Dexia Holding SA · EURONEXT:DEXB
Dexia Holding SA — Q3 2007 Earnings Presentation
35 slides from Dexia Holding SA's earnings presentation, Nov 16, 2007
Slide 1: Press Conference Call 3Q 2007 Results
short term has no futur e Press Conference Call 3Q 2007 Results Axel Miller, CEO November 16th, 2007
Slide 2: Agenda
Agenda Activi ty and Highlights Results Impact of the current crisis on Dexia Capital Management Conclusion 2
Slide 3: Dexia Results at September 30th 2007
Dexia Results at September 30th 2007 “Dexia’s operating performance to date has been good, supported by the strong contribution of all our commercial business lines. The financial crisis has created liquidity disruptions that have led to the negative mark-to- market of certain financial portfolios,
Slide 4: Summary of 9M Results: +11.8% of Underlying Net Income
Summary of 9M Results : + 11.8 % of Underlying Net Income M EUR Changes of scope + 58 Reported net Income Denizbank + 96 BAN, DPBF, PBUK - 17 Fundings… - 22 1,963 1,946 1,572 1,758 Non-operating Non-operating Underlying net Income +11.8% +186 Underlying Underlying 9M 06 9M 07 9M 06 9M 07 449 Non-ope
Slide 5: Highlights (1)
Highlights (1) Underlying net income 9M 07 up 11.8% at EUR 1,758 million. Underlying 3Q 07 net income, at EUR 481 million, stable compared to 3Q 06 Continued robust growth of all commercial business lines (activity and results) Favourable commercial environment for Dexia and FSA (risk re-pricing; ri
Slide 6: Highlights (2)
Highlights (2) EUR 112 million share buy backs realized between August 31st and September 30th as part of a EUR 500 million program to be completed before next AGM in May 2008 Tier 1 ratio target under Basel II: 10.5%. Objective to deploy excess capital in accordance with Dexia’s capital management
Slide 7: Robust Commercial Activity Across All Business Lines
Robust Commercial Activity Across All Business Lines Over 12 months Public / Project • LT bankin g commitments o/s + 15.0 % Finance and Cr edit • Net par o/s FSA + 13.4 % Enhancement Per sonal Financial • Customer assets o/s(1) + 5.4 % Ser vices • Customer loans o/s + 12.8 % • Assets under managemen
Slide 8: Long-Term Commitments Continue to Increase Strongly
Long-Term Commitments (1) Continue to Increase Strongly Public / Project Finance & Credit Enhancement + 15.0 % Bn EUR + 17.6 % on a cst. exch. rate 292.7 Asia & rest of the world 254.4 45 40 + 58 % Project / Corporate Finance 33 25 + 34 % 50 North & Central America 45 + 10 % + 20 % on a cst. exch. r
Slide 9: 3Q 07: Strongest Quarter Ever for Originations at FSA
3Q 07: Strongest Quarter Ever for Originations at F SA … Credit Enhancement FSA - Gross present value originations M USD 537 299 292 Financial products Internatio nal ABS 218 193 197 Internatio nal Public Finance 126 U.S. ABS U.S. Public Finance 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 2Q 07 3Q 07 9 Au mois d’
Slide 10: A Growing Base for Future Earnings
… a Growing Base for Future Earnings Credit Enhancement FSA - Gross present value originations FSA - Net par outstanding M USD + 54.2 % Bn USD + 13.4 % 953 85 50 414 365 19 30 Financial products 618 337 16 23 30 Internatio nal ABS 85 16 93 23 77 Internatio nal Public Finance 219 U.S. ABS 232 U.S. Pu
Slide 11: Double Digit Growth in All Loan Segments, Especially SMEs & Self-Employed
Double Digit Growth in All Loan Segments, Especially SMEs & Self-Employed Personal Financial Services Customer loans Bn EUR + 12.8 % 36.7 32.5 33.4 4.1 Loans to Private banking customers 3.7 3.7 8.4 Loans to SME & the self-employed 7.2 7.4 3.9 Consumer loans 3.3 3.5 Mortgage lo ans 18.3 18.8 20.4 30
Slide 12: Customer Assets up 5.4%
Customer Assets up 5.4% Personal Financial Services Customer assets Bn EUR + 5.4 % of which 136.6 129.6 131.3 12.9 1 4.4 1 2.5 48.5 + 9.3 % Insurance Private yoy Banking 6 1.5 62.6 6 3.2 Off-balance sheet assets 88.1 + 3.3 % Retail yoy Balance sheet assets 5 9.0 Banking 5 5.6 55.9 30/09/06 31/12/06
Slide 13: Positive Net New Cash in a Challenging Environment
Positive Net New Cash in a Challenging Environment Asset Management Organic growth : +4.4 % in one year Market effect : +5.1 % in one year Bn EUR + 9.5 % 1.3 111.1 0.7 0.2 112.0 1.3 108.4 1.4 105.2 1.9 Market 2.4 Organic 102.3 0.5 Market effect Organic growth effect Organic Market growth growth effe
Slide 14: Investor Services: Strong Growth in All Activities
Strong Growth in All Activities Investor Ser vices Number of shareholder Assets under administration (1) Number of funds under accounts in transfer agent (Bn USD) administration (in thousands) + 29.9 % + 10.9 % + 8.2 % 2,819 5,083 6,861 4,585 4,679 6,341 6,385 2,290 2,170 30/09/06 31/12/06 30/09/07
Slide 15: Agenda
Agenda Activi ty and Highlights Results Impact of the current crisis on Dexia Capital management Conclusion 15 Comme on l’a vu, la performance commerciale a été plus que robuste Passons maintenant au commentaire des résultats, mais avant l’analyse, un mot de préambule : • comme on le sait, les nouve
Slide 16: Stable Underlying 3Q 2007 Net Income
Stable Underlying( 1) 3Q 2007 Net Income Variation 3 Q 2 006 3Q 2007 underlying (M EUR) underlying pro forma underlying underlying on a cst. exch. r ate Inc ome 1,605 1,622 + 1.1 % + 0.8 % Expenses - 902 - 967 + 7.1 % + 6.8 % Gros s operating income 702 656 - 6.6 % - 6.8 % Co st of risk - 24 - 38 +
Slide 17: Double Digit Increase in 9M07 Underlying Net Income
Double Digit Increase in 9M07 Underlying(1) Net Income Variation 9M 2006 9M 2 007 underlying (M EUR) underlying underlying underlying on a cst. pro forma e xch. rate Income 4,882 5 ,21 6 + 6.8 % + 7.4 % Expenses - 2,656 - 2 ,82 9 + 6.5 % + 7.1 % Gross opera ting income 2,226 2 ,38 7 + 7.2 % + 7.7 %
Slide 18: Non-Operating Items, Affected by the MtM of FSA's CDS Portfolio
Non-Operating Items, Affected by the MtM of F SA’s CDS Portfolio… (M EUR) 3Q 2006 3Q 2007 9M 2006 9M 2007 Income + 133 - 170 + 468 - 15 of which . capital gains + 132 + 40 + 435 * + 237 . MTM, CDS FSA -1 - 215 + 20 - 258 . interest DB NL +2 +1 + 10 0 Expenses 0 -1 0 -1 Cost of risk (DBNL) + 14 -8 -
Slide 19: Are Reflected In Both 3Q Reported Earnings
…Are Reflected In Both 3Q Reported Earnings… 3Q 2006 3Q 2007 (M EUR) Var iatio n repo rted rep orted Inco me 1,662 1,452 - 12.6 % * The 173 M EUR decrease comes from: Expen ses - 849 - 967 + 13.9 % ª Changes in scope + 17 M EUR G ross operating in come 813 485 - 40.3 % ª Non-operating items - 184 M
Slide 20: And 9M2007 Reported Earnings
…And 9M2007 Reported Earnings 9M 2006 9M 2007 (M EUR) Variation repo rted repo rted * The 17 M EUR decrease comes from: Income 5,122 5,201 + 1.5 % Expen ses - 2,504 - 2,830 + 13.0 % ª Changes in scope + 58 M EUR G ross o perating inco me 2,618 2,371 - 9.4 % ª Non-operating items - 261 M EUR Cost of
Slide 21: Cost of Risk Remains at a Low Level
Cost of Risk Remains at a Low Level (in basis points) Credit enhancement(1) 2.5 1.2 1.2 1.0 0.4 0.7 0.6 0.6 0.6 0.6 0.6 0.4 0.5 97 98 99 00 01 02 03 04 05 06 1Q07 2Q07 3Q07 annualized 12.2 (3) Banking activitie s(2) 9.8 (3) 7.8 6.4 6.6 5.7 (3) (3) (3) 3.7 (3) 4.2 2.2 1.8 (3) 1.6 (3) 2.4 (3) 3.4 97 9
Slide 22: All Commercial Business Lines Come with Double-digit Growth Rates
All Commercial Business Lines Come with Double-digit Growth Rates NET UNDERLYING INCOME GROUP SHARE Variation * Variation * 3Q 07 / 3Q 06 YTD 07/06 PPFCE + 11. 9% + 19. 0% PFS + 15. 6% + 14. 4% Asset Managem ent + 35. 0% + 32. 1% Investor Services + 14. 1% + 18. 6% * On a consta nt scop e an d exch
Slide 23: Fixed Income Suffered From the Effects of Spreads Widening
Fixed Income Suffered From the Effects of Spreads Widening on Trading Portfolios Treasury and Financial Markets Market Engineering and Treasury Fixed Income Trading (M EUR) 3Q 2006 3Q 2007 3Q 2006 3Q 2007 3Q 2006 3Q 2007 Income 41 32 71 - 13 16 16 Costs - 16 - 17 - 15 - 21 - 14 - 19 Gross operating
Slide 24: Underlying EPS Growth of 8.6%
Underlying EPS Growth of 8.6 % 9M 2006 9M 2007 C/I ratio 48.9 % 54.4 % C/I ratio und erlyin g 54.4 % 54.2 % ROE 23.0 % 18.4 % Variation Return on risk-weighted assets 2.2 % 1.9 % 9M 07 / 9M 06 EPS (EUR) reported 1.80 1.67 - 7.2 % underlying 1.39 1.51 + 8.6% 24 On voit donc l’origine de la baisse de
Slide 25: Agenda
Agenda Activi ty and Highlights Results Impact of the current crisis on Dexia Credit Risk considerations Accounting impacts Solv ency / Liquidity / Funding Capital management Conclusion 25 Point sur la crise financière et son impact sur Dexia La crise a des implications en terme de • Risque de crédi
Slide 26: Credit Risks Exposure
Credit Risks Exposure No credit de terioration • Sub prime exposure well pro tected : stress te st suggests no loss • Other US b orrowers: ‘Helocs’ , which have b ecome a market concern , would ha ve a moderate nega tive impact i f the curren t very unfavou rab le conditions persist durab ly • No ma
Slide 27: Accounting Effects from Credit Spread Widening
Accounting Effects from Credit Spread Widening MtM of FSA’s CD S portfolio : EUR - 138 M (non operating) • Accounting treatment o f the CD S portfolio as ‘deriva tive ’, while it is an insured portfolio which will run to its maturity. • Negative marks should not b e trea ted as real or continuing Wi
Slide 28: Funding: Dexia and FSA ratings not questioned
Funding Dexia and FS A ratings not questioned Fitch and Moody’s recent reports confirm Funding capabilities rem ain intact and v ery competitive Liquidity not an issue 28 Crise de liquidité/ Notation Notations de Dexia et FSA confirmées Capacité de refinancement intacte, et dans des conditions très
Slide 29: Funding Capabilities Remain Strong
Funding Capabilities Remain Strong Funding Strong short-term liquidity positions Long-term funding: a very modest increase in the cost of funding Swaps Covered Bonds 5 years 25 25 20 Pfandb riefe 5Y 20 Cedulas 5Y 15 UK CB 5Y 15 10 DexiaMA 5.5% 25 Oct 12 10 OF 5Y 5 5 0 0 -5 -5 -10 -10 Jun-07 Jul-07 S
Slide 30: FSA's Competitive Position Has Never Been Stronger
FSA’s Competitive Position Has Never Been Stronger Business opportunities Relative risk perception puts FSA in a unique competitive position Monolines 5y CDS 700 ABK AAA 600 FG IC FS A 500 MBIA AAA XL Cap AAA 400 300 200 100 0 7 7 07 -07 7 07 7 - 07 -0 -0 t -0 -0 v- il- in in ût pt ct oû no - ju ao
Slide 31: Agenda
Agenda Activi ty and Highlights Results Impact of the current crisis on Dexia Capital management Conclusion 31
Slide 32: RWA Developed on the Back of Robust Commercial Activity
RWA Developed on the Back of Robust Commercial Activity Variation in 31/12/06 30/06/07 30/09/07 3 months Tier 1 ratio 9.8 % 9.9 % 9.3 % - Tier 1 ratio with 50% hybrid 9.2 % 9.4 % 8.8 % - Tier 1 capital (M EUR) 13,028 14,045 14,098 + 0.4 % Risk-weighted assets (B n EUR) 133.4 141.4 152.3 + 7.7 % NAV
Slide 33: Dexia Capital Strength Will Be Higher Under Basel II
Dexia Capital Strength Will Be Higher Under Basel II Capital Management Basel I capital ratios objectives : core Tier 1 ≥ 8.5% Total RWA core Tier 1 + 50% hybrid Tier 1 ≥ 9% Total RWA Basel II capital ratio objective : Tier 1 ≥ 10.5% Total RWA Under this new constraint, the excess capital stood at E
Slide 34: Agenda
Agenda Activi ty and Highlights Results Impact of the current crisis on Dexia Capital management Conclusion 34
Slide 35: Conclusion
Conclusion “The current crisis has obviously created new opportunities, but also a higher volatility which must be dealt with in financial reporting and which implies a continuing surveillance of asset quality and liquidity situations. The st rong capit al base and commercial f ranchise of Dexia, th