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K&H Bank reports net profit of HUF 42.3 bln in 2020

Banking

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K&H Bank recorded a net profit of HUF 42.3 billion, a 6% increase y.o.y. on underlying basis, excluding the HUF 12.7 billion negative pre-tax impact of exceptional items, according to a press release sent to the Budapest Business Journal.

The items included a HUF 4.4 bln modification loss related to the payment moratorium, HUF 19.7 bln IFRS9 impairment on the expected future credit losses due to the pandemic and a pre-tax gain of HUF 11.4 bln related to the transfer of activities/operations of K&H Fund Management to the Hungarian Branch of KBC Asset Management. This operation will be delivering synergies for the KBC Group while clients will continue to enjoy the same high standard of services as before.

David Moucheron, CEO, K&H Group highlighted, “2020 was a year like no other. In spite of the difficult circumstances, K&H  achieved resilient financial results driven by strong market share increase in loans in all segments.  K&H  continued delivering its market-leading innovations in its mobile app, such as our K&H+ services and the instant account opening service. This shows that COVID-19 did not slow us down  and K&H remains strong in crises.”

K&H’s underlying positive net profit increased by 6% thanks to the growing business volumes – especially in the second half of the year due to the economic rebound - and good cost control. Regarding the economic activities of K&H clients, following the bottom in Q2 the incoming account turnover of Corporates and Micro SMEs started to increase by the end of 2020 despite the 2nd wave of the coronavirus pandemic. Corporate account turnover is now above pre-pandemic level while Micro SME turnover still below the pre-crisis level in Q4.

"K&H Bank keeps playing an active role in financing the Hungarian economy, households, small businesses, large corporations, and the public sector. In 2020  we granted a total of HUF 620 bln new loans (a 23% increase y.o.y.)  and our total loan volume increased by 18% y.o.y., reaching HUF 1,900 bln.  Retail loans new production market share increased to 13.3% in Q4. Retail loans new production reached HUF 235 bln in 2020, growing by 21% y.o.y. Including baby-boom new production HUF 58 bln representing 12.4% market share in Q4 2020. Corporate loan portfolio increased by 19% in 2020. K&H contracted a total amount of 173 bln for the Funding for Growth Hajrá! scheme by December 31, representing a market share of 11%  in outstanding. The government bonds’ volume in our balance sheet reached HUF 1,078 bln by the end of 2020, representing a 23% growth y.o.y.," said Attila Gombás, CFO, K&H Group.

Pandemic boosts digital banking

The coronavirus pandemic has accelerated the usage and affinity of clients towards digital banking and insurance solutions. Today, 82% of K&H clients (about 570,000 people) are digitally active. K&H mobile bank client number grew by 28% y.o.y. to 485,000. Over the past year, customers on average used their mobile app three times a week.

Balázs Németh, chief innovation officer, K&H Group added, "We keep focusing on mobile service’s development for banking and insurance. In 2020 we started offering non-banking services to our clients and we launched K&H+ in our mobile app. This mobility solution is automatically available to 485,000  mobile bank users Our clients can now purchase over 1,000 types of city and intercity public bus tickets and passes in 70 cities, in just a few clicks without even needing to enter credit card details. K&H is also the only one  in the Hungarian banking market to offer travel, home, and MTPL insurance in banking mobile app."

"Finally, since last year clients can see details of their loans, deposits and investments in the K&H mobile bank and make use of several advanced bank card management functions. Our next innovative feature,  instant online account opening service becomes available as of today. The number of digitally active clients continues to strongly increase as most of the core banking and insurance services and functions are now available on the mobile phone.  The K&H mobile app is a platform where insurance, investments, wallets, and even transport tickets can be handled all together. As a K&H client you literally have your bank is in your pocket,”  he noted.

Nik Vincke, CEO, K&H Insurance, announced, "In 2020 our net profit reached HUF 8.3 bln. In Non-Life, premium income reached HUF 51.2 bln, growing by 4% y.o.y. Life brought strong business performance with a 41% y.o.y. growth in regular unit-linked pension, 38% y.o.y. growth in regular unit-linked non-pension and 22% y.o.y. growth in individual risk products. Our digital service is permanently improving: More than 40,000 customers visited our pension insurance calculator in 2020. Hundreds of thousands of our customers will receive their green cards in digital format from 2021.”

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