Kbc Group N.v. · EURONEXT:KBC
Kbc — KBC Investor Lunch London (June 2010)
46 slides from Kbc's conference presentation, Jun 4, 2010
Slide 1: No new plans, no enhanced expectations but monitoring progress
No new plans, no enhanced expectations but monitoring progress and following up on key deliverables 1 1
Slide 2: Contact information
Contact information Investor Relations Office: investor.relations@kbc.com Surf to www.kbc.com or m.kbc.com for the latest updates 2
Slide 3: Important information for investors
Important information for investors • This company 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 summarised and ther
Slide 4: Contents
Contents 1. Reminder: how we designed the new future for the Group J. Vanhevel Group CEO 2. How we put the plans to work J. Vanhevel Group CEO 3. Doing the maths, again L. Philips Group CFO 4. An appealing value proposition L. Philips Group CFO 5. Wrap up J. Vanhevel Group CEO 4
Slide 5: Speakers' curricula vitae J. Vanhevel Group CEO
Speakers’ curricula vitae J. Vanhevel Group CEO 1971 Legal and Litigation Departments, Kredietbank, Brussels 1981 Several functions in regional credit departments and the corporate banking network, Kredietbank 1990 Regional Manager, Antwerp Corporate banking Office, Kredietbank 1994 Senior General M
Slide 6: Speakers' curricula vitae L. Philips Group CFO
Speakers’ curricula vitae L. Philips Group CFO 1971 Various functions in domestic network, Kredietbank (Belgium) 1981 Head of Corporate Banking Department, Kredietbank New York branch 1987 Senior Vice-President and General Manager, Kredietbank New York branch 1991 General Manager Corporates/Multinat
Slide 7: Contents
Contents 7
Slide 8: The New Future
The New Future KBC aims to be a KBC will build on KBC is resuming the KBC is reshaping the high-performing sustainable convergence play in ‘other’ activities European regional foundations in Eastern Europe player with a more Belgium KBC has divested private focused range of We are committed to 5 cor
Slide 9: Strategic review – Dec 2009
Strategic review – Dec 2009 Keep and refine Divest Reduce Bancassurance in Belgium BEL Complementary channels for banking & insurance in Belgium Bancassurance in CEE-5 CEE Banking in CEE, outside EU (Russia,Serbia) Corporate banking for home market business customers Merchant Investment ba
Slide 10: The KBC way
The KBC way • In order to limit execution risk, KBC has opted for a ‘no-nonsense’ approach, i.e. sale of activities that can be monetised at ‘fair valuation’ (avoiding distressed prices) notwithstanding difficult market conditions, e.g.: • Divestment of complementary distribution channel in Belgium
Slide 11: Milestones
Milestones Q1 Q2 Q3 Q4 Q1 Q2 2010 … 2009 2009 2009 2009 2010 1Q 2009 Delivering on promises Strategic review announced; • Leveraging core earnings power 25% of RWA earmarked for • Releasing capital tied up in non-core assets being reduced • Reducing risk profile 2Q 2009 State capital transaction fin
Slide 12: How we put the plans to work
How we put the plans to work J. Vanhevel, Group CEO J. Vanhevel, Group CEO 4 June 2010 KBC Investor Lunch London
Slide 13: On the path of execution: Where are we mid-2010?
On the path of execution Where are we mid-2010? Stream 1: We have completed the sale of KBL EPB Stream 2: We are well advanced in the preparation of the IPO process of the Czech bank Stream 3: We have designed the stand-alone strategy for the Belgian assets and prepared the launch of the divestment
Slide 14: Risk weighted assets reduction well under way
Risk weighted assets reduction well under way • Previously announced risk weighted assets reduction of 39bn in 2008-2013 period (-25%) • Mainly reduction of capital market activities and international corporate lending • Including the sale of KBL EPB, RWA have fallen by 17bn (44% of target) • For po
Slide 15: Stream 1: Divestment of KBL European Private Bankers
Stream 1: Divestment of KBL European Private Bankers Pure play private banking with network of local brands • Sales process has been completed: KBC branded private banking • Transaction was launched in 1Q 2010 in Belgium maintained • Second half of May: agreement with the Hinduja Group of India • Tr
Slide 16: Stream 2: IPO Czech subsidiary CSOB
Stream 2: IPO Czech subsidiary CSOB* • The plan has not changed: • IPO on Prague Stock Exchange expected in 2010 • Sale of minority stake, e.g., 40% (as assumed in the table below) • During the last six months KBC has taken important steps with the various financial and legal advisors to prepare for
Slide 17: Stream 3: Divestment of Belgian complementary channels
Stream 3: Divestment of Belgian complementary channels 1. 2. 3. 4. 5. 6. Divestment decision Design of disentanglement Initiate ‘hold seperate Execute disentanglement Preparation of sale Launch sale … process strategy’ transaction transaction Screen Assign hold Execute Prepare data Send information
Slide 18: Stream 4: Run-down of international Merchant Banking loan book
Stream 4: Run-down of international Merchant Banking loan book 39bn group wide RWA reduction (-25%), 16bn in international corporate loan book BU KBL EPB -6 BU CEE -5 Market Activities -7 KBC Group, international Merchant Banking loan book RWA (in bn EUR) All figures are restated in line with the Ne
Slide 19: Stream 4: Run down of international Merchant Banking loan book (cont'd)
Stream 4. Run down of international Merchant Banking loan book (con’td) Figures in EUR Western-Europe International corporate loan portfolio RWA 2008 6,7bn Sub portfolios up for sale 2010 Q1 4,8bn or accelerated wind-down Run down 28% represent 9.7bn: Global Trade & Project Finance 2008 5,0bn 2010 Q
Slide 20: Stream 5: Run-down of the capital market activities
Stream 5. Run-down of the capital market activities RWA RWA Expected RWA (*) 31/12/08 31/12/09 31/12/10 Activities that are being run off (less liquid and long-duration positions) 7.0 5.5 3.6 Structured credit & credit derivatives 5.3 4.1 2.9 Structured Fund derivatives 0.4 0.1 0.1 Structured equity
Slide 21: Divestment program, overview
Divestment program, overview Step 1: Step 2: Step 3: Step 4: Initial Expected Internal Info Indicative Final timing Closing Date Active preparation exchange bids bids Private Banking: KBL European Private Bank Merchant Banking: 2010 Completed US reverse mortgages 2012 Completed “Well on our
Slide 22: Contents
Contents 1. Reminder: how we designed the new ruture for the Group 2. How we put plans at work 3. Doing the maths, again 4. Wrap up 22
Slide 23: Capital assumptions
Capital assumptions • Tier-1 target ratio of 10%, of which approx. 8% core Tier-1 (may be reviewed if market conditions change in a sustainable way) • Aim to resume cash dividend payment in 2011 based on 2010 earnings • Commitment to pay coupon on State hybrid capital instruments (8.5%) • Commitment
Slide 24: Reminder: strategic review, capital planning presented per Nov 2009
Reminder: strategic review, capital planning presented per Nov 2009 Illustration given as reality check, no detailed financial planning was disclosed KBC, capital plan 2010-2013, building block illustration (all amounts in EUR) Capital needs Capital sources Organic RWA growth Available surplus (abov
Slide 25: Evolution over last 6 months
Evolution over last 6 months What has changed over What has not changed last 6 months ? over last 6 months? • Roll-forward: available surplus capital • Divestment program on schedule and has been boosted by accrued earnings within budget and RWA winddown over the past period • Intention to pay cash
Slide 26: Strategic review, capital planning update June 2010
Strategic review, capital planning update June 2010 KBC, capital plan 2010-2013, building block illustration (all amounts in EUR) INITIALLY Capital sources, Sep 2009 UPDATED Capital sources, March 2010 Available surplus (above 8% Available surplus incl. KBL 1.1bn (above 8% core Tier 1) 2.4bn core Ti
Slide 27: Our plan meets the capital needs (illustration only)
Our plan meets the capital needs (illustration only) CAPITAL NEEDS* * Including 5.0%- 7.5% RWA projections 11.3 – 13.0 bn REALITY CHECK – No detailed financial planning is disclosed. However, this illustration shows our capacity to meet the capital needs for growth and reimbursement. Actual numbers
Slide 28: Possible new banking capital adequacy requirements
Possible new banking capital adequacy requirements In the future, capital planning will be impacted by new banking capital adequacy requirements Various upcoming regulatory capital changes will negatively impact RWA (largely market RWA). E.g., a doubling of market RWA (EUR 12bn) would lead to a ne
Slide 29: Flexibility in place to cope with regulatory pressure
Flexibility in place to cope with regulatory pressure • More stringent regulatory filters expected, but capital adequacy levels not defined yet • E.g. 1% lower core Tier 1 ratio would unlock EUR 1.4bn of capital • Previously announced ‘Strategy wild cards’ still valid: • Postponement of the redempti
Slide 30: An appealing value proposition
An appealing value proposition L. Philips, Group CFO L. Philips, Group CFO 4 June 2010 KBC Investor Lunch London
Slide 31: An appealing value proposition…
An appealing value proposition… Projected share of Belgium and CEE in 2013 100% • Going forward, KBC’s business model will Other be increasingly geared towards the two 83% Belgium and CEE 82% home markets Belgium and Central & 48% 40% Eastern Europe where the value & potential of our franchise is st
Slide 32: An appealing value proposition…
An appealing value proposition… Key strengths: Well-developed bancassurance strategy and strong cross-selling capabilities Strong franchise in Belgium with high and stable return levels Exposure to growth in ‘new Europe’, but with mitigated risk profile (most mature markets in the region)
Slide 33: Reminder: how we designed the new future for the Group
Reminder: how we designed the new future FOr the GrOUP : verieve: croup ce 2 How we put the plans to WOKK : verre, cue ceo 3 Doing the maths, again . orig: cisco 4 An appealing value Proposition « sies croup cro
Slide 34: Wrap up: Where are we today?
WRAP UP Where are we today? • Available surplus represents 20% of capital needs • Capital budget remains ‘matched’, execution risk is declining • 44% of targeted RWA reduction is already realised • Divestment program is on track Despite tough market circumstances, KBC is living up to its promise 3
Slide 35: Appendices
Appendices
Slide 36: Future geographic focus
Future geographic focus Czech Republic Banking: 23% Poland L Insurance: 9% Banking: 4% NL Insurance: 5% L Insurance: 7% NL Insurance: 9% Belgium Banking: 20% Slovakia L Insurance: 17% Banking: 10% NL Insurance: 10% L Insurance: 5% NL Insurance: 2% Hungary Banking: 9% L Insurance: 4% NL Insurance: 4%
Slide 37: Composition of the Executive Committee
Composition of the Executive Committee
Slide 38: KBC
KBC Legal Department, Kredietbank Head of the Litigation Department, Kredietbank Head of the Credit Department, Kredietbank Branch Manager, Kredietbank Antwerp Deputy Commercial Manager, Antwerp Regional Office Manager, Antwerp Corporate Office, Kredietbank General Manager, Processing & Automation D
Slide 39: Danny De Raymaeker, Group COO
= Danny De Raymaeket F gue coo e Born 1959 ¢ Belgian © Commercial and Business-economic Engineer (K.U.Leuven) and Master's Degree in Internal Auditing (Universiteit Antwerpen) ¢ Joined KBC in 1984 © COO (Chief Operating Officer)
Slide 40: Career
Career 1978 Various functions in Barclays Bank in London and Taiwan 1996 Head of commercial banking Hong Kong branch, Kredietbank 1997 General manager of Shanghai branch, Kredietbank 1999 General manager of Southeast-Asia offices, KBC Bank 2003 CEO of K&H Bank in Hungary 2006 Senior general manager
Slide 41: Luc Philips, Group CFO
Luc Philips PF Geup cro e Born 1951 ¢ Belgian e Master's Degree in Commercial and Financial Sciences (Hoger Instituut voor Bestuurs- en Handels-wetenschappen Brussel) ¢ Joined KBC in 1971 © CFO (Chief Financial Officer)
Slide 42: Career
Career 1988 1995 1996 1999 2002 2008 2009 2009 Various functions in corporate banking, Kredietbank Associate Director Credit Risk Management, Warburg Dillen Read, London Director Corporate Finance, Leveraged Finance Group, SBC Warburg Executive Director Corporate Finance, KBC Securities General mana
Slide 43: Various actuary functions in life and non-life insurance, ABB Insurance
Various actuary functions in life and non-life insurance, ABB Insurance Head of non-life department, Limburg regional office, ABB Insurance Provincial manager Limburg and Eastern Belgium, KBC Insurance Senior General Manager non-life insurance, KBC Insurance Member of the Executive Committee of KBC
Slide 44: Career
Career 1972 Various functions in Generale Bank 1983 Head of dealing room, KBL EPB 1986 Head of Hong Kong subsidiary, KBL EPB 1987 Member of the Executive Committee, KBL EPB 2002 CEO, KBL EPB 2005 Member of the Executive Committee of KBC Group 2006 CEO of the European Private Banking Business Unit KB
Slide 45: Marko Volić
Marko Volié ¢ Born 1949 e Slovene e Master's Degree in economics (University of Ljubljana and Belgrade) ¢ Joined KBC in 2004 © CEO Central and Eastern Europe and Russia Business Unit Career 1976 Head of the analytical department of the National Bank of Slovenia 1979 World Bank in Washington D.C. and
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