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Impact of IFRS Foto gebouw. 2 Disclaimer By its nature, the information in this presentation involves numerous assumptions, uncertainties and opportunities,

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Presentation on theme: "Impact of IFRS Foto gebouw. 2 Disclaimer By its nature, the information in this presentation involves numerous assumptions, uncertainties and opportunities,"— Presentation transcript:

1 Impact of IFRS Foto gebouw

2 2 Disclaimer By its nature, the information in this presentation involves numerous assumptions, uncertainties and opportunities, both general and specific. We caution readers of this presentation not to place undue reliance on this information as a number of factors could cause future Group results to differ materially. All data in this document are unaudited and are meant as indications necessary to illustrate the changes introduced by IFRS which will affect future reportings. KBC undertakes no obligation to revise or update any information to reflect changes in policy, events, expectations or otherwise.

3 3 Content 1.Disclosure headlines 2.Impact on financial statements Impact on financial statements 2005

4 4 Headlines Corrections due to the first time application of IFRS valuation rules in opening B/S on 1-Jan-04 (exception: first time application of IAS 32/39 and IFRS 4 in opening B/S on 1-Jan-05) Comparative figures of 2004 available (excluding impact of IAS 32/39 on financial instruments and IFRS 4 on insurance contracts) First IFRS reporting 1Q Headlines – Impact 2004 – Impact 2005

5 5 Disclosure schedule, 2005 New IFRS templates FY04 IFRS income statement and B/S (excl. impact IAS 32/39 and IFRS 4) Impact of IAS 32/39 on shareholders equity in opening B/S of 1-Jan-05 Apr 28, Q05 earnings (full set of IFRS interim financial statements and notes) 1Q04, 2Q04, 3Q04 and 4Q04 earnings (IFRS reference P/L and B/S, incl. segments, excl. impact of IAS 32/39 and IFRS 4) Jun 9, 2005 Mar 23, 2005 Headlines – Impact 2004 – Impact 2005

6 6 Segment information, 2005 Financial statements 6 business segments 1) Banking 2) Insurance 3) Asset Management 4) European private banking* 5) Specialized investment activities* 6) Holding Co P/L and B/S 3 geographical segments 1) Belgium 2) CEE 3) Rest of world Key income figures Management reporting 6 customer segments 1) Retail 2) CEE 3) European private banking* 4) SME/corporate 5) Capital Markets 6) Specialized investment activities* + Group Item (= non-allocated activities) P/L * Temporarly solution for 2005: KBL and Gevaert as non-integrated divisions

7 7 Main changes in valuation rules, 2004 Impact on earnings Impact on book value Impact start Presentation of own equity before profit appropriation (instead of after profit appropriation) X2004 Stricter criteria for recognition of provisions (IAS 37) XX2004 Recognition of deficit/excess of defined benefit pension plans (DBP) (IAS 19) XX2004 Broader criteria for recognition of deferred taxes (IAS12) XX2004 Reclassification from operating to finance lease (IAS 17) XX2004 Correction of depreciation of tangible assets and capitalisation of internal software (IAS 16/38) XX2004 Impairment testing of goodwill and no further depreciation (IAS 36 and IFRS 3) XX2004 Misceleneous other changes with limited impact, such as inclusion of SPV’s in scope of consolidation, etc. XX2004 Headlines – Impact 2004 – Impact 2005

8 8 IFRS Income statement FY 2004* m euros KBC (Old) KBC Group (Mergco) Net interest income Gross earned premium, insurance Dividend income Net gains from financial instruments at fair value Net realised gains from available for sale assets Net fee and commission income Other income Gross income Operating Expenses Impairments - o/w on loans and receivables - o/w on AFS assets Gross technical charges, insurance Ceded reinsurance result Share in results, associated companies Profit before taxes Income tax expense Minority interests Net profit * Non-audited figures (excl. impact of IFRS 4 and IAS 32/39) Headlines – Impact 2004 – Impact 2005

9 Net profit 2004 BEL GAAP Net profit 2004 IFRS Impact on profit 2004* - KBC Old * Non-audited figures (excl. impact of IFRS 4 and IAS 32/39) Provisions DBP Tax Lease Fixed assets Goodwill Other Headlines – Impact 2004 – Impact 2005

10 Net profit 2004 BEL GAAP Net profit 2004 IFRS Impact on profit KBC Mergco Non-audited figures excl. impact of IFRS 4 and IAS 32/ Provisions* DBP Tax Lease Fixed assets Goodwill Other * Mainly related to reversal of the use of the provision for financial risks in the insurance business Headlines – Impact 2004 – Impact 2005

11 11 Impact on EPS 2004 * Euros KBC (Old) KBC Group (Mergco) Basic EPS, Belgian GAAP IFRS adjustments: - reversal of provisions - underfunding of DBP - adjustments of deferred taxes - reclassidication of lease - adjustments on fixed assets - adjustment of goodwill - other - change in definition of no of shares Total IFRS adjustments Basis EPS, IFRS * Non-audited figures (excl. impact of IFRS 4 and IAS 32/39) Headlines – Impact 2004 – Impact 2005

12 12 IFRS Balance sheet, 31-Dec-04 * m euros KBC (Old) KBC (Mergco) Loans and advances to customers Securities Loans and advances to banks Derivative financial instruments Property and equipment (excl invest. property) Goodwill and other intangible fixed assets Investments in associated companies Other assets Deposits from customers and debt securities Deposits from banks Derivative financial instruments Gross technical provisions, insurance Liabilities under investment contracts, insurance Other liabilities Total equity - Parent company equity - Minorities Balance sheet total * non-audited figures (indicative only), excl. impact of IFRS 4 and IAS 32/39 Headlines – Impact 2004 – Impact 2005

13 13 Headlines – Impact 2004 – Impact 2005 Impact on BPS, 31-Dec-04 * Euros KBC (Old) KBC Group (Mergco) Book value per share, Belgian GAAP IFRS adjustments: - profit appropriation - reversal of provisions - underfunding of DBP - adjustments of deferred taxes - reclassidication of lease - adjustments on fixed assets - adjustment of goodwill - other - change in definition of no of shares Total IFRS adjustments Book value per share, IFRS * non-audited figures excl. impact of IFRS 4 and IAS 32/39, based on 307.7m shares for ‘KBC old’ and on m shares for ‘KBC Mergco’

14 14 Headlines – Impact 2004 – Impact 2005 Main changes in valuation rules, 2005 Impact on earnings Impact on book value Impact start Deposit accounting for unit-linked life products (IFRS 4) 2005 Derecognition of catastrophe / equalisation provision (4) XX2005 Insurance liability adequacy test (IFRS 4) XX2005 Adjustment of loan losses (NPV-approach and recognition of portfolio-based provisions) (IAS 32/39) XX2005 Recognition impairments on equity investments (32/39) XX2005 Deduction of treasury shares from own equity (32/39) XX2005 Convertible bonds to be considered as own equity (32/39) XX2005 Marking to market,‘bonds available for sale’ (IAS 32/39) X2005 Marking to market, ‘bonds at fair value’ (IAS 32/39) XX2005 Marking to market, ‘shares available for sale’ (IAS 32/39) X2005 Marking to market, ‘shares at fair value’ (IAS 32/39) XX2005 Marking to market, derivatives not held for trading (32/39) XX2005

15 15 Disclosure schedule reminder Impact of IAS 32/39 on shareholders equity in opening B/S of 1-Jan-05 Apr 28, Q05 earnings (full set of interim IFRS financial statements and notes, incl. impact of IAS 32/39 and IFRS 4) Jun 9, 2005 Headlines – Impact 2004 – Impact 2005

16 16 Indicative composition of portfolios* Assets as of 2005 Value at * Valuation (volatility impact) Loans and receivables Mortgages/consumer credit Corporate loans 28.3 bn 78.2 bn Amortized cost (no impact from volatility in valuation) HTM instruments Bonds, banking book Bonds, insurance book 5.9 bn 2.5 bn Amortized cost (no impact from volatility in valuation) AFS instruments Bonds, banking book Bonds, insurance book Shares, banking book Shares, insurance book Unit-linked investments 16.5 bn 7.3 bn 1.0 bn 2.9 bn 3.9 bn Fair Value (adjustments recognized in shareholders’ equity) Financial instruments at Fair Value Bonds, banking book Bonds, insurance book Trading portfolios Derivatives, banking book Derivatives, insurance book 18.5 bn 0.6 bn 31.5 bn p.m. Fair Value (adjustments in P&L) * Figures for KBC pre-merger, book value according to B-GAAP Headlines – Impact 2004 – Impact 2005

17 17 Annex Disclosure on IFRS available in the annual report at Description of major differences between IFRS and B-GAAP Full P/L and B/S 2004 IFRS with reconciliation to B-GAAP, for both ‘KBC’ (old) and ‘KBC Group’ (Mergco)


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