Kbc Group N.v. · EURONEXT:KBC
Kbc — Investor Conference, March 2010
24 slides from Kbc's conference presentation, March 2010
Slide 1: KBC Group: Managing for value in an uncertain environment
KBC Group “Managing for value in an uncertain environment” Investor Conference, March 2010 www.kbc.com mobile: m.kbc.com Printed on FSC certified paper 26Feb10
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 KBC KBC believes that this presentation is reliable, although some information is condensed and therefore inc
Slide 3: Contents
Contents Reshaping our strategy and business profile Facing the changing regulatory environment Wrap-up Annexes 2
Slide 4: Reminder: where we put the capital at work
Reminder: where we put the capital at work Business mix (KBC, capital allocation, Dec-2009) Central and Eastern Europe 4% Main CEE-5 markets: 25% - Czech Republic (EUR 18 bn loans) - Poland (7 bn) - Hungary (7 bn) - Slovakia (4 bn) - Bulgaria (1 bn) 52% Belgium 20% International Merchant Banking 3%
Slide 5: How the crisis impacted our performance?
How the crisis impacted our performance? Underlying return on equity Non operating items, mainly (ex. non operating items and investment markdowns (bn EUR) investment markdowns) 4.1 20% 2.8 18% 18% 16% 16% 1.5 0.2 0.3 0.1 0.1 -0.1 FY05 FY06 FY07 FY08 FY09 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 Du
Slide 6: How is the situation now?
How is the situation now? Including the EUR 7 bn State securities, the core Tier-1 COMFORTABLE SOLVENCY ratio is at a comfortable 9.2% level (Dec’09) Remaining CDO risk is largely covered by a State MITIGATED guarantee to avoid that new market turbulences would ‘TOXIC’ RISK set the capital position
Slide 7: Solvency and liquidity position
Solvency and liquidity position Including State core tier 1 Shareholders’ equity securities, KBC is well-capitalised Capital (core Tier-1 ratio of 9.2%); while adequacy? earnings retention and the divestment program will enable to fully replace State capital in the Funding & next few years deposit
Slide 8: How appealing is the strategy?
How appealing is the strategy? KBC, return on equity KBC, return on equity through-cycle Belgium* ROE target: Central and Eastern through-cycle Europe* ROE target: 46% >26% 18 - 20% 36% 31% 32% 29% 25% 25% 25% 22% Return on equity target: >26% Return on equity target: 18-20% 0% 2005 2006 2007 2008 2
Slide 9: Execution milestones
Execution milestones 1Q 2Q 3Q 4Q 1Q 2010 … 2009 2009 2009 2009 2010 Strategic review announced; Delivering on promises: 25% of RWA earmarked for - leveraging core earnings power being reduced - releasing capital tied up in non-core assets State capital transaction - reducing risk profile finalised;
Slide 10: Contents
Contents Reshaping our strategy and business profile Facing the changing regulatory environment Wrap-up Annexes 9
Slide 11: For sure, the future will be more regulated
For sure, the future will be more regulated Solveny & Important for us are trends on ‘solvency/deleveraging’ liquidity risks and ‘liquidity’ (given our business profile and company are key culture the ‘compensation debate’, e.g., is less ours….) Transition The challenges for the sector are big!
Slide 12: Changing liquidity regulation
Changing liquidity regulation Illustration only CURRENT CURRENT POST ! SITUATION SITUATION Y L Y DIVESTMENTS DEPOSIT TO LOAN test 114% 114% A R N 114% IN N O Level of coverage of customer loans of of required required level level of equired level by customer deposit funding ca I ca 80 M O 80--90% I
Slide 13: Changing solvency regulation
Changing solvency regulation SOLVENCY SENSITIVITY TO BASEL III PROPOSALS ! Pro forma 31 Dec 2009 Y L Y Actual Change Pro forma Core Tier-1 capital Shareholders' equity A R N bn euros 9.7 bn euros bn euros 9.7 Illustration only IN N O State core Tier-1 securities 7.0 7.0 Assumptions made here: Curren
Slide 14: Flexibility to offset regulatory risk
Flexibility to offset regulatory risk We currently have some EUR 1.8 bn ‘capital surplus’ (in excess of our 8% core capital target) If our solvency position would unexpectedly come under threat, we could consider a series of measures in 2012/2013: • Postpone redemption of max. EUR 3.5 bn related
Slide 15: Solid solvency and liquidity, also in CEE
Solid solvency and liquidity, also in CEE Loan to deposit ratio, group total at 88% Tier 1 ratio, Group at 10.8% and core tier 1 ratio at 9.2% Capital and liquidity position in CEER subsidiaries: CZ SK HU PL BG RU Core Tier 1 ratio 12.1% 15.2% 11.0% 9.1% 9.2% 11.8% LTD ratio 65% 89% 91% 115% 9
Slide 16: Contents
Contents Reshaping our strategy and business profile Facing the changing regulatory environment Wrap-up Annexes 15
Slide 17: Wrap up
Wrap up 1. The core business model remained largely intact throughout the crisis, it is ready to deliver again an attractive return in the ‘normalised’ future 2. The new management team is well on its way to deliver on its strategy to focus on core businesses, to reduce the risk profile and to reimb
Slide 18: Annexes
Annexes
Slide 19: Geographical footprint in Europe
Geographical footprint in Europe KBC’S CORE MARKETS OTHER PRESENCES Belgium Ireland KBC’s core markets Total assets: EUR 212 bn Total assets: EUR 19 bn Activity to be reviewed 2012 ESTONIA in Belgium and CEE-5 Czech Republic Russia Total assets: EUR 33 bn Total assets: EUR 2 bn Hungary Exit schedule
Slide 20: 2010-2013 business plan
2010-2013 business plan APPROVED BY ‘BRUSSELS’ 1. LEVERAGE We continue to leverage our succesful business model in EARNINGS POWER core markets 2. SHRINK RWA Capital is being freed up by: BY 25% Reducing international lending & capital market activities (2008-’13) Divesting Private Banking (EUR 4
Slide 21: RWA reduction well under way
RWA reduction well under way Announced RWA reduction of EUR 39 bn in 2008-2013 period (-25%): Reduction of capital market activities and international corporate lending RWA at year-end 2009 dropped by EUR 12 bn (31% of target achieved) KBC Group risk weighted assets (in bn EUR) -11.9 -4.6 (-8%)
Slide 22: Update on divestment program
Update on divestment program Initial Non Preparation Info 1st 2nd Closing timing active phase exchange round round exp. of bids of bids Belgium: Secondary bank channel 2010 2010 Secondary insurance channel 2010 2010 CEE: IPO in Czech Republic 2010 2010 Consumer finance in Poland 2012 2010 Banking in
Slide 23: Equity analysts’ coverage
Equity analysts’ coverage Bank / Broker Analyst Rating Target Price Upside Autonomous bschmidt@autonomous-research.com + 39.6 26% Barclays Capital kiri.vijayarajah@barcap.com + 36 15% BNP Paribas/Fortis Bank kurt.debaenst@fortis.com = 34 8% Cheuvreux hpluijgers@cheuvreux.com + 40 27% Citi Investment
Slide 24: Contact information
Contact information Investor Relations Office E-mail: investor.relations@kbc.com Go to www.kbc.com for the latest update 23