KBC Groupe : General Investor Presentation 1Q2024

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KBC Group

Company presentation

1Q 2024

More information: www.kbc.com

KBC Group - Investor Relations Office:[e-mail]

Highlights

• Commercial bank-insurance franchises performed excellently

Excellent net result of 506m EUR over 1Q24

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Net result

• As policy rates have peaked, KBC Group is well-positioned

being an integrated bank-insurer with tailored AM business

• Customer loans and customer deposits increased q-o-qin

almost all our core countries (on a comparable basis)

• Higher net interest income q-o-q

• Higher net fee and commission income q-o-q

• Q-o-qlower net result from financial instruments at fair value

and net other income slightly above normal run rate

in m EUR

966

	882
One-off	370
Ireland

877

677

506

• Higher sales of non-lifeinsurance y-o-y, strong sales of life

insurance (up both q-o-q and y-o-y)

• Costs in 1Q include bulk of full-year bank & insurance taxes;

(518m EUR bank & insurance taxes in 1Q24)

512

Costs excl. bank & insurance taxes down q-o-q

• Limited net loan loss impairment charges

• Solid solvency and liquidity

• An extraordinary interim dividend of roughly 280m EUR or 0.70

EUR per share in May 2024 (see next page)

1Q23

YTD

ratios

2Q23

3Q23

4Q23

1Q24

Return on Equity 14%*

Cost-income ratio 46%**

Combined ratio 85%

Credit cost ratio 0.04%

CET1 ratio 14.9% (B3, DC, fully loaded) after deduction of the extraordinary interim dividend of 280m EUR (CET1 ratio 15.2% without this deduction)

Leverage ratio 5.4% (fully loaded)

NSFR 139% & LCR 162%

• When bank & insurance taxes are evenly spread throughout the year and excluding one-offs
• When excluding certain non-operating items. See glossary for the exact definition

Highlights

Profit & Loss

Capital & Liquidity

Looking forward

Business units

Company profile

KBC Strategy

Sustainability

Asset quality

MREL & Funding

Dividend policy and capital deployment policy

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• In line with our announced capital deployment plan for FY23, the Board of Directors decided to distribute the surplus capital above the fully loaded CET1 ratio of 15% (roughly 280m EUR) in the form of an extraordinary interim dividend of
  0.70 EUR per share on 29 May 2024*
• We aim to be amongst the better capitalised financial institutions in Europe. As a consequence, the Board of Directors decided:
  • The dividend policy for 2024 to remain unchanged:
• • Payout ratio policy (i.e. dividend + AT1 coupon) of at least 50% of consolidated profit of the accounting year
  • Interim dividend of 1 EUR per share in November of each accounting year as an advance on the total dividend

• • The capital deployment policy for 2024 to remain unchanged:
  • • On top of the payout ratio of at least 50% of consolidated profit, each year (when announcing the full year results), the Board of Directors will take a decision, at its discretion, on the distribution of the capital above 15.0% fully loaded CET1 ratio, so-calledsurplus capital. The distribution of this surplus capital can be in the form of a cash dividend, a share buy-backor a combination of both
• Considering the introduction of Basel 4 as of 1 Jan 2025 onwards, the dividend policy as well as the surplus capital threshold will be reviewed in 1H25

* Ex-coupon date 27 May 2024; record date 28 May 2024 and payment date 29 May 2024

Highlights

Profit & Loss

Capital & Liquidity

Looking forward

BU & FY23 view

Company profile

KBC Strategy

Sustainability

Asset quality

MREL & Funding

Strategic focus | What differentiates us from peers

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Unique integrated bank- insurance+ model

• We offer an integrated response to our clients' banking and insurance needs. Our organisation is similarly integrated, operating as a single business and a digital-first, data- driven and AI-ledbank-insurer.
• Our integrated model offers our clients the benefit of a comprehensive, one-stop,relevant and personalised financial service that allows them to choose from a wider, complementary and optimised range of products and services, which go beyond pure bank-insurance.
• For ourselves, it offers benefits in terms of income and risk diversification, additional sales potential through intensive co- operation between the bank and insurance distribution channels, significant cost-savings and synergies, and heightened interaction opportunities with and a more complete understanding of our clients.

Successful digital-first approach through KATE

• Our digital interaction with clients forms the basis of our business model in our strategy, not only in terms of sales and advice, but also in E2E digital process and product development.
• Artificial intelligence and data analysis will play an important part in digital sales and advice. Kate, our personal digital assistant, is featured prominently in this regard.
• The independent international consulting firm Sia Partners named KBC Mobile one of the top performing mobile banking apps worldwide (N°1 in 2021 and N°3 in 2022 and 2023): a clear recognition of a decade of innovation, development and listening closely to our clients.

Firmly embedded sustainability strategy

• As a company that aims to support the transition to a more sustainable and climate-proof society, we have made sustainability integral to our overall business strategy and integrated it into our day-to-day business operations and the products and services we provide.
• Our sustainability strategy consists of three cornerstones: encouraging responsible behaviour on the part of all our employees, increasing our positive impact on society and limiting any adverse impact we might have

26% 133

of the 506m EUR Group Net result* originates from

Insurance activities

356

Banking activities

Insurance Activities

• Difference between the net result of KBC Group and the sum of the banking and insurance contributions is accounted for by the holding-company/group items

4.5 million	KATE
autonomy
users
in contact	65% BE
with Kate	65% CZ

see climate targets on Slide 56

Highlights

Profit & Loss

Capital & Liquidity

Looking forward

BU & FY23 view

Company profile

KBC Strategy

Sustainability

Asset quality

MREL & Funding

At KBC it is our ambition to

be the reference

for bank-insurance

in all our core markets

Strategic focus | The reference

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Profitability

With a Return on Equity of 14% in 1Q24 KBC is one of the most profitable EU financial institutions

Solvency

With a fully loaded CET1 ratio of 14.9% at end 1Q24 KBC is amongst the better capitalised EU banks

Sustainability

Sustainalytics ranks KBC 3rd out of 311 diversified global banks

Digitalisation

Sia Partners ranks KBC Mobile as Belgian N°1 banking app and N°3 worldwide

"KBC Mobile is a perfect and efficient banking app for everyday needs and one of the most innovative with some interesting extras. The app surprises customers with the wide range of functionalities and the virtual assistance by Kate."

Highlights

Profit & Loss

Capital & Liquidity

Looking forward

Business units

Company profile

KBC Strategy

Sustainability

Asset quality

MREL & Funding

Main exceptional items

BE BU

CZ BU

IM BU

GC BU

	1Q24	4Q23	1Q23	6 of 67
NOI - Realised gains		+18m EUR
NOI - Recuperation Belgian bank & insurance taxes + moratorium interests			+48m EUR
Total Exceptional items BE BU		+18m EUR	+48m EUR
NOI - legacy legal file(s)			-2m EUR
Impairments - Goodwill on CSOB S		-109m EUR
Total Exceptional items CZ BU		-109m EUR	-2m EUR
HU - BK & INS TAX - Temporary extra (windfall/DGS) bank and insurance tax	-71m EUR	-1m EUR	-79m EUR
HU - BK TAX - (Recovery of) extraordinary Deposit Guarantee Fund			+9m EUR
HU - Impairments - Modification losses		-10m EUR
BG - Opex - Integration costs Raiffeisenbank Bulgaria	-4m EUR	-5m EUR	-1m EUR
BG - Opex - EUR adoption costs	-1m EUR	-1m EUR	-1m EUR
Total Exceptional items IM BU	-76m EUR	-17m EUR	-72m EUR
IRL - Sales transaction(s)		+0m EUR	+370m EUR
TAX - Higher DTA (due to higher expected future taxable profits in the UK)		+15m EUR
Total Exceptional items GC BU		+15m EUR	+370m EUR
Total Exceptional items	-76m EUR	-93m EUR	+344m EUR
Total Exceptional items (post-tax)	-69m EUR	-72m EUR	+340m EUR

Highlights

Profit & Loss

Capital & Liquidity

Looking forward

Business units

Company profile

KBC Strategy

Sustainability

Asset quality

MREL & Funding

Higher net interest income

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Net interest income

in m EUR

1,324	1,407	1,382
	106
			96
	92

1,232

1,301

1,286

1,360

98

1,261

1,369

95

1,274

Insurance

Banking (incl. Holding)

Net interest margin*

in %, calculated excluding dealing room, ALM FX swaps & repos

2.04%

2.11%

2.04%

1.99%

2.08%

1Q23

2Q23

3Q23

4Q23

1Q24

1Q23

2Q23

3Q23

4Q23

1Q24

• NII increased by 1% q-o-q and by 3% y-o-y
• Q-o-qincrease was driven primarily by:
• • Continued increasing reinvestment yields (which has a positive impact on commercial transformation result)
  • Loan volume growth
  • Slightly lower costs on the minimum required reserves held with the central

banks (-52m EUR in 1Q24 versus -55m EUR in 4Q23) partly offset by:

• • Further shifts from current & savings accounts to term deposits, at lower margins
  • Lower loan margins in some core markets
  • Lower NII on inflation-linked bonds (-26m EUR q-o-q, from +14m EUR in 4Q23 to -12m EUR in 1Q24)
  • Lower dealing room NII (-14m EUR q-o-q)
  • Negative FX effect (-11m EUR q-o-q)
  • Lower number of days (-8m EUR q-o-q)
• Y-o-yincrease was driven primarily by sharply increasing commercial transformation result, higher ALM result and increased term deposits at better margins, partly offset by lower lending income, lower NII in Ireland, lower NII on inflation-linked bonds, lower dealing room NII, higher funding cost of participations & MREL, higher costs on the minimum required reserves and negative FX effect

Highlights

Profit & Loss

Capital & Liquidity

Looking forward

Business units

• Rose by 9 bps q-o-q and by 4 bps y-o-y for the reasons mentioned on net interest income

Organic volume trend

		o/w retail	Customer
	Total loans**	mortgages	deposits***
Volume	184bn	75bn	216bn
Growth q-o-q*	+1%	0%	+1%
Growth y-o-y	+4%	+3%	+1%

* Non-annualised ** Loans to customers, excluding reverse repos (and bonds). Growth figures are excluding FX, consolidation adjustments and reclassifications.

• Customer deposits, excluding debt certificates and repos. Excluding the volatility in the foreign branches of KBC Bank (included in BE BU), core customer deposits stabilised q-o-q and fell by 2% y-o-y

Company profile

KBC Strategy

Sustainability

Asset quality

MREL & Funding

Inflow of core customer money

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Customer money dynamic over 1Q24

in m EUR

+2.0bn EUR

	+1.2bn EUR	-1.5bn EUR				+1.9bn EUR
			-3.2bn EUR		+3.7bn EUR
				-0.3bn EUR
31DEC23	foreign branches	FX impact	current accounts	savings accounts	term deposits	mutual funds	31MAR24

• 1Q24 saw an inflow of core customer money of +2.0bn EUR (+0.6bn EUR incl. FX impact)

Highlights

Profit & Loss

Capital & Liquidity

Looking forward

BU & FY23 view

Company profile

KBC Strategy

Sustainability

Asset quality

MREL & Funding

Higher net fee and commission income

Net fee & commission income

in m EUR

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Assets under management

in bn EUR

576

10

262

584

11

262

588

12

268

600

12

265

614

15 Other

261 Banking services

			244	258
	225	227		Investment
217	55	59
46	49	advice
42
63	65	64	68	71	Fund-of-Funds
		Group assets &
	20	19	21	21
20	Pension fund

304

311

309

323

338 Asset management services

92	95	94	100	107	Direct Client
Money

1Q23

2Q23

3Q23

4Q23

1Q24

• Up by 2% q-o-q and by 7% y-o-y
• Q-o-qincrease was mainly the result of:
• • Net F&C income from Asset Management Services increased by 5% q-o-q due to higher management & entry fees
  • Net F&C income from banking services fell by 2% q-o-q. Higher securities- related fees, lower distribution commissions paid for banking products and seasonally lower client incentives in Retail (in the Czech Republic) were more than offset by lower fees from payment services (partly seasonal) and lower fees from credit files & bank guarantees
  • Seasonally higher distribution fees linked to non-life insurance
• Y-o-yincrease was mainly the result of:
• • Net F&C income from Asset Management Services rose by 11% y-o-y due entirely to higher management fees
  • Net F&C income from banking services fell by 1% y-o-y due mainly to higher client incentives, largely offset by higher securities-related fees, higher fees from payment services and higher network income
  • Higher distribution fees linked to non-life insurance

Highlights

Profit & Loss

Capital & Liquidity

Looking forward

Business units

1Q23

2Q23

3Q23

4Q23

1Q24

• Increased by 5% q-o-qdue to net inflows (+1%) and positive market performance (+4%)
• Increased by 19% y-o-y due to net inflows (+8%) and positive market performance (+11%)
• The mutual fund business has seen strong net inflows this quarter both in higher-margin direct client money (1.9bn EUR in 1Q24 versus 0.9bn EUR in 4Q23 and 1.8bn EUR in 1Q23) as well as in lower-margin assets

Company profile

KBC Strategy

Sustainability

Asset quality

MREL & Funding

Non-life sales up y-o-y, life sales significantly up q-o-q and y-o-y

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Non-life sales	Life sales
in m EUR	in m EUR

667 577 558 549 730

1Q23

2Q23

3Q23

4Q23

1Q24

• Up by 9% y-o-y, with growth in all countries and all classes, due to a combination of volume and tariff increases

727			765
	685	33
32
		36
218			261
477	438	297
31
32
248	216
477			471
		351

Hybrid products

Guaranteed- Interest products

Unit-Linked products

Combined ratio (Non-life)

in %

83%

85%

84%

85%

2023 2024

87%

199		191
1Q23	2Q23	3Q23	4Q23	1Q24

• Increased by 12% q-o-q due entirely to higher sales of unit-linked products

(excellent sales in 1Q24 as the result of a successful launch of a new

structured fund and a commercial action within Private Banking in Belgium),

1Q

1H

9M

FY

• Non-lifecombined ratio for 1Q24 amounted to an excellent 85% (83% in
  1Q23). This is mainly the result of:
• • 10% y-o-y higher insurance revenues before reinsurance
  • 17% y-o-y higher insurance service expenses before reinsurance due to the very low level of claims in 1Q23
  • Higher net result from reinsurance contracts held (up by 14m EUR y-o-y)

partly offset by lower sales of guaranteed-interest products (due partly to

traditionally higher volumes in tax-incentivised pension savings products in

Belgium in 4Q23) as well as lower sales of hybrid products

• Increased by 60% y-o-y due mainly to sharply higher sales of unit-linked

products, besides also higher sales of guaranteed-interest products as well

as higher sales of hybrid products

• Sales of guaranteed-interest products and unit-linked products accounted

for 34% and 62% of total life insurance sales in 1Q24 respectively, with hybrid

products (mainly in the Czech Republic) accounting for the remainder

Highlights

Profit & Loss

Capital & Liquidity

Looking forward

Business units

Company profile

KBC Strategy

Sustainability

Asset quality

MREL & Funding