market activities asset management investor relations conference 2 july 2001 luc philips member of...

Market Activities Asset Management

Investor Relations Conference2 July 2001

Luc PhilipsMember of the EC

Market Activities

Description of the activities

Business characteristics

Market position

Financial results

Challenges

Risk profile

Market risk

Outlook / plans

To

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s

Description

The activity consists of :

FX - MM - Capital Markets of KBC Bank

Equity markets of KBC Securities (excl. Corporate Finance) in Belgium, France & Netherlands, Peel Hunt (GB) and Patria Finance (Czech Rep.)

Convertible Bonds & Equity Derivatives of KBC Financial Products

Clearing and Settlement Services

Characteristics

Focus on (European) Small & Medium Caps

Centralized management responsibility realized in FX, MM, Capital Markets and in KBCFP. Process started in KBC Securities

Synergies between business lines and with Corporate Finance/Banking Business

Market Leadership

Equity in Belgium Convertibles (secondary market) in

New York and Tokyo Warrants in Hong Kong Structured Equity Products in Europe Czech Republic

Market position

0

10

20

30

40

50

60

70

1998 1999 2000 2001(annualised)

U.S. DomesticMarketsEuropeanMarketsJapaneseMarketsAsias Markets

KBC FP’s Convertible Turnover (in US$ billion)

1998 1999 2000 2001 (Annualised*)

U.S. Domestic Markets 0.5 8.7 23.3 40.4

European Markets 13.2 9.2 13.1 19.2

Japanese Markets 5.5 7.1 8.1 5.4

Asian Markets 2.9 2.0 2.3 2.3

Total Convertible Turnover 22.1 27.1 46.9 67.4

* KBC FP’s convertible turnover for 2001 has been annualised using data from 01-Jan-2001 to 31-Mar-2001

KB

C F

P's

Con

vert

ible

Tur

nove

r(in

US

$ bi

llion

)Significant Share of US$ 500 Bil Global

CB Markets

Good Market Position

Small & Medium Caps in UK Brokerage in France

Relative Weak Position

Netherlands & Germany (equity) Corporate Finance in France Warrants in Europe

Market position

Financial Results

Profit Contribution

Share in Group Profit (%)

Equity allocation

ROE (%)

184

18.4

1 374

-

90

7.8

1 135

7.2

159

14.3

728

17.1

45

13.4

1 061

18.1

1998 1999 2000 1Q01In m EUR

Challenges

Decreased importance Belgian market

Consolidation of exchanges

Integration of equity business

Optimization of synergies Small & Midcaps

Control risk profile

Market requirements on system development

Risk Profile

All activities increasingly client instead of trading oriented

KBC FP Belgium : managing Long Term OTC Derivatives

Convertibles sales and other equity derivatives : low risk profile

KBCSec (Belgium) Equities somewhat higher relative exposure, due to dominant profile in the Belgian market

Risk Profile

Peel Hunt/Patria : very small position trading/limits

“Consolidated” risk profile from equity + Equity Derivatives Business

Role of RIS & Market Committee

Market Risk

Possibility extreme negative MTM results mitigated by Conservative position taking/limits in

equity derivatives; cfr NO trading losses throughout recent weeks/months

Compensation between activities in all but the most extreme scenario’s

Stress scenario testing

Market Risk

Revenue generation most vulnerable in scenario of combination of

absence of volatility

low stock prices

low stable interest rates

Outlook - Plans

Strengthen equity position in France and Germany

Integrate product offering to Small and Mid cap European market (Limitation : liquidity in underlying stock for more sophisticated derivatives offering)

Fully integrate/centralize management of equity business

Outlook - Plans

Develop credit derivatives trading activity prudently

In Synergy with Asset Management : launch Hedge Fund Products on the basis

of existing strengths (e.g. convertible arbitrage)

Asset Management

Structure

Assets under management

Financial results

Retail market shares

Drivers of success

Opportunities

Plans

Targets

To

pic

s

KBC Bank & Insurance

Holding NV

Asset Management

KBC Bank KBC Insurance

100%100%

KBC Asset Man45%

55%

• KBC Asset Management Ltd Dublin• Luxemburg Conseils

Assets under Management

32,4

5,3

3,36,5

4,4

35,8

5,1

4,2

8,6

8,6

7,3

37,4

4,94,4

8,9

8,5

8,6

31.12.1999 31.12.2000 30.05.2001

51.9

69.6

In b

illio

n s o

f E

UR

72.7

Fund of Funds

Group Assets

Institut. Internat.

Institut. BelgiumRetail Others

Retail UCI

Financial Results

Strategic Capital Allocation by 2003 : 8.5 - 10 %

Contribution to Group Profitsin m. EUR 1999 91 2000 129 2001 (Q1) 29

Share of Group Profits : 1999 8% 2000 12% 2001 (Q1) 8%

Cost Efficiency : 5bp vs 15 bp AUM (McKinsey survey)

Retail Market Share UCI’s in Belgium

0%

10%

20%

30%

40%

50%

60%

Bond funds Equity funds Mixed funds Moneymarket funds

Cap.Guarant.Funds

Y2000 figures

19.9%

25.9% 24.6% 24.9%

51.7%

Comparative Market position in Belgium

Drivers of success

Product development capacity New products launched 2000 : 87

2001 : 42 (1Q01)

Very short time to market Seamless to distribution system

Very broad product range, consistent with4 defined customer risk profiles(430 Retail products outstanding)

Undisputed market leadership in Capital Guaranteed Products (210 products)

Belgium: huge UCI market share in Europe, making KBC the nr 13 UCI manager in Europe

Opportunities

Demographics in Belgium/Europe

Pension funding problems in Europe

Third party/white labeling services

Grow KBC AM Ltd in UK (and US)

Plans

Consolidate Belgian market share

Export retail model to Central Europe (30 - 40 % market share)

Make reporting fully gips compliant

Select additional 3/4 products for institutional market

Direct marketing European and UK market

Work with marketing services in the US

Alternative investment initiatives

Targets A.U.M

Retail UCI

Other Retail

Institutional Belgium

Institutional Int’l

Group Assets

FoF/Inst. funds

90

9

8

26

13

16

56

7

6

16

10

11

Total 106 162

2003 2006In bn EUR

Market Activities Asset Management

Investor Relations Conference2 July 2001

Luc PhilipsMember of the EC