KBC Bank & Insurance Group

Investor presentationYearend 2004

www.kbc.com

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Contact information

Visit www.kbc.com

Investor Relations Office :

Luc CoolNele KindtMarina Kanamori

Tel. : +32 2 429 49 16 E-mail : investor.relations@kbc.com

Ticker codes: KBC BB (Bloomberg) KBKBT BR (Reuters)

B:KB (Datastream)

ISIN code: BE0003565737

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Disclaimer

• THIS PRESENTATION IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY.

• ALTHOUGH THE STATEMENTS OF FACT IN THIS PRESENTATION HAVE BEEN OBTAINED FROM AND ARE BASED UPON SOURCES THAT KBC BELIEVES TO BE RELIABLE, KBC DO NOT GUARANTEE THEIR ACCURACY, AND ANY SUCH INFORMATION MAY BE CONDENSED OR INCOMPLETE.

• THIS PRESENTATION CONTAINS FORWARD-LOOKING STATEMENTS WITH RESPECT TO OUR STRATEGIES AND EARNINGS DEVELOPMENT BY THEIR NATURE, THESE FORWARD-LOOKING STATEMNTS INVOLVE NUMEROUS ASSUMPTIONS, UNCERTAINTIES AND OPPORTUNITIES. THE RISK EXISTS THAT THESE STATEMENTS MAY NOT BE FULFILLED AND THAT FUTURE RESULTS DIFFER MATERIALLY.

• BY RECEIVING THIS PRESENTATION EACH INVESTOR IS DEEMED TO REPRESENT THAT IT IS A SOPHISTICATED INVESTOR AND POSSESSES SUFFICIENT INVESTMENT EXPERTISE TO UNDERSTAND THE RISKS INVOLVED.

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Table of contents

1. Company profile

2. Developments in Belgium

3. Developments in CEE

Company profile

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6

Top-20 player in Euroland banking (*)

1 BNP Paribas (35 bn) 1 BNP Paribas (45 bn) 1 BSCH (57 bn)2 BSCH (31 bn) 2 BSCH (45 bn) 2 BNP Paribas (48 bn)3 BBVA (29 bn) 3 Deutsche Bank (38 bn) 3 BBVA (42 bn)4 Deutsche Bank (26 bn) 4 BBVA (35 bn) 4 Deutsche Bank (35 bn)5 ABN AMRO (25 bn) 5 Société Gén. (31 bn) 5 Crédit Agricole (35 bn)6 Société Gén. (24 bn) 6 ABN AMRO (30 bn) 6 Société Gén. (34 bn)7 Unicredit (24 bn) 7 Crédit Agricole (28 bn) 7 ABN AMRO (32 bn)8 Fortis (22 bn) 8 Unicredit (27 bn) 8 Unicredit (27 bn)9 Crédit Agricole (14 bn) 9 Fortis (21 bn) 9 Fortis (26 bn)

10 Dexia (14 bn) 10 Intesa BCI (18 bn) 10 Intesa BCI (21 bn)11 Intesa BCI (12 bn) 11 Dexia (16 bn) 11 Dexia (18 bn)

12 Allied Irish Banks (12 bn) 12 San Paolo IMI (15 bn) 12 KBC (18 bn)13 Bank of Ireland (10 bn) 13 KBC (11 bn) 13 San Paolo IMI (15 bn)

14 KBC (9 bn) 14 Bco Popular (11 bn) 14 Allied Irish Banks (12 bn) 15 San Paolo IMI (9 bn) 15 Allied Irish Banks (11 bn) 15 HVB (12 bn)16 Banco Popular (8 bn) 16 Bank of Ireland (11 bn) 16 Bank of Ireland (11 bn)17 HVB (7 bn) 17 HVB (10 bn) 17 Bco Popular (10 bn)18 Mediobanca (6 bn) 18 Commerzbank (9 bn) 18 Commerzbank (9 bn)19 Bca MPS (6 bn) 19 Mediobanca (7 bn) 19 BA-CA (9 bn)20 Bco Popular (5 bn) 20 Bca MPS (6 bn) 20 Mediobanca (9 bn)

Dec 2002 Dec 2003 Nov 2004

(*) DJ Euro Stoxx Banks Constituents - Ranking by Market Capitalization – Situation as at 16 Nov 2004

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Prominent player in 2 core markets

KBC is a top financial player in Belgium and has succesfully expanded its operations in the 5 most advanced countries in CEE (new EU members)

Besides these core markets, KBC is active in selected ‘other’ areas: international mid-corporate banking (mostly in W. Eur.) and financial markets

As investments in CEE have continued to increase, the ‘other’ activities have been progressively scaled down

Breakdown of revenue (9M 04)

Treasury & other 9%

CEE25%

Belgium

48%

Financial markets 11%

International corporate 7%

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0% 10% 20% 30%

Other

Argenta

ING

DEXIA

KBC

FORTIS

Client deposits

0% 10% 20% 30%

Other

ING

KBC

Ethias

AXA

FORTIS

Insurance premiums

0% 10% 20% 30%

Other

ING

DEXIA

FORTIS

KBC

Mutual funds

Top-3 player in Belgium

Market share: (1)

Consolidated banking landscape (80-90% of market held by Top-4)

Market highly receptive to cross-selling of AM & insurance products

KBC is particularly strong in the Northern region (one of the wealthiest regions in Europe)

(1) Figures for 2003. Sources: FEBELFIN, KBC Asset Management, Uw Vermogen (Flemish investment journal)

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KBC is one of the largest international players in the region

In contrast to other players, KBC limits its presence to new EU Member States (the Czech and Slovak Republics, Hungary, Poland and Slovenia)and is active in both the banking and insurance fields

8.7

13.2

13.5

14.3

19.0

21.6

23.5

24.6

28.6

29.0

ING (NL)

OTP (HU)

Citibank (US)

Intesa BCI (IT)

Société Générale (FR)

RZB (AT)

HVB / BA-CA (GE/AT)

UniCredit (IT)

Erste Bank (AT)

KBC (BE)

Top-3 player in the CEE region

International banks in CEE (by total assets, bn EUR) :

Source: RZB – assets as at 31 Dec 03, ownership structure as at 30 Jun 04

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Banking Insurance

Slovakia:Market share: 6% (No. 4)Inhabitants: 5 mTotal assets: 2 bn EUR

Czech Republic:Market share: 18% (No. 1)Inhabitants: 10 mTotal assets:18 bn EUR

Poland:Market share: 5% (No. 8)Inhabitants: 38 mTotal assets: 5 bn EUR

Slovenia:Minority interest (34%)Inhabitants: 2 mMarket share: 42% (No. 1)

Czech Republic:Life M share: 7% (No. 4)Non-life M share: 4% (No. 6)

Slovakia:Life M share: 4% (No. 8)Non-life M share: 1% (No. 6)

Hungary:Life M share: 2% (No. 13)Non-life M share: 4% (No. 6)

Poland:Life M share: 4% (No. 5)Non-life M share: 13% (No. 2)

Slovenia:Life M share: 4% (No. 5)

Top-3 position in the CEE region

Hungary:Market share: 11% (No. 2)Inhabitants: 10 mTotal assets: 6 bn EUR

KBC invested ± 3.6 bn to acquire a prominent banking and insurance position in a growth market of ± 65 m inhabitants

In Poland, KBC is looking for external growth in banking (lack of scale)

Developments in Belgium

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6%9% 11%

16% 16%

UK Nordic Spain Germany Belgium

2.9% 3.1% 3.7% 4.0% 4.2%5.5%

Germany NL France UK Belgium Spain

Nominal GDP growth Savings rate

Do not underestimate the market

KBC estimates, 2005 EU forecast report Spring 04, % of GDP, 2003

Belgian GDP outgrowing European average (slightly) in 2004-05 Savings ratio amongst the highest in the world

(every year, ca. 15% of disposable income flows into financial assets) Belgium’s high savings rate a key driver for sustained growth of the

financial industry

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KBC is well positioned

AM and Life insurance markets growing at ca. 8-10% per year KBC outgrowing the market on the back of its favourable position:

Especially strong in the (wealthy) Northern region Innovative product offering in retail AM (as a result, steadily

increasing market share over the past 10 yrs. ) A differentiating bancassurance distribution model

(on the back of which life reserves grew >20% p.a. over the last 3 yrs.)

127141 146

133 139 145130

149156

143157

165

1999 2000 2001 2002 2003 3M04

145122

170153

202220

264

131118107

1999 2000 2001 2002 2003 2004e

Life insurance, written premiumsRetail AUM

CAGR KBC +10% CAGR KBC +18%1998 = 100total market (LH)vs. KBC (RH)

1998 = 100total market (LH)vs. KBC (RH)

14

17

84118

156

464541

Italy Belgium France Spain Germany UK NL

100108

118128

2001 2002 2003 2004e

Do not underestimate the market

Mortgage loan growthTotal market

Source: ECB

CAGR 9%

Mortgage debt / GDP per capita

Mortgages growing at 8-10% per year, driven by housing inflation (loan-to-value for new loans is typically 75%)

Real estate prices still below other European markets, ensuring a) sustained mortgage growth and b) acceptable risk position

More modest corporate loan growth, in line with nominal GDP growth trend (expected at 4.2 % in 2005)

Source: NBB

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0.6%1.0% 1.0%

0.7%0.7%

End-00 End-01 End-02 End-03 Mid-04

Spreads on new mortgages

Margin development

KBC

1.0%1.5% 1.4% 1.2%

1.5%

End-00 End-01 End-02 End-03 Mid-04

Spreads on new small business loans

KBC

Loan spreads increased substantialy (‘doubled’), following consolidationon market at the end of the ’90s

Recently, renewed margin pressure on both the credit and deposit sides, since large players are eager to defend their market share

KBC’s net-interest margin in Belgium currently at 1.97% (2.04% in ’03)

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Do not underestimate the market

Fee rates still ‘cheap’, allowing for further (gradual) repricing

Greatest hindrance to repricing (probably) not from market competition, but from public opinion

56 60

102 102 104

183

UK Belgium Germany France Spain Sweden

Core banking service fee rates World retail banking report (EFMA)EUR, 2003

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Solid credit quality

19%18%

13%11% 11%

9%8%

6%

France UK Germany Italy PortugalSpainBelgium NL

Non-secured retail loans / total loans

0.32%0.22% 0.24%

0.07%

2001 2002 2003 9M04

Loan loss charges, KBC

Market’s ‘savings culture’ implies low demand for unsecured consumer lending

Commercial loan exposure well-diversified, spanning a large number of SMEs (limited number of very large corporates)

Credit quality proven to be solid, with low loan loss charges over the cycle

Source: central banks%, 2003 KBC (net provisions to gross loans)

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Further cost reduction potential

51%54% 56%

65% 66% 66%

UK Spain Nordic Benelux Germany France

Cost/income, total market%, 2003 Banking

85% 86%

74%69%

2001 2002 2003 9M04

Cost/income, KBC Belgium

- 16 pp

Retail banking(incl. AM)

KBC committed to bring cost/income further down by Reducing product and business-process complexity (360 projects) Co-sourcing of back offices with other (international) banks, e.g.:

‘Orbay project’ with Rabobank (securities processing): unit cost to be reduced by 2/3, generating 15-20 m recurring cost savings

‘Fin-Force project’ (cross-border payments) Similar areas

Developments in CEE

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3.7% 4.7% 3.4%

4.0%4.2% 3.1%

4.2%

2.8%

CR Slovakia Hungary Poland

2005e

Above-average GDP growth

Real GDP growth + inflation - KBC estimates

6.5%8.7%

7.6% 7.3%

Nominal GDP growth in 2005 expected at ca. 7% in the region, outgrowing EU level by ca. 3.5%

GDP expected to outgrow European averages for a long time(similar to previous EU entrants)

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73%

44% 44%34%

CR Slovakia Hungary Poland

80%63%

44% 46%

CR Slovakia Hungary Poland

1997 2003

Increasing product penetration

Current level of financial intermediation and product penetration still low (e.g., 45% of the population in our markets have a bank account, 30% a savings account and 5% a mortgage loan)

Levels steadily catching up with that of the EU

Size of retail financial sector could multiply five-fold in 10 yrs. time,if financial assests to GDP were to reach current levels of S. Europe

Deposits as % of GDP (EMU avg = 100) Deposits as % of GDP (EMU avg = 100)

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2 158

11 47413 914

1998 2002 9M03

39%

93% 90%

Czech Rep. Hungary Poland

Mortgage loan growth

Strong momentum in retail business

Mutual fund growth

CAGR +48%

Total market, 2003 Total market CEE-3, in m EUR FEFSI

Retail business growing at double-digit pace (albeit starting from a low basis), on the back of a) increasing disposable income and b) underpenetration of financial products

This explains KBC’s (and other FIs) key focus on the retail market Corporate market more mature, including corporate loan growth,

which is more in line with (higher) GDP growth trend

NBP, NMB, CNB

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6.1%

3.1%

1.7%2.5%

1.3%1.5%

2.5%3.2%

1.7%

End-02 Mid-03 End-03 Mid-04

CRHungaryPoland

Margin levels have been ‘normalizing’

Mortgage loan spreadsNMB, NBP, CNB

N/a N/a N/a

Due to increased competition, margin pressure has already come through to a large extent

KBC’s net-interest margin currently at 2.7% in CR/SR (vs. 2.5% in ’03), 3.8% in Hungary (vs. 4.0%) and 4.6% in Poland (vs. 4.9%)

As rates continue to converge towards euro levels, somewhat more margin compression expected – to be offset by volume growth and fees

Total market

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67%

57%

80%73% 70%

84%77%

66%63%

53%56%

70%

2002 2003 9M04 Sector2003

CR

Hungary

Poland

Cost/income ratio

Cost-reduction potential

KBC

C/I levels significantly down in the the last 2 yrs. (except in Poland)

Still existing ‘efficiency gap’ vis-à-vis local market average, in the process of being closed

In Poland, resolution to structural issue (lack of scale) may be critical

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Expanded horizons in CEE paying off

Ytd figures clearly illustrating internal return target of 17% is achievable (except in Poland)

Since we are closing the efficiency gap, higher return in these market levels seems to be within reach (assuming stable cost of risk)

In Poland, returns can be further increased, but ‘structural issue’ (scale) may be critical for creating value above cost of capital

Contribution to Group: profit excl. minority interests and return on excess capital; incl. allocated Group overhead.

In m EURStand-alone

net profit

Contribution to Group

Contribution% y-o-y

Return onallocated capital

Return on invested capital

CR/SLK (o/w SLK)

16313 124 7% 17% 12%

Hungary 65 25 5% 19% 16%

Poland 32 25 - 11% 6%

Slovenia 65 22 - - 7%

Banking results – 9M04

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Update on restructuring efforts in Poland

Risk issue adequately dealt with in 2003 Historic loan book ‘cleaned-up’

(one of the highest provision coverage rates on the market and ytd 04 provisions below market avg.)

Risk management procedures upgraded and distressed asset portfolio closely monitored

Cost basis significantly reduced: Centralization of back offices, outsourcing

of non-core functions and divestiture of non-core assets (Ukraine, Lithuania, etc.)

Headcount reduced by 1 300 FTEs (-19%)

Renewed focus on business development as of 2H04 Including intensive transfer of KBC know-how Acceleration in bancassurance and AM sales

Key achievements :

Clearprofitabilityturnaround

- Risk

- Costs

+ Volumes

KBC Bank & Insurance Group

www.kbc.com

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