By Cristina Roca


KBC Group NV said Thursday that net profit for the first quarter fell despite top-line growth, and that it is bracing for an indirect hit from the war in Ukraine.

The Belgian lender and insurer posted a quarterly net profit of 458 million euros ($481.6 million), down from EUR557 million a year earlier. This was due to higher costs, reflecting the bulk of bank taxes for the year and a staff bonus.

The bank's total income, its top-line figure, totaled EUR2.12 billion up from EUR1.93 billion a year prior.

Net interest income--the difference between what banks earn from loans and pay for deposits--was EUR1.2 billion, up 12% on year. Loan growth and interest-rate hikes in the Czech Republic, an important market for KBC, drove the increase.

Net fee and commission income rose 9% to EUR482 million.

KBC said its direct exposure to Ukraine, Belarus and Russia is mainly commercial and amounts to roughly EUR55 million, making it quite limited.

However, the bank is cautious on the potential fallout caused by the war. "We are keeping a very close eye on the indirect macroeconomic impact, such as the effect of high gas and oil prices on inflation and economic growth, and on spillover effects for us, our counterparties and our customers, both financially and operationally, including a heightened focus on information security threats," Chief Executive Johan Thijs said.

KBC booked provisions of EUR223 million to cover risks emerging from the war. "[The war] is clearly going to have an impact on our financial performance," it said, noting that its 2022 guidance was issued before the invasion of Ukraine.

The bank will provide a detailed outlook for the year, as well as 2024 guidance, during second-quarter reporting, it said.


Write to Cristina Roca at cristina.roca@wsj.com


(END) Dow Jones Newswires

05-12-22 0246ET