kbc bank & insurance group company presentation winter 2004

KBC Bank & Insurance Group

Company presentation Winter 2004

www.kbc.com

2

Contact information

Investor Relations Office :

Luc CoolNele KindtMarina Kanamori

Tel.: +32 2 429 49 16 E-mail: [email protected]

Visit www.kbc.com for the latest update.

Ticker codes: KBC BB (Bloomberg) KBKBT BR (Reuters)

B:KB (Datastream)

ISIN code: BE0003565737

mailto:[email protected]

http://www.kbc.com/

3

Disclaimer

• THIS PRESENTATION IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY.

• ALTHOUGH THE STATEMENTS OF FACT IN THIS PRESENTATION HAVE BEEN OBTAINED FROM AND ARE BASED UPON SOURCES THAT KBC BELIEVES TO BE RELIABLE, KBC DO NOT GUARANTEE THEIR ACCURACY, AND ANY SUCH INFORMATION MAY BE CONDENSED OR INCOMPLETE.

• THIS PRESENTATION CONTAINS FORWARD-LOOKING STATEMENTS WITH RESPECT TO OUR STRATEGIES AND EARNINGS DEVELOPMENT BY THEIR NATURE, THESE FORWARD-LOOKING STATEMNTS INVOLVE NUMEROUS ASSUMPTIONS, UNCERTAINTIES AND OPPORTUNITIES. THE RISK EXISTS THAT THESE STATEMENTS MAY NOT BE FULFILLED AND THAT FUTURE RESULTS DIFFER MATERIALLY.

• BY RECEIVING THIS PRESENTATION EACH INVESTOR IS DEEMED TO REPRESENT THAT IT IS A SOPHISTICATED INVESTOR AND POSSESSES SUFFICIENT INVESTMENT EXPERTISE TO UNDERSTAND THE RISKS INVOLVED.

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Table of contents

1. Company profile

2. Strategy and earnings drivers

3. Financial highlights, year-to-date

4. Additional information

5. Closing remarks on dividend policy and valuation

Company profile

Foto gebouw

1

6

Top-20 player in Euroland banking (*)

1 BNP Paribas (35 bn) 1 BNP Paribas (45 bn) 1 BSCH (57 bn)2 BSCH (31 bn) 2 BSCH (45 bn) 2 BNP Paribas (48 bn)3 BBVA (29 bn) 3 Deutsche Bank (38 bn) 3 BBVA (42 bn)4 Deutsche Bank (26 bn) 4 BBVA (35 bn) 4 Deutsche Bank (35 bn)5 ABN AMRO (25 bn) 5 Société Gén. (31 bn) 5 Crédit Agricole (35 bn)6 Société Gén. (24 bn) 6 ABN AMRO (30 bn) 6 Société Gén. (34 bn)7 Unicredit (24 bn) 7 Crédit Agricole (28 bn) 7 ABN AMRO (32 bn)8 Fortis (22 bn) 8 Unicredit (27 bn) 8 Unicredit (27 bn)9 Crédit Agricole (14 bn) 9 Fortis (21 bn) 9 Fortis (26 bn)

10 Dexia (14 bn) 10 Intesa BCI (18 bn) 10 Intesa BCI (21 bn)11 Intesa BCI (12 bn) 11 Dexia (16 bn) 11 Dexia (18 bn)

12 Allied Irish Banks (12 bn) 12 San Paolo IMI (15 bn) 12 KBC (18 bn)13 Bank of Ireland (10 bn) 13 KBC (11 bn) 13 San Paolo IMI (15 bn)

14 KBC (9 bn) 14 Bco Popular (11 bn) 14 Allied Irish Banks (12 bn) 15 San Paolo IMI (9 bn) 15 Allied Irish Banks (11 bn) 15 HVB (12 bn)16 Banco Popular (8 bn) 16 Bank of Ireland (11 bn) 16 Bank of Ireland (11 bn)17 HVB (7 bn) 17 HVB (10 bn) 17 Bco Popular (10 bn)18 Mediobanca (6 bn) 18 Commerzbank (9 bn) 18 Commerzbank (9 bn)19 Bca MPS (6 bn) 19 Mediobanca (7 bn) 19 BA-CA (9 bn)20 Bco Popular (5 bn) 20 Bca MPS (6 bn) 20 Mediobanca (9 bn)

Dec 2002 Dec 2003 Nov 2004

(*) DJ Euro Stoxx Banks Constituents - Ranking by Market Capitalization – Situation as at 16 Nov 2004

7

Prominent player in 2 core markets

KBC is a top financial player in Belgium and has succesfully expanded its operations in the 5 most advanced countries in CEE (new EU members)

Besides these core markets, KBC is active in selected ‘other’ areas: international mid-corporate banking (mostly in W. Eur.) and financial markets

As investments in CEE have continued to increase, the ‘other’ activities have been progressively scaled down

Breakdown of revenue :

Treasury & other 9%

CEE25%

Belgium

48%

Financial markets 11%

Internaternational corporate 7%

8

0% 10% 20% 30%

Other

Argenta

ING

DEXIA

KBC

FORTIS

Client deposits

0% 10% 20% 30%

Other

ING

KBC

AXA

ETHIAS

FORTIS

Insurance premiums

0% 10% 20% 30%

Other

ING

DEXIA

FORTIS

KBC

Mutual funds

Top-3 player in Belgium

Market share:

Consolidated banking landscape (80% of market held by Top-4 banks)

Deposit base largely sufficient for funding lending activities

Market highly receptive to cross-selling of AM & insurance products (the bancassurance model dominates)

9

KBC is one of the largest international players in the region

In contrast to the other players, KBC limits its presence to the new EU Member States (the Czech Republic, Slovakia, Hungary, Poland and Slovenia) and is active in both the banking and insurance fields

8.7

13.2

13.5

14.3

19.0

21.6

23.5

24.6

28.6

29.0

ING (NL)

OTP (HU)

Citibank (US)

Intesa BCI (IT)

Société Générale (FR)

RZB (AT)

HVB / BA-CA (GE/AT)

UniCredit (IT)

Erste Bank (AT)

KBC (BE)

Top-3 player in the CEE region

International banks in CEE (by total assets, in bn EUR):

Source: RZB – assets as at 31 Dec 03, ownership structure as at 30 Jun 04

10

Banking Insurance

Slovakia:Market share: 6% (No. 4)Inhabitants: 5 mTotal assets: 2 bn EUR

Czech Republic:Market share: 18% (No. 1)Inhabitants: 10 mTotal assets:18 bn EUR

Poland:Market share: 5% (No. 8)Inhabitants: 38 mTotal assets: 5 bn EUR

Slovenia:Minority interest (34%)Inhabitants: 2 mMarket share: 42% (No. 1)

Czech Republic:Life M share: 7% (No. 4)Non-life M share: 4% (no 6)

Slovakia:Life M share: 4% (No. 8)Non-life M share: 1% (no 6)

Hungary:Life M share: 2% (No. 13)Non-life M share: 4% (no 6)

Poland:Life M share: 4% (No. 5)Non-life M share: 13% (No. 2)

Slovenia:Life M share: 4% (No. 5)

Top-3 position in the CEE region

Hungary:Market share: 11% (No. 2)Inhabitants: 10 mTotal assets: 6 bn EUR

KBC invested ± 3.6 bn to acquire a prominent position in a growth market of ± 65 m inhabitants

Especially in Poland, KBC is looking for external growth (lack of scale)

11

Core targets:

Cost/income ratio, banking 58%

Combined ratio, non-life insurance 95%

EPS growth (4-y CAGR) 10%

Return on equity, group 16%

Return on allocated capital:

- Retail in Belgium 16%

- Central and Eastern Europe 17%

- Corporates 12%

- Financial markets 18%

Tier-1 ratio, banking 8%

Solvency margin, insurance 200%

Challenging financial objectives

Minimumtargets for 2005

12

Solid group performance

Profitability

Efficiency

SolvencyTier-1, banking

Solvency, insurance

Cost/income, banking

Combined ratio, insurance

Return on equity

Growth in EPS

8.8%

320%

65%

101%

13%

Dec 02

+1%

9.5%

316%

65%

95%

13%

Dec 03

+8%

9.6%

341%

60%

94%

17%

+36%

Sep 04

+

+

+

+

+

+

Trend

Strategy and earnings drivers

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2

14

Do not underestimate the market: KBC is well positioned:

Earnings drivers in Belgium - overview

Consolidated banking market (80% of assets held by Top 4)

Savings ratio amongst the highest in the world (every year, c15% of GDP flows into financial assets)

Market highly receptive to cross-selling of AM & insurance products

AM and life insurance business growing at c10% per year

Mortgages growing at c10% p.a. (slightly above housing price inflation)

Fee rates still ‘cheap’, allowing for (be it gradual) repricing

Cost/income ratio still on the high side, allowing for further reduction

Credit quality has proven to be solid over the cycle

Top-3 market position, especially strong in the Northern region (one of the wealthiest regions in the EU)

Innovative product offering in retail AM (market share has been steadily increasing over the past 10 yrs.)

Outperforming bancassurance distribution model (life reserves grew >20% p.a. over the last 3 yrs.)

Cost efficiency improvement potential (on the back of product simplication and co-sourcing of back offices with other banks)

Compared to Belgian peers: exposure to above average growth potential in CEE

15

Strong market growth momentum: KBC is well positioned:

Solid market positions in retail and corporate (temporarily excl. Poland)

Competitive advantage in enhancing cross-selling of insurance and asset management products (re Belgium)

Cost-to-income still on the high side, allowing for further improvement

Adequately provisioned balance sheet(risks under control)

Geographical exposure entirely within the EU, limiting the risk substantially

Availability of capital within the Group

Compared to other CEE peers:highly profitable Belgian franchise as a stable earnings factor

Earning drivers in CEE - overview

Nominal GDP growth in 2005 expected at c 7%, outgrowing EMU level by c 3.5%

Ongoing catch-up in product penetration level (currently, an avg 45% for banking accounts, 30% for savings accounts and 5% for mortgages)

Mortgages volumes growing at double-digit pace (up 72% on avg in 2003)

Size of financial sector could multiply five-fold if financial assets to GDP were to reach current level of S. Europe

Unexploited cross-border (cost) synergies

16

3.7%5.4% 4.2%

3.4%3.1%

2003 2004e 2005e

2.9% 3.7% 3.4%

4.7%6.7%

4.2%

2003 2004e 2005e

4.2% 4.8% 4.7%

8.7% 7.5%4.0%

2003 2004e 2005e

3.1% 3.6% 3.7%

2.9% 2.8%

2003 2004e 2005e

Czech Republic Slovakia

Above average GDP growth

Hungary Poland

Real GDP growth + inflation - KBC estimates Real GDP growth + inflation - KBC estimates

Real GDP growth + inflation - KBC estimates Real GDP growth + inflation - KBC estimates

3.2%

6.5% 6.5%

12.9% 12.3%

8.7%

7.6%10.4%

7.6%4.5%

8.7%7.3%

17

72.9% 79.6%

1997 2002

34.0%45.6%

1997 2002

43.5% 43.7%

1997 2002

< 1 pp

44.4%62.9%

1997 2002

Czech Republic Slovenia

Increasing product penetration

Hungary Poland

Deposits as % of GDP(EMU avg = 100)




+12 pp

+7 pp +19 pp

Financial highlights,year-to-date

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3

19

Overview of earnings headlines

Earnings components

Performance by areas of activities

Outlook

20

2001 2002 2003 2004e

Strong 2004 earnings momentum

Net profitin m EUR

1 0221 119

1 034

Consensusestimate

3-y CAGR: +14%

9M 04 profit : +40% year-on-yearWell on track to deliver on all our targets

1 500

1 201

Highlights — Earnings components — Areas of activity — Outlook

21

3,5534,338 4,231 4,446

9M01 9M02 9M03 9M04

Top-line growth, banking

1,8442,500 2,774

3,487

9M01 9M02 9M03 9M04

Premium growth, insurance

In bn EURIn bn EUR

+15% org

64% 65%60% 58%

2002 2003 9M04 Target

Cost/income ratio, banking

105%95% 94% 95%

2002 2003 9M04 Target

Combined ratio, insurance

- 1 pp

Key points, year-to-date

- 5 pp

+5%


22

0.55%0.35%

0.71%

0.16%

2002 2003 9M04 Targetcorporates

Loan-loss ratio, banking

13% 13%17% 16%

2002 2003 9M04 Target

ROE, Group

Key points, year-to-date

- 55 bp

+4 pp

In bn EUR

320% 316% 341%

>200%

2002 2003 9M04 Target

Solvency margin, insurance

8.8% 9.5% 9.6%> 8%

2002 2003 9M04 Target

Tier-1 ratio, banking


23

Key points, 3rd quarter

As anticipated, slowdown in rate of growth of revenue: Seasonal slowdown in trading, dividend and premium income Adverse climate for trading (flattening yield curve, low volatility, etc.) Somewhat hardening competitive environment in Belgium

On the other hand: Further reduction in cost basis Sustained low loan-loss charges Sustained good technical results in non-life

Net profit: 332 m (up 30% y-o-y, down 30% q-o-q)


24


Earnings components


Outlook

25

Growth in banking revenue

Total 9M04 income up 5% y-o-y : Interest income up 2%, mainly

driven by volume growth. NIMmore or less stable y-o-y at 1.7%

Sustained high commission income (+4%), mainly on the back of growth in investment management, bancassurance and corp. finance

Robust financial market activity (+18%), although major slowdown in Q3

Q3 lower than Q2 mainly due to much lower trading income (seasonal slowdown and adverse market conditions) and some margin pressure in Belgium.

9M 2004

1 8192 330 2 318 2 357

1 112

1 282 1 340 1 416623

726 573674

9M 01 9M 02 9M 03 9M 04

Interest income Commissions & otherFinancial transactions

Banking income (in m EUR)

4 4464 231


4 338

3 553

* Extension of consolidation scope in 4Q01

26

299

1 0501 369 1 552 931

766

622

870

614

684784

1,065

9M 01 9M 02 9M 03 9M 04

Life, non-linked Life, unit-linked Non-Life

9M 2004

Growth in premium income

2 774

Sustained robust growth in Life: Organically, up 19% y-o-y,

outgrowing the market on the back of the succesful business model

Belgian market expected to continue to outgrow GDP driven by ‘underpenetration’ and the high savings rate

Non-life: up 5% in organic terms Primary business in Belgium

growing (+7%) slightly above claims inflation

Expansion in CEE: premiums up 18% y-o-y (in organic terms)

Drop in reinsurance exposure(premium income: -8% y-o-y)


Premium income (in m EUR)

3 487

2 500

1 844


27

Non-life claims charge

Favourable levels in all markets

9M 2004


Year-to-date claims ratio(% of net premium income)

71% 67% 65% 62%

9M01 9M02 9M03 9M04

Premiumincome

(m EUR)

Claimsratio

9M03

Claimsratio

9M04

Belgium 537 59% 61%

CR 52 80% 64%

SR 7 70% 63%

Hungary 42 70% 66%

Poland 240 - 61%

R/I 187 77% 66%

Total 1 065 65% 62%

28

42

98

55 98 81

228

109

116

37

9M 02 9M 03 9M 04

Belgium CEE Other

Net specific provisions to average gross customer loans

Loan-loss charge

Loan-loss provisions at historically low level (-68% y-o-y)

305

Loan-loss provisions (in m EUR)

9M 2004

425


134

Customerloan book

Gross loans

(in bn EUR)

LossratioFY03

Lossratio

9M04

Belgium 52.7 0.24% 0.11%

CR / SR 6.8 0.34% 0.12%

Hungary 4.4 0.32% 0.64%

Poland 3.3 8.68% 0.85%

International 34.8 0.48% 0.11%

Total 102.0 0.71% 0.16%

29

Equity impairment charge

Profitability of insurance division adversely impacted by additional impairments on equity portfolio (191 m o/w 27 m in 3Q)

Partly offset by write-back of provision for financial risks (93 m in 1Q) and non-recurring capital gains (18 m). As a balance, net 9M impact of -79 m

No additional impairments expected in Q4 (‘stable market assumption’)

9M 2004


Impairment charge on equity(insurance division)

(in m EUR)

48

255

108

191

33 44

79

17

9M 01 9M 02 9M 03 9M 04

Gross impairmentsNet negative P/L impact (non-recurring result)

30

9M 2004

1 647

425 749 726

362 384

1 5731 761 1 852

743

9M 01 9M 02 9M 03 9M 04

Belgium CEE Rest o/t World

2 461

2 782

Banking expenses (in m EUR)

2 6832 757

Total cost basis down 3% y-o-y : In Belgium: -4% y-o-y (-73 m ),

headcount reduced by 730 FTEs CEE: -3% y-o-y (-23 m ).

In Poland, headcount will be reduced by 1 500 FTEs by yearend (above the initial target)

Elsewhere: +6% (+22 m ), mainly related to trading bonuses

Cost/income ratio significantly improved from 65% to 60%

Q3 down 6% y-o-y (cost-savings programme) and 7% q-o-q (partly on the back of lower trading income)

Highlights — Earnings components — Areas of activity — Outlook* Extension of consolidation scope in 4Q01

Banking expenses

31

Non-life expense ratio (32%) has been steadily improving, though in 2004 negative impact of widening of consolidation scope (WARTA 34%)and of lower inbound R/I volumes

Life expense ratio (5.7%) progressively improving on the back of the scale effect on admin costs and the high degree of lump-sum contracts

9M 2004


Expenses(% of net written premium)

6.8%

6.3% 6.2%

5.7%

33%

32%

30%

32%

9M01 9M02 9M03 9M04

Expenses to net premiums, non-lifeExpenses to net premiums, life


Insurance expenses

32


Earnings components


Outlook

33

Areas of activity

Profit contribution % y-o-y

-11% 14%

223 m(19%)

- 15%

101 m (8%)

+5%

284 m (24%)

+99% 19%

146 m (12%)

+25% 17%

Contribution to Group result (excl. return on excess capital and minority interests)

9M 2004

322 m (27%)

Retail, Belgium

CEE

Corporates

Financial markets

Asset management

Operationally strong, depressed by equity

impairments

Strong operational performance and risks

under control

Low loan loss and non-life claims charges

Very strong in 1H, but adverse climate in Q3

Sustained money inflow (but shift to lower margin products)

Return


34

Revenues ExpensesProvisions

202

77

179

50

245

184

9M 02 9M 03 9M 04

Banking Insurance

Belgian retail


Profit contribution (in m EUR)

322

252

9M 2004

9M 04 at a glance :RevenueExpensesCredit risk

9M profit: 322 m (ROAC 14%), down 11% due to a 58% drop in contribution from insurance

Banking result up 37% y-o-y, driven by 5% income growth, maintained cost control (expenses -1% and C/I down from 78 % to 73 %) and sustained low level of problem loans (8 bp loan losson RWA).

Although strong premium income (+17%) and improving expense ratios, pressure on insurance contribution due to impairments on equity portfolio and higher taxes

Q3 less favourable in insurance (low level of capital gains), but much better in banking (lower costs)

363

35

Revenues ExpensesProvisions

78

195

28

9M 02 9M 03 9M 04

Banking Insurance

CEE



73

-4

193

9M 2004

9M 04 at a glance (organic):RevenueExpensesCredit risk

9M profit contribution: 223 m (ROAC 15%), up from –4 m in 9M03

Banking profit at 195m (vs –4m in 9M04), on the back of strong income growth (+12%), maintained cost reduction (C/I down from 76% to 67%) and sustained low level of problem loans (loan loss ratio 46 bp).

Strong premium growth and improved technical results (CR 95%) are at the basis of the net profit of 28 m in insurance

Q3 up 5% q-o-q in banking (income growth and better C/I), but down 18% in insurance due to the non-recurrence of technical gains in the life business

36

68% 76%92%

60%76% 78%

CR/SR Hungary Poland

9M 03 9M 04

16%

11%

-3%


Top-line growth

KBC, 9M 04

0.12%

0.64%

0.85%


Loan-loss ratio

KBC, 9M 0417%

19%

11%


Cost/income ratio

Return on allocated capital

KBC, 9M 04

KBC

CEE banking


37

CR & SLK: return level of 17% driven by a) robust asset (RWA +10%) and revenue growth (+16%), b) a signicant improvement in efficiency (C/I down to 60%) and c) a sustained low loan-loss ratio (12 bp)

Hungary : return level of 19% on the back of asset growth (RWA +8%) and favourable revenue development (+11%). Cost-income ratio stable and loan losses higher (no structural deterioration expected)

Poland : strong turnaround on the back of a) the thorough cost-reduction program, expenses down 10%* y-o-y and b) a much lower loan loss ratio (85 bp)

Contribution to Group: profit excl. minority interests and return on excess capital; incl. allocated Group overhead.

In m EURStand-alone

net profit

Contribution to Group

Contribution% y-o-y

Return onallocated capital

Return on invested capital

CR/SLK (o/w SLK)

16313 124 7% 17% 12%

Hungary 65 25 5% 19% 16%

Poland 32 25 - 11% 6%

Slovenia 65 22 - - 7%

* Adjusted for exchange-rate effects

CEE bankingBanking results – 9M04


38

Revenues Expenses

9M 02 9M 03 9M 04

9M profit contribution : 101 m (after allocation of distribution fee to retail business), up 5% thanks to higher AUM

Assets (101 bn) up 13% ytd (of which 60% net inflow), but gradual shift to lower margin business

Growth especially strong in capital-guaranteed funds and advisory mandats for HNW individuals

Asset management

Profit contribution (in m EUR) Belgium :

87%CEE : 5 %

87

97

9M 2004

9M 04 at a glance :RevenueExpenses

101


39

Revenues

ExpensesProvisions

166 139

264

9M 02 9M 03 9M 04

Banking Insurance

Profit contribution: 284 m, up 99% (ROAC 19%) mainly driven by lower loan loss and non-life claims charges and sustained cost control

Turnaround in banking: Substantially lower cost of risk (16 bp

on RWA versus 65 bp in 9M03) Gross income margin sligthly up from

2.5% to 2.6% Cost/income stable at 37% Profit increase most remarkable in

Belgium, ‘corporate US’ and the global structured finance activities.

Better return in re-insurance thanks to improved underwriting performance (CR 94 % versus 101% in 9M03)


Corporates

142

284

156

9M 2004

9M 04 at a glance :RevenueExpensesCredit risk


40

Revenues

Expenses

85

21

97

67

11

61

9M 02 9M 03 9M 04 Equity-related activities

Money and capital markets

Profit contribution: 146 m, up 25% (ROAC 17%) mainly driven by strong income growth (cost/income stable at 64%)

1H04 very strong, Q3 rather very poor due to: Seasonal slowdown trading activities Adverse climate: rate incertainty,

flattening yield curve, low volatility, limited stock market momentum…


Financial markets

76

117

146

9M 2004

9M 04 at a glance :RevenueExpenses


41


Earnings components


Outlook

42

Outlook for 2004

FY04 net earnings expected to be up at least 35% (assuming stable economic and financial climate and stable stock levels)

Top-line growth in 4Q: Significant volume growth in deposits/life insurance in Belgium on the

back of successful ‘savings’ marketing campaign. Margin pressure not expected to lessen Potential gain on disposal of equity holdings

Commitment to maintaining strict cost discipline

Level of provisions in 4Q: loan losses expected to be much lower than in 2003 Claims ratio may increase depending on weather conditions (seasonal effect) No further equity impairments (insurance division) expected (‘stable market

assumption’)

Restructuring in Poland has been successful. FY profit expected to be > 30 m


43


On 22 November 2004, Almanij / KBC confirmed that

they are currently examing whether it is possible to carry out

a structural change within the Group.

At this stage of the investigation, it is not possible to

comment on the outcome, the timing or the practical details

of such an investigation.

This statement is still valid.

Additional information

Foto gebouw

4

45

Year-to-date results

In millions of EUR 6M 04 3Q 04 q-o-q 9M 04 y-o-y

Gross operating income 3 599 1 610 -11% 5 209 +7% - banking 3 094 1 352 -11% 4 446 +5% - insurance 510 264 -5% 774 +21%Administrative expenses - 2 174 - 1 004 -6% - 3 178 +1% - banking - 1 838 -844 -7% - 2 682 -3% - insurance -335 -158 -3% -493 +30%Operating result 1 425 606 -17% 2 031 +17% - banking 1 256 508 -17% 1 764 +20% - insurance 175 106 -7% 281 +8%Loan-loss provisions

Value adjust., non-recurring, extraordinary and other results

- 120

- 15

- 14

- 91

-82%

-

- 134

- 106

-68%

Pre-tax profit 1 290 501 -27% 1 791 +41%

Taxes - 333 -123 -24% -456 +43%Minority interests - 88 -46 +1% -135 +41%

Net profit 869 332 -30% 1 201 +40%

46

1 997 1 280 167 708 579 Gross operating income (m)

+3% +23% +3% +6% +12% (% y-o-y)

614 405 122 420 206 Net operating income (m)

+11% 66% +2% +9% 14% (% y-o-y)

322 223 101 284 146 Net profit, group share (m)

-11% - +5% +99% +25% (% y-o-y)

33 135 14 981 - 31 952 10 255 Risk-weighted assets (bn)

+2% -1% - -3% -8% (% y-o-y)

3 005 1 966 - 2 044 1 117 Allocated capital (bn)

+6% +1% - -3% -6% (% y-o-y)

14% 15% - 19% 17% ROAC

Areas of activity

Areas of activity

Retail CEE AM Corporate Markets9M 2004

47

CEE

CSOB K&H KB NLB Insurance

Expanded horizons in CEE paying off

9M 04 (in m EUR, % chg. y-o-y)

611(+15%)

293(+15%)

234(+1%)

170 Gross operating income

- 346(+2%)

- 205(+10%)

- 181(-10%)

- 137 General expenses

- 22 - 10 - 25 - Provisions

- 80 - 13 - 11 - 6 Taxes & extraordinary

163(+1%)

65(+27%)

32(n.r.)

65 27 Stand-alone profit

- 25 - 23 - 3 - + 4 Adjustments, o/w yield on excess capital

- 14 - 17 - 4 - 43 - 5 Minority interests

124(+7%)

25(+5%)

25(n.r.)

22 27(n.r.)

Profit contributionto Group

17% 19% 11% - 9% ROAC

48

Update on restructuring efforts in Poland

Risk issue adequately dealt with in 2003 Historic loan book ‘cleaned-up’ (one of the highest

provision coverage rates on the market and ytd 04 provisions below market avg.)

Risk management procedures upgraded and distressed asset portfolio closely monitored

Cost basis significantly reduced: Centralization of back offices, outsourcing

of non-core functions and divestiture of non-core assets (Ukraine, Lithuania, etc.)

Headcount reduced by 1 300 FTEs (-19%)

Renewed focus on business development as of 2H04 Including intensive transfer of KBC know-how Acceleration in bancassurance and AM sales

Key achievements :

Clearprofitabilityturnaround

- Risk

- Costs

+ Volumes

49

Market value of securities portfolio

In m EUR Book value

Market value

Non-realised

Fixed-income 49 020 50 448 1 429

- Banking 39 603 40 599 996

- Insurance 9 417 9 849 432

Equity 4 729 5 181 352

- Banking 1 766 1 913 147

- Insurance 2 877 3 081 204

30 September 2004

* Excluding trading portfolio

50

Non-audited simulation based on 31 Dec. 2003 figures. Impact partly to be reported in opening balance sheet as at 1 Jan. 2004 and partly as at 1 Jan. 2005. For more details, surf to www.kbc.com

Simulated impact on own equity In m EUR

Profit appropriation + 498

Value adjustment of financial instruments (IAS 32 / 39) +272

Reversal of provisions (IAS 4 / 37) + 215

Correction of depreciations of tangible assets and capitalization of internally generated software (IAS 16/38)

+ 34

Inclusion of special purpose vehicles in consolidation scope + 10

Reclassification from operational to financial leasing (IAS 17) + 9

Adjustment of deferred tax assets and liabilities (IAS 12) + 3

Impairment testing of goodwill (IAS 36) - 0

Translation differences - 2

Underfunding of defined benefit pension plans (IAS 19) - 402

Total equity correction + 637

Impact of IFRS

51

Quantitative impact simulation on required capital (Sept. 04): Credit risk: 84% of current required capital level (positive impact

from the lower weight of retail/SME credit portfolio) Operational risk: additionaly 11% of current required capital

(ca. 800 m EUR) On balance: 95% of current required capital level

Methodology: Credit risk: IRB Foundation method Operational risk: Standardized method

Implementation: 31 December 2006

Impact of Basle II regulation

Closing remarks on dividend policy and valuation

Foto gebouw

5

53

1.421.48 1.52

1.64

2000 2001 2002 2003

3.90

3.39 3.42

3.68

2000 2001 2002 2003

EPS

36%44% 44% 45%

2000 2001 2002 2003

Payout ratio

3.1% 3.6%4.2%

4.9%

2000 2001 2002 2003

DPS

Dividend yield

Steadily growing dividend

EUREUR

54

Valuation

P/E 2005

CEE banks (1) 12.8

CEE-exposed banks (2) 12.2

Euro-zone banks (3) 11.9

KBC 11.3

BEL banks (4) 10.0

Key figures: Share price: 55.7 EUR Net Asset Value: 38.2 EUR

Analysts’ estimates: EPS 2004 consensus: 4.82 EPS 2005 consensus: 5.17 P/E 2005: 11.3

Recommendations : Positive: 38% Neutral: 29% Negative: 33%

Valuation relative to peer group :

Unweighted average of IBES data :(1) OTP, Komercni, Pekao, BPH PBK, BRE(2) BA-CA, Erste, Unicredit, Soc Gen, Intesa BCI(3) Top 20 of DJ Euro Stoxx banks (4) Fortis, Dexia

Situation as at 16 November 2004

55

Sell-side coverage

http://www.oppenheim.de/de/00.htm

kbc bank & insurance group company presentation winter 2004

Documents

financial player

total assets

cee regionkbc

pptprominent player

pptdisclaimerthis presentation

cee new eu membersbesides

rzb assets

euroland banking