INVESTOR PRESENTATION HALF YEAR 2019 October 2019 1
AGENDA Table of contents Name / Company / Chapter 1. BUSINESS UPDATE HALF YEAR 2019 Paulus de Wilt, CEO 2. FINANCIAL RESULTS HALF YEAR 2019 Herman Dijkhuizen, CFO 2
BUSINESS UPDATE HALF YEAR 2019 Paulus de Wilt CEO 3
HALF YEAR PERFORMANCE Delivering upon our promises with steady performance in first half of 2019 MEDIUM-TERM METRICS OBJECTIVES H1 2019 COMMENTS ▪ Stable net profit H1 2019 of EUR 83 million, compared to EUR 84 Return on Equity 10 - 12% 9.7% million in H1 2018 (Holding) ▪ Return on Equity (ROE) of 9.7%, well on track to achieve medium- term objective by year-end (H1 2018: 10.5%). With profits being Cost-to-income stable, ROE declines slightly due to the higher equity base < 45% 46% (Holding) ▪ Fully-loaded cost-to-income ratio of 46%, including costs related to the IT transition and regulatory projects CET 1 ≥ 14% 18.5% ▪ CET 1 ratio of 18.5%, excluding half year profit. The pro-forma H1 (Holding) 2019 CET 1 ratio, following the IMI announcement in June, is 16.1% ▪ Interim dividend paid of EUR 0.25 per share, leading to a payout of Dividend pay-out ≥ 50% 44% EUR 37 million (Holding) Rating BBB+ Stable Outlook BBB+ (Bank) . Note: Financials for NIBC Holding as of H1 2019, unless otherwise stated 4
LOOKING AT THE WORLD AROUND US Uncertainty and volatility casting a shadow CHALLENGING ENVIRONMENT FOR BANKS DUTCH ECONOMY POSITIVE, GERMAN DUTCH ECONOMY DOING WELL … ECONOMY SLOWING DOWN 1 ▪ International, highly competitive economy Benelux sector performance ▪ Solid housing price development Since 30 Sept 2019 YTD 8 NIBC IPO NIBC € 7.18 (13.6)% (17.9)% … BUT INTERNATIONAL UNCERTAINTY ABN AMRO € 16.18 (21.3)% (22.4)% CONTINUES … 6 ING € 9.60 2.1% (19.8)% ▪ Brexit deadline is nearing, hard Brexit has KBC € 59.62 5.2% (7.9)% become the default Average (6.9)% (12.6)% 4 ▪ International trade tensions, particularly between the US and China Indicies performance Since 30 Sept 2019 YTD NIBC IPO 2 WITH FUNDAMENTAL CHANGES IN KEY STOXX Europe DRIVERS 393.1 16.4% 7.4% 600 Index ▪ Interest rate environment: low-for-longer 0 STOXX Europe 132.0 (0.3)% (23.4)% Banks Index ▪ 2015 2016 2017 2018 2019 Turn of the (economic) cycle AEX Index 580.2 18.9% 11.3% ▪ NL GDP (%) GE GDP (%) Higher regulatory requirements related to AMX Index 834.1 26.8% 5.5% license to operate NL Unemployment (%) GE Unemployment (%) 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 1 OPTIMISED FUNDING MIX COMMENTS ▪ Funding mix has been optimised, decreasing 3.5 average cost-of-funds ▪ Increased focus on originate-to-manage for retail 3 as well as corporate lending business 2.5 ▪ Focus own book on shorter maturities compared 1.22% to focus on longer maturities for originate-to- 2 1.01% manage origination 0.87% 1.5 ▪ The current interest rate environment has an 0.73% 0.72% estimated negative impact on NII in the next 12 1 months of around 3 million 0.5 ▪ An immediate decrease of interest rates (yield curve) by 1%-points has an estimated negative 0 impact on NII in the coming 12 months of up to EUR 14 to 16 million 1 -0.5 2015 2016 2017 2018 H1 2019 2015 2016 2017 2018 2019 5y/5y EUR inflation forward Funding spread 10y EUR swap rate (vs 6m EURIBOR) 6 1 Excluding the positive impact of Euribor floors of 0% in our Corporate loan contracts and including the positive impact of lower retail savings of 1% (which might however be bounded by floors of for example 0%)
TURN OF THE ECONOMIC CYCLE Continued rebalancing of our portfolios towards more resilience NIBC PORTFOLIO TRANSFORMATION SINCE 2016 COMPOSITION NIBC’S CLIENT ASSETS COMMENTS FY 2016 ▪ Relatively stable balance sheet in 2016 - vs. H1 H1 2019, but continued rebalanced H1 2019 FY 2016 2019 in EUR billion 2016 towards a higher portion in retail Offshore energy 0.8 1.2 -31% ▪ Decreased exposure in the cyclical Shipping 1.3 1.5 -14% Financial sponsors & Leveraged sectors Shipping, Energy and Leveraged Finance 1.3 1.7 -25% Finance by EUR 1 billion Commercial Real Estate 1.3 1.0 22% 45% ▪ Growth in granular exposures in Fintech 19.1bn Fintech & Structured finance 1.1 0.7 48% 55% & Structured Finance Infrastructure 1.6 1.7 -9% ▪ New businesses focused on higher Mid Market Corporates 1.5 1.4 7% margins like Beequip (4%+) and Buy-to- Total corporate loans (drawn & undrawn) Let (3%+) 8.7 9.2 -5% Retail bank Beequip 0.4 0.1 > 100% ▪ Strong growth of the originate to Other lease receivables 0.0 0.1 -67% H1 2019 manage offering of EUR 3.6 billion Corporate bank Investment loans 0.2 0.2 -8% Equity investments 0.2 0.3 -9% Investment property - 0.3 - Total corporate client assets 9.7 10.2 -5% Owner-occupied mortgage loans 45% 8.9 8.5 5% 19.3bn Buy to Let mortgages 0.7 0.4 77% 55% Total retail client assets 9.6 8.8 8% Retail client assets 3.3 0.0 > 100% Corporate client assets 0.8 0.4 88% 7 Originate-to-manage assets 4.1 0.5 > 100%
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 ‘ Aflossingsblij ’ for ▪ Regulatory environment projects necessary mortgages ▪ Financial stakeholders ▪ ▪ Importance of big data 3rd party savings technology restriction ▪ 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 INTEGRATED BUSINESS APPROACH STRONG SUSTAINABILITY RATINGS IT BEGINS WITH US ▪ ▪ Embedded in NIBC’s business strategy 100% renewable electricity ISS OEKOM across all locations & decision making 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 Outperformer OWN OPERATIONS COMMUNITY ENGAGEMENT MSCI ▪ 6 NGO’s operating from NIBC’s AA / BBB headquarters ▪ Focus on SCR activities which directly benefit our communities REPRISK Carbon Neutral in Head office 100% ▪ Sustainability challenges in the NIBC AA / AA own operations Co2-neutral Talent Program ▪ High engagement among employees Note: As per June 2019 9
CORPORATE CLIENT OFFERING Progressing well with rebalancing strategy CORPORATE LOAN ORIGINATION REBALANCING THE PORTFOLIO FACTS AND FIGURES SELECTIVE ORIGINATION GROWTH IN CHOSEN SECTORS NET PROMOTOR SCORE (NPS) OFFSET BY REDUCTIONS 47% 1.0bn 9.7bn ▪ Improvement of the net promotor score in Q2 2019 compared to Q1 2019 In EUR bn ▪ Growth in chosen sectors like Structured Finance and Digital Infrastructure C+ 3.7 1 ▪ Growth in Leasing with Beequip (+20%) 3.1 ▪ Reduced exposures in Energy, Shipping and /PRIME Leveraged Finance by over EUR 200m ▪ Continued focus of margin over volume 1.0 22 1 2017 2018 H1 2019 1 FY 2018 score, survey not updated for H1 2019 10
RETAIL CLIENT OFFERING Strong mortgage origination results in market share of 4% MORTGAGE LOAN ORIGINATION GROWTH CLIENTS ▪ STRONG ORIGINATION MARKET SHARE Number of clients +8% since FY 2018 ▪ Total number of clients 107k 1.8bn 4.3% ▪ Number of clients -2% since FY 2018 ▪ Total number of clients 302k MORTGAGE LOAN PORTFOLIO LOW RISK PORTFOLIO FACTS AND FIGURES In EUR bn ▪ 12.8 On-balance portfolio growth of EUR 300 million 7.7 NIBC DIRECT 11.6 ▪ Strong growth OTM portfolio by 35% from 3.3 CUSTOMER SURVEY EUR 2.4 billion to EUR 3.3 billion 9.8 2.4 SCORE SAVINGS 1 ▪ 0.7 Secured second mandate in OTM, totaling OTM 0.7 0.3 0.6 0.6 mandates to EUR 5.4 billion (YTD 30/9/19) 8.9 8.1 8.6 NIBC DIRECT 8.2 ▪ Total OTM clients increased to almost 20.000 CUSTOMER SURVEY ▪ 2017 2018 H1 2019 Renewed growth in Buy-to-let portfolio SCORE MORTGAGES 1 Owner-occupied Buy-to-let Fair value adjustment Originate-to-manage 1 FY 2018 score, survey not updated for H1 2019 11
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