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Getting you there.




First half year 2008 net profit of EUR 1.6 billion

Net profit up 3% to EUR 830 million in second q...
Disclaimer

These pages are intended to provide investors with financial information about Fortis’s business plans. The
fi...
Agenda


  1      Strategic update


  2      Financials


  3      Conclusion




  Additional information
     - First h...
CEO & Senior Management priorities


          Diligent and full execution of the accelerated capital strengthening plan

...
Diligent execution of the capital plan
      Accelerated capital plan announced on 26 June is being executed step by step
...
Three main items drove the net profit downwards over H1 2008

                                      Credit      Impairment...
Sustained commercial performance despite adverse conditions

                                                             ...
ABN AMRO transition & integration – Progress status

                               AAAM transferred to Fortis on 1 April ...
ABN AMRO transition and integration – Next steps
         ► All subject to regulatory approval

                          ...
Agenda


  1      Strategic update


  2      Financials


  3      Conclusion




  Additional information
     - First h...
Key Messages


          In the first half of 2008 our businesses, including the acquired ABN AMRO

          activities, ...
Net profit mainly impacted by credit market turmoil, impairments and lower
capital gains
                                 ...
Insurance – Gross inflow up and continued profitable underwriting

                              Life                     ...
Commercial activities still able to grow underlying revenues
                                       Underlying 1      Mark...
Cost measures kept underlying Banking expenses stable

                    Total expenses (underlying1)                   ...
Credit loss ratio moving closer to through-the-cycle level
                    Change in impairments                      ...
Additional impairments on structured credit portfolio 1

           Total net exposure of EUR 41.7 billion, down EUR 1.6 b...
ABN AMRO activities delivering sound underlying performance
               Underlying1 net profit down 2% in H1 2008 due t...
Expected close of the EC remedies and future divestments and partnerships
will increase the volatility in quarterly result...
Equity method – H1 2008 evolution (under BIS I)

                                                                         ...
Equity method – Sound Q2 2008 solvency
       (EUR billion)
                                                              ...
Look-through method –
Execution of capital plan to bring core equity above targets
                                       ...
Agenda


  1      Strategic update


  2      Financials


  3      Conclusion




  Additional information
     - First h...
Conclusion


          First half year 2008 net profit of EUR 1.6 billion

          Banking net profit impacted by

     ...
Getting you there.
Additional information


  1      First half-year 2008 results


  2      Structured Credit Portfolio




Fortis first hal...
Results overview

                                                                                 H1 '08         H1 '07  ...
Overview of main impacts on Fortis and ABN AMRO results

    Reported                                                     ...
Impact of credit market turmoil

                          Bank                            H1 2008    H1 2007    Q2 2008  ...
Banking results mainly impacted by the credit market turmoil

                                                            ...
Banking – H1 ’08 vs. H1 ’07 analysis

                                                                                    ...
Main elements impacting total income (1/2)

                                                            H1 2008    H1 2007...
Main elements impacting total income (2/2)

                                                           H1 2008    H1 2007 ...
Total income up 6% despite ABN AMRO financing costs
                           Net         Net            Capital    Treas...
Banking – Sound commercial performance in adverse conditions

        Net interest income 1
                              ...
Resilient treasury and financial markets in adverse markets

    Total Banking (EUR million)                      H1 '08  ...
Solid underlying1 loan portfolio growth
                                Residential          Consumer            Commercia...
Evolution of deposits
                            Demand             Saving      Time       Other
                        ...
Corporate loan portfolio by sector

                            EUR billion                             Q4 '07   Q1 '08   ...
Main elements impacting total expenses

                                                          H1 2008    H1 2007    Ch...
ABN AMRO contribution offset by financing & integration costs

     EUR million                                      H1 20...
Banking – Q2 ’08 vs. Q1 ’08 analysis

                                                                                    ...
Banking Total Income – Q2 ’08 vs. Q1 ’08 analysis

                                                                    Q2 ...
Loans to Customers – Product view (Q2 ’08 vs. Q1 ’08)

                   EUR million                               Q2 '08...
Loans to Customers – Business view (Q2 ’08 vs. Q1 ’08)

                        EUR million                            Q2 ...
ABN AMRO – Overview Q2 2008

     EUR million                                      Q2 2008   Q1 2008   Change
            ...
Major milestones reached for ABN AMRO Asset Management

                                ABN AMRO Asset Management transfer...
BU Netherlands – Integration 1 progress status

                                Opening of 3 new business centres for larg...
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
Fortis first half financial results 2008
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Fortis first half financial results 2008

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Fortis first half financial results 2008

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Fortis first half financial results 2008

  1. 1. Getting you there. First half year 2008 net profit of EUR 1.6 billion Net profit up 3% to EUR 830 million in second quarter, but environment is becoming more difficult 4 August 2008
  2. 2. Disclaimer These pages are intended to provide investors with financial information about Fortis’s business plans. The financial information contained in this presentation has been prepared by Fortis and has not been audited. The figures are provided for information purposes only and are subject to the conditions and restrictions mentioned hereafter. No warranty can be given by Fortis, either explicitly or implicitly, regarding the reasonableness, correctness or completeness of the information, forecasts and assumptions contained in these pages. The information here provided could be subject to change. This presentation and the information contained herein in no way replace any formal reporting. Investment considerations should continue to be based on periodical reporting and other information Fortis is required to disclose by law or stock exchange regulations. Certain of the statements contained herein may be statements of future expectations and other forward- looking statements that are based on management’s current views and assumptions as well as on partial information and involve a certain degree of risk and uncertainty that could cause actual results or performance to differ materially from those expressed or implied in such statements. Actual results or performance may differ materially from those contained in such statements due to general economic conditions, market conditions, changes in laws and regulations, general competitive factors and other factors not specified here. Fortis first half-year 2008 results │4 August 2008 │ 2
  3. 3. Agenda 1 Strategic update 2 Financials 3 Conclusion Additional information - First half-year 2008 results - Structured Credit Portfolio Fortis first half-year 2008 results │4 August 2008 │ 3
  4. 4. CEO & Senior Management priorities Diligent and full execution of the accelerated capital strengthening plan Provide financial flexibility through strict capital management Bring look-through group core equity above target by end-2009 Enforce the disciplined and focused execution of our strategy Swift integration of acquired ABN AMRO businesses Sustain commercial momentum and step up costs-saving efforts Restore confidence and stability with full transparency and clear communication Fortis first half-year 2008 results │4 August 2008 │ 4
  5. 5. Diligent execution of the capital plan Accelerated capital plan announced on 26 June is being executed step by step It will enable Fortis to absorb the full consolidation of ABN AMRO planned for end of 2009, and develop our business further Impact completed measures: EUR 3.1 billion Measure Amount Status Equity raising (ABO) 1.5 Completed: core equity reinforced end-Q2 2008 Interim 2008 dividend cancelled 1.4 Completed: core equity preserved end-Q2 2008 Capital relief / Sale & lease back 1.5 Securitisation ▪ 1st deal completed (EUR 115 m relief in Q2) ▪ Additional transactions planned Real estate ▪ 1st deal completed (EUR 60 m relief in Q3) ▪ Additional transactions planned, of which one to be closed shortly (EUR ~70 m relief) Disposals non-core assets 2.0 AAAM 1 ▪ IAM sale completed (EUR 40 m relief in Q3) ▪ Good progress on sales of AAAM non-core Fortis ▪ Businesses up for sale identified Non-dilutive capital instruments 2.0 Planned 1 Discontinued operations Fortis first half-year 2008 results │4 August 2008 │ 5
  6. 6. Three main items drove the net profit downwards over H1 2008 Credit Impairments Capital ABN Operational Reported Reported market loan gains AMRO performance H1 ’07 H1 ’08 turmoil portfolio (Group) contribution 2,782 1,638 31 28 (182) 765 Insurance 642 (382) (149) (273) (59) (14) 2,062 Banking 1,185 (189) 18 (44) General (107) (56) Fortis first half-year 2008 results │4 August 2008 │ 6
  7. 7. Sustained commercial performance despite adverse conditions Underlying lending growth Customer Deposits EUR EUR (2%) +1% +7% bn bn +14% 284.0 219.7 215.0 212.5 264.8 248.5 H1 2007 FY 2007 H1 2008 H1 2007 FY 2007 H1 2008 Funds under Management Insurance - Gross Inflow Life Non-life 10.3 13.9 (0.5) Net intake EUR bn EUR = 283.0 bn Transfer 88.7 from AAAM +5% on 1 Apr 08 7.0 7.0 209.3 207.8 3.2 3.1 H1 ’07 H1 ’08 H1 ’07 H1 ’08 H1 2007 FY 2007 H1 2008 Fortis first half-year 2008 results │4 August 2008 │ 7
  8. 8. ABN AMRO transition & integration – Progress status AAAM transferred to Fortis on 1 April 2008, first business unit to exit the consortium Asset Integration of product lines and sales channels, rebranding to Fortis Investments Management All senior management nominated and 90% of staff formally appointed Advisory arrangements enforced globally, facilitating asset management by new teams integration All regulatory, legal structuring and compliance issues resolved Integration Integration plans finalised, including target operating model and organisation 1 on track Integration costs and synergies in line with projections Agreement (SPA) with Deutsche Bank signed on the sale of two corporate client units, 13 EC commercial advisory branches, parts of HBU and factoring company IFN Remedies 1 Separation of activities started Process for closing in Q4 2008 ongoing Opening of 3 new business centres for Commercial Banking, preparing the integration towards 74 centres in the Netherlands (on a total of 175 worldwide) Clients ATM of both banks accessible in the Netherlands for all customers without limitations Successful distribution of ‘Best of both worlds’ note (asset management structured products) Involvement of top management with key Private Banking clients Cultural integration & leadership programmes ‘Connecting for Growth‘ (300 senior managers Cultural of ABN AMRO and Fortis) and ‘Talent for Growth’ (leaders in talent pool) completed integration ‘Leading for Growth’ programme for 3,000 managers to be launched 1 Subject to regulatory approval Fortis first half-year 2008 results │4 August 2008 │ 8
  9. 9. ABN AMRO transition and integration – Next steps ► All subject to regulatory approval Q4 2008 Q1 2009 Q4 2009 Expected close Transfer Private Banking Systems fold-in in EC remedies activities in Jersey, Belgium, Retail, Merchant & Private Gibraltar and Taiwan Banking Netherlands 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 2008 Q4 2010 Q4 2009 Transfer ‘fast track’ activities Finalise Transfer all activities integration in the Netherlands Factoring, Leasing, Groenbank, Cards, and start integration Private Banking activities in Germany, Spain, France, Switzerland, Luxembourg, Hong Kong, Singapore, Dubai and China Fortis first half-year 2008 results │4 August 2008 │ 9
  10. 10. Agenda 1 Strategic update 2 Financials 3 Conclusion Additional information - First half-year 2008 results - Structured Credit Portfolio Fortis first half-year 2008 results │4 August 2008 │ 10
  11. 11. Key Messages In the first half of 2008 our businesses, including the acquired ABN AMRO activities, performed satisfactory in turbulent market conditions most of the commercial activities were still able to grow underlying revenues at the same time, costs were well controlled. but we observe that the environment is becoming more difficult The expected close of the EC remedies and future divestments and partnerships will increase the volatility in quarterly results in the second half of 2008 Solid capital position end-Q2 2008, diligent execution of the capital plan will enable full consolidation of ABN AMRO and ensure future financial flexibility Fortis first half-year 2008 results │4 August 2008 │ 11
  12. 12. Net profit mainly impacted by credit market turmoil, impairments and lower capital gains H1 2008 driven downwards by three main items Credit Impairments Capital AA Operational H1 ’07 H1 ’08 turmoil loan portfolio gains impact performance 2,782 1,638 (41%) 31 28 (182) 765 (16%) 642 Insurance (382) (273) (149) 2,062 (59) (14) Banking (43%) 1,185 18 (189) General (44) (107) (56) Q2 2008 net profit up 3% Credit Impairments Capital Operational Q1 ’08 Q2 ’08 turmoil loan portfolio gains performance 808 830 3% 167 (79) 116 423 93% 219 Insurance (249) 145 (95) 721 (57) Banking (36%) 465 General 6 (132) (57) 69 1 Excluding integration costs Fortis first half-year 2008 results │4 August 2008 │ 12
  13. 13. Insurance – Gross inflow up and continued profitable underwriting Life Non-life Annualised Premium Technical Reserves Gross Written Combined Ratio Equivalents (APE) Premiums (GWP) (3%) +5% +3% +3% 719 90.5 3,233 99.0% 96.2% 699 87.7 3,072 (EUR m) (EUR bn) (EUR m) H1 07 H1 08 H1 07 H1 08 H1 07 H1 08 H1 07 H1 08 Stable inflow at EUR 7 billion GWP up 5% to EUR 3.2 billion growth in International (Portugal) and strong growth in Accident & Health in Netherlands (pension-related contracts) Netherlands and Belgium offset by lower inflow in Belgium (fewer decrease at International (EUR/GBP impact) campaigns and competition from bank Combined ratio at 96.2%, driven by cost control savings products) and focus on profitable underwriting Technical reserves up 3% to EUR 90.5 billion H1 07 impacted by Kyrill and floods in the UK Net profit decreased from EUR 556 m to EUR Net profit up 8% to EUR 225 m despite credit 417 m due to credit turmoil impact (EUR 162 m) market turmoil net impact of EUR 20 million Fortis first half-year 2008 results │4 August 2008 │ 13
  14. 14. Commercial activities still able to grow underlying revenues Underlying 1 Market-driven income 1 client-driven income up 2% down 19% 6,090 +5 (47) +117 5,980 +110 (43) +6% (169) +183 5,832 +228 Negative 5,752 (144) +53 (2%) impact +44 on tax Adjust.2 Net Net Credit Other Capital Treas. Gross Divid. ABN Other H1 ’07 interest Comm. hedge adjust. Gains & finan. & others income up AMRO impact3 income & fees impact markets ex-AA impact +4% H1 ’08 H1’08 (3%) (41%) H1 ’08 (12%) H1 ’08 +30% +73% H1 ’07 H1 ’07 H1 ’08 H1 ’08 Reported Adjusted Adjusted Reported Net interest income and Net commissions & fees performed satisfactory under challenging conditions Lower capital gains and treasury & fin. markets results impacted total income The impact of grossing up, due to an unfavourable trading mix with lower deductible losses than in H1 2007, negatively impacted the effective tax rate in H1 2008 1 See slides 32-33 in Annex for details on computation of underlying growth 2 Adjustments on H1 ’07 reported income: grossing up effect (+162), credit hedge (+37), correction FHB (+29) 3 Profit contribution AA (+198), financing costs AA in Bank (-270), AAAM funding (-65 in NII, + 22 in T&FM), AAAM comm. & fees (+68) Fortis first half-year 2008 results │4 August 2008 │ 14
  15. 15. Cost measures kept underlying Banking expenses stable Total expenses (underlying1) Number of FTEs QoQ YoY YoY (EUR m) Underlying (1%) Stable +4% FTEs down 1% 1,645 1,653 3,334 47,737 3,298 46,080 Outside Benelux Benelux 38% 62% Q1 08 Q2 08 H1 07 H1 08 H1 07 H1 08 Total expenses, reported up 4%, largely impacted in H1 2008 by: - the integration costs of ABN AMRO (EUR 100 million) - the transfer of AA Asset Management (EUR 85 million) Improvement in Cost / Income ratio (down 1% to 57%) and positive 1.4% operating leverage despite the impact of ABN AMRO related charges ► Underlying1 total expenses down 1% year-on-year (excl. AA integration and AAAM transfer costs) Underlying staff expenses up 2%, while underlying FTEs were down 1% (excl. AAAM integration) Decrease in non-staff expenses as a result of cost containment measures ► Underlying1 total expenses remained stable quarter-on-quarter 1 See slide 40 in Annex for details on computation of underlying growth Fortis first half-year 2008 results │4 August 2008 │ 15
  16. 16. Credit loss ratio moving closer to through-the-cycle level Change in impairments Impaired loans YoY (EUR m) Structured credits Stable 2,751 Loan Portfolio 5,294 5,273 479 (EUR m) As % of total 366 1.5% 1.6% loans to customers 83 26 161 9 82 81 (116) H1 07 H1 08 Stable level of impaired loans and coverage (33%) Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Credit loss ratio on loan portfolio Loans to customers and CRWCs1 19 bp in H1 08 Loans to Customers H1 08 H1 07 Change Retail Banking 73,629 80,701 (9%) 2 bp in H1 07 Private Bk. & Asset Mgmt. 10,224 8,083 26% 25 Merchant Banking 228,310 210,808 8% 13 5 12 Other Banking 49,122 28,955 70% 0 Total 361,285 328,547 10% Average CRWCs 256,101 239,257 7% (18) (in bp, annualised) Increase in commercial loans (Merchant Bk.) Mortgages securitisation (Retail ► Other Bk.) Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 1 Credit risk-weighted commitments Fortis first half-year 2008 results │4 August 2008 │ 16
  17. 17. Additional impairments on structured credit portfolio 1 Total net exposure of EUR 41.7 billion, down EUR 1.6 billion over Q2 ’08 due to: - additional write-downs - the impact of repayments, changes in exchanges rates and selective sales ► EUR 1.9 billion net exposure (61% total coverage ratio) Net exposure Q2 impairm. Coverage ratio SS High Grade CDOs 1.7bn 340m 57% (up from 48%) CDO Origination SS Mezzanine CDOs 0.1bn 58m 74% (up from 63%) Warehousing 0.1bn 14m 74% (up from 70%) ► EUR 2.2 billion net exposure, down EUR 0.3 billion in Q2 ’08 due to: Insurance ABS - EUR 0.3 billion impact of repayments, exchanges rates and sales - EUR 47 million change in value for lower-rated investments ► EUR 37.6 billion net exposure, down EUR 0.9 billion in Q2 ’08 due to: Credit Spread - EUR 0.8 billion impact of repayments, exchanges rates and sales Portfolio - EUR 67 million in impairments, primarily on downgraded subprime, midprime and Alt-A securities Total net exposure decreased by EUR 6.5 bn in H1 2008 1 Update on structured credit portfolio available in Annex Fortis first half-year 2008 results │4 August 2008 │ 17
  18. 18. ABN AMRO activities delivering sound underlying performance Underlying1 net profit down 2% in H1 2008 due to impact of AAAM transfer BU NL underlying1 net profit up 12%, supported (EUR million) H1 07 Chg. H1 08 by higher treasury & financial markets results and a 1% decrease in underlying expenses BU Netherlands 436 12% 488 BU PC underlying1 net profit down 7% as lower BU Private Clients 165 (7%) 154 financial markets and divestments impacted AuM (down 16%) and commissions, offsetting BU Asset Management2 110 * 56 an 11% decrease in expenses Underlying1 net profit 697 711 (2%) AAAM transfer in Q2 08 and interest revenues on sale to Fortis distorted H1 08 results Underlying1 net profit up 18% in Q2 2008 BU NL underlying1 net profit up 14%, a.o. due (EUR million) Q1 08 Chg. Q2 08 to the adjustment of interest revenues and lower expenses (down 6%) BU Netherlands 228 14% 260 BU PC underlying1 net profit up 13% due to a BU Private Clients 72 13% 81 10% decline in underlying operating expenses, offsetting a 3% decrease in AuM BU Asset Management2 19 * 37 AAAM transfer in Q2 08 and interest revenues Underlying1 net profit 378 319 18% on sale to Fortis distorted quarterly comparison 1 Excluding integration costs Fortis first half-year 2008 results │4 August 2008 │ 18 2 Q2 08 results limited to France, Argentina and interests received on AAAM sale proceeds
  19. 19. Expected close of the EC remedies and future divestments and partnerships will increase the volatility in quarterly results in the second half of 2008 Strategic partnerships EC remedies Sale imposed by the European Commission in Fortis Ping An Investments JV order to reduce combined market share in - Ping An will acquire 50% of Fortis Investments Commercial Banking in the Netherlands for a total EUR 2.1 billion consideration October 2008 deadline for sale set by EC - Solvency impact of ~ EUR 2.15 billion through: Sale agreement signed on 2 July 2008, closing - a EUR 675 million capital gain on Fortis expected in Q4 2008 Investments revaluation (P&L impact) Sale will impact Fortis through: - the recognition of the minority interests for EUR 1,475 million (Balance Sheet impact) - realised loss of EUR 0.3 bn (sale price of EUR 0.7 bn vs. EUR 1 bn NAV) Interparking-Vinci JV will create the largest - capital required of ~ EUR 0.5 bn for credit European public car park operator. Transaction risk coverage on assets sold, released is expected to generate a ~ EUR 0.5 billion over time as loans mature capital gain and small relief on required capital. - credit protection valuation (recorded as a Other divestments and partnerships may financial guarantee). Unrealised loss materially impact net profit after divestments. will revert over time depending on credit Exact timing remains uncertain but this should performance of transferred assets. lead to substantial volatility between quarters. - Write down of intangibles on divested Net impact on look-through solvency should assets (~ 10% of total ABN AMRO however remain positive (potential capital intangibles) losses offset by reversal of goodwill). Fortis first half-year 2008 results │4 August 2008 │ 19
  20. 20. Equity method – H1 2008 evolution (under BIS I) (EUR billion) Non-Innovative T1 Equity after prudential filters 1.6 1.1 1.5 5.7 (2.1) (3.6) 6.8 Core Core Equity Equity 24.6 26.1 20.4 17.8 Q4 2007 Q2 2008 Retained Goodwill & Capital Capital Impact profit intangibles raising instruments equity H1 2008 AAAM (ABO) (NITSH) markets & other Fortis first half-year 2008 results │4 August 2008 │ 20
  21. 21. Equity method – Sound Q2 2008 solvency (EUR billion) Regulatory Core Equity EUR 4.0 billion above target Limits Max. 15% of (4.4) Innovative Hybrids 8.0 tier 1 capital** EUR 3.4 billion ► currently 8% 24.6 21.0 Actual Core Equity Max. 33% of tier Non-innovative Hybrids 1 capital** ► currently 17% Tier 1 capital (EUR 28.0 bn) EUR 6.8 billion* Q2 2008 Core equity capital (EUR 24.6 bn) Group Bank Insurance Equity leverage method 7.4% 196% 15% 4.0 Equity after prudential filters (3.6) EUR 17.8 billion 7.2 Minimum 67% 20.6 of tier 1 capital** (EUR 30.2 billion Target ► currently 75% 17.1 before deduction Core Equity of participations) Q2 2008 Group Bank Insurance Equity leverage method 6.0% 175% 15% * Adjusted for deferred tax effects and recognition of the option premium in core equity Fortis first half-year 2008 results │4 August 2008 │ 21 ** Tier 1 capital before deduction of participations
  22. 22. Look-through method – Execution of capital plan to bring core equity above targets Participation RFS Hold. 12.1) (EUR billion) Goodwill ABN AMRO (19.4) Intangibles ABN AMRO (2.9) Fortis Ping An 2.1) Goodwill & intang. AAAM 3.6) Investments JV Capital support (CSA) 2.5) Interparking JV 0.5) EC remedies (0.3) Delta Lloyd JV (0.2) ~2.4 26.6 ~(4.4) 4.0 24.6 22.6 Non-dilutive Retained Actual Divestments Consolidation instruments earnings Core Equity & acquisitions treatments & non-core H2 ’08 & disposals FY ’09 Q2 2008 Q2 2008 Look- End Equity Look- through Impact consolidation 2009 method through plan RWC AA and EC remed. 4.9 Delta Lloyd - AA JV 0.2 (1.5) 25.7 5.1 24.2 Target 20.6 Capital Controlled Core Equity Consolidation treatments, relief RWC/RMM divestments & acquisitions transactions growth End Group core equity Above target Above target 2009 Bank core tier 1 7.4% > 6.0% Insur. core solv. 196% > 175% Fortis first half-year 2008 results │4 August 2008 │ 22
  23. 23. Agenda 1 Strategic update 2 Financials 3 Conclusion Additional information - First half-year 2008 results - Structured Credit Portfolio Fortis first half-year 2008 results │4 August 2008 │ 23
  24. 24. Conclusion First half year 2008 net profit of EUR 1.6 billion Banking net profit impacted by credit market turmoil impairments on loan portfolio lower capital gains but the commercial performance of businesses remained satisfactory Insurance net profit up when excluding net of tax impact of credit market turmoil Diligent execution of the capital plan will enable the full consolidation of the acquired ABN AMRO activities and ensure future financial flexibility Fortis first half-year 2008 results │4 August 2008 │ 24
  25. 25. Getting you there.
  26. 26. Additional information 1 First half-year 2008 results 2 Structured Credit Portfolio Fortis first half-year 2008 results │4 August 2008 │ 26
  27. 27. Results overview H1 '08 H1 '07 % Chg. Q2 '08 Q1 '08 % Chg. Net profit before results on divestments 1,638 2,782 (41%) 830 808 3% Banking 1,185 2,062 (43%) 465 721 (36%) Insurance 642 765 (16%) 423 219 93% General (189) (44) * (57) (132) (57%) Results on divestments - - - - - - Net profit 1,638 2,782 (41%) 830 808 3% of which ABN AMRO 198 - - 114 84 - Weighted average number of shares 2,195 1,548 42% 2,198 2,191 0% 0.75 1.80 (58%) 0.38 0.37 3% 1 Earnings per share (EUR) Net equity per share (EUR) 12.48 12.51 0% 12.48 14.08 (11%) 11% 22% Return on Equity 2 Based on average number of outstanding shares / 2 Rolling average over the last four quarters 1 Net profit of EUR 1,638 million in H1 2008, including a total negative impact of the credit market turmoil of EUR 591 million Q2 2008 net profit up 3% quarter on quarter to EUR 830 million, including a total negative impact of the credit market turmoil of EUR 362 million (vs. EUR 229 million in Q1 2008) Fortis first half-year 2008 results │4 August 2008 │ 27
  28. 28. Overview of main impacts on Fortis and ABN AMRO results Reported Standalone Standalone H1 ’08 H1 ’08 H1 ’08 costs (net of tax) RFS Holdings 1,638 2,477 3,068 contribution Accounting Integration Purchase AA profit Shared Assets AA 697 307 AA 83 591 114 697 198 (4) (198) 271 69 Credit market H1 ’07 Fortis turmoil costs (net of tax) costs (net of tax) 2,784 impact contribution Fortis 2,371 Integration Financing (net) AA profit (15%) Fortis 1,780 1,638 Fortis first half-year 2008 results │4 August 2008 │ 28
  29. 29. Impact of credit market turmoil Bank H1 2008 H1 2007 Q2 2008 Q1 2008 Impairments - Gross impact (845) - (479) (366) - Net impact (540) - (309) (231) Credit portfolio hedge - Gross impact 183 (37) (28) 210 - Net impact 131 (27) (20) 151 Total impact - Gross impact (662) (37) (507) (156) - Net impact (409) (27) (329) (80) Insurance H1 2008 H1 2007 Q2 2008 Q1 2008 - Gross impact (256) - (47) (209) - Net impact (182) - (33) (149) Fortis H1 2008 H1 2007 Q2 2008 Q1 2008 - Gross impact (918) (37) (554) (365) - Net impact (591) (27) (362) (229) Fortis first half-year 2008 results │4 August 2008 │ 29
  30. 30. Banking results mainly impacted by the credit market turmoil Change EUR million H1 2008 H1 2007 6% Total income 6,090 5,752 * Change in impairments (1,088) (36) 4% Total expenses (3,483) (3,334) Tax exp. / Discontinued operations / Minorities (334) (320) 4% Net profit - reported 1,185 2,062 (43%) Net impact credit market turmoil 409 27 - Net profit - adjusted for credit market turmoil 1,594 2,089 (24%) Net profit at EUR 1,185 million, incl. EUR 409 million net impact of credit market turmoil Total income up 6%: lower net interest income (due to ABN AMRO related financing costs) and capital gains were offset by higher treasury & financial markets results and ABN AMRO contribution ABN AMRO contribution of EUR 198 million. When taking financing, integration and other costs into account - totaling EUR 257 million - the total ABN AMRO impact on Banking was EUR (59) million. Total expenses growth contained to 4% despite the impact of ABN AMRO integration costs and the transfer of ABN AMRO Asset Management to Fortis on 1 April 2008 ►Underlying performance satisfactory despite difficult market conditions ►Net profit down due to the impact of credit market turmoil, ABN AMRO-related financing/integration costs, lower capital gains and higher effective tax rate Fortis first half-year 2008 results │4 August 2008 │ 30
  31. 31. Banking – H1 ’08 vs. H1 ’07 analysis Total income up 6%: H1 '08 H1 '07 Chg. % lower net interest income (due to Total income 6,090 5,752 6% ABN AMRO financing costs) and Change in impairments (1,088) (36) * capital gains Total expenses (3,483) (3,334) 4% offset by higher treasury & Pre-tax profit 1,520 2,383 (36%) financial markets results (up thanks to gains on a credit hedge) Tax (343) (312) 10% and ABN AMRO contribution Discontinued operations 24 - * Minorities (15) (9) 67% Impairments impacted by write- downs on structured credits and Net profit 1,185 2,062 (43%) higher impairments in loan portfolio Expenses up 4% only thanks to +338 costs containment and monitoring (1,052) H1 ’07 measures 2,062 Net profit down 43%. Excluding +24 (149) (31) (6) write-downs on structured credits H1 ’08 1,185 and the gain on credit hedge, net profit was down 24% due to the financing & integrations costs of ABN AMRO and lower capital gains Net profit Δ Δ Δ Δ Δ Δ Net profit Income Impairm. Expenses Tax Discont. Minorities Fortis first half-year 2008 results │4 August 2008 │ 31
  32. 32. Main elements impacting total income (1/2) H1 2008 H1 2007 Change Q2 2008 Q1 2008 Change Net interest income - reported 2,417 2,618 (8%) 1,167 1,250 (7%) - Financing costs ABN AMRO 270 134 136 - Funding transfer ABN AMRO Asset Management 65 65 - Reclassification of fees on unused credit lines 18 18 - Correction at Fortis Hypotheekbank 29 - Others (5) 8 (5) Net interest income - adjusted 2,765 2,655 4% 1,379 1,386 (0%) H1 2008 H1 2007 Change Q2 2008 Q1 2008 Change Net commissions and fees - reported 1,506 1,490 1% 783 723 8% - ABN AMRO Asset Management inclusion (68) (68) - Reclassification of fees on unused credit lines (18) (18) - Retrocession fees to ABN AMRO (Merchant Bk.) 19 19 - Others (8) Net commissions and fees - adjusted 1,439 1,482 (3%) 716 723 (1%) H1 2008 H1 2007 Change Q2 2008 Q1 2008 Change Combined NII & NCF - adjusted 4,204 4,137 2% 2,095 2,108 (1%) Adjusted figures provided for period on period comparison purposes only Q2 2008 reported figures are the relevant base for upcoming quarters, except for the impact of AAAM transfer funding on net interest income (which should not impact next quarters) Fortis first half-year 2008 results │4 August 2008 │ 32
  33. 33. Main elements impacting total income (2/2) H1 2008 H1 2007 Change Q2 2008 Q1 2008 Change Treasury & financial markets - reported 1,404 1,008 39% 579 826 (30%) - Grossing up (117) 162 (1) (116) - CDS hedge (183) 37 28 (210) T&FM excl. grossing up and credit hedge 1,104 1,207 (9%) 606 500 21% - Funding transfer ABN AMRO Asset Management (22) (22) - Retrocession fees to ABN AMRO (Merchant Bk.) (19) (19) Treasury & financial markets - adjusted 1,063 1,207 (12%) 565 500 13% H1 2008 H1 2007 Change Q2 2008 Q1 2008 Change Dividend & other invest. income - reported 390 148 164% 254 137 85% - ABN AMRO profit contribution (198) (114) (84) Dividend & other invest. income - adjusted 192 148 30% 140 53 164% No adjustment on items 'Capital gains' and 'Other income' H1 2008 H1 2007 Change Q2 2008 Q1 2008 Change Total income - reported 6,090 5,752 6% 2,912 3,178 (8%) - Total adjustments (258) 228 17 (274) Total income - adjusted 5,832 5,980 (2%) 2,929 2,904 1% Adjusted figures provided for period on period comparison purposes only Fortis first half-year 2008 results │4 August 2008 │ 33
  34. 34. Total income up 6% despite ABN AMRO financing costs Net Net Capital Treasury Dividend & Other interest commissions gains & financial other invest. income income & fees markets income (8%) +1% (41%) +39% - +72% 6,090 +53 Up +242 6% 5,752 (201) +16 +396 (169) Up 4% excl. YoY impact ABN AMRO AA financing and credit hedge contribution AAAM transfer EUR +220m EUR +198m H1 ’07 H1 ’08 Net interest income and net commissions & fees impacted in H1 2008 by ABN AMRO financing and AAAM integration transfer ► underlying1 combined growth of NII and NCF was up 2% Higher treasury & financial markets and the contribution of ABN AMRO offset lower capital gains 1 See slides 32-33 in Annex for details on computation of underlying growth Fortis first half-year 2008 results │4 August 2008 │ 34
  35. 35. Banking – Sound commercial performance in adverse conditions Net interest income 1 Net interest income (down 8% in H1 2008) impacted by financing costs on +4% ABN AMRO acquisition and funding of AA Asset Management transfer 2,765 2,655 ► Underlying1 net interest income up 4%, slightly lower than the 5% growth in credit risk-weighted commitments (EUR m) Net interest margin will be affected by the increased competition on savings H1 07 H1 08 Net commissions & fees 1 Net commissions & fees up 1%, benefiting from AAAM integration (3%) ► Underlying1 net commissions & fees down 3% 1,482 1,440 - lower fees in corporate finance, brokerage and asset management - offset the higher revenues related to loans and payment services (EUR m) Total net outflow limited to EUR 0.5 billion in H1 2008 H1 07 H1 08 Treas. & financial markets 2 Results benefited from the credit portfolio hedge revaluation and higher pre- (9%) tax revenues (but lower post-tax due to mix in capital gains/losses) 1,207 ► Underlying2 treasury & financial markets results down 9% 1,104 Trading results down 9%, but already close to annual floor of EUR 500 m (EUR m) Non-trading results also fell by 9% as higher GSFG results were offset by H1 07 H1 08 lower Private Equity results (lower gains on exits than in H1 2007) 1 See slides 32-33 for computation details / 2 Adjusted only for gross up and credit hedge impact Fortis first half-year 2008 results │4 August 2008 │ 35
  36. 36. Resilient treasury and financial markets in adverse markets Total Banking (EUR million) H1 '08 H1 '07 Change Comments Treasury and financial markets - Reported 1,404 1,008 39% - Grossing-up (117) 162 * More non-deductible losses on equities Treasury and fin. markets - grossed up 1,287 1,170 10% Strong performance ▪ Trading 484 531 (9%) Already close to annual floor ▪ Non-trading 637 423 51% Positive hedge impact (Δ +220 YoY) - GSFG 268 262 2% Rising despite higher liquidity costs - Private Equity 98 143 (31%) Lower exits than in H1 '07 - Credit Portfolio Hedge 183 (37) * Benefited from spread widening in Q1 - Other non-trading at Merchant Banking 88 55 60% - ▪ Others1 166 216 (23%) Lower ALM contribution Treasury and fin. markets - adjusted for 1,104 1,207 (9%) gross up and credit portfolio hedge Trading results remained resilient on a high base, while gains on the credit portfolio hedge more than offset the lower contribution of ALM and Private Equity (lower exits) 1 Other Banking, Retail Banking, Private Banking and Asset Management Fortis first half-year 2008 results │4 August 2008 │ 36
  37. 37. Solid underlying1 loan portfolio growth Residential Consumer Commercial Others 2 Mortgages Loans Loans 2,038 284,008 +25% 27,926 +14% +22% (1,487) +6,359 (13%) +7% 248,541 H1 ’08 H1 ’07 1 Underlying loan portfolio = total loans to customers excluding Reverse Repo’s and Securities Lending 2 Government & official institutions and Others (mainly financial lease receivables and factoring) Fortis first half-year 2008 results │4 August 2008 │ 37
  38. 38. Evolution of deposits Demand Saving Time Other Deposits Deposits Deposits Deposits (3,685) 1,578 (7%) 219,654 +2% (2%) (2,444) (85) Total (39%) (3%) Customer 215,018 Deposits Total Customer Deposits H1 ’08 H1 ’07 Fortis first half-year 2008 results │4 August 2008 │ 38
  39. 39. Corporate loan portfolio by sector EUR billion Q4 '07 Q1 '08 Q2 '08 Agriculture, forestry and fishing 0.7 0.7 0.9 Automotive 0.6 1.1 1.0 Basic Metals 2.7 2.9 2.6 Chemicals, Rubber & Plastic products 3.8 4.0 4.8 Construction: Materials & Engineering 2.9 2.6 2.7 Consumer goods 2.1 2.5 3.3 Electricity, Gas & W ater (supply) 4.9 5.2 5.1 Financial services 4.9 6.3 7.2 Holding & Other Services 6.2 6.6 7.5 Machinery & Equipment 0.9 0.9 1.1 Oil & Gas (raw mat. & extraction) 4.2 4.7 4.5 Private persons 0.0 0.0 0.1 Public & Social Services 2.0 2.2 2.1 Raw & Intermediate Materials 0.3 0.3 0.2 Real Estate 3.5 5.9 6.0 Retail 1.1 1.1 1.2 Supranational Organisation 0.4 0.5 0.2 Telecom, Media & Technology 1.5 1.4 2.1 Trade & Commodity finance 1.1 1.2 1.4 Transportation 6.8 6.3 6.6 W ood, Pulp & Paper products 0.2 0.2 0.3 Miscellaneous 9.7 11.2 11.1 Total 60.4 67.8 71.8 Fortis first half-year 2008 results │4 August 2008 │ 39
  40. 40. Main elements impacting total expenses H1 2008 H1 2007 Change Q2 2008 Q1 2008 Change Total expenses - reported (3,483) (3,334) 4% (1,793) (1,690) 6% - Integration costs ABN AMRO (100) (56) (45) - ABN AMRO Asset Management inclusion (85) (85) Total expenses - adjusted (3,298) (3,334) (1%) (1,653) (1,645) 0% H1 2008 H1 2007 Change Q2 2008 Q1 2008 Change Staff expenses - reported (2,060) (1,934) 6% (1,032) (1,027) 0% - Integration costs ABN AMRO (61) (29) (33) - ABN AMRO Asset Management inclusion (29) (29) Staff expenses - adjusted (1,969) (1,934) 2% (974) (995) (2%) H1 2008 H1 2007 Change Q2 2008 Q1 2008 Change Other expenses - reported (1,423) (1,400) 2% (761) (662) 15% - Integration costs ABN AMRO (39) (27) (12) - ABN AMRO Asset Management inclusion (55) (55) Other expenses - adjusted (1,329) (1,400) (5%) (679) (650) 4% Adjusted figures provided for period on period comparison purposes only Q2 2008 reported figures are the relevant base for upcoming quarters Fortis first half-year 2008 results │4 August 2008 │ 40
  41. 41. ABN AMRO contribution offset by financing & integration costs EUR million H1 2008 H1 2007 Change BU Netherlands 488 436 12% BU Private Clients 154 165 (7%) BU Asset Management 56 110 - Underlying net profit showing Underlying 1 net profit 697 711 (2%) resilience despite AAAM transfer Integration costs (net) - recorded at AA (83) - - Impact of higher funding costs at Shared assets (307) (67) * ALM, lower Private Equity results Reported net profit 307 644 (52%) and write-down on Unicredit stake Purchase accounting (114) - RFS Holdings 4 - Adjustment for results before acquisition date - (644) Recorded as income from participation Net profit contribution to Fortis 198 - Net contribution transferred AAAM activities 38 EUR 313 million impact at Fortis, mainly Purchase accounting on AAAM (11) financing and integration costs Financing costs (net) (270) (Bank EUR 257m, General EUR 56m) Integration costs (net) - recorded at Fortis (69) Total impact on Fortis net profit (115) ►The negative contribution of shared assets and impact of financing and integration costs brought the total net impact of ABN AMRO to a negative EUR 115 million in H1 2008 1 Excluding integration costs Fortis first half-year 2008 results │4 August 2008 │ 41
  42. 42. Banking – Q2 ’08 vs. Q1 ’08 analysis Total income down 8%: Q2 '08 Q1 '08 Chg. % lower net interest income (due to Total income 2,912 3,178 (8%) funding of AAAM transfer), lower Change in impairments (640) (448) 43% capital gains and lower treasury & Total expenses (1,793) (1,690) 6% fin. mkts (large gain in Q1) Pre-tax profit 479 1,041 (54%) more than offset higher comm. & fees resulting from AAAM Tax (28) (315) (91%) consolidation as of Q2 Discontinued operations 24 - * Minorities (11) (4) * Impairments increase mainly due to higher impairments on structured Net profit 465 721 (36%) credit portfolio (EUR 479m pre-tax in Q2 vs. EUR 366m pre-tax in Q1) Q1 ’08 Expenses up 6% due to AAAM (266) 721 consolidation (underlying was flat) +24 (7) Q2 ’08 Net profit down EUR 256 million (192) 465 +287 quarter on quarter, due to negative (103) impact of credit market turmoil (EUR 329m in Q2 vs. EUR 80m in Q1) and higher impairments on the loan portfolio Net profit Δ Δ Δ Δ Δ Δ Net profit Income Impairm. Expenses Tax Discont. Minorities Fortis first half-year 2008 results │4 August 2008 │ 42
  43. 43. Banking Total Income – Q2 ’08 vs. Q1 ’08 analysis Q2 '08 Q1 '08 % Change Net interest income on interest-margin products 1,167 1,250 (7%) Net commissions and fees 783 723 8% Capital gains on investment portfolio 65 182 (65%) Treasury and financial markets 579 826 (30%) Dividend and other investment income 254 137 86% Other income 65 61 6% Total incom e 2,912 3,178 (8%) Net interest income down 7%, but stable when excluding the financing costs relating to the transfer of ABN AMRO Asset Management (AAAM) and reclassification of fees on unused credit lines Net commissions & fees up 8% due to the inclusion of AAAM, down 1% excluding this impact Lower capital gains than in Q1, which benefited from capital gains on bonds Treasury and financial markets results down strongly with lower revaluation on a credit portfolio hedge (delta QoQ EUR 238m) and lower trading results more than offsetting higher Private Equity (exits) and GSFG revenues (Q2 seasonality) Higher dividend (Q2 seasonality) and other investment income (contribution of ABN AMRO) Fortis first half-year 2008 results │4 August 2008 │ 43
  44. 44. Loans to Customers – Product view (Q2 ’08 vs. Q1 ’08) EUR million Q2 '08 Q1 '08 Chge. Loans to Customers 361,285 333,481 8% Government and official institutions 5,790 5,168 12% Residential mortgages 97,929 96,241 2% Consumer loans 10,117 9,747 4% Commercial loans 154,948 142,461 9% Reverse repurchase agreements 48,564 37,831 28% Securities lending transactions 28,713 26,053 10% Other loans to customers 15,224 15,980 (5%) Loans to Customers (underlying) 284,008 269,597 5% Total loans to customers up by EUR 28 billion (or 8%) supported mainly by the increase in Commercial loans (EUR 12 billion) and Reverse repurchase agreements (EUR 11 billion) The underlying loan growth (excl. Securities lending transactions and Reverse repurchase agreements) was at 5%, up EUR 14 billion to EUR 284 billion Residential mortgages up 2% over the quarter Commercial loans up mainly in Corporate & Public Banking (part of Merchant Banking) Increase in Securities lending transactions and Reverse repurchase agreements due to seasonality Fortis first half-year 2008 results │4 August 2008 │ 44
  45. 45. Loans to Customers – Business view (Q2 ’08 vs. Q1 ’08) EUR million Q2 '08 Q1 '08 Chge. Retail Banking 73,629 85,944 (14%) Private Banking & Asset Management 10,224 9,736 5% Merchant Banking 228,310 205,744 11% Other Banking 49,122 32,058 53% Total 361,285 333,481 8% Loans to customers were up 8% in the second quarter, driven mainly by Merchant Banking The underlying loan growth (excl. Securities lending transactions and Reverse repurchase agreements) was at 5%, up EUR 14 billion to EUR 284 billion Retail Banking: EUR 12 billion decrease resulting from a securitisation transaction, with a transfer of EUR 15 billion mortgages to Other Banking. Excluding this transaction, loans to customers in Retail Banking were up 4%, led by consumer loans and mortgages. Private Banking & Asset Management: loans up 5%, mainly in Private Banking Merchant Banking: underlying loan growth of 6% (11% when including Securities lending transactions and Reverse repurchase agreements) due mainly to Corporate & Public Banking Other Banking: up strongly due to the transfer of mortgages (securitisation) from retail Fortis first half-year 2008 results │4 August 2008 │ 45
  46. 46. ABN AMRO – Overview Q2 2008 EUR million Q2 2008 Q1 2008 Change Underlying net profit up 18% BU Netherlands 260 228 14% BU NL up 14% a.o. due to the BU Private Clients 81 72 13% application of liquidity transfer BU Asset Management 37 19 * pricing Underlying 1 net profit 378 319 18% BU PC up 13% on lower costs Integration costs (net) - recorded at AA (43) (40) - Impact of higher funding costs and Shared assets (163) (144) 14% ramp-down costs Reported net profit 173 135 28% Purchase accounting (63) (51) 24% RFS Holding 4 - - Adjustment for results before acquisition date - - - Recorded as income within Fortis Net profit contribution to Fortis 114 84 36% Net contribution transferred AAAM activities 38 - Purchase accounting on AAAM (11) - Financing costs (net) (135) (271) (136) Integration costs (net) - recorded at Fortis (36) (69) (32) Total impact on Fortis net profit (115) (30) (84) ►The contribution of the acquired ABN AMRO activities to Fortis net profit reached EUR 114 million in Q2 2008, up 36%, supported by an 18% increase in the underlying net profit 1 Excluding integration costs Fortis first half-year 2008 results │4 August 2008 │ 46
  47. 47. Major milestones reached for ABN AMRO Asset Management ABN AMRO Asset Management transferred to Fortis on 1 April 2008 Transfer First business unit to exit the consortium completed Separation from ABN AMRO completed ahead of schedule and with no continuity issues All regulatory, legal structuring and compliance issues resolved Management/ All senior management nominated, 90% of staff formally appointed Operating Integration planning completed, benefiting staff and external stakeholders model Advisory arrangements enforced globally, facilitating asset management by new teams Investments Process managed without any compliance issues and limited client losses transition Keep voluntary attrition as targeted (12%) Distribution/ Integration of product lines and sales channels Branding Rebranding to Fortis Investments Management (FIM) completed IT/ Common internal communication systems Operations London office relocated Fortis first half-year 2008 results │4 August 2008 │ 47
  48. 48. BU Netherlands – Integration 1 progress status Opening of 3 new business centres for large and medium-sized businesses Further extension of the integrated business network will reinforce client & regional focus Commercial Alignment of quality of service and broadening of cooperation between centres Banking Account managers are the first point of contact for cross-border-advice on financial matters Combined commercial network dedicated to large and medium-sized businesses will count 175 business centres across Europe, of which 74 in the Netherlands As of 1 July 2008, banks operating in the Netherlands must complete bilateral agreements on Retail the use of cash tellers (in terms of service range and charges) by ‘non-proprietary clients’ Banking ABN AMRO en Fortis clients will have access to cash tellers of each network with the same range of service and limitations Between April and June 2008, 290 senior managers from Fortis and ABN AMRO set out on the road to cultural integration in the ‘Connecting for Growth’ leadership programme Cultural The objective is to bring together senior leaders to explore and discuss strategic ambitions, integration markets and customers features, as well as company values The new ‘Leading for Growth’ programme for 3,000 managers will be launched shortly EC Remedies – IT contribution to ring-fencing of sold activities on track IT/ Separation/Integration – Legal entities and brands to be combined Operations Operations – Migration strategy for Retail Banking fold-in finalised 1 Subject to regulatory approval Fortis first half-year 2008 results │4 August 2008 │ 48

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