Operating performance & Risk Management

Methodology

The analysis is based on the consolidated financial statements and Pillar 3 disclosures of the six Belgian banks under ECB supervision: BNP Paribas Fortis, KBC Group, Belfius, ING Belgium, Crelan, and Argenta. Figures up to 31 December 2025 are reported on a fully consolidated basis, meaning they include the results of all subsidiaries and affiliates.

As such, the analysis reflects group-level performance, meaning that banking groups are compared with one another rather than focusing solely on banking activities in Belgium.

Bank	Key operating segments within the consolidation scope
BNP Paribas Fortis	Banking activities in Belgium, Luxembourg, and Turkey Arval and Leasing Solutions Other (Personal Finance, Asset Management, etc.)
KBC Group	Bancassurance activities in Belgium, the Czech Republic, and Central Europe (Slovakia, Hungary, Bulgaria), which include asset management activities, leasing activities, etc.
Belfius	Bancassurance activities in Belgium (for Individuals, Entrepreneurs, Enterprises, and Public Sector), which include asset management activities, leasing activities etc.
ING Belgium	Primarily retail and wholesale banking activities, mainly in Belgium, with additional activities in Luxembourg
Crelan	Retail banking activities (Crelan Federation and Europabank) in Belgium
Argenta	Retail banking and insurance activities in Belgium and the Netherlands, and asset management activities in Luxembourg

Income

In FY25, the six largest Belgian banks demonstrated resilience of their income base in a challenging environment: navigating a declining rate cycle, rising regulatory costs and geopolitical uncertainty while still growing their combined income to EUR 31.8 billion, a 4.1% increase year-on-year.

Bank	CAGR (FY21–FY25)	CAGR (FY24–FY25)
BNP Paribas Fortis	5,9%	2,9%
KBC Group	12,7%	9,2%
Belfius (*)	4,6%	2,4%
ING Belgium	3,6%	(6,7%)
Crelan (**)	26,9%	3,1%
Argenta	5,0%	6,5%

Three trends stand out:

_{(*) For comparison purposes with other banks, we removed bank levies from Belfius’ operating income figures.
(**) Crelan’s compound annual growth rate (CAGR) over FY21-FY25 is largely driven by its acquisition of AXA Bank.}

1. Net Interest Income (NII) proved more resilient than feared. Despite the ECB's continued rate easing in FY25, most banks managed to hold or grow their net interest income. Three factors cushioned the impact: proactive liability management as deposits migrated from more expensive term accounts back into lower-cost savings products; a recovery in mortgage origination volumes, driven in part by the reduction of registration duties in Flanders and Wallonia early 2025; and continued repricing on the lending side. The exception is ING Belgium, where NII fell due to a combination of rate compression and the phase-out of mass retail activities in Luxembourg to refocus on private banking and wholesale.

Compared to the European median net interest margin (NIM) of ECB-supervised significant institutions, apart from KBC Group, most Belgian banks operate at lower NIM, driven by structural features of the Belgian market: mortgage books that are predominantly fixed-rate, statutory caps on variable mortgage rates, and inexpensive legal prepayment options – all of which compress asset yields relative to European peers.

Note that the NIM is defined as the ratio between net interest income and average interest-earning assets. A higher NIM generally reflects better profitability and asset utilization, while a lower NIM may indicate rising funding costs and/or reduced lending returns.

2. Fee income became the sector's primary growth engine. All six banks reported record or near-record net fee and commission income in FY25. Two engines drove this. The first was investment-led: clients rotating maturing term deposits and government bonds into investment funds, unit-linked insurance and discretionary mandates, generating higher entry and management fees as assets under management reached new highs. The second was transactional: payment services, network income and securitiesrelated fees grew steadily alongside higher customer activity.

3. Income diversification provided a buffer against NII pressure, though the sources varied across banks. For KBC Group and Belfius, insurance underwriting provided a genuine third income pillar: life premium volumes rose sharply, supported by an attractive rate environment and a shift in savings flows away from maturing deposit products towards insurance investment solutions, while non-life portfolios benefited from indexation and portfolio growth.

For BNPPF and ING Belgium, other income was driven by different engines: BNPPF benefits from vehicle leasing and international operations, while ING Belgium's other income was supported by financial markets activity and deeper wholesale client engagement.

The structural shift in income mix is now visible in the numbers: for some institutions, net fee income approaches a quarter of total operating income, a share that would have seemed improbable at the NIIdominated peak of 2022–2023

Costs

In FY25, Belgian banks navigated a cost environment shaped by three concurrent pressures: wage indexation driven by Belgian inflation of around 3%, rising mandatory regulatory charges, and continued technology investment requirements. The net result, for most institutions, was operational cost growth held broadly in line with or below inflation, with cost-to-income ratios stable or improving. The only exception is ING Belgium, whose CIR rose as falling net interest income could not be offset by operational cost discipline, with a surge in contributions to the Deposit Guarantee Scheme (DGS) adding further pressure on the cost base.

For comparison purposes, we adjusted the reported CIR for Belfius to account for bank levies as part of operating expenses. Nonetheless, cost-income ratios may not be fully comparable across banks, as calculation methods can differ – particularly in the treatment of non-recurring or exceptional items, and allocation of commission-related costs.

Costs held below inflation despite structural wage pressure. Belgium's automatic wage indexation mechanism pushed staff expenses higher across the board. Banks offset this through reductions in external consultancy fees, professional services and discretionary spending.

Most banks managed to contain total operational cost growth within or below the rate of inflation despite having limited room to maneuver on the staff line.

Technology investment is rising. ICT costs increased at several institutions, reflecting continued investment in application infrastructure, core platform modernization and AI tooling. For instance, ING Belgium launched a multi-year core banking modernization program. Belfius increased technology and system costs while reducing consultancy spending. Argenta continued to invest in digitalization and infrastructure renewal. This tradeoff – accepting higher technology costs in exchange for reductions elsewhere – partly explains why headline cost growth remained contained even as strategic investment accelerated. The scale of these investments is further visible on the balance sheet, as annual additions to internally developed software totalled approximately EUR 650 million across the six institutions in FY25

Bank levies are the fastest-growing cost line. Contributions to the Deposit Guarantee Scheme (DGS) rose significantly across the sector, driven by the Law of 23 November 2023, which raised the DGS target level to 1.8% of covered deposits with contributions front-loaded over 2023–2025. These charges are non-discretionary and cannot be offset by operational efficiency measures. Several banks explicitly noted that rising levies were the primary factor preventing their reported cost-to-income ratio from reflecting the full extent of underlying operational cost discipline. Although FY25 marked the end of the DGS front-loading period, overall levy pressure remains subject to legislative and fiscal developments.

Asset Quality

The cost of risk (CoR) is a key measure to compare the asset quality of banks. For comparison purposes, it is defined here as the reported impairment charges on financial assets (at amortized cost) in the reporting year over the average gross carrying amount of both loans & advances and debt securities, expressed in basis points (bps). The former reflects the impact of changes in provisions for credit losses (ECLs) since initial recognition. Figures may therefore differ from bank-reported cost of risk metrics (*).

The cost of risk across Belgian banks remained low by historical standards in FY25, but trends diverged compared to FY24: ING Belgium and BNPPF saw an upward drift, driven primarily by their international and wholesale books, while KBC also rose modestly at the group level; Belfius recorded an improvement, partly reflecting significant stage 1 and 2 provision reversals driven by model updates and bond portfolio derisking, that partially offset stage 3 charges; and Argenta and Crelan remained essentially flat at very low levels.

The pattern in the domestic Belgian portfolio is consistent across the sector: retail and mortgage portfolios held up well, supported by a resilient housing market and stable household credit quality, while the pressure was concentrated in the SME and corporate segment. Belgian bankruptcies reached their highest level since 2013, with construction, transport, and professional services the most affected sectors by bankruptcy count, while chemicals and manufacturing – exposed to the combined effect of high energy costs, wage indexation, and subdued demand – were the most prominent corporate credit stress sectors.

_{(*) Note that if a bank releases more provisions than it sets aside (e.g., reverses previous impairments because expected credit losses have improved or actual losses are less than anticipated), the net impairment charge becomes negative. Conversely, a low net charge may also reflect effective anticipative provisioning: when exposures migrate from stage 2 to stage 3, previously accumulated S2 provisions are reversed and replaced by specific S3 allowances, with the two movements partially offsetting in the P&L.}

The main forward-looking risk, flagged by several banks, is the potential for a second year of corporate credit cycle pressure, particularly if trade tariff impacts and Belgian fiscal tightening weigh further on export-oriented SMEs. Finally, several banks have also formally embedded geopolitical risk into their ECL provisioning frameworks, adjusting macroeconomic scenario weightings toward adverse outcomes in response to trade policy uncertainty, the conflict in Ukraine and broader geopolitical fragmentation. However, given their calibration as of 31 December 2025, these provisions did not yet capture the impact of the Iran conflict that escalated in 2026.

Capital & Liquidity

FY25 marked the first year of application of CRR3 (Basel IV), and its impact on the reported CET1 (transitional) ratios varied considerably across banks, reflecting differences in business model, portfolio mix, and the extent to which the new output floor proved binding. Among the four universal banks, movements were modest and broadly explained by the interplay between profit generation, dividend distributions, and CRR3-driven RWA changes. KBC's ratio edged up, supported by strong profit generation, while BNP Paribas Fortis saw a decline, driven in large part by a sharp increase in operational risk RWA under CRR3's new single standardized methodology. ING Belgium benefited from the revised credit risk treatment and a business relandscaping that reduced overall RWA, while Belfius remained broadly stable.

The larger moves occurred at Argenta and Crelan, both retail-focused institutions with IRB-modelled mortgage portfolios. Argenta's ratio rose materially, combining continued capital accumulation through profit retention with a net reduction in RWA following model recalibrations and several CRR3 changes that proved favorable for its portfolio, though the bank itself notes that the output floor had no material impact in FY25 and expects it to begin affecting results from 2026. Crelan saw its ratio decline as the output floor accounted for the large majority of the RWA increase, with IRB portfolio growth and operational risk making up the rest; despite a strengthening of its capital base through Crédit Agricole's entry into the shareholder structure, which cushioned the ratio impact.

FY25 liquidity ratios were broadly stable across the six largest banks, with all maintaining a solid buffer above the regulatory minimum. Argenta stood out with a sharp increase in its LCR, driven by continued customer funding inflows and successful wholesale issuances.