Thank you. A very good morning to all of you from the headquarters of KBC in Brussels and welcome to the KBC conference call.

Today is Thursday, August the 6th, 2026, and we are hosting the conference call on the second quarter results of KBC. As usual, we have Johan Thijs, our Group CEO, with us, as well as Group CFO, Bartel Puelinckx, and they will both elaborate on the results.

As such, it's my pleasure to give the floor to our CEO, Johan Thijs, who will quickly run you through the presentation.

Thank you very much, Kurt. Also from my side, a warm, well, a warm welcome on the announcement of the second quarter results.

As always, we start with the overview. I'm very happy to announce a very excellent result over the second quarter, totaling €1 billion 152 million.

This is a return on tangible equity of 18%. Once again, it highlights that KBC is not only a very well-integrated bancassurance group, but that KBC is once again able to make the machine turn on all its, fire on all its cylinders.

All countries performed excellently in delivering this result, and that is also translated in, amongst others, customer loans growth and customer deposit growth over the quarter again, and that also totals in a very strong inflow of core customer moneys now totaling in one single quarter €6 billion. It also translates and transpires in an excellent net interest income result, which allows us to increase the guidance to approximately €7 billion 50 million.

Not only the interest income part was delivering, but as I said, diversification into the fee and commission business and the insurance business, both delivered excellent results. Again, very strong inflow on the asset management business, but also on the life and non-life side.

If you compare it with previous periods in the, in the, with the same periods, sorry, in previous year, then we see a strong growth more than 10% each. In terms of guidance, also there, we will further increase the guidance.

In terms of the sum of all parts, you will not be surprised that also total income guidance is now brought to approximately 11%, as it is a comparison to 9.7%, 9%, an increase of roughly 1.2%. Costs are well under control.

They're perfectly in line with the guidance which we gave in, in, in at the end of, on the back of the fourth quarter results. Is now also perfectly in line with our internal, internal trajectory on the cost evolution.

As a matter of fact, we have some advance in that perspective that trajectory was used to put the guidance in place. Now, in terms of loan loss impairments, excellent credit cost ratio.

We have taken some impairments on other matters, but I will come back to that in a second. Solvency and liquidity positions remain very strong with a solvency position of 14.4%, which us allows us also to announce today, as usual, the execution of our dividend policy, indicating that we are going to pay out a €1 per share interim dividend, as usual, in November of this year.

Let me go then more into the detail. On the next slide, you can see what I just said about the diversification.

In general, it's more or less 50-50 split. This quarter, it was a little bit more on the net interest income side.

It is a 52-48%, and this is confirming what I said, highly diversified. In KBC, both growth and costs are under control because of the investments which we do in the digital environment, artificial intelligence, amongst others, and that is then transpiring into through what you all know under the name Kate.

Kate is continuously improving its its deliveries in terms of both the revenue side and on the cost side. More than six of, more than 6.2 million of our customers are in contact with Kate and using it, and the autonomy in that perspective of Kate is hovering around 80%, 77% in Belgium this quarter, 75% in Czech Republic, where we launched Kate 2.0.

In the other Central European countries, Kate 2.0 is going to be launched in the quarters to come, which also means that there you can expect indeed a further increase. As we we start we want to have numbers of autonomy 80% or more.

In terms of the translation into what is the effect on the cost side, well, Kate is doing the equivalent of work of at least 420 of our commercial employees, and that is calculated in a very conservative way. Let me also highlight something else.

Kate is generating, on the back of customer data, leads which are then sent out to our employees in a dedicated way, and on the back of that, Kate was able to trigger roughly 0.5 million sales in this quarter. To be precise, 488,000 sales were delivered on the back of that, giving, just to give you an idea, this is a success rate of roughly 19%, for instance, in the business unit Belgium, lead to contract.

On the next page, you can see an overview of where we are in terms of the different positions, profitability, sustainability, but let me skip that to spend more time on the really technical numbers. This quarter was also characterized by a couple of one-offs.

The most important one-off which is in this pack is the adjustment for the modification losses in Hungary. That is, in essence, is very straightforward.

As you remember, there is a cap on the interest rates for mortgages in Hungary. That cap was, by the, normally taking six months timeline, every every six months, it was decided if the cap would be withheld or not, triggering an impairment, a modification loss.

The previous government, Orbán government, just before they handed over the bar to the to the Péter Magyar government, they changed that and actually have decided to to get rid of that temporary six months cap, and therefore, the impairment needs to be calculated over the full lifetime of the loans totaling €42 million. As we speak, Hungarian government is indeed reconsidering that position and then bringing back the caps again.

A couple of things needs to be discussed on that matter, but it is potentially possible that we are going to review that €42 million in the quarters to come, and then obviously, we will write back that impairment. In essence, over the full quarter after taxes, €38 million total one-offs, which is, as you can see on the graph, a bit different than on previous quarter.

Let me go into the different P&L lines, and as usual, we always start with net interest income. We have an extremely good quarter.

€1 billion 805 million is indeed a strong performance, and it's triggered by its two main drivers plus an extra. The two main drivers are the transformation result.

Transformation result went up significantly over the quarter on the back of two things: first of all, higher yields, and second thing, a continuous inflow of benchmark deposit volumes. I will come back to that in a second, but in this quarter, we had a very strong inflow again on current accounts and saving accounts.

Next to that, we had a strong increase of our lending income, roughly €28 million more than than before, which is due to two things: first of all, traditional lending income generated by volumes and margin. Volumes were up on the on on all countries and in a very significant way compared to our guidance.

In this quarter alone, volumes increased with 2.8%, which is indeed, and that is 7.2% on the year for good understanding, which is indeed significant. As a matter of fact, year-to-date, given the second quarter results, we now have an increase of our lending volumes of 4.3%, which is already almost achieving the full-year target guidance which we gave, at least 5%.

On the back of that, we are going to increase that guidance for the for the loan growth to at least 6% for 2026. Growth is, volume is one thing, what about the margin?

It's clear that in a lot of markets where we are present, and on the mortgage side and on the corporate side, margins are under pressure. It's not always downward, sometimes we are able to increase margin, but in general, I would say there is commercial pressure on the margins on the lending side.

In terms of the total margin for the entire book, that means and the margins on the deposit side replicated before, and the margin on the lending side, and all other products which are generating interest income, the margin went up from 217 basis points to 223 basis points, which is indeed a very strong increase. If you compare it over the year, then the increase is 15 basis points, and that is indeed very significant.

I said two drivers, I just explained them, and an extra. The extra is inflation-linked bonds.

As we have indicated on the announcement of the previous quarter where inflation-linked bonds were contributing negatively, this quarter was stellar: €45 million net interest income was generated through those inflation-linked bonds, which makes the difference, back-to-back with previous quarter, €57 million. As a matter of fact, the totals, the the interest income for the inflation-linked bonds over this year already to €34 million.

We guided previously between €30-€40 million, we are coming getting closer there. You cannot extrapolate the €45 million of this quarter going forward, probably will generate a couple of million euro every quarter in the two coming quarters to come.

What about the the other adjustments, they are to a to a lesser extent, number of days, €9 million extra where it was previously negative. All in all, a very strong number.

Let me come back to what I said on the volumes. There was a 2% growth overall on the quarter of our deposits.

If you look at the inflow of core customer moneys on the next slide, then it is indeed a very strong quarter: €6 billion of inflow of core customer moneys. What is even more important is that this in comparison to previous quarter, this quarter was characterized by a strong inflow on current accounts and saving accounts rather than on term deposits.

As a matter of fact, the inflow on current accounts, saving accounts is double of that of the term deposits, which is a different trend as what was probably assumed in quarter one. If you sum it up of all parts, then we are almost at €12 billion net inflow of core customer moneys.

You also see that in that perspective, we do see 1.4 in €1.4 billion inflow on the mutual fund business, which already gives you an indication on the strong performance of last year. Let me say one more word on the term deposits.

Term deposits here are also used as a defensive instrument. This defensive instrument is used, for instance, when competition is launching these kind of products, when states are launching state notes with higher interest rates, well, then term deposits are often used to actually facilitate our customers with sort-like products, but there is one fundamental difference.

Mostly at the time, we do see that clearly, for example, in the in the business unit Belgium where private banking is using this instrument for the same reason, that most customers lock in those moneys in a very short term: 55% of all the moneys which are on term deposits in in that perspective in Belgium are having a tenor of less than 3 months; 75% have a tenor of less than 6 months, which means it's just an instrument to mitigate potential other investments in the future, amongst others, mutual funds, let me say it differently, amongst others, products with higher yields. Let me then go into a make the immediate bridge to the fee and commission, already already mentioned the very strong inflows.

But €758 million put the net fee and commission income at a record high, and this is due to actually two things, in essence: 4% growth on the asset management services and 4% as well growth on the banking services. Asset management services, as is also driven on the evolution of the the the market, the market performance is generating here a very strong uptick.

Our assets under management grew to €328 billion, which is a increase of of 10% on the quarter, and that 10% is actually generated through roughly 9% to 10% market performance and 1% net inflow. Now, given that market performance, there's no big surprise that the asset management fees are increasing indeed strongly over the quarter, and that net inflows follow up, but to a lesser extent, that is the translation of the strong inflow of the €1.4 billion.

In terms of the banking services, a very strong performance on the payment services. Payment services are the bulk of those banking services, but also very strong performance on the network income and the credit files linked to the loan growth, but also on the security-related fees which we get on our trading platforms in Belgium, Czech Republic, and Hungary.

Just to give you an idea, we had, again on the record of last quarter, we had another improvement: 12% more customers on the Bolero platform in Belgium over the year, compared 36% more transactions. All in all, very strong performance on the fee and commission side.

We stand now at €3 billion gross, sorry, €3 billion net sales inflow in the first half of this year, and this is a perfect in line with our ambition. In this perspective, as we don't give detailed guidance, but we are quite positive about the evolution, just to give you an idea, in the first months of this third quarter, yes, third quarter, we have achieved a sale of €1 billion net as well.

What about the insurance side? Non-life business is doing excellently, 10% sales increase, which is quite significant.

This is due to all countries: Belgium 7%, more mature market, bigger portfolio; and then the Central European portfolios, they all grew above their targets, more than 10%: 12% Bulgaria, Hungary 16%, and 14% in Czech Republic. Slovakia is a bit slow lower, why?

On purpose, because of the reshuffling which we're doing on the portfolios, and this is mainly due to the MTPL portfolio. Combined ratios in all countries are performing excellently despite the fact that we had thunderstorms with consequences in Belgium and in Hungary, but also a couple of big fires in, amongst others, Czech Republic.

If you all take that into account and you put it into a combined ratio, then you see that combined ratio stand at an excellent 85%, perfectly comparable with the the same period previous year and clearly below the target of lower than 91%. This is a clear token that the underlying quality of this portfolio is of such kind that allows us to absorb even a couple of calamities which they which can happen in a quarter.

What about the life business? The quarter performance looks compared to previous quarter subdued, but this is not an correct observation.

As a lot of sales in these portfolios are driven by campaigns, and the first quarter characterized by very strange strong campaignment not only in Belgium, but also Central European countries, amongst others, Czech Republic. This was not the case in the second quarter, only we had only one campaign in Belgium and in in Bulgaria, and nevertheless, we were able to generate 24% more sales in this quarter than in the same period last year where you have the same seasonality.

Combining the two quarters, the first half of year's net sales was 18% higher than the same period last year, just to indicate that also in that perspective, the commercial machine has been doing its utmost to generate extra sales. Quality-wise, also the margin which we deliver on those products, the CSM margin, has further increased, it now is solidly above the 17%, which is a fundamental uptick in comparison with, for instance, the same period the same position a year ago.

Then we go on to more volatile results, that is the financial instruments at fair value. As you can see, we have a clear improvement on the derivatives which are used for our mark-to-market positions, €42 million better, which is on the back of the lower ineffectiveness of our micro hedges.

All the other stuff you can read in the detail. In essence, the total result improved with roughly €26 million over the quarter, which is totaling -€92 million.

Net other income, the income generated through the leasing and and real estate and the assistance company is here perfectly in line with the run rate, €50 million is precisely the result which we have booked in this quarter. Coming to the operating expenses, well, operating expenses are significantly lower than previous quarter, but once again here, be careful, bank taxes are, as upfront paid in the first quarter, let's ignore that.

If you look purely at the underlying operating expenses, well, then the the expenses this quarter are roughly €5 million lower than previous quarter if you take into account the FX effect. We had a very strong appreciation of the the forint, to a lesser extent, the the Czech koruna.

If you exclude, make like-for-like comparison, well, then the cost growth is €9 million, which is a translation that costs are under control. The comparison made by previous quarter, need to be aware, we paid €23 million bonus in that quarter.

Despite the fundamental uptick of inflation, despite the fundamental uptick of the FX effect, we were able to keep costs more or less in line compared to with to previous quarter. Also that transpires in a calculation of the underlying effectiveness of KBC Group.

If you exclude, you make a like-for-like comparison, if you exclude the FX effect I just was referring to, the one-off profit bonus, and then, of course, the acquisition of 365.bank, let me remind you that the integration of 365.bank at this stage is an integration of a not-efficient institution, at high costs, and that the benefits of that, the synergies, that they will be reaped in 2028, start to do that in '27, but ultimately the big chunk comes in 2028. It is front-loading the costs and back-loading the efficiencies or the the synergies.

If you exclude that 365.bank to make a comparison on a like-for-like basis, then we do see this quarter an increase of our costs of 3.4%, absorbing, indeed, what I just said, wage inflation, which I think is a major achievement. This is perfectly in line in and with the guidance and also, but these are numbers you obviously don't know, perfectly in line with the trajectory which we had forecasted for ourselves to get to the guidance.

Cost-income ratio now stands at 39.8% when you exclude the bank taxes, and that is better than the 41% of previous year. Certainties in life are bank taxes.

We paid another €64 million, mainly triggered by the windfall taxes in Hungary, €54 million. We do expect that by year-end, the sum of all taxes paid is €730 million, and that is indeed quite a lot.

Going to asset impairments, well, asset impairments are very benign in this quarter, despite a very difficult circumstances which were part of our lives, €135 million, but if you look at really underlying impairments on loans, it's only €53 million. That €53 million is translated into 11 basis points credit cost ratio, which is indeed a very good result.

If you compare that with previous quarter, it's an improvement, if you compare that with the results of last year, and it's another improvement. Indeed, the quality of our portfolio is and remains good.

Non non sorry, the impaired loans ratio stands at 1.8%, which is stable over the years, and if you translate that at EBA level, then it's 146%, and that's clearly below the European average. Now, we have added a couple of things to those impairments this quarter, and that is, first of all, giving the turbulence in the world, the parameters change, and therefore, the modeled ECL buffer has increased with €13 million.

As I as I indicated on previous on previous quarter, the €75 million management overlay, we would not touch, and if you add both numbers together, then the total buffer now stands for total buffer for geopolitical and macroeconomic uncertainties plus the management overlay stands at €188 million, which is roughly 8 basis points of our lending book. The other impairment which we took is the €42 million modification losses, which I explained earlier, and which we potentially are going to take back in the coming quarters.

We also took a €28 million impairment on software. That impairment is a seasonal exercise which we do for sure half a year and end of year, probably we'll do it every quarter now going forward because also this impairment has a positive impact on our capital position, and therefore, it will indeed have a positive contribution to our CET1 ratio.

Let me go into the exposures which we have particularly on our portfolio. You might have questions about that.

We already indicated in in the first quarter and has not changed that we do have no exposure to private private credit, we have hardly any exposure to private equity, and we have hardly exposure to the Middle East. 0.2% in the latter on on our outstanding book is indeed limited, but also sectors which can be qualified as vulnerable, our exposures are limited.

You can see the numbers on this page. I'm not going to dwell upon this in the detail.

Might you have questions about, we are willing happy to answer those questions. Let me go to the sum of all parts, which brings us to the CET1 ratio.

The CET1 ratio stands at 14.4%, which is the consequence of capital distribution through the profit generation. Mind you that it might occur that the dividend which is coming from the dividend, sorry, from the insurance company is pretty low.

As this has to do with the dividends which are generated through the Belgian GAAP result and paid out, there's always a quarter delay. That €25 million will be in the next quarter, for instance, €208 million, there is some seasonality in those numbers.

Then the second thing is, of course, the evolution of the risk-weighted assets. We have had a strong growth of the volume, I indicated already that on the on the back of that, we we increase our guidance, but this, of course, translates itself in the in the volume increase of our risk-weighted assets, as you can see, €2.3 billion out of the €3.5 billion directly comes from that from that volume increase, and also FX effect, the the very strong uptick of the forint and to a lesser extent the Czech koruna have generated 0.6% extra risk-weighted assets.

Sum of two parts is explaining roughly 90% of that increase. So 14.4% on the capital side, which actually triggers also buffers roughly of €4.8 billion if you compare them with the MDA of the OCR level.

There is a small adjustment on the MDA, the 5 basis points come on sorry, on the OCR, 4 basis points come on top of that because of an increase of the countercyclical buffer in Czech Republic as of the 1st of July of this year. MDA buffer now stands at 10.99%, which is due to a 5 basis points shortfall on the AT1.

Leverage ratios are actually in line with with what it was previous quarter. Also, the liquidity ratios are super stable, and the insurance company stands at a rock-solid 231% solvency ratio.

Now, I already mentioned that in the introduction, given the strong results, we actually updated and I should say upgraded our guidance. The guidance now stands for the total income 11%, which compares to the previous guidance 9.9%.

This is mainly triggered by an interest income guidance increase to approximately €7.05 billion and an increase of the insurance revenues to approximately 9%. You already noticed there is a difference in the wording where we used previously "at least," we now use word more precisely "approximately."

The difference is, at the beginning of the year, the world is very uncertain, we make a prediction for a full year. Now, 7 months down the road, it becomes quite clear where we are, and therefore, we're making a guidance now which is far more precise than the previous one, which is giving you a bigger range.

This is the reason why we have changed that, and that is also translated in the operating expenses, which we now guide at approximately 3.4% year-on-year. Consequently, the jaws are standing now 3.3%, which means that we also upgraded the jaw.

Previously, the jaw stood at 2.2%, the full increase of income is indeed calculated on top of the jaws, so that benefit is fully taken into the jaw. The cost-income ratio will be approximately 40%, and the rest of the guidance remains unchanged.

We didn't touch the guidance of 2028 because that guidance was, sorry, that guidance is only done once a year, and that is, as always at the back of a budget exercise, which is currently starting up. Update on updated on 2028, but also giving you insights on 2029 will be delivered, as always, in the month of February on the back of the fourth quarter results.

I keep it here, and I'll give back the floor to Kurt, who will guide us through your to your questions.

Thank you, Johan. Let's open the floor for questions.

Please restrict the number of questions to two to allow for a maximum number of people to raise questions. Thank you.

Hi, good morning. Thanks for taking my questions.

Two from my side, please. First, on the M&A and Ethias deal, could you please update us on what's the latest on the discussion from the government side on the optionality around Ethias, this recent report, what you make of it?

Also, you've been open about distributing the equivalent capital to shareholders in case that deal doesn't happen. I think from the ROI perspective, it's probably not the best, in cash or a buyback.

Would you consider opening up to another M&A option across Europe, Central Europe, and you've been always transparent about what could be the target, which country, or at least when asked, not pushing back too much on commenting. Would you be opening up to another option to use the capital?

Second question is on costs, especially in Belgium. Your last comment about approximately versus at least seems that you're confident about your cost target.

What do you make of the fact that if inflation picks up because of this uncertain macro environment, especially in the Middle East, take cost inflation up, and then costs in Belgium up? Have you identified any levers to offset that inflation in case it persists?

Thank you.

Thank you very much, Tarik, for your questions. Let me take the first one.

Indeed, what we said about potential M&A and then especially the Ethias file, on the previous quarter, I said at this stage, it's only certain that Belfius will come to the market, the government is trying to sell 20% stake, and that process is now started up. We expect by year-end that the government will make a clear statement about what they're going to do with Ethias.

Where we are today, and that is also in the newspapers and also picked up by analysts' reports, actually that statement which we made last quarter, quarter before, is confirmed by the official declarations of the government. It's quite clear that the government has launched a process to sell 20% stake in Belfius.

The government has also triggered a investment firm to give an analysis on what to do with Ethias, and then also to comment on the possibilities of merging Belfius and Ethias at this stage. The intermediate conclusions which have been also sounded by the Minister of Finance were that a merger between Belfius and Ethias is not possible when you do a launch of the stake, the sale of 20% stake in Belfius, as is happening today.

As a matter of fact, also economically, it makes a lot of sense to merge Ethias with another financial institution, a bank, an insurance company, which means actually that they are now indicating that the process of Belfius is one and potential process of Ethias is another. The investment firm is going to come back to the Belgian government before the end of September, and then on the back of that, the government is going to take a decision on Ethias.

Which means before the year-end, we know what they're going to do with Ethias. Let me remind you that whatever happens, if the government is willing to sell Ethias, we will be a candidate, and for the right price, we will pursue that transaction.

If the government would decide not to sell it, it will not break KBC, because we are growing our market share on the insurance side, we are meanwhile number three in Belgium and growing, and in that perspective, we're not desperate. What to do with the moneys?

I agree with you, you have two options. In essence, you would go for building business, which we're currently doing, let's not forget that we grew our lending book roughly 5% this quarter, we grow insurance book roughly 10% in this quarter.

If you take that into account, then I could say that we grow the size of an Ethias every year again, roughly over 2 years, I think it will be roughly there. Over 5 years, we grew the size of a company like ČSOB organically.

What we definitely will do continuously is screen the market for opportunities: in the first place, in the countries where we are present, this is translated into, for instance, the acquisition of 365 and others in the previous years; and as I said before, we look in specific markets that if an opportunity arises which fits our strategy, and which clearly fits also our business model, that we will at least consider. Countries which we have mentioned in the past were, amongst others, Romania, and if it is an opportunity, then we'll definitely pursue.

In terms of business development, given the returns which we are making, I think also it makes a lot of sense for investors that we use our capital to expand our business organically, for sure, but if possible, inorganically as well.

A very good morning to all of you from my side. Good morning, Tarik.

Thanks for your question on OPEX. Basically, indeed, as Johan has been highlighting, we maintain our guidance on the OPEX evolution.

We made it more specific by changing it below to approximate. We maintain the 7.7% year-on-year on non-organic basis and the 3.4% organic basis, excluding 365 and also the FX impact.

As far as wage inflation in Belgium is concerned, there, we are very clear that we, as Johan also has been highlighting, that we anticipate that we will be able to absorb in '26 the inflation increased by further efficiency improvements, driven mainly by, of course, Kate and the impact on our FTE savings, theoretical FTE savings. From that perspective, you should take that into account that we will absorb that.

Thank you very much.

Hi, good morning. Thank you for taking my two questions.

On NII, I hear you that you have changed from "at least" to "approximately." I'm just trying to understand if this is a realistic or still sort of conservative guidance.

If I take Q2 and I assume it's flat in Q3 and Q4, I'm already at or above the 7.05 guidance. Then, of course, you still have got loan growth and deposit growth coming.

Is the difference because the contribution from the inflation-linked bonds is going to be lower, or is it conservatism? Some comments on that.

Then secondly, loan growth is ahead of deposit growth in each market. For now, I think it's fine because loans are still below deposits.

Is there a moment, or do you think we're approaching a moment where there needs to be much more deposit competition because loan growth is accelerating and banks need to fund the loan growth? Thank you.

Thank you, Giulia, for your questions. Let me answer the first one.

Of course, like always, your calculation is correct. Then the question is what is the driver behind that?

If you make the analysis on the evolution net interest income, then first of all, two main drivers are transformation result. Transformation result was triggered by inflows, and I just highlighted that we do have a very strong performance on the inflow of core deposit money and that the yields are higher.

On transformation result, actually the outlook is the same as what we have given already for many quarters, that will continue to increase. On the lending side, well, we gave guidance that it is at least 6% and that the current position after 6 months is 4.3%, which means the second quarter is not going to grow as fast, or we do expect that it's not going to grow as fast as it did in the first half of year.

In that perspective, some slowdown, assuming same margins, well, you will have anyway some slowdown in that perspective. Then we already highlighted the impact in the second quarter that you need to be careful: inflation-linked bonds have been totaling €45 million in this quarter, you cannot keep that constant going forward.

We expect inflation-linked bonds to generate couple of million euros every quarter, but definitely not the 45 which you have seen in this quarter. In all pieces, if you put them together, well, you will see some further increase on your net interest income, which brings us to the approximately 7.05, but that the margin of conservatism, which was in the first guidance, well, that margin of conservatism has certainly calmed down.

I'm not saying it's zero, but it's certainly calmed down.

Good morning, Giulia. On your question on the loan growth, which is higher than the deposit growth, obviously correct.

We have 2.8% organic growth on the loan side and 2% on the deposit side. Now, there's two elements that I would like to highlight.

You also seen that basically we have a strong inflow into our asset management business, net sales €1.4 billion, €3 billion for the year. That also you should take into account.

We are indeed also driving our inflows in order to generate higher investment returns, which are also where the margins are also well north of 100 basis points, and which ties in the clients even better. It's improved also the client loyalty.

Secondly, also within KBC, we've always done that, whereas we obviously guide and steer our entities on loan growth, we do the same also on the deposit growth. They need to focus also on growing deposits, obviously without generating a deposit war.

A good example of that you can see in Slovakia. In Slovakia, where we had a loan-to-deposit ratio of well above 140%, this has now dropped to 127%, exactly because also the Slovaks have been focusing on increasing their deposit base.

Moreover, thanks to Kate as well, and thanks to the fact that we've been able to increase our NPS scores, we are also able to attract new clients, and new clients means also nice deposit growth. From that perspective, our loan-to-deposit ratio for the whole group still stands at a very favorable 88%, and so that it will grow somewhat, but we will definitely manage that to avoid that it would be increasing dramatically.

Thanks.

Morning, and thank you for taking my questions. My first question is the net interest income in Belgium.

It's up 18% year-on-year in the second quarter, but loans grow below that at 6% year-on-year, and deposits only 2% year-on-year, and you've spoken about lending margin pressure. Can you just break down to me the components of how Belgium NII can grow 18% year-on-year?

I just wondered if it's all the replicating portfolio with savings rates not moving. Then my second question, which is again on the loan-to-deposit ratio, but in Czech.

The Czech loan-to-deposit ratio was 67% 3 years ago, and now it's 80%. Are you happy for the loan-to-deposit ratio to continue to grind upwards there, or is there a limit?

What assumption for the Czech retail bond have you made in your NII guidance? Thank you.

Thank you, Namita, for your questions. I will take the first one.

Indeed, we do have in Belgium a very strong beat in the net interest income, and that is driven by the two elements which I highlighted for the group, in essence. You have in Belgium very strong performance on the transformation side, given the fact that inflow of core moneys, current accounts and saving accounts, is indeed also happening in Belgium.

As this is by far the biggest portfolio. We do see that the net interest income, we're now talking about nominal amounts, whereas inflow we mostly have times speak about percentages.

Net interest income is indeed generated through the transformation result at a higher yield on a higher volume in current accounts, saving accounts, which are the two products which have the highest margin in this perspective. As a consequence, we do see in Belgium that the transformation result increases significantly.

As we don't give a precise number, definitely not per country, but believe me, it was significant. The other element is the lending income.

Belgium had a very strong quarter on the growth, and in that perspective, the growth was on two sides: both on the mortgage side, where as we tried in the first quarter to push up the margins, also in the last quarter of '25, push up the margin, we lost some market share consequently because competition did not follow, but we do see that in the second quarter, that has completely been restored to the detriment, certain extent, of our margin, you can see that in the detail which we have published, but volumes have come up significantly. In Belgium, we do see a increase of our volumes on the term loans with 4% and roughly a percent on the mortgages, restoring our market share back to 21%.

Both have been contributing significant increase of that net interest income. Let's not forget, in Belgium, the main bulk of the inflation-linked bonds are booked in Belgium, on the insurance company, and so the €45 million is almost entirely on the interest income of the business unit Belgium.

Good morning, Namita. Your question on the loan-to-deposit ratio in the Czech Republic, indeed, our loan-to-deposit ratio currently stands at 83%, which is indeed up compared to the previous quarters.

This needs to be put somewhat into perspective. As what I said earlier with respect to the focus on loan growth also and then also on the deposit growth is also valid, of course, for the Czech Republic.

There, what you clearly see indeed is the impact, of course, of the retail state bond, which was more successful than anticipated. They expected to raise CZK 40 billion, now at CZK 74 billion, which is significantly up, roughly €3 billion.

Now, that only led to an outflow within ČSOB of roughly 7 billion, which is well below the market share of 21% on the deposit side. Moreover, you should also take into account that notwithstanding the fact that in the Czech Republic, we had, of course, also a policy rate increase, the market continues to react quite in a reasonable way in the sense that the top rate remains at 400 basis points.

We, by the way, as I already highlighted on the first quarter, have been decreasing the top rate so the top rate for the saving accounts from 400 basis points to 380 basis points, and nevertheless, our market share in saving accounts did not drop. We continue to see also quite some strong growth.

We will not do crazy things. On top of that, we're also focusing in the Czech Republic on shifting part of that towards our investment products in order that again to also link better our clients, which we do with quite a success, because also you can see that our private banking and wealth market shares continue to increase and our assets under management also continue to increase.

Take also those two aspects into account.

That's helpful. Thanks very much.

Yes, hi. Good morning, and thank you for taking my questions.

The first one is on risk-weighted assets. Besides loan volume, should we expect any other drivers going forward?

In that context, if we could also talk about SRTs, if you plan to undertake more in the second half, please? The second one is just generally on asset quality.

Is there any pockets or signs of stress anywhere that you're seeing, if you could talk about the different geographies, please? Thank you.

Yes, good morning. In terms of your question related to the risk-weighted assets, indeed, risk-weighted assets for this quarter increased by €3.5 billion, 2.6%.

That is, as you have seen in the company presentation, is mainly driven by volume increase and also by FX, obviously. To some extent, we also have seen an increase as a result of the defaulted loan portfolio.

Now there, to be very clear, this is not immediately linked to a potential deterioration of the loan portfolio, this is simply because we have been writing off quite a number of legacy files with higher provision coverage than the inflow of new files, which explains the increase of the risk-weighted assets on that side. We see a relatively modest, but something that you cannot avoid, increase in our risk-weighted assets from models and model changes.

This is obviously related to updates of models, but also interventions of the regulator. As we indicated already before, we will mitigate that by, of course, through portfolio management initiatives.

These are, amongst others, SRTs, but it's also more than SRTs. We're also looking obviously at credit insurance, but we're also looking at further improving our data and also being much more aware of what the impact is of potential increases in loan volumes on the risk-weighted asset side.

In terms of SRTs, we have been issuing our second SRT in June, which was on a €1 billion 250 million corporate portfolio in Belgium, generating a RWA saving of €0.7 billion. We do have indeed another number of SRTs into our planning, still also for this year, but it's too early to give you an indication on what the impact would be and on what the portfolio would be, because as the impact is depending on the concentration of the portfolio.

Yes, if there are any further impacts of model changes, etc., we will, to the extent possible, manage that through portfolio management.

Amit, I will take your second question. What about asset quality and what about potential stress?

If you look at the numbers which are also part of our disclosures today, both in the PowerPoint analyst presentation as in the detail and quarterly report, you can see that our non asset impairment ratio and our credit cost ratio are actually either stable or improving. The answer to your question on the basis of this macro picture of our portfolio is actually very straightforward.

We don't see any kind of deterioration despite the stress which is there, there are some shocks given the Strait of Hormuz closures and so on and so forth, but we don't see it transpiring directly in a fundamental uptick into our numbers. One of the reasons is we are not exposed to, first of all, directly the region, and secondly, the number of sectors which are very sensitive to this are not present in our portfolios in a large extent.

That detail is provided in the analyst presentation. Now, looking into specifically the ratios, as I said, in the quarterly report, you also find an overview of the PD classes with the different buckets, PD 1 to 4, 5 to 7, 8 and 9, and then you have 10, 11, 10 to 12.

If you make that average of and you look into the evolution over time, if you would do that exercise, you would see that the second quarter is better than the previous one. As a matter of fact, those quarters are perfectly in line with what we have seen over the last 2 years.

As a matter of fact, they are slightly higher than 2022, which was a period when the credit cost ratio was absolutely at its lowest level, hardly 0 or hardly positive and close to zero. Our guidance remains.

If you look at what is happening, you look at our credit cost ratio, it is improving, it is 11 basis points, it will not go back to zero. We do expect that we will have a normalization of the underlying impairments on our portfolio.

This would be a normal way of thinking. It is not crystallizing yet in our portfolios, but we remain extremely, extremely vigilant about that, extremely attentive about that.

We do on every book, for every country, particular exercises on sectors which might be vulnerable to external factors, amongst others, the conflicts in the Middle East. As I said, the tentativeness makes us sure that we will not have big jumps in our credit cost ratio, but the normalization is what we guided before and which we continue to say today.

Very helpful. Thank you.

Yes, good morning. The first question is actually to come back on the '28 targets.

Again, what is the reason not to upgrade the '28 numbers given your upgraded '26 guidance? I think your exit NII will be at about €7.2 billion in the fourth quarter.

You've been guiding for €7.9 billion by '28 implicitly, or more than that actually. Trying to understand why you decide not to upgrade the '28.

Is that just a budgetary exercise which did not take place, or are there uncertainties around assumptions especially on the net interest income for the future? The second one is on the NII guidance, the €7 billion 50.

What type of assumptions did you take for the rest of the year in terms of pass-through rates and also mix shift? Just wanted to understand a bit how you view the competition in the second part of the year on the deposit side.

Just maybe last one is on the NII generated from lending. I think you've been able to grow it in H1, and I think you flagged some margin pressure in some countries.

I think the mortgage margin is under pressure in Belgium, and there's some margin pressure also in South Western Europe. Overall, can you start to grow again your lending NII, or you think it's going to be more on the flat-ish side?

Thank you.

Benoit, Benoit. As far as your first question is concerned related to the upgrade of the '28 numbers, indeed, you're actually already gave yourself the answer.

We enter into our budget exercise as of September, and we typically do not upgrade the '28 numbers because we have not yet run our budget exercise. That's the reason why we have not upgraded that.

As far as the second question is concerned, this is mainly the assumptions in terms of our €7 billion 50 million approximately guidance for the NII. As and as we've been indicating already in the past, we have been taking into account indeed some impact particularly in Belgium on the pass-through rates, in the sense that obviously, when you still have, and it's still the case today, a pass-through on the saving accounts or an external rate on the saving accounts in Belgium 60 basis points, which is historically low, with the current evolution of the rates and also of, of course, the replication portfolios of banks, it is not unlikely to expect that there might be some increase.

We did include some increases particularly over the full cycle until '28. Now what is important here is that what we see in Belgium today is that we see a very rational behavior of competition, in the sense that none of the large banks has increased their rates on the saving accounts, and then I'm referring on the standard saving accounts.

What we did see is that quite a number of banks, including ourselves, have been increasing their external rates on the specific saving accounts, saving accounts with specific features. In our case, this is the Start to Save saving accounts, which means that basically we have increased our external rate on that to 350 basis points.

Of course, the amounts of that are limited, it's limited to up to €500 a month maximum. The impact of that for today is roughly €4 billion, only a small part of our total savings.

We do not expect an irrational behavior as we have seen in the past, particularly in Belgium, but we can of course not exclude going forward that there will be further initiatives taken on that side depending also on what is going to happen with the policy rates going forward. As far as on NII on the lending side is concerned, NII on the lending is obviously increasing.

We saw quite nice increase of our NII on the lending quarter-on-quarter. This to some extent also, of course, was also driven by the correction on the calculation of the interest rates on the subsidized loans in Hungary.

All in all, thanks to the strong loan growth, we do see an increase. There is margin pressure, as Johan has been highlighting.

It has an impact on the NII income, but mainly indeed on the mortgages. In Belgium, the margins on mortgages are indeed under pressure again, -19 basis points quarter-on-quarter on the margin.

As in Belgium, the sales of mortgages is mainly driven by, of course, the ancillary business that you can generate. If you take that into account, the margins remain quite very attractive, well north of 100 basis points.

Also in the Czech Republic, we see some pressure on the margins, but there, the margins now are somewhat lower, but only a few basis points than the back book. Indeed, there is some pressure.

The good news, however, is that basically in Belgium, we've seen a very strong growth on the corporate side with margins that actually have increased. From that perspective, there is some compensation, but indeed NII on the lending side is going to be under pressure going forward.

Great, thank you very much.

Good morning. Thank you for taking my questions.

I have two, please. Firstly, on fees, wanted to understand about asset management flows in the context of the shorter-tenor term deposits comment you made earlier.

Overall asset management flows at 1% does not look high in the context of very strong markets, what explains this? Do you expect flows to go towards mutual funds from term deposits in the coming quarters?

Secondly, a follow-up on M&A. It's very clear that your near-term priority is Ethias, maybe Romania.

Previously, you spoke about Greece as an interesting market over the near medium term. Do you see the need to accelerate interest in this market in the wake of successful hostile takeover of Commerzbank by UniCredit?

Can you provide a pecking order of your M&A preferences as of today? Thank you.

Good morning, Sharath. I will take the question on fees and inflows of asset management.

As far as asset management is concerned, we have actually seen a quite nice increase in our assets under management from €295 billion to €328 billion. Also, the inflow of direct client money increased quite significantly to a total of €141 billion, which is up roughly by €13.7 billion.

Out of that, as Johan has been highlighting, €1.4 billion net sales. What is important is that net sales is supported by a kind of what I would always call our bread and butter in terms of support of our assets under management, which are the RIPs, the regular investment plans, which continue to generate quite some nice inflows.

This quarter, this was €557 million, which is roughly 1/3 of the net sales, and which is actually continuously growing, not only in terms of the number of RIPs that we are selling, both in Belgium and in the Czech Republic, and in Central Europe, but also in terms of the average inflow on a monthly basis. In Belgium, that increased now from €121 to €125, and in the Czech Republic, we are almost at €60, €59 per month to be increased up from €55.

In also international markets, we are now already at €54. Next to that, as only a small part of our asset management flows come today from the Central Europe.

What is clearly happening and what we always expecting is what is the wealth conversion, and we see a proportionate strong growth of our assets under management particularly in Central Europe going forward. From that perspective, we do not guide, of course, our net fee and commission income because this is to a large extent also depending on the market performance, 50% of the portfolio is equity, and that, of course, is depending on external market performance, but the other 50% is, of course, non-market, where the impact could be less.

That's how you should look at the future development of our flows. We're certainly not negative on that.

I will answer your second question, Sharath. On M&A, let me actually repeat what I answered to the question of Tarik earlier.

We will continue to monitor the markets in terms of M&A definitely in the core countries we are present, and that is for banking and insurance activities or related activities. In the past, on the back of also some rumors in the market, we reacted indeed that we were interested in opening banking insurance franchise in Romania.

Until further notice, this has not been materialized, given that no opportunities or not opportunities which allow us to take a significant position in that market. For a good understanding, we never said that we were interested in the Greek market.

I know that some investment bankers are running around with packages saying that we should buy something in Greece, but that's something else. Until further notice, we have never made a statement that we would be interested in Greece, and I confirm today that we're not looking into entering Greece.

Thank you.

Hi, I have a follow-up on M&A and then a question on NII, but maybe just the NII one first. On the transformation side of things, we're moving into a slightly different rates backdrop to what we thought about at the start of the year.

A few of your peers have changed the shape and the size of the structural hedge. I know you don't want to give precise details on what the hedge looks like, but just are you making any changes in how that hedge is set up that would impact either NII growth for the next few years, but also rate sensitivity as we go forward?

Just mechanical on NII. Secondly, on M&A, if Ethias is a no-go, right, and you talked about looking at other opportunities, would that be that you start looking properly and setting things in motion after getting clarity on Ethias at the end of this year?

Because I guess you have around €2 billion of excess capital versus your 13% floor today. If you start looking for alternative options after the end of this year, I can assume that's going to take a year or more to close.

Likewise, anything in terms of accelerated investments in the business, you could probably cover that by organic capital generation if you're doing 18% RoTE today. Am I right in thinking that if Ethias is a no-go, you're almost certainly going to need to distribute some of that excess capital at the end of this year because otherwise the time frames are becoming just too extended?

Maybe if you could remind us the moving parts on how much capital Ethias could consume. I know there's obviously a wide range of potential numbers there, but just what you think that would look like.

You mentioned Romania a few times, there's obviously one big option in Romania, but that's closer to 300 basis points of capital consumption. Just any thoughts about how much further up you'd be willing to take CET1 to sit on a bigger sum of excess in order to give you more flexibility with regards to Romania?

Thank you.

Good morning, Chris. I will take the first question, Johan will take the second.

As far as our replication portfolio is concerned, and you're right, from that perspective, we do not disclose because we consider that as our internal kitchen. Having said that, I can confirm that yes, we have been somewhat reviewing the hedge and that we have started to shorten somewhat the duration gradually, which will allow us indeed to further benefit going forward.

I would like to recall that anyway, we do not yet see the inflection point in the coming cycle in the sense that we expect our transformation result to further increase over the next cycle.

Thank you for your second question, Chris. Indeed, I think it was a perfect analysis of all the topics which are on our table.

In essence, let me highlight a couple of potential answers to your questions. For good understanding, we never disclose the impact what the potential acquisition of Ethias may be.

I know that in the market some assumptions are made by amongst other analysts and investment firms, but we never disclose the precise number. What is clear is that when Ethias comes to the market and when we would do it under the Danish Compromise, and we would acquire it via the insurance company of KBC Group.

We do have, in indeed that perspective, the opportunity of the Danish Compromise. What is also mentioned then by a lot of investment firms that the impact might max be 100 basis points.

I do not comment on that, but we never disclose the precise number besides the fact that it is indeed under the Danish Compromise. The question is, what happens if it doesn't fly?

What happens if it is not for sale, or we consider it not to be at the right price? We will end up with a capital position which we have today plus then the upcoming period of profit and everything else which is influencing the risk-weighted assets evolution and the capital position.

It's clear, if we do not have any opportunities for building our book inorganically, then we do have capital which is exceeding the threshold of, let's call it, the surplus capital. We do not have a precise threshold anymore, as that means that it is at the discretion of the board what to do with it, but it's quite clear that surplus capital, or capital which we cannot make work, which is more than what we need for organic growth and for any opportunities in the let's call it the short-term, mid-term, that capital will be distributed to shareholders.

We were quite clear about that, quite vocal about that on previous occasion, and we're not going to change that today. What is the ideal position in terms of capital?

For instance, Romania, you pointed out what potential acquisition might cost, and I agree with you, it's fundamentally higher than what, for instance, an acquisition of Ethias would cost. That position is taken into consideration when we take the decision on what to do with capital and what to do with distribution.

Distribution will be anyway to the higher end of the range which is currently in our dividend policy, that is 50% to 65%, and the higher range means that it indeed is at a very end of that range. What it is in terms of capital distribution, I cannot disclose because we simply didn't have that discussion with our board because at this stage, we are still having potential opportunity on the table called Ethias.

We will clearly come back to that to you in the period to come, definitely after year-end, and give you much clarification.

That's really helpful. Thank you.

Hi, and thank you for taking my question. It's actually just a follow-up on NII, and obviously your guidance is predicated on forward rates as of early August, which actually implies more than one incremental rate hike this year.

If you were to instead, for example, assume flat rates for the rest of this year, or only one hike, how would that affect your net interest income guidance? Thank you.

Good morning, Shrey. You're right, of course, forwards are taking into account for the guidance.

Now what is important here indeed, they do include a rate hike. What I can give you is what we give you before, that is of course the sensitivity on our NII, a parallel shift of 25 basis points would have an impact on a yearly basis of €60 million, 6-0 million euro.

Obviously, we do not expect a parallel shift, it would be more on the short side than on the long end.

Even sort of qualitatively, how is the shortening of the duration of your replicating portfolio sort of affected this? Thank you.

Of course, that's the reason why we shorten somewhat the duration, because we expect this to provide a positive impact, that goes without saying.

That's expected to offer you some sort of benefit this year as from this year itself?

Yes, we have 5 months to go, from that perspective, this will have already an impact indeed and has been taken into account, of course, also in the guidance.

Thank you.

All right, if there are no further questions, this sums it up for this call. I would like to thank you for your attendance and enjoy the rest of the day.

Bye-bye.