The Belgian market held its own in 2016. Issuance of structured products, at 327 (excluding non-retail, leverage and flow), was up around 10% from the previous year (294 products), although sales volumes, at €5bn (2015: €5.6bn), were down approximately 9.5%. Equity-linked products, with sales of €4bn (€4.6bn) dominated proceedings, followed by interest rates (€841m), funds (€248m) and FX rates (€3m) while medium-term notes had the upper hand (€2.7bn) ahead of funds (€1.2bn) and life insurance (Class 23) products (€1.1bn).
SRP reviews the data and the financial results of three of the main Belgian distributors, Belfius, BNP Paribas Fortis, ING Belgium and KBC.
KBC, with a share of 41% of the Belgian structured product market, was the number one distributor in 2016. KBC issued 89 structured products worth €2bn in 2016 - including 48 structured funds (€1.3bn), 28 life insurance products (€828m) and 13 medium-term notes (€36m) - down from the 90 products with a volume of €2.6bn in 2015. KBC-Life MI+ Buyback 90 5 was the best-selling product for the year with sales of €98m. The 90% protected class 23 product, which has a term of just three years and was issued via the bank's Arcade Finance special purpose vehicle (SPV), participates for 100% in the performance of a basket of 30 global stocks.
KBC's Belgian business unit reported a net result of €439m. Net fee and commission income rose by 3% year-on-year driven by higher management fees from mutual funds and unit-linked life insurance products (thanks to reset date CPPI and a good equity market performance) and higher fees from credit files and bank guarantees, which were only partly offset by lower fees from securities transactions, higher commissions paid on insurance sales and slightly lower fees from payment transactions and other banking services, according to the bank-insurer.
Sales of life insurance products, including unit-linked class 23 structured products, decreased by 2% y-o-y driven mainly by lower sales of guaranteed interest products, KBC reported.
BNP Paribas Fortis launched 52 structured products worth €861m between January 1 and December 31, 2016, up from 50 products with sales of €786m during the same period in 2015. The bank's offering included 44 products linked to a single index including 15 products linked to the Stoxx Europe Select 50 EUR.
Operating income, at €2.4bn, was up 5.5% versus 2015, while net income stood at €1.7bn, according to BNPP Fortis' 2016 full year results.
Belfius, with a 13% market share, launched 48 structured products in 2016, collecting sales of €687m, compared to 55 products worth €851m the previous year. The majority of the bank's products were linked to equities, with 32 products (€424m) using a single index as underlying, including offerings linked to the iStoxx Europe Demography 50 (10 products), Eurostoxx 50 (eight) and Stoxx Europe 600 Health Care (five). Fifteen of Belfius' products were linked to the Constant Maturity Swap (CMS) Rate (€324m) while Belfius Financing Company (LU) Top Fund Coupon, the bank's sole fund linked product, collected sales of €3.1m during its subscription period.
Belfius reported a pre-tax income of €780m in 2016, up 14% from the prior year. The bank has a liquidity buffer of €32bn which represents approximately five times the institutional funding sources maturing within the year. Belfius confirmed its leading position in debt capital markets (DCM) - issues for (semi) public customers - as it took part in 86% of the available mandates according to the bank's full year 2016 results. In 2016, the bank issued €5.2bn in innovative loans in the form of short-term (commercial paper) and long-term issues (medium-term notes and bonds).
ING Belgium collected sales of €351m from 14 structured products in 2016 translating in a 7% share of the Belgian market, against €193m from eight products in 2015 (3% market share). Eight of the bank's products were linked to the interest rate, either the Euribor, Libor or CMS, while the remaining six products were linked to a single index. The latter included two products with combined sales of €90m linked to the Sustainable Europe Low Risk Equity (Selre), an index composed of 30 European sustainable stocks which was launched by ING in August 2015 in collaboration with Solactive and Sustainalytics.
When excluding one-off positive impacts, pre-tax results for ING Belux show a year-on-year decline of 3% to €1.1bn. According to the bank's full year results for 2016, challenging market circumstances due to continued low interest rates, higher bank levies and changing customer behaviour, had an impact on the core earning model and underlying results.
Compared to 2015, the bank's 2016 total income was stable at €3.2bn. The decrease in ING Belux net interest income, from €2.3bn in 2015 to €2.2bn last year, due to the low interest rate environment and decrease in the bank's investment product commissions revenues, was fully offset by strong lending revenues growth and other income impacts.
Click the link to view the full year 2016 results for Belfius, BNP Paribas Fortis, ING Belux and KBC.
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