PILLAR III REPORT HALF-YEAR 2017 PILLAR III REPORT 2013 1
Contents Half-Year Highlights... 1 1 Half-Year Risk Statement... 2 2 Prudential Requirements... 2 Own Funds (transitional definition)... 2 Capital Adequacy... 3 Risk Weighted Assets... 4 Leverage Ratio... 4 3 Final Remark... 5 Half-Year Highlights Risk Weighted Assets +4% EUR 4.0 billion Total Capital Ratio 15.93% Tier T1 1 Ratio 15.91% 12.1% CET1 1 Ratio 15.91% 12.1% 1
1 Half-Year Risk Statement On 1 st January 2017, KBL epb acquired Insinger de Beaufort, a leading private bank in the Netherlands. Subject to approval by relevant authorities, KBL epb intends to merge Insinger de Beaufort and Theodoor Gilissen on 1 st October 2017, the group s wholly owned Dutch private banking unit. This acquisition does not significantly impact the Bank s risk profile. 2 Prudential Requirements Own Funds (transitional definition) In the first six months of 2017, the calculation of own funds was primarily impacted by the first consolidation of Insinger de Beaufort (i.e. goodwill and other intangibles allocation). Common Equity Tier 1 (CET1) Additional Tier 1 (AT1) Tier 2 (T2) Capital Own Funds in EUR million 31/12/2016 30/06/2017 - before regulatory adjustments 1,096.2 1,089.3 - regulatory adjustments -446.1-459.4 - after regulatory adjustments 650.1 629.9 - before regulatory adjustments - - - regulatory adjustments - - - after regulatory adjustments - - Tier 1 Capital 650.1 629.9 - before regulatory adjustments 1.0 0.7 - regulatory adjustments - - - after regulatory adjustments 1.0 0.7 Total Capital 651.0 630.6 2
Capital Adequacy KBL epb s half-year Total Capital and Common Equity Tier 1 ratios respectively stand at 15.93% and 15.91%. As compared to 2016, the evolution of these ratios is closely linked to the acquisition of Insinger de Beaufort. Indeed, prior to the first consolidation of Insinger de Beaufort in 2017, Precision Capital, the parent company, injected 200 million in capital by the end of December 2016. Half Year Capital Ratios 31/12/2016 30/06/2017 Total Capital Ratio 17,14% 15,93% Regulatory Minimum 11,52% 11,52% Tier I Ratio 17,11% 15,91% Regulatory Minimum 10,52% 10,52% Common Equity Tier I Ratio 17,11% 15,91% Regulatory Minimum 10,52% 10,52% 3
Risk Weighted Assets No significant variation is identified with regard to the evolution of the credit risk in the first six months of 2017. The slight increase in the market risk is driven by the renewal of foreign exchange positions with some longer maturities, while the increase in operationnal risk is mainly due to the inclusion of Insinger de Beaufort in the scope of consolidation. Risk Weighted Assets in EUR million 31/12/2016 30/06/2017 Credit Risk 2.729,7 2.694,5 Central Governments and Central Banks 121,8 127,0 Regional Governments and Local Authorities 16,6 10,6 Public Sector Entities 25,9 41,2 Multilateral Development Banks - - International Organisations - - Institutions 329,3 430,6 Corporate 1.167,1 1.081,6 Retail 120,8 123,9 Secured by Mortgages on Immovable Property 295,2 401,7 Exposures in Default 17,1 33,9 High Risk 45,9 65,7 Covered Bonds 5,3 8,7 Claims on Institutions and Corporate with a Short-Term Rating 31,2 44,9 Claims in the form of CIU 114,3 66,7 Equity 226,8 35,5 Other Items 212,4 222,5 Securitisation - - Credit Valuation Adjustment (CVA) 14,2 21,1 Settlement Risk 0,1 0,0 Market Risk 339,6 444,8 Interest Rate Risk Risk 326,4 428,4 Equity Risk 7,6 7,5 Foreign Exchange Risk 5,6 8,9 Operational Risk 715,7 798,1 Total Risk Weighted Assets 3.799,3 3.958,5 4
Leverage Ratio At half year, KBL epb s indicative Leverage Ratio stands at 5.11%, according to the transitional definition of own funds. Although no regulatory constraint is currently binding in the European Union, this figure stands comfortably above the 3% minimum Leverage Ratio recommendation of the Basel Committee on Banking Supervision. In EUR Million 30/06/2017 Leverage Ratio 5.11% Tier 1 629.9 Total Exposure 12,334.3 3 Final Remark Although the Bank is currently working in a challenging macroeconomic environment, no additional significant information that would not be available in the Bank s latest annual Pillar III Report as at 31 December 2016 was identified in the first half of 2017 with regard to the evolution of the Bank s risk profile and the necessary information to be disclosed to market participants in order to convey a fair picture of this risk profile. 5