Annual Report 2004 - KU Leuven€¦ · Management and audit bodies 3 Corporate Governance 5 2004...

Annual Report

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PRESENTATION OF ACTIVITIESManagement and audit bodies 3

Corporate Governance 5

2004 ANNUAL ACCOUNTSReport by the Board of Directors to the General Meeting 11

Key figures 20

Balance sheet after allocation 21

Off-balance sheet items 23

Profit-and-loss account 24

Allocations and deductions 26

Annexe 27

Social balance sheet 39

Summary of valuation rules 42

Report by the College of Auditors 46

2004 CONSOLIDATED ANNUAL ACCOUNTSReport by the Board of Directors to the General Meeting 49




Annexe 56


CONTENTS

Board of Directors

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Chairman André CORMIER, general manager, Caisse Fédérale du Crédit Mutuel Nord Europe sc

Vice-Chairmen Jean COURTIN, managing director, Société Fédérale de Participations, limited liability companyunder public law

Rik JAEKEN, president, UNIZO

Roger MENE, chairman of the board of directors, Banque de Crédit Professionnel SCRL

Directors Daniel BROUET, member of the executive board, Crédit Professionnel sa

Eric CHARPENTIER, deputy general manager, Caisse Fédérale du Crédit Mutuel Nord Europe sc

Serge DECLERCK, member of the executive board, Crédit Professionnel sa

Pierre GERVAIS, deputy general manager, Caisse Fédérale du Crédit Mutuel Nord Europe scand member of the executive board, Crédit Professionnel sa

Guido HENKENS, chairman of the executive board, Oostvlaams Beroepskrediet cvba

Noël PAUWELS, chairman of the executive board, West-Vlaamse Bank cvba

Werner ROGIERS, chairman of the executive board, Crédit Professionnel sa

André VAN MALDEGEM, chairman of the executive board, Onderling Beroepskrediet cvba

Robert TOLLET, chairman of the board of directors, Société Fédérale de Participations, limited liability company under public law

Jozef VANDENBERGHE, chairman of the board of directors, Federale Kas voor het Beroepskrediet cvba

Jean-Christophe VANHUYSSE, member of the executive board, Crédit Professionnel sa

Paul VAN ROMPUY, managing director, Société Fédérale de Participations, limited liability company under public law

Philippe VASSEUR, chairman of the board of directors, Caisse Fédérale du Crédit Mutuel Nord Europe sc

Crédit Professionnel

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Executive Board

ChairmanWerner ROGIERS

Vice-ChairmanPierre GERVAIS

Members Daniel BROUETSerge DECLERCKJean-Christophe VANHUYSSE

Permanent GuestEric CHARPENTIER

Crédit Mutuel Nord Europe Belgium sa (CMNE Belgium sa) 1,976,080 shares 52.74 %

Société Fédérale de Participations, 951,902 shares 25.41%limited liability company under public law

Crédit Professionnel du Brabant - Banque scrl 187,333 shares 5.00 %

Banque de Crédit Professionnel scrl 179,569 shares 4.79 %

West-Vlaamse Bank cvba 137,632 shares 3.67 %

Onderling Beroepskrediet cvba 107,286 shares 2.87 %

Oostvlaams Beroepskrediet cvba 93,196 shares 2.49 %

Federale Kas voor het Beroepskrediet cvba 65,608 shares 1.75 %

Middenstands Deposito- en Kredietkantoor cvba 28,165 shares 0.75 %

Crédit Professionnel Interfédéral scrl 19,889 shares 0.53 %

Shareholder Structure

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Management and audit bodies

College of Auditors

PricewaterhouseCoopers Company Auditors SCCRL represented by Josy STEENWINCKEL

Deloitte & Touche Company Auditors SC s.f.d. SCRL represented by Philip MAEYAERT

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The bank’s powers are divided between its various bodies, in accordance with

the principles of company law, the operation of credit institutions and the pro-

visions of the banking protocol.

Corporate Governance

The board of directors lays down the overalllines of policy for the bank and approvesthe financial programmes for the financialyear. The board is informed from time totime of the bank’s commercial and financialresults and is asked to provide its opinionon financial decisions of the highestimportance.

In compliance with articles 16, 18 and 21 ofthe Royal Decree issued on 23rd December1996, the board exercises particularcontrol over the conditions for accessingthe Crédit Professionnel network.

The board of directors met on eight occa-sions in 2004.

Duties of the Board of Directors

The executive board, which meets weekly, is authorised tocarry out all acts of management within the objectives ofthe company and within the scope of the strategy definedby the board of directors.

The members of the executive board share the supervisionand control of the operating departments.

Assets and Liabilities Committee - ALCO

This committee is made up of members of the executiveboard, as well as specialists from the finance division andaccounts department.The committee analyses possible trends in interest rates anddecides on the general lines of the policies applied to finan-ce, funding and liquid assets.

ALCO is the body entrusted by the executive board tomanage the bank’s balance sheet, while complying withthe directives approved by the board of directors andwithin the confines of the strategies and lines of conductapproved by the executive board regarding interest raterisks.

Duties and operation of the Executive Board

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The Charter of the Crédit Professionnelnetwork was signed on 16th December1999. The parties to the Charter are: CaisseFédérale du Crédit Mutuel Nord Europe,Crédit Professionnel/Beroepskrediet andeight Regional Banks:

Banque de Crédit Professionnel, Crédit Pro-fessionnel Interfédéral, Federale Kas voorhet Beroepskrediet, Middenstands Deposito-en Kredietkantoor, Onderling Beroeps-krediet, Oostvlaams Beroepskrediet, West-Vlaamse Bank and Crédit Professionnel duBrabant-Banque.

The signatories to the Charter decided on31st January 2000 to create the consultationcommittee. Since then, it has discussed anyand all matters relating to the life of thenetwork. It is at this level that the group’sstrategies and marketing campaigns arediscussed, as well as the definition and des-ignation of joint products. The committeekeeps abreast of all of the audit reportsproduced by members of the network. Inrelation to its members, the committeefulfils the role of conciliation chamber pro-vided for under point 7.2 of the Code ofEthics.

ConsultationCommittee

Chairman: G. HENKENS, chairman of the executive board,Oostvlaams Beroepskrediet cvba - Zele

Vice-chairmen: Ph. VASSEUR, chairman of the board of directors, Caisse Fédérale du Crédit Mutuel Nord Europe sc - Lille

N. PAUWELS, chairman of the executive board, West-Vlaamse Bank cvba - Brugge

M. VERWILGHEN, chairman of the executive board,Banque de Crédit Professionnel scrl - Namur

Members: D. BROUET, member of the executive board, Crédit Professionnel Interfédéral scrl - Mouscron

E. CHARPENTIER, deputy general manager, CaisseFédérale du Crédit Mutuel Nord Europe sc - Lille

A. CORMIER, general manager, Caisse Fédérale du Crédit Mutuel Nord Europe sc - Lille and chairman of the board of directors, Crédit Professionnel sa

S. DECLERCK, member of the executive board, Crédit Professionnel du Brabant-Banque scrl

R. DEVLOO, vice-chairman of the board of directors, Caisse Fédérale du Crédit Mutuel Nord Europe sc - Lille

O. L’ENFANT, chairman of the executive board, Midden-stands Deposito-en Kredietkantoor cvba - Mechelen

P. GERVAIS, deputy general manager, Caisse Fédérale du Crédit Mutuel Nord Europe sc - Lille and vice-chairman of the executive board, Crédit Professionnel sa

W. ROGIERS, chairman of the executive board, Crédit Professionnel sa

A. VAN MALDEGEM, chairman of the executive board,Onderling Beroepskrediet cvba - Gent

J. VANDENBERGHE, chairman of the board of directors,Federale Kas voor het Beroepskrediet cvba - Kortrijk

Permanent guest: A. TUSSCHANS, chairman of the executive board,Antwerps Beroepskrediet cvba - Antwerp

Secretary: Ph. NOBLESSE, Secretary-General, CMNE Belgium

The consultation committee is composed as follows:

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Bureau

The bureau is responsible for preparing thedeliberations of the board of directors. Theboard may also instruct the bureau to moni-tor individual matters. The bureau is not adecision-making body and may not be dee-med to constitute a separate seat of powerthat might replace the board of directorsor the executive board.

Chairman: A. CORMIER, general manager, Caisse Fédérale du Crédit Mutuel Nord Europe sc and chairman of the board of directors, Crédit Professionnel sa

Members: J. COURTIN, managing director, Société Fédérale deParticipations, limited liability company under public law

G. HENKENS, chairman of the executive board,Oostvlaams Beroepskrediet cvba

W. ROGIERS, chairman of the executive board, Crédit Professionnel sa

R. TOLLET, president, Société Fédérale de Participations,limited liability company under public law

Ph. VASSEUR, chairman of the board of directors,Caisse Fédérale du Crédit Mutuel Nord Europe sc

The bureau is composed as follows:

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The purpose of the audit committee is toassist the board of directors in the actualsupervision of SA Crédit Professionnel. Theaudit committee maintains relations withthe audit and control departments, com-pliance, the executive board in connectionwith audit problems, as well as with thecompany auditors. The audit committee mayrequire any relevant information or docu-ment to be produced and may proceed withany and all investigations, solely throughthe internal audit department or throughthe executive board.The audit committee may also be instruc-ted by the board of directors to carry outspecific assignments that fall within thescope of its duties.

Audit Committee

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Chairman: P. VAN ROMPUY, managing director, Société Fédérale de Participations, limited liability company under public law

Members: E. CHARPENTIER, deputy general manager,Caisse Fédérale du Crédit Mutuel Nord Europe sc

G. HENKENS, chairman of the executive board,Oostvlaams Beroepskrediet cvba

Permanent guests: J. DRUON, inspector-general, Caisse fédérale du Crédit Mutuel Nord Europe sc

W. ROGIERS, chairman of the executive board,Crédit Professionnel sa

J.C. VANHUYSSE, member of the executiveboard, Crédit Professionnel sa

K. BOMANS, internal auditor, Crédit Professionnel sa

Ph. NOBLESSE, compliance officer, Crédit Professionnel sa

The audit committee is composed as follows:

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CONTENTSHighlights 10

Accounting results 12

Notes on the balance sheet and profit-and-loss account 14

Banking risks 16

Key figures 20




Allocations and deductions 26

Annexe 27

Social balance sheet 39

Summary of valuation rules 42


2004 annual accounts

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Highlights

Expansion of the services provided to the Regional Banks

The acquisition of all of the sharesin a stockbroking company loca-ted in Knokke, taking the name ofBKCP Securities, enabled SA CréditProfessionnel to expand the servicesit provides to the Regional Banks.

BKCP Securities has been a fullsubsidiary of SA Crédit Profession-nel since 19th July 2004.

Collaboration with the RegionalBanks will be put into operationin 2005 in such a way as to provi-de their customers with stockbro-king transactions and administra-tion of assets.

Registration as a savings banks onthe lists of the CBFA

The board of directors of SA CréditProfessionnel decided to requestthat the credit institution be regis-tered on the lists of the CBFA, underthe heading of “Savings Banks”.The CBFA granted its approval on2nd February 2004.

As a result, all of the credit institu-tions in the Crédit Professionnelnetwork are now registered underthe same heading.

Human Resources

On 11th May 2004, the Work Counciland the Health and Safety in theWorkplace Committee (Comitépour la Prévention et la Protectiondu Travail) were elected for a singleTechnical Operating Unit (UnitéTechnique d’Exploitation) as partof the collective working agree-ment on the single status.

As a result, social consultationbecame a joint matter for SACrédit Professionnel, Banque duBrabant, Crédit Professionnel Inter-fédéral and BKCP-IT.

Procedures underway

A transaction agreement withCPH and Banque du Brabantenabled an old dispute before theCouncil of State to be ended withregard to one of the circularsissued at the time by CaisseNationale de Crédit Professionnel.

This agreement made it possibleto write-back a provision of ±10million EUR, which not only consti-tuted an exceptional result, but inparticular led to a strengtheningof the equity capital of SA CréditProfessionnel.

Rating

The improvement in the financialsituation at CPsa led to an upgradeby the rating agency FitchRatingsof the long-term rating to A fromA-, with stable prospects.

Report by the Board of Directors to the General Meeting of Shareholders on 12th May 2005

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At 31st December 2004, the resultwas 10.6 million EUR, comparedwith 0.9 million EUR for the 2003financial year. The accounts for2004 were highlighted, on the onehand, by a return to the black ofprofit before tax and extraordina-ry items, with a little less than 0.7million EUR and, on the other, bythe unexpected occurrence ofmainly positive items, generatingan extraordinary profit of 10 mil-lion EUR.

After a year in 2003 that wasinfluenced financially by the conse-quences associated with a lack offixed-rate resource allocation againsta background of widespread fallin rates, 2004 was affected positi-vely by:

• an improvement in our refinan-cing terms, with the maturing ofloans at a high fixed rate repre-senting almost 250 million EUR;

• a sharp increase in our issues ofMTNs, mainly on behalf of theregional banks in the network,with a gross total of 210 millionEUR.

This more than made up for thenegative impact in terms of earlyreimbursements and exceptionalreviews since 2003 resulting fromincreased competition in a contextof exceptionally low rates.

As a result, the interest marginrose from 7.4 million EUR to 9.8million EUR, representing an increaseof 32.8%.

The balance of commissions recei-ved and paid out, after adjust-ment for commissions transferredto non-members of the BKCPNetwork(1) and the recovery ofcosts on payment business, conti-nued its improvement for thesecond consecutive year, with atotal of 1.4 million EUR, comparedwith 0.9 million EUR in 2003.

• The level of commissions recei-ved improved as an effect, onthe one hand, of the very goodmarketing of our insurance andfinancial products by the Net-work, with something in excessof 0.1 million EUR, or an increaseof slightly under 30% and, onthe other, from the combinedeffect of the increase in volumesand the review of the chargingterms for the payment business,also for a little over 0.1 millionEUR.

• The downward trend recordedsince 2001 continued in the areaof cash certificates, with contri-buting commissions falling by alittle over 0.1 million EUR.

Accounting results for 2004

(1): Commissions transferred to non-members of the BKCP Networkconsist of the difference betweenthe customer rate for contracts andthe mobilisation ratio for the refi-nancing linked to it. These commis-sions should be analysed rather interms of the interest margin. These“commissions” represented 2.2 mil-lion EUR in 2004, compared with 2.3million EUR in 2003.

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Remuneration for services on behalfof the Guarantee Funds continuedits downward trend, with 0.5 mil-lion EUR in 2004, versus 1.7 millionEUR in 2003.

The process of relocating the day-to-day management activities inthe regional structures ended on1st March 2004 with the transferof the management of the FlemishGuarantee Fund to Participatie-maatschappij Vlaanderen.

Income from financial fixed assetsremained stable.

Net bank income was boosted by aprofit of 2.4 million EUR, 3 millionEUR in 2003, generated by the dis-posal of marketable securities inthe wake of a market opportunity.Net bank income was 11.4 millionEUR, compared with 8.7 millionEUR at the end of the 2003 finan-cial year, representing an improve-ment of 31%.(2)

Operating overheads recorded inthe accounts during the 2004financial year represented a grossamount of 13.7 million EUR, com-pared with 13.9 million EUR in2003. Restructuring provisions of1.8 and 2.5 million EUR written-back for 2004 and 2003 respective-ly need to be deducted from theseamounts, as well as miscellaneousamounts incurred on behalf ofthird parties and re-billed in otherincome for an amount of 3 millionEUR in 2004 and 2.3 million EUR in2003. As a result, operating over-heads were 8.9 million EUR in 2004and 9.1 million EUR in 2003.

Staff overheads continued theiruninterrupted downward move-ment since 2002, with 3.8 millionEUR in 2004, compared with 4.3million EUR in 2003. This was areduction of 11.6% and was madepossible as the result of the trans-fer of business from the Flemishguarantee fund.

At 31st December 2004, the num-ber of staff on indefinite employ-ment contracts working at CréditProfessionnel sa was 44, comparedwith 62 one year earlier.

Other administrative overheads roseby 0.3 million EUR, or an increaseof 3.2%.

Extraordinary profit rose by 7.6million EUR compared with 2003and closed at 10 million EUR.Settlements on the disputed mat-ters examined by the Council ofState enabled a net profit of 10million EUR to be entered in theaccounts. The write-back of extra-ordinary provisions associated withrestructuring represented a littleless than 1.8 million EUR and a dis-pute with social security requiredan extraordinary provision of 1.9million EUR to be set aside.

The balance of the provision forrestructuring was 1.1 million EURat the end of the financial year.This will make it possible to conti-nue the investments committed forrevamping the IT systems andmaking the bank’s structures fallinto line with the requirements ofthe Network.

(2): excluding remuneration for servicesprovided on behalf of the GuaranteeFund.

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The balance sheet total at the end of the 2004 financial year was2,040 million EUR, compared with 2,276 million EUR at the endof 2003. This represents a fall of 236 million EUR. This variationwas the result, on the one hand, of a reduction in our customerbusiness (down by 138 million EUR) and, on the other, in ourinvestment portfolio (down by 116.6 million EUR). Our interbankbusiness continued to grow in 2004, rising by 21.1 million EUR asa result of the continued development of our refinance business.

Claims on credit institutions (item III of the assets)

Claims on credit institutions represented an amount of 1,201.6million EUR, which was up by 21.1 million EUR over the previousyear. In addition to at call and term interbank advances, thisitem includes medium and long-term loans raised by the regio-nal banks. At 31st December 2004, the loans raised by the regio-nal banks (excluding managed loans) represented 943 millionEUR, compared with 868 million EUR in 2003, or an increase of8.6%. Other at call and term interbank advances fell from onefinancial to the other by 55.2 million EUR.

Claims on customers (item IV of the assets)

This item of the balance sheet mainly includes loans raised bypartner organisations other than the regional banks. Outstandingterm loans granted to these financial institutions represented272 million EUR at 31st December 2004, or a reduction of 8.7%over the year. Our stock of direct loans, representing loans gran-ted to our “retail” customers up until July 2001, fell by 18.8%,with the amount outstanding at 226 million EUR. This item alsoincludes mortgages acquired abroad, which at the end of 2004only represented an amount of 0.7 million EUR.

Fixed investment portfolio (item V of the assets)

This portfolio decreased by a little less than 117 million EUR, fal-ling from 379 million EUR in 2003 to 262 million EUR in 2004. Thisfall corresponds to the repayment of securities reaching maturity.

Debts to credit institutions (item I of the liabilities)

The fall of 45 million EUR, (776 million EUR in 2003, comparedwith 731 million EUR in 2004), resulted from the reduction bothof our at call debts, which fell 29 million EUR, and our termdebts, which fell 16 million EUR.

Debts to customers (item II of the liabilities)

The fall of 214 million EUR, (481 million EUR in 2003 comparedwith 267 million EUR in 2004), resulted from two loans reachingmaturity. The Merrill Lynch loan for 149 million EUR, fromFebruary, and a loan of 75 million dollars during September.

Debts represented by a security (item III of the liabilities)

Outstanding cash certificates fell by 58 million EUR, (333 millionEUR in 2003 compared with 275 million EUR in 2004). MTNs atone year fell by 28 million EUR, (117 million EUR in 2003, comparedwith 87 million EUR in 2004), while MTNs at more than one yearrose by 159 million EUR, (404 million EUR in 2003, compared with563 million EUR in 2004).

Provisions for risks and charges (item VIa of the liabilities)

The account for provisions for risks and charges fell by 10.6 mil-lion EUR during the 2004 financial year. This movement was causedin particular, on the one hand, by the entry of recoveries in theaccounts, with most notably an amount of 10.3 million EUR aspart of transactions conducted in the matter relating to commis-sions associated with the ‘9/93 circular’, as well as 1.8 million EURassociated with the restructuring of the bank and, on the otherhand, by the entry in the accounts of an amount of 1.9 millionEUR representing provision for a dispute with social security.

Subordinated debts (item VIII of the liabilities)

Subordinated debts fell from 59 million EUR at the end of the2003 financial year to 20 million EUR at the end of 2004. A loanof 37 million EUR matured during September.

The aim of these notes is to provide additional information about the main

items in the balance sheet and the profit-and-loss account.

Notes on the balance sheet and profit-and-loss account at 31.12.04

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Changes to outstanding

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Interest income and charges (items I & II of the profit-and-loss account)

The interest rate margin recovered significantly, with an increa-se of 32,8%, rising from 7.4 million EUR in 2003 to 9.8 millionEUR in 2004. Interest received fell by 12.1 million EUR, 4.6 millionEUR of which was associated with the repayment of security rea-ching maturity and from the sale of OLOs at the end of the 2003financial year for an amount of 31 million EUR. Interest paid outfell by 14.5 million EUR, mainly as the result of high fixed-rateloans reaching maturity.

Commissions (items IV & V of the profit-and-loss account)

Commissions received were 1.6 million EUR in 2004, comparedwith 1.1 million EUR in 2003. Adjusted from the item for therecovery of expenses on payments business (included in item VIIB‘other administrative overheads’ in the profit-and-loss account),the difference is 0.3 million EUR from one financial year to theother. 0.1 million EUR is associated with an improvement in theterms for the foreign payment business and 0.1 million EUR isassociated with the improvement in commissions on outstandingfinancial and insurance. The balance relates to extraordinaryinvoicing for the ‘national payments’ and electronic bankingbusinesses.

Commissions paid out fell from 2.7 million EUR in 2003 to 2.5 mil-lion EUR in 2004. This fall is due virtually exclusively to the reductionin commissions paid on cash certificates and interest from theDiscount Houses.

Income from financial transactions (item VI of the profit-and-loss account)

Income from foreign exchange and the trading of securities andother financial instruments fell by 0.4 million EUR. This reductionresulted from lesser gains realised on the sale of securities fromthe investment portfolio, 2.4 million EUR in 2004, compared with3 million EUR in 2003, and a positive exchange result in 2004,unlike 2003.

Administrative overheads (item VII of the profit-and-loss account)

Operating overheads fell by 1.4%. The remuneration item fell by0.5 million EUR and was mainly the result of a contraction in thenumber of staff employed in accordance with the restructuringplan. Other administrative overheads rose by 0.3 million EUR, or+3.15%.

Note an increase of 0.2 million EUR in the amount of the costsrecovered on the payment business (see the note to item IV ofthe profit-and-loss account).

Write-downs, downward value adjustments, provisions andprovident funds (items VIII to XIII of the profit-and-loss account)

The amount for the Internal Security Fund, which was 3.1 millionEUR at 31st December 2003 (see item IV of the assets) was alloca-ted in full to downward adjustments in value for mainly indivi-

dualised pre-litigious and litigious situations (item IX). In thecontext of the implementation of international accounting stan-dards (IFRS), the board of directors decided, from 1st January2004, to cease allocating providential funds for future risks, suchas to the fund for general banking risks and the internal securi-ty fund. Previously, these funds were the subject of an annualallocation amounting to a minimum of 5% of net profit aftertax. Recoveries for downward value adjustments in the invest-ment portfolio of 0.160 million, related to our portfolio of SICAVunit trusts (item X).

Write-backs of provisions for risks and charges were associatedmainly with the Merrill Lynch loan, which matured in February2004, and fell by 1.4 million EUR (item XI). The provisions accountfor risks and charges was allocated 0.254 million EUR as part ofthe review of the statutory rate of capitalisation of the indexa-tion and equalisation fund for retirees (item XII).

Other operating income and charges (items XIV and XV of the profit-and-loss account)

Other operating income was made up mainly of the miscella-neous re-billing operations by the bank, mainly to the variousstructures of the CMNE Belgium group, through the CostAssociation (1 million EUR in 2003 and 2 million EUR in 2004) ordirectly (1.3 million EUR in 2003 and 1 million EUR in 2004).

Note should be made for the 2004 financial year in particular ofan amount of 0.5 million EUR representing income generated bythe services provided on behalf of the Guarantee Fund, comparedwith 1.7 million EUR during the previous financial year. Theseservices ceased during the year in accordance with the initial plan.

Extraordinary income (items XVII and XVIII of the profit-and-loss account)

The extraordinary income accounts represented the followingentries during the 2004 financial year:

• 10.3 million EUR for write-back of a provision relating to trans-actions conducted in the matter relating to commissions asso-ciated with the “9/93 circular” (see item VIa of the liabilities).

• 1.8 million EUR for write-back of the provision for restructuringset up in 1999 and 2000.

• 0.675 million EUR corresponding to the receipt of a fixed indem-nity as part of a court case (item XVII.E).

The extraordinary overheads account included the items below:

• 1.9 million EUR relating to the constitution of a provision in thecontext of a dispute with social security.

• 0.775 million EUR representing a downward adjustment invalue on commercial risks associated with the transaction lea-ding to the receipt of the extraordinary fixed indemnity.

• 0.225 million EUR corresponding to the payment of a fixedindemnity as part of a court case (item XVIII.E).

Profit-and-loss account

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TAKING THE RISK

Loans are raised via these three distribution channels:

- the Regional Banks;

- the Discount Houses;

- Credimo-Kempar.

Regional Banks

As part of the “Collaborative Contracts” with theRegional Banks, Crédit Professionnel sa (CPsa) has enteredinto an agreement for refinancing loans. These loansrepresent a counter-party risk on the part of theRegional Bank.

CPsa takes the risk rate on the loan granted by theRegional Bank to its customer.

The counter-party risk that the regional Banks representvis-à-vis CPsa is the subject of close scrutiny in the auditcommittee which handles feedback to the board ofdirectors.

All loans are required to satisfy a certain number ofconditions, as set out in the policy of loans that can beraised introduced by the Regional Banks.

Discount Houses

Discount Houses are, for the most part, companies witha collective name. The involvement of the associateddirectors is determining in the ‘intuitu personae’ rela-tionship that we maintain with them.

The 1995 agreements and amendments provide for thepledging of the customer monitoring accounts linked tothe loans raised in favour of CPsa.

We have two separate refinancing procedures:

- automatic refinancing;

- prior refinancing, which has to have the prior approvalof CPsa.

CPsa’s commitment to refinance is subject to the endor-sement of a conveyancing guarantee draft in favour ofCPsa.

Risk monitoring is the subject of repeated inspectionsconducted on the spot by the external audit.

Credimo-Kempar

The procedures are laid down in various conventionsthat provide for the refinancing of loans either by a sys-tem of fund raising (identical to the Regional Banks) orby a system similar to the Discount Houses.

These conventions provide for the pledging of linearbonds in favour of CPsa in order to enable sufficientcover for the risks to be provided.

Risk monitoring is the subject of repeated inspectionsconducted on the spot by the external audit.

Credit risks

The banking risks described below are the following:

- credit risks;

- financial risks;

- operating risks.

For the amounts and their approximate size,

see the annual accounts and their attachments.

Banking risks

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DEFAULT RISK MANAGEMENT

Delays in payments of outstanding or‘direct’(1) CPsa loans are monitored usingmonthly lists.

1. Recent late payments (less than threemonths) are followed up by the salesstaff in the Regional Banks for the pur-pose of reinforcing the effect of thereminder letters sent out systematicallyand automatically by the informationsystem.

2. If the payment is more than threemonths late, follow-up is handled by thepre-litigation department. If required,this department then takes the stepsneeded to set up an arrangement forsettling the arrears and makes sure thatthe extent of the arrears is restricted asmuch as possible.

Every quarter, a statement of guaran-tees is produced by the departmentusing uniform standards. If the level ofguarantee is not sufficient, a proposalof provision is submitted to the mana-ger of the pre-litigation department.

3. If it is not possible to reach an amicablesettlement with the customer, or if thecircumstances lead to immediate termi-nation, the loans are called in and theirmanagement is taken over by the litiga-tion department. The litigation depart-ment then takes responsibility for reali-sing the guarantees and/or for establishingan amicable repayment plan. Using aquarterly report as a base, the level ofprovisions per case is notified to mana-gement. The litigation department thenproposes any necessary adjustments. Ifthe steps taken by the litigation depart-ment are not successful, the matter isput forward for writing off in theaccounts.

(1): CPsa transferred its retail business to CPI on1st July 2001, but retained the existing portfolioon its balance sheet.

In the context of its role as the bank for the BKCP networkbanks, Crédit Professionnel sa (CP sa) handles certainfinancial risks for the whole of the group, in particular therisk of refinancing and rate risk. These risks are managedin a dedicated department within CP sa based on theconventions used in the Crédit Mutuel Nord Europe(CMNE) group.

As a refinancing body, CP sa has a dealing room thatworks closely with the CMNE dealing room. Its three maintasks are cashflow management on behalf of the bank,the management of the bank’s own assets and, finally, thedevelopment of its ‘Certificates of Deposit’ and ‘MediumTerm Notes’ programmes on the markets.

The counter-party risk is managed globally within theCMNE group. In fact, CP sa has its own counter-party limitsinside the group’s limit. The positions are analysed andchecked daily by the dealing back-office.

Rate risk and liquidity risk are assessed and controlled bythe Assets and Liabilities Committee (ALCO) within CP sa.

All of the items on and off the balance sheet are analysedby ALCO by projecting outstanding funds and by type ofrate. Exposure to one type of rate: fixed, reviewable andvariable is assessed and analysed separately. Developmentof exposure makes it possible to manage the risk with fines-se. In addition to the management of stock at the fixed clo-sing date, the methodology used incorporates the projec-tion of future production and business. The overallapproach to distributing stock and future production provi-des a projected overall view of the risks in the balancesheet. The growing rate risk is assessed every month based on theyield realised for the month.

The liquidity risk is managed and assessed on the basis ofthe same conventions applied in the CMNE group. The dis-tribution of stock in its entirety makes it possible to revealstructural liquidity requirements. Looking ahead two years,this risk must not exceed the amount of the realisable assetsand the lines of finance confirmed to CP sa.

Financial, liquidity and cashflow risks

18

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During 2004, a new approach to the management of raterisk was implemented to enable the Current Net Value(CNV) to be calculated. This approach, which needs to berelated to the requirements of the Basle II accord, willenable the risk rate to be managed in finer detail.The initial conventions and hypotheses made led to a firstestimate of the sensitivity of the NPV, based on the situa-tion at 31/12/04. The model will be developed furtherduring 2005 and will produce a calculation of the VAR.

The positions in foreign currency stem from past invest-ments on which no exchange rate risk has been authorised.

Operational risks

Operational risks are understood to be risks of losses gene-rated by inadequacies or shortcomings in internal processes,human resources and systems, or by events outside thegroup.

The aim of managing these risks in the various entitieswithin the group is to avoid a major claim or series ofclaims threatening the group’s financial results and henceits future.

This takes the form of identifying and regularly updatingany claims encountered so that their impact can be quan-tified and they can be managed by prevention and by aninsurance policy covering the three main risk areas in busi-ness, i.e. people, responsibilities and assets.

The ‘parent company’, Crédit Mutuel Nord Europe, is oneof the leading lights of the working group looking atoperational risks in the context of implementing theMcDonough ratio. This group has been set the task ofdefining for the whole of the Crédit Mutuel - CIC group acommon typology and mapping of risks, as well as draf-ting a set of IT specifications for managing these risks anddesignating an operational risk manager in each of theregional entities of the Crédit Mutuel - CIC group.

As far as the specific situation in Belgium is concerned, aBasle II executive has been recruited to work with CMNEFrance in the area of risks.

Risk mapping, which is based on the triptych of type of risk /object of risk / consequence, gives rise to the systematiccataloguing of claims in excess of 1,000 EUR for the entitiesin the CMNE Belgium group, in order to establish a refe-rence database.

Having stabilised the elements of the standard method,the whole of the methodology defined by the workinggroup was presented to the audit authority, which appro-ved it, thereby enabling the group to envisage the choiceof the advanced method.

19

The setting aside of an exceptional provi-sion of 1,898,931.15 EUR relating to a dis-pute with social security.

Following an in-principle agreement rea-ched in February 2005, CPsa has taken aholding of 4,503,858.56 EUR in the capitalof Middenstands Deposito-en Krediet-kantoor cvba.

This transaction was finalised on 2ndMarch 2005 as part of modifications to thearticles of association.

Events subsequent to the endof the financial year

Details of the services rendered by theauditors outside their mandate are as fol-lows:

• Fees for legal and taxation advice paidto Deloitte & Touche : 193,525.69 EUR, of which 138,458.49 EURfor the Cost Association.

• Fees for taxation advice paid to PricewaterhouseCoopers : 47,639.52 EUR.

Fees paid to the auditors outside their mandate

20

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Balance sheet in millions of EUR2004 2003 Variation

2 040,0 2 276,0 -10,4%Liabilities, of which

Tier two capital 62,5 68,2 -8,4%Equity capital 47,5 38,4 23,7%Subordinated loans 20,3 59,0 -65,6%

Third-party funds, of which 1 923,1 2 111,2 -8,9%Credit institutions 730,8 776,2 -5,8%Customers 266,7 480,7 -44,5%Cash certificates 275,1 333,5 -17,5%Deposit certificates 650,5 520,8 24,9%

Assets, of whichClaims on credit institutions 1 201,6 1 180,5 1,8%Claims on customers 521,5 659,1 -20,9%Portfolio of fixed-revenue securities 262,0 378,6 -30,8%

Key figures

Profit-and-loss account in millions of EUR

Ratios 2004 2003 Variation

Risk Asset Ratio (RAR) 10,09% 9,11% 10,8%Risk Asset Ratio (Tier 1) 7,92% 5,31% 49,2%

2004 2003 Variation

Interest received and similar income 91,1 103,3 -11,8%Interest paid and similar charges -81,3 -95,9 -15,2%

Interest margin 9,8 7,4 32,8%Bank income 11,4 8,7 31,3%

Operating overheads -13,7 -13,9 -1,4%of which staff overheads -3,8 -4,3 -11,6%

Gross operating profit/loss -2,3 -5,2 56,3%Write-downs, downward value adjustments, -0,3 0,3 -200%provisions and provident fundsOther operating income and charges 3,2 3,5 -8,6%

Profit/loss before tax and extraordinary items 0,6 -1,4 144,7%Extraordinary income and charges 10,0 2,3 334,8%

Profit before tax 10,6 0,9 1 080,7%Taxes and settlements 0,0 0,0 0%

NET RESULT FOR THE FINANCIAL YEAR 10,6 0,9 1 080,7%

21

Balance sheet after allocation

Assetsin thousands of EUR 2004 2003

I. CASH IN HAND, ASSETS WITH CENTRAL BANKS AND 77 124POST OFFICE ACCOUNTS

III. CLAIMS ON CREDIT INSTITUTIONS 1 201 555 1 180 488A. At call 146 117 94 225B. Other claims (term or notice) 1 055 438 1 086 263

IV. CLAIMS ON CUSTOMERS 521 467 659 053

V. BONDS AND OTHER FIXED-REVENUE SECURITIES 262 049 378 627 A. From government issuers 223 109 315 441 B. From other issuers 38 940 63 186

VI. EQUITIES, STOCKS AND OTHER VARIABLE-REVENUE SECURITIES 23 640 23 480

VII. FINANCIAL FIXED ASSETS 6 833 4 378 A. Holdings in affiliated companies 6 160 3 797C. Other equities and stock constituting financial fixed assets 581 581D. Subordinated claims on affiliated companies and 92 -

on other companies with which a shareholding link exists

VIII. ESTABLISHMENT COSTS AND INTANGIBLE FIXED ASSETS 107 236

IX. TANGIBLE FIXED ASSETS 11 404 12 129

XI. OTHER ASSETS 972 2 659

XII. ADJUSTMENT ACCOUNTS 12 256 15 191

TOTAL ASSETS 2 040 360 2 276 365

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Liabilitiesin thousands of EUR 2004 2003

I. DEBTS TO CREDIT INSTITUTIONS 730 861 776 194A. At call 18 611 47 916C. Other term or notice debts 712 250 728 278

II. DEBTS TO CUSTOMERS 266 741 480 666 B. Other debts 266 741 480 666

1) at call 146 217 167 6342) term or notice 120 524 313 032

III. DEBTS REPRESENTED BY A SECURITY 925 566 854 317A. Bills and bonds outstanding 275 097 333 471 B. Other 650 469 520 846

IV. OTHER DEBTS 3 542 3 304

V. ADJUSTMENT ACCOUNTS 39 335 47 417

VI. A. PROVISIONS FOR RISKS AND CHARGES 4 475 15 031 1. Pensions and similar obligations 1 066 847 3. Other risks and charges 3 409 14 184

VII. FUND FOR GENERAL BANKING RISKS 2 002 2 002

VIII. SUBORDINATED DEBTS 20 337 59 014

EQUITY CAPITAL 47 501 38 420

IX. CAPITAL 36 328 36 328 A. Subscribed capital 36 328 36 328

XI. REVALUATION SURPLUSES 315 315

XII. RESERVES 1 634 1 105A. Statutory reserve 1 634 1 105

XIII. PROFIT BROUGHT FORWARD (LOSS BROUGHT FORWARD (-)) 9 224 672

TOTAL LIABILITIES 2 040 360 2 276 365

23

in thousands of EUR 2004 2003

I. CONTINGENT LIABILITIES 26 255 91 719 A. Un-negotiated acceptances 36 63B. Guarantees in the form of credit substitute 19 034 85 145 C. Other guarantees 7 185 6 511

II. COMMITMENTS THAT MAY GIVE RISE TO A CREDIT RISK 6 954 36 952 C. Available margin on confirmed credit lines 6 954 36 952

III. ASSETS ENTRUSTED TO THE CREDIT INSTITUTION 898 451 796 827A. Assets held on an organised trusteeship basis 320 507B. Unsecured deposits and similar 898 131 796 320

IV. TO BE RELEASED ON EQUITIES AND COMPANY STOCK 4 4

Off-balance sheet items

24


I. INTEREST AND SIMILAR INCOME 91 149 103 260 of which: fixed-revenue securities 17 225 21 798

II. INTEREST AND SIMILAR CHARGES (-) (81 323) (95 856)

III. INCOME FROM VARIABLE-REVENUE SECURITIES 67 67 D. Other equities and company stock constituting financial fixed assets 67 67

IV. COMMISSIONS RECEIVED 1 632 1 081

V. COMMISSIONS PAID (-) (2 487) (2 696)

VI. PROFIT (LOSS (-)) FROM FINANCIAL TRANSACTIONS 2 411 2 798 A. From foreign exchange and dealings in securities and other financial instruments 15 (161)B. From the realisation of marketable securities 2 396 2 959

VII. ADMINISTRATIVE OVERHEADS (-) (13 653) (13 870)A. Salaries, social charges and pensions 3 763 4 282 B. Other administrative overheads 9 890 9 588

VIII. WRITE-DOWNS AND DOWNWARD ADJUSTMENTS IN VALUE (-) (885) (1 110)ON ESTABLISHMENT COSTS, ON INTANGIBLE AND TANGIBLE FIXED ASSETS

IX. WRITE-BACKS OF DOWNWARD ADJUSTMENTS IN VALUE (DOWNWARD 130 (338)ADJUSTMENTS IN VALUE (-)) ON DEBTS AND WRITE-BACKS OF PROVISIONS (PROVISIONS(-)) FOR ITEMS "I. CONTINGENT LIABILITIES" AND "II. COMMITMENTSTHAT MAY GIVE RISE TO A CREDIT RISK" FROM THE OFF-BALANCE SHEET ITEMS

X. WRITE-BACKS OF DOWNWARD ADJUSTMENTS IN VALUE (DOWNWARD 160 224ADJUSTMENTS IN VALUE (-)) ON THE PORTFOLIO OF INVESTMENTS IN BONDS, STOCKS AND OTHER FIXED OR VARIABLE-REVENUE SECURITIES

XI. USE AND WRITE-BACKS OF PROVISIONS FOR RISKS AND CHARGES 589 1 653 OTHER THAN THOSE COVERED BY ITEMS "I. CONTINGENT LIABILITIES" AND "II. COMMITMENTS THAT MAY GIVE RISE TO A CREDIT RISK" FROM THE OFF-BALANCE SHEET ITEMS

XII. PROVISIONS FOR RISKS AND CHARGES OTHER THAN THOSE COVERED (304) (143)BY ITEMS "I. CONTINGENT LIABILITIES" AND "II. COMMITMENTS THAT MAY GIVE RISE TO A CREDIT RISK" FROM THE OFF-BALANCE SHEET ITEMS (-)

XIII. DEDUCTION FROM (ALLOCATION TO (-)) THE GENERAL - (48) BANKING RISKS FUND

XIV. OTHER OPERATING INCOME 3 601 4 077

XV. OTHER OPERATING OVERHEADS (-) (431) (528)

XVI. PROFIT (LOSS(-)) BEFORE TAX AND EXTRAORDINARY ITEMS 656 (1 429)


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25


XVII. EXTRAORDINARY INCOME 12 887 2 584 B. Write-backs of downward adjustments in value on financial fixed assets - 29C. Write-backs of provisions for extraordinary risks and charges 12 103 2 544D. Gains on disposal of fixed assets 1 6E. Other extraordinary income 783 5

XVIII. EXTRAORDINARY CHARGES (-) (2 929) (250)C. Provisions for extraordinary risks and charges 2 674 - D. Losses on disposal of fixed assets 16 138 E. Other extraordinary charges 239 112

XIX. PROFIT (LOSS(-)) FOR THE FINANCIAL YEAR BEFORE TAX 10 614 905XIXbis. A. Deductions on activated taxes (-) (34) (47)

XXI. PROFIT (LOSS(-)) FOR THE FINANCIAL YEAR 10 580 858

XXIII. PROFIT (LOSS (-)) FOR THE FINANCIAL YEAR TO BE ALLOCATED 10 580 858


26


A. PROFIT (LOSS (-)) TO BE ALLOCATED 11 252 1 4271. Profit (Loss (-)) to be allocated for the financial year 10 580 8582. Profit carried forward (Loss carried forward (-)) from the previous financial year 672 569

C. ALLOCATIONS TO EQUITY CAPITAL (-) (529) (43)2. to the statutory reserve (529) (43)

D. RESULT TO BE CARRIED FORWARD (9 224) (672) 1. Profit to be carried forward (-) (9 224) (672)2. Loss to be carried forward 0

F. PROFIT TO BE DISTRIBUTED (-) (1 499) (712) 1. Repayment of capital (1 499) (712)

Allocations and deductions

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27

Annexe

I. Statement of claims on credit institutions

(item III of the assets) in thousands of EUR 2004 2003

A. FOR THE ITEM AS A WHOLE:1. - claims on affiliated companies 280 651 209 220

- claims on other companies with which 661 186 747 571a shareholding link exists

B. OTHER CLAIMS ON CREDIT INSTITUTIONS (TERM OR NOTICE) (item III B. of the assets)

1. Bills eligible for refinancing at the central bank of the country(ies) 9 000 13 000where the credit institution is located

2. Breakdown according to residual term: - up to 3 months 112 209- more than 3 months and up to one year 75 508- more than one year and up to 5 years 300 542- more than 5 years 560 222- of indefinite duration 6 957

II. Statement of claims on customers(item IV of the assets) in thousands of EUR 2004 2003

1. CLAIMS- on affiliated companies 2 635 54 916

2. SUBORDINATED DEBTS 0 186

4. BREAKDOWN ACCORDING TO RESIDUAL TERM: - up to 3 months 23 466 - more than 3 months and up to one year 36 240 - more than one year and up to 5 years 165 872 - more than 5 years 266 857- of indefinite duration 29 032

5. BREAKDOWN BY TYPE: - trade bills (including own acceptances) 0 - debts resulting from lease financing and similar debts 0 - fixed loading rate loans 0 - mortgages 206 103- other term loans of more than one year 281 997- other 33 367

6. GEOGRAPHIC BREAKDOWN *- claims on Belgium 514 012- claims on other countries 7 455

* Trade bills are broken down by reference to the beneficiaries of the credit

28

III. Statement of bonds and other fixed-revenue securities(item V of the assets) in thousands of EUR 2004 2003

1. BONDS AND OTHER SECURITIES ISSUED BY:- affiliated companies 0 16

2. BONDS AND SECURITIES REPRESENTING SUBORDINATED DEBTS 0 16

3. GEOGRAPHIC BREAKDOWN OF THE FOLLOWING ITEMS: Belgium Other countriesV.A. - government issuers 210 261 12 848V.B. - other issuers 19 549 19 391

4. LISTINGS AND TERMS Book Marketvalue value

a) - Listed securities 262 049 277 589- Unlisted securities 0

b) - Residual term up to a maximum of one year 19 581- Residual term greater than one year 242 468

5. BREAKDOWN BY OWNERSHIP a) - in the trading portfolio 0b) - in the investment portfolio 262 049

6. FOR THE TRADING PORTFOLIO: - positive difference between the upper market value and the acquisition value 0

for bonds and securities valued at market value

7. FOR THE INVESTMENT PORTFOLIO- positive difference for all securities whose redemption 49

value is greater than their book value- negative difference for all securities whose redemption 29 753

value is less than their book value

8. DETAIL OF THE BOOK VALUE OF THE INVESTMENT PORTFOLIOa) ACQUISITION VALUE

At the end of the previous financial year 378 627Changes during the financial year:- acquisitions 0- disposals (-) (111 737)- adjustments according to article 35 c §4 and 5 (+/-) (4 841)At the end of the financial year 262 049

d) BOOK VALUE AT THE END OF THE FINANCIAL YEAR ( a) + b) - c) ) 262 049

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29

IV. Statement of equities, shares and other variable-revenue securities

(item VI of the assets) in thousands of EUR 2004

1. GEOGRAPHIC BREAKDOWN OF ISSUERS OF SECURITIES:- Belgian issuers 4 612- foreign issuers 19 028

2. LISTINGS Book Marketvalue value

- Listed securities 23 640 27 547

3. BREAKDOWN BY OWNERSHIP- in the investment portfolio 23 640

5. DETAILS OF THE BOOK VALUE OF THE INVESTMENT PORTFOLIOa) ACQUISITION VALUE

At the end of the previous financial year 24 854Changes during the financial year:- acquisitions 81 308- disposals (-) (81 308)- other variations (+/-) 0At the end of the financial year 24 854

c) DOWNWARD ADJUSTMENTS IN VALUEAt the end of the previous financial year 1 374Changes during the financial year: - recorded 126- offset (-) (285)At the end of the financial year 1 214

d) BOOK VALUE AT THE END OF THE FINANCIAL YEAR ( a) + b) - c) ) 23 640

V. Statement of financial fixed assets (item VII of the assets) in thousands of EUR

A.1. Breakdown of items VII A,B,C of the assets: credit otherinstitutions

2004 2003 2004 2003

A) ECONOMIC SECTOR OF THE FOLLOWING ITEMS:A. Shareholdings in affiliated companies 7 7 6 153 3 790C. Other equities and stock constituting financial fixed assets 581 581

B) LISTING LISTED NOT LISTEDA. Shareholdings in affiliated companies 6 160C. Other equities and stock constituting financial fixed assets 0 581

30

(item VII of the assets) in thousands of EUR 2004 2003

A.2. Details of the book value at the end of the financial year Companiesfor items VII.A, B and C of the assets

affiliated OTHER(VII.A.) (VII.C.)

A. ACQUISITION VALUEAt the end of the previous financial year 4 020 581Changes during the financial year- acquisitions 2 613 0- disposals and withdrawals (-) -250At the end of the financial year 6 383 581

C. DOWNWARD ADJUSTMENTS IN VALUE At the end of the previous financial year 223 0Changes during the financial year- recorded 0 0At the end of the financial year 223 0

D. NET BOOK VALUE AT THE END OF THE FINANCIAL YEAR (A + B -C) 6 160 581

A. Information to be completed by all credit institutions: The credit institution draws up and publishes consolidated accounts and a consolidated management report in accordance withthe provisions of the Royal Decree issued on 23rd September 1992 relating to the consolidated accounts of credit institutions: YES

B. Information to be completed by the credit institution if it is a subsidiary or joint subsidiaryName, full address of the registered office and, if it is a subsidiary under Belgian law, the VAT number or national registrationnumber of the parent company(ies), stating whether this (these) parent company(ies) draw up and publish consolidated accountsin which the accounts for the institution are integrated by consolidation*:Crédit Mutuel Nord Europe, Avenue des Arts 6 - 9, 1210 Brussels N° nat. 470,114,260: no consolidated annual accounts Crédit Mutuel Nord Europe , place Richebé,4, B.P.1009, 59011 Lille Cedex, France: consolidated annual accounts- If the parent company(ies) is (are) governed by foreign law, the location where the consolidated accounts mentioned above canbe obtained*: Crédit Mutuel Nord Europe, place Richebé 4, B.P. 1009, 59011 Lille Cedex, France

* If the accounts for the institution are consolidated on several levels, information is given on the one hand for the largest groupand on the other hand for the smallest group of companies that the institution is part of as a subsidiary and for which consolidatedaccounts are drawn up and published.

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(item VII of the assets) in thousands of EUR

B. BREAKDOWN OF ITEM VII D. OF THE ASSETScredit other

institutions

2004 2003 2004 2003

Subordinated claims on: - affiliated companies 92

31

Information taken from the latestDirect company rights annual accounts available

Company name, registered Type Number % Annual accounts Units of Equity capital Net resultoffice, V.A.T. nº or NAT REG n° ending on currency (+) or (-) (+) or (-)

C.N.C.P.-N.K.B.K. POOL S.A. ordinary 9 999 99 31-12-03 EUR 252 36Avenue des Arts 6-9 shares1210 BRUSSELSVAT n° : BE 453 215 177

C.N.C.P.-N.K.B.K. ordinary 9 999 99 31-12-03 EUR 414 -9INTERNATIONAL sharesFINANCE S.A.Rue Eugène Ruppert 5 L-2453 LUXEMBOURG

CP-BK REINSURANCE S.A. ordinary 4 998 99 31-12-03 EUR 1 700Av. de la gare 65 sharesL 1611 Luxembourg

BKCP Securities ordinary 12 000 100 31-12-03 EUR 1 418 149Avenue Lippens 115 shares8300 Knokke-HeistVAT n° : BE 424 506 147

VII. Statement of establishment costs and intangible fixed assets

(item VIII of the assets) in thousands of EUR 2004

A. DETAILS OF THE ESTABLISHMENT COSTS Net book value at the end of the previous financial year 121- Write-downs (-) (121)Net book value at the end of the financial year 0of which: - establishment costs and fees for increasing capital 0

(item VIII of the assets) in thousands of EUR

B. Intangible fixed assets OtherGoodwill intangible

fixed assets

A. ACQUISITION VALUEAt the end of the previous financial year 0 462At the end of the financial year 0 462

B. WRITE-DOWNS AND DOWNWARD ADJUSTMENTS IN VALUEAt the end of the previous financial year 0 347- recorded 0 8At the end of the financial year 0 355

C. NET BOOK VALUE AT THE END OF THE FINANCIAL YEAR ( A) - B) ) 0 107

VI §1 List of companies in which the credit institution has a shareholding The companies listed below are those in which the credit institution has a shareholding in the sense of the Royal Decree issued on 23rd September 1992, as well as the other companies in which the credit institution holds company rights representing at least10% of the subscribed capital.

32

VIII. Statement of tangible assets(item IX of the assets) in thousands of EUR Land Installations, Furniture Other tangible

and machinery and fixed assetsbuildings and equipment vehicles

A) ACQUISITION VALUEAt the end of the previous financial year 14 291 14 344 667 1 080Changes during the financial year- acquisitions including immobilised production 0 14 17 10- disposals and closures (-) (9) -At the end of the financial year 14 291 14 349 684 1 090

C) WRITE-DOWNS AND DOWNWARD ADJUSTMENTS IN VALUE

At the end of the previous financial year 3 430 14 122 448 253Changes during the financial year- recorded 428 121 94 114- written back because surplus (-)At the end of the financial year 3 858 14 243 542 367

D) NET BOOK VALUE AT THE END OF 10 433 106 142 723THE FINANCIAL YEAR ( A) + B) - C) )

IX. Other assets(item XI of the assets) in thousands of EUR 2004

MISCELLANEOUS 972

X. Adjustment accounts(item XII of the assets) in thousands of EUR 2004

1. CHARGES TO BE CARRIED FORWARD 820

2. INCOME ACQUIRED 11 436

XI. Statement of debts to credit institutions(item I of the liabilities) in thousands of EUR 2004 2003

A. FOR THE ITEM IN ITS ENTIRETY:- debts to affiliated companies 609 204 646 834- debts to other companies with which there is 65 536 92 431

a shareholding link

B. BREAKDOWN OF DEBTS OTHER THAN AT CALL, ACCORDING TO THEIR RESIDUAL TERM: (ITEMS I.B. AND C. OF THE LIABILITIES)

- up to 3 months 144 250- over 3 months and up to one year 206 000- over one year and up to 5 years 332 000- more than 5 years 30 000- of indefinite duration 0

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33

XII. Statement of debts to customers(item II of the liabilities) in thousands of EUR 2004 2003

1. DEBTS TO:- affiliated companies 2 127 57 954- other companies with which there is a shareholding link 49 041 47 888

2. GEOGRAPHIC BREAKDOWN OF DEBTS:- to Belgium 264 760- to other countries 1 981

3. BREAKDOWN ACCORDING TO RESIDUAL TERM: - at call 202 977- up to 3 months 11 249- over 3 months and up to one year 4 450- over one year and up to 5 years 0- more than 5 years 0- of indefinite duration 48 065

XIII. Statement of debts represented by a security(item III of the liabilities) in thousands of EUR 2004 2003

1. DEBTS WHICH TO THE KNOWLEDGE OF THE CREDIT INSTITUTION CONSTITUTE DEBTS:

- to affiliated companies 289 476 123 380- to other companies with which there is 232 332 267 429

a shareholding link

2. BREAKDOWN ACCORDING TO RESIDUAL TERM: - up to 3 months 90 555- over 3 months and up to one year 181 095- over one year and up to 5 years 574 772- more than 5 years 79 144- of indefinite duration 0

XIV. Statement of other debts(item IV of the liabilities) in thousands of EUR 2004

2. TAXES:a) to be paid 568

3. OTHER DEBTSSalaries and social charges 280Staff solidarity fund 106Invoices to be paid and miscellaneous 1 089Dividend to be paid 1 499

34

XV. Adjustment accounts(item V of the liabilities) in thousands of EUR 2004

1. CHARGES TO BE ALLOCATED 38 827

2. INCOME TO BE CARRIED FORWARD 508

XVI. Provisions for other risks and charges(item VI. A. 3. of the liabilities) in thousands of EUR 2004

BREAKDOWN OF THIS ITEM IF IT REPRESENTS A LARGE AMOUNT

PROVISION FOR RESTRUCTURING CHARGES AND SOCIAL PLAN 1 091

PROVISION FOR LITIGATION WITH SOCIAL SECURITY 1 899

MISCELLANEOUS 419

XVII. Statement of subordinated debts(item VIII of the liabilities) in thousands of EUR 2004 2003

A. FOR THE ITEM IN ITS ENTIRETY- debts to affiliated companies 18 354 57 031- debts to other companies with which there is 0

a shareholding link

B. CHARGES RELATING TO SUBORDINATED DEBTS 3 144

C. INDICATIONS RELATING TO EACH SUBORDINATED LOAN:(ITEM VIII OF THE LIABILITIES, CONTINUED)

Ref nº currency amount term or a) circumstances of advance repaymentduration b) terms of subordination

c) terms of convertibility

1 EUR 1 983 19-01-2006 a) nilb) subordination vis-à-vis preferential and

unsecured creditors of the debtorc) nil

2 USD 25 000 perpetual a) call exercisable on 28th February 2005b) subordination vis-à-vis preferential and

unsecured creditors of the debtorc) nil

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35

XIX. Breakdown of assets and liabilities between euro and foreign currencies

in thousands of EUR in EUR in foreign currency

(equivalentvalue in EUR)

TOTAL ASSETS 2 013 625 26 735

TOTAL LIABILITIES 2 020 831 19 529

XXI. Statement of debts and guaranteed commitmentsActual guarantees constituted or irrevocably pledged by the credit institution against its own assets

in thousands of EUR Pledges on other assets

Book value of the assets pledged

A) AS SECURITY FOR DEBTS AND COMMITMENTS BY THE CREDIT INSTITUTION1. Items in liabilities

Repo operations 0BNB tender 155 000BNB : Target, Ellips 4 000

2. Off-balance sheet itemsSwaps and derivatives 2 000Miscellaneous guarantees 1 141

XXII. Statement of contingent liabilities and commitmentsthat could give rise to a credit risk

(items I and II of off-balance sheet) in thousands of EUR 2004 2003

- Total of contingent liabilities for affiliated companies 25 116 88 707- Total of contingent liabilities for other companies 12 12

with which there is a shareholding link - Total commitments to affiliated companies 1 735 1 735- Total commitments to other companies with which 744 744

there is a shareholding link

XVIII. Statement of capitalA. Share capital in thousands of EUR Amount Number of shares

1. PAID UP CAPITAL (ITEM IX. A. OF THE LIABILITIES)- At the end of the previous financial year 36 328- At the end of the financial year 36 328

2. REPRESENTATION OF CAPITAL2.1. Categories of shares

S.D.V.N. 36 328 3 746 6602.2. Registered shares or bearer shares

Registered 3 746 660

36

XXIII. Information relating to operating results(items I to XV of the profit-and-loss account) in thousands of EUR 2004 2003

A. 1. TOTAL NUMBER OF WORKERS ENTERED IN THE STAFF REGISTER a) Total number of persons entered at year end 44 62b) Average number of persons entered as full-time equivalents 44 59c) Number of hours effectively worked 69 986 109 450

1BIS. TEMPORARY STAFF AND WORKERS AVAILABLE TO THE COMPANYa) Total number at year end 0 0b) Average number of persons employed as full-time equivalents 0 0c) Number of hours effectively worked 0 170d) Costs associated with these categories of staff 0 4

2. STAFF OVERHEADSa) Salaries and direct social benefits 2 609 2 946b) Employer social insurance contributions 811 891c) Employer premiums for extra-legal insurance 177 320d) Other staff overheads 132 125e) Pensions 34 0

3. PROVISIONS FOR PENSIONSa) allowances (+) 254 0b) use and write-backs (-) (33) (41)

B. 1. OTHER OPERATING INCOMERecovery of management costs for Guarantee Fund 476 1655Recovery of costs for BKCP IT and BKCP Soft 783 1 256Recovery of ADF costs 1 977 1 022Miscellaneous 365 144

2. OTHER OPERATING CHARGES (ITEM XV OF THE PROFIT-AND-LOSS ACCOUNT)- levies and taxes 332 383- other operating charges 99 145

C. OPERATING RESULTS RELATING TO AFFILIATED COMPANIESIncome 21 052 19 322Charges 51 336 44 848

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XXIII. Information relating to operating results(continued)


D. Operating income according to origin Belgian offices Belgian offices

I. INTEREST AND SIMILAR INCOME 91 149 103 260

III. INCOME FROM VARIABLE-REVENUE SECURITIES- From shareholdings in affiliated companies 0 0- Other shares and corporate stocks constituting 67 67

financial fixed assets

IV. COMMISSIONS RECEIVED 1 632 1 081

VI. PROFITS FROM FINANCIAL TRANSACTIONS- from foreign exchange and the trading of securities and other financial instruments 15 (161)- from the realisation of marketable securities 2 396 2 959

XIV. OTHER OPERATING INCOME (*) 3 601 4 077

Notes:

1) For foreign companies, a breakdown of each category of business and geographic market must be featured in the annexe to the standardised

document, insofar as from the point of view of the organisation that sells products and provides services relating to the ordinary activities of the credit

institution, these market categories differ considerably from one another.

2) Items III B. and C. of the profit-and-loss account must be annexed to the standardised document and be broken down geographically by reference

to the location of the main office of the companies in question.

XXIV. Statement of term off-balance sheet transactions on transferablesecurities, foreign currency and other financial instruments notconstituting commitments that could give rise to a credit risk inthe sense of item II of the off-balance sheet section

Types of transaction in thousands of EUR Amount at the end of the financial year

2. ON FOREIGN CURRENCY (A)- term foreign exchange transactions 0- swaps of foreign currency and interest 7 161

3. ON OTHER FINANCIAL INSTRUMENTS1. ON INTEREST (b)

- interest rate swaps 609 395

(a) amounts to be delivered(b) nominal/notional reference amount

Category of term interest rate transactions in thousands of EUR Amount on Difference between the closing date market value andfor accounts (a) book value (b)

A) IN THE CONTEXT OF CASH MANAGEMENT 0 0

B) IN THE CONTEXT OF ALM MANAGEMENT 522 000 -27 780

(a) nominal/notional reference amount(b) + : positive difference between market value and the results already recorded

- : negative difference between market value and the results already recorded

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XXV. Exceptional resultsin thousands of EUR 2004

B. OTHER EXTRAORDINARY INCOME: (ITEM XVII. E. IN THE PROFIT-AND-LOSS ACCOUNT)

Miscellaneous 783Other extraordinary charges (item XVIII. E. in the profit-and-loss account)Miscellaneous 239

XXVI. Tax on the resultin thousands of EUR 2004

A. BREAKDOWN OF ITEM XX.A. IN THE PROFIT-AND-LOSS ACCOUNT1. Tax on the result for the financial year

a. Taxes and deductions due or paid 33b. Surpluses from payments of tax or advance levy payments entered as assets (33)

D. SOURCES OF DEFERRED TAXES TO THE EXTENT THAT THESE INDICATIONS ARE OF IMPORTANCE FOR ASSESSING THE FINANCIAL SITUATION OF THE CREDIT INSTITUTION

1. Active deferrals:- accumulated tax losses, deductibility of subsequent taxable profits 53 234

(tax loss 2003)Active fiscal deferral corresponding to an additional tax generated 34by the surplus realised in 1995 the amount of which is the subjectof allocation.

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XXVIII. Off-balance sheet fees and commitments not covered by the statements featured in this section,nor by other off-balance sheet items

in thousands of EUR 2004

B. MAJOR DISPUTES AND OTHER MAJOR COMMITMENTS: Debt on the bankrupt “Gewestelijk Verbond”, the former Fédérale d’Outillage for 5 613which no downward adjustment in value was constituted in view of the State guarantee.This guarantee has already been confirmed by the payment of a provision.

XXVII. Other taxes and charges borne by third partiesin thousands of EUR 2004 2003

A. VALUE-ADDED TAX, EQUALISATION TAXES AND SPECIAL TAXES RECORDED IN THE ACCOUNTS:

1. To the company (deductible) 80 472. By the company 598 365

B. AMOUNTS WITHHELD AND CHARGEABLE TO THIRD PARTIES IN RELATION TO:1. Payroll withholding tax 941 1 2592. Withholding tax on company income 2 101 2 569

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I. Statement of persons employed

Social balance sheet

Where applicable, the number under which the company is registered with the National Social Security Office (ONSS number):167.728.131. Numbers of the joint representation committees on which the company depends: 325

Full-time Part-time Total (T) or total in full-timeequivalents (FTE)

2004 2004 2004 2003

A. WORKERS ENTERED IN THE STAFF REGISTER1. During the current financial year and the past financial yearAverage number of workers 40 6 46 61Number of hours effectively worked 63 039 6 947 69 986 109 450Staff overheads (in thousands of EUR) 3 459 260 3 719 4 323Benefits granted in addition to salary - - 45 44(in thousands of EUR)

2. At the end of the financial year Full-time Part-time Total in full-time equivalents

a. Number of workers entered 39 4 43.8in staff register

b. By type of employment contractContract of indefinite duration 39 4 42.8Fixed-term contract 1 0 1Replacement contract 0 0 0

c. By genderMale 22 0 22Female 18 4 22

d. By professional categoryOffice employees 40 4 43.8

B. TEMPORARY STAFF AND PERSONS Temporary SECONDED TO THE COMPANY staffAverage number of persons employed 0Number of hours effectively worked 0Cost to the company (in thousands of EUR) 0

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II. Table of staff movements during the financial yearFull-time Part-time Total

in full-timeequivalents

A. ARRIVALS

a. Number of workers entered in 10 10the staff register during the financial year

b. By type of employmentContract of indefinite duration 6 6Fixed-term contract 4 4

c. By gender and level of educationMale: primary 1 1

secondary 3 3higher non-university 0 0university 2 2

Female: secondary 3 3higher non-university 1 1university 0 0

B. DEPARTURES

a. Number of workers for whom the end date 18 6 23of their employment contract was entered in the staffregister during the financial year

b. By type of employment contractContract of indefinite duration 11 6 16Fixed-term contract 7 0 7

c. By gender and level of educationMale: primary 0 0

secondary 5 0 5higher non-university 1 1

Female: secondary 5 6 11higher non-university 2 2university 3 3

d. By reasons for termination of contractEarly retirement 1 1Dismissal 0 0Other reason: voluntary departure, of which: the number 17 6 22of persons continuing, at least part-time, to provide services to the company as self-employed workers

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III. Statement regarding the use of measures promotingemployment during the financial year

IV. Information about staff training during the financial year

Number of workers involved Amount of

Number In full-timethe financial

equivalentsbenefit

1. MEASURES INVOLVING A FINANCIAL BENEFIT (*) 1.6. Structural reduction of social security 62 61 78

contributions

2. OTHER MEASURES2.4. Reduction of personal social security contributions 2 2

for workers on low wages

Number of workers affected by one or more measures for promoting employment:

- total for the financial year 62 61- total for the previous financial year

males females

Total initiatives for training staff to be borne by the employer

1. NUMBER OF WORKERS INVOLVED 13 2

2. NUMBER OF HOURS OF TRAINING ATTENDED 220 61

3. COST FOR THE COMPANY 16 5

(*) Financial benefit for the employer concerning the job-holder or his/her replacement

in thousands of EUR

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Summary of valuation rules

1. ITEMS FROM THE ASSETS

1.1. Cash in hand, assets with central banks and Post Office cheque accountsThese debts and claims are recorded in the balance sheet at theirnominal value.

1.2. Claims on credit institutionsClaims represented by deposits or advances of funds that do notconsist of shares or negotiable securities from credit institutionsare valued at the amount made available to these credit institu-tions, less any repayments made in the interim and any associateddownward adjustments in value. With regard to bad or doubtfuldebts, the necessary adjustments in value are recorded for thepotentially irrecoverable amount, fixed by offsetting.

1.3. Claims on customersClaims on customers are valued at the amount of funds made avai-lable to the debtor, less any repayments made in the interim andany associated downward adjustments in value.With regard to debts represented by loans granted at a fixed char-ging rate, reimbursed by periodic payments of a fixed amount, theinterest incurred is calculated using the actuarial method. Loan insu-rance charges are entered for the year in which they are incurred.For debts that are totally or partially irrecoverable or doubtful,downward adjustments in value are made based on an objectiveassessment, albeit a cautious one, of the risk incurred. Account isalso taken of the debtor’s situation and the value of the actual per-sonal guarantees received.Uncertain of doubtful debts are covered adequately (in the curren-cy of the transaction) by carrying out individual downward adjust-ments in value and/or by entering reserved income. They can also beoffset directly.Downward adjustments in value are entered in the accounts eachtime a genuine risk of non-recovery is detected. Downward adjustments in value are written back totally of partial-ly when the risk disappears or is reduced. In principle, each debt isassessed individually.For debts with totally identical technical and legal characteristics,which owing to their individual size and limited number may be

difficult to take into consideration for individual valuation, overalldownward adjustments in value are recorded.An overall adjustment in value is applied to outstanding loans.Overall downward adjustments in value on outstanding loans notwritten off and on commitments entered into with mutual guaranteecompanies (MGC) in which Crédit Professionnel sa/Beroepskredietnv is required to intervene, are set in accordance with the straight-line averaging principle.Interest that cannot be recovered of for which recovery is uncertain,is not taken into account.Reserved interest is deducted from unpaid debts in the assets on thebalance sheet.

1.4. Stocks and other securitiesStocks and other securities are entered in the accounts at theiracquisition value, including costs and charges but not includingbroking fees, and after the deduction of commissions received.

1.4.1. Investment securitiesThe term “Investment securities” is understood to mean thosesecurities acquired by the institution for the purpose of imple-menting a reasoned investment by way of gaining a yield over alonger period of time; not included are securities acquired withthe intention of reselling them for reasons of short-term yield(trading portfolio), as well as securities to be entered underfinancial fixed assets.These securities must be the subject of a specific downwardadjustment in value when reimbursement is totally or partiallyuncertain or is placed in doubt on account of the debtor’s situation.

• Fixed-revenue securities (bonds)The difference between the acquisition price and the reimburse-ment price is entered in the profit-and-loss account for theperiod between the time of acquisition and maturity. The entryis made on an updated basis, taking into account the real yieldon purchase; the effect of this method is to create an equivalentadjustment in the value of the bonds. The securities are enteredin the balance sheet at their acquisition value, plus or minus thedifference mentioned above (i.e. the part entered in the accountsas a profit or loss).

These rules have been drafted in the way provided for in article 7. paragraph 1 of the Law enacted

on 17th July 1975 relating to the accounting and annual accounts of companies, repeated in

article 15 of the Royal Decree issued on 23rd September 1992 in relation to the annual accounts

of credit institutions.

The rules are founded on the following basic principles:

• prudence, sincerity and good faith,

• accurate picture.

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• Treasury certificatesTreasury certificates are entered into the assets at their acquisi-tion price. Based on the actuarial yield calculated at the time ofpurchase, the book value is increased periodically by the amountof interest acquired definitively; this increase is accompanied byan appropriate entry in the profit-and-loss account.

• Linear bondsThese fixed-revenue securities are entered in the assets at theiracquisition value. They are treated in a similar manner to the fixed-revenue securities mentioned above.

• ArbitrageThe entry of gains and losses made through the arbitrage offixed-revenue securities is spread out over time in accordancewith the provisions of article 35c, § 5, of the Royal Decree issuedon 23rd September 1992.

• Liquidity supportSecurities acquired as part of the investment portfolio that areconsidered as “liquidity support” are valued at their marketvalue on the date the accounts are closed if this value is lowerthan their book value, made up of their acquisition value, plus orminus, where appropriate, the amount entered in the accountscalculated on the basis of the actuarial yield of the differencebetween the acquisition value and the reimbursement value. Thedifference will be treated in the form of a downward adjustmentin value in the profit-and-loss account and the reduction in valuerecorded will be entered in the assets as a deduction of theacquisition value.

• Investment sharesThese securities are entered at the acquisition price or market priceon the understanding that the lowest value will be taken intoconsideration. For shares listed on the stock exchange, the marketprice is understood to be the stock exchange price. For shares notlisted on the stock exchange, the market price is understood to bethe estimated value based on the net assets of the issuer last knownbalance sheet, adjusted where necessary to take account of impor-tant events that may have occurred since and which were not incor-porated into these net assets.

1.4.2. Securities for disposalSecurities that are part of the trading portfolio and cash transac-tions in progress relative to securities that are part of the tradingportfolio for which there is a cash market, are valued at their mar-ket price on the date the accounts are closed.If there is no cash market, they are valued at the market price/estimated value or acquisition price, on the understanding thatthe lowest value will be taken into consideration. The estimatedvalue is based on the net assets of the issuer last known balancesheet, adjusted where necessary to take account of importantevents that may have occurred since and which were not incor-porated into these net assets.

1.4.3. Stocks and other securities to be invested This item includes stocks and short-term securities that havebeen acquired as part of an issue for the purpose of investingthem with a third party.

During the investment period, the securities will be valued at theamount at which they were underwritten with the issuer.

1.5. Financial fixed assetsShareholdings and stocks that are part of the financial fixedassets are entered in the accounts at their acquisition value. Theacquisition fees are allocated to the profit-and-loss account forthe year in which they were incurred.

At the end of each financial year, the book value is comparedwith the stock market value or, if the securities are not listed,with the value of the net assets of the company in which the share-holding is held, where appropriate adjusted to take account ofknown items, such as profitability and/or prospects for the future.If the stock market value or estimated value (for unlisted stocks)is lower than the book value, a downward adjustment in valuewill be entered in the accounts, provided the reduction in valueis long-lasting or definitive. In the event of securities being sold,the book value of the items sold for calculating the results can befound by applying the weighted average cost method.

1.6. Establishment costsCosts associated with setting up, subsequent development,restructuring or developing the institution, in particular the costsinvolved for constitution, increasing capital, possibly reducingcapital and restructuring costs are allocated to the profit-and-loss account for the year in which the costs were incurred.Syndicate charges and other fees associated with the issue ofbonds or other debt securities invested during the usual deadli-nes for investment in such bills have been activated and shownin the results symmetrically as interest charges since 1st January1995. Commissions paid to intermediaries during the tap issue ofcash certificates and capitalisation bonds, are immediately ente-red into the accounts for the year in which these charges wereincurred.Any agios and disagios associated with loans issued by the insti-tution are spread over the lifetime of the loans and are thenentered symmetrically into the results with interest charges.

1.7. Intangible fixed assetsCommissions paid for bringing transactions carried out with cus-tomers must be entered in the accounts immediately.

1.8. Tangible fixed assetsTangible fixed assets are entered in the assets at their acquisitionvalue, including any charges, VAT and/or non-recoverable taxes.

• Write-down rates

- Land and buildings

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- Constructions, to the exclusion of related expenses: 3% annual-ly, straight-line- Technical installations: 10% annually, straight-line- Ancillary expenses: same percentage as for the principal.

The long lease rights associated with the parking spaces arevalued on the basis of updated future rents, minus a straight-line write-down on the residual term of the contract.

- Installations, machinery, equipment, furniture and vehicles:- Furniture: 10% annually, straight-line- Non-IT machinery, vehicles: 20% annually, straight-line- Installation of the central computer, including software: 20%

annually, straight-line- Other IT equipment (PC, terminals, etc.): 33.3% annually,

straight-line.

- Write-downs are calculated pro rata temporis.

• Leasing and similar feesWrite-downs on the items covered under this heading are calcu-lated using the same standards as those that apply to assets of asimilar nature that are fully acquired.

• Other tangible fixed assetsThe costs involved for fitting out buildings taken as rentals thatbelong to other companies of the group in which a majority shareholding is held are written down using the straight-linemethod for the residual term of the lease contract underway.

The costs involved for fitting out buildings taken as rentals thatdo not belong to the group are entered into the profit-and-lossaccount on the year in which they are incurred.

2. ITEMS FROM THE LIABILITIES

2.1. Debts to customers and debts represented by a securityThese debts are assessed in accordance with article 20, §2 of theRoyal Decree relating to the annual accounts of credit institu-tions, which states that debts represented or not by commercialpaper or negotiable securities and which represent deposits oradvances are entered in the balance sheet for the amount of thefunds made available to the credit institution, minus any reim-bursements made in the interim.Any difference between the nominal value of such debts and theamount of funds made available originally is treated as incomeor interest charge pertaining to these debts (also see the itemunder “Establishment costs”).Any agios and disagios associated with loans issued by the insti-tution are spread over the lifetime of the loans and are thenentered symmetrically into the accounts with interest charges.

2.2. Provisions for risks and charges

Provisions are set up to cover any probable or certain losses andcharges where the amount can only be estimated reasonably and

for which the time they fall due is not generally known with anycertainty. This item first of all includes any provisions set up tocover the risk of losses associated with possible liabilities andinvolving potential credit risks (commitment loans).The risks associated with commitment loans are assessed on acase-by-case basis, depending on the debtor’s situation on theone hand and the real and personal guarantees received, whileat the same time displaying the necessary caution.This item also includes any provisions made for the risks associa-ted with the existence of positions in foreign currencies, bills ofexchange and other financial instruments.Should, on the date the accounts close, the positions taken inforeign currencies, securities and other new financial instru-ments result in the need to record probable losses, these losseswill be calculated with the prudence required at the date theaccounts are closed, taking account of the situation of the finan-cial markets on which the transactions were conducted andrecorded in the accounts. The provisions entered will not be lessthan the cost of the transactions required to cancel any existingposition on the date the accounts close or to terminate any outs-tanding contracts.

2.3. Provident fund for future risks

Crédit Professionnel sa/Beroepskrediet nv uses the option provi-ded for in article 35 b, §4, of the Royal Decree issued on 23rdSeptember 1992, which consists of applying the two methods ofsetting up a provident fund for potential future risks associatedwith the running of a credit institution. A fund for general ban-king risks and an in-house security fund were used.On 11th November 2004 the board of directors decided not toendow these funds any longer from the financial year 2004 on. The impact of this change in the valuation rule amounts to 1.058million EUR for the financial year 2004.

2.4. Subordinated debts

Debts for which the creditor has signed a subordination clausewith regard to the institution’s non-privileged creditors, areentered in the accounts under this heading; they are valued inthe same way as non-subordinated debts and indicated underthe same heading.

3. NEW FINANCIAL INSTRUMENTS

Hedging transactionsThese are transactions that are designed to provide protectionagainst the risk of fluctuations in exchange rates, interest rate or prices.In general, gains and losses are entered in the profit-and-lossaccount symmetrically with allocation of the income and chargesrelating to the items hedged in order to offset the repercussionstotally or in part.

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Arbitrage or trading transactionsThese are transactions that are entered into as part of an arbitra-ge or trading activity. They do not constitute hedging transac-tions, nor are they considered as such on account of legal provi-sions. To determine the result, these transactions are estimatedat the market rate on the date the accounts are closed.- Transactions carried out on a cash market: the balance of the

positive and negative differences is allocated to the profit-and-loss account, by type of transactions, as income or charges arisingfrom term interest rate transactions.

- Transactions on non-cash markets: in which case, only negativebalances are allocated to the profit-and-loss account, whilepositive balances are entered in the adjustment accounts in theliabilities.

4. OFF-BALANCE SHEET ITEMS

Commitment loans grantedThe amount of security bonds confirmed to customers and notdrawn down are entered in the off-balance sheet items at thenominal value.

Margins available for confirmed lines of creditAmounts not drawn down from lines of credit confirmed andgranted by the institution are given a mention.

Assets entrusted to the credit institutionAssets entrusted to the institution for encashment are mentionedat the nominal or face value of the assets entrusted. For assetsentrusted to the institution as overdraft deposits, the followingvalues are mentioned:

- overdraft deposit: the stock market or intrinsic value of assetsand securities, to be reviewed annually and for cash certificates,the nominal amount of the securities,

- unit trust securities entrusted: the last known price on the clo-sing date.

Assets under trust management

Mainly entered in the accounts under this heading are transac-tions that the institution conducts in its role as trustee of theParticipation Fund. These are claims and securities that the insti-tution holds or owns in its own name, but entirely on behalf ofand at the risk of the principal.These trust transactions do not involve any risk for Crédit Profes-sionnel sa/Beroepskrediet nv.

5. COUNTRY RISKS

Cover for risks on countries that have fallen behind with pay-ments on their debts is regulated by the list of the Banking andFinance Commission. A scoring method is used for at-risk coun-tries to classify them by group, where a specific cover percenta-ge is allocated to each country.

6. CONVERSION INTO EUR OF ITEMS FROM THE ANNUAL ACCOUNTS EXPRESSED AT THE OUTSET IN FOREIGN CURRENCY

6.1. Conversion of items from the balance sheet and off-balance sheet itemsThe annual accounts, stated in EUR, are drawn up on the basis ofassets and liabilities expressed in their respective currencies onthe date the funds or securities of the transactions in questionwere made available.Non-monetary elements, expressed in foreign currency, are ente-red into the accounts at their acquisition value in EUR, calculatedon the basis of the exchange rate in effect on the acquisitiondate or th

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