2003 How IFRS will impact reported earnings as of next year Guido Segers, Managing Director

Investor Day IFRS time schedule for KBC First external IFRS reporting : results of 1Q 2004 Comparative figures of 2003 Transition to IFRS : Corrections due to first time application of IFRS valuation rules : in opening balance sheet of equity on !!! Possibility of reschudeling depending on timing of approval of most important standards !!!

Investor Day Important uncertainties Insurance contracts : no accounting standard available Financial instruments (IAS 32/39) : disagreement between IASB and European Banking Federation about existing standards and about proposed amendments : Obligation to measure all derivatives at fair value

Investor Day Important uncertainties Financial instruments (IAS 32/39) : disagreement between IASB and European Banking Federation about existing standards and about proposed amendments : Hedge accounting rules Application of fair value option Loan impairment rules Line to be drawn between insurance products falling within the scope of IAS 39 and other insurance products (within the scope of the expected standard for insurance contracts)

Investor Day Impact on presentation of financial statements KBC IFRS financial statements consist of : Accounting policies Income statement + balance sheet :  Integrated scheme vs current functional scheme  Based on format of IAS 30 + specific insurance items Statement of changes in equity Cash flow statement : using indirect method Segment reporting : based on organisational structure :  Primary reporting format : business segments : banking, insurance, asset management, holding  Secondary reporting format : geographical segments : Belgium, Central Europe, Western Europe, rest of the world Notes to the financial statements

Investor Day Bel GAAPIFRSReported Loans and receivablesPro rata Investment portfolio Bonds held to maturity Bonds available for sale Bonds at fair value Shares Pro rata Locom / cost Pro rata Fair value Equity P&l Equity Trading portfolioFair value P&l Derivatives In banking books In trading books Pro rata Fair value P&l Impact on B/S and off balance items

Investor Day Bel GAAPIFRSReported Funding liabilitiesPro rata Liabilities at fair valuePro rataFair valueP&l Trading liabilitiesFair value P&l * !! All first time application corrections will be reported in equity !! Valuation of financial liabilities* : Impact on B/S and off balance items

Investor Day Valuation of insurance contracts : according to the current valuation rules until publication of insurance accounting standard Valuation of post employment benefits - defined benefit plans* : present value of defined benefit obligations less fair value of plan assets Provisions* : only to be recognized in case of present or constructive obligation *!! All first time application corrections will be reported in equity!! Impact on B/S and off balance items

Investor Day Deferred taxes* : Liabilities : always to be recognized Assets : to be recognized under certain conditions (foreseeable taxable profit) Changing rules for loan impairment and impairment of equity investments* *!! All first time application corrections will be reported in equity!! Impact on B/S and off balance items

Investor Day Impact on B/S and off balance items !! The figures on the next slide only relate to first time application corrections for the banking business – they will be reported in the opening balance sheet of equity on !! Moreover, these figures are conditional.

Investor Day Fair valuing of bonds and shares available for sale :+ 634 m Fair valuing of derivatives and financial instruments at fair value :- 41 m (including derivatives KBC Bank EUR m and bonds at fair value KBC Bank EUR m) Deduction own shares :- 55 m Underfunding of defined benefit pension plans : m Reversal of provisions : m Deferred taxes : - 55 m Bonds convertible in KBC shares : m Profit appropriation : m Total correction of equity : m Impact on B/S and off balance items

Investor Day Impact on B/S and off balance items !! The figures on the next slide only relate to first time application corrections of the insurance business in Belgium (*) – they will be reported in the opening balance sheet of equity on !! Moreover, these figures are conditional. (*) KBC Insurance NV - non-consolidated

Investor Day Additional impairments shares available for sale : EUR- 342 m Fair valuing of bonds and shares available for sale :EUR+ 424 m Deduction own shares : EUR- 4 m Underfunding of defined benefit pension plans : EUR- 20 m Reversal of provisions : EUR+ 122 m Deferred taxes : EUR- 99 m Profit appropriation : EUR+ 191 m Total correction of equity : EUR+ 272 m Impact on B/S and off balance items

Investor Day Impact on the consolidation scope Special purpose vehicles will be included in the consolidation scope An interest in subsidiaries, associates or joint ventures that is acquired and held exclusively with a view to its subsequent disposal after twelve months from its acquisition = venture capital

Investor Day Impact on equity / tier 1-capital The Belgian Supervising Authority has not yet published any rules concerning solvency requirements under IFRS Will probably increase KBC will use the current rules for the reporting of equity / tier 1-capital until new rules will be published