Earnings Statement KBC Group 3Q 2008 and 9M 2008

Regulated information* - 6 November 2008 (7 a.m. CET)

KBC posted a  net loss of  906 million euros  (IFRS) for the  quarter
ending 30 September 2008. The loss  was driven by value markdowns  on
structured credit  and  other  investment  portfolios.  Adjusted  for
exceptional  items  and  for   structured  credit  and  other   value
write-downs (see details  in the  quarterly report),  the net  profit
would have  come to  551  million euros.  As  at 30  September  2008,
year-to-date reported  profit  stood  at  141  million  euros  (2 094
million on an adjusted basis).

According to André  Bergen, Group CEO:  "Following the  credit-rating
downgrades of the Collateralised  Debt Obligations held, KBC  decided
mid-October to  communicate  its preliminary  third-quarter  earnings
earlier than planned. The definitive  set of results presented  today
is fully in line with the information disclosed at that time. Despite
the  difficult  operating  environment,  commercial  performance  was
satisfactory, especially in Eastern Europe. The financial position of
the   group   remains   solid,   and   the   more   so   after    the
capital-strengthening transaction that was announced last week."

Financial highlights - 3Q 2008

André Bergen, Group CEO, summarised  the financial highlights for  3Q
2008, as follows:
"The  preliminary  earnings  disclosure   of  mid-October  is   fully
confirmed. Despite the difficult climate, and taking into account the
recurring  seasonal   revenue   pattern,  commercial   results   were
satisfactory, especially  in Eastern  Europe. However,  the  reported
results have  been negatively  affected  by accounting  markdowns  on
investment portfolios across business units."
"The net  profit  impact  of  the investment  markdowns  due  to  the
financial crisis  was  1.4 billion  euros:  1.1 billion  on  the  CDO
portfolio, 0.2 billion on shareholdings  and 0.1 billion on  exposure
to troubled US banks Lehman  Brothers and Washington Mutual. Part  of
the CDO markdown  resulted from  credit rating downgrades  of 5  CDOs
held. The markdowns  also included  the impact  of extrapolating  the
rating downgrading to those CDO notes  that were out of the scope  of
the credit rating agency  review. By so  doing, the future  financial
impact of  potential  effective downgrades  of  those CDOs  has  been
anticipated."
"While overall  economic  activity slowed,  credit  quality  remained
remarkably good. Loan losses  were low again in  Belgium, as was  the
case in our  international loan book.  Year-to-date, the credit  cost
ratio was 24 basis points. When including the losses on bonds of  the
troubled US banks,  the ratio  came to  37 basis  points. Within  the
context of the  deterioriating economic environment,  it is  expected
that the loan loss trend will remain upwards for the next quarters."
"Even after the consensus macroeconomic  forecast for the region  was
revised, the Central  and Eastern Europe  business unit continues  to
perform well, mainly thanks to the relative weight of our presence in
countries with more moderate vulnerability. Updated stress tests also
provide comfort as regards our selective foreign-currency lending  in
the region."
"KBC's financial  position remains  very solid  thanks to  its  sound
liquidity buffer and firm solvency  ratios. When account is taken  of
 the  capital-strengthening  transaction  announced  last  week,  the
Tier-1 ratio for banking  activities stands at  10.7%, of which  8.2%
core capital.  For the  insurance division,  the solvency  margin  is
280%."

Financial highlights - 9M 2008

Net profit according to IFRS for the nine months ending 30  September
2008 amounted to 141 million euros. This figure includes charges  for
items that do not occur during  the normal course of business in  the
amount of -90 million euros, net, and losses on investment portfolios
related to the financial crisis in the amount of 1 863 million, net.

Net interest  income came  to 3  723  million euros,  up 24%  on  the
year-earlier figure (+12% on an  underlying basis), mainly thanks  to
solid volume growth  achieved across  all markets.  The net  interest
margin in  the Central  &  Eastern Europe  and Russia  Business  Unit
increased (partly thanks to growth in higher-margin countries), while
it fell in Belgium due to the repricing of savings deposits during 3Q
2008.

Gross earned premiums, insurance,  stood at 3  166 million euros,  up
19% compared to the year-earlier figure. Net of technical charges and
ceded reinsurance result,  the income was  54 million higher  (+15%).
The combined  ratio, non-life,  remained at  a remarkably  favourable
level of 92%.

Dividend income from equity holdings  amounted to 195 million  euros,
somewhat lower than the year-earlier figure.

Net gains from financial instruments at fair value came to a negative
1 680 million euros. This amount included a valuation markdown of 2.1
billion euros on  structured credit investments.  The line item  also
includes income from professional money and securities trading, which
was negatively impacted by the adverse capital-market climate.

Gains from available-for-sale assets were  realised in the amount  of
341 million euros (mostly on investments in shares), 199 million less
than the year-earlier figure.

Net fee and commission income amounted  to 1 336 million euros.  This
is 11% below the  year-earlier level, largely  due to lower  customer
investment activities consequent on the adverse investment climate.

Other net income  stood at 435  million euros, 47  million above  the
year-earlier level.

Operating expenses  came to  3  939 million  euros. Compared  to  the
year-earlier period,  the 4%  growth  in costs  is explained  by  new
acquisitions and currency appreciations. Excluding these factors, the
cost level was down 3%, largely  on the back of lower bonus  accruals
due to lower trading revenue.

Impairment charges stood at 909  million euros, 300 million euros  of
which related to  the loan  portfolio. An impairment  of 591  million
euros was taken on available-for-sale investment securities, of which
415 million  euros related  to shares  held mainly  in the  insurance
business and  172 million  euros  related to  (mostly) bonds  of  the
troubled US banks Lehman Brothers and Washington Mutual.

The contribution  from associated  companies amounted  to 33  million
euros, while  the  share  in  the  result  attributable  to  minority
interests was 83 million euros. Due to the negative pre-tax  results,
a deferred tax asset was  recognised, resulting in a positive  impact
on the profit and loss account.

As at the end of September 2008, parent shareholders' equity came  to
14.3 billion euros  (42 euros  per share).  Shareholders' equity  was
down on the start of the year, as profit for the period (+0.1 billion
euros) was more than offset by dividends paid out and treasury shares
repurchased (-1.6 billion euros, combined)  and by a decrease in  the
revaluation reserve  for  available-for-sales  assets  (-1.8  billion
euros).


Future developments

André Bergen,  Group CEO:"When  the financial  crisis first  came  to
public notice in the summer of 2007, we could not have imagined  that
it would last so long and be so deep. Reported earnings will continue
to be  influenced  by  market  price  trends  of  shares  and  credit
instruments. It is  obvious that  we remain vigilant,  while we  make
sure that  much of  the management  agenda continues  to be  directed
towards business performance and enhancement of the mid-term value of
our core business portfolio."

KBC has a credit exposure to 3 Icelandic banks in the amount of 277
million euros. No impairment decision has been taken yet since the
level thereof could not be reliably determined. This decision will be
taken later in the fourth quarter.


* This news item contains information that is subject to the
transparency regulations for listed companies.


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