Turning customer satisfaction into value Maarten Edixhoven CEO Aegon the Netherlands THE INFORMATION CONTAINED IN THIS DOCUMENT MAY CONSTITUTE INSIDE INFORMATION AND MUST BE KEPT CONFIDENTIAL UNTIL ITS RELEASE TO THE PUBLIC. THE FINALIZATION OF THE FINANCIAL INFORMATION IS SUBJECT TO APPROVAL FROM THE AEGON N.V. MANAGEMENT BOARD AND SUPERVISORY BOARD. THE PUBLIC ANNOUNCEMENT WILL FOLLOW THEREAFTER. December 12, 2019 Helping people achieve a lifetime of financial security
Translating growth opportunities into valuable businesses Underlying earnings before tax 1H19 annualized Asia 2 Joint ventures in Spain & Portugal 3 Scale-up for the Future € 11m € 96m 1 € 129m € 62m Drive for growth Sales CAGR 4 2017-1H19 17% 22% 26% AIFMC 19% 15% JVs -28% TLB 1. Underlying earnings based on segment reporting used in results press releases. Remainder of this presentation based on statutory reporting 2. Consists of High Net Worth businesses, insurance joint ventures in China and India (combined as JVs for sales CAGR), and the asset management joint venture AIFMC in China B-2 3. Excludes expenses for services shared with own channels in Spain 4. Based on i) gross deposits for asset management and banking businesses, ii) sum of Life APE, and new premiums (A&H and P&C) for insurance businesses, iii) local currency for Mongeral Aegon
Knab is Aegon’s innovative online bank € Daily banking: Wealth accumulation: Integration: Knab lab: Have a firm grip on Build wealth for a Innovate together your daily finances financially secure future with our customers Payment Account Saving Accounts Bank Savings 3 Credit Card Overview & Insights Managed Investments Insurance Products for Crowdfunding Services Self-employed 1 Simplifying operation and Becoming the one-stop Financial Planning using Knab brand going Work Related Services for shop for entrepreneurs Self-employed 2 forward B-3 1. Offered via strategic partners 2. E.g. attractive prices on laptops or lease-cars and accounting system integration services via strategic partners 3. Bank savings are fiscally attractive method to save for pensions and other purposes via designated savings account currently offered under Aegon label, which will be migrated to Knab label
Knab is well positioned in self-employed and individual wealth accumulation markets Growth drivers for Knab Growth in self-employed market Demand for individual wealth accumulation Growing demand for online banking Number of Dutch self-employed 1 Dutch retail savings and investment AuM 2 Mobile banking adoption in the Netherlands 3 (in 1,000) (in EUR billion) (in %) +5% CAGR: CAGR 1.121 437 62 428 424 1.071 419 405 399 14% 1.011 391 36 34 32 967 29 26 23 913 17 857 823 41 269 264 267 0% 266 262 264 265 28 10 3% 133 128 127 124 112 117 108 2012 2013 2014 2015 2016 2017 2018 2015 2016 2017 2018 2012 2013 2014 2015 2016 2017 2018 Bank savings Savings Investments Self-employed market is strategic Broad product offering to help clients Knab is a fully online bank focus point accumulate wealth B-4 1. Source: Dutch Central Bureau of Statistics (CBS) 2. Source: IPSOS; DNB 3. Source: GfK Netherlands research. Adoption is defined as the number of mobile banking customers divided by number of banking customers
Growth is driven by high customer satisfaction I'm a big fan - Definitely the best I have never been so What a good service! bank in my opinion. happy with a bank! We keep our customers happy… …to increase our customer base… …and support balance sheet growth (r-NPS 1 ) (in thousands) (in EUR billion, liability side) 28% market share with starting self-employed 2 9% market share in Bank savings 40 36 33 15.6 29 674 646 14.1 600 13.7 593 12.2 4,5 3,5 4,1 428 3,4 444 446 473 3 7,9 7,6 6,9 6,4 145 111 76 52 3,2 3,0 2,7 101 2,4 91 78 68 2016 2017 2018 1H 2019 2016 2017 2018 1H 2019 2016 2017 2018 1H 2019 Retail Self-employed and SME Aegon Bank savings Savings 4 Other 5 1. For Knab label 2. Source: ZZP Barometer 2018 B-5 3. Netted for 52k customers with a product discontinued in 2017 4. Savings are regular savings deposits, i.e. excluding the fiscal friendly Bank savings 5. Includes mainly wholesale funding, equity and derivatives
Financial performance is consistently improving Return on Capital 2 Net interest income and net interest margin (in EUR million, in %) (in %) 1.19% 4.4% 1.10% 0.96% 0.92% 3.4% 2.0% 234 192 146 121 0% 2019 1 2019 1 2016 2017 2018 2016 2017 2018 Gross deposits Cost / Income ratio (in EUR billion) (in %) 11.5 98 89 84 9.7 80 7.7 6.4 2016 2017 2018 2019 2016 2017 2018 1H19 B-6 1. 1H19 figures are annualized 2. Note that the RoC is defined as underlying earnings before tax divided by average allocated IFRS capital. Financial leverage is held at group level and downstreamed as equity into the operating entities
Clear goals and targets for the future Medium term KPI target Maintain +40 points Net promotor • Maintain excellent service and high NPS among Knab clients score (NPS) • Continue growth in self-employed and Customer growth and entrepreneurial retail customers high NPS • Integrate our daily banking and wealth accumulation Net customer + ~70k clients offerings under the Knab label per year growth • Grow the balance sheet to scale of EUR ~20 billion Cost / Income 60% • Further increase fee business ratio • Sustainable Realize cost synergies from integration of labels profitability • Ensure regulatory compliance with explicit focus on Return on KYC/CDD and AML 1 9% Capital • Absorb additional investments in IT and compliance B-7 1. KYC: know your customer; CDD: customer due diligence; AML: anti money-laundering
Translating growth opportunities into valuable businesses Strong foundation Growth opportunities • • High customer satisfaction scores Growing demand for individual • Strong position in fast growing wealth accumulation products • self-employed market Rapid adoption of online banking Value creation B-8
Appendix For questions please contact Investor Relations +31 70 344 8305 ir@aegon.com P.O. Box 85 2501 CB The Hague The Netherlands Helping people achieve a lifetime of financial security
Bridging statutory and segment reporting • Difference between statutory view 1H19 Underlying earnings before tax (UEBT) reconciled (in EUR million) and segment reporting driven by intra-group mortgage transactions 48 (34) • Fair value of mortgages acquired is higher than nominal value. This premium above par is amortized through net income over the duration of the mortgages 0 5 19 • Next to that, statutory reporting is different for pensions (cash basis versus IAS 19) UEBT Segment Amortization IAS 19 allocation Other UEBT Statutory reporting mortgage reporting transactions B-10
Key ratios per 1H19 % Core Tier 1 Leverage Liquidity Coverage Net Stable Funding Ratio Ratio Ratio Ratio 21.9% 1 4.4% 161% 148% B-11 1. This is based on Core Tier 1 capital of EUR 672 million and Total Risk Exposure Amount EUR 3,071 million under the standard model
Balance sheet composition Over 65% of total assets allocated to prime Dutch residential mortgage portfolio Mortgage loans Balance sheet 1 (per 1H 2019, EUR billion) • Low-risk, high-quality mortgage portfolio, with low LtV and high NHG coverage 2 15.6 15.6 • Prime Dutch residential mortgage portfolio with an average LtV of approx. 70% per 1H 2019 • Roughly 70% of Aegon Bank’s mortgage portfolio is guaranteed by Dutch state Mortgage loans Regular savings 1 deposits through NHG scheme per 1H 2019 7,9 10,0 Wholesale funding Bank savings deposits Consumer & small business loans • Covered bonds, collateralized by prime Dutch residential mortgage portfolio • Per 1H 2019 the wholesale funding consists of: Wholesale funding Fixed income securities - EUR 750 million covered bond maturing in 2020 3,2 - Three covered bonds of EUR 500 million each, maturing in 2023, 2024 and 2027 respectively 1,4 Other liabilities and Cash and amounts due accruals - EUR 500 million Senior Non-Preferred bond maturing in 2024 from banks 1,2 2,7 2,1 Equity Other assets 1,1 1,0 0,7 Assets Liabilities & Equity B-12 1. Regular savings deposits exclude the fiscal friendly bank savings deposits 2. LtV: Loan-to-Value ratio. NHG: Nationale Hypotheek Garantie; this is a government guarantee scheme for retail mortgage debt
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