International Strategy of KBC
Networking event Agoria Banking Club
Brussels,
December 18th, 2007
John Hollows
Senior General Manager
Centra and Eastern Europe
& Russia
Mission
Statement
KBC
2
KBC Group aims to be an independent,
medium-sized bancassurer for private persons and
medium-sized enterprises in selected European
countries, with expertise in asset management and the
financial markets. It endeavours to achieve high
profitability targets through efficiency, customercentricity, employee-friendly policies and sound risk
management.
Through our customer-friendliness, efficiency,
enterprising spirit and capacity for innovation, we will
provide the best solutions for our customers, earn the
loyalty of our employees, guarantee a high return to
our shareholders and contribute towards the economic,
social and cultural development of the community to
which we belong
KBC Group
Key financials (31-12-2006)
Balance sheet total:
EUR 325.4 billion
Net profit:
EUR 3 430 (ROE : 24%)
Solvency levels:
Tier 1, banking: 8.7%
Solvency margin, insurance: 374%
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Customers:
11 000 000
Headcount:
51 000

Number 3 financial group in Central & Eastern Europe (consolidated
assets, branches and employees)

KBC is number 2 bankassurance player in Belgium, with strong
presence in the prosperous and Northern region of Flanders

Number 18 bank in Europe
KBC’s Banks and Insurance co’s
Czech Republic
 CSOB Bank (100%)
 CSOB Insurance (100%)
Slovakia
 CSOB Bank (100%)
 CSOB Insurance (100%)
Hungary
 K&H Bank (100%)
 K&H Insurance (100%)
Slovenia
NLB Bank (34%)
NLB Life Insurance (67%)
* financial participation
Poland
 Kredyt Bank (80%)
 Warta Insurance (100%)
Percentages concern direct + indirect
presence
4
Serbia
 A Banka (100%)
Russia
 Absolut Bank (95%)
Bulgaria
 DZI Insurance (89.7%)
 EIBANK (75%)
Romania
 Romstal Leasing
 INK Insurance broker
 Swiss Capital stock broker
Serbia
 KBC Securities Serbia:
Senzal, Hipobroker and Bastion
Hungary
 Equitas stock broker
Latvia
 Baltic Investment Company
(BIC)
KBC: an important player in
Central and Eastern Europe & Russia
Bank
Insurance
L/ NL
7th / 2nd
2% /10%
2.5 m.
Poland Ranking
8th
Market share* 3.6%
Clients
0.9 m.
Branches
376
Czech Ranking
2nd
3rd / 5th
Republic Market share* 21%
10% /4.5%
Clients
2.9 m.
0.75 m.
Branches
273
(+3350 points of salePO)
Slovakia Banking
4th
5th / 6th
Market share* 6%
4% / 3%
Clients
0.2 m.
0.2 m.
Branches
100
Hungary Ranking
2nd
7th / 6th
Market share* 10%
3% / 4%
Clients
0.9 m.
0.3 m.
Branches
170
Slovenia Ranking
1st
Life : 4th
Market share* 42%
Life : 8%
Clients
1.0 m.
0,03 m.
Branches
220
*01-04-2007
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Bank
Serbia
Ranking
Market share
(**)
Clients
Branches
Bulgaria Ranking (**)
Market share
Clients
Branches
Russia Ranking
Market
share
Clients
Branches
** 31-12-2006
Market share total assets
Insurance
L/ NL
34th
0.4%
-
55,000
44
9th
3.1%
225,000
91 (+120 ‘outlets’)
1st /1st
28.5% / 17.6%
510,000
200
26th (2005)
0.86% in loans,
0.50% in deposits
108,000
39
-
Key elements of KBC’s strategy

KBC will strenghthen its position in
CEER via

Distribution: Focussing on the retail segment and small
corporates:




broaden customer base by expanding branch and agent
networks in banking and insurance
Intensify use of other distribution and service channels
Intensify the corporate businesses in a number of
countries, targeting profitable growth
Bancassurance: Enhancing the bancassurance
concept, built on strong local brands
6
Pursuing distribution excellence

Survey results show that, in forthcoming years, new client
acquisition and maintenance of the actual customer base
will be based predominantly on traditional sales channels in
the retail market (branches, agents etc.)

The experience of the last few years show a strong
correlation between retail market share and branch density

We therefore upgrade our networks of bank branches and
insurance agents (using the bancassurance model)
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By expanding the bank branch
network
No. of KBC branches
1400
1200
1000
800
600
400
200
0
843
1072
120.000
1163
100.000
SK
HU
CZ
PL
PL
CZ
HU
SK
80.000
60.000
40.000
20.000
0
2006
8
972
No. of inhabitants per KBC branch
2007
actual
2008
planned
2009
planned
2006
2007
actual
2008
2009
planned planned

Branch-Opening Program is on track:
 In 2006-2007, 180 new branches were opened
 190 to be opened in 2008 and 2009

Expansion of the branch networks will enable us to reach more
customers and service existing customers better
Bank Branch-Opening Program –
example (Poland)
 100 new branches
opened
 Further locations
identified for potential
new KB branches
9
By increasing the number of tied
insurance agents
Number of inhabitants per KBC Tied Agents
No. of active Tied Agents
100.000
5000
4000
4 000
3 190
Sk
Sk
3000
Hu
2000
Hu
50.000
Cz
Cz
Pl
Pl
1000
0
0
2007


10
2008
2009
2007
The number of (active) insurance
agents will be expanded from 3 190 to
4 000 by 2009 (+25%)
Recruitment of new high-quality
agents is main challenge
2008
2009
Micro-market
Agent
Bank
By reinforcing direct distribution
channels
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Intensifying the corporate business
through network desks in each country
KBC Group in Poland
Network Bank
13 Corporate Banking
Centers
336 branches and subbranches
Staff Bank
6,565
Staff Insurances
3,357
Activities
Corporate and Retail
Banking, Investment
Banking, Asset
Management, Insurance
(life & non-life),
Brokerage, Leasing, …
Philip Van Ginderachter
Head Network Desk
 48 22 63 48 362
Philip.van.ginderachter@kredytbank.pl
http://www.kredytbank.pl
http://www.warta.pl
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KBC Group in the Czech
Republic
Network Bank
11 corporate branches
234 retail branches + 3,350
points of sale located in post
offices
Staff Bank
6768
Staff Insurance 710
Activities
Corporate and Retail Banking,
Financial Investment, Treasury,
Leasing, Factoring, Asset
Management, Insurance (life &
non-life), …
Lucie Trnkova-Pazderova
Jolana Knoppova
Nicol Fabbio
Contacts
International Corporate Desk
 +420 224 114 171/ltrnkova-pazder@csob.cz
 +420 224 114 169/jknoppova@csob.cz
 +420 224 114 993/nfabbio@csob.cz
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http://www.csob.cz
http://www.csobpoj.cz
KBC Group in Slovakia
Network Bank
3 corporate branches
105 retail branches
Staff Bank
1,496
Staff Insurance
249
Activities
Corporate and Retail Banking,
Financial Investment, Treasury,
Leasing, Factoring, Asset
Management, Insurance (life &
non-life)
Marcel MARKUS
Head
International Corporate Desk
 421 2 59 66 83 49
 421 2 54 41 48 06
mmarkus@csob.sk
http://www.csob.sk
http://www.csobpoistovna.sk
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KBC Group in Hungary
Network Bank
20 corporate branches
168 retail branches
Staff Bank
3,804
Staff Insurance 261
Activities
Retail and Corporate
Banking, Treasury, Asset
Management, Investment
Consulting, Leasing,
Insurance (life & nonlife),Private Equity
Investment Services, …
Oluremi Durosaiye
Head
International Corporate Desk
 00 36 1 328 90 06
 00 36 1 328 96 95
oluremi.durosaiye@khb.hu
http://www.khb.hu
http://www.khbiztosito.hu
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KBC Group in Russia
Network Bank:
39 branches
Staff Bank:
1,416
Activities:
Trade Finance, Corporate
Lending, SME banking &
Retail Business
Eugenia Zhiglova
Head
Network Desk
 +7 (495) 777-71-95 ext. 515-35
 +7 (495) 777-71-60
e.zhiglova@absolutbank.ru
http://www.absolutbank.com
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KBC Group in Serbia
Network Bank 18 branches, 26 sub-branches
Staff Bank
356
Activities
Corporate and Retail banking;
deposits, loans and payments
Mirko Golijanin
Director Corporate Segment
 +381 11 30 50 321
 +381 11 35 40 830
Mirko.golijanin@abanka.co.yu
http://www.alcobanka.co.yu
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KBC Group in Bulgaria
Network Insurance
Network Bank
200 outlets
17 regional offices, 91
branches, 129 other
outlets
Staff Insurance
10,200 Insurace Agents
217 Brokers
1,472
Staff Bank
Activities
Non-life/ life Insurance;
retal and corporate
products
Alexandra Bacheva
Head of Corporate Clients
Relationships
 +359 2 9399 116
abacheva@hg.eibank.bg
http://www.dzi.bg
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Further enhancing the
Bancassurance concept


19
“Integrated distribution” principle, applied for bank and insurance
channels:

Unified management

Centralised marketing

Integrated customer databases

Remuneration schemes
“Micro-Markets” approach:

Tied Agents: exclusive, self-employed agents linked to the local bank
branches

Local insurance agents and local bank outlets work together (“act as
one company”)

Bank branches sell standardised insurance products, and refer more
complicated products to the agents

Agents refer customers to the bank branches and deal with after-sales
service
Further enhancing the
Bancassurance concept (2)

Further enhancing the bancassurance concept
by:
 Completing
the development of shared
customer databases
 Expanding insurance agent networks
 Upgrading of the agent networks: “Tied
Agents project” focusing on specialisation,
sales support, training, review of incentive
system, segmentation etc.
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KBC will develop the bancassurance
to the highest level

KBC is stepping up from a ‘Level-2’ to a ‘Level-3’ bancassurer

The Belgian model is the reference, implementation in CE will take the local situation into account

The shared marketing and distribution function, as well as the local micromarket concept, are the
cornerstones of the model
Level 3: Integrated distribution
Acting as a single company: bank and insurance operations working
under unified
governance,
integrated distribution channels &
FCCE
externalwith
benchmarking?
centralised marketing, integrated customer databases & centralised
IT platform and streamlined remuneration schemes
Level 2: Exclusive distribution
Bank branches sell insurance products from intra-group
insurance company as additional source of fee income
Level 1: Non-exclusive distribution
Bank branches selling insurance products
of third-party insurers as additional source
of fee income. This is the model of most
European banks.
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Using secondary channels to reach
additional market segments
Poland:


Zagiel Consumer Finance: 220 sales offices and 35 000
retailers
Ongoing project to increase number of Sales Points
(average initial investment: 10 000 EUR, break-even after
11 months)
Czech Republic:



Postal Bank: 3 400 outlets and 31 financial centres,
another 30 financial centres to be opened by 2010;
special attention on Consumer Finance – consumer loans
and cards
Hypotecni Banka (monoline mortgage lender): 30 sales
points
CMSS: monoline “building savings” company providing
savings accounts and subsequently, housing loans
through 2 400 exclusive agents
Hungary:


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Sale of retail insurance via brokers
Retail banking products via 2 200 non-exclusive banking
agents
Using strong local brands
Czech
Republic
Pre- 2005
Slovakia
Pre- 2005
Hungary
23
June 05
Poland
Sept. 05
Bulgaria
Sept. 07
Using strong local brands (2)
we are building a
great brand…
Make smart
decisions
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