(01/09/2005) KBC: profit for first six months up 55% and earnings target expected to be exceeded in 2005

KBC closed the second quarter of 2005 with a Group profit of 536 million euros. This brings the result for the first half of the year to 1 253 million euros, 55% more compared to last year. Financial highlights - 2Q 05: ? The volume of deposits, loans and assets under management continued to grow vigorously, keeping commission income high and enabling net interest income to hold up well, despite the flattening of the yield curve. Sales of life insurance reached a record level. Net gains from financial instruments at fair value were limited. ? Costs were up on the preceding quarter and on the second quarter of 2004, owing partly to one-off charges associated with the merger between the KBC Bank and Insurance Holding Company and Almanij. ? Loan losses remained at an extremely favourable level and the non-life insurance result was again very good. Profit outlook for 2005: KBC is optimistic about how its strategy will play out in the various business segments. For 2005, it is expected that there will be a reduction in costs in the banking business, and there are no indications at present that loan quality or the technical result in the insurance business will worsen significantly. On the other hand, developments in the interest rate and equity markets remain a source of uncertainty. Previously, KBC had already set itself a medium-term target for average annual growth of earnings per share of at least 10% per annum. Given the fine results achieved for the first six months of the year and based on current expectations regarding the relevant economic and financial parameters, KBC expects to exceed this target and achieve a Group profit of over 2 billion euros in 2005. A conference for financial analysts (Webcast) will take place today at 3.30 p.m. CET (tel. + 44 20 7162 0182). Full information is available at www.kbc.com. © CompanynewsGroup