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KBC Bank & Insurance Group

KBC Bank & Insurance Group. Full year results 2001. Brussels 4 March 2002. KBC Bank & Insurance Group. Group results and key features Results - Banking Results - Insurance Profit contribution by activity Outlook. KBC Bank & Insurance Group Key figures. 2001.  %. In millions of EUR.

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KBC Bank & Insurance Group

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  1. KBCBank & Insurance Group Full year results 2001 Brussels 4 March 2002

  2. KBC Bank & Insurance Group • Group results and key features • Results - Banking • Results - Insurance • Profit contribution by activity • Outlook

  3. KBC Bank & Insurance GroupKey figures 2001  % In millions of EUR 2000 Consolidated profit - Group share (1) - Banking - Insurance - Holding company Key figures per share (in EUR) - Net earnings - Net asset value - Net dividend - Pay-out ratio 1 165.5 876.7 320.6 -31.8 3.90 35.2 1.065 36.4% 1 022.4 697.6 359.9 -35.1 3.39 33.8 1.11 43.6% -12.3 -20.412.2 -10.3 -13.0 -4.0 4.2 - • figures for 2000 excl. capital gain on CCF

  4. KBC Bank & Insurance GroupNet group profit per quarter In m EUR -12.3%

  5. KBC Bank & Insurance GroupQ4 2001 Key developments • Positive developments • Slight recovery of financial markets • Write back of unrealized valuation losses on shares • Better performance of equity and derivatives subsidiaries • Recovery of unit-linked sales (+ 35% versus Q3) • Higher interest income : + 4.7% (excl. KB Poland) • Capital gains on fixed-income securities • Strong performance of non-life business due to fewer claims in reinsurance • Negative developments • Higher specific loan provisioning • Cost increase : excl. one-off items + 15% • Full consolidation of Kredyt Bank Poland

  6. KBC Bank & Insurance GroupGroup profit and profitability +20.2% -12.3% +21.6% +12.8% In millions of EUR 23.3% 20.5% 17.3% 16.1%

  7. KBC Bank & Insurance GroupFY 2001 key developments • Positive developments • Increase in market shares • Positive development of the profit contribution by Central Europe • 2.5 bn EUR growth in assets under management • Efficiency • Organic cost development in banking improving : + 3.3% • Combined ratio in insurance at 103.8% approaching the 2004 target • Strong solvency ratios • Strenghtening of pure equity by transfer of FGBR • Negative developments • Unfavourable market conditions for volatile revenue components • Commission income : - 12% (organic) • Negative result for equity and derivatives subsidiaries • Unit-linked premium income : - 15.7% • High loan provisioning

  8. KBC Bank & Insurance GroupSustained solid solvency ratios 1998 1999 2000 2001 7.4% 12.8% 298% 9.5% 16.0% 307% 8.8% 14.7% 318% • Bank • Tier-1 ratio • CAD ratio Insurance • Solvency ratio (*) 7.2% 11.5% 311% Decrease of solvency ratios in banking due to widening of scope of consolidation (*) excluding unrealized capital gains

  9. KBC Bank & Insurance Group • Group results and key features • Results - Banking • Results - Insurance • Profit contribution by activity • Outlook

  10. BankingSummary Org.  % In millions of EUR  % 2000 2001 Gross operating incomeGeneral admin. expenses Operating result Value adjustments and provisionsExtraordinary result Profit before tax Taxes Minority interests Profit after tax 4656 -3094 1562 -334 49 1277 -243 -158 877(1) 4977-3510 1467 -37680 1171 -313 -160 698 6.913.4 -6.1 12.8- -8.4 28.8 1.5 -20.4 -1.43.3 -10.9 -4.5- -9.5 19.1 1.5 -18.9 (1) excl. capital gain on CCF

  11. BankingIncome Stream Total 4977 Total 4656 7.1% Total 3868 2.2% Total 3435 5.9% In millions of EUR 9.2% % of total income 1999 2000 2001 Other income Commission income Profit on financial transactions Net interest income (incl. dividends) 8% 20% 16% 56% 8% 22% 18% 52% 8% 21% 18% 53%

  12. KBC Belgium Other Change ofconsol.Scope BankingStaff charges Total : 1843 (10%) +2.7% Total : 1675 +2.3% In millions of EUR Increase at KBC Belgium of 27 m EUR due to : Inflation : 20.5 m FTE : 13.8 m Other : - 7.3 m

  13. KBC Belgium Other Change ofconsol.Scope BankingOther operating expenses Total : 1667 (+17.5%)+6.9% Total : 1419 +0.8% In millions of EUR Increase at other companies of 6.9% or 56 m EUR due to : KBC Lease : 29 m KBC FP : 11 m KBC AM : 3 m expansion of activities

  14. KBC Bank & Insurance GroupCost/Income ratio 1999 2000 2001 • As published • At unchanged scope of consolidation • Taking into account 2004projected cost savings • Staff charges : 115 m EUR • IT : 89 m EUR • Other : 20 m EUR 65.3% 66.5% 70.5% 69.7% 66.0%

  15. BankingProvisioning for credit risks 1999 2000 2001 In millions of EUR Specific provisions Domestic International of which Kredyt Bank Other general provisions for credit risks Loan loss ratio Domestic International Non-performing ratio 270.4 103.2167.1 71.2 0.24%0.48% 2.1% 285.1 252.632.5 -43.8 0.53%0.09% 2.1% 330.7 166.6164.139.0 -9.3 0.35%0.38% 2.8% Increase of non-performing ratio due to Kredyt Bank Poland : + 0.4% pt Organic : + 0.3% pt

  16. KBC Bank & Insurance Group • Group results and key features • Results - Banking • Results - Insurance • Profit contribution by activity • Outlook

  17. InsuranceSummary In millions of EUR 2000  % 2001 7691 881-2 517615 748 -376 372 20 392 -74 2 321 8201 688-2 330631 809 -409 401 6 407 -51 4 360 6.6-9.9-7.42.6 8.2 8.7 7.7 - 3.8 -30.4 - 12.2 Non-life premium incomeLife premium incomeNet technical charges (*)Investment income (*) Total gross margin General expenses Recurring result Non-recurr. and extraord. result Profit before tax Taxes Minority interests Profit after tax (*) excl. impact of value changes of unit-linked products

  18. InsuranceEvolution of gross premiums -15.7% In millions of EUR +7% +7.1% +44.5%

  19. KBC Bank & Insurance GroupEfficiency Ratios 1999 2000 2001 Non-life ° Net expense ratio Net loss ratio (total) Net loss ratio (direct business) Combined ratio Target by 2004 33.6% 72.5% 70.2% 106.1% 34.0% 72.6% 66.6% 106.6% 34.4% 69.4% 63.9% 103.8% 103.0% Combined ratio target for 2004 almost achieved

  20. InsuranceContribution to net group profit Total 361 Total 321 +34% Total 272 Total 237 In millions of EUR +12% +8.1% % of total recurring result 1999 2000 2001 Non-technical Non-life Life 10% 47% 37% 11% 39% 50% 13% 39% 48%

  21. KBC Bank & Insurance Group • Group results and key features • Results - Banking • Results - Insurance • Activities • Retail bancassurance • Corporate services • Market activities • Central Europe • Asset management • Outlook

  22. Profit Contribution by Activity -13.7% 422 31-12-00 : 1181 m EUR 31-12-01 : 1022 m EUR 364 +43.3% In millions of EUR 228 -4.3% 211 +38.4% 175 168 -12.6% 147 138 109 100 -79.6% 95 47 % profit contribution 36% 36% 13% 21% 19% 5% 7% 12% 9% 9% 15% 16% Retailbancassurance Corporateservices Marketactivities CentralEurope Assetmanagement Groupitems

  23. Retail Bancassurance • 2001 : • Stable interest income but negative impact of stock market climate on commission income • Slightly higher costs • Market shares(1) on the rise (from 12/00) • Consumer credit : 26.1% +0.3% pts • Home loans : 25.6% +0.5% pts • Savings deposits : 20.0% +0.6% pts • Savings certificates : 17.8% -0.1% pts • Unit-linked prod. : 20.2% +0.5% pts • Positive development of cross-selling • 555 200 mutual clients buying 1 insurance and 1 bankproduct (+ 4.2% versus Dec. 2000) • Merger process on track Financial highlights Profit contribution :(in m EUR) 2000 : 422 2001 : 364 Share in Group profit : 2000 : 35.7%2001 : 35.6% Return on equity: 2000 : 16.2%2001 : 13.9% (1) KBC estimates

  24. KBC Bank & Insurance GroupMerger in Belgium on track • Conversion and integration at insurance company completed • Merger in KBC Bank to be completed by 2004 • Closure of bank branches • 1998 : 1500 branches • 350 branches already closed, leaving 1150 at end 2001 • Target by 2004 : 850 branches to remain • Creation of 1 IT platform • IT workload almost completed • 2 250 000 clients already served on new platform, still 300 000 ex-KB clients to be migrated (target date mid 2004) • Reduction of workforce • Gradual reduction by 1650 (11%) by end of 2004

  25. 2001 Increase of gross operating income (+9%) Higher interest income Higher commission income Lower income from corporate finance Higher operating expenses (+9%) Higher loan provisioning (+25%)from 202 m EUR to 252 m EURalso resulting in lower taxes Strategic reduction of risk weighted assets continued (- 9.5% or 4 bn EUR) Increase in domestic market share (1) in lending end 2000 : 20.7% end 2001 : 22.5% Corporate services Financial highlights Profit contribution :(in m Eur) 2000 : 147.4 2001 : 211.1 Share in Group profit : 2000 : 12.5%2001 : 21.1% Return on equity: 2000 : 5.7%2001 : 8.3% (1) KBC estimates

  26. 2001: profit contribution 80% lower Strong performance of dealing rooms (95 m EUR)in Belgium but especially abroad Weakness of stock markets reflected in negative results of equitysubsidiaries KBC Securities (-14 m EUR)and KBC Financial Products Convertible bonds +11 m EUR Derivatives - 32 m EUR Other - 14 m EUR Market activities Financial highlights Profit contribution :(in m Eur) 2000 : 228.2 2001 : 46.5 Share in Group profit : 2000 : 19.3%2001 : 4.5% Return on equity: 2000 : 20.5%2001 : 4.1%

  27. Central EuropeDevelopments in 2001 • Czech & Slovak Republic • Integration of bank distribution networks of CSOB and IPB completed • Feb. 2002 : acquisition of 65% of IPB Pojist'ovna • Increase of stake in CSOB Pojist'ovna to 100% Investment by KBC : 3.6 m EUR • 2002 : planned integration of insurance companies • Poland • Increase of stake in Kredyt Bank Poland from 49.9% to 56.6% Investment by KBC : 60 m EUR (incl. capital increase) Total investments in C.E. to date : 2.2 bn EUR

  28. Central EuropeDevelopments in 2001 • Hungary • July 2001 : merger of K&H Bank with ABN AMRO Magyar. Investment by KBC : 141 m EURCompletion of merger by mid 2002 ahead of schedule • Slovenia • End 2001 - March 2002 : Binding offer on Nova Ljubljanska Banka (NLB) for 34% stake.Exclusive negotiations with Slovenian government.

  29. Central Europe  %excl. changes 2001  % 2000 Profit contribution (*) (in m EUR) Share in group profit Return on Equity 99.6 7.3% 8.4% 137.9 11.5% 7.5% 38.4% 18% (*) before deduction of minorities 107.0 -0.3 8.4 -2.4 -13.0 164.5 -1.0 -12.2 -3.2 -10.1 • Profit contribution • CSOB • K&H Bank • Kredyt Bank • Insurance subsidiaries • Overhead • Non-performing ratio • K&H Bank • CSOB • Kredyt Bank 1.8% 2.6% 11.6%

  30. Asset Management • 2001 • Growth of operating income (+ 3%) in line with growth of AUM • Profit contribution 12.6% lower due to higher costs • Increase in assets under management, notwithstanding difficult market conditions • 3.7% rise in 2001 • increase in volume (4.5 bn EUR) more than offsets decrease in value (- 2.2 bn EUR) • Largest Belgian player in mutual funds • market share : 29.3% Dec. 2001 • 54% market share in capital-guaranteed funds Financial highlights Profit contribution :(in m EUR) 2000 : 109 2001 : 95 Share in Group profit : 2000 : 9.2% 2001 : 9.3%

  31. AssetManagementFurther growth in assets under management 71.1 (+2.2%) 69.6 (+34.1%) 51.9 (+41%) 36.8 (+18.3%) In billions of EUR 31.1 % of total AUM 1999 2000 2001 Private Banking Institutional funds Mutual funds 7% 35% 58% 7% 34% 59% 10% 23% 66%

  32. KBC Bank & Insurance Group • Group results and key features • Results - Banking • Results - Insurance • Profit contribution by activity • Outlook

  33. Outlook 2002 • Economic climate and market conditions remain uncertain • Asset quality ? • Equity related activities ? • Expected growth of interest income • Merger related savings will have positive impact on costs Overall profit outlook uncertain

  34. KBC Bank & Insurance GroupKey figures per share 1998 1999 2000 2001 Net profit P/E Gross dividend Pay-out ratio Net asset value Price / NAV 2.69 25.0 1.09 40.6% 32.3 2.1 3.26 16.4 1.23 37.7% 33.8 1.6 3.90 11.8 1.42 36.4% 35.2 1.3 3.39 11.1 1.48 43.6% 33.8 1.1

  35. KBCBank & Insurance Group Full year results 2001 Brussels4 March 2002

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