FULL YEAR RESULTS 2018 Reflections 27 February 2019 Paulus de Wilt, - PowerPoint PPT Presentation

FULL YEAR RESULTS 2018 Reflections – 27 February 2019 Paulus de Wilt, CEO Herman Dijkhuizen, CFO 1

AGENDA Table of contents 1. BUSINESS UPDATE Name / Company / Chapter FULL YEAR 2018 Paulus de Wilt, CEO 2. FINANCIAL RESULTS FULL YEAR 2018 Herman Dijkhuizen, CFO 3. Q&A Paulus de Wilt, CEO Herman Dijkhuizen, CFO 2

BUSINESS UPDATE FULL YEAR 2018 Paulus de Wilt CEO 3

REFLECTING ON OUR PERFORMANCE… Delivering upon our promises MEDIUM-TERM OBJECTIVES 1 METRICS FY 2018 COMMENTS  Strong net profit FY 2018 of EUR 217 million (+2%) compared to EUR 213 Return on Equity million last year 10 - 12% 13.6% (Holding)  Return on Equity (ROE) of 13.6%, compared to 11.9% in 2017. Excluding non-recurring items, ROE of 10.8% provides a better reflection of real performance in 2018 Cost-to-income < 45% 43% (Holding)  Cost-to-income ratio with 43% well below the medium term objective of 45%, allowing us flexibility to invest in business development, IT and regulatory projects CET1  ≥ 14% 18.5% Fully loaded CET 1 ratio increased from 16.1% on 1 Jan 2018 (post-IFRS 9) to (Holding) 18.5% per FY 2018  Final dividend proposed of EUR 0.36 per share, totaling the full dividend for 2018 at EUR 0.86 per share or EUR 126 million Dividend pay-out ≥ 50% 58% (Holding) Rating BBB Positive Outlook BBB+ (Bank) Note: Financials for NIBC Holding as of FY 2018, unless otherwise stated. All comparison figures of FY 2017 include the results from Vijlma. 4 1 Medium-term objectives as announced on 8 February 2018 at the publication of FY2017 results, except for cost-to-income ratio (Bank)

REFLECTING ON THE WORLD AROUND US Softer economic conditions ahead SOLID ECONOMIC DEVELOPMENTS IN THE BUSINESS CONFIDENCE LEVEL SEEMS TO DUTCH ECONOMY, SOLID FUNDAMENTALS… NETHERLANDS AND GERMANY 1 HAVE PEAKED 2  International, highly competitive economy  Housing price increase 8 103  Low un-employment 6 102 …BUT INTERNATIONAL CHALLENGES REMAIN: 4 101  Interest rate environment: low for even longer  Brexit deadline is nearing, yet uncertainty remains 2 100  International trade tensions, particularly between the US and China 0 99  Turn of the (economic) cycle? 2015 2016 2017 2018 2015 2016 2017 2018 2019 NL GDP (%) GE GDP (%) NL GE NL Unemployment (%) GE Unemployment (%) 1 Real GDP growth in percentage, y-o-y. Sources: Dutch Statistics Office (NL) ; German Federal Statistics Office (GE) 5 2 Source: OECD (2019), Business confidence index (BCI)

REFLECTING ON OUR ROLE IN THE FINANCIAL ECOSYSTEM Distinct strategy and unique business model Rebalance Growth Partnerships with large scale players…. Capital Employment by M&A…. …and innovative fintechs …or shareholder return Operational control Risk appetite 6

CORPORATE CLIENT OFFERING Record origination and active rebalancing leading to stable, more granular portfolio REBALANCING CORPORATE LOAN ORIGINATION FACTS AND FIGURES INCREASED ORIGINATION WELL DIVERSIFIED CORPORATE STRONG NET PROMOTOR CLIENT EXPOSURE SCORE (NPS) 3.7bn 9.9bn 63% C+  Leveraged Finance reduced by EUR 220 mln, but In EUR bn off-balance activities increased through EUR 3.7 450 mln CLO /PRIME  Reduction of equity portfolio: Sale of NEIF leading to a one-off result and significant 72 reduction of RWAs 3.1 3.1  Growth in more granular portfolios of +52% in /OUTPERFORMER leasing (e.g. BEEQUIP) and +23% in receivable finance 2016 2017 2018  Expansion to Nordics 7

RETAIL CLIENT OFFERING Record origination fuelling both on- and off-balance mortgage portfolio GROWTH MORTGAGE LOAN ORIGINATION FACTS AND FIGURES INCREASED ORIGINATION MATURE GRANULAR NIBC DIRECT CUSTOMER SURVEY MORTGAGE PORTFOLIO SCORE SAVINGS 9.3bn 7.7 3.4bn NIBC DIRECT CUSTOMER SURVEY MORTGAGE LOAN PORTFOLIO LOW RISK PORTFOLIO 11.6 SCORE MORTGAGES In EUR bn  On-balance portfolio growth of ± EUR 0.4 billion 8.1 9.8  Growth of owner-occupied portfolio of 6%, with 2.4 8.8 Loan-to-Value (LTV) of 72% 0.7 0.3 0.6 0.4 0.6  Moderate growth in Buy-to-Let (+2.5%), with LTV 0.4 of 52% CAMPAIGNS 8.6 8.2 8.0   NIBC Direct 10yr Anniversary Strong growth OTM portfolio from EUR 0.7 billion to EUR 2.4 billion  2016 2017 2018 Dutch television in ‘Heel Holland Bakt ’ Owner-occupied Buy-to-let  ‘ Aflossingsblij ’ Fair value adjustment Originate-to-manage 8

REFLECTING ON OUR STRATEGIC PRIORITIES Continuous evolution of client franchise, expertise and propositions  Record origination on corporate client side in combination with active 1 Further optimisation of capital structure and rebalancing leads to stable corporate client portfolio diversification of funding  Record production for on- and off balance exposure on retail client side:  Sustainably lowered funding costs from 87 to 73bps NIBC is well positioned for changing consumer behaviour  Further RWA reduction by 9%  CETI ratio further strengthened to 18.5%, well above 2 Focus on growth of asset portfolio in core markets medium-term objective 6  52% growth in lease receivables  Total dividend of EUR 126 million (EUR 0.86 per share)  23% growth in receivables finance offering, supporting for example iwoca, Ratepay  On-balance growth of mortgages of ± EUR 400 million Ongoing investment in people, culture and innovation  IMD and McKinsey to gain outside-in view 3 Diversification of income 5  High personnel turnover (-18%) due to active  Increased OTM mandate to EUR 3.5 billion. Drawn rebalancing of the organisation portfolio at 2.4 billion  Bank- wide ‘Virgin Pulse’ Vitality program  Diversified LF offering to off-balance with successful  Continued talent investments leads to record year for closing of EUR 450m North Westerly V CLO trainees, with large well diversified group  Markets business still challenging 4  Over EUR 3,000 training expenses per employee Building on existing agile and effective organisation  Strategic investments made in various fintechs  Permanent and increased focus on ‘Know Your Customer’ (KYC) and Anti -Money Laundering results in further strengthening of processes on both sides of the business 9

FINANCIAL RESULTS FULL YEAR 2018 Herman Dijkhuizen CFO 10

INCOME STATEMENT Continued strong profitability in FY 2018 PROFIT AFTER TAX AND RETURN ON EQUITY INCOME STATEMENT COMMENTS  IFRS 9 IFRS 9 IAS 39 IAS 39 Profit after tax attributable to shareholders of the ex. non- ex. company in 2018 of EUR 217 million and return on 13.6% recurring Vijlma equity at EUR 13.6% 11.9% 2018 2018 2017 2017 10.8%  Excluding non-recurring in 2018 and the result on Net interest income 427 427 342 354 Vijlma in 2017: 9.0% Net fee and commission income 51 51 54 54  Profit after tax attributable to shareholders of 6.0% Investment income 74 37 67 67 the company increased by 8% to EUR 173 million 44 mainly driven by net interest income on the back 53 Other income (1) (1) 96 (2) of lower funding costs Operating income 551 513 559 473  Return on equity (ROE) increased by 20% to Personnel expenses 108 102 111 111 10.8% compared to 9.0% in 2017 173 160 Other operating expenses 111 107 102 98  ROE in 2017 was based on the pre-IFRS 9 equity 104 Depreciation and amortisation 5 5 6 6 base, which was substantially higher Regulatory charges 15 15 14 14  The profitability improvement in 2018 reflects the 2016 2017 2018 Operating expenses 239 230 233 229 investments made in prior years Net operating income 312 284 326 244 Non-recurring profit Profit after tax Credit loss expense / (recovery) 54 54 56 55 Return on equity Return on equity ex. non-recurring Tax 29 45 54 26 Profit after tax 229 185 216 163 Profit attributable to non- controlling shareholders 12 12 3 3 Profit after tax attributable to 217 173 213 160 shareholders of the company 11