Strong operating performance, clouded by non-cash items.

Net profit (IFRS) for the quarter ending 30 June was 493 million euros,bringing net profit for the first half of the year to 1 047 million euros.Underlying net profit – i.e. excluding exceptional items – for the secondquarter of 2008 came to 510 million euros, a 42% drop compared with the verystrong year-earlier quarter. While business cash flows remained highly resilientthroughout the quarter, non-cash factors had a significant negative impact onthe results reported.

According to André Bergen, KBC Group CEO, ‚During the second quarter,operating performance showed clear evidence of resiliency. Lending anddeposit-gathering trends remained solid, while capital market activities alsoperformed well. Especially Eastern Europe continued to do very well. On theother hand, the adverse equity and credit markets in June resulted in therecognition of additional markdowns at the end of the quarter. If the effect ofthese was stripped out, the underlying quarter profit would have exceeded800 million euros, well above the previous quarter and the quarterly averagedelivered over the last year.‘

To see the full KBL press release, please go to: http://www.kbl.lu