1. and key elements in ČSOB´s growth strategy
Market position
and key elements in ČSOB´s growth strategy
Prague
April 19, 2004
Patrick Daems
Member of the Board of Directors

2. Outline of the presentation
Profile incl. history
Financial performance and risk management
Market position – the Bank
Market position – subsidiaries
Role of KBC
Strategy

3. ČSOB belongs to major players in Central Europe
Operates as :
universal bank
strong group offering a full range of banking and other financial services
bank with well diversified business: retail, SME, corporate/financial markets (3.2m customers)
group with vast distribution network: in the Czech Republic (CR) 208 branches and 3,400 postal outlets, in the Slovak Republic (SR) 75 branches, full range of direct banking channels
KBC´s largest banking subsidiary in CE
(by assets and profit contribution)
The largest bank in the CR
(by assets)
Fourth largest bank in the Slovak market
(by assets and deposits)
2002 Top CE banks
(USDbn)
The second largest bank in CE
(by assets)

4. ČSOB´s Vision
“Our ambition is to be a united family of bank-insurers built upon a stable and substantial retail franchise, efficiently providing financial services to our customers according to their needs, and delivering a sustainable return to our shareholders by leveraging our current position.”

5. upper RETAIL KB mass RETAIL ČS
WE ARE PRIMARILY FOCUSING ON RETAIL BUSSINESSES Brand & Image Positioning
future competitive area necessity to differentiate via non-tangible image
ČSOB
Private Bank KB
upper RETAIL
ČSOB
GECB ČS
mass RETAIL
PSB
The Czech retail market is rapidly maturing which increases the competition amongst key players that have been more targeting middle-retail customers. Therefore, ČSOB intends to attack ČS’s position from below via PSB, as well as is preparing a new positioning strategy for ČSOB brand

6. ČSOB´s retail dual brand distribution network
 890 ths clients
Postal Savings Bank
(PSB)
ČSOB
 2,150 ths clients
Mass 77%
Distribution:
190 branches
33 SME hubs
125 affluent hubs
Differentiated service through personal bankers
Affluent 13%
160,000
standard service
SMEs
Affluent Retail
Mass Retail
45,000
Mass 97%
Affluent 3%
8 own PSB branches
3,400 postal outlets, incl specialized PSB counters
standard service

7. ČSOB Historic milestones
1964 – ČSOB established to finance foreign trade of the country and to act as an exclusive agent of the State at the international markets
1990 – diversification of commercial banking activities; customer base and branch network started to steadily grow
1999 – ČSOB privatized – majority shareholder KBC Bank NV, minority stakes of EBRD and IFC
2000 – IPB business acquired; ČSOB leveraged opportunity to leapfrog in retail banking
2001 – merger with IPB successfully completed, acquisition significantly strengthened ČSOB´s position in the building savings industry, mortgage banking, insurance and pension funds

8. Outline of the presentation
Profile incl. history
Financial performance and risk management
Market position – the Bank
Market position – subsidiaries
Role of KBC
Strategy

9. ČSOB good track record of sound profitability
2003 Net profit: CZK 6.2 bn
( EUR 195m)
2003
ROAE
C/I ratio
CAD
14.3 %
67.2 %
2.15 %
15.36 %
Key Drivers :
solid growth in fee income
strong growth in lending across segments
modest increase of NIM
significant contribution from business performed by subsidiaries
2002 exceptionally high recoveries of bad debts not repeated
our operations virtually free of non-standard, historical drivers after completion of the cleanup of the Group B/S
NIM
Development of net profit (CZKm)
Release of provisions
CZK 1.2bn

10. 2003: strong business growth leading to high growth of revenues, costs under control
CZKm
2002
2003
Change
2003 Adj.1)
Change Adj.
Operating expenses
Net interest income
Net fee income
Provisions
13,721
5,591
15,054
1,150
14,730
6,367
15,617
- 353
+ 7 %
+ 14 %
+ 4 % -
14,454
6,207
15,232
N/A
+ 5 %
+ 11 %
+ 1 %
N/A
Fee income related primarily to business growth in sales of funds and asset management, payment cards, domestic payments and lending
Comparable cost flat despite expansion in Slovakia and investment in advanced technologies (direct channels)
Note: 1) excluding ČSOB PF which was consolidated for the first time in 2003

11. Traditional „ČSOB“ high credit quality improved even further
NPLs of the Bank decreased to 3.1 % (i.e. Loans › 90 days overdue)
90 % of portfolio is of good quality (Loans A - D according to ČSOB´s classification)
High level of credit risk provision coverage (187 %)
Historic portfolio and related recoveries no more pollute performance reporting
Fitch 9/03: „ČSOB has a track record of strict credit risk classification.“
Moody´s 8/03: „ČSOB has a tradition of adopting more conservative asset-quality measures than its domestic peer group.“
S&P 10/03: „Historically ČSOB had the best lending culture of the major domestic banks operating in the Czech Republic.“

12. Outline of the presentation
Profile incl. history
Financial performance and risk management
Market position – the Bank
Market position – subsidiaries
Role of KBC
Strategy

13. ČSOB´s strengths Leading market position in terms of total assets
Market share in the CR - Bank (in %)
Leading market position in terms of total assets
Strong market position in deposits kept despite continuing transfer of deposits to mutual funds
Leading market position in sales of mutual funds (mainly CGFs – 80% market share)
Strong market position in mortgage business
Leading market position in construction savings and loans
Leading market position in financial markets
Leading market position in leasing

14. Major shift from plain deposits to mutual funds – CGFs (CR)
Market
Share
RETAIL BANK DEPOSITS*
29 %
30 %
31 %
CZK bn
ČSOB
RETAIL CLIENTS´ASSETS IN MUTUAL FUNDS**
10 %
12 %
15 %
20 %
Market
Share
ČSOB
CZK bn
ČSOB y/y growth in sales: + 43 %
Decrease in (term) deposits due to the low interest rate environment was partially offset by the continuing growth of construction savings (still the most attractive product).
Looking poorly at retail clients (households), ČSOB bank including PSB holds stable market position at the level of 26-27% since 2000, which confirms the above position in overall primary deposits.
Transfer from (term) bank deposits to mutual funds is obvious.
Note: *) ČSOB, ČMSS (only individuals)
**) without ex-privatization funds

15. UNDER ČSOB GROUP MANAGEMENT
Product / service innovation drives the increase of AuM
CUSTOMER ASSETS
UNDER ČSOB GROUP MANAGEMENT
+ 5 %
ČSOB KeyPlan (financial advisory – used by 43ths retail clients till ) brings more assets under management
Tohle jsou všechny komentáře
2002
2003
Change
AUM (incl. pension funds)
Bank deposits
Building savings
73,533
384,199
64,608
78,307
382,881
85,895
+ 7 % -
+ 33 %

16. Retail/SME Corporate ČSOB Bank y/y loan growth
Initiative to be more flexible and up to clients´ needs resulted in lending volume growth across the segments
Retail/SME
Corporate
CR + 38 %
SR + 88 %
CR + 8 %
SR + 36 %
ČSOB Bank y/y loan growth
High speed
+ flexibility
High growth
High quality

17. Retail lending proved new dynamics (CR)
Market
share
CONSUMER LENDING*
3 %
4 %
5 %
7 % +
CZK bn
ČSOB y/y growth: + 71 %
Market
+ 15 %
MORTGAGES & BUILDING LOANS**
share
39 %
33 %
32 %
+ 1
CZK bn
ČSOB y/y growth: + 50 %
+ 46 %
We have a structural problem in our balance sheet. The problem is in the fact that our loan portfolio is in volume much smaller than the volume of our overall deposits.
Although this is not positive news from todays’ profit perspective, it is a huge potential for above market growths for us in the future.
Note: *) consumer loans, credit cards, and overdrafts
**) ČSOB, ČMHB, ČMSS

18. Branch and business expansion in Slovakia
Branch expansion
Number of customers
22 new branches were opened in 2003.
Number of customers increased by more than 15 thousand in 2003 and almost doubled since 2000.

19. Investments in network in Slovakia strengthened sales
Market share in the SR (in %)
Growth outpaced by far the market: ČSOB + 22 %,
the market - 2 %
Assets *)
Loans
Robust growth:
ČSOB + 55 %,
the market + 15 %
Mortgages
SKK 737m of new mortgages
Consumer loans doubled,
SKK 1.2 bn of new consumer loans
Consumer
Loans
Market share in 2003 adjusted, with MinFin deposit withdrawal the share decreased to 6.0 %
Deposits
*)Excluding extra-ordinary deposits from Ministry of Finance
Contribution of Slovak operations to Group income - 8 %

20. Outline of the presentation
Profile incl. history
Financial performance and risk management
Market position – the Bank
Market position – subsidiaries
Role of KBC
Strategy

21. Building savings deposits1 Building savings loans1
Subs´ leading position in CR provides opportunities for further synergies
Building savings deposits1
Mortgages1
2nd in Europe, 2.2m customers
Volume of mortgages CZK 26.1bn
1st
2nd
Building savings loans1
Leasing2
2nd
1st
1st
Note: 1) according to volume as at 31 December 2003
2) according to volume of new business in 2003

22. Significant market position also in life insurance and pension funds (CR)
Total insurance1
Pension funds2
5th
6th
Life insurance1
2 pension funds
for dynamic investors
5th
for conservative investors
Total written insurance premium in 2003: CZK 6.0 bn (life insurance: CZK 3.2 bn)
Note: 1) according to volume of written premium in 2003
2) according to volume of client-funds as at 31 December 2003

23. Good market position also in Slovakia
Leasing1
Building savings deposits2
3rd
2nd
Note: 1) according to volume of new business in 2003
2) according to target amount of new contracts in 2003

24. Outline of the presentation
Profile incl. history
Financial performance and risk management
Market position – the Bank
Market position – subsidiaries
Role of KBC
Strategy

25. Close co-operation with KBC
KBC Governed areas
Centrally coordinated areas in KBC Group
market risk
credit risk
internal audit
procurement
card processing
intl. cash management
investment research
KBC
Transfer of know-how
Support in product innovation
retail
bancassurance
asset management
distribution network management and other areas
mutual funds
chip cards
intl. cash management
financial market products

26. Outline of the presentation
Profile incl. history
Financial performance and risk management
Market position – the Bank
Market position – subsidiaries
Role of KBC
Strategy

27. STRATEGIC INITIATIVES
Strategy of the ČSOB Group
Strengthen ČSOB’s position on the Czech financial market
Significantly improve its position in Slovakia
Therefore we will focus on:
providing bank-insurance services to individuals and small and medium-sized enterprises in both markets
maintaining our current strong position in the segment of corporate customers as well as in the area of financial market services
STRATEGIC GOALS
Group governance model - United Family - creates value through cross- selling & use of distribution synergies. United Family concept also implements cost saving processes and creates efficiency gains from increased synergies.
Cost-out initiative assesses areas of potential cost-savings across the ČSOB Group and introduces active cost management.
Increase of Retail & SME lending activities intends to increase market share in consumer lending, to make mortgages a core banking product as well as to benefit from building loans´ high potential utilisation
STRATEGIC INITIATIVES

28. CORE BUSINESS INTENTION
Business direction of the ČSOB Group
CORE BUSINESS INTENTION
To provide bank-insurance services to individuals and to serve entrepreneurs, small and medium-sized enterprises, municipalities, large corporate clients and non-banking financial institutions.
Continue to build upon successful brand approach (ČSOB and Postal Savings Bank) and extensively develop multi-channel way of service in both Czech and Slovak markets.
Significantly improve the quality of client relationship management.
Introduce (in Retail and SME segment) a concept of four customer-need platforms in 2004: Wealth management, Payment comfort, Financing customers’ needs, and Services for SME clients.
Nurture ČSOB Bank’s (not including Postal Savings Bank) ambition to achieve at least 18% market share for all ČSOB retail banking products by 2007 (with the exception of consumer lending, where it intends to nearly double its currently low 5% market share).
HOW TO GET THERE
Part I

29. Business direction of the ČSOB Group
Assure that sales in the Bank’s branches reach 18% market share in new mortgages granted in 2007.
Build upon successful wealth management, where ČSOB currently holds a leading position in the sales of mutual funds in the Czech Republic.
ČSOB desires to become the main bank for 27 % of the SME clients by 2007 (currently 20%).
In Slovakia, to complete ČSOB’s retail branch expansion and to achieve a very ambitious target: 10% market share in retail loans and assets under management by 2007.
HOW TO GET THERE
Part II

30. BETTER COST MANAGEMENT
Financial goals of the ČSOB Group
Rightsizing project: By the end of 2004, ČSOB should complete the rightsizing project that would reduce the staff in the Bank headquarters in Prague by appr employees.
Management of operational expenses improvement project: primarily based on the SAP implementation in 2004 and on a new procurement and logistics concept
New headquarters building: to be opened in late 2006, also plays a very important role in this cost reduction process as it will significantly downsize ČSOB’s facility management expenses.
BETTER COST MANAGEMENT
Operational income enhancement: ČSOB will strengthen its ongoing effort to maintain a balanced relationship between net interest income and fee and commission income.
Cross-selling will be the main driver of the operating income growth, supported by activities such as ČSOB “Key Plan” campaigns.
REVENUE ENHANCEMENT

31. KBC´s corporate governance and shareholding IPB transaction
Appendix
KBC´s corporate governance and shareholding
IPB transaction
Risk management in ČSOB
ČSOB ratings
E-banking and card business

32. KBC´s corporate governance and shareholding
Two executive managers – expatriates nominated by KBC to ČSOB´s BoD responsible for FM operations, ALM, Corporate Banking, IS and Retail/SME and activities in the SR
About 10 KBC experts working as line managers in Credits and Bad Debts, Retail and SME Branch Network Management, Corporate Banking Policy and IS Development
Frequent contacts between ČSOB and KBC Bank at all levels
ČSOB´S SHAREHOLDER STRUCTURE
as at
KBC purchased 4.39% stake of IFC ( )
ČSOB´s registered capital = CZK 5,105m (EUR 157m)

33. IPB transaction completed
Acquisition of IPB contributed significantly towards the fulfillment of ČSOB´s goal – to broaden the scope of its retail business. ČSOB took over ex- IPB retail client base including their funds. IPB acquisition also provided ČSOB with the postal distribution network.
The IPB acquisition significantly strengthened ČSOB´s position in the building savings industry, mortgage banking, insurance and pension funds.
Integration included merger of head offices and branch networks, IT systems and customers bases, re-branding of all buildings with new logo.
IPB put into forced administration at 16 June after severe run on the bank caused by rumors regarding the financial health of the bank. ČSOB purchased the „IPB Enterprise“ (i.e. business) from the IPB´s forced administrator on 19 June 2000.
Czech Ministry of Finance and the central bank have provided a support scheme linked to the rescue acquisition – the arrangements eliminated financial risks of the transaction for ČSOB.
Restructuring Plan provided ČSOB with an option to put any IPB asset to a state owned work-out institution („ČKA“). The ČKA similarily had a call option. By August 2003 all ex-IPB assets determined as eligible for transfer have been transferred to ČKA.

34. Conservative risk management in ČSOB
In risk management ČSOB adheres to the principle of a limited risk profile that is based on a sophisticated structure of internal limits for different types of risk and products. ČSOB follows the KBC Group standards;
Market risk - ČSOB and ČSOB Group is primarily monitored, analyzed and reported at ČSOB level. The results are used for monitoring at the consolidated KBC Group level;
Operational risk – KBC Group-wide methodology implemented;
Short-term liquidity is managed on a daily basis, liquidity scenarios are used for medium and long-term liquidity management.

35. ČSOB belongs, according to its rating, to the most creditworthy banks in CE
ČSOB's LT and ST ratings from Moody´s and Fitch are at the same level as the sovereign rating for the Czech Republic (i.e. the highest possible). ČSOB´s rating of Financial Strength from Moody´s and Individual rating from Fitch are higher than the ratings of ČSOB´s Czech peers.
ČSOB belongs to banks with the highest rating also in CE. ČSOB's LT ratings from Moody's, Fitch and S&P are at the highest level in CE. Among the banks with the highest LT ratings, ČSOB has the highest rating of Financial Strength from Moody´s and the second highest Individual rating from Fitch.

36. Dynamic growth of e-banking and card business
Number of E-banking users (incl. SR)
Number of e-channel users up by nearly 60 % compared to 2002
More than 50 % of all transactions
e-booked
Chip cards: 160ths issued (June-Dec. 2003)
ČSOB the largest operator of a network of payment terminals in the CR