Transcript KBC Bank & Insurance Group

KBC Group
Company presentation
Spring 2005
Web site: www.kbc.com
Ticker codes: KBC BB (Bloomberg)
KBKBT BR (Reuters)
ISIN code: BE0003565737
Contact information
Investor Relations Office :
Luc Cool
Nele Kindt
Marina Kanamori
Tel.: +32 2 429 49 16
investor.relations @ kbc.com
Surf to www.kbc.com for the latest update.
2
Disclaimer
3

This presentation is provided for informational purposes only and does not
constitute an offer to sell or the solicitation of an offer to buy any security.

Although the statements of fact in this presentation have been obtained from and
are based on sources that KBC believes to be reliable, KBC does not guarantee
their accuracy, and any such information may be condensed or incomplete.

This presentation contains forward-looking statements with respect to our strategies
and earnings development. By their nature, these forward-looking statements
involve numerous assumptions, uncertainties and opportunities. The risk exists that
these statements may not be fulfilled and that future results differ materially.

By receiving this presentation, each investor is deemed to represent that it is a
sophisticated investor and possesses sufficient investment expertise to understand
the risks involved.
Table of contents
1. Company profile
2. Strategy and earnings drivers
3. 2004 Financial highlights
4. Impact of IFRS
5. Information on capital management
6. Closing remarks on valuation
4
Foto gebouw
1
Company profile
6
* DJ Euro Stoxx Banks constituents as at 14 March 2005
SAB
MPS
BNL
AN
AL
BCP
EUR
CAP
NBG
COM
ERSTE
MED
BACA
POP
BIR
AIB
HVB
SP IMI
DEXIA
INTESA BCI
KBC
UNICREDITO
FORTIS
CREDIT AGRICOLE
ABN AMRO
SOCIETE GENERALE
DEUTSCHE BANK
BBVA
BNP PARIBAS
BSCH
Considerable scale in Euroland
Euroland top-30 banks, ranking by market cap *
KBC Group : 24 bn euros
Shareholder structure
Free float
CERA/Almancora
27.3%
Institutional,
Cont. Europe
14%
MRBB
11.6%
Free float
46.6%
Other committed
shareholders 11.4%
KBC
(own shares: 3.3%)
Situation as of 3-Mar-05
* Including ESOP hedge
Institutional,
UK
23%
Institutional,
N. America
20%
Institutional,
R/o world
1%
Institutional,
Belgium
14%
Staff
6%
Retail,
Belgium
22%
Situation as of 31-Dec-04
(before merger with Almanij)
7

KBC is majority-owned by a group of committed shareholders providing continuity to pursue longterm strategic goals

Core holders include the Cera/Almancora Group (co-operative investment company), a farmers’
association (MRBB) and a syndicate of industrialist families
Business portfolio
Revenue breakdown
(2004 pro forma new Group, excl. group items)
Capital markets
International
corporate
11%
Gevaert
2%
7%
Belgium
46%
European
10%
private banking
24%
CEE
8

KBC is a top bancassurer and asset manager in Belgium and has successfully expanded its
operations in CEE

Thanks to the merger with Almanij (March 2005), the private banking activities were expanded
to include a Western-European network. PB has become a more pronounced key focus

KBC is also active – be it rather selective – in corporate banking (mostly in W. Europe) and
financial markets. As investments in CEE have increased, operations in these areas became
relatively less important
Top-3 player in Belgium
Market share:
Insurance premiums
Mutual funds
Client deposits
FORTIS
KBC
FORTIS
KBC
FORTIS
ETHIAS
DEXIA
DEXIA
AXA
ING
ING
KBC
Argenta
ING
Other
0%
Other
10%
20%
30%
0%
Other
10%
20%
30%
0%
10%
20%
30%
31-Dec-03
9

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)
Top-3 player in the CEE region
International banks in CEE (by total assets, in bn EUR):
29.0
KBC (BE)
28.6
Erste Bank (AT)
24.6
23.5
UniCredit (IT)
HVB / BA-CA (GE/AT)
21.6
RZB (AT)
19.0
Société Générale (FR)
14.3
Intesa BCI (IT)
Citibank (US)
13.5
OTP (HU)
13.2
ING (NL)
8.7
Source: RZB – assets as at 31 Dec 03, ownership structure as at 30 Jun 04
10

KBC Group is one of the largest international players in the 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
Top-3 position in the CEE region
Banking
11
Insurance
Czech Republic:
Market share: 21% (No. 2)
Inhabitants: 10 m
Total assets:18 bn EUR
Czech Republic:
Life M share: 8% (No. 5)
Non-life M share: 4% (No. 6)
Slovakia:
Market share: 6% (No. 4)
Inhabitants: 5 m
Total assets: 2 bn EUR
Slovakia:
Life M share: 4% (No. 8)
Non-life M share: 2% (No. 7)
Hungary:
Market share: 11% (No. 2)
Inhabitants: 10 m
Total assets: 7 bn EUR
Hungary:
Life M share: 3% (No. 7)
Non-life M share: 4% (no 6)
Poland:
Market share: 5% (No. 8)
Inhabitants: 38 m
Total assets: 5 bn EUR
Poland:
Life M share: 2% (No. 7)
Non-life M share: 12% (No. 2)
Slovenia:
Minority interest (34%)
Inhabitants: 2 m
Market share: 41% (No. 1)
Slovenia:
Life M share: 6% (No. 5)

KBC Group invested ± 3.6 bn to achieve a prominent position in a growth market
of ± 65 m inhabitants

Especially in Poland, KBC is looking for external growth (lack of scale)
European private banking network
Netherlands:
Theodoor Gilissen
Acquired in ’03 – participation: 100%
UK:
Brown Shipley
Acquired in ’89 – participation: 100%
Belgium:
Puilaetco private bankers
Acquired in ’04 – participation: 100%
Luxembourg:
Kredietbank Luxembourg
Parent company
Spain:
Banco Urquijo
Acquired in ’98 – participation: 100%
12
Germany:
Merck Finck & Co
Acquired in ’99 – participation: 100%
Switzerland:
Kredietbank (Suisse)
Historical presence
France:
KBL France
Acquired in ’98 – participation: 100%
Monaco:
KB Luxembourg (Monaco)
Historical presence
Italy:
Fumagalli Soldan
Acquired in ’01 – participation: 95%

Since ‘98, KBC Group (KBL) has developed a private banking network throughout
Western-Euope, anticipating erosion of its offshore activities in Luxembourg

AUM grew from 18 bn to c. 44 bn (appx. 70% managed outside Luxembourg)
Solid performance
KBC pre-merger:
Dec 02 Dec 03 Dec 04
Profitability
Efficiency
Target
Return on equity
13%
13%
18%
16%
EPS growth
+1%
+8%
+54%
+10%
Cost/income, banking
65%
65%
60%
58%
Combined ratio, insurance
101%
96%
95%
95%
Tier-1, banking
8.8%
9.5%
10.1%
>8%
Solvency, insurance
320%
316%
389%
>200%
Combined ratio, insurance, excluding reinsurance.
Solvency
Solvency, insurance, including unrealized gains.
13
Solid performance (pro forma)
KBC post-merger (pro-forma):
Dec 02 Dec 03 Dec 04
Profitability
Efficiency
Return on equity
10%
12%
14%
EPS growth
+2%
+26%
+29%
Cost/income, banking
66%
66%
63%
Combined ratio, insurance
101%
96%
95%
Tier-1, banking
8.8%
9.6%
10.0%
Solvency, insurance
320%
316%
389%
Combined ratio, insurance, excluding reinsurance.
Solvency
Solvency, insurance, including unrealized gains.
14
* Non-updated targets used by the KBC Bank and Insurance Group before the merger with Almanij in March 2005
Foto gebouw
2
Strategy and earnings
drivers
Strategy headlines
16

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 cosourcing for back-office processes

Balanced risk profile through diversified business portfolio

Solid solvency levels and credit ratings
Earnings drivers in Belgium - overview
Do not underestimate the market:





17
Consolidated banking market (80% of
assets held by Top 4)
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
Growth trend for mortgages, AM and life
insurance business of about 10% per
year expected to continu
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)
Innovative product offering in retail AM
(steadily increasing market share
throughout the past 10 yrs.)
Performing bancassurance distribution
model (life reserves grew >20% p.a.
over last 3 yrs.)
Cost efficiency improvement potential
(on the back of business process
redesigning and co-sourcing of back
offices processes with other banks)
Earning drivers in CEE - overview
18
Strong market growth momentum:
KBC Group is well positioned:

Nom. GDP growth in 2005 at
6.5%, outgrowing EMU by 3.3%


Ongoing catch-up in product
penetration (currently, an avg. 45%
for banking accounts and 5% for
mortgages)
Solid market position in retail and
corporate businesses (excl. banking in
Poland)

Competitive advantage in enhancing
cross-selling of asset management and
insurance products
C/I still on high side, allowing for further
improvement
Adequately provisioned balance sheet
(risks under control)

Mortgage volumes growing at doubledigit 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



Geographical exposure entirely within EU,
limiting risk substantially

Availability of capital within the Group
Above average GDP growth, CEE
Czech Republic
Slovakia
Real GDP growth + inflation - KBC estimates
6.8%
5.6%
6.8%
3.2%
2.0%
3.2%
3.6%
3.6%
3.6%
2004
2005e
2006e
Real GDP growth + inflation - KBC estimates
12.5%
8.5%
8.0
3.5%
3.0%
5.0%
4.7%
5.0%
2004
2005e
2006e
7.5%
Hungary
Poland
Real GDP growth + inflation - KBC estimates
10.7%
8.1%
8.3%
6.8%
19
4.5%
4.5%
3.9%
3.6%
3.8%
2004
2005e
2006e
Real GDP growth + inflation - KBC estimates
8.9%
7.7%
6.5%
3.5%
3.6%
5.4%
2004
2.6%
4.1%
3.9%
2005e
2006e
Earnings drivers in private banking
Changing market environment:



20
Shift in customer preference towards
new investment concepts: open
architecture, alternative investments,
financial planning..
Progressively growing requirements
from regulators (increasing vulnerability
of smaller players)
Pressure on profitability (although
decent performance was seen again in
Europe in 2004)
KBC Group is well positioned:



Strong relationship-based approach, open
architecture concept and add-on of the
product expertise of KBC AM to the tailormade services of KBL epb
Stringent compliance infrastructure,
centrally monitored from Luxembourg
Greatly improved efficiency
(implementation of large scale
rationalization program), to be further
fueled by the realization of merger
synergies within an enlarged KBC Group
Foto gebouw
3
2004
Financial highlights
Headlines
Results KBC Bank & Insurance (pre merger)
- Financial performance
Foto gebouw
- Areas of activity
Results KBL epb
Results Gevaert
Financial outlook for 2005
Merger synergies – update
Quick reminder

Until 31-Dec-04:
Almanij
KBC
Bank & Insurance
KBC
Bank

KBL
European Private Bankers
KBC
Insurance
Gevaert
KBC
Asset Management
As of 01-Jan-05:
KBC Group NV
KBC
Bank
23
KBC
Insurance
KBC
AM
KBL
European Private Bankers
Gevaert
Strong earnings momentum
KBC Bank & Insurance
Key figures
2002
2003
2004
ROE
13%
13%
18%
Profit growth
+1%
+8%
+57%
Revenue growth*
+7%
-1%
+6%
C/I, banking
65%
65%
60%
Loan loss
0.55%
0.71%
0.20%
C/R, non-life
105%
96%
95%
Net profit
in m EUR
+57%
1 022
2001
2002
1 119
2003
2004

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
24
1 034
1 758
Outperforming the market
KBC Bank & Insurance
Peer group *
CAGR: +20%
CAGR: +6%
172

100
101
109
2001
2002
2003
70
2004
2001
2002
83
2003
2004
Earnings growth at sustained high level compared to sector
* DJ Euro Stoxx Banks universe
25
118
100
CAGR = compound average growth rate
KBC Group (mergco)
Key figures, 2004
Net profit
KBC
(New)
6 999
-4 306
7 880
-5 002
2 693
2 879
-333
+61
-336
-130
2 421
2 413
Taxes
Minorities
-490
-172
-541
-195
Net profit
1 758
1 682
Revenues
Costs
in m EUR
1 682
1 017
KBC
(Old)
1 038
1 305
Operating result
Provisions&value adj
Extraordinary
Pre-tax result
2001
26
2002
2003
2004

Pro forma net profit FY2004 of 1 682 m

Major differences with KBC Bank & Insurance’s 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 through P/L
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)
Simulated impact of IFRS standards
Impact on P/L: -67 m *
Impact on equity: + 426 m *
in m EUR
in m EUR
Profit
appropriation
Provisions
-97
DBP
Underfunding
-35
Tax
Lease
Tangibles &
intangibles
Lease
3
89
* Impact on KBC Mergco’s 2004 pro-forma figures
27
-449
11
Tax
0.4
-29
14.0
DBP
Underfunding
2
Goodwill
Other
Provisions
674
9
Tangibles &
intangibles
81
Goodwill
80
Other
7
Growing dividend
Dividend per KBC share *
EUR
+12%
1.52
1.64
2002
2003
2004e

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
28
1.84
Headlines
Results KBC Bank & Insurance (pre merger)
- Financial performance
Foto gebouw
- Areas of activity
Results KBL European Private Bankers
Results Gevaert
Financial outlook for 2005
Merger synergies – update
Key points
Top-line growth, banking
In m EUR
In m EUR
5 756
Premium growth, insurance
5 037
6 011
5 655
3 486
3 156
+6%
+33% org
FY02
FY03
FY04
Investment return, insurance
FY02
FY03
FY04
Loan-loss ratio, banking
In bn EUR
0.71%
7.2%
0.55%
5.9%
- 50 bp
5.2%
0.20%
0.35%
- 70bp
2002
2002
30
2003
2004
2003
2004
Target
corporates
Key points
Combined ratio, non-life
Cost/income ratio, banking
65%
105%
96%
95%
65%
95%
- 1pp
2002
2003
60%
58%
2004
Target
- 5pp
2004
Target
Return on equity, banking
2002
2003
Return on equity, insurance
23%
19%
31
10%
11%
2002
2003
17%
16%
16%
16%
2004
Target
-1pp
+8pp
2004
Target
2002
2003
Solid growth in banking revenues
FY 2004
5 756
Banking income
(in m EUR)
5 655
6 011
730
1 696
1 807
1 971
3 046
3 118
3 138
FY02
FY03
FY04
Financial transactions
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)
902
1 014
Interest income

Commissions & other
NIM = net interest margin
32
Favourable growth in banking assets
End of 2004
Customer loans
(in bn EUR)
106.6
98.8
90.3
16.6
13.1
6.3
62.2
59.3

Customer deposits up 6%*

Customer loans up 7%*:

Corporate book* up 4% (down in 2003,
partly due to impairments in Poland)

Solid mortgage growth :
O/S*
in bn
61.7
Belgium
23.5
24.6
28.3
2002
2003
2004
0
Retail
Corporate
Institutional
Chg
2003
Chg
2004
18.1
+10%
+9%
CR/Slovakia
1.2
+36%
+42%
Hungary
0.9
+69%
+71%
Poland
0.4
+24%
+5%
26.7
+16%
+17%
Total
O/S = outstanding.
Chg in 2003: excl. deconsolidation of Krefima
* Excl. institutional activity
Note : mortgage growth adjusted for currency depreciations
33
Spread development
Interest margin,
Belgium banking business
2.10%
1.8%
Spreads on outstanding loans,
Belgium banking business
5.5%
1.6%
2.00%
5.0%
1.90%
4.5%
1.4%
1.2%
trend
1.0%
1.80%
4.0%
1.70%
3.5%
0.8%
0.6%
trend
0.4%
1.60%
3.0%
1.50%
2.5%
FY02
FY03
FY04
Interest margin, Belgium (left)
10-y EUR T-bonds (right)
34
0.2%
0.0%
Jan-02
Jul-02
Jan-03
Mortgages
Jul-03
Jan-04
Jul-04
Jan-05
SME loans (installments)
Strong growth in premium income
FY 2004
Premium income
(in m EUR)
5 037

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)
1 428
3 486
3 156
910
1 085
1 048
762
971
2 525
1 275
FY02
Life, non-linked
1 676
FY03
Life, unit-linked
FY04
Non-Life
* Extension of consolidation scope in 2004
35
Lower investment yields, insurance
Interest income, insurance
7.0%
6.5%
Total Investment income, insurance
6.19%
6.0%
m EUR
5.24%
5.5%
4.79%
5.0%
4.5%
4.0%
3.5%
3.0%
FY02
FY03
FY04
FY 02
FY 03
FY 04
Interest, dividend,
rent
449
455
524
Capital gains on
shares *
198
138
104
Total
647
593
628
7.2%
5.9%
5.2%
Investment return
Interest yield, bond portfolio
10-y EUR T-bonds
* capital gains on shares in 2004: 4.75% on market value of equity portfolio
36
Low loan-loss charges
FY 2004
Loan-loss provisions
(in m EUR)

676
Loan-loss provisions at very low level (-71% y-o-y)
Customer
loan book
156
465
Gross
loans
(in bn
EUR)
Loss
ratio*
FY03
Loss
ratio*
FY04
Belgium
52.2
0.24%
0.09%
CR/Slovakia
7.1
0.34%
0.26%
Hungary
4.6
0.32%
0.64%
Poland
3.5
8.68%
0.69%
International
41.6
0.48%
0.26%
Total
109.0
0.71%
0.20%
168
403
199
153
78
144
117
FY02
FY03
Belgium
CEE
76
45
FY04
Other
* Net specific provisions to average gross customer loans
37
Favourable non-life claims charge
FY 2004

Claims ratio
(% of net premium income)
72%
FY02
38
65%
FY03
62%
FY04
Favourable development in all markets:
Premium
income
(in m
EUR)
Claims
ratio
FY03
Claims
ratio
FY04
Belgium
715
59%
59%
CR
70
78%
68%
Slovakia
8
87%
88%
Hungary
55
78%
72%
Poland
330
-
63%
R/I
249
75%
69%
Total
1 428
65%
62%
Banking expenses well controlled
FY 2004
Banking expenses
(in m EUR)
3 751
3 695
3 636
431
491
520
1 018
1 006
997
2 302
2 197
2 119
FY02
Belgium
FY03
CEE
FY04
Rest o/t World
* Extension of consolidation scope in 4Q01
39

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)
Reducing product complexity - update
Product simplification programme - banking, Belgium
Area of
business
40
Examples
Realized
Realization
in progress
Pending
59
Reducing no of types of
credit cards, transaction
forms,etc
77%
19%
5%
Investment
products
129
Reducing no of savings
accounts, high complex
orders,etc
78%
23%
0%
Home, car
and travel
services
45
Reducing no of mortgages,
no more floating rates for
consumer loans,etc
89%
11%
0%
Services to
businesses
131
Reduction in interest rate
formulas for cash facilities,
integrating types of
insurance policies,etc.
76%
18%
7%
TOTAL
364
78%
19%
3%
Payments
services
Actions
planned
Co-sourcing initiatives - update
Joint venture with the DZ Bank Group for cross-border payments
GE
BE
±12 m transactions p.a. from
KBC's Belgian banking
activities
Fin-Force
Transactions from DZ and its
1 200 co-operative banks
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 < 1 year) *
* For competitivity reasons, no further details can be disclosed
41
Incremental intra-group synergies
Cross-border synergies with CEE entities :
42

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 int’l cash management product offering (W1SE), joint
nostro/vostro proposal, centralized approach for cash handling, etc.

KBC standards for retail distribution and bancassurance (Mercator)
Headlines
Results KBC Bank & Insurance (pre merger)
- Financial performance
Foto gebouw
- Areas of activity
Results KBL European Private Bankers
Results Gevaert
Financial outlook for 2005
Merger synergies – update
Areas of activity overview
Net profit contribution, in m EUR *
2002
2003
2004
583
490
365
378
269
193
116 132
118
218
221
143
93
126
-132
Retail
* Pro forma
44
Belgium
CEE
Asset management
SME & corporates
Capital markets
Belgian retail
FY 2004
Profit contribution
(in m EUR)
Revenues
Provisions
Expenses
582

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)
490
239
363
230
343
322
260
41
FY02
FY03
Banking
FY 04 at a glance :
Revenues
Expenses
Credit risk
45
FY04
Insurance
Central and Eastern Europe
FY 2004
Profit contribution
(in m EUR)
Revenues
Provisions

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).
Expenses
269
24
108
244
…
118
FY02
FY03
FY04
-132
Banking
Insurance
FY04 at a glance (organic):
Revenues
Expenses
Credit risk
46
Key developments in CEE banking
Top-line growth *
FY03
Cost/income ratio
FY04
14%
11%
FY03
17%
FY04
68% 61%
78% 74%
88%
79%
-1%
3%
0%
CR/Slovakia
Hungary
Poland
CR/Slovakia
Dec-04
Poland
Return on investment
Market shares
Dec-03
Hungary
FY03
Avg deposits and loans
FY04
21.5% 20.9%
5.5%
5.9%
14%
11% 12%
11.4% 11.4%
8%
5%
5.5% 4.7%
n/r
CR
Slovakia
Hungary
Poland
CR/Slovakia
* Growth in local currency, after elimination of the yield on excess capital
47
Hungary
Poland
CEE, company overview
CEE
48
KB
FY 04
NLB
Insurance
(in m EUR)
(% chg y-o-y in local currency)
CSOB
K&H
816
(+10%)
405
(+18%)
317
(-2%)
217
(+257%)
Gross operating income
-471
(+0%)
-279
(+10%)
-244
(-11%)
- 191
(+210%)
General expenses
-32
-30
-41
-
Provisions
-101
-16
+3
-2
Taxes & extraordinary
212
(+5%)
79
(+121%)
35
(-)
79
24
(-)
Stand-alone profit
-32
-26
-6
-
+4
Adjustments, o/w yield
on excess capital, etc
-19
-21
-4
-52
-4
Minority interests
162
(+13%)
31
(+180%)
25
(-)
27
24
(-)
Profit contribution
to Group
17%
18%
8%
-
7%
Return on allocated cap
Asset management
Assets under management
(in bn EUR)
Net change in assets, 2004
Retail funds, Belgium
107 bn
89 bn
Belgium:
88%
Corporate
Retail funds, CEE
635
13
5 162
81 bn
In billions of EUR
11
Private assets, Belgium
20
9
1145
19
20
17
8 278
Institutional assets
Retail
2337 Group assets
15
14
54
CEE:
5%
40
45
2002
2003
Market share, retail funds
2004
Institutional, group assets
Institutional, third-party assets
Retail, private assets
Retail, funds
49
Belgium :
Czech Republic :
Slovakia :
Hungary :
Poland :
31.5%
22.0%
7.7%
9.4%
1.3%
Asset management
FY 2004
Profit contribution
(in m EUR)
Revenues

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 capitalguaranteed 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)
Expenses
143
132
116
FY02
FY03
FY 04 at a glance :
Revenues
Expenses
FY04
Belgium :
88%
50
CEE :
5%
Market share in Belgium
Mutual funds market – development of market shares
35
KBC
30
25
Competitor A
20
Competitor C
Competitor B
15
Rest of the market
10
5
Dec-93
51
Dec-94
Dec-95
Dec-96
Dec-97
Dec-98
Dec-99
Dec-00
Dec-01
Dec-02
Dec-03
Dec-04
SME and corporates
FY 2004
Profit contribution
(in m EUR)
Revenues
Expenses
Provisions
193

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 loanloss 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
346
206
209
FY02
FY03
Banking
FY 04 at a glance :
Revenues
Expenses
Credit risk
52
FY04
Insurance
SME and corporates
Profit contribution, geographical breakdown
(in m EUR)
166
103
100
69
67
51
42
1
12
41
35
0
FY 02
1
2
FY 03
Belgium
SE Asia
53
61
W. Europe
RoW + other
11
8
FY 04
USA
(Re)insurance
32
Capital markets
FY 2004
Profit contribution
(in m EUR)
Revenues
221
Expenses
126

FY profit contribution 221 m, up 76%,
boosted by the pick-up of equity capital
markets. ROAC at 20%.

Revenues 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
72
93
22
46
10
0
116
127
81
-34
FY02
M/DCM
FY03
ECM (cash)
FY 04 at a glance :
Revenues
Expenses
54
FY04
ECM (derivatives)
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)
* Best-efforts approach for 2005 – will be reassessed for 2006
55
Areas of activity in 2005: *
1.
Retail bancassurance (mainly
in Belgium)
2.
Central and Eastern Europe
3.
Corporate services
(SME and corporates)
4.
Market activities
5.
KBL European private banking
6.
Gevaert
Headlines
Results KBC Bank & Insurance (pre merger)
- Financial performance
Foto gebouw
- Areas of activity
Results KBL European Private Bankers
Results Gevaert
Financial outlook for 2005
Merger synergies – update
KBL 1996
1996
57
Challenges

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
Strategy of KBL epb
1.
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
2.
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)
3.
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
58
KBL epb today
2004
59
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
Financial key points
Net profit
In bn EUR (Lux Gaap)
174
181
193
Assets under management
205
In bn EUR
36
34
CAGR +6%
CAGR +6%
2001
2002
2003
2004
2001
60
2003
Lux Gaap
Lux Gaap
2001
2002
8.4%
2002
10.0%
2003
2004
Return on equity
Tier-1 ratio
7.6%
43
38
9.2%
2004
15%
17%
18%
2001
2002
2003
21%
2004
Revenues in line with strategy trend
Operating income
(in m EUR)
1 000
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 highyielding assets)

Non-recurrence of extraordinary
dividends (in 2003 related to reinsurance captive KB Ré)

Capital gains on non-core investments
914
822
800

756
192
122
65
158
71
600
15
321
312
335
317
FY02
FY03
213
400
200
370
0
61
FY04
Commissions
Interest income
Dividends
Other Operating Income
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
FY02
FY03
15 bp
2003
21 bp
2002
15 bp
Avg 5 yrs
17 bp
FY04
* Net specific provisions to average gross customer loans
62
2004
Expenses under control
Operating expenses
(in m EUR)
530
299
318
FY02
FY03
FY04
Other Overhead Expenses
* Extension of consolidation scope in 4Q01
63

… cost/income ratio rises from 60%
to 70%
208
194
317
Staff Costs
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
526
492
213

Strongly reduced provisions
In m EUR,
Lux GAAP
2002
2003
2004
Operating income
Overhead expenses
914
-530
822
-492
756
-526
384
330
230
-183
-83
19
Pre-tax result
201
247
248
Income tax
Minority interest
-18
-2
-52
-1
-43
-1
Net profit
181
193
206
Operating result
Provisions and depreciations

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)

64
As a balance, net profit up 6.5%
Reconciliation with KBC Group’s pro forma results:
m EUR
2000
2001
2002
2003
2004
161
174
181
193
205
1
-33
-35
-53
-112
-71
-63
-51
-31
-20
Amortisation of goodwill
-2
-2
-6
-10
-10
Contribution
to Group profit
89
76
89
99
63
Stand-alone profit
Consolidation adjustments*
Minority interests
* 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)
65
Headlines
Results KBC Bank & Insurance (pre merger)
- Financial performance
Foto gebouw
- Areas of activity
Results KBL European Private Bankers
Results Gevaert
Financial outlook for 2005
Merger synergies – update
Gevaert portfolio
67

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,…
Gevaert portfolio
68
2003*
2004
Results of associated
companies
Realised gains, securities
Other income
Gross income
107
-9
99
197
46
19
108
173
Administrative expenses
-92
-109
Operating result
105
63
Value adjustments
Amortisation of goodwill
Share in restructuring costs
in associated companies
+13
-28
+8
-28
-
-81
Extraordinary results
Taxes
Minorities
-9
2
+6
-4
-
Contribution to Group
result
83
-36
* Pro forma, including Almafin in the scope of consolidation

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
Gevaert portfolio
Contribution to KBC Group’s pro forma results:
2000
2001
2002
2003
2004*
46
86
20
152
2
14
25
41
69
-9
8
68
104
-9
13
109
46
19
108
173
-8
-6
-5
-6
-109
Operating result
144
35
63
103
63
Value adjustments
Amortisation of goodwill **
Share in restructuring associates **
-19
-30
-
-19
-30
-75
-55
-27
-19
+13
-27
-
+8
-28
-81
Extraordinary results
Taxes
Minorities
2
-21
-1
+19
-7
-1
1
-1
-
+6
-4
-
Contribution to Group result
76
-71
-45
88
-36
Non-realised gains at 31-Dec
405
87
220
259
496
Results associated companies
Realised gains
Other income
Gross income
Administrative expenses
* Extension of consolidation scope (acquisition of Almafin) ** Mainly related to Afga Gevaert
69
Headlines
Results KBC Bank & Insurance (pre merger)
- Financial performance
Foto gebouw
- Areas of activity
Results KBL European Private Bankers
Results Gevaert
Financial outlook for 2005
Merger synergies – update
Profit outlook - 2005
71

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, yearon-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
2005 IFRS disclosure schedule
23 Mar. 2005
• New IFRS templates
• FY04 IFRS earnings and B/S (excl. impact of IAS 32/39 and IFRS 4)
28 Apr. 2005
• Impact of IAS 32/39 and IFRS 4 on shareholders equity on 1 Jan 2005
9 June 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)
72
Headlines
Results KBC Bank & Insurance (pre merger)
- Financial performance
Foto gebouw
- Areas of activity
Results KBL European Private Bankers
Results Gevaert
Financial outlook for 2005
Merger synergies – update
Quick reminder
74

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 cosourcing

Balanced risk profile through diversified business portfolio

Solid solvency levels and credit ratings
Synergy areas
Synergy potential
Synergy area
Corporate
functions
Private
banking
(activities of
KBL epb)

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


Gevaert
portfolio
75

Optimization of capital and risk management by rebalancing equity
portfolio
Strenghtening of competitive position by merging Gevaert’s activities
into KBC Bank and KBC Insurance

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
Activities of KBL epb
Synergy benefit, in m
(see note below)







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’
Revenue
80
60
40
20
Cost + Cost
Avoidance
0
2005 2006 2007 2008 2009
Note: ‘Synergy benefit’ described throughout as peak recurring annual increase in pre- tax bottom-line result vs. base
business.
76
Gevaert portfolio
Strategy headlines
Business line
Holdings in
listed
companies
Real estate
& specialized
finance

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


Private
equity
77

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)
Foto gebouw
4
Impact of IFRS
Disclaimer
79

By its nature, the information in this presentation involves numerous
assumptions, uncertainties and opportunities, both general and
specific. We caution readers of this presentation not to place undue
reliance on this information as a number of factors could cause
future Group results to differ materially.

All data in this document are unaudited and are meant as indications
necessary to illustrate the changes introduced by IFRS which will
affect future reportings.

KBC undertakes no obligation to revise or update any information to
reflect changes in policy, events, expectations or otherwise.
Content
80
1.
Disclosure headlines
2.
Impact on financial statements 2004
3.
Impact on financial statements 2005
Headlines
1
81
First IFRS reporting 1Q 2005
2
Comparative figures of 2004 available (excluding impact of IAS
32/39 on financial instruments and IFRS 4 on insurance contracts)
3
Corrections due to the first time application of IFRS valuation rules
in opening B/S on 1-Jan-04 (exception: first time application of IAS
32/39 and IFRS 4 in opening B/S on 1-Jan-05)
Headlines – Impact 2004 – Impact 2005
Disclosure schedule, 2005
Mar 23, 2005
Apr 28, 2005
Jun 9, 2005
82
•
New IFRS templates
•
FY04 IFRS income statement and B/S (excl. impact IAS 32/39 and IFRS 4)
•
•
•
Impact of IAS 32/39 on shareholders equity in opening B/S
of 1-Jan-05
1Q05 earnings (full set of IFRS interim 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)
Headlines – Impact 2004 – Impact 2005
Segment information, 2005
Financial
statements
Management
reporting
6 business
segments
1) Banking
2) Insurance
3) Asset Management
4) KBL epb*
5) Gevaert *
6) Holding Company
P/L and B/S
3 geographical
segments
1) Belgium
2) CEE
3) Rest of world
Key income
figures
6 customer
segments
1) Retail
2) CEE
3) SME/corporate
4) Capital Markets
5) KBL epb*
6) Gevaert*
+ Group Item (= non-allocated
activities)
P/L
* Temporarly solution for 2005: KBL and Gevaert as non-integrated divisions
83
Headlines – Impact 2004 – Impact 2005
Main changes in valuation rules, 2004
Impact on
earnings
Presentation of own equity before profit appropriation
(instead of after profit appropriation)
84
Impact on
book value
Impact
start
X
2004
Stricter criteria for recognition of provisions (IAS 37)
X
X
2004
Recognition of deficit/excess of defined benefit pension plans
(DBP) (IAS 19)
X
X
2004
Broader criteria for recognition of deferred taxes (IAS12)
X
X
2004
Reclassification from operating to finance lease (IAS 17)
X
X
2004
Correction of depreciation of tangible assets and
capitalisation of internal software (IAS 16/38)
X
X
2004
Impairment testing of goodwill and no further depreciation
(IAS 36 and IFRS 3)
X
X
2004
Misceleaneous other changes with limited impact, such as
inclusion of SPV’s in scope of consolidation, etc.
X
X
2004
Headlines – Impact 2004 – Impact 2005
IFRS Income statement FY 2004*
m euros
KBC
(Old)
KBC Group
(Mergco)
Net interest income
Gross earned premium, insurance
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
3 687
5 158
214
647
513
1 029
308
3 833
5 158
231
725
503
1 404
479
Gross income
11 555
12 333
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
Profit before taxes
-4 200
-379
-201
-165
-4 633
-68
55
2 329
-4 944
-365
-198
-150
-4 633
-68
22
2 345
-498
-172
-537
-193
1 659
1 615
Income tax expense
Minority interests
Net profit
85
* Non-audited figures (excl. impact of IFRS 4 and IAS 32/39)
Headlines – Impact 2004 – Impact 2005
Impact on profit 2004 - KBC Old
Provisions*
1758
-92
DBP
-34
Net profit
2004
BEL GAAP
Tax
Lease
-7
+0.4
Fixed
assets
Goodwill Other
-10
+39
1659
+5
Non-audited figures, excl. impact of IFRS 4 and IAS 32/39
Net profit
2004 IFRS
* Mainly related to reversal of the use of the provision for financial risks in the insurance business
86
Headlines – Impact 2004 – Impact 2005
Impact on profit 2004 - KBC Mergco
1682 Provisions*
Goodwill Other
-29
-97
DBP
-35
Tax
+2
Net profit
2004
BEL GAAP
Fixed
assets
Lease
+3
+0.4
+89
Non-audited figures excl. impact of IFRS 4 and IAS 32/39
1615
Net profit
2004 IFRS
* Mainly related to reversal of the use of the provision for financial risks in the insurance business
87
Headlines – Impact 2004 – Impact 2005
Impact on EPS 2004 *
KBC
(Old)
KBC Group
(Mergco)
5.66
4.59
-0.30
-0.11
-0.02
+0.00
+0.02
+0.12
-0.03
+0.06
-0.27
-0.10
+0.01
+0.00
+0.01
+0.24
-0.08
+0.08
Total IFRS adjustments
-0.26
-0.10
Basis EPS, IFRS
5.40
4.49
Euros
Basic EPS, Belgian GAAP
IFRS adjustments:
- reversal of provisions
- underfunding of DBP
- adjustments of deferred taxes
- reclassidication of lease
- adjustments on fixed assets
- adjustment of goodwill
- other
- change in definition of no of shares
* Non-audited figures (excl. impact of IFRS 4 and IAS 32/39)
88
Headlines – Impact 2004 – Impact 2005
IFRS Balance sheet, 31-Dec-04 *
m euros
KBC
(Mergco)
Loans and advances to customers
Securities
Loans and advances to banks
Derivative financial instruments
Property and equipment (excl invest. property)
Goodwill and other intangible fixed assets
Investments in associated companies
Other assets
106 798
90 887
27 065
15 376
1 782
650
615
9 160
111 177
98 862
38 463
15 376
2 300
1 086
1 228
16 671
Deposits from customers and debt securities
Deposits from banks
Derivative financial instruments
Gross technical provisions, insurance
Liabilities under investment contracts, insurance
Other liabilities
141 955
42 460
17 728
13 259
3 931
20 847
157 712
55 083
17 728
13 259
3 931
23 351
12 154
10 641
1 513
14 099
12 328
1 771
252 334
285 163
Total equity
- Parent company equity
- Minorities
Balance sheet total
* non-audited figures (indicative only), excl. impact of IFRS 4 and IAS 32/39
89
KBC
(Old)
Headlines – Impact 2004 – Impact 2005
Impact on BPS, 31-Dec-04 *
Euros
KBC
(Old)
KBC
Group
(Mergco)
Book value per share, Belgian GAAP
33.84
32.50
+1.19
+0.05
-1.31
+0.03
+0.03
+0.28
+0.12
+0.00
+0.35
+1.84
+0.04
-1.23
+0.03
+0.02
+0.22
+0.22
+0.02
+0.63
Total IFRS adjustments
+0.74
1.80
Book value per share, IFRS
34.58
34.30
IFRS adjustments:
- profit appropriation
- reversal of provisions
- underfunding of DBP
- adjustments of deferred taxes
- reclassidication of lease
- adjustments on fixed assets
- adjustment of goodwill
- other
- change in definition of no of shares
* non-audited figures excl. impact of IFRS 4 and IAS 32/39, based on 307.7m shares
for ‘KBC old’ and on 359.5 m shares for ‘KBC Mergco’
90
Headlines – Impact 2004 – Impact 2005
Main changes in valuation rules, 2005
Impact on
earnings
Impact on
book value
2005
Deposit accounting for unit-linked life products (IFRS 4)
Derecognition of catastrophe / equalisation provision (4)
X
X
2005
Insurance liability adequacy test (IFRS 4)
X
X
2005
Adjustment of loan losses (NPV-approach and recognition
of portfolio-based provisions) (IAS 32/39)
X
X
2005
Recognition impairments on equity investments (32/39)
X
X
2005
Deduction of treasury shares from own equity (32/39)
X
X
2005
Convertible bonds to be considered as own equity (32/39)
X
X
2005
X
2005
X
2005
X
2005
Marking to market,‘bonds available for sale’ (IAS 32/39)
Marking to market, ‘bonds at fair value’ (IAS 32/39)
X
Marking to market, ‘shares available for sale’ (IAS 32/39)
91
Impact
start
Marking to market, ‘shares at fair value’ (IAS 32/39)
X
X
2005
Marking to market, derivatives not held for trading (32/39)
X
X
2005
Headlines – Impact 2004 – Impact 2005
Disclosure schedule 2005 - reminder
92
Apr 28, 2005
•
Jun 9, 2005
•
Impact of IAS 32/39 on shareholders equity in opening B/S
of 1-Jan-05
1Q05 earnings (full set of interim IFRS financial statements and notes, incl.
impact of IAS 32/39 and IFRS 4)
Headlines – Impact 2004 – Impact 2005
Indicative composition of portfolios*
Assets as of
2005
Value at
31-12-04 *
Loans and
receivables
Mortgages/consumer credit
Corporate loans
HTM
instruments
28.3 bn
78.2 bn
Amortized cost (no
impact from volatility in
valuation)
Bonds, banking book
Bonds, insurance book
5.9 bn
2.5 bn
Amortized cost (no
impact from volatility in
valuation)
AFS
instruments
Bonds, banking book
Bonds, insurance book
Shares, banking book
Shares, insurance book
16.5 bn
7.3 bn
1.0 bn
2.9 bn
Fair Value (adjustments
recognized in
shareholders’ equity)
Financial
instruments
at Fair Value
Bonds, banking book
Bonds, insurance book
Trading portfolios
Unit-linked investments
Derivatives, banking book
Derivatives, insurance book
18.5 bn
0.6 bn
31.5 bn
3.9 bn
p.m.
p.m.
Fair Value (adjustments
in P&L)
* Figures for KBC pre-merger, book value according to B-GAAP
93
Valuation (volatility
impact)
Headlines – Impact 2004 – Impact 2005
Annex
Disclosure on IFRS available in the annual report at www.kbc.com:
94

Description of major differences between IFRS and B-GAAP

Full P/L and B/S 2004 IFRS with reconciliation to B-GAAP,
for both ‘KBC’ (old) and ‘KBC Group’ (Mergco)
Foto gebouw
5 Information on capital
management
Solvency
Banking KBC,
(Tier-1)
In m EUR
10 000
Private banking,
KBL epb (Tier-1)
10.1%
9.5%
In m EUR
1100
9.2%
2500
7 000
3 871m
6 000
5 000
389%
3000
900
8 000
In m EUR
10.0%
2 060 m
9 000
Insurance business
(solvency margin)
700
467 m
2000
1 372 m
316%
1500
500
726 m
4 000
1000
3 000
300
359 m
3 871m
2 000
500
726 m
100
1 000
0
0
2003
Legal
2004
Econ buffer
-100
Excess
2003
Legal
2004
Econ buffer + Excess
2004
2003
Legal
Econ buffer
In the short term, regulators will not apply the IFRS approach for monitoring solvency
96
Excess
Non-realized gains on investments*
31-Dec-04, in m EUR
Book value
Market
value
Net gains
Fixed-income
- Banking business
40 331
41 739
1 402
- Private banking business
13 414
13 529
115
- Insurance business
10 409
11 036
627
14
15
1
927
955
28
3 050
3 413
363
867
1 363
496
- Gevaert portfolio
Equity
- Banking business
- Insurance business
- Gevaert portfolio
* Excluding trading portfolio
97
Allocation of excess capital

Excess capital may be used for:
 Increasing presence in CEE (banking presence in Poland and
insurance presence in Hungary may be strenghtened by acquisitions or
setting up business combinations)
 Strenghtening the European private banking franchise
 Buying out minority shareholders
 Decreasing the leverage at holding-company level
 Securing a stable, growing dividend

Board’s mandate to buy back own shares, up to 10% of capital*
* Valid until 29 Oct. 2005. Extension subject to approval of the AGM on 28 Apr. 2005
98
Foto gebouw
6
Closing remarks on
valuation
Valuation
Key figures:

Share price: 65.8 euros

Net asset value: 39.3 euros
Analysts’ estimates:


2005 EPS consensus*:
6.02 euros (+7% y-o-y)
P/E 2005: 10.9
Recommendations:



Positive: 55%
Neutral: 25%
Negative: 20%
Valuation relative to peer group:
P/E
2005
CEE banks 1
13.5
CEE-exposed banks 2
12.4
Euro-zone banks 3
12.1
KBC
10.9
BEL banks 4
10.4
Weighted average of IBES data :
1) OTP, Komercni, Pekao, BPH PBK, BRE
2) BA-CA, Erste, Unicredit, Soc. Gen., Intesa BCI
3) Top 20 DJ Euro Stoxx Banks
4) Fortis, Dexia
Situation as at 14 March 2005
100
* Smart consensus collected by KBC (13 estimates)
Group restructuring benefits
Merger of KBC with parent company Almanij (March 2005):
101

Business benefits:
 Flexibility for fully implementing existing strategies
 Unity of strategy, capital and management
 Enhanced efficiency, with business synergies

Financial benefits:
 Increased share liquidity, thanks to pooling of two listed entities
and higher free float
 Elimination of holding-company discount
 Increased transparency through simplified structure
 Improved visibility on capital markets
Increased visibility and share liquidity
Market capitalization (in EUR)
KBC (old)
Almanij
KBC (new)
15 bn
10 bn
24 bn
31%
5 bn
18 m
29%
3 bn
8m
46%
11 bn
51 m
Free float
% of shares outstanding
Size, bn EUR
Daily traded volume (Ytd, m EUR)

Amongst top-10 banking shares in the euro zone

Increased weighting in stock indices due to higher free float

Further expansion of (equity) research coverage
Situation as at 15 Dec. 2004 for KBC (old) and Almanij; as at 14 Mar. 2005 for KBC (new)
102
Research coverage
103
Sollicited research coverage
104