Investor Day
               2002


Investment Management Services

  A focused European player


                         ...
AGENDA
                             Investor Day
                                 2002




!   1. Private Banking         ...
Private Banking activities
                                                                                              I...
Onshore Private Banking strategy
                                                                      Investor Day
      ...
A focused onshore Private Banking strategy
                                                     Investor Day
             ...
Market positioning of onshore entities
                                                                       Investor Day...
Key success factors of IPBP
                                                                                              ...
Positive outlook for offshore banking markets
                                                                            ...
Offshore Private Banking for Dexia
                                                                                       ...
The Swiss market
                                                                         Investor Day
                   ...
Conclusion: Private Banking strategy
                                                                       Investor Day
 ...
Private Banking*
                                                                              Investor Day
              ...
AGENDA
                             Investor Day
                                 2002




    1. Private Banking

!   2. ...
Dexia AM: a production entity servicing all the
                                                                          ...
Expected growth in AuM 2002-2006
                                                                                   Invest...
Product range
                                                                                 Investor Day
              ...
Key ratios show that Dexia AM is well positioned
                                                                         ...
Dexia Asset Management in its universe
                                                                                   ...
Asset Management
                                                                    Investor Day
                        ...
AGENDA
                             Investor Day
                                 2002




    1. Private Banking

    2. ...
Market Fundamentals
                                                                                 Investor Day
        ...
Dexia Fund Services
                                                                                                      ...
A leading market position
                                                                                Investor Day
   ...
A strong international growth
                                                                                            ...
International strategy:
                                                                                                  ...
Our strategic positioning
                                                                                    Investor Day...
2 strategic options for Dexia Fund Services
                                                                    Investor D...
Dexia Fund Services
                                                                            Investor Day
             ...
AGENDA
                             Investor Day
                                 2002




    1. Private Banking

    2. ...
Dexia Securities is a multi-local specialist
                                                                             ...
Growth expected over the next 5 years
                                                                                 Inv...
Dexia Securities
                                                                   Investor Day
                         ...
Outlook 2001 –2006
                                                                 Investor Day
                Income st...
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Microsoft PowerPoint - 3 Investment Management Services (Marc ...

  1. 1. Investor Day 2002 Investment Management Services A focused European player Marc HOFFMANN Head of Investment Management Services Chairman of the Management Board of Dexia BIL
  2. 2. AGENDA Investor Day 2002 ! 1. Private Banking " 2. Asset Management 3. Dexia Fund Services 4. Dexia Securities
  3. 3. Private Banking activities Investor Day 2002 ! Dexia has private banking activities in two types of markets ! Onshore markets ! AuM 2001: 9 Bn € 19% ! 7 countries (Belgium, Spain, France, The Netherlands, Italy, Denmark, UK) 81% ! Offshore markets Onshore Offshore ! AuM 2001: 29 Bn € ! 5 countries (Luxembourg, Switzerland, Monaco, Jersey, Singapore) ! Growth expected by 2006 (at 2001 constant scope): ! + 10 % p.a. in AuM ! Income stability as a result of the assumed clients’ more conservative attitude in terms of investments ! The specificities of the two types of markets we operate in leads us to conduct distinct development strategies
  4. 4. Onshore Private Banking strategy Investor Day 2002 Onshore markets typology Affluent HNWI Very HNWI Competitive advantage for domestic players with Niche players large network Network-based strategy Upscale strategy
  5. 5. A focused onshore Private Banking strategy Investor Day 2002 A network-based strategy Upscale strategy Affluent HNWI Very HNWI Dexia Banque Privée France Dexia Bank Nederland Dexia Private Banking Belgium Ely Fund Managers Iberagentes Popular Banca Privada
  6. 6. Market positioning of onshore entities Investor Day Spain: Iberagentes Popular Banca Privada 2002 A network-based strategy Upscale strategy Affluent HNWI Very HNWI ! New alliance with Banco Popular: Iberagentes Popular Banca Privada ! Shareholders before the new alliance new alliance ! Banco Popular: 25 % 60 % ! Dexia: 25 % 40 % ! 2 founders: 25 % each Belgium Spain France Netherlands UK
  7. 7. Key success factors of IPBP Investor Day 2002 A clear goal Become third Spanish Private Bank by 2004 A strong commercial Client acquisition coverage LA CORUÑA BILBAO ! Own network 177 PAMPLONA VALLADOLID ! Client transfers from Banco 248 285 ZARAGOZA BARCELONA 30 Popular’s retail network MADRID (2 DLG) PALMA DE 232 VALENCIAMALLORCA Target AuM (Bn €) 36 63 GANDIA 6,4 4,4 ALICANTE MURCIA 2,5 SEVILLA 1,3 MALAGA TENERIFE 2001 2002E 2003E 2004E CAGR: 69 % Current branches New branches 2004 Market share: 6.6 %
  8. 8. Positive outlook for offshore banking markets Investor Day 2002 ! Persisting market attractiveness despite regulatory pressures !Growth expectations more stable than onshore markets !Margins remain higher !No need of an extended network, resulting in lower operating expenses !Market concentrated in a limited number of financial centers 100% 90% HK/Singapore US dependencies 10% 10% 80% 12 .5 % 70% onshore Growth expectations 60% 70% Other (mainly 8 .5 % 8 .9 % made in 2000 50% Caribbean) Switzerland 6 .5 % 40% 25% 30% 30% 20% offshore Growth expectations 10% 30% made in 2002 0% UK dependencies Luxembourg Ons ho re Offs ho re 15% 10% Marché HNWI Source: Flemings Research, UBS Warburg, Mc Kinsey, Société Générale
  9. 9. Offshore Private Banking for Dexia Investor Day 2002 ! Offshore contribution remains predominant for Dexia Private Banking Revenues 2001 AuM 2001 Onshore 19% 26% 51% Non 14% Luxembourg Offshore 67% 23% Luxembourg Non Luxembourg offshore: Switzerland, Monaco, Jersey, Singapore ! Luxembourg has developed and keeps an excellent profitability ! Increase in number of clients ! Strong resistance to worsening environment ! Very good productivity # clients Average AuM (Bn€) C/I ratio +1.4% 22 23 59% 58% 50% 48% 48% 49% 54% 50% 47% 20 17 18 45% 45% 44% 14 15 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 1995 1996 1997 1998 1999 2000 2001 1999 2001
  10. 10. The Swiss market Investor Day 2002 ! The Swiss market is more and more attractive for a number of players ! Today, the market believes in Swiss Private Banking’s perennity ! Switzerland is the main offshore private banking center ! Switzerland concentrates strong brands and upscale know-how ! Dexia Banque Privée Suisse ! AuM 2001: 3 Bn€ ! PNB 2001: 47 M€
  11. 11. Conclusion: Private Banking strategy Investor Day 2002 ONSHORE OFFSHORE Our acquisition strategy is today ! Our offshore banking activities leveraged either through are most efficient ! Offshore private banking is and will probably remain ! the potential of a large predominant in our business mix domestic retail network or ! a niche specialisation in upscale private banking A Focused European Private Banking Player
  12. 12. Private Banking* Investor Day 2006 projections 2002 ! Steady growth of Gross Operating Income: (M€) 2001 2006 CAGR 01-06 13 % CAGR Net banking income 468 632 6% ! Net banking income Costs -335 -391 3% grow at a slower pace than AuM due to Gross operating income 133 241 13% prudent assumption of clients more Net income 75 168 18% conservative investment attitude C/I 71.6% 61.9% ! Cost control: improvement of the Assets under 38 61 10% C/I ratio of 10 points management (Bn€) ! Net income growth forecast of 18% p.a. over the period * excluding Legio Lease
  13. 13. AGENDA Investor Day 2002 1. Private Banking ! 2. Asset Management " 3. Dexia Fund Services 4. Dexia Securities
  14. 14. Dexia AM: a production entity servicing all the Investor Day Group’s activities 2002 ! Dexia AM services the distribution networks of all Dexia business lines ! Dexia AM is also developing autonomously: ! Institutional mandates ! Fund distribution through third-party distribution networks Public Finance clientele Retail Banking Fund Administration FSA business Insurance Private Banking Dexia Asset Management Third-party networks Institutional clients
  15. 15. Expected growth in AuM 2002-2006 Investor Day 2002 143 (Bn €) 31 84 28 41 19 15 10 AuM Organic Market External AuM Organic Market AuM 12/1996 growth effect growth 12/2001 growth effect 12/2006
  16. 16. Product range Investor Day 2002 ! Dexia AM is present in all asset Equity Funds 23% classes and is in line with the geographical reach of Dexia in Global Balanced Europe 25% ! Good and stable mix of asset classes Bond Funds 19% Sustainable Funds 2% ! All asset classes have positive Alternative & Structured contribution to P&L Money Market Funds Funds 17% 14% ! "Captive" private & retail distribution network is a competitive advantage ! Structure of AuM ! 39 % Institutional ! 61 % Retail
  17. 17. Key ratios show that Dexia AM is well positioned Investor Day compared to peers 2002 Total revenues / AuM (%) Total costs / AuM (%) Peers worst 0.42 0.44 0.13 0.10 Peers average 0.25 0.35 0.45 0.55 0.65 0.6 0.5 0.4 0.3 0.2 0.1 0 Peers best Dexia AM 2002 C/I ratio Gross operating income / AuM (%) Dexia AM 2005 0.31 0.23 0.29 0.34 1.2 1 0.8 0.6 0.4 0.2 0 0 0.1 0.2 0.3 0.4 Peers: SGAM, BNP Paribas, UBS AM, Credit Suisse AM, Vontobel, Sarasin, Unigestion, Axa AM, Julius Baër, Deutsche Bank, Dresdner Bank, Commerzbank, ING, ABN Amro, KBC, AMVESCAP, Schroders, Edinburg Fund Mngrs, Rathbones, Fideuram
  18. 18. Dexia Asset Management in its universe Investor Day 2002 Dominant US players, Dominant US players, Dominant European Dominant European Public or Public or World players World players present in Asia present in Asia players present in players present in regional players regional players and Europe and Europe Asia or // and the USA Asia or and the USA • Operate in all three zones • Operate in all three zones, but • Operates in other zones, but • Strong presence in limited presence outside US limited presence outside local market • Presence in retail, Europe institutional and • Presence in retail, institutional • Expertise in certain pension fund markets and US pension fund markets • Strong presence in retail areas of asset management markets and many • Comprehensive range of • Regional business but aiming institutional mandates in • Seeking to develop services to be globally competitive different Europe countries geographically • Consider asset management • Regional business with a • Manage business as national as global business global reach reinforcing group position in Europe UBS, Groupe AXA, Fidelity, Dexia Asset Management, Nippon Life, KBC Merrill Lynch State Street Global Advisors, CS Asset Management Vanguard Fortis Investment Management
  19. 19. Asset Management Investor Day 2006 projections 2002 ! Steady growth of AuM: (M€) 2001 2006 CAGR 01-06 11% CAGR Net banking income 246 394 10% ! Group networks Costs -132 -154 3% ! Autonomous growth Operating income 114 240 16% Net income 84 172 15% ! Costs under control resulting in an improvement of the C/I C/I 53.7% 39.1% ratio of 14 points Assets under 84 143 11% management (Bn€) ! Net income growth forecast of 15 % p.a. over the period
  20. 20. AGENDA Investor Day 2002 1. Private Banking 2. Asset Management ! 3. Dexia Fund Services " 4. Dexia Securities
  21. 21. Market Fundamentals Investor Day 2002 ! Macro economic factors ! Growing aging population in developed countries needing to prepare for retirement ! Private pension plans growth ! Industry trends ! Consolidation trend in the industry, reflected by change in strategy for various players, resulting in strategic opportunities ! Growing cross-border distribution of financial products ! Growing outsourcing trend for asset managers ! Implications for Dexia Fund Services ! Strong potential for organic growth both in Luxembourg and at international level ! Strategic opportunities for Dexia to come out as a winner of the global industry change
  22. 22. Dexia Fund Services Investor Day A strong growth in total net assets 2002 both in Luxembourg and at international level Luxembourg Other entities 62,366 CAGR + 25% 207,000 196,000 CAGR + 87% 170,000 TNA (Bn€) TNA (Bn€) 126,000 35,838 25,137 15,301 1999 2000 2001 03/2002 1999 2000 2001 03/2002
  23. 23. A leading market position Investor Day 2002 ! Market leader in Luxembourg for third-party administration ! Expected market growth in Luxembourg: 18 % p.a. in terms of new money Number of funds Total assets Our objective: Market Market Market Market remain leader in Luxembourg share position share position (%) (%) Custody 13.9 1 12.8 3 Administration 14.9 2 19.7 1 Transfer Agent 30.6 1 47.3 1 Source: Fitzrovia 12/2001
  24. 24. A strong international growth Investor Day 2002 A steady and profitable internationalisation Non Luxembourg activity Custody Administration Transfer Agent (% of total assets) 31/12/2000 23 % 19 % 13 % 31/03/2002 40 % 39 % 18 % Geographical asset split as of 31/3/2002 Custody Funds Transfer Agent Administration 11% 10% 10% 4% 8% 9% 3% 1% 60% 17% 61% 17% 2% 0% 2% 1% 82% 2% Luxembourg Dublin France Belgium Singapore Switzerland Spain
  25. 25. International strategy: Investor Day go where the market growth is 2002 ! DFS Dublin ! Established in 1997 (greenfield) to follow the move of money market funds from Luxembourg to Dublin ! Today one of the major service provider in Dublin ! Retained by the largest fund groups with European retail distribution strategy ! Was profitable at the end of the second year of activity ! DFS Switzerland ! Start in January 2002 (greenfield) ! Will be break-even at the end of year 1 ! Comprehensive service offering: custody, accounting, transfer agent, universal ordering ! Objective: 5 % to 7 % market share acquisition by 2004 ! DFS Italy ! Established in 2001 (greenfield) following the request of a large Italian fund group ! Large market potential ! Outsourcing solutions not yet in the trend but clearly identified by asset managers ! DFS Hong Kong ! Butterfield operations acquired in June 2002 to consolidate our presence in Asia, where we serve a global demand
  26. 26. Our strategic positioning Investor Day There are currently 3 “Business Models” 2002 Industry giants •Large volumes with low margin Added value •Need to grow in “pure conservation” to face huge IT investments •Low quality Industry target •Add side services to increase margins Pictet positioning PFPC Dexia Followers •Volumes limited to domestic market •Low margins •Unstable strategy SG •Globaly low returns CAI BNP P Specialists SSB •“Securities processing” is a component of CDC Chase Bony the business system, not the basis •Higher margins •High quality of service Volumes •Integrated services •High returns
  27. 27. 2 strategic options for Dexia Fund Services Investor Day 2002 ! Pursuit of a strong organic growth ! Seize alliance opportunity to foster growth Added value Industry target Pictet positioning PFPC Dexia SG CAI BNP P SSB CDC Chase Bony Volumes
  28. 28. Dexia Fund Services Investor Day 2006 projections 2002 (M€) 2001 2006 CAGR 01-06 ! Steady growth of net Net banking income 182 347 14% banking income: 14% CAGR Costs -103 -163 10% ! Volumes grow faster than Operating income 79 184 18% market Net income 53 131 20% ! Margins grow with new value added services C/I 57% 47% ! Costs under control resulting in an Assets in custody 99.7 172.9 12% improvement of the (Bn€) C/I ratio of 10 points # of NAV's in 220,000 406,000 13% ! Net income growth administration forecast of 20 % p.a. over the period # of transactions in 4.6 8.4 14% T.A. (M)
  29. 29. AGENDA Investor Day 2002 1. Private Banking 2. Asset Management 3. Dexia Fund Services ! 4. Dexia Securities "
  30. 30. Dexia Securities is a multi-local specialist Investor Day servicing both Dexia and external clients 2002 Internal External Institutional Dexia Bank investors Dexia Crediop Nederland -Insurers Research, -Pension funds Research and Sales & -Mutual funds Group Asset Dexia Dexia Management Sales & Securities Securities Trading and companies Trading Espana France Corporate Finance Professional Services counterparties Dexia Services Dexia BIL Securities Belgium Corporate clients “Support business”
  31. 31. Growth expected over the next 5 years Investor Day 2002 Market ! We expect market capitalization to grow at an annual rate of 8.5 % over the period ! Annual market turnover equal to 1, a fairly conservative assumption Niche player ! Dexia Securities will focus on niches: ! strong expertise in local stocks (small & large) as well as a selected number of pan-European small & mid caps stocks, such as properties ! expanding activities on listed derivatives which exhibited strong resilience in the past months compared to cash markets ! such niches are prone to cross-selling activities in corporate finance areas, where Dexia maintains strong relationships
  32. 32. Dexia Securities Investor Day 2006 projections 2002 ! Expected revenue growth: 6 % p.a. (M€) 2001 2006 CAGR 01-06 ! Costs under Net banking income 136 182 6% control resulting in Costs -96 -109 3% !13 % growth in Operating income 40 73 13% Operating Income Net income 32 46 8% !10.7 points C/I 70.6% 59.9% improvement of C/I ratio
  33. 33. Outlook 2001 –2006 Investor Day Income statement of the business line* 2002 (M€) 2001 CAGR 2006 Revenues 1,207 +6% 1,626 Net interest income & related 404 +4% 487 Net commissions & other income 803 +7% 1,139 Insurance 0 0 Costs -765 +2% -858 Cost of risks -40 - 51 % -1 Operating income 402 + 14 % 767 Net income 272 + 14 % 529 Cost / Income ratio 63 % 53 % Allocated equity 542 + 11 % 931 ROEE 51 % 58 % * Excluding exceptional items

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