Dexia's first quarter 2002 results

Following the meeting of its Board of Directors on May 23, 2002, the Dexia group reported continued growth of its business and increased earnings.

Commenting on the results, Pierre Richard, CEO and Chairman of the Management Board, said:

'Once again, Dexia has met its objectives to achieve further growth. This was made possible, first, through the strategy of maintaining a balanced portfolio of businesses. Thus we benefited from the excellent performance of the group’s first business line during this quarter, even though the other two business lines continued to suffer from the effects of a poor environment. On the other hand, we worked diligently to control our costs – one of our two strategic priorities for 2002: our efforts were rewarded in the first quarter, and this will continue. Finally, the considerable reduction in the cost of risk, which is now back to a level more usual for Dexia, demonstrates the group’s determination to maintain a particularly low risk profile, distinguishing it from the rest of the industry.

'We are also actively pursuing our second strategic priority for 2002, the integration of Artesia. It is now irreversible, the legal merger having taken place in April, and we are beginning to see the results we expect.'

New growth in net income in the 1st quarter 2002
Net income in the first quarter of 2002 was EUR 397 million, 18.9% more than in the fourth quarter of 2001. Excluding exceptional items, the increase was 3.4%. This result reflects favorable underlying operating trend across the group.

Revenues, at EUR 1,333 million, declined 5.0% compared to their level in the fourth quarter of 2001. Excluding exceptional and non-recurring revenues, the reduction was 6.8%. It reflects sluggish markets that affected retail financial services and investment management services, but it also takes place in the context of the integration of the new acquisitions in Belgium and the Netherlands.

Operating expenses werewere were EUR 797 million, a sharp reduction from those of the fourth quarter 2001 (-5.4% excluding exceptional items). This stems directly from management’s determination to contain 2002 costs below the pro-forma base level of EUR 3,304 million incurred for the full year 2001. At this stage, objectives are exceeded.

Cost of risk amounted to EUR 29 million, reflecting a very substantial (75.4%) decrease compared to the fourth quarter of 2001 and bringing it near the EUR 28 million recorded in the first quarter of 2001, when the group’s scope was not as wide and, in particular, did not include Artesia. The cost of risk’s rate, which is now 0.06% of outstandings on an annual basis, has thus returned to the vicinity of the levels historically seen at Dexia, which contrast with the average of the European banking sector (0.53% in 2001).

Operating income rose to EUR 507 million, an underlying increase of 6.9% from operating income in the fourth quarter 2001.

Net gains and write-downs on long term investments rose to + EUR 33 million in the first quarter of 2002 due to gains realized from the sales of some non-strategic holdings as well as one transaction in Artesia’s portfolio, which alone released a gain of EUR 15 million.

Allocation to GBRR was EUR 5 million, compared with EUR 6 million in the first quarter 2001. In the fourth quarter, EUR 85 million was written back as part of Artesia’s integration.

Return on equity (ROE) 4 rose to 20.1% on an annual basis. It was 17.6% in the fourth quarter of 2001.

Earnings per share (EPS) grew 17.1% to EUR 0.343, compared with EUR 0.293 in the fourth quarter of 2001.

Group Tier One Ratio was 9.3%, unchanged from that of the end of 2001.

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(source: Dexia)

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