kbc bank debt investor presentation autumn 2005
DESCRIPTION
KBC Bank Debt investor presentation Autumn 2005. Web site: www.kbc.com. Important information. 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 - PowerPoint PPT PresentationTRANSCRIPT
KBC Bank
Debt investor presentationAutumn 2005Web site: www.kbc.com
2
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
KBC believes that this presentation is reliable, although some information may be condensed or incomplete
This presentation contains forward-looking statements with respect to our earnings development involving assumptions and uncertainties. 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 possesses sufficient expertise to understand the risks involved
Important information
Foto gebouw
Company profile
2005 financial highlights
- KBC Group, financial performance
- Financial headlines, KBC Bank
- Overview, other Group segments
Future earnings drivers
Capital position
4
Reminder: group structure
KBC Group
KBCInsurance
KBCAM
KBL European private bankers
GevaertKBCBank
59%19%
10%7% 5%
KBC Bank KBC Insurance KBC AM KBL epb Gevaert
1H05 net profit contribution
5
Credit ratings, KBC Bank
S&P Moody's Fitch
LT credit rating A+ Aa3 AA-(outlook) (stable) (stable) (stable)
ST credit rating A-1 P1 F1+
Recent rating actions:• March 2005: all ratings confirmed on the occasion of the merger of ‘KBC Holdings’ and ‘Almanij’ to ‘KBC Group’• March 2004: S&P’s outlook from ‘negative’ to ‘stable’• Jan 2003: Moody’s outlook from ‘negative’ to ‘stable’
6
Group business portfolio
KBC Group is a top bancassurer and asset manager in Belgium and has successfully expanded its operations in CEE-5, its 2nd home market.
Recently, Private Banking has become more of a key focus. The PB business was expanded to include a Western European network. KBC is also active – be it rather selective – in commercial banking (mostly in W. Europe) and financial markets.
Revenue geographical breakdown(1H 2005)
Belgium:- retail bancassurance- asset management- private banking- SME/corporate
CEE:- retail bancassurance- asset management- private banking- SME/corporate
Selected other markets (mostly in W. Europe):- private banking- SME/corporate- capital markets
55%25%
20%
7
Group strategy headlines
Strategy headlines include: Retail- and wealth-management-oriented, with focus on Belgium and CEE-5 and selected
Western European markets Further enhancement of efficiency (with emphasis on - but not exclusively in - CEE and
European private banking) Standalone basis (opportunistic operational alliances in certain areas to generate
economies of scale, if needed) Steady dividend growth and solid level of financial strength/solvency
The solid ‘growth and value’ outlook is reflected in ambitious financial targets, valid until 2008:
Efficiency: Cost/income, banking
Combined ratio, non-life
max. 58%
max. 95%
Financial strength:
Tier-1, banking
Solvency margin, insurance
min. 8%
min. 200%
Value creation: Adjusted ROE
EPS growth (CAGR)
min. 16%
min. 10%
Foto gebouw
Company profile
2005 financial highlights
- KBC Group, financial performance
- Financial headlines, KBC Bank
- Overview, other Group segments
Future earnings drivers
Capital position
9
1. Group net profit at 1 253 m, up 55% y/y, generating a return on equity of 20%
2. Underlying Group profit (excl. one-offs) growing at 34%
3. Comparison of individual P/L lines with pro forma 2004 figures distorted by application of IFRS 32/39 and IFRS 4 as of 2005
4. Strong business volume growth (deposits / loans / AUM / insurance) generating strong commission income (+23%) and offsetting impact of flattening yield curve on net interest income
5. Further downtrend in expenses - cost/income ratio (banking) at 57 %
6. Very low credit-risk provisioning (loan-loss ratio at 0.06%)
7. High levels of return in most business segments, especially in Belgian retail (29%) and in CEE (54%)
8. Outlook for 2005 remains positive
1H 2005 at a glance
10
Profit trend, 1H 05
1H 2004pro forma
1H 2005 1H/1H 1H/1Hexcl.
one-offs
Gross income, net of technical insur. charges
3 919 4 163 +6% +2%
Expenses -2 373 -2 313 -3% -6%
Operating result 1 545 1 850 +20% +15%
Impairments -242 -57 -76% -76%
Associated companies -39 +33 - -27%
Net profit 810 1 253 +55% +34%
C/I, bankingCR, non-lifeROE
61%93%14%
57%94%20%
Notes:1) One-offs include the disinvestment loss at Agfa Gevaert (net bottom-line impact of –80 m) in Q2 2004, the write-back of of provisions for
operating expenses after a legal settlement (net +48m) in Q2 2004, the income related to the settlement of a ‘historic’ Slovakian loan (net +68 m) in Q1 2005, the ‘non-recurring’ value gains on shares of Irish insurer FBD (net +68m) in Q1 2005 and merger-related expenses (net 13m) in Q2 2005
2) All 2004 figures exclude impact of IAS 32/39 and IFRS 4
11
Solid business growth
Note: Growth trend, excl. (reverse) repo activity, from 31-Dec-04 to 30-Jun-05
Growth, Ytd +7% +10% +7% +11% +11%
Belgium +7% +8% +5% +10% +15%
CEE +3% +16% +15% +15% +20%
Rest of world +7% +15% +7% - +5%
30 June 2005Customer
loans o/w
mortgagesCustomer deposits(banking)
Life ‘deposits’
(insurance)
AUM(asset
management)
Outstanding 108.7 bn 30.7 bn 167.8 bn 14.9 bn 170.5 bn
12
Solid revenue trend
Gross income (in m), per half year
6 353 5 980 5 660
1H04 2H04 1H05 2H05
Down 693 m y/y, mainly due to non-recognition of 1.1 bn new unit-linked premium volume under IFRS 2005
Apart from one-offs (136 m in Q1), solid revenue ‘quality’: NII: volume growth almost offsetting negative impact
on NIM from flattening yield curve (-13 bps) High level of life insurance premium income (2 bn) Strong commission line (+23%)
13
Sustained favourable y/y cost trend
Operating expenses (in m), per half year
2 373 2 571 2 313
1H04 2H04 1H05 2H05
Ytd expenses down 3%, mainly driven by (a) cost cutting in Belgium and (b) lower staff profit-sharing bonuses (esp. at KBC Financial Producs)
Cost/income, banking, down from 61% to 57%
-3%
14
Historic low impairment levelImpairment charges (in m), per half year
242
12357
1H04 2H04 1H05 2H05
Impairments down 185 m (-76%) on the back of limited credit risk and solid equity markets
Loan-loss ratio down from 0.20% in FY 04 to 0.06%
Impairments on investments limited to 16 m versus 130 m in 1H 04
-76%
LLR Avg loans FY 04 1H 05
Belgium 58.3 0.09% 0.03%
CZ/Slovakia 10.7 0.26% 0.00%Hungary 5.4 0.64% 0.93%
Poland 3.9 0.69% 0.00%International 40.2 0.26% 0.09%
Total 118.5 0.20% 0.06%
Foto gebouw
Company profile
2005 financial highlights
- KBC Group, financial performance
- Financial headlines, KBC Bank
- Overview, other Group segments
Future earnings drivers
Capital position
16
1H 05 profit at record level of 784 m, driven by: Strong commission income (+21%) NII almost stable despite flatening yield curve
due to solid volume growth Strict cost control (C/I at 57% incl. AM) Limited credit cost (0.06 bp) One-off income in 1Q related to settlement of
historic Slovakian loan (net 68 m)
Q2 05 (314 m), down q/q due to: One-off income in 1Q ( 68m) expected higher cost level:
Elimination of time lag in usage of IT and marketing budgets ( Q2/Q1 40m)
Higher income-related staff costs ( 27 m esp. at KBC Financial Products)
Restructuring costs (20 m) Q2 05 y/y trend: Q2 04 includes write-back (73 m) of
provision for operating charges (after legal settlement)
Key points, banking segment
332246
470
367
318
314
0
100
200
300
400
500
600
700
800
900
1H04 2H04 1H05 2H05
Pro forma IFRS 2004 IFRS 2005
BANKINGNet profit (in m)
699
564
784
3Q04
4Q04
1Q04
2Q04
1Q05
2Q05
17
NII trend, banking activities
Belgium 1.96%E x c l. IF R S 05 : sta b le
CEE 2.94%E x c l. IF R S 0 5 : - 4 0 b ps
Other(o /w e p b 0 .55 % ,
s ta b le e xc l. IFR S )
NIM 1.63%In c l. IF R S 0 5 : sta b le
E x c l. IF R S 0 5 : -1 3 b ps
Belgium+ 8%
CEE+ 1 7%
Other(o /w ep b -1 4% )
Avg. volumein te re st-be a rin g a ss e ts
+ 6%
N II 1 886mIn c l. IF R S 0 5 : + 6%E x c l. IF R S 0 5 : -3%
1H 05 (y/y trend)
18
Competitive landscape in Belgium
In 1H 05, NIM was stable y/y at 2.0 %.
In Q4 04 and Q1 05 the (obviously lagging) effect of the flattening of the yield curve was offset by the improved product mix (shift to low-yielding liquid savings deposits in anticipation of an interest rate hike). In Q2 05, customers switched to long-term investments, anticipating deposit rate cuts (-25 bps as of Q3 03).
Volume growth (deposits/loans) was strong in Belgium, further boosting NII
Since mid-2004, credit spreads have seen a significant deterioriation as a result of increased price competition. Currently, pricing rationality is tending to be restored.
2.0%1.9% 2.0%
2.0% 2.0%
1.9%
2.1% 2.1% 2.1%
1.7%
1.6%
1.3%
1Q04 2Q04 3Q04 4Q04 1Q05 2Q05
Interest margin, BelgiumSpread 3m-10y treasury
Net Interest Margin, KBC Bank, Belgium Spreads on new mortgages (bps), KBC, Belgium
Jan
-04
Mar-
04
May-0
4
Ju
l-04
Sep
-04
No
v-0
4
Jan
-05
Mar-
05
May-0
5
Ju
l-05
0.88
0.76
0.41
0.48
19
Competitive landscape in Belgium
0.0% -0.1%0.1%0.0%0.0%
0.9% 1.0%
-1.1%-0.9%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05
KBC
Other large banks
Small retail banks
Change in retail market share since the beginning of 2004 (avg. deposits and loans), proxy
Source: Febelfin (market sample)Includes consumer loans, mortgages, saving accounts and saving certificates
In 2004, the large banks, representing >80% of the market, lost roughly 1% market share to the benefit of smaller players. But from 1H05, this trend seems to be on the wane.
KBC has been able to keep its market share stable (and may have further increased its market share in unit-linked insurance and probably mutual funds).
Foto gebouw
Company profile
2005 financial highlights
- KBC Group, financial performance
- Financial headlines, KBC Bank
- Overview, other Group segments
Future earnings drivers
Capital position
21
Segment structure
KBC Group NV
KBCInsurance
KBCAM KBL epb GevaertKBC
Bank
Primary segmentation by business segment
22
-55
30
122
58
89
124
-70
-20
30
80
130
180
230
280
1H04 2H04 1H05 2H05
Pro forma IFRS 2004 IFRS 2005
INSURANCE
Net profit (in m)
3
119
246
1Q04
2Q04 1Q05
2Q05
4Q04
3Q04
43 3853
23
-30
41
Pro forma IFRS 2004 IFRS 2005
Net profit (in m)
EUROPEAN PRIVATE BANKING
66
8
94
1Q04
2Q04
3Q04
4Q04
1Q05
2Q05
51 53 58
58 66 68
0
20
40
60
80
100
120
140
160
180
1H04 2H04 1H05 2H05
Pro forma IFRS 2004 IFRS 2005
Net profit (in m)
ASSET MANAGEMENT
109 119 126
3Q04
4Q04
1Q05
2Q05
1Q04
2Q04
17 1232
-65
85 31
1H04 2H04 1H05 2H05
Pro forma IFRS2004 IFRS 2005
Net profit (in m)GEVAERT
-48
36
63
1Q04
2Q04
3Q04
4Q04
1Q05
2Q05
23
Segment structure – cont’d.
KBC Group NV
KBCInsurance
KBCAM KBL epb GevaertKBC
Bank
CEE
Markets
European private banking
Gevaert
Retail
Business customers
1
2
1 . Primary segmentation by business segment2. Additional breakdown by area of activity
24
66 74
19198
46
121
1H04 2H04 1H05 2H05
Pro forma
Net profit (in m)
87 97
295132
260
244
1H04 2H04 1H05 2H05
Pro forma
Net profit (in m)
CEE
RETAIL BELGIUM
219
357
539
1Q04
2Q04
3Q04
4Q04
1Q05
2Q05
164120
312
1Q04
2Q04
3Q04
4Q04
1Q05
2Q05
68
1753
70
9253
1H04 2H04 1H05 2H05
Pro forma
Net profit (in m)
108 91125
11894
101
1H04 2H04 1H05 2H05
Pro forma
Net profit (in m)
CAPITAL MARKETS
BUSINESS CUSTOMERS
226185
225
1Q04
2Q04
3Q04
4Q04
1Q05
2Q05
137
92 106
1Q04
2Q04
3Q04
4Q04
1Q05
2Q05
Foto gebouw
Company profile
2005 financial highlights
- KBC Group financial performance
- Financial headlines KBC Bank
- Overview other Group segments
Future earnings drivers
Capital position
26
Do not underestimate the market: KBC Group is well positioned:
Consolidated banking market (80% of assets held by top-4 players)
Savings ratio amongst highest in the world (every year, ca. 15% of GDP flows into fin. assets)
Market highly receptive to cross-selling of AM & insurance, fueling strong growth trend in AM and life insurance business
Strong mortgage growth trend (ca. 10% per year) expected to continue, as residential property price levels are still below other European markets
Fee rates for retail banking services only 50% of European average (gradual increase expected)
Credit quality has proven to be solid over the cycle
Top-3 market position, esp. strong in Northern region (one of the wealthiest regions in the EU)
Of the top players, level of customer satisfaction is highest
Innovative product offering in retail AM (steadily increasing market share over the past 10 yrs.)
Still high cross-selling potential for (non-life) insurance products and well-performing bancassurance distribution model
Well-diversified revenue structure (50% fee income) and further increase in fee income targeted
Further cost efficiency improvement potential, among other things, via co-sourcing of back offices with other banks
Earnings drivers in Belgium - overview
27
Mid-term financial outlook, Belgium
Gross income C/I, banking LLR Net profit
Retail 5% CAGR Low 60s < 0.25% >10% CAGR
Business customers >2% on RWA < 43% < 0.35% >10% CAGR
28
Strong market growth momentum: KBC Group is well positioned:
Earning drivers in CEE - overview
Nom. GDP growth in 2005/06 at 6.3%. Although prospects have been revised due to global economic slowdown, growth will still outgrow EMU by c. 3%
Ongoing catch-up in product penetration (currently, an avg. of 45% for banking accounts and 5% for mortgages)
Mortgage volumes growing at double-digit pace (up 51% on avg. in 2004)
Financial sector could grow five-fold if financial assets to GDP were to reach current levels of S. Europe
Solid market position in retail and corporate businesses (excl. banking in Poland) with nationwide branch networks
Competitive advantage in enhancing cross-selling of asset management and insurance products
Well positioned in HNWI and private banking through epb know-how
C/I still on the high side overall, inducing further improvement, e.g., by setting up cross-border platforms for processing transactions
Adequately provisioned balance sheet (risks under control)
Availability of capital within the Group
29
Bancassurance fueling CEE earnings
Cross-sell rates2004
CZ HU PL SK BE
Consumer loan
XLife
83% 50% 100% 94% 67%
Mortgage loan
XLife
45% 50% 100% 75% 67%
Mortgage loan
XProperty
insurance
54% 71% 42% 30% 50%
Now the model is in place:
Transfer of product know-how and streamlining of business processes and IT systems
Implementation of KBC’s distribution model and setting up of sales incentives and adequate sales approach
Unified management responsibility (joint management committee of bank and insurance)
= competitive advantage relative to other CEE players
Results are encouraging:
30
Growth in AM fueling CEE earnings
KBC is well positioned:
Strong appetite for ‘risk-free’ investments in the market (money-market, capital-guaranteed funds), fully in line with KBC’s core competencies and successful track record in Belgium
Cost/AUM below average (around 16 bps vs. 20 bps for Europe)
= competitive advantage relative to other CEE players
Results are encouraging:
AUM grew in ’04 by 25%. Continued high growth expected in coming years (CAGR of 15-20% in mutual funds and 10-15% in pension products)
Via the funds business, new customers are recruited. Existing customers using deposits to buy funds replenish deposit accounts after one year
Market share
2003 2004 1H05 Trend
CZ 19% 22% 26% +++
HU 8% 9% 11% ++
SK 6% 7% 8% +
SLO - 8% 10% ++
PL 3% 4% 4% +
31
Mid-term financial outlook, CEE
RWA CAGR
Net profit CAGR
Loan-loss ratio
Cost/Incomeratio
Banking 10% – 15% 10% – 15% < 0.50% < 60%
Premium income CAGR
Net profit CAGR
Combined ratio
Insurance 15% – 25% 25% - 35% 95%
Growth AUM mutual funds
Growth AUM pension producs
AM 15% – 20% 10% - 20%
32
Private banking in higher gear
Dual brand strategy: network-led vs. ‘independent boutique’
Growth drivers: network trade-up, extension of product offer and hiring of private bankers
Business model: integrated private banking business in selected European markets focusing on clients with >€1m of investable assets
Total assets currently amounts to 76 bn (Sep-05)
Integrated network of local pure-play private banking brands (boutique style)
Priority of reducing costs by creating synergies in a central ‘hub’ (IT, operations, support)
Growth drivers: increased share of wallet, hiring of PB managers and opportunistic M&A
Low-growth market
Focus on profitability (leveraging the hub)
If possible, steer repatriated assets to KBC onshore
No expansion, except in IFAs with short payback
Small today , but high market growth expected (>15% p.a.)
Strengthening a network-led model, leveraging Belgian experience
Belgium W. Europe onshore W. Europe offshore CEE
Opportunistic acquisitions may imply investments of 150-250 m per year
AUM 28 bn
AUM 27 bnAUM 18 bn
AUM 3 bn
33
Mid-term financial outlook, PB
AUM Growth Net profit Cost/Income
Private Banking
9% CAGR(14% Belgium, 15% CEE0% offshore and 10% W. Eur onshore)
10% CAGR < 55%
34
FY 2005 profit outlook
KBC continues to be positive on its strategy in the various business lines
Banking costs are expected to decrease in 2005
There are no signs of any substantial decline in credit quality or in underwriting performance, non-life
The interest rate and stock market environments remain factors of uncertainty
KBC has already set a mid-term objective of >10% CAGR EPS growth
On the basis of the solid 1H 05 earnings and the prevailing view regarding the relevant economic and financial parameters, KBC’s 2005 net profit is expected to exceed the10% growth level, amounting to more than 2 bn euros
Foto gebouw
Company profile
2005 financial highlights
- KBC Group financial performance
- Financial headlines KBC Bank
- Overview other Group segments
Future earnings drivers
Capital position
36
0
500
1000
1500
2000
2500
3000
Dec-04 1H05
Legal Econ buffer Excess
-100
100
300
500
700
900
1100
Dec-04 1H05
Legal Econ buffer Excess
Solvency
8.5% 347%
397%
KBL epb(Tier-1)
KBC Insurance (solvency margin)
In m EURIn m EUR
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
Dec-04 1H05
Legal Econ buffer Excess
KBC Bank(Tier-1)
In m EUR
10.1% 9.8%
8.1%
37
Capital position
Capital position
Available capital 1
Surplus capital 2
Immediatefree surplus 3
KBC Bank 10.7 bn 2.1 bn 1.5 bn
KBC Insurance 2.8 bn 1.2 bn 0.4 bn
Gevaert 1.2 bn 1.0 bn 0.4 bn
KBC AM and KBL epb p.m.
Total 14.7 bn 4.3 bn 2.3 bn
Internal capital budget requirements
Deleveraging of the holding company 0.4 – 0.6 bn
Buy-out of 3rd parties in CEE 0.8 – 1.3 bn
External growth in CEE 1.0 – 2.0 bn
1 Regulatory capital under Basel I/Solvency I (incl. hybrids and minority interests, after elimination of intangibles and goodwill), based on capital position as at 30-Mar-052 Difference between available capital and internal minimum level3 Surplus capital excl. expected adverse IFRS impact on Tier-1, banking (as of 2006), unrealized gains on tied-up assets (insurance) and value of Agfa-Gevaert (timing of disposal uncertain)
Appendices
- Issue activity KBC Bank, overview- Other
Foto gebouw
39
Issue activity 2002
A total of 75 senior debt transactions issued through KBC Ifima subdivided in: 5 strategic FRN
transactions for 2 200 m EUR equivalent
70 (structured) private/ public placements for 531 m EUR equivalent
Origin of Funding 2002
Strategic FRN transactions
81%
Structured issuance
19%
40
Detail of FRN issuance over 2002
Issue size Type of transaction Start End All-in cost p.a. Tenor
EUR 500 000 000 (*) public FRN issue 21/01/2002 21/01/2005 euribor 3m + 13.37 bp 3 year
EUR 250 000 000 (*) public FRN issue 31/01/2002 21/01/2005 euribor 3m + 13.51bp 3 year
EUR 500 000 000public FRN issue
13/03/2002 13/03/2007 euribor 3m + 17.35 bp 5 year
EUR 250 000 000 (*)public FRN issue
28/03/2002 21/01/2005 euribor 3m + 12.97 bp 2y 10m
EUR 300 000 000 private FRN issue 26/04/2002 26/04/2004 euribor 3m + 8 bp 2 year
EUR 200 000 000 private FRN issue 03/05/2002 03/05/2004 euribor 3m + 8 bp 2 year
EUR 200 000 000 private FRN issue 05/07/2002 05/01/2004 euribor 3m + 5.68 bp 1.5 year
(*) fungible tranches
FRN issuance in International Markets over 2002
41
Issue activity 2003
A total of 142 senior debt transactions issued through KBC Ifima subdivided in : 3 strategic FRN
transactions for 610 m EUR equivalent
139 (structured) private/public placements for 1 259 m EUR equivalent
An ad hoc Tier-I issue of 200 m GBP (perpetual NC 16 years)
Origin of Funding 2003
Tier-113%
Strategic FRN transactions
28%
Structured issuance
59%
42
Detail of FRN+Tier-1 issuance over 2003
Issue size Type of transaction Start End All-in cost p.a. Tenor
EUR 250 000 000 private FRN issue 27/01/2003 27/01/2005 euribor 3m + 8 bp 2 year
EUR 100 000 000 private FRN issue 07/02/2003 07/02/2005 euribor 3m + 8 bp 2 year
EUR 260 000 000 private FRN issue 21/03/2003 23/03/2008 euribor 3m + 8 bp 5 year
GBP 200 000 000 public Tier-1 issue 19/12/2003 Perp NC 16 euribor 3m + 8 bp Perp
FRN and Tier-1 in International Markets over 2003
43
Issue activity 2004
A total of 301 seniordebt transactions and 2 subordinated Lower Tier-II transactions (101 m EUR equivalent) issued through KBC Ifima subdivided in: 8 strategic FRN
transactions for 2 698 m EUR equivalent
295 (structured) private/ public placements for 1 940 m EUR equivalent
An ad hoc Tier-I issue of 175 m GBP (perpetual NC 15 years)
Origin of Funding 2004
Tier-15%
Strategic FRN transactions
55%
Structured issuance
40%
44
Detail of FRN issuance +Tier-1 issuance over 2004
Issue size Type of transaction Start End All-in cost p.a. Tenor
EUR 500 000 000 public FRN issue 20/01/2004 20/01/2006 euribor 3m + 4.5 bp 2 year
EUR 50 000 000 private FRN issue 27/01/2004 27/01/2006 euribor 3m + 2 bp 2 year
EUR 300 000 000 public FRN issue 28/01/2004 28/01/2009 euribor 3m + 12 bp 5 year
JPY 27 000 000 000 private FRN issue 09/02/2004 09/02/2006 euribor 3m + 3 bp 2 year
EUR 200 000 000 private FRN issue 19/02/2004 19/02/2004 euribor 3m + 3 bp 2 year 1m
EUR 500 000 000 public FRN issue 15/09/2004 15/09/2004 euribor 3m + 8.5 bp 4 year
CZK 1 100 000 000 private zero coupon issue 25/10/2004 25/10/2004 pribor 3m - 1 bp 2 year
EUR 100 000 000 Private FRN issue 27/10/2004 27/10/2004 euribor 3m flat 2 year
EUR 300 000 000 public FRN issue 02/12/2004 02/12/2004 euribor 3m + 8 bp 3.8 year
EUR 150 000 000 private FRN issue 01/12/2004 01/12/2004 euribor 3m + 2.5 bp 2 year
EUR 500 000 000 Private FRN issue 14/12/2004 14/12/2004 euribor 3m + 9.5 bp 5 year
USD 27 351 535 private issue 16/02/2005 16/02/2005 euribor 3m + 4.5 bp 5 year
GBP 175 000 000 public Tier-1 issue 03/11/2004 03/11/2004 libor 3m + 79 bp Perp
FRN and Tier-1 issuance in International Markets over 2004
45
Issue activity 2005 (till 31st august)
A total of 402 seniordebt transactions and 7 subordinated Lower Tier-II transactions (409 m EUR equivalent) issued through KBC Ifima subdivided in: 3 strategic FRN
transactions for 615 m EUR equivalent
399 (structured) private/ public placements for 3 053 m EUR equivalent
Origin of Funding 2005 (till 31st August)
Strategic FRN transactions
17%
Structured issuance
83%
46
Detail of FRN issuance over 2005(till 31st August)
Issue size Type of transaction Start End All-in cost p.a. Tenor
EUR 215 000 000 private FRN issue 10/01/2005 10/01/2010 euribor 3m + 9.5 bp 5 year
EUR 250 000 000 private FRN issue 23/03/2005 23/03/2007 euribor 3m flat 2 year
EUR 100 000 000 private FRN issue 24/04/2005 24/04/2007 euribor 3m - 1 bp 2 year
FRN issuance in International Markets over 2005
47
Maturity buckets of strategic FRN
Maturity buckets of outstanding strategic FRN
0
500
1 000
1 500
2 000
2 500
1H06 1H07 1H08 2H08 1H09 2H09 1H10
Am
ou
nt
in m
EU
R
Appendices
- Issue activity KBC Bank, overview- Other
Foto gebouw
49
Market cap ranking in Euroland
1 BNP Paribas (35 bn) 1 BNP Paribas (43 bn) 1 BSCH (63 bn)2 BSCH (31bn) 2 BSCH (37 bn) 2 BNP Paribas (53 bn)
3 BBVA (29 bn) 3 BBVA (36 bn) 3 BBVA (47 bn)
4 Deutsche Bank (26bn) 4 Société Générale (30 bn) 4 Deutsche Bank (39 bn)
5 ABN AMRO (25 bn) 5 Deutsche Bank (30 bn) 5 Société Générale (39 bn)
6 Société Générale (24 bn) 6 Crédit Agricole (29 bn) 6 ABN AMRO (37 bn)7 Unicredito (22 bn) 7 ABN AMRO (28 bn) 7 Crédit Agricole (33 bn)
8 Fortis (22 bn) 8 Unicredit (24 bn) 8 Fortis (31 bn)9 Crédit Agricole (14bn) 9 Fortis (23 bn) 9 Unicredit (29 bn)
10 Dexia (14 bn) 10 Intesa BCO (17 bn) 10 KBC (25 bn)
11 Intesa BCI (12bn) 11 Dexia (16 bn) 11 Intesa BCI (23 bn)
12 Allied Irish Banks (12 bn) 12 KBC (15 bn) 12 Dexia (20bn)
13 Bank of Ireland (10 bn) 13 SanPaolo IMI (13 bn) 13 San Paolo IMI (18 bn)
14 KBC (9 bn) 14 Allied Irish Banks (11 bn) 14 HVB (17 bn)15 SanPaolo IMI (9 bn) 15 HVB (10 bn) 15 Allied Irish Banks (16 bn)16 Banco Popular (8 bn) 16 Commerzbank (8 bn) 16 Bank Austria (13 bn)
17 HVB (7 bn) 17 Erste Bank (8 bn) 17 Commerzbank (13bn)
18 Mediobanca (6 bn) 18 Bank Austria (8 bn) 18 Mediobanca (12 bn)
19 Bca MPS (6 bn) 19 Mediobanca (7bn) 19 Bank of Ireland (12 bn)
20 Bco Popular (5 bn) 20 Bca MPS (6 bn) 20 Bco Popular (12 bn)
Dec 2002 Aug 2004 Aug 2005
DJ Euro Stoxx Banksconstituents
50
Shareholder structure
CERA/Almancora27.1%
(own shares: 2.3%, including ESOP hedge)
Other committed shareholders 11.7%
MRBB11.6%
Free float47.3%
KBC is majority-owned by a group of committed shareholders, thereby providing continuity for the pursuit of long-term strategic goals
Core shareholders include the Cera/Almancora Group (co-operative investment company), a farmers’ association (MRBB) and a syndicate of industrialist families
Situation as at 30-Jun-05
51
2005 H1
25%
KBC’s presence in CEE
CEE profit contribution to KBC Group
Retail 57%
Other22%
SME/Corp 21%
Share of business segments in gross income, CEE Banking
Profit contribution, CZ + SK
2003 2004
143 m 162 m
Czech Republic
Total assets, bank: 18 bn EURMarket share, bank: 21% (No. 2)Market share, life: 8% (No. 5)Market share, non-life: 4% (No. 6)
Profit contribution, Poland
2003 2004
-295 m 25 m
Total assets, bank: 5 bn EURMarket share, bank: 5% (No. 8)Market share, life: 3% (No. 7)Market share, non-life: 11% (No. 2)
Profit contribution, Hungary
2003 2004
11 m 31 m
Total assets, bank: 7 bn EURMarket share, bank: 11% (No. 2)Market share, life: 4% (No. 7)Market share, non-life: 4% (No. 6)
Slovakia
Total assets, bank: 2 bn EURMarket share, bank: 6% (No. 4)Market share, life: 4% (No. 8)Market share, non-life: 2% (No. 7)
Profit contribution, Slovenia
2003 2004
10 m 26 m
Minority stake (34%)Market share, bank: 41% (No. 1)Market share, life: 6% (No. 5)
52
Group income statement, 1H 2005
(in m euros) Banking Insurance AM KBL epb Gevaert Holding Group
Net interest incomeGross earned premium, insuranceDividend incomeNet gains from FI at FV Net realised gains from AFS assetsNet fee and commission incomeOther income
1 8070
67121
63605223
2661 707
864
144-148
29
-10781
1841
7907
8221
20633
-203
1437
049
-3000
-40
-2235
2 1221 707
169225265839330
Gross income 2 887 2 088 199 429 101 200 5 660
Operating expensesImpairments - o/w on loans and receivables - o/w on AFS assetsGross technical charges, insuranceCeded reinsurance resultShare in results, associated companies
-1 685-34-34
100
17
-254-20
-1-18
- 1464-33
0
-30000000
-287-501002
-4211100
15
-257000000
-2 313-57-34-16
-1 464-3333
Profit before taxes 1 185 316 169 137 75 -57 1 826
Income tax expense
Minority interests
-306-96
-66-4
-430
-39-4
-12-1
-20
-469-104
Net profit 784 246 126 94 63 -59 1 253
Excl. intrasegment eliminations
53
Areas of activity overview, 1H 2005
(in m euros) Retail CEE SME/Corp.
Markets KBL epb Gevaert Total
Banking and AM
Gross incomeOperating expensesImpairmentsIncome tax expenseMinority interestsNet profit – group share
1 288-734
+7-178
0383
925-526
-7-71-41282
508-183
-34-84
0208
410-235
-2-67
0106
429-289
-5-39
-494
3 515-2 004
-39-415-100
1 003
Insurance
Gross income (- techn. ch.)Operating expensesImpairmentsIncome tax expenseMinority interestsNet profit – group share
373-156
-15-46
-1155
131-83
-1-10
-730
47-15
-4-10
017
591-254
-20-66
-4246
Holding Co
Net profit – group share 63 3
Group total
Net profit – Group shareShare in group resultROAC
53943%29%
31225%54%
22518%20%
1068%
28%
948%
16%
635%
11%
1 253
20%
Excl. non-allocated results
54
Contact information
Investor Relations Office
Luc CoolNele KindtMarina Kanamori
Surf to www.kbc.com for the latest update.