Transcript KBC Bank & Insurance Group

KBC Group
New segment reporting,
pro forma figures 2005
REMINDER
Changes in reporting: background information
KBC has restated its 2005 quarterly figures to comply with:

The retro-active application of ‘portfolio hedge accounting’ (carve-out’) in Q4 2005 1

Its new segment reporting approach
The retro-active application of the principles of ‘portfolio hedging’ includes that:
the financial impact of it (previously booked as a lump-sum amount in Q4 2005) is
allocated to the relevant 2005 quarters (this has a negative impact of 40 m on the
Q2 results, fully offset by the positive impact on the Q3 results (7 m) and the
Q4 results (33 m)

The segment reporting changes are explained on the following slide
1
Restatement of the P&L lines ‘Net gains from financial instruments at fair value’ and ‘taxes’
2
REMINDER
Changes in segment reporting: background information

New business unit structure as major segment reporting criterion (i.e. Retail Belgium,
CEE, European private banking, Merchant Banking, Group Centre)

Disclosure of area of activity results in a full P&L format (which was not the case before)

Full allocation of results of each subsidiary to a single segment

No further imputation of impact of capital ‘normalisation’ adjustments on segment bottomline. In return, funding costs of goodwill related to equity participations will be allocated to
the relevant segments

Further restatements of historical time series

Limitation of number of ‘Group Center’ items to:
 results of holding company
 non-allocated expenses of other entities that can be deemed holding-company
overheads (e.g., strategic consultancy fees, BoD expenses, ‘group-level’ operating
provisions, etc.)
 results of co-sourcing vehicles (such as e.g. Fin-Force - as a rule, expenditure is
covered by service users, so, barring timing differences, impact on bottom line tends
to be immaterial
 results of equity holdings within investment portfolio of banking business
1
1
An exception has to be made for KBC Bank NV and KBC Insurance NV Belgium’s activities
3
REMINDER
New organisational structure
KBC Group
Belgium
Retail &
Private
Bancassurance
1
2
CEE
Czech
Slovakia
Poland
Hungary Slovenia
Rep.
BancBancBancBancBancassurance assurance assurance assurance
assurance
No
majority
control
Group Centre functions
& Shared Services
Europ. Merchant
Private Banking
Banking
3
4
5
The new business unit structure will be used as major segment reporting criterion
4
FY05 earnings, Group total
Bank & Insurance,
in millions of EUR
1Q05
2Q05
6M05
3Q05
9M05
4Q05
12M05
Net interest income
Gross earned premium
Dividend income
Net gains from FI at Fair Value
Net realized gains from AFS
Net fee and commission income
Other income
1 019
729
34
163
168
429
215
1 043
978
135
63
97
410
118
2 062
1 707
169
225
265
839
333
1 096
810
25
166
49
452
112
3 158
2 516
194
392
314
1 290
444
1 061
1 034
41
251
144
528
130
4 219
3 550
235
642
458
1 819
574
Gross income
2 757
2 843
5 600
2 709
8 309
3 189
11 498
-1 104
-15
-612
-17
21
-257
-1 209
-42
-852
-17
13
-192
-2 313
-57
-1 464
-33
33
448
-1 177
-3
-696
-10
19
-211
-3 490
-54
-2 161
-44
14
-660
-1 424
-49
-899
-26
2
-266
- 4 914
-103
-3 059
-69
16
-925
Profit after tax
774
544
1 318
598
1 916
528
2 443
Minority interests
-57
-48
-104
-48
-153
-41
-194
Net profit – share Group
717
496
1 213
550
1 763
486
2 249
Operating expenses
Impairments
Gross technical charges
Ceded reinsurance result
Share in result associated companies
Taxes
Risk-weighted assets, banking
Total equity
Return on equity
Cost/income, banking
Combined ratio, non-life insurance
107 608
13 316
24%
51%
92%
111 693
14 383
20%
57%
94%
113 990
15 262
19%
58%
95%
117 730
15 751
18%
60%
96%
5
FY05 earnings, by segment
In millions of EUR
Retail,
Belgium
CEE
Merchant
banking
European
Private
Banking
Group
Center
Total
Net interest income
Gross earned premium
Dividend income
Net gains from FI at FV
Net realized gains from AFS
Net fee and commission income
Other income
2 082
2 358
102
-320
256
830
164
926
870
3
263
33
276
219
1 008
293
95
667
89
231
103
258
63
13
8
35
450
57
-57
-33
21
24
45
33
32
4 219
3 550
235
642
458
1 819
574
Gross income
5 472
2 590
2 485
885
66
11 498
-1 834
2
-2 210
-13
3
-415
-1 318
-88
-594
-42
22
-69
-1 076
22
-181
-30
1
-340
-568
23
-90
0
3
-55
-119
-62
15
16
-13
-46
- 4 914
-103
-3 059
-69
16
-925
1 005
501
882
199
-143
2 443
-2
-92
-92
-7
0
-194
Net profit – share Group
1 003
409
789
192
-144
2 249
Share in group results
Return on allocated capital
Return on equity
45%
28%
18%
31%
35%
24%
9%
28%
-6%
-
100%
Operating expenses
Impairments
Gross technical charges
Ceded reinsurance result
Share in result associated companies
Taxes
Profit after tax
Minority interests
18%
6
Retail and Private bancassurance, Belgium
Bank & Insurance,
in millions of EUR
Net interest income
Gross earned premium
Dividend income
Net gains from FI at Fair Value
Net realized gains from AFS
Net fee and commission income
Other income
Gross income
Operating expenses
Impairments
Gross technical charges
Ceded reinsurance result
Share in result associated companies
Taxes
Profit after tax
Minority interests
Net profit – share Group
Risk-weighted assets, banking
Allocated capital
Return on allocated capital
Cost/income, banking
Combined ratio, non-life insurance
1Q05
2Q05
6M05
3Q05
9M05
4Q05
12M05
501
446
11
-82
110
196
38
511
667
72
-193
37
184
48
1 012
1 114
83
-275
147
380
86
538
522
2
-32
27
201
40
1 550
1 635
85
-307
173
582
127
532
722
17
-14
83
248
37
2 082
2 358
102
-320
256
830
164
1 220
1 327
2 547
1 298
3 845
1 627
5 472
-411
1
-407
-9
1
-112
-448
-6
-636
1
2
-65
-859
-5
-1 043
-8
2
-177
-422
7
-495
-2
2
-115
-1 282
3
-1 538
-10
4
-292
-552
-1
-672
-2
-1
-123
-1 834
2
-2 210
-13
3
-415
283
174
457
273
729
276
1 005
-1
-1
-1
-1
-2
0
-2
282
173
455
272
727
276
1 003
34 153
3 439
33%
55%
89%
34 839
3 531
19%
77%
98%
34 839
3 531
26%
65%
93%
35 807
3 618
30%
55%
95%
35 807
3 618
27%
61%
94%
36 123
3 681
30%
63%
98%
36 123
3 681
28%
61%
95%
7
Central & Eastern Europe
Bank & Insurance,
in millions of EUR
1Q05
2Q05
6M05
3Q05
9M05
4Q05
12M05
Net interest income
Gross earned premium
Dividend income
Net gains from FI at Fair Value
Net realized gains from AFS
Net fee and commission income
Other income
220
196
4
83
20
66
117
233
231
2
79
2
62
22
452
427
6
162
22
128
140
232
207
-3
52
10
72
48
684
634
3
214
32
200
187
242
236
1
49
0
76
31
926
870
3
263
33
276
219
Gross income
705
632
1 337
618
1 955
635
2 590
-295
4
-133
-9
9
-59
-316
-12
-149
-18
3
-5
-611
-8
-282
-27
13
-64
-333
-34
-141
-6
7
-10
-945
-42
-423
-34
20
-75
-373
-45
-172
-8
2
5
-1 318
-88
-594
-42
22
-69
Profit after tax
221
135
357
100
456
44
501
Minority interests
-30
-22
-53
-23
-76
-15
-92
Net profit – share Group
191
113
304
76
380
29
409
16 456
1 365
62%
50%
98%
1 6 453
1 379
36%
69%
93%
16 453
1 379
49%
59%
96%
17 547
1 455
23%
69%
104%
17 547
1 455
40%
62%
98%
18 199
1 508
8%
76%
100%
18 199
1 508
31%
65%
99%
Operating expenses
Impairments
Gross technical charges
Ceded reinsurance result
Share in result associated companies
Taxes
Risk-weighted assets, banking
Allocated capital
Return on allocated capital
Cost/income ratio, banking
Combined ratio, non-life insurance
8
CEE – Czech & Slovak Republics
Bank & Insurance,
in millions of EUR
1Q05
2Q05
6M05
3Q05
9M05
4Q05
12M05
Net interest income
Gross earned premium
Dividend income
Net gains from FI at FV
Net realized gains from AFS
Net fee and commission income
Other income
130
57
4
46
4
53
111
134
60
2
11
2
52
13
264
116
6
57
6
104
124
135
62
-4
24
7
55
25
399
178
2
81
13
160
149
144
64
1
20
6
55
38
544
243
3
101
19
215
187
Gross income
404
274
678
305
982
328
1 310
-133
8
-55
-2
0
-53
-154
-2
-81
-3
0
-8
-287
6
-136
-5
0
-62
-131
-23
-34
-4
0
-27
-418
-17
-170
-9
0
-89
-194
-27
-31
-2
0
-7
-612
-44
-201
-11
0
-96
169
25
194
85
280
66
345
0
-1
-1
-1
-2
-4
-6
168
25
193
85
278
62
340
8 485
670
97%
36%
98%
8 621
683
8%
69%
99%
8 621
683
52%
48%
98%
9 552
749
39%
49%
98%
9 552
749
47%
49%
98%
10 139
792
27%
67%
117%
10 139
792
41%
53%
103%
Operating expenses
Impairments
Gross technical charges
Ceded reinsurance result
Share in result associated companies
Taxes
Profit after tax
Minority interests, local
Net profit, local
Risk-weighted assets, banking
Allocated capital
Return on allocated capital
Cost/income, banking
Combined ratio, non-life insurance
9
CEE – Poland
Bank & Insurance,
in millions of EUR
1Q05
2Q05
6M05
3Q05
9M05
4Q05
12M05
Net interest income
Gross earned premium
Dividend income
Net gains from FI at FV
Net realized gains from AFS
Net fee and commission income
Other income
52
119
0
16
16
-5
2
69
142
0
12
1
-2
6
121
261
0
28
16
-7
8
44
124
1
11
4
-14
6
166
385
1
38
20
-21
14
60
147
0
11
-5
-3
-3
226
532
1
49
15
-24
11
Gross income
200
228
428
174
602
206
809
Operating expenses
Impairments
Gross technical charges
Ceded reinsurance result
Share in result associated companies
Taxes
-83
-2
-76
-6
1
-4
-99
9
-82
-15
-1
-2
-181
8
-158
-21
0
-6
-66
0
-78
-3
0
17
-248
8
-237
-23
0
12
-96
2
-86
-6
0
4
-344
9
-323
-29
0
15
30
40
70
45
115
24
138
0
0
0
0
0
0
0
30
40
70
45
115
24
138
3 763
383
25%
72%
101%
3 407
368
35%
82%
93%
3 407
368
31%
77%
97%
3 354
363
40%
72%
104%
3 354
363
34%
76%
99%
3 257
361
18%
83%
95%
3 257
361
30%
78%
98%
Profit after tax
Minority interests, local
Net profit, local
Risk-weighted assets, banking
Allocated capital
Return on allocated capital
Cost/income ratio, banking
Combined ratio, non-life insurance
10
CEE – Hungary
Bank & Insurance,
in millions of EUR
Net interest income
Gross earned premium
Dividend income
Net gains from FI at FV
Net realized gains from AFS
Net fee and commission income
Other income
1Q05
2Q05
6M05
3Q05
9M05
4Q05
12M05
56
19
0
25
0
23
2
56
22
0
25
0
17
4
112
42
0
50
0
40
6
64
21
0
23
0
21
3
176
62
0
73
0
60
9
60
19
0
24
0
27
5
236
81
0
97
1
87
14
Gross income
125
125
250
130
380
135
515
Operating expenses
Impairments
Gross technical charges
Ceded reinsurance result
Share in result associated companies
Taxes
-72
-10
-12
-1
1
-8
-78
-16
-15
-1
1
-4
-149
-25
-27
-1
1
-12
-88
-5
-17
0
1
-5
-238
-30
-44
-2
3
-17
-78
-7
-14
-1
0
-8
-316
-37
-58
-2
2
-26
24
12
36
16
52
27
79
0
0
0
0
0
0
0
24
12
36
16
52
27
79
4 207
311
21%
65%
83%
4 425
328
7%
73%
88%
4 425
328
14%
69%
86%
4 641
343
12%
77%
113%
4 641
343
13%
71%
95%
4 803
354
24%
64%
102%
4 803
354
16%
69%
97%
Profit after tax
Minority interests, local
Net profit, local
Risk-weighted assets, banking
Allocated capital
Return on allocated capital
Cost/income ratio, banking
Combined ratio, non-life insurance
11
CEE – Other 1
Bank & Insurance,
in millions of EUR
1Q05
2Q05
6M05
3Q05
9M05
4Q05
12M05
Net interest income
Gross earned premium
Dividend income
Net gains from FI at FV
Net realized gains from AFS
Net fee and commission income
Other income
-18
0
0
-3
0
-4
2
-28
7
0
31
-1
-4
0
-46
7
0
28
-1
-9
2
-11
1
-1
-6
0
10
14
-56
8
-1
22
-1
1
16
-23
5
0
-6
0
-2
-9
-79
13
-1
17
-2
-1
7
Gross income
-24
5
-19
8
-10
-35
-45
Operating expenses
Impairments
Gross technical charges
Ceded reinsurance result
Share in result associated companies
Taxes
-8
7
9
0
8
6
14
-4
30
0
3
9
6
4
39
0
11
15
-48
-6
-11
0
5
4
-41
-2
28
0
17
20
-4
-13
-40
0
3
17
-46
-15
-12
0
19
37
Profit after tax
-1
58
57
-47
10
-72
-62
Minority interests
-30
-21
-51
-23
-74
-11
-86
Net profit
-31
36
5
-70
-64
-83
-148
Mainly:
(1) The funding costs of the goodwill of the equity participations in CEE
(2) NLB Vita, Slovenia (proportional consolidation)
(3) Consolidation adjustments
(4) Allocated group operating expenses
(5) Impairments on goodwill of the equity participations in CEE
(6) Contribution from NLB Bank, Slovenia (associated company)
(7) Minorities on KBC level
(1)
(2)
(3)
(3)
(3)
(3)
(3)
(4)
(5)
(2)
(6)
(7)
12
Merchant Banking
In millions of EUR
1Q05
2Q05
6M05
3Q05
9M05
4Q05
12M05
Net interest income
Gross earned premium
Dividend income
Net gains from FI at FV
Net realized gains from AFS
Net fee and commission income
Other income
266
78
16
99
33
58
20
264
66
39
147
2
55
23
531
145
55
246
35
113
43
264
76
23
157
3
56
24
794
220
77
403
39
169
67
213
73
18
263
50
62
36
1 008
293
95
667
89
231
103
Gross income
570
597
1 167
602
1 770
716
2 485
-231
-19
-48
-6
0
-66
-252
-22
-42
-3
0
-83
-483
-41
-90
-9
0
-149
-258
27
-48
-3
0
-81
-741
-14
-138
-12
0
-230
-335
36
-43
-18
1
-110
-1 076
22
-181
-30
1
-340
Profit after tax
201
194
395
240
635
246
882
Minority interests
-22
-23
-45
-24
-69
-24
-92
Net profit – share Group
179
171
350
216
566
223
789
47 248
3 298
23%
46%
90%
50 277
3 503
22%
47%
92%
50 277
3 503
22%
46%
90%
51 015
3 548
26%
48%
88%
51 015
3 548
24%
47%
90%
54 347
3 775
26%
55%
100%
54 347
3 775
24%
49%
92%
Operating expenses
Impairments
Gross technical charges
Ceded reinsurance result
Share in result associated companies
Taxes
Risk-weighted assets, banking
Allocated capital
Return on allocated capital
Cost/income ratio, banking
Combined ratio, non-life insurance
13
European Private Banking
In millions of EUR
1Q05
2Q05
6M05
3Q05
9M05
4Q05
12M05
Net interest income
Gross earned premium
Dividend income
Net gains from FI at FV
Net realized gains from AFS
Net fee and commission income
Other income
46
18
2
45
2
100
24
49
19
6
38
19
107
9
95
37
9
82
22
207
33
73
15
3
-25
9
114
7
168
52
11
57
30
322
40
91
11
2
-49
5
129
16
258
63
13
8
35
450
57
Gross income
238
247
485
196
681
204
885
-135
-1
-24
0
1
-22
-155
-4
-26
0
1
-19
-289
-5
-50
0
2
-41
-147
12
-22
0
1
4
-437
6
-72
0
3
-37
-131
16
-18
0
1
-18
-568
23
-90
0
3
-55
Profit after tax
57
44
101
44
145
54
199
Minority interests
-3
-2
-5
-1
-6
-2
-7
Net profit – share Group
54
42
96
43
140
52
192
9 749
720
31%
63%
10 122
745
22%
71%
10 122
745
27%
67%
9 618
711
22%
86%
9 618
711
26%
72%
8 772
653
29%
71%
8 772
653
28%
72%
Operating expenses
Impairments
Gross technical charges
Ceded reinsurance result
Share in result associated companies
Taxes
Risk-weighted assets, banking
Allocated capital
Return on allocated capital
Cost/income ratio
14
Group Center 1
In millions of EUR
Net interest income
Gross earned premium
Dividend income
Net gains from FI at FV
Net realized gains from AFS
Net fee and commission income
Other income
Gross income
Operating expenses
Impairments
Gross technical charges
Ceded reinsurance result
Share in result associated companies
Taxes
Profit after tax
Minority interests
Net profit – share Group
1Q05
2Q05
6M05
3Q05
9M05
4Q05
12M05
-15
-9
1
18
4
10
16
-15
-6
16
-9
36
3
15
-30
-15
17
9
39
12
31
-11
-11
1
14
0
8
-7
-41
-25
18
23
39
20
23
-17
8
3
1
6
13
9
-57
-33
21
24
45
33
32
24
40
64
-5
59
7
66
-32
0
0
7
10
2
-38
2
1
4
7
-19
-70
1
1
11
17
-17
-17
-8
8
2
-29
-9
-87
-7
10
13
-12
-26
-32
-55
5
3
-1
-20
-119
-62
15
16
-13
-46
11
-3
8
-58
-50
-93
-143
0
0
-1
1
0
0
0
11
-3
8
-58
-50
-93
-144
Includes:
•
Results of Holding company (-109 m for FY05) and Gevaert (-32m)
•
Non-allocated operating expenses of KBC Bank and KBC Insurance that can be deemed
holding company overheads (-26 m)
•
Results of co-sourcing vehicles (-1 m)
•
Results of equity holdings within the investment portfolio of banking business (+25m)
1
including intrasegment eliminations
15
Return on allocated capital per segment methodology
ROAC = Net adjusted profit / average allocated capital
Example: CEE, FY 2005

Net profit, group share
+ minority interests
= Net profit after tax
- Yield on excess capital (after tax)
= Net adjusted profit

Allocated capital = 8% Tier 1 x RWA, banking+ 200% x capital required, insurance
Allocated capital, 31-12-2004
Allocated capital, 31-12-2005
Average capital, 2005
409 m
+92 m
501 m
- 61 m
440 m (1)
1 299 m
1 508 m
1 403 m (2)
ROAC = (1) / (2) = 31%
16
Contact information
Investor Relations Office
Luc Cool, Head of IR
Luc Albrecht, Financial Communications Officer
Tamara Bollaerts, IR Coordinator
Christel Decorte, IR Assistant
Marina Kanamori, CSR Communications Officer
Nele Kindt, IR Analyst
E-mail: [email protected]
Surf to www.kbc.com for the latest update
17