KBC Group

Retail bancassurance and private banking on the Belgian market

April 2005Web site: www.kbc.com

Ticker codes: KBC BB (Bloomberg) KBKBT BR (Reuters)

ISIN code: BE0003565737

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Contact information

Investor Relations Office

Luc CoolNele KindtMarina Kanamori

Tel.: +32 2 429 49 16 investor.relations@kbc.com

Surf to www.kbc.com for the latest update.

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Disclaimer

This presentation is provided for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any security.

Although the statements of fact in this presentation have been obtained from and are based on sources that KBC believes to be reliable, KBC does not guarantee their accuracy, and any such information may be condensed or incomplete.

This presentation contains forward-looking statements with respect to our strategies and earnings development. By their nature, these forward-looking statements involve numerous assumptions, uncertainties and opportunities. The risk exists that these statements may not be fulfilled and that future results differ materially.

By receiving this presentation, each investor is deemed to represent that it is a sophisticated investor and possesses sufficient investment expertise to understand the risks involved.

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ING Financials Day - 18 April 2005

1. Introduction W. Duron

2. Retail bancassurance in Belgium F. Florquin

3. Private banking in Belgium F. Florquin

4. Synergies for private banking W. Duronwithin KBC Group

Introduction

Foto gebouw

1

6

BSC

H

BN

P PA

RIB

AS

BBVA

DEU

TSC

HE

BAN

K

SOCIE

TE

GEN

ERALE

ABN

AM

RO

CRED

IT A

GRIC

OLE

FORTIS

UN

ICRED

ITO

INTES

A B

CI

DEX

IA

SP I

MI

HVB

AIB

BIR

POP

BACA

MED

ERST

E

CO

M

NBG

CAP

EUR

BCP

AL

AN

BN

L

MPS

SAB

KB

C

Euroland top-30 banks, by market cap *

* DJ Euro Stoxx Banks constituents ranking by market cap, as at 14 March 2005

KBC Group : 24 bn euros

Benelux players have considerable scale

7

46%

24%

10%

7%11% 2%

KBC Group’s business portfolio

Although KBC has successfully expanded its operations in CEE, it primarily is a top bancassurer and asset manager in Belgium, its historical home market

Thanks to the merger with Almanij (March 2005), the private banking activities were expanded to include a Western European network. PB has become a more pronounced key focus

CEE

Capital markets

International SME/corporate

Europeanprivate banking

Revenue breakdown*

Belgium :- retail bancassurance- private banking- asset management- SME and corporates

Gevaert

* 2004 pro forma figures, excl. group items

8

0% 10% 20% 30%

Other

Argenta

ING

DEXIA

KBC

FORTIS

Client deposits

0% 10% 20% 30%

Other

ING

DEXIA

FORTIS

KBC

Mutual funds

0% 10% 20% 30%

Other

ING

KBC

AXA

ETHIAS

FORTIS

Insurance premiums

Belgian market, headlines

Market shares:

The banking landscape in Belgium is highly consolidated (80%held by top-4 banks)

The market growth in the field of wealth management is significant (high savings rate)

The market is highly receptive to cross-selling of AM & insurance products

KBC is a top-3 player, especially strong in the Northern region

31-Dec-03

9

92%72%

2001 2004

382

583

2001 2004

14%

19%

2001 2004

Return on capital

Cost/income ratio, banking

Profit contribution

Retail and private bancassurance *

100%93%

2001 2004

Combined ratio, non-life

Target 2007:sustained high level

Target 2007:high single digit CAGR

Target 2007:further down to low 60-ties

Target 2007:max 95%

over-the-cycle

* excl. European private banking

10

European private banking network

Netherlands:Theodoor GilissenAcquired in ’03 – participation: 100%

Germany:Merck Finck & CoAcquired in ’99 – participation: 100%

Switzerland:Kredietbank (Suisse)Historical presence

Italy:Fumagalli SoldanAcquired in ’01 – participation: 95%

Monaco:KB Luxembourg (Monaco)Historical presence

Luxembourg:Kredietbank LuxembourgParent company for European PB

France:KBL France Acquired in ’98 – participation: 100%

Spain:Banco UrquijoAcquired in ’98 – participation: 100%

Since ‘98, KBC Group (KBL) has developed a private banking network throughout Western Europe, anticipating further erosion of its offshore activities for a/o Belgian customers in Luxembourg

Private banking assets outside Belgium grew to 43 bn across the 10 countries

UK:Brown ShipleyAcquired in ’89 – participation: 100%

Belgium:KBC Private bankingPuilaetco private bankers (100% participation acquired in ’04)

Retail bancassurancein Belgium

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2

12

92%72%

85%68%

2001 2004

166

414216

169

2001 2004

14%

19%

7%

18%

2001 2004

Return on capital

Cost/income ratio

Profit contribution

Retail and private bancassurance, Belgium

100%93% 93%

100%

2001 2004

Combined ratio, non-life

Target 2007:sustained high level

Target 2007:high single digit CAGR

Target 2007:further down to low 60-ties

Target 2007:max 95%

over-the-cycle

* excl. European private banking

382

583

Core retailOther retail and private banking

Core retailRetail and private bancassurance

Core retailRetail and private bancassurance

Core retailRetail and private bancassurance

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Nice results 2004

In mio EUR2004

12m

Evolution

Abs. %

a.o. Savings & investments 1 132 +19 +2%

Lending 424 -12 -3%

Insurance 236 +32 +15%

Gross income 1 829 +66 +4%

Direct costs -811 +4 -1%

Allocated costs -439 +13 -3%

Operating expenses -1 250 +17 -1%

Provisions -11 +42 -80%

Pre-tax profit 568 +125 +28%

Net profit 414 +75 +22%

Core retail only:

How to achieve further growth ?

14

Sharp increase in productivity

Efficiencystrategy

100

93

116 115119

143

154

1998 1999 2000 2001 2002 2003 2004

+5% p.a.

+10% p.a.

Strong growth in revenue per FTE

Revenues per FTE, 1998 = 100

100 102

139

152

170

218

236

1998 1999 2000 2001 2002 2003 2004

+15% p.a.

Strong growth in revenue per branch

Revenues per branch, 1998 = 100

15

Cost-savings largely implemented

Efficiencystrategy

Spontaneous cost inflation

3

4 Integration of ICT platforms and of products and support services

Reduction in No. of branches: -680 or -45%

Cutback in branch FTEs: -1 300 or -18%

Spontaneous cost inflation

Up to 2004: significant decline in costs

Henceforth: upwards pressure on costs

1 344

1 295

1 250

+45estimate

-101

-10

-40

+57

2001 costs

2004 costs

2007 costs

Core retail only, cost trend, in m EUR

2

3

4

11

1

2

1

Target:cost growth below wage inflation rate

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Rather limited potential for further automation

Efficiency strategy

69.5%

82.3%

87.4%88.60%

90.9%93.3% 94.1%

60%

65%

70%

75%

80%

85%

90%

95%

100%

2001 2002 2003 2004

Debit transfers Cash withdrawals

?

Potential for further automation

Rate of automation

17

Strict cost control remains important

Efficiency strategy

Number of bank branchesper million inhabitants

611

537

514

427

371

289

275

245

219

200

Germany

Belgium

Italy

France

Switzerland

Japan

USA

UK

Sweden

Netherlands

Closely-knit network High wage costs

Source: Febelfin

1. Wage costs in Belgium are higher than in other European countries

2. Average level of education of branch staff is higher than in other European countries

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Core retail Belgium only Trend of impairments in credit portfolio

Write-downs vs. risk-weighted assets

0.23% 0.24%

0.09%

2002 2003 2004

Low over-the-cycle credit-loss charges

Target:<0.25%

over-the-cycle

Risk strategy

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Focus on revenue growth strategy

Revenue growth (*) in 2001-2004 period partly driven by positive pricing effects.

Revenue growth (*) in 2004-2007 period driven by positive volume effects

and negative price effects

1 564

1 829

+28

+47

+101

+89

2001 income

Savings &investments

Lending

Insurance (excl.S&I)

Other

2004 income

+5% p.a.

½ due to positive pricing effects

1 828

2 087

5

+67

+32

+165

Inkomsten 2004

Sparen &Beleggen

Krediet-verlening

Verzekeren(excl.S&B)

Overige

Inkomsten 2007

+5% p.j.

Margin pressure

Ambition:maintain

growth trend

Growth strategy

(*) Core retail Belgium only

Achieved+5% p.a.

revenue growth

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Growth in the savings & investments field

Growthstrategy

How to grow within a mature market?

2.1% 2.3% 2.8%3.5% 3.7% 3.9%

5.8%

Germany NL France EMU Belgium UK Spain

Market potential

Estimated nominal GDP growth rate

10.6%14.2%

Eurozone Belgium

3.4 3.3

5.3

2002 2003 2004

1

Attracting new funds

Proven performance

Savings rate New funds attracted – in bn

22 23 2528 28 29 29 30 31 31

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Market share of mutual funds

21

Growth in the insurance field

Growthstrategy

How to grow within a mature market?

1

Attracting new funds

2Insurance

High internal potential Proven performance

17% 4% 2%20%24%31%

69% 76% 80% 83% 96% 98%

Totalnon-life

Home Family Car Hospital Accident

% bank client households w/o product

% bank client households w/ product

8%5%

8%

12% 14%

3% 3%

6% 6% 5%

2000 2001 2002 2003 2004

Bank branches Tied agents

56%

34% 40%60%

bank x bank (> 3 of 6product areas)

bank x insurance

2000 2004

Premium growth, non-life

X-sell results

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Growth in the lending field

Growthstrategy

How to grow within a mature market?

1

Attracting new funds

2

Insurance3

Lending

100108

118128

2001 2002 2003 2004e

Total market – Mortgage loans

CAGR 9%

Source: NBB

Small business loans:

• Moderate growth trend, in line with nominal GDP growth (+4.2% in 2005)

• But, still additional growth potential via raising amounts of advances in current account (with higher margins) and increasing non-credit-linked revenues

High expectations for growth in retail lending

Mortage loans: strong growth on the back of:• steep rise in Belgian real estate prices• real estate prices still below level of other European markets

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Obstacles to growth

Growthstrategy

How to grow within a mature market?

1

Attracting new funds

2

Insurance

3

Lending

Sharper price competition !

85%

18%

16%

Pressure onmargins

Investments inadditionalservices

Slowdown ineconomic

growth

Mortgages

Small busniess loans

Threats to growth according to analystsNos. 1 & 2 based on ranking

Hardening credit-pricing cycle

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Would you recommend your bank to others?Yes, definitely + Yes, probably

80%

76%

71%

68%

KBC

Competitor A

Competitor B

Competitor C

Catalysts for growth

Growthstrategy

How to grow within a mature market?

1

Attracting new funds

2

Insurance

3

Lending

Enhancing customer satisfaction Customer satisfaction at KBC

1999 2000 2001 2002 2004 TargetTop-4 bancassurers only

Private banking in Belgium

Foto gebouw

3

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Business model in Belgium

KBC PB is a seperate channel for distribution of wealth management services to HNWI

Focus: customers with 1-5m of investible assets. Downflow of below-threshold clients to retail (> 65% are (ex-)entrepreneurs and owners of own business or practice; others are upper middle management/senior executives, heirs to a large fortune, etc.)

19 dedicated branches focused on onshore private banking; broad local market representation (in the Northern part of Belgium)

Network-led model; private banking under corporate brand with growth primarily through identifying and converting clients from the retail and corporate network

Full-service banking (in partnership with the retail business*) - broad range of wealth management products and services

Controlled open architecture: > 90% investment management in-house, with an emphasis on product design (structured products, particularly capital guaranteed products) and quantitative techniques

* PB clients are served by retail branches for their standard banking needs

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Leveraging links with retail and corporate branches

42%

19%

39%

Existing client relationships offer a high degree of opportunity

KBC is primary bank (e.g. SME)

KBC is second bank (e.g. SME)

Acquisition focus

Retail clie

nts

> 2.5 m

Retail clients

> 1 m

Acquisition costs

Other

prospects

Retail clients

< 1 m with

potential Prospects

known to

retail

branchesProspects

known

to corporate

banches

highlow

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Key performance figures

Growth of relationships base Growth primarily from retail trade-up*

* New clients with former retail relationship

100115

128108

2001 2002 2003 2004

85%

80%

86%

82%

2001 2002 2003 2004

CAGR 9%

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Key performance figures

7.6 7.9

9.5

12.5

2001 2002 2003 2004

22

13

41

56

2001 2002 2003 2004

67%

78%

56%49%

2001 2002 2003 2004

Client asset growth (bn)

Contribution (bn; pre-tax) Cost/income

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Key performance figures

Exits to competition

1.6% 1.6% 1,5%

2002 2003 2004

91%97% 94%

(Very) good

Yes

(Very) satisfied

How do you rate your

experience with PB overall?

Are you satisfied with your CRO’s

competence level?

Would you describe

your CRO as

proactive?

Customer satisfaction

Source: Annual customer survey 2004; response rate: 21% of all PB clients

Synergies for private banking within KBC Group

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Quick reminder

Until 31 Dec. 04:

As of 01 Jan. 05:

Almanij

KBCBank & Insurance

KBLEuropean Private Bankers

Gevaert

KBC Bank

KBC Insurance

KBCAsset Management

KBC Group NV

KBCBank

KBCInsurance

KBCAM

KBLEuropean Private Bankers

Gevaert

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KBC Group’s epb* today

Presence in 10 countries outside Belgium, multi-domestic positioning

No link with traditional banking network (contrary to the network-led model in Belgium)

Highly based on open architecture (though product penetration of in-house products to increase within new KBC Group)

* epb: European private banking

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174 181193

205

2001 2002 2003 2004

Net profit

Key financials of epb*

36 3438

43

2001 2002 2003 2004

Assets under management

In bn EUR

7.6% 8.4%10.0% 9.2%

2001 2002 2003 2004

Tier-1 ratio

15% 17% 18%21%

2001 2002 2003 2004

Return on equity

In m EUR (Lux GAAP)

Lux GAAPLux GAAP

CAGR +6% CAGR +6%

* Reminder: figures excl. KBC PB in Belgium

35

0

20

40

60

80

2005 2006 2007 2008 2009

Synergies within enlarged KBC Group

Note: ‘Synergy benefit’ described throughout as peak recurring annual increase in pre-tax bottom-line result vs. base business

Synergy benefit, in m (see note below)

Revenue

Cost + Cost Avoidance

Synergies via integrating epb with KBC PB (Belgium) and KBC AM

Total synergy programme of NPV 500 m (net of restructuring and capital costs, post- tax)

Estimated capital and restructuring costs are ca. 50m over 5 years

Recurring pre-tax benefits of 75 m (peak level), half of which can be realized by 2006

Cashflow positive every year 40% revenue and 60% cost (and cost

avoidance) benefits All synergies reach their peak by 2009

(some faster than others) Portfolio of 32 synergies, 19 ‘large’ and

13 ‘small’

KBC Group