1 GROWTH IN CEE COUNTRIES “Czech Evidence” Jaromír Sladkovský FPK Conference, London 14 December 2004

2 LEGAL 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.

3 TABLE OF CONTENTS INTRODUCTION CURRENT SITUATION IN CR FUTURE GROWTH POTENTIAL IN CR KBC POSITIONING IN CR

4 COUNTRIES WITH KBC PRESENCE POLAND population 38.2m GDP*46% bank assets**104m Source: OECD, Statistics of National Banks *) GDP per capita - EU25=100% (PPP) **) as of the end of 2003 (EUR) CZECH REPUBLIC population 10.2m GDP73% bank assets80m SLOVAKIA population 5.4m GDP51% bank assets24m HUNGARY population 10.1m GDP61% bank assets 56m SLOVENIA population 2.0m GDP77% bank assets22m

5 WHERE WILL THE VALUE CREATION COME FROM IN CR IN FUTURE ? M&A Activities Limited on the local market (privatization completed; 85% of bank equity and 96% of bank assets in hands of foreign strategic investors: KBC, ERSTE, SG, HVB, GE etc.) Market concentrated enough (top 3 players have 75% market share in total bank deposits and 50% in bank loans; the concentration in retail banking is even higher as top 4 players have 85% in retail deposits and 90% in retail outstanding loans) Cost Management Main strategic focus after strategic takeover (centralization of processes such as back-office activities; headcount rightsizing; close control of central procurement etc.) Still not sufficiently exploited Revenue Based Growth Large potential (low penetration of the population and companies with financial products; low loan to deposit volume ratio compared to EU countries etc. Dynamic volume growth in key products

6 INTRODUCTION CURRENT SITUATION IN CR FUTURE GROWTH POTENTIAL IN CR KBC POSITIONING IN CR

7 RETAIL LOANS SPEEDED UP COMPARED TO RETAIL DEPOSITS IN Source: CNB, Czech Statistical Bureau (data without individual entrepreneurs) Percent

8 LEVEL OF HOUSEHOLDS’ DEBT IS FAR BEHIND THE EURO-ZONE AVERAGE Source: ECB, CNB, NBS 48% 10% 8% *) Including mortgages and building loans **) Including loans provided to individual entrepreneurs, non-residents etc. Retail loans as % of GDP (2003)

9 CZECH FAMILIES HAVE IMPROVED THEIR STANDARDS OF LIVING Source: Czech Statistical Bureau 1990 BASE LINE = 100 INCREASING PURCHASING POWER REDUCES FUTURE UNCERTAINTY AND ENHANCES WILLINGNESS TO BOROW MONEY* *) Average Czech Family owes over EUR 3 thousand at the end of 2003

10 PORTFOLIO OF THE MOST DEMANDED PRODUCTS HAS CHANGED SINCE 1990 Saving Deposits Social Loans Before 1990 SME Loans Current Accounts Saving Deposits Building Savings Saving Deposits Car Leasing Non-bank consumer credits Consumer Lending Building Savings Building Loans Mutual Funds Life Insurance Mortgages SME Loans Consumer Lending Mutual Funds Pension Funds Life Insurance 2004 Future 2004 Future

11 PENETRATION OF RETAIL CLIENTS WITH BASIC PRODUCTS IS LOW Source: GfK Research – Czech Republic (Spring 2004)

12 PENETRATION OF SME WITH PRODUCTS IS ALSO FAR BEHIND THE POTENTIAL Source: GfK Research – Czech Republic (Spring 2004) COMPANIES* INDIVIDUAL ENTREPRENEURS *) firms with annual turnover up to EUR 10m

13 INTRODUCTION CURRENT SITUATION IN CR FUTURE GROWTH POTENTIAL IN CR KBC POSITIONING IN CR

14 WHICH CLIENTS WILL BRING THE HIGHEST REVENUE GROWTH? RETAIL SME CORPORATE Growing profits resulting in higher volume of deposits Limited potential in terms of number of customers Significantly penetrated with loan and leasing products Highly competitive market – squeezing margins  Unsaturated clients’ needs (only 5% of SME have a loan) Interesting margins and fees New business opportunities resulting from EU accession Risk management (new scoring based methods) Gradually reducing fees from FX transaction (accession to the Euro-zone) Insufficient penetration with financial products Growing wealth of the population Unexploited marketing instruments (propensity models etc.) Robust risk management techniques (scoring-based)

15 WHAT FACTORS WILL SHAPE FUTURE RETAIL BANKING IN CR ? Former antipathy of households against money borrowing originated from the communist-time has been gradually disappearing Demographic development  strong generation in their 30’s has financing and life-time investment needs (life insurance, pension funds)  strong generation in their 50’s (becoming retired in 5-10 years) require mainly short-term investments (mutual funds) Continuing enhancement of living standards Interest rates will very likely stay at current low level …

16 STRONG POPULATION YEARS ARE BECOMING ACTIVE Newly-born children in a given year years old population now Source: Czech Statistical Bureau Thousand of people

17 MORTGAGE SEEMS TO BE A KEY DRIVER IN RETAIL LENDING *) Fixed exchange rate of 31 CZK/EUR **) 2004 Forecast based on the actual results in October 2004 ***) Including consumer loans, overdrafts, credit cards and other loans % 20% 32% CAGR Source: CNB, ČSOB Forecast EUR Billion*

18 PENSION FUNDS AND MUTUAL FUNDS WILL MAINTAIN THEIR HIGH GROWTH Source: CNB, ČSOB Forecast *) current and saving accounts **) technical reserves of life insurance %3% 3%3% 15% 10% 17% 10% EUR Billion* CAGR

19 INTRODUCTION CURRENT SITUATION IN CR FUTURE GROWTH POTENTIAL IN CR KBC POSITIONING IN CR

20 SUMMARY Revenue growth is the topic for value creation in the future Imbalance in deposit to loan ratio of the banking industry shows clear potential Key segments of growth potential are SME clients and individuals (specifically the affluent segment) Housing needs will drive the credit market growth Improving regulatory framework will play an important role

21 ČSOB POTENTIAL Critical mass of customers Ability to retain and attract clients (mainly affluent clients) Focus on lending growth (SME loans, mortgages, etc.) Robust risk management techniques (mainly for SME) Efficiency in „the back” and in the internal supply chain WINNING FORMULA Largest financial group in CR with 5 million retail clients Affluent clients turnover below 1%; growing private banking Strengthening in SME business (35% y-on-y growth) New scoring based approach towards SME Centralization of card mgmt within CEE region KBC (ČSOB)

22 GROWTH IN CEE COUNTRIES “Czech Evidence” Jaromír Sladkovský FPK Conference, London 14 December 2004

23 INTRODUCTION CURRENT SITUATION IN CR FUTURE GROWTH POTENTIAL IN CR KBC POSITIONING IN CR APPENDICES ON THE KBC GROUP

24 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 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 TOP-20 IN EUROLAND BANKING (*)

25 PROMINENT PLAYER IN 2 MARKETS Top financial player in Belgium Succesfully expanded in 5 most advanced countries in CEE (new EU) 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 : Treasury & other 9% CEE 25% Belgium 48% Financial markets 11% Internaternational corporate 7%

26 KBC is one of the largest international players in the region In contrast to the other players, KBC limits its presence to the new EU Member States (the Czech Republic, Slovakia, Hungary, Poland and Slovenia) and is active in both the banking and insurance fields TOP-3 PLAYER IN THE CEE REGION International banks in CEE (by total assets, in bn EUR): Source: RZB – assets as at 31 Dec 03, ownership structure as at 30 Jun 04

27 Core targets: * Capital allocated on the basis of risk-weighted assets and non-amortised goodwill Cost/income ratio, banking 58% Combined ratio, non-life insurance 95% EPS growth (4-y CAGR)10% Return on equity, Group 16% Return on allocated capital *: - Retail in Belgium16% - Central and Eastern Europe17% - Corporates12% - Financial markets18% Tier-1 ratio, banking8% Solvency margin, insurance200% CHALLENGING FINANCIAL TARGETS Minimum targets for 2005

28 SOLID GROUP PERFORMANCE Profitability Efficiency Solvency Tier-1, banking Solvency, insurance Cost/income, banking Combined ratio, insurance Return on equity Growth in EPS 8.8% 320% 65% 101% 13% Dec 02 +1% 9.5% 316% 65% 95% 13% Dec 03 +8% Combined ratio, insurance excluding reinsurance. Solvency, insurance including unrealized gains. 9.6% 341% 60% 94% 17% +36% Sep Trend

29 STRONG EARNINGS MOMENTUM Net profit in m EUR Consensus estimate 3-y CAGR: +15% 9M 04 profit : +40% year-on-year Well on track to deliver on all our targets Consensus estimate as at 7 December 2004

30 EPS Payout ratio DPS Dividend yield STEADILY GROWING DIVIDEND EUR

31 VALUATION P/E 05 CEE banks (1) 13.4 CEE-exposed banks (2) 12.1 Euro-zone banks (3) 11.6 KBC 10.9 BEL banks (4) 9.9 Key figures: Share price: 57.3 EUR Net Asset Value: 38.2 EUR Analysts’ estimates: EPS 2004 consensus: 4.97 EPS 2005 consensus: 5.27 P/E 2005: 10.9 Analysts’ recommendations : Positive: 41% Neutral: 23% Negative: 36% Valuation relative to peer group : Unweighted average of IBES data : (1) OTP, Komercni, Pekao, BPH PBK, BRE (2) Erste, Unicredit, BA-CA, Soc Gen, Intesa BCI (3) Top 20 of DJ Euro Stoxx banks (4) Fortis, Dexia Situation as at 7 December 2004