Annual report 2006 - Dexia.com

ASSET MANAGEMENT
Australian and the Italian teams. The money market and equities
products represented more than 50% of Dexia AM net
new cash in 2006.
Dexia AM continues to show a very good productivity ratio,
with costs representing 13 basis points of assets under management,
one of the lowest levels in the industry.
Today, Dexia AM covers a large number of asset classes via
a significant number of very efficient investment processes.
Fixed income and money market investments represented
41.1% of assets under management, equity investments
21.2% and alternative investments the balance. With 13.4%
(or EUR 14.3 billion) of its total assets under management in
Socially Responsible Investment (SRI), Dexia Asset Management
was awarded the “Sustainable Asset Manager of the
Decade” by BANCO, a Swiss asset management magazine,
recognizing its leadership in sustainable investment in continental
Europe over the last decade. As a pioneer in SRI,
Dexia AM created in 2006 its SRI Advisory Board which will
assist the continuous development of the SRI approach and
analysis.
UNDERLYING (1) RESULTS
The Asset management business has experienced a very good
year 2006, with net income – Group share amounting to
EUR 104 million, up 31.7% compared to 2005.
The total income was up 28.2% (or EUR +55 million) to
EUR 253 million, a very robust progression mainly stemming
from:
• a continuous and steady increase of management fees (+22%
year on year or EUR +36 million) reaching EUR 197 million in
2006; and
• relative performance fees going up to EUR 43 million in 2006
from EUR 17 million in 2005.
The revenue increase was even stronger quarter to quarter, as
a consequence of the relative performance fees, the amount of
which in Q4 06 was twice higher than that of Q4 05.
Costs were up (+24.9% in one year, or EUR 27 million), in
conjunction with the strong development of the activity. In
particular, new sales offices were opened (in Sweden, Germany
and Bahrain) to develop business with institutional
clients. Staff headcounts increased by 57 in 2006, adding to
the recruitments made in 2005. Lastly, the variable compensation
followed the trend of the relative performance fees.
Despite the increase, the cost per unit of asset managed was
kept at the low level of 13 basis points.
(1) As described on page 70.
UNDERLYING STATEMENT OF INCOME (EXCLUDING NON-OPERATING ITEMS)
(in millions of EUR, except where indicated) 2005 (1) 2006 Variation
MANAGEMENT REPORT
COMPTES CONSOLIDÉS
Income 198 253 +28.2%
of which net commissions 194 248 +28.0%
Costs (111) (138) +24.9%
Gross operating income 87 115 +32.5%
Cost of risk 0 0 n.s.
Impairments on (in)tangible assets 0 0 n.s.
Tax expense (7) (9) +21.3%
Net income 80 106 +33.5%
Minority interests 1 3 x2.8
Net income – Group share 79 104 +31.7%
COMPTES SOCIAUX
Cost-income ratio 56.0% 54.5%
ROEE (2) 90.8% 92.2%
Total allocated equity (average) 87 112
(1) Pro forma.
(2) Return on economic equity (net income – Group share/allocated equity – Group share).
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