Annual report 2010 - Dexia.com

Activity and results of the business lines // Public and Wholesale Bankingthe environment and renewable energies (sixth in the worldin terms of the number of transactions) and public-privatepartnerships (first in the world).The public-private partnership to finance the McGill Hospitalin Canada, winner of the “Americas PPP Deal of the Year”,the public-private partnership to the Birmingham highways inEngland, which won the “Europe PPP Deal of the Year” andthe C-Power transaction in relation to the construction andoperation of a wind farm in the North Sea, named “EuropeRenewables Deal of the Year”, are just some examples of thissustained commercial dynamic. Tariff levels remained high inall geographic areas of activity, but more particularly in Franceand Spain.In corporate banking new commitments amounted toEUR 1.2 billion in 2010. These new commitments wererealised in Belgium with medium-sized corporates, using theuniversal bank platform.Debt restructuring activity, carried on in line with the principlesstated by the “charter of good conduct” between bankinginstitutions and local authorities, represented a volume ofEUR 11.1 billion in 2010. This amount, realised principally inFrance, Belgium and Spain, is based above all on a range of“plain vanilla” products.In accordance with the commercial strategy preferring amore diversified offer and aiming to improve Group liquidity,collection of deposits and investment products amountedto EUR 38.7 billion, up 4% on 2009. This progress wassustained in particular by a dynamic of collection in Franceand Germany, from para-public entities.Among the initiatives likely to guarantee the business line’sfunding, mention can also be made of the transfer ofEUR 14 billion of the business line’s assets to Group issuevehicles rated AAA.ResultsIn 2010, the business line benefited from a positive trend ofcommercial margins, growth of project finance fees and animprovement of the environment driving down the cost ofrisk. Nevertheless, these positive factors were more than offsetby the evolution of the business line’s funding mix, relyingon longer-dated and more stable resources and thereforemore costly maturities. As a consequence, pre-tax incomeamounted to EUR 544 million in 2010, down 4% on 2009.Total income fell by 18% in 2010, principally as a result ofthe increase in the costs of funding allocated to the businessline (EUR 290 million), and to a lesser extent lower incomeassociated with market activities. Restated from capital gainsrecorded in 2010, namely EUR 69 million for SPE in thesecond quarter and EUR 14 million for AdInfo in the thirdquarter, the recorded fall is 25%.Expenses amounted to EUR 521 million in 2010, down 3%on 2009, impacted by implementation of the transformationplan. The cost-income ratio was 51.7% in 2010.The cost of risk returned to the traditionally low levelsrecorded by the business line, after sustained provisioning inproject finance in the second half of 2009. The improvementof the economic situation resulted in the cost of risk falling byEUR 195 million compared to 2009. Provisions were recordedin a total amount of EUR 128 million in 2009, whilst reversalswere booked in 2010, particularly in the fourth quarter.Management reportConsolidatedfinancial statementsIn October 2010, Dexia presented its financial and commercialtargets for 2014, within the context of an Investor Dayorganised in Brussels. The commercial ambitions set up forPublic and Wholesale Banking are detailed in the chapter“Strategy” on page 18 of this annual report.consolidated Statement of income(in millions of EUR, except where indicated) 2009 (1) 2010 (2) VariationIncome (3) 1,227 1,007 -17.9%Expenses (535) (521) -2.6%Gross operating income 692 486 -29.7%Cost of risk (128) 67 n.s.Other impairments and provisions for legal litigations (1) 0 (9) n.s.Pre-tax income 564 544 -3.5%Cost-income ratio 43.6% 51.7%Total allocated equity (average) 2,916 2,638Weighted risks 44,926 43,167(1) The provisions for legal litigations were previously included in income (other net income).(2) The results of AdInfo, previously booked to the Public and Wholesale Banking business line, are recorded in Group Center.(3) Income (also mentioned as revenues) = interests, fees, commissions, trading and other income.Additional information Annual financial statementsAnnual report 2010 Dexia107