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KBC
Bank N.V.
18
November 1999
The rating
reflects the size and strong commercial position of KBC
Bank N.V. The bank has an outstanding counterparty rating
of ‘A+’ from Standard and Poors (S&P) which
reflects its robust asset quality, stable profitability
and comfortable capitalisation. The bank, which was formed
from the merger of Kredietbank N.V. and CERA Bank in June
1998, is one of the top two banks in Belgium and has a
presence in more than 30 countries. The asset quality
is robust on account of a significant proportion of low
risk government debt in the asset book and the conservative
portfolio management followed by the bank. However, the
bank’s expansion in Central and Eastern Europe has
exposed it to the region’s volatility. The profitability
has been stable with an average ROA (PAT/Average Assets
deployed) of 0.45% over the past five years. The bank
is comfortably capitalised with a Tier I capital ratio
of 7.18% as at December 31, 1998. KBC Bank N.V. had an
asset base of BFr 5640 billion and a deposit base of BFr
2562 billion as at December 31, 1998.
KBC Bank
N.V. has had a presence in India since 1995 through its
representative office. Over this period, the bank had
taken credit exposure to foreign currency denominated
paper of domestic corporates and financial institutions.
However, in 1999 the bank set up its first, and till date
only, branch in India at Mumbai. The bank has strategically
positioned its Indian operations towards wholesale banking
and currently performs Corporate Banking, Treasury and
Correspondent Banking functions. The bank plans to focus
on adding high credit quality corporate banking assets
and leverage its global network and relationships to attract
the top tier corporates and MNC’s in the country.
The recently started branch operations, despite a small
balance sheet size, have been able to breakeven in the
first few months of its operations. Given the limited
track record and nascent stage of operations, the branch
is yet to establish a stable funding profile and the funding
is significantly aligned towards the inter-bank borrowings.
However, the bank is expected to build a significant and
stable wholesale deposit base in the near future which
should reduce its dependence on the inter-bank market.
The Indian operations of the bank had an asset base of
Rs. 283.22 crores and a capital base of Rs. 58.76
crores as at September 30, 1999.
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