contingent capital securities roadshow...contingent capital securities roadshow important...

January 2013

CONTINGENT CAPITAL SECURITIES ROADSHOW

Important information for investors (1/2)

1 1

• The information in this document has been prepared by KBC Bank NV (KBC Bank) solely for use at a presentation to be held in connection, inter alia, with a potential offering (the Offering) of Contingent Capital Securities (the Securities) by KBC Bank.

• This presentation is provided for information purposes only. This presentation does not constitute an offer or invitation to sell, or any solicitation of any offer to subscribe for or purchase any securities, and nothing contained herein shall form the basis of any contract or commitment whatsoever. Investors and prospective investors in the Securities of KBC Bank are required to make their own independent investigation and appraisal of the business and financial condition of KBC Bank and the nature of the Securities. Any decision to purchase Securities in the context of the Offering, if any, should be made solely on the basis of information contained in the prospectus published in relation to such Offering. No reliance may be placed for any purpose whatsoever on the information contained in this presentation, or any other material discussed verbally, or on its completeness, accuracy or fairness. This presentation does not constitute a recommendation regarding the Securities of KBC Bank.

• Any offer of Securities to the public that may be deemed to be made pursuant to this document in any EEA Member State that has implemented Directive 2003/71/EC (together with any applicable implementing measures in any Member State, the Prospectus Directive) is only addressed to qualified investors in that Member State within the meaning of the Prospectus Directive.

• A prospectus prepared pursuant to the Prospective Directive is intended to be published, which, if published, can be obtained in accordance with the applicable rules. A decision to purchase or sell our securities should be made only on the basis of a prospectus prepared for that purpose and on the information contained or incorporated by reference therein.

• In the event the Offering proceeds, investment in the Securities will involve certain risks. A summary of the material risks relating to the Offering will be set out in the section headed "Risk Factors" in the prospectus. There may be additional material risks that are currently not considered to be material or of which KBC Bank and its advisors or representatives are unaware.

• KBC Bank believes that this presentation is reliable, although some information is summarised and therefore incomplete. Financial data is generally unaudited. KBC Bank cannot be held liable for any loss or damage resulting from the use of the information.

• Forward-looking statements:

This presentation contains non-IFRS information and “forward-looking statements” relating to KBC Bank including with respect to the strategy, earnings and capital trends of KBC Bank, that are subject to known and unknown risks and uncertainties, many of which are outside of KBC Bank’s control and are difficult to predict, that may cause actual results to differ materially from any future results expressed or implied from the forward-looking statements. In this presentation, the words “anticipates,” “believes,” “estimates,” “seeks,” “expects,” “plans,” “intends” and similar expressions, as they relate to KBC Bank, are intended to identify forward-looking statements. Important factors that could cause actual results to differ materially from such expectations include, without limitation: the inability to obtain necessary regulatory approvals or to obtain them on acceptable terms; the economic environment of the industries in which KBC Bank operates; costs associated with research and development; changes in the prospects for products in the pipeline or under development by KBC Bank; dependence on the existing management of KBC Bank; changes or uncertainties in tax laws or the administration of such laws; changes or uncertainties in the laws or regulations applicable to the markets in which KBC Bank operates. All written and oral forward-looking statements attributable to KBC Bank or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements above. KBC Group does not intend, or undertake any obligation, to update these forward-looking statements.

Important information for investors (2/2)

2 2

• Much of the information in these slides relates to KBC Group NV (including KBC Bank and KBC Insurance NV) (KBC Group) and may not, therefore, be wholly relevant to the performance or financial condition of KBC Bank and its subsidiaries. Those interested in KBC Bank should not place undue reliance or attach too great importance to the information contained in these slides relating to KBC Group.

• This document and its contents are confidential and are being provided to you solely for your information and may not be retransmitted, further distributed to any other person or published, in whole or in part, by any medium or in any form for any purpose. The opinions presented herein are based on general information gathered at the time of writing and are subject to change without notice. KBC Bank relies on information obtained from sources believed to be reliable but does not guarantee its accuracy or completeness.

• This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order) or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as relevant persons). Any investment activity to which this communication may relate is only available to, and any invitation, offer, or agreement to engage in such investment activity will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

• Neither this presentation nor any copy of it may be taken or transmitted into, or distributed, directly or indirectly in, the United States of America (or to U.S. persons), its territories or possessions, Canada, Australia or Japan. This presentation is not a public offer of securities for sale in the United States. The Securities proposed in the Offering have not been and will not be registered under the U.S. Securities Act of 1933 (the "Securities Act"), or the laws of any state or other jurisdiction of the United States, and may not be offered or sold within the United States or to U.S. persons, absent registration or an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state laws. The Issuer does not intend to register any portion of the Offering in the United States or conduct a public offering of securities in the United States. The Securities are subject to U.S. tax law requirements. KBC Bank does not intend to register any portion of the proposed Offering under the applicable securities laws of the United States, Canada, Australia or Japan. Any failure to comply with these restrictions may constitute a violation of U.S., Canadian, Australian or Japanese securities laws, as applicable. The distribution of this document in other jurisdictions may also be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.

• By reading this presentation, each investor is deemed to represent that it understands and agrees to the foregoing restrictions.

3

Executive summary

3

• Strong bancassurance group with leading market positions in core geographies (Belgium and CEE) and high cross-selling ratios

• A leading financial institution in both Belgium and the Czech Republic¹

• One of the most advanced banks in the deleveraging process in Europe

• 22 of 25 EU mandated disposals have been signed or announced and government capital repayment already well under way

• Consistent, strong underlying profitability and robust organic capital generation

• Stable, conservative and retail-oriented business model with very modest wholesale funding needs and strong liquidity profile

• 82% LTD ratio at KBC Bank as of 9M12

• One of the best capitalised banks in Europe (pro forma Group CT1 ratio of 12.7%²)

• Capital position represents a significant buffer (5.7%) to the trigger ratio of the envisaged instrument (7% CT1/CET1 of KBC Group)

1. Please see page 6 for further details 2. Basel II 9M12 pro forma CT1 includes 1) the impact of the signed divestments of Absolut Bank, NLB and a full exit of Kredyt Bank, 2) the impact of the capital increase and the sale of treasury

shares and 3) the reimbursement of the remaining EUR 3bn Federal State aid (+ 15% penalty premium)

Strategy and business profile

Financial performance

Asset quality

Liquidity

Capital

Transaction overview

4 4

Contents

4

5 5

Overview of KBC Group

• Bancassurance group present in Belgium & CEE

• National champion, strongly embedded in local economies with leading market positions • Business focus on Retail, SME & Midcap clients • Unique selling proposition: in-depth knowledge of local markets and profound relationships with clients

• Integrated bancassurance business model • Strong value creator with good underlying results through the cycle • Integrated model creates cost synergies by avoiding overlap of supporting entities and generates added value

for our clients through a complementary and optimized product and service offering

• Strong capital and liquidity positions • Pro-forma T1 ratio of 14.8% in 9M12 at KBC Group • Estimated B3 CET1 of KBC Group at the end of 2013: 12.3% phased in (11.3% fully loaded), factoring in EUR

4.67bn notional repayment of State aid instruments by end 2013, well above the 10% internal target¹ • Continued strong liquidity position (82% LTD ratio at KBC Bank as of 9M12)

• Resilient business performance • Underlying net group profit of EUR 1,233m for 9M12, 1.5% of 9M12 risk weighted assets

• Momentum maintained on divestments and de-risking • Sales of NLB and Absolut Bank have been signed • GIIPS exposure down 67% since end of 2011 • P&L sensitivity to CDO positions significantly reduced thanks to de-risking activities

5

1. KBC press release as of 10-Dec-2012 – Group announced intention to maintain a fully loaded Basel 3 CET1 Ratio of 10% as of 01-Jan-2013.

Well defined core markets provide access to ‘new growth’ in Europe

6

1. Excluding Centea and Fidea 2. Including 55% of the joint venture with CMSS 3. Source: KBC data, January 2013

BE CZ SK HU BG

% of Assets

2011a

2012e

2013e SPAIN

FRANCE

BELGIUM

NETHERLANDS

GERMANY

CZECH REP SLOVAKIA

HUNGARY

BULGARIA

UK

IRELAND

ITALY

GREECE Macroeconomic outlook Based on GDP, CPI and unemployment trends Inspired by Financial Times

KBC Group’s core markets In Belgium and CEE-4

PORTUGAL

Rea

l GD

P gr

owth

out

look

fo

r cor

e m

arke

ts3

61%

14% 2% 3% 1%

Mar

ket s

hare

, as

of e

nd 2

011

BE¹ CZ SK HU BG

Loans and deposits

Investment funds

Life insurance

Non-life insurance

19% 20%10% 9% 3%

8% 6%2% 5%

13%

41% 31%10%

20%

2

16%7% 5% 3%

13%

+1.8% +1.7%+3.3%

+1.6% +1.7%

(0.2)% (1.1)%

+2.5%

(1.2)%

+0.8%

+0.6% +0.0%

+2.0%+0.5%

+1.6%

7

Overview of key financial data at 9M 2012

7

• Market cap (03/01/13): EUR 10.3bn

• Underlying profit: EUR 1.2bn

• Total assets: EUR 270bn

• Total equity: EUR 18bn

• T1 ratio: 15.3%

• CT1 ratio: 13.4%

S&P (Dec 2012) Moody’s (Jun 2012) Fitch (Jul 2012)

Long-term A- (Positive) A3 (Stable) A- (Stable)

Short-term A-2 Prime-2 F1

Contingent Capital Securities [BB+] expected NR NR

KBC Group

Credit ratings of KBC Bank

• Underlying profit (Bank and AM): EUR 0.9bn¹

• Total assets: EUR 240bn

• Total equity: EUR 12bn

• T1 ratio: 12.8%

• CT1 ratio: 10.6%

KBC Bank KBC Insurance

• Underlying profit: EUR 0.4bn

• Gross earned premium: EUR 2.4bn

• Non-life GWP: EUR 1.3bn

• Life GWP: EUR 3.6bn

• Combined operating ratio: 90%

• Solvency ratio: 365%

1. Excl. KBL epb and holding company eliminations

114.8

128.7

140.0

147.0

155.3

143.4

132.0

126.3

111.1

101.8

End 2004

End 2005

End 2006

End 2007

End 2008

End 2009

End 2010

End 2011

End 9M12

End 9M12 Pro

Forma¹

8

RWA reduced by more than initially planned

KBC Group risk weighted assets (in EUR bn)

-34%

-53.5bn EUR

KBC FP Convertible Bonds KBC FP Asian Equity Derivatives KBC FP Insurance Derivatives KBC FP Reverse Mortgages KBC Peel Hunt KBC AM in the UK KBC AM in Ireland KBC Securities BIC KBC Business Capital Secura KBC Concord Taiwan KBC Securities Romania KBC Securities Serbia

Organic wind-down of international MEB loan book outside home markets

Centea Fidea Warta KBL European Private Bankers Zagiel Kredyt Bank NLB Signed Absolut Bank Signed

• 34% reduction in risk weighted assets between the end of 2008 and 9M 2012 due in large part to divestment activities

• Divestments of KBC companies have taken place on large scale since 2009: >20 entities

Select Finalised Divestments

1. Including the effects of Kredyt Bank, NLB and Absolut Bank divestments



Asset quality

Liquidity

Capital


9 9

Contents

9

Underlying earnings capacity remains strong through crisis

10

Note: Amounts in EUR m for KBC Group 1. Pre-impairments 2. FY11 with neutralisation of impact of 5-5-5 bonds

Reported net profit

Underlying net profit Underlying gross operating income¹

Excl. exceptional items Excl. exceptional items and cyclical effects of credit

provisions

3,430 3,281

-2,484 -2,466

1,860

13 372

FY06 FY07 FY08 FY09 FY10 FY11 9M12

Losses on non-core structured credit

3,762 4,317

3,581 4,223 3,912 3,830

2,560

FY06 FY07 FY08 FY09 FY10 FY11² 9M12

1,098

290 96 220 96

2,548

3,143

2,270 1,724 1,710 1,800

1,233

FY06 FY07 FY08 FY09 FY10 FY11 9M12

Impairments Greek Govt. Bonds Impact new FX law Hungary Impact 5-5-5 product One-off impairments for Bulgaria

0.8

0.1 0.1

1.1 1.1

1.4

1.1 1.1 1.1 1.0

FY05 FY06 FY07 FY08 FY09 FY10 FY11

0.21

0.02

0.11

0.38

0.25

0.34 0.34

FY08 FY09 FY10 FY11

0.3

0.1 0.1 0.1

0.3 0.4

0.6 0.5

0.2

0.6 0.6

FY05 FY06 FY07 FY08 FY09 FY10 FY11

Satisfying FY results in home markets

11 Note: Amounts in EUR bn

Underlying net profit Belgium (retail) Underlying net profit CEE

Underlying net profit Merchant Banking (BE +Intl) (affected by Ireland) Underlying net profit MEB excluding Ireland

Consistent performer Consistent performer

0.8 0.9 1.0

0.5

0.3

0.1

-0.1 FY05 FY06 FY07 FY08 FY09 FY10 FY11

2011 ROAC: 11% 2011 ROAC: 27%

Consistent performer

Impairments Greek Govt. Bonds Impact 5-5-5 product Impairments Greek Govt. Bonds Impact new FX law Hungary One-off impairments Bulgaria

Impairments Greek Govt. Bonds Impact 5-5-5 product MEB underlying net profit excluding Ireland



Asset quality

Liquidity

Capital


12 12

Contents

12

2.7% 2.5% 2.9% 2.8% 3.0% 3.2% 3.3% 3.3% 3.8% 3.9% 4.1%

4.0% 4.1% 4.8% 5.2% 5.6% 6.4% 7.1%

7.8% 9.1% 9.5%

10.1%

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

13 13

Loan book credit quality

13

NPL excluding Ireland NPL including Ireland

Belgian NPL Progression

CEE NPL Progression

MEB NPL Progression Group NPL Progression

Loan Book Overview • Customer loan book: EUR 131bn at end 9M12

• 41% residential mortgages

• 3% consumer finance

• 11% other retail loans

• 46% SME/corporate loans

• Largely sold through own branches

• Total Group NPL at 5.5% at end 9M12

• 5.5% in CEE and 1.6% in Belgium

• NPL coverage ratio for KBC Group at 61% at end 9M12 (68% in CEE)

3.6% 3.7% 4.0% 4.1% 4.2% 4.3%

4.6% 4.9%

5.2% 5.3% 5.5%

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

1.6% 1.5% 1.5% 1.5% 1.6% 1.5% 1.6% 1.5% 1.5% 1.5% 1.6%

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

4.6% 5.2% 5.6% 5.6% 5.7% 5.3% 5.7% 5.6% 5.6% 5.6% 5.5%

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

Very low loan losses in Belgian operations

14

Note: Credit cost ratio is the amount of losses incurred on troubled loans as a % of total average outstanding loan portfolio 1. The high credit cost ratio at CEE is attributable entirely to Bulgaria (very illiquid domestic real estate market) and K&H Bank (impact of new law on FX mortgages) in 2H11 2. The high credit cost ratio at Merchant Banking is due in full to KBC Bank Ireland 3. Credit cost ratio fell to 0.63% in 9M12 (from 0.82% in FY11). Excluding KBC Bank Ireland, the credit cost ratio stood at a very low 0.27% in 9M12

9M12 credit cost

ratio

FY 2011 credit cost

ratio

FY 2010 credit cost

ratio

FY 2009 credit cost

ratio Average

1999-2010 Peak

1999-2010

Belgium 0.06% 0.10% 0.15% 0.15% 0.16% 0.31%

CEE 0.40% 1.59%¹ 1.16% 2.11% 1.05% 2.75%

Merchant Banking 1.38%² 1.36%² 1.38%² 1.19% 0.55% 1.38%²

Group Centre 0.85% 0.32% 1.17% 1.58%

Total 0.63%³ 0.82% 0.91% 1.11% 0.45% 1.11%

Government bond portfolio (KBC Group)

• Notional investment of EUR 49bn in government bonds (excl. trading book) at end 9M12, primarily as a result of a significant excess liquidity position and the reinvestment of insurance reserves into fixed-income instruments

• GIIPS exposure down by 67% since end of 2011, to EUR 1.6bn carrying value as of 9M12

15

End 2010 End 2011 End 9M12

Belgium 45%

Czech Rep. 14% Poland

5%

Hungary 4%

Slovakia 2%

Italy 10%

France 5%

Spain 4%

Germany 2%

Austria 1%

Greece 1%

Nether-lands 1%

Ireland 1% Portugal

1%

Other 4%

Belgium 44%

Czech Rep. 15%

Poland 5%

Hungary 4%

Slovakia 2%

Italy 5%

France 7%

Spain 4%

Germany 3%

Austria 2%

Greece 1%

Nether-lands 1%

Ireland 1%

Portugal 0%

Other 6%

Belgium 49%

Czech Rep. 17%

Poland 6%

Hungary 6%

Slovakia 3%

Italy 2%

France 6%

Spain 0%

Germany 3%

Austria 1%

Greece 0%

Nether-lands 1%

Ireland 1%

Portugal 0%

Other 5%

Total: EUR 51bn Total: EUR 49bn Total: EUR 60bn



Asset quality

Liquidity

Capital


16 16

Contents

16

A solid liquidity position driven by a loyal deposit base throughout the crisis

17

1. Excluding all the entities earmarked for divestment in Group Centre: KBL epb, ADB, KBC Deutschland, KBC Banka, Absolut Bank and Kredyt Bank 2. Excluding Centea (retroactively adjusted) 3. Excluding Kredyt Bank and Absolut Bank (items earmarked for divestment in Group Centre)

• KBC Bank continues to have a strong retail/corporate deposit base in its core markets – resulting in a stable funding mix with a significant portion of the funding attracted from core customer segments & markets

• LTD ratio of 82% at KBC Bank at the end of 9M12

• Improvement in LTD from 94% at FY 2011 is the result of strong deposit growth in retail/corporate and a recovery in the more volatile institutional deposits after the decrease in 4Q11 – (at that time due to a downgrade of our short-term rating by S&P and the risk aversion to the European market in general)

• The downgrade of our Moody’s ST and LT rating in June 2012 had no substantial impact on the funding profile

100%

72% customer driven 64% 66% 64% 70% 69% 72%

8% 7% 7% 7%

3% 3% 8% 7% 8% 8%

9% 10% 10% 8% 8%

7% 7%

8%

-4%

5% 5% 5% 9% 3% 14% 7% 8% 3% 3% 4%

FY07 FY08 FY09 FY10 FY11 9M12

Funding from customers Certificates of deposit Total equity Debt issues placed at institutional relations Net secured funding Net unsecured interbank funding

82%

58%

76%

KBC Bank¹ Belgium² CEE³

Funding mix 9M 2012 LTD ratios

Liquid asset buffer more than double short term funding needs

18

1. According to IFRS5, the situation at 28/09/2012 excludes the remaining divestment entities as of 9M12 (Absolut Bank, Kredyt Bank, KBC Deutschland, KBC Banka, ADB, KBL) Excluding Centea (retroactively adjusted)

2. Graphs are based on Note 18 of KBC’s quarterly report, except for the ‘available liquid assets’ and ‘liquid assets coverage’, which is based on the Treasury Management Report of KBC Group

The liquid asset buffer increased substantially in comparison with the end of June 2012, due to the following factors:

• Increasing investments in highly liquid assets and positive MtM

• Automation of the credit claims pledging process allowing KBC to pledge more than EUR 4bn worth (after haircuts) of loans at National Bank of Belgium

• Substantial increase in total amount of unencumbered assets (less secured funding)

Therefore, the already strong liquidity position has improved further as:

• Unencumbered assets are more than double the amount of the net recourse on short-term wholesale funding

• Funding from non-wholesale markets is stable funding from core customer segments in our home markets

18.7 16.6

18.0 18.7

33.8 32.1

42.6

50.3

181.0% 193.0%

237.0%

269.0%

FY2011 1Q12 2Q12 3Q12

EUR

bn

Net Short Term Funding Available Liquid Assets Liquid Assets Coverage

Short term unsecured funding KBC Bank vs. liquid assets as of end September 20121,2

19

Low refinancing need compared to peers

Note: the graph on top left -hand side does not include the ECB LTRO for a total amount of EUR 8.7bn (3y maturity)

Breakdown funding maturity buckets senior vs. subordinated & callable vs. non-callable – as of 9M12 5Y Credit Spreads vs. iTraxx Senior Financial Index

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2012 2013 2014 2015 2016 2017 2018 2019 2020 >=2021

Amou

nt M

atur

ing

(in E

UR

m e

qv)

Maturity Senior Funding Non-Callable Subordinated Funding Non-Callable

Senior Funding Callable Subordinated Funding Callable

Debt Maturing 2013 / Total Assets as of H1 2012¹

1. Source: Bloomberg, company reports

0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%

Intesa SHB Rabobank Nordea BBVA DnB Bank ABN AMRO CASA Lloyds KBC Bank BNP Paribas Barclays

106

142

0

50

100

150

200

250

300

350

400

Mar-12 May-12 Jul-12 Sep-12 Nov-12

bps

KBC 4.500% 03-2017

ITRAXX Senior Financial 5yr



Asset quality

Liquidity

Capital


20 20

Contents

20

5.5%

7.5%

9.3% 10.6%

13.4% 12.7% 12.3%

15.3% 14.8%

FY11 9M12 9M12 pro forma²

CT1 excl. State capital CT1 incl. State capital T1

Strong capital position at KBC Group

21

• Strong T1 ratio of 15.3% (14.8% pro forma) at KBC Group as at end 9M12

• Pro forma CT1 ratio – including the effect of the sale of Kredyt Bank, Absolut Bank and NLB, the capital increase and the sale of treasury shares, and the reimbursement of the remaining Federal State aid – of 12.7% at KBC Group

1. Source: Company filings as of September 2012 (Standard Chartered as of June 2012). Capital ratios under Basel 2.5 2. Basel II 9M12 pro forma CT1 includes 1) the impact of the signed divestments of Absolut Bank, NLB and a full exit of Kredyt Bank, 2) the impact of the capital increase and the sale of treasury

shares and 3) the reimbursement of the remaining EUR 3bn Federal State aid (+ 15% penalty premium) 3. Excluding transition rules 4. As per press release of 26 November 2012 – pro forma for repayment of EUR 1.125bn to Dutch State, including the sale of ING Direct Canada

Capital position at 9M12 Favourable peer group comparison1

18.1%

16.5%

14.7%

12.7%

10.7%

11.8%

11.2%

11.6%

10.4%

12.2%

12.2%

11.4%

11.7%

10.3%

11.1%

9.3%

10.7%

10.4%

10.4%

10.8%

2.1%

2.3%

3.8%

2.1%

3.5%

2.4%

2.5%

1.8%

3.0%

1.1%

1.1%

1.8%

1.4%

1.7%

0.8%

2.3%

0.6%

0.9%

0.4%

UBS

SEB

CS

KBC

DB

ING

Barc

St. Ch.

RBS

CB

Nordea

BNPP

HSBC

SG

ISP

CASA

UCG

SAN

Erste

BBVA

Core Tier 1 as of Sep-12 Tier 1 as of Sep-12 Avg: 11.9% Avg: 13.7%

3

2

3

4

20.2%

18.9%

13.4%

18.5%

14.2%

14.2%

14.8%

13.7%

13.4%

13.3%

13.3%

13.2%

13.1%

12.0%

11.9%

11.6%

11.3%

11.2%

10.8%

10.8%

Assessment of State aid position repayment schedule

22 22

• KBC announced the accelerated full repayment of EUR 3.0bn of State aid to the Belgian Federal Government in December 2012, approved by the National Bank of Belgium and its intention to accelerate repayment of EUR 1.17bn of State aid to the Flemish Regional Government in the first half of 2013

• KBC is committed to repaying the remaining outstanding balance of EUR 2.33bn issued to the Flemish Regional Government in seven equal instalments of EUR 0.33bn (plus premium) over the 2014‐2020 period (KBC however has the option to further accelerate these repayments)

Belgian Federal

Government

Flemish Regional

Government

EUR 3.5bn EUR 3.0bn

EUR 0.5bn1

EUR 3.0bn2

Jan 2012 Dec 2012 1H 2013 2014-2020

Full Repayment

1. Plus 15% premium amounting to EUR 75m 2. Plus 15% premium amounting to EUR 450m 3. Plus 50% premium amounting to EUR 583m 4. Plus 50% premium amounting to EUR 1,165m

Total remaining

amount EUR 7.0bn EUR 6.5bn EUR 3.5bn EUR 2.33bn EUR 0

EUR 3.5bn EUR 3.5bn EUR 3.5bn EUR 2.33bn

EUR 1.17bn

EUR 2.33bn

To be repaid in seven equal instalments of EUR 0.33bn

(plus premium)

3

4

107118

Estimated CET1 at end 2013 Phased in B31 (For illustrative purposes only)

23

RWA impact (EUR bn)

1. Given remaining State aid being part of CET1 as agreed with local regulator 2. Based on average earnings consensus estimates of 9 sell-side equity analysts collected by KBC during the period from 16 November 2012 to 21 November 2012 of EUR 1,582m for 2012 and

EUR 1,503m for 2013 and 4Q12 trading update in ABB press release on 10-Dec-2012 3. Remaining divestments include Absolut Bank, NLB, KBC Bank Deutschland, Antwerp Diamond Bank, and KBC Banka 4. Of which includes EUR 12.4bn of RWAs, as calculated under Solvency 1, in relation to the consolidation of KBC Insurance under the building block method

B3 impact at numerator level (EUR bn)

• Phased in B3 CET1 ratio of approx. 12.6% at end 9M12

• Phased in B3 CET1 ratio of approx. 12.3% at end 2013

2013e Other

1

Remaining divestments3

-5

Kredyt Bank

-7

9M12, including shift to IRBA and Basel 3

Reimbursement 4.2bn EUR

principal YES

-4.2

Consensus earnings 4Q12-

FY20132

1.8

Capital increase and sale of

treasury shares

1.6

CT1 end 9M12

14.9 13.1

Estimated CET1 at end

2013

Recuperation of DTAs

0.3

Penalty on reimbursed

principal YES + dividend/coupon

YES

-1.2

4



Asset quality

Liquidity

Capital


24 24

Contents

24

EUR 1,258m

EUR 736m

EUR 884m

FY10 FY11 9M12

Und

erly

ing

prof

it at

trib

utab

le to

KB

C

Ban

king

and

Ass

et

Man

agem

ent2

KBC Group structure

25

1. “KBC Group” means KBC Group NV and its subsidiaries for so long as KBC Group NV is the parent undertaking of the Issuer and if KBC Group NV is no longer parent undertaking of the Issuer, all references herein to KBC Group shall be deemed to be to the Issuer and its subsidiaries and all references to KBC Group NV shall be to the Issuer

2. Excl. KBL epb and holding company eliminations

KBC Group1

KBC Bank NV KBC Insurance NV

100% 100%

EUR 404m EUR 364m EUR 369m

FY10 FY11 9M12

Und

erly

ing

prof

it at

trib

utab

le to

KB

C

Insu

ranc

e

Issuing Entity

Trigger Level (Consolidated Basis)

Transaction summary1

26

1. This is only a summary. Full terms are disclosed in Prospectus 2. Compliance with applicable regulatory requirements, including the prior approval of the National Bank of Belgium (if required) and no Trigger Event having occurred 3. “KBC Group” means KBC Group NV and its subsidiaries for so long as KBC Group NV is the parent undertaking of the Issuer and if KBC Group NV is no longer parent undertaking of the Issuer, all references herein

to KBC Group shall be deemed to be to the Issuer and its subsidiaries and all references to KBC Group NV shall be to the Issuer

26

Issuer • KBC Bank NV (“Issuer”)

Securities • USD[●]mm Contingent Capital Securities (“Securities”)

Issuer Ratings • A3/ A-/ A- (Moody’s, S&P, Fitch)

Instrument Rating • Expected to be rated BB+ by S&P

Regulatory Treatment • Tier 2

Currency / Format / Offering • USD / Reg S (Not to be offered to any investors in the US)

Maturity • [10] years. Issuer call option (one-time) [5] years after the issue date (“Reset Date”), subject to certain conditions2

Issuer Call Date • [●] 2018 (one-time) with not less than 15 nor more than 30 days' notice to the holders, subject to certain conditions2

Ranking • Subordinated, pari passu with existing dated tier 2 notes

Coupon

• Fixed rate of [●]% per annum until (but excluding) the Reset Date • From (and including) the Reset Date, reset to a fixed rate of [●]% per annum based on the then prevailing 5-year USD mid-swap rate + the initial margin of [●] bps. No

step-up • In each case payable semi- annually • 30/360 day count basis

Redemption for Taxation Reasons • Callable at par at any time subject to conditions for redemption1 if the Issuer has or will become obliged to pay additional amounts

Redemption Upon a Regulatory Event • Callable at par at any time subject to conditions for redemption1 if the Securities are (or will be) fully excluded from Tier 2 capital of the Issuer or KBC Group

Contingent Write Down

• Upon the occurrence of a Trigger Event, and following a Trigger Event Write-down Notice the full principal amount of each Security will automatically be written down to zero

• A Trigger Event will be deemed to have occurred if KBC Group’s3 CET1 Ratio as of any Quarterly Financial Period End Date (available on www.kbc.com under “Investor relations”) or Extraordinary Calculation Date is less than 7.00 per cent provided that a Trigger Event shall not be deemed to have occurred if a Regulatory Event has occurred and is continuing

• CET1 Ratio means the ratio of CET1 Capital (core tier 1 capital before the CRD IV Adoption Date and common equity tier 1 capital on or after CRD IV Adoption Date) to RWA

• RWA means the risk weighted assets of KBC Group on a consolidated basis (excl. the risk weighted assets relating to the insurance undertakings) plus the risk weighted equivalent amount in respect of each insurance undertaking which will be equal to a) if calculated before the CRDIV Adoption Date, the amount determined by applying the risk weighting to the minimum capital required for each insurance undertaking and b) if calculated after the CRDIV Adoption Date, the higher of i) the amount determined by applying the risk weighting to the minimum capital required for each insurance undertaking and ii) the amount determined by applying the risk weight applied to the equity participations in such insurance undertakings

Point of Non-Viability • None, the Securities do not contain a contractual provision which requires them to be converted into equity or written off if the Issuer is determined to be non-viable • However investors should note the risk factors in the Prospectus entitled “Statutory loss absorption”, “Basel III Reforms- Loss absorbency at the point of non-viability”,

“Future bank recovery and resolution regimes and intervention measures available to regulators” and “Change of law”

Governing Law • English law, save for Form, Status and Meeting of Holders and Modification which will be governed by Belgian law

Denominations • USD200k + 200k

Listing • Luxembourg, prospectus approved by FSMA

ECNs (c. GBP 8.3bn,

4.564% - 16.125%)

BCNs

(USD 2.0bn, 7.875%) Tier 1

(USD 2.0bn, 8.400%)

Tier 2

(USD 2.0bn, 7.250%) Tier 2

(USD 3.0bn, 7.625%) Tier 2

Issue Date 1-Dec-2009 24-Feb-2011 9-Nov-2011 22-Feb-2012 21-Nov-2012 NA

Maturity 10 years – Perpetual 30 years Perpetual 10 years 10 years 10 years

Coupon Must Pay Must Pay Discretionary, Non-cum Must Pay Must Pay Must Pay

Basis of Trigger Basel II Core Tier 1 (static) / RWAs

Basel III (Transitional) CET1 / RWAs

Equity Capital Ratio (Equity / RWAs)




Loss Absorption Mechanism

Full Conversion (Fixed)

Full Conversion (Variable)

Pro-rata Permanent Write-down

Full Permanent Write-down



PONV Approach None Contractual Risk factor Contractual Risk factor Risk factor

Current Ratings (M/S/F) Ba3 or B1 / BB+ or BB / BB+ NR / NR / BBB- NR / NR / BBB+ NR / BBB- / BBB NR / BBB- / BBB- NR / [BB+] / NR

Earnings Buffer (Net Income / RWA)1 0.92% 1.74% 0.91% 2.10% 1.24% 1.48%

Last Reported Capital Buffer / Annualised Total Income5

1.1 x 0.7x 1.0x 0.7 x 0.6x 0.8 x

Capital Buffer at Issue (Buffer to Trigger)

Last Reported Capital Buffer (Buffer to Trigger)

Transaction comparison (For illustrative purposes only)

27 27

Note: Capital position at issue and last reported capital position does not include impacts of Basel III transition Source: Transaction documentation, company financials as of September 2012, Bloomberg, IFR. Last reported capital position as of Sep 2012 except Rabobank (June 2012) 1. IBES 2013 net income estimates and reported RWAs as of Sep-2012 (Net Income for Rabobank based on LTM net income as of Jun-2012 and net income for KBC based on 2013 earnings consensus of 9 sell-side

equity analysts of EUR 1,503m as published on 12-Dec-2012, RWA for KBC based on Sep 2012 RWAs of EUR 101.8bn pro forma for the impact of divestments of Absolut Bank, NLB and a full exit of Kredyt Bank) 2. Pro-forma as of 30 June 2009, including rights offering after expenses and GAPS payment and excluding impact of any equity generated as part of exchange offers (Source: Investor presentation) 3. Transitional (phased-in) CET1 ratio as of Dec-2011 for capital position at issue and as of Sep-2012 for current capital position 4. Basel II 9M12 pro forma CT1 includes 1) the impact of the signed divestments of Absolut Bank, NLB and a full exit of Kredyt Bank, 2) the impact of the capital increase and the sale of treasury shares and 3) the

reimbursement of the remaining EUR 3bn Federal State aid (+ 15% penalty premium) 5. Annualised 9M total income as of Sep-2012 (Rabobank based on annualised 6M total income as of Jun-2012 ). Total income means total underlying income for Lloyds, net revenue for Credit Suisse, total income for

Rabobank, total operating income for UBS, total income net of insurance claims for Barclays and total income for KBC

Trigger 5.0% Trigger 7.0% Trigger 8.0% Trigger 5.0%

Buffer 6.5% Buffer 7.7% Buffer 6.5% Buffer 8.6%

11.5% 14.7% 14.5% 13.6%³

Trigger 5.0% Trigger 7.0% Trigger 8.0% Trigger 5.0% Trigger 7.0% Trigger 7.0% Buffer 3.6%

Buffer 5.2% Buffer 6.0% Buffer 5.8% Buffer 4.2% Buffer 5.7%

8.6%² 12.2% 14.0%

10.8%³ 11.2% 12.7%4

NA NA

12.7% 12.9%

12.3%

6%

7%

8%

9%

10%

11%

12%

13%

PF Q3 2012 Basel II CT1

PF Q4 2012 Basel II CT1

Q4 2013 Basel III CET1 Phased-in

A significant capital buffer exists (For illustrative purposes only)

28 28

1. Basel II 9M12 pro forma CT1 includes 1) the impact of the signed divestments of Absolut Bank, NLB and a full exit of Kredyt Bank, 2) the impact of the capital increase and the sale of treasury shares and 3) the reimbursement of the remaining EUR 3bn Federal State aid (+ 15% penalty premium)

2. Based on earnings consensus estimates of 9 sell-side equity analysts of EUR 1,582m as published on 12-Dec-2012, 4Q12 trading update in ABB press release and assuming Q3 2012 RWAs of EUR 101.8bn pro forma for the impact of divestments of Kredyt Bank, Absolut Bank and NLB

3. As described on page 23 assuming 1) remaining YES being part of CET1 as agreed with local regulator 2) based on earnings consensus estimates of 9 sell-side equity analysts collected by KBC during the period from 16 November 2012 to 21 November 2012 of EUR 1,582m for 2012 and EUR 1,503m for 2013 and 4Q12 trading update in ABB press release on 10-Dec-2012 (For indicative purposes only)

4. Based on Basel II 9M12 pro forma CT1 includes 1) the impact of the signed divestments of Absolut Bank, NLB and a full exit of Kredyt Bank, 2) the impact of the capital increase and the sale of treasury shares and 3) the reimbursement of the remaining 3bn EUR Federal State aid (+ 15% penalty premium) and Q3 2012 RWAs of EUR 101.8bn pro forma for the impact of divestments of Absolut Bank, NLB and a full exit of Kredyt Bank

5. Based on 2013 earnings consensus estimates of 9 sell-side equity analysts collected by KBC during the period from 16 November 2012 to 21 November 2012 of EUR 1,503m, as published on 12-Dec-2012

Equal to RWA Increase of EUR 83bn or c. 81% of Current RWA

Equal to c. EUR 5.8bn capital losses or 3.9x

Net Income5

Trigger at 7.0%

-45%

7.0%

6.4%

5.9%

5.4%

5.0%

4.7%

81% 7.0% 6.7% 6.3% 6.0% 5.6%

Simulation Analysis4 1

CT1 Capital Change 10.2% 0% -5% -10% -15% -20%

RW

A C

hang

e

0% 12.7% 12.1% 11.4% 10.8% 10.2%

10% 11.5% 11.0% 10.4% 9.8% 9.2%

20% 10.6% 10.0% 9.5% 9.0% 8.5%

30% 9.8% 9.3% 8.8% 8.3% 7.8%

40% 9.1% 8.6% 8.2% 7.7% 7.3%

50% 8.5% 8.0% 7.6% 7.2% 6.8%

2

3

Conservative approach of KBC

versus its peers in RWA calculations

29

Source: Company disclosures as of Sep-2012 (Rabobank and Standard Chartered as of Jun-2012)

52%

46% 46% 46% 45%

43% 42%

41%

34%

32% 31% 30% 28% 27%

25% 25% 24% 24% 24% 23% 23%

19% 17%

15%

BB

VA

DN

B

Inte

sa

Sta

nCha

rt

Uni

cred

it

San

tand

er

HS

BC

KB

C

Lloy

ds

ING

Com

mer

zban

k

Rab

oban

k

BN

PP

Soc

Gen

Nor

dea

SE

B

Sw

edba

nk

Bar

clay

s

Dan

ske

Cre

dit A

gric

ole

CS

SH

B

Deu

tsch

e

UB

S

Median: 29%

Risk weighted assets vs. total assets

Supplementary Information on KBC Ireland

Supplementary Information on CDO Exposure

Supplementary Information on KBC Capital Position

30 30

Appendices

30

31

Ireland (1/2)

Loan portfolio Outstanding NPL NPL coverage

Owner occupied mortgages 9.4bn 16.9% 31%

Buy to let mortgages 3.2bn 28.0% 40%

SME /corporate 1.8bn 17.8% 70%

Real estate investment 1.3bn 28.6% 62%

Real estate development 0.5bn 90.7% 73%

16.2bn 22.5% 45%

• Loan loss provisions in 3Q12 of EUR 129m (EUR 136m in 2Q12). The loss after tax in 3Q12 was EUR 71m

• Emerging stabilisation in parts of the domestic economy and an improvement in financial sentiment towards Ireland. Slightly better than expected tax revenues, broadly flat unemployment and a range of survey indicators reflect a tentative turning point in domestic activity of late

• There are signs that the housing market may have bottomed out in terms of prices and transaction levels

• KBCI is implementing longer term mortgage resolution options as part of its Mortgage Arrears Resolution Strategy that should restore a significant number of customers back to financial stability. KBCI’s comprehensive outreach programme continues to have positive results

• The Personal Insolvency Bill is expected to be enacted in 1Q13. The degree of impact on the KBCI mortgage portfolio will be determined by the final parameters including: (i) the voting rights of creditors, (ii) requirement for borrowers prior cooperation and (iii) the upper debt limit in the Personal Insolvency Arrangement

• Commercial customers operating in the Irish domestic market continue to face a challenging environment

• Successful retail deposit campaign with expanded product offering. Increased gross retail deposit levels of EUR +0.9bn (YTD) to EUR 1.7bn and new customer accounts of c. 16,000 to end 3Q12

• Local tier-1 ratio to 11.36% at the end of 3Q12 through a capital increase of EUR 100m (11.12% at the end of 2Q12)

Irish loan book – key figures as at Sep 2012

Proportion of High Risk and NPLs

17.1% 15.9% 16.4%

17.1% 18.3% 20.0%

21.8%

11.1% 13.2%

15.2%

17.7% 20.5% 21.4% 22.5%

0

5

10

15

20

25

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

High Risk (Probability of Default > 6.4%) Non-Performing

32

Ireland (2/2)

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

2007 2008 2009 2010 2011 H1 2012

GDP %

0

2

4

6

8

10

12

14

16

2007 2008 2009 2010 2011 2012

% Unemployment Rate

Continuing tentative signs of GDP stabilisation Unemployment rate has remained broadly stable through 2012

Residential property prices have increased in each of the last 3 months

Reduction in residential mortgage arrears & NPL growth continuing in 2012 YTD

40

50

60

70

80

90

100

110

2007 2008 2009 2010 2011 2012

Irish Residential Property Prices - CSO Index(% change from peak)

• Key indicators show tentative signs of stabilisation

Source: Troika Report Sep 2012 (Eurostat definition), Central Statistics Offices Ireland




33 33

Appendices

33

34 34

Legacy Assets within investment portfolio

1. Figures exclude all expired, unwound or terminated CDOs 2. Taking into account the guarantee agreed with the Belgian State and a provision rate for MBIA at 70%

34

• CDO exposure largely written down or covered by a State guarantee

• The total notional amount remained stable over the last quarter. The outstanding markdowns decreased as a result of the credit spread tightening

Outstanding CDO Exposure¹

Outstanding CDO Exposure¹

EUR bn as of 3Q 2012 Notional Outstanding markdowns

Hedged Portfolio 10.1 -0.6

Unhedged Portfolio 5.5 -3.5

Total 15.6 -4.1

EUR bn as of 3Q 2012 Total

Outstanding value adjustments -4.1

Claimed and settled losses -2.2

Of which impact of settled credit events -2.1

• Within the scope of the sensitivity tests, the value adjustments reflect a 10.7% cumulative loss in the underlying corporate risk (approx. 85% of the underlying collateral consists of corporate reference names)

• Claimed and settled losses amounted to EUR 2.2bn Negative P&L impact² of a 50% widening in

corporate and ABS credit spreads 0.50

0.45

0.40

0.35

0.30

0.25 3Q12 2Q12 1Q12 4Q11

• P&L sensitivity significantly reduced thanks to de-risking activities EU

R b

n

Breakdown of KBC’s CDOs originated by KBC FP

35

Breakdown of assets underlying KBC’s CDOs originated by KBC FP¹ Corporate breakdown by ratings²

Corporate break down by region³ Corporate breakdown by industry4

Note: Figures as of 9-Oct-2012 1. % of total initial deal (notional) 2. Direct Corporate exposure as a % of the total Corporate Portfolio; Tranched Corporate exposure as a % of total Corporate Portfolio; Figures based on Moody’s Ratings 3. Direct and Tranched Corporate exposure as a % of the total Corporate Portfolio 4. Direct Corporate exposure as a % of the total Corporate Portfolio; Tranched Corporate exposure as a % of the total Corporate Portfolio

0%

2%

4%

6%

8%

10%

12%

Aaa

Aa1

Aa2

Aa3

A1

A2

A3

Baa1

Baa2

Baa3

Ba1

Ba2

Ba3

B1 B2 B3 Caa1

Caa2

Caa3

Ca C D/Credit Event

NR

Direct Corporate Portfolio

Tranched Corporate Portfolio

Tranched Corporate Exposure

32%

Mutli-Sector ABS

Exposure 15%

Direct Corporate Exposure

53%

Europe 22%

Asia 17% Other 4%

North America 57%




36 36

Appendices

36

107118

Estimated CET1 at end 2013 Fully loaded B31 (For illustrative purposes only)

37

RWA impact (EUR bn)

1. Given remaining YES being part of CET1 as agreed with local regulator 2. Based on average earnings consensus estimates of 9 sell-side equity analysts collected by KBC during the period from 16 November 2012 to 21 November 2012 of EUR 1,582m for 2012 and

EUR 1,503m for 2013 and 4Q12 trading update in ABB press release on 10-Dec-2012 3. Remaining divestments include Absolut Bank, NLB, KBC Bank Deutschland, Antwerp Diamond Bank, and KBC Banka 4. Of which includes EUR 12.4bn of RWAs, as calculated under Solvency 1, in relation to the consolidation of KBC Insurance under the building block method

B3 impact at numerator level (EUR bn)

• Fully loaded B3 CET1 ratio of approx. 11.7% at end 9M12

• Fully loaded B3 CET1 ratio of approx. 11.3% at end 2013

• Announced intention to maintain a fully loaded B3 CET1 ratio of 10% as of 01-Jan-2013

Consensus earnings 4Q12-

FT20132

1.8

Capital increase and sale of

treasury shares

1.6

Look through CET1 at end

9m12

13.8 12.1

Estimated CET1 at end

2013

Recuperation of DTAs

0.3

Penalty on reimbursed

principal YES + dividend/coupon

YES

-1.2

Reimbursement 4.2bn EUR

principal YES

-4.2

-7

9M12, including shift to IRBA and Basel 3

2013e Other

1

Remaining divestments³

-5

Kredyt Bank

4

contingent capital securities roadshow...contingent capital securities roadshow important...

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