Market position and key elements in ČSOB´s growth strategy

Market position and key elements in ČSOB´s growth strategy Prague April 19, 2004 Patrick Daems Member of the Board of Directors

Outline of the presentation Profile incl. history Financial performance and risk management Market position – the Bank Market position – subsidiaries Role of KBC Strategy

ČSOBbelongs to major players in Central Europe ČSOB Operates as : • universal bank • strong group offering a full range of banking and other financial services • bank with well diversified business: retail, SME, corporate/financial markets (3.2m customers) • group with vast distribution network: in the Czech Republic (CR) 208 branches and 3,400 postal outlets, in the Slovak Republic (SR) 75 branches, full range of direct banking channels KBC´s largest banking subsidiary in CE (by assets and profit contribution) The largest bank in the CR (by assets) Fourth largest bank in the Slovak market (by assets and deposits) 2002 TopCE banks (USDbn) The second largest bank in CE (by assets)

ČSOB´s Vision “Our ambition is to be a united family of bank-insurers built upon a stable and substantial retail franchise, efficiently providing financial services to our customers according to their needs, and delivering a sustainable return to our shareholders by leveraging our current position.”

WE ARE PRIMARILY FOCUSING ON RETAIL BUSSINESSESBrand & Image Positioning future competitive area necessity to differentiate via non-tangible image ČSOB Private Bank KB upper RETAIL ČSOB GECB ČS mass RETAIL PSB The Czech retail market is rapidly maturing which increases the competition amongst key players that have been more targeting middle-retail customers. Therefore, ČSOB intends to attack ČS’s position from below via PSB, as well as is preparing a new positioning strategy for ČSOB brand

ČSOB Postal Savings Bank (PSB) Distribution: • 190 branches • 33 SME hubs • 125 affluent hubs • Differentiated service through personal bankers  890 ths clients  2,150 ths clients SMEs • 8 own PSB branches • 3,400 postal outlets, incl. 400 specialized PSB counters • standard service 160,000 Affluent Retail Affluent 13% • standard service Mass Retail Mass 97% Mass 77% Affluent 3% 45,000 ČSOB´sretail dual brand distribution network

1964 – ČSOB established to finance foreign trade of the country and to act as an exclusive agent of the State at the international markets 1990 – diversification of commercial banking activities; customer base and branch network started to steadily grow 1999 – ČSOB privatized – majority shareholder KBC Bank NV, minority stakes of EBRD and IFC 2000 – IPB business acquired; ČSOB leveraged opportunity to leapfrog in retail banking 2001 – merger with IPB successfully completed, acquisition significantly strengthened ČSOB´s position in the building savings industry, mortgage banking, insurance and pension funds ČSOB Historic milestones

ROAE C/I ratio CAD ČSOB good track record of sound profitability 2003 Net profit: CZK 6.2 bn ( EUR 195m) 2003 14.3 % 67.2 % 2.15 % 15.36% Key Drivers : • solid growth in fee income • strong growth in lending across segments • modest increase of NIM • significant contribution from business performed by subsidiaries • 2002 exceptionally high recoveries of bad debts not repeated • our operations virtually free of non-standard, historical drivers after completion of the cleanup of the Group B/S NIM Development of net profit (CZKm) Release of provisions CZK 1.2bn

Net interest income Net fee income Operating expenses Provisions 2003:strong business growth leading to high growth of revenues, costs under control CZKm 2002 2003 Change 2003 Adj.1) Change Adj. 13,721 5,591 15,054 1,150 14,730 6,367 15,617 - 353 + 7 % + 14 % + 4 % - 14,454 6,207 15,232 N/A + 5 % + 11 % + 1 % N/A • Fee income related primarily to business growth in sales of funds and asset management, payment cards, domestic payments and lending • Comparable cost flat despite expansion in Slovakia and investment in advanced technologies (direct channels) Note: 1) excluding ČSOB PF which was consolidated for the first time in 2003

Traditional „ČSOB“ high credit quality improved even further • NPLs of the Bank decreased to 3.1 % (i.e. Loans › 90 days overdue) • 90 % of portfolio is of good quality (Loans A - D according to ČSOB´s classification) • High level of credit risk provisioncoverage (187 %) • Historic portfolio and related recoveries no more pollute performance reporting • Fitch 9/03: „ČSOB has a track record of strict credit risk classification.“ • Moody´s 8/03: „ČSOB has a tradition of adopting more conservativeasset-quality measures than its domestic peer group.“ • S&P 10/03: „Historically ČSOB had the best lending culture of the major domestic banks operating in the Czech Republic.“

ČSOB´s strengths Market share in the CR - Bank(in %) • Leading market position in terms oftotal assets • Strong market position in deposits kept despite continuing transfer of deposits to mutual funds • Leading market position in sales of mutual funds (mainly CGFs – 80% market share) • Strong market position in mortgage business • Leading market position in construction savings and loans • Leading market position in financial markets • Leading market position in leasing

RETAIL BANK DEPOSITS* Market Share Market Share 29 % 30 % 31 % 30 % 10 % 12 % 15 % 20 % Market ČSOB CZK bn Market ČSOB CZK bn Major shift from plain deposits to mutual funds– CGFs (CR) RETAIL CLIENTS´ASSETS IN MUTUAL FUNDS** ČSOB y/y growth in sales: + 43 % Note: *) ČSOB,ČMSS (only individuals) **) without ex-privatization funds

Product / service innovation drives the increase of AuM 2002 2003 Change CUSTOMER ASSETS UNDER ČSOB GROUP MANAGEMENT + 5 % ČSOB KeyPlan(financial advisory – used by 43ths retail clients till 31.3.04) brings more assets under management AUM (incl.pension funds) Bank deposits Building savings 73,533 384,199 64,608 78,307 382,881 85,895 + 7 % - + 33 %

Initiative to be more flexible and up to clients´ needs resulted in lending volume growth across the segments Corporate Retail/SME CR + 38 % SR + 88 % CR + 8 % SR + 36 % ČSOB Bank y/y loan growth High speed + flexibility High growth High quality

MORTGAGES & BUILDING LOANS** CONSUMER LENDING* Market share 39 % 33 % 32 % 32 % Market share 3 % 4 % 5 % 7 % CZK bn CZK bn + 1 + ČSOB y/y growth: + 50 % ČSOB y/y growth: + 71 % Market + 46 % Market + 15 % Retail lending proved new dynamics (CR) Note: *) consumer loans, credit cards, and overdrafts **) ČSOB, ČMHB, ČMSS

Branch and business expansion in Slovakia Branch expansion Number of customers • 22 new branches were opened in 2003. • Number of customers increased by more than 15 thousand in 2003 and almost doubled since 2000.

Assets Investments in network in Slovakia strengthened sales Market share in the SR (in %) Growth outpaced by far the market: ČSOB +22%, the market - 2% *) Loans Robust growth: ČSOB + 55%, the market + 15 % Mortgages SKK 737m of new mortgages Consumer loans doubled, SKK 1.2 bn of new consumer loans Consumer Loans Market share in 2003 adjusted, with MinFin deposit withdrawal the share decreased to 6.0 % Deposits *)Excluding extra-ordinary deposits from Ministry of Finance Contribution of Slovak operations to Group income - 8 %

Subs´ leading position in CR provides opportunities for further synergies Building savingsdeposits1 Mortgages1 2nd in Europe, 2.2m customers Volume of mortgages CZK 26.1bn 1st 2nd Building savings loans1 Leasing2 2nd 1st 1st Note: 1) according to volume as at 31 December 2003 2) according to volume of new business in 2003

Significant market position also in life insurance and pension funds (CR) Total insurance1 Pension funds2 5th 6th Life insurance1 2 pension funds for dynamic investors 5th for conservative investors Total written insurance premium in 2003: CZK 6.0bn (life insurance: CZK 3.2bn) Note: 1) according to volume of written premium in 2003 2) according to volume of client-funds as at 31 December 2003

Good market position also in Slovakia Leasing1 Building savings deposits2 3rd 2nd Note: 1) according to volume of new business in 2003 2) according to target amount of new contracts in 2003

Close co-operation with KBC KBC Governed areas Centrally coordinated areas in KBC Group • procurement • card processing • intl. cash management • investment research • market risk • credit risk • internal audit KBC Transfer of know-how Support in product innovation • retail • bancassurance • asset management • distribution network management and other areas • mutual funds • chip cards • intl. cash management • financial market products

Strategy of the ČSOB Group • Strengthen ČSOB’s position on the Czech financial market • Significantly improve its position in Slovakia • Therefore we will focus on: • providing bank-insurance services to individuals and small and medium-sized enterprises in both markets • maintaining our current strong position in the segment of corporate customers as well as in the area of financial market services STRATEGIC GOALS Group governance model - United Family - creates value through cross-selling & use of distribution synergies. United Family concept also implements cost saving processes and creates efficiency gains from increased synergies. Cost-out initiativeassesses areas of potential cost-savings across the ČSOB Group and introduces activecost management. Increase of Retail & SME lending activities intends to increase market share in consumer lending, to make mortgages a core banking product as well as to benefit from building loans´ high potential utilisation STRATEGIC INITIATIVES

Business direction of the ČSOB Group • To provide bank-insurance services to individuals and to serve entrepreneurs, small and medium-sized enterprises, municipalities, large corporate clients and non-banking financial institutions. CORE BUSINESS INTENTION • Continue to build upon successful brand approach (ČSOB and Postal Savings Bank) and extensively develop multi-channel way of service in both Czech and Slovak markets. • Significantly improve the quality of client relationship management. • Introduce (in Retail and SME segment) a concept of four customer-need platforms in 2004: Wealth management, Payment comfort, Financing customers’ needs, and Services for SME clients. • Nurture ČSOB Bank’s (not including Postal Savings Bank) ambition to achieve at least 18% market share for all ČSOB retail banking products by 2007 (with the exception of consumer lending, where it intends to nearly double its currently low 5% market share). HOW TO GET THERE Part I

Business direction of the ČSOB Group • Assure that sales in the Bank’s branches reach 18% market share in new mortgages granted in 2007. • Build upon successful wealth management, where ČSOB currently holds a leading position in the sales of mutual funds in the Czech Republic. • ČSOB desires to become the main bank for 27 % of the SME clients by 2007(currently 20%). • In Slovakia, to complete ČSOB’s retail branch expansion and to achieve a very ambitious target: 10% market share in retail loans and assets under management by 2007. HOW TO GET THERE Part II

Financial goals of the ČSOB Group • Rightsizing project: By the end of 2004, ČSOB should complete the rightsizing project that would reduce the staff in the Bank headquarters in Prague by appr. 1 000 employees. • Management of operational expensesimprovement project: primarily based on the SAP implementation in 2004 and on a new procurement and logistics concept • New headquarters building: to be opened in late 2006, also plays a very important role in this cost reduction process as it will significantly downsize ČSOB’s facility management expenses. BETTER COST MANAGEMENT • Operational income enhancement: ČSOB will strengthen its ongoing effort to maintain a balanced relationship between net interest income and fee and commission income. • Cross-selling will be the main driver of the operating income growth, supported by activities such as ČSOB “Key Plan” campaigns. REVENUE ENHANCEMENT

Appendix KBC´s corporate governance and shareholding IPB transaction Risk management in ČSOB ČSOB ratings E-banking and card business

KBC´s corporate governance and shareholding • Two executive managers– expatriates nominated by KBC to ČSOB´s BoD responsible for FM operations, ALM, Corporate Banking, IS and Retail/SME and activities in the SR • About 10 KBC experts working as linemanagers in Credits and Bad Debts, Retail and SME Branch Network Management, Corporate Banking Policy and IS Development • Frequent contacts between ČSOB and KBC Bankat all levels ČSOB´S SHAREHOLDER STRUCTURE as at 31.3.2004 KBC purchased 4.39% stake of IFC (1.3.2004) ČSOB´s registered capital = CZK 5,105m (EUR 157m)

IPB transaction completed • Acquisition of IPB contributed significantly towards the fulfillment of ČSOB´s goal – to broaden the scope of its retail business.ČSOBtook over ex-IPB retail client base including their funds. IPB acquisition also provided ČSOB with the postal distribution network. • The IPB acquisition significantly strengthened ČSOB´s position in the building savings industry, mortgage banking, insurance and pension funds. • Integration included merger of head offices and branch networks, IT systems and customers bases, re-branding of all buildings with new logo. • IPB put into forced administration at 16 June 2000 after severe run on the bank caused by rumors regarding the financial health of the bank.ČSOB purchased the „IPB Enterprise“ (i.e. business) from the IPB´s forced administrator on 19 June 2000. • Czech Ministry of Finance and the central bank have provided a support scheme linked to the rescue acquisition – the arrangements eliminated financial risks of the transaction for ČSOB. • Restructuring Plan provided ČSOB with an option to put any IPB asset to a state owned work-out institution („ČKA“). The ČKA similarily had a call option. By August 2003 all ex-IPB assets determined as eligible for transfer have been transferred to ČKA.

Conservative risk management in ČSOB • In riskmanagement ČSOB adheres to the principle of a limited risk profile that is based on a sophisticated structure of internal limits for different types of risk and products. ČSOB follows the KBC Group standards; • Market risk - ČSOB and ČSOB Group is primarily monitored, analyzed and reported at ČSOB level. The results are used for monitoring at the consolidated KBC Group level; • Operational risk – KBC Group-wide methodology implemented; • Short-term liquidity is managed on a daily basis, liquidity scenarios are used for medium and long-term liquidity management.

ČSOB belongs, according to its rating, to the most creditworthy banks in CE • ČSOB's LT and ST ratings from Moody´s and Fitch are at the same level as the sovereign rating for the Czech Republic (i.e. the highest possible). ČSOB´s rating of Financial Strength from Moody´s and Individual rating from Fitch are higher than the ratings of ČSOB´s Czech peers. • ČSOB belongs to banks with the highest rating also in CE. ČSOB's LT ratings from Moody's, Fitch and S&P are at the highest level in CE. Among the banks with the highest LT ratings, ČSOB has the highest rating of Financial Strength from Moody´s and the second highest Individualrating from Fitch.

Dynamic growth of e-banking and card business Number of E-banking users (incl. SR) • Number of e-channel users up by nearly 60 % compared to 2002 • More than 50 % of all transactions • e-booked • Chip cards: 160ths issued (June-Dec. 2003) • ČSOB the largest operator of a network of payment terminals in the CR

Market position and key elements in ČSOB´s growth strategy