1. Getting you there.
First half year 2008 net profit of EUR 1.6 billion
Net profit up 3% to EUR 830 million in second quarter,
but environment is becoming more difficult
4 August 2008
2. Disclaimer
These pages are intended to provide investors with financial information about Fortis’s business plans. The
financial information contained in this presentation has been prepared by Fortis and has not been audited.
The figures are provided for information purposes only and are subject to the conditions and restrictions
mentioned hereafter.
No warranty can be given by Fortis, either explicitly or implicitly, regarding the reasonableness, correctness
or completeness of the information, forecasts and assumptions contained in these pages. The information
here provided could be subject to change. This presentation and the information contained herein in no way
replace any formal reporting. Investment considerations should continue to be based on periodical reporting
and other information Fortis is required to disclose by law or stock exchange regulations.
Certain of the statements contained herein may be statements of future expectations and other forward-
looking statements that are based on management’s current views and assumptions as well as on partial
information and involve a certain degree of risk and uncertainty that could cause actual results or
performance to differ materially from those expressed or implied in such statements. Actual results or
performance may differ materially from those contained in such statements due to general economic
conditions, market conditions, changes in laws and regulations, general competitive factors and other factors
not specified here.
Fortis first half-year 2008 results │4 August 2008 │ 2
3. Agenda
1 Strategic update
2 Financials
3 Conclusion
Additional information
- First half-year 2008 results
- Structured Credit Portfolio
Fortis first half-year 2008 results │4 August 2008 │ 3
4. CEO & Senior Management priorities
Diligent and full execution of the accelerated capital strengthening plan
Provide financial flexibility through strict capital management
Bring look-through group core equity above target by end-2009
Enforce the disciplined and focused execution of our strategy
Swift integration of acquired ABN AMRO businesses
Sustain commercial momentum and step up costs-saving efforts
Restore confidence and stability with full transparency and clear communication
Fortis first half-year 2008 results │4 August 2008 │ 4
5. Diligent execution of the capital plan
Accelerated capital plan announced on 26 June is being executed step by step
It will enable Fortis to absorb the full consolidation of ABN AMRO planned for end of 2009,
and develop our business further
Impact completed measures: EUR 3.1 billion
Measure Amount Status
Equity raising (ABO) 1.5 Completed: core equity reinforced end-Q2 2008
Interim 2008 dividend cancelled 1.4 Completed: core equity preserved end-Q2 2008
Capital relief / Sale & lease back 1.5 Securitisation ▪ 1st deal completed (EUR 115 m relief in Q2)
▪ Additional transactions planned
Real estate ▪ 1st deal completed (EUR 60 m relief in Q3)
▪ Additional transactions planned, of which
one to be closed shortly (EUR ~70 m relief)
Disposals non-core assets 2.0 AAAM 1 ▪ IAM sale completed (EUR 40 m relief in Q3)
▪ Good progress on sales of AAAM non-core
Fortis ▪ Businesses up for sale identified
Non-dilutive capital instruments 2.0 Planned
1 Discontinued operations
Fortis first half-year 2008 results │4 August 2008 │ 5
6. Three main items drove the net profit downwards over H1 2008
Credit Impairments Capital ABN Operational
Reported Reported
market loan gains AMRO performance
H1 ’07 H1 ’08
turmoil portfolio (Group) contribution
2,782 1,638
31
28
(182)
765
Insurance 642
(382)
(149)
(273)
(59) (14)
2,062
Banking
1,185
(189)
18
(44)
General
(107) (56)
Fortis first half-year 2008 results │4 August 2008 │ 6
8. ABN AMRO transition & integration – Progress status
AAAM transferred to Fortis on 1 April 2008, first business unit to exit the consortium
Asset Integration of product lines and sales channels, rebranding to Fortis Investments
Management All senior management nominated and 90% of staff formally appointed
Advisory arrangements enforced globally, facilitating asset management by new teams
integration
All regulatory, legal structuring and compliance issues resolved
Integration Integration plans finalised, including target operating model and organisation 1
on track Integration costs and synergies in line with projections
Agreement (SPA) with Deutsche Bank signed on the sale of two corporate client units, 13
EC commercial advisory branches, parts of HBU and factoring company IFN
Remedies 1 Separation of activities started
Process for closing in Q4 2008 ongoing
Opening of 3 new business centres for Commercial Banking, preparing the integration towards
74 centres in the Netherlands (on a total of 175 worldwide)
Clients ATM of both banks accessible in the Netherlands for all customers without limitations
Successful distribution of ‘Best of both worlds’ note (asset management structured products)
Involvement of top management with key Private Banking clients
Cultural integration & leadership programmes ‘Connecting for Growth‘ (300 senior managers
Cultural of ABN AMRO and Fortis) and ‘Talent for Growth’ (leaders in talent pool) completed
integration ‘Leading for Growth’ programme for 3,000 managers to be launched
1 Subject to regulatory approval
Fortis first half-year 2008 results │4 August 2008 │ 8
9. ABN AMRO transition and integration – Next steps
► All subject to regulatory approval
Q4 2008 Q1 2009 Q4 2009
Expected close Transfer Private Banking Systems fold-in in
EC remedies activities in Jersey, Belgium, Retail, Merchant & Private
Gibraltar and Taiwan Banking Netherlands
2008 2009 2010
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Q4 2008 Q4 2010
Q4 2009
Transfer ‘fast track’ activities Finalise
Transfer all activities
integration
in the Netherlands
Factoring, Leasing, Groenbank, Cards,
and start integration
Private Banking activities in Germany,
Spain, France, Switzerland, Luxembourg,
Hong Kong, Singapore, Dubai and China
Fortis first half-year 2008 results │4 August 2008 │ 9
10. Agenda
1 Strategic update
2 Financials
3 Conclusion
Additional information
- First half-year 2008 results
- Structured Credit Portfolio
Fortis first half-year 2008 results │4 August 2008 │ 10
11. Key Messages
In the first half of 2008 our businesses, including the acquired ABN AMRO
activities, performed satisfactory in turbulent market conditions
most of the commercial activities were still able to grow underlying revenues
at the same time, costs were well controlled.
but we observe that the environment is becoming more difficult
The expected close of the EC remedies and future divestments and partnerships
will increase the volatility in quarterly results in the second half of 2008
Solid capital position end-Q2 2008, diligent execution of the capital plan will enable
full consolidation of ABN AMRO and ensure future financial flexibility
Fortis first half-year 2008 results │4 August 2008 │ 11
12. Net profit mainly impacted by credit market turmoil, impairments and lower
capital gains
H1 2008 driven downwards by three main items
Credit Impairments Capital AA Operational
H1 ’07 H1 ’08
turmoil loan portfolio gains impact performance
2,782 1,638 (41%)
31
28
(182)
765 (16%)
642
Insurance
(382)
(273)
(149)
2,062 (59) (14)
Banking
(43%)
1,185
18
(189)
General (44) (107) (56)
Q2 2008 net profit up 3%
Credit Impairments Capital Operational
Q1 ’08 Q2 ’08
turmoil loan portfolio gains performance
808 830 3%
167
(79)
116
423 93%
219
Insurance
(249)
145
(95)
721 (57)
Banking
(36%)
465
General 6
(132) (57)
69
1 Excluding integration costs
Fortis first half-year 2008 results │4 August 2008 │ 12
13. Insurance – Gross inflow up and continued profitable underwriting
Life Non-life
Annualised Premium Technical Reserves Gross Written Combined Ratio
Equivalents (APE) Premiums (GWP)
(3%)
+5%
+3% +3%
719 90.5 3,233 99.0% 96.2%
699 87.7 3,072
(EUR m) (EUR bn) (EUR m)
H1 07 H1 08 H1 07 H1 08 H1 07 H1 08 H1 07 H1 08
Stable inflow at EUR 7 billion GWP up 5% to EUR 3.2 billion
growth in International (Portugal) and strong growth in Accident & Health in
Netherlands (pension-related contracts) Netherlands and Belgium
offset by lower inflow in Belgium (fewer decrease at International (EUR/GBP impact)
campaigns and competition from bank Combined ratio at 96.2%, driven by cost control
savings products) and focus on profitable underwriting
Technical reserves up 3% to EUR 90.5 billion H1 07 impacted by Kyrill and floods in the UK
Net profit decreased from EUR 556 m to EUR Net profit up 8% to EUR 225 m despite credit
417 m due to credit turmoil impact (EUR 162 m) market turmoil net impact of EUR 20 million
Fortis first half-year 2008 results │4 August 2008 │ 13
14. Commercial activities still able to grow underlying revenues
Underlying 1 Market-driven
income 1
client-driven
income up 2% down 19%
6,090
+5
(47)
+117
5,980 +110 (43) +6%
(169)
+183
5,832
+228 Negative
5,752 (144) +53 (2%) impact
+44
on tax
Adjust.2 Net Net Credit Other
Capital Treas. Gross
Divid. ABN
Other
H1 ’07 interest Comm. hedge adjust.
Gains & finan. & others income up AMRO
impact3
income & fees impact
markets ex-AA impact
+4% H1 ’08 H1’08
(3%) (41%) H1 ’08
(12%) H1 ’08
+30% +73%
H1 ’07 H1 ’07 H1 ’08 H1 ’08
Reported Adjusted Adjusted Reported
Net interest income and Net commissions & fees performed satisfactory under challenging conditions
Lower capital gains and treasury & fin. markets results impacted total income
The impact of grossing up, due to an unfavourable trading mix with lower deductible losses than in
H1 2007, negatively impacted the effective tax rate in H1 2008
1 See slides 32-33 in Annex for details on computation of underlying growth
2 Adjustments on H1 ’07 reported income: grossing up effect (+162), credit hedge (+37), correction FHB (+29)
3 Profit contribution AA (+198), financing costs AA in Bank (-270), AAAM funding (-65 in NII, + 22 in T&FM), AAAM comm. & fees (+68)
Fortis first half-year 2008 results │4 August 2008 │ 14
15. Cost measures kept underlying Banking expenses stable
Total expenses (underlying1) Number of FTEs
QoQ YoY YoY
(EUR m)
Underlying
(1%)
Stable +4%
FTEs
down 1%
1,645 1,653 3,334 47,737
3,298 46,080
Outside
Benelux
Benelux
38%
62%
Q1 08 Q2 08 H1 07 H1 08 H1 07 H1 08
Total expenses, reported up 4%, largely impacted in H1 2008 by:
- the integration costs of ABN AMRO (EUR 100 million)
- the transfer of AA Asset Management (EUR 85 million)
Improvement in Cost / Income ratio (down 1% to 57%) and positive 1.4% operating leverage
despite the impact of ABN AMRO related charges
► Underlying1 total expenses down 1% year-on-year (excl. AA integration and AAAM transfer costs)
Underlying staff expenses up 2%, while underlying FTEs were down 1% (excl. AAAM integration)
Decrease in non-staff expenses as a result of cost containment measures
► Underlying1 total expenses remained stable quarter-on-quarter
1 See slide 40 in Annex for details on computation of underlying growth
Fortis first half-year 2008 results │4 August 2008 │ 15
16. Credit loss ratio moving closer to through-the-cycle level
Change in impairments Impaired loans
YoY
(EUR m)
Structured credits
Stable
2,751
Loan Portfolio
5,294 5,273
479
(EUR m)
As % of total
366 1.5%
1.6% loans to customers
83
26 161
9 82
81
(116) H1 07 H1 08
Stable level of impaired loans and coverage (33%)
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08
Credit loss ratio on loan portfolio Loans to customers and CRWCs1
19 bp in H1 08 Loans to Customers H1 08 H1 07 Change
Retail Banking 73,629 80,701 (9%)
2 bp in H1 07 Private Bk. & Asset Mgmt. 10,224 8,083 26%
25
Merchant Banking 228,310 210,808 8%
13
5 12 Other Banking 49,122 28,955 70%
0
Total 361,285 328,547 10%
Average CRWCs 256,101 239,257 7%
(18)
(in bp, annualised)
Increase in commercial loans (Merchant Bk.)
Mortgages securitisation (Retail ► Other Bk.)
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08
1 Credit risk-weighted commitments
Fortis first half-year 2008 results │4 August 2008 │ 16
17. Additional impairments on structured credit portfolio 1
Total net exposure of EUR 41.7 billion, down EUR 1.6 billion over Q2 ’08 due to:
- additional write-downs
- the impact of repayments, changes in exchanges rates and selective sales
► EUR 1.9 billion net exposure (61% total coverage ratio)
Net exposure Q2 impairm. Coverage ratio
SS High Grade CDOs 1.7bn 340m 57% (up from 48%)
CDO Origination
SS Mezzanine CDOs 0.1bn 58m 74% (up from 63%)
Warehousing 0.1bn 14m 74% (up from 70%)
► EUR 2.2 billion net exposure, down EUR 0.3 billion in Q2 ’08 due to:
Insurance ABS - EUR 0.3 billion impact of repayments, exchanges rates and sales
- EUR 47 million change in value for lower-rated investments
► EUR 37.6 billion net exposure, down EUR 0.9 billion in Q2 ’08 due to:
Credit Spread - EUR 0.8 billion impact of repayments, exchanges rates and sales
Portfolio - EUR 67 million in impairments, primarily on downgraded subprime,
midprime and Alt-A securities
Total net exposure decreased by EUR 6.5 bn in H1 2008
1
Update on structured credit portfolio available in Annex
Fortis first half-year 2008 results │4 August 2008 │ 17
18. ABN AMRO activities delivering sound underlying performance
Underlying1 net profit down 2% in H1 2008 due to impact of AAAM transfer
BU NL underlying1 net profit up 12%, supported
(EUR million) H1 07 Chg.
H1 08
by higher treasury & financial markets results
and a 1% decrease in underlying expenses
BU Netherlands 436 12%
488
BU PC underlying1 net profit down 7% as lower
BU Private Clients 165 (7%)
154
financial markets and divestments impacted
AuM (down 16%) and commissions, offsetting
BU Asset Management2 110 *
56
an 11% decrease in expenses
Underlying1 net profit 697 711 (2%) AAAM transfer in Q2 08 and interest revenues
on sale to Fortis distorted H1 08 results
Underlying1 net profit up 18% in Q2 2008
BU NL underlying1 net profit up 14%, a.o. due
(EUR million) Q1 08 Chg.
Q2 08
to the adjustment of interest revenues and
lower expenses (down 6%)
BU Netherlands 228 14%
260
BU PC underlying1 net profit up 13% due to a
BU Private Clients 72 13%
81
10% decline in underlying operating expenses,
offsetting a 3% decrease in AuM
BU Asset Management2 19 *
37
AAAM transfer in Q2 08 and interest revenues
Underlying1 net profit 378 319 18% on sale to Fortis distorted quarterly comparison
1 Excluding integration costs
Fortis first half-year 2008 results │4 August 2008 │ 18 2 Q2 08 results limited to France, Argentina and interests received on AAAM sale proceeds
19. Expected close of the EC remedies and future divestments and partnerships
will increase the volatility in quarterly results in the second half of 2008
Strategic partnerships
EC remedies
Sale imposed by the European Commission in Fortis Ping An Investments JV
order to reduce combined market share in - Ping An will acquire 50% of Fortis Investments
Commercial Banking in the Netherlands for a total EUR 2.1 billion consideration
October 2008 deadline for sale set by EC
- Solvency impact of ~ EUR 2.15 billion through:
Sale agreement signed on 2 July 2008, closing - a EUR 675 million capital gain on Fortis
expected in Q4 2008 Investments revaluation (P&L impact)
Sale will impact Fortis through: - the recognition of the minority interests for
EUR 1,475 million (Balance Sheet impact)
- realised loss of EUR 0.3 bn (sale price of
EUR 0.7 bn vs. EUR 1 bn NAV) Interparking-Vinci JV will create the largest
- capital required of ~ EUR 0.5 bn for credit European public car park operator. Transaction
risk coverage on assets sold, released is expected to generate a ~ EUR 0.5 billion
over time as loans mature capital gain and small relief on required capital.
- credit protection valuation (recorded as a Other divestments and partnerships may
financial guarantee). Unrealised loss materially impact net profit after divestments.
will revert over time depending on credit Exact timing remains uncertain but this should
performance of transferred assets. lead to substantial volatility between quarters.
- Write down of intangibles on divested Net impact on look-through solvency should
assets (~ 10% of total ABN AMRO however remain positive (potential capital
intangibles) losses offset by reversal of goodwill).
Fortis first half-year 2008 results │4 August 2008 │ 19
20. Equity method – H1 2008 evolution (under BIS I)
(EUR billion)
Non-Innovative T1
Equity after
prudential filters
1.6
1.1
1.5
5.7 (2.1)
(3.6) 6.8
Core
Core
Equity
Equity
24.6
26.1
20.4 17.8
Q4 2007 Q2 2008
Retained Goodwill & Capital Capital Impact
profit intangibles raising instruments equity
H1 2008 AAAM (ABO) (NITSH) markets
& other
Fortis first half-year 2008 results │4 August 2008 │ 20
21. Equity method – Sound Q2 2008 solvency
(EUR billion)
Regulatory
Core Equity EUR 4.0 billion above target Limits
Max. 15% of
(4.4) Innovative Hybrids
8.0 tier 1 capital**
EUR 3.4 billion
► currently 8%
24.6
21.0
Actual
Core Equity Max. 33% of tier
Non-innovative Hybrids 1 capital**
► currently 17%
Tier 1 capital (EUR 28.0 bn)
EUR 6.8 billion*
Q2 2008
Core equity capital (EUR 24.6 bn)
Group
Bank Insurance Equity
leverage
method
7.4% 196% 15%
4.0
Equity
after prudential filters
(3.6) EUR 17.8 billion
7.2 Minimum 67%
20.6 of tier 1 capital**
(EUR 30.2 billion
Target ► currently 75%
17.1 before deduction
Core Equity
of participations)
Q2 2008
Group
Bank Insurance Equity
leverage
method
6.0% 175% 15%
* Adjusted for deferred tax effects and recognition of the option premium in core equity
Fortis first half-year 2008 results │4 August 2008 │ 21 ** Tier 1 capital before deduction of participations
22. Look-through method –
Execution of capital plan to bring core equity above targets
Participation RFS Hold. 12.1)
(EUR billion)
Goodwill ABN AMRO (19.4)
Intangibles ABN AMRO (2.9)
Fortis Ping An 2.1)
Goodwill & intang. AAAM 3.6)
Investments JV
Capital support (CSA) 2.5)
Interparking JV 0.5)
EC remedies (0.3)
Delta Lloyd JV (0.2)
~2.4 26.6
~(4.4) 4.0
24.6
22.6 Non-dilutive Retained
Actual
Divestments Consolidation instruments earnings
Core Equity & acquisitions treatments & non-core H2 ’08 &
disposals FY ’09
Q2 2008 Q2 2008 Look-
End
Equity Look- through
Impact consolidation 2009
method through plan
RWC AA and EC remed. 4.9
Delta Lloyd - AA JV 0.2
(1.5)
25.7
5.1
24.2
Target
20.6 Capital Controlled
Core Equity Consolidation treatments,
relief RWC/RMM
divestments & acquisitions
transactions growth
End
Group core equity Above target Above target
2009
Bank core tier 1 7.4% > 6.0%
Insur. core solv. 196% > 175%
Fortis first half-year 2008 results │4 August 2008 │ 22
23. Agenda
1 Strategic update
2 Financials
3 Conclusion
Additional information
- First half-year 2008 results
- Structured Credit Portfolio
Fortis first half-year 2008 results │4 August 2008 │ 23
24. Conclusion
First half year 2008 net profit of EUR 1.6 billion
Banking net profit impacted by
credit market turmoil
impairments on loan portfolio
lower capital gains
but the commercial performance of businesses remained satisfactory
Insurance net profit up when excluding net of tax impact of credit market turmoil
Diligent execution of the capital plan will enable the full consolidation of the
acquired ABN AMRO activities and ensure future financial flexibility
Fortis first half-year 2008 results │4 August 2008 │ 24
26. Additional information
1 First half-year 2008 results
2 Structured Credit Portfolio
Fortis first half-year 2008 results │4 August 2008 │ 26
27. Results overview
H1 '08 H1 '07 % Chg. Q2 '08 Q1 '08 % Chg.
Net profit before results on divestments 1,638 2,782 (41%) 830 808 3%
Banking 1,185 2,062 (43%) 465 721 (36%)
Insurance 642 765 (16%) 423 219 93%
General (189) (44) * (57) (132) (57%)
Results on divestments - - - - - -
Net profit 1,638 2,782 (41%) 830 808 3%
of which ABN AMRO 198 - - 114 84 -
Weighted average number of shares 2,195 1,548 42% 2,198 2,191 0%
0.75 1.80 (58%) 0.38 0.37 3%
1
Earnings per share (EUR)
Net equity per share (EUR) 12.48 12.51 0% 12.48 14.08 (11%)
11% 22%
Return on Equity 2
Based on average number of outstanding shares / 2 Rolling average over the last four quarters
1
Net profit of EUR 1,638 million in H1 2008, including a total negative impact of the credit market
turmoil of EUR 591 million
Q2 2008 net profit up 3% quarter on quarter to EUR 830 million, including a total negative impact
of the credit market turmoil of EUR 362 million (vs. EUR 229 million in Q1 2008)
Fortis first half-year 2008 results │4 August 2008 │ 27
28. Overview of main impacts on Fortis and ABN AMRO results
Reported Standalone Standalone
H1 ’08 H1 ’08 H1 ’08
costs (net of tax)
RFS Holdings
1,638 2,477 3,068
contribution
Accounting
Integration
Purchase
AA profit
Shared
Assets
AA
697
307 AA
83
591
114 697
198 (4)
(198)
271
69 Credit
market
H1 ’07
Fortis
turmoil
costs (net of tax)
costs (net of tax)
2,784
impact
contribution
Fortis 2,371
Integration
Financing
(net)
AA profit
(15%)
Fortis
1,780
1,638
Fortis first half-year 2008 results │4 August 2008 │ 28
30. Banking results mainly impacted by the credit market turmoil
Change
EUR million H1 2008 H1 2007
6%
Total income 6,090 5,752
*
Change in impairments (1,088) (36)
4%
Total expenses (3,483) (3,334)
Tax exp. / Discontinued operations / Minorities (334) (320) 4%
Net profit - reported 1,185 2,062 (43%)
Net impact credit market turmoil 409 27 -
Net profit - adjusted for credit market turmoil 1,594 2,089 (24%)
Net profit at EUR 1,185 million, incl. EUR 409 million net impact of credit market turmoil
Total income up 6%: lower net interest income (due to ABN AMRO related financing costs) and
capital gains were offset by higher treasury & financial markets results and ABN AMRO contribution
ABN AMRO contribution of EUR 198 million. When taking financing, integration and other costs into
account - totaling EUR 257 million - the total ABN AMRO impact on Banking was EUR (59) million.
Total expenses growth contained to 4% despite the impact of ABN AMRO integration costs and the
transfer of ABN AMRO Asset Management to Fortis on 1 April 2008
►Underlying performance satisfactory despite difficult market conditions
►Net profit down due to the impact of credit market turmoil, ABN AMRO-related financing/integration
costs, lower capital gains and higher effective tax rate
Fortis first half-year 2008 results │4 August 2008 │ 30
31. Banking – H1 ’08 vs. H1 ’07 analysis
Total income up 6%:
H1 '08 H1 '07 Chg. %
lower net interest income (due to
Total income 6,090 5,752 6%
ABN AMRO financing costs) and
Change in impairments (1,088) (36) *
capital gains
Total expenses (3,483) (3,334) 4% offset by higher treasury &
Pre-tax profit 1,520 2,383 (36%) financial markets results (up
thanks to gains on a credit hedge)
Tax (343) (312) 10%
and ABN AMRO contribution
Discontinued operations 24 - *
Minorities (15) (9) 67% Impairments impacted by write-
downs on structured credits and
Net profit 1,185 2,062 (43%)
higher impairments in loan portfolio
Expenses up 4% only thanks to
+338 costs containment and monitoring
(1,052)
H1 ’07 measures
2,062
Net profit down 43%. Excluding
+24
(149) (31) (6) write-downs on structured credits
H1 ’08
1,185 and the gain on credit hedge, net
profit was down 24% due to the
financing & integrations costs of
ABN AMRO and lower capital gains
Net profit Δ Δ Δ Δ Δ Δ Net profit
Income Impairm. Expenses Tax Discont. Minorities
Fortis first half-year 2008 results │4 August 2008 │ 31
32. Main elements impacting total income (1/2)
H1 2008 H1 2007 Change Q2 2008 Q1 2008 Change
Net interest income - reported 2,417 2,618 (8%) 1,167 1,250 (7%)
- Financing costs ABN AMRO 270 134 136
- Funding transfer ABN AMRO Asset Management 65 65
- Reclassification of fees on unused credit lines 18 18
- Correction at Fortis Hypotheekbank 29
- Others (5) 8 (5)
Net interest income - adjusted 2,765 2,655 4% 1,379 1,386 (0%)
H1 2008 H1 2007 Change Q2 2008 Q1 2008 Change
Net commissions and fees - reported 1,506 1,490 1% 783 723 8%
- ABN AMRO Asset Management inclusion (68) (68)
- Reclassification of fees on unused credit lines (18) (18)
- Retrocession fees to ABN AMRO (Merchant Bk.) 19 19
- Others (8)
Net commissions and fees - adjusted 1,439 1,482 (3%) 716 723 (1%)
H1 2008 H1 2007 Change Q2 2008 Q1 2008 Change
Combined NII & NCF - adjusted 4,204 4,137 2% 2,095 2,108 (1%)
Adjusted figures provided for period on period comparison purposes only
Q2 2008 reported figures are the relevant base for upcoming quarters, except for the impact
of AAAM transfer funding on net interest income (which should not impact next quarters)
Fortis first half-year 2008 results │4 August 2008 │ 32
33. Main elements impacting total income (2/2)
H1 2008 H1 2007 Change Q2 2008 Q1 2008 Change
Treasury & financial markets - reported 1,404 1,008 39% 579 826 (30%)
- Grossing up (117) 162 (1) (116)
- CDS hedge (183) 37 28 (210)
T&FM excl. grossing up and credit hedge 1,104 1,207 (9%) 606 500 21%
- Funding transfer ABN AMRO Asset Management (22) (22)
- Retrocession fees to ABN AMRO (Merchant Bk.) (19) (19)
Treasury & financial markets - adjusted 1,063 1,207 (12%) 565 500 13%
H1 2008 H1 2007 Change Q2 2008 Q1 2008 Change
Dividend & other invest. income - reported 390 148 164% 254 137 85%
- ABN AMRO profit contribution (198) (114) (84)
Dividend & other invest. income - adjusted 192 148 30% 140 53 164%
No adjustment on items 'Capital gains' and 'Other income'
H1 2008 H1 2007 Change Q2 2008 Q1 2008 Change
Total income - reported 6,090 5,752 6% 2,912 3,178 (8%)
- Total adjustments (258) 228 17 (274)
Total income - adjusted 5,832 5,980 (2%) 2,929 2,904 1%
Adjusted figures provided for period on period comparison purposes only
Fortis first half-year 2008 results │4 August 2008 │ 33
34. Total income up 6% despite ABN AMRO financing costs
Net Net Capital Treasury Dividend & Other
interest commissions gains & financial other invest. income
income & fees markets income
(8%) +1% (41%) +39% - +72%
6,090
+53
Up
+242
6%
5,752
(201)
+16 +396
(169)
Up 4% excl. YoY impact ABN AMRO
AA financing and credit hedge contribution
AAAM transfer EUR +220m EUR +198m
H1 ’07 H1 ’08
Net interest income and net commissions & fees impacted in H1 2008 by ABN AMRO financing
and AAAM integration transfer ► underlying1 combined growth of NII and NCF was up 2%
Higher treasury & financial markets and the contribution of ABN AMRO offset lower capital gains
1 See slides 32-33 in Annex for details on computation of underlying growth
Fortis first half-year 2008 results │4 August 2008 │ 34
35. Banking – Sound commercial performance in adverse conditions
Net interest income 1
Net interest income (down 8% in H1 2008) impacted by financing costs on
+4%
ABN AMRO acquisition and funding of AA Asset Management transfer
2,765
2,655 ► Underlying1 net interest income up 4%, slightly lower than the 5% growth in
credit risk-weighted commitments
(EUR m)
Net interest margin will be affected by the increased competition on savings
H1 07 H1 08
Net commissions & fees 1
Net commissions & fees up 1%, benefiting from AAAM integration
(3%)
► Underlying1 net commissions & fees down 3%
1,482
1,440
- lower fees in corporate finance, brokerage and asset management
- offset the higher revenues related to loans and payment services
(EUR m)
Total net outflow limited to EUR 0.5 billion in H1 2008
H1 07 H1 08
Treas. & financial markets 2 Results benefited from the credit portfolio hedge revaluation and higher pre-
(9%) tax revenues (but lower post-tax due to mix in capital gains/losses)
1,207
► Underlying2 treasury & financial markets results down 9%
1,104
Trading results down 9%, but already close to annual floor of EUR 500 m
(EUR m)
Non-trading results also fell by 9% as higher GSFG results were offset by
H1 07 H1 08
lower Private Equity results (lower gains on exits than in H1 2007)
1 See slides 32-33 for computation details / 2 Adjusted only for gross up and credit hedge impact
Fortis first half-year 2008 results │4 August 2008 │ 35
36. Resilient treasury and financial markets in adverse markets
Total Banking (EUR million) H1 '08 H1 '07 Change Comments
Treasury and financial markets - Reported 1,404 1,008 39% -
Grossing-up (117) 162 * More non-deductible losses on equities
Treasury and fin. markets - grossed up 1,287 1,170 10% Strong performance
▪ Trading 484 531 (9%) Already close to annual floor
▪ Non-trading 637 423 51% Positive hedge impact (Δ +220 YoY)
- GSFG 268 262 2% Rising despite higher liquidity costs
- Private Equity 98 143 (31%) Lower exits than in H1 '07
- Credit Portfolio Hedge 183 (37) * Benefited from spread widening in Q1
- Other non-trading at Merchant Banking 88 55 60% -
▪ Others1 166 216 (23%) Lower ALM contribution
Treasury and fin. markets - adjusted for
1,104 1,207 (9%)
gross up and credit portfolio hedge
Trading results remained resilient on a high base, while gains on the credit portfolio hedge more
than offset the lower contribution of ALM and Private Equity (lower exits)
1 Other Banking, Retail Banking, Private Banking and Asset Management
Fortis first half-year 2008 results │4 August 2008 │ 36
37. Solid underlying1 loan portfolio growth
Residential Consumer Commercial Others 2
Mortgages Loans Loans
2,038 284,008
+25%
27,926
+14%
+22%
(1,487)
+6,359 (13%)
+7%
248,541
H1 ’08
H1 ’07
1 Underlying loan portfolio = total loans to customers excluding Reverse Repo’s and Securities Lending
2 Government & official institutions and Others (mainly financial lease receivables and factoring)
Fortis first half-year 2008 results │4 August 2008 │ 37
38. Evolution of deposits
Demand Saving Time Other
Deposits Deposits Deposits Deposits
(3,685)
1,578
(7%)
219,654 +2% (2%)
(2,444) (85)
Total
(39%)
(3%)
Customer 215,018
Deposits
Total
Customer
Deposits
H1 ’08
H1 ’07
Fortis first half-year 2008 results │4 August 2008 │ 38
40. Main elements impacting total expenses
H1 2008 H1 2007 Change Q2 2008 Q1 2008 Change
Total expenses - reported (3,483) (3,334) 4% (1,793) (1,690) 6%
- Integration costs ABN AMRO (100) (56) (45)
- ABN AMRO Asset Management inclusion (85) (85)
Total expenses - adjusted (3,298) (3,334) (1%) (1,653) (1,645) 0%
H1 2008 H1 2007 Change Q2 2008 Q1 2008 Change
Staff expenses - reported (2,060) (1,934) 6% (1,032) (1,027) 0%
- Integration costs ABN AMRO (61) (29) (33)
- ABN AMRO Asset Management inclusion (29) (29)
Staff expenses - adjusted (1,969) (1,934) 2% (974) (995) (2%)
H1 2008 H1 2007 Change Q2 2008 Q1 2008 Change
Other expenses - reported (1,423) (1,400) 2% (761) (662) 15%
- Integration costs ABN AMRO (39) (27) (12)
- ABN AMRO Asset Management inclusion (55) (55)
Other expenses - adjusted (1,329) (1,400) (5%) (679) (650) 4%
Adjusted figures provided for period on period comparison purposes only
Q2 2008 reported figures are the relevant base for upcoming quarters
Fortis first half-year 2008 results │4 August 2008 │ 40
41. ABN AMRO contribution offset by financing & integration costs
EUR million H1 2008 H1 2007 Change
BU Netherlands 488 436 12%
BU Private Clients 154 165 (7%)
BU Asset Management 56 110 -
Underlying net profit showing
Underlying 1 net profit 697 711 (2%)
resilience despite AAAM transfer
Integration costs (net) - recorded at AA (83) - -
Impact of higher funding costs at
Shared assets (307) (67) *
ALM, lower Private Equity results
Reported net profit 307 644 (52%)
and write-down on Unicredit stake
Purchase accounting (114) -
RFS Holdings 4 -
Adjustment for results before acquisition date - (644)
Recorded as income from participation
Net profit contribution to Fortis 198 -
Net contribution transferred AAAM activities 38
EUR 313 million impact at Fortis, mainly
Purchase accounting on AAAM (11)
financing and integration costs
Financing costs (net) (270)
(Bank EUR 257m, General EUR 56m)
Integration costs (net) - recorded at Fortis (69)
Total impact on Fortis net profit (115)
►The negative contribution of shared assets and impact of financing and integration costs brought the
total net impact of ABN AMRO to a negative EUR 115 million in H1 2008
1 Excluding integration costs
Fortis first half-year 2008 results │4 August 2008 │ 41
42. Banking – Q2 ’08 vs. Q1 ’08 analysis
Total income down 8%:
Q2 '08 Q1 '08 Chg. %
lower net interest income (due to
Total income 2,912 3,178 (8%)
funding of AAAM transfer), lower
Change in impairments (640) (448) 43%
capital gains and lower treasury &
Total expenses (1,793) (1,690) 6% fin. mkts (large gain in Q1)
Pre-tax profit 479 1,041 (54%) more than offset higher comm. &
fees resulting from AAAM
Tax (28) (315) (91%)
consolidation as of Q2
Discontinued operations 24 - *
Minorities (11) (4) * Impairments increase mainly due
to higher impairments on structured
Net profit 465 721 (36%)
credit portfolio (EUR 479m pre-tax
in Q2 vs. EUR 366m pre-tax in Q1)
Q1 ’08
Expenses up 6% due to AAAM
(266)
721
consolidation (underlying was flat)
+24
(7) Q2 ’08
Net profit down EUR 256 million
(192) 465
+287 quarter on quarter, due to negative
(103) impact of credit market turmoil
(EUR 329m in Q2 vs. EUR 80m in
Q1) and higher impairments on the
loan portfolio
Net profit Δ Δ Δ Δ Δ Δ Net profit
Income Impairm. Expenses Tax Discont. Minorities
Fortis first half-year 2008 results │4 August 2008 │ 42
43. Banking Total Income – Q2 ’08 vs. Q1 ’08 analysis
Q2 '08 Q1 '08 % Change
Net interest income on interest-margin products 1,167 1,250 (7%)
Net commissions and fees 783 723 8%
Capital gains on investment portfolio 65 182 (65%)
Treasury and financial markets 579 826 (30%)
Dividend and other investment income 254 137 86%
Other income 65 61 6%
Total incom e 2,912 3,178 (8%)
Net interest income down 7%, but stable when excluding the financing costs relating to the transfer
of ABN AMRO Asset Management (AAAM) and reclassification of fees on unused credit lines
Net commissions & fees up 8% due to the inclusion of AAAM, down 1% excluding this impact
Lower capital gains than in Q1, which benefited from capital gains on bonds
Treasury and financial markets results down strongly with
lower revaluation on a credit portfolio hedge (delta QoQ EUR 238m) and lower trading results
more than offsetting higher Private Equity (exits) and GSFG revenues (Q2 seasonality)
Higher dividend (Q2 seasonality) and other investment income (contribution of ABN AMRO)
Fortis first half-year 2008 results │4 August 2008 │ 43
44. Loans to Customers – Product view (Q2 ’08 vs. Q1 ’08)
EUR million Q2 '08 Q1 '08 Chge.
Loans to Customers 361,285 333,481 8%
Government and official institutions 5,790 5,168 12%
Residential mortgages 97,929 96,241 2%
Consumer loans 10,117 9,747 4%
Commercial loans 154,948 142,461 9%
Reverse repurchase agreements 48,564 37,831 28%
Securities lending transactions 28,713 26,053 10%
Other loans to customers 15,224 15,980 (5%)
Loans to Customers (underlying) 284,008 269,597 5%
Total loans to customers up by EUR 28 billion (or 8%) supported mainly by the increase in
Commercial loans (EUR 12 billion) and Reverse repurchase agreements (EUR 11 billion)
The underlying loan growth (excl. Securities lending transactions and Reverse repurchase
agreements) was at 5%, up EUR 14 billion to EUR 284 billion
Residential mortgages up 2% over the quarter
Commercial loans up mainly in Corporate & Public Banking (part of Merchant Banking)
Increase in Securities lending transactions and Reverse repurchase agreements due to seasonality
Fortis first half-year 2008 results │4 August 2008 │ 44
45. Loans to Customers – Business view (Q2 ’08 vs. Q1 ’08)
EUR million Q2 '08 Q1 '08 Chge.
Retail Banking 73,629 85,944 (14%)
Private Banking & Asset Management 10,224 9,736 5%
Merchant Banking 228,310 205,744 11%
Other Banking 49,122 32,058 53%
Total 361,285 333,481 8%
Loans to customers were up 8% in the second quarter, driven mainly by Merchant Banking
The underlying loan growth (excl. Securities lending transactions and Reverse repurchase
agreements) was at 5%, up EUR 14 billion to EUR 284 billion
Retail Banking: EUR 12 billion decrease resulting from a securitisation transaction, with a transfer of
EUR 15 billion mortgages to Other Banking. Excluding this transaction, loans to customers in Retail
Banking were up 4%, led by consumer loans and mortgages.
Private Banking & Asset Management: loans up 5%, mainly in Private Banking
Merchant Banking: underlying loan growth of 6% (11% when including Securities lending
transactions and Reverse repurchase agreements) due mainly to Corporate & Public Banking
Other Banking: up strongly due to the transfer of mortgages (securitisation) from retail
Fortis first half-year 2008 results │4 August 2008 │ 45
46. ABN AMRO – Overview Q2 2008
EUR million Q2 2008 Q1 2008 Change
Underlying net profit up 18%
BU Netherlands 260 228 14%
BU NL up 14% a.o. due to the
BU Private Clients 81 72 13%
application of liquidity transfer
BU Asset Management 37 19 *
pricing
Underlying 1 net profit 378 319 18% BU PC up 13% on lower costs
Integration costs (net) - recorded at AA (43) (40) -
Impact of higher funding costs and
Shared assets (163) (144) 14%
ramp-down costs
Reported net profit 173 135 28%
Purchase accounting (63) (51) 24%
RFS Holding 4 - -
Adjustment for results before acquisition date - -
-
Recorded as income within Fortis
Net profit contribution to Fortis 114 84 36%
Net contribution transferred AAAM activities 38 -
Purchase accounting on AAAM (11) -
Financing costs (net) (135)
(271) (136)
Integration costs (net) - recorded at Fortis (36)
(69) (32)
Total impact on Fortis net profit (115)
(30) (84)
►The contribution of the acquired ABN AMRO activities to Fortis net profit reached EUR 114 million
in Q2 2008, up 36%, supported by an 18% increase in the underlying net profit
1 Excluding integration costs
Fortis first half-year 2008 results │4 August 2008 │ 46
47. Major milestones reached for ABN AMRO Asset Management
ABN AMRO Asset Management transferred to Fortis on 1 April 2008
Transfer First business unit to exit the consortium
completed Separation from ABN AMRO completed ahead of schedule and with no continuity issues
All regulatory, legal structuring and compliance issues resolved
Management/
All senior management nominated, 90% of staff formally appointed
Operating Integration planning completed, benefiting staff and external stakeholders
model
Advisory arrangements enforced globally, facilitating asset management by new teams
Investments
Process managed without any compliance issues and limited client losses
transition Keep voluntary attrition as targeted (12%)
Distribution/ Integration of product lines and sales channels
Branding Rebranding to Fortis Investments Management (FIM) completed
IT/ Common internal communication systems
Operations London office relocated
Fortis first half-year 2008 results │4 August 2008 │ 47
48. BU Netherlands – Integration 1 progress status
Opening of 3 new business centres for large and medium-sized businesses
Further extension of the integrated business network will reinforce client & regional focus
Commercial Alignment of quality of service and broadening of cooperation between centres
Banking Account managers are the first point of contact for cross-border-advice on financial matters
Combined commercial network dedicated to large and medium-sized businesses will count
175 business centres across Europe, of which 74 in the Netherlands
As of 1 July 2008, banks operating in the Netherlands must complete bilateral agreements on
Retail the use of cash tellers (in terms of service range and charges) by ‘non-proprietary clients’
Banking ABN AMRO en Fortis clients will have access to cash tellers of each network with the same
range of service and limitations
Between April and June 2008, 290 senior managers from Fortis and ABN AMRO set out on
the road to cultural integration in the ‘Connecting for Growth’ leadership programme
Cultural
The objective is to bring together senior leaders to explore and discuss strategic ambitions,
integration markets and customers features, as well as company values
The new ‘Leading for Growth’ programme for 3,000 managers will be launched shortly
EC Remedies – IT contribution to ring-fencing of sold activities on track
IT/
Separation/Integration – Legal entities and brands to be combined
Operations
Operations – Migration strategy for Retail Banking fold-in finalised
1 Subject to regulatory approval
Fortis first half-year 2008 results │4 August 2008 │ 48
