NORD/LB Group Presentation August 2018 1 Agenda. NORD/LB at a - - PowerPoint PPT Presentation

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NORD/LB Group Presentation

August 2018

2

Agenda.

NORD/LB at a glance 3 Financials 10 Segments 18 Outlook 29 Appendix 34

3

Established commercial bank in northern Germany.

NORD/LB at a glance

Market leader in Northern Germany in its business units private, commercial and corporate customers Excellent knowledge in renewable energy and infrastructure projects Over 30 years of experience in ship and aircraft finance Represented in important financial centres worldwide Member of the extended Guarantee Funds of landesbanks and savings banks Among the top seven German banks Successful universal bank for over 250 years in the market

4

Ownership structure and regional network.

NORD/LB at a glance

¹ Total differences are rounding differences 59.1% 5.6% 26.4% 5.3% 3.7%

Saxony-Anhalt Savings Banks Holding Association Special Purpose Holding Association of the Mecklenburg-Western Pomerania Savings Banks State of Lower Saxony Lower Saxony Savings Banks and Giro Association State of Saxony-Anhalt

Strong support from our owners¹ Headquarters and ownership region

Hanover

Brunswick Magdeburg

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Represented in important financial and trade centres worldwide.

NORD/LB at a glance

Addresses and more details: www.nordlb.com/nordlb/about-us/locations-worldwide

 Head offices Hanover, Brunswick, Magdeburg  Branches worldwide London, New York, Singapore, Shanghai  German branches Bremen, Duesseldorf, Hamburg, Munich, Oldenburg Schwerin, Stuttgart and approx. 100 branches

• f Braunschweigische

Landessparkasse  Subsidiaries and bank holdings Deutsche Hypothekenbank, NORD/LB Luxembourg Covered Bond Bank

London Amsterdam Paris Luxembourg Frankfurt Munich Nuremberg Bremen Hamburg Brunswick Magdeburg Hanover Duesseldorf Schwerin Warsaw New York Shanghai Singapore Stuttgart Oldenburg

6

Our business segments.

NORD/LB at a glance

Corporate Customers

• Corporate customer business
• Agricultural Banking
• Finance with public and

cooperative housing associations

• Corporate Finance
• Leasing

Private and Commercial Customers

• Private customer business
• Private Banking
• Commercial customer business
• Insurance services for private

customers in cooperation with public insurances in Lower Saxony

Energy and Infrastructure Customers

• Renewable energy finance
• Infrastructure finance

Real Estate Banking Customers

• Commercial real estate

finance

• International social care

property finance

Markets

Business with

• Institutional customers
• Savings banks/ financial

institutions

• Public-sector customers

Ship Customers

Ship finance

• Container vessels
• Bulker
• Tanker
• Multi purpose vessels
• Offshore Oil & Gas
• Cruises / Ferries

Aircraft Customers

Aircraft finance

• Narrow-/Widebodies
• Freighters
• Regional Jets
• Turboprops
• Helicopter
• Spare Engines
• Finance and Operating Lease

Savings Bank Network Customers

• Savings Bank Network/

extended network

• Corporate customers/

syndication loans

• Municipal customers

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Holding structure and brands.1

NORD/LB at a glance

¹ For additional information about subsidiaries and affiliated companies please consult https://www.nordlb.com/nordlb/about-us/investments/ or our Group Annual Reports 2017, note (84) ² NORD/LB ensures that the companies mentioned in the Annual Report 2017, Note (75) are able to meet their obligations ³ Incorporated under public law with partial legal capacity

100%2 100%2 3

Private and commercial customers

• Loans
• Financial Markets & Sales
• Client services & B2B

Commercial real estate finance

• Private and Commercial Customers
• Corporate Customers
• Markets
• Ship, Aircraft, Energy/Infrastructure, Real

Estate Banking

• Leasing
• Savings Bank Network

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Senior unsecured preferred debt with outlook Baa2, negative A-, negative A, positive Deposits with outlook (long-term/short-term) Baa2/P-2, negative A-/F1 A/R-1 (low) Counterparty Risk Rating/Derivate counterparty rating (long-term/short-term) Baa2(cr)/P-2(cr) A-(dcr)/-

• Senior unsecured non-preferred debt with
• utlook

Ba1, negative A-, negative A (low), positive Subordinate/Tier 2 B1 BB- BBB (high) Intrinsic financial strength 1 ba3 bb BBB (low) Tier 1 Caa1 (hyb)

• Public-Sector / Mortgage / Aircraft Pfandbriefe

Aa1 / Aa1 / A3

• Our ratings.

NORD/LB at a glance

1 Adjusted Baseline Credit Assessment / Viability Rating / Intrinsic Assessment

NORD/LB credit ratings NORD/LB sustainability ratings

Corporate Rating C+ Prime A 64 of 100 points Sustainability Rating Neutral CCC Public-Sector Pfandbriefe Positive BBB Mortgage Pfandbriefe Positive BB Shipping Pfandbriefe Positive B

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Agenda.

NORD/LB at a glance 3 Financials 10 Segments 18 Outlook 29 Appendix 34

10 Financials

Implementation of the transformation programme shows positive impact in the reduction of risk positions and administrative expenses.

Common Equity Tier I ratio > 11,0 % Consolidated profit De-risking of loan portfolio Transformation

   

Capital ratio strengthened through disciplined RWA- and balance sheet management. Common Equity Tier 1 ratio at 12.4 per cent as at 30 June 2018, significantly above regulatory requirements (9.54 per cent) Consolidated profit before taxes with €52m as at 30 June 2018. The previous year was impacted by profits from sale of promissory notes and amounted to €451m before taxes NORD/LB Group’s non-performing loans (NPL) ratio decreased from 4.7 % (as at 31 Dec 2017) to 4.0 % (as at 30 June 2018). The reduction of shipping NPLs from €7.7bn (as at 30 June 2018) to €5bn by the end of 2019 is on track Administrative expenses reduced by 10 %; Reduction of shipping portfolio on track; Balance sheet further decreased to €158.7bn (€163.8bn as at 31 Dec 2017); Stable capital ratios

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Income statement: positive consolidated profit.

Financials

1 Some previous year figures were adjusted, see Interim Report as at 30 June 2018, Note (2)

Income statement (in €m) 1 Jan - 30 Jun 2018 1 Jan - 30 Jun 20171 Change in % Net interest income 618 731

• 15

Net commission income 28 68

• 59

Profit/loss from financial assets at fair value

• 36

193 >100 Risk provisioning

• 31
• 437
• 93

Disposal profit/loss from financial assets not measured at fair value 30 451

• 93

Profit/loss from hedge accounting

• 12

13 >100 Profit/loss from shares in companies 11 2 >100 Profit/loss from investments accounted for using the equity method 11 27

• 59

Administrative expenses (-) 531 588

• 10

Other operating profit/loss

• 20

8 >100 Earnings before reorganisation and taxes 68 468

• 85

Restructuring result 14

• 4

>100 Reorganisation expenses (-) 30 13 >100 Earnings before taxes 52 451

• 88

Income taxes (-)

• 2

149 >100 Consolidated profit 54 302

• 82
• Decline in net interest income due to decreasing average asset

levels and persistently low interest-rates

• Net commission income: Increased payments for guarantee

premiums

• Profit/loss from financial assets at fair value: High positive

interest-rate effects in 2017

• Risk provisioning: Less allocations necessary due to better market

conditions in merchant shipping and more reversals due to higher market values

• Disposal profit/loss from financial assets that are not measured

at fair value through profit or loss: Significantly lower profits from the sale of promissory notes compared to previous year’s period

• Administrative expenses: Expenses for experts and consultants

decline, as well as expenses for IT and communication services and staff

• Other operating profit/loss is influenced in particular by the

annual contribution of the bank levy (€56m) in 2018

• Restructuring result: Primarily contain gains from the reversal of

restructuring provisions related to the transformation programme

• Reorganisation expenses: Especially characterized by measures to

secure the bank’s future and competitiveness. These expenses have to be separately accounted for and are extraordinary one-off effects

12

Total assets further reduced.

Financials

1 Some previous year figures were adjusted, see Interim Report as at 30 June 2018, Note (2)

• Total assets: further decreasing due to reduction of shipping

portfolio

• Financial assets at fair value through other comprehensive

income contain mainly bonds for the bank’s liquidity management; decrease caused by IFRS 9 adjustments and lower bonds portfolio

• Financial assets at amortised costs: Slight decrease of loans and

advances to banks and customers

• Financial liabilities at amortised cost contain among others

liabilities to customers and banks, issued bonds, Pfandbriefs and money market bonds, slightly decreased due to lower funding needs

• Other liabilities

€34.3bn from money market business with banks €55.8bn from money market business with customers

• Equity (balance sheet) primarily fell by cumulative first adoption
• f IFRS 9 effects (in the amount of €200m)

Balance sheet (in €m) 30 June 2018 31 December 20171 Total assets 158,683 163,838 Financial assets at fair value through other comprehensive income 21,112 24,831 Financial assets at amortised costs 118,340 121,218

• f which: Loans and

advances to banks 26,420 27,660

• f which: Loans and

advances to customers 87,397 91,608 Financial liabilities at amortised cost 134,903 138,848

• f which: Liabilities to banks

7,344 3,799

• f which: Other liabilities

90,068 96,650

• f which: Securitised

liabilities 35,507 36,058 Equity (balance sheet) 5,918 6,193

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4.2% 4.7% 5.5% 4.7% 4.0%

160.9 146.3 147.6 147.8 143.4 15.4 13.9 16.6 15.5 16.1 9.9 9.9 8.7 7.0 6.2 8.6 7.7 5.3 4.4 3.9 3.3 3.2 1.8 1.6 1.3 4.1 3.7 4.1 2.3 2.4 8.8 9.1 10.7 8.8 7.2

2014² 2015 2016² 2017 30 Jun 18

default (=NPL) very high risk high risk increased risk reasonable/satisfactory good/satisfactory very good to good

High quality of total portfolio: 79 per cent in the highest category.

Financials

1 Total differences are rounding differences 2 Figures were adjusted, see Interim Report as at 30 Jun 2015, page 28 and Interim Report as at 30 Sep 2017, page 32 3 incl. fair-value discount (acc. to IFRS 9)

in €bn in %

211.0

NPL ratio Total exposure1

193.7 194.8 187.3 180.5

3 3

14

Sound capital ratios.

Financials

10.7% 13.1% 11.3% 12.4% 12.4% 13.2% 16.7% 16.3% 18.1% 18.7%

31 Dec 14 31 Dec 15 31 Dec 16 31 Dec 17 30 Jun 18 CET1¹ TC²

Capital ratios (transitional)

8.4% 12.2% 9.9% 11.9% 12.3% 12.4% 16.7% 15.2% 17.7% 18.5%

31 Dec 14 31 Dec 15 31 Dec 16 31 Dec 17 30 Jun 18 CET1¹ TC²

Capital ratios (fully loaded)

69.2 63.7 59.9 46.8 46.1

31 Dec 14 31 Dec 15 31 Dec 16 31 Dec 17 30 Jun 18

Risk-weighted assets (RWA)

in €bn

1 CET1 - Common Equity Tier 1 2 TC - Total Capital 3 Figures were adjusted

3

• SREP minimum requirements (P2R) CET11 since 1.1.2018:

9.54 % LCR-Ratio: 173 % (30 Jun 18; 31 Dec 17: 205 %)

• SREP minimum requirements (P2R) TC2 since 1.1.2018: 13.04 %

Leverage Ratio: 3.5 % (30. Jun 18; 31 Dec 17: 3,6 %)

7,380 8,319 6,752 5,804 5,730

31 Dec 14 31 Dec 15 31 Dec 16 31 Dec 17 30 Jun 18

3

Common Equity Tier I

in €m

3

3

15

Regulatory capital has been strengthened further.

Financials

1 The chart may include minor differences that occur in the reproduction of mathematical operations 2 Due to the adjustment of regulatory data as at 31 Dec 2017 previous year‘s figures were adjusted accordingly.

• Comments on selected items

(1) Deductible items (€319m) include primarily the shortfall from the shipping portfolio. Audited loan loss provisions have a compensating effect (2) Grandfathered AT1 mainly containing our old-style “Fürstenberg”-bonds, partly accounted for in AT1; Eligibility is reduced by 10 percentage points every year, currently at 50 per cent (3) Paid-up instruments of Tier 2 capital comprise subordinated liabilities including “Fürstenberg” bonds

Regulatory capital (in €m)1 30 Jun 2018 31 Dec 20172 Paid-up capital including premium 4,930 4,930 Retained profits 1,179 1,491 Other components of CET 1

• 99
• 158
• Deductible items (from CET 1 capital)
• 319
• 688

Adjustments due to transition rules 40 230 Common Equity Tier 1 capital (1) 5,730 5,804 Paid-in instruments of additional Tier 1 capital 50 50 Additional Tier 1 Capital instruments due to grandfathering 355 443 Adjustments due to transition rules

• 67

Additional Tier 1 Capital (2) 405 426 Tier 1 Capital 6,135 6,230 Paid-up instruments of Tier 2 capital 2,657 2,682 Other capital components of Tier 2 capital 164

• Deductible items (from Tier 2 capital)
• 10
• 10

Adjustments due to transition rules

• 339
• 445

Tier 2 Capital (3) 2,472 2,227 Own funds 8,608 8,457

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CET12 €5.8 € AT1 / T2 ² €2.7bn Plain-vanilla senior liabilities 3 €25bn

MREL available

MREL figures of NORD/LB Group

Financials

1 MREL - Minimum Requirement of Eligible Liabilities and Own Funds (MREL) 2 Regulatory capital (Own Funds) transitional; including issued AT1 and Tier 2 capital from subsidiaries 3 Subject to approval of €7.2bn in promissory notes by the supervisory authority

Minimum Requirement of Eligible Liabilities and Own Funds (MREL)

• MREL ratio: 20.04 per cent
• Total Liabilities & Own Funds (TLOF):

€167.2bn

€33.5bn

as at 31 December 2017

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Agenda.

NORD/LB at a glance 3 Financials 10 Segments 18 Outlook 29 Appendix 34

18

Our solid and diversified business model proved its strength against market distortions (1/2).

Segments

1 Minor differences might occur in the reproduction of mathematical operations 2 Disposal profit/loss from financial assets not measured at fair value, Profit/loss from hedge

accounting, Profit/loss from shares in companies, Profit/loss from investments accounted for using the equity method, Other operating profit/loss

3 Earnings before Restructuring result / Reorganisation expenses and Taxes

1 Jan - 30 Jun 18 in €m1 Private and Commercial Customers Corporate Customers Markets Savings Bank Network Customers Energy and Infra- structure Customers Ship Customers Aircraft Customers Real Estate Banking Customers Net interest income 85 173 78 31 88 90 42 92 Net commission income 31 20 24 7 17 7 6 Profit/loss from financial assets at fair value 4

• 3

1 18 2 1 2 Further earnings2 4 7 1

• 1

Administrative expenses 85 73 53 24 48 41 16 34 Operative earnings 35 124 46 15 82 58 34 59 Risk provisioning

• 12

3 1

• 28

7 15 Earnings before taxes3 35 112 46 18 81 29 41 73

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Our solid and diversified business model proved its strength against market distortions (2/2).

Segments

1 Minor differences might occur in the reproduction of mathematical operations 2 Disposal profit/loss from financial assets not measured at fair value, Profit/loss from hedge

accounting, Profit/loss from shares in companies, Profit/loss from investments accounted for using the equity method, Other operating profit/loss

3 Earnings before Restructuring result / Reorganisation expenses and Taxes

1 Jan - 30 Jun 17 in €m1 Private and Commercial Customers Corporate Customers Markets Savings Bank Network Customers Energy and Infra- structure Customers Ship Customers Aircraft Customers Real Estate Banking Customers Net interest income 88 182 81 25 86 139 58 103 Net commission income 31 28 22 4 21 10 4 Profit/loss from financial assets at fair value 2 18 52 5 25 13 1 5 Further earnings2

• 6
• 2

1

• 4

Administrative expenses 90 79 52 22 52 60 16 31 Operative earnings 25 147 103 12 81 102 47 73 Risk provisioning 2

• 4

1 2

• 15
• 409
• 1
• 4

Earnings before taxes3 27 142 103 15 67

• 308

47 69

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Private and Commercial Customers. Deeply rooted in the home region.

Segments

¹ The chart may include minor differences that occur in the reproduction of mathematical operations

as at 30 Jun 2018

Exposure by industry1

Exposure at default: €7.8bn

• Advice and service in nearly 100 locations as well as online

and by phone via BLSK.direkt

• We offer customer-oriented consulting and selected

products and services for private and commercial customers within the region of Braunschweigische Landessparkasse, in Hanover, in Hamburg as well as in Bremen and Oldenburg

• NORD/LB and Braunschweigische Landessparkasse offer

inheritance optimisation, trust management, portfolio management and individual asset management for private banking clients

• Successful performance with partners like Öffentliche

Versicherung Braunschweig, LBS Nord (building society), Deka, Deutsche Leasing, S-Kreditpartner and the Versicherungsgruppe Hannover (insurance companies)

Other 13% Land, housing 21% Public administration, defence, social insurance 11% Private household 44% Other service industry 11% €m 1 Jan – 30 Jun 2018 Earnings 120 Expenses 85 Operative earnings 35 Loan loss provisions Earnings before taxes 35

21

Corporate customer business. Stable and well diversified portfolio.

Segments

¹ The chart may include minor differences that occur in the reproduction of mathematical operations

Manufacturing industry 15% Energy, water and mining 12% Construction 2% Trade, maintenance and repairs 10% Agriculture, forestry and fishing 8% Transport/ communications 6% Financing institutes/ insurance companies 13% Service industries/other 34%

as at 30 Jun 2018

Exposure by industry1

Exposure at default: €23.4bn

• Stable business development with existing and new

customers in the corporate customer segment

• Tailor-made financial solutions for SMEs – partly in close

cooperation with the Savings Banks

• Strong position and high competence in acquisition finance

business confirmed

• Elevated market position as an important financer in the field
• f agricultural banking
• Successful marketing of asset and structuring expertise in

public housing segment

• Successful strategic positioning with customers together with

corporate finance (e.g. asset-liability management, capital- market financing, working-capital management and purchasing receivables)

• For over 25 years we are one of the leading lenders for

leasing companies

€m 1 Jan – 30 Jun 2018 Earnings 197 Expenses 73 Operative earnings 124 Loan loss provisions

• 12

Earnings before taxes 112

22

• Markets. Frequent issuer of benchmarks.

Segments

Own benchmark issues and syndicated issues 2018

1 NORD/LB AöR EUR 1,000,000,000 0.75% Mortgage Pfandbrief Jan 2018 – Jan 2028 Joint Bookrunner USD 650,000,000 2,875% Lettres de Gage publiques Feb 2018 – Feb 2021 Joint Bookrunner EUR 500,000,000 0,500% Mortgage Pfandbrief Jun 2018 – Jun 2026 Joint Bookrunner

• Issuer of Pfandbriefe (public-sector, mortgage, ship and

aircraft), Lettres de Gage (covered bonds according to Luxemburg law), bearer bonds, promissory notes, money market securities

• Successfully positioned as lead manager/arranger of bond

issues, particularly covered bonds

• Comprehensive, customized range of money and capital

market products in private placement segment

• International funding programmes1:

€25bn EMTN Programme, €10bn CP Programme, €4bn Negotiable European CP Programme, $3bn CP Programme

• As at 30 June 2018: €27.4bn ECB eligible securities

concerning NORD/LB Group, thereof €20.3bn from NORD/LB AöR

EUR 1,500,000,000 0.250% Covered Bond Jan 2018 – Jan 2023 Joint Bookrunner

Boligkreditt

EUR 500,000,000 0.500% Covered Bond Jan 2018 – Jan 2025 Joint Bookrunner EUR 500,000,000 0.500% Covered Bond Mar 2018 – Mar 2025 Joint Bookrunner EUR 500,000,000 0.625% Covered Bond Apr 2018 – Apr 2025 Joint Bookrunner EUR 1,000,000,000 0.625% Covered Bond Jun 2018 – Sep 2025 Joint Bookrunner EUR 500,000,000 0.625% Pfandbrief Jul 2018 – Nov 2027 Joint Bookrunner EUR 500,000,000 0.500% Senior Bond Jun 2018 – Jun 2025 Joint Lead Tap EUR 1,100,000,000 1.250% Senior Bond Mar 2018 – Apr 2033 Joint-Lead EUR 500,000,000 0.875% Pfandbrief Jan 2018 – Jan 2028 Joint Bookrunner

€m 1 Jan – 30 Jun 2018 Earnings 99 Expenses 53 Operative earnings 46 Loan loss provisions Earnings before taxes 46

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Savings Bank Network Customers. Increasing cooperation in strategic market activities.

Segments

1 The chart may include minor differences that occur in the reproduction of mathematical operations

as at 30 June 2018

Exposure nach Branchen1

Exposure at default: €20.8bn

• Consultancy and support of savings banks in Lower

Saxony, Saxony-Anhalt and Mecklenburg-Western Pomerania as well as savings banks in Schleswig-Holstein in its girocentre function including private banking products

• Expanding the syndication loan business with savings

banks as well as the corporate customer business in its network

• Focus on municipalities in the network regions/owner

states and selective product-oriented supra-regional business

• Expanding the syndication activities with savings bank

network and providing of alternative financial products for the balance sheet management of savings banks

• Transfer service for KfW loans within Savings Bank

Network and developing of digitisation

Savings Bank Network/ extended network 47% Corporate customers/ syndication loans 14% Municipal Customers 39% €m 1 Jan – 30 Jun 2018 Earnings 39 Expenses 24 Operative earnings 15 Loan loss provisions 3 Earnings before taxes 18

24

Financial services 2% Gas / Biogas 3% Trade and services 14% Media and IT 2% Public sector 5% Solar energy 9% Other energy 14% Supply and disposal 4% Manufacturing industry 1% Transportation 4% Wind onshore 42%

Energy- and Infrastructure Customers. Stability and expansion in growth industries.

Segments

¹ The chart may include minor differences that occur in the reproduction of mathematical operations

• Expansion and strengthening of our market position through

long-term expertise and customised structuring in renewable energy finance; our focus is on energy from wind and solar, leading financer in European core markets Germany, France, Ireland and UK. Expansion of customer base in North America and Asia in energy sector

• Concentration on social infrastructure projects in the fields
• f education, accommodation, blue light and

transportation; Public Finance Initiative (PFI) as well as public project finance business

as at 30 Jun 2018

By industry1

Exposure at default: €15.8bn

€m 1 Jan – 30 Jun 2018 Earnings 130 Expenses 48 Operative earnings 82 Loan loss provisions 1 Earnings before taxes 81

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Ship Customers: Focus on maritime industries.

Segments

¹ The chart may include minor differences that occur in the reproduction of mathematical operations

2 Maritime industry portfolio is part of the shipping portfolio, you can find further information on the NPL portfolio on page 36

Maritime Industries Portfolio1,2

• The business segment Maritime Industries comprises

cash-flow- and asset-based shipping loans as well as short-term, mid-term and long-term financing of maritime corporates (secured and unsecured, but then

• nly in case of a high creditworthiness)
• Business is done mainly through Hannover and Bremen,

supported by Hamburg, Singapore and New York branches

• The long-standing expertise as asset financer, the broad

franchise base, the established brand “NORD/LB“ and the ability to develop tailor-made financial solutions for customers form the basis for the excellent position in the world-wide maritime industry market. Traditional financing products in combination with additional services enable NORD/LB to offer its customers individual and comprehensive solutions

as at 30 Jun 2018 Exposure at default: €3.5bn

Container ships; €798m ; 23% Bulk carrier; €498m; 14% Other; €144m; 4% Offshore; €224m; 6% Cruise ships/ferries; €418m; 12% MPP Heavy Lift ; €94m; 3% MPP General Cargo; €243m ; 7% Chemical tanker; €120m; 3% LPG tanker; €102m ; 3% Product tanker; €109m; 3% Crude oil tanker; €542m ; 16% Corporates; €196m; 6%

€m 1 Jan – 30 Jun 2018 Earnings 93 Expenses 41 Operative earnings 52 Loan loss provisions

• 223

Earnings before taxes

• 171

26

Aircraft customers. High-quality portfolio. Well diversified.

Segments

¹ The chart may include minor differences that occur in the reproduction of mathematical operations

• Aircraft portfolio with 577 aircrafts (and other airplanes in

warehouse facilities), six helicopters and 17 (spare-) engines is well diversified

• Considering only long-standing and fungible assets (aircrafts

and turbines)

• Exposure has very high collateral coverage (approx. 95 per

cent)

• Average age of roughly six years
• Mostly warehouse and operating lease structures
• For more than 20 years established as a market leader in

aircraft finance: broad range of commercial and covered financing of widebodies, narrowbodies, regional jets and helicopters

• Conservative risk approach in line with our financing

principles and high risk awareness as well as ensuring appropriate redemption payments/finance structures

• Focus on reliable and well-known partners

Narrow- bodies 45% Widebodies 23% Ultra Large Aircraft 7% Regional Jets 6% Freighter 14% Turboprop 5%

as at 30 June 2018

By type of aircraft and year of manufacture1

Exposure at default: €6.9bn

13% 42% 44% 1%

Construction year 2007 and earlier Construction year 2008 - 2012 Construction year 2013 - 2017 New delivery since 2018

€m 1 Jan – 30 Jun 2018 Earnings 50 Expenses 16 Operative earnings 34 Loan loss provisions 7 Earnings before taxes 41

27

Real Estate Banking Customers. Focus on commercial real estate in Germany.

Segments

¹ The chart may include minor differences that occur in the reproduction of mathematical operations

• Deutsche Hypothekenbank is the competence centre for

commercial real estate (CRE) within NORD/LB Group

• Tailored financial solutions and individual, high quality

customer consultation

• Emphasis is on financing of office buildings, shopping malls,

hotels, logistics facilities and multi-story residential properties in preferred urban centres with good tenant structure and above average cash flow

• Activities are focussed on Europe especially on Germany

and financings of commercial real estate in UK, France, Benelux, Spain and Poland

• Since the 1980’s the bank has financed housing projects.

Today, the bank is one of the leading institutions to finance affordable housing projects nationwide

• Successful strategic cooperation with pension funds as

financing partners for high-volume projects

Spain 1% France 8% USA 1% UK 9% Benelux 17% Germany 62% Other 2%

as at 30 Jun 2018

By country1

Exposure at default: €15.1bn

€m 1 Jan – 30 Jun 2018 Earnings 93 Expenses 34 Operative earnings 59 Loan loss provisions 15 Earnings before taxes 73

28

Agenda.

NORD/LB at a glance 3 Financials 10 Segments 18 Outlook 29 Appendix 34

29

Transformation of the bank – our goals.

Outlook

Simplification of the Group structure, just as started with full integration of Bremer Landesbank Enhancing the operating model and significant improving of the bank‘s efficiency Focus on core business segments, portfolio reduction in Shipping Customers‘ segment

Group structure Operating model Business model

CET1

• ca. 13 per cent

Revenue level at roughly €2bn Sustainable earnings Sound capital base Cost-income ratio < 50 per cent Higher efficiency €150-200m until the end of 2020 Target level < €1bn Administrative expenses Cost reduction (incl. synergies of BLB1 merger) Cost synergies Target of BLB1 merger up to €80m

¹ Bremer Landesbank

30

Targets

Transformation of the bank – target achievement on track.

Outlook

1 Net interest income, net commission income, profit/loss from financial instruments at fair value incl. hedge accounting, profit/loss from financial assets, profit/loss from investments accounted for using the

equity method resp. net interest income, Net commission income, Profit/loss from financial instruments at fair value (including hedge accounting), Disposal profit/loss from financial assets not measured at fair value through profit/loss, Profit/loss from investments, Profit/loss from investments accounted for using the equity method

Figure Long-term target Target achievement as at 31 Dec 2017

Sustainable profitability1

Profit level

• approx. €2bn

€2.1bn

Sound capital base

CET 1 ratio 13 % 12.2 %

Reduction of shipping portfolio

NPL portfolio until 2019: €5bn €8.2bn

Cost reduction by transformation

Savings until YE 2020: €150 – 200m €230m identified by initiatives

Cost synergies BLB-merger

Synergies €80m 423 MAK 96 % contracted No sale to further benefit from its profitability

Deutsche Hypo Business model Group structure Operating model

Target amount until YE 2020: < €1bn €1.2bn

Administrative expenses

 

Target achievement as at 30 June 2018 €650m (H1) 12.4 % €7.7bn €230m identified by initiatives 97 % contracted €531m (H1)

   

31 Outlook

NORD/LB expects a challenging business year 2018.

Outlook 2018 Capital NPL shipping portfolio

• We expect the current business year to be challenging
• We aim to post positive results for financial year 2018. Priority is to systematically reduce the NPL

portfolio and further strengthen the capital ratios to be prepared for future regulatory requirements, which may have a negative impact on earnings

• We are exploring various capitalisation models and are in close contact with the EU Commission as well

as the regulators

• The courses of action under review include the possible participation of external investors and a possible

change to the legal form of the bank

• We have also started on first talks with potential investors in order to assess market expectations.
• Together with our owners, we want to present a comprehensive, viable concept by the end of the year

Reduction of the NPL portfolios to below €5bn until end of 2019; non-performing shipping loans amount to €7.7bn as at 30 June 2018

32

Financial calendar.

Outlook

Interim Report as at 30 June 2018 30 August 2018 Figures as at 30 September 2018 End of November 2018

33

Agenda.

NORD/LB at a glance 3 Financials 10 Segments 18 Outlook 29 Appendix 34

34

171 92 194 142 18 316 431 408 217 33 93 50 40 102 110 100 200 300 400 500 2014 2015 2016 2017 YTD (Q2) 2018 Anzahl der Schiffe

Verschrottungen

Container Bulker Tanker 200 400 600 800 1000 1200 2016 2017 2018 2019 2020 2021 Anzahl Schiffe

Auslieferungszeitplan

Container Bulker Tanker ausgeliefert

Industry outlook ships: shipping markets copes with progressive fleet growth.

Appendix

• no. of vessels
• no. of vessels

delivered

Delivery schedule Demolitions

Multitude of deliveries planed in 2018 Number of lay-ups on low level as at end of 2Q 2018 (1.1% of total fleet, 246.440 TEU without any charter) Demolitions decreased in reinforced market sectors

• Container charter rates reflect the sound demand

in the first half of the year

• Baltic Dry Index: Upwards trend has been still intact since 2016

Harpex / Baltic Dry

100 200 300 400 500 600 700 800

Harpex

500 1.000 1.500 2.000 2.500

Baltic Dry

200.000 400.000 600.000 800.000 1.000.000 1.200.000 1.400.000 1.600.000 1.800.000 50 100 150 200 250 300 350 400 450 TEU

• no. of vessels

Idle Fleet

7500+ TEU 5100-7499 TEU 3000-5099 TEU 2000-2999 TEU 1000-1999 TEU 500-999 TEU total TEU (RHS)

35

Current market level: weak

Stable recovery remains intact.

Appendix

Source: NORD/LB sector research based on charter rates and market values (new constructions and second hand) as at June/July 2018

Current market level: high Current market level: weak Current market level: medium Current market level: medium Expected market development: up to 12 mths / 12-36 mths unchanged / slight increase Current market level: medium Current market level: weak

Neo-/Postpanamax

Containerships >(6-14,9/ >15K TEU

Expected market development: up to12 mths / 12-36 mths unchanged / slight increase Expected market development: up to12 mths / 12-36 mths unchanged / unchanged Expected market development: up to 12 mths / 12-36 mths unchanged / slight increase Expected market development: up to12 mths / 12-36 mths slight increase / slight increase Current market level: low

Cruise ships and ferries

Current market level: low Current market level: medium Expected market development: up to12 mths / 12-36 mths unchanged / slight increase Expected market development: up to 12 mths / 12-36 mths increase / unchanged

Feeder

Containerships < 3K TEU

Intermediate

Containerships 3-5,9K TEU

Multi-Purpose

Heavy Lift & General Cargo

Crude oil tankers Product tankers Other tankers Off shore Bulker

Expected market development: up to12 mths / 12-36 mths unchanged / unchanged Expected market development: up to12 mths / 12-36 mths unchanged / unchanged Expected market development: up to 12 mths / 12-36 mths unchanged / slight increase

36

1.7 1.1

• 0,6

+0,3 +0.1 1.0 17.3 9.7 9.9 0.8 0.5

Successful transformation and reduction of ship financings.

Appendix

¹ The chart may include minor differences that occur in the reproduction of mathematical operations

2 Redemptions (approx. -€187m) and USD development (approx. €535m)

• Reduction by €599m in the second quarter 2018 (represents 55 shipping loans)
• Portfolio reduction is mainly driven by: Extraordinary repayments, sales and placements
• The NPL portfolio amounted to €7.7bn as at 30 June 2018, the target is a reduction to €5bn until end 2019

EaD shipping loans Dec 2015 Redemptions and USD development2

NORD/LB Group - exposure reduction1

Already negotiated reductions of loans

EaD shipping loans June 2018

in €bn

Reduction of ship loans

Non-commercial shipping

11.5 19.0 11.6 EaD shipping loans Mar 2018 New business

37

7.9

• 0.6

+0.0 +0.0 +0.4 7.7

Transformation and reduction of shipping portfolio continuously successful.

NORD/LB Group – NPL exposure reduction in the second quarter 20181

in €bn Appendix

1 The chart may include minor differences that occur in the reproduction of mathematical operations

Loan increase EaD shipping loans 03/2018 EaD shipping loans 06/2018 Loss & recoveries Reduction FX- and other effects

38

Ship Customers. Portfolio reduction continues.1

Appendix

1 The chart may include minor differences that occur in the reproduction of mathematical operations 2 Core Coverage Ratio of market values and loan loss provisions 3 Loan loss provisions for defaulted loans only.

in €bn

Ship exposure

Number

Ships

1,544 1,481 1,363 1,115 1,087 2014 2015 2016 2017 30 Jun 18 17.7 19.0 16.9 12.1 11.5 2014 2015 2016 2017 30 Jun 18

NPL-Portfolio

in €bn in €bn

Loan loss provisions for shipping (balance sheet)

6.5 7.0 9.4 8.2 7.7 77% 84% 88% 93%

0% 20% 40% 60% 80% 100% 5 10 15 20 25 30

2014 2015 2016 2017 30 Jun 18 NPL-Exposure Core Coverage Ratio

1,822 2,369 4,320 3,176 3.378

421 345 151 131 2014 2015 2016 2017 30 Jun 18 Single loan loss provisions Portfolio loan loss provisions 2,714 4,471 3,307 2,243 3,378 3

2

39 Appendix as at 30 Jun 2018

NPL-Shipping portfolio (exposure)1

€7.7.bn 31 Dec 16 31 Dec 17 30 Jun 18 Rating class 16-18 Rating class 11-15 Rating class 1-10

Shipping portfolio.

1 The chart may include minor differences that occur in the reproduction of mathematical operations

€16.9bn €12.1bn

Shipping portfolio by rating1

€bn €9.4bn €8.2bn €3.6bn €2.2bn €3.8bn €1.7bn €11.5bn €7.7bn €2.1bn €1.6bn

Container ships; €2,561m; 33% Bulk carrier; €1,367m ; 18% Other; €126m; 1% Offshore; €293m; 4% Cruise ships/ferries; €64m; 1% MPP Heavy Lift ; €1,021m; 13% MPP General Cargo; €705m; 9% Chemical tankers; €242m; 3% LPG tankers; €160m; 2% Product tankers; €596m; 8% Crude oil tankers; €65m ; 1% Corporates; €529m; 7%

40

Break down of securitised liabilities.

Appendix

1 The chart may include minor differences that occur in the reproduction of mathematical operations 2 Some previous year figures were adjusted, see Interim Report as at 30 June 2018, Note (2)

(in €m)1 30 June 2018 31 December 20172 Securitised liabilities (at amortised costs) 35,507 36,058 Pfandbriefs (covered bonds) 11,691 11,354 Municipal bonds 7,746 8,434 Other securitised liabilities 13,354 13,819 Sub-ordinated securitised liabilities 2,716 2,451 Securitised liabilities (at fair value ) 3,462 2,883 Securitised liabilities 38,969 38,941

41

76 505 4,402 258 1,227 5,488

NORD/LB Ship Pfandbriefe NORD/LB Aircraft Pfandbriefe NORD/LB CBB Lettres de Gage Total outstanding Total cover pool

4,057 8,703 5,517 9,679

NORD/LB

• Dt. Hypo

Total outstanding Total cover pool

Pfandbriefe (covered bonds) at a glance.

Appendix

16,216 3,873 17,830 4,098

NORD/LB

• Dt. Hypo

Total outstanding Total cover pool

Total cover pool: €21.9bn as at 30 Jun 2018

Public Sector Pfandbriefe

Total cover pool: €15.2bn as at 30 Jun 2018

Mortgage Pfandbriefe

Total cover pool: €7.0bn as at 30 Jun 2018

Other Pfandbriefe/Covered Bonds

After the merger between NORD/LB and BLB on 1 Sep 2017 BLB does not have a separate cover pool

• anymore. Cover pools of NORD/LB and BLB have been

merged and will be published together in der transparency guidelines for the first time as at 30 Sep 2017.

42

Countries 9% Regional authorities 22% Local authorities 40% Other 26% Loans acc. To § 20, sec. 2/2 3%

Pfandbriefe (covered bonds): first class and secure collateral (1/2).

Appendix

1 Nominal value NORD/LB AöR 2 Debtors incl. statutory overcollateralisation 3 93 per cent in Germany 4 Moody‘s Performance Overview, 31 Mar 2018

Office buildings 8% Commercial Buildings 7% Industrial buildings 2% Other commerial buildings 13% Condomi- niums 5% One and two family houses 17% Apartment buidings 48%

as at 30 Jun 2018 as at 30 Jun 2018

Mortgage Pfandbrief (by building type) Public-Sector Pfandbrief (by debtor)2, 3

€5.5bn1 €17.8bn1

Outstandings €4,057.2m Cover pool total €5,516.9m Over-collateralisation €1,459.7m / 36 % Weighted average life of

• utstanding Pfandbriefe4

4.8 years Weighted average life of the cover pool4 5.8 years Outstandings €16,215.7m Cover pool total €17,830.0m Over-collateralisation €1,614.3m / 10.0 % Weighted average life of

• utstanding Pfandbriefe4

6.4 years Weighted average life of the cover pool4 7.2 years

43

Pfandbriefe (covered bonds): first class and secure collateral (2/2).

Appendix

1 Nominal value, NORD/LB AöR 2 Moody‘s Performance Overview, 31 Mar 2018

Freighter 23% Narrowbody 29% Regional Jet 7% Turboprop 16% Ultralarge 14% Widebody 11% Bulker 11% Containers 12% MPP 19% Tankers 54% Others 4%

as at 30 Jun 2018 as at 30 Jun 2018

Ship Pfandbrief (by type) Aircraft Pfandbrief (by type)

€258.1m1 €1.2bn1

Outstandings €76.1m Cover pool total €258.1m Over-collateralisation €182.0m / 239.2 % Outstandings €505.0m Cover pool total €1,226.5m Over-collateralisation €721.5m / 142.9 % Weighted average life of

• utstanding Pfandbriefe 2

0.9 years Weighted average life of the cover pool2 5.8 years

44

NORD/LB Group - Pfandbriefe at a glance.

Appendix

1 Outstandings 30 Jun 2017 versus 30 Jun 2018

Nominal values as at 30 June 2018 (in €m) Outstandings Cover pool total Over- collateralisation Over- collateralisation in % Change of

• utstandings in 20181

NORD/LB AöR Public-Sector Pfandbrief 16,215.7 17,830.0 1,614.3 10.0 1,978.6 NORD/LB AöR Mortgage Pfandbrief 4,057.2 5,516.9 1,459.7 36.0 2,017.9 NORD/LB AöR Ship Pfandbrief 76.1 258.1 182.0 239.2

• 3.9

NORD/LB AöR Aircraft Pfandbrief 505.0 1,226.5 721.5 142.9

• 501.0

Deutsche Hypo Public-Sector Pfandbrief 3,873.3 4,097.9 224.6 5.8

• 973.7

Deutsche Hypo Mortgage Pfandbrief 8,703.4 9,678.8 975.4 11.2 663.2 NORD/LB Luxembourg Lettres de Gage Publique 4,401.5 5,488.1 1,086.6 24.7 434.7 Total 37,832.2 44,096.3 6,264.1 3.615.8

45

Institutional protection and deposit guarantee schemes of NORD/LB.

Appendix

• Basic protective measures to avoid bankruptcy
• The Capital Requirements Regulation (CRR , “Kapitaladäquanzverordnung”) is a EU

regulation in banking containing requirements for capital adequacy under Basel III

• Institutional Protection Scheme of the Savings Banks Finance Group was founded

in the 1970s

• Since July 2015 the Institutional Protection Scheme is recognised as a deposit

guarantee scheme under Germany’s Deposit Guarantee Act (EinSiG)

• 13 guarantee funds: of the Landesbanken (1), of the regional savings banks (11) and of

the building associations (1)

• Bail-in of shareholders and creditors

 Equity: Tier 1, AT 1, Tier 2, subordinated capital  Liabilities: Senior unsecured and other (structured) liabilities

• Excluded: i.a. deposits (under Deposit Guarantee Act: up to 100,000€/person), covered

bonds as well as money market instruments

• The Single Resolution Mechanism (SRM) is augmented by the Single Resolution Fund

(SRF), which can provide the financial resources needed for resolution.

• European deposit guarantee scheme: The German banking industry defeats the

proposed regulations of the EU commission. There is a compromise proposal from the EU parliament. But it is still quite uncertain, whether this proposal will come into effect.

Legal responsibility

Institutional Protection Scheme

• f the Savings Banks Finance Group

German Act on the Recovery and Resolution of Credit Institutions European Scheme Capital requirements

46

Important links.

Appendix

Declaration of Norddeutsche Landesbank Girozentrale on the German Corporate Governance Codex: www.nordlb.com/legal-information/legal-notices/corporate-governance/ NORD/LB protection scheme www.nordlb.com/legal-information/legal-notices/security-mechanisms/ Sustainability (report, ratings) www.nordlb.com/nordlb/sustainability/ NORD/LB supervisory board www.nordlb.com/nordlb/investor-relations/committees-and-executive-bodies/ NORD/LB Annual, Interim Reports and Disclosure Reports www.nordlb.com/reports

47

Contact.

NORD/LB Norddeutsche Landesbank Girozentrale Investor Relations Georgsplatz 1 30159 Hanover, Germany ir@nordlb.de www.nordlb.de/www.nordlb.com Bitte hier Ihr Foto einfügen

Gabriele Bödeker (Head of Investor Relations)

gabriele.boedeker@nordlb.de Tel.: ++49 511 361-4338

Thomas Breit

thomas.breit@nordlb.de Tel.: ++49 511 361-5382

Marcel Mock, CIIA, CEFA

marcel.mock@nordlb.de Tel.: ++49 511 361-8914

Svenja Pohlmann

svenja.pohlmann@nordlb.de Tel.: ++49 511 361-4683

48

Disclaimer.

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• events. These forward-looking statements include, but are not limited to, all

statements other than statements of historical facts, including, without, limitation, those regarding NORD/LB’s future financial position and results of

• perations, strategy, plans, objectives, goals and targets and future

developments in the markets where NORD/LB participates or is seeking to

• participate. The NORD/LB Group’s ability to achieve its projected results is

dependent on many factors which are outside management’s control. Actual results may differ materially from (and be more negative than) those projected

• r implied in the forward-looking statements. Such forward-looking information

involves risks and uncertainties that could significantly affect expected results and is based on certain key assumptions. The following important factors could cause the Group’s actual results to differ materially from those projected or implied in any forward-looking statements: – the impact of regulatory decisions and changes in the regulatory environment; – the impact of political and economic developments in Germany and other countries in which the Group operates; – the impact of fluctuations in currency exchange and interest rates; and – the Group’s ability to achieve the expected return on the investments and capital expenditures it has made in Germany and in foreign countries. The foregoing factors should not be construed as exhaustive. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements as a prediction of actual results. All forward- looking statements included herein are based on information available to NORD/LB as of the date hereof. NORD/LB undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by applicable law. All subsequent written and oral forward-looking statements attributable to NORD/LB or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The material is provided to you for informational purposes only, and NORD/LB is not soliciting any action based upon it. The material is not intended as, shall not be construed as and does not constitute, an offer or solicitation for the purchase or sale of any security or other financial instrument or financial service

• f NORD/LB or of any other entity. Any offer of securities, other financial

instruments or financial services would be made pursuant to offering materials to which prospective investors would be referred. Any information contained in the material does not purport to be complete and is subject to the same qualifications and assumptions, and should be considered by investors only in light of the same warnings, lack of assurances and representations and other precautionary matters, as disclosed in the definitive offering materials. The information herein supersedes any prior versions hereof and will be deemed to be superseded by any subsequent versions, including any offering materials. NORD/LB is not obliged to update or periodically review the material. All information in the material is expressed as at the date indicated in the material and is subject to changes at any time without the necessity of prior notice or

• ther publication of such changes to be given. The material is intended for the

information of NORD/LB´s institutional clients only. The information contained in the material should not be relied on by any person.

49

Disclaimer.

In the United Kingdom this communication is being issued only to, and is directed only at, intermediate customers and market counterparties for the purposes of the Financial Services Authority’s Rules ("relevant persons"). This communication must not be acted on or relied on by persons who are not relevant persons. To the extent that this communication can be interpreted as relating to any investment or investment activity then such investment or activity is available only to relevant persons and will be engaged in only with relevant persons. Viewing the following material involves no obligation or commitment of any kind by any person. Viewers of he following material are not to construe information contained in it as a recommendation that an investment is a suitable investment or that any recipient should take any action, such as making

• r selling an investment, or that any recipient should refrain from taking any
• action. Prior to making an investment decision, investors should conduct such

investigations as they consider necessary to verify information contained in the relevant offering materials and to determine whether the relevant investment is appropriate and suitable for them. In addition, investors should consult their

• wn legal, accounting and tax advisers in order to determine the consequences
• f such investment and to make an independent evaluation of such investment.

Opinions expressed in the material are NORD/LB´s present opinions only. The material is based upon information that NORD/LB considers reliable, but NORD/LB does not represent, guarantee, or warrant, expressly or implicitly, that the material or any part of it is valid, accurate or complete (or that any assumptions, data or projections underlying any estimates or projections contained in the material are valid, accurate or complete), or suitable for any particular purpose, and it should not be relied upon as such. NORD/LB accepts no liability or responsibility to any person with respect to, or arising directly or indirectly out of the contents of or any omissions from the material or any other written or oral communication transmitted to the recipient by NORD/LB. Neither the material nor any part thereof may be reproduced, distributed, passed on, or otherwise divulged directly or indirectly by the party that receives it, to any other person without the prior written consent of NORD/LB. The distribution of the material in certain jurisdictions may be restricted by law and persons into whose possession the material comes are required by NORD/LB to inform themselves about, and to observe, any such restrictions. This presentation does not constitute an offer to sell or the solicitation of an

• ffer to purchase or subscribe for any securities of NORD/LB in the United
• States. No part of this presentation should form the basis of or be relied upon in

connection with any investment decision or any contract or commitment to purchase or subscribe for any securities of NORD/LB. Any offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from NORD/LB and will contain detailed information about NORD/LB, its management and its financial statements. None of NORD/LB’s securities may be offered or sold in the United States, without registration under the U.S. Securities Act of 1993, as amended, or pursuant to an exemption from registration therefrom. By viewing the following material, the recipient acknowledges, and agrees to abide by, the aforementioned.