KBC Bank and Insurance by jnyjhtw

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									                                                   2003




           KBC Bank & Insurance Group
                                   Investor presentation
Website: www.kbc.com
                                            Winter 2003
Ticker codes: KBC BB (Bloomberg)
              KBKBT BR (Reuters)
              B:KB (Datastream)

ISIN code: BE0003565737
                               KBC Bank & Insurance Group


              Table of contents                             2003



n Shareholder information
n Company profile
n Strategy overview
n Business highlights, year-to-date
n Financial highlights, year-to-date
n Additional information
n Contact co-ordinates




                                                               2
                                     2003




Shareholder information

          Website: www.kbc.com

          Ticker codes: KBC BB (Bloomberg)
                        KBKBT BR (Reuters)
                        B:KB (Datastream)

          ISIN code: BE0003565737
                                                  KBC Bank & Insurance Group

      Relatively low share price related to
                                                                                  2003
       book value and earnings capactity

Key figures

                                       Oct
                2000    2001   2002                Analyst forecasts (September 2003)
                                      2003

Closing price    46.1   37.7   30.4    36.5             l   EPS 2003 consensus: 3.59
                                                        l   EPS 2004 consensus: 4.11
EPS              3.90   3.39   3.42    3.70             l   P/E (average 2 years): 9.6
P/E (based on
                 11.8   11.1    8.9           -
closing)                                           Recommendations :
                                                       l Positive : 14
Net Asset
                 35.2   33.8   31.6    34.9            l Neutral : 11
Value
                                                       l Negative : 2
P/NAV             1.3    1.1    1.0      1.0


         N° of shares outstanding : 302.4 m




                                                                                         4
                                                            KBC Bank & Insurance Group

          Shareholder structure guaranteeing
                                                                                                       2003
            long-term strategic perspective
n   KBC is a middle-sized financial company                CERA Holding      Other stable
    in Europe with a market cap of ± 11 bn                 & Almancora       shareholders
                                                                                                      MRBB
    (float: ± 3.3 bn)
                                                                      ± 38%         ± 16%
                                                                                                  ± 17%
                           Number 11 in
                            Euro ranking                            ± 26%                      100%    Gevaert
                                                                               Almanij                Private equity


                                                           Stock                          ± 78%           KBL
                                                           Market                                     Private bank
                                                                                       ± 68%
                                                                    ± 30%

                                                                                 KBC
                                                                            Bank & Insurance



                                                       n    Almanij is an investment company (of which
                                                            KBC is ± 75% of the assets) committed to
                                                            support KBC on the long-term
                                                       n    Core holders include the Ceragroup
                                                            (co-operative investment company), a
                                                            farmers association (MRBB) and a syndicate
                       As of end of 18 November 2003        of industrialist families, all of which KBC is a
                                                            major asset                                   5
                                                     KBC Bank & Insurance Group

               Dividend policy aiming steady
                                                                                           2003
                   and growing dividend


                                                       1998   1999    2000    2001     2002
n   Board of directors’ preference to
    maintain a steadily growing dividend      EPS      2.69    3.26    3.90    3.39    3.42
n   Gross dividend up every year over the
    past 5 years (at a CAGR of 9%)            DPS      1.09    1.23    1.42    1.48    1.52
n   Average payout: 40-45% (usually
    cash). Payout may be raised to keep     Payout     41%     38%     36%     44%     44%
    dividend stable in case of temporary
    drop in profit
                                            Yield     1.8%    2.1%    3.1%    3.6%    4.2%
                                              (*)

                                                      (*) Gross DPS versus average share price




                                                                                                 6
                             2003




Company profile

  Website: www.kbc.com

  Ticker codes: KBC BB (Bloomberg)
                KBKBT BR (Reuters)
                B:KB (Datastream)

  ISIN code: BE0003565737
                                                 KBC Bank & Insurance Group


                  Successful in core businesses                                  2003

                                                   KEY FIGURES:
n   Top bancassurer in Belgium:
                                                   Total assets: EUR ±210 bn
     l   3rd bank (market share: ± 22 %)
                                                   Net profit ‘02: 1.03 bn
     l   1st asset manager (31% in retail
         funds)                                    ROE ’02: 12.7 %
     l   3rd retail insurer (13% L&H, 9% P&C)      Headcount: ± 44 000
n   Successful expansion in the 5 most             Customers: ± 10 m
    converged countries in ‘Emerging
                                                   Credit rating: AA-, AA3, A+
    Europe’
     l   growth market of ± 65 mln
         inhabitants
     l   ± 3 bn capital invested
     l   prominent/leading position in banking
         in each country
n   Focused/niche activities in
    corporate and investment banking
    As investments in CE progressed,
    CIB activities have been downsized.


                                                     Share in allocated capital
                                                                                    8
                                                     (excl. goodwill)
                                                           KBC Bank & Insurance Group


              Leading player in Central Europe                                                      2003

        Banking                                                                     Insurance
Czech Republic:                                                             Czech Republic:
Market share: 18% (no 2)                                                    Life M share: 9% (no 5)
Total assets: 19 bn                                                         Non life M share: 4% (no 6)
Profit/ROE ‘02: 199m (16%)                                                  Assets/Profit ‘02: 0.6 bn/-12m

Slovakia:                                                                   Slovakia:
Market share: 6% (no 4)                                                     Life M share: 4% (no 6)
                                                                            Non life M share: 2% (no 8)
                                                                            Assets/Profit ‘02: 40m/-1m
Hungary:
                         30%
Market share: 12% (no 2)
Total assets: 5 bn                                                          Hungary:
Profit/ROE ‘02: 48m (13%)25%                                                Life M share: 2% (no 14)
                                                                            Non life M share: 4% (no 6)
                                                                            Assets/Profit ‘02: 67m/2m
Poland:
Market share: 6% (no 7)
Total assets: 6 bn                                                          Poland:
Profit/ROE ‘02: -82m (-17%)                                                 Minority interest (40%),
                                                                               agreement to acquire 51 %
                                                                            Life M share: 1% (no 9)
Slovenia:                                                                   Non life M share: 14% (no 2)
Minority interest (34%)                                                     Total assets: 1.1 bn
Market share: 45% (no 1)
Total assets: 9 bn
                                                                            Slovenia:
                                1998    1999     2000      2001   2002      Startup life business

                 share in group profit (left) and in allocated capital (right), excl. group items            9
                                                               KBC Bank & Insurance Group


               Successful financial track record                                                   2003
Financial track record ‘98-’02                          n   Gross revenue growth: 13 % CAGR
                                                        n   Life premium income doubled from 1.1 bn
                                                            in ’98 to 2.2 in ‘02 (bancassurance model)
                                                        n   Slowdown in cost efficiency: C/I up from
                                                            60 % in ’98 to 65 % in ’02. Although
                                                            merger synergies in Belgium arose,
                                                            acquisitions in CEE weighted on efficiency
                                                            (synergies still to materialize)
                                                        n    Since 2001:impact of the adverse
                                                             financial climate (cost of risk, value losses)
                                                        n   As a balance: EPS CAGR 6 %
   Gross operating (left), net operating income (mid)
                 and net profit (right)
                                                            19%
                                                            Commission

                     Revenue profile :
                     (9M ‘03)
                                                                              Insurance
                                                                              (technical and
                                                                              investment income)



                           Interest income,
                           banking                                           Trading income



                                                                           Other                              10
                                              KBC Bank & Insurance Group

Balanced credit portfolio                                                                2003

                                               Geographical breakdown
                                                                Other
                                                   US
                                                   6.9 bn

                                                                               Belgium
                                             W. Eur                            53.1 bn
                                             19.9 bn

          Sector breakdown
                                                   C.E.E.
                                                   16.9 bn




30 June 2003
Credit portfolio incl. corporate bonds and loans to banks, excl. reverse repo’s.            11
                                       KBC Bank & Insurance Group


              Performing asset manager                                   2003


                                                Breakdown of Belgian
    Assets under management (bn EUR)            retail funds:
                                                                         Equity: 12%
                                                        Other

                                  84                                              Bonds
            76     81      80                                                       &
                                                                                   MM:
                                                                                   16%

Belgium:
 85 %                                                                             Mixed:
                                                                                  12%
                                            Capital guaranteed:
                                            49%
Central
Europe:
                                                  Market share, retail   funds:
  5%
                                                   Belgium :             31%
                                                   Czech Republic :      23%
                                                   Slovak Republic:      11%
                                                   Hungary :             11%



                                                                                     12
                                               KBC Bank & Insurance Group


                            SWOT analysis                                         2003

Strenghts                                      Weaknesses
n   Prominent market positions in home         n   Still high cost/income ratio
    markets, both Belgium and CEE
                                               n   Cost reduction management is rather
n   Geographical/business diversification          difficult in Belgium
n   High performing asset management           n   Volatily related to level of gearing to
    and P&C insurance division                     equity markets
n   Unique bancassurance concept               n   CEE still a somewhat higher risk zone
n   Good overall profitability track               (although rapidly converging)
    recordand Very sound solvency levels       n   Lack of stability and scale in Poland
n   Stable core shareholders (long term)           (work in progress)

Opportunities                                  n   Moderate share liquidity

n   Revenue growth and barely tapped cost
    cutting potential in CEE                   Threats
n   Availability of excess capital             n   Consolidation wave in Europe, if any
n   Unexploited synergy within Almanij group
n   Relatively low share valuation

                                                                                             13
                               2003




Strategy overview

    Website: www.kbc.com

    Ticker codes: KBC BB (Bloomberg)
                  KBKBT BR (Reuters)
                  B:KB (Datastream)

    ISIN code: BE0003565737
                                          KBC Bank & Insurance Group


                             Group strategy                               2003


        KBC is a bancassurer, focussing on local clients (individuals
        and SME), in Belgium and selected countries in (Central) Europe


Key objectives                        Achieved up-to-date
n   Cross selling (bancassurance)     n   Premium income boosted (life premiums
    in Belgium                            doubled from 1.1 bn in ’98 to 2.2 in ’02
                                          at al level of 85 % sold via bank outlets.
                                          Bank distribution of P&C growing faster
                                          then via traditional channels)
n   Reducing banking costs            n   Cost synergies thanks to integrated IT-
    in Belgium                            infrastructure, reduced branches (-43%)
                                          and headcount (-12%)

n   Developing a second home          n   Solid franchise in the main 5 countries,
    market in CEE                         renewed IT-systems and bancassurance
                                          model gradually set up. Cost reduction
                                          programs in progress.


                                                                                   15
                                           KBC Bank & Insurance Group


                          Earnings drivers                               2003


             Future earnings drivers in Belgium


Key objectives                         Work in progress
n   Cross selling (bancassurance)      n   Bancassurance potential for SME (10%
    in Belgium                             market share vs 20-25 % in banking)
                                       n   Bancassurance potential for P&C (10%
                                           via bank channel vs 90 % in life)

n   Reducing banking costs             n   Cut of product complexity in retail
    in Belgium                             (reduction by 70 % considered)
                                       n   Outscourcing of processing (payments)
                                           and IT (lmited scale), ) stronger
                                           pooling of backoffices of Belgian
                                           subsidiaries and co-sourcing with other
                                           banks, e.g. within the Almanij group in
                                           the field of private banking
                                       n   Rationalisation of headquarter
                                           workspace and other non FTE expenses
                                                                                 16
                                            KBC Bank & Insurance Group


                           Earnings drivers                                 2003


             Future earnings drivers in Central and Eastern Europe


Key objectives                         Work in progress
n   Developing a second home           n   Penetration of banking and AM products
    market in CEE (more focus on           (deposits to GDP at 45%-80% of EU avg)
    commercial clout and operational   n   Sales of insurance products via bank
    efficiency)                            network (premium/capita <20% of EU)
                                       n   Business reorganising in CZ and PL
                                           -> 10-15% FTE downsizing by 2004
                                       n   Cross border cost-sharing (payments
                                           systems, IT procurement, equity
                                           research, etc.)
                                       n   Strenghening of internal governance
                                           model and central management structure
                                       n   If acquisition opportunities arise, meeting
                                           the 10% market share in HU (insurance)
                                           and PL (banking)

                                                                                    17
                                KBC Bank & Insurance Group


Demanding financial objectives                                2003

                                               Minimum
                                             targets 2005

  Cost/income ratio, banking                      58 %
  Combined ratio, P&C insurance    (*)            95 %
  Tier-1, banking                                  8%
  Solvency, insurance (**)                       200 %
  EPS growth (4y CAGR)                            10 %
  ROE, group                                      16 %
  ROAC
    Retail in Belgium                             16   %
    Central and Eastern Europe                    17   %
    Corporates                                    12   %
    Markets                                       18   %




                      (*) excl. re-insurance
                      (**) incl. non-realised capital gains      18
                                             2003




Year-to-date business highlights

                  Website: www.kbc.com

                  Ticker codes: KBC BB (Bloomberg)
                                KBKBT BR (Reuters)
                                B:KB (Datastream)

                  ISIN code: BE0003565737
                                    KBC Bank & Insurance Group


             Year-to-date business highlights                           2003

n   Increasing efficiency in        n   Clustering of retail branches
    Belgium
                                    n   Efficiency enhancement programs for the
                                        back office operations
                                    n   Outscourcing of transaction processing
                                        (payments) and IT (lmited scale)

                                    n   Reorganisation program in Poland and
n   Shift from external expansion       staff redcution in CR
    towards commercial clout and
    operational efficiency in       n   Instensifying cross-border initiatives in
                                        such areas as bank card technology
    Central and Eastern Europe
                                    n   Succesful start of bancassurance in
                                        Slovenia
                                    n   Strenghening management and controlling
                                        capacity at KBC HQ

n   Further downscaling of less-
    strategic areas                 n   Selling of retail activities in the
                                        Netherlands, broker-related consumer
                                        lending in Belgium, non-strategic
                                        operations in CEE (Ukraïn, Lithuania)

                                                                                    20
                                               2003




Year-to-date financial highlights

                   Website:     www.kbc.com

                   Ticker codes: KBC BB (Bloomberg)
                                 KBKBT BR (Reuters)
                                 B:KB (Datastream)

                   ISIN code:   BE0003565737
                                      KBC Bank & Insurance Group


                  Third Quarter Highlights                         2003
      In m EUR                                    + 15%
                                + 0%




                               - 5%                + 69%

Average quarter
     2002

                                                         - 15%




                  Relatively good performance (up 69 %) y
                                    -o-y
                                                                      22
                                                       KBC Bank & Insurance Group


                         Third Quarter Highlights                                   2003
n   Robust performance in Belgium
    l   Further improving level of costs in banking (ytd -5%)
    l   Pressure on interest margin reversed (Q/Q: 195 -> 210 bp)
    l   Low level of loan loss ratio (ytd 22 bp) and P&C (*) claims ratio
        (ytd 59 bp)
n   Satisfactory result in most CEE markets
    l   ROAC (*) banking in Czech (CR) / Slovak republics (SR): ytd 17%
    l   ROAC for banking in Hungary: ytd 19%
    l   Improved performance by insurance operations (still limited scale)
n   … but very poor performance of banking business in Poland
    (high loan loss provisions : 124 m in 3Q)




        (*)
               P&C : Property and Casualty insurance
        (**)
               Return on allocated capital
                                                                                       23
                                            KBC Bank & Insurance Group


         Banking, income development                                                2003
      9M 03
-1%                                    n   Interest income : ytd ä 2% organic growth
             Total income -2%              (margin : 6M 1.63% à 9M 1.71%)
                                       n   Commission income : strong growth
                                           (capital-guaranteed funds)
                                           Lower trading income due to lower FX income
              Gross income ytd         n
                                           and MtM of equity derivatives
                                       n   Considerable capital gains (ytd 196 m)
                                           on ‘free’ bond portfolio
      +16%
                                       n   One-off ‘other income’ recorded in 2Q 02
                                           and lower dividends

         - 13%               - 12%
                 - 33%
                         -30%




                              Excluding capital gains, stable gross operating
                                   income despite difficult climate in 1H

                                                                                         24
                                                    KBC Bank & Insurance Group


                Banking, expense development                                            2003
                                          n   Belgium :
       Cost/Income ratio 9M 03: 65%             l   Expenditures ytd : æ 5% (- 60 m)
              (65% for FY 02)                   l   Headcount reduction :
                                                    target of 1 650 FTE met in Oct 03
                Ytd expenses (m EUR)
                       2 782      2 757
                                                                                     9M 03:
            2 461                                                                     45 %
                                          n   Central and Eastern Europe :           Belgium
                                                l   Expenditures ytd: ä 1% (6 m)
                                                l   Headcount reduction :
                                                      - Czech Republic : æ 460 FTE
                                                        (48% of target)
                                                      - Poland : new target of
                                                        æ 1 000/1200 FTE



                                                                                        9M 03:
                                                                                        27 %
2001 excl. KB                                                                           CEE




                               Continuing cost control
                                                                                                 25
                                                        KBC Bank & Insurance Group


                         Cost control in Belgium                                          2003
n   Merger (almost) completed, full extent of cost savings in bottom-line as of 1H 04
n   Lower cost/income ratio ahead, thanks to:
     l   Greater use of bancassurance (acceleration in P&C and to SME segment)
     l   Reduction in product complexity in retail (possibly by up to 70%) (*)
     l   Outsourcing of transaction processing (payments) and IT (limited scale)
         (implementation in progress)
     l   Stronger pooling of back-office activities of Belgian group companies
     l   Various other co-sourcing scenarios being considered
     l   Screening of real-estate-related costs




         Although Belgium is a ‘mature’ market, further
                         improvement
                in performance can be expected


            (*)
                  e.g. by reducing the wide range of credit cards, travellers’ cheques,
                               mortgage loans, savings certificates, …                       26
                                         KBC Bank & Insurance Group


               Banking, loan provisions                                         2003

Loan loss ratio 9M 03: 0.60%
       (0.55 for FY 02)                                          Customer         Loss
                                                                 loan book        ratio
Quarterly loan loss provisions (m EUR)                            Sept. 03       9M 03
                                                                     (1)            (2)




                                                Belgium              49.0 bn      0.22%

                                                Hungary                3.7 bn     0.32%

                                                 CR / SR               5.9 bn     0.45%

                                                  Poland               4.0 bn     6.09%

                                            International            27.6 bn      0.51%

                                                    Total            90.3 bn      0.60%

                                                       (1)
                                                             Gross loans
                                                       (2)
                                                             Specific provisions - annualized



        Intensive clean-up of loan portfolio in Poland
                                                                                           27
                                           KBC Bank & Insurance Group


             Retail banking in Belgium                                  2003
 l      Ytd profit 145 m (ä 189%), ROAC up to 10% from 3%
 l      Growth in income : ytd ä 6%
        (strong commission income and rebound in interest income)
 l      Cost reduction : ytd æ 5%
 l      Provisions (38 m EUR) remain low (16 bp on RWA(*))



                                               +36%




                                                               Belgium
                                                               1st home market




        2003 has seen a turnaround in Belgian retail
on the back of robust commission business and cost savings
 (*)
                                                                                 28
       Risk -weighted assets
                                                             KBC Bank & Insurance Group

                     Banking in Central and
                                                                                                  2003
                        Eastern Europe
l   CR & SR : stable yoy in spite of pressure on margin, thanks to commission income
    and zero expense growth
l   Hungary : income and volume growth more than set off pressure on margin
l   Poland : difficult economic conditions and high loan loss provisions (195 m)


     In m           9M 02            9M 03              %           ROAC 03
     EUR(*)
     CR / SR          109              112            +3 %             18%
     Hungary           13               23           +77 %             19%
     Poland           -37             -138               -               -
                                                                                    Central Europe
     Slovenia          -               +5                -               -          2nd home market


           Satisfactory performance in Czech Republic,Slovakia
        and Hungary (though further improvement to be expected)
               Still basic restructuring work to do in Poland

                              (*)                                                                          29
                                    excl. minority interests, incl. 12 m provisions for KB related to 02
                                               KBC Bank & Insurance Group

                    Activities in Central and
                                                                             2003
                        Eastern Europe
n   Confidence in our strategy fundamentals :
     l Satisfying year-to-date results in most markets (incl. insurance),
       excl. banking in Poland
     l Within 6 months : all CEE affiliates (5 countries) operating in the EU

     l Common shared optimism regarding rebound of economic cycle in ‘04

n   Refocusing : from ‘external expansion’ to ‘improvement in performance’
n   Adjustment of group governance model to encompass CEE affiliates.
    Key issues :
     l Further increase in management and controlling capacity of KBC HQ

     l Improved organization of transfer of know-how to CEE

     l Strengthened central audit teams




                                                             Central Europe
                                                             2nd home market
                                                                                30
                                                   KBC Bank & Insurance Group

          Addressing the challenges in Poland                                    2003
ül    Capital base : strengthened (+ 666 m PLN (completed), KBC's stake up to 81%)

ül    Risk sensitivity : to be greatly reduced
     ü l Credit risk policies redefined and credit decision authority reduced (completed)
       l Cleaning up ‘historic’ loan book (195 m provisions ytd)
       l Improving risk control and risk management

 l    Cost base : to be further reduced
       l Centralizing back offices, strengthening HR and performance measurement
       l Reducing headcount (driven by new central IT system) by 1000/1200 FTE,
         real estate expenses (15-20 %) and other tangible costs (5-10%) by ‘04
       l Disinvesting from non-strategic activities (Ukraine, Lithuania, PKB, Pension Fund,…)

 l    Market position : to be improved on the retail market (sales growth 10-15 %)
       l Thorough customer segmentation in the nationwide network
       l Transfer of KBC product know-how (e.g., in the field of AM)
       l Acceleration of bancassurance efforts with WARTA Insurance




                                                                Central Europe
                                                                2nd home market          31
                                                    KBC Bank & Insurance Group


                 Asset Management division                                        2003

                                                     Breakdown of retail funds

l   Profit contribution : ytd 84 m (æ 4%)                                Equity: 11%
                                                          Other
l   New capital-guaranteed funds :                                                Bonds &
    ytd 105 new mutual/unit-linked funds
                                                                                  MM: 13%
l   AUM : ytd ä 5% to 84 bn from 80 bn            Capital-
      l   Retail funds (42 bn) : ä 4%             guaranteed:
                                                  48%                             Balanced:
      l   Private assets (13 bn) : ä 4%                                            12%
      l   Institutional & group assets (28 bn):
           ä 6%


                                                       Central
                                                       Europe:         Belgium:
                                                         5%             85 %


                      Profit contribution down slightly

                                                                                         32
                                                       KBC Bank & Insurance Group


        Corporate and investment banking 2 0 0 3
n   Corporate banking :                       n   Market activities :
    l   Profit contribution: ytd 140m æ 10%        l    Profit contribution: ytd 117 m ä 51 %
        (ROAC 9%)                                       (ROAC 14%)
    l   Cost decrease (æ 7%) due to strict         l    Very strong performance in money and
        cost control, mainly in Belgium /               capital market products
        Western Europe
    l   No repeat of 2002 one-off revenues         l    Equity trading: still weak (break-even
                                                        for KBC Securities at operating level)
    l   Provisions for problem loans
        (56 bp on RWA), mainly for the             l    KBC Financial Products : satisfactory
        electricity sector in the US                    result but negative MtM for equity
                                                        derivatives


           Profit contribution : corporate banking and market activities




                                                                                                 33
                       KBC Bank & Insurance Group


   Interim results at 30 Sep 2003                   2003




Highlights

     Performance, banking

                Performance, insurance

                                      Outlook




                                                       34
                                    KBC Bank & Insurance Group


                  P&C, underwriting result                          2003

          Premium income          Combined ratio
                                                         Excl R/I
                        784        99%
 Premiums                                  95%       94%
  ytd 15%         684
org. growth 614


                                                             Exceptionally
                                                               low level




             Very sound business, in ‘03 partly driven by
          upward trend in rates and in general by strong risk
                          and cost discipline                           35
                                             KBC Bank & Insurance Group


        Life business, underwriting result                                  2003
                         Quarterly net
                       premium income              9M 03: 1 991 m
                                                   1 369 m interest-guar.
                                                   622 m unit-linked
  Premiums
   ytd 9 %
organic growth
                              9M 02: 1816 m                                 9M 03:
                              1 050 m interest-guar.                         95 %
       9M 01: 1 230 m         766 m unit-linked                             Belgium
       299 m interest-guar.
       931 m unit-linked

                                                                            9M 03:
                                                                             5%
                                                                            Central
                                                                            Europe




         Very strong growth (bancassurance-driven)
                                                                                      36
                         KBC Bank & Insurance Group


Insurance, investment income                                    2003


                                                   9M 02     9M 03         D
                                Interest,
                                dividend,           347       347      +0%
                                rent


                                Capital gains
                                                    136        96     -30%
                                on shares (*)


                                Total               483       443      -8%




    Suffering from low bond yields
                 (*) incl. write-back from provision for financial risk
               (15m in ‘03)and excl. value adj. for unit-linked products
                                                                               37
                                              KBC Bank & Insurance Group


     Insurance, non-recurring items                                            2003


In m EUR                                           3Q 03         9M 03


Non-recurring result
  Value adjustments, shares                             -18           -108

  Transfer from equalization reserve                        -            92

  Non-recurring gains on securities                         -         122

  Transfer to provision for financial risks                7          -115

  Other                                                    -2             -8

Total non-recurring result                              -13              -17



       Value adjustments on shares offset by
               non-recurring income

                 Provision for financial risks, balance : 100 m EUR
                                                                                  38
                        KBC Bank & Insurance Group


   Interim results at 30 Sep 2003                    2003



Highlights

      Performance, banking

                 Performance, insurance

                                      Outlook




                                                        39
                                           KBC Bank & Insurance Group


                           Profit outlook                               2003


n   Interest rate environment and general financial climate
    have improved. Economic outlook is more favourable.
n   On the other hand,
    further loan losses in 4Q cannot be ruled out
    (credit review, Poland).
n   Profit ‘03 expectation : at least the ’02 level
    (based on current information and assumption of stable stock market)




                                                                           40
                  2003




Additional information
                                             KBC Bank & Insurance Group


    Year-to-date results, detailed overview 2 0 0 3
                                                                      Organic
m EUR                             9M 02         9M 03       D%
                                                                        D%
Gross operating income              4 979          4 872      - 2%         - 2%
  - banking                         4 338          4 231      - 2%         - 2%
  - insurance                         652            640      - 2%         - 3%
Administrative expenses            - 3 133        - 3 143    + 0%          + 0%
  - banking                        - 2 782        - 2 757      - 1%          - 1%
  - insurance                         -348           -380    + 9%          + 7%
Operating result                    1 846          1 729      - 6%          - 5%
  - banking                         1 556          1 474      - 5%          - 4%
  - insurance                          303            260   - 14%         - 14%
Loan loss provisions                 - 305          - 425
Value adjust., non-recurring,
extraordinary and other results     - 211               8

Pre-tax profit                     1 323          1 274       - 4%         - 3%
Taxes                               - 445          - 318
Minority interests                  - 130            - 96
Net profit                           747            860     + 15%         + 15%




                                                                                    42
                                        KBC Bank & Insurance Group


      Contribution per business, year-to-date 2 0 0 3
Net profit
in m EUR
                                              860
                  744           747
                                      -2%                  ROE banking :
                                                              11.1%


                                      +20%                ROE insurance :
                                                              16.3%


                                                             ROE Group:
                                                               13.2%




             Group result : 3/4 from banking, 1/4 from insurance
                                                                           43
                                          KBC Bank & Insurance Group


                 Year-To-Date Highlights                               2003
n   In banking : high commission income (y-o-y +16%)
    and in 3Q strongly improving interest income.
n   In insurance : high premium volume (y-o-y + 11%),
    but pressure on investment income.
n   Zero cost growth y.o.y. In banking : cost level down 1%.
n   Strong technical result in non-life : combined ratio 95.4%
    (excl. reinsurance : 93.8%).
n   Relatively high loan loss provisions (425 m).
n   Value impairments on shares (100 m, but offset).
n   Solid solvency : 8.6% (Tier 1 - bank) and 318% (insurance)




                                                                          44
                                                        KBC Bank & Insurance Group


  Main changes in scope of consolidation 2 0 0 3
            2002                                 2003                      2004         Impact (*)
           Q2       Q3       Q4         Q1     Q2          Q3        Q4      Q1
CSOB Insurance          Full
                    consolidation,
                 retroactively to 1Q

NLB Bank                                                                    E
                               Equity
                               method                                       X             +0.1%
                                                                            P
Ergo Insurance
                                            Full                            E
                                        consolidation                       C             +0.1%

                                                                            T
Krefima Bank                                      Deconsolidation
                                                  (previously full
                                                                            E
                                                                                          -0.4%
                                                   consolidation)           D
Warta Insurance                                                 (full consolidation,
                                                                      previously
                                                                  equity method)


           Limited net impact of changes in consolidation
                                                             (*) Impact on gross operating income    45
                                         KBC Bank & Insurance Group


      Group, key performance ratios                                   2003


                                     Sep 02      Dec 02        Sep 03

Cost / income, banking               64.1%        65.2%        65.2%

Combined ratio, insurance (*)        95.2%       101.4%        93.8%

Solvency (Tier 1), banking           8.3%         8.8%         8.6%

Solvency, insurance (**)             305%         320%         318%

Return on equity                     12.3%        12.7%        13.2%

Growth in EPS (y-o-y)                 +0%          +1%         +15%




             Getting closer to strategic objectives

   (*) Excluding reinsurance
   (**) Including unrealized gains
                                                                         46
                                                       KBC Bank & Insurance Group

               Areas of activity, profit contribution 2 0 0 3
Profit contribution (*) year-to-date
        Activity        m EUR       %D     ROAC    Headlines

                                                   -   Strong commission and premium income
                                                   -   Improving interest margin (2.1% in 3Q)
Retail, Belgium         328 m      ä 30%    15%    -   Cost reduction in banking (æ 5% y-o-y)
                                                   -   Low loan losses (16 bp/RWA) and low
                                                       combined ratio P&C (92 %)

Central Europe:          -28   m     -      - 2%   - Strong commissions and zero cost growth in CR
                                                     (although margin pressure and fewer one-offs)
 - banking in CR/SR      112   m    + 3%   +18%
                                                   - Strong income growth in banking in Hungary
 - banking in Hungary     23   m   + 77%   + 19%   - High loan losses in Poland (195 m)
 - banking in Poland    -138   m     -        -    - Improvement in insurance (though limited scale)

Asset management         84 m      æ 4%        -   - AUM up 5% vs Dec 02

                                                   - Successful cost control
                                                   - Less one-off income (CLOs) and higher loan
Corporate services      139 m      æ 11%     9%      losses (US energy)
                                                   - R/I out of the red

                                                   - Fixed income: very strong
Market activities       117 m      ä 51%    14%    - Equities: still weak but cost-cutting successful
                                                   - Derivatives: satfisfactory (suffered from MtM)


                        Strong rebound in Belgian retail.
                         High adverse impact of Poland.
                                                                     (*)
                                                                           Profit excluding minority interests   47
                         KBC Bank & Insurance Group


Interest spreads in Belgium, banking 2 0 0 3
  Interest margin             Spread on new loans




      Going forward, increasing market rates
            could fuel top-line growth
                                                      48
                                               KBC Bank & Insurance Group


                           Economic outlook                                  2003

           Popu-          Real                 10-y interest              CPI
           lation      GDP growth                  rate                 change

                    2002     2003e   2004e   Dec 03e   Sep 04e   2002   2003e    2004e

Belgium    10 m     0.7%     0.8%    1.9%     4.4%      4.8%     1.6%    1.5%    1.1%

Czech
           10 m     2.0%     3.0%    3.9%     4.5%      5.0%     1.8%    0.0%    2.2%
Republic

Slovak
           5m       4.4%     3.5%    4.2%     5.1%      5.4%     3.3%    8.2%    6.0%
Republic

Hungary    10 m     3.2%     2.0%    3.0%     7.3%      7.5%     5.3%    4.5%    6.5%


Poland     38 m     1.3%     3.1%    4.0%     5.0%      5.8%     1.9%    0.6%    2.2%




                                     Source : KBC Asset Management, November 2003

                                                                                     49
                                      KBC Bank & Insurance Group


Value adjustments, investment portfolio2 0 0 3


                 DJ Eurostoxx
                                                  125




                                                           -6



                                -35




                    -223                 -220


            Significant value adjustments
   in ‘02 and in 1Q 03 (offset in insurance business
                by non-recurring result)                           50
                                         KBC Bank & Insurance Group

Unrealized gains, investment portfolio 2 0 0 3

   In m EUR                     Dec 02        Sep 03        %D

   Banking
                                 1 742          1 784      +2%
    book
                 Bonds           1 630          1 597

                 Shares            113            187
  Insurance
    book                            82            174     + 112%

                 Bonds             497            434
                 Shares           -516           -359
               Real estate         101             99


  Balance of gains and losses

           Unrealized gains increasing,
     driven by upward trend of stock markets

                                                                      51
                                             KBC Bank & Insurance Group


                              Solvency                                    2003

           Banking business                 Insurance business
           (Tier 1)                         (Solvency margin)
In m EUR
                                          In m EUR


           8.8%   8.8%                               504%
                         8.6%
                                612 m
                                                                     318%
                                                            320%
                                3 868 m                                     668 m


                                                                            564 m
                                3 868 m
                                                                            564 m




            Solid solvency in both banking and insurance
                   (no double gearing and no DAC)
                                                                                52
                                       KBC Bank & Insurance Group


                       Solvency                                     2003

n   KBC Bank 1993 / 2003 mandatory convertible bond
     l Conversion, 30 Nov 2003 :
        - Capital increase: ca. 8.1 m new shares (*)
          (not dividend-entitled for ’03)
     l Impact :
        - Lower interest charges (12.2% for ‘03)
        - EPS ‘04 dilution, ca. 1.5 pp
        - Tier 1: ca. 30 bp
        - Free float : ca. + 1%




                         (*)
                               Based on outstanding MCB at 30 Sept. 2003
                                                                           53
                                     KBC Bank & Insurance Group


               Contact information                                2003



Investor Relations Office:
Luc Cool
Tel. +32 2 429 49 16
E-mail investor.relations@kbc.be


Visit www.kbc.com for the latest update on our company:
 l press releases and E-mail alert service

 l financial information, annual and quarterly reports

 l company background, strategy and governance related items




                                                                     54

								
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