Kbc Group N.v. · EURONEXT:KBC
Kbc — FY2008 Earnings Presentation
81 slides from Kbc's earnings presentation, March 2009
Slide 1: KBC Group Company presentation Spring 2009
sin BC Group a Company presentation Spring 2009 KBC Web site: www.kbc.com Ticker codes: KBC BB (Bloomberg) KBC Group - Investor Relations Office - E-mail: investor.relations@kbc.com KBC BR (Reuters)
Slide 2: Contact information
Contact information Investor Relations Office e-mail: investor.relations@kbc.com Surf to www.kbc.com for the latest update. 2
Slide 3: Important information for investors
Important information for investors • This presentation is provided for informational 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
Slide 4: Content
Content PART 1 1 2008 financial highlights 2 Company profile and strategy 3 Wrap Up PART 2 4 4Q 2008 financial highlights 5 Update on topics 6 Wrap Up 7 Annexes 4
Slide 5: Part 1
PART 1 5
Slide 6: 2008 financial highlights
2008 financial hightlights 6
Slide 7: 4Q 08 was one of the most eventful and challenging periods in financial history
4Q 08 was one of the most eventful and challenging periods in financial history MSCI Europe Share price index 160 QUARTERLY EARNINGS HIGHLIGHTS 140 120 • Additional investment mark-downs of -2.6bn, net 100 after having applied a conservative valuation 80 4Q 08 approach (write down of non super senio
Slide 8: FY 2008 accounts significantly impacted by financial crisis
As a result, FY 2008 accounts significantly impacted by financial crisis • Performance kept up well until summer, but operating environment changed markedly since Net profit trend September Non operating items 138 incl. ‘direct’ crisis impact • ‘Direct damage’ from financial markets crisis by means
Slide 9: Nevertheless, interest income grew by good 10%
Nevertheless, interest income grew by good 10% 58% of underlying total income in m euros Net Interest Income • On an underlying basis, net Interest income up 10% 4459 4910 compared to 2007 4072 +10% +10% • Major growth driver was solid organic volume growth across core markets z Belgium: loans +8%,
Slide 10: Fee income reflecting the investment climate
Fee income reflecting the investment climate 19% of underlying total income Net fees & Commission income in m euros • Fee income 18% below year-earlier level, largely due to lower customer investment transaction levels, negative fund 2008 2140 performances and shift to lower-margin funds +7% 1755 -1
Slide 11: Underwriting income from insurance kept up well
Underwriting income from insurance kept up well 7% of underlying total income Premium inflow, life • Life premium inflow up 48% for interest-guaranteed life in m euros 4123 4199 policies (despite low guaranteed rate compared to bank 3404 deposit rates), but down -19% for unit-linked products -17% (o
Slide 12: Professional trading income suffered
Professional trading income suffered 8% of underlying total income Net gains from financial instruments at fair value (underlying basis, ex. CDO markdown and unwinding losses on discontinued business) • Income from professional money and securities trading in m euros 1350 1275 negatively impacted by
Slide 13: Operating expenses under control
Operating expenses under control in m euros Operating Expenses Group 5591 • Compared to 2007, the 8% cost growth is largely explained by new acquisitions and Organic currency appreciations +4% 4976 5164 flat 5127 • Excluding these factors, flat cost level flat whereby lower staff bonus accruals offs
Slide 14: Manageable credit loss, though rising
Manageable credit loss, though rising Loan loss ratio: 46 bps (70 bps incl. loans to troubled banks) Size 2006 2007 2008 of loan loss loss loss • Cost of credit risk remained low in Belgium and Market book ratio ratio ratio ‘reasonable’ in CEE (incl. Hungary) Belgium 55bn 0.07% 0.13% 0.09% • Pronoun
Slide 15: Satisfactory core business performance
Satisfactory core business performance Underlying return on allocated shareholders’ capital ex. ‘direct damage’ from financial crisis* - using Basel II capital approach as of 2007 * Excl. markdown on structured credit investments, value loss on equity holdings, impairment on troubled US and Icelandi
Slide 16: Depressed yield on equity holdings
Depressed yield on equity holdings IFRS figures in m euros Yield on equity holdings 256 • KBC has share investment portfolio of 2.7 bn, mainly investment of insurance liabilities (vs. 4.1 211 bn at end-2007) 834 477 259 107 • Significant drop in realised gains compared to FY 2006 FY 2007 FY 2008 pre
Slide 17: Revaluation of structured credit portfolio
Revaluation of structured credit portfolio CORPORATE SYNTHETIC CDO PORTOLIO ABS PORTFOLIO • - 4.0 bn financial impact since start of crisis, • - 1.7 bn financial impact since start of crisis, booked against revenue mostly booked against shareholders’ equity • Outstanding book: 5.4 bn (57% of origina
Slide 18: Scenario analysis for KBC FP CDO portfolio
Scenario analysis for KBC FP CDO portfolio Amounts in bn € Value KBC FP CDOs Loss as % of nominal Nominal (excl. CDO in run-off) 7.4 Market value 4.2 -3.2 -43% KBC, total, nominal outstanding Total CDO 8.7bn Impairment scenario 7.1 -0.3 -4% o/w third party CDO -0.8bn “Expected loss” scenario 6.2 -1.
Slide 19: Amortization schedule of KBC FP CDO portfolio
Amortization schedule of KBC FP CDO portfolio CDOs issued and managed by KBC Financial Products and invested in by KBC Nominal amount in millions of EUR, net of provision for equity & junior pieces and before mark-downs and excl. CDO in run-off Am Amortization ortization schedule of the schedule CDO
Slide 20: Solvency position
Solvency position Solvency, Stress test 1 (pro-forma end-08*) If Moody’s 2009 corporate rating migration expectations were to materialise, ceteris paribus, procyclical impact on Tier-1 ratio due Tier-1 11.2% to higher RWA would be around 85 bps (bringing the Tier 1 ratio Core Tier-1 8.6% from 11.2%
Slide 21: Company profile and strategy
Company profile and strategy 21
Slide 22: Business profile
Business profile Strategy, capital & risk management 1 2 3 4 Belgium Central & Eastern Merchant Banking European (retail) Europe (Belgium & international) private Banking CEE-4 Other Commercial Investment Belgium BU: banking banking Private Banking BU: ± 28% of allocated capital Czechia Russia Polan
Slide 23: Belgium Business Unit
Belgium Business Unit Retail bancassurance & asset management in Belgium (28% of allocated group capital) Trends & challenges • Solid market share trends despite competitive pressure (margins suffered but recovered by the end of the year and are expected to gather pace in 2009) • Investment portfoli
Slide 24: Reminder: presence in CEE
Reminder: presence in CEE Main markets New markets Czech Republic Russia Total assets: 30 bn Total assets: 4 bn ESTONIA Bank ranking: Top-3 Bank ranking: Top-25 LATVIA Insurance ranking: Top-5 Entry: 2007 RUSSIA Entry: 1999 LITHUANIA Bulgaria Hungary Total assets: 1 bn BELARUS Total assets: 12 bn Ba
Slide 25: CEE Business Unit
Home market strategy in Czechia, CEE Business Unit Slovakia, Poland and Hungary (90% of CEE assets); build-up phase in Russia, Bulgaria and Serbia (10% of assets) Trends & challenges • Resilient growth and margin trends • Weakening credit environment (2008 loan loss ratio at 73 bps) and macro concer
Slide 26: Update on Hungary
Update on Hungary 8% of underlying group profit 4% of group loan book Areas of concerns • Large external public debt resulted in bank funding strains and put foreign currency borrowers at risk • Interest rate defence of currency adversely affects potential economic recovery 3,00% KBC, Non Performing
Slide 27: Update on Russia
Update on Russia 1% of underlying group profit 2% of group loan book Areas of concerns • Foreign capital outflows - triggered by geopolitical tensions, falling oil prices and RUB devaluation - generated financing problems for corporate Russia (incl. Russian banks) Key figures, KBC, Dec-08 0,60% 0,50
Slide 28: Commercial banking
Commercial banking Commercial banking in Belgium and international corporate lending (mainly Europe); ca.50% of total loan book, combined Trends & challenges • Manageable loan losses (48 bps in 2008), though rising, notably in non- domestic portfolios (UK/US exposure taking the lead) • Competitive m
Slide 29: Update on Ireland
Update on Ireland 4% of underlying group profit 12% of group loan book Areas of concerns • Falling real estate prices (-16% since 4Q 2006 peak level) and climbing unemployment raising questions about asset quality (notably retail mortgage and commercial real estate exposure) 3,20% KBC, home loans, N
Slide 30: Investment banking
Investment banking Capital market activities and small- cap investment banking in Belgium and CEE and niche strategies in derivatives Trends & challenges • 2008 performance severely hit by credit crisis • reduced viability of derivatives strategy due to increased funding costs, changed market prospe
Slide 31: Investment banking (cont'd)
Investment banking (cont’d) Strategy update (2) • Strategy for sales and trading Money market and Debt Capital Market largely untouched (mainly Brussels and CEE based) • Business model for equity brokerage & corporate finance largely unchanged but fixed cost base cut (mainly based in Brussels, Londo
Slide 32: Asset Management
Asset Management Branch network distribution of funds in Belgium and CEE; direct sales & third-party distribution in Western Europe and Asia & Pacific Trends & challenges • Although profitability came down recently due to current market conditions, home market strategy has shown to be highly rewardi
Slide 33: European private banking
European private banking Boutique-style private wealth management in Benelux and neighbouring countries (44 bn AUM) Trends & challenges • Business model is delivering (pure organic onshore asset influx: +5% in 2008), but a shift to more defensive products will slow down margin expansion in years ahe
Slide 34: Wrap Up
Wrap Up 34
Slide 35: Wrap up
Wrap up • 2008, especially 4Q, was very difficult • Results impacted by financial crisis and deteriorating investment sentiment z Reflected in structured credit portfolio and equity investments z Reflected in assets under management, fee and commission income and trading income • Underlying performa
Slide 36: Part 2
PART 2 36
Slide 37: 4Q 2008 financial highlights
4Q 2008 financial highlights 37
Slide 38: Financial highlights 4Q 2008
Financial highlights 4Q 2008 One-off items + result of ALM-hedges +impact of financial crisis* 212 58 -7 -126 -183 -313 -1 457 -2 801 Net profit, reported 979 936 639 708 554 493 -906 -2 625 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2007 2007 2007 2007 2008 2008 2008 2008 Underlying net profit 878 785 834 806 737 646
Slide 39: Financial headlines 4Q 08 (2)
Financial headlines 4Q 08 (2) • Significant impact from investments markdown after having applied a conservative valuation approach • Profitability in Belgium underpinned by strong market position, despite weakening environment • Resilient volume and margin trends in CEE with credit risk remaining a
Slide 40: Revenue trend - Group
Revenue trend - Group in m euros NII 1257 1265 NIM* 1199 1202 1186 1.81% 1081 1116 1.74% 1.74% 979 1020 1034 1039 1063 1.69%1.67% 1.70% 1.71%1.71% 1.68%1.69% 1.68% 1.57% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 200
Slide 41: Revenue trend - Group
Revenue trend - Group in m euros F&C Banking Insurance AUM in bn euros 532 550 513 541 539 546 464 482 430 529 229 232 231 227 227 398 379 216 222 213 208 209 207 204 612 622 609 626 626 647 586 586 561 547 507 475 -80 -77 -72 -96 -85 -87 -101 -122 -104 -117 -128 -32 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
Slide 42: Revenue trend - Group
Revenue trend - Group All figures are in m euros Premium income FV gains 1419 1 328 1 236 482 1008 946 869 824 969 922 384 359 404 403 852 768 754 284 307 242 201 206 175 114 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 200
Slide 43: Revenue trend - Group
Revenue trend - Group AFS realised gains All figures are in m euros Dividend income 198 112 103 143 108 107 115 71 86 96 80 54 62 70 63 23 29 15 18 19 20 12 12 2 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2006 2
Slide 44: Operating expenses and asset impairment – Group
Operating expenses and asset impairment – Group Operating expenses All figures are in m euros Asset impairment 420 on other & goodwill 51 1.646 on securities 29 1.388 1.314 1.266 1.376 1.284 1.383 1.278 on loans 1.238 1.223 1.208 1.126 152 143 341 102 58 54 56 18 23 28 -3 61 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Slide 45: Operating expenses (2)
Operating expenses (2) Quarter-on-quarter developments Year-on-year developments 68 -118 64 1 646 59 1 646 135 68 64 119 135 1 376 1 278 42 Commercial expenses Non-organic Restructuring Other 4Q 07 Actual 4Q 08 Actual Commercial expenses Non-organic 3Q 08 Actual Restructuring 4Q 08 Actual Other Pens
Slide 46: Business Unit Belgium
Business Unit Belgium Underlying net profit Volume trends in m euros 455 416 323 328 313 307 318 Total Of which Customer Life AUM 275 266 loans mortgages deposits reserves 241 215 158 Growth q/q* +1% +2% +2% -4% 0% Growth y/y +8% +9% +6% -7% 0% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q *non-annualized 200
Slide 47: Business Unit Belgium (2)
Business Unit Belgium (2) NII in m euros NIM 542 511 532 479 489 481 478 483 479 478 469 441 1.96% 1.92% 1.82% 1.81% 1.84% 1.77% 1.68% 1.76% 1.72% 1.68% 1.19% 1.25% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 200
Slide 48: Business Unit Belgium (3)
Business Unit Belgium (3) Banking Insurance F&C in m euros AUM in bn euros 162 160 158 160 158 158 149 151 225 249 229 238 234 235 214 192 205 141 143 163 186 163 135 134 262 278 276 276 255 279 249 249 227 219 207 220 -37 8 -33 -29 -38 -42 -45 -56 -46 -43 -44 -57 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Slide 49: Business Unit Belgium (4)
Business Unit Belgium (4) Operating expenses All figures are in m euros Asset impairment 601 45 501 471 461 485 464 486 479 427 444 452 432 18 15 13 10 12 12 6 9 8 4 -3 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008
Slide 50: Business Unit Belgium (5)
3Q 08 Actual 479 Non-organic 55 elements Restructuring 19 charges Commercial 0 litigations Pension related 61 expenses Other -13 Quarter-on-quarter developments 4Q 08 Actual 601 4Q 07 Actual 485 Operating expenses Non-organic 55 Non-organic elements: for Business Unit Belgium, essentially accounting
Slide 51: Business Unit CEER
Business Unit CEER Underlying net profit Volume trends 222 201 175 184 180 in m euros 152 135 130 Organic trends Total Of which Customer Life 124 AUM 110 loans mortgages deposits reserves 84 56 Growth q/q* +6% +15% +1% -8% +14% Growth y/y +25% +52% +8% -6% +28% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q *n
Slide 52: Business Unit CEER (2)
Business Unit CEER (2) in m euros NII 471 482 NIM* 3,29% 439 3.18% 3.13% 390 3.09% 3.08% 3.10% 361 3.03% 3.04% 3.04% 2.98% 319 2.90% 2.93% 271 274 283 247 236 247 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2006
Slide 53: Business Unit CEER (3)
Business Unit CEER (3) in m euros F&C AUM in bn euros Banking Insurance 14,4 14,1 79 13,0 13,6 82 76 75 70 12,4 84 82 11,1 11,7 77 76 83 75 10,6 75 10,0 9,2 7,8 7,9 129 129 132 143 131 102 106 105 113 109 118 116 -27 -29 -29 -30 -34 -34 -34 -47 -53 -56 -64 -61 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 200
Slide 54: Business Unit CEER (4)
Business Unit CEER (4) All figures are in m euros Operating expenses Asset impairment 151 548 479 454 446 397 406 83 351 363 311 328 321 64 302 53 44 30 37 35 22 19 10 1 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 200
Slide 55: Business Unit CEER (5)
Business Unit CEER (5) Operating expenses Quarter-on-quarter developments Year-on-year developments 548 548 52 31 17 31 36 9 479 -25 9 454 0 0 Commercial expenses Non-organic 4Q 07 Actual 4Q 08 Actual Restructuring Other Commercial expenses Non-organic Restructuring Other 3Q 08 Actual 4Q 08 Actual P
Slide 56: Business Unit Merchant Banking
Business Unit Merchant Banking Underlying net profit Commercial banking Investment banking Volume trends in m euros Organic trends Total Customer 102 loans deposits 130 113 32 111 27 Growth q/q* 107 -3% -14% 26 160 23 183 Growth y/y 0% -4% 153 168 135 120 156 130 135 143 114 74 45 *non-annualized -4
Slide 57: Business Unit Merchant Banking (2)
Business Unit Merchant Banking (2) RWA (Commercial banking) in m euros NII (Commercial banking) 284 279 in bn euros 275 273 277 279 269 245 249 53 54 55 52 53 242 243 51 52 52 48 50 45 45 208 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2006 2006 2006 2006 2007 2007 2007 2
Slide 58: Business Unit Merchant Banking (3)
Business Unit Merchant Banking (3) F&C All figures are in m euros FV gains (Investment banking) 121 340 351 105 294 288 96 96 279 85 79 251 76 81 74 74 67 180 132 134 109 28 77 50 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2006 2006 2006 2006 2007 2007 2007 2007 2008 200
Slide 59: Business Unit Merchant Banking (4)
Business Unit Merchant Banking (4) Operating expenses All figures are in m euros Asset impairments 215 357 367 350 336 299 322 311 323 301 323 242 217 85 42 17 12 19 9 -13 -33 2 5 -26 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2006 2006 2006 2006 2007 2007 2007 2007 2008
Slide 60: Business Unit Merchant Banking (5)
Business Unit Merchant Banking (5) Operating expenses Quarter-on-quarter developments Year-on-year developments 28 7 -4 350 28 7 -119 58 58 44 53 350 323 217 Commercial expenses Non-organic 4Q 07 Actual 4Q 08 Actual Restructuring Other Commercial expenses Non-organic Restructuring Other 3Q 08 Actual
Slide 61: Business Unit Private Banking
Business Unit Private Banking Underlying net profit Volumes in m euros 58 64 55 52 Customer Life 50 50 50 Organic trends AUM 44 44 deposits reserves 38 32 Growth q/q* -12% -12% -26% 15 Growth y/y -13% -19% -28% *non-annulized 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2006 2006 2006 2006 2007 2007 2007 200
Slide 62: Business Unit Private Banking (2)
Business Unit Private Banking (2) F&C All figures are in m euros Operating expenses 135 132 147 144 148 121 119 120 127 128 132 111 116 112 107 124 120 104 118 115 99 96 111 95 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2
Slide 63: Business Unit Private Banking (3)
Business Unit Private Banking (3) Operating expenses Quarter-on-quarter developments Year-on-year developments 23 148 9 5 -2 148 5 128 8 111 9 0 0 0 Commercial expenses Non-organic 4Q 07 Actual 4Q 08 Actual Restructuring Other Commercial expenses Non-organic Restructuring Other 3Q 08 Actual 4Q 08 Ac
Slide 64: Update on topics
Update on topics 64
Slide 65: Update on loan portfolio
Update on loan portfolio Share of sectors Outstanding loan volumes building and real estate Small-cap mortgages automotive banks construction risk LBO/MBO KBC Group total 178bn 30% 2% 4% 7% 4% 2% Total LTV outst. LTV FX- NPL – Total LTV new production Share of FX-mortgages mortgages mortgages mortga
Slide 66: Update on Ireland
Update on Ireland Areas of concerns • Falling real estate prices (-16% since 4Q 2006 peak level) and climbing unemployment raising questions about asset quality (notably retail mortgage and commercial real estate exposure) 3,20% KBC, home loans, NPL ratio, Ireland Key figures, KBC, Dec-08 2,50% • Lo
Slide 67: Economic outlook for 2009
Economic outlook for 2009 Forecasts for 2009 Real GDP-growth 2008 Market consensus KBC-estimation (Jan 2009) Eurozone 1.0% -1.8% -1.4% Belgium 1.4% -1.8% -0.7% US 1.2% -2.1% -1.8% Ireland -1.5% -5.0% -2.6% Poland 4.8% 1.3% 1.9% Czech Republic 3.3% 0.8% 0.3% Hungary 0.6% -1.9% -2.4% Slovakia 7.0% 1.1
Slide 68: Measures taken (summary)
Measures taken (summary) Strategy Financial impact (2009) Committed to keep lending Single-digit RWA-growth anticipated for 2009 Belgium (incl. pro-cyclicality) Adjusted pricing to obtain sustainable margins Cost savings: 5% reduction of salary base “Ban” on growth in higher-risk markets Single-digi
Slide 69: Revaluation of structured credit portfolio
Revaluation of structured credit portfolio • CORPORATE SYNTHETIC CDO PORTOLIO ABS PORTFOLIO • - 4.1bn financial impact since start of crisis, • - 1.7 bn financial impact since start of crisis, booked against revenue mostly booked against shareholders’ equity • Outstanding book: 5.4bn (57% of origina
Slide 70: Scenario analysis for KBC FP CDO portfolio
Scenario analysis for KBC FP CDO portfolio Amounts in bn € Value KBC FP CDOs Loss as % of nominal Nominal (excl. CDO in run-off) 7.4 Market value 4.2 -3.2 -43% KBC, total, nominal outstanding Total CDO 8.7bn Impairment scenario 7.1 -0.3 -4% o/w third party CDO -0.8bn “Expected loss” scenario 6.2 -1.
Slide 71: Amortization schedule of KBC FP CDO portfolio
Amortization schedule of KBC FP CDO portfolio CDOs issued and managed by KBC Financial Products and invested in by KBC Nominal amount in millions of EUR, net of provision for equity & junior pieces and before mark-downs and excl. CDO in run-off Am Amortization ortization schedule of the schedule CDO
Slide 72: Solvency position
Solvency position Solvency, Stress test 1 (pro-forma end-08*) If Moody’s 2009 corporate rating migration expectations were to materialise, ceteris paribus, procyclical impact on Tier-1 ratio due Tier-1 11.2% to higher RWA would be around 85 bps (bringing the Tier 1 ratio Core Tier-1 8.6% from 11.2%
Slide 73: Wrap up
Wrap up 73
Slide 74: Wrap Up
Wrap Up • Significant impact from investments markdown after having applied a conservative valuation approach • Profitability in Belgium underpinned by strong market position, despite weakening environment • Resilient volume and margin trends in CEE with credit risk remaining at manageable levels •
Slide 75: Annexes
Annexes 75
Slide 76: Annex 1: Volumes y/y
Annex 1: Volumes y/y Total loans Of which Customer AUM Life mortgages deposits reserves Outstanding (in bn) 157 56 197 207 23 Growth, y/y +8% +19% +2% -10% +2% Belgium +8% +9% +6% -7% +0% CEE R +25% +52% +8% -6% +28% - Czech Republic +16% +30% +2% -3% +9% - Slovakia +21% +19% +12% -5% +17% - Hungary
Slide 77: Annex 2: Volumes q/q – non-annualised
Annex 2: Volumes q/q – non-annualised Total loans Of which Customer AUM Life mortgages deposits reserves Outstanding (in bn) 157 56 197 207 23 Growth, q/q +1% +4% -4% -7% +1% Belgium +1% +2% +2% -4% +0% CEE R +6% +15% +1% -8% +5% - Czech Republic +2% +5% -2% -10% +0% - Slovakia +3% +1% +9% -15% +3%
Slide 78: Annex 3: Structured Credit Portfolio – Overview
Annex 3: Structured Credit Portfolio – Overview Portfolio in million euros TOTAL ABS CDO As of 31 Dec 2009 Initial nominal amount 15 944 6 439 9 505 Initial write down -779 -779 Nominal outstanding 15 165 6 439 8 726 Value mark downs (1,2,3,4 next slide) -4 962 -1 680 -3 282 Outstanding (Fair Value)
Slide 79: Annex 4: Structured Credit Portfolio – Detailed financial crisis impact
Annex 4: Structured Credit Portfolio – Detailed financial crisis impact TOTAL GRAND All figures are in million euros 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 2008 TOTAL Value markdowns -100 -208 -220 -263 -1 642 -2 529 -4 654 -4 962 CDO through P&L (1) -51 -114 -125 -169 -1 420 -1 403 -3 117 -3 282 CDO t
Slide 80: Annex 5: Credit cost ratio per business units
Annex 5: Credit cost ratio per business units FY 08 Credit cost ratio FY 06 FY 07 FY 08 excl LB, WaMu, Iceland Belgium 0.07% 0.13% 0.09% 0.09% Czech Republic 0.36% 0.18% 0.57% 0.38% Slovakia - 0.96% 0.82% 0.82% Hungary 1.50% 0.62% 0.41% 0.41% Poland 0.00% 0.00% 0.95% 0.95% Russia - 0.21% 2.40%* 2.40
Slide 81: Annex 6: Loan-to-Deposit ratio per countries
Annex 6: Loan-to-Deposit ratio per countries Loan-to-Deposit ratio As of 31 Dec 2008 Belgium 79% Czech Republic 72% Slovakia 80% Hungary 104% Poland 129% Russia 414% KBC Group consolidated 92% Definition of Loan-to-Deposit ratio had been fine-tuned in 4Q 08 81