The record year for Belgian banks - Trends-Tendances sur PC

The record year for Belgian banks – Trends-Tendances sur PC

Despite rates still at rock bottom and the health crisis, our four major banks – KBC, BNP Paribas Fortis, Belfius and ING Belgium – have published flamboyant results for 2021.

The harvest was good in 2021 for the country’s main banks. Despite the pandemic and interest rates still at rock bottom, the annual results just published by KBC, BNP Paribas Fortis, Belfius and ING Belgium are indeed reaching new heights. At the end of the 2021 financial year, the four tenors together made a pre-tax profit of 9.4 billion euros, against 6.1 billion a year earlier, i.e. a spectacular increase of 53% over 12 months.

The harvest was good in 2021 for the country’s main banks. Despite the pandemic and interest rates still at rock bottom, the annual results just published by KBC, BNP Paribas Fortis, Belfius and ING Belgium are indeed reaching new heights. At the end of the 2021 financial year, the four tenors together made a pre-tax profit of 9.4 billion euros, against 6.1 billion a year earlier, i.e. a spectacular increase of 53% over 12 months. Each sign went there from its record. With 2.6 billion, KBC saw its net profit jump by 81% and surpass its performance in 2019. For the first time in three years, ING Belgium saw its income increase to cross the 3 billion euro mark. Better still, Belfius recorded the best final result in its history to come close to a billion euros in profit. As for the former Fortis, the house shows net revenues that exceed 2.5 billion euros, a figure never reached since its takeover in 2009 by the BNP Paribas group. But how have our banks managed to make so much money when they have been complaining about low rates for years? In reality, several elements support these historic results, starting with the rebound in economic activity after the successive confinements of 2020. There were fewer accidents on existing loans than expected. The money set aside to deal with bankruptcies has almost been recovered. The “cost of risk”, as the bankers say, has decreased, also thanks to “the development of a more anticipatory management of these bad credits via artificial intelligence”, notes Anthony Wolf, partner at Sia Partners. In addition, bank customers, households and businesses, stimulated demand for new credit. At BNP Paribas Fortis, loans to the Belgian economy increased last year by 3.2% to cross the symbolic bar of 130 billion. Still in the income department, “in addition to lending massively to households and businesses, just to increase volume to compensate for the pressure on margins, activities related to investment products, synonymous with commissions, are more profitable than before, adds Anthony Wolf. Banks are more active in this segment thanks to household “covid savings” and technology that facilitates access to this type of product for the general public”. Example at Belfius, with its new Re=Bel stock market trading app launched last summer which already has 50,000 users. Finally, it must be noted that one of the levers used to compensate for the low rates consists in charging customers a maximum of fees via a more specific segmentation of the offers, to the point of paying for what was free (the Lion Account of ING). Even advice is paying for some (new Advice pack at BNP Paribas Fortis). And then, “banks are also spending less by using automation and closing branches”, adds Anthony Wolf.

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