Dexia Holding SA · EURONEXT:DEXB
Dexia Holding SA — Investor Presentation (September 2005)
62 slides from Dexia Holding SA's investor presentation, September 2005
Slide 1: General Presentation
World Leader of Public Finance General Presentation September 2005
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: 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 2003 1,240 Bn€ 514 Bn€ 1,473 Bn€ Bond Mainly Bond market and Method of financing market bank loans bank loans Annual expected 4.5 % 1.5 % 4.5 % future growth rate 4 • A very wide and deep market, in the developed areas of the world (by compar
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 Hypoth
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: + 1.9 % p.a. CAGR: +5.9% p.a. 107 Bn€ 514 Bn€ 451 Bn€ 27 72Bn€ +11.7% p.a. 12 +4.4% p.a. 80 59 1996 1997 1998 1999 2000 2001 2002 2003 1996 1997 1998 1999 2000 2001 2002 2003 Local authorities* Local authorities* Other
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) 645 987 Risk-weighted assets B/S 582 962 Customer deposits 73 99 Total shareholders' equity 10 21 Impaired loans 1,000 1,000 Revenues (1,000 basis) 541 608 Costs P&L 17 49 Cost of risk 348
Slide 11: Profit margin
Profit margin * HVB Group HBOS Deutsche Bank ABN Amro SP IMI*** UBS RBOS Crédit Suisse Bank Austria Creditanstalt KBC Lloyds Intesa Allianz (Banking Business) Unicredito SocGen average of Average of 30 30 Banks banks 26.5 % Santander Barclays HSBC ING Groep** Standard Chartered CA SA BNP Paribas AIB
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: Dexia primary franchise
Dexia primary franchise … Assets Liabilities High grade bond funding 128 Bn€ Public/Project Finance credit O/S 212 Bn€ Institutional client deposits 52 Bn€ Retail/Private banking deposits 65 Bn€ Credit enhancement 326 BnUS$ Asset management 72 Bn€ (FSA) Aggregate amounts at Dec. 31, 2004 13 • The pr
Slide 14: Business portfolio
Business portfolio Investment Management and Insurance Services 12% Personal Financial Services Public/Project Finance 51% 22% & Credit Enhancement 15% Treasury and Financial Markets Net income - Group share H1 2005 : 982 M€ Pie chart represents segment contributions to the underlying net income – G
Slide 15: 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) Objective 2.02 1.92 (1) 1.63 CAGR CAGR CAGR: CAGR: “UNDERLYING” ++12.0 “UNDERLYING”: : 12.0%%p.a. p.a. ++10.1 10.1% %p.a. 1.25 1.24 1.44 (1) p.a. 1.15 1.13 0.98 0.85 0.89 0.75 0.66 0.83 1996 1997 1998 1999 2000 2001
Slide 17: Dividend per share
Dividend per share Gross dividend (in EUR) Dexia France Dexia Belgium Dexia CAGR: CAGR: ++11.5 11.5%%p.a. p.a. + +17.0 17.0% % 0.62 0.53 0.48 0.48 0.43 0.39 0.36 0.32 0.31 0.26 1997 1998 1999 2000 2001 2002 2003 2004 17 • Pay-out ratio has been in the area of 40 %. • Management objective is to incre
Slide 18: ROE and Tier 1 ratio
ROE and tier 1 ratio 19.8% 19.3% 20% MIDTERM TARGET 18% 16.2% 16.5% 16% MIDTERM TARGET ROE 14% 12% 2002 2003 2004 H1 2005 Dexia GAAP EU GAAP* * core ROE i.e. shareholders’ equity without AFS and CFH reserves, and cumulative translations adjustments (CTA) 10.7% 9.3% 9.9% 9.4% Tier 1 ratio 2002 2003 2
Slide 19: Return on risk-weighted assets (RORWA)
Return on risk-weighted assets (RORWA)* 1.85% 1.76% 1.50% 1.76% 1.30% 1.40% 1.50% 1.32% 1.23% 1.01% 2001 2002 2003 2004 H1 2005 (Annualized) Dexia Peer group ** * The ratio between the net income including minority interests and the average risk-weighted assets ** Peer Group: Abn-Amro, Barclays Bank
Slide 20: Cost-income ratio (%)
Cost-income ratio (%) 59.0 58.9 59.2 Objective 55.9 54.9 52.6 2001 2002 2003 2004 H1 2005 * 2007 * under Dexia GAAP under EU GAAP * Excluding non-operating items 20 • A low cost-income ratio stemming from Dexia’s specific business model, and cost efficiency discipline in all business lines. • Strong
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 * 1.1 * activities 1997 1998 1999 2000 2001 2002 2003 2004 H1 2005 annualized * Excluding impact of charges for Share leasing at
Slide 22: Summary of P&L
Summary of P&L under EU GAAP (IFRS as endorsed by EU Commission) Δ Evolution of Full Year (M€) 2004* H1 2004* H1 2005** H1 05 / underlying H1 04 *** Income 5,629 2,865 2,896 + 1.1 % + 3.5 % Costs - 3,064 - 1,499 - 1,566 + 4.5 % + 5.2 % Gross operating income 2,565 1,366 1,330 - 2.6 % + 1.6 % Cost of
Slide 23: 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) H1 2005 51% Underlying* net income – Group share FY 2004: 884 M€ H1 2005: 478 M€ * Excluding non-operating items 24 • Municipal finance consists
Slide 25: Geographical origin of the net income
Geographical origin of the net income* Other Other (mainly (mainly Europe) Europe) 19% 19% America America 7% France France++ 7% Benelux Benelux Dexia NY 51% 51% • Long and short-term FSA • Liquidity facilities FSA 23% financing to the public sector 23% • Project finance • Other financial services t
Slide 26: A robust single-digit revenue growth
A robust “single-digit” revenue growth (M €) 2,043 1,877 1,793 1,716 884 790 724 634 2001 2002 2003 2004 under Dexia GAAP under EU GAAP Revenue Net income - Group share 26 • This business line delivers a high single digit growth in income.
Slide 27: Growth of outstandings stems mainly from new markets
Growth of outstandings stems mainly from new markets… (Bn€) Long-term outstandings CAGR 2001-2004 + 8.5 % 193.0 177.7 167.1 26.8 + 15.5 % America 151.2 24.1 21.1 17.4 80.7 + 14.0 % Other countries 65.7 71.4 54.5 France + Belgium 79.3 80.3 82.2 85.5 + 2.6 % 2001 2002 2003 2004 27 • Good balance betwe
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 2001-2004 + 2.6 % 85.5 79.3 80.3 82.2 5.8 - 5.9 % 6.9 6.7 6.9 Corporate and 19.2 + 10.8 % 14.1 14.8 16.7 project finance Other local players Local authorities + 1.3 % 58.3 58.6 58.8 60.6 2001 20
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 250 170 160 231 150 218 140 200 204 206 206 209 130 120 110 150 100 90 69 bp 68 bp 70 bp 71 bp 68 bp 80 65 bp 100 70 60 50 40 50 30 20 10 0 0 Q1 2004 Q2
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 – H1 2005 International asset-backed obligations International municipal obligations + 12.5 % 326 328 U.S. asset-backed obligations + 8.3 % U.S. Muni obligations 294 32 33 8 8 + 32.3 % 266 38 34 6 87 0% 217 5 98
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 Δ Full Year (M€) 2004** H1 2004** H1 2005*** H1 05 / H1 04 Income 2,043 999 1,092 + 9.4 % Costs - 693 - 334 - 366 + 9.8 % Gross operating income 1,351 665 726 + 9.2 % Cost of risk - 30 - 16 -7 - 54.8 % Tax expense - 394 - 192 - 222 + 15.6 %
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 H1 2005 22% Underlying* net income – Group share FY 2004: 372 M€ H1 2005: 208 M€ * Excluding non-operating items 34 • After the acquisition of Artesia in 2001, Dexia Bank Belgium became one of the three largest
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 30/06/2005 123.1 of which 8.5 39.9 Private 58.9 banking 83.2 27.4 Retail 55.7 banking 18.6 2.5 6.3 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 Dec. 2004) Savings bonds Savings accounts Mutual funds Dexia market share: 23.0 % 16.2 % 19.6 % Mortgages Consumer loans Dexia market share: 15.3 % 18.3 % 36 • Market share strongest in savings bonds (a historic product of Dexia Bank, on which margins are relati
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 Objectivealready alreadyexceeded exceeded Target set in 2001 1,483 -- 26 26 % % 1,098 1,099 940 850 895 543 248 204 2001 2002 2003 2004 June 2005 End 2005 Employee netw
Slide 38: Underlying P&L
Personal Financial Services Underlying* P&L Δ Full Year (M€) 2004** H1 2004** H1 2005*** H1 05 / H1 04 Income 2,164 1,065 1,104 + 3.6 % Costs - 1,577 - 788 - 790 + 0.2 % Gross operating income 586 277 314 + 13.3 % Cost of risk - 35 - 15 - 15 - 3.4 % Tax expense - 180 - 82 - 92 + 11.9 % Other items +
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 H1 2005 12% Underlying* net income – Group share FY 2004: 179 M€ H1 2005: 112 M€ * Excluding non-operating items 40
Slide 41: Investment Management and Insurance Services
Investment Management and Insurance Services Underlying* gross operating income H1 2005 Insurance 39% Fund Asset services management 32% 29% Underlying* gross operating income FY 2004: 251 M€ H1 2005: 139 M€ * Excluding non-operating items 41 • The reorganization decided at group level in 2004 and e
Slide 42: Dexia Asset Management
Dexia Asset Management (Bn€) Assets by type of management CAGR 81.4 + 16.9 % 71.5 20.0 Institutional mandates 62.2 18.4 55.1 3.7 Private clients discretionary 14.9 mandates 11.2 3.8 4.0 4.1 Mutual funds (ret & instit.) 57.7 49.3 43.4 39.8 2002 2003 2004 30/06/2005 42 • Dexia AM is a significant Euro
Slide 43: Fund services
Investment Management and Insurance Services Fund services Capital managed at end # of NAV to calculate in # of transactions of period (Bn€) the year (x 1000)** (in million) 376 348 348 2.15 410 1.97 1.84 1.83 156 397 1.76 168 160 377 Other* 221 180 189 Mandates to DFS June Dec. June June Dec. June
Slide 44: Insurance premiums
Investment Management and Insurance Services (M€) Insurance premiums 3,003 397 2,363 of which PFS 70 % 317 1,754 1,686 281 218 IMIS Non life 10 % 2,606 2,046 Life 1,473 1,468 PPF 20 % 2002* 2003* 2004 H1 2005 * As previously published for the first and second business lines and excluding direct busi
Slide 45: Underlying P&L
Investment Management and Insurance Services Underlying* P&L Δ Full Year (M€) 2004** H1 2004** H1 2005*** H1 05 / H1 04 Income 630 317 339 + 7.1 % Costs - 379 - 180 - 200 + 10.7 % Gross operating income 251 136 139 + 2.4 % Cost of risk -1 0 0 n.s. Tax expense - 63 - 30 - 25 - 15.7 % Other items -9 -
Slide 46: Strategy and outlook
Investment Management and Insurance Services Strategy and outlook 9 Asset management 2 Target strong growth of assets 9 Fund services 2 Continue to develop Luxembourg and international operations 2 Keep on improving productivity New joint venture: Dexia RBC Investor Services (as from Jan. 2006) 9 In
Slide 47: Contribution of the business lines to the revenues
Insurance Activities* at Group level: Contribution of the business lines to the revenues H1 H12005 2005underlying** underlying**revenues: revenues: 226 226M€ M€ + +16.1 16.1% %over overH1 H12004 2004 Public/Project Finance 51 % 5% Personal Financial Services 44 % Investment Management and Insurance
Slide 48: Treasury and Financial Markets
Treasury and Financial Markets H1 2005 Underlying* net income – Group share FY 2004: 231 M€ 15% H1 2005: 135 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: 29 Bn€ in 2004 19 Bn€ in H1 2005 2 CSP outstanding: 39 Bn€
Slide 50: Underlying P&L
Treasury and Financial Markets Underlying* P&L Δ Full Year (M€) 2004** H1 2004** H1 2005*** H1 05 / H1 04 Income 449 255 233 - 8.6 % Costs - 163 - 81 - 85 + 5.3 % Gross operating income 287 174 148 - 15.0 % Cost of risk + 20 + 11 0 n.s. Tax expense - 73 - 44 - 12 - 72.0 % Other items -2 -1 -1 n.s. N
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: Appendices
Appendices
Slide 53: Stock performance
12.00 € 13.00 € 14.00 € 15.00 € 16.00 € 17.00 € 18.00 € 19.00 € 02/01/2004 02/02/2004 02/03/2004 02/04/2004 2004 02/05/2004 02/06/2004 Stock performance 02/07/2004 average Dexia 02/08/2004 02/09/2004 02/10/2004 02/11/2004 02/12/2004 02/01/2005 EuroStoxx Banks 02/02/2005 02/03/2005 02/04/2005 02/05/2
Slide 54: Total shareholder return
Total shareholder return Value in € at 26/09/2005 of 1,000 € invested* on November 20, 1996 on September 19, 1999 (day before creation of Dexia) (day before merger Dexia France and Dexia Belgium) 3,464 3,158 2,391 2,275 2,210 1,565 1,370 1,208 1,101 1,008 CAC 40 EuroStoxx50 BEL 20 EuroStoxx Dexia CA
Slide 55: Dexia ranking in Euroland (market capitalisation)
Dexia ranking in Euroland (market capitalisation) 26/09/2005 (Bn€) 1 Santander Central Hispano 67.2 2 BNP Paribas 53.9 3 ING Groep 53.7 4 BBVA 48.4 5 Allianz Dresdner 42.7 6 Deutsche Bank 41.6 7 Société Générale 41.3 8 ABN-Amro 37.4 9 Crédit Agricole 35.9 10 Fortis 31.5 11 Unicredito Italiano 29.9 1
Slide 56: 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 57: Shareholders' base at June 30, 2005
Shareholders’ base at June 30, 2005 Total number of shares outstanding: 1,096,013,736 Arcofin 16.4% Holding Communal CDC 46.2% 16.4% Ethias Staff and Management 8.6% Treasury Shares 6.8% Others 4.9% 0.7% 57
Slide 58: 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 58
Slide 59: New segmentation as from January 1, 2005
New segmentation as from January 1, 2005 Investment Retail Financial Management Services Services Public & Project becomes becomes Treasury and Central Finance Financial Markets Assets (PPF) Personal Financial Investment (TFM) Services Management and (PFS) Insurance services (IMIS) Share-Leasing Pub
Slide 60: New accounting standards: IFRS
New accounting standards: IFRS ¾ Starting equity base at 01/01/05 increases by EUR 1.9 Bn to EUR 12.4 Bn at 01/01/05, mainly due to ¾ GBBR ¾ Impact of IAS 32 & IAS 39 & IFRS 4 ¾ Use of European hedge portfolio (« carve-out ») allows no radical change in ALM policies and procedures, and should not ma
Slide 61: 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€) Total reg. Capital 11.6 0.8 Tier 1 capital 10.8 8.8 8.7 8.8 -2.7 +2.0 +0.6 Basel II Basel II Basel II Pillar 1 Pillar
Slide 62: Contacts
Contacts Robert Boublil Director of Investor Relations Investor Relations Officers: Peter de Baere (Brussels) Anne Garsoux (Brussels) Jim Root (Paris) Christian Daumann (Paris) Tel: +32 2 213 57 46 Tel: +32 2 213 57 49 Tel: +33 1 43 92 83 93 Tel: +33 1 43 92 82 54 Fax: +32 2 213 57 80 Fax: +32 2 213