Carnegie Hlding AB (Frmerly ABCIB Hlding AB) Crp. reg. n. 556780-4983, registered ffice Stckhlm Parent Cmpany f Carnegie Investment Bank AB (publ) And Carnegie Fnder AB Interim Reprt 1 January 31 March 2011
Interim reprt 1 January 31 March 2011 Carnegie has cntinued t strengthen its market psitin: Psitin remains strng in securities trading. Strng rder bk in transactin services. Increased number f discretinary mandates in Private Banking. Inflw t Carnegie s funds. Carnegie was tp ranked fr Private Banking in a survey cnducted by Eurmney. Financial data fr the grup: Revenue amunted t SEK 500 (557 1 ) millin. The decrease relates t terminated peratins and lw revenue in Investment Banking. Expenses befre credit reserves amunted t SEK 465 millin (504 1 ). Items affecting cmparability increased expenses by SEK 11 millin (0). Prfit befre credit reserves amunted t SEK 34 millin (54 1 ). Adjusted fr items affecting cmparability, prfit befre credit reserves amunted t SEK 45 millin (54 1 ). Prfit fr the perid amunted t SEK 24 millin (109 1 ). Carnegie has assets under management f apprximately SEK 110 billin. Strng financial psitin with equity amunting t SEK 2.5 billin, capital adequacy f 20 percent, and Tier I capital adequacy f 15 percent at the end f the quarter. President's cmments Carnegie stands stable in a hesitant market The early part f 2011 has been marked by dramatic events arund the wrld, with cnflicts in the Middle East and Nrth Africa, natural disasters in Japan, and cntinued ecnmic prblems fr a number f EU cuntries. These all impact n investr activity and investrs willingness t take risk, which als affects Carnegie. Carnegie s earnings are partly marked by the hesitant market situatin, with relatively lw revenue in crprate transactins, while Private Banking and Fnder are reprting stable revenue. Carnegie's revenues in Securities and Investment Banking have a strng crrelatin with the market fr equity capital markets transactins. The integratin f the autumn s acquisitins will cntinue thrughut the year, and at this pint synergies have nly partially been realised. Hwever, we can be pleased that Carnegie is standing stable in the market, with increasing shares f brkeragedriven trade and a gd pipeline in equity capital markets transactins and M&As. Our fund peratins cntinue t develp well, and we have expanded ur activity in terms f market cmmunicatin in rder t prfile ur actively managed funds. Private Banking has experienced a stable quarter, with an increased inflw f discretinary mandates. Carnegie was als tp ranked in a number f categries in private banking, accrding t a survey by Eurmney magazine at the start f the year. Carnegie has a unique platfrm as the leading independent investment bank in the Nrdic regin. We have strengthened ur psitin, and even thugh there is still plenty t be dne, there are many factrs that mean we can lk t the future with ptimism. Frans Lindelöw President and CEO 1) Pr frma 2010: Includes prfits frm HQ Bank and HQ Fnder. Frm page 4 and later, the cmparisn figures are nt pr frma. 2
Operative incme statement (SEKm) 2011 Pr frma 2010 1 Securities 216 208 Investment Banking 87 154 Private Banking 148 146 Fnder 49 49 Ttal incme 500 557 Persnnel expenses -328-328 Other expenses -138-176 Expenses befre credit lsses -465-504 Operating prfit befre credit lsses 34 54 Credit reserves, net 4 71 Prfit/lss befre taxes 39 125 Taxes -15-16 Prfit/lss fr the perid 24 109 Average number f emplyees 827 901 Number f emplyees at year-end (FTE) 818 896 Revenue Revenue fr the first quarter f 2011 amunted t SEK 500 millin (557 1 ). The decrease relates t Carnegie having terminated parts f the peratins frm HQ Bank, and t lwer revenue frm the Investment Banking business area. In the Securities business area, underlying revenue is up in relatin t the previus year, driven by higher brkerage revenue. Revenue in Investment Banking is lwer as a cnsequence f a weaker market fr equity capital markets transactins. Hwever, the level f underlying activity in this area is high, and Carnegie has a gd rder bk. Revenue frm these peratins is typically generated unevenly acrss the year. Private Banking and Fnder are bth demnstrating a stable trend, with an inflw f capital t the funds and t discretinary asset management. Expenses Expenses befre credit reserves fr the first quarter f 2011 amunted t SEK 465 millin (504 1 ). These expenses include items affecting cmparability f SEK 11 millin (0), which relate t csts assciated with restructuring. Adjusted fr items affecting cmparability, expenses befre credit reserves amunted t SEK 454 millin (504 1 ). Prfit Prfit befre credit reserves during the first quarter f 2011 amunted t SEK 34 millin (54 1 ). Restructuring csts affected prfit by SEK 11 millin (0). Adjusted fr the abve items, prfit befre credit reserves amunted t SEK 45 millin (54 1 ). Net prfit fr the perid was SEK 24 millin (109 1 ). 1) Pr frma 2010: Includes prfits frm HQ Bank and HQ Fnder. Frm page 4 and later, the cmparisn figures are nt pr frma. 3
Imprtant events during the first quarter f 2011 New fund names in Carnegie Fnder Carnegie Fnder, frmerly HQ Fnder, ffers a brad range f funds that have all used the prefix HQ in their name, such as the HQ Strategifnd fund. As a natural cnsequence f the cmpany name changing t Carnegie Fnder, the fund names have been changed s that Carnegie is instead used as the prefix, such as fr the Carnegie Strategifnd fund. During January 2011, mst Swedish-registered funds changed their name. Thse funds that are registered in Luxemburg will change their names later in 2011. Carnegie Fnder terminating ETF peratins Carnegie Fnder has decided t terminate its peratins in exchange-traded funds, als called ETFs. This means that Carnegie Fnder will nce again fcus entirely n its cre business f actively managed funds. Risks and uncertainties General infrmatin n risks and uncertainties The business activities f Carnegie expse the grup t market, credit, liquidity and peratinal risks. Market risk is defined as the risk f lss due t the effect f, fr example, changes in equity prices, interest rates, r currency exchange rates. Credit risk is defined as the risk f lss due t a cunterparty being unable t meet its bligatins. Credit risk mainly arises as a cnsequence f lans t clients using shares as cllateral. Liquidity risk is related t the need fr liquidity in the day-t-day peratins. Operatinal risk is the risk f lss resulting frm inadequate r failed prcesses and systems, alternatively human errr r external events. A mre detailed descriptin f the Carnegie grup s risk management is presented in the 2010 annual reprt fr Carnegie Hlding. Capital requirement and capital rati The tables belw present the capital requirement and capital rati accrding t the Swedish Financial Supervisry Authrity s directive FFFS 2007:5 regarding publicatin f infrmatin n capital adequacy. The capital rati is calculated as the rati between the capital base and capital requirement. The capital rati must nt fall belw 1 accrding t the legal requirement. At Carnegie Bank, which includes mst f the grup s perating activities, the capital rati n 31 March 2010 was 2.4, which crrespnds t capital adequacy f 19.2 percent. In the financial cmpanies grup, i.e. Carnegie Hlding, in which Carnegie Fnder is als included, the capital rati was 2.5, crrespnding t capital adequacy f 20.0 percent. A mre detailed descriptin f Carnegie s capital adequacy is prvided in the 2010 annual reprt, as well as n Carnegie s website at www.carnegie.se. 4
Capital adequacy Carnegie Bank Grup Carnegie Hlding Grup 31 March 31 March (SEKm) 2011 2010 2011 2010 Capital base Equity capital 2 042 1 972 2 441 1 577 Deductins (intangible assets and deferred tax asset) -581-275 -1 262-276 Equity capital in the capital base 1 461 1 697 1 179 1 301 Tier II capital (subrdinated dept) - - 410 - Ttal capital base 1 461 1 697 1 589 1 301 Capital requirement Capital requirement fr credit risk, standardized methd 180 164 181 155 Capital requirement fr equity and interest rate risk 75 34 75 34 Capital requirement fr currency risk 63 54 63 54 Capital requirement fr peratinal risk, base methd 290 319 317 319 Ttal capital requirement 608 571 636 562 Surplus capital 853 1 126 953 739 Tier I capital qutient 2.4 2.97 1.85 2.31 Capital qutient 2.4 2.97 2.50 2.31 Tier 1 rati % 19.22 19.92 14.83 18.52 Capital rati % 19.22 19.92 19.98 18.52 5
Investments The grup s investments in fixed assets amunted t SEK -5 millin (-6) during the perid. Summary f the parent cmpany Ttal revenue in the parent cmpany during the perid amunted t SEK 3 millin (3). Prfit befre tax during the perid amunted t SEK -8 millin (-1). N investments have been made in fixed assets during the perid (-). Liquidity, defined as cash and lending t credit institutins, amunted t SEK 5 millin (2) per 31 March 2011 fr the parent cmpany. Equity per 31 March 2011 amunted t SEK 2,229 millin (1,842). Liquidity The Carnegie grup's peratins invlve largely shrt-term bligatins that mature within tw mnths, which means that the bank des nt require financing with lng duratin. The grup's financing cnsists f equity, issued bnds and depsits frm the public. Equity and bnds make up 23 percent, depsits frm the public make up 40 percent, and ther liabilities make up 37 percent f ttal capital emplyed. Of ther liabilities, the majrity d nt attract interest. The Carnegie grup manages its liquidity in fur different liquidity reserves: Carnegie Investment Bank AB and the subsidiaries in Denmark, Luxemburg and Nrway. Each unit is self-financing and the liquidity reserves are managed individually. The liquidity reserve was SEK 2,943 millin per 31 March fr the Carnegie grup. The cmpsitin f the liquidity reserve was as fllws: Cash and cash equivalents: SEK 2,589m Gvernment securities: SEK 47m Secured bnds: SEK 307m T assure an adequate liquidity reserve the grup utilises liquidity risk tlerance levels that shuld ensure the bank always has an adequate liquidity reserve t survive perids f market turbulence. The liquidity reserve shuld always be greater than the anticipated utflw f cash during a perid f stress. The liquidity reserve may nly cnsist f balances with banks and assets that can be refinanced with the Swedish Riksbank. A maximum f 40 percent f the liquidity requirement may be derived frm the refinancing f securities (0 at end f perid). The liquidity reserve shuld make up at least 10 percent f ttal capital emplyed (20 percent at end f perid). 6
Cnslidated statements f cmprehensive incme Full year (SEKm) 2011 2010 2010 Cmmissin incme 495 328 1 712 Cmmissin expenses -63-1 -90 Net cmmissin incme 433 327 1 622 Interest incme 43 24 159 Interest expenses -34-15 -107 Net interest incme 9 9 52 Other dividend incme 0-0 Net prfit frm financial transactins 58 31 122 Capital gain frm discntinued peratins - - -1 Ttal perating incme 500 367 1 796 Persnnel expenses -328-235 -1 225 Other administrative expenses -120-113 -719 Amrtisatin f intangible assets and depreciatin f tangible fixed assets -18-10 553 Ttal perating expenses -465-358 -1 391 Prfit/lss befre credit lsses 34 10 405 Credit lsses, net 4 71 135 Prfit/lss befre tax 39 81 540 Taxes -15-4 -39 Prfit/lss fr the perid 24 77 501 Other cmprehensive incme: Translatin differenses, net after tax -12-7 -66 Ttal cmprehensive incme fr the perid 12 70 435 7
Cnslidated statements f financial psitin 31 March 31 March 31 December (SEKm) 2011 2010 2010 Assets Cash and bank depsits with central banks 238 224 287 Negtiable gvernment securities 48 458 827 Lans t credit institutins 4 927 1) 5 040 5 519 Lans t general public 3 527 3 143 3 617 Bnds and ther interest-bearing securities 512 566 468 Shares and participatins 2 228 1 775 1 682 Derivative instruments 312 649 343 Intangible assets 796 19 803 Tangible fixed assets 119 134 126 Current tax assets 36 11 26 Deferred tax assets 559 257 560 Trade and client receivables 463 341 470 Other assets 172 798 107 Prepaid expenses and accrued incme 717 153 243 Ttal assets 14 655 13 567 15 078 Liabilities and sharehlders' equity Liabilities t credit institutins 699 659 552 Depsits and brrwing frm general public 6 516 1) 6 969 7 611 Securities issued 935 935 935 Shrt psitins, shares 1 221 819 878 Derivative instruments 466 271 350 Current tax liabilities 64 30 65 Deferred tax liabilities 104 8 109 Trade and client payable 545 197 234 Other liabilities 617 981 598 Accrued expenses and prepaid incme 444 447 716 Other prvisins 163 72 162 Subrdinated debt 410-410 Sharehlders' equity 2 470 2 179 2 459 Ttal liabilities and sharehlders' equity 14 655 13 567 15 078 1) Wheref SEK 487m in client funds 8
Cnslidated statements f changes in equity Full year (SEKm) 2011 2010 2010 Sharehlders' equity - pening balance 2 459 2 109 2 109 Repayment f capital cntributin - - -525 Sharehlders' cntributin - - 440 Cmprehensive incme fr the year 12 70 435 Sharehlders' equity - clsing balance 2 470 2 179 2 459 Cnslidated statements f cash flws Full year (SEKm) 2011 2010 2010 Prfit befre tax 39 81 540 Adjustments fr items nt affecting cash flw 28-241 -500 Paid tax -31-9 17 Cash flws frm peratins befre changes in wrking capital 35-169 58 Changes in wrking capital -1 218-625 -2 618 Cash flws frm peratins -1 182-795 -2 560 Acquisitin f subsidiaries - - 1 687 Acquisitin f intangible and tangible fixed assets -5-6 -28 Cash flws frm investing activities -5-6 1 659 Issue f capital - - 440 Repayment f capital cntributin - - -525 Issue f cnvertible debentures - - 410 Cash flws frm financing activities - - 325 Cash flws fr the perid -1 187-801 -576 Cash and cash equivalents at pening balance 5 737 6 713 6 713 Exchangerate effects n cash and cash equivalents -23-218 -401 Cash and cash equivalents at clsing balance 4 526 5 694 5 737 9
Incme statement f Parent Cmpany Full year (SEKm) 2011 2010 2010 Net incme 3 3 12 Other external expenses -1 0-2 Persnnel expenses -3-3 -14 Operating prfit/lss -1 0-4 Interest incme 0 0 0 Interest expenses -7-1 -22 Result frm investments in subsidiaries - - 505 Prfit/lss frm financial items -7-1 483 Prfit/lss befre tax -8-1 479 Taxes 0-0 Prfit/lss fr the perid -8-1 479 Statement f cmprehensive incme Full year 2011 2010 2010 Prfit/lss fr the perid -8-1 479 Other cmprehensive incme, net f tax - - - Ttal cmprehensive incme fr the perid -8-1 479 10
Balance sheet f Parent Cmpany Full year (SEKm) 2011 2010 2010 Assets Shares and participatins in Grup cmpanies 2 638 1 715 2 638 Deferred tax assets 0-0 Ttal financial nn-current assets 2 639 1 715 2 639 Current receivables frm Grup cmpanies 506 525 506 Other current receivables 1 1 1 Prepaid expenses and accrued incme 0-0 Cash and bank 4 2 4 Ttal current assets 511 529 511 Ttal assets 3 150 2 244 3 150 Liabilities and sharehlders' equity Sharehlders' equity 2 229 1 842 2 238 Cnvertible debentures 410-410 Other nn-current liabilities - - - Trade accunt payables 0 1 0 Current liabilities t Grup cmpanies 214-212 Other current liabilities 279 399 279 Accrued expenses and prepaid incme 16 1 10 Pensin prvisins 1-1 Ttal liabilities and sharehlders' equity 3 150 2 244 3 150 11
The Carnegie grup T clarify the legal structure encmpassed by this financial reprt, a brief descriptin is prvided belw f the peratins within Carnegie. Carnegie Hlding Carnegie Hlding was frmed n 19 March 2009 in cnjunctin with the Altr and Bure acquisitin f Carnegie Investment Bank AB (publ) ( Carnegie Bank ). The hlding cmpany s peratins cnsist f directly r indirectly wning, managing, issuing guarantees and lans t the banking peratins and ther grup cmpanies assciated with financial peratins. All business peratins within Carnegie take place within Carnegie Bank and Carnegie Fnder AB (frmerly HQ Fnder Sverige AB). Carnegie Hlding is wned by Altr Fund III, the investment cmpany Bure Equity AB, Investment AB Öresund and emplyees f Carnegie. Carnegie Bank As f 3 September 2010, peratins previusly cnducted in HQ Bank AB were included in Carnegie Bank. HQ Bank AB was merged with Carnegie Bank n 30 September 2010. Carnegie Fnder Carnegie Hlding cnslidates Carnegie Fnder AB ( Carnegie Fnder ) as f 22 September 2010. Cmparisn figures Pages 2 and 3 present cmmentary n Carnegie Hlding's perating results fr the first quarter f 2011 cmpared with the first quarter f 2010 pr frma, that is t say including HQ Bank and HQ Fnder. Frm page 4 and subsequently, the cmparisn figures are nt pr frma. Carnegie Hlding 1) Carnegie Fnder Carnegie Bank 2) 1) Carnegie Hlding cnsists f the parent cmpany Carnegie Hlding AB and its subsidiaries. 2) Carnegie Bank cnsists f the parent cmpany Carnegie Investment Bank AB (publ) and its subsidiaries. 12
MISCELLANEOUS Accunting plicies This reprt was prepared in accrdance with IAS 34 Interim Financial Reprting, the Annual Accunts Act fr Credit Institutins and Securities Cmpanies (1995:1559) and the Swedish Financial Supervisry Authrity s regulatins (FFFS 2008:25). The parent cmpany s accunts were prepared accrding t the Annual Accunts Act and RFR 2 Accunting fr Legal Entities. The accunting plicies and calculatin methds applied in this reprt are the same as thse used in the 2010 annual reprt. Nte that runding may result in amunts in SEK millins nt agreeing when summed. Auditr s review reprt This reprt has nt been reviewed by the cmpany s auditrs. Certificatin The chief executive fficer hereby certifies that this interim reprt prvides a true and fair summary f the peratins, financial psitin and earnings f the parent cmpany and the grup and the significant risks and uncertainties faced by the parent cmpany and thse cmpanies that are included in the grup. Stckhlm, 26 April 2011 Frans Lindelöw Chief Executive Officer 13