Dexia Holding SA · EURONEXT:DEXB
Dexia Holding SA — FY2008 Earnings Presentation
34 slides from Dexia Holding SA's earnings presentation, Feb 26, 2009
Slide 1: FY & 4Q 2008 Results
FY & 4Q 2008 Results Pierre Mariani, CEO Philippe Rucheton, CFO February 26, 2009
Slide 2: Disclaimer
Disclaimer This presentation and the information contained herein 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 includes unaudit
Slide 3: Agenda
Agenda 2008 Results Highlights - Pierre Mariani, CEO FY & 4Q 2008 Group Results - Philippe Rucheton, CFO Dexia Transformation Plan Update - Pierre Mariani, CEO 3
Slide 4: FSA and crisis in 4Q08 led to a EUR 3.3 bn FY loss
4Q and Full Year Results FSA and crisis in 4Q08 led to a EUR 3.3 bn FY loss Impacts on 4Q08 Financial Net income (EUR m) net income impact 9M 4Q FY 2008 2008 2008 • Sale of FSA Insurance -EUR 1,655 m • Dislocation of financial -723 -EUR 1,504 m markets • Additional restructuring -EUR 181 m -1,655 ch
Slide 5: Highlights (1/2)
Highlights (1/2) • Net loss of EUR 3,326 m in FY08, and EUR 2,603 m in 4Q08 • The continued deterioration of the US mortgage market and a more cautious approach led to the booking of a EUR 300 m collective impairment in 4Q08 Group Results • Financial crisis impacts of EUR 5,868 m in FY08 and EUR 3,1
Slide 6: Highlights (2/2)
Highlights (2/2) • Prudential ratios reflecting all consequences of the FSA sale and protected against potential further FP losses, after the Solvency expected finalization of States Guarantee on FP assets • Tier 1 ratio of 10.6%, including core Tier 1 ratio of 9.6% • PWB: proven resiliency in 4Q08
Slide 7: Agenda
Agenda 2008 Results Highlights - Pierre Mariani, CEO FY & 4Q 2008 Group Results - Philippe Rucheton, CFO Dexia Transformation Plan Update - Pierre Mariani, CEO 7
Slide 8: 4Q 2008 mainly affected by FSA exit and new impairments
4Q 2008 Results 4Q 2008 mainly affected by FSA exit and new impairments Impact crisis (m EUR) 4Q 2007 4Q 2008 Var* 4Q 2008 Income 1,695 -249 n.s. -2,308 Expenses -1,004 -1,177** 17.2% 0 Gross operating income 691 -1,426 n.s. -2,308 Cost of risk -63 -1,438 x22.8 -1,230 Pre-tax income 621 -2,874 n.s.
Slide 9: EUR 3.2 bn Financial Crisis Impact in 4Q 2008
EUR 3.2 bn Financial Crisis Impact in 4Q 2008 Major items: FSA exit, insurance impairments, monolines Revenues Cost of risk (m EUR) Net income (before tax) (before tax) FSA -1,302 -781 -2,031 FSA - Financial products -38 -339 -378 Including EUR 300 m collective impairment booked in 4Q08 Sale of FSA
Slide 10: Quarterly Results Excluding Crisis Impact
Quarterly Results Excluding Crisis Impact Resilient revenues, beginning of cost reductions 4Q 2008 net income excl. crisis: EUR 557 m including restructuring charges Revenues Expenses Cost of risk (m EUR) (m EUR) (m EUR) 181 1,230 49 1,844 6% 1,975 1,959 2,060 1,001 1,007 995 942 944 1,868 994 5% 4%
Slide 11: Impact of IAS Reclassification
Impact of IAS 39 Reclassification EUR 100 bn* reclassified without significant P&L impact • As announced mid-November, Dexia reclassified part of its AFS and trading 30/09/08: € 217bn assets. Reclassification took effect on 01/10/08: € 129bn (-40%) € 91bn 1/10/08 « AFS » portfolio • Impact on result
Slide 12: AFS Reserve – 4Q 2008 Evolution
AFS Reserve – 4Q 2008 Evolution IAS 39 amendment impact on AFS reserve (bn EUR) 30/09/08 01/10/08 • As a result of IAS 39 reclassification, part of the AFS reserve was “frozen” Frozen • The “frozen” AFS reserve is amortized on AFS Reclassification of reserve AFS AFS assets reserve to L&R -6.8 an acc
Slide 13: FY 2008 Results: EUR 3.3 bn net loss, 10.6% Tier 1 ratio
FY 2008 Results EUR 3.3 bn net loss, 10.6% Tier 1 ratio Impact crisis (m EUR) FY 2007 FY 2008 Var* FY 2008 Income 6,896 3,556 -48.4% -4,173 Expenses -3,834 -4,119** 7.4% 0 Gross operating income 3,062 -563 n.s. -4,173 Cost of risk -163 -3,292 x20.2 -2,852 Pre-tax income 2,892 -3,877 n.s. -7,026 Net
Slide 14: Solvency: Core Tier 1 at 9.6%
Solvency Core Tier 1 at 9.6%, taking into account all impacts of the FSA transaction Tier 1 ratio and core Tier 1 ratio • All impacts from the ongoing sale of FSA 14.5% Insurance and prudential consolidation of FP were taken into account in 4Q08 11.2% 11.4% • Dexia Tier 1 ratio protected against pot
Slide 15: 4Q 2008 Results Impacted by FSA Sale and Insurance Impairments
4Q 2008 Results Impacted by FSA Sale and Insurance Impairments 4Q 2008 figures Net income, excl. financial crisis: EUR 557 m Impact from financial crisis: EUR -3,159 m (m EUR) (m EUR) 299 -2 -41 202 -216 -446 -456 87 105 7 13 + -1,999* -157 PWB FSA PFS TFM AM IS CA PWB FSA PFS TFM AM IS CA excl. (PW
Slide 16: Public and Wholesale Banking: Key Financials
Public and Wholesale Banking: Key Financials Excluding FSA Resilient performance during 4Q 2008 4Q08 FY08 (m EUR) 2007 2008 Var* 2008 Var* • FY08 net income increased by 9% yoy when Income 557 553 -0.7% 2,452 8.5% excluding a EUR -283 m crisis impact (mainly Expenses -220 -210 -4.5% -869 6.6% Gross
Slide 17: Public and Wholesale Banking: Activity Figures
Public and Wholesale Banking: Activity Figures Excluding FSA Slowdown of production and focus on core markets Production volumes • 4Q08 production significantly lower as the (bn EUR) public bond portfolio was put in run-off 30* 5 • 4Q08 loan origination was focused on core 14 markets and valuable co
Slide 18: Personal Financial Services: Key Financials
Personal Financial Services: Key Financials Insurance impairments affecting reported results 4Q08 FY08 (m EUR) 2007 2008 Var* 2008 Var* • FY08 income impacted by impairments and losses Income 717 237 -67.0% 2,197 -22.1% on the insurance investment portfolio Expenses -497 -497 -0.1% -1,997 5.7% Gross
Slide 19: Personal Financial Services: Activity Figures
Personal Financial Services: Activity Figures Deposit Base stabilized Customer deposits Loans yoy (bn EUR) yoy (bn EUR) 42 42 69 72 69 Bonds +20% 38 6 Other +3 % 11 5 10 12 5 10 10 Business +15 % 25 Term deposits & 9 28 25 -1% 3 3 Consumer +7 % savings bonds 2 Savings -6% Mortgages +10 % 26 24 24 ac
Slide 20: Asset Management: Key Financials
Asset Management: Key Financials AuM down by 28% in 2008, costs being reduced 4Q08 FY08 (m EUR) 2007 2008 Var* 2008 Var* Income 73 2 -97.2% 161 -43.4% • 4Q08 results affected by a one-off commercial action Expenses -45 -36 -20.6% -143 -9.9% related to the crisis (EUR 41 m, pre- and post-tax) Gross o
Slide 21: Investor Services: Key Financials
Investor Services: Key Financials Assets under Administration down 34% but good commercial performance 4Q08 FY08 (m EUR) 2007 2008 Var* 2008 Var* Income 112 89 -20.8% 409 -4.1% • 4Q08 and FY08 revenues decreased by resp. Expenses -76 -75 -2.1% -297 4.4% Gross operating income 36 14 -60.6% 112 -21.2%
Slide 22: Treasury and Financial Markets: Key Financials
Treasury and Financial Markets: Key Financials 4Q08 FY08 • FY08 results deeply impacted by the financial crisis (m EUR) 2007 2008 Var* 2008 Var* (EUR 1,504 m), including: Income 145 255 75.6% 33 -94.3% - Impairments on banking portfolios (EUR 750 m) Expenses -52 -65 24.4% -245 14.0% Gross operating
Slide 23: Agenda
Agenda 2008 Results Highlights - Pierre Mariani, CEO FY & 4Q 2008 Group Results - Philippe Rucheton, CFO Dexia Transformation Plan update - Pierre Mariani, CEO 23
Slide 24: Dexia's Key Challenges
Dexia’s Key Challenges Refocus Public & Grow and improve Reduce the size of Wholesale Banking profitability of R&CB Portfolios • Refocus on markets • Growth of deposit • Large scale with local long term base deleveraging efforts funding, true • Improvement of in current market commercial relative co
Slide 25: Transformation Plan to Address Key Challenges
Transformation Plan to Address Key Challenges Implementation on track 1 Priority given to core client franchises 2 Improvement of the Group’s risk profile 3 Adaptation of the cost base 25
Slide 26: Public & Wholesale Banking: resilient business
1 Priority Given to Core Client Franchises Public & Wholesale Banking: resilient business High proportion of Diversified and Resilient business businesses with solid profitable business fundamentals in Belgium PWB income excl. FSA PWB income (2008, excl. Belgium PWB activity: (EUR m) FSA and crisis
Slide 27: Rapid refocus of the Public & Wholesale Banking business
1 Priority Given to Core Client Franchises Rapid refocus of the Public & Wholesale Banking business Refocus on markets with core client franchises New loan production • Confirmation of the commercial franchise in EUR 55 bn Belgium, France, Luxembourg, Italy and Iberia • Platforms to tap into local f
Slide 28: Actions to improve risk profile are on track
2 Improvement of the Group’s Risk Profile Actions to improve risk profile are on track FSA sale process Liquidity situation In-depth reorganization in line with plan gradually improving of trading activities • Approval by US anti-trust • Benefits from the States’ • Exit of proprietary trading • Guar
Slide 29: All portfolios regrouped and put in run-off
2 Improvement of the Group’s Risk Profile All portfolios regrouped and put in run-off Bond portfolio (excl. FPs) Financial Products portfolio EUR 158 bn USD 16.1 bn / EUR 11.5 bn AAA 36% AAA AA 36% 17% AA 35% NIG A 1% 8% BBB BBB 9% A NIG 14% 20% 25% • 99% investment grade • 75% investment grade • Cu
Slide 30: EUR 200m cost savings in 2009, EUR 600m by 2011
3 Adaptation of the Cost Base EUR 200m cost savings in 2009, EUR 600m by 2011 1 2 3 TFM PWB Efficiency and cost transformation + transformation + reduction in 2009 EUR 200 m cost savings in 2009 Reduction of 888 full time (c. EUR 300 m full year impact) positions in 2009 888 EUR 100% EUR 4.1 bn EUR
Slide 31: Initiatives to deliver cost savings in 2010 and 2011 launched
3 Adaptation of the Cost Base Initiatives to deliver cost savings in 2010 and 2011 launched 1 2 3 Transformation of Transformation of Efficiency and the Businesses the Support Lines cost reduction Initiatives detailed to • TFM transformation • Efficiency and cost our social • PWB transformation redu
Slide 32: Experienced leadership team
New Management Board Experienced leadership team • CEO and chairman of Dexia Group Management Board since Oct. 2008 CEO • Previously, Senior Executive Vice- P. Mariani President of BNP Paribas and co-Head of Retail Banking, in charge of International Retail Services at BNP Paribas Public & Retail &
Slide 33: 10.6% Tier 1 ratio after impact of the crisis and sale of FSA
Dexia Group Profile 10.6% Tier 1 ratio after impact of the crisis and sale of FSA Public & Wholesale Retail & Commercial Portfolios FSA Insurance Banking (excl. FSA) Banking in run-off sold • EUR 2.5 bn income • EUR 2.7 bn income • EUR 158 bn bonds • USD 425 bn • 35% C/I ratio • 89% C/I ratio • EUR
Slide 34: Conclusion from the CEO
Conclusion from the CEO • Economic and financial environment to remain very challenging in 2009 • Quality of outstanding and resiliency of revenues will support PWB performance until the re-opening of long-term funding markets • Robustness of retail banking activities demonstrated over recent months