Wim Allegaert – Director of Investor Relations Johan Thijs – Group CEO Luc Popelier – Group CFO

Anton Kryachok – UBS Investment Bank Jean-Pierre Lambert – Keefe, Bruyette & Woods Benoit Petrarque – Kepler Cheuvreux Andrew Coombs – Citigroup, Inc.

Good morning from KBC to everybody on the call. Today is November 13, 2014 and we’re hosting the conference call on the third quarter results for KBC Group.

My name is Wim Allegaert. I’m head of investor relations.

We are in the company today of Johan Thijs, Group CEO as well as Luc Popelier, Group CFO, and they will both elaborate on the results and give some additional financial insight on KBC. We will take roughly 30 minutes to guide you through the presentation for the analysts which can be found at our corporate website, KBC.com.

After this, there is of course time for questions until around 10:30. This conference call is taped as well and can be replayed until the 27th of November.

As usual, investor relations and our CFO are organizing a sell-side analyst meeting in London tomorrow morning at our offices in Old Broad Street 111. That meeting starts at 8:30, local time, and we would be pleased to have you over.

There will be further room to discuss the financials there, ask the additional question coming up later today or just listen to our story with a cup of coffee. And now, it is my pleasure to give the floor to Johan Thijs.

Good morning to all of you. A warm welcome from my side and I will talk you through the first part of this conference call and the third quarter results of 2014.

Before I start in doing so, perhaps, first a small reminder which is mentioned on Page 2 of our pack which can be found on the KBC.com website. That is that, as of this quarter we are going to report as [indiscernible] by the end of 2013 on the basis of new ABA guidelines for the impaired loans and the coverage [ph] ratios and therefore it means that we have been starting to include all those loans to be returned [ph] in the calculation of all these ratios.

We have, for the easiness of comparison also restated all our numbers on that respect. There’s also a lot of more minor change that has to do with the changes in statues of pensions [ph] on the Czech Republic and the consolidation of some extra [ph] entities both called Patria and linked to Patria Corporate Finance and Patria Online.

They have been included in the consolidation scope but they have no major impact on our result we talk about, the EUR1 million and that for that reason we did not restate the previous quarter. Okay.

Then something about main takeaways and the key takeaways of our result; actually we can say that KBC has been performing very strongly over the last quarter with a net result of EUR591 and a suggested net result EUR477 million, we can actually say that indeed our bank insurance franchises have been performing strong. The quality of the result is intrinsically also very good.

I mean, we’re talking about the traditional banking and insurance activity, net interest income was up significantly. The fee and commission business was doing very well.

We have seen an improvement in our margins. We have seen also good performance in terms of the quality of the life business.

Life business is up as well. And despite the fact that we have seen a slight increase of our loan impairments; we still are a very low level of credit cost ratio.

So in that respect, it’s indeed a good quality. The strong EUR591 million is actually a bit distorted by the fact that we have reverse [ph] impairments which we have taken over 2012 and 2013 for Antwerp Diamond Bank which have been, as I said, reversed [ph] in this quarter.

But regardless of that, it is actually a good result. It has been a very busy quarter because not only the decision on Antwerp Diamond Bank was taken but also KBC Germany was closed, the sale of KBC Germany was closed, meaning, that actually our divestment filed with the European Commission agreed back in 2009 was fully completed.

Also, we completed – we collapsed the two remaining studios releasing a significant amount of capital. And last but not least, if you add up all these elements, we have been able to improve our solvency ratio and our liquidity ratio.

Another big event which was already strongly in the press was obviously the ECB’s stress test and AQR exercise. And as you know KBC came out quite well, also taking into account that we have, further payback stated included in that calculation and therefore I could say we have withstand the stress test, keep a solid buffer and we are very confident that the impact of the AQR exercise has none material impact on our fourth quarter results going forward.

And as you are used, our definition of non-material is lower than EUR100 million. On top line, we can state this quite explicitly that also we do not expect any impact of the AQR exercise on the fourth quarter in terms of adjustment for Ireland.

Flipping through Slide 6 gives you the idea of the split up between the net result and the adjusted result. I’m not going to dwell on this because I already explained.

So also on Slide 7, you can see the split up between the bank and insurance activities. Also there is quite common which what we have been showing in the previous quarters.

It’s almost split up, 80/20. It’s a bit higher this time, 83% on the banking activity; 17% for the insurance activities.

But let’s say this is quite normal. On Slide 8, far more important is the net interest income.

There, we can say actually that the net interest income increased 6% quarter-on-quarter. And if you consider it on the yearly basis, the increase is about 11% which is quite significant.

This is due to several elements. As we have been doing in the previous quarters, we have been continuing to work on our commercial margins which stand at a very solid level.

We have been able to increase our volumes both in the deposit side and in the lending book. And last but not least, we do have obviously also some lower funding cost.

This has to do obviously with the lesser expensive senior debts and also the cost which we have been doing on the hybrid instruments. And last but not least as well, the impact of our hedging result.

In that respect, we did see in this quarter in our net interest margin a pick-up of 10 basis points. That pick up is obviously due to the fact that indeed we have been working on commercial margins on the funding cost side but also one needs to be aware of that.

It includes a non-sustainable amount of prepayment fees. This non-sustainability amounts to about EUR10 million on prepayments which are primarily due to Belgium.

EUR10 million extra on a normal run rate and therefore this should be taken into account extrapolating for the future. In that respect, the net interest income is a further improvement, it’s something which we have been working on quite hardly and is on Slide 9 further continued by a successful performance on the fee and commission income side.

For the, I think, it’s about sixth quarter in a row that we do see an increase on the fee and commission business. This is primarily driven by a successful seal in the mutual funds business.

And on top hand, this is all something which is very encouraging, a rebound of the sales on the life insurance side, mainly on the unit link business but I will come back to that later on. So we do see an increase of 4% on the quarter.

We do see an increase of 19% on the year, which is quite encouraging and this is always due to the fact that we see net inflows but also do see some positive price effect. That is also translated in the assets under management where we have seen a 4% increase on the quarter and we have seen a 13% on the increase on the year, also both resulting from net inflows and positive price effect.

So, as we have said in previous quarters, this is a major point of attention in terms of what are we working on the fee and commission income has been quite strong this quarter and we continue to work on this side for the next coming quarters as indicated also earlier in previous calls and previous meetings. On the insurance side, here we have – I’m on Page 10 now.

We do have a split up between the life and non-life business. And first on the non-life business, this has been a – on the quarter basis, a 2% increase; on a yearly basis, we could actually say that it is quite flat.

It has to do with some teaming up in some portfolios amongst others in Belgium. But also there, far more important, is not only the growth but is the quality of the portfolio which stands with a combined ratio at 93% which is an excellent result.

And in that respect, one can say that the hailstorm which impacted seriously the second quarter has been fully absorbed because of this third quarter. In terms of the life business, I would like to skip through the next slide where we do see that the increase of the life business was quite substantial.

We are talking about an increase on the quarter of 12%, whereas the increase on the year is 50% which is quite significant. This is due to, let’s first talk about the yearly increase.

This is due to both the guaranteed interest products and on – I’m talking about an increase 33% but also – and this is very, very clear increase on the unit-linked business. On a yearly basis, the increase is about 74% in the unit-linked side, and it now accounts for about 50% of the total life insurance sale.

On the quarter, comparison is also very strong for the unit-linked business, up at 33%. On the guaranteed interest for this, it’s about a slight decrease, about 3% within that respect, given also the difficult market circumstances; it is a quite good result.

So life and the insurance business as a whole are doing quite well in this quarter and are actually now a continuation of what we have seen in the previous two quarters as well. On Slide 12, we give you an insight in – our financial – the realization on the financial instruments, first of all, the fair value gains.

We see that we have a slight increase of EUR15 million on these instruments. This is due to – and then this is also for the first time that we made a split up in this graph between the impact of the mark-to-market of the ALM derivatives which stood again at a negative EUR46 million in this quarter and that we make the split up between the true business and those derivates.

In terms of true business, you could see a slight increase, EUR4 million. This has to do with several elements but far more important is that in this respect the mark-to-market of the derivative with EUR46 million influenced [ph] it very negatively the outcome of the business activities.

In terms of the gains realized on the available for sale portfolio, it was that respect a rather poor [ph] quarter, EUR27 million of gains realized split up between and equity, EUR60 million versus equity, EUR11 million that is substantially lower than previous quarter but also substantially lower than what we have seen on the third quarter last year, so we have obviously realized less gains in this quarter. The average run rate if you would make a comparison of what we have seen in 2012 and 2013 would be about EUR45 million for ‘12 and 2013, EUR53 million per quarter.

So it is definitely clear that this quarter we did not realize that much gains on our available to sell book [ph]. In terms of other net income, stands at EUR64 million which is substantially higher than previous quarter and substantially lower than then quarter of last year but be aware both quarters, previous one and last year’s quarter were heavily distorted by one-off effects.

Previous quarter was distorted by the EUR231 million which we booked on the Hungarian retail book for the law which was voted on the 4th of July. And then last year’s number was also seriously distorted by one-offs.

Some legal cases and some gains which we realized on the sale of some real-estate, we’re taking into account in that quarter. Now, if you would exclude the one-off elements, then I could say that the EUR64 million [indiscernible] quite a normal run rate of this quarter which is about EUR50 million, EUR55 million.

On Slide 13, operating expenses also there, I could say, we have to bring – we can bring some good news. Costs are definitely under control.

Our cost-income ratio for the quarter stands at 52%. Now, if you would calculate the cost-income ratio for the whole year, it stands at 59% but we all know that the income side is heavily distorted by some specific elements, amongst others the one-off provisions in Hungary, but also the impact of the ALM derivatives which definitely negatively influenced this ratio.

If you would excuse those, then our ratio would drop to54% for the whole year, year-to-date which is close to our targets, 2017 targets 53% which shows that our cost are well under control. Purely, not only our cost spend is down with 3% on the quarter, it also went down with 1% on the year, showing that indeed cost are under control.

One needs to be aware that obviously for the fourth quarter, one cannot extrapolate the evolution of the last three quarters, very, very roughly. Pulling the line through would be a bit too naïve.

This quarter is obviously also influenced by seasonal effects, summer periods and definitely also the fourth quarter is influenced and characterized by some seasonal effects as well. In terms of operating expenses, this ratio is also negatively influenced by the taxes, the bank taxes which we have to pay in all countries present.

We have a very – we have a slide on this matter and that is Slide 14 which explicitly shows that we are paying currently 10% of our total operating expenses in the form of banking taxes. If you would exclude those taxes, out of the operational expenses, then our ratio would drop from 55% to a mere 49% which would be indeed an excellent result.

So costs are under control. In terms of technical quality of the banking book, then we are talking about asset impairments on the loan book side is clear that also there, the result is intrinsically good despite the fact that you see a slight increase here on the quarter.

Definitely, if you compare it with last year, that is mainly distorted also by Ireland; but definitely if you compare it with last year, there’s a serious improvement. But on the quarter, a slightly increase.

We are talking about an increase of EUR35 million on our loan book. All the rest is related to other elements, amongst others, the write-down on some software which we did in the Belgium business unit about now the euro [ph].

But in this respect, credit cost ratio was EUR30 million up. The good news is that in Ireland, the credit cost ratio – sorry, the impairments on the loans came to EUR47 million compared to the EUR62 million in the second quarter.

The reason why it increased has to do with the Belgium business unit where we didn’t see in foreign branches and also in some large corporate files [ph] some extra impairments. All in all if you make the summary of all these impairments, we come to the conclusion that the cost, credit cost ratio stands at 41 basis points which is fairly low if you compare it with the previous five years.

And if you would compare it with the average cost, credit cost ratio over the last 15 years, so since 1999, that is definitely through the cycle, then that average would stand at 55 basis points which clearly indicates that the current position of 41 basis points is very good. In terms of credit cost ratios, for Ireland, we do see and we have also seen this in the AQR exercise that our position compared also with peers is very acceptable.

On the other hand, once we’ve even conclude that we are in this kind of way conservative in terms of NTL [ph], in terms of total impairments versus total loan book. We therefore also are quite confident that after the AQR exercise at this stage that indeed there will be no adjustments related to the AQR in the fourth quarter for Ireland on the loan book.

And in that respect we maintain our guidance for the full year in Ireland, the guidance being in the range somewhere EUR150 million to EUR200 million and we always stated that it will be the higher end of the ratio which is confirmed today. In terms of non-performing loans, that is the bottom end of the slides, this is according to the new definition where include PD 10 loans in the calculation ratios, the impaired loans ratio dropped to 10%.

This is definitely related to the decrease of the ratio in Ireland. The non-performing loans dropped as well from 6.3% to 6% showing indeed good quality of the book.

I will now hand over the floor to Luc Popelier who will talk you through the rest of the presentation.

Good morning everyone, I propose not to go through all the business units given timing and it would allow us to give more time for Q&A. I would like to highlight a few elements.

First of all, with regard to Hungary, that’s on Slide 40, where you can see the total loan book 5.2 billion, slightly up compared to last quarter particularly driven by growth in the SME and corporate loan book. There we also see that impaired loan book is coming down.

You see it quite graphically in the left-hand chart. Also the NPL ratio which is separately, sort of the high-risk portfolio view which is separately indicated is coming down as well, which is a good news.

We see that the lower impairments are particularly driven by lower impairments in retail whereas corporates are slightly up. In the retail book, the impairments are still coming from a high rate delinquency of previously restructured files has been the case for many quarters now.

If I then go to Slide 42, you see all the – as you have seen the foreign exchange mortgage loans at least FX housing loans and home-equity loans have been now converted or rather we have hedged against the foreign exchange risk because actually conversion would only happen next year but we have now – are protected. And the conversion has happened at market rates which is also good, good news.

We don’t – for the recurring impact, as regards to the interest rate that’s one we could charge on the converted loans, it is still too early to tell. We are making calculations at this point in time.

Then on Ireland, on Slide 43, you see the table there, the Irish loan book top left-hand side, just to mention that we now present those figures excluding reserve interest [indiscernible] previously. This was including reserve interest.

So that’s why the numbers, if you compare to last quarter have changed. Overall, we see that impairments have come down versus last quarter and certainly of course versus last year, particularly driven by retail.

Corporate impairments have been more or less stable. Impaired loans are still going up slightly.

But you also see that the movement, the high-risk part of the loan book is coming down quite considerably and you also see that the migration from the high-risk book into the default book is really slowing down very, very considerably. You also see that the book is supported by good macroeconomic conditions.

We see also a strong increase on property prices both notion [ph] nationwide and particularly in Dublin area. I would like then to go to Slide 52 where you can see the solvency ratio, 13.7% from an equity ratio on a Basel II, Basil III, fully-loaded basis that is [ph] compromised; very strongly supported by both, obviously the profit generation in the third quarter.

AFS gains and a strong reduction in risk-weighted assets now minus almost EUR3 billion, that is driven by the sale of KBC Germany as we explained and by the collapse of the CDOs, if we would take – make extraction [ph] of those two, there would be an increase of about EUR1.7 billion risk-weighted assets, partly explained by model changes and partly explained by volume growth we see particularly in Belgium and somewhat in Hungary as well. That is what I wanted to just highlight.

I will now give the floor back to Johan.

Thank you very much, Luc, which brings me already to the wrap up. Actually, you could wrap it up in one sentence.

The KBC machine has been performing on all cylinders of the engine. It means that the banking business, the insurance business, both life-on-life [ph] asset management, the quality of the books and so on have been performing in a very manner, quality wise, this was a very good quarter.

It confirms our underlying track record and it further strengthens our already solid capital and liquidity position and brings us to very good levels. Also therefore, in terms of the nearby future, we are confirming that we will go for a stable and solid [indiscernible] Belgium business unit, Czech Republic, as well, we do see also that in the business unit international markets, that we can return to profitability in the what we set latest 2015 and also explicitly for Ireland, we do expect return to profitability to be a given in 2016.

As a matter of fact for the business unit international markets, if we would not have had the one-off in terms of the correction on the loan book in Hungary, then it would be already a given for this year to – for the international markets, would have been having a positive result. In terms of the asset quality review, I repeat what I said during the call, that is that, the impact will have a none – will be a non-material one on our provisions in the fourth quarter and we will definitely have no impact on our positions in Ireland.

We confirm our targets which you all know, the 10.5%, the LCR [ph] and the [indiscernible] targets and definitely also our targets in terms of dividend payout as of 2016. I would like to keep it here and give the floor free to questions, which probably will be there.

Wim?

Thank you Johan.

So indeed, the floor is now open for questions. If you would be so kind to limit the number of questions to two so that we can have a maximum number of people asking questions.

So the floor is now open. Thank you.

Hi, good morning everyone. I have actually one question on the strategy.

I mean, your capital level now clean of the government stake is around 10.4% in my estimate which is very close to your midterm communicably [ph] Tier 1 threshold. So that’s push me to think, I mean, are you now – I mean, most of the build-up was not expected from your side at the beginning of the year and during investment day because, I mean, and you have here in my numbers, we had that in 2015 and beyond.

So my question is, would that be pushing you to review a strategy and to review your timing of the repayment of state aid, the resuming dividend, potential M&A and any strategy that maybe you’re thinking about it more towards ‘16 than now? Thank you very much.

Thank you for your question. The detail of our capital ratios are very solid, as you rightfully pointed out.

As a matter of fact and to answer straightforward to your question, it does not change our strategy. As we had been indicating on the 17th of June, our strategy is composed of three building blocks actually that is obviously growing our normal business activities which consumes a little bit of capital.

But also keep the options open in terms of dividend payment, in terms of earlier repayment of the state aid and in terms of strengthening our positions in our core countries if they deliver value for the group. Now in that respect and more going back, it does lead to your question on capital repayment or state aid repayment, as we have indicated on the investor day and the earlier repayments, I mean in comparison with the original position of the agreement with European Commission paying back before 2020, we already indicated that we will pay back by the end of 2017 which definitely we’ll do.

The question now is, and that’s probably your question, can you pay back now from earlier than that. It’s indeed an optionality but we both keep that option open and we will definitely not pay back before the end of this year.

That is for sure.

Okay, thank you.

Good morning. Thank you very much for taking the questions.

I have two questions please, one on margins and one on Ireland. Firstly on margins, can you please give us a little bit more color behind the 10 basis points improvement in net interest margin, how much of this improvement was driven by lower funding costs?

And also given that you have more than EUR3 billion of I think your funding maturing next year, do you expect this to be a tailwind for margins in 2015? And then the second question, please, on Ireland; a number of key peers in Ireland have started writing back their provisions on the Irish mortgage books and this is mainly driven by an improvement in Irish house prices.

Can you please share with us your thoughts on the provision writeback scope in your operations and which functions have you used for house price deflation and how that differs from the actual experience we have seen in Ireland? Thank you.

Okay. The 10 basis points improvement quarter-on-quarter have primarily been driven by the lower subordination costs where you now have the full effect of the conversion of the old style Tier 1 into new style additional [ph] Tier 1 where the new style is not going through P&L anymore.

That is the biggest driver. The second biggest driver of 10 basis points, I’m not going to give you a percentage but it’s also a big driver, is the reduction on the term deposits.

As you’ve seen, we have reduced term deposit by about EUR1.3 billion in Belgium alone, moved to our balance sheet product primarily. And when we also refinanced a portion of term deposits at much lower costs because we reduced tariffs offered for those term deposits.

Those are the two single biggest drivers. Then on maturing debts, well, there is still some tailwinds in the sense that still relatively more expensive wholesale debt is maturing in the fourth quarter and will be replaced by – are not replaced were [ph] replaced by cheaper funding.

We have two options first of all. We could issue some further covered bonds which we certainly do next year.

We could issue some senior debt at much lower spreads. And last but not least, as you know, we have announced that we will draw on the CLTRO [ph] at the end of the year in December for about EUR2.5 billion, obviously a very cheap rate.

Having said that, that tailwind will be compensated to some extent by the issue of a new Tier 2 issues. You know that we want to have a capital rate – total cap ratio [ph] of 17%.

Some Tier 2 capital value is evaporating given that they’re nearing their – well, they’re coming into the five-year time horizon and we have to issue more Tier 2 going forward. And that, of course, will be more expensive and that is reducing somewhat that tailwind.

On the provisions in Ireland, I think Johan will take the floor.

Thank you, Luc. Indeed, Ireland – so first of all, our position in Ireland, what is clear that is obviously true that we learned a lot after the AQR, mainly because we have been provided some insight in the books or in the results at least of our peers.

If we – and let’s use this as a starting position to answer your question. First of all, if you compare us to the peers, and that’s for the Irish residential mortgage books, then it is clear that KBC is quite conservative in its approach.

If you look at, first of all, the obligation of the EBA guidelines, I can assure you we apply the EBA guidelines in a very strict manner. So what is written down in those rules is applied in Ireland in the books of KBC.

That boils down to some observations. If you compare KBC Bank Ireland with our peers and this is on the basis of, let’s say, half year numbers 2014, then it’s clear that our NPL ratio outperforms the NPL ratio of our peers.

Now we can say that the quality of our book is probably worse than our peers but it outperforms in such a way that it is definitely clear that we have been applying the rules quite strictly, to say the least. The other element which is quite important to notice is that if we look at the comparison of our retail provisions, as a percentage of our retail mortgage loan book, we are outperforming all peers in Ireland.

So this news that we are – and first of all in terms of approaching our own retail book, our mortgage book, our loan book in general in Ireland, that we are very conservative. In terms of evolutions, it is indeed true that we do see the macro elements in Ireland improve.

We do see the housing prices coming up, we do see employment improving, we do see the GDP growing quite significantly and the domestic consumption is rather lagging behind in that respect. But still, it is improving, so all the macroeconomic elements are in favor of, let’s say, a mortgage book.

And in that respect, indeed we feel ourselves comfortable with the guidance which we have given and which we have confirmed today. In terms of what it will bring going forward, in terms of amongst others the impact of the housing prices which is indeed used as a model, you’re fully right that that can happen and in fact, that can have obviously also a positive impact when those housing prices continue to rise.

But also here, we take a very conservative stance. Despite of our model, we do see that housing prices increase.

Indeed, we do have a slight buffer in our model now but also there, we do see that the housing prices are perhaps probably a bit underpinned by the – and the lack of supply on the housing market in Ireland and therefore we still keep a quite conservative stance in this respect. So all in all, yes, we are conservative [ph] provisions in Ireland.

I forgot to mention one thing. Because of this makeup [ph] operation of the EBA guidelines, it is clear also that a loan – it has a probation period of at least a year and that one has to take into account as well before anticipating any writebacks on these books.

But summary, quite conservative provisions. Definitely if you compare us with peers, we are applying the EBA guidelines strictly and therefore, we feel quite comfortable with our current provision and we do not give any guidance on the writebacks on the near future.

Thank you. That’s very helpful.

Yes, good morning to you. I would like to come back on the potential writebacks of provisions in Ireland.

I know you don’t provide a guidance, but within your management guidance for 2015, ‘16, how much is the writeback of provisions which you have penciled in so that we have an idea of the dynamics? And second question is, how many restructuring loans are coming to the end of their restructuring in 2014 and ‘15?

Thank you very much.

Thank you very much for your question. The guidance for ‘15 and ‘16 and perhaps I should have said it earlier is confirmed as well today.

So we guided – for clear understanding, we guided that it would be in the range of EUR50 million to EUR100 million for both countries – for both years, sorry. And that’s confirmed today.

Unfortunately, we do not give any detail on how much of these provisions are geared to new loans or writebacks on books and so on. So in that respect, I do have to disappoint you, we do not give any guidance.

Also on the second part of your question in terms of the restructuring which are coming to an end in the period of one year, also there, we do not provide any further detail on this manner.

Thank you.

Yes, good morning. Just two questions on my side.

On M&A, now that we’ve seen the results on the outcome of the AQR, I guess you were waiting a bit to see which bank will be under stress in some countries like Czech, Puerto Rico [ph] or Slovakia. But now that we’ve seen the AQR outcome, I mean do you see opportunity still following the results or was the AQR outcome a bit more kind of softer than you were anticipating, i.e.

are you maybe less – you do have maybe less chance to do M&A in, see, for next year? And then talking about the shift, I think very interesting shift from time deposit into short term savings, probably current accounts.

What do you see in Q4 and where are we in this process of shifting out of the time deposit into more short term savings? I mean we have seen a very positive effect on net interest income this quarter from that, so are you expecting more shift next year?

Thank you.

I will take the first question and then Luc will give you insight on the second one. In terms of impact of the AQR and potential impacts on – or the stress test itself as well – and then potential impacts on assets coming available on the markets, I mean what is our feeling about this?

It’s a bit of a mixed feeling. First of all, it’s clear that some banks who have suffered the ache around the stress test the most have some exposure in countries which are of our interest.

And then I’m talking about central European countries which we define as our core countries. So I confirmed today that we are not interested and still not interested if some assets would become available in other markets which are not considered to be our current core markets today.

Secondly, so there is potentially some possible impact on assets coming available in our core markets but it’s too early days. I mean we are not, in that respect, looking into files of banks of who have been running into difficulties in the stress test.

And so we will keep our eyes and ears open in case of. In that respect, also the impact of the AQR on some banks, and that’s part of the mixed feeling, on some banks which are also heavily exposed to our core markets was quite okay.

And I don’t think therefore that will be a big shift in the short term period because of the AQR because of the stress test on those banks on their assets in our core markets. Nevertheless, what is going to happen in reality, our stance remains the same.

It’s only one of the optionalities which we have. We will look into it and we will always take into consideration and very careful take into consideration our capital position.

And obviously also, if we would do an acquisition, if we would do an acquisition of assets, that it contributes to the return on the group level and that it contributes in terms of return on investments on the short term and on the midterm for sure.

Okay. And on your question on the shift of term deposits, we believe that will be a continuing trend going forward also into the New Year.

That shift is not only, as you suggest, to current accounts. Actually, it’s mostly into asset management products and saving accounts, because the strong increase in current accounts mostly comes from SEBs and corporates.

But it’s going to continue and that will be a further tailwind for our NII development next year, of course offset by, as I mentioned before, some other elements like the Tier 2, the further potential of prepayments and so on.

Thank you very much.

Good morning. Two questions, please, first on impairment and second on capital.

First on Belgium impairments, you have seen a step up there and you mentioned a few corporate names. Perhaps you could be a bit more specific, how many names, whether it’s from the same industry, what was the cause of this, and do you expect it to continue?

So I’d be interested on that. Second on capital.

And I know we’ve gone back and forth on this point a number of times, but you talked about today of repayment. You said definitely not this year.

You’ll keep your options open beyond that. You’re still not expecting to pay or accrue a dividend, I should say, for next year.

When we look at your capital structure now, I mean even pro forma for state aid repayment of 50% penalty, you’re running at a 10.4 core Tier 1 ratio. Yes, the total capital ratio would drop with the state aid repayment.

But as you said, you’re planning to issue some Tier 2 issuance next year and in any case, you would have to do that at some point in order to get the right balance sheet structure. So perhaps you could just talk a bit more about the pros and cons of repaying state aid and how you see that in terms of funding cost versus the ability to pay a dividend potentially earlier.

Thank you.

Coming back on the impairments for the Belgian business units, and this has to do with two files which had the impact, now as you probably can understand, we don’t disclose the names of the underlying customers of these files. But in essence, two files were impacting and we’re just talking a little bit the credit cost ratio of the Belgian business unit.

Now, for a good understanding, the credit cost ratio of the Belgian business unit only stands at 20 basis points which is still very low. Then the second question on capital and what’s doing without the weight [ph] forward, actually I think I’m going more or less repeat what I just said.

It is indeed that we have a solid capital position, that if you even exclude the state aid, that we do have a, and still have a solid capital position, that we indeed have the possibility to buyback state aid. As you know, in 2015, we are not wrote [ph] a coupon on that state aid.

So in that respect, it’s cheap capital. I know that it’s a bit of a drag reputation wise because of capital coming from state aid, but still, it’s cheap capital.

It allows us to keep other options open and it allows us to have plenty of time in order to consider these options and to do repayments whenever it is needed. In terms of also dividend, that is also related to our positions which we have been explaining since the investor day in June.

The dividend is linked to the payments of coupons and therefore, given the fact that coupon payment would be zero if no dividend would be applied, that is indeed confirmed also today that we are not going to pay out a dividend next year. So as a matter of fact, we have all options open in this respect and we will keep them open to see if there are any opportunities which we can grab when they occur.

And last one, I said it – but as I said [ph] before, last but not least, state aid will be paid back ultimately by 2017. No doubt about that.

Thank you.

Thanks. Yes, two questions.

First one on kind of deposit repricing. I take it the comments you made on the ability to see some shift out of sort of term deposits into mutual funds and other savings products.

But is there also an opportunity to reprice? Have you already and can you look at repricing in the term deposits looking forward?

Because I think just to confirm on savings deposits, you’ve pretty much done as much as you can. And then the second question is around fees and commissions, obviously a very strong quarter.

But can you give us any sort of color on how much of the same commission in the quarter has been driven by sort of entry sales fees, so more kind of one-off in nature and how much is the underlying improvement driven by asset growth on the mutual funds? Any color around that would be helpful.

Thank you.

Okay, on the depository pricing, next to the shifts into asset management products and savings accounts, we also are able to reprice term deposits to actually offering lower rates across the board on term deposits. So some clients prefer them to shift to other products.

Other clients who actually want to stay in cash aggregates, in savings accounts or take up a new term deposit at lower costs. So we do reprice term deposits as well.

On the fee and commission income, the main driver is actually management fees for this quarter-on-quarter. Management fees particularly driven by the fact that we saw net entries into – and a shift also into higher margin products, particularly CPPI products and equity funds products.

And secondly, obviously because of the positive price evolution, volumes went up by about – the price went up – prospects on general went up by about 2%, also gave a boost to management fees as well. If you compare to last year, then entry fees were also very important because we saw a strong pick-up in the sale of unit linked products already for the second quarter.

So there’s a strong increase in entry fees, and particularly if you compare with last quarter. But the main driver remains the management fees.

Thank you.

You’re welcome.

Good morning, everybody. And it’s Tom [ph] on HSBC.

Two questions. First of all, on your net interest income adjusted for the one-off, we talk about EUR1.1 billion roughly.

So would this be a good run rate for the next quarters or do we have to factor in any other effects in your view, or probably the Tier 2 capital I guess and the Tier 1 compensating each other, how do you think about that? And the second thing is regarding your strategy in Ireland.

What is currently your most preferred options of the three you’ve presented with the investor day?

Okay, on NII, I know this is the easiest question and most difficult to answer. But to give you an idea, we believe that given the [indiscernible] comes first of all negative elements, particularly reinvestment yield and positive ones, I gave a few of them tailwinds on funding cost in particular.

And some further volume growth certainly will be helpful. But we believe that overall, if we take all, everything together, NII should remain stable at least going forward for a few quarters.

But it will become more and more difficult in 2015 given that the actions we can take are running to – start to deplete. And the reinvestment deal, if interest rates remain at this level, the reinvestment deals obviously will become a strong driver.

And going back to your second question, that is the strategy in Ireland and what about that strategy, what is most likely today. So what we announced for good sake of understanding, what we announced were the following.

We will make it profitable by 2016 and therefore, we will build it also as a more full-fledged retail bank. Then the three options on top of that were – in 2016, we will look at the options which are – keep the bank and build it together with an insurance company in a bank insurance model.

And the second one was keep it as a profitable bank. And the third one would be an exit.

Now, I can guarantee you that we will do anything to make it profitable by 2016. So if you ask me what’s most likely – what’s the most likely option, that is that one, that we will make it possible by 2016.

And that we will also build it as a full-fledged retail bank. We are currently doing so.

As you know, we were – in previous times, we were actually mainly a mortgage-drive bank or a loan-driven bank. But as today, we are turning it into a bank with a limited number of branches.

Currently, we have about nine. We do have a full-fledged resource [ph] via the Internet and we are offering also products which are more known for being noble banking products.

So the accounts that [ph] we are launching – asset management product have launched, consumer finance body as well. We have been able to collect EUR3.3 billion of deposits which is quite successful, see the number of clients increasing.

So the likelihood of being a profitable bank increases day by day. But to have a final cut [ph] on the three options, as we say, this is what we’re going to do and therefore, I suggest that we wait until 2016.

I understand. I don’t want to have a final – just what do you think, is this more likely like a sale or run it as a bank because you make so good progress, just get an update what do you think is more likely.

I don’t want to have a final decision.

I know that indeed it is too early days to have a final decision but it’s pretty clear that having the likelihood defined, I mean we are building this to become a profitable bank. That’s the most likely thing which we are going to do.

And then we will take the options in 2016 and take the decision when the moment is appropriate.

Okay. Thank you.

Thank you very much. So this sums it up for the call indeed.

Thank you, everyone, for attending the call and we hope to see a large delegation tomorrow at our offices in London at 8:30. We’ve booked a large room, so that won’t be a problem.

Thank you and see you tomorrow.