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Market Activities Asset Management Investor Relations Conference 2 July 2001

Market Activities. Description of the activitiesBusiness characteristicsMarket positionFinancial resultsChallengesRisk profileMarket riskOutlook / plans. Topics. Description. The activity consists of :FX - MM - Capital Markets of KBC BankEquity markets of KBC Securities (excl. Corporate F

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Market Activities Asset Management Investor Relations Conference 2 July 2001

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    1. Market Activities Asset Management Investor Relations Conference 2 July 2001 Luc Philips Member of the EC

    2. Market Activities Description of the activities Business characteristics Market position Financial results Challenges Risk profile Market risk Outlook / plans

    3. Description The activity consists of : FX - MM - Capital Markets of KBC Bank Equity markets of KBC Securities (excl. Corporate Finance) in Belgium, France & Netherlands, Peel Hunt (GB) and Patria Finance (Czech Rep.) Convertible Bonds & Equity Derivatives of KBC Financial Products Clearing and Settlement Services

    4. Characteristics Focus on (European) Small & Medium Caps Centralized management responsibility realized in FX, MM, Capital Markets and in KBCFP. Process started in KBC Securities Synergies between business lines and with Corporate Finance/Banking Business

    5. Market Leadership Equity in Belgium Convertibles (secondary market) in New York and Tokyo Warrants in Hong Kong Structured Equity Products in Europe Czech Republic Market position

    6. Significant Share of US$ 500 Bil Global CB Markets

    7. Good Market Position Small & Medium Caps in UK Brokerage in France Relative Weak Position Netherlands & Germany (equity) Corporate Finance in France Warrants in Europe Market position

    8. Financial Results Profit Contribution Share in Group Profit (%) Equity allocation ROE (%)

    9. Challenges Decreased importance Belgian market Consolidation of exchanges Integration of equity business Optimization of synergies Small & Midcaps Control risk profile Market requirements on system development

    10. Risk Profile All activities increasingly client instead of trading oriented KBC FP Belgium : managing Long Term OTC Derivatives Convertibles sales and other equity derivatives : low risk profile KBCSec (Belgium) Equities somewhat higher relative exposure, due to dominant profile in the Belgian market

    11. Risk Profile Peel Hunt/Patria : very small position trading/limits “Consolidated” risk profile from equity + Equity Derivatives Business Role of RIS & Market Committee

    12. Market Risk Possibility extreme negative MTM results mitigated by Conservative position taking/limits in equity derivatives; cfr NO trading losses throughout recent weeks/months Compensation between activities in all but the most extreme scenario’s Stress scenario testing

    13. Market Risk Revenue generation most vulnerable in scenario of combination of absence of volatility low stock prices low stable interest rates

    14. Outlook - Plans Strengthen equity position in France and Germany Integrate product offering to Small and Mid cap European market (Limitation : liquidity in underlying stock for more sophisticated derivatives offering) Fully integrate/centralize management of equity business

    15. Outlook - Plans Develop credit derivatives trading activity prudently In Synergy with Asset Management : launch Hedge Fund Products on the basis of existing strengths (e.g. convertible arbitrage)

    16. Asset Management Structure Assets under management Financial results Retail market shares Drivers of success Opportunities Plans Targets

    17. Asset Management

    18. Assets under Management

    19. Financial Results Strategic Capital Allocation by 2003 : 8.5 - 10 % Contribution to Group Profits in m. EUR 1999 91 2000 129 2001 (Q1) 29 Share of Group Profits : 1999 8% 2000 12% 2001 (Q1) 8% Cost Efficiency : 5bp vs 15 bp AUM (McKinsey survey)

    20. Retail Market Share UCI’s in Belgium

    21. Comparative Market position in Belgium

    22. Drivers of success Product development capacity ?? New products launched 2000 : 87 2001 : 42 (1Q01) Very short time to market Seamless to distribution system Very broad product range, consistent with 4 defined customer risk profiles (430 Retail products outstanding) Undisputed market leadership in Capital Guaranteed Products (210 products) Belgium: huge UCI market share in Europe, making KBC the nr 13 UCI manager in Europe

    23. Opportunities Demographics in Belgium/Europe Pension funding problems in Europe Third party/white labeling services Grow KBC AM Ltd in UK (and US)

    24. Plans Consolidate Belgian market share Export retail model to Central Europe (30 - 40 % market share) Make reporting fully gips compliant Select additional 3/4 products for institutional market Direct marketing European and UK market Work with marketing services in the US Alternative investment initiatives

    25. Targets A.U.M

    26. Market Activities Asset Management Investor Relations Conference 2 July 2001 Luc Philips Member of the EC

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