K&H Bank reports HUF 66.9 billion net profit for H1 2024

• K&H Bank’s after-tax profit came to HUF 66.9 billion in the first half of 2024.
• Excluding the effect of government measures, the after-tax profit of the Bank’s core financial activities went up by 20 percent.
• K&H Insurance realised a HUF 0.7 billion loss due to the windfall tax. But the Company’s business performance was strong, similarly the Bank’s results: premium income rose by 10 percent, and all business lines are steadily growing.
• These results include the HUF 40 billion group-level pre-tax negative effect of the various government measures (windfall tax, other bank tax, interest rate cap).
• The Bank’s credit portfolio expanded by 10 percent compared to the same period of last year, reaching HUF 2,972 billion. The volume of credits newly granted in H1 2024 amounted to HUF 275 billion.
• Similarly to credits, the volume of deposits placed by clients expanded by 10 percent compared to the first six months of 2023, while the assets managed in investment funds rose by 37 percent to HUF 1,559 billion.
• K&H Bank has more than 720,000 digitally active customers. Almost 60 percent of new retail accounts are opened online, and over 650,000 clients have already contacted Kate, the first voice-based digital financial assistant.
• This year, K&H received two awards from the financial publication Euromoney: “Best Bank in Hungary 2024” (for the fifth time), and “Best digital bank in Hungary 2024”.

According to Guy Libot, CEO of K&H Group: „Once again, our financial performance was encouraging in the first half of 2024, with success in all areas of banking: K&H achieved double-digit growth in deposits, investments and lending, while the after-tax profit of our core financial activities increased by 20 percent without the effect of government measures. After a five percent rise compared to June 2023, the total number of customers reached 990,000 in the first half year.

The number of clients whose income is regularly transferred to K&H accounts exceeded 613,000, six percent higher than a year earlier. The ever-widening range of our market-leading digital services allows clients to effect simple banking transactions rapidly and conveniently online, while personal meetings at customer points are increasingly used for detailed discussions with advisors. I am proud of both recent professional awards by the British financial magazine Euromoney, i.e. the titles of “Best bank in Hungary 2024” and “Best digital bank in Hungary 2024”. The strategy of K&H has been unchanged for a long time: we want to grow and we focus on establishing long-term relations with our clients. We intend to serve all financial and insurance needs of our customers, and grow with them. Our mission is to help our clients realise and defend their dreams.”

financial results in H1 2024

K&H Bank made a HUF 66.9 billion after-tax profit. The Bank’s income increased by 15 percent: both credits and deposits expanded by 10 percent, while the assets managed in investment funds went up by 37 percent. Due to pressure on costs caused by inflation and expenditures on new digital solutions, operating costs (without bank taxes) rose by 13 percent compared to last year. The Hungarian government recently announced additional bank taxes for the second half of 2024, which could total up to HUF 16 billion for K&H.

„The corporate credit portfolio went up by nine percent compared to the same period of 2023. K&H remains actively involved in state-subsidised financing schemes that support the daily operation and development expenditures of businesses: we have concluded contracts worth almost HUF 260 billion in total under the Széchenyi Card Program (including schemes completed and underway), while the total value of the credit agreements concluded in the first half of 2024 reached HUF 120 billion”, said Attila Gombás, Chief Financial Officer of K&H Group. „We achieved double-digit growth in both retail credits and retail deposits. The portfolio of retail deposits expanded by 13 percent, exceeding the 9 percent average growth in the banking sector. While the retail credit portfolio increased by six percent in the banking sector overall, K&H registered 11 percent growth compared to last year. The volume of new mortgage loan agreements reached HUF 101 billion in the first half of 2024, which means that we sold almost four times more new mortgage loans than in the same period of 2023. HUF 18 billion of “baby boom” loans were sold in January-June 2024. Since the launch of the K&H Green Home Loan program, we have disbursed more than HUF 13 billion for the purchase of energy-efficient new homes, and for the purchase or retroactive energy-efficiency upgrade of older real properties. The volume of deposits placed by customers reached HUF 3,781 billion, 10 percent higher than in the previous year. The assets managed in K&H investment funds went up by 37 percent to HUF 1,559 billion compared to the previous year. The growth is attributable to an influx of new money and outstanding yields HUF 132 billion of net investments were sold in the first half year. The structure of the funds sold in the second quarter was well-balanced, thanks to growing interest in mixed and share funds.”

Nik Vincke, CEO of K&H Insurance, said: “In H1 2024, a loss of HUF -0.7 billion was recorded as a result of the booking of the entire year’s windfall tax. In Non-Life, premium income grew 10 percent yoy to reach HUF 39.8 billion and all business lines are growing permanently. Life also brought strong business performance in targeted product lines and increased 13 percent yoy driven by regular unit-linked pension and regular risk business lines. K&H came out in the second quarter as a winner of the national home insurance campaign with a net growth of 5 percent of home insurance contracts after the campaign.”

digital transformation and innovation

K&H has won a series of international awards for our digital banking solutions. Both in 2023 and 2024, we garnered the “Best Digital Bank in Hungary” award by Global Banking and Finance Review. In August 2024, it was the British financial magazine Euromoney that gave K&H an accolade in the category of digital finances. Our services are focused on the development of digital solutions, so that users should always feel that the new functions serve their convenience.

„Virtually all of our digitally active customers have interacted with Kate, our artificial intelligence-based digital financial assistant who has been contacted by more than 95 percent of K&H mobile bank users. Kate offers over 200 functions now. Since September 2023, more than 650,000 users have contacted Kate through their mobile phones”, said Balázs Németh, head of Innovations at K&H Group. „More than 115,000 small and medium-sized enterprises use our electronic channels daily. Kate is now available to them, too, and can proactively reach out to them with relevant, personalized and actionable messages.”

After a seven percent year-on-year increase, the number of digitally active K&H clients reached 720,000, and almost 60 percent of total new retail accounts are now opened online.

„The range of services that are available digitally is expanded continuously. Kate is developing constantly, with a focus on serving customers proactively, through personalized and actionable messages. Kate will remind them if they haven’t yet paid their monthly credit card instalment. Then our customers can either settle the transaction right away through Kate or ask to be reminded later. Among others, Kate can notify them of their tax reimbursement or find the nearest ATM with geolocation. Close to 140,000 clients have registered to the K&H cashback service since its introduction last year; in the summer months, registered clients received exchange rate refunds for payments with their bank cards abroad. K&H is the only issuer that offers digital SZÉP cards which can be used for payment with a mobile phone and other smart devices, just like a bank card. The number of digital SZÉP cards has reached 75,000, and they are accepted at more and more sales points. Consequently, contactless payments can now be made across Hungary in almost 22,000 shops. Our customers can acquire a green card and an insurance coverage certificate for their insurance policies in the mobile bank, with the assistance of Kate, and the documents are available instantly”, adds Balázs Németh.

sustainability

For the third year now, K&H devotes the month of September to raising awareness of the importance of sustainability. In line with this tradition, we have launched a new initiative. Environmental sustainability is only one element of sustainability. Shaping the social conditions surrounding business, improving the lives of disadvantaged groups and involving them in the life of the community are just as important.

„At the beginning of the month, we concluded a support agreement with SOS-Gyermekfalu Hungary, a foundation supporting orphaned and disadvantaged children. Based on that contract, we support the Foundation’s Life-starting Fund with HUF 10 million. This fund is available to applicants who are about to leave their foster families and start their adult lives. The money can be spent on vocational training, for a deposit for a rented home, or on acquiring a driver’s license, so that the recipients can successfully embark on a new phase of their lives. Also this month, a challenge is started in which 3,800 K&H employees can spend one work day in voluntary work in 2024. In addition, we announced the “K&H for sustainable municipalities” award for the first time, for the assessment of those initiatives by municipalities or their companies or budgetary entities which enrich the environmental and social values of local residents”, said Guy Libot, CEO of K&H Group.

Besides awareness-raising, K&H is also strongly committed to sustainability through its core activities and products. K&H offers a home energy consumption calculator tool to retail clients, which has been used for 3,700 calculations so far. In line with our credit policy, K&H has contracted new corporate green credits exceeding HUF 70 billion. To agricultural customers – both plant farmers and animal breeders – they provide an internally developed CO2 calculator online. Within new comprehensive vehicle damage and theft insurance (casco) contracts, the share of electric cars was 27 percent. Concerning K&H green car leasing agreements, electric vehicles accounted for 23 percent. In the area of savings, as much as 50 percent of assets are in certified responsible investment funds. However, K&H notices that policies should be aiming to finance the purchase of more sustainable and more energy-efficient properties, current change with the cease of CSOK subsidy is effectively detracting customers from the objective to go for greener, more modern real estates.

K&H’s unaudited, consolidated results according to the international financial reporting standards (IFRS):