1. Human Capital: regional challenges a Central European perspective Edwin De Boeck Chief Economist KBC Group

2. KBC in Central Europe well-defined core markets to access ‘new growth’ in Europe BE¹CZSKHUBG Loans and deposits Investment funds Life insurance Non-life insurance 1.Excluding Centea and Fidea 2.Including 55% of the joint venture with CMSS MARKET SHARE, AS OF END 2012 BELGIUM CZECH REP SLOVAKIA HUNGARY KBC Group’s core markets Belgium and CEE-4 2 20% 10%8%2% BULGARIA 20%8% 30%35% 8% 17% 13% 3%5% 11% 4%3% 6% 9%

3. Consumer confidence producer confidenceOECD- leading indicators Central Europe growth supported by global economic recovery

4. real GDP (2000 = 100) Source: Eurostat GDP per capita (PPS, in % of EU1-average) regional challenges but macro-economic ‘convergence’ has been stalling

5. employment rate (employed in % of 20-64 years old) employment rate by age category (employed in % of age group) Source: Eurostat regional challenges How to increase labour market participation ?

6. population at active age (20-64 years old, 2000 = 100) Source: Eurostat old-age dependency ratio (65+ years old as a % of 20-64) regional challenges ageing will reduce the labour force

7. keep human capital (longer) at work… effective retirement age (in years) …and keep it productive (‘employable’) participation to life-long learning (in % of 20-64 years old) Source: Eurostat regional challenges keeping human capital at work …and productive

8. school expectancy expected years of education over a lifetime Source: Eurostat regional challenges education, education, education… tertiary education: graduates in maths, science and technology (in % of all fields)

9. tax wedge: labour taxes in % of average wage (single individuals) Source: OECD regional challenges watch out for excessive taxes on labour income OECD (2010):«Cutting the ’tax wedge’ to the OECD-average could raise Hungary’s employment rate by about 4 %-point over a 10-year horizon»

10. expenditures on R &D (in % of GDP) net foreign direct investments (in % of GDP) Source: World BankSource: Eurostat regional challenges (re-)activate knowledge transfer through FDI’s

11. WEF global competitiveness index (ranking on 148 countries) IMD global competitiveness index (ranking on 60 countries) regional challenges international competitiveness rankings

12. regional challenges conclusion Best way to ‘preserve human capital in CE’ is to restore macro- economic convergence of the region by growth supportive economic policies increase labour participation watch out for excessive labour taxation (tax wedge) invest in education and life-long learning stimulate knowledge transfer and investments in R&D, a.o.through FDI’s

13. 13 awards: Best Bank in Hungary in 2013 Euromoney Awards for Excellence Bank of the Year in 2008 and 2011 Best Foreign Bank in 2009 and 2010 Best Trade Finance Bank in 2010 and 2011 K&H Bank – overview KBC is an active professional 100% shareholder of K&H Bank providing stability, liquidity and strong capital base K&H is one of the market leaders on the Hungarian corporate banking market universal banking services country-wide retail and corporate branch network pioneer in Treasury, Cash management, Trade finance and agricultural solutions, providing tailor-made products

14. attracting young talent nearly 700 participants in 4 K&H Student Cups 160+ student internships 300+ applicants for the K&H Young Graduate Program K&H is attractive to talent external recruitment avg. 20+ applicants per vacancy Most attractive employer for graduates Figyelő Hewitt TOP30 2010 Most attractive employer for graduates Figyelő Hewitt TOP30 2010

15. fostering internal career moves about 10% (400) rotates per year 50% vertical 70+% of people management vacancies filled internally K&H participates in the KBC Top Talent Program avg. 9 days of training per employee each year, above 95% satisfaction K&H fosters and develops talents Best Talent Mentoring System in Hungary 2012 Best Talent Mentoring System in Hungary 2012 Diversity and family friendly employer 2013 Diversity and family friendly employer 2013