KBC Group Company presentation - 1Q 2018 - KBC Bank

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KBC Group Company presentation - 1Q 2018 - KBC Bank
KBC Group
 Company presentation
 1Q 2018

More information: www.kbc.com

KBC Group - Investor Relations Office – E-mail:   investor.relations@kbc.com

                                                                               1
KBC Group Company presentation - 1Q 2018 - KBC Bank
Important information for investors
 This presentation is provided for information purposes only. It does not constitute an offer to sell or the solicitation to buy any
  security issued by the KBC Group.

 KBC believes that this presentation is reliable, although some information is condensed and therefore incomplete. KBC cannot be
  held liable for any loss or damage resulting from the use of the information.
 This presentation contains non-IFRS information and forward-looking statements with respect to the strategy, earnings and capital
  trends of KBC, involving numerous assumptions and uncertainties. There is a risk that these statements may not be fulfilled and
  that future developments differ materially. Moreover, KBC does not undertake any obligation to update the presentation in line
  with new developments.

 By reading this presentation, each investor is deemed to represent that it possesses sufficient expertise to understand the risks
  involved.

                                                                2
1Q 2018 key takeaways for KBC Group
1Q18 financial performance:                                                  Capital and liquidity positions:
Very good net result of 556m EUR, despite the large                           The fully loaded** B3 common equity ratio based on the
upfront bank taxes (371m EUR). ROE of 14%* in 1Q18                             Danish Compromise decreased from 16.3% at the end of
  Good performance of the commercial bank-insurance franchises                2017 to 15.9% at the end of 1Q18 due to the impact of the
   in our core markets and core activities                                     first-time application of IFRS 9 (-41bps)

  Q-o-q increase in customer loan volumes and customer deposits              Fully loaded B3 leverage ratio, based on current CRR
   (excluding debt certificates & repos) in most of our core countries         legislation, amounted to 5.7% at KBC Group

  Roughly stable net interest income and higher net interest margin          Continued strong liquidity position (NSFR at 137% and LCR
   q-o-q                                                                       at 139%) at end 1Q18

  High net fee and commission income                                        ** This clearly exceeds the minimum capital requirements set by the competent
                                                                             supervisors of respectively 9.875% phased-in and 10.60% fully loaded for 2018. On
                                                                             top of the above-mentioned capital requirements, the ECB expects KBC to hold a
  Lower net gains from financial instruments at fair value and higher       pillar 2 guidance (P2G) of 1.0% CET1
   other net income

  Combined ratio of 90% in 1Q18. Excellent sales of non-life and life
   insurance products

  Strict cost management resulted in a cost/income ratio of 55%
   YTD adjusted for specific items

  Net impairments releases on financial assets at amortised cost of
   63m EUR, mainly driven by Ireland (net release of 43m EUR in
   1Q18). We are maintaining our impairment guidance for Ireland,
   namely a net release in a range of 100m-150m EUR for FY18
                                                                         3
* ROE taking into account pro rata bank taxes amounted to 19% in 1Q18
Contents

 1    1Q 2018 performance of KBC Group

 2    1Q 2018 performance of business units

 3    Strong solvency and solid liquidity

 4    1Q 2018 wrap up

Annex 1: Company profile
Annex 2: Other items

                                            4
KBC Group

Section 1

1Q 2018 performance of KBC Group

               5
Net result at KBC Group
                                                                                              CONTRIBUTION OF BANKING ACTIVITIES
                                                                                                  TO KBC GROUP NET RESULT*
                                                                                                    750

                                                                                                                      575
                                                                                        526
                                                                                                                                                     461
                         NET RESULT AT KBC GROUP*
                                                                                                                                      330

                                 855
                                                                                        1Q17        2Q17              3Q17           4Q17            1Q18
                                        691
                  630
                                                             556
                                                                                          CONTRIBUTION OF INSURANCE ACTIVITIES
                                                  399                                          TO KBC GROUP NET RESULT*
                                                                                                                      137
                 1Q17            2Q17   3Q17     4Q17       1Q18
                                                                                        111          113
                                                                                                                       96                            102
                                                                                                                                      78
                                                                                                     64
                                                                                         78                                           27              42

                                                                                                     82                93             84              75
                                                                                         61

                                                                                        -29                                                          -15
* Difference between net result at KBC Group and the sum of the banking and insurance                -33              -52             -34
 contribution is accounted for by the holding-company/group items
                                                                                        1Q17        2Q17              3Q17           4Q17            1Q18

                                                                                                    Non-Life result          Non-technical & taxes

              Amounts in m EUR                                                      6
                                                                                                    Life result
Summary 2017 pro forma figures

Impact shift                 4Q17                4Q17                 3Q17                3Q17                 2Q17               2Q17             1Q17          1Q17
per P&L line                as was             pro forma             as was             pro forma             as was            pro forma         as was       pro forma

NII                          1,029                1,137               1,039               1,114               1,028                1,094          1,025          1,081
                                   +108                                       +75                                     +66                                +56

FIFV                          235                  118                 182                     94               249                 180            191           130
                                         +26                                      +25                                     +24                              +24

F&C                           430                  456                 408                  433                 430                 454            439           463
                                  +17                                      +12                                     +21                               +19

AFS gains*                     51                    6                  51                     2                 52                   8            45             14
* Due to IFRS 9, the P&L line ‘net realised result from AFS assets is replaced by ‘net realised result from debt instruments at FV through OCI’

 •     Interest accrual FX derivatives: shifted from FIFV to NII (in line with the transition to IFRS 9)
 •     Network income (income received from margins earned on FX transactions carried out by the network for clients): shifted from FIFV to F&C
 •     IFRS 9: overlay approach for insurance: shift from realised gains AFS shares and impairments on AFS shares to FIFV
 •     Please note that due to IFRS 9, the realised gains on AFS shares in Banking (26m in 4Q17, 32m in 3Q17, 21m in 2Q17 and 10m in 1Q17) have
       been eliminated from net result as they are now booked in equity

                                                                                           7
Good net interest income and higher net interest margin
                                  NII (pro forma for 2017*)                       Amounts in m EUR

                     1,081          1,094           1,114
                                                        2 22
                                                                   1,137
                                                                       3 47
                                                                                   1,125
                                                                                       0 27
                                                                                                                   Net interest income (1,125m EUR)
                         3 28           3 21                                      128
                    143            142             144            135                                                 • Down by 1% q-o-q and up by 4% y-o-y
                                                                                                                      • The small q-o-q decrease was driven primarily by:
                                                                                                                        o lower netted positive impact of ALM FX swaps
                      907            928             946             952               970
                                                                                                                        o lower reinvestment yields
                                                                                                                        o more negative pressure on commercial loan margins in
                                                                                                                          most core countries
                     1Q17            2Q17           3Q17            4Q17               1Q18
                     NII - netted positive impact of ALM FX swaps**          NII - Insurance
                                                                                                                        o lower number of days
                     NII - Holding-company/group                             NII - Banking                              partly offset by:
* 2017 pro forma figures for NII as the impact of ALM FX derivatives was ‘netted’ in NII as of 2018
                                                                                                                        o lower funding costs (due mainly to the call of the CoCo)
** From all ALM FX swap desks                                                                                           o continued good loan volume growth
*** NIM is calculated excluding the dealing room and the net positive impact of ALM FX swaps & repos
                                                                                                                        o positive impact of both short & long term increasing
                        NIM (pro forma for 2017***)                                                                       interest rates in the Czech Republic
                                                                                   2.01%
                                                                   1.97%
                     1.93%          1.96%           1.96%
                                                                                                                   Net interest margin (2.01%)
                                                                                                                      • Up by 4 bps q-o-q and by 8 bps y-o-y thanks to lower funding
                                                                                                                        costs and the positive impact of repo rate hikes in the Czech
                                                                                                                        Republic

                                                                                                                                                  Customer deposit volumes excluding debt
                     1Q17            2Q17           3Q17            4Q17               1Q18                                                      certificates & repos +2% q-o-q and +7% y-o-y
                                                                                                 VOLUME TREND
          Excluding FX effect                                Total loans **                    o/w retail mortgages      Customer deposits***       AuM                 Life reserves
          Volume                                                  143bn                                60bn                     188bn               213bn                   29bn
          Growth q-o-q*                                            +1%                                 0%                        -3%                 -2%                     0%
          Growth y-o-y                                             +5%                                 +4%                       +3%                 0%                      -2%
              *   Non-annualised
              ** Loans to customers, excluding reverse repos (and bonds)                                     8
              *** Customer deposits, including debt certificates but excluding repos
High net fee and commission income
                                                                                    Amounts in m EUR            Net fee and commission income (450m EUR)
                                     F&C (pro forma for 2017*)                                                   • Down by 1% q-o-q and by 3% y-o-y
                                                                                                                 • Positive net sales of mutual funds in 1Q18
                         463            454                            456               450
                         24             24
                                                        433
                                                                       26                25
                                                                                                                 • Q-o-q decrease was the result chiefly of:
                                                        25
                                                                                                                   o lower management fees
                                                                                                                   o lower fees from payment services
                         511            506                            518               502
                                                        489                                                        o lower fees from credit files & bank guarantees
                                                                                                                   o lower securities-related fees
                         -72                -73         -81                -86       -77
                                                                                            0                      partly offset by:
                                       -2                             -1                                           o higher entry fees
                        1Q17            2Q17           3Q17            4Q17              1Q18
                                                                                                                   o lower commissions paid on insurance sales
                 F&C - network income                 F&C - banking contribution                                 • Y-o-y decrease was mainly the result of:
                 F&C - insurance contribution         F&C - contribution of holding-company/group                  o lower entry fees
* 2017 pro forma figures as the network income shifted from FIFV to net F&C as of 2018                             o lower securities-related fees
                                                                                                                   o lower fees from credit files & bank guarantees
                                                                                     Amounts in bn EUR             partly offset by:
                                                                                                                   o higher fees from payment services
                                                      AuM*                                                         o the contribution of UBB/Interlease
                         214            213             215            217               213

                                                                                                                Assets under management (213bn EUR)
                                                                                                                 • Fell by 1.5% q-o-q owing entirely to a negative price effect
                                                                                                                 • The mutual fund business has seen net inflows again, but this
                                                                                                                   was offset by net outflows in group assets and investment
                                                                                                                   advice
                        1Q17           2Q17            3Q17            4Q17              1Q18

 * Note that 2017 AuM figures were reduced due to a roughly 2bn EUR adjustment in Institutional Mandates

                                                                                                           9
Insurance premium income up y-o-y
                   and good combined ratio

                   PREMIUM INCOME (GROSS EARNED PREMIUM)                                       Insurance premium income (gross earned
                                                                    794
                                                                                                premium) at 714m EUR
                      672               636            660
                                                                                   714
                                                                                                • Non-life premium income (378m) increased by 5%
                                                                    410                           y-o-y
                                                       282                         336
                      312               267                                                     • Life premium income (336m) down by 18% q-o-q
                                                                                                  and up by 8% y-o-y
                      360               369            378          384            378

                     1Q17               2Q17          3Q17          4Q17         1Q18

                                Life premium income      Non-Life premium income

                                COMBINED RATIO (NON-LIFE)

                     79%
                                90%
                                          84%                83%
                                                                           88%                 The non-life combined ratio at 1Q18 amounted
                                                                                                to 90%, still a good number despite higher
                                                                                                technical charges due mainly to higher storm
                                                                                                claims in Belgium

                           1Q                   1H             9M                FY

                                          2017        2018

                                                                                         10
Amounts in m EUR
Non-life and life sales up y-o-y

                   NON-LIFE SALES (GROSS WRITTEN PREMIUM)                                    Sales of non-life insurance products
                    468                                                          492          • Up by 5% y-o-y thanks to a good commercial
                                                                                                performance in all major product lines in our core
                                   358            349         342                               markets and tariff increases

                    1Q17          2Q17            3Q17       4Q17            1Q18

                                                                                             Sales of life insurance products
                                                                                              • Decreased by 15% q-o-q and up by 5% y-o-y
                                            LIFE SALES                                        • The q-o-q decrease was driven mainly by lower sales of
                                                              588                               guaranteed interest products in Belgium (attributable
                    474                                                          498            chiefly to traditionally higher volumes in tax-
                                   415            405                                           incentivised pension saving products in 4Q17 and extra
                                                              318
                    267                                                          279            sales for individual pension agreements for self-
                                   222            218
                                                                                                employed business leaders, anticipating the reduction
                                                              270
                                                                                                of corporate tax as of 2018) and lower sales of unit-
                    207            193            187                            219            linked products in the Czech Republic
                    1Q17          2Q17            3Q17       4Q17            1Q18             • The y-o-y increase was driven mainly by higher sales of
                                                                                                guaranteed interest products in Belgium and higher
                                                                                                sales of unit-linked products in the Czech Republic
                           Guaranteed interest products   Unit-linked products                • Sales of unit-linked products accounted for 44% of total
                                                                                                life insurance sales

                                                                                       11
Amounts in m EUR
Lower FV gains, higher other net income
                                   FV GAINS (pro forma for 2017*)
                                          180
                                                                                                                                        The lower q-o-q figures for net gains from
                          130              86                             118
                                                                                                                                         financial instruments at fair value were
                                                           94                              96                                            attributable mainly to:
                          110                                              94                                                            • a negative change in market, credit and funding value
                                           73              71                              73
                                                                                                                                           adjustments (mainly as a result of changes in the
                        19
                               1
                                           21                     11            7
                                                                                         19
                                                                                                4                                          underlying market value of the derivative portfolio)
                                                         12              17
                         1Q17            2Q17             3Q17            4Q17            1Q18                                           • lower dealing room income
               Other FV gains                   Net result on equity instruments (overlay insurance)
               M2M ALM derivatives

*   2017 pro forma figures as:
    1) the impact of the FX derivatives was ‘netted’ in NII as of 2018
    2) the shift from realised gains AFS shares and impairments on AFS shares to FIFV due to IFRS 9 (overlay approach for insurance)

                                          OTHER NET INCOME                                                                              Other net income amounted to 71m EUR,
                          77
                                                                                           71
                                                                                                                                         higher than the normal run rate of around 50m
                                                                                                                                         EUR due to the settlement of an old legal file in
                                           47
                                                                                                                                         Belgium and the sale of a building in Hungary

                                                              4

                                                                           -14
                         1Q17            2Q17             3Q17            4Q17            1Q18

                                                                                                                     12
Amounts in m EUR
Operating expenses up due entirely to higher bank taxes,
              but good cost/income ratio
                              OPERATING EXPENSES                                                     Cost/income ratio (banking) adjusted for specific
                                                                                                      items* at 55% in 1Q18
                                                                               1,291
                   1,229                                                                              • Operating expenses excluding bank tax went down by
                                                                 1,021         371                      6% q-o-q due mainly to seasonal effects such as
                    361       910                 914              41                                   traditionally lower ICT, marketing and professional fee
                              19                  18
                                                                                                        expenses, despite a 12m EUR provision for facility
                                                                                                        expenses for one specific file in Belgium in 1Q18
                              891                 896            980           920
                    868
                                                                                                      • Operating expenses without bank tax increased by 6%
                                                                                                        y-o-y due chiefly to the consolidation of UBB/Interlease,
                                                                                                        higher ICT costs, higher staff expenses (wage drift in
                    1Q17     2Q17             3Q17               4Q17          1Q18                     most countries), higher marketing expenses, a 12m EUR
                                                                                                        provision for facility expenses for one specific file in
                                  Bank tax         Operating expenses                                   Belgium and higher depreciation & amortisation costs
                                                                                                        (due to the capitalisation of some projects)

         EXPECTED BANK TAX SPREAD IN 2018 (PRELIMINARY)**
                   TOTAL   Upfront                      Spread out over the year                      • Pursuant to IFRIC 21, certain levies (such as
                                                                                                        contributions to the European Single Resolution Fund)
                   1Q18     1Q18             1Q18         2Q18e          3Q18e         4Q18e            have to be recognised in advance, and this adversely
                            273               0              0             0             0
                                                                                                        impacted the results for 1Q17. The y-o-y increase can
    BU BE           273
                                                                                                        mainly be explained by the consolidation of UBB
    BU CZ           29       29               0              0             0             0            • Total bank taxes (including ESRF contribution) are
    Hungary         45       26               19            21            21            21              expected to increase from 439m EUR in FY17 to 461m
                                                                                                        EUR in FY18, although still subject to changes
    Slovakia         7       3                4              4             4             4

    Bulgaria        14       14               0              0             0             0

    Ireland          4       3                1              1             1            14

    GC               0       0                0              0             0             0

    TOTAL           371     347               24            25            25            39            * See glossary (slide 88) for the exact definition
                                                                                               13
Amounts in m EUR                                                                                      ** still subject to changes
Overview of bank taxes*                                                                                                                                   Bank taxes of 273m EUR in
                                                                                                                                                                  1Q18. On a pro rata basis, bank
                                                                                                                                                                  taxes represented 11.1% of
                           KBC GROUP                                  Bank taxes of 371m EUR in                                       BELGIUM BU                  1Q18 opex at the Belgium BU
       361                                                   371      1Q18. On a pro rata basis,                   278                                           273
                                                                      bank taxes represented 11.1%                 53                                             58
        83                                                   98
                                                                      of 1Q18 opex at KBC Group**

                                                                                                                   225                                           215
       278                                                   273
                                                41
                     19           18                   0                                                                                              0
                                              41                                                                              -4 -2
                   -1 20
                                                                                                                                -6           -7
       1Q17        2Q17          3Q17         4Q17          1Q18
                                                                                                                  1Q17         2Q17         3Q17     4Q17        1Q18
                    European Single Resolution Fund contribution                                                                ESRF contribution   Common bank taxes
                    Common bank taxes
                                                                                                                                                                   Bank taxes of 70m EUR in
                                                                                                                                                                   1Q18. On a pro rata basis,
                                                                     Bank taxes of 29m EUR in                                                                      bank taxes represented 18.0%
                     CZECH REPUBLIC BU                               1Q18. On a pro rata basis,                  INTERNATIONAL MARKETS BU                          of 1Q18 opex at the IM BU
                                                                     bank taxes represented 4.3%
                                                             29      of 1Q18 opex at the CZ BU                                                                    70
        26
                                                                                                                   57                                             18
                                                                                                                   11
                                                                                                                                                      41
                                                             22
        20
                                                                                                                                25           25
                                                                                                                                1                                 52
                                                                                                                   46
                                                                                                                                24
        6            1             0               0          6

       1Q17        2Q17          3Q17         4Q17          1Q18                                                  1Q17         2Q17         3Q17     4Q17       1Q18

                                                                                                                                ESRF contribution   Common bank taxes
                      ESRF contribution      Common bank taxes

* This refers solely to the bank taxes recognised in opex, and as such it does not take account of income tax expenses, non-recoverable VAT, etc.
** The C/I ratio adjusted for specific items of 55% in 1Q18 amounts to roughly 48% excluding these bank taxes
                                                                                              14
Net impairment releases, excellent credit cost ratio and
improved impaired loans ratio
                              ASSET IMPAIRMENT
                                      31               2                             Very low asset impairments
                                      15
     8
         1                            15
                                                      32                              • This was attributable mainly to:
 6                       7                                              6
                                                                                        o net loan loss provision releases in Ireland of 43m EUR
                                                      -30
                        -78                                            -63                 (compared with 52m in 4Q17)
                                                                                        o also small net loan provision reversals in Bulgaria, Hungary,
                                                                       -56                 Slovakia and Group Centre
                        -71
 1Q17                 2Q17           3Q17            4Q17              1Q18
                                                                                      • Impairment of 6m on other in the Czech Republic as a result of
              Other impairments       Impairments on financial assets at AC*
               * AC = Amortised Cost. Under IAS 39, impairments on L&R
                                                                                        the review of the residual value calculation on financial leases
                                                                                        for cars in CSOB Leasing
                             CREDIT COST RATIO
 0.42%

                      0.23%

                                     0.09%
                                                                                     The credit cost ratio amounted to -0.15% in 1Q18 due to
                                                                                      low gross impairments and several releases
                                                    -0.06%
                                                                   -0.15%
 FY14                  FY15          FY16            FY17              1Q18

                       IMPAIRED LOANS RATIO
 6.8%                  6.9%          6.6%
                                                     6.0%              5.9%
                                                                                     The impaired loans ratio improved to 5.9%, 3.5% of
                                                                                      which over 90 days past due

 3.6%                  3.9%          3.7%            3.4%              3.5%

 1Q17                 2Q17           3Q17           4Q17               1Q18
                                                                               15
             Impaired loans ratio     of which over 90 days past due
KBC Group

Section 2

1Q 2018 performance of business units

                16
BELGIUM BUSINESS UNIT

                           CFO SERVICES

                           CRO SERVICES

                              CZECH         INTERNATIONAL
                BELGIUM
                             REPUBLIC          MARKETS

                          CORPORATE STAFF

                              17
Belgium BU (1): net result of 243m EUR
                             NET RESULT                                                          Net result at the Belgium Business Unit
                    483
                                                                                                  amounted to 243m EUR
                                   455                                                           • The quarter under review was characterised by lower
                                                                                                   net interest income, roughly stable net fee and
                                                 336                                               commission income, decreased trading and fair value
      301                                                                                          income, higher other net income, an improved
                                                               243                                 combined ratio, seasonally lower sales of life
                                                                                                   insurance products, higher operating expenses due
                                                                                                   entirely to higher bank taxes and lower impairment
                                                                                                   charges q-o-q
                                                                                                 • Excluding both the upfront booking of the bank tax in
                                                                                                   1Q18 and the one-off negative impact of the reform
     1Q17           2Q17          3Q17          4Q17          1Q18                                 of the Belgian corporate income tax regime in 4Q17,
                                                                                                   the net result rose by roughly 3% q-o-q
 Amounts in m EUR                                                                                • Customer deposits excluding debt certificates and
                                                                                                   repos rose by 4% y-o-y, while customer loans also
                                                                                                   increased by 4% y-o-y

                                                                            VOLUME TREND                                   Customer deposit volumes excluding debt
                                                                                                                          certificates & repos +2% q-o-q and +4% y-o-y
                                            Total loans **               o/w retail mortgages     Customer deposits***        AuM               Life reserves
      Volume                                     96bn                           35bn                     126bn               199bn                   27bn
      Growth q-o-q*                               +1%                            0%                       -5%                  -1%                   -1%
      Growth y-o-y                                +4%                           +1%                       0%                   0%                    -2%
* Non-annualised
** Loans to customers, excluding reverse repos (and bonds)
*** Customer deposits, including debt certificates but excluding repos

                                                                                    18
Belgium BU (2): lower NII despite stable NIM
                                                                                       Amounts in m EUR
                                  NII (pro forma for 2017*)
                      681              677            664            677
                                                                                      649                       Net interest income (649m EUR)
                      28               19             20             39
                      130              129
                                                                                       19                        • Fell by 4% q-o-q due mainly to the lower netted impact of FX
                                                      132            123              117                          swaps, lower reinvestment yields and lower number of days
                                                                                                                 • Down by 5% y-o-y, driven primarily by:
                                                                                                                   o lower reinvestment yields
                      523              529            512            515              513                          o pressure on commercial loan margins
                                                                                                                   o lower upfront prepayment fees (6m EUR in 1Q18 compared
                                                                                                                      with 9m EUR in 1Q17)
                                                                                                                   partly offset by:
                     1Q17             2Q17           3Q17            4Q17            1Q18
                                                                                                                   o lower funding costs on term deposits
         NII - netted positive impact of ALM FX swaps**       NII - contribution of banking
                                                                                                                   o good loan volume growth
         NII - contribution of insurance

•   2017 pro forma figures for NII as the impact of ALM FX derivatives was ‘netted’ in NII as of 2018
** From all ALM FX swap desks
*** NIM is calculated excluding the dealing room and the net positive impact of ALM FX swaps & repos

                               NIM (pro forma for 2017***)                                                      Net interest margin (1.73%)
                     1.78%            1.79%
                                                    1.72%           1.73%            1.73%
                                                                                                                 • Stabilised q-o-q
                                                                                                                 • Fell by 5 bps y-o-y due to the negative impact of lower
                                                                                                                   reinvestment yields and some pressure on commercial loan
                                                                                                                   margins

                     1Q17             2Q17           3Q17            4Q17            1Q18

                                                                                                          19
Credit margins in Belgium
               PRODUCT SPREAD ON CUSTOMER LOAN BOOK, OUTSTANDING
1.4

1.2

1.0

0.8

0.6

0.4

0.2

0.0
   1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18

                                                                  Customer loans

                             PRODUCT SPREAD ON NEW PRODUCTION
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
  1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18

                                              SME and corporate loans                    Mortgage loans
                                                                          20
Belgium BU (3): good net F&C income
                                                                                    Amounts in m EUR
                                    F&C (pro forma for 2017*)                                                          Net fee and commission income (318m EUR)
                         356                                                                                            • Positive net sales of mutual funds in 1Q18
                                        339                             321
                         10
                                         9              307
                                                                         8
                                                                                       318
                                                                                        9
                                                                                                                        • Net F&C income decreased by 1% q-o-q due mainly to:
                                                         7
                                                                                                                          o lower management fees
                                                                                                                          o lower securities-related fees
                                                                                                                          o lower fees from credit files & bank guarantees
                        391             376             352             368            356                                partly offset by
                                                                                                                          o higher entry fees from mutual funds and unit-linked
                                                                                                                            life insurance products
                                                                                                                          o higher fees from payment services
                         -45            -45             -52             -55                -47                            o lower commissions paid on insurance sales
                        1Q17           2Q17            3Q17            4Q17            1Q18

                         F&C - network income                    F&C - contribution of banking                          • Fell by 11% y-o-y driven chiefly by lower entry fees from
                         F&C - contribution of insurance                                                                  mutual funds & unit-linked life insurance products (as
*   2017 pro forma figures as the network income shifted from FIFV to net F&C as of 2018                                  1Q17 benefited from the launch of EasyInvest), lower
                                                                                                                          securities-related fees, lower fees from credit files &
                                                       AuM*                         Amounts in bn EUR
                                                                                                                          bank guarantees, slightly lower fees from payment
                        200             198             200             202            199                                services and higher commissions paid on insurance sales

                                                                                                                       Assets under management (199bn EUR)
                                                                                                                        • Fell by 1% q-o-q owing entirely to a negative price effect
                                                                                                                        • Stabilised y-o-y as net inflows (+1%) were offset by a
                                                                                                                          negative price effect (-1%)

                        1Q17           2Q17            3Q17            4Q17            1Q18

*   Also note that 2017 AuM figures were reduced due to a roughly 2bn EUR adjustment in Institutional Mandates

                                                                                                                 21
Belgium BU (4): higher y-o-y non-life sales and good
combined ratio

                                                                         Sales of non-life insurance products
NON-LIFE SALES (GROSS WRITTEN PREMIUM)                                    • Increased by 2% y-o-y
  323                                                        329
                                                                          • Premium growth was situated in all classes, except for
                                                                            ‘Accident & Health’
                  256
                                 241
                                               228

 1Q17             2Q17           3Q17          4Q17         1Q18

             COMBINED RATIO (NON-LIFE)                                   Combined ratio amounted to 93% in 1Q18
                                                                          (86% in FY17). 1Q18 was negatively impacted by
            93%
                    81%
                                                      86%                 higher technical charges y-o-y due mainly to
                                        80%
 77%
                                                                          higher storm claims

       1Q                 1H              9M                FY

                          2017     2018
                                                                   22
Belgium BU (5): lower life sales and good cross-selling
      ratios
                                   LIFE SALES                                             Sales of life insurance products
                                                      460
                                                                                           • Fell by 12% q-o-q as the sales of guaranteed interest
                                                                         404
                                                                                             products are traditionally lower in the first quarter
             396
                                                                                             (versus traditionally higher volumes in tax-incentivised
                           340                                                               pension saving products in the fourth quarter and
                                          306
                                                      290                                    extra sales for individual pension agreements for self-
             241                                                         250
                           197                                                               employed business leaders in 4Q17, anticipating the
                                          193                                                reduction of corporate tax as of 2018). The lower
                                                                                             sales of unit-linked products was the result of
             155           143                        170                154
                                                                                             commercial efforts in 4Q17 and a less favourable
                                          113                                                investment climate in 1Q18
         1Q17             2Q17            3Q17       4Q17            1Q18                  • Increased by 2% y-o-y driven entirely by higher sales
                                                                                             of guaranteed interest products
                   Guaranteed interest products   Unit-linked products                     • As a result, guaranteed interest products and unit-
                                                                                             linked products accounted for 62% and 38%,
      Amounts in m EUR
                                                                                             respectively, of life insurance sales in 1Q18

         MORTGAGE-RELATED CROSS-SELLING RATIOS
90
85                                                                               86.5%
80                                                                               78.9%
75
70                                                                                        Mortgage-related cross-selling ratios
65                                                                                         • 86.5% for property insurance
     63.7%
60                                                                                         • 78.9% for life insurance
                                    Property insurance          Life insurance
55
50
45   49.5%
40

                                                                                    23
Belgium BU (6): lower FV gains and higher other net income
                                 FV GAINS (pro forma for 2017*)                                                                          The lower q-o-q figures for net gains from
                           110
                                                                                                                                          financial instruments at fair value were the
                           61               74                                                                                            result mainly of negative q-o-q change in
                                           23                               51                                                            market, credit and funding value adjustments
                                                            36                              34                                            (mainly as a result of changes in the
                           29              30                               36
                                                            10
                                                            14
                                                                                            17                                            underlying market value of the derivative
                           20              21               12
                                                                          -2
                                                                              17
                                                                                          -2
                                                                                               19                                         portfolio)
                          1Q17            2Q17            3Q17             4Q17            1Q18

                  Other FV gains                 Net result on equity instruments (overlay insurance)
                  M2M ALM derivatives

*    2017 pro forma figures as:
     1) the impact of the FX derivatives was ‘netted’ in NII as of 2018
     2) the shift from realised gains AFS shares and impairments on AFS shares to FIFV due to IFRS 9 (overlay approach for insurance)

                                           OTHER NET INCOME
                                                                                                                                         Other net income amounted to 59m EUR in
                                                                                            59                                            1Q18, higher than the normal run rate of
                           46
                                                            51                                                                            around 50m EUR due to the settlement of an
                                            40                              38                                                            old legal file

                          1Q17            2Q17            3Q17             4Q17            1Q18

                                                                                                                      24
    Amounts in m EUR
Belgium BU (7): higher opex due entirely to higher bank
taxes, lower impairments, good credit cost ratio
                   OPERATING EXPENSES                                             Operating expenses: +45% q-o-q and stable y-o-y
     822                                                          822
                                                                                   • Operating expenses without bank tax fell by 3% q-o-q due
                                                                                     mainly to traditionally lower marketing, professional fee
                                                                                     and ICT expenses in the first quarter, despite a 12m EUR
    278                                                           273
                    544
                                                    566                              provision for facility expenses for one specific file in 1Q18
                                     520             0
                                                                                   • Operating expenses without bank tax increased by 1% y-o-y
                                                                                     as lower staff and marketing expenses were more than
                                                                                     offset by a 12m EUR provision for facility expenses for one
    544             550              527           566            549                specific file in 1Q18, higher ICT & professional fee expenses
                                                                                   • Cost/income ratio: 77% in 1Q18, distorted mainly by the
                                                                                     bank taxes. Adjusted for specific items, the C/I ratio
                    -6               -7
                                                                                     amounted to 56% in 1Q18 (53% in FY17)
    1Q17           2Q17             3Q17           4Q17          1Q18
                        Bank tax       Operating expenses

                    ASSET IMPAIRMENT
     60
     1                                                                            Loan loss provisions amounted to 14m EUR in 1Q18
                                                                                   (compared with loan loss provisions of 12m EUR in
                                      34
                                                                                   4Q17), so continuously overall low gross impairments
     59
                                                                                   (in all segments) in 1Q18. Credit cost ratio amounted
                                      13            24
                                                                                   to 5 bps in 1Q18 (9 bps in FY17)
                                                    12               13
                                      21
                                                                   14
                                                                                  Impaired loans ratio improved to 2.6%, 1.3% of which
                                                    12
                             3                                       -1
                                                                                   over 90 days past due
                   -4
                        -2
    1Q17          2Q17               3Q17          4Q17           1Q18
      Other impairments            Impairments on financial assets at AC*
           * AC = Amortised Cost. Under IAS 39, impairments on L&R
Amounts in m EUR                                                            25
Net result at the Belgium BU

                                                                                CONTRIBUTION OF BANKING ACTIVITIES TO
                                                                                   NET RESULT OF THE BELGIUM BU*
                                                                                                   385
                                                                                                                   336
                                                                                                                                271
          NET RESULT AT THE BELGIUM BU*                                         208
                                                                                                                                                 165
                   483
                             455

                                          336
    301                                                                         1Q17           2Q17              3Q17          4Q17              1Q18
                                                       243

                                                                                CONTRIBUTION OF INSURANCE ACTIVITIES TO
                                                                                    NET RESULT OF THE BELGIUM BU*
                                                                                                                   119
   1Q17            2Q17     3Q17         4Q17         1Q18
                                                                                 93                98
                                                                                                                   79
                                                                                                   48                            65               78
                                                                                 64                                               9               20

                                                                                                   70              80            74               63
                                                                                 50
                                                                                                                                                  -5
                                                                                 -21               -20                           -19
                                                                                                                   -40

* Difference between net profit at the Belgium Business Unit and the sum of     1Q17           2Q17              3Q17          4Q17              1Q18
  the banking and insurance contribution is accounted for by the rounding up
                                                                                 Non-Life result         Life result     Non-technical & taxes
  or down of figures

Amounts in m EUR                                                           26
CZECH REPUBLIC BUSINESS UNIT

                           CFO SERVICES

                           CRO SERVICES

                              CZECH         INTERNATIONAL
                BELGIUM
                             REPUBLIC          MARKETS

                          CORPORATE STAFF

                               27
Czech Republic BU (1): net result of 171m EUR
                           NET RESULT
                                                                                     Net result at the Czech Republic Business Unit of
      181           183
                               170          167          171                          171m EUR
                                                                                      • Q-o-q results were characterised by higher net
                                                                                        interest income, higher net fee and commission
                                                                                        income, lower but still good net results from financial
                                                                                        instruments at fair value, stable net other income, an
                                                                                        improved combined ratio, lower sales of life insurance
                                                                                        products, higher operating expenses (due entirely to
                                                                                        higher bank taxes) and lower impairment charges
                                                                                      • The net result rose by 2% q-o-q. Excluding the upfront
                                                                                        booking of the bank tax in 1Q18, the net result was
                                                                                        even up by 16% q-o-q
     1Q17           2Q17       3Q17        4Q17         1Q18                          • Profit contribution from the insurance business
                                                                                        remained limited in comparison to the banking
                                                                                        business
 Amounts in m EUR

                                                                    VOLUME TREND
Excluding FX effect               Total loans **            o/w retail mortgages    Customer deposits***          AuM             Life reserves
Volume                                 23bn                          11bn                  31bn                  9.7bn               1.2bn
Growth q-o-q*                          +1%                               +1%                +1%                   +1%                 +7%
Growth y-o-y                           +5%                           +10%                   +3%                  +10%                +13%
* Non-annualised
** Loans to customers, excluding reverse repos (and bonds)
*** Customer deposits, including debt certificates but excluding repos

                                                                               28
Czech Republic BU (2): higher NII and NIM
                                               NII                                                            Net interest income (248m EUR)
                                                                               248                             • Up by 6% q-o-q and by 15% y-o-y to 248m EUR.
                216             220             218
                                                                234                                              Corrected for FX effects, NII rose by 5% q-o-q and by
                                                                                                                 8% y-o-y pro forma
                                                                                                               • The pro forma q-o-q increase was the result primarily
                                                                                                                 of the positive impact of both short & long term
                                                                                                                 increasing interest rates and the growth in retail loan
                                                                                                                 volumes, which were partly offset by pressure on
                                                                                                                 lending margins in mortgages and consumer finance
                                                                                                               • Loan volumes up by 5% y-o-y, driven mainly by growth
                                                                                                                 in mortgages and consumer finance and, to a lesser
                1Q17           2Q17            3Q17            4Q17            1Q18                              extent, in SME loans
                                                                                                               • Customer deposit volumes up by 3% y-o-y
          Amounts in m EUR

                           NIM (pro forma for 2017*)
                                                                                                              Net interest margin (3.02%)
                                                                              3.02%
               2.93%           2.91%           2.84%          2.95%
                                                                                                               • Up by 7 bps q-o-q and by 9 bps y-o-y to 3.02%
                                                                                                               • The q-o-q increase was driven mainly by the positive
                                                                                                                 impact of repo rate hikes, partly offset by pressure on
                                                                                                                 lending margins
                                                                                                               • The y-o-y increase was the result of the positive impact
                                                                                                                 of repo rate hikes, partly offset by pressure on lending
                                                                                                                 margins (especially in mortgages and consumer
                                                                                                                 finance)
               1Q17            2Q17            3Q17            4Q17            1Q18

* NIM is is calculated excluding the dealing room and the net positive impact of ALM FX swaps & repos

                                                                                                        29
Czech Republic BU (3): higher net F&C income
                                                                           Amounts in m EUR

                        F&C (pro forma for 2017*)                                                    Net fee and commission income (67m EUR)
                                                                            67                        • Rose by 5% q-o-q and by 19% y-o-y on a pro forma
                                                            64                                          basis
             56              56                                             10
                                             53             10                                        • The q-o-q increase was driven by lower paid
             9               9
                                            10                                                          commissions to the Czech Post (from this year on,
                                                                                                        Czech Post receives more support than in the past,
                                                                                                        booked in opex). Besides this effect, there is impact of
             47              47
                                                            53              57                          higher entry fees, higher securities-related fees, but
                                            43                                                          lower fees from payment services (seasonal effect of
                                                                                                        Christmas) and lower fees from credit files & bank
                                                                                                        guarantees
           1Q17            2Q17            3Q17            4Q17            1Q18                       • The y-o-y increase was attributable chiefly to higher
                                                                                                        management & entry fees, higher fees from payment
                  F&C - network income            F&C - banking & insurance
                                                                                                        services, higher securities-related fees and due to less
*   2017 pro forma figures as the network income shifted from FIFV to net F&C as of 2018                fees paid to the Czech Post

                                          AuM                              Amounts in bn EUR

                                                                            9.7
            8.8
                            9.2             9.3             9.6
                                                                                                     Assets under management (9.7bn EUR)
                                                                                                      • Increased by 1% q-o-q owing to net inflows (+2%) and
                                                                                                        a negative price effect (-1%)
                                                                                                      • Y-o-y, assets under management rose by 10%, driven
                                                                                                        by net inflows (+6%) and a positive price effect (+4%)

           1Q17            2Q17            3Q17            4Q17            1Q18

                                                                                               30
Czech Republic BU (4): higher premium income, good
 combined ratio
  PREMIUM INCOME (GROSS EARNED PREMIUM)
                                                       155
                                                                                        Insurance premium income              (gross    earned
                                    124                                 117
                                                                                         premium) stood at 117m EUR
     97             100
                                                        96                               • Non-life premium income (57m) rose by 10% y-o-y
                                    68                                  60
     48             47                                                                     excluding FX effect, due to growth in all products
                    53              56                  59              57
                                                                                         • Life premium income (60m) went down by 39% q-o-q
     49
                                                                                           and increased by 17% y-o-y, excluding FX effect. Q-o-q
    1Q17           2Q17             3Q17               4Q17            1Q18                decline entirely in unit-linked single premiums
             Life premium income           Non-Life premium income

             COMBINED RATIO (NON-LIFE)
   100%
            93%       98%                   97%                  97%                    Combined ratio: 93% in 1Q18 (compared with
                                                                                         97% in FY17) due to very good claim experience
                                                                                         (no large claims and mild winter)

       1Q                   1H                    9M                   FY
                             2017          2018

                    CROSS-SELLING RATIOS
Mortg. & prop.            Mortg. & life risk             Cons. Fin. & life risk
                                                                                        Cross-selling ratios remained at a good level

 65% 61% 60%                                                  63% 57%
                             47% 48% 45%                              53%

  2016 2017 1Q18             2016 2017 1Q18                   2016 2017 1Q18      31
Czech Republic BU (5): higher opex due entirely to higher
bank taxes, excellent credit cost ratio
                                                        Operating expenses (189m EUR)
        OPERATING EXPENSES                               • Fell by 10% q-o-q and rose by 8% y-o-y, excluding FX
                                                           effect and bank tax
                                           189
 165
                                 177
                                  0
                                                         • The q-o-q decrease excluding FX effect and bank tax
                                            29
         151         153                                   was due mainly to traditionally lower marketing
  26                  0
          1                                                expenses and professional fees, lower ICT costs and
                                                           facilities expenses in the first quarter
                                 176
                                                         • The y-o-y increase excluding FX effect and bank tax was
 139    150          152                   160             attributable primarily to higher staff expenses (mainly
                                                           due to wage inflation) and higher support to the Czech
                                                           Post (which is compensated by lower paid fee)
                                                         • Cost/income ratio at 47% in 1Q18. Adjusted for specific
 1Q17   2Q17        3Q17        4Q17       1Q18            items, the C/I ratio amounted to roughly 42% in 1Q18
                                                           (and 43% in FY17)
         Bank tax    Operating expenses

                                                        Very limited loan loss provisions due to several
         ASSET IMPAIRMENT                                releases (which almost fully offset the low gross
         11                     11                       impairments)
                                                        Impairment of 6m EUR on ‘other’ as the result of
                                           7             a revaluation of leased cars in CSOB Leasing
                                                        Credit cost ratio amounted to 0.01% in 1Q18
                     3
                                                                   2014    2015     2016     2017    1Q18
                                                          CCR     0.18%    0.18%    0.11%   0.02%    0.01%

  -1                                                    Impaired loans ratio stabilised at 2.4%, 1.6% of
 1Q17   2Q17        3Q17       4Q17       1Q18           which over 90 days past due

                                                  32
INTERNATIONAL MARKETS BUSINESS UNIT

                           CFO SERVICES

                           CRO SERVICES

                              CZECH         INTERNATIONAL
                BELGIUM
                             REPUBLIC          MARKETS

                          CORPORATE STAFF

                              33
International Markets BU (1): net result of 137m EUR
                                                                                                                  Net result: 137m EUR
                                      NET RESULT                                                                  The pro forma q-o-q results were characterised by:
                                                                                                                     • lower net interest income. NIM amounted to 2.88% in
                              177
                               5
                                                                                                                       1Q18 (2.84% in 4Q17)
                                                                                                                     • lower net fee and commission income (in BG & HU)
                                                                             137
                                                                                                                     • higher result from financial instruments at fair value
                                                                                 21
              114             99                                                                                     • sharply higher net other income (especially in IRL, as 4Q17
               4
                                                                                                                       was impacted by an additional provision related to the
                                                78              74               57                                    tracker mortgage review)
               67
                                                22               18                                                  • a very good combined ratio of 86% (especially in HU & SK)
                              47
                                                            3
                                                                                                                     • higher life insurance sales (in SK & BG)
                                                40                               34
               20                                               39
                                                                                                                     • higher costs due entirely to higher bank taxes
               22             25                16              16               23                                  • higher net impairment releases
                                            -1
             1Q17            2Q17            3Q17           4Q17             1Q18                                 Profit breakdown for International Markets (next
                      Bulgaria        Ireland        Hungary          Slovakia                                     slides): 23m EUR for Slovakia, 34m EUR for Hungary,
         Amounts in m EUR
                                                                                                                   57m EUR for Ireland and 21m EUR for Bulgaria

                                                                                         VOLUME TREND
Excluding FX effect                                        Total loans **              o/w retail mortgages                 Customer deposits***       AuM           Life reserves
Volume                                                               24bn                          15bn                            23bn                4.5bn            0.7bn
Growth q-o-q*                                                         0%                            0%                              +1%                -11%              +6%
Growth y-o-y                                                         +13%                           +8%                            +24%              -21%****            +7%
     *      Non-annualised
     **     Loans to customers, excluding reverse repos (and bonds)
     ***    Customer deposits, including debt certificates but excluding repos
     ****   The decrease can partly be explained by the divestment of KBC TFI in Poland in December 2017 (-0.93bn AuM in 4Q17)
                                                                                                       34
International Markets BU (2): Slovakia
                                                                                                       Net result of 23m EUR characterised by (pro
                                         NET RESULT                                                     forma q-o-q):
                                                                                                        • slightly lower net interest income as volume growth
                                   25                                                                     was more than offset by margin pressure
                                                                          23
                    22                                                                                  • stable net fee & commission income as the strong
                                                                                                          performance in sales of mutual funds was offset by
                                                                                                          lower income from banking services
                                              16           16
                                                                                                        • lower net other income
                                                                                                        • an excellent combined ratio (87% in 1Q18); roughly
                                                                                                          stable technical insurance result in life
                                                                                                        • lower operating expenses driven by traditionally lower
                                                                                                          ICT & marketing expenses in the first quarter and lower
                                                                                                          staff expenses
                                                                                                        • net impairment releases (mainly in consumer finance
                   1Q17           2Q17      3Q17         4Q17            1Q18                             and leasing)
                                                                                                        • credit cost ratio of -0.20% in 1Q18
              Amounts in m EUR

                                         VOLUME TREND                                                  Volume trend:
                          Total loans **     o/w retail mortgages              Customer deposits***     • Total customer loans rose by 1% q-o-q and by 7% y-o-y,
                                                                                                          amongst other things due to the continuously
 Volume                          7bn                   3bn                             6bn                increasing mortgage portfolio and consumer finance
 Growth q-o-q*                   +1%                   +3%                             +3%              • Total customer deposits rose by 3% q-o-q and by 9%
                                                                                                          y-o-y thanks to retail as well as corporates
 Growth y-o-y                    +7%                  +12%                             +9%
* Non-annualised
** Loans to customers, excluding reverse repos (and bonds)
*** Customer deposits, including debt certificates but excluding repos
                                                                                             35
International Markets BU (3): Hungary
                                                                                                       Net result of 34m EUR characterised by (pro forma
                                         NET RESULT                                                     q-o-q):
                                                                                                        • lower net interest income due to a one-off effect (2m
                                   47                                                                     EUR)
                                              40           39
                                                                                                        • lower net fee and commission income as higher
                                                                                                          management fees were more than offset by traditionally
                                                                          34                              lower fees from payment transactions in the first quarter
                                                                                                        • higher net results from financial instruments thanks to
                                                                                                          higher M2M ALM derivatives
                    20
                                                                                                        • higher net other income due to the sale of a building
                                                                                                        • good non-life commercial performance y-o-y in all major
                                                                                                          product lines and growing average tariff in motor retail;
                                                                                                          an excellent combined ratio (84% in 1Q18); stable sales of
                                                                                                          life insurance products q-o-q
                   1Q17           2Q17      3Q17         4Q17            1Q18                           • lower operating expenses excluding bank tax (45m EUR)
                                                                                                          due mainly to lower staff & ICT expenses
              Amounts in m EUR                                                                          • net impairment releases (mainly in retail and corporates)
                                                                                                        • credit cost ratio of -0.44% in 1Q18

                                         VOLUME TREND
 Excl. FX effect          Total loans **     o/w retail mortgages              Customer deposits***    Volume trend:
 Volume                          4bn                   2bn                             7bn              • Total customer loans stabilised q-o-q and rose by 11%
                                                                                                          y-o-y, mainly in mortgages and corporates
 Growth q-o-q*                   0%                     0%                             -3%              • Total customer deposits fell by 3% q-o-q, but rose by 6%
 Growth y-o-y                 +11%                     +7%                             +6%                y-o-y due to strong growth in corporates

* Non-annualised
** Loans to customers, excluding reverse repos (and bonds)
*** Customer deposits, including debt certificates but excluding repos
                                                                                             36
International Markets BU (4): Ireland
                                                                                                       Net result of 57m EUR characterised by (pro forma
                                        NET RESULT                                                      q-o-q):
                                                                                                        • higher net interest income due mainly to lower funding
                                  99                                                                      costs
                                                                                                        • net other income in 4Q17 was impacted by an additional
                                                                                                          provision of 61.5m EUR related to the industry-wide
                                                                                                          review of the tracker rate mortgage products originated
                    67                                                                                    in Ireland before 2009
                                                                          57
                                                                                                        • higher operating expenses excluding bank tax due mainly
                                                                                                          to higher ICT expenses and regulatory levies (mainly CBI
                                                                                                          Industry Funding levy)
                                                                                                        • lower net impairment releases (-43m EUR in 1Q18
                                                                                                          compared with -52m EUR in 4Q17), as 4Q17 benefited
                                                                                                          from 31m EUR IBNR parameter changes. Releases in
                                                           3
                                                                                                          1Q18 are driven by:
                                              -1                                                              o an increase in the 9-month average House Price
                   1Q17          2Q17       3Q17         4Q17            1Q18                                    Index and an improved portfolio performance
              Amounts in m EUR                                                                                o lower provisions on existing non-performing loans
                                                                                                                 driven by improved macro-economic conditions and
                                                                                                                 provision releases following deleveraging for
                                        VOLUME TREND                                                             corporates
                          Total loans **     o/w retail mortgages              Customer deposits***     • credit cost ratio of -1.36% in 1Q18
                                                                                                       Volume trend:
 Volume                       11bn                    10bn                             6bn
                                                                                                        • Total customer loans fell by 1% q-o-q and stabilised y-o-y.
 Growth q-o-q*                   -1%                    0%                             +5%                The q-o-q decrease resulted from the further deleveraging
                                                                                                          of the corporate loan portfolio
 Growth y-o-y                    0%                    +2%                             +8%
                                                                                                        • Retail mortgages: new business (written from 1 Jan 2014)
* Non-annualised                                                                                          +7% q-o-q and +49% y-o-y, while legacy -2% q-o-q and -7%
** Loans to customers, excluding reverse repos (and bonds)                                                y-o-y
*** Customer deposits, including debt certificates but excluding repos                                  • Total customer deposits rose by 5% q-o-q and
                                                                                             37           by 8% y-o-y
International Markets BU (5): Bulgaria
                                                                                                                                 Net result of 21m EUR
                                                  NET RESULT
                                                                                                                                 Net result was characterised by (pro forma q-o-q):
           Amounts in m EUR
                                                          22                                                                        • In banking (CIBank & UBB/Interlease):
                                                                                         21
                                                                                                                                      o slightly lower net interest income, as volume growth was
                                                                          18                                                              more than offset by margin pressure
                                                                                                                                      o lower net fee and commission income due to traditionally
                                                                                                                                          lower fees from payment transactions in the first quarter
                                                                                                                                      o lower net results from financial instruments
                                                                                                                                      o lower operating expenses excluding bank tax due mainly to
                                                                                                                                          lower staff & ICT expenses
                                           5
                           4                                                                                                          o higher bank tax y-o-y due to UBB/Interlease acquisition
                                                                                                                                      o net impairment releases. Credit ratio of -1.09% in 1Q18
                                                                                                                                    • In insurance (DZI): higher net result
                         1Q17            2Q17            3Q17           4Q17            1Q18                                          o good earned premiums both in Life and Non-Life, offset by
                                                                                                                                          higher technical charges. Combined ratio amounted to 93%

                                                 VOLUME TREND                                                                    Volume trend:
                                                                                                                                    • Total customer loans rose by 1% q-o-q and by 231% y-o-y
 Excl. FX effect                Total loans ***            o/w retail mortg.              Customer deposits****                       (11% y-o-y excluding UBB/Interlease), amongst other things
                                                                                                                                      due to the continuously increasing mortgage portfolio and a
 Volume                                3bn                           1bn                                4bn                           strong pick-up in corporates in 1Q18
 Growth q-o-q*                         +1%                          +1%                                 +3%                         • Total loans: new business +3% q-o-q and +186% y-o-y, while
                                                                                                                                      legacy -7% q-o-q and +787% y-o-y
 Growth y-o-y                      +231%**                       +239%**                            +396%**
                                                                                                                                    • Total customer deposits rose by 3% q-o-q and by 396% y-o-y
                                                                                                                                      (9% y-o-y excluding UBB/Interlease)
*      Non-annualised
**     Y-o-y growth excluding UBB/Interlease amounted to +11% for total loans, +20% for retail mortgages and +9% for customer deposits
***    Loans to customers, excluding reverse repos (and bonds)
****   Customer deposits, including debt certificates but excluding repos
                                                                                                                   38
GROUP CENTRE

                          CFO SERVICES

                          CRO SERVICES

                             CZECH         INTERNATIONAL
               BELGIUM
                            REPUBLIC          MARKETS

                         CORPORATE STAFF

                             39
Group Centre: net result of 5m EUR
                                     NET RESULT                                             Net result: 5m EUR
                33                                                                          The net result for the Group Centre comprises the results coming
                                                                                             from activities and/or decisions specifically made for group
                               12                                                            purposes (see table below for components)
                                                                       5

                                            -12
                                                                                            The q-o-q improvement was attributable mainly to:
                                                         -179                                o one-off upfront negative P&L impact of 126m EUR due to the
               1Q17           2Q17         3Q17          4Q17        1Q18
                                                                                               Belgian corporate income tax reform in 4Q17
                                                                                             o higher NII due to lower debt costs (as a result of the call of the
                                                                                               CoCo)
                                                                                             o lower operating expenses
                                                                                             o net impairment releases

     BREAKDOWN OF NET RESULT AT GROUP CENTRE
                                                                                    1Q17           2Q17          3Q17          4Q17         1Q18
Group item (ongoing business)                                                       -50              0            -31          -157          -17
- Operating expenses of group activities                                            -14             -14           -20           -25          -17
- Capital and treasury management                                                   -18             17             5             -5           -4
                                                  o/w net subordinated debt cost            -9            -9            -9            -13          -6
- Holding of participations                                                          -9             -13           -13           18            1
                                           o/w net funding cost of participations           -2            0             0              -1          -1
- Group Re                                                                           5              6              5            10             7
- Other                                                                             -14             5             -9           -154           -3
Ongoing results of divestments and companies in run-down                            83              11            19            -22           23
Total net result at GC                                                              33              12           -12          -179            5

          Amounts in m EUR                                                            40
Overview of results based on business units*
                                                                                                                                            Amounts in m EUR
                                                                     NET PROFIT – KBC GROUP
                                                                                                       1Q18 ROAC: 21%
                                                                           2,639                 2,575
                                                                                      2,427

                                                                 1,762
                                                                           2,129                1,945
                                                                                      2,035
                                                                 1,415
                                                                                                             556

                                                                            510        392       630
                                                                  347
                                                                 2014       2015      2016       2017       1Q18

                                                                                   2Q-4Q        1Q

        NET PROFIT – BELGIUM                                     NET PROFIT – CZECH REPUBLIC                              NET PROFIT – INTERNATIONAL MARKETS
                                      1Q18 ROAC: 15%                                                     1Q18 ROAC: 40%                                1Q18 ROAC: 25%
1,516      1,564                1,575                                                            702
                     1,432
                                                                                       596
                                                                  529       542                                                              428       444

1,165     1,234                1,274                                                             521
                     1,223                                        390       399        467                                           245               330
                                                                                                                                             368
                                                                                                             171                                               137
                                           243                                                                                       221
 351       330                  301                               138       143        129       181                                                   114
                      209                                                                                                            24      60
 2014      2015      2016       2017      1Q18                   2014       2015      2016       2017       1Q18
                                                                                                                              -156
                   2Q-4Q      1Q                                                     2Q-4Q        1Q                           -26
                                                                                                                              -182
                                                                                                                              2014   2015   2016      2017     1Q18

                                                                                                                                            2Q-4Q      1Q
* Note that the 1Q18 results & ROAC were impacted by the upfront booking of the bank tax
                                                                                           41
Balance sheet (1/2):
                            Loans and deposits continue to grow in most core countries

                                                  Y-O-Y ORGANIC* VOLUME GROWTH FOR KBC GROUP

                                                            4%                 4%

                                                                                                1%

                                                        Loans**          Retail mortgages   Deposits***

* Volume growth excluding FX effects and divestments/acquisitions
** Loans to customers, excluding reverse repos (and bonds)
*** Customer deposits, including debt certificates but excluding repos
                                                                                      42
Balance sheet (2/2):
                                       Loans and deposits continue to grow in most core countries
                                                                       Y-O-Y ORGANIC* VOLUME GROWTH FOR MAIN ENTITIES
                                                                                                                                                   12%

                                                                                                                                                                 9%
                                                                                                                10%
                                                                                                                                       7%
                    4%               BE                                                                 CZ
                                                                                             5%
                                                                                                                         3%
                                     1%
                                                      0%
                Loans**          Retail   Deposits***                                     Loans**         Retail   Deposits***       Loans**      Retail     Deposits***
                                mortgages                                                                mortgages                               mortgages

                                                                                                                20%

                   11%

                                                                                             11%
                                     7%
                                                      6%                                                                   9%

                                                                                                                                                                 8%

                                                                                                                                                    2%
                                                                                                                                       0%
                Loans**          Retail   Deposits***                                     Loans**          Retail      Deposits***   Loans**       Retail    Deposits***
                                mortgages                                                                 mortgages                            mortgages****
*      Volume growth excluding FX effects and divestments/acquisitions
**     Loans to customers, excluding reverse repos (and bonds)
***    Customer deposits, including debt certificates but excluding repos                                         43
****   Retail mortgages in Ireland: new business (written from 1 Jan 2014) +49% y-o-y, while legacy -7% y-o-y
KBC Group

Section 3

Strong solvency and
solid liquidity

                44
Strong capital position
Fully loaded Basel 3 CET1 ratio at KBC Group (Danish Compromise)                                     The common equity ratio* decreased from
                            15.9%     16.3%                                                           16.3% at the end of 2017 to 15.9% at the end
   15.7%     15.7%                                  15.9%
                                                                                                      of 1Q18 based on the Danish Compromise,
                                                             14.0% ‘Own Capital Target’               due to the impact of the first-time application
                                                                                                      of IFRS 9 (-41bps). This clearly exceeds the
                                                            10.6% fully loaded regulatory minimum
                                                                                                      minimum capital requirements** set by the
                                                                                                      competent supervisors of 9.875% phased-in
                                                                                                      for 2018 and 10.6% fully loaded and our ‘Own
                                                                                                      Capital Target’ of 14.0%
                                                                                                     The pro forma*** fully loaded CET1 ratio
                                                                                                      amounted to roughly 15.7% at the end of
    1Q17     1H17           9M17       FY17         1Q18
                                                                                                      1Q18
                                                                                                      *   Note that as from 01/01/2018 onwards, there is no difference
Fully loaded Basel 3 total capital ratio (Danish Compromise)                                              anymore between fully loaded and phased-in
                                                                                                      ** Excludes a pillar 2 guidance (P2G) of 1.0% CET1
                                    20.7%                                                             *** Also taking into account the impact of the share buy-back
              19.7%
                                     2.3%
              2.3% T2
                                     2.6%
              1.5% AT1

                                                                                                     The fully loaded total capital ratio amounted
                                                                                                      to 19.7% at the end of 1Q18. Including the
             15.9% CET1             15.9%                                                             successful issuance of 1bn EUR additional Tier-
                                                                                                      1 instrument in April 2018, the pro forma fully
                                                                                                      loaded total capital ratio amounted to 20.7%

            Total capital       Pro forma total
             ratio 1Q18        capital ratio 1Q18                                       45
Fully loaded Basel 3 leverage ratio and Solvency II ratio
           Fully loaded Basel 3 leverage ratio at KBC Group                                                  Fully loaded Basel 3 leverage ratio at KBC Bank
                 5.7%                        5.8%          6.1%
                               5.7%                                      5.7%
                                                                                                                  4.8%          4.7%           4.7%          5.0%
                                                                                                                                                                           4.7%

                 1Q17          1H17         9M17           FY17          1Q18                                     1Q17           1H17         9M17           FY17          1Q18

                                   Solvency II ratio

                                                                         4Q17            1Q18                    The increase (+6%-points) in the Solvency II ratio
                                                                                                                  was mainly the result of lower equity markets
Solvency II ratio*                                                       212%            218%

    * On 19 April 2017, the NBB retroactively relaxed the strict cap on the loss-absorbing capacity of deferred taxes in the calculation of the required capital. Belgian insurance
    companies are now allowed to apply a higher adjustment for deferred taxes, in line with general European standards, if they pass the recoverability test. This is the case for KBC
                                                                                                 46
Solid liquidity position (1)
 KBC Bank continues to have a strong retail/mid-cap deposit base in its core markets – resulting in a stable funding mix
  with a significant portion of the funding attracted from core customer segments & markets
 Customer funding further increased in 1Q18. The elevated amount in short-term wholesale funding is on the back of
  short-term arbitrage opportunities
                                                                                                                              Funding from customers (m EUR)

                                                                                                                                                                        162.536
                                                                                                                                                      143.690 155.774
                                                                                       10%                 129.555 131.914 132.862 133.766 139.560
   3%              6%               3%     2%       4%           5%              8%           12%
                           0%                             2%              2%           7%
   9%                              10%
                   8%                               8%           8%              8%           7%
   7%                                                                                  9%
                   9%               8%              9%           8%              8%           8%
   9%              3%               2%              3%           3%                    10%    6%
                                                                                 8%                         FY11   FY12    FY13     FY14       FY15   FY16    FY17      1Q18
   3%

                                                                                                                                  0% 7%

                                                                                                                        21%
                                   75%
                                                                                                       72%
   69%             73%                             73%          73%                    70%    72%
                                                                                 69%                 customer
                                                                                                      driven

                                                                                                                                                        72%

                                                                                 -1%          -4%
                                                                                       -6%
  FY11            FY12            FY13             FY14         FY15            FY16   FY17   1Q18                            Retail and SME
                                                                                                                              Mid-cap
        Net unsecured interbank funding                    Total equity
                                                                                                                              Debt issues in retail network
        Net secured funding                                Certificates of deposit
                                                                                                                              Government and PSE
        Debt issues placed with institutional investors    Funding from customers

                                                                                        47
Solid liquidity position (2)
 Short term unsecured funding KBC Bank vs Liquid assets as of end March 2018 (*)
                                 (bn EUR)
                               486%
             68,14
                        411%                                           65,39
                                58,30
                                                                                                          KBC maintains a solid liquidity position, given that:
                                                  56,23                                     57,79
                                                                                                           • Available liquid assets remained very high at more than
                                                                                                             3 times the amount of the net short-term wholesale
                                                                                   309%
                                                                                                             funding
  271%
                                                            288%                                           • Funding from non-wholesale markets is stable funding
    25,10
                                                             22,70                                           from core-customer segments in core markets
                                                                                    18,71
                        14,19
                                          11,56

        1Q17                2Q17               3Q17                  4Q17               1Q18
            Net Short Term Funding         Available Liquid Assets             Liquid Assets Coverage

* Graph is based on Note 18 of KBC’s quarterly report, except for the ‘available liquid assets’ and
   ‘liquid assets coverage’, which are based on the KBC Group Treasury Management Report

               Ratios                   FY17                1Q18                  Regulatory              NSFR is at 137% and LCR is at 139% by the end of
                                                                                 requirement               1Q18
               NSFR*                    134%                137%                     ≥100%                 • Both ratios were well above the regulatory requirement
                                                                                                             of at least 100%
                LCR**                   139%                139%                     ≥100%

   * Net Stable Funding Ratio (NSFR) is based on KBC’s interpretation of the proposal of CRR
   amendment
   ** Liquidity Coverage ratio (LCR) is based on the Delegated Act requirements. From EOY2017
   onwards, KBC discloses 12 months average LCR in accordance to EBA guidelines on LCR
   disclosure
                                                                                                    48
KBC Group

Section 4

1Q 2018 wrap up

                  49
1Q 2018 wrap up

 Strong commercial bank-insurance results in our core countries

 Successful earnings track record

 Solid capital and robust liquidity position

                                                50
Looking forward
 We expect 2018 to be a year of sustained economic growth in both the euro area, the US and in each of our
  core markets

 Management guides for:
  • solid returns for all Business Units
  • loan impairments for Ireland towards a release in a 100m-150m EUR range for FY18
  • the impact of the reform of the Belgian corporate income tax regime: a recurring positive P&L impact as of 2018
    onwards and the one-off negative impact in 4Q17 will be fully recuperated in roughly 3 years’ time
  • B4 impact for KBC Group is estimated at roughly 8bn EUR higher RWA on a fully loaded basis as at year-end 2017, which
    corresponds with a RWA inflation of 9% and an impact on the CET1 ratio of -1.3%

 Next to the Belgium and the Czech Republic Business Units, the International Markets Business Unit has
  become a strong contributor to the net result of KBC Group thanks to:
  • Ireland: re-positioning as a core country with a sustainable profit contribution
  • Bulgaria: the legal merger of CIBank into UBB was approved. The new group UBB has become the largest bank-insurance
    group in Bulgaria with a substantial increase in profit contribution
  • Sustainable profit contribution of Hungary and Slovakia

                                                           51
KBC Group

Annex 1

Company profile

                  52
Business profile
                 BREAKDOWN OF ALLOCATED CAPITAL BY BUSINESS UNIT AS AT 31 MARCH 2018

                                                                        Czech Republic
                                                                  16%

                               Belgium 61%

                                                                   20%
                                                                           International Markets

                                                             3%
                                                              Group Centre

 KBC is a leading player (retail and SME bank-insurance, private banking, commercial and local investment
  banking) in Belgium, the Czech Republic and its 4 core countries in the International Markets Business Unit

                                                        53
Well-defined core markets provide access to ‘new
                  growth’ in Europe
                                                                                                                                     MARKET SHARE (END 2017)
                                                                                                                                      BE       CZ         SK     HU     BG      IRL
                                                      KBC Group’s core markets                                          Loans and     20%       20%
                                                                                                                                                          11%    11%    10%     8%*
                                                                                                                        deposits

                                                                                                                        Investment    33%
                                                                                                                                                    22%           13%     13%
                                                                                                                        funds                              7%

                                                NETHERLANDS                                                             Life                                              21%
                                                                                                                                      14%           8%
           IRELAND                      UK                                                                              insurance                          4%      3%

                                              BELGIUM                                                                   Non-life                                          11%
                                                                   GERMANY                                              insurance      9%           7%             7%
                                                                                 CZECH REP                                                                 3%
                                                                                             SLOVAKIA
                                                                                                                        * Only for retail segment

                                                                                                                                    REAL GDP GROWTH OUTLOOK
                                             FRANCE                                      HUNGARY
                                                                                                                                        FOR CORE MARKETS1
                                                                                                                                     BE        CZ         SK     HU     BG      IRL
                                                                                                                                      64%
                                                                                                                        % of
                                                                                                             BULGARIA   Assets                  20%
                                                                                                                                                          3%     3%     2%      4%

                                                                                     ITALY                                                                                      7.8%
                                                                                                                                                4.6%      3.4%   4.0%   3.6%
                                                                                                                        2017         1.7%
                                SPAIN
          PORTUGAL
                                             Macroeconomic outlook                                                                                                              6.0%
                                                                                                  GREECE                                                  3.9%   3.8%   3.6%
                                             Based on GDP, CPI and unemployment trends                                  2018e        1.9%       3.3%
                                             Inspired by the Financial Times

                                                                                                                                                          3.9%   3.5%   3.5%    4.0%
                                                                                                                        2019e        1.7%       2.8%
1. Source: KBC data, May 2018

                                                                                                        54
Key strengths

 Well-developed bank-insurance strategy and strong cross-selling capabilities

 Strong commercial bank-insurance franchises in Belgium and the Czech Republic with stable and solid returns.
  The International Markets Business Unit also has become a strong contributor to the net result of KBC Group

 Successful earnings track record

 Solid capital and robust liquidity position

                                                      55
Shareholder structure
                                      SHAREHOLDER STRUCTURE AT END 1Q18

                                                           Other core
                                              MRBB
                                                         7.4%
                                       Cera      11.4%
                                              2.7%

                            KBC Ancora 18.5%

                                                                 60.0%
                                                                         Free float

 Roughly 40% of KBC shares are owned by a syndicate of core shareholders, providing continuity to pursue long-term
  strategic goals. Committed shareholders include the Cera/KBC Ancora Group (co-operative investment company),
  the Belgian farmers’ association (MRBB) and a group of industrialist families
 The free float is held mainly by a large variety of international institutional investors

                                                           56
KBC Group going forward:
Wants to be among the best performing financial institutions in Europe

    KBC wants to be among Europe’s best performing financial institutions.
     This will be achieved by:

    • Strengthening our bank-insurance business model for retail, SME and mid-cap
      clients in our core markets, in a highly cost-efficient way

    • Focusing on sustainable and profitable growth within the framework of solid
      risk, capital and liquidity management

    • Creating superior client satisfaction via a seamless, multi-channel, client-centric
      distribution approach

    By achieving this, KBC wants to become the reference in bank-insurance
     in its core markets

                                               57
KBC Group going forward:
 The bank-insurance business model, different countries, different
 stages of implementation

    Level 4: Integrated distribution and operation
Acting as a single operational company: bank and insurance operations           Belgium
working under unified governance and achieving commercial and non-
                          commercial synergies

              Level 3: Integrated distribution
       Acting as a single commercial company: bank and insurance
                                                                          Target for Central
       operations working under unified governance and achieving               Europe
                           commercial synergies

               Level 2: Exclusive distribution                          KBC targets to reach at
          Bank branches selling insurance products from intra-
                                                                        least level 3 in every
                     group insurance company as                         country, adapted to the
                   additional source of fee income
                                                                        local market structure and
                                                                        KBC’s market position in
                    Level 1: Non-exclusive
                         distribution
                                                                        banking and insurance.
                    Bank branches selling insurance
                   products of third party insurers as
                    additional source of fee income

                                                                 58
More of the same…                     but differently…

•   Integrated distribution model     •   Client-centricity will be further      •   Investment in our digital
    according to a real-time              fine-tuned into ‘think client, but         presence (e.g., social media) to
    omni-channel approach                 design for a digital world’                enhance client relationships and
    remains key but client                                                           anticipate their needs
    interaction will change over      •   Digitalisation end-to-end, front-
    time. Technological                   and back-end, is the main lever:       •   Easy-to-access and convenient-
    development will be the                 • All processes digital                  to-use set-up for our clients
    driving force                           • Execution is the
                                                 differentiator                  •   Clients will drive the pace of
•   Human interface will still play                                                  action and change
    a crucial role                    •   Further increase efficiency and
                                          effectiveness of data management       •   Further development of a fast,
                                                                                     simple and agile organisation
•   Simplification is a               •   Set up an open architecture IT             structure
    prerequisite:                         package as core banking system for
      • In the way we operate             our International Markets Unit         •   Different speed and maturity in
      • Is a continuous effort                                                       different entities/core markets
      • Is part of our DNA            •   Improve the applications we offer
                                          our clients (one-stop-shop offering)   •   Adaptation to a more open
                                          via co-creation/partnerships with          architecture (with easy plug in
                                          Fintechs and other value chain             and out) to be future-proof and
                                          players                                    to create synergy for all

                                                            59
Summary of the guidance at KBC Group level
as announced at our Investor Visit in June 2017
More of the same …
Guidance…                                                                 by…
CAGR total income (‘16-’20)*                                  ≥ 2.25%     2020
C/I ratio banking excluding bank tax                          ≤ 47%       2020
C/I ratio banking including bank tax                          ≤ 54%       2020
Combined ratio                                                ≤ 94%       2020
Dividend payout ratio                                         ≥ 50%     As of now
 * Excluding marked-to-market valuations of ALM derivatives

Regulatory requirements…                                                  by…
Common equity ratio*excluding P2G                             ≥ 10.6%     2019
Common equity ratio*including P2G                             ≥ 11.6%     2019
MREL ratio**                                                  ≥ 25.9%   May 2019
NSFR                                                          ≥ 100%    As of now
LCR                                                           ≥ 100%    As of now
* Fully loaded, Danish Compromise. P2G = Pillar 2 guidance.
** See slide 83 for more details

                                                                 60
Summary of the guidance at KBC Group level
as announced at our Investor Visit in June 2017
… but differently…
 Make further progress in our bank-insurance model
 Guidance                                        by…                         Guidance                                               by…
 CAGR Bank-Insurance clients                                                 CAGR Bank-Insurance stable clients
 (1 Bank product + 1 Insurance product)                                      (3 Bk + 3 Ins products in Belgium; 2 Bk + 2 Ins products in CE)

 BU BE               > 2%                       2020                         BU BE                 > 2%                               2020
 BU CR               > 15%                      2020                         BU CR                 > 15%                              2020
 BU IM               > 10%                      2020                         BU IM                 > 15%                              2020

 Guidance on inbound omni-channel/digital behaviour*
                           Guidance                                                         by …
                           % Inbound contacts via omni-channel and
                           digital channel
                           KBC Group**                     > 80%                             2020
• Clients interacting with KBC through at least one of the non-physical channels (digital or through a remote advisory centre), possibly in addition
   to contact through physical branches. This means that clients solely interacting with KBC through physical branches (or ATMs) are excluded
** Bulgaria & PSB out of scope for Group target
                                                                                       61
Digital Investments 2017-2020
                                  Cashflow 2017-2020 = 1.5bn EUR                                                                    Operating Expenses 2017-2020 = 1bn EUR

 Regulatory driven                                                               Organic growth
developments (IFRS                                                               or operational
                                                                                                                                                                        48              55
 9, CRS(*), MIFID,                 Regulatory                                      efficiencies                               43                   44
       etc.)                          20%                      Strategic
                                                                                                                                                   78                   83              90
                                                                Growth                                                        94
                                                                 36%

                            Strategic Transformation                                                                          112                 125                  127              128
                                      44%

                                                                                                                            2017                  2018                2019              2020
                              Omni-channel                                                                            Strategic Grow                  Strategic Transform                Regulatory
                            and core-banking
                                 system

    (*) The Common Reporting Standard (CRS) refers to a systematic and periodic exchange of information at international level aimed at preventing tax evasion. Information on the
    taxpayer in the country where the revenue was taken is exchanged with the country where the taxpayer has to pay tax. It concerns an exchange of information between as many as 53
    OECD countries in the first year (2017). By 2018, another 34 countries will join.
                                                                                                        62
Digital sales are increasing (examples: BU Belgium)

20.000                                                   1.200
18.000
16.000                                                   1.000
14.000                                                    800
12.000
10.000                                                    600
 8.000
 6.000                                                    400
 4.000
                                                          200
 2.000
     0                                                      0
           Q1    Q2           Q3        Q4   Q1                   Q1   Q2           Q3         Q4   Q1
                      2017                   2018                           2017                    2018

                      Consumer loans                                        Travel insurance

8.000                                                    35.000
7.000                                                    30.000
6.000
                                                         25.000
5.000
                                                         20.000
4.000
                                                         15.000
3.000
                                                         10.000
2.000
1.000                                                     5.000

   0                                                         0
           Q1    Q2          Q3         Q4   Q1                   Q1   Q2            Q3        Q4   Q1

                      2017                   2018                           2017                    2018

                      Pension savings                                       Current accounts
                                                    63
Omnichannel is embraced by our customers (examples: BU Belgium)

     Digital signing after contact with the branches                                        Digital sales @ KBC Live increases,
                or KBC Live in 2017-2018                                                      strong performance in non-life

   90,00%

   80,00%
                                                                                  30.000
   70,00%
                                                                                  25.000
   60,00%
                                                                                           KBC Live cumulative sales 2017-2018
                                                                                  20.000
   50,00%

                                                                                  15.000
   40,00%

                                                                                  10.000
   30,00%
            17Q1        17Q2           17Q3          17Q4             18Q1
                                                                                   5.000
               Digital signing of consumer loans
               Digital signing of debt protect cover life insurance
                                                                                      0
               Digital signing mortgage loans                                              Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mrt
               Digital signing housing insurance
                                                                                               Non life insurance   Life insurance     Housing loans
               Digital signing car insurance
                                                                                               Consumer loans       Investment plans

                                                                             64
Impact of Basel 4 agreement
 On 7 December, the Basel Committee reached an agreement on the remaining Basel 3 post-crisis regulatory
  reforms (commonly known as Basel 4). The main elements of the Basel 4 agreement are:
     o   credit risk: changes to the internal ratings-based approach and a revised standardised approach;
     o   market risk: FRTB postponed to 2022;
     o   operational risk: a revised and more risk sensitive standardised approach, replacing all existing approaches;
     o   an aggregate output floor (gradually phased-in between 2022 and 2027), which will ensure that banks' risk-weighted assets
         based on internal models are not lower than 72.5% of RWAs as calculated by the revised standardised approaches

 For KBC Group, the RWA increase related to Basel 4 is estimated at roughly 8bn EUR higher RWA on a fully
  loaded basis as at year-end 2017, which corresponds with a RWA inflation of 9% and an impact on the CET1 ratio
  of -1.3%. This figure is based on our current interpretation of Basel 4, a static balance sheet and the current
  economic environment. It also does not take into account possible management actions

 We no longer see evidence that KBC is impacted significantly more than our peers. As a consequence, the 1%
  buffer for Basel 4 in our management targets is no longer required

 The Basel agreement now needs to be implemented in EU regulation (CRR/CRD package), which might influence (in
  a positive or negative way) the final impact for KBC

 Elements that are not included in above mentioned RWA impact (and which might affect KBC earlier):
     o   the ongoing Targeted Review of Internal Models (TRIM) exercise by ECB;
     o   the potential impact of the EBA review of the IRB approach (PD & LGD estimation; treatment defaulted exposures);
     o   any impact on the Pillar 2 requirements (given that pillar 1 more adequately captures the risks)

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