Dexia Holding SA · EURONEXT:DEXB
Dexia Holding SA — Investor Day (September 2006)
59 slides from Dexia Holding SA's investor day presentation, Sep 26, 2006
Slide 1: Creating Strategic Value: Personal Financial Services
Creating Strategic Value Moving Forward into the Next 10 Years Personal Financial Services Stefaan Decraene - Chairman of the Management Board - Dexia Bank Belgium Philippe Jouard - Head of Dexia Private Banking Alain Delouis - Member of the Executive Committee, Head of TFM Paris, September 26th 200
Slide 2: Personal Financial Services within the Dexia Group
Creating Strategic Value Moving Forward into the Next 10 Years Personal Financial Services within the Dexia Group Paris, September 26th 2006
Slide 3: Agenda
Agenda Geographical scope of PFS European PFS: an attractive market Focus on PFS Belgium Belgian Retail Banking environment A successful track record in responding to challenges Focus on objectives New challenges Focus on Dexia Banka Slovensko Dexia BIL – Proximity banking Turkey PFS Financial & Ope
Slide 4: PFS within the Dexia Group
PFS within the Dexia Group Important & growing contribution to the group GOI, Net income(1) (EUR M ) CAGR 02-04 623 GOI + 26.1% 583 518 Net income 393 326 420 359 370 286 CAGR 02-04 202 + 33.3% 02 04 04 05 Dexia GAAP EU GAAP (2) (1) Underlyin g non pro formated (2) IFRS as adopted by the EU Strong d
Slide 5: Geographical Scope
Geographical Scope Net Net income income -- 2005 2005 pro pro forma forma (1) (1) Geographical Geographical presence presence -- Europe Europe overview overview Others Turkey 7% 11% Lux. 20% 62% Belgium Belgium Luxembourg (1) Underlying and including Slovakia France Insurance ; excluding Banque (20%
Slide 6: European Personal Financial Services: An Attractive Market
European Personal Financial Services: An Attractive Market The Themarket marketpredicts predictsstrong strong growth growth for forEuropean European retail retailbanking banking European European clients clientsare areunder-equipped under-equipped with with certain certainproducts products Loans out
Slide 7: Focus on PFS Belgium: Belgian Retail Banking Environment
Focus on PFS Belgium: Belgian Retail Banking Environment Strong penetration of asset gathering products, but still opportunities in loans products (1) Gross income per customer by consumer product line 2004 (EUR) Belgium Netherl ands France Germany EU15 Current accounts 109 108 124 186 133 Deposits
Slide 8: Focus on PFS Belgium: Belgian Retail Environment
Focus on PFS Belgium: Belgian Retail Environment High saving ratio Decreasing but still above the European average Efficient, state-of-the-art and cheap payments systems Increasing use of cards and Internet Banking Significant growth of the High cross-selling ratio market over the last few Explains
Slide 9: A Successful Track Record in Responding to Challenges
Focus on PFS Belgium: A Successful Track Record in Responding to Challenges Well Well defined defined change change plans plans Excellent Excellent execution execution Massive Massive mobilization mobilization of of people people '90 s: Spectacular product diversification and increase of fee busines
Slide 10: Young customer acquisition through Axion branding
Focus on PFS Belgium: A Successful Track Record in Responding to Challenges '90 s: Strong acquisition of young customers through “Axion” branding • Approach: – Creation of a unique young brand – Accent on extra-banking services – With a distinctive tone of voice & communication media Axion: today
Slide 11: Integration of Artesia
Focus on PFS Belgium: A Successful Track Record in Responding to Challenges ’00: holding a strong position among top players in a consolidating market Acquisition of Artesia ’02-’05: integration of Artesia: announced synergies overachieved 446 branches closed (-30%) FTE reduction: 2,066 FTE (-23%) 9
Slide 12: Strategy in mortgage loans
Focus on PFS Belgium: A Successful Track Record in Responding to Challenges Strategy Strategy in in mortgage mortgage loans loans Importance of mortgages Top “Moment of Truth” transaction with heavy impact on loyalty First product for post-Axion customers Booming market in low interest rate environm
Slide 13: Increase/restore market share
Focus on PFS Belgium: A Successful Track Record in Responding to Challenges ’05: increase/restore market share in still highly competitive market Focus on other products Market Market share share Non life insurance 4.2% – Ambition: doubling of market share 2003 Æ 2008 4.0% 3.8% 2003 2004 2005 (f)
Slide 14: Increase market share in private banking
Focus on PFS Belgium: A Successful Track Record in Responding to Challenges ’05: increase market share in private banking (PB) Approach A Unique PB concept shouldered on a retail network (leveraging on the customer base) Twofold approach: innovative “duo servicing” model & direct approach throug
Slide 15: Still Focused on the Fundamental Objectives
Focus on PFS Belgium: … but Still Focused on the Fundamental Objectives Become Become the the best best relationship relationship bank bank and and improve improve significantly significantly the the potential potential in in the the domestic domestic market market Large client base and strong marke
Slide 16: Accessibility and innovative product range
Focus on PFS Belgium: … but Still Focused on the Fundamental Objectives Accessibility (AAA) Dexia Direct Net: 627,783 contracts (08/2006, +30% vs. 12/2005) Innovative & modern range of products Structured products Debit card with picture: 82,000 demands since launch in June 2006 Socially responsible
Slide 17: Ready to Tackle New Challenges
Focus on PFS Belgium: … and Ready to Tackle New Challenges Increase the satisfaction and loyalty of customers and focus on service differentiation Roll-out of a highly efficient innovative customer approach Servicing through life stages “Moments of Truth” Delivery of a consequent product & servi
Slide 18: Moments of Truth
Focus on PFS Belgium: … and Ready to Tackle New Challenges A MoT is a moment of interaction Moments of Truth (MoT): with an emotional charge and with impact on loyalty The MoT transformation program aims at delivering superior service to the customer at these moments, resulting in higher immediate s
Slide 19: Solution Project: overall vision
Focus on PFS Belgium: … and Ready to Tackle New Challenges Solution Project: overall vision Complete solution in terms of product offering, services and communication, especially designed to answer customers’ needs in the context of a specific life stage/event E.g. solution project: My House Speed C
Slide 20: Multi channel distribution model
Focus on PFS Belgium: … and Ready to Tackle New Challenges Accelerate commercial development by im plementing a new modern and highly efficient multi channel distribution model What have we done so far ? Next steps New sales organization From “one size fits all ” distribution model to … New CR
Slide 21: Reach fair share
Focus on PFS Belgium: … and Ready to Tackle New Challenges Reach fair share in: Business Banking Become top 3 by 2010 Create relationship beyond sales by offering solutions before, during and after the career of business clients Highly specialized and dedicated sales force, knowing and underst
Slide 22: Further boosting of Private Banking approach
Focus on PFS Belgium: … and Ready to Tackle New Challenges Further boosting of Private Banking approach Accelerated leveraging of the existing customer base within the retail networks Focus on synergy with Business Banking Specific training program to enhance specialized competencies in PB within th
Slide 23: Wrap-up
Focus on PFS Belgium: Wrap-up Better segment penetration Product range Multi channel distribution model Productivity 23
Slide 24: Dexia Banka Slovensko: Success of the Turbo Retail Programme
Focus on Dexia Banka Slovensko: Success of the Turbo Retail Programme 52 Branches, 200,000 clients How How Result Result High customer retention index (1) Satisfied and loyal customers Packages, Visa, structured products Complete product offering Increase retail deposit market share Shifting priorit
Slide 25: Dexia BIL: Proximity Banking
Focus on Dexia BIL: Proximity Banking Dexia BIL: The oldest bank in Luxembourg (150 years) Innovative bank A network of 40 branches (+3 agencies in 2007) N° 2 for SMEs N° 3 for Individuals, with a competitive positioning in the “Personal Banking” sector (independent individuals, managers…) Challenge
Slide 26: Turkey: A Strong Growth Platform
Focus on Turkey: A Strong Growth Platform A very promising market Impressive growth story of DenizBank thanks among others to the quality of its management. DenizBank well positioned to become among top 5 players in Turkey Several interactions between Dexia and DenizBank PFS management. Extensive li
Slide 27: Focus on Private Banking
Creating Strategic Value Moving Forward into the Next 10 Years Focus on Private Banking Paris, September 26th 2006
Slide 28: Growing and Expertise-led Environment
Growing and Expertise-led Environment Sustained growth in assets Global wealth will continue to grow Market fragmentation Global client trends: expertise is key Client knowledge Holistic wealth advice everywhere Human resources must develop to meet challenges Increasing role of universal banks PB as
Slide 29: A Proven Track Record
A Proven Track Record Europe is the home-base CAL CAL ((EUR EURBn) Bn) CAL CAL(2)(2) split split Gross Gross Margin Margin on on CAL CAL M edium-size (EUR 43 Bn as of June, 2006) Dk Others Switz. 0.97% Leading franchises in Belgium and Luxembourg 0.96% 43 Presence in Switzerland, Denmark, Jersey 0.9
Slide 30: Asset Quality Commands Revenue Growth
Asset Quality Commands Revenue Growth Evolution Evolution of of asset asset quality quality (EUR (EUR Bn) Bn) Split Split of of assets assets –– June June 2006 2006 Credits 43 M andate 36 Direct 7% Securities 17% 49% 16% 47% 47% 21% SICAV 44% 22% Deposit 7% Dec. 2004 June 2006 5% 5% Struc. Prod. Cre
Slide 31: Models Selected for Profitable Growth
Two Models Selected for a Profitable Growth Model 1 – Partnerships with proprietary and external networks ; Leverage proprietary networks Create external partnerships when appropriate (e.g. JV in Spain) Follow Dexia expansion initiatives abroad (e.g. Turkey) Model 2 – International platforms ; Promo
Slide 32: Dexia's JV with Banco Popular is a Proven Success
Dexia’s JV with Banco Popular is a Proven Success CAL CAL growth growth (EUR (EUR Bn) Bn) Initial Joint Venture based on small brokerage activities 4.5 Leverage of Banco Popular regional 3.6 2.3 branches, investment, wealth 1.2 1.7 advisory specialists and corporate Dec. 02 Dec. 03 Dec. 04 Dec. 05 J
Slide 33: Dexia Private Banking Strategic Initiatives
Dexia Private Banking Strategic Initiatives Grow International banking based on expertise and emerging wealth Develop micro-segments (euro migrants, SOP beneficiaries, etc.) providing tailor-made wealth management solutions in Europe Open greenfield operations in selected emerging markets Opportunis
Slide 34: Dexia WealthCare
Dexia WealthCareTM Growing demand from European customers for expert advice and investment solutions in the retirement field Dexia launched in Belgium a research initiative (first tests in 2007; full launch in 2008) Project involves several divisions (mainly Treasury and Financial Markets, Insurance
Slide 35: Dexia Private Banking Financial Objectives
Dexia Private Banking Financial Objectives Key Key Targets Targets 2009 2009 Client Assets and Liabilities (CAL): EUR 55 Bn 5% to 6% annual net new cash Overall Gross Margin on CAL roughly stable Cost-Income Ratio < 60% Revenues to increase twice as fast as costs 35
Slide 36: Cooperation between Treasury & Financial Markets and PFS
Creating Strategic Value Moving Forward into the Next 10 Years Cooperation between Treasury & Financial Markets and Personal Financial Services Paris, September 26th 2006
Slide 37: Strong Benefits from Cooperation between TFM and PFS
Strong Benefits from Cooperation between TFM and PFS In-house development of “standard products” allows to capture lion share of value chain Distribution of Value-added in terms of offering thanks to differentiated products based on: Long-term Specific asset classes (underlying public finance assets
Slide 38: From Standard Products to More Value-Added Products
From Standard Products to More Value-Added Products Low risk structured issues for retail clients Guaranteed capital Tailor-made structured products for Private Banking clients Long-term products Retirement solutions Transfer of financial assets from one generation to the next Structured Products us
Slide 39: Examples of Future Developments
Examples of Future Developments Solutions for stock options owners Private Banking in Middle East: development of elaborated structured products Development of IT platform for pricing and selling structured instruments to PFS clients and to improve execution process …. 39
Slide 40: Focus on Operations & IT
Creating Strategic Value Moving Forward into the Next 10 Years Focus on Operations & IT Paris, September 26th 2006
Slide 41: Operations and IT: Agenda
Operations and IT: Agenda Mid-term priorities (2009) Lower down the cost-income ratio mainly in Personal Financial Services Strengthen service and customer orientation Enhance a performance driven culture Long term challenges 41
Slide 42: Scope of Operations and IT
Scope of Operations and IT One global organization Cost Cost per per domain domain Operations F&L IT IT 35% Facility & Logistics Organization 40% Belgium / France / Luxembourg: EUR 1,000 M; 5,500 FTE (2006) 25% Average activity growth: 5% / year OPS Banking Securities Payments Public & Corp. Credits
Slide 43: Main Focus on Improving Efficiency in PFS
Main Focus on Improving Efficiency in Personal Financial Services Existing efficiency levels 2009 objectives (pro forma 2005) Public Finance CIR: 34% Revenues growing faster than costs PFS CIR: 68% Cost income ratio below 62% in 2009 (vs. 68% in 2005) Asset Management Cost/AuM : 13 bps M aintain hig
Slide 44: Major Initiatives for the Next 3 Years
Operations and IT: Major Initiatives for the Next 3 Years Operations IT Development & Infrastructure Efficiency Improvement Infrastructure consolidation End-to-end process optimization, STP Consolidation of data centers Lean Management Process optimization Group Synergies IT Development TFM Group Go
Slide 45: Operations Efficiency Improvement
Operations and IT: Major Initiatives for the Next 3 Years Operations Efficiency Improvement End-to-end process optimization Automation and STP Lean Management Group Synergies TFM Securities Payments Non-Life Insurance Selective Sourcing 45
Slide 46: Selected Initiatives: Securities Operations
Selected Initiatives: Securities Operations Benefits Benefits Resources Resources decrease: decrease: >> 10% 10% (2006 Æ 2009) (2006 Æ 2009) Volumes Volumes increase: increase: >> 20% 20% (2006 Æ 2009) (2006 Æ 2009) Main group initiatives Local initiatives Group Brokerage Group Securities Refe
Slide 47: Selected Initiatives: Treasury and Financial Markets
Selected Initiatives: Treasury and Financial Markets Benefits Benefits Support Supportbusiness business growth growth Share Share IT IT investments investments and and reduce reduce IT IT costs costs Boosting of business development Multi-entity common client approach New product development (
Slide 48: IT Development & Infrastructure
Operations and IT: Major Initiatives for the Next 3 Years IT Development & Infrastructure Infrastructure consolidation Consolidation of data centers Process optimization IT Development Group Governance and methods Target IT architecture Project Portfolio Management 48
Slide 49: Selected Initiatives: One Common IT Infrastructure
Selected Initiatives: One Common IT Infrastructure Benefits Benefits Global Global savings: savings: ≥≥ EUR15 EUR15 M/year M/year (from (from 2009) 2009) Service Service oriented oriented organization organization Consolidation of DBB/DBL Data Centers Mainframes and servers Desktops and Teleco
Slide 50: Facility & Logistics
Operations and IT: Major Initiatives for the Next 3 Years Facility & Logistics Facility Master Plan 2009 Purchasing Dexia Purchasing policy Logistics Process optimization & best practices 50
Slide 51: Organization: Project Portfolio Management
Operations and IT: Major Initiatives for the Next 3 Years Organization Project Portfolio Management Common IT & Business project portfolio Project Management Best practice methods and alignment Dexia Corporate University Performance Management KPIs and Business Reviews 51
Slide 52: Implement a Selective Sourcing Strategy
Implement a Selective Sourcing Strategy Priority to internal options, with efficiency improvement, local or cross-border Necessary Critical Core processes: processes: competency: Selective out/co/sourcing Outsourcing Case by case In House where we do not have scale possible analysis and expertise Fu
Slide 53: Ambitious Efficiency Improvements
Ambitious Efficiency Improvements Total cost reduction potential: EUR 75/100 M over 2007/2009 period Cost Cost evolution evolution Operations Operations and and IT IT scope scope (EUR (EUR MM)) ~120 ~1,120 - 75/100 Ops 1,000 IT ~1,030 1% growth F&L Natural budgeting cost drift per annum (+4% per yea
Slide 54: Strengthen Service & Customer Orientation
Strengthen Service & Customer Orientation Service-oriented organization Examples Relation with the customer DBB: Alignment on best practices and front office 60% reduction time to grant business (increase commercial time available) credit 70% reduction time to set-up new fund Optimizing end-to-e
Slide 55: Implement a Performance Driven Culture
Implement a Performance Driven Culture Purpose Manage / Improve Performance Drive new orientations Covering all Operations & IT lines Focus on 5 areas Costs Operational risks Business activity and processes Customer satisfaction Staff satisfaction and HR Integrated in Customer and Business Reviews 5
Slide 56: Long-Term Challenges for Dexia
Long-Term Challenges for Dexia Increasing Regulatory burden Size and economies of scale Chase economies of scale: Synergies within Dexia Expansion Partnerships & Sourcing Balance between innovation and automation X-Borders and X-Entities synergies An An on-going on-going From processing to ser
Slide 57: Financial & Operational Objectives
Creating Strategic Value Moving Forward into the Next 10 Years Financial & Operational Objectives Paris, September 26th 2006
Slide 58: Financial & Operational Objectives
Financial & Operational Objectives 3-year 3-year financial financial objectives objectives Net income CAGR 05-09 above 10% Cost-income ratio below 62% in 2009 (vs. 68% in 2005)(1) Continuous Continuous improvement improvement of of C/I C/I ratio ratio (1) Proforma inclu ding Denizbank and exclu din
Slide 59: Creating Strategic Value
Creating Strategic Value Moving Forward into the Next 10 Years Paris, September 26th 2006