PRESS RELEASE
07/02/2002

Dexia group activity in 2001

  • A much broader base of business in 2001
  • Substantial organic growth in most segments
  • Strong upturn across all businesses in the fourth quarter
 
annual growth rate
Public/project finance and credit enhancement
  • Outstanding long-term loans and off B/S commitments*:
+ 12,4%
(+ 8.4% at constant scope)
  • New long-term lendings*:
+ 20,7%
(+18.3% at constant scope)
  • PV of Gross Premiums written by FSA:
+ 55,4%
Retail Financial Services
  • Customers' assets:
+ 34.7%
(+ 0.7% at constant scope)
  • Outstanding loans:
+ 45.5%
(+ 8.1% at constant scope)
  • Insurance premiums collected:
+ 95.3%
(+ 18.5% at constant scope)
Investment Management Services
  • Private banking customer assets:
+ 22.2%
(- 3.8% at constant scope)
  • Assets under management:
+ 48.1%
(- 2.9% at constant scope)
Number of Transfer Agent transactions:
+ 16,9%
* excluding Germany  

The Board of Directors of Dexia met on Thursday, February 7, 2002 to review the Group's business performance in 2001. Although market conditions were far less favorable than in 2000, the Group's overall performance was good, and some business units performed exceptionally well.

1. Public/project finance and credit enhancement

Long-term credit outstandings* rose +10.4% to EUR 150.4 billion at December 31, 2001 (+12.4% excluding the German subsidiary DHB). Artesia, acquired in 2001, accounted for EUR 4.0 billion of total loans and off-balance
sheet commitments, excluding those in the subsidiaries accounted for by the equity method the increase (EUR 1.0 billion of public sector business and EUR 3.0 billion with large corporate clients). At constant scope, the increase was +7.2% (+8.4% excluding Germany), reflecting the overall good standing of the activity in the markets where the group operates:

  • In France, where local governments have been reducing their debts for the last five years, the outstandings increased by +1.2% over the last 12 months, to EUR 52.8 billion in total. In structured finance, the production rose by +10.0% to EUR 0.52 billion. New lendings to the public sector climbed +7.5% to EUR 6.4 billion. This sector was further enhanced by the addition of a EUR 0.4 billion loan portfolio acquired during the year. In addition to extending new financing, Dexia Crédit Local actively pursued its activity of debt restructuring in the local government sector (EUR 5 billion).
  • In Belgium, outstanding long-term loans and off-balance sheet commitments increased by 1% to EUR 20.7 billion (excluding Artesia), an increase which reflects the reduced credit appetite which traditionally follows election years. But as in France, the active management of customer debts did very well, with a total of EUR 840 million being restructured. Outstanding credit facilities to corporate clients were cut to EUR 2.1 billion, excluding Artesia (against EUR 3.4 billion at year-end 2000), as a result of the ongoing policy to scale down the Bank's business in this area.
  • In international markets, total long-term outstandings of fully-consolidated subsidiaries (excluding DHB in Germany) increased by +29.6% to EUR 44.0 billion, in constrasting markets. In Italy, Dexia Crediop succeeded in increasing its book of business by + 0.6% to EUR 14.7 billion in a highly competitive market. In the United Kingdom, where competition was also fierce, credit outstandings climbed +4.1% to EUR 2.7 billion. In Spain, where the new joint venture Dexia Sabadell Banco Local was opened in April, starting with a loan book of EUR 1.4 billion, the activity was very strong, and the outstandings at year end stood at EUR 2.3 billion. In Sweden, the book of loans and off/BS commitments was up + 24.3% to EUR 2.6 billion. In the other European countries and in Asia, where Dexia Crédit Local operates either through local subsidiaries* (Israel, Slovakia) or directly, the outstandings surged +56.9% to EUR 4.3 billion (including EUR 0.4 billion loan book of the new subsidiary in Israel, OSM, which was fully consolidated for the first time in 2001). Finally it was in North America where the performance was the highest: outstandings stood at EUR 17.4 billion at year end, an increase of +46.1% compared with 2000; this region represented the Group's largest source of new business (EUR 7.7 billion out of a total of EUR 23.3 billion excluding Germany). This excellent performance arose both from the successful actions of the Dexia Crédit Local teams in New York and from the joint commercial efforts with FSA which produced substantial synergies (see below).

    * In Austria, where the subsidiary KommunalKredit Austria is accounted for by the equity method, long-term loans and commitments increased by +46.8%, reaching EUR 4.0 billion.

New long-term credit commitments contributed to the growth in the outstandings discussed above. The volume of the new facilities increased significantly during the year (excluding Germany: +20,7% and + 18,3% at constant scope of consolidation), and particularly in the fourth quarter, in all geographic markets without exception:

(in EUR billions)
Q4 new loans
Total new loans in 2001
Q4 new loans as a percentage of total new loans for the year
France
3,70
6,94
53,3%
Belgium *(public sector)
0,66
1,85
35,7%
America
2,06
7,69
26,8%
Italy
2,10
3,11
67,5%
Austria
0,50
1,37
36,5%
Spain
0,25
0,74
33,8%
Sweden
0,23
0,76
30,3%
United Kingdom
0,25
0,43
58,1%
Israel
0,03
0,09
33,3%
Slovakia
0,02
0,05
40,0%
Head office (Asia)
0,15
0,31
48,4%
Head office (Other)
0,42
1,09
38,5%
* excluding Artesia

Credit enhancement - FSA

For FSA, 2001 was by far the best year in the company's history. Present Value of gross premiums surged +55.4% to EUR 790 million compared to the 2000 year-end. FSA's U.S. municipal bond business and the ABS (Asset-Backed Securities) businesses in both the United States and Europe all performed exceptionally well.
New issue volume in the U.S. municipal bond market reached $286.3 billion, the second highest level in history, and the insured issues increased to 46% from 40% in the previous year. In this environment, FSA held the leading market share, with approximately 27% of the insured new issues underwritten during the year. Gross premiums rose by a strong 34.1% to EUR 267 million.
In the ABS (Asset Backed Securities) market, the interest rate environment fuelled sustained demand for credit enhancement. FSA reaped the full benefits of the buoyant market, achieving the best performance in the company's history with PV of gross premiums up +69% to EUR 523 million. The strongest growth was achieved in the U.S. market, which accounts for 77% of FSA's ABS business, where present values of gross premiums were up +77.9%.

Very much as in the long-term financing business, the credit enhancement business rose sharply in the fourth quarter, despite the September 11 events.

(in EUR millions)
Q4 new premiums
Total new premiums in 2001
Q4 new premiums as a percentage of total new premiums for the year
PV of gross premiums
301
790
38,1%
  • of which Municipal
78
267
29,2%
  • of which ABS
223
523
42,6%
PV of net premiums
191
525
36,4%
  • of which Municipal
49
179
27,4%
  • of which ABS
142
346
41,0%

During 2001, FSA and Dexia made considerable progress in tapping the synergies between their respective businesses: a total of 56 joint transactions were carried out in 2001 (against 15 in 2000), both in the Municipal market (37 transactions) and in the ABS market (19 transactions). Since FSA joined the Dexia Group, it has insured a total amount of EUR 32.2 billion of par in joint operations - nearly 10% of the total amount insured by FSA - and produced EUR 157.7 million premiums, yielding an ROE in excess of 25%. (Full information about FSA's business and results in 2001 is available on the company's website: fsa.com).

Other activities in the public/ project finance sector

Outstanding short-term loans climbed +7.6% to EUR 4.4 billion at year-end 2001 (excluding Artesia). In France, drawdowns on short-term facilities were 36% higher than in 2000; in Belgium the increase was + 2.8%. Dexia Sofaxis posted strong growth in insurance products catering to local government employees. Premiums collected in 2001 went up by +52.8% to EUR 230 million, including an agreement with the Caisse Nationale de Prévoyance, which contributed EUR 80 million to the 2001 figures. Lastly, customer assets in this business line (deposits and investment products, excluding the EUR 4.7 billion contribution of Artesia) amounted to EUR 10.5 billion, EUR 624 million lower than at year-end 2000, primarily as a result of a policy to scale down corporate business in Belgium.

2. Retail Financial Services

2001 was marked for Dexia by the uneven performance of the various products, due to the slump in the equities markets, changes in the taxation of bonds in Europe and finally in the continuing marketing drive for the group's life insurance products. During the year, the project to set up a hub-and-spoke network in Belgium was completed - as of January 1, 2002 all Dexia Bank's branches were grouped together in 159 clusters. Dexia Bank held on to its market share in the main product categories, except savings bonds as a result of the Bank's policy decision to scale down its presence in this segment (27.6% market share at the end of September 2001 against 29.0% at year-end 2000). Intense marketing activity was kept up across all product categories despite the involvement in the the integration process of Dexia Bank and Artesia.

  • Customer assets

Total customer assets (deposits, savings bonds, mutual funds, life insurance products and Dexia bonds but excluding securities holdings) amounted to EUR 79.7 billion at year-end 2001, an increase of +34.7% on the year-earlier figure (or +0.7% at constant scope). Pro forma growth, including Artesia in both 2001 and 2000, was +1.6%. Year-on-year changes in the amount of funds invested in the various products reflect both prevailing market conditions and the ongoing effects of the Group's policy to promote disintermediated products.

Quarter-end outstandings
(in EUR billions)
Dec 00 pro forma
Mar 01
June 01
Sept 01
Dec 01
Annual growth
Deposits
28,0
28,3
28,6
28,4
29,2
+ 4,5%
Savings bonds
21,2
20,3
19,6
19,0
18,8
-11,3%
Dexia euro-bonds
6,2
6,7
6,9
7,0
7,0
+13,9%
Artesia coop. Units
1,2
1,2
1,2
1,2
1,2
+2.8%
Mutual funds
17,2
16,8 *
17,5
16,4
17,8
+3,8%
Life insurance
4,9
5,1
5,5
5,3
5,7
+17,2%
Total customer assets
78,5
78,3
79,4
77,3
79,7
+1,6%
  • Figures for Artesia are based on estimates : EUR 4.1 Billion
  • Loans

At December 31, 2001, retail loans (including Artesia) totaled EUR 20.7 billion, up +45.5% on the previous year-end, and +8.1% at constant scope (excluding Artesia). Pro forma growth, including Artesia in both 2001 and 2000, was +6.2%. Trends during the year were mixed, depending on the products. Mortgage loans increased by +5.9% (+8.1% growth for the Dexia network and +1.5% for the Artesia network), consumer loans and personal overdrafts contracted by -8.7% (-9.6% in the Dexia network and -5.6% in Artesia) and loans to SMEs, sole proprietorships and professionals climbed +13.4% (+15.4% growth for the Dexia network and +2.5% for the Artesia network).

Quarter-end outstandings
(in EUR billions)
Dec 00 pro forma
Mar 01
Juni 01
Sept 01
Dec 01
Annual growth
Mortgage loans
11,6
11,7
11,9
12,1
12,3
+ 5,9%
Consumer loans and overdrafts
2,4
2,2
2,2
2,5
2,2
- 8,7%
Loans to SME, sole proprietorships and professionals
5,5
5,9
6,0
6,0
6,3
+ 13,4%
Total
19,5
19,8
20,1
20,6
20,7
+ 6,2%

Overall, the loan book, including Artesia, remains largely composed of individual households business, representing 70% of the total, against 67% at year-end 2000, before Artesia joined the Group.

  • Insurance

Taking all types of retail insurance products into account, premiums collected from the retail customers totaled EUR 1,927 million in 2001, an increase of +95.3% on the previous year (+18.5% at constant scope). The Group outperformed the market in 2001, testifying to the growth potential which exists in the Dexia Bank's customer base. Out of the total, EUR 147.7 million was generated by sales of products distributed by the Group and manufactured by third parties.

Quarterly premiums
(in EUR millions)
Q1 01
Q2 01
Q3 01
Q4 01
Total 2001
Life
  • Dexia
356
289
203
227
1 075
  • Artesia
198
154
109
120
581
Total Life
554
443
312
347
1 656
Non-Life
  • Dexia
27
23
24
20
94
  • Artesia
43
45
42
47
177
Total Non-Life
70
68
66
67
271
Total
624
511
378
414
1 927

Life insurance accounted for 86% of the premiums collected. The strongest demand was for "branche 23" products (unit-linked contracts), which accounted for EUR 1,224.5 million worth of the premiums collected in 2001.

3. Investment Management Services (Private banking, Asset management and Fund administration)

The equity markets downturn, particularly in the third quarter produced a negative impact in this business line as it did in the whole industry. Besides during the year, the Group carried out several acquisitions. These are isolated in order to analyse the underlying trends.

  • In Private Banking, customers' assets (excluding the Labouchere 'share leasing' products discussed below) totaled EUR 37.5 billion at December 31, 2001, an increase of +22.2% compared with the previous year-end (EUR 30.7 billion). Out of the total increase, EUR 8.0 billion came from external growth (mainly EUR 2.8 billion contributed by Kempen, EUR 3.8 billion by Artesia and EUR 1.2 billion by Dexia Nordic Private Bank Lux). Excluding these acquisitions, the total contracted by -3.8% over the year, to EUR 29.5 billion. The decline was entirely attributable to the fall in asset values (- EUR 1.2 billion), net new money flows during the whole year being nominal. A closer analysis shows that the trend was reversed in the fourth quarter, as shown below.
    • Total assets at December 31, 2000 EUR 30.7 billion
    • Net capital outflow in the first 9 months of 2001 EUR - 0.3 billion
    • Market effect in the first 9 months of 2001 EUR - 2.3 billion
    • Financial assets at September 30, 2001 EUR 28.1 billion
    • Net new money in the 4th quarter of 2001 EUR + 0.3 billion
    • Market effect in the 4th quarter of 2001 EUR + 1.1 billion
    • Total assets at December 31, 2001 EUR 29.5 billion

Falling stock market prices had the greatest effect on portfolios managed under discretionary mandates. The value of customer investments fell by -15.3% over the year, although they recovered by +3.8% in the fourth quarter. Portfolios under advisory management contracted by -5.0% over the year, but grew by +1.9% in the fourth quarter. Lastly, customers' assets held without mandates rose by +2.9% over the year, and by +8.3% in the fourth quarter.

The decline in the value of funds invested in the 'share leasing' products sold by Labouchere - now merged into Dexia Bank Nederland - observed during the first nine months continued into the fourth quarter (EUR 4.1 billion against EUR 4.3 billion at September 30, 2001). The year-on-year decrease stemmed from a fall in the value of the underlying assets -all equities- and also from a net outflow of capital, due to the fact that only a limited number of expiring contracts were reinvested in the same product, due to the equity markets downturn.

  • In Asset Management, volumes jumped +48.1% to EUR 82.8 billion (before elimination of assets counted twice as managed accounts may include some group mutual funds) from EUR 55.9 billion at year-end 2000. The increase was attributable on the one hand to the inclusion of the assets managed by Artesia/Cordius (EUR 20.7 million) and by Kempen and Ely Fund Managers (EUR 7.8 billion), and on the other hand to a - EUR 1.6 billion decline in the value of assets managed by the businesses as they stood before these acquisitions.
  • This decline was not due to a net outflow of capital and, as was the case in private banking, it took place in the first part of the year. Part of the lost ground was recovered in the fourth quarter:
    • Total assets at December 31, 2000 EUR 55.9 billion
    • Net new money in the first 9 months of 2001 EUR + 0.5 billion
    • Market effect in the first 9 months of 2001 EUR - 5.2 billion
    • Total assets at September 30, 2001 EUR 51.2 billion
    • Net new money in the 4th quarter of 2001 EUR + 0.8 billion
    • Market effect in the 4th quarter of 2001 EUR + 2.3 billion
    • Total assets at December 31, 2001 EUR 54.3 billion

 

Changes in the scope of consolidation and stock market trends in 2001 modified the structure of the EUR 82.8 billion worth of assets under management, compared with 2000. At year-end 2001, mutual funds accounted for 49.6% of the total (against 45.9% at year-end 2000), assets under advisory management services accounted for 12.7% (against 19.4%), assets under discretionary management accounted for 12.7% (against 16.8%) and institutional fund management represented 25.0% (against 17.8%).

  • Fund Administration was also affected by falling stock market prices in 2001. Faced with a decline in the value of their portfolios, individual investors tended to adopt a wait-and-see attitude, while fund promoters and managers were often postponing or reconsidering their projects. Despite these unfavorable market conditions, Dexia BIL achieved further growth in the various business segments and also benefited from the trend observed in the fourth quarter. In custody services, the value of assets held totaled EUR 99.7 billion at December 31, 2001, up +1.8% on year-end 2000 and +11.5% compared with September 30, 2001. The number of transactions grew by +17.9% over the year, with fourth-quarter volumes +6.9% higher than in the third quarter. The central administration services experienced a 10.9% fall in volumes of capital managed (EUR 92.2 billion at December 31, 2001 against EUR 103.5 billion one year earlier). However, the value of administered funds at year-end was +12.3% higher than at September 30, 2001, and the number of managed portfolios increased by +13.0% over the year and +7.1% in the fourth quarter. The number of net asset value calculations climbed +15.4% compared with 2000, including +9.7% growth in the fourth quarter. Transfer Agent services have borne on amounts of funds totaling EUR 213.8 billion at year-end 2001 compared with EUR 185.8 billion one year earlier, representing an increase of +15.1%. Dexia remained the leading player in this market in Luxembourg which is Europe's largest fund administration market. The number of individual mutual fund holders accounts rose +15.3% over the year, and +2.9% in the fourth quarter alone. The number of transactions (purchases/sales) climbed +16.9% over the year and +3.6% in the last three months. Lastly, the number of registers kept rose +21.5% over the year and +9.6% in the fourth quarter of 2001.

4. Treasury and refinancing activities of the Group

Volumes in this activity line remained important as in the past. During the year 2001, the volume of new issues amounted to EUR 23.8 billion (EUR 17.3 billion in 2000), of which 13.3 billion of AAA obligations.

Pierre Richard, CEO and President of the Management Board, stated:

"Dexia significantly expanded its business base in 2001 and now has substantial scope for future organic growth to support its development strategy. Activity levels were very satisfactory - the majority of our businesses improved on their prior year performance and some of them achieved exceptionally well. Trends in the fourth quarter are an encouragement for the periods to come."