Kbc Group N.v. · EURONEXT:KBC

Kbc — Debt Investor Presentation (November 2016)

86 slides from Kbc's debt investor presentation, November 2016

  1. Slide 1: KBC Group / Bank Debt presentation November 2016

    KBC Group / Bank Debt presentation November 2016 More infomation: www.kbc.com KBC Group - Investor Relations Office – Email: investor.relations@kbc.com 1

  2. Slide 2: Important information for investors

    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 th

  3. Slide 3: 3Q 2016 key takeaways for KBC Group

    3Q 2016 key takeaways for KBC Group  STRONG BUSINESS PERFORMANCE IN 3Q16 Good net result of 629m EUR in 3Q16 (and 1.74bn EUR in 9M16) o Good commercial bank-insurance franchises in our core markets and core activities o Slight q-o-q increase in customer loan volumes in most of our core countries o

  4. Slide 4: Contents

    Contents 1 Strategy and business profile 2 Financial performance 3 Balance sheet 4 Solvency and liquidity 5 MREL strategy 6 3Q16 Wrap up Appendices 4

  5. Slide 5: Well-defined core markets provide access to 'new growth' in Europe

    Well-defined core markets provide access to ‘new growth’ in Europe MARKET SHARE (END 2015) BE CZ SK HU BG KBC Group’s core markets 21% 19% Loans and 11% 10% and Ireland deposits 3% Investment 40% 26% 18% funds 7% NETHERLANDS IRELAND Life 17%1 UK 12% insurance 7% 4% 4% BELGIUM GERMANY 9% 10% Non-life

  6. Slide 6: Group's legal structure and issuer of debt instruments

    Group’s legal structure and issuer of debt instruments KBC Group NV  AT 1  Tier 2  Wholesale EMTN 100% 100% 48% 52% KBC Bank KBC Asset Management KBC Insurance  Covered bond  No public issuance  No public issuance KBC IFIMA*  Retail and Wholesale EMTN * All debt obligations of KBC IFIMA are u

  7. Slide 7: Overview of key financial data at 3Q 2016

    Overview of key financial data at 3Q 2016 KBC Group Market cap1 Net result 9M16 Total assets Total equity CET1 ratio2 24 1.7 266 17 15.3 bn EUR bn EUR bn EUR bn EUR % KBC Bank KBC Insurance Net result 9M 20163: 1 554m EUR Net result 9M 2016: 217m EUR Total assets: 230bn EUR Total assets: 39bn EUR To

  8. Slide 8: Credit ratings as at November 2016

    Credit ratings as at 15 November 2016 Moody’s S&P Fitch Senior Unsecured Baa1 BBB+ A- Tier II - BBB- BBB+ Group Additional Tier I - BB BB Short-term P-2 A-2 F1 Outlook Stable Stable Positive Covered Bonds AAA - AAA Senior Unsecured A1 A A- Tier II (CoCo)1 - BBB- - Bank Additional Tier I -2 -2 -2 Sho

  9. Slide 9: Overview of KBC Group

    Overview of KBC Group  STRONG BANK-INSURANCE GROUP PRESENT WITH LEADING MARKET POSITIONS IN ITS CORE GEOGRAPHIES (BELGIUM AND CEE) • A leading financial institution in both Belgium and the Czech Republic • Business focus on Retail, SME & Midcap clients • Unique selling proposition: in-depth knowled

  10. Slide 10: Business profile: KBC is a leading player in Belgium and its 4 core countries in CEE

    Business profile: KBC is a leading player in Belgium and its 4 core countries in CEE BREAKDOWN OF ALLOCATED CAPITAL BY BUSINESS UNIT AT 30 September 2016 CFO SERVICES CRO SERVICES Czech Republic 15% CZECH INTERNATIONAL Belgium 61% BELGIUM REPUBLIC MARKETS 19% International Markets 5% CORPORATE STAFF

  11. Slide 11: KBC Group going forward

    KBC Group going forward: To be among the best performing retail-focused institutions in Europe  KBC wants to be among Europe’s best performing retail-focused financial institutions. This will be achieved by: • Strengthening our bank-insurance business model for retail, SME and mid-cap clients in ou

  12. Slide 12: Summary of the financial targets at KBC Group level

    Summary of the financial targets at KBC Group level as announced at our investor day in June 2014 Targets… by… CAGR total income (‘13-’17)1 ≥ 2.25% 2017 CAGR bank-insurance gross income (‘13-’17) ≥ 5% 2017 C/I ratio ≤ 53% 2017 Combined ratio ≤ 94% 2017 Common equity ratio ≥ 10.25%2 2016 (phased-in,

  13. Slide 13: Contents

    Contents 1 Strategy and business profile 2 Financial performance 3 Balance sheet 4 Solvency and liquidity 5 MREL strategy 6 3Q16 Wrap up Appendices 13

  14. Slide 14: Earnings capacity

    Earnings capacity CONTRIBUTION OF BANKING ACTIVITIES TO KBC GROUP NET RESULT1,2 903 765 644 NET RESULT1 564 524 552 412 358 448 2 639 765 -310 1 860 1 762 1 742 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Impact Financial Holding Goodwill impairments 1 015 612 2 218 13 CONTRIBUTION OF INSURANCE ACTIVITIES TO

  15. Slide 15: Slightly lower net interest income and net interest margin

    Slightly lower net interest income and net interest margin Amounts in m EUR NII 1 091 1 092  Net interest income 1 062 1 066 1 067 1 070 1 064 • Down by 1% q-o-q and slightly up y-o-y 163 31 162 22 157 19 154 10 156 8 154 2 157 5 2 4 1 4 • The q-o-q decrease was driven primarily by: o lower reinves

  16. Slide 16: Higher net fee and commission income

    Higher net fee and commission income  Net fee and commission income F&C • Up by 2% q-o-q and down by 4% y-o-y 459 465 • Q-o-q increase was the result chiefly of: 383 371 346 360 368 o higher management fees from mutual funds & unit- linked life insurance products (thanks to reset date CPPI) 518 530

  17. Slide 17: Operating expenses down, due entirely to lower bank taxes

    Operating expenses down, due entirely to lower bank taxes OPERATING EXPENSES  Cost/income ratio (banking) adjusted for specific 1 186 items* at 57% in 3Q16 and YTD 1 125 • Operating expenses excluding bank tax increased by 2% q-o-q as higher professional fees, timing differences and 264 941 962 335

  18. Slide 18: Unsustainably low asset impairments, excellent credit cost ratio

    Unsustainably low asset impairments, excellent credit cost ratio and decreased impaired loans ratio ASSET IMPAIRMENT 472  Lower impairment charges q-o-q (unsustainable low 149 level) 11 344 • The q-o-q decrease in loan loss provisions was attributable 77 50 mainly to: 71 4 138 49 21 o net loan loss

  19. Slide 19: Overview of results based on business units

    Overview of results based on business units NET PROFIT – BELGIUM NET PROFIT – CZECH REPUBLIC 9M16 ROAC: 22% 9M16 ROAC: 43% 1 570 1 515 1 564 581 554 528 542 1 360 114 377 348 119 465 414 121 119 296 993 1 193 1 216 467 435 423 1 064 1 102 408 2012 2013 2014 2015 9M16 2012 2013 2014 2015 9M16 4Q 9M 4

  20. Slide 20: Contents

    Contents 1 Strategy and business profile 2 Financial performance 3 Balance sheet 4 Solvency and liquidity 5 MREL strategy 6 3Q16 Wrap up Appendices 20

  21. Slide 21: Balance sheet (KBC Group consolidated at September 2016)

    Balance sheet (KBC Group consolidated at 30 September 2016) Total assets Total liabilities and equity (EUR 266bn) (EUR 266bn) Credit quality 131 143 Capital adequacy & liquidity position 50 17 27 21 20 13 13 10 9 41 37 Customer deposits Loan book (loans and advances to customers) Equity Bank investm

  22. Slide 22: Breakdown of KBC Bank's loan portfolio

    Breakdown of KBC Bank’s loan portfolio* Sector breakdown Geographic breakdown North America Asia Services Other CEE Rest Private Persons 11% Other W-Eur 1% 2% Bulgaria 7% 2% Distribution 2% Electricity Hungary 3% 1% 1% 8% 1% Food producers Slovakia 5% 1% Metals 42% 1% Chemicals 1% Ireland 9% 14% Res

  23. Slide 23: Impaired loans ratios of KBC Group and per Business Unit

    Impaired loans ratios of KBC Group and per Business Unit, incl. of which over 90 days past due KBC GROUP 9.6% 9.3% 9.0% 8.6% 8.2% 7.8% 7.6% International Markets excl. Ireland: 5.5% 5.3% 5.2% 4.8% 4.7% 4.4% 4.2% - Impaired loans ratio stands at 7% - Ratio of 90 days past due at 6% 1Q15 2Q15 3Q15 4Q1

  24. Slide 24: Cover ratios

    Cover ratios KBC GROUP BELGIUM BU 60.3% 60.8% 61.5% 62.0% 58.3% 60.4% 60.0% 59.7% 60.1% 57.6% 57.8% 57.9% 57.6% 56.5% 43.9% 44.8% 45.4% 45.5% 45.6% 43.4% 43.6% 44.0% 44.7% 44.8% 42.7% 42.4% 42.9% 42.5% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Impaired loans cover ratio *

  25. Slide 25: Loan loss experience at KBC

    Loan loss experience at KBC 9M16 FY15 FY14 FY13 FY 2012 AVERAGE CREDIT COST RATIO CREDIT COST RATIO CREDIT COST RATIO CREDIT COST RATIO CREDIT COST RATIO ‘99 –’15 Belgium 0.07% 0.19% 0.23% 0.37% 0.28% n/a Czech 0.09% 0.18% 0.18% 0.26% 0.31% n/a Republic International -0.18% 0.32% 1.06% 4.48%1 2.26%

  26. Slide 26: Limited trading activity at KBC Group

    Limited trading activity at KBC Group BREAKDOWN ACCORDING TO RWA* 30-09-2016 Market risk 3% Operational risk 12% Credit risk 75% 10% Insurance activity * RWA on fully loaded basis and under Danish Compromise 26

  27. Slide 27: Investment portfolio (as per 30/09/2016)

    Investment portfolio (as per 30/09/2016) INVESTMENT PORTFOLIO (Total EUR 71bn) SOVEREIGN BOND PORTFOLIO Equities Other Non-Financial bonds (Carrying value1 EUR 54bn) 2% 2% (Notional value EUR 49bn) 5% Covered bonds Netherlands * Ireland ** 6% Austria * Portugal * ABS Germany * 2% Spain Financial bon

  28. Slide 28: Contents

    Contents 1 Strategy and business profile 2 Financial performance 3 Balance sheet 4 Solvency and liquidity 5 MREL strategy 6 3Q16 Wrap up Appendices 28

  29. Slide 29: Strong capital position

    Strong capital position BASEL 3 CET1 RATIO AT KBC GROUP BASED ON THE DANISH COMPROMISE 14.9% 15.3%  Common equity ratio (B3 phased-in) of 14.6% 14.9% 14.0% 15.1% based on the Danish Compromise at 13.2% end 9M16, which clearly exceeds the 11.7% minimum capital requirements set by the ECB (9.75%) and

  30. Slide 30: Fully loaded Basel 3 leverage ratio

    Fully loaded Basel 3 leverage ratio Fully loaded Basel 3 leverage ratio at KBC Bank 5.4% 5.1% 5.3% 4.9% 4.8% 4.8% 5.0%  Fully loaded B3 leverage ratio, based on the 1Q15 1H15 9M15 FY15 1Q16 1H16 9M16 current CRR legislation (which was adapted during 4Q14): • 5.3% at KBC Bank consolidated level Full

  31. Slide 31: Solid liquidity position (1/2)

    Solid liquidity position (1/2)  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 3% 3% 3% 4% 5% 100% 8% 6% 2% 8% 5% 0% 2% 2% 9% 10% 5% 7%

  32. Slide 32: Solid liquidity position (2/2)

    Solid liquidity position (2/2) (*) Short-term unsecured funding KBC Bank vs Liquid assets as of end September 2016 (bn EUR) 68.6 62.9 58.5 58.3 59.0  KBC maintains a solid liquidity position, given that: 376% 337% • Available liquid assets are more than 3 times the amount 362% of the net recourse o

  33. Slide 33: Upcoming mid-term funding maturities

    Upcoming mid-term funding maturities Breakdown Funding Maturity Buckets (Including % of KBC Group’s balance sheet) 5000 1.8% 4500  KBC Group has successfully issued a 750m EUR senior unsecured 4000 bond with 7-year maturity in October 2016 Millions EUR 3500 1.2% 1.2% 1.1% 3000 2500  KBC’s credit s

  34. Slide 34: Credit spreads evolution

    Credit spreads evolution Credit Spreads Evolution 240 145 125 190 105 85 140 65 90 45 25 40 5 -15 -10 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 1 2Y Senior Debt Opco Interpolated 5Y Covered Bond Interpolated 5Y Senior Debt Holdco 10NC5 Subordinated Tier 2 1 10NC5 Subordinated Ti

  35. Slide 35: Summary covered bond programme (1/2)

    Summary covered bond programme (1/2) (details, see Annex 3)  KBC IS A FREQUENT ISSUER OF BENCHMARK COVERED BONDS AND PRIVATE PLACEMENTS FOR AN AMOUNT OF 7.31 BN EUR • KBC’s 10bn EUR covered bond programme is rated Aaa/AAA (Moody’s/Fitch) • CRD and UCITS compliant / 10% risk-weighted • All issues pe

  36. Slide 36: Summary covered bond programme (2/2)

    Summary covered bond programme (2/2) (details, see Annex 3)  COVER POOL: BELGIAN RESIDENTIAL MORTGAGE  KBC HAS A DISCIPLINED ORIGINATION POLICY LOANS • 2009 to 2016 residential mortgage loan losses below 4 bp • Exclusively, this is selected as main asset category • Arrears in Belgium approx. stabl

  37. Slide 37: Contents

    Contents 1 Strategy and business profile 2 Financial performance 3 Balance sheet 4 Solvency and liquidity 5 MREL strategy 6 3Q16 Wrap up Appendices 37

  38. Slide 38: KBC Group: Already comfortable bail-in buffer (30/09/2016)

    KBC Group: Already comfortable bail-in buffer (30/09/2016) +0.8% 23.1% At 18 October 2016 KBC Group issued +0.8% senior unsecured debt to the tune of 0.8% 2.0% 19.6% 750m EUR, 7 years 12.8% on phased-in basis 0.8% 3.4% +0.3% 1.9% 1.6% 1.6% 12.9% +0.3% +0.3% 7.6% +0.3% +0.3% 8.4% 3.9% 0.3% 7.2% 0.7%

  39. Slide 39: KBC Group: Moving towards MREL via HoldCo issues

    KBC Group: Moving towards MREL via HoldCo issues1 TOTAL CAPITAL KBC GROUP MREL AT HOLDCO CONCEPT 30/09/2016 30/09/2016 UP TO 8% MINIMUM* (all transitional) (all transitional) +0.3% Minimum 17% total capital, 19.5% HoldCo Senior both phased or fully loaded up to MREL target 7.5% T2 2.7% Senior 0.3% a

  40. Slide 40: KBC has a diversified holding structure which helps mitigate risks

    KBC has a diversified holding structure which helps mitigate risks • Additional Tier 1 • Tier 2 • Senior Unsecured (MREL/TLAC) (KBC Group) Approx. 85% of profit Approx. 15% of profit as at 9M16 100% 100% as at 9M16 48% KBC Bank KBC Insurance NV 52% • Covered bonds • No public issuance • Senior Unsec

  41. Slide 41: KBC has strong buffers cushioning Sr. debt at all levels

    KBC has strong buffers cushioning Sr. debt at all levels (pro forma: 30-09-2016 incl. KBC Group Sr. unsecured bond of 750m EUR issued at 18-10-2016) Senior issued by KBC Bank, To large extent customer- Temporary short-term which will be limited going finance which allowed forward (for funding relate

  42. Slide 42: Key investment highlights

    Key investment highlights  KBC is one of the strongest capitalised and most capital generative financials in Europe • Compared with other European financials to have issued from their Holding Companies, KBC has one of the strongest leverage ratios and one of the highest CET1 and total capital posit

  43. Slide 43: Contents

    Contents 1 Strategy and business profile 2 Financial performance 3 Balance sheet 4 Solvency and liquidity 5 MREL strategy 6 3Q16 Wrap up Appendices 43

  44. Slide 44: Wrap up

    Wrap up  Strong commercial bank-insurance results in our core countries  Successful underlying earnings track record  Solid capital and robust liquidity position 44

  45. Slide 45: Looking forward

    Looking forward  KBC Group is the bank-insurer that puts its clients centre stage, even in demanding economic circumstances  We expect the remainder of 2016 to be a year of sustained economic growth in both the euro area and the US  Management guides for: • continued stable and solid returns for

  46. Slide 46: Appendices

    Appendices 1 KBC 2015/16 benchmarks + overview of outstanding benchmarks 2 KBC Bank CDS levels 3 Summary of KBC’s covered bond programme 4 Details on selective credit exposure 5 Overview of bank taxes 6 Solvency: details on capital 7 Macroeconomic views 46

  47. Slide 47: KBC 2015 benchmarks

    KBC 2015 benchmarks  KBC 7Y Fixed – Covered – BE0002482579  KBC 12NC7 Fixed – Tier 2 – BE0002485606 • Notional: 1bn EUR • Notional: 750m EUR • Issue Date: 22 January 2015 – Maturity: 22 January 2022 • Issue Date: 11 March 2015 – Maturity: 11 March 2027 • Coupon: 0.45% A, Act/Act • Coupon: 1.875 %,

  48. Slide 48: KBC 2016 Benchmarks

    KBC 2016 Benchmarks  KBC 6.5Y Fixed – Covered – BE0002498732  KBC Groep 5Y Fixed – Senior – BE6286238561 • Notional: 1.25bn EUR • Notional: 750m EUR • Issue Date: 01 March 2016 – Maturity: 01 September 2022 • Issue Date: 26 April 2016 – Maturity: 26 April 2021 • Coupon: 0.375% A, Act/Act • Coupon:

  49. Slide 49: Outstanding benchmarks

    Outstanding benchmarks Tranche Report Issuer Curr Amount issued Coupon Settlement Date Maturity Date ISIN YEAR UNSECURED KBC Ifima N.V. EUR 1 000 000 000 4.5 27/03/2012 27/03/2017 XS0764303490 2017 KBC Ifima N.V. EUR 750 000 000 2.125 10/09/2013 10/09/2018 XS0969365591 2018 KBC Group EUR 750 000 000

  50. Slide 50: Main characteristics of subordinated debt issues

    Main characteristics of subordinated debt issues SUBORDINATED BOND ISSUES KBC KBC Bank NV KBC Groep NV KBC Groep NV KBC Groep NV KBC Bank NV T2 Coco AT1 Tier II Tier II Amount issued GBP 525 000 000 USD 1 000 000 000 EUR 1 400 000 000 EUR 750 000 000 EUR 750 000 000 Tendered GBP 480 500 000 Net Amou

  51. Slide 51: Appendices

    Appendices 1 KBC 2015/16 benchmarks + overview of outstanding benchmarks 2 KBC Bank CDS levels 3 Summary of KBC’s covered bond programme 4 Details on selective credit exposure 5 Overview of bank taxes 6 Solvency: details on capital 7 Macroeconomic views 51

  52. Slide 52: KBC Bank CDS levels (in bp)

    KBC Bank CDS levels (in bp) 600 500 400 300 200 100 0 KBC CDS EUR KBC CDS EUR KBC CDS KBC CDS KBC CDS SR 2Y Corp SR 3Y Corp EUR SR 5Y Corp EUR SR 7Y Corp EUR SR 10Y Corp 52

  53. Slide 53: Appendices

    Appendices 1 KBC 2015/16 benchmarks + overview of outstanding benchmarks 2 KBC Bank CDS levels 3 Summary of KBC’s covered bond programme 4 Details on selective credit exposure 5 Overview of bank taxes 6 Solvency: details on capital 7 Macroeconomic views 53

  54. Slide 54: Key messages on KBC's covered bond programme

    Key messages on KBC’s covered bond programme  KBC’s covered bonds are backed by strong legislation and superior collateral • KBC’s covered bonds are rated Aaa/AAA (Moody’s/Fitch) • Cover pool: Belgian residential mortgage loans • Strong Belgian legislation – inspired by German Pfandbriefen law • KB

  55. Slide 55: KBC's disciplined origination leads to low arrears and extremely low loan losses

    KBC’s disciplined origination leads to low arrears and extremely low loan losses BELGIUM SHOWS A SOLID PERFORMANCE OF MORTGAGES… Arrears have been very stable over the past 10 years. Arrears in Belgium are low due to:  Cultural aspects, stigma associated with arrears, importance attached to owning

  56. Slide 56: Belgian legal framework

    Belgian legal framework  Direct covered bond issuance from a bank’s balance sheet  Dual recourse, including recourse to a special estate with cover assets included in a register  The special estate is not affected by a bank’s insolvency National Bank of  Requires licenses from the National Bank

  57. Slide 57: Strong legal protection mechanisms

    Strong legal protection mechanisms 1  The value of one asset category must be at least 85% of the nominal amount of covered bonds Collateral type • KBC Bank selects residential mortgage loans and commits that their value (including collections) will be at least 105% 2  The value of the cover asset

  58. Slide 58: KBC Bank NV residential mortgage covered bond programme

    KBC Bank NV residential mortgage covered bond programme Issuer: • KBC Bank NV • min 105% of covered bond outstanding is covered by residential mortgage loans and Main asset category: collections thereon Programme size: • Up to 10bn EUR (only) Interest rate: • Fixed rate, floating rate or zero coupon

  59. Slide 59: Benchmark issuance KBC covered bonds

    Benchmark issuance KBC covered bonds  Since establishment of the covered bond programme KBC has issued eight benchmark issuances: SPREAD EVOLUTION KBC COVERED BONDS (SPREAD IN BP VERSUS 6 MONTH MID SWAP) Source Bloomberg Mid ASW levels 59

  60. Slide 60: Key cover pool characteristics (1/3)

    Key cover pool characteristics (1/3) Investor reports, final terms and prospectus are available on www.kbc.com/covered_bonds Portfolio data as of : 30 September 2016 Total Outstanding Principal Balance 10 739 772 359 Total value of the assets for the over-collateralisation test 9 975 442 254 No. of

  61. Slide 61: Key cover pool characteristics (2/3)

    Key cover pool characteristics (2/3) REPAYMENT TYPE (LINEAR VS. ANNUITY) GEOGRAPHICAL ALLOCATION Linear Brussels Hoofdstedelijk gewest 4% 5% Waals Brabant 1% Oost- Vlaanderen Vlaams 18% Brabant 17% West- Vlaanderen 15% Antwerpen Luxemburg 29% Annuity 0% Limburg Henegouwen 96% 1% 12% Namen Luik 0% 2%

  62. Slide 62: Key cover pool characteristics (3/3)

    Key cover pool characteristics (3/3) FINAL MATURITY DATE SEASONING 60,00 45,00 Weighted Average Weighted Average Remaining Maturity: 40,00 Seasoning: 50,00 188 months 35,00 48 months 40,00 30,00 25,00 30,00 20,00 20,00 15,00 10,00 10,00 5,00 0,00 0,00 2013 - 2017 2018 - 2022 2023 - 2027 2028 - 2032

  63. Slide 63: Appendices

    Appendices 1 KBC 2015/16 benchmarks + overview of outstanding benchmarks 2 KBC Bank CDS levels 3 Summary of KBC’s covered bond programme 4 Details on selective credit exposure 5 Overview of bank taxes 6 Solvency: details on capital 7 Macroeconomic views 63

  64. Slide 64: Ireland (1/2)

    Ireland (1/2): Profitable YTD (89m EUR) IMPAIRED LOAN OUT- STANDING IMPAIRED LOANS IMPAIRED LOANS PD SPECIFIC LOANS  The Irish economy remains on track to record robust GDP growth of PORTFOLIO € PROVISIONS PD 10-12 € € 10-12 € COVERAGE around 4% in 2016 as improving domestic demand counters the adv

  65. Slide 65: Ireland (2/2): Portfolio analysis

    Ireland (2/2): Portfolio analysis 3Q16 Retail Portfolio 3Q16 Corporate Loan Portfolio PD Exposure Impairment Cover % PD Exposure Impairment Cover % PD 1-8 6,014 26 0.4% PD 1-8 445 1 0.1% Perf. Of whi ch non Forborne 5,939 PD 9 69 3 3.6% Performing Of whi ch Forborne 75 PD 10 468 172 36.7% Impaired P

  66. Slide 66: Appendices

    Appendices 1 KBC 2015/16 benchmarks + overview of outstanding benchmarks 2 KBC Bank CDS levels 3 Summary of KBC’s covered bond programme 4 Details on selective credit exposure 5 Overview of bank taxes 6 Solvency: details on capital 7 Macroeconomic views 66

  67. Slide 67: Overview of bank taxes

    Overview of bank taxes1 Bank taxes of 273m EUR YTD. KBC GROUP Bank taxes of 410m EUR BELGIUM BU On a pro rata basis, bank taxes 335 YTD. On a pro rata basis, 241 represented 10.9% of 9M16 bank taxes represented opex at the Belgium BU 264 92 11.1% of 9M16 opex at KBC 57 62 Group2 160 42 243 184 202 8

  68. Slide 68: Appendices

    Appendices 1 KBC 2015/16 benchmarks + overview of outstanding benchmarks 2 KBC Bank CDS levels 3 Summary of KBC’s covered bond programme 4 Details on selective credit exposure 5 Overview of bank taxes 6 Solvency: details on capital 7 Macroeconomic views 68

  69. Slide 69: Fully loaded B3 CET1 based on the Danish Compromise from 2Q16 to 3Q16

    Fully loaded B3 CET1 based on the Danish Compromise (DC) from 2Q16 to 3Q16 DELTA AT NUMERATOR LEVEL (BN EUR) -0.3 0.0 0.5 0.1 13.3 13.6  Fully loaded B3 common equity ratio of approx. 15.3% at end B3 CET1 at 3Q16 net result Jan 2012 Pro-rata accrual dividend Delta in AFS Dec 2012 Other* B3 CET1 at

  70. Slide 70: Overview of B3 CET1 ratios at KBC Group

    Overview of B3 CET1 ratios at KBC Group Method Numerator Denominator B3 CET1 ratio FICOD1, phased-in 13 921 103 345 13.5% FICOD, fully loaded 14 166 104 159 13.6% DC2, phased-in 13 349 88 154 15.1% DC, fully loaded 13 593 88 967 15.3% DM3, fully loaded 12 484 83 232 15.0% 1 FICOD: Financial Conglome

  71. Slide 71: Solvency II ratio

    Solvency II ratio  On 25 April 2016, the NBB decided to impose a cap on the loss absorbing capacity of deferred taxes in the calculation of the required capital with retro- active application from 1 January 2016 onwards*. The introduction of such absolute cap deviates both from the European Solvenc

  72. Slide 72: Loss Absorption in KBC Bank

    Implementation of the BRRD in Belgium 1. The BRRD has been transposed to a large extent by the Act of 25 April 2014 on the legal Hierarchy of Claims in Belgium status and supervision of credit institutions ("The Banking Act") which applies since May-2015, with the exception of some major provisions,

  73. Slide 73: Capital instruments: what happens in different solvency situations

    General principles (1/2): What happens in different solvency situations? Point of Non Viability (PONV) Resolution Authority KBC is in control is in control Business as usual Recovery plan Resolution plan in breach of minimum requirements (4.5% CET1 / Capital instruments sufficiently above Joint in b

  74. Slide 74: General principles (2/2): risks for HoldCo senior investors

    General principles (2/2): What are the risks for HoldCo senior investors? Public Issuance size of loss Senior Unsecured In all scenarios surpassing the Point of Non Tier 2 Viability, the investors are protected by the BRRD capital No Creditor Worse Off principle (“NCWO”), AT1 instruments which stipu

  75. Slide 75: Appendices

    Appendices 1 KBC 2015/16 benchmarks + overview of outstanding benchmarks 2 KBC Bank CDS levels 3 Summary of KBC’s covered bond programme 4 Details on selective credit exposure 5 Overview of bank taxes 6 Solvency: details on capital 7 Macroeconomic views 75

  76. Slide 76: Belgian economic growth

    Belgian economic growth Moderate but steady GDP growth – with strong consumption Real GDP in the Euro Area Real private consumption (Q1 2008 = 100) (Q1 2008 = 100) Belgium 110 Belgium 108 Germany Germany France 108 France 106 Netherlands Netherlands Euro Area Euro Area 106 104 102 104 100 102 98 100

  77. Slide 77: Belgian economic growth

    Belgian economic growth Moderate but steady GDP growth – with rising exports Real GDP in the Euro Area Exports (Q1 2008 = 100) (Q1 2008 = 100) Belgium 130 Belgium 108 Germany Germany France 125 France 106 Netherlands Netherlands Euro Area 120 Euro Area 104 115 102 110 100 105 100 98 95 96 90 94 85 9

  78. Slide 78: Confidence indicators

    Confidence indicators Sentiment indicators suggest growth slowed during the summer months Belgium - Producer confidence Belgium - Consumer confidence (standard deviation from long term average) (standard deviation from long term average) 1,5 1,5 1 1 0,5 0,5 0 0 -0,5 -1 -0,5 -1,5 -1 -2 Indicator NBB

  79. Slide 79: External trade

    External trade Belgian exports to the UK impacted by the GBP depreciation Belgian exports (in value, year-on-year change in %, 3mma) 20 0,9 20 15 15 0,85 10 10 0,8 5 5 0,75 0 0 0,7 -5 -5 0,65 -10 Exports to EU countries (ex. UK) -10 Exports to UK (lhs) Exports to UK GBP per EUR (rhs) Exports to outs

  80. Slide 80: Belgian labour market

    Belgian labour market The positive momentum in the job market slowed somewhat Belgium - Domestic employment 100 (year-on-year change in ‘000) Reduced dynamic in the labour market 15 20000 80 15000 60 10 10000 40 5000 5 20 0 0 -5000 0 -10000 -20 -5 -15000 -40 -10 -20000 Number of unemployed (year-on-

  81. Slide 81: Growth outlook 2016 & 2017

    Growth outlook 2016 & 2017 REAL GDP GROWTH Comparison with other forecasters (IN %, KBC forecast) 2016 Belgium Euro Area Germany 2015 2016 2017 IMF (April) 1.2 1.5 1.5 EC (Spring) 1.2 1.6 1.6 US 2.6 1.4 2.1 OECD (June) 1.2 1.6 1.6 Federal Planning Bureau (Sept.) 1.4 - - EMU 1.6 1.4 1.3 Consensus Eco

  82. Slide 82: Belgian housing market

    Belgian housing market A soft landing House prices Belgium (*) Mortgage market supported by historical low interest (*) Corrected for price changes resulting from changes rates in the quality and location of the real estate sold 120 8 Index (Q1 2008 = 100, lhs) 3,5 1,2 Year-on-year change (in %, rhs

  83. Slide 83: Interest rates still at an historically low level

    Interest rates still at an historically low level 10-year government bond yields Interest rate spreads Euro Area 5,5 (in %) 800 (10-year rate versus Germany, in basis points) Belgium Belgium France 700 4,5 Germany Netherlands Italy 600 Spain 3,5 Ireland 500 2,5 400 300 1,5 200 0,5 Spread Belgium-Ger

  84. Slide 84: Glossary (1)

    Glossary (1) AQR Asset Quality Review B3 Basel III CBI Central Bank of Ireland [technical insurance charges, including the internal cost of settling claims / earned premiums] + [operating expenses / written premiums] (after reinsurance Combined ratio (non-life insurance) in each case) Common equity

  85. Slide 85: Glossary (2)

    Glossary (2) MARS Mortgage Arrears Resolution Strategy MREL Minimum requirement for own funds and eligible liabilities PD Probability of default Return on allocated capital (ROAC) for a [result after tax, including minority interests, of a business unit, adjusted for income on allocated capital inst

  86. Slide 86: Contact information

    Contact information Investor Relations Office E-mail: investor.relations@kbc.com visit www.kbc.com for the latest update 86

KBC Group — Debt Investor Presentation (November 2016) on 6ix