SNS Reaal Groep 2002 Int

Transcription

Annual Report SNS Reaal Group
2002
SNS Reaal Group
Croeselaan 1
P.O. Box 8444
3503 RK Utrecht
The Netherlands
Telephone: +31 30 291 52 00
www.snsreaalgroup.com
Group Communications
Telephone: +31 30 291 48 71
Fax:
+31 30 291 48 49
[email protected]
Investor Relations
Telephone: +31 30 291 51 02
Fax:
+31 30 291 51 32
[email protected]
Registered at the Trade Register of the Chamber of Commerce under no. 16062627
Annual Report 2002 / SNS Reaal Group
1
SNS Reaal Group in brief
MISSION
STRATEGIC OBJECTIVES
SNS Reaal Group wants to be a leading provider of • To grow faster than the market.
financial services offering a coherent range of innova- • To focus on retail and retail-plus clients.
tive banking, investment and insurance products.
• To manage on the basis of synergy and cost control.
• To achieve balanced growth of economic valueSNS Reaal Group focuses on the Dutch retail and small
added.
and medium-sized business market, which it serves
through a range of efficient distribution channels.
COMMERCIAL OBJECTIVES
PROFILE
(Growth in market shares up to the end of 2005)
SNS Reaal Group is an innovative banking and insu- • Mortgages from 7% to 10%.
rance provider with total assets worth more than Z 46 • Savings and investments from
billion and over 5,400 employees (year-end 2002). It
4% to 6%.
serves its private and business clients mainly through • Individual life insurance policies
SNS Bank and Hooge Huys.
from 6% to 9%.
• Business services from
SNS Bank serves its clients through branch offices, inde3% to 5%.
pendent intermediaries, the internet and the telephone.
Hooge Huys markets its products and services through
independent intermediaries.
FINANCIAL OBJECTIVES
(2002: 8.6%)1
(2002: 5.8%)
(2002: 8.0%)1
(2002: 3.0%)
In addition to the main brands, SNS Reaal Group also • Net profit increase of at least
includes various niche labels that operate in a specific
10% per year.
(2002: -49.1%)
market: ASN Bank, BLG Hypotheken, CVB Bank, Pro- • Return on shareholders’ equity of at
teq, Reaal Overlijdenszorg, SNS Securities, SNS Asset
least 12.5% per year after tax.
(2002: 5.6%)
Management and SNS Financial Markets.
• Maximum efficiency ratio for bank
operations of 65%.
(2002: 64.7%)
SNS Reaal Group attaches great importance to the • Maximum cost/premium ratio for
principle of socially responsible – or ethical – busiinsurance operations of 27%.
(2002: 27.8%)
ness practice. Sustainability and a first-class personnel policy are therefore areas of prime importance for
the Group.
RATINGS
Moody’s
S&P
Fitch
SNS Reaal Group
A3
ASNS Bank
A2
A
A+
1
2
) Relates to new production.
Contents
SNS Reaal Group in brief
2
GENERAL
Management
Commercial structure of SNS Reaal Group
Key figures
Foreword by the Chairman of the Group Executive Board
Highlights of 2002
6
7
11
12
14
REPORT OF THE SUPERVISORY BOARD
REPORT OF THE GROUP EXECUTIVE BOARD
An overview of 2002
Strategy and policy
SNS Reaal Group strategy
SNS Bank policy
Hooge Huys policy
Economic developments
Commercial developments
Private market
Business market
Private banking
Professional market
Financial developments
Net profit
Income
Expenses
Efficiency ratios
Composition and growth of the balance sheet
Capital base
Risk management
Funding
Socially responsible business
Personnel and organisation policy
Outlook
18
19
19
20
21
27
29
29
35
36
36
38
38
41
42
43
43
43
45
52
53
55
60
2002 ANNUAL ACCOUNTS
Consolidated balance sheet
Consolidated profit and loss account
Consolidated cash flow statement
General notes
Notes to the consolidated balance sheet
Notes to the consolidated profit and loss account
Consolidated balance sheet of SNS Bank
Consolidated profit and loss account of SNS Bank
Consolidated balance sheet of Hooge Huys
Consolidated profit and loss account of Hooge Huys
62
63
64
66
73
96
104
105
106
108
3
Consolidated balance sheet of SNS Reaal Invest
Consolidated profit and loss account of SNS Reaal Invest
Company balance sheet
Company profit and loss account
Notes to the company balance sheet
Main Group companies
List of the most important equity participations
112
113
114
115
116
120
121
OTHER INFORMATION
4
Profit appropriation under the articles of association
Auditor’s report
124
124
Biographies of the Supervisory Board members
Additional responsibilities of the Executive Board members
Definitions
125
126
127
General
5
General
Management
SUPERVISORY BOARD SNS REAAL GROUP 1
Prof. J.L. Bouma, chairman
H.M. van de Kar, deputy chairman
J.V.M. van Heeswijk
D. Huisman
Prof. S.C.J.J. Kortmann
H. Muller
J.W.M. Simons
GROUP EXECUTIVE BOARD SNS REAAL GROUP
S. van Keulen, chairman
C.H. van den Bos
M.W.J. Hinssen
R.R. Latenstein van Voorst, Chief Financial Officer
1) The present members of the Supervisory Board of SNS Reaal Group
also make up the Supervisory Board of SNS Bank and the Supervisory Board of Hooge Huys.
The Group Executive Board. From left to right Messrs. Van den Bos, Van Keulen, Latenstein van Voorst and Hinssen.
6
General
situatie per 1 1 maar t 20 0 3
BOARD OF DIRECTORS SNS BANK
BOARD OF DIRECTORS HOOGE HUYS
M.W.J. Hinssen, chairman
C.H. van den Bos, deputy chairman
B.A.G. Janssen, deputy chairman
J.A.M. Henneke
Th.A.W.M. Janssen
M. Menkveld
G. van Wakeren
C.H. van den Bos, chairman
M.W.J. Hinssen, deputy chairman
A.F.J. Bakker
J. Boven
N.J. Jongerius
J.H. Wilkes
BOARD OF DIRECTORS SNS REAAL INVEST
C.J. Ambachtsheer
CENTRAL EMPLOYEES COUNCIL
H.H. Foppen, deputy chairman
J.C.T. Hemels, deputy chairman
A. Dijkhuizen, secretary
R. Bloos
A.M.J. Borsboom
A.P. van Campen
G.J.M. Dröge
G.M. ten Heggeler
J. Jeukens
K. Nijmeijer
A.J.M. Schoutsen
R.A. Schrama
R. Tiemens
W.G. Vredenburg
L. van de Wiel
COMMERCI A L STRUCT UR E OF SNS R E A A L GROUP
SNS Reaal Group
SNS Bank
Hooge Huys
SNS Reaal Invest
ASN Bank
CVB Bank
BLG Hypotheken [mortgages]
Reaal Overlijdenszorg
[funeral insurance]
The activities of SNS Reaal Invest that
support the core businesses of SNS Bank
and Hooge Huys are now being
transferred to those units.
SNS Securities
SNS Asset Management
SNS Financial Markets
Proteq
Mortgages Service Centre
Securities Service Centre
Bank Service Centre
Insurance Service Centre
The intention is to wind down
the portfolio of remaining equity
investments gradually.
7
General
Key figures
2002
2001
2000
1999
1998
Total assets
46,342
43,761
40,879
32,527
26,529
Investments
Mortgage loans
Other loans
Shareholders’ equity
Capital base
Technical provisions, insurance operations
Funds entrusted
Debt certificates
8,461
28,433
4,194
1,408
2,692
8,253
16,073
14,210
8,501
24,738
4,238
1,571
2,813
8,178
14,965
12,201
8,527
22,909
4,203
1,575
2,575
7,683
13,997
11,072
8,028
17,486
3,662
1,452
2,113
7,032
13,119
5,188
7,207
13,897
3,263
1,197
1,700
6,158
11,956
2,954
Income banking operations
Interest income
Commission
Other income
503
71
54
436
69
70
391
89
69
348
63
57
291
59
54
Total
628
575
549
468
404
Income insurance operations
Gross premium income
Investment income
Other income
1,501
24
4
1,490
392
16
1,410
444
22
1,249
517
145
1,162
481
159
Total
1,529
1,898
1,938
1,911
1,802
47
5
61
36
5
52
31
3
41
27
2
32
15
3
19
113
93
75
61
37
3,539
3,436
3,907
3,675
3,639
3,390
3,209
2,978
2,901
2,710
In € millions
BA L A NCE SHEE T
R ESULT S
Income SNS Reaal Invest
Interest income
Commission
Other income
Total
Total income
Total expenses
Operating profit before taxation
Banking operations
Insurance operations
SNS Reaal Invest
Group
165
(73)
46
(35)
144
135
20
(67)
157
111
32
(51)
140
102
24
(35)
115
87
13
(24)
Total
103
232
249
231
191
84
165
179
161
138
5.6%
10.5%
11.8%
12.2%
12.4%
Efficiency ratio banking operations
64.7%
71.5%
68.4%
68.8%
69.9%
Cost / premium ratio insurance operations
Net profit
K EY R AT IOS
Return on shareholders’ equity
27.8%
29.6%
30.8%
31.7%
32.7%
Capital ratio
5.8%
6.4%
6.3%
6.5%
6.4%
Number of employees
5,432
5,860
5,932
5,603
5,231
11
General
Foreword by the Chairman of the Group Executive Board
TO ALL STAKEHOLDERS IN SNS REAAL GROUP
From the point of view of operations, 2002 was a successful year for SNS Reaal Group. Market shares and gross
income increased considerably for all areas, while important progress was made in the field of cost control. Consequently, net operating profit (excluding investment losses) grew from Z 165 million in 2001 to Z 238 million.
A good performance, certainly in view of the deteriorating economic climate in 2002.
However, from a financial point of view, 2002 was not a good year, because investment losses on the share portfolio of our insurance operations resulted in a net profit of SNS Reaal Group of Z 84 million. Nevertheless, the
commercial results demonstrate that we are on the right track with our retail-plus strategy. This strategy means
that we focus almost entirely on individuals and on the small and medium-sized business sector.
OUR STRATEGY
Our product range centres on mortgages, savings & investments and pensions & insurance. From its centralised
centres of competence, SNS Reaal Group develops innovative products aimed at responding to the rapidly changing needs of our clients. SNS Reaal Group is the only banking and insurance provider in the Netherlands that
has comprehensively integrated its operations in four service centres. As a result, new products can be marketed
and administratively processed rapidly and efficiently.
Recent successes include the high-quality internet and i-mode services. SNS Reaal Group is a national leader in
this field. A second example is the mortgage interest variant, ‘SNS Plafondrente’ [ceiling interest], which confirmed our reputation as an innovator. One of the innovative contributions made by Hooge Huys in 2002 is the
extranet, ‘ nside’, which provides intermediaries and their clients online insight into their pension situation,
while salary and address changes are updated centrally.
SNS Reaal Group deliberately seeks to capture the attention of a broad public in the Netherlands with a continuous flow of modern products and product combinations. We also hope to capture this public in the Randstad
area (the metropolitan conurbation in western Netherlands). In 2002, we started opening new branch offices
in this part of the Netherlands. In addition to our products, we are striving to win clients by offering a perfect
service and solid advice from our staff. A new appraisal, reward and training system has been introduced with
the aim of improving the performance of all staff in a structured manner.
Accessibility and specifically the ability to respond rapidly and effectively to questions from clients are important
aspects of SNS Reaal Group’s services. Our offices are accessible directly by telephone and will remain so in the
future. Long connection and waiting times do not fit into our strategy. The internet systems for fund transfers
and investments are available 24 hours a day, seven days a week.
OUR CULTURE
As far as the quality of our services is concerned, we continue to give a decent, almost old-fashioned, level of
service to customers. However, apart from being a solid institution, we also stand out as a modern, ambitious
organisation – a banking and insurance provider that uses advanced information and communication technology and offers advanced and modern products. Speed is one of the most critical success factors for our company.
We anticipate market developments. A short decision-making process, rapid product development, room for
12
General
internal entrepreneurship and opportunities for new talent are hallmarks of our culture. Moreover, as a nonlisted company, we are at the same time able to continuously focus on long-term issues. This combination of
traditional and modern characteristics – the best of both worlds – defines the positioning and strategy of SNS
Reaal Group.
Whether or not we succeed in realising our plans and goals largely depends on interaction between our clients
and our staff. That’s why they’re both central figures in our business philosophy. In our economic and social
policy, we consciously strive to balance the interests of all stakeholders in SNS Reaal Group. Although by no
means always as simple, we try to base our decision making on criteria that refer to social engagement and a
sustainable society.
In everyday practice, this policy translates into specific investment products from our experts at ASN Bank and
SNS Asset Management. For years now, both units have enjoyed recognition in this field and can look forward
to a growing client group.
Socially responsible business also calls for active concern for the quality of our living environment. The environmental programme of SNS Reaal Group has set rigorous objectives to minimise the impact on the environment. The Stichting SNS Reaal Fonds provides financial support to projects of general social interest that have
an idealistic or social purpose.
OBJECTIVES FOR 2003
Our objectives for 2003 are clear:
•
•
•
•
•
We aim to be the fastest-growing retail and retail-plus specialist in the financial sector in the
Netherlands.
To increase our distribution power: in the next three years we aim to open 25 branches in the Randstad and
to strengthen our other distribution channels.
To continually launch new products with both banking and insurance elements.
To continue along the way of synergy and cost control in all our banking and insurance operations.
To restructure our financing and risk management tools to increase our financial leeway and our returns.
Should the economy improve, we would expect 2003 to be a good year commercially. However, it should be
borne in mind that, at the time of writing this foreword, the economic and political prospects unfortunately
remain rather gloomy.
On behalf of the Executive Board of SNS Reaal Group, I would like to thank all
our staff for their efforts and enthusiasm, and our clients for their loyalty and
confidence.
Sjoerd van Keulen
Chairman, Group Executive Board
13
General
Highlights of 2002
14
•
SNS Reaal Group’s net profit amounts to Z 84 million (-49.1%). Excluding investment losses on the share
portfolio of the insurance operations, net profit rises to Z 238 million (+ 44.0%) (see page 38).
•
Strong commercial growth led to an increase in the market shares of the core products in the field of mortgages,
savings & investments and pensions & insurance. This success is due in part to innovative new products such
as the SNS Plafondrente, Groeps Individueel PensioenPlan, other savings and investment products, and also
thanks to the quality of our services (SNS Effectenlijn, which was rated as best internet broker, and Hooge
Huys nside) (see page 29).
•
Our focus on cost control has resulted in a structural decline in expenses. The number of full employees
decreased by 7.3% (see page 60).
•
The goal of ‘One enterprise, one policy, one management centre’ was achieved (see page 18).
•
In line with the focus on core business, the activities within SNS Reaal Invest are being unwound gradually
(see page 19).
Repor t of the Super visor y Board
STRATEGY
REAPPOINTMENT TO THE SUPERVISORY BOARD
The strategic frameworks of SNS Reaal Group were
discussed with the Executive Board during the year
under review. This resulted in reconfirmation of the
most important strategic objectives. The development
into the ‘retail banking and insurance provider of the
Netherlands’ was vigorously pursued.
During its meeting of 12 March 2002, the Supervisory
Board reappointed Mr. D. Huisman. In accordance with
the agreed procedure, the chairman of the Supervisory
Board and the Executive Committee of the Central
Employees Council discussed the reappointment with
Mr. Huisman in advance.
Consequently we abandonned what we call the broadening strategy. This means that all holdings of SNS
Reaal Invest that fall under the core business of the
banking or insurance operations are being transferred
to these areas. Other participating interests are being
wound down gradually.
ANNUAL ACCOUNTS AND BUDGET
During its meeting of 11 March 2003, the Supervisory
Board adopted the 2002 year-end accounts. The internal
and external 2002 management letters were discussed
during the meetings of December 2002 and January
2003 respectively. The 2003 budget was approved durAPPOINTMENTS TO THE GROUP EXECUTIVE BOARD ing the meeting on 11 December 2002. The subjects
AND BOARD OF DIRECTORS
mentioned were discussed at length in advance in the
Audit Committee, and subsequently submitted to the
During its meeting on 11 December 2002, the Super- full Supervisory Board with recommendations.
visory Board appointed Mr. S. van Keulen as chairman
of the Executive Board of SNS Reaal Group. During
the same meeting, Mr. R.R. Latenstein van Voorst was MEETINGS
appointed Chief Financial Officer and member of the
Executive Board of SNS Reaal Group. With the Group The Supervisory Board met eight times during the year
Executive Board once again at full strength, the ambi- under review. The Audit Committee met three times.
tious growth objectives of SNS Reaal Group can now be In addition to the aforementioned, the following issues
pursued with renewed verve.
were raised in the meetings of the Supervisory Board:
the social policy, ethical business practice, amendSeptember of the year under review saw the departure ments to the Articles of Association, the pension
of Mr. J. den Hoed, who had served the Supervisory problems, the 2003 funding plan, the 2003 investment
Board and the Group Executive Board as external advi- plan, reports of supervisory bodies, acquisitions and the
sor for a long time. The Supervisory Board would like introduction of a profit-sharing scheme for staff.
to express its gratitude towards Mr. Den Hoed for the
way in which he carried out his role and for his contri- As in previous years, the Supervisory Board assessed
bution towards the further integration of the banking its own performance in a special meeting.
and insurance operations.
During the meeting in May, the Supervisory Board
During the year under review, Mr. J.H. Wilkes was approved the sale of a 60%-interest in SNS Automoappointed to the Board of Directors of Hooge Huys with tive. Approval of the sale of a 60%-interest in PrimeLine
responsibility for distribution and sales. Mr. J.B.M. van services was granted in the meeting of November.
Roon stepped down in September 2002 as member of
the Board of Directors of SNS Reaal Invest. We would
like to express our appreciation for Mr. Van Roon’s commitment to the Group all these years.
15
APPRECIATION FOR THE EFFORT
We would like to express our appreciation to the
Executive Board and all staff for their effort. Despite
the current adverse economic climate, we look ahead
with confidence to the future.
Utrecht, 11 March 2003
On behalf of the Supervisory Board,
J.L. Bouma, chairman
16
Repor t of the Group Executive Board
17
2002 in brief
A commercially successful year, but a drop in
net profit
Commercially, the year under review was a successful
one for SNS Reaal Group. The three core products of
SNS Reaal Group – in the field of mortgages, savings
& investments and pensions & insurance – grew their
market share.
However, the net profit of SNS Reaal Group reported for
2002 dropped sharply compared to the year before. As
a result of the investment losses on the share portfolio
of the insurance operations, the net profit of SNS Reaal
Group decreased by 49.1% to Z 84 million. The net profit
of the banking operations amounted to Z 110 million,
that of the insurance operations to Z (46) million and
that of SNS Reaal Invest to Z 47 million.
Directors of SNS Bank and Hooge Huys, as well as the
internal departments of the Group Executive Board are
now centralised in Utrecht. The same applies to the
three competence centres, set up to develop innovative
products for the benefit of the core and other products
in the field of mortgages, savings & investments and
pensions & insurance.
Emphasis on sales
Far-reaching changes were implemented in the sales
organisations during the year under review, and they
now have a stronger than ever focus on sales. In addition, the process of building up the service centres,
started a number of years ago, was completed. There
are four of these administrative centres, for mortgages,
securities transactions, fund transfers and pensions &
insurance. Just like the competence centres, the service centres work for all the brands within SNS Reaal
Group.
In fact, the total investment portfolio of the insurance
operations yielded a small profit in the year under
review. The negative development in the value of the
share portfolio was actually totally compensated by the Organisational structure completed
positive development in the bond and real estate port- The organisational structure envisaged for SNS Reaal
folios of the insurance operations. However, in accord- Group has been completed. The integration that was
ance with the guidelines for annual reporting, the latter achieved – built on innovation, synergy and efficiency
is not expressed in the profit and loss account.
– gives SNS Reaal Group an edge in the market. The
market shares of the core products actually increased
One enterprise, one policy, one management centre
during a year in which the senior management reloIn connection with the choices for product leadership cated, the competence centres were set up and the
and an offensive competitive strategy, essential ele- sales organisations were restructured. Moreover, this
ments of the banking and insurance operations were growth was realised with fewer staff. Following this
brought together to maximise synergy opportunities. positive running start in the year under review, 2003
The goal of ‘One enterprise, one policy, one manage- will be involved mainly with the further development
ment centre’ was achieved in the year under review. of the Randstad as area of operations, for SNS Bank in
The Executive Board of SNS Reaal Group, the Boards of particular.
18
Strategie en beleid
SNS REAAL GROUP STRATEGY
The focus is the retail market in a broad sense, also
known as ‘retail-plus’, and includes segments with close
SNS Reaal Group has formulated four strategic objec- links to the retail market, such as small and mediumtives that for a period of three to five years will form the sized business and private banking. The large business
basis of our service to clients and the further develop- market is being wound down at the banking operations.
ment and growth of SNS Reaal Group, SNS Bank, Hooge The large business non-life insurance has already been
Huys and the niche labels. The first steps have already wound down at the insurance operations. Large busibeen taken in the year under review towards each of ness life insurance will be continued.
the objectives listed below.
The stronger focus on core products in no way comproStrategic objectives
mises the wide range of financial products and services
for the chosen target groups: it is a question of shifting
1. To grow faster than the market.
emphasis. In this context, it was decided to transfer the
2. To focus on retail and retail-plus clients.
activities that currently come under SNS Reaal Invest
3. To manage on the basis of synergy and cost control.
and that support the core business of the banking or
4. To achieve balanced growth of economic valueinsurance operations, to those core businesses. The
added.
remainder of the portfolio will be wound down graduTo grow faster than the market
ally. So far, 60% of the interest in SNS Automotive (car
SNS Reaal Group has set itself the goal of becoming the lease) and PrimeLine services (consumer credit) has
leading retail banking and insurance provider on the been sold.
Dutch market, with a top-3 position in market share
for the core products. These core products can be found Managing on the basis of synergy and cost control
in the field of mortgages, savings & investments and Generating synergy plays a main role in the way the
pensions & insurance. SNS Reaal Group aims to achieve organisation and the working methods of SNS Reaal
this through product leadership, or the development Group have been shaped. Creating a banking and
and marketing of innovative financial products.
insurance provider requires far-reaching cooperation
between, and the merging of, business units of the
In this context, SNS Bank and Hooge Huys are being banking and insurance operations.
repositioned to present themselves as modern innova- Examples include the establishment of competence
tive financial service providers. As part of the competi- centres, the building of service centres, the creation of
tive strategy offensive, ambitious sales objectives have a single management centre, the utilisation of each othbeen set for the core products for the period 2002 to er’s distribution channels, the merging of investment
2005. The first steps towards achieving this goal were funds, selling each other’s products, etc. All brands can
taken in the year under review, allowing us to reap the benefit from the sustainability analysis of SNS Asset
full benefits in 2003.
Management. In addition, SNS Financial Markets serves
as in-house bank for the entire Group.
SNS Reaal Group targets organic and non-organic
growth. Non-organic growth consists of participating The Group Executive Board specifically uses synergy
interests that strengthen the core business and con- as a starting point for the strategic management of the
tribute towards synergy. An important precondition company, with the criterion of the ‘added value’ the
for any targeted increases in market share is that the activities create for the company. This applies not only
growth must be profitable, achieving a 12.5% net return to the activities of the main brands, but also to those
on shareholders’ equity.
of the niche labels.
Focusing on retail and retail-plus clients
SNS Reaal Group concentrates on the retail market as
far as both products and target groups are concerned.
With synergy in mind, we looked closely at scope for
cooperation in intermediation. Different brands within
SNS Reaal Group use intermediaries. On the banking
19
side, these include SNS Bank, BLG Hypotheken and
CVB Bank, and on the insurance side, Hooge Huys and
Reaal Overlijdenszorg. A certain degree of coordination is important, for example in the selection of agents
to do business with, in preventing fraud and in risk
management. To share knowledge about the market
and coordinate commercial activities, a discussion
platform is being set up within SNS Reaal Group for
the intermediary channel.
Cost control is always an area of close focus for the
Group Executive Board and the Boards of Directors, who
are vigilant to ensure that costs and expenses develop
in a balanced way.
in the field of mortgages and savings & investments.
These are the key elements within a broad package of
financial services. This growth-oriented strategy is
underlined by the new positioning of SNS Bank.
Three business lines
The strategic choice necessitated numerous organisational changes in order to achieve the desired focus,
synergy and efficiency. For instance, we made a sweeping ‘conversion’ of the sales organisation of SNS Bank.
The company was split into three business lines focused
on the ‘Individuals’, ‘Business Market’ and ‘Private
Banking’ target groups.
This reorganisation enables tight and efficient manBalanced growth of economic value-added
agement. The staff can now devote all their time to
SNS Reaal Group strives to achieve a balanced value their own specialist fields. The halving of the number
development for the company. Capital resources are of counter transactions realised during the year under
allocated in such a way that the pursued goals are review, for instance, has led to more time becoming
achieved as effectively as possible. Our evaluation proc- available for focused advisory services and sales in the
ess includes a cost analysis in which the return on the ‘Individuals’ business line.
investment is compared to its costs, taking account of
any risk involved. In this way, potential activities are The newly formed ‘Business Market’ business line
compared on the basis of their ‘added value’, adjusted for concentrates on providing services to the small and
risk which is calculated as accurately as possible. This medium-sized business sector and the non-profit secform of ‘value thinking’ is catching on increasingly in tor. The basic idea is get entrepreneurs self-motivated
the organisation.
through good products and internet.
The equity of the company is thus spread out equally
across the business units and their activities to achieve
balanced value creation. Continuing along this line,
other aspects are also important for the assessment
of the financial soundness, such as a predictable and
growing income flow and a strong equity position that
grows with the company.
SNS BANK POLICY
Repositioning
The smart card
SNS Bank was the first bank to offer clients the possibility of using a single bankcard for cash withdrawals from three different accounts, for example a
current account, a savings account and a standing
credit account. This card allows you to withdraw
cash from each of these accounts 24 hours a day,
seven days a week. The advantage to the client is
that he or she only needs one bankcard and one PIN
code. Moreover, it is no longer necessary to first
transfer funds from the savings account if the current account balance is insufficient.
At the end of the year under review, SNS Bank presented itself as ‘a new bank’. The strategy of SNS Bank
is focused on product leadership for the core products The ‘Private Banking’ business line – another recent
creation - specialises in integrated equity management
for wealthy individuals and entrepreneurs.
Target Randstad
The Randstad – the metropolitan conurbation in
western Netherlands – is an important lead for SNS
20
Bank in realising the envisaged growth in the market
share. The Randstad has become the prime target, as
borne out by the considerable marketing efforts being
undertaken and the coordinated deployment of all the
distribution channels. In close cooperation with the
branch offices, the intermediary plays an essential role
in ‘capturing’ the Randstad. A separate organisation
with service desks and account managers was set up
to support intermediaries. The concentrated support
provided by SNS Direct will also be a significant factor
in the service provision to this promising residential
and working area. The big initial focus will be on selling mortgages and related products.
sibilities of internet banking will be expanded further,
including services to business clients.
SNS Bank voted best internet broker
In the annual survey of internet brokers conducted
by Beurs.nl, SNS Bank ended in first place, just like
the year before. SNS Bank scored high in the ‘overall
opinion’ of internet investors: 7.9. The score was also
high in the categories ‘accessibility’, ‘speed’, ‘information’ and ‘service’.
Innovation and synergy
The SNS Plafondrente [ceiling interest] is a mortgage
SNS Bank has announced it will open dozens of branch interest variant that was marketed with great success,
offices and service points in the major Randstad resi- not only by SNS Bank, but also – under its own name
dential centres over the next few years. Offices have – by most brands within SNS Reaal Group. Various savalready been established in Amsterdam, Rotterdam, The ings and investment products and investment funds
Hague and Utrecht. There will be virtually no increase were launched, which were also sold by other brands
in the number of SNS Bank branch offices in the coun- of SNS Reaal Group.
try as a whole, but there will be a better spread.
It was encouraging to see the huge interest among
Rapid development of SNS Direct
private investors for the SNS ParticipatieCertificaten,
In addition to branches and intermediaries, SNS an innovative way to strengthen the equity position,
Bank has a third distribution channel, SNS Direct. in combination with an attractive return for the cliSNS Direct provides customer contact by telephone ent. Most of the other SNS Reaal Group brands also
and electronically, with a call centre that meets the supported the issue. The capital base of SNS Bank was
information needs of clients and non-clients and also increased by Z 241 million in two tranches.
organises appointments with mortgage and investment
advisors at the branch offices.
Telephone sales were launched in the year under review. HOOGE HUYS POLICY
Mortgage advisors now, for example, also sell mortgages
via the call centre. Products such as consumer credit A streamlined organisation
and life and non-life insurance policies are also sold During the year under review, Hooge Huys completed
over the phone. In 2003, the call centre will also provide the reorganisation of the insurance operations. The
services for the business market.
former market group structure has been replaced by a
functional organisational structure.
Internet: market leader
Internet offers SNS Bank a great opportunity to show- Focus on the pensions market
case its innovative approach. Maintaining its lead in The insurance operations envisage growth in market
this area is a high priority. Independent surveys consist- share through product leadership in the core products:
ently rate SNS Bank in the top 3 in the categories serv- life insurance, private and semi-group pension insurice, accessibility and pricing for investing via internet ance and mortgages. The focus is increasingly on the
(see box). Throughout most of the year under review, pensions market given increased consumer interest in
SNS Bank has presented itself as the bank offering the
highest internet savings rate.
In addition, SNS Bank is taking the lead in facilitating
i-mode for banking through mobile phones. The next
step is i-mode investing. In 2003 the interactive pos-
21
filling holes in pension provisions. The products are
sold via intermediaries to the target groups: individuals and – increasingly – small and medium-sized businesses. In line with our focus on specific target groups,
the large business non-life portfolio has been wound
down almost completely.
New partners
For many years now Hooge Huys has cooperated with
other financial institutions in the sale of mortgage
and insurance products, normally under the partner
company’s label. This means that the bulk of the mortgage portfolio is managed on behalf of third parties:
the partners provide funding and Hooge Huys the
relevant insurance.
There is more and more recognition for the quality of
the Hooge Huys insurance products. Partnerships are
formed with other financial service providers in which
the insurance products of Hooge Huys form the basis for
products, which these new partners then market under
their own label. Hooge Huys is actively pursuing the
further expansion of such partnerships.
Innovation and synergy
During the year under review, Hooge Huys launched a
number of innovative products including a semi-group
pension product. The Groeps Individueel PensioenPlan
[Group-Individual Pension Plan] is currently the only
product on the market that satisfies all the applicable
rules in this segment.
In addition, a new kind of mortgage and a number
of savings products were introduced in tandem with
the bank, and marketed by Hooge Huys under its own
name. Where possible, Hooge Huys is now the provider
of life and non-life insurance to SNS Bank and the other
banking labels, mainly in combination with mortgage
loans. Hooge Huys has also started selling SNS Bank
mortgages linked to Hooge Huys insurance policies.
that reason, computerised support for proposals and
policy preparation also enjoys a high priority. In all
the relevant areas we now apply Document Imaging
System / Workflow Management systems whereby files
are scanned and processed electronically.
Code of Conduct and Information Brochure
The Dutch Association of Insurers [Verbond van
Verzekeraars] and pressure groups representing
intermediaries want clients to receive adequate
information about what to expect from insurance
brokers. To this end, they drew up a code of conduct
governing information about the services of intermediaries [Gedragscode Informatieverstrekking
Dienstverlening Intermediair] (GIDI). This contains
rules of conduct that brokers are expected to observe
in dealing with consumers.
One of these rules stipulates that intermediaries
provide customers with a brochure explaining services to be expected, the relationship between the
intermediary and the insurers, the fee structure and
complaints procedure.
Hooge Huys is affiliated to the Stichting Implementatie GIDI, responsible for the implementation of
GIDI, which basically means that it only works with
intermediaries who endorse the code of conduct and
supply an information brochure to their clients.
Together with a number of other insurance providers,
Hooge Huys is taking part in ‘MeetingPoint’, an initiative aimed at strengthening chain integration. As part
of this effort, Hooge Huys has created its own extranet,
‘ nside’ (see box on next page).
The automated approval system for non-life insurance
is now virtually ready and will soon also be ready to
process non-life claims electronically. In future, the
acceptance of life insurance will also be computerised.
Non-life insurance is an important ‘accompanying’
product and, as such, indispensable in the Hooge Huys
product range.
A number of years ago, ‘Distributiepartner’ was set up to
support intermediaries with growth potential by proIncreasing importance of chain integration
viding financial support or taking a minority interest.
The pursuit of product leadership is supported by This company, a joint subsidiary of Hooge Huys and
the speed and quality of the administration that has SNS Reaal Invest, will shortly come under the complete
become synonymous with the Hooge Huys name. For control of Hooge Huys. The same applies to a number of
25
other SNS Reaal Invest ventures whose activities fit in
closely with those of the insurance provider.
Hooge Huys
NSIDE
Under the name ‘ nside’, Hooge Huys has set up a
full complement of extranet applications to enable
efficient information exchange between Hooge
Huys, intermediaries and the intermediaries’ clients.
The website www.hoogehuys.nl offers brokers and
customers access to nside using individual login
codes. Intermediaries can thus access the advisory
and proposal software of Hooge Huys. nside also
contains three innovative service concepts: ‘ n
Pensioenregeling’, ‘ n Bancaire Diensten’ and ‘
n Financieel Plan’.
‘ n Pensioenregeling’ enables integrated communication between Hooge Huys and the business clients,
i.e. the intermediary, the employer and the employees. This means intermediaries can view pension
agreements online. Details of changes of address,
in salary, of new employees or departing employees
– are centrally updated. Employers can request statements of the insured entitlements, both at group and
individual level. Employees can literally view their
pension situation day and night. Hooge Huys offers
a wealth of information and a wide range of professional assistance and support, both technically and
with regard to content. A recent survey by Ordina of
the quality of the advice of almost thirty pension
insurers rated ‘ n Pensioenregeling’ the best.
26
Economic developments
the already low money market rates by half a percentIn 2002, US economic growth was limited. Although the age point. Thus, at the end of the year under review, the
‘double dip’ after the 2001 recession did not material- short-term rate came to 2.75% in the European Union,
ise, US business investments, sales and profitability all while it reached an historic low of 1.25% in the US. On
declined. One positive aspect is that consumer spend- the capital market, too, interest rates dropped in both
ing remained at a reasonable level, partly as a result of Europe and the US as the economy weakened and inflarelatively low unemployment.
tionary expectations diminished. (See graph).
World economic slowdown
The European Union showed a bleaker economic
picture than expected. Exports suffered as a result of
the worldwide slowdown in growth. Unemployment
increased in the major member states, which put pressure on consumer spending.
Deliberate use of the spread between long-term and
short-term interest rates enabled SNS Reaal Group to
increase the net interest margin on credit, especially
mortgages. The margin on savings declined slightly
because the banking operations decided not to follow
the drop in the market rates. This led to an increase in
In the Netherlands, the prosperous years of the so- the market share.
called polder model are over. Gross domestic product
increased by a mere 0.3% in 2002: the lowest growth in Mortgage market remains stable
twenty years. This marginally positive outcome was the The relatively low mortgage rates of recent years
result of an increase in private and, in particular, gov- have boosted the overall market despite the limited
ernment spending; investments and export declined. economic growth. The market now appears to have
Inflation dropped by 0.9% to 3.3% during the year stabilised: in the year under review, total mortgage
under review.
production grew only a few percentage points above
the level of 2001. The number of registered mortgages
Further drop in interest rates
remained virtually unchanged, indicating that the
The disappointing economic developments prompted growth in production can be attributed to a slight
central banks in the European Union and the US to cut increase in house prices. This price increase was mainly
caused by a shortage in homes for sale in the middle
market segment. Prices at the high end of the market
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came under pressure. In this stabilising market SNS
Reaal Group grew market share.
Dangers lurking ahead
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On the stock markets, the major indices dropped for
the third successive year. At year-end 2002, the AEX
index (Amsterdam) closed at 323 points, more than
50% below the peak of September 2000. At year-end
2001, the AEX still stood at 507. Other indices inside
and outside Europe fared no better. The weak world
economy, reduced corporate profits, and doubts about
the reliability of profit figures following a series of
accounting scandals can be seen as the main causes.
The aftermath of the terrorist attacks of 11 September
2001 and the political tension surrounding Iraq do not
bode well for recovery.
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27
Consequences for customers
The stock market losses have hurt customers who invest
in equities or investment funds that invest partly or
entirely in equities. However, the drop in interest
rates has had a favourable effect for investors in bonds
or bond funds: bond prices increased during the year
under review. The negative developments on the stock
markets have also resulted in a decline in demand for
investment insurance, whereas the sale of traditional
insurance products increased. The same trend could be
seen in the single premium business.
assume that the short and long-term consequences for
all parties involved will have been carefully considered,
particularly since asset creation usually involves longterm contracts.
During the year under review, the government took
various decisions that affect asset creation and have
far-reaching consequences for banks and insurance
providers. Not only the decision as such, but also the
short time between the decision and its implementation. Examples of this are the decision to limit and
abolish the contractual and premium savings schemes
Uncertainty about government policy
and to abolish the basic tax exemption for annuity preThe government often provides tax incentives for asset miums. This has resulted in tremendous strain on the
creation. When there are amendments to the legisla- administration, in numerous contractual adjustments
tion and regulations in this field, it should be safe to and has sown uncertainty among clients.
28
Commercial developments
PRIVATE MARKET
call centre that just recently started offering its own
mortgage advisory and selling mortgages.
Commercially, SNS Reaal Group has had a successful year. The market share of the core products of the BLG: above-average service provision
retail banking and insurance provider – in the field Of the total mortgage production in the year under
of mortgages, savings & investments and pensions & review, BLG Hypotheken, which markets its products
insurance – all increased.
via intermediaries, accounted for Z 1.0 billion, little
changed from production in the previous year. The
Commercial objectives
mortgage portfolio increased from Z 5.1 billion (2001)
to Z 5.5 billion. In a 2002 survey, for the second year in a
(Groei marktaandelen tot en met 2005)
1
row, intermediaries rated the services and organisation
Mortgages from 7% to 10%.
(2002: 8.6%)
of BLG Hypotheken above average.
Savings and investments
from 4% to 6%.
(2002: 5.8%)
Individual life insurance policies
from 6% to 9%.
(2002: 8.0%)1
Business services
from 3% to 5%.
(2002: 3.0%)
1
) Relates to new production.
Mortgages
Market share increases to 8.6%
In the year under review, SNS Reaal Group posted a gross
mortgage production of Z 7.0 billion (2001: Z 5.6 billion).
The value of the mortgage portfolio increased by 14.9%
to Z 28.4 billion (2001: Z 24.7 billion). Group market
share increased to 8.6% (2001: 7.1%). During the year
under review, mortgages totalling Z 1.1 billion gross
were securitised, bringing the total securitisation
portfolio to Z 3.9 billion gross.
SNS Bank: the ‘Plafondrente’ is a hit
A significant part of the increased market share can
be attributed to the success of SNS Plafondrente, a
mortgage interest product with a variable interest rate,
which lets consumers benefit from interest rate cuts,
but does not inflict the disadvantages of interest rate
increases. SNS Plafondrente can be sold in combination
with every possible mortgage. A large number of brands
within SNS Reaal Group sell mortgages with this and
other popular mortgage interest variations – such as
SNS Stabielrente – under their own names. Increasingly, this is done in combination with Hooge Huys
insurance policies.
CVB: a banking formula for intermediaries
As the ‘leading intermediary bank of the Netherlands’,
CVB Bank offers some 300 brokers a banking formula
that includes mortgages, savings and investment
accounts, consumer credit and internet banking. Thanks
partly to five new types of mortgages – including the
CVB Plafondrente mortgage – production rose 10.0%
to Z 2.2 billion (2001: Z 2.0 billion). Mortgage expenses
insurance as also introduced. CVB Bank concentrates
specifically on recruiting new intermediaries in areas
where other banks are closing branches.
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SNS Bank: call centre also sells mortgages
SNS Bank sells mortgages through its own branch network, intermediaries and SNS Direct. This includes a
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29
Hooge Huys: stable mortgage portfolio
SNS Bank developed the SNS VermogensPrisma to help
Hooge Huys sells some mortgages under its own staff in sales to advise and support clients in the field of
name, but mostly under the name of its partners. savings and investments. The aim is to manage client
Hooge Huys also sells mortgages from SNS Bank and assets in a more structured way that takes the investBLG Hypotheken under its own label. During the year ment objectives and the investment profile of the client
under review, we got intermediaries to start selling into account. The monitoring of asset development is
mortgages funded by SNS Bank linked to Hooge Huys an essential and unique element of SNS VermogensPinsurance policies. The mortgage portfolio of Hooge risma. The recommended investment portfolios consist
Huys, including the part managed on behalf of third of single investment funds or combinations of these.
parties, remained stable at Z 5.5 billion in the year With this in mind, a number of special mixed funds
under review.
with varying risk and return profiles have been developed: SNS Optimaal Geel, SNS Optimaal Oranje and
Increase in consumer credit
SNS Optimaal Rood.
During the year, the banking operations issued
Z 63 million in consumer credit. The consumer credit Decrease in net assets, increase in issued capital
portfolio increased by 12.3% to Z 577 million (2001: Total assets placed with the investment funds of SNS
Z 514 million).
Reaal Group decreased by 0.9% to Z 1.3 billion in the
year under review. This includes the capital increase
Savings & investments
following the merger with Hooge Huys BeleggingsSNS internet savings concept continues to grow
fondsen. Without this merger, the net assets would
The total savings deposits of the banking operations, have dropped by Z 132 million, a decrease of 10.4%.
including accrued interest, rose 17.0% to Z 9.6 billion The funds invested in bonds and/or deposits showed
in the year under review (2001: Z 8.2 billion). The a positive development, but funds partly or entirely
internet savings concept, SNS Internetsp@ren, con- invested in equities suffered as a result of the negative
tinued to build on the success of previous years, both developments on stock markets worldwide.
in terms of the number of account holders and the
Key Features Document for Financial Products
level of deposits. The bulk of the growth represents
‘new money’. This means that the banking operations
achieved an increase in market share of savings, a core
product, to 5.8% (2001: 5.4%). The attraction of saving
increased especially as a result of the poor stock market
climate.
ASN Bank introduced two new types of savings during the year under review. The ASN Internet savings
account is the first sustainable savings account in this
category. The deposited money is used to fund sustainable projects. ASN Jeugdsparen was set up together
with the charity ‘Mensen in Nood’ [People in Need],
partly for the benefit of a project for street children
in Cameroon.
Investment funds: merging and expanding
During the year under review, Hooge Huys merged
its investment funds with similar products under the
umbrella of SNS Beleggingsfondsen with a view to
synergy and efficiency. Hooge Huys clients now have
a wider choice of investment funds.
30
With effect from 1 July 2002, financial institutions are required by law to include a “key features
document” with the sale of all complex financial
products. A complex financial product contains
a number of components, of which at least one is
linked to the securities, capital or currency markets
with respect to its value development. For example,
investment mortgages, investment insurance and
investment funds.
The key features document contains information
about the vital characteristics of the product, to
enable consumers to understand the product and
its inherent risk better. It also makes for easier
comparison of similar financial products offered
by different providers.
In contrast to other insurance providers, Hooge Huys
includes all costs in its cost comparison for investment insurance, including the fund costs.
Despite the deteriorating stock market climate, the
year under review saw an increase in assets invested:
Z 142 million (2001: Z 64 million). This increase was
visible in both the existing funds and the previously
mentioned new funds.
cooperation with database partners serve as additional
sales channels.
Capital invested in the funds of ASN Bank grew 7.1% Pensions & insurance
to Z 525 million (2001: Z 490 million). During the year Increase in market share of life insurance policies
under review, ‘Het Andere Beleggingsfonds’ was inte- During the year under review, Hooge Huys succeeded
grated with the investment operations of ASN Bank. in achieving a significant increase in market share for
The intention is to change the name of this fund to ASN its core products in the field of equity protection. The
Mixfonds in 2003. In terms of sustainable savings and market share of recurrent individual life insurance
investments, the integration has strengthened the posi- policies such as pension insurance and investment
tion of ASN Bank as market leader. The market share of insurance, rose from 6.5% (2001) to 8.0%. The life
ASN Bank now stands at approximately 33%.
insurance portfolio grew by 4.2% from Z 624 million
to Z 651 million.
Innovative savings/investment products
The market share of the single premiums almost douAs in preceding years, various innovative products bled: from 4.3% (2001) to 8.4%, particularly through
containing both savings and investment elements were the sale of instant annuities.
launched during the year under review. In 2002, these
included SNS TopSectorWinstPlan and SNS TripleBest. Hooge Huys has issued a tax credit guarantee for cliA common characteristic of these products is the fact ents likely to suffer from the abolition of the basic tax
that they almost fully guarantee customer’s deposits credit for annuity premiums in 2003. If the client does
while allowing them to also benefit from any price not qualify for a tax deduction, Hooge Huys will pay
increases on the domestic and/or international stock the difference.
markets. The term of these guaranteed products varies
between five and seven years. Both banking brands and Within the context of synergy, Hooge Huys is, of course,
Hooge Huys carried similar products under their own the main insurance provider for the other brands
labels during the year under review.
within SNS Reaal Group, with SNS Bank as a particularly important ‘client’. With respect to the premium
SNS Effectenlijn: the high-quality securities trading service
paying products, the production via the banking operaAs a result of the negative stock market developments, tions increased by 50% during the year under review.
orders through the SNS Effectenlijn [securities line] fell In addition, Hooge Huys has increasingly been signing
during the year under review. The possibility of placing contracts with other parties that provide tailor-made
orders for foreign stock exchanges online was further products to their clients under their own label.
expanded. The service once again provided top quality.
In 2002, SNS Effectenlijn was again ranked among the ‘Universal finance’: given a wider market
top 3 best securities trading services in every independ- In 2001, Hooge Huys, together with SNS Bank, develent survey.
oped the Hooge Huys Financieel Plan [financial plan],
an innovative ‘universal finance’ concept (see also
Funeral insurance now also available via brokers
‘ nside’ box, page 26). The product was first tested
SNS Reaal Group offers funeral insurance through through a few dozen intermediaries, and introduced
Reaal Overlijdenszorgverzekering. With a market share to a wider market in the second half of the year under
of approximately 9%, the group’s funeral insurer ranks review. Hooge Huys Financieel Plan offers the intermeamong the major providers in this field in the Neth- diary ample scope to add value as a financial advisor.
erlands. During the year, new business increased by
9%. Reaal Overlijdenszorg offers only capital payment Non-life insurance indispensable
insurance cover in its range, in other words, no non- Non-life insurance plays an essential part in equity
monetary insurance. Reaal Overlijdenszorg has its own protection. It is therefore a vital member of the product
sales organisation. In addition, it was decided during and services range of SNS Reaal Group.
the year under review to promote selling via interme- In line with the focus on the private market, the
diaries as a key element of the policy. The internet and large business non-life insurance portfolio has now
31
Specialised units
‘Business & Institutions’ units have been created at 14
larger branches of SNS Bank. They feature account managers who provide ‘customised’ services to mediumsized companies and the non-profit sector. In addition,
there are ‘Enterprise desks’ to provide services to clients
Hooge Huys acquired a housing expenses insurance, in mainly the small business sector. The business line
which the brands within SNS Reaal Group can sell also includes regional insurance units. Apart from the
under their own labels. BLG Hypotheken and CVB specialised units already described, services to business
Bank already make use of this. The combined purchas- clients are also provided via internet and call centre
ing power provides an example of synergy.
(through SNS Zakenlijn, part of SNS Direct).
been virtually wound down. Compared to 2001 (Z 218
million), the private non-life insurance portfolio
increased slightly to Z 220 million. Thanks to a number
of efficiency measures, the return on invested capital
improved.
Proteq: strategic reorientation
Sales credit: quick and unique
The strategic reorientation of Proteq has not yet resulted The Enterprise desks can offer rapid and innovative
in a definite direction. Proteq increasingly uses internet services. For instance, loan requests can often be
to sell insurance policies such as car insurance and the decided on within a couple of hours. The sales of the
commercially successful ‘Dier & Zorg’ [animal health- company in question now form the basis for a decision
care] insurance.
on credit facilities, as opposed to the scrutiny of balance sheets and profit and loss accounts, which delayed
the process in the past.
BUSINESS MARKET
SNS Bank
Business savings via the internet: the best rate
SNS Bank introduced ‘SNS Business savings via internet’, offering a high interest rate plus an interest premium on ‘loyal money’. This results in a very competitive market rate, which was also the case in the year
under review with internet savings for individuals.
‘Business Market’ as an independent business line
Until 2002, the business services of SNS Bank came
under the regional banks, as part of the retail business.
The fundamental reorganisation carried out during the
year under review has led to the creation of three business lines, of which the business market is one. The Ambitious growth objectives
creation of this independent and fully-fledged unit, We now have an efficient setup, fast credit, a flexible
‘Business Market’, has resulted in tighter management package of products and high use of the internet, thus
of the business side, greater transparency and a more the foundations have been laid for progress in the busiefficient way of working. The target groups of ‘Business ness market. As part of the competitive strategy offenMarket’ include the Dutch small and medium-sized sive, ambitious growth targets have been set for the
business sector, and institutions, foundations and business market. In 2005, a minimum market share of
associations in the non-profit sector.
5% must be achieved in business services to mediumsized businesses, up from 3% currently.
Innovative product packages
‘Business Market’ promotes itself – in line with SNS Hooge Huys
Bank – as innovative, internet-oriented and providing a In view of all the tax and social changes, ‘pension’
24-hour service. The basic principle is the ‘self-motiva- is an ongoing topic of discussion. The social trend
tion’ of the entrepreneur, supported by good products towards increasing individualisation and the retreat
and processing systems, and advice up request. SNS of government means that pensions are becoming an
Bank offers all the products that are required of a fully- increasingly complex issue. The demands made on a
fledged service offering to commercial target groups, professional discussion partner in the field of pension
including insurance. These products can be offered as provision extend beyond knowledge about insurance
part of a package, tailored to the specific requirements solutions alone.
of the enterprise in question. There is also a broad package of lease products.
35
Growing demand for group pensions
from the other business lines. Following the expansion
2002 has been a year of good growth for the products of SNS Bank in the Randstad, Private Banking units will
of the Collectief Pensioenbedrijf (Group pensions). be established in a number of major cities.
New products are now under development to build on
that growth further. For example the introduction of Duty of care increased
a ‘hybrid pension’ is scheduled for 2003. Hooge Huys During the year under review, substantially more
pension products meet the needs of both small and attention was paid to the bank’s duty to take care of its
medium-sized companies - through the products Col- clients. Partly due to a tightening of the regulations, the
lectief Invulpensioen, Groeps Individueel PensioenPlan risk profiles of the investing clients were recorded, and
- and larger employers, through investment deposits and supervision of this target group was intensified.
pension funds.
As far as the investment policy is concerned, the coopInsight into pension status
eration with SNS Asset Management is very close, thus
We believe it’s important to help employees assess their enabling individual investors to also access this availpension situation. Some 80% of the working population able professional knowledge.
has a pension gap to a greater or lesser extent. Our Virtuele WerkWinkel [virtual workshop] offers internetbased information on individuals’ pension situation, PROFESSIONAL MARKET
allowing them to make calculations and optimise their
pension, if required, through additional savings.
Every year, SNS Reaal Group effects a large number of
transactions on the stock markets and the money and
capital markets both nationally and internationally,
PRIVATE BANKING
not only for private and business clients, but also as part
of its own financial management. Specialised business
‘Private Banking’ is the third business line of SNS Bank units of SNS Bank carry out a substantial part of the
besides Individuals and the Business Market. The pos- activities in these fields. SNS Securities is a securities
sibility of offering wealthy individuals integrated asset broker and SNS Asset Management carries out asset
management has clearly increased with the creation management tasks for institutional investors.
of a separate business line, whereby private bankers
and financial advisors help clients achieve the best SNS Securities
possible management of their assets. These specialists The CBS price index for shares declined for the third
are based at the four regional offices in Amsterdam, successive year. It lost about one third of its value,
Arnhem, Eindhoven and Zwolle, with additional rep- which represents the largest post-war drop. In contrast
resentation in Maastricht, The Hague and Groningen. to the fall in share prices, prices in Dutch bonds and
These advisory services are supported by the central real estate funds increased.
Financial Planning department. The central Asset Management department is, meanwhile, well equipped to Extending the services
deal with increasing demand for discretionary fund The stock exchange turnover on Euronext Amstermanagement.
dam declined, as was the case in the year before. But
while the activities of investors on the stock exchange
For wealthy individuals and business people
showed a further decline, the level of professional activThe private banking target group consists of wealthy ity increased. After four hundred years, the physical
individuals and business people and focuses primarily stock exchange trading room in Amsterdam was closed.
on assets in excess of Z 200,000 that are freely available The focus on the ongoing evolution in electronic trade,
for investment. Despite the stock market malaise, the order processing and settlement systems meant that
number of Private Banking clients increased during SNS Securities expanded its services to asset managers
the year under review, and further ambitious growth and professional traders.
is aimed for in 2003. Potential SNS Private Banking
clients are identified in cooperation with colleagues
36
Liquidity provider for numerous securities
the Group subsidiaries and their investment products
At Euronext Amsterdam, the year was again charac- and the external institutional investors.
terised by the disappearance, through public bids, of
dozens of companies in the Mid & Small Cap and real This unit fulfils a pioneering role in the development of
estate segment. Nevertheless, activities in this area of imaginative concepts. For example, a method was develsecurities trade were further expanded. An important oped in 2002 to classify countries according to their
factor in this was the increase in the number of securi- sustainability, which can be used for putting together
ties represented by SNS Securities as liquidity provider. fixed interest portfolios. By mid-2003, SNS Asset ManAt year-end, SNS Securities and SNS Bank together serv- agement expects, in addition to the European market,
iced 63 listed companies and investment funds. During to have mapped out the North American market.
the year under review, a number of private placements
were carried out, as well as a number of initial public New asset management mandates
offerings of investment funds. In addition, buy-backs SNS Asset Management strengthened its position durof shares and convertible bonds were performed upon ing the year under review with the acquisition of new
the instruction of various issuing institutions.
asset management mandates in which sustainability
plays a role. It also established joint ventures with asset
Decline in income
management companies to advise on and manage susAs in preceding years, excellent results were achieved tainable portfolios such as the Orange SeNSe Fund.
in fixed income, with the number of Dutch institu- Substantial investments are being made to strengthen
tional clients showing a slight increase. Regrettably, the organisation, including the sustainability analyhowever, this only partly compensated the strong sis department, to develop SNS Asset Management
decline income from equities trading, which led to further.
cost cutting and a reduction in the number of staff
from around 95 to 85.
Increase in the volume of managed assets
The disappointing developments on the stock markets
SNS Asset Management
during the year under review put pressure on the volSustainability analysis strengthened
ume of assets under management. However, thanks to
SNS Asset Management has a leading position in the the new mandates, managed assets grew by 3% from
field of research and asset management with respect to Z 9.8 billion to Z 10.1 billion. Twenty percent of this is
sustainable investments. These activities involve both invested in accordance with sustainability criteria.
37
Financial developments
NET PROFIT
In the year under review, SNS Reaal Group net profit
fell 49.1% to Z 84 million (2001: Z 165 million). The
stock market decline had a significant impact on the
results. The insurance operations incurred net investment losses on their share portfolio of Z 154 million.
Excluding these investment losses, the net profit of SNS
Reaal Group came to Z 238 million, reflecting growth of
44.2% for the other activities. The banking operations
and SNS Reaal Invest achieved profit growth. The insurance operations, however, achieved a net loss as a result
of the aforementioned investment losses on shares.
The net profit of the banking operations increased
by 18.3% from Z 93 million to Z 110 million during the
year under review. This positive development is mainly
attributable to a higher interest margin and lower staff
costs thanks to cost control measures. In contrast, additions to the value adjustments to loans and advances
item rose significantly.
The insurance operations posted a net loss of Z 46
million for 2002, compared to a net profit of Z 90
million for 2001. Excluding the investment losses on
the share portfolio, the result came out at to Z 108
million, 20% up on 2001. Both the life and non-life
operations contributed to the increase in operating
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profit. The increase can be attributed to a good insurance result, due in part to income by virtue of the
surrender of a group insurance contract, and lower
operating costs resulting from rigorous cost control.
SNS Reaal Invest achieved a net profit of Z 47 million
during the year, which is Z 21 million higher than in
2001. Book profits achieved from the sale of 60% of the
Result of SNS Reaal Group
2002
2001
3,774
3,436
3,907
3,675
(3.4%)
(6.5%)
Taxes
338
94
232
61
45.7%
54.1%
Group profit
Third-party interests
244
6
171
6
42.7%
0.0%
Net profit before investment losses
238
165
44.2%
Investment losses after taxation
154
--
--
84
165
(49.1%)
in € millions
Income excluding investment losses
Expenses
Net profit
38
Change
Result of banking operations
2002
503
71
54
2001
436
69
70
Change
15.4%
2.9%
(22.9%)
Total income
628
575
9.2%
Staff costs
Other operating expenses
235
171
260
151
(9.6%)
13.2%
Total operating expenses
Value adjustments to loans and advances
406
57
411
20
(1.2%)
185.0%
Total expenses
463
431
7.4%
Taxes
165
55
144
46
14.6%
19.6%
Group profit
110
--
98
5
12.2%
(100.0%)
Net profit
110
93
18.3%
Gross premium income, life insurance
Gross premium income, non-life insurance
2002
1,248
253
2001
1,231
259
Change
1.4%
(2.3%)
Total premium income
1,501
1,490
0.7%
Investment income
Other income
Total income
24
4
1,529
392
16
1,898
(93.9%)
(75.0%)
(19.4%)
Technical expenses, insurance operations
1,270
1,427
(11.0%)
Staff costs
117
148
118
171
(0.8%)
(13.5%)
Other expenses
265
67
289
47
(8.3%)
42.6%
1,602
1,763
(9.1%)
Taxes
(73)
(28)
135
44
(154.1%)
(163.6%)
Group profit
(45)
1
91
1
(149.5%)
0.0%
Net profit
(46)
90
(151.1%)
in € millions
Net interest income
Commission
Other income
Result of insurance operations
in € millions
Total expenses
39
Result of SNS Reaal Invest
2002
47
5
61
2001
36
5
52
Change
30.6%
0.0%
17.3%
113
93
21.5%
Staff costs
23
21
28
20
(17.9%)
5.0%
44
23
48
25
(8.3%)
(8.0%)
Total expenses
67
73
(8.2%)
Operating profit befor taxation
Taxes
46
(2)
20
(6)
130.0%
(66.7%)
Group profit
48
1
26
--
84.6%
Net profit
47
26
80.8%
in € millions
Net interest income
Commission
Other income
Total income
interest in SNS Automotive and PrimeLine services had a
positive effect on the result. In contrast, there were some
downward revaluations of participating interests within
Venture Capital, albeit to a lesser extent than in 2001.
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The difference between the net profit of SNS Reaal
Group (Z 84 million) and that of the group companies
together (Z 111 million) arises from financing costs,
the costs of the holding company and third-party
interests.
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INCOME
The total income of SNS Reaal Group declined by Z 0.4
billion (-9.4%) to Z 3.5 billion in the year under review.
This is almost entirely attributable to the lower investment income, both for own account and for account
and risk of the policyholders. Without the investment
losses, income would have amounted to Z 3.8 billion.
The negative stock market performance also depres-
sed other income. The gross premium income and the
banking interest income are at the same level as the
previous year.
The total income of the banking operations increased
by 9.2% to Z 628 million in 2002. This reflects higher
interest income, which grew by 15.4% to Z 503 million.
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Commission income increased slightly, with higher
insurance commission being partly compensated by
lower commission on securities. The results from financial transactions, part of other income, declined due to
the negative stock market climate. This lead to lower trading results at SNS Financial Markets and SNS Securities.
For the insurance operations, total income declined
by 19.4% to Z 1.5 billion. Gross annuity premiums rose
5.2% to Z 648 million. This higher regular premium
income was partly cancelled out by lower single
premium income. Despite substantially higher new
production of single premiums, the income level
declined fractionally due to the withdrawal of a group
contract. Income from investments for own account
and risk and income from investments for account
and risk of policyholders were both strongly influenced
by the stock market developments. The gross non-life
premium income declined to Z 253 million in the year
under review (2001: Z 259 million). This development
was in line with the ‘run-off’ scenario for a part of the
portfolio.
to lower technical provisions for insurance operations, lower interest charges and lower staff costs on
the one hand, and higher value adjustments to loans
and advances on the other. The staff costs decreased, in
particular through the decline in the number of staff
as a result of two strategic projects. The staffing level
decreased by 428 full time equivalents to 5,432 (-7.3%)
during the year.
For the banking operations, total expenses increased
by 7.4% to Z 463 million in the year under review. Staff
costs fell 9.6% to Z 235 million due to a decrease in the
number of permanent staff. The increasing pension
charges, in part caused by the stock market developments, were largely neutralised by the effects of the
new valuation principles for pensions. On balance, the
number of employees at the banking operations fell
10.5% to 3,373. The administrative expenses increased
by 13.2% to Z 171 million, mainly due to higher marketing and accommodation costs.
The increase in profit was achieved despite a significantly higher addition to the value adjustments to loans
and advances. A total of Z 57 million was added in 2002
(2001: Z 20 million) in response to increasing payment
arrears and in view of the present economic climate.
This reflects SNS Bank’s prudent provisioning policy.
The addition amounts to 33 basis points of the riskweighted assets (2001: 13 basis points).
Total expenses for the insurance operations declined
by 9.1% to Z 1.6 billion in the year under review. This
was largely the result of a decline in technical provisions for insurance operations. These dropped by 11%
to Z 1.3 billion, mainly due to the lower investment
results for the account and risk of policyholders.
Additionally, this also includes one-off income from
the surrender of a group life-insurance contract. The
other operating expenses declined by 13.5% to Z 148
million due to lower acquisition and marketing costs.
The personnel costs remained virtually unchanged at
Z 117 million (2001: Z 118 million).
EFFICIENCY RATIOS
EXPENSES
SNS Reaal Group’s total expenses decreased by 6.5%
to Z 3.4 billion in the year under review. This was due
42
During the year under review, the efficiency ratio of
the banking operations increased significantly from
71.5% to 64.7%, in particular as a result of the higher
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net interest income and lower personnel costs. This
ratio does not include the value adjustments to loans
and advances.
The cost/premium ratio of the insurance operations
also improved. During the year under review this
ratio dropped from 29.6% to 27.8% as a result of lower
costs (in particular marketing costs, depreciation
and non-recurring operating costs) and higher gross
premiums.
COMPOSTITION AND GROWTH OF THE BALANCE
SHEET
The balance sheet total of SNS Reaal Group increased
by 5.9% to Z 46.3 billion in the year under review. The
mortgage portfolio grew by Z 3.7 billion – an increase of
14.9% – to Z 28.4 billion. Of the entire portfolio, 92.9%
relates to the banking operations and 7.1% to the insurance operations.
Despite the stock market developments, the value of
investments fell only 0.5% to Z 8.5 billion. Of this figure, Z 7.1 billion relates to the investment portfolio of
the insurance operations. The technical provisions for
insurance operations increased by 0.9% to Z 8.3 billion.
Despite the drop in the share prices, the total market
value of the investment portfolio of the insurance
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operations remained almost unchanged, reflecting an
increase in the market value of the fixed-income portfolio. In accordance with current accounting principles,
this is not expressed in the result.
Partly due to the success of internet-based activities,
savings deposits rose 17% to Z 9.6 billion. Debt certificates increased by 16.5% to Z 14.2 billion, mainly
through the funding activities of SNS Bank as part of
its EMTN programme.
The ‘banks’ item decreased on both the asset and the
liability side, to Z 2.4 billion (-36.9%) and Z 2.9 billion
(-19.9%) respectively.
CAPITAL BASE
The capital base of SNS Reaal Group declined 4.3%
to Z 2.7 billion. This reflects mainly the 10.4% drop in
shareholders’ equity to Z 1.4 billion. The subordinated
debts and the third-party interest – including the ParticipatieCertificaten issued by SNS Bank – increased;
the Fund for General Banking Risks remained
unchanged.
Despite the addition of Z 84 million in net profit, shareholders’ equity declined by Z 163 million. This reflects
downward valuation adjustments of investment losses
on the share portfolio of the insurance operations and
43
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the effect of the accounting principles for pension
implemented in 2002.
During the year, SNS Reaal Group’s return on shareholders’ equity fell to 5.6% from 10.5%. The long-term
financial objective is 12.5%.
The capital ratio, the capital base as a percentage of the
total assets, fell to 5.8% from 6.4%.
44
The shareholders’ equity for the banking operations
increased by Z 217 million to Z 1.3 billion, partly as a
result of the successful issue of SNS ParticipatieCertificaten.
The BIS ratio – the solvency ratio of the banking operations – was 11.6%, the same as in 2001. The equity and
the weighted credit facilities increased almost equally.
The BIS ratio comfortably exceeds the legal requirements of 8% and the internal requirement of 11%.
The Tier-1 ratio improved significantly, from 7.4% at
year-end 2001 to 8.4% at year-end 2002, as a result of
the issuance of SNS ParticipatieCertificaten.
The shareholders’ equity for the insurance operations
fell Z 212 million (-26.6%) to Z 586 million, partly as
a result of the 2002 net loss and the decline in the
revaluation reserve for equities due to stock market
developments.
The solvency of the life insurance operations declined
from 241% to 159% during the year under review; the
solvency of the non-life insurance operations improved
from 403% to 426%. At year-end 2002, total solvency
amounted to 184% (2001: 258%). Despite the stock
market developments, the solvency still comfortably satisfies both the external and internal solvency
requirements.
Risk Management
The Group Executive Board considers systematic and The interest rate risks with respect to these positions
adequate risk management very important. Because of are monitored in the relevant ALM Committee. The
its size and the range of different products and clients, interest rate risk at the banking operations are moniSNS Reaal Group strives towards high quality risk man- tored with the aid of gapping and duration analysis,
agement using modern and reliable tools. SNS Reaal value-at-risk and the analysis of stress scenarios. The
Group maintains a modest risk profile. In the year management has issued a system of limits and paramunder review this has proved to be a sensible choice.
eters, constraining the interest rate risk. The banking
operations apply a cautious interest rate risk profile.
Risk Policy
The study into the interest rate risk in the insurance
Resources are allocated on the basis of the income/risk operations was completed in 2002. There is now a clear
relationship of the separate activities and the aggre- picture of the interest rate risks of both the investments
gated risk profile of the group as a whole.
and the commitments, and the best way in which these
risks can be limited. The first steps towards implemenOrganisation
tation of this policy have already been taken.
The Group Executive Board bears responsibility for
integrated risk management. Within the banking and Share price risks
the insurance operations, risk management is the Within the group, Hooge Huys in particular faces price
responsibility of the Boards of Directors. A centrally risks on share positions. As part of its strategic asset &
located internal department provides them with the liability policy, Hooge Huys has managed a proprietary
required support. In addition, there are various risk share portfolio for many years. The relative, and thus
committees that advise the Boards of Directors and the absolute, size of this portfolio has been meticuthe Group Executive Board in their individual areas of
responsibility (e.g. asset & liability management (ALM),
treasury, pricing policy).
In 2002, the Operational Risk Management Committee
was set up. This committee is responsible for preparing
the policies and for applying the risk self-assessment
method used by the Group.
Market risk
Market risk concerns adverse value changes in the
trading positions and the structural positions of the
group due to interest rate changes and changes in
foreign currency and stock markets. In monitoring
market risks, SNS Reaal Group uses simulation models,
scenario analysis and stress-tests in order to map out
the potential consequences of market risk on capital
and profit. SNS Reaal Group uses derivatives in managing market risk.
.
Interest rate risk
SNS Reaal Group is exposed to structural interest rate
risk. This risk arises from the difference between the
term of loans issued/investments made and that of
loans contracted/liabilities.
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45
lously determined by means of modern methods and
techniques, including stochastic scenario analyses.
The ALM policy was tested vigorously in the past year
by the stock market crash in June. Thanks to the robust
ALM policy, the required solvency of Hooge Huys was
not threatened for a single moment. The substantial
price falls certainly affected the profitability of the
investment portfolio. On balance, the market value
ended the year with a slight increase in value. This
development is illustrated in the diagram on page 45.
Development in the profitability of the Hooge Huys
investment portfolio
scoring models for granting business loans, enabling
account managers to complete the credit procedure
rapidly and reliably.
Liquidity risk
SNS Reaal Group focuses ample attention on the management of the liquidity risk so that the group has sufficient reserves at its disposal and always remains able
to meet its financial obligations. The procedures and
measures are also geared towards stress situations on
the money and capital markets. SNS Bank is the largest borrower within the group. In recent years, a lot of
work has gone into achieving a broad investor base, as
well as an extensive range of financing instruments
Currency risk
and generous access to the international money and
Since SNS Reaal Group focuses on the Dutch market, capital markets. The dependence on other commercial
the sensitivity to foreign currency rates is limited. In banks was substantially reduced, and greater emphasis
the banking operations, all relevant currency risks are was put on liquid assets. In the past year, SNS Bank was
hedged. The currency risks in the investment portfolio successful in maintaining a combination of good access
of the insurance operations are calculated risks. Fol- to the market and stable and low spread development.
lowing the developments in mid-2002, the ALM Committee decided to hedge the currency risks of the US Insurance risk
dollar and the yen.
Management of insurance risks focuses in particular
on the adequacy of the premium rates, the provision
Trading activities
for insurance commitments and capital. The relationWithin the group, only SNS Bank faces a limited trad- ship between this and interest rate and market risk
ing risk. This risk is calculated on a daily basis and is analysed and managed on book and market value
managed by means of a system of limits. The applied in an asset and liability context. The relevant areas
framework of value-at-risk and stress limits for extreme of attention within insurance risk include developsituations for managing its trading activities also per- ments in mortality rates, claim percentages, maturity
formed to satisfaction during the past year. The number percentages, the impact of catastrophes and costs, as
of deviations was in line with expectations for such well as general market conditions. Unwanted risks are
models.
reinsured externally. Procedures are in place for product development, acceptance, additions to reserves and
Credit risk
pricing, among other things.
The credit risk within insurance operations particularly concerns the counterparty risk in the investment Operational risk
portfolio. Hooge Huys employs a system of creditwor- In 2002, a great deal of attention was focused on the
thiness criteria and risk-spreading measures for man- management of operational risks. In this context,
aging this risk. The portfolio is spread evenly across SNS Reaal Group employs the following management
companies, sectors and regions.
principles:
• Operational risk management is a line responsibilWithin banking operations, the credit risk particularly
ity and a means of further improving the day-to-day
concerns loans to private individuals on the basis of
and other processes;
mortgage collateral. In addition, loans are granted to • Operational risks can manifest themselves in the
small and medium-sized companies on a smaller scale.
entire organisation and can be a source of financial
The credit risk in banking operations is very small.
and insurance risks;
The credit risk management is set up independently • Operational risks have a negative effect on scarce
from the commercial activities. The bank employs
capital.
49
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in the value of equity investments (insurance operations) and the issue of subordinated debt securities.
The diagram below illustrates the movements in the
solvency ratios of SNS Bank.
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In addition to a positive profit development, SNS Bank
improved its ratios in the year under review through
three issues of hybrid Tier-1 capital. SNS ParticipatieCertificaten earned Z 241 million in two tranches
on the retail market. In addition, Z 75 million was
issued on the institutional market.
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During the past year, the huge drop in share values
worldwide had a negative effect on the solvency devel��
opment of Hooge Huys. In spite of this, neither the
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statutorily required solvency nor the internally agreed
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minimum solvency was threatened at any time.
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Hooge Huys did not have to resort to involuntary liquidation of its share positions. A stress scenario, including
procedures, was worked out in detail in order to prevent
the solvency sinking to unacceptable levels in the event
The year under review saw the launch of a group-wide of a further drop in share values. These measures are
inventory of operational risks, using ‘risk self-assess- also geared towards restoring the share holding to the
ment’. This means that the group’s business units strategic level within the investment mix.
identify, prioritise and assess their own individual
operational risks in a uniform and structured man- The diagram below illustrates the movements in the
ner. Subsequently, they implement the actions they level of solvency in 2002.
deem necessary.
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Solvency
The table below illustrates the solvency ratios for SNS
Bank and the solvency, in millions of euros, for Hooge
Huys.
2002
2001
BIS ratio
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SNS Bank
Tier-1 ratio
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11.6%
11.6%
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8.4%
7.4%
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Hooge Huys
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Available
655
887
Required
356
345
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Surplus
299
542
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The solvency ratios and positions are mainly affected by
bonuses to policyholders, the development of risk-based
bank loans, the sale of insurance policies, developments
50
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Price risk
SNS Reaal Group pays a great deal of attention to the
way in which its rates and prices are calculated. This
takes place within an interaction between the theoretical pricing on the one hand and the competitive market
parties on the other. The theoretical rates for all products are fixed centrally and include a fee for the risks
taken and to be taken, the use of shareholders’ equity
and loan capital, and management expenses. Examples
of risks include the credit risk in a loan, the death risk
in a life insurance policy or the market risk in an investment product. The structure of shareholders’ equity and
the financing also affect the theoretical pricing.
Basle II
The capital that banks are required to hold as a buffer
against unexpected losses is based on the 1988 Basle
capital accord. Work is currently underway on a new
Basle II capital accord, which is expected to take effect
in 2007. This new accord is more sophisticated and goes
further in meeting the actual risk profile of a bank. SNS
Bank is taking great care in preparing for this new regulation. Initial calculations have been made on the basis
of models released by Basle. This has led to the conclusion that the new accord, indeed, does justice to the low
risk profile of SNS Bank’s activities.
Integrity policy
As a major provider of services in the financial sector,
SNS Reaal Group attaches great value to its integrity,
its professionalism and its solid reputation. In order
to give more substance to this, SNS Reaal Group has
developed an integrity policy, of which specific
rules and procedures drawn up by the Compliance
department form an integral part. These rules and
procedures are based on existing or new legislation
and regulations, codes of conduct in the banking
and insurance sector, and the group’s own standards.
The Compliance department also communicates and
explains these rules and procedures to the staff and
management of SNS Reaal Group and monitors their
compliance.
The Compliance policy statement forms the basis for
the integrity policy:
‘SNS Reaal Group strives to provide high-quality
service. This is only possible if SNS Reaal Group
and its employees act with complete integrity. This
does not only mean acting in accordance with legal
constraints, but also treating clients with respect
and maintaining the reputation of SNS Reaal Group
as a trusted partner.’
51
Funding
The funding and treasury activities for business units
of SNS Reaal Group are carried out by SNS Financial
Markets, a specialised department of SNS Bank.
Programme scope
of the financial year was later changed to a ‘stable
outlook’.
Ratings (ultimo 2002)
Moody’s S&P Fitch
SNS Bank has access to a Euro Medium-Term Note
SNS Reaal Group
A3
Aprogramme (EMTN) worth Z 20 billion. At the end of
SNS Bank
A2
A
A+
the year under review, the outstanding amount came
to Z 11.5 billion. In 2002, more than Z 2 billion was
issued privately. SNS Bank also has a Euro Commercial Focus: benchmark size
Paper programme (ECP) worth Z 2 billion at its dis- For years now, SNS Bank has applied the policy of coorposal.
dinating the supply of bonds with the demand created
according to a book-building procedure. In 2002 it was
The value of the SNS Reaal Group EMTN programme also decided to issue SNS bonds in ‘benchmark size’,
has been set at Z 1 billion. During the year under review, that in amounts of at least Z 500 million. The reason
a ‘Floating Rate Note’ of Z 200 million was agreed under for this is that many investors only buy bonds that are
this programme. A total of Z 876 million is currently included in an index (such as the Deutsche Börse I-boxx
outstanding.
or the Salomon Smith Barney BIG index) because they
use these as benchmarks against which to measure
Funding: focused on diversification
their own performance.
The funding policy of SNS Bank is founded on diversification of the investor base according to category, This benchmark strategy, combined with the applied
geography and funding instrument. By ‘category’ we book-building procedure, has enabled SNS Bank to
mean diversification across banks, money market develop into a benchmark within its own rating catfunds, pension funds, insurance companies, etc. The egory. There is an active trade in the 2007 and 2010
instruments include Euro Commercial Paper, Treu- issues in particular (see box). This means that SNS Bank
hand, the inter-bank money market, Euro Medium- bonds in the single A-rating category are traded with
Term Notes (public and private) and securitisation of the smallest spread in preference to Euribor/swaps.
the mortgage portfolio. Efforts are made to optimally
SNS Bank Benchmark Loans
time public issues and to set the term according to
investor needs.
Z 750 million
4.75 %
Sept. 2004
Z 500 million
Increasing credit spread
FRN
Sept. 2006
Z 1.000 million
6.00 %
Oct. 2007
The declining share markets, a number of major banZ 1.000 million
6.125%
Apr.2010
kruptcies and various accounting scandals have had
Z 500 million
5.625%
Jun. 2012
repercussions on the bond markets. Many investors
exchanged equities for safe government bonds. In the
year under review, long-term (10-year) interest rates in 10% of balance sheet total securitised
the euro zone trended downwards, moving 80 basis SNS Bank’s Hermes programme rates among the most
points from the beginning (5.2%) to the end of the year actively traded securitisation programmes for home
(4.4%). However, credit spreads between government mortgage loans in the Netherlands. Since 1999, an
and corporate bonds increased sharply, partly due to original amount of Z 3.9 billion in mortgage loans
an endless stream of ratings downgrades for major have been refinanced in five transactions, representing
companies and banks. As a consequence, companies 10% of the total assets of SNS Bank. The fifth tranche,
have to pay relatively high interest on their bond loans. amounting to Z 1.1 billion gross, took place during the
SNS Bank is a favourable exception: the ‘negative year under review. Securitisation is an integral part of
outlook’ that Fitch had added to the rating at the start the funding strategy of the organisation.
52
Socially responsible business
SNS Reaal Group attaches great importance to the Each office its own unique energy plan
ethical business principle. The group is the result of An office energy plan has been drawn up for each office
a large number of mergers whose common character- building in order to optimise electricity, gas and water
istic was their traditionally deep roots in society. SNS consumption. A long-term agreement with the governReaal Group, therefore, naturally pursues an active ment specifies that, by 2006, the banking operations
policy with respect to doing business in a socially will be 25% and the insurance operations 23% more
responsible way.
energy efficient compared to the reference years 1995
and 1996 respectively. Moreover, soon 25% of the
In-company environmental care
energy supply will come from sustainable sources.
Sustainable development of society calls for structural
attention to the quality of the environment. While the Active contribution by staff
environmental impact of a financial service provider such The staff themselves actively contribute towards
as SNS Reaal Group is relatively limited, the Group never- achieving environmental goals, for instance by sepatheless pursues an active policy to minimise any impact. rating office waste. The company uses different methods for separating waste within the office. The range
Environmental programme: rigorous goals
of office supplies has been strongly reduced and now
A baseline measurement was carried out in 2000 to comprises only environmentally friendly articles.
ascertain energy, water and paper consumption, how
much waste was produced and the total distance in The catering companies in the staff restaurants of SNS
kilometres commuted by car. Using these findings as Reaal Group also pay critical attention to environmena basis, rigorous goals were set in the SNS Reaal Group tal aspects, both in the selection and in the preparaEnvironmental programme for the coming years. Natu- tion of food products. The possibilities of a completely
rally, these goals are also based on legal requirements organic ‘Eco’-certified lunch are being investigated. In
and on agreements reached between the financial the year under review, SNS Bank signed the ‘organic
sector and the government. The Environmental Care catering’ declaration of intent. SNS Bank wishes in this
Steering Committee monitors the progress.
way to contribute towards achieving a higher share of
organic products in the catering trade. Coffee and tea
Sustainable accommodation
consumed in the offices are Eco-certified.
The Environmental programme contains provisions
covering sustainable accommodation, which is vitally
In-company Environmental Care
– Declaration of Intention
important for a financial organisation with numerous
small and large offices. This concerns, for instance,
the use or reuse of material during the construction
or refurbishment of branches. Starting in 2005, SNS
Reaal Group will construct or refurbish in accordance
with the principles of sustainable accommodation.
SNS Reaal Group attaches great importance to sustainable use of the environment. SNS Reaal Group puts
this into practice by applying environmental criteria
to an increasing number of products and services it
offers its clients. For the company itself, and thus for
its entire staff, the environment is an inseparable
element of policy. The internal environmental care
policy helps to reinforce the reputation of SNS Reaal
Group as a banking and insurance provider that is
involved in society.
In 2002, the head office relocated to Utrecht. Staff are
accommodated in an open-plan structure, which saves
office space. This also reduces the impact on the environment. Where possible, open-plan structures and
flexible working environments (so-called ‘hot desks’)
will be introduced within the Group in 2003.
There is a goal of reducing paper consumption by
20% during the period from 2001 to 2005. Modern
For cleaning the offices, the use of chemical materials processes, such as DIS/WFM – Document Imaging
is gradually being replaced by the micro-fibre method System/ Workflow Management – are an important
as much as possible.
aid towards reducing the amount of paper used in our
53
operations. Environmentally friendly paper is used
both internally and externally. You are holding an
example in your hands.
When developing new products and services in their
respective professional fields, the three competence
centres of SNS Reaal Group take environmental aspects
into account.
Sustainable products and services
Through its range of brand names, SNS Reaal Group Dialogue concerning sustainability and engagement
puts products on the market in which sustainability During the year under review, ASN Bank, in cooperaplays a major role. For instance, it offers investment tion with Het Andere Beleggingsfonds, organised the
funds that exclusively invest in companies that sat- fourth Ethical Investment Day [Dag van het Ethisch
isfy stringent criteria in the field of environmental Beleggen] around the theme ‘sustainability and gloperformance and social policy. Examples include the balisation’. The guest speaker was Noreena Hertz,
ASN Aandelenfonds [equity fund] and the SNS Duur- professor at Cambridge University and author of ‘The
zaam Aandelenfonds [sustainable equity fund]. These Silent Takeover’.
and other funds are also offered by the other banking
names and the insurance operations.
ASN Bank considers the ongoing dialogue with stakeholders to be of great value. During the Annual General
ASN Bank – ‘the Netherlands’ sustainable bank’ – spe- Meeting of Shareholders of the ASN Investment Funds,
cifically concentrates on providing financial services this investment criteria regarding genetic modification
centred on sustainability. The ASN Milieufonds [envi- were amended.
ronmental fund] invests in promising listed companies
that focus on technology and systems aimed at solving SNS Bank is signatory to an inter-bank covenant to
environmental problems. The ASN Novib Fonds focuses make basic payment services available to the homeon sustainable small-scale activities in developing less and socially vulnerable. Specific attention is also
countries. The ASN Groenprojectenfonds [green project focused on services to the elderly and disabled, in confund] funds projects in the field of sustainable energy, sultation with their interest groups. Examples include
sustainable housing, organic farming and nature and help in the use of cash dispensers and the internet, and
landscape conservation. During the year under review, better accessibility of offices and cash dispensers. SelfASN Bank played a major role in preventing the disman- service equipment is provided with larger keys and
tling of the green tax benefit. Earlier in this report (page lettering for the benefit of visually impaired people.
30), we referred to two savings facilities of ASN Bank
SNS Reaal Fund:
focused on sustainability and social involvement.
supporting community projects
SNS Asset Management has a good reputation in the
field of sustainability analysis and sustainable investment with both share and fixed interest portfolios. As
mentioned earlier (page 37), SNS Asset Management
strengthened its position as asset manager and currently invests some Z 2.0 billion in managed assets on
the basis of sustainability criteria.
54
The Stichting SNS Reaal Fonds provides financial
support to projects of general social interest that
have an idealistic or social purpose. The emphasis
is shifting more and more towards the themes ‘culture and education’ and ‘nature and environment’.
During the year under review, approximately
Z 4 million was spent on activities in these fields.
Personnel and organisation policy
petence appraisal’ [Prestatie en Competentie BeoordeSNS Reaal Group pays close attention to staff devel- ling]. The aim is a more result-oriented organisation
opment. After all, they determine the success of the that pays specific attention to competence developorganisation. Ample investment is made in support and ment. ‘Competence’ concerns the development of
training, with a view to both the services to the client skills and personal characteristics that are essential
as well as the continuity of the company. We want to for a successful performance of the tasks. ‘Performance’
offer our staff a clear perspective on a satisfying career. relates to the degree to which agreed objectives were
The core of our staff policy is based on having the right achieved. These objectives are aligned to those of the
person in the right place, with the right knowledge and organisation and are ambitious, but then achievable
skills, to get the job done properly.
and measurable.
Personnel development: a joint responsibility
In the first instance, members of staff are responsible The basis for this system is regular meetings between
for their own development. The organisation’s respon- the line manager and the member of staff to discuss
sibility lies in providing the opportunities for them to the agreed and achieved performance and competence
develop in a mutually agreed direction. There are vari- development. The appraisal cycle comprises three
ous resources available in this context, which comple- formal contact meetings, i.e. a planning meeting, a
ment each other. SNS Reaal Group spends the equivalent performance review and an appraisal meeting. These
of 3.5% of salaries on staff training and development.
meetings examine the objectives, review progress made
and discuss the final balance. Of course, all other issues
Structured care for staff members
in the field of staff development can also be raised and
A personal development plan is drawn up for each discussed during these meetings.
member of staff. This includes preparing an inventory
of the member of staff’s wishes and interests. A career SNS Reaal Group’s own collective labour agreement
path is then mapped out together with the line manager (CAO)
and the personnel advisor. This ensures a continuous During the year under review, a one-year CAO was
updating of ambitions together with the current and again agreed with the trade unions for SNS Reaal Group
future abilities of staff.
as a whole. The present CAO now offers staff the possibility to take social leave, among other things. Half a
During the year under review, SNS Reaal Group working week can basically be taken up as exceptional
launched the leadership development programme. leave on full pay to be devoted to recognised social
This programme invests in talented and promising activities.
staff with management potential. To ensure structured,
step-by-step development, the programme offers five SNS Reaal Group is firmly rooted in society and thus
training courses in which experienced external train- has an interest in contributing to increasing flexibility
ing institutions are involved. A few dozen staff mem- with regard to hours of work and the workplace. This
bers go through every year.
basically means that there is room for personal input
in the allocation of hours over the working week, in
SNS Reaal Group strives to fill three quarters of the part-time working, etc. There is an increase in ‘hot
senior positions in the company internally. Manage- desks’ in the offices of SNS Reaal Group, which save
ment Development focuses specifically on filling key costs and the environment.
positions, now and in the future. It involves individual
support and supervision in career development, with Since January 1st 2003, all SNS Reaal Group staff have
coaching becoming increasingly important.
had the same legal employer, which simplifies the
internal mobility of staff.
Performance and development rewarded
During the year under review, an appraisal and reward A profit sharing scheme for SNS Reaal Group was
system was introduced, called ‘performance and com- launched in the year under review, taking effect on 1
55
Composition of the staff
SNS Bank
Hooge Huys
Group
Total
2002
2001
2002
2001
2002
2001
2002
2001
3,736
4,140
1,625
1,638
193
194
5,554
5,972
Female staff
Female staff in job grade 8 and higher2
46.9%
6.1%
48.8%
5.4%
42.3%
4.9%
42.9%
4.0%
40.9%
23.3%
39.3%
18.0%
45.3%
6.4%
46.9%
5.4%
Part-time staff
Fixed-term contract
39.9%
5.1%
38.3%
7.3%
33.5%
4.8%
31.0%
7.1%
23.3%
2.6%
25.8%
9.2%
37.4%
4.9%
35.8%
7.3%
Up to 34 years
55 years and older
33.4%
6.7%
39.0%
4.9%
41.7%
6.0%
43.0%
5.1%
37.3%
4.1%
42.7%
4.4%
36.0%
6.4%
40.2%
5.0%
Number of employees1
1
) SNS Reaal Invest and participations of SNS Reaal Invest not included.
) In relation to the total number of employees.
2
January 2002. Under this initiative, staff will receive a
gross bonus payment if net profit increases by at least
10%.
Reducing sick leave
In 2001, banks, trade unions and the government signed
a three-year health and safety covenant. This includes
agreements aimed at improving working conditions.
For example, specific goals have been agreed to reduce
excessive work pressure, RSI, sick leave and the number
of people claiming occupational disability benefit (the
so-called ‘WAO’). Although these agreements were
made in the banking sector, they will be implemented
by SNS Reaal Group as a whole.
New legislation for improving occupational disability
schemes [Wet Verbetering Poortwachter] took effect
during the year under review. This legislation sees the
return to work after sickness as the joint responsibility
of the member of staff and the line manager. The line
manager is expected to take a far more active role in
this process. Management has been paying increasing
attention to the problem of sick leave and as a result it
has declined markedly during the year under review.
The Social Plan contains the general regulations on
reorganisations and applies to the entire Group. The
aim is to avoid, eliminate or reduce the negative effects
of reorganisations. The centrepiece of this is to provide
advice and support to members of staff in new positions, or find suitable alternative positions within or
outside the company. The Social Plan has been applied
now for some years and has proven its worth in practice.
��
��
��
��
��
��
��
��
��
��
��
Social Plan: peace of mind for reorganisation
The reorganisations within SNS Reaal Group in recent
years have led to many changes in positions and locations. Various rules and procedures were agreed in order
to prepare properly for the consequences.
��
��
��
��
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59
Its validity has therefore been regularly extended: the
current one expires in January 2004.
Numerous reorganisations took place during the year
under review such as the restructuring of the sales
organisations of the banking and insurance operations and the establishment of the management centre
in Utrecht. Given the many relocations arising from
these reorganisations, it was decided to enhance the
provisions of the Social Plan with a package of mobility
promoting measures for a period of two years.
In addition to the Social Plan, SNS Bank has introduced
a ‘placement procedure’. This is for the benefit of staff
in the sales organisation or central departments where
there have been a lot of changes and it entails an active
search for an alternative position within the staff
members’ own organisation.
Reduction in the number of staff
In line with the streamlining of the organisation, the
number of permanent staff – based on a full working
week of 36 hours – declined 7.3% to 5,432 (2001: 5,860).
The table on page 59 gives an overview of the composition of staff members.
Central employees council:
critical and positive
In many areas and at many levels, staff consultation was actively involved in the changes that have
been implemented within SNS Reaal Group in recent
years. The Central Employees Council, the individual Employees Councils and the Business Unit
Committees are almost constantly being asked to
balance the interests of the group as a whole with
those of the individual business units as well as specific groups of colleagues. It’s a big responsibility and
poses difficult choices.
The Executive Board appreciates the overall contribution that staff consultation has made towards the
success of the far-reaching change project. Always
critical, but always positive, promoting the interest
of the organisation as a whole. The fact that we now
have an SNS Reaal Group set to develop further as
the leading retail banking and insurance provider
of the Netherlands is partly the result of staff consultation.
Outlook
SNS Reaal Group is in a strong position:
• The organisation is in good health.
• The strategy is clear.
• The financial base is solid.
We continue to pursue our aim of growing faster than
the market. Given the uncertainty of developments on
the financial markets and in the macroeconomic and
political fields, SNS Reaal Group is not prepared to issue
a profit forecast for 2003.
S. van Keulen
C.H. van den Bos
M.W.J. Hinssen
R.R. Latenstein van Voorst
60
Annual Accounts 2002
61
Consolidated balance sheet
31 December 2002
31 December 2001
7
110
395
8,461
28,433
4,194
2,416
454
1,090
782
-123
300
8,501
24,738
4,238
3,830
544
768
719
46,342
43,761
Shareholders’ equity 11
Third-party interests 12
1,408
277
1,571
268
Group equity
Subordinated debts 13
Fund for general banking risks 14
1,685
937
70
1,839
904
70
Capital base
2,692
2,813
351
8,253
9,618
6,455
14,210
2,925
1,077
761
175
8,178
8,223
6,742
12,201
3,650
903
876
46,342
43,761
After profit appropriation and in v millions
ASSETS
Intangible fixed assets 1
Tangible fixed assets 2
Participating interests 3
Investments 4
Mortgage loans 5
Other loans 6
Banks 7
Liquid assets 8
Other assets 9
Accrued assets 10
TOTAL ASSETS
LIABILITIES
General provisions 15
Technical provisions, insurance operations 16
Savings 17
Other funds entrusted, banking operations 18
Debt certificates 19
Banks 20
Other liabilities 21
Accrued liabilities 22
TOTAL LIABILITIES
The numbers mentioned with the balance sheet items refer to the notes starting on page 73.
62
Consolidated profit and loss account
In v millions
2002
2001
INCOME
1,501
94
1,749
76
119
1,490
455
1,750
74
138
3,539
3,907
1,270
1,296
45
394
341
90
--
1,427
1,371
32
426
342
47
30
3,436
3,675
103
232
13
61
GROUP PROFIT
90
171
6
6
84
165
Gross premium income 23
Investment income 24
Interest income, banking operations 25
Commission 26
Other income 27
TOTAL INCOME
EXPENSES
Technical expenses, insurance operations 28
Interest charges, banking operations 29
Other interest charges 30
Staff costs 31
Other operating expenses 32
Value adjustments to loans and advances 33
Other expenses 34
TOTAL EXPENSES
Taxes 35
NET PROFIT
The numbers mentioned with the profit and loss account items refer to the notes starting on page 96.
63
Consolidated cash flow statement
In v millions
2002
2001
CASH FLOW FROM OPERATIONAL INCOME
Net profit
Adjustments for:
- Depreciation
- Value adjustments to loans and advances
- Change in general provisions
- Other changes in accrued and deferred items
84
41
90
176
(326)
Cash flow from business operations
Change in mortgage loans
Change in other loans
Change in banks (not payable on demand)
Change in technical provisions, insurance operations
Change in savings
Change in other funds entrusted, banking operations
Other changes relating to operational activities
TOTAL CASH FLOW FROM OPERATIONAL ACTIVITIES
64
165
40
47
(88)
(84)
(19)
(85)
65
80
(3,695)
44
750
75
1,395
(287)
122
(1,829)
(35)
(137)
495
1,187
(219)
(93)
(1,596)
(631)
(1,531)
(551)
In v millions
2002
2001
CASH FLOW FROM INVESTMENT ACTIVITIES
Investments and purchases:
- Investment portfolios
- Other participating interests
- Tangible fixed assets
- Intangible fixed assets
4,441
126
34
8
2,390
46
37
-(4,609)
Divestments, redemptions and disposals:
- Investment portfolios
- Participating interests
4,079
39
10
2,196
138
4
4,128
Change in investments on behalf of policyholders
TOTAL CASH FLOW FROM INVESTMENT ACTIVITIES
(2,473)
2,338
(61)
(280)
(542)
(415)
75
(40)
6,257
(4,248)
110
(5)
8,772
(7,643)
2,044
1,234
CASH FLOW FROM FINANCING ACTIVITIES
Income from subordinated loans
Redemptions of subordinated loans
Income from debt certificates
Redemptions of debt certificates
TOTAL CASH FLOW FROM FINANCING ACTIVITIES
CHANGE IN LIQUID ASSETS
(29)
268
65
General notes
PRINCIPLES FOR THE CONSOLIDATED BALANCE SHEET AND PROFIT & LOSS ACCOUNT OF
SNS REAAL GROUP
CONSOLIDATION PRINCIPLES
SNS Reaal Group N.V. holds 100% of the shares in SNS Bank N.V., Hooge Huys N.V. and SNS Reaal Invest N.V.,
which are respectively engaged in banking, insurance and other operations. The items in the consolidated balance
sheet, profit and loss account and the consolidated cash flow statement, as well as the accounting principles, are
therefore presented as far as possible in accordance with the relevant guidelines and practices in these respective sectors. The summary of the group companies shows which of them form part of SNS Bank, Hooge Huys
and SNS Reaal Invest, respectively.
The assets, liabilities, income and expenses of SNS Reaal Group and its group companies are consolidated in full.
Third-party interests in the equity and income of group companies are disclosed separately in the consolidated
balance sheet and the profit and loss account. Financial relationships and transactions conducted between SNS
Reaal Group, SNS Bank, Hooge Huys and SNS Reaal Invest within the framework of the normal business operations and in line with normal commercial practice are not eliminated. All other mutual financial relationships
and transactions are eliminated. This method is designed to provide clear insight into the development of the
business activities.
The notes to the consolidated balance sheet and profit and loss account present information by segment, making
a distinction between SNS Bank, Hooge Huys, SNS Reaal Invest and the group. The result of Hooge Huys is divided
into the categories life insurance, non-life insurance and other.
The company profit and loss account was prepared in accordance with article 402, Book 2 of the Netherlands
Civil Code.
CHANGES TO PRINCIPLES
In accordance with the guidelines for annual reporting, the internally developed and the externally acquired
software was capitalised. In addition, a statutory reserve has been included for the internally developed software. The capitalised software will be amortized over three years. Self-developed software worth Z 7 million
was capitalised in 2002.
Due to a change in insight and the pursuit of greater transparency, some investment constructions have been
stated under Banks instead of under Shares. The figures for 2001 were adjusted for this purpose, which have led to
a shift in the balance sheet of Z 500 million from Shares to Banks. This change has no effect on the net result.
With a view to keeping up with changes in the way pensions are accounted for, SNS Reaal Group calculated the
pension provision and charges in 2002 in accordance with draft guideline 271, published under the auspices of
the Council for Annual Reporting [Raad voor de Jaarverslaggeving] (RJ). In the application of RJ 271, estimates
are used in respect of future economic factors, such as wage increases, indexations, income from investments
and future staffing levels. Under the former valuation principles, pension costs would have been Z 26 million
higher. In addition, Z 135 million was charged to the reserves as at 1 January 2002. The comparative figures
have not been adjusted.
66
PRINCIPLES FOR VALUATION AND DETERMINATION OF RESULTS
General principles
Valuation
The assets and liabilities are carried at nominal value unless stated otherwise.
The valuation of tangible and intangible fixed assets, participating interests and investments works on the principle of permanent loss of value. Any identified loss of value is charged directly to the profit and loss account.
Permanent loss of value in relation to assets stated at fair value is charged to the revaluation reserve and is only
charged to the result if and insofar as there is a negative revaluation reserve on balance.
Recognition
Assets are included in the balance sheet if these can be expected to generate future economic benefits for the
company and if the value of these benefits can be estimated with a fair degree of accuracy. Obligations are
included in the balance sheet if their settlement will lead to an outflow of assets that could generate economic
benefits whose value can be estimated with a fair degree of accuracy.
Income is included in the profit and loss account if an increase in the value of an asset or decline in the value
of an obligation leads to an increase in the economic potential, the size of which can be estimated with a fair
degree of accuracy. Expenses are recognised in the profit and loss account if a decline in the value of an asset or
increase in the value of an obligation leads to a reduction in the economic potential, the size of which can be
estimated with a fair degree of accuracy.
A financial asset and a financial obligation are balanced and stated as a net amount in the balance sheet if and
insofar as legal or contractual provisions permit the balancing and simultaneous settlement of the asset and
obligation and if there was a prior intention to settle said items in this manner.
Foreign currency
Assets and liabilities denominated in foreign currency, and forward exchange contracts entered into in relation
to borrowing and lending activities, are converted at the spot rate applicable on the balance sheet date. Gains
and losses resulting from foreign currency transactions are converted at the rates prevailing on the balance
sheet date. Foreign currency differences are accounted for in the profit and loss account. (Swap) results arising
from forward exchange contracts entered into in relation to borrowing and lending activities are recognised in
the profit and loss account in proportion to the expired part of the term.
Derivatives
Derived financial instruments (derivatives) are carried at fair value, i.e. the estimated market value. Value adjustments to these derivatives are accounted for directly in the profit and loss account as income from financial
transactions under Other income.
Hedge accounting
Transactions are treated as hedging instruments if identified as such and if the hedging is highly effective in
the sense that changes in the fair value of the hedging instrument largely compensate changes in the fair value
of the hedged position. Financial instruments (including derivatives) used for hedging purposes are accounted
for in accordance with the accounting principles applicable to the hedged position. If financial instruments are
used to hedge risks relating to specific assets or liabilities, which are subsequently sold or terminated, then the
instruments are no longer treated as hedging instruments. Gains and losses resulting from hedging instruments
67
are included in the profit and loss account concurrently with the gains and losses resulting from the settlement
of the hedged position.
Reinsurance
Reinsurance premiums, commission, claims payments, as well as provisions concerned with reinsurance are
accounted for in the same manner as the original contracts for which they were concluded. Receivables relating
to reinsurance are included under Other assets.
Specific principles
Tangible and intangible fixed assets
Tangible and intangible fixed assets are carried at cost net of accumulated depreciation. Straight-line depreciation is applied over the estimated useful lives of the assets. For the software, IT equipment and the other movable
assets, the depreciation period used is three to five years.
Participating interests
Participating interests where significant control is exercised over the business and financial policy are carried at
net asset value. The Group’s share in the profits or losses of these participating interests and the gains or losses realised on their disposal are accounted for in the profit and loss account as Income from securities and participating
interests under Other income. Differences between the cost and the (share in the) fair value of the acquired assets
and obligations (goodwill) are credited or charged directly to the shareholders’ equity.
Other participating interests are valued at cost or lower fair value, i.e. the stock exchange prices of the shares
in these participating interests or, if unlisted, the estimated market value based on the stock exchange prices
of similar securities.
Investments
Land and buildings
Land and buildings used by SNS Bank are carried at replacement value, based on continuity and functionality.
The replacement value is determined on the basis of regular rotation where all buildings are appraised at least
once every ten years. Value adjustments resulting from these appraisals are credited or charged directly to
the revaluation reserve after deducting deferred taxes. Depreciation is applied on a straight-line basis, taking
account of estimated useful life and residual value. Buildings under construction are valued on the basis of
incurred expenditure.
Land and buildings used by Hooge Huys are carried at fair value, i.e. the estimated proceeds from private sale in
rented state. Appraisals are made on a rotational basis so that all land and buildings are appraised at least once
every five years. Value adjustments are credited or charged to the revaluation reserve, after deducting deferred
taxes. No depreciation is applied to land and buildings, with the exception of payments made for the perpetual
settlement of ground rent. Gains and losses realised on the sale of land or buildings are directly incorporated in
the shareholders’ equity, taking account of taxes and/or deferred taxes. Buildings under construction (including
land) are valued on the basis of incurred expenditure.
Land and buildings not in own use
Land and buildings not used for the group’s own activities are carried at fair value, i.e. the estimated proceeds
from private sale in rented state. No depreciation is applied. At SNS Bank, any gains or losses (including realised value adjustments) made on the sale of land and buildings are reported in the profit and loss account. At
Hooge Huys, any gains or losses are carried over to the revaluation reserve, taking account of deferred taxes. An
68
amount is released from this revaluation reserve to the profit and loss account to supplement the total return
on investment.
Shares and convertible bonds
Shares and convertible bonds are carried at fair value. For the listed shares and convertible bonds, as well as the
related options, this is the market price on the balance sheet date. Unlisted securities are stated at the estimated
fair value.
For the investments in shares held by SNS Bank, unrealised changes in value are reported in the revaluation
reserve, taking account of deferred taxes.
For Hooge Huys, unrealised and realised value movements are accounted for in the revaluation reserve, taking account
of deferred taxes. In the event of a negative revaluation reserve, value adjustments are charged against profits.
Insofar as the revaluation reserve relates to life insurance operations, an amount is released from this reserve to the
profit and loss account to supplement the total return on investment. This amount is computed as the difference
between, on the one hand, the average yield on ten-year Dutch government bonds over the previous ten years, applied
at the average value of this investment portfolio and, on the other hand, the dividends actually received.
Participating interests are carried at cost or lower fair value, i.e. the estimated market value.
Investments in fixed-income securities
Investments in fixed-income securities are carried at redemption value. The difference between the redemption
value and the purchase price is included under Accrued assets or under Accrued liabilities, as appropriate, and
is reported in the profit and loss account as interest income in proportion to the residual term to maturity of
the related asset. Investments in fixed-income securities that do not pay out annual interest (e.g. zero coupon
bonds) are carried at purchase price plus the part of the difference between purchase price and redemption
value that is attributable to the expired term. Gains or losses on swaps are stated in the profit and loss account
as interest income on the basis of the weighted average term of the portfolio concerned. Insofar as this accounting method would, on balance, lead to higher capitalisation of expenses than deferral of income, the surplus is
booked directly to the profit and loss account. Gains or losses arising from a structural decline in the portfolio
are reported directly in the profit and loss account.
Positions in investment pools
Positions in investment pools held by Hooge Huys are valued at fair value, in accordance with the accounting
principles applied by the pools themselves. Proceeds from disposals are booked directly to the profit and loss
account.
Investments on behalf of policyholders
Investments made on behalf of policyholders are carried at fair value, in accordance with the accounting principles
applied to the investments held at the risk of the insurer, with the exception of the investments made separately for
large group pension contracts. These are valued in accordance with the conditions of the contracts in question. The
changes in value are reported in the profit and loss account.
Loans and advances
A downward value adjustment is applied where necessary to the (nominal) value of mortgage loans, other loans
and receivables from banks to cover the risk of default. The addition to bad debt provisions, which in the profit
and loss account is stated under changes in the value of receivables, is based on the receivables’ level of risk. In
addition, the adequacy of the provision is evaluated statically on an annual basis, taking account of the value
of the provided sureties.
69
Interest is not booked on credits already in the process of settlement. Depending on the degree of doubt about
the repayment, interest on other credits is recorded in the profit and loss account only on receipt.
This item includes lease contracts, usually operational. Leased assets are carried at cost less depreciation and any
diminution in value as determined on the basis of the nature of the assets, the contract period, the estimated
useful life and the residual value.
Other assets
At SNS Bank, securities (both shares and interest-bearing securities) held in the trading portfolio are stated at
fair value, which is usually the market price on balance sheet date. Interest-bearing securities issued by group
companies that have been purchased for resale are valued at cost or lower fair value. Realised and unrealised
value movements are stated in the profit and loss account as Other income.
Accrued assets
At Hooge Huys, the accrued acquisition costs exclusively concern the acquisition commissions on life insurance
policies with regular premiums. The capitalised acquisition costs are written down on a straight-line basis over
a maximum of 10 years (in line with the repayment of expenses by the premiums).
Subordinated debts
At Hooge Huys, the final bonus account concerns final bonus commitments in relation to certain life insurance
policies. Entitlement to the final bonus applies only to specific individual policies that become payable upon
expiry of the agreed term or upon the death of the insured party. Entitlement to the final bonus lapses on surrender of the policy. Entitlements to final bonuses not yet paid out are subordinated to all other debts. It is also
stipulated that entitlement to a final bonus is cancelled if and insofar as the results erode the capital base to the
extent that the statutory solvency requirements can or may no longer be complied with. The final bonus account
is calculated on an actuarial basis using the same principles as applied to calculate the profit additions, which
form part of the technical provisions for insurance operations, and taking account of the estimated probability
of early termination of insurance policies. Part of the final bonus account is converted annually, according to a
fixed method, into an unconditional right of the policyholder and added to the Technical provisions for insurance operations.
Fund for general banking risks
SNS Bank keeps an open fund for general banking risks. It serves as a buffer in the event of calamities and is
a precautionary measure taken in view of overall banking risk. Deferred tax assets in relation to the fund for
general banking risks are deducted from the fund. Any additions to or withdrawals from this fund are noted
separately in the profit and loss account.
General provisions
Provisions are taken for business-related obligations that exist on the balance sheet date of uncertain size or
date of settlement.
Deferred tax liabilities
A provision for deferred tax liabilities is taken to cover the differences between the book value according to
the annual accounts and the tax value, as well as for tax equalisation reserves. The provision for deferred tax
liabilities is based on the actual rate of taxation. Deferred tax assets are stated under “Other assets” insofar as
it is likely that these can be realised.
In the case of minority interests, the deferral arising from the real estate reinvestment reserve is booked at a
cash value of 15%.
70
Pensions and early retirement
The pension commitment equals the cash value of future pension entitlements less investments. The value of
the pension entitlement is based on the contracts and takes into account demographic and economic assumptions, such as the expected future salary developments, indexations and chances of dismissal. With respect to
the counterpart investments, account is taken of the expected return on investment and the investment gains
or losses achieved.
Pension costs are charged to the profit and loss account in such a way that the costs are spread across the expected
working life of the employees.
Technical provisions, insurance operations
Life insurance
The provision for life insurance comprises the actuarial commitments, including profits already allocated under
profit-sharing schemes, less the actuarial value of future premiums. The costs are calculated using the net method.
For insurance policies whose term exceeds the period for which premiums are paid, an additional provision,
calculated according to actuarial principles, is levied to cover costs incurred in the premium-free period. The
average actuarial interest rate is 4%. Mortality rates are determined on the basis of the same principles used to
calculate the premiums. Where necessary, adjustments are made in accordance with the latest mortality tables.
In the case of insurance contracts for which there is no exposure to investment risks, the actuarial interest rate
is based on the guaranteed return.
The provision for life insurance is checked annually for adequacy and, if necessary, added to for any inadequacy
as a result of principles applied. The adequacy test looks at expected future developments, unamortized interest
rate rebates and accrued acquisition costs.
The provisions are stated net of capitalised interest rate rebates. Depending on the type of insurance contract,
the capitalised interest rate rebate is amortized either on an actuarial basis or over a period of eight years.
Unearned premiums and current risks
The provision for unearned premiums is computed in proportion to the unexpired risk periods. The provision
is equal to the unearned gross premiums net of prepaid reinsurance premiums. Gross premiums are stated net
of the stated commission. The provision for unexpired risks is calculated on the basis of claims and administrative expenses that may arise after balance sheet date and which are covered by contracts concluded before that
date insofar as the amount estimated in this connection exceeds the provision for unearned premiums and the
premiums claimable in relation to these contracts.
Outstanding claims
The provision for reported but unsettled claims is determined for each individual item. A provision is also
carried for claims arising from events that have occurred, but have not yet been reported, as well as for claimhandling expenses.
The adequacy of the provision for unsettled claims is tested each year using standard actuarial techniques.
Profit sharing and discounts
This provision is valued on the basis of actuarial principles and consists of the amounts set aside in relation to
profit-sharing schemes for policyholders or beneficiaries.
Insurance policies in which policyholders bear the investment risk
The technical reserves for insurance policies, in which policyholders bear the investment risk, are generally
stated in the balance sheet value of the related investments.
71
The premium income from life insurance products is included in the profit and loss account on the date on which
the policyholder’s payment falls due. Other premiums are allocated to the periods to which they relate.
Method for cost allocation
The costs for group staff are allocated to group subsidiaries proportionately. The costs of management and certain
holding company costs are not allocated to group subsidiaries.
Taxes
When computing the tax burden, account is taken of all the temporary differences between the profit before
taxation, calculated on the basis of the accounting principles described above, and the taxable amount according
to tax legislation. Taxes on profit are computed on the basis of operating profits before taxation as shown in the
annual accounts, allowing for tax-exempt profit components such as the participation exemption.
PRINCIPLES FOR THE CONSOLIDATED CASH FLOW STATEMENT
The cash flow statement is drawn up according to the indirect method, making a distinction between cash flows
from operating, investment and financing activities.
Cash flows in foreign currency are converted at the average exchange rates during the financial year.
With regard to cash flow from operations, net profit is adjusted for income and expenses that did not result in
income and expenses in the same financial year and for changes in provisions and accrued and deferred items
(other assets, Accrued assets, other debts and Accrued liabilities).
With investments in consolidated participating interests, the liquid assets available in these participating
interests are deducted from the purchase price.
Liquid assets consist of legal payment instruments, demand deposits at De Nederlandsche Bank (Dutch central
bank) and demand deposits at other banks.
72
Notes to the consolidated balance sheet
In v millions
2002
2001
Insurance
2002
2001
Total
2002
2001
ASSETS
Banking
2002
2001
1. INTANGIBLE FIXED ASSETS
Software
TOTAL
3
--
4
--
7
--
3
--
4
--
7
--
Balance as at 1 January
Investments
Depreciation
-8
(1)
----
7
--
Invest
2002
2001
Total
2002
2001
BALANCE AS AT 31 DECEMBER
Accumulated depreciation on the intangible fixed assets as at
31 December 2002 amounted to Z 1 million.
Banking
2002
2001
2. TANGIBLE FIXED ASSETS
Data processing equipment
Other moveable assets
TOTAL
Insurance
2002
2001
24
46
26
58
7
24
7
18
4
5
5
9
35
75
38
85
70
84
31
25
9
14
110
123
Investments
Divestments
Depreciation
123
34
(10)
(37)
127
40
(4)
(40)
110
123
Reclassification
2002
2001
Total
2002
2001
Accumulated depreciation on the tangible fixed assets as at
31 December 2002 amounted to Z 218 million (2001: Z 206 million).
3. PARTICIPATING
INTERESTS
Equity participation
Receivables
TOTAL
Banking
2002
2001
Insurance
2002
2001
Invest
2002
2001
6
--
6
--
-1
---
166
119
142
48
(3)
106
2
102
169
226
150
150
6
6
1
--
285
190
103
104
395
300
73
In v millions
EQUITY PARTICIPATION IN PARTICIPATING INTERESTS
Participating
interests
with
significant
influence
2002
2001
2002
2001
Other
participating
interests
2002
2001
Total
2002
2001
Acquisitions and expansions
Disposals and reductions
Income from participating interests
Dividend received
Change in group composition
Revaluations
144
20
(19)
39
(29)
9
(1)
160
12
(42)
36
(24)
-2
6
1
----(1)
31
8
(30)
---(3)
150
21
(19)
39
(29)
9
(2)
191
20
(72)
36
(24)
-(1)
163
144
6
6
169
150
RECEIVABLES FROM PARTICIPATING INTERESTS
Advances
Repayments
150
21
(20)
75
190
26
(66)
--
226
150
328
1,136
4,836
51
7
2,103
322
1,276
4,801
52
8
2,042
8,461
8,501
Insurance
2002
2001
Total
2002
2001
The receivables from participating interests include a subordinated loan of 
4. INVESTMENTS
Land and buildings
Fixed-Income securities
Interests in investment pools of insurance operations
Deposits at insurers
TOTAL
LAND AND BUILDINGS
Land and buildings entirely or partially in group’s own use
Other land and buildings
TOTAL
74
Banking
2002
2001
132
2
148
7
56
138
65
102
188
140
213
109
134
155
194
167
328
322
2002
In v millions
Investments
Divestments
Revaluations
Depreciation
322
25
(24)
8
(3)
302
11
(3)
15
(3)
328
322
Insurance
2002
2001
Total
2002
2001
Banking
2002
2001
SHARES AND CONVERTIBLE BONDS
Listed
Unlisted
TOTAL
29
1
42
--
1,106
--
1,214
20
1,135
1
1,256
20
30
42
1,106
1,234
1,136
1,276
Composition of the portfolio by industry:
- Financial institutions
- Trade, industry and services
- Investment funds
- Other
221
652
206
57
311
602
274
89
1,136
1,276
1,276
502
(251)
(391)
1,496
737
(750)
(207)
1,136
1,276
Elimination
2002
2001
Total
2002
2001
TOTAL
Additions
Disposals
Revaluations
FIXED-INCOME
SECURITIES
Bonds and fixed-income
securities
Private loans
Deposits at credit
institutions
Other fixed-income
securities
Bad debt provision
TOTAL
Banking
2002
2001
Insurance
2002
2001
1,348
--
1,018
--
1,780
1,758
1,959
1,894
-27
-32
--
--
82
65
--
--
--
--
--
21
21
--
--
--
1,348
1,018
3,641
3,939
27
32
--
--
27
32
(4)
1,344
(17)
1,001
(18)
3,623
(13)
3,926
2001
Group
2002
2001
-(158)
(158)
-(158)
-(158)
3,128
1,627
2,977
1,768
--
82
65
--
21
21
4,858
4,831
(158)
-(158)
(22)
4,836
(30)
4,801
75
In v millions
2002
2001
The balance includes listed securities issued by group companies up to an
amount of Z 2 million (2001: Z 29 million).
Additions and advances
Disposals and redemptions
Other movements
Composition of the bond portfolio by counterparty:
- The Dutch government or guaranteed by the Dutch government
- Foreign public bodies or guaranteed by foreign public bodies
- Trade and industry
- Other
TOTAL
Composition of the portfolio of private loans by counterparty:
- The Dutch government or guaranteed by the Dutch government
- Other Dutch public bodies or guaranteed by Dutch public bodies
- Trade and industry
- Other
TOTAL
4,801
3,914
(3,804)
(75)
4,917
1,132
(1,251)
3
4,836
4,801
892
1,102
723
268
143
1,164
493
818
223
279
3,128
2,977
33
92
1,202
14
286
75
166
1,247
23
257
1,627
1,768
1,308
588
13
194
1,393
470
-179
2,103
2,042
INVESTMENTS ON BEHALF OF POLICYHOLDERS
Investments on behalf of policyholders include separate deposits, investments for unit linked-insurances and separate investments for large collective pension contracts.
Bonds and fixed-income securities
Private loans
Other investments
TOTAL
76
2002
In v millions
Additions and advances
Disposals and redemptions
Revaluations
2001
2,042
1,016
(697)
(258)
1,762
789
(358)
(151)
2,103
2,042
Insurance
2002
2001
Total
2002
2001
5. MORTGAGE LOANS
Banking
2002
2001
Loans with (government) guarantee
Other mortgage loans
3,549 3,321
22,901 19,380
304
1,714
154 3,853 3,475
1,903 24,615 21,283
Bad debt provision
26,450 22,701
(26)
(10)
2,018
(9)
2,057 28,468 24,758
(10)
(35)
(20)
26,424 22,691
2,009
2,047 28,433 24,738
TOTAL
Breakdown of the portfolio by type of security:
- Residential property in the Netherlands
- Residential property outside the Netherlands
- Other property in the Netherlands
TOTAL
Advances
Repayments
Securitisation
26,825
171
1,437
23,503
103
1,132
28,433
24,738
24,738
7,009
(2,593)
(721)
22,909
5,629
(2,292)
(1,508)
28,433
24,738
As further security, an undisclosed lien has been established on mortgages
with a total value of Z 155 million (2001: Z 163 million).
6. OTHER LOANS
This item relates to loans and advances to non-banks, other than in the form
of interest-bearing securities.
77
In v millions
Banking
2002
2001
Invest
2002
2001
2002
2001
Elimination
2002
2001
Total
2002
2001
Personal loans
Business loans
Lease contracts
577
2,772
--
514
3,001
--
669
148
332
562
167
417
-(186)
--
-(346)
--
1,246
2,734
332
1,076
2,822
417
Bad debt provision
3,349
(72)
3,515
(43)
1,149
(46)
1,146
(34)
(186)
--
(346)
--
4,312
(118)
4,315
(77)
3,277
3,472
1,103
1,112
(186)
(346)
4,194
4,238
TOTAL
Breakdown by security:
- Public sector
- Private sector with government guarantee
- Private sector other
TOTAL
Breakdown by business sector:
- Public sector
- Agriculture and horticulture, forestry and fishery
- Industry
- Service sector companies
- Other
TOTAL
89
376
3,729
88
349
3,801
4,194
4,238
89
71
274
2,317
172
1,271
88
72
260
2,174
383
1,261
4,194
4,238
2,416
3,830
454
544
Loans include receivables from group companies up to an amount of
7. BANKS
The Banks item concerns loans and advances to banks, insofar as not in the
form of interest-bearing securities.
A receivable of Z 5 million (2001: Z 5 million) was extended in the form of a
subordinated loan.
8. LIQUID ASSETS
Liquid assets also include the demand deposits at De Nederlandsche Bank and
deposits of Hooge Huys at other banks. Loans and advances of SNS Bank to
banks are included in Banks.
78
In v millions
2002
2001
9. OTHER ASSETS
Securities trading portfolio
Amounts due from direct insurance:
- Policyholders
- Agents
Amounts due from reinsurance
Deferred tax receivables
Other amounts due
TOTAL
375
158
166
9
203
152
185
115
14
258
77
146
1,090
768
351
216
111
104
382
161
80
96
782
719
340
1,068
340
1,231
1,408
1,571
277
268
The securities trading portfolio contains listed securities issued by group
companies up to an amount of Z 69 million (2001: Z 46 million).
10. ACCRUED ASSETS
Accrued interest
Premiums / discounts
Accrued acquisition costs
Other accrued assets
TOTAL
LIABILITIES
11. SHAREHOLDERS’ EQUITY
Share capital
Share premium and reserves
TOTAL
For further details on shareholders’ equity, reference is made to the notes to
the company balance sheet.
12. THIRD-PARTY INTERESTS
This item includes participation certificates issued by SNS Bank to
third parties. The certificates have an open-ended term, with SNS Bank
maintaining the right to early redemption in full after 10 years. Dividend in
the form of a coupon rate is fixed over a period of 10 years and equal to the
CBS return on 9-10 year Government bonds with a surcharge (CBS: Central
Bureau of Statistics). The payment on the participation certificates is charged
to the profit sharing.
79
2002
In v millions
2001
This item also includes the equity interest of third parties in the group
companies of SNS Reaal Group. In 2001, this mainly concerned the minority
interest in investment contracts.
13. SUBORDINATED DEBTS
Bond loans
Private loans
716
162
641
202
Final bonus account
878
59
843
61
937
904
113
136
125
5
50
50
81
81
75
113
136
125
5
50
50
81
81
--
716
641
70
70
TOTAL
BOND LOANS
SNS Reaal Group
SNS Bank
SNS Bank
SNS Bank
SNS Bank
SNS Bank
SNS Bank
SNS Bank
SNS Bank
7.25%
6.25%
5.125%
5.056%
Variable
Variable
Variable
7.625%
5.125%
1996/06
1997/09
1999/11
1999/19
2000/10
2000/10
2001/11
Perpetual
2002/49
TOTAL
PRIVATE LOANS
The average interest rate amounts to 6.3% (2001: 6.12%).
FINAL BONUS ACCOUNT
The final bonus account is largely of a long-term nature.
14. FUND FOR GENERAL BANKING RISKS
As the fund is deemed to be more than sufficient to absorb adverse effects
resulting from banking risks, no additions were made to the reserve in recent
years.
80
In v millions
15. GENERAL PROVISIONS
Deferred tax liabilities
Pensions and early
retirement
Other general provisions
TOTAL
Banking
2002
2001
Insurance
2002
2001
Invest
2002
2001
2002
2001
Group
2002
2001
Total
2002
2001
14
11
92
98
1
2
--
--
107
111
128
23
-25
76
13
7
13
-1
-5
-3
2
12
204
40
9
55
165
36
181
118
2
7
3
14
351
175
DEFERRED TAXES
The sources of deferred tax receivables can be specified as follows:
- Bonds
- Technical provisions, insurance operations
- Pension provision
- Other provisions
- Tax-deductible losses
- Other
TOTAL
The sources of deferred tax liabilities can be specified as follows:
- Real estate
- Investments
- Capitalised acquisition costs
- Interest rate rebates
- Equalisation reserve
- Other
TOTAL
The deferred tax receivable on tax-deductible losses can be specified as
follows:
- Total tax-deductible losses
- Tax deductible losses carried as deferred tax receivable
Average tax rate
33
33
70
14
2
--
24
31
-15
2
5
152
77
39
13
7
14
21
13
32
16
16
17
19
11
107
111
2
2
7
7
34.5%
35%
81
In v millions
2002
2001
PENSIONS AND EARLY RETIREMENT
SNS Reaal Group offers a range of pension schemes to its employees, with
the majority of employees being guaranteed a pension of 70% of their final
salary, taking account of the WAO franchise and other specific conditions.
The commencement of the pension benefit varies between 60, 62 or 65 years
of age.
Group pension contracts have been concluded with Hooge Huys for the
majority of the employees.
The tables below illustrate the pension liabilities and the fair value of the
pension investments.
Gross addition due to change in accounting principles
Reclassification
9
201
(6)
204
Pursuant to the change in accounting principles to RJ 271, the net transitional
liability as at 1 January 2002 is calculated as follows:
Present value of pension entitlements
Investments/pension provision already accounted for
Shortfall
Already stated debts for pension premiums under previous principles
TOTAL
1,005
751
254
53
201
The additional pension provision of Z 204 million as at 31 December 2002 is
calculated as follows:
Present value of pension entitlements
Investments/pension provision already accounted for
Shortfall
Unamortized actuarial loss
ADDITIONAL PENSION PROVISION
With due account being taken of the corridor, Z 7 million of the loss to be
amortized will be charged to 2003. The accounted for pension provision
arising from the group pension contract amounts to Z 738 million and is stated
under technical provisions, insurance operations.
82
1,186
798
388
(184)
204
In v millions
2002
2001
The changes in the additional provision during 2002 can be specified as
follows:
Additional pension provision as at 1 January 2002
Reclassification of outstanding pension premiums to provision
Already stated pension charges
Pension premiums paid
ADDITIONAL PENSION PROVISION AS AT 31 DECEMBER 2002
The following important long-term assumptions were applied in the
calculation of the pension provision:
- Discount rate
- Expected salary development (including correction for inflation)
- Expected return on investments/technical provisions, insurance operations
- Expected indexation
201
53
46
(96)
204
4.75%
4.5%
5.5%
2%
OTHER GENERAL PROVISIONS
Other general provisions include provisions for information technology as
well as integration and reorganisation.
Changes:
- Through profit and loss
- Through the shareholders’ equity
55
(3)
71
--
(14)
2
(16)
--
40
55
16. TECHNICAL PROVISIONS, INSURANCE OPERATIONS
Provision for life insurance obligations
Unamortized interest rate rebates
Provision for unearned premiums and accrued risks
Provision for payable claims
Provision for profit-sharing and rebates
Technical provision for insurance policies in which policyholders bear the
investment risk
TOTAL
5,647
(118)
46
369
--
5,756
(79)
47
337
11
5,944
6,072
2,309
2,106
8,253
8,178
The technical reserve for life insurance includes an amount of Z 738 million
(2001: Z 678 million) for pension liabilities to staff and former staff.
83
In v millions
2002
2001
The technical provisions for insurance operations are largely of a long-term
nature.
17. SAVINGS
9,618
8,223
1,367
945
3,286
325
532
1,771
768
3,430
306
467
6,455
6,742
14,210
12,210
2,925
3,650
The Savings item comprises balances of savings accounts, savings deposits and term deposits of private customers. This item also includes interest
payable on savings, insofar as the contract terms stipulate that this interest is
to be added to the savings account.
18. OTHER FUNDS ENTRUSTED, BANKING OPERATIONS
Other funds entrusted concern non-subordinated debts to non-banks other
than in the form of debt certificates.
Breakdown by category:
- Private loans
- Business deposits
- Credit balances of account holders
- Mortgage deposits
- Other credit balances
TOTAL
Other funds entrusted, banking operations, also include debts to group companies up to an amount of Z 679 million (2001: Z 350 million).
19. DEBT CERTIFICATES
Debt certificates concern bonds and other debt certificates with a fixed or
variable interest rate insofar as not subordinated.
The debt certificates have an average interest rate of 5.1%.
20. BANKS
The Banks item refers to debts to banks, insofar as not in the form of interestbearing debt certificates.
Banks includes debts to group companies up to an amount of Z 5 million
(2001: Z 96 million).
84
In v millions
2002
2001
21. OTHER LIABILITIES
Loans and other long-term debts
Debts in relation to direct insurance
Deposits of reinsurers
Taxes and social security contributions
Other liabilities
TOTAL
265
174
-1
637
161
142
141
21
438
1,077
903
457
89
215
476
291
109
761
876
116
1,226
103
803
The non-subordinated bond loans, private loans and deposits held by SNS
Bank are included in other funds entrusted, banking operations, debt certificates and banks.
22. ACCRUED LIABILITIES
Accrued interest
Premiums / discounts
Other accrued liabilities
TOTAL
OFF-BALANCE SHEET COMMITMENTS
CONTINGENT LIABILITIES
Commitments regarding sureties and guarantees issued
Commitments arising from irrevocable facilities
In order to meet its clients’ requirements, SNS Reaal Group offers loan-related
financial products. The underlying value of these products is not accounted for
as assets or liabilities in the balance sheet. For these products, the underlying
value indicates the maximum potential credit risk incurred by SNS Reaal Group,
assuming that all its counterparties would default on their contractual obligations and all existing sureties would be worthless.
Guarantees concern both credit replacement and non-credit replacement
guarantees. It is expected that the majority of guarantees will expire without
any claim being made against them and will therefore not cause any future
cash flows.
The irrevocable facilities consist mainly of credit facilities granted to clients,
but which have not yet been used. These facilities are granted for a specified
period and at a floating interest rate. The majority of the irrevocable credit
facilities that have not been used have sureties pledged for them.
85
In v millions
SECURITISATIONS
The SNS Reaal Group has securitised mortgage receivables. With these
transactions, the legal ownership of mortgage receivables was transferred to
a separate company. This company has the option of selling the remaining
outstanding portfolio to SNS Reaal Group after an agreed period. The securitised portfolio amounts to Z 3,276 million for SNS Bank (2001: Z 2,547 million)
and Z 411 million for Hooge Huys (2001: Z 432 million).
The Investments item includes an amount of Z 41 million in subordinated
loans issued to these companies.
RENTAL COMMITMENTS
The future rental commitments arising from leasing contracts as at
31 December 2002 are as follows:
2003
2004
2005
2006
2007
Financial year after 2007
LEGAL PROCEEDINGS
Group subsidiaries of SNS Reaal Group are involved in legal proceedings that
relate to claims by and against these companies that ensue from normal business operations. It is very unlikely that the rulings in current or threatened
proceedings would have material consequences for the financial position of
SNS Reaal Group.
RISK POLICY OF SNS REAAL GROUP
SNS Reaal Group has a conservative approach to risk based on an integral
approach to all risks.
Management decisions are taken on the basis of broad knowledge of the
risks and a number of established risk parameters. Individual activities are
assessed according to their capital requirements, risk and return.
Market risk
Market risk concerns adverse value changes in the trading positions and the
structural positions of the group due to interest rate changes and changes in
foreign currency and stock markets. SNS Reaal Group monitors market risks
with the aid of simulation models, scenario analyses and stress tests. In this
way, insight is gained into the potential consequences of the market risk for
capital and profit. SNS Reaal Group uses derivatives in the management of
market risk.
86
7
7
5
3
---
In v millions
Hooge Huys has a policy of hedging its share position to the extent that its
solvency will not go below the internally maintained norm of 150% of the
legally required level.
Interest rate risk
SNS Reaal Group is exposed to structural interest rate risk. This risk arises
from the difference between the term of loans issued/investments made and
that of loans contracted/liabilities. The interest rate risks with respect to
these positions are monitored by the relevant ALM Committee. The interest rate risk of SNS Bank is monitored with the aid of gapping and duration
analysis, value-at-risk and analyses of stress scenarios. As an indication of
the interest rate risk, the table below illustrates the interest typical maturity
calendar of SNS Bank.
≤ 1 month
≤3 months
≤ 1 year
≤ 5 years
> 5 years
Total
1,951
5,167
326
1,324
117
5,475
-10,609
-7,126
2,394
29,701
41
8
59
1,042
534
1,684
1,850
2,968
440
180
770
1,876
3,832
--
298
5,275
1,023
--
-3,570
4,077
--
-2,272
3,573
459
2,918
15,961
12,945
639
(2,056)
2,864
1,414
(1,913)
ASSETS
Banks
Loans and advances
Interest-bearing
securities
LIABILITIES
Banks
Funds entrusted
Debt certificates
Subordinated debts
DERIVATIVES
Swaps
(452)
(143)
Currency risk
Given that SNS Reaal Group focuses on the Dutch market, it has little or no
sensitivity to foreign currency rates. In SNS Bank, all relevant currency risks
are hedged. The currency risks in the investment portfolio of Hooge Huys are
calculated risks. Following the developments in mid-2002, the ALM Committee decided to hedge the currency risks of the US dollar and the yen. The table
below gives an indication of the foreign currency position of SNS Bank.
87
In v millions
US Dollar
Japanese Yen
British Pound
Swiss Franc
Canadian Dollar
Australian Dollar
Other
TOTAL
Balance sheet
debit
Balance sheet
credit
371
125
620
12
-1
14
1,449
477
685
12
42
23
454
(1,078)
(352)
(65)
-(42)
(22)
(440)
1,078
352
65
-42
22
440
1,143
3,142
(1,999)
1,999
Net
Derivatives
The converted total assets and liabilities of SNS Reaal Group comes to Z 1,813
million (2001: Z 2,749) and Z 3,302 million (2001: Z 4,554 million) respectively.
Credit risk
The table below gives an indication of the credit risk of SNS Bank, based on
the weighting percentages used in regular reporting to De Nederlandsche
Bank. Generally, these percentages are 0% for claims against or guaranteed
by OECD public sector, 20% for claims against or guaranteed by OECD banks,
50% for loans entirely and fully covered by mortgages and 100% for the other
counterparties.
Notional
amount
Loans and advances to the public sector
Liquid assets
Banks
Loans and advances to the private sector
Interest-bearing securities
Equities
Fixed assets and participating interests
Other assets
Accrued assets
Derivatives and off balance sheet products
TOTAL
94.2% of the loans relate to the Netherlands and the remainder mainly to
Europe.
88
Riskweighted
amount
89
281
2,394
29,612
1,684
65
213
72
537
--
--223
16,050
158
30
210
72
226
162
34,947
17,131
In v millions
Liquidity risk
The residual term of a number of assets and liabilities in 2002 is illustrated in
the table below.
Payable on
demand
≤ 3 months
22
---
1,859
604
2,009
7
115
412
33
637
852
495
27,077
921
2,416
28,433
4,194
--
203
168
661
2,096
3,128
5
--
947
--
210
--
1,096
3
667
159
2,925
162
7,536
2,844
---
633
1,290
1,062
--
50
458
2,299
818
643
628
7,412
--
756
1,235
3,437
259
9,618
6,455
14,210
1,077
≤ 1 year
≤ 5 years
> 5 years
Total
ASSETS
Banks
Mortgage loans
Other loans
Interest-bearing
securities
LIABILITIES
Banks
Private loans
Funds entrusted:
- Savings
- Other
Debt certificates
Other liabilities
The table below illustrates the residual term for 2001.
Payable on
demand
≤ 3 months
157
---
2,906
815
1,582
190
101
473
27
688
497
550
23,134
1,686
3,830
24,738
4,238
--
85
79
558
2,255
2,977
57
--
1,116
--
307
--
1,276
154
894
48
3,650
202
5,936
3,592
---
454
817
998
--
106
213
1,090
594
673
1,141
6,238
8
1,054
979
3,875
301
8,223
6,742
12,201
903
≤ 1 year
≤ 5 years
> 5 years
Total
ASSETS
Banks
Mortgage loans
Other loans
Interest-bearing
securities
LIABILITIES
Banks
Private loans
Funds entrusted:
- Savings
- Other
Debt certificates
Other liabilities
89
In v millions
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
The table below sets out the estimated fair value of the financial assets and
liabilities of SNS Reaal Group. A number of balance sheet items have not been
included in this table because they do not satisfy the definition of a financial
asset or liability. The total of the fair value shown below does not represent
the underlying value of SNS Reaal Group and should, therefore, not be interpreted as such.
2002
FINANCIAL ASSETS
Investments
- Shares and convertible bonds
- Fixed-income securities
Loans and advances
Banks
Liquid assets
Other assets
- Trading portfolio
- Other receivables
Accrued assets 1, 2
Estimated
fair value
2001
Balance
sheet value
Estimated
fair value
Balance
sheet value
462
395
399
300
1,136
5,029
34,421
2,413
454
1,136
4,836
32,627
2,416
454
1,276
4,897
29,833
3,824
544
1,276
4,801
28,976
3,830
544
375
715
104
375
715
671
158
610
96
158
610
639
45,109
43,625
41,637
41,134
951
937
898
904
30,653
2,982
1,067
117
30,283
2,925
1,077
761
26,978
3,659
910
133
27,166
3,650
903
876
35,770
35,983
32,578
33,499
FINANCIAL LIABILITIES
Subordinated loans
Funds entrusted and debt certificates of
the banking operations
Banks
Other liabilities
Accrued liabilities
1
) Accrued assets exclude accrued acquisition costs with respect to insurance policies.
2
) The change between the balance sheet value and fair value of the accrued items is caused by the fact
that the accrued interest and share premiums/discounts have been discounted in the fair value of the
interest-bearing items.
90
The estimated fair values represent the amounts for which financial instruments can be traded at balance sheet date on a realistic economic basis
between properly informed parties prepared to enter into a transaction (‘at
arm’s length’). The fair value of financial assets and liabilities is based on
market prices, insofar as these are available. If not, various techniques have
been developed for estimating the fair value of these instruments. These
techniques are subjective by nature and rely on different assumptions with
respect to the discount rate and the moment and volume of the expected
future cash flows. Changes in these assumptions can have a significant influence on the estimated fair value. This can lead to the stated fair value not
being an accurate estimate of the net fair value. Furthermore, the estimated
fair value is based on the market conditions at a given moment and, therefore,
probably not an accurate estimate of the future net fair value.
The following methods and assumptions have been applied in order to determine the estimated fair value of the financial instruments.
FINANCIAL ASSETS
The fair value of participating interests is based on the stock exchange prices
of the shares in these participating interests or, if non-listed, the estimated
market value based on the stock exchange prices of similar securities. The
fair value of receivables from participating interests is determined in the
same way as described below for fixed-income securities.
Investments
The fair value of shares and convertible bonds is based on stock market prices.
The fair value of fixed-income securities, insofar as these are not mortgage
loans, is based on the cash value of the expected future cash flows, using the
current market interest rate as applicable given the return, the creditworthiness and term of the investment. The fair value of mortgage loans is estimated by determining the cash value of the expected future cash flows, using
the interest rate currently applicable to similar loans.
Loans and advances
The fair value of loans and advances is estimated on the basis of the cash
value of the future cash flows, using the interest rate currently applicable to
loans and advances under similar conditions.
91
Banks
The fair value of loans and advances to banks is estimated on the basis of the
cash value of the expected future cash flows, using the current market interest rate applicable to loans and advances with similar characteristics.
Liquid assets
The book value of the liquid assets is considered a fair estimate of the fair
value.
Other assets
The fair value of equities included in the trading portfolio is based on stock
market prices. The book value of the “Other receivables” is considered a fair
estimate of the fair value.
Accrued assets
The book value of the accruals is considered a fair estimate of the fair value,
with the accrued interest and the share premiums/discounts being discounted in the fair value of the interest-bearing items.
FINANCIAL LIABILITIES
Subordinated loans
The estimated fair value of the subordinated loans is based on the cash value
of cash flows, using the interest rate applicable to similar instruments.
Funds entrusted and debt certificates of the banking operations
De boekwaarden van de direct opvraagbare deposito’s en deposito’s zonder
overeengekomen looptijden worden geacht een redelijke benadering te zijn
van de reële waarde. De reële waarde van de deposito’s met overeengekomen
looptijden zijn geschat op basis van de contante waarde van de toekomstige
geldstromen, gebruik makend van de interestvoet die op dit moment van
toepassing is op deposito’s met een zelfde resterende looptijd.
Banks
The fair value of debts to banks is estimated on the basis of the cash value of
the future cash flows, using the interest rate currently applicable to debts to
banks under similar conditions.
92
Other liabilities
The fair value of negotiable other liabilities is estimated on the basis of stock
market prices. The book value of non-negotiable other liabilities with a variable interest rate is considered a fair estimate of the fair value. The fair value
of non-negotiable other fixed-interest liabilities is estimated by determining
the cash value of the cash flows, using the interest rate currently applicable
to similar instruments.
Accrued liabilities
The book value of the accruals is considered a fair estimate of the fair value,
with the accrued interest and the share premiums/discounts being discounted in the fair value of the interest-bearing items.
DERIVATIVES
Derivatives are financial instruments embodied in contracts whose value
depends on one or more underlying primary financial instruments. Derivatives contain rights and obligations as a result of which one or more of the
financial risks attendant on the underlying primary financial instruments
are transferred between parties. They do not lead to the transfer of the underlying primary financial instrument when the agreement is entered into, nor
need any transfer take place on the expiry of the agreement.
Examples of derivatives are forwards, options, swaps and futures. The
underlying primary financial instrument can be an interest rate product, a
currency product, a share product or a combination of these products. The
transferred financial risks are interest rate risks, currency risks, market risks
or a combination of these risks.
SNS Reaal Group concludes transactions in derivatives principally to hedge
interest rate and currency risks. Interest rate swaps and forward rate agreements are used for hedging interest rate risks. Currency risks are primarily
covered by means of forward exchange transactions and currency swaps.
A proportion of the derivatives transactions are effected for arbitrage and
trading purposes. The interest rate and currency derivatives are generally
over-the-counter contracts and the other derivatives contracts are usually
listed on the stock exchange.
The contracted amounts (or notional amounts) shown in the summary
(including the breakdown by residual term to maturity) reflect the extent to
which SNS Reaal Group is active in the various markets.
93
In v millions
Total
Interest rate contracts
- Swaps and FRAs
- Futures
Currency contracts
- Swaps
- Forwards
TOTAL
Notional amounts
≤ 1 year
> 1 ≤ 5 years
> 5 years
11,761
158
8,938
--
8,685
--
---
21
--
5,006
3,992
933
3,992
3,027
--
1,046
--
104
--
239
--
38,540
16,844
11,965
9,731
104
260
The notional amounts show the units of account that, in relation to derivatives, reflect the relationship to the underlying values of the primary financial instruments. These notional amounts give no indication of the size of the
cash flows or the price and credit risks attendant on the transactions.
The positive fair value on balance sheet date indicates the maximum losses to
SNS Reaal Group on its derivatives transactions should all its counterparties
default on their obligations. We understand positive fair value to mean the
market-to-market value of the derivatives contracts, for which a receivable
from the counterparty arises that, if not met, leads to profit erosion. This fair
value will fluctuate daily as a result of the change in value of the underlying
assets.
Credit risk is a better basis for comparison with other banking activities.
To provide insight into the scale of the derivatives activities and the related
credit risks, in addition to the positive replacement value, the unweighted
credit equivalent is included.
The unweighted credit equivalent amounts to a total of Z 550 million
(2001: Z 498 million) and the weighted credit equivalent to a total of
This unweighted credit equivalent is an indication of the maximum loss that
SNS Reaal Group could incur on its derivatives transactions. The weighted
credit equivalent is determined by multiplying the unweighted credit
equivalent by the weighting percentages in accordance with the standards of
international supervisory authorities.
Negative
Fair value
29,384
158
Of the total in notional amounts, 55.2 % relate to contracted derivatives from
trading activities. The remaining 44.8 % relates to activities in the context of
balance sheet management.
94
Positive
Fair value
In v millions
2002
2001
STATUTORY SOLVENCY REQUIREMENTS
For SNS Bank, the capital requirement, in accordance with the BIS requirements, amounts to 8% of the risk-weighted assets, off-balance sheet items and
market risk of the trading portfolios (the so-called ‘BIS standard’). At year-end
2002, this came to Z 1,402 million (2001: Z 1,273 million).
Core capital (Tier 1)
Supplementary capital (Tier 2)
Available Tier-3 capital
Deductible items (participating interests)
1,458
563
-(6)
1,171
668
30
(8)
2,015
1,831
8.4%
11.6%
7.4%
11.6%
Available solvency
Legally required solvency
655
356
887
345
SOLVENCY MARGIN
299
542
QUALIFYING CAPITAL (EXCLUDING TIER 3)
Risk-weighted assets:
- Tier-1 ratio
- BIS ratio
European directives require insurance companies based in one of the member
states of the European Union to maintain a minimum solvency margin.
The solvency rate of the insurance operations as at 31 December 2002 stood
at 184% (2001: 258%) of the legally required level, as illustrated in the table
below.
95
Notes to the consolidated profit and loss account
In v millions
Banking
2002 2001
Insurance
2002 2001
Invest
2002 2001
Group
Elimination
Total
2002 2001 2002 2001 2002 2001
INCOME
Investment income
Interest income,
banking operations
Commission
Other income
TOTAL INCOME
-72
-- 1,501 1,490
70
24
392
---
---
-2
-3
-(4)
-- 1,501 1,490
(10)
94
455
--16
99
5
61
88
5
52
70
-107
66
-209
(81)
-(107)
(84) 1,749 1,750
-76
74
(209) 119
138
1,858 1,889 1,529 1,898
165
145
179
278
(192) (303) 3,539 3,907
--
--
--
--
--
-- 1,270 1,427
(86) 1,296 1,371
(8)
45
32
-394
426
1,661 1,680
71
69
54
70
--4
EXPENSES
Technical expenses,
insurance operations
Interest charges,
banking operations
Other interest charges
Staff costs
Other operating
expenses
Value adjustments to
loans and advances
Other costs
TOTAL EXPENSES
Operating profit before
taxation
Taxes
GROUP PROFIT
NET PROFIT
96
--
-- 1,270 1,427
1,230 1,314
--235
260
-57
117
-38
118
52
-23
52
-28
83
3
19
91
2
20
(69)
(15)
--
171
151
148
171
21
20
2
--
(1)
--
341
342
57
--
20
--
10
--
2
7
23
--
25
--
---
-23
---
---
90
--
47
30
1,693 1,745 1,602 1,763
119
125
107
136
(85)
(94) 3,436 3,675
165
144
(73)
135
46
20
72
142
(107)
(209)
103
232
55
46
(28)
44
(2)
(6)
(12)
(23)
--
--
13
61
110
98
(45)
91
48
26
84
165
(107) (209)
90
171
--
5
1
1
1
--
--
--
--
6
6
110
93
(46)
90
47
26
84
165
(111) (209)
84
165
4
2002
In v millions
2001
INCOME
23. GROSS PREMIUM INCOME
Gross premium income concerns the insurance premiums before deduction
of reinsurance premiums.
Life insurance
- Regular premiums
- Single premiums
Non-life insurance
TOTAL
648
600
616
615
1,248
253
1,231
259
1,501
1,490
24. INVESTMENT INCOME
This includes interest income, rental income, dividends and part of the
realised value movements of shares. In addition, this includes income from
investments made on behalf of policyholders.
Banking
2002 2001
Land and buildings
Shares and convertible bonds:
- Interest, dividend, etc.
- Realised value movements
Bonds and fixed-income securities
Private loans
Other investments
Income from investments made on
behalf of policyholders:
- Interest, dividend, etc.
- Value movements
TOTAL
Insurance
2002 2001
Group
Elimination
Total
2002 2001 2002 2001 2002 2001
--
--
11
12
--
--
(1)
--
10
12
--72
---
--70
---
16
(182)
113
130
150
26
41
120
136
162
---2
--
---3
--
---(3)
--
---(9)
(1)
16
(182)
185
129
150
26
41
190
130
161
72
70
238
497
2
3
(4)
(10)
308
560
---
---
54
(268)
73
(178)
---
---
---
---
54
(268)
73
(178)
--
--
(214)
(105)
--
--
--
--
(214)
(105)
72
70
24
392
2
3
(4)
(10)
94
455
97
In v millions
25. INTEREST INCOME, BANKING OPERATIONS
Interest income includes income arising from lending activities and related
transactions as well as related commissions and other income of an interestrelated nature. This also includes results from financial instruments insofar
as these serve to reduce interest rate risk.
Banking
2002 2001
Mortgage loans
Other loans
Other
TOTAL
Invest
2002 2001
Group
Elimination
Total
2002 2001 2002 2001 2002 2001
1,394 1,302
287
237
(20) 141
-95
4
-88
--
-69
1
-63
3
-(81)
--
-- 1,394 1,302
(70) 370
318
(14)
(15) 130
1,661 1,680
99
88
70
66
(81)
(84) 1,749 1,750
26. COMMISSION
Commission includes fees for services rendered insofar as these are not of an
interest-related nature.
Banking
2002 2001
Payment services
Securities business
Insurance business
Other activities
TOTAL
13
17
27
12
--6
(1)
--5
--
12
16
36
12
13
17
32
12
71
69
5
5
76
74
27. OTHER INCOME
This includes income from securities and participating interests, results
from securities trading, price changes on securities in the trading portfolio,
results from currency dealing, foreign exchange rate differences and results
from derivatives not used for hedging purposes. In addition, this includes all
income that cannot be accounted for under other headings.
Total
2002 2001
12
16
30
13
The commission from insurance business of SNS Bank concerns income from
Hooge Huys.
98
Invest
2002 2001
2002
In v millions
Banking
2002 2001
Income from securities and participating interests
Result on securities business
Result on currency business
Result on other financial transactions
Result on sale of business activities
Management fees
Other income
TOTAL
Insurance
2002 2001
2001
Invest
2002 2001
Total
2002 2001
1
23
6
(6)
3
25
2
3
15
16
7
-21
8
------4
----4
9
3
48
-----13
38
-----14
49
23
6
(6)
3
25
19
41
15
16
7
4
30
25
54
70
4
16
61
52
119
138
In 2001, the income from securities and participating interests included an
amount of Z 9 million from a book profit on the sale of a real estate interest by
SNS Reaal Invest to Hooge Huys.
EXPENSES
28. TECHNICAL EXPENSES, INSURANCE OPERATIONS
Insurance expenses include reinsurance premiums, additions to insurance
provisions, payouts, surrender of policies, claims and claims handling costs.
Profit sharing and rebates are also included.
Life insurance expenses
- Payments for own account
- Change in technical provisions for own account
- Profit-sharing and rebates
- Reinsurance premiums
Non-life insurance expenses
- Claims for own account
- Change in provision for payable claims
- Profit-sharing and rebates
- Reinsurance premiums
TOTAL
895
176
10
19
708
476
43
18
1,100
1,245
117
15
-38
128
12
3
39
170
182
1,270
1,427
99
2002
In v millions
2001
29. INTEREST CHARGES, BANKING OPERATIONS
Interest charges include costs arising from the borrowing of funds and
related transactions, as well as other costs of an interest-related nature.
Banking
2002 2001
Funds entrusted
Debt certificates
Other interest-bearing commitments
TOTAL
574
525
131
Invest
2002 2001
Group
Elimination
Total
2002 2001 2002 2001 2002 2001
596
554
164
48
-4
43
-9
10
69
4
14
68
9
(64)
-(5)
(70)
-(16)
568
594
134
1,230 1,314
52
52
83
91
(69)
(86) 1,296 1,371
45
30. OTHER INTEREST CHARGES
583
622
166
32
This includes interest expenses related to non-banking activities, which are
attributable to the financial year.
31. STAFF COSTS
Salaries
Pension costs
Social costs
Other staff costs
TOTAL
Banking
2002 2001
Insurance
2002 2001
100
Group
2002 2001
Total
2002 2001
145
27
18
45
160
48
18
34
66
12
8
31
64
20
8
26
15
2
1
5
19
2
1
6
12
2
1
4
13
2
1
4
238
43
28
85
256
72
28
70
235
260
117
118
23
28
19
20
394
426
The pension costs for own staff for 2002 break down as follows:
- Interest charge
- Increase in cash value of entitlements
- Expected income from investments
TOTAL
Invest
2002 2001
39
54
(50)
43
2002
2001
EMPLOYEES
The average number of staff calculated on the basis of full-time equivalents:
- SNS Bank
- Hooge Huys
- SNS Reaal Invest
- Group
TOTAL
3,572
1,659
378
181
3,811
1,607
380
164
5,790
5,962
SNS Reaal Group has not issued any options to management or staff.
REMUNERATION OF EXECUTIVE BOARD AND SUPERVISORY BOARD
General policy
The policy pursued by SNS Reaal Group with respect to the remuneration of
members of the Executive Board is in line with that of other managers within
the group. The policy is aimed at attracting and retaining high-quality people
and to motivate them, in accordance with the strategic and derived financial
objectives. The Supervisory Board decides the remuneration of the Executive
Board.
The table below provides an overview of the salaries and bonuses of the
individual members of the Executive Board.
Remuneration of the
Executive Board in 2002
(in Z thousands)
S. van Keulen1
M.W.J. Hinssen
C.H. van den Bos1
R.R. Latenstein van Voorst1
TOTAL
1
Regular
payments
Payment in
instalments
Profitsharing &
bonuses
Severance
payment
Total
119
402
351
29
28
95
84
7
-----
-87
43
--
147
584
478
36
901
214
--
130
1,245
) Mr. Van Keulen joined SNS Reaal Group on 15 October 2002 and Mr. Latenstein van Voorst on
1 December 2002. Mr. Van den Bos has been associated with SNS Reaal Group since 1 July 2001.
The remuneration of the members and former members of the Executive
Board jointly, including pension contributions, amounted to Z 3,2 million in
2001 (including extraordinary payments).
101
2002
In v millions
2001
As member of As member of
the Board
the committee
Remuneration of the Supervisory Board in 2002
(in Z thousands)
J.L. Bouma
H.M. van de Kar
J.V.M. van Heeswijk
D. Huisman
S.C.J.J. Kortmann
H. Muller
J.W.M. Simons
TOTAL
Total
35
28
23
23
23
23
23
6
6
3
3
6
-3
41
34
26
26
29
23
26
178
27
205
The remuneration of the members of the Supervisory Board amounted to
Z 0,2 million in 2001.
Mortgage loans to directors and supervisory directors in 2002
(in Z thousands):
M.W.J. Hinssen
S.C.J.J. Kortmann
584
327
911
TOTAL
Executive and supervisory directors had received loans and advances of
Z 0.7 million as at 31 December 2001.
32. OTHER OPERATING EXPENSES
Acquisition costs:
- Life insurance
- Non-life insurance
Accommodation costs
IT costs
Marketing and public relations costs
External consultancy costs
Other expenses
Cost allocation
TOTAL
Banking
2002 2001
Insurance
2002 2001
Invest
2002 2001
Total
2002 2001
--41
35
26
10
50
9
--35
30
19
15
45
7
60
45
14
12
8
3
2
4
64
44
20
14
12
2
11
4
--4
3
4
2
7
1
--4
4
4
2
5
1
--6
3
1
3
2
(14)
--2
2
2
4
2
(12)
60
45
65
53
39
18
61
--
64
44
61
50
37
23
63
--
171
151
148
171
21
20
1
0
341
342
Acquisition costs include depreciation on capitalised acquisition costs up to
an amount of Z 32 million (2001: Z 34 million). IT costs and accommodation
costs include depreciation on tangible and intangible fixed assets totalling 
102
Group
2002 2001
2002
In v millions
2001
90
33. VALUE ADJUSTMENT TO LOANS AND ADVANCES
47
These include value adjustments for bad debts.
34. OTHER EXPENSES
Other expenses include all charges that cannot be presented under other
headings.
Insurance
2002 2001
Reorganisation costs
Other costs
TOTAL
Group
2002 2001
Total
2002 2001
---
3
4
---
23
--
---
26
4
--
7
--
23
--
30
35. TAXES
Payable taxes
Deferred taxes
(11)
24
46
15
TOTAL
13
61
103
34.5%
232
35%
Reconciliation between statutory and effective tax rate:
Operating profits before taxation
Nominal tax rate
Nominal tax amount
Effect of participation exemption
Other tax facilities
35
(21)
(1)
81
(17)
(3)
EFFECTIVE TAX AMOUNT
13
61
12.1%
26.3%
Effective tax rate
103
Consolidated balance sheet SNS Bank
31 December 2002
31 December 2001
281
2,394
334
3,783
ASSETS
Cash
Banks
89
29,612
Loans and advances
Interest-bearing securities
Shares
Intangible fixed assets
Property and equipment
Other assets
Accrued assets
TOTAL ASSETS
87
26,076
29,701
1,684
65
6
3
204
70
538
26,163
1,128
73
6
-239
177
513
34,946
32,416
2,918
3,628
LIABILITIES
Banks
Savings
Other funds entrusted
9,618
6,343
Funds entrusted
Debt certificates
Other debts
Accrued liabilities
Provisions
Fund for general banking risks
Subordinated debts
15,961
12,945
412
508
165
14,982
10,961
153
530
36
32,909
30,290
70
639
70
707
1,328
--
1,111
238
Group equity
1,328
1,349
Capital base
2,037
2,126
34,946
32,416
TOTAL LIABILITIES
104
8,223
6,759
Consolidated profit and loss account SNS Bank
In v millions
2002
2001
INCOME
Interest income
Interest charges
Net interest income
Commission income
Commission expenses
1,733
1,230
1,750
1,314
503
1
81
10
Commission
Result from financial transactions
Other income
TOTAL INCOME
436
3
79
10
71
23
30
69
38
29
628
575
EXPENSES
Staff costs
Other administrative expenses
Staff and other administrative expenses
Depreciation
Value adjustments to loans
Value adjustments to other receivables
TOTAL EXPENSES
Taxes
GROUP PROFIT
NET PROFIT
235
142
260
122
377
29
54
3
382
29
20
--
463
431
165
144
55
46
110
98
--
5
110
93
105
Consolidated balance sheet Hooge Huys
31 December 2002
31 December 2001
Investments
6,990
7,432
2,103
2,042
ASSETS
Receivables
- Amounts due from direct insurance
- Amounts due from reinsurance
- Receivables from group companies
- Other amounts due
172
18
16
149
126
7
7
30
355
Other assets
- Intangible fixed assets
- Liquid assets
4
31
173
170
25
211
208
Accrued assets
- Accrued interest
- Other accrued assets
TOTAL ASSETS
106
115
17
236
119
10
132
129
9,788
10,009
31 December 2002
31 December 2001
LIABILITIES
586
23
798
19
Group equity
Subordinated debts
609
59
817
62
Capital base
Technical provisions
- Gross
- Reinsurance component
668
5,909
185
879
6,055
251
5,724
5,804
2,234
2,044
Other provisions
181
118
Deposits of reinsurers
151
141
Technical provisions for insurance policies
in which policyholders bear the investment risk
Debts
- Debts in relation to direct insurance
- Debts to credit institutions
- Debts to group companies
- Other debts
Accrued liabilities
TOTAL LIABILITIES
176
7
18
429
144
13
47
529
630
733
200
290
9,788
10,009
107
Consolidated profit and loss account Hooge Huys
In v millions
2002
2001
TECHNICAL ACCOUNT, LIFE INSURANCE
Premiums, net of reinsurance
- Gross premium income
- Outward reinsurance premiums
1,248
19
1,231
18
1,229
Investment income
- Investments for own account
- Investments on behalf of policyholders
215
(214)
1,213
468
(105)
1
Benefits, net of reinsurance
- Gross
- Reinsurers’ share
911
16
363
721
13
(895)
Changes in provision for life insurance
- Gross
Profit-sharing and rebates
Operating expenses
Investment costs
RESULT OF TECHNICAL ACCOUNT, LIFE INSURANCE
108
183
7
(708)
486
10
(176)
(476)
(10)
(43)
(171)
(178)
(56)
(38)
(78)
133
In v millions
2002
2001
TECHNICAL ACCOUNT, NON-LIFE INSURANCE
Earned premiums, net of reinsurance
- Gross premium income
- Outward reinsurance premiums
253
38
259
39
215
Change in technical provision for
unearned premiums and accrued risks
- Gross
(1)
(1)
Investment income
Claims, net of reinsurance
- Gross
220
----
--
215
220
23
23
133
16
142
14
(117)
Change in provision for payable claims
- Gross
Profit-sharing and rebates
Operating expenses
Investment costs
RESULT OF TECHNICAL ACCOUNT, NON-LIFE INSURANCE
26
11
(128)
28
16
(15)
(12)
(132)
(140)
--
(3)
(94)
(96)
(1)
--
11
4
109
2002
In v millions
2001
NON-TECHNICAL ACCOUNT
Technical account result, life insurance
Technical account result, non-life insurance
TOTAL TECHNICAL RESULT
(78)
11
133
4
(67)
137
Other income
Other costs
Value adjustment to loans and advances
4
-(10)
(73)
135
Taxes
(28)
1
44
1
(46)
90
NET PROFIT
ANALYSIS OF LIFE
INSURANCE PREMIUMS
Life insurance policies
in which insurer bears
the investment risk
2002
2001
7
(7)
(2)
Life insurance policies
in which policyholders bear
the investment risk
2002
2001
REGULAR PREMIUM POLICIES
Individual policies
- Without profit-sharing
- With profit-sharing
232
107
244
74
229
--
219
--
Collective with profit-sharing
339
29
318
35
229
51
219
44
368
353
280
263
Individual policies
- Without profit-sharing
- With profit-sharing
51
402
25
157
78
--
102
--
Collective with profit-sharing
453
26
182
61
78
43
102
270
479
243
121
372
847
596
401
635
TOTAL
SINGLE PREMIUM POLICIES
TOTAL
TOTAL PREMIUM
INCOME, LIFE INSURANCE
110
In v millions
ANALYSIS OF NON-LIFE
INSURANCE TECHNICAL RESULT
Total
2002 2001
Fire
2002 2001
Accident
and health
2002 2001
Motor
vehicles
2002 2001
Other
sectors
2002 2001
Earned gross premiums
Gross claims
254
159
259
170
74
41
83
45
33
24
30
27
112
77
111
81
35
17
35
17
Reinsurance balance
95
(12)
89
(9)
33
(2)
38
(3)
9
(1)
3
(1)
35
(2)
30
(2)
18
(7)
18
(3)
Operating expenses and profit-sharing
83
(94)
80
(99)
31
(31)
35
(32)
8
(5)
2
(8)
33
(47)
28
(44)
11
(11)
15
(15)
(11)
(19)
--
3
3
(6)
(14)
(16)
--
--
22
23
3
3
5
9
10
9
4
2
11
4
3
6
8
3
(4)
(7)
4
2
OPERATING RESULT
Investment income
TECHNICAL RESULT
111
Consolidated balance sheet of SNS Reaal Invest
31 December 2002
31 December 2001
22
33
ASSETS
Banks
-1,103
Loans and advances
Property and equipment
Other assets
Accrued assets
TOTAL ASSETS
1
1,111
1,103
285
9
86
18
1,112
190
14
78
21
1,523
1,448
2
13
LIABILITIES
Banks
Other funds entrusted
1,233
Funds entrusted
Other debts
Accrued liabilities
Provisions
Group equity
TOTAL LIABILITIES
112
1,186
1,233
141
47
2
1,186
45
49
7
1,425
1,300
80
18
138
10
98
148
1,523
1,448
Consolidated profit and loss account of SNS Reaal Invest
In v millions
2002
2001
INCOME
Interest income
Interest charges
Net interest income
Commission income
Commission expenses
99
52
88
52
47
49
11
6
Commission
Other income
TOTAL INCOME
36
38
11
6
5
12
5
14
113
93
EXPENSES
Staff costs
Other administrative expenses
Staff and other administrative expenses
Depreciation
23
19
28
17
42
2
23
45
3
25
67
73
46
20
Taxes
(2)
(6)
GROUP PROFIT
48
26
1
--
47
26
TOTAL EXPENSES
NET PROFIT
113
Company balance sheet
31 December 2002
31 December 2001
1,756
1,287
27
2,058
1,239
31
3,070
3,328
161
41
3,231
3,369
340
15
49
76
7
921
340
15
162
31
-1,023
Subordinated debts 6
1,408
239
1,571
249
Capital base
Provisions
Long-term debts 7
Short-term debts 8
1,647
3
1,367
214
1,820
14
1,323
212
3,231
3,369
ASSETS
Fixed assets
- Participating interests in group companies 1
- Receivables from group companies 2
- Other receivables 3
Current assets
- Receivables 4
TOTAL
LIABILITIES
Shareholders’ equity 5
- Issued share capital
- Share premium
- Revaluation reserve
- Participating interests reserve
- Intangible fixed assets reserve
- Other reserves
TOTAL
The numbers mentioned with the balance sheet items refer to the notes starting on
page 116.
114
Company profit and loss account
In v millions
Result on group companies after taxation
Other results after taxes
NET PROFIT
2002
2001
107
(23)
209
44
84
165
115
Notes to the company balance sheet
In v millions
2002
2001
GENERAL
For further details on the accounting policies, please see the general notes on
page 66 and following.
Receivables from and debts to group companies for banking services are
stated as short-term receivables or short-term debts.
ASSETS
1. PARTICIPATING INTERESTS IN GROUP COMPANIES
SNS Bank
Hooge Huys
SNS Reaal Invest
Other
TOTAL
Capital contribution
Goodwill
Revaluations
Released revaluations
Result
Dividend received
Other movements
2. RECEIVABLES FROM GROUP COMPANIES
Breakdown by residual term to maturity:
Payable on demand
≤ 3 months
≤ 1 year
≤ 5 years
TOTAL
3. OTHER RECEIVABLES
116
1,087
586
80
3
1,111
798
138
11
1,756
2,058
2,058
-(13)
(54)
(56)
106
(144)
(141)
2,001
50
(21)
(97)
(43)
209
-(41)
1,756
2,058
1,287
1,239
-245
344
698
97
166
-976
1,287
1,239
27
31
2002
In v millions
2001
4. SHORT-TERM RECEIVABLES
Receivables from group companies
Other amounts due
Accrued assets
TOTAL
144
1
16
15
2
24
161
41
LIABILITIES
Share
premium
Revaluation
reserve
Participating
interests
reserve
15
356
40
824
(21)
(54)
2
(11)
163
57
162
31
5. SHAREHOLDERS’ EQUITY
Issued
share
capital
Balance on 1 January 2001
Goodwill
Revaluations
Net profit 2001
Other movements
340
Balance as at 31 December 2001
Change in accounting
principles pensions
Goodwill
Revaluations
Net profit 2002
Other movements
340
Intangible fixed
assets
reserve
Other
reserves
(97)
(43)
15
--
1,023
(135)
(13)
(57)
(56)
340
15
3
--
34
8
7
49
76
7
50
(4)
921
Total
assets
1,575
(21)
(97)
(43)
165
(8)
1,571
(135)
(13)
(54)
(56)
84
11
1,408
750,007 shares have been issued and fully paid up. The nominal value of a
share is ƒ 1,000. In accordance with sections 178c(1) and 67c(1), Book 2 of the
Netherlands Civil Code, the nominal value of a share is Z 453,78.
Stichting Beheer SNS Reaal holds all shares (minus one) issued via Stichting
Administratiekantoor SNS Reaal. The Board of the Stichting Beheer SNS Reaal
consists of the members of the Supervisory Board and Group Executive Board
of SNS Reaal Groep N.V.
117
In v millions
2002
2001
6. SUBORDINATED DEBTS
This concerns debts that are subordinated to the other obligations.
Bond loan 7.25% 1996/06
Private loans
Other debts
113
30
96
113
30
106
239
249
Bond loans
Private loans
1,266
101
1,240
83
TOTAL
1,367
1,323
113
-227
50
876
113
159
227
50
691
1,266
1,240
TOTAL
Group companies have subordinated bonds to the value of Z 10 million (2001:
Z 2 million).
The private loans have an average interest rate of 7.11%. The term is longer
than five years.
The other liabilities include the present value (based on an actuarial interest
rate of 6%) of a long-term, non-interest bearing debt of Z 136 million nominal
(2001: Z 148 million). The remaining term is 12 years.
7. LONG-TERM DEBTS
Bond loans
7.0%
1993/03
7.75% 1995/02
6.75% 1995/04
6.5%
1996/03
EMTN – loans
TOTAL
Group companies hold bonds up to an amount of Z 59 million
(2001: Z 43 million).
The private loans are subject to an average interest rate of 4.7% (2001: 4.9%)
and have terms shorter than five years.
118
In v millions
2002
2001
8. SHORT-TERM DEBTS
Debts to group companies
Taxes
Other debts
Accrued liabilities
TOTAL
40
7
128
39
136
19
4
53
214
212
GUARANTEES
Guarantees in the sense of section 403, Book 2 of the Netherlands Civil
Code, have been issued for most of the wholly owned subsidiaries of SNS
Bank and SNS Reaal Invest. Barring a few exceptions, no such guarantees
have been issued for the subsidiaries belonging to Hooge Huys. SNS Reaal
Groep N.V. has issued guarantees to meet the commitments of Hooge Huys
Schadeverzekeringen N.V. for specific insurance contracts entered into after
1 September 2000.
119
Main Group Companies
The most important group companies are listed below, broken down under banking operations, insurance
operations and SNS Reaal Invest. Ownership is 100% unless stated otherwise.
BANKING OPERATIONS
SNS Bank N.V.1
Algemene Spaarbank voor Nederland ASN N.V.
CVB Bank N.V.
BLG Hypotheekbank N.V.
SNS Securities N.V.
Utrecht
The Hague
’s-Hertogenbosch
Geleen
Amsterdam
INSURANCE OPERATIONS
Hooge Huys N.V.
Hooge Huys Levensverzekeringen N.V.2
Hooge Huys Schadeverzekeringen N.V.3
Reaal Overlijdenszorgverzekering N.V.
Reaal Reassurantie S.A.
Proteq Levensverzekeringen N.V.
Proteq Schadeverzekeringen N.V.
“LATER” Natura-uitvaartverzekeringsmaatschappij N.V. (50%)
Utrecht
Alkmaar
Zoetermeer
Utrecht
Luxemburg
Alkmaar
Alkmaar
Amsterdam
SNS REAAL INVEST
SNS Reaal Invest N.V.
Leaseco Nederland B.V.
Abfin B.V.
TransNed Lease B.V.
TMF Group Holding B.V. (49%)
Xtensive Franchising B.V. (70%)
Foresta Investerings Maatschappij N.V.
DIN AdviesGroup B.V.
1
’s-Hertogenbosch
’s-Hertogenbosch
Sassenheim
Eindhoven
Amsterdam
Hilversum
Amersfoort
Baarn
) With effect from 13 January 2003, the name SNS bank N.V. was changed to SNS Bank N.V.
2
) On 28 September 2002, a legal merger was affected between Reaal Levensverzekering N.V. (acquiring company) and Hooge Huys Levensverzekeringen
N.V. and N.V. Levensverzekering Maatschappij NOG (dissolved companies). On the same date, the name Reaal Levensverzekering N.V. was changed
to Hooge Huys Levensverzekeringen N.V.
3
) On 3 April 2002, a legal merger was affected between Hooge Huys Schadeverzekeringen N.V. (acquiring company) and Reaal Schadeverzekering N.V.
(dissolved company).
120
List of the most impor tant equity par ticipations
The most important equity participations are listed below. These are holdings of SNS Reaal Invest.
Infra Holding B.V.
NeSBIC CTE Fund B.V.
NeSBIC CTE Fund II B.V.
Parnassus Participatiefonds B.V.
PrimeLine services B.V.
Life Sciences Partners II B.V.
Skala Home Electronics B.V.
Stienstra Holding B.V.
Vesting Finance Group B.V.
Wanu Beheer B.V.
SNS Automotive N.V.
(43.7%)
(13.6%)
(10%)
(42.9%)
(40%)
(13.2%)
(45%)
(45%)
(49.9%)
(20%)
(40%)
Naarden
Utrecht
Utrecht
Amsterdam
’s-Hertogenbosch
Amsterdam
’s-Hertogenbosch
Heerlen
Naarden
Rotterdam
’s-Hertogenbosch
OTHER RELEVANT INFORMATION
The limited partnership Distributiepartner C.V. was formed by Distributiepartner B.V. (controlling partner)
and two limited partners. Distributiepartner B.V. and one of the limited partners are wholly-owned subsidiaries of SNS Reaal Invest N.V. The second limited partner is a wholly-owned subsidiary of Hooge Huys N.V.
The overview in the sense of sections 379 and 414, Book 2 of the Netherlands Civil Code has been filed with
the trade register of the Chamber of Commerce in Utrecht.
THE SUPERVISORY BOARD
THE GROUP EXECUTIVE BOARD
J.L. Bouma
H.M. van de Kar
J.V.M. van Heeswijk
D. Huisman
S.C.J.J. Kortmann
H. Muller
J.W.M. Simons
S. van Keulen
C.H. van den Bos
M.W.J. Hinssen
R.R. Latenstein van Voorst
121
122
Other information
123
Other information
Profit appropriation under the ar ticles of association
Article 36:
3. Distribution of profits may only take place follow1. Subject to the approval of the Supervisory Board, the
ing the adoption of the financial statements in
Executive Board may reserve as much of the profit
which such distribution is approved.
as it deems fit. The General Meeting of Shareholders
is authorised to reserve part of the profit, proposed
by the Group Executive Board and approved by the
Supervisory Board, for social and cultural projects.
Any profits not reserved pursuant to the preceding
sentences are at the disposal of the General Meeting for full or partial reservation or full or partial
distribution to the shareholders in proportion to
their shareholdings.
Profit 2002
Z 84 million
2. The company may only make payments to shareholders and others entitled to the distributable The profit has been recognised in
profits insofar as its shareholders’ equity exceeds the annual accounts as follows:
the total amount of issued share capital plus the
statutory reserves.
Addition to the reserves
Z 84 million
Auditor’s repor t
Introduction
We have audited the 2002 annual accounts of SNS
Reaal Group N.V. of Utrecht. These annual accounts
are the responsibility of the company’s management.
Our responsibility is to express an opinion on these
annual accounts based on our audit.
accounts. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall annual
accounts presentation. We believe that our audit provides a reasonable basis for our opinion.
Opinion
Scope
In our opinion, the annual accounts give a true and
We conducted our audit in accordance with auditing fair view of the financial position of the company at
standards generally accepted in the Netherlands. Those 31 December 2002 and of the result for the year then
standards require that we plan and perform the audit ended, in accordance with accounting principles gento obtain reasonable assurance about whether the erally accepted in the Netherlands and comply with
annual accounts are free of material misstatement. the financial reporting requirements included in Part
An audit includes examining, on a test basis, evidence 9, Book 2 of the Netherlands Civil Code.
supporting the amounts and disclosures in the annual
Amstelveen, 11 March 2003
KPMG Accountants N.V.
124
Biographies of the Super visor y Board members
The Supervisory Board of SNS Reaal Group has seven members, all of Dutch nationality. The summary below
gives a selection of current and former responsibilities of these members.
The Group Executive Board and the Supervisory Board together form the board of the Foundation (Stichting
Beheer) holding all depositary receipts (minus one) for the shares of SNS Reaal Group N.V. The Supervisory
Board is also the board of the Stichting Administratiekantoor, holder of the shares of SNS Reaal Group N.V. The
Stichting Beheer has transferred the shares of SNS Reaal Group N.V. to the management of Stichting Administratiekantoor. The Executive Board forms the management of Stichting Administratiekantoor. SNS Reaal Group
N.V. is 100% owner of SNS Bank N.V., Hooge Huys N.V. and SNS Reaal Invest N.V.
Prof. J.L. Bouma (68), chairman
Emeritus professor in business economics at the Rijksuniversiteit in Groningen; member of the Royal Dutch
Academy of Sciences; chairman of the supervisory boards of Albron, Eriks Group, Intereffekt, Koop Holding
Europe, O.de Leeuw Holding and Raab Karcher Nederland; deputy chairman of the board of the Association of
Aegon.
H.M. van de Kar (59), deputy chairman
University lecturer at the tax-economics faculty at Leiden University; member of the supervisory board of ITA;
chairman of the board of the International Institution for Social History; chairman of the Pension Fund for
Dutch Theatre; treasurer of the International Institute of Public Finance; dean of Crisis and Disaster Management training; chairman of the Sports Fund Foundation Leo van de Kar.
J.V.M. van Heeswijk (64)
Supervisory Board member of Tref, Mammoet Holding; former managing director of Geveke; former chairman
of the Supervisory Board of Calpam Internationale Petroleum Company, SSM Coal, Merrem & La Porte and
Sligro.
D. Huisman (67)
Chairman of the supervisory council MCL/Zorggroep Noorderbreedte; chairman of the supervisory board of
Ophtec; former chairman of the board of Friesland Chamber of Commerce; former deputy chairman of the Dutch
Association of Insurers; former deputy chairman of the executive board of Avéro-Centraal Beheergroep.
Prof. S.C.J.J. Kortmann (52)
Professor in civil law at Nijmegen Catholic University; chairman of the business and law research centre [Onderzoekcentrum Onderneming & Recht]; chairman of Centrum voor Postdoctoraal Onderwijs; chairman of the
board of Stichting Grotius Academie; deputy judge at the Courts of Arnhem and ‘s-Hertogenbosch; member of
the supervisory boards of Kropman, Dela Coöperatie; chairman or member of various boards of trust offices or
anti-takeover foundations of listed companies.
H. Muller (60)
Chairman of the Supervisory Board of ABF, Het Andere Beleggingsfonds Webefo; member of the Supervisory Board
of ASN Beleggingsfondsen; chairman of the Nederlands Participatie Instituut; member of the SNV supervisory
council, Nederlandse Ontwikkelingsorganisatie; chairman of the board of De Burcht (Nationaal Vakbondsmuseum and Henri Polak Instituut); chairman of the Nederlands Platform Ouderen en Europa; former federation
manager and treasurer of FNV (Dutch trade union federation), member of the Sociaal-Economische Raad and
Stichting van de Arbeid.
J.W.M. Simons (68)
Chairman of the supervisory boards of Boldrik Construction and Real Estate Group, Orange European Property
Fund, MAB Group; member of the supervisory boards of Vesteda Management, Copaco, M.J. de Nijs and Zonen
Holding; chairman of Stichting Administratiekantoor ING Group, chairman of College Sluitend Stelsel Ministerie
van Volkshuisvesting; former chairman of the executive board of Bouwfonds Nederlandse Gemeenten.
125
Additional responsibilities of Executive Board members
S. van Keulen, chairman (56)
No additional responsibilities.
C.H. van den Bos RA (50)
Board member of Verbond van Verzekeraars (Association of Insurers); member of the supervisory board of
Trustinstelling Hoevelaken.
M.W.J. Hinssen (46)
Board member of Nederlandse Vereniging van Banken (Netherlands Bankers’ Association); Supervisory Board
member of Interpay Nederland; Supervisory Board member of Brabantse Ontwikkelingsmaatschappij (Brabant
development company).
R.R. Latenstein van Voorst MBA, Chief Financial Officer (38)
No additional responsibilities.
126
Definitions
The share of minorities in the equity and result of
a subsidiary.
Market risk
The risk related to fluctuations in stock market
prices and/or interest rates.
BIS ratio
Solvency ratio of banking operations (Dutch central
bank standard: 8%) based on the risk-weighted total
assets.
Net asset value
The net asset value is calculated based on the fair
value of the acquired assets and liabilities, valued in
accordance with the accounting principles of SNS
Reaal Groep.
Capital ratio
The capital base as percentage of the total assets.
Compliance
The fulfilment of internal and external regulations
and legislation related to the quality and reliability
of the organisation and all its activities.
Efficiency ratio of banking operations
Operating costs as a percentage of income according
to the banking model.
Employee benefits
Range of employee insurances, including pensions
and disability insurance.
Financial instruments
Financial instruments are agreements that result
in a financial asset for one party and a financial
liability or a shareholders’ equity instrument for
another party.
Cost/premium ratio insurance operations
The operating costs (excluding reinsurance commission income received) as a percentage of the
gross premium income, with 12.5% of single premium policies included and single premium profit
policies excluded.
Credit risk
The risk that a counter party in a financial instrument does not meet its obligations, resulting in a
financial disadvantage.
Fair value
The amount for which an asset is traded or an
obligation settled between properly informed
independent parties prepared to enter into a transaction.
Return on shareholders’ equity
Net profit as a percentage of average shareholders’
equity.
Interest rate risk
The extent to which fluctuations in short-term and
long-term interest rates can affect the result.
Securitisation
The restructuring of credits in the form of negotiable securities.
Solvency
A measure of financial resilience, usually expressed
in shareholders’ equity as a percentage of the total
assets.
Universal Life/Unit Linked insurance
Insurance linked to an investment product.
Currency risk
The price risk associated with changes in the
exchange rate of foreign currencies.
Earned premiums
The share of accounted net premiums that relates
to the expired part of the term of the policy.
Liquidity risk
The risk that a position cannot be settled in the
short term at market price.
127
PUBLICATION
Concept & design
Nuyten & Associates, Amsterdam
Beelden
Hummel Fotografie, Amsterdam
Typesetting
Melis Graphic Services bv, Helmond
Paper
This Annual Report is printed on environmentally friendly paper
Printing
vanGrinsven drukkers Venlo bv
Published by
SNS Reaal Group
Croeselaan 1
P.O.Box 8444
3503 RK Utrecht
The Netherlands
128

SNS Reaal Groep 2002 Int

Transcription

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