Dexia Holding SA · EURONEXT:DEXB
Dexia Holding SA — FY2007 Earnings Presentation
40 slides from Dexia Holding SA's earnings presentation, Feb 29, 2008
Slide 1: Press Conference 4Q & FY 2007 Results
short term has no futur e Press Conference 4Q & FY 2007 Results Axel Miller, CEO February 29th, 2008
Slide 2: Disclaimer
Disclaimer This presentation and the information contained therein are provided for information purposes only and may not be comple te. 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 presentatio n may include f
Slide 3: Agenda
Agenda Summary and Highlights 4Q and Full Year 2007 Acti vity and Results Active capital management Impacts from the Financial Crisis 2008 – 2010 Plan 3
Slide 4: Dexia Results in 2007
Dexia Results in 2007 ““With full year underlying net profit up 12.5% and ROE of 17.8%, Dexia’s operating performance in 2007 was solid, supported by the strong contribution of all commercial business lines. Dexia’s strengths and solidity are reaffirmed. The financial cris is had little effects on o
Slide 5: Summary of FY 2007 Results: Underlying Net Income up +12.5%
Summary of FY 2007 Results : Underlying Net Income up +12.5% M EUR Changes of scope + 56 Reported net Income 2,750 2,533 2,100 2,362 Non-operating Non-operating Underlying net Income +12.5% +262 Underlying Underlying FY 06 FY 07 FY 06 FY07 706 Non-operating items 171 -535 FY 06 FY 07 + 660 Capital g
Slide 6: Summary of 4Q 2007 Results: Underlying Net Income up +14.2%
Summary of 4Q 2007 Results : Underlying Net Income up +14.2% M EUR -1 Changes of scope Reported net Income 528 603 786 587 +14.2% Non-operating Non-operating Underlying net Income + 75 4A 06 $A 07 Underlying Underlying + 257 Non-operating items 4Q 06 4Q 07 - 273 - 16 + 222 Capital gains + 119 Main i
Slide 7: Highlights
Highlights (１) Dexia’s financial solidity is r eaffirmed Subprime and financial crisis have no material impact on group asset quality Cost of funding remains competitive Tier 1 ratio of 9.1% Str ong commercial activity in the context of incr easing oppor tunities Tur key: vigorous expansion; s
Slide 8: Financial Highlights
Financial Highlights Under lying net income amounted to EUR 603 million in 4Q07 (up 14.2% compar ed to 4Q06 pro for ma), and to EUR 2,362 million for the FY 2007 (up 12.5% compar ed to 2006 pr o forma) Recor d under lying FY net income (+18.5% at cst. exchange r ate) in Public Project Finance & Cr e
Slide 9: Agenda
Agenda Summary and Highlights 4Q and Full Year 2007 Acti vity and Results Active capital management Impacts from the Financial Crisis 2008 – 2010 Plan 9
Slide 10: 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 + 22.0 % on a constant exchange rate Finance and Cr edit • Net par o/s FSA (USD) + 13.3 % Enhancement Per sonal Financial • Customer assets o/s(1) + 3.4 % Ser vices • Customer loans o/s
Slide 11: Public / Project Finance: Long-Term Commitments Continued to Increase Strongly
Long-Term Commitments (1) Continued to Increase Strongly Public / Project Finance + 19.1 % Bn EUR + 22.0 % on a cst. exch. rate 322.3 Asia & rest of the world 270.5 52 53 + 89 % Project / Corporate Finance + 50 % 35 28 51 North & Central America 47 + 10 % + 23 % on a cst. exch. rate 111 Europe 98 Pu
Slide 12: Public / Project Finance: Long-Term Origination up 28% YoY
Long-Term Origination up 28% YoY and 44% QoQ (1) Public / Project Finance + 28.3 % Bn EUR + 31.1 % on a cst. exch. rate 80.4 Asia & rest of the world 22 4Q 20 + 59 % 62.6 Project / Corporate Finance 14 13 14 North & Central America + 59 % 4Q + 27 % 11 + 40 % on a cst. exch. rate + 44 % 3Q 3Q 25 Euro
Slide 13: Credit Enhancement: Strong Originations in 2007
Strong Originations in 2007: a Growing Base for Future Earnings Credit Enhancement FSA - Gross present value originations FSA - Net par outstanding M USD + 39.6 % Bn USD + 13.3 % 1,271 88 68 426 376 19 910 17 35 Financial products 405 29 24 120 18 Internatio nal ABS 49 79 93 Internatio nal Public Fi
Slide 14: Personal Financial Services: Double Digit Loan Growth
Double Digit Growth in All Loan Segments, Especially SMEs & Self-Employed Personal Financial Services Customer loans Bn EUR + 13.8 % 36.7 38.0 33.4 4,1 4,3 3,7 Loans to Private banking customers 8,4 8,9 7,4 Loans to SME & the self-employed 3,9 4,1 3,5 Consumer loans Mortgage lo ans 20,4 20,8 18,8 31
Slide 15: Personal Financial Services: Customer Assets up 3.4%
Customer Assets up 3.4 % Personal Financial Services Customer assets Bn EUR + 3.4 % of which 131.4 136.8 135.9 Insurance 13,0 14,6 15,8 + 7.5% 48.7 yoy Private Banking Off-balance sheet assets 62,6 63,2 60,6 87.2 + 1.2 % yoy Balance sheet assets Retail Banking 55,9 59,0 59,5 31/12/06 30/09/07 31/12/
Slide 16: Asset Management: Positive Net New Cash
FY 07 Positive Net New Cash in a Challenging Environment Asset Management Organic growth : + 3.4 % in one year Market effect : + 0.9 % in one year Bn EUR + 4.3 % 111.1 +0.7 +0.2 112.0 - 0.5 - 1.8 +1.4 +1.3 109.7 +1.9 +1.3 108.4 Market 105.2 Market Organic effect Organic effect growth Organic Market
Slide 17: Investor Services: Strong Growth in All Activities
Strong Growth in All Activities Investor Ser vices Assets under administration (1) Number of shareholder Number of funds under accounts in transfer agent (Bn USD) administration (in thousands) + 25.9 % + 9.7 % + 19.7 % 7,645 2,819 2,882 5,134 5,083 6,861 4,679 6,385 2,290 31/12/06 30/06/07 31/12/07
Slide 18: DenizBank: Strong Increase of Activities
DenizBank: Strong Increase of Activities ….. DenizBank: one year later Public/Pr oject Originations Persona l Fin Customer assets Finance Services 4,233 2,381 + 28.7% 3,289 M EUR x2.3 873 31/12/06 31/12/07 31/12/06 31/12/07 Long term commitments Customer loans 3,268 3,206 + 41.5% + 62.9% 2,312 1,969
Slide 19: Strong Increase in Underlying 4Q 2007 Net Income
Strong Increase in Underlying(1) 4Q 2007 Net Income Variation 4Q 2006 4Q 2007 (M EUR) underlying underlying under lying underlying on a cst. pr o forma exch. rate Income 1,637 1,779 + 8.7 % + 8.6 % Expenses - 953 - 1,004 + 5.3 % + 4.9 % G ross opera ting income 684 775 + 13.3 % + 13.7 % Cost of risk
Slide 20: Double Digit Increase in 2007 Underlying Net Income
Double Digit Increase in 2007 Underlying(1) Net Income Variation FY 2006 FY 2007 underlying (M EUR) underly ing pro forma underlying unde rlying on a cst. exch. r ate Inc ome 6,5 19 6,995 + 7.3 % + 7.7 % Expenses - 3,6 10 - 3,833 + 6.2 % + 6.5 % Gross operating income 2,9 10 3,162 + 8.7 % + 9.1 % Co
Slide 21: Non-Operating Items: Active Management of Equity Portfolio
Non-Operating Items: Acti ve management of Equity Portfolio Offsets Temporary Negative MtMs of FSA’s Insured CDS (M EUR) 4Q 2006 4Q 2007 FY 2006 FY 2007 Income + 229 - 84 + 697 - 99 of which . capital gains + 222 + 119 + 6601 + 362 2 . MTM, CDS FSA +6 - 203 + 25 - 461 . interest DBNL +2 +1 + 12 +1 E
Slide 22: Reported FY Earnings Also Supported by Lower Non Operating Items
Reported FY 07 Earnings Also Supported by Lower Non Operating Items Than in 2006 FY 2006 FY 2007 (M EUR) Variation rep orted rep orted * The 217 M EUR decrease comes from: Income 7.005 6.896 - 1.6 % Expenses - 3.474 - 3.834 + 10.4 % ª Changes in scope + 56 M EUR Gro ss operatin g income 3.531 3.062
Slide 23: Cost of Risk Remained at a Low Level
Cost of Risk Remained at a Low Level (in basis points) Credit enhancement (1) 2,5 1,2 1,2 0,7 0,6 0,6 0,6 0,8 0,6 0,8 0,4 97 98 99 00 01 02 03 04 05 06 07 12,2(3) Banking activitie s (2) 9,8(3) 7,8 6,4 6,6 5,7 (3) 4,3 (3) 2,2 1,8(3) 1,6(3) 2,4(3) 97 98 99 00 01 02 03 04 05 06 07 (1) Cost of risk rel
Slide 24: All Commercial Business Lines at Double-digit Growth Rates
All Commercial Business Lines at a Double-digit Growth Rates NET UNDERLYING INCOME - GROUP SHARE Variation * FY 07/06 PPFCE + 18. 5% PFS + 10. 7% Asset Managem ent + 12. 3% Investor Servi ces + 17. 1% Treasury and Financi al Markets - 20.1% 24* On a consta nt scop e an d exch an ge rate Les grandes
Slide 25: Treasury and Financial Markets: Record 4Q in Treasury Operations
Within TF M, Treasury Operations Had a Record 4Q 07 Treasury and Financial Markets Market Eng in eerin g an d Trea sury F ixed Income T rading (M EUR) 4Q 2006 4Q 2007 4Q 2006 4Q 2007 4Q 200 6 4Q 2007 Income 29 117 102 -7 15 25 Costs - 17 - 18 - 20 - 19 - 15 - 16 Gross operati ng income 12 100 81 - 2
Slide 26: DenizBank: Synergies on Track
Synergies on Track Profit Contribution from Turkey up 32% DenizBank: one year later Anticipated level of synergies was reached Some synergies will have an accelerating effect Synergies, post tax (EUR M) Net profit contribution from Turkey ( EUR M) + 32 % 183 138 55 18 2007 Tar get 2009 proforma 2006
Slide 27: Underlying EPS Growth of 9.7%
Underlying EPS Growth of 9.7% FY 2 006 FY 20 07 C/I ratio 49.6 % 5 5.6 % C/I ratio underlying 55.4 % 5 4.8 % ROE (1) 23.1 % 1 7.8 % Variation Return on risk-weighted a ssets 2.3 % 1.8 % FY 07 / FY 06 EPS (EUR) reported (2) 2.4 9 2.18 -12 .5 % Unde rly ing (2) 1.85 2.03 +9 .7 % (1) The ratio between
Slide 28: Agenda
Agenda Summary and Highlights 4Q and Full Year 2007 Acti vity and Results Active capital management Impacts from the Financial Crisis 2008 – 2010 Plan 28
Slide 29: RWA Growth Accelerated During 2H as Opportunities Developed
RWA Growth Accelerated During 2H as Opportunities Developed Varia tion in 31/12/06 30/09/07 31/12/07 3 months Tier 1 ratio 9.8 % 9.3 % 9.1 % - Tier 1 ratio with 50% hybrid 9.2 % 8.8 % 8.7 % - Tier 1 capital (M EUR) 13,028 14,098 14,549 + 3.2 % Risk-weighted assets (Bn EUR) 133.4 152.3 159.4 + 4.7 %
Slide 30: Acquisition of a EUR 3 bn UK Social Housing Portfolio
Acquisition of a EUR 3 bn UK Social Housing Portfolio at Attractive Terms Dexia has been active in the UK social housing sector since 1996. The additio n of B&B EUR 3 bn portfolio raised Dexia’s market share to around 8% With no default experie nced in the past, UK social housing is a very low risk
Slide 31: EUR 340m Capital Investment into Financial Guaranty Business
EUR 340m Capital Investment into the now very Attractive Financial Guaranty Business Weakened Monoline industry players by contrast to FSA FSA, only leading player with AAA rating and stable outlook by all 3 rating agencies Very attractive new business opportunities, both on primary and FSA Transact
Slide 32: Capital Management: Basel II Update
Capital Management: Basel II Update EUR 500 M share buy back program. EUR 307 M realized at end of February Basel II Tier I ratio of 11.5% at end December 2007, after retain ing safety margins Further refinin g of the model will allow additio nal capital savings by the end of the year All things bei
Slide 33: Agenda
Agenda Highlights 4Q and Full Year 2007 Results Active capital management Impacts from the Financial Crisis Business Plan 2008 - 2010 33
Slide 34: Update On Current Financial Crisis – Wrap Up
Update On Current Financial Crisis – Wrap Up Credit risks: no deterioration in group asset quality • Dexia applies a conservative risk underwriting policy • Dexia group kept out of the ABS C DO market • Group Exposure to all types of U S subprime R MBS generally remains well protected with no materi
Slide 35: Group Asset Quality is Strong
Group Asset Quality is Strong FSA is the only major monoline which avoided the ABS CDO market Dexia’s (excluding FSA) unhedged credit exposure to CDO of RMBS = 0 Existing such type of assets are fully hedged by the largest commercial and investment banks Credit exposure at Dexia (excluding FSA), on
Slide 36: Agenda
Agenda Summary and Highlights 4Q and Full Year 2007 Acti vity and Results Active capital management Impacts from the Financial Crisis 2008 – 2010 Plan 36
Slide 37: 2006-2009 Targets vs Realised 2007
2006-2009 Targets vs Realised 2007 Group’s targets vs realized 2007 Targ et 2009 2005- 2 007 EPS Underlying (i n EUR) – CAGR 05-09 around 10 % CAGR 05-07 11.3 % EPS Reported (in EUR) – CAGR 05-09 around 10 % CAGR 05-07 8.0 % ROE repo rted > 16.0 % 23% (06) / 18% (0 7) Cost-income ra tio underlying <
Slide 38: Business Plan 2008-10: Strategic Focus on Commercial Expansion and Operating Efficiency
Business Plan 2008-10: Strategic Focus on Commercial Expansion and Operating Efficiency Focused development on Dexia’s main franchises • Public finance: • Further geographical expansion: take mkt shares in tomorrow’s growth markets (Canada, Japan, ….) and prepare positioning for future markets • Cli
Slide 39: 2008-2010 Targets: Confirmation of 10% EPS Growth Prospects
2008-2010 Targets: Confirmation of 10% EPS Growth Prospects Group’s 2008-2010 targets Target 2010 E PS Underlying (in E UR) – CAGR 07-10 10 % E PS Reported (in E UR) – CA GR 07-10 10 % ROE reported > 16.0 % Cos t-inc ome ratio underlying 52.0 % DPS (in EUR) – CAGR 07- 10 > 10 % 39 Le point d’étape q
Slide 40: Conclusion
Conclusion The financial crisis has created a new environment of which only banks with the strongest level of liquidity, asset quality and capital base can take advantage from. Wit h its 2007 results and developments, Dexia proves it is one of these banks. The current crisis will last, creating new