The business review for the fiscal year 2000 was presented to Dexia"s Board
of Directors at their meeting on Tuesday, February 6, 2001. Business was marked
by very satisfactory growth in line with the trends observed in the first half
of the year in each of the Dexia group"s sectors of activity.
1 - Public and project finance
Outstanding long-term commitments (balance sheet and off-balance sheet) totaled
EUR 150.6 billion as of December 31, 2000 (including 100% of the outstanding
commitments of affiliates accounted for under the equity method), representing
an increase of 5.4% over the end of 1999 (and of 6.5% excluding the outstanding
commitments of the German subsidiary). This increase was only slightly due to
changes in consolidation (full consolidation since January 1, 2000, of the outstanding
commitments of the Slovak subsidiary Prvá Kommunálna Banka).
Overall, outstanding commitments grew in the business"s two main markets. In
the public sector, outstanding commitments increased by 5.3% to EUR 98.2 billion
(excluding Germany). In structured financing, they grew 14.5% to EUR 11.2 billion.
Outstanding commitments increased in all regional markets, although in unequal
proportions. In France, where the trend in the reduction of local government
debt continues, outstanding long-term commitments nevertheless rose 0.5% to
EUR 55.2 billion. Likewise in Belgium, outstanding commitments increased by
1.1% to EUR 23.8 billion. In Italy, sustained marketing efforts in an environment
that is also very competitive made it possible to report a slight rise in outstanding
commitments (+ 0.1%) in spite of a significant rise in early repayment. In Germany,
too, outstanding commitments rose only 0.2%. Elsewhere, growth was satisfactory,
as in the United Kingdom (+ 4.8%), or very strong, as in the United States (+
48%), where outstanding commitments totaled EUR 11.3 billion (excluding credit
Beyond long-term financing, deposits and investment products of public finance
clients rose significantly, up 8.2%, to EUR 12 billion at the end of 2000, with
a notable increase in France (+ 41% to EUR 1.7 billion).
In addition, the efforts undertaken to diversify the products and services
offered to the local public sector produced satisfactory results, in particular
with regard to the brokerage business of the group"s insurance subsidiary Sofaxis,
whose premium income increased by 6.5% to EUR 145.1 million.
At FSA, which has been consolidated since July 1, 2000, the total amount of
American local government bonds insured at the end of 2000 was up 9.5% from
the previous year to EUR 153.7 billion. Since Dexia"s acquisition of FSA in
March 2000, more than a dozen joint operations have been conducted in municipal
bond credit enhancement, illustrating the strong potential for marketing synergies
now existing in the group.
2 - Retail banking
Dexia reported increased business volume in each of its sectors of activity
Customer deposits and investment products
As of December 31, 2000, total customer savings (deposits, savings bonds, mutual
funds, life insurance policies and Dexia bond issues, excluding securities accounts)
totaled EUR 59.0 billion, up 3.2% from December 31, 1999. The breakdown of these
investments confirms the trend towards disintermediation encouraged by the group.
Deposits and savings bonds were down 3.1% from the end of 1999 to EUR 38.0 billion
as of December 31, 2000. During the same period, investment in mutual funds
rose 11.4% to EUR 13.0 billion as of December 31, 2000. In addition, Dexia bond
issues subscribed by retail banking customers totaled EUR 5.6 billion, up 22.5%.
Finally, life insurance policies increased by 37.1% to EUR 2.4 billion. Therefore,
as of December 31, 2000, customer savings other than deposits and savings bonds
represented 35.6% of total retail customer investments in the group, as compared
with 24.9% at the end of 1998 and 31.5% at the end of 1999.
As of December 31, 2000, outstanding retail loans in the group totaled EUR
14.2 billion, up 10.9% from the end of 1999. Of this total, mortgage loans rose
dynamically during the year in a lackluster market; up 8.7%, they stood at EUR
7.6 billion at the end of 2000. Outstanding consumer loans and overdrafts remained
stable at EUR 1.9 billion, and outstanding loans to small businesses and the
self-employed grew 20.4% from the end of 1999 to EUR 4.7 billion as of December
Taking all types of insurance products into account (including the life insurance
products mentioned above), premium income from the group"s retail customers
totaled EUR 987 million, representing an increase of 21.7% over 1999. This increase
was the result of very different trends according to the type of product and
particularly reflected the business"s new organization, now centered around
In non-life insurance, premium income rose slightly (+ 2.4%) to EUR 104 million,
versus EUR 101 million a year earlier. As Dexia Insurance pursued its efforts
to externalize risks, the distribution of third-party products expanded to the
detriment of direct subscriptions. As of December 31, 2000, premium income corresponding
to third-party insurance products represented 40.5% of total premium income
in the non-life sector (compared with 36.2% a year earlier).
In life insurance, which represented 89.5% of new bancassurance business, premium
income totaled EUR 883 million as of December 31, 2000, up 24.4% from 1999.
Premium income was particularly significant as far as Branch 23 products (unit
contracts) were concerned. The new insurance policy, Dexia Life Fund, was a
commercial success and now accounts for almost 50% of the group"s total life
3 - Financial management (private banking, asset management, investment fund
The Dexia group continues to report excellent performances, in spite of the
volatile stock market and monetary environment and the decrease in the value
of financial assets which characterized the period. Note should be made of the
fact that the group acquired several companies in 2000. The main acquisition
was that of Banque Labouchere in the Netherlands (consolidated as of the second
half of 2000), which reported remarkable commercial results, mentioned when
appropriate in the following breakdown.
· In private banking, deposits managed for private banking clients totaled
EUR 29.2 billion, up 4.4% from the end of 1999 in spite of the negative impact
of the deterioration of the financial markets. This amount excludes deposits
managed by Banque Labouchere for its private banking clients, which totaled
EUR 1.6 billion.
· In asset management, as of December 31, 2000, assets under management totaled
EUR 62.1 billion, representing an increase of 34.7% in a year, partly owing
to the consolidation of the assets managed by Banque Labouchere (share leasing
in the amount of EUR 6.2 billion and discretionary management for EUR 1.4 billion
at the end of 2000), but also to savings deposits and new clients. After the
elimination of assets counted twice (managed accounts may include group mutual
funds), total assets under management stood at EUR 54.4 billion, up 33.3% in
a year. Asset management provides a concrete example of the synergies which
may exist among the Dexia group"s different business lines - approximately 6%
of the sums invested in managed mutual funds are contributed by the public finance
business, 54% by retail banking customers and 40% by private banking activities.
· In investment fund administration, growth was achieved in a generally depressed
market environment marked by the stagnation or decline of the world"s main stock
markets, especially in the last quarter. In custody services, assets totaled
EUR 98 billion at the end of December 2000, representing an increase of 20.6%
over 1999. Central administration funds increased by 19% over the course of
the year to EUR 103.5 billion. Transfer agent services reported 40% growth during
the year, with assets at the end of 2000 totaling EUR 185.8 billion. In this
sector, Dexia remains the leader in the Luxembourg market, which is the largest
in Europe for investment fund administration, with a market share of 32% in
the number of funds managed for third-parties, and of 40% in volume. In this
line, in two years, Dexia has more than doubled the funds it manages by expanding
its range of services, pursuing its international development and profiting
from the very strong growth in these markets.
4 - Group funding, investment portfolio and insurance of ABSs
Activities related to the group"s refinancing and balance sheet management,
which are coordinated by Dexia Capital Markets, were bolstered by the addition
of a new focus in 2000, the credit enhancement of asset-backed securities (ABSs)
as a result of the acquisition of FSA.
Significant growth was reported in business volume in this sector as well.
In 2000, long-term funding totaled EUR 21.8 billion, including EUR 8.5 billion
in obligations financières issued by Dexia Municipal Agency. In addition, the
group"s investment portfolio, mainly composed of public or private debt securities,
amounted to EUR 35 billion at the end of 2000, as compared with EUR 30 billion
in 1999. Finally, FSA"s credit enhancement of asset-backed securities grew significantly
in 2000. A total of EUR 88.5 billion (representing the principal and interest
of the insured issues) was reported at the end of 2000, as compared with EUR
69.7 billion in 1999, for an increase of 27%.