Transcript KBC Bank & Insurance Group

KBC Group
Web site: www.kbc.com
Ticker codes: KBC BB (Bloomberg)
KBKBT BR (Reuters)
Company presentation
Autumn 2005
Contact information
Investor Relations Office
Luc Cool
Nele Kindt
Marina Kanamori
[email protected]
Surf to www.kbc.com for the latest update.
2
Important information

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

KBC believes that this presentation is reliable, although some information may be condensed or incomplete

This presentation contains forward-looking statements with respect to our earnings development involving
assumptions and uncertainties. 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 possesses sufficient expertise to
understand the risks involved
3
Table of contents
1.
Company profile
2.
Strategy and earnings drivers
3.
1H 2005 financial highlights
4.
Information on capital management
5.
Closing remarks on valuation
4
Foto gebouw
1
Company profile
Ranking in Euroland
Market cap ranking
Dec 2002
Aug 2005
Aug 2004
1
2
3
BNP Paribas (35 bn)
BSCH (31bn)
1
2
BNP Paribas (43 bn)
BSCH (37 bn)
1
2
BSCH (63 bn)
BNP Paribas (53 bn)
BBVA (29 bn)
3
BBVA (36 bn)
3
BBVA (47 bn)
4
Deutsche Bank (26bn)
4
Société Générale (30 bn)
4
Deutsche Bank (39 bn)
5
ABN AMRO (25 bn)
5
Deutsche Bank (30 bn)
5
Société Générale (39 bn)
6
7
8
9
10
Société Générale (24 bn)
Unicredito (22 bn)
DJ
7 ABN AMRO (28 bn)
Euro
Fortis (22 bn)
8 Unicredit (24 bn)
Stoxx Banks
Crédit Agricole (14bn)
9 Fortis (23 bn)
constituents
Dexia (14 bn)
10 Intesa BCO (17 bn)
6
Crédit Agricole (29 bn)
6
7
ABN AMRO (37 bn)
Crédit Agricole (33 bn)
8
9
10
Fortis (31 bn)
Unicredit (29 bn)
KBC (25 bn)
11
Intesa BCI (12bn)
11
Dexia (16 bn)
11
Intesa BCI (23 bn)
12
Allied Irish Banks (12 bn)
12
KBC (15 bn)
12
Dexia (20bn)
13
Bank of Ireland (10 bn)
13
SanPaolo IMI (13 bn)
13
San Paolo IMI (18 bn)
14
KBC (9 bn)
SanPaolo IMI (9 bn)
Banco Popular (8 bn)
14
15
16
Allied Irish Banks (11 bn)
HVB (10 bn)
Commerzbank (8 bn)
14
15
16
HVB (17 bn)
Allied Irish Banks (16 bn)
Bank Austria (13 bn)
HVB (7 bn)
17
Erste Bank (8 bn)
17
Commerzbank (13bn)
18
Mediobanca (6 bn)
18
Bank Austria (8 bn)
18
Mediobanca (12 bn)
19
Bca MPS (6 bn)
19
Mediobanca (7bn)
19
Bank of Ireland (12 bn)
20
Bco Popular (5 bn)
20
Bca MPS (6 bn)
20
Bco Popular (12 bn)
15
16
17
6
Shareholder structure
Free float
Institutional,
Cont. Europe
14%
CERA/Almancora
27.1%
MRBB
11.6%
Free float
47.3%
Other committed
shareholders 11.7%
(own shares: 2.3%,
including ESOP hedge)
Situation as at 30-Jun-05
Institutional,
UK
23%
Institutional,
N. America
20%
Institutional,
R/o world
1%
Institutional,
Belgium
14%
Staff
6%
Retail,
Belgium
22%
Situation as at 31-Dec-04
(before merger with Almanij)

KBC is majority-owned by a group of committed shareholders, thereby providing continuity for the pursuit of longterm strategic goals

Core shareholders include the Cera/Almancora Group (co-operative investment company), a farmers’ association
(MRBB) and a syndicate of industrialist families
7
Business portfolio
Revenue
geographical breakdown
Selected other markets (mostly in W. Europe):
- private banking
- SME/corporate
(1H 2005)
20%
CEE:
- retail bancassurance
- asset management
- private banking
- SME/corporate
25%
55%
Belgium:
- retail bancassurance
- asset management
- private banking
- SME/corporate

KBC is a top bancassurer and asset manager in Belgium and has successfully expanded its operations in
CEE-5, its 2nd home market.

Recently, Private Banking (69 bn AUM) has become more of a key focus. The PB business was expanded to
include a Western European network. KBC is also active – be it rather selective – in commercial banking
(mostly in W. Europe) and financial markets.
8
Top-3 player in Belgium
Mutual funds
Market share:
32% (1st)
Mortgages
Market share:
24% (2nd)
Savings deposits
19% (2nd )
Business loans
21% (2nd)
Individual Life
15% (3rd)
Non-life insurance
9% (4th)

Consolidated banking landscape (80% of market held by top-4 banks)

Market highly receptive to cross-selling of AM & insurance products (the bancassurance model dominates)
9
KBC’s presence in CEE
CEE profit contribution to KBC Group
Profit contribution, Poland
25%
2005
H1
2003
2004
-295 m
25 m
Share of business segments
in gross income, CEE Banking
Other
22%
Total assets, bank:
5 bn EUR
Market share, bank:
5% (No. 8)
Market share, life:
3% (No. 7)
Market share, non-life: 11% (No. 2)
SME/Corp
21%
Retail
57%
Profit contribution, CZ + SK
2003
2004
143 m
162 m
Czech Republic
Total assets, bank: 18 bn EUR
Market share, bank: 21% (No. 2)
Market share, life:
8% (No. 5)
Market share, non-life: 4% (No. 6)
Profit contribution, Slovenia
2003
2004
10 m
26 m
Minority stake (34%)
Market share, bank: 41% (No. 1)
Market share, life:
6% (No. 5)
Slovakia
Total assets, bank: 2 bn EUR
Market share, bank: 6% (No. 4)
Market share, life: 4% (No. 8)
Market share, non-life: 2% (No. 7)
Profit contribution, Hungary
2003
2004
11 m
31 m
Total assets, bank:
7 bn EUR
Market share, bank: 11% (No. 2)
Market share, life:
4% (No. 7)
Market share, non-life: 4% (No. 6)
10
KBC’s presence in CEE
Density of KBC’s branch network
Percent of towns with KBC branch
HU
HU
SLO
SLO
SK
SK
CZ
CZ
PL
PL
0%
20%
40%
60%
80%
100%
towns with KBC branch
No. of towns
0
200
400
600
800
1000

KBC Group is one of the largest international players in the region

The density of KBC’s branch network is amongst the highest in the CEE region

Unlike the other players, KBC limits its presence to the EU Member States (Czech Republic, Slovakia, Hungary,
Poland and Slovenia) and is active in both the banking and insurance fields
11
KBC’s commercial banking network
Credit exposure
Belgium
CEE
Western-Euope
Rest of the world
TOTAL
• •
61 bn
21 bn
32 bn
8 bn
122 bn
•
• •
•• •
•
•
• •
•
12
KBC’s private banking network
AUM
•
•
•
•
•• • • •
• •
•
•
•
Belgium
CEE
Luxemburg
Switzerland
Monaco
Spain *
Germany
Netherlands
United Kingdom
France
Italy
Total
24 bn
3 bn
18 bn
12 bn
5 bn
3 bn
3 bn
1 bn
0.4 bn
69 bn
* Of which 7 bn in low-yielding assets
13
Solid financial track record
Combined ratio, non-life
Cost/income, banking
In m EUR
66%
65%
96%
95%
57%
FY03
FY04
1H05
94%
FY03
Return on equity
FY04
1H05
Net profit growth
In m EUR
20%
12%
FY03
14%
FY04
1H05
Pro forma figures, KBC Group (2003 figures are according to B-GAAP)
1 305
1 615
FY03
FY04
1 253
1H05
14
Foto gebouw
2
Strategy and earnings
drivers
Start of a new decade
In Q1 2005, KBC merged with parent company Almanij:


‘Quick wins’ for shareholders included:
• The re-rating of the KBC share due to increased transparency, visibility and share liquidity
(analysts previously used a 10-15% discount)
• Operational synergies, particularly in the field of wealth management
(programme of 75 m recurring pre-tax result, of which ½ as from 2006)
Further value-creating potential includes:
• Shifting the earnings trend in the private banking area ‘into much higher gear’
(earnings growth to be doubled from 5% to at least 10% CAGR)
Moreover, KBC continues to be ambitious, maintaining its performance commitments in both Belgium
and CEE
16
We build a solid future

Strategy headlines include:

Retail- and wealth-management-oriented, with focus on Belgium and CEE-5 and selected
Western European markets

Further enhancement of efficiency (with emphasis on - but not exclusively in - CEE and European
private banking)

Standalone basis (opportunistic operational alliances in certain areas to generate economies of
scale, if needed)

Steady dividend growth and solid level of financial strength/solvency

The solid ‘growth and value’ outlook is reflected in ambitious financial targets, valid until 2008:
Efficiency:
Financial strength:
Value creation:
Cost/income, banking
max. 58%
Combined ratio, non-life
max. 95%
Tier-1, banking
min. 8%
Solvency margin, insurance
min. 200%
Adjusted ROE
min. 16%
EPS growth (CAGR)
min. 10%
17
Earnings drivers in Belgium - overview
Do not underestimate the market:






Consolidated banking market (80% of assets
held by top-4 players)
Savings ratio amongst highest in the world (every
year, ca. 15% of GDP flows into fin. assets)
Market highly receptive to cross-selling of AM &
insurance, fueling strong growth trend in AM and
life insurance business
Strong mortgage growth trend (ca. 10% per year)
expected to continue, as residential property
price levels are still below other European
markets
Fee rates for retail banking services only 50% of
European average (gradual increase expected)
Credit quality has proven to be solid over the
cycle
KBC Group is well positioned:






Top-3 market position, esp. strong in Northern
region (one of the wealthiest regions in the EU)
Of the top players, level of customer satisfaction
is highest
Innovative product offering in retail AM (steadily
increasing market share over the past 10 yrs.)
Still high cross-selling potential for non-life
products and well-performing bancassurance
distribution model
Further cost efficiency improvement potential,
among other things, via co-sourcing of back
offices with other banks
Well-diversified revenue structure (50% fee
income) and further increase in fee income
targeted
18
Earning drivers in CEE - overview
Strong market growth momentum:
KBC Group is well positioned:

 Solid market position in retail and corporate

Nom. GDP growth in 2005/06 at 6.3%. Although
prospects have been revised due to global
economic slowdown, growth will still outgrow
EMU by 3.1%
Ongoing catch-up in product penetration
(currently, an avg. of 45% for banking accounts
and 5% for mortgages)
businesses (excl. banking in Poland) with
nationwide branch networks
 Competitive advantage in enhancing cross-selling of
asset management and insurance products
 Well positioned in HNWI and private banking through

Mortgage volumes growing at double-digit pace
(up 51% on avg. in 2004)


Financial sector could grow five-fold if financial
assets to GDP were to reach current levels of S.
Europe

epb know-how
C/I still on the high side overall, inducing further
improvement, e.g., by setting up cross-border
platforms for processing transactions
Adequately provisioned balance sheet (risks under
control)
 Availability of capital within the Group
19
Average real GDP growth, 2002-2004 (in %)
Strong growth fundamentals in CEE
4.5
Turkey
(1,2; 7,5)
4.0
Ireland
(9,4;5,0)
Poland
Slovakia
High flyers
3.5
3.0
2.5
EU-13
(not-EMU)
Czech
Rep.
UK
Hungary
Slovenia
US
Sweden
Spain
Finland
2.0
Belgium
France
Denmark
1.5
EMU
1.0
Germany
0.5
The Netherlands
Italy
Switzerland
Financial services (banking & insurance) in % of GDP (2004)
Portugal
0.0
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
-0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Belgium
Average real GDP growth, 1997-2001 (in %)
EU-15
(Source: IMF)
US
Poland
Hungary
Czech Republic
Slovakia
Slovenia
(Source: Vienna Institute for International Economic Studies)
20
Bancassurance fueling CEE earnings
Now the model is in place:

Transfer of product know-how and
streamlining of business processes and IT
systems

Implementation of KBC’s distribution model
and setting up of sales incentives and
adequate sales approach

Unified management responsibility (joint
management committee of bank and
insurance)
=
competitive advantage relative to other CEE
players
Results are encouraging:
Cross-sell
rates
2004
CZ
HU
PL
SK
BE
Consumer
loan
X
Life
83%
50%
100%
94%
67%
Mortgage
loan
X
Life
45%
50%
100%
75%
67%
Mortgage
loan
X
Property
insurance
54%
71%
42%
30%
50%
21
Growth in AM fueling CEE earnings
KBC is well positioned:
Results are encouraging:

Strong appetite for ‘risk-free’ investments in
the market (money-market, capital-guaranteed
funds), fully in line with KBC’s core
competencies and successful track record in
Belgium

Cost/AUM below average (around 16 bps vs.
20 bps for Europe)
=

AUM grew in ’04 by 25%. Continued high
growth expected in coming years (CAGR of
15-20% in mutual funds and 10-15% in
pension products)

Via the funds business, new customers are
recruited. Existing customers using deposits to
buy funds replenish deposit accounts after one
year
competitive advantage relative to other CEE
players
Market
share
2003
2004
1H05
Trend
CZ
19%
22%
26%
+++
HU
8%
9%
11%
++
SK
6%
7%
8%
+
SLO
-
8%
10%
++
PL
3%
4%
4%
+
22
Centralized processes reducing costs
Example 1: card transactions


Example 2: cross-border payments
Centralized purchasing & processing of:

7.5 million cards

500 million transactions

Centralized processing of cross-border
transactions (also open for third-parties)

Reduced costs driven by:

Standardized technology anticipating future
developments (SEPA)

Economies of scale
Reduced costs driven by:

Standardized technology anticipating future
developments (SEPA)

Economies of scale
cost/trans.
Standalone
Processing costs
0.12 €
0.10 €
0.08 €
0.06 €
0.04 €
0.02 €
0.00 €
-
500
1 000
1 500
2 000
2 500
100
Incl. DZ
Bank
Group
90
Incl.
KBC
CEE
80
Open for
other
parties
Volume of transactions
million transactions
23
Mid-term financial outlook, CEE
Banking
Insurance
RWA
CAGR
Net profit
CAGR
Loan-loss
ratio
Cost/Income
ratio
10% – 15%
10% – 15%
< 0.50%
< 60%
Premium income
CAGR
Net profit
CAGR
Combined
ratio
15% – 25%
25% - 35%
95%
24
Private banking in higher gear
Core business: an integrated private banking business in selected European markets focusing on clients with
>€1m of investable assets
Belgium


W. Europe onshore
Dual brand strategy:
network-led vs.
‘independent boutique’

Growth drivers: network
trade-up, extension of
product offer and hiring
of private bankers


Integrated network of local
pure-play private banking
brands (boutique style)
Priority of reducing costs by
creating synergies in a
central ‘hub’ (IT, operations,
support)
Growth drivers: increased
share of wallet, hiring of PB
managers and opportunistic
M&A
W. Europe offshore

Low-growth market

Focus on profitability
(leveraging the hub)

If possible, steer repatriated
assets to KBC onshore

No expansion, except in
IFAs with short payback
CEE

Small today
(2 bn AUM), but high
market growth expected
(>15% p.a.)

Strengthening a
network-led model,
leveraging Belgian
experience
Opportunistic acquisitions may imply investments of 150-250 m per year
25
Private banking in higher gear
Changing market environment:


Shift in customer preference towards greater
sophistication: open architecture, alternative
investments, financial planning, accessibility and
Internet delivery
However, the core needs of customers will remain
the same (trusted personal relationships,
status/exclusivity, investment performance)
KBC Group is well positioned:





Strong relationship-based approach, open
architecture concept, KBC AM’s sound product
expertise and solid capability for tailor-made solutions
Greatly improved efficiency (implementation of large
scale rationalization programme), to be further
boosted by the realization of merger synergies within
the enlarged KBC Group
Leveraging the network in Belgium
Local private banking brands with status/heritage in
Germany, Spain, Netherlands, UK and Belgium
‘Unique’ model attracting experienced private bankers
from big banks
26
Operational synergies in private banking
The merger of KBC and Almanij allows to realise synergies by reducing costs and cross selling.
The total benefit amounts to 75 m euro (pre-tax) per year as of 2009 (50% to be realised as of 2006).
Type of benefits*
80
€m
Securities
Payments
Securities
Fin. Markets
60
Source of benefits*
€m
80
3.9
1.0
74.6
70
Revenue
(40%)
12.6
60
Corporate
50
Insurance
40
20
Asset
Management
ICT &
Overheads
30
Cost
(60%)
0
By Type
12.6
20
10
0
By Area
27.7
40
16.7
Cross
New
Optimisales business zation
Pro- People
curement
* Synergy benefits defined as peak recurring annual increase in pre-tax bottom-line result (2009 - peak level)
Costs Total
avoided
27
Private banking, financial projections
In total, KBC Group projects ~10% net income growth per year until 2008
KBC Group Forecasts
AUA Growth
2004
AUA (€bn)
2008
Forecasts
KBL EPB
44
KBC PB
14
Total
58
2004
Net Income
(€bn)
KBL EPB
CAGR
14%
Onshore W. Europe
CAGR
10%
Offshore W. Europe
CAGR
0%
CEE
CAGR
15%
Total AUA Growth
CAGR
9%
2008
Forecasts
Net Income Growth
205
400
KBC PB
Total
Cost Income
Ratio
83
Belgium
350
50
255
300
380
CAGR 10%
250
200
67%
55%
150
100
Excluding any future acquisitions
50
0
2004
2008
This assumes normal market conditions
28
Foto gebouw
3
1H 2005
Financial highlights
Financial highlights
Foto gebouw
- At a glance
- Group financial performance
- Headlines per segment
FY 2005 profit outlook
1H 2005 at a glance
1.
2.
Net profit at 1 253 m, up 55% y/y, generating a return on equity of 20%
3.
Comparison of individual P/L lines with pro forma 2004 figures distorted by application
of IFRS 32/39 and IFRS 4 as of 2005
4.
Strong business volume growth (deposits / loans / AUM / insurance) generating strong
commission income (+23%) and offsetting impact of flattening yield curve on net interest
income
5.
6.
7.
8.
9.
AUM reaching the 170 bn EUR level (o/w 69 bn in private banking)
Underlying profit (excl. one-offs) growing at 34%
Further downtrend in expenses - cost/income ratio (banking) at 57 %
Sustained low combined ratio, non-life (94%)
Very low credit-risk provisioning (loan-loss ratio at 0.06%)
High levels of return in most business segments, especially in Belgian retail (29%)
and in CEE (54%)
10. Outlook for 2005 remains positive
31
Solid business growth
Customer
loans
o/w
mortgages
Customer
deposits
(banking)
Life
‘deposits’
(insurance)
AUM
(asset
management)
Outstanding
108.7 bn
30.7 bn
167.8 bn
14.9 bn
170.5 bn
Growth, Ytd
+7%
+10%
+7%
+11%
+11%
Belgium
+7%
+8%
+5%
+10%
+15%
CEE
+3%
+16%
+15%
+15%
+20%
Rest of world
+7%
+15%
+7%
-
+5%
30 June 2005
Note: Growth trend, excl. (reverse) repo activity, from 31-Dec-04 to 30-Jun-05
32
Profit trend, 1H 05
1H 2004
1H 2005
1H/1H
3 919
4 163
+6%
+2%
-2 373
-2 313
-3%
-6%
1 545
1 850
+20%
+15%
-242
-57
-76%
-76%
Associated companies
-39
+33
-
-27%
Net profit
810
1 253
+55%
+34%
61%
93%
14%
57%
94%
20%
pro forma
Gross income, net of technical insur.
charges
Expenses
Operating result
Impairments
C/I, banking
CR, non-life
ROE
1H/1H
excl.
one-offs
Notes:
1)
One-offs include the disinvestment loss at Agfa Gevaert (net bottom-line impact of –80 m) in Q2 2004, the write-back of of provisions for
operating expenses after a legal settlement (net +48m) in Q2 2004, the income related to the settlement of a ‘historic’ Slovakian loan
(net +68 m) in Q1 2005, the ‘non-recurring’ value gains on shares of Irish insurer FBD (net +68m) in Q1 2005 and merger-related
expenses (net 13m) in Q2 2005
2)
All 2004 figures exclude impact of IAS 32/39 and IFRS 4
33
Profit trend, Q2 05
2Q 04
1Q 05
2Q 05
2Q/2Q
2Q/1Q
1 917
2 127
2 035
-1 105
-1 104
-1 209
Operating result
812
1 024
826
+2%
-19%
Operating result, underlying
739
851
846
+15%
-1%
Impairments
-90
-15
-42
Associated companies
-60
+21
+13
Net profit
434
717
536
+24%
-25%
Net profit, underlying
465
581
550
+18%
-5%
Gross income, net of tech. charges
Expenses
Notes:
1)
One-offs include the disinvestment loss at Agfa Gevaert (net bottom-line impact of -80m) in Q2 2004, the write-back of of provisions for
operating expenses after a legal settlement (net +48m) in Q2 2004, the income related to the settlement of a ‘historic’ Slovakian loan
(net +68 m) in Q1 2005, the ‘non-recurring’ value gains on shares of Irish insurer FBD (net +68m) in Q1 2005 and merger-related
expenses (net 13m) in Q2 2005
2)
All 2004 figures exclude impact of IAS 32/39 and IFRS 4
34
Financial highlights
Foto gebouw
- At a glance
- Group financial performance
- Financial headlines per segment
FY 2005 profit outlook
Solid revenue trend
Gross income (in m), per quarter
Gross income (in m), per half year
3 175
3 178
1Q04
2Q04
3 462
2 517
3Q04
4Q04
2 756
2 904
1Q05
2Q05

IFRS reclassfications distort comparison with 2004
(among other things, non-recognition of unit-linked
insurance premiums)

Q1’s solid trends continued in Q2:
 NII: volume growth almost offsetting q/q
NIM contraction
 High level of life insurance premium income
(1.2 bn - mostly unit-linked, in line with stock
market performance)
 Strong commission line (410 m)
6 353
5 980
5 660
1H04
2H04
1H05
2H05

Down 693 m y/y, mainly due to non-recognition of 1.1 bn
new unit-linked premium volume under IFRS 2005

Apart from one-offs (136 m in Q1), solid revenue ‘quality’:
 NII: volume growth almost offsetting negative impact
on NIM from flattening yield curve (-13 bps)
 High level of life insurance premium income (2 bn)
 Strong commission line (+23%)
36
NII trend, banking activities
1H 05 (y/y trend)
NII 1 886m
Incl. IFRS 05: +6%
Excl. IFRS 05: -3%
NIM 1.63%
Incl. IFRS 05: stable
Excl. IFRS 05: -13 bps
Belgium 1.96%
Excl. IFRS 05: stable
CEE 2.94%
Excl. IFRS 05: - 40 bps
Avg. volume
interest-bearing assets
+6%
Other
(o/w epb 0.55%,
stable excl. IFRS)
Belgium
+8%
CEE
+17%
Other
(o/w epb -14%)
37
Impact of IFRS on NII / FV income
1H 05 IFRS, as reported
NII
FV income
Total
1H 04
1H 05
%
1 961
2 122
+8%
415
225
-46%
2 376
2 348
-1%
Main impact from IFRS:
1H 05, adjusted for comparison *
NII
FV income
Total

Reclassification of interest income on hedging
derivatives from NIM to FV income ( 175m)

Negative impact of FV adjustments on financial
instruments (-70m)
1H 04
1H 05
%
1 961
1 947
-1%
415
470
+13%
2 376
2 417
+2%
* Remark: simplified - only the mentioned main IFRS-adjustments are used
38
Impact of IFRS on Life income
1H 05 IFRS, as reported
1H 04
1H 05
%
1 910
892
-53%
-
32
-
-1 945
-983
-49%
Financial income
160
259
+62%
Total
123
197
+61%
Premium income, life
Fees, investments w/o DPF
Technical charges, life
1H 05, adjusted for comparison

No recognition of premium income and technical
charges of investments contracts without Discretionary
Participationt Feature (mostly unit-linked life products)

Margin recognized as fee/commission income

Remark: no bottom-line impact !
1H 04
1H 05
%
1 910
1 963
+3%
-
-
-
-1 945
-2 025
+4%
Financial income
160
259
+62%
Total
123
197
+61%
Premium income, life
Fees, investments w/o DPF
Technical charges, life
39
Competitive landscape in Belgium
Net Interest Margin, KBC Bank, Belgium
2.1%
2.1%
2.1%
1.9%
2.0%
2.0%
2.0%
Spreads on new mortgages (bps), KBC, Belgium
2.0%
0.88
1.9%
1.7%
0.76
1.6%
0.48
1.3%
Jul-05
May-05
Mar-05
Jan-05
2Q05
Nov-04
1Q05
Sep-04
4Q04
Jul-04
3Q04
Interest margin, Belgium
Spread 3m-10y treasury
May-04
2Q04
Mar-04
1Q04
Jan-04
0.41

In 1H 05, NIM was stable y/y at 2.0 %.

In Q4 04 and Q1 05 the (obviously lagging) effect of the flattening of the yield curve was offset by the improved
product mix (shift to low-yielding liquid savings deposits in anticipation of an interest rate hike). In Q2 05,
customers switched to long-term investments, anticipating deposit rate cuts (-25 bps as of Q3 03).

Volume growth (deposits/loans) was strong in Belgium, further boosting NII

Since mid-2004, credit spreads have seen a significant deterioriation as a result of increased price competition.
Currently, pricing rationality is tending to be restored.
40
Competitive landscape in Belgium
Change in retail market share since the beginning of 2004 (avg. deposits and loans), proxy
3.0%
2.0%
1.0%
0.9%
1.0%
KBC
0.0%
-0.1%
0.0%
4Q03
-1.0%
-2.0%
0.1%
1Q04
2Q04
3Q04
4Q04
-0.9%
Other large banks
1Q05
2Q05
-1.1%
Small retail banks
Source: Febelfin (market sample)
Includes consumer loans, mortgages, saving
accounts and saving certificates
-3.0%

In 2004, the large banks, representing >80% of the market, lost roughly 1% market share to the benefit of
smaller players. But from 1H05, this trend seems to be on the wane.

KBC has been able to keep its market share stable (and may have further increased its market share in unitlinked insurance and probably mutual funds).
41
Sustained favourable y/y cost trend
Operating expenses (in m), per quarter
Operating expenses (in m), per half year
1 269
1Q04


1 424
1 105
1 147
2Q04
3Q04
4Q04
1 104
1 209
1Q05
2Q05
As expected, cost level up q/q due to:

Elimination in Q2 of underusage of IT and
marketing budgets of ca. 20m in Q1 (time
lag)

Higher income-related staff costs ( 27 m
esp. at KBC Financial Products)

Restructuring costs (20 m) and one-off
merger-related costs (20 m)
Y/y trend: Q2 04 includes write-back (73 m) of
provision for operating charges (after legal
settlement)
-3%
2 373
2 571
1H04
2H04
2 313
1H05
2H05

Ytd expenses down 3%, mainly driven by (a) cost
cutting in Belgium and (b) lower staff profit-sharing
bonuses (esp. at KBC Financial Producs)

Cost/income, banking, down from 61% to 57%
42
Historic low impairment level
Impairment charges (in m), per quarter
Impairment charges (in m), per half year
152
90
79
44
15
1Q04
-76%
242
2Q04
3Q04
4Q04
1Q05
Q2 impairments remain at historic low

Q2 includes 5 m impairment on goodwill at KBL
France
Belgium
CZ/Slovakia
Hungary
Poland
International
Total
57
1H04
2Q05

LLR
123
42
2H04
1H05
2H05

Impairments down 185 m (-76%) on the back of
limited credit risk and solid equity markets

Loan-loss ratio down from 0.20% in FY 04 to 0.06%

Impairments on investments limited to 16 m versus
130 m in 1H 04
Avg loans
FY 04
1H 05
58.3
10.7
5.4
3.9
40.2
118.5
0.09%
0.26%
0.64%
0.69%
0.26%
0.20%
0.03%
0.00%
0.93%
0.00%
0.09%
0.06%
43
Excellent underwriting result, non-life
Combined ratio, year-to-date
97%
3M04

Combined ratio
93%
94%
95%
92%
94%
105%
6M04
9M04
12M04
3M05
6M05
2002
Q2 sligthly higher q/q, mainly for seasonality
reasons
C/R
FY03
FY04
1H05
Belgium
Czech Rep.
Slovakia
Hungary
Poland
R/I
93%
102%
146%
103%
100%
92%
99%
138%
98%
95%
98%
93%
93%
116%
86%
97%
90%
Total
96%
95%
94%
96%
95%
94%
2003
2004
1H05

Combined ratio at 94% on the back of

Sound risk management (claims ratio at 64%)

Good cost control (expense ratio at 30%)

Favourable claims environment on all markets
44
Financial highlights
Foto gebouw
- At a glance
- Group financial performance
- Financial headlines per segment
FY 2005 profit outlook
Segment structure
KBC Group NV
KBC
Bank
KBC
Insurance
KBC
AM
KBL epb
Gevaert
Primary segmentation by business segment
46
Key points, business segments
900
800
700
Net profit (in m)
BANKING
784
699
564
600
314
367
500
2Q05
318
400
2Q04
300
4Q04
200
332
100
1Q04
470
246
1Q05
3Q04
0
1H04
2H04
1H05
2H05
IFRS 2005
Pro forma IFRS 2004
INSURANCE
280
Net profit (in m)
246
230
124
180
119
130
2Q05
3
80
89
58
30
2Q04
-20
122
4Q04
3Q04 30
1Q05
-55
1Q04
-70
1H04
2H04
Pro forma IFRS 2004
1H05
2H05
Banking:
 Q2 05 result at 314 m:
 Good top-line mix, commissions particularly strong, not
boosted by gains and trading income, NII almost stable
despite flatening yield curve
 Higher costs after the very low Q1 level (see above)
 Impact of one-offs in y/y and q/q comparison (see below)
 1H 05 profit at record level of 784 m, driven by:
 Strong commission income (+21%)
 Strict cost control (C/I at 57% incl. AM)
 Limited credit cost (0.06 bp)
 One-off
income related to settlement of historic
Slovakian loan (net 68 m)
Insurance:
 Q2 05 results in line with Q1 (though high gains in Q1), due to
 Record level of sales of life products (1.2 bn)
 High dividend income (86 m)
 Slightly better claims result
 1H 05 results increasing to 246 m on the back of:
 High sales of life insurance (2 bn euro)
 Excellent underwriting performance (CR, non-life, 94%)
 Higher investment income o/w capital gains (esp. FBD –
net non-recurring impact: 68 m)
 Low impairment charges on portfolios (extremely high in
1Q 04)
IFRS 2005
47
Profit trend, banking segment
Impact of one-off items:
Segment banking
2Q 04
1Q 05
2Q 05
2Q/2Q
as
stated
2Q/2Q
excl.
one-offs
2Q/1Q
as
stated
2Q/1Q
excl.
one-offs
Gross income
1 400
1 513
1 373
-2%
-2%
-9%
-3%
-816
-807
-878
+8%
-1%
+9%
+9%
Operating result
585
706
495
-15%
-3%
-30%
-18%
Net profit
367
470
314
-14%
-2%
-33%
-22%
Net profit, underlying
319
402
314
Expenses
-2%
-22%
Notes:
1)
One-offs include the write-back of of provisions for operating expenses after a legal settlement (net +48m) in Q2 2004 and the income
related to the settlement of a ‘historic’ Slovakian loan (net +68 m) in Q1 2005
2)
All 2004 figures exclude impact of IAS 32/39 and IFRS 4
48
Key points, business segments
180
Asset management:

AUM in 1H 05 up 16% to 97 bn (2/3 due to new money
inflows)

1H 05 profit contribution at 126 m, +16 m y/y (driven by
increased AUM)

Note: total AUM within the Group: 170 bn

Asset management segment: 82 bn (3rd party) + 15
bn (group assets)

Banking segment: 24 bn (mostly private and HNWI
assets in Belgium and CEE)

European private banking segment: 50 bn (o/w 46
bn of private banking customers)
ASSET MANAGEMENT
Net profit (in m)
160
140
126
119
109
120
100
60
68
66
58
80
2Q05
4Q04
2Q04
40
1Q04
0
58
53
51
20
3Q04
1H04
1Q05
2H04
1H05
2H05
IFRS 2005
Pro forma IFRS 2004
EUROPEAN PRIVATE
BANKING
Net profit (in m)
94
66
2Q04
1Q04
41
23
8
43
38
3Q04
2Q05
53
European private banking:

1H 05 profit contribution at 94 m, up 28 m y/y and down
12 m q/q (due to restructuring provisions)

Top-line at high level (partly due to M2M of financial
instruments) with sustained growth trend of commission
income

Private banking AUM in 1H 05 up 8% to 50 bn

Cost/income at 67%

No relevant impairment charges
1Q05
-30
4Q04
Pro forma IFRS 2004
IFRS 2005
49
Key points, business segments
Net profit (in m)
GEVAERT
36
63
85
-48
17
1Q04
31
2Q05
4Q04
12
3Q04
1H04
32
1Q05
2H04
1H05
2H05
Gevaert:

1H 05 profit contribution of 63 m (remember that in 2Q 04,
discontinued activities weighed on the P/L at –80 m)

Revenue shored up, among other things, by M2M
according to IFRS standards of private equity portfolio in
1Q 05 (15 m) and by gains on disposal of listed equity
holdings in 2Q 05 (30 m)

1H 05 profit contribution from Agfa-Gevaert: 14 m
-65
2Q04
IFRS 2005
Pro forma IFRS2004
Net profit (in m)
-19
1Q04
1H04
-12
2Q04
-7
-40
HOLDING COMPANY
-59
2H04
3Q04
-13
1H05
1Q05
-18
2H05
-27
-41
4Q04
Holding company:

1H 05 net holding company results at -59 m, quite high
due to:

One-off costs in Q2, related to Almanij-KBC merger
(20m): expenses for existing stock option plan at
KBL and external advisory services

Elimination of received dividends on own shares
(IFRS 2005) (9 m)

Costs of debt related to minority buy-out of KBL

Debt funding will be gradually reduced in future
2Q05
Pro forma IFRS 2004
IFRS 2005
50
Segment structure – cont’d.
2
1
KBC Group NV
KBC
Bank
KBC
Insurance
KBC
AM
KBL epb
Gevaert
Retail
Business customers
CEE
Markets
European
private banking
1 . Primary segmentation by business segment
2. Additional breakdown by area of activity
Gevaert
51
Retail Belgium and CEE
RETAIL BELGIUM
Net profit (in m)
539
435
244
2Q05
303
219
2Q04
132
4Q04
87
3Q04
1Q04
1H04
295
132
1Q05
Pro2H04
forma
1H05
2H05
CEE
Net profit (in m)
312
121
2Q05
164
126
98
4Q04
2Q04
1Q04
66
1H04
3Q04
51
75
2H04
Pro forma
191
1Q05
1H05
2H05
Retail Belgium:

Q2 somewhat lower q/q due to lower banking revenue
(partly seasonal) and higher taxes (less exempted gains)

1H 05 net profit of 539 m, 320 m more than 1H 04:

sound revenue growth (esp. related to
savings/investments and mortgages)

sustained cost discipline (-4%)

strong non-life underwriting performance

absence of credit provisioning and normalization of
value impairments on the investment portfolio
(impairments  148 m)

‘Private banking’ sub-segment contributes 32m in 1H 05

1H 05 ROAC at 29% (pro forma FY 04: 22%)
CEE:

Q2 on same (high) level as Q1 (except 68 m one-off in Q1)

1H 05 profit contribution of 312 m - ROAC at 54% (pro
forma FY04: 27%)

In CZ/Slovakia: 1H 05 profit contribution of 219 m (incl.
one-off of 68 m in Q1). The negative effect of lower interest
rates is compensated by higher volumes. Sound growth of
insurance business.

Hungary: further positive trend of operating results, but
somewhat higher loan-loss provisions (LLR 0.93%, similar
to that of major peer). 1H 05 profit at 20 m.

Poland: 1H 05 profit contribution of 62 m, (incl. deferred
taxes of 9 m in Q2) due to sound cost trend, growing
insurance business and absence of loan losses)
52
SME and wholesale activities
Net profit (in m)
226
118
SME/corporate:

Strong profitability trend of 2004 continues as a result of:

Low credit provisions (LLR 1H 05: 0.21%)

High cost efficiency (C/I 36%)

Solid technical result from reinsurance (C/R 90%)

2nd quarter profit level slightly lower than average of
previous quarters due to lower revenue and higher taxes

1H 05 ROAC at 20% (pro forma FY04: 19%)
SME/CORPORATE
204
225
101
105
2Q05
2Q04
4Q04
108
1Q04
99
1Q05
3Q04
1H04
125
2H04
1H05
Pro forma
2H05
Capital markets:

2Q 05 profit contribution continues to be at level registered
in previous quarter, but below record high of 1H 04 (when
exceptionally fine results were booked in derivatives)

1H 05 earnings amounts to 106 m (-23% y/y). Income from
convertibles & equity derivatives trading was particular
weak. Equity brokerage and structured credit business
brought about a result improvement.

1H 05 ROAC at 28% (pro forma FY 04: 34%)
CAPITAL MARKETS
Net profit (in m)
137
70
96
106
53
2Q04
76
2Q05
68
53
4Q04
3Q0419
1Q04
1H04
2H04
1Q05
1H05
2H05
Pro forma
53
Financial highlights
Foto gebouw
- At a glance
- Group financial performance
- Financial headlines per segment
FY 2005 profit outlook
2005 profit outlook

KBC continues to be positive on its strategy in the various business lines

Banking costs are expected to decrease in 2005

There are no signs of any substantial decline in credit quality or in
underwriting performance, non-life

The interest rate and stock market environments remain factors of uncertainty

KBC has already set a mid-term objective of >10% CAGR EPS growth

On the basis of the solid 1H 05 earnings and the prevailing view regarding
the relevant economic and financial parameters, KBC’s 2005 net profit is
expected to exceed the10% growth level, amounting to more than 2 bn euros
55
Financial highlights
Foto gebouw
- At a glance
- Group financial performance
- Financial headlines per segment
FY 2005 profit outlook
Additional information
Solid business growth
Customer
loans
o/w
mortgages
Customer
deposits
‘Life
deposits’
AUM
(off-balance)
Outstanding (in bn)
108.7
30.7
167.8
14.9
170.5
Growth, 2Q 05
+3%
+6%
+3%
+7%
+4%
Belgium
+4%
+4%
+2%
+7%
+5%
CEE
- CZ/Slovakia
- Hungary
- Poland
+4%
+5%
+3%
+0%
+9%
+8%
+12%
+5%
+5%
+6%
+6%
-5%
+8%
+3%
+27%
+16%
+12%
+10%
+24%
+12%
Rest of the world
+1%
+9%
+4%
-
+0%
Growth, Ytd
+7%
+10%
+7%
+11%
+11%
Belgium
+7%
+8%
+5%
+10%
+15%
CEE
- CZ/Slovakia
- Hungary
- Poland
+3%
+6%
+4%
-4%
+16%
+15%
+22%
+7%
+15%
+21%
+10%
-3%
+15%
+12%
+46%
+8%
+20%
+22%
+68%
-4%
Rest of the world
+7%
+15%
+7%
-
+5%
Note: growth trend excl. (reverse) repo activity
57
Group income statement, 1H 2005
(in m euros)
Banking
Insurance
Net interest income
Gross earned premium, insurance
Dividend income
Net gains from FI at FV
Net realised gains from AFS assets
Net fee and commission income
Other income
1 807
0
67
121
63
605
223
266
1 707
86
4
144
-148
29
-1
0
7
8
1
184
1
Gross income
2 887
2 088
-1 685
-34
-34
1
0
0
17
Profit before taxes
Income tax expense
Minority interests
Operating expenses
Impairments
- o/w on loans and receivables
- o/w on AFS assets
Gross technical charges, insurance
Ceded reinsurance result
Share in results, associated companies
Net profit
Excl. intrasegment eliminations
AM
KBL
epb
Gevaert
Holding
Group
79
0
7
82
21
206
33
-2
0
3
14
37
0
49
-30
0
0
-4
0
-2
235
2 122
1 707
169
225
265
839
330
199
429
101
200
5 660
-254
-20
-1
-18
- 1464
-33
0
-30
0
0
0
0
0
0
-287
-5
0
1
0
0
2
-42
1
1
1
0
0
15
-257
0
0
0
0
0
0
-2 313
-57
-34
-16
-1 464
-33
33
1 185
316
169
137
75
-57
1 826
-306
-96
-66
-4
-43
0
-39
-4
-12
-1
-2
0
-469
-104
784
246
126
94
63
-59
1 253
58
Areas of activity overview, 1H 2005
(in m euros)
Retail
CEE
SME/
Corp.
Markets
KBL epb
1 288
-734
+7
-178
0
383
925
-526
-7
-71
-41
282
508
-183
-34
-84
0
208
410
-235
-2
-67
0
106
429
-289
-5
-39
-4
94
373
-156
-15
-46
-1
155
131
-83
-1
-10
-7
30
47
-15
-4
-10
0
17
Gevaert
Total
Banking and AM
Gross income
Operating expenses
Impairments
Income tax expense
Minority interests
Net profit – group share
3 515
-2 004
-39
-415
-100
1 003
Insurance
Gross income (- techn. ch.)
Operating expenses
Impairments
Income tax expense
Minority interests
Net profit – group share
591
-254
-20
-66
-4
246
Holding Co
Net profit – group share
63
3
63
5%
11%
1 253
Group total
Net profit – Group share
Share in group result
ROAC
Excl. non-allocated results
539
43%
29%
312
25%
54%
225
18%
20%
106
8%
28%
94
8%
16%
20%
59
Group income statement, 2Q 2005
(in m euros)
KBL
epb
Banking
Insurance
910
0
49
51
6
284
74
136
978
76
9
38
-67
10
-1
0
4
4
0
96
1
41
0
5
38
19
106
9
0
0
2
-6
34
0
26
-14
0
0
-3
0
0
130
1 074
978
135
92
97
410
118
1 373
1 180
105
217
56
112
2 904
-878
-36
-38
2
0
0
6
-131
-4
0
-4
-852
-17
0
-15
0
0
0
0
0
0
-153
-4
-1
1
0
0
1
-22
2
1
1
0
0
6
-149
0
0
0
0
0
0
-1 209
-42
-38
0
-852
-17
13
Profit before taxes
465
176
90
60
42
-37
797
Income tax expense
Minority interests
-109
-42
-48
-4
-22
0
-18
-1
-11
0
-4
0
-212
-48
314
124
68
41
31
-41
536
Net interest income
Gross earned premium, insurance
Dividend income
Net gains from FI at FV
Net realised gains from AFS assets
Net fee and commission income
Other income
Gross income
Operating expenses
Impairments
- o/w on loans and receivables
- o/w on AFS assets
Gross technical charges, insurance
Ceded reinsurance result
Share in results, associated comp.
Net profit
AM
Gevaert
Holding
Group
60
Areas of activity overview, 2Q 2005
(in m euros)
Retail
CEE
SME/
Corp.
Markets
KBLepb
Gevaert
Total
Banking and AM
(incl. KBL)
Gross income
Operating expenses
Impariments
Income tax expense
Minority interests
Net profit – group share
629
-363
-6
-91
0
170
403
-273
-2
-11
-16
101
250
-89
-21
-45
0
95
159
-82
-3
-35
0
74
70
-42
0
-4
-4
19
22
-7
0
-8
0
6
235
-142
-2
-38
0
53
218
-155
-4
-18
-1
41
1 696
- 1 048
-40
-149
-42
422
Insurance
Gross income - tecbn. ch.
Operating expenses
Impairments
Income tax expense
Minority interests
Net profit – group share
313
-131
-4
-48
-4
124
Holding Co
Net profit – group share
31
-10
31
536
Group total
Net profit – Group share
Excl. non-allocated results
244
121
101
53
41
61
Group earnings, quarter by quarter
(in m euros)
1Q04
2Q04
3Q04
4Q04
1Q05
2Q05
Net interest income
Gross earned premium, insurance
Dividend income
Net gains from FI at FV
Net realised gains from AFS assets
Net fee and commission income
Other income
995
1 275
25
224
193
357
106
966
1 404
121
191
60
324
113
910
901
39
123
93
323
128
963
1 577
46
187
157
399
132
1 048
729
34
133
168
429
215
1 074
978
135
92
97
410
118
Gross income
3 175
3 178
2 517
3 462
2 756
2 904
-1 269
-152
-33
-119
- 1 169
-5
20
- 1 105
-90
-74
-12
-1 240
-22
-60
-1 147
-44
-15
-18
-771
-12
34
-1 424
-79
-76
-2
-1 454
-29
28
-1 104
-15
3
-16
-612
-17
21
-1 209
-42
-38
0
-852
-17
13
Profit before taxes
602
662
577
504
1 030
797
Income tax expense
Minority interests
-170
-55
-177
-51
-155
-57
-35
-29
-256
-57
-212
-48
376
434
365
440
717
536
Operating expenses
Impairments
- o/w on loans and receivables
- o/w on AFS assets
Gross technical charges, insurance
Ceded reinsurance result
Share in results, associated companies
Net profit
62
CEE, company overview
CEE
1H 2005
(in m EUR)
K&H
KB
NLB
Insurance
547
207
149
12
131
Gross income
-265
-142
-113
-83
General expenses
6
-25
12
-1
Impairments
-61
10
9
-10
Taxes
227
30
57
38
Standalone profit
7
-6
-4
-1
Adjustments, o/w elimination of
yield on excess capital, etc
-24
-10
-8
-7
Minority interests
210
15
45
30
Profit contribution
to Group
83%
17%
42%
CSOB
12
31%
Return on allocated capital
63
CEE banking - I/S details, 1H 2005
1H 2005
CSOB
KB
K&H
Statutory accounts
Net interest income
Dividend income
Net gains from financial instruments at fair value
Net realised gains from available for sale assets
Net fee and commission income
Other income
252 197
5 631
44 866
6 496
114 291
123 249
101 629
184
17 312
-1 148
22 648
8 659
107 767
127
50 139
-191
42 918
6 490
Gross income
546 730
149 283
207 251
-265 016
6 169
0
-60 971
-113 082
12 143
98
8 618
-142 048
-25 178
1 369
-10 989
Net statutory profit
226 911
57 061
30 405
Profit contibution to Group
Net statutory profit
Consolidation adjustments
Results of capital allocation
Minority interests
226 911
18 758
-11 586
-23 609
57 061
-949
-3 295
-7 644
30 405
-940
-4 870
-9 971
Profit contribution, Group share
ROAC
ROI
210 474
83%
26%
45 172
42%
14%
14 624
17%
11%
Operating expenses
Impairments
Share in result of associated companies
Taxes
NLB
11 731
64
CEE banking - I/S details, 2Q 2005
2Q 2005
CSOB
KB
K&H
Statutory accounts
Net interest income
Dividend income
Net gains from financial instruments at fair value
Net realised gains from available for sale assets
Net fee and commission income
Other income
128 313
2 118
25 955
2 177
56 598
8 801
51 216
184
5 803
-2 611
6 421
5 298
54 290
114
24 864
-141
18 338
3 845
Gross income
223 961
66 311
101 309
-142 622
1 597
0
- 7 434
-53 724
12 118
0
9 950
-73 645
-15 509
0
633
Net statutory profit
75 502
34 174
9 559
Profit contibution to Group
Net statutory profit
Consolidation adjustments
Results of capital allocation
Minority interests
75 502
-299
- 6 377
-6 106
34 174
- 440
-1 267
-4 406
9 559
-443
-213
- 1 695
Profit contribution, Group share
62 721
28 060
7 208
Operating expenses
Impairments
Share in result of associated companies
Taxes
NLB
3 308
65
No. of shares outstanding
BASIC NUMBER OF SHARES (in millions)
Ordinary
shares
Mandatory
convertibles
Treasury
shares
Basic No.
of shares
Avg.
quarter
Average
Ytd
31/12/03
367.7
2. 6
-11.0
359.4
-
-
31/03/04
367.0
2. 6
-10.1
359.6
359.5
359.5
30/06/04
366.3
2. 6
-9.7
359.2
359.4
359.5
30/09/04
366.3
2. 6
-9.5
359.4
359.3
359.4
31/12/04
366.4
2. 6
-9. 6
359.5
359.5
359.4
31/03/05
366. 4
2. 6
-12.6
356.5
358.0
358.0
30/06/05
366. 4
2. 6
-9.1
360.0
358.3
358.1
DILUTIVE NUMBER OF SHARES (in millions)
Basic No.
of shares
Stock
options
Convertible
bonds
Dilutive
No. of
shares
Avg.
quarter
Average
Ytd
31/12/03
359.4
6.1
5.2
370.7
-
-
31/03/04
359.6
6.1
5.2
370.9
370.8
370.8
30/06/04
359.2
6.0
5.2
370.5
370.7
370.8
30/09/04
359.5
5.8
5.2
370.5
370.5
370.7
31/12/04
359.5
5.0
5.2
369.7
370.1
370.5
31/03/05
356.5
5.0
5.2
366.7
368.2
368.2
30/06/05
360.0
4.0
5.2
369.3
368.0
368.1
Net profit
1H 05 (in m)
1 253
Basic number
of shares
358 122 942
Dilutive number
of shares
368 084 650
Basic EPS
(in euros)
3.50
Dilutive EPS
(in euros)
3.42
66
Foto gebouw
4 Information on capital
management
Capital position
Capital position
Available
capital 1
Surplus
capital 2
Immediate
free surplus 3
Banking
10.7 bn
2.1 bn
1.5 bn
Insurance
2.8 bn
1.2 bn
0.4 bn
Gevaert
1.2 bn
1.0 bn
0.4 bn
14.7 bn
4.3 bn
2.3 bn
Total
Internal capital budget requirements
Deleveraging of the holding company
0.4 – 0.6 bn
Buy-out of 3rd parties in CEE
0.8 – 1.3 bn
External growth in CEE
1.0 – 2.0 bn
1 Regulatory
capital under Basel I/Solvency I (incl. hybrids and minority interests, after elimination of intangibles and goodwill),
based on capital position as at 30-Mar-05
2 Difference between available capital and internal minimum level
3 Surplus capital excl. expected adverse IFRS impact on Tier-1, banking (as of 2006), unrealized gains on tied-up assets
(insurance) and value of Agfa-Gevaert (timing of disposal uncertain)
68
Foto gebouw
5
Closing remarks on
valuation
Valuation
Key figures:

Share price: 66.6 euros

Net asset value: 40.0 euros

1H 2005 EPS: 3.50 euros
Analysts’ estimates: 1



2005 EPS consensus: 5.97 (+33% y/y)
2006 EPS consensus: 6.24 (+4% y/y)
2005-06 P/E: 10.9
Recommendations:



Positive: 42%
Neutral: 42%
Negative: 16%
Valuation relative to peer group:
weighted P/E
2005-06
unweighted P/E
2005-06
CEE banks 2
15.0
15.1
CEE-exposed banks 3
11.6
12.4
Euro-zone banks 4
11.5
12.4
KBC 1
10.9
10.9
BEL banks 5
10.3
10.4
Weighted and unweighted averages of IBES data :
2 OTP, Komercni, Pekao, BPH PBK, BRE
3 BA-CA, Erste, Unicredit, Soc. Gen., Intesa BCI
4 Top-20 DJ Euro Stoxx Banks
5 Fortis, Dexia
Situation as at 18 August 2005
5
Smart consensus collected by KBC (18 estimates)
70
Analysts’ recommendations
EPS momentum
Fair value momentum
5.9
5.63 5.68 5.68
5.7
5.76 5.76 5.80
75
5.43
5.5
70.5 70.5
67.5
70
5.3 5.22
65
5.1
60
4.9
55
4.7
50
4.5
45
Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05
Jul-05 Aug-05
IBES consensus 2005 EPS
70.6
67.8 67.1
64.3
61.8
Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05
Fair value (smart consensus)
Jul-05
01-Aug
Share price (month average)
71