Dexia Holding SA · EURONEXT:DEXB
Dexia Holding SA — Q2 2003 Earnings Presentation
48 slides from Dexia Holding SA's earnings presentation, Sep 11, 2003
Slide 1: Activity and Financial Results in Q2, 2003
Activity and Financial Results in Q2 , 2003 September 11th, 2003 Rembert von Lowis Group CFO
Slide 2: Changes in scope of consolidation and methods
Changes in scope of consolidation and methods ! Scope (M€) Reported Net Income June 30, 2002 782 - Exits (Alex, Cortal, BIL SIM Italy, …) +1.6 + Additions (increase in shares of DVV & Fortior; acq. of Butterfield) +0.8 - Funding costs -1.2 Pro forma June 30, 2002 783 ∆≈ +1 ! Methods Q2 2003: Crédit
Slide 3: Summary of 2nd Quarter 2003 P&L
Summary of 2nd Quarter 2003 P&L Evolution of underlying* Evolution of (M€) Q2 2002 Q2 2003 ! at constant underlying* rate of exchange Revenues " Net Interest and Related Income 973 900 -7.5% " Net Commissions and other Income 262 253 -3.4% " Technical & Financial Margin / Insurance 196 208 +6.4% Tot
Slide 4: Quarterly evolution of the underlying Gross Operating Income
Quarterly evolution of the underlying Gross Operating Income (M€) 1,373 1,323 1,289 1,251 1,236 Revenues 1,090 776 752 772 745 727 732 Costs + 19.4% +30.6% 641 537 551 475 491 363 Gross Operating Income Q1 2002* Q2 2002* Q3 2002* Q4 2002* Q1 2003* Q2 2003* * Pro forma 4
Slide 5: Cost of Risk related to total net O/S commitments
Cost of Risk related to total net O/S commitments (in basis points) 2.5 bp Credit 1.2 bp 0.7 bp 0.6 bp 0.6 bp 0.9 bp 0.4 bp Enhancement 12.2 bp* 9.8 bp* 7.8 bp 6.4 bp 6.6 bp 4.7 bp* 2.2 bp Banking Activities 1997 1998 1999 2000 2001 2002 H1 03** * Excluding impact of provisions for Legio Lease at De
Slide 6: 1st Half 2003 P&L Account
1st Half 2003 P&L Account Evolution of underlying* H1 2002 H1 2003 Evolution of (M€) ! at constant underlying* rate of exchange Revenues " Net Interest and Related Income 1,846 1,749 -5.3% " Net Commissions and other Income 544 475 -12.6% " Technical & Financial Margin / Insurance 369 384 +4.3% Tota
Slide 7: Key Performance indicators
Key Performance indicators 30/06/02 30/06/03 EPS (€) 0.68 0.66 ROE* 19.6% 17.5% C/I Ratio 57.4% 57.2% Tier one Ratio* 9.3% 9.7% RWA** (Bn€) 106.4 108.2 RORWA 1.58% 1.47% Profit Margin 30.0% 30.7% NAV per share***(€) 8.75 9.07 * Annualized ** End of period *** Including GBRR Group share 7
Slide 8: Business Lines: Activity and Results
Business Lines Activity and Results
Slide 9: Public / Project Finance & Credit Enhancement: Production of L.T. facilities
Activity Highlights Public / Project Finance & Credit Enhancement ! Production of L.T. facilities (in & off B/S)* + 18.5 % + 29.8 % at constant exchange rate (Bn€) 14.6 12.3 2.0 Other 1.9 Public Sector 12.6 10.4 H1 2002 H1 2003 * Fully consolidated Co’s ; Germany excluded 9
Slide 10: Public / Project Finance & Credit Enhancement: L.T. Outstandings
Activity Highlights Public / Project Finance & Credit Enhancement ! L.T. Outstandings (in & off B/S)* +8.3 % + 10.8 % at constant exchange rate 167.5 (Bn€) 154.6 14.6 14.2 Other Public Sector 152.9 140.4 * Fully consolidated Co’s June 2002 June 2003 10
Slide 11: Public / Project Finance & Credit Enhancement: Deposits & Customers' Assets
Activity Highlights Public / Project Finance & Credit Enhancement ! Deposits & Customers’ Assets * + 15.7 % 19.5 (Bn€) 16.9 6.1 5.2 Off B/S 13.4 B/S 11.7 June 2002 June 2003 * Off B/S of Artesia excluded 11
Slide 12: Public / Project Finance & Credit Enhancement: New Insurance Premiums
Activity Highlights Public / Project Finance & Credit Enhancement ! New Insurance Premiums + 18.1 % (M€) 331.1 19.6 280.3 11.3 63.8 47.2 Other* DVV Insurance Dexia-Sofaxis 247.7 221.8 H1 2002 H1 2003 * Dexia Prévoyance and Dexia Life & Pensions 12
Slide 13: Public / Project Finance & Credit Enhancement: FSA Gross Present Value Origination
Activity Highlights Public / Project Finance & Credit Enhancement ! FSA Gross Present Value Origination (M US$) + 15.5 % 433 18 375 35 + 65.5 % 27 331 35 84 15 30 Investments Products 50 International ABS 87 200 76 International Muni 113 8 US. ABS 17 66 U.S. Muni 44 209 56 150 144 75 H1 2002 H1 2003
Slide 14: Public/Project Finance & Credit Enhancement: Analysis of underlying P&L
Public/Project Finance & Credit Enhancement Analysis of underlying P&L ∆ ∆ at constant (M€) Q2 2002* Q2 2003* Q2 03 / rate of Q2 02 exchange Revenues 439 479 +9.1% 15.8% Costs -144 -153 +6.0% 10.5% Gross Operating Income 294 326 +10.6% 18.5% Cost of Risk -43 -6 -86.0% Corporate income tax -65 -87 +3
Slide 15: Public/Project Finance & Credit Enhancement: Quarterly evolution of Gross Operating Income
Public/Project Finance & Credit Enhancement Quarterly evolution of the underlying Gross Operating Income (M€) 522 479 455 434 439 Revenues 398 +10.6% +8.1% 347 326 Gross 294 301 272 Operating 249 Income 163 175 Costs 144 149 154 153 Q1 2002* Q2 2002* Q3 2002* Q4 2002* Q1 2003* Q2 2003* * Pro forma 1
Slide 16: Public/Project Finance & Credit Enhancement: Analysis of underlying P&L
Public/Project Finance & Credit Enhancement Analysis of underlying P&L ∆ ∆ at constant (M€) H1 2002* H1 2003 H1 03 / rate of H1 02 exchange Revenues 873 934 +7.0% +14.2% Costs -307 -307 +0.0% +4.4% Gross Operating Income 566 627 +10.8% +19.5% Cost of Risk -56 -30 -46.7% Corporate income tax -142 -16
Slide 17: Retail Financial Services: Customers' Assets
Activity Highlights Retail Financial Services ! Customers’ Assets +1.9 % (Bn€) + 3.0 % 79.6 78.7 81.1 24.0 23.3 24.4 -Market effect :+0.5 - Inflows : +0.6 off B/S products 55.6 55.4 56.7 in B/S products June 2002 Dec. 2002 June 2003 17
Slide 18: Retail Financial Services: Credit Outstandings
Activity Highlights Retail Financial Services ! Credit Outstandings + 3.9 % + 2.0 % 22.3 22.8 (Bn€) 21.9 6.7 6.9 6.7 SME Personal Sector 15.2 15.6 15.9 June 2002 Dec. 2002 June 2003 18
Slide 19: Retail Financial Services: Insurance Premiums
Activity Highlights Retail Financial Services ! Insurance Premiums + 72.2 % 701 72 (M€) 48 Non Life 489 440 407 76 Traditional Life 345 68 Assurance 70 46 61 458 55 71 Life Guaranteed 34 214 yield (Branch 21) 59 124 73 Life Unit-linked (Branch 23) 224 167 187 153 123 Q2 2002 Q3 2002 Q4 2002 Q1 2003
Slide 20: Retail Financial Services: Analysis of underlying P&L
Retail Financial Services Analysis of underlying P&L ∆ Q2 03 / (M€) Q2 2002* Q2 2003* Q2 02 Revenues 435 452 +3.8% Costs -344 -335 -2.8% Gross Operating Income 91 117 +28.9% Cost of Risk -8 -8 +0.2% Corporate Income tax -23 -32 +36.6% Other Items +5 +11 n.s. Net Income 65 88 +35.4% ROEE** 14.1% 19.7
Slide 21: Retail Financial Services: Quarterly evolution of Gross Operating Income
Retail Financial Services Quarterly evolution of the underlying Gross Operating Income (M€) 452 435 Revenues 415 410 420 400 Costs 343 344 339 326 335 335 + 28.9% + 45.7% Gross 117 Operating 91 89 74 80 Income 57 Q1 2002* Q2 2002* Q3 2002* Q4 2002* Q1 2003* Q2 2003* * Pro forma 21
Slide 22: Retail Financial Services: Analysis of H1 2003 underlying P&L
Retail Financial Services Analysis of H1 2003 underlying P&L ∆ H1 03 / (M€) H1 2002* H1 2003 H1 02 Revenues 836 872 +4.3% Costs -688 -674 -2.0% Gross Operating Income 148 198 +33.6% Cost of Risk -18 -21 +13.5% Corporate Income tax -35 -57 +64.4% Other Items +12 +17 n.s Net Income 107 137 +27.9% ROEE
Slide 23: Investment Management Services: Private Banking/Affluent customers' assets
Activity Highlights Investment Management Services ! Private Banking/Affluent customers’ assets* -4.4 % +1.0 % (Bn€) -0.6 -1.0 -0.6 +0.9 30.8 Organic growth Market effect 29.1 Q1 2003 Q1 2003 Organic growth Market effect 29.4 Q2 2003 Q2 2003 Dec. 2002 March 2003 June 2003 * Excluding Dexia Nederland
Slide 24: Investment Management Services: Assets under management
Activity Highlights Investment Management Services ! Assets under management* +4.8 % +6.7 % (Bn€) +0.9 -2.1 +3.3 +1.3 72.8 69.4 Organic growth Market effect 68.2 Organic growth Market effect Q1 2003 Q1 2003 Q2 2003 Q2 2003 Dec. 2002 March 2003 June 2003 * Excluding Dexia Nederland Holding (Dexia Ban
Slide 25: Investment Management Services: Fund Administration and Securities Services
Investment Management Services ➼ Fund Administration and Securities Services Total assets under # of NAV to calculate # of transactions custody (Bn€) in the year (x 1000) (in millions) 303 305 297 321 302 2.62 2.39 181 182 184 Other** Other** Other** Dec. 122 115 121 00 Mandates Mandates Mandates 00
Slide 26: Investment Management Services: Analysis of underlying P&L
Investment Management Services Analysis of underlying P&L ∆ ∆ Q2 03 / at constant (M€) Q2 2002* Q2 2003* Q2 02 rate of exchange Revenues 252 235 -6.8% -5.7% Costs -161 -147 -8.4% -8.2% Gross Operating Income 91 88 -4.1% -1.1% Cost of Risk 1 -4 n.s. Corporate Income Tax -29 -26 -11.0% Other Items 0 -
Slide 27: Investment Management Services: underlying with/without the Netherlands
Investment Management Services underlying with/without the Netherlands Total IMS excluding Dexia Nederland Dexia Nederland Total IMS Holding Holding (M€) Q2 02* Q2 03* ∆ Q2 02* Q2 03* ∆ Q2 02* Q2 03* ∆ Revenues 177 167 -5.9% 75 68 -9.1% 252 235 -6.8% Costs -122 -122 -0.1% -39 -25 -34.5% -161 -147 -8
Slide 28: Investment Management Services: Quarterly evolution of Gross Operating Income
Investment Management Services Quarterly evolution of the underlying Gross Operating Income (M€) Revenues 273 252 242 244 235 224 Costs 178 169 161 161 162 147 -4.1% +43.2% Gross 95 91 88 81 76 Operating 61 Income Q1 2002* Q2 2002* Q3 2002* Q4 2002* Q1 2003* Q2 2003* * Pro forma 28
Slide 29: Investment Management Services: Analysis of underlying P&L
Investment Management Services Analysis of underlying P&L ∆ ∆ H1 03 / at constant (M€) H1 2002* H1 2003 H1 02 rate of exchange Revenues 525 459 -12.6% -11.4% Costs -338 -310 -8.5% -8.4% Gross Operating Income 187 149 -20.1% -16.9% Cost of Risk +1 -6 n.s Corporate Income Tax -56 -41 -26.2% Other Item
Slide 30: Capital Markets & Treasury Activities: Analysis of underlying P&L
Capital Markets & Treasury Activities Analysis of underlying P&L ∆ ∆ Q1 03 / at constant (M€) Q2 2002* Q2 2003* Q1 02 rate of exchange Revenues 165 123 -25.7% -20.8% Costs -40 -37 -7.2% -5.2% Gross Operating Income 125 86 -31.7% -25.9% Cost of Risk -2 +2 n.s. Corporate Income Tax -37 -15 -60.5% Othe
Slide 31: Capital Markets & Treasury Activities: Quarterly evolution of Gross Operating Income
Capital Markets & Treasury Activities Quarterly evolution of the underlying Gross Operating Income (M€) Revenues 177 165 148 138 123 131 125 106 94 72 86 Costs 46 40 41 43 41 37 Gross Operating 32 Income Q1 2002* Q2 2002* Q3 2002* Q4 2002* Q1 2003* Q2 2003* * Pro forma 31
Slide 32: Capital Markets & Treasury Activities: Analysis of underlying P&L
Capital Markets & Treasury Activities Analysis of underlying P&L ∆ ∆ H1 03 / at constant (M€) H1 2002* H1 2003 H1 02 rate of exchange Revenues 342 271 -20.9% -16.7% Costs -86 -79 -8.3% -6.3% Gross Operating Income 256 192 -25.1% -20.3% Cost of Risk 1 1 n.m Corporate Income Tax -60 -41 -31.0% Other I
Slide 33: Central Assets: Analysis of underlying P&L
Central Assets Analysis of underlying P&L (M€) Q2 2002* Q2 2003* H1 2002* H1 2003 Revenues -3 85 -36 74 Costs -63 -60 -110 -108 Gross Operating -65 25 -145 -33 Income Cost of Risk -10 -5 -15 -6 Corporate Income 12 6 41 22 Tax Other Items -12 -15 -25 -32 Net Income -75 11 -144 -49 Variation of quarte
Slide 34: Impact of the Exceptionals on P&L
Impact of the Exceptionals on P&L (M€) Q2 2002 Q2 2003 H1 2002 H1 2003 Revenues +114 +3 +173 -1 Costs -20 -13 -21 -16 Gross Operating Income +94 -10 +152 -17 Cost of Risk -32 +13 -36 -10 Net gains + impairments -10 -68 +7 -18 on LT investments Corporate Income Tax +19 +59 +13 +50 Net charge on GBBR
Slide 35: Main Exceptional Items
Main Exceptional Items Q2 Q2 (M€) 2002 2003 Revenues • Net gains on OLO’s +49.1 - • Capital gain on sale participation in Clearstream +74.9 - • CLN -8.2 +0.2 • Gains/losses on equities +12.3 -4.5 • Exchange gain - +7.1 • Provision for compensation at DBNL -10.5 - Costs • Restructuring costs DBNL - 2
Slide 36: Appendices
Appendices • Update on DBNL/Legio • Update on Artesia integration • Group Equity Portfolio
Slide 37: Final Results of the Dexia Offer
DBNL/Legio Final Results of the Dexia Offer ! Rate of response to the Offer: 58% of the contracts* ! Acceptance of the Offer by 80% of the respondents ! Effective average acceptance rate: 46% " 41% for contracts already matured " 54% for contracts expiring between 2003 and 2006 " 42% for contracts e
Slide 38: Portfolio Update
DBNL/Legio Portfolio Update !Risk amounts at close of the Dexia Offer (as of July 4th, 2003) Total amount of lease contracts: 3,757 M€ Total Lack of Collateral*: 1,693 M€ (based on AEX index of 293) Contracts with Bullet contracts Bullet contracts “No” to the periodic yes to the Dexia Offer no respo
Slide 39: Provisions
DBNL/Legio Provisions ! New methodology has been devised and adopted " following presentation in August 2003 to the Regulators and the statutory auditors " in the light of the commercial offer’s results and the latest available default statistics ! Provisions cover: " Potential losses on the portfol
Slide 40: The Portfolio Provision
DBNL/Legio The « Portfolio Provision » The « portfolio provision » is aimed at covering the potential credit losses on the various components of the portfolio, not delinquent to date Average Loss Rate* "Contracts with periodic repayment of principal ≈ 3% "Bullet Contracts - Dexia Offer accepted " Ze
Slide 41: Cost of the Dexia Offer
DBNL/Legio Cost of the Dexia Offer Main assumptions for the calculation of the Offer: " Zero Interest Loans Net present value of revenue loss calculated at 9.38% per annum (average commercial rate of the total portfolio) " Extensions Net present value of revenue loss calculated at 6.38% per annum (a
Slide 42: The Hardship Clause
DBNL/Legio The “Harship Clause” The total cost of the « Hardship Clause » is estimated on experience to date: "2,100 files have been submitted to the Hardship Commission "700 have been ruled on "27% have received an agreement for compensation "Cost range per contract: 11,000 € to 15,000 € 42
Slide 43: Specific provisions on delinquent accounts at June 30, 2003
DBNL/Legio Specific provisions on delinquent accounts at June 30, 2003 Risk Amount (M€) Loss Rate Provision ! Delinquencies " 0-30 days 32 - " 31-90 days 55 ≈ 25% " Over 91 days and Forced Termination 48 ≈ 82% 43
Slide 44: Provisions in the accounts
DBNL/Legio Provisions in the accounts (M€) General Specific Total Provisions at 31.12.2002 448 30 478 Write-backs (-) or allowances (+) in Q1 2003 - +18 +18 Provisions at 31.03.2003 448 48 496 Write-backs (-) or allowances (+) in Q2 2003 -26 +8 -18 Provisions at 30.06.2003 422 56 478 Adjustments to
Slide 45: Cost synergy achievements
Artesia integration Cost synergy achievements (M€) 60 59 50 Best case Worst ⇒ 41 M€ linked to staff costs case ⇒ 18 M€ linked to other operating expenses Objective full Achieved year 2003 H1 2003 45
Slide 46: Impact on Personnel
Artesia integration Impact on Personnel EFT reduction Achieved to objective 30/06/03 vs EFT headcount at 30/06/01 Head Offices -1,400 -803 Employee network -870 -353 -2,270 -1,156 51% realised after 2 years 46
Slide 47: Downsizing of the branch network
Artesia integration Downsizing of the branch network Closures to Objective Number of branches 2001 30/06/03 2005 Independent Network 940 -42 895 Employee Network 543 -88 204 Total 1,483 -130 1,099 Transfer of employees independent network 98 persons applied, of which 92 effectively transferred at Ju
Slide 48: Group's Equity portfolios
Group’s Equity portfolios* Market Net Cap. (M€) Book Value Value Gain/Loss 30/06/03 30/06/03 (when available) " Long term Investments 1,232 - - o Quoted 748 778 +30 o Non-quoted 484 n.a " Other 2,074 - - o Quoted 1,481 1,414 -67 Of which money/bond funds 309 n.a Of which booked in Insurance Co’s por