KBC Groupe : General Investor Presentation 3Q2020 (English)

Total Exceptional Items (pre-tax)

Total Exceptional Items (post-tax)

November 12, 2020 at 04:07 am EST

KBC Group

Company presentation 3Q 2020

More information: www.kbc.com

KBC Group - Investor Relations Office - E-mail:IR4U@kbc.be

Important information for investors

This presentation is provided for information 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 therefore incomplete. KBC cannot be held liable for any loss or damage resulting from the use of the information.
This presentation contains non-IFRS information and forward-looking statements with respect to the strategy, earnings and capital trends of KBC, involving numerous assumptions and uncertainties. There is a risk that these statements may not be fulfilled and that future developments differ materially. Moreover, KBC does not undertake any obligation to update the presentation in line with new developments.
By reading this presentation, each investor is deemed to represent that it possesses sufficient expertise to understand the risks involved.

3Q 2020 key takeaways

3Q20 financial performance

Commercial bank-insurance franchises in core markets performed well
Customer loans and customer deposits increased y-o-yin most of our core countries
Higher net interest income and lower net interest margin

❖	Slightly higher net fee and commission income	Excellent
	net result
❖ Lower net gains from financial instruments at fair
of 697m
	value and lower net other income	EUR in
❖ Excellent result of non-life insurance and excellent
	sales of life insurance y-o-y	3Q20

Strict cost management
Sharply lower net impairments on loans
Solid solvency and liquidity

Comparisons against the previous quarter unless otherwise stated

9M20

ROE* 7% (15% in 3Q20)
Cost-incomeratio 59% (adjusted for specific items)
Combined ratio 83%
Credit cost ratio 0.61% (0.17% without collective Covid-19 impairments**)
Common equity ratio 16.6% (B3, DC, fully loaded)
Leverage ratio 5.9% (fully loaded)
NSFR 146% & LCR 142%

		745		Net result
			702			697
			612

430
						210

					-5
	1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20

when evenly spreading the bank tax throughout the year
784m EUR collective Covid-19 impairments in 9M20, of which 637m EUR management overlay and 147m EUR impairments captured by the ECL models through the updated IFRS 9 macroeconomic variables

Overview of building blocks of the 3Q20 net result

					50	1.872	-21
				85

			225
		390						-905
	1.122

								-63	-2
									-184	697

	NII	NFCI	Technical	FIFV	Other	Total	Bank taxes	Opex excl. Impairments	Other	Income	3Q20 net
			Insurance		Income**	Income		bank tax		taxes	result
			Result*
Q-o-Q	+4%	+1%	-9%			-8%		+3%
Y-o-Y	-4%	-12%	+26%			+3%		-4%			+14%

Earned premiums - technical charges + ceded reinsurance
Dividend income + net realised result from debt instruments FV through OCI + net other income

Main exceptional items

BU	NII - one-off technical item (insurance)
Impairments - Modification loss from moratorium
BE
	Total Exceptional Items BE BU


	Opex - Restructuring costs
BU
Opex - Release provision of legacy legal files

CZ	Impairments - Modification loss from moratorium
	Total Exceptional Items CZ BU

3Q20

2Q20

3Q19

+26m EUR

-11m EUR

+26m EUR

-11m EUR

-5m EUR

+4m EUR

	-5m EUR
-5m EUR	-1m EUR

GC IM BU

IRL - NOI - Additional impact for the tracker mortgage review	-6m EUR		-18m EUR
HU - Impairments - Modification loss from moratorium		+7m EUR

Total Exceptional Items IM BU	-6m EUR	+7m EUR		-18m EUR

NOI - Settlement of old legal file			+3m EUR
Total Exceptional Items GC			+3m EUR

Contents

3Q 2020 performance of KBC Group
Covid-19
3Q 2020 performance of business units
Strong solvency and solid liquidity
Looking forward

Annex 1: Company profile

Annex 2: Other items

KBC Group

Section 1

3Q 2020 performance of KBC Group

Net result at KBC Group

NET RESULT AT KBC GROUP*

745

702697

612

430

210

-5

1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20

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

Amounts in m EUR

CONTRIBUTION OF BANKINGACTIVITIES

TO KBC GROUP NET RESULT*

618		586
		546
	514

334

CONTRIBUTION OF INSURANCEACTIVITIES

TO KBC GROUP NET RESULT*

															173	157
							143
			124		99									119	134
							94
96		61		66

33
68		83		79	79		3			85	73

	36
	-4
		-20		-46	-30				-20			-31	-50


														-13

1Q19	2Q19	3Q19	4Q19		1Q20		2Q20	3Q20
						Non-Life result				Non-technical & taxes

						Life result

Higher net interest income and lower net interest margin

														NII				Amounts in m EUR

1,129			1,132				1,174	1,182		1,195					1,083	1,122
			16					12		117	14	114	12		111	17			15
118				114
										106		6	131
	4		1		1,044		1,057	1,066	1
992		1,006				971			977


											-1									-1

1Q19			2Q19				3Q19	4Q19		1Q20					2Q20	3Q20
	NII - netted positive impact of ALM FX swaps*			NII - Insurance

	NII - Holding-company/group							NII - Banking

													NIM **
1.98%			1.94%				1.94%	1.94%		1.97%

																	1.82%	1.81%

Net interest income (1,122m EUR)
- Increased by 4% q-o-q and decreased by 4% y-o-y
- The q-o-q increase was driven primarily by:
  o the positive impact of TLTRO3 (+26m EUR q-o-q)o a positive one-off item (+26m EUR NII insurance)
  o higher margin on new production mortgages than the margin on the outstanding portfolio in Belgium, the Czech Republic and Slovakia
  o higher netted positive impact of ALM FX swaps partly offset by:
  o the further negative impact of the CNB rate cuts (as the last CNB rate cut from 1.00% to 0.25% happened early May 2020)
  o lower reinvestment yields
- The y-o-y decrease was mainly the result of the CNB rate cuts, the depreciation of the CZK & HUF and the negative impact of lower reinvestment yields

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

From all ALM FX swap desks
NIM is calculated excluding the dealing room and the net positive impact of ALM FX swaps & repos

Net interest margin (1.81%)
- Decreased by 1 bp q-o-q and by 13 bps y-o-y due mainly to the CNB rate cuts, the negative impact of lower reinvestment yields and an increase of the interest-bearing assets (denominator)

ORGANIC VOLUME TREND	Total loans**	o/w retail mortgages	Customer deposits***	AuM	Life reserves
Volume	158bn	69bn	212bn	204bn	27bn
Growth q-o-q*	+1%	+2%	+1%	+1%	0%
Growth y-o-y	+4%	+6%	+4%	-4%	-3%

* Non-annualised ** Loans to customers, excluding reverse repos (and bonds). Growth figures are excluding FX, consolidation adjustments, reclassifications and collective Covid-19 ECL

Customer deposits, including debt certificates but excluding repos. Customer deposit volumes excluding debt certificates & repos +1% q-o-q and +9% y-o-y

Slightly higher net fee and commission income

					F&C				Amounts in m EUR

410	435		444	445	429
				390
						388

219	230	237	243	229	219	218


264	270	275	279	270	237	245


-73	-65		-68	-77	-71	-68	-73
1Q19	2Q19	3Q19	4Q19		1Q20	2Q20	3Q20
	Distribution		Banking services		Asset management services

								Amounts in bn EUR
					AuM
210	210		212	216			202	204
						193

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

Net fee and commission income (390m EUR)
- Up by 1% q-o-q and down by 12% y-o-y
- Q-o-qincrease was the result of the following:
  o Net F&C income from Asset Management Services increased by 4% q-o-q as a result of higher management fees, partly offset by lower entry fees from unit-linked life insurance products
  o Net F&C income from banking services roughly stabilised q-o-q as higher fees from payment services and higher network income was offset by lower securities-related fees (after two exceptionally strong quarters)
  o Distribution costs rose by 8% q-o-q due chiefly to higher commissions paid linked to increased non-life insurance sales
- Y-o-ydecrease was mainly the result of the following:
  o Net F&C income from Asset Management Services fell by 11% y-o-y as a result of lower management fees and entry fees
  o Net F&C income from banking services decreased by 8% y-o-y(-6%y-o-y excluding FX effect) driven mainly by lower fees from payment services (partly due to less transaction volumes as a result of Covid-19, partly due to the SEPA regulation) and lower fees from credit files & bank guarantees, partly offset by higher securities-related fees
  o Distribution costs rose by 7% y-o-y due chiefly to higher commissions paid linked to banking products and increased non-life insurance sales
Assets under management (204bn EUR)
- Increased by 1% q-o-q due mainly to a positive price effect (+1%), next to limited net inflows in mutual fund business
- Decreased by 4% y-o-y due mainly to a negative price

10 effect

Non-life premium income up y-o-y and excellent combined ratio

PREMIUM INCOME (GROSS EARNEDPREMIUMS)

766	742	731	805	740
		712	715

351	317	291	364	297	276	267

415	425	440	441	443	435	448

1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20
		Life premium income		Non-Life premium income

COMBINED RATIO (NON-LIFE)

93%	90%	92%	92%	90%
		83%		83%

2019 2020

Insurance premium income (gross earned premiums) at 715m EUR
- Non-lifepremium income (448m EUR) increased by 2% y-o-y
- Life premium income (267m EUR) down by 3% q-o-q and by 8% y-o-y

The non-lifecombined ratio for 9M20 amounted to an excellent 83%. This is the result of 4% y-o-y premium growth combined with 13% y-o-y lower technical charges in 9M20. The latter was due mainly to lower normal claims in 9M20 (especially in Motor due to Covid-19) and a negative one-off in 9M19 (-16m due to reassessment on claims provisions). However, note that 9M20 was impacted by a higher negative ceded reinsurance result compared with 9M19

Amounts in m EUR

Non-life and life sales up y-o-y

NON-LIFE SALES (GROSS WRITTENPREMIUM)

534			567

412	411	400	415	416

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

LIFE SALES

516							561
			471
		459	403	427	235	420


302		261		311				214
		242	249

							327
214		198	161	160	177		205

1Q19	2Q19	3Q19	4Q19		1Q20	2Q20	3Q20
		Guaranteed interest products		Unit-linked products

Amounts in m EUR

Sales of non-life insurance products
- Up by only 1% y-o-y due to negative impact of Covid-19 on renewals of existing business (mainly 'Workmen's compensation' and 'General third-party liability')

Sales of life insurance products
- Decreased by 25% q-o-q, but increased by 4% y-o-y
- The q-o-q decrease was driven by both lower sales of unit-linked products and guaranteed interest products in Belgium
- The y-o-y increase was driven entirely by higher sales of unit-linked products in Belgium (due to a shift from mutual funds to unit-linked products by Private Banking clients), only partly offset by lower sales of guaranteed interest products (due mainly to the suspension of universal single life insurance products in Belgium)
- Sales of unit-linked products accounted for 49% of total life insurance sales in 3Q20

Lower FIFV and net other income

				FIFV		253
							126
99					130
				44			85
						100
62		8				19
11			48	10	55
29	19		17	28	31	13
	-22-8			-58	-2
	-3	-37	-25		-3
		-2	-1
		-46

						-186

					-59
					-82

					-385
1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20

Dealing room & other income		M2M ALM derivatives
MVA/CVA/FVA				Net result on equity instruments (overlay insurance)

The q-o-qdecline in net gains from financial instruments at fair value was attributable mainly to the exceptional rebound in 2Q20:
- a negative change in market, credit and funding value adjustments, although still a positive number (mainly as a result of changes in the underlying market value of the derivatives portfolio due to decreasing counterparty credit spreads & KBC funding spread, partly offset by lower long-term interest rates)
  o FVA: 24m EUR (-49m EUR q-o-q)
  o CVA: 30m EUR (+3m EUR q-o-q)
  o MVA: 2m EUR (+1m EUR q-o-q)
- lower dealing room income after an excellent 2Q20 result
- a lower net result on equity instruments (insurance)

NET OTHER INCOME

	133
59			47	50	53
		43	37



1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20
Amounts in m EUR

Net other income amounted to 37m EUR, below the normal run rate of around 50m EUR per quarter due to, among other things, an additional impact of the tracker mortgage review in Ireland of -6m EUR (of which -4m related to the tracker mortgage fine)

Strict cost management

OPERATING EXPENSES

	1,296												1,338

	382	988		975	1,045	407
			51			904	926
				30
								28
															21
									994			27
	913	957		947	931
				905
		877


		1Q19	2Q19		3Q19	4Q19	1Q20	2Q20	3Q20
								Bank tax		Operating expenses

Amounts in m EUR
EXPECTED BANK TAX SPREAD IN 2020
	TOTAL					Upfront					Spread out over the year

	3Q20	1Q20		2Q20	3Q20	1Q20		2Q20		3Q20	4Q20e

BE BU	0	289			2		0		0	0	0		0

CZ BU	0	40			0		0		0	0	0		0

Hungary	20	25			1		0		20	18	20		24

Slovakia	0	3				0		0		8	8	0		0

Bulgaria	0	17			-1		0		0	0	0		0

Ireland	1	4				-1		0		1	1	1		26

GC	0	0				0		0		0	0	0		0

TOTAL	21	377			0		0		29	27	21		50

Operating expenses excluding bank taxes decreased by 3.7% y-o-y in 9M20, roughly in line with our FY20 guidance of -3.5%y-o-y due chiefly to the announced cost savings related to Covid-19
Operating expenses excluding bank taxes

increased by 3% q-o-q primarily as a result of:

o higher staff expenses (largely due to reduced accrued variable remuneration in 2Q20 and wage inflation in most countries, despite less FTEs)

o seasonally higher marketing costs, higher facilities and depreciation & amortisation costs

partly offset by:

1. seasonally lower ICT costs and professional fees
Cost/income ratio (banking) adjusted for specific items* at 58% in 3Q20 and 59% YTD (58% in FY19). Cost/income ratio (banking): 52% in 3Q20 and 61% YTD, both distorted by bank taxes and the latter by lower FIFV
Total bank taxes (including ESRF contribution) are expected to increase by 3% y-o-y to 504m EUR in FY20
- See glossary (slide 87) for the exact definition

Overview of bank taxes*						Bank taxes of 291m EUR YTD.
																				On a pro rata basis, bank taxes
														Amounts in m EUR					represented 12.1% of 9M20
																		opex at the Belgium BU
						KBC GROUP						Bank taxes of 454m EUR YTD.			BELGIUMBU

								407						On a pro rata basis, bank taxes	273				289
382													represented 12.2% of 9M20
													63				67
														opex at KBC Group**
								115
109

															210				222
								292
273

		30			28	51			27			21			4	0	0		2		0


		29			2				25		2			1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20
1Q19	2Q19	3Q19	4Q19	1Q20	2Q20		3Q20

						European Single Resolution Fund (ESRF) contribution			ESRF contribution	Common bank taxes

Common bank taxes

CZECH REPUBLICBU

					41
35
					29
28
7	1			12
0	0			0	0

1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20
			ESRF contribution		Common bank taxes

Bank taxes of 41m EUR YTD. On a pro rata basis, bank taxes represented 5.6% of 9M20 opex at the CZ BU

									Bank taxes of 123m EUR YTD.
									On a pro rata basis, bank
INTERNATIONAL MARKETSBU	taxes represented 19.3% of
9M20 opex at the IM BU
74								77

18								19

							50
56	26			28		58	25
							21

	28

		-2

1Q19	2Q19	3Q19	4Q19		1Q20	2Q20	3Q20
						ESRF contribution		Common bank taxes

This refers solely to the bank taxes recognised in opex, and as such it does not take account of income tax expenses, non-recoverable VAT, etc.
The C/I ratio adjusted for specific items of 59% in 9M20 amounts to 51% excluding these bank taxes

Sharply lower asset impairments

											ASSET IMPAIRMENT	857
																			141			12
																				746
																				20
69								82		43							63
										7
					1		40		26							78		99			11
							75
67	4								57
36	25		1

																							-5


				1Q19	2Q19		3Q19			4Q19		1Q20	2Q20	3Q20
			Other impairments				Impairments on financial assets at AC and FVOCI

			Collective Covid-19 ECL

											CREDIT COST RATIO					0.61%

0.42%

								0.23%
											0.09%										0.12%
																					0.17%



																-0.06%	-0.04%

				FY14	FY15		FY16			FY17		FY18	FY19	9M20
	CCR with collective Covid-19 ECL			CCR without collective Covid-19 ECL
											IMPAIRED LOANS RATIO
4.3%
								3.7%		3.5%		3.5%	3.3%		3.4%
														3.2%

2.4%	2.1%		2.0%		1.9%	1.9%		1.9%		1.8%


				1Q19	2Q19	3Q19		4Q19	1Q20	2Q20	3Q20
Amounts in m EUR		Impaired loans ratio			of which over 90 days past due	16

Sharply lower asset impairments q-o-q
- The q-o-q decrease of loan loss provisions was attributable mainly to:
  o 746m EUR collective Covid-19 impairments booked in 2Q20, of which 5m was reversed in 3Q20 (small impact from updated IFRS 9 macroeconomic variables and management overlay)
  o lower loan loss impairments in Belgium and the Czech Republic (2Q20 was impacted by several corporate files in both countries)
- Impairment of 11m EUR on 'other' due to several small items (of which 4m EUR - the largest amount - as the result of an impairment on a lease contract related to a HQ building in Hungary)
The credit cost ratio in 9M20 amounted to:
- 17 bps (12 bps in FY19) without collective Covid-19 ECL
- 61 bps with collective Covid-19 ECL
The impaired loans ratio improved to 3.2%, 1.8% of which over 90 days past due

KBC Group

Section 2

Covid-19

COVID-19(1/9)

Latest status of government & sector measures in each of our core countries

Belgium

Czech Republic

Hungary

Deferral of payments

Opt-in: 3 months for consumer finance , 6-9 months for mortgages and non-retail loans, (until 31 Oct 2020 and can be extended to 31 Dec 2020)

For private persons: deferral of principal and interest payments, while only deferral of principal payments for non-retail clients
Interest is accrued over the deferral period, apart from families with net income of less than 1,700 EUR. For the latter group, this results in a modification loss for the bank (-11m EUR booked in 2Q)

Opt-in: 3 or 6 months

Application period finished on 30 Sep 2020, however end of Oct 2020 all deferrals expired

Applicable for retail and non-retail clients
For private persons and entrepreneurs: deferral of principal and interest payments, while only deferral of principal payments for non-retail clients
Interest is accrued over the deferral period, but must be paid in the final instalment, resulting in a modification loss for the bank (-5m EUR, booked in 2Q)
For consumer loans, the interest during the deferral period may not exceed the 2-week repo rate + 8%

Opt-out: a blanket moratorium originally until 31 Dec 2020

Extension of the deferral until 30 JUN 2021 but with certain eligibility criteria (no detailed legislation available yet for non-retail clients)

• Applicable for retail and non-retail clients

• Deferral of principal and interest payments

• Interest is accrued over the deferral period,

but unpaid interest cannot be capitalised

and must be collected on a linear basis

during the remaining (extended) lifetime.

This results in a modification loss for the

bank (-18m EUR booked in 1Q; revised to -11m

EUR in 2Q based on the actual opt-out ratio)

Guarantee Scheme &

liquidity assistance

A state guarantee scheme of up to 40bn EUR to cover losses incurred on future non-retailloans granted before 31 Dec 2020 to viable companies, with a tenor of maximum 12 months and a maximum interest rate of 1.25%. Guarantee covers 50% of losses above 3% of total credit losses and 80% above 5% of losses
As of 3Q, a revised state guarantee scheme of up to 10bn EUR has been offered to cover losses on future SME loans granted before 31 Dec 2020, with a tenor between 1 and 3 years and with a maximum interest rate of 2%. Guarantee covers 80% of all losses

The Czech-Moravian Guarantee and Development Bank (CZMRB) launched several guarantee programs (COVID II, COVID II Praha, COVID III) for working capital loans provided by commercial banks to non-retailclients. The loan amount is guaranteed up to 80% or 90% of the loan amount. Interest on these loans is subsidised up to 25% (COVID II)
The Export Guarantee and Insurance Corporation (EGAP) under its COVID Plus program offers guarantees on loans provided by commercial banks. EGAP guarantees 70% to 80% of the loan amount, depending on the rating of the debtor. The program is aimed at companies in which exports accounted for more than 20% of turnover in 2019

• A guarantee scheme is provided by

Garantiqa and the Hungarian Development

Bank. These state guarantees can cover up

to 90% of the loans with a maximum tenor

of 6 years

• Funding for growth scheme (launched by

MNB): a framework amount of 4.2bn EUR

for SMEs that can receive loans with a 20-

year tenor and a maximum interest rate of

2.5%

• Annual interest rate on personal loans

granted by commercial banks may not

exceed the central bank base rate by more

than 5pp (until 31 Dec 2020)

COVID-19(2/9)

Latest status of government & sector measures in each of our core countries

				Slovakia

payments			Opt-in: 9 months or 6 months (for leases)
			entrepreneurs
			Application period is still running (but most will
			end in 1Q 2021)
			•	Applicable for retail customers, SMEs and
of			• Deferral of principal and interest payments
		• Interest is accrued over the deferral period, but
Deferral
			the customer has the option of paying all

				interest at once after the moratorium or paying
				it on a linear basis. The latter option would
				result in an immaterial modification loss for the
				bank
			• Anti-CoronaGuarantee program offered by the
GuaranteeScheme &	liquidityassistance
	(guarantee of up to 80% for loans of 2-20m EUR).
				Slovak Investment Holding (SIH) and aimed at
				SMEs, consists of two components: (i) an 80%
				state guarantee with a 50% portfolio cap and (ii)
				the interest rate subsidy of up to 4% p.a.
			• In addition, financial aid in the form of the State
				guarantee schemes, with guaranteed fee subsidy
				can be provided by the (i) Slovak Investment
				Holding (guarantee of up to 90% % for loans < 2m
				EUR) and the (ii) Export-Import Bank of SR
				No portfolio cap is applied

Bulgaria

Opt-in: 6 months

(until 31 Mar 2021 at the latest)

Application period expired on 30 Sep 2020

Applicable for retail and non-retail customers
Deferral of principal with or without deferral of interest payments
In the case of principal deferral only, the tenor is extended by 6 months
Interest is accrued over the deferral period and is payable in 12 months (consumer and non-retail) or 60 months (mortgages) in equal instalments
0.4bn EUR of state guarantees
provided by the Bulgarian Development Bank to commercial banks. Of this amount, 0.1bn EUR is used to guarantee 100% of consumer loans, while 0.3bn EUR is planned to be used to guarantee 80% of non-retailloans

Ireland

Opt-in: 3 to 6 months

Application period expired on 30 Sep 2020

- Applicable for mortgage loans, consumer finance loans and business banking loans with a repayment schedule
- Deferral of principal and interest payments for up to 6 months (with review after 3 months) for mortgages & consumer finance and 3 months for business banking
- Option for customers to extend their loan term by up to 6 months to match the payment holiday
- Interest is accrued over the deferral period
The Irish authorities put substantial relief measures in place, amongst other measures, via the SBCI. KBC Bank Ireland is mainly focused on individual customers, therefore the relief programs for business customers are less relevant

COVID-19(3/9)

Overview of EBA compliant payment holidays and public Covid-19 guarantee schemes

By the end of September 2020:

The volume of granted loans with payment holidays, according to the EBA definitions, amounted to 13.7bn EUR or 9% of total loan book*
Approx. 1bn EUR of moratoria already expired, of which 97% have resumed payments
Government guaranteed loans granted (under Covid-19 scheme) for 583m EUR

Payment holidays - by country :

Status: 30 Sep 2020	Loan	#	% of total

	deferrals
	obligors	loan
	granted	k	portfolio
	EUR bn

KBC Group	13.7	198	9%
of which:
Belgium	7.7	25	7%
Czech Republic	2.1	22	7%
Hungary (opt-out)	1.7	128	37%
Slovakia	0.8	12	10%

Payment holidays - by segment :

Status: 30 Sep 2020	Loan	#	% of total
	deferrals
	obligors	loan
	granted	k	portfolio
	EUR bn

KBC Group	13.7	198	9%
of which:
Mortgages	4.5		7%
SME	4.3		13%
Corporate	4.2		10%

Payment holidays excl. Hungary** - by segment :

Status: 30 Sep 2020	Loan	#	% of total
	deferrals
	obligors	loan
	granted	k	portfolio
	EUR bn

KBC Group (excl. HU)	12.0	70	8%
of which:
Mortgages	4.0		6%
SME	3.6		11%
Corporate	3.9		9%

Bulgaria	0.2	5	7%
Ireland	1.2	6	12%

Hungary opt-out, a blanket moratorium applicable for retail and non-retail loans :

Deferral of principal and interest payments
Interest is accrued over the deferral period, but unpaid interest cannot be capitalised and must be collected on a linear basis during the remaining (extended) lifetime

Loans and advances under public Covid-19 guarantee schemes :

Status: 30 Sep 2020	Loans granted	# obligors
	EUR m	k
KBC Group	583	7
of which:
SME	261
Corporate	309

• Loans to customers, excluding reverse repos (and bonds)	20

COVID-19(4/9)

IFRS 9 scenarios

OPTIMISTIC SCENARIO	BASE-CASE SCENARIO	PESSIMISTIC
		SCENARIO

▪ The Covid-19 pandemic continues to be the main

driver of the global economy. The epidemiological

Virus spread and impact sufficiently under control thanks to continued social distancing and other precautionary measures, avoiding the need for another lockdown period

Steep and steady recovery from 3Q20 onwards with a fast return to pre-Covid-19 levels of activity

Sharp, short V-pattern

Virus spread and impact sufficiently under control thanks to continued and possibly intensified social distancing and other precautionary measures, avoiding the need for another full lockdown period

More moderate, but still steady recovery from 3Q20 onwards with a recovery to pre-Covid-19 levels of activity by the end of 2023

U-pattern

Virus reappears and continues to weigh on society and economy, necessitating on-off lockdown periods that have a significant impact on economic activity

Another (series of) shock(s) takes place, leading to an interrupted and unsteady path to recovery

More L-like pattern, with right leg only slowly increasing

developments are far from good. The number of

new Covid-19 cases are rapidly increasing in many countries. Because of this uncertainty, we continue working with three alternative scenarios: a base- case scenario, a more optimistic scenario and a more pessimistic scenario

The definition of each scenario reflects the latest virus-related and economic developments, while we continue to assign the same probabilities as in previous quarter: 45% for the base-case,40% for the pessimistic and 15% for the optimistic scenario

Macroeconomic scenarios*

September 2020

Real GDP growth		2020			2021			2022

	Optimistic	Base	Pessimistic	Optimistic	Base	Pessimistic	Optimistic	Base	Pessimistic

Euro area	-6.7%	-8.3%	-11.6%	8.7%	5.2%	-1.0%	2.9%	2.0%	2.2%
Belgium	-6.1%	-9.0%	-11.1%	9.1%	5.1%	-1.1%	2.9%	2.0%	2.0%
Czech Republic	-6.1%	-7.0%	-8.5%	6.2%	4.7%	1.3%	2.8%	3.0%	3.3%
Hungary	-3.0%	-6.2%	-12.0%	4.0%	5.0%	4.0%	3.5%	3.5%	3.5%
Slovakia	-6.5%	-8.0%	-9.5%	6.6%	6.1%	1.6%	4.5%	3.5%	3.8%
Bulgaria	-4.0%	-8.0%	-12.0%	4.0%	5.0%	4.0%	3.0%	3.0%	3.0%
Ireland	0.0%	-5.0%	-10.0%	5.0%	4.0%	1.0%	3.0%	3.5%	2.5%

For the euro area, we have revised GDP growth for 2020 upwards to -8.3% and, mechanically, this less negative outcome for 2020 translates into a downward revision of growth to 5.2% for 2021

•	The macroeconomic information is based on the economic situation in September 2020 and hence does not yet reflect	21
	the official macroeconomic figures for 3Q20 as reported by different authorities

COVID-19(5/9)

IFRS 9 scenarios

Macroeconomic scenarios

September 2020

Unemployment		2020			2021			2022
rate

	Optimistic	Base	Pessimistic	Optimistic	Base	Pessimistic	Optimistic	Base	Pessimistic

Belgium	6.6%	7.2%	7.8%	7.0%	7.6%	11.0%	6.0%	6.9%	9.5%
Czech Republic	4.3%	5.1%	6.1%	4.2%	5.4%	7.3%	3.5%	4.8%	6.8%
Hungary	4.8%	6.1%	7.5%	4.2%	5.6%	7.5%	4.0%	4.8%	6.5%
Slovakia	7.5%	9.0%	10.0%	8.0%	10.0%	12.0%	7.0%	8.0%	10.5%
Bulgaria	6.0%	8.0%	11.0%	4.3%	10.0%	13.0%	4.2%	7.0%	12.0%
Ireland	8.0%	11.0%	20.0%	6.0%	7.0%	16.0%	5.0%	6.0%	12.0%

House-price		2020			2021			2022
index

	Optimistic	Base	Pessimistic	Optimistic	Base	Pessimistic	Optimistic	Base	Pessimistic

Belgium	1.5%	-0.5%	-1.5%	1.0%	-3.0%	-6.0%	2.5%	1.0%	-2.0%
Czech Republic	5.3%	4.8%	3.5%	1.0%	-0.8%	-4.0%	4.1%	2.0%	-0.8%
Hungary	4.0%	2.0%	-7.5%	1.0%	-1.0%	-5.0%	3.1%	2.0%	-1.0%
Slovakia	6.5%	5.0%	2.0%	1.0%	-1.0%	-5.0%	3.0%	2.0%	-0.5%
Bulgaria	0.5%	-2.0%	-3.0%	1.0%	-1.0%	1.0%	3.0%	3.0%	1.5%
Ireland	-2.0%	-7.0%	-12.0%	4.0%	3.5%	0%	4.0%	3.5%	1.0%

COVID-19(6/9)

Steady staging of loan portfolio

Loan portfolio*:

(in billions of EUR)	YE19	1Q20	1H20	9M20
Portfolio outstanding	175	180	179	179
Retail	42%	40%	41%	42%
of which mortgages	38%	37%	38%	39%
of which consumer finance	3%	3%	3%	3%
SME	22%	21%	21%	22%
Corporate	37%	39%	38%	37%

Total loan portfolio by IFRS 9 ECL stage *

Stage 3	3.5%	3.3%	3.4%	3.2%

11.3%	10.7%	11.3%	11.4%
Stage 2

Stage 1	85.2%	86.0%	85.4%	85.4%

		FY19	1Q20	1H20	9M20

As disclosed during previous quarters, our Expected Credit Loss (ECL) models were not able to adequately reflect all the specificities of the Covid-19 crisis or the various government measures implemented in the different countries to support households, SMEs and Corporates through this crisis. Therefore, an expert-based calculation at portfolio level is required via a management overlay
In the first quarter, this calculation was limited to a certain number of (sub)sectors. In the second quarter, driven by significant uncertainties around the Covid-19 crisis, the scope of the management overlay was expanded to include all sectors of our corporate and SME portfolio as well as our retail portfolio
To be consistent with the second quarter, we recalculated the Covid-19ECL based on the same methodology used on the performing and non- performing portfolio by the end of September 2020 but including the latest economic scenarios
Until now, only minor PD shifts have been observed in our portfolio, which is reflected in stable staging percentages. Note that in line with ECB/ESMA/EBA guidance, any general government measure granted before the end of September 2020 has not led to automatic staging

• Aligned with the credit risk view of our loan portfolio as reported in the quarterly financial statements

COVID-19(7/9)

Impact of the collective Covid-19 ECL after 9M

Impairment on financial assets

at AC and at FVOCI

							121
1Q20			78		43
								845
2Q20			99	150		596
	-	3 -2			52
3Q20		57				1 018


9M20					234	147	637

Collective Covid-19 ECL = 784m

Impairments on financial assets at AC and at FVOCI without any COVID-19 impact Covid-19 impact already captured by ECL models

Management overlay

Credit Cost %	FY19	3M20	1H20	9M20
(annualized*)

Without collective COVID-19 ECL	0.12%	0.17%	0.20%	0.17%

With collective COVID-19 ECL		0.27%	0.64%	0.61%

* Collective Covid-19 ECL, not annualized

The updated assessment of the impact of Covid-19 on the performing and non-performing portfolio after 9M20 (see details in following slides), resulted in a total collective Covid-19ECL of
784m EUR (q-o-q release of 5m EUR) of which:
- a total management overlay of 637m EUR, with a -2m EUR release being booked in 3Q20
- the ECL models captured an impact of 147m EUR after 9M through the updated macroeconomic variables used in the calculation, resulting in a q-o-q release of -3m EUR
The total collective Covid-19 ECL of 784m EUR in 9M20 consists of 6% stage 1, 85% stage 2 and 9% stage 3 impairments
Including the collective Covid-19 ECL, the Credit Cost Ratio amounted to 0.61% in 9M20
We are reiterating our estimate for FY20 impairments (on financial assets at AC and at FVOCI) of roughly 1.1bn EUR as a result of the coronavirus pandemic. Depending on a number of events such as the length and depth of the economic downturn, the significant number of government measures in each of our core countries, and the unknown number of customers who will avail themselves of these mitigating measures, we estimate the FY20 impairments to range between roughly 0.8bn EUR (optimistic scenario) and roughly 1.6bn EUR (pessimistic scenario)

Amounts in m EUR

COVID-19(8/9)

Collective Covid-19 ECL in more detail : no major change in the classification of sector risk

SME & Corporate loan portfolio* of 104bn EUR broken down by sector sensitivity to Covid-19 :

Low		3.3%

36%				1.0%
		1.2%

			1.2%

		1.9%
	23% High	2.9%

	3.3%


41%		3.5%

Medium		4.7%

Sum of other sectors < 1% (incl. Aviation sector) Building & construction

Hotels, bars & restaurants Shipping (transportation) Metals

Commercial real-estate

Services

(entertainement, leisure & retirement homes)

Automotive

Distribution

(retail & wholesale)

No major change in the sector split between high- medium-low risk compared to the previous quarter.

Only minor reallocations of underlying activities from 'high' to 'medium' or even to 'low' risk. Also very limited shifts from 'medium' to 'high' risk, situated mainly in the following sectors:

9M20	Distribution	A minor share of activities related to the wholesale distribution of apparel was

moved into the 'high risk' category, adding to the already designated retail part (mainly retail fashion)

Composition of 'other sectors <1%' in more detail :

Services	Increase in 'high risk' category, driven by retirement homes mainly in Belgium
Metals	The activity related to the manufacture of metal structures, linked to the
	construction of non-residential buildings, was shifted into the 'high risk' category

Aviation sector

Exploration and production of oil, gas & other fuels

As in the second quarter, both sectors categorised as 'high risk', but with a limited share of 0.3% both

Building &	In the previous quarter, the entire portfolio was allocated to 'medium risk' due
construction	to the limited lockdown interruption as this was one of the first sectors to
	restart. In addition, the temporary unemployment cover provided by the Belgian
	government tempered the impact. Now, in the third quarter, a limited share of
	activities related to the construction of non- residential buildings was shifted into
	the 'high risk' category

• Aligned with the credit risk view of our loan portfolio as reported in the quarterly financial statements.

COVID-19(9/9)

Collective Covid-19 ECL in more detail : q-o-q release of 5m EUR

Collective Covid-19 ECL per country:

9M20	Performing portfolio impact	Non-	Total
	Optimistic	Base	Pessimistic	Probability	Performing	3Q20	2Q20	1Q20
	9M20
EUR m	15%	45%	40%	weighted	portfolio

KBC Group	471	621	908	714	70	784	-5	746	43
By country:
Belgium	300	366	450	390	20	410	-3	378	35
Czech Republic	95	143	198	158	9	167	9	152	6
Slovakia	23	30	50	37	0	37	-3	39	1
Hungary	24	38	82	54	0	54	-1	54	1
Bulgaria	7	16	25	18	5	23	-5	28	n/a
Ireland	22	28	103	57	36	93	-2	95	n/a

KBC Group

Section 3

3Q 2020 performance of business units

Business profile

BELGIUM	CZECH	SLOVAKIA	HUNGARY	BULGARIA	IRELAND
REPUBLIC

3Q20 NET RESULT (in million euros)	486m	116m	33m	51m	27m	13m
ALLOCATED CAPITAL (in billion euros)	7.0bn	1.7bn	0.6bn	0.8bn	0.4bn	0.6bn
LOANS (in billion euros)	104bn	28bn	8bn	5bn	3bn	10bn
DEPOSITS (in billion euros)	137bn	39bn	7bn	8bn	5bn	5bn
BRANCHES (end 3Q20)	507	221	117	208	176	16
Clients (end 3Q20)	3.7m	4.2m	0.6m	1.6m	1.4m	0.3m

GROUP CENTRE

-28m

0.2bn

Belgium BU (1): net result of 486m EUR

NET RESULT

Net result at the Belgium Business Unit amounted to 486m EUR in 3Q20

388 368

486

412

• The quarter under review was characterised by higher
net interest income, stable net fee and commission
income, lower dividend income, lower trading and fair
value income, lower net other income, an	excellent
combined ratio, lower sales of life insurance	products,

176

204

stable operating expenses and sharply lower

impairment charges q-o-q

• Customer deposits excluding debt certificates and

repos rose by 9% y-o-y, while customer loans increased

by 3% y-o-y

				-86
1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20

Amounts in m EUR

ORGANIC VOLUME TREND	Total loans**	o/w retail mortgages	Customer deposits***	AuM	Life reserves
Volume	104bn	38bn	137bn	188bn	26bn
Growth q-o-q*	0%	+2%	0%	+1%	0%
Growth y-o-y	+3%	+5%	+2%	-5%	-3%

* Non-annualised ** Loans to customers, excluding reverse repos (and bonds). Growth figures are excluding FX, consolidation adjustments, reclassifications and collective Covid-19 ECL

Customer deposits, including debt certificates but excluding repos. Customer deposit volumes excluding debt certificates & repos flat q-o-q and +9% y-o-y

Belgium BU (2): higher NII and stable NIM

								NII			Amounts in m EUR

625			637	634	640	635	673
621		14
						9			5
	13		7
	7		10
										120
			105	101	99	94
106
	101

511

510

519

526

532

536

539

1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20
NII - netted positive impact of ALM FX swaps*				NII - contribution of banking

NII - contribution of insurance

From all ALM FX swap desks
NIM is calculated excluding the dealing room and the net positive impact of ALM FX swaps & repos

Net interest income (673m EUR)
- Excluding the 26m EUR positive one-off in 3Q20 (in NII insurance), NII rose by 2% q-o-q and y-o-y due mainly to:
  o higher margins on new loan production than on outstanding portfolio in all segments
  o the positive impact of TLTRO3 (+16m EUR q-o-q) and of ECB deposit tiering (+9m EUR y-o-y)
  o higher netted positive impact of FX swaps partly offset by:
  o lower reinvestment yields

			NIM**				▪ Net interest margin (1.63%)
1.71%
1.67%	1.68%	1.68%	1.68%	1.63%	1.63%	• Stabilised q-o-q as higher margins on new loan production than


							on outstanding portfolio in all segments and the positive impact
							of TLTRO3 was offset by the negative impact of lower
							reinvestment yields and an increase of the interest-bearing
							assets (denominator)
							• Fell by 5 bps y-o-y due chiefly to the negative impact of lower
							reinvestment yields and an increase of the interest-bearing
							assets (denominator)

1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20

Credit margins in Belgium

PRODUCT SPREAD ON CUSTOMER LOAN BOOK, OUTSTANDING

1.3

1.2

1.1

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0.0

1Q15

2Q15

3Q15

4Q15

1Q16

2Q16

3Q16

4Q16

1Q17

2Q17

3Q17

4Q17

1Q18

2Q18

3Q18

4Q18

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

Customer loans

PRODUCT SPREAD ON NEW PRODUCTION

1.5

1.4

1.3

1.2

1.1

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

1Q15

2Q15

3Q15

4Q15

1Q16

2Q16

3Q16

4Q16

1Q17

2Q17

3Q17

4Q17

1Q18

2Q18

3Q18

4Q18

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

SME and corporate loans Mortgage loans

Belgium BU (3): stable net F&C income

F&C	Amounts in m EUR

286 293 297 307 308

271 271

342	343	353	366	354	321	326


-56	-51	-56	-58	-46	-50	-55
1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20
	F&C - contribution of insurance		F&C - contribution of banking

			AuM		Amounts in bn EUR
195	195	197	200	185	188
			178

Net fee and commission income (271m EUR)
- Stabilised q-o-q due mainly to:
  o higher management fees from mutual funds and unit- linked life insurance products
  o higher fees from payment services offset by:
  o lower securities-related fees (after two exceptionally strong quarters)
  o lower entry fees from unit-linked life insurance products
  o lower fees from credit files & bank guarantees
  o higher distribution costs due chiefly to higher commissions paid linked to mutual funds and increased non-life insurance sales
- Fell by 9% y-o-y driven chiefly by lower entry & management fees, lower fees from payment services and higher distribution costs, partly offset by higher securities-related fees
Assets under management (188bn EUR)
- Increased by 1% q-o-q due to a positive price effect (+1%)
- Decreased by 5% y-o-y as a result of net outflows (-2%) and a negative price effect (-2%)

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

Belgium BU (4): stable y-o-ynon-life sales, excellent combined ratio

Amounts in m EUR

NON-LIFE SALES (GROSS WRITTEN PREMIUM)

340		359

273	263	276	263
	247

Sales of non-life insurance products
- Stabilised y-o-y
- Premium growth mainly in classes 'Fire' and 'Motor comprehensive cover', offset by the negative impact of Covid-19 on 'Workmen's compensation' and on 'General third-party liability'

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

COMBINED RATIO (NON-LIFE)

93%	95%	92%	91%	89%

85%	83%

2019 2020

Combined ratio amounted to an excellent 83% in 9M20 (91% in 9M19). This is the result of 3% y-o-y premium growth combined with 16% y-o-y lower technical charges in 9M20. The latter was due mainly to lower normal claims in 9M20 (especially in Motor due to Covid-19) and a negative one-off in 9M19 (-16m EUR due to reassessment on claims provisions). However, note that 9M20 was impacted by a negative ceded reinsurance result (compared with a positive ceded reinsurance result in 9M19)

Belgium BU (5): lower life sales, good cross-selling ratios

Amounts in m EUR

LIFE SALES

						488
423
	362		380		206
			339	338
			319

267
	230	214	282	215	188

						282
157	132	105	98	124	151



1Q19		2Q19	3Q19	4Q19	1Q20	2Q20	3Q20
		Guaranteed interest products		Unit-linked products

MORTGAGE-RELATEDCROSS-SELLING RATIOS

90
85
80
75
70
65
60	63.7%
55	Property insurance	Life insurance

49.5%

Sales of life insurance products
- Decreased by 31% q-o-q, but increased by 6% y-o-y
- The q-o-q decrease was driven by both lower sales of unit-linked products (mainly due to less shifts from mutual funds to unit-linked products by Private Banking clients) and guaranteed interest products (due mainly to the seasonally lower sales of private pension products to self-employed people)
- The y-o-y increase was driven entirely by higher sales of unit-linked products (due to the shift from mutual funds to unit-linked products by Private Banking

clients), only partly offset by lower sales of guaranteed interest products (due mainly to the suspension of universal single life insurance products)

Guaranteed interest products and unit-linked products accounted for 55% and 45%, respectively, of life insurance sales in 3Q20

91.3%

82.6%

Mortgage-relatedcross-selling ratios
- 91.3% for property insurance
- 82.6% for life insurance

Belgium BU (6): lower FIFV and net other income

48 43 17

30		8
	19
-23	-1	-2

Amounts in m EUR

	FIFV		149
		89		49
					67
		46		74
	6		2
	22				42
	18				8
-18	-3	24	1	-4	30	16

-15

-9			-113

▪ The q-o-q decline in net gains from financial

instruments at fair value was attributable

mainly to the strong rebound in 2Q20:

• a negative change in market, credit and funding

value adjustments, although still a positive number

(mainly as a result of changes in the underlying

market value of the derivatives portfolio due to

decreasing counterparty credit spreads & KBC

-26-78

					-217
1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20

Dealing room & other income		M2M ALM derivatives
MVA/CVA/FVA				Net result on equity instruments (overlay insurance)

NET OTHER INCOME

50 51

3536

	funding spread, despite lower long-term interest
	rates)
•	lower dealing room income
•	a lower net result on equity instruments
	(insurance)

partly offset by:

• a positive change in ALM derivatives
Net other income amounted to 36m EUR in 3Q20

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

Belgium BU (7): stable opex and sharply lower impairments

Amounts in m EUR

OPERATING EXPENSES

807					828

273	575		289
	552	550	521
		4		520
						2
534	572		539
		519

Operating expenses: stable q-o-q and -6%y-o-y
- Operating expenses without bank taxes roughly stabilised q-o-q as seasonally higher marketing and facilities costs were fully offset by lower ICT costs and professional fees
- Operating expenses without bank taxes decreased by 6% y-o-y due chiefly to lower staff expenses, ICT costs, marketing and facilities cost
- Adjusted for specific items, the C/I ratio amounted to 55% in 3Q20 and 57% YTD (60% in FY19)
- Cost/income ratio: 47% in 3Q20 and 60% YTD

1Q2019

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

Bank tax Operating expenses

ASSET IMPAIRMENT

469

												378
									109	117
										0
83							2		35


		1		31				107		43

82
	21	81		80			2
	1
				30							44

													-3

	1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20
Other impairments		Impairments on financial assets at AC and FVOCI

Collective Covid-19 ECL

Loan loss impairments decreased to 41m EUR in 3Q20 (compared with 458m EUR in 2Q20), largely due to a 3m EUR reversal of collective Covid-19 ECL booked in 3Q20 versus 378m EUR collective Covid-19 ECL booked in 2Q20. Furthermore, 3Q20 was less impacted by several corporate files compared to 2Q20. Credit cost ratio amounted to 23 bps (22 bps in FY19) without collective Covid-19 ECL and 59 bps with collective Covid-19 ECL in 9M20
Impaired loans ratio improved to 2.2%, 1.2% of which over 90 days past due
Impairment of 2m EUR on 'other'

Net result at the Belgium BU

NET RESULT AT THE BELGIUM BU*

486

388 368 412

CONTRIBUTION OF BANKINGACTIVITIES TO

NET RESULT OF THE BELGIUM BU*

352

289 287 301

102

176

204

				-55
1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20

CONTRIBUTION OF INSURANCEACTIVITIES TO

NET RESULT OF THE BELGIUM BU*

				-86
1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20

Amounts in m EUR

Difference between net profit at the Belgium Business Unit and the sum of the banking and insurance contribution is accounted for by the rounding up or down of figures

												136	134
							111

				99	81						80	97
						70
74		37	47

21
55		69	68	65					74	64
									4
	-2			-7
			-34	-25		-32		-17	-28


							-3

								-30
1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20
				Non-Life result		Life result			Non-technical & taxes

Czech Republic BU

						NET RESULT		Amounts in m EUR
		248

							205
			82
177
		159

										116
		166					88	77


	1Q19	2Q19		3Q19	4Q19	1Q20	2Q20	3Q20
						One-off gain ČMSS

						NII & NIM		Amounts in m EUR
				329	338	351
302
	308

	3.25%	3.18%	2.93%	2.90%	2.98%
				235	220

									2.32%
									2.05%

Net result of 116m EUR in 3Q20

+46% q-o-q excluding FX effect due entirely to sharply lower impairments, partly offset by lower net interest income, sharply lower net results from financial instruments at fair value, lower insurance result and higher costs

Customer deposits (including debt certificates, but excluding repos) rose by 8% y-o-y, while customer loans rose by 2% y-o-y

Highlights

Net interest income
- -10%q-o-q and -31%y-o-y (both excl. FX effect)
- Q-o-qdecrease primarily due to the further negative impact of CNB rate cuts (from 2.25% early February to 0.25% early May 2020) and lower netted positive impact of ALM FX swap

▪

Net interest margin

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

• Fell by 27 bps q-o-q due mainly to the repo rate cut in May and an

NIM

NII

increase of the interest-bearing assets (denominator)

ORGANIC VOLUME TREND

Total loans **

o/w retail mortgages Customer deposits***

AuM

Life reserves

Volume

28bn

15bn

39bn

10.8bn

1.2bn

Growth q-o-q*

+2%

-3%

Growth y-o-y

+2%

+6%

+8%

+3%

-6%

* Non-annualised ** Loans to customers, excluding reverse repos (and bonds). Growth figures are excluding FX, consolidation adjustments, reclassifications and collective Covid-19 ECL

*** Customer deposits, including debt certificates but excluding repos.	38

Czech Republic BU

		F&C		Amounts in m EUR

	67	70

58		59	55		52
			51

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

CROSS-SELLING RATIOS

Mortg. & prop.

Mortg. & life risk Cons.fin. & life risk

59%	60%	61%			45%	54%	54%	48%
	48%	49%

2018	2019	9M20	2018	2019	9M20	2018	2019	9M20

Net F&C income
- Roughly stable q-o-q and -24%y-o-y (both excl. FX effect)
- The roughly stable q-o-q net F&C income was the result of higher network income, offset by lower securities-related fees
Assets under management
- 10.8bn EUR
- Flat q-o-q
- +3% y-o-y due to net inflows (+4%), partly offset by a negative price & FX effect (-1%)
Trading and fair value income
- 74m EUR lower q-o-q net results from financial instruments at fair value (FIFV) to 16m EUR due mainly to lower dealing room results and a negative q-o-q change in market, credit and funding value adjustments
Insurance
- Insurance premium income (gross earned premium): 128m EUR o Non-life premium income (78m EUR) +10% y-o-y excluding FX
  effect, due to growth in all products (except 'travel' due to Covid-19)
  o Life premium income (50m EUR) +11% q-o-q and -3%y-o-y, excluding FX effect. Q-o-q increase mainly in single life insurance products
- Combined ratio of 87% in 9M20 (94% in FY19)

Czech Republic BU

									OPERATING EXPENSES	Amounts in m EUR

																		221
204								200	41
						179	187		179
35

		1												164

169	178								181

			1Q19		2Q19	3Q19	4Q19		1Q20	2Q20	3Q20
											Bank tax		Operating expenses

											ASSET IMPAIRMENT	Amounts in m EUR
																				175
																				5
																				152
																					18
											9						9		3
						7								18	9
										3			1	6
									3							6
						4									1
			-2		0								1			2



			1
	-
			1Q19		2Q19	3Q19		4Q19		1Q20	2Q20	3Q20
Other impairments				Impairments on financial assets at AC and FVOCI

Collective Covid-19 ECL

Operating expenses
- 179m EUR; +7% q-o-q and -1%y-o-y, both excluding FX effect and bank taxes
  o Q-o-q increase was due mainly to higher staff expenses (largely due to reduced accrued variable remuneration in 2Q20 and wage inflation in 3Q20), higher professional fees and higher depreciation & amortisation
  o Y-o-y decrease was chiefly the result of lower staff expenses and lower marketing, travel & event costs
- Adjusted for specific items, C/I ratio amounted to roughly 58% in 3Q20 and 51% YTD (47% in FY19)
Loan loss and other impairment
- Loan loss impairments decreased q-o-q due mainly to:
  o much lower collective Covid-19 ECL (9m EUR in 3Q20 versus 152m EUR in 2Q20)
  o only 6m EUR 'impairments on financial asset at AC' (versus 18m EUR in 2Q20 due mainly to a few corporate files)
- Credit cost ratio amounted to 0.10% (0.04% in FY19) without collective Covid-19 ECL and 0.64% with collective Covid-19 ECL in 9M20
- Impaired loans ratio improved to 2.1%, 1.1% of which over 90 days past due
- Impairment of 3m EUR on 'other'

International Markets BU

									NET RESULT			Amounts in m EUR
															123
										119

	104					27								27
							85
70	29			2										13
	23

			9			50
13
						4									51

14													35
55		45
25
					10

										38	12		14			33
18			11		12						10		16
								4
														-70



																		-6


																	-45
1Q19		2Q19	3Q19	4Q19		1Q20	2Q20	3Q20
		Bulgaria				Ireland		Hungary	Slovakia

ORGANIC VOLUME TREND	Total loans **
Volume	26bn
Growth q-o-q*	+3%
Growth y-o-y	+7%

Net result of 123m EUR

Slovakia 33m EUR, Hungary 51m EUR, Bulgaria 27m EUR and Ireland 13m EUR

Highlights (q-o-q results)

Higher net interest income. NIM 2.61% in 3Q20 (+3 bps q-o-q and stable y-o-y)
Higher net fee and commission income
Higher result from financial instruments at fair value
An excellent combined ratio of 82% in 9M20
Higher non-life & life insurance sales
Higher costs
Small net loan loss impairment releases in 3Q20 compared with high loan loss impairment charges in 2Q20. 215m EUR collective Covid-19 impairments were booked in 2Q20, of which 11m EUR was reversed in 3Q20 (small impact from updated IFRS 9 macroeconomic variables and management overlay)

o/w retail mortgages	Customer deposits***	AuM	Life reserves
16bn	25bn	5.5bn	0.6bn
+2%	+3%	+1%	-2%
+6%	+11%	+16%	-5%

* Non-annualised ** Loans to customers, excluding reverse repos (and bonds). Growth figures are excluding FX, consolidation adjustments, reclassifications and collective Covid-19 ECL

*** Customer deposits, including debt certificates but excluding repos.

International Markets BU - Slovakia

NET RESULT	Amounts in m EUR
38
	33

11 12

					-6
1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20

ORGANIC	Total	o/w retail	Customer
VOLUME TREND	loans **	mortgages	deposits***
Volume	8bn	4bn	7bn
Growth q-o-q*	+2%	+4%	+9%
Growth y-o-y	+6%	+11%	+10%

Non-annualised

Loans to customers, excluding reverse repos (and bonds). Growth figures are excluding FX, consolidation adjustments, reclassifications and collective Covid-19 ECL
Customer deposits, including debt certificates but excluding repos.

Net result of 33m EUR

Highlights (q-o-q results)

Higher net interest income due mainly to loan volume growth
Slightly higher net fee & commission income as a result of higher payment-related fees
Lower result from financial instruments at fair value
Lower net other income
Excellent combined ratio (83% in 9M20)
Higher non-life and life insurance sales
Lower operating expenses due entirely to lower bank taxes
Net loan loss impairment releases in 3Q20 compared with high loan loss impairment charges in 2Q20 (due almost entirely to 39m EUR collective Covid-19 ECL). 3m EUR of the collective Covid-19 ECL was reversed in 3Q20. Credit cost ratio of 0.19% (0.14% in FY19) without collective Covid-19 ECL and 0.53% with collective Covid-19 ECL in 9M20

Volume trend

Total customer loans rose by 2% q-o-q and by 6% y-o-y, the latter due entirely to the increasing mortgage portfolio
Total customer deposits increased by 9% q-o-q and by 10% y-o-y (both due mainly to retail and SME deposits)

International Markets BU - Hungary

NET RESULT	Amounts in m EUR
55
50	51
45

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

ORGANIC	Total	o/w retail	Customer
VOLUME TREND	loans **	mortgages	deposits***
Volume	5bn	2bn	8bn
Growth q-o-q*	+6%	+4%	+2%
Growth y-o-y	+17%	+8%	+22%

Non-annualised

Loans to customers, excluding reverse repos (and bonds). Growth figures are excluding FX, consolidation adjustments, reclassifications and collective Covid-19 ECL
Customer deposits, including debt certificates but excluding repos.

Net result of 51m EUR

Highlights (q-o-q results)

Higher net interest income excluding FX effect due chiefly to loan volume growth
Stable net fee and commission income excluding FX effect due mainly to Covid-19
Higher net results from financial instruments at fair value
Excellent combined ratio (84% in 9M20)
Higher life insurance sales
Higher operating expenses excluding FX effect due largely to higher staff expenses and higher bank taxes, partly offset by lower professional fees
Net loan loss impairment releases in 3Q20 compared with high loan loss impairment charges in 2Q20 (due almost entirely to 54m EUR collective Covid-19 ECL). 1m EUR of the collective Covid-19 ECL was reversed in 3Q20. Credit cost ratio of -0.09%(-0.02% in FY19) without collective Covid-19 ECL and 0.89% with collective Covid-19 ECL in 9M20
Impairment of 5m EUR on 'other' (of which 4m EUR as the result of an impairment on a lease contract related to a HQ building)

Volume trend

Total customer loans rose by 6% q-o-q and by 17% y-o-y, the latter due mainly to corporate and consumer finance loans
Total customer deposits rose by +2% q-o-q and +22% y-o-y (the latter due to growth in all segments)

International Markets BU - Bulgaria

NET RESULT	Amounts in m EUR
29
27	27

	23
13	14

	10

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

ORGANIC	Total	o/w retail	Customer
VOLUME TREND	loans **	mortgages	deposits***
Volume	3bn	1bn	5bn
Growth q-o-q*	+3%	+4%	+4%
Growth y-o-y	+12%	+12%	+14%

Non-annualised

Loans to customers, excluding reverse repos (and bonds). Growth figures are excluding FX, consolidation adjustments, reclassifications and collective Covid-19 ECL
Customer deposits, including debt certificates but excluding repos.

Net result of 27m EUR

Highlights (q-o-q results)

Stable net interest income
Higher net fee and commission income driven mainly by higher fees from payment services
Excellent combined ratio at 79% in 9M20, positively influenced by slower pace of claims-level normalisation in 3Q20 (after exceptionally low claims level in 2Q20 driven by Covid-19)
Higher operating expenses due chiefly to higher staff and ICT costs
Sharply lower net loan loss impairment charges in 3Q20 (as 2Q20 was impacted by 28m EUR collective Covid-19 ECL). Credit cost ratio of 0.17% (0.14% in FY19) without collective Covid-19 ECL and 0.81% with collective Covid-19 ECL in 9M20

Volume trend:

Total customer loans +3% q-o-q and +12% y-o-y, the latter mainly due to corporates, SMEs and retail mortgages
Total customer loans: new bank portfolio +3% q-o-q and +16% y-o-y, while legacy -9%q-o-q and -28%y-o-y
Total customer deposits increased by 4% q-o-q and by 14% y-o-y (the latter due to growth in all segments)

International Markets BU - Ireland

14	NET RESULT		Amounts in m EUR
	12	13


	9

					-70
1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20

Net result of 13m EUR

Highlights (q-o-q results)

Higher net interest income due mainly to lower funding costs (due mainly to the positive impact of TLTRO3) and higher mortgage margins
Higher net results from financial instruments at fair value
Lower net other income due to an additional impact of the tracker mortgage review of -6m EUR (a.o. 18m EUR tracker mortgage fine, of which 14m EUR was already provisioned in 3Q19)
Higher expenses due to higher bank taxes
No additional net loan loss impairment charges in 3Q20 (as 2Q20 was impacted by 95m EUR collective Covid-19 ECL). Credit cost ratio of 0.02% (-0.32% in FY19) without collective Covid-19 ECL and 0.94% with collective Covid-19 ECL in 9M20

ORGANIC	Total	o/w retail	Customer
VOLUME TREND	loans **	mortgages	deposits***
Volume	10bn	10bn	5bn
Growth q-o-q*	+1%	+1%	-4%
Growth y-o-y	+2%	+2%	-5%

Non-annualised

Loans to customers, excluding reverse repos (and bonds). Growth figures are excluding FX, consolidation adjustments, reclassifications and collective Covid-19 ECL

*** Customer deposits, including debt certificates but excluding repos.

Volume trend

Total customer loans rose by 2% y-o-y driven by new production of fixed rate mortgages
Total customer deposits decreased by 4% q-o-q and by 5% y-o-y as the increase in retail deposits was more than offset by the deliberate decrease in expensive corporate and credit union deposits

Group Centre

NET RESULT

Amounts in m EUR

-26

-28

-33

				-43
1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20

Net result of -28m EUR

The net result for the Group Centre comprises the results from activities and/or decisions specifically made for group purposes (see table below for components)

Highlights (q-o-q results)

The small q-o-q deterioration was attributable mainly to:

lower net results from financial instruments at fair value due largely to a negative change in M2M ALM derivatives
higher costs
lower ceded reinsurance result

partly offset by:

higher net interest income due to the positive impact of TLTRO3 (+9m EUR q-o-q)

BREAKDOWN OF NET RESULT AT GROUP CENTRE	1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20

Group item (ongoing business)	2	-1	-12	-35	-46	-25	-24
Operating expenses of group activities	-18	-14	-14	-34	-15	-18	-20
Capital and treasury management	-3	-7	-9	-8	-11	-6	1
Holding of participations	-11	21	1	-2	-3	-1	2
Group Re	0	8	-3	11	7	3	3
Other	34	-9	12	-2	-25	-3	-10
Ongoing results of divestments and companies in run-down	4	5	12	2	3	-1	-4

Total	7	4	0	-33	-43	-26	-28

Amounts in m EUR

Overview of contribution of business units to 9M20 result

NET PROFIT - KBC GROUP

9M20 ROAC: 11%

Amounts in m EUR

								2,427	2,575	2,570	2,489
								462
								685		621	702


								1,742	2,113	1,948	1,787	902



								2016	2017		2018	2019	2020
												4Q			9M

	NET PROFIT - BELGIUM			NET PROFIT - CZECH REPUBLIC	NET PROFIT - INTERNATIONAL MARKETS
	1,575			9M20 ROAC: 12%										9M20 ROAC: 22%							9M20 ROAC: 7%

1,432	335		1,450	1,344										789
		361				702
439			412					654	205
						596	168								533
								170
																444	93
								131							428
																		74				379
																			139
	1,240	1,089		605									584	281						119
993			932				534		484						440
						465						370

																		289			260	113


2016	2017	2018	2019	2020		2016	2017		2018	2019	2020		2016	2017	2018	2019	2020
			4Q		9M							4Q				9M							4Q	9M

Balance sheet:

Loans and deposits continue to grow in all countries

11%

10%

Y-O-Y ORGANIC* VOLUME GROWTH

4%4%