CAPITAL MARKETS UPDATE The Curtain Hotel London 29 November 2018 - - PowerPoint PPT Presentation

CAPITAL MARKETS UPDATE

The Curtain Hotel – London

29 November 2018

CAPITAL MARKETS UPDATE

The Curtain Hotel – London

29 November 2018

3

Welcome

Our Executive Committee is presenting today

Saskia Hovers Reinout van Riel Paulus de Wilt Caroline Oosterbaan Michel Kant Herman Dijkhuizen

4

AGENDA

An overview

Q&A

14:00 INTRODUCTION

Michèle Negen, IR

14.10 – 14.30 REFLECTIONS

Paulus de Wilt, CEO

14.30 – 15.00 REBALANCING AT THE CORE OF OUR BUSINESS

Reinout van Riel, CRO

15.00 – 15.20 CORPORATE PRODUCT OFFERING

Caroline Oosterbaan, Corporate Banking Products Victor Ruitenberg, Leveraged Finance

16:10 – 16.45 FINANCIAL DRIVERS Q3 YEAR TO DATE 2018

Herman Dijkhuizen, CFO

16:45 – 17.15 Q&A AND CLOSING REMARKS

Paulus de Wilt, CEO Herman Dijkhuizen, CFO

15.20 – 15.40 UPDATE ON OUR CLIENT FRANCHISE

Saskia Hovers, Corporate Banking Clients Sven de Veij, Offshore Energy

15.40 – 16.00 TRENDS IN THE DUTCH MORTGAGE MARKET

Michel Kant, Retail Banking Frits van der Scheer, Originate to Manage

Break

5

REFLECTIONS

Paulus de Wilt, CEO

7

8

9

10

11

12

AGENDA

An overview

Q&A

14:00 INTRODUCTION

Michèle Negen, IR

14.10 – 14.30 REFLECTIONS

Paulus de Wilt, CEO

14.30 – 15.00 REBALANCING AT THE CORE OF OUR BUSINESS

Reinout van Riel, CRO

15.00 – 15.20 CORPORATE PRODUCT OFFERING

Caroline Oosterbaan, Corporate Banking Products Victor Ruitenberg, Leveraged Finance

16:10 – 16.45 FINANCIAL DRIVERS Q3 YEAR TO DATE 2018

Herman Dijkhuizen, CFO

16:45 – 17.15 Q&A AND CLOSING REMARKS

Paulus de Wilt, CEO Herman Dijkhuizen, CFO

15.20 – 15.40 UPDATE ON OUR CLIENT FRANCHISE

Saskia Hovers, Corporate Banking Clients Sven de Veij, Offshore Energy

15.40 – 16.00 TRENDS IN THE DUTCH MORTGAGE MARKET

Michel Kant, Retail Banking Frits van der Scheer, Originate to Manage

Break

REBALANCING AT THE CORE OF OUR BUSINESS

Reinout van Riel, CRO

14

TRENDS IN OUR MARKETS

How do we deal with them

Liquid markets with ample liquidity Competition from banks/ non-banks Turn of the cycle? Sustainability

▪ Build our business around the three C’s:

▪ Client ▪ Cash flow ▪ Collateral

▪ Team up with partners ▪ Decide what on own balance / what off balance ▪ Calibrate our portfolios down ▪ Grow where

• pportunities lie

▪ Manage our portfolios hands-on ▪ ISS Oekom Rating and Sustainalytics ratings upgrade received 2018 ▪ Every corporate deal vetted on CSR elements

15

READY AND WELL PREPARED

To absorb industry-wide regulatory changes

Europe Asset quality Non-financial risks

▪ Brexit ▪ Italy ▪ Movements in underlying sectors ▪ Reduced equity exposure ▪ Stress testing ▪ Impairments ▪ Model validation ▪ Cyber risk ▪ Conduct & AML ▪ No payment services ▪ All corporate clients individually assessed ▪ Deliberate choice in products and geography

Capital

▪ Well capitalised with 16.8% CET 1 ratio ▪ Basel IV impact manageable

16

HOW DO WE DEAL WITH CURRENT CHALLENGES

Prudent risk management taking action where and whenever needed

Smaller individual tickets, overall shift towards smaller ticket businesses like leasing and structuring Growing the retail business

✓ Historically low risk with currently very low (~1bps) realised losses

Rebalancing exposures on corporate business Pro-actively manage our portfolios, looking at the continuously changing markets

✓ Offshore Energy & Shipping markets stabilising to picking up; Leveraged Finance poses new challenges ✓ Well diversified Commercial Real Estate (CRE) book, solidly structured with high churn ✓ Mezzanine & Equity portfolio doing well, making use of good market to exit

NIBC is not a market share player; we are not forced to grow for the sake of growing

✓ Deliberate reduction of Offshore Energy & Maritime sectors ✓ On-balance exposures in Leveraged Finance book will also be reduced

Growth in Buy-to-Let, Structuring, Leasing and mortgages; building granular portfolios, well-collateralised with higher churn

Q&A

18

AGENDA

An overview

Q&A

14:00 INTRODUCTION

Michèle Negen, IR

14.10 – 14.30 REFLECTIONS

Paulus de Wilt, CEO

14.30 – 15.00 REBALANCING AT THE CORE OF OUR BUSINESS

Reinout van Riel, CRO

15.00 – 15.20 CORPORATE PRODUCT OFFERING

Caroline Oosterbaan, Corporate Banking Products Victor Ruitenberg, Leveraged Finance

16:10 – 16.45 FINANCIAL DRIVERS Q3 YEAR TO DATE 2018

Herman Dijkhuizen, CFO

16:45 – 17.15 Q&A AND CLOSING REMARKS

Paulus de Wilt, CEO Herman Dijkhuizen, CFO

15.20 – 15.40 UPDATE ON OUR CLIENT FRANCHISE

Saskia Hovers, Corporate Banking Clients Sven de Veij, Offshore Energy

15.40 – 16.00 TRENDS IN THE DUTCH MORTGAGE MARKET

Michel Kant, Retail Banking Frits van der Scheer, Originate to Manage

Break

19

CORPORATE PRODUCT OFFERING

Caroline Oosterbaan, Corporate Banking Products Victor Ruitenberg, Leveraged Finance

21

CORPORATE PRODUCT OFFERING

Rebalancing portfolios driven by our view on global trends

Technology & Data Regulation

▪ Technological advancements ▪ Radical increase in data availability ▪ Declining cost of data storage ▪ Higher transparency ▪ Greater competition GOING FORWARD ▪ We are there for fast growing, innovative companies with range of relevant product solutions ▪ Building granular portfolio of (direct) mezzanine and equity ▪ Selectively enhancing our Corporate Finance & Capital Markets franchise ▪ Rebalancing Leveraged Finance portfolio, investing in our growing Receivables financing business TRENDS FINANCIAL INDUSTRY

Artificial intelligence / Big Data

Customization Aging Population Platform Economies Sustainability Innovation

RELEVANT GLOBAL THEMES

22

ENABLING GROWTH AND INNOVATION

Financing our client RatePay, established Fintech in Germany

RATEPAY

▪ NIBC supporting RatePay’s impressive growth in digital factoring and payment services ▪ Founded in 2009, RatePay is a Top3 provider of E-Commerce prepayment & factoring solutions in Germany ▪ Regulated by the Bafin and part of the Concardis payment group, RatePAY has a strong financial profile and a significantly growing and granular receivables portfolio ▪ NIBC provided a Receivable Financing solution, providing a fast and tailor-made solution

23

TRENDS IN CURRENT LEVERAGED FINANCE MARKET

Sustained sponsor activity and high liquidity leads to borrower friendly transaction structures

WESTERN EUROPEAN LOAN ISSUANCE (excluding US borrowers and Repricings) MARKET DEVELOPMENTS ▪ Sustained financial sponsor activity at normalised post-crisis levels ▪ EV and leverage multiples have gone up

• ver the past years

▪ Substantial equity contributions continue (>45%) ▪ Transaction structures and documentation have become more borrower friendly, driven by high liquidity INCREASING EV’S & EQUITY CUSHIONS

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1H18

50 100 150 200 250 Source: Fitch Credit Opinions Database Sponsor Projection Number of deals

0.x 2.x 4.x 6.x 8.x 10.x 12.x 0% 10% 20% 30% 40% 50% 60% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q2 2018

Equity cushion EV multiple

24

LEVERAGED FINANCE AT NIBC

Longstanding business, well diversified portfolio, serving mid-market private equity clients

OVERVIEW ▪ For over 20 years NIBC has provided financing for our financial sponsor clients acquiring companies in selected geographies and industries ▪ Focus on mid-market companies with EV of EUR 50-500 ▪ Selective origination has resulted in a well diversified and granular portfolio ▪ Re-balancing portfolio ▪

• Ca. 90 assets, for over 50 sponsor

clients ▪ Average exposure around EUR 16m ▪ Increasing Super Senior, while very limited cov-lite ▪ Nordics as new geography ▪ Successful closing of NW5 CLO in Q3 2018, providing investment

• pportunities to our institutional

investor clients

“The acquisition of HG was a great investment opportunity for us. NIBC acted as a reliable partner by contributing to the financing in a swift and timely manner.” Hiram Claus, Cobepa

25

LEVERAGED FINANCE

Strong alignment with NIBC strategy, enabling growth for our clients Highly selective origination Pro-active Portfolio Management Well diversified and granular portfolio Experienced team, local know how, both on and off-balance

Q&A

27

AGENDA

An overview

Q&A

14:00 INTRODUCTION

Michèle Negen, IR

14.10 – 14.30 REFLECTIONS

Paulus de Wilt, CEO

14.30 – 15.00 REBALANCING AT THE CORE OF OUR BUSINESS

Reinout van Riel, CRO

15.00 – 15.20 CORPORATE PRODUCT OFFERING

Caroline Oosterbaan, Corporate Banking Products Victor Ruitenberg, Leveraged Finance

16:10 – 16.45 FINANCIAL DRIVERS Q3 YEAR TO DATE 2018

Herman Dijkhuizen, CFO

16:45 – 17.15 Q&A AND CLOSING REMARKS

Paulus de Wilt, CEO Herman Dijkhuizen, CFO

15.20 – 15.40 UPDATE ON OUR CLIENT FRANCHISE

Saskia Hovers, Corporate Banking Clients Sven de Veij, Offshore Energy

15.40 – 16.00 TRENDS IN THE DUTCH MORTGAGE MARKET

Michel Kant, Retail Banking Frits van der Scheer, Originate to Manage

Break

UPDATE ON OUR CLIENT FRANCHISE

Saskia Hovers, Corporate Banking Clients Sven de Veij, Offshore Energy

30

NPS SCORE

37% 64% 67%

2016 2017 3Q 2018

+67%

OVERVIEW ▪ Mid-market companies, privately

• wned often by entrepreneurs or

family ▪ NIBC is a sector player that supports its clients through the cycle ▪ Pro-actively adjust commercial strategies and focus depending on market circumstances and global trends ▪ Trend of sustainability irreversible and prerequisite for NIBC and our clients, driving our choices ▪ Green Frog Power as solution provider for unbalances in electricity grid

REFLECTIONS ON OUR CLIENT FRANCHISE

Enabling growth for our clients at decisive moments

CLIENT EXAMPLE

31

REFLECTIONS ON OUR CLIENT FRANCHISE

Financing sustainable real estate

PLESMANDUIN – IMPACT VASTGOED ▪ Redevelopment of monumental office buildings former Ministry of Infrastructure into 350 high end apartments ▪ Short term development financing ▪ High profile net worth entrepreneurial clients, real estate developers ▪ NIBC supports sustainable transformation contributing to the environment and preservation of monumental landmark building

32

ENERGY MARKET

A growing market in transformation

WORLD DEMAND FOR ENERGY 2000 - 2040 (In million tonnes) OVERVIEW ▪ Growing sector with strong business opportunities ▪ Improved underlying fundamentals ▪ Underinvest in offshore projects in recent year ▪ Cost reductions achieved in the industry ▪ Targeting service providers value chain of Offshore Energy ▪ Main focus on North-Western Europe ▪ Strong market position ▪ Through the cycle sector approach ▪ Sustainability shift

Source: Energy Outlook IEA 2018

2,308 3,750 3,768 3,809 3,665 4,435 4,754 4,894 2,071 3,107 3,539 4,436 675 688 805 971 662 1,334 1,855 3,014 646 658 666 591 2000 2017 2025 2040 Coal Oil Gas Nuclear Renewables Solid Biomass

33

PORTFOLIO MANAGEMENT AND ORIGINATION IN OFFSHORE ENERGY

A growing market in transformation

NEW BUSINESS SELECTION ▪ Following our clients leads to a mix of clean energy exposure and traditional energy exposure ▪ Current market dynamics provide interesting business opportunities ▪ Prudent new deal selection for well secured and solidly priced transactions ▪ Supporting existing clients as well as new clients PORTFOLIO MANAGEMENT ▪ Cautious approach to some sub-sectors ▪ Close to our clients ▪ Granular portfolio

34

OFFSHORE ENERGY AT NIBC

Supporting a client in transformation

CASE SETTING ▪ Existing client actively involved in the energy transition ▪ High-spec asset built at reputable yard ▪ Ability to work in both O&G and Offshore Wind installation market ▪ New contracts in Offshore Wind installation market provided basis for debt structuring

Q&A

36

AGENDA

An overview

Q&A

14:00 INTRODUCTION

Michèle Negen, IR

14.10 – 14.30 REFLECTIONS

Paulus de Wilt, CEO

14.30 – 15.00 REBALANCING AT THE CORE OF OUR BUSINESS

Reinout van Riel, CRO

15.00 – 15.20 CORPORATE PRODUCT OFFERING

Caroline Oosterbaan, Corporate Banking Products Victor Ruitenberg, Leveraged Finance

16:10 – 16.45 FINANCIAL DRIVERS Q3 YEAR TO DATE 2018

Herman Dijkhuizen, CFO

16:45 – 17.15 Q&A

Paulus de Wilt, CEO Herman Dijkhuizen, CFO

15.20 – 15.40 UPDATE ON OUR CLIENT FRANCHISE

Saskia Hovers, Corporate Banking Clients Sven de Veij, Offshore Energy

15.40 – 16.00 TRENDS IN THE DUTCH MORTGAGE MARKET

Michel Kant, Retail Banking Frits van der Scheer, Originate to Manage

Break

TRENDS IN THE DUTCH MORTGAGE MARKET

Michel Kant, Retail Banking Frits van der Scheer, Originate to Manage

39

MORTGAGE FRANCHISE

The Netherlands

1 Publication date: 10 – 22 – 2018, Kadaster 2 HDN

MORTGAGE ORIGINATION IN THE NETHERLANDS1 (EUR billion) MARKET DEVELOPMENTS Increase in volumes - the mortgage

• rigination volumes substantially

increased Decrease in loan losses - Losses continue to decrease, due to declining unemployment rate and improving housing market (<1bps) Increase in fixed terms - High demand for longer fixed interest terms (20/30 years) due to low interest rate environment Leading to successful launch of Originate-to-Manage in 2016

0% 10% 20% 30% 40% 50% 60% 70% 2014 2015 2016 2017 2018 10 years 20 years 30 years

CHOSEN FIXED-TERM MORTGAGE ORIGINATION2 BUSINESS MODEL Independent advice - Mortgages are distributed via independent advisors (access to 4000) throughout the country Efficient - No current accounts

• ffered and no expensive branch

network Scalable - Non-value adding activities are outsourced resulting in an efficient and scalable setup

37 49 64 81 101 78

2013 2014 2015 2016 2017 YTD Q3 2018

40

ORIGINATE TO MANAGE

How does it work

UNIQUE SELLING POINTS

Investor preference – Maturity, NHG Alignment of interest - no differences in process and underwriting for own book and OTM mortgages Balance sheet support – Ability to facilitate investor appetite Experienced mortgage originator and servicer – Leveraging on existing experience

PROCESS

Independent advice - Retail Client and NIBC ▪ Label NIBC direct ▪ No differences in underwriting for OTM and own book NIBC and Investor (OTM partner) ▪ Allocation based on pre-agreed terms ▪ Allocation at moment of loan

• ffer

▪ Financial risks (credit and interest rate risk) fully transferred

Lender of Record

Retail client Investor

NIBC

• wn book

NIBC OTM

OTM Partners

41

AMBITION TO GROW FURTHER

Building on strategic partnerships

WAY FORWARD ▪ NIBC and AXA IM announced strategic partnership ▪ Mandate currently over € 3.5 billion ▪ Intensify strategic partnerships ▪ Further diversify the investor base

42

DUAL TRACK MORTGAGE STRATEGY

Creating interest income and fee income

TRANSFORMATION ▪ Retail client offering transformed from solely own balance sheet lending to a dual strategy by including originate-to- manage in 2016 in order to:

▪ Follow the client in their preference to fix their interest rate for a long maturity (20-30 years) ▪ Enhance income diversification by adding the fee generating originate-to- manage business line ▪ Create flexible origination (on balance sheet or originate-to-manage) depending on market circumstances ▪ Creating a one-stop shop for brokers with a full product range from niche products to price competitive long interest fixed terms

EVOLUTION OF MORTGAGES ORIGINATION… …RESULTING IN TRANSFORMATION OF MORTGAGE PORTFOLIO

CAGR: 15%

0.0 0.5 1.0 1.5 2.0 2.5 2016 2017 Q3 2018

Origination Own book Origination OTM

0.0 2.0 4.0 6.0 8.0 10.0 12.0 2016 2017 Q3 2018

Portfolio volume OTM Portfolio volume Own book

Q&A

WE WILL BE RIGHT BACK!

Let’s have a short break

45

AGENDA

An overview

Q&A

14:00 INTRODUCTION

Michèle Negen, IR

14.10 – 14.30 REFLECTIONS

Paulus de Wilt, CEO

14.30 – 15.00 REBALANCING AT THE CORE OF OUR BUSINESS

Reinout van Riel, CRO

15.00 – 15.20 CORPORATE PRODUCT OFFERING

Caroline Oosterbaan, Corporate Banking Products Victor Ruitenberg, Leveraged Finance

16:10 – 16.45 FINANCIAL DRIVERS Q3 YEAR TO DATE 2018

Herman Dijkhuizen, CFO

16:45 – 17.15 Q&A AND CLOSING REMARKS

Paulus de Wilt, CEO Herman Dijkhuizen, CFO

15.20 – 15.40 UPDATE ON OUR CLIENT FRANCHISE

Saskia Hovers, Corporate Banking Clients Sven de Veij, Offshore Energy

15.40 – 16.00 TRENDS IN THE DUTCH MORTGAGE MARKET

Michel Kant, Retail Banking Frits van der Scheer, Originate to Manage

Break

FINANCIAL DRIVERS Q3 YEAR TO DATE 2018

Herman Dijkhuizen, CFO

All figures Q3 2018 are unaudited / not reviewed All financials relate to NIBC Holding

47

PERFORMANCE Q3 2018

Above medium-term objectives contributing to building the dividend curve

Medium term

• bjective

H1 2018 YTD Q3 2018 CET 1 > 14% 16.4% 16.8% Cost Income < 45% 47% 43% Return

• n equity1

>10-12% 10.5% 13.4%

✓ ✓ ✓ ✓

H1 2018 EPS1 1.15 H1 2018 Dividend € 37 million

(€ 0.25 per share)

Q3 2018 € 37 million

(€ 0.25 per share)

✓

YTD Q3 2018 1.46

1 Annualized

✓ ✓

48

FURTHER GROWTH IN 2018

Development of commercial assets

1 Retail client assets for 2016 and 2017 exclude the fair value adjustment, making the figures comparable to the IFRS 9 figures of 2018

CLIENT ASSETS FOR OWN BOOK1 (Euro billions)

0.7 1.6 1.9 0.3 1.9 3.3 3.5

2016 2017 H1 2018 Q3 2018 Retail assets under management Mandate

10.2 9.8 10.0 10.1 8.4 8.8 9.2 9.2

2016 2017 H1 2018 Q3 2018 Corporate clients assets Retail client assets

CONTINUED REBALANCING OF THE PORTFOLIO We are rebalancing the portfolio, grasping

• pportunities in segments that make the

portfolio more granular: ▪ The mortgage loan portfolio for own book increased by 5% in 2018 ▪ The mortgage loan portfolio in OTM nearly tripled in 2018 ▪ Corporate client assets increased by 3% in 2018

19.0 18.9 19.2 19.3

MORTGAGES ORIGINATE TO MANAGE (Euro billions)

49

DEVELOPMENTS IN PORTFOLIO SPREADS

Slightly higher portfolio volumes at relatively stable asset spreads in 2018

MORTGAGE SPREADS ABOVE BASE

(Percentages)

CORPORATE LOAN SPREADS ABOVE BASE

(Percentages)

COMMENTS

▪ Although in 2018 spreads on the commercial assets remained relatively stable, especially in the mortgage business origination spreads are under pressure ▪ Markets are therefore more challenging, with - in our view - certain risks increasingly not always being correctly priced into the current yield curves ▪ Therefore we will continue to exercise a margin over volume origination strategy at cautious origination levels

2.69% 2.53% 2.41% 3.91% 3.52% 3.35% 2.42% 2.08% 1.48%

2016 2017 H1 2018 YTD 2018

Portfolio spread Origination spread BTL Origination spread owner occupied

2.74% 2.79% 2.76% 3.31% 3.06% 2.96%

2016 2017 H1 2018 YTD 2018 Portfolio spread Origination spread

50

NET INTEREST INCOME

Continued improvement of net interest margin, mainly driven by lower funding spreads

NET INTEREST MARGIN (Percentages) FUNDING SPREAD ABOVE BASE (Percentages) DECREASED FUNDING SPREAD IS DRIVING NIM ▪ Net interest margin improved further to approximately 2% (excl. IFRS 9: approximately 1.8%) ▪ Main driver behind the continued improvement of net interest margin is the further decrease of the average funding spread ▪ We are also benefiting from favorable market environment with respect to interest rates to further increase the average maturity in our wholesale funding ▪ We do foresee that the decrease of the average funding spread could bottom-

• ut in 2019

▪ The growth of commercial assets in 2018 also had a positive impact on net interest income

1.47% 1.64% 1.90% 1.76%

2016 2017 H1 2018 YTD 2018 Net interest margin Net interest margin excl. IFRS 9

1.01% 0.87% 0.81%

2016 2017 H1 2018 YTD 2018 Funding spread

51

OTHER OPERATING INCOME

Improvement of net fee income and investment income

NET FEE INCOME (Euro millions) ▪ Originate-to-manage fees display strong growth in line with the continued growth of related assets under management. ▪ The relatively high investment management fees are fueled by strong performance of equity investments ▪ Investment income in Q3 2018 is driven by a number of closed sales (Cyclomedia and SportCity) as well as a (partial) revaluation of NEIF. At closing of the sale of assets from NEIF in Q4 2018 an additional gain will be realized ▪ Based on the closing and settlement of realized sales we anticipate a strong decrease by 175m (incl. undrawn) of the equity investment portfolio in Q4 2018, leading to a decrease of around approximately € 600m of RWAs ▪ This decrease in RWAs includes € 26m related to HSH Nordbank, for which we have lowered our commitment to € 30m as opposed to € 56m mentioned in our interim report 2018 INVESTMENT INCOME (Euro millions)

23 67 21 56

2016 2017 H1 2018 YTD 2018

32 54 21 34

2016 2017 H1 2018 YTD 2018

52

OPERATING EXPENSES AND CREDIT LOSS EXPENSE

Further trending down

COST/INCOME (Percentage) ▪ The cost/income ratio of 43% at Q3 2018 also benefits from the relatively high investment income ▪ Operating expenses YTD Q3 2018 include one-off expenses of € 9m related to the IPO and € 4m related to Vijlma (assets sold in 2017, final settlement in 2018) ▪ NIBC executes a full credit loss closing process twice a year at the half year and full year reporting dates ▪ The YTD Q3 2018 credit loss expenses reflects the H1 2018 closing and additionally a Q3 internal review CREDIT LOSS EXPENSE AND COST OF RISK (EUR million, Percentage)

49% 48% 47%

2016 2017 H1 2018 YTD 2018 49 56 21 31 20 4 2 3 3 0.74% 0.62% 0.55% 2016 2017 H1 2018 YTD 2018

Credit loss expense AQR Other credit losses Cost of risk

53

NET PROFIT AND RETURN ON EQUITY

Continued strong performance

INCOME STATEMENT AND KEY FIGURES NET PROFIT AND RETURN ON EQUITY (EUR million) CONTINUED STRONG PERFORMANCE ▪ Continued strong performance in Q3 2018, with all key performance metrics displaying improvement ▪ Net profit in 2018 is boosted by high investment income, driven by a number

• f sales of equity investments of which

a portion will be closed in Q4 2018 ▪ Net interest income and net fee income also improved in line with the growth

• f NIBC’s business

▪ Continued cost control, keeping the cost/income ratio sustainably below 45%

104 160 84 160 53 6.0% 9.0% 10.5%

2016 2017 H1 2018 YTD 2018 Profit after tax Profit Vijlma Return on equity

NIBC Holding YTD YTD (millions of euros) Q3 2018 H1 2018

Net interest income 318 207 Net fee and commission income 34 21 Investment income 56 21 Other 5 5 Operating income 413 254 Operating expenses 177 120 Net operating income 237 134 Credit loss expense 31 21 Corporate tax 38 23 Profit after tax 168 90 Profit attributable to non controlling interest 9 6 Net profit attributable to parent shareholders 160 84 CET 1 ratio 16.8% 16.4% RoE NIBC Holding 13.4% 10.5% Cost-to-income ratio 43% 47% Return on assets 0.97% 0.76% Earnings per share (in EUR) 1.46 1.15

54

FUNDING PROFILE

Continuously active in funding capital markets, diversifying NIBC’s funding profile

1 Overview of public funding transactions issued in Q3 2018. All funding transactions are issued by NIBC Bank

SINCE H1 2018 FURTHER DIVERSIFIED FUNDING PROFILE1 IMPROVEMENT RATING NIBC BANK CONTINUES COMMENTS

▪ Improvement S&P rating to BBB positive outlook was partially driven by:

▪ NIBC Bank’s status as ‘bail-in bank’ ▪ the intention of NIBC to comply to MREL through own funds and senior non- preferred only ▪ the limited amount of senior non- preferred required to comply with the (as yet non-binding) MREL-target ▪

• ur intention to issue non-preferred

within 12 months

▪ Continued to diversify NIBC’s wholesale funding profile by means of transactions in various maturities and currencies

2018 2017 2016 2015

BBB- Stable BBB- Stable BBB- Positive BBB- Positive BBB Stable BBB BBB Posi

• sitiv

tive BBB Stable

NIBC Bank also received an unsolicited rating from Moody’s of Baa1 Type Size (m) Original maturity Spread (coupon) RMBS EUR 447 Call date 5yrs 3m eur +0.41% (3m eur+0.41%) Senior unsecured GBP 250 5yrs UKT+2.05% (3.125%) Senior unsecured EUR 300 2yrs 3m eur +0.40% (3m eur + 0.50%) Covered bond EUR 500 10yrs m/s+0.15% (1.00%)

55

CAPITAL POSITION

Continued increase of solvency ratios and a strong leverage ratio at 6.7%

1 The SREP ratio excludes pillar 2 guidance (P2G)

CET 1 RATIO (Percentage) LEVERAGE RATIO (Percentage) COMMENTS ▪ The solvency ratios are comfortably above our SREP-levels and provide us with a sufficient buffer to comply with the future Basel IV regulation (impact +20-30% RWAs) ▪ The ratio is expected to be positively impacted in Q4 2018 by the decrease of approximately € 600m in RWAs from the already realized but not yet closed/settled sale of equity investments ▪ NIBC permanently calibrates its credit models: expected impact in 2019

• f approximately € 300m higher RWAs

▪ The current SREP ratio of 10% for CET 1 is expected to increase to 10.7% as of 1/1/2019 due to: ▪ the final transition of the capital conservation buffer from 1.875% to 2.5% ▪ an anticipated increase of the countercyclical buffer from 0.1% to 0.2%

6.5% 7.7% 6.5% 6.8% 6.7%

2016 2017 1-jan-18 H1 2018 YTD 2018

15.1% 19.3% 16.1% 16.4% 16.8%

2016 2017 1-Jan-18 H1 2018 YTD 2018

IAS 39 IFRS 9

Target 14% SREP 10%1

IAS 39 IFRS 9

56

DIVIDEND

Building our dividend curve

DIVIDEND PAY-OUT (EUR million, Percentage) EARNINGS AND DIVIDEND PER SHARE (EUR) COMMENTS ▪ The CET1 ratio of 16.8% is well above the medium-term objective of 14% and the ROE well above 10% , enabling: ▪ NIBC to be well prepared for the potential deterioration of credit market circumstances ▪ the future pay-out of solid dividends ▪ future growth of our business ▪ NIBC to be well prepared for Basel IV ▪ A 2nd interim dividend of EUR 0.25 per share (EUR 37m) is payable in December 2018, backed by profits on some equity investment exits

0.71 1.46 1.15 1.46 0.17 0.66 0.25 0.50 2016 2017 H1 2018 YTD 2018 Earnings per share (annualised) Dividend per share 25 96 37 37 37 25% 45% 2016 2017 H1 2018 YTD 2018 Dividend paid 2nd interim dividend Pay-out ratio

57

MEDIUM-TERM OBJECTIVES

Continued delivering as promised YTD Q3 2018

Return on Equity (Holding) > 10 - 12% 13.4% Cost/income (Holding) < 45% 43% CET1 (Holding) > 14% 16.8% Dividend pay-out (Holding) > 50% €0.50 per share Rating (Bank) BBB+ BBB positive outlook Metrics Medium-term objectives YTD 2018

58

AGENDA

An overview

Q&A

14:00 INTRODUCTION

Michèle Negen, IR

14.10 – 14.30 REFLECTIONS

Paulus de Wilt, CEO

14.30 – 15.00 REBALANCING AT THE CORE OF OUR BUSINESS

Reinout van Riel, CRO

15.00 – 15.20 CORPORATE PRODUCT OFFERING

Caroline Oosterbaan, Corporate Banking Products Victor Ruitenberg, Leveraged Finance

16:10 – 16.45 FINANCIAL DRIVERS Q3 YEAR TO DATE 2018

Herman Dijkhuizen, CFO

16:45 – 17.00 Q&A AND CLOSING REMARKS

Paulus de Wilt, CEO Herman Dijkhuizen, CFO

15.20 – 15.40 UPDATE ON OUR CLIENT FRANCHISE

Saskia Hovers, Corporate Banking Clients Sven de Veij, Offshore Energy

15.40 – 16.00 TRENDS IN THE DUTCH MORTGAGE MARKET

Michel Kant, Retail Banking Frits van der Scheer, Originate to Manage

Break

Q&A

CLOSING REMARKS

Paulus de Wilt, CEO

61

CLOSING REMARKS

NIBC has defined its role in the changing financial ecosystem

...by partnering with large players to benefit from their economies of scale, ...actively seeking cooperation with fintechs to import their growth and agility, ...and continuous evaluating potential bolt-on M&A opportunities

NIBC has a unique and differentiated business model

...capable to re-balance portfolios, ...to pro-actively manage portfolios down, if needed, to align to our risk appetite, ...or to grasp opportunities to further grow our client franchise

NIBC is building a strong earnings track record

...by disciplined execution of our strategy, ...leading to a delivery upon our mid-term objectives ...resulting in strong capital generation and sustainable 10%+ returns

62

DISCLAIMER

FORWARD-LOOKING STATEMENTS The forward-looking statements included in this press release with respect to the business, results of operation and financial condition of NIBC are subject to a number of risks and uncertainties that could cause actual results to differ materially from forecasts, estimates or other statements set forth in this release, including but not limited to the following: changes in economic conditions in Western Europe, changes in credit spreads or interest rates, the results of our strategy and investment policies and objectives. NIBC undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances that may arise after the date of this release.

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CAPITAL MARKETS UPDATE

The Curtain Hotel – London

29 November 2018