Robust income, low costs and minimal impairments.
KBC closed the first quarter of 2005 strongly with a Group profit of 717 million euros, a 63% increase on the preceding quarter and a 91% increase on the first quarter of 2004. This reflected – viewed on a comparable
basis – (i) a solid development in income, low cost ratios and minimal impairments of loans and investments and (ii) a number of non-recurrent results (136 million euros). The trend started in 2004 has therefore been sustained, and KBC remains positive about the outlook for 2005.

Financial highlights
• Quarterly profit (717 million euros, of which 136 million euros non-recurrent) was 63% and 91% up on the preceding quarter and the corresponding quarter in 2004 respectively.
• Commission income of the Group grew by 20% year-on-year, due in particular to the successful sale of investment funds and unit-linked insurance and to asset management.
• On account of the changed IFRS treatment, the net interest earnings, results from financial instruments and insurance premiums are not entirely comparable with those of 2004.
• On a comparable basis, net interest earnings from banking remain stable despite stiffer competition (e.g. in Belgium) and the difficult interest-rate climate (e.g. in Central and Eastern Europe).
• The cost level of the Group is lower than in each preceding quarter in 2004 and the cost/income ratio of the banking business and asset management has fallen to 51%.
• Non-life insurance business grew by 5%, once again generating a strong technical result (combined ratio: 92%)
• No net supplementary provisions were set aside this quarter for loan losses.
• Value impairments on the investment portfolio are still very limited; partly as a result, the contribution to the result from insurance business (122 million euros) was at a significantly higher level than the pro forma figure for the first quarter of 2004.
• The retail segment (mainly in Belgium) contributed 295 million euros to the Group result, the Central and Eastern European region 191 million euros, the financial services for corporates and the capital market activities 134 and 75 million euros respectively, European Private Banking 53 million euros and Gevaert 32 million euros.
• The Polish banking activities once again measured up to expectations, with no net additional loan losses and a net profit of 23 million euros (17 million euros contribution towards KBC Group profit).

Profit outlook for 2005
The results in the first quarter of 2005 are exceptionally robust from various perspectives. The profit for the quarter cannot be extrapolated for the year as a whole, although KBC remains positive about 2005.
Strict cost control remains in prospect on the banking side and there are at present no indications of any significant deterioration in loan quality. The impact of IFRS on the net result has so far remained relatively limited, partly as a result of successful management of it, the intention being to sustain this policy. On the other hand, interest rate developments remain an uncertain factor.
On the basis of the current appraisal of the relevant economic and financial parameters, KBC once again confirms its previous forecast that the net profit in 2005 will amount to at least 1 825 million euros.