NIBC COVERED BOND PRESENTATION August 2020 1
EXECUTIVE SUMMARY ▪ Focused mid-market corporate and retail franchise with differentiated approach ▪ Net profit of EUR 3 million in H1 2020 (EUR 83 million in H1 2019) ▪ Net interest margin of 1.85% in H1 2020 (1.89% in 2019) NIBC ▪ Impairment ratio of 0.95% in H1 2020 (from 0.29% in 2019) ▪ Cost-to-income ratio at 54% in H1 2020 (44% in 2019) ▪ Solid capital position, with fully-loaded CET 1 ratio at 18.5% and leverage ratio of 7.3% at half year 2020 ▪ AAA/AAA (S&P/Fitch) rated Conditional Pass-Through Covered Bonds ▪ Law-based programme, registered with the Dutch Central Bank Covered Bond ▪ Favorable regulatory treatment Programme ▪ Documented minimum overcollateralisation of 15% ▪ Cover pool of prime Dutch residential mortgage loans ▪ Total residential mortgage book of EUR 9.0 billion 1 ▪ Despite Covid-19 the Dutch housing market remains resilient: NPLs remain low and credit loss expenses at half year 2020 were EUR 5 million Mortgage Business ▪ Origination via independent intermediaries, underwriting criteria fully controlled by NIBC ▪ In-house arrears and foreclosure management 2 1: Excludes buy-to-let exposure of EUR 0.8 billion
TABLE OF CONTENTS 1. NIBC BUSINESS AND FINANCIAL UPDATE HALF YEAR 2020 4 2. DUTCH HOUSING AND MORTGAGE MARKET 26 3. RETAIL CLIENT OFFERING AND ASSET QUALITY 29 4. CONDITIONAL PASS-THROUGH COVERED BOND PROGRAMME 34 APPENDIX I COVID-19: OVERVIEW OF SELECTED POLICY MEASURES FOR BANKS 38 APPENDIX II MORTGAGE BUSINESS AT NIBC 40 APPENDIX III MAIN UNDERWRITING CRITERIA 43 APPENDIX IV ASSET COVER TEST 46 APPENDIX V CONDITIONAL PASS-THROUGH SCENARIOS 48 APPENDIX VI INVESTOR REPORTING AND LEGAL FRAMEWORK 50 3
NIBC BUSINESS AND FINANCIAL UPDATE HALF YEAR 2020 4
HALF YEAR PERFORMANCE Performance significantly impacted by COVID-19 in first half of 2020 MEDIUM-TERM METRICS OBJECTIVES H1 2020 COMMENTS ▪ Net profit in H1 2020 of EUR 3 million Return on Equity 10 - 12% 0.3% ▪ We reiterate the AGM statement from April 2020 that the medium- (Holding) term objective of a ROE between 10-12% is not expected to be achieved in 2020 due to the impact of the COVID-19 pandemic Cost-to-income < 45% 54% ▪ Fully-loaded cost-to-income ratio of 54% at stable operating (Holding) expenses ▪ Improvement of the CET 1 ratio in H1 2020 to 18.5%, displaying a CET 1 ≥ 14% 18.5% significant buffer above minimum SREP requirements (Holding) ▪ Following the ECB recommendation, NIBC will not pay an interim dividend in 2020 Dividend pay-out ≥ 50% 0% (Holding) Rating BBB+ Negative Outlook BBB+ (Bank) . Note: Financials for NIBC Holding as of H1 2020, unless otherwise stated 5 Rating reflects S&P’s long -term issuer credit rating on NIBC Bank
OUR RESPONSE TO COVID-19 First priority to safeguard health of our staff and families and to ensure business continuity Our People Our Business Our Clients ▪ ▪ ▪ Almost all staff working from home since 16 Since beginning of March, Business Continuity Prudently extending credit to businesses of all March 2020 in a fully remote working Plan (BCP) in place, headed by CFO/CRO with sizes for working capital and general corporate environment initially (bi)-daily update calls, currently set to a purposes weekly schedule ▪ ▪ Since July NIBC is gradually and in a safe manner Client relief such as 90-day grace period for ▪ (keeping 1.5m distance, maximum number of Strong focus on liquidity management leading to mortgage payments people in the office, A- and B- teams, etc) an increase of NIBC’s liquidity buffers to EUR ▪ Increased monitoring of portfolios on a name-by- facilitating working at our offices again 4.1bn in H1 2020 name basis, offering tailor-made solutions for ▪ ▪ Skeleton staff at office locations to ensure Active monitoring of the development of our existing clients where necessary continuity – taken special measures into account retail savings. Currently, no wholesale ▪ Cautious client origination on corporate client transactions planned nor needed ▪ Intensified communication to all staff with regular side; focus on portfolio management, also using ▪ Corona news releases, periodic video updates by Regular contact with various regulators and the tools of our partner OakNorth an ExCo member Dutch Banking Association ▪ ▪ Early payment of the annual € 600 euro per Cost deep-dive to reduce monthly run-rate, employee to spend on work facilities at home including stopping of marketing campaigns, reductions of external staff, reprioritising (large) ▪ Regular updates to management on (possible) projects infected staff 6
FOCUSED TRANSFORMATION Continued rebalancing of our portfolios towards more resilience COMPOSITION NIBC’S NIBC PORTFOLIO TRANSFORMATION SINCE 2018 COMMENTS CLIENT OWN BOOK ASSETS ▪ The deliberate reduction of certain asset classes - as H1 2020 vs. indicated in the Capital Market Update in Q4 2018 - H1 2020 FY 2018 FY 2018 in EUR billion FY 2018 continued in H1 2020 Energy 0.7 0.8 -20% ▪ Total client assets - including originate-to-manage - Shipping 0.9 1.4 -35% increased by 13% since 2018 Financial sponsors & Leveraged Finance 1.0 1.4 -29% Commercial Real Estate ▪ 1.1 1.3 -14% Clients assets for NIBC’s own book declined by 2%, Fintech & Structured finance displaying continued rebalancing towards a higher 1.3 1.0 25% 19.1bn 48% 52% share of retail and other granular asset classes: Infrastructure 1.6 1.6 -2% Mid Market Corporates 1.3 1.5 -10% • Decreased exposure in the cyclical sectors Total corporate loans (drawn & undrawn) 7.9 9.0 -13% Shipping, Energy and Leveraged Finance by EUR Beequip and other lease receivables 1.0 billion (-29%) 0.6 0.4 33% Investment loans 0.2 0.2 -28% • Growth in more granular exposures in Fintech & Equity investments 0.3 0.2 26% Structured Finance (+25%) H1 2020 Total corporate client assets 8.9 9.9 -10% • Growth of new higher margin businesses such Owner-occupied mortgage loans 9.0 8.6 5% as leasing incl. Beequip (+33%) and Buy-to-Let Buy to Let mortgages 0.8 0.6 19% (+19%) Total retail client assets 9.8 9.2 6% ▪ Strong growth of the retail originate-to-manage OTM Retail client assets 5.6 2.4 133% 48% 18.6bn offering by EUR 3.2 billion to EUR 5.6 billion 52% OTM Corporate client assets 1.0 0.9 21% Originate-to-manage assets Retail client 6.7 3.3 104% assets Corporate 7 client assets
COMPOSITION OF NIBC’S TOTAL ASSETS Result of continued rebalancing CORPORATE LOANS NIBC’S TOTAL ASSETS COMMENTS ▪ Diversified portfolio: of NIBC’s total assets 3% 2% of EUR 22.2bn at half year 2020: 1% 5% • 3% 11% is in ‘liquid means’ (governments 4% & central bank) 29% • 2% 46% in residential mortgage loans 5% 4% 46% 11% 6% 5% 3% Corporate loans Governments & central bank Commercial Real Estate Energy Financial Sponsors & Leveraged Finance Fintech & Structured Finance Other financial institutions Residential mortgage loans Infrastructure Mid Market Corporates Equity investments Lease Receivables Shipping Derivatives Other 8
CORPORATE CLIENT OFFERING Progressing with rebalancing strategy CORPORATE LOAN ORIGINATION REBALANCING THE PORTFOLIO FACTS AND FIGURES SELECTIVE ORIGINATION ACTIVELY MANAGED CORPORATE NET PROMOTOR SCORE (NPS) RWA 0.6bn 8.9bn 35% C+ In EUR bn 1 ▪ Growth in Leasing with Beequip (+14%) ▪ Reduced exposures in Energy, Shipping and 3.7 /PRIME Leveraged Finance by nearly EUR 0.3bn 3.0 (compared to EOY 2019) ▪ 22 Continued focus of margin over volume 1 0.6 2018 2019 H1 2020 1 FY 2019 score, survey not updated for H1 2020 9
RETAIL CLIENT OFFERING Strong mortgage origination results in market share of 4% MORTGAGE LOAN ORIGINATION GROWTH CLIENTS ▪ STRONG ORIGINATION MARKET SHARE ORIGINATION Number of clients +7% since FY 2019 ▪ Total number of clients 121k 2.2bn 4% ▪ Number of clients -2% since FY 2019 ▪ Total number of clients 306k MORTGAGE LOAN PORTFOLIO LOW RISK PORTFOLIO FACTS AND FIGURES 15.4 In EUR bn ▪ Strong growth OTM portfolio from EUR 4.3 14.0 billion to EUR 5.6 billion 7.8 NIBC DIRECT 11.6 5.6 ▪ CUSTOMER SURVEY Total OTM mandates increased to EUR 8.8 billion 4.3 SCORE SAVINGS 1 2.4 ▪ Growth in the Buy-to-let portfolio of 7% 0.8 0.7 0.6 ▪ 66% loan to value on own book residential 9.0 9.0 8.6 8.0 NIBC DIRECT mortgage portfolio CUSTOMER SURVEY ▪ 2018 2019 H1 2020 Retail savings increased in H1 2020 by 1.5% to SCORE MORTGAGES 1 EUR 9.6 billion Owner-occupied Buy-to-let Originate-to-manage 1 FY 2019 score, survey not updated for H1 2020 10
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