Major improvements in operating performance

First half-year results 2004 (versus first half-year of 2003)

Net operating profit almost tripled, from EUR 683 million to EUR 1,829 million. Value adjustments on the equity portfolio contributed EUR 271 million, compared with a loss of EUR 740 million last year. Net operating profit before realised capital gains increased by EUR 303 million, or 33%, to EUR 1,226 million and by 51% excluding Assurant and Seguros Bilbao, reflecting a major improvement in the operating performance of the businesses. Net realised capital gains came down by EUR 168 million, or 34%, to EUR 332 million.

Net profit tripled from EUR 671 million to EUR 2,078 million, benefiting from EUR 249 million of non-operating items, mainly in respect of realised gains on the sale of 65% of Assurant and of Seguros Bilbao. Earnings per share amounted to EUR 1.60 compared to EUR 0.52 last year. Based on the last twelve months, return on equity came to 31.0%.

In the Banking business net operating profit increased by 36% to EUR 1,157 million.
Net operating profit before realised capital gains rose 58% to EUR 814 million as a result of a significant decrease in value adjustments on loans and a reduction in operating costs. Substantial increases in net interest income (+11%) and commissions (+13%) were offset by lower net realised capital gains and a lower trading result within Other income.

In the Insurance business net operating profit increased by EUR 800 million to EUR 766 million. Net operating profit before realised capital gains increased by 20%, excluding Assurant and Seguros Bilbao, as a result of a continued good performance in Life and an excellent performance in Non-life. Value adjustments on the equity portfolio contributed EUR 230 million to net operating profit, compared with a loss of EUR 724 million last year.

Key half-year figures (in EUR million)
	H1 2004	H1 2003	% change	% change 1)
Net operating profit before realised capital gains	1,226	923	33	51
Banking	814	515	58
Insurance	499	516	(3)	20
General	(87)	(108)	(20)
Net realised capital gains 2)	332	500	(34)	(33)
Net operating profit excluding value adjustments on the equity portfolio	1,558	1,423	10	18
Value adjustments on the equity portfolio	271	(740)	*
Realised	(92)	(647)	(86)
Unrealised	363	(93)	*
Net operating profit	1,829	683	*
Banking	1,157	851	36
Insurance	766	(34)	*
General	(94)	(134)	(30)
Non-operating items	249	(12)	*
Net profit	2,078	671	*

1) Excluding Assurant and Seguros Bilbao.

2) Excluding equity portfolio, after tax.

Second quarter of 2004 (versus first quarter of 2004)

Net operating profit decreased by EUR 219 million (-21%) to EUR 805 million as a result of lower net realised capital gains (down EUR 272 million). In addition, value adjustments on the equity portfolio declined (down EUR 91 million). However, net operating profit before realised capital gains increased by EUR 144 million (+27%) to EUR 685 million and by 31% excluding Assurant and Seguros Bilbao, and by 27% and 43%, respectively, compared to the same quarter last year, reflecting the quarter-on-quarter improvement of the operating performance.

In the Banking business net operating profit came down by EUR 149 million (-23%) to EUR 504 million as a result of lower net realised capital gains (down EUR 265 million). However, net operating profit before realised capital gains increased by EUR 130 million (+38%) to EUR 472 million, driven by exceptionally low value adjustments on loans, ongoing cost reduction and better trading results. Net operating profit before realised capital gains advanced 39% compared to the same quarter last year.

In the Insurance business net operating profit decreased by EUR 68 million (-17%) to EUR 349 million as a result of a lower contribution from value adjustments on the equity portfolio (down EUR 96 million). However, net operating profit before realised capital gains, excluding Assurant and Seguros Bilbao, increased by EUR 34 million (+17%) to EUR 231 million and by 25% compared to the same quarter last year.

Key quarterly figures (in EUR million)
	Q2 2004			Q1 2004	% change	% change1)	Q2 2003	% change	% change1)
Net operating profit before realised capital gains			685	541	27	31	540	27	43
Banking	472			342	38		338	39
Insurance	260			239	9	17	264	(2)	25
General	(47)			(40)	18		(62)	(25)
Net realised capital gains 2)	30			302	(90)	(90)	87	(65)	(62)
Net operating profit excluding value adjustments on the equity portfolio	715			843	(15)	(14)	627	14	27
Value adjustments on the equity portfolio		90		181	(51)		509	(82)
Realised	1			(93)	*		(614)	*
Unrealised	89			274	(68)		1,123	(92)
Net operating profit	805			1,024	*(21)*		1,136	*(29)*
Banking	504			653	(23)		492	2
Insurance	349			417	(17)		672	(48)
General	(48)			(46)	5		(28)	73
Non-operating items	(2)			251	*		(12)	(83)
Net profit	803			1,275	*(37)*		1,124	*(29)*

1) Excluding Assurant and Seguros Bilbao.

2) Excluding equity portfolio, after tax.

Fortis CEO Anton van Rossum:

"I am pleased with the strong performance that we delivered in the first half of 2004. Our net operating profit almost tripled, on the back of the recovery of the equity markets. More importantly, the operating performance of our businesses improved considerably, which is reflected in the significant increase in our net operating profit before realised capital gains. We have steadily improved our performance over the last twelve months. Although these results are encouraging, we have not yet achieved our full potential and much has yet to be done. We will therefore continue to concentrate on revenue growth while remaining disciplined in our cost control.

Our aim is to deliver profitable growth in our core Benelux businesses and to expand certain businesses in which we have a competitive advantage on a European or global basis. We are doing this by investing in organic growth opportunities, selected value-adding acquisitions and joint ventures to improve our returns in the medium term. The recently announced acquisition of a controlling stake in Milleniumbcp Fortis Insurance Group in Portugal is an example of how we are implementing our strategy.

In view of the favourable developments in our operating performance and despite the decreased equity markets since the end of June, we are more optimistic than we were at the end of the first quarter. The ongoing operating improvements in the businesses should more than compensate for the reduction in net operating profit due to the sale of Assurant and Seguros Bilbao. Barring unforeseen circumstances and with the stock markets at today's levels, this should result in at least a 10% increase of net operating profit for Fortis as a whole in 2004."

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Annexes Results First Half-Year 2004

Major improvements in operating performance

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