KBC Bank

1
Foto gebouw
KBC Group2004 Full-year results Analysts
presentation
2
Headlines Results KBC Bank Insurance (pre
merger) - Financial performance - Areas of
activity Results KBL epb Results
Gevaert Financial outlook for 2005 Merger
synergies update
Willy DuronManaging DirectorGroup CEO
3
Quick reminder

• Until 31-Dec-04
• As of 01-Jan-05

Almanij
KBCBank Insurance
Gevaert
KBLEuropean Private Bankers
KBC Bank
KBC Insurance
KBCAsset Management
KBC Group NV
KBCBank
KBCInsurance
KBCAM
KBLEuropean Private Bankers
Gevaert
4
Key points, 4th quarter 2004
KBC Bank Insurance Q4 profit of 557 m

• Excellent performance in Belgium retail on the
  back of a wealth management marketing campaign
• As anticipated, gains on equity holdings (partly
  offsetting year-to-date equity impairment
  charges)
• Low loan-loss charges (65m) and sustained solid
  technical results in non-life (claims ratio of
  60)
• Seasonality in the cost basis and significant
  provisions for operating charges (70 m)

5
Strong earnings momentum
KBC Bank Insurance
Net profit
in m EUR
57

• Net profit FY2004 of 1 758 m
• Strong year-on-year growth (57) and ROE (18),
  driven by solid revenue dynamics and successful
  risk- and cost management

Organic growth
6
Outperforming the market
KBC Bank Insurance
Peer group
CAGR 20
CAGR 6

• Earnings growth at sustained high level compared
  to sector

DJ Euro Stoxx Banks universe
CAGR compound average growth rate
7
KBC Group (mergco)
Net profit
in m EUR

• Pro forma net profit FY2004 of 1 682 m
• Major differences with KBC Bank Insurances
  results
• Elimination of gains on the sale of Almanij Group
  shares (82 m)
• Add-on of earnings of KBL epb, however with the
  non-recognition of the use of the GFBR (130 m)
  net contribution of 63 m
• Add-on of profit contribution of Gevaert (-36m) ,
  adversely impacted by the one-off divestment
  loss of Agfa Gevaert (81 m)

8
Simulated impact of IFRS standards
Impact on P/L -67 m
Impact on equity 426 m
in m EUR
in m EUR
EPS-impact -0.10 EUR
BPS-impact 1.80 EUR
Impact on KBC Mergcos 2004 pro-forma figures
9
Growing dividend
Dividend per KBC share
EUR
12

• Gross 2004 dividend yield, relative to 2004
  average share price is 3.7 (subject to AGM
  approval)
• Backed by its strong solvency position and
  enhanced profitability, KBC Group intends in
  future to continue its policy of paying out a
  steadily growing dividend

4.7 for ex-Almanij shares that were converted
to KBC shares
10
Headlines Results KBC Bank Insurance (pre
merger) - Financial performance - Areas of
activity Results KBL European Private
Bankers Results Gevaert Financial outlook for
2005 Merger synergies update
Andre BergenManaging DirectorCEO of KBC Bank
11
Key points
Premium growth, insurance
Top-line growth, banking
In m EUR
In m EUR
6
33 org
Investment return, insurance
Loan-loss ratio, banking
In bn EUR
- 50 bp
- 70bp
12
Key points
Combined ratio, non-life
Cost/income ratio, banking
- 100bp
- 500bp
Return on equity, insurance
Return on equity, banking
-100bp
700bp
13
Solid growth in banking revenue
FY 2004
Banking income (in m EUR)

• Total FY04 income up 6 y-o-y
• Sustained high commission income (10), mainly
  on the back of growth in investment management
  and to a lesser extent in corporate finance,
  bancassurance and payments services in CEE
• Robust financial market activity (24), mainly
  in the first half of the year. Capital gains on
  investments (365m) in line with 2003
• Interest income up 1 owing to volume growth.
  NIM slightly down to 1.67 from 1.73 in 2003
  (vs. 1.67 in 2002)
• Strong Q4 thanks to a successful marketing
  campaign (investment products) in Belgium and
  normalized trading levels (after weak Q3)

6 011
5 756
5 655
NIM net interest margin
14
Favourable growth in banking assets
End of 2004
Customer loans(in bn EUR)
106.6

• Customer deposits up 6
• Customer loans up 7
• Corporate book up 4 (down in 2003, partly due
  to impairments in Poland)
• Solid mortgage growth

98.8
90.3
O/S outstanding.Chg in 2003 excl.
deconsolidation of Krefima
Excl. institutional activity
Note mortgage growth adjusted for currency
depreciations
15
Spread development
Interest margin, Belgium banking business
Spreads on outstanding loans,Belgium banking
business
trend
trend
16
Strong growth in premium income
FY 2004
Premium income (in m EUR)

• Sustained robust growth in Life
• Up 45 y-o-y in organic terms
• Very strong in Belgium (47), outgrowing the
  market on the back of successful business model
  (market share up from 13 to 15, at 31 in
  unit-linked business)
• Solid growth in CEE (28). Market share up in
  Hungary and Slovenia, down in Poland and CR.
• Non-life up 5 in organic terms
• Primary business in Belgium growing (7)
  slightly above claims inflation (stable market
  share)
• Expansion in CEE premiums up 11 y-o-y in
  organic terms. Market share stable in Hungary and
  SR, down in Poland and CR.
• Drop in reinsurance exposure(premium income -3
  y-o-y)

5 037
3 486
3 156
Extension of consolidation scope in 2004
17
Lower investment yields, insurance
Interest income, insurance
Total Investment income, insurance
capital gains on shares in 2004 4.75 on
market value of equity portfolio
18
Low loan-loss charges
FY 2004
Loan-loss provisions (in m EUR)

• Loan-loss provisions at very low level (-71
  y-o-y)

676
465
199
Net specific provisions to average gross
customer loans
19
Favourable non-life claims charge
FY 2004

• Favourable development in all markets

Claims ratio( of net premium income)
20
Banking expenses well controlled
FY 2004
Banking expenses (in m EUR)
3 695
3 751
3 636

• Total cost basis down 2 y-o-y
• In Belgium -4 y-o-y (-78 m), headcount reduced
  y-o-y by 800 FTEs
• CEE -1 y-o-y (-9 m).In Poland, headcount
  reduced by 1 275 FTEs (exceeding initial target)
• Elsewhere 6 (29 m), mainly related to
  trading bonuses
• Cost/income ratio significantly improved from 65
  to 60
• Q4 up 2 y-o-y (higer profit than anticipated
  resulting in higher bonus expenses) and 13 q-o-q
  (seasonality reasons and higher marketing costs)

Extension of consolidation scope in 4Q01
21
Reducing product complexity - update
Product simplification programme - banking,
Belgium
22
Co-sourcing initiatives - update
Joint venture with the DZ Bank Group for
cross-border payments
GE
BE
Transactions from DZ and its 1 200 co-operative
banks
12 m transactions p.a. from KBC's Belgian
banking activities
Fin-Force
shared processing platform for cross-border
payments transactions
Multi-bank platform based on high performance
straight-through processing and compliant with
new EU regulation
Economies of scale the no. of cross-border
transactions will go up over 50, generating
substantial recurring cost savings (double-digit
reduction of unit cost per transaction - expected
payback period lt 1 year)
For competitivity reasons, no further details
can be disclosed
23
Incremental intra-group synergies

• Cross-border synergies with CEE entities
• Centralized card purchasing/processing (SiNSYS)
• Alignment of ICT approach and joint contracting
  of business partners, e.g., in the field of cash
  handling (purchases of vendor solutions
  machinery, etc.) and HRM (SAP)
• Integrated intl cash management product offering
  (W1SE), joint nostro/vostro proposal, centralized
  approach for cash handling, etc.
• KBC standards for retail distribution and
  bancassurance (Mercator)

24
Headlines Results KBC Bank Insurance (pre
merger) - Financial performance - Areas of
activity Results KBL European Private
Bankers Results Gevaert Financial outlook for
2005 Merger synergies update
Herman AgneessensChief Financial OfficerChief
Risk Officer
25
Areas of activity overview
Net profit contribution, in m EUR
Pro forma
26
Belgian retail
Profit contribution (in m EUR)
FY 2004

• FY profit conribution of 582 m, up 19, thanks to
  remarkable improvement in banking profitability.
  ROAC at 19
• Banking result up 32, driven by 4 revenue
  growth (margin pressure offset by asset growth
  and higher fee income in funds and insurance
  business), sustained cost control (-2 expenses)
  and low level of problem loans (9 bp loss on
  RWA). Private banking contributing 49 m
• Strong premium income (38 y-o-y) and strict
  technical discipline (combined ratio at 93), but
  negative impact from lower investment yields and
  normalized tax level
• Excellent performance in Q4 on the back of a
  succesful marketing campaign (investment
  products) and capital gains (offsetting
  impairment charges of preceding quarters)

582
490
363
FY 04 at a glance RevenueExpensesCredit risk
27
Central and Eastern Europe
Profit contribution (in m EUR)
FY 2004

• FY profit contribution of 269 m, up from -132m
  in 2003, underpinned by the robust turnaround in
  Poland and solid operating performance on the
  other markets. ROAC 14 (15 in banking)
• Banking at 244 m (vs. 131 m), thanks to solid
  revenue expansion (11), cost discipline (C/I
  down from 75 to 67) and normalized credit
  risk (loan-loss charges at 48 bp)
• Insurance at 24 m (vs. 1 m), driven by solid
  premium growth (20 in organic terms) and
  improved underwriting (C/R down from 104 to 97)
  
• Q4 result below quarterly average due to various
  items change in recognition of interest income
  and higher marketing costs (PL), seasonal effects
  in operating expenditure and higher life
  reservation charges (CZ) and provisioning for
  legal disputes (HU).

269
108

-132
FY04 at a glance (organic)RevenueExpensesCredi
t risk
28
Key developments in CEE banking
Top-line growth
Cost/income ratio
FY03
FY04
FY03
FY04
Market shares
Return on investment
FY03
FY04
Dec-04
Dec-03
Avg deposits and loans
n/r
Growth in local currency, after elimination of
the yield on excess capital
29
CEE, company overview
CEE
FY 04 (in m EUR)( chg y-o-y in local currency)
CSOB
KH
KB
NLB
Insurance
30
Asset management
Assets under management(in bn EUR)
Net change in assets, 2004
Retail funds, Belgium
107 bn
Retail funds, CEE
Corporate
89 bn
Belgium88
Private assets, Belgium
81 bn
Institutional assets
Retail
Group assets
CEE 5
Market share, retail funds Belgium
31.5 Czech Republic 22.0
Slovakia 7.7 Hungary
9.4 Poland 1.3
31
Asset management
Profit contribution (in m EUR)
FY 2004

• FY profit contribution of 143 m (after allocation
  of distribution fees to retail business), up 8,
  underpinned by solid increase in AUM
• Assets (107 bn) up 20 y-o-y (of which 66 net
  inflow), but gradual shift to lower margin
  business (buoyant growth in capital-guaranteed
  retail funds and advisory mandates for HNW
  individuals in Belgium)
• Solid growth momentum in CEE region, be it from a
  low basis AUM up 25 y-o-y (57 for retail
  funds on the back of market innovation / launch
  of structured funds)
• Search for international expansion through
  third-party distribution of funds (0.5 bn
  gathered in 2004)
• Strong Q4 segment result (6 increase in AUM)

143
132
116
FY 04 at a glance RevenueExpenses
Belgium 88
CEE 5
32
Market share in Belgium
Mutual funds market development of market shares
KBC
Competitor A
Competitor C
Competitor B
Rest of the market
33
SME and corporates
FY 2004
Profit contribution (in m EUR)

• FY profit contribution 378 m, up 72, driven by
  improved operating performance and substantially
  lower loan-loss charges. ROAC at 19.
• Solid growth in banking on the back of a 5
  revenue increase, stable expenditure level and
  significant gain (112 m) from lower loan-loss
  provisions (28 bp on RWA vs. 62 bp in 2003)
• Better return in re-insurance thanks to further
  improvement in underwriting performance (combined
  ratio of 98 vs. 100 in 2003)
• Remarkable profit increase in Belgium and in the
  global structured finance business. Also fine
  results from Ireland, the US and the diamond
  niche sector.
• Q4 segment results in line with previous quarters
  (somewhat higher risk-provisioning offset by
  higher fee income)

378
219
193
FY 04 at a glance RevenueExpensesCredit risk
34
SME and corporates
Profit contribution, geographical breakdown (in
m EUR)
35
Capital markets
Profit contribution (in m EUR)
FY 2004
221

• FY profit contribution 221 m, up 76, boosted by
  the pick-up of equity capital markets. ROAC at
  20.
• Revenue in ECM activity up 20 (with expenses
  almost flat), mainly on the back of the
  non-recurrence of fair value adjustments on an
  unwinding derivatives portfolio in 2003 and
  additional commission income out of hedge fund
  activities. Moreover, further improvement in
  contribution from cash equity business profit
  contribition of 22 m (vs. breakeven in 2003)
• Profit contribution of money and debt capital
  markets up 9 as a result of 7 increase in
  income and 5 increase in expenditure
• Q4 segment result back to high average level
  after weak Q3 which was hurt by seasonal activity
  slowdown and adverse climate

126
93
FY 04 at a glance RevenueExpenses
36
Changes in activity reporting, 2005

• Changes as of 1Q 2005
• Use of IFRS reporting standards(impact expected
  to be limited)
• Integration of Asset management business into
  retail and coporate divisions (separate details
  on asset management will be available)
• Additional areas KBL epb Gevaert (to be
  integrated in 2006)
• Allocation of capital
• 6.8 on RWA (Tier-1 of 8 with 15 hybrid),
  previously 5.95
• No further allocation of goodwill(ROAC becomes
  an indicator for operating performance, as
  opposed to ROI)

• Areas of activity in 2005
• Retail bancassurance (mainly in Belgium)
• Central and Eastern Europe
• Corporate services (SME and corporates)
• Market activities
• KBL European private banking
• Gevaert

• Best-efforts approach for 2005 will be
  reassessed for 2006

37
Headlines Results KBC Bank Insurance (pre
merger) - Financial performance - Areas of
activity Results KBL European Private
Bankers Results Gevaert Financial outlook for
2005 Merger synergies update
Etienne VerwilghenManaging DirectorCEO of KBL
38
KBL 1996
Challenges
1996

• Private banking purely concentrated on offshore
  (although predictable erosion of offshore
  center)
• Limited geographic customer base diversification
• KBL not primarily focused on private banking yet

39
Strategy of KBL epb

• To develop a network of European Private Bankers
  (epb)
• Higher proportion of AUM based in on-shore
  centres
• Well-balanced and diversified geographic origin
  of private clients
• To refocus KBL in Luxembourg
• Parent company activity
• Support function for the members of epb (IT,
  Global Custody, Markets, etc)
• Local banking activities in Luxembourg
• Private banking
• Niches securities services and services to
  local professionals in Luxembourg (banks,
  insurers, asset managers)
• To continue a reasonable profit growth and
  decrease reliance on non-private banking revenues

To achieve the above 3 targets, necessity to grow
through acquisitions
40
KBL epb today
2004
Achievements

• Presence in 11 countries
• Clearly focused on private banking
• The client is at the center
• Relationship-based on long term view
• Multicultural
• Based on open-architecture

41
Financial key points
Net profit
Assets under management
In bn EUR
In bn EUR (Lux Gaap)
CAGR 6
CAGR 6
Return on equity
Tier-1 ratio
Lux Gaap
Lux Gaap
42
Revenues in line with strategy trend

• Strong increase in commission income (17 of
  which 6 on organic basis) due to the
  strengthening of the core private banking
  activity.
• Contraction of net interest income on the back
  of
• Focus on private banking and intentional
  restricting of loan exposure
• Reduction of exceptional profits on treasury
  activity
• Lower excess capital (further to acquisitions and
  maturity of high-yielding assets)
• Non-recurrence of extraordinary dividends (in
  2003 related to re-insurance captive KB Ré)
• Capital gains on non-core investments

Operating income (in m EUR)
914
822
756
43
Continued stringent loan policy

• Loan portfolio of 7.7 bn (diversified portfolio
  with 90 of exposure in Western-Europe)
• Progressive scaling down of lending activities
  not related to private banking since 2000
• Centralization of risk exposure and Strict local
  lending limits
• Consistantly low loss ratio

Loan portfolio (in m EUR)
10 017
9 600
7 679
Net specific provisions to average gross
customer loans
44
Expenses under control
Operating expenses (in m EUR)

• Despite
• continued streamlining of cost base resulting in
  organic cost decrease of -2.5 y-o-y
• improved efficiency through support services to
  epb from Luxembourg
• cost/income ratio rises from 60 to 70

530
526
492
Extension of consolidation scope in 4Q01
45
Strongly reduced provisions

• Reduced operating result compensated by the
  non-recurrence of value adjustments on
  investments portfolios
• A new provision was set aside for potential
  future restructuring charges (127 m), but offset
  by the writeback of the GFBR (130m)
• As a balance, net profit up 6.5

46
Reconciliation with KBC Groups pro forma results
Mainly due to differences in scope of
consolidation (-16 m in 2001), the elimination of
intragroup income (-20m in 2002 and and -46m
in 2003), and the fact that the GFBR has already
been reversed (-130m) through equity in the
Group pro-forma accounts in 2001 (relevant for
2004 results)
47
Headlines Results KBC Bank Insurance (pre
merger) - Financial performance - Areas of
activity Results KBL European Private
Bankers Results Gevaert Financial outlook for
2005 Merger synergies update
Andre BergenManaging DirectorCEO of KBC Bank
48
Gevaert portfolio

• Fields of business of Gevaert (total portfolio at
  31-Dec-04 1.5 bn)
• Holdings in listed companies, of which important
  investment in Agfa Gevaert (26 stake, worth 854
  m at 31-Dec-04)
• Private equity (0.2 bn)
• Real estate and specialised leasing and finance
  activities within Almafin, a since 2004
  fully-owned subsidiary of Gevaert with total
  assets of 0.5 bn
• Activity in 2004
• New equity investments 166 m (excl. intragroup
  shares)
• Realised gains on exits (incl. real estate) 35 m

Belgian listed imaging technology company
focusing on the health care and grafics sectors
(market cap ca. 3.4 bn) in the niche fields of
audiovisual and railway equipment, leisure
infrastructure,
49
Gevaert portfolio

• Profit contribution 36m caused by the decreased
  contribution from Agfa Gevaert (-66 m, down from
  63m in 03)
• Depressed contribution of Agfa due to
• one-off divestment loss charge (81 m) related to
  the sale of the consumer imaging division
• reduction of business scope (disposal of non-core
  assets in 2003/04)
• rather difficult business climate, although
  reversed trend recognised at end of year
• Significant non-realised gains on equity
  portfolio
• On equity holdings 496m, of which on Agfa
  Gevaert 311m

Pro forma, including Almafin in the scope of
consolidation
50
Gevaert portfolio
Contribution to KBC Groups pro forma results
Extension of consolidation scope (acquisition
of Almafin) Mainly related to Afga Gevaert
51
Headlines Results KBC Bank Insurance (pre
merger) - Financial performance - Areas of
activity Results KBL European Private
Bankers Results Gevaert Financial outlook for
2005 Merger synergies update
Herman AgneessensChief Financial OfficerChief
Risk Officer
52
Profit outlook - 2005

• We continue to face a favourable environment in
  all of our home markets. In this respect, we are
  confident about 2005
• However, due to uncertainty surrounding the
  implementation of IFRS, we cannot provide any
  precise quantitative guidance
• Nevertheless, we are convinced that, on a
  like-for-like basis, year-on-year Group profit
  will be higher in 2005 then in 2004
• This confidence is supported by the good results
  achieved so far in the first quarter

53
2005 IFRS disclosure schedule

• New IFRS templates
• FY04 IFRS earnings and B/S (excl. impact of IAS
  32/39 and IFRS 4)

23 Mar. 2005

• Impact of IAS 32/39 and IFRS 4 on shareholders
  equity on 1 Jan 2005

28 Apr. 2005

• 1Q05 earnings (full set of interim IFRS financial
  statements and notes)
• 1Q04, 2Q04, 3Q04 and 4Q04 earnings (IFRS
  reference P/L and B/S, incl. segments, excl.
  impact of IAS 32/39 and IFRS 4)

9 June 2005
54
Headlines Results KBC Bank Insurance (pre
merger) - Financial performance - Areas of
activity Results KBL European Private
Bankers Results Gevaert Financial outlook for
2005 Merger synergies update
Willy DuronManaging DirectorGroup CEO
55
Quick reminder

• Merger of KBC with parent company Almanij,
  following public bid on KBL European Private
  Bankers (KBL epb'), in order to unlock
  additional value on the back of
• increased visibility and liquidity
• realization of group synergies
• Flexibility to continue current strategies
• Leverage on bancassurance model and private
  banking expertise
• Core geographic focus on Belgium, CEE and private
  banking throughout Europe
• Continued good prospects for Belgian market
• CEE and European private banking to remain
  long-term earnings drivers
• Continued quest for (cost) synergies, partly
  through intra- and cross-group co-sourcing
• Balanced risk profile through diversified
  business portfolio
• Solid solvency levels and credit ratings

56
Synergy areas

• Optimization of value management by centralising
  capital and and risk management function
• Additional revenue growth based on
  complementarity of product ranges (e.g. funds,
  life insurance...) and geographical presence
• Cost savings based on overlapping activities and
  functions
• Optimization of capital and risk management by
  rebalancing equity portfolio
• Strenghtening of competitive position by merging
  Gevaerts activities into KBC Bank and KBC
  Insurance

Corporate functions
Private banking(activities of KBL epb)
Gevaert portfolio

• Synergy projects proceeding according to plan
• Unified strategy for private banking and private
  equity expected to be fully ready for execution
  by mid-2005
• Management is committed to start realizing
  synergies immediately

57
Activities of KBL epb

• Total synergy program of NPV 500 m (net of
  restructuring and capital costs, post tax)
• Estimated capital and restructuring costs are c
  50m over 5 years
• Recurring pre-tax benefits of 75 m (peak level),
  half of which can be realized by 2006
• Cashflow positive in every year
• 40 revenue and 60 cost (and cost avoidance)
  benefits
• All synergies reach their peak by 2009 (some
  faster than others)
• Portfolio of 32 synergies, 19 large and 13
  small

Synergy benefit, in m (see note below)
Revenue
Cost Cost Avoidance
Note Synergy benefit described throughout as
peak recurring annual increase in pre- tax
bottom-line result vs. base business.


58
Gevaert portfolio

• Reduction of equity portfolio (case by case
  approach as to individual equity positions)
• Merger of activities of Almafin into KBC Bank
  (i.e. KBC Real Estate and KBC Lease)
• Disposal of of non-core activities
• Merger of Gevaert and KBC Investco (KBC
  Investco is a subsidiary of KBC Bank and KBC
  Insurance)
• Build up a private equity platform with
  geographical focus on home markets (targeted
  portfolio of 500-600 m)

Holdings in listed companies
Real estate specialized finance
Private equity
59
QA panel
Herman AgneessensChief Financial OfficerChief
Risk Officer
Andre BergenManaging DirectorCEO of KBC Bank
Willy DuronManaging DirectorGroup CEO
Etienne VerwilghenManaging DirectorCEO of KBL
Analysts wishing to participate in the QA
conference call should dial 32 2 290 1411or
44 207 162 0181