Human Capital: regional challenges

1. Human Capital: regional challenges a Central European perspective Edwin De Boeck Chief Economist KBC Group

2. KBC in Central Europe well-defined core markets to access ‘new growth’ in Europe KBC Group’s core markets Belgium and CEE-4 MARKET SHARE, AS OF END 2012 20% 20% 2 10% 8% 2% 35% 30% 8% 20% BELGIUM 17% 8% 13% CZECH REP SLOVAKIA 5% 3% 11% 9% HUNGARY 6% 3% 4% BULGARIA • Excluding Centea and Fidea • Including 55% of the joint venture with CMSS

3. Central Europe growth supported by global economic recovery producer confidence OECD- leading indicators Consumer confidence

4. regional challenges but macro-economic ‘convergence’ has been stalling GDP per capita (PPS, in % of EU1-average) real GDP (2000 = 100) Source: Eurostat Source: Eurostat

5. regional challenges How toincreaselabour market participation ? employment rate (employed in % of 20-64 years old) employment rate by age category (employed in % of age group) Source: Eurostat Source: Eurostat

6. regional challenges ageing will reduce the labour force population at active age (20-64 years old, 2000 = 100) old-age dependency ratio (65+ years old as a % of 20-64) Source: Eurostat Source: Eurostat

7. regional challenges keeping human capital at work …and productive …and keep it productive (‘employable’) participation to life-long learning (in % of 20-64 years old) keep human capital (longer) at work… effective retirement age (in years) Source: Eurostat Source: Eurostat

8. regional challenges education, education, education… tertiary education: graduates in maths, science and technology (in % of all fields) school expectancy expected years of education over a lifetime Source: Eurostat Source: Eurostat

9. regional challenges watch out for excessive taxes on labour income tax wedge: labour taxes in % of average wage (single individuals) OECD (2010):«Cutting the ’tax wedge’ to the OECD-average could raise Hungary’s employment rate by about 4 %-point over a 10-year horizon» Source: OECD

10. regional challenges (re-)activate knowledge transfer through FDI’s net foreign direct investments(in % of GDP) expenditures on R &D (in % of GDP) Source: World Bank Source: Eurostat

11. regional challenges international competitiveness rankings WEF global competitiveness index (ranking on 148 countries) IMD global competitiveness index (ranking on 60 countries)

12. regional challenges conclusion • Best way to ‘preservehuman capital in CE’ is to restore macro-economic convergence of the region by growthsupportiveeconomicpolicies • increase labour participation • watchout for excessive labour taxation (taxwedge) • invest in education and life-long learning • stimulateknowledgetransfer and investments in R&D, a.o.throughFDI’s

13. K&H Bank – overview • KBC is an active professional 100% shareholder of K&H Bank providing stability, liquidity and strong capital base • K&H is one of the market leaders on the Hungarian corporate banking market • universal banking services • country-wide retail and corporate branch network • pioneer in Treasury, Cash management, Trade finance and agricultural solutions, providing tailor-made products • awards: • Best Bank in Hungary in 2013 Euromoney Awards • for Excellence • Bank of the Year • in 2008 and 2011 • Best Foreign Bank • in 2009 and 2010 • Best Trade FinanceBank • in 2010 and 2011

14. K&H is attractive to talent • external recruitment • avg. 20+ applicants per vacancy • attracting young talent • nearly 700 participants in 4 K&H Student Cups • 160+ student internships • 300+applicants for the K&H Young Graduate Program Most attractive employerfor graduates Figyelő Hewitt TOP30 2010

15. K&H fosters and develops talents • fostering internal career moves • about 10% (400) rotates per year • 50% vertical • 70+% of people management vacancies filled internally • K&H participates in the KBC Top Talent Program • avg. 9 days of training per employee each year, above 95% satisfaction Diversity and familyfriendly employer 2013 Best Talent Mentoring System in Hungary 2012