Earnings Statement KBC Group, 4Q 2008 and FY 2008

Regulated information* - 12 February 2009 (7.00 a.m. CET)

KBC posted a net loss of 2 484 million euros for financial year  2008
on the back of the financial  crisis. Adjusted for the direct  impact
of the crisis and disregarding  other exceptional items (see  details
in the  quarterly  report), (underlying)  net  profit came  to  2 270
million euros. The net profit for the quarter ending 31 December 2008
stood at -2 625  million euros (+176 million  euros on an  underlying
basis).

According to André Bergen, Group  CEO: "The fourth quarter was  truly
dreadful for the financial  markets, with no respite  at all for  the
sector. Our performance was not immune to the fall-out of the crisis.
We already  released preliminary  quarterly earnings  information  in
mid-January and adopted a conservative  stance when marking down  the
value  of  all  non-super-senior  tranches  of  Collateralised   Debt
Obligations to zero. We also  took decisive measures to reduce  costs
and to de-risk the business portfolio. The financial position of  the
group remains solid, especially  after we secured additional  capital
support from the  Flemish Regional  Government at the  start of  this
year. Although the financial crisis has obviously not come to an  end
yet, the  underlying business  performance at  the start  of 2009  is
encouraging, as  illustrated by  the  fact that  January 2009  was  a
better month than January 2008."

Financial highlights - 4Q 2008

André Bergen, Group CEO, summarised  the financial highlights for  4Q
2008 as follows:

"The  results  were  affected  by  markdowns  on  structured   credit
portfolios to the  tune of  1.7 billion euros,  after credit  ratings
were downgraded,  benchmark  credit  spreads  widened  and  non-super
senior  tranches  of  CDO  investments  were  marked  down  to  zero.
Moreover, a 0.7-billion-euro loss  was recorded in  the value of  the
equity investment portfolio, as share  prices in Europe sank  another
20%, on  average.  Finally, write-offs  in  respect of  exposures  to
Icelandic banks had a net negative impact of 0.2 billion euros."

"Since the summer of 2008,  deposit pricing pressure and weak  levels
of  income   from  retail   investment  transactions   have   limited
profitability in Belgium. On the other hand, customer deposit  growth
and life insurance sales remained solid in the quarter under  review,
while the interest margin edged up by 6 basis points. Moreover, at  9
basis points,  credit  risk  charges remained  very  low,  while  the
underwriting result for the insurance  business was very good  again,
bringing the combined  ratio for  the year to  96%. Excluding  losses
related to the  financial crisis, the  full-year return on  allocated
capital for the Belgium Business  Unit came to 36%, illustrating  the
strength of our competitive position  and the intrinsic value of  our
business."

"There is a  lot of pessimism  in the market  about asset quality  in
Eastern Europe. With an underlying loan loss ratio of 73 basis points
for financial year 2008, we believe that the cost of risk remained at
a reasonable  level. This  was  also the  case  for our  presence  in
Hungary, which represents  only 4% of  our loan book.  On an  organic
basis, overall loan growth in  the region stood at 25%  year-on-year.
Although the loan loss trend is upwards and volume growth is expected
to slow down  in the  coming quarters, we  believe that  KBC is  well
positioned, with its  exposure being concentrated  in countries  that
have, on  average,  a  lower risk  profile  despite  experiencing  an
economic slowdown."

"The Merchant banking unit faced severe challenges during the  fourth
quarter. While overall  economic activity slowed,  credit growth  was
restricted and commercial loan loss  charges rose, especially in  the
non-domestic loan  book. The  underlying  full-year loan  loss  ratio
ended at  48  basis points.  Capital  market activities,  notably  in
derivatives products,  have been  severely hit  by historically  high
volatility, reduced effectiveness of  hedges and losses incurred  due
to the  unwinding  of positions.  All  these factors  resulted  in  a
quarterly loss for the business unit."

"In the European private banking unit, the business model has  proven
to be resilient. Despite the adverse investment climate, the  outflow
of assets during the quarter remained limited to 1%. Obviously,  core
earnings  were  heavily  impacted  by  the  cyclical  low  volume  of
transactions  and  a  shift  to  plain  vanilla  (i.e.  low   margin)
products."

"KBC's financial  position remains  very solid  thanks to  its  sound
liquidity buffer and firm solvency ratios. When the support  received
from both the Belgian  State and the  Flemish Regional Government  is
included, the  tier-1  ratio for  the  banking activities  stands  at
11.2%. For  the  insurance business,  the  solvency margin  is  188%.
Decisive measures have been  taken to contain  costs and reduce  risk
levels. Lending  outside  the home  markets  of Belgium  and  Eastern
Europe was restricted,  while market  risk is also  being reduced  by
downsizing investment banking activities."

Financial highlights - 2008

*  Net profit according to IFRS amounted to -2 484 million euros for
  the 2008 financial year. This figure includes exceptional items,
  such as losses on investment portfolios and the unwinding of
  trading positions related to the financial crisis (a net 4.8
  billion euros). When adjusted for these items, (underlying) profit
  came to a positive 2 270 million euros, reflecting an underlying
  return on equity of 16%.
* Net interest income came to 4 992 million euros, up 22% on the
  year-earlier figure (+10% on an underlying basis), thanks mainly to
  solid volume growth. Underlying loan growth stood at 8%
  year-on-year (8% in Belgium, 25% in Central and Eastern Europe and
  0% in Merchant Banking). The net interest margin in the Central &
  Eastern Europe and Russia Business Unit increased from 3.0% to 3.2%
  (thanks in part to growth in higher-margin countries), while it
  fell in Belgium from 1.8% to 1.5%, due to lower savings deposit
  spreads.
* Gross earned premiums for the insurance business stood at 4 585
  million euros, up 15% on the year-earlier figure. Net of technical
  charges and the ceded reinsurance result, income was 110 million
  higher (+21%). The combined ratio for the non-life business stood
  at a favourable 95%.
* Dividend income from equity holdings amounted to 259 million euros,
  roughly on a par with the year-earlier figure.
* Net gains from financial instruments at fair value came to a
  negative 3 481 million euros. This amount included a valuation
  markdown of 3.8 billion euros related to structured credit
  investments. The line item also includes income from professional
  money and securities trading, which was negatively impacted by the
  adverse capital-market climate and the unwinding of trading
  positions in derivative products. At the request of the external
  auditors, the effect of changes in own credit spreads was taken
  into account to determine the fair value of liabilities at fair
  value through profit or loss. In order to meet this request, the
  carrying amount of own debt designated as liabilities at fair value
  through profit or loss was adjusted, resulting in a fair value gain
  of 371 million euros (amount excluded, however, for regulatory
  capital purposes).
* Gains from available-for-sale assets (mostly investments in shares)
  were limited to 95 million euros, 587 million euros less than the
  year-earlier figure owing to the poor performance of the equity
  markets.
* Net fee and commission income amounted to 1 714 million euros. This
  is 14% below the year-earlier level, largely due to lower customer
  investment activities consequent on the adverse investment climate.
* Other net income stood at 618 million euros, the same as its
  year-earlier level.
* Operating expenses came to 5 600 million euros. The 7% year-on-year
  increase in costs is accounted for by new acquisitions and currency
  appreciations. Excluding these factors, costs remained stable, with
  lower bonus accruals being offset by additional non-staff expenses,
  including restructuring charges.
* Total impairment charges stood at 2 234 million euros, 822 million
  euros of which related to the loan portfolio and 1 333 million
  euros to available-for-sale investment securities (to a large
  extent shares held in the insurance business). An impairment charge
  of 190 million euros was taken (mainly) on bonds issued by the
  troubled US banks Lehman Brothers and Washington Mutual, while
  impairment of 249 million euros related (mostly) to loans
  outstanding to troubled Icelandic banks.
* The contribution from associated companies amounted to -1 million
  euros, while the result attributable to minority interests was +105
  million euros.
*  Due to the negative pre-tax result, a deferred tax asset was
  recognised, resulting in a positive impact on the income statement.
* At the end of December 2008, parent shareholders' equity came to
  14.2 billion euros. Shareholders' equity was down on the start of
  the year, as newly issued core capital securities (3.5 billion
  euros' worth issued to the Belgian State) were more than offset by
  the negative result for the year (-2.5 billion euros), the decrease
  in the revaluation reserve for available-for-sale investments (-1.9
  billion euros) and treasury shares repurchased and dividends paid
  out in the first half of the year (-1.6 billion euros, combined),
  among other factors.

Future developments
The ongoing strategy review will  result in a further fine-tuning  of
the way capital  will be used  in the  years ahead. So  far in  2009,
lending outside the home markets  of Belgium and Central and  Eastern
Europe has  continued to  be restricted,  while market  risk is  also
being reduced by downsizing investment banking activities.

KBC's strategy will remain focused  primarily on further building  on
its strong competitive positions in  Belgium and Central and  Eastern
Europe. Niche strategies  in merchant banking  and wealth  management
will be pursued  on a  more selective basis,  while acquisitions  are
highly unlikely in  the immediate future.  Projects to contain  costs
throughout the group are currently being rolled out.

André Bergen, Group CEO: "Like everybody else in the sector, we  have
been facing a  number of  strong headwinds recently,  but we  believe
that we have taken the right steps to keep growing our core  business
and to safeguard its strong mid-term value."



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