Dexia Holding SA · EURONEXT:DEXB
Dexia Holding SA — Investor Presentation (March 2007)
98 slides from Dexia Holding SA's investor presentation, Mar 1, 2007
Slide 1: Together in Istanbul - Part 2
No achievement without commitment Together in Istanbul - Part 2 Axel Miller, CEO Dirk Bruneel, Member of the Management Board Hakan Ates, CEO DenizBank Rembert von Lowis, Member of the Management Board 1 March 1st 2007, Istanbul
Slide 2: Disclaimer
Disclaimer This presentation includes forward-looking statements and assumptions related to the possible evolutions of business environment in the next 3 years. By their very nature, statements contained in this document involve inherent risks and uncertainties, both general and specific, and risks
Slide 3: Agenda
Agenda Update on DenizBank Integration Dirk Bruneel Dexia + DenizBank : a Successful Combination Hakan Ates Turkey : an Engine for Growth Rembert von Lowis Conclusion Photo : G. Boublil Axel Miller 3
Slide 4: Agenda
Agenda Update on DenizBank Integration Dirk Bruneel Dexia + DenizBank : a Successful Combination Hakan Ates Turkey : an Engine for Growth Rembert von Lowis Conclusion Photo : G. Boublil Axel Miller 4
Slide 5: Looking Back (1/2)
Looking Back (1/2) 2006 May June July August September Selection of first key people Ongoing preparation Presentation by Dexia 30.05 Set-up of within Dexia of integration of strategy integration to support (accounting, going teams commercial consolidation, forward to development risk, funding, Top 5
Slide 6: Looking Back (2/2)
Looking Back (2/2) 2006 2007 October November December January February Today 10 Expats on Mandatory tender Budget approved Public Finance Together in Istanbul Closing the ground 01.03 offer incl. expected Seminar 17.10 Launch of synergies Istanbul 32 sponsored integration Budgetting by Dexia workgr
Slide 7: 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 8: Building the Future of DenizBank (1/2)
Building the Future of DenizBank (1/2) Capitalizing on DenizBank's excellent current positioning Confirmation of strong elements : • Strong management • Well organized • Marginal adjustments • State-of-the-art IT system • Focus on new activities & support functions to • Large product range ensure op
Slide 9: Building the Future of DenizBank (2/2)
Building the Future of DenizBank (2/2) Goal = Balance between + + Maintaining and Adding expertise and further developing ensuring appropriate control strong entrepreneurial and fast moving spirit of DenizBank 9
Slide 10: Current Composition of Board of Directors (1/2)
Current Composition of Board of Directors (1/2) Strong Dexia Support as Witnessed by Non-resident Board members D. Bruneel Chairman H. Lasat Head of PFS B. Deletré Head of PPFCE A. Delouis Head of TFM Resident Board members H. Ates General Manager B. Accou Former Director Corporate Banking Dexia Ban
Slide 11: Current Composition of Board of Directors (2/2)
Current Composition of Board of Directors (2/2) Strong Dexia Support as Witnessed by 2 independent Board members A. Yilmaz former Minister T. Titiz former Minister Key success factors : • D. Bruneel, member of Dexia's Management Board, in charge of monitoring DenizBank and ensuring good coordination
Slide 12: A Stronger Organization (1/4)
A Stronger Organization (1/4) • Confirmation of Hakan Ates in his CEO position. • Confirmation of all Executive Vice President’s (EVP’s) positions. On Ontop top... ... Dexia Dexiaadded addedspecific specificexpertise expertisein innew newbusinesses businessesas aswell wellas askey key control contro
Slide 13: A Stronger Organization (2/4)
A Stronger Organization (2/4) Dexia's Business Expertise Added to the Organization • EVP Public Project Finance (new position) Bringing expertise and creating empowerment to this activity. • Appointment of a mortgage expert Responsible for developing a full mortgage offer, efficient processes & rela
Slide 14: A Stronger Organization (3/4)
A Stronger Organization (3/4) Dexia's Business Expertise Added to the Organization • Appointment of an insurance expert Supporting the shift from a pure distribution approach towards an integrated distributor/manufacturer approach. • Appointment of a financial markets / ALM expert Optimizing funding
Slide 15: A Stronger Organization (4/4)
A Stronger Organization (4/4) Dexia's Expertise Added to Ensure Optimal Integration and Control • Appointment of Head of Risk Management Implementing Dexia’s risk approach and tools and ensuring Basel II roll out. • Appointment of a Management Information Systems expert Ensuring smooth integration i
Slide 16: 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 17: Agenda
Agenda Update on DenizBank Integration Dirk Bruneel Dexia + DenizBank : a Successful Combination Hakan Ates Turkey : an Engine for Growth Rembert von Lowis Conclusion Photo : G. Boublil Axel Miller 17
Slide 18: Dexia + DenizBank: a Successful Combination
Agenda Dexia + DenizBank : a Successful Combination • Personal Financial Services • PPFCE • Asset Management • TFM • Others • Overall Photo : G. Boublil 18
Slide 19: 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 20: Access to a Promising Retail Market
Access to a Promising Retail Market The Turkish Market Outstanding Mortgages (EUR Bn ) Credit Cards Issuing Volume Growth (%) Volume (YTL Bn) 12.0 108 71 61 64 85 7.3 65 39 32 27 0.5 1.4 25 2003 2004 2005 2006 2002 2003 2004 2005 2006 While Whilethe thecredit creditcard cardmarket marketwill willcon
Slide 21: 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 22: Capturing the Growth in Retail - Enhance Sales Approach
Capturing the Growth in Retail - Enhance Sales Approach Boosting Sales Time within an Appropriate Segmentation Approach Strong attractive integrated value proposition towards affluent clients : • Focus on affluent customers as they offer the highest profitability • Upgrade existing high potential cu
Slide 23: Customer Intimacy Model
Capturing the Growth in Retail - Enhance Sales Approach Customer Intimacy Model Implementation of a segmented-customer approach Served by RM : Acquiring & A A+ Avg. # customers/RM Retaining = 200 Served by SM : B B+ Avg. # customers/SM Upselling Economic Value = 500 C ADC = main D communication Touc
Slide 24: Develop Branch Network & Alternative Distribution Channels
Capturing the Growth in Retail Develop Branch Network & Alternative Distribution Channels 1. Support the opening of new branches (from 273 to 435 by 2009*) 2. Promote Alternative Distribution Channels (ADC) : • To offer a dedicated and innovative alternative channel strategy in the Turkish market (p
Slide 25: Lower the Transactional & Operational Burden
Capturing the Growth in Retail - Increase Efficiency in the Branches to Boost Sales Time Lower the Transactional & Operational Burden Belgium Turkey • No back-office people in the • 18% of branch staff focusing branches on back-office tasks* • 80% automated decisions at • Fragmented decision branch
Slide 26: Lower the Transactional & Operational Burden
Capturing the Growth in Retail - Increase Efficiency in the Branches to Boost Sales Time Lower the Transactional & Operational Burden % of branch transactions / Total transactions : 47 < 40 2006 2009 Obj. Use of alternative channels through adequate pricing / sales strategy. 26
Slide 27: Resulting Benefits
Capturing the Growth in Retail - Operations Resulting Benefits Challenging effectiveness of operations, with the experience of a mature banking market. Processes with important optimization opportunities : • Cash withdrawals and deposits • Credit transfers • Bill / tax / invoice collections • Credit
Slide 28: Focus on Mortgages (1/3)
Capturing the Growth in Retail - Adding Product Expertise Focus on Mortgages (1/3) A nascent but promising market : Mortgage / GDP (% ) in 2005 36.5 3.0 Turkey EU 12 New law on mortgages will set the framework : • For product diversification (a.o. introduction of variable rates) • For secondary mark
Slide 29: Focus on Mortgages (2/3)
Capturing the Growth in Retail - Adding Product Expertise Focus on Mortgages (2/3) Mortgages will be set as the anchor product in an overall customer relationship. Only top segments are currently eligible to obtain a mortgage. Hence, this will significantly support the inflow towards and the acquisi
Slide 30: Focus on Mortgages (3/3)
Capturing the Growth in Retail - Adding Product Expertise Focus on Mortgages (3/3) Implement state-of-the art credit scoring systems and exploit the potential of an automated credit approval system. Capacity to build long-term relationships with all constituencies (real estate promoters,…). Develop
Slide 31: Capturing the Growth in SME & Agriculture
Capturing the Growth in SME & Agriculture DenizBank will further pursue its impressive track record with regard to SME by : • Sub segmenting in small size & mid size SME will help to increase the share of wallet • Continuing the effort to substantially enlarge the customer base DenizBank will equall
Slide 32: Capturing the Growth in Personal Financial Services
Capturing the Growth in Personal Financial Services Resulting in… Evolution of outstanding loans (EUR M) : 38 % CA GR CAGR ~5,100 Agriculture 52 % Credit Card 32 % SME 40 % ~1,950 Retail 34 % 2006 2009 Obj. 32
Slide 33: Capturing the Growth in Insurance - The Turkish Market
Capturing the Growth in Insurance The Turkish Market Life-Insurance Penetration (% ) AuM Pension Fund (EUR M) (Total premium Income/GDP) (Converted at TRY/EUR = 2) 1,396 5.10 53 9 *0.26 13 8 3 Turkey Europe 2003 2004 2005 2006 * Currently mainly traditional life insurance products # participants 15,
Slide 34: Capturing the Growth in Insurance - How?
Capturing the Growth in Insurance How ? Position DenizBank as a manufacturer and distributor of life insurance products building on Dexia Insurance Services expertise. Continue non-life business as distributor. Acquisition of Global Hayat Signed on January 26th Readily usable licenses : • Thereby si
Slide 35: Capturing the Growth in Insurance - Resulting in…
Capturing the Growth in Insurance Resulting in… Split of life-insurance net profit (EUR M) 13 Technical and 8 Financial profit 3 5 Distribution profit 2006 2009 Obj. 35 Source : DenizBank
Slide 36: Private Banking - The Turkish Market
Private Banking - Increasing Needs of Personal Wealth Management The Turkish Market Limited number of foreign players, domestic players slowly starting up their franchise. Substantial wealth within the country estimated at EUR 100 Bn eligible for Private Banking; another significant amount is estima
Slide 37: Accelerate Private Banking Offer
Accelerate Private Banking Offer - Permanent Solutions for Wealth Planning & Investment of Savings for HNWI What we'll do Focus on the overall management of the clients’ assets, adding expertise in wealth management, financial planning and wealth structuring within a comprehensive approach. DenizBan
Slide 38: Implementation of a Fully Integrated PB Approach
Accelerate Private Banking Offer - And Become One of the Benchmark Players in Turkey Implementation of a Fully Integrated PB Approach Leveraging the existing network by enhancing and systematizing client referrals : • Retail Banking • Commercial Banking • SME Banking • Corporate Banking Set up of ne
Slide 39: Private Banking on the Turkish Market - Resulting in…
Private Banking on the Turkish Market - Promising Through Tangible Perspectives Resulting in… Evolution of Turkish origin AuM (EUR M) - at Group level ~ 1,000 X5 ~ 200 2006 2009 Obj. 39
Slide 40: Quick Wins Identified - PFS
Main Sources of Synergies Quick Wins Identified - PFS Setting & defining the overall new retail strategy for 2007-2009, currently rolled out in the regions. Acquisition of Global Hayat. Several housing projects (ao.linked to Istanbul municipality) already signed, involving several thousands of mortg
Slide 41: Agenda
Agenda Dexia + DenizBank : a Successful Combination • PFS • Public / Project Finance and Credit Enhancement • Asset Management • TFM • Others • Overall Photo : G. Boublil 41
Slide 42: Public / Project Finance and Credit Enhancement
Main Sources of Synergies Public / Project Finance and Credit Enhancement Access to: - larger transactions (current legal lending limit constraint of DenizBank) - new deals for Dexia Cheaper and more easily available funding. Combination of Dexia’s technical expertise in specific sectors (e.g. telec
Slide 43: Public / Project Finance and Credit Enhancement
Main Sources of Synergies Public / Project Finance and Credit Enhancement Expertise to off-load certain risks. (syndication, distribution to external investors, securitization…) Expertise of Dexia to increase share of wallet of clients through product cross selling in corporate/commercial banking. D
Slide 44: Combining DenizBank's Local Franchise with Dexia's Expertise
Combining DenizBanks’ Local Franchise with Dexia’s Expertise and Financial Strength Larger Access to underwriting more capacity competitive funding Structuring capabilities Product Strong local expertise commercial franchise Expertise to off- Expertise in load risks Project Finance (placement, (Infr
Slide 45: A Staged Approach
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 46: A Staged Approach - Illustration
Leveraging Dexia’s Worldwide Leadership in Public Finance A Staged Approach - Illustration Dexia participated in financing of Birecik Dam, built on the Euphrate 4th congress on financing municipalities & local authorities February 13th/14th Istanbul 1 2 Main sponsors: 46
Slide 47: Local Public Finance Market in Turkey
Strong Growth Perspectives in Medium to Long Term Local Public Finance Market in Turkey Large potential in Public and Project Finance due to a large number of projects in the following fields : • Environment : significant investment needs in areas of water treatment and distribution Investments need
Slide 48: Local Public Finance Market in Turkey: Now
Strong Growth Perspectives in Medium to Long Term Local Public Finance Market in Turkey : Now Local • Only 20 % of municipalities have proper income resources. Authorities • A certain need to improve financial management. • The current accounting system is not efficient. • Investment eligible for in
Slide 49: Local Public Finance Market in Turkey: Now
Strong Growth Perspectives in Medium to Long Term Local Public Finance Market in Turkey : Now Iller Bankasi • Transfer agent for State funds and taxes, main lending bank for municipalities which do not have their own resources, technical support to local authorities. • No deposit taking 49
Slide 50: Local Public Finance Market in Turkey: Within 10 years
Strong Growth Perspectives in Medium to Long Term Local Public Finance Market in Turkey : Within 10 years • Important trend towards more decentralization anticipated which will strengthen the financial position of local authorities and which will increase their decision autonomy regarding future inv
Slide 51: 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 52: Analyses on Portfolio Performed and New Strategy Identified
Analyses on Portfolio Performed and New Strategy Identified Commercial & Corporate Banking Analysis of customer base leads to identifying 4 different quadrants and according strategies : High I & III : Improving relationship & become Top 3 banker. II: price modification. Profitability III IV IV: Cus
Slide 53: Product Usage & Profitability
Product Usage & Profitability Strong Correlation between Customers Profitability and Product Usage Number of Customers versus average profitability # of Average customers profitability per customer # of 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 products Significant Significantpotential potentialin i
Slide 54: Strategy Will Lead to a Strengthened Franchise (1/2)
Strategy Will Lead to a Strenghtened Franchise (1/2) 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 • Targe
Slide 55: Strategy Will Lead to a Strengthened Franchise (2/2)
Strategy Will Lead to a Strenghtened Franchise (2/2) Commercial & Corporate Banking Main drivers going forward: • DenizBank to be more competitive in the market thanks to cheaper funding and enhanced perceived financial strength • Larger underwriting capacity • Enhance the relationship with the clie
Slide 56: Capturing Market Share in Corporate and Commercial Banking
Capturing Market Share in Corporate and Commercial Banking and First Successes in PPF 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. * Inc
Slide 57: Agenda
Agenda Dexia + DenizBank : a Successful Combination • PFS • PPFCE • Asset Management • TFM • Others • Overall Photo : G. Boublil 57
Slide 58: Asset Management - Main Sources of Synergies
Main Sources of Synergies Asset Management Local development - Implement best practices and bring new investment processes to the Turkish market. - Broadening of product offer for both retail and institutional client segment. - Adapt client reporting and IT environment. - Implement international ris
Slide 59: The Turkish Market and its Perspectives
Capturing Growth in Asset Management The Turkish Market and its Perspectives • Robust market growth prospects: Turkish mutual funds market is expected to grow significantly (present level at 3.5% of GDP). • Lower interest rate environment can leverage significantly the investment fund environment. D
Slide 60: Initiatives by 2009
Capturing Market Share in Asset Management Initiatives by 2009 • Bringing innovative products to the Turkish market. • Turkish Equity and Fixed Income Investment Fund in Dexia’s Luxembourg based umbrella fund for pan-European distribution. • Local registration of Luxembourg domiciled investment fund
Slide 61: Capturing Market Share in Asset Management
Capturing Market Share in Asset Management Resulting in ... Market share (%) 3.0 1.5 Current 2009 Obj. 61
Slide 62: Agenda
Agenda Dexia + DenizBank : a Successful Combination • PFS • PPFCE • Asset Management • Treasury and Financial Markets • Others • Overall Photo : G. Boublil 62
Slide 63: Financial Markets - Main Sources of Synergies
Main Sources of Synergies Financial Markets A strong reduction of Denizbank’s overall funding* cost due to : • Dexia’s financial strength and funding capacity • DenizBank’s rating upgrade, now being one of the top tier banks in Turkey • Optimizing the liquidity management throughout the Group • Dexi
Slide 64: Quick Win in Financial Markets
Main Sources of Synergies Quick Win in Financial Markets Average Market Funding Cost for DenizBank (bps above Libor ) 100 ~ 60 2005 Now By Byjoining joiningDexia DexiaGroup, Group,DenizBank’s DenizBank’ssignature signatureimproved improveddrastically, drastically, which whichenables enablesan anoppo
Slide 65: Financial Markets - Forex
Main Sources of Synergies Financial Markets Enhancing the group’s competences in Forex and Forex Options’ trading and pricing by streamlining the important flows of Denizbank within Dexia global forex management. Exchange best practices : • Common use of the Internet trading platform 3D (Dexia Direc
Slide 66: Numerous Initiatives in Financial Markets
Exploiting Opportunities Numerous Initiatives in Financial Markets Equity markets • Leveraging DenizBank’s expertise, already the number 1 in the Turkish equity markets. • Sharing research and industry knowledge. • Leveraging Dexia’s experience in Equity derivatives trading by developing the over-th
Slide 67: Numerous Initiatives in Financial Markets - Fixed Income
Exploiting Opportunities Numerous Initiatives in Financial Markets Fixed Income • Combining Dexia’s debt origination expertise and investment appetite with DenizBank’s network and market knowledge for further developing the Turkish debt market. • Extending further the placement capacity of the inter
Slide 68: Financial Markets Overall Target
Main Sources of Synergies Financial Markets Overall Target Joint activity deployment in uncovered markets combining and leveraging present expertises. Support and facilitation of the ambitious expansion plans of the commercial businesses through innovation and know-how. Offering to DenizBank and the
Slide 69: Quick Wins in Financial Markets
Main Sources of Synergies Quick Wins in Financial Markets Combining of Nostro account fees and rebates on outgoing « benededuct Message Type 103’s »: EUR ~ 1.0 – 1.5 M for 2007. Fitch and Moody’s have upgraded DenizBank’s ratings as follows : On October 18, 2006 : Fitch has upgraded DenizBank • Fore
Slide 70: Agenda
Agenda Dexia + DenizBank : a Successful Combination • PFS • PPFCE • Asset Management • TFM • Others • Overall Photo : G. Boublil 70
Slide 71: First Mover in Basel II
First Mover in Basel II Roadmap to IRBA* Defined and Kicked-off Roadmap to IRBA has been defined in close cooperation between Dexia and DenizBank. Combining Dexia’s experience/roadmap in Basel II IRB and DenizBank’s outstanding data warehouse. DenizBanks’ DenizBanks’objective objectiveisisto tobe be
Slide 72: IT Competence Center and Procurements
IT Competence Center and Procurements Creation of an IT competence center in Turkey. Combined procurement (e.g. 2400 ATM’s for 2007-2009 period). Combined purchases (e.g. Reuters screens…). 72
Slide 73: Agenda
Agenda Dexia + DenizBank : a Successful Combination • PFS • PPFCE • Asset Management • TFM • Others • Overall Photo : G. Boublil 73
Slide 74: Overview Synergies (1/3)
Overview Synergies (1/3) Conclusion 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 74
Slide 75: Overview Synergies (2/3)
Overview Synergies (2/3) Conclusion 100% = EUR ~55 M (2009 Objective) Others 9% PPFCE 52% PFS 39% All AllBusiness BusinessLines Linesbenefit benefitfrom fromthe thecombination combination 75
Slide 76: Overview Synergies (3/3)
Overview Synergies (3/3) Conclusion No major costs identified for restructuring. Important quick wins already secured. 76
Slide 77: Agenda
Agenda Update on DenizBank Integration Dirk Bruneel Dexia + DenizBank : a Successful Combination Hakan Ates Turkey : an Engine for Growth Rembert von Lowis Conclusion Photo : G. Boublil Axel Miller 77
Slide 78: 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. 78
Slide 79: DenizBank: Update on 2006 Results (IFRS figures)
DenizBank : Update on 2006 Results (IFRS figures) Another Strong Year Net Income underlying pro forma* (EUR M) 50 % + 138 92 2005 2006 * After accounting retreatments within Dexia’s accounts 79
Slide 80: DenizBank: Update on 2006 Results (BRSA figures)
DenizBank : Update on 2006 Results (BRSA figures) Shareholder’s Equity Evolution 9M 2006 (year-to-date)* (%) 13.6 14.2 5.8 3.8 -0.2 -0.6 -7.1 Isbank Akbank Garanti Vakif Halk DenizBank Oyak In a challenging year 2006 affected by DenizBanks’ sales process, May market turbulences, a more regulated cre
Slide 81: Contribution of Turkey to Dexia (1/2)
Contribution of Turkey to Dexia (1/2) Approach Synergies / activities linked to Turkey not Accounting booked in retreatments DenizBanks’ accounts within Dexia accounts* (e.g. large project finance transactions Turkey's in Turkey) = contribution to Dexia result DenizBank Profit & Loss * Mainly amorti
Slide 82: Contribution of Turkey to Dexia (2/2)
Contribution of Turkey to Dexia (2/2) Pro Forma 2006* (Underlying Net Income) Public Project Finance / Personal Financial Total Credit Enhancement Services 6% 8% 6% Turkey Turkeyalready alreadycontributes contributessignificantly significantlyto toDexia’s Dexia’sresults resultsand andshould shouldse
Slide 83: Accounting Treatment of DenizBank's Goodwill and Identified Intangible Assets
Accounting Treatment of DenizBank’s Goodwill and Identified Intangible Assets In EUR M 618 2,563 deducted from equity 408 1,945 210 recorded 1,718 as an intangible asset 1,310 635 845 191 Acquisition of MTO on Minority Total acquisition Majority Stake Interests price* Goodwill Adjusted equity includ
Slide 84: Macro-economic Assumptions
Macro-economic Assumptions Approach TRY / EUR Real GDP Growth (%) 1.95 2.03 2.11 1.83 5 5 4 4 2006 2007 2008 2009 2006 2007 2008 2009 Inflation (%) Public Debt / GDP (%) 10 62 62 64 7 58 4 4 2006 2007 2008 2009 2006 2007 2008 2009 84
Slide 85: Key Drivers of 2006 - 2009 Business Plan (1/4)
Key Drivers of 2006 - 2009 Business Plan (1/4) Franchise Branches* (#) FTE (#, Average on year) R : 17 % C AG 435 8,950 273 ~ 6,000 2006 2009 Obj. 2006 2009 Obj. * Foreign subsidiaries included. 85
Slide 86: Key Drivers of 2006 - 2009 Business Plan (2/4)
Key Drivers of 2006 - 2009 Business Plan (2/4) Commercial Activity Loans (EUR Bn) Deposits (EUR Bn) R : 34 % R: 22 % C AG 11.2 C AG 8.1 4.7 4.5 2006 2009 Obj. PPFCE 2006 2009 Obj. PFS Further Furtherdevelopment developmentof ofthe thebranch branchnetwork networktotocapture capturemarket’s market’sgr
Slide 87: Key Drivers of 2006 - 2009 Business Plan (3/4)
Key Drivers of 2006 - 2009 Business Plan (3/4) Increase in Efficiency Loans / FTE (EUR M) Deposits / FTE (EUR M) 1.3 0.8 0.9 0.7 2006 2009 Obj. 2006 2009 Obj. Higher Higherpenetration penetrationofofthetheexisting existingcustomer customerbase baseand andnew newclient’s client’s acquisition will imp
Slide 88: Key Drivers of 2006 - 2009 Business Plan (4/4)
Key Drivers of 2006 - 2009 Business Plan (4/4) Margins are expected to slim down due to : - lowering of inflation - increased competition Cost of risk expected to increase slightly, within acceptable limits. 88
Slide 89: Growth Targets Communicated in September 2006 are Revised Upward
Growth Targets Communicated in September 2006 are Revised Upward 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 strongergrowt
Slide 90: 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* Proforma 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 e
Slide 91: Evolution of Contribution per Business Line
Evolution of Contribution per Business Line Underlying Net Income 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 92: To Support Ambitious Growth
Required Injection of Tier 2 To Support Ambitious Growth • CAD of 12% at DenizBank level required by BRSA to open new branches. • Group Core Tier 1 target ratio of 8.5%. EUR ~ 400 M Retained Earnings 2007-2009* YE 2006 equity YE 2009 required Additional Tier 2 equity to achieve over 2007-2009** CAD
Slide 93: 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 94: 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 94
Slide 95: Agenda
Agenda Update on DenizBank Integration Dirk Bruneel Dexia + DenizBank : a Successful Combination Hakan Ates Turkey : an Engine for Growth Rembert von Lowis Conclusion Photo : G. Boublil Axel Miller 95
Slide 96: 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 97: A Strong Growth Engine for Dexia
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 98: Together in Istanbul - Part 2
No achievement without commitment Together in Istanbul - Part 2 Axel Miller, Chairman of the Management Board Dirk Bruneel, Member of the Management Board Hakan Ates, CEO DenizBank Rembert von Lowis, Member of the Management Board 98 March 1st 2007, Istanbul