Consolidated Interim Financial Statements for the first quarter of 2007 Brussels/Utrecht, 11 May 2007

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(1)Brussels/Utrecht, 11 May 2007. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. Consolidated Interim Financial Statements for the first quarter of 2007.

(2) │Consolidated Interim Financial Statements for the first quarter of 2007. Contents Consolidated balance sheet............................................................................................................................................. 4 Consolidated income statement ...................................................................................................................................... 5 Consolidated statement of changes in equity ................................................................................................................ 6 Consolidated cash flow statement .................................................................................................................................. 7. General Notes.................................................................................................................................................................... 9 1. Summary accounting policies and principles of consolidation ...................................................................... 10 1.1 Basis of accounting..................................................................................................................................... 10 1.2 Changes in accounting policies .................................................................................................................. 10 1.3 Accounting estimates.................................................................................................................................. 10 1.4 Determination of accounting policies .......................................................................................................... 10 1.5 Segment reporting ...................................................................................................................................... 12 1.6 Scope of consolidation................................................................................................................................ 12 1.7 Presentation and disclosures...................................................................................................................... 13. 2. Acquisitions and divestments ............................................................................................................................ 14. 3. Outstanding shares and earnings per share ..................................................................................................... 15. 4. Dividend................................................................................................................................................................ 16. 5. Supervision and solvency................................................................................................................................... 16 5.1 Fortis consolidated...................................................................................................................................... 16 5.2 Banking....................................................................................................................................................... 16 5.3 Insurance.................................................................................................................................................... 17 5.4 Fortis core equity target and total capital .................................................................................................... 17. Explanatory notes to the balance sheet........................................................................................................................ 19 6. Assets and liabilities held for trading ................................................................................................................ 20. 7. Due from banks.................................................................................................................................................... 22. 8. Due from customers ............................................................................................................................................ 23. 9. Investments .......................................................................................................................................................... 25 9.1 Investments available for sale .................................................................................................................... 26 9.2 Net unrealised gains and losses on Available for sale investments included in equity ............................... 27 9.3 Investments held at fair value through profit or loss.................................................................................... 28 9.4 Real estate ................................................................................................................................................. 29. 10. Due to banks ........................................................................................................................................................ 30. 11. Due to customers................................................................................................................................................. 31. 12. Liabilities arising from insurance and investment contracts........................................................................... 32. Explanatory notes to the income statement ................................................................................................................. 33 13. Interest income .................................................................................................................................................... 34. 14. Insurance premiums............................................................................................................................................ 35. 15. Realised capital gains and losses on investments........................................................................................... 37. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. 2.

(3) Consolidated Interim Financial Statements for the first quarter of 2007. │. 16. Other realised and unrealised gains and losses............................................................................................... 38. 17. Fee and commission income .............................................................................................................................. 39. 18. Interest expense................................................................................................................................................... 40. 19. Insurance claims and benefits............................................................................................................................ 41. 20. Change in impairments ....................................................................................................................................... 42. 3. Explanatory note on segment reporting ....................................................................................................................... 43 21. Information on segments .................................................................................................................................... 44 21.1 General information .................................................................................................................................... 44 21.2 Banking....................................................................................................................................................... 44 21.3 Insurance.................................................................................................................................................... 46 21.4 General....................................................................................................................................................... 47 21.5 Balance sheet by activity ............................................................................................................................ 48 21.6 Income statement by activity ...................................................................................................................... 50 21.7 Income statement of Banking segments..................................................................................................... 52 21.8 Income statement of Insurance segments .................................................................................................. 54. Explanatory note to the Insurance income statement ................................................................................................. 57 22. Technical and non-technical result Insurance .................................................................................................. 58 22.1 Reconciliation ............................................................................................................................................. 58 22.2 Technical result .......................................................................................................................................... 59 22.3 Non-technical result .................................................................................................................................... 60 22.4 Technical result Life and Non-life by branch and insurance segment......................................................... 61 22.5 Non-life financial information by branch...................................................................................................... 62 22.6 Non-life ratios ............................................................................................................................................. 62. 23. Assets under management ................................................................................................................................. 64. 24. Contingent liabilities............................................................................................................................................ 66. 25. Post-balance sheet date events.......................................................................................................................... 66. Review report .................................................................................................................................................................. 67. Annex – Quarterly income statements by activity and by segment ........................................................................... 69 Income statement – by activity............................................................................................................................... 70 Income statement – Banking segments ................................................................................................................. 80 Income statement – Insurance segments .............................................................................................................. 92. All amounts reported in these Interim Financial Statements are denominated in millions of euros, unless stated otherwise. Because figures have been rounded off, small differences may occur in comparison with previously reported figures.. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. Additional explanatory notes ......................................................................................................................................... 63.

(4) │Consolidated Interim Financial Statements for the first quarter of 2007. Consolidated balance sheet Note. 31 March 2007. 31 December 2006. Assets Cash and cash equivalents. 26,371. 20,413. Assets held for trading. 6. 88,426. 70,215. Due from banks. 7. 118,982. 90,131. Due from customers. 8. 312,644. 286,459. Investments:. 9. - Held to maturity. 4,478. 4,505. 180,448. 186,428. - Held at fair value through profit or loss. 6,344. 6,600. - Investment property. 3,205. 3,047. - Associates and joint ventures. 2,030. - Available for sale. 1,854 196,505. 202,434. 29,795. 28,749. Reinsurance and other receivables. 9,218. 9,187. Property, plant and equipment. 3,485. 3,522. Goodwill and other intangible assets. 2,523. 2,261. 74,192. 61,858. 862,141. 775,229. Investments related to unit-linked contracts. Accrued interest and other assets Total assets. Liabilities Liabilities held for trading. 6. 87,606. 64,308. Due to banks. 10. 208,675. 177,481. Due to customers. 11. 266,298. 259,258. Liabilities arising from insurance and investment contracts. 12. 61,881. 59,764. Liabilities related to unit-linked contracts Debt certificates Subordinated liabilities Other borrowings Provisions Current and deferred tax liabilities Accrued interest and other liabilities Total liabilities. Shareholders' equity Minority interests Total equity. Total liabilities and equity. 30,273. 29,156. 102,155. 90,686. 15,821. 15,375. 2,149. 2,149. 838. 817. 2,726. 2,733. 61,249. 51,951. 839,671. 753,678. 21,563. 20,644. 907. 907. 22,470. 21,551. 862,141. 775,229. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. 4.

(5) Consolidated Interim Financial Statements for the first quarter of 2007. │. 5. Consolidated income statement. Note. First. First. Fourth. quarter. quarter. quarter. 2007. 2006. 2006. Income Interest income. 13. 20,852. 16,629. 19,556. Insurance premiums. 14. 4,258. 3,137. 4,504. 196. 188. 225. Dividend and other investment income Share in result of associates and joint ventures. 58. 57. 39. 399. 403. 291. 391. 448. 303. 1,024. 964. 939. 794. 893. Realised capital gains (losses) on investments. 15. Other realised and unrealised gains and losses. 16. Fee and commission income. 17. 452. Income related to investments for unit-linked contracts Other income. 196. 125. 191. Total income. 27,826. 22,745. 26,941. Expenses Interest expense. 18. ( 19,042 ). ( 14,839 ). ( 17,611 ). Insurance claims and benefits. 19. ( 3,849 ). ( 2,696 ). ( 4,450 ). ( 860 ). ( 1,018 ). ( 998 ). Change in impairments. 20. Fee and commission expense Depreciation and amortisation of tangible and intangible assets Staff expenses. ( 32 ). ( 18 ). ( 95 ). ( 564 ). ( 542 ). ( 462 ). ( 143 ). ( 136 ). ( 157 ). ( 1,165 ). ( 1,104 ). ( 1,195 ). Other expenses. ( 832 ). ( 726 ). ( 1,033 ). Total expenses. ( 26,487 ). ( 21,079 ). ( 26,001 ). Profit before taxation. 1,339. 1,666. Income tax expense. ( 149 ). ( 320 ). Net profit for the period. 1,190. 1,346. 940. ( 178 ) 762. Net profit attributable to minority interests. 23. 18. 13. Net profit attributable to shareholders. 1,167. 1,328. 749. Basic earnings per share. 0.90. 1.03. Diluted earnings per share. 0.89. 1.01. Per share data (EUR). 3. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. Charges related to unit-linked contracts.

(6) │Consolidated Interim Financial Statements for the first quarter of 2007. Consolidated statement of changes in equity Net profit Share. Balance at 1 January 2006. Currency. attributable. Unrealised. Share. Premium. Other. translation. to. gains. Shareholders'. Minority. Capital. reserve. reserves. reserve. shareholders. and losses. equity. interests. 6,307. 11,718. ( 8,206 ). 22. Net profit for the period. 3,941. 5,147. 1,328. Revaluation of investments. ( 635 ). Foreign exchange differences. ( 79 ). Other non-owner changes in equity. 2. Total non-owner changes in equity. 2. 26. 18,929. 727. 19,656. 1,328. 18. 1,346. ( 635 ). (6). ( 641 ). ( 53 ). (1). ( 54 ). 11. 653. ( 26 ). ( 26 ). 2 ( 79 ). 1,328. ( 609 ). Total. 642. 2. Transfer Dividend Increase of capital Treasury shares. 131. 131. Other changes in equity. 131 (3). (3). Balance at 31 March 2006. 6,307. 11,718. ( 8,073 ). ( 57 ). 5,269. 4,538. 19,702. 709. 20,411. Balance at 1 January 2007. 6,316. 11,783. ( 5,689 ). ( 146 ). 4,351. 4,029. 20,644. 907. 21,551. 23. 1,190. Net profit for the period. 1,167. Revaluation of investments. 1,167 ( 259 ). Foreign exchange differences. 15. Other non-owner changes in equity. ( 26 ). Total non-owner changes in equity. ( 26 ). ( 259 ) 15. ( 14 ) 1. ( 26 ) 15. 1,167. ( 259 ). 897. ( 273 ) 16 ( 26 ). 10. 907. ( 19 ). ( 19 ). 12. 26. (3). (3). Transfer Dividend Increase of capital. 2. 12. Treasury shares. 14 8. 8. Other changes in equity Balance at 31 March 2007. 6,318. 11,795. ( 5,707 ). ( 131 ). 5,518. 3,770. 21,563. 8. 907. 22,470. An amount of EUR 266 million (2006: EUR 266 million) included in Other reserves is related to the equity component of convertible loans.. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. 6.

(7) Consolidated Interim Financial Statements for the first quarter of 2007. │. 7. Consolidated cash flow statement First quarter 2007 Profit before taxation. First quarter 2006. 1,339. 1,666. ( 757 ). ( 907 ). 170. 236. Adjustments on non-cash items included in profit before taxation: (Un)realised gains (losses) Depreciation, amortisation and accretion Provisions and impairments Share of profits in associates and joint ventures Share based compensation expense. 44. 16. ( 58 ). ( 57 ). 3. 2. Changes in operating assets and liabilities: 5,437. 4,010. Due from banks. ( 28,847 ). ( 10,046 ). Due from customers. ( 26,754 ). ( 11,715 ). Reinsurance and other receivables. 14. 341. Investments related to unit-linked contracts. ( 1,045 ). ( 1,154 ). Due to banks. 31,058. 14,951. Due to customers. 7,343. 16,689. Liabilities related to insurance and investment contracts. 2,129. 758. Liabilities related to unit-linked contracts. 1,089. 1,313. ( 1,881 ). ( 9,260 ). Net changes in all other operational assets and liabilities Dividend received from associates Income tax paid. 53 ( 262 ). 36 ( 116 ). Cash flow from operating activities. ( 10,925 ). Purchases of investments. ( 37,792 ). ( 21,871 ). 42,983. 15,554. Proceeds from sales, maturities and redemptions of investments Purchases of investment property. ( 133 ). 6,763. ( 607 ). Proceeds from sales of investment property. 33. 319. Investments in associates and joint ventures. ( 39 ). ( 19 ). Proceeds from sales of associates and joint ventures Purchases of property, plant and equipment Proceeds from sales of property, plant and equipment Acquisition of subsidiaries, net of cash acquired Purchases of intangible assets Cash flow from investing activities Proceeds from the issuance of debt certificates Payment of debt certificates Proceeds from the issuance of subordinated liabilities Payment of subordinated liabilities Proceeds from the issuance of other borrowings Payment of other borrowings Proceeds from the issuance of shares (including minority interests) Purchases of treasury shares Proceeds from sales of treasury shares Dividends paid to shareholders of the parent company Dividends paid to minority interests Cash flow from financing activities Effect of exchange rate differences on cash and cash equivalents Net increase (decrease) of cash and cash equivalents. 4 ( 137 ) 12 ( 261 ) ( 60 ) 4,610. 51 ( 114 ) 67 ( 54 ) ( 10 ) ( 6,684 ). 26,100. 23,748. ( 14,347 ). ( 19,963 ). 727. 683. ( 204 ). ( 136 ). 676. 313. ( 671 ). ( 250 ). 26 ( 212 ). ( 128 ). 220. 259. (4). (3). ( 19 ). ( 26 ). 12,292 ( 19 ). 4,497 ( 102 ). 5,958. 4,474. Cash and cash equivalents at 1 January. 20,413. 21,822. Cash and cash equivalents at 31 March. 26,371. 26,296. 20,744. 17,217. Supplementary disclosure of operating cash flow information Interest received Dividend received from investments Interest paid. 43 ( 18,057 ). 42 ( 14,844 ). WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. Assets and liabilities held for trading.

(8) │Consolidated Interim Financial Statements for the first quarter of 2007. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. 8.

(9) Consolidated Interim Financial Statements for the first quarter of 2007. │. 9. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. General Notes.

(10) │Consolidated Interim Financial Statements for the first quarter of 2007. 1. Summary accounting policies and principles of consolidation. 1.1. Basis of accounting. The Fortis Consolidated Interim Financial Statements for the first quarter of 2007, including the 2006 comparative figures, have been prepared in accordance with IAS 34, Interim Financial Reporting, and include condensed financial statements (balance sheet, income statement, statement of changes in equity, cash flow statement) and selected explanatory notes. The Fortis Consolidated Interim Financial Statements should be read in conjunction with the audited Fortis Consolidated Financial Statements 2006 which are available at http://www.fortis.com/Press/annualreports.asp.. 1.2. Changes in accounting policies. The accounting policies used to prepare the Consolidated Interim Financial Statements for the first quarter of 2007 are consistent with those applied in the Fortis Consolidated Financial Statements for the year ended 31 December 2006. A more extensive description of the accounting policies is included in the Fortis Consolidated Financial Statements 2006 and is also available at http://www.fortis.com/Shareholders/accountingpolicies.asp. No new Standards or Interpretations were published by the IASB during the first quarter of 2007. No endorsements of Standards or Interpretations by the European Union took place during the first quarter of 2007.. 1.3. Accounting estimates. The preparation of the Consolidated Interim Financial Statements in conformity with IFRS requires the use of certain accounting estimates. It also requires management to exercise its judgement in the process of applying these accounting policies. Actual results may differ from these estimates and judgemental decisions. Interim results are not necessarily indicative for full-year results. Judgements and estimates are principally made in the following areas: • estimation of the recoverable amount of impaired assets • determination of fair values of non-quoted financial instruments • determination of the useful life and the residual value of property, plant and equipment, investment property and intangible assets • measurement of liabilities for insurance contracts • actuarial assumptions related to the measurement of pension obligations and assets • estimation of present obligations resulting from past events in the recognition of provisions.. 1.4. Determination of accounting policies. IFRS allows in certain cases the application of different options. The following options were chosen by Fortis: •. Trade date accounting: all purchases and sales of financial assets requiring delivery within the time frame established by regulation or market convention are recognised on the trade date, which is the date when Fortis becomes a party to the contractual provisions of the financial assets.. •. Investment property, real estate held for own use, fixed assets and intangible fixed assets are measured at cost less accumulated depreciation and any accumulated impairment losses.. •. Investments in joint ventures are accounted for using the equity method.. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. 10.

(11) │. •. Fortis uses three types of hedges: fair value hedges, cash flow hedges and net investment hedges. Fair value hedge accounting is applied as from 1 January 2005 for portfolio hedges of interest rate risk ('macro hedging'). In this context, the difference between the fair value and the carrying value of the hedged item at designation of the hedging relationship is amortised over the remaining life of the hedged item. For macro hedges, Fortis uses the 'carved out' version of IAS 39 adopted by the European Union which removes some of the limitations on fair value hedges and the strict requirements on the effectiveness of those hedges. Under this version, the impact of the changes in the estimates of the repricing dates is only considered ineffective if it leads to underhedging.. •. At initial recognition or first-time adoption of IFRS, Fortis has irrevocably designated some financial assets and liabilities as held at fair value through profit or loss, because: - the host contract includes an embedded derivative that would otherwise require separation, or - it eliminates or significantly reduces a measurement or recognition inconsistency (‘accounting mismatch’), or - it relates to a portfolio of financial assets and/or liabilities that are managed and evaluated on a fair value basis.. •. Fortis applies 'shadow accounting' to the unrealised changes in fair value of the investments and assets and liabilities held for trading that are linked to and therefore affect the measurement of the insurance liabilities. These changes in fair value are therefore not part of equity.. •. The whole of the remaining unrealised changes in fair value of the available-for-sale portfolio – after application of 'shadow accounting' – that are subject to discretionary participation features are classified as a component of equity.. •. The adequacy of insurance liabilities ('liability adequacy test') is tested on the level of homogeneous product groups at each reporting date.. •. Borrowing costs are generally expensed as incurred. Borrowing costs that are directly attributable to the acquisition or construction of an asset are capitalised while the asset is being constructed as part of the cost of that asset.. •. Pensions: under IFRS, Fortis uses the corridor approach, i.e. not recording actuarial differences within defined limits.. 11. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. Consolidated Interim Financial Statements for the first quarter of 2007.

(12) │Consolidated Interim Financial Statements for the first quarter of 2007. 1.5. Segment reporting. On 12 October 2006 Fortis announced organisational changes to support the evolution of its growth strategy. The modified organisation has been operational since 1 January 2007. The primary format for reporting segment information is based on business segments. Fortis's core activities are Banking and Insurance. As such, Fortis is organised on a worldwide basis into three businesses, further subdivided into business segments: Retail Banking • Retail Banking Network • Retail Banking Asset Management Merchant & Private Banking • Merchant & Private Banking Clients • Merchant & Private Banking Skills Insurance • Insurance Belgium – Life • Insurance Belgium – Non-Life • Insurance Netherlands – Life • Insurance Netherlands – Non-Life • Insurance International – Life • Insurance International – Non-Life Activities not related to Banking or Insurance and elimination differences are reported separately from the Banking and Insurance activities. Fortis’s geographical segments for reporting purposes are as follows: • Benelux (Belgium, the Netherlands, Luxembourg) • Other European countries • North America • Asia • Other. 1.6. Scope of consolidation. The Consolidated Interim Financial Statements include Fortis SA/NV and Fortis N.V. (the ‘Parent Companies’) and their subsidiaries. In combining the financial statements of Fortis SA/NV and Fortis N.V., Fortis applies consortium accounting in order to reflect its Banking and Insurance activities in the most reliable manner in accordance with the EU 7th directive dated 13 June 1983 (83/349/EEC). Fortis sponsors the formation of Special Purpose Entities (‘SPEs’) primarily for the purpose of asset securitisation transactions, structured debt issuance, or to accomplish another well-defined objective. Some of the SPEs are bankruptcy-remote companies whose assets are not available to settle the claims of Fortis. SPEs are consolidated if in substance they are controlled by Fortis. Investments in joint ventures – contractual agreements whereby Fortis and other parties undertake an economic activity that is subject to joint control – are accounted for using the equity method. Investments in associates – investments whereby Fortis has significant influence, but which it does not control – are accounted for using the equity method.. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. 12.

(13) Consolidated Interim Financial Statements for the first quarter of 2007. 1.7. │. 13. Presentation and disclosures. The Consolidated Interim Financial Statements are stated in euros, which is the functional currency of the Parent Companies of Fortis.. •. Interest on assets and liabilities held for trading and derivatives are reported in the interest margin.. •. Dividends received are included in investment income.. •. Realised and unrealised results on assets and liabilities held for trading are included in 'Other realised and unrealised gains and losses'.. •. Changes in the clean fair value (i.e. excluding the interest accruals) of derivatives are also reported under 'Other realised and unrealised gains and losses'.. •. Cash flow statement: Fortis reports cash flows from operating activities using the indirect method. Interest received and interest paid, are presented as cash flows from operating activities. Dividends paid are classified as cash flows from financing activities, dividends received are classified as cash flow from operating activities.. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. Where IFRS allows a choice or is not descriptive in presentation or disclosures, Fortis opted for the following:.

(14) │Consolidated Interim Financial Statements for the first quarter of 2007. 2. Acquisitions and divestments. The following major and material acquisitions and divestments were made in 2007 and 2006:. Acquired company. Capitalised. Goodwill/. Quarter of. Acquisition. Percentage. intangible. (negative. acquisition. amount. acquired. assets. goodwill). Segment. Dreieck Industrie Leasing AG. Q1 2006. 64. 100. 29. 4. Merchant & Private Banking. O'Connor & Company. Q1 2006. 58. 100. 0. 14. Merchant & Private Banking. Von Essen KG Bankgesellschaft. Q1 2006. 93. William Properties. Q3 2006. FEMT and FBECC. Q4 2006. Cadogan. Q4 2006. Dominet. Q1 2007. 100. 3. 31. Retail Banking. 100. 15. 25. Insurance Netherlands. 356. 100. 0. 138. 119. 70. 0. 116. Retail Banking. 240. 100. 223. Retail Banking. Merchant & Private Banking. The amounts of the capitalised intangible assets and the goodwill (negative goodwill) presented above are the initial amounts, converted to euro and taking into account changes that were necessary because the accounting for a business combination was only determined provisionally by the end of the period in which the combination was effected, but excluding subsequent changes due to net exchange differences and other changes. These acquisitions did not have a substantial impact on Fortis’s financial position and performance. Detailed information on the acquisition of Fortis Energy Marketing & Trading (FEMT), FB Energy Canada, Corp. (FBECC) and Cadogan is provided in the Fortis Consolidated Financial Statements 2006. Fortis finalised on 22 March the acquisition of 100% of the shares of Dominet SA, the parent company of Dominet Bank SA. Dominet is a full-service retail bank with 869 employees and a modern nation-wide branch network in Poland. It occupies a strong position in the car finance segment and has a fast-growing portfolio of cash loans. Dominet also supplies other banking products to retail customers. The acquisition price was EUR 240 million. Due to the fact that the acquisition was only finalised by the end of March the amount of goodwill is provisional. Fortis made no major divestments in 2007 and 2006. At 31 March 2007 as well as at 31 December 2006, Fortis had no assets or operations to which IFRS 5, Non-current Assets Held for Sale and Discontinued Operations, applied.. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. 14.

(15) Consolidated Interim Financial Statements for the first quarter of 2007. 3. │. 15. Outstanding shares and earnings per share. The following table shows the number of outstanding shares.. Number of shares at 31 December 2006 Issued related to option plans. Shares. Treasury. Shares. issued. shares. outstanding. 1,342,815,545 488,500. Balance (acquired) / sold Number of shares at 31 March 2007. ( 50,698,454 ). 488,500 309,244. 1,343,304,045. 1,292,117,091. ( 50,389,210 ). 309,244 1,292,914,835. Shares issued and potential number of shares In addition to the shares already outstanding, Fortis issued options or instruments containing option features, which could upon exercise lead to an increase in the number of outstanding shares. The table below shows an overview of the shares issued and the potential number of shares at 31 March 2007. Number of shares at 31 March 2007. 1,343,304,045. Shares that may be issued: - in connection with option plans, including warrants. 30,373,405. - in connection with convertible notes. 1,526. Total potential number of shares at 31 March 2007. 1,373,678,976. Earnings per share The following table details the calculation of earnings per share. First quarter 2007. Net profit attributable to shareholders Elimination of interest expense on convertible debt (net of tax impact) Net profit used to determine diluted earnings per share. Weighted average number of ordinary shares for basic earnings per share. 1,167. First quarter 2006. 1,328. 20. 18. 1,187. 1,346. 1,292,477,969. 1,285,989,815. 39,684,066. 39,684,998. 5,944,365. 3,788,481. - assumed conversion of convertible debt - share options - restricted shares Weighted average number of ordinary shares for diluted earnings per share. 759,778 1,338,866,178. 1,329,463,294. Basic earnings per share (in euro per share). 0.90. 1.03. Diluted earnings per share (in euro per share). 0.89. 1.01. In the first quarter of 2007 weighted average options on 466,831 shares (first quarter 2006: 2,150,187 shares) with weighted average exercise prices of EUR 35.29 per share (first quarter 2006: EUR 33.96 per share) were excluded from the calculation of diluted EPS because the exercise price of the options was higher than the average market price of the shares. During the first quarter of 2007 (as in the first quarter of 2006) no shares arising from convertible securities were excluded from the calculation of diluted earnings per share, because the interest per share saved on these securities was lower than the basic earnings per share.. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. Adjustments for:.

(16) │Consolidated Interim Financial Statements for the first quarter of 2007. 4. Dividend. A total cash dividend for 2006 of EUR 1.40 per share, an increase of 21% on the EUR 1.16 paid for 2005, will be proposed by the Board of Directors to the Annual General Meetings of Shareholders on 23 May 2007. As an interim dividend of EUR 0.58 per share was paid on 7 September 2006, the final dividend amounts to EUR 0.82 per share and will be payable on 14 June 2007.. 5. Supervision and solvency. As a financial institution, Fortis is subject to regulatory supervision. Fortis is supervised at the Fortis consolidated level and at the level of the individual operating companies.. 5.1. Fortis consolidated. At the Fortis consolidated level, Fortis is supervised jointly by the Belgian Banking, Finance and Insurance Commission (BFIC) and the Dutch Central Bank (DNB). Their prudential supervision includes verification on a semi-annual basis that Fortis meets the solvency requirements of each different financial sector represented within Fortis. The elements of own funds and the solvency requirements for the Banking and Insurance activities are calculated in accordance with the corresponding sector rules. Fortis has been identified as a financial conglomerate and is subject to the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate as provided for in the EU Directive 2002/87/EC. The supplementary capital adequacy requirements demand that the own funds of the financial conglomerate calculated on the basis of the consolidated position of the group exceed the sum of the solvency requirements for each different financial sector represented in the group. The qualifying elements of own funds and the solvency requirements are calculated in accordance with the corresponding sector rules. Fortis met all requirements in the first quarter of 2007 as well as in 2006.. 5.2. Banking. Fortis’s banking subsidiaries are subject to the regulations of the various supervisory authorities in the countries where the subsidiaries operate. These guidelines require the banking subsidiaries to maintain a minimum level of qualifying capital relative to the on- and off-balance sheet credit commitments and the bank's trading positions. The positions and credit commitments are weighted according to the level of risk involved (risk-weighted commitments). The requirement for total qualifying capital must be maintained at a minimum of 8% of risk-weighted commitments. 31 March 2007. 31 December 2006. Bank Total risk bearing capital Risk-weighted commitments. Tier 1 ratio Total capital ratio. 27,633. 26,664. 262,828. 240,104. 6.5%. 7.1%. 10.5%. 11.1%. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. 16.

(17) Consolidated Interim Financial Statements for the first quarter of 2007. 5.3. │. 17. Insurance. Fortis’s insurance subsidiaries are required to maintain a minimum level of qualifying capital relative to the premiums received for Non-life insurance contracts and relative to the Life insurance liabilities arising from insurance and investment contracts. The consolidated regulatory solvency requirements of Fortis’s insurance subsidiaries are at 31 March 2007 EUR 3,871 million (31 December 2006: EUR 3,689 million) and are largely covered by the available qualifying total capital.. 5.4. Fortis core equity target and total capital. Fortis has communicated on its solvency using the net core capital/cap/floor model since 1998. Although the cap/floor model has served its purpose well, it had some limitations that have prompted the introduction of a new model based on target capital. The new model provides greater granularity and insight into the capitalisation at Banking and Insurance level, gives more guidance regarding future capital management actions, is in line with market practice and is consistent with the regulators’ latest view on capital. Fortis’s core equity and total capital is composed as follows: General Banking. Insurance. (incl. eliminations). Total. 12,568. 4,031. ( 4,324 ). 12,275. 4,052. 1,771. ( 305 ). 5,518. 657. 2,933. 180. 3,770. 17,277. 8,735. 31 March 2007. Net profit attributable to shareholders Unrealised gains and losses Shareholders' equity FRESH Minority interests. 214. Revaluation of real estate to fair value Revaluation of debt securities, net of shadow accounting. 661. ( 4,449 ). 21,563. 1,123. 1,123. 32. 1,483 ( 15 ). ( 320 ). ( 11 ). Revaluation of equity securities, net of shadow accounting. ( 613 ). ( 244 ). ( 12 ). Goodwill. ( 981 ). ( 235 ). Expected dividend. ( 225 ). ( 520 ). Other. ( 889 ). ( 392 ). Fortis core equity Innovative Tier 1 capital Tier 1 capital. ( 321 ). 2,439. 599. 17,207. 9,767. ( 3,145 ) ( 1,728 ). 12,134. 761. ( 1,708 ). ( 136 ). Total capital. 27,633. 10,392. ( 869 ). ( 1,066 ) ( 1,281 ). 9,168. Other prudential filters and deductions on total capital. ( 346 ). ( 1,216 ). 14,768. Subordinated loans. 907 1,483. ( 3,638 ) 493. 20,298 3,531 23,829 11,167 ( 1,844 ). ( 4,873 ). 33,152. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. Share capital and reserves.

(18) │Consolidated Interim Financial Statements for the first quarter of 2007. General Banking. Insurance. (incl. eliminations). Total. 31 December 2006 Share capital and reserves Net profit attributable to shareholders Unrealised gains and losses Shareholders' equity. 12,593. 4,021. ( 4,350 ). 12,264. 3,149. 1,419. ( 217 ). 4,351. 924. 2,923. 182. 16,666. 8,363. 198. 678. FRESH Minority interests Revaluation of real estate to fair value. 20,644. 1,108. 1,108. 31. 907. 1,465. 1,465. Revaluation of debt securities, net of shadow accounting. ( 176 ). ( 477 ). ( 19 ). Revaluation of equity securities, net of shadow accounting. ( 721 ). ( 234 ). ( 12 ). Goodwill. ( 749 ). ( 268 ). Expected dividend. ( 225 ). ( 520 ). Other. ( 490 ). ( 392 ). Fortis core equity Innovative Tier 1 capital Tier 1 capital. 14,503. 8,615. ( 321 ) 12 ( 3,586 ). 2,438. 600 9,215. ( 3,093 ) ( 1,726 ). 11,642. 819. Other prudential filters and deductions on total capital. ( 1,919 ). ( 99 ). Total capital. 26,664. 9,935. ( 672 ) ( 967 ) ( 1,017 ). 16,941. Subordinated loans. 4,029. ( 4,385 ). 493. ( 1,066 ) ( 870 ) 19,532 3,531 23,063 10,735 ( 2,018 ). ( 4,819 ). 31,780. Core equity target The three components of the Fortis’s core equity target are: • a Fortis Bank capital target set at a Tier 1 ratio of 7%, including 1% hybrid capital. This implies a core equity target of 6%. • a Fortis Insurance capital target set at 225% of the regulatory minimum, which includes 50% of hybrid capital. This implies a core equity target of 175%. • a Group leverage target (at General) set at 15% of the total of the core equity of Banking plus the core equity of Insurance, implying that at the level of Banking and Insurance 15% of their combined target equity could be financed by group debt. The key capital indicators of Fortis can be shown as follows: 31 March 2007. 31 December 2006. Fortis Core equity. 20,298. 19,532. Core equity target. 19,162. 17,733. 1,136. 1,799. Total capital. 33,152. 31,780. Minimum solvency requirements. 24,897. 22,898. 8,255. 8,882. Amount of core equity above target. Amount of total capital above minimum solvency requirements. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. 18.

(19) Consolidated Interim Financial Statements for the first quarter of 2007. │. 19. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. Explanatory notes to the balance sheet.

(20) │Consolidated Interim Financial Statements for the first quarter of 2007. 6. Assets and liabilities held for trading. Assets held for trading The following table provides a specification of Assets held for trading. General Banking. Insurance. (incl. eliminations). Total. 31 March 2007 Securities held for trading: Treasury bills and other eligible bills. 4,016. 4,016. Debt securities: - Government bonds. 6,770. - Corporate debt securities. 8,526. - Mortgage-backed securities. 2,277. - Other asset-backed securities. 2,138. 6,770 ( 248 ). 8,278 2,277 2,138. Equity securities. 35,211. ( 183 ). 35,028. Total trading securities. 58,938. ( 431 ). 58,507. 29,138. Derivatives held for trading: Over the counter (OTC) Exchange traded Total trading derivatives. Other assets held for trading Total assets held for trading. 29,266. 142. ( 270 ). 603. 9. (1). 611. 29,869. 151. ( 271 ). 29,749. 151. ( 702 ). 88,426. 170 88,977. 170. 31 December 2006 Securities held for trading: Treasury bills and other eligible bills. 2,533. 2,533. Debt securities: - Government bonds. 7,354. - Corporate debt securities. 7,631. - Mortgage-backed securities. 2,254. - Other asset-backed securities. 2,681. 7,354 ( 254 ). 7,377 2,254 2,681. Equity securities. 26,533. ( 160 ). 26,373. Total trading securities. 48,986. ( 414 ). 48,572. ( 202 ). 21,010. Derivatives held for trading: Over the counter (OTC) Exchange traded Total trading derivatives. Other assets held for trading Total assets held for trading. 21,028. 184. 523. 12. 21,551. 196. ( 202 ). 21,545. 196. ( 616 ). 70,215. 535. 98 70,635. 98. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. 20.

(21) Consolidated Interim Financial Statements for the first quarter of 2007. │. 21. Liabilities held for trading The table below shows the composition of Liabilities held for trading. General Banking. Insurance. (incl. eliminations). Total. 31 March 2007 Short security sales. 62,457. 62,457. Derivative financial instruments: Over the counter (OTC) Exchange traded Total derivatives held for trading Other liabilities held for trading Total liabilities held for trading. 24,757. 29. 421. 3. ( 74 ). 24,712. 25,178. 32. ( 74 ). 25,136. 32. ( 74 ). 87,606. 424. 13 87,648. 13. 31 December 2006 Short security sales. 39,922. 39,922. Derivative financial instruments: Over the counter (OTC) Exchange traded Total derivatives held for trading. 24,015. 28. 320. 22. 24,065. 1. 321. 24,335. 28. 23. 24,386. 64,257. 28. 23. 64,308. Total liabilities held for trading. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. Other liabilities held for trading.

(22) │Consolidated Interim Financial Statements for the first quarter of 2007. 7. Due from banks. Due from banks consists of the following: General Banking. Insurance. (incl. eliminations). 10,051. 603. ( 487 ). 5,914. 790. ( 260 ). Total. 31 March 2007 Interest-bearing deposits Loans and advances Reverse repurchase agreements. 59,336. Securities lending transactions. 36,526. Mandatory reserve deposits with central banks. 106. Other. 263. Fair value adjustments from hedge accounting Total. 6,962. ( 6,962 ). 36,526 6,153 106. 156. ( 145 ). 274. 8,511. ( 7,854 ). 119,007. 1 118,350. 6,444 59,336. 6,153. Held at fair value through profit or loss. 10,167. 1. Less impairments: - specific credit risk. ( 14 ). - incurred but not reported (IBNR). ( 11 ). Due from banks. ( 14 ) ( 11 ). 118,325. 8,511. ( 7,854 ). 118,982. Interest-bearing deposits. 4,964. 292. ( 202 ). 5,054. Loans and advances. 5,613. 846. ( 229 ). 31 December 2006. Reverse repurchase agreements. 49,592. Securities lending transactions. 24,425. Mandatory reserve deposits with central banks. 101. Other. 139. Fair value adjustments from hedge accounting Total. 2,247. ( 2,247 ). 4,603. Held at fair value through profit or loss. 24,425 4,603 101. 154. ( 143 ). 1 89,438. 6,230 49,592. 150 1. 3,539. ( 2,821 ). 90,156. Less impairments: - specific credit risk - incurred but not reported (IBNR) Due from banks. ( 17 ). ( 17 ). (8) 89,413. (8) 3,539. ( 2,821 ). 90,131. The impairments for specific credit risk and incurred but not reported (IBNR) on credit commitments to banks were below EUR 1 million at 31 March 2007 and at 31 December 2006.. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. 22.

(23) Consolidated Interim Financial Statements for the first quarter of 2007. 8. │. 23. Due from customers. The composition of Due from customers is as follows: General Banking. Insurance. (incl. eliminations). Total. 5,096. 455. 5,551. Residential mortgage. 90,545. 4,150. 94,695. Consumer loans. 10,823. 9. 116,451. 2,287. 31 March 2007 Government and official institutions. Commercial loans. 10,832 ( 1,072 ). 117,666. Reverse repurchase agreements. 39,151. ( 1,020 ). 38,131. Securities lending transactions. 43,141. ( 9,020 ). 34,121. Policyholder loans Finance lease receivables Factoring. 10,207. 113. 113. 69. 10,276. 1,708. 1,708. Other loans. 592. Loans available for sale. 264. 264. Held at fair value through profit or loss. 1,333. 1,333. Fair value adjustment from hedge accounting. ( 875 ). ( 875 ). Total. 318,436. 412. 7,495. ( 55 ). ( 11,167 ). 949. 314,764. Less impairments: - specific credit risk - incurred but not reported (IBNR) Due from customers. ( 1,733 ). ( 47 ). ( 339 ). (1). 316,364. 7,447. ( 1,780 ) ( 340 ) ( 11,167 ). 312,644. 31 December 2006 5,313. 463. 5,776. Residential mortgage. 89,322. 4,228. 93,550. Consumer loans. 10,226. 172. 10,398. 110,650. 1,760. Commercial loans. ( 931 ). 111,479. Reverse repurchase agreements. 37,649. ( 1,852 ). 35,797. Securities lending transactions. 22,091. ( 3,736 ). 18,355. Policyholder loans Finance lease receivables Factoring Other loans Loans available for sale Held at fair value through profit or loss Fair value adjustment from hedge accounting Total. 10,000. 116. 116. 70. 10,070. 1,532 548. 1,532 421. ( 60 ). 909. 28. 28. 1,358. 1,358. ( 639 ) 288,078. ( 639 ) 7,230. ( 6,579 ). 288,729. Less impairments: - specific credit risk - incurred but not reported (IBNR) Due from customers. ( 1,876 ). ( 69 ). ( 1,945 ). ( 325 ) 285,877. ( 325 ) 7,161. ( 6,579 ). 286,459. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. Government and official institutions.

(24) │Consolidated Interim Financial Statements for the first quarter of 2007. The impairments on credit commitments to customers are as follows: General Banking. Insurance. (incl. eliminations). Total. 31 March 2007 - Specific credit risk - Incurred but not reported (IBNR) Total impairments. 159. 159. 82. 82. 241. 241. 150. 150. 31 December 2006 - Specific credit risk - Incurred but not reported (IBNR) Total impairments. 80. 80. 230. 230. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. 24.

(25) Consolidated Interim Financial Statements for the first quarter of 2007. 9. │. 25. Investments. The composition of Investments is as follows: General Banking. Insurance. (incl. eliminations). Total. 31 March 2007 Investments: - Held to maturity - Available for sale - Held at fair value through profit or loss - Investment property - Associates and joint ventures Total, gross. 4,478. 4,478. 121,880. 59,166. ( 306 ). 3,299. 2,373. 672. 653. 2,614. 1,445. 599. 131,755. 64,752. 180,740 6,344 3,267. ( 14 ) 352. 2,030 196,859. Impairments: - on investments available for sale - on investment property Total impairments. Total. ( 62 ). ( 230 ). (5). ( 57 ). ( 62 ). ( 67 ). ( 287 ). ( 354 ). 131,688. ( 292 ). 64,465. 352. 196,505. 127,895. 59,248. ( 391 ). 186,752. 3,535. 2,352. 713. 6,600. 605. 2,504. 1,319. 549. ( 14 ). 1,854. 137,859. 64,653. 31 December 2006 Investments: - Held to maturity - Available for sale - Held at fair value through profit or loss - Investment property - Associates and joint ventures Total, gross. 4,505. 4,505. 3,109. 308. 202,820. Impairments:. - on investment property Total impairments. Total. ( 77 ). ( 247 ). (5). ( 57 ). ( 62 ). ( 82 ). ( 304 ). ( 386 ). 137,777. 64,349. ( 324 ). 308. 202,434. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. - on investments available for sale.

(26) │Consolidated Interim Financial Statements for the first quarter of 2007. 9.1. Investments available for sale. The fair value and amortised cost of Fortis’s available for sale investments including gross unrealised gains and losses were as follows: Fair value Historical/. adjustment. Gross. Gross. amortised. from hedge. unrealised. unrealised. Fair. cost. accounting. gains. losses. values. Impairments. 31 March 2007 Treasury bills and other eligible bills. (1). 439. Government bonds. 82,318. ( 260 ). (4). 1,298. ( 802 ). 82,550. Corporate debt securities. 45,757. ( 21 ). (1). 444. ( 388 ). 45,791. Mortgage-backed securities. 11,340. (6). 26. (6). 11,354. Other asset-backed securities. 25,999. (5). (7). 80. ( 22 ). 26,045. ( 18 ). 150. (2). 343. (9). ( 247 ). 3,343. ( 66 ). 12,662. ( 15 ). 215. ( 301 ). ( 292 ). 5,556. ( 1,287 ). 180,448. 91,063. ( 281 ). (4). 1,158. ( 262 ). 91,674. Corporate debt securities. 43,913. ( 19 ). (1). 479. ( 286 ). 44,086. Mortgage-backed securities. 10,457. (6). 28. (3). 10,476. Other asset-backed securities. 25,021. (5). 25,077. Private equities and venture capital Equity securities Other investments Total. 440. 213 9,641 1,064 176,772. 1,264. 31 December 2006 Treasury bills and other eligible bills Government bonds. Private equities and venture capital Equity securities Other investments Total. 895. 895. (7). 82. ( 14 ). ( 20 ). 119. (9). 315. (5). ( 266 ). 3,324. ( 37 ). 12,661. ( 26 ). 214. ( 316 ). ( 324 ). 5,404. ( 611 ). 186,428. 225 9,645 1,056 182,275. 1,244. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. 26.

(27) Consolidated Interim Financial Statements for the first quarter of 2007. 9.2. │. 27. Net unrealised gains and losses on Available for sale investments included in equity General Banking. Insurance. (incl. eliminations). Total. 3,538. 10,694. 37. 14,269. 701. 2,845. 94. 3,640. ( 88 ). ( 239 ). 31 March 2007 Available for sale investments in equity securities and other investments: Carrying amount. Gross unrealised gains and losses - Related tax Shadow accounting. ( 225 ). - Related tax Net unrealised gains and losses. 63. ( 327 ) 117 ( 40 ). 613. 2,444. 171. 118,279. 48,242. ( 342 ). 7. 629. (7). 8. ( 211 ). ( 108 ) 23 3,228. Available for sale investments in debt securities: Carrying amount. Gross unrealised gains and losses - Related tax Shadow accounting. ( 134 ). - Related tax Net unrealised gains and losses. 166,179. 629 ( 203 ). 28. ( 106 ). 36. ( 10 ). 26. 15. 320. 11. 346. 3,403. 10,789. 28. 14,220. 821. 2,687. 104. 3,612. 31 December 2006 Available for sale investments in equity securities and other investments: Carrying amount. Gross unrealised gains and losses - Related tax. ( 100 ). Shadow accounting - Related tax Net unrealised gains and losses. ( 210 ). 1. ( 309 ). ( 234 ). 112. ( 122 ). 69. ( 38 ). 31. 721. 2,312. 179. 3,212. 124,415. 48,212. ( 419 ). 172,208. 240. 965. ( 22 ). 1,183. ( 64 ). ( 300 ). 1. ( 363 ). ( 242 ). 43. ( 199 ). Carrying amount. Gross unrealised gains and losses - Related tax Shadow accounting - Related tax Net unrealised gains and losses. 63 176. 486. ( 15 ) 7. 48 669. Available for sale investments in equity securities and other investments also include private equities and venture capital and all other investments, excluding debt securities.. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. Available for sale investments in debt securities:.

(28) │Consolidated Interim Financial Statements for the first quarter of 2007. 9.3. Investments held at fair value through profit or loss. The following table provides information about the Investments that are held at fair value and for which unrealised gains or losses are recorded through profit or loss. General Banking. Insurance. (incl. eliminations). Total. 31 March 2007 Treasury bills and other eligible bills. 76. Government bonds Corporate debt securities Mortgage-backed securities Other asset-backed securities. 63. 899. Equity securities. 147. Total investments held at fair value through profit or loss. 12. 149. 212. 147 1,878. Private equities and venture capital. Other investments. 76 12. 147 2,204. ( 253 ). 3,829. 925. 1,078. 672. 6,344. 899 6. 88. 3. 3,298. 2,374. 91. 12. 12. 62. 118. 180. 31 December 2006 Treasury bills and other eligible bills Government bonds Corporate debt securities Mortgage-backed securities Other asset-backed securities. 136 2,309. Private equities and venture capital. 812. Equity securities. 128. Other investments Total investments held at fair value through profit or loss. 136 2,214. ( 251 ). 4,272. 964. 1,098. 713. 6,600. 812 6. 88. 2. 3,535. 2,352. 90. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. 28.

(29) Consolidated Interim Financial Statements for the first quarter of 2007. 9.4. │. 29. Real estate. The fair value of Real estate, held as investment as well as for own use, of the Banking and Insurance businesses is set out below. Banking. Insurance. Total. 31 March 2007 Fair values: Investment property. 758. 4,104. 4,862. Real estate for own use. 1,828. 1,675. 3,503. Total fair value. 2,586. 5,779. 8,365. Carrying amount: Investment property. 649. 2,556. 3,205. Own use. 1,459. 1,064. 2,523. Total carrying amount. 2,108. 3,620. 5,728. 478. 2,159. 2,637. ( 599 ). ( 749 ). 1,560. 1,888. Gross unrealised gain/loss Taxation Net unrealised gain/loss (not recognised in equity). ( 150 ) 328. 31 December 2006 Fair values: Investment property. 704. 4,035. 4,739. Real estate for own use. 1,810. 1,632. 3,442. Total fair value. 2,514. 5,667. 8,181. Investment property. 600. 2,447. 3,047. Own use. 1,439. 1,080. 2,519. Total carrying amount. 2,039. 3,527. 5,566. 475. 2,140. 2,615. Gross unrealised gain/loss Taxation Net unrealised gain/loss (not recognised in equity). ( 151 ) 324. ( 593 ). ( 744 ). 1,547. 1,871. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. Carrying amount:.

(30) │Consolidated Interim Financial Statements for the first quarter of 2007. 10. Due to banks. The table below shows the components of Due to banks. General Banking. Insurance. 6,697. 390. 82,798. 615. (incl. eliminations). Total. 31 March 2007 Deposits from banks: Demand deposits Time deposits Other deposits. ( 390 ) 21. 6,697 83,434. 153. 51. (1). 203. Total deposits. 89,648. 1,056. ( 370 ). 90,334. Repurchase agreements. 70,304. 1,020. ( 1,020 ). 70,304. Securities borrowing. 34,668. 1,475. ( 1,475 ). 34,668. Advances against collateral. 12,000. 6,963. ( 6,930 ). 12,033. Held at fair value through profit or loss. 478. Other. 761. 124. ( 27 ). 858. 207,859. 10,638. ( 9,822 ). 208,675. Total due to banks. 478. 31 December 2006 Deposits from banks: Demand deposits Time deposits Other deposits Total deposits. 7,304. 667. ( 542 ). 7,429. 75,291. 567. ( 567 ). 75,291. ( 1,109 ). 82,920. 145. 55. 82,740. 1,289. 200. Repurchase agreements. 61,526. 1,869. ( 1,869 ). 61,526. Securities borrowing. 19,086. 1,000. ( 1,000 ). 19,086. Advances against collateral. 12,500. 2,247. ( 2,200 ). 12,547. Held at fair value through profit or loss. 439. Other. 870. 128. ( 35 ). 963. 177,161. 6,533. ( 6,213 ). 177,481. Total due to banks. 439. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. 30.

(31) Consolidated Interim Financial Statements for the first quarter of 2007. 11. │. 31. Due to customers. The components of Due to customers are as follows: General Banking. Insurance. (incl. eliminations). Total. 31 March 2007 Demand deposits. 81,100. Saving deposits Time deposits Other deposits. 284. 6. Total deposits. 220,450. 6. Repurchase agreements Securities borrowing Other borrowings. ( 4,303 ). 76,797. 54,292. (2). 54,290. 84,774. ( 8,164 ). 76,610. ( 12,469 ). 207,987. 47,525. 47,525. 5,319 453. Funds held under reinsurance agreements Held at fair value through profit or loss. 5,319 4. 3,057. 3,514. 1,784. 1,830. 140 46. Fair value hedge adjustments Total due to customers. 290. 140. ( 17 ) 273,793. 150. ( 7,645 ). ( 17 ) 266,298. 31 December 2006 76,127. Saving deposits. 55,720. 1. Time deposits. 74,770. 49. Other deposits. 229. 7. Total deposits. 206,846. 57. Repurchase agreements Securities borrowing Other borrowings. Total due to customers. 72,972 55,721. ( 2,826 ). 71,993. ( 5,981 ). 200,922. 236. 48,391. 48,391. 4,271. 4,271. 504. Funds held under reinsurance agreements Held at fair value through profit or loss. ( 3,155 ). 4. 3,149. 3,657. 1,840. 1,884. 133 44 260,056. 194. 133. ( 992 ). 259,258. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. Demand deposits.

(32) │Consolidated Interim Financial Statements for the first quarter of 2007. 12. Liabilities arising from insurance and investment contracts. The following table provides an overview of the Liabilities arising from insurance and investment contracts. Total. Other. Insurance. Investment. Life. Non-life. (incl.. contracts. contracts. contracts. contracts. eliminations). 36,974. 17,402. 54,376. Total. 31 March 2007 Liability for future policyholder benefits. ( 1,748 ). Claims reserves. 6,781. Unearned premiums. 2,024. Reserve for policyholder profit sharing. 148. 143. 291. Shadow accounting adjustment. 219. 72. 291. 37,341. 17,617. 54,958. 37,214. 17,617. 54,831. 36,421. 16,420. 52,841. Gross Reinsurance Net. ( 127 ). ( 127 ). 12. 52,628 6,793 2,024 291. (1) 8,804. ( 145 ). 145. ( 1,881 ). 61,881. ( 989 ) 7,815. ( 1,116 ) ( 1,881 ). 60,765. ( 1,899 ). 50,942. 31 December 2006 Liability for future policyholder benefits Claims reserves. 6,664. Unearned premiums. 1,519. Reserve for policyholder profit sharing. 162. 156. 318. Shadow accounting adjustment. 355. 104. 459. 36,938. 16,680. 53,618. 16,680. 53,503. Gross Reinsurance Net. ( 115 ) 36,823. ( 115 ). 17. 1. 8,184. 319 ( 156 ). 303. ( 2,038 ). 59,764. ( 888 ) 7,296. 6,681 1,519. ( 1,003 ) ( 2,038 ). 58,761. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. 32.

(33) Consolidated Interim Financial Statements for the first quarter of 2007. │. 33. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. Explanatory notes to the income statement.

(34) │Consolidated Interim Financial Statements for the first quarter of 2007. 13. Interest income. The breakdown of Interest income by type of product is as follows: General Banking. Insurance. (incl. eliminations). Total. 205. 23. ( 20 ). 208. First quarter 2007 Interest income on cash equivalents Interest income on due from banks. 1,943. 75. ( 136 ). 1,882. Interest income on investments. 1,396. 577. (7). 1,966. Interest income on due from customers. 3,862. 129. ( 47 ). 3,944. 12,132. 49. ( 91 ). 12,090. Interest income on derivatives held for trading Other interest income Total interest income. 761. 6. (5). 762. 20,299. 859. ( 306 ). 20,852. 161. 9. ( 18 ). 152. 1,394. 32. ( 30 ). 1,396. First quarter 2006 Interest income on cash equivalents Interest income on due from banks Interest income on investments. 1,263. 485. ( 21 ). 1,727. Interest income on due from customers. 3,453. 129. ( 43 ). 3,539. Interest income on derivatives held for trading. 9,287. 24. ( 64 ). 9,247. 568. 8. (8). 568. 16,126. 687. ( 184 ). 16,629. Other interest income Total interest income. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. 34.

(35) Consolidated Interim Financial Statements for the first quarter of 2007. 14. │. 35. Insurance premiums. The following table provides an overview of gross insurance premiums earned.. First quarter 2007. First quarter 2006. Life insurance. 3,003. 1,978. Non-life insurance. 1,287. 1,197. Eliminations Total gross earned premiums from Insurance activities Insurance premiums earned from Banking activities Eliminations Total gross earned premiums. ( 12 ) 4,278 3 ( 23 ) 4,258. ( 25 ) 3,150 3 ( 16 ) 3,137. The table below shows the details of Life insurance premiums.. First quarter 2007. First quarter 2006. Unit-linked insurance contracts Single written premiums. 204. Periodic written premiums. 135. 97. 339. 121. Group business total Single written premiums. 24. 74. 71. 248. 238. Individual business total. 322. 309. Total unit-linked insurance contracts. 661. 430. Periodic written premiums. Non unit-linked insurance contracts Single written premiums. 110. 92. Periodic written premiums. 275. 277. Group business total. 385. 369. Single written premiums. 503. 307. Periodic written premiums. 297. 296. Individual business total Total non unit-linked insurance contracts. 800. 603. 1,185. 972. 1,080. 511. Single written premiums Periodic written premiums. 77. 65. Total investment contracts with DPF. 1,157. 576. Total gross premiums Life insurance. 3,003. 1,978. Premium inflow recognised in income statement. 3,003. 1,978. Premium inflow deposit accounting Total premium inflow Life insurance. 851. 774. 3,854. 2,752. Total premium inflow Life insurance is gross premiums received by insurance companies for issued insurance and investment contracts. Premium inflow of insurance contracts and investment contracts with DPF is recognised in the income statement. Premium inflow of investment contracts without DPF, mainly unit-linked contracts, is – after deduction of fees – directly recognised as liabilities (deposit accounting). Fees are recognised as fee income in the income statement.. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. Investment contracts with DPF.

(36) │Consolidated Interim Financial Statements for the first quarter of 2007. The table below shows the details of Non-life insurance premiums for the period. Premiums for Motor, Fire and Other damage to property and other, are grouped in Property & Casualty. Accident &. Property &. Health. Casualty. Total. 686. 1,113. 1,799. First quarter 2007 Gross written premiums Change in unearned premiums, gross. ( 273 ). ( 239 ). Gross earned premiums. 413. 874. Ceded reinsurance premiums. ( 82 ). ( 132 ). Reinsurers' share of unearned premiums Net earned premiums Non-life insurance. ( 512 ) 1,287 ( 214 ). 30. 59. 89. 361. 801. 1,162. 1,613. First quarter 2006 Gross written premiums. 633. 980. ( 234 ). ( 182 ). Gross earned premiums. 399. 798. 1,197. Ceded reinsurance premiums. ( 80 ). ( 83 ). ( 163 ). 25. 19. 44. 344. 734. 1,078. Change in unearned premiums, gross. Reinsurers' share of unearned premiums Net earned premiums Non-life insurance. ( 416 ). Below is a breakdown of the Non-life gross earned premiums by reporting segment. Accident &. Property &. Health. Casualty. Total. First quarter 2007 Insurance Belgium. 96. 233. 329. Insurance Netherlands. 268. 243. 511. Insurance International. 49. 398. 447. 413. 874. 1,287. Gross earned premiums Non-life insurance. First quarter 2006 Insurance Belgium Insurance Netherlands Insurance International Gross earned premiums Non-life insurance. 94. 212. 306. 255. 242. 497. 50. 344. 394. 399. 798. 1,197. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. 36.

(37) Consolidated Interim Financial Statements for the first quarter of 2007. 15. │. 37. Realised capital gains and losses on investments. Realised capital gains and losses on investments are broken down as follows: General Banking. Insurance. (incl. eliminations). Total. First quarter 2007 Debt securities. ( 10 ). ( 56 ). Equity securities. ( 66 ). 212. 229. Real estate. 2. 16. 18. Subsidiaries, associates and joint ventures. 2 11. 11. Other Realised capital gains (losses) on investments. (7). 434. 2. 206. 200. (7). 399. ( 10 ). 318. First quarter 2006 32. ( 17 ). 208. 120. Real estate. 3. 57. Subsidiaries, associates and joint ventures. 6. Equity securities. Other Realised capital gains (losses) on investments. 15. 60 6. 4 249. 164. 4 ( 10 ). 403. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. Debt securities.

(38) │Consolidated Interim Financial Statements for the first quarter of 2007. 16. Other realised and unrealised gains and losses. Other realised and unrealised gains and losses as included in the income statement are presented below. General Banking. Insurance. (incl. eliminations). Total. 1. 319. First quarter 2007 Assets/liabilities held for trading. 334. ( 16 ). Assets and liabilities held at fair value through profit or loss. 42. (2). Hedging results. 50. 1. Other Other realised and unrealised gains and losses. ( 21 ). 51 2. 426. ( 17 ). 19. ( 18 ). 2 391. First quarter 2006 Assets/liabilities held for trading. 208. 1. ( 128 ). 81. Assets and liabilities held at fair value through profit or loss. 107. (4). 157. 260. Hedging results. 109. (1). (1). 107. 424. (4). 28. 448. Other Other realised and unrealised gains and losses. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. 38.

(39) Consolidated Interim Financial Statements for the first quarter of 2007. 17. │. 39. Fee and commission income. Fee and commission income were as follows: General Banking. Insurance. (incl. eliminations). Total. First quarter 2007 Securities. 243. Insurance, including reinsurance commissions. 105. 96. ( 77 ). 124. Asset management. 338. 10. (4). 344. Payment services. 118. Guarantees and commitment fees. 73. Other service fees. 91. Other. 243. 118 73 (4). 87. 44. (9). 35. 150. ( 94 ). 1,024. 78. 89. ( 62 ). 105. Asset management. 316. 12. (2). 326. Payment services. 111. Total fee and commission income. 968. First quarter 2006. Insurance, including reinsurance commissions. 226. Guarantees and commitment fees. 68. Other service fees. 98. Other Total fee and commission income. 897. 226. 111 68 (3). 95. 37. (4). 33. 138. ( 71 ). 964. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. Securities.

(40) │Consolidated Interim Financial Statements for the first quarter of 2007. 18. Interest expense. The following table shows the breakdown of Interest expense by product. General Banking. Insurance. (incl. eliminations). Total. Interest expenses due to banks. 2,420. 100. ( 92 ). 2,428. Interest expenses due to customers. 2,405. 3. ( 55 ). 2,353. Interest expenses on debt certificates. 1,082. (3). 1,079. First quarter 2007. Interest expenses on subordinated liabilities Interest expenses on other borrowings Interest expenses on liabilities held for trading and derivatives Interest expenses on other liabilities. 173. 18. 13. 49. 15. (8). 56. 12,467. 47. ( 92 ). 12,422. 444. 39. 19,040. 222. ( 220 ). Interest expenses due to banks. 1,912. 34. ( 27 ). 1,919. Interest expenses due to customers. 2,149. (1). 2,148. Total interest expenses. 17. 204. 500 19,042. First quarter 2006. Interest expenses on debt certificates. 715. ( 14 ). 701. Interest expenses on subordinated liabilities. 170. 22. 14. 206. Interest expenses on other borrowings. 100. 22. ( 38 ). 84. 9,510. 20. ( 72 ). 9,458. Interest expenses on liabilities held for trading and derivatives Interest expenses on other liabilities Total interest expenses. 270. 35. 14,826. 133. 18 ( 120 ). 323 14,839. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. 40.

(41) Consolidated Interim Financial Statements for the first quarter of 2007. 19. │. 41. Insurance claims and benefits. The details of Insurance claims and benefits are shown in the table below. First quarter 2007. First quarter 2006. Life insurance. 2,885. 1,946. Non-life insurance. 1,020. 823. Eliminations Total insurance claims and benefits from Insurance activities Insurance claims and benefits from Banking activities Eliminations Total insurance claims and benefits. ( 12 ) 3,893. ( 32 ) 2,737. 3 ( 47 ) 3,849. ( 41 ) 2,696. Details of Life insurance claims and benefits, net of reinsurance, are shown below. First quarter 2007. First quarter 2006. Benefits and surrenders, gross. 1,259. 1,197. Change in liabilities arising from insurance and investment contracts, gross. 1,603. 712. Ceded reinsurance premiums Total Life insurance claims and benefits, gross Reinsurers' share of claims and benefits Total Life insurance claims and benefits, net. 23. 37. 2,885. 1,946. ( 19 ) 2,866. (9) 1,937. Details of Non-life insurance claims and benefits, net of reinsurance, are shown in the following table. First quarter 2006. Claims paid, gross. 767. Change in liabilities arising from insurance contracts, gross. 128. 54. Ceded reinsurance premiums. 214. 168. ( 89 ). ( 44 ). Reinsurers' share of unearned premiums Total Non-life insurance claims and benefits, gross. 1,020. 645. 823. Reinsurers' share of change in liabilities. ( 57 ). (8). Reinsurers' share of claims paid. ( 32 ). ( 30 ). Total Non-life insurance claims and benefits, net. 931. 785. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. First quarter 2007.

(42) │Consolidated Interim Financial Statements for the first quarter of 2007. 20. Change in impairments. Change in impairments were as follows: General Banking. Insurance. (incl. eliminations). Total. First quarter 2007 Due from banks Due from customers Credit commitments - customers. 3 15. 3 (1). 7. 14 7. Investments in debt securities Investments in equity securities and other. 1. 1. Investment property. 1. 1. Reinsurance and other receivables. 5. 5. 26. 6. 32. 9. 3. Accrued interest and other assets Total change in impairments. 1. 1. First quarter 2006 Due from banks Due from customers Credit commitments - customers. (2). 12 (2). Investments in debt securities. 1. 1. Investments in equity securities and other. 2. 2. Investment property. 2. 2. Reinsurance and other receivables. 1. Accrued interest and other assets. 2. Total change in impairments. 9. 1 2. 9. 18. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. 42.

(43) Consolidated Interim Financial Statements for the first quarter of 2007. │. 43. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. Explanatory note on segment reporting.

(44) │Consolidated Interim Financial Statements for the first quarter of 2007. 21 21.1. Information on segments General information. Fortis is an international financial services provider whose core activities are Banking and Insurance. The primary format for segment reporting is based on businesses. In October 2006 Fortis announced a new organisational structure to support the evolution of its growth strategy. The new structure was implemented on 1 January 2007. The 2006 figures have been changed for comparison purposes. Fortis is now organised on a world-wide basis into three businesses which are further subdivided into business segments (for details see below): • • •. Retail Banking Merchant & Private Banking Insurance.. Activities not related to the Banking and Insurance businesses and elimination differences are reported separately. Fortis’s segment reporting reflects the full economic contribution of the businesses of Fortis. The aim is direct allocation to the businesses of all balance sheet and income statement items for which the businesses have full managerial responsibility. Segment information is prepared based on the same accounting policies as those used in preparing and presenting Fortis’s Consolidated Financial Statements (as described in note 1) and by applying appropriate allocation rules. Transactions between the different businesses are executed under standard commercial terms and conditions.. 21.2. Banking. Retail Banking Retail Banking consists of the business segments Network and Asset Management. Retail Banking Network Retail Banking Network offers financial services to retail customers including individuals, self-employed people, members of the independent professions and small businesses, through the international Retail Banking business. Fortis operates through a variety of distributions channels in the Benelux countries to deliver service and advice on every aspect of individual banking, saving, investment, credit and insurance. Turkey is served by a comprehensive and tailored product offering. In Germany the focus is on credit cards and consumer lending. Affluent customers and small businesses are the target groups of Fortis Bank Poland, which is also rolling out a consumer finance business in this market. In Ireland a financial services joint venture with An Post has been established. Retail Banking Asset Management Fortis carries out asset management activities, mainly through Fortis Investments, acting as a multi-centre, multi-product asset management firm. Based in Europe, Fortis Investments has a global presence with both sales offices and some key investment centres in Europe, the US and Asia. Activities range from institutional portfolio management to the development and management of mutual funds.. WorldReginfo - bc32d6f0-ea10-431f-b0c3-72d86ec9902c. 44.