Interim Report January – September 2007
July - September 2007
Total income increased by 47% to SEK 1,067 million (727). Adjusted for income from Max Matthiessen, the increase amounted to 28%.
Total expenses before profit sharing amounted to SEK 629 million (396). This figure includes items affecting comparability, see more on page 4.
Net profit increased by 27% to SEK 151 million (119). Profit per share amounted to SEK 1.95 (1.72).
January - September 2007
Total income amounted to SEK 2,958 million (3,076).
Total expenses before profit sharing amounted to SEK 1,608 million (1,226).
Net profit amounted to SEK 266 million (656), corresponding to profit per share of SEK 3.52 (9.50).
Important events during the third quarter
The Swedish Financial Supervisory Authority (FSA) issued a warning to the subsidiary Carnegie Investment Bank AB(1) for deficiencies in the control of trading operations and a penalty fee of SEK 50 million was charged against earnings for the quarter.
The CEO of Carnegie Investment Bank AB and D.Carnegie & Co Stig Vilhelmson resigned from his positions in conjunction with the FSA’s ruling. Anders Onarheim was appointed new acting CEO. Matti Kinnuen was appointed acting deputy CEO.
Per Axman was appointed new manager for the Asset Management and Private Banking business areas.
Increased market shares in customer driven securities activities.
Subsequent events
The Board of Directors has decided to appeal parts of the FSA ruling, see more on page 9.
An Extraordinary General Meeting will be convened to elect a new Board of Directors.
Bo Haglund was appointed acting CFO.
CEO’s Comments
It is with great pride I report that Carnegie’s employees continued to deliver the highest value to our customers during a very difficult period. Carnegie’s income rose by 28 per cent, excluding income from Max Matthiessen, compared with the corresponding period of the preceding year. Profit before tax increased by 21 per cent, excluding Max Matthiessen. The positive trend has continued into October and is a further testament of the great strength of our organization and the loyalty of our clients.
Naturally, the events following the overstatement of trading positions that were discovered in May, had an impact on the quarter. At the same time, the events of the quarter should mark an end of a period of uncertainty and the start of a new phase in Carnegie’s development.
Securities showed very favorable growth driven by strong commission income. In Investment Banking, Carnegie reported acceptable income despite a significant softening of the market since the first half of the year. Asset Management reported yet another strong quarter driven by high income from mutual funds with a performance-based fee structure and an increase in asset under management. The Private Banking business area and Max Matthiessen showed stable growth in a seasonally weak quarter.
The Swedish Financial Supervisory Authority’s criticism of Carnegie Investment Bank AB at the end of September was harsh. The FSA concluded that the risk management and control systems were insufficient. From late spring and ongoing, we have worked intensively to implement a comprehensive action programme. The FSA stated that the action programme was adequate and has good prospects of correcting the deficiencies.
The decisions by the supervisory authority meant that the former CEO was forced to resign and the Nomination Committee will propose a new Board of Directors at an upcoming Extraordinary General Meeting.
During this period, Carnegie’s employees have worked tirelessly and proudly to deliver strong results. We also managed to recruit a number of top-quality people during the quarter. We continued to receive important proof of strong customer confidence in our operations, such as being ranked in first place in Prospera’s Nordic summary within Investment Banking.
We also decided to relocate, together with Max Matthiessen, to new, more efficient and more modern office premises where we can gather all employees in Stockholm under one roof.
We look back with both insight and regret on what has been a very trying time for our shareholders and our employees. At the same time, it is gratifying that the results of the most recent quarter allow us to conclude that we continued to perform at a high level, despite harsh judgments and turbulent markets. With this as a starting point, we take Carnegie’s customers and shareholders into a new phase on the back of our strong belief in the future, driven by a clear focus on delivering the very best performance.
Anders Onarheim
Acting CEO
Contact persons
For further information, please contact: Anders Onarheim (acting CEO) +46 8-676 88 00, Bo Haglund (acting CFO) +46 8-5886 90 03 or Andreas Koch (Information and IR) +46 8-676 86 39. Further information is available at www.carnegie.se/ir.
(1) Carnegie Investment Bank AB is a wholly owned subsidiary of D. Carnegie & Co AB, whose shares are listed on the OMX Nordic Exchange. In this report “Carnegie” means the listed company.