Dexia Holding SA · EURONEXT:DEXB
Dexia Holding SA — FY2006 Earnings Presentation
42 slides from Dexia Holding SA's earnings presentation, Mar 1, 2007
Slide 1: Q4 and Full Year 2006 Results, Update on DenizBank
No achievement without commitment Press Conference Q4 and Full Year 2006 Results Update on DenizBank Axel Miller, CEO March 1st, 2007, Istanbul
Slide 2: Agenda
Agenda Results Dexia 2006 Dexia + DenizBank : a Successful Combination Photo : G. Boublil 2
Slide 3: 2006: A year of achievements and changes for Dexia (1/2)
2006 : A year of achievements and changes for Dexia (1/2) • New Management structure • Strategic Review • Development opportunities (external and organic) • Two licences in Japan (Banking and Credit Enhancement) • Acquisition of DenizBank • Capital increase • Several divestitures 3
Slide 4: 2006: A year of achievements and changes for Dexia (2/2)
2006 : A year of achievements and changes for Dexia (2/2) • Main changes of scope + - DenizBank Bank Artesia Nederland 75% consolidated in Q4 06 100% sold in Q4 06 (+32M€ net income (+18M€ net income in Q4 06) in Q1, Q2 and Q3 06) • Sizeable capital gains in 2006 upon disposals • Capital increase ch
Slide 5: Another year of strong performance
Another year of strong performance (M€) FY 2005 FY 2006 Variation Gross Operating Income 2,747 3,531 +28.5% Underlying +10.9% Net Income-Group Share 2,038 2,750 +34.9% Underlying +14.3% Q4 2005 Q4 2006 Variation Net Income-Group Share 553 786 +42.1% Underlying +14.4% 5
Slide 6: Key Performance Indicators
Key Performance Indicators FY 2005 FY 2006 C/I ratio 54.0% 49.6% C/I ratio underlying 56.2% 55.1% ROE 20.0% 23.1% Return on risk-weighted assets 1.92% 2.29% Profit margin 35.0% 40.5% Tier 1 ratio 10.3% 9.8% NAV per share (Core shareholders’equity)1 9.86 € 11.60 € +17.6% 1 (proposed) dividend for the
Slide 7: Earnings Per Share (€)
Earnings Per Share (€) 2.49 +33.2% CAGR: CAGR: ++14.2 14.2 % % p.a. p.a. 1.87 1.63 1.58 1.25 1.24 1.15 1.13 +12.8% 0.98 1.85 0.85 1.64 1.13 1.03 1.18 1.44 1.43 0.75 0.66 1996 1997 1998 1999 2000 2001 2002 2003 2004 2004 2005 2006 IFRS as adopted Dexia Gaap by EU 7 Excluding non-operating it ems – NA
Slide 8: Progressions in all Business Lines (1/2)
Progressions in all Business Lines (1/2) Business volumes 2006/2005 Public/Project • LT banking commitments o/s + 14.5 % Finance and Credit Enhancement • Net par o/s FSA + 7.1 % Personal Financial • Customer assets o/s + 5.3 % Services • Customer loans o/s + 11.8 % • Assets under management + 16.1 %
Slide 9: Progressions in all Business Lines (2/2)
Progressions in all Business Lines (2/2) Underlying Net Income-Group Share 2006/2005 Public / Project Finance & Credit Enhancement + 14.1 % Personal Financial Services + 13.1 % Asset Management + 31.7 % Investor Services + 51.4 % Insurance Services + 12.1 % Treasury and Financial Markets + 11.2 % 9
Slide 10: Long-term Banking Commitments
Long-term Banking Commitments(1) Public / Project Finance & Credit Enhancement (Bn€) + 14.5 % 268.2 234.3 32.7 46.1 America (+ 8.6 %) 24.4 42.5 Project/ Corporate Finance 124.1 Other countries (+ 12.2 %) 98.3 (+ 26.2 %) 235.5 209.9 Public Finance 93.5 98.0 France + (+ 33.4 %) Belgium + Luxembourg (+
Slide 11: Credit Enhancement (FSA)
Credit Enhancement (FSA) Public / Project Finance & Credit Enhancement Gross present value originations Net par outstanding (M US$) (Bn US$) -10.2 % + 7.1 % 1,014 376 93 910 352 13 17 56 29 120 29 12 18 185 49 79 82 195 318 113 215 233 485 310 FY 2005 FY 2006 31/12/05 31/12/06 U.S. Muni U.S. ABS Int
Slide 12: Personal Financial Services: Total Customer Assets
Total Customer Assets(1) (Retail & Private banking) Personal Financial Services (Bn€) +5.3% 128.3 of which 127.2 121.9 10.4 10.5 9.6 Insurance 45.4 (Life insurance Private technical reserves) Banking 60.5 63.6 64.5 Off-balance sheet products (Mutual funds, direct securities,...) 83.0 Retail Balance
Slide 13: Personal Financial Services: Total Customer Loans
Total Customer Loans(1) (Retail & Private banking) Personal Financial Services (Bn€) +11.8% 30.9 30.3 Loans to Private banking 27.6 3.2 3.3 customers 2.7 6.6 Loans to SME, 6.5 independents 6.4 2.4 2.5 Consumer loans 2.3 Mortgage loans 18.1 18.6 16.3 Dec. 2005 Sept. 2006 De c. 2006 13 (1) excluding D
Slide 14: Asset Management: Assets under Management
Assets under Management Asset Management (Bn€) Organic growth: YTD + 11.0% Market effect: YTD + 5.1% + 16.1 % 2.4 105.2 3.0 102.3 0.5 2.0 O rganic M arket 2.0 effect 1.2 97.2 97.3 M arket grow th 5.4 effect O rganic O rganic M arket grow th -1.9 grow th 90.6 effect M arket effect O rganic grow th De
Slide 15: Insurance Gross Written Premiums
Insurance Gross Written Premiums Insurance Services (M€) 1,297 94 257 1,057 947 106 829 823 87 885 885 127 101 92 120 101 686 115 74 123 149 99 56 Nonlife 117 946 864 705 728 719 Life Branch 23 586 573 470 Life Branch 21 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Gross Grosswrit
Slide 16: Investor Services: Activity Highlights
Investor Services (1): Activity Highlights Investor Services Number of shareholder accounts Assets under administration (2) Number of funds under in transfer agent (Bn USD) administration (in thousands) + 27.5 % + 20.0 % + 10.4 % 2,290 4,585 4,679 2,170 6,341 6,385 3,898 5,783 1,796 Dec. Sept. Dec.
Slide 17: Group Treasury – Funding Activities
Group Treasury – Funding Activities New Long-Term Issues Treasury and Financial Markets 29.7 29.9 (Bn€) AA AA AAA AAA FY 05 FY 06 17
Slide 18: Summary of FY 2006 P&L Account
Summary of FY 2006 P&L Account Variation (M€) FY 2005 FY 2006 reported underlying(1) Income 5,976 7,012 +17.3% +8.2% Costs - 3,229 - 3,481 +7.8% +6.1% Gross operating income 2,747 3,531 +28.5% +10.9% Cost of risk -52 -124 x2.4 +55.4% Impairments on (in)tangible assets 0 0 n.s. n.s. Tax expense
Slide 19: Cost of Risk
Cost of Risk Related to Total Net o/s Commitments (2) (in basis points) 2.5 1.2 1.2 Credit 0.7 0.6 0.6 0.6 0.6 0.6 0.4 enhancement 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 (1) 12.2 9.8 (1) 7.8 6.4 6.6 5.7 (1) (1) Banking 2.2 2.4 1.8 (1) (1) activities 1.6 1997 1998 1999 2000 2001 2002 2003
Slide 20: Dividend Per Share (€)
Dividend Per Share (€) CAGR: CAGR: ++11.9 11.9 % % p.a. p.a. ++14.1 14.1 % % 0 .81 0.7 1 0.6 2 0.53 0.48 0.48 0.43 0.39 0.36 0.32 0.31 0.27 19 97 199 8 1999 2000 2001 2002 2003 2 004 20 05 20 06 proposed Dexia France Dexia Belgium Dexia 20
Slide 21: Agenda
Agenda Results Dexia 2006 Dexia + DenizBank : a Successful Combination Photo : G. Boublil 21
Slide 22: Rationale of the Acquisition
Rationale of the Acquisition Turkey, a country with strong growth potential : • Provide PFS business with a strong growth engine. • Offer a platform to develop Public/Project Finance on a large and promising market. DenizBank is one of the most dynamic and profitable banks in Turkey. 22
Slide 23: Future of DenizBank Within the Dexia Group
Future of DenizBank Within the Dexia Group Bringing Expertise and Financial Strength Capitalizing on DenizBank's excellent current positioning in a large and growing market Create Createaastrong strongleading leadingfinancial financialgroup group active activein inTurkey Turkeyand andits itsregion r
Slide 24: Dexia Provides Significant Support
Dexia Provides Significant Support as Witnessed by Composition of the Board and Expats Sent Board Composition • D. Bruneel (Chairman of the Board), is in charge of monitoring DenizBank and ensuring good coordination with Dexia. • Dexia’s Business heads (H. Lasat, B. Deletré, A. Delouis) to ensure st
Slide 25: Already Advanced Integration in Important Control Functions
Already Advanced Integration in Important Control Functions Done Ongoing Risk 9 Delegation of powers • Basel II / Economic capital 9 Risk framework • Unified rating system Finance 9 Consolidation into Dexia • Transfer pricing 9 Integration in budget 2007-2009 • Enhanced reporting tools Audit / Compl
Slide 26: DenizBank Provides ... Personal Financial Services
DenizBank Provides ... Personal Financial Services Access to another important market with : • A growing customer base of over 1.9 M PFS customers including 230,000 SME and agricultural customers. • Important growth perspectives in most of its segments (a.o. private banking, mortgages, insurance…).
Slide 27: A Successful Combination in Retail Banking
A Successful Combination in Retail Banking Personal Financial Services Strenghten DenizBank’s retail franchise growth and efficiency : • Enhance sales approach • Develop the branch network and alternative distribution channels • Increase efficiency in the branches to boost sales time Add product exp
Slide 28: A Successful Combination in Personal Financial Services
A Successful Combination in Personal Financial Services Resulting in… Evolution of outstanding loans Evolution of Turkish origin AuM in (EUR M) Private Banking (EUR M) At Group level ~ 1,000 ~ 5,100 CAGR 38% : Agriculture 52 % A GR Credit Card 32 % X 5 C SME 40 % ~ 1,950 ~ 200 Retail 34 % 2006 2009
Slide 29: Combining DenizBank's Local Franchise with Dexia's Expertise
Combining DenizBanks’ Local Franchise with Dexia’s Expertise and Financial Strength Main sources of synergy in PPFCE Larger Access to underwriting more capacity competitive funding Structuring capabilities Product Strong local expertise commercial franchise Expertise to off- Expertise in load risks
Slide 30: Leveraging Dexia's Worldwide Leadership in Public Finance
Leveraging Dexia’s Worldwide Leadership in Public Finance A Staged Approach • Project financing with specific focus on : -Telecom - Energy - Infrastructure / Housing - Environment - Shipping • Develop activities with “satellites*” of Istanbul and extend to other large 1 2 cities. Support the develop
Slide 31: Potential in Public/Project Finance for Dexia
Potential in Public/Project Finance for Dexia is More Medium to Long Term Public/Project Finance Volume will depend on : • Regulatory/administrative changes EUR 7 – 9 Bn • Degree of decentralization • Strengthening of financial position and autonomy of local authorities • Improvement of financial co
Slide 32: Combination Will Lead to a Strengthened Franchise
Combination Will Lead to a Strengthened Franchise … Commercial & Corporate Banking Customer retention : • Focus on sales approach and increase product sophistication New customers’ acquisition : • Focus on niche sectors, education, energy, health, shipping,… in which Dexia is a world leader • Target
Slide 33: A Successful Combination in PPFCE
A Successful Combination in PPFCE Resulting in ... Market share corporate & Evolution of commercial (%) outstanding* (EUR M) 6.3 3 0 % R : ~6,200 4.0 C A G Public Project Finance ² ~2,800 Corporate/ Commercial Current 2009 Obj. 2006 2009 Obj. * Including long term and short term loans. 33
Slide 34: Dexia - DenizBank's successful combination: synergies
Dexia - DenizBanks’ successful combination Across all Business Lines USD 66 M EUR 51 M EUR ~ 55 M = Estimation 2010 2009 Obj. Announced in May 2006 Higher Higherand andfaster fastersynergies synergiesthan thanoriginally originallyexpected expected 34
Slide 35: Strong Expected Growth in Turkey Contribution to Dexia Result
Strong Expected Growth in Turkey Contribution to Dexia Result Turkey contribution to Dexia : Net Income (EUR M) : 30% ~ 300 ~ 325 R CAG 138 ROI > 12% Pro forma 2006 2009 Obj. 2009 Obj. assuming F.Y. ownership excl. amortization of intangibles Cost Income ratio 61 % 49 % ••AAstronger strongergrowth g
Slide 36: Expected Contribution of Turkey per Business Line
Expected Contribution of Turkey per Business Line Net Income, EUR M ~300 CAGR 06-09 172 PFS 53 % ~138 48 71 146 PPFCE 27 % 19 -18 Others* Pro forma 2006 2009 Obj. assuming F.Y. ownership * Central assets and other business lines; the negative evolution of central assets is linked to the decrease of
Slide 37: Evolution of Contribution per Business Line
Evolution of Contribution per Business Line Contribution of Turkey Public Project Finance / Personal Financial Total Credit Enhancement Services 2006 6% 8% 6% 2009 10% 19% 11% Obj. AAstrong stronggrowth growthengine enginefor forPersonal PersonalFinancial FinancialServices Servicesand andaagood good
Slide 38: DenizBank FX risk exposure: Sensitivity Analysis
DenizBank FX risk exposure Sensitivity Analysis 2007 2008 2009 TRY/EUR 1.95 2.03 2.11 budget rate TRY/EUR +/- 10% 2.14 /1.75 2.23 /1.88 2.32 /1.90 Net Income* Turk. - /+ 6.3 % - /+ 6.5 % - /+ 6.6 % Impact Dexia global -/+ 0.5 % -/+ 0.6 % -/+ 0.7 % •• An Anoverall overalllimited limitedexposure expos
Slide 39: Valuation Metrics on DenizBank's Acquisition
Valuation Metrics on DenizBanks’ Acquisition • Expected ROI by 2009 > 12% • Price paid to actual book end 2006 : 3.5x • Expected net contribution to Dexia of ~ EUR 300 M by 2009 • Price paid to actual (CAGR 06-09 at 30%) earnings 2006 : 13.8x • Limited exposure to FX risk 39
Slide 40: Conclusion: A Strong Growth Engine for Dexia
Conclusion A Strong Growth Engine for Dexia DenizBank is a very good investment for Dexia : - by offering a significant European growth engine for PFS - and a foothold in a large but still nascent public finance market with huge infrastructure needs DenizBank DenizBankfully fullyfits fitswith withDe
Slide 41: Conclusion: Integration of DenizBank fully on track
Conclusion A Strong Growth Engine for Dexia Integration of DenizBank in Dexia is fully on track : • Strong involvement of Dexia at all levels while maintaining current management team and its strong proven-successful entrepreneurial approach. • Turkey contribution 06-09 Obj. shows a 30% growth of it
Slide 42: Press Conference, March 1st, 2007, Istanbul
No achievement without commitment Press Conference Q4 and Full Year 2006 Results Update on DenizBank Axel Miller, CEO March 1st, 2007, Istanbul