HALF YEAR RESULTS 2019 Debt Investor Presentation – September 2019 1
TABLE OF CONTENTS BUSINESS UPDATE HALF YEAR 2019 FINANCIAL RESULTS HALF YEAR 2019 APPENDICES 2
BUSINESS UPDATE HALF YEAR 2019 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 proposed of EUR 0.25 per share, leading to a Dividend pay-out ≥ 50% 44% payout of 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, SOLID FUNDAMENTALS… ECONOMY SLOWING DOWN 1 ▪ International, highly competitive economy Benelux sector performance ▪ Solid housing price development Since 27 Aug 2019 YTD 8 NIBC IPO ▪ Low unemployment NIBC € 7.540 (9.3)% (13.8)% ▪ 1.4% GDP growth expected in 2020 ABN AMRO € 16.02 (22.0)% (33.0)% 6 ING € 8.495 (9.7)% (36.7)% KBC € 51.72 (8.8)% (26.6)% …BUT INTERNATIONAL UNCERTAINTY Average (12.4)% (24.1)% 4 CONTINUES: Indicies performance ▪ Interest rate environment: low for longer Since 27 Aug 2019 YTD ▪ Brexit deadline is nearing, hard Brexit has NIBC IPO 2 become the default STOXX Europe 373.1 10.5% 2.0% 600 Index ▪ International trade tensions, particularly between the US and China 0 STOXX Europe 119.4 (9.9)% (30.8)% Banks Index 2015 2016 2017 2018 2019 ▪ Turn of the (economic) cycle AEX Index 545.6 11.8% 4.6% NL GDP (%) GE GDP (%) AMX Index 794.8 20.9% 0.5% NL Unemployment (%) GE Unemployment (%) 1 Real GDP growth in percentage, y-o-y. Sources: Dutch Statistics Office (NL) ; German Federal Statistics Office (GE) 5
CHANGING ENVIRONMENT Impacting 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 6
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 1.0bn 9.7bn 47% C+ In EUR bn 1 ▪ Growth in chosen sectors like Structured Finance and Digital Infrastructure 3.7 ▪ /PRIME Growth in Leasing with Beequip (+20%) 3.1 ▪ Reduced exposures in Energy, Shipping and 22 Leveraged Finance by over EUR 200m 1 ▪ Continued focus of margin over volume 1.0 2017 2018 H1 2019 1 FY 2018 score, survey not updated for H1 2019 7
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 from EUR 2.4 3.3 CUSTOMER SURVEY 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 4.5 billion 8.9 8.1 8.6 NIBC DIRECT 8.2 ▪ Growth in Buy-to-let portfolio of 4% CUSTOMER SURVEY 2017 2018 H1 2019 SCORE MORTGAGES 1 Owner-occupied Buy-to-let Fair value adjustment Originate-to-manage 1 FY 2018 score, survey not updated for H1 2019 8
OUR STRATEGIC PRIORITIES Continuous evolution of client franchise, expertise and propositions ▪ Progressing well with the execution of the rebalancing strategy, reducing 1 exposure in highly-cyclical sectors Further optimisation of capital structure ▪ Strong mortgage origination across all tenors and diversification of funding ▪ Lower funding costs at 72bps ▪ Strong CET 1 ratio of 18.5%; pro-forma CET 1 following 6 the impact of the IMI is 16.1% 2 Focus on growth of asset portfolio in core markets ▪ Interim-dividend reconfirmed at EUR 0.25 per share ▪ 20% growth in Leasing (Beequip) ▪ Growth in Structuring and Digital Infrastructure ▪ On-balance growth of mortgage portfolios of EUR 300m ▪ Off-balance growth of mortgage portfolios of EUR 900m Ongoing investment in people, culture 5 and innovation 3 Diversification of income ▪ Secured second OTM mandate and increased total ▪ Second group of senior staff participated in IMD OTM mandate to EUR 4.5 billion program ▪ Markets business still challenging ▪ ‘Young NIBC’ – many activities organized ranging from Brexit seminar, Meet the Client, Young Financials network to sports and charity/volunteering events 4 ▪ Election of Deal of the Quarter based on engagement Building on existing agile and effective organisation (shares and likes) in Social Media ▪ Strategic investments in fintechs continue; contract with OakNorth signed ▪ NIBC Sustainability report 2019 published ▪ 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 HALF YEAR 2019 10
INCOME STATEMENT Steady performance in H1 2019 INCOME STATEMENT PROFIT AFTER TAX AND RETURN ON EQUITY COMMENTS ▪ Profitability remained stable in H1 2019, with a profit IFRS 9 IFRS 9 H1 2018 vs after tax attributable to shareholders of EUR 83 H1 2019 H1 2018 H1 2019 million in H1 2019 compared to EUR 84 million in H1 13.6% Net interest income 209 207 1% 2018 11.9% Net fee and commission income 19 21 -7% 10.8% 10.5% 10.5% ▪ Return on equity declined to 9.7% (H1 2018: 10.5%) Investment income 16 21 -24% 9.7% 9.7% 9.0% Other income 7 5 37% due to the higher equity base at 1 January 2019 Operating income 251 254 -1% compared to 1 January 2018 Personnel expenses 57 55 3% ▪ Net interest income remained relatively stable with a Other operating expenses 47 53 -12% 44 53 1% increase compared to H1 2018, but continues to Depreciation and amortisation 3 3 8% be affected by the adoption of IFRS 9 Regulatory charges 9 9 -2% Operating expenses 116 120 -4% ▪ Excluding the IFRS 9 impact of EUR 19 million in H1 Net operating income 135 134 1% 2019 and EUR 28 million in H1 2018, net interest 173 160 Credit loss expense / (recovery) 21 21 3% income increased by 6% Tax 25 23 9% 84 83 ▪ Operating expenses decreased by 4% in H1 2019, Profit after tax 89 90 -2% mainly driven by a decrease from one-off expenses Profit attributable to non-controlling 6 6 0% shareholders 2017 H1 2018 2018 H1 2019 in H1 2018 related to the IPO being partially Profit after tax attributable to 83 84 -1% compensated by higher expenses and investments in shareholders of the company Profit after tax Non-recurring profit Profit after tax Non-recurring profit H1 2019 for our IT transition program, regulatory projects and new ventures Return on equity Return on equity ex. non-recurring 11
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