Annual report 2010 - Dexia.com

Activity and results of the business lines // Asset Management and ServicesManagement reportConsolidatedfinancial statementsResultsIn 2010, the Asset Management and Services contribution tothe Group’s pre-tax income was sharply higher at EUR 308million, twice the level of 2009, supported by a strong driveof Insurance and Investor Services. Insurance contributed upto 60% to the business line’s total pre-tax income in 2010,while Asset Management and Investor Services representing ashare of 20% each.Asset ManagementPre-tax income amounted to EUR 63 million in 2010, up53% compared to 2009 and driven by higher revenues(+14%) while costs were under control.Total income stood at EUR 194 million in 2010, due to higherrecurrent management fees and financial income whichwas negative in 2009. The increase of management feesin 2010 (+18%) was driven by higher average assets undermanagement and a higher product-mix margin. Performancefees fell by 25% over the year.Expenses amounted to EUR 131 million, a +3% variationexplained by a low cost level in 2009 which included bonusreversals. The cost on average assets under management ratiodecreased from 16.2 basis points in 2009 to 15.5 basis pointsin 2010, reflecting the activity’s high level of efficiency.Investor ServicesPre-tax income amounted to EUR 60 million, more thandouble that recorded in 2009.As a consequence, the gross operating income amountedto EUR 61 million, of which EUR 1 million was associatedwith integration of the UBI Banca depository bank activities(impact of EUR +8 million on revenues and EUR -7 millionon costs).InsurancePre-tax income more than doubled (x2.3) compared to 2009,reaching EUR 185 million in 2010 due to improved revenuesand a halved cost of risk.Total income stood at EUR 434 million, one-third growthcompared to last year, as a result of higher financial resultssupported by outstandings and higher capital gains. Technicalaccounts were affected by increased profit sharing allocationsand a deteriorated loss ratio as a result of the storms and thefloods at the end of the year.At EUR 241 million, costs increased by EUR 4 million dueto higher expenses (like IT projects and IAS 19 provisionexpenses) at the end of the year.Cost of risk halved year-on-year to EUR 8 million.Additional information Annual financial statementsTotal income for the year 2010 was EUR 393 million, up 20%compared to 2009. This was driven by progress on the NorthAmerican markets (13% to 20%), generating a developmentof client assets. Foreign exchange activity was also sustained,contributing up to EUR 25 million to revenue growth.Expenses rose to EUR 332 million in 2010, up 13% on 2009,one half of that increase attributable to a foreign exchangeeffect.consolidated Statement of income(in millions of EUR, except where indicated) 2009 (1) 2010 (2) VariationIncome (3) 829 1,021 +23.1%Expenses (659) (704) +6.9%Gross operating income 171 317 +85.7%Cost of risk (21) (7) -64.7%Other impairments & provisions for legal litigation (1) (1) (2) n.s.Pre-tax income 149 308 x2.1of whichAsset Management 41 63 +52.8%Investor services (4) 27 60 x2.2Insurance 81 185 x2.3Cost-income ratio 79.4% 68.9%Total allocated equity (average) 1,091 1,115Weighted risks 2,533 2,205(1) The provisions for legal litigation were previously included in income (other net income).(2) The results of Dexia Épargne Pension (DEP) previously recorded in Asset Management and Services are now recorded in Group Center.(3) Income (also mentioned as revenues) = interest, fees, and commissions, trading and other income.(4) 2010 figures including UBI Banca depository activities bank business from 31 May 2010.110 Dexia Annual report 2010