kbc bank & insurance group first half year results 2001 3 september 2001

KBCBank & Insurance Group

First Half Year Results 2001

3 September 2001

2

KBC Bank & Insurance Group

Group results and key features Results - Banking

Results - Insurance

Activities Retail bancassurance Corporate services Central Europe Market activities Asset management

Outlook

3

In millions of EUR 30-6-0130-6-00 %

Consolidated profit - Group share (1)

- Banking- Insurance- Holding company

Key figures per share (in EUR)

- Net earnings - Net asset value

KBC Bank & Insurance GroupKey Figures

631.2

494.6147.9-11.3

2.11 35.2

-7.3

-10.614.9 -

-7.60.3

585.2

442.4169.9-27.1

1.9535.3

(1) figures over 2000 excl. capital gain on CCF(2) as per 31.12.00

(2)

4

KBC Bank & Insurance GroupNet Profit

371

260

631

186

349

535

1Q 00 2Q 00 1H 00 3Q 00 4Q 00 2H 00

355

230

585

1Q 01 2Q 01 1H 01

-7.3%In m EUR

5

KBC Bank & Insurance Group1st Half 2001 Key elements

Core businesses deliver good revenues Interest income : + 13.2 % Non-life premiums : + 7.1 %

Slight increase of marketshares versus dec. 2000 Lending : 23.1 % (+ 0.9 % pt) Saving deposits : 19.5 % (+ 0.1 % pt) Mutual funds : 29.8 % (+ 0.6 % pt)

Asset quality remains goodNon-performing loans stable at 2.2 %

Assets under management : + 3 bn EUR

Development of Central Europe on track

Sustained solid solvency ratio’s

6

KBC Bank & Insurance Group1st Half 2001 Key elements

Unfavourable market conditions have negative impact on volatile revenue components

trading result : -14.7 % commission income from securities : -1.3 % unit linked premium income : -19.0 %

Cost performance in banking still unsatisfactory (+18.1 %) merger related savings still limited deterioration of cost / income ratio due to slower

growth of revenues

7

KBC Bank & Insurance GroupProfitability

798970

631

1166

585

1998 1999 30-06-00 2000 30-06-01

Net profit ROE

+12.8%

+21.6%+20.2%

1821incl. CCF

+87.7%

16.1%20.5%

23.3%

In m

illio

ns o

f EU

R

+37.2%

27.3%

20.1%

-7.3%

8

KBC Bank & Insurance GroupEfficiency Ratios

31-12-00

Cost / Income ratio

Non-life Net cost ratio

Net loss ratio (total) Net loss ratio (direct business)

Combined ratio

30-06-00

59.3%

32.1%73.6%68.5%

105.7%

70.2%

32.2%71.9%67.0%

104.1%

(*) excl. impact change in consolidation scope

66.5% 64.2% (*)

34.0%72.6%67.7%

106.6%

30-06-01

9

KBC Bank & Insurance GroupSustained solid solvency ratios

2000

Bank Tier-1 ratio CAD ratio

Insurance Solvency ratio (*)

7.2%11.5%

311%

9.5%16.0%

307%

(*) excluding unrealized capital gains

1998

7.4%12.8%

298%

1999 30-6-01

8.6%14.8%

314%

10

Target Realized 30 June ‘01

ROE at group levelEPS growthCost/income ratio bankCombined ratio insurermin. Tier-1 ratio bankmin. CAD ratio bankmin. Solvency ratio insurer

22%15% (1) 55% (2)

103% (2)

7%11%

200%

20.1%-7.6%70.2%

104.1%8.6%

14.8%314.0%

KBC Bank & Insurance GroupOverall financial targets

(1) average over the period 2000-2004(2) by 2004

11


Group results and key features

Results - Banking Results - Insurance

Activities Retail bancassurance Corporate services Central Europe Market activities Asset management

Outlook

12

In millions of EUR 30-6-01

Gross operating incomeGeneral admin. expensesOperating resultValue adjustments and provisionsExtraordinary resultProfit before taxTaxesMinority interestsProfit after tax

30-6-00 %

2380-1411

969-274 (1)

0695

-128-73494 (2)

2372-1666

706-115

92683

-155-86442

-0.318.1

-27.1-58.0

- -1.721.217.8

-10.5

BankingSummary

(1) incl. allocation to FGBR of 118 m EUR(2) excl. capital gain on CCF

13

1186

423495268

1048

581514237

2437

836

1034

349

2157

636

756

319

1960

732

610

133

1998 1999 2000 30-6-00 30-6-01

In m

illio

ns o

f EU

R

+13.1%-3.7%

-27.3%

+13.2%

-0.3%

Total3435

Total3868

Total4656

BankingIncome Stream

Other incomeCommission income Profit on financial transactions Net interest income (incl. dividends)

% of total income 1999 2000 30-6-00 30-6-01

Total2380

Total2372

8%

20%16%56%

11%

21%18%50%

8%

22%18%52%

10%

22%24%44%

14

BankingExpenses KBC Belgium

Personnel costsOther admin. expensesTotal

In millions of EUR 30-6-01 %30-6-00

527.0272.9799.9

482.1280.9763.0

+9.3-2.9+4.8

Impact

• Traditional elements : 28.5 m EUR (inflation, promotions, etc)• Profit related wage component : 6.5 m EUR• One-off elements : 20.0 m EUR

15

BankingExpenses other group companies

Personnel costsOther admin. expensesTotal

Excl. impact acquisitions

In millions of EUR 30-6-01 %30-6-00

390.6302.4693.0554.0

304.8196.5501.3501.3

+28+54+38

+10.5

Impact

• acquisitions : 139 m EUR (IPB, Peel Hunt, Patria)• KBC FP and KBC Sec. France : 37 m EUR (increase nr. of personnel with 96 FTE or 21 %)

16

BankingProvisioning for credit risks

Specific provisionsDomesticInternational

Loan loss ratioDomesticInternational

Non performing loans

Other general provisions for credit risks

In millions of EUR 20001999 30-6-0130-6-00

283.7253.030.7

0.53%0.09%2.1%

-42.4

270.4103.2167.1

0.24%0.48%

2.1%

71.2

77.046.530.6

0.22%0.23%

2.0%

3.1

62.142.919.3

0.18%0.12%2.2%

20.0

Asset quality remains good

17



Results - Banking

Results - Insurance Activities

Retail bancassurance Corporate services Central Europe Market activities Asset management

Outlook

18

InsuranceSummary

In millions of EUR 30-6-01Non-life premium incomeLife premium income Net technical charges (*)Investment income (*) Total gross margin

General expenses

Operating result

Non-recurring result

Profit before tax

Taxes

Minority interests

Profit after tax

30-6-00 %413915

-1248316 396

-205

191

13

203

-33

0

170

3861064

-1382304 372

-192

180

9

188

-37

-3

148

7.1-14.0

-9.73.9 6.4

6.4

6.4

42.9

8.1

-9.7

-

14.9(*) excl. impact value changes unit-linked products

19

Insurance Evolution of gross premiums

180 181 195239

710

387 412444

7 11 12

0

100

200

300

400

500

600

700

800

900

Trad. Life Unit Linked Non-life Acceptances

30-06-99

30-06-00

30-00-01

In m

illio

ns o

f EU

R

+7.7%

-19%

+7.8%

+9.1%

877

20

InsuranceBusiness mix

30-6-00Gross premiums1481 million EUR

fire 6%

accepted business 7%

motor 9%

individuallife 68%

group life 3% other non-life

13%

30-6-01Gross premiums1361 million EUR

individuallife 63%

group life 4%

fire 7%

accepted business 8%

motor 10%

other non-life 8%

21

101

117

18

117

128

67

161

124

86

77

5943

90

4457

1998 1999 2000 30-6-00 30-6-01

In m

illio

ns o

f EU

R

+32.6%

-24.9%

+15.8%

+6.4%

Total236

Total312

Total371

InsuranceContribution to recurring result

Non-technical Non-life Life

% of total recurring result 1999 2000 30-6-00 30-6-01

Total178

Total190

21%

26%53%

22%

41%37%

23%

34%43%

24%

33%43%

22

Non recurring realized gains

Allocation to provision for financial risks

Non recurring result

69.6

56.8

12.8

InsuranceNon recurring result

In millions of EUR as per 30.06.01

23



Results - Banking

Results - Insurance

Activities Retail bancassurance Corporate services Market activities Central Europe Asset management

Outlook

24

Profit Contribution by Activity

30-6-00 : 631.2 m EUR30-6-01 : 585.2 m EUR

Retailbancassurance

CentralEurope

Corporateservices

Assetmanagement

Marketactivities

Groupitems

% profit contribution 36% 34% 19% 20% 24% 12% 3% 12% 9% 8% 10% 14%

-13.7%

-3.5%

-51.7% +279%

-12.6%

+30.5%

In m

illio

ns o

f EU

R227

196

120 116

149

72

19

7255

49

81

62

25

Revenues and Capital Allocation per activity

Revenues

Asset Manage-ment 8.3%

Retailbanc-assurance

33.5%

CentralEurope12.3%

Corporateservices19.8%

MarketActivities

12.3%

Groupitems13.9%

CapitalAllocation

Asset Manage-ment --

Retailbanc-assurance

39.1%

CentralEurope13.9%

Corporate services 33.3%

MarketActivities

13.5%

Groupitems0.1%

As per 30.6.2001

26

Retail Bancassurance

Merger of bank branches on track retail branches reduced from

1272 end 2000 to 1217 mid 2001 goal : ± 850 by end 2003 / early 2004

Conversion and integration at insurance company as planned

Banking market shares(1) on the rise (v.12/00) Consumer credit : Home loans : Saving deposits : Saving certificates :

Positive evolution of cross selling

Continued success of electronic banking

26.5%25.5%19.5%

18.1%

(1) KBC estimates

+0.7% pts+0.4% pts+0.1% pts+0.2% pts

Financial highlights

Profit contribution :(in m Eur) 30-6-2000 : 227 30-6-2001 : 196

Share in Group profit : 30-6-2000 : 36.0% 30-6-2001 : 33.5%

Return on equity: 30-6-2000 : 20.9% 30-6-2001 : 17.0%

27

Retail Bancassurance in BelgiumCross-selling penetration

Total clients bank1 331 242 Total clients insurance

741 010

Cross-selling

548 401 clients holding at least 1 bank AND 1 insurance product + 2.9 % versus 31.12.2000 36 % of overall client base

166 322 clients holding at least 3 bank AND 3 insurance products + 5.7 % versus 31.12.2000 10.9% of overall client base

548 401mutual clients

28

Continued success of electronic banking

71.4 % (+ 2.1 % pt *) of payment transactions via electronic channels

150 000 (+ 76 % *) active subscribers to KBC Internet & PC Banking

(*) versus December 2000

29

Corporate services Strategic reduction of risk weighted assets started

(-8,5 % or -3,9 bn EUR)

Continued rationalization of international network

scaling down of multinational relationships for focus on mid-caps

closure of branch in Frankfurt regrouping of corporate branches at

KBC Nederland improved relationship management by

creation of ‘network desks’

Increase in domestic market share (1) in lending end 2000 : 20.7% mid 2001 : 21.9% slight increase in corporate lending in Belgium

(+4.4%)




Return on equity: 30-6-2000 : 12.0% 30-6-2001 : 11.4%

(1) KBC estimates

30

Market activities

Strong performance of dealing rooms abroad

restructuring processfavourable interest rate positions

Stable profit for dealing room in Brussels Weakness of stock markets reflected in results of equity-subsidiaries KBC Securities (-89 %) and KBC Financial Products (-69 %)

Peel Hunt bid successfully wrapped up perfect fit into European corporate platform for small- and mid-caps profit contribution slightly positive (2.5 m EUR)




Return on equity: 30-6-2000 : 40.6% 30-6-2001 : 17.9%

31

Central Europe (1) CSOB becomes one of the premier financial

groups in Central Europe since take-over of IPB market shares : ca. 20-25% in Czech Rep. (1)

and 6% in Slovakia 3.4 million customers integration process on track staff levels reduced by ca. 6% in 1H 2001

K&H Bank and ABN Amro Magyar merged on 1July 2001

new K&H Bank becomes second bank in Hungary

market share around 14% almost 600 000 clients staff levels reduced by ca. 12% in 1H 2001

Request to move to majority stake in Kredyt Bank (Poland)




Return on equity: 30-6-2000 : 6.4% 30-6-2001 : 17.8%

(1) Including all assets and liabilities of IPB

32

Central Europe (2)

Central European Insurance activities also progressing

stake in CSOB Pojist’ovna raised from 75.8% to 100%

market shares (2) : 0.5% in Czech Rep., 3.5% in Hungary and 13% in Poland

Bancassurance on track in Central Europe co-operation started between Argosz,

K&H Life and K&H Bank agreement signed between Warta

and Kredyt Bank




Return on equity: 30-6-2000 : 6.4% 30-6-2001 : 17.8%

(2) KBC estimates

33

Asset Management Increase in assets under management, notwithstanding difficult market conditions

4,3% rise in 1H 2001 volume increase (3.7 bn EUR) more than compensates value decrease (- 0.7 bn EUR)

Largest Belgian player as to mutual funds market share from 29.2% end 2000 to 29.8% mid 2001 ± 50% market share in capital guaranteed funds

Continued launch of new investment funds during 1H 2001

55 new funds in Belgium 2 new CSOB-funds in Czech Republic focus on capital-guaranteed funds

Continued innovation in funds KBC Private Equity Fund Biotech KBC Click Solidarity 1 Kom op tegen Kanker Hedge Fund




34

Asset ManagementFurther growth in assets under management

23.9

2.84.4

27.4

4.64.8

36.8

9.85.3

43.1

21.4

5.1

45.9

21.8

4.9

1997 1998 1999 2000 30-06-01

31.1

36.8 (+18.3%)

51.9 (+41%)

In b

illio

n s o

f EU

R

69.6 (+34.1%)

Private Banking Institutional funds

Mutual funds

% of total AUM 1999 2000 30-6-01

72.6 (+4.3%)

7%30%63%

10%19%71%

7%30%63%

35

Outlook

Economic climate and market conditions remain uncertain

Q3 and Q4 results however should develop more favourably

Y2001 result forecast slightly above Y2000 results

Lang term average EPS growth target of 15 % maintained

KBCBank & Insurance Group

First Half Year Results 2001

Brussels3 September 2001

kbc bank & insurance group first half year results 2001 3 september 2001

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