FACTS SEB ASSET MANAGEMENT
SEB Asset Management offers a broad range of asset manage- ment expertise and services to institutions, life insurance com- panies and private individuals, among others. The offerings include equity and fixed income, private equity, real estate and hedge funds management. The division has about 100 portfolio managers and analysts. On 31 December 2004, total assets under management amounted to SEK 639bn.
SEB Asset Management aims to be the leading asset manager in its markets in terms of customer satisfaction and profitability.
The division’s activities, comprising administration, packaging, management and sales of mutual funds and institutional portfolios, are conducted in Sweden, Denmark, Finland, Luxembourg and Germany. Sales are carried out through the Group’s branch offices and private banking entities, but also through the division’s own sales-force, the Internet, telephone and call centres.
SEB Asset Management’s investment philosophy is to achieve superior results in the long term through active portfolio management.
2004 2003
Percentage of SEB’s total income 6 5 Percentage of SEB’s operating result 8 6 Percentage of SEB’s staff 2 3
Profit and loss account
Change,
SEKm 2004 2003 per cent
Net interest income 77 83 –7
Net commission income 1,516 1,235 23 Net result of financial transactions 9 3 200
Other operating income 22 18 22
Total income 1,624 1,339 21
Staff costs –471 –521 –10
Other operating costs –358 –330 8 Amortisation of goodwill –3 –7 –57 Depreciation and write-downs –19 –26 –27
Total costs –851 –884 –4 Operating result 773 455 70
Cost/Income ratio 0.52 0.66 Allocated capital, SEKbn 1.8 1.8 Return on capital, % 30.9 18.2 Number of full time equivalents,
average 443 474
Strong results
The division’s result increased by 70 per cent compared with last year. Profit from operations outside Sweden developed even stronger and accounted for approximately one third of the result. Income for the year increased by 21 per cent, mainly thanks to strong equity markets and significantly increased performance fees. Costs were lower than in 2003 as a result of lower staff costs and lower performance-related remuneration, particularly in the fourth quarter. The sale of the U.S. operations in the second quarter contributed to the cost decrease, too.
The cost/income ratio improved to 0.52 from 0.66.
Strong net sales despite weak markets
The division as a whole reported strong net sales during 2004. Net sales rose by 63 per cent, to SEK 26bn (16). Institutional sales were strong across the board, where the entities outside Sweden accounted for two thirds of total net sales. Retail sales showed a somewhat weaker development, especially after the summer.
In Sweden, SEB’s net sales of its own mutual funds was SEK 4.1bn (9.3), compared to a total market of SEK 56bn (70). This represents a market share of 7.4 per cent (13.4). The decrease was mainly explained by net outflow from institutional clients. Net sales of external mutual funds (which are not included in the official market share statistics) were at the same level, approximately SEK 3bn, as last year, representing approxi- mately 40 per cent of total net sales of funds. The total value of external funds was SEK 11bn (8) at year-end 2004.
The division’s total assets under management increased by 7 per cent, to SEK 639bn, including external mutual funds.
Of total assets under management, the equity part repre- sented 38 per cent (35) and fixed income 56 per cent (56). Total mutual funds including external funds represented 39 per cent (36) of the division’s assets under management, totalling SEK 250bn (213), of which SEK 181bn (154) in Sweden.
Difficult year for asset managers
Like most of its major domestic and international competitors, SEB’s investment performance in relation to index benchmark was not satisfactory. However, SEB’s long term performance in relation to the mutual fund peer group improved during the year, which resulted in an increased Morningstar rating. Swedish mutual funds performed slightly better than peer group benchmarks. The work on enhancing and refining in- vestment processes and methods continues and is high on the agenda. The aim is to create the best possible investment return for all clients.
SEB Asset Management
Assets under management Per asset type
Total amount SEK 639bn
Fixed income 56% Equities 38% Real estate 4% Cash 2%
Per country
Total amount SEK 639bn
Sweden 61% Denmark 20% Germany 11% Finland 8%
Assets under management per product type, SEKbn
Total amount SEK 639bn
700 500 400 300 0 200 100 600 Institutional portfolios Q4 -04 Q3 -04 Q2 -04 Q1 -04 Q4 -03 Q3 -03 Q2 -03 Q1 -03 Mutual Funds
Mutual funds per asset type
Total amount SEK 251bn
Equity funds 48% Fixed income funds 33% Balanced funds 13% Other funds 6%
SEB Asset Management manages 72 per cent of the SEB Group’s total assets under management
Net sales, SEKbn
Total net sales SEK 26bn 2004
10 6 4 2 –4 0 –2 8 2004 2003 2002 Q1 Q2 Q3 Q4
Increased focus on customer satisfaction and sales
During the year, a number of client surveys confirmed SEB Asset Management’s strengthened position in the institutional segment as well as within retail in all home markets. In a Swedish mutual funds client survey, conducted by Prospera, SEB came in second place compared to tenth in the previous survey from 2002. In Denmark, 120 institutional clients ranked SEB Asset Management third among approximately 30 firms. Another example confirming the positive trend was the SFR
Best result to date
In 2004, SEB Trygg Liv achieved its best annual result ever. All the six latest quarterly results have exceeded the preceding quarter. The year’s operating result of the profit-distributing operations amounted to SEK 379m (149), excluding the recently acquired Codan Pension, and SEK 508m including Codan Pension. The company is consolidated in SEB Trygg Liv from 1 October, 2004 and contributed SEK 129m to the result in the fourth quarter.
Income, excluding Codan Pension, rose by 17 per cent com- pared with the preceding year, as a result of increased assets under management and a higher number of customers. Total cost increases were limited to 1 per cent.
The new business margin improved for the fourth consecu- tive year to 19.5 per cent (18.1), excluding Codan Pension.
The business result (which includes changes in surplus val- ues) amounted to SEK 1,978m (1,888). At present, surplus val- ues are not calculated in the Danish operations. The surplus values are not included in the SEB Group’s result and balance sheet.
Strong position within occupational insurance in Sweden
Sales by the companies in Sweden, Ireland and Luxembourg improved by 7 per cent to SEK 29.6bn (27.6), measured as weighted volume. Sales of unit-linked insurance, which are prioritised, accounting for 90 per cent of total sales, increased by 15 per cent. The rate of sales growth levelled off gradually during the year, but SEB Trygg Liv continued to strengthen its position as the market leader within unit-linked insurance in Sweden, with a share of new business of 34.8 per cent (29.5).