(20/05/2005) Fortis releases 2004 figures under IFRS

Brussels/Utrecht, 20 May 2005 - Full application of IFRS accounting rules as from 1 January 2004, including IAS 32/39 and IFRS 4 - Net equity under IFRS amounts to EUR 15.4 billion at year end 2004, compared with EUR 14.4 billion under Fortis Accounting Principles (FAP (1)) - Net Profit for full year 2004 under IFRS is: - EUR 3.0 billion (2) including the proforma effect of hedge accounting, compared with EUR 3.4 billion under FAP - EUR 2.4 billion (3), excluding the effect of hedge accounting Fortis CFO Gilbert Mittler comments: 'Fortis is today publishing its 2004 results under the new IFRS accounting framework. As we explained in January, Fortis decided early on to fully apply IFRS as from 1 January 2004 (including IAS 32/39 and IFRS 4) in order to provide its stakeholders with consistent and easily comparable financial information. 'Irrespective of accounting rules, Fortis has always had hedging strategies in place, using derivatives to mitigate the interest rate risk attached to certain of its commercial and financial activities. 'The economic result of this risk reduction strategy will be fully recognised in the 2005 accounts under IFRS, but is not visible in the 2004 accounts under IFRS as the final rules - only published in the last quarter of 2004 -- did not provide the possibility retroactively applying hedge accounting. 'For this reason, Fortis has also published the proforma 2004 net profit, as if existing hedging strategies had been recognised as from 1 January 2004. As from 2005 we have applied hedge accounting to reflect the underlying economic reality and, consequently, to reduce substantially accounting volatility.' Full year 2004 figures under IFRS (versus full year 2004 figures under FAP)

(in EUR million)	FAP	IFRS (2)	Difference	IFRS (3)	Difference	Difference
		Proforma	vs FAP		vs IFRS (2)	vs FAP
Net Profit	3,359	3,003	-356	2,36	-643	-999
Banking	1,855	1,593	-262	950	-643	-905
Insurance	1,6	1,272	-328	1,272	0	-328
General	-96	138	234	138	0	234

(1) FAP in accordance with applicable legal and regulatory requirements in Belgium. (2) Proforma, including recognition of the change in fair value of hedged items. (3) By excluding the effect of hedge accounting, Fortis recognises only the change in fair value of the hedging derivatives and not the change in fair value of the hedged items. This does not properly reflect economic reality in Fortis's results nor does it give a fair view of Fortis's risk profile. - Full Year 2004 Net Profit under IFRS, including the effect of hedge accounting, amounts to EUR 3.0 billion, which is EUR 643 million higher than full year 2004 Net Profit under IFRS, excluding hedge accounting. The difference is the proforma after-tax impact of existing hedge strategies on the net profit. - Full Year 2004 Net Profit under IFRS2 amounts to EUR 3.0 billion, compared with EUR 3.4 billion under FAP. This is mainly due to the different treatment of positive value adjustments to the equity portfolio, which under IFRS no longer appear on the P&L but are directly recognised under equity. For Banking, Net Profit2 amounts to EUR 1.6 billion, which is EUR 262 million lower than under FAP. The main causes for this decrease are changes in fair value unrelated to hedging strategies, recognition of depreciation in the real estate portfolio and reversal of provisions under FAP in 2004. For Insurance, Net Profit amounts to EUR 1.3 billion compared with EUR 1.6 billion under FAP. The difference can be explained by the absence of positive value adjustments to the equity portfolio, which under IFRS are taken directly to equity whereas under FAP they appeared on the P&L whenever the value of the equity portfolio was below its historic cost. This reversal of value adjustments was only partly compensated for by higher realised capital gains. General contributes EUR 138 million profit under IFRS, compared to a EUR 96 million loss under FAP. This is thanks to a higher capital gain on the sale of Assurant, as under IFRS there is no reversal of goodwill and the currency conversion effect is different. - Net Equity at year-end 2004 amounts to EUR 15.4 billion under IFRS compared with EUR 14.4 billion under FAP. The positive impact of the transfer of the Fund for General Banking Risks to equity and the revaluation of financial instruments was partly offset by the 'fresh start' approach under IAS 19 - Employee Benefits and the option to value the real estate portfolio at amortised cost. - Net Core Capital at year-end 2004 amounts to EUR 20.2 billion under IFRS compared with EUR 21.3 billion under FAP. The decrease can largely be attributed to the aforementioned 'fresh start' approach under IAS 19, recognising all cumulative actuarial gains and losses at 'first time adoption'. First quarter 2004 figures under IFRS (versus first quarter 2004 figures under FAP)

(in EUR million)	FAP	IFRS (2)	Difference	IFRS (3)	Difference	Difference
		Proforma	vs FAP		vs IFRS (2)	vs FAP
Net Profit	1,275	1,4	125	975	-425	-300
Banking	642	553	-89	128	-425	-514
Insurance	523	403	-120	403	0	-120
General	110	444	334	444	0	334

First quarter 2004 Net Profit under IFRS including the effect of hedge accounting (2) amounts to EUR 1.4 billion, which is EUR 425 million higher than first quarter 2004 Net Profit under IFRS, excluding hedge accounting. The difference is the proforma after-tax impact of existing hedge strategies on net profit. (2) Proforma, including recognition of the change in fair value of hedged items (3) By excluding the effect of hedge accounting, Fortis accounts only for the change in fair value of the hedging derivatives and not the change in fair value of the hedged items. This does not properly reflect the economic reality in Fortis's accounting results, nor does it give a fair view of Fortis's risk profile. - First quarter 2004 Net Profit amounts to EUR 1.4 billion under IFRS (2) compared with EUR 1.3 billion under FAP. For Banking, Net Profit (2) amounts to EUR 553 million, which is EUR 89 million lower than under FAP. This decrease in profit is due to changes in fair value unrelated to hedging strategies and various small differences, including lower provisions and depreciation of real estate. For Insurance, Net Profit amounts to EUR 403 million under IFRS compared with EUR 523 million under FAP. Here too, the difference can be explained by the absence of value adjustments to the equity portfolio, which under IFRS are taken directly to equity whereas under FAP they are recognised on the P&L whenever the value of the equity portfolio is below historical cost. These were only partly compensated for by higher realised capital gains. General contributes EUR 444 million to profit under IFRS, compared to EUR 110 million under FAP. This is thanks to a higher capital gain on the sale of Assurant, as under IFRS there is no reversal of goodwill and there is a different currency conversion effect. This press release should be read in conjunction with the following two attachments: 1. Summary of Accounting Policies under IFRS 2. Tables with Balance Sheet and Income Statement figures under IFRS A detailed presentation on the main differences between Fortis's 2004 figures under IFRS and under FAP can be downloaded from our website www.fortis.com. CFO Gilbert Mittler will host a conference call for press today at 9.00 am CET. To access please dial: +44(0)20 7365 1832 Disclaimer - This press release aims only to give a general overview of the impact of IFRS on Fortis's financial reporting. It does not replace any formal reports in any way whatsoever. Investment considerations should continue to be based on the periodic reports and other information that Fortis is required to disclose by law and/or stock exchange regulations. - This press release has been prepared in accordance with IFRS standards and the interpretations issued by the IASB on 31 December 2004 and endorsed by the European Commission at that time. - These accounting policies and interpretations, and consequently the information provided, are not definitive and may still change before 31 December 2005 as a result of (among other reasons) the following: - Changes in IFRS rules and interpretations - Changes in regulatory requirements - Audit procedures - Any figures in this press release are unaudited and are in millions of euros unless stated otherwise. - The figures and trends referred to this document are for information purposes only. - Some comments in this press release refer to the future. Attached to these comments, which include such words or phrases as 'will likely result', 'are expected to', 'will continue', 'is anticipated', 'estimated' and 'projected' are certain risks and uncertainties. Actual figures may differ substantially from those suggested by these comments owing to the risks and uncertainties attached to Fortis's expectations with respect to, for example, its market risk evaluations or potential acquisitions, expansion and premium growth and investment income, cash flow projections and, more generally, general economic conditions, and legal, fiscal and regulatory developments. Fortis assumes no obligation to revise or update any information to reflect changes in policy, events, expectations or any other situation. Fortis is an integrated financial services provider active in the fields of banking and insurance. With a market capitalization of EUR 27.9 billion (29/04/2005) and around 51,000 employees, Fortis ranks in the top 20 of European financial institutions. In its home market, the Benelux countries, Fortis occupies a leading position which it aims to develop and bolster. Fortis is drawing on the expertise it has acquired in its home market to realize its European ambitions via growth platforms. Fortis also operates successfully worldwide in selected activities. In specific countries in Europe and Asia it effectively exploits its know-how and experience in bancassurance. Fortis is listed on the exchanges of Amsterdam, Brussels and Luxembourg and has a sponsored ADR programme in the United States. More information is available on www.fortis.com Press Offices: Brussels: +32 2 565 35 84 Utrecht: +31 30 226 32 19 Investor Relations: Brussels: +32 2 510 53 91 Utrecht: +31 30 226 32 20 Annex 1 Summary Accounting Policies Please find below a summary of the "Accounting Policies" as adopted by Fortis under IFRS. The full document with an extensive discussion of the accounting policies is available for download on our website www.fortis.com/ir. 1. General accounting principles and principles of consolidation 1.1 General The consolidated annual financial statements of companies publicly listed in the European Union must be prepared in accordance with International Financial Reporting Standards ('IFRS') as endorsed by the European Commission for the financial years starting on or after 1 January 2005. Consequently, this consolidated interim financial report, including the 2004 comparative figures, has been prepared in accordance with IFRS - including International Accounting Standards ('IAS') and Interpretations - issued by the International Accounting Standards Board ('IASB') as at 31 December 2004 and as endorsed by the European Commission (including the so-called 'carved out' version of IAS 39, Financial Instruments: Recognition and Measurement). These accounting policies and interpretations, and consequently the information presented, including the 2004 comparatives, are not necessarily final and are subject to change up to 31 December 2005 as a result of, amongst other things, changes in IFRS Standards and Interpretations, changes in regulatory requirements and the execution of audit procedures. According to IFRS1, First-time Adoption of International Financial Reporting Standards, an entity has to use the same accounting policies in its opening IFRS balance sheet and throughout all periods presented in its first IFRS annual financial statements. Fortis' financial statements for the year ended 31 December 2004 were prepared in accordance with the applicable legal and regulatory requirements in Belgium. An overview of these accounting principles ('FAP') can be found in the Fortis 2004 Annual Accounts. Fortis has restated these consolidated financial statements for comparative reasons to comply with IFRS. 1.2 Accounting estimates The preparation of financial statements in conformity with IFRS requires the use of certain accounting estimates. It also requires management to exercise its judgement in the process of applying these accounting policies. Actual results may differ from these estimates and decisions. 1.3 Adoption dates IFRS allows Fortis to select the date of adoption of certain standards. Fortis has chosen to adopt IAS 32 (Financial Instruments: Disclosure and Presentation), IAS 39 (Financial Instruments: Recognition and Measurement), IFRS 2 (Share Based Payment), IFRS 3 (Business Combinations), and IFRS 4 (Insurance Contracts) as from 1 January 2004. However, IFRS 5 (Non-current Assets Held for Sale and Discontinued Operations) will be implemented as from 1 January 2005. 1.4 Determination of accounting policies The IFRS Standards allow in certain cases the application of different options. The following options were chosen by Fortis: - Trade date accounting: all purchases and sales of financial assets requiring delivery within the time frame established by regulation or market convention are recognised on the trade date, which is the date when Fortis becomes a party to the contractual provisions of the financial assets. Under FAP, these were recognised at settlement date, which is the date that an asset is delivered to or by Fortis. - Investment property, real estate held for own use, fixed assets and intangible fixed assets are measured at cost less accumulated depreciation and any accumulated impairment losses. Investment property and real estate held for own use were measured at fair value under FAP. - Investments in joint ventures are accounted for using the equity method. Under FAP these were consolidated proportionately. - Fortis will use three types of hedges: fair value hedges, cash flow hedges and net investment hedges. Fair value hedge accounting is applied as from 1 January 2005 for portfolio hedges of interest rate risk ('macro hedging'). In this context, the starting difference between the fair value and the carrying value of the hedged item at designation of the hedging relationship is amortised over the remaining life of the hedged item ('reverse amortisation'). For macro hedges, Fortis uses the 'carved out' version of IAS 39 endorsed by the European Commission which removes some of the limitations on fair value hedges and the strict requirements on the effectiveness of those hedges. Under this version, ineffectiveness only arises when the revised estimate of a certain hedged item bucket drops below the designated amount of that bucket. - Fortis will apply 'shadow accounting' to the unrealised changes in fair value of the investments that are linked to and therefore affect the measurement of the insurance liabilities. These changes in fair value will therefore not be part of net equity. - The whole of the remaining unrealised changes in fair value of the available-for-sale portfolio - after application of 'shadow accounting' - that are subject to discretionary participation features are classified as a separate component of equity. - The adequacy of insurance liabilities ('liability adequacy test') is tested at each reporting date on the level of homogeneous product groups. - Borrowing costs are generally expensed as incurred. Borrowing costs that are directly attributable to the acquisition or construction of an asset are capitalised while the asset is being constructed as part of the cost of that asset. - Pensions: under IFRS, Fortis will continue to use the corridor approach, i.e. not recording actuarial differences within a defined bandwidth. 1.5 Other accounting principles A number of IFRS accounting policies are highlighted below due to their importance and difference with FAP: Provisions Under IFRS, provisioning is subject to stricter rules than under FAP. Under IFRS, only provisions where Fortis has a present obligation resulting from a past event can be recognised in the income statement. Derivatives Under IFRS, derivatives must be recognised in the balance sheet at fair value. Changes in the fair value are recorded directly in the income statement. Under FAP, only trading derivatives were recorded on the balance sheet. Financial instruments IFRS recognises four categories of financial assets, with a different valuation basis by category: - loans and receivables, measured at amortised cost, with the periodic amortisation recognised in the income statement; - held-to-maturity investments, consisting of instruments with fixed or determinable payments and fixed maturity for which the positive intent and ability to hold to maturity is demonstrated. The valuation method is the same as for loans and receivables; - financial assets at fair value through profit or loss, consisting of (i) financial assets held for trading, and (ii) financial assets that Fortis has irrevocably designated at acquisition as at fair value through profit or loss; - available-for-sale financial assets (all those not classified in the previous categories), at fair value through equity. Fortis will classify most of its bonds as available-for-sale financial assets. This means that under IFRS these bonds, which under FAP are valued at amortised cost, will be recorded at fair value through equity. Financial liabilities are, with the exception of derivatives valued at amortised cost. Treasury shares Where the Parent Companies or their subsidiaries purchase Fortis share capital or obtain rights to purchase their share capital, the consideration paid including any attributable transaction costs is shown as deduction from total shareholders' equity. Gains and losses on sales of own shares are recorded as an adjustment to shareholders' equity. This is in contrast to FAP, under which Fortis shares are recorded as assets. Realised results were accounted for in the income statement with the exception of shares that were issued for the Floating-Rate Equity-Linked Subordinated Hybrid Loans ('FRESH'). Insurance According to IFRS 4, non-profit sharing policies that involve no or only a very limited insurance risk must not be classified as insurance contracts but as investment contracts. As a result, and in contrast with the situation under FAP, the premiums received by Fortis for these policies must under IFRS be recorded directly in the balance sheet instead of in the income statement. Financial instrument with an equity component Components of compound financial instruments (liability and equity parts) are classified in their respective sections of the balance sheet. Under FAP these financial instruments were fully treated as liabilities. 1.6 Scope of consolidation The consolidated interim financial report includes that of Fortis SA/NV and Fortis N.V. (the 'Parent Companies') and their subsidiaries. In combining the financial statements of Fortis SA/NV and Fortis N.V., Fortis has opted for consortium accounting in order to reflect in the most reliable manner its banking and insurance activities in accordance with the 7th EU directive dated 13 June 1983 (83/349/EEC). Fortis sponsors the formation of Special Purpose Entities ('SPEs') primarily for the purpose of asset securitisation transactions, structured debt issuance, or to accomplish another well-defined objective. Some of the SPEs are bankruptcy-remote companies whose assets are not available to settle the claims of Fortis. SPEs are consolidated if in terms of economic reality they are controlled by Fortis. Investments in joint ventures - contractual agreements whereby Fortis and other parties undertake an economic activity that is subject to joint control - are accounted for using the equity method. In addition, a number of subsidiaries which are not consolidated under FAP will be included in the consolidation scope under IFRS. However, these changes will have no material impact on group equity. 1.7 First-Time Adoption of IFRS IFRS 1, First-time Adoption of International Financial Reporting Standards, requires the retrospective application of IFRS when an entity is first adopting IFRS. However, to facilitate the implementation of IFRS, the standard provides entities with nine optional exemptions. Fortis has decided to use the following exemptions: 1. Business Combinations that occurred prior to 1 January 2004 will not be restated under IFRS. As a consequence, previously paid goodwill that was included in equity will not be restated. 2. Employee Benefits: IFRS allows entities, when preparing the IFRS opening balance sheet, to recognise as net equity all cumulative actuarial gains and losses that were not yet recognised previously in the income statement. Fortis will make use of this option. As stated above, Fortis will continue to use the corridor approach (not recording actuarial differences within defined limits) from 1 January 2004. 3. Cumulative Translation Differences: the cumulative translation differences for all foreign operations are deemed to be zero at the date of transition to IFRS, and the gain or loss on a subsequent disposal of any foreign operation shall exclude translation differences that arose before the date of transition to IFRS. 4. Designation of Previously Recognised Financial Instruments: Fortis will designate previously recognised financial assets as held at fair value through profit or loss or available for sale at the date of transition. 5. Share-Based Payments: Fortis has elected to apply IFRS 2 to all options and restricted shares granted to employees and outstanding as of 1 January 2004 and all options and restricted shares issued subsequent to 1 January 2004. 1.8 Segment Reporting Fortis's principle business segments are banking and insurance, with the following subsegments: - Retail Banking - Commercial & Private Banking - Merchant Banking - Insurance Belgium - Insurance Netherlands - Insurance International Activities not related to banking or insurance and elimination differences are reported separately, in addition to the banking and insurance segments. 1.9 Presentation and disclosures The consolidated quarterly report is stated in euros, the functional currency of the countries in which the Parent Companies are incorporated. Under IFRS, financial assets and liabilities must be reported on a net basis if Fortis: - currently has a legally enforceable right to set off the recognised amounts, and - intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. These are stricter rules than under FAP. Where IFRS allows a choice in presentation or disclosures, Fortis opted for the following: - Interest on trading assets and derivatives are reported in the interest margin. - Dividends received are included in investment income. - Realised and unrealised results on trading assets are included in 'Other 'realised and unrealised gains and losses'. - Changes in the clean fair value (i.e. excluding interest accruals) of derivatives that are not designated as hedging instruments are also reported under 'Other 'realised and unrealised gains and losses'. - Cash flow statement: Fortis reports cash flows from operating activities using the indirect method. Interest received and interest paid are presented as cash flows from operating activities. Dividends paid are classified as cash flows from financing activities, dividends received are classified as cash flow from operating activities. Annex 2 Attachements to the press release are available on http://www.companynewsgroup.com © CompanynewsGroup