Financial and Operational Review Brussels/Utrecht, 8 March 2007

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(1)Financial and Operational Review. Full-year 2006 results. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. Brussels/Utrecht, 8 March 2007.

(2) WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. . [This page has intentionally been left blank].

(3) . 1. 1.1. 1.2. 1.3. 1.4.. Fortis Income Statement Analysis Strategic and operational developments Solvency Economic capital and RARORAC. 5 5 6 8 11. 2. 2.1. 2.2. 2.3. 2.4.. Banking Retail Banking Merchant Banking Commercial & Private Banking Other Banking. 14 19 24 29 34. 3. 3.1. 3.2. 3.3.. Insurance Insurance Belgium Insurance Netherlands Insurance International. 37 43 49 55. 4.. General (including eliminations). 62. Annexes - Quarterly Figures. 65. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. Contents.

(4) . Fortis Commercial focus and entrepreneurship drive Fortis’s net profit to record EUR 4.4 billion. New ambitious targets and 21% dividend increase affirm confidence in sustainable growth.. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. Brussels/Utrecht, 8 March 2007.

(5) . 1. Fortis Income Statement Key figures Fortis. Net profit attributable to shareholders before results on divestments. 4,351. FY 2005 3,498. Change 24%. Q4 2006 749. Q3 2006 884. Change (15%). - Banking. 3,149. 2,434. 29%. 505. 593. (15%). - Insurance. 1,420. 1,225. 16%. 333. 367. (9%). (218). (161). 36%. (89). (76). 18%. - . 443. -. 443. - General (incl eliminations). Results on divestments - Assurant (General). Net profit attributable to shareholders. 4,351. 3,941. 10%. 749. 884. (15%). EPS (in EUR). 3.38. 3.07. 10%. 0.58. 0.69. (16%). - Before results on divestments Net equity per share. Return on equity (in %). (1). 3.38. 2.73. 24%. 0.58. 0.69. (16%). 15.98. 14.75. 8%. 15.98. 15.41. 4%. 22.0%. 20.4%. 1.1. Analysis Net profit Fortis. Net profit Banking. Net profit before results on divestments in 2006 grew 24% to EUR 4,351 million. Results improved across Banking and Insurance, while General reported lower results. Net profit for 2006 went up 10% on the previous year, which benefited from the divestment of Assurant (EUR 443 million).. Full-year net profit at Banking clocked in at EUR 3,149 million, a substantial increase of 29% or EUR 715 million compared with year-end 2005. This outstanding performance was achieved thanks to buoyant commercial activity, higher treasury and financial markets results, lower changes in. (1) R olling average based on last four quarters, excluding results on divestments. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. FY 2006.

(6) . Fourth-quarter net profit came to EUR 505 million, down 15% on the previous quarter, as increased operating expenses and higher changes in impairments offset 9% revenue growth. Revenue momentum was sustained in the fourth quarter, with top-line growth of 9% driven by higher fees and commissions as well as treasury and financial market results, while net interest income declined 3%. Fourth-quarter operating expenses contained several one-off elements such as a EUR 40 million early departure provision, while investments in growth accelerated at the end of the year. Net profit Insurance Net profit for 2006 increased 16% to EUR 1,420 million, with Life advancing 24% to EUR 924 million and Non-Life rising 4% to EUR 496 million. At Life, higher investment income and higher capital gains, partly offset by the result-related commission paid to Retail Banking in Belgium, fuelled the 11% increase in pre-tax results. A lower effective tax rate owing to a more favourable capital gains mix also contributed to the rise in Life net profit. Non-Life technical results advanced 7%, chiefly owing to the improved combined ratio. Higher technical results in the Dutch Accident & Health market and better results at Motor compensated for lower results at Fire. Net profit at Non-Life went up 4%, in line with higher technical results. Fourth-quarter net profit came down 9% to EUR 333 million. Higher results at Life were more than offset by lower results at Non-Life, due to seasonality factors. Net profit General The unusually high net profit for 2005 reflects the positive impact of the divestment of Assurant in the first quarter of that year. Excluding this transaction, the negative result increased EUR 57 million to EUR 218 million compared with 2005. The net decline was the result of several offsetting elements. Positive contributors were EUR 91 million – EUR 13 million of which in the fourth quarter – in surrender penalties received from group entities owing to early loan repayments and lower eliminations of treasury share revenues.. Negative elements were higher financing charges due to the acquisition of Fortis Bank Insurance from Fortis Bank Belgium in the context of the Fortis Insurance Belgium merger, a lower positive change in the fair value of the mandatory exchangeable bond (MEB) convertible into Assurant shares (EUR 52 million compared with EUR 76 million last year), and higher costs related to the promotion of the Fortis brand. Net profit for the fourth quarter came down EUR 13 million on the third quarter as a result of lower changes in the fair value of the MEB and higher branding costs. Lower eliminations of treasury share revenues, a loan surrender penalty and a lower tax rate partly compensated for this decline.. 1.2. Strategic and operational developments: Fortis raises long-term financial targets Successful implementation in 2004-06 Fortis has met or is on track to meeting all its targets for the period 2004-06, achieving in two years the net profit target for 2009: • For 2004-06: compound annual growth rate (CAGR) of 34%, compared to a 10% target for the 2004-09 period • An average operating leverage well above the 250 basispoint target • Excellent growth (30% CAGR) in Benelux, fuelled by strong customer focus and increased efficiency • Profit generated outside Benelux doubled from EUR 0.4 billion in 2004 to EUR 0.9 billion in 2006, representing a larger share of a growing profit: from 15% in 2004 to 21% in 2006 A new performance culture was introduced in this period, with intense leadership training for the top 3,000 managers, the introduction of behavioural values (‘Fortiomas’) for all staff, and internationalisation of the workforce: one out of three employees is currently based outside the Benelux countries. Finally, Fortis enhanced its operating model by introducing a new organisational structure featuring three businesses and five support functions.. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. impairments and a lower effective tax rate. Expenses rose mainly due to accelerated investments in growth, new hiring and the consolidation of acquisitions..

(7) . The excellent results over the past two years, combined with the new organisational structure, give Fortis the confidence to reaffirm and accelerate its strategy of becoming a leading European provider of high-quality financial services, with a strong customer focus, pursuing growth in the enlarged Europe and selectively in Asia and North America. Fortis's strategy will centre on the following three growth levers: Perform², Grow² and Expand². 1. ‘Perform²’: in its established markets and segments, Fortis will protect and strengthen its leadership positions, building scale and client relevance, increasing cross-selling and enhancing efficiency. Revenue and cost synergies – increased return on the investment portfolio, positive effects from the new Insurance and Merchant & Private Banking businesses, and Fortis-wide cost management – will result in EUR 400 million (EUR 550 million pre-tax) of additional net profit growth. This lever should generate two-thirds of total net profit growth by 2011. Perform² builds on the enhanced operating model: Fortis will bolster its strong positions in established markets. • Retail Banking is introducing a more differentiated crossborder distribution organisation focused on three client segments: Mass Retail, Affluent and Professionals & Small Enterprises. It will invest EUR 350 million in a harmonised cross-border core banking platform and will raise customer satisfaction through services tailored to each segment. The Personal Banking approach, for instance, will be accelerated by adding 140 Personal Bankers in 2007. • The new Merchant & Private Banking (MPB) organisation will optimise client service and streamline international expansion through coordination among business lines, resulting in integration synergies. Continued investment in IT, recruitment and development will reinforce market leadership in the Benelux countries and in specific sectors like shipping and commodities.. • Insurance is building a new, strengthened organisation, including new common functions to ensure the sharing of best practices and implementation of a single insurance strategy. Strategic initiatives will be developed across the core regions (Netherlands, Belgium, Europe and Asia) in order to leverage skills globally, while creating scale locally. Further investments will be made in multi-channel distribution, product/market innovation, operational excellence and enhanced service levels. 2. ‘Grow²’: invest in growth engines – i.e. selected core competencies – to enter new markets, launch new business activities and unlock new value chains. The target for these activities is a CAGR of at least 15% for the period 2006–11. This lever entails propelling our growth rate to a higher level and represents one-third of organic growth to 2011. Businesses will roll out proven models to new markets and segments. • Retail Banking, for example, will launch its Personal Banking and Banking for Professionals & Small Enterprises in Poland and Turkey. Further investments will be made in the continued international expansion of consumer finance - primarily in Turkey, Poland and Germany - and in the rollout of the postal banking model in Ireland and selective new markets. Finally, in asset gathering, Fortis Investments will further enhance its product offering and expand geographically (including Turkey, South-Korea, Japan and Indonesia). • Acceleration in Merchant & Private Banking (MPB) will come from building scale in selected countries, such as Turkey and France, seizing market opportunities in Poland and rolling out MPB capabilities in Asia. The business will compete as a global integrated player in the ECT (Energy, Commodities & Transportation) sectors and will capture opportunities in structured capital markets products and in Clearing, Funds & Custody. It will also leverage the ‘Enterprise & Entrepreneur’ model by extending the Private Banking offer to corporate clients.. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. Fortis²: Raising the bar As announced in August 2006, Fortis has evaluated the longterm financial targets it formulated in January 2005..

(8) . 3. ‘Expand²’: continue to pursue external growth by further making selective add-on acquisitions, within strict investment criteria. Acquisitions should fit from a strategic, resource and financial point of view. For 2004–11, this translates into the following long-term financial targets: • Compound annual growth rate (CAGR) of net profit per share of at least 15%; this leads to a commitment of a 12% CAGR based on the 2006 cycle-neutral profit base of EUR 3.8 billion� (1) • Return on Equity of 18.5% and Risk-Adjusted Return on Risk-Adjusted Capital (RARORAC) of 18.5% (compared to the previous target of 15%) • Average operating leverage of at least 250 basis points • 30% of net profit to come from outside Benelux by 2009 • Cash dividend at least stable or growing in line with longterm EPS growth. 1.3. Solvency Shareholders’ equity increased by EUR 1.7 billion compared with the end of last year. The main drivers behind the rise were the retained profit of EUR 2.8 billion and the negative. (1) 2006 net profit of EUR 4.35 billion comes to cycle-neutral EUR 3.8 billion when substituting impairments on loans by their expected loss and adjusting the treasury and financial markets income at Merchant Banking to EUR 900 million, due to exceptional gains in trading and private equity. revaluation of Available-For-Sale investments of EUR 0.9 billion. The revaluation of Available-For-Sale securities comprises a positive revaluation of equities (EUR 1.2 billion) and a negative revaluation of the bond portfolio (EUR 2.1 billion), due to the rise in interest rates compared with the end of 2005. In view of the legal merger between FB Insurance and Fortis AG, FB Insurance was sold by Fortis Bank to Fortis Insurance. This transfer drove up negative equity in the General sector and produced a similar increase in the bank’s equity. Overall, there was no impact on Fortis’s equity. Fortis’s net core capital stood at EUR 27.1 billion, or 126% of the internal minimum requirement floor. Net core capital excludes any unrealised capital gains on the bond portfolio, goodwill and other intangible assets and any elements of embedded value, but includes unrealised gains on real estate and hybrid Tier 1 loans. Compared with year-end 2005, net core capital advanced EUR 4.0 billion as a result of retained profit (EUR 2.8 billion), the revaluation of equities (EUR 1.2 billion), the issue of a new hybrid loan of EUR 0.5 billion, adverse movements in currency translation reserves, and the reversal of non-trade derivatives and hedge accounting. The Tier 1 ratio of Fortis Bank decreased from 7.4% at year-end 2005 (calculated based on Belgian accounting principles) to 7.1% at the end of December 2006 (based on IFRS). The positive impact of retained profit after dividends, the transfer of FB Insurance to Fortis Insurance and the transfer of preference shares in Fortis Insurance to Fortis Utrecht were more than offset by the impact of the implementation of IFRS, the 13% rise in risk-weighted commitments (driven by the 14% underlying increase in loans to customers and growth of committed credit lines to customers) and the smaller proportion of reverse repurchase agreements in the mix of loans to customers. The increase in risk-bearing capital can be attributed to the profit for the year less dividends paid by the bank, the issue of new subordinated loans and the transfer of FB Insurance.. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. • Insurance, which in 2006 entered five new markets (Germany, Ukraine, Russia, Turkey and India), will leverage its extensive knowledge of insurance products and distribution models. This will be done in a number of ways, including expanding the bancassurance model and, in the Netherlands, combining the strengthened broker distribution with the extension of other distribution channels. Insurance will also transfer innovative products and proven concepts - such as the Portuguese unit-linked proposition, Belgian multi-product solutions and UK affinity success - to other markets. In Asia, finally, the business will build on strong forecast regional growth to further expand its product portfolio and distribution channels..

(9) . in EUR million. 31 December 2006. 31 December 2005. 20,644. 18,929. 907. 727. Hybrid loans. 4,640. 4,080. Revaluation real estate to fair value. 1,833. 1,678. (672). (2,582). 491. 696. (1,017). (716). 307. 314. Net core capital. 27,133. 23,126. Solvency requirements floor. 21,547. 19,300. 126%. 120%. 27,008. 24,238. 26,664. 22,210. 240,105. 212,095. 7.1%. 7.4%. 11.1%. 10.5%. Fortis Shareholders’ equity Minority interests. Revaluation of bonds, net of shadow accounting Reversal non trade derivatives and hedge accounting Goodwill participations Treasury shares. - Net Core Capital as % of Floor. Solvency requirements cap. Bank Risk-bearing capital Risk-weighted commitments Tier 1 ratio (in %). (1). Total capital ratio (in %). (1) 2005 under BGAAP. (1). WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. Solvency.

(10) 10. New capital model Fortis has communicated on its solvency using the NCC/cap/ floor model since 1998. Fortis’s net core capital remained between the cap and the floor throughout this period, thereby balancing the interests of shareholders and bondholders. Although the cap/floor model has served its purpose well, it has some limitations that have prompted the introduction of a new model based on target capital:. Building a target model To overcome the limitations of the cap/floor model, Fortis has decided to introduce a new model based on target capital. The new model provides greater insight into the specific situation at Banking and at Insurance, gives guidance regarding future capital management action, is in line with market practice and is consistent with the regulators' view on capital.. • A Fortis Bank capital target set at a Tier I ratio of 7%, including 1% hybrid capital. • Clarity on excess capital: net core capital surplus to the floor does not equal excess capital.. • A Fortis Insurance capital target set at 225% of the regulatory minimum, which includes 50% of hybrid capital. • Guidance: as long as the net core capital remains between the cap and the floor, the model does not provide guidance on the direction of capital management.. • A Group leverage target (at General) set at 15% of the total core equity of Banking plus the core equity of Insurance. • Market practice: a capital model based on target capital is more common in the market. • Assessment of available capital: the introduction of IFRS has changed the regulators' definition of net core capital. Regulators now take a more restricted view of available capital than they did previously. Fortis's timing in launching its new target capital model is appropriate, as most regulators have now reach conclusions on how IFRS figures should be used in the computation of available capital.. The three components together result in a group core equity target. The multiple compared with regulatory capital targets is based on extensive analysis and set at a level that satisfies the requirements of both regulatory supervisors and rating agencies, assuming AA-range ratings for core operations. Internal risk views based on stress scenarios have also been taken into account in these capital targets, which are based on the current risk profile of Fortis’s operations. A change in risk profile could result in a change of targets. Assuming optimum financing of the Banking and Insurance sectors, taking into account the 15% group leverage, these targets combine to form the one group target for core equity. This model provides Fortis with a new and strict framework for managing its capital. Should actual core equity differ materially from the target, Fortis will take the necessary measures to bring it back in line within a reasonable timeframe.. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. The new model consists of three components: • Granularity: the cap/floor model only provides a groupwide view and does not give specific insight into capital management at Banking or Insurance..

(11) 11. The Fortis capital model and the targets have already been presented to the regulators and rating agencies. The Fortis capital model will replace the NCC/cap/floor model in future communications on solvency and capital as of the first quarter of 2007. Basel II Fortis is well on track to compliance with Basel II. By choosing the most advanced approaches, Fortis shows its commitment towards a superior Risk Management. It has opted to apply the Advanced Internal Ratings Based Approach (AIRBA) to credit risk and will continue to apply the Value-at-Risk Approach (VaR) to market risk. Fortis will take an Advanced Measurement Approach (AMA) to the new layer of operational risk, which will introduce additional capital requirements compared to Basel I. Fortis is confident it will achieve the maximum level of capital relief allowed by the regulators, which is limited to 10% in 2008 and an additional 10% in 2009, compared to Basel I requirements.. 1.4. Economic capital and RARORAC Background Economic capital is a consistent and easily compared measure applicable to all risk types and businesses at Fortis. It serves as an indicator of Value-at-Risk (VaR) with a horizon of one year and a confidence interval of 99.97%, and therefore represents extreme events. The methodology is refined and improved on an ongoing basis. Economic capital (ECAP) is calculated separately for each risk type per business. We then determine the total economic capital at business level, at banking/insurance level and for Fortis as a whole. The figures so obtained are used for a range of internal monitoring and management purposes. Since it is extremely unlikely that all risks will become reality at the same time, an allowance is made for diversification benefits when adding up the individual risks. The result is a figure for total economic capital at group level that is significantly lower than the sum of the individual risks. The Risk-Adjusted Return on Risk-Adjusted Capital (RARORAC) is a performance yardstick that establishes a consistent relationship between the risks and returns of Fortis’s various activities. RARORAC is calculated by dividing the risk-weighted return by the economic capital after the incorporation of diversification benefits. The risk-adjusted return is itself based on net profit, with provisions for credit risks being replaced by cycle-neutral expected losses.. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. As of 31 December 2006, the difference between actual and target capital under the new Fortis capital model was comparable to the capital surplus above the midpoint between the floor and the cap under the old capital model. The group core equity target at 31 December 2006 was EUR 17.7 billion, while the available core equity was EUR 19.5 billion. The positive difference of EUR 1.8 billion under the new model compares with the surplus above the midpoint between the floor and the cap of EUR 2.9 billion. The disparity between the two models can be attributed to the deduction of the final 2006 dividend to be paid in June 2007, which formed part of net core capital under the old model..

(12) 12. Movements in 2006 in EUR million RARORAC. FY 2006. FY 2005. FY 2006. FY 2005. Retail Banking. 3.9. 3.3. 27%. 26%. Merchant Banking. 4.8. 3.7. 22%. 22%. Commercial & Private Banking. 2.7. 2.5. 23%. 18%. Other Banking. 1.2. 1.4. -. -. Total Banking. 12.6. 10.9. 22%. 20%. Insurance Belgium. 1.5. 1.5. 35%. 30%. Insurance Netherlands. 1.6. 1.9. 36%. 27%. Insurance International. 0.6. 0.6. 33%. 35%. Total Insurance. 3.7. 4.1. 35%. 30%. General. 0.1. 0.1. -. -. 16.4. 15.1. 24%. 22%. Total Fortis. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. ECAP.

(13) 13. Total ECAP for Total Fortis rose by 9%, from EUR 15.1 billion to EUR 16.4 billion. The increase was generated by Banking and was partly offset by a decrease at Insurance. Healthy commercial developments across the board, and especially at Merchant Banking and Retail Banking, fuelled the increase at Banking. The decline at Insurance resulted from a lower ALM risk at Fortis Insurance Netherlands, mainly due to a higher yield environment and more advantageous diversification benefits. RARORAC at Retail Banking improved slightly to 27% in 2006, thanks to the fact that it maintained a strong risk-return profile in 2006 despite investing heavily in growth. The sharp rise in income was largely counterbalanced by an increase in economic capital. At 22% in 2006, RARORAC at Merchant Banking was stable compared to 2005. This demonstrates Merchant Banking's ability to sustain high, controlled growth in 2006: the sharp rise in net profit (up 28 % to EUR 1.15 billion in 2006) was in line with the growth of the risk profile (up 32% to EUR 4.8 billion). This growth was mainly caused by the increase in credit risk ECAP for Corporate & Institutional Banking and Specialised Finance (which is in line with the growing corporate portfolio) and to a lesser extent for Global Markets (counterparty risk on OTC derivatives, including Securities Borrowing & Lending activities).. RARORAC at Commercial & Private Banking went up by 5% to 23% in 2006. This increase was mainly because enhanced profitability at Commercial & Private Banking amply compensated for the growth in economic capital, which can be entirely attributed to the rise in the business contribution to ALM economic capital. Whereas ECAP has remained stable at Fortis Insurance Belgium, the rise in RARORAC from 30% to 35% can chiefly be attributed to the 13% increase in the net profit of Fortis Insurance Belgium, due to higher capital gains. RARORAC at Fortis Insurance Netherlands grew from 27% to 36%. This sharp rise was generated by higher net profit, mainly due to improved technical results at Non-life and a decrease in ECAP caused by a higher yield curve and more advantageous diversification benefits. RARORAC at Fortis Insurance International remained very high at 33%, driven by substantially higher profit in all countries as a result of various growth initiatives. The slight decline in RARORAC in 2006 compared to 2005 was due to the more refined method of calculating ALM risks that was introduced in 2006.. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. RARORAC for Total Fortis further increased from 22% in 2005 to 24% in 2006. All businesses reported a RARORAC above the 15% long-term hurdle. Our new capital management model has now raised this hurdle to 18.5%..

(14) 14. 2. Banking Income Statement. FY 2006. FY 2005. Change. Q4 2006. Q3 2006. Change. Net interest income. 5,086. 4,653. 9%. 1,166. 1,277. (9%). Net fee and commission income. 2,764. 2,290. 21%. 696. 657. 6%. 576. 712. (19%). 169. 142. 19%. 1,339. 805. 66%. 279. 54. *. Dividend, share in result of associates and joint ventures and other investment income. 287. 259. 11%. 61. 64. (5%). Other income. 272. 272. 0%. 75. 52. 44%. 10,324. 8,991. 15%. 2,446. 2,246. 9%. (158). (209). (24%). (90). (18). *. Net revenues. 10,166. 8,782. 16%. 2,356. 2,228. 6%. Staff expenses. (3,625). (3,370). 8%. (956). (920). 4%. Other expenses. (2,690). (2,233). 20%. (803). (629). 28%. Total expenses. (6,315). (5,603). 13%. (1,759). (1,549). 14%. 3,851. 3,179. 21%. 597. 679. (12%). (692). (734). (6%). (91). (83). 10%. 3,159. 2,445. 29%. 506. 596. (15%). 10. 11. (9%). 1. 3. (67%). 3,149. 2,434. 29%. 505. 593. (15%). Realised capital gains (losses) on investments Other realised and unrealised gains and losses. Total income, net of interest expense Change in impairments. Profit before taxation Income tax expense Net profit for the period Net profit attributable to minority interests Net profit attributable to shareholders. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. in EUR million.

(15) 15. Accounting- vs. Activity-based in EUR million FY 2006. FY 2005. Change. Q4 2006. Q3 2006. Change. 5,086. 4,653. 9%. 1,166. 1,277. (9%). 576. 712. (19%). 169. 142. 19%. Other (un)realised gains and losses. 1,339. 805. 66%. 279. 54. *. Total. 7,001. 6,170. 13%. 1,614. 1,473. 10%. 5,087. 4,573. 11%. 1,264. 1,305. (3%). 530. 497. 7%. 168. 102. 65%. Treasury and financial markets. 1,384. 1,100. 26%. 182. 66. *. Total. 7,001. 6,170. 13%. 1,614. 1,473. 10%. FY 2006. FY 2005. Change. Q4 2006. Q3 2006. Change. Cost / Income ratio. 61.2%. 62.3%. 71.9%. 69.0%. Operating leverage. 2.1%. 221,633. 218,912. 15. 3. Accounting-based Net interest income Realised capital gains (losses) on investments. Net interest income on interest-margin products Capital gains on investment portfolio. Key Performance Indicators. Credit RWCs (in EUR million) - Credit loss ratio (basis points). (1). 221,633. 198,241. 12%. 1%. 7. 10. 288,078. 280,233. 3%. 288,078. 293,669. (2%). 5,934. 6,371. (7%). 5,934. 6,001. (1%). 2.1%. 2.3%. 2.1%. 2.0%. Credit Quality (in EUR million) - Total loans to customers - Non-performing loans As a % of total loans to customers. (1) As a % of average Credit RWCs. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. Activity-based.

(16) 16. Analysis. Full-year net profit at Banking clocked in at EUR 3,149 million, a substantial increase of 29% or EUR 715 million compared with 2005. This outstanding performance was achieved thanks to buoyant commercial activity, higher treasury and financial markets results, lower changes in impairments and a lower effective tax rate. Expenses rose mainly due to accelerated investments in growth, new hires and the consolidation of acquisitions. Fourth-quarter net profit amounted to EUR 505 million, down 15% on the previous quarter, as increased operating expenses and higher changes in impairments offset 9% revenue growth. Fourth-quarter operating expenses contained several one-off elements such as a EUR 40 million early departure provision, while investments in growth accelerated at the end of the year. Around half of the rise in expenses compared with the third quarter was due to permanent factors. Impairments peaked in the fourth quarter, but credit quality remained strong as illustrated by a slightly lower level of non-performing loans. Revenue momentum was sustained in the fourth quarter, with top-line growth of 9% driven by higher fees and commissions as well as treasury and financial market results, while net interest income declined on lower ALM income. Total income for the full year advanced to EUR 10,324 million, up 15% from EUR 8,991 million at year-end 2005, reflecting ongoing robust customer activity, a substantially higher contribution from treasury and financial markets and the inclusion of acquisitions. Excluding the latter, organic yearon-year growth was still substantial at 12%.. The upward trend witnessed in the first nine months of the year continued on into the final quarter. Total income hit EUR 2,446 million, up 9% on the third quarter, fuelled by an upsurge in net commissions and fees, stronger treasury and financial markets income and higher realised capital gains. Net interest income was lower due to a number of one-off benefits in the third quarter and the impact of a flattened yield curve. Net interest income on interest-margin products rreached EUR 5,087 million for full-year 2006, up 11% on 2005, or 7% adjusting for the impact of acquisitions. Growth was generated by vigorous commercial activity and better ALM results. Significant volume growth was partly offset by contracting margins. Underlying loan volume (excluding reverse repurchase agreements) rose 14% compared with year-end 2005. Net interest income from ALM benefited from higher short-term interest rates, higher retained earnings and a slightly higher duration of equity. Total Loans to customers came to EUR 288 billion, up 3% from year-end 2005. Reverse repurchase agreements with customers waned, masking solid underlying loan growth of 14%. This rise in loans can be explained by expansion of the residential mortgages portfolio at Retail Banking (up 15% on year-end 2005 to EUR 57 billion), Commercial & Private Banking loans (up 14% to EUR 62 billion) and Corporate & Institutional Banking and Specialised Finance loans (up 37% to EUR 49 billion). In line with the strong underlying loan volume growth, Credit risk-weighted commitments (CRWCs) came to EUR 222 billion at the end of the year, up 12% on year-end 2005. Total risk-weighted commitments, including market risk-weighted commitments of EUR 18 billion, were up 13% on 2005, reaching EUR 240 billion at the end of 2006. Fourth-quarter net interest income from interest-margin products declined to EUR 1,264 million, down 3% on the previous quarter. Slightly higher net interest income at all business lines was more than offset by lower ALM results. More than half of this decline was the result of one-off positive. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. • All business lines contribute to 29% rise in Banking net profit to EUR 3,149 million • Total income up 15% to EUR 10.3 billion; 74% of increase stems from net interest income and net commissions • Funds under management climb to EUR 191 billion, up 16%, mainly on net inflow of EUR 17 billion • Organic operating leverage reaches 370 basis points • Benign credit environment leads to exceptionally low credit loss ratio of 7 basis points.

(17) 17. Funds under management ended the year at EUR 191 billion, 16% higher compared with year-end 2005. Net inflow hit a record EUR 17 billion for the year, EUR 7 billion of which came in at Private Banking and EUR 10 billion at Fortis Investments. Growth at Private Banking was due chiefly to network expansion and effective cross-selling to Commercial Banking and Trust customers. Fortis Investments' substantial net inflows were the result of its strong focus on the diversification of distribution channels, with major successes among external institutional customers in countries like Italy, Spain, France and Germany. Net commissions and fees amounted to EUR 2,764 million, up 21% on 2005. Acquisitions accounted for 4% of the increase. Banking benefited from a new EUR 83 million result-related commission from Fortis Insurance Belgium on sales of insurance products through the bank channel. Even excluding this factor, though, net commissions and fees went up organically by 13%. This healthy growth was achieved thanks to fees related to assets under management (up 18%) and security transactions (up 24%). Fees for assets under management benefited from high net inflows and higher asset values, resulting in a substantially higher fee base. Growth of securities-related fees was recorded on the back of much more vigorous activity at the exchanges. Fourth-quarter net commissions and fees recovered to EUR 696 million owing to increasingly robust market activity, lifting securities-related fees following the seasonal slowdown in the third quarter. Asset management fees increased on growth of assets under management generated by high net intake and favourable market developments. Capital gains on the investment portfolio came to EUR 530 million in 2006, rising EUR 33 million or 7% from the level achieved in 2005. Realised capital gains in 2006 were primarily equity-based and event-driven, bringing down the overall effective tax rate, while the 2005 gains were essentially bond-driven.. The EUR 168 million in capital gains realised on the investment portfolio in the fourth quarter is mainly attributable to the sale of Banksys shares, combined with additional gains on both the equity and the bond investment portfolios. Treasury and financial markets revenues rose sharply by 26% to EUR 1,384 million for full-year 2006. This activity benefited from robust trading results, higher market values of financial market instruments and private equity shareholdings, and seasonally strong global securities-financing activities in the second quarter. A EUR 180 million gain, posted as a result of a non-qualifying hedge on the part of the mortgage portfolio, was largely neutralised by one-off surrender penalty charges of EUR 91 million on early repayment of intercompany loans and negative revaluation of derivative positions. These penalty charges were recorded as benefits for the General segment, neutralising the impact at Fortis level. Fourth-quarter treasury and financial markets revenues surged to EUR 182 million from EUR 66 million in the third quarter. Changes in fair value of the non-qualifying hedge in the third and fourth quarters largely explain this increase. A gain of EUR 34 million was posted in the fourth quarter, while a EUR 74 million loss was booked in the previous quarter. Merchant Banking’s good fourth-quarter trading performance combined with solid customer flows more than offset the negative impact of higher short-term interest rates on Global Markets funding and the decline in market value of the credit hedging portfolio as a result of tighter credit spreads. Other income for the full year came to EUR 272 million, unchanged from 2005. While 2005 benefited from an exceptional reimbursement from the Belgian Deposit Protection Fund, 2006 was impacted favourably by higher income on expenses recharged to Insurance. The benign credit environment resulted in very low changes in impairments in 2005 and 2006, mainly due to net releases posted by Merchant Banking in both years. Impairment levels at Commercial Banking improved thanks to the strong underlying credit quality while Other Banking benefited from provision releases for Belgolaise. The change in impairments for Retail Banking increased year-on-year, reflecting higher credit provisions related to the integration of the acquisitions. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. factors booked in the third quarter, the remainder can be attributed to the impact of the flattening yield curve. Underlying loans to customers (excluding reverse repo's) advanced 1% on the previous quarter, in line with 1% growth of credit riskweighted commitments to EUR 222 billion at year-end 2006..

(18) 18. Changes in impairments rose to EUR 90 million in the fourth quarter from a very low EUR 18 million in the third quarter. This increase stems from much lower releases at Merchant Banking and additional loan provisioning at Commercial Banking for specific accounts in Belgium and the Netherlands. The annualised credit loss ratio for the year (expressed as a percentage of average credit risk-weighted commitments) stood at 7 basis points, in line with expectations and below the 10 basis points posted for full-year 2005. The 2006 credit loss ratio is considerably lower than the expected cross-cycle credit loss ratio of around 25 basis points. Total expenses ended up at EUR 6,315 million for the full year, up EUR 712 million or 13% on 2005. Organic year-onyear growth amounted to only 8%, resulting in an organic operating leverage of 370 basis points. The full year cost/income ratio improved by 1% to 61.2%. Excluding acquisitions, the cost /income ratio stood at 59.8% in 2006, a 2% improvement on 2005. Staff expenses rose 8% to EUR 3,625 million for full-year 2006. A EUR 135 million restructuring charge related to the upgrade of the quality of management was taken in 2005, while EUR 40 million in early departure costs was posted in the fourth quarter of this year. Adjusting both years for these exceptional provisions, staff expenses rose by 11% year-onyear partly due to acquisitions. The organic increase stood at 6% explained by the impact of hiring and wage drift, which were partly offset by exceptional releases in health insurance and pension provisions. Fourth-quarter staff expenses climbed to EUR 956 million, up EUR 36 million or 4% on the third quarter, owing to the early departure restructuring charge of EUR 40 million taken in the fourth quarter.. Total Banking FTEs stood at 43,575 at the end of 2006, an increase of 2,638 or 6% compared with year-end 2005. Organic hiring, representing about half of year-on-year growth, supported more robust commercial activity at Commercial & Private Banking and Merchant Banking. Other expenses came to EUR 2,690 million for the full year, 20% higher than in 2005. Part of this increase is attributable to the integration of acquisitions, putting organic growth at 15%, in line with revenue growth. Other expenses rose chiefly due to investments in technology infrastructure, consultancy, growth engines and branding in support of our long-term growth plans. Other expenses in the fourth quarter were marked by major one-off charges and a significant acceleration of investments. Other operating expenses came to EUR 803 million, rising EUR 174 million on the third quarter. The firsttime consolidation of Houston-based Cinergy, Marketing & Trading was responsible for EUR 13 million in additional costs compared with the previous quarter. Around half of the remaining increase of EUR 161 million was due to the acceleration of investments in our growth strategy, made primarily in marketing and branding, technology infrastructure upgrades, the rollout of consumer finance in Germany and distribution expansion in Turkey. Major one-off charges were also booked in the last quarter, explaining most of the remaining increase. The effective tax rate stood at 18% in 2006, 5% lower than in 2005. This decrease can be attributed to the structure of trading revenues and a higher level of (equity-based) taxexempt capital gains. The establishment of a treasury centre earlier in the year also contributed to lower effective tax rate.. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. in Germany and Turkey, although underlying credit quality at Retail Banking remained sound..

(19) 19. 2.1. Retail Banking Income Statement. FY 2006. FY 2005. Change. Q4 2006. Q3 2006. Change. Net interest income. 2,647. 2,467. 7%. 655. 653. 0%. Net fee and commission income. 1,362. 1,092. 25%. 344. 327. 5%. Realised capital gains (losses) on investments. 11. 63. (83%). (1). 5. *. Other realised and unrealised gains and losses. 44. 43. 2%. 8. 14. (43%). Dividend, share in result of associates and joint ventures and other investment income. 18. 16. 13%. 5. 2. *. 724. 513. 41%. 198. 96. *. 4,806. 4,194. 15%. 1,209. 1,097. 10%. (150). (130). 15%. (33). (44). (25%). Net revenues. 4,656. 4,064. 15%. 1,176. 1,053. 12%. Staff expenses. (1,249). (1,111). 12%. (329). (312). 5%. (523). (385). 36%. (168). (130). 29%. Allocated expenses. (1,370). (1,262). 9%. (368). (332). 11%. Total expenses. (3,142). (2,758). 14%. (865). (774). 12%. 1,514. 1,306. 16%. 311. 279. 11%. (424). (444). (5%). (97). (71). 37%. 1,090. 862. 26%. 214. 208. 3%. -. -. *. -. -. *. 1,090. 862. 26%. 214. 208. 3%. Other income Total income, net of interest expense Change in impairments. Other operating and administrative expenses. Profit before taxation Income tax expense Net profit for the period Net profit attributable to minority interests Net profit attributable to shareholders. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. in EUR million.

(20) 20. Activity-based in EUR million FY 2006. FY 2005. Change. Q4 2006. Q3 2006. Change. 2,647. 2,467. 7%. 655. 653. 0%. Capital gains on investment portfolio. 11. 63. (83%). (1). 5. *. Treasury and financial markets. 44. 43. 2%. 8. 14. (43%). FY 2006. FY 2005. Change. Q4 2006. Q3 2006. Change. Cost / Income ratio. 65.4%. 65.8%. 71.5%. 70.6%. Operating leverage. 0.7%. Net interest income on interest-margin products. Key Performance Indicators. - # of FTEs. 17,030. 14,186. 20%. 17,030. 16,874. 1%. 1,092. 1,128. (3%). 1,092. 1,102. (1%). 159. 163. (2%). 159. 159. 0%. 37. 37. 0%. 37. 37. 0%. 211. 174. 21%. 211. 196. 8%. 128.1. 110.6. 16%. 128.1. 123.0. 4%. - Belgium - Netherlands - Luxembourg - Turkey Funds under management (in EUR billion). WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. - # of Fortis Bank branches.

(21) 21. Analysis. Net profit in Retail Banking passed the EUR 1 billion mark, climbing to EUR 1,090 million for full-year 2006, up 26% on 2005. This steep rise was fuelled by robust 15% income growth on the back of higher commissions, increased ALM income and a lower tax rate. Total expenses were up 14%, translating into a 65 basis-point operating leverage for 2006, despite heavy investments in growth. Excluding the consolidation of Consumer Finance Germany and Retail Bank Turkey, total income growth (+11%) significantly outpaced cost growth (+6%), which was reflected in a 570 basis-point organic operating leverage. At EUR 214 million, fourth-quarter net profit rose slightly above the third quarter level, as a 10% increase in total income and lower changes in impairments were partly offset by a 12% rise in expenses and a 6% higher effective tax rate.. in a slight decrease in the overall balance. Retail Banking Belgium posted a net intake of EUR 3.3 billion for 2006 in total deposits, thanks mainly to the success of time deposits (up EUR 3.1 billion), while at the same time recording EUR 1.6 billion inflow into off-balance products. The mortgage portfolio grew EUR 7.4 billion (15%) to EUR 56.7 billion. The bulk of the increase (upwards of EUR 4 billion) was attributable to the focus on mortgages in the Netherlands, which grew strongly especially in the first half of the year. In the last few months of the year, we opted to pursue disciplined growth due to increasing margin pressure. Belgium contributed EUR 2.1 billion to the expansion. After continued margin pressure since the start of 2006, we repriced our mortgage rates in Belgium during the month of September in order to stabilise and improve the margins while at the same time protecting our market share. Anticipating the changing needs of its clients, Fortis launched – ahead of the February Batibouw fair - a flexible mortgage product in Belgium allowing the client to modify the length or reimbursement schedule to facilitate changes in his personal or professional situation. Fourth-quarter net interest income remained stable compared with the third quarter, as waning savings margins and volumes in the Netherlands were more than offset by higher net interest income in Belgium and Turkey.. Net interest income for 2006 was up 7% on the previous year, driven by recent acquisitions. Excluding the EUR 170 million impact of the consolidation of Consumer Finance Germany and Retail Bank Turkey, net interest income remained stable as margin pressure in the Benelux countries was balanced by volume growth.. Net commissions and fees rose 25% to EUR 1,362 million for full-year 2006. Excluding acquisitions, they still clocked in at 19% above the previous year's level. The steep rise can be attributed to higher asset management fees in our Belgian distribution network, the strong performance of Fortis Investments (contributing EUR 93 million to the increase) and to the EUR 83 million result-related commission payment on insurance sales received from Fortis Insurance Belgium.. Customer deposits for total Retail Banking grew to EUR 91.2 billion, up EUR 6.3 billion or 7% from year-end 2005, with more than half of the rise realised in Belgium. Saving deposits have become less attractive as a result of flattening yield curves, making short-term deposits more appealing. In addition, the continuous shift from saving deposits towards off-balance products during the last 2 quarters has resulted. Fortis Investments accounted for the bulk of the EUR 17 million or 5% quarter-on-quarter increase in net commissions and fees to EUR 344 million. The traditional year-end asset gathering campaign in life insurance in Belgium, good for EUR 781 million in gross inflow, also helped raise commissions.. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. • Retail Banking’s net profit passes the EUR 1 billion mark • Net fund inflow at Fortis Investments hits EUR 10 billion, lifting assets under management to EUR 121 billion • European franchise expanded through selective acquisitions; position strengthened in promising markets • Retail Banking is evolving from a multi-local to a true cross-border distribution organisation with greater service differentiation.

(22) 22. Net inflow for the year came to EUR 10 billion, generated by considerable new institutional business across all key geographies, and also underpinned by continued growth in the wholesale retail segment. At product level, fixed-income and structured products remained the main contributors to net inflow. Strong organic growth was achieved despite adverse market conditions, such as those seen in the second quarter, demonstrating the effectiveness of our highly diversified product portfolio and well-performing distribution platform. All countries contributed to the increase, reflecting a good balance, both geographically and between the wholesale retail and institutional networks. Fund performance for 2006 was favourable, with around two thirds of the funds delivering above-benchmark performance. Other income increased 41% compared with 2005, thanks to higher ALM results. Quarter-on-quarter other income more than doubled to EUR 198 million as a result of the allocation of the capital gain on Banksys. The change in impairments was 15% or EUR 20 million higher than in 2005, largely due to the acquisitions made in Turkey and Germany and a change in the method used. to compute the IBNR for SME business in accordance with Basel II guidelines. Underlying credit provisioning remains low at 21 basis points. Changes in impairments in the fourth quarter amounted to EUR 33 million, down 25% on the third quarter, benefiting from some releases and reflecting the sound quality of the credit portfolio. The growth plans both in the home market and on a European scale obviously have implications for costs. Total expenses in 2006 rose 14% above the previous year's level, with half of the increase attributable to the recent acquisitions. Scope changes account for 50% of the EUR 138 million increase (+12%) in staff expenses, with the balance made up by FTE transfers in Belgium and the Netherlands, higher staff costs at Fortis Investments due to new hiring and higher bonuses, only partly offset by a reversal of provisions in Belgium and the Netherlands. Other operating and administrative expenses climbed 36% (up EUR 138 million), or 17% excluding scope changes, reflecting investments in Consumer Finance, higher marketing costs in the Netherlands, and higher one-off expenses at Fortis Investments. Allocated expenses rose 9%, due to higher IT investments. Total expenses rose EUR 91 million in the last quarter of 2006, up 12% on the third quarter. Staff expenses went up 5%, or EUR 17 million, due to a provision for an early departure plan in Belgium, which was only partly offset by a EUR 7 million provision release in the Netherlands. Higher IT and consulting costs and seasonal expenses at Fortis Investments, plus the rollout of credit centres in Germany were largely responsible for the 29% increase in other operating and administrative expenses. The EUR 36 million increase in allocated expenses compared with the third quarter was related to the early departure plan in Belgium and higher infrastructure and operations expenses.. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. Fortis Investments had a very strong year, posting net profit of EUR 87 million, 65% higher than in 2005. Assets under management advanced by an impressive 15% year-on-year, to EUR 121 billion. Fortis Investments continued to expand and enhance its investment and distribution capabilities in 2006. Significant investments in IT and staff were made towards the end of the year to support the growth strategy. In addition to setting up a new joint venture with CIT Finance in Russia, Fortis Investments acquired 70% of Cadogan Management LLC and combined its respective fund of hedge funds activities, as it sees strong demand across the customer base for this type of products..

(23) 23. The Personal Banking approach in Belgium proved to be a success in 2006 – more than 5,000 new customers with investable assets exceeding EUR 250,000 found their way to our service offering. With more than 65,000 customers, served by 314 personal bankers, Personal Banking accounted for one third of net new money in 2006.. Distribution channels With the opening of another twelve credit shops in Germany in the last three months of the year, Consumer Finance reached a total of 21 openings in 2006. The sharp acceleration of the original roll-out plan foresees 85 openings of these specialised lending shops in 2007. Customers and international professionals clearly value this business concept – Credit4me was rewarded a MAPIC Award for its innovative concept at a retail real estate trade fair. The branch network in Poland was reorganised as a result of the shift in focus to the Affluent and Professionals & Small Enterprises segments, enabling Retail Banking to provide optimum service to these customers. The expansion of branches in Turkey is also proceeding full speed ahead, with 15 openings in the fourth quarter of 2006. Retail Banking opened 37 branches in 2006 and is targeting another 25 a year until 2011.. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. Customer approach Retail Banking aims to anticipate changing customer behaviour by evolving from a multi-local to a true cross-border distribution organisation based on three segments: Mass Retail, Affluent, and Professionals & Small Enterprises. Mass Retail customers will enjoy increased pricing transparency, access to dedicated packages and services through optimum use of remote channels. Relationship Managers dedicated to the Affluent customer segment will operate in full-service branches and with optimum use of technology. The Professionals & Small Enterprises segment will benefit from the tailored product and service offering, the unique credit scoring models and global relationship management. This should enable Retail Banking to offer greater service differentiation to each segment, adapted to local markets, while keeping costs under control..

(24) 24. 2.2. Merchant Banking Income Statement. FY 2006. FY 2005. Change. Q4 2006. Q3 2006. Change. Net interest income. 886. 764. 16%. 125. 176. (29%). Net fee and commission income. 561. 459. 22%. 137. 133. 3%. Realised capital gains (losses) on investments. 128. 318. (60%). 4. 55. (93%). Other realised and unrealised gains and losses. 910. 527. 73%. 178. 87. *. 99. 114. (13%). 28. 22. 27%. 160. 126. 27%. 33. 23. 43%. 2,744. 2,308. 19%. 505. 496. 2%. 116. 107. 8%. 4. 39. (90%). Net revenues. 2,860. 2,415. 18%. 509. 535. (5%). Staff expenses. (675). (603). 12%. (200). (171). 17%. Other operating and administrative expenses. (345). (364). (5%). (95). (70). 36%. Allocated expenses. (409). (359). 14%. (114). (105). 9%. (1,429). (1,326). 8%. (409). (346). 18%. 1,431. 1,089. 31%. 100. 189. (47%). (78). (76). 3%. 40. 43. (7%). 1,353. 1,013. 34%. 140. 232. (40%). 5. 6. (17%). 1. 1. 0%. 1,348. 1,007. 34%. 139. 231. (40%). Dividend, share in result of associates and joint ventures and other investment income Other income Total income, net of interest expense Change in impairments. Total expenses Profit before taxation Income tax expense Net profit for the period Net profit attributable to minority interests Net profit attributable to shareholders. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. in EUR million.

(25) 25. Activity-based in EUR million FY 2006. FY 2005. Change. Q4 2006. Q3 2006. Change. 796. 705. 13%. 209. 204. 2%. 83. 111. (25%). 4. 15. (73%). 1,045. 793. 32%. 94. 99. (5%). FY 2006. FY 2005. Change. Q4 2006. Q3 2006. Change. Cost / Income ratio. 52.1%. 57.5%. 81.0%. 69.8%. Operating leverage. 11.1%. Activity-based Net interest income on interest-margin products Capital gains on investment portfolio Treasury and financial markets. Net profit attributable to shareholders per FTE (in EUR). - # of FTEs (1). (1) Period average. 287,175. 248,449. 16%. 29,612. 49,212. (40%). 4,694. 4,056. 16%. 4,872. 4,694. 4%. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. Key Performance Indicators.

(26) 26. Analysis. Net profit soared 34% to EUR 1,348 million in 2006. Growth was fuelled mainly by a solid 19% rise in total income to EUR 2,744 million, resulting in 11% operating leverage. All businesses benefited from sustained commercial activity, generating a strong 24% growth in commercial loans, increased cross-selling and an exceptional performance in trading and private equity. Merchant Banking's fast-growing niches such as Energy, Commodities & Transportation (ECT), Structured Products and Securities Financing continued to strengthen their leading positions in the Benelux region and expanded across Asia and North America. These sustainable niches became increasingly important growth engines for Merchant Banking in 2006 and now represent more than 50% of total income. ECT generated 19% of total income, services to hedge funds and other institutional investors 27%, and structured products and complex financing solutions for financial institutions accounted for 9%. Total income came to EUR 505 million in the fourth quarter, up 2% on the previous quarter. Growth was supported by a 2% increase in net interest income on interest-margin products and a 3% rise in net commissions and fees. Trading gains remained stable. Higher expenses, due chiefly to hiring and integration costs related to acquisitions, and lower releases of provisions for impairments depressed net profit by 40% quarter-on-quarter. Net interest income on interest-margin products increased 13% to EUR 796 million in 2006, as higher volumes more than offset lending margin pressure. Commercial loans went up 24% to EUR 56 billion compared with the end of 2005, with growth stemming mainly from ECT activities, Real Estate, Retail and Services sectors and from Institutional. Banking. Net interest income also benefited from interestrelated income on several deals in the Metals, Shipping, Energy and Chemicals sectors. Global Securities & Funds Solutions recorded a sharp rise in net interest income on the back of its clients' portfolio growth and high turnover. Likewise, robust activity and higher financing requirements of professional counterparties benefited Clearing & Custody. The average margin on commercial loans remained under pressure throughout the year due to strong competition in a benign credit environment. Net interest income rose by 2% in the fourth quarter of 2006, in line with the growth in commercial lending. Net commissions and fees went up 22% to EUR 561 million thanks to robust client activity and higher cross-selling results. Assets under custody (+18% to EUR 313 billion) and assets under administration (+42% to USD 123 billion) both posted strong volume growth. The rise in commissions and fees was supported by higher commissions in ECT sectors and increased activity in securities financing and credit derivatives at Global Markets. Net commissions and fees climbed 3% in the fourth quarter. Income from ECT sectors and Global Securities & Funds Solutions offset a small decline in Corporate & Institutional Banking. Capital gains on the investment portfolio came to EUR 83 million, 25% lower than in the previous year. Higher capital gains realised on the Private Equity portfolio failed to match last year's gains in ECT and Corporate Banking. Only EUR 4 million in capital gains was realised in the fourth quarter of 2006 owing to smaller Private Equity exits than in the third quarter. Treasury and financial markets income grew by 32% to EUR 1,045 million in 2006, supported by vigorous client activity and buoyant capital markets. Securities lending and arbitrage activities contributed EUR 313 million to this revenue line, predominantly in the second quarter, thanks to higher trade volumes and the negotiation of exclusive rights with large institutional investors. Private Equity also had a. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. • Net profit rose strongly by 34% to EUR 1,348 million • Total income up 19% to EUR 2,744 million on robust commercial activity and strong trading • Benign credit environment results in second year of net release of impairments • Operating leverage at 11% while investment in growth continues.

(27) 27. Excluding these items (securities lending, private equity, credit hedging and others), Treasury and financial markets income stood at EUR 597 million, earned on trading and funding positions at Global Markets. This result should be viewed in conjunction with the effective tax rate as the structure of trading results strongly influences the balance between Treasury & financial markets revenue and tax expense. A more accurate assessment of the actual trading performance can be made by taking the tax impact of these trading results into account (grossed-up). Trading positions are managed on an after-tax basis. Grossed-up trading results were actually at EUR 867 million in 2006. The effective tax rate at Merchant Banking was a low 5% as trading results contained large tax-exempt gains and tax-deductible losses. This exceptional performance was supported by strong results across all trading desks in 2006. With a diversified mix of activities, all performed better than in 2005. The average daily Value at Risk (VaR) climbed from EUR 14.4 million in 2005 to EUR 24.9 million in 2006, remaining at a relatively low level, close to Fortis's historical average VaR. Treasury and financial markets income came to EUR 94 million in the fourth quarter of 2006, stable compared with the third quarter. Cinergy Marketing & Trading (rebranded Fortis Energy Marketing & Trading, FEMT) was consolidated for the first time, contributing EUR 13 million as mild weather and consequently comfortable storage levels had an unfavourable impact on this entity’s activities. Higher short-term interest rates raised Global Markets' funding costs, depressing Treasury and financial markets revenues in the fourth quarter, while the underlying trading performance remained healthy. The net release in impairments amounted to EUR 116 million for full-year 2006, up 8% for the year. Substantial provisions were released, in line with improved financial positions of counterparties or repayment of credit facilities. Additional provisioning on loans remained limited. Non-. performing loans declined by one third over 2006, remaining well below 1% of Merchant Banking's total outstanding loans. After two years of significant releases, a lower release in impairments is foreseen in the medium term, while at the same time there are no signs of a significant deterioration in the quality of the loan portfolio. The EUR 4 million net release in the fourth quarter was lower than the third-quarter EUR 39 million release. Credit risk is being increasingly actively handled by the credit portfolio management group with a view to managing loan exposure and earnings volatility. Total expenses increased 8% to EUR 1,429 million in 2006, resulting in solid 11% operating leverage. More than 70% of this rise was due to staff hiring. While the average number of FTEs grew by 16%, staff expenses went up 12% year-on-year as an extraordinary charge was taken in the fourth quarter of 2005 for upgrading the quality of management. Excluding this charge, staff expenses would have been completely in line with the growth in the average number of FTEs. Non-staff expenses grew by 4% over the year, driven by integration costs and higher IT investment aimed at supporting future growth. The cost/income ratio ended up at a low 52%, a 5% improvement on last year. Total expenses went up 18% or EUR 63 million in the fourth quarter of 2006. The first-time consolidation of Cinergy resulted in total expenses of EUR 13 million in the fourth quarter, part of which was related to integration charges. The remainder of the increase was caused by 4% growth in the number of FTEs and the acceleration of investment aimed at bolstering the new Merchant & Private Banking organisation. Taxation at Merchant Banking is heavily influenced by the structure of trading results, as gains and losses on the various financial instruments are subject to different tax treatments. The low effective tax rates in 2006 (5%) and 2005 (7%) reflect the composition of trading results, with large tax-exempt gains and tax-deductible losses. Conversely, reported trading revenues would appear inflated in years with few tax-exempt gains and tax-deductible losses, but this would be entirely offset by higher tax expenses. As previously mentioned, Merchant Banking's trading positions are managed on an after-tax basis and the structure of trading results ultimately has no impact on net profit.. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. very good year, as its portfolio gained EUR 207 million on revaluation. Marking-to-market of Merchant Banking´s credit hedge portfolio, however, had a negative impact of EUR 87 million as credit spreads almost halved in the second half of 2006. Other miscellaneous factors unrelated to trading contributed EUR 15 million to Treasury and financial markets income..

(28) 28. Commercial developments In the fourth quarter of 2006, Corporate & Institutional Banking closed a major credit facility combined with a loan syndication in the Global Metals sector. This successful transaction clearly demonstrates Fortis’s capacity to lead a large credit facility for a giant global market leader. A key factor in Fortis’s success was the combination of the strengths of Credits, Contracting, Legal, Loan Syndication and Corporate Banking in Belgium and in the Netherlands. Corporate & Institutional Banking also underwrote 50% of a major credit line for a leading global biopharmaceutical player in Belgium. Fortis's Structured Credit Group successfully completed a EUR 4 billion Dutch Residential Mortgage-Backed Securities issue, originated from Fortis Hypotheekbank portfolio. It was the first time that a master issuer programme was used for a continental European borrower, applying the mechanics of EMTN issuance for securitisation. Fortis was sole arranger and attracted more than 100 investors in 17 European countries. Structured Credit Group has gained recognition for its expertise in the securitisation of residential mortgages, auto loans, delinquent tax and in the Spanish securitisation market as a whole. In the US, it mainly focused on repackaging US leveraged loans (CLOs) and structured finance CDOs.. Fortis ranked first for securitisation in the Benelux league table and tenth for European issuance, placing about EUR 20 billion in structured credit products in 2006 (including ABS and CDO products). Appointed bookrunner for 17 different transactions, nine of which were USD-denominated, Fortis is a global player in the structured credits market. In the fourth quarter, Fortis Private Equity acquired Innovative Medical Company, a Dutch holding company and a fastgrowing European developer and worldwide supplier of branded medical and wellness products. Fortis Private Equity also took a 33% stake in the Belgian-based Studio 100 through a capital increase aimed at supporting the company's international expansion. Fortis was elected Best Soft Commodity Finance Bank by Trade and Forfaiting Review for the second consecutive year, based on an online poll among its readers.. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. The third and fourth quarters of 2006 both posted a negative effective tax rate, reflecting large tax-exempt gains and taxdeductible losses in trading..

(29) 29. 2.3. Commercial & Private Banking Income Statement. FY 2006. FY 2005. Change. Q4 2006. Q3 2006. Change. 1,190. 1,031. 15%. 310. 303. 2%. 843. 702. 20%. 220. 197. 12%. Realised capital gains (losses) on investments. 11. 16. (31%). 3. 1. *. Other realised and unrealised gains and losses. 85. 62. 37%. 24. 18. 33%. Dividend, share in result of associates and joint ventures and other investment income. 46. 39. 18%. 10. 11. (9%). 327. 238. 37%. 90. 47. 91%. 2,502. 2,088. 20%. 657. 577. 14%. (137). (153). (10%). (71). (19). *. Net revenues. 2,365. 1,935. 22%. 586. 558. 5%. Staff expenses. (721). (566). 27%. (187). (183). 2%. Other operating and administrative expenses. (373). (277). 35%. (133). (84). 58%. Allocated expenses. (406). (446). (9%). (115). (96). 20%. (1,500). (1,289). 16%. (435). (363). 20%. 865. 646. 34%. 151. 195. (23%). (194). (186). 4%. (38). (43). (12%). 671. 460. 46%. 113. 152. (26%). -. -. *. -. -. *. 671. 460. 46%. 113. 152. (26%). Net interest income Net fee and commission income. Other income Total income, net of interest expense Change in impairments. Total expenses Profit before taxation Income tax expense Net profit for the period Net profit attributable to minority interests Net profit attributable to shareholders. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. in EUR million.

(30) 30. Activity-based in EUR million FY 2006. FY 2005. Change. Q4 2006. Q3 2006. Change. 1,190. 1,031. 15%. 310. 303. 2%. Capital gains on investment portfolio. 11. 16. (31%). 3. 1. *. Treasury and financial markets. 85. 62. 37%. 24. 18. 33%. FY 2006. FY 2005. Change. Q4 2006. Q3 2006. Change. Cost / Income ratio. 60.0%. 61.7%. 66.2%. 62.9%. Operating leverage. 3.5%. - # of FTEs. 8,024. 6,119. 31%. 8,024. 7,810. 3%. 79.0. 69.8. 13%. 79.0. 75.4. 5%. Activity-based Net interest income on interest-margin products. Funds under management (in EUR billion). (1) Year-end 2005. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. Key Performance Indicators.

(31) 31. Analysis. Net profit for 2006 clocked in at EUR 671 million, up 46% on 2005. Total income grew by 20% to EUR 2,502 million, 15% was organic, stemming from a sharp rise in net interest income (up 15%), net commissions and fees (up 20%) and stronger allocated ALM results. With organic cost growth of 6%, organic operating leverage stood at 9%. Net profit fell by EUR 39 million to EUR 113 million in the last quarter of 2006: stronger commissions were more than offset by a higher change in impairments and the rise in total expenses. Total revenues went up 14% on the third quarter as net interest income advanced 2% and net commissions and fees rose by 12%, with volumes picking up after a seasonally slow third quarter. Higher allocated ALM results further contributed to the increase in revenues. Total expenses grew by 20% quarter-on-quarter due to additional marketing costs, investments in IT projects and a number of one-off elements. Net interest income climbed to EUR 1,190 million, up 15% on 2005, 10% was organic. Around 80% of the non-organic growth resulted from the integration of the Turkish activities (Commercial Banking, Fortis Lease and Fortis Commercial Finance) and the remainder was generated by the Dryden, Dreieck and Atradius Factoring acquisitions. Net interest income at Commercial Banking increased 12% to EUR 745 million, EUR 29 million of which stemmed from the Turkish operations. Credits and deposits contributed equally to the organic growth of net interest income. Loans to customers generated healthy 8% volume growth across all countries. Ongoing competitive pressure slightly depressed margins compared with 2005. On the deposit side, the rise in short-term rates adversely affected margins and the product mix in the second half of the year. This was compensated for by volume growth.. A similar pattern emerged at Private Banking, where net interest income advanced 15% to EUR 233 million in 2006. The excellent deposit margins seen in the first half of the year decreased in the fourth quarter, especially in the Netherlands. However, higher net interest income on Private Banking deposits was posted for the year, thanks to continued organic volume growth. Credits provided to High Net Worth Individuals rose EUR 2 billion to EUR 6.8 billion (+40%), with nearly all countries contributing to this promising growth. Net interest income at Specialised Financial Services went up 28% to EUR 212 million, with all sub-businesses contributing to growth. This result was driven by strong commercial developments (illustrated by 22% organic growth in the leasing portfolio), acquisitions (Fortis Turkey in Leasing and Factoring, Dreieck in Leasing and Atradius in Factoring) and lower hedging and funding costs at Trust. Net interest income went up 2% quarter-on-quarter to EUR 310 million, echoing underlying developments in lending and deposits. Volume growth at all Commercial & Private Banking businesses more than compensated for slightly narrowing credit margins. On the deposit side, volumes in time deposits and highly remunerated current accounts increased considerably in the last quarter, partly due to a shift out of savings, though at significantly lower margins. This resulted in lower quarterly net interest income on deposits at Private Banking, while overall volume growth compensated for the lower margin at Commercial Banking. Fortis Lease saw net interest income remain at a high level, benefiting from vigorous activity towards the end of the year. The leasing portfolio grew organically by 9% in the fourth quarter. Net commissions and fees climbed 20% to EUR 843 million in 2006, 11% was organic. The Dryden and Atradius acquisitions contributed to this strong performance. Fees from securities transactions rose to EUR 201 million in 2006, EUR 60 million of which was earned in the fourth quarter. Commercial & Private Banking had a very strong first half, followed by lower volumes in the third quarter. The last quarter of 2006 picked up, with net commissions and fees up 12% on the third quarter, in line with higher market volumes and rising equity markets. Total client turnover at Fortis Commercial. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. • Net profit at EUR 671 million, up 46% on 2005, thanks to vigorous commercial activity • Total revenues up 20% to EUR 2,502 million, driven by net interest income and net commissions and fees • New inflow of EUR 7 billion, funds under management up 13% to EUR 79 billion • Loans to customers grow by 14% to EUR 61.7 billion, lower cost of risk.

(32) 32. Finance (Factoring) went up 31% to EUR 34.4 billion in 2006. Trust saw the number of structures managed grow by 2% to 22,465 in 2006, despite losing 201 accounts owing to the sale of Monterey.. organic cost growth was due to higher external staff, training and consultancy expenses, about one third was due to one-off factors, and the remainder came from intensified marketing, advertising and public relations efforts.. Private Banking reported robust commercial activity in the fourth quarter, with clients displaying increasing interest in structured products (mainly in Luxembourg and the Netherlands) and in Fortis Commercial Finance.. Total expenses grew to EUR 435 million in the fourth quarter, up 20% on the previous quarter, due mainly to the rise in non-staff expenses owing to the reasons stated under the year-on-year cost development.. Funds under management hit a record EUR 79 billion in 2006, 13% higher than in 2005. Ongoing efforts to expand the Private Banking network combined with successful cooperation with Commercial Banking and Fortis Intertrust resulted in a net inflow of EUR 7 billion in 2006. Referrals from Commercial Banking more than doubled, yielding EUR 1.5 billion in net inflow. Thanks to Private Banking’s international strategy, more than half of net inflow is now generated outside the Benelux region, with 27% of new money coming from Asia and 26% from Europe (outside the Benelux). Despite last year’s integration, former Dryden entities managed to keep funds under management stable at EUR 8 billion.. Changes in impairments came to EUR 137 million, or EUR 16 million lower than in 2005. Loans to customers grew by 14% to EUR 61.7 billion in 2006, while the credit quality improved, resulting in a slight decline in non-performing loans. Changes in impairments climbed to EUR 70.5 million in the fourth quarter, mainly related to accounts in the Netherlands.. Total costs went up 16% to EUR 1,500 million in 2006. The largest non-organic sources of cost growth were Dryden (consolidated only as of the last quarter of 2005) and Disbank (Fortis Turkey, consolidated at business level only as of the first quarter of 2006). Organically, cost growth remained contained at 6% despite investments in the expansion of the Commercial & Private Banking network. Staff expenses increased organically by 3%, while the number of FTEs grew by 7%. This rise can be attributed to one-off costs in the fourth quarter of 2005 for upgrading the quality of management and a release of provisions for pension schemes in the Netherlands. Commercial & Private Banking employed a total of 8,024 FTEs at the end of 2006, representing 31% growth. Other operating charges climbed 35% in 2006, with organic growth accounting for 22%. Nearly half of the increase in. New organisational structure In October 2006, the Executive Committee presented Fortis’s new organisational structure. Fortis now has three core businesses, i.e. Retail Banking, Merchant & Private Banking and Insurance. The new Merchant & Private Banking business, which is headed by Filip Dierckx, groups together all banking activities devoted to large international companies and institutions, medium-sized enterprises and entrepreneurs, and private banking clients. This combination allows Fortis’s customers to benefit from a wider range of sophisticated solutions. Additionally, by establishing a unified IT platform, all Merchant & Private Banking customers now have access to a global distribution network. Acquisitions and integration Fortis Lease was very active in acquiring leasing companies in 2006. It acquired Dreieck Industrie Leasing SA (with operations in Switzerland) in January, and Innotrade Leasing Rt. and Takleasing Rt. (Hungary) in the third quarter of the year. Fortis Lease acquired Global, a Romanian leasing specialist, in the fourth quarter of 2006. We are keen to establish a presence in the Romanian leasing market, which,. WorldReginfo - 2c2930e1-c15c-4569-8bbb-1b87f17cb77b. Funds under management rose EUR 3.6 billion in the fourth quarter compared with the previous quarter, driven by net inflow of EUR 1.6 billion and rising equity markets.. The effective tax rate was 22% for 2006, 7% lower than in 2005. This decrease was due chiefly to one-off tax benefits seen in the second quarter of 2006..