Dexia Holding SA · EURONEXT:DEXB
Dexia Holding SA — Q2 2008 Earnings Presentation
75 slides from Dexia Holding SA's earnings presentation, Aug 29, 2008
Slide 1: Analysts' and Investors' Conference Call 2Q 2008 Results
short term has no future Analysts’ and Investors’ Conference Call 2Q 2008 Results Axel Miller, Chief Executive Officer Rembert von Lowis, Member of the Management Board August 29, 2008
Slide 2: Disclaimer
Disclaimer This presentation and the information contained therein are provided for information purposes only and may not be complete. It does not constitute an offer to sell or the solicitation to buy any securities issued by Dexia or any entity of the Dexia Group. This presentation may include fut
Slide 3: Agenda
Agenda Highlights 2Q 2008 Results Focus on the Credit and Financial Crisis Appendices 3
Slide 4: Net income excluding FSA up 23.8%
Highlights Net income excluding FSA up 23.8 % FSA provisions strengthening had a significant impact on Group earnings in 2Q 2008 FSA lowered Dexia’s reported net income by EUR 216 m to EUR 532 m (- 32.4 % yoy) Excluding FSA and on an underlying basis, 2Q 2008 net income grew by 23.8 % to EUR 760 m D
Slide 5: Agenda
Agenda Highlights 2Q 2008 Results Focus on the Credit and Financial Crisis Appendices 5
Slide 6: Buoyant Activity in PPFCE
Buoyant Activity in PPFCE Over 12 months Public / Project • LT banking commitments + 21.3 % on a constant exchange rate Finance and Credit • Net par outstanding FSA (USD) + 11.0 % Enhancement Personal Financial • Customer assets (1) -3 .9 % Services • Customer loans + 12.9 % Asset Management & • Ass
Slide 7: Underlying Results Negatively Impacted by FSA
Underlying Results Negatively Impacted by FSA Variation (Underlying m EUR) 2Q 2007 2Q 2008 on a current on a constant exchange rate exchange rate Income 1,866 1,817 - 2.6 % - 1.5 % Expenses - 933 - 944 + 1.2 % + 2.7 % Gross operating income 933 873 - 6.5 % - 5.7 % Cost of risk - 29 - 470 x 15.9 Impa
Slide 8: Dynamic Revenues, Good Cost Control, Low Risk Charge and Taxes
Dexia excluding FSA Achieved a 24 % Growth in Underlying Results Dynamic Revenues, Good Cost Control, Low Risk Charge and Taxes Variation (Underlying m EUR) 2Q 2007 2Q 2008 on a current on a constant exchange rate exchange rate Income 1,718 1,888 + 9.9 % + 10.0 % Expenses - 897 - 937 + 4.5 % + 5.5 %
Slide 9: Significant Strengthening of Provisions at FSA in 2Q 2008
FSA Reduced Dexia’s Underlying Net Income by EUR 321 m Significant Strengthening of Provisions at FSA in 2Q 2008 (Underlying m EUR) 3Q 2007 4Q 2007 1Q 2008 2Q 2008 PPFCE CA Income 136 168 135 - 71 Ö - 76 5 Expenses - 35 - 37 - 27 -7 Ö -7 0 Gross operating income 101 131 108 - 78 Ö - 83 5 Cost of ris
Slide 10: Revenues Inflated by EUR 82 m MtM Adjustments in 2Q 2008
Main MtM Effects on Underlying Revenues, excluding FSA Revenues Inflated by EUR 82 m MtM Adjustments in 2Q 2008 (Underlying m EUR) 3Q 2007 4Q 2007 1Q 2008 2Q 2008 PPFCE TFM TFM – Fixed income trading books - 89 - 91 - 250 + 20 Ö 0 + 20 PPFCE – trading books -6 - 20 -5 + 16 Ö + 16 0 Securitisation –
Slide 11: 2Q Reported Net Income Affected by FSA's Provisions Strengthening
2Q Reported Net Income Affected by FSA’s Provisions Strengthening 2Q results 2Q 2007 2Q 2008 (m EUR) Variation reported reported Income 1,964 1,991 + 1.4 % Expenses - 937 - 945 + 0.9 % * The EUR 255 m decrease comes from: Gross operating income 1,027 1,046 + 1.9 % ª Changes in scope n.s. Cost of ris
Slide 12: 1H 2008 Affected by FSA Provisions and Lower Other Non-ops
1H 2008 Affected by Both FSA’s Provisions Strengthening And Lower Other Non-ops 1H results 1H 2007 1H 2008 (m EUR) Variation reported reported Income 3,749 3,490 - 6.9 % Expenses - 1,863 - 1,887 + 1.3 % * The EUR 686 m decrease comes from: Gross operating income 1,886 1,603 - 15.0 % ª Changes in sco
Slide 13: Non-Operating Items Mainly Coming from FSA
Overall Positive EUR 92 m Impact From Non-Operating Items in 2Q 2008 Non-Operating Items Mainly Coming from FSA Non-Operating items: impact on P&L (m EUR) 2Q 2007 2Q 2008 1H 2007 1H 2008 Income 93 174 113 - 160 of which . capital gains 126 10 156 11 . interest DBNL -2 -1 . MTM on FSA CDS - 34 159 -
Slide 14: Cost of Risk on Banking Activities Remained at a Low Level excluding FSA
Cost of Risk on Banking Activities Remained at a Low Level excluding FSA in basis points Credit enhancement (1) 63 29 2.5 1.2 1.2 0.7 0.6 0.6 0.6 0.8 0.6 0.8 0.4 97 98 99 00 01 02 03 04 05 06 07 1Q08 2Q08 annualized 12.2 (3) Banking activities (2) 9.8 (3) 7.8 6.4 6.6 5.7 (3) 5.1 (3) (3) 4.3(3) 4.3 1
Slide 15: Underlying EPS Decreased by 25.1%
Underlying EPS Decreased by - 25.1 % 2Q 2007 2Q 2008 Variation 1H 2007 1H 2008 Variation C/I ratio 47.7 % 47.5 % 49.7 % 54.1 % C/I ratio underlying 50.0 % 52.0 % 51.1 % 51.7 % ROE (1) 22.1 % 14.2 % 21.5 % 10.9 % EPS (EUR) reported (2) 0.68 0.46 - 32.1 % 1.30 0.71 - 45.4 % underlying (2) 0.60 0.38 -
Slide 16: Tier 1 Improved and Is Well Above 10.5% Target
Good capital position Tier 1 Improved and Is Well Above 10.5 % Target Variation 31/12/07 31/03/08 30/06/08 in 3 months Tier 1 ratio * 9.1 % 11.2 % 11.4 % + 0.2 pts Tier 1 capital * (m EUR) 14,549 13,483 13,843 + 2.7 % Total weighted risks * (m EUR) 159,383 120,113 121,670 + 1.3 % Core shareholders’
Slide 17: Public / Project Finance: Long-Term Commitments Continued to Increase Strongly
Long-Term Commitments(1) Continued to Increase Strongly Public / Project Finance bn EUR + 17.0 % + 21.3 % on a cst. exch. rate 342.2 292.5 16.0 32.9 International headquarters 11.7 36.1 28.1 28.5 25.1 + 16 % 13.9 Corporate Tomorrow growth markets + 37 % + 81 % 148.3 171.7 Project Finance Growth mark
Slide 18: Public / Project Finance: Robust 2Q Long-Term Originations
Robust 2Q Long-Term Originations(1) Public / Project Finance bn EUR + 48 % + 58 % on a cst. exch. rate 43.6 1.4 4.0 International headquarters 5.6 8.9 - 63 % Corporate 29.5 2Q 4.0 3.9 Tomorrow growth markets + 1.9 % + 119 % 4.9 4.1 2Q Project Finance + 53 % 25.3 Growth markets + 14 % 13.4 34.0 + 89
Slide 19: Credit Enhancement: Strong US Public Finance Originations at FSA
1H 2008: Strong US Public Finance Originations at FSA Credit Enhancement FSA - Gross present value originations FSA - Net par outstanding m USD + 42.3 % bn USD + 11.0 % 591 23 45 443 58 399 27 18 415 30 18 29 Financial products 50 20 88 25 89 International ABS 72 International Public Finance 466 118
Slide 20: PPFCE's Earnings Performance Directly Affected by FSA's Related Losses
PPFCE’s Earnings Performance Directly Affected by FSA’s Related Losses Public / Project Finance & Credit Enhancement Variation Variation (Underlying m EUR) 2Q 2007 2Q 2008 on a current on a constant 1H 2008 on a current on a constant exchange rate exchange rate exchange rate exchange rate Income 708
Slide 21: PPFCE, excluding FSA, Driven by Strong Volumes and Improving Margins
PPFCE, excluding FSA, Driven by Strong Volumes and Improving Margins Public / Project Finance & Credit Enhancement PPFCE excluding FSA Variation Variation (Underlying m EUR) 2Q 2007 2Q 2008 on a current on a constant 1H 2008 on a current on a constant exchange rate exchange rate exchange rate exchan
Slide 22: Quarterly Variation of the Underlying Gross Operating Income
Quarterly Variation of the Underlying Gross Operating Income Public / Project Finance & Credit Enhancement m EUR 839 708 695 718 681 630 603 Income 457 475 457 463 404 Gross operating income 233 238 255 236 225 226 Expenses 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 2007 based on pro forma accounts 22
Slide 23: Personal Financial Services: Growth in All Loan Segments
Growth in All Loan Segments Personal Financial Services bn EUR Loans + 12.9 % 40.3 35.7 37.8 5.3 5.1 4.9 Other loans 9.6 8.8 Business loans 8 2.6 2.4 Consumer loans 2.3 Mortgage loans 20.5 21.5 22.7 30/06/07 31/12/07 30/06/08 23 • Loans to customers continued to expand at a rapid pace during the sec
Slide 24: Decline in Customer Assets in Challenging Financial Markets
Decline in Customer Assets in the Context of Challenging Financial Markets Personal Financial Services bn EUR Customer assets - 3.9 % of which 137.5 136.0 132.1 14.3 15.9 16.6 Life insurance reserves 47.1 Private 53.8 50.9 Banking Off-balance sheet assets 43.4 Balance sheet assets 85.0 69.3 69.3 72.
Slide 25: PFS Earnings Down Compared to a Record Quarter in 2Q 2007
PFS Earnings Down 10 % Compared a Record Quarter in 2Q 2007 Personal Financial Services Variation Variation (Underlying m EUR) 2Q 2007 2Q 2008 on a current on a constant 1H 2008 on a current on a constant exchange rate exchange rate exchange rate exchange rate Income 704 722 + 2.6 % + 3.3 % 1,442 +
Slide 26: Quarterly Variation of the Underlying Gross Operating Income
Quarterly Variation of the Underlying Gross Operating Income Personal Financial Services m EUR 704 700 720 722 692 656 Income 476 498 477 487 450 465 Expenses 238 244 238 206 216 202 Gross operating income 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 2007 based on pro forma accounts 26
Slide 27: Asset Management: Significant Negative Market Effect on AUM
Significant Negative Market Effect on AUM Asset Management bn EUR Organic growth : - 3.2 % in one year Market effect : - 7.8 % in one year - 11.0 % 111.1 112.0 109.7 +0.7 +0.2 - 0.5 - 1.8 - 1.9 102.2 - 5.6 98.8 Net Market Net Market - 1.9 - 1.4 New effect New Net Market effect New Net Market Cash Ca
Slide 28: Resilient Asset Management Results in a Challenging Environment
Resilient Asset Management Results in a Challenging Environment Asset Management Variation Variation (Underlying m EUR) 2Q 2007 2Q 2008 on a current on a constant 1H 2008 on a current on a constant exchange rate exchange rate exchange rate exchange rate Income 74 65 - 11.5 % - 11.5 % 124 - 13.1 % -
Slide 29: Quarterly Variation of the Underlying Gross Operating Income
Quarterly Variation of the Underlying Gross Operating Income Asset Management m EUR 74 73 69 68 65 Income 58 45 39 39 38 37 36 Expenses 33 35 30 28 28 Gross operating income 21 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 2007 based on pro forma accounts 29
Slide 30: Investor Services: Growth in All Activities
Growth in All Activities Investor Services Assets under administration(1) Number of shareholder Number of funds under accounts in transfer agent (bn USD) administration (in thousands) + 5.0 % + 7.4 % + 19.4 % 7,961 2,882 5,134 5,288 7,645 2,765 4,925 2,633 6,667 30/06/07 31/12/07 30/06/08 30/06/07 3
Slide 31: Resilient Performance and Investments to Support Commercial Development
Resilient Performance and Investments to Support Commercial Development Investor Services Variation Variation (Underlying m EUR) 2Q 2007 2Q 2008 on a current on a constant 1H 2008 on a current on a constant exchange rate exchange rate exchange rate exchange rate Income 112 114 + 1.0 % + 3.3 % 219 +
Slide 32: Quarterly Variation of the Underlying Gross Operating Income
Quarterly Variation of the Underlying Gross Operating Income Investor Services m EUR 112 112 114 103 105 99 74 76 74 73 Income 66 69 Expenses 43 36 40 33 32 29 Gross operating income 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 2007 based on pro forma accounts 32
Slide 33: 1H08 Long Term Issuance Better than 1H07
1H08 Long Term Issuance Better than 1H07, when Market Conditions Were More Favorable Treasury and Financial Markets bn EUR LT debt issues AAA issues (>= 2 years) AA issues (>= 2 years) 13.6 10.6 6.4 5.5 1H 2007 1H 2008 1H 2007 1H 2008 33 • Despite challenging conditions, the Group’s Long-Term Fundin
Slide 34: Size of CSP Portfolio Was Stabilized
Size of CSP Portfolio Was Stabilized Treasury and Financial Markets bn EUR 84.9 + 2.3 - 3.6 New Repayments - 11.1 72.5 investments & sales 72.8 + 1.8 - 1.5 Transfer to Including 10.6 hedged New Repayments PPFCE investments & sales exposure (cf slide 54) 61.9 62.1 31/12/07 31/03/08 30/06/08 34 • The
Slide 35: Treasury & Financial Markets Record Results
Treasury & Financial Markets Record Results Treasury and Financial Markets Variation Variation (Underlying m EUR) 2Q 2007 2Q 2008 on a current on a constant 1H 2008 on a current on a constant exchange rate exchange rate exchange rate exchange rate Income 194 262 + 35.2 % + 38.6 % 384 - 6.5 % - 3.9 %
Slide 36: Treasury & Financial Markets Driven by Buoyant Cash & Liquidity Management
Treasury & Financial Markets Driven by Buoyant Cash & Liquidity Management Treasury and Financial Markets Market Engineering Treasury Fixed Income (m EUR) and Trading 2Q 2007 2Q 2008 2Q 2007 2Q 2008 2Q 2007 2Q 2008 Income 91 122 75 100 29 40 Expenses - 18 - 19 - 17 - 19 - 18 - 19 Gross operating inc
Slide 37: Quarterly Variation of Underlying Net Income – Group Share
Quarterly Variation of the Underlying Net Income – Group Share Treasury and Financial Markets m EUR 262 Income 217 194 170 145 125 122 120 Net income – Group share 95 57 60 Expenses 52 53 52 56 58 25 -22 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 2007 based on pro forma accounts 37
Slide 38: Underlying Contribution of Central Assets
Underlying Contribution of Central Assets (m EUR) 2Q 2007 2Q 2008 1H 2007 1H 2008 Income + 74 + 24 + 113 + 12 Expenses - 73 - 63 - 165 - 126 Gross operating income +1 - 39 - 53 - 114 Cost of risk 0 0 -1 -1 Tax expense -5 + 25 + 24 + 47 Minority interests + 10 +9 + 19 + 20 Net income – Group share -
Slide 39: Agenda
Agenda Highlights 2Q 2008 Results Focus on the Credit and Financial Crisis Appendices 39
Slide 40: Update On Current Financial Crisis – Wrap Up
Update On Current Financial Crisis – Wrap Up Credit risks: Excluding FSA, little deterioration in asset quality Dexia applies a conservative risk underwriting policy Dexia and FSA stayed out of the ABS CDO market FSA’s provisions strengthened to reflect a more severe US mortgage market scenario No l
Slide 41: Agenda
Agenda Highlights 2Q 2008 Results Focus on the Credit and Financial Crisis Credit risk exposure Accounting effects from changes in credit spreads Funding Appendices 41
Slide 42: USD 987 m P&L Losses in 2Q 2008: Overview of Losses at FSA by Portfolio
Overview of Losses at FSA by Portfolio USD 987 m P&L Losses in 2Q 2008 FSA’s Total Net Par Outstanding: Asset Backed Portfolio: Financial Products Portfolio: USD 443.3 bn USD 133.8 bn USD 17.3 bn Other ABS; $1,9 Option Arm RMBS; Int'l ABS; $5 ,0 $0,8 Other Cons umer Other ABS; $0,3 Othe r Pool ed Re
Slide 43: FSA – HELOCs: More Severe Assumptions
FSA – HELOCs : More Severe Assumptions Stressed Environment Assumed to Continue Well Into 2009 PV of expected losses on FSA’s insured HELOCs rose from USD 333 m in March 08 to USD 776 m in June 08 While performance of the problematic transactions in 2Q 2008 were close to 1Q 08 expectations, we now a
Slide 44: FSA – Alt-A CES: More Severe Assumptions
FSA - Alt-A CES : More Severe Assumptions Stressed Environment Assumed to Continue Well Into 2009 PV of expected losses on FSA’s insured ALT-A CES rose from USD 87 m in March 08 to USD 168 m in June 08 While performance of the problematic transactions in 1Q 08 has been in line with expectations, we
Slide 45: FSA – First lien RMBS
FSA - First lien RMBS : Subprime, Alt-A first Lien, Option ARMs Losses of USD 39 m in the Insured Portfolio, USD 277 m in FP We determined a peak default rate for each first lien RMBS, based on various assumptions of liquidation rates by rating agencies and Wall Street analysts This peak default rat
Slide 46: The Specific Case of Jefferson County
FSA - Provisions on Public Finance Insured Portfolio The Specific Case of Jefferson County FSA has USD 151 m of net par exposure to Jefferson County sewer debt against which it booked a USD 51 m provision in 2Q 2008 Jefferson County is a unique situation and not part of a larger trend for US Munis:
Slide 47: FSA – Insured CDS Portfolio
FSA - Insured CDS portfolio USD 68 m Losses on Two CDS Transactions USD 50 m provisions in 2Q 2008 on one CDS transaction referencing a pool of high yield corporate obligations Out of FSA’s pooled corporate CDS portfolio of USD 41 bn, one 2001 BIG transaction with a net par of USD 712 m continued to
Slide 48: Agenda
Agenda Highlights 2Q 2008 Results Focus on the Credit and Financial Crisis Credit risk exposure Accounting effects from credit spread changes Funding Appendices 48
Slide 49: Accounting Effects from Changes in Credit Spreads
Impacts on Accounts of Changes in Spreads Accounting Effects from Changes in Credit Spreads Impact on IFRS total shareholders’ equity: Accumulated OCI decreased by EUR 0.4 bn slide 50 Impact (1): Financial Products (FP) Portfolio………………………………………… slide 51 Impact (2): Credit Spread Portfolio…………………………
Slide 50: Limited Deterioration in OCI Reserves in 2Q 2008
Negative Fixed Income Accumulated OCI : No Impact on Group Solvency and Cash Flows Limited Deterioration in OCI Reserves in 2Q 2008 Accumulated OCI Impact on regulatory capital m EUR 1,730 M arch 2008 June 2008 AFS reserves of Fixed income portfolio were negative June 2007 ¾ no impact on regulatory
Slide 51: FSA's Financial Products Portfolio
FSA’s Financial Products Portfolio Accounting Effects from Credit Spread Changes – Impact on Equity (1) FP – Invested Assets by Sector FP – Invested Assets by Rating USD 17.3 bn * USD 17.3 bn * Option Arm RMBS; $0,8 Other ABS; $0,3 PFI / Regulated Fed Funds overnight Utility; $0,8 investments; $1,5
Slide 52: FSA's FP Portfolio Contributed to Group Accumulated OCI Erosion
FSA’s FP Portfolio Contributed to Group Accumulated OCI Erosion Accounting Effects from Credit Spread Changes – Impact on Equity (1) FP Portfolio Accumulated OCI (m USD) – after tax Source of Negative Mark-to-Market Example of subprime MBS volatility 2008 Movements (Scale= 0-450 bps) Balance OTTI Mt
Slide 53: FSA's FP Negative Marks Will Revert Over Time
FSA’s FP Negative Marks Will Revert Over Time Accounting Effects from Credit Spread Changes – Impact on Equity (1) Financial Products MtM Reversal assuming no realized losses, no change in market spreads and duration of invested assets (m USD) * Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-1
Slide 54: Credit Spread Portfolio: a Buy and Hold Model with High Quality Assets
Credit Spread Portfolio : a Buy and Hold Model with High Quality Assets Accounting Effects from Credit Spread Changes – Impact on Equity (2) CSP – Asset class breakdown CSP – Rating breakdown EUR 62.1bn credit exposure and EUR 10.6 bn hedged EUR 62.1bn credit exposure Fully hedged ABS AAA AAA 54.2%
Slide 55: CSP Accumulated OCI Became Negative with Widening Spreads
CSP Accumulated OCI Became Negative with Widening Spreads – No Credit Deterioration Accounting Effects from Credit Spread Changes – Impact on Equity (2) AFS Reserves declined but credit quality remains very strong CSP – Accumulated OCI (pre-tax) CSP – 2Q 2008 Change in Acc. OCI (pre-tax) m EUR Bank
Slide 56: Public Finance Bond Denominated Exposure Contributed to OCI Changes
The Public Finance Bond Denominated Exposure also Contributed to OCI Changes – Little Credit Deterioration Accounting Effects from Credit Spread Changes – Impact on Equity (3) Part of the Public Finance Business is operated in Bond Format Public Finance Bond denominated Exposure Public Finance Bond
Slide 57: FSA's Insured CDS: Tightening of Spreads
FSA’s Insured CDS : Tightening of Spreads Accounting Effects from Credit Spread Changes – Impact on P&L (1) FSA’s Insured Transactions Subject to MtM (1) Transactions Subject to MtM by Rating(4) CDOs & CLOs A BB & below 41.4% 2.5% 1.1% AA Super AAA 6.6% 58.6% (2) Other 11.8% AAA 31.2% Pooled Corp CD
Slide 58: FSA's Insured CDS MtM: Pricing Principles
FSA’s Insured CDS MtM : MtM Pricing Principles for Insured Credit Default Swaps Accounting Effects from Credit Spread Changes – Impact on P&L (1) Consistent with U.S. GAAP and IFRS accounting principles, FSA’s mark-to-market pricing methodology for guaranteed CDS derives market premium rates that: a
Slide 59: FSA's Insured CDS MtM: USD 233.9 m Positive Adjustment in 2Q 2008
FSA’s Insured CDS MtM : USD 233.9 m Positive Adjustment in 2Q 2008 Accounting Effects from Credit Spread Changes – Impact on P&L (1) Pricing categories and pre-tax impact on P&L Pooled CLOs/ Corporate CDOs Other(2) Total(3) Net Par O/S (bn USD) 36.7 32.4 9.2 78.3 Pre-Tax Net PV Premium O/S (m USD) U
Slide 60: FSA's Insured CDS Negative Marks to Reverse Over Time
FSA’s Insured CDS Negative Marks to Reverse Over Time Accounting Effects from Credit Spread Changes – Impact on P&L (1) Insured CDS MtM Reversal m USD, at 30/6/08 credit spread (1) (1) After tax negative mark of USD 509.6 m, as of June 30, 2008 60 • Given the relatively short duration of the insured
Slide 61: CSP Trading Portfolio – Negative Marks partly reversed during 2Q 2008
CSP “Trading” Portfolio – Negative Marks partly reversed during 2Q 2008 Accounting Effects from Credit Spread Widening – Impact on P&L (2) CSP “trading” portfolio (EUR 4.47 bn) CSP “Trading” Portfolio breakdown Iboxx ABS 50 % 99 other ABS 98.5 86% AAA 98 97.5 97 96.5 96 95.5 95 RMBS 94.5 97% AAA 94
Slide 62: Agenda
Agenda Highlights 2Q 2008 Results Focus on the Credit and Financial Crisis Credit risk exposure Accounting effects from credit spread widening Funding Appendices 62
Slide 63: Competitive Cost of Funding
Funding Capabilities Are Strong Competitive Cost of Funding Strong short-term liquidity positions Long-term funding: a very modest increase in the cost of funding Swaps Covered Bonds 10 years (spreads over Euribor) 110 110 Public Pfandbriefe 10Y 100 Cedulas 10Y 100 90 UK CB 10Y 90 DexiaMA 3.875% 24
Slide 64: Agenda
Agenda Highlights 2Q 2008 Results Focus on the Credit and Financial Crisis Appendices FSA DenizBank Insurance Activities Dexia Bank Nederland 64
Slide 65: FSA Results: from US GAAP (FSA) to IFRS (Dexia)
FSA Results : from US GAAP (FSA) to IFRS (Dexia) FSA (m USD) 1H 2007 1H 2008 US GAAP – Net Income (as reported by FSA) 148 - 752 Other fair value adjustments +7 IFRS Adjustments +5 Change in US GAAP accounting principles (SFAS 157) -5 MtM derivative on soft capital - 56 Different treatment of Forex
Slide 66: Negative Contribution to PPFCE Earnings Due to US Mortgages Losses
Negative Contribution to PPFCE Earnings Due to US Mortgages Losses FSA Contribution of FSA to PPFCE Variation (Underlying m EUR) 1H 2007 1H 2008 on a current on a constant exchange rate exchange rate Income 265 55 - 79.3 % - 76.0 % Expenses - 67 - 34 - 49.9 % - 42.0 % Gross operating income 197 21 -
Slide 67: 2Q 2008: Strong US Public Finance Originations at FSA
2Q 2008 : Strong US Public Finance Originations at FSA FSA m USD FSA – Gross present value originations 537 Financial products 318 309 International ABS 282 International Public Finance 197 218 U.S. ABS U.S. Public Finance 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 67 • Note that on July 21 Moody's announc
Slide 68: DenizBank: Another Good Set of Results
Another Good Set of Results DenizBank Variation (m YTL) 1H 2007 1H 2008 on a current on a constant exchange rate exchange rate BRSA GAAP – Net Income (as reported by DenizBank) 168 186 + 10.6 % IFRS (as reported by DenizBank) 169 191 + 13.1 % Adjustments due to various factors 1 0 Underlying IFRS (a
Slide 69: DenizBank: Quarterly Earnings
Quarterly Earnings DenizBank Contribution of DenizBank to Dexia Variation (Underlying m EUR) 1H 2007 1H 2008 on a current on a constant exchange rate exchange rate Income 293 365 + 24.6 % + 30.2 % Expenses - 172 - 209 + 21.4 % + 26.9 % Gross operating income 121 156 + 29.1 % + 34.9 % Cost of risk -
Slide 70: Insurance Activities: Good Commercial Performance Particularly in Branch Products
Good Commercial Performance Particularly in Branch 21 Products Insurance Activities m EUR 1,775 1,786 98 140 146 61 1,156 1,048 115 Non life 108 925 104 124 Life Branch 23 109 1,530 1,585 66 Life Branch 21 831 917 754 2Q 2007 3Q 2007 4Q 2007 1Q 2008 2Q 2008 Gross written premiums 1H 2008: EUR 2,942
Slide 71: Insurance Activities: A Contrasted Net Income Progression
A Contrasted Net Income Progression… Insurance Activities 1H 2008 underlying net income - Group share: EUR 93.3 m - 8 % versus 1H 2007 By business lines Geographically By type 18% 2% 1% 37% 7% 90% 63% 82% Belgium France PFS PPFCE Luxembourg Turkey Life Non life 71
Slide 72: Insurance Activities: Lower Life Results and Higher Non-life Results
… Driven by Lower Life Results (significant outstanding increase and pressure onto financial markets) and Higher Non-life Results (better tech. results) Insurance Activities Underlying P&L (m EUR) 2Q 2007 2Q 2008 Variation 1H 2007 1H 2008 Variation Revenues 112 115 + 2.1 % 216 226 + 4.7 % of which F
Slide 73: Insurance Activities: Attributable to both PPFCE & PFS
… Attributable to both PPFCE & PFS Insurance Activities Underlying contribution of DIS to PPFCE 2Q 2007 2Q 2008 Variation 1H 2007 1H 2008 Variation (m EUR) Revenues 14 20 + 37.0 % 28 33 + 18.8 % Expenses -7 -7 + 1.4 % - 14 - 14 - 2.8 % Gross operating income 7 12 + 71.3 % 14 19 + 38.6 % Taxes and ot
Slide 74: Dexia 1H Underlying Operating Performance
Dexia 1H Underlying(1) Operating Performance 1H results Variation (Underlying m EUR) 1H 2007 1H 2008 on a current on a constant exchange rate exchange rate Income 3,626 3,650 + 0.7 % + 1.8 % Expenses - 1,854 - 1,886 + 1.8 % + 3.1 % Gross operating income 1,772 1,763 - 0.5 % + 0.5 % Cost of risk - 56
Slide 75: Dexia 1H Underlying Operating Performance, excl. FSA
Dexia 1H Underlying(1) Operating Performance, excl. FSA 1H results Variation (Underlying m EUR) 1H 2007 1H 2008 on a current on a constant exchange rate exchange rate Income 3,338 3,586 + 7.4 % + 7.5 % Expenses - 1,785 - 1,852 + 3.8 % + 4.6 % Gross operating income 1,553 1,734 + 11.6 % + 10.8 % Cost