KBC Group (OTC:KBCSY) shares experienced a significant drop on Thursday, November 9, 2023, as they fell to EUR49.90, marking a 3.7% decrease. This decline was primarily attributed to a disappointing annual forecast, which was impacted by customer shifts from savings accounts to term deposits and asset management. The Belgian bank insurer now anticipates its net interest income for 2023 to be about EUR5.40 billion, a significant drop from the initial estimate of EUR5.60 billion and falling below RBC (TSX:RY) analysts' consensus estimate of EUR5.5 billion.
The company attributes this downward adjustment to several factors, including a government retail bond issue, increased minimum reserve requirements from central banks, and lower customer deposits. These circumstances led KBC to reduce their original projection for the full-year target.
Despite these challenges, KBC managed to increase its net profit to EUR877.0 million, surpassing analysts' expectations and the Q3 profit of the previous year. However, a slight decline in loan income led to a 2% quarter-to-quarter decrease in net interest income, falling short of consensus estimates.
Despite a significant initial drop on the Brussels Stock Exchange on Thursday morning, KBC shares managed to curtail their losses by late morning, closing 1.5% lower. Looking ahead, KBC anticipates 2024's net interest income to remain flat at EUR5.4 billion (EUR1 = USD1.0683).
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