KBC Group

1
KBC Group

• Project NEXT Confirmed long-term strategy, new
  management structure and capital deployment

16 December 2005
2
Important information for investors

• This presentation is provided for informational
  purposes only. It does not constitute an offer to
  sell or the solicitation to buy any security
  issued by the KBC Group.
• KBC believes that this presentation is reliable,
  although some information may be condensed or
  incomplete.
• This presentation contains forward-looking
  statements with respect to the strategy, earnings
  and capital trends of KBC, involving numerous
  assumptions and uncertainties. The risk exists
  that these statements may not be fulfilled and
  that future developments differ materially.
• By reading this presentation, each investor is
  deemed to represent that it possesses sufficient
  expertise to understand the risks involved.

3
The NEXT project summary

• In H2 2005, KBC undertook a review of its
  strategic horizons and challenged its ambitions
  for the long term, taking into account among
  other things, potential increased competition in
  a consolidating European financial sector. This
  strategic review was called project NEXT.
• The NEXT project clearly re-affirmed KBCs
  ability to ensure sound growth and solid value
  creation post-2007/2008 whilst maintaining a
  standalone position. In order to secure this, KBC
  will take initiatives to strengthen the existing
  franchises (incl. selected add-on acquisitions)
  and enhance cost efficiency and performance
  management.
• The focus remains on retail, SME and
  wealth-management activities and, geographically,
  on Belgium and CEE and selected Western-European
  countries. KBC will not enter into completely new
  lines of business or new geographic zones. If
  necessary, further opportunistic operational
  alliances in certain areas may be set up to
  generate additional scale effects.
• The organizational structure of Group management
  will be brought more in line with the
  international profile of the Group and become a
  catalyst for cross-group initiatives. Additional
  members have been appointed to the Executive
  Committee, bringing the total number to 7 (from 3
  initially). The structure of legal entities
  structure remains untouched.
• The NEXT project has identified additional growth
  options that require extra capital investments,
  starting in 2006 and spread over a period of 5-7
  years. KBC is fully able to fund the NEXT growth
  options without having to raise additional
  capital and by keeping the minimum solvency
  targets unchanged at a solid level (a Tier-1
  ratio of min. 8 for banking activities and a
  solvency margin of min. 200 for insurance
  activities).
• The main 2006 investment relates to the buy-out
  of third-party interests in CEE subsidiaries.
  Moreover, in 2006, a share buy-back programme of
  1 bn euros will be initiated. As a result, the
  immediately available excess capital will be
  almost fully used up.

4
KBC Group

• Confirmed long-term strategy, new management
  structure and capital deployment

5
Strong, attractive franchises today
Strong bancassurancefootprint in home markets
Selected niche strategies
Onshore private bankingW. Eur.
Offshore private banking
RetailBelgium
Consumerfinance Poland
RetailCzech Rep. Slovakia
RetailPoland
RetailHungary
RetailSlovenia
Institutl market activities
Internatl (mid-)corp. banking
Institutlasset mgt
Domesticcorporatefinance equitybrokerage
Retailassetmgt.
Leasing
SME/corp. banking networks
Private banking networks
Operations IT
Operations IT
Operations IT
Operations IT
Operations IT
Capital risk management

• Over the past few years, KBC has strengthened its
  bancassurance position in its historic home
  market in Belgium while building up an additional
  franchise in CEE. By merging with Almanij, KBC
  has added on the option of developing a European
  private banking franchise. It also operates in
  selected other markets, pursuing niche
  strategies.
• In the coming years, Group earnings are expected
  to grow to 2.7 bn euros in 2008 from 1.6 bn in
  2004. This represents an average annual EPS
  growth of more than 10 percent and a return on
  equity of at least 16. The NEXT project
  reconfirms this (existing) financial outlook. 1

1 Financial objectives 2005-2008 as published on
23 June 2005
6
Anticipating future challenges

• Source McKinsey, 2003 data

• The NEXT project addressed, among other things,
  to what extent the upsizing of scale in Europe
  due to cross-border consolidation could
  jeopardize KBCs competitive position, growth
  prospects and standalone strategy in the long
  term. KBC believes that - if the conditions are
  correctly anticipated this will not be
  life-threatening.
• When looking at the key success factors in retail
  financial services, the companys scale is not
  necessarily relevant (as illustrated in the
  above graph). KBC believes that it is vital to
  hold significant market share in the relevant
  individual markets, and, at the same time,
  maintaining excellence in the implementation of
  distribution and operating models.
• The NEXT project has therefore focused on
  designing initiatives to further strengthen the
  current franchises and to ensure distribution
  excellence and lean processing. KBC will not
  enter into completely new lines of business or
  geographic zones. If necessary, further
  opportunistic operational alliances may be set up
  in certain areas to generate additional scale
  effects.

7
NEXT initiatives - overview
Management objective Examples Required mgt. attention2006-07 Additional capital2006-07
Strengthening the CEE franchise Buy-out of third parties- Acquisitions Accelerated organic growth - e.g., 40 of KH (Hungary), 7 of CSOB Bank (CR)- e.g., Poland, Romania, the Balkans - e.g., SME, HNWI consumer finance development
Strengthening the Belgian franchise - Strengthening of non-life distribution channels, launch of innovative longevity life products, etc.
Strengthening the Private Banking franchise Setting up of cost-saving central back-office functions(potentially, small add-on acquisitions)
Distribution excellence - Integration of distribution channel management per local market, setting up of a distribution competence centre to leverage distribution experience throughout the Group, etc.
Lean operations - Setting up of Group-wide product factories and shared services, co-sourcing of selected activities, etc.
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• The NEXT project has identified some 25 business
  cases - illustrated in the above table - in
  order to strengthen the current franchises (in
  terms of improved market penetration, product
  offering, distribution channels, management
  control, etc.) and to ensure distribution
  excellence and lean processing.
• The implementation of the business cases will
  be spread over a 3-to-5-year period and will
  enable KBC to safeguard its competitive position
  and growth prospects in the long term. In the
  2006-07 period, both management attention and
  additional capital allocation will be focused on
  the buy-out of third-party interests in CEE
  (since these are expected to be immediately
  value-enhancing) and on the implementation of
  the new organizationional structure (for further
  details, see subsequent slides).

8
NEXT initiatives in CEE - overview
Russia

• Organic growth
• Accelerating business development (e.g.,
  bancassurance,SME, HNWI and consumer finance
  business, branch openings, etc.)
• Buying out third-party interests

Estonia
Latvia
Lithuania
Belarus
Poland
Ukraine
Czech Rep.
Moldova
Slovakia
Slovenia
Hungary

• Geographic add-ons (depending on opportunities)
• Romania, e.g., via greenfield
• Croatia and the Balkans
• Poland (banking) and Hungary (insurance) to
  increase existing foothold (expected to occur
  post-2007)

Romania
Croatia
Bulgaria
Bosnia
Serbia
Albania
Turkey
Macedonia

• The strategy in CEE is focused on accelerating
  the organic growth (incl. buying out third-party
  interests) and making selected geographic add-on
  investments.
• The additional allocation of capital for
  third-party buy-outs and add-on acquisitions will
  be assessed on the basis of a set of conservative
  parameters, both strategic and financial, in line
  with our past track record in this respect.

9
The new Group management structure

• A new Group management structure has been drawn
  up, based on the following 4 principles
• Focus on distribution as the lever of future
  competitive advantage and the integration of
  Retail Banking, network-driven Private Banking
  and Insurance in local geographical areas into
  single business units to serve as the backbone of
  this competitive advantage
• Strengthening of the international dimension of
  the Group and the explicit separation of Belgian
  activities from Head Office functions to
  ensure this principle
• Delegation of clear accountability for
  performance to the Business Units, whilst
  ensuring strict compliance at the same time with
  Group standards and effective Group steering,
• Further movement towards lean processing,
  taking advantage of Group scale by combining
  manufacturing activities in product factories and
  support operations into shared services
• The structure of legal entities remains
  untouched.

The Share in Group profit and allocated equity
relate to 9M 2005 and 30-Sep-2005 figures,
respectively.

10
Group Executive Committee
New structure as of May 2006
On the occasion of the retirement of Willy
Duron, Group CEO, Andre Bergen will be nominated
Group CEO. From May to August 2006, Mr. Bergen
- as Deputy Group CEO will be in charge of the
implementation of the new management structure.
Group CEO
Chairs the Executive Comittee, responsible for
overall strategy and performance, heads various
Centre Functions
CEO,Belgium
CEO, CEE
CEO,European Private Banking
Responsible for CEE performance, manages country
CEOs, develops regional strategy and heads CEE
support staff office
Implements integrated domestic retail private
bancassurance strategy
Focuses on developing, integrating and leading
strategy for cost-advantaged local pure-play
private banks
Frans Florquin (currently Senior Manager of
KBC Bank
Etienne Verwilghen (currently Member of Group
ExCo, heading KBL European Private Banking)
Jan Vanhevel (currently Senior Manager of KBC
Bank)
CEO, Merchant Banking
Group COO
Group CFO/CRO
Develops and implements strategies for Merchant
Banking
Develops Shared Service Product Factory
Infrastructure and is responsible for
Organization and Lean Processing
Manages Groups Value Risk policies and heads
Finance/IR and Legal/Fiscal
Guido Segers (currently Senior Manager of KBC
Bank)
Chris Defrancq (currently Senior Manager of KBC
Insurance)
Herman Agneessens(current Group CFO/CRO)

• The new structure includes the appointment of 5
  additional Members to the Group Executive
  Committee alongside the various business lines
  (effective as of 1 May 2006). A new position of
  Group Chief Operations Officer has also been
  created.
• Willy Duron, the Group CEO, is due to retire on 1
  September 2006, on which date Andre Bergen will
  become the Group CEO.

11
Capital situation as at 31 December 2005
(forecast)
Availablecapital Requiredcapital Immediatelyavailable excess
Banking private banking (Tier-1) 11.3 bn 9.4 bn 1.9 bn
Insurance (explicite solvency) 2.0 bn 1.6 bn 0.4 bn
Gevaert (excl. Agfa Gevaert) 0.3 bn 0.1 bn 0.2 bn
Total, Group 13.5 bn 11.1 bn 2.5 bn
Existing leverage at holding-company level Existing leverage at holding-company level Existing leverage at holding-company level -1.3 bn
Core excess capital ( net of leverage at holding-company level) Core excess capital ( net of leverage at holding-company level) Core excess capital ( net of leverage at holding-company level) 1.2 bn

• The total and excess capital is expected to
  be 13.5 bn and 2.5 bn euros, respectively, as at
  31 December 2005. 1
• The capital planning takes into account the new
  Belgian regulation on Banking Capital Adequacy
  (in order to comply with European IFRS) which
  will be introduced by KBC Group as of 31 December
  2005. The available capital (i.e. Tier-1,
  banking) is negatively impacted by 0.5 bn.
• Of the excess capital of 2.5 bn euros, 1.3 bn
  euros is funded by the existing leverage at
  holding-company level. The gearing ratio the
  sum of the equity of the subsidiaries divided by
  the Group consolidated equity amounts to 108.

1 A net profit forecast for 2005 of 2.2 bn euros
has been taken into account
12
Planned capital deployment in 2006-07
Available Capital Required Capital Immediately available excess
Capital as at 31-Dec-2005 13.5 bn 11.1 bn 2.5 bn
Capital generation 2006-07, current business 1 1.9 bn
NEXT capital investments - Buy-out of third parties, CEE - Acquisitions, mainly in CEE - Accelerated organic development 1.4 bn1.0 bn0.1 bn -1.4 bn-1.0 bn-0.1 bn
Further de-leveraging of Holding Company -0.5 bn -0.5 bn
Subtotal 1.4 bn
Share buy-back, 2006 -1.0 bn -1.0 bn
Immediately available excess capital as at 31-Dec-2007 (estimate) Immediately available excess capital as at 31-Dec-2007 (estimate) Immediately available excess capital as at 31-Dec-2007 (estimate) 0.4 bn
Remaining leverage at Holding-Company level as at 31-Dec-2007 Remaining leverage at Holding-Company level as at 31-Dec-2007 Remaining leverage at Holding-Company level as at 31-Dec-2007 -0.8 bn
Core excess capital as at 31-Dec-2007 (estimate) Core excess capital as at 31-Dec-2007 (estimate) Core excess capital as at 31-Dec-2007 (estimate) -0.4 bn

• The excess capital will be almost fully used up
  via the NEXT capital investments planned, the
  further de-leveraging of the Holding Company
  (reducing the gearing ratio to ca. 104) and the
  2006 share buy-back.
• The buy-out of third-parties includes the
  announced buy-out of ABN Amros stake in KH Bank
  (Hungary). This will require 0.5 bn euro capital.
• The planned external growth is highly dependent
  on market opportunities. Therefore, the timing
  may differ from the above plan or some
  opportunities may not even occur. Moreover, the
  timing of the debt reduction at holding- company
  level may be adjusted should acquisition
  opportunities arise.
• Since the timing of the disposal of Agfa-Gevaert
  is uncertain, the resulting proceeds are not yet
  included in the above plan. If and when the Agfa
  stake is sold, the plan will be updated
  accordingly.
• The unrealized gains on AFS shares are not deemed
  to be immediately available excess capital. It
  should be noted that the value could fluctuate
  heavily over time, that the realization of gains
  would entail dividend implications and, last but
  not least, that these unrealized gains hedge the
  tail-duration of the life activity exposure of
  the Group.

1 It is not our intention to provide any guidance
on 2006-07 earnings and assets growth. Therefore,
the earnings and assets growth assumptions
used in the above capital model (e.g., 2006 and
2007 net profits equal to expected 2005 net
profit of 2.2 bn) should be viewed as purely
hypothetical.
13
Share buy-back programme - 2006

• In 2006, a share buy-back programme will be
  realized via open market purchases in the amount
  of 1 bn euros. The buy-back is, amongst others,
  technically limited to the amount of available
  reserves on the balance sheet (expected to be
  ca. 1.2 bn euros in the course of 2006). The
  April 2005 AGM provided authorization for such a
  transaction (valid untill Oct-2006) to take place
  within a price range of plus/minus 10 vs. the
  last Euronext closing price.
• A share buy-back is preferable to a super
  dividend since the fiscal treatment of the
  former is more shareholder friendly.
• At a hypothetical average share price of 80 euro
• 12.5 million shares would be bought and deleted,
  representing 3.4 of the shares outstanding
• As a result, the earnings per share would
  increase by ca. 3.5.
• The free float may be reduced somewhat (maximum
  by ca. 1.8 in case the syndicated shareholders
  do not participate in the buy-back). This should
  not be a burden for share-trading liquidity
  (year-to-date average daily trading volume has
  been 45 m and velocity 47 p.a.).

1 No withholding tax is due if the share
buy-backs are conducted via the stock exchange.
14
Increased transparency towards investors

• In 2006, KBC will be further enhancing its
  efforts to improve its communication with the
  markets. The IR staff will be enlarged, the
  transparency of segment reporting will be
  improved and we plan to extend the notes to the
  accounts in certain fields. Moreover, quarterly
  earnings updates will be published before trading
  hours.
• As of 1Q 2006, the following segment breakdown
  will be provided (including a time serie of 2005
  quarterlies for comparison purposes) Belgium -
  CEE - European Private Banking - Merchant Banking
  - Group Centre. The segment reporting will be
  simplified and, consequently, will become more
  transparant (better reconciliation with Group
  accounts, less restatements of previous periods,
  more transparant allocation to Group Centre,
  etc.).
• The management will be available for follow-up
  discussions with the market regarding the
  decisions taken in the NEXT project. Face-to-face
  investor meetings will be scheduled on 13 January
  2006 (London).
• The 2006 Investor Day will focus on the CEE
  Business Unit, to be held in Prague, 15 June
  2006.

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KBC Group

• 16 December 2006

16
Annex 1 the new management organization

• Combines Belgian Retail Insurance and Retail
  Private Banking activities into one business,
  with one CEO, a combined PL and having shared
  goals, strategy and incentives
• Excludes corporate banking, includes network
  private banking branches in Belgium
• Model effective as of 2007, with progression
  towards this model starting early 2006
• Distinctive distribution strategies are
  maintained for the various brands (KBC, CBC,
  Centea, Fidea, etc.). However, co-ordination
  takes place with shared product factories, HR and
  Facilities
• In each country, a single management team is set
  up for all banking and insurance companies,
  headed by a single country CEO (without creating
  a new holding company in each country).
• We consider to recognize Slovakia as a separate
  business unit (currently, highly integrated in
  the Czech Rep.).
• All country CEOs report to CEO of CEE.
• The CEE division Includes local corporate and
  HNWI banking activities.
• The new structure will be implemented as soon as
  possible, but timing will vary according to
  market.
• Includes the pure-play private banks (European
  private banking network) and a central hub
  for operations, back-office, IT and
  intermediation
• Network private banking activities remain
  within the Bancassurance Units, with distinct
  strategies (co-ordination at Group level)
• The dealing-room activities will continue to be
  managed within the Private Banking Unit, with the
  setting of limits, monitoring of positions and,
  if necessary, intervention by the Merchant
  Banking Unit
• Merges markets and corporate services activities
  into one business unit, with one CEO, a combined
  PL and having shared goals, strategy and
  incentives.
• Trade finance and leasing operations become
  Group-wide product factories
• Corporate banking operations in CEE continue to
  report to the local CEE countries.

Belgium
Central Eastern Europe
European Private Banking
Merchant Banking
Product Factories
Shared Services
Group Centreand Functions
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Annex 2 senior management photo gallery
Frans FlorquinCEO Belgium
André BergenGroup CEO (as of Sep-06)
Willy DuronGroup CEO (till Aug-06)
Etienne VerwilghenCEO Private Banking
Jan VanhevelCEO CEE
Christian DefrancqCOO
Herman AgneessensCFO / CRO
Guido SegersCEO Merchant banking
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Annex 3 capital planning - methodology
Banking - Available Capital
KBC Bank Tier-1 Capital
KBL epb Tier-1 Capital
AVAILABLE CAPITAL
Insurance - Available Capital
KBC Insurance, implicit Solvency Capital
Gevaert Equity (excl. Agfa-Gevaert)
Net asset value, Gevaert (excl. Agfa-Gevaert)
Banking - Required Capital
KBC Bank, min. Tier-1 Capital (8 of
risk-weighted assets)
KBL epb, min. Tier-1 Capital (8 of risk-weighted
assets)
REQUIRED CAPITAL
Insurance - Required Capital
KBC Insurance, min. Solvency Capital (200 of
legally required capital)
Gevaert - Required Capital (excl. Agfa-Gevaert)
Gevaert operational required equity (8 of net
asset value)
IMMEDIATELY AVAILABLE EXCESS CAPITAL
Excess Capital with current Holding Co. gearing
Elimination of Holding Companys net debt
position (Third-party funding minus cash
position)
Existing leverage at Holding Co. level
CORE EXCESS CAPITAL
Excess Capital with 0 Holding-company gearing
Sources of future generation of (excess) capital
Organic (Excess) Capital generation
Future profits
Retained earnings ()
Organic growth capital consumption (-)
(Excess) Capital via (realization, net of
dividend payout, of)
Revaluation reserve, AFS shares
gains on AFS shares
Proceeds of the sale of Agfa-Gevaert
(Excess) Capital via sale of Agfa-Gevaert
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Annex 4 shareholder return
Total shareholder return
(31 December 2004 100)
KBC
DJ EURO STOXX banks
DJ EURO STOXX
133
128
123
118
113
108
103
Dec-04
Jan-05
Feb-05
Mar-05
Apr-05
May-05
Jun-05
Jul-05
Aug-05
Sep-05
Oct-05
Nov-05
(daily closing prices)
Source Bloomberg data ending Nov. 2005

• The increased share visibility, the reinforced
  risk management and the consecutive earnings
  upgrades have been beneficial for the Groups
  market value. Capital markets have begun to
  recognize the attractiveness of KBCs strategy.
• Today again, the question remains whether
  valuation multiples fully incorporate KBCs
  strenghtened long-term growth.

20
Contact information

• Investors contact Luc Cool or Nele Kindt -
  investor.relations_at_kbc.com
• Media contact Viviane Huybrecht or Stef Leunens
  pressofficekbc_at_kbc.com