Dexia Holding SA · EURONEXT:DEXB
Dexia Holding SA — FY2002 Earnings Presentation
56 slides from Dexia Holding SA's earnings presentation, Mar 13, 2003
Slide 1: Year and Q4 2002 Results Analysts' Meeting
Year and Q4 2002 Results Analysts’ Meeting Brussels March 13th, 2003
Slide 2: Activity and Results
DEXIA Activity and Results
Slide 3: Changes in scope of consolidation and methods (1)
Changes in scope of consolidation and methods (1) ! Scope (M€) Reported Net Income 2001 1,426 - Exits (Artesia Lux; MWB) - 9 + Additions (Kempen & Ely 1st Half 2001; increase in Crediop and DVV; Butterfield; Fortior) + 44 - Funding costs - 27 Pro-forma 2001 1,434 ∆≈ + 8 ! Segment reallocations Impac
Slide 4: Changes in scope of consolidation and methods (2)
Changes in scope of consolidation and methods (2) Change in the analytical treatment of Dexia Bank’s Savings Accounts ! Issue " Until Q2 2002, Savings Accounts (carnets de dépôt) at Dexia Bank were treated as a 2 year duration resource " In Q2 2002, ALM policy was modified to take into account the e
Slide 5: Consequences of change in ALM Policy
Consequences of change in ALM Policy Previous ALM strategy: Savings New ALM strategy: Savings Accounts duration 2 years Accounts duration 4 years rates 4 year loan rate : e.g.: 6% X X Commercial margin on loans 100% RFS Commercial margin on loans 100% RFS Transfer pricing rate -4 year duration X X 6
Slide 6: Summary of 2002 P&L
Summary of 2002 P&L 2001 Underlying (M€) 2002 pro-forma ∆% ∆% Revenues 5,165 5,638 -8.4% -6.2% Costs -3,045 -3,350 -9.1% -4.3% Gross Operating Income 2,120 2,288 -7.3% -9.0% Cost of Risk -722 -293 +146.0% 3.9% Net gains + impairments -36 +13 n.s. n.s. on LT investments Taxes -57 -522 -89.0% -14.2% G
Slide 7: Key Performance indicators
Key Performance indicators 2002 2001 RWA* (Bn€) 109.4 103.6 RORWA 1.30 % 1.50 % ** Tier one Ratio* 9.3 % 9.3 % ROE 16.1 % 18.7 % Profit Margin 26.8 % 26.8 % C/I Ratio 59.0 % 59.1 % NAV per share*** (€) 9.01 8.53 * End of period ** Including an estimation of the Artesia contribution *** Including GBR
Slide 8: Underlying Cost of Risk related to total net O/S commitments
Underlying 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 0.4 bp Enhancement 12.2 bp* 9.8 bp* 7.8 bp 6.4 bp 6.6 bp 2.2 bp Banking Activities 1997 1998 1999 2000 2001 2002 * Excluding Dexia Bank Nederland provisions 8
Slide 9: Summary of Q4 2002 P&L
Summary of Q4 2002 P&L Q4 2001 Underlying (M€) Q4 2002 ∆% pro-forma ∆% Revenues 1,275 1,395 -8.6% -1.2% Costs -676 -937 -27.8% -6.0% Gross Operating Income 598 458 +30.6% +6.5% Cost of Risk -140 -121 +16.1% +42.3% Net gains + impairments -15 -47 -67.1% n.s. on LT investments Taxes -77 -20 n.s. -25.3
Slide 10: Impact on 2002 Income of Equity impairments
Impact on 2002 Income of Equity impairments Capital Retail Investment Public Markets + Central Total Total Financial Manageme Finance Treasury Assets 2002 2001 Services nt Services Activities Revenues -7 - 20 3.2 - 4.4 18 - 10.2 -21.7 Of which underlying -7 - 20 - - 4.4 - 24.5 - 55.9 -31.0 Net Gains
Slide 11: Quarterly evolution of the underlying Gross Operating Income
Quarterly evolution of the underlying Gross Operating Income (M€) 1,347 1,378 1,360 1,324 1,344 Revenues 1,311 1,268 1,128 836 837 784 787 790 779 786 Costs 750 562 592 545 557 523 475 478 Gross Operating 379 Income Q1 2001* Q2 2001* Q3 2001* Q4 2001* Q1 2002* Q2 2002* Q3 2002* Q4 2002 * Q1 2001 to
Slide 12: Segment Performances
DEXIA Segment Performances
Slide 13: 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)* + 28.1 % 28.7 (Bn €) Other 3.9 22.4 3.0 Public Sector 24.8 19.4 2001 2002 * Fully consolidated Co’s ; Germany excluded 13
Slide 14: Public/Project Finance & Credit Enhancement: L.T. Outstandings
Activity Highlights Public / Project Finance & Credit Enhancement ! L.T. Outstandings (in & off B/S)* +8.9 % 133.7 122.7 13.3 (Bn €) Other 14.0 Public Sector 120.3 108.7 Dec. 2001 Dec. 2002 * Fully consolidated Co’s ; Germany excluded 14
Slide 15: Public/Project Finance & Credit Enhancement: Deposits & Customers' Assets
Activity Highlights Public / Project Finance & Credit Enhancement ! Deposits & Customers’ Assets * + 5.1% 16.9 (Bn €) 16.0 4.9 5.7 Off B/S 11.1 11.2 B/S Dec. 2001 Dec. 2002 * Off B/S of Artesia excluded 15
Slide 16: Public/Project Finance & Credit Enhancement: New Insurance Premiums
Activity Highlights Public / Project Finance & Credit Enhancement ! New Insurance Premiums + 15.6 % 372.9 20.5 322.6 93.4 (M€) 93.1 Others DVV/AP Sofaxis 259.0 229.6 2001 2002 16
Slide 17: Public/Project Finance & Credit Enhancement: FSA Gross PV Originations
Activity Highlights Public / Project Finance & Credit Enhancement ! FSA Gross PV Originations + 26.6 % 882 (M USD) 66 Asset Management Products 697 4 199 120 International 196 350 U.S. ABS 421 U.S. Muni 222 2001 2002 17
Slide 18: Public/Project Finance & Credit Enhancement: Analysis of underlying P&L
Public/Project Finance & Credit Enhancement Analysis of underlying P&L At 2001 ∆ 2002 / constant (M€) 2002 Pro-forma 2001 rate of exchange Revenues 1,798 1,716 + 4.8% + 6.9% Costs - 637 - 633 + 0.6% + 2.1% Gross Operating Income 1,161 1,082 + 7.3% + 9.7% Cost of Risk - 168 - 180 - 7.0% Corporate inc
Slide 19: Public/Project Finance & Credit Enhancement: Quarterly Gross Operating Income
Public/Project Finance & Credit Enhancement Quarterly evolution of the underlying Gross Operating Income (M€) 511 456 454 448 436 414 403 Revenues 392 338 302 297 287 275 256 252 238 Costs 167 162 174 154 154 158 151 151 Gross Operating Income Q1 2001* Q2 2001* Q3 2001* Q4 2001* Q1 2002* Q2 2002* Q3
Slide 20: Retail Financial Services: Customers' Assets
Activity Highlights Retail Financial Services ! Customers’ Assets - 1.1 % (Bn €) + 1.4 % 79.6 77.6 78.7 OPC + unit linked: OPC + unit linked: 24,8 - Market effect: -2.8 23,0 - Market effect: 0.0 23,3 - inflows: +1.0 - inflows: +0.3 off B/S products 54,8 54,6 55,4 in B/S products Dec. 2001 Sept. 2002
Slide 21: Retail Financial Services: Credit Outstandings
Activity Highlights Retail Financial Services ! Credit Outstandings + 6.0 % (Bn €) + 1.3 % 21.7 22.0 20.7 6.6 6.7 6.3 SME 14.4 15.1 15.3 Personal Sector Dec. 2001 Sept. 2002 Dec. 2002 21
Slide 22: Retail Financial Services: Insurance Premiums
Activity Highlights Retail Financial Services ! Insurance Premiums 438 440 420 407 (M€) Non Life 72 68 67 70 345 46 61 54 71 55 Traditional Life Assurance 79 89 59 34 124 73 Life Guaranted yield (Branch 21) 240 224 187 Life Unit-linked 167 209 (Branch 23) Q4 2001 Q1 2002 Q2 2002 Q3 2002 Q4 2002 22
Slide 23: Retail Financial Services: Analysis of underlying P&L
Retail Financial Services Analysis of underlying P&L 2002 2001 ∆ 2002 / (M€) Pro-forma 2001 Revenues 1,703 1,756 - 3.0% Costs - 1,377 - 1,434 - 3.9% Gross Operating Income 326 323 + 1.0% Cost of Risk - 43 -29 + 49.0% Corporate Income tax - 112 -95 + 18.1% Other Items +31 +19 n.s. Net Income 202 218
Slide 24: Retail Financial Services: Quarterly Gross Operating Income
Retail Financial Services Quarterly evolution of the underlying Gross Operating Income (M€) Revenues 467 445 448 427 418 422 420 414 368 Costs 356 356 354 352 353 331 341 Gross 111 89 94 91 Operating 79 59 64 61 Income Q1 2001* Q2 2001* Q3 2001* Q4 2001* Q1 2002* Q2 2002* Q3 2002* Q4 2002 * Q1 2001
Slide 25: Investment Management Services: Private Banking / Affluent Customer Assets
Activity Highlights Investment Management Services ! Private Banking / Affluent Customer Assets* Conso & (Bn €) technic.effect New Money Market effect 33.9 -0.2 - 0.5 -2.5 30.8 Dec. 2001 Dec. 2002 * Excluding Dexia Bank Nederland 25
Slide 26: Investment Management Services: Assets under management
Activity Highlights Investment Management Services ! Assets under management* (Bn €) New money Market effect Conso & effect +0.2 +0.7 -7.8 76.4 69.4 Dec. 2001 Dec. 2002 * Excluding Dexia Bank Nederland 26
Slide 27: Fund Administration
Activity Highlights Fund Administration Capital managed end of # of NAV to calculate # of transactions period (bn €) in the year (x 1000) (x 1 000 000) + 2.3 % + 71.1 % + 12.9 % +11.4% +0.1% 276 5.17 5.24 112.3 112.3 114.8 4.64 +25.2% 202 161 Dec. Dec. 02 02 2002 Dec. scope Dec. Dec. scope Dec. scop
Slide 28: Investment Management Services: Analysis of underlying P&L
Investment Management Services Analysis of underlying P&L At 2001 ∆ 2002 / constant (M€) 2002 Pro-forma 2001 rate of exchange Revenues 1,045 1,189 -12.1% -11.6% Costs -700 -751 -6.8% -6.8% Gross Operating Income 345 438 -21.1% -19.7% Cost of Risk -8 -14 -46.5% Corporate Income Tax -97 -135 -27.6% Ot
Slide 29: Investment Management Services: Quarterly Gross Operating Income
Investment Management Services Quarterly evolution of the underlying Gross Operating Income (M€) 315 Revenues 301 299 274 273 263 256 253 195 184 187 185 180 171 173 176 Costs 131 114 104 Gross 89 93 92 83 77 Operating Income Q1 2001* Q2 2001* Q3 2001* Q4 2001* Q1 2002* Q2 2002* Q3 2002* Q4 2002 * Q
Slide 30: Segment contributions within Investment Management Services
Segment contributions within Investment Management Services underlying Total IMS excluding Dexia Bank Nederland Total IMS Dexia Bank Nederland (M€) 2002 2001 ∆% 2002 2001 ∆% 2002 2001 ∆% Revenues 717 773 -7.2% 328 416 -21.2% 1,045 1,189 -12.1% Costs -510 -514 -0.8% -190 -238 -19.9% -700 -751 -6.8% G
Slide 31: Capital Markets & Treasury Activities: Analysis of underlying P&L
Capital Markets & Treasury Activities Analysis of underlying P&L At 2001 ∆ 2002 / constant (M€) 2002 Pro-forma 2001 rate of exchange Revenues 551 688 -20.0% -18.9% Costs -168 -181 -7.3% -6.8% Gross Operating Income 383 507 -24.5% -23.3% Cost of Risk -24 -21 +15.6% Corporate Income Tax -75 -145 -48.0
Slide 32: Capital Markets & Treasury Activities: Quarterly Gross Operating Income
Capital Markets & Treasury Activities Quarterly evolution of the underlying Gross Operating Income (M€) 184 Revenues 177 173 177 165 155 137 140 130 129 131 126 108 72 94 47 44 44 47 45 Costs 40 40 43 Gross 32 Operating Income Q1 2001* Q2 2001* Q3 2001* Q4 2001* Q1 2002* Q2 2002* Q3 2002* Q4 2002 *
Slide 33: Synthesis: Underlying Income of the Business Lines
Synthesis: Underlying Income of the Business Lines 2002 2001 ∆ 2002 / (M€) Pro-forma 2001 Public Finance 719 634 +85 Retail Banking 202 218 -16 Investment Management Services - without DBNL 153 171 -17 - at DBNL 85 116 -31 Capital Markets and Treasury Activities 281 340 -59 Total Business Lines / un
Slide 34: Central Assets: Analysis of underlying P&L
Central Assets Analysis of underlying P&L 2002 2001 (M€) Pro-forma Revenues - 34 + 47 Costs - 223 - 244 Gross Operating Income - 256 - 198 Cost of Risk - 31 - 19 Corporate Income Tax + 129 + 134 Other Items - 96 - 109 Net Income - 254 - 192 34
Slide 35: Impact of the Exceptionals on P&L
Impact of the Exceptionals on P&L 2001 (M€) 2002 pro-forma Revenues + 101 + 243 Costs + 60 - 107 Gross Operating Income + 161 + 136 Cost of Risk - 448 - 30 Net gains + impairments on LT - 41 + 31 investments Corporate Income Tax + 364 - 31 Net charge on GBBR + 82 + 38 Net Income + 113 + 147 35
Slide 36: Main Exceptional Items in 2002
Main Exceptional Items in 2002 ! Revenues • Net gains on OLO + 137 M€ • Net gains on Clearstream + 75 M€ • CLN - 89 M€ ! Costs • Dexia Bank Nederland restructuring costs - 41 M€ • Capital gains on disposal of real estate assets + 125 M€ ! Cost of Risk • Dexia Bank Nederland provision - 448 M€ (speci
Slide 37: Summary of Net Income variations 2002 / 2001
Summary of Net Income variations 2002 / 2001 2001 ∆ 2002 / (M€) 2002 proforma 2001 Total 3 Core Business Lines (underlying) 1,159 1,139 +21 Capital Markets + Treasury (underlying) 281 340 -59 Central Assets (underlying) -254 -192 -62 Exceptionals 113 147 -34 TOTAL 1,299 1,434 -135 37
Slide 38: Strategic Foundations - 2003
Strategic Foundations - 2003 ! Financial Strength ! Core Business Focus ! Action Levers ! Steering / Organisation ! Cost Reductions ! Capital Management 38
Slide 39: Fundamentals of Dexia have remained very strong
Fundamentals of Dexia have remained very strong ! Record year in Public Finance: • originations + 28.1% • net income* growth + 13.3% ! Cost reduction: objectives exceeded - 4.3%* ! Cost of risk: 10 bp in 2002 (without DBNL**) ! ROE: 16.1% ! Tier One: 9.3% * underlying ** 31 bp including DBNL 39
Slide 40: Good resistance of EPS in a difficult environment
Good resistance of EPS in a difficult environment CCB and CLF, then Dexia ’s EPS streams since 1988 CLF and CCB Dexia € per share (adjusted) CAGR +8.7% CAGR +9.4% 1.25 1.15 1.13 0.98 0.85 0.75 0.62 0.62 0.66 0.51 0.55 0.44 0.47 0.40 0.35 0.58 0.39 0.41 0.20 0.24 0.29 0.10 0.16 1988 1989 1990 1991 19
Slide 41: Share price performance
Share price performance Dexia and EuroStoxx Banks since January 2nd, 2002 2001 results Q1 2002 results Q2 2002 results FSA meeting 13/03/02 23/05/02 12/09/02 19/11/02 2002 2003 € -25.2% 20 -26.9% 18 16 14 +15,2% 12 +7,3% 10 +8,7% -30,2% 8 -35,5% 6 -2,4% 4 02/01/2002 20/01/2002 07/02/2002 25/02/2002
Slide 42: The FSA concerns
The FSA « concerns » ! US Economy ! Corporate credit quality ! Consumer credit quality $ Real questions, but they concern FSA only remotely $ Insufficient understanding about credit enhancement and securitization 42
Slide 43: FSA: Business strategy
FSA: Business strategy ! Muni: A strong « market pull » " Develop originations – GPV premiums more than doubled in 2002 – Net par insured up +60% " Risk factor stays minimal " Huge synergy potential with Dexia – 52 transactions totalling USD 74 M premiums in 2002 ! ABS: Selective development " CDO’s
Slide 44: Dexia Bank Nederland – The Legio Issue (1)
Dexia Bank Nederland – The « Legio » Issue (1) Solutions currently under implementation ! Reorganisation of Dexia Bank Nederland to handle only Retail products ! « Commercial offer » launched ! « Hardship committee » in place 44
Slide 45: Dexia Bank Nederland – The Legio Issue (2)
Dexia Bank Nederland – The « Legio » Issue (2) Legal Proceedings ! Dutch Securities Institute (DSI) arbitration ! Stichting Leaseverlies ! Law suit against vendor 45
Slide 46: Strategic Foundations - 2003
Strategic Foundations - 2003 ! Financial Strength ! Core Business Focus ! Action Levers ! Steering / Organisation ! Cost Reductions ! Capital Management 46
Slide 47: Priorities for 2003: profitability and strategic focus (2)
Priorities for 2003: profitability and strategic focus (2) Core businesses priorities % FSA – Business development and risk policies % Corporate Risks – Reduce direct exposure " Europe and USA % Capital markets activities – reduce capital allocated " Scale down CSP " Terminate Proprietary management
Slide 48: Strategic Foundations - 2003
Strategic Foundations - 2003 ! Financial Strength ! Core Business Focus ! Action Levers ! Steering / Organisation ! Cost Reductions ! Capital Management 48
Slide 49: Actions Levers (1): Steering / Organisation
Actions Levers (1) Steering / Organisation Clear Management Missions ! Central steering of strategic corporate functions ! 3 core businesses must increase their contributions to total group earnings ! Specific assignments (DBNL ; Central Assets ; …) 49
Slide 50: Actions Levers (2): Cost Reductions
Actions Levers (2) Cost Reductions Underlying costs (M€) -4.3% 3,244* 3,244 3,105 3,105 2001 2002 2003 Realised Budget * proforma 50
Slide 51: Example of Artesia integration
Example of Artesia integration ! Cost synergies (M€) 2002 2003 2005 Objective Realised Objective Objective 25 - 30 54.5 50 - 60 180 - 200 ! Staff reductions 12,660 One third of total 3,510 objective 11,920 (2,270 by 2005) 3,439 independent +23 independent -814 +122 9,150* Recruitments 8,481 Job cuts
Slide 52: Actions Levers (3): Capital Management
Actions Levers (3) Capital Management ! Free cash flow in excess of own needs ! Share buy-back programme ! Dexia will be able to maintain dividend level for 2002: 48 ¢ per share proposed 52
Slide 53: Conclusion
DEXIA Conclusion
Slide 54: Appendices
DEXIA Appendices
Slide 55: Group's Equity portfolios
Group’s Equity portfolios* Market Net Cap. Book (M€) Value Gain/Loss Value 31/12/02 31/12/02 (when available) & Long term Investments 1,389 - - o Quoted 854 828 -26 o Non-quoted 535 n.a. & Other 1,754 - - o Quoted 1,410 1,340 -69 Of which money/bond funds 213 Of which preferred shares 188 205 Of whi
Slide 56: Impact P&L of Group's Equity portfolios in 2002
Impact P&L of Group’s Equity portfolios in 2002 Investment Retail Financial Capital Markets + Public Finance Management Unallocated Total Services Treasury activities Services Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Net Banking -7.0 -20.0 +3.2 -0.5 -0.8 -17.7 +14.6 -1