INVESTOR PRESENTATION FULL YEAR 2019 26 February 20 20 1
AGENDA Table of contents Name / Company / Chapter 1. BUSINESS UPDATE FULL YEAR 2019 Paulus de Wilt, CEO 2. FINANCIAL RESULTS FULL YEAR 2019 Herman Dijkhuizen, CFO 2
BUSINESS UPDATE FULL YEAR 2019 Paulus de Wilt CEO 3
FULL YEAR PERFORMANCE Delivering upon our promises with strong performance over 2019 MEDIUM-TERM METRICS OBJECTIVES FY 2019 COMMENTS ▪ Strong net profit 2019 of EUR 194 million Return on Equity 10 - 12% 11.4% ▪ Return on Equity (ROE) of 11.4%, in line with medium-term (Holding) objective (FY 2018: 13.6%) ▪ Excluding non-recurring items profitability increased from 10.8% to Cost-to-income < 45% 44% 11.8% (Holding) ▪ Fully-loaded cost-to-income ratio of 44%, including costs related to the IT re-transition and regulatory projects as well as a CET 1 ≥ 14% 17.1% restructuring provision of EUR 9 million related to the (Holding) discontinuation of the capital markets activities ▪ Strong capital position with CET 1 ratio of 17.1%, including full Dividend pay-out ≥ 50% 59% effects of the IMI (Holding) ▪ Total dividend proposed of EUR 0.78 per share, leading to a payout of EUR 114 million. Rating BBB+ Stable Outlook BBB+ (Bank) . Note: Financials for NIBC Holding as of FY 2019, unless otherwise stated 4
LOOKING AT THE WORLD AROUND US Uncertainty and volatility casting a shadow CHALLENGING ENVIRONMENT FOR BANKS DUTCH ECONOMY HOLDING UP, DUTCH ECONOMY HOLDING UP… GERMAN ECONOMY SLOWING DOWN 1 ▪ International, highly competitive economy Benelux sector performance ▪ Solid housing price development Since 31 Dec 2019 2019 8 NIBC IPO NIBC € 7.52 (9.5)% (14.1)% … BUT INTERNATIONAL UNCERTAINTY ABN AMRO € 16.22 (21.0)% (22.2)% CONTINUES … 6 ING € 10.67 13.6% (10.7)% ▪ The UK’s post -Brexit transition period KBC € 67.06 18.3% 5.1% ▪ Corona virus outbreak and its impact on the Average 0.3% (7.0)% 4 global economy and stock markets Since 25 Febr 2020 YTD 2020 2 NIBC IPO WITH FUNDAMENTAL CHANGES IN KEY NIBC € 9.61 27.80% 9.80% DRIVERS ABN AMRO € 14.00 (13.70)% (41.50)% ▪ Interest rate environment: low-for-longer 0 ING € 9.17 (14.20)% (31.60)% 2015 2016 2017 2018 2019 ▪ Turn of the (economic) cycle KBC € 65.10 (2.90)% (7.60)% NL GDP (%) GE GDP (%) Average (0.70)% (20.10)% ▪ Higher regulatory requirements related to NL Unemployment (%) GE Unemployment (%) license to operate 1 Real GDP growth in percentage, y-o-y. Sources: Dutch Statistics Office (NL) ; German Federal Statistics Office (GE) 5
ADAPTING TO A LOW-FOR-LONGER ENVIRONMENT Optimising the balance sheet HISTORIC INFLATION FORWARD & SWAP RATE OPTIMISED FUNDING MIX COMMENTS ▪ Funding mix has been optimised, 2 decreasing average cost-of-funds ▪ Increased focus on originate-to-manage 1.5 for retail as well as corporate lending 1.22% business 1.01% ▪ 1 Focus own book on shorter maturities 0.87% compared to focus on longer maturities 0.73% 0.71% for originate-to-manage origination 0.5 ▪ Increased investment portfolio by 41% due to revaluations and several new 0 investments -0.5 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2020 5y/5y EUR inflation forward Funding spread 10y EUR swap rate (vs 6m EURIBOR) 6
TURN OF THE ECONOMIC CYCLE Continued rebalancing of our portfolios towards more resilience COMPOSITION NIBC’S NIBC PORTFOLIO TRANSFORMATION SINCE 2016 COMMENTS CLIENT ASSETS ▪ Clients assets grew with 4% over the period 2016 - FY 2016 vs. 2019, by continued rebalancing towards a higher FY 2019 FY 2016 FY 2019 in EUR billion 2016 share of retail, resulting in a faster de-risking of the Energy 0.7 1.2 -37% balance sheet Shipping 1.0 1.5 -33% ▪ Decreased exposure in the cyclical sectors Shipping, Financial sponsors & Leveraged Finance 1.0 1.7 -38% Commercial Real Estate Energy and Leveraged Finance by EUR 1.7 billion 1.6 1.0 51% Fintech & Structured finance 1.3 0.7 48% 45% ▪ Growth in more granular exposures in Fintech & 19.1bn Infrastructure 1.7 1.7 -1% 55% Structured Finance Mid Market Corporates 1.5 1.4 7% ▪ New businesses focused on higher margins like Total corporate loans (drawn & Beequip (4.94%) and Buy-to-Let (3.45%) undrawn) 8.9 9.2 -4% Beequip and other lease receivables ▪ 0.5 0.2 > 100% Strong growth of the Originate-to-manage offering Investment loans of EUR 4.6 billion 0.2 0.2 -13% Retail bank 2019 Equity investments 0.3 0.3 16% Corporate bank Investment property - 0.3 - Total corporate client assets 9.9 10.2 -3% Owner-occupied mortgage loans 9.1 8.5 5% Buy to Let mortgages 0.7 0.4 77% 19.7bn 50% 50% Total retail client assets 9.8 8.8 11% OTM Retail client assets 4.3 0.0 OTM Corporate client assets 0.8 0.4 65% Originate-to-manage assets 5.1 0.5 > 100% 7
LICENSE TO OPERATE Impacted by regulatory requirements … ULTIMATELY INCREASING THE COSTS ASSOCIATED WITH THE LICENSE TO OPERATE … … ARE IMPACTING THE ‘FINANCIAL ECOSYSTEM’ IN WHICH WE ▪ Project CARE on the OPERATE… CHANGING STAKEHOLDER corporate client side DEMANDS …. ▪ Customer Due Diligence ▪ Ramping up towards (CDD) for our Buy-to-Let ▪ Impact of society Basel IV clients ▪ Public opinion ▪ ▪ Multitude of regulatory 3rd party savings restriction ▪ Regulatory environment projects necessary ▪ Delivering on our promises ▪ Financial stakeholders ▪ Importance of big data with respect to addressing technology observations of the regulator ▪ Sustainability / ESG ▪ Partnerships with ▪ Know Your Customer fintechs (KYC) procedures ▪ Banker’s Oath ▪ Tax morality …. and changing the way we do business ▪ Remuneration 8
SUSTAINABILITY EMBEDDED IN OUR STRATEGY The way we do business IT BEGINS WITH US INTEGRATED BUSINESS APPROACH STRONG SUSTAINABILITY RATINGS ▪ ▪ Embedded in NIBC’s business strategy 100% renewable electricity ISS OEKOM across all locations & the way we do business C+ / Prime ▪ ▪ Robust sustainability policy Significant reduction in use of framework gas for heating and cooling ▪ ▪ Integrated risk management 25% of employees commute by SUSTAINALYTICS bicycle ▪ Comprehensive reporting 22 OWN OPERATIONS COMMUNITY ENGAGEMENT MSCI ▪ 6 NGO’s operating from NIBC’s headquarters BBB ▪ Focus on SCR activities which directly benefit our communities Carbon Neutral in Head office 100% ▪ Sustainability challenges in the NIBC REPRISK own operations Co2-neutral Talent Program AA ▪ High engagement among employees 9
CORPORATE CLIENT OFFERING Progressing well with rebalancing strategy CORPORATE LOAN ORIGINATION REBALANCING THE PORTFOLIO FACTS AND FIGURES NET PROMOTOR SCORE (NPS) SELECTIVE ORIGINATION GROWTH IN CHOSEN SECTORS OFFSET BY REDUCTIONS 3.0bn 9.9bn 47% C+ ▪ ▪ Selective origination focused on further de- Growth in chosen sectors like Structured risking / rebalancing of the portfolio Finance and Digital Infrastructure ▪ ▪ Nearly 40% of origination was in Fintech and Growth in Leasing including Beequip (+19%) /PRIME Structured Finance and in (Digital) Infrastructure ▪ Reduced exposures in Energy, Shipping and ▪ Less than 16% of origination was in Energy, Leveraged Finance by over EUR 750m in 2019 22 Shipping and Leveraged Finance ▪ Continued focus of margin over volume ▪ The origination of Beequip amounted to EUR 275 million (2018: 244 million) 10
RETAIL CLIENT OFFERING Strong mortgage origination MORTGAGE LOAN ORIGINATION GROWTH CLIENTS ▪ Number of clients +6% since FY 2018 STRONG ORIGINATION MARKET SHARE ▪ Total number of clients 113k 3.7bn 4.1% ▪ Number of clients +3% since FY 2018 ▪ Total number of clients 310k MORTGAGE LOAN PORTFOLIO LOW RISK PORTFOLIO FACTS AND FIGURES In EUR bn 14.1 ▪ On-balance portfolio growth of EUR 520 million 7.9 NIBC DIRECT ▪ Strong growth OTM portfolio by 79% from 11.6 4.3 EUR 2.4 billion to EUR 4.3 billion CUSTOMER SURVEY 9.5 2.4 ▪ Secured new mandates in OTM, totaling OTM SCORE SAVINGS 0.7 0.7 0.6 0.6 mandates to EUR 6.5 billion per 31 December 9.1 8.6 8.2 8.0 NIBC DIRECT ▪ Total OTM clients increased to almost 21.000 2017 2018 2019 CUSTOMER SURVEY ▪ Reinvigorated growth in Buy-to-let portfolio Owner-occupied Buy-to-let Originate-to-manage SCORE MORTGAGES 11
OUR STRATEGIC PRIORITIES Continuous evolution of client franchise, expertise and propositions ▪ Progressing well with the execution of the rebalancing strategy, reducing exposure in highly-cyclical sectors 1 ▪ Strong mortgage origination across all tenors ▪ ESG compliant CLO placement Further optimisation of capital structure ▪ Retail OTM assets under management +79% and diversification of funding ▪ Sustainably lower funding expenses ▪ CET 1 ratio at 17.1%, well above medium-term objective Focus on growth of asset portfolio in core markets 6 2 ▪ 19% growth in lease receivables ▪ 520 million growth on-balance mortgages Ongoing investment in people, culture Diversification of income 5 3 and innovation ▪ Retail OTM mandate increased 86% to EUR 6.5 billion ▪ Internal programmes for junior and medior staff ▪ IMD programme for senior staff ▪ NIBC Sustainability report 2019 published 4 Building on existing agile and effective organisation ▪ Completion KYC/AML improvement projects ▪ Transition IT infrastructure to Cegeka completed 12
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