KBC Group New segment reporting, pro forma figures 2005.

KBC Group

New segment reporting,pro forma figures 2005

2

Changes in reporting: background information

KBC has restated its 2005 quarterly figures to comply with:

The retro-active application of ‘portfolio hedge accounting’ (carve-out’) in Q4 2005 1

Its new segment reporting approach

The retro-active application of the principles of ‘portfolio hedging’ includes that:

the financial impact of it (previously booked as a lump-sum amount in Q4 2005) is allocated to the relevant 2005 quarters (this has a negative impact of 40 m on the Q2 results, fully offset by the positive impact on the Q3 results (7 m) and the Q4 results (33 m)

The segment reporting changes are explained on the following slide

1 Restatement of the P&L lines ‘Net gains from financial instruments at fair value’ and ‘taxes’

REMINDER REMINDER

3

1 An exception has to be made for KBC Bank NV and KBC Insurance NV Belgium’s activities

Changes in segment reporting: background information

New business unit structure as major segment reporting criterion (i.e. Retail Belgium, CEE, European private banking, Merchant Banking, Group Centre)

Disclosure of area of activity results in a full P&L format (which was not the case before)

Full allocation of results of each subsidiary to a single segment 1

No further imputation of impact of capital ‘normalisation’ adjustments on segment bottom-line. In return, funding costs of goodwill related to equity participations will be allocated to the relevant segments

Further restatements of historical time series

Limitation of number of ‘Group Center’ items to: results of holding company non-allocated expenses of other entities that can be deemed holding-company

overheads (e.g., strategic consultancy fees, BoD expenses, ‘group-level’ operating provisions, etc.)

results of co-sourcing vehicles (such as e.g. Fin-Force - as a rule, expenditure is covered by service users, so, barring timing differences, impact on bottom line tends to be immaterial

results of equity holdings within investment portfolio of banking business

REMINDER REMINDER

4

New organisational structure

Europ.Private

Banking

Belgium Retail & PrivateBanc-

assurance

Merchant Banking

CEE

SloveniaBanc-

assurance

No majority control

Czech Rep.Banc-

assurance

SlovakiaBanc-

assurance

PolandBanc-

assurance

HungaryBanc-

assurance

KBC Group

REMINDER REMINDER

1

2

3

Group Centre functions& Shared Services

4

5

The new business unit structure will be used as major segment reporting criterion

5

FY05 earnings, Group total

Bank & Insurance,in millions of EUR 1Q05 2Q05 6M05 3Q05 9M05 4Q05 12M05

Net interest incomeGross earned premiumDividend incomeNet gains from FI at Fair ValueNet realized gains from AFSNet fee and commission incomeOther income

1 019729

34163168429215

1 043978135

6397

410118

2 0621 707

169225265839333

1 096810

25166

49452112

3 1582 516

194392314

1 290444

1 0611 034

41251144528130

4 2193 550

235642458

1 819574

Gross income 2 757 2 843 5 600 2 709 8 309 3 189 11 498

Operating expensesImpairmentsGross technical chargesCeded reinsurance resultShare in result associated companiesTaxes

-1 104-15

-612-1721

-257

-1 209-42

-852-1713

-192

-2 313-57

-1 464-3333

448

-1 177-3

-696-1019

-211

-3 490-54

-2 161-4414

-660

-1 424-49

-899-26

2-266

- 4 914-103

-3 059-6916

-925

Profit after tax 774 544 1 318 598 1 916 528 2 443

Minority interests -57 -48 -104 -48 -153 -41 -194

Net profit – share Group 717 496 1 213 550 1 763 486 2 249

Risk-weighted assets, bankingTotal equity Return on equityCost/income, bankingCombined ratio, non-life insurance

107 60813 316

24%51%92%

111 69314 383

20%57%94%

113 99015 262

19%58%95%

117 73015 751

18%60%96%

6

FY05 earnings, by segment

In millions of EUR

Retail, Belgium CEE Merchant

banking

European Private

Banking

Group Center Total

Net interest incomeGross earned premiumDividend incomeNet gains from FI at FVNet realized gains from AFSNet fee and commission incomeOther income

2 0822 358

102-320256830164

926870

3263

33276219

1 008293

95667

89231103

2586313

835

45057

-57-332124453332

4 2193 550

235642458

1 819574

Gross income 5 472 2 590 2 485 885 66 11 498


-1 8342

-2 210-13

3-415

-1 318-88

-594-4222

-69

-1 07622

-181-30

1-340

-56823

-9003

-55

-119-621516

-13-46

- 4 914-103

-3 059-6916

-925

Profit after tax 1 005 501 882 199 -143 2 443

Minority interests -2 -92 -92 -7 0 -194

Net profit – share Group 1 003 409 789 192 -144 2 249

Share in group resultsReturn on allocated capitalReturn on equity

45%28%

18%31%

35%24%

9%28%

-6%-

100%

18%

7

Retail and Private bancassurance, Belgium



501446

11-82110196

38

511667

72-193

37184

48

1 0121 114

83-275147380

86

538522

2-3227

20140

1 5501 635

85-307173582127

532722

17-1483

24837

2 0822 358

102-320256830164

Gross income 1 220 1 327 2 547 1 298 3 845 1 627 5 472


-4111

-407-91

-112

-448-6

-63612

-65

-859-5

-1 043-82

-177

-4227

-495-22

-115

-1 2823

-1 538-10

4-292

-552-1

-672-2-1

-123

-1 8342

-2 210-13

3-415

Profit after tax 283 174 457 273 729 276 1 005

Minority interests -1 -1 -1 -1 -2 0 -2

Net profit – share Group 282 173 455 272 727 276 1 003

Risk-weighted assets, bankingAllocated capitalReturn on allocated capitalCost/income, bankingCombined ratio, non-life insurance

34 1533 43933%55%89%

34 8393 53119%77%98%

34 8393 53126%65%93%

35 8073 61830%55%95%

35 8073 61827%61%94%

36 1233 68130%63%98%

36 1233 68128%61%95%

8

Central & Eastern Europe



220196

4832066

117

233231

279

26222

452427

6162

22128140

232207

-352107248

684634

3214

32200187

242236

149

07631

926870

3263

33276219

Gross income 705 632 1 337 618 1 955 635 2 590


-2954

-133-99

-59

-316-12

-149-18

3-5

-611-8

-282-2713

-64

-333-34

-141-67

-10

-945-42

-423-3420

-75

-373-45

-172-825

-1 318-88

-594-4222

-69

Profit after tax 221 135 357 100 456 44 501


Net profit – share Group 191 113 304 76 380 29 409

Risk-weighted assets, banking Allocated capitalReturn on allocated capitalCost/income ratio, bankingCombined ratio, non-life insurance

16 4561 36562%50%98%

1 6 4531 37936%69%93%

16 4531 37949%59%96%

17 5471 45523%69%

104%

17 5471 45540%62%98%

18 1991 508

8%76%

100%

18 1991 50831%65%99%

9

CEE – Czech & Slovak Republics



13057

446

453

111

13460

211

25213

264116

657

6104124

13562-424

75525

399178

28113

160149

14464

120

65538

544243

3101

19215187

Gross income 404 274 678 305 982 328 1 310


-1338

-55-20

-53

-154-2

-81-30

-8

-2876

-136-50

-62

-131-23-34

-40

-27

-418-17

-170-90

-89

-194-27-31

-20

-7

-612-44

-201-11

0-96

Profit after tax 169 25 194 85 280 66 345

Minority interests, local 0 -1 -1 -1 -2 -4 -6

Net profit, local 168 25 193 85 278 62 340

Risk-weighted assets, banking Allocated capital Return on allocated capitalCost/income, bankingCombined ratio, non-life insurance

8 485670

97%36%98%

8 6216838%

69%99%

8 621683

52%48%98%

9 552749

39%49%98%

9 552749

47%49%98%

10 139792

27%67%

117%

10 139792

41%53%

103%

10

CEE – Poland



52119

01616-52

69142

012

1-26

121261

02816-78

44124

111

4-14

6

166385

13820

-2114

60147

011-5-3-3

226532

14915

-2411

Gross income 200 228 428 174 602 206 809


-83-2

-76-61

-4

-999

-82-15

-1-2

-1818

-158-21

0-6

-660

-78-30

17

-2488

-237-23

012

-962

-86-604

-3449

-323-29

015

Profit after tax 30 40 70 45 115 24 138

Minority interests, local 0 0 0 0 0 0 0

Net profit, local 30 40 70 45 115 24 138

Risk-weighted assets, bankingAllocated capitalReturn on allocated capitalCost/income ratio, bankingCombined ratio, non-life insurance

3 763383

25%72%

101%

3 407368

35%82%93%

3 407368

31%77%97%

3 354363

40%72%

104%

3 354363

34%76%99%

3 257361

18%83%95%

3 257361

30%78%

98%

11

CEE – Hungary



5619

025

023

2

5622

025

017

4

11242

050

040

6

6421

023

021

3

17662

073

060

9

6019

024

027

5

23681

097

18714

Gross income 125 125 250 130 380 135 515


-72-10-12

-11

-8

-78-16-15

-11

-4

-149-25-27

-11

-12

-88-5

-1701

-5

-238-30-44

-23

-17

-78-7

-14-10

-8

-316-37-58

-22

-26

Profit after tax 24 12 36 16 52 27 79

Minority interests, local 0 0 0 0 0 0 0

Net profit, local 24 12 36 16 52 27 79

Risk-weighted assets, bankingAllocated capital Return on allocated capitalCost/income ratio, bankingCombined ratio, non-life insurance

4 207311

21%65%83%

4 4253287%

73%88%

4 425328

14%69%86%

4 641343

12%77%

113%

4 641343

13%71%95%

4 803354

24%64%

102%

4 803354

16%69%97%

12

CEE – Other 1



-1800

-30

-42

-2870

31-1-40

-4670

28-1-92

-111

-1-60

1014

-568

-122-11

16

-2350

-60

-2-9

-79 13 -117-2-17

(1)(2)(3)(3)(3)(3)(3)

Gross income -24 5 -19 8 -10 -35 -45


-879086

14-430

039

64

390

1115

-48-6

-11054

-41-228

01720

-4-13-40

03

17

-46-15-12

01937

(4)(5)(2)

(6)

Profit after tax -1 58 57 -47 10 -72 -62

Minority interests -30 -21 -51 -23 -74 -11 -86 (7)

Net profit -31 36 5 -70 -64 -83 -148

Mainly:(1) The funding costs of the goodwill of the equity participations in CEE(2) NLB Vita, Slovenia (proportional consolidation)(3) Consolidation adjustments(4) Allocated group operating expenses(5) Impairments on goodwill of the equity participations in CEE(6) Contribution from NLB Bank, Slovenia (associated company)(7) Minorities on KBC level

13

Merchant Banking

In millions of EUR 1Q05 2Q05 6M05 3Q05 9M05 4Q05 12M05


266781699335820

2646639

1472

5523

531145

55246

35113

43

2647623

1573

5624

794220

77403

39169

67

2137318

263506236

1 008293

95667

89231103

Gross income 570 597 1 167 602 1 770 716 2 485


-231-19-48

-60

-66

-252-22-42

-30

-83

-483-41-90

-90

-149

-25827

-48-30

-81

-741-14

-138-12

0-230

-33536

-43-18

1-110

-1 07622

-181-30

1-340

Profit after tax 201 194 395 240 635 246 882



Risk-weighted assets, bankingAllocated capital Return on allocated capitalCost/income ratio, banking Combined ratio, non-life insurance

47 2483 29823%46%90%

50 2773 50322%47%92%

50 2773 50322%46%90%

51 0153 54826%48%88%

51 0153 54824%47%90%

54 3473 77526%55%

100%

54 3473 77524%49%92%

14

European Private Banking



4618

245

2100

24

4919

63819

1079

9537

98222

20733

7315

3-25

9114

7

16852115730

32240

9111

2-49

5129

16

2586313

835

45057

Gross income 238 247 485 196 681 204 885


-135-1

-2401

-22

-155-4

-2601

-19

-289-5

-5002

-41

-14712

-22014

-4376

-7203

-37

-13116

-1801

-18

-56823

-9003

-55

Profit after tax 57 44 101 44 145 54 199



Risk-weighted assets, bankingAllocated capital Return on allocated capitalCost/income ratio

9 749720

31%63%

10 122745

22%71%

10 122745

27%67%

9 618711

22%86%

9 618711

26%72%

8 772653

29%71%

8 772653

28%72%

15

Group Center 1



-15-91

184

1016

-15-616-936

315

-30-1517

9391231

-11-11

114

08

-7

-41-251823392023

-178316

139

-57-332124453332

Gross income 24 40 64 -5 59 7 66


-32007

102

-382147

-19

-7011

1117

-17

-17-882

-29-9

-87-71013

-12-26

-32-55

53

-1-20

-119-621516

-13-46

Profit after tax 11 -3 8 -58 -50 -93 -143

Minority interests 0 0 -1 1 0 0 0

Net profit – share Group 11 -3 8 -58 -50 -93 -144

1 including intrasegment eliminations

Includes:• Results of Holding company (-109 m for FY05) and Gevaert (-32m)• Non-allocated operating expenses of KBC Bank and KBC Insurance that can be deemed

holding company overheads (-26 m)• Results of co-sourcing vehicles (-1 m)• Results of equity holdings within the investment portfolio of banking business (+25m)

16

Return on allocated capital per segment - methodology

ROAC = Net adjusted profit / average allocated capital

Example: CEE, FY 2005

Net profit, group share 409 m+ minority interests +92 m= Net profit after tax 501 m- Yield on excess capital (after tax) - 61 m= Net adjusted profit 440 m (1)

Allocated capital = 8% Tier 1 x RWA, banking+ 200% x capital required, insurance

Allocated capital, 31-12-2004 1 299 mAllocated capital, 31-12-2005 1 508 mAverage capital, 2005 1 403 m (2)

ROAC = (1) / (2) = 31%

17

Contact information

Investor Relations Office

Luc Cool, Head of IRLuc Albrecht, Financial Communications OfficerTamara Bollaerts, IR CoordinatorChristel Decorte, IR AssistantMarina Kanamori, CSR Communications OfficerNele Kindt, IR Analyst

E-mail: [email protected]

Surf to www.kbc.com for the latest update

KBC Group New segment reporting, pro forma figures 2005.

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