Dexia Holding SA · EURONEXT:DEXB
Dexia Holding SA — Investor Presentation (March 2006)
64 slides from Dexia Holding SA's investor presentation, March 2006
Slide 1: General Presentation
World Leader of Public Finance General Presentation March 2006
Slide 2: Contents
Contents 9 Dexia within the local public finance market 9 Group financial performance and targets 9 Business lines 9 Appendices 2
Slide 3: Part One: Dexia within the local public finance market
Part One Dexia within the local public finance market
Slide 4: The main markets of local public finance
The main markets of local public finance Outstanding debt 2004 1,233 Bn€ 581 Bn€* 1,474 Bn€** Bond Mainly Bond market and Execution market bank loans bank loans * EU-25 data ** Estimation based on 2003 figures 4
Slide 5: The players
The local public finance market The players Liability-driven Asset-driven Domestic savings L.T. lending Intermediated banks institutions Bank Crédit Local Arrangers Dexia Public Capital Markets Disintermediated (Municipal bond market) Bond Investors insurers Dexia Municipal Agency (DMA) Dexia Kommun
Slide 6: Market constituents and clients’ needs
Market constituents and clients’ needs Market constituents Clients’ needs 2 Municipalities 2 Funding 2 Regions 2 Long-lasting relationship 2 Social housing institutions 2 Assistance to financial/budget management 2 Health care institutions 2 Access to capital markets solutions 2 Schools / universiti
Slide 7: Dexia is the only global player to offer full range of products/services
Dexia is the only global player to offer full range of products/services to the local public sector Debt management Structured loans Project financing Payment services / short term Insurance services lendings Local Local public public sector sector Asset management Long term loans Credit Capital mar
Slide 8: Dexia outperformed the market in Europe
Dexia outperformed the market in Europe Long-term loans outstanding Europe* CAGR: + 3.0 % p.a. 572 Bn€ CAGR: + 6.2 % p.a. 119 Bn€ 451 Bn€ 28 73 Bn€ + 9.2 % p.a. 14 + 5.4 % p.a. 91 59 1996 1997 1998 1999 2000 2001 2002 2003 2004 1996 1997 1998 1999 2000 2001 2002 2003 2004 Local authorities** Local a
Slide 9: Key business model features
Key business model features 9 Solvency of borrowers ª Low risk asset weighting ª Narrow margins ª Low cost of risk 9 Long-term ª Annuity building business ª Low revenue volatility 9 Importance of funding ª High credit ratings needed 9 Differential advantages ª A “volume” business ª Innovation: new p
Slide 10: A different business model
A different business model Dexia Group of the 29 first European banks 1,000 1,000 Customer loans (1,000 basis) 598 940 Risk-weighted assets B/S 506 907 Customer deposits 73 92 Total shareholders' equity 8 17 Impaired loans 1,000 1,000 Revenues (1,000 basis) 540 623 Costs P&L 9 54 Cost of risk 350 24
Slide 11: Profit margin
Profit margin * HB OS D eut sche B ank C r éd it Suisse C o mmer z b ank A B N A mr o C ap it alia B ar clays A llianz - D r esd ner Llo yd s SP IM I So ciét é Génér ale R B OS Average ofag 30 A ver Banks e of 3 0 b anks 27.5 % U nicr ed it o HSB C F o r t is * * St and ar d C har t er ed B N P Par
Slide 12: History: In 1996 CCB and CLF combined into Dexia
History: In 1996 CCB and CLF combined into Dexia Crédit Communal de Belgique (CCB) Crédit local de France (CLF) Lendings to Retail LT lendings local public authorities to local customer public Retail loans authorities deposits LT bond issues (52 Bn€) Bond portfolio (66 Bn€) Bond portfolio assets lia
Slide 13: Business portfolio
Business portfolio Investment Management and Insurance Services 12% Personal Financial Services Public/Project Finance 52% 22% & Credit Enhancement 14% Treasury and Financial Markets Net income - Group share FY 2005 : 2,038 M€ Pie chart represents segment contributions to the underlying net income –
Slide 14: Key profit drivers
Key profit drivers Outstandings at 31/12/05 Credit commitments Customer assets Personal sector 52 52Bn€ L.T. credit o/s Bn€ 241 241 Bn€ Bn€ Public / Project Finance 30 Local public sector 30Bn€ Bn€ Credit spread portfolio 55 55Bn€ Bn€ Loans to personal 15 15Bn€ Bn€ Institutional clients 29 29Bn€ Bn€
Slide 15: Part Two: Group financial performance and targets
Part Two Group financial performance and targets
Slide 16: A double digit growth of the earnings per share
A double digit growth of the earnings per share Reported earnings per share (in EUR) CAGR: 1.87 CAGR: ++12.3 12.3%%p.a. p.a. 1.63 1.64 (1) 1.25 1.24 1.43 (1) 1.15 1.13 ++14.5 14.5%. %. 0.98 0.85 0.75 0.66 (2) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 IFRS as adopted Dexia GAAP (1) Excluding
Slide 17: Dividend per share
Dividend per share Gross dividend (in EUR) Dexia France Dexia Belgium Dexia CAGR: CAGR: ++11.6 11.6%%p.a. p.a. + + 14.5 14.5 % % 0.71 0.62 0.53 0.48 0.48 0.43 0.39 0.36 0.32 0.31 0.27 1997 1998 1999 2000 2001 2002 2003 2004 2005 proposed 17
Slide 18: ROE and Tier 1 ratio
ROE and tier 1 ratio 19.8% 20.0% 16.2% 16.5% 17.2% ROE 2002 2003 2004 2004 2005 10.7% 10.3% 9.3% 9.9% 10.0% Tier 1 ratio 31/12/02 31/12/03 31/12/04 1/01/05 31/12/05 Dexia GAAP EU GAAP* * “Core ROE” : i.e. shareholders’ equity without AFS and CFH reserves, and cumulative translations adjustments 18
Slide 19: Return on risk-weighted assets (RORWA)
Return on risk-weighted assets (RORWA)* 1.92% 1.76% 1.50% 1.40% 1.69% 1.30% 1.50% 1.32% 1.23% 1.01% 2001 2002 2003 2004 2005 Dexia Peer group ** * The ratio between the net income including minority interests and the average risk-weighted assets ** Peer Group: Abn-Amro, Barclays Bank, HVB Group then
Slide 20: Cost-income ratio (%)
Cost-income ratio (%) 58.9 59.2 54.4 54.0 2002 2003 2004 2005 under Dexia GAAP under EU GAAP 20
Slide 21: Cost of risk
Cost of risk related to total net O/S commitments** (in basis points) 2.5 1.2 1.2 Credit 0.4 0.7 0.6 0.6 0.6 0.6 enhancement 12.2 * 9.8 * 7.8 6.4 6.6 5.7* Banking 2.2 1.8 * 1.6 * activities 1997 1998 1999 2000 2001 2002 2003 2004 2005 * Excluding impact of charges for Share leasing at Dexia Bank Ned
Slide 22: Summary of P&L
Summary of P&L under EU GAAP (IFRS as adopted by the EU) Variation Variation of (M€) FY 2004* FY 2005** FY 05 / underlying FY 04 *** Income 5,623 5,976 + 6.3 % + 6.3 % Costs - 3,057 - 3,229 + 5.6 % + 5.8 % Gross operating income 2,566 2,747 + 7.1 % + 6.9 % Cost of risk - 226 - 52 - 77.0 % + 21.4 %
Slide 23: Part Three: Business lines
Part Three Business lines Public/Project Finance and Credit Enhancement Personal Financial Services Investment Management and Insurance Services Treasury and Financial Markets
Slide 24: Public/Project Finance & Credit Enhancement
Public/Project Finance & Credit Enhancement This business line covers: • Municipal finance • Project finance • Corporate lending • Credit enhancement (FSA) 2005 52% Underlying* net income – Group share FY 2004: 884 M€ FY 2005: 1,008 M€ * Excluding non-operating items 24
Slide 25: Geographical origin of the net income
Geographical origin of the net income* Other Other (mainly (mainly Europe) Europe) 17% 17% America France + America France + 10% Benelux 10% Benelux 48% 48% Dexia NY • Long and short-term FSA FSA • Liquidity facilities 25% 25% financing to the public sector • Project finance • Other financial servic
Slide 26: A robust growth, both top and bottom line
A robust growth, both top and bottom line (M €) CAGR CAGR ++7.0 7.0% % 2,253 2,037 1,877 1,793 1,716 CAGR CAGR ++12.3 12.3% % 1,008 884 790 724 634 2001 2002 2003 2004 2005 under Dexia GAAP Under Underlying revenue EU GAAP Underlying net income - Group share 26
Slide 27: Growth of outstandings stems mainly from new markets…
Growth of outstandings stems mainly from new markets… (Bn€) Long-term outstandings CAGR 2001-2005 + 12.4 % 241.3 42.5 + 25.0 % 193.1 177.7 167.1 26.8 151.2 24.1 21.1 + 18.6 % America 17.4 107.9 80.8 65.7 71.4 54.5 Other countries France + Belgium 82.2 85.5 90.9 + 3.5 % 79.3 80.3 2001 2002 2003 2004
Slide 28: … and from “other local players” in historic markets
… and from “other local players” in historic markets (France & Belgium) (Bn€) Long-term outstandings CAGR 2001-2005 + 2.9 % 89.0 85.5 80.3 82.2 4.9 79.3 5.8 - 8.2% Corporate and 6.9 6.7 6.9 19.3 project finance 16.7 19.2 + 8.1% 14.1 14.8 Other local players Local authorities + 2.7% 58.6 58.8 60.6 64
Slide 29: Stable return on growing volumes
Activity highlights Public/Project Finance & Credit Enhancement Stable return on growing volumes Commitments* Gross return on commitments** Bn€ bp 250 170 243 160 240 231 150 218 140 200 204 206 206 209 130 120 110 150 100 90 69 bp 68 bp 72 bp 71 bp 68 bp 69 bp 80 65 bp 65 bp 100 70 60 50 40 50 30 2
Slide 30: FSA’s credit enhancement: a high growth business
FSA’s credit enhancement: a high growth business Net par outstanding (Bn US$) CAGR 2001 – 2005 International asset-backed obligations International municipal obligations U.S. asset-backed obligations* 351 + 12.8 % U.S. Muni obligations 326 29 + 3.8 % 32 12 + 41.4 % 294 8 266 38 + 2.2 % 95 34 6 217 5
Slide 31: FSA’s adjusted book value growth
Since the merger with Dexia, FSA’s adjusted book value has grown at a high double digit rate $ per Share $120 Adjusted book value pre-merger post-merger CAGR 1999 - H1 2005* $110 ABV: 17.7 % $100 BV: 16.7 % $90 Book value $80 $70 $60 $50 $40 $30 $20 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Slide 32: Underlying P&L
Public/Project Finance & Credit Enhancement Underlying* P&L Variation (M€) FY 2004** FY 2005*** FY 05 / FY 04 Income 2,037 2,253 + 10.6 % Costs - 687 - 752 + 9.5 % Gross operating income 1,351 1,501 + 11.1 % Cost of risk - 30 - 34 + 14.7 % Tax expense - 394 - 421 + 6.8 % Other items - 43 - 38 - 12.0
Slide 33: Strategy and outlook
Public/Project Finance & Credit Enhancement Strategy and outlook Development largely driven by organic growth Innovation Innovation Based on Broadening Broadeningof ofclient clientbase base Geographic Geographicexpansion expansion leading to High single digit annual growth of underlying gross operat
Slide 34: Personal Financial Services
Personal Financial Services This business line covers: • Retail banking • Private banking 2005 22% Underlying* net income – Group share FY 2004: 370 M€ FY 2005: 420 M€ * Excluding non-operating items 34
Slide 35: Dexia: a key player in asset gathering
Dexia: a key player in asset gathering, mainly in Belgium and Luxembourg Volumes outstanding in Bn€, at 31/12/2005 123.2 of which 9.6 41.7 Private banking 61.3 81.5 28.6 Retail 52.3 banking 19.3 6.4 2.9 Loans to retail customers Life insurance technical reserves Loans to professionals & SME’s Off-ba
Slide 36: Domestic market shares in Belgium
Domestic market shares in Belgium (at June 2005) Savings bonds Savings accounts Mutual funds Dexia market share: 21.7 % 15.6 % 19.6 % Mortgages Consumer loans Dexia market share: 16.2 % 9.8 % 36
Slide 37: Streamlining the branch network after acquiring Artesia
Personal Financial Services Streamlining the branch network after acquiring Artesia in 2001 Number of branches in Belgium Objective Objectiveexceeded exceeded Target set in 2001 1,483 --28 28%% 1,069 1,099 940 833 895 543 236 204 2001 2002 2003 2004 2005 End 2005 Employee network Independent agents
Slide 38: Underlying P&L
Personal Financial Services Underlying* P&L Variation (M€) FY 2004** FY 2005*** FY 05 / FY 04 Income 2,150 2,219 + 3.2 % Costs - 1,568 - 1,596 + 1.8 % Gross operating income 583 623 + 6.9 % Cost of risk - 35 - 23 - 34.4 % Tax expense - 179 - 182 + 1.6 % Other items +2 +1 - 20.1 % Net income – Group
Slide 39: Strategy and outlook
Personal Financial Services Strategy and outlook 9 Finalize the integration of Artesia, and the restructuring of the distribution networks in Belgium 9 Deploy commercial action in Belgium - increase wallet-share 9 Fully exploit the synergies between retail and private banking leading to Annual growt
Slide 40: Investment Management and Insurance Services (IMIS)
Investment Management and Insurance Services (IMIS) This business line covers: • Asset management • Fund services • Insurance 2005 12% Underlying* net income – Group share FY 2004: 179 M€ FY 2005: 230 M€ * Excluding non-operating items 40
Slide 41: Investment Management and Insurance Services
Investment Management and Insurance Services Underlying* gross operating income FY 2004: 251 M€ FY 2005: 278 M€ Insurance 35% Asset Fund management services 31% 34% * Excluding non-operating items 41
Slide 42: Dexia Asset Management
Dexia Asset Management (Bn€) Assets by type of management CAGR CAGR 90.6 ++18.0 18.0% % 21.8 Institutional mandates 71.5 62.2 4.6 18.4 Private clients discretionary 55.1 mandates 14.9 11.2 3.8 4 Mutual funds (ret & instit.) 4.1 64.2 49.3 39.8 43.4 2002 2003 2004 2005 42
Slide 43: Insurance premiums
Investment Management and Insurance Services (M€) Insurance premiums of which PFS 3,684 72 % 413 3,003 397 2,363 IMIS 11 % 317 1,754 Non life 281 3,271 2,606 2,046 Life 1,473 PPF 17 % 2002* 2003* 2004 2005 * As previously published for the first and second business lines and excluding direct busines
Slide 44: RBC Dexia Investor Services
RBC Dexia Investor Services A 50-50 joint venture between Dexia and Royal Bank of Canada Client Assets Under Custody Top Global Custodians 9 Among top 10 global custodians in the At December 31, 2004 US$ billion 1 Bank of New York 9,700 world 2 State Street 9,497 3 JPMorgan 9,137 4 Citigroup 7,900 5
Slide 45: Underlying P&L
Investment Management and Insurance Services Underlying* P&L Variation (M€) FY 2004** FY 2005*** FY 05 / FY 04 Income 630 701 + 11.2 % Costs - 379 - 423 + 11.6 % Gross operating income 251 278 + 10.6 % Cost of risk -1 0 ns Tax expense - 63 - 42 - 32.4 % Other items -9 -6 - 39.2 % Net income – Group
Slide 46: Strategy and outlook
Investment Management and Insurance Services Strategy and outlook 9 Asset management 2 Target strong growth of assets 9 Insurance 2 Develop life insurance activities 2 Pursue the reorganization of the activity 9 Fund services 2 Continue to develop Luxembourg and international operations 2 Keep on im
Slide 47: Contribution of the business lines to the revenues
Insurance Activities* at Group level: Contribution of the business lines to the revenues 2005 2005underlying** underlying**revenues: revenues: 443 443M€ M€ + +13.3 13.3% %over over2004 2004 Public/Project Finance 50 % 5% Personal Financial Services 45 % Investment Management and Insurance Services *
Slide 48: Treasury and Financial Markets
Treasury and Financial Markets 2005 Underlying* net income – Group share FY 2004: 231 M€ 14% FY 2005: 267 M€ * Excluding non-operating items 48
Slide 49: Missions and key figures
Treasury and Financial Markets Missions and key figures 9 Missions 2 Long and short-term funding 2 Liquidity 2 Financial markets desks (Foreign exchange, financial engineering and derivatives, fixed income…) 9 Key figures 2 L.T. debt issued: 30 Bn€ in 2005 2 CSP outstanding: 55 Bn€ at 31/12/05 2 S.T
Slide 50: Underlying P&L
Treasury and Financial Markets Underlying* P&L Variation (M€) FY 2004** FY 2005*** FY 05 / FY 04 Income 449 487 + 8.5 % Costs - 163 - 177 + 8.5 % Gross operating income 287 311 + 8.5 % Cost of risk + 20 +1 - 94.1% Tax expense - 73 - 42 - 42.9 % Other items -2 -3 + 51.2% Net income – Group share 231
Slide 51: Strategy and outlook
Treasury and Financial Markets Strategy and outlook 9 Develop, through permanent innovation, the offer of market products to the commercial business lines and group treasury functions 9 Support the growth of Group’s balance sheet 9 Optimize the use of allocated equity by maintaining a cautious risk/
Slide 52: New organization / Management since January 2006
New organization / Management since January 2006 Pierre RICHARD Axel MILLER Chairman of the Board CEO 52
Slide 53: The new organization…
The new organization… Axel Axel Miller Miller CEO CEO Group Management Board Jacques Jacques Guerber Guerber Rembert Rembert Dirk Dirk Xavier Xavier von von Lowis Lowis Bruneel Bruneel de de Walque Walque Vice-chairman Vice-chairman Public Public && Project Project Personal Personal Treasury Treasur
Slide 54: … does not alter existing segmentation
… does not alter existing segmentation Public Public & & Project Project Investment Investment Personal Personal Financial Financial Treasury Treasury and and Finance Finance and and Credit Credit Management Management and and Central Central Services Services Financial Financial Markets Markets Enh
Slide 55: Appendices
Appendices
Slide 56: Stock performance
12 € 14 € 16 € 18 € 20 € 22 € 24 € 2/01/2004 2/02/2004 Dexia basis 2/03/2004 2/04/2004 2/05/2004 2/06/2004 2004 2/07/2004 Average Dexia 2/08/2004 Stock performance 2/09/2004 2/10/2004 2/11/2004 2/12/2004 2/01/2005 2/02/2005 2/03/2005 2/04/2005 Dow Jones EuroStoxx Banks 2/05/2005 2/06/2005 2005 2/07/
Slide 57: Total shareholder return
Total shareholder return Value in € at 09/03/2006 of 1,000 € invested* on November 20, 1996 on September 16, 1999 (day before creation of Dexia) (day before merger Dexia France and Dexia Belgium) 3,780 3,838 2,629 2,568 2,522 1,639 1,732 1,404 1,210 1,117 CAC 40 EuroStoxx50 BEL 20 EuroStoxx Dexia CA
Slide 58: Dexia ranking in Euroland (market capitalisation)
Dexia ranking in Euroland (market capitalisation) 9/03/2006 (Bn€) 1 Santander Central Hispano 74.6 2 ING Groep 67.7 3 Unicredito Italiano 62.3 4 BNP Paribas 61.2 5 BBVA 57.3 6 Allianz Dresdner 51.6 7 Deutsche Bank 49.7 8 Société Générale 49.6 9 Crédit Agricole 46.7 10 ABN-Amro 46.1 11 Fortis 37.2 12
Slide 59: Main stock indexes including the Dexia stock
Main stock indexes including the Dexia stock Ö Euronext 100 Ö CAC 40 Ö BEL 20 Ö Dow-Jones Stoxx & EuroStoxx Ö FTSE Eurotop 100 Ö FTSEurofirst80 Ö MSCI Ö Next CAC 70 Ö Dexia is also included in 4 “Sustainable Growth” indexes: Ö DJ Sustainability Index “World”, Ö ASPI Eurozone, Ö FTSE 4 Good “Europe”
Slide 60: Shareholders’ base at December 31, 2005
Shareholders’ base at December 31, 2005 Total number of shares outstanding: 1,107,469,030 Arcofin 16.6% Holding Communal Caisse des Dépôts 44.8% 16.2% Ethias Staff and Management 8.9% Treasury Shares 6.8% 4.8% Others 1.9% 60
Slide 61: Credit ratings of main subsidiaries
Credit ratings of main subsidiaries S&P Moody’s Fitch Dexia Crédit Local AA Aa2 AA+ Dexia Bank Belgium AA Aa2 AA+ Dexia BIL AA Aa2 AA+ Dexia Municipal Agency AAA Aaa AAA FSA AAA Aaa AAA 61
Slide 62: New accounting standards: IFRS
New accounting standards: IFRS ¾ Starting equity base at 01/01/05 increases by EUR 1.6 Bn at 01/01/05, mainly due to 8 General Banking Risks Reserve now part of Equity 8 Impact of IAS 32 & IAS 39 & IFRS 4 ¾ Use of the European hedge portfolio (« carve-out ») allows to pursue prior ALM policies and p
Slide 63: Economic Capital: a new method implemented in 2005
Economic Capital: a new method implemented in 2005 The amount of economic capital may change from time to time ! with continuing refinements of the risk measurement methodology (Bn€, at 31/12/05) Total reg. capital 12.5 Tier 1 capital 11.9 10.0 9.2 -2.5 +2.4 +0.9 Basel II Basel II Basel II Pillar 1
Slide 64: Contacts
Contacts Robert Boublil Director of Investor Relations Investor Relations Officers: Peter de Baere (Brussels) Anne Garsoux (Brussels) Christian Daumann (Paris) Tel: +32 2 213 57 46 Tel: +32 2 213 57 49 Tel: +33 1 43 92 82 54 Fax: +32 2 213 57 80 Fax: +32 2 213 57 80 Fax: +33 1 43 92 71 07 peter.deba