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KBC Group FY'17 profit up 6% YOY despite Belgian tax reform-related charge in Q4

Belgium-based KBC Group NV saw an increase in full-year 2017 profits despite a decline in fourth-quarter results.

The bank-insurance group reported fourth-quarter 2017 profit attributable to equity holders of the parent of €399 million based on International Financial Reporting Standards, down from €685 million in the year-ago period. EPS for the quarter stood at 92 cents, compared to €1.61 a year earlier.

The result was impacted by a one-off charge of €211 million due to the Belgian corporate tax reform. Excluding this item, net profit for the period would have been €610 million.

Net interest income for the quarter came in at €1.03 billion, compared to the year-ago €1.06 billion, while net fee and commission income rose to €430 million from €376 million over the period.

The group's nonlife insurance income before reinsurance fell year over year to €152 million from €178 million. The life insurance business recorded a loss before reinsurance of €3 million, narrowing from the year-ago loss of €44 million.

Impairment charges narrowed on a yearly basis to €2 million from €73 million.

For full year 2017, the group reported attributable profit of €2.58 billion, up from €2.43 billion earned in 2016.

Return on equity was 17% in 2017, compared to 18% a year earlier.

The group's fully loaded common equity ratio stood at 16.3% at 2017-end based on the Basel III Danish Compromise method, compared to 15.8% at the end of 2016. On a phased-in basis, the CET1 ratio was 16.5% at 2017-end, compared to the year-ago 16.2%. The fully loaded leverage ratio under Basel III was 6.1% at the end of 2017, unchanged from 2016-end.

KBC Insurance's Solvency II ratio stood at 212% at Dec. 31, 2017, compared to 203% at the end of 2016.

The group will propose a final dividend of €2 per share, to be paid in May, taking the total gross dividend for the year to €3 per share. The company will also propose to buy back 2.7 million shares in a bid to offset shareholder dilution caused by annual capital increases for staff.