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KBC Groep : KBC Group : Earnings statement KBC Group, 4Q 2012 and FY 2012

  KBC Groep : KBC Group : Earnings statement KBC Group, 4Q 2012 and FY 2012

This news  release  contains  information  that  is  subject  to  transparency 
regulations for listed companies.
Date of release: 14 February 2013, 7 a.m. CET.

Summary: further alignment with core strategy and good commercial results

KBC ended the  last three  months of  2012 with a  net profit  of 240  million 
euros, compared with a net profit of 531 million euros in the previous quarter
and 437 million euros  in the year-earlier quarter.  This means the group  has 
generated a total  net profit  of 612 million  euros for  the full-year  2012, 
compared with 13 million euros a year earlier.

After excluding all exceptional and non-operating items, KBC ended the  fourth 
quarter of 2012 with an underlying  net profit of 309 million euros,  compared 
with a net profit of 406 million euros in the previous quarter and 161 million
euros in  the  corresponding  quarter  of 2011.  The  underlying  results  for 
full-year 2012 amounted to 1 542 million euros, well above 1098million euros
in 2011.

Johan Thijs, Group CEO:



'The continued alignment  of the  group with its  core strategy  was the  main 
focus for  the  last  quarter  of 2012.  Besides  generating  good  commercial 
results, we made substantial progress  again in this quarter towards  bringing 
KBC into line with its  strategic objectives. Significant divestments, a  very 
successful strengthening of  our capital and  a large repayment  of state  aid 
were the main features of  the fourth quarter, a  period in which we  recorded 
underlying net profit of 309 million euros.



Our underlying result  was driven by  the good commercial  performance of  our 
strategic banking and insurance business model in our home markets in  Belgium 
and Central and  Eastern Europe.  Net interest  income held  firm despite  the 
current  challenging  low-yield  environment,  thanks  to  healthy  commercial 
margins and the lower funding cost of covered bonds, among other things.  Loan 
and deposit volumes grew considerably in our core markets. Fee income went  up 
significantly and  insurance  products sold  well,  particularly in  the  life 
insurance business. The combined ratio  was persistently low across the  year, 
but loan loss impairments in the quarter under review were slightly higher.



We also successfully carried outthe  merger of our Polish banking  subsidiary, 
Kredyt Bank, with Bank  Zachodni WBK. In addition,  we signed an agreement  to 
sell our Russian  banking subsidiary,  Absolut Bank,  to Blagosostoyanie,  the 
group that manages the assets of the second-largest non-state pension fund  in 
Russia. And we signed an agreement to fully exit NLB by selling our  remaining 
22% stake to the Republic of Slovenia. Consequently, we are now in a  position 
to focus further on our core activities.



We improved  our  already  strong  liquidity position,  as  illustrated  by  a 
loan-to-deposit ratio of 78% at the end of December. We have decided to  repay 
8.3 billion euros of the LTRO to the ECB, given that our group boasts a strong
retail and  corporate deposit  base  in our  core  markets and  our  wholesale 
funding needs for 2013 are well advanced.



In addition  to  the successful  placement  of  350 million  euros'  worth  of 
treasury shares at the beginning of the fourth quarter, an equally  successful 
placement of 59  million ordinary shares  at the beginning  of December  added 
gross cash proceeds of 1 250 million euros to our capital. At the beginning of
2013, we complemented these transactions with the issue of a tier-2 contingent
capital note for 1 billion US dollars that was eight times oversubscribed.



We repaid 3 billion euros of state aid plus paid a penalty of 15% (450 million
euros) to the Belgian Federal Government in December. We intend to  accelerate 
repayment of  1.17  billion  euros  of  state  aid  to  the  Flemish  Regional 
Government plus pay the accompanying penalty of 580 million euros in the first
half of  2013, subject  to the  customary  approval of  the National  Bank  of 
Belgium.



As a result, our tier-1 capital ratio  settled at 13.8% in the fourth  quarter 
of 2012. This ratio will amount to 14.6% on a pro forma basis when the effects
of the sale of our stake in Bank Zachodni WBK, the sale of our holding in Nova
Ljubljanska banka group and the sale of Absolut Bank are included. Our  common 
equity ratio under Basel III at the end of 2012 stood at 10.8% (fully loaded),
well above our goal to maintain a  target common equity ratio under Basel  III 
(fully loaded) of 10% as of 1 January 2013.



At the beginning of October, we  announced our updated strategy for the  group 
for 2013 and beyond and have restructured our organisation with effect from  1 
January 2013 to better  reflect this updated strategy.  Our goal is to  become 
more agile and efficient and thus more  competitive. In doing so, we will  not 
only adapt to  changing client  behaviour but  will also  meet the  legitimate 
expectations from  society  as  a  whole,  to  the  benefit  of  our  clients, 
employees, shareholders and other stakeholders alike.



Over the whole of  2012, KBC generated  a profit of 612  million euros. On  an 
underlying basis, this  figure stood at  an even higher  1 542 million  euros. 
When taking into account the repayment  penalty of 450 million euros, paid  to 
the Belgian State, and the coupon of 543 million euros, to be paid on the core
capital securities  sold to  the Belgian  State and  the Flemish  Region,  our 
underlying earnings per share comes to 1.57 euros, while reported earnings per
share amounts  to  -1.09  euros.  Given our  strong  solvency  position  -  as 
reflected in our tier-1 capital ratio of 13.8% - we will propose to the Annual
General Meeting of Shareholders that a dividend of 1.00 euro per share be paid
this year.



We also intend not to pay a dividend next year, which means no coupon will  be 
paid to  the  Flemish Regional  Government  either. Taking  all  factors  into 
account, the  return the  Flemish  Region will  receive  on the  core  capital 
securities will remain higher than 10% per year. As mentioned above, we  still 
intend to accelerate  repayment of  1167 million euros  of state  aid to  the 
Flemish Regional Government plus pay  the accompanying premium of  583million 
euros in the  first half of  2013, subject  to the customary  approval of  the 
National Bank of Belgium. '

Main exceptional and non-operating items impacting the reported IFRS result
for 4Q2012:

A number of exceptional items were excluded from the underlying results. Their
combined impact  in 4Q2012  amounted to  -0.1billion euros.  Apart from  some 
smaller items, the main non-operating items  in 4Q2012 were a negative  amount 
of 0.1 billion euros  for a marked-to-market adjustment  in relation to  KBC's 
own credit risk, a  positive amount of 0.1  billion euros attributable to  the 
Kredyt Bank divestment file  and a negative amount  of 0.1 billion euros  from 
the sale of our stake in the Nova Ljubljanska banka group.

Financial highlights for 4Q2012 compared to 3Q2012:

  *Continued good underlying net group profit through strong commercial
    franchise. 

  *Stable net interest income.

  *Good growth in loan and deposit volumes in our core markets.

  *Healthy combined ratio at 95% year-to-date.

  *Robust sales of unit-linked life insurance products.

  *Increased net fee and commission income, up by 4%.

  *Solid gains from financial instruments at fair value.

  *Underlying cost/income ratio at 57% year-to-date.

  *Credit cost ratio at a satisfactory 0.71% year-to-date. Excluding Ireland,
    this ratio stands at 0.39%. 

  *Consistently strong liquidity position with a solid loan-to-deposit ratio
    of 78%.

  *Solvency: strong capital base: pro forma tier-1 ratio - including the
    effect of divestments which have been signed, but not yet closed - at
    14.6% (with a core tier-1 ratio of 12.5%). Basel III common equity ratio
    (fully loaded) well above the 10% target.

Overview                        4Q2011    3Q2012    4Q2012    Cumul.    Cumul.
KBC Group (consolidated)                                      FY2011    FY2012
Net result, IFRS (in               437       531       240        13       612
millions of EUR)
Basic earnings per share,         0.63      1.16     -0.97     -1.93     -1.09
IFRS (in EUR)^1
Underlying net result (in          161       406       309     1 098     1 542
millions of EUR)
Underlying basic earnings        -0.19      0.79     -0.84      1.26      1.57
per share (in EUR)^1
Breakdown of underlying net
result per business unit
(in millions of EUR)
     Belgium                  251       290       237       802     1 019
     Central & Eastern         98       169       146       327       621
Europe
     Merchant Banking        -153        10        -7      -110       -19
     Group Centre             -35       -64       -67        79       -78
Parent shareholders' equity
per share (in EUR, end of         28.7      31.3      29.0      28.7      29.0
period)
The IFRS and underlying income statement summary tables are provided below in
this earnings statement.
1 Note: If a coupon is expected to be paid on the core-capital securities sold
to the Belgian Federal and Flemish Regional governments, it will be deducted
from the numerator (pro rata). If a penalty has to be paid, it will likewise
be deducted.

Underlying results
Highlights of 4Q2012 (excluding exceptional and non-operating items)

In addition to  the figures  according to  IFRS (next  section), KBC  provides 
'underlying'  figures  aimed  at  giving   more  insight  into  the   business 
performance. The differences with the IFRS figures relate to the exclusion  of 
exceptional or non-operating  items and a  different accounting treatment  for 
certain hedging results and capital-market income.
A full explanation of the differences between the IFRS and underlying  figures 
is  provided  in  the  'Consolidated  financial  statements'  section  of  the 
quarterly report, under 'Notes on  segment reporting'. A reconciliation  table 
for the net result is provided below.

Consolidated income                                              Cumul  Cumul
statement,                                                      FY2011 FY2012
underlying
KBC Group (in          1Q   2Q    3Q    4Q   1Q   2Q   3Q    4Q
millions of EUR)     2011 2011  2011  2011 2012 2012 2012  2012
Net interest income 1 374    1 1 342 1 298    1    1    1 1 086  5 404  4 534
                           390              211  150  087
Earned premiums,
insurance (before   1 141  975   972 1 033  884  890  578   623  4 122  2 975
reinsurance)
Technical charges,     -1
insurance (before     016 -843  -817  -880 -752 -757 -499  -584 -3 556 -2 593
reinsurance)
Ceded reinsurance     -17   -8   -18    -1  -14   -1  -12    13    -44    -13
result
Dividend income         8   37    14    15    5   21   10     5     74     41
Net result from
financial
instruments at fair   259  102    10   138  326  113  256   222    509    917
value through
profit or loss
Net realised result
from                   53   42    11    85   31    6   57    55    191    150
available-for-sale
assets
Net fee and           399  394   367   374  306  310  349   363  1 535  1 328
commission income
Other net income       73   72  -210    12   -8   53   74    89    -52    209
Total income        2 274    2 1 673 2 075    1    1    1 1 873  8 182  7 549
                           161              989  786  900
Operating expenses     -1   -1    -1    -1   -1  - 1 -990    -1 -4 686 -4 184
                      227  155   172   133  110  016        068
Impairment          - 105 -333  -740  -730 -271 -241 -305  -378 -1 909 -1 195
  on loans and     -97 -164  -475  -599 -261 -198 -283  -329 -1 335 -1 072
receivables
  on
available-for-sale     -6 -135  -228   -85   -5  -24   -4    -4   -453    -37
assets
  on goodwill        0    0     0     0    0    0    0     0      0      0
  on other          -2  -35   -38   -46   -5  -18  -18   -45   -121    -86
Share in results of
associated              1    0   -23   -35   -9   -9  -13     1    -57    -31
companies
Result before tax     943  673  -262   177  599  520  592   428  1 530  2 139
Income tax expense  - 271 -138    22    -9 -136 -144 -177  -110   -397   -567
Result after tax      671  534  -240   167  463  376  415   317  1 133  1 572
  attributable
to minority            14    6     8     7    7    5    9     9     35     30
interests
  attributable
to equity holders     658  528  -248   161  455  372  406   309  1 098  1 542
of the parent
     Belgium     280  238    32   251  266  226  290   237    802  1 019
     Central &   123  146   -40    98  118  188  169   146    327    621
Eastern Europe
     Merchant    177   63  -196  -153   42  -65   10    -7   -110    -19
Banking
     Group        77   81   -44   -35   30   23  -64   -67     79    -78
Centre
Basic earnings per   1.50 1.11 -1.17 -0.19 0.93 0.69 0.79 -0.84   1.26   1.57
share (EUR)
Diluted earnings     1.50 1.11 -1.17 -0.19 0.93 0.69 0.79 -0.84   1.26   1.57
per share (EUR)
Reconciliation of
underlying and IFRS
result
KBC Group (in          1Q   2Q    3Q    4Q   1Q   2Q   3Q   4Q   Cumul   Cumul
millions of EUR)     2011 2011  2011  2011 2012 2012 2012 2012  FY2011 FY2012
Result after tax,
attributable to
equity holders of     658  528  -248   161  455  372  406  309   1 098   1 542
the parent:
UNDERLYING
+ MTM of
derivatives for ALM    96  -77  -245   -46   45  -29  -33  -30    -273     -46
hedging
+ gains/losses on     114 -108  -628   154  149  -32  274   40    -468     431
CDOs
+ impairment on         0  -17   -57   -41    0  -16    0   -8    -115     -24
goodwill
+ result on legacy
structured             14   43     5   -12  -11   -7    6    7      50      -6
derivative business
(KBC FP)
+ MTM of own debt     -16  -25   185   215 -340   41 -144  -87     359    -531
issued
+ results on          -45  -12  -591     8   81 -868   23   10    -640    -754
divestments
Result after tax,
attributable to       821  333    -1   437  380 -539  531  240      13     612
equity holders of                579
the parent: IFRS

The underlying net result for the quarter under review amounted to 309 million
euros, compared to 406 million euros in 3Q2012 and 161 million euros in
4Q2011.

Gross income stable quarter-on-quarter.

  *Underlying net interest  income stood  at 1  086 million  euros, the  same 
    level as the previous quarter and down 16% year-on-year. The  year-on-year 
    performance was impacted partly by the deconsolidation of KBL epb,  Warta, 
    Zagiel and Fidea. Leaving these items out, net interest income was down by
    10% year-on-year. This was  due primarily to the  lower income from  asset 
    and liability management, while  commercial margins remained healthy.  The 
    net interest margin came  to 1.77% for the  quarter under review, 3  basis 
    points higher than in the previous  quarter but 18 basis points less  than 
    the high  level of  a year  earlier. In  the Belgium  Business Unit,  both 
    deposit and  loan  volumes  were up  quarter-on-quarter  and  year-on-year 
    (loans:  +5%  year-on-year  and  +1%  quarter-on-quarter;  deposits:   +5% 
    year-on-year and 1% quarter-on-quarter). The loan book in the CEE Business
    Unit increased by  4% year-on-year  (attributable to  the Czech  Republic, 
    Slovakia and Bulgaria) and by  1% quarter-on-quarter, while deposits  rose 
    by 2% year-on-year and  3% quarter-on-quarter. The  loan portfolio in  the 
    Merchant Banking Business Unit was down 6% year-on-year (mainly in Western
    Europe and the US) and 2% quarter-on-quarter, while the deposit base  grew 
    by 23%  year-on-year,  after a  sharp  contraction  in 4Q2011  and  by  2% 
    quarter-on-quarter.

  *Both the  life  and  non-life insurance  businesses  had  good  commercial 
    results during the quarter under  review. In total, gross earned  premiums 
    less gross technical charges and the  ceded reinsurance result came to  52 
    million euros, down 22% quarter-on-quarter and 66% year-on-year.  However, 
    when account is taken  of the deconsolidation of  Fidea, VITIS and  Warta, 
    this result was 42% less  than the year-earlier figure. This  year-on-year 
    effect was caused by technical elements.

The non-life  segment was  characterised by  a good  level of  premiums but  a 
relatively high  level of  claims due  to bad  weather conditions  as well  as 
technical elements like the introduction  of new indicative tables for  bodily 
injury claims, leading to  a high figure for  technical charges. The  combined 
ratio for the year came to a good 95%.

In the  life segment,  and on  a  comparable basis,  sales of  life  insurance 
products rose  by 29%  quarter-on-quarter, due  to a  very successful  savings 
campaign in the fourth quarter. Year-on-year,  these sales rose by as much  as 
49%.

It should  be noted  that the  insurance  results were  also impacted  by  low 
investment income but benefitted from strict control of general administrative
expenses.

  *The net result from  financial instruments at fair  value amounted to  222 
    million euros in the quarter under review, down on the exceptionally  high 
    figure for the previous quarter  but substantially up on the  year-earlier 
    figure. 

  *Net realised  gains from  available-for-sale assets  stood at  55  million 
    euros for the quarter  under review, similar to  the previous quarter  but 
    well above the 45-million-euro  average for the  last four quarters.  This 
    item was impacted mostly by gains on the sale of bonds.

  *Net fee  and  commission income  amounted  to  363 million  euros,  up  4% 
    quarter-on-quarter but down 3% year-on-year. The year-on-year  performance 
    was impacted partly by the deconsolidation  of KBL epb, Warta, Zagiel  and 
    Fidea. Leaving these items out, income  was up by 8% year-on-year.  Assets 
    under management stood  at 155 billion  euros, up 4%  on the  year-earlier 
    figure, due to a positive  investment performance, but flat compared  with 
    the figure for the third quarter of 2012.

  *Other net income came to 89 million  euros, 41 million euros of which  was 
    recovered with respect to the KBC Lease UK fraud case.

Operating expenses impacted by year-end effects.

  *Operating expenses came  to 1  068 million euros  in the  last quarter  of 
    2012, up 8% on their  level in the previous quarter  and down 6% on  their 
    year-earlier level. The year-on-year performance was accounted for  partly 
    by the  deconsolidation of  KBLepb, Warta,  Zagiel and  Fidea.  Excluding 
    deconsolidated companies, underlying  costs increased by  10% compared  to 
    the previous year.  Higher marketing expenses  and restructuring  charges, 
    primarily in  Central and  Eastern Europe,  were the  main causes  of  the 
    quarterly increase.  The  year-on-year  comparison  is  distorted  by  the 
    recovery of  55 million  euros of  the bank  tax in  Hungary in  the  last 
    quarter of 2011. The year-to-date cost/income  ratio came to 57%, a  clear 
    indication that costs remain well under control.

Credit cost ratios up; loan loss provisions for Merchant Banking Business Unit
sizeable.

  *Loan loss impairment stood at 329 million euros in the last quarter, up on
    the 283 million euros  recorded in the previous  quarter, but down on  the 
    599 million  euros  recorded a  year  earlier. The  quarterly  figure  was 
    accounted for by the  fact that loan loss  impairment of 87 million  euros 
    was recorded at  KBC Bank  Ireland, as  well as  96 million  euros at  the 
    Merchant Banking Business  Unit excluding Ireland.  The annualised  credit 
    cost ratio stood at 0.71% for 2012. This breaks down into a low 0.11%  for 
    the Belgian retail book (compared to  0.10% for FY2011), 0.40% in  Central 
    and Eastern Europe (down from 1.59%  for FY2011, which had been  adversely 
    affected  by  Hungary  and  Bulgaria)  and  1.42%  for  Merchant   Banking 
    (marginally up from 1.36% for FY2011). Excluding Ireland, the credit  cost 
    ratio for Merchant Banking stood at 0.48% (down from 0.59% for FY2011).

  *Impairment charges on  available-for-sale assets came  to 4 million  euros 
    and other impairment charges amounted  to 45million euros in the  quarter 
    under review. 

Strong solvency capital position under Basel II.

  *The group's tier-1 ratio (under  Basel II) stood at  a strong 13.8% at  31 
    December 2012 (core tier-1  ratio of 11.7%). Including  the effect of  the 
    sale of the stake  in Bank Zachodni  WBK, the sale of  the holding in  the 
    Nova Ljubljanska banka group and the  sale of Absolut Bank, the pro  forma 
    tier-1 ratio was as high as 14.6% (core tier-1 ratio of 12.5%).

  *The solvency ratio  for KBC  Insurance stood at  an excellent  322% at  31 
    December 2012, down  from a  very high  365% at  the end  of the  previous 
    quarter. 

  *The common equity  ratio under the  current Basel III  framework stood  at 
    10.8% (fully loaded, including the aid from the Flemish Region) at the end
    of 2012, well above  the targeted common equity  ratio of 10% under  Basel 
    III (fully loaded).

Highlights of underlying performance per business unit.

  *The Belgium  Business Unit  contributed  237 million  euros to  profit  in 
    4Q2012, compared to 290 million euros in the previous quarter. The quarter
    was characterised by increased net interest income due to good  commercial 
    margins, good insurance sales but a challenging combined ratio due largely
    to technical elements,  increased fee income  and a higher  level of  loan 
    impairment. Operating expenses were up  for seasonal reasons but  remained 
    very well under control. 

  *The CEE Business  Unit (Czech  Republic, Slovakia,  Hungary and  Bulgaria) 
    posted a profit of  146 million euros in  4Q2012, compared to 169  million 
    euros in  the  previous  quarter,  driven partly  by  a  higher  level  of 
    operating expenses  and a  somewhat lower  net interest  income.  Overall, 
    impairment levels in the fourth quarter remained low.

  *The Merchant Banking Business Unit recorded  a loss of 7 million euros  in 
    4Q2012, compared to a profit of 10 million euros in 3Q2012. The result was
    impacted by  an  increased  level  of loan  impairment  in  the  corporate 
    branches. In Ireland,  impairment charges  amounted to  87 million  euros, 
    down 33% on the previous quarter. The respectable dealing room results and
    a recovery  of  an amount  related  to the  fraud  case at  KBC  Lease  UK 
    contributed substantially to the gross income. Excluding KBC Bank Ireland,
    net profit for  the Merchant Banking  Business Unit in  4Q2012 would  have 
    been 53 million euros.

  *It should be noted that all planned  divestments in the KBC group are  not 
    included in the respective business units, but have been grouped  together 
    in the Group Centre in order to clearly state the financial performance of
    the long-term  activities  and  the  planned  divestments  separately.  In 
    4Q2012, the Group Centre's net result came to a negative 67 million euros,
    compared to -64  million euros in  the previous quarter.  This result  was 
    driven largely  by the  impairments in  a  small number  of files  in  the 
    project finance portfolio of  KBC Finance Ireland as  well as at KBC  Bank 
    Deutschland.

Exceptional and non operating items.

A number of exceptional items were excluded from the underlying results. Their
combined impact  in 4Q2012  amounted to  -0.1billion euros.  Apart from  some 
smaller items, the main non-operating items  in 4Q2012 were a negative  amount 
of 0.1 billion euros  for a marked-to-market adjustment  in relation to  KBC's 
own credit risk, a positive amount of 0.1 billion euros income from the Kredyt
Bank divestment file and a negative amount of 0.1 billion euros from the  sale 
of the group's stake in the Nova Ljubljanska banka group.

IFRS result
Highlights of FY2012

A full overview of the IFRS consolidated income statement and balance sheet is
provided in the 'Consolidated Financial Statements' section of this  quarterly 
report. Condensed statements of comprehensive income, changes in shareholders'
equity, and cash  flow, as well  as several  notes to the  accounts, are  also 
available in the same  section. In order  to provide a  good insight into  the 
underlying business performance, KBC  also publishes its 'underlying'  results 
(see above).

Consolidated income
statement, IFRS
KBC Group (in          1Q    2Q    3Q   4Q   1Q    2Q   3Q    4Q  Cumul  Cumul
millions of EUR)     2011  2011  2011 2011 2012  2012 2012  2012 FY2011 FY2012
Net interest income 1 395 1 406 1 341    1    1 1 190    1 1 121  5 479  4 669
                                       337  261        097
  Interest       3 047 3 195 2 910    2    2 2 563    2 2 382 11 883 10 134
income                                 732  695        493
  Interest          -1    -1   - 1   -1   -1    -1   -1    -1 -6 404 -5 465
expense               651   789   569  395  434   374  396   261
Earned premiums,                         1
insurance (before   1 141   974   972  033  884   890  578   623  4 119  2 975
reinsurance)
Technical charges,     -1
insurance (before     012  -840  -812 -877 -752 - 757 -499  -584 -3 541 -2 593
reinsurance)
Ceded reinsurance     -17    -8   -18   -1  -14    -1  -12    13    -44    -13
result
Dividend income        12    41    17   15    6    21   13     5     85     45
Net result from
financial
instruments at fair   472  -194  -892  436   60    43  275    42   -178    420
value through
profit or loss
Net realised result
from                   34    42    10   83   32     9   56    85    169    181
available-for-sale
assets
Net fee and           300   297   281  287  304   309  343   360  1 164  1 315
commission income
  Fee and          518   530   480  514  492   479  494   541  2 043  2 005
commission income
  Fee and         -218  -233  -200 -227 -188  -170 -151  -181   -878   -690
commission expense
Other net income       92   110  -149    3   73   368  106   187     56    734
Total income        2 416 1 829   749    2    1 2 072    1 1 854  7 310  7 733
                                       317  853        954
Operating expenses     -1    -1  -1    -1    -1    -1   -1    -1 -4 344 -4 248
                      143   081  077  043   132   033  003   081
Impairment           -105  -332  -940 -746 -273    -1 -302  -463 -2 123 -2 511
                                                  473
  on loans and     -97  -164  -473 -599 -261  -198 -283  -330 -1 333 -1 072
receivables
  on
available-for-sale     -6  -118  -223  -71   -5   -75   -4   -11   -417    -95
assets
  on goodwill        0   -17   -62  -41    0  -414    0    -8   -120   -421
  on other          -2   -33  -183  -35   -7  -786  -15  -114   -253   -923
Share in results of
associated              1     0   -23  -35   -9    17   -6     1    -58      2
companies
Result before tax   1 170   416    -1  492  439  -417  644   310    786    976
                                  292
Income tax expense   -334   -76   165  -75  -93  -110 -103   -56   -320   -362
Net post-tax result
from discontinued       0     0  -445   26   40    -8    0    -6   -419     27
operations
Result after tax      835   340  -1    443  387  -535  540   249     47    641
                                 571
   attributable
to minority            14     6     8    6    7     5    9     9     34     29
interests
  attributable                  -1
to equity holders     821   333   579  437  380  -539  531   240     13    612
of the parent
     Belgium     385   158  -348  226  489   204  321   286    421  1 300
     Central &   141   145   -91   94  119   171  182   119    289    591
Eastern Europe
     Merchant    203    69  -255 -225   17   -65   -8   -58   -208   -114
Banking
     Group        92   -39  -885  342 -246  -849   37  -107   -489 -1 165
Centre
Basic earnings per   1.98  0.54 -5.08 0.63 0.71 -1.99 1.16 -0.97  -1.93  -1.09
share (EUR)
Diluted earnings     1.98  0.54 -5.08 0.63 0.71 -1.99 1.16 -0.97  -1.93  -1.09
per share (EUR)







IFRS net result for 2012 at 612 million euros, compared to 13 million euros  a 
year earlier.

  *Net interest income  amounted to 4  669 million euros,  compared to 5  479 
    million euros a  year earlier.  The decline  was caused  primarily by  the 
    deconsolidation  of  KBL   epb,  Warta,   Zagiel  and   Fidea  and   lower 
    re-investment yields. Year-on-year, loan volumes grew overall by 1%: 5% in
    Belgium, 4%  in  Central Europe  and  -6% in  Merchant  Banking.  Customer 
    deposits expanded by 9%: 5% in Belgium,  2% in Central Europe, and 23%  at 
    Merchant Banking, after  a sharp contraction  in 4Q2011. The  year-to-date 
    net interest margin shrunk to 1.81%,  16 basis points lower than the  high 
    figure a year ago.

  *Gross  earned  premiums  less  gross  technical  charges  and  the   ceded 
    reinsurance result  came  to 369  million  euros, down  31%  year-on-year, 
    primarily because of the deconsolidation of VITIS, Warta and Fidea. 

For the non-life activities, the year-to-date combined ratio came to a  strong 
95%, slightly up on the 92% for FY2011 due largely to technical items. For the
life activities  and on  a  comparable basis,  there  was a  16%  year-on-year 
increase in the  sale of life  insurance products (thanks  to higher sales  of 
unit-linked products). It should be noted that the insurance results were also
affected  by  investment   income  and   charges,  as  well   as  by   general 
administrative expenses. Investment income, in particular, was lower for  both 
the life and  non-life businesses  compared to  the previous  quarter and  the 
year-earlier quarter.

  *Net fee and commission income amounted to 1 315 million euros in 2012,  up 
    13% on its level a year ago, thanks, inter alia, to the successful sale of
    unit-linked products. Assets under management stood at 155 billion  euros, 
    up  4%  on  the  year-earlier   figure,  due  to  a  positive   investment 
    performance. 

  *The net result from financial instruments at fair value (trading and  fair 
    value income) came to  420 million euros in  2012, compared to a  negative 
    178 million euros a year earlier.  On an underlying basis (i.e.  excluding 
    exceptional items such  as value  adjustments to  structured credit,  fair 
    valuing of the  group's own  debt and after  shifting all  trading-related 
    income items to this heading), trading  and fair value income amounted  to 
    917 million  euros on  31 December  2012, almost  double the  year-earlier 
    figure, due to the  very good performance turned  in by the dealing  room, 
    especially in the first quarter, and the positive credit value adjustments
    in the third quarter. 

  *The remaining  income components  were as  follows: dividend  income  from 
    equity investments amounted to 45  million euros, the net realised  result 
    from available-for-sale assets  (bonds and  shares) stood  at 181  million 
    euros and  other net  income  totalled 734  million euros,  accounted  for 
    primarily by the capital gain realised on the closure of the sale of Warta
    in the second quarter. 

  *Operating expenses amounted to 4 248 million euros in 2012, 2% lower  than 
    the year-earlier figure. This was caused by the divestments, but offset by
    such factors as  inflation, wage  indexation and  a higher  bank tax.  The 
    underlying cost/income ratio for banking - a measure of cost efficiency  - 
    stood at  57% at  the end  of December  2012, an  improvement on  the  60% 
    recorded for FY2011.

  *Total impairment stood  at 2  511 million  euros for  2012. Impairment  on 
    loans and receivables amounted to 1 072 million euros, substantially lower
    than the 1 333 million euros recorded in 2011. As a result, the annualised
    credit cost ratio for 2012 came to 0.71%, an improvement on the figure  of 
    0.82% for  FY2011. Impairment  on available-for-sale  assets stood  at  95 
    million euros. Impairment on goodwill totalled 421 million euros and other
    impairment charges 923 million euros.  Impairment charges on goodwill  and 
    other impairment charges were both caused by the planned divestment  files 
    (primarily NLB, Absolut Bank, Antwerp Diamond Bank, KBC Banka and KBC Bank
    Deutschland) and were recorded in the second quarter.

  *Income tax amounted to 362 million euros for FY2012. 

  *At year-end  2012, total  equity came  to 16.0  billion euros  - down  0.8 
    billion euros on its level  at the start of the  year - due mainly to  the 
    repayment of 3.0 billion  euros (plus a penalty  of 0.5 billion euros)  of 
    non-voting core  capital  securities  subscribed by  the  Belgian  Federal 
    Government and  the deduction  of the  coupon on  non-voting core  capital 
    securities  subscribed  by  the  Belgian  Federal  and  Flemish   Regional 
    governments (-0.6 billion  euros). These  outflows were  mitigated by  the 
    inclusion of  net profit  for 2012  (0.6 billion  euros), the  substantial 
    change in the available-for-sale revaluation reserve (1.4 billion  euros), 
    and the capital increase through the sale of treasury shares and issue  of 
    new shares (1.6 billion euros combined). The remaining items include  cash 
    flow hedges and translation differences. The group's tier-1 capital  ratio 
    - a measure of financial strength - stood at a sound 13.8% at 31  December 
    2012. This  ratio will  amount to  14.6% on  a pro  forma basis  when  the 
    effects of the sale  of the stake  in Bank Zachodni WBK,  the sale of  the 
    holding in NLB and sale of Absolut Bank are included.

Selected balance sheet data

Highlights of
consolidated
balance sheet 31-03-2011 30-06-2011 30-09-2011 31-12-2011 31-03-2012 30-06-2012 30-09-2012 31-12-2012
KBC Group (in
millions of
EUR)
Total assets     322 493    312 899    305 109    285 382    290 635    285 848    270 010    256 886
Loans and
advances to      147 625    143 182    143 451    138 284    135 980    133 326    131 048    128 492
customers*
Securities
(equity and       88 839     85 144     74 062     65 036     65 853     64 227     65 171     67 295
debt
instruments)*
Deposits from
customers and    192 412    188 116    184 453    165 226    166 551    163 685    160 945    159 632
debt
certificates*
Technical
provisions,       23 870     24 084     21 064     19 914     19 925     19 539     19 637     19 205
before
reinsurance*
Liabilities
under
investment         6 568      6 638      6 787      7 014      7 871      8 856      9 680     10 853
contracts,
insurance*
Parent
shareholders'     11 011     11 500      9 834      9 756     10 949      9 687     10 629     12 099
equity
Non-voting
core-capital       7 000      7 000      7 000      6 500      6 500      6 500      6 500      3 500
securities
* In accordance with IFRS 5, the assets and liabilities of a number of divestments have been
reallocated to 'Non-current assets held for sale and disposal groups' and 'Liabilities associated
with disposal groups', which slightly distorts the comparison between periods.

Selected ratios

Selected ratios                                          FY2011         FY2012
KBC Group (consolidated)
Profitability and efficiency (based on
underlying results)
  Return on equity^1                                     5%            10%
  Cost/income ratio, banking                             60%            57%
  Combined ratio, non-life insurance                      92%            95%
Solvency²
  Tier-1 ratio                                         12.3%          13.8%
  Core tier-1 ratio                                    10.6%          11.7%
Credit risk
  Credit cost ratio                                    0.82%          0.71%
  Non-performing ratio                                  4.9%           5.3%
1 If a coupon is expected to be paid on the core-capital securities sold to
the Belgian Federal and Flemish Regional governments, it will be deducted from
the numerator (pro rata).
2 After coupon on the core-capital securities sold to the Belgian Federal and
Flemish Regional governments and assumed dividend of 1.00 euros per share,
payable in May 2013.

Strategy highlights and main events

KBC's core  strategy  remains  focused  on bank-insurance  in  Belgium  and  a 
selection  of  countries  in  Central  and  Eastern  Europe  (Czech  Republic, 
Slovakia, Hungary and Bulgaria).  In line with its  strategic plan, the  group 
has almost finished the sale or run-down of a number of (non-core)  activities 
(see below).

Significant progress  made  in 4Q2012  and  so  far in  2013  in  implementing 
strategic refocusing plan.

  *On 8 October  2012, Johan Thijs,  the group's CEO,  presented the  updated 
    strategy and explained how  KBC will address  the challenges presented  by 
    the changed business environment. He also put forward KBC's main financial
    targets for 2015, setting the course for the group to become the reference
    in bank-insurance in its core markets.

  *On 16 October 2012, KBC Group NV and KBC Bank NV announced the  successful 
    completion of  the  private placement  of  18.2 million  euros'  worth  of 
    treasury shares. The gross proceeds  from the transaction amounted to  350 
    million euros.

  *On 3 December 2012, KBC launched a highly successful Mortgage Pfandbriefen
    benchmark issue  in  euros, marking  KBC's  inaugural benchmark  issue  of 
    covered bonds. The  1.25-billion-euro covered  bond issue  allowed KBC  to 
    further  diversify  its  investor  base  and  long-term  funding  mix  and 
    resources through covered bonds.

  *On 4 December  2012, the Polish  Financial Supervision Authority  approved 
    the  merger  of  KBC  and  Banco  Santander's  respective  Polish  banking 
    subsidiaries, Kredyt Bank and Bank Zachodni WBK. The merger was registered
    on 4 January 2013.

  *On 4 December 2012, KBC Private Equity NV reached an agreement with  KeBeK 
    I regarding the  sale of most  of KBC Private  Equity's remaining  private 
    equity portfolio.

  *On 10 December 2012,  KBC Group NV announced  the successful placement  of 
    58.8 million  ordinary  shares  at  a price  of  21.25  euros  per  share, 
    resulting in gross cash proceeds of 1 250 million euros.

  *On 17 December 2012, KBC repaid 3 billion euros of state aid plus paid a
    penalty of 15% (450 million euros) to the Belgian Federal Government,
    after having obtained approval from the National Bank of Belgium. Since
    KBC had already repaid 500 million euros in state aid (plus a 15% penalty)
    to the Belgian Federal Government on 2 January 2012, all of the state aid
    received from the Belgian Federal Government has now been reimbursed.

  *On 20  December  2012,  KCB  announced  the  amendment  of  the  guarantee 
    agreement (the Portfolio Protection Agreement or PPA) for the group's  CDO 
    and ABS  portfolio. Additional  clauses  have been  added to  the  revised 
    agreement that  grant  KBC  a  conditional  discount  on  the  outstanding 
    premiums, under certain  strict conditions  and limited to  a set  maximum 
    amount.

  *On 24 December 2012, KBC Group NV signed an agreement to sell its  Russian 
    banking subsidiary  Absolut Bank  to  a group  of Russian  companies  that 
    manage  the  assets  of  Blagosostoyanie,  the  group  that  manages   the 
    second-largest non-state pension fund in Russia. The transaction is  still 
    subject to regulatory approval, which is expected in the second quarter of
    2013. 

  *On 28 December 2012, KBC reached  agreement with the Republic of  Slovenia 
    regarding the sale  of its  remaining 22%  stake in  the Nova  Ljubljanska 
    banka group. Completion of the agreement  is expected in early 2013  after 
    the approval of the Slovenian Competition Authority has been obtained.

  *On 18 January 2013, KBC successfully placed 1 billion US dollars' worth of
    tier-2 contingent capital notes. The issue met with strong demand and  was 
    more than eight times oversubscribed.

  *On 25  January 2013,  KBC Group  NV announced  its decision  to repay  its 
    three-year Long Term Refinancing Operation to the European Central Bank in
    the first quarter of 2013, for an amount totalling 8.3 billion euros.  KBC 
    boasts a strong retail and corporate deposit base in its core markets  and 
    its wholesale funding needs for 2013 are well advanced.

  *For three of  its remaining  divestment files, i.e.  Antwerp Diamond  Bank 
    (Belgium), KBC Banka (Serbia) and  KBC Bank Deutschland (Germany), KBC  is 
    still in  discussions  with a  number  of interested  parties,  while  the 
    divestment of the stake in Bank Zachodni WBK (Poland) is ongoing. For  all 
    four files, KBC is also maintaining an open and constructive dialogue with
    the European Commission 

Other main events in 2012

                                     *On 3 October 2012, the European Banking
                                       Authority and National Bank of  Belgium 
                                       announced the final  assessment of  the 
                                       capital exercise and fulfilment of  the 
                                       EBA December 2011 Recommendation, which
                                       showed that KBC Bank meets the 9%  core 
                                       tier-1 ratio  including  the  sovereign 
                                       buffer     as     stated     in     the 
                                       recommendation.

                                     *The Irish economy appears to be growing
                                       modestly albeit  not  evenly.  A  solid 
                                       export performance and growing signs of
                                       stabilisation in domestic activity have
                                       coincided  with   an   improvement   in 
                                       financial  sentiment.  Reflecting   the 
                                       challenging  global   environment   and 
                                       ongoing    budget    austerity,     the 
                                       turnaround in Irish economic conditions
                                       is  likely  to  be  gradual.   However, 
                                       growth  in  tax  revenues,  a  marginal 
                                       easing  in  unemployment  and   broadly 
                                       encouraging   survey    data    suggest 
                                       domestic  activity  is  approaching   a 
                                       turning point,  while  recent  data  on 
                                       housing transactions  and  prices  seem 
                                       consistent with a bottoming out in  the 
                                       housing market. A  loan loss  provision 
                                       of 87  million  euros was  recorded  in 
                                       4Q2012,  resulting  in  impairment   on 
                                       loans of 547 million euros for the full
                                       financial year.

                                     *KBC has acted  to reduce volatility  in 
                                       its results,  and further  reduced  its 
                                       exposure    to    Southern     European 
                                       government bonds  in  the  first  three 
                                       quarters  by  almost  a  third,  mainly 
                                       through cutting  back its  holdings  of 
                                       Spanish and Italian government bonds.

                                     *KBC  reduced   the  profit   and   loss 
                                       sensitivity  of   its   CDO   portfolio 
                                       significantly    through     de-risking 
                                       activities.

Statement of risk

  *Mainly active in banking, insurance  and asset management, KBC is  exposed 
    to a  number of  typical risks  such as  - but  not exclusively  -  credit 
    default risk, movements in interest rates, capital markets risk,  currency 
    risk, liquidity  risk,  insurance  underwriting  risk,  operational  risk, 
    exposure to emerging markets, changes in regulations, customer litigation,
    as well as the economy  in general. It is part  of the business risk  that 
    the macroeconomic environment and the ongoing restructuring plans may have
    a negative impact  on asset  values or could  generate additional  charges 
    beyond anticipated levels. 

  *Risk management data are  provided in KBC's  annual reports, the  extended 
    quarterly reports  and  the  dedicated  risk reports,  all  of  which  are 
    available at www.kbc.com. 

  *Although political event risks remain large, particularly in the  Southern 
    part of the  European Monetary  Union (EMU) area,  economic risks  clearly 
    receded in  recent  months.  This  is illustrated,  for  example,  by  the 
    avoidance of the fiscal cliff in the US and the ongoing favourable  effect 
    on EMU sovereign bond markets of the OMT programme announced by the ECB in
    September 2012. As a consequence, the recovery in global manufacturing  is 
    gaining strength and is becoming most visible in the US, China and in core
    EMU economies such as  Germany. Since structural  reforms in the  Southern 
    EMU area are  starting to bear  fruit and the  political approach  towards 
    growth-reducing austerity has  become more  pragmatic, it  is likely  that 
    countries in that  area will  gradually join  the global  recovery in  the 
    second half of 2013.

Additional information

  *"Our auditor has confirmed that his audit procedures of the  consolidated 
    financial  statements,  prepared  in  accordance  with  the  International 
    Financial Reporting  Standards  as  adopted in  the  European  Union,  are 
    substantially completed and  that these procedures  have not revealed  any 
    material modification  that  would  have  to be  made  to  the  accounting 
    information  derived  from  the  consolidated  financial  statements   and 
    included in this earnings statement."

  *In 2012, the  changes in  the scope  of consolidation  related to  Centea, 
    Fidea, Warta and KBL epb. The  combined effect of these changes on  profit 
    is immaterial.

Financial calendar for 2013

2012 Annual Report available as of             2 April 2013
2012 Risk Report available as of               2 April 2013
Annual General Meeting                           2 May 2013
Ex-dividend date                                13 May 2013
Payment date                                    16 May 2013
KBC Group - Publication of 1Q 2013 results      16 May 2013
KBC Group - Publication of 2Q 2013 results    8 August 2013
KBC Group - Publication of 3Q 2013 results 14 November 2013
KBC Group - Publication of 4Q 2013 results 13 February 2014

The financial calendar, including analyst and investor meetings, is  available 
at www.kbc.com/ir/calendar.



Contact details:
- Wim Allegaert, General Manager, Investor Relations, KBC Group
Tel 32 2429 40 51 wim.allegaert@kbc.be

-  Viviane  Huybrecht,  General   Manager  of  Corporate  Communication/   KBC 
Spokeswoman
Tel 32 2429 85 45 pressoffice@kbc.be

Note for the editor:

Follow KBC via Twitter on www.twitter.com/kbc_group

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