I will now hand over the call to your host, Kurt De Baenst, Investor Relations Manager, to begin today's conference. Thank you.
Thank you, operator. 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, February 8, 2024, and we are hosting the conference call on the 4Q and full year 2023 results of KBC. As usual, we have our CEO, Johan Thijs, with us, as well as Luc Popelier, our Group CFO, and they will both elaborate on the results and add some additional insight. 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, and also from my side, a warm welcome to the announcement of the quarter four results of 2023, which obviously also means that we are going to disclose the full year results. Now, let me start with the highlights of the quarter four of 2023. Well, actually, we have posted EUR 677 million, a very good result, in circumstances which were not always the easiest one. The reason why I call this result a very good result is because we also, in this EUR 677 million, took into account a impairment on goodwill of the building savings society in Czech Republic of EUR 109 million. And we also took impairments voluntarily on software to the tune of roughly EUR 56 million.
If we would exclude those, then the profit would not be EUR 677 million, but EUR 812 million, and then obviously, that sounds completely different. Now, what is also very good news is that we once again have confirmed that KBC is more than a net interest income bank. We have excellent results posted with record high sales on asset management and record results posted on the insurance side, where we had strong growth in sales in the 4Q on both non-life and life insurance business.
As a matter of fact, we also posted a record result on our combined ratio of 87%, despite the fact that we put in extra buffers for inflation, which is linked to claims, and that we also put in an extra buffer for what is known in Belgium as a state fund for uninsured risk. The sum of the two combined is roughly 45 million EUR. Now, talking about net interest income, well, also in this quarter, we, we have posted better than guided results, and, oh, this is definitely something which is also important for the quarters to come. We kept our cost under control, and we were also able to further increase all the other lines in our P&L.
So in that perspective, if I look at the full year results, then we have beaten our own net interest income guidance. So yes, indeed, we have been a bit too conservative. We ultimately end at EUR 5.5 billion, but as the guidance was EUR 5.4 billion, so that is an over delivery on this guidance. We are spot on with our cost guidance, and we have also beaten our net income guidance, which we gave for the full year. So that is all good news in terms of our liquidity ratio is also very solid, and also our capital position is better than what was assumed. So in this perspective, this is clearly indeed also a further underpinning of the excellent results of this quarter.
The consequence of all of that is that our return on equity is north of 15%. Cost income ratio is 43%, if you exclude the bank taxes and our credit cost ratio, which is a token of quality of our underwriting book, stands at 0 basis points, which is indeed also much better than what we have guided for. Consequences of all these numbers are that we are proposing a gross dividend of 4.15 EUR per share, which is topping up the interim dividend with 3 EUR per share, and that is something, which is in line with our capital deployment plan, which you can see on the next page, where it is expressed. In line with also that, capital deployment plan for 2023, we will execute it as you are used of us.
That means that we will distribute the surplus capital above the fully loaded ratio of 15%. And that will be decided by our board, as always, at their discretion in the first half of this year, and then the execution of this decision will then be, as always, in the traditional form, either in cash, either in share buybacks. Let me take you to more detail, and that is on the next page, where you can see what is driving, amongst others, our commercial performance and our efficiency more and more. That is the impact of Kate. I already said on previous occasions that it is going much faster than what we have hoped for.
As a matter of fact, in the meanwhile, we have 4.2 million of our customers actively using Kate, and that has a clear positive effect on the, on the sales side, but definitely also on the cost side, so on, on our efficiency. As a matter of fact, we have 44 million push messages to our customers in the meanwhile, and they are picked up quite massively with our customers.
Also, the NPS of those customers referring to Kate is very good, and as a matter of fact, when we take a couple of conservative stances, then we can clearly see that Kate is doing roughly, fully independent without anybody interfering, roughly, let me round the number, 6,000 sales extra per month, and that is similar to productivity gain as well on the cost side, where we also clearly can see that Kate starts to replace FTEs, which we can then use for other things. The split up between the bank and the insurance company in terms of results is like usual, it's a bit better now for the insurance side.
16% on the income is insurance, 84% is on the banking side, and also in that perspective, quite important, KBC, once again, confirms its position as one of the front runners on the sustainability domain. Building business in a sustainable manner is clearly what we do, and that has been then warranted by also the outside world in terms of rating agencies. We are very happy to see that Sustainalytics consider KBC as top three globally amongst the diversified banks. But also, what is very important to us, that CDP has confirmed our A rating. We're pretty pleased with that, giving also the pressure which we see from supervisors and regulators. On the next page, you can see the building blocks, and I just want to stress one thing on this building blocks slide.
That is, if you look at the income side, it clearly shows how diversified KBC is. Net interest income is now roughly 50% of our total income, whereas asset management and insurance is actually the remaining part. So it is 50.8% versus 49.2%, so it's quite quite diversified. So clearly, we are more than a net insurance bank. In terms of the one-offs, this quarter is characterized, I already mentioned that, by a one-off impairment on the goodwill of our building savings society in Czech Republic, is EUR 109 million. The other one, which I want to mention, I will come back to that later on, that is on the net other income side, where we have a one-off of EUR 18 million on a realized gain or sale of assets.
Let me go now to the more important P&L lines. First of all, start with the net interest income. Well, if you look at the net interest income on the banking side, there is a difference of EUR 25 million on the quarter. Actually, the net interest income overall decreased by 2%. But there is a big but, and the big but is that difference of EUR 25 million is entirely explained by the impact which we guided for on the previous quarter on the impact of the State Note. The State Note impact, the difference quarter three, quarter four, was EUR 29 million, so it explains more than what you can see on this graph.
On top of that, the negative impact of the minimum reserve requirement was EUR 24 million, which means that our transformation result has outperformed that, that impact in a significant manner. This is a translation of the way KBC has hedged, its replicating portfolio, so it has, hedged its deposits. And as you know, we lengthened our tenor, and we started to reap the benefits from that. Moreover, this will be a continuation to see in the quarters to come, our net interest income will further increase on the transformation side going forward. In terms of, also the lending book, we have seen good outcome this quarter. The lending income has increased, and that means this is on the back of two things. The volume increased with 3%.
We have seen an extremely strong third, sorry, 4Q, both on the side of commercial lending and also on the side of the mortgage book. This is not the case in every country, but the commercial side, you can generalize on the mortgage side. It depends a little bit on the country, but nevertheless, on both books, we saw a strong increase of the lending business, which is a good uptake, which is also confirmed in the first weeks of this of this year. In terms of the margin, margin is commercially under pressure. It is stabilizing certain countries, definitely on the mortgage side.
It is increasing again, but all in all, the commercial margin is still not what it was, let me say, something a year ago, but it is at least bottoming out and increasing slightly, creeping up, as they say, in general. In terms of the total impact, five basis points less Net Interest Margin, this is fully due to the impact of the State Note and the impact of the minimum reserve requirements. Without them, it would have been an increase in the margin. In terms of the deposit side, and actually, when we speak about deposit side, we mean core customer money. Well, there is good news to mention here as well. We saw EUR 2.2 billion of net inflows of core customer money.
As a matter of fact, we saw a positive inflow of EUR 1.3 billion on the, let's call it, traditional deposit side, and we saw another EUR 0.9 billion increase on our asset management side, so on the mutual fund business. Let me talk about the real deposits. Well, the positive inflow of EUR 1.3 billion is also translated in a further shift from current accounts and saving accounts, towards term deposits. For a good understanding, we always took in our guide as a very conservative stance in this perspective, and what you see in this quarter was a bit better than that conservatism, which was included in terms of shift on the net interest income side.
Obviously, if you look at the year, we have an inflow of EUR 5.9 billion, which is partially or mostly offset by the outflow, which was linked to the State Note, EUR 5.7 billion. But all in all, if you exclude the State Note, yes, indeed, then we do have an inflow of traditional deposits, and we have a super strong inflow of the EUR 4.8 billion in mutual funds. So it clearly shows the diversification model, the bank insurance asset management machine in KBC is performing well in 2023. So on the deposit side... Also good news to mention, what about then the fee and commission business? Well, here we do post a record result, EUR 600 million on the asset management and all other fee-related business side is indeed a record high.
This is 2% up on the quarter, 9% up the year. The good news is that it increases on all different underlying parameters, so asset management business was, was up with roughly EUR 9 million. The entry fees were up with roughly EUR 5 million. Our securities-related fee was actually up because you have to be aware that in the previous quarter, we had a one-off, which was related to the fees paid for the State Note, EUR 11 million at the time. So if you take that out, also there we saw an increase. As a matter of fact, payment services and so on, so forth, all of them increased, including the credit transfers, which were linked to the fees, which were linked to the credit transfers.
In terms of the assets under management, we now clearly stand at a very high level, EUR 244 million, which is 8% above the year. If you split it up in net inflows and market-driven performance, then the latter is 6%, the former is 2%. Let me highlight that inflow. As I said, we have EUR 4.8 billion of net inflows in this quarter. That is, again, in the 4Q, a net inflow of EUR 0.9 billion, which is indeed a very strong result. If you compare it with 2022, which was also a record year, then we have beaten that result with roughly, on a year basis, EUR 1.9 billion.
That is really good. In terms of component and composing elements, you all know that we always refer to the regular investment plans, which is the stable contributor to this net inflow. Well, that was at a level of EUR 1.5 billion for the full year, and that is actually a comparison which you could say is equal per quarter. So the EUR 1.5 billion is equally spread. So we continue to see that growing, and that's also a solid base for our net fee and commission income, going forward for our net fee commission income in the future. Let me talk about the insurance business. Well, here again, the diversification machine has turned on all cylinders. We saw a very strong increase of the sales quarter-on-quarter of.
Sorry, year-on-year of the non-life insurance business, 14% up. This is indeed a very strong performance. This performance is not only happening in Central Europe, but also in Belgium. So it was really, really a good year, but also a good quarter in the non-life insurance business. Quality of underwriting is 87, and I repeat what I said, we have taken extra provisions for the Humasol-like motor third-party funds, so it is the government-owned fund for uninsured risks. So we put there in roughly EUR 25 million extra as a buffer, and we also put in an extra buffer for future inflation on claims of roughly EUR 20 million. So in that perspective, the 87% combined ratio even excels more.
In terms of where we book those results, actually, 87% is more or less the standard within KBC Group. Every country has cost income ratio... Sorry, not cost income, combined ratio, which is clearly better than the target. There's one exception, that is Slovakia, but it's a very tiny portfolio where we have a little bit higher than what we had anticipated for. But all the rest, 87% on average. In terms of the life sales, also a very strong quarter. It's driven by commercial actions, as I indicated also on the announcement of the third quarter results. Well, we have now an increase of 56% on the quarter, and if you compare it with the absolute record sales in 2022, then we are more or less in line, slightly down.
But, also that is, I mean, not too important because it is indeed, once again, a confirmation that if we do commercial actions, we do see immediately a very strong impact on our sales, both on the interest-guaranteed products as on the unit-linked products. The split up, by the way, between the two, is 51% on the unit-linked and then, 43% on the interest-guaranteed products. The balance, 6%, is for the hybrid products, which is a mixture of the two. Let me go to, financial instruments and fair value. I mean, you know the volatility of those instruments or the financial instruments fair value.
What is important here to mention is a very strong performance on the dealing room results, which had a EUR 31 million increase on the income side, and then also higher results on the investments, which are linked to the unit-linked products. But you know how that works. Under IFRS 17, that is offset by the IFE, as we call it. So, the investments, financial expenses, income and expenses, which are booked on the other side of the balance sheet. Now, all in all, we have seen a zero impact quarter on quarter on the financial instruments on fair value.
Regarding the net interest income, we do have a EUR 60 million income, which is EUR 16 million higher than last quarter, but that is mainly driven through an impairment of EUR 18 million on one or the other sale of assets. This is, excluding number, actually a perfect normal quarter. So let's not waste too much time here, and let's continue with the cost side. Well, cost side, good news. First of all, perfectly in line for the full year with the guidance which we gave, and as a matter of fact. We are now with a cost-income ratio of 43%. If you exclude the bank taxes, to be precise, 42.6% is the actual number.
Cost increases were kept under control, despite the fact that we have in the 4Q traditional higher marketing expenses and further incoming invoices on the IT side, we were able to keep our FTEs in control. As a matter of fact, we were able to reduce further our FTEs and to compensate big time for the inflation, which is pushing up the salaries of our staff, the wages of our staff. There's a certainty in life, that is that bank taxes continue to rise. They now stand at EUR 687 million, which you can also see in a split up on the table on the very same page, but also on the next page, where you can see the evolution of the bank and insurance taxes for the full year.
13.4% of operational costs are bank and insurance taxes, and that's quite a lot. Things are split up per country. You can pick out the country which you prefer, but also in Hungary and in Belgium, those are the two countries where we have the highest taxes to be paid. What about the quality of the lending book? Which you can see on the next page. It is actually very good. Let me start with the most whopping number, the credit cost ratio stands at 0%. If you include the release of provisions, which we have on the geographical emerging risk buffer. 0% is indeed a whopping number, and it's substantially lower than our guidance. How is it built up?
Well, on the traditional lending book, we have seen 30 million euro of impairments, which are most of the time linked to a couple of bigger files, corporate files in Belgium and in Hungary. In all the rest, the portfolio has hardly any impairment, so that is indeed a reflection of the underwriting quality. What we do see as well, that is because of the improvement of the macroeconomic parameters. We had releases on the buffer for geographic and emerging risks, EUR 35 million, so that the sum combined of those two lines give us a release of provisions of EUR 5 million. In terms of the buffer, mind you, that we still have EUR 256 million of buffers for potential impact linked to geographical and emerging risks.
That is, among others, inflation, which we know is now coming down significantly, so it's really becoming a buffer. In that perspective, you could say it is more or less the impairment of a full year, which is still buffered a bit lower than what it is for the full year. In terms of the other impairments, I already highlighted the fact that we took a hit on our goodwill, or we impaired our goodwill of EUR 109 million for Building Savings Society in Czech Republic. But next to that, we also took impairments voluntarily on software, which is bringing the total to 50, roughly 55 million EUR and EUR 10 million on the interest rate cap, and Hungary completes the EUR 66 million total, which you see on this page.
In terms of credit cost ratio, including the or excluding the buffer releases, we stand at seven basis points, which is also half of our guidance. Then, I think we are then at. Let me see. Yes, indeed, the ratios relating to the capital. Well, also on this side, we do have good news. First of all, we have the traditional build-up of the numerator. Sorry, of the numerator. That is the results and the accruals of dividends on the insurance side. Then, on the denominator side, that is good news. We guided previously that the releases of our risk-weighted assets linked to, among others, decisions by the ECB, would be roughly around EUR 2 billion. Well, the releases are higher.
They are now totaling EUR 3.2 billion, and that is indeed a significant improvement compared to the guidance which we have given. If you look at then the consequence of both combined, we stand at a capital ratio CTE1 of 15.2%, at the end of last year. Expressed on page 17, the buffer on the CTE1 side now stands at 4.3%, totaling roughly EUR 5 billion. If you translate that to other buffers, the MDA buffer, then obviously because KBC has not issued any AT1 and Tier 2 to compensate for the CTE1, the buffer stands a little bit lower at EUR 4 billion, 3.6%. By the way, the OCR ratio for KBC stands at 10.9%.
In terms of the leverage ratio and then also the liquidity ratios, very solid positions. We have a leverage ratio of 5%, 5.7%, which is an improvement compared to last year, with 40 basis points. Ratios on the liquidity side stand solidly above the thresholds, and we have a 159 LCR ratio, which shows again that KBC is, in that perspective, a very liquid institution. And the solvency ratio of the insurance company has also further improved to 206%, substantially higher than the regulatory minimum. So what are we going to face going forward? Well, economic growth, which was quite under pressure in the 4Q of this year, will tend to improve in the period to come.
We do expect that as of this year, beginning of this year, certainly in the second part of this year, economic growth is going to compared to the last quarter of last year, to go better, so to improve. We do expect that, in on the European level for the full year, a growth of 0.5%. But far more important for us, that is in the countries where we are present, Belgium, 0.9% growth expectation, and then in Central Europe, Czech Republic, and all the other countries, we expect this to be roughly a bit more than double. It depends a little bit on the country, on the different countries, but it is indeed significantly best and better than in Western Europe.
In terms of inflation, we also expect this to be hovering around 2%, depends also a little bit on the country. But it's clearly that inflation is now better under control. Now, as usual, on the back of the full year results, we always bring a guidance for the year to come and then also a longer-term guidance. Let me start with the former. What about the financial guidance 2024? We changed our approach, giving the fact and giving the experience of 2023, where we gave kind of a number and then had to constantly update this, given the yeah, the unforeseen circumstances, government stepping in, requesting also part of the profits banks are making, changing the policy of the ECB, for instance, on the MRR, and so on, so forth.
We now changed the approach, and actually, we gave guidance, which is clearly putting a floor under the income side and clearly putting a ceiling on everything which is considered to be expenses, costs, combined ratios, and so on, so forth, impairments, and so on, so forth. So giving that floor-ceiling approach, we now give for the net interest income a EUR 5.3 billion-EUR 5.5 billion range. And we consider our loan growth to be 3% or north of this. In terms of our insurance revenues, we say at least, clearly indicating this is a floor, 6%, and for the operating expenses, we say it's below 1.7%. So it's also clearly putting a ceiling on the cost growth.
Cost-income ratio, as a consequence, will then be below 45%, and the combined ratio will clearly be below 91%. In terms of the credit cost ratio, we also guide here that it will be significantly below the through the cycle cost range of 25-30 basis points. Now, let me highlight what is included in that guidance. You can see this clearly on the next page. Within the range, 5.3-5.5, we built in some very strict conservative numbers. First of all, we used the market forward rates of mid-January. Now, if you want to know which is precise the period, you take the worst situation, which you have seen mid-January, and that's the number which we used.
We took into account a further increase of the MRR to 2% as of the first of April 2024, so doubling it. We have taken into account the conservative assumption that there is no inflow of a deposit after the maturity of the State Note in Belgium in September of 2024. You know that we had an outflow of EUR 5.7, so we assume in the calculation here there is no inflow. I repeat what I said on the previous occasion, commercially, we have completely different targets than no inflow, I can assure you. And then, last but not least, we have also considered further continuation of the shifts from current accounts and saving accounts to term deposits, in a very conservative manner. Now, what else?
There is a sensitivity which we add that, if there is a deviation from those market forward rates of 25 bps, then that will generate an impact on a net interest income of roughly EUR 70 million. And you can consider this to be roughly 50/50 split up on the short-term impact and on the long-term impact. I would like to repeat that. That is not necessarily the case, that when you have a cut on your interest rates, that, the long-term interest rates move similar. So therefore, we gave this guidance with a rough split up between short term and long term.
And if, and in the event that the Belgian state would issue a new State Note with very favorable facilities, at i.e., the withholding tax reduction and the one-year tenor, those, and definitely the withholding tax is the key one, then this would lead for us to an impact on our net interest income of EUR 25 million for every EUR 1 billion of subscription. As a matter of fact, the government is going to take a decision today on the State Note and the form of that State Note. This guidance also applies obviously to the longer term, so to 2026. And here also we approach the same way. So we put in the floor for the income side, and we put in a ceiling for the expenses side. So the everything which is related to expenses, outgoing monies, CRM is included.
CAGR for 2023-2026 is at least 1.8%. Insurance revenues is at least 6%. Operating expenses is below 1.7% over the full cycle. Cost income, therefore, as a consequence, will be worst case below 42%, so the worst case is 42%. Combined ratio, 91%, and the guidance on the credit cost ratio remains the same, that is, well below the through this cycle. So in this way of guidance, we hope now that we do not have to update again every quarter the numbers because of unforeseen circumstances.
Also, you have noticed that at the end of last year, in December, the European Commission, the European Parliament, and the Council came to an agreement regarding the implementation of Basel IV, which is confirmed to be happening as of the first of January 2025. We had given guidance on the available information back at the quarter three. Well, we have updated that information, and it contains indeed good news for KBC. That is on the back of this political agreement, by the way, which still needs to be translated into what is then called regulatory technical standards by EBA in the next coming period. That decision, which is the basis for that translation, has good news in terms of, first of all, the first-time application, which we originally guided for EUR 2.5 billion impact. Well, that impact drops to zero.
So that is indeed a very good news because that was applied as of the first of January 2025, so that goes to zero. And then the second thing is, that obviously, if you look at then the floor, the floor which is applicable only in 2023, 2033. So what is that? Within nine years, that floor is, as a consequence of the releases of the impairments of the Risk-Weighted Assets, now guided higher than before. It now stands at EUR 6 billion. But that six billion is mainly driven by elements, which are related to non-rated corporates, in essence, SMEs. And obviously, this assumption is that we are working on a static balance sheet and that we do not do anything between now and 2033 in respect of the rating of those SMEs, so this is highly unlikely.
Let me summarize it differently. Between quarter three and today, the impact on the risk-weighted assets, including Basel IV, including the simplification, is roughly EUR 4 billion better than what we have guided for in quarter three of this year. On the next page, you have the summary as a wrap-up of all those parameters, and then all the numbers on the business units are there, but I suggest that we skip that part of the presentation. After the business units, we have a presentation of full year, but I think all of you are more interested not to see what the full year is, because that's simple. This is some of the previous quarters. I think you guys are more into questions.
So I will leave the floor open, but of course, Luc and myself will be very happy to all answer. Sorry, I forgot one thing. Luc reminded me, yes, indeed, we do have, for non-financials, new targets, as well, and they are on... Let me see, the page, sixty-three. They are on page 63. So the non-financial targets, which are linked to our customer, so NPS scores, in essence, are top two. We are on a straight-through processing, which is important for our, efficiency and therefore our cost side, is increased to 68%. We do increase our, target for our bank insurance clients to 83%. We increase our target for our bank insurance stable clients to 29%.
Then also on the digital side, the sales on both banking and insurance sides are increased to respectively 65% and 35% going forward. These are targets to be achieved by 2026. By the way, we mostly achieved the targets on 2023, which were forecasted. We have a slight miss on the bank insurance clients, but it's only due to the fact that we have incorporated several new customer portfolios through acquisitions, and therefore, you know, we have a small miss on that one, but otherwise we would have achieved all those targets. I now hand over the floor back to Kurt, who will guide you through your questions. Thank you very much.
Thank you, Johan. I open the floor now for questions. Please restrict the number of questions to two, to allow for a maximum number of people to raise questions. Thank you.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. We will take the first question from line, Giulia Aurora Miotto from Morgan Stanley. The line is open now. Please go ahead.
Yes, hi, good morning. So two questions from me. The first one on NII, please. On your slide 22, you talk about the shift between current to, and savings to term and conservative assumptions. Looking at ECB data monthly, you know, progression, it seems like that's moderating. It was quite intense in Q3, especially, and then that's moderating. What are you seeing, you know, year to date? Because I was thinking that's stabilizing, so it should be better than what you have seen in Q4. Is that correct? And then secondly, on costs, the 1.7, on top of being a ceiling, seems very low to me, given, you know, given inflation, especially in the geographies where you operate.
So, can you tell us a bit more about what gives you so much confidence on that number being a ceiling? Thanks.
Thank you, Giulia, for your questions. Let me take the first one on net interest income. So indeed, your analysis is correct. What we have seen in quarter four is that shifts continue, but at the pace of those shifts between current account, saving accounts at group level is indeed no longer at the same pace as what we have seen in quarter two, and in quarter three, for sure. Now, quarter three, be aware, that has always also been negatively impacted because of the outflow of the State Note, which, as you know, was quite significant with EUR 5.7 billion. So in that perspective, even when you make the abstraction of the State Note, the slowdown of the shifts, current account, saving accounts, are indeed happening as we speak.
By the way, Czech Republic, which is indeed a bit further down the cycle in terms of interest rate hikes and the interest rate cuts, well, there we can, this is kind of a guide for what happens in the Eurozone. There we see clearly the same thing, and only with that difference that it anticipated the Eurozone's situation with roughly one or two quarters. So in our guidance for good understanding, we took the full pace of 2023 as a guidance for the shifts in the future. So if it is continuing to slow down further, then indeed that it creates an extra tad of conservatism as we speak.
Now, in general, if you make an assumption on the guidance, we have EUR 1.360 in terms of net interest income for the 4Q. If you multiply that by 4, you end up at EUR 5.44, which is in the middle of our guidance. Multiplying by 4 means you have the full impact of the State Note. Multiply by 4, which is an exaggeration, because it matures in September, and therefore, you have 4 months of release. Second thing is you multiply by 4, the MRR, which is the given, and then obviously, you multiply by 4, the increase of the pass-through and the increase of the, or the further increase of the shifts. So indeed, in that perspective, it's a bit on the conservative side.
On the cost side, you are all right that we still have some overhanging effects of the high inflationary environment we had last year. But we do see that inflation is coming down rapidly, not so much in Belgium, because their inflation will probably go a little bit up compared to last year, but it was very low in Belgium, as you know, in 2023. But certainly in Central Eastern Europe, where we had double-digit inflation rates, which we believe will come down quite considerably in all these countries. And that is certainly a help to relieve the pressure on our cost inflation. But there's two other elements are very important. First of all, we will see further benefits of Raiffeisen integration in Bulgaria.
As you know, we acquired it in 2022. We are working now on the integration and also the Euro adoption, and those costs have been heavily weighing on Bulgaria. And therefore, we have not been able to really reap the benefits of the synergies. There are some, but the real synergies will come through the next years, and particularly also in 2024. So that's an important element. Secondly, we have Ireland, where in 2023, we still had Ireland for about EUR 100 million in total of costs. That will be virtually gone, since that we are close to liquidating the bank completely this year. So there's a big delta as well.
And then the third reason is the one we've always flagged, that is we still continue to see productivity gains of about 1 to perhaps even 1.5% per year. And these are three combined factors will also offset the reduced, but still there, inflationary pressures.
Thanks.
Thank you. We will take the next question from line, Tariq El Mejjad from Bank of America. The line is open now. Please go ahead.
Hi, good morning. A couple of questions, please. First of all, to come back on NII, and I want to understand better your range. I mean, I understand you want to stop or not keep updating every quarter, which is fair, but I'm questioning actually the ceiling of it. I mean, you- there are some elements there that you admittedly said in the call, they are very unlikely to materialize. For instance, no deposit inflow from the state notes, and the MRR too went to 2%, now is getting consensus that this is something that's very unlikely to happen, and the pass-through rate as well. So why would you take such conservative approach to the ceiling?
Clearly, you don't want to change that again, that ceiling as well, during the year. So, I guess the next update will be next year, even if you have higher run rates in Q1 and so on. So the first question, and then still on NII, I mean, in 2026, can you explain, like, the CAGR you gave us? Because I think volume growth will pick up a bit across your divisions. And I wanted to understand why you've been conservative in 2026 as well. And secondly, on capital, so the capital return above 15% CTE1, I thought it was within your policy. So why it needs the board to approve that, and then you delayed the announcement to later on in the year?
Changing your share buyback limit to July from, I think before it was mid-August, is that just a timing where it would be approved in around Q1 and start to be implemented, post, post-July? Thank you.
... Okay, Tariq, I will take the first one on NII. Yes, and I know you can challenge that upper ceiling indeed. Of course, we can take more aggressive conservative assumptions. But for example, if you say no deposit inflow, well, if we do have deposit inflow back from the state guarantee, we think it's gonna end up in term deposits and not on saving current accounts, so the margin on that will be much lower. But it will be a bit of an uptick, but only for three months because the State Note expires in September only, so we have only a very limited number of months for which we benefit from the margin on those term deposits.
As I said, these are, of course, much lower than margins on securing the savings accounts from which they came. On the MRR, you're right. If the MRR is not going to 2%, that's about EUR 48 million difference. Yeah. That is can also still be fitting within the ceiling, but obviously, if you take other elements like pass-through rates, which would be coming down, and if you add all the positive elements, then probably you'll break through the ceiling. That is correct. But again, on pass-through rates, there are two things there. There is the active pass-through rate. That means that there is either an if rates would stay high, then we would probably have to also increase the pass-through rate.
That's active pass-through rate, but that, of course, depends on the rate scenario. If rates come down as we now project, then there will be a passive pass-through rate increase because we will not go as quickly reducing the pass-through on savings accounts as the rates come down, because that will also be determined by competition. Yeah. So we'll see what happens there. If we can do it very quickly, obviously, then that adds to a higher probability of breaking through the ceiling. On the loan volumes you mentioned there, yeah, we are foreseeing a loan volume growth of next year, about 3%. We didn't give any guidance for the years thereafter, but I agree with you that they would not. We don't foresee a reduction for the outer years.
However, I should flag that the consensus is 1.6% CAGR, whereas we are at 1.8, so that's already a little bit better than consensus thinking. Sorry, worst case, yeah. This is a worst case, 1.8%, so it's a bit better than consensus, and it's a floor. We should also see that loan volume, but new production is relatively low, so the higher margins that we see on the new loan production will only feed through slowly. And contrary to that, we also see, given that MRO requirements have gone up, that we also have potentially higher financing costs for wholesale financing costs.
Hi, Tariq. I'm going to take your second question regarding the capital and the capital deployment plan.
As a matter of fact, we have not changed anything whatsoever, so it's a copy of what you have seen in the last years, because on the capital deployment plan, and then, obviously, on the capital deployment execution, nothing has changed. Regarding, by the way, the plan, we will update you as always, on the back of the first quarter results. That is, what is it? Somewhere in May, on the new capital deployment plan for the year 2024. But for 2023, nothing has changed. So if I may correct a little bit what you said in your, in your question, also the decision on surplus capital. Last year, we did the exact same thing. The board took a decision on the surplus capital in the course of the first half of the year.
We are going to do now exactly the same thing. You know, you can calculate yourself how much the surplus capital is, roughly EUR 280 million. Also, the board is going to take their decision, and then the question is, how are we going to distribute it? Well, that's exactly the same options as last year. That is, in terms of options, you can distribute it in cash, or you can distribute it in terms of a share buyback. You made reference to the share buyback, and to avoid any kind of misunderstanding, we have changed nothing at all on the execution of the share buyback. As a matter of fact, it is perfectly in line with what we have seen, and it will normally end as it was foreseen.
So I, I don't know where you got that we postponed it a bit because it is just foreseen as it was foreseen. It needs to be executed in a period of 12 months or in a period of a year, and that means that it ends, I think, in, indeed, in August, end of July. So, indeed, at the end of July, it is done. So there is no postponement whatsoever. It is perfectly in line with... And then the execution is perfectly in line with what we said on the previous announcements. Okay, perfect. Thank you very much.
Thank you. We will take the next question from line, Raul Sinha from JP Morgan. The line is open now. Please go ahead.
Hi, good morning. Thanks very much for taking my questions. Two, please. The first one on the, on the capital update. If I can ask how important the fact that there is no initial up impact anymore of Basel would be to your thinking? Or will you be focusing on the full, kind of, fully loaded ratio going forward as well? And the reason I ask this is because consensus is clearly looking for your capital ratio to stay around 15% level, even for the full year 2024. And so I just wanted to check your, you know, your latest thinking around whether or not you think that we should expect a reduction on the CET1 threshold for surplus capital is still on the table? And what factors you'll be looking at?
That's the first question. And then the second one is just a bit of detail on Czech NII outlook. The NII is up 4% quarter-on-quarter. The margin is up three basis points despite the lower rates, and you flagged your transformation result there, which seems to be very strong. Loan growth is actually slightly below the group level. What do you see as the outlook from here? And obviously, do you expect any pickup in loan growth in 2024? Yeah. Thank you.
Thank you, Raul, for your questions. Let me take the first one to start with. The capital update, yes, is indeed foreseen with the next announcement, so not today. So if I'm not really going to preempt on the detail, but your analysis is correct. So first of all, given the Basel IV update and given the updates on the relief, which is indeed higher than what we have guided for, there is more room on our risk-weighted assets side. As a matter of fact, for, let's say, 2024, 2025, there is clearly a better position of roughly EUR 4 billion with all the information I have now.
So that is indeed much better than what it was a quarter ago. The fully loaded impact, if you take into account, indeed, everything, static balance sheet and us doing nothing until 2033, then the fully loaded impact is the same as what we said last quarter. Now, in terms of, us doing nothing, if you know that of the EUR 6 billion, which is the floor impact back in 2033, that all of that or most of that is related to the ratings of the non-rated corporates. Let's, let's summarize it as a means, then, I mean, if we would be sitting on our hands for the next nine years, I think that's super unlikely. So saying that the fully loaded impact is the same over the whole period is, I think, a super conservatism and not really, really, really realistic.
Let me say it differently. I don't believe the impact is EUR 6 billion at the end of 2033 in that perspective. So, what it then will be on threshold and so on, support, what is the level of the definition of surplus capital? Well, that discussion is a discussion which we are going to have with our board, and this is something which I cannot obviously preempt here in this call, on the first, on the 4Q results management piece. So we have a bit more... you need a bit more patience, but, indeed, we have lower risk-weighted assets taking into account the new guidance on Basel IV.
On the NII in the Czech Republic, you're indeed right that we see an uptick in the margin on one hand, and transformation result is and continues to be strong for the foreseeable future. Because also there, in the Czech Republic, we still enjoy the benefits of the reinvestment at high yields. Given the longer duration books that we have, we've been increasing, as you know, duration of our investment portfolio the last two years, and we now reap the benefits of that. The lending also is going to be okay in line with what the overall guidance. I would say. But although there's still some pricing, some margin pressures, we do see a chance to improve margins as well in the Czech Republic.
What I should also mention is that we have an introduction of the Minimum Reserve Requirement in October 2023, that will now have a full year effect, that needs to be deducted, and that will be a dampener of the NII growth that you would expect in the Czech Republic. So in summary, we do not believe that NII will come down in 2024, not at all, and there are certainly upsides to that.
Thank you very much.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. We will take the next question from line, Benoît Pétrarque from Kepler Cheuvreux. The line is open now, please go ahead.
Yes, good morning, Benoît Pétrarque from Kepler Cheuvreux. So the first question is on the combined ratio target and also in combination with that, the kind of 6% gross return premium growth on insurance. So yeah, I think you, you have very strong targets overall, but the, the combined ratio below 91 seems to be very conservative. And yeah, I was wondering if you could maybe provide a bit of a better, you know, more, more granular guidance on the, on, on the combined ratio.
And also, you know, I was wondering where this 6% comes from, whether that's a market share gain, this is inflation, this is you know, other stuff, because it seems to be a pretty high figure in the context of lower indexation on gross return premium. And then on the NII, just on the broader discussion around the passive and active pass-through rate, so maybe talking more about the Belgium market as well, not KBC specific, but what do you expect the core deposit rate will do in Belgium in the context of ECB rate cuts? Do you think banks will adjust fast or not?
You know, what is your, again, your expectations in your guidance in terms of speed, or tracking speed, let's say, on the downside? And then maybe if I can just squeeze the short one on the bank tax, so it's EUR 687 for 2023. What is your guidance for 2024, please? Thank you.
... Thanks, Benoît , for a series of very interesting questions. Let me start with the first one, and my colleagues will hop in for sure. On combined ratio, so, and then, and on the growth on the insurance side. Well, first of all, let me remind you the ambition, and I, I don't know if everybody knows this, but it's quite clear that KBC has in all countries a target of increasing market share on the insurance side. And that is clearly true for the last, what is it? 10 years, that we want to grow 50% faster than the market on the life side, for sure, and on the life side and certain products as well.
So we have achieved those targets all these years, and for that reason, we do see now this year, a total growth of 12%. The at least 6% is therefore a reflection of that ambition. The commercial targets, which we have imposed upon the people, are higher, clearly higher than the 6% I just mentioned. Why is this growing? Market share, as I said, and then obviously, inflation is not gone. As you know, in certain of our geographical areas, we do have an automatic link between premiums and inflation, obviously, also between claims and inflation, but that is reflecting cost income, on the cost of combined ratio. So in that perspective, we do have the two sides of your question, indeed, into our targets, and definitely also into the guidance of the 6%.
For good understanding, the 6% also applies to Belgium. So in that perspective, the ambition level in Belgium is to grow at least faster than the market, plus 50%, which we have achieved for the last 10 years, except one year. Now, in terms of the Combined Ratio, quality needs remain at the same level. We brought it down from what it was, the target 92 to 91. It seems symbolic, but it's more than just a symbol, because let's face it, with a 91 Combined Ratio, we clearly below that today, I know, 87, and there is no ambition whatsoever to make that 87 become 91, so it needs to be below the 91.
But if I make reference to our markets where we are active in, that is, we have a combined ratio, which is significantly higher than all the markets and all the peers where we are currently are present. And, this is for one main reason, that is a fully automated underwriting process for the last 10 years, and that clearly pays off the difference. For that reason, I perhaps, I agree with you that it is... the target is the, the 91 is, is kind of conservative, but as we said, it's kinda, kind of a ceiling, and therefore, the ambition, the underlying ambition from our side is much more ambitious than, than the 91%. Perhaps, and Luc can jump in here as well.
What about the, the pass-through and the active, passive part?
Yeah, obviously, if you start to see the rate cuts coming, and the expectation of the market that it will happen in, in April, our guess or our estimate is in that perspective, a bit later. We do expect the first rate cuts of the ECB in June, and then four further cuts between, June and end of year. So it's quite significant. Of course, as a consequence, what Luc already explained, your passive pass-through will go, but your, your, your normal pass-through, does not change nominal.
And then also what is for us, super important, net interest income side, and Luc explained that as well, we have a hedged out portfolio with a longer tenor, and therefore, we locked in, in that perspective, the higher returns, and so the cuts, don't really have an impact on the short term, on our, on our net interest income. On the contrary, we will continue to see for the next quarters, I would even say next years, further increase of that transformation result. What about rates? Well, now you put myself in a very difficult position. I'm not allowed to make any kind of comments on that because that will be market guidance, commercial guidance, and that would indeed create a cartel situation.
So I have to refrain from comments on what we would do with rates, and I also have to refrain from comments what I think the market will do, because that would give us an implicit commercial guidance, and that, as you know, is forbidden by law. So, I would say, let's observe what's going to happen in the next coming quarters. And, you know, in that perspective, I think the past is a good guide for the future. On the taxes, well, yeah, well, there are a couple of things. First of all, bank insurance taxes have been on the rise. Banks and insurance taxes have been on the rise, for the last years.
Giving the budgetary situation of a lot of governments, the countries where we are present, I think honestly, but let me say it as well, I don't hope that we'll see in the nearby future, any cuts on taxes going forward. Obviously, I would like to see that, but given the budgetary situation of a lot of countries where we are present, I don't think it is realistic. We also know that, you know, contributions for the resolution fund will normally come to an end, but in our expectation, we do not see that come to zero. We think it will be replaced with other taxes on the banking and or insurance side, whatever, in order to make up for budgetary constraints of the governments of countries where we are present.
So I would like to see cuts, but I'm afraid that is not going to happen.
Okay, so we can assume a roughly stable bank tax in 2024?
Let's consider this to be a floor.
Oh. Great. Thank you very much.
Because it, because Yeah bank taxes grow also with volumes, as you know?
Yes, yes. Thank you very much for that.
Thank you. We will take the next question from line, Sam Moran-Smyth from Barclays. The line is open now, please go ahead.
Hi there. Thank you. So two questions from me. Just firstly, on the DPS and the fact that you printed a 15.2% CTE1 ratio. So why is it that you didn't use the excess capital of 20 basis points to inflate that dividend a little bit higher? Is it a timing thing, or is it possible that you're holding capital for other reasons, like buybacks later in the year or even an acquisition? And then secondly, on slide 29, where you're mapping out the lending spreads in Belgium, both mortgage and corporate lending, are higher Q-on-Q. You've previously spoken about intense competition in that market, so should we think about the increases as a temporary impact from lower funding costs, or do you expect this margin expansion to continue, or at least stabilize at higher levels?
Thank you.
Thank you for your question. And let me take the first one, on dividend per share. Well, you know, in terms of, the sub part of your question, that is, what about acquisitions on support? We continuously monitor the market and see if we can strengthen our position, both on the bank and insurance side. In our core countries, that has not changed, and we will continue to do so. Regarding the position of our surplus capital and regarding, as a consequence, the dividend per share, I repeat what I said on, on a previous question, which was quite similar in terms of content. So we just execute our policy. We didn't, change anything whatsoever.
Therefore, also in terms of surplus capital, in terms of what it's going to do with that, it is exactly the same position as last year. Board will take a decision, and as a consequence of the decision, the DPS will be influenced. So I, I suggest as well that you wait until that, until the first half end, the first half year end, to see what the consequence is, and then you start with EUR 4.15 dividend per share. You will see how much it will be after the discretionary decision of our board.
By the way, if the world would explode in between now and, let me say something, the end of the first half of the year, if the war would escalate, if we all would go sour, we go into recession, let me give you an Armageddon scenario. Decision on the payout of capital will be completely different, as you can imagine, huh. But we do not expect this scenario. Let's say it different. We do not hope this scenario to come true.
Okay, and on the, the margins in Belgium on slide 29, yes, we see a, a slight improvement in the third quarter for mortgage loans, and that is now confirmed, and even slightly higher in the, the 4Q. We, we think that it will be possible to at least maintain these margins and probably, increase them, given that, rates, have come down and, long-term rates have come down and will probably continue to come down a little bit, not too much anymore. There will be some room, for some margin expansion. That is at least what we, we hope for, because the market is still, unlike what some are saying, in Belgium, we are in a very competitive market. Yeah.
The question will be that the reduction in cost of funding, how quickly will that be translating in a reduced rate, external rates for clients? And how much margin can we increase? So it's a fragile thing at the moment, but we do hope that there should be margin expansion possible. On the SME and corporate loans, you see an uptick there in the 4Q, but that also has to do with the mix. And, you know, in corporate loans, sometimes we have big tickets, and we have some big tickets in the 4Q. Large acquisition files and other files which had rich margins, and that influences, of course, the quarter effect. So this is not something that will keep on growing to the same extent.
But overall, I would argue that the margins on corporate and SMEs, although we're also here in a competitive market, should be more or less stable if you look a bit longer in, in history, so the last year or so, and that would be a good pointer. Perhaps a little bit of expansion, but not too much. So please do not extrapolate the large quarter increase to the next quarters.
Thank you.
Thank you. We will take the next question from the line, Guillaume Tiberghien from BNP Paribas Exane. The line is open now, please go ahead.
Yes, good morning. Thank you very much for taking the question. Number one is on the cost. A bit of clarification on what you said about the bank taxes, because your resolution fund contribution is gonna go down about, I don't know, maybe EUR 100 million or EUR 130 million in 2024 versus 2023. So if you say you expect overall taxes to be up, can you actually quantify the impact for the various geographies? The other one is on the fees and commission. Looking into 2024, can you maybe give us a flavor of what you see for the fees in banking services? Because I guess asset management starts the year quite with a nice tailwind from a higher market. And then maybe a final observation on the cost of risk.
I appreciate you want between 23 and 26 for cost of risk to be significantly below through the cycle, but if that's the case, then over 12 years you will have had a cost of risk at 10 basis point on average. So is it not time to actually just change it through the cycle? Thank you.
... Thank you, Guillaume, for your questions. I will take the first one because I also answered that to, I think it was Benoît . So for good understanding and apology for that, if I have not expressed myself clear, I thought I had indeed said that the contribution of the resolution fund should stop and should drop out. But what I also said is that has a positive impact, indeed. That positive impact is indeed quite significant. But what I think is that will be consumed, if not in full, then for sure in part, by extra taxes, which will imposed upon us by one or the other government. Therefore, the dropping to zero will not fully benefit, I think, in our P&L. I hope I'm wrong, eh?
I hope that indeed, that there is no compensation of that free fall of, resolution taxes, resolution fund taxes. But in terms of, our, our budgeting, at least, we do take that into, consideration. The other reason why I said that it will not necessarily decrease is because the, the bank taxes, traditional bank taxes, are linked to volumes in, amongst others, Belgium, and we do expect our volumes, amongst others, on deposit side, to grow in the future, and therefore, we do expect more bank taxes to be imposed upon us. As you remember, in the guidance of the quarter three, there you can find the detail. Belgium also has decided to put in extra bank taxes for the sector, and that will come into play in 2024.
I thought also that in your question, you were referring to geographical presence, but, you know, geographical split up, we can provide you that, to a certain extent, not in all detail, but we will take that offline.
Okay. On the banking services fees, what do we see at the moment? Well, of course, the biggest driver, more than 50% are asset management fees, and as you saw, the 4Q was still very strong with good net sales, of course, very strong performance, certainly in December. That means that the starting base, at which we start the first quarter, of course, is much higher than the previous quarter. So that's already a good start.
We also see continued strong interest in investment in our mutual funds, and that is still going strong. A little bit of attention point here compared to last year is that in first there is a bit of change in mix. There's more money market funds and more fixed income funds. But we think for the full 2024, that will redress itself, and that will be more focused again more on structured funds and on the typical balanced funds. But there could be some first quarter effects, so just as a warning.
But we still see very strong growth in asset management because of strong starting base, strong interest in mutual fund business, and obviously, we hope that the markets themselves perform well, that because that's also an important, an important driver over how equity markets and bond markets behave, which is, by the way, the reason why we do not give specific guidance for this. Then on the other fees, we also see strong continued growth in payment fees. In credit fees, again, of course, at a lower pace than previously because of the lower growth in loan production. The question mark will be securities fees that also has an impact. Will it continue to grow as strongly as last year?
That is a question mark, because it really depends on how many transactions our clients will be doing, and can we repeat the highly successful last year all over again? That is a question mark. Yeah. All the rest, net working income, that means the foreign exchange margins we make on people who make foreign payments, who use their credit cards abroad and so on, that we also foresee to continue to grow strongly with GDP growth and even higher than GDP growth, obviously. So these are the main aspects, yeah. The reason why we do not give any specific guidance is primarily because of the market-driven nature of asset management fees.
Thank you.
Thank you.
We will take the next question from line 10.
From RBC. The line is open now. Please go ahead.
Yeah, sorry, I, I'm not sure if this was fully considered, but, I actually just had a similar question on the total revenues, given you were saying you're obviously not an NII bank. But, from concluding from the previous question, looking at your 2024 guidance, it really is a flaw, considering that other revenues would need to be flat year-over-year, if you just come in in line with that target, which on the back of the fee comments here, seems some more conservative. And then secondly, you made a comment when you were talking about your Sustainalytics rating, that you see pressure from regulators on, yeah, on the ESG side. I just wondered if there's anything concrete specific you're thinking about, that we should be thinking about as well. Thank you very much.
Okay, so I'll take the first question. Indeed, if you just look at the floors and the ceilings we put in there in our NII guidance and in our insurance fees and so on, then you could come to the conclusion that all rest would be flat. Now, there are, of course, many components in the other elements, and that's not only the asset management and all the banking service fees, but there are also other net other income and fair value income. And particularly, fair value income, we can be a big influencer, yeah.
... And so we do not think that fair value income, for example, will increase. It probably will be lower than the previous years, and that is because of different interest rate environment. We also take a conservative assumption on the dealing room, and that makes it could compensate, potentially compensate, if the worst case comes out as we guide for here, that would compensate fully the other service the fee lines, yeah. But as I mentioned again, these are all conservative assumptions that we put in the market, so you should not then conclude that all the rest will be flat. And then coming back to your question regarding the sustainability side, so ESG side, and then the regulatory pressures. Now, I have to interpret the definition of regulatory pressure.
So first of all, as we all know, that the ECB, I think also in execution of the European Commission policy, is putting anyway more pressure on the financial industry. And as a consequence, we have to obviously bring more reporting to them, which also means that we have to interact with our customers more intensively than, let me say, something ten years ago. And this is something which is also happening to us for obvious reasons. As a matter of fact, KBC is executing its policy on sustainability in as a consequence of different steps, which were taken or started up ten years ago.
Until now, we never, ever got from the ECB any kind of restriction or any kind of fine or any kind of letter, which appears to be sent out to certain banks in Europe. KBC has not received that letter, for sure not. Given the fact that what we are doing on the on the sustainability side, and we're one of the few banks which has a full, fully audited climate action report, which, by the way, is available, as you know, on our website. In that perspective, we have not received any kind of pressure from the ECB side on this matter.
On the contrary, so we were asked to give also insight with the ECB on how we perform on, and how we structure our way around the ESG activities of KBC Group, because it could be used as an example. Now, in terms of, being used as a reference, let me highlight, and that is indicated on page 4-5 in the back. Also, the external world, apparently appreciates what we are doing. If you look at, at the, the ratings, which we get by, by, rating agencies like Sustainalytics, CDP, like others, Standard and Poor's, and so on, so forth, KBC is always amongst the top three, top 3% part of the financial industry. So in that perspective, I think we're doing quite a good job.
To a short answer to your question, any strong pressure from the regulatory side, the answer is negative.
Thank you very much.
Thank you. We will take the next question from line, Jason Kalamboussis from ING. The line is open now. Please go ahead.
Yes, hi, good morning. I just had one follow-up question on the dividend, if I may. When we look at the growth of your net results in 2019, it has been very strong. So it's, let's call it an 8%, and if we want to take out the IFRS impact and look to 2022 on, well, then we have about 4%. If we look at the dividend, the ordinary dividend amount, the growth has been from 2023 to, I think here I have, right, to 2019, has been 0%. So I was looking to understand what you're thinking behind it.
I mean, it's very encouraging what you said earlier on the dividend, but what has kept you from starting to put some growth into your ordinary dividend? Thank you.
Thanks, Jason, for your question. Now, you went into quite a lot of numbers and quite a lot of detail, and the line was not of the best quality. So we got a little bit lost in your question, but what I suggest is we take your question offline, and then we can have all those numbers in the right understanding before we start to guess about the question, and then probably provide you with the wrong answer. So we'll take this offline, okay?
If I may put it in a simple way, I mean, your ordinary dividend amount, your DPS has gone up, your ordinary dividend amount has been stable over, you know, if we look at it since 2019. How should we think about it? I mean, do you find that, you know, at the end of the day, it's only the DPS that counts at your end, and so you're happy to have a dividend, the ordinary dividend amount being stable over the years?
So our dividend policy in that perspective has not changed. So the policy is at least 50% payout, and the at least 50%, the qualification of the at least 50%, that's this perspective is done in every year in a different manner, but it's steadily growing, as you indicated. There is a couple of hiccups between the period of 2019 and now, but that is not related to KBC. This is related to, amongst others, decisions taken by, amongst others, the ECB, regarding dividend and dividend distribution during the COVID period. And therefore, you have a couple of swings in that dividend per share and that dividend payout.
But in general, policy remains the same, and that is also executed for 2023, more than 50% for 15, and then obviously everything, we're just topping the 15% surplus capital threshold. That is then also the discretionary decision of the board, which influences in 2019, 2020, 2021, and 2022, the payout ratio, and that will for sure have an impact on the payout ratio in 2023. And that one is going to be concluded, and that's going to be announced to all of you in the course of the first half of this year, because that's the period in which the board takes the decision.
Okay, thank you very much.
Thank you. It appears no further question at this time. I will hand it back over to the host for closing remarks.
All right, so thank you, operator. This sums it up for this call. I would like to thank you for your interesting questions and for your attendance. Take care and speak to you soon. Cheers. Bye-bye.