
\n
- - - 560
\n
\n
attributable to minority interests - - - 0
\n
\n
attributable to equity holders of the parent - - - 560
\n
2021
\n
\n
Earned premiums, insurance (before reinsurance)
\n
1 196 1 905 0 3 101
\n
\n
of which changes in the provision for unearned premiums -1 -48 0 -49
\n
Technical charges, insurance (before reinsurance)
\n
-1 150 -1 106 0 -2 256
\n
\n
Claims paid -1 163 -872 0 -2 036
\n
\n
Change in technical provisions -1 -223 0 -224
\n
\n
Other technical result 14 -10 0 4
\n
Net fee and commission income
\n
-5 -367 0 -372
\n
Ceded reinsurance result
\n
-2 27 0 25
\n
General administrative expenses
\n
-149 -255 -2 -407
\n
\n
Internal claims settlement expenses -9 -59 0 -68
\n
\n
Indirect acquisition costs -31 -68 0 -98
\n
\n
Administrative expenses -109 -128 0 -238
\n
\n
Investment management fees 0 0 -2 -2
\n
Technical result
\n
-110 204 -2 91
\n
Investment income*
\n
382 92 69 543
\n
Technical
\n
-financial result 271 296 66 634
\n
Share in results of associated companies and joint ventures
\n
\u2013 \u2013 0 0
\n
RESULT BEFORE TAX
\n
271 296 66 634
\n
Income tax expense
\n
\u2013 \u2013 \u2013 -125
\n
RESULT AFTER TAX
\n
\u2013 \u2013 \u2013 508
\n
\n
attributable to minority interests \u2013 \u2013 \u2013 0
\n
\n
attributable to equity holders of the parent \u2013 \u2013 \u2013 508
\n
* Investment income (in millions of euros, for 2022 and 2021, respectively) comprises: \u2018Net interest income\u2019 (428, 398), \u2018Net dividend income\u2019 (39, 31), \u2018Net result from financial instruments at fair
\n
value through profit or loss\u2019 (91, 117), \u2018Other net income\u2019 (-9, 1), \u2018Net realised result from debt instruments at fair value through OCI\u2019 (-16, -2) and \u2018Impairment\u2019 (1, -3). The \u2018Non-technical account\u2019
\n
also includes the results from non-insurance subsidiaries, such as VAB group and ADD, and a number of real estate companies. They have been included in the note for the \u2018insurance business\u2019
\n
given that they are KBC Insurance subsidiaries (but as they cannot be recognised under \u2018Life\u2019 or \u2018Non-life\u2019, they are included under \u2018Non-technical account\u2019). The \u2018Non-technical account\u2019 also
\n
includes the investment income from equity (i.e. mainly interest income from bonds).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n

\n\n

\n\n
\u2022 The figures relating to earned premiums do not include investment contracts without DPF, which largely correspond to unit-
\n
linked contracts. The margin on these products is recognised under \u2018Net fee and commission income\u2019.
\n
\u2022 \u2018Non-life technical charges\u2019 consist mainly of paid claims, changes in claims provisions, changes in the deficiency provision,
\n
recourse received, changes in recourse estimations and other technical charges. \u2018Life technical charges\u2019 consist primarily of
\n
paid claims, changes in claims provisions, changes in the life insurance provision, changes in the provision for (non-unbundled)
\n
unit-linked products, bonuses (profit-sharing), changes in the deficiency provision and other technical charges.
\n
\u2022 An overview of the insurer\u2019s investment portfolio can be found in the \u2018How do we manage our risks?\u2019 section (in the \u2018Investment
\n
portfolio of KBC group insurance entities\u2019 table, which constitutes part of the financial statements).
\n
\u2022 In the vast majority of cases, internal acquisition costs are recognised immediately in the income statement (i.e. not spread).
\n
\u2022 In 2022, the non-life technical result was negatively impacted by factors including extreme weather conditions, such as flooding
\n
and storms (especially in Belgium, having a gross impact of 107 million euros, which comes down to 53 million euros after
\n
reinsurance). In 2021, the non-life technical result was negatively impacted by factors including the tornado in the Czech
\n
Republic and even more so by heavy flooding in Belgium (the gross impact of the latter totalled 110 million euros, which comes
\n
down to 87 million euros after reinsurance, 45 million euros of which above the legal limit (i.e. the ceiling introduced in Belgian
\n
law on the intervention of insurers in the event of very large floods), but which is still within the limit agreed between the Belgian
\n
insurance sector and the Walloon government). In 2022, the Life and Non-life technical result benefited from a release of
\n
technical reserves in the Czech Republic (31 million euros and 10 million euros, respectively) resulting from a reassessment of the
\n
confidence level of technical provisions.
\n
\u2022 More information on the acquisition of certain life and pension insurance policies from NN in Bulgaria in 2021 is provided in Note
\n
6.6.
\n
\u2022 See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\n
Reconciliation of the earned premiums stated in the consolidated income statement
\n
and in Note 3.7.1 (in millions of EUR)
\n
2022
\n
2021
\n
Non
\n
-life insurance (before reinsurance) \u2013 Earned premiums
\n
In the consolidated income statement
\n
2 033 1 885
\n
Addition of premiums from intragroup transactions between bank and insurer
\n
21 20
\n
In Note 3.7.1
\n
2 054 1 905
\n
Life insurance (before reinsurance)
\n
\u2013 Earned premiums
\n
In the consolidated income statement
\n
1 163 1 196
\n
Addition of premiums from intragroup transactions between bank and insurer
\n
1 1
\n
In Note 3.7.1
\n
1 163 1 196
\n

\n\n

\n\n

\n\n
\n
\n
\n\n

\n\n
Note 3.7.2: Life insurance
\n
\n
2022 2021
\n
(in millions of EUR)
\n
Total
\n
1 163 1 196
\n
By
\n
IFRS category
\n
Insurance contracts
\n
884 900
\n
Investment contracts with DPF
\n
280 296
\n
By type
\n
\n
Accepted reinsurance
\n
0 0
\n
Primary business
\n
1 163 1 196
\n
Breakdown of primary business
\n
\n
Individual premiums
\n
816 831
\n
\n
Single premiums 44 61
\n
\n
Periodic premiums 773 770
\n
Premiums under group contracts
\n
347 365
\n
\n
Single premiums 26 50
\n
\n
Periodic premiums 321 315
\n
Total sales of life insurance (including investment contracts without DPF)
\n
\n
Unit
\n
-linked 1 089 942
\n
Guaranteed
\n
-rate 996 1 022
\n
Total
\n
2 085 1 964
\n
\n
\u2022 As required under IFRS, we use deposit accounting for a number of investment contracts without DPF. This means that the
\n
premium income and technical charges from these contracts are not recognised under \u2018Earned premiums\u2019 and \u2018Technical
\n
charges\u2019, but that the margins on them are reported under \u2018Net fee and commission income\u2019. Investment contracts without DPF
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n
are more or less the same as unit-linked contracts, which in 2021 accounted for premium income of 0.9 billion euros and in 2022
\n
for premium income of 1.1 billion euros. Premium income generated by investment contracts without DPF (under deposit
\n
accounting) is included in \u2018Total sales of life insurance\u2019, as presented in the lower part of the table. These sale volumes,
\n
therefore, comprise earned insurance premiums plus premiums from contracts that are subject to deposit accounting.
\n

\n\n

\n\n
\n
\n\n
Note 3.7.3: Non-life insurance
\n
\n
Technical insurance
\n
Operating
\n
Earned premiums
\n
charges
\n
expenses
\n
(before
\n
(before
\n
(before
\n
Ceded
\n
(in millions of EUR)
\n
reinsurance)
\n
reinsurance)
\n
reinsurance)
\n
reinsurance
\n
Total
\n
2022
\n
\n
Total
\n
2 054 -1 154 -688 1 213
\n
Accepted reinsurance
\n
30 -26 -10 18 12
\n
Primary business
\n
2 024 -1 128 -678 -17 201
\n
Accident & health (classes 1 & 2, excl. industrial accidents)
\n
128 -60 -41 0 27
\n
Industrial accidents (class 1)
\n
94 -95 -18 -1 -21
\n
Motor, third
\n
-party liability (class 10) 525 -321 -156 -2 45
\n
Motor, other classes (classes 3 & 7)
\n
360 -212 -124 -1 23
\n
Shipping, aviation, transport (classes 4, 5, 6, 7, 11 & 12)
\n
9 -2 -3 -2 2
\n
Fire and other damage to property (classes 8 & 9)
\n
622 -327 -231 -5 58
\n
General third
\n
-party liability (class 13) 156 -45 -51 -6 54
\n
Credit and suretyship (classes 14 & 15)
\n
0 0 0 0 0
\n
Miscellaneous pecuniary losses
\n
(class 16) 30 -13 -11 1 7
\n
Legal assistance (class 17)
\n
65 -40 -23 0 2
\n
Assistance (class 18)
\n
36 -11 -20 0 4
\n
2021
\n
\n
Total
\n
1 905 -1 106 -622 27 204
\n
Accepted reinsurance
\n
27 -11 -9 -3 4
\n
Primary business
\n
1 878 -1 095 -614 30 200
\n
Accident & health (classes 1 & 2, excl. industrial accidents)
\n
123 -53 -40 0 28
\n
Industrial accidents (class 1)
\n
89 -77 -16 0 -4
\n
Motor, third
\n
-party liability (class 10) 512 -305 -148 -4 55
\n
Motor, other classes (classes 3 & 7)
\n
320 -179 -108 3 36
\n
Shipping, aviation, transport (classes 4, 5, 6, 7, 11 & 12)
\n
7 -2 -2 -1 1
\n
Fire and other damage to property (classes 8 & 9)
\n
569 -343 -211 28 44
\n
General third
\n
-party liability (class 13) 142 -92 -46 1 6
\n
Credit and suretyship (classes 14 & 15)
\n
0 0 0 0 0
\n
Miscellaneous pecuniary losses (class 16)
\n
22 -9 -8 3 9
\n
Legal assistance (class 17)
\n
62 -28 -22 0 13
\n
Assistance (class 18)
\n
31 -6 -13 0 12
\n

\n\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfInsurancePremiumRevenueExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag805": { "value": "\n

\n\n

\n\n

\n
Note 3.7.1: Overview
\n
\n
Non-
\n
technical
\n\n

\n\n
(in millions of EUR)
\n
Life
\n
Non-life
\n
account
\n
Total
\n
2022
\n
\n
Earned premiums, insurance
\n
(before reinsurance) 1 163 2 054 0 3 217
\n
\n
of which changes in the provision for unearned premiums -1 -71
\n
0
\n
\n
-72
\n
Technical charges, insurance (before reinsurance)
\n
-1 071 -1 154 0 -2 225
\n
\n
Claims paid -1 399 -1 029
\n
0
\n
-2 428
\n
\n
Change in technical provisions 419 -115
\n
0
\n
\n
304
\n
\n
Other technical result -91 -9
\n
0
\n
-100
\n
Net fee and commission income
\n
-4 -403 0 -407
\n
Ceded reinsurance result
\n
-3 1 0 -2
\n
General administrative expenses
\n
-152 -285 -3 -440
\n
\n
Internal claims settlement expenses -9 -65 0 -74
\n
\n
Indirect acquisition costs -32 -68 0 -100
\n
\n
Administrative expenses -110 -152 0 -263
\n
\n
Investment management fees 0 0 -3 -3
\n
Technical result
\n
-67 213 -3 143
\n
Investment income*
\n
383 112 38 534
\n
Technical
\n
-financial result 316 325 36 677
\n
Share in results of associated companies and joint ventures
\n
- - 0 0
\n
RESULT BEFORE TAX
\n
316 325 36 677
\n
Income tax expense
\n
- - - -117
\n
RESULT AFTER TAX
\n
- - - 560
\n
\n
attributable to minority interests - - - 0
\n
\n
attributable to equity holders of the parent - - - 560
\n
2021
\n
\n
Earned premiums, insurance (before reinsurance)
\n
1 196 1 905 0 3 101
\n
\n
of which changes in the provision for unearned premiums -1 -48 0 -49
\n
Technical charges, insurance (before reinsurance)
\n
-1 150 -1 106 0 -2 256
\n
\n
Claims paid -1 163 -872 0 -2 036
\n
\n
Change in technical provisions -1 -223 0 -224
\n
\n
Other technical result 14 -10 0 4
\n
Net fee and commission income
\n
-5 -367 0 -372
\n
Ceded reinsurance result
\n
-2 27 0 25
\n
General administrative expenses
\n
-149 -255 -2 -407
\n
\n
Internal claims settlement expenses -9 -59 0 -68
\n
\n
Indirect acquisition costs -31 -68 0 -98
\n
\n
Administrative expenses -109 -128 0 -238
\n
\n
Investment management fees 0 0 -2 -2
\n
Technical result
\n
-110 204 -2 91
\n
Investment income*
\n
382 92 69 543
\n
Technical
\n
-financial result 271 296 66 634
\n
Share in results of associated companies and joint ventures
\n
\u2013 \u2013 0 0
\n
RESULT BEFORE TAX
\n
271 296 66 634
\n
Income tax expense
\n
\u2013 \u2013 \u2013 -125
\n
RESULT AFTER TAX
\n
\u2013 \u2013 \u2013 508
\n
\n
attributable to minority interests \u2013 \u2013 \u2013 0
\n
\n
attributable to equity holders of the parent \u2013 \u2013 \u2013 508
\n
* Investment income (in millions of euros, for 2022 and 2021, respectively) comprises: \u2018Net interest income\u2019 (428, 398), \u2018Net dividend income\u2019 (39, 31), \u2018Net result from financial instruments at fair
\n
value through profit or loss\u2019 (91, 117), \u2018Other net income\u2019 (-9, 1), \u2018Net realised result from debt instruments at fair value through OCI\u2019 (-16, -2) and \u2018Impairment\u2019 (1, -3). The \u2018Non-technical account\u2019
\n
also includes the results from non-insurance subsidiaries, such as VAB group and ADD, and a number of real estate companies. They have been included in the note for the \u2018insurance business\u2019
\n
given that they are KBC Insurance subsidiaries (but as they cannot be recognised under \u2018Life\u2019 or \u2018Non-life\u2019, they are included under \u2018Non-technical account\u2019). The \u2018Non-technical account\u2019 also
\n
includes the investment income from equity (i.e. mainly interest income from bonds).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\u2022 The figures relating to earned premiums do not include investment contracts without DPF, which largely correspond to unit-
\n
linked contracts. The margin on these products is recognised under \u2018Net fee and commission income\u2019.
\n
\u2022 \u2018Non-life technical charges\u2019 consist mainly of paid claims, changes in claims provisions, changes in the deficiency provision,
\n
recourse received, changes in recourse estimations and other technical charges. \u2018Life technical charges\u2019 consist primarily of
\n
paid claims, changes in claims provisions, changes in the life insurance provision, changes in the provision for (non-unbundled)
\n
unit-linked products, bonuses (profit-sharing), changes in the deficiency provision and other technical charges.
\n
\u2022 An overview of the insurer\u2019s investment portfolio can be found in the \u2018How do we manage our risks?\u2019 section (in the \u2018Investment
\n
portfolio of KBC group insurance entities\u2019 table, which constitutes part of the financial statements).
\n
\u2022 In the vast majority of cases, internal acquisition costs are recognised immediately in the income statement (i.e. not spread).
\n
\u2022 In 2022, the non-life technical result was negatively impacted by factors including extreme weather conditions, such as flooding
\n
and storms (especially in Belgium, having a gross impact of 107 million euros, which comes down to 53 million euros after
\n
reinsurance). In 2021, the non-life technical result was negatively impacted by factors including the tornado in the Czech
\n
Republic and even more so by heavy flooding in Belgium (the gross impact of the latter totalled 110 million euros, which comes
\n
down to 87 million euros after reinsurance, 45 million euros of which above the legal limit (i.e. the ceiling introduced in Belgian
\n
law on the intervention of insurers in the event of very large floods), but which is still within the limit agreed between the Belgian
\n
insurance sector and the Walloon government). In 2022, the Life and Non-life technical result benefited from a release of
\n
technical reserves in the Czech Republic (31 million euros and 10 million euros, respectively) resulting from a reassessment of the
\n
confidence level of technical provisions.
\n
\u2022 More information on the acquisition of certain life and pension insurance policies from NN in Bulgaria in 2021 is provided in Note
\n
6.6.
\n
\u2022 See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\n
Reconciliation of the earned premiums stated in the consolidated income statement
\n
and in Note 3.7.1 (in millions of EUR)
\n
2022
\n
2021
\n
Non
\n
-life insurance (before reinsurance) \u2013 Earned premiums
\n
In the consolidated income statement
\n
2 033 1 885
\n
Addition of premiums from intragroup transactions between bank and insurer
\n
21 20
\n
In Note 3.7.1
\n
2 054 1 905
\n
Life insurance (before reinsurance)
\n
\u2013 Earned premiums
\n
In the consolidated income statement
\n
1 163 1 196
\n
Addition of premiums from intragroup transactions between bank and insurer
\n
1 1
\n
In Note 3.7.1
\n
1 163 1 196
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfProfitLossFromOperatingActivitiesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag831": { "value": "\n

\n\n

\n
Note 3.7.1: Overview
\n
\n
Non-
\n
technical
\n\n

\n\n
(in millions of EUR)
\n
Life
\n
Non-life
\n
account
\n
Total
\n
2022
\n
\n
Earned premiums, insurance
\n
(before reinsurance) 1 163 2 054 0 3 217
\n
\n
of which changes in the provision for unearned premiums -1 -71
\n
0
\n
\n
-72
\n
Technical charges, insurance (before reinsurance)
\n
-1 071 -1 154 0 -2 225
\n
\n
Claims paid -1 399 -1 029
\n
0
\n
-2 428
\n
\n
Change in technical provisions 419 -115
\n
0
\n
\n
304
\n
\n
Other technical result -91 -9
\n
0
\n
-100
\n
Net fee and commission income
\n
-4 -403 0 -407
\n
Ceded reinsurance result
\n
-3 1 0 -2
\n
General administrative expenses
\n
-152 -285 -3 -440
\n
\n
Internal claims settlement expenses -9 -65 0 -74
\n
\n
Indirect acquisition costs -32 -68 0 -100
\n
\n
Administrative expenses -110 -152 0 -263
\n
\n
Investment management fees 0 0 -3 -3
\n
Technical result
\n
-67 213 -3 143
\n
Investment income*
\n
383 112 38 534
\n
Technical
\n
-financial result 316 325 36 677
\n
Share in results of associated companies and joint ventures
\n
- - 0 0
\n
RESULT BEFORE TAX
\n
316 325 36 677
\n
Income tax expense
\n
- - - -117
\n
RESULT AFTER TAX
\n
- - - 560
\n
\n
attributable to minority interests - - - 0
\n
\n
attributable to equity holders of the parent - - - 560
\n
2021
\n
\n
Earned premiums, insurance (before reinsurance)
\n
1 196 1 905 0 3 101
\n
\n
of which changes in the provision for unearned premiums -1 -48 0 -49
\n
Technical charges, insurance (before reinsurance)
\n
-1 150 -1 106 0 -2 256
\n
\n
Claims paid -1 163 -872 0 -2 036
\n
\n
Change in technical provisions -1 -223 0 -224
\n
\n
Other technical result 14 -10 0 4
\n
Net fee and commission income
\n
-5 -367 0 -372
\n
Ceded reinsurance result
\n
-2 27 0 25
\n
General administrative expenses
\n
-149 -255 -2 -407
\n
\n
Internal claims settlement expenses -9 -59 0 -68
\n
\n
Indirect acquisition costs -31 -68 0 -98
\n
\n
Administrative expenses -109 -128 0 -238
\n
\n
Investment management fees 0 0 -2 -2
\n
Technical result
\n
-110 204 -2 91
\n
Investment income*
\n
382 92 69 543
\n
Technical
\n
-financial result 271 296 66 634
\n
Share in results of associated companies and joint ventures
\n
\u2013 \u2013 0 0
\n
RESULT BEFORE TAX
\n
271 296 66 634
\n
Income tax expense
\n
\u2013 \u2013 \u2013 -125
\n
RESULT AFTER TAX
\n
\u2013 \u2013 \u2013 508
\n
\n
attributable to minority interests \u2013 \u2013 \u2013 0
\n
\n
attributable to equity holders of the parent \u2013 \u2013 \u2013 508
\n
* Investment income (in millions of euros, for 2022 and 2021, respectively) comprises: \u2018Net interest income\u2019 (428, 398), \u2018Net dividend income\u2019 (39, 31), \u2018Net result from financial instruments at fair
\n
value through profit or loss\u2019 (91, 117), \u2018Other net income\u2019 (-9, 1), \u2018Net realised result from debt instruments at fair value through OCI\u2019 (-16, -2) and \u2018Impairment\u2019 (1, -3). The \u2018Non-technical account\u2019
\n
also includes the results from non-insurance subsidiaries, such as VAB group and ADD, and a number of real estate companies. They have been included in the note for the \u2018insurance business\u2019
\n
given that they are KBC Insurance subsidiaries (but as they cannot be recognised under \u2018Life\u2019 or \u2018Non-life\u2019, they are included under \u2018Non-technical account\u2019). The \u2018Non-technical account\u2019 also
\n
includes the investment income from equity (i.e. mainly interest income from bonds).
\n

\n\n

\n\n

\n\n

\n\n

\n\n
\u2022 The figures relating to earned premiums do not include investment contracts without DPF, which largely correspond to unit-
\n
linked contracts. The margin on these products is recognised under \u2018Net fee and commission income\u2019.
\n
\u2022 \u2018Non-life technical charges\u2019 consist mainly of paid claims, changes in claims provisions, changes in the deficiency provision,
\n
recourse received, changes in recourse estimations and other technical charges. \u2018Life technical charges\u2019 consist primarily of
\n
paid claims, changes in claims provisions, changes in the life insurance provision, changes in the provision for (non-unbundled)
\n
unit-linked products, bonuses (profit-sharing), changes in the deficiency provision and other technical charges.
\n
\u2022 An overview of the insurer\u2019s investment portfolio can be found in the \u2018How do we manage our risks?\u2019 section (in the \u2018Investment
\n
portfolio of KBC group insurance entities\u2019 table, which constitutes part of the financial statements).
\n
\u2022 In the vast majority of cases, internal acquisition costs are recognised immediately in the income statement (i.e. not spread).
\n
\u2022 In 2022, the non-life technical result was negatively impacted by factors including extreme weather conditions, such as flooding
\n
and storms (especially in Belgium, having a gross impact of 107 million euros, which comes down to 53 million euros after
\n
reinsurance). In 2021, the non-life technical result was negatively impacted by factors including the tornado in the Czech
\n
Republic and even more so by heavy flooding in Belgium (the gross impact of the latter totalled 110 million euros, which comes
\n
down to 87 million euros after reinsurance, 45 million euros of which above the legal limit (i.e. the ceiling introduced in Belgian
\n
law on the intervention of insurers in the event of very large floods), but which is still within the limit agreed between the Belgian
\n
insurance sector and the Walloon government). In 2022, the Life and Non-life technical result benefited from a release of
\n
technical reserves in the Czech Republic (31 million euros and 10 million euros, respectively) resulting from a reassessment of the
\n
confidence level of technical provisions.
\n
\u2022 More information on the acquisition of certain life and pension insurance policies from NN in Bulgaria in 2021 is provided in Note
\n
6.6.
\n
\u2022 See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\n
Reconciliation of the earned premiums stated in the consolidated income statement
\n
and in Note 3.7.1 (in millions of EUR)
\n
2022
\n
2021
\n
Non
\n
-life insurance (before reinsurance) \u2013 Earned premiums
\n
In the consolidated income statement
\n
2 033 1 885
\n
Addition of premiums from intragroup transactions between bank and insurer
\n
21 20
\n
In Note 3.7.1
\n
2 054 1 905
\n
Life insurance (before reinsurance)
\n
\u2013 Earned premiums
\n
In the consolidated income statement
\n
1 163 1 196
\n
Addition of premiums from intragroup transactions between bank and insurer
\n
1 1
\n
In Note 3.7.1
\n
1 163 1 196
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfClaimsAndBenefitsPaidExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag835": { "value": "\n

\n
Note 3.7.1: Overview
\n
\n
Non-
\n
technical
\n\n

\n\n
(in millions of EUR)
\n
Life
\n
Non-life
\n
account
\n
Total
\n
2022
\n
\n
Earned premiums, insurance
\n
(before reinsurance) 1 163 2 054 0 3 217
\n
\n
of which changes in the provision for unearned premiums -1 -71
\n
0
\n
\n
-72
\n
Technical charges, insurance (before reinsurance)
\n
-1 071 -1 154 0 -2 225
\n
\n
Claims paid -1 399 -1 029
\n
0
\n
-2 428
\n
\n
Change in technical provisions 419 -115
\n
0
\n
\n
304
\n
\n
Other technical result -91 -9
\n
0
\n
-100
\n
Net fee and commission income
\n
-4 -403 0 -407
\n
Ceded reinsurance result
\n
-3 1 0 -2
\n
General administrative expenses
\n
-152 -285 -3 -440
\n
\n
Internal claims settlement expenses -9 -65 0 -74
\n
\n
Indirect acquisition costs -32 -68 0 -100
\n
\n
Administrative expenses -110 -152 0 -263
\n
\n
Investment management fees 0 0 -3 -3
\n
Technical result
\n
-67 213 -3 143
\n
Investment income*
\n
383 112 38 534
\n
Technical
\n
-financial result 316 325 36 677
\n
Share in results of associated companies and joint ventures
\n
- - 0 0
\n
RESULT BEFORE TAX
\n
316 325 36 677
\n
Income tax expense
\n
- - - -117
\n
RESULT AFTER TAX
\n
- - - 560
\n
\n
attributable to minority interests - - - 0
\n
\n
attributable to equity holders of the parent - - - 560
\n
2021
\n
\n
Earned premiums, insurance (before reinsurance)
\n
1 196 1 905 0 3 101
\n
\n
of which changes in the provision for unearned premiums -1 -48 0 -49
\n
Technical charges, insurance (before reinsurance)
\n
-1 150 -1 106 0 -2 256
\n
\n
Claims paid -1 163 -872 0 -2 036
\n
\n
Change in technical provisions -1 -223 0 -224
\n
\n
Other technical result 14 -10 0 4
\n
Net fee and commission income
\n
-5 -367 0 -372
\n
Ceded reinsurance result
\n
-2 27 0 25
\n
General administrative expenses
\n
-149 -255 -2 -407
\n
\n
Internal claims settlement expenses -9 -59 0 -68
\n
\n
Indirect acquisition costs -31 -68 0 -98
\n
\n
Administrative expenses -109 -128 0 -238
\n
\n
Investment management fees 0 0 -2 -2
\n
Technical result
\n
-110 204 -2 91
\n
Investment income*
\n
382 92 69 543
\n
Technical
\n
-financial result 271 296 66 634
\n
Share in results of associated companies and joint ventures
\n
\u2013 \u2013 0 0
\n
RESULT BEFORE TAX
\n
271 296 66 634
\n
Income tax expense
\n
\u2013 \u2013 \u2013 -125
\n
RESULT AFTER TAX
\n
\u2013 \u2013 \u2013 508
\n
\n
attributable to minority interests \u2013 \u2013 \u2013 0
\n
\n
attributable to equity holders of the parent \u2013 \u2013 \u2013 508
\n
* Investment income (in millions of euros, for 2022 and 2021, respectively) comprises: \u2018Net interest income\u2019 (428, 398), \u2018Net dividend income\u2019 (39, 31), \u2018Net result from financial instruments at fair
\n
value through profit or loss\u2019 (91, 117), \u2018Other net income\u2019 (-9, 1), \u2018Net realised result from debt instruments at fair value through OCI\u2019 (-16, -2) and \u2018Impairment\u2019 (1, -3). The \u2018Non-technical account\u2019
\n
also includes the results from non-insurance subsidiaries, such as VAB group and ADD, and a number of real estate companies. They have been included in the note for the \u2018insurance business\u2019
\n
given that they are KBC Insurance subsidiaries (but as they cannot be recognised under \u2018Life\u2019 or \u2018Non-life\u2019, they are included under \u2018Non-technical account\u2019). The \u2018Non-technical account\u2019 also
\n
includes the investment income from equity (i.e. mainly interest income from bonds).
\n

\n\n

\n\n

\n\n
\u2022 The figures relating to earned premiums do not include investment contracts without DPF, which largely correspond to unit-
\n
linked contracts. The margin on these products is recognised under \u2018Net fee and commission income\u2019.
\n
\u2022 \u2018Non-life technical charges\u2019 consist mainly of paid claims, changes in claims provisions, changes in the deficiency provision,
\n
recourse received, changes in recourse estimations and other technical charges. \u2018Life technical charges\u2019 consist primarily of
\n
paid claims, changes in claims provisions, changes in the life insurance provision, changes in the provision for (non-unbundled)
\n
unit-linked products, bonuses (profit-sharing), changes in the deficiency provision and other technical charges.
\n
\u2022 An overview of the insurer\u2019s investment portfolio can be found in the \u2018How do we manage our risks?\u2019 section (in the \u2018Investment
\n
portfolio of KBC group insurance entities\u2019 table, which constitutes part of the financial statements).
\n
\u2022 In the vast majority of cases, internal acquisition costs are recognised immediately in the income statement (i.e. not spread).
\n
\u2022 In 2022, the non-life technical result was negatively impacted by factors including extreme weather conditions, such as flooding
\n
and storms (especially in Belgium, having a gross impact of 107 million euros, which comes down to 53 million euros after
\n
reinsurance). In 2021, the non-life technical result was negatively impacted by factors including the tornado in the Czech
\n
Republic and even more so by heavy flooding in Belgium (the gross impact of the latter totalled 110 million euros, which comes
\n
down to 87 million euros after reinsurance, 45 million euros of which above the legal limit (i.e. the ceiling introduced in Belgian
\n
law on the intervention of insurers in the event of very large floods), but which is still within the limit agreed between the Belgian
\n
insurance sector and the Walloon government). In 2022, the Life and Non-life technical result benefited from a release of
\n
technical reserves in the Czech Republic (31 million euros and 10 million euros, respectively) resulting from a reassessment of the
\n
confidence level of technical provisions.
\n
\u2022 More information on the acquisition of certain life and pension insurance policies from NN in Bulgaria in 2021 is provided in Note
\n
6.6.
\n
\u2022 See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\n
Reconciliation of the earned premiums stated in the consolidated income statement
\n
and in Note 3.7.1 (in millions of EUR)
\n
2022
\n
2021
\n
Non
\n
-life insurance (before reinsurance) \u2013 Earned premiums
\n
In the consolidated income statement
\n
2 033 1 885
\n
Addition of premiums from intragroup transactions between bank and insurer
\n
21 20
\n
In Note 3.7.1
\n
2 054 1 905
\n
Life insurance (before reinsurance)
\n
\u2013 Earned premiums
\n
In the consolidated income statement
\n
1 163 1 196
\n
Addition of premiums from intragroup transactions between bank and insurer
\n
1 1
\n
In Note 3.7.1
\n
1 163 1 196
\n

\n\n
Note 3.7.3: Non-life insurance
\n
\n
Technical insurance
\n
Operating
\n
Earned premiums
\n
charges
\n
expenses
\n
(before
\n
(before
\n
(before
\n
Ceded
\n
(in millions of EUR)
\n
reinsurance)
\n
reinsurance)
\n
reinsurance)
\n
reinsurance
\n
Total
\n
2022
\n
\n
Total
\n
2 054 -1 154 -688 1 213
\n
Accepted reinsurance
\n
30 -26 -10 18 12
\n
Primary business
\n
2 024 -1 128 -678 -17 201
\n
Accident & health (classes 1 & 2, excl. industrial accidents)
\n
128 -60 -41 0 27
\n
Industrial accidents (class 1)
\n
94 -95 -18 -1 -21
\n
Motor, third
\n
-party liability (class 10) 525 -321 -156 -2 45
\n
Motor, other classes (classes 3 & 7)
\n
360 -212 -124 -1 23
\n
Shipping, aviation, transport (classes 4, 5, 6, 7, 11 & 12)
\n
9 -2 -3 -2 2
\n
Fire and other damage to property (classes 8 & 9)
\n
622 -327 -231 -5 58
\n
General third
\n
-party liability (class 13) 156 -45 -51 -6 54
\n
Credit and suretyship (classes 14 & 15)
\n
0 0 0 0 0
\n
Miscellaneous pecuniary losses
\n
(class 16) 30 -13 -11 1 7
\n
Legal assistance (class 17)
\n
65 -40 -23 0 2
\n
Assistance (class 18)
\n
36 -11 -20 0 4
\n
2021
\n
\n
Total
\n
1 905 -1 106 -622 27 204
\n
Accepted reinsurance
\n
27 -11 -9 -3 4
\n
Primary business
\n
1 878 -1 095 -614 30 200
\n
Accident & health (classes 1 & 2, excl. industrial accidents)
\n
123 -53 -40 0 28
\n
Industrial accidents (class 1)
\n
89 -77 -16 0 -4
\n
Motor, third
\n
-party liability (class 10) 512 -305 -148 -4 55
\n
Motor, other classes (classes 3 & 7)
\n
320 -179 -108 3 36
\n
Shipping, aviation, transport (classes 4, 5, 6, 7, 11 & 12)
\n
7 -2 -2 -1 1
\n
Fire and other damage to property (classes 8 & 9)
\n
569 -343 -211 28 44
\n
General third
\n
-party liability (class 13) 142 -92 -46 1 6
\n
Credit and suretyship (classes 14 & 15)
\n
0 0 0 0 0
\n
Miscellaneous pecuniary losses (class 16)
\n
22 -9 -8 3 9
\n
Legal assistance (class 17)
\n
62 -28 -22 0 13
\n
Assistance (class 18)
\n
31 -6 -13 0 12
\n

\n\n
Overview of ceded reinsurance assets and insurance contract obligations, in millions of EUR, 01-01-2022
\n
Total
\n
PAA
\n
BBA
\n
VFA
\n
Ceded reinsurance assets
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
By portfolio
\n
13 13 - -
\n
\n
- Life -18 -18 - -
\n
\n
- Non-life 32 32 - -
\n
Insurance contract obligations
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
By
\n
portfolio, profitability label, product and business unit
\n
\n
19 912
\n
\n
2 739
\n
\n
16 157
\n
\n
1 016
\n
Total Life
\n
16 847 60 15 771 1 016
\n
By profitability label
\n
\n
\n
- Profitable contracts 16 466 - - -
\n
\n
- Doubtful contracts 0 - - -
\n
\n
- Onerous contracts 381 - - -
\n
By product
\n
\n
\n
- Unit-linked contracts 899 0 0 899
\n
\n
- Non-unit-linked contracts 15 700 60 15 640 0
\n
\n
- Hybrid contracts 248 0 131 117
\n
By business unit
\n
\n
- Belgium 14 906 59 14 847 0
\n
- Czech Republic 1 157 0 630 527
\n
- International Markets 784 1 294 489
\n
- Group Centre 0 0 0 0
\n
Total Non
\n
-life 3 065 2 679 386 0
\n
By profitability label
\n
\n
\n
\n
- Profitable contracts
\n
\n
2 802 - - -
\n
\n
- Doubtful contracts
\n
\n
183 - - -
\n
\n
- Onerous contracts
\n
\n
80 - - -
\n
By product
\n
\n
\n
- Personal insurance 1 096 710 386 -
\n
\n
- Liabilities 1 385 1 385 0 -
\n
\n
- Property, incl. other 583 583 0 -
\n
By business unit
\n
\n
\n
- Belgium 2 470 2 084 386 0
\n
\n
- Czech Republic 305 305 0 0
\n
\n
- International Markets 276 276 0 0
\n
\n
- Group Centre 14 14 0 0
\n
By component
\n
\n
\n
19 912
\n
\n
2 739
\n
\n
16 157
\n
\n
1 016
\n
LRC
\n
17 447 428 16 023 996
\n
\n
- Best estimate 15 383 - 14 540 844
\n
\n
- Risk adjustment 178 - 170 9
\n
\n
- CSM 1 383 - 1 240 142
\n
\n
- Loss component 76 - 74 2
\n
\n
- LRC PAA 428 428 - -
\n
LIC
\n
2 465 2 312 134 19
\n
\n
- Best estimate 2 193 2 044 130 19
\n
\n
- Risk adjustment 272 268 4 0
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfReinsuranceExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag823": { "value": "\n

\n\n
Note 3.7.2: Life insurance
\n
\n
2022 2021
\n
(in millions of EUR)
\n
Total
\n
1 163 1 196
\n
By
\n
IFRS category
\n
Insurance contracts
\n
884 900
\n
Investment contracts with DPF
\n
280 296
\n
By type
\n
\n
Accepted reinsurance
\n
0 0
\n
Primary business
\n
1 163 1 196
\n
Breakdown of primary business
\n
\n
Individual premiums
\n
816 831
\n
\n
Single premiums 44 61
\n
\n
Periodic premiums 773 770
\n
Premiums under group contracts
\n
347 365
\n
\n
Single premiums 26 50
\n
\n
Periodic premiums 321 315
\n
Total sales of life insurance (including investment contracts without DPF)
\n
\n
Unit
\n
-linked 1 089 942
\n
Guaranteed
\n
-rate 996 1 022
\n
Total
\n
2 085 1 964
\n
\n
\u2022 As required under IFRS, we use deposit accounting for a number of investment contracts without DPF. This means that the
\n
premium income and technical charges from these contracts are not recognised under \u2018Earned premiums\u2019 and \u2018Technical
\n
charges\u2019, but that the margins on them are reported under \u2018Net fee and commission income\u2019. Investment contracts without DPF
\n

\n\n

\n\n

\n\n
are more or less the same as unit-linked contracts, which in 2021 accounted for premium income of 0.9 billion euros and in 2022
\n
for premium income of 1.1 billion euros. Premium income generated by investment contracts without DPF (under deposit
\n
accounting) is included in \u2018Total sales of life insurance\u2019, as presented in the lower part of the table. These sale volumes,
\n
therefore, comprise earned insurance premiums plus premiums from contracts that are subject to deposit accounting.
\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.1: Financial assets and liabilities, breakdown by portfolio and product
\n
(in millions of EUR)
\n
Measured
\n
at
\n
amortised
\n
cost (AC)
\n
Measured
\n
at fair
\n
value
\n
through
\n
other
\n
compre-
\n
hensive
\n
income
\n
(FVOCI)
\n
Mandatorily
\n
measured at
\n
fair value
\n
through
\n
profit or loss
\n
(MFVPL) excl.
\n
HFT and
\n
overlay
\n
Measured at
\n
fair value \u2013
\n
overlay
\n
approach
\n
(overlay)
\n
Held for
\n
trading
\n
(HFT)
\n
Desig-
\n
nated at
\n
fair value
\n
1
\n
(FVO)
\n
Hedging
\n
Deriva-
\n
tives
\n
Total
\n
Total pro
\n
forma
\n
excluding
\n
KBC Bank
\n
Bulgaria
\n
(formerly
\n
Raiffeisen-
\n
bank
\n
Bulgaria)
\n
FINANCIAL ASSETS, 31-12-2022
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
4 240 0 13 0 1 0 0 4 254
\n
4 203
\n
of which loans and advances to banks repayable on
\n
demand and term loans to banks at not more than three
\n
months
\n
\n
1 237 1 237
\n
Loans and advances to customers (excluding reverse
\n
repos)
\n
177 427 0 625 0 0 0 0 178 053
\n
174 083
\n
Trade receivables
\n
2 818
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 818
\n
2 729
\n
Consumer credit
\n
6 222
\n
0
\n
430
\n
0
\n
0
\n
0
\n
0
\n
6 652
\n
5 977
\n
Mortgage loans
\n
73 465
\n
0
\n
196
\n
0
\n
0
\n
0
\n
0
\n
73 660
\n
72 891
\n
Term loans
\n
82 894
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
82 894
\n
80 744
\n
Finance lease
\n
6 368
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
6 368
\n
6 117
\n
Current account advances
\n
4 886
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 886
\n
4 885
\n
Other
\n
774
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
774
\n
740
\n
Reverse repos
\n
2
\n
\n
20 186
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 219
\n
20 219
\n
with credit institutions and investment firms
\n
20 018
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 050
\n
20 050
\n
with customers
\n
168
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
168
\n
168
\n
Equity instruments
\n
0
\n
315
\n
13
\n
1 237
\n
430
\n
0
\n
0
\n
1 994
\n
1 989
\n
Investment contracts (insurance)
\n
6
\n
\n
0
\n
0
\n
12 771
\n
0
\n
0
\n
0
\n
0
\n
12 771
\n
12 771
\n
Debt securities
\n
52 030
\n
11 813
\n
17
\n
0
\n
1 728
\n
0
\n
0
\n
65 588
\n
64 871
\n
Public bodies
\n
44 219
\n
8 135
\n
0
\n
0
\n
1 667
\n
0
\n
0
\n
54 021
\n
53 390
\n
Credit institutions and investment firms
\n
5 160
\n
1 621
\n
0
\n
0
\n
9
\n
0
\n
0
\n
6 790
\n
6 747
\n
Corporates
\n
2 651
\n
2 057
\n
17
\n
0
\n
53
\n
0
\n
0
\n
4 777
\n
4 733
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
6 279
\n
0
\n
542
\n
6 821
\n
6 813
\n
3
\n
\n
Other
\n
1 561
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
1 561
\n
1 561
\n
Total
\n
255 444
\n
12 128
\n
13 439
\n
1 237
\n
8 471
\n
0
\n
542
\n
291 262
\n
286 511
\n
FINANCIAL ASSETS, 31-12-2021
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
7 920 0 0 0 1 0 0 7 920
\n
-
\n
of which loans and advances to banks repayable on demand
\n
and term loans to banks at not more than three months
\n
3 146 -
\n
Loans and advances to customers (excl. reverse repos)
\n
159 167
\n
0
\n
560
\n
0
\n
0
\n
0
\n
0
\n
159 728
\n
-
\n
Trade receivables
\n
2 090
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 090
\n
-
\n
Consumer credit
\n
5 470
\n
0
\n
381
\n
0
\n
0
\n
0
\n
0
\n
5 851
\n
-
\n
Mortgage loans
\n
67 486
\n
0
\n
179
\n
0
\n
0
\n
0
\n
0
\n
67 665
\n
-
\n
Term loans
\n
72 998
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
72 998
\n
-
\n
Finance lease
\n
5 815
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
5 815
\n
-
\n
Current account advances
\n
4 819
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 819
\n
-
\n
Other
\n
490
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
490
\n
-
\n
2
\n
-
\n
\n
Reverse repos
\n
24 978
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 978
\n
with credit institutions and investment firms
\n
24 861
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 861
\n
-
\n
with customers
\n
117
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
117
\n
-
\n
Equity instruments
\n
0
\n
321
\n
8
\n
1 366
\n
448
\n
0
\n
0
\n
2 144
\n
-
\n
6
\n
-
\n
\n
Investment contracts (insurance)
\n
0
\n
0
\n
14 620
\n
0
\n
0
\n
0
\n
0
\n
14 620
\n
Debt securities
\n
47 172
\n
15 503
\n
17
\n
0
\n
2 958
\n
0
\n
0
\n
65 650
\n
-
\n
Public bodies
\n
41 475
\n
10 514
\n
0
\n
0
\n
2 517
\n
0
\n
0
\n
54 507
\n
-
\n
Credit institutions and investment firms
\n
3 310
\n
2 245
\n
0
\n
0
\n
357
\n
0
\n
0
\n
5 912
\n
-
\n
Corporates
\n
2 387
\n
2 744
\n
17
\n
0
\n
84
\n
0
\n
0
\n
5 232
\n
-
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
5 443
\n
0
\n
283
\n
5 727
\n
-
\n
3
\n
-
\n
\n
Other
\n
892
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
892
\n
Total
\n
240 128
\n
15 824
\n
15 205
\n
1 366
\n
8 850
\n
0
\n
283
\n
281 658
\n
-
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
(in millions of EUR)
\n
Measured at
\n
amortised
\n
cost
\n
(AC)
\n
Held for
\n
trading (HFT)
\n
Designated at
\n
fair value (FVO)
\n
\n
Hedging
\n
derivatives
\n
Total
\n
Total pro forma
\n
excluding KBC
\n
Bank Bulgaria
\n
(formerly
\n
Raiffeisenbank
\n
Bulgaria)
\n
FINANCIAL
\n
LIABILITIES, 31-12-2022
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
24 819 0 0 0 24 819
\n
24 737
\n
of which deposits from banks repayable on demand
\n
\n
\n
\n
\n
\n
\n
\n
5 085 5 085
\n
Deposits from customers and debt
\n
securities (excl. repos)
\n
\n
251 496 44 1 205 0 252 746
\n
247 585
\n
\n
Demand deposits 122 053 0 0 0 122 053 117 401
\n
\n
Time deposits 22 280 44 73 0 22 397 21 960
\n
\n
Savings accounts 76 979 0 0 0 76 979 76 954
\n
\n
Special deposits 2 710 0 0 0 2 710 2 663
\n
\n
Other deposits 268 0 0 0 268 268
\n
Subtotal deposits from customers (excl. repos)
\n
224 290 44 73 0 224 407 219 246
\n
\n
Certificates of deposit 9 321 0 1 0 9 322 9 322
\n
\n
Savings certificates 104 0 0 0 104 104
\n
\n
Non-convertible bonds 15 621 0 1 006 0 16 627 16 627
\n
\n
Non-convertible subordinated liabilities 2 160 0 126 0 2 285 2 285
\n
Repos
\n
4
\n
11 091 7 0 0 11 097
\n
11 097
\n
\n
with credit institutions and investment firms 10 852 7 0 0 10 859 10 859
\n
\n
with customers 239 0 0 0 239 239
\n
Liabilities under investment contracts
\n
6
\n
0 0 12 002 0 12 002
\n
12 002
\n
Derivatives
\n
0 8 038 0 577 8 615
\n
8 605
\n
Short positions
\n
0 1 007 0 0 1 007
\n
1 007
\n
\n
In equity instruments 0 5 0 0 5 5
\n
\n
In debt securities 0 1 002 0 0 1 002 1 002
\n
Other
\n
5
\n
2 448 0 0 0 2 448
\n
2 370
\n
Total
\n
289 854 9 096 13 207 577 312 735
\n
307 403
\n
FINANCIAL LIABILITIES, 31
\n
-12-2021
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
38 047 0 0 0 38 047
\n
-
\n
of which deposits from banks repayable on demand 4 695 -
\n
Deposits from
\n
customers and debt securities (excl. repos)
\n
\n
224 759 21 1 312 0 226 093
\n
-
\n
\n
Demand deposits 112 097 0 0 0 112 097
\n
-
\n
\n
Time deposits 9 106 21 60 0 9 187
\n
-
\n
\n
Savings accounts 74 801 0 0 0 74 801
\n
-
\n
\n
Special deposits 2 962 0 0 0 2 962
\n
-
\n
\n
Other deposits 428 0 0 0 428
\n
-
\n
Subtotal deposits from customers (excl. repos)
\n
199 395 21 60 0 199 476
\n
-
\n
\n
Certificates of deposit 6 273 0 0 0 6 273
\n
-
\n
\n
Savings certificates 253 0 0 0 253
\n
-
\n
\n
Non-convertible bonds 15 892 0 1 118 0 17 011
\n
-
\n
\n
Non-convertible subordinated liabilities 2 946 0 134 0 3 080
\n
-
\n
Repos
\n
4
\n
3 293 2 0 0 3 295
\n
-
\n
\n
with credit institutions and investment firms 2 888 2 0 0 2 890
\n
-
\n
\n
with customers 405 0 0 0 405
\n
-
\n
Liabilities under investment
\n
contracts
\n
6
\n
0 0 13 603 0 13 603
\n
-
\n
Derivatives
\n
0 5 619 0 1 094 6 713
\n
-
\n
Short positions
\n
0 1 628 0 0 1 628
\n
-
\n
\n
In equity instruments 0 18 0 0 18
\n
-
\n
\n
In debt securities 0 1 611 0 0 1 611
\n
-
\n
Other
\n
5
\n
2 288 0 0 0 2 288
\n
-
\n
Total
\n
268 387 7 271 14 916 1 094 291 667
\n
-
\n
1 The carrying value comes close to the maximum credit exposure.
\n
2 The amount of the reverse repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out).
\n
3 Financial assets not included under \u2018Loans and advances to customers\u2019 as they are not directly related to commercial lending.
\n
4 The amount of the repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out), with the assets being partly reflected on the balance sheet
\n
and partly obtained through reverse repo transactions.
\n
5 Financial liabilities not included under deposits from customers as they are not directly related to commercial deposit acquisition.
\n
6 The difference between \u2018Investment contracts (insurance)\u2019 and \u2018Liabilities under investment contracts\u2019 is accounted for by the presentation of non-unbundled investment contracts that are
\n
included under \u2018Investment contracts (insurance)\u2019 on the financial assets side, but are included under \u2018Technical provisions (before reinsurance)\u2019 on the liabilities side.
\n

\n\n

\n\n

\n\n

\n\n

\n\n\n
\u2022 \u2018Non-convertible bonds\u2019 comprise mainly KBC Bank, KBC Group, \u010cSOB and KBC IFIMA issues. They are usually recognised under
\n
\u2018Measured at amortised cost\u2019. However, if they contain closely related embedded derivatives, they are recorded under
\n
\u2018Designated at fair value\u2019 (see accounting policies). This item also includes three green bonds (for 500, 500 and 750 million euros
\n
each) and a social bond (for 750 million euros), which have been recognised at amortised cost.
\n
\u2022 More information on major new debt issues or redemptions is provided under the \u2018Consolidated cashflow statement\u2019.
\n
\u2022 \u2018Deposits from credit institutions and investment firms\u2019 include funding obtained from the ECB\u2019s TLTRO programme (15.4 billion
\n
euros at year-end 2022, 9.1 billion euros less than at year-end 2021 on account of redemptions). KBC calculates these deposits
\n
using the effective interest rate method, with the rate being adjusted should we fail to meet the conditions (similar to a floating
\n
rate instrument), as per paragraph B.5.4.5 of IFRS 9. KBC\u2019s management has reasonable assurance that KBC will comply with
\n
the conditions attached (including the level of lending to households and non-financial companies) and hence the interest has
\n
accordingly been recognised (a gross amount of 112 million euros in interest income (negative interest rate) in 2022 and 242
\n
million euros in 2021).
\n
\u2022 Transferred financial assets that continue to be recognised in their entirety: KBC regularly lends and/or sells securities with the
\n
commitment to buy them back at a later date (repo transactions). Securities lent or sold with such a commitment are transferred
\n
to the counterparty, and, in exchange, KBC receives cash or other financial assets. However, KBC retains the main risks and
\n
income relating to these securities, and, therefore, continues to recognise them on its balance sheet. In addition, a financial
\n
liability is recognised equalling the cash received.
\n
\n
Transferred financial assets that continue to be recognised in their entirety (carrying value, in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Transferred financial assets that continue to be recognised in their entirety: repo transactions and securities lent out
\n
17 425 13 762
\n
Held for
\n
trading 960 1 221
\n
Fair value through OCI
\n
860 1 474
\n
Amortised cost
\n
15 605 11 067
\n
Associated financial liability
\n
10 534 2 936
\n
Held for trading
\n
689 335
\n
Fair value through OCI
\n
609 362
\n
Amortised cost
\n
9 236 2 239
\n
\n
\u2022 It should be noted that KBC has more transferred financial assets on its balance sheet than repo transactions, due to the fact
\n
that the cash legs of certain repo transactions are offset against reverse repo transactions if they are carried out with the same
\n
counterparty, in the same currency and with the same maturity date. Moreover, there is a legally enforceable right, and an
\n
intention, to settle the transactions on a net basis or to realise the financial asset and settle the financial liability simultaneously.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria in 2022 is provided in Note 6.6.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. We report on estimated greenhouse gas emissions
\n
associated with lending and other activities and have defined objectives for reducing the greenhouse gas intensity of loans
\n
we have provided to the energy sector, electricity producers and the real estate sector, mortgage loans and loans provided
\n
for commercial residential real estate, as well as loans provided to the automotive industry and financial and operational car
\n
leasing (see Note 6.2), the agricultural sector, and cement, steel and aluminium producers. See \u2018Focus on climate\u2019 in the \u2018Report
\n
of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our Climate Report and
\n
\n
our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfNetAssetValueAttributableToUnitholdersExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag828": { "value": "\n
Note 3.7.2: Life insurance
\n
\n
2022 2021
\n
(in millions of EUR)
\n
Total
\n
1 163 1 196
\n
By
\n
IFRS category
\n
Insurance contracts
\n
884 900
\n
Investment contracts with DPF
\n
280 296
\n
By type
\n
\n
Accepted reinsurance
\n
0 0
\n
Primary business
\n
1 163 1 196
\n
Breakdown of primary business
\n
\n
Individual premiums
\n
816 831
\n
\n
Single premiums 44 61
\n
\n
Periodic premiums 773 770
\n
Premiums under group contracts
\n
347 365
\n
\n
Single premiums 26 50
\n
\n
Periodic premiums 321 315
\n
Total sales of life insurance (including investment contracts without DPF)
\n
\n
Unit
\n
-linked 1 089 942
\n
Guaranteed
\n
-rate 996 1 022
\n
Total
\n
2 085 1 964
\n
\n
\u2022 As required under IFRS, we use deposit accounting for a number of investment contracts without DPF. This means that the
\n
premium income and technical charges from these contracts are not recognised under \u2018Earned premiums\u2019 and \u2018Technical
\n
charges\u2019, but that the margins on them are reported under \u2018Net fee and commission income\u2019. Investment contracts without DPF
\n

\n\n
are more or less the same as unit-linked contracts, which in 2021 accounted for premium income of 0.9 billion euros and in 2022
\n
for premium income of 1.1 billion euros. Premium income generated by investment contracts without DPF (under deposit
\n
accounting) is included in \u2018Total sales of life insurance\u2019, as presented in the lower part of the table. These sale volumes,
\n
therefore, comprise earned insurance premiums plus premiums from contracts that are subject to deposit accounting.
\n

\n\n

\n\n

\n\n
Note 4.1: Financial assets and liabilities, breakdown by portfolio and product
\n
(in millions of EUR)
\n
Measured
\n
at
\n
amortised
\n
cost (AC)
\n
Measured
\n
at fair
\n
value
\n
through
\n
other
\n
compre-
\n
hensive
\n
income
\n
(FVOCI)
\n
Mandatorily
\n
measured at
\n
fair value
\n
through
\n
profit or loss
\n
(MFVPL) excl.
\n
HFT and
\n
overlay
\n
Measured at
\n
fair value \u2013
\n
overlay
\n
approach
\n
(overlay)
\n
Held for
\n
trading
\n
(HFT)
\n
Desig-
\n
nated at
\n
fair value
\n
1
\n
(FVO)
\n
Hedging
\n
Deriva-
\n
tives
\n
Total
\n
Total pro
\n
forma
\n
excluding
\n
KBC Bank
\n
Bulgaria
\n
(formerly
\n
Raiffeisen-
\n
bank
\n
Bulgaria)
\n
FINANCIAL ASSETS, 31-12-2022
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
4 240 0 13 0 1 0 0 4 254
\n
4 203
\n
of which loans and advances to banks repayable on
\n
demand and term loans to banks at not more than three
\n
months
\n
\n
1 237 1 237
\n
Loans and advances to customers (excluding reverse
\n
repos)
\n
177 427 0 625 0 0 0 0 178 053
\n
174 083
\n
Trade receivables
\n
2 818
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 818
\n
2 729
\n
Consumer credit
\n
6 222
\n
0
\n
430
\n
0
\n
0
\n
0
\n
0
\n
6 652
\n
5 977
\n
Mortgage loans
\n
73 465
\n
0
\n
196
\n
0
\n
0
\n
0
\n
0
\n
73 660
\n
72 891
\n
Term loans
\n
82 894
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
82 894
\n
80 744
\n
Finance lease
\n
6 368
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
6 368
\n
6 117
\n
Current account advances
\n
4 886
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 886
\n
4 885
\n
Other
\n
774
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
774
\n
740
\n
Reverse repos
\n
2
\n
\n
20 186
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 219
\n
20 219
\n
with credit institutions and investment firms
\n
20 018
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 050
\n
20 050
\n
with customers
\n
168
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
168
\n
168
\n
Equity instruments
\n
0
\n
315
\n
13
\n
1 237
\n
430
\n
0
\n
0
\n
1 994
\n
1 989
\n
Investment contracts (insurance)
\n
6
\n
\n
0
\n
0
\n
12 771
\n
0
\n
0
\n
0
\n
0
\n
12 771
\n
12 771
\n
Debt securities
\n
52 030
\n
11 813
\n
17
\n
0
\n
1 728
\n
0
\n
0
\n
65 588
\n
64 871
\n
Public bodies
\n
44 219
\n
8 135
\n
0
\n
0
\n
1 667
\n
0
\n
0
\n
54 021
\n
53 390
\n
Credit institutions and investment firms
\n
5 160
\n
1 621
\n
0
\n
0
\n
9
\n
0
\n
0
\n
6 790
\n
6 747
\n
Corporates
\n
2 651
\n
2 057
\n
17
\n
0
\n
53
\n
0
\n
0
\n
4 777
\n
4 733
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
6 279
\n
0
\n
542
\n
6 821
\n
6 813
\n
3
\n
\n
Other
\n
1 561
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
1 561
\n
1 561
\n
Total
\n
255 444
\n
12 128
\n
13 439
\n
1 237
\n
8 471
\n
0
\n
542
\n
291 262
\n
286 511
\n
FINANCIAL ASSETS, 31-12-2021
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
7 920 0 0 0 1 0 0 7 920
\n
-
\n
of which loans and advances to banks repayable on demand
\n
and term loans to banks at not more than three months
\n
3 146 -
\n
Loans and advances to customers (excl. reverse repos)
\n
159 167
\n
0
\n
560
\n
0
\n
0
\n
0
\n
0
\n
159 728
\n
-
\n
Trade receivables
\n
2 090
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 090
\n
-
\n
Consumer credit
\n
5 470
\n
0
\n
381
\n
0
\n
0
\n
0
\n
0
\n
5 851
\n
-
\n
Mortgage loans
\n
67 486
\n
0
\n
179
\n
0
\n
0
\n
0
\n
0
\n
67 665
\n
-
\n
Term loans
\n
72 998
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
72 998
\n
-
\n
Finance lease
\n
5 815
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
5 815
\n
-
\n
Current account advances
\n
4 819
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 819
\n
-
\n
Other
\n
490
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
490
\n
-
\n
2
\n
-
\n
\n
Reverse repos
\n
24 978
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 978
\n
with credit institutions and investment firms
\n
24 861
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 861
\n
-
\n
with customers
\n
117
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
117
\n
-
\n
Equity instruments
\n
0
\n
321
\n
8
\n
1 366
\n
448
\n
0
\n
0
\n
2 144
\n
-
\n
6
\n
-
\n
\n
Investment contracts (insurance)
\n
0
\n
0
\n
14 620
\n
0
\n
0
\n
0
\n
0
\n
14 620
\n
Debt securities
\n
47 172
\n
15 503
\n
17
\n
0
\n
2 958
\n
0
\n
0
\n
65 650
\n
-
\n
Public bodies
\n
41 475
\n
10 514
\n
0
\n
0
\n
2 517
\n
0
\n
0
\n
54 507
\n
-
\n
Credit institutions and investment firms
\n
3 310
\n
2 245
\n
0
\n
0
\n
357
\n
0
\n
0
\n
5 912
\n
-
\n
Corporates
\n
2 387
\n
2 744
\n
17
\n
0
\n
84
\n
0
\n
0
\n
5 232
\n
-
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
5 443
\n
0
\n
283
\n
5 727
\n
-
\n
3
\n
-
\n
\n
Other
\n
892
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
892
\n
Total
\n
240 128
\n
15 824
\n
15 205
\n
1 366
\n
8 850
\n
0
\n
283
\n
281 658
\n
-
\n

\n\n

\n\n

\n\n

\n\n
\n
(in millions of EUR)
\n
Measured at
\n
amortised
\n
cost
\n
(AC)
\n
Held for
\n
trading (HFT)
\n
Designated at
\n
fair value (FVO)
\n
\n
Hedging
\n
derivatives
\n
Total
\n
Total pro forma
\n
excluding KBC
\n
Bank Bulgaria
\n
(formerly
\n
Raiffeisenbank
\n
Bulgaria)
\n
FINANCIAL
\n
LIABILITIES, 31-12-2022
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
24 819 0 0 0 24 819
\n
24 737
\n
of which deposits from banks repayable on demand
\n
\n
\n
\n
\n
\n
\n
\n
5 085 5 085
\n
Deposits from customers and debt
\n
securities (excl. repos)
\n
\n
251 496 44 1 205 0 252 746
\n
247 585
\n
\n
Demand deposits 122 053 0 0 0 122 053 117 401
\n
\n
Time deposits 22 280 44 73 0 22 397 21 960
\n
\n
Savings accounts 76 979 0 0 0 76 979 76 954
\n
\n
Special deposits 2 710 0 0 0 2 710 2 663
\n
\n
Other deposits 268 0 0 0 268 268
\n
Subtotal deposits from customers (excl. repos)
\n
224 290 44 73 0 224 407 219 246
\n
\n
Certificates of deposit 9 321 0 1 0 9 322 9 322
\n
\n
Savings certificates 104 0 0 0 104 104
\n
\n
Non-convertible bonds 15 621 0 1 006 0 16 627 16 627
\n
\n
Non-convertible subordinated liabilities 2 160 0 126 0 2 285 2 285
\n
Repos
\n
4
\n
11 091 7 0 0 11 097
\n
11 097
\n
\n
with credit institutions and investment firms 10 852 7 0 0 10 859 10 859
\n
\n
with customers 239 0 0 0 239 239
\n
Liabilities under investment contracts
\n
6
\n
0 0 12 002 0 12 002
\n
12 002
\n
Derivatives
\n
0 8 038 0 577 8 615
\n
8 605
\n
Short positions
\n
0 1 007 0 0 1 007
\n
1 007
\n
\n
In equity instruments 0 5 0 0 5 5
\n
\n
In debt securities 0 1 002 0 0 1 002 1 002
\n
Other
\n
5
\n
2 448 0 0 0 2 448
\n
2 370
\n
Total
\n
289 854 9 096 13 207 577 312 735
\n
307 403
\n
FINANCIAL LIABILITIES, 31
\n
-12-2021
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
38 047 0 0 0 38 047
\n
-
\n
of which deposits from banks repayable on demand 4 695 -
\n
Deposits from
\n
customers and debt securities (excl. repos)
\n
\n
224 759 21 1 312 0 226 093
\n
-
\n
\n
Demand deposits 112 097 0 0 0 112 097
\n
-
\n
\n
Time deposits 9 106 21 60 0 9 187
\n
-
\n
\n
Savings accounts 74 801 0 0 0 74 801
\n
-
\n
\n
Special deposits 2 962 0 0 0 2 962
\n
-
\n
\n
Other deposits 428 0 0 0 428
\n
-
\n
Subtotal deposits from customers (excl. repos)
\n
199 395 21 60 0 199 476
\n
-
\n
\n
Certificates of deposit 6 273 0 0 0 6 273
\n
-
\n
\n
Savings certificates 253 0 0 0 253
\n
-
\n
\n
Non-convertible bonds 15 892 0 1 118 0 17 011
\n
-
\n
\n
Non-convertible subordinated liabilities 2 946 0 134 0 3 080
\n
-
\n
Repos
\n
4
\n
3 293 2 0 0 3 295
\n
-
\n
\n
with credit institutions and investment firms 2 888 2 0 0 2 890
\n
-
\n
\n
with customers 405 0 0 0 405
\n
-
\n
Liabilities under investment
\n
contracts
\n
6
\n
0 0 13 603 0 13 603
\n
-
\n
Derivatives
\n
0 5 619 0 1 094 6 713
\n
-
\n
Short positions
\n
0 1 628 0 0 1 628
\n
-
\n
\n
In equity instruments 0 18 0 0 18
\n
-
\n
\n
In debt securities 0 1 611 0 0 1 611
\n
-
\n
Other
\n
5
\n
2 288 0 0 0 2 288
\n
-
\n
Total
\n
268 387 7 271 14 916 1 094 291 667
\n
-
\n
1 The carrying value comes close to the maximum credit exposure.
\n
2 The amount of the reverse repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out).
\n
3 Financial assets not included under \u2018Loans and advances to customers\u2019 as they are not directly related to commercial lending.
\n
4 The amount of the repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out), with the assets being partly reflected on the balance sheet
\n
and partly obtained through reverse repo transactions.
\n
5 Financial liabilities not included under deposits from customers as they are not directly related to commercial deposit acquisition.
\n
6 The difference between \u2018Investment contracts (insurance)\u2019 and \u2018Liabilities under investment contracts\u2019 is accounted for by the presentation of non-unbundled investment contracts that are
\n
included under \u2018Investment contracts (insurance)\u2019 on the financial assets side, but are included under \u2018Technical provisions (before reinsurance)\u2019 on the liabilities side.
\n

\n\n

\n\n

\n\n\n
\u2022 \u2018Non-convertible bonds\u2019 comprise mainly KBC Bank, KBC Group, \u010cSOB and KBC IFIMA issues. They are usually recognised under
\n
\u2018Measured at amortised cost\u2019. However, if they contain closely related embedded derivatives, they are recorded under
\n
\u2018Designated at fair value\u2019 (see accounting policies). This item also includes three green bonds (for 500, 500 and 750 million euros
\n
each) and a social bond (for 750 million euros), which have been recognised at amortised cost.
\n
\u2022 More information on major new debt issues or redemptions is provided under the \u2018Consolidated cashflow statement\u2019.
\n
\u2022 \u2018Deposits from credit institutions and investment firms\u2019 include funding obtained from the ECB\u2019s TLTRO programme (15.4 billion
\n
euros at year-end 2022, 9.1 billion euros less than at year-end 2021 on account of redemptions). KBC calculates these deposits
\n
using the effective interest rate method, with the rate being adjusted should we fail to meet the conditions (similar to a floating
\n
rate instrument), as per paragraph B.5.4.5 of IFRS 9. KBC\u2019s management has reasonable assurance that KBC will comply with
\n
the conditions attached (including the level of lending to households and non-financial companies) and hence the interest has
\n
accordingly been recognised (a gross amount of 112 million euros in interest income (negative interest rate) in 2022 and 242
\n
million euros in 2021).
\n
\u2022 Transferred financial assets that continue to be recognised in their entirety: KBC regularly lends and/or sells securities with the
\n
commitment to buy them back at a later date (repo transactions). Securities lent or sold with such a commitment are transferred
\n
to the counterparty, and, in exchange, KBC receives cash or other financial assets. However, KBC retains the main risks and
\n
income relating to these securities, and, therefore, continues to recognise them on its balance sheet. In addition, a financial
\n
liability is recognised equalling the cash received.
\n
\n
Transferred financial assets that continue to be recognised in their entirety (carrying value, in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Transferred financial assets that continue to be recognised in their entirety: repo transactions and securities lent out
\n
17 425 13 762
\n
Held for
\n
trading 960 1 221
\n
Fair value through OCI
\n
860 1 474
\n
Amortised cost
\n
15 605 11 067
\n
Associated financial liability
\n
10 534 2 936
\n
Held for trading
\n
689 335
\n
Fair value through OCI
\n
609 362
\n
Amortised cost
\n
9 236 2 239
\n
\n
\u2022 It should be noted that KBC has more transferred financial assets on its balance sheet than repo transactions, due to the fact
\n
that the cash legs of certain repo transactions are offset against reverse repo transactions if they are carried out with the same
\n
counterparty, in the same currency and with the same maturity date. Moreover, there is a legally enforceable right, and an
\n
intention, to settle the transactions on a net basis or to realise the financial asset and settle the financial liability simultaneously.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria in 2022 is provided in Note 6.6.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. We report on estimated greenhouse gas emissions
\n
associated with lending and other activities and have defined objectives for reducing the greenhouse gas intensity of loans
\n
we have provided to the energy sector, electricity producers and the real estate sector, mortgage loans and loans provided
\n
for commercial residential real estate, as well as loans provided to the automotive industry and financial and operational car
\n
leasing (see Note 6.2), the agricultural sector, and cement, steel and aluminium producers. See \u2018Focus on climate\u2019 in the \u2018Report
\n
of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our Climate Report and
\n
\n
our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n\n

\n\n
Overview of ceded reinsurance assets and insurance contract obligations, in millions of EUR, 01-01-2022
\n
Total
\n
PAA
\n
BBA
\n
VFA
\n
Ceded reinsurance assets
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
By portfolio
\n
13 13 - -
\n
\n
- Life -18 -18 - -
\n
\n
- Non-life 32 32 - -
\n
Insurance contract obligations
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
By
\n
portfolio, profitability label, product and business unit
\n
\n
19 912
\n
\n
2 739
\n
\n
16 157
\n
\n
1 016
\n
Total Life
\n
16 847 60 15 771 1 016
\n
By profitability label
\n
\n
\n
- Profitable contracts 16 466 - - -
\n
\n
- Doubtful contracts 0 - - -
\n
\n
- Onerous contracts 381 - - -
\n
By product
\n
\n
\n
- Unit-linked contracts 899 0 0 899
\n
\n
- Non-unit-linked contracts 15 700 60 15 640 0
\n
\n
- Hybrid contracts 248 0 131 117
\n
By business unit
\n
\n
- Belgium 14 906 59 14 847 0
\n
- Czech Republic 1 157 0 630 527
\n
- International Markets 784 1 294 489
\n
- Group Centre 0 0 0 0
\n
Total Non
\n
-life 3 065 2 679 386 0
\n
By profitability label
\n
\n
\n
\n
- Profitable contracts
\n
\n
2 802 - - -
\n
\n
- Doubtful contracts
\n
\n
183 - - -
\n
\n
- Onerous contracts
\n
\n
80 - - -
\n
By product
\n
\n
\n
- Personal insurance 1 096 710 386 -
\n
\n
- Liabilities 1 385 1 385 0 -
\n
\n
- Property, incl. other 583 583 0 -
\n
By business unit
\n
\n
\n
- Belgium 2 470 2 084 386 0
\n
\n
- Czech Republic 305 305 0 0
\n
\n
- International Markets 276 276 0 0
\n
\n
- Group Centre 14 14 0 0
\n
By component
\n
\n
\n
19 912
\n
\n
2 739
\n
\n
16 157
\n
\n
1 016
\n
LRC
\n
17 447 428 16 023 996
\n
\n
- Best estimate 15 383 - 14 540 844
\n
\n
- Risk adjustment 178 - 170 9
\n
\n
- CSM 1 383 - 1 240 142
\n
\n
- Loss component 76 - 74 2
\n
\n
- LRC PAA 428 428 - -
\n
LIC
\n
2 465 2 312 134 19
\n
\n
- Best estimate 2 193 2 044 130 19
\n
\n
- Risk adjustment 272 268 4 0
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentContractsLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag833": { "value": "\n

\n\n

\n\n

\n
Note 3.8: Operating expenses
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
-4 818 -4 396
\n
Staff expenses
\n
- 2 561 -2 457
\n
General administrative expenses
\n
-1 883 -1 583
\n
\n
ICT -558 -462
\n
\n
Facility expenses -224 -210
\n
\n
Marketing and communications -109 -86
\n
\n
Professional service fees -157 -125
\n
\n
Other -190 -175
\n
\n
Bank taxes -646 -525
\n
Depreciation and amortisation of fixed assets
\n
-374 -356
\n
\n
\u2022 The total expenses went up by 10% in 2022 compared to 2021.
\n
\u2022 The most important non-operating and/or exceptional items in this respect were the inclusion of the acquired Raiffeisenbank
\n
Bulgaria in the scope of consolidation and the associated integration expenses with effect from July 2022, the payment of a
\n
one-off coronavirus-related bonus to staff in 2021 and an exceptional profit bonus in 2022, one-off expenses related to the
\n
sale transactions in Ireland in 2022 and 2021, and exceptional additional bank taxes in Hungary in 2022. Excluding the non-
\n
operating and/or exceptional items and exchange rate effects, the total expenses went up by 7%, due mainly to indexation
\n
and wage drift and higher ICT costs.
\n
\u2022 For information on the average number of persons employed, see Note 3.9; information on the remuneration of members of the
\n
Executive Committee and the Board of Directors is provided under \u2018Remuneration report\u2019 in the \u2018Corporate governance
\n
statement\u2019 section; details of the statutory auditor\u2019s remuneration (PWC) are provided in Note 6.4.
\n\n
\u2022 Share-based employee benefits are included under \u2018Staff expenses\u2019: since 2000, KBC has launched several stock option plans
\n
for its employees. There were no longer any outstanding options at year-end 2021 and 2022.
\n

\n\n
\u2022 Information on the capital increase reserved for KBC group employees can be found in the \u2018Company annual accounts and
\n
additional information\u2019 section. In 2022, this resulted in the recognition of a limited employee benefit (2 million euros) as the
\n
issue price was lower than the market price. Information regarding the price of the KBC share can be found in the \u2018Report of
\n
the Board of Directors\u2019 section.
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesByNatureExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag806": { "value": "\n

\n\n

\n
Note 3.8: Operating expenses
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
-4 818 -4 396
\n
Staff expenses
\n
- 2 561 -2 457
\n
General administrative expenses
\n
-1 883 -1 583
\n
\n
ICT -558 -462
\n
\n
Facility expenses -224 -210
\n
\n
Marketing and communications -109 -86
\n
\n
Professional service fees -157 -125
\n
\n
Other -190 -175
\n
\n
Bank taxes -646 -525
\n
Depreciation and amortisation of fixed assets
\n
-374 -356
\n
\n
\u2022 The total expenses went up by 10% in 2022 compared to 2021.
\n
\u2022 The most important non-operating and/or exceptional items in this respect were the inclusion of the acquired Raiffeisenbank
\n
Bulgaria in the scope of consolidation and the associated integration expenses with effect from July 2022, the payment of a
\n
one-off coronavirus-related bonus to staff in 2021 and an exceptional profit bonus in 2022, one-off expenses related to the
\n
sale transactions in Ireland in 2022 and 2021, and exceptional additional bank taxes in Hungary in 2022. Excluding the non-
\n
operating and/or exceptional items and exchange rate effects, the total expenses went up by 7%, due mainly to indexation
\n
and wage drift and higher ICT costs.
\n
\u2022 For information on the average number of persons employed, see Note 3.9; information on the remuneration of members of the
\n
Executive Committee and the Board of Directors is provided under \u2018Remuneration report\u2019 in the \u2018Corporate governance
\n
statement\u2019 section; details of the statutory auditor\u2019s remuneration (PWC) are provided in Note 6.4.
\n\n
\u2022 Share-based employee benefits are included under \u2018Staff expenses\u2019: since 2000, KBC has launched several stock option plans
\n
for its employees. There were no longer any outstanding options at year-end 2021 and 2022.
\n

\n\n
\u2022 Information on the capital increase reserved for KBC group employees can be found in the \u2018Company annual accounts and
\n
additional information\u2019 section. In 2022, this resulted in the recognition of a limited employee benefit (2 million euros) as the
\n
issue price was lower than the market price. Information regarding the price of the KBC share can be found in the \u2018Report of
\n
the Board of Directors\u2019 section.
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag816": { "value": "\n

\n
Note 3.8: Operating expenses
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
-4 818 -4 396
\n
Staff expenses
\n
- 2 561 -2 457
\n
General administrative expenses
\n
-1 883 -1 583
\n
\n
ICT -558 -462
\n
\n
Facility expenses -224 -210
\n
\n
Marketing and communications -109 -86
\n
\n
Professional service fees -157 -125
\n
\n
Other -190 -175
\n
\n
Bank taxes -646 -525
\n
Depreciation and amortisation of fixed assets
\n
-374 -356
\n
\n
\u2022 The total expenses went up by 10% in 2022 compared to 2021.
\n
\u2022 The most important non-operating and/or exceptional items in this respect were the inclusion of the acquired Raiffeisenbank
\n
Bulgaria in the scope of consolidation and the associated integration expenses with effect from July 2022, the payment of a
\n
one-off coronavirus-related bonus to staff in 2021 and an exceptional profit bonus in 2022, one-off expenses related to the
\n
sale transactions in Ireland in 2022 and 2021, and exceptional additional bank taxes in Hungary in 2022. Excluding the non-
\n
operating and/or exceptional items and exchange rate effects, the total expenses went up by 7%, due mainly to indexation
\n
and wage drift and higher ICT costs.
\n
\u2022 For information on the average number of persons employed, see Note 3.9; information on the remuneration of members of the
\n
Executive Committee and the Board of Directors is provided under \u2018Remuneration report\u2019 in the \u2018Corporate governance
\n
statement\u2019 section; details of the statutory auditor\u2019s remuneration (PWC) are provided in Note 6.4.
\n\n
\u2022 Share-based employee benefits are included under \u2018Staff expenses\u2019: since 2000, KBC has launched several stock option plans
\n
for its employees. There were no longer any outstanding options at year-end 2021 and 2022.
\n

\n\n
\u2022 Information on the capital increase reserved for KBC group employees can be found in the \u2018Company annual accounts and
\n
additional information\u2019 section. In 2022, this resulted in the recognition of a limited employee benefit (2 million euros) as the
\n
issue price was lower than the market price. Information regarding the price of the KBC share can be found in the \u2018Report of
\n
the Board of Directors\u2019 section.
\n

\n\n

\n\n

\n
Note 5.4: Property and equipment and investment property
\n
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Property and equipment
\n
2 989 3 050
\n
Investment property
\n
571 518
\n
Rental income
\n
50 57
\n
Direct operating expenses from investments generating rental income
\n
15 15
\n
Direct operating expenses from investments not generating rental
\n
income 1 2
\n
MOVEMENTS TABLE
\n
Land and
\n
buildings
\n
IT
\n
equipment
\n
Other
\n
equipment
\n
Total property
\n
and equipment
\n
Investment property
\n
2022
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
1 479 117 1 454 3 050 518
\n
Acquisitions
\n
37 68 470 575 85
\n
Disposals
\n
-30 -1 -204 -235 -13
\n
Depreciation
\n
-120 -60 -25 -205 -31
\n
Other movements
\n
7 6 -209 -196 12
\n
Closing balance
\n
1 373 130 1 486 2 989 571
\n
\n
accumulated depreciation and impairment 1 570 446 876 2 892 376
\n
Fair value
\n
\u2013 \u2013 \u2013 \u2013 827
\n
2021
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
1 561 138 1 437 3 136 555
\n
Acquisitions
\n
113 43 448 603 15
\n
Disposals
\n
-57 -4 -205 -266 -17
\n
Depreciation
\n
-119 -64 -24 -207 -33
\n
Other movements
\n
-19 4 -201 -216 -2
\n
Closing balance
\n
1 479 117 1 454 3 050 518
\n
accumulated depreciation and impairment 1 487 446 832 2 766 412
\n
Fair value
\n
\u2013 \u2013 \u2013 \u2013 792
\n
\n\n
\u2022 Annual rates of depreciation: mainly 3% for buildings (including investment property), 33% for IT equipment, between 5% and
\n
33% for other equipment. No depreciation is charged for land.
\n

\n\n
\u2022 There was a small amount (around 0.4 billion euros) for commitments for the acquisition of property and equipment. There are
\n
no material restrictions on title, or on property and equipment pledged as security for liabilities.
\n
\u2022 Most investment property is valued by an independent expert on a regular basis and by in-house specialists on an annual
\n
basis, based primarily on the capitalisation of the estimated rental value and on unit prices of similar real property. Account is
\n
taken of all the market inputs available on the date of the assessment (including location and market situation, type of building
\n
and construction, state of repair, use, etc.).
\n
\u2022 Certain other investment property is valued annually by in-house specialists based on the current annual rental per building
\n
and expected rental movements and on an individual capitalisation rate per building.
\n
\u2022 The impact of the heavy flooding and other extreme weather conditions in 2022 and 2021 on property and equipment and
\n
investment property (in this case, our branch network) and on the associated impairment was insignificant. For more
\n
information, see \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\u2022 The impact of our own activities as a bank-insurer on the environment is very limited, especially when compared to industrial
\n
companies and our indirect impact through lending and other activities, and stems mainly from our buildings and vehicles
\n
(commuting). We nevertheless also calculate our own direct greenhouse gas impact and apply certain targets in that regard.
\n
See \u2018Focus on climate\u2019 in the \u2018Report of the Board of Directors\u2019 section for a more detailed explanation. More details can also
\n
be found in our Climate Report and our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n
Note 5.5: Goodwill and other intangible assets
\n
\n\n

\n\n
(in millions of EUR)
\n
Goodwill
\n
Software
\n
developed
\n
in-house
\n
Software
\n
developed
\n
externally
\n
Other
\n
Total
\n
2022
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
913 559 263 13 1 749
\n
Acquisitions
\n
438 262 73 9 783
\n
Disposals
\n
0 0 -1 -3 -4
\n
Amortisation
\n
0 -90 -78 -1 -169
\n
Other movements
\n
-6 -12 -8 -2 -28
\n
Closing balance
\n
1 346 719 250 16 2 331
\n
\n
accumulated amortisation and impairment 260 646 836 56 1 797
\n
2021
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
845 386 301 20 1 551
\n
Acquisitions
\n
56 234 84 9 383
\n
Disposals
\n
0 0 -12 -10 -21
\n
Amortisation
\n
0 -62 -85 -2 -149
\n
Other movements
\n
12 1 -24 -3 -14
\n
Closing balance
\n
913 559 263 13 1 749
\n
\n
accumulated amortisation and impairment 255 794 859 53 1 961
\n

\n\n

\n\n
\n\n
\u2022 Goodwill: includes the goodwill paid on companies included in the scope of consolidation and relating to the acquisition of
\n
activities. Goodwill paid on associated companies: included in the nominal value of \u2018Investments in associated companies\u2019
\n
shown on the balance sheet.
\n
\u2022 For goodwill in respect of recent acquisitions, see Note 6.6.
\n
\u2022 Impairment testing: a test was carried out to establish whether impairment on goodwill had to be recognised (see table and
\n
Note 3.10). This impairment test is performed at least once a year. We also carry out a high level assessment on a quarterly
\n
basis to see whether there is an indication of impairment. In the test, each entity is regarded as a separate cash-generating
\n
unit. Each entity has a specific risk profile and it is rare to have different profiles within a single entity.
\n
\u2022 Impairment on goodwill under IAS 36: recognised in profit or loss if the recoverable amount of an investment is lower than its
\n
carrying value. The recoverable amount is defined as the higher of the value in use (calculated based on discounted cashflow
\n
analysis) and the fair value (calculated based on multiple analysis, etc.) less costs to sell.
\n
\u2022 The main group companies to which goodwill relates are listed in the table. All of these companies have been valued using the
\n
discounted cashflow method. The discounted cashflow method calculates the recoverable amount of an investment as the
\n
present value of all future free cashflows of the business. This method is based on long-term projections about the company\u2019s
\n
business and the resulting cashflows (i.e. projections for a number of years ahead and the residual value of the business at the
\n
end of the specific projection period). These long-term projections are the result of an assessment of past and present
\n
performances combined with external sources of information on future performances in the respective markets and the global
\n
macroeconomic environment. Consequently, in cases where sustainability aspects and products/projects have been factored
\n
into the underlying financial projections, this will also affect the valuation. The ultimate growth rate is determined using a long-
\n
term average market growth rate. The present value of these future cashflows is calculated using a compound discount rate
\n
which is based on the capital asset pricing model (CAPM). A country-specific risk-free rate and a market-risk premium
\n
(multiplied by an activity beta) are also used in the calculation. KBC has developed two distinct discounted cashflow models,
\n
viz. a bank model and an insurance model. Free cashflows in both cases are the dividends that can be paid out to the
\n
company\u2019s shareholders, account taken of the minimum capital requirements.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Discount rates throughout the specific period
\n
of cashflow projections
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
K&H Bank
\n
173 188 17.3%-13.3% 11.4%-10.6%
\n
\u010cSOB (Czech Republic)
\n
259 251 13.9%-12.8% 10.6%-8.7%
\n
\u010cSOB Stavebn\u00ed sporitelna
\n
176 171 13.2%-12.8% 10.6%-8.8%
\n
United Bulgarian Bank and Raiffeisenbank Bulgaria
\n
(now KBC Bank Bulgaria)
\n
544 110 12.5%-12.2% 10.6%-9.2%
\n
DZI Insurance
\n
75 75 10.5%-8.1% 8.6%-7.2%
\n
KBC Commercial Finance
\n
21 21 9.9%-9.9% 8.8%-8.7%
\n
Pension Insurance Company UBB
\n
56 56 9.3%-9.1% -
\n
Rest
\n
42 42 \u2013 \u2013
\n
Total
\n
1 346 913 \u2013 \u2013
\n
\n
\u2022 The period to which the cashflow budgets and projections relate is 10 years in most cases. This longer period is used to take
\n
account of current strong growth in the Central and Eastern European countries, where the growth rate is expected to develop
\n
towards a more moderate level in the longer term.
\n
\u2022 The growth rate used to extrapolate the cashflow projections after that period is equal to the expected long-term growth rate
\n
of the gross domestic product. This rate depends on the country and varied between 3.2% and 4.7% in 2022 (between 1.2% and
\n
1.7% in 2021).
\n
\u2022 The discount rates applied have been raised considerably since last year, but on a net basis they only have a limited impact
\n
on valuations given the higher cashflow budgets resulting from improved net interest income.
\n
\u2022 No sensitivity analysis was carried out for entities where the recoverable amount exceeded the carrying value to such a large
\n
extent that no reasonably possible change in the key assumptions would result in the recoverable amount being less than or
\n
equal to the carrying value. The table gives an indication for the other entities of the change in key assumptions that would
\n
lead to their recoverable amount equalling their carrying value.
\n
\n
Change in key assumptions
\n
1
\n
\n
Increase in
\n
discount rate
\n
2
\n
\n
Decrease in
\n
terminal growth
\n
rate
\n
Increase in
\n
targeted solvency
\n
ratio
\n
3
\n
\n
Decrease in
\n
annual net profit
\n
Increase in annual
\n
impairment
\n
charges
\n
\u010cSOB Stavebn\u00ed sporitelna
\n
2.5% 8.0% 6.4% 12% -
\n
United Bulgarian Bank and Raiffeisenbank Bulgaria
\n
(now KBC Bank Bulgaria)
\n
0.6% 4.2% 1.0% 6% 38%
\n
Pension Insurance Company UBB
\n
4.0%
\n
-
\n
-
\n
47%
\n
-
\n
1 Needless to say account should be taken of the fact that a change in these assumptions could affect other assumptions used to calculate the recoverable amount.
\n
2 Based on a parallel shift and absolute increase in the discount rate curve. Discount rates are in the 15.7%-15.3% bracket for \u010cSOB Stavebn\u00ed sporitelna, the 13.1%-12.8% bracket for United
\n
Bulgarian Bank and KBC Bank Bulgaria, and in the 13.3%-13.1% bracket for Pension Insurance Company UBB.
\n
3 Absolute increase in the tier-1 capital ratio.
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag812": { "value": "\n
\u2022 Share-based employee benefits are included under \u2018Staff expenses\u2019: since 2000, KBC has launched several stock option plans
\n
for its employees. There were no longer any outstanding options at year-end 2021 and 2022.
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag824": { "value": "\n
Note 3.9: Personnel
\n
\n
(number)
\n
2022 2021
\n
Total average number of persons employed (in full
\n
-time equivalents) 37 946 37 194
\n
By legal entity
\n
\n
KBC Bank
\n
28 741 28 558
\n
KBC Insurance
\n
4 024 3 953
\n
KBC Group NV (holding company) and KBC Global Services NV (cost
\n
-sharing structure) 5 181 4 683
\n
By employee classification
\n
\n
\n
Blue
\n
-collar staff 389 383
\n
White
\n
-collar staff 37 306 36 558
\n
Senior management
\n
251 253
\n
\n
\u2022 The figures in the table are annual averages, which \u2013 in terms of scope \u2013 may differ from year-end figures that are provided
\n
elsewhere.
\n
\u2022 The 2022 figures contain the acquired Raiffeisenbank Bulgaria (now renamed KBC Bank Bulgaria) for six months and still contain
\n
KBC Bank Ireland, as the sale had not yet been finalised at year-end 2022.
\n

\n\n
Transactions with key management (members of the Board of Directors and Executive Committee of
\n
KBC Group NV) (in millions of EUR)*
\n
2022
\n
2021
\n
Total*
\n
13 14
\n
Breakdown by type of remuneration
\n
\n
Short
\n
-term employee benefits 11 10
\n
Post
\n
-employment benefits 2 2
\n
\n
Defined benefit plans 0 0
\n
\n
Defined contribution plans 2 2
\n
Other long
\n
-term employee benefits 0 0
\n
Termination benefits
\n
0 2
\n
Share
\n
-based payments 0 0
\n
Stock options (units)
\n
\n
At the beginning of the period
\n
0 0
\n
Granted
\n
0 0
\n
Exercised
\n
0 0
\n
Composition
\n
-related changes 0 0
\n
At the end of the period
\n
0 0
\n
\n
Advances and loans granted to key management and partners 1 1
\n
* Remuneration to key management or partners of the consolidating company on the basis of their activity in that company, its subsidiaries and associated companies, including the
\n
amount of retirement pensions granted to former key management staff on that basis.
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag836": { "value": "\n

\n

\n

\n\n

\n
Note 3.10: Impairment (income statement)
\n
\n
\n

\n\n

\n\n
2022 2021
\n
(in millions of EUR*)
\n
Total
\n
-284 261
\n
Impairment on financial assets at AC and at FVOCI
\n
-154 334
\n
(impairment on loans)
\n
By IFRS category
\n
\n
\n
Financial assets at amortised cost -155 330
\n
\n
Financial assets at fair value through OCI 1 4
\n
By product
\n
\n
\n
Loans and advances -177 315
\n
\n
Debt securities -2 3
\n
\n
Off-balance-sheet commitments and financial guarantees 25 15
\n
By type
\n
\n
\n
Stage 1 (12-month ECL) 5 74
\n
\n
Stage 2 (lifetime ECL) -106 449
\n
\n
Stage 3 (lifetime ECL) -60 -191
\n
\n
Purchased or originated credit impaired assets 8 2
\n
By business unit/country
\n
\n
\n
Belgium -35 309
\n
\n
Czech Republic -46 142
\n
\n
International Markets -78 -110
\n
\n
Slovakia -19 16
\n
\n
Hungary -29 22
\n
\n
Bulgaria -30 2
\n
\n
Ireland in 2021 - -149
\n
\n
Group Centre 5 -7
\n
\n
Of which Ireland in 2022 7 -
\n
Impairment on goodwill
\n
-5 -7
\n
Impairment on other
\n
-125 -65
\n
Intangible fixed assets (other than goodwill)
\n
-34 -35
\n
Property and
\n
equipment (including investment property) -18 -17
\n
Associated companies and joint ventures
\n
0 0
\n
Other
\n
-73 -13
\n
* Positive figures indicate a reversal and hence a positive impact on results
\n

\n\n

\n\n
\n
\n
\u2022 Impairment on loans:
\n
\u25e6 In 2022, this item included a full reversal of the remaining 255 million euros in coronavirus-related ECL (see Note 1.4), net
\n
provisioning of 413 million euros for geopolitical and emerging risks (see Note 1.4), net provisioning of 17 million euros related to
\n
the sale transactions in Ireland (see Note 6.6) and a net reversal of 21 million euros for several individual loans.
\n
\u25e6 In 2021, this item included a net reversal of collective coronavirus-related ECL totalling 494 million euros (see Note 1.4), net
\n
provisioning of 178 million euros related to the sale transactions in Ireland (see Note 6.6) and a net reversal of 18 million euros
\n
for several individual loans.
\n
\u2022 The impact of the extreme weather conditions, including flooding and storms, in 2022 and 2021 on (impairment on) loans was
\n
insignificant.
\n
\u2022 Impairment on other:
\n
\u25e6 In 2022, this item included an impairment of tangible and intangible assets relating to the sale transactions in Ireland,
\n
impairment of real estate and modification losses related to the provision of the interest cap regulation in Hungary.
\n
\u25e6 In 2021, this item included impairment of tangible and intangible assets relating to the sale transactions in Ireland and
\n
modification losses.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. Based on internal management reports, the
\n
composition and quality of the loan portfolio is set out in detail in the \u2018How do we manage our risks?\u2019 section (under \u2018Credit
\n
risk\u2019). All parts of that particular section which have been audited by the statutory auditor are listed at the start of the section.
\n
Among other things, this section also provides more information on impaired loans (Stage 3).
\n
\u2022 For information on total impairment recognised in the balance sheet, see Note 4.2.
\n
\u2022 More background information and methodology for KBC\u2019s ECL model is provided in the accounting policies under \u2018Financial
\n
assets \u2013 impairment\u2019 in Note 1.2.
\n

\n\n

\n\n

\n\n

\n
\u2022 KBC uses specific models for PD, EAD and LGD in order to calculate ECL. It is essential to take account of historical observations
\n
and forward-looking projections in this respect.
\n
- PD represents the probability of a counterparty defaulting in the next 12 months or during the entire term of the facility
\n
(depending on which IFRS 9 \u2018Stage\u2019 the facility is in). The PD is determined by the counterparty\u2019s internal (and, if applicable,
\n
external) credit rating. Variables used in PD models include financial ratios and behavioural parameters (arrears).
\n
- EAD represents the estimated outstanding debt at the time of default and depends on the existing outstanding debt and
\n
any changes permitted under the contract and normal repayments. Variables used in these models include product types
\n
and repayment schedules.
\n
- LGD is the estimated size of the loss relative to the outstanding debt at the time of default. LGD is presented as a percentage
\n
of the outstanding debt and is determined by historical amounts recovered on similar claims. Variables used in these models
\n
include collateral types and financial ratios.
\n
\u2022 On 31 December 2022, there were around 80 different IFRS 9 models. In addition to several group-wide models, we have
\n
separate PD, EAD and LGD models for each of our core countries. In accordance with the Basel grouping approach, we use
\n
the type of counterparty (private individuals, SMEs, companies, governments, etc.) to determine the scope of an IFRS 9 model.
\n
Each model allows for differentiation in terms of facility type (term loans, revolving facilities, etc.) and collateral type (mortgages,
\n
pledges on business assets, guarantees, etc.). Examples of IFRS 9 models include \u2018Banks\u2019, \u2018Belgian private persons \u2013 home
\n
loans\u2019, \u2018Czech corporates\u2019, \u2018Bulgarian corporates and SMEs\u2019 and \u2018Central governments\u2019. Detailed documentation is available
\n
for each PD, EAD and LGD model. The main models are subject to review by external auditors. The Basel models, which the IFRS
\n
9 models are based on, are subject to external control performed by the supervisory authorities.
\n\n

\n\n
\u2022 We create the models for the various portfolios using typical PD, EAD and LGD inputs, as well as macroeconomic variables to
\n
the extent that there is a statistical relationship. The macroeconomic variables are GDP growth, the unemployment rate, policy
\n
interest rates, the exchange rate, government bond yields, house prices and inflation. As a result of regular back-testing,
\n
models may change and macroeconomic variables may be reassessed. Note 1.4 presents the optimistic, pessimistic and base-
\n
case scenarios for the three key indicators (GDP growth, unemployment rate and house price index) for each of our core
\n
countries.
\n
\u2022 As set out under \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section, KBC considers ESG risks in
\n
its credit risk management processes. The vulnerability of individual clients to specific ESG risks may become apparent during
\n
the term of the loan in client-specific credit risk figures, such as credit risk ratings and collateral valuations affecting the ECL
\n
calculation. Especially in terms of climate risk, which may have considerable consequences for certain sectors in the longer
\n
term, the impact on our loan portfolio is not expected to occur within the time horizon considered for the ECL measurement.
\n
\u2022 Our ECL models are not able to adequately reflect all the specifics of the direct and indirect consequences of the war in Ukraine
\n
and the coronavirus crisis. Therefore, an expert-based calculation at portfolio level has been performed that takes due account
\n
of the macroeconomic situation (see Note 1.4).
\n
\u2022 We use three different forward-looking macroeconomic scenarios (with different probability weightings) to measure ECL. The
\n
weightings at year-end 2022 were 60% for the \u2018base\u2019 scenario, 5% for the \u2018up\u2019 scenario and 35% for the \u2018down\u2019 scenario. The
\n
forecast horizon is 30 years. For further information on the key macroeconomic parameters, see Note 1.4.
\n
\u2022 A sensitivity analysis of the impact of these multiple economic scenarios on the collectively assessed ECL (i.e. without the ECL
\n
for individually assessed loans of 1.6 billion euros at the end of 2022 and 1.7 billion euros at the end of 2021) shows that the \u2018base\u2019
\n
scenario generates an ECL of 1.0 billion euros (0.9 billion euros in 2021), which is 0.1 billion euros lower than for the \u2018down\u2019 scenario
\n
(0.1 billion euros in 2021) and 0.0 billion euros higher than for the \u2018up\u2019 scenario (0.1 billion euros in 2021). The assessed scenario-
\n
weighted collective ECL (that was recognised) amounted to 1.0 billion euros (0.9 billion euros in 2021). These amounts take into
\n
account the ECL relating to geopolitical and emerging risks at year-end 2022 (see Note 1.4).
\n
\n
100%
\n
100%
\n
100%
\n
Collectively assessed ECL by country (2022, in billions of EUR)
\n
\n
pessimistic
\n
base-case scenario
\n
optimistic scenario
\n
scenario
\n
Total
\n
1.0 1.0 1.1
\n
Belgium
\n
0.3 0.3 0.3
\n
Czech Republic
\n
0.3 0.3 0.4
\n
Slovakia
\n
0.1 0.1 0.1
\n
Hungary
\n
0.1 0.1 0.1
\n
Bulgaria
\n
0.2 0.1 0.2
\n
Rest
\n
0.0 0.0 0.0
\n

\n\n

\n\n

\n\n

\n\n

\n
Note 5.4: Property and equipment and investment property
\n
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Property and equipment
\n
2 989 3 050
\n
Investment property
\n
571 518
\n
Rental income
\n
50 57
\n
Direct operating expenses from investments generating rental income
\n
15 15
\n
Direct operating expenses from investments not generating rental
\n
income 1 2
\n
MOVEMENTS TABLE
\n
Land and
\n
buildings
\n
IT
\n
equipment
\n
Other
\n
equipment
\n
Total property
\n
and equipment
\n
Investment property
\n
2022
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
1 479 117 1 454 3 050 518
\n
Acquisitions
\n
37 68 470 575 85
\n
Disposals
\n
-30 -1 -204 -235 -13
\n
Depreciation
\n
-120 -60 -25 -205 -31
\n
Other movements
\n
7 6 -209 -196 12
\n
Closing balance
\n
1 373 130 1 486 2 989 571
\n
\n
accumulated depreciation and impairment 1 570 446 876 2 892 376
\n
Fair value
\n
\u2013 \u2013 \u2013 \u2013 827
\n
2021
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
1 561 138 1 437 3 136 555
\n
Acquisitions
\n
113 43 448 603 15
\n
Disposals
\n
-57 -4 -205 -266 -17
\n
Depreciation
\n
-119 -64 -24 -207 -33
\n
Other movements
\n
-19 4 -201 -216 -2
\n
Closing balance
\n
1 479 117 1 454 3 050 518
\n
accumulated depreciation and impairment 1 487 446 832 2 766 412
\n
Fair value
\n
\u2013 \u2013 \u2013 \u2013 792
\n
\n\n
\u2022 Annual rates of depreciation: mainly 3% for buildings (including investment property), 33% for IT equipment, between 5% and
\n
33% for other equipment. No depreciation is charged for land.
\n

\n\n
\u2022 There was a small amount (around 0.4 billion euros) for commitments for the acquisition of property and equipment. There are
\n
no material restrictions on title, or on property and equipment pledged as security for liabilities.
\n
\u2022 Most investment property is valued by an independent expert on a regular basis and by in-house specialists on an annual
\n
basis, based primarily on the capitalisation of the estimated rental value and on unit prices of similar real property. Account is
\n
taken of all the market inputs available on the date of the assessment (including location and market situation, type of building
\n
and construction, state of repair, use, etc.).
\n
\u2022 Certain other investment property is valued annually by in-house specialists based on the current annual rental per building
\n
and expected rental movements and on an individual capitalisation rate per building.
\n
\u2022 The impact of the heavy flooding and other extreme weather conditions in 2022 and 2021 on property and equipment and
\n
investment property (in this case, our branch network) and on the associated impairment was insignificant. For more
\n
information, see \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\u2022 The impact of our own activities as a bank-insurer on the environment is very limited, especially when compared to industrial
\n
companies and our indirect impact through lending and other activities, and stems mainly from our buildings and vehicles
\n
(commuting). We nevertheless also calculate our own direct greenhouse gas impact and apply certain targets in that regard.
\n
See \u2018Focus on climate\u2019 in the \u2018Report of the Board of Directors\u2019 section for a more detailed explanation. More details can also
\n
be found in our Climate Report and our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n\n

\n

\n
Note 5.5: Goodwill and other intangible assets
\n
\n\n

\n\n
(in millions of EUR)
\n
Goodwill
\n
Software
\n
developed
\n
in-house
\n
Software
\n
developed
\n
externally
\n
Other
\n
Total
\n
2022
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
913 559 263 13 1 749
\n
Acquisitions
\n
438 262 73 9 783
\n
Disposals
\n
0 0 -1 -3 -4
\n
Amortisation
\n
0 -90 -78 -1 -169
\n
Other movements
\n
-6 -12 -8 -2 -28
\n
Closing balance
\n
1 346 719 250 16 2 331
\n
\n
accumulated amortisation and impairment 260 646 836 56 1 797
\n
2021
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
845 386 301 20 1 551
\n
Acquisitions
\n
56 234 84 9 383
\n
Disposals
\n
0 0 -12 -10 -21
\n
Amortisation
\n
0 -62 -85 -2 -149
\n
Other movements
\n
12 1 -24 -3 -14
\n
Closing balance
\n
913 559 263 13 1 749
\n
\n
accumulated amortisation and impairment 255 794 859 53 1 961
\n

\n\n

\n\n
\n\n
\u2022 Goodwill: includes the goodwill paid on companies included in the scope of consolidation and relating to the acquisition of
\n
activities. Goodwill paid on associated companies: included in the nominal value of \u2018Investments in associated companies\u2019
\n
shown on the balance sheet.
\n
\u2022 For goodwill in respect of recent acquisitions, see Note 6.6.
\n
\u2022 Impairment testing: a test was carried out to establish whether impairment on goodwill had to be recognised (see table and
\n
Note 3.10). This impairment test is performed at least once a year. We also carry out a high level assessment on a quarterly
\n
basis to see whether there is an indication of impairment. In the test, each entity is regarded as a separate cash-generating
\n
unit. Each entity has a specific risk profile and it is rare to have different profiles within a single entity.
\n
\u2022 Impairment on goodwill under IAS 36: recognised in profit or loss if the recoverable amount of an investment is lower than its
\n
carrying value. The recoverable amount is defined as the higher of the value in use (calculated based on discounted cashflow
\n
analysis) and the fair value (calculated based on multiple analysis, etc.) less costs to sell.
\n
\u2022 The main group companies to which goodwill relates are listed in the table. All of these companies have been valued using the
\n
discounted cashflow method. The discounted cashflow method calculates the recoverable amount of an investment as the
\n
present value of all future free cashflows of the business. This method is based on long-term projections about the company\u2019s
\n
business and the resulting cashflows (i.e. projections for a number of years ahead and the residual value of the business at the
\n
end of the specific projection period). These long-term projections are the result of an assessment of past and present
\n
performances combined with external sources of information on future performances in the respective markets and the global
\n
macroeconomic environment. Consequently, in cases where sustainability aspects and products/projects have been factored
\n
into the underlying financial projections, this will also affect the valuation. The ultimate growth rate is determined using a long-
\n
term average market growth rate. The present value of these future cashflows is calculated using a compound discount rate
\n
which is based on the capital asset pricing model (CAPM). A country-specific risk-free rate and a market-risk premium
\n
(multiplied by an activity beta) are also used in the calculation. KBC has developed two distinct discounted cashflow models,
\n
viz. a bank model and an insurance model. Free cashflows in both cases are the dividends that can be paid out to the
\n
company\u2019s shareholders, account taken of the minimum capital requirements.
\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag814": { "value": "\n

\n
Note 3.10: Impairment (income statement)
\n
\n
\n

\n\n

\n\n
2022 2021
\n
(in millions of EUR*)
\n
Total
\n
-284 261
\n
Impairment on financial assets at AC and at FVOCI
\n
-154 334
\n
(impairment on loans)
\n
By IFRS category
\n
\n
\n
Financial assets at amortised cost -155 330
\n
\n
Financial assets at fair value through OCI 1 4
\n
By product
\n
\n
\n
Loans and advances -177 315
\n
\n
Debt securities -2 3
\n
\n
Off-balance-sheet commitments and financial guarantees 25 15
\n
By type
\n
\n
\n
Stage 1 (12-month ECL) 5 74
\n
\n
Stage 2 (lifetime ECL) -106 449
\n
\n
Stage 3 (lifetime ECL) -60 -191
\n
\n
Purchased or originated credit impaired assets 8 2
\n
By business unit/country
\n
\n
\n
Belgium -35 309
\n
\n
Czech Republic -46 142
\n
\n
International Markets -78 -110
\n
\n
Slovakia -19 16
\n
\n
Hungary -29 22
\n
\n
Bulgaria -30 2
\n
\n
Ireland in 2021 - -149
\n
\n
Group Centre 5 -7
\n
\n
Of which Ireland in 2022 7 -
\n
Impairment on goodwill
\n
-5 -7
\n
Impairment on other
\n
-125 -65
\n
Intangible fixed assets (other than goodwill)
\n
-34 -35
\n
Property and
\n
equipment (including investment property) -18 -17
\n
Associated companies and joint ventures
\n
0 0
\n
Other
\n
-73 -13
\n
* Positive figures indicate a reversal and hence a positive impact on results
\n

\n\n

\n\n
\n
\n
\u2022 Impairment on loans:
\n
\u25e6 In 2022, this item included a full reversal of the remaining 255 million euros in coronavirus-related ECL (see Note 1.4), net
\n
provisioning of 413 million euros for geopolitical and emerging risks (see Note 1.4), net provisioning of 17 million euros related to
\n
the sale transactions in Ireland (see Note 6.6) and a net reversal of 21 million euros for several individual loans.
\n
\u25e6 In 2021, this item included a net reversal of collective coronavirus-related ECL totalling 494 million euros (see Note 1.4), net
\n
provisioning of 178 million euros related to the sale transactions in Ireland (see Note 6.6) and a net reversal of 18 million euros
\n
for several individual loans.
\n
\u2022 The impact of the extreme weather conditions, including flooding and storms, in 2022 and 2021 on (impairment on) loans was
\n
insignificant.
\n
\u2022 Impairment on other:
\n
\u25e6 In 2022, this item included an impairment of tangible and intangible assets relating to the sale transactions in Ireland,
\n
impairment of real estate and modification losses related to the provision of the interest cap regulation in Hungary.
\n
\u25e6 In 2021, this item included impairment of tangible and intangible assets relating to the sale transactions in Ireland and
\n
modification losses.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. Based on internal management reports, the
\n
composition and quality of the loan portfolio is set out in detail in the \u2018How do we manage our risks?\u2019 section (under \u2018Credit
\n
risk\u2019). All parts of that particular section which have been audited by the statutory auditor are listed at the start of the section.
\n
Among other things, this section also provides more information on impaired loans (Stage 3).
\n
\u2022 For information on total impairment recognised in the balance sheet, see Note 4.2.
\n
\u2022 More background information and methodology for KBC\u2019s ECL model is provided in the accounting policies under \u2018Financial
\n
assets \u2013 impairment\u2019 in Note 1.2.
\n

\n\n

\n
\u2022 KBC uses specific models for PD, EAD and LGD in order to calculate ECL. It is essential to take account of historical observations
\n
and forward-looking projections in this respect.
\n
- PD represents the probability of a counterparty defaulting in the next 12 months or during the entire term of the facility
\n
(depending on which IFRS 9 \u2018Stage\u2019 the facility is in). The PD is determined by the counterparty\u2019s internal (and, if applicable,
\n
external) credit rating. Variables used in PD models include financial ratios and behavioural parameters (arrears).
\n
- EAD represents the estimated outstanding debt at the time of default and depends on the existing outstanding debt and
\n
any changes permitted under the contract and normal repayments. Variables used in these models include product types
\n
and repayment schedules.
\n
- LGD is the estimated size of the loss relative to the outstanding debt at the time of default. LGD is presented as a percentage
\n
of the outstanding debt and is determined by historical amounts recovered on similar claims. Variables used in these models
\n
include collateral types and financial ratios.
\n
\u2022 On 31 December 2022, there were around 80 different IFRS 9 models. In addition to several group-wide models, we have
\n
separate PD, EAD and LGD models for each of our core countries. In accordance with the Basel grouping approach, we use
\n
the type of counterparty (private individuals, SMEs, companies, governments, etc.) to determine the scope of an IFRS 9 model.
\n
Each model allows for differentiation in terms of facility type (term loans, revolving facilities, etc.) and collateral type (mortgages,
\n
pledges on business assets, guarantees, etc.). Examples of IFRS 9 models include \u2018Banks\u2019, \u2018Belgian private persons \u2013 home
\n
loans\u2019, \u2018Czech corporates\u2019, \u2018Bulgarian corporates and SMEs\u2019 and \u2018Central governments\u2019. Detailed documentation is available
\n
for each PD, EAD and LGD model. The main models are subject to review by external auditors. The Basel models, which the IFRS
\n
9 models are based on, are subject to external control performed by the supervisory authorities.
\n\n

\n\n
\u2022 We create the models for the various portfolios using typical PD, EAD and LGD inputs, as well as macroeconomic variables to
\n
the extent that there is a statistical relationship. The macroeconomic variables are GDP growth, the unemployment rate, policy
\n
interest rates, the exchange rate, government bond yields, house prices and inflation. As a result of regular back-testing,
\n
models may change and macroeconomic variables may be reassessed. Note 1.4 presents the optimistic, pessimistic and base-
\n
case scenarios for the three key indicators (GDP growth, unemployment rate and house price index) for each of our core
\n
countries.
\n
\u2022 As set out under \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section, KBC considers ESG risks in
\n
its credit risk management processes. The vulnerability of individual clients to specific ESG risks may become apparent during
\n
the term of the loan in client-specific credit risk figures, such as credit risk ratings and collateral valuations affecting the ECL
\n
calculation. Especially in terms of climate risk, which may have considerable consequences for certain sectors in the longer
\n
term, the impact on our loan portfolio is not expected to occur within the time horizon considered for the ECL measurement.
\n
\u2022 Our ECL models are not able to adequately reflect all the specifics of the direct and indirect consequences of the war in Ukraine
\n
and the coronavirus crisis. Therefore, an expert-based calculation at portfolio level has been performed that takes due account
\n
of the macroeconomic situation (see Note 1.4).
\n
\u2022 We use three different forward-looking macroeconomic scenarios (with different probability weightings) to measure ECL. The
\n
weightings at year-end 2022 were 60% for the \u2018base\u2019 scenario, 5% for the \u2018up\u2019 scenario and 35% for the \u2018down\u2019 scenario. The
\n
forecast horizon is 30 years. For further information on the key macroeconomic parameters, see Note 1.4.
\n
\u2022 A sensitivity analysis of the impact of these multiple economic scenarios on the collectively assessed ECL (i.e. without the ECL
\n
for individually assessed loans of 1.6 billion euros at the end of 2022 and 1.7 billion euros at the end of 2021) shows that the \u2018base\u2019
\n
scenario generates an ECL of 1.0 billion euros (0.9 billion euros in 2021), which is 0.1 billion euros lower than for the \u2018down\u2019 scenario
\n
(0.1 billion euros in 2021) and 0.0 billion euros higher than for the \u2018up\u2019 scenario (0.1 billion euros in 2021). The assessed scenario-
\n
weighted collective ECL (that was recognised) amounted to 1.0 billion euros (0.9 billion euros in 2021). These amounts take into
\n
account the ECL relating to geopolitical and emerging risks at year-end 2022 (see Note 1.4).
\n
\n
100%
\n
100%
\n
100%
\n
Collectively assessed ECL by country (2022, in billions of EUR)
\n
\n
pessimistic
\n
base-case scenario
\n
optimistic scenario
\n
scenario
\n
Total
\n
1.0 1.0 1.1
\n
Belgium
\n
0.3 0.3 0.3
\n
Czech Republic
\n
0.3 0.3 0.4
\n
Slovakia
\n
0.1 0.1 0.1
\n
Hungary
\n
0.1 0.1 0.1
\n
Bulgaria
\n
0.2 0.1 0.2
\n
Rest
\n
0.0 0.0 0.0
\n

\n\n

\n\n

\n\n
Note 4.2.1: Impaired financial assets
\n
\n
\n
Carrying value before
\n
Carrying value after
\n
(in millions of EUR)
\n
impairment
\n
Impairment
\n
impairment
\n
31
\n
-12-2022
\n
*
\n
204 473 -2 619 201 853
\n
Financial assets at amortised cost: Loans and advances
\n
Stage 1 (12
\n
-month ECL) 163 846 -110 163 736
\n
Stage 2 (lifetime ECL)
\n
36 577 -635 35 941
\n
Stage 3 (lifetime ECL)
\n
3 616 -1 796 1 820
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
434
\n
-77
\n
357
\n
Financial assets at amortised cost: Debt securities
\n
52 048 -18 52 030
\n
Stage 1 (12
\n
-month ECL) 51 909 -7 51 903
\n
Stage 2 (lifetime ECL)
\n
130 -4 126
\n
Stage 3 (lifetime ECL)
\n
8 -7 1
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
Financial assets at fair value through OCI: Debt securities
\n
11 818 -4 11 813
\n
Stage 1 (12
\n
-month ECL) 11 753 -3 11 750
\n
Stage 2 (lifetime ECL)
\n
65 -2 63
\n
Stage 3 (lifetime ECL)
\n
0 0 0
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
31
\n
-12-2021
\n
*
\n
194 638 -2 573 192 065
\n
Financial assets at amortised cost: Loans and advances
\n
Stage 1 (12
\n
-month ECL) 167 426 -104 167 322
\n
Stage 2 (lifetime ECL)
\n
23 131 -507 22 624
\n
Stage 3 (lifetime ECL)
\n
3 493 -1 848 1 645
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
588
\n
-114
\n
474
\n
Financial assets at amortised cost: Debt securities
\n
47 181 -9 47 172
\n
Stage 1 (12
\n
-month ECL) 47 155 -5 47 150
\n
Stage 2
\n
(lifetime ECL) 24 -3 21
\n
Stage 3 (lifetime ECL)
\n
1 -1 1
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
Financial assets at fair value through OCI: Debt securities
\n
15 509 -6 15 503
\n
Stage 1 (12
\n
-month ECL) 15 418 -3 15 415
\n
Stage 2
\n
(lifetime ECL) 91 -3 88
\n
Stage 3 (lifetime ECL)
\n
0 0 0
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
* The carrying value after impairment in this note corresponds to the sum of the \u2018Loans and advances to credit institutions and investment firms (excl. reverse repos)\u2019, \u2018Loans and advances to
\n
customers (excl. reverse repos)\u2019 and \u2018Reverse repos\u2019 in Note 4.1 (in the \u2018Measured at amortised cost\u2019 column).
\n

\n\n

\n\n

\n\n

\n\n
\u2022 Acquisition of Raiffeisenbank Bulgaria (now renamed KBC Bank Bulgaria):
\n
\u25e6 The carrying value before impairment at year-end 2022 included 4.7 billion euros for KBC Bank Bulgaria, of which 4.1 billion
\n
euros in loans and advances (3.2, 0.8 and 0.1 billion euros in Stages 1, 2 and 3, respectively), 0.5 billion euros in debt securities
\n
at amortised cost and 0.1 billion euros in debt securities at fair value through OCI. KBC Bank Bulgaria\u2019s portfolios account
\n
for 1.8% of the entire KBC group.
\n
\u25e6 Impairment at year-end 2022 included 113 million euros for KBC Bank Bulgaria, of which 106 million euros in loans and
\n
advances (10, 30 and 66 million euros in Stages 1, 2 and 3, respectively), and 7 million euros in debt securities at amortised
\n
cost. These impairment valuations partly deviate from the methodology set out in the accounting policies (particularly as
\n
regards the forward-looking information, IFRS 9 models and criteria used to determine a significant increase in credit risk).
\n
The integration of KBC Bank Bulgaria in 2023 will also involve the alignment of the accounting policies at KBC Bank Bulgaria
\n
for determining impairment.
\n
\u2022 Carrying value before impairment of loans and advances at amortised cost: increase of 9.8 billion euros in 2022, due primarily
\n
to:
\n
\u25e6 The acquisition of Raiffeisenbank Bulgaria (see above).
\n
\u25e6 An organic net increase in the loan portfolio (mainly mortgage loans and term loans, in all countries).
\n
\u25e6 This increase was partly offset by a decrease of the carrying value before impairment of loans and advances (excluding
\n
reverse repos) and the reverse repos to credit institutions and investment firms.
\n
\u2022 Carrying value before impairment of loans and advances at amortised cost in \u2018Stage 2\u2019: increase of 13.4 billion euros in 2022,
\n
due primarily to:
\n
\u25e6 The migration to \u2018Stage 2\u2019 based on a collective approach of \u2018Stage 1\u2019 loans (see also Note 1.4) that have indirect exposure
\n
to Russia, Ukraine and Belarus (i.e. as a result of the military conflict; 2.8 billion euros) and/or are vulnerable to emerging
\n
risks (11.3 billion euros).
\n
\u25e6 The acquisition of Raiffeisenbank Bulgaria (see above).
\n
\u25e6 This was partly offset by the discontinuation of the collective \u2018Stage 2\u2019 transfer of loans vulnerable to coronavirus-related
\n
risks (3.1 billion euros in receivables that had been moved to \u2018Stage 2\u2019 at year-end 2021). The remaining coronavirus-related
\n
risks in our loan portfolio are included in the regular indicators used to assess considerable credit risk increases (probability
\n
of default, forbearance and the number of days past due), which are no longer concealed by the moratoria.
\n
\u25e6 Please note that the migration of loans from \u2018Stage 1\u2019 to \u2018Stage 2\u2019 based on the collective approach resulted in a net
\n
decrease of 3.6 billion euros of the carrying value before impairment of loans and advances at amortised cost in \u2018Stage 1\u2019,
\n
which was partly offset by the organic net increase in the loan portfolio and the acquisition of Raiffeisenbank Bulgaria.
\n
\u25e6 Also note that the migration predicted in the management overlay at the time is not reflected in the 2021 year-end figures,
\n
because it was determined based on a collective approach and, therefore, could not be individually linked to specific
\n
loans. Taking into account the impact of the management overlay on staging at year-end 2021, this would result in a
\n
carrying value before impairment of loans and advances of an estimated 165.4, 24.3 and 4.3 billion euros in Stages 1, 2 and
\n
3, respectively (or net migration of 1% of the total portfolio from \u2018Stage 1\u2019 to \u2018Stage 2\u2019 and 0.4% from \u2018Stage 1\u2019 and \u2018Stage 2\u2019
\n
to \u2018Stage 3\u2019).
\n
\u2022 Carrying value before impairment of debt securities at amortised cost: increase of 4.9 billion euros in 2022, almost entirely in
\n
\u2018Stage 1\u2019:
\n
\u25e6 More than half of this increase concerns (issues by) public bodies, one third concerns credit institutions and investment
\n
firms, and the remaining part concerns corporates, and related primarily to net investments.
\n
\u2022 Impairment: increase of 0.1 billion euros in 2022, due to:
\n
\u25e6 The acquisition of Raiffeisenbank Bulgaria (see above).
\n
\u25e6 For information on other changes, see Note 3.10.
\n
\u2022 See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\u2022 In 2022, \u2018Stage 2\u2019 and \u2018Stage 3\u2019 financial assets with a net carrying value of 471 million euros have been subject to modifications
\n
in the past that did not result in derecognition. The gross carrying value of \u2018Stage 1\u2019 financial assets subject to modifications in
\n
the past that did not result in derecognition came to 1 088 million euros in 2022. The corresponding figures for 2021 were 1 712
\n
million euros and 509 million euros, respectively. Modification gains or losses are recognised under impairment (see Note 3.10).
\n
\u2022 In 2022, financial assets at amortised cost with a gross carrying value of 80 million euros were written off, but were still subject
\n
to enforcement activities; the corresponding figure in 2021 was 72 million euros.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.2.2: Impairment details
\n
\n
\n
\n
Subject to lifetime ECL
\n
Stage 1
\n
Stage 2
\n
Stage 3
\n
(purchased or
\n
\n
Subject to 12-
\n
Subject to lifetime
\n
Subject to lifetime
\n
originated credit
\n
(in millions of EUR)
\n
month ECL
\n
ECL
\n
ECL
\n
impaired)
\n
Total
\n
2022
\n
\n
LOANS AND ADVANCES AT AMORTISED COST
\n
Impairment on 1 January
\n
104
\n
507
\n
1 848
\n
114
\n
2 573
\n
1
\n
-6 96 147 -8 230
\n
Movements with an impact on results
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) -22 158 60 0 197
\n
\n
Stage 2 (lifetime ECL) 4 -83 95 0 16
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 26 -54 -3 -31
\n
New financial assets
\n
2
\n
\n
40
\n
43
\n
10
\n
0
\n
93
\n
\n
Changes in risk parameters during the reporting period -16 -23 90 -5 48
\n
\n
Changes in the model or methodology -1 3 0 0 2
\n
Derecognised financial assets
\n
3
\n
-10 -26 -59 -1 -97
\n
\n
\n
Other -1 -2 4 0 2
\n
Movements without an impact on results
\n
12 32 -199 -29 -184
\n
\n
Derecognised financial assets
\n
3
\n
0 -1 -296 -7 -304
\n
Changes in the scope of consolidation
\n
14
\n
32
\n
88
\n
0
\n
133
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
\n
Other -2 1 9 -21 -13
\n
Impairment on 31 December
\n
110 635 1 796 77 2 619
\n
DEBT
\n
SECURITIES AT AMORTISED COST
\n
Impairment on 1 January
\n
5 3 1 0 9
\n
1
\n
2 0 1 0 3
\n
Movements with an impact on results
\n
Transfer of financial assets
\n
\n
\n
\n
\n
\n
\n
Stage 1 (12-month ECL) 0 0 0 0 0
\n
\n
Stage 2 (lifetime ECL) 0 -1 1 0 0
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
1 0 0 0 1
\n
\n
Changes in risk parameters during the reporting period 0 1 0 0 1
\n
Changes in the model or methodology
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
\n
Other 0 0 0 0 0
\n
Movements without an impact on results
\n
0 1 5 0 6
\n
\n
Derecognised financial assets
\n
3
\n
0 0 -1 0 -1
\n
\n
Changes in the scope of consolidation 0 1 6 0 7
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
Other
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Impairment on 31 December
\n
7 4 7 0 18
\n
DEBT SECURITIES AT FAIR VALUE THROUGH OCI
\n
\n
Impairment on 1 January
\n
3 3 0 0 6
\n
Movements with an impact on results
\n
1
\n
0 -1 0 0 -1
\n
\n
Transfer of financial assets
\n
Stage 1 (12-month ECL)
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Stage 2 (lifetime ECL)
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
0 0 0 0 0
\n
\n
Changes in risk parameters during the reporting period 0 -1 0 0 -1
\n
\n
Changes in the model or methodology 0 0 0 0 0
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
Other
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Movements without an impact on results
\n
0 0 0 0 0
\n
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
Changes in the scope of consolidation 0 0 0 0 0
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
\n
Other 0 0 0 0 0
\n
Impairment on 31 December
\n
3 2 0 0 4
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
2021
\n
LOANS AND ADVANCES AT AMORTISED COST
\n
Impairment on 1 January
\n
168 992 2 517 18 3 695
\n
Movements with an impact on results
\n
1
\n
-62 -454 242 -2 -276
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) -12 99 42 0 129
\n
\n
Stage 2 (lifetime ECL) 6 -116 80 0 -30
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL)
\n
0
\n
20
\n
-36
\n
0
\n
-16
\n
\n
New financial assets
\n
2
\n
25 14 7 0 45
\n
\n
Changes in risk parameters during the reporting period -57 -426 214 1 -269
\n
\n
Changes in the model or methodology 0 -1 0 0 -1
\n
\n
Derecognised financial assets
\n
3
\n
-24 -48 -84 -2 -158
\n
\n
Other 0 2 20 0 22
\n
Movements without an
\n
impact on results -2 -32 -911 98 -847
\n
3
\n
Derecognised financial assets
\n
\n
0
\n
0
\n
-286
\n
-12
\n
-299
\n
\n
Changes in the scope of consolidation 0 0 4 0 4
\n
\n
Transfers under IFRS 5 -3 -31 -540 0 -574
\n
\n
Other 1 0 -90 110 21
\n
Impairment on 31 December
\n
104 507 1 848 114 2 573
\n
DEBT SECURITIES AT AMORTISED COST
\n
\n
Impairment on 1 January
\n
6
\n
1
\n
2
\n
0
\n
9
\n
Movements with an impact on results
\n
1
\n
\n
-1
\n
2
\n
0
\n
0
\n
1
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) 0 0 0 0 0
\n
\n
Stage 2 (lifetime ECL) 0 0 0 0 0
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
1 0 0 0 1
\n
Changes in risk parameters during the reporting period
\n
-2
\n
3
\n
0
\n
0
\n
1
\n
\n
Changes in the model or methodology 0 0 0 0 0
\n
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 -1
\n
\n
Other 0 0 0 0 0
\n
Movements without an
\n
impact on results 0 0 -1 0 -1
\n
Derecognised financial assets
\n
3
\n
0 0 -1 0 -1
\n
\n
\n
Changes in the scope of consolidation 0 0 0 0 0
\n
Transfers under IFRS 5
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
Other 0 0 0 0 0
\n
Impairment on 31
\n
December 5 3 1 0 9
\n
DEBT SECURITIES AT FAIR VALUE THROUGH OCI
\n
\n
Impairment on 1 January
\n
6 3 0 0 9
\n
Movements with an impact on results
\n
1
\n
-3 0 0 0 -4
\n
Transfer of financial assets
\n
\n
\n
\n
\n
\n
\n
Stage 1 (12-month ECL) 0 0 0 0 0
\n
\n
Stage 2 (lifetime ECL) 0 -1 0 0 -1
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
0 0 0 0 0
\n
\n
Changes in risk parameters during the reporting period -3 0 0 0 -3
\n
\n
Changes in the model or methodology 0 0 0 0 0
\n
Derecognised financial assets
\n
3
\n
\n
-1
\n
0
\n
0
\n
0
\n
-1
\n
\n
Other 0 0 0 0 0
\n
Movements without an impact on
\n
results 0 0 0 0 0
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
\n
Changes in the scope of consolidation 0 0 0 0 0
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
\n
Other 0 0 0 0 0
\n
Impairment on 31 December
\n
3
\n
3
\n
0
\n
0
\n
6
\n
1 Amounts recovered in respect of loans that have already been written off are recycled to the income statement and recorded as \u2018Impairment on financial assets at amortised cost and at
\n
fair value through OCI\u2019. However, they have not been included in this table since they do not have any impact on impairment losses on the balance sheet.
\n
2 Also includes impairment related to new financial assets resulting from off-balance-sheet commitments and financial guarantees already given being called.
\n
3 Derecognition without an impact on results occurs when the impairment adjustment has already been made upfront (for example, at the moment of the sale agreement (disposals) or before
\n
the write-off). Derecognition with an impact on results occurs when the impairment adjustment takes place at the same time (for instance, in the case of debt forgiveness).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\u2022 The change in impairment in 2022 relates mainly to the reserve set aside to cover geopolitical and emerging risks and the full
\n
reversal of the remaining reserves set aside for the coronavirus crisis (see Note 1.4) and the changes in the scope of
\n
consolidation, partly offset by the elimination of the impairment on derecognised financial assets.
\n
\u2022 Changes in the scope of consolidation: relates mainly to the acquisition of Raiffeisenbank Bulgaria.
\n
\u2022 The vast majority of the staging is triggered by a collective management assessment and relative changes in PD (see the multi-
\n
tier approach outlined in Note1.2 under \u2018Significant increase in credit risk since initial recognition\u2019).
\n
\u2022 For information on provisions for commitments and financial guarantees, see Note 5.7.2.
\n
\u2022 For information regarding the impact of changes in impairment on the income statement, see Note 3.10.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. Based on internal management reports, the
\n
composition and quality of the loan portfolio is set out in detail in the \u2018How do we manage our risks?\u2019 section (under \u2018Credit
\n
risk\u2019). All parts of that particular section which have been audited by the statutory auditor are listed at the start of the section.
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag819": { "value": "\n

\n\n

\n\n

\n\n
Note 3.11: Share in results of associated companies and joint ventures
\n
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
-10 -5
\n
Of which
\n
\n
Isabel NV
\n
2 2
\n
Joyn International NV
\n
-1 1
\n
Bancontact Payconiq Company NV
\n
1 1
\n
Payconiq International SA
\n
-6 -6
\n
Skip Pay, s.r.o.
\n
0 -3
\n
Batopin NV
\n
-3 -1
\n
IGLUU s.r.o.
\n
-1 0
\n
Immoscoop 2.0 BV
\n
-2 0
\n
\n
\u2022 Impairment on (goodwill on) associated companies and joint ventures is included in \u2018Impairment\u2019 (see Note 3.10). The share in
\n
results of associated companies and joint ventures does not therefore take this impairment into account.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 5.3: Investments in associated companies and joint ventures
\n
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
Total
\n
32 37
\n
Overview of investments, including goodwill
\n
\n
Skip Pay, s.r.o.
\n
- 3
\n
IGLUU s.r.o.
\n
2 -
\n
Immoscoop 2.0 BV
\n
1 -
\n
Isabel NV
\n
12 11
\n
Joyn
\n
International NV 0 1
\n
Bancontact Payconiq Company NV
\n
7 6
\n
Payconiq International SA
\n
7 9
\n
Batopin NV
\n
1 4
\n
Other
\n
2 4
\n
Goodwill on associated companies and joint ventures
\n
\n
Gross amount
\n
0 0
\n
Accumulated impairment
\n
0 0
\n
Breakdown by type
\n
\n
Unlisted
\n
32 37
\n
Listed
\n
0 0
\n
Fair value of investments in listed associated companies and joint ventures
\n
0 0
\n
\n
\u2022 Associated companies are companies on whose management KBC exerts significant influence, without having direct or indirect
\n
full or joint control. In general, KBC has a 20% to 50% shareholding in such companies. Joint ventures are companies over which
\n
KBC exercises joint control.
\n
\u2022 Goodwill paid on associated companies and joint ventures is included in the nominal value of \u2018Investments in associated
\n
companies and joint ventures\u2019 shown on the balance sheet. An impairment test is performed and, if required, the necessary
\n
impairment losses on goodwill recognised (see table).
\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag811": { "value": "\n

\n\n

\n\n
Note 3.11: Share in results of associated companies and joint ventures
\n
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
-10 -5
\n
Of which
\n
\n
Isabel NV
\n
2 2
\n
Joyn International NV
\n
-1 1
\n
Bancontact Payconiq Company NV
\n
1 1
\n
Payconiq International SA
\n
-6 -6
\n
Skip Pay, s.r.o.
\n
0 -3
\n
Batopin NV
\n
-3 -1
\n
IGLUU s.r.o.
\n
-1 0
\n
Immoscoop 2.0 BV
\n
-2 0
\n
\n
\u2022 Impairment on (goodwill on) associated companies and joint ventures is included in \u2018Impairment\u2019 (see Note 3.10). The share in
\n
results of associated companies and joint ventures does not therefore take this impairment into account.
\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 5.3: Investments in associated companies and joint ventures
\n
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
Total
\n
32 37
\n
Overview of investments, including goodwill
\n
\n
Skip Pay, s.r.o.
\n
- 3
\n
IGLUU s.r.o.
\n
2 -
\n
Immoscoop 2.0 BV
\n
1 -
\n
Isabel NV
\n
12 11
\n
Joyn
\n
International NV 0 1
\n
Bancontact Payconiq Company NV
\n
7 6
\n
Payconiq International SA
\n
7 9
\n
Batopin NV
\n
1 4
\n
Other
\n
2 4
\n
Goodwill on associated companies and joint ventures
\n
\n
Gross amount
\n
0 0
\n
Accumulated impairment
\n
0 0
\n
Breakdown by type
\n
\n
Unlisted
\n
32 37
\n
Listed
\n
0 0
\n
Fair value of investments in listed associated companies and joint ventures
\n
0 0
\n
\n
\u2022 Associated companies are companies on whose management KBC exerts significant influence, without having direct or indirect
\n
full or joint control. In general, KBC has a 20% to 50% shareholding in such companies. Joint ventures are companies over which
\n
KBC exercises joint control.
\n
\u2022 Goodwill paid on associated companies and joint ventures is included in the nominal value of \u2018Investments in associated
\n
companies and joint ventures\u2019 shown on the balance sheet. An impairment test is performed and, if required, the necessary
\n
impairment losses on goodwill recognised (see table).
\n

\n\n

\n\n

\n\n

\n\n

\n
Note 6.5: Subsidiaries, joint ventures and associated companies
\n
\n
\n
KBC Group: main companies included in the scope of consolidation at year
\n
-end 2022
\n
Company
\n
\n
\n
Registered office
\n
Company
\n
number
\n
Share of capital held
\n
at group level (in %)
\n
Business
\n
unit
\n
1
\n
\n
Activity
\n
KBC Bank (group)
\n
\n
KBC Bank NV
\n
\n
Brussels
\n
\u2013 BE 0462.920.226
\n
\n
100.00 BEL/GRP credit institution
\n
KBC Bank Bulgaria EAD (formerly Raiffeisenbank
\n
Bulgaria)
\n
2
\n
\n
Sofia
\n
\u2013 BG --
\n
\n
100.00 IMA credit institution
\n
CBC BANQUE SA
\n
\n
Namur
\n
\u2013 BE 0403.211.380
\n
\n
100.00 BEL credit institution
\n
\u010ceskoslovensk\u00e1 Obchodn\u00e1 Banka a.s.
\n
\n
Bratislava
\n
\u2013 SK --
\n
\n
100.00 IMA credit institution
\n
\u010ceskoslovensk\u00e1 Obchodn\u00ed Banka a.s.
\n
\n
Prague
\n
\u2013 CZ --
\n
\n
100.00 CZR credit institution
\n
KBC Asset Management NV
\n
\n
Brussels
\n
\u2013 BE 0469.444.267
\n
\n
100.00 BEL asset management
\n
KBC Autolease NV
\n
\n
Leuven
\n
\u2013 BE 0422.562.385
\n
\n
100.00 BEL leasing
\n
KBC Bank Ireland Plc
\n
2
\n
\n
Dublin
\n
\u2013 IE --
\n
\n
100.00 GRP credit institution
\n
KBC Commercial Finance NV
\n
\n
Brussels
\n
\u2013 BE 0403.278.488
\n
\n
100.00 BEL factoring
\n
KBC IFIMA SA
\n
\n
Luxembourg
\n
\u2013 LU --
\n
\n
100.00 GRP financing
\n
KBC Securities NV
\n
\n
Brussels
\n
\u2013 BE 0437.060.521
\n
\n
100.00 BEL stockbroker
\n
K&H Bank Zrt.
\n
\n
Budapest
\n
\u2013 HU --
\n
\n
100.00 IMA credit institution
\n
Loan Invest NV
\n
\n
Brussels
\n
\u2013 BE 0889.054.884
\n
\n
100.00 BEL securitisation
\n
United Bulgarian Bank AD
\n
\n
Sofia
\n
\u2013 BG --
\n
\n
99.91 IMA credit institution
\n
KBC Insurance (group)
\n
\n
KBC Insurance NV
\n
\n
Leuven
\n
\u2013 BE 0403.552.563
\n
\n
100.00 BEL/GRP insurance company
\n
ADD NV
\n
\n
Heverlee
\n
\u2013 BE 0406.080.305
\n
\n
100.00 BEL insurance broker
\n
KBC
\n
Group Re SA
\n
Luxembourg
\n
\u2013 LU --
\n
\n
100.00 GRP reinsurance company
\n
\u010cSOB Poji\u0161t\u2019ovna a.s.
\n
\n
Pardubice
\n
\u2013 CZ --
\n
\n
100.00 CZR insurance company
\n
\u010cSOB Poist\u2019ov\u0148a a.s.
\n
\n
Bratislava
\n
\u2013 SK --
\n
\n
100.00 IMA insurance company
\n
DZI (group)
\n
\n
Sofia
\n
\u2013 BG --
\n
\n
100.00 IMA insurance company
\n
Groep VAB NV
\n
\n
Zwijndrecht
\n
\u2013 BE 0456.920.676
\n
\n
100.00 BEL
\n
driving school/roadside
\n
assistance
\n
K&H Biztos\u00edt\u00f3 Zrt.
\n
\n
Budapest
\n
\u2013 HU --
\n
\n
100.00 IMA insurance company
\n
KBC group
\n
\n
Discai NV
\n
\n
Brussels
\n
\u2013 BE 0773.435.537
\n
\n
100.00 GRP software company
\n
KBC Group NV
\n
\n
Brussels
\n
\u2013 BE 0403.227.515
\n
\n
100.00 GRP
\n
bank-insurance holding
\n
company
\n
KBC Bank (group)
\n
\n
various locations
\n
--
\n
\n
100.00 various credit institution
\n
KBC Global Services NV
\n
\n
Brussels
\n
\u2013 BE 0772.332.707
\n
\n
100.00 GRP cost-sharing structure
\n
KBC Insurance (group)
\n
\n
various locations
\n
--
\n
\n
100.00 various insurance company
\n
1 BEL: Belgium Business Unit; CZR: Czech Republic Business Unit: IMA: International Markets Business Unit; GRP = Group Centre.
\n
2 See Note 6.6.
\n
\n
\n

\n

\n
\u2022 The KBC group\u2019s legal structure has one single entity \u2013 KBC Group NV \u2013 in control of two underlying companies, viz.
\n
KBC Bank NV and KBC Insurance NV, as well as companies such as Discai NV and KBC Global Services NV (see the \u2018Company
\n
annual accounts and additional information\u2019 section). KBC Bank and KBC Insurance have several subsidiaries and
\n
sub-subsidiaries. In addition, the main group companies are shown in the table. A complete list of group companies (included
\n
in or excluded from the scope of consolidation) is provided at www.kbc.com > About us > Our structure.
\n\n
\u2022 Companies eligible for consolidation are effectively included in the consolidated accounts if two of the following criteria are
\n
met: (i) the group\u2019s share in equity exceeds 2.5 million euros (ii) the group\u2019s share in the results exceeds 1 million euros (iii) the
\n
balance sheet total exceeds 100 million euros. The combined balance sheet total of the companies excluded from
\n
consolidation may not amount to more than 1% of the consolidated balance sheet total.
\n
\u2022 All (material) entities (including structured entities (SPVs)) over which the consolidating entity exercises, directly or indirectly,
\n
exclusive control are consolidated according the method of full consolidation. To assess whether or not structured entities have
\n
to be consolidated, KBC uses the principles set out in IFRS 10, as well as thresholds for inclusion in consolidation (see previous
\n
bullet point).
\n

\n\n

\n\n

\n\n

\n\n
\u2022 Disclosures of interests in other entities (IFRS 12)
\n
- Significant judgements and assumptions
\n
\u25e6 In general, funds managed by KBC are not included in the scope of consolidation, as they do not meet the three criteria of
\n
control (power, exposure to a variable return and ability to use such power to affect those returns).
\n
\u25e6 Joint entities in which KBC does not hold 50% of the share capital are classified as joint ventures, since it has joint control
\n
over these entities based on shareholder agreements. Based on the Articles of Association and/or shareholder
\n
agreements, voting rights in (and therefore the control of) the joint venture are spread evenly across the different
\n
shareholders and decisions may only be taken by unanimity.
\n
- Interests in subsidiaries
\n
\u25e6 For the vast majority of the entities, the voting rights are materially equal to the ownership rights.
\n
\u25e6 Pursuant to the joint capital decision, specific pillar-II levels have been set to ensure that certain minimum capital ratios
\n
are respected, which impose certain restrictions on the repatriation of capital and distribution of dividends.
\n
\u25e6 With regard to Loan Invest NV, KBC is exposed to loan losses on the mortgage portfolio and, therefore, recognises
\n
impairment losses on them where necessary.
\n
- Interests in unconsolidated structured entities
\n
\u25e6 KBC Bank NV is arranger and dealer of a number of 40-billion-euro medium term notes programmes issued by 19
\n
unconsolidated structured entities established in Ireland for that purpose. Their primary business is to raise money by issuing
\n
notes in order to buy financial assets (such as securities, bonds and deposits) and to enter into related derivative and other
\n
contracts. They provide investment opportunities for clients by providing economies of scale, a diversification of credit risk
\n
and a high level of granularity. Each structured entity has a prospectus that was approved by the Central Bank of Ireland
\n
(available at www.kbc.be/prospectus/spv). However, the structured entities are not consolidated because they fail to
\n
meet the three criteria for consolidation (power, exposure to a variable return and ability to use such power to affect those
\n
returns). At year-end 2022, the assets under management at these entities amounted to 5.2 billion euros.
\n
\u25e6 Sponsored unconsolidated structured entities are defined as structured entities where KBC or one of its subsidiaries acts
\n
as arranger of the issuance programme, but where the decision-making power of the entities does not reside with KBC or
\n
one of its subsidiaries. As a result, these entities are not consolidated.
\n
\u25e6 In 2022, KBC had received income from unconsolidated structured entities in the form of management fees (24 million euros)
\n
and accounting fees (1 million euros).
\n
\u25e6 At year-end 2022, KBC held 2 billion euros\u2019 worth of notes issued by the unconsolidated structured entities. Its liabilities
\n
towards the unconsolidated structured entities amounted to 1.5 billion euros and comprised mainly time deposits (1.4 billion
\n
euros).
\n
\u25e6 Any potential decrease in the value of the notes is passed on to the end-client, which means it will have no impact on KBC.
\n
\u2022 At year-end 2022, no group companies were active in the extractive industry. As a result, no consolidated report on payments
\n
to governments has been prepared (see Art.3:8 \u00a7 1 of the Companies and Associations Code).
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestsInOtherEntitiesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag818": { "value": "\n

\n\n
Note 3.11: Share in results of associated companies and joint ventures
\n
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
-10 -5
\n
Of which
\n
\n
Isabel NV
\n
2 2
\n
Joyn International NV
\n
-1 1
\n
Bancontact Payconiq Company NV
\n
1 1
\n
Payconiq International SA
\n
-6 -6
\n
Skip Pay, s.r.o.
\n
0 -3
\n
Batopin NV
\n
-3 -1
\n
IGLUU s.r.o.
\n
-1 0
\n
Immoscoop 2.0 BV
\n
-2 0
\n
\n
\u2022 Impairment on (goodwill on) associated companies and joint ventures is included in \u2018Impairment\u2019 (see Note 3.10). The share in
\n
results of associated companies and joint ventures does not therefore take this impairment into account.
\n

\n\n

\n\n
Note 5.3: Investments in associated companies and joint ventures
\n
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
Total
\n
32 37
\n
Overview of investments, including goodwill
\n
\n
Skip Pay, s.r.o.
\n
- 3
\n
IGLUU s.r.o.
\n
2 -
\n
Immoscoop 2.0 BV
\n
1 -
\n
Isabel NV
\n
12 11
\n
Joyn
\n
International NV 0 1
\n
Bancontact Payconiq Company NV
\n
7 6
\n
Payconiq International SA
\n
7 9
\n
Batopin NV
\n
1 4
\n
Other
\n
2 4
\n
Goodwill on associated companies and joint ventures
\n
\n
Gross amount
\n
0 0
\n
Accumulated impairment
\n
0 0
\n
Breakdown by type
\n
\n
Unlisted
\n
32 37
\n
Listed
\n
0 0
\n
Fair value of investments in listed associated companies and joint ventures
\n
0 0
\n
\n
\u2022 Associated companies are companies on whose management KBC exerts significant influence, without having direct or indirect
\n
full or joint control. In general, KBC has a 20% to 50% shareholding in such companies. Joint ventures are companies over which
\n
KBC exercises joint control.
\n
\u2022 Goodwill paid on associated companies and joint ventures is included in the nominal value of \u2018Investments in associated
\n
companies and joint ventures\u2019 shown on the balance sheet. An impairment test is performed and, if required, the necessary
\n
impairment losses on goodwill recognised (see table).
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInAssociatesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag840": { "value": "\n
Note 3.11: Share in results of associated companies and joint ventures
\n
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
-10 -5
\n
Of which
\n
\n
Isabel NV
\n
2 2
\n
Joyn International NV
\n
-1 1
\n
Bancontact Payconiq Company NV
\n
1 1
\n
Payconiq International SA
\n
-6 -6
\n
Skip Pay, s.r.o.
\n
0 -3
\n
Batopin NV
\n
-3 -1
\n
IGLUU s.r.o.
\n
-1 0
\n
Immoscoop 2.0 BV
\n
-2 0
\n
\n
\u2022 Impairment on (goodwill on) associated companies and joint ventures is included in \u2018Impairment\u2019 (see Note 3.10). The share in
\n
results of associated companies and joint ventures does not therefore take this impairment into account.
\n

\n\n

\n\n
Note 5.3: Investments in associated companies and joint ventures
\n
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
Total
\n
32 37
\n
Overview of investments, including goodwill
\n
\n
Skip Pay, s.r.o.
\n
- 3
\n
IGLUU s.r.o.
\n
2 -
\n
Immoscoop 2.0 BV
\n
1 -
\n
Isabel NV
\n
12 11
\n
Joyn
\n
International NV 0 1
\n
Bancontact Payconiq Company NV
\n
7 6
\n
Payconiq International SA
\n
7 9
\n
Batopin NV
\n
1 4
\n
Other
\n
2 4
\n
Goodwill on associated companies and joint ventures
\n
\n
Gross amount
\n
0 0
\n
Accumulated impairment
\n
0 0
\n
Breakdown by type
\n
\n
Unlisted
\n
32 37
\n
Listed
\n
0 0
\n
Fair value of investments in listed associated companies and joint ventures
\n
0 0
\n
\n
\u2022 Associated companies are companies on whose management KBC exerts significant influence, without having direct or indirect
\n
full or joint control. In general, KBC has a 20% to 50% shareholding in such companies. Joint ventures are companies over which
\n
KBC exercises joint control.
\n
\u2022 Goodwill paid on associated companies and joint ventures is included in the nominal value of \u2018Investments in associated
\n
companies and joint ventures\u2019 shown on the balance sheet. An impairment test is performed and, if required, the necessary
\n
impairment losses on goodwill recognised (see table).
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfJointVenturesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag810": { "value": "\n
Note 3.12: Income tax expense
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Total
\n
-608 -804
\n
By type
\n
\n
Current taxes on income
\n
-525 -485
\n
Deferred taxes on
\n
income -83 -319
\n
Tax components
\n
\n
Result before tax
\n
3 351 3 418
\n
Income tax at the Belgian statutory rate
\n
25.00% 25.00%
\n
Income tax calculated
\n
-838 -855
\n
Plus/minus tax effects attributable to
\n
\n
\n
differences in tax rates, Belgium \u2013 abroad 131 106
\n
\n
tax-free income 130 86
\n
\n
adjustments related to prior years 4 -4
\n
\n
adjustments to deferred taxes due to change in tax rate -1 -1
\n
\n
unused tax losses and unused tax credits to reduce current tax expense 2 1
\n
\n
unused tax losses and unused tax credits to reduce deferred tax expense 28 2
\n
\n
reversal of previously recognised deferred tax assets due to tax losses 0 -59
\n
\n
other (including non-deductible expenses) -63 -81
\n
\n
\u2022 For information on tax assets and tax liabilities, see Note 5.2.
\n
\u2022 In 2021, the \u2018Reversal of previously recognised deferred tax assets due to tax losses\u2019 item includes the one-off negative impact
\n
of 51 million euros due to the derecognition of deferred tax assets as a result of the sale transactions in Ireland. Taxes in 2022
\n
were bolstered by a one-off recognition of 51 million euros in deferred tax assets, partly due to the increase in business tax in
\n
the UK from 19% to 25% and the recognition of a deferred tax asset in Ireland (see also Note 6.6).
\n
\u2022 Following the conversion of the Pillar 2 rules into a European Directive, KBC has conducted an initial analysis of the impact of
\n
these rules on its organisation. These new rules are expected to have limited impact on KBC and as a result of specific
\n
circumstances in certain entities the effective tax rate would fall to below 15%. A more detailed estimate will be prepared based
\n
on a more detailed interpretation of the top-up taxes and safe harbour rules in the countries with local KBC presence.
\n
\u2022 The table on the next page shows the country-by-country reporting.
\n

\n\n

\n\n
Revenues from
\n
intra-group
\n
Tangible assets
\n
Average
\n
Revenues
\n
transactions
\n
Income tax
\n
Income taxes
\n
other than
\n
Government
\n
number of
\n
from third-
\n
with other tax
\n
Result
\n
accrued \u2013
\n
paid on a
\n
Retained
\n
cash and cash
\n
grants
\n
(in millions of EUR)
\n
FTEs
\n
party sales
\n
\n
1
\n
jurisdictions
\n
2
\n
\n
before tax
\n
current year
\n
cash basis
\n
earnings
\n
equivalents
\n
3
\n
\n
received
\n
2022
\n
\n
KBC core countries
\n
\n
\n
Belgium
\n
13 959
\n
4 712
\n
598
\n
1 801
\n
-261
\n
-229
\n
12 423
\n
2 260
\n
0
\n
\n
Czech Republic
\n
10 166
\n
1 794
\n
-554
\n
816
\n
-157
\n
-128
\n
1 582
\n
548
\n
0
\n
\n
Slovakia
\n
3 685
\n
753
\n
-28
\n
229
\n
-40
\n
5
\n
643
\n
153
\n
0
\n
\n
Hungary
\n
3 241
\n
364
\n
4
\n
118
\n
-26
\n
-18
\n
-182
\n
185
\n
0
\n
\n
Bulgaria
\n
5 482
\n
401
\n
-8
\n
174
\n
-18
\n
-17
\n
-115
\n
209
\n
0
\n
Other countries
\n
\n
\n
China
\n
35
\n
1
\n
0
\n
0
\n
-1
\n
0
\n
0
\n
-3
\n
0
\n
\n
Germany
\n
22
\n
1
\n
0
\n
0
\n
-1
\n
-1
\n
0
\n
0
\n
0
\n
\n
France
\n
56
\n
5
\n
-2
\n
9
\n
-2
\n
-2
\n
1
\n
0
\n
0
\n
\n
Great Britain
\n
39
\n
17
\n
8
\n
16
\n
17
\n
17
\n
528
\n
-1
\n
0
\n
\n
Hong Kong
\n
36
\n
1
\n
0
\n
1
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
Ireland
\n
1 069
\n
341
\n
107
\n
130
\n
-9
\n
-9
\n
-1 665
\n
18
\n
\n
\n
Italy
\n
7
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
Luxembourg
\n
39
\n
59
\n
-125
\n
48
\n
-27
\n
7
\n
157
\n
137
\n
0
\n
\n
The Netherlands
\n
25
\n
4
\n
0
\n
1
\n
0
\n
0
\n
5
\n
40
\n
0
\n
\n
Romania
\n
0
\n
3
\n
0
\n
3
\n
0
\n
0
\n
20
\n
33
\n
0
\n
\n
Singapore
\n
43
\n
2
\n
0
\n
1
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
USA
\n
43
\n
4
\n
0
\n
2
\n
0
\n
0
\n
0
\n
-20
\n
0
\n
Total
\n
\n
37
\n
\n
946
\n
8 463
\n
0
\n
\n
\n
3 351
\n
-525
\n
\n
-376
\n
\n
\n
13 399
\n
3 560
\n
\n
\n
0
\n
2021
\n
\n
KBC core countries
\n
\n
\n
Belgium
\n
14 223
\n
4 259
\n
46
\n
2 018
\n
-356
\n
-333
\n
12 886
\n
2 130
\n
0
\n
\n
Czech Republic
\n
10 029
\n
1 508
\n
-53
\n
845
\n
-132
\n
-101
\n
2 051
\n
560
\n
0
\n
\n
Slovakia
\n
3 683
\n
572
\n
-8
\n
268
\n
-41
\n
-29
\n
651
\n
164
\n
0
\n
\n
Hungary
\n
3 513
\n
329
\n
7
\n
111
\n
-15
\n
-15
\n
-217
\n
203
\n
0
\n
\n
Bulgaria
\n
4 203
\n
259
\n
-13
\n
128
\n
-13
\n
-12
\n
-176
\n
193
\n
0
\n
\n
Ireland
\n
1 192
\n
343
\n
139
\n
-134
\n
-4
\n
-4
\n
-1 630
\n
47
\n
0
\n
Other countries
\n
\n
\n
China
\n
45
\n
9
\n
0
\n
3
\n
3
\n
3
\n
0
\n
1
\n
0
\n
\n
Germany
\n
23
\n
14
\n
0
\n
13
\n
8
\n
8
\n
0
\n
0
\n
0
\n
\n
France
\n
52
\n
50
\n
-2
\n
30
\n
21
\n
21
\n
1
\n
1
\n
0
\n
\n
Great Britain
\n
37
\n
46
\n
1
\n
13
\n
10
\n
10
\n
521
\n
1
\n
0
\n
\n
Hong Kong
\n
40
\n
8
\n
0
\n
1
\n
1
\n
1
\n
0
\n
1
\n
0
\n
\n
Italy
\n
8 0 0 -2 -2 -2 0 0 0
\n
\n
Luxembourg
\n
39
\n
75
\n
-117
\n
63
\n
-7
\n
10
\n
162
\n
142
\n
0
\n
\n
The Netherlands
\n
21
\n
35
\n
0
\n
30
\n
20
\n
20
\n
7
\n
74
\n
0
\n
\n
Romania
\n
0
\n
4
\n
0
\n
4
\n
0
\n
0
\n
17
\n
34
\n
0
\n
\n
Singapore
\n
39
\n
9
\n
0
\n
11
\n
9
\n
11
\n
0
\n
1
\n
0
\n
\n
USA
\n
\n
49
\n
39
\n
0
\n
17
\n
13
\n
15
\n
0
\n
17
\n
0
\n
Total
\n
\n
37 194
\n
7 558
\n
0
\n
3 418
\n
-485
\n
-398
\n
14 272
\n
3 568
\n
0
\n

\n\n
Countries with zero FTEs and whose figures are below 0.5 million euros (i.e. rounded to zero in the table) have been excluded.
\n
1 Corresponds to \u2018Total income\u2019 in the income statement.
\n
2 If this column contains a positive figure for a particular jurisdiction, it means that all group entities in that jurisdiction combined had more intra-group income than intra-group expenses
\n
compared with other tax jurisdictions. If the figure is negative, it means that all group entities in this jurisdiction combined had less intra-group income than intra-group expenses arising
\n
compared with other tax jurisdictions.
\n
3 Corresponds to \u2018Property and equipment and investment property\u2019 in the balance sheet.
\n

\n\n

\n\n

\n\n
Note 5.2: Tax assets and tax liabilities
\n
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
CURRENT TAXES
\n
\n
Current tax assets
\n
174 179
\n
Current tax liabilities
\n
150 87
\n
DEFERRED TAXES
\n
1 005 769
\n
Deferred tax assets by type of temporary difference
\n
1 475 1 413
\n
Employee benefits
\n
78 82
\n
Losses carried forward
\n
186 247
\n
Tangible and intangible fixed assets
\n
77 126
\n
Provisions for risks and charges
\n
49 21
\n
Impairment for losses on loans and advances
\n
219 273
\n
Financial instruments at fair value through profit or loss and fair value hedges
\n
142 113
\n
Fair value changes, available-for-sale assets, financial instruments at FVOCI, cashflow hedges and hedges of net investments
\n
in foreign operations
\n
594 476
\n
Technical provisions
\n
42 30
\n
Other
\n
88 47
\n
Deferred tax liabilities by type of
\n
temporary difference 470 644
\n
Employee benefits
\n
99 37
\n
Losses carried forward
\n
0 0
\n
Tangible and intangible fixed assets
\n
41 34
\n
Provisions for risks and charges
\n
9 9
\n
Impairment for losses on loans and advances
\n
3 3
\n
Financial instruments at fair value
\n
through profit or loss and fair value hedges 131 132
\n
Fair value changes, available-for-sale assets, financial instruments at FVOCI, cashflow hedges and hedges of net investments
\n
in foreign operations
\n
44 292
\n
Technical provisions
\n
115 106
\n
Other
\n
29 33
\n
Recognised as a net amount in the balance sheet as follows:
\n
\n
Deferred tax assets
\n
1 138 1 117
\n
Deferred tax liabilities
\n
133 348
\n
Unused tax losses and unused tax credits
\n
151 177
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag838": { "value": "\n
Revenues from
\n
intra-group
\n
Tangible assets
\n
Average
\n
Revenues
\n
transactions
\n
Income tax
\n
Income taxes
\n
other than
\n
Government
\n
number of
\n
from third-
\n
with other tax
\n
Result
\n
accrued \u2013
\n
paid on a
\n
Retained
\n
cash and cash
\n
grants
\n
(in millions of EUR)
\n
FTEs
\n
party sales
\n
\n
1
\n
jurisdictions
\n
2
\n
\n
before tax
\n
current year
\n
cash basis
\n
earnings
\n
equivalents
\n
3
\n
\n
received
\n
2022
\n
\n
KBC core countries
\n
\n
\n
Belgium
\n
13 959
\n
4 712
\n
598
\n
1 801
\n
-261
\n
-229
\n
12 423
\n
2 260
\n
0
\n
\n
Czech Republic
\n
10 166
\n
1 794
\n
-554
\n
816
\n
-157
\n
-128
\n
1 582
\n
548
\n
0
\n
\n
Slovakia
\n
3 685
\n
753
\n
-28
\n
229
\n
-40
\n
5
\n
643
\n
153
\n
0
\n
\n
Hungary
\n
3 241
\n
364
\n
4
\n
118
\n
-26
\n
-18
\n
-182
\n
185
\n
0
\n
\n
Bulgaria
\n
5 482
\n
401
\n
-8
\n
174
\n
-18
\n
-17
\n
-115
\n
209
\n
0
\n
Other countries
\n
\n
\n
China
\n
35
\n
1
\n
0
\n
0
\n
-1
\n
0
\n
0
\n
-3
\n
0
\n
\n
Germany
\n
22
\n
1
\n
0
\n
0
\n
-1
\n
-1
\n
0
\n
0
\n
0
\n
\n
France
\n
56
\n
5
\n
-2
\n
9
\n
-2
\n
-2
\n
1
\n
0
\n
0
\n
\n
Great Britain
\n
39
\n
17
\n
8
\n
16
\n
17
\n
17
\n
528
\n
-1
\n
0
\n
\n
Hong Kong
\n
36
\n
1
\n
0
\n
1
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
Ireland
\n
1 069
\n
341
\n
107
\n
130
\n
-9
\n
-9
\n
-1 665
\n
18
\n
\n
\n
Italy
\n
7
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
Luxembourg
\n
39
\n
59
\n
-125
\n
48
\n
-27
\n
7
\n
157
\n
137
\n
0
\n
\n
The Netherlands
\n
25
\n
4
\n
0
\n
1
\n
0
\n
0
\n
5
\n
40
\n
0
\n
\n
Romania
\n
0
\n
3
\n
0
\n
3
\n
0
\n
0
\n
20
\n
33
\n
0
\n
\n
Singapore
\n
43
\n
2
\n
0
\n
1
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
USA
\n
43
\n
4
\n
0
\n
2
\n
0
\n
0
\n
0
\n
-20
\n
0
\n
Total
\n
\n
37
\n
\n
946
\n
8 463
\n
0
\n
\n
\n
3 351
\n
-525
\n
\n
-376
\n
\n
\n
13 399
\n
3 560
\n
\n
\n
0
\n
2021
\n
\n
KBC core countries
\n
\n
\n
Belgium
\n
14 223
\n
4 259
\n
46
\n
2 018
\n
-356
\n
-333
\n
12 886
\n
2 130
\n
0
\n
\n
Czech Republic
\n
10 029
\n
1 508
\n
-53
\n
845
\n
-132
\n
-101
\n
2 051
\n
560
\n
0
\n
\n
Slovakia
\n
3 683
\n
572
\n
-8
\n
268
\n
-41
\n
-29
\n
651
\n
164
\n
0
\n
\n
Hungary
\n
3 513
\n
329
\n
7
\n
111
\n
-15
\n
-15
\n
-217
\n
203
\n
0
\n
\n
Bulgaria
\n
4 203
\n
259
\n
-13
\n
128
\n
-13
\n
-12
\n
-176
\n
193
\n
0
\n
\n
Ireland
\n
1 192
\n
343
\n
139
\n
-134
\n
-4
\n
-4
\n
-1 630
\n
47
\n
0
\n
Other countries
\n
\n
\n
China
\n
45
\n
9
\n
0
\n
3
\n
3
\n
3
\n
0
\n
1
\n
0
\n
\n
Germany
\n
23
\n
14
\n
0
\n
13
\n
8
\n
8
\n
0
\n
0
\n
0
\n
\n
France
\n
52
\n
50
\n
-2
\n
30
\n
21
\n
21
\n
1
\n
1
\n
0
\n
\n
Great Britain
\n
37
\n
46
\n
1
\n
13
\n
10
\n
10
\n
521
\n
1
\n
0
\n
\n
Hong Kong
\n
40
\n
8
\n
0
\n
1
\n
1
\n
1
\n
0
\n
1
\n
0
\n
\n
Italy
\n
8 0 0 -2 -2 -2 0 0 0
\n
\n
Luxembourg
\n
39
\n
75
\n
-117
\n
63
\n
-7
\n
10
\n
162
\n
142
\n
0
\n
\n
The Netherlands
\n
21
\n
35
\n
0
\n
30
\n
20
\n
20
\n
7
\n
74
\n
0
\n
\n
Romania
\n
0
\n
4
\n
0
\n
4
\n
0
\n
0
\n
17
\n
34
\n
0
\n
\n
Singapore
\n
39
\n
9
\n
0
\n
11
\n
9
\n
11
\n
0
\n
1
\n
0
\n
\n
USA
\n
\n
49
\n
39
\n
0
\n
17
\n
13
\n
15
\n
0
\n
17
\n
0
\n
Total
\n
\n
37 194
\n
7 558
\n
0
\n
3 418
\n
-485
\n
-398
\n
14 272
\n
3 568
\n
0
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfGovernmentGrantsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag804": { "value": "\n
Note 3.13: Earnings per share
\n
\n
(in millions of EUR)
\n
2022 2021
\n
Result after tax, attributable to equity holders of the parent
\n
2 743 2 614
\n
Coupon on AT1 instruments
\n
-50 -50
\n
Net result used to determine basic earnings per share
\n
2 694 2 564
\n
Weighted average number of ordinary shares outstanding (millions of
\n
units) 417 417
\n
Basic earnings per share (EUR)
\n
6.46 6.15
\n
\n
\u2022 Diluted earnings per share are currently almost the same as basic earnings per share.
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag859": { "value": "\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.1: Financial assets and liabilities, breakdown by portfolio and product
\n
(in millions of EUR)
\n
Measured
\n
at
\n
amortised
\n
cost (AC)
\n
Measured
\n
at fair
\n
value
\n
through
\n
other
\n
compre-
\n
hensive
\n
income
\n
(FVOCI)
\n
Mandatorily
\n
measured at
\n
fair value
\n
through
\n
profit or loss
\n
(MFVPL) excl.
\n
HFT and
\n
overlay
\n
Measured at
\n
fair value \u2013
\n
overlay
\n
approach
\n
(overlay)
\n
Held for
\n
trading
\n
(HFT)
\n
Desig-
\n
nated at
\n
fair value
\n
1
\n
(FVO)
\n
Hedging
\n
Deriva-
\n
tives
\n
Total
\n
Total pro
\n
forma
\n
excluding
\n
KBC Bank
\n
Bulgaria
\n
(formerly
\n
Raiffeisen-
\n
bank
\n
Bulgaria)
\n
FINANCIAL ASSETS, 31-12-2022
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
4 240 0 13 0 1 0 0 4 254
\n
4 203
\n
of which loans and advances to banks repayable on
\n
demand and term loans to banks at not more than three
\n
months
\n
\n
1 237 1 237
\n
Loans and advances to customers (excluding reverse
\n
repos)
\n
177 427 0 625 0 0 0 0 178 053
\n
174 083
\n
Trade receivables
\n
2 818
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 818
\n
2 729
\n
Consumer credit
\n
6 222
\n
0
\n
430
\n
0
\n
0
\n
0
\n
0
\n
6 652
\n
5 977
\n
Mortgage loans
\n
73 465
\n
0
\n
196
\n
0
\n
0
\n
0
\n
0
\n
73 660
\n
72 891
\n
Term loans
\n
82 894
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
82 894
\n
80 744
\n
Finance lease
\n
6 368
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
6 368
\n
6 117
\n
Current account advances
\n
4 886
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 886
\n
4 885
\n
Other
\n
774
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
774
\n
740
\n
Reverse repos
\n
2
\n
\n
20 186
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 219
\n
20 219
\n
with credit institutions and investment firms
\n
20 018
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 050
\n
20 050
\n
with customers
\n
168
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
168
\n
168
\n
Equity instruments
\n
0
\n
315
\n
13
\n
1 237
\n
430
\n
0
\n
0
\n
1 994
\n
1 989
\n
Investment contracts (insurance)
\n
6
\n
\n
0
\n
0
\n
12 771
\n
0
\n
0
\n
0
\n
0
\n
12 771
\n
12 771
\n
Debt securities
\n
52 030
\n
11 813
\n
17
\n
0
\n
1 728
\n
0
\n
0
\n
65 588
\n
64 871
\n
Public bodies
\n
44 219
\n
8 135
\n
0
\n
0
\n
1 667
\n
0
\n
0
\n
54 021
\n
53 390
\n
Credit institutions and investment firms
\n
5 160
\n
1 621
\n
0
\n
0
\n
9
\n
0
\n
0
\n
6 790
\n
6 747
\n
Corporates
\n
2 651
\n
2 057
\n
17
\n
0
\n
53
\n
0
\n
0
\n
4 777
\n
4 733
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
6 279
\n
0
\n
542
\n
6 821
\n
6 813
\n
3
\n
\n
Other
\n
1 561
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
1 561
\n
1 561
\n
Total
\n
255 444
\n
12 128
\n
13 439
\n
1 237
\n
8 471
\n
0
\n
542
\n
291 262
\n
286 511
\n
FINANCIAL ASSETS, 31-12-2021
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
7 920 0 0 0 1 0 0 7 920
\n
-
\n
of which loans and advances to banks repayable on demand
\n
and term loans to banks at not more than three months
\n
3 146 -
\n
Loans and advances to customers (excl. reverse repos)
\n
159 167
\n
0
\n
560
\n
0
\n
0
\n
0
\n
0
\n
159 728
\n
-
\n
Trade receivables
\n
2 090
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 090
\n
-
\n
Consumer credit
\n
5 470
\n
0
\n
381
\n
0
\n
0
\n
0
\n
0
\n
5 851
\n
-
\n
Mortgage loans
\n
67 486
\n
0
\n
179
\n
0
\n
0
\n
0
\n
0
\n
67 665
\n
-
\n
Term loans
\n
72 998
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
72 998
\n
-
\n
Finance lease
\n
5 815
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
5 815
\n
-
\n
Current account advances
\n
4 819
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 819
\n
-
\n
Other
\n
490
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
490
\n
-
\n
2
\n
-
\n
\n
Reverse repos
\n
24 978
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 978
\n
with credit institutions and investment firms
\n
24 861
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 861
\n
-
\n
with customers
\n
117
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
117
\n
-
\n
Equity instruments
\n
0
\n
321
\n
8
\n
1 366
\n
448
\n
0
\n
0
\n
2 144
\n
-
\n
6
\n
-
\n
\n
Investment contracts (insurance)
\n
0
\n
0
\n
14 620
\n
0
\n
0
\n
0
\n
0
\n
14 620
\n
Debt securities
\n
47 172
\n
15 503
\n
17
\n
0
\n
2 958
\n
0
\n
0
\n
65 650
\n
-
\n
Public bodies
\n
41 475
\n
10 514
\n
0
\n
0
\n
2 517
\n
0
\n
0
\n
54 507
\n
-
\n
Credit institutions and investment firms
\n
3 310
\n
2 245
\n
0
\n
0
\n
357
\n
0
\n
0
\n
5 912
\n
-
\n
Corporates
\n
2 387
\n
2 744
\n
17
\n
0
\n
84
\n
0
\n
0
\n
5 232
\n
-
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
5 443
\n
0
\n
283
\n
5 727
\n
-
\n
3
\n
-
\n
\n
Other
\n
892
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
892
\n
Total
\n
240 128
\n
15 824
\n
15 205
\n
1 366
\n
8 850
\n
0
\n
283
\n
281 658
\n
-
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
(in millions of EUR)
\n
Measured at
\n
amortised
\n
cost
\n
(AC)
\n
Held for
\n
trading (HFT)
\n
Designated at
\n
fair value (FVO)
\n
\n
Hedging
\n
derivatives
\n
Total
\n
Total pro forma
\n
excluding KBC
\n
Bank Bulgaria
\n
(formerly
\n
Raiffeisenbank
\n
Bulgaria)
\n
FINANCIAL
\n
LIABILITIES, 31-12-2022
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
24 819 0 0 0 24 819
\n
24 737
\n
of which deposits from banks repayable on demand
\n
\n
\n
\n
\n
\n
\n
\n
5 085 5 085
\n
Deposits from customers and debt
\n
securities (excl. repos)
\n
\n
251 496 44 1 205 0 252 746
\n
247 585
\n
\n
Demand deposits 122 053 0 0 0 122 053 117 401
\n
\n
Time deposits 22 280 44 73 0 22 397 21 960
\n
\n
Savings accounts 76 979 0 0 0 76 979 76 954
\n
\n
Special deposits 2 710 0 0 0 2 710 2 663
\n
\n
Other deposits 268 0 0 0 268 268
\n
Subtotal deposits from customers (excl. repos)
\n
224 290 44 73 0 224 407 219 246
\n
\n
Certificates of deposit 9 321 0 1 0 9 322 9 322
\n
\n
Savings certificates 104 0 0 0 104 104
\n
\n
Non-convertible bonds 15 621 0 1 006 0 16 627 16 627
\n
\n
Non-convertible subordinated liabilities 2 160 0 126 0 2 285 2 285
\n
Repos
\n
4
\n
11 091 7 0 0 11 097
\n
11 097
\n
\n
with credit institutions and investment firms 10 852 7 0 0 10 859 10 859
\n
\n
with customers 239 0 0 0 239 239
\n
Liabilities under investment contracts
\n
6
\n
0 0 12 002 0 12 002
\n
12 002
\n
Derivatives
\n
0 8 038 0 577 8 615
\n
8 605
\n
Short positions
\n
0 1 007 0 0 1 007
\n
1 007
\n
\n
In equity instruments 0 5 0 0 5 5
\n
\n
In debt securities 0 1 002 0 0 1 002 1 002
\n
Other
\n
5
\n
2 448 0 0 0 2 448
\n
2 370
\n
Total
\n
289 854 9 096 13 207 577 312 735
\n
307 403
\n
FINANCIAL LIABILITIES, 31
\n
-12-2021
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
38 047 0 0 0 38 047
\n
-
\n
of which deposits from banks repayable on demand 4 695 -
\n
Deposits from
\n
customers and debt securities (excl. repos)
\n
\n
224 759 21 1 312 0 226 093
\n
-
\n
\n
Demand deposits 112 097 0 0 0 112 097
\n
-
\n
\n
Time deposits 9 106 21 60 0 9 187
\n
-
\n
\n
Savings accounts 74 801 0 0 0 74 801
\n
-
\n
\n
Special deposits 2 962 0 0 0 2 962
\n
-
\n
\n
Other deposits 428 0 0 0 428
\n
-
\n
Subtotal deposits from customers (excl. repos)
\n
199 395 21 60 0 199 476
\n
-
\n
\n
Certificates of deposit 6 273 0 0 0 6 273
\n
-
\n
\n
Savings certificates 253 0 0 0 253
\n
-
\n
\n
Non-convertible bonds 15 892 0 1 118 0 17 011
\n
-
\n
\n
Non-convertible subordinated liabilities 2 946 0 134 0 3 080
\n
-
\n
Repos
\n
4
\n
3 293 2 0 0 3 295
\n
-
\n
\n
with credit institutions and investment firms 2 888 2 0 0 2 890
\n
-
\n
\n
with customers 405 0 0 0 405
\n
-
\n
Liabilities under investment
\n
contracts
\n
6
\n
0 0 13 603 0 13 603
\n
-
\n
Derivatives
\n
0 5 619 0 1 094 6 713
\n
-
\n
Short positions
\n
0 1 628 0 0 1 628
\n
-
\n
\n
In equity instruments 0 18 0 0 18
\n
-
\n
\n
In debt securities 0 1 611 0 0 1 611
\n
-
\n
Other
\n
5
\n
2 288 0 0 0 2 288
\n
-
\n
Total
\n
268 387 7 271 14 916 1 094 291 667
\n
-
\n
1 The carrying value comes close to the maximum credit exposure.
\n
2 The amount of the reverse repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out).
\n
3 Financial assets not included under \u2018Loans and advances to customers\u2019 as they are not directly related to commercial lending.
\n
4 The amount of the repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out), with the assets being partly reflected on the balance sheet
\n
and partly obtained through reverse repo transactions.
\n
5 Financial liabilities not included under deposits from customers as they are not directly related to commercial deposit acquisition.
\n
6 The difference between \u2018Investment contracts (insurance)\u2019 and \u2018Liabilities under investment contracts\u2019 is accounted for by the presentation of non-unbundled investment contracts that are
\n
included under \u2018Investment contracts (insurance)\u2019 on the financial assets side, but are included under \u2018Technical provisions (before reinsurance)\u2019 on the liabilities side.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n\n
\u2022 \u2018Non-convertible bonds\u2019 comprise mainly KBC Bank, KBC Group, \u010cSOB and KBC IFIMA issues. They are usually recognised under
\n
\u2018Measured at amortised cost\u2019. However, if they contain closely related embedded derivatives, they are recorded under
\n
\u2018Designated at fair value\u2019 (see accounting policies). This item also includes three green bonds (for 500, 500 and 750 million euros
\n
each) and a social bond (for 750 million euros), which have been recognised at amortised cost.
\n
\u2022 More information on major new debt issues or redemptions is provided under the \u2018Consolidated cashflow statement\u2019.
\n
\u2022 \u2018Deposits from credit institutions and investment firms\u2019 include funding obtained from the ECB\u2019s TLTRO programme (15.4 billion
\n
euros at year-end 2022, 9.1 billion euros less than at year-end 2021 on account of redemptions). KBC calculates these deposits
\n
using the effective interest rate method, with the rate being adjusted should we fail to meet the conditions (similar to a floating
\n
rate instrument), as per paragraph B.5.4.5 of IFRS 9. KBC\u2019s management has reasonable assurance that KBC will comply with
\n
the conditions attached (including the level of lending to households and non-financial companies) and hence the interest has
\n
accordingly been recognised (a gross amount of 112 million euros in interest income (negative interest rate) in 2022 and 242
\n
million euros in 2021).
\n
\u2022 Transferred financial assets that continue to be recognised in their entirety: KBC regularly lends and/or sells securities with the
\n
commitment to buy them back at a later date (repo transactions). Securities lent or sold with such a commitment are transferred
\n
to the counterparty, and, in exchange, KBC receives cash or other financial assets. However, KBC retains the main risks and
\n
income relating to these securities, and, therefore, continues to recognise them on its balance sheet. In addition, a financial
\n
liability is recognised equalling the cash received.
\n
\n
Transferred financial assets that continue to be recognised in their entirety (carrying value, in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Transferred financial assets that continue to be recognised in their entirety: repo transactions and securities lent out
\n
17 425 13 762
\n
Held for
\n
trading 960 1 221
\n
Fair value through OCI
\n
860 1 474
\n
Amortised cost
\n
15 605 11 067
\n
Associated financial liability
\n
10 534 2 936
\n
Held for trading
\n
689 335
\n
Fair value through OCI
\n
609 362
\n
Amortised cost
\n
9 236 2 239
\n
\n
\u2022 It should be noted that KBC has more transferred financial assets on its balance sheet than repo transactions, due to the fact
\n
that the cash legs of certain repo transactions are offset against reverse repo transactions if they are carried out with the same
\n
counterparty, in the same currency and with the same maturity date. Moreover, there is a legally enforceable right, and an
\n
intention, to settle the transactions on a net basis or to realise the financial asset and settle the financial liability simultaneously.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria in 2022 is provided in Note 6.6.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. We report on estimated greenhouse gas emissions
\n
associated with lending and other activities and have defined objectives for reducing the greenhouse gas intensity of loans
\n
we have provided to the energy sector, electricity producers and the real estate sector, mortgage loans and loans provided
\n
for commercial residential real estate, as well as loans provided to the automotive industry and financial and operational car
\n
leasing (see Note 6.2), the agricultural sector, and cement, steel and aluminium producers. See \u2018Focus on climate\u2019 in the \u2018Report
\n
of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our Climate Report and
\n
\n
our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.3: Maximum credit exposure and offsetting
\n
\n
Collateral and other
\n
Maximum credit
\n
credit enhancements
\n
(in millions of EUR)
\n
\n
exposure (A)
\n
received (B) Net (A-B)
\n
31
\n
-12-2022
\n
\n
\n
\n
Subject to impairment
\n
326 705 132 743 193 962
\n
\n
of which Stage 3 \u2018non-performing\u2019 (AC and FVOCI)
\n
2 106
\n
1 550
\n
556
\n
Debt securities
\n
63 843 98 63 745
\n
Loans and advances (excl. reverse
\n
repos) 181 668 99 415 82 252
\n
Reverse repos
\n
20 186 20 131 55
\n
Other financial assets
\n
1 561 0 1 561
\n
Off
\n
-balance-sheet liabilities 59 447 13 099 46 348
\n
\n
Irrevocable
\n
38 832
\n
6 741
\n
32 091
\n
\n
Revocable
\n
20 616
\n
6 358
\n
14 258
\n
Not
\n
subject to impairment 9 239 2 213 7 026
\n
Debt securities
\n
1 745 0 1 745
\n
Loans and advances (excl. reverse repos)
\n
639 593 46
\n
\n
of which designated upon initial recognition at fair value through profit or loss (FVO)
\n
0 0 0
\n
Reverse repos
\n
33 33 0
\n
Derivatives
\n
6 821 1 588 5 234
\n
Other financial assets
\n
0 0 0
\n
Off
\n
-balance-sheet liabilities 0 0 0
\n
Total
\n
335 944 134 956 200 987
\n
31
\n
-12-2021
\n
\n
\n
\n
Subject to impairment
\n
309 988 127 140 182 848
\n
\n
of which Stage 3 \u2018non-performing\u2019 (AC and FVOCI) 2 072 1 584 488
\n
Debt securities
\n
62 675 93 62 582
\n
Loans and advances (excl. reverse repos)
\n
167 087 90 770 76 317
\n
Reverse repos
\n
24 978 24 877 101
\n
Other financial assets
\n
892 0 892
\n
Off
\n
-balance-sheet liabilities 54 357 11 400 42 957
\n
\n
Irrevocable 36 957 6 031 30 926
\n
\n
Revocable 17 401 5 370 12 031
\n
Not subject to
\n
impairment 9 263 2 294 6 969
\n
Debt securities
\n
2 976 0 2 976
\n
Loans and advances (excl. reverse repos)
\n
561 545 16
\n
\n
of which designated upon initial recognition at fair value through profit or loss (FVO) 0 0 0
\n
Reverse repos
\n
0 0 0
\n
Derivatives
\n
5 727 1 749 3 977
\n
Other financial assets
\n
0 0 0
\n
Off
\n
-balance-sheet liabilities 0 0 0
\n
Total
\n
319 251 129 434 189 818
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
\u2022 Maximum credit exposure for a financial asset is the net carrying value. Besides the amounts on the balance sheet, maximum
\n
credit exposure also includes the undrawn portion of irrevocable credit lines, financial guarantees granted and other
\n
irrevocable commitments.
\n
\u2022 The main types of collateral and other credit enhancements received relate to mortgages on real estate (mainly collateral for
\n
mortgage loans), securities lent out (mainly as a collateral for reverse repos), off-balance-sheet financial guarantees received
\n
and collateral of movable property. Mortgage loans with an LTV (loan-to-value) greater than 100% are limited to 0.6 billion
\n
euros or 0.7% of the entire mortgage loan portfolio at year-end 2022.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. Based on internal management reports, the
\n
composition and quality of the loan portfolio is set out in detail in the \u2018How do we manage our risks?\u2019 section (under \u2018Credit
\n
risk\u2019). All parts of that particular section which have been audited by the statutory auditor are listed at the start of the section.
\n\n
\u2022 Collateral and credit enhancements received: recognised at market value and limited to the outstanding amount of the
\n
relevant loans.
\n

\n\n
\u2022 The maximum credit exposure for the KBC Bank Ireland financial assets has not been included in the above figures (see Note
\n
5.11 for more information).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Financial instruments subject to offsetting, enforceable master
\n
financial
\n
instruments set
\n
the balance
\n
Amounts not set off
\n
netting agreements and similar arrangements
\n
instruments
\n
off
\n
sheet
\n
in the balance sheet
\n
Net amount
\n
\n
Financial
\n
Cash
\n
Securities
\n
(in millions of EUR)
\n
\n
\n
\n
\n
instruments
\n
collateral
\n
collateral
\n
\n
\n
31
\n
-12-2022
\n
FINANCIAL ASSETS
\n
Derivatives
\n
32 380 25 559 6 821 4 485 1 302 67 968
\n
\n
Derivatives (excluding central clearing houses)
\n
6
\n
\n
601
\n
\n
0
\n
\n
6
\n
\n
601
\n
\n
4
\n
\n
485
\n
\n
1
\n
\n
302
\n
\n
67
\n
\n
748
\n
\n
\n
Derivatives with central clearing houses
\n
*
\n
\n
25
\n
\n
779
\n
\n
25
\n
\n
559
\n
\n
220
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
220
\n
\n
Reverse repos, securities borrowing and similar
\n
arrangements 25 694 5 475 20 219 0 0 20 210 8
\n
\n
Reverse repos
\n
25
\n
\n
694
\n
\n
5
\n
\n
475
\n
\n
20
\n
\n
219
\n
\n
0
\n
\n
0
\n
\n
20
\n
\n
210
\n
\n
8
\n
\n
\n
Securities borrowing
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
58 074 31 034 27 040 4 485 1 302 20 277 976
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
31 462 22 846 8 615 4 492 1 095 447 2 582
\n
Derivatives (excluding central clearing houses)
\n
8
\n
\n
329
\n
0
\n
8
\n
\n
329
\n
4
\n
\n
492
\n
1
\n
\n
095
\n
447
\n
2
\n
\n
296
\n
Derivatives with central clearing houses
\n
*
\n
\n
23
\n
\n
132
\n
22
\n
\n
846
\n
286
\n
0
\n
0
\n
0
\n
286
\n
Repos, securities lending and similar arrangements
\n
16 573 5 475 11 097 0 0 11 082 15
\n
\n
Repos
\n
16
\n
\n
573
\n
\n
5
\n
\n
475
\n
\n
11
\n
\n
097
\n
\n
0
\n
\n
0
\n
\n
11
\n
\n
082
\n
\n
15
\n
\n
\n
Securities lending
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
48 035 28 322 19 713 4 492 1 095 11 529 2 597
\n
31
\n
-12-2021
\n
FINANCIAL ASSETS
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
13 969 8 242 5 727 2 731 1 298 112 1 586
\n
\n
Derivatives (excluding central clearing houses) 5 619 0 5 619 2 731 1 298 112 1 478
\n
\n
Derivatives with central clearing houses
\n
*
\n
8 349 8 242 107 0 0 0 107
\n
Reverse repos, securities borrowing and similar
\n
arrangements 38 160 13 182 24 978 67 0 24 900 10
\n
\n
Reverse repos 38 160 13 182 24 978 67 0 24 900 10
\n
\n
Securities borrowing 0 0 0 0 0 0 0
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
52 129 21 425 30 704 2 798 1 298 25 012 1 596
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
16 084 9 372 6 713 3 015 1 793 640 1 265
\n
\n
Derivatives (excluding central clearing houses) 6 608 0 6 609 3 015 1 793 640 1 161
\n
\n
Derivatives with central clearing houses
\n
*
\n
9 476 9 372 104 0 0 0 104
\n
Repos, securities lending and similar arrangements
\n
16 477 13 182 3 295 160 0 3 135 1
\n
\n
Repos 16 477 13 182 3 295 160 0 3 135 1
\n
\n
Securities lending 0 0 0 0 0 0 0
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
32 562 22 554 10 008 3 174 1 793 3 774 1 266
\n
* For central clearing houses, the offsetting procedure refers to the amount of offsetting between derivatives and related cash collateral. Cash collateral with central clearing houses
\n
amounted to 2 712 million euros at year-end 2022 and 1 130 million euros at year-end 2021.
\n
\n
\u2022 The criteria for offsetting are met if KBC currently has a legally enforceable right to set off the recognised financial assets and
\n
financial liabilities and intends either to settle the transactions on a net basis, or to realise the financial asset and settle the
\n
financial liability simultaneously. Financial assets and financial liabilities that are set off relate to financial instruments that were
\n
traded on (central) clearing houses.
\n\n
\u2022 The amounts presented in the \u2018Financial instruments\u2019 column under the \u2018Amounts not set off in the balance sheet\u2019 heading are
\n
for financial instruments entered into under an enforceable master netting agreement or similar arrangement that does not
\n
meet the criteria defined in IAS 32. These amounts refer to situations in which offsetting can only be applied if one of the
\n
counterparties defaults, becomes insolvent or goes bankrupt. The same principle applies for financial instruments given or
\n
received as collateral. The value given in the table for non-cash collateral received (in the \u2018Securities collateral\u2019 column under
\n
the \u2018Amounts not set off in the balance sheet\u2019 heading) is the market value. This is the value that is used if one of the
\n
counterparties defaults, becomes insolvent or goes bankrupt.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
which is monitored by the ECB. Note that this -3% of tier-1 capital at year-end 2022 is equivalent to a -0.4% points impact on
\n
the end of year 2022 fully loaded CET1 ratio.
\n
\u2022 The table shows the changes in economic value of equity under six different interest rate scenarios. To test these six scenarios,
\n
we combine the shift in the yield curves with changes in maturities depending on clients\u2019 behaviour (e.g., interest-rate-driven
\n
prepayment behaviour) and use a run-off balance sheet where maturing items are not replaced. The bank also analyses the
\n
impact of different interest rate scenarios on its net interest income.
\n
\n
Changes of the economic value of equity
\n
Supervisory shock scenarios (in millions of EUR, material currencies)*
\n
End of 4Q2022
\n
End of 2Q2022
\n
1 Parallel up
\n
-491
\n
-1 163
\n
2 Parallel down
\n
370
\n
600
\n
3 Steepener
\n
-55
\n
-207
\n
4 Flattener
\n
-26
\n
-3
\n
5 Short rates up
\n
-179
\n
-343
\n
6 Short rates down
\n
102
\n
176
\n
\n
* Supervision of the underlying internal models\u2019 compliance with the approval criteria as provided for in the standards imposed by the regulator does not come under the responsibility of the statutory auditor.
\n
\u2022 Note that the above stress test covers the full balance sheet (full economic view), with compensating effects across the balance
\n
sheet, whereas the table below focuses on some parts of the balance sheet.
\n
\n
\u2022 Furthermore, taking into account 1) KBCs large stock of high-quality liquid assets (approximately 92 billion euros on average in
\n
2022), which consist of cash and bonds which can be repoed in the private market and at the central banks, 2) 48% of total
\n
customer deposits at KBC are covered by the Deposit Guarantee and 3) 83% of total customer deposits consisting of more
\n
stable retail & SME clients, the unrealised losses on the debt securities portfolio at amortised cost do not need to be realised
\n
for liquidity purposes and are therefore irrelevant from a capital perspective.
\n
\n
\n
\n
Fair value of financial instruments that are not measured at fair value
\n
Financial assets
\n
Financial liabilities
\n
in the balance sheet
\n
at amortised cost
\n
at amortised cost
\n
Carrying
\n
Fair
\n
Carrying
\n
Fair
\n
(in millions of EUR)
\n
value
\n
value
\n
value
\n
value
\n
31-12-2022
\n
FINANCIAL ASSETS
\n
\n
Loans and advances to credit institutions and investment firms (incl. reverse
\n
repos) 24 258 24 211 \u2013 \u2013
\n
Loans and advances to customers (incl. reverse repos)
\n
177 596 163 972 \u2013 \u2013
\n
Debt securities
\n
52 030 46 886 \u2013 \u2013
\n
Other
\n
1 561 1 561 \u2013 \u2013
\n
Total
\n
255 444 236 630 \u2013 \u2013
\n
\n
Level 1 \u2013 43 364 \u2013 \u2013
\n
\n
Level 2 \u2013 31 917 \u2013 \u2013
\n
\n
Level 3 \u2013 161 349 \u2013 \u2013
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms (incl. repos)
\n
\n
\u2013 \u2013 35 671 35 207
\n
Deposits from customers and debt securities (incl. repos)
\n
\n
\u2013 \u2013 251 735 250 485
\n
Liabilities under investment
\n
contracts \u2013 \u2013 0 0
\n
Other
\n
\u2013 \u2013 2 448 2 448
\n
Total
\n
\u2013 \u2013 289 854 288 140
\n
Level 1
\n
\u2013
\n
\u2013
\n
\u2013
\n
47
\n
Level 2
\n
\u2013
\n
\u2013
\n
\u2013
\n
111 093
\n
Level 3
\n
\u2013
\n
\u2013
\n
\u2013
\n
176 999
\n
31
\n
-12-2021
\n
FINANCIAL ASSETS
\n
\n
Loans and advances to credit institutions and investment firms (incl. reverse
\n
repos) 32 780 32 789 \u2013 \u2013
\n
Loans and advances to customers (incl. reverse repos)
\n
159 285 160 037 \u2013 \u2013
\n
Debt securities
\n
47 172 47 878 \u2013 \u2013
\n
Other
\n
892 892 \u2013 \u2013
\n
Total
\n
240 128 241 595 \u2013 \u2013
\n
Level 1
\n
\u2013
\n
44 062
\n
\u2013
\n
\u2013
\n
Level 2
\n
\u2013
\n
36 737
\n
\u2013
\n
\u2013
\n
Level 3
\n
\u2013
\n
160 797
\n
\u2013
\n
\u2013
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms (incl. repos)
\n
\n
\u2013 \u2013 40 935 41 003
\n
Deposits from customers and debt securities (incl. repos)
\n
\n
\u2013 \u2013 225 164 225 299
\n
Liabilities under investment
\n
contracts \u2013 \u2013 0 0
\n
Other
\n
\u2013 \u2013 2 288 2 286
\n
Total
\n
\u2013 \u2013 268 387 268 588
\n
\n
Level 1 \u2013 \u2013 \u2013 24
\n
\n
Level 2 \u2013 \u2013 \u2013 105 714
\n
\n
Level 3 \u2013 \u2013 \u2013 162 850
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n
\u2022 All internal valuation models are validated by an independent Risk Validation Unit. In addition, the Executive Committee has
\n
appointed a Group Valuation Committee (GVC) to ensure that KBC meets all the legal requirements for measuring financial
\n
assets and liabilities at fair value. The GVC monitors consistent implementation of the KBC Valuation Framework, which consists
\n
of various guidelines, including the Group Valuation Policy, the Group Market Value Adjustments Policy and the Group
\n
Parameter Review Policy. The GVC meets at least twice a quarter to approve significant changes in valuation methods
\n
(including, but not limited to, models, market data and inputs) or deviations from group policies for financial assets and liabilities
\n
measured at fair value. The committee is made up of members from Finance, Risk Management and the Middle Office. Valuation
\n
uncertainty measurements are made and reported to the GVC every six months. Certain fair values generated by valuation
\n
models are challenged by a team set up specifically for this purpose.
\n
\u2022 The fair value of mortgage and term loans not measured at fair value in the balance sheet (see table) is calculated by
\n
discounting contractual cashflows at the risk-free rate. This calculation is then adjusted for credit risk by taking account of
\n
margins obtained on similar, but recently issued, loans or by using a spread derived from the listed-bond spread. The fair value
\n
of the main portfolios takes account of prepayment risks and cap options. The fair value of time deposits is calculated by
\n
discounting contractual cashflows at the risk-free rate. The fair value of demand and savings deposits is presumed to be equal
\n
to their carrying value.
\n
\u2022 As a result of the first-time adoption of IFRS 9 on 1 January 2018, debt instruments with a total carrying value of 15 060 million
\n
euros have been reclassified from \u2018Available-for-sale assets\u2019 to \u2018Financial assets held at amortised cost\u2019. Due to this
\n
reclassification, changes in fair value (before tax) totalling -566 million euros were not recorded in the revaluation reserve in
\n
2022 (-199 million euros in 2021). The fair value of this reclassified portfolio (after redemptions) amounted to 4 668 million euros
\n
at year-end 2022 (5 753 million euros at year-end 2021).
\n
\u2022 The difference between the fair value and the carrying value of the financial instruments at amortised cost was caused by the
\n
substantial interest rate hikes in 2022. As a hold-to-collect business model is applied on the assets side, interim changes in fair
\n
value are less relevant. In addition, part of this difference has already been recorded under fair value hedges for a portfolio of
\n
interest rate risk, which is presented separately on the balance sheet (on both the assets and the liabilities side) in the
\n
\u2018Profit/loss on positions in portfolios hedged against interest rate risk\u2019 balance sheet item. Furthermore, there are ALM interest
\n
derivatives not recognised in hedge accounting.
\n

\n\n

\n\n
\n
\n
\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n

\n

\n

\n

\n

\n

\n

\n
Note 4.5: Financial assets and liabilities measured at fair value \u2013 fair value hierarchy
\n
\n
\n
Fair value hierarchy
\n
31-12-2022 31-12-2021
\n
(in millions of EUR)
\n
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
\n
FINANCIAL ASSETS AT FAIR VALUE
\n
\n
Mandatorily measured at fair value through profit or loss other than held for trading (including
\n
\n
overlay)
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 13 0 13 0 0 0 0
\n
reverse repos)
\n
Loans and advances to customers (incl. reverse repos)
\n
0 0 625 625 0 0 560 560
\n
Equity instruments
\n
1 131 0 118 1 250 1 323 0 52 1 374
\n
Investment contracts (insurance)
\n
12 638 134 0 12 771 14 365 254 0 14 620
\n
Debt securities
\n
12 0 5 17 14 0 3 17
\n
of which sovereign bonds
\n
\n
0
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 34 0 34 0 1 0 1
\n
reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Equity instruments
\n
429 0 0 430 448 0 0 448
\n
Debt securities
\n
1 480 244 4 1 728 1 522 1 432 4 2 958
\n
\n
of which sovereign bonds 1 444 223 0 1 667 1 441 1 076 0 2 517
\n
Derivatives
\n
3 5 547 729 6 279 1 4 482 961 5 443
\n
Other
\n
0 0 0 0 0 0 0 0
\n
Designated upon initial recognition at fair value through profit or loss (FVO)
\n
Loans and advances to credit institutions and
\n
0 0 0 0 0 0 0 0
\n
investment firms (incl. reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Debt securities
\n
0 0 0 0 0 0 0 0
\n
\n
of which sovereign bonds 0 0 0 0 0 0 0 0
\n
At fair value through OCI
\n
\n
\n
\n
\n
\n
\n
\n
\n
Equity instruments
\n
18 1 297 315 15 1 306 321
\n
Debt securities
\n
9 508 2 070 235 11 813 12 269 2 963 271 15 503
\n
\n
of which sovereign bonds
\n
\n
7 003 1 059 73 8 135 8 751
\n
\n
1 711
\n
\n
52
\n
\n
10 514
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0 542 0 542 0 283 0 283
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial assets at fair value
\n
25 219 8 585 2 014 35 818 29 956 9 416 2 157 41 529
\n
FINANCIAL LIABILITIES AT FAIR VALUE
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 7 0 7 0 2 0 2
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 44 0 44 0 21 0 21
\n
Derivatives
\n
2
\n
6 911
\n
1 125
\n
8 038
\n
1
\n
4 410
\n
1 209
\n
5 619
\n
Short positions
\n
884 123 0 1 007 1 582 47 0 1 628
\n
Designated at fair value
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 0 0 0 0 0 0 0
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 74 1 131 1 205 0 61 1 251 1 312
\n
Liabilities under investment contracts
\n
12 002 0 0 12 002 13 603 0 0 13 603
\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0
\n
479
\n
98
\n
577
\n
0
\n
696
\n
398
\n
1 094
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial liabilities at fair value
\n
12 887 7 638 2 355 22 881 15 185 5 238 2 857 23 280
\n
\n
\u2022 The fair value hierarchy prioritises the valuation techniques and the respective inputs into three levels.
\n
- The fair value hierarchy gives the highest priority to \u2018level 1 inputs\u2019. This means that, when there is an active market, quoted
\n
prices have to be used to measure the financial assets or liabilities at fair value. Level 1 inputs are prices that are readily and
\n
regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency (and that are
\n
quoted in active markets accessible to KBC). They represent actual and regularly occurring market transactions on an arm\u2019s
\n
length basis. The fair value is then based on a mark-to-market valuation derived from currently available transaction prices.
\n
No valuation technique (model) is involved.
\n
- If there are no price quotations available, the reporting entity establishes fair value using a model based on observable or
\n
unobservable inputs. The use of observable inputs must be maximised. Observable inputs are also referred to as \u2018level 2
\n
inputs\u2019 and reflect the assumptions market participants would use in pricing the asset or liability based on market data
\n
obtained from sources independent of the reporting entity. Examples of observable inputs are the risk-free rate, exchange
\n
rates, stock prices and implied volatility. Valuation techniques based on observable inputs include discounted cashflow
\n
analysis, or reference to the current or recent fair value of a similar instrument.
\n
- Unobservable inputs are also referred to as \u2018level 3 inputs\u2019 and reflect the reporting entity\u2019s own assumptions about the
\n
assumptions that market participants would use in pricing the asset or liability (including assumptions regarding the risks
\n
involved). Unobservable inputs reflect a market that is not active. For example, proxies and correlation factors can be
\n
considered to be unobservable in the market.
\n
\u2022 When the inputs used to measure the fair value of an asset or a liability can be categorised into different levels of the fair value
\n
hierarchy, the fair value measurement is classified in its entirety into the same level as the lowest level input that is significant
\n
to the entire fair value measurement. For example, if a fair value measurement uses observable inputs that require significant
\n
adjustment based on unobservable inputs, that measurement is a level 3 measurement.
\n
\u2022 The valuation methodology and the corresponding classification in the fair value hierarchy of the most commonly used financial
\n
instruments are summarised in the table. Whereas the majority of instruments of a certain type are within the level indicated in
\n
the table, a small portion may actually be classified in another level.
\n
\u2022 KBC follows the principle that transfers into and out of levels of the fair value hierarchy are made at the end of the reporting
\n
period. Transfers between the various levels are dealt with in more detail in Note 4.6 and Note 4.7.
\n

\n\n

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\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Instrument type Products Valuation technique
\n
Liquid financial instruments
\n
FX spots, exchange traded financial futures, exchange traded options,
\n
Mark-to-market (quoted prices in active
\n
for which quoted prices are
\n
exchange traded stocks, exchange traded funds, liquid government
\n
markets), for bonds: BVAL or vendor
\n
data.
\n
\n
Level 1
\n
regularly available
\n
\n
bonds, other liquid bonds, liquid asset backed securities (ABS) in active
\n
markets
\n
Plain vanilla/liquid
\n
(Cross-currency) interest rate swaps (IRS), FX swaps, FX forwards, forward
\n
Discounted cashflow analysis based on
\n
derivatives
\n
\n
rate agreements (FRA), inflation swaps, dividend swaps and futures,
\n
discount and estimation curves (derived
\n
reverse floaters, bond future options, interest rate future opt
\n
ions, overnight
\n
from quoted deposit rates,
\n
\n
index swaps (OIS), FX resets
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Caps & floors, interest rate options, European stock options, European &
\n
Option pricing model based on
\n
American FX options, forward starting options, digital FX options, FX strips
\n
observable inputs (e.g., volatilities)
\n
\n
of simple options, European swaptions, European cancellable IRS,
\n
\n
compound options
\n
\n
Linear financial liabilities
\n
Deposits, simple cashflows, repo transactions
\n
Discounted cashflow analysis based on
\n
(without optional features)
\n
\u2013
\n
discount and estimation curves (derived
\n
cash instruments
\n
\n
from quoted deposit rates,
\n
\n
\n
Level 2
\n
FX swaps and (CC)IRS)
\n
\n
\n
Semi-liquid bonds/asset
\n
Semi-liquid bonds/asset backed securities
\n
BVAL, prices corroborated by alternative
\n
backed securities
\n
\n
observable market data, or using
\n
comparable spread method
\n
\n
\n
Debt instruments
\n
KBC IFIMA own issues (liabilities), mortgage bonds held by \u010cSOB
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
observable inputs
\n
\n
\n
Linear financial assets (cash
\n
Loans, commercial paper
\n
Discounted cashflow analysis based on
\n
instruments)
\n
\n
discount and estimation curves (derived
\n
from quoted deposit rates,
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Exotic derivatives
\n
Target profit forwards, flexible forwards, American & Asian stock options,
\n
Option pricing model based on
\n
Bermudan swaptions, digital interest rate options, quanto interest rate
\n
observable inputs (e.g., correlation)
\n
\n
options, digital stock options, composite stock options, barrier stock
\n
options, quanto digital FX options, FX
\n
Asian options, FX European barrier
\n
options, FX simple digital barrier options, FX touch rebates, inflation
\n
options, Bermudan cancellable IRS, constant maturity swaps (CMS), CMS
\n
spread swaps, CMS spread options, CMS interest rate caps/floors,
\n
(callable) ra
\n
nge accruals, outperformance options, auto-callable options,
\n
\n
Level 3
\n
lookback options, commodity swaps and forwards
\n
Illiquid credit-linked
\n
Collateralised debt obligations (notes)
\n
Valuation model based on correlation of
\n
instruments
\n
\n
probability of default of underlying assets
\n
\n
\n
Private equity investments
\n
Private equity and non-quoted participations
\n
Based on the valuation guidelines of the
\n
European Private Equity & Venture Capital
\n
Association
\n
\n
\n
Illiquid bonds/asset backed
\n
Illiquid (mortgage) bonds/asset backed securities that are indicatively
\n
BVAL, third-party pricing (e.g., lead
\n
securities
\n
\n
priced by a single pricing provider in an inactive market
\n
\n
manager), where prices
\n
cannot be
\n
\n
\n
corroborated due to a lack of
\n
available/reliable alternative market data
\n
\n
\n
Debt instruments
\n
KBC own issues (KBC IFIMA)
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
\n
unobservable inputs (indicative pricing by
\n
third parties for derivatives)
\n
\n
\n
Structured loans
\n
Government-regulated loans with leveraged interest rates and exotic
\n
Discounted cashflow analysis and
\n
early repayment
\n
schedules (K&H)
\n
valuation of related derivatives based on
\n
unobservable inputs
\n
\n
\n
\n

\n\n

\n\n

\n\n

\n\n

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\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfLoansAndAdvancesToCustomersExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag864": { "value": "\n

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\n\n

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\n\n

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\n\n

\n\n
Note 4.1: Financial assets and liabilities, breakdown by portfolio and product
\n
(in millions of EUR)
\n
Measured
\n
at
\n
amortised
\n
cost (AC)
\n
Measured
\n
at fair
\n
value
\n
through
\n
other
\n
compre-
\n
hensive
\n
income
\n
(FVOCI)
\n
Mandatorily
\n
measured at
\n
fair value
\n
through
\n
profit or loss
\n
(MFVPL) excl.
\n
HFT and
\n
overlay
\n
Measured at
\n
fair value \u2013
\n
overlay
\n
approach
\n
(overlay)
\n
Held for
\n
trading
\n
(HFT)
\n
Desig-
\n
nated at
\n
fair value
\n
1
\n
(FVO)
\n
Hedging
\n
Deriva-
\n
tives
\n
Total
\n
Total pro
\n
forma
\n
excluding
\n
KBC Bank
\n
Bulgaria
\n
(formerly
\n
Raiffeisen-
\n
bank
\n
Bulgaria)
\n
FINANCIAL ASSETS, 31-12-2022
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
4 240 0 13 0 1 0 0 4 254
\n
4 203
\n
of which loans and advances to banks repayable on
\n
demand and term loans to banks at not more than three
\n
months
\n
\n
1 237 1 237
\n
Loans and advances to customers (excluding reverse
\n
repos)
\n
177 427 0 625 0 0 0 0 178 053
\n
174 083
\n
Trade receivables
\n
2 818
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 818
\n
2 729
\n
Consumer credit
\n
6 222
\n
0
\n
430
\n
0
\n
0
\n
0
\n
0
\n
6 652
\n
5 977
\n
Mortgage loans
\n
73 465
\n
0
\n
196
\n
0
\n
0
\n
0
\n
0
\n
73 660
\n
72 891
\n
Term loans
\n
82 894
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
82 894
\n
80 744
\n
Finance lease
\n
6 368
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
6 368
\n
6 117
\n
Current account advances
\n
4 886
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 886
\n
4 885
\n
Other
\n
774
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
774
\n
740
\n
Reverse repos
\n
2
\n
\n
20 186
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 219
\n
20 219
\n
with credit institutions and investment firms
\n
20 018
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 050
\n
20 050
\n
with customers
\n
168
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
168
\n
168
\n
Equity instruments
\n
0
\n
315
\n
13
\n
1 237
\n
430
\n
0
\n
0
\n
1 994
\n
1 989
\n
Investment contracts (insurance)
\n
6
\n
\n
0
\n
0
\n
12 771
\n
0
\n
0
\n
0
\n
0
\n
12 771
\n
12 771
\n
Debt securities
\n
52 030
\n
11 813
\n
17
\n
0
\n
1 728
\n
0
\n
0
\n
65 588
\n
64 871
\n
Public bodies
\n
44 219
\n
8 135
\n
0
\n
0
\n
1 667
\n
0
\n
0
\n
54 021
\n
53 390
\n
Credit institutions and investment firms
\n
5 160
\n
1 621
\n
0
\n
0
\n
9
\n
0
\n
0
\n
6 790
\n
6 747
\n
Corporates
\n
2 651
\n
2 057
\n
17
\n
0
\n
53
\n
0
\n
0
\n
4 777
\n
4 733
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
6 279
\n
0
\n
542
\n
6 821
\n
6 813
\n
3
\n
\n
Other
\n
1 561
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
1 561
\n
1 561
\n
Total
\n
255 444
\n
12 128
\n
13 439
\n
1 237
\n
8 471
\n
0
\n
542
\n
291 262
\n
286 511
\n
FINANCIAL ASSETS, 31-12-2021
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
7 920 0 0 0 1 0 0 7 920
\n
-
\n
of which loans and advances to banks repayable on demand
\n
and term loans to banks at not more than three months
\n
3 146 -
\n
Loans and advances to customers (excl. reverse repos)
\n
159 167
\n
0
\n
560
\n
0
\n
0
\n
0
\n
0
\n
159 728
\n
-
\n
Trade receivables
\n
2 090
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 090
\n
-
\n
Consumer credit
\n
5 470
\n
0
\n
381
\n
0
\n
0
\n
0
\n
0
\n
5 851
\n
-
\n
Mortgage loans
\n
67 486
\n
0
\n
179
\n
0
\n
0
\n
0
\n
0
\n
67 665
\n
-
\n
Term loans
\n
72 998
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
72 998
\n
-
\n
Finance lease
\n
5 815
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
5 815
\n
-
\n
Current account advances
\n
4 819
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 819
\n
-
\n
Other
\n
490
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
490
\n
-
\n
2
\n
-
\n
\n
Reverse repos
\n
24 978
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 978
\n
with credit institutions and investment firms
\n
24 861
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 861
\n
-
\n
with customers
\n
117
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
117
\n
-
\n
Equity instruments
\n
0
\n
321
\n
8
\n
1 366
\n
448
\n
0
\n
0
\n
2 144
\n
-
\n
6
\n
-
\n
\n
Investment contracts (insurance)
\n
0
\n
0
\n
14 620
\n
0
\n
0
\n
0
\n
0
\n
14 620
\n
Debt securities
\n
47 172
\n
15 503
\n
17
\n
0
\n
2 958
\n
0
\n
0
\n
65 650
\n
-
\n
Public bodies
\n
41 475
\n
10 514
\n
0
\n
0
\n
2 517
\n
0
\n
0
\n
54 507
\n
-
\n
Credit institutions and investment firms
\n
3 310
\n
2 245
\n
0
\n
0
\n
357
\n
0
\n
0
\n
5 912
\n
-
\n
Corporates
\n
2 387
\n
2 744
\n
17
\n
0
\n
84
\n
0
\n
0
\n
5 232
\n
-
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
5 443
\n
0
\n
283
\n
5 727
\n
-
\n
3
\n
-
\n
\n
Other
\n
892
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
892
\n
Total
\n
240 128
\n
15 824
\n
15 205
\n
1 366
\n
8 850
\n
0
\n
283
\n
281 658
\n
-
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
(in millions of EUR)
\n
Measured at
\n
amortised
\n
cost
\n
(AC)
\n
Held for
\n
trading (HFT)
\n
Designated at
\n
fair value (FVO)
\n
\n
Hedging
\n
derivatives
\n
Total
\n
Total pro forma
\n
excluding KBC
\n
Bank Bulgaria
\n
(formerly
\n
Raiffeisenbank
\n
Bulgaria)
\n
FINANCIAL
\n
LIABILITIES, 31-12-2022
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
24 819 0 0 0 24 819
\n
24 737
\n
of which deposits from banks repayable on demand
\n
\n
\n
\n
\n
\n
\n
\n
5 085 5 085
\n
Deposits from customers and debt
\n
securities (excl. repos)
\n
\n
251 496 44 1 205 0 252 746
\n
247 585
\n
\n
Demand deposits 122 053 0 0 0 122 053 117 401
\n
\n
Time deposits 22 280 44 73 0 22 397 21 960
\n
\n
Savings accounts 76 979 0 0 0 76 979 76 954
\n
\n
Special deposits 2 710 0 0 0 2 710 2 663
\n
\n
Other deposits 268 0 0 0 268 268
\n
Subtotal deposits from customers (excl. repos)
\n
224 290 44 73 0 224 407 219 246
\n
\n
Certificates of deposit 9 321 0 1 0 9 322 9 322
\n
\n
Savings certificates 104 0 0 0 104 104
\n
\n
Non-convertible bonds 15 621 0 1 006 0 16 627 16 627
\n
\n
Non-convertible subordinated liabilities 2 160 0 126 0 2 285 2 285
\n
Repos
\n
4
\n
11 091 7 0 0 11 097
\n
11 097
\n
\n
with credit institutions and investment firms 10 852 7 0 0 10 859 10 859
\n
\n
with customers 239 0 0 0 239 239
\n
Liabilities under investment contracts
\n
6
\n
0 0 12 002 0 12 002
\n
12 002
\n
Derivatives
\n
0 8 038 0 577 8 615
\n
8 605
\n
Short positions
\n
0 1 007 0 0 1 007
\n
1 007
\n
\n
In equity instruments 0 5 0 0 5 5
\n
\n
In debt securities 0 1 002 0 0 1 002 1 002
\n
Other
\n
5
\n
2 448 0 0 0 2 448
\n
2 370
\n
Total
\n
289 854 9 096 13 207 577 312 735
\n
307 403
\n
FINANCIAL LIABILITIES, 31
\n
-12-2021
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
38 047 0 0 0 38 047
\n
-
\n
of which deposits from banks repayable on demand 4 695 -
\n
Deposits from
\n
customers and debt securities (excl. repos)
\n
\n
224 759 21 1 312 0 226 093
\n
-
\n
\n
Demand deposits 112 097 0 0 0 112 097
\n
-
\n
\n
Time deposits 9 106 21 60 0 9 187
\n
-
\n
\n
Savings accounts 74 801 0 0 0 74 801
\n
-
\n
\n
Special deposits 2 962 0 0 0 2 962
\n
-
\n
\n
Other deposits 428 0 0 0 428
\n
-
\n
Subtotal deposits from customers (excl. repos)
\n
199 395 21 60 0 199 476
\n
-
\n
\n
Certificates of deposit 6 273 0 0 0 6 273
\n
-
\n
\n
Savings certificates 253 0 0 0 253
\n
-
\n
\n
Non-convertible bonds 15 892 0 1 118 0 17 011
\n
-
\n
\n
Non-convertible subordinated liabilities 2 946 0 134 0 3 080
\n
-
\n
Repos
\n
4
\n
3 293 2 0 0 3 295
\n
-
\n
\n
with credit institutions and investment firms 2 888 2 0 0 2 890
\n
-
\n
\n
with customers 405 0 0 0 405
\n
-
\n
Liabilities under investment
\n
contracts
\n
6
\n
0 0 13 603 0 13 603
\n
-
\n
Derivatives
\n
0 5 619 0 1 094 6 713
\n
-
\n
Short positions
\n
0 1 628 0 0 1 628
\n
-
\n
\n
In equity instruments 0 18 0 0 18
\n
-
\n
\n
In debt securities 0 1 611 0 0 1 611
\n
-
\n
Other
\n
5
\n
2 288 0 0 0 2 288
\n
-
\n
Total
\n
268 387 7 271 14 916 1 094 291 667
\n
-
\n
1 The carrying value comes close to the maximum credit exposure.
\n
2 The amount of the reverse repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out).
\n
3 Financial assets not included under \u2018Loans and advances to customers\u2019 as they are not directly related to commercial lending.
\n
4 The amount of the repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out), with the assets being partly reflected on the balance sheet
\n
and partly obtained through reverse repo transactions.
\n
5 Financial liabilities not included under deposits from customers as they are not directly related to commercial deposit acquisition.
\n
6 The difference between \u2018Investment contracts (insurance)\u2019 and \u2018Liabilities under investment contracts\u2019 is accounted for by the presentation of non-unbundled investment contracts that are
\n
included under \u2018Investment contracts (insurance)\u2019 on the financial assets side, but are included under \u2018Technical provisions (before reinsurance)\u2019 on the liabilities side.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n\n
\u2022 \u2018Non-convertible bonds\u2019 comprise mainly KBC Bank, KBC Group, \u010cSOB and KBC IFIMA issues. They are usually recognised under
\n
\u2018Measured at amortised cost\u2019. However, if they contain closely related embedded derivatives, they are recorded under
\n
\u2018Designated at fair value\u2019 (see accounting policies). This item also includes three green bonds (for 500, 500 and 750 million euros
\n
each) and a social bond (for 750 million euros), which have been recognised at amortised cost.
\n
\u2022 More information on major new debt issues or redemptions is provided under the \u2018Consolidated cashflow statement\u2019.
\n
\u2022 \u2018Deposits from credit institutions and investment firms\u2019 include funding obtained from the ECB\u2019s TLTRO programme (15.4 billion
\n
euros at year-end 2022, 9.1 billion euros less than at year-end 2021 on account of redemptions). KBC calculates these deposits
\n
using the effective interest rate method, with the rate being adjusted should we fail to meet the conditions (similar to a floating
\n
rate instrument), as per paragraph B.5.4.5 of IFRS 9. KBC\u2019s management has reasonable assurance that KBC will comply with
\n
the conditions attached (including the level of lending to households and non-financial companies) and hence the interest has
\n
accordingly been recognised (a gross amount of 112 million euros in interest income (negative interest rate) in 2022 and 242
\n
million euros in 2021).
\n
\u2022 Transferred financial assets that continue to be recognised in their entirety: KBC regularly lends and/or sells securities with the
\n
commitment to buy them back at a later date (repo transactions). Securities lent or sold with such a commitment are transferred
\n
to the counterparty, and, in exchange, KBC receives cash or other financial assets. However, KBC retains the main risks and
\n
income relating to these securities, and, therefore, continues to recognise them on its balance sheet. In addition, a financial
\n
liability is recognised equalling the cash received.
\n
\n
Transferred financial assets that continue to be recognised in their entirety (carrying value, in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Transferred financial assets that continue to be recognised in their entirety: repo transactions and securities lent out
\n
17 425 13 762
\n
Held for
\n
trading 960 1 221
\n
Fair value through OCI
\n
860 1 474
\n
Amortised cost
\n
15 605 11 067
\n
Associated financial liability
\n
10 534 2 936
\n
Held for trading
\n
689 335
\n
Fair value through OCI
\n
609 362
\n
Amortised cost
\n
9 236 2 239
\n
\n
\u2022 It should be noted that KBC has more transferred financial assets on its balance sheet than repo transactions, due to the fact
\n
that the cash legs of certain repo transactions are offset against reverse repo transactions if they are carried out with the same
\n
counterparty, in the same currency and with the same maturity date. Moreover, there is a legally enforceable right, and an
\n
intention, to settle the transactions on a net basis or to realise the financial asset and settle the financial liability simultaneously.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria in 2022 is provided in Note 6.6.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. We report on estimated greenhouse gas emissions
\n
associated with lending and other activities and have defined objectives for reducing the greenhouse gas intensity of loans
\n
we have provided to the energy sector, electricity producers and the real estate sector, mortgage loans and loans provided
\n
for commercial residential real estate, as well as loans provided to the automotive industry and financial and operational car
\n
leasing (see Note 6.2), the agricultural sector, and cement, steel and aluminium producers. See \u2018Focus on climate\u2019 in the \u2018Report
\n
of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our Climate Report and
\n
\n
our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Note 4.2: Financial assets and liabilities, breakdown by portfolio and quality
\n
\n\n

\n\n
Note 4.2.1: Impaired financial assets
\n
\n
\n
Carrying value before
\n
Carrying value after
\n
(in millions of EUR)
\n
impairment
\n
Impairment
\n
impairment
\n
31
\n
-12-2022
\n
*
\n
204 473 -2 619 201 853
\n
Financial assets at amortised cost: Loans and advances
\n
Stage 1 (12
\n
-month ECL) 163 846 -110 163 736
\n
Stage 2 (lifetime ECL)
\n
36 577 -635 35 941
\n
Stage 3 (lifetime ECL)
\n
3 616 -1 796 1 820
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
434
\n
-77
\n
357
\n
Financial assets at amortised cost: Debt securities
\n
52 048 -18 52 030
\n
Stage 1 (12
\n
-month ECL) 51 909 -7 51 903
\n
Stage 2 (lifetime ECL)
\n
130 -4 126
\n
Stage 3 (lifetime ECL)
\n
8 -7 1
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
Financial assets at fair value through OCI: Debt securities
\n
11 818 -4 11 813
\n
Stage 1 (12
\n
-month ECL) 11 753 -3 11 750
\n
Stage 2 (lifetime ECL)
\n
65 -2 63
\n
Stage 3 (lifetime ECL)
\n
0 0 0
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
31
\n
-12-2021
\n
*
\n
194 638 -2 573 192 065
\n
Financial assets at amortised cost: Loans and advances
\n
Stage 1 (12
\n
-month ECL) 167 426 -104 167 322
\n
Stage 2 (lifetime ECL)
\n
23 131 -507 22 624
\n
Stage 3 (lifetime ECL)
\n
3 493 -1 848 1 645
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
588
\n
-114
\n
474
\n
Financial assets at amortised cost: Debt securities
\n
47 181 -9 47 172
\n
Stage 1 (12
\n
-month ECL) 47 155 -5 47 150
\n
Stage 2
\n
(lifetime ECL) 24 -3 21
\n
Stage 3 (lifetime ECL)
\n
1 -1 1
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
Financial assets at fair value through OCI: Debt securities
\n
15 509 -6 15 503
\n
Stage 1 (12
\n
-month ECL) 15 418 -3 15 415
\n
Stage 2
\n
(lifetime ECL) 91 -3 88
\n
Stage 3 (lifetime ECL)
\n
0 0 0
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
* The carrying value after impairment in this note corresponds to the sum of the \u2018Loans and advances to credit institutions and investment firms (excl. reverse repos)\u2019, \u2018Loans and advances to
\n
customers (excl. reverse repos)\u2019 and \u2018Reverse repos\u2019 in Note 4.1 (in the \u2018Measured at amortised cost\u2019 column).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\u2022 Acquisition of Raiffeisenbank Bulgaria (now renamed KBC Bank Bulgaria):
\n
\u25e6 The carrying value before impairment at year-end 2022 included 4.7 billion euros for KBC Bank Bulgaria, of which 4.1 billion
\n
euros in loans and advances (3.2, 0.8 and 0.1 billion euros in Stages 1, 2 and 3, respectively), 0.5 billion euros in debt securities
\n
at amortised cost and 0.1 billion euros in debt securities at fair value through OCI. KBC Bank Bulgaria\u2019s portfolios account
\n
for 1.8% of the entire KBC group.
\n
\u25e6 Impairment at year-end 2022 included 113 million euros for KBC Bank Bulgaria, of which 106 million euros in loans and
\n
advances (10, 30 and 66 million euros in Stages 1, 2 and 3, respectively), and 7 million euros in debt securities at amortised
\n
cost. These impairment valuations partly deviate from the methodology set out in the accounting policies (particularly as
\n
regards the forward-looking information, IFRS 9 models and criteria used to determine a significant increase in credit risk).
\n
The integration of KBC Bank Bulgaria in 2023 will also involve the alignment of the accounting policies at KBC Bank Bulgaria
\n
for determining impairment.
\n
\u2022 Carrying value before impairment of loans and advances at amortised cost: increase of 9.8 billion euros in 2022, due primarily
\n
to:
\n
\u25e6 The acquisition of Raiffeisenbank Bulgaria (see above).
\n
\u25e6 An organic net increase in the loan portfolio (mainly mortgage loans and term loans, in all countries).
\n
\u25e6 This increase was partly offset by a decrease of the carrying value before impairment of loans and advances (excluding
\n
reverse repos) and the reverse repos to credit institutions and investment firms.
\n
\u2022 Carrying value before impairment of loans and advances at amortised cost in \u2018Stage 2\u2019: increase of 13.4 billion euros in 2022,
\n
due primarily to:
\n
\u25e6 The migration to \u2018Stage 2\u2019 based on a collective approach of \u2018Stage 1\u2019 loans (see also Note 1.4) that have indirect exposure
\n
to Russia, Ukraine and Belarus (i.e. as a result of the military conflict; 2.8 billion euros) and/or are vulnerable to emerging
\n
risks (11.3 billion euros).
\n
\u25e6 The acquisition of Raiffeisenbank Bulgaria (see above).
\n
\u25e6 This was partly offset by the discontinuation of the collective \u2018Stage 2\u2019 transfer of loans vulnerable to coronavirus-related
\n
risks (3.1 billion euros in receivables that had been moved to \u2018Stage 2\u2019 at year-end 2021). The remaining coronavirus-related
\n
risks in our loan portfolio are included in the regular indicators used to assess considerable credit risk increases (probability
\n
of default, forbearance and the number of days past due), which are no longer concealed by the moratoria.
\n
\u25e6 Please note that the migration of loans from \u2018Stage 1\u2019 to \u2018Stage 2\u2019 based on the collective approach resulted in a net
\n
decrease of 3.6 billion euros of the carrying value before impairment of loans and advances at amortised cost in \u2018Stage 1\u2019,
\n
which was partly offset by the organic net increase in the loan portfolio and the acquisition of Raiffeisenbank Bulgaria.
\n
\u25e6 Also note that the migration predicted in the management overlay at the time is not reflected in the 2021 year-end figures,
\n
because it was determined based on a collective approach and, therefore, could not be individually linked to specific
\n
loans. Taking into account the impact of the management overlay on staging at year-end 2021, this would result in a
\n
carrying value before impairment of loans and advances of an estimated 165.4, 24.3 and 4.3 billion euros in Stages 1, 2 and
\n
3, respectively (or net migration of 1% of the total portfolio from \u2018Stage 1\u2019 to \u2018Stage 2\u2019 and 0.4% from \u2018Stage 1\u2019 and \u2018Stage 2\u2019
\n
to \u2018Stage 3\u2019).
\n
\u2022 Carrying value before impairment of debt securities at amortised cost: increase of 4.9 billion euros in 2022, almost entirely in
\n
\u2018Stage 1\u2019:
\n
\u25e6 More than half of this increase concerns (issues by) public bodies, one third concerns credit institutions and investment
\n
firms, and the remaining part concerns corporates, and related primarily to net investments.
\n
\u2022 Impairment: increase of 0.1 billion euros in 2022, due to:
\n
\u25e6 The acquisition of Raiffeisenbank Bulgaria (see above).
\n
\u25e6 For information on other changes, see Note 3.10.
\n
\u2022 See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\u2022 In 2022, \u2018Stage 2\u2019 and \u2018Stage 3\u2019 financial assets with a net carrying value of 471 million euros have been subject to modifications
\n
in the past that did not result in derecognition. The gross carrying value of \u2018Stage 1\u2019 financial assets subject to modifications in
\n
the past that did not result in derecognition came to 1 088 million euros in 2022. The corresponding figures for 2021 were 1 712
\n
million euros and 509 million euros, respectively. Modification gains or losses are recognised under impairment (see Note 3.10).
\n
\u2022 In 2022, financial assets at amortised cost with a gross carrying value of 80 million euros were written off, but were still subject
\n
to enforcement activities; the corresponding figure in 2021 was 72 million euros.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.2.2: Impairment details
\n
\n
\n
\n
Subject to lifetime ECL
\n
Stage 1
\n
Stage 2
\n
Stage 3
\n
(purchased or
\n
\n
Subject to 12-
\n
Subject to lifetime
\n
Subject to lifetime
\n
originated credit
\n
(in millions of EUR)
\n
month ECL
\n
ECL
\n
ECL
\n
impaired)
\n
Total
\n
2022
\n
\n
LOANS AND ADVANCES AT AMORTISED COST
\n
Impairment on 1 January
\n
104
\n
507
\n
1 848
\n
114
\n
2 573
\n
1
\n
-6 96 147 -8 230
\n
Movements with an impact on results
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) -22 158 60 0 197
\n
\n
Stage 2 (lifetime ECL) 4 -83 95 0 16
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 26 -54 -3 -31
\n
New financial assets
\n
2
\n
\n
40
\n
43
\n
10
\n
0
\n
93
\n
\n
Changes in risk parameters during the reporting period -16 -23 90 -5 48
\n
\n
Changes in the model or methodology -1 3 0 0 2
\n
Derecognised financial assets
\n
3
\n
-10 -26 -59 -1 -97
\n
\n
\n
Other -1 -2 4 0 2
\n
Movements without an impact on results
\n
12 32 -199 -29 -184
\n
\n
Derecognised financial assets
\n
3
\n
0 -1 -296 -7 -304
\n
Changes in the scope of consolidation
\n
14
\n
32
\n
88
\n
0
\n
133
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
\n
Other -2 1 9 -21 -13
\n
Impairment on 31 December
\n
110 635 1 796 77 2 619
\n
DEBT
\n
SECURITIES AT AMORTISED COST
\n
Impairment on 1 January
\n
5 3 1 0 9
\n
1
\n
2 0 1 0 3
\n
Movements with an impact on results
\n
Transfer of financial assets
\n
\n
\n
\n
\n
\n
\n
Stage 1 (12-month ECL) 0 0 0 0 0
\n
\n
Stage 2 (lifetime ECL) 0 -1 1 0 0
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
1 0 0 0 1
\n
\n
Changes in risk parameters during the reporting period 0 1 0 0 1
\n
Changes in the model or methodology
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
\n
Other 0 0 0 0 0
\n
Movements without an impact on results
\n
0 1 5 0 6
\n
\n
Derecognised financial assets
\n
3
\n
0 0 -1 0 -1
\n
\n
Changes in the scope of consolidation 0 1 6 0 7
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
Other
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Impairment on 31 December
\n
7 4 7 0 18
\n
DEBT SECURITIES AT FAIR VALUE THROUGH OCI
\n
\n
Impairment on 1 January
\n
3 3 0 0 6
\n
Movements with an impact on results
\n
1
\n
0 -1 0 0 -1
\n
\n
Transfer of financial assets
\n
Stage 1 (12-month ECL)
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Stage 2 (lifetime ECL)
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
0 0 0 0 0
\n
\n
Changes in risk parameters during the reporting period 0 -1 0 0 -1
\n
\n
Changes in the model or methodology 0 0 0 0 0
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
Other
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Movements without an impact on results
\n
0 0 0 0 0
\n
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
Changes in the scope of consolidation 0 0 0 0 0
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
\n
Other 0 0 0 0 0
\n
Impairment on 31 December
\n
3 2 0 0 4
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
2021
\n
LOANS AND ADVANCES AT AMORTISED COST
\n
Impairment on 1 January
\n
168 992 2 517 18 3 695
\n
Movements with an impact on results
\n
1
\n
-62 -454 242 -2 -276
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) -12 99 42 0 129
\n
\n
Stage 2 (lifetime ECL) 6 -116 80 0 -30
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL)
\n
0
\n
20
\n
-36
\n
0
\n
-16
\n
\n
New financial assets
\n
2
\n
25 14 7 0 45
\n
\n
Changes in risk parameters during the reporting period -57 -426 214 1 -269
\n
\n
Changes in the model or methodology 0 -1 0 0 -1
\n
\n
Derecognised financial assets
\n
3
\n
-24 -48 -84 -2 -158
\n
\n
Other 0 2 20 0 22
\n
Movements without an
\n
impact on results -2 -32 -911 98 -847
\n
3
\n
Derecognised financial assets
\n
\n
0
\n
0
\n
-286
\n
-12
\n
-299
\n
\n
Changes in the scope of consolidation 0 0 4 0 4
\n
\n
Transfers under IFRS 5 -3 -31 -540 0 -574
\n
\n
Other 1 0 -90 110 21
\n
Impairment on 31 December
\n
104 507 1 848 114 2 573
\n
DEBT SECURITIES AT AMORTISED COST
\n
\n
Impairment on 1 January
\n
6
\n
1
\n
2
\n
0
\n
9
\n
Movements with an impact on results
\n
1
\n
\n
-1
\n
2
\n
0
\n
0
\n
1
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) 0 0 0 0 0
\n
\n
Stage 2 (lifetime ECL) 0 0 0 0 0
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
1 0 0 0 1
\n
Changes in risk parameters during the reporting period
\n
-2
\n
3
\n
0
\n
0
\n
1
\n
\n
Changes in the model or methodology 0 0 0 0 0
\n
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 -1
\n
\n
Other 0 0 0 0 0
\n
Movements without an
\n
impact on results 0 0 -1 0 -1
\n
Derecognised financial assets
\n
3
\n
0 0 -1 0 -1
\n
\n
\n
Changes in the scope of consolidation 0 0 0 0 0
\n
Transfers under IFRS 5
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
Other 0 0 0 0 0
\n
Impairment on 31
\n
December 5 3 1 0 9
\n
DEBT SECURITIES AT FAIR VALUE THROUGH OCI
\n
\n
Impairment on 1 January
\n
6 3 0 0 9
\n
Movements with an impact on results
\n
1
\n
-3 0 0 0 -4
\n
Transfer of financial assets
\n
\n
\n
\n
\n
\n
\n
Stage 1 (12-month ECL) 0 0 0 0 0
\n
\n
Stage 2 (lifetime ECL) 0 -1 0 0 -1
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
0 0 0 0 0
\n
\n
Changes in risk parameters during the reporting period -3 0 0 0 -3
\n
\n
Changes in the model or methodology 0 0 0 0 0
\n
Derecognised financial assets
\n
3
\n
\n
-1
\n
0
\n
0
\n
0
\n
-1
\n
\n
Other 0 0 0 0 0
\n
Movements without an impact on
\n
results 0 0 0 0 0
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
\n
Changes in the scope of consolidation 0 0 0 0 0
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
\n
Other 0 0 0 0 0
\n
Impairment on 31 December
\n
3
\n
3
\n
0
\n
0
\n
6
\n
1 Amounts recovered in respect of loans that have already been written off are recycled to the income statement and recorded as \u2018Impairment on financial assets at amortised cost and at
\n
fair value through OCI\u2019. However, they have not been included in this table since they do not have any impact on impairment losses on the balance sheet.
\n
2 Also includes impairment related to new financial assets resulting from off-balance-sheet commitments and financial guarantees already given being called.
\n
3 Derecognition without an impact on results occurs when the impairment adjustment has already been made upfront (for example, at the moment of the sale agreement (disposals) or before
\n
the write-off). Derecognition with an impact on results occurs when the impairment adjustment takes place at the same time (for instance, in the case of debt forgiveness).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n
\u2022 The change in impairment in 2022 relates mainly to the reserve set aside to cover geopolitical and emerging risks and the full
\n
reversal of the remaining reserves set aside for the coronavirus crisis (see Note 1.4) and the changes in the scope of
\n
consolidation, partly offset by the elimination of the impairment on derecognised financial assets.
\n
\u2022 Changes in the scope of consolidation: relates mainly to the acquisition of Raiffeisenbank Bulgaria.
\n
\u2022 The vast majority of the staging is triggered by a collective management assessment and relative changes in PD (see the multi-
\n
tier approach outlined in Note1.2 under \u2018Significant increase in credit risk since initial recognition\u2019).
\n
\u2022 For information on provisions for commitments and financial guarantees, see Note 5.7.2.
\n
\u2022 For information regarding the impact of changes in impairment on the income statement, see Note 3.10.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. Based on internal management reports, the
\n
composition and quality of the loan portfolio is set out in detail in the \u2018How do we manage our risks?\u2019 section (under \u2018Credit
\n
risk\u2019). All parts of that particular section which have been audited by the statutory auditor are listed at the start of the section.
\n

\n\n

\n\n

\n\n

\n\n
\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.3: Maximum credit exposure and offsetting
\n
\n
Collateral and other
\n
Maximum credit
\n
credit enhancements
\n
(in millions of EUR)
\n
\n
exposure (A)
\n
received (B) Net (A-B)
\n
31
\n
-12-2022
\n
\n
\n
\n
Subject to impairment
\n
326 705 132 743 193 962
\n
\n
of which Stage 3 \u2018non-performing\u2019 (AC and FVOCI)
\n
2 106
\n
1 550
\n
556
\n
Debt securities
\n
63 843 98 63 745
\n
Loans and advances (excl. reverse
\n
repos) 181 668 99 415 82 252
\n
Reverse repos
\n
20 186 20 131 55
\n
Other financial assets
\n
1 561 0 1 561
\n
Off
\n
-balance-sheet liabilities 59 447 13 099 46 348
\n
\n
Irrevocable
\n
38 832
\n
6 741
\n
32 091
\n
\n
Revocable
\n
20 616
\n
6 358
\n
14 258
\n
Not
\n
subject to impairment 9 239 2 213 7 026
\n
Debt securities
\n
1 745 0 1 745
\n
Loans and advances (excl. reverse repos)
\n
639 593 46
\n
\n
of which designated upon initial recognition at fair value through profit or loss (FVO)
\n
0 0 0
\n
Reverse repos
\n
33 33 0
\n
Derivatives
\n
6 821 1 588 5 234
\n
Other financial assets
\n
0 0 0
\n
Off
\n
-balance-sheet liabilities 0 0 0
\n
Total
\n
335 944 134 956 200 987
\n
31
\n
-12-2021
\n
\n
\n
\n
Subject to impairment
\n
309 988 127 140 182 848
\n
\n
of which Stage 3 \u2018non-performing\u2019 (AC and FVOCI) 2 072 1 584 488
\n
Debt securities
\n
62 675 93 62 582
\n
Loans and advances (excl. reverse repos)
\n
167 087 90 770 76 317
\n
Reverse repos
\n
24 978 24 877 101
\n
Other financial assets
\n
892 0 892
\n
Off
\n
-balance-sheet liabilities 54 357 11 400 42 957
\n
\n
Irrevocable 36 957 6 031 30 926
\n
\n
Revocable 17 401 5 370 12 031
\n
Not subject to
\n
impairment 9 263 2 294 6 969
\n
Debt securities
\n
2 976 0 2 976
\n
Loans and advances (excl. reverse repos)
\n
561 545 16
\n
\n
of which designated upon initial recognition at fair value through profit or loss (FVO) 0 0 0
\n
Reverse repos
\n
0 0 0
\n
Derivatives
\n
5 727 1 749 3 977
\n
Other financial assets
\n
0 0 0
\n
Off
\n
-balance-sheet liabilities 0 0 0
\n
Total
\n
319 251 129 434 189 818
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
\u2022 Maximum credit exposure for a financial asset is the net carrying value. Besides the amounts on the balance sheet, maximum
\n
credit exposure also includes the undrawn portion of irrevocable credit lines, financial guarantees granted and other
\n
irrevocable commitments.
\n
\u2022 The main types of collateral and other credit enhancements received relate to mortgages on real estate (mainly collateral for
\n
mortgage loans), securities lent out (mainly as a collateral for reverse repos), off-balance-sheet financial guarantees received
\n
and collateral of movable property. Mortgage loans with an LTV (loan-to-value) greater than 100% are limited to 0.6 billion
\n
euros or 0.7% of the entire mortgage loan portfolio at year-end 2022.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. Based on internal management reports, the
\n
composition and quality of the loan portfolio is set out in detail in the \u2018How do we manage our risks?\u2019 section (under \u2018Credit
\n
risk\u2019). All parts of that particular section which have been audited by the statutory auditor are listed at the start of the section.
\n\n
\u2022 Collateral and credit enhancements received: recognised at market value and limited to the outstanding amount of the
\n
relevant loans.
\n

\n\n
\u2022 The maximum credit exposure for the KBC Bank Ireland financial assets has not been included in the above figures (see Note
\n
5.11 for more information).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n
Financial instruments subject to offsetting, enforceable master
\n
financial
\n
instruments set
\n
the balance
\n
Amounts not set off
\n
netting agreements and similar arrangements
\n
instruments
\n
off
\n
sheet
\n
in the balance sheet
\n
Net amount
\n
\n
Financial
\n
Cash
\n
Securities
\n
(in millions of EUR)
\n
\n
\n
\n
\n
instruments
\n
collateral
\n
collateral
\n
\n
\n
31
\n
-12-2022
\n
FINANCIAL ASSETS
\n
Derivatives
\n
32 380 25 559 6 821 4 485 1 302 67 968
\n
\n
Derivatives (excluding central clearing houses)
\n
6
\n
\n
601
\n
\n
0
\n
\n
6
\n
\n
601
\n
\n
4
\n
\n
485
\n
\n
1
\n
\n
302
\n
\n
67
\n
\n
748
\n
\n
\n
Derivatives with central clearing houses
\n
*
\n
\n
25
\n
\n
779
\n
\n
25
\n
\n
559
\n
\n
220
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
220
\n
\n
Reverse repos, securities borrowing and similar
\n
arrangements 25 694 5 475 20 219 0 0 20 210 8
\n
\n
Reverse repos
\n
25
\n
\n
694
\n
\n
5
\n
\n
475
\n
\n
20
\n
\n
219
\n
\n
0
\n
\n
0
\n
\n
20
\n
\n
210
\n
\n
8
\n
\n
\n
Securities borrowing
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
58 074 31 034 27 040 4 485 1 302 20 277 976
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
31 462 22 846 8 615 4 492 1 095 447 2 582
\n
Derivatives (excluding central clearing houses)
\n
8
\n
\n
329
\n
0
\n
8
\n
\n
329
\n
4
\n
\n
492
\n
1
\n
\n
095
\n
447
\n
2
\n
\n
296
\n
Derivatives with central clearing houses
\n
*
\n
\n
23
\n
\n
132
\n
22
\n
\n
846
\n
286
\n
0
\n
0
\n
0
\n
286
\n
Repos, securities lending and similar arrangements
\n
16 573 5 475 11 097 0 0 11 082 15
\n
\n
Repos
\n
16
\n
\n
573
\n
\n
5
\n
\n
475
\n
\n
11
\n
\n
097
\n
\n
0
\n
\n
0
\n
\n
11
\n
\n
082
\n
\n
15
\n
\n
\n
Securities lending
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
48 035 28 322 19 713 4 492 1 095 11 529 2 597
\n
31
\n
-12-2021
\n
FINANCIAL ASSETS
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
13 969 8 242 5 727 2 731 1 298 112 1 586
\n
\n
Derivatives (excluding central clearing houses) 5 619 0 5 619 2 731 1 298 112 1 478
\n
\n
Derivatives with central clearing houses
\n
*
\n
8 349 8 242 107 0 0 0 107
\n
Reverse repos, securities borrowing and similar
\n
arrangements 38 160 13 182 24 978 67 0 24 900 10
\n
\n
Reverse repos 38 160 13 182 24 978 67 0 24 900 10
\n
\n
Securities borrowing 0 0 0 0 0 0 0
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
52 129 21 425 30 704 2 798 1 298 25 012 1 596
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
16 084 9 372 6 713 3 015 1 793 640 1 265
\n
\n
Derivatives (excluding central clearing houses) 6 608 0 6 609 3 015 1 793 640 1 161
\n
\n
Derivatives with central clearing houses
\n
*
\n
9 476 9 372 104 0 0 0 104
\n
Repos, securities lending and similar arrangements
\n
16 477 13 182 3 295 160 0 3 135 1
\n
\n
Repos 16 477 13 182 3 295 160 0 3 135 1
\n
\n
Securities lending 0 0 0 0 0 0 0
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
32 562 22 554 10 008 3 174 1 793 3 774 1 266
\n
* For central clearing houses, the offsetting procedure refers to the amount of offsetting between derivatives and related cash collateral. Cash collateral with central clearing houses
\n
amounted to 2 712 million euros at year-end 2022 and 1 130 million euros at year-end 2021.
\n
\n
\u2022 The criteria for offsetting are met if KBC currently has a legally enforceable right to set off the recognised financial assets and
\n
financial liabilities and intends either to settle the transactions on a net basis, or to realise the financial asset and settle the
\n
financial liability simultaneously. Financial assets and financial liabilities that are set off relate to financial instruments that were
\n
traded on (central) clearing houses.
\n\n
\u2022 The amounts presented in the \u2018Financial instruments\u2019 column under the \u2018Amounts not set off in the balance sheet\u2019 heading are
\n
for financial instruments entered into under an enforceable master netting agreement or similar arrangement that does not
\n
meet the criteria defined in IAS 32. These amounts refer to situations in which offsetting can only be applied if one of the
\n
counterparties defaults, becomes insolvent or goes bankrupt. The same principle applies for financial instruments given or
\n
received as collateral. The value given in the table for non-cash collateral received (in the \u2018Securities collateral\u2019 column under
\n
the \u2018Amounts not set off in the balance sheet\u2019 heading) is the market value. This is the value that is used if one of the
\n
counterparties defaults, becomes insolvent or goes bankrupt.
\n

\n\n

\n\n

\n\n

\n\n
\n\n

\n\n

\n\n

\n

\n\n

\n\n
Note 4.4: Fair value of financial assets and liabilities \u2013 general
\n
\u2022 In line with European Banking Authority guidelines, we conduct an outlier stress test on a quarterly basis by applying six different
\n
scenarios to the banking books (material currencies). The worst-case scenario is set off against tier-1 capital. For the banking
\n
book at KBC group level, this risk came to -3% of tier-1 capital at year-end 2022. This -3% is well below the -15% Tier 1 threshold,
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
which is monitored by the ECB. Note that this -3% of tier-1 capital at year-end 2022 is equivalent to a -0.4% points impact on
\n
the end of year 2022 fully loaded CET1 ratio.
\n
\u2022 The table shows the changes in economic value of equity under six different interest rate scenarios. To test these six scenarios,
\n
we combine the shift in the yield curves with changes in maturities depending on clients\u2019 behaviour (e.g., interest-rate-driven
\n
prepayment behaviour) and use a run-off balance sheet where maturing items are not replaced. The bank also analyses the
\n
impact of different interest rate scenarios on its net interest income.
\n
\n
Changes of the economic value of equity
\n
Supervisory shock scenarios (in millions of EUR, material currencies)*
\n
End of 4Q2022
\n
End of 2Q2022
\n
1 Parallel up
\n
-491
\n
-1 163
\n
2 Parallel down
\n
370
\n
600
\n
3 Steepener
\n
-55
\n
-207
\n
4 Flattener
\n
-26
\n
-3
\n
5 Short rates up
\n
-179
\n
-343
\n
6 Short rates down
\n
102
\n
176
\n
\n
* Supervision of the underlying internal models\u2019 compliance with the approval criteria as provided for in the standards imposed by the regulator does not come under the responsibility of the statutory auditor.
\n
\u2022 Note that the above stress test covers the full balance sheet (full economic view), with compensating effects across the balance
\n
sheet, whereas the table below focuses on some parts of the balance sheet.
\n
\n
\u2022 Furthermore, taking into account 1) KBCs large stock of high-quality liquid assets (approximately 92 billion euros on average in
\n
2022), which consist of cash and bonds which can be repoed in the private market and at the central banks, 2) 48% of total
\n
customer deposits at KBC are covered by the Deposit Guarantee and 3) 83% of total customer deposits consisting of more
\n
stable retail & SME clients, the unrealised losses on the debt securities portfolio at amortised cost do not need to be realised
\n
for liquidity purposes and are therefore irrelevant from a capital perspective.
\n
\n
\n
\n
Fair value of financial instruments that are not measured at fair value
\n
Financial assets
\n
Financial liabilities
\n
in the balance sheet
\n
at amortised cost
\n
at amortised cost
\n
Carrying
\n
Fair
\n
Carrying
\n
Fair
\n
(in millions of EUR)
\n
value
\n
value
\n
value
\n
value
\n
31-12-2022
\n
FINANCIAL ASSETS
\n
\n
Loans and advances to credit institutions and investment firms (incl. reverse
\n
repos) 24 258 24 211 \u2013 \u2013
\n
Loans and advances to customers (incl. reverse repos)
\n
177 596 163 972 \u2013 \u2013
\n
Debt securities
\n
52 030 46 886 \u2013 \u2013
\n
Other
\n
1 561 1 561 \u2013 \u2013
\n
Total
\n
255 444 236 630 \u2013 \u2013
\n
\n
Level 1 \u2013 43 364 \u2013 \u2013
\n
\n
Level 2 \u2013 31 917 \u2013 \u2013
\n
\n
Level 3 \u2013 161 349 \u2013 \u2013
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms (incl. repos)
\n
\n
\u2013 \u2013 35 671 35 207
\n
Deposits from customers and debt securities (incl. repos)
\n
\n
\u2013 \u2013 251 735 250 485
\n
Liabilities under investment
\n
contracts \u2013 \u2013 0 0
\n
Other
\n
\u2013 \u2013 2 448 2 448
\n
Total
\n
\u2013 \u2013 289 854 288 140
\n
Level 1
\n
\u2013
\n
\u2013
\n
\u2013
\n
47
\n
Level 2
\n
\u2013
\n
\u2013
\n
\u2013
\n
111 093
\n
Level 3
\n
\u2013
\n
\u2013
\n
\u2013
\n
176 999
\n
31
\n
-12-2021
\n
FINANCIAL ASSETS
\n
\n
Loans and advances to credit institutions and investment firms (incl. reverse
\n
repos) 32 780 32 789 \u2013 \u2013
\n
Loans and advances to customers (incl. reverse repos)
\n
159 285 160 037 \u2013 \u2013
\n
Debt securities
\n
47 172 47 878 \u2013 \u2013
\n
Other
\n
892 892 \u2013 \u2013
\n
Total
\n
240 128 241 595 \u2013 \u2013
\n
Level 1
\n
\u2013
\n
44 062
\n
\u2013
\n
\u2013
\n
Level 2
\n
\u2013
\n
36 737
\n
\u2013
\n
\u2013
\n
Level 3
\n
\u2013
\n
160 797
\n
\u2013
\n
\u2013
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms (incl. repos)
\n
\n
\u2013 \u2013 40 935 41 003
\n
Deposits from customers and debt securities (incl. repos)
\n
\n
\u2013 \u2013 225 164 225 299
\n
Liabilities under investment
\n
contracts \u2013 \u2013 0 0
\n
Other
\n
\u2013 \u2013 2 288 2 286
\n
Total
\n
\u2013 \u2013 268 387 268 588
\n
\n
Level 1 \u2013 \u2013 \u2013 24
\n
\n
Level 2 \u2013 \u2013 \u2013 105 714
\n
\n
Level 3 \u2013 \u2013 \u2013 162 850
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n
\u2022 All internal valuation models are validated by an independent Risk Validation Unit. In addition, the Executive Committee has
\n
appointed a Group Valuation Committee (GVC) to ensure that KBC meets all the legal requirements for measuring financial
\n
assets and liabilities at fair value. The GVC monitors consistent implementation of the KBC Valuation Framework, which consists
\n
of various guidelines, including the Group Valuation Policy, the Group Market Value Adjustments Policy and the Group
\n
Parameter Review Policy. The GVC meets at least twice a quarter to approve significant changes in valuation methods
\n
(including, but not limited to, models, market data and inputs) or deviations from group policies for financial assets and liabilities
\n
measured at fair value. The committee is made up of members from Finance, Risk Management and the Middle Office. Valuation
\n
uncertainty measurements are made and reported to the GVC every six months. Certain fair values generated by valuation
\n
models are challenged by a team set up specifically for this purpose.
\n
\u2022 The fair value of mortgage and term loans not measured at fair value in the balance sheet (see table) is calculated by
\n
discounting contractual cashflows at the risk-free rate. This calculation is then adjusted for credit risk by taking account of
\n
margins obtained on similar, but recently issued, loans or by using a spread derived from the listed-bond spread. The fair value
\n
of the main portfolios takes account of prepayment risks and cap options. The fair value of time deposits is calculated by
\n
discounting contractual cashflows at the risk-free rate. The fair value of demand and savings deposits is presumed to be equal
\n
to their carrying value.
\n
\u2022 As a result of the first-time adoption of IFRS 9 on 1 January 2018, debt instruments with a total carrying value of 15 060 million
\n
euros have been reclassified from \u2018Available-for-sale assets\u2019 to \u2018Financial assets held at amortised cost\u2019. Due to this
\n
reclassification, changes in fair value (before tax) totalling -566 million euros were not recorded in the revaluation reserve in
\n
2022 (-199 million euros in 2021). The fair value of this reclassified portfolio (after redemptions) amounted to 4 668 million euros
\n
at year-end 2022 (5 753 million euros at year-end 2021).
\n
\u2022 The difference between the fair value and the carrying value of the financial instruments at amortised cost was caused by the
\n
substantial interest rate hikes in 2022. As a hold-to-collect business model is applied on the assets side, interim changes in fair
\n
value are less relevant. In addition, part of this difference has already been recorded under fair value hedges for a portfolio of
\n
interest rate risk, which is presented separately on the balance sheet (on both the assets and the liabilities side) in the
\n
\u2018Profit/loss on positions in portfolios hedged against interest rate risk\u2019 balance sheet item. Furthermore, there are ALM interest
\n
derivatives not recognised in hedge accounting.
\n

\n\n

\n\n
\n
\n
\n\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n

\n

\n

\n

\n

\n

\n

\n
Note 4.5: Financial assets and liabilities measured at fair value \u2013 fair value hierarchy
\n
\n
\n
Fair value hierarchy
\n
31-12-2022 31-12-2021
\n
(in millions of EUR)
\n
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
\n
FINANCIAL ASSETS AT FAIR VALUE
\n
\n
Mandatorily measured at fair value through profit or loss other than held for trading (including
\n
\n
overlay)
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 13 0 13 0 0 0 0
\n
reverse repos)
\n
Loans and advances to customers (incl. reverse repos)
\n
0 0 625 625 0 0 560 560
\n
Equity instruments
\n
1 131 0 118 1 250 1 323 0 52 1 374
\n
Investment contracts (insurance)
\n
12 638 134 0 12 771 14 365 254 0 14 620
\n
Debt securities
\n
12 0 5 17 14 0 3 17
\n
of which sovereign bonds
\n
\n
0
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 34 0 34 0 1 0 1
\n
reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Equity instruments
\n
429 0 0 430 448 0 0 448
\n
Debt securities
\n
1 480 244 4 1 728 1 522 1 432 4 2 958
\n
\n
of which sovereign bonds 1 444 223 0 1 667 1 441 1 076 0 2 517
\n
Derivatives
\n
3 5 547 729 6 279 1 4 482 961 5 443
\n
Other
\n
0 0 0 0 0 0 0 0
\n
Designated upon initial recognition at fair value through profit or loss (FVO)
\n
Loans and advances to credit institutions and
\n
0 0 0 0 0 0 0 0
\n
investment firms (incl. reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Debt securities
\n
0 0 0 0 0 0 0 0
\n
\n
of which sovereign bonds 0 0 0 0 0 0 0 0
\n
At fair value through OCI
\n
\n
\n
\n
\n
\n
\n
\n
\n
Equity instruments
\n
18 1 297 315 15 1 306 321
\n
Debt securities
\n
9 508 2 070 235 11 813 12 269 2 963 271 15 503
\n
\n
of which sovereign bonds
\n
\n
7 003 1 059 73 8 135 8 751
\n
\n
1 711
\n
\n
52
\n
\n
10 514
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0 542 0 542 0 283 0 283
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial assets at fair value
\n
25 219 8 585 2 014 35 818 29 956 9 416 2 157 41 529
\n
FINANCIAL LIABILITIES AT FAIR VALUE
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 7 0 7 0 2 0 2
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 44 0 44 0 21 0 21
\n
Derivatives
\n
2
\n
6 911
\n
1 125
\n
8 038
\n
1
\n
4 410
\n
1 209
\n
5 619
\n
Short positions
\n
884 123 0 1 007 1 582 47 0 1 628
\n
Designated at fair value
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 0 0 0 0 0 0 0
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 74 1 131 1 205 0 61 1 251 1 312
\n
Liabilities under investment contracts
\n
12 002 0 0 12 002 13 603 0 0 13 603
\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0
\n
479
\n
98
\n
577
\n
0
\n
696
\n
398
\n
1 094
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial liabilities at fair value
\n
12 887 7 638 2 355 22 881 15 185 5 238 2 857 23 280
\n
\n
\u2022 The fair value hierarchy prioritises the valuation techniques and the respective inputs into three levels.
\n
- The fair value hierarchy gives the highest priority to \u2018level 1 inputs\u2019. This means that, when there is an active market, quoted
\n
prices have to be used to measure the financial assets or liabilities at fair value. Level 1 inputs are prices that are readily and
\n
regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency (and that are
\n
quoted in active markets accessible to KBC). They represent actual and regularly occurring market transactions on an arm\u2019s
\n
length basis. The fair value is then based on a mark-to-market valuation derived from currently available transaction prices.
\n
No valuation technique (model) is involved.
\n
- If there are no price quotations available, the reporting entity establishes fair value using a model based on observable or
\n
unobservable inputs. The use of observable inputs must be maximised. Observable inputs are also referred to as \u2018level 2
\n
inputs\u2019 and reflect the assumptions market participants would use in pricing the asset or liability based on market data
\n
obtained from sources independent of the reporting entity. Examples of observable inputs are the risk-free rate, exchange
\n
rates, stock prices and implied volatility. Valuation techniques based on observable inputs include discounted cashflow
\n
analysis, or reference to the current or recent fair value of a similar instrument.
\n
- Unobservable inputs are also referred to as \u2018level 3 inputs\u2019 and reflect the reporting entity\u2019s own assumptions about the
\n
assumptions that market participants would use in pricing the asset or liability (including assumptions regarding the risks
\n
involved). Unobservable inputs reflect a market that is not active. For example, proxies and correlation factors can be
\n
considered to be unobservable in the market.
\n
\u2022 When the inputs used to measure the fair value of an asset or a liability can be categorised into different levels of the fair value
\n
hierarchy, the fair value measurement is classified in its entirety into the same level as the lowest level input that is significant
\n
to the entire fair value measurement. For example, if a fair value measurement uses observable inputs that require significant
\n
adjustment based on unobservable inputs, that measurement is a level 3 measurement.
\n
\u2022 The valuation methodology and the corresponding classification in the fair value hierarchy of the most commonly used financial
\n
instruments are summarised in the table. Whereas the majority of instruments of a certain type are within the level indicated in
\n
the table, a small portion may actually be classified in another level.
\n
\u2022 KBC follows the principle that transfers into and out of levels of the fair value hierarchy are made at the end of the reporting
\n
period. Transfers between the various levels are dealt with in more detail in Note 4.6 and Note 4.7.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Instrument type Products Valuation technique
\n
Liquid financial instruments
\n
FX spots, exchange traded financial futures, exchange traded options,
\n
Mark-to-market (quoted prices in active
\n
for which quoted prices are
\n
exchange traded stocks, exchange traded funds, liquid government
\n
markets), for bonds: BVAL or vendor
\n
data.
\n
\n
Level 1
\n
regularly available
\n
\n
bonds, other liquid bonds, liquid asset backed securities (ABS) in active
\n
markets
\n
Plain vanilla/liquid
\n
(Cross-currency) interest rate swaps (IRS), FX swaps, FX forwards, forward
\n
Discounted cashflow analysis based on
\n
derivatives
\n
\n
rate agreements (FRA), inflation swaps, dividend swaps and futures,
\n
discount and estimation curves (derived
\n
reverse floaters, bond future options, interest rate future opt
\n
ions, overnight
\n
from quoted deposit rates,
\n
\n
index swaps (OIS), FX resets
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Caps & floors, interest rate options, European stock options, European &
\n
Option pricing model based on
\n
American FX options, forward starting options, digital FX options, FX strips
\n
observable inputs (e.g., volatilities)
\n
\n
of simple options, European swaptions, European cancellable IRS,
\n
\n
compound options
\n
\n
Linear financial liabilities
\n
Deposits, simple cashflows, repo transactions
\n
Discounted cashflow analysis based on
\n
(without optional features)
\n
\u2013
\n
discount and estimation curves (derived
\n
cash instruments
\n
\n
from quoted deposit rates,
\n
\n
\n
Level 2
\n
FX swaps and (CC)IRS)
\n
\n
\n
Semi-liquid bonds/asset
\n
Semi-liquid bonds/asset backed securities
\n
BVAL, prices corroborated by alternative
\n
backed securities
\n
\n
observable market data, or using
\n
comparable spread method
\n
\n
\n
Debt instruments
\n
KBC IFIMA own issues (liabilities), mortgage bonds held by \u010cSOB
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
observable inputs
\n
\n
\n
Linear financial assets (cash
\n
Loans, commercial paper
\n
Discounted cashflow analysis based on
\n
instruments)
\n
\n
discount and estimation curves (derived
\n
from quoted deposit rates,
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Exotic derivatives
\n
Target profit forwards, flexible forwards, American & Asian stock options,
\n
Option pricing model based on
\n
Bermudan swaptions, digital interest rate options, quanto interest rate
\n
observable inputs (e.g., correlation)
\n
\n
options, digital stock options, composite stock options, barrier stock
\n
options, quanto digital FX options, FX
\n
Asian options, FX European barrier
\n
options, FX simple digital barrier options, FX touch rebates, inflation
\n
options, Bermudan cancellable IRS, constant maturity swaps (CMS), CMS
\n
spread swaps, CMS spread options, CMS interest rate caps/floors,
\n
(callable) ra
\n
nge accruals, outperformance options, auto-callable options,
\n
\n
Level 3
\n
lookback options, commodity swaps and forwards
\n
Illiquid credit-linked
\n
Collateralised debt obligations (notes)
\n
Valuation model based on correlation of
\n
instruments
\n
\n
probability of default of underlying assets
\n
\n
\n
Private equity investments
\n
Private equity and non-quoted participations
\n
Based on the valuation guidelines of the
\n
European Private Equity & Venture Capital
\n
Association
\n
\n
\n
Illiquid bonds/asset backed
\n
Illiquid (mortgage) bonds/asset backed securities that are indicatively
\n
BVAL, third-party pricing (e.g., lead
\n
securities
\n
\n
priced by a single pricing provider in an inactive market
\n
\n
manager), where prices
\n
cannot be
\n
\n
\n
corroborated due to a lack of
\n
available/reliable alternative market data
\n
\n
\n
Debt instruments
\n
KBC own issues (KBC IFIMA)
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
\n
unobservable inputs (indicative pricing by
\n
third parties for derivatives)
\n
\n
\n
Structured loans
\n
Government-regulated loans with leveraged interest rates and exotic
\n
Discounted cashflow analysis and
\n
early repayment
\n
schedules (K&H)
\n
valuation of related derivatives based on
\n
unobservable inputs
\n
\n
\n
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag867": { "value": "\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.1: Financial assets and liabilities, breakdown by portfolio and product
\n
(in millions of EUR)
\n
Measured
\n
at
\n
amortised
\n
cost (AC)
\n
Measured
\n
at fair
\n
value
\n
through
\n
other
\n
compre-
\n
hensive
\n
income
\n
(FVOCI)
\n
Mandatorily
\n
measured at
\n
fair value
\n
through
\n
profit or loss
\n
(MFVPL) excl.
\n
HFT and
\n
overlay
\n
Measured at
\n
fair value \u2013
\n
overlay
\n
approach
\n
(overlay)
\n
Held for
\n
trading
\n
(HFT)
\n
Desig-
\n
nated at
\n
fair value
\n
1
\n
(FVO)
\n
Hedging
\n
Deriva-
\n
tives
\n
Total
\n
Total pro
\n
forma
\n
excluding
\n
KBC Bank
\n
Bulgaria
\n
(formerly
\n
Raiffeisen-
\n
bank
\n
Bulgaria)
\n
FINANCIAL ASSETS, 31-12-2022
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
4 240 0 13 0 1 0 0 4 254
\n
4 203
\n
of which loans and advances to banks repayable on
\n
demand and term loans to banks at not more than three
\n
months
\n
\n
1 237 1 237
\n
Loans and advances to customers (excluding reverse
\n
repos)
\n
177 427 0 625 0 0 0 0 178 053
\n
174 083
\n
Trade receivables
\n
2 818
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 818
\n
2 729
\n
Consumer credit
\n
6 222
\n
0
\n
430
\n
0
\n
0
\n
0
\n
0
\n
6 652
\n
5 977
\n
Mortgage loans
\n
73 465
\n
0
\n
196
\n
0
\n
0
\n
0
\n
0
\n
73 660
\n
72 891
\n
Term loans
\n
82 894
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
82 894
\n
80 744
\n
Finance lease
\n
6 368
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
6 368
\n
6 117
\n
Current account advances
\n
4 886
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 886
\n
4 885
\n
Other
\n
774
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
774
\n
740
\n
Reverse repos
\n
2
\n
\n
20 186
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 219
\n
20 219
\n
with credit institutions and investment firms
\n
20 018
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 050
\n
20 050
\n
with customers
\n
168
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
168
\n
168
\n
Equity instruments
\n
0
\n
315
\n
13
\n
1 237
\n
430
\n
0
\n
0
\n
1 994
\n
1 989
\n
Investment contracts (insurance)
\n
6
\n
\n
0
\n
0
\n
12 771
\n
0
\n
0
\n
0
\n
0
\n
12 771
\n
12 771
\n
Debt securities
\n
52 030
\n
11 813
\n
17
\n
0
\n
1 728
\n
0
\n
0
\n
65 588
\n
64 871
\n
Public bodies
\n
44 219
\n
8 135
\n
0
\n
0
\n
1 667
\n
0
\n
0
\n
54 021
\n
53 390
\n
Credit institutions and investment firms
\n
5 160
\n
1 621
\n
0
\n
0
\n
9
\n
0
\n
0
\n
6 790
\n
6 747
\n
Corporates
\n
2 651
\n
2 057
\n
17
\n
0
\n
53
\n
0
\n
0
\n
4 777
\n
4 733
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
6 279
\n
0
\n
542
\n
6 821
\n
6 813
\n
3
\n
\n
Other
\n
1 561
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
1 561
\n
1 561
\n
Total
\n
255 444
\n
12 128
\n
13 439
\n
1 237
\n
8 471
\n
0
\n
542
\n
291 262
\n
286 511
\n
FINANCIAL ASSETS, 31-12-2021
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
7 920 0 0 0 1 0 0 7 920
\n
-
\n
of which loans and advances to banks repayable on demand
\n
and term loans to banks at not more than three months
\n
3 146 -
\n
Loans and advances to customers (excl. reverse repos)
\n
159 167
\n
0
\n
560
\n
0
\n
0
\n
0
\n
0
\n
159 728
\n
-
\n
Trade receivables
\n
2 090
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 090
\n
-
\n
Consumer credit
\n
5 470
\n
0
\n
381
\n
0
\n
0
\n
0
\n
0
\n
5 851
\n
-
\n
Mortgage loans
\n
67 486
\n
0
\n
179
\n
0
\n
0
\n
0
\n
0
\n
67 665
\n
-
\n
Term loans
\n
72 998
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
72 998
\n
-
\n
Finance lease
\n
5 815
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
5 815
\n
-
\n
Current account advances
\n
4 819
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 819
\n
-
\n
Other
\n
490
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
490
\n
-
\n
2
\n
-
\n
\n
Reverse repos
\n
24 978
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 978
\n
with credit institutions and investment firms
\n
24 861
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 861
\n
-
\n
with customers
\n
117
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
117
\n
-
\n
Equity instruments
\n
0
\n
321
\n
8
\n
1 366
\n
448
\n
0
\n
0
\n
2 144
\n
-
\n
6
\n
-
\n
\n
Investment contracts (insurance)
\n
0
\n
0
\n
14 620
\n
0
\n
0
\n
0
\n
0
\n
14 620
\n
Debt securities
\n
47 172
\n
15 503
\n
17
\n
0
\n
2 958
\n
0
\n
0
\n
65 650
\n
-
\n
Public bodies
\n
41 475
\n
10 514
\n
0
\n
0
\n
2 517
\n
0
\n
0
\n
54 507
\n
-
\n
Credit institutions and investment firms
\n
3 310
\n
2 245
\n
0
\n
0
\n
357
\n
0
\n
0
\n
5 912
\n
-
\n
Corporates
\n
2 387
\n
2 744
\n
17
\n
0
\n
84
\n
0
\n
0
\n
5 232
\n
-
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
5 443
\n
0
\n
283
\n
5 727
\n
-
\n
3
\n
-
\n
\n
Other
\n
892
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
892
\n
Total
\n
240 128
\n
15 824
\n
15 205
\n
1 366
\n
8 850
\n
0
\n
283
\n
281 658
\n
-
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
(in millions of EUR)
\n
Measured at
\n
amortised
\n
cost
\n
(AC)
\n
Held for
\n
trading (HFT)
\n
Designated at
\n
fair value (FVO)
\n
\n
Hedging
\n
derivatives
\n
Total
\n
Total pro forma
\n
excluding KBC
\n
Bank Bulgaria
\n
(formerly
\n
Raiffeisenbank
\n
Bulgaria)
\n
FINANCIAL
\n
LIABILITIES, 31-12-2022
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
24 819 0 0 0 24 819
\n
24 737
\n
of which deposits from banks repayable on demand
\n
\n
\n
\n
\n
\n
\n
\n
5 085 5 085
\n
Deposits from customers and debt
\n
securities (excl. repos)
\n
\n
251 496 44 1 205 0 252 746
\n
247 585
\n
\n
Demand deposits 122 053 0 0 0 122 053 117 401
\n
\n
Time deposits 22 280 44 73 0 22 397 21 960
\n
\n
Savings accounts 76 979 0 0 0 76 979 76 954
\n
\n
Special deposits 2 710 0 0 0 2 710 2 663
\n
\n
Other deposits 268 0 0 0 268 268
\n
Subtotal deposits from customers (excl. repos)
\n
224 290 44 73 0 224 407 219 246
\n
\n
Certificates of deposit 9 321 0 1 0 9 322 9 322
\n
\n
Savings certificates 104 0 0 0 104 104
\n
\n
Non-convertible bonds 15 621 0 1 006 0 16 627 16 627
\n
\n
Non-convertible subordinated liabilities 2 160 0 126 0 2 285 2 285
\n
Repos
\n
4
\n
11 091 7 0 0 11 097
\n
11 097
\n
\n
with credit institutions and investment firms 10 852 7 0 0 10 859 10 859
\n
\n
with customers 239 0 0 0 239 239
\n
Liabilities under investment contracts
\n
6
\n
0 0 12 002 0 12 002
\n
12 002
\n
Derivatives
\n
0 8 038 0 577 8 615
\n
8 605
\n
Short positions
\n
0 1 007 0 0 1 007
\n
1 007
\n
\n
In equity instruments 0 5 0 0 5 5
\n
\n
In debt securities 0 1 002 0 0 1 002 1 002
\n
Other
\n
5
\n
2 448 0 0 0 2 448
\n
2 370
\n
Total
\n
289 854 9 096 13 207 577 312 735
\n
307 403
\n
FINANCIAL LIABILITIES, 31
\n
-12-2021
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
38 047 0 0 0 38 047
\n
-
\n
of which deposits from banks repayable on demand 4 695 -
\n
Deposits from
\n
customers and debt securities (excl. repos)
\n
\n
224 759 21 1 312 0 226 093
\n
-
\n
\n
Demand deposits 112 097 0 0 0 112 097
\n
-
\n
\n
Time deposits 9 106 21 60 0 9 187
\n
-
\n
\n
Savings accounts 74 801 0 0 0 74 801
\n
-
\n
\n
Special deposits 2 962 0 0 0 2 962
\n
-
\n
\n
Other deposits 428 0 0 0 428
\n
-
\n
Subtotal deposits from customers (excl. repos)
\n
199 395 21 60 0 199 476
\n
-
\n
\n
Certificates of deposit 6 273 0 0 0 6 273
\n
-
\n
\n
Savings certificates 253 0 0 0 253
\n
-
\n
\n
Non-convertible bonds 15 892 0 1 118 0 17 011
\n
-
\n
\n
Non-convertible subordinated liabilities 2 946 0 134 0 3 080
\n
-
\n
Repos
\n
4
\n
3 293 2 0 0 3 295
\n
-
\n
\n
with credit institutions and investment firms 2 888 2 0 0 2 890
\n
-
\n
\n
with customers 405 0 0 0 405
\n
-
\n
Liabilities under investment
\n
contracts
\n
6
\n
0 0 13 603 0 13 603
\n
-
\n
Derivatives
\n
0 5 619 0 1 094 6 713
\n
-
\n
Short positions
\n
0 1 628 0 0 1 628
\n
-
\n
\n
In equity instruments 0 18 0 0 18
\n
-
\n
\n
In debt securities 0 1 611 0 0 1 611
\n
-
\n
Other
\n
5
\n
2 288 0 0 0 2 288
\n
-
\n
Total
\n
268 387 7 271 14 916 1 094 291 667
\n
-
\n
1 The carrying value comes close to the maximum credit exposure.
\n
2 The amount of the reverse repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out).
\n
3 Financial assets not included under \u2018Loans and advances to customers\u2019 as they are not directly related to commercial lending.
\n
4 The amount of the repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out), with the assets being partly reflected on the balance sheet
\n
and partly obtained through reverse repo transactions.
\n
5 Financial liabilities not included under deposits from customers as they are not directly related to commercial deposit acquisition.
\n
6 The difference between \u2018Investment contracts (insurance)\u2019 and \u2018Liabilities under investment contracts\u2019 is accounted for by the presentation of non-unbundled investment contracts that are
\n
included under \u2018Investment contracts (insurance)\u2019 on the financial assets side, but are included under \u2018Technical provisions (before reinsurance)\u2019 on the liabilities side.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n\n
\u2022 \u2018Non-convertible bonds\u2019 comprise mainly KBC Bank, KBC Group, \u010cSOB and KBC IFIMA issues. They are usually recognised under
\n
\u2018Measured at amortised cost\u2019. However, if they contain closely related embedded derivatives, they are recorded under
\n
\u2018Designated at fair value\u2019 (see accounting policies). This item also includes three green bonds (for 500, 500 and 750 million euros
\n
each) and a social bond (for 750 million euros), which have been recognised at amortised cost.
\n
\u2022 More information on major new debt issues or redemptions is provided under the \u2018Consolidated cashflow statement\u2019.
\n
\u2022 \u2018Deposits from credit institutions and investment firms\u2019 include funding obtained from the ECB\u2019s TLTRO programme (15.4 billion
\n
euros at year-end 2022, 9.1 billion euros less than at year-end 2021 on account of redemptions). KBC calculates these deposits
\n
using the effective interest rate method, with the rate being adjusted should we fail to meet the conditions (similar to a floating
\n
rate instrument), as per paragraph B.5.4.5 of IFRS 9. KBC\u2019s management has reasonable assurance that KBC will comply with
\n
the conditions attached (including the level of lending to households and non-financial companies) and hence the interest has
\n
accordingly been recognised (a gross amount of 112 million euros in interest income (negative interest rate) in 2022 and 242
\n
million euros in 2021).
\n
\u2022 Transferred financial assets that continue to be recognised in their entirety: KBC regularly lends and/or sells securities with the
\n
commitment to buy them back at a later date (repo transactions). Securities lent or sold with such a commitment are transferred
\n
to the counterparty, and, in exchange, KBC receives cash or other financial assets. However, KBC retains the main risks and
\n
income relating to these securities, and, therefore, continues to recognise them on its balance sheet. In addition, a financial
\n
liability is recognised equalling the cash received.
\n
\n
Transferred financial assets that continue to be recognised in their entirety (carrying value, in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Transferred financial assets that continue to be recognised in their entirety: repo transactions and securities lent out
\n
17 425 13 762
\n
Held for
\n
trading 960 1 221
\n
Fair value through OCI
\n
860 1 474
\n
Amortised cost
\n
15 605 11 067
\n
Associated financial liability
\n
10 534 2 936
\n
Held for trading
\n
689 335
\n
Fair value through OCI
\n
609 362
\n
Amortised cost
\n
9 236 2 239
\n
\n
\u2022 It should be noted that KBC has more transferred financial assets on its balance sheet than repo transactions, due to the fact
\n
that the cash legs of certain repo transactions are offset against reverse repo transactions if they are carried out with the same
\n
counterparty, in the same currency and with the same maturity date. Moreover, there is a legally enforceable right, and an
\n
intention, to settle the transactions on a net basis or to realise the financial asset and settle the financial liability simultaneously.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria in 2022 is provided in Note 6.6.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. We report on estimated greenhouse gas emissions
\n
associated with lending and other activities and have defined objectives for reducing the greenhouse gas intensity of loans
\n
we have provided to the energy sector, electricity producers and the real estate sector, mortgage loans and loans provided
\n
for commercial residential real estate, as well as loans provided to the automotive industry and financial and operational car
\n
leasing (see Note 6.2), the agricultural sector, and cement, steel and aluminium producers. See \u2018Focus on climate\u2019 in the \u2018Report
\n
of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our Climate Report and
\n
\n
our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfLoansAndAdvancesToBanksExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag858": { "value": "\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.1: Financial assets and liabilities, breakdown by portfolio and product
\n
(in millions of EUR)
\n
Measured
\n
at
\n
amortised
\n
cost (AC)
\n
Measured
\n
at fair
\n
value
\n
through
\n
other
\n
compre-
\n
hensive
\n
income
\n
(FVOCI)
\n
Mandatorily
\n
measured at
\n
fair value
\n
through
\n
profit or loss
\n
(MFVPL) excl.
\n
HFT and
\n
overlay
\n
Measured at
\n
fair value \u2013
\n
overlay
\n
approach
\n
(overlay)
\n
Held for
\n
trading
\n
(HFT)
\n
Desig-
\n
nated at
\n
fair value
\n
1
\n
(FVO)
\n
Hedging
\n
Deriva-
\n
tives
\n
Total
\n
Total pro
\n
forma
\n
excluding
\n
KBC Bank
\n
Bulgaria
\n
(formerly
\n
Raiffeisen-
\n
bank
\n
Bulgaria)
\n
FINANCIAL ASSETS, 31-12-2022
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
4 240 0 13 0 1 0 0 4 254
\n
4 203
\n
of which loans and advances to banks repayable on
\n
demand and term loans to banks at not more than three
\n
months
\n
\n
1 237 1 237
\n
Loans and advances to customers (excluding reverse
\n
repos)
\n
177 427 0 625 0 0 0 0 178 053
\n
174 083
\n
Trade receivables
\n
2 818
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 818
\n
2 729
\n
Consumer credit
\n
6 222
\n
0
\n
430
\n
0
\n
0
\n
0
\n
0
\n
6 652
\n
5 977
\n
Mortgage loans
\n
73 465
\n
0
\n
196
\n
0
\n
0
\n
0
\n
0
\n
73 660
\n
72 891
\n
Term loans
\n
82 894
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
82 894
\n
80 744
\n
Finance lease
\n
6 368
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
6 368
\n
6 117
\n
Current account advances
\n
4 886
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 886
\n
4 885
\n
Other
\n
774
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
774
\n
740
\n
Reverse repos
\n
2
\n
\n
20 186
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 219
\n
20 219
\n
with credit institutions and investment firms
\n
20 018
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 050
\n
20 050
\n
with customers
\n
168
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
168
\n
168
\n
Equity instruments
\n
0
\n
315
\n
13
\n
1 237
\n
430
\n
0
\n
0
\n
1 994
\n
1 989
\n
Investment contracts (insurance)
\n
6
\n
\n
0
\n
0
\n
12 771
\n
0
\n
0
\n
0
\n
0
\n
12 771
\n
12 771
\n
Debt securities
\n
52 030
\n
11 813
\n
17
\n
0
\n
1 728
\n
0
\n
0
\n
65 588
\n
64 871
\n
Public bodies
\n
44 219
\n
8 135
\n
0
\n
0
\n
1 667
\n
0
\n
0
\n
54 021
\n
53 390
\n
Credit institutions and investment firms
\n
5 160
\n
1 621
\n
0
\n
0
\n
9
\n
0
\n
0
\n
6 790
\n
6 747
\n
Corporates
\n
2 651
\n
2 057
\n
17
\n
0
\n
53
\n
0
\n
0
\n
4 777
\n
4 733
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
6 279
\n
0
\n
542
\n
6 821
\n
6 813
\n
3
\n
\n
Other
\n
1 561
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
1 561
\n
1 561
\n
Total
\n
255 444
\n
12 128
\n
13 439
\n
1 237
\n
8 471
\n
0
\n
542
\n
291 262
\n
286 511
\n
FINANCIAL ASSETS, 31-12-2021
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
7 920 0 0 0 1 0 0 7 920
\n
-
\n
of which loans and advances to banks repayable on demand
\n
and term loans to banks at not more than three months
\n
3 146 -
\n
Loans and advances to customers (excl. reverse repos)
\n
159 167
\n
0
\n
560
\n
0
\n
0
\n
0
\n
0
\n
159 728
\n
-
\n
Trade receivables
\n
2 090
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 090
\n
-
\n
Consumer credit
\n
5 470
\n
0
\n
381
\n
0
\n
0
\n
0
\n
0
\n
5 851
\n
-
\n
Mortgage loans
\n
67 486
\n
0
\n
179
\n
0
\n
0
\n
0
\n
0
\n
67 665
\n
-
\n
Term loans
\n
72 998
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
72 998
\n
-
\n
Finance lease
\n
5 815
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
5 815
\n
-
\n
Current account advances
\n
4 819
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 819
\n
-
\n
Other
\n
490
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
490
\n
-
\n
2
\n
-
\n
\n
Reverse repos
\n
24 978
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 978
\n
with credit institutions and investment firms
\n
24 861
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 861
\n
-
\n
with customers
\n
117
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
117
\n
-
\n
Equity instruments
\n
0
\n
321
\n
8
\n
1 366
\n
448
\n
0
\n
0
\n
2 144
\n
-
\n
6
\n
-
\n
\n
Investment contracts (insurance)
\n
0
\n
0
\n
14 620
\n
0
\n
0
\n
0
\n
0
\n
14 620
\n
Debt securities
\n
47 172
\n
15 503
\n
17
\n
0
\n
2 958
\n
0
\n
0
\n
65 650
\n
-
\n
Public bodies
\n
41 475
\n
10 514
\n
0
\n
0
\n
2 517
\n
0
\n
0
\n
54 507
\n
-
\n
Credit institutions and investment firms
\n
3 310
\n
2 245
\n
0
\n
0
\n
357
\n
0
\n
0
\n
5 912
\n
-
\n
Corporates
\n
2 387
\n
2 744
\n
17
\n
0
\n
84
\n
0
\n
0
\n
5 232
\n
-
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
5 443
\n
0
\n
283
\n
5 727
\n
-
\n
3
\n
-
\n
\n
Other
\n
892
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
892
\n
Total
\n
240 128
\n
15 824
\n
15 205
\n
1 366
\n
8 850
\n
0
\n
283
\n
281 658
\n
-
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
(in millions of EUR)
\n
Measured at
\n
amortised
\n
cost
\n
(AC)
\n
Held for
\n
trading (HFT)
\n
Designated at
\n
fair value (FVO)
\n
\n
Hedging
\n
derivatives
\n
Total
\n
Total pro forma
\n
excluding KBC
\n
Bank Bulgaria
\n
(formerly
\n
Raiffeisenbank
\n
Bulgaria)
\n
FINANCIAL
\n
LIABILITIES, 31-12-2022
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
24 819 0 0 0 24 819
\n
24 737
\n
of which deposits from banks repayable on demand
\n
\n
\n
\n
\n
\n
\n
\n
5 085 5 085
\n
Deposits from customers and debt
\n
securities (excl. repos)
\n
\n
251 496 44 1 205 0 252 746
\n
247 585
\n
\n
Demand deposits 122 053 0 0 0 122 053 117 401
\n
\n
Time deposits 22 280 44 73 0 22 397 21 960
\n
\n
Savings accounts 76 979 0 0 0 76 979 76 954
\n
\n
Special deposits 2 710 0 0 0 2 710 2 663
\n
\n
Other deposits 268 0 0 0 268 268
\n
Subtotal deposits from customers (excl. repos)
\n
224 290 44 73 0 224 407 219 246
\n
\n
Certificates of deposit 9 321 0 1 0 9 322 9 322
\n
\n
Savings certificates 104 0 0 0 104 104
\n
\n
Non-convertible bonds 15 621 0 1 006 0 16 627 16 627
\n
\n
Non-convertible subordinated liabilities 2 160 0 126 0 2 285 2 285
\n
Repos
\n
4
\n
11 091 7 0 0 11 097
\n
11 097
\n
\n
with credit institutions and investment firms 10 852 7 0 0 10 859 10 859
\n
\n
with customers 239 0 0 0 239 239
\n
Liabilities under investment contracts
\n
6
\n
0 0 12 002 0 12 002
\n
12 002
\n
Derivatives
\n
0 8 038 0 577 8 615
\n
8 605
\n
Short positions
\n
0 1 007 0 0 1 007
\n
1 007
\n
\n
In equity instruments 0 5 0 0 5 5
\n
\n
In debt securities 0 1 002 0 0 1 002 1 002
\n
Other
\n
5
\n
2 448 0 0 0 2 448
\n
2 370
\n
Total
\n
289 854 9 096 13 207 577 312 735
\n
307 403
\n
FINANCIAL LIABILITIES, 31
\n
-12-2021
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
38 047 0 0 0 38 047
\n
-
\n
of which deposits from banks repayable on demand 4 695 -
\n
Deposits from
\n
customers and debt securities (excl. repos)
\n
\n
224 759 21 1 312 0 226 093
\n
-
\n
\n
Demand deposits 112 097 0 0 0 112 097
\n
-
\n
\n
Time deposits 9 106 21 60 0 9 187
\n
-
\n
\n
Savings accounts 74 801 0 0 0 74 801
\n
-
\n
\n
Special deposits 2 962 0 0 0 2 962
\n
-
\n
\n
Other deposits 428 0 0 0 428
\n
-
\n
Subtotal deposits from customers (excl. repos)
\n
199 395 21 60 0 199 476
\n
-
\n
\n
Certificates of deposit 6 273 0 0 0 6 273
\n
-
\n
\n
Savings certificates 253 0 0 0 253
\n
-
\n
\n
Non-convertible bonds 15 892 0 1 118 0 17 011
\n
-
\n
\n
Non-convertible subordinated liabilities 2 946 0 134 0 3 080
\n
-
\n
Repos
\n
4
\n
3 293 2 0 0 3 295
\n
-
\n
\n
with credit institutions and investment firms 2 888 2 0 0 2 890
\n
-
\n
\n
with customers 405 0 0 0 405
\n
-
\n
Liabilities under investment
\n
contracts
\n
6
\n
0 0 13 603 0 13 603
\n
-
\n
Derivatives
\n
0 5 619 0 1 094 6 713
\n
-
\n
Short positions
\n
0 1 628 0 0 1 628
\n
-
\n
\n
In equity instruments 0 18 0 0 18
\n
-
\n
\n
In debt securities 0 1 611 0 0 1 611
\n
-
\n
Other
\n
5
\n
2 288 0 0 0 2 288
\n
-
\n
Total
\n
268 387 7 271 14 916 1 094 291 667
\n
-
\n
1 The carrying value comes close to the maximum credit exposure.
\n
2 The amount of the reverse repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out).
\n
3 Financial assets not included under \u2018Loans and advances to customers\u2019 as they are not directly related to commercial lending.
\n
4 The amount of the repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out), with the assets being partly reflected on the balance sheet
\n
and partly obtained through reverse repo transactions.
\n
5 Financial liabilities not included under deposits from customers as they are not directly related to commercial deposit acquisition.
\n
6 The difference between \u2018Investment contracts (insurance)\u2019 and \u2018Liabilities under investment contracts\u2019 is accounted for by the presentation of non-unbundled investment contracts that are
\n
included under \u2018Investment contracts (insurance)\u2019 on the financial assets side, but are included under \u2018Technical provisions (before reinsurance)\u2019 on the liabilities side.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n\n
\u2022 \u2018Non-convertible bonds\u2019 comprise mainly KBC Bank, KBC Group, \u010cSOB and KBC IFIMA issues. They are usually recognised under
\n
\u2018Measured at amortised cost\u2019. However, if they contain closely related embedded derivatives, they are recorded under
\n
\u2018Designated at fair value\u2019 (see accounting policies). This item also includes three green bonds (for 500, 500 and 750 million euros
\n
each) and a social bond (for 750 million euros), which have been recognised at amortised cost.
\n
\u2022 More information on major new debt issues or redemptions is provided under the \u2018Consolidated cashflow statement\u2019.
\n
\u2022 \u2018Deposits from credit institutions and investment firms\u2019 include funding obtained from the ECB\u2019s TLTRO programme (15.4 billion
\n
euros at year-end 2022, 9.1 billion euros less than at year-end 2021 on account of redemptions). KBC calculates these deposits
\n
using the effective interest rate method, with the rate being adjusted should we fail to meet the conditions (similar to a floating
\n
rate instrument), as per paragraph B.5.4.5 of IFRS 9. KBC\u2019s management has reasonable assurance that KBC will comply with
\n
the conditions attached (including the level of lending to households and non-financial companies) and hence the interest has
\n
accordingly been recognised (a gross amount of 112 million euros in interest income (negative interest rate) in 2022 and 242
\n
million euros in 2021).
\n
\u2022 Transferred financial assets that continue to be recognised in their entirety: KBC regularly lends and/or sells securities with the
\n
commitment to buy them back at a later date (repo transactions). Securities lent or sold with such a commitment are transferred
\n
to the counterparty, and, in exchange, KBC receives cash or other financial assets. However, KBC retains the main risks and
\n
income relating to these securities, and, therefore, continues to recognise them on its balance sheet. In addition, a financial
\n
liability is recognised equalling the cash received.
\n
\n
Transferred financial assets that continue to be recognised in their entirety (carrying value, in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Transferred financial assets that continue to be recognised in their entirety: repo transactions and securities lent out
\n
17 425 13 762
\n
Held for
\n
trading 960 1 221
\n
Fair value through OCI
\n
860 1 474
\n
Amortised cost
\n
15 605 11 067
\n
Associated financial liability
\n
10 534 2 936
\n
Held for trading
\n
689 335
\n
Fair value through OCI
\n
609 362
\n
Amortised cost
\n
9 236 2 239
\n
\n
\u2022 It should be noted that KBC has more transferred financial assets on its balance sheet than repo transactions, due to the fact
\n
that the cash legs of certain repo transactions are offset against reverse repo transactions if they are carried out with the same
\n
counterparty, in the same currency and with the same maturity date. Moreover, there is a legally enforceable right, and an
\n
intention, to settle the transactions on a net basis or to realise the financial asset and settle the financial liability simultaneously.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria in 2022 is provided in Note 6.6.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. We report on estimated greenhouse gas emissions
\n
associated with lending and other activities and have defined objectives for reducing the greenhouse gas intensity of loans
\n
we have provided to the energy sector, electricity producers and the real estate sector, mortgage loans and loans provided
\n
for commercial residential real estate, as well as loans provided to the automotive industry and financial and operational car
\n
leasing (see Note 6.2), the agricultural sector, and cement, steel and aluminium producers. See \u2018Focus on climate\u2019 in the \u2018Report
\n
of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our Climate Report and
\n
\n
our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfDepositsFromBanksExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag861": { "value": "\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.1: Financial assets and liabilities, breakdown by portfolio and product
\n
(in millions of EUR)
\n
Measured
\n
at
\n
amortised
\n
cost (AC)
\n
Measured
\n
at fair
\n
value
\n
through
\n
other
\n
compre-
\n
hensive
\n
income
\n
(FVOCI)
\n
Mandatorily
\n
measured at
\n
fair value
\n
through
\n
profit or loss
\n
(MFVPL) excl.
\n
HFT and
\n
overlay
\n
Measured at
\n
fair value \u2013
\n
overlay
\n
approach
\n
(overlay)
\n
Held for
\n
trading
\n
(HFT)
\n
Desig-
\n
nated at
\n
fair value
\n
1
\n
(FVO)
\n
Hedging
\n
Deriva-
\n
tives
\n
Total
\n
Total pro
\n
forma
\n
excluding
\n
KBC Bank
\n
Bulgaria
\n
(formerly
\n
Raiffeisen-
\n
bank
\n
Bulgaria)
\n
FINANCIAL ASSETS, 31-12-2022
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
4 240 0 13 0 1 0 0 4 254
\n
4 203
\n
of which loans and advances to banks repayable on
\n
demand and term loans to banks at not more than three
\n
months
\n
\n
1 237 1 237
\n
Loans and advances to customers (excluding reverse
\n
repos)
\n
177 427 0 625 0 0 0 0 178 053
\n
174 083
\n
Trade receivables
\n
2 818
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 818
\n
2 729
\n
Consumer credit
\n
6 222
\n
0
\n
430
\n
0
\n
0
\n
0
\n
0
\n
6 652
\n
5 977
\n
Mortgage loans
\n
73 465
\n
0
\n
196
\n
0
\n
0
\n
0
\n
0
\n
73 660
\n
72 891
\n
Term loans
\n
82 894
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
82 894
\n
80 744
\n
Finance lease
\n
6 368
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
6 368
\n
6 117
\n
Current account advances
\n
4 886
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 886
\n
4 885
\n
Other
\n
774
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
774
\n
740
\n
Reverse repos
\n
2
\n
\n
20 186
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 219
\n
20 219
\n
with credit institutions and investment firms
\n
20 018
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 050
\n
20 050
\n
with customers
\n
168
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
168
\n
168
\n
Equity instruments
\n
0
\n
315
\n
13
\n
1 237
\n
430
\n
0
\n
0
\n
1 994
\n
1 989
\n
Investment contracts (insurance)
\n
6
\n
\n
0
\n
0
\n
12 771
\n
0
\n
0
\n
0
\n
0
\n
12 771
\n
12 771
\n
Debt securities
\n
52 030
\n
11 813
\n
17
\n
0
\n
1 728
\n
0
\n
0
\n
65 588
\n
64 871
\n
Public bodies
\n
44 219
\n
8 135
\n
0
\n
0
\n
1 667
\n
0
\n
0
\n
54 021
\n
53 390
\n
Credit institutions and investment firms
\n
5 160
\n
1 621
\n
0
\n
0
\n
9
\n
0
\n
0
\n
6 790
\n
6 747
\n
Corporates
\n
2 651
\n
2 057
\n
17
\n
0
\n
53
\n
0
\n
0
\n
4 777
\n
4 733
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
6 279
\n
0
\n
542
\n
6 821
\n
6 813
\n
3
\n
\n
Other
\n
1 561
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
1 561
\n
1 561
\n
Total
\n
255 444
\n
12 128
\n
13 439
\n
1 237
\n
8 471
\n
0
\n
542
\n
291 262
\n
286 511
\n
FINANCIAL ASSETS, 31-12-2021
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
7 920 0 0 0 1 0 0 7 920
\n
-
\n
of which loans and advances to banks repayable on demand
\n
and term loans to banks at not more than three months
\n
3 146 -
\n
Loans and advances to customers (excl. reverse repos)
\n
159 167
\n
0
\n
560
\n
0
\n
0
\n
0
\n
0
\n
159 728
\n
-
\n
Trade receivables
\n
2 090
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 090
\n
-
\n
Consumer credit
\n
5 470
\n
0
\n
381
\n
0
\n
0
\n
0
\n
0
\n
5 851
\n
-
\n
Mortgage loans
\n
67 486
\n
0
\n
179
\n
0
\n
0
\n
0
\n
0
\n
67 665
\n
-
\n
Term loans
\n
72 998
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
72 998
\n
-
\n
Finance lease
\n
5 815
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
5 815
\n
-
\n
Current account advances
\n
4 819
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 819
\n
-
\n
Other
\n
490
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
490
\n
-
\n
2
\n
-
\n
\n
Reverse repos
\n
24 978
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 978
\n
with credit institutions and investment firms
\n
24 861
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 861
\n
-
\n
with customers
\n
117
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
117
\n
-
\n
Equity instruments
\n
0
\n
321
\n
8
\n
1 366
\n
448
\n
0
\n
0
\n
2 144
\n
-
\n
6
\n
-
\n
\n
Investment contracts (insurance)
\n
0
\n
0
\n
14 620
\n
0
\n
0
\n
0
\n
0
\n
14 620
\n
Debt securities
\n
47 172
\n
15 503
\n
17
\n
0
\n
2 958
\n
0
\n
0
\n
65 650
\n
-
\n
Public bodies
\n
41 475
\n
10 514
\n
0
\n
0
\n
2 517
\n
0
\n
0
\n
54 507
\n
-
\n
Credit institutions and investment firms
\n
3 310
\n
2 245
\n
0
\n
0
\n
357
\n
0
\n
0
\n
5 912
\n
-
\n
Corporates
\n
2 387
\n
2 744
\n
17
\n
0
\n
84
\n
0
\n
0
\n
5 232
\n
-
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
5 443
\n
0
\n
283
\n
5 727
\n
-
\n
3
\n
-
\n
\n
Other
\n
892
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
892
\n
Total
\n
240 128
\n
15 824
\n
15 205
\n
1 366
\n
8 850
\n
0
\n
283
\n
281 658
\n
-
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
(in millions of EUR)
\n
Measured at
\n
amortised
\n
cost
\n
(AC)
\n
Held for
\n
trading (HFT)
\n
Designated at
\n
fair value (FVO)
\n
\n
Hedging
\n
derivatives
\n
Total
\n
Total pro forma
\n
excluding KBC
\n
Bank Bulgaria
\n
(formerly
\n
Raiffeisenbank
\n
Bulgaria)
\n
FINANCIAL
\n
LIABILITIES, 31-12-2022
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
24 819 0 0 0 24 819
\n
24 737
\n
of which deposits from banks repayable on demand
\n
\n
\n
\n
\n
\n
\n
\n
5 085 5 085
\n
Deposits from customers and debt
\n
securities (excl. repos)
\n
\n
251 496 44 1 205 0 252 746
\n
247 585
\n
\n
Demand deposits 122 053 0 0 0 122 053 117 401
\n
\n
Time deposits 22 280 44 73 0 22 397 21 960
\n
\n
Savings accounts 76 979 0 0 0 76 979 76 954
\n
\n
Special deposits 2 710 0 0 0 2 710 2 663
\n
\n
Other deposits 268 0 0 0 268 268
\n
Subtotal deposits from customers (excl. repos)
\n
224 290 44 73 0 224 407 219 246
\n
\n
Certificates of deposit 9 321 0 1 0 9 322 9 322
\n
\n
Savings certificates 104 0 0 0 104 104
\n
\n
Non-convertible bonds 15 621 0 1 006 0 16 627 16 627
\n
\n
Non-convertible subordinated liabilities 2 160 0 126 0 2 285 2 285
\n
Repos
\n
4
\n
11 091 7 0 0 11 097
\n
11 097
\n
\n
with credit institutions and investment firms 10 852 7 0 0 10 859 10 859
\n
\n
with customers 239 0 0 0 239 239
\n
Liabilities under investment contracts
\n
6
\n
0 0 12 002 0 12 002
\n
12 002
\n
Derivatives
\n
0 8 038 0 577 8 615
\n
8 605
\n
Short positions
\n
0 1 007 0 0 1 007
\n
1 007
\n
\n
In equity instruments 0 5 0 0 5 5
\n
\n
In debt securities 0 1 002 0 0 1 002 1 002
\n
Other
\n
5
\n
2 448 0 0 0 2 448
\n
2 370
\n
Total
\n
289 854 9 096 13 207 577 312 735
\n
307 403
\n
FINANCIAL LIABILITIES, 31
\n
-12-2021
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
38 047 0 0 0 38 047
\n
-
\n
of which deposits from banks repayable on demand 4 695 -
\n
Deposits from
\n
customers and debt securities (excl. repos)
\n
\n
224 759 21 1 312 0 226 093
\n
-
\n
\n
Demand deposits 112 097 0 0 0 112 097
\n
-
\n
\n
Time deposits 9 106 21 60 0 9 187
\n
-
\n
\n
Savings accounts 74 801 0 0 0 74 801
\n
-
\n
\n
Special deposits 2 962 0 0 0 2 962
\n
-
\n
\n
Other deposits 428 0 0 0 428
\n
-
\n
Subtotal deposits from customers (excl. repos)
\n
199 395 21 60 0 199 476
\n
-
\n
\n
Certificates of deposit 6 273 0 0 0 6 273
\n
-
\n
\n
Savings certificates 253 0 0 0 253
\n
-
\n
\n
Non-convertible bonds 15 892 0 1 118 0 17 011
\n
-
\n
\n
Non-convertible subordinated liabilities 2 946 0 134 0 3 080
\n
-
\n
Repos
\n
4
\n
3 293 2 0 0 3 295
\n
-
\n
\n
with credit institutions and investment firms 2 888 2 0 0 2 890
\n
-
\n
\n
with customers 405 0 0 0 405
\n
-
\n
Liabilities under investment
\n
contracts
\n
6
\n
0 0 13 603 0 13 603
\n
-
\n
Derivatives
\n
0 5 619 0 1 094 6 713
\n
-
\n
Short positions
\n
0 1 628 0 0 1 628
\n
-
\n
\n
In equity instruments 0 18 0 0 18
\n
-
\n
\n
In debt securities 0 1 611 0 0 1 611
\n
-
\n
Other
\n
5
\n
2 288 0 0 0 2 288
\n
-
\n
Total
\n
268 387 7 271 14 916 1 094 291 667
\n
-
\n
1 The carrying value comes close to the maximum credit exposure.
\n
2 The amount of the reverse repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out).
\n
3 Financial assets not included under \u2018Loans and advances to customers\u2019 as they are not directly related to commercial lending.
\n
4 The amount of the repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out), with the assets being partly reflected on the balance sheet
\n
and partly obtained through reverse repo transactions.
\n
5 Financial liabilities not included under deposits from customers as they are not directly related to commercial deposit acquisition.
\n
6 The difference between \u2018Investment contracts (insurance)\u2019 and \u2018Liabilities under investment contracts\u2019 is accounted for by the presentation of non-unbundled investment contracts that are
\n
included under \u2018Investment contracts (insurance)\u2019 on the financial assets side, but are included under \u2018Technical provisions (before reinsurance)\u2019 on the liabilities side.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n\n
\u2022 \u2018Non-convertible bonds\u2019 comprise mainly KBC Bank, KBC Group, \u010cSOB and KBC IFIMA issues. They are usually recognised under
\n
\u2018Measured at amortised cost\u2019. However, if they contain closely related embedded derivatives, they are recorded under
\n
\u2018Designated at fair value\u2019 (see accounting policies). This item also includes three green bonds (for 500, 500 and 750 million euros
\n
each) and a social bond (for 750 million euros), which have been recognised at amortised cost.
\n
\u2022 More information on major new debt issues or redemptions is provided under the \u2018Consolidated cashflow statement\u2019.
\n
\u2022 \u2018Deposits from credit institutions and investment firms\u2019 include funding obtained from the ECB\u2019s TLTRO programme (15.4 billion
\n
euros at year-end 2022, 9.1 billion euros less than at year-end 2021 on account of redemptions). KBC calculates these deposits
\n
using the effective interest rate method, with the rate being adjusted should we fail to meet the conditions (similar to a floating
\n
rate instrument), as per paragraph B.5.4.5 of IFRS 9. KBC\u2019s management has reasonable assurance that KBC will comply with
\n
the conditions attached (including the level of lending to households and non-financial companies) and hence the interest has
\n
accordingly been recognised (a gross amount of 112 million euros in interest income (negative interest rate) in 2022 and 242
\n
million euros in 2021).
\n
\u2022 Transferred financial assets that continue to be recognised in their entirety: KBC regularly lends and/or sells securities with the
\n
commitment to buy them back at a later date (repo transactions). Securities lent or sold with such a commitment are transferred
\n
to the counterparty, and, in exchange, KBC receives cash or other financial assets. However, KBC retains the main risks and
\n
income relating to these securities, and, therefore, continues to recognise them on its balance sheet. In addition, a financial
\n
liability is recognised equalling the cash received.
\n
\n
Transferred financial assets that continue to be recognised in their entirety (carrying value, in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Transferred financial assets that continue to be recognised in their entirety: repo transactions and securities lent out
\n
17 425 13 762
\n
Held for
\n
trading 960 1 221
\n
Fair value through OCI
\n
860 1 474
\n
Amortised cost
\n
15 605 11 067
\n
Associated financial liability
\n
10 534 2 936
\n
Held for trading
\n
689 335
\n
Fair value through OCI
\n
609 362
\n
Amortised cost
\n
9 236 2 239
\n
\n
\u2022 It should be noted that KBC has more transferred financial assets on its balance sheet than repo transactions, due to the fact
\n
that the cash legs of certain repo transactions are offset against reverse repo transactions if they are carried out with the same
\n
counterparty, in the same currency and with the same maturity date. Moreover, there is a legally enforceable right, and an
\n
intention, to settle the transactions on a net basis or to realise the financial asset and settle the financial liability simultaneously.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria in 2022 is provided in Note 6.6.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. We report on estimated greenhouse gas emissions
\n
associated with lending and other activities and have defined objectives for reducing the greenhouse gas intensity of loans
\n
we have provided to the energy sector, electricity producers and the real estate sector, mortgage loans and loans provided
\n
for commercial residential real estate, as well as loans provided to the automotive industry and financial and operational car
\n
leasing (see Note 6.2), the agricultural sector, and cement, steel and aluminium producers. See \u2018Focus on climate\u2019 in the \u2018Report
\n
of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our Climate Report and
\n
\n
our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 5.1: Other assets
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
Total
\n
2 036 1 630
\n
Debtors arising out of direct insurance operations
\n
457 404
\n
Debtors arising out of reinsurance operations
\n
89 78
\n
Deposits with ceding companies
\n
8 10
\n
Prepaid charges and accrued income
\n
565 441
\n
Other
\n
917 696
\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag862": { "value": "\n
Note 4.1: Financial assets and liabilities, breakdown by portfolio and product
\n
(in millions of EUR)
\n
Measured
\n
at
\n
amortised
\n
cost (AC)
\n
Measured
\n
at fair
\n
value
\n
through
\n
other
\n
compre-
\n
hensive
\n
income
\n
(FVOCI)
\n
Mandatorily
\n
measured at
\n
fair value
\n
through
\n
profit or loss
\n
(MFVPL) excl.
\n
HFT and
\n
overlay
\n
Measured at
\n
fair value \u2013
\n
overlay
\n
approach
\n
(overlay)
\n
Held for
\n
trading
\n
(HFT)
\n
Desig-
\n
nated at
\n
fair value
\n
1
\n
(FVO)
\n
Hedging
\n
Deriva-
\n
tives
\n
Total
\n
Total pro
\n
forma
\n
excluding
\n
KBC Bank
\n
Bulgaria
\n
(formerly
\n
Raiffeisen-
\n
bank
\n
Bulgaria)
\n
FINANCIAL ASSETS, 31-12-2022
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
4 240 0 13 0 1 0 0 4 254
\n
4 203
\n
of which loans and advances to banks repayable on
\n
demand and term loans to banks at not more than three
\n
months
\n
\n
1 237 1 237
\n
Loans and advances to customers (excluding reverse
\n
repos)
\n
177 427 0 625 0 0 0 0 178 053
\n
174 083
\n
Trade receivables
\n
2 818
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 818
\n
2 729
\n
Consumer credit
\n
6 222
\n
0
\n
430
\n
0
\n
0
\n
0
\n
0
\n
6 652
\n
5 977
\n
Mortgage loans
\n
73 465
\n
0
\n
196
\n
0
\n
0
\n
0
\n
0
\n
73 660
\n
72 891
\n
Term loans
\n
82 894
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
82 894
\n
80 744
\n
Finance lease
\n
6 368
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
6 368
\n
6 117
\n
Current account advances
\n
4 886
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 886
\n
4 885
\n
Other
\n
774
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
774
\n
740
\n
Reverse repos
\n
2
\n
\n
20 186
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 219
\n
20 219
\n
with credit institutions and investment firms
\n
20 018
\n
0
\n
0
\n
0
\n
33
\n
0
\n
0
\n
20 050
\n
20 050
\n
with customers
\n
168
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
168
\n
168
\n
Equity instruments
\n
0
\n
315
\n
13
\n
1 237
\n
430
\n
0
\n
0
\n
1 994
\n
1 989
\n
Investment contracts (insurance)
\n
6
\n
\n
0
\n
0
\n
12 771
\n
0
\n
0
\n
0
\n
0
\n
12 771
\n
12 771
\n
Debt securities
\n
52 030
\n
11 813
\n
17
\n
0
\n
1 728
\n
0
\n
0
\n
65 588
\n
64 871
\n
Public bodies
\n
44 219
\n
8 135
\n
0
\n
0
\n
1 667
\n
0
\n
0
\n
54 021
\n
53 390
\n
Credit institutions and investment firms
\n
5 160
\n
1 621
\n
0
\n
0
\n
9
\n
0
\n
0
\n
6 790
\n
6 747
\n
Corporates
\n
2 651
\n
2 057
\n
17
\n
0
\n
53
\n
0
\n
0
\n
4 777
\n
4 733
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
6 279
\n
0
\n
542
\n
6 821
\n
6 813
\n
3
\n
\n
Other
\n
1 561
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
1 561
\n
1 561
\n
Total
\n
255 444
\n
12 128
\n
13 439
\n
1 237
\n
8 471
\n
0
\n
542
\n
291 262
\n
286 511
\n
FINANCIAL ASSETS, 31-12-2021
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and
\n
investment firms (excl. reverse repos)
\n
7 920 0 0 0 1 0 0 7 920
\n
-
\n
of which loans and advances to banks repayable on demand
\n
and term loans to banks at not more than three months
\n
3 146 -
\n
Loans and advances to customers (excl. reverse repos)
\n
159 167
\n
0
\n
560
\n
0
\n
0
\n
0
\n
0
\n
159 728
\n
-
\n
Trade receivables
\n
2 090
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
2 090
\n
-
\n
Consumer credit
\n
5 470
\n
0
\n
381
\n
0
\n
0
\n
0
\n
0
\n
5 851
\n
-
\n
Mortgage loans
\n
67 486
\n
0
\n
179
\n
0
\n
0
\n
0
\n
0
\n
67 665
\n
-
\n
Term loans
\n
72 998
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
72 998
\n
-
\n
Finance lease
\n
5 815
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
5 815
\n
-
\n
Current account advances
\n
4 819
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
4 819
\n
-
\n
Other
\n
490
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
490
\n
-
\n
2
\n
-
\n
\n
Reverse repos
\n
24 978
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 978
\n
with credit institutions and investment firms
\n
24 861
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
24 861
\n
-
\n
with customers
\n
117
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
117
\n
-
\n
Equity instruments
\n
0
\n
321
\n
8
\n
1 366
\n
448
\n
0
\n
0
\n
2 144
\n
-
\n
6
\n
-
\n
\n
Investment contracts (insurance)
\n
0
\n
0
\n
14 620
\n
0
\n
0
\n
0
\n
0
\n
14 620
\n
Debt securities
\n
47 172
\n
15 503
\n
17
\n
0
\n
2 958
\n
0
\n
0
\n
65 650
\n
-
\n
Public bodies
\n
41 475
\n
10 514
\n
0
\n
0
\n
2 517
\n
0
\n
0
\n
54 507
\n
-
\n
Credit institutions and investment firms
\n
3 310
\n
2 245
\n
0
\n
0
\n
357
\n
0
\n
0
\n
5 912
\n
-
\n
Corporates
\n
2 387
\n
2 744
\n
17
\n
0
\n
84
\n
0
\n
0
\n
5 232
\n
-
\n
Derivatives
\n
0
\n
0
\n
0
\n
0
\n
5 443
\n
0
\n
283
\n
5 727
\n
-
\n
3
\n
-
\n
\n
Other
\n
892
\n
0
\n
0
\n
0
\n
0
\n
0
\n
0
\n
892
\n
Total
\n
240 128
\n
15 824
\n
15 205
\n
1 366
\n
8 850
\n
0
\n
283
\n
281 658
\n
-
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\n
(in millions of EUR)
\n
Measured at
\n
amortised
\n
cost
\n
(AC)
\n
Held for
\n
trading (HFT)
\n
Designated at
\n
fair value (FVO)
\n
\n
Hedging
\n
derivatives
\n
Total
\n
Total pro forma
\n
excluding KBC
\n
Bank Bulgaria
\n
(formerly
\n
Raiffeisenbank
\n
Bulgaria)
\n
FINANCIAL
\n
LIABILITIES, 31-12-2022
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
24 819 0 0 0 24 819
\n
24 737
\n
of which deposits from banks repayable on demand
\n
\n
\n
\n
\n
\n
\n
\n
5 085 5 085
\n
Deposits from customers and debt
\n
securities (excl. repos)
\n
\n
251 496 44 1 205 0 252 746
\n
247 585
\n
\n
Demand deposits 122 053 0 0 0 122 053 117 401
\n
\n
Time deposits 22 280 44 73 0 22 397 21 960
\n
\n
Savings accounts 76 979 0 0 0 76 979 76 954
\n
\n
Special deposits 2 710 0 0 0 2 710 2 663
\n
\n
Other deposits 268 0 0 0 268 268
\n
Subtotal deposits from customers (excl. repos)
\n
224 290 44 73 0 224 407 219 246
\n
\n
Certificates of deposit 9 321 0 1 0 9 322 9 322
\n
\n
Savings certificates 104 0 0 0 104 104
\n
\n
Non-convertible bonds 15 621 0 1 006 0 16 627 16 627
\n
\n
Non-convertible subordinated liabilities 2 160 0 126 0 2 285 2 285
\n
Repos
\n
4
\n
11 091 7 0 0 11 097
\n
11 097
\n
\n
with credit institutions and investment firms 10 852 7 0 0 10 859 10 859
\n
\n
with customers 239 0 0 0 239 239
\n
Liabilities under investment contracts
\n
6
\n
0 0 12 002 0 12 002
\n
12 002
\n
Derivatives
\n
0 8 038 0 577 8 615
\n
8 605
\n
Short positions
\n
0 1 007 0 0 1 007
\n
1 007
\n
\n
In equity instruments 0 5 0 0 5 5
\n
\n
In debt securities 0 1 002 0 0 1 002 1 002
\n
Other
\n
5
\n
2 448 0 0 0 2 448
\n
2 370
\n
Total
\n
289 854 9 096 13 207 577 312 735
\n
307 403
\n
FINANCIAL LIABILITIES, 31
\n
-12-2021
\n
\n
Deposits from credit institutions and investment firms (excl. repos)
\n
\n
38 047 0 0 0 38 047
\n
-
\n
of which deposits from banks repayable on demand 4 695 -
\n
Deposits from
\n
customers and debt securities (excl. repos)
\n
\n
224 759 21 1 312 0 226 093
\n
-
\n
\n
Demand deposits 112 097 0 0 0 112 097
\n
-
\n
\n
Time deposits 9 106 21 60 0 9 187
\n
-
\n
\n
Savings accounts 74 801 0 0 0 74 801
\n
-
\n
\n
Special deposits 2 962 0 0 0 2 962
\n
-
\n
\n
Other deposits 428 0 0 0 428
\n
-
\n
Subtotal deposits from customers (excl. repos)
\n
199 395 21 60 0 199 476
\n
-
\n
\n
Certificates of deposit 6 273 0 0 0 6 273
\n
-
\n
\n
Savings certificates 253 0 0 0 253
\n
-
\n
\n
Non-convertible bonds 15 892 0 1 118 0 17 011
\n
-
\n
\n
Non-convertible subordinated liabilities 2 946 0 134 0 3 080
\n
-
\n
Repos
\n
4
\n
3 293 2 0 0 3 295
\n
-
\n
\n
with credit institutions and investment firms 2 888 2 0 0 2 890
\n
-
\n
\n
with customers 405 0 0 0 405
\n
-
\n
Liabilities under investment
\n
contracts
\n
6
\n
0 0 13 603 0 13 603
\n
-
\n
Derivatives
\n
0 5 619 0 1 094 6 713
\n
-
\n
Short positions
\n
0 1 628 0 0 1 628
\n
-
\n
\n
In equity instruments 0 18 0 0 18
\n
-
\n
\n
In debt securities 0 1 611 0 0 1 611
\n
-
\n
Other
\n
5
\n
2 288 0 0 0 2 288
\n
-
\n
Total
\n
268 387 7 271 14 916 1 094 291 667
\n
-
\n
1 The carrying value comes close to the maximum credit exposure.
\n
2 The amount of the reverse repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out).
\n
3 Financial assets not included under \u2018Loans and advances to customers\u2019 as they are not directly related to commercial lending.
\n
4 The amount of the repos (before offsetting) is virtually identical to the amount of the underlying assets (that have been lent out), with the assets being partly reflected on the balance sheet
\n
and partly obtained through reverse repo transactions.
\n
5 Financial liabilities not included under deposits from customers as they are not directly related to commercial deposit acquisition.
\n
6 The difference between \u2018Investment contracts (insurance)\u2019 and \u2018Liabilities under investment contracts\u2019 is accounted for by the presentation of non-unbundled investment contracts that are
\n
included under \u2018Investment contracts (insurance)\u2019 on the financial assets side, but are included under \u2018Technical provisions (before reinsurance)\u2019 on the liabilities side.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n\n
\u2022 \u2018Non-convertible bonds\u2019 comprise mainly KBC Bank, KBC Group, \u010cSOB and KBC IFIMA issues. They are usually recognised under
\n
\u2018Measured at amortised cost\u2019. However, if they contain closely related embedded derivatives, they are recorded under
\n
\u2018Designated at fair value\u2019 (see accounting policies). This item also includes three green bonds (for 500, 500 and 750 million euros
\n
each) and a social bond (for 750 million euros), which have been recognised at amortised cost.
\n
\u2022 More information on major new debt issues or redemptions is provided under the \u2018Consolidated cashflow statement\u2019.
\n
\u2022 \u2018Deposits from credit institutions and investment firms\u2019 include funding obtained from the ECB\u2019s TLTRO programme (15.4 billion
\n
euros at year-end 2022, 9.1 billion euros less than at year-end 2021 on account of redemptions). KBC calculates these deposits
\n
using the effective interest rate method, with the rate being adjusted should we fail to meet the conditions (similar to a floating
\n
rate instrument), as per paragraph B.5.4.5 of IFRS 9. KBC\u2019s management has reasonable assurance that KBC will comply with
\n
the conditions attached (including the level of lending to households and non-financial companies) and hence the interest has
\n
accordingly been recognised (a gross amount of 112 million euros in interest income (negative interest rate) in 2022 and 242
\n
million euros in 2021).
\n
\u2022 Transferred financial assets that continue to be recognised in their entirety: KBC regularly lends and/or sells securities with the
\n
commitment to buy them back at a later date (repo transactions). Securities lent or sold with such a commitment are transferred
\n
to the counterparty, and, in exchange, KBC receives cash or other financial assets. However, KBC retains the main risks and
\n
income relating to these securities, and, therefore, continues to recognise them on its balance sheet. In addition, a financial
\n
liability is recognised equalling the cash received.
\n
\n
Transferred financial assets that continue to be recognised in their entirety (carrying value, in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Transferred financial assets that continue to be recognised in their entirety: repo transactions and securities lent out
\n
17 425 13 762
\n
Held for
\n
trading 960 1 221
\n
Fair value through OCI
\n
860 1 474
\n
Amortised cost
\n
15 605 11 067
\n
Associated financial liability
\n
10 534 2 936
\n
Held for trading
\n
689 335
\n
Fair value through OCI
\n
609 362
\n
Amortised cost
\n
9 236 2 239
\n
\n
\u2022 It should be noted that KBC has more transferred financial assets on its balance sheet than repo transactions, due to the fact
\n
that the cash legs of certain repo transactions are offset against reverse repo transactions if they are carried out with the same
\n
counterparty, in the same currency and with the same maturity date. Moreover, there is a legally enforceable right, and an
\n
intention, to settle the transactions on a net basis or to realise the financial asset and settle the financial liability simultaneously.
\n
\u2022 More information on the acquisition of Raiffeisenbank Bulgaria in 2022 is provided in Note 6.6.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. We report on estimated greenhouse gas emissions
\n
associated with lending and other activities and have defined objectives for reducing the greenhouse gas intensity of loans
\n
we have provided to the energy sector, electricity producers and the real estate sector, mortgage loans and loans provided
\n
for commercial residential real estate, as well as loans provided to the automotive industry and financial and operational car
\n
leasing (see Note 6.2), the agricultural sector, and cement, steel and aluminium producers. See \u2018Focus on climate\u2019 in the \u2018Report
\n
of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our Climate Report and
\n
\n
our Sustainability Report at www.kbc.com.
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag866": { "value": "\n

\n\n
Note 4.2.1: Impaired financial assets
\n
\n
\n
Carrying value before
\n
Carrying value after
\n
(in millions of EUR)
\n
impairment
\n
Impairment
\n
impairment
\n
31
\n
-12-2022
\n
*
\n
204 473 -2 619 201 853
\n
Financial assets at amortised cost: Loans and advances
\n
Stage 1 (12
\n
-month ECL) 163 846 -110 163 736
\n
Stage 2 (lifetime ECL)
\n
36 577 -635 35 941
\n
Stage 3 (lifetime ECL)
\n
3 616 -1 796 1 820
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
434
\n
-77
\n
357
\n
Financial assets at amortised cost: Debt securities
\n
52 048 -18 52 030
\n
Stage 1 (12
\n
-month ECL) 51 909 -7 51 903
\n
Stage 2 (lifetime ECL)
\n
130 -4 126
\n
Stage 3 (lifetime ECL)
\n
8 -7 1
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
Financial assets at fair value through OCI: Debt securities
\n
11 818 -4 11 813
\n
Stage 1 (12
\n
-month ECL) 11 753 -3 11 750
\n
Stage 2 (lifetime ECL)
\n
65 -2 63
\n
Stage 3 (lifetime ECL)
\n
0 0 0
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
31
\n
-12-2021
\n
*
\n
194 638 -2 573 192 065
\n
Financial assets at amortised cost: Loans and advances
\n
Stage 1 (12
\n
-month ECL) 167 426 -104 167 322
\n
Stage 2 (lifetime ECL)
\n
23 131 -507 22 624
\n
Stage 3 (lifetime ECL)
\n
3 493 -1 848 1 645
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
588
\n
-114
\n
474
\n
Financial assets at amortised cost: Debt securities
\n
47 181 -9 47 172
\n
Stage 1 (12
\n
-month ECL) 47 155 -5 47 150
\n
Stage 2
\n
(lifetime ECL) 24 -3 21
\n
Stage 3 (lifetime ECL)
\n
1 -1 1
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
Financial assets at fair value through OCI: Debt securities
\n
15 509 -6 15 503
\n
Stage 1 (12
\n
-month ECL) 15 418 -3 15 415
\n
Stage 2
\n
(lifetime ECL) 91 -3 88
\n
Stage 3 (lifetime ECL)
\n
0 0 0
\n
Purchased or originated credit impaired assets (POCI)
\n
\n
0
\n
0
\n
0
\n
* The carrying value after impairment in this note corresponds to the sum of the \u2018Loans and advances to credit institutions and investment firms (excl. reverse repos)\u2019, \u2018Loans and advances to
\n
customers (excl. reverse repos)\u2019 and \u2018Reverse repos\u2019 in Note 4.1 (in the \u2018Measured at amortised cost\u2019 column).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\u2022 Acquisition of Raiffeisenbank Bulgaria (now renamed KBC Bank Bulgaria):
\n
\u25e6 The carrying value before impairment at year-end 2022 included 4.7 billion euros for KBC Bank Bulgaria, of which 4.1 billion
\n
euros in loans and advances (3.2, 0.8 and 0.1 billion euros in Stages 1, 2 and 3, respectively), 0.5 billion euros in debt securities
\n
at amortised cost and 0.1 billion euros in debt securities at fair value through OCI. KBC Bank Bulgaria\u2019s portfolios account
\n
for 1.8% of the entire KBC group.
\n
\u25e6 Impairment at year-end 2022 included 113 million euros for KBC Bank Bulgaria, of which 106 million euros in loans and
\n
advances (10, 30 and 66 million euros in Stages 1, 2 and 3, respectively), and 7 million euros in debt securities at amortised
\n
cost. These impairment valuations partly deviate from the methodology set out in the accounting policies (particularly as
\n
regards the forward-looking information, IFRS 9 models and criteria used to determine a significant increase in credit risk).
\n
The integration of KBC Bank Bulgaria in 2023 will also involve the alignment of the accounting policies at KBC Bank Bulgaria
\n
for determining impairment.
\n
\u2022 Carrying value before impairment of loans and advances at amortised cost: increase of 9.8 billion euros in 2022, due primarily
\n
to:
\n
\u25e6 The acquisition of Raiffeisenbank Bulgaria (see above).
\n
\u25e6 An organic net increase in the loan portfolio (mainly mortgage loans and term loans, in all countries).
\n
\u25e6 This increase was partly offset by a decrease of the carrying value before impairment of loans and advances (excluding
\n
reverse repos) and the reverse repos to credit institutions and investment firms.
\n
\u2022 Carrying value before impairment of loans and advances at amortised cost in \u2018Stage 2\u2019: increase of 13.4 billion euros in 2022,
\n
due primarily to:
\n
\u25e6 The migration to \u2018Stage 2\u2019 based on a collective approach of \u2018Stage 1\u2019 loans (see also Note 1.4) that have indirect exposure
\n
to Russia, Ukraine and Belarus (i.e. as a result of the military conflict; 2.8 billion euros) and/or are vulnerable to emerging
\n
risks (11.3 billion euros).
\n
\u25e6 The acquisition of Raiffeisenbank Bulgaria (see above).
\n
\u25e6 This was partly offset by the discontinuation of the collective \u2018Stage 2\u2019 transfer of loans vulnerable to coronavirus-related
\n
risks (3.1 billion euros in receivables that had been moved to \u2018Stage 2\u2019 at year-end 2021). The remaining coronavirus-related
\n
risks in our loan portfolio are included in the regular indicators used to assess considerable credit risk increases (probability
\n
of default, forbearance and the number of days past due), which are no longer concealed by the moratoria.
\n
\u25e6 Please note that the migration of loans from \u2018Stage 1\u2019 to \u2018Stage 2\u2019 based on the collective approach resulted in a net
\n
decrease of 3.6 billion euros of the carrying value before impairment of loans and advances at amortised cost in \u2018Stage 1\u2019,
\n
which was partly offset by the organic net increase in the loan portfolio and the acquisition of Raiffeisenbank Bulgaria.
\n
\u25e6 Also note that the migration predicted in the management overlay at the time is not reflected in the 2021 year-end figures,
\n
because it was determined based on a collective approach and, therefore, could not be individually linked to specific
\n
loans. Taking into account the impact of the management overlay on staging at year-end 2021, this would result in a
\n
carrying value before impairment of loans and advances of an estimated 165.4, 24.3 and 4.3 billion euros in Stages 1, 2 and
\n
3, respectively (or net migration of 1% of the total portfolio from \u2018Stage 1\u2019 to \u2018Stage 2\u2019 and 0.4% from \u2018Stage 1\u2019 and \u2018Stage 2\u2019
\n
to \u2018Stage 3\u2019).
\n
\u2022 Carrying value before impairment of debt securities at amortised cost: increase of 4.9 billion euros in 2022, almost entirely in
\n
\u2018Stage 1\u2019:
\n
\u25e6 More than half of this increase concerns (issues by) public bodies, one third concerns credit institutions and investment
\n
firms, and the remaining part concerns corporates, and related primarily to net investments.
\n
\u2022 Impairment: increase of 0.1 billion euros in 2022, due to:
\n
\u25e6 The acquisition of Raiffeisenbank Bulgaria (see above).
\n
\u25e6 For information on other changes, see Note 3.10.
\n
\u2022 See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\u2022 In 2022, \u2018Stage 2\u2019 and \u2018Stage 3\u2019 financial assets with a net carrying value of 471 million euros have been subject to modifications
\n
in the past that did not result in derecognition. The gross carrying value of \u2018Stage 1\u2019 financial assets subject to modifications in
\n
the past that did not result in derecognition came to 1 088 million euros in 2022. The corresponding figures for 2021 were 1 712
\n
million euros and 509 million euros, respectively. Modification gains or losses are recognised under impairment (see Note 3.10).
\n
\u2022 In 2022, financial assets at amortised cost with a gross carrying value of 80 million euros were written off, but were still subject
\n
to enforcement activities; the corresponding figure in 2021 was 72 million euros.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.2.2: Impairment details
\n
\n
\n
\n
Subject to lifetime ECL
\n
Stage 1
\n
Stage 2
\n
Stage 3
\n
(purchased or
\n
\n
Subject to 12-
\n
Subject to lifetime
\n
Subject to lifetime
\n
originated credit
\n
(in millions of EUR)
\n
month ECL
\n
ECL
\n
ECL
\n
impaired)
\n
Total
\n
2022
\n
\n
LOANS AND ADVANCES AT AMORTISED COST
\n
Impairment on 1 January
\n
104
\n
507
\n
1 848
\n
114
\n
2 573
\n
1
\n
-6 96 147 -8 230
\n
Movements with an impact on results
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) -22 158 60 0 197
\n
\n
Stage 2 (lifetime ECL) 4 -83 95 0 16
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 26 -54 -3 -31
\n
New financial assets
\n
2
\n
\n
40
\n
43
\n
10
\n
0
\n
93
\n
\n
Changes in risk parameters during the reporting period -16 -23 90 -5 48
\n
\n
Changes in the model or methodology -1 3 0 0 2
\n
Derecognised financial assets
\n
3
\n
-10 -26 -59 -1 -97
\n
\n
\n
Other -1 -2 4 0 2
\n
Movements without an impact on results
\n
12 32 -199 -29 -184
\n
\n
Derecognised financial assets
\n
3
\n
0 -1 -296 -7 -304
\n
Changes in the scope of consolidation
\n
14
\n
32
\n
88
\n
0
\n
133
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
\n
Other -2 1 9 -21 -13
\n
Impairment on 31 December
\n
110 635 1 796 77 2 619
\n
DEBT
\n
SECURITIES AT AMORTISED COST
\n
Impairment on 1 January
\n
5 3 1 0 9
\n
1
\n
2 0 1 0 3
\n
Movements with an impact on results
\n
Transfer of financial assets
\n
\n
\n
\n
\n
\n
\n
Stage 1 (12-month ECL) 0 0 0 0 0
\n
\n
Stage 2 (lifetime ECL) 0 -1 1 0 0
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
1 0 0 0 1
\n
\n
Changes in risk parameters during the reporting period 0 1 0 0 1
\n
Changes in the model or methodology
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
\n
Other 0 0 0 0 0
\n
Movements without an impact on results
\n
0 1 5 0 6
\n
\n
Derecognised financial assets
\n
3
\n
0 0 -1 0 -1
\n
\n
Changes in the scope of consolidation 0 1 6 0 7
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
Other
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Impairment on 31 December
\n
7 4 7 0 18
\n
DEBT SECURITIES AT FAIR VALUE THROUGH OCI
\n
\n
Impairment on 1 January
\n
3 3 0 0 6
\n
Movements with an impact on results
\n
1
\n
0 -1 0 0 -1
\n
\n
Transfer of financial assets
\n
Stage 1 (12-month ECL)
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Stage 2 (lifetime ECL)
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
0 0 0 0 0
\n
\n
Changes in risk parameters during the reporting period 0 -1 0 0 -1
\n
\n
Changes in the model or methodology 0 0 0 0 0
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
Other
\n
0
\n
0
\n
0
\n
0
\n
0
\n
Movements without an impact on results
\n
0 0 0 0 0
\n
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
Changes in the scope of consolidation 0 0 0 0 0
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
\n
Other 0 0 0 0 0
\n
Impairment on 31 December
\n
3 2 0 0 4
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
2021
\n
LOANS AND ADVANCES AT AMORTISED COST
\n
Impairment on 1 January
\n
168 992 2 517 18 3 695
\n
Movements with an impact on results
\n
1
\n
-62 -454 242 -2 -276
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) -12 99 42 0 129
\n
\n
Stage 2 (lifetime ECL) 6 -116 80 0 -30
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL)
\n
0
\n
20
\n
-36
\n
0
\n
-16
\n
\n
New financial assets
\n
2
\n
25 14 7 0 45
\n
\n
Changes in risk parameters during the reporting period -57 -426 214 1 -269
\n
\n
Changes in the model or methodology 0 -1 0 0 -1
\n
\n
Derecognised financial assets
\n
3
\n
-24 -48 -84 -2 -158
\n
\n
Other 0 2 20 0 22
\n
Movements without an
\n
impact on results -2 -32 -911 98 -847
\n
3
\n
Derecognised financial assets
\n
\n
0
\n
0
\n
-286
\n
-12
\n
-299
\n
\n
Changes in the scope of consolidation 0 0 4 0 4
\n
\n
Transfers under IFRS 5 -3 -31 -540 0 -574
\n
\n
Other 1 0 -90 110 21
\n
Impairment on 31 December
\n
104 507 1 848 114 2 573
\n
DEBT SECURITIES AT AMORTISED COST
\n
\n
Impairment on 1 January
\n
6
\n
1
\n
2
\n
0
\n
9
\n
Movements with an impact on results
\n
1
\n
\n
-1
\n
2
\n
0
\n
0
\n
1
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) 0 0 0 0 0
\n
\n
Stage 2 (lifetime ECL) 0 0 0 0 0
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
1 0 0 0 1
\n
Changes in risk parameters during the reporting period
\n
-2
\n
3
\n
0
\n
0
\n
1
\n
\n
Changes in the model or methodology 0 0 0 0 0
\n
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 -1
\n
\n
Other 0 0 0 0 0
\n
Movements without an
\n
impact on results 0 0 -1 0 -1
\n
Derecognised financial assets
\n
3
\n
0 0 -1 0 -1
\n
\n
\n
Changes in the scope of consolidation 0 0 0 0 0
\n
Transfers under IFRS 5
\n
0
\n
0
\n
0
\n
0
\n
0
\n
\n
Other 0 0 0 0 0
\n
Impairment on 31
\n
December 5 3 1 0 9
\n
DEBT SECURITIES AT FAIR VALUE THROUGH OCI
\n
\n
Impairment on 1 January
\n
6 3 0 0 9
\n
Movements with an impact on results
\n
1
\n
-3 0 0 0 -4
\n
Transfer of financial assets
\n
\n
\n
\n
\n
\n
\n
Stage 1 (12-month ECL) 0 0 0 0 0
\n
\n
Stage 2 (lifetime ECL) 0 -1 0 0 -1
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL) 0 0 0 0 0
\n
\n
New financial assets
\n
2
\n
0 0 0 0 0
\n
\n
Changes in risk parameters during the reporting period -3 0 0 0 -3
\n
\n
Changes in the model or methodology 0 0 0 0 0
\n
Derecognised financial assets
\n
3
\n
\n
-1
\n
0
\n
0
\n
0
\n
-1
\n
\n
Other 0 0 0 0 0
\n
Movements without an impact on
\n
results 0 0 0 0 0
\n
Derecognised financial assets
\n
3
\n
0 0 0 0 0
\n
\n
\n
Changes in the scope of consolidation 0 0 0 0 0
\n
\n
Transfers under IFRS 5 0 0 0 0 0
\n
\n
Other 0 0 0 0 0
\n
Impairment on 31 December
\n
3
\n
3
\n
0
\n
0
\n
6
\n
1 Amounts recovered in respect of loans that have already been written off are recycled to the income statement and recorded as \u2018Impairment on financial assets at amortised cost and at
\n
fair value through OCI\u2019. However, they have not been included in this table since they do not have any impact on impairment losses on the balance sheet.
\n
2 Also includes impairment related to new financial assets resulting from off-balance-sheet commitments and financial guarantees already given being called.
\n
3 Derecognition without an impact on results occurs when the impairment adjustment has already been made upfront (for example, at the moment of the sale agreement (disposals) or before
\n
the write-off). Derecognition with an impact on results occurs when the impairment adjustment takes place at the same time (for instance, in the case of debt forgiveness).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\u2022 The change in impairment in 2022 relates mainly to the reserve set aside to cover geopolitical and emerging risks and the full
\n
reversal of the remaining reserves set aside for the coronavirus crisis (see Note 1.4) and the changes in the scope of
\n
consolidation, partly offset by the elimination of the impairment on derecognised financial assets.
\n
\u2022 Changes in the scope of consolidation: relates mainly to the acquisition of Raiffeisenbank Bulgaria.
\n
\u2022 The vast majority of the staging is triggered by a collective management assessment and relative changes in PD (see the multi-
\n
tier approach outlined in Note1.2 under \u2018Significant increase in credit risk since initial recognition\u2019).
\n
\u2022 For information on provisions for commitments and financial guarantees, see Note 5.7.2.
\n
\u2022 For information regarding the impact of changes in impairment on the income statement, see Note 3.10.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. Based on internal management reports, the
\n
composition and quality of the loan portfolio is set out in detail in the \u2018How do we manage our risks?\u2019 section (under \u2018Credit
\n
risk\u2019). All parts of that particular section which have been audited by the statutory auditor are listed at the start of the section.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.3: Maximum credit exposure and offsetting
\n
\n
Collateral and other
\n
Maximum credit
\n
credit enhancements
\n
(in millions of EUR)
\n
\n
exposure (A)
\n
received (B) Net (A-B)
\n
31
\n
-12-2022
\n
\n
\n
\n
Subject to impairment
\n
326 705 132 743 193 962
\n
\n
of which Stage 3 \u2018non-performing\u2019 (AC and FVOCI)
\n
2 106
\n
1 550
\n
556
\n
Debt securities
\n
63 843 98 63 745
\n
Loans and advances (excl. reverse
\n
repos) 181 668 99 415 82 252
\n
Reverse repos
\n
20 186 20 131 55
\n
Other financial assets
\n
1 561 0 1 561
\n
Off
\n
-balance-sheet liabilities 59 447 13 099 46 348
\n
\n
Irrevocable
\n
38 832
\n
6 741
\n
32 091
\n
\n
Revocable
\n
20 616
\n
6 358
\n
14 258
\n
Not
\n
subject to impairment 9 239 2 213 7 026
\n
Debt securities
\n
1 745 0 1 745
\n
Loans and advances (excl. reverse repos)
\n
639 593 46
\n
\n
of which designated upon initial recognition at fair value through profit or loss (FVO)
\n
0 0 0
\n
Reverse repos
\n
33 33 0
\n
Derivatives
\n
6 821 1 588 5 234
\n
Other financial assets
\n
0 0 0
\n
Off
\n
-balance-sheet liabilities 0 0 0
\n
Total
\n
335 944 134 956 200 987
\n
31
\n
-12-2021
\n
\n
\n
\n
Subject to impairment
\n
309 988 127 140 182 848
\n
\n
of which Stage 3 \u2018non-performing\u2019 (AC and FVOCI) 2 072 1 584 488
\n
Debt securities
\n
62 675 93 62 582
\n
Loans and advances (excl. reverse repos)
\n
167 087 90 770 76 317
\n
Reverse repos
\n
24 978 24 877 101
\n
Other financial assets
\n
892 0 892
\n
Off
\n
-balance-sheet liabilities 54 357 11 400 42 957
\n
\n
Irrevocable 36 957 6 031 30 926
\n
\n
Revocable 17 401 5 370 12 031
\n
Not subject to
\n
impairment 9 263 2 294 6 969
\n
Debt securities
\n
2 976 0 2 976
\n
Loans and advances (excl. reverse repos)
\n
561 545 16
\n
\n
of which designated upon initial recognition at fair value through profit or loss (FVO) 0 0 0
\n
Reverse repos
\n
0 0 0
\n
Derivatives
\n
5 727 1 749 3 977
\n
Other financial assets
\n
0 0 0
\n
Off
\n
-balance-sheet liabilities 0 0 0
\n
Total
\n
319 251 129 434 189 818
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
\u2022 Maximum credit exposure for a financial asset is the net carrying value. Besides the amounts on the balance sheet, maximum
\n
credit exposure also includes the undrawn portion of irrevocable credit lines, financial guarantees granted and other
\n
irrevocable commitments.
\n
\u2022 The main types of collateral and other credit enhancements received relate to mortgages on real estate (mainly collateral for
\n
mortgage loans), securities lent out (mainly as a collateral for reverse repos), off-balance-sheet financial guarantees received
\n
and collateral of movable property. Mortgage loans with an LTV (loan-to-value) greater than 100% are limited to 0.6 billion
\n
euros or 0.7% of the entire mortgage loan portfolio at year-end 2022.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. Based on internal management reports, the
\n
composition and quality of the loan portfolio is set out in detail in the \u2018How do we manage our risks?\u2019 section (under \u2018Credit
\n
risk\u2019). All parts of that particular section which have been audited by the statutory auditor are listed at the start of the section.
\n\n
\u2022 Collateral and credit enhancements received: recognised at market value and limited to the outstanding amount of the
\n
relevant loans.
\n

\n\n
\u2022 The maximum credit exposure for the KBC Bank Ireland financial assets has not been included in the above figures (see Note
\n
5.11 for more information).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Financial instruments subject to offsetting, enforceable master
\n
financial
\n
instruments set
\n
the balance
\n
Amounts not set off
\n
netting agreements and similar arrangements
\n
instruments
\n
off
\n
sheet
\n
in the balance sheet
\n
Net amount
\n
\n
Financial
\n
Cash
\n
Securities
\n
(in millions of EUR)
\n
\n
\n
\n
\n
instruments
\n
collateral
\n
collateral
\n
\n
\n
31
\n
-12-2022
\n
FINANCIAL ASSETS
\n
Derivatives
\n
32 380 25 559 6 821 4 485 1 302 67 968
\n
\n
Derivatives (excluding central clearing houses)
\n
6
\n
\n
601
\n
\n
0
\n
\n
6
\n
\n
601
\n
\n
4
\n
\n
485
\n
\n
1
\n
\n
302
\n
\n
67
\n
\n
748
\n
\n
\n
Derivatives with central clearing houses
\n
*
\n
\n
25
\n
\n
779
\n
\n
25
\n
\n
559
\n
\n
220
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
220
\n
\n
Reverse repos, securities borrowing and similar
\n
arrangements 25 694 5 475 20 219 0 0 20 210 8
\n
\n
Reverse repos
\n
25
\n
\n
694
\n
\n
5
\n
\n
475
\n
\n
20
\n
\n
219
\n
\n
0
\n
\n
0
\n
\n
20
\n
\n
210
\n
\n
8
\n
\n
\n
Securities borrowing
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
58 074 31 034 27 040 4 485 1 302 20 277 976
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
31 462 22 846 8 615 4 492 1 095 447 2 582
\n
Derivatives (excluding central clearing houses)
\n
8
\n
\n
329
\n
0
\n
8
\n
\n
329
\n
4
\n
\n
492
\n
1
\n
\n
095
\n
447
\n
2
\n
\n
296
\n
Derivatives with central clearing houses
\n
*
\n
\n
23
\n
\n
132
\n
22
\n
\n
846
\n
286
\n
0
\n
0
\n
0
\n
286
\n
Repos, securities lending and similar arrangements
\n
16 573 5 475 11 097 0 0 11 082 15
\n
\n
Repos
\n
16
\n
\n
573
\n
\n
5
\n
\n
475
\n
\n
11
\n
\n
097
\n
\n
0
\n
\n
0
\n
\n
11
\n
\n
082
\n
\n
15
\n
\n
\n
Securities lending
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
48 035 28 322 19 713 4 492 1 095 11 529 2 597
\n
31
\n
-12-2021
\n
FINANCIAL ASSETS
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
13 969 8 242 5 727 2 731 1 298 112 1 586
\n
\n
Derivatives (excluding central clearing houses) 5 619 0 5 619 2 731 1 298 112 1 478
\n
\n
Derivatives with central clearing houses
\n
*
\n
8 349 8 242 107 0 0 0 107
\n
Reverse repos, securities borrowing and similar
\n
arrangements 38 160 13 182 24 978 67 0 24 900 10
\n
\n
Reverse repos 38 160 13 182 24 978 67 0 24 900 10
\n
\n
Securities borrowing 0 0 0 0 0 0 0
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
52 129 21 425 30 704 2 798 1 298 25 012 1 596
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
16 084 9 372 6 713 3 015 1 793 640 1 265
\n
\n
Derivatives (excluding central clearing houses) 6 608 0 6 609 3 015 1 793 640 1 161
\n
\n
Derivatives with central clearing houses
\n
*
\n
9 476 9 372 104 0 0 0 104
\n
Repos, securities lending and similar arrangements
\n
16 477 13 182 3 295 160 0 3 135 1
\n
\n
Repos 16 477 13 182 3 295 160 0 3 135 1
\n
\n
Securities lending 0 0 0 0 0 0 0
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
32 562 22 554 10 008 3 174 1 793 3 774 1 266
\n
* For central clearing houses, the offsetting procedure refers to the amount of offsetting between derivatives and related cash collateral. Cash collateral with central clearing houses
\n
amounted to 2 712 million euros at year-end 2022 and 1 130 million euros at year-end 2021.
\n
\n
\u2022 The criteria for offsetting are met if KBC currently has a legally enforceable right to set off the recognised financial assets and
\n
financial liabilities and intends either to settle the transactions on a net basis, or to realise the financial asset and settle the
\n
financial liability simultaneously. Financial assets and financial liabilities that are set off relate to financial instruments that were
\n
traded on (central) clearing houses.
\n\n
\u2022 The amounts presented in the \u2018Financial instruments\u2019 column under the \u2018Amounts not set off in the balance sheet\u2019 heading are
\n
for financial instruments entered into under an enforceable master netting agreement or similar arrangement that does not
\n
meet the criteria defined in IAS 32. These amounts refer to situations in which offsetting can only be applied if one of the
\n
counterparties defaults, becomes insolvent or goes bankrupt. The same principle applies for financial instruments given or
\n
received as collateral. The value given in the table for non-cash collateral received (in the \u2018Securities collateral\u2019 column under
\n
the \u2018Amounts not set off in the balance sheet\u2019 heading) is the market value. This is the value that is used if one of the
\n
counterparties defaults, becomes insolvent or goes bankrupt.
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag868": { "value": "\n

\n\n
Note 4.3: Maximum credit exposure and offsetting
\n
\n
Collateral and other
\n
Maximum credit
\n
credit enhancements
\n
(in millions of EUR)
\n
\n
exposure (A)
\n
received (B) Net (A-B)
\n
31
\n
-12-2022
\n
\n
\n
\n
Subject to impairment
\n
326 705 132 743 193 962
\n
\n
of which Stage 3 \u2018non-performing\u2019 (AC and FVOCI)
\n
2 106
\n
1 550
\n
556
\n
Debt securities
\n
63 843 98 63 745
\n
Loans and advances (excl. reverse
\n
repos) 181 668 99 415 82 252
\n
Reverse repos
\n
20 186 20 131 55
\n
Other financial assets
\n
1 561 0 1 561
\n
Off
\n
-balance-sheet liabilities 59 447 13 099 46 348
\n
\n
Irrevocable
\n
38 832
\n
6 741
\n
32 091
\n
\n
Revocable
\n
20 616
\n
6 358
\n
14 258
\n
Not
\n
subject to impairment 9 239 2 213 7 026
\n
Debt securities
\n
1 745 0 1 745
\n
Loans and advances (excl. reverse repos)
\n
639 593 46
\n
\n
of which designated upon initial recognition at fair value through profit or loss (FVO)
\n
0 0 0
\n
Reverse repos
\n
33 33 0
\n
Derivatives
\n
6 821 1 588 5 234
\n
Other financial assets
\n
0 0 0
\n
Off
\n
-balance-sheet liabilities 0 0 0
\n
Total
\n
335 944 134 956 200 987
\n
31
\n
-12-2021
\n
\n
\n
\n
Subject to impairment
\n
309 988 127 140 182 848
\n
\n
of which Stage 3 \u2018non-performing\u2019 (AC and FVOCI) 2 072 1 584 488
\n
Debt securities
\n
62 675 93 62 582
\n
Loans and advances (excl. reverse repos)
\n
167 087 90 770 76 317
\n
Reverse repos
\n
24 978 24 877 101
\n
Other financial assets
\n
892 0 892
\n
Off
\n
-balance-sheet liabilities 54 357 11 400 42 957
\n
\n
Irrevocable 36 957 6 031 30 926
\n
\n
Revocable 17 401 5 370 12 031
\n
Not subject to
\n
impairment 9 263 2 294 6 969
\n
Debt securities
\n
2 976 0 2 976
\n
Loans and advances (excl. reverse repos)
\n
561 545 16
\n
\n
of which designated upon initial recognition at fair value through profit or loss (FVO) 0 0 0
\n
Reverse repos
\n
0 0 0
\n
Derivatives
\n
5 727 1 749 3 977
\n
Other financial assets
\n
0 0 0
\n
Off
\n
-balance-sheet liabilities 0 0 0
\n
Total
\n
319 251 129 434 189 818
\n

\n\n

\n\n

\n\n

\n
\u2022 Maximum credit exposure for a financial asset is the net carrying value. Besides the amounts on the balance sheet, maximum
\n
credit exposure also includes the undrawn portion of irrevocable credit lines, financial guarantees granted and other
\n
irrevocable commitments.
\n
\u2022 The main types of collateral and other credit enhancements received relate to mortgages on real estate (mainly collateral for
\n
mortgage loans), securities lent out (mainly as a collateral for reverse repos), off-balance-sheet financial guarantees received
\n
and collateral of movable property. Mortgage loans with an LTV (loan-to-value) greater than 100% are limited to 0.6 billion
\n
euros or 0.7% of the entire mortgage loan portfolio at year-end 2022.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. Based on internal management reports, the
\n
composition and quality of the loan portfolio is set out in detail in the \u2018How do we manage our risks?\u2019 section (under \u2018Credit
\n
risk\u2019). All parts of that particular section which have been audited by the statutory auditor are listed at the start of the section.
\n\n
\u2022 Collateral and credit enhancements received: recognised at market value and limited to the outstanding amount of the
\n
relevant loans.
\n

\n\n
\u2022 The maximum credit exposure for the KBC Bank Ireland financial assets has not been included in the above figures (see Note
\n
5.11 for more information).
\n

\n\n

\n\n

\n\n

\n
Financial instruments subject to offsetting, enforceable master
\n
financial
\n
instruments set
\n
the balance
\n
Amounts not set off
\n
netting agreements and similar arrangements
\n
instruments
\n
off
\n
sheet
\n
in the balance sheet
\n
Net amount
\n
\n
Financial
\n
Cash
\n
Securities
\n
(in millions of EUR)
\n
\n
\n
\n
\n
instruments
\n
collateral
\n
collateral
\n
\n
\n
31
\n
-12-2022
\n
FINANCIAL ASSETS
\n
Derivatives
\n
32 380 25 559 6 821 4 485 1 302 67 968
\n
\n
Derivatives (excluding central clearing houses)
\n
6
\n
\n
601
\n
\n
0
\n
\n
6
\n
\n
601
\n
\n
4
\n
\n
485
\n
\n
1
\n
\n
302
\n
\n
67
\n
\n
748
\n
\n
\n
Derivatives with central clearing houses
\n
*
\n
\n
25
\n
\n
779
\n
\n
25
\n
\n
559
\n
\n
220
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
220
\n
\n
Reverse repos, securities borrowing and similar
\n
arrangements 25 694 5 475 20 219 0 0 20 210 8
\n
\n
Reverse repos
\n
25
\n
\n
694
\n
\n
5
\n
\n
475
\n
\n
20
\n
\n
219
\n
\n
0
\n
\n
0
\n
\n
20
\n
\n
210
\n
\n
8
\n
\n
\n
Securities borrowing
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
58 074 31 034 27 040 4 485 1 302 20 277 976
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
31 462 22 846 8 615 4 492 1 095 447 2 582
\n
Derivatives (excluding central clearing houses)
\n
8
\n
\n
329
\n
0
\n
8
\n
\n
329
\n
4
\n
\n
492
\n
1
\n
\n
095
\n
447
\n
2
\n
\n
296
\n
Derivatives with central clearing houses
\n
*
\n
\n
23
\n
\n
132
\n
22
\n
\n
846
\n
286
\n
0
\n
0
\n
0
\n
286
\n
Repos, securities lending and similar arrangements
\n
16 573 5 475 11 097 0 0 11 082 15
\n
\n
Repos
\n
16
\n
\n
573
\n
\n
5
\n
\n
475
\n
\n
11
\n
\n
097
\n
\n
0
\n
\n
0
\n
\n
11
\n
\n
082
\n
\n
15
\n
\n
\n
Securities lending
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
48 035 28 322 19 713 4 492 1 095 11 529 2 597
\n
31
\n
-12-2021
\n
FINANCIAL ASSETS
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
13 969 8 242 5 727 2 731 1 298 112 1 586
\n
\n
Derivatives (excluding central clearing houses) 5 619 0 5 619 2 731 1 298 112 1 478
\n
\n
Derivatives with central clearing houses
\n
*
\n
8 349 8 242 107 0 0 0 107
\n
Reverse repos, securities borrowing and similar
\n
arrangements 38 160 13 182 24 978 67 0 24 900 10
\n
\n
Reverse repos 38 160 13 182 24 978 67 0 24 900 10
\n
\n
Securities borrowing 0 0 0 0 0 0 0
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
52 129 21 425 30 704 2 798 1 298 25 012 1 596
\n
FINANCIAL LIABILITIES
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
16 084 9 372 6 713 3 015 1 793 640 1 265
\n
\n
Derivatives (excluding central clearing houses) 6 608 0 6 609 3 015 1 793 640 1 161
\n
\n
Derivatives with central clearing houses
\n
*
\n
9 476 9 372 104 0 0 0 104
\n
Repos, securities lending and similar arrangements
\n
16 477 13 182 3 295 160 0 3 135 1
\n
\n
Repos 16 477 13 182 3 295 160 0 3 135 1
\n
\n
Securities lending 0 0 0 0 0 0 0
\n
Other financial instruments
\n
0 0 0 0 0 0 0
\n
Total
\n
32 562 22 554 10 008 3 174 1 793 3 774 1 266
\n
* For central clearing houses, the offsetting procedure refers to the amount of offsetting between derivatives and related cash collateral. Cash collateral with central clearing houses
\n
amounted to 2 712 million euros at year-end 2022 and 1 130 million euros at year-end 2021.
\n
\n
\u2022 The criteria for offsetting are met if KBC currently has a legally enforceable right to set off the recognised financial assets and
\n
financial liabilities and intends either to settle the transactions on a net basis, or to realise the financial asset and settle the
\n
financial liability simultaneously. Financial assets and financial liabilities that are set off relate to financial instruments that were
\n
traded on (central) clearing houses.
\n\n
\u2022 The amounts presented in the \u2018Financial instruments\u2019 column under the \u2018Amounts not set off in the balance sheet\u2019 heading are
\n
for financial instruments entered into under an enforceable master netting agreement or similar arrangement that does not
\n
meet the criteria defined in IAS 32. These amounts refer to situations in which offsetting can only be applied if one of the
\n
counterparties defaults, becomes insolvent or goes bankrupt. The same principle applies for financial instruments given or
\n
received as collateral. The value given in the table for non-cash collateral received (in the \u2018Securities collateral\u2019 column under
\n
the \u2018Amounts not set off in the balance sheet\u2019 heading) is the market value. This is the value that is used if one of the
\n
counterparties defaults, becomes insolvent or goes bankrupt.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n

\n

\n

\n

\n

\n

\n

\n
Note 4.5: Financial assets and liabilities measured at fair value \u2013 fair value hierarchy
\n
\n
\n
Fair value hierarchy
\n
31-12-2022 31-12-2021
\n
(in millions of EUR)
\n
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
\n
FINANCIAL ASSETS AT FAIR VALUE
\n
\n
Mandatorily measured at fair value through profit or loss other than held for trading (including
\n
\n
overlay)
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 13 0 13 0 0 0 0
\n
reverse repos)
\n
Loans and advances to customers (incl. reverse repos)
\n
0 0 625 625 0 0 560 560
\n
Equity instruments
\n
1 131 0 118 1 250 1 323 0 52 1 374
\n
Investment contracts (insurance)
\n
12 638 134 0 12 771 14 365 254 0 14 620
\n
Debt securities
\n
12 0 5 17 14 0 3 17
\n
of which sovereign bonds
\n
\n
0
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 34 0 34 0 1 0 1
\n
reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Equity instruments
\n
429 0 0 430 448 0 0 448
\n
Debt securities
\n
1 480 244 4 1 728 1 522 1 432 4 2 958
\n
\n
of which sovereign bonds 1 444 223 0 1 667 1 441 1 076 0 2 517
\n
Derivatives
\n
3 5 547 729 6 279 1 4 482 961 5 443
\n
Other
\n
0 0 0 0 0 0 0 0
\n
Designated upon initial recognition at fair value through profit or loss (FVO)
\n
Loans and advances to credit institutions and
\n
0 0 0 0 0 0 0 0
\n
investment firms (incl. reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Debt securities
\n
0 0 0 0 0 0 0 0
\n
\n
of which sovereign bonds 0 0 0 0 0 0 0 0
\n
At fair value through OCI
\n
\n
\n
\n
\n
\n
\n
\n
\n
Equity instruments
\n
18 1 297 315 15 1 306 321
\n
Debt securities
\n
9 508 2 070 235 11 813 12 269 2 963 271 15 503
\n
\n
of which sovereign bonds
\n
\n
7 003 1 059 73 8 135 8 751
\n
\n
1 711
\n
\n
52
\n
\n
10 514
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0 542 0 542 0 283 0 283
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial assets at fair value
\n
25 219 8 585 2 014 35 818 29 956 9 416 2 157 41 529
\n
FINANCIAL LIABILITIES AT FAIR VALUE
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 7 0 7 0 2 0 2
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 44 0 44 0 21 0 21
\n
Derivatives
\n
2
\n
6 911
\n
1 125
\n
8 038
\n
1
\n
4 410
\n
1 209
\n
5 619
\n
Short positions
\n
884 123 0 1 007 1 582 47 0 1 628
\n
Designated at fair value
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 0 0 0 0 0 0 0
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 74 1 131 1 205 0 61 1 251 1 312
\n
Liabilities under investment contracts
\n
12 002 0 0 12 002 13 603 0 0 13 603
\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0
\n
479
\n
98
\n
577
\n
0
\n
696
\n
398
\n
1 094
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial liabilities at fair value
\n
12 887 7 638 2 355 22 881 15 185 5 238 2 857 23 280
\n
\n
\u2022 The fair value hierarchy prioritises the valuation techniques and the respective inputs into three levels.
\n
- The fair value hierarchy gives the highest priority to \u2018level 1 inputs\u2019. This means that, when there is an active market, quoted
\n
prices have to be used to measure the financial assets or liabilities at fair value. Level 1 inputs are prices that are readily and
\n
regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency (and that are
\n
quoted in active markets accessible to KBC). They represent actual and regularly occurring market transactions on an arm\u2019s
\n
length basis. The fair value is then based on a mark-to-market valuation derived from currently available transaction prices.
\n
No valuation technique (model) is involved.
\n
- If there are no price quotations available, the reporting entity establishes fair value using a model based on observable or
\n
unobservable inputs. The use of observable inputs must be maximised. Observable inputs are also referred to as \u2018level 2
\n
inputs\u2019 and reflect the assumptions market participants would use in pricing the asset or liability based on market data
\n
obtained from sources independent of the reporting entity. Examples of observable inputs are the risk-free rate, exchange
\n
rates, stock prices and implied volatility. Valuation techniques based on observable inputs include discounted cashflow
\n
analysis, or reference to the current or recent fair value of a similar instrument.
\n
- Unobservable inputs are also referred to as \u2018level 3 inputs\u2019 and reflect the reporting entity\u2019s own assumptions about the
\n
assumptions that market participants would use in pricing the asset or liability (including assumptions regarding the risks
\n
involved). Unobservable inputs reflect a market that is not active. For example, proxies and correlation factors can be
\n
considered to be unobservable in the market.
\n
\u2022 When the inputs used to measure the fair value of an asset or a liability can be categorised into different levels of the fair value
\n
hierarchy, the fair value measurement is classified in its entirety into the same level as the lowest level input that is significant
\n
to the entire fair value measurement. For example, if a fair value measurement uses observable inputs that require significant
\n
adjustment based on unobservable inputs, that measurement is a level 3 measurement.
\n
\u2022 The valuation methodology and the corresponding classification in the fair value hierarchy of the most commonly used financial
\n
instruments are summarised in the table. Whereas the majority of instruments of a certain type are within the level indicated in
\n
the table, a small portion may actually be classified in another level.
\n
\u2022 KBC follows the principle that transfers into and out of levels of the fair value hierarchy are made at the end of the reporting
\n
period. Transfers between the various levels are dealt with in more detail in Note 4.6 and Note 4.7.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Instrument type Products Valuation technique
\n
Liquid financial instruments
\n
FX spots, exchange traded financial futures, exchange traded options,
\n
Mark-to-market (quoted prices in active
\n
for which quoted prices are
\n
exchange traded stocks, exchange traded funds, liquid government
\n
markets), for bonds: BVAL or vendor
\n
data.
\n
\n
Level 1
\n
regularly available
\n
\n
bonds, other liquid bonds, liquid asset backed securities (ABS) in active
\n
markets
\n
Plain vanilla/liquid
\n
(Cross-currency) interest rate swaps (IRS), FX swaps, FX forwards, forward
\n
Discounted cashflow analysis based on
\n
derivatives
\n
\n
rate agreements (FRA), inflation swaps, dividend swaps and futures,
\n
discount and estimation curves (derived
\n
reverse floaters, bond future options, interest rate future opt
\n
ions, overnight
\n
from quoted deposit rates,
\n
\n
index swaps (OIS), FX resets
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Caps & floors, interest rate options, European stock options, European &
\n
Option pricing model based on
\n
American FX options, forward starting options, digital FX options, FX strips
\n
observable inputs (e.g., volatilities)
\n
\n
of simple options, European swaptions, European cancellable IRS,
\n
\n
compound options
\n
\n
Linear financial liabilities
\n
Deposits, simple cashflows, repo transactions
\n
Discounted cashflow analysis based on
\n
(without optional features)
\n
\u2013
\n
discount and estimation curves (derived
\n
cash instruments
\n
\n
from quoted deposit rates,
\n
\n
\n
Level 2
\n
FX swaps and (CC)IRS)
\n
\n
\n
Semi-liquid bonds/asset
\n
Semi-liquid bonds/asset backed securities
\n
BVAL, prices corroborated by alternative
\n
backed securities
\n
\n
observable market data, or using
\n
comparable spread method
\n
\n
\n
Debt instruments
\n
KBC IFIMA own issues (liabilities), mortgage bonds held by \u010cSOB
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
observable inputs
\n
\n
\n
Linear financial assets (cash
\n
Loans, commercial paper
\n
Discounted cashflow analysis based on
\n
instruments)
\n
\n
discount and estimation curves (derived
\n
from quoted deposit rates,
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Exotic derivatives
\n
Target profit forwards, flexible forwards, American & Asian stock options,
\n
Option pricing model based on
\n
Bermudan swaptions, digital interest rate options, quanto interest rate
\n
observable inputs (e.g., correlation)
\n
\n
options, digital stock options, composite stock options, barrier stock
\n
options, quanto digital FX options, FX
\n
Asian options, FX European barrier
\n
options, FX simple digital barrier options, FX touch rebates, inflation
\n
options, Bermudan cancellable IRS, constant maturity swaps (CMS), CMS
\n
spread swaps, CMS spread options, CMS interest rate caps/floors,
\n
(callable) ra
\n
nge accruals, outperformance options, auto-callable options,
\n
\n
Level 3
\n
lookback options, commodity swaps and forwards
\n
Illiquid credit-linked
\n
Collateralised debt obligations (notes)
\n
Valuation model based on correlation of
\n
instruments
\n
\n
probability of default of underlying assets
\n
\n
\n
Private equity investments
\n
Private equity and non-quoted participations
\n
Based on the valuation guidelines of the
\n
European Private Equity & Venture Capital
\n
Association
\n
\n
\n
Illiquid bonds/asset backed
\n
Illiquid (mortgage) bonds/asset backed securities that are indicatively
\n
BVAL, third-party pricing (e.g., lead
\n
securities
\n
\n
priced by a single pricing provider in an inactive market
\n
\n
manager), where prices
\n
cannot be
\n
\n
\n
corroborated due to a lack of
\n
available/reliable alternative market data
\n
\n
\n
Debt instruments
\n
KBC own issues (KBC IFIMA)
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
\n
unobservable inputs (indicative pricing by
\n
third parties for derivatives)
\n
\n
\n
Structured loans
\n
Government-regulated loans with leveraged interest rates and exotic
\n
Discounted cashflow analysis and
\n
early repayment
\n
schedules (K&H)
\n
valuation of related derivatives based on
\n
unobservable inputs
\n
\n
\n
\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.7: Financial assets and liabilities measured at fair value \u2013 focus on level 3
\n
\n
\u2022 In 2022, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 65 million euros, primarily on account of new transactions, partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of unlisted shares rose by 66 million euros, due primarily to new
\n
transactions.
\n
- Financial assets at fair value through OCI: the fair value of debt instruments decreased by 36 million euros, primarily on
\n
account of instruments reaching maturity and changes in market inputs.
\n
- Financial assets held for trading: the fair value of derivatives decreased by 232 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities held for trading: the fair value of derivatives decreased by 83 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives decreased by 300 million euros due to changes
\n
in market inputs.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of issued debt instruments decreased by 120
\n
million euros, primarily on account of transactions reaching maturity and the sale of existing positions, only partly offset by
\n
new transactions.
\n
\u2022 In 2021, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 173 million euros, primarily on account of new transactions, only partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of debt instruments fell by 34 million euros, owing primarily to changes
\n
in market inputs.
\n
- Financial liabilities held for trading: the fair value of derivatives increased by 103 million euros, due mainly to changes in market
\n
inputs and new transactions, partly offset by sales. The fair value of issued debt instruments fell by 85 million euros, due mainly
\n
to instruments that had reached maturity.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives increased by 398 million euros due to
\n
reclassifications in level 3 owing to an optimisation of the classification method.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of debt instruments increased by 100 million
\n
euros, primarily on account of new issues, partly offset by sales.
\n
\u2022 Some level 3 assets are associated or economically hedged with identical level 3 liabilities, which means that KBC\u2019s exposure
\n
to unobservable inputs is lower than would appear from the gross figures. Most of the level 3 instruments are also valued using
\n
third-party pricing sources, with KBC not developing any unobservable inputs itself. The main unobservable inputs applied by
\n
KBC to the valuation of exotic derivatives include: mean reversion parameter on Bermudan swaptions, equity cross-correlations
\n
and volatilities for certain stock options, interest-rate correlations for CMS spread options, and the funding costs used to
\n
determine the forward equity prices as part of the valuation of certain equity derivatives. The change in fair value resulting from
\n
a change in these inputs to reflect reasonably possible alternative assumptions is insignificant.
\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.8: Derivatives
\n
\n
\u2022 In terms of volume of the notional amounts of the derivatives, approximately 77% are trading derivatives and approximately
\n
23% are hedging derivatives.
\n
\u2022 The majority of trading derivatives are effectively included in the trading book but are largely economically hedged (limited
\n
open positions) by other trading derivatives (such as derivative transactions initiated by commercial clients that are
\n
economically hedged) or by balance sheet positions (such as currency positions), which leads to large volumes of notional
\n
amounts but also to result-neutral revaluations on a net basis.
\n
\u2022 A limited number of trading derivatives are ALM derivatives included in the banking book, which are used to hedge economic
\n
risk. These are not subject to hedge accounting. Hedge accounting is applied to most of the ALM interest rate contracts. Only
\n
a limited number of the ALM derivatives for foreign currencies are included in hedge accounting.
\n
\n
\n
Note 4.8.1: Trading derivatives
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
\n
Carrying value
\n
Notional amounts*
\n
Carrying value
\n
Notional amounts*
\n
\n
Assets
\n
Liabilities
\n
Purchased
\n
Sold
\n
Assets
\n
Liabilities
\n
Purchased
\n
Sold
\n
Total
\n
6 279 8 038 567 205 568 302 5 443 5 619 491 716 503 818
\n
Interest rate contracts
\n
2 642 3 678 379 270 377 754 3 056 2 788 291 100 301 289
\n
of which interest rate swaps and
\n
2 429 3 542 368 144 371 294 2 731 2 669 278 999 294 056
\n
futures
\n
\n
of which options 214 136 11 126 6 460 325 119 12 101 7 232
\n
Foreign exchange contracts
\n
3 166 3 620 174 787 177 841 1 722 1 880 185 800 187 835
\n
of which currency and interest
\n
rate swaps, forward foreign
\n
3 081 3 509 171 878 172 361 1 668 1 830 182 613 183 020
\n
exchange transactions and
\n
futures
\n
\n
of which options 85 112 2 909 5 480 54 50 3 187 4 816
\n
Equity
\n
contracts 452 720 12 812 12 371 646 935 14 494 14 376
\n
\n
of which equity swaps 414 410 10 553 10 394 620 637 12 607 12 651
\n
\n
of which options 37 311 2 259 1 977 26 298 1 888 1 725
\n
Credit contracts
\n
0 0 0 0 0 0 4 4
\n
\n
of which credit default swaps 0 0 0 0 0 0 4 4
\n
Commodity and other contracts
\n
20 19 337 335 19 17 318 314
\n
* In this table, both legs of the derivatives are reported in the notional amounts.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 4.8.2: Hedging derivatives
\n
31-12-2022
\n
(in millions of EUR)
\n
Hedging instrument
\n
Hedged item
\n
Impact on equity
\n
\n
Notional amounts
\n
1
\n
\n
Carrying value
\n
Change in fair
\n
value of hedging
\n
items used as
\n
basis for
\n
recognising hedge
\n
ineffectiveness for
\n
the period
\n
2
\n
\n
Type
\n
Carrying value
\n
Change in fair
\n
value of hedged
\n
items used as
\n
basis for
\n
recognising
\n
hedge
\n
ineffectiveness
\n
for the period
\n
2
\n
\n
Ineffective
\n
portion
\n
recognised in
\n
profit or loss
\n
Effective
\n
portion
\n
recognised in
\n
OCI
\n
Hedging strategy
\n
Purchased
\n
Sold
\n
Assets
\n
Liabilities
\n
\n
\n
Total (including
\n
fair value
\n
changes)
\n
Of which
\n
accumulated
\n
fair value
\n
adjustments
\n
\n
\n
\n
Fair value micro hedge
\n
\n
Interest rate swaps
\n
22 753 22 753 185 102 -619
\n
Debt
\n
securities held at AC 4 007 -684 -323
\n
Currency and
\n
interest rate swaps
\n
0 0 0 0 0
\n
Loans and advances at AC
\n
683 70 -310
\n
\n
\n
Debt securities held at FVOCI
\n
1 342 -152 -176
\n
\n
\n
Debt securities issued at AC
\n
14 624 -1 334 1 432
\n
\n
\n
Deposits at AC
\n
0 0 0
\n
Total
\n
22 753 22 753 185 102 -619
\n
Total
\n
624 5 -
\n
Portfolio hedge of interest rate risk
\n
\n
Interest rate swaps
\n
123 930 123 930 209 261 3 172
\n
Debt securities held at AC
\n
359 -122 -123
\n
Currency and
\n
interest rate options
\n
1 762 0 101 0 82
\n
Loans and advances at AC
\n
104 980 -4 207 -3 769
\n
\n
\n
Debt securities held at FVOCI
\n
23 -6 -6
\n
\n
\n
Debt securities issued at AC
\n
0 0 0
\n
\n
\n
Deposits at AC
\n
14 574 -1 432 644
\n
Total
\n
125 692 123 930 310 261 3 254
\n
Total
\n
-3 254 0 -
\n
Cashflow hedge (micro hedge and portfolio hedge)
\n
\n
Interest rate swaps
\n
20 073 20 073 47 115 177
\n
\n
\n
Currency and
\n
interest rate swaps
\n
1 204 1 257 0 39 -13
\n
\n
\n
Total
\n
21 277 21 330 47 154 164
\n
Total
\n
-167 -3 -1 046
\n
Hedge of net
\n
investments in foreign operations
\n
Total
\n
3
\n
1 755 1 807 0 505 18
\n
Total
\n
-18 0 20
\n
1 In this table, both legs of the derivatives are reported in the notional amounts.
\n
2 Ineffectiveness is recognised in \u2018Net result from financial instruments at fair value through profit or loss\u2019 (also see Note 3.3).
\n
3 Hedging instruments in the form of foreign currency deposits.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
31-12-2021
\n
(in millions of EUR)
\n
Hedging instrument
\n
Hedged item
\n
Impact on equity
\n
\n
Notional amounts
\n
1
\n
\n
Carrying value
\n
Change in fair
\n
value of hedging
\n
items used as
\n
basis for
\n
recognising hedge
\n
ineffectiveness for
\n
the period
\n
2
\n
\n
Type
\n
Carrying value
\n
Change in fair
\n
value of hedged
\n
items used as
\n
basis for
\n
recognising
\n
hedge
\n
ineffectiveness
\n
for the period
\n
2
\n
\n
Ineffective
\n
portion
\n
recognised in
\n
profit or loss
\n
Effective
\n
portion
\n
recognised in
\n
OCI
\n
Hedging strategy
\n
Purchased
\n
Sold
\n
Assets
\n
Liabilities
\n
\n
\n
Total (including
\n
fair value
\n
changes)
\n
Of which
\n
accumulated
\n
fair value
\n
adjustments
\n
\n
\n
\n
Fair value micro hedge
\n
\n
Interest rate swaps
\n
22 027 22 027 98 407 307
\n
Debt securities held at AC
\n
3 576 -360 -394
\n
Currency and
\n
interest rate swaps
\n
0 0 0 0 0
\n
Loans and advances at AC
\n
857 391 -114
\n
\n
\n
Debt securities held at FVOCI
\n
1 900 25 -79
\n
\n
\n
Debt securities issued at AC
\n
15 998 98 282
\n
\n
\n
Deposits at AC
\n
0 0 -2
\n
Total
\n
22 027 22 027 98 407 307
\n
Total
\n
-307 0 -
\n
Portfolio hedge of interest rate risk
\n
\n
Interest rate swaps
\n
89 467 89 467 110 183 809
\n
Debt securities held at AC
\n
11 -1 -2
\n
Currency and
\n
interest rate options
\n
1 981 0 21 0 11
\n
Loans and advances at AC
\n
74 412 -504 -1 772
\n
\n
\n
Debt securities held at FVOCI
\n
13 -1 -1
\n
\n
\n
Debt securities issued at AC
\n
0 0 0
\n
\n
\n
Deposits at AC
\n
13 632 -862 960
\n
Total
\n
91 448 89 467 131 183 820
\n
Total
\n
-815 5 -
\n
Cashflow hedge (micro hedge and portfolio hedge)
\n
\n
Interest rate swaps
\n
21 249 21 249 24 502 177
\n
\n
\n
Currency and
\n
interest rate swaps
\n
711 721 26 0 19
\n
\n
\n
Total
\n
21 960 21 970 50 502 196
\n
Total
\n
-196 0 -1 197
\n
Hedge of net investments in foreign operations
\n
\n
Total
\n
3
\n
1 904 1 965 5 420 -109
\n
Total
\n
109 0 20
\n
1 In this table, both legs of the derivatives are reported in the notional amounts.
\n
2 Ineffectiveness is recognised in \u2018Net result from financial instruments at fair value through profit or loss\u2019 (also see Note 3.3).
\n
3 Hedging instruments in the form of foreign currency deposits.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\u2022 The sharp change in fair value of the hedging instruments and the hedged items in the fair value micro hedges and fair value
\n
hedges for a portfolio of interest rate risk for 2022 are attributable to the substantial increase in market interest rates.
\n
\u2022 The Treasury departments of the various entities manage the interest rate risk. To prevent rate movements from having a
\n
negative impact, the maturities of assets and liabilities are adjusted on the balance sheet using interest rate swaps and other
\n
derivatives.
\n
\u2022 As regards the relationship between risk management and hedge accounting policy, \u2018economic\u2019 management takes priority
\n
and risks are hedged in accordance with the general ALM framework. Only then is a decision made on which, if any, of these
\n
techniques will be used to limit any resulting accounting mismatch.
\n
\u2022 The balances remaining in the cashflow hedge reserve from any hedging relationships for which hedge accounting is no longer
\n
applied came to -166 million euros. The accumulated amount of fair value hedge adjustments remaining on the balance sheet
\n
for any hedged items that have ceased to be adjusted for hedging gains and losses amounted to -24 million euros. These
\n
adjustments are amortised to profit or loss.
\n
\u2022 The difference between the \u2018Profit/loss on positions in portfolios hedged against interest rate risk\u2019 balance sheet item and
\n
accumulated fair value adjustments following portfolio hedges of interest rate risk as included in Note 4.8.2 is attributable to
\n
accumulated fair value adjustments regarding discontinued fair value hedges not included in Note 4.8.2 but included in the
\n
balance sheet.
\n
\u2022 The accumulated fair value adjustments of the hedged assets involved in portfolio hedges of interest rate risk dropped in 2022
\n
due to the general increase in interest rates. The \u2018Profit/loss on positions in portfolios hedged against interest rate risk\u2019 balance
\n
sheet item on the liabilities side of the balance sheet also became more negative for the same reason.
\n
\u2022 Also see the paragraph on hedge accounting in the \u2018How do we manage our risks?\u2019 section and Note 3.3.
\n
\n
\n
Estimated cashflows from cashflow hedging derivatives per time bucket (in millions of EUR)
\n
Inflow
\n
Outflow
\n
Not more than three months
\n
7 -38
\n
More than three but not more than six months
\n
33 -95
\n
More than six months but not more than one year
\n
123 -274
\n
More than one but not more than two
\n
years 222 -514
\n
More than two but not more than five years
\n
505 -960
\n
More than five years
\n
545 -849
\n

\n\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag860": { "value": "\n
Note 4.3: Maximum credit exposure and offsetting
\n
\n
Collateral and other
\n
Maximum credit
\n
credit enhancements
\n
(in millions of EUR)
\n
\n
exposure (A)
\n
received (B) Net (A-B)
\n
31
\n
-12-2022
\n
\n
\n
\n
Subject to impairment
\n
326 705 132 743 193 962
\n
\n
of which Stage 3 \u2018non-performing\u2019 (AC and FVOCI)
\n
2 106
\n
1 550
\n
556
\n
Debt securities
\n
63 843 98 63 745
\n
Loans and advances (excl. reverse
\n
repos) 181 668 99 415 82 252
\n
Reverse repos
\n
20 186 20 131 55
\n
Other financial assets
\n
1 561 0 1 561
\n
Off
\n
-balance-sheet liabilities 59 447 13 099 46 348
\n
\n
Irrevocable
\n
38 832
\n
6 741
\n
32 091
\n
\n
Revocable
\n
20 616
\n
6 358
\n
14 258
\n
Not
\n
subject to impairment 9 239 2 213 7 026
\n
Debt securities
\n
1 745 0 1 745
\n
Loans and advances (excl. reverse repos)
\n
639 593 46
\n
\n
of which designated upon initial recognition at fair value through profit or loss (FVO)
\n
0 0 0
\n
Reverse repos
\n
33 33 0
\n
Derivatives
\n
6 821 1 588 5 234
\n
Other financial assets
\n
0 0 0
\n
Off
\n
-balance-sheet liabilities 0 0 0
\n
Total
\n
335 944 134 956 200 987
\n
31
\n
-12-2021
\n
\n
\n
\n
Subject to impairment
\n
309 988 127 140 182 848
\n
\n
of which Stage 3 \u2018non-performing\u2019 (AC and FVOCI) 2 072 1 584 488
\n
Debt securities
\n
62 675 93 62 582
\n
Loans and advances (excl. reverse repos)
\n
167 087 90 770 76 317
\n
Reverse repos
\n
24 978 24 877 101
\n
Other financial assets
\n
892 0 892
\n
Off
\n
-balance-sheet liabilities 54 357 11 400 42 957
\n
\n
Irrevocable 36 957 6 031 30 926
\n
\n
Revocable 17 401 5 370 12 031
\n
Not subject to
\n
impairment 9 263 2 294 6 969
\n
Debt securities
\n
2 976 0 2 976
\n
Loans and advances (excl. reverse repos)
\n
561 545 16
\n
\n
of which designated upon initial recognition at fair value through profit or loss (FVO) 0 0 0
\n
Reverse repos
\n
0 0 0
\n
Derivatives
\n
5 727 1 749 3 977
\n
Other financial assets
\n
0 0 0
\n
Off
\n
-balance-sheet liabilities 0 0 0
\n
Total
\n
319 251 129 434 189 818
\n

\n\n

\n
\u2022 Maximum credit exposure for a financial asset is the net carrying value. Besides the amounts on the balance sheet, maximum
\n
credit exposure also includes the undrawn portion of irrevocable credit lines, financial guarantees granted and other
\n
irrevocable commitments.
\n
\u2022 The main types of collateral and other credit enhancements received relate to mortgages on real estate (mainly collateral for
\n
mortgage loans), securities lent out (mainly as a collateral for reverse repos), off-balance-sheet financial guarantees received
\n
and collateral of movable property. Mortgage loans with an LTV (loan-to-value) greater than 100% are limited to 0.6 billion
\n
euros or 0.7% of the entire mortgage loan portfolio at year-end 2022.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. Based on internal management reports, the
\n
composition and quality of the loan portfolio is set out in detail in the \u2018How do we manage our risks?\u2019 section (under \u2018Credit
\n
risk\u2019). All parts of that particular section which have been audited by the statutory auditor are listed at the start of the section.
\n\n
\u2022 Collateral and credit enhancements received: recognised at market value and limited to the outstanding amount of the
\n
relevant loans.
\n

\n\n
\u2022 The maximum credit exposure for the KBC Bank Ireland financial assets has not been included in the above figures (see Note
\n
5.11 for more information).
\n

\n\n

\n\n
Note 5.11: \u2018Non-current assets held for sale and disposal groups\u2019 and \u2018Liabilities associated with disposal groups\u2019
\n
(IFRS 5)
\n
\n
KBC Bank Ireland: Non-current assets held for sale and disposal groups
\n
and Liabilities associated with disposal groups (in millions of EUR)
\n
31-12-2022 31-12-2021
\n
ASSETS
\n
\n
\n
\n
Loans and advances to customers (excl. reverse repos)
\n
8 049 9 998
\n
\n
Consumer credit 18 32
\n
\n
Mortgage loans 7 938 9 871
\n
\n
Term loans 84 83
\n
\n
Current account advances 10 12
\n
Liabilities
\n
\n
\n
\n
Deposits from customers and debt securities (excl. repos)
\n
1 929 3 999
\n
\n
Demand deposits 303 481
\n
\n
Time deposits 494 949
\n
\n
Savings accounts 1 132 2 569
\n
Deposits from credit
\n
institutions and investment firms (excl. repos) 91 263
\n
\n
Of which repayable on demand 35 257
\n
\n
\u2022 At the end of August 2021, KBC Bank Ireland reached agreement on the disposal of a non-performing mortgage loan portfolio
\n
in a transaction financed by funds managed by CarVal Investors. The deal was finalised in early February 2022, which means
\n
that the relevant assets and liabilities are not included in the figures for year-end 2022 in the table.
\n
\u2022 In October 2021, KBC Bank Ireland also confirmed that it had entered into a legally binding agreement with Bank of Ireland
\n
relating to the sale of substantially all of KBC Bank Ireland\u2019s performing loan assets and its deposit book to Bank of Ireland
\n
Group (see Note 6.6 for more details). Since we consider all the requirements under IFRS 5 to have been met, these sales resulted
\n
in a shift to the \u2018Non-current assets held for sale and disposal groups\u2019 and \u2018Liabilities associated with disposal groups\u2019 items
\n
\u2022 Maximum credit exposure: the maximum credit risk associated with \u2018Non-current assets held for sale and disposal groups\u2019
\n
amounted to 8.0 billion euros, of which 7.9 billion euros in collateral and other credit enhancements received (10.0 billion euros
\n
and 9.8 billion euros, respectively, at year-end 2021).
\n

\n\n

\n\n

\n\n

\n\n

\n
Note 6.1: Off-balance-sheet commitments and financial guarantees given and received
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
\n
Nominal
\n
amount
\n
Provision Net exposure
\n
Nominal
\n
amount
\n
Provision Net exposure
\n
Undrawn portion of credit lines
\n
granted
\n
Stage 1
\n
39 134 17 39 117 38 414 17 38 397
\n
Stage 2
\n
8 077 26 8 051 4 770 16 4 754
\n
Stage 3
\n
51 13 38 42 4 38
\n
Total
\n
47 262 56 47 206 43 226 37 43 189
\n
\n
of which irrevocable credit lines 26 618 27 26 591 25 802 14 25 788
\n
Financial guarantees given
\n
\n
Stage 1
\n
7 600 2 7 598 8 675 2 8 673
\n
Stage 2
\n
3 139 8 3 131 1 678 5 1 673
\n
Stage 3
\n
119 44 76 153 86 67
\n
Total
\n
10 858 54 10 805 10 506 93 10 413
\n
Other commitments given
\n
\n
Total
\n
1 440 4 1 436 756 1 755
\n
Total
\n
\n
Off-balance-sheet commitments and financial
\n
guarantees
\n
59 561 114 59 447 54 488 130 54 357
\n
\n
\u2022 Fair value of financial guarantees: based on the available market value.
\n\n
\u2022 The carrying value of financial assets pledged by KBC as collateral came to 59 753 million euros for liabilities and 5 291 million
\n
euros for contingent liabilities (66 386 million euros and 3 961 million euros, respectively, in 2021). At year-end 2022, some 16.6
\n
billion euros\u2019 worth of residential mortgage loans and cash collections were entered in the cover asset register for the special
\n
estate of the covered bond programme (16.6 billion euros at year-end 2021).
\n

\n\n
\u2022 There is an obligation to return collateral received (which may be sold or repledged in the absence of default by the owner; see
\n
table) in its original form, or possibly in cash. Collateral can be called in if loans are terminated for various reasons such as
\n
default or bankruptcy. In the event of bankruptcy, the collateral will be sold by the receiver. In other cases, the bank will organise
\n
the foreclosure itself or take possession of the collateral. Collateral received that relates to OTC derivatives is primarily cash,
\n
which is recognised by KBC on the balance sheet (and is not included in the table). More details are provided in Note 4.3.
\n
\u2022 Collateral acquired through foreclosure came to 4 million euros in 2022 (4 million euros in 2021).
\n
\u2022 The increase in \u2018Stage 2\u2019 relates to the collective stage transfer linked to \u2018Stage 1\u2019 loans (see also Note 1.4) that have indirect
\n
exposure to Russia, Ukraine and Belarus.
\n
\n
\n
\n
Collateral received (which may be sold or repledged
\n
in the absence of default by the owner) (in millions of EUR)
\n
Fair value of collateral received
\n
Fair value of collateral sold or
\n
repledged
\n
\n
31-12-2022 31-12-2021 31-12-2022 31-12-2021
\n
Financial assets
\n
30 126
\n
39 863
\n
7 792
\n
11 862
\n
Equity instruments
\n
16 11 2 1
\n
Debt securities
\n
29 876 39 633 7 790 11 860
\n
Loans and advances
\n
234 219 0 0
\n
Cash
\n
0 0 0 0
\n
Other
\n
0
\n
0
\n
0
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfCollateralExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag863": { "value": "\n
\u2022 Collateral and credit enhancements received: recognised at market value and limited to the outstanding amount of the
\n
relevant loans.
\n

\n\n
\u2022 The amounts presented in the \u2018Financial instruments\u2019 column under the \u2018Amounts not set off in the balance sheet\u2019 heading are
\n
for financial instruments entered into under an enforceable master netting agreement or similar arrangement that does not
\n
meet the criteria defined in IAS 32. These amounts refer to situations in which offsetting can only be applied if one of the
\n
counterparties defaults, becomes insolvent or goes bankrupt. The same principle applies for financial instruments given or
\n
received as collateral. The value given in the table for non-cash collateral received (in the \u2018Securities collateral\u2019 column under
\n
the \u2018Amounts not set off in the balance sheet\u2019 heading) is the market value. This is the value that is used if one of the
\n
counterparties defaults, becomes insolvent or goes bankrupt.
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCollateralExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag857": { "value": "\n

\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n

\n

\n

\n

\n

\n

\n

\n
Note 4.5: Financial assets and liabilities measured at fair value \u2013 fair value hierarchy
\n
\n
\n
Fair value hierarchy
\n
31-12-2022 31-12-2021
\n
(in millions of EUR)
\n
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
\n
FINANCIAL ASSETS AT FAIR VALUE
\n
\n
Mandatorily measured at fair value through profit or loss other than held for trading (including
\n
\n
overlay)
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 13 0 13 0 0 0 0
\n
reverse repos)
\n
Loans and advances to customers (incl. reverse repos)
\n
0 0 625 625 0 0 560 560
\n
Equity instruments
\n
1 131 0 118 1 250 1 323 0 52 1 374
\n
Investment contracts (insurance)
\n
12 638 134 0 12 771 14 365 254 0 14 620
\n
Debt securities
\n
12 0 5 17 14 0 3 17
\n
of which sovereign bonds
\n
\n
0
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
0
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Loans and advances to credit institutions and investment firms (incl.
\n
0 34 0 34 0 1 0 1
\n
reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Equity instruments
\n
429 0 0 430 448 0 0 448
\n
Debt securities
\n
1 480 244 4 1 728 1 522 1 432 4 2 958
\n
\n
of which sovereign bonds 1 444 223 0 1 667 1 441 1 076 0 2 517
\n
Derivatives
\n
3 5 547 729 6 279 1 4 482 961 5 443
\n
Other
\n
0 0 0 0 0 0 0 0
\n
Designated upon initial recognition at fair value through profit or loss (FVO)
\n
Loans and advances to credit institutions and
\n
0 0 0 0 0 0 0 0
\n
investment firms (incl. reverse repos)
\n
Loans and advances to
\n
customers (incl. reverse repos) 0 0 0 0 0 0 0 0
\n
Debt securities
\n
0 0 0 0 0 0 0 0
\n
\n
of which sovereign bonds 0 0 0 0 0 0 0 0
\n
At fair value through OCI
\n
\n
\n
\n
\n
\n
\n
\n
\n
Equity instruments
\n
18 1 297 315 15 1 306 321
\n
Debt securities
\n
9 508 2 070 235 11 813 12 269 2 963 271 15 503
\n
\n
of which sovereign bonds
\n
\n
7 003 1 059 73 8 135 8 751
\n
\n
1 711
\n
\n
52
\n
\n
10 514
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n

\n\n

\n\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0 542 0 542 0 283 0 283
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial assets at fair value
\n
25 219 8 585 2 014 35 818 29 956 9 416 2 157 41 529
\n
FINANCIAL LIABILITIES AT FAIR VALUE
\n
\n
Held for trading
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 7 0 7 0 2 0 2
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 44 0 44 0 21 0 21
\n
Derivatives
\n
2
\n
6 911
\n
1 125
\n
8 038
\n
1
\n
4 410
\n
1 209
\n
5 619
\n
Short positions
\n
884 123 0 1 007 1 582 47 0 1 628
\n
Designated at fair value
\n
\n
\n
\n
\n
\n
\n
\n
\n
Deposits from credit institutions and investment firms
\n
0 0 0 0 0 0 0 0
\n
(incl. repos)
\n
Deposits from customers and debt securities (incl. repos)
\n
0 74 1 131 1 205 0 61 1 251 1 312
\n
Liabilities under investment contracts
\n
12 002 0 0 12 002 13 603 0 0 13 603
\n
Hedging derivatives
\n
\n
\n
\n
\n
\n
\n
\n
\n
Derivatives
\n
0
\n
479
\n
98
\n
577
\n
0
\n
696
\n
398
\n
1 094
\n
Total
\n
\n
\n
\n
\n
\n
\n
\n
\n
Total financial liabilities at fair value
\n
12 887 7 638 2 355 22 881 15 185 5 238 2 857 23 280
\n
\n
\u2022 The fair value hierarchy prioritises the valuation techniques and the respective inputs into three levels.
\n
- The fair value hierarchy gives the highest priority to \u2018level 1 inputs\u2019. This means that, when there is an active market, quoted
\n
prices have to be used to measure the financial assets or liabilities at fair value. Level 1 inputs are prices that are readily and
\n
regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency (and that are
\n
quoted in active markets accessible to KBC). They represent actual and regularly occurring market transactions on an arm\u2019s
\n
length basis. The fair value is then based on a mark-to-market valuation derived from currently available transaction prices.
\n
No valuation technique (model) is involved.
\n
- If there are no price quotations available, the reporting entity establishes fair value using a model based on observable or
\n
unobservable inputs. The use of observable inputs must be maximised. Observable inputs are also referred to as \u2018level 2
\n
inputs\u2019 and reflect the assumptions market participants would use in pricing the asset or liability based on market data
\n
obtained from sources independent of the reporting entity. Examples of observable inputs are the risk-free rate, exchange
\n
rates, stock prices and implied volatility. Valuation techniques based on observable inputs include discounted cashflow
\n
analysis, or reference to the current or recent fair value of a similar instrument.
\n
- Unobservable inputs are also referred to as \u2018level 3 inputs\u2019 and reflect the reporting entity\u2019s own assumptions about the
\n
assumptions that market participants would use in pricing the asset or liability (including assumptions regarding the risks
\n
involved). Unobservable inputs reflect a market that is not active. For example, proxies and correlation factors can be
\n
considered to be unobservable in the market.
\n
\u2022 When the inputs used to measure the fair value of an asset or a liability can be categorised into different levels of the fair value
\n
hierarchy, the fair value measurement is classified in its entirety into the same level as the lowest level input that is significant
\n
to the entire fair value measurement. For example, if a fair value measurement uses observable inputs that require significant
\n
adjustment based on unobservable inputs, that measurement is a level 3 measurement.
\n
\u2022 The valuation methodology and the corresponding classification in the fair value hierarchy of the most commonly used financial
\n
instruments are summarised in the table. Whereas the majority of instruments of a certain type are within the level indicated in
\n
the table, a small portion may actually be classified in another level.
\n
\u2022 KBC follows the principle that transfers into and out of levels of the fair value hierarchy are made at the end of the reporting
\n
period. Transfers between the various levels are dealt with in more detail in Note 4.6 and Note 4.7.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Instrument type Products Valuation technique
\n
Liquid financial instruments
\n
FX spots, exchange traded financial futures, exchange traded options,
\n
Mark-to-market (quoted prices in active
\n
for which quoted prices are
\n
exchange traded stocks, exchange traded funds, liquid government
\n
markets), for bonds: BVAL or vendor
\n
data.
\n
\n
Level 1
\n
regularly available
\n
\n
bonds, other liquid bonds, liquid asset backed securities (ABS) in active
\n
markets
\n
Plain vanilla/liquid
\n
(Cross-currency) interest rate swaps (IRS), FX swaps, FX forwards, forward
\n
Discounted cashflow analysis based on
\n
derivatives
\n
\n
rate agreements (FRA), inflation swaps, dividend swaps and futures,
\n
discount and estimation curves (derived
\n
reverse floaters, bond future options, interest rate future opt
\n
ions, overnight
\n
from quoted deposit rates,
\n
\n
index swaps (OIS), FX resets
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Caps & floors, interest rate options, European stock options, European &
\n
Option pricing model based on
\n
American FX options, forward starting options, digital FX options, FX strips
\n
observable inputs (e.g., volatilities)
\n
\n
of simple options, European swaptions, European cancellable IRS,
\n
\n
compound options
\n
\n
Linear financial liabilities
\n
Deposits, simple cashflows, repo transactions
\n
Discounted cashflow analysis based on
\n
(without optional features)
\n
\u2013
\n
discount and estimation curves (derived
\n
cash instruments
\n
\n
from quoted deposit rates,
\n
\n
\n
Level 2
\n
FX swaps and (CC)IRS)
\n
\n
\n
Semi-liquid bonds/asset
\n
Semi-liquid bonds/asset backed securities
\n
BVAL, prices corroborated by alternative
\n
backed securities
\n
\n
observable market data, or using
\n
comparable spread method
\n
\n
\n
Debt instruments
\n
KBC IFIMA own issues (liabilities), mortgage bonds held by \u010cSOB
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
observable inputs
\n
\n
\n
Linear financial assets (cash
\n
Loans, commercial paper
\n
Discounted cashflow analysis based on
\n
instruments)
\n
\n
discount and estimation curves (derived
\n
from quoted deposit rates,
\n
\n
FX swaps and (CC)IRS)
\n
\n
\n
Exotic derivatives
\n
Target profit forwards, flexible forwards, American & Asian stock options,
\n
Option pricing model based on
\n
Bermudan swaptions, digital interest rate options, quanto interest rate
\n
observable inputs (e.g., correlation)
\n
\n
options, digital stock options, composite stock options, barrier stock
\n
options, quanto digital FX options, FX
\n
Asian options, FX European barrier
\n
options, FX simple digital barrier options, FX touch rebates, inflation
\n
options, Bermudan cancellable IRS, constant maturity swaps (CMS), CMS
\n
spread swaps, CMS spread options, CMS interest rate caps/floors,
\n
(callable) ra
\n
nge accruals, outperformance options, auto-callable options,
\n
\n
Level 3
\n
lookback options, commodity swaps and forwards
\n
Illiquid credit-linked
\n
Collateralised debt obligations (notes)
\n
Valuation model based on correlation of
\n
instruments
\n
\n
probability of default of underlying assets
\n
\n
\n
Private equity investments
\n
Private equity and non-quoted participations
\n
Based on the valuation guidelines of the
\n
European Private Equity & Venture Capital
\n
Association
\n
\n
\n
Illiquid bonds/asset backed
\n
Illiquid (mortgage) bonds/asset backed securities that are indicatively
\n
BVAL, third-party pricing (e.g., lead
\n
securities
\n
\n
priced by a single pricing provider in an inactive market
\n
\n
manager), where prices
\n
cannot be
\n
\n
\n
corroborated due to a lack of
\n
available/reliable alternative market data
\n
\n
\n
Debt instruments
\n
KBC own issues (KBC IFIMA)
\n
Discounted cashflow analysis and
\n
\n
valuation of related derivatives based on
\n
\n
unobservable inputs (indicative pricing by
\n
third parties for derivatives)
\n
\n
\n
Structured loans
\n
Government-regulated loans with leveraged interest rates and exotic
\n
Discounted cashflow analysis and
\n
early repayment
\n
schedules (K&H)
\n
valuation of related derivatives based on
\n
unobservable inputs
\n
\n
\n
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsDesignatedAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag865": { "value": "\n

\n\n

\n\n

\n\n

\n\n
Note 4.6: Financial assets and liabilities measured at fair value \u2013 transfers between levels 1 and 2
\n
\n
\u2022 In 2022, KBC transferred 77 million euros\u2019 worth of financial assets and liabilities out of level 1 and into level 2, and 434 million
\n
euros\u2019 worth of financial assets and liabilities out of level 2 and into level 1. The corresponding figures for 2021 were 206 million
\n
euros and 294 million euros, respectively. Most of these reclassifications were carried out due to a change in the liquidity of
\n
government bonds and corporate bonds.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n

\n\n
Note 4.7: Financial assets and liabilities measured at fair value \u2013 focus on level 3
\n
\n
\u2022 In 2022, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 65 million euros, primarily on account of new transactions, partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of unlisted shares rose by 66 million euros, due primarily to new
\n
transactions.
\n
- Financial assets at fair value through OCI: the fair value of debt instruments decreased by 36 million euros, primarily on
\n
account of instruments reaching maturity and changes in market inputs.
\n
- Financial assets held for trading: the fair value of derivatives decreased by 232 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities held for trading: the fair value of derivatives decreased by 83 million euros, due mainly to sales of existing
\n
positions and changes in market inputs, only partly offset by new purchases and reclassifications into level 3.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives decreased by 300 million euros due to changes
\n
in market inputs.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of issued debt instruments decreased by 120
\n
million euros, primarily on account of transactions reaching maturity and the sale of existing positions, only partly offset by
\n
new transactions.
\n
\u2022 In 2021, significant movements in financial assets and liabilities classified in level 3 of the fair value hierarchy included the
\n
following:
\n
- Financial assets measured at fair value through profit or loss (other than held for trading): the fair value of loans and advances
\n
increased by 173 million euros, primarily on account of new transactions, only partly offset by changes in market inputs and
\n
instruments that had reached maturity. The fair value of debt instruments fell by 34 million euros, owing primarily to changes
\n
in market inputs.
\n
- Financial liabilities held for trading: the fair value of derivatives increased by 103 million euros, due mainly to changes in market
\n
inputs and new transactions, partly offset by sales. The fair value of issued debt instruments fell by 85 million euros, due mainly
\n
to instruments that had reached maturity.
\n
- Financial liabilities relating to hedging derivatives: the fair value of derivatives increased by 398 million euros due to
\n
reclassifications in level 3 owing to an optimisation of the classification method.
\n
- Financial liabilities measured at fair value through profit or loss: the fair value of debt instruments increased by 100 million
\n
euros, primarily on account of new issues, partly offset by sales.
\n
\u2022 Some level 3 assets are associated or economically hedged with identical level 3 liabilities, which means that KBC\u2019s exposure
\n
to unobservable inputs is lower than would appear from the gross figures. Most of the level 3 instruments are also valued using
\n
third-party pricing sources, with KBC not developing any unobservable inputs itself. The main unobservable inputs applied by
\n
KBC to the valuation of exotic derivatives include: mean reversion parameter on Bermudan swaptions, equity cross-correlations
\n
and volatilities for certain stock options, interest-rate correlations for CMS spread options, and the funding costs used to
\n
determine the forward equity prices as part of the valuation of certain equity derivatives. The change in fair value resulting from
\n
a change in these inputs to reflect reasonably possible alternative assumptions is insignificant.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfReclassificationOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag3": { "value": "\n

\n\n

\n\n

\n\n

\n\n
Note 5.1: Other assets
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
Total
\n
2 036 1 630
\n
Debtors arising out of direct insurance operations
\n
457 404
\n
Debtors arising out of reinsurance operations
\n
89 78
\n
Deposits with ceding companies
\n
8 10
\n
Prepaid charges and accrued income
\n
565 441
\n
Other
\n
917 696
\n

\n\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag4": { "value": "\n

\n\n

\n\n
Note 5.1: Other assets
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
Total
\n
2 036 1 630
\n
Debtors arising out of direct insurance operations
\n
457 404
\n
Debtors arising out of reinsurance operations
\n
89 78
\n
Deposits with ceding companies
\n
8 10
\n
Prepaid charges and accrued income
\n
565 441
\n
Other
\n
917 696
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag5": { "value": "\n

\n\n
Note 5.1: Other assets
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
Total
\n
2 036 1 630
\n
Debtors arising out of direct insurance operations
\n
457 404
\n
Debtors arising out of reinsurance operations
\n
89 78
\n
Deposits with ceding companies
\n
8 10
\n
Prepaid charges and accrued income
\n
565 441
\n
Other
\n
917 696
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentAssetsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag6": { "value": "\n
Note 5.1: Other assets
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
Total
\n
2 036 1 630
\n
Debtors arising out of direct insurance operations
\n
457 404
\n
Debtors arising out of reinsurance operations
\n
89 78
\n
Deposits with ceding companies
\n
8 10
\n
Prepaid charges and accrued income
\n
565 441
\n
Other
\n
917 696
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentAssetsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag7": { "value": "\n

\n\n

\n\n

\n\n
Note 5.2: Tax assets and tax liabilities
\n
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
CURRENT TAXES
\n
\n
Current tax assets
\n
174 179
\n
Current tax liabilities
\n
150 87
\n
DEFERRED TAXES
\n
1 005 769
\n
Deferred tax assets by type of temporary difference
\n
1 475 1 413
\n
Employee benefits
\n
78 82
\n
Losses carried forward
\n
186 247
\n
Tangible and intangible fixed assets
\n
77 126
\n
Provisions for risks and charges
\n
49 21
\n
Impairment for losses on loans and advances
\n
219 273
\n
Financial instruments at fair value through profit or loss and fair value hedges
\n
142 113
\n
Fair value changes, available-for-sale assets, financial instruments at FVOCI, cashflow hedges and hedges of net investments
\n
in foreign operations
\n
594 476
\n
Technical provisions
\n
42 30
\n
Other
\n
88 47
\n
Deferred tax liabilities by type of
\n
temporary difference 470 644
\n
Employee benefits
\n
99 37
\n
Losses carried forward
\n
0 0
\n
Tangible and intangible fixed assets
\n
41 34
\n
Provisions for risks and charges
\n
9 9
\n
Impairment for losses on loans and advances
\n
3 3
\n
Financial instruments at fair value
\n
through profit or loss and fair value hedges 131 132
\n
Fair value changes, available-for-sale assets, financial instruments at FVOCI, cashflow hedges and hedges of net investments
\n
in foreign operations
\n
44 292
\n
Technical provisions
\n
115 106
\n
Other
\n
29 33
\n
Recognised as a net amount in the balance sheet as follows:
\n
\n
Deferred tax assets
\n
1 138 1 117
\n
Deferred tax liabilities
\n
133 348
\n
Unused tax losses and unused tax credits
\n
151 177
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
\u2022 Deferred tax assets are recognised to the extent that it is probable that, on the basis of realistic financial projections, taxable
\n
profit will be available against which the deductible temporary differences can be utilised in the foreseeable future (limited to
\n
a period of eight to ten years).
\n
\u2022 Unused tax losses and unused tax credits concern tax losses of group companies which are not capitalised due to insufficient
\n
proof of future taxable profit. Most tax losses and tax credits can be carried forward for 20 years or more.
\n
\u2022 The net change in deferred taxes (+236 million euros in 2022) breaks down as follows:
\n
\u25e6 The change in deferred tax assets of (+62 million euros) was accounted for chiefly by:
\n
- a net increase in deferred tax assets on account of changes in the revaluation reserve for financial instruments
\n
measured at fair value through OCI, cashflow hedges and hedges of net investments in foreign operations (+118 million
\n
euros);
\n
- a decrease in deferred tax assets via the income statement of 74 million euros, mainly due to the usage and write-offs
\n
of losses carried forward, partly offset by the one-off recognition of deferred tax assets, due in part to the increase in
\n
business tax in the UK from 19% to 25% and the recognition of deferred tax assets in Ireland (-61 million euros net) as a
\n
result of lower deferred tax assets on impairment for losses on loans and advances (-18 million euros) and on non-
\n
current assets (-12 million euros). In addition, the arbitration proceedings against ICEC-Holding (see Note 3.6) have led
\n
to an increase in deferred tax assets via the income statement of 28 million euros.
\n
- changes in technical provisions of +12 million euros;
\n
\u25e6 The change in deferred tax liabilities of -174 million euros was accounted for chiefly by:
\n
- a decrease in deferred tax liabilities on account of changes in the revaluation reserve for financial instruments
\n
measured at fair value through OCI, cashflow hedges and hedges of net investments in foreign operations (-249 million
\n
euros);
\n
- changes in defined benefit plans of +62 million euros and to a lesser extent the technical provisions (+9 million euros).
\n
\u2022 The deferred tax assets presented in the balance sheet are attributable primarily to KBC Bank, KBC Insurance, \u010cSOB in the
\n
Czech Republic and KBC Bank Ireland
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag8": { "value": "\n

\n\n

\n\n

\n
Note 5.4: Property and equipment and investment property
\n
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Property and equipment
\n
2 989 3 050
\n
Investment property
\n
571 518
\n
Rental income
\n
50 57
\n
Direct operating expenses from investments generating rental income
\n
15 15
\n
Direct operating expenses from investments not generating rental
\n
income 1 2
\n
MOVEMENTS TABLE
\n
Land and
\n
buildings
\n
IT
\n
equipment
\n
Other
\n
equipment
\n
Total property
\n
and equipment
\n
Investment property
\n
2022
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
1 479 117 1 454 3 050 518
\n
Acquisitions
\n
37 68 470 575 85
\n
Disposals
\n
-30 -1 -204 -235 -13
\n
Depreciation
\n
-120 -60 -25 -205 -31
\n
Other movements
\n
7 6 -209 -196 12
\n
Closing balance
\n
1 373 130 1 486 2 989 571
\n
\n
accumulated depreciation and impairment 1 570 446 876 2 892 376
\n
Fair value
\n
\u2013 \u2013 \u2013 \u2013 827
\n
2021
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
1 561 138 1 437 3 136 555
\n
Acquisitions
\n
113 43 448 603 15
\n
Disposals
\n
-57 -4 -205 -266 -17
\n
Depreciation
\n
-119 -64 -24 -207 -33
\n
Other movements
\n
-19 4 -201 -216 -2
\n
Closing balance
\n
1 479 117 1 454 3 050 518
\n
accumulated depreciation and impairment 1 487 446 832 2 766 412
\n
Fair value
\n
\u2013 \u2013 \u2013 \u2013 792
\n
\n\n
\u2022 Annual rates of depreciation: mainly 3% for buildings (including investment property), 33% for IT equipment, between 5% and
\n
33% for other equipment. No depreciation is charged for land.
\n

\n\n
\u2022 There was a small amount (around 0.4 billion euros) for commitments for the acquisition of property and equipment. There are
\n
no material restrictions on title, or on property and equipment pledged as security for liabilities.
\n
\u2022 Most investment property is valued by an independent expert on a regular basis and by in-house specialists on an annual
\n
basis, based primarily on the capitalisation of the estimated rental value and on unit prices of similar real property. Account is
\n
taken of all the market inputs available on the date of the assessment (including location and market situation, type of building
\n
and construction, state of repair, use, etc.).
\n
\u2022 Certain other investment property is valued annually by in-house specialists based on the current annual rental per building
\n
and expected rental movements and on an individual capitalisation rate per building.
\n
\u2022 The impact of the heavy flooding and other extreme weather conditions in 2022 and 2021 on property and equipment and
\n
investment property (in this case, our branch network) and on the associated impairment was insignificant. For more
\n
information, see \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\u2022 The impact of our own activities as a bank-insurer on the environment is very limited, especially when compared to industrial
\n
companies and our indirect impact through lending and other activities, and stems mainly from our buildings and vehicles
\n
(commuting). We nevertheless also calculate our own direct greenhouse gas impact and apply certain targets in that regard.
\n
See \u2018Focus on climate\u2019 in the \u2018Report of the Board of Directors\u2019 section for a more detailed explanation. More details can also
\n
be found in our Climate Report and our Sustainability Report at www.kbc.com.
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentPropertyExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag9": { "value": "\n

\n\n

\n\n

\n\n

\n\n

\n

\n
Note 5.5: Goodwill and other intangible assets
\n
\n\n

\n\n
(in millions of EUR)
\n
Goodwill
\n
Software
\n
developed
\n
in-house
\n
Software
\n
developed
\n
externally
\n
Other
\n
Total
\n
2022
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
913 559 263 13 1 749
\n
Acquisitions
\n
438 262 73 9 783
\n
Disposals
\n
0 0 -1 -3 -4
\n
Amortisation
\n
0 -90 -78 -1 -169
\n
Other movements
\n
-6 -12 -8 -2 -28
\n
Closing balance
\n
1 346 719 250 16 2 331
\n
\n
accumulated amortisation and impairment 260 646 836 56 1 797
\n
2021
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
845 386 301 20 1 551
\n
Acquisitions
\n
56 234 84 9 383
\n
Disposals
\n
0 0 -12 -10 -21
\n
Amortisation
\n
0 -62 -85 -2 -149
\n
Other movements
\n
12 1 -24 -3 -14
\n
Closing balance
\n
913 559 263 13 1 749
\n
\n
accumulated amortisation and impairment 255 794 859 53 1 961
\n

\n\n

\n\n
\n\n
\u2022 Goodwill: includes the goodwill paid on companies included in the scope of consolidation and relating to the acquisition of
\n
activities. Goodwill paid on associated companies: included in the nominal value of \u2018Investments in associated companies\u2019
\n
shown on the balance sheet.
\n
\u2022 For goodwill in respect of recent acquisitions, see Note 6.6.
\n
\u2022 Impairment testing: a test was carried out to establish whether impairment on goodwill had to be recognised (see table and
\n
Note 3.10). This impairment test is performed at least once a year. We also carry out a high level assessment on a quarterly
\n
basis to see whether there is an indication of impairment. In the test, each entity is regarded as a separate cash-generating
\n
unit. Each entity has a specific risk profile and it is rare to have different profiles within a single entity.
\n
\u2022 Impairment on goodwill under IAS 36: recognised in profit or loss if the recoverable amount of an investment is lower than its
\n
carrying value. The recoverable amount is defined as the higher of the value in use (calculated based on discounted cashflow
\n
analysis) and the fair value (calculated based on multiple analysis, etc.) less costs to sell.
\n
\u2022 The main group companies to which goodwill relates are listed in the table. All of these companies have been valued using the
\n
discounted cashflow method. The discounted cashflow method calculates the recoverable amount of an investment as the
\n
present value of all future free cashflows of the business. This method is based on long-term projections about the company\u2019s
\n
business and the resulting cashflows (i.e. projections for a number of years ahead and the residual value of the business at the
\n
end of the specific projection period). These long-term projections are the result of an assessment of past and present
\n
performances combined with external sources of information on future performances in the respective markets and the global
\n
macroeconomic environment. Consequently, in cases where sustainability aspects and products/projects have been factored
\n
into the underlying financial projections, this will also affect the valuation. The ultimate growth rate is determined using a long-
\n
term average market growth rate. The present value of these future cashflows is calculated using a compound discount rate
\n
which is based on the capital asset pricing model (CAPM). A country-specific risk-free rate and a market-risk premium
\n
(multiplied by an activity beta) are also used in the calculation. KBC has developed two distinct discounted cashflow models,
\n
viz. a bank model and an insurance model. Free cashflows in both cases are the dividends that can be paid out to the
\n
company\u2019s shareholders, account taken of the minimum capital requirements.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 6.6: Main changes in the scope of consolidation
\n
\n
\u2022 2021: Acquisition of NN\u2019s Bulgarian pension and life insurance business
\n
- In July 2021, we completed the acquisition of NN\u2019s Bulgarian pension and life insurance business for a total consideration of
\n
77.7 million euros (the deal did not contain any contingent consideration arrangements). This acquisition comprises all the
\n
shares of NN Pension Insurance Company EAD in Bulgaria (which has been renamed Pension Insurance Company UBB EAD)
\n
and all the assets and liabilities of NN Insurance Co. Ltd. \u2013 Sofia Branch. This deal will enable UBB and DZI to further expand
\n
their cross-selling opportunities through their already established bank-insurance presence in the Bulgarian market, allowing
\n
them to serve more clients and to benefit from economies of scale and increased visibility.
\n
- The impact of the acquisition is included in the consolidated balance sheet figures. The results of the operations concerned
\n
have been fully consolidated in the income statement since 1 August 2021. In the last five months of 2021, the impact
\n
amounted to +5 million euros in total income (mainly net commission income), -4 million euros in operating expenses, and +1
\n
million euros in result after tax.
\n
- KBC recognised goodwill of 56 million euros in its consolidated financial statements for Pension Insurance Company UBB EAD.
\n
This is accounted for by this company\u2019s profitability (based on the results achieved in previous years and the business plan
\n
for the years ahead) and enables UBB and DZI to further expand their cross-selling opportunities through their already
\n
established bank-insurance presence in the Bulgarian market, allowing them to serve more clients and to benefit from
\n
economies of scale and increased visibility. KBC has not recorded any goodwill or badwill on the acquisition of all assets and
\n
liabilities of NN Insurance Co. Ltd. \u2013 Sofia Branch because the consideration was virtually identical to the net value of the
\n
assets and liabilities acquired (taking into account specific fair value adjustments). Goodwill is not deductible for tax
\n
purposes.
\n
- The deal had no impact on KBC Group NV\u2019s capital position.
\n
- The table below shows the fair value of the main assets and liabilities involved in the acquisition of the relevant NN activities.
\n
\n
\u2022 2022: Acquisition of Bulgarian activities from Raiffeisen Bank International (KBC Bank Bulgaria)
\n
- In July 2022, we finalised the agreement with Raiffeisen Bank International on the acquisition of 100% of the shares in
\n
Raiffeisenbank (Bulgaria) EAD for a total consideration of 1 009 million euros in cash (the deal did not contain any contingent
\n
consideration arrangements). The transaction also includes the subsidiaries Raiffeisen Leasing Bulgaria, Raiffeisen Asset
\n
Management (Bulgaria), Raiffeisen Insurance Broker and Raiffeisen Service. Raiffeisenbank (Bulgaria) EAD was renamed KBC
\n
Bank Bulgaria EAD, and the subsidiaries were also renamed. The bank had a market share in Bulgaria of an estimated 8% in
\n
terms of assets, a network of 122 bank branches, roughly 2 500 employees and 600 000 clients.
\n
- The transaction had not yet been finalised at year-end 2021 and was therefore not included in the consolidated balance
\n
sheet figures of year-end 2021, but it was included in the figures of year-end 2022. The results of KBC Bank Bulgaria have
\n
been fully consolidated in the income statement since the third quarter of 2022. The impact in the second half of 2022
\n
amounted to: +108 million euros in total income (mainly 70 million euros in net interest income and 36 million euros in net
\n
commission income), -51 million euros in operating expenses, -5 million euros in impairment and +47 million euros in result after
\n
tax. More information on the impact of the consolidation of KBC Bank Bulgaria on the financial assets and liabilities can be
\n
found in Note 4.1.
\n
- KBC recognised goodwill of 433 million euros in its consolidated financial statements, taking into account limited fair value
\n
adjustments. This is accounted for by the quality of the acquired entity, which is expressed in the qualitative loan portfolio
\n
and profitability (based on the results achieved in previous years and the business plan for the years ahead). It allows KBC to
\n
expand its client base and benefit from economies of scale (through considerable cost synergies for the office network and
\n
head office in Bulgaria and through revenue synergies, including from higher sales of DZI insurance products) and greater
\n
visibility as a result. The acquisition offers KBC the opportunity to earmark its surplus capital for a value-increasing transaction
\n
in a market that the group is highly familiar with. In principle, IFRS 3 (Business Combinations) allows the amount of goodwill to
\n
be adjusted during the 12-month measurement period starting from the acquisition date (IFRS 3.45). This means that the
\n
amount of goodwill is temporary and subject to change, although there are currently no indications that the goodwill
\n
calculation will be subject to any major adjustments. Goodwill is not deductible for tax purposes.
\n
- The transaction had an impact of -0.9 percentage points on KBC Group\u2019s common equity ratio in the third quarter of 2022.
\n
- KBC Bank Bulgaria will legally merge with United Bulgarian Bank (UBB) in 2023.
\n
- The table below shows the fair value of the main assets and liabilities involved in the acquisition of Raiffeisenbank Bulgaria.
\n

\n\n

\n\n
Impact of the most important acquisitions and disposals (in millions of EUR)
\n
\n
2022:
\n
Raiffeisenbank Bulgaria
\n
(KBC Bank Bulgaria)
\n
2021:
\n
NN\u2019s Bulgarian pension
\n
and life insurance
\n
business
\n
Percentage of shares bought or sold in the relevant year
\n
\n
purchase
\n
100.00%
\n
purchase
\n
100.00%
\n
Percentage of shares after deal
\n
100.00% 100.00%
\n
For business unit
\n
International Markets International Markets
\n
Deal date (month and year)
\n
June 2022 June 2021
\n
Results of the relevant company/business recognised in the
\n
group result as from: June 2022 August 2021
\n
Purchase price or sale price*
\n
1 009 78
\n
Cashflow for acquiring or selling companies less cash and cash equivalents acquired or sold
\n
-42 -71
\n
Amounts recognised for the purchased assets and liabilities (fair
\n
value)
\n
Situation on:
\n
7 July 2022 31 July 2021
\n
Cash and cash balances with central banks
\n
1 053 7
\n
Financial assets
\n
4 686 106
\n
\n
Amortised cost 4 521 1
\n
\n
Fair value through OCI 132 58
\n
\n
Fair value through profit or loss
\n
30 47
\n
\n
Hedging derivatives 4 0
\n
Tax assets
\n
2 0
\n
Investments in associated companies and joint ventures
\n
\n
2 0
\n
Property and equipment
\n
\n
35 1
\n
Goodwill and other intangible assets
\n
\n
15 0
\n
Other assets
\n
\n
20 5
\n
Cash and
\n
cash equivalents (included in the above assets) 1 053 7
\n
Financial liabilities
\n
5 150 36
\n
\n
Held for trading 19 0
\n
\n
Amortised cost 5 130 0
\n
Hedging derivatives
\n
\n
0 36
\n
Technical provisions, before reinsurance
\n
0 59
\n
Provisions for risks and
\n
charges 9 0
\n
Other liabilities
\n
21 3
\n
Cash and cash equivalents (included in the above liabilities)
\n
28 0
\n
* A further 58 million euros was paid for an additional tier-1 instrument issued by Raiffeisenbank Bulgaria, included in equity at nominal value.
\n

\n\n
\n
\u2022 Sale of activities in Ireland (not yet fully finalised at year-end 2022)
\n
- At the end of August 2021, KBC Bank Ireland reached agreement on the disposal of a non-performing mortgage loan portfolio
\n
of roughly 1.1 billion euros in a transaction financed by funds managed by CarVal Investors. The deal was finalised in early
\n
February 2022. The loans will be managed by Pepper Finance Corporation (Ireland) DAC as the legal title holder of the loans.
\n
Pepper is supervised by the Central Bank of Ireland.
\n
- The transaction had an impact on the income statement of -120 million euros in 2021 and +3 million euros in 2022 (see the
\n
detailed table below). The transaction created marginal capital growth with an impact on the common equity ratio of
\n
approximately 2 basis points and a decline in risk-weighted assets of 0.8 billion euros in 2021. The finalisation of the deal
\n
resulted in a decrease in the \u2018Non-current assets held for sale and disposal groups\u2019 balance sheet item of 0.6 billion euros in
\n
2022.
\n
- In October 2021, KBC Bank Ireland also confirmed that it had entered into a legally binding agreement with Bank of Ireland
\n
relating to the sale of substantially all of KBC Bank Ireland\u2019s performing loan assets and its deposit book to Bank of Ireland
\n
Group The latter will also acquire a small non-performing mortgage loan (and credit card balances) portfolio. The Irish
\n
Competition and Consumer Protection Commission (CCPC) approved the transaction in May 2022, and the Irish Minister for
\n
Finance gave his approval in early December 2022. The transaction was finalised on 3 February 2023. The acquisition, initially
\n
totalling approximately 6.4 billion euros, includes approximately 7.6 billion euros in performing mortgage loans, approximately
\n
0.1 billion euros in mainly performing commercial and consumer loans, approximately 0.2 billion euros in non-performing
\n
mortgage loans and approximately 1.8 billion euros in deposits.
\n
- The transaction had an impact on the income statement of -241 million euros in 2021 and -35 million euros in 2022 (see the
\n
detailed table below). In the first quarter of 2023, the transaction will have a positive impact of around 0.4 billion euros. When
\n

\n\n
finalised, the transaction will also positively impact the common equity ratio by approximately 0.9 percentage points (due in
\n
part to a reduction in risk-weighted assets).
\n
- In 2022, Ireland was transferred from the International Markets Business Unit to the Group Centre (without retroactive
\n
restatement).
\n
\n
Impact of the transactions relating to Ireland on financial year 202
\n
1 and 2022:
\n
one-off items* (in millions of EUR)
\n
Sale transaction for
\n
non-performing loans
\n
Sale transaction for
\n
remaining loans and
\n
deposits and scheduled
\n
settlement
\n
Total
\n
2022
\n
\n
Total income
\n
6 1 6
\n
Operating expenses
\n
0 -32 -33
\n
Impairment
\n
-2 -38 -41
\n
\n
on financial assets at amortised cost and at fair value through OCI*
\n
-2 -15 -17
\n
\n
other
\n
0 -24 -24
\n
Income tax expense
\n
0 36 36
\n
RESULT AFTER TAX
\n
3 -35 -31
\n
2021
\n
\n
Total income
\n
0 -3 -3
\n
Operating expenses
\n
-7 -91 -97
\n
Impairment
\n
-129 -81 -210
\n
\n
on financial assets at amortised cost and at fair value through OCI* -129 -49 -178
\n
\n
other 0 -32 -32
\n
Income tax expense
\n
16 -67 -51
\n
RESULT AFTER TAX
\n
-120 -241 -361
\n
* The impairment is caused by a comparison between the sale price of the impaired loans and the net carrying value of the underlying loans.
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag10": { "value": "\n

\n\n
(in millions of EUR)
\n
Goodwill
\n
Software
\n
developed
\n
in-house
\n
Software
\n
developed
\n
externally
\n
Other
\n
Total
\n
2022
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
913 559 263 13 1 749
\n
Acquisitions
\n
438 262 73 9 783
\n
Disposals
\n
0 0 -1 -3 -4
\n
Amortisation
\n
0 -90 -78 -1 -169
\n
Other movements
\n
-6 -12 -8 -2 -28
\n
Closing balance
\n
1 346 719 250 16 2 331
\n
\n
accumulated amortisation and impairment 260 646 836 56 1 797
\n
2021
\n
\n
\n
\n
\n
\n
\n
Opening balance
\n
845 386 301 20 1 551
\n
Acquisitions
\n
56 234 84 9 383
\n
Disposals
\n
0 0 -12 -10 -21
\n
Amortisation
\n
0 -62 -85 -2 -149
\n
Other movements
\n
12 1 -24 -3 -14
\n
Closing balance
\n
913 559 263 13 1 749
\n
\n
accumulated amortisation and impairment 255 794 859 53 1 961
\n

\n\n

\n\n
\u2022 Goodwill: includes the goodwill paid on companies included in the scope of consolidation and relating to the acquisition of
\n
activities. Goodwill paid on associated companies: included in the nominal value of \u2018Investments in associated companies\u2019
\n
shown on the balance sheet.
\n
\u2022 For goodwill in respect of recent acquisitions, see Note 6.6.
\n
\u2022 Impairment testing: a test was carried out to establish whether impairment on goodwill had to be recognised (see table and
\n
Note 3.10). This impairment test is performed at least once a year. We also carry out a high level assessment on a quarterly
\n
basis to see whether there is an indication of impairment. In the test, each entity is regarded as a separate cash-generating
\n
unit. Each entity has a specific risk profile and it is rare to have different profiles within a single entity.
\n
\u2022 Impairment on goodwill under IAS 36: recognised in profit or loss if the recoverable amount of an investment is lower than its
\n
carrying value. The recoverable amount is defined as the higher of the value in use (calculated based on discounted cashflow
\n
analysis) and the fair value (calculated based on multiple analysis, etc.) less costs to sell.
\n
\u2022 The main group companies to which goodwill relates are listed in the table. All of these companies have been valued using the
\n
discounted cashflow method. The discounted cashflow method calculates the recoverable amount of an investment as the
\n
present value of all future free cashflows of the business. This method is based on long-term projections about the company\u2019s
\n
business and the resulting cashflows (i.e. projections for a number of years ahead and the residual value of the business at the
\n
end of the specific projection period). These long-term projections are the result of an assessment of past and present
\n
performances combined with external sources of information on future performances in the respective markets and the global
\n
macroeconomic environment. Consequently, in cases where sustainability aspects and products/projects have been factored
\n
into the underlying financial projections, this will also affect the valuation. The ultimate growth rate is determined using a long-
\n
term average market growth rate. The present value of these future cashflows is calculated using a compound discount rate
\n
which is based on the capital asset pricing model (CAPM). A country-specific risk-free rate and a market-risk premium
\n
(multiplied by an activity beta) are also used in the calculation. KBC has developed two distinct discounted cashflow models,
\n
viz. a bank model and an insurance model. Free cashflows in both cases are the dividends that can be paid out to the
\n
company\u2019s shareholders, account taken of the minimum capital requirements.
\n

\n\n

\n\n

\n\n

\n\n
Discount rates throughout the specific period
\n
of cashflow projections
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
K&H Bank
\n
173 188 17.3%-13.3% 11.4%-10.6%
\n
\u010cSOB (Czech Republic)
\n
259 251 13.9%-12.8% 10.6%-8.7%
\n
\u010cSOB Stavebn\u00ed sporitelna
\n
176 171 13.2%-12.8% 10.6%-8.8%
\n
United Bulgarian Bank and Raiffeisenbank Bulgaria
\n
(now KBC Bank Bulgaria)
\n
544 110 12.5%-12.2% 10.6%-9.2%
\n
DZI Insurance
\n
75 75 10.5%-8.1% 8.6%-7.2%
\n
KBC Commercial Finance
\n
21 21 9.9%-9.9% 8.8%-8.7%
\n
Pension Insurance Company UBB
\n
56 56 9.3%-9.1% -
\n
Rest
\n
42 42 \u2013 \u2013
\n
Total
\n
1 346 913 \u2013 \u2013
\n
\n
\u2022 The period to which the cashflow budgets and projections relate is 10 years in most cases. This longer period is used to take
\n
account of current strong growth in the Central and Eastern European countries, where the growth rate is expected to develop
\n
towards a more moderate level in the longer term.
\n
\u2022 The growth rate used to extrapolate the cashflow projections after that period is equal to the expected long-term growth rate
\n
of the gross domestic product. This rate depends on the country and varied between 3.2% and 4.7% in 2022 (between 1.2% and
\n
1.7% in 2021).
\n
\u2022 The discount rates applied have been raised considerably since last year, but on a net basis they only have a limited impact
\n
on valuations given the higher cashflow budgets resulting from improved net interest income.
\n
\u2022 No sensitivity analysis was carried out for entities where the recoverable amount exceeded the carrying value to such a large
\n
extent that no reasonably possible change in the key assumptions would result in the recoverable amount being less than or
\n
equal to the carrying value. The table gives an indication for the other entities of the change in key assumptions that would
\n
lead to their recoverable amount equalling their carrying value.
\n
\n
Change in key assumptions
\n
1
\n
\n
Increase in
\n
discount rate
\n
2
\n
\n
Decrease in
\n
terminal growth
\n
rate
\n
Increase in
\n
targeted solvency
\n
ratio
\n
3
\n
\n
Decrease in
\n
annual net profit
\n
Increase in annual
\n
impairment
\n
charges
\n
\u010cSOB Stavebn\u00ed sporitelna
\n
2.5% 8.0% 6.4% 12% -
\n
United Bulgarian Bank and Raiffeisenbank Bulgaria
\n
(now KBC Bank Bulgaria)
\n
0.6% 4.2% 1.0% 6% 38%
\n
Pension Insurance Company UBB
\n
4.0%
\n
-
\n
-
\n
47%
\n
-
\n
1 Needless to say account should be taken of the fact that a change in these assumptions could affect other assumptions used to calculate the recoverable amount.
\n
2 Based on a parallel shift and absolute increase in the discount rate curve. Discount rates are in the 15.7%-15.3% bracket for \u010cSOB Stavebn\u00ed sporitelna, the 13.1%-12.8% bracket for United
\n
Bulgarian Bank and KBC Bank Bulgaria, and in the 13.3%-13.1% bracket for Pension Insurance Company UBB.
\n
3 Absolute increase in the tier-1 capital ratio.
\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag25": { "value": "\n

\n\n

\n\n

\n\n
Note 5.6: Technical provisions, insurance
\n
\n
\n
(in millions of EUR)
\n
Gross
\n
Reinsurance
\n
Gross
\n
Reinsurance
\n
Technical provisions
\n
31-12-2022 31-12-2022 31-12-2021 31-12-2021
\n
Total
\n
18 484 192 18 967 191
\n
Insurance contracts, Non
\n
-life 4 154 180 3 967 181
\n
Provision for unearned premiums
\n
885 5 814 4
\n
Provision for claims outstanding
\n
3 025 175 2 908 176
\n
Provision for profit sharing and rebates
\n
2 0 3 0
\n
Other technical provisions
\n
242 0 242 0
\n
Insurance contracts, Life
\n
8 348 12 8 511 10
\n
Provision for unearned premiums
\n
19 1 18 1
\n
Life insurance provision
\n
7 945 8 8 080 8
\n
Provision for claims outstanding
\n
165 4 197 1
\n
Provision for profit sharing and rebates
\n
37 0 28 0
\n
Other
\n
technical provisions 181 0 187 0
\n
Investment contracts with DPF, Life
\n
5 982 0 6 489 0
\n
Life insurance provision
\n
5 918 0 6 418 0
\n
Provision for claims outstanding
\n
11 0 16 0
\n
Provision for profit sharing, rebates and other
\n
53 0 55 0
\n
Movements table
\n
2022 2022 2021 2021
\n
Insurance contracts, Non
\n
-life
\n
Opening balance
\n
3 967 181 3 676 137
\n
Movements reflected in earned premiums (income statement)
\n
71 1 48 2
\n
Movements reflected in technical charges (income statement)
\n
115 -3 222 41
\n
\n
Payments regarding claims of previous financial years -412 -42 -328 -22
\n
\n
Provision for new claims 610 37 625 66
\n
\n
Surplus/shortfall of claims provision for previous financial years -113 28 -112 2
\n
\n
Cost of profit sharing -1 0 0 0
\n
\n
Other movements with an impact on results 31 -26 38 -5
\n
Movements reflected in balance sheet
\n
\n
2
\n
\n
1
\n
22 1
\n
Closing
\n
balance 4 154 180 3 967 181
\n
Insurance contracts, Life
\n
\n
Opening balance
\n
8 511 10 8 315 8
\n
Movements reflected in earned premiums (income statement)
\n
1 0 1 0
\n
Movements reflected in technical charges (income statement)
\n
-175 2 71 2
\n
\n
New business (net of risk premium and charges) 590 0 633 0
\n
\n
Payments (including funding of risk premium) -844 0 -776 0
\n
\n
Accretion of interest 159 0 166 2
\n
\n
Cost of profit sharing 20 0 13 0
\n
\n
Provision for new claims and change in provision for claims outstanding -38 3 -3 0
\n
\n
Fair value adjustments of unit-linked contracts (not unbundled) -70 0 32 0
\n
\n
Other movements with an impact on results 7 0 6 1
\n
Movements reflected in balance sheet
\n
11 0 124 0
\n
Closing balance
\n
8 348 12 8 511 10
\n
Investment contracts with DPF, Life
\n
\n
Opening balance
\n
6 489 0 6 727 0
\n
Movements reflected in
\n
technical charges (income statement) -244 0 -70 0
\n
\n
New business (net of risk premium and charges) 266 0 281 0
\n
\n
Payments (including funding of risk premium) -593 0 -461 0
\n
\n
Accretion of interest 85 0 92 0
\n
\n
Cost of profit sharing 8 0 6 0
\n
\n
Provision for new claims and change in provision for claims outstanding -9 0 12 0
\n
\n
Fair value adjustments of unit-linked contracts (not unbundled) 0 0 0 0
\n
\n
Other movements with an impact on results 0 0 0 0
\n
Movements reflected in balance sheet
\n
-263 0 -168 0
\n
Closing balance
\n
5 982 0 6 489 0
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n
\u2022 Technical provisions relate to insurance contracts and investment contracts with a discretionary participation feature (DPF).
\n
\u2022 Liabilities under investment contracts without DPF are measured at fair value. These liabilities concern mainly unit-linked
\n
contracts, which are recognised under financial liabilities (see Note 4.1).
\n\n
\u2022 Technical provisions for life insurance are calculated using various assumptions. Judgement is required when making these
\n
assumptions and the assumptions used are based on various internal and external sources of information. At present, IFRS 4
\n
refers extensively to local accounting principles for the recognition of technical provisions. These provisions are generally
\n
calculated using the technical assumptions that were applicable at the inception of the insurance contract and are subject to
\n
liability adequacy tests. The key assumptions are:
\n
- mortality and morbidity rates, which are based on standard mortality tables and adapted where necessary to reflect the
\n
group\u2019s own experience;
\n
- expense assumptions, which are based on current expense levels and expense loadings;
\n
- the discount rate, which is generally equal to the technical interest rate, remains constant throughout the life of the policy,
\n
and in some cases is adjusted to take account of legal requirements and internal policy decisions.
\n
- It should be noted that assumptions may vary depending on the type of life insurance (e.g., conventional versus modern), the
\n
generation of contracts (mainly the time when the contract is entered into and the applicable terms and conditions) and the
\n
country (since we have insurance companies in five of our core markets), making it impossible to quantify these assumptions
\n
for the entire group. This is illustrated by the following two points: (i) The discount rate follows the historical market rate and
\n
since it concerns a life portfolio, most of which has existed for a long time and also has a long maturity, there are considerable
\n
differences within the portfolio. In Belgium alone, discount rates range from 4.75% for the oldest rates to 0.5% and lower for
\n
certain modern products. (ii) In terms of mortality risk, unisex mortality tables are used in Belgium, based on the standard
\n
\u2018MK/FK\u2019 mortality tables for products sold from 2012 on (before 2012, separate mortality tables were used for men and
\n
women). Corrections may still be made to these standard tables, with due consideration being given to the segmentation
\n
criteria of the relevant policies. As a result, the range of mortality tables used is extensive.
\n
\u2022 Assumptions for the technical provisions for claims outstanding are based on past claims experience relating to claim numbers,
\n
claim payments and claims handling costs, and adjusted to take account of such factors as anticipated market experience,
\n
claims inflation and external factors such as court awards and legislation. The technical provision for claims outstanding is
\n
generally not discounted except when long-term obligations and/or annuities (industrial accidents, guaranteed income and
\n
hospitalisation insurance) are involved.
\n
\u2022 In 2022, a reassessment of the confidence level of technical provisions resulted in a release of technical reserves in the Czech
\n
Republic (31 million euros in Life and 10 million euros in Non-Life technical result). In 2021, there were no changes in assumptions
\n
leading to a significant change in the valuation of insurance assets and liabilities.
\n

\n\n
\u2022 The \u2018Movements reflected in the balance sheet\u2019 item in 2021 also includes the impact of the life insurance business acquired
\n
from NN in Bulgaria (see Note 6.6).
\n
\u2022 See also \u2018Climate-related and other ESG risks\u2019 in the \u2018How do we manage our risks?\u2019 section.
\n
\u2022 Information relating to IFRS 17 can be found in Note 6.10.
\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "kbc:DisclosureOfTechnicalProvisionsInsuranceExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag11": { "value": "\n

\n\n

\n\n

\n
Note 5.7: Provisions for risks and charges
\n
\n\n
Note 5.7.1: Overview
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Total provisions for risks and charges
\n
418 282
\n
Provisions for off
\n
-balance-sheet commitments and financial guarantees 114 130
\n
Provisions for other risks and charges
\n
305 152
\n
\n
Provisions for restructuring 92 87
\n
\n
Provisions for taxes and pending legal disputes 192 45
\n
\n
Other 20 20
\n

\n\n
\n
\n
Note 5.7.2: Details of off-balance-sheet commitments and financial guarantees
\n
\n
\n
(in millions of EUR)
\n
Subject to 12-
\n
month ECL
\n
Subject to
\n
lifetime ECL
\n
Subject to
\n
lifetime ECL \u2013
\n
non-performing
\n
Total
\n
31
\n
-12-2022
\n
Provisions on 1 January
\n
19 21 91 130
\n
Movements with an impact on results
\n
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) -6 10 6 10
\n
\n
Stage 2 (lifetime ECL) 0 -5 7 2
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL)
\n
0 6 -2 4
\n
\n
New financial assets 8 4 0 12
\n
\n
Changes in risk parameters during the reporting period -1 1 -45 -45
\n
\n
Changes in the model or methodology 0 0 0 0
\n
\n
Derecognised financial assets -1 -1 -1 -3
\n
\n
Other 0 -5 0 -5
\n
Movements without an impact on results
\n
\n
\n
Derecognised financial assets 0 0 0 0
\n
\n
Changes in the scope of consolidation 1 2 3 6
\n
\n
Other 0 1 1 2
\n
Provisions on 31 December
\n
19 35 60 114
\n
31
\n
-12-2021
\n
Provisions on 1 January
\n
26 17 99 143
\n
Movements with an impact on results
\n
\n
\n
Transfer of financial assets
\n
\n
Stage 1 (12-month ECL) -2 4 0 2
\n
\n
Stage 2 (lifetime ECL) 0 -4 2 -1
\n
\n
Stage 3 \u2018non-performing\u2019 (lifetime ECL)
\n
0 1 -1 0
\n
\n
New financial assets 6 1 1 8
\n
\n
Changes in risk parameters during the reporting period -9 2 -13 -20
\n
\n
Changes in the model or methodology 0 0 0 0
\n
\n
Derecognised financial assets -2 -1 0 -4
\n
\n
Other 0 0 0 0
\n
Movements without an impact on results
\n
\n
\n
Derecognised financial assets 0 0 0 0
\n
\n
Changes in the scope of consolidation 0 0 0 0
\n
\n
Other 1 1 2 4
\n
Provisions on 31 December
\n
19 21 91 130
\n
\n
\u2022 Also see Note 6.1.
\n

\n\n

\n\n

\n\n

\n\n

\n
Note 5.7.3: Details of provisions for other risks and charges
\n
\n
(in millions of EUR)
\n
Provisions for
\n
restructuring
\n
Provisions for taxes and
\n
pending legal disputes
\n
Other
\n
Total
\n
2022
\n
\n
\n
\n
\n
\n
Opening balance
\n
87 45 20 152
\n
Movements with an impact on results
\n
\n
\n
Amounts allocated 13 163 9 185
\n
\n
Amounts used -7 -11 -7 -26
\n
\n
Unused amounts reversed 0 -6 -2 -8
\n
Transfers out of/into liabilities associated
\n
with disposal groups
\n
0 0 0 0
\n
Changes in the scope of consolidation
\n
0 1 2 2
\n
Other
\n
0 1 -1 0
\n
Closing balance
\n
92 192 20 305
\n
2021
\n
\n
\n
\n
\n
\n
Opening balance
\n
7 32 27 66
\n
Movements with an impact on results
\n
\n
\n
Amounts allocated 84 28 9 120
\n
\n
Amounts used -4 -16 -15 -35
\n
\n
Unused amounts reversed -1 -1 -1 -3
\n
Transfers out of/into liabilities associated
\n
with disposal groups
\n
0 0 0 0
\n
Changes in the scope of consolidation
\n
0 2 0 2
\n
Other
\n
1 0 0 1
\n
Closing balance
\n
87 45 20 152
\n
\n
\u2022 The change in the restructuring provision in 2021 relates mainly to Ireland (see Note 6.6). For most of the other provisions
\n
recorded, no reasonable estimate can be made of when they will be used.
\n
\u2022 For details on \u2018Provisions for taxes and pending legal disputes\u2019 in 2022, see Note 3.6.
\n
\u2022 Other provisions included those set aside for miscellaneous risks.
\n\n

\n\n

\n
\u2022 Information relating to the main legal disputes pending: claims filed against KBC group companies are \u2013 in keeping with IFRS
\n
rules \u2013 treated on the basis of an assessment of whether they will lead to an outflow of resources (i.e. \u2018probable outflow\u2019,
\n
\u2018possible outflow\u2019 or \u2018remotely probable outflow\u2019). Provisions are set aside for \u2018probable outflow\u2019 cases (see \u2018Notes on the
\n
accounting policies\u2019). No provisions are constituted for \u2018possible outflow\u2019 cases, but information is provided in the financial
\n
statements if such cases might have a material impact on the balance sheet (i.e. when the claim could lead to a possible
\n
outflow of more than 50 million euros). All other claims (\u2018remotely probable outflow\u2019), of whatever magnitude, that represent a
\n
minor or no risk at all do not have to be reported. The most important cases are listed below. The information provided is limited
\n
in order not to prejudice the position of the group in ongoing litigation.
\n\n

\n\n
\u2022 Possible outflow: on 6 October 2011, Irving H. Picard, trustee (the \u2018trustee\u2019) for the liquidation of Bernard L. Madoff Investments
\n
Securities LLC (& Bernard L. Madoff), sued KBC Investments Ltd (a full subsidiary of KBC Bank) before the bankruptcy court in
\n
New York to claw back approximately 110 million US dollars\u2019 worth of transfers made to KBC entities by Madoff (through a feeder
\n
fund that KBC had lent to Harley International). This claim is just one of a whole set made by the trustee against several banks,
\n
hedge funds, feeder funds and investors (\u2018joint defense group\u2019). A lengthy litigation process was conducted on the basis of
\n
preliminary objections in respect of the applicability of the Bankruptcy Code\u2019s \u2018safe harbor\u2019 and \u2018good defenses\u2019 rules, as well
\n
as prudential limitations on U.S. courts\u2019 powers in international cases, to subsequent transferees (as is the case for KBC
\n
Investments Ltd), as detailed in previous disclosures. In June 2015, the Trustee stated his intention to amend the original claim
\n
which led to increase the amount claimed to USD 196 000 000. A court ruling dismissing the claim of the Trustee was issued on
\n
3 March 2017. The Trustee appealed and the appellate court (\u2018Court of Appeals for the Second Circuit\u2019) reversed the dismissal
\n
on 28 February 2019. A certiorari petition filed on 30 August 2019 was dismissed by the US Supreme Court on 2 June 2020. As a
\n
consequence the merits of the case are handled by the Bankruptcy Court. On 30 August 2021, in two other appeals by other
\n
defendants, the Court of Appeals for the Second Circuit reversed the burden of proof from an initial burden on the Trustee to
\n
adequately demonstrate the defendant\u2019s lack of good faith to a burden on the defendant to prove its good faith. On 1 August
\n
2022, the Bankruptcy Court issued a decision determining the structure of the proceedings. In this context, on 5 August 2022
\n
the Trustee amended his complaint by reducing his claim to a principal of USD 86 million. On 18 November 2022, KBC submitted
\n
a motion to dismiss the amended complaint for lack of specific jurisdiction of the US court. The final reply supporting its motion
\n
must be submitted on or before 10 March 2023. A hearing will then be held in April 2023. Despite the increased burden of proof,
\n
KBC still believes it has good and credible defenses, both procedurally and on the merits, including demonstrating its good
\n
faith. The procedure may still take several years.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 5.8: Other liabilities
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
Total
\n
2 568 2 520
\n
Retirement benefit obligations or other employee benefits
\n
93 184
\n
Deposits from reinsurers
\n
115 98
\n
Accrued charges (other than from interest expenses on financial liabilities)
\n
360 364
\n
Other
\n
2 000 1 874
\n
\n
\u2022 For more information on retirement benefit obligations, see Note 5.9 (note that the amount recognised under \u2018Retirement
\n
benefit obligations or other employee benefits\u2019 in Note 5.8 relates to a broader scope than the amounts presented in Note 5.9).
\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 5.9: Retirement benefit obligations
\n
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
DEFINED BENEFIT PLANS
\n
\n
Reconciliation of defined benefit obligations
\n
\n
\n
Defined benefit obligations at the beginning of the period
\n
3 335 3 387
\n
Current service cost
\n
129 134
\n
Interest cost
\n
26 8
\n
Actuarial gain or loss resulting from changes in demographic assumptions
\n
-10 -3
\n
Actuarial gain or loss resulting from changes in financial assumptions
\n
-814 -31
\n
Experience adjustments
\n
58 -16
\n
Past service cost
\n
0 -11
\n
Benefits paid
\n
-129 -120
\n
Other
\n
-14 -14
\n
Defined benefit obligations at the end of the period
\n
2 580 3 335
\n
Reconciliation of the fair value of plan assets
\n
\n
Fair value of plan assets at the beginning of the period
\n
3 244 2 849
\n
Actual return on
\n
plan assets -499 363
\n
Expected interest income on plan assets, calculated based on market yields on high quality corporate bonds 25 7
\n
Employer contributions
\n
94 90
\n
Plan participant contributions
\n
19 18
\n
Benefits paid
\n
-129 -120
\n
Other
\n
16 44
\n
Fair value of plan assets at the end of the period
\n
2 746 3 244
\n
\n
of which financial instruments issued by the group 0 24
\n
\n
of which property occupied by KBC 2 4
\n
Funded status
\n
\n
Plan assets in excess of defined benefit
\n
obligations 166 -90
\n
Reimbursement rights
\n
0 0
\n
Asset ceiling limit
\n
-12 -37
\n
Unfunded accrued/prepaid pension cost
\n
153 -128
\n
Movement in net liabilities or net assets
\n
\n
Unfunded accrued/prepaid pension cost at the beginning of the period
\n
-128 -537
\n
Amounts recognised in the income statement
\n
-112 -107
\n
Amounts recognised in other comprehensive income
\n
299 387
\n
Employer contributions
\n
94 90
\n
Other
\n
-1 40
\n
Unfunded accrued/prepaid pension cost at the end of the period
\n
153 -128
\n
Amounts recognised in the income statement
\n
-112 -107
\n
Current service cost
\n
-129 -134
\n
Interest cost
\n
-1 -2
\n
Plan participant contributions
\n
19 18
\n
Other
\n
0 11
\n
Changes to the amounts recognised in other comprehensive income
\n
299 387
\n
Actuarial gain or loss resulting from changes in demographic assumptions
\n
10 3
\n
Actuarial gain or loss resulting from changes in financial assumptions
\n
814 31
\n
Actuarial result on plan assets
\n
-524 356
\n
Experience adjustments
\n
-58 16
\n
Adjustments to asset ceiling limits
\n
25 -37
\n
Other
\n
31 19
\n
DEFINED CONTRIBUTION PLANS
\n
\n
\n
\n
\n
Expenses for defined contribution plans
\n
-21 -20
\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n
\u2022 Retirement benefits that are actively accrued for the Belgium-based staff of KBC Bank, KBC Insurance and most of their Belgian
\n
subsidiaries are accrued exclusively through the KBC pension fund. Up until year-end 2018, employer-funded retirement
\n
benefits had accrued primarily through a defined benefit plan, where the benefit is calculated based on the final salary of
\n
employees before they retire, the number of years they had been in the plan and a formula that applies a progressive rate
\n
scale. A defined contribution plan was introduced on 1 January 2014 for all new employees and any employees who had chosen
\n
to switch to it. In this plan, a contribution is deposited based on the current monthly salary and the amounts deposited are
\n
paid out together with the (guaranteed) return on retirement. Both types of pension plan are managed by the KBC pension
\n
fund, which uses the services of KBC Asset Management for the investment strategy. In addition, there are a number of smaller,
\n
closed group insurance schemes from the past that will continue to be funded and are managed by the KBC pension fund.
\n
On 1 January 2019, a new defined contribution plan was introduced to replace the one introduced in 2014. All employees were
\n
again given the one-time option of switching from the defined benefit plan to the new defined contribution plan. At year-end
\n
2022, 55% of employees were active participants in the defined benefit plan and 45% in the defined contribution plan (the
\n
corresponding figures at year-end 2021 were 58% and 42%).
\n
\u2022 From 2021, the expected age of retirement of each employee and the expected wage inflation based on an inflation curve
\n
derived from the market value of inflation-linked bonds are taken into account in the calculation of the gross defined benefit
\n
obligations.
\n

\n\n

\n\n
\u2022 Since 1 January 2020, the insurance risks related to death and disability are fully reinsured through an external reinsurance
\n
programme.
\n
\u2022 As regards the management of the assets, the share of responsible investments came to around 67% at the end of December.
\n
The aim is for the KBC Pension Fund investment portfolio to be carbon-neutral by 2050. In 2021 and 2022, the first measurements
\n
were carried out to determine the greenhouse gas intensity (Scopes 1 and 2) of listed bonds and shares. The exercise will be
\n
repeated annually to allow for a quantitative follow-up of the target.
\n
\u2022 As part of the sale transaction in Ireland, the outstanding defined benefit plans were transferred from Ireland to KBC Bank
\n
Belgium. Net assets under this plan amounted to 24 million euros at year-end 2022.
\n
\u2022 As a result of the sharp increase in interest rates, the accrued benefits often exceed the current value of the liability of the
\n
guaranteed minimum under the defined contribution plan, and therefore sensitivity to interest rate changes is limited.
\n
\u2022 A new discount curve, supplied by an approved external supplier, was used for a model adjustment at the end of the year. If
\n
the same method had been used to determine the curve at the start of the year, the pension plan liability would have been 76
\n
million euros lower.
\n
\u2022 There are no significant defined benefit plans in the group\u2019s other core countries.
\n
\n
\n
\n
Additional information on retirement benefit obligations (in millions of EUR)
\n
2022 2021 2020 2019 2018
\n
Changes in main headings in the main table
\n
\n
Defined benefit obligations
\n
2 580 3 335 3 387 3 212 2 945
\n
Fair value of plan assets
\n
2 746 3 244 2 849 2 791 2 369
\n
Unfunded accrued/prepaid pension cost
\n
153 -128 -537 -457 -598
\n
Impact of changes in the assumptions used in the actuarial calculation of plan
\n
assets and retirement benefit obligations
\n
\n
Impact on plan assets
\n
0 0 0 0 0
\n
Impact on retirement benefit obligations*
\n
-825 -35 253 250 -35
\n
* Arising from defined benefit plans. A plus sign indicates an increase in the (absolute value of) the obligation, a minus sign a decrease.
\n
\n
\n
\n
\n\n

\n\n
Additional information on retirement benefit obligations: DEFINED BENEFIT PLANS, KBC pension fund
\n
\n
Composition (31
\n
-12-2022)
\n
Equity instruments 37%
\n
Bonds 46%
\n
Real estate 14%
\n
Cash 3%
\n
of which illiquid assets 18%
\n
Composition (31
\n
-12-2021)
\n
Equity instruments 38%
\n
Bonds 47%
\n
Real estate 13%
\n
Cash 2%
\n
of which illiquid assets 11%
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag12": { "value": "\n
Note 5.7.1: Overview
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Total provisions for risks and charges
\n
418 282
\n
Provisions for off
\n
-balance-sheet commitments and financial guarantees 114 130
\n
Provisions for other risks and charges
\n
305 152
\n
\n
Provisions for restructuring 92 87
\n
\n
Provisions for taxes and pending legal disputes 192 45
\n
\n
Other 20 20
\n

\n\n

\n
Note 5.7.3: Details of provisions for other risks and charges
\n
\n
(in millions of EUR)
\n
Provisions for
\n
restructuring
\n
Provisions for taxes and
\n
pending legal disputes
\n
Other
\n
Total
\n
2022
\n
\n
\n
\n
\n
\n
Opening balance
\n
87 45 20 152
\n
Movements with an impact on results
\n
\n
\n
Amounts allocated 13 163 9 185
\n
\n
Amounts used -7 -11 -7 -26
\n
\n
Unused amounts reversed 0 -6 -2 -8
\n
Transfers out of/into liabilities associated
\n
with disposal groups
\n
0 0 0 0
\n
Changes in the scope of consolidation
\n
0 1 2 2
\n
Other
\n
0 1 -1 0
\n
Closing balance
\n
92 192 20 305
\n
2021
\n
\n
\n
\n
\n
\n
Opening balance
\n
7 32 27 66
\n
Movements with an impact on results
\n
\n
\n
Amounts allocated 84 28 9 120
\n
\n
Amounts used -4 -16 -15 -35
\n
\n
Unused amounts reversed -1 -1 -1 -3
\n
Transfers out of/into liabilities associated
\n
with disposal groups
\n
0 0 0 0
\n
Changes in the scope of consolidation
\n
0 2 0 2
\n
Other
\n
1 0 0 1
\n
Closing balance
\n
87 45 20 152
\n
\n
\u2022 The change in the restructuring provision in 2021 relates mainly to Ireland (see Note 6.6). For most of the other provisions
\n
recorded, no reasonable estimate can be made of when they will be used.
\n
\u2022 For details on \u2018Provisions for taxes and pending legal disputes\u2019 in 2022, see Note 3.6.
\n
\u2022 Other provisions included those set aside for miscellaneous risks.
\n\n

\n\n

\n
\u2022 Information relating to the main legal disputes pending: claims filed against KBC group companies are \u2013 in keeping with IFRS
\n
rules \u2013 treated on the basis of an assessment of whether they will lead to an outflow of resources (i.e. \u2018probable outflow\u2019,
\n
\u2018possible outflow\u2019 or \u2018remotely probable outflow\u2019). Provisions are set aside for \u2018probable outflow\u2019 cases (see \u2018Notes on the
\n
accounting policies\u2019). No provisions are constituted for \u2018possible outflow\u2019 cases, but information is provided in the financial
\n
statements if such cases might have a material impact on the balance sheet (i.e. when the claim could lead to a possible
\n
outflow of more than 50 million euros). All other claims (\u2018remotely probable outflow\u2019), of whatever magnitude, that represent a
\n
minor or no risk at all do not have to be reported. The most important cases are listed below. The information provided is limited
\n
in order not to prejudice the position of the group in ongoing litigation.
\n\n

\n\n
\u2022 Possible outflow: on 6 October 2011, Irving H. Picard, trustee (the \u2018trustee\u2019) for the liquidation of Bernard L. Madoff Investments
\n
Securities LLC (& Bernard L. Madoff), sued KBC Investments Ltd (a full subsidiary of KBC Bank) before the bankruptcy court in
\n
New York to claw back approximately 110 million US dollars\u2019 worth of transfers made to KBC entities by Madoff (through a feeder
\n
fund that KBC had lent to Harley International). This claim is just one of a whole set made by the trustee against several banks,
\n
hedge funds, feeder funds and investors (\u2018joint defense group\u2019). A lengthy litigation process was conducted on the basis of
\n
preliminary objections in respect of the applicability of the Bankruptcy Code\u2019s \u2018safe harbor\u2019 and \u2018good defenses\u2019 rules, as well
\n
as prudential limitations on U.S. courts\u2019 powers in international cases, to subsequent transferees (as is the case for KBC
\n
Investments Ltd), as detailed in previous disclosures. In June 2015, the Trustee stated his intention to amend the original claim
\n
which led to increase the amount claimed to USD 196 000 000. A court ruling dismissing the claim of the Trustee was issued on
\n
3 March 2017. The Trustee appealed and the appellate court (\u2018Court of Appeals for the Second Circuit\u2019) reversed the dismissal
\n
on 28 February 2019. A certiorari petition filed on 30 August 2019 was dismissed by the US Supreme Court on 2 June 2020. As a
\n
consequence the merits of the case are handled by the Bankruptcy Court. On 30 August 2021, in two other appeals by other
\n
defendants, the Court of Appeals for the Second Circuit reversed the burden of proof from an initial burden on the Trustee to
\n
adequately demonstrate the defendant\u2019s lack of good faith to a burden on the defendant to prove its good faith. On 1 August
\n
2022, the Bankruptcy Court issued a decision determining the structure of the proceedings. In this context, on 5 August 2022
\n
the Trustee amended his complaint by reducing his claim to a principal of USD 86 million. On 18 November 2022, KBC submitted
\n
a motion to dismiss the amended complaint for lack of specific jurisdiction of the US court. The final reply supporting its motion
\n
must be submitted on or before 10 March 2023. A hearing will then be held in April 2023. Despite the increased burden of proof,
\n
KBC still believes it has good and credible defenses, both procedurally and on the merits, including demonstrating its good
\n
faith. The procedure may still take several years.
\n

\n\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherProvisionsContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag13": { "value": "\n

\n\n
\u2022 Possible outflow: on 6 October 2011, Irving H. Picard, trustee (the \u2018trustee\u2019) for the liquidation of Bernard L. Madoff Investments
\n
Securities LLC (& Bernard L. Madoff), sued KBC Investments Ltd (a full subsidiary of KBC Bank) before the bankruptcy court in
\n
New York to claw back approximately 110 million US dollars\u2019 worth of transfers made to KBC entities by Madoff (through a feeder
\n
fund that KBC had lent to Harley International). This claim is just one of a whole set made by the trustee against several banks,
\n
hedge funds, feeder funds and investors (\u2018joint defense group\u2019). A lengthy litigation process was conducted on the basis of
\n
preliminary objections in respect of the applicability of the Bankruptcy Code\u2019s \u2018safe harbor\u2019 and \u2018good defenses\u2019 rules, as well
\n
as prudential limitations on U.S. courts\u2019 powers in international cases, to subsequent transferees (as is the case for KBC
\n
Investments Ltd), as detailed in previous disclosures. In June 2015, the Trustee stated his intention to amend the original claim
\n
which led to increase the amount claimed to USD 196 000 000. A court ruling dismissing the claim of the Trustee was issued on
\n
3 March 2017. The Trustee appealed and the appellate court (\u2018Court of Appeals for the Second Circuit\u2019) reversed the dismissal
\n
on 28 February 2019. A certiorari petition filed on 30 August 2019 was dismissed by the US Supreme Court on 2 June 2020. As a
\n
consequence the merits of the case are handled by the Bankruptcy Court. On 30 August 2021, in two other appeals by other
\n
defendants, the Court of Appeals for the Second Circuit reversed the burden of proof from an initial burden on the Trustee to
\n
adequately demonstrate the defendant\u2019s lack of good faith to a burden on the defendant to prove its good faith. On 1 August
\n
2022, the Bankruptcy Court issued a decision determining the structure of the proceedings. In this context, on 5 August 2022
\n
the Trustee amended his complaint by reducing his claim to a principal of USD 86 million. On 18 November 2022, KBC submitted
\n
a motion to dismiss the amended complaint for lack of specific jurisdiction of the US court. The final reply supporting its motion
\n
must be submitted on or before 10 March 2023. A hearing will then be held in April 2023. Despite the increased burden of proof,
\n
KBC still believes it has good and credible defenses, both procedurally and on the merits, including demonstrating its good
\n
faith. The procedure may still take several years.
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n
Note 6.1: Off-balance-sheet commitments and financial guarantees given and received
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
\n
Nominal
\n
amount
\n
Provision Net exposure
\n
Nominal
\n
amount
\n
Provision Net exposure
\n
Undrawn portion of credit lines
\n
granted
\n
Stage 1
\n
39 134 17 39 117 38 414 17 38 397
\n
Stage 2
\n
8 077 26 8 051 4 770 16 4 754
\n
Stage 3
\n
51 13 38 42 4 38
\n
Total
\n
47 262 56 47 206 43 226 37 43 189
\n
\n
of which irrevocable credit lines 26 618 27 26 591 25 802 14 25 788
\n
Financial guarantees given
\n
\n
Stage 1
\n
7 600 2 7 598 8 675 2 8 673
\n
Stage 2
\n
3 139 8 3 131 1 678 5 1 673
\n
Stage 3
\n
119 44 76 153 86 67
\n
Total
\n
10 858 54 10 805 10 506 93 10 413
\n
Other commitments given
\n
\n
Total
\n
1 440 4 1 436 756 1 755
\n
Total
\n
\n
Off-balance-sheet commitments and financial
\n
guarantees
\n
59 561 114 59 447 54 488 130 54 357
\n
\n
\u2022 Fair value of financial guarantees: based on the available market value.
\n\n
\u2022 The carrying value of financial assets pledged by KBC as collateral came to 59 753 million euros for liabilities and 5 291 million
\n
euros for contingent liabilities (66 386 million euros and 3 961 million euros, respectively, in 2021). At year-end 2022, some 16.6
\n
billion euros\u2019 worth of residential mortgage loans and cash collections were entered in the cover asset register for the special
\n
estate of the covered bond programme (16.6 billion euros at year-end 2021).
\n

\n\n
\u2022 There is an obligation to return collateral received (which may be sold or repledged in the absence of default by the owner; see
\n
table) in its original form, or possibly in cash. Collateral can be called in if loans are terminated for various reasons such as
\n
default or bankruptcy. In the event of bankruptcy, the collateral will be sold by the receiver. In other cases, the bank will organise
\n
the foreclosure itself or take possession of the collateral. Collateral received that relates to OTC derivatives is primarily cash,
\n
which is recognised by KBC on the balance sheet (and is not included in the table). More details are provided in Note 4.3.
\n
\u2022 Collateral acquired through foreclosure came to 4 million euros in 2022 (4 million euros in 2021).
\n
\u2022 The increase in \u2018Stage 2\u2019 relates to the collective stage transfer linked to \u2018Stage 1\u2019 loans (see also Note 1.4) that have indirect
\n
exposure to Russia, Ukraine and Belarus.
\n
\n
\n
\n
Collateral received (which may be sold or repledged
\n
in the absence of default by the owner) (in millions of EUR)
\n
Fair value of collateral received
\n
Fair value of collateral sold or
\n
repledged
\n
\n
31-12-2022 31-12-2021 31-12-2022 31-12-2021
\n
Financial assets
\n
30 126
\n
39 863
\n
7 792
\n
11 862
\n
Equity instruments
\n
16 11 2 1
\n
Debt securities
\n
29 876 39 633 7 790 11 860
\n
Loans and advances
\n
234 219 0 0
\n
Cash
\n
0 0 0 0
\n
Other
\n
0
\n
0
\n
0
\n

\n\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag14": { "value": "\n
\u2022 Possible outflow: on 6 October 2011, Irving H. Picard, trustee (the \u2018trustee\u2019) for the liquidation of Bernard L. Madoff Investments
\n
Securities LLC (& Bernard L. Madoff), sued KBC Investments Ltd (a full subsidiary of KBC Bank) before the bankruptcy court in
\n
New York to claw back approximately 110 million US dollars\u2019 worth of transfers made to KBC entities by Madoff (through a feeder
\n
fund that KBC had lent to Harley International). This claim is just one of a whole set made by the trustee against several banks,
\n
hedge funds, feeder funds and investors (\u2018joint defense group\u2019). A lengthy litigation process was conducted on the basis of
\n
preliminary objections in respect of the applicability of the Bankruptcy Code\u2019s \u2018safe harbor\u2019 and \u2018good defenses\u2019 rules, as well
\n
as prudential limitations on U.S. courts\u2019 powers in international cases, to subsequent transferees (as is the case for KBC
\n
Investments Ltd), as detailed in previous disclosures. In June 2015, the Trustee stated his intention to amend the original claim
\n
which led to increase the amount claimed to USD 196 000 000. A court ruling dismissing the claim of the Trustee was issued on
\n
3 March 2017. The Trustee appealed and the appellate court (\u2018Court of Appeals for the Second Circuit\u2019) reversed the dismissal
\n
on 28 February 2019. A certiorari petition filed on 30 August 2019 was dismissed by the US Supreme Court on 2 June 2020. As a
\n
consequence the merits of the case are handled by the Bankruptcy Court. On 30 August 2021, in two other appeals by other
\n
defendants, the Court of Appeals for the Second Circuit reversed the burden of proof from an initial burden on the Trustee to
\n
adequately demonstrate the defendant\u2019s lack of good faith to a burden on the defendant to prove its good faith. On 1 August
\n
2022, the Bankruptcy Court issued a decision determining the structure of the proceedings. In this context, on 5 August 2022
\n
the Trustee amended his complaint by reducing his claim to a principal of USD 86 million. On 18 November 2022, KBC submitted
\n
a motion to dismiss the amended complaint for lack of specific jurisdiction of the US court. The final reply supporting its motion
\n
must be submitted on or before 10 March 2023. A hearing will then be held in April 2023. Despite the increased burden of proof,
\n
KBC still believes it has good and credible defenses, both procedurally and on the merits, including demonstrating its good
\n
faith. The procedure may still take several years.
\n

\n\n
\u2022 The carrying value of financial assets pledged by KBC as collateral came to 59 753 million euros for liabilities and 5 291 million
\n
euros for contingent liabilities (66 386 million euros and 3 961 million euros, respectively, in 2021). At year-end 2022, some 16.6
\n
billion euros\u2019 worth of residential mortgage loans and cash collections were entered in the cover asset register for the special
\n
estate of the covered bond programme (16.6 billion euros at year-end 2021).
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag15": { "value": "\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 5.8: Other liabilities
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
Total
\n
2 568 2 520
\n
Retirement benefit obligations or other employee benefits
\n
93 184
\n
Deposits from reinsurers
\n
115 98
\n
Accrued charges (other than from interest expenses on financial liabilities)
\n
360 364
\n
Other
\n
2 000 1 874
\n
\n
\u2022 For more information on retirement benefit obligations, see Note 5.9 (note that the amount recognised under \u2018Retirement
\n
benefit obligations or other employee benefits\u2019 in Note 5.8 relates to a broader scope than the amounts presented in Note 5.9).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag16": { "value": "\n

\n\n

\n\n

\n\n

\n\n
Note 5.8: Other liabilities
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
Total
\n
2 568 2 520
\n
Retirement benefit obligations or other employee benefits
\n
93 184
\n
Deposits from reinsurers
\n
115 98
\n
Accrued charges (other than from interest expenses on financial liabilities)
\n
360 364
\n
Other
\n
2 000 1 874
\n
\n
\u2022 For more information on retirement benefit obligations, see Note 5.9 (note that the amount recognised under \u2018Retirement
\n
benefit obligations or other employee benefits\u2019 in Note 5.8 relates to a broader scope than the amounts presented in Note 5.9).
\n

\n\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfAccruedExpensesAndOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag17": { "value": "\n

\n\n

\n\n

\n\n
Note 5.8: Other liabilities
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
Total
\n
2 568 2 520
\n
Retirement benefit obligations or other employee benefits
\n
93 184
\n
Deposits from reinsurers
\n
115 98
\n
Accrued charges (other than from interest expenses on financial liabilities)
\n
360 364
\n
Other
\n
2 000 1 874
\n
\n
\u2022 For more information on retirement benefit obligations, see Note 5.9 (note that the amount recognised under \u2018Retirement
\n
benefit obligations or other employee benefits\u2019 in Note 5.8 relates to a broader scope than the amounts presented in Note 5.9).
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Note 5.9: Retirement benefit obligations
\n
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
DEFINED BENEFIT PLANS
\n
\n
Reconciliation of defined benefit obligations
\n
\n
\n
Defined benefit obligations at the beginning of the period
\n
3 335 3 387
\n
Current service cost
\n
129 134
\n
Interest cost
\n
26 8
\n
Actuarial gain or loss resulting from changes in demographic assumptions
\n
-10 -3
\n
Actuarial gain or loss resulting from changes in financial assumptions
\n
-814 -31
\n
Experience adjustments
\n
58 -16
\n
Past service cost
\n
0 -11
\n
Benefits paid
\n
-129 -120
\n
Other
\n
-14 -14
\n
Defined benefit obligations at the end of the period
\n
2 580 3 335
\n
Reconciliation of the fair value of plan assets
\n
\n
Fair value of plan assets at the beginning of the period
\n
3 244 2 849
\n
Actual return on
\n
plan assets -499 363
\n
Expected interest income on plan assets, calculated based on market yields on high quality corporate bonds 25 7
\n
Employer contributions
\n
94 90
\n
Plan participant contributions
\n
19 18
\n
Benefits paid
\n
-129 -120
\n
Other
\n
16 44
\n
Fair value of plan assets at the end of the period
\n
2 746 3 244
\n
\n
of which financial instruments issued by the group 0 24
\n
\n
of which property occupied by KBC 2 4
\n
Funded status
\n
\n
Plan assets in excess of defined benefit
\n
obligations 166 -90
\n
Reimbursement rights
\n
0 0
\n
Asset ceiling limit
\n
-12 -37
\n
Unfunded accrued/prepaid pension cost
\n
153 -128
\n
Movement in net liabilities or net assets
\n
\n
Unfunded accrued/prepaid pension cost at the beginning of the period
\n
-128 -537
\n
Amounts recognised in the income statement
\n
-112 -107
\n
Amounts recognised in other comprehensive income
\n
299 387
\n
Employer contributions
\n
94 90
\n
Other
\n
-1 40
\n
Unfunded accrued/prepaid pension cost at the end of the period
\n
153 -128
\n
Amounts recognised in the income statement
\n
-112 -107
\n
Current service cost
\n
-129 -134
\n
Interest cost
\n
-1 -2
\n
Plan participant contributions
\n
19 18
\n
Other
\n
0 11
\n
Changes to the amounts recognised in other comprehensive income
\n
299 387
\n
Actuarial gain or loss resulting from changes in demographic assumptions
\n
10 3
\n
Actuarial gain or loss resulting from changes in financial assumptions
\n
814 31
\n
Actuarial result on plan assets
\n
-524 356
\n
Experience adjustments
\n
-58 16
\n
Adjustments to asset ceiling limits
\n
25 -37
\n
Other
\n
31 19
\n
DEFINED CONTRIBUTION PLANS
\n
\n
\n
\n
\n
Expenses for defined contribution plans
\n
-21 -20
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n

\n\n

\n\n
\u2022 Retirement benefits that are actively accrued for the Belgium-based staff of KBC Bank, KBC Insurance and most of their Belgian
\n
subsidiaries are accrued exclusively through the KBC pension fund. Up until year-end 2018, employer-funded retirement
\n
benefits had accrued primarily through a defined benefit plan, where the benefit is calculated based on the final salary of
\n
employees before they retire, the number of years they had been in the plan and a formula that applies a progressive rate
\n
scale. A defined contribution plan was introduced on 1 January 2014 for all new employees and any employees who had chosen
\n
to switch to it. In this plan, a contribution is deposited based on the current monthly salary and the amounts deposited are
\n
paid out together with the (guaranteed) return on retirement. Both types of pension plan are managed by the KBC pension
\n
fund, which uses the services of KBC Asset Management for the investment strategy. In addition, there are a number of smaller,
\n
closed group insurance schemes from the past that will continue to be funded and are managed by the KBC pension fund.
\n
On 1 January 2019, a new defined contribution plan was introduced to replace the one introduced in 2014. All employees were
\n
again given the one-time option of switching from the defined benefit plan to the new defined contribution plan. At year-end
\n
2022, 55% of employees were active participants in the defined benefit plan and 45% in the defined contribution plan (the
\n
corresponding figures at year-end 2021 were 58% and 42%).
\n
\u2022 From 2021, the expected age of retirement of each employee and the expected wage inflation based on an inflation curve
\n
derived from the market value of inflation-linked bonds are taken into account in the calculation of the gross defined benefit
\n
obligations.
\n

\n\n

\n\n
\u2022 Since 1 January 2020, the insurance risks related to death and disability are fully reinsured through an external reinsurance
\n
programme.
\n
\u2022 As regards the management of the assets, the share of responsible investments came to around 67% at the end of December.
\n
The aim is for the KBC Pension Fund investment portfolio to be carbon-neutral by 2050. In 2021 and 2022, the first measurements
\n
were carried out to determine the greenhouse gas intensity (Scopes 1 and 2) of listed bonds and shares. The exercise will be
\n
repeated annually to allow for a quantitative follow-up of the target.
\n
\u2022 As part of the sale transaction in Ireland, the outstanding defined benefit plans were transferred from Ireland to KBC Bank
\n
Belgium. Net assets under this plan amounted to 24 million euros at year-end 2022.
\n
\u2022 As a result of the sharp increase in interest rates, the accrued benefits often exceed the current value of the liability of the
\n
guaranteed minimum under the defined contribution plan, and therefore sensitivity to interest rate changes is limited.
\n
\u2022 A new discount curve, supplied by an approved external supplier, was used for a model adjustment at the end of the year. If
\n
the same method had been used to determine the curve at the start of the year, the pension plan liability would have been 76
\n
million euros lower.
\n
\u2022 There are no significant defined benefit plans in the group\u2019s other core countries.
\n
\n
\n
\n
Additional information on retirement benefit obligations (in millions of EUR)
\n
2022 2021 2020 2019 2018
\n
Changes in main headings in the main table
\n
\n
Defined benefit obligations
\n
2 580 3 335 3 387 3 212 2 945
\n
Fair value of plan assets
\n
2 746 3 244 2 849 2 791 2 369
\n
Unfunded accrued/prepaid pension cost
\n
153 -128 -537 -457 -598
\n
Impact of changes in the assumptions used in the actuarial calculation of plan
\n
assets and retirement benefit obligations
\n
\n
Impact on plan assets
\n
0 0 0 0 0
\n
Impact on retirement benefit obligations*
\n
-825 -35 253 250 -35
\n
* Arising from defined benefit plans. A plus sign indicates an increase in the (absolute value of) the obligation, a minus sign a decrease.
\n
\n
\n
\n
\n\n

\n\n
Additional information on retirement benefit obligations: DEFINED BENEFIT PLANS, KBC pension fund
\n
\n
Composition (31
\n
-12-2022)
\n
Equity instruments 37%
\n
Bonds 46%
\n
Real estate 14%
\n
Cash 3%
\n
of which illiquid assets 18%
\n
Composition (31
\n
-12-2021)
\n
Equity instruments 38%
\n
Bonds 47%
\n
Real estate 13%
\n
Cash 2%
\n
of which illiquid assets 11%
\n

\n\n

\n\n

\n\n

\n\n

\n\n

\n\n
Contributions expected in 2023 (in millions of EUR)
\n
47
\n
Regulatory framework
\n
Pension plans are registered in collective labour agreements and incorporated into a set of regulations.
\n
Annual reporting of funding levels to supervisory authorities (FSMA/NBB). Any underfunding must be
\n
reported immediately to the supervisory authorities.
\n
\n
Risks for KBC
\n
Investment risk and inflation risk.
\n
\n
ALM policy
\n
The hedging portfolio hedges against interest rate risk and inflation risk using interest rate swaps.
\n
The return portfolio aims to generate an extra return.
\n
\n
Plan amendments
\n
A new version of the employer-funded defined contribution plan was introduced on 1 January 2019. All
\n
employees who had been signed up to the defined benefit plan were given the one-time option of
\n
switching to this new plan.
\n
\n
Curtailments and settlements
\n
\n
Not applicable.
\n
\n
Discounting method
\n
\n
Based on quotes for various time buckets of AA-rated corporate bonds. The derived bond yields are
\n
converted into a zero coupon curve.
\n
\n
Key actuarial assumptions
\n
\n
\n
Average discount rate 3.98%
\n
\n
Expected rate of salary increase 3.22%
\n
\n
Expected inflation rate 2.89%
\n
\n
Expected rate of increase in pensions \u2013
\n
\n
Weighted average duration of the obligations 10 years
\n
Impact of changes in the assumptions used in the
\n
actuarial calculation of the retirement benefit
\n
obligations
\n
\n
Increase in the retirement benefit obligations
\n
on 31-12-2022 consequent on:
\n
\n
\n
a decrease of 1% in the discount rate 11.73%
\n
\n
an increase of 1% in the expected inflation rate 9.22%
\n
an increase that is 1% higher than the expected real
\n
increase in salary
\n
12.21%
\n
\n
an increase of one year in life expectancy \u2013
\n
The impact of the following assumptions has not been
\n
calculated:
\n
\n
Decreasing mortality rates. Pension benefits are paid out
\n
in capital, so longevity risk is immaterial.
\n
Staff turnover rates: sensitivity to changes remains limited.
\n
\n
Additional information on retirement benefit obligations: DEFINED CONTRIBUTION PLANS, KBC pension fund
\n
\n
Contributions expected in 2023 (in
\n
millions of EUR) 42
\n
Regulatory framework
\n
Pursuant to the Belgian Supplementary Pensions Act, the employer must guarantee a minimum return of
\n
1.75% on employee and employer contributions.
\n
Risks for KBC
\n
Investment risk.
\n
Valuation
\n
Retirement benefit obligations are measured on the basis of the accrued benefits on the reporting date,
\n
making a projection of these benefits (at the rate of interest guaranteed by law) until the expected age
\n
of retirement, and discounting the resulting benefits.
\n
KBC offers two types of defined contribution plan: one that is financed through employee contributions
\n
and one through employer contributions. The valuation of retirement benefit obligations for the
\n
employer-funded defined contribution plan takes account of future contributions. However, it is not
\n
taken into account for the valuation of the employee-funded defined contribution plan, because the
\n
employer\u2019s obligation for that plan only relates to the guaranteed minimum interest rate.
\n
Discounting method
\n
Based on quotes for various time buckets of AA-rated corporate bonds. The derived bond yields are
\n
converted into a zero coupon curve.
\n
\n
Key actuarial assumptions
\n
\n
\n
Average discount rate 4.13%
\n
\n
Weighted average duration of the obligations 17 years
\n
Impact of changes in the assumptions used in the
\n
actuarial calculation of the retirement benefit
\n
obligations
\n
\n
Increase in the retirement benefit obligations
\n
on 31-12-2022 consequent on:
\n
\n
\n
a decrease of 1% in the discount rate 1.00%
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag18": { "value": "\n

\n\n
Note 5.8: Other liabilities
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
Total
\n
2 568 2 520
\n
Retirement benefit obligations or other employee benefits
\n
93 184
\n
Deposits from reinsurers
\n
115 98
\n
Accrued charges (other than from interest expenses on financial liabilities)
\n
360 364
\n
Other
\n
2 000 1 874
\n
\n
\u2022 For more information on retirement benefit obligations, see Note 5.9 (note that the amount recognised under \u2018Retirement
\n
benefit obligations or other employee benefits\u2019 in Note 5.8 relates to a broader scope than the amounts presented in Note 5.9).
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag19": { "value": "\n
Note 5.8: Other liabilities
\n
\n
(in millions of EUR)
\n
31-12-2022 31-12-2021
\n
Total
\n
2 568 2 520
\n
Retirement benefit obligations or other employee benefits
\n
93 184
\n
Deposits from reinsurers
\n
115 98
\n
Accrued charges (other than from interest expenses on financial liabilities)
\n
360 364
\n
Other
\n
2 000 1 874
\n
\n
\u2022 For more information on retirement benefit obligations, see Note 5.9 (note that the amount recognised under \u2018Retirement
\n
benefit obligations or other employee benefits\u2019 in Note 5.8 relates to a broader scope than the amounts presented in Note 5.9).
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag20": { "value": "\n

\n
Note 5.10: Parent shareholders\u2019 equity and additional tier-1 instruments
\n
\n\n
Quantities
\n
31-12-2022
\n
31-12-2021
\n
Ordinary shares
\n
417 169 414 416 883 592
\n
\n
of which ordinary shares that entitle the holder to a dividend payment
\n
417 169 414 416 883 592
\n
\n
of which treasury shares
\n
2 2
\n
Additional information
\n
\n
Par value per share (in EUR)
\n
3.51 3.51
\n
Number of shares issued but not fully paid up
\n
0 0
\n

\n\n
\n
\u2022 Ordinary shares: ordinary shares of no nominal value. All ordinary shares carry voting rights and each share represents one vote.
\n
No participation certificates or non-voting shares have been issued. The shares are listed on Euronext Brussels.
\n
\u2022 Capital increases: the number of KBC Group NV shares went up by 285 822 in 2022 and by 189 034 in 2021, due to new shares
\n
being issued following the capital increases reserved for staff. For more information, see the \u2018Company annual accounts and
\n
additional information\u2019 section.
\n
\u2022 Share buybacks: there were no buyback programmes in 2022 and 2021. Treasury shares: at year-end 2022, KBC group
\n
companies held 2 KBC shares in portfolio (the same number as in 2021. For information on the authorisation to increase capital
\n
and to repurchase own shares, see the \u2018Company annual accounts and additional information\u2019 section.
\n
\u2022 Additional tier-1 (AT1) instruments (these securities are classified as equity instruments under IAS 32 and the coupon is treated
\n
as a dividend):
\n
- In April 2018, KBC issued 1 billion euros in AT1 securities (a perpetual AT1 instrument with a seven year first-call date and a
\n
temporary write-down trigger should the common equity ratio fall below 5.125% and an initial coupon of 4.25% per annum,
\n
which is payable every six months).
\n
- In February 2019, KBC issued 500 million euros in AT1 securities (a perpetual AT1 instrument with a five year first-call date and
\n
a temporary write-down trigger should the common equity ratio fall below 5.125% and an initial coupon of 4.75% per annum,
\n
which is payable every six months).
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag21": { "value": "\n
Quantities
\n
31-12-2022
\n
31-12-2021
\n
Ordinary shares
\n
417 169 414 416 883 592
\n
\n
of which ordinary shares that entitle the holder to a dividend payment
\n
417 169 414 416 883 592
\n
\n
of which treasury shares
\n
2 2
\n
Additional information
\n
\n
Par value per share (in EUR)
\n
3.51 3.51
\n
Number of shares issued but not fully paid up
\n
0 0
\n

\nTreasury shares: at year-end 2022, KBC groupcompanies held 2 KBC shares in portfolio (the same number as in 2021.", "dimensions": { "concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag22": { "value": "\n

\n\n

\n\n

\n\n
Note 5.11: \u2018Non-current assets held for sale and disposal groups\u2019 and \u2018Liabilities associated with disposal groups\u2019
\n
(IFRS 5)
\n
\n
KBC Bank Ireland: Non-current assets held for sale and disposal groups
\n
and Liabilities associated with disposal groups (in millions of EUR)
\n
31-12-2022 31-12-2021
\n
ASSETS
\n
\n
\n
\n
Loans and advances to customers (excl. reverse repos)
\n
8 049 9 998
\n
\n
Consumer credit 18 32
\n
\n
Mortgage loans 7 938 9 871
\n
\n
Term loans 84 83
\n
\n
Current account advances 10 12
\n
Liabilities
\n
\n
\n
\n
Deposits from customers and debt securities (excl. repos)
\n
1 929 3 999
\n
\n
Demand deposits 303 481
\n
\n
Time deposits 494 949
\n
\n
Savings accounts 1 132 2 569
\n
Deposits from credit
\n
institutions and investment firms (excl. repos) 91 263
\n
\n
Of which repayable on demand 35 257
\n
\n
\u2022 At the end of August 2021, KBC Bank Ireland reached agreement on the disposal of a non-performing mortgage loan portfolio
\n
in a transaction financed by funds managed by CarVal Investors. The deal was finalised in early February 2022, which means
\n
that the relevant assets and liabilities are not included in the figures for year-end 2022 in the table.
\n
\u2022 In October 2021, KBC Bank Ireland also confirmed that it had entered into a legally binding agreement with Bank of Ireland
\n
relating to the sale of substantially all of KBC Bank Ireland\u2019s performing loan assets and its deposit book to Bank of Ireland
\n
Group (see Note 6.6 for more details). Since we consider all the requirements under IFRS 5 to have been met, these sales resulted
\n
in a shift to the \u2018Non-current assets held for sale and disposal groups\u2019 and \u2018Liabilities associated with disposal groups\u2019 items
\n
\u2022 Maximum credit exposure: the maximum credit risk associated with \u2018Non-current assets held for sale and disposal groups\u2019
\n
amounted to 8.0 billion euros, of which 7.9 billion euros in collateral and other credit enhancements received (10.0 billion euros
\n
and 9.8 billion euros, respectively, at year-end 2021).
\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag23": { "value": "\n

\n\n

\n\n
Note 5.11: \u2018Non-current assets held for sale and disposal groups\u2019 and \u2018Liabilities associated with disposal groups\u2019
\n
(IFRS 5)
\n
\n
KBC Bank Ireland: Non-current assets held for sale and disposal groups
\n
and Liabilities associated with disposal groups (in millions of EUR)
\n
31-12-2022 31-12-2021
\n
ASSETS
\n
\n
\n
\n
Loans and advances to customers (excl. reverse repos)
\n
8 049 9 998
\n
\n
Consumer credit 18 32
\n
\n
Mortgage loans 7 938 9 871
\n
\n
Term loans 84 83
\n
\n
Current account advances 10 12
\n
Liabilities
\n
\n
\n
\n
Deposits from customers and debt securities (excl. repos)
\n
1 929 3 999
\n
\n
Demand deposits 303 481
\n
\n
Time deposits 494 949
\n
\n
Savings accounts 1 132 2 569
\n
Deposits from credit
\n
institutions and investment firms (excl. repos) 91 263
\n
\n
Of which repayable on demand 35 257
\n
\n
\u2022 At the end of August 2021, KBC Bank Ireland reached agreement on the disposal of a non-performing mortgage loan portfolio
\n
in a transaction financed by funds managed by CarVal Investors. The deal was finalised in early February 2022, which means
\n
that the relevant assets and liabilities are not included in the figures for year-end 2022 in the table.
\n
\u2022 In October 2021, KBC Bank Ireland also confirmed that it had entered into a legally binding agreement with Bank of Ireland
\n
relating to the sale of substantially all of KBC Bank Ireland\u2019s performing loan assets and its deposit book to Bank of Ireland
\n
Group (see Note 6.6 for more details). Since we consider all the requirements under IFRS 5 to have been met, these sales resulted
\n
in a shift to the \u2018Non-current assets held for sale and disposal groups\u2019 and \u2018Liabilities associated with disposal groups\u2019 items
\n
\u2022 Maximum credit exposure: the maximum credit risk associated with \u2018Non-current assets held for sale and disposal groups\u2019
\n
amounted to 8.0 billion euros, of which 7.9 billion euros in collateral and other credit enhancements received (10.0 billion euros
\n
and 9.8 billion euros, respectively, at year-end 2021).
\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag24": { "value": "\n
Note 5.11: \u2018Non-current assets held for sale and disposal groups\u2019 and \u2018Liabilities associated with disposal groups\u2019
\n
(IFRS 5)
\n
\n
KBC Bank Ireland: Non-current assets held for sale and disposal groups
\n
and Liabilities associated with disposal groups (in millions of EUR)
\n
31-12-2022 31-12-2021
\n
ASSETS
\n
\n
\n
\n
Loans and advances to customers (excl. reverse repos)
\n
8 049 9 998
\n
\n
Consumer credit 18 32
\n
\n
Mortgage loans 7 938 9 871
\n
\n
Term loans 84 83
\n
\n
Current account advances 10 12
\n
Liabilities
\n
\n
\n
\n
Deposits from customers and debt securities (excl. repos)
\n
1 929 3 999
\n
\n
Demand deposits 303 481
\n
\n
Time deposits 494 949
\n
\n
Savings accounts 1 132 2 569
\n
Deposits from credit
\n
institutions and investment firms (excl. repos) 91 263
\n
\n
Of which repayable on demand 35 257
\n
\n
\u2022 At the end of August 2021, KBC Bank Ireland reached agreement on the disposal of a non-performing mortgage loan portfolio
\n
in a transaction financed by funds managed by CarVal Investors. The deal was finalised in early February 2022, which means
\n
that the relevant assets and liabilities are not included in the figures for year-end 2022 in the table.
\n
\u2022 In October 2021, KBC Bank Ireland also confirmed that it had entered into a legally binding agreement with Bank of Ireland
\n
relating to the sale of substantially all of KBC Bank Ireland\u2019s performing loan assets and its deposit book to Bank of Ireland
\n
Group (see Note 6.6 for more details). Since we consider all the requirements under IFRS 5 to have been met, these sales resulted
\n
in a shift to the \u2018Non-current assets held for sale and disposal groups\u2019 and \u2018Liabilities associated with disposal groups\u2019 items
\n
\u2022 Maximum credit exposure: the maximum credit risk associated with \u2018Non-current assets held for sale and disposal groups\u2019
\n
amounted to 8.0 billion euros, of which 7.9 billion euros in collateral and other credit enhancements received (10.0 billion euros
\n
and 9.8 billion euros, respectively, at year-end 2021).
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag853": { "value": "\n

\n\n

\n\n

\n\n

\n
Note 6.1: Off-balance-sheet commitments and financial guarantees given and received
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
\n
Nominal
\n
amount
\n
Provision Net exposure
\n
Nominal
\n
amount
\n
Provision Net exposure
\n
Undrawn portion of credit lines
\n
granted
\n
Stage 1
\n
39 134 17 39 117 38 414 17 38 397
\n
Stage 2
\n
8 077 26 8 051 4 770 16 4 754
\n
Stage 3
\n
51 13 38 42 4 38
\n
Total
\n
47 262 56 47 206 43 226 37 43 189
\n
\n
of which irrevocable credit lines 26 618 27 26 591 25 802 14 25 788
\n
Financial guarantees given
\n
\n
Stage 1
\n
7 600 2 7 598 8 675 2 8 673
\n
Stage 2
\n
3 139 8 3 131 1 678 5 1 673
\n
Stage 3
\n
119 44 76 153 86 67
\n
Total
\n
10 858 54 10 805 10 506 93 10 413
\n
Other commitments given
\n
\n
Total
\n
1 440 4 1 436 756 1 755
\n
Total
\n
\n
Off-balance-sheet commitments and financial
\n
guarantees
\n
59 561 114 59 447 54 488 130 54 357
\n
\n
\u2022 Fair value of financial guarantees: based on the available market value.
\n\n
\u2022 The carrying value of financial assets pledged by KBC as collateral came to 59 753 million euros for liabilities and 5 291 million
\n
euros for contingent liabilities (66 386 million euros and 3 961 million euros, respectively, in 2021). At year-end 2022, some 16.6
\n
billion euros\u2019 worth of residential mortgage loans and cash collections were entered in the cover asset register for the special
\n
estate of the covered bond programme (16.6 billion euros at year-end 2021).
\n

\n\n
\u2022 There is an obligation to return collateral received (which may be sold or repledged in the absence of default by the owner; see
\n
table) in its original form, or possibly in cash. Collateral can be called in if loans are terminated for various reasons such as
\n
default or bankruptcy. In the event of bankruptcy, the collateral will be sold by the receiver. In other cases, the bank will organise
\n
the foreclosure itself or take possession of the collateral. Collateral received that relates to OTC derivatives is primarily cash,
\n
which is recognised by KBC on the balance sheet (and is not included in the table). More details are provided in Note 4.3.
\n
\u2022 Collateral acquired through foreclosure came to 4 million euros in 2022 (4 million euros in 2021).
\n
\u2022 The increase in \u2018Stage 2\u2019 relates to the collective stage transfer linked to \u2018Stage 1\u2019 loans (see also Note 1.4) that have indirect
\n
exposure to Russia, Ukraine and Belarus.
\n
\n
\n
\n
Collateral received (which may be sold or repledged
\n
in the absence of default by the owner) (in millions of EUR)
\n
Fair value of collateral received
\n
Fair value of collateral sold or
\n
repledged
\n
\n
31-12-2022 31-12-2021 31-12-2022 31-12-2021
\n
Financial assets
\n
30 126
\n
39 863
\n
7 792
\n
11 862
\n
Equity instruments
\n
16 11 2 1
\n
Debt securities
\n
29 876 39 633 7 790 11 860
\n
Loans and advances
\n
234 219 0 0
\n
Cash
\n
0 0 0 0
\n
Other
\n
0
\n
0
\n
0
\n

\n\n

\n\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag849": { "value": "\n

\n\n
Note 6.2: Leasing
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Finance lease receivables
\n
\n
Gross investment in finance leases, receivable
\n
6 836 6 155
\n
\n
At not more than one year 1 378 1 504
\n
\n
At more than one but not more than five years 4 069 3 421
\n
\n
At more than five years 1 389 1 230
\n
Unearned future finance income on finance leases
\n
468 340
\n
Net investment in finance leases
\n
6 368 5 815
\n
\n
At not more than one year 1 226 1 427
\n
\n
At more than one but not more than five years 3 842 3 239
\n
\n
At more than five years 1 300 1 149
\n
of which unguaranteed residual values accruing to the benefit of the lessor
\n
36
\n
34
\n
\n
Accumulated
\n
impairment for uncollectable lease payments receivable 35 47
\n
Contingent rents recognised in the income statement
\n
111 83
\n
Operating lease receivables
\n
\n
Future aggregate minimum rentals receivable under non
\n
-cancellable operating leases 513 494
\n
Contingent rents recognised in the income statement
\n
0 0
\n
\n
\u2022 KBC acts only to a limited extent as a lessee in operational and financial leasing.
\n
\u2022 Finance leases: KBC offers finance lease products ranging from equipment and vehicle leasing to real estate leasing. In Belgium,
\n
finance leases are typically sold through KBC group\u2019s branch network, and that channel is becoming increasingly important in
\n
Central Europe, too.
\n
\u2022
\n
Operating leases: involve primarily full service car leases, which are sold through the KBC Bank and CBC Banque branch
\n
network and through an internal sales team. Full service car leasing activities are being further developed in Central Europe,
\n
too. The increased importance of leasing hybrid and all-electric vehicles supports the transition to green mobility, and the
\n
segment of (electric) company bicycles also continued to grow.
\n
\u2022 We report on estimated greenhouse gas emissions associated with lending, leasing and other activities and, in that context,
\n
have defined objectives for reducing the greenhouse gas intensity of our financial and operational car leasing. See \u2018Focus on
\n
climate\u2019 in the \u2018Report of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our
\n
Climate Report and our Sustainability Report at www.kbc.com.
\n

\n\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag846": { "value": "\n
Note 6.2: Leasing
\n
\n
(in millions of EUR)
\n
31-12-2022
\n
31-12-2021
\n
Finance lease receivables
\n
\n
Gross investment in finance leases, receivable
\n
6 836 6 155
\n
\n
At not more than one year 1 378 1 504
\n
\n
At more than one but not more than five years 4 069 3 421
\n
\n
At more than five years 1 389 1 230
\n
Unearned future finance income on finance leases
\n
468 340
\n
Net investment in finance leases
\n
6 368 5 815
\n
\n
At not more than one year 1 226 1 427
\n
\n
At more than one but not more than five years 3 842 3 239
\n
\n
At more than five years 1 300 1 149
\n
of which unguaranteed residual values accruing to the benefit of the lessor
\n
36
\n
34
\n
\n
Accumulated
\n
impairment for uncollectable lease payments receivable 35 47
\n
Contingent rents recognised in the income statement
\n
111 83
\n
Operating lease receivables
\n
\n
Future aggregate minimum rentals receivable under non
\n
-cancellable operating leases 513 494
\n
Contingent rents recognised in the income statement
\n
0 0
\n
\n
\u2022 KBC acts only to a limited extent as a lessee in operational and financial leasing.
\n
\u2022 Finance leases: KBC offers finance lease products ranging from equipment and vehicle leasing to real estate leasing. In Belgium,
\n
finance leases are typically sold through KBC group\u2019s branch network, and that channel is becoming increasingly important in
\n
Central Europe, too.
\n
\u2022
\n
Operating leases: involve primarily full service car leases, which are sold through the KBC Bank and CBC Banque branch
\n
network and through an internal sales team. Full service car leasing activities are being further developed in Central Europe,
\n
too. The increased importance of leasing hybrid and all-electric vehicles supports the transition to green mobility, and the
\n
segment of (electric) company bicycles also continued to grow.
\n
\u2022 We report on estimated greenhouse gas emissions associated with lending, leasing and other activities and, in that context,
\n
have defined objectives for reducing the greenhouse gas intensity of our financial and operational car leasing. See \u2018Focus on
\n
climate\u2019 in the \u2018Report of the Board of Directors\u2019 section for a more detailed explanation. More details can also be found in our
\n
Climate Report and our Sustainability Report at www.kbc.com.
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag856": { "value": "\n

\n

\n

\n
Note 6.3: Related-party transactions
\n
\n
2022
\n
2021
\n

\n

\n\n

\n\n

\n\n
Transactions with related parties,
\n
excluding key management
\n
\n
(in millions of EUR)
\n
Subsidiaries
\n
Associated
\n
companies
\n
Joint
\n
ventures
\n
Other
\n
Total
\n
Subsidiaries
\n
Associated
\n
companies
\n
Joint
\n
ventures
\n
Other
\n
Total
\n
Assets
\n
147 107 33 0 287 144 111 42 142 439
\n
Loans and advances
\n
15 89 0 0 104 21 94 0 100 214
\n
Equity instruments (including investments
\n
in associated companies and joint
\n
ventures)
\n
131 19 33 0 184 124 17 42 0 183
\n
Other
\n
0 0 0 0 0 0 0 0 41 41
\n
Liabilities
\n
54 74 0 593 721 40 89 0 838 968
\n
Deposits
\n
54 10 0 590 654 40 20 0 831 891
\n
Other financial liabilities
\n
0 0 0 0 0 0 0 0 0 0
\n
Other
\n
1 63 0 3 67 1 69 0 8 77
\n
Income statement
\n
-1 -2 0 -1 -3 0 -3 0 0 -3
\n
Net interest income
\n
0 1 0 0 0 0 -1 0 0 -1
\n
\n
Interest income 0 2 0 0 2 0 0 0 0 0
\n
\n
Interest expense 0 -1 0 0 -1 0 -1 0 0 -1
\n
Earned premiums, insurance (before
\n
reinsurance)
\n
0 0 0 0 0 0 0 0 0 0
\n
Technical insurance charges (before
\n
reinsurance)
\n
0 0 0 0 0 0 0 0 0 0
\n
Dividend income
\n
4 1 0 4 9 5 2 0 4 11
\n
Net fee and commission income
\n
1 0 0 2 3 1 -1 0 2 3
\n
\n
Fee and commission income 1 0 0 2 3 1 0 0 2 3
\n
\n
Fee and commission expense 0 0 0 0 0 0 -1 0 0 -1
\n
Other net income
\n
1 -1 0 0 0 -3 -1 0 1 -3
\n
General administrative expenses
\n
-7 -2 0 -7 -16 -4 -2 0 -7 -13
\n
Undrawn portion of loan commitments,
\n
financial guarantees and other
\n
commitments
\n
\n
\n
\n
\n
Given by the group
\n
0 0 0 50 50 0 0 0 74 74
\n
Received by the group
\n
0 0 0 0 0 0 0 0 0 0
\n

\n\n

\n\n

\n\n
\n\n

\n\n
Transactions with key management (members of the Board of Directors and Executive Committee of
\n
KBC Group NV) (in millions of EUR)*
\n
2022
\n
2021
\n
Total*
\n
13 14
\n
Breakdown by type of remuneration
\n
\n
Short
\n
-term employee benefits 11 10
\n
Post
\n
-employment benefits 2 2
\n
\n
Defined benefit plans 0 0
\n
\n
Defined contribution plans 2 2
\n
Other long
\n
-term employee benefits 0 0
\n
Termination benefits
\n
0 2
\n
Share
\n
-based payments 0 0
\n
Stock options (units)
\n
\n
At the beginning of the period
\n
0 0
\n
Granted
\n
0 0
\n
Exercised
\n
0 0
\n
Composition
\n
-related changes 0 0
\n
At the end of the period
\n
0 0
\n
\n
Advances and loans granted to key management and partners 1 1
\n
* Remuneration to key management or partners of the consolidating company on the basis of their activity in that company, its subsidiaries and associated companies, including the
\n
amount of retirement pensions granted to former key management staff on that basis.
\n

\n\n

\n\n

\n\n

\n
\u2022 The \u2018Subsidiaries\u2019 heading in the first table includes transactions with unconsolidated subsidiaries (transactions with
\n
consolidated subsidiaries have already been eliminated from the consolidated financial statements).
\n
\u2022 The \u2018Other\u2019 heading in the first table includes KBC Ancora, Cera and MRBB.
\n
\u2022 All related-party transactions occur at arm\u2019s length.
\n\n
\u2022 Key management comprises the members of the Board of Directors and Executive Committee of KBC Group NV. More detailed
\n
information on remuneration paid to key management staff is provided in the \u2018Corporate governance statement\u2019 section.
\n

\n\n
\u2022 There were no significant impairment charges vis-\u00e0-vis related parties.
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag843": { "value": "\n

\n\n
Transactions with key management (members of the Board of Directors and Executive Committee of
\n
KBC Group NV) (in millions of EUR)*
\n
2022
\n
2021
\n
Total*
\n
13 14
\n
Breakdown by type of remuneration
\n
\n
Short
\n
-term employee benefits 11 10
\n
Post
\n
-employment benefits 2 2
\n
\n
Defined benefit plans 0 0
\n
\n
Defined contribution plans 2 2
\n
Other long
\n
-term employee benefits 0 0
\n
Termination benefits
\n
0 2
\n
Share
\n
-based payments 0 0
\n
Stock options (units)
\n
\n
At the beginning of the period
\n
0 0
\n
Granted
\n
0 0
\n
Exercised
\n
0 0
\n
Composition
\n
-related changes 0 0
\n
At the end of the period
\n
0 0
\n
\n
Advances and loans granted to key management and partners 1 1
\n
* Remuneration to key management or partners of the consolidating company on the basis of their activity in that company, its subsidiaries and associated companies, including the
\n
amount of retirement pensions granted to former key management staff on that basis.
\n

\n\n

\n\n
\u2022 Key management comprises the members of the Board of Directors and Executive Committee of KBC Group NV. More detailed
\n
information on remuneration paid to key management staff is provided in the \u2018Corporate governance statement\u2019 section.
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag851": { "value": "KBC Group", "dimensions": { "concept": "ifrs-full:NameOfUltimateParentOfGroup", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag845": { "value": "NV", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag854": { "value": "\n
Note 6.4: Statutory auditor\u2019s remuneration
\n
\n
Statutory auditor\u2019s remuneration (PwC, in EUR)
\n
2022 2021
\n
KBC Group NV and its subsidiaries
\n
\n
Standard audit services
\n
8 524 658 7 598 504
\n
Other
\n
services
\n
\n
Other certifications 892 844 749 213
\n
\n
Tax advice 0 0
\n
\n
Other non-audit assignments 2 225 94 705
\n
KBC Group NV (alone)
\n
\n
Standard audit services
\n
570 825 272 449
\n
Other services
\n
250 890 108 348
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag841": { "value": "\n

\n
Note 6.5: Subsidiaries, joint ventures and associated companies
\n
\n
\n
KBC Group: main companies included in the scope of consolidation at year
\n
-end 2022
\n
Company
\n
\n
\n
Registered office
\n
Company
\n
number
\n
Share of capital held
\n
at group level (in %)
\n
Business
\n
unit
\n
1
\n
\n
Activity
\n
KBC Bank (group)
\n
\n
KBC Bank NV
\n
\n
Brussels
\n
\u2013 BE 0462.920.226
\n
\n
100.00 BEL/GRP credit institution
\n
KBC Bank Bulgaria EAD (formerly Raiffeisenbank
\n
Bulgaria)
\n
2
\n
\n
Sofia
\n
\u2013 BG --
\n
\n
100.00 IMA credit institution
\n
CBC BANQUE SA
\n
\n
Namur
\n
\u2013 BE 0403.211.380
\n
\n
100.00 BEL credit institution
\n
\u010ceskoslovensk\u00e1 Obchodn\u00e1 Banka a.s.
\n
\n
Bratislava
\n
\u2013 SK --
\n
\n
100.00 IMA credit institution
\n
\u010ceskoslovensk\u00e1 Obchodn\u00ed Banka a.s.
\n
\n
Prague
\n
\u2013 CZ --
\n
\n
100.00 CZR credit institution
\n
KBC Asset Management NV
\n
\n
Brussels
\n
\u2013 BE 0469.444.267
\n
\n
100.00 BEL asset management
\n
KBC Autolease NV
\n
\n
Leuven
\n
\u2013 BE 0422.562.385
\n
\n
100.00 BEL leasing
\n
KBC Bank Ireland Plc
\n
2
\n
\n
Dublin
\n
\u2013 IE --
\n
\n
100.00 GRP credit institution
\n
KBC Commercial Finance NV
\n
\n
Brussels
\n
\u2013 BE 0403.278.488
\n
\n
100.00 BEL factoring
\n
KBC IFIMA SA
\n
\n
Luxembourg
\n
\u2013 LU --
\n
\n
100.00 GRP financing
\n
KBC Securities NV
\n
\n
Brussels
\n
\u2013 BE 0437.060.521
\n
\n
100.00 BEL stockbroker
\n
K&H Bank Zrt.
\n
\n
Budapest
\n
\u2013 HU --
\n
\n
100.00 IMA credit institution
\n
Loan Invest NV
\n
\n
Brussels
\n
\u2013 BE 0889.054.884
\n
\n
100.00 BEL securitisation
\n
United Bulgarian Bank AD
\n
\n
Sofia
\n
\u2013 BG --
\n
\n
99.91 IMA credit institution
\n
KBC Insurance (group)
\n
\n
KBC Insurance NV
\n
\n
Leuven
\n
\u2013 BE 0403.552.563
\n
\n
100.00 BEL/GRP insurance company
\n
ADD NV
\n
\n
Heverlee
\n
\u2013 BE 0406.080.305
\n
\n
100.00 BEL insurance broker
\n
KBC
\n
Group Re SA
\n
Luxembourg
\n
\u2013 LU --
\n
\n
100.00 GRP reinsurance company
\n
\u010cSOB Poji\u0161t\u2019ovna a.s.
\n
\n
Pardubice
\n
\u2013 CZ --
\n
\n
100.00 CZR insurance company
\n
\u010cSOB Poist\u2019ov\u0148a a.s.
\n
\n
Bratislava
\n
\u2013 SK --
\n
\n
100.00 IMA insurance company
\n
DZI (group)
\n
\n
Sofia
\n
\u2013 BG --
\n
\n
100.00 IMA insurance company
\n
Groep VAB NV
\n
\n
Zwijndrecht
\n
\u2013 BE 0456.920.676
\n
\n
100.00 BEL
\n
driving school/roadside
\n
assistance
\n
K&H Biztos\u00edt\u00f3 Zrt.
\n
\n
Budapest
\n
\u2013 HU --
\n
\n
100.00 IMA insurance company
\n
KBC group
\n
\n
Discai NV
\n
\n
Brussels
\n
\u2013 BE 0773.435.537
\n
\n
100.00 GRP software company
\n
KBC Group NV
\n
\n
Brussels
\n
\u2013 BE 0403.227.515
\n
\n
100.00 GRP
\n
bank-insurance holding
\n
company
\n
KBC Bank (group)
\n
\n
various locations
\n
--
\n
\n
100.00 various credit institution
\n
KBC Global Services NV
\n
\n
Brussels
\n
\u2013 BE 0772.332.707
\n
\n
100.00 GRP cost-sharing structure
\n
KBC Insurance (group)
\n
\n
various locations
\n
--
\n
\n
100.00 various insurance company
\n
1 BEL: Belgium Business Unit; CZR: Czech Republic Business Unit: IMA: International Markets Business Unit; GRP = Group Centre.
\n
2 See Note 6.6.
\n
\n
\n

\n

\n
\u2022 The KBC group\u2019s legal structure has one single entity \u2013 KBC Group NV \u2013 in control of two underlying companies, viz.
\n
KBC Bank NV and KBC Insurance NV, as well as companies such as Discai NV and KBC Global Services NV (see the \u2018Company
\n
annual accounts and additional information\u2019 section). KBC Bank and KBC Insurance have several subsidiaries and
\n
sub-subsidiaries. In addition, the main group companies are shown in the table. A complete list of group companies (included
\n
in or excluded from the scope of consolidation) is provided at www.kbc.com > About us > Our structure.
\n\n
\u2022 Companies eligible for consolidation are effectively included in the consolidated accounts if two of the following criteria are
\n
met: (i) the group\u2019s share in equity exceeds 2.5 million euros (ii) the group\u2019s share in the results exceeds 1 million euros (iii) the
\n
balance sheet total exceeds 100 million euros. The combined balance sheet total of the companies excluded from
\n
consolidation may not amount to more than 1% of the consolidated balance sheet total.
\n
\u2022 All (material) entities (including structured entities (SPVs)) over which the consolidating entity exercises, directly or indirectly,
\n
exclusive control are consolidated according the method of full consolidation. To assess whether or not structured entities have
\n
to be consolidated, KBC uses the principles set out in IFRS 10, as well as thresholds for inclusion in consolidation (see previous
\n
bullet point).
\n

\n\n

\n\n
\u2022 Disclosures of interests in other entities (IFRS 12)
\n
- Significant judgements and assumptions
\n
\u25e6 In general, funds managed by KBC are not included in the scope of consolidation, as they do not meet the three criteria of
\n
control (power, exposure to a variable return and ability to use such power to affect those returns).
\n
\u25e6 Joint entities in which KBC does not hold 50% of the share capital are classified as joint ventures, since it has joint control
\n
over these entities based on shareholder agreements. Based on the Articles of Association and/or shareholder
\n
agreements, voting rights in (and therefore the control of) the joint venture are spread evenly across the different
\n
shareholders and decisions may only be taken by unanimity.
\n
- Interests in subsidiaries
\n
\u25e6 For the vast majority of the entities, the voting rights are materially equal to the ownership rights.
\n
\u25e6 Pursuant to the joint capital decision, specific pillar-II levels have been set to ensure that certain minimum capital ratios
\n
are respected, which impose certain restrictions on the repatriation of capital and distribution of dividends.
\n
\u25e6 With regard to Loan Invest NV, KBC is exposed to loan losses on the mortgage portfolio and, therefore, recognises
\n
impairment losses on them where necessary.
\n
- Interests in unconsolidated structured entities
\n
\u25e6 KBC Bank NV is arranger and dealer of a number of 40-billion-euro medium term notes programmes issued by 19
\n
unconsolidated structured entities established in Ireland for that purpose. Their primary business is to raise money by issuing
\n
notes in order to buy financial assets (such as securities, bonds and deposits) and to enter into related derivative and other
\n
contracts. They provide investment opportunities for clients by providing economies of scale, a diversification of credit risk
\n
and a high level of granularity. Each structured entity has a prospectus that was approved by the Central Bank of Ireland
\n
(available at www.kbc.be/prospectus/spv). However, the structured entities are not consolidated because they fail to
\n
meet the three criteria for consolidation (power, exposure to a variable return and ability to use such power to affect those
\n
returns). At year-end 2022, the assets under management at these entities amounted to 5.2 billion euros.
\n
\u25e6 Sponsored unconsolidated structured entities are defined as structured entities where KBC or one of its subsidiaries acts
\n
as arranger of the issuance programme, but where the decision-making power of the entities does not reside with KBC or
\n
one of its subsidiaries. As a result, these entities are not consolidated.
\n
\u25e6 In 2022, KBC had received income from unconsolidated structured entities in the form of management fees (24 million euros)
\n
and accounting fees (1 million euros).
\n
\u25e6 At year-end 2022, KBC held 2 billion euros\u2019 worth of notes issued by the unconsolidated structured entities. Its liabilities
\n
towards the unconsolidated structured entities amounted to 1.5 billion euros and comprised mainly time deposits (1.4 billion
\n
euros).
\n
\u25e6 Any potential decrease in the value of the notes is passed on to the end-client, which means it will have no impact on KBC.
\n
\u2022 At year-end 2022, no group companies were active in the extractive industry. As a result, no consolidated report on payments
\n
to governments has been prepared (see Art.3:8 \u00a7 1 of the Companies and Associations Code).
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag842": { "value": "KBC Group NV", "dimensions": { "concept": "ifrs-full:NameOfParentEntity", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag844": { "value": "\n
\u2022 Companies eligible for consolidation are effectively included in the consolidated accounts if two of the following criteria are
\n
met: (i) the group\u2019s share in equity exceeds 2.5 million euros (ii) the group\u2019s share in the results exceeds 1 million euros (iii) the
\n
balance sheet total exceeds 100 million euros. The combined balance sheet total of the companies excluded from
\n
consolidation may not amount to more than 1% of the consolidated balance sheet total.
\n
\u2022 All (material) entities (including structured entities (SPVs)) over which the consolidating entity exercises, directly or indirectly,
\n
exclusive control are consolidated according the method of full consolidation. To assess whether or not structured entities have
\n
to be consolidated, KBC uses the principles set out in IFRS 10, as well as thresholds for inclusion in consolidation (see previous
\n
bullet point).
\n

\n", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag850": { "value": "\n
Note 6.7: Risk management and capital adequacy
\n
\n
Capital management is a key management process relating to all decisions on the level and composition of our capital, both for
\n
banking and for insurance. It covers all instruments that are positioned to absorb losses in going concern and/or gone concern
\n
situations. Capital management aims to achieve the best possible balance between regulatory requirements, investor
\n
expectations, rating agencies\u2019 views and management ambitions. Ultimate accountability for capital management lies with the
\n
Board of Directors.
\n
\n
Capital management entails a broad scope of activities covering strategic topics (such as defining policies, targets, etc.),
\n
frameworks and models (e.g., for regulatory capital, internal capital, cost of equity, measuring performance, etc.), planning and
\n
allocation (e.g., allocating capital to business, planning capital instrument issuances, forecasting capital ratios, etc.),
\n
implementation (e.g., dividends, capital transactions) and monitoring (including current solvency positions at various levels,
\n
compliance with group policies and regulatory requirements).
\n
\n
ICAAP (Internal Capital Adequacy Assessment Process) consists of numerous business and risk processes that together contribute
\n
to the aim of being adequately capitalised at all times in view of our risk profile and the quality of our risk management and
\n
control environment. In addition to the integrated approach at group level, KBC Insurance and its insurance and reinsurance
\n
subsidiaries conduct an Own Risk and Solvency Assessment (ORSA) on a regular basis, in accordance with Solvency II
\n
requirements.
\n
\n
We report the solvency of the group, the bank and the insurance company based on IFRS data and according to the rules
\n
imposed by the regulator.
\n
\u2022 For the KBC group and KBC Bank, this implies that we calculate our solvency ratios based on CRR/CRD. KBC began applying
\n
the transitional provisions for IFRS 9 and certain tier-2 instruments on 30 June 2020. KBC has received authorisation from the
\n
regulator to apply a risk weighting to the participation in KBC Insurance (Danish compromise method) at KBC group level. The
\n
KBC group and KBC Bank are subject to minimum solvency ratios.
\n
\u2022 In accordance with the regulatory requirement, the common equity ratio of the KBC group must be 11.30% (fully loaded) at year-
\n
end 2022. This includes the pillar 1 minimum requirement (4.5%), the pillar 2 requirement (1.86% set by the ECB following its
\n
supervisory review and evaluation process) and the buffer requirements (4.94% set by the local competent authorities in KBC\u2019s
\n
core markets). At year-end 2022, the fully loaded common equity ratio came to 15.3% (see the \u2018How do we manage our capital?\u2019
\n

\n\n
section for more information). At year-end 2022, the transitional common equity ratio came to 14.1%, which represented a
\n
capital buffer of 3.1% relative to the minimum requirement of 10.95%.
\n
\u2022 In accordance with the regulatory requirement, the common equity ratio of KBC Bank must be 10.92% (transactional) at year-
\n
end 2022. At year-end 2022, the transitional common equity ratio was 14.2%.
\n
\u2022 The solvency of KBC Insurance is calculated on the basis of Solvency II (the minimum requirement is 100%). At year-end 2022,
\n
the Solvency II ratio came to 203% relative to the minimum requirement of 100%.
\n
\n
Key solvency figures for the KBC group,
\n
\n
KBC Bank and KBC Insurance (in millions of EUR)
\n
KBC group
\n
(consolidated)
\n
CRR/CRD
\n
transitional
\n
KBC Bank
\n
(consolidated)
\n
CRR/CRD
\n
transitional
\n
KBC Insurance
\n
(consolidated)
\n
Solvency II
\n
\n
31-12-2022
\n
\n
31-12-2021
\n
31-12-2022
\n
\n
31-12-2021
\n
31-12-2022
\n
\n
31-12-2021
\n
Total regulatory capital, after profit appropriation
\n
18 742 20 733 17 516 17 964 3 721 4 075
\n
Tier
\n
-1 capital 16 974 18 998 15 749 16 210 3 220 3 574
\n
\n
Common equity 15 474 17 498 14 249 14 710 \u2013 \u2013
\n
Parent shareholders\u2019 equity (after deconsolidating KBC
\n
Insurance for the KBC group)
\n
16 982 17 708 15 618 14 912 2 157 3 991
\n
\n
Solvency adjustments -1 508 -210 -1 370 -202 1 063 -416
\n
\n
Additional going concern capital
\n
1
\n
1 500 1 500 1 500 1 500 \u2013 \u2013
\n
Tier
\n
-2 capital
\n
2
\n
1 767 1 735 1 768 1 754 500 500
\n
Total weighted risk volume (RWA)
\n
3
\n
109 966 104 362 100 285 94 836 \u2013 \u2013
\n
\n
Credit risks 84 988 80 687 84 988 80 687
\n
\u2013
\n
\n
\u2013
\n
\n
\n
Market risks 3 132 2 665 3 132 2 665
\n
\u2013
\n
\n
\u2013
\n
\n
\n
Operational risks 12 166 11 484 12 166 11 484
\n
\u2013
\n
\n
\u2013
\n
\n
\n
Insurance risks 9 133 9 133 \u2013 \u2013
\n
\u2013
\n
\n
\u2013
\n
\n
Holding-company activities and elimination of intragroup
\n
transactions
\n
548 392 \u2013 \u2013
\n
\u2013
\n
\n
\u2013
\n
\n
Solvency capital requirement (insurance)
\n
\u2013 \u2013 \u2013 \u2013 1 833 2 029
\n
Common equity ratio (group, bank)
\n
14.1% 16.8% 14.2% 15.5% \u2013 \u2013
\n
Solvency II ratio (insurance)
\n
\u2013 \u2013 \u2013 \u2013 203% 201%
\n
1 Includes perpetual subordinated loans with fully discretionary, non-cumulative interest payments. The securities also have a loss absorption mechanism (i.e. a temporary write-down trigger
\n
should the common equity tier-1 ratio fall below 5.125%). Also see Note 5.10.
\n
2 Includes subordinated loans with a fixed maturity date where principal and interest payments cannot be cancelled in a going concern.
\n
3 Supervision of the RWA internal models\u2019 compliance with the approval criteria as provided for in the standards imposed by the regulator does not come under the responsibility of the
\n
statutory auditor.
\n
\n
\n
\u2022 More detailed information is provided in the \u2018How do we manage our capital?\u2019 section of this report and in KBC\u2019s Risk Report.
\n
\u2022 The loan portfolio accounts for the largest share of the financial assets. Based on internal management reports, the
\n
composition and quality of the loan portfolio is set out in detail in the \u2018How do we manage our risks?\u2019 section (under \u2018Credit
\n
risk\u2019). The information required in relation to risks (in accordance with IFRS 4 and IFRS 7) is provided in those parts of the \u2018How
\n
do we manage our risks?\u2019 section which have been audited by the statutory auditor and which constitute part of the financial
\n
statements.
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag848": { "value": "\n
Note 6.8: Post-balance-sheet events
\n
\n
Significant non-adjusting events between balance sheet date and the date on which the financial statements were approved
\n
for publication by the Board of Directors (16 March 2023):
\n
\u2022 3 February 2023: completion of the sale of the Irish portfolios to Bank of Ireland Group. see Note 6.6 for more information.
\n
\n
Significant adjusting post-balance-sheet events between balance sheet date and the date on which the financial statements
\n
were approved for publication by the Board of Directors (16 March 2023):
\n
\u2022 see Note 3.6.
\n

\n", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag847": { "value": "\n
Note 6.9: General information on the company
\n
\n
\u2022 Name KBC Group.
\n
\u2022 Incorporated: 9 February 1935 as the Kredietbank; the present name dates from 2 March 2005.
\n
\u2022 Country of incorporation: Belgium.
\n
\u2022 Registered office: Havenlaan 2, 1080 Brussels, Belgium.
\n
\u2022 VAT: BE 0403.227.515.
\n
\u2022 RLP: Brussels.
\n
\u2022 Website: https://www.kbc.com
\n
\u2022 E-mail address reserved for shareholders and bondholders: IR4U@kbc.be
\n
\u2022 Legal form:
\n
naamloze genoteerde vennootschap
\n
(listed company with limited liability) under Belgian law. The company is a
\n
mixed financial holding company that is subject to the prudential supervision of the National Bank of Belgium and the European
\n
Central Bank.
\n
\u2022 Life: undefined.
\n
\u2022 Object (Article 2 of the Articles of Association, which are available at www.kbc.com):
\n
The company has as its object the direct or indirect ownership and management of shareholdings in other companies,
\n
including but not restricted to credit institutions, insurance companies and other financial institutions.
\n
The company also has as object to provide services to third parties, either for its own account or for the account of others,
\n
including to companies in which the company has an interest \u2013 either directly or indirectly \u2013 and to (potential) clients of those
\n
companies.
\n
The object of the company is also to acquire in the broadest sense of the word (including by means of purchase, hire and
\n
lease), to maintain and to operate resources, and to make these resources available in the broadest sense of the word
\n
(including through letting and granting rights of use) to the beneficiaries referred to in the second paragraph.
\n
In addition, the company may function as an intellectual property company responsible for, among other things, the
\n
development, acquisition, management, protection and maintenance of intellectual property rights, as well as for making
\n
these rights available, granting rights of use in respect of these rights and/or transferring these rights.
\n
The company may also perform all commercial, financial and industrial transactions that may be useful or expedient for
\n
achieving the object of the company and that are directly or indirectly related to this object. The company may also by means
\n
of subscription, contribution, participation or in any other form whatsoever participate in all companies, businesses or
\n
institutions that have a similar, related or complementary activity.
\n
In general, the company may, both in Belgium and abroad, perform all acts which may contribute to the achievement of its
\n
object.
\n
\u2022 Documents open to public inspection: the Articles of Association of the company can be found at the Registry of the Dutch-
\n
speaking division of the Brussels Business Court and at www.kbc.com and www.notaris.be/statuten. The financial statements,
\n
the annual report and the statutory auditor\u2019s reports regarding the financial statements are filed with the National Bank of
\n
Belgium and are available at www.kbc.com. The annual report can also be obtained from the company\u2019s registered office and
\n
will be sent to those requesting it. Extracts of minutes concerning decisions on the appointment and the termination of the
\n
offices of members of the Executive Committee and the Board of Directors are published in the appendices to the Belgian
\n
Official Gazette. Financial reports about the company are published in the financial press and/or on www.kbc.com. Convening
\n
notices of general meetings of shareholders are published in the Belgian Official Gazette, in at least one national newspaper,
\n
in the media and on www.kbc.com.
\n
\u2022 For information on the general meeting of shareholders and the right of shareholders to take part in such meetings, see Article
\n
23 et seq. of the Articles of Association, which are available at www.kbc.com.
\n

\n", "dimensions": { "concept": "kbc:DisclosureOfGeneralInformationOnCompanyExplanatory", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag855": { "value": "Belgium", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tag852": { "value": "Havenlaan 2, 1080 Brussels, Belgium", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:213800X3Q9LSAKRUWY91", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "footnote1": { "value": "
\u2018Interest paid\u2019 and \u2018Interest received\u2019 in this overview are the equivalent of the \u2018Interest expense\u2019 and \u2018Interest income\u2019
\n
items in the consolidated income statement. Given the large
\n
number of underlying contracts that generate interest expense and interest income, it would take an exceptional administrative effort to establish actual cashflows. Moreover, it is
\n
reasonable to assume that actual cashflows for a bank-insurance company do not differ much from the accrued interest expense and accrued interest income, as most rate products
\n
pay interest regularly within the year.
", "dimensions": { "concept": "xbrl:note", "noteId": "footnote1", "language": "en" } } } }