KBC Groupe NV

Quarterly Report • May 11, 2017

KBC Group I Quarterly Report – 1Q2017 I p.1

Report for 1Q2017

Summary 4

The core of our strategy 5

Highlights in the quarter under review 5

Overview of our results and balance sheet 6

Analysis of the quarter 7

Risk statement 10

Our views and guidance 10

Consolidated financial statements according to IFRS

Consolidated income statement 12

Consolidated statement of comprehensive income 13

Consolidated balance sheet 14

Consolidated statement of changes in equity 15

Consolidated cash flow statement 16

Notes on statement of compliance and changes in accounting policies 16

Notes on segment reporting 17

Other notes 18

Statutory auditors' report 27

Additional information

Credit risk 30

Solvency 36

Income statement per business unit 40

Details of ratios and terms 48

Management certification

'I, Rik Scheerlinck, Chief Financial Officer of the KBC Group, certify on behalf of the Executive Committee of KBC Group NV that, to the best of my knowledge, the abbreviated financial statements included in the quarterly report are based on the relevant accounting standards and fairly present in all material respects the financial condition and results of KBC Group NV including its consolidated subsidiaries, and that the quarterly report provides a fair view of the main events, the main transactions with related parties in the period under review and their impact on the abbreviated financial statements, and an overview of the main risks and uncertainties for the remainder of the current year.'

Forward-looking statements

The expectations, forecasts and statements regarding future developments that are contained in this report are, of course, based on assumptions and are contingent on a number of factors that will come into play in the future. Consequently, the actual situation may turn out to be (substantially) different.

Investor Relations contact details Investor.relations@kbc.com

KBC Group NV, Investor Relations Office, Havenlaan 2, 1080 Brussels, Belgium

This report contains information that is subject to transparency regulations for listed companies. Date of release: 11 May 2017

KBC Group

Report for 1Q2017

Summary: Excellent first-quarter result of 630 million euros

Against the background of highly accommodating monetary policy, persistently low interest rates and further improving economic growth, particularly in Central Europe and Ireland, KBC turned in another strong performance with a net profit of 630 million euros, well up on the 392 million euros in the first quarter of 2016. It was down on the 685 million euros recorded in the fourth quarter of 2016, since it was distorted by the booking of upfront banking taxes in the first quarter. Our lending and deposit volumes as well as our assets under management continued to grow in the first quarter 2017. In addition to the fine business performance, costs remained under control, overall loan loss impairment charges were extremely low and our solvency position remained strong. For Ireland, our guidance for loan impairment is for a release of 120-160 million euros for full year 2017.

Financial highlights for the first quarter of 2017

• Both our banking and insurance franchises in our core markets and core activities continued to perform strongly.
• Quarter-on-quarter, lending to our clients increased by 1%, and deposits from our clients went up by 2%, with growth in both cases in almost all of our core countries.
• Net interest income our main source of income continued to be impacted by the climate of low reinvestment yields, and fell by some 3% in the quarter. Our net interest margin came to 1.88%, down 2 basis points quarter-on-quarter.
• Year-on-year, the premium income we earned on our non-life insurance products increased by 6% while claims fell 12%. Consequently, our non-life combined ratio for the first quarter of 2017 ended up at an exceptionally low 79%. Sales of our life insurance products decreased by 9% quarter-on-quarter.
• Our net fee and commission income went up sharply, rising by 17% quarter-on-quarter thanks mainly to our asset management services.
• Our other income items combined fell by 7% quarter-on-quarter; they included lower (but still high) trading and fair value income, higher gains realised on the sale of financial assets and lower other net income.
• Our operating expenses were impacted by most of the full-year bank taxes being booked in the first quarter (361 million euros). Excluding these taxes, expenses increased by 2% year-on-year. As a consequence, when the bank taxes are evenly spread throughout the year and some non-operational items excluded, our cost/income ratio for the first quarter of 2017 stood at a comfortable 52%.
• At 6 million euros, loan loss impairment remained extremely low in the quarter under review, thanks largely to impairment releases in Ireland. This brought our annualised cost of credit to a very low 0.02%. For Ireland, our guidance for loan impairment is for a release of 120-160 million euros for full year 2017.
• Income taxes stood at 85 million euros and benefited from a one-off deferred tax asset of 66 million euros related to the liquidation of a group company.
• Our liquidity position remained strong, as did our capital base, with a common equity ratio of 15.7% (fully loaded, Danish compromise).

Johan Thijs, our group CEO, says…

'We again performed very well in the quarter under review, notwithstanding the fact that the first quarter is traditionally impacted by the bulk of bank taxes for the full year being booked upfront. We are especially happy with the way our net fee and commission income has rebounded. This is evidence that we are succeeding in our ambition to diversify our income towards fee business such as asset management and insurance. This, together with the very low level of loan loss impairment and our continued focus on cost containment, has enabled us to post an excellent 630 million euros in net profit.

Clients borrowed more from us, and also increased their deposits and assets under management with us. All this is proof that our client-centric approach is clearly paying off. Moreover, our solvency position remained strong and comfortably surpassed the minimum capital requirements set by the regulators.

On the strategic front – and as already announced earlier this year – we have named Ireland as a core country, where we will focus on a 'Digital First' approach. In all of our other core markets too, we are

continuing to pro-actively roll-out our financial technology plans so we can serve our clients even better going forward. Moreover, the recent appointment of a dedicated Group Chief Innovation Officer to our Executive Committee clearly reflects the importance we attach to digitalisation and innovation in our group.

However, we see digitalisation as a means rather than an end. We are in fact constantly looking at how we can adapt in order to respond to our clients' changing needs. Indeed, in our business model, client-centricity is and remains the main pillar around which we define our future actions as a sustainable bank-insurer'.

Overview KBC Group (consolidated, IFRS)	1Q2017	4Q2016	1Q2016
Net result (in millions of EUR)	630	685	392
Basic earnings per share (in EUR)	1.47	1.61	0.91
Breakdown of the net result by business unit (in millions of EUR)
Belgium	301	439	209
Czech Republic	181	131	129
International Markets	114	139	60
Group Centre	33	-24	-6
Parent shareholders' equity per share (in EUR, end of period)	39.4	38.1	34.3

The core of our strategy

Our core strategy remains focused on providing bank-insurance products and services to retail, SME and mid-cap clients in our core countries of Belgium, Bulgaria, the Czech Republic, Hungary, Ireland and Slovakia.

Our strategy consists of four interacting cornerstones:

• We put our clients' interests at the heart of what we do and strive to offer them high quality service and relevant solutions at all times.
• We strive to offer our clients a unique bankinsurance experience.
• We develop our group with a long-term perspective in order to achieve sustainable and profitable growth.
• We take our responsibility towards society and local economies very seriously and aim to reflect that in our everyday activities.

We are convinced that our strategy – powered by our culture and the efforts of our people – helps us earn, keep and grow trust day by day and, therefore, gives us the capacity to become the reference in our core markets.

Highlights in the quarter under review

On the strategic front – and as already announced in February – we have named Ireland as a core market, alongside Belgium, Bulgaria, the Czech Republic, Hungary and Slovakia. As a consequence, KBC Bank Ireland will strive to achieve a share of at least 10% in the retail and micro-SME market. Life and non-life insurance products will continue to be offered through partnerships. KBC Bank Ireland will accelerate its efforts and investments in expertise and resources to become a fully fledged, digital-first client-centric bank, while continuing to carefully and efficiently manage its legacy portfolio for maximum recovery. We plan to organise a KBC Group investor visit, which is scheduled to take place in Dublin on 21 June 2017.

As a group, we remain fully committed to our omnichannel approach, in which digitalisation and innovation are playing an ever increasing role. In order to keep on improving service to our clients, we are continuing to roll-out our financial technology plans in all of our core markets, leading to a continuous stream of new products and services (for instance, in Bulgaria, MasterCard and CIBANK have joined forces to launch the very first ATM to accept contactless cards and devices; in Ireland, KBC was among the first companies to make Apple Pay and Android Pay available to their clients, enabling them to use their phones to make contactless payments anywhere in the world; and in Belgium, we further expanded KBC Live, our regional contact centres, providing enhanced (video) chat capabilities and more staff, to reinforce our omnichannel approach).

On the operational level, we also reflected the importance we attach to innovation in the composition of our top management: our Executive Committee now includes a Chief Innovation Officer (Erik Luts) who will specifically manage KBC Group's innovation and digitalisation agenda.

We also welcomed Rik Scheerlinck as the new Group CFO. He succeeded Luc Popelier who became the CEO of the International Markets Business Unit, replacing Luc Gijsens who left the Executive Committee after a much-appreciated 40-year career with our group.

We view sustainability as an integral part of our strategy and our everyday business. We elaborate on our sustainability approach not only in our Annual Report, but also in our Report to Society, which we published at the end of March and in which we focus on how KBC assumes its responsibility towards the community. We will also shortly be publishing a dedicated sustainability report, in which we will provide detailed information on our non-financial performance.

Selection of awards and recognition since the start of the year

• KBC Group's corporate website www.kbc.com tops the Comprend Webranking for Belgium
• Fitch Ratings upgrades KBC Bank's and KBC Group's long-term ratings from 'A-' to 'A'
• Euromoney magazine names ČSOB Private Banking 'Best Private Bank in the Czech Republic in 2017'
• KBC among the best workplaces in Belgium for 2017 (Great Place to Work ©)
• KBC wins several awards from the Structured Retail Products magazine
• KBC receives award for 'Best Trade Finance Provider 2017' in Belgium, the Czech Republic, Slovakia and Hungary
• KBC Securities receives two awards from Euronext: 'Equity Finance House of the Year 2016' and 'Belgian SME Broker of the Year 2016'

Overview of our results and balance sheet

We provide a full overview of our IFRS consolidated income statement and balance sheet in the 'Consolidated financial statements' section of the quarterly report. Condensed statements of comprehensive income, changes in shareholders' equity, as well as several notes to the accounts, are also available in the same section.

Consolidated income statement, IFRS KBC Group (in millions of EUR)	1Q2017	4Q2016	3Q2016	2Q2016	1Q2016
Net interest income	1 025	1 057	1 064	1 070	1 067
Non-life insurance (before reinsurance)	187	178	164	141	145
Earned premiums Technical charges	360 -173	363 -185	357 -193	349 -208	341 -196
Life insurance (before reinsurance)	-28	-44	-34	-38	-35
Earned premiums Technical charges	312 -341	413 -457	336 -370	402 -440	426 -461
Ceded reinsurance result	-4	-15	-1	-13	-8
Dividend income	15	19	12	36	10
Net result from financial instruments at fair value through P&L	191	224	69	154	93
Net realised result from available-for-sale assets	45	8	26	128	27
Net fee and commission income	439	376	368	360	346
Other net income	77	101	59	47	51
Total income	1 946	1 903	1 727	1 885	1 697
Operating expenses	-1 229	-963	-895	-904	-1 186
Impairment	-8	-73	-28	-71	-28
on loans and receivables on available-for-sale assets	-6 -1	-54 -4	-18 -7	-50 -20	-4 -24
on goodwill	0	0	0	0	0
other	0	-15	-3	-1	-1
Share in results of associated companies and joint ventures	5	5	9	6	7
Result before tax	715	871	814	916	489
Income tax expense	-85	-186	-184	-194	-97
Net post-tax result from discontinued operations	0	0	0	0	0
Result after tax	630	685	629	721	392
attributable to minority interests	0	0	0	0	0
attributable to equity holders of the parent	630	685	629	721	392
Basic earnings per share (EUR) Diluted earnings per share (EUR)	1.47 1.47	1.61 1.61	1.47 1.47	1.69 1.69	0.91 0.91

Key consolidated balance sheet figures KBC Group (in millions of EUR)	31-03-2017	31-12-2016	30-09-20126	30-06-2016	31-03-2016
Total assets	287 293	275 200	266 016	265 681	261 551
Loans and advances to customers	135 304	133 231	131 973	131 383	129 703
Securities (equity and debt instruments)	72 329	73 262	72 774	73 494	72 860
Deposits from customers and debt certificates	181 722	177 730	170 425	175 870	173 646
Technical provisions, before reinsurance	19 234	19 657	19 745	19 724	19 619
Liabilities under investment contracts, insurance	13 128	12 653	12 506	12 427	12 508
Parent shareholders' equity	16 506	15 957	15 135	14 834	14 335

Selected ratios for the KBC group (consolidated)	1Q2017	FY2016
Profitability and efficiency
Return on equity	17%	18%
Cost/income ratio, banking (between brackets: when evenly spreading the bank taxes and excluding some non-operational items)	66% (52%)	55% (57%)
Combined ratio, non-life insurance	79%	93%
Solvency
Common equity ratio according to Basel III Danish Compromise method (phased-in/fully loaded)	15.9%/15.7%	16.2%/15.8%
Common equity ratio according to FICOD method (fully loaded)	14.6%	14.5%
Leverage ratio according to Basel III (fully loaded)	5.7%	6.1%
Credit risk
Credit cost ratio	0.02%	0.09%
Impaired loans ratio	6.8%	7.2%
for loans more than 90 days overdue	3.6%	3.9%
Liquidity
Net stable funding ratio (NSFR)	130%	125%
Liquidity coverage ratio (LCR)	145%	139%

Analysis of the quarter (1Q2017)

The net result for the quarter amounted to 630 million euros, compared to 685 million euros in the previous quarter and 392 million euros in the corresponding quarter a year earlier.

Our total income was up 2% quarter-on-quarter, with increased net fee and commission income, higher realised gains and a higher contribution from the insurance activities being partly offset by a decrease in net interest income, trading and fair value income and other net income.

Our net interest income (1 025 million euros) was down 3% on its level in the previous quarter and 4% on its yearearlier level. This was due in part to low reinvestment yields, a lower contribution to interest income from the dealing room, lower prepayment fees on mortgage loan refinancing, continued loan margin pressure and –quarteron-quarter – the lower number of days in the quarter. The impact of these items was partly offset by decreased funding costs, the further positive effect of enhanced ALM management and loan volume growth (see below). As a result, our net interest margin came to 1.88% for the quarter under review, down 2 and 8 basis points on the figure recorded in the previous and year-earlier quarters, respectively. As already mentioned, interest income continued to be driven by loan volume growth: our total lending volume rose by 1% quarter-on-quarter and by 4% year-on-year. Deposits increased by 2% quarter-onquarter and by almost 10% year-on-year.

Breakdown of the 1Q2017 result

Technical income from our non-life and life insurance activities (earned premiums less technical charges, plus the ceded reinsurance result) stood at 155 million euros in the quarter under review. Our non-life insurance activities contributed 183 million euros to that technical insurance income, 12% more than in the previous quarter, thanks mainly to much lower claims and a better reinsurance result. Compared to a year ago, the non-life activities contributed as much as 34% more to the result, but the main part of this increase relates to the fact that claims in the first quarter of 2016 had been impacted by the Brussels attacks. As a result, our combined ratio for the quarter under review came to an excellent 79%, compared to 93% for full year 2016. The technical insurance income of our life insurance activities stood at -28 million euros, compared to -44 million euros in the previous quarter and -35 million euros in the year-earlier quarter. Compared to the relatively strong reference quarters, the aggregate sales of life insurance products fell by 9% quarter-on-quarter and by 19% year-on-year. The quarter-on-quarter drop was accounted for mainly by the Czech Republic (fewer sales of unit-linked life products), while the year-on-year decline was due to Belgium (primarily interest-guaranteed life products) and the Czech Republic (unit-linked products).

Our net fee and commission income improved sharply, going up by 17% quarter-on-quarter and by as much as 27% year-onyear, to 439 million euros. The improvement in both cases was almost entirely attributable to Belgium and was due essentially to the much higher contribution from asset management services, which generated an increase in both entry and management fees. At the end of March 2017, our total assets under management stood at 216 billion euros, up 1% quarter-on-quarter and 4% yearon-year, thanks mainly to the positive price performance in both periods.

All other income items amounted to an aggregate 328 million euros, compared to 352 million euros in the previous quarter and 181 million euros in the year-earlier quarter. The figures for the first quarter of 2017 include 45 million euros in gains realised on the sale of securities (two-thirds of which relating to shares), 15 million euros of dividend income and 77 million euros of other net income. It also includes a high net result of 191 million euros from financial instruments at fair value (trading and fair value income). This latter figure was down on the even higher 224 million euros in the previous quarter (as a further increase in our dealing room result could not fully offset the lower value of derivatives used for asset/liability management purposes), but up significantly on the 93 million euros in the year-earlier quarter (also owing to the solid performance of the dealing rooms combined with the positive impact of various valuation adjustments).

Disregarding bank taxes, costs fell 7% quarter-on-quarter, and rose just 2% year-on-year

At first sight, costs rose significantly on their level of the previous quarter (+28%), but this was due entirely to the fact that the first quarter of the year traditionally includes the upfront booking of the largest part of the bank tax for the full year (361 million euros in the first quarter of 2017, compared with 27 million euros in the fourth quarter of 2016 and 335 million euros in the first quarter of 2016).

Disregarding these bank taxes, costs were only slightly (2%) higher than in the year-earlier quarter and were even down 7% on the seasonally high figure for the last quarter of 2016 (which, besides higher marketing costs, professional fees and ICT costs, had also been impacted by one-off expenses for early retirement, among other things).

As a result, the cost/income ratio of our banking activities stood at 66% in the first quarter of 2017, compared to 55% for full year 2016. When the bank taxes are evenly spread throughout the year and some non-operational items are excluded, our cost/income ratio for the first quarter of 2017 came to a comfortable 52% (57% for full year 2016).

Extremely low level of overall loan loss impairment charges in the quarter under review

In the first quarter of 2017, we booked an extremely low 6 million euros in loan loss impairment charges, compared to 54 million euros in the previous quarter and a likewise extremely low 4 million euros a year earlier. The low figure for the quarter under review was due essentially to the combination of a net impairment release of 50 million euros in Ireland (thanks mainly to the increase in the 9-month average housing price index and a further improvement in the non-performing portfolio), a net addition of 59 million euros in Belgium (impacted by two large corporate loans), and just a minor impact from provisioning in all other countries (a net addition of 2 million euros in Slovakia and 1 million euros in Bulgaria, a net release of 1 million euros in the Czech Republic, 1 million euros in Hungary and 4 million euros in the Group Centre).

Consequently, annualised loan loss impairment for the entire group in the first quarter of 2017 accounted for a very low 0.02% of the total loan portfolio. At the end of March 2017, some 6.8% of our loan book was classified as impaired (3.6% was impaired and more than 90 days past due), a further improvement on the situation at the beginning of the year (7.2% and 3.9%, respectively).

Impairment on assets other than loans stood at 1 million euros, compared to 19 million in the fourth quarter of 2016 and 25 million euros in the first quarter of 2016.

Income tax expense

There was an income tax charge of 85 million euros in the first quarter of 2017, compared to 186 million euros in the previous quarter and 97 million euros in the year-earlier quarter. The quarter-on-quarter difference is accounted for by a number of factors, including the lower taxable base in the first quarter of 2017 and the fact that that quarter also benefited from a higher amount of deferred tax assets (including 66 million euros related to the liquidation of an Irish group company).

Results per business unit (quarter-on-quarter)

Our quarterly profit of 630 million euros breaks down as follows:

301 million euros for the Belgium Business Unit.

Excluding the effect of the special bank tax, the net result went up by 10% quarter-on-quarter, as higher net fee and commission income, increased technical insurance income, higher realised gains on the sale of financial assets and lower costs were only partially offset by a decrease in net interest income, in trading and fair value income and in other net income, combined with a somewhat higher level of loan loss impairment.

181 million euros for the Czech Republic Business Unit.

Excluding the effect of the special bank tax, this represents an increase of 54% quarter-on-quarter, thanks essentially to higher trading and fair value income, higher realised gains on the sale of bonds, a positive one-off item in other net income, seasonally lower costs and a small net release of loan loss impairment, while net interest income managed to remain at its level of the previous quarter.

114 million euros for the International Markets Business Unit (22 million euros for Slovakia, 20 million euros for Hungary, 4 million euros for Bulgaria and 67 million euros for Ireland).

Excluding the effect of the special bank tax, this is an increase of 2% quarter-on-quarter for the business unit as a whole. The net result (excluding bank taxes) decreased in Ireland, where the positive effect of the higher level of loan loss impairment releases was less than the positive impact of the tax benefit (recognition of a deferred tax asset) in the previous quarter. The net result (excluding bank taxes) went up in Bulgaria, Slovakia (total income more or less stable, combined with lower costs and loan loss impairment) and in Hungary (stable total income and lower costs, combined with the positive effect of the lower income tax rate in 2017).

33 million euros for the Group Centre, 57 million euros more than in the previous quarter. The quarter under review included the booking of a deferred tax asset relating to the liquidation of IIB Finance Ireland (a positive impact of 66 million euros).

	Belgium		Czech Republic		International Markets
Selected ratios per business unit	1Q2017	FY2016	1Q2017	FY2016	1Q2017	FY2016
Cost/income ratio, banking (between brackets: when evenly spreading bank taxes and excl. some non-operational items)	67% (50%)	54% (55%)	43% (40%)	45% (46%)	72% (64%)	64% (66%)
Combined ratio, non-life insurance	77%	92%	100%	96%	85%	94%
Credit cost ratio*	0.24%	0.12%	-0.02%	0.11%	-0.75%	-0.16%

* Negative figure indicates a net impairment release (with positive impact on results).

A full results table is provided in the 'Additional information' section of the quarterly report. A short analysis of the results per business unit is provided in the analyst presentation, available on www.kbc.com.

Strong fundamentals: equity, solvency and liquidity

At the end of March 2017, our total equity stood at 17.9 billion euros (16.5 billion euros in parent shareholders' equity and 1.4 billion euros in additional tier-1 instruments), up 0.5 billion euros on its level at the beginning of the year. The change during the first three months of the year resulted from the inclusion of the profit for that period (+0.6 billion euros), changes in the availablefor-sale and cash flow hedge reserves (-0.1 billion euros combined) and a number of minor items.

At 31 March 2017, our fully loaded common equity ratio (Basel III, under the Danish compromise) stood at a strong 15.7%. It hence comfortably exceeds the regulators' target (10.40% by 2019, with additional pillar 2 guidance of 1.0%). Our leverage ratio (Basel III, fully loaded) came to 5.7%. The solvency ratio for KBC Insurance under the Solvency II framework was a sound 220% at 31 March 2017.

Our liquidity position remained excellent too, as reflected in an LCR ratio of 145% and an NSFR ratio of 130% at the end of March 2017.

Risk statement

As we are mainly active in banking, insurance and asset management, we are exposed to a number of typical risks for these financial sectors such as – but not limited to – credit default risk, counterparty credit risk, concentration risk, movements in interest rates, currency risk, market risk, liquidity and funding risk, insurance underwriting risk, changes in regulations, operational risk, customer litigation, competition from other and new players, as well as the economy in general. Although we closely monitor and manage each of these risks within a strict risk framework containing governance and limits, they may all have a negative impact on asset values or could generate additional charges beyond anticipated levels.

At present, a number of items are considered to constitute the main challenges for the financial sector in general and, as a consequence, are also relevant to us. Regulatory uncertainty regarding capital requirements is a dominant theme for the sector, besides enhanced consumer protection. Another ongoing challenge remains the low interest rate environment, despite the recent uptrend, particularly for longer maturities. The financial sector also faces the potential systemic consequences of political and financial developments like Brexit and protectionist measures in the US, which will have an impact on the European economy. Moreover, EU political risks, although somewhat abated by the outcome of the Dutch and French elections, can still lead to uncertainty and volatility, while concerns remain about the banking sector in certain countries, such as Italy. Financial technology is an additional challenge for the business model of traditional financial institutions. Finally, cyber risk has become one of the main threats during the past few years, not just for the financial sector, but for the economy as a whole.

On the macroeconomic front, the positive momentum of the global economy persisted into the first quarter of 2017. Particularly in the euro area, economic growth remained robust in the first quarter. The economic and financial environment is also improving in emerging markets. Commodity exporters are benefiting from increasing commodity prices. Higher global inflation was driven mainly by the rise in the energy component, while in the euro area, the persistently low level of core inflation caught the eye. During the first quarter, global long-term government bond yields on balance remained low, mainly as a result of doubts about the new US government's ability to pursue an expansionary fiscal policy, somewhat lower inflation expectations and the Fed's less hawkish communication after the March rate hike. Meanwhile, the intra-EMU sovereign yield spread initially widened, but eased again, while the euro strengthened against the US dollar.

Risk management data is provided in our annual reports, quarterly reports and dedicated risk reports, all of which are available at www.kbc.com.

Our views and guidance

Our view on interest rates and foreign exchange rates: we are working on the assumption that the euro area will 'survive' its election calendar of 2017/2018 and that intra-EMU spreads will eventually ease again to slightly below their current levels by the end of 2017. After December 2017, we expect the ECB to gradually phase out its QE programme and end it by mid-2018. The ECB will probably not raise its policy rate before the end of 2018. In the meantime, we expect another two rate increases by the Fed in 2017 and three more in 2018 (of 25 basis points each). As a result, we expect the US dollar to appreciate against the euro in 2017, as it will benefit from short-term interest rate support. Given the low inflation environment and still highly accommodating global monetary policies, we expect German and US long-term bond yields to rise only moderately in the period ahead.

Our view on economic growth: the economic environment in the euro area continues to improve. This is particularly true for Germany, the engine driving growth in the euro area. The consumer sector in the euro area remains solid, as confidence is still on an upward trend. Indeed, retail sales growth in the euro area remains firm. Moreover, labour market conditions continue to improve, which will further support consumption in the period ahead. The most significant risks still stem from political events, the real start of the Brexit negotiations after the UK general election on 8 June, and the trend of de-globalisation. These risks may add to uncertainty that could potentially spill over to the real economy in the form of more pessimistic sentiment and a postponement of investments.

Our guidance on KBC's results for 2017: we anticipate solid returns in all our business units. We view the current credit cost ratio as being very low. For Ireland, in particular, our guidance for loan impairment is for a release of 120-160 million euros for full year 2017.

KBC Group Consolidated financial statements according to IFRS 1Q 2017

Section reviewed by the Auditor

Consolidated income statement

(in millions of EUR)	Note	1Q 2017	4Q 2016	1Q 2016
Net interest income	3.1	1 025	1 057	1 067
Interest income	3.1	1 576	1 593	1 707
Interest expense	3.1	- 551	- 537	- 639
Non-life insurance before reinsurance	3.7	187	178	145
Earned premiums Non-life	3.7	360	363	341
Technical charges Non-life	3.7	- 173	- 185	- 196
Life insurance before reinsurance	3.7	- 28	- 44	- 35
Earned premiums Life	3.7	312	413	426
Technical charges Life	3.7	- 341	- 457	- 461
Ceded reinsurance result	3.7	- 4	- 15	- 8
Dividend income	3.2	15	19	10
Net result from financial instruments at fair value through profit or loss	3.3	191	224	93
Net realised result from available-for-sale assets	3.4	45	8	27
Net fee and commission income	3.5	439	376	346
Fee and commission income	3.5	620	552	507
Fee and commission expense	3.5	- 181	- 176	- 161
Net other income	3.6	77	101	51
TOTAL INCOME		1 946	1 903	1 697
Operating expenses	3.8	- 1 229	- 963	- 1 186
Staff expenses	3.8	- 565	- 581	- 556
General administrative expenses	3.8	- 601	- 318	- 570
Depreciation and amortisation of fixed assets	3.8	- 63	- 63	- 60
Impairment	3.10	- 8	- 73	- 28
on loans and receivables	3.10	- 6	- 54	- 4
on available-for-sale assets	3.10	- 1	- 4	- 24
on goodwill	3.10	0	0	0
on other	3.10	0	- 15	- 1
Share in results of associated companies and joint ventures	3.11	5	5	7
RESULT BEFORE TAX		715	871	489
Income tax expense	3.12	- 85	- 186	- 97
RESULT AFTER TAX		630	685	392
Attributable to minority interest		0	0	0
Attributable to equity holders of the parent		630	685	392
Earnings per share (in EUR)
Basic	3.13	1,47	1,61	0,91
Diluted	3.13	1,47	1,61	0,91

Consolidated statement of comprehensive income (condensed)

(in millions of EUR)	1Q 2017	4Q 2016	1Q 2016
RESULT AFTER TAX	630	685	392
attributable to minority interest	0	0	0
attributable to equity holders of the parent	630	685	392
Other comprehensive income - to be recycled to P&L	- 106	54	- 251
Net change in revaluation reserve (AFS assets) - Equity	37	85	- 106
Net change in revaluation reserve (AFS assets) - Bonds	- 214	- 375	198
Net change in revaluation reserve (AFS assets) - Other	0	0	0
Net change in hedging reserve (cash flow hedge)	79	305	- 331
Net change in translation differences	- 2	38	- 11
Net change related to associated companies & joint ventures	- 7	0	0
Other movements	0	0	- 1
Other comprehensive income - not to be recycled to P&L	38	80	- 204
Net change in defined benefit plans	41	80	- 204
Net change on own credit risk - liabilities designated at FV(T)PL	- 2	0	0
Net change related to associated companies & joint ventures	0	0	0
TOTAL COMPREHENSIVE INCOME	562	819	- 63
attributable to minority interest	0	0	0
attributable to equity holders of the parent	562	819	- 63

The largest movements in other comprehensive income (1Q 2017 vs. 1Q 2016):

• Net change in revaluation reserve (AFS assets) Equity: the +37 million euros in 1Q 2017 can be explained for a large part by positive stock exchange movements, while the -106 million euros in 1Q 2016 was affected by negative fair value movements.
• Net change in revaluation reserve (AFS assets) Bonds: -214 million euros for 1Q 2017: mainly explained by an increase in long-term interest rates; +198 million euros for 1Q 2016: mainly caused by a decrease in long-term interest rates.
• Net change in hedging reserve (cash flow hedge): +79 million euros for 1Q 2017: mainly explained by an increase in long-term interest rates; -331 million euros for 1Q 2016: mainly caused by decreasing long-term interest rates.
• Net change in defined benefit plans: +41 million euro for 1Q 2017: due to an increase in interest rate; -204 million euro for 2016: due to a decrease in the interest rate at that time.

Consolidated balance sheet

ASSETS (in millions of EUR)	Note	31-03-2017	31-12-2016
Cash, cash balances at central banks and other demand deposits	-	21 070	20 686
Financial assets	4.1 - 4.7	257 794	246 298
Held for trading	4.1 - 4.7	8 972	9 683
Designated at fair value through profit or loss	4.1 - 4.7	14 353	14 184
Available for sale	4.1 - 4.7	35 735	36 708
Loans and receivables	4.1 - 4.7	165 116	151 615
Held to maturity	4.1 - 4.7	33 148	33 697
Hedging derivatives	4.1 - 4.7	469	410
Reinsurers' share in technical provisions	5.6	127	110
Fair value adjustments of hedged items in portfolio hedge of interest rate risk	-	116	202
Tax assets	5.2	2 366	2 312
Current tax assets	5.2	62	66
Deferred tax assets	5.2	2 303	2 246
Non-current assets held for sale and assets associated with disposal groups	-	24	8
Investments in associated companies and joint ventures	5.2	210	212
Investment property	5.4	425	426
Property and equipment	5.4	2 512	2 451
Goodwill and other intangible assets	5.5	1 008	999
Other assets	5.1	1 641	1 496
TOTAL ASSETS		287 293	275 200
LIABILITIES AND EQUITY (in millions of EUR)	Note	31-03-2017	31-12-2016
Financial liabilities	4.1 - 4.7	245 785	234 300
Held for trading	4.1 - 4.7	7 281	8 559
Designated at fair value through profit or loss	4.1 - 4.7	15 170	16 553
Measured at amortised cost	4.1 - 4.7	221 535	207 485
Hedging derivatives	4.1 - 4.7	1 798	1 704
Technical provisions, before reinsurance	5.6	19 234	19 657
Fair value adjustments of hedged items in portfolio hedge of interest rate risk	-	150	204
Tax liabilities	5.2	698	681
Current tax liabilities	5.3	253	188
Deferred tax liabilies	5.4	445	493
Provisions for risks and charges	5.7	264	238
Other liabilities	5.8	3 256	2 763
TOTAL LIABILITIES		269 388	257 843
Total equity	5.10	17 906	17 357
Parent shareholders' equity	5.10	16 506	15 957
Additional Tier-1 instruments included in equity	5.10	1 400	1 400
Minority interests	-	0	0
TOTAL LIABILITIES AND EQUITY		287 293	275 200

In order to align with the consolidated financial reporting framework (FINREP) of the European Banking Authority, the presentation of the balance sheet has been slightly changed: Cash and cash balances includes as of 2017 also other demand deposits with credit institutions and consequently has been renamed 'Cash, cash balances at central banks and other demand deposits from credit institutions'. The reference figures have been restated accordingly (shift of 538 million euros mainly from Loans and receivables).

Consolidated statement of changes in equity

					Hedging	Remeasure ment of	Own credit				Additional Tier-1
				Revaluation	reserve	defined	risk			Parent share	instruments
	Issued and paid	Share	Treasury	reserve	(cashflow	benefit	(through	Retained	Translation	holders'	included in	Minority
In millions of EUR	up share capital	premium	shares	(AFS assets)	hedges)	obligations	OCI)	earnings	differences	equity	equity		interests Total equity
31-03-2017
Balance at the beginning of the period (01-01-2017)	1 455	5 453	0	1 756	- 1 347	- 138	- 4	8 751	31	15 957	1 400	0	17 357
Net result for the period	0	0	0	0	0	0	0	630	0	630	0	0	630
Other comprehensive income for the period	0	0	0	- 184	79	41	- 2	0	- 2	- 68	0	0	- 68
Total comprehensive income	0	0	0	- 184	79	41	- 2	630	- 2	562	0	0	562
Dividends	0	0	0	0	0	0	0	0	0	0	0	0	0
Coupon additional Tier-1 instruments	0	0	0	0	0	0	0	- 13	0	- 13	0	0	- 13
Change in minorities	0	0	0	0	0	0	0	0	0	0	0	0	0
Total change	0	0	0	- 184	79	41	- 2	617	- 2	549	0	0	549
Balance at the end of the period	1 455	5 453	0	1 572	- 1 268	- 97	- 7	9 368	29	16 506	1 400	0	17 906
of which revaluation reserve for shares of which revaluation reserve for bonds				527 1 045
of which relating to non-current assets held for sale and disposal groups of which relating to equity method				0 19	0 0	0 0	0 0	0 0	0 7	0 25			0 25

31-03-2016
Balance at the beginning of the period (01-01-2016)	1 454	5 437	0	1 782	- 1 146	94	0	6 779	11	14 411	1 400	0	15 811
Net result for the period	0	0	0	0	0	0	0	392	0	392	0	0	392
Other comprehensive income for the period	0	0	0	91	- 331	- 204	0	- 1	- 11	- 455	0	0	- 455
Total comprehensive income	0	0	0	91	- 331	- 204	0	391	- 11	- 63	0	0	- 63
Dividends	0	0	0	0	0	0	0	0	0	0	0	0	0
Coupon additional Tier-1 instruments	0	0	0	0	0	0	0	- 13	0	- 13	0	0	- 13
Change in minorities	0	0	0	0	0	0	0	0	0	0	0	0	0
Total change	0	0	0	91	- 331	- 204	0	378	- 11	- 76	0	0	- 76
Balance at the end of the period	1 454	5 437	0	1 873	- 1 477	- 110	0	7 156	0	14 335	1 400	0	15 735
of which revaluation reserve for shares				441
of which revaluation reserve for bonds				1 432
of which relating to non-current assets held for sale and disposal groups				0	0	0		0	- 3	- 3			- 3
of which relating to equity method				21	0	0		0	7	28			28

As an advance payment of the total 2016 dividend, KBC decided to distribute an interim dividend of 1 euro per share (418 million euros in total), paid on 18 November 2016 (already deducted from retained earnings in 2016). Furthermore, for 2016 the board of directors has proposed to the general meeting of shareholders, who approved this on 4 May 2017, that a closing dividend of 1.80 euros is paid out per share entitled to dividend (753 million euros in total; see also note Post balance sheet events).

Condensed consolidated cash flow statement

In millions of EUR	1Q 2017	1Q 2016
Cash and cash equivalents at the beginning of the period	26 747	10 987
Net cash from (used in) operating activities	9 163	4 191
Net cash from (used in) investing activities	533	340
Net cash from (used in) financing activities	80	30
Effects of exchange rate changes on opening cash and cash equivalents	1	- 10
Cash and cash equivalents at the end of the period	36 524	15 538

On 30 December 2016, KBC announced the acquisition of the United Bulgarian Bank and Interlease in Bulgaria: we expect the deal to close during the second quarter of 2017 at the latest. The consolidated figures in these condensed interim financial statements do not yet include the impact of this announced acquisition. The cash flows from investing activities in 2Q 2017 will be negatively impacted by the payments of the total consideration of 610 million euros in cash.

Cash and cash equivalents increased substantially in 1Q 2017 mainly thanks to the higher amount of reverse repos. This was largely generated out of net cash from operating activities largely thanks to higher deposits.

Notes on statement of compliance and changes in accounting policies

Statement of compliance (note 1.1 in the annual accounts 2016)

The condensed interim financial statements of the KBC Group for the first quarter ended 31 March 2017 have been prepared in accordance with IAS 34, 'Interim financial reporting'. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2016, which have been prepared in accordance with the International Financial Reporting Standards as adopted for use in the European Union ('endorsed IFRS').

The same accounting policies, methods of computation and presentation have been followed in its preparation as were applied in the most recent annual financial statements, except for the following item:

For financial liabilities, IFRS 9 changes the presentation of gains and losses on own credit risk for financial instruments designated at fair value through profit or loss. KBC early adopts this aspect of IFRS 9 with effect from 1 January 2017 and the gains and losses on own credit risk go through other comprehensive income from now on. The impact of early adoption is minimal given the limited effect of own credit risk.

Summary of significant accounting policies (note 1.2 in the annual accounts 2016)

A summary of the main accounting policies is provided in the group's annual accounts as at 31 December 2016.

Notes on segment reporting

Segment reporting according to the management structure of the group (note 2.2 in the annual accounts 2016)

For a description on the management structure and linked reporting presentation, reference is made to note 2.1 in the annual accounts 2016.

			Business
			unit
	Business	Business	Interna
	unit	unit Czech	tional	of which:	of which:	of which:	of which:	Group	KBC
In millions of EUR	Belgium	Republic	Markets	Hungary	Slovakia	Bulgaria	Ireland	Centre	Group
1Q 2017
Net interest income	625	216	189	58	53	12	66	- 5	1 025
Non-life insurance before reinsurance	143	18	25	9	6	10	0	1	187
Earned premiums Non-life	256	49	53	23	8	21	0	2	360
Technical charges Non-life	- 113	- 30	- 28	- 14	- 2	- 12	0	- 1	- 173
Life insurance before reinsurance	- 44	11	6	2	3	1	0	- 1	- 28
Earned premiums Life	241	48	23	4	13	6	0	0	312
Technical charges Life	- 285	- 38	- 17	- 2	- 9	- 5	0	- 1	- 341
Ceded reinsurance result	- 2	- 1	- 1	0	0	- 1	0	1	- 4
Dividend income	12	0	0	0	0	0	0	2	15
Net result from financial instruments at fair value through profit or loss	156	50	28	19	4	1	5	- 44	191
Net realised result from available-for-sale assets	23	11	2	1	0	1	0	9	45
Net fee and commission income	346	47	48	37	12	- 1	0	- 3	439
Net other income	46	26	4	1	2	0	0	1	77
TOTAL INCOME	1 305	378	301	127	81	22	71	- 38	1 946
Operating expenses	- 822	- 165	- 212	- 101	- 50	- 16	- 44	- 29	- 1 229
Impairment	- 60	1	47	1	- 2	- 1	50	4	- 8
on loans and receivables	- 59	1	48	1	- 2	- 1	50	4	- 6
on available-for-sale assets	- 1	0	0	0	0	0	0	0	- 1
on goodwill	0	0	0	0	0	0	0	0	0
on other	0	0	0	0	0	0	0	0	0
Share in results of associated companies and joint ventures	0	4	1	0	0	0	0	0	5
RESULT BEFORE TAX	423	218	137	26	28	5	76	- 63	715
Income tax expense	- 121	- 37	- 22	- 6	- 6	- 1	- 10	96	- 85
RESULT AFTER TAX	301	181	114	20	22	4	67	33	630
Attributable to minority interests	0	0	0	0	0	0	0	0	0
NET RESULT	301	181	114	20	22	4	67	33	630

1Q 2016
Net interest income	688	211	178	58	54	12	55	- 10	1 067
Non-life insurance before reinsurance	107	20	20	8	5	7	0	- 2	145
Earned premiums Non-life	248	45	46	19	8	20	0	2	341
Technical charges Non-life	- 141	- 25	- 26	- 11	- 3	- 12	0	- 4	- 196
Life insurance before reinsurance	- 49	8	6	1	3	1	0	0	- 35
Earned premiums Life	335	67	24	4	14	6	0	0	426
Technical charges Life	- 384	- 59	- 18	- 3	- 10	- 5	0	0	- 461
Ceded reinsurance result	- 8	- 2	0	0	0	1	0	2	- 8
Dividend income	8	0	0	0	0	0	0	1	10
Net result from financial instruments at fair value through profit or loss	20	32	23	16	4	0	2	19	93
Net realised result from available-for-sale assets	23	0	4	3	0	0	0	0	27
Net fee and commission income	255	46	48	38	11	- 1	0	- 3	346
Net other income	46	5	1	- 1	1	- 1	0	0	51
TOTAL INCOME	1 090	318	280	123	79	20	57	8	1 697
Operating expenses	- 774	- 170	- 208	- 103	- 51	- 14	- 39	- 34	- 1 186
Impairment	- 30	- 1	2	1	- 1	- 1	3	0	- 28
on loans and receivables	- 6	- 1	3	2	- 1	- 1	3	0	- 4
on available-for-sale assets	- 24	0	0	0	0	0	0	0	- 24
on goodwill	0	0	0	0	0	0	0	0	0
on other	0	0	- 1	- 1	0	0	0	0	- 1
Share in results of associated companies and joint ventures	- 1	6	0	0	0	0	0	1	7
RESULT BEFORE TAX	286	154	74	22	26	5	21	- 24	489
Income tax expense	- 77	- 25	- 14	- 9	- 6	0	2	19	- 97
RESULT AFTER TAX	209	129	60	12	20	4	23	- 6	392
Attributable to minority interests	0	0	0	0	0	0	0	0	0
NET RESULT	209	129	60	12	20	4	23	- 6	392

Other notes

Net interest income (note 3.1 in the annual accounts 2016)

In millions of EUR	1Q 2017	4Q 2016	1Q 2016
Total	1 025	1 057	1 067
Interest income	1 576	1 593	1 707
Available-for-sale assets	166	172	175
Loans and receivables	921	936	976
Held-to-maturity investments	234	249	245
Other assets not at fair value	33	18	18
Subtotal, interest income from financial assets not measured at fair value through profit or loss	1 354	1 375	1 415
Financial assets held for trading	152	142	185
Hedging derivatives	68	68	76
Other financial assets at fair value through profit or loss	2	9	30
Interest expense	- 551	- 537	- 639
Financial liabilities measured at amortised cost	- 228	- 197	- 261
Other	- 18	- 21	- 4
Subtotal, interest expense for financial liabilities not measured at fair value through profit or loss	- 245	- 217	- 264
Financial liabilities held for trading	- 171	- 175	- 208
Hedging derivatives	- 125	- 132	- 146
Other financial liabilities at fair value through profit or loss	- 8	- 11	- 19
Net interest expense on defined benefit plans	- 2	- 2	- 2

Net result from financial instruments at fair value through profit or loss (note 3.3 in the annual accounts 2016)

The result from financial instruments at fair value through profit or loss in 1Q 2017 is 33 million euros lower compared to 4Q 2016. The quarter-on-quarter decrease is due largely to lower results for MtM ALM derivatives, partly compensated by a higher level of dealing room income.

Compared to 1Q 2016, the result from financial instruments at fair value through profit or loss is 98 million euros higher, for a large part explained by a higher level of both dealing room income and positive market value adjustments in 1Q 2017 (compared to negative market value adjustments in 1Q 2016), partially offset by a lower MtM ALM derivatives.

Net realised result from available-for-sale assets (note 3.4 in the annual accounts 2016)

In millions of EUR	1Q 2017	4Q 2016	1Q 2016
Total	45	8	27
Breakdown by portfolio
Fixed-income securities	14	3	6
Shares	31	6	21

Net fee and commission income (note 3.5		in the annual accounts 2016)
-----------------------------------------	--	---------------------------------

In millions of EUR	1Q 2017	4Q 2016	1Q 2016
Total	439	376	346
Income	620	552	507
Expense	- 181	- 176	- 161
Breakdown by type
Asset Management Services	323	270	233
Income	333	280	246
Expense	- 10	- 10	- 12
Banking Services	184	182	177
Income	268	260	245
Expense	- 84	- 78	- 68
Distribution	- 68	- 75	- 64
Income	19	13	17
Expense	- 87	- 88	- 81

Presentation change to the note Net fee and commission income: in view of a more transparent breakdown of the net fee and commission income, the following breakdown is provided as of 2017 (reference figures restated accordingly):

• Asset management services: include the income and expense relating to management fees and entry fees

• Banking services: include the income and expense relating to credit/guarantee related fees, payment service fees and securities related fees

• Distribution: include the income and expense relating to the distribution of mutual funds, banking products and insurance products

Net other income (note 3.6 in the annual accounts 2016)

In millions of EUR	1Q 2017	4Q 2016	1Q 2016
Total	77	101	51
Of which net realised result following
The sale of loans and receivables	2	2	0
The sale of held-to-maturity investments	6	1	1
Other: of which:	69	98	50
Income concerning leasing at the KBC Lease-group	20	19	20
Income from Group VAB	18	16	19
Realised gains or losses on divestments	0	3	0
Impact surrender reinsured contract	0	25	0
Settlement of an old legal file	14	0	0

Note: old legal file related to Czech Republic.

Breakdown of the insurance results (note 3.7.1 in the annual accounts 2016)

			Non-technical
In millions of EUR	Life	Non-life	account	TOTAL
1Q 2017
Earned premiums, insurance (before reinsurance)	313	365		678
Technical charges, insurance (before reinsurance)	- 341	- 173		- 514
Net fee and commission income	0	- 72		- 72
Ceded reinsurance result	0	- 4		- 4
Operating expenses	- 47	- 60	- 1	- 107
Internal costs claim paid	- 2	- 14		- 16
Administration costs related to acquisitions	- 8	- 19		- 27
Administration costs	- 37	- 27		- 64
Management costs investments	0	0	- 1	- 1
Technical result	- 74	56	- 1	- 19
Net interest income			143	143
Dividend income			7	7
Net result from financial instruments at fair value			2	2
Net realised result from AFS assets			22	22
Net other income			0	0
Impairments			- 1	- 1
Allocation to the technical accounts	136	22	- 158	0
Technical-financial result	61	78	14	154
Share in results of associated companies and joint ventures			0	0
RESULT BEFORE TAX	61	78	14	154
Income tax expense				- 44
RESULT AFTER TAX				110
attributable to minority interest				0
attributable to equity holders of the parent				111
1Q 2016
Earned premiums, insurance (before reinsurance)	426	346		772
Technical charges, insurance (before reinsurance)	- 461	- 196		- 657
Net fee and commission income	- 9	- 67		- 76
Ceded reinsurance result	0	- 8		- 8
Operating expenses	- 47	- 60	- 1	- 107
Internal costs claim paid	- 2	- 14		- 16
Administration costs related to acquisitions	- 8	- 20		- 28
Administration costs	- 37	- 25		- 62
Management costs investments	0	0	- 1	- 1
Technical result	- 90	15	- 1	- 76
Net interest income			156	156
Dividend income			8	8
Net result from financial instruments at fair value			- 2	- 2
Net realised result from AFS assets			9	9
Net other income			3	3
Impairments			- 24	- 24
Allocation to the technical accounts	118	15	- 134	0
Technical-financial result	28	31	14	73
Share in results of associated companies and joint ventures			1	1
RESULT BEFORE TAX	28	31	16	74
Income tax expense				- 26
RESULT AFTER TAX				48
attributable to minority interest				0
attributable to equity holders of the parent				48

Note: Figures for premiums exclude the investment contracts without DPF, which roughly coincide with the unit-linked products. Figures are before elimination of transactions between the bank and insurance entities of the group (more information in the 2016 annual accounts).

Operating expenses – income statement (note 3.8 in the annual accounts 2016)

The operating expenses for 1Q 2017 include 361 million euros related to bank (and insurance) levies (27 million euros in 4Q 2016; 335 million euros in 1Q 2016). Application of IFRIC 21 (Levies) has as a consequence that certain levies are taken upfront in expense of the first quarter of the year.

Impairment – income statement (note 3.10 in the annual accounts 2016)

In millions of EUR	1Q 2017	4Q 2016	1Q 2016
Total	- 8	- 73	- 28
Impairment on loans and receivables	- 6	- 54	- 4
Breakdown by type
Specific impairments for on-balance-sheet lending	20	- 45	- 9
Provisions for off-balance-sheet credit commitments	- 32	4	8
Portfolio-based impairments	6	- 13	- 2
Breakdown by business unit
Business unit Belgium	- 59	- 46	- 6
Business unit Czech Republic	1	- 11	- 1
Business unit International Markets	48	8	3
of which: Hungary	1	1	2
of which: Slovakia	- 2	- 7	- 1
of which: Bulgaria	- 1	1	- 1
of which: Ireland	50	12	3
Group Centre	4	- 5	0
Impairment on available-for-sale assets	- 1	- 4	- 24
Breakdown by type
Shares	- 1	- 7	- 24
Other	0	3	0
Impairment on goodwill	0	0	0
Impairment on other	0	- 15	- 1
Intangible assets, other than goodwill	0	- 10	0
Property and equipment and investment property	0	- 5	0
Held-to-maturity assets	0	0	0
Associated companies and joint ventures	0	0	0
Other	0	1	- 1

Income tax expense – income statement (note 3.12 in the annual accounts 2016)

In 1Q 2017, the income tax expenses were positively influenced by 66 million euros of deferred tax assets (DTA) related to the liquidation of IIB Finance Ireland at KBC Bank NV. According to Belgian tax law, the loss in paid-in capital that KBC Bank sustained as a result of the liquidation of IIB Finance Ireland is tax deductible for the parent company on the date of liquidation, rather than at the time the losses were incurred.

Financial assets and liabilities: breakdown by portfolio and product (note 4.1 in the annual accounts 2016)

	Held for	Designated at	Available for	Loans and	Held to	Hedging
In millions of EUR	trading	fair value	sale	receivables	maturity	derivatives	Total
FINANCIAL ASSETS, 31-03-2017
Loans and advances to credit institutions and investment firms a	401	1	0	27 909	-	-	28 311
Loans and advances to customers b	8	52	0	135 245	-	-	135 304
Excluding reverse repos	0	44	0	134 003	-	-	134 047
Trade receivables	0	0	0	3 629	-	-	3 629
Consumer credit	0	0	0	3 189	-	-	3 189
Mortgage loans	0	28	0	57 388	-	-	57 416
Term loans	8	23	0	60 412	-	-	60 443
Finance leasing	0	0	0	4 943	-	-	4 943
Current account advances	0	0	0	5 258	-	-	5 258
Other	0	0	0	426	-	-	426
Equity instruments	474	2	1 758	-	-	-	2 234
Investment contracts (insurance)	-	13 887	-	-	-	-	13 887
Debt securities issued by	1 312	412	33 977	1 247	33 148	-	70 095
Public bodies	1 030	47	22 355	275	31 321	-	55 029
Credit institutions and investment firms	132	174	5 128	135	1 144	-	6 714
Corporates	150	191	6 494	836	682	-	8 353
Derivatives	6 777	-	-	-	-	469	7 247
Other	0	0	0	715	0	0	715
Total carrying value	8 972	14 353	35 735	165 116	33 148	469	257 794
a Of which reverse repos							22 699
b Of which reverse repos							1 257
FINANCIAL ASSETS, 31-12-2016

Loans and advances to credit institutions and investment firms a	6	1	0	16 922	-	-	16 929
Loans and advances to customers b	1	77	0	133 154	-	-	133 231
Excluding reverse repos	1	45	0	132 810	-	-	132 856
Trade receivables	0	0	0	3 549	-	-	3 549
Consumer credit	0	0	0	3 180	-	-	3 180
Mortgage loans	0	29	0	57 307	-	-	57 335
Term loans	0	49	0	59 035	-	-	59 083
Finance leasing	0	0	0	4 916	-	-	4 916
Current account advances	0	0	0	4 640	-	-	4 640
Other	1	0	0	527	-	-	528
Equity instruments	427	2	1 723	-	-	-	2 153
Investment contracts (insurance)	-	13 693	-	-	-	-	13 693
Debt securities issued by	1 001	411	34 985	1 015	33 697	-	71 109
Public bodies	713	47	22 982	16	32 131	-	55 889
Credit institutions and investment firms	127	174	5 032	140	948	-	6 421
Corporates	161	190	6 970	859	618	-	8 799
Derivatives	8 249	-	-	-	-	410	8 659
Other	0	0	0	524	-	-	525
Total carrying value	9 683	14 184	36 708	151 615	33 697	410	246 298
a Of which reverse repos							11 776
b Of which reverse repos							376

	Held for	Designated at fair	Hedging	Measured at
In millions of EUR	trading	value	derivatives	amortised cost	Total
FINANCIAL LIABILITIES, 31-03-2017
Deposits from credit institutions and investment firms a	59	5	-	39 539	39 603
Deposits from customers and debt certificates b	400	2 038	-	179 284	181 722
Excluding repos	398	1 960	-	178 749	181 107
Demand deposits	0	0	-	65 844	65 844
Time deposits	52	998	-	21 298	22 347
Saving accounts	0	0	-	53 898	53 898
Special deposits	0	0	-	2 154	2 154
Other deposits	0	0	-	713	713
Certificates of deposit	0	9	-	17 583	17 592
Customer savings certificates	0	0	-	1 668	1 668
Non-convertible bonds	348	759	-	13 117	14 224
Non-convertible subordinated liabilities	0	272	-	3 009	3 281
Liabilities under investment contracts	-	13 128	-	0	13 128
Derivatives	6 241	0	1 798	-	8 039
Short positions	574	0	-	-	574
in equity instruments	35	0	-	-	35
in debt instruments	539	0	-	-	539
Other	7	0	-	2 712	2 719
Total carrying value	7 281	15 170	1 798	221 535	245 785
a Of which repos					12 177
b Of which repos					615

FINANCIAL LIABILITIES, 31-12-2016
-----------------------------------	--

Deposits from credit institutions and investment firms a	5	1 766	-	30 248	32 020
Deposits from customers and debt certificates b	541	2 134	-	175 055	177 730
Excluding repos	536	1 869	-	175 017	177 421
Demand deposits	0	0	-	63 427	63 427
Time deposits	117	1 100	-	21 027	22 245
Saving accounts	0	0	-	53 328	53 328
Special deposits	0	0	-	2 056	2 056
Other deposits	0	0	-	630	630
Certificates of deposit	0	14	-	16 629	16 643
Customer savings certificates	0	0	-	1 959	1 959
Non-convertible bonds	424	744	-	12 889	14 057
Non-convertible subordinated liabilities	0	276	-	3 109	3 385
Liabilities under investment contracts	-	12 653	-	0	12 653
Derivatives	7 334	-	1 704	-	9 037
Short positions	665	0	-	-	665
in equity instruments	36	0	-	-	36
in debt instruments	629	0	-	-	629
Other	13	0	-	2 182	2 195
Total carrying value	8 559	16 553	1 704	207 485	234 300
a Of which repos					9 420
b Of which repos					309

Additional information on quarterly time series

Loans and deposits

In millions of EUR	31-03-2017	31-12-2016	30-09-2016	30-06-2016	31-03-2016
Total customer loans excluding reverse repo
Business unit Belgium	92 307	91 804	90 605	90 218	88 881
Business unit Czech Republic	20 253	19 552	19 269	18 983	18 600
Business unit International Markets	21 487	21 496	21 268	21 020	21 022
of which: Hungary	3 825	3 802	3 727	3 556	3 592
of which: Slovakia	6 217	6 094	5 910	5 756	5 584
of which: Bulgaria	826	835	773	762	741
of which: Ireland	10 618	10 765	10 859	10 945	11 105
Group Centre	0	4	268	501	620
KBC Group	134 047	132 856	131 410	130 722	129 123
Mortgage loans
Business unit Belgium	34 085	34 265	34 079	33 784	33 394
Business unit Czech Republic	9 273	9 077	8 799	8 503	8 281
Business unit International Markets	14 058	13 993	13 897	13 716	13 643
of which: Hungary	1 469	1 451	1 441	1 379	1 375
of which: Slovakia	2 695	2 608	2 491	2 316	2 146
of which: Bulgaria	236	234	235	237	245
of which: Ireland	9 657	9 700	9 731	9 784	9 877
Group Centre	0	0	0	0	0
KBC Group	57 416	57 335	56 776	56 003	55 318
Customer deposits and debt certificates excl. repos
Business unit Belgium	127 005	125 074	116 489	120 067	114 557
Business unit Czech Republic	27 770	26 183	25 403	24 888	24 328
Business unit International Markets	18 539	18 344	18 018	18 117	17 615
of which: Hungary	6 756	6 814	6 096	6 054	5 879
of which: Slovakia	5 745	5 739	5 840	5 773	5 559
of which: Bulgaria	808	792	750	694	688
of which: Ireland	5 229	4 999	5 333	5 597	5 489
Group Centre	7 793	7 820	7 624	8 368	8 251
KBC Group	181 107	177 421	167 534	171 440	164 750

Technical provisions plus unit linked, life insurance

	31-03-2017			31-12-2016	30-09-2016		30-06-2016		31-03-2016
In millions of EUR	Interest Guaranteed Unit Linked		Interest Guaranteed Unit Linked		Interest Guaranteed	Unit Linked	Interest Guaranteed	Unit Linked	Interest Guaranteed	Unit Linked
Business unit Belgium	13 816	12 952	14 143	12 760	14 233	12 609	14 183	12 525	14 102	12 605
Business unit Czech Republic	495	524	493	525	493	460	492	483	494	488
Business unit International Markets	199	411	196	408	197	402	203	383	202	368
of which: Hungary	47	285	48	284	49	280	51	267	51	254
of which: Slovakia	108	123	107	122	107	121	107	116	107	113
of which: Bulgaria	44	3	41	2	42	1	46	0	44	0
KBC Group	14 510	13 887	14 832	13 693	14 923	13 471	14 877	13 391	14 798	13 461

Financial assets and liabilities measured at fair value – fair value hierarchy (note 4.5 in the annual accounts 2016)

For more details on how KBC defines and determines (i) fair value and the fair value hierarchy and (ii) level 3 valuations reference is made to notes 4.4 up to and including 4.7 of the annual accounts 2016.

Fair value hierarchy				31-03-2017				31-12-2016
In millions of EUR	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
Financial assets measured at fair value
Held for trading	1 278	5 675	2 019	8 972	1 034	6 585	2 064	9 683
Designated at fair value	13 544	607	202	14 353	13 377	616	191	14 184
Available for sale	30 449	3 715	1 570	35 735	31 427	3 716	1 565	36 708
Hedging derivatives	0	469	0	469	0	410	0	410
Total	45 271	10 467	3 791	59 530	45 838	11 328	3 820	60 986
Financial liabilities measured at fair value
Held for trading	574	4 410	2 298	7 281	665	5 659	2 234	8 559
Designated at fair value	13 125	1 517	528	15 170	12 652	3 344	557	16 553
Hedging derivatives	0	1 798	0	1 798	0	1 704	0	1 704
Total	13 699	7 725	2 826	24 250	13 318	10 707	2 791	26 815

Financial assets and liabilities measured at fair value – transfers between level 1 and 2 (note 4.6 in the annual accounts 2016)

In the first 3 months of 2017, a total amount of 191 million euros in financial instruments at fair value was transferred from level 1 to level 2. KBC also transferred 38 million euros in financial instruments at fair value from level 2 to level 1. The majority of the transfers is due to changed liquidity of corporate and government bonds.

Financial assets and liabilities measured at fair value – focus on level 3 (note 4.7 in the annual accounts 2016)

In the first 3 months of 2017 the following material movements are observed with respect to instruments classified in level 3 of the fair value level hierarchy:

• In the assets held for trading category, the fair value of derivatives decreased by 52 million euros, which is mainly due to maturing deals.
• The available for sale category remains largely at the same level, but includes compensating effects between debt securities and unquoted equities:
• o In the available for sale debt securities, a total amount of bonds of about 113 million euros was transferred into level 3 and 101 million euros out of level 3. The majority of the transfers is due to changed liquidity of bonds. This net increase in level 3 was more than compensated by a decrease in fair value of 70 million euros due to mainly the net impact of acquiring, selling and maturing of positions
• o In the available for sale unquoted equities, total fair value increased by 64 million euros for a large part due to acquisitions.

Parent shareholders' equity and AT1 instruments (note 5.10 in the annual accounts 2016)

in number of shares	31-03-2017	31-12-2016
Ordinary shares	418 372 082	418 372 082
of which ordinary shares that entitle the holder to a dividend payment	418 372 082	418 372 082
of which treasury shares	2	2
Other information
Par value per ordinary share (in EUR)	3,48	3,48
Number of shares issued but not fully paid up	0	0

The ordinary shares of KBC Group NV have no nominal value and are quoted on NYSE Euronext (Brussels).

Main changes in the scope of consolidation (note 6.6 in the annual accounts 2016)

In 2016 and 1Q 2017:

• No material changes.

Post-balance sheet events (note 6.8 in the annual accounts 2016)

Significant non-adjusting events between the balance sheet date (31 March 2017) and the publication of this report (11 May 2017):

For 2016 the board of directors has proposed to the general meeting of shareholders, who approved this on 4 May 2017, that a closing dividend of 1.80 euros is paid out per share entitled to dividend (753 million euros in total). This closing dividend will be deducted from retained earnings in 2Q 2017. At that time this will also negatively impact the net cash (flow) from financing activities.

KBC Group Additional Information 1Q 2017

Section not reviewed by the Auditor

Credit risk

Snapshot of the credit portfolio (banking activities)

The main source of credit risk is the loan portfolio of the bank. A snapshot of the banking portfolio is shown in the table below. It includes all payment credit, guarantee credit (except for confirmations of letters of credit and similar export-/importrelated commercial credit), standby credit and credit derivatives, granted by KBC to private persons, companies, governments and banks. Bonds held in the investment portfolio are included if they are corporate- or bank-issued, hence government bonds and trading book exposure are not included. Further on in this chapter, extensive information is provided on the credit portfolio of each business unit. Information specifically on sovereign bonds can be found in the 2016 annual accounts page 102.

Credit risk: loan portfolio overview
Total loan portfolio (in billions of EUR)	31-03-2017	31-12-2016
Amount granted	181	181
Amount outstanding 1	148	148
Total loan portfolio, by business unit (as a % of the portfolio of credit outstanding)
Belgium	65%	65%
Czech Republic	15%	15%
International Markets	17%	17%
Group Centre	3%	3%
Total	100%	100%
Total outstanding loan portfolio sector breakdown
Private persons
Finance and insurance	42,0% 5,9%	42,3% 5,7%
Authorities	3,1%	3,1%
Corporates	49,1%	48,9%
services	11,5%	11,5%
distribution real estate	7,7%	7,6%
building & construction	6,9%	6,9%
agriculture, farming, fishing	4,3%	4,2%
automotive	2,7%	2,8%
electricity	2,2%	2,2%
food producers	1,6% 1,4%	1,6% 1,4%
metals	1,4%	1,4%
shipping	1,2%	1,2%
chemicals	1,2%	1,1%
machinery & heavy equipment	1,1%	1,1%
traders hotels, bars & restaurants	0,9%	0,9%
oil, gas & other fuels	0,8%	0,9%
electrotechnics	0,7%	0,7%
other 2	0,6%	0,6%
	2,9%	2,9%
Total outstanding loan portfolio geographical breakdown
Home countries	87.7%	88.2%
Belgium	56.3%	56.8%
Czech Republic	14.3%	14.0%
Ireland	8.6%	8.9%
Slovakia Hungary	4.8% 3.1%	4.8% 3.1%
Bulgaria	0.6%	0.6%
Rest of Western Europe	7.8%	7.3%
France	1.9%	1.8%
Netherlands	1.8%	1.7%
Great Britain	1.2%	1.1%
Spain	0.6%	0.6%
Luxemburg	0.6%	0.6%
Germany	0.6%	0.4%
other	1.1%	1.0%
Rest of Central Europe	0.5%	0.5%
Russia	0.1%	0.1%
other	0.4%	0.4%
North America	1.6% 1.3%	1.6% 1.4%
USA Canada	0.3%	0.2%
Asia	0.8%	0.8%
China	0.3%	0.3%
Hong Kong	0.2%	0.2%
Singapore	0.2%	0.2%
other	0.1%	0.1%
Rest of the world	1.6%	1.6%

	31-03-2017	31-12-2016
Impaired loans (in millions of EUR or %)
Amount outstanding	10 017	10 583
of which: more than 90 days past due	5 361	5 711
Ratio of impaired loans, per business unit
Belgium	3.0%	3.3%
Czech Republic	2.7%	2.8%
International Markets	24.2%	25.4%
Group Centre	8.2%	8.8%
Total	6.8%	7.2%
of which: more than 90 days past due	3.6%	3.9%
Specific loan loss impairments (in millions of EUR) and Cover ratio (%)
Specific loan loss impairments	4 667	4 874
of which: more than 90 days past due	3 413	3 603
Cover ratio of impaired loans
Specific loan loss impairments / impaired loans	47%	46%
of which: more than 90 days past due	64%	63%
Cover ratio of impaired loans, mortgage loans excluded
Specific loan loss impairments / impaired loans, mortgage loans excluded	56%	54%
of which: more than 90 days past due	74%	72%
Credit cost, by business unit (%)
Belgium	0.24%	0.12%
Czech Republic	-0.02%	0.11%
International Markets	-0.75%	-0.16%
Slovakia	0.11%	0.24%
Hungary	-0.08%	-0.33%
Bulgaria	0.60%	0.32%
Ireland	-1.54%	-0.33%
Group Centre	-0.34%	0.67%
Total	0.02%	0.09%

1 Outstanding amount includes all on-balance sheet commitments and off-balance sheet guarantees 2 Other includes corporate sectors not exceeding 0.5% concentration and unidentified sectors

Impaired loans are loans for which full (re)payment of the contractual cash flows is deemed unlikely. This coincides with KBC's Probability-of-Default-classes 10, 11 and 12 (see annual accounts FY 2016 - section on credit risk for more information on PD classification). These impaired loans are equal to 'non-performing loans' under the (new) definition used by EBA.

Credit portfolio per business unit (banking activities)

Legend:

• ind. LTV - Indexed Loan To Value: current outstanding loan / current value of property
• Impaired loans: loans for which full (re)payment is deemed unlikely (coincides with KBC's PD-classes 10, 11 or 12)
• Impaired loans that are more than 90 days past due: loans that are more than 90 days overdue and/or loans which have been terminated/cancelled or bankrupt obligors (coincides with KBC's PD-classes 11 and 12)
• Portfolio based impairments: impairments for non-impaired exposure (i.e. exposure with PD < PD 10)
• Specific impairments: loan loss impairments for impaired exposure (i.e. exposure with PD 10, 11 or 12)

• Cover ratio impaired loans: specific impairments / impaired loans Loan portfolio Business Unit Belgium 31-03-2017, in millions of EUR Total outstanding amount 89 694 6 036 95 730 Counterparty break down % outst. % outst. % outst. SME / corporate 25 914 28,9% 6 036 100,0% 31 949 33,4% retail 63 781 71,1% 0 0,0% 63 781 66,6% o/w private 35 032 39,1% 0 0,0% 35 032 36,6% o/w companies 28 749 32,1% 0 0,0% 28 749 30,0% Mortgage loans 2 % outst. ind. LTV % outst. ind. LTV % outst. total 33 597 37,5% 59% 0 0,0% - 33 597 35,1% o/w FX mortgages 0 0,0% - 0 0,0% - 0 0,0% o/w ind. LTV > 100% 1 342 1,5% - 0 0,0% - 1 342 1,4% Probability of default (PD) % outst. % outst. % outst. low risk (PD 1-4; 0.00%-0.80%) 67 599 75,4% 3 509 58,1% 71 108 74,3% medium risk (PD 5-7; 0.80%-6.40%) 16 755 18,7% 1 955 32,4% 18 710 19,5% high risk (PD 8-9; 6.40%-100.00%) 2 768 3,1% 145 2,4% 2 913 3,0% impaired loans (PD 10 - 12) 2 474 2,8% 411 6,8% 2 886 3,0% unrated 98 0,1% 15 0,2% 113 0,1% Overall risk indicators spec. imp. % cover spec. imp. % cover spec. imp. % cover outstanding impaired loans 2 474 1 186 47,9% 411 197 47,9% 2 886 1 384 47,9% o/w PD 10 impaired loans 1 146 301 26,3% 287 102 35,7% 1 433 404 28,2% o/w more than 90 days past due (PD 11+12) 1 328 885 66,6% 125 95 76,1% 1 453 980 67,5% all impairments (specific + portfolio based) n.a. n.a. 1 498 o/w portfolio based impairments n.a. n.a. 115 o/w specific impairments 1 186 197 1 384 2016 Credit cost ratio (CCR) 0,11% 0,32% 0,12% YTD 2017 CCR 0,24% 0,24% 0,24% Belgium 1 Foreign branches Total Business Unit Belgium

Remarks

1 Belgium = KBC Bank (all retail and corporate credit lending activities except for the foreign branches), CBC, KBC Lease part Belgium, KBC Commercial Finance, KBC Credit Investments (part of non-legacy portfolio assigned to BU Belgium)

2 Mortgage loans: only to private persons (as opposed to the accounting figures)

Loan portfolio Business Unit Czech Republic

31-03-2017, in millions of EUR					For information: ČMSS 3
					(consolidated via equity-method)
Total outstanding amount	22 581			2 405
Counterparty break down		% outst.			% outst.
SME / corporate	7 886	34,9%		43	1,8%
retail	14 695	65,1%		2 363	98,2%
o/w private	10 580	46,9%		2 350	97,7%
o/w companies	4 115	18,2%		12	0,5%
Mortgage loans 1		% outst.	ind. LTV		% outst.	ind. LTV
total	9 610	42,6%	67%	1 841	76,6%	69%
o/w FX mortgages	0	0,0%	-	0	0,0%	-
o/w ind. LTV > 100%	402	1,8%	-	160	6,7%	-
Probability of default (PD)		% outst.			% outst.
low risk (PD 1-4; 0.00%-0.80%)	15 492	68,6%		1 761	73,2%
medium risk (PD 5-7; 0.80%-6.40%)	5 734	25,4%		409	17,0%
high risk (PD 8-9; 6.40%-100.00%)	720	3,2%		158	6,6%
impaired loans (PD 10 - 12)	605	2,7%		79	3,3%
unrated	30	0,1%		0	0,0%
Overall risk indicators 2		spec. imp.	% cover		spec. imp.	% cover
outstanding impaired loans	605	334	55,1%	79	38	48,8%
o/w PD 10 impaired loans	191	46	24,1%	13	2	13,6%
o/w more than 90 days past due (PD 11+12)	414	288	69,4%	66	37	55,8%
all impairments (specific + portfolio based)	377			43
o/w portfolio based impairments	43			5
o/w specific impairments	334			38
2016 Credit cost ratio (CCR)	0,11%			n/a
YTD 2017 CCR	-0,02%			n/a

1 Mortgage loans: only to private persons (as opposed to the accounting figures)

2 CCR at country level in local currency

3 ČMSS: pro-rata figures, corresponding with KBC's 55%-participation in ČMSS

Loan portfolio Business Unit International Markets
31-03-2017, in millions of EUR		Ireland			Slovakia			Hungary			Bulgaria			Total Int Markets
Total outstanding amount	12 804			6 910			4 644			924			25 298
Counterparty break down		% outst.			% outst.			% outst.			% outst.			% outst.
SME / corporate	1 630	12.7%		2 764	40.0%		2 692	58.0%		321	34.8%		7 423	29.3%
retail	11 174	87.3%		4 146	60.0%		1 951	42.0%		603	65.2%		17 875	70.7%
o/w private	11 161	87.2%		3 345	48.4%		1 786	38.5%		357	38.6%		16 649	65.8%
o/w companies	13	0.1%		802	11.6%		165	3.6%		246	26.6%		1 226	4.8%
Mortgage loans 1		% outst.	ind. LTV		% outst.	ind. LTV		% outst.	ind. LTV		% outst.	ind. LTV		% outst.
total	11 136	87.0%	82%	2 808	40.6%	69%	1 641	35.3%	71%	197	21.3%	64%	15 782	62.4%
o/w FX mortgages	0	0.0%	-	0	0.0%	-	11	0.2%	127%	56	6.1%	58%	68	0.3%
o/w ind. LTV > 100%	2 926	22.9%	-	46	0.7%	-	321	6.9%	-	4	0.4%	-	3 297	13.0%
Probability of default (PD)		% outst.			% outst.			% outst.			% outst.			% outst.
low risk (PD 1-4; 0.00%-0.80%)	528	4.1%		4 922	71.2%		2 100	45.2%		126	13.6%		7 683	30.4%
medium risk (PD 5-7; 0.80%-6.40%)	5 584	43.6%		1 472	21.3%		1 785	38.4%		565	61.2%		9 415	37.2%
high risk (PD 8-9; 6.40%-100.00%)	1 304	10.2%		266	3.8%		347	7.5%		88	9.6%		2 006	7.9%
impaired loans (PD 10 - 12)	5 388	42.1%		199	2.9%		402	8.7%		145	15.7%		6 133	24.2%
unrated	0	0.0%		52	0.7%		10	0.2%		0	0.0%		62	0.2%
Overall risk indicators 2		spec. imp.	% cover		spec. imp.	% cover		spec. imp.	% cover		spec. imp.	% cover		spec. imp.	% cover
outstanding impaired loans	5 388	2 237	41.5%	199	127	64.0%	402	244	60.7%	145	62	42.8%	6 133	2 670	43.5%
o/w PD 10 impaired loans	2 788	739	26.5%	34	14	40.4%	55	18	32.0%	27	3	9.8%	2 904	773	26.6%
o/w more than 90 days past due (PD 11+12)	2 600	1 498	57.6%	165	113	68.9%	347	226	65.2%	118	59	50.5%	3 229	1 898	58.8%
all impairments (specific + portfolio based)	2 309			141			255			65			2 771
o/w portfolio based impairments	72			14			12			3			101
o/w specific impairments	2 237			127			244			62			2 670
2016 Credit cost ratio (CCR)	-0.33%			0.24%			-0.33%			0.32%			-0.16%
YTD 2017 CCR	-1.54%			0.11%			-0.08%			0.60%			-0.75%

Remarks

Total Int Markets: total outstanding amount includes a small amount of KBC internal risk sharings which were eliminated at country level

1 Mortgage loans: only to private persons (as opposed to the accounting figures)

2 CCR at country level in local currency

Loan portfolio Group Centre

Total Group Centre 1

31-03-2017, in millions of EUR

Total outstanding amount	4 778
Counterparty break down		% outst.
SME / corporate	4 778	100,0%
retail	0	0,0%
o/w private	0	0,0%
o/w companies	0	0,0%
Mortgage loans 2		% outst.	ind. LTV
total	0	0,0%	-
o/w FX mortgages	0	0,0%	-
o/w ind. LTV > 100%	0	0,0%	-
Probability of default (PD)		% outst.
low risk (PD 1-4; 0.00%-0.80%)	2 803	58,7%
medium risk (PD 5-7; 0.80%-6.40%)	1 414	29,6%
high risk (PD 8-9; 6.40%-100.00%)	168	3,5%
impaired loans (PD 10 - 12)	393	8,2%
unrated	0	0,0%
Overall risk indicators		spec. Imp.	% cover
outstanding impaired loans	393	280	71,3%
o/w PD 10 impaired loans	128	32	24,7%
o/w more than 90 days past due (PD 11+12)	265	248	93,8%
all impairments (specific + portfolio based)	303
o/w portfolio based impairments	23
o/w specific impairments	280
2016 Credit cost ratio (CCR)	0,67%
YTD 2017 CCR	-0,34%

Remarks

1 Total Group Centre = KBC Credit Investments (legacy & and part of non-legacy portfolio assigned to BU Group),

KBC FP (ex-Atomium assets), KBC Bank part Group (a.o. activities in wind-down: e.g. ex-Antwerp Diamond Bank);

in the segment reporting of loans & deposits included in the financial statements pg. 24 this part is allocated to business unit Belgium

2 Mortgage loans: only to private persons (as opposed to the accounting figures)

Solvency

KBC reports its solvency at group, banking and insurance level, calculating it on the basis of IFRS figures and the relevant guidelines issued by the competent regulator.

Solvency KBC Group

We report the solvency of the group, the bank and the insurance company based on IFRS data and according to the rules imposed by the regulator. For the KBC group, this implies that we calculate our solvency ratios based on CRR/CRD IV. This regulation entered gradually into force on 1 January 2014, and will be fully implemented by 1 January 2022. The general rule under CRR/CRD IV for insurance participations is that an insurance participation is deducted from common equity at group level, unless the competent authority grants permission to apply a risk weighting instead (Danish compromise). KBC received such permission from the supervisory authority and hence reports its solvency on the basis of a 370% risk weighting being applied to the holdings of own fund instruments of the insurance company, after having deconsolidated KBC Insurance from the group figures.

In addition to the solvency ratios under CRD IV/CRR, KBC is considered a financial conglomerate since it covers both significant banking and insurance activities. Therefore KBC also has to disclose its solvency position as calculated in accordance with the Financial Conglomerate Directive (FICOD; 2002/87/EC). KBC meets the FICOD requirement by aligning the building block method with method 1 (the accounting consolidation method) under FICOD. This implies that available capital is calculated on the basis of the consolidated position of the group and the eligible items recognised as such under the prevailing sectorial rules, which are CRR/CRD IV for the banking business and Solvency II (as of 2016) for the insurance business. The capital requirement for the insurance business based on Solvency II is multiplied by 12.5 to obtain a risk weighted asset equivalent.

The Internal Rating Based (IRB) approach is since its implementation in 2008 the primary approach to calculate KBC's risk weighted assets. This is, based on a full application of all the CRD IV/CRR rules, used for approximately 82% of the weighted credit risks, of which approx. 75% according to Advanced and approx. 7% according to Foundation approach. Note that, retail exposure treated under IRB is always subject to an Advanced approach. The remaining weighted credit risks (ca. 18%) are calculated according to the Standardised approach. 12% of the latter, under the Danish Compromise, are the 370% risk-weighted holdings of own funds instruments of the insurance company.

The 2017 minimum CET1 requirement that KBC is to uphold is set at 8.65% (phased-in, Danish Compromise) which includes the CRR/CRD IV minimum requirement (4.5%), the Pillar 2 Requirement (1.75%) and the buffers set by national competent authorities (1.25% Capital Conservation Buffer, 1.00% Systemic Buffer and 0.15% Countercycle Buffer). Furthermore ECB has set a Pillar 2 Guidance of 1.00%. For further information see press release of 14 December 2016 on www.kbc.com.

Following table groups the solvency on the level of KBC Group according to different methodologies and calculation methods, including the deduction method.

Overview of KBC Group's capital ratios - In millions of EUR - 31-03-2017

		numerator (common equity)	denominator (total weighted risk volume)	ratio (%)
CRDIV, Common Equity ratio
	Phased-in	13 960	87 961	15,87%
Danish Compromise	Fully loaded	13 839	88 389	15,66%
Deduction Method	Fully loaded	12 754	82 176	15,52%
Financial Conglomerates Directive*
	Fully loaded	14 700	100 506	14,63%

* KBC aligned the building block method with method 1 (the accounting consolidation method) under FICOD

Danish Compromise		31-03-2017		31-12-2016
In millions of EUR	Fully loaded	Phased-in	Fully loaded	Phased-in
Total regulatory capital (after profit appropriation)	17 694	17 797	17 571	17 887
Tier-1 capital	15 239	15 397	15 286	15 473
Common equity	13 839	13 960	13 886	14 033
Parent shareholders' equity (after deconsolidating KBC Insurance)	15 989	15 989	15 500	15 500
Intangible fixed assets (incl deferred tax impact) (-)	- 408	- 408	- 400	- 400
Goodwill on consolidation (incl deferred tax impact) (-)	- 484	- 484	- 483	- 483
AFS revaluation reserve bonds (-)		- 83		- 206
Hedging reserve (cash flow hedges) (-)	1 274	1 274	1 356	1 356
Valuation diff. in fin. liabilities at fair value - own credit risk (-)	- 14	- 14	- 18	- 18
Value adjustment due to the requirements for prudent valuation (-)	- 155	- 136	- 140	- 109
Dividend payout (-)	- 1 055	- 1 055	- 753	- 753
Renumeration of AT1 instruments (-)	- 2	- 2	- 2	- 2
Deduction re. financing provided to shareholders (-)	- 91	- 91	- 91	- 91
IRB provision shortfall (-)	- 203	- 203	- 203	- 203
Deferred tax assets on losses carried forward (-)	- 1 014	- 828	- 879	- 557
Additional going concern capital	1 400	1 437	1 400	1 440
Grandfathered innovative hybrid tier-1 instruments	0	37	0	40
CRR compliant AT1 instruments	1 400	1 400	1 400	1 400
Tier 2 capital	2 455	2 399	2 285	2 414
IRB provision excess (+)	366	364	367	362
Subordinated liabilities	2 088	2 035	1 918	2 053
Total weighted risk volume	88 389	87 961	87 782	86 878
Banking	79 108	78 680	78 482	77 579
Insurance	9 133	9 133	9 133	9 133
Holding activities	190	190	198	198
Elimination of intercompany transactions	- 42	- 42	- 32	- 32
Solvency ratios
Common equity ratio	15,66%	15,87%	15,82%	16,15%
Tier-1 ratio	17,24%	17,50%	17,41%	17,81%
Total capital ratio	20,02%	20,23%	20,02%	20,59%

FICOD		31-03-2017		31-12-2016
In millions of EUR	Fully loaded	Phased-in	Fully loaded	Phased-in
Common Equity	14 700	14 821	14 647	14 794
Total weighted risk volume	100 506	100 078	101 039	100 136
Common equity ratio	14,63%	14,81%	14,50%	14,77%

Leverage ratio KBC Group

Leverage ratio KBC Group (Basel III fully loaded)

In millions of EUR	31-03-2017	31-12-2016
Tier-1 capital (Danish compromise)	15 239	15 286
Total exposures	265 597	251 891
Total Assets	287 293	275 200
Deconsolidation KBC Insurance	-32 977	-32 678
Adjustment for derivatives	-4 651	-5 784
Adjustment for regulatory corrections in determining Basel III Tier-1 capital	-2 354	-2 197
Adjustment for securities financing transaction exposures	1 676	1 094
Off-balance sheet exposures	16 609	16 256
Leverage ratio	5,74%	6,07%

The leverage ratio decreased compared to the end of 2016 due to higher total exposures (mainly caused by an increase in reverse repos).

Solvency banking and insurance activities separately

As is the case for the KBC group, the solvency of KBC Bank is calculated based on CRR/CRD IV. The solvency of KBC Insurance is calculated on the basis of Solvency II rules as they became effective on 1 January 2016.

The tables below show the tier-1 and CAD ratios calculated under Basel III (CRD IV/CRR) for KBC Bank, as well as the solvency ratio of KBC Insurance under Solvency II.

KBC Bank consolidated - CRDIV/CRR		31-03-2017		31-12-2016
In millions of EUR	Fully loaded	Phased in	Fully loaded	Phased in
Total regulatory capital, after profit appropriation	15 874	15 975	16 229	16 347
Tier-1 capital	12 537	12 693	12 625	12 803
Of which common equity	11 130	11 237	11 219	11 348
Tier-2 capital	3 337	3 282	3 604	3 544
Total weighted risks	79 108	78 680	78 482	77 579
Credit risk	66 019	65 590	65 933	65 030
Market risk	2 958	2 958	2 417	2 417
Operational risk	10 132	10 132	10 132	10 132
Solvency ratios
Common equity ratio	14,1%	14,3%	14,3%	14,6%
Tier-1 ratio	15,8%	16,1%	16,1%	16,5%
CAD ratio	20,1%	20,3%	20,7%	21,1%

Solvency II, KBC Insurance consolidated

In millions of EUR	31-03-2017	31-12-2016
Own Funds	3 734	3 637
Tier 1	3 233	3 137
IFRS Parent shareholders equity	2 995	2 936
Dividend payout	- 106	- 103
Deduction intangible assets and goodwill (after tax)	- 123	- 123
Valuation differences (after tax)	339	349
Volatility adjustment	122	120
Other	6	- 42
Tier 2	500	500
Subordinated liabilities	500	500
Solvency Capital Requirement (SCR)	1 700	1 791
Market risk	1 585	1 589
Non-life	529	531
Life	608	608
Health	181	181
Counterparty	125	87
Diversification	- 901	- 881
Other	- 427	- 323
Solvency II ratio	220%	203%

In April 2016, the National Bank of Belgium issued a Belgian specific regulation which limited the loss absorbing capacity of deferred taxes in the calculation of the required capital. Without applying this Belgian specific regulation, the Solvency II ratio of 4Q 2016 equals 214%.

On 19 April 2017, the NBB retroactively waived the strict cap on the loss absorbing capacity of deferred taxes in the calculation of the required capital. Belgian insurance companies are now allowed to apply a higher adjustment for deferred taxes, in line with general European standards, if they pass the recoverability test. This is the case for KBC.

Income statement per business unit

Details on our segments or business units are available in the company presentation.

Business Unit Belgium - Breakdown P&L

in millions of EUR	1Q 2017	4Q 2016	3Q 2016	2Q 2016	1Q 2016
Net Interest Income	625	651	680	682	688
Non-life insurance before reinsurance	143	122	118	94	107
Earned premiums Non-life	256	257	256	251	248
Technical charges Non-life	- 113	- 135	- 138	- 158	- 141
Life insurance before reinsurance	- 44	- 62	- 47	- 50	- 49
Earned premiums Life	241	298	257	327	335
Technical charges Life	- 285	- 360	- 304	- 377	- 384
Ceded reinsurance result	- 2	- 8	11	- 7	- 8
Dividend income	12	15	10	27	8
Net Result from FIFV through profit or loss	156	174	69	66	20
Net Realised result from Available for sale assets	23	6	12	49	23
Net Fee and Commission Income	346	279	272	264	255
Net other income	46	66	53	44	46
Total income	1 305	1 244	1 177	1 169	1 090
Operating expenses	- 822	- 556	- 529	- 573	- 774
Impairment	- 60	- 60	- 41	- 48	- 30
Impairment on Loans and receivables	- 59	- 46	- 33	- 28	- 6
Impairment on available-for-sale assets	- 1	- 7	- 7	- 20	- 24
Impairment on goodwill	0	0	0	0	0
Impairment on Other	0	- 7	- 1	0	0
Share in results of assoc. comp & joint-ventures	0	0	1	0	- 1
Result before tax	423	628	608	548	286
Income tax	- 121	- 189	- 193	- 177	- 77
Result after tax	301	439	414	371	209
Attributable to Minority Interest	0	0	0	0	0
Attributable to equity holders of the parent	301	439	414	371	209
Banking	208	371	330	303	176
Insurance	93	68	84	68	33
Risk-weighted assets, banking (end of period, Basel III, fully loaded in '17, phased-in '16)	42 797	42 566	42 537	42 697	43 112
Required capital, insurance (Solv.II as of '16)	1 494	1 611	1 782	1 639	1 652
Allocated capital (end of period)	5 945	5 974	6 142	6 016	6 071
Return on allocated capital (ROAC)	20%	29%	28%	25%	14%
Cost/income ratio, banking	67%	45%	47%	50%	74%
Combined ratio, non-life insurance	77%	92%	86%	100%	92%
Net interest margin, banking	1,67%	1,72%	1,78%	1,84%	1,86%

Business unit Czech Republic - Breakdown P&L

in millions of EUR	1Q 2017	4Q 2016	3Q 2016	2Q 2016	1Q 2016
Net Interest Income	216	215	213	210	211
Non-life insurance before reinsurance	18	24	17	17	20
Earned premiums Non-life	49	50	49	46	45
Technical charges Non-life	- 30	- 27	- 32	- 29	- 25
Life insurance before reinsurance	11	10	10	8	8
Earned premiums Life	48	94	59	51	67
Technical charges Life	- 38	- 84	- 49	- 43	- 59
Ceded reinsurance result	- 1	- 3	2	- 1	- 2
Dividend income	0	0	0	0	0
Net Result from FIFV through profit or loss	50	24	20	41	32
Net Realised result from Available for sale assets	11	0	0	48	0
Net Fee and Commission Income	47	50	46	49	46
Net other income	26	2	7	4	5
Total income	378	322	314	378	318
Operating expenses	- 165	- 152	- 144	- 143	- 170
Impairment	1	- 11	- 2	- 10	- 1
Impairment on Loans and receivables	1	- 11	- 2	- 9	- 1
Impairment on available-for-sale assets	0	3	0	0	0
Impairment on goodwill	0	0	0	0	0
Impairment on Other	0	- 3	0	- 1	0
Share in results of assoc. comp & joint-ventures	4	4	8	5	6
Result before tax	218	163	175	231	154
Income tax	- 37	- 33	- 30	- 40	- 25
Result after tax	181	131	145	191	129
Attributable to Minority Interest	0	0	0	0	0
Attributable to equity holders of the parent	181	131	145	191	129
Banking	174	118	137	186	123
Insurance	7	13	8	5	6
Risk-weighted assets, banking (end of period, Basel III, fully loaded in '17, phased-in '16)	14 386	13 664	13 921	13 571	13 328
Required capital, insurance (Solv.II as of '16)	110	103	90	84	80
Allocated capital (end of period)	1 606	1 504	1 517	1 475	1 437
Return on allocated capital (ROAC)	48%	36%	41%	54%	37%
Cost/income ratio, banking	43%	47%	45%	36%	53%
Combined ratio, non-life insurance	100%	93%	96%	100%	95%
Net interest margin, banking	3,06%	2,96%	2,91%	2,91%	3,00%

Business unit International Markets - Breakdown P&L

	in millions of FUI

in millions of EUR	1Q 2017	4Q 2016	3Q 2016	2Q 2016	1Q 2016
Net Interest Income	189	198	184	179	178
Non-life insurance before reinsurance	25	24	24	24	20
Earned premiums Non-life	53	52	50	49	46
Technical charges Non-life	- 28	- 28	- 27	- 25	- 26
Life insurance before reinsurance	6	7	3	4	6
Earned premiums Life	23	21	20	24	24
Technical charges Life	- 17	- 14	- 17	- 19	- 18
Ceded reinsurance result	- 1	- 2	- 2	- 2	0
Dividend income	0	0	0	0	0
Net Result from FIFV through profit or loss	28	24	11	31	23
Net Realised result from Available for sale assets	2	2	0	32	4
Net Fee and Commission Income	48	50	52	51	48
Net other income	4	2	- 2	- 2	1
Total income	301	305	271	317	280
Operating expenses	- 212	- 189	- 180	- 172	- 208
Impairment	47	3	35	- 6	2
Impairment on Loans and receivables	48	8	37	- 6	3
Impairment on available-for-sale assets	0	0	0	0	0
Impairment on goodwill	0	0	0	0	0
Impairment on Other	0	- 5	- 2	0	- 1
Share in results of assoc. comp & joint-ventures	1	0	0	0	0
Result before tax	137	119	125	139	74
Income tax	- 22	20	- 19	- 16	- 14
Result after tax	114	139	106	123	60
Attributable to Minority Interest	0	0	0	0	0
Attributable to equity holders of the parent	114	139	106	123	60
Banking	106	135	99	119	52
Insurance	9	5	7	4	7
Risk-weighted assets, banking (end of period, Basel III, fully loaded in '17, phased-in '16)	17 667	17 163	17 642	17 406	17 928
Required capital, insurance (Solv.II as of '16)	93	95	91	98	106
Allocated capital (end of period)	1 931	1 854	1 899	1 882	1 944
Return on allocated capital (ROAC)	23%	28%	22%	26%	13%
Cost/income ratio, banking	72%	61%	67%	53%	75%
Combined ratio, non-life insurance	85%	98%	97%	93%	88%
Net interest margin, banking	2,67%	2,70%	2,52%	2,48%	2,47%

Hungary - Breakdown P&L

in millions of EUR	1Q 2017	4Q 2016	3Q 2016	2Q 2016	1Q 2016
Net Interest Income	58	59	58	57	58
Non-life insurance before reinsurance	9	9	8	8	8
Earned premiums Non-life	23	22	21	20	19
Technical charges Non-life	- 14	- 13	- 13	- 11	- 11
Life insurance before reinsurance	2	3	- 1	0	1
Earned premiums Life	4	4	4	4	4
Technical charges Life	- 2	- 1	- 5	- 3	- 3
Ceded reinsurance result	0	- 1	0	0	0
Dividend income	0	0	0	0	0
Net Result from FIFV through profit or loss	19	15	18	17	16
Net Realised result from Available for sale assets	1	0	0	15	3
Net Fee and Commission Income	37	40	40	40	38
Net other income	1	2	1	1	- 1
Total income	127	127	122	137	123
Operating expenses	- 101	- 82	- 78	- 75	- 103
Impairment	1	0	10	0	1
Impairment on Loans and receivables	1	1	11	1	2
Impairment on available-for-sale assets	0	0	0	0	0
Impairment on goodwill	0	0	0	0	0
Impairment on Other	0	- 1	- 1	0	- 1
Share in results of assoc. comp & joint-ventures	0	0	0	0	0
Result before tax	26	45	55	63	22
Income tax	- 6	- 21	- 13	- 10	- 9
Result after tax	20	23	42	53	12
Attributable to Minority Interest	0	0	0	0	0
Attributable to equity holders of the parent	20	23	42	53	12
Banking	17	21	40	50	9
Insurance	3	2	2	3	3
Risk-weighted assets, banking (end of period, Basel III, fully loaded in '17, phased-in '16)	5 551	5 199	5 562	5 197	5 515
Required capital, insurance (Solv.II as of '16)	34	33	29	26	23
Allocated capital (end of period)	611	566	599	558	589
Return on allocated capital (ROAC)	12%	15%	28%	35%	8%
Cost/income ratio, banking	81%	65%	63%	55%	85%
Combined ratio, non-life insurance	84%	99%	101%	92%	83%

Slovakia - Breakdown P&L

in millions of EUR	1Q 2017	4Q 2016	3Q 2016	2Q 2016	1Q 2016
Net Interest Income	53	56	53	52	54
Non-life insurance before reinsurance	6	5	5	5	5
Earned premiums Non-life	8	9	8	8	8
Technical charges Non-life	- 2	- 3	- 3	- 3	- 3
Life insurance before reinsurance	3	3	3	3	3
Earned premiums Life	13	12	13	12	14
Technical charges Life	- 9	- 9	- 10	- 10	- 10
Ceded reinsurance result	0	0	0	0	0
Dividend income	0	0	0	0	0
Net Result from FIFV through profit or loss	4	2	2	7	4
Net Realised result from Available for sale assets	0	1	0	14	0
Net Fee and Commission Income	12	11	12	11	11
Net other income	2	2	1	1	1
Total income	81	82	76	94	79
Operating expenses	- 50	- 55	- 48	- 45	- 51
Impairment	- 2	- 7	- 1	- 6	- 1
Impairment on Loans and receivables	- 2	- 7	- 1	- 6	- 1
Impairment on available-for-sale assets	0	0	0	0	0
Impairment on goodwill	0	0	0	0	0
Impairment on Other	0	0	0	0	0
Share in results of assoc. comp & joint-ventures	0	0	0	0	0
Result before tax	28	20	26	43	26
Income tax	- 6	- 4	- 6	- 6	- 6
Result after tax	22	16	20	37	20
Attributable to Minority Interest	0	0	0	0	0
Attributable to equity holders of the parent	22	16	20	37	20
Banking	19	14	17	35	17
Insurance	3	2	3	2	3
Risk-weighted assets, banking (end of period, Basel III, fully loaded in '17, phased-in '16)	4 716	4 635	4 480	4 592	4 522
Required capital, insurance (Solv.II as of '16)	23	23	25	22	20
Allocated capital (end of period)	513	499	484	493	484
Return on allocated capital (ROAC)	17%	13%	17%	32%	18%
Cost/income ratio, banking	64%	66%	65%	46%	67%
Combined ratio, non-life insurance	73%	94%	87%	89%	85%

Bulgaria - Breakdown P&L

in millions of EUR	1Q 2017	4Q 2016	3Q 2016	2Q 2016	1Q 2016
Net Interest Income	12	13	12	12	12
Non-life insurance before reinsurance	10	10	10	10	7
Earned premiums Non-life	21	22	21	21	20
Technical charges Non-life	- 12	- 12	- 11	- 11	- 12
Life insurance before reinsurance	1	1	1	1	1
Earned premiums Life	6	5	3	8	6
Technical charges Life	- 5	- 4	- 2	- 6	- 5
Ceded reinsurance result	- 1	- 1	- 1	- 1	1
Dividend income	0	0	0	0	0
Net Result from FIFV through profit or loss	1	1	0	0	0
Net Realised result from Available for sale assets	1	0	0	3	0
Net Fee and Commission Income	- 1	- 1	- 1	- 1	- 1
Net other income	0	- 1	0	- 4	- 1
Total income	22	21	23	21	20
Operating expenses	- 16	- 15	- 13	- 14	- 14
Impairment	- 1	- 2	- 1	- 1	- 1
Impairment on Loans and receivables	- 1	1	- 1	- 1	- 1
Impairment on available-for-sale assets	0	0	0	0	0
Impairment on goodwill	0	0	0	0	0
Impairment on Other	0	- 3	0	0	0
Share in results of assoc. comp & joint-ventures	0	0	0	0	0
Result before tax	5	4	9	5	5
Income tax	- 1	1	- 1	- 1	0
Result after tax	4	5	8	4	4
Attributable to Minority Interest	0	0	0	0	0
Attributable to equity holders of the parent	4	5	8	4	4
Banking	3	4	5	5	3
Insurance	1	1	2	- 1	1
Risk-weighted assets, banking (end of period, Basel III, fully loaded in '17, phased-in '16)	842	839	799	792	779
Required capital, insurance (Solv.II as of '16)	37	39	37	50	63
Allocated capital (end of period)	125	125	119	131	142
Return on allocated capital (ROAC)	13%	16%	22%	12%	14%
Cost/income ratio, banking	72%	66%	53%	58%	67%
Combined ratio, non-life insurance	96%	98%	97%	96%	97%

Ireland - Breakdown P&L

in millions of EUR	1Q 2017	4Q 2016	3Q 2016	2Q 2016	1Q 2016
Net Interest Income	66	69	61	59	55
Non-life insurance before reinsurance	0	0	0	0	0
Earned premiums Non-life	0	0	0	0	0
Technical charges Non-life	0	0	0	0	0
Life insurance before reinsurance	0	0	0	0	0
Earned premiums Life	0	0	0	0	0
Technical charges Life	0	0	0	0	0
Ceded reinsurance result	0	0	0	0	0
Dividend income	0	0	0	0	0
Net Result from FIFV through profit or loss	5	7	- 9	6	2
Net Realised result from Available for sale assets	0	0	0	0	0
Net Fee and Commission Income	0	- 1	0	0	0
Net other income	0	- 1	- 4	0	0
Total income	71	75	49	65	57
Operating expenses	- 44	- 36	- 40	- 37	- 39
Impairment	50	12	27	1	3
Impairment on Loans and receivables	50	12	28	1	3
Impairment on available-for-sale assets	0	0	0	0	0
Impairment on goodwill	0	0	0	0	0
Impairment on Other	0	0	- 1	0	0
Share in results of assoc. comp & joint-ventures	0	0	0	0	0
Result before tax	76	51	35	28	21
Income tax	- 10	44	1	1	2
Result after tax	67	95	37	30	23
Attributable to Minority Interest	0	0	0	0	0
Attributable to equity holders of the parent	67	95	37	30	23
Banking	67	95	37	30	23
Insurance	0	0	0	0	0
Risk-weighted assets, banking (end of period, Basel III, fully loaded in '17, phased-in '16)	6 544	6 477	6 787	6 810	7 095
Required capital, insurance (Solv.II as of '16)	-	-	-	-	-
Allocated capital (end of period)	681	664	696	698	727
Return on allocated capital (ROAC)	38%	52%	20%	16%	13%
Cost/income ratio, banking	63%	49%	83%	58%	69%
Combined ratio, non-life insurance	-	-	-	-	-

Group Centre - Breakdown net result

in millions of EUR	1Q 2017	4Q 2016	3Q 2016	2Q 2016	1Q 2016
Operating expenses of group activities	-14	-39	-21	-7	-18
Capital and treasury management-related costs
	-18	4	-4	1	1
Costs related to the holding of participations	-9	-14	-13	-9	-17
Results of remaining companies earmarked for divestment or in run-down	83	14	17	10	-8
Other items	-9	11	-14	41	36
Total net result for the Group Centre	33	-24	-36	37	-6
	1Q 2017	4Q 2016	3Q 2016	2Q 2016	1Q 2016
Group Centre - Breakdown P&L
Net Interest Income	-5	-7	-13	-2	-10
Non-life insurance before reinsurance	1	8	5	6	-2
Earned premiums Non-life	2	3	2	3	2
Technical charges Non-life	-1	5	3	4	-4
Life insurance before reinsurance	-1	0	0	0	0
Earned premiums Life	0	0	0	0	0
Technical charges Life	-1	0	0	0	0
Ceded reinsurance result	1	-2	-12	-4	2
Dividend income	2	3	2	9	1
Net Result from FIFV through profit or loss	-44	2	-31	16	19
Net Realised result from Available for sale assets Net Fee and Commission Income	9 -3	0 -2	13 -2	-1 -4	0 -3
Net other income	1	30	2	1	0
Total income	-38	32	-35	20	8
Operating expenses	-29	-67	-41	-16	-34
Impairment	4	-5	-20	-7	0
Impairment on Loans and receivables	4	-5	-20	-7	0
Impairment on available-for-sale assets	0	0	0	0	0
Impairment on goodwill	0	0	0	0	0
Impairment on Other	0	0	0	0	0
Share in results of assoc. comp & joint-ventures	0	1	1	1	1
Result before tax	-63	-39	-95	-2	-24
Income tax	96	15	59	39	19
Result after tax	33	-24	-36	37	-6
Attributable to Minority Interest	0	0	0	0	0
Attributable to equity holders of the parent	33	-24	-36	37	-6
Banking	38	-11	-14	35	7
Insurance	2	11	-4	-1	2
Group	-7	-24	-17	2	-14
Risk-weighted assets, banking (end of period, Basel III, fully loaded in '17, phased-in '16)	4 407	4 186	4 921	5 341	5 438
Risk-weighted assets, insurance (end of period, Basel II Danish compromise)	9 133	9 133	9 133	9 133	9 133
Required capital, insurance (end of period, Solv.II as of '16)	3	- 18	- 18	- 35	- 20
Allocated capital (end of period)	461	428	487	513	537

Details of ratios and terms

Basic and diluted earnings per share

Gives an idea of the amount of profit over a certain period that is attributable to one share (and, where applicable, including dilutive instruments).

Calculation (in millions of EUR)	Reference	1Q 2017	1Q 2016
Result after tax, attributable to equity holders of the parent (A)	'Consolidated income statement'	630	392
-
Coupon on the additional tier-1 instruments included in equity (B)	'Consolidated statement of changes in equity'	- 13	- 13
/
Average number of ordinary shares less treasury shares (in millions) in the period (C)	Note 5.10	418	418
or
Average number of ordinary shares plus dilutive options less treasury shares in the period (D)		418	418
Basic = (A-B) / (C) (in EUR)		1,47	0,91
Diluted = (A-B) / (D) (in EUR)		1,47	0,91

Combined ratio (non-life insurance)

Gives an insight into the technical profitability (i.e. after eliminating investment returns, among other items) of the non-life insurance business, more particularly the extent to which insurance premiums adequately cover claim payments and expenses. The combined ratio takes ceded reinsurance into account.

Calculation (in millions of EUR or %)	Reference	1Q 2017	1Q 2016
Net technical insurance charges, including the internal cost of settling Note 3.7.1		183	208
/
Net earned insurance premiums (B)	Note 3.7.1	355	336
+
Operating expenses (C)	Note 3.7.1	126	123
/
Net written insurance premiums (D)	Note 3.7.1	452	429
= (A/B)+(C/D)		79,4%	90,8%

Common equity ratio

A risk-weighted measure of the group's solvency, based on common equity tier-1 capital.

Calculation (in millions of EUR or %)	Reference	1Q 2017	2016
'Detailed calculation 'Danish compromise' table in the 'Solvency KBC Group'
section.'
Phased-in*		15,9%	16,2%
Fully loaded*		15,7%	15,8%
* CRD IV capital rules are being implemented gradually to allow banks to build up the necessary capital buffers. The capital position of a bank taking into account the transition period is called 'phased-in'. The capital position of a bank based on a full application of all rules as applicable after the transition period is called 'fully loaded'.

Cost/income ratio

Gives an impression of the relative cost efficiency (costs relative to income) of the banking activities.

Calculation (in millions of EUR or %)	Reference	1Q 2017	1Q 2016
Operating expenses of the banking activities (A)	'Consolidated income statement': component of 'Operating expenses'	1 097	1 053
/
Total income of the banking activities (B)	'Consolidated income statement': component of 'Total income'	1 662	1 477
=(A) / (B)		66,0%	71,3%

Where relevant, we also estimate exceptional and/or non-operating items when calculating the cost/income ratio. The adjustments include: MTM ALM derivatives (fully excluded), bank taxes (including contributions to European Single Resolution Fund) are included pro rata and hence spread over all quarters of the year instead of being recognised for the most part upfront (as required by IFRIC 21) and one-off items. The Cost/Income ratio adjusted for specific items is 52% in 1Q 2017.

Cover ratio

Indicates the proportion of impaired loans (see 'Impaired loans ratio' for definition) that are covered by impairment charges. Where appropriate, the numerator and denominator in the formula may be limited to impaired loans that are more than 90 days past due.

Calculation (in millions of EUR or %)	Reference	1Q 2017	2016
Specific impairment on loans (A)	'Credit risk: loan portfolio overview' table in the 'Credit risk' section	4 667	4 874
/ Outstanding impaired loans (B)	'Credit risk: loan portfolio overview' table in the 'Credit risk' section	10 017	10 583
= (A) / (B)		46,6%	46,1%

Credit cost ratio

Gives an idea of loan impairment charges recognised in the income statement for a specific period (in this case, a year), relative to the total loan portfolio (see 'Loan portfolio' for definition). In the longer term, this ratio can provide an indication of the credit quality of the portfolio.

Calculation (in millions of EUR or %)	Reference	1Q 2017	1Q 2016
Net changes in impairment for credit risks (A) (annualised)	'Consolidated income statement': component of 'Impairment'	6	4
/
Average outstanding loan portfolio (B)	'Credit risk: loan portfolio overview' table in the 'Credit risk' section	148 792	144 505
= (A) (annualised) / (B)		0,02%	0,01%

Impaired loans ratio

Indicates the proportion of impaired loans in the loan portfolio (see 'Loan portfolio' for definition) and, therefore, gives an idea of the creditworthiness of the portfolio. Impaired loans are loans where it is unlikely that the full contractual principal and interest will be repaid/paid. These loans have a KBC default status of PD 10, PD 11 or PD 12 and correspond to the new definition of 'nonperforming' used by the European Banking Authority.

Calculation (in millions of EUR or %)	Reference	1Q 2017	2016
Amount outstanding of impaired loans (A)	'Credit risk: loan portfolio overview'	10 017	10 583
	table in the 'Credit risk' section
/
Total outstanding loan portfolio (B)	'Credit risk: loan portfolio overview in	148 387	147 526
	the 'Credit risk' section
= (A) / (B)		6,8%	7,2%

Where appropriate, the numerator may be limited to impaired loans that are more than 90 days past due (PD 11 + PD 12).

Leverage ratio

Gives an idea of the group's solvency, based on a simple non-risk-weighted ratio.

Calculation (in millions of EUR or %)	Reference	1Q 2017	2016
Regulatory available tier-1 capital (A)	'Leverage ratio KBC Group (Basel III	15 239	15 286
	fully loaded)' table in the 'Leverage
	KBC Group' section
/
Total exposure measures (total of non-risk-weighted on and off-balance sheet	Based on the Capital Requirements	265 597	251 891
items, with a number of adjustments) (B)	Regulation (CRR)
= (A) / (B)		5,7%	6,1%

Liquidity coverage ratio (LCR)

Gives an idea of the bank's liquidity position in the short term, more specifically the extent to which the group is able to overcome liquidity difficulties over a one-month period.

Reference	1Q 2017	2016
Based on the European	70 950	65 400
Commission's Delegated Act on
	48 900	47 100
	145%	139%
	LCR

Loan Portfolio

Gives an idea of the magnitude of (what are mainly pure, traditional) lending activities.

Calculation (in millions of EUR or %)	Reference	1Q 2017	2016
Loans and advances to customers (related to the group's banking activities) (A)	Note 4.1, component of 'Loans and advances to customers'	133 266	131 415
- Reverse repos with customers (B)	Note 4.1	- 1 257	- 376
+ Debt instruments issued by corporates and by credit institutions and investment firms (related to the group's banking activities) (C)	Note 4.1, component of 'Debt instruments issued by corporates and by credit institutions and investment firms'	7 298	7 114
+ Loans and advances to credit institutions and investment firms (related to the group's banking activities, excluding dealing room activities) (D)	Note 4.1, component of 'Loans and advances to credit institutions and investment firms '	990	952
+ Financial guarantees granted to clients (E)	Note 6.1, component of 'Financial guarantees given'	8 343	8 279
+ Impairment on loans (F)	Note 4.2, component of 'Impairment'	4 838	5 094
+ Other (including accrued interest) (G)	Component of Note 4.1	- 5 091	- 4 952
= (A)-(B)+(C)+(D)+(E)+(F)+(G)		148 387	147 526

Minimum requirement for own funds and eligible liabilities (MREL)

Indicates the extent to which a bank has sufficient own funds and eligible liabilities available for bail-in. MREL and bail-in are based on the idea that shareholders and debt-holders should bear losses first if a bank fails.

Calculation (in millions of EUR or %)	Reference	1Q 2017	2016
Own funds and eligible liabilities (issued from KBC Group NV) (A)	Based on BRRD	19 670	18 467
/
Risk weighted assets (consolidated, Danish compromise method) (B)	'Consolidated balance sheet'	88 389	87 782
= (A) / (B)		22,3%	21,0%

Net interest margin

Gives an idea of the net interest income of the banking activities (one of the most important sources of revenue for the group) relative to the average total interest-bearing assets of the banking activities.

Calculation (in millions of EUR or %)	Reference	1Q 2017	1Q 2016
Net interest income of the banking activities (A) (annualised)	'Consolidated income statement': component of 'Net interest income'	871	904
/
Average interest-bearing assets of the banking activities (B)	'Consolidated balance sheet': component of 'Total assets'	185 294	182 122
= (A) (annualised x360/number of calendar days) / (B)		1,88%	1,96%

Net stable funding ratio (NSFR)

Gives an idea of the bank's structural liquidity position in the long term, more specifically the extent to which the group is able to overcome liquidity difficulties over a one-year period.

Calculation (in millions of EUR or %)	Reference	1Q 2017	2016
Available amount of stable funding (A)	Basel III: the net stable funding ratio' (Basel Committee on Banking Supervision	148 800	144 150
	publication, October 2014)
/
Required amount of stable funding (B)		114 550	114 950
= (A) / (B)		130%	125%

Parent shareholders' equity per share

Gives the carrying value of a KBC share, i.e. the value in euros represented by each share in the parent shareholders' equity of KBC.

2016 15 957
418
38,1

Return on allocated capital (ROAC) for a particular business unit

Gives an idea of the relative profitability of a business unit, more specifically the ratio of the net result to the capital allocated to the business unit.

Calculation (in millions of EUR or %)	Reference	1Q 2017	1Q 2016
BELGIUM BUSINESS UNIT
Result after tax (including minority interests) of the business unit (A) /	Note 2.1: Segment reporting based on the management structure	301	209
The average amount of capital allocated to the business unit is based on the risk-weighted assets for the banking activities (under Basel III) and risk-weighted asset equivalents for the insurance activities (under Solvency II) (B)		6 119	5 815
= (A) annualised / (B)		19,7%	14,4%
CZECH REPUBLIC BUSINESS UNIT
Result after tax (including minority interests) of the business unit (A) /	Note 2.1: Segment reporting based on the management structure	181	129
The average amount of capital allocated to the business unit is based on the risk-weighted assets for the banking activities (under Basel III) and risk-weighted asset equivalents for the insurance activities (under Solvency II) (B)		1 511	1 405
= (A) annualised / (B)		47,9%	36,6%
INTERNATIONAL MARKETS BUSINESS UNIT
Result after tax (including minority interests) of the business unit (A) /	Note 2.1: Segment reporting based on the management structure	114	60
The average amount of capital allocated to the business unit is based on the risk-weighted assets for the banking activities (under Basel III) and risk-weighted asset equivalents for the insurance activities (under Solvency II) (B)		1 992	1 895
= (A) annualised / (B)		22,9%	12,6%

Return on equity

Gives an idea of the relative profitability of the group, more specifically the ratio of the net result to equity.

Calculation (in millions of EUR or %)	Reference	1Q 2017	1Q 2016
Result after tax, attributable to equity holders of the parent (A) (annualised)	'Consolidated income statement'	630	392
-
Coupon on the additional tier-1 instruments included in equity (B) (annualised)	'Consolidated statement of changes in equity'	- 13	- 13
/
Average parent shareholders' equity, excluding the revaluation reserve for available-for-sale	'Consolidated statement of changes in equity'	14.567	12.545
assets (C)
= (A-B) (annualised) / (C)		16,9%	12,1%

Solvency ratio (insurance)

Measures the solvency of the insurance business, calculated under Solvency II.

Calculation	1Q 2017	2016
Detailed calculation under 'Solvency II, KBC Insurance consolidated' table in the	220%	203%
Solvency banking and insurance activities separately section

Total assets under management

Total assets under management (AuM) comprise third-party assets and KBC group assets managed by the group's various asset management companies (KBC Asset Management, ČSOB Asset Management, etc.), as well as assets under advisory management at KBC Bank. The assets, therefore, consist mainly of KBC investment funds and unit-linked insurance products, assets under discretionary and advisory management mandates of (mainly retail, private banking and institutional) clients, and certain group assets. The size and development of total AuM are major factors behind net fee and commission income (generating entry and management fees) and hence account for a large part of any change in this income line. In that respect, the AuM of a fund that is not sold directly to clients but is instead invested in by another fund or via a discretionary/advisory management portfolio, are also included in the total AuM figure, in view of the related work and any fee income linked to them.

Calculation (in billions of EUR)	Reference	1Q 2017	2016
Belgium Business Unit (A)	Company presentation on	201,8	198,9
	www.kbc.com
+
Czech Republic Business Unit (B)		8,8	8,5
+
International Markets Business Unit (C)		5,7	5,7
A)+(B)+(C)		216,2	213,1

Total capital ratio

A risk-weighted measure of the group's solvency, based on total regulatory capital.

Calculation	1Q 2017	2016
Detailed calculation in the table 'Danish Compromise' under 'Solvency KBC
Group' section
Phased-in*	20,2%	20,6%
Fully loaded*	20,0%	20,0%

* CRD IV capital rules are being implemented gradually to allow banks to build up the necessary capital buffers. The capital position of a bank taking into account the transition period is called 'phased-in'. The capital position of a bank based on a full application of all rules as applicable after the transition period is called 'fully loaded'.