KBC Bank has today missed market expectations as geopolitical challenges pressed on first-quarter earnings and the Belgian bank joined European peers boosting their buffers amid the Iran war.
The lender's full loan loss impairment was €165m in the quarter, a more than €100m increase compared with the same period last year, at a time when the US-Israeli war with Iran bogs down the global economy.
"Due to the geopolitical turmoil we increased the reserve for geopolitical and macroeconomic uncertainties by €75m," CEO Johan Thijs said in a press release.
Global and European economic growth projections have been revised downwards, while inflation expectations have moved higher because of the war.
Thijs, however, said that his base case scenario still assumed the war would be short-lived, limiting the drag on Europe's economy.
"Central banks will look through the inflation and will not hike (interest rates)," he said during an analyst call, contrary to interest rate forward curves that are inching up on bets that policymakers would raise rates as oil prices push inflation higher.
KBC said its net profit came to €557m in the first quarter, missing the €578m analysts polled by the bank had expected, even as its net interest income soared 18% on the year.
In a note to clients, RBC analysts said that an unchanged guidance also "dampens the excitement", even if NII beat expectations.
The lender's shares slumped 4% in early Brussels trading, underperforming the broader European banking index.
