Dexia Holding SA · EURONEXT:DEXB
Dexia Holding SA — Q1 2007 Earnings Presentation
47 slides from Dexia Holding SA's earnings presentation, May 23, 2007
Slide 1: Analysts' Conference Call Q1 2007 Results
No achievement without commitment Analysts’ Conference Call Q1 2007 Results Rembert von Lowis, Member of the Management Board May 23rd, 2007
Slide 2: Agenda
Agenda Highlights Group Results Business Lines: Activity & Results Focuses 2
Slide 3: Robust Growth of Business Volumes Across All Business Lines
Robust Growth of Business Volumes Across All Business Lines Over 12 months Public/Project • LT banking commitments o/s + 14.1 % Finance and Credit Enhancement • Net par o/s FSA + 10.8 % • Customer assets o/s(1) + 5.2 % Personal Financial Services • Customer loans o/s + 14.0 % • Assets under manageme
Slide 4: Agenda
Agenda Highlights Group Results Business Lines: Activity & Results Focuses 4
Slide 5: Reported Net Income – Group Share
Reported Net Income – Group Share: EUR 720 million (M€) Q1 2006 Q1 2007 Variation *The *The47M€ 47M€decrease decreasecomes comesfrom: reported reported from: Income 1,784 1,785 +0.1% ªChangesininscope ªChanges scope +21M€ +21M€ Expenses -818 -926 +13.2% Gross operating income 966 859 -11.1% ªNon-ope
Slide 6: Changes in Scope
Changes in Scope (M€) Reported net income – Group share March 31, 2006 767 - Consolidation of DenizBank +33 - Deconsolidation (BAN, DBPF, Private banking London) -6 - Funding costs & other -5 Pro forma net income – Group share March 31, 2006 789 of which : • Income +82 M€ Variation + 21 • Expenses -
Slide 7: Both Q1 2006 and Q1 2007 Include Material Non-Operating Items
Both Q1 06 and Q1 07 Include Material Non-Operating Items but a Lot Less in 2007 (M€) Q1 2006 Q1 2007 Variation Income + 265 + 30 - 235 of which . capital gains + 237* +39 . MTM, CDS FSA + 24 -9 . interest DBNL +4 +1 Expenses 0 0 - Cost of risk (DBNL) + 13 +4 -9 Tax expense - 16 + 69 + 85 of which .
Slide 8: A Strong Double Digit Increase of the Underlying Net Income
A Strong Double Digit Increase of the Underlying(1) Net Income Variation Q1 2006 underlying at Q1 2007 (M€) underlying constant underlying underlying pro forma rate of exchange Income 1,601 1,756 +9.7% +11.8% Expenses -867 -926 +6.8% +9.2% Gross operating income 734 829 +13.0% +15.0% Cost of risk -2
Slide 9: Cost of Risk Remains Low
Cost of Risk Remains Low (in basis points) 2.5 1.2 1.2 Credit 0.7 0.6 0.6 0.6 0.6 0.6 0.4 0.4 enhancement(1) 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Q1 (3) 2007 12.2 annualized (3) 9.8 7.8 6.4 6.6 5.7 (3) (3) (3) 3.4 2.2 (3) (3) 2.4 Banking 1.8 1.6 activities(2) 1997 1998 1999 2000 2001 20
Slide 10: Key Performance Ratios
Key Performance Ratios: - High ROE - C/I Ratio Improves Q1 2006 Q1 2007 C/I ratio 45.9 % 51.9 % C/I ratio underlying 54.2 % 52.8 % ROE 28.0 % 21.0 % (1) 19.7% Return on risk-weighted assets 2.69 % 2.18 % Profit margin 44.1 % 41.6 % Variation 35.5% (1) Q1 07/ Q1 06 EPS (€) reported 0.71 0.62 -12.3 %
Slide 11: Stable Capital Ratios
Stable Capital Ratios Variation in 3 31/12/06 31/03/07 months Tier 1 ratio 9.8% 9.7% - Tier 1 ratio with 50% hybrid 9.2% 9.2% - Tier 1 capital (M€) 13,028 13,497 +3.6% Risk weighted assets (Bn€) 133.4 138.8 +4.1% NAV per share(1): Core shareholders’ equity (2) (€) 11.60 12.00 +3.4% (3) Total shareho
Slide 12: Agenda
Agenda Highlights Group Results Business Lines: Activity & Results Focuses 12
Slide 13: Long-term Banking Commitments Keep on Increasing Strongly
Long-term Banking Commitments(1) Keep on Increasing Strongly Public / Project Finance & Credit Enhancement (Bn€) + 14.1 % 270.8 237.3 34.3 46.8 America + 7.4 % Project/ 26.9 43.5 + 18.1 % Corporate At constant exch. rate Finance + 27.7 % 128.0 Other countries 103.0 + 24.3 % 236.5 Public 210.4 Financ
Slide 14: High Volume of Originations Due to Stronger than Expected US Market
High Volume of Originations Due to Stronger than Expected US Market Public / Project Finance & Credit Enhancement Gross present value originations Net par outstanding (M US$) (Bn US$) + 10.8 % + 56.2 % 198 27 391 353 17 16 13 30 127 17 30 19 13 15 87 3 64 79 28 26 217 239 74 54 Q1 2006 Q1 2007 31/03
Slide 15: A Brilliant 1st Quarter Despite Adverse Foreign Exchange Movements
A Brilliant 1st Quarter Despite Adverse Foreign Exchange Movements Public / Project Finance & Credit Enhancement Variation Variation (1) (M€) Q1 2006 Q1 2007 Q1 07 / at constant rate Q1 06 of exchange Income 629 706 + 12.3% + 15.6% Expenses - 217 - 224 + 2.9% + 6.0% Gross operating income 412 483 +
Slide 16: Quarterly Variation of the Underlying Gross Operating Income
Quarterly Variation of the Underlying Gross Operating Income Public / Project Finance & Credit Enhancement (M€) 706 Income 655 643 629 639 Gross 483 operating 445 430 income 412 406 Expenses 233 224 217 210 213 (1) (1) (1) (1) Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 16 (1) Based on pro forma account
Slide 17: Total Customer Assets in a Competitive Environment
Total Customer Assets in a Competitive Environment Personal Financial Services (Bn€) + 5.2% 133.8 of which 131.4 127.2 12.9 13.5 11.7 46.7 Private + 12.5% Banking yoy 60.8 62.6 63.0 87.1 + 1.6% 54.7 55.9 57.3 Retail yoy March 2006 De c. 2006 March 2007 Balance sheet products Off-balance sheet produc
Slide 18: Total Customer Loans Increase, Especially in Private Banking
Total Customer Loans Increase, Especially in Private Banking Personal Financial Services (Bn€) + 14.0% 34.4 33.4 30.2 4.0 Loans to Private 3.7 banking customers 3.2 7.4 7.7 Loans to SME and the 6.7 self-employed 3.5 3.6 Consumer loans 3.1 Mortgage loans 18.8 19.2 17.2 March 2006 De c. 2006 March 200
Slide 19: Double Digit Growth in Net Income Pulled by Increasing Revenues
Double Digit Growth in Net Income Pulled by Increasing Revenues and Stable Cost Base C/I Ratio Down 1.6% Point in 12 Months Personal Financial Services Variation Variation (1 ) (M€) Q1 2006 Q1 2007 Q1 07 / at constant rate Q1 06 of exchange Income 658 674 + 2.4% + 4.2% Expenses - 461 - 461 + 0.1% +
Slide 20: Quarterly Variation of the Underlying Gross Operating Income
Quarterly Variation of the Underlying Gross Operating Income Personal Financial Services (M€) 685 674 658 659 662 Income 461 462 467 470 461 Expenses 223 213 Gross 197 192 192 operating income Q1 2006(1) Q2 2006(1) Q3 2006 (1) Q4 2006 (1) Q1 2007 20 (1) Based on pro forma accounts
Slide 21: EUR 1.9Bn New Money in 3 Months, Mainly Institutional
EUR 1.9Bn New Money in 3 Months, Mainly Institutional Asset Management (Bn€) Organic growth: + 6.6% in one year Market effect: + 5.0% in one year + 11.6 % 1.3 108.4 1.9 2.4 105.2 0.5 3.0 102.3 O rganic M arket effect 2.0 2.0 O rganic M arket grow th 97.2 97.3 M arket grow th effect effect O rganic g
Slide 22: 86% of Fund Volumes in 1st and 2nd Quartile
86% of Fund Volumes in 1st and 2nd Quartile Asset Management Dexia AM Sector Peer Group Fund Quartile Ranking (31/03/07) – 3 year rolling 47% 39% 37% 29% % # Funds per quartile 23% % Volume of funds assets per quartile 11% 11% 2% 1st 2nd 3rd 4th 22 Source: Micropal
Slide 23: High Net Income Growth Driven by Strong Increase in Revenues
High Net Income Growth Driven by Strong Increase in Revenues Asset Management Variation Variation (M€) Q1 2006 (1) Q1 2007 Q1 07 / at constant rate Q1 06 of exchange Income 59 69 + 17.2% + 17.2% Expenses - 31 - 36 + 15.9% + 15.9% Gross operating income 28 33 + 18.6% + 18.6% Cost of risk 0 0 n.s. Tax
Slide 24: Quarterly Variation of the Underlying Gross Operating Income
Quarterly Variation of the Underlying Gross Operating Income Asset Management (M€) 81 69 59 61 Income 50 41 34 36 31 32 40 Expenses 33 28 26 Gross 18 operating income (1) (1) (1) (1) Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 24 (1) Based on pro forma accounts
Slide 25: Strong Growth in All Activities
Strong Growth in All Activities Investor Services Assets under administration (1) Number of funds under Number of shareholder accounts (Bn USD) administration in transfer agent (in thousands) + 22.8 % + 20.5 % + 11.0 % 2,428 4,819 6,685 4,679 2,290 6,385 1,978 3,998 6,020 March Dec. March March Dec.
Slide 26: Net Income Growth Mitigated by Adverse CAD Evolution
Net Income Growth Mitigated by Adverse CAD Evolution Investor Services Variation Variation (1) (M€) Q1 2006 Q1 2007 Q1 07 / at constant rate Q1 06 of exchange Income 89 99 +10.4% +19.9% Expenses -59 -65 +11.6% +21.0% Gross operating income 31 33 +8.1% +17.8% Cost of risk 0 0 n.s. Tax expense -10 -10
Slide 27: Quarterly Variation of the Underlying Gross Operating Income
Quarterly Variation of the Underlying Gross Operating Income Investor Services (M€) 101 99 95 89 89 Income 66 65 63 61 59 Expenses 38 31 33 Gross 28 29 operating income (1) (1) Q1 2006 Q2 2006 (1) Q3 2006 Q4 2006 (1) Q1 2007 27 (1) Based on pro forma accounts
Slide 28: Dexia Keeps Issuing LT Debt at a High Pace
Dexia Keeps Issuing LT Debt at a High Pace Treasury and Financial Markets LT debt issues in the quarter (Bn€) 8.9 9.0 AA AA AAA AAA Q1 2006 Q1 2007 28
Slide 29: CSP Portfolio: Volumes up at Sustained Quality of Risk
CSP Portfolio: Volumes up at Sustained Quality of Risk Treasury and Financial Markets (Bn€) 74.0 + 5.1 - 3.5 75.6 New Repayments investments & sales 94 % 93 % 31/12/2006 31/03/2007 Available for sale & held to maturity Trading 29
Slide 30: Good Profitability Mitigated by Currency Exchange Rates
Good Profitability Mitigated by Currency Exchange Rates Treasury and Financial Markets Variation Variation (M€) Q1 2006(1) Q1 2007 Q1 07 / at constant rate Q1 06 of exchange Income 161 176 +8.9% +11.8% Expenses - 43 - 51 +17.3% +19.4% Gross operating income 118 125 +5.8% +9.0% Cost of risk 0 0 n.s.
Slide 31: Quarterly Variation of the Underlying Net Income - Group Share
Quarterly Variation of the Underlying Net Income - Group Share Treasury and Financial Markets (M€) 176 Income 161 147 127 128 Net income 96 - Group share 86 85 71 64 Expenses 52 51 43 44 45 Q1 2006(1) Q2 2006 (1) Q3 2006 (1) Q4 2006 (1) Q1 2007 31 (1) Based on pro forma accounts
Slide 32: Fixed Income and MET Desks Performed Particularly Well
Fixed Income and MET Desks Performed Particularly Well Treasury and Financial Markets Market Engineering Treasury Fixed Income and Trading (MET) (M€) Q1 06 (2) Q1 07 Q1 06 (2) Q1 07 Q1 06 (2) Q1 07 Income 40 29 82 106 27 34 Expenses -12 -12 -15 -20 -14 -17 Gross operating income 28 17 67 86 13 17 Ta
Slide 33: Underlying Contribution of Central Assets
Underlying Contribution of Central Assets (M€) Q1 06(1) Q1 07 Variation Income 4 32 +28 Expenses - 56 - 90 - 34 Gross operating income - 52 - 57 -6 Cost of risk 2 -1 -3 Tax expense 29 30 0 Minority interests 6 9 +3 Net income – Group share - 27 - 37 - 11 33 (1) Pro forma
Slide 34: Agenda
Agenda Highlights Group Results Business Lines: Activity & Results Focuses 34
Slide 35: Split of Revenues and Net Income by Type
Split of Revenues and Net Income by Type FSA Turkey Insurance Activities DBNL / Legio 35
Slide 36: Split of Revenues and Net Income Across the Different Activities of the Group
Split of Revenues and Net Income Across the Different Activities of the Group (M€) Variation Q1 Q1 Q1 07 / 2006 2007 Q1 06 Revenues (underlying) 1,601 1,756 +9.7% - Banking activities 1,373 1,509 +9.9% - FSA 136 140 +3.3% - Insurance Activities 92 106 +15.3% Net income (underlying) 528 617 +16.9% -
Slide 37: A Good Set of Operating Results at FSA
A Good Set of Operating Results at FSA … FSA Variation Q1 07/Q1 (M$) Q1 06 Q1 07 06 US GAAP – Net Income (as reported by FSA) 130 85 -34.6% Fair value adjustments for economic interest rate hedges -23.6 0 Fair value adjustments for insured CDS -19.0 -8.6 US GAAP – Operating Earnings (as reported by
Slide 38: However Mitigated by the Exchange Rate Effect
… However Mitigated by the Exchange Rate Effect … FSA Contribution of FSA to PPFCE Variation Variation at Q1 07/ cst. rate of Q1 2006 Q1 2007 (M€) Q1 06 exchange Income 122 129 +5.3% +14.3% Expenses (33) (32) -4.5% +4.3% Gross operating income 89 97 +9.0% +18.0% Net income - Group share 61 66 +9.4%
Slide 39: and by the Incidence of MTM on the CDS Portfolio
… and by the Incidence of MTM on the CDS Portfolio FSA (M€) Quarterly incidence of the MTM / CDS portfolio 24 6 -1 -3 -9 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 39
Slide 40: DenizBank, a Powerful Growth Engine as Expected
DenizBank, a Powerful Growth Engine as Expected, but Contribution was Mitigated by Unfavorable Exchange Rate Turkey Variation Net income (MYTL) Q1 07 / Q1 06 Q1 07 Q1 06 BRSA GAAP – (as reported by DenizBank) 56 81 + 45.5% IFRS– (as reported by DenizBank) 54 81 + 50.8% Adjustments due to various fac
Slide 41: Scope of Insurance Activities Within Dexia Group
Scope of Insurance Activities Within Dexia Group Insurance Activities FSA Reported mainly in PPFCE Credit enhancement Dexia Sofaxis Reported mainly in PPFCE Insurance brokerage specialist in local authorities in France Dexia Insurance Life and non-life production and distribution Services Reported m
Slide 42: Good Commercial Performance, Notably in Branch Products
Good Commercial Performance, Notably in Branch 21 Products Insurance Activities (M€) 1,055 1,030 945 106 131 86 880 887 127 98 100 92 115 56 74 Non life Life Branch 23 863 801 Life Branch 21 703 723 721 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Gross Grosswritten writtenpremiums premiumsQ1 Q12007 2007
Slide 43: A Strong Net Income Progression
A Strong Net Income Progression… Insurance Activities Q1 Q12007 2007underlying underlyingnet netincome income:: 45 45M€ M€ ++22.3 22.3% %versus versusQ1 Q12006 2006 By business lines Geographically By type 15% 5% 3% 11% 85% 84% 97% Belgium France PFS PPFCE Luxembourg Life Non life 43
Slide 44: Pulled by High Revenues
… Pulled by High Revenues … Insurance Activities (M€) Variation Q1 Q1 Q1 07 / Underlying P&L 2006 2007 Q1 06 Revenues 92 106 +15.3% of which: Financial revenues 143 179 +24.9% Net interest & dividend income 94 116 +23.6% Net trading inc. & net inc. on investments 49 62 +27.3% Other financial income
Slide 45: Attributable to Both PPFCE and PFS
… Attributable to Both PPFCE and PFS Insurance Activities (M€) Variation Q1 Q1 Q1 07 / Underlying contribution of DIS to PPFCE 2006 2007 Q1 06 Revenues 11 14 +19.3% Expenses (6) (7) +19.1% Gross operating income 6 7 +19.5% Taxes and other (1) 0 n.s. Net income – Group share 5 7 +32.9% Variation Q1 Q
Slide 46: DBNL / Legio: a Fast Decreasing Share Leasing Portfolio
DBNL / Legio: a Fast Decreasing Share Leasing Portfolio (M€) January 25, 2007 : Duisenberg Arrangement is granted binding force by the Amsterdam Court of Appeal 2,448 147 Total 702 1,625 Of which Of which Of which 1.489 300 contracts Not w ith Accepted accepted 1,145 capital an an repayments agreeme
Slide 47: DBNL / Legio: Evolution of the Provision
DBNL / Legio: Evolution of the Provision (M€) 393 + 42 - 44 391 Cost of risk 363 +20 350 -14 -33 105 (allocation,…) 103 -14 Cost of risk Cost of risk -4 Utilizations (reversal) 101 (allocation) -52 294 106 Cost of risk + Utilizations Utilizations (reversal) adjustments + + Utilizations adjustments a