Belgian bank KBC has raised its 2024 growth forecasts for lending and net interest income (NII) after they drove stronger than expected second-quarter profits.
The lender said it now expected NII, a key measure of earnings on loans minus deposit costs, of €5.5 billion this year, up from €5.3-5.5 billion previously, and 4% growth in organic loan volumes, up from 3% previously.
KBC is the latest European bank to report resilient NII as European interest rates have remained higher for longer than analysts' initially expected, although they are anticipated to fall into next year amid signs of slowing economies.
KBC's net profit fell 4% to €925m in April-June from a year earlier, beating analysts' average estimate of €864m in a company poll.
NII came in at €1.38 billion, above the expected 1.36 billion, and almost half of group quarterly income.
While more than half of net profit came from Belgium, central European markets including Czech Republic, Slovakia, Hungary and Bulgaria accounted for the rest.
CEO Johan Thijs told an analyst call that growth in central Europe was outperforming western Europe, and that should continue in the second half of 2024.
"One of the key attractions of KBC medium-longer term is its geographic footprint which should result in above-average growth," UBS analysts said.
KBC said it also benefited from higher net fee income and solid insurance revenues in the quarter.
Insurance revenues before reinsurance, including for homes and vehicles, rose 9% from a year ago to €726m.
KBC kept its annual forecast for insurance revenues to rise at least 6%.
It will pay an interim dividend of €1 per share in November, in line with last year.
KBC left the Irish market last year.
