KBC Group Leading financial group in Belgium

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KBC GroupLeading financial group in Belgium
CEE,now entering Serbian financial market

• Belgrade, 27 June 2007

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Todays speakers
André BergenGroup CEO
Jan VanhevelCEO CEE
Belgian, born in 1948. Doctor of Laws and
Master in Notarial Sciences, University of
Louvain Financial Mgmt. Programme at
VLEKHO and Advanced Management Programme at
INSEAD. From 1971 to 1996 worked at Kredietbank
(Belgium) in diverse positions to become Managing
Director in 1996. In 1998 joined KBC Bank as
Managing Director and Member of the Executive
Committee of KBC Group. In addition, in 2006, Mr
Vanhevel was appointed CEO of KBCs Central and
Eastern European operations.
Belgian, born in 1950. Masters in
Economics, University of Leuven (Belgium).
Joined Generale Bank (Fortis) in 1982. Worked
in diverse positions in Belgium. Became Member
of the Executive Committee in 1993. Joined
Agfa-Gevaert in 2000 as CFO CAO and afterwards
Vice-Chairman of the Management Board in 2001.
Mr. Bergen joined KBC Group in 2003 as CEO of KBC
Bank and Deputy CEO of the KBC Group. He has been
KBC Group CEO since September 2006.
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KBC Group a solid group supported by long-term
stable committed shareholders

• KBC is 50-owned by a syndicate of shareholders,
  providing continuity to pursue long-term
  strategic goals.
• Committed shareholders include the
  Cera/Almancora Group (co-operative investment
  company), the farmers association of Belgium
  (MRBB) and a group of industrialist families
• Some of these shareholders have been
  shareholders for decades / generations
• The free float (45.2) is chiefly held by a large
  variety of international institutional investors.

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KBC Group top performer in Belgium Europe

• Ranking
• KBC is number 2 bancassurance player in Belgium,
  with strong presence in the prosperous and
  dynamic Northern region of Flanders
• Number 18 bank in Europe
• Number 3 financial group in Central Eastern
  Europe (consolidated assets, branches and
  employees)
• Market share in Belgium
• Banking between 20-25
• Insurance approximately 9 (non-life) - 15
  (life)

KBC Group NV is listed on Euronext Brussels and
the Luxembourg Stock Exchange (ticker symbol
KBC)
31-12-2006
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KBC Group . among the top-20 European banks
(Market capitalization 31-05-2007)
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KBC Group a solid financial group

• Balance sheet total 325.4 bn euros (31-12-2006)
  
• Parent shareholders equity 17.2 bn
• Customer deposits 180.0 bn customer loans
  132.4 bn
• Life insurance reserves 21.2 bn
• Equity market capitalisation KBCs market
  value more than tripled during the past 4 years
  (from 10 bn at the end of 2003 to 37.8 bn euros
  (31 May 2007))
• Net profit
• 2006 3 430 m euros (ROE 24)

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KBC Group a solid financial group

• Solvency levels (31-12-2006)
• Tier 1, banking 8.7
• Solvency margin, insurance 374
• Ambitious financial targets (2007 2009)
• Average growth of EPS (earnings per share) min.
  12
• Average adjusted ROE (return on equity) min.
  18.5
• Cost/income ratio Banking (2009) max. 55
• Combined ratio, non-life insurance max. 95

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KBC Group a solid financial group

• Headcount ca. 51 000
• Belgium ca. 20 000
• CEE ca. 25 000
• Rest of the world ca. 6 000
• Customers ca. 11 000 000
• Belgium ca. 3 300 000
• CEE ca. 6 900 000
• Rest of the world ca. 800 000

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The KBC group in ..
Belgium Luxemburg United Kingdom Ireland France Sp
ain Netherlands Germany Switzerland Monaco Italy P
oland Czech Rep
Slovakia Hungary Slovenia Serbia Bulgaria Bosnia M
acedonia Romania Russia
Turkey
USA
Japan China Taiwan Filippines Malaysia Singapore
Dubai
India
Australia
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KBC Group a healthy and profitable organisation
Ratings as at 05-2007 Ratings as at 05-2007 Ratings as at 05-2007
KBC Bank Rating Outlook
Fitch AA- Stable
Moodys Aa2 Stable
Standaard Poors AA- Stable
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KBC Group a clear mission statement

• KBC has the ambition to be an independent,
  multi-channel bancassurer, serving private
  persons and small andmedium-sized enterprisesin
  selected European countries, with expertise in
  asset management andthe financial markets,and
  the aim of achieving high profitability
  targetsthrough efficiency, customer centricity,
  employee-friendly policies and sound risk
  management.

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KBC Group pioneer with unique successful
bancassurance concept
KBC is stepping up from a Level-2 to a true
Level-3 bancassurer in CEE, repeating the
success in Belgium
Level 3 Integrated distribution Acting as a
single company bank and insurance operations
working under unified governance, with integrated
distribution channels centralised marketing,
integrated customer databases centralised IT
platform and streamlined remuneration schemes
FCCE external benchmarking?
Level 2 Exclusive distribution Bank branches
sell insurance products from intra-group
insurance company as additional source of fee
income
Level 1 Non-exclusive distribution Bank branches
selling insurance products of third-party
insurers as additional source of fee income. This
is the model of most European banks.
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KBC a longstanding history at the heart of the
prosperous Flemish region
Merger of KH Bank and ABN-Amro Magyar (Hungary)
(second largest financial institution in
Hungary), with KBC holding a 59 stake. Increase
ownership in Kredyt Bank to majority stake
Acquisitions in CEE, including a 82 stake in
CSOB (Czech Republic and Slovakia) and a 49
stake in Kredyt Bank (Poland) (gradual increase
from an initial 5 stake in 1996)
The General Banking Association regroups its
industrial assets in Belgium and Hungary into a
new holding company, Almanij
Buy-out of minorities in Warta (Poland). Buy-back
of ABN AMRO stake in KH Bank (Hungary)
Incorporation of KBL as a first step to the
international expansion of Kredietbank
Establishment of Volksbank van Leuven
Increase stake in Kredyt Bank (Poland) to 85
1889
1922
1931
1935
1949
1998
1999
2000
2001
2002
2004
2005
2006
2007
Raises stake in KH Bank (Hungary) to 100. CSOB
s acquisition of IPB Bank (becomes 1 financial
institution in the Czech Republic). Acquisition
of a 40 stake in TUiR Warta (Poland's second
largest non-life insurance company)
Following a major restructuring of
Middenkredietkas, the Belgian government approves
the creation of Kredietbank as an independent
bank. Middenkredietkas is replaced by CKL, the
forerunner of CERA Bank
Kredietbank, ABB-insurance and CERA Bank merge to
form KBC Bank and Insurance Holding Company
(third largest bancassurance group in Belgium)
Merger with parent company, Almanij, and change
of name to KBC Group NV. Change of organisational
structure and reorganisation of management team
Further expansion in CEE via acquisitions in
Serbia (A Banka) Romania (Romstal, INK
Insurance, Swiss Capital), Hungary (Equitas),
Bulgaria (DZI Insurance),Russia (Absolut Bank)

Incorporation of Belgian Mutual Insurance, the
forerunner of ABB Insurance, through the
combination of all the Belgian Farmers Union
insurance activities
Acquisition of a 34 stake in NLB, Slovenia's
largest banking group. Increase ownership in
Warta to majority stake
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KBC group an important player in CEE
31-12-2006
Banking Insurance Life/ Non-Life
Poland Ranking 8th 7th / 2nd
Market share 5 3 /11
Clients 0,9 m. 2,0 m.
Branches 336
Czech Rep. Ranking 2nd 3th / 5th
Market share 21 9 /4
Clients 3,0 m. 0,7 m.
Branches 234 (3350 points of sale-PO) 234 (3350 points of sale-PO)
Slovakia Banking 4th 5th / 6th
Market share 6 4 / 4
Clients 0,2 m. 0,2 m.
Branches 105
Hungary Ranking 2nd 7th / 6th
Market share 11 4 / 4
Clients 0,9 m. 0,5 m.
Branches 170
Slovenia Ranking 1st Life 4th
Market share 42 Life 8
Clients 1,0 m. 0,03 m.
Branches 220
01-04-2007
Market share is average of share in customer
credits and in customer deposits
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CEE market dominated by small number of
international players
Consol. Assets (. Bn)
Branches
Employees (ths)
()
() incl. proforma BCR
Source Unicredit NE research network proforma
2005, as of perimeter May 2006
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KBC strong growth ambitions in Central
Eastern Europe

• Home market strategy in CEE
• Implement universal bancassurance business model
• Focus on retail and SME
• Achieve critical mass (c. 10 market share)

• Further roll-out of home market strategy
  2007-2009
• Increase the number of bank branches by 30
• Continue to enhance efforts for cross-selling
  Bank x Insurance x Asset Management
• Further upgrade the insurance agents networks
  (ca. 5 600 agents)
• Build more cross-border synergies
• Optimise the corporate customer approach
• Make small acquisitions to strengthen market
  position, depending on opportunities

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KBC strong growth ambitions in Central
Eastern Europe (contd)

• Add-on strategy in adjacent geographies
• Niche strategy focused on business areas where
  we can leverage skills (e.g. leasing, consumer
  finance, asset management, SME finance,.. )
• As a first step. May develop further into home
  markets if opportunities enable growth
• Broadening geographical scope
• Romania leasing, securities brokerage
• Bulgaria insurance, securities brokerage
• Serbia banking platform
• Slovenia life-insurance (minority stake in
  banking)

CEE home market- Inhabitantsc 64m - Banking
assets c 400 bn- Asset growth c 12/y
Poland
Czech
Slovakia
South-eastern European area- Inhabitantsc
47m - Banking assets c 130 bn- Asset growth c
20/y
Hungary
Romania
Slovenia
Bosnia
Serbia
Croatia
Bulgaria
Montenegro
Macedonia
As a comparison, all our current CEE home
markets were initially entered using a toe in
the water approach e.g. small investments first
in Hungary in 1992(non-life insurance
greenfield), then in Poland and Hungary in 1996
(minority stakes in banking) and in 1998 in Czech
Republic (insurance)
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Entry in new market RUSSIA

• Latest evolutions
• Romania
• Romstal Leasing (Dec06) - closed
• INK Insurance broker (Dec06) - closed
• Swiss Capital stock broker (Dec06) - closed
• Serbia
• A Banka (Jan07) closed
• KBC Securities Serbia (Apr07)
• Hungary
• Equitas stock broker (Jan07) - closed
• Bulgaria
• DZI Insurance (Jan07)
• DZI Invest (Jan07)
• Russia
• Absolut Bank (Apr07)

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Why is KBC attracted to Serbia?

• KBC has identified Serbia as one of the key
  financial markets of the Central European region.
• KBCs strategy is to invest in Central and
  Eastern European countries that
• Experience high growth potential in the retail
  and SME/corporate banking and insurance segment
  and
• Exhibit an attractive macro-economic and stable
  legal and political environment.
• Serbia fits those criteria well.
• Moreover, currently about 31 Belgian(-linked)
  companies are active in Serbia. KBC is now the
  first Belgian financial institution to invest in
  Serbia.

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Why is A Banka so attractive to KBC ?

• In Serbia, A Banka will offer KBC an ideal
  platform to enter the market
• To enter the market via A Bankas nationwide
  distribution network of 42 bank branches
• To compete effectively with international/other
  financial groups active on the Serbian market
• to fully develop in due time KBC Groups
  bancassurance concept

• Within KBC Group, A Banka will be able to
  succesfully
• benefit from KBC Groups know-how and experience
  in banking
• integrate into KBC Group, benefiting from
  synergies throughout KBCs existing Central and
  Eastern European banking franchises.

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Serbia and Belgium already developed bilateral
economic trade relations

• In 2006 export from Serbia to Belgium amounted to
  around EUR 66 million (1,35 of total export)
  import in Serbia from Belgium amounted around EUR
  85 million (0,86 of total import)
• Net foreign direct investments from Belgium
  between 2000 and 2006 amounted to around EUR 18
  million (ranked 19th) (please note that this
  amount does not include one major investment)
• Several succesful economic missions since reforms
  took place in Serbia have contributed to
  strenghtening the bilateral economic and trade
  relations between the two countries for 2007 the
  Serbian Chamber of Commerce announced visits of
  two Belgian economic delegations
• The Serbian Chamber of Commerce, also represented
  in Brussels, has signed a co-operation agreement
  with the Federation of Belgian Chambers of
  Commerce
• (Source Serbian Chamber of Commerce, March 2007)
  

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What does KBC have to offer to A Banka?
KBC is not a financial investor, but a
long-term strategic investor. This means that in
principle we are here for eternity !

• KBC wants to build further on the local strengths
  and business model of A Banka
• and to add to this KBCs successful and proven
  banking ànd in due time bancassurance model
  (following the multi-domestic approach)
• thereby respecting local retail and corporate
  customer needs and providing the right product at
  the right time, be it banking, asset management,
  consumer finance or insurance (life and non-life)
• and building upon the local management team
  strengthened with KBC management and experience -
  with an efficient degree of autonomy and
  responsibility to develop their local business,
  and within a clearly defined group strategy,
  governance and reporting lines

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KBC A Banka have the strong ambition

• to play a leading role in the various segments
  of the Serbian financial market
• To achieve this we are preparing and will further
  fine-tune A Bankas strategy and mid-term
  business plan aiming to
• offer new, innovative products adapted to
  customers needs and further improve the already
  high service both in retail and SME/Corporate
  segment
• further empower and invest in the professional
  and nationwide distribution network of A Banka
• Co-operate closely with other KBC Group entities
  such as KBC Securities Serbia (Hipobroker, Senzal
  and Bastion)
• offer interesting and challenging career
  prospects to A Banka employees, both in Serbia
  and within the region

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Our mission

• KBC wants to ensure the growth and future of
• A Banka to the benefit of all stakeholders
• retail and corporate customers,
• employees,
• shareholders
• and the Serbian community at large.

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KBC GroupLeading financial group in Belgium
CEE,now first steps into Serbia