Kempen European High Dividend Fund N.V. N · EURONEXT:KEHDF
Kempen European High Dividend Fund N.V. N — Van Lanschot Kempen — Debt Investor Presentation (June 2022)
65 slides from Kempen European High Dividend Fund N.V. N's debt investor presentation, June 2022
Slide 1: Van Lanschot Kempen Soft Bullet Covered Bond Programme
Van Lanschot Kempen Soft Bullet Covered Bond Programme June 2022
Slide 2: Important Notice
IMPORTANT NOTICE NOT FOR DISTRIBUTION TO ANY U.S. PERSON OR TO ANY PERSON OR ADDRESS IN THE U.S. AND NOT FOR DISTRIBUTION TO ANY PERSON WHICH IS NOT A QUALIFIED INVESTOR AS DEFINED IN REGULATION (EU) 2017/1129, AS AMENDED. IMPORTANT: The following applies to the presentation following this page (the
Slide 3: Table of Contents
Table of Contents Executive summary 4 Strategy Van Lanschot Kempen 6 Q1 2022 results 14 2021 full-year results 16 Funding profile and capital buffer 27 Mortgage loan portfolio 33 Soft Bullet Covered Bond Programme 37 Annexes Annex I Sustainability 46 Annex II Dutch housing market 52 Annex III Produc
Slide 4: Van Lanschot Kempen at a glance
Van Lanschot Kempen at a glance Who we are Solid performance on all key financials • Well-capitalised, profitable, independent wealth manager with a strong specialist position in the market 2021 2020 • Net result €143.8m €49.8m • Clear choice for wealth management, targeting private, wholesale, inst
Slide 5: Executive summary - Soft Bullet Covered Bond Programme
Executive summary - Soft Bullet Covered Bond Programme Van Lanschot Kempen N.V. Issuer Van Lanschot Kempen NV • Strong balance sheet and attractive capital strategy Programme size €5.0bn • Credit rating of BBB+/BBB+ (S&P/Fitch) Format Soft Bullet (SB) Extension Period Maximum of 12 months Now debuts
Slide 6: Van Lanschot Kempen is a well-capitalised, profitable, specialist wealth manager
Van Lanschot Kempen is a well-capitalised, profitable, specialist wealth manager 6
Slide 7: Our independent wealth management strategy
Our independent wealth management strategy Our ambitions Our strategic pillars Supported by our strong client relationships we are a In order to deliver on our ambitions, we defined five leading player in our relevant markets and geographies: strategic pillars: • A leading wealth manager in the Neth
Slide 8: Our client segments catering to the needs of our clients
Our client segments catering to the needs of our clients 8
Slide 9: Our journey to a modern integrated and independent wealth manager
Our journey to a modern integrated and independent wealth manager 2013 2021 A small universal bank – Continue our successful journey as an independent doing everything for everyone wealth manager under one brand: • Clear choices for specific client groups • €4bn Corporate Banking loan portfolio run
Slide 10: A closer look at our journey
A closer look at our journey Strategy review Assets under management • In 2013 we started our journey from universal bank to a €bn specialist wealth manager with focus on private banking, investment management and investment banking 174% 112.1 • We simplified our product portfolio and organisation a
Slide 11: De-risking our balance sheet over the years
De-risking our balance sheet over the years CET 1 ratio Risk-weighted assets Corporate banking loan portfolio €bn €bn +12.7ppt 23.7% -63% 10.5 -98% 11.0% 5 0.1 3.9 2012 2021 2012 2021 2012 2021 AuM Underlying net result Return on CET 1* €bn €m +29.1 ppt 15.7% +174% 112.1 159.9 -13.4% 40.9 11.1 2012
Slide 12: Delivering on our growth ambitions as an independent, specialist wealth manager
Delivering on our growth ambitions as an independent, specialist wealth manager in Western Europe A leading wealth manager in the Netherlands and Belgium that creates and preserves wealth in a sustainable way The leading wealth management platform for the mass-affluent market in the Netherlands, com
Slide 13: Our sustainability ambitions
Our sustainability ambitions Time to take bigger strides • To preserve and create wealth, in a sustainable way, for our clients and the society we serve • We focus on three themes: climate, circularity and health • We are committed to become a net-zero wealth manager by 2050 • Ambitious annual carbo
Slide 14: Q1 2022 results
Q1 2022 results
Slide 15: Q1 2022: strong overall performance
Q1 2022: strong overall performance Net result €25.1m (2021 Q1: €33.1m) Commission income €106.1m Underlying net result €35.7m (+18% vs 2021 Q1) (2021 Q1: €33.7m) Interest income €35.6m (-3% vs 2021 Q1) Operating expenses €108.6m Efficiency ratio 72.0% (2021 Q1: €97.8m) (2021 Q1: 71.6%) AuM €106.3bn
Slide 16: 2021 full-year results
2021 full-year results
Slide 17: Our 2021 performance reflects our successful wealth management strategy
Our 2021 performance reflects our successful wealth management strategy • Net profit at €143.8m • Strong growth in commission income to €385.5m (+30%) • Interest income stable, further releases from loan loss provisions • Our portfolio of participating interests generated a strong result, including
Slide 18: 2021: Very strong overall performance
2021: Very strong overall performance Net result €143.8m (2020: €49.8m) Commission income €385.5m (+30%) Underlying net result €159.9m Interest income €153.6m (+1%) (2020: €51.0m) Operating expenses Efficiency ratio 68.9% €409.9m (+10%) (2020: 85.7%) AuM €112.1bn (+13%) Client assets €131.1bn (+14%)
Slide 19: Overview of net result
Overview of net result €m 2021 2020 % chang e Commission 385.5 296.4 30% Interest 153.6 152.1 1% Other income 55.6 -14.5 Income fr om op er ating activities 594.7 434.0 37% Operating expenses -409.9 -371.8 10% Gr oss r esult 184.8 62.2 197% Loan loss provision 11.7 -1.9 Other impairments 6.5 - Opera
Slide 20: Strong commission income drives net result to €143.8m
Strong commission income drives net result to €143.8m Key drivers of net result €m • Other consists of special items and operating profit before tax of non-strategic investments 20
Slide 21: Private Clients: exceptionally high inflows reflect our unique wealth management position
Private Clients: exceptionally high inflows reflect our unique wealth management position Private Clients: AuM Private Clients: Revenue composition € bn Total = €387.0m 1% 36% 63% Commission Interest Other • All the underlying client segments show positive net inflow • Inflow in discretionary manage
Slide 22: Wholesale & Institutional Clients: AuM stable
Wholesale & Institutional Clients: AuM stable Wholesale & Institutional Clients: AuM € bn • Fiduciary management outflow due to the loss of two clients – both because of a merger with other parties – partially offset by growth within our UK fiduciary management franchise • Investment strategies’ flo
Slide 23: Stable interest income in 2021
Stable interest income in 2021 Interest income and margin (12-mth moving Average volume charged negative interest rates average)* € bn €m 1.13% 1.03% 0.98% 1.07% 0.98% 0.92% • Stable interest income driven by loan portfolio growth and our ability to charge negative interest rates • As of July 2021,
Slide 24: Structured products activities develop according to plan
Structured products activities develop according to plan Outstanding volume structured products portfolio €m 783 691 385 187 105 92 31-3-2020 31-12-2020 31-12-2021 Macro-hedge portfolio Back-to-back portfolio • Result on structured products activities stabilised at -€1.3m (2020: -€33.2m) • Significa
Slide 25: Increased operating expenses driven by organic and inorganic growth
Increased operating expenses driven by organic and inorganic growth Operating expenses €m • Operating expenses increased by €38.1m to €409.9m • Our two acquisitions led to an increase of operating expenses of c. €16m • Higher variable remuneration driven by significantly higher net profit • In the c
Slide 26: Strong capital position, CET 1 ratio to 23.7%
Strong capital position, CET 1 ratio to 23.7% Common Equity Tier 1 ratio % • As of 1 January 2022, the DNB-floor has impacted our CET-ratio by 3.2%-points, we expect this impact will largely disappear when Basel IV is implemented in 2025 • Including this DNB-floor, our capital position is still ampl
Slide 27: Van Lanschot Kempen's diversified funding profile and solid capital buffers
Van Lanschot Kempen’s diversified funding profile and solid capital buffers 27
Slide 28: Van Lanschot Kempen's solid profile is reflected in its creditworthiness
Van Lanschot Kempen’s solid profile is reflected in its creditworthiness Standard & Poor’s Fitch • Long-term credit rating of issuer: BBB+ • Long-term credit rating of issuer: BBB+ • Outlook long-term credit rating: Stable outlook • Outlook long-term credit rating: Stable outlook • Short-term credit
Slide 29: Balance sheet shows strong capital and funding position
Balance sheet shows strong capital and funding position Significant capital buffer Balance sheet 31 December 2021 • Total equity of €1.4bn € bn, balance sheet total = €16.3bn • CET1 ratio 23.7% 0.5 Due to banks • Leverage ratio 6.3% Cash and cash equivalents and balances at banks 3.8 Low-risk assets
Slide 30: Van Lanschot Kempen has various funding programmes
Van Lanschot Kempen has various funding programmes Secured programmes Unsecured programmes • Public covered bond programmes used for wholesale funding purposes Debt Issuance Programme / MTN • Residential mortgage loan portfolio, fully originated and • €5.0 billion programme serviced by Van Lanschot
Slide 31: Diversified funding mix and solid liquidity buffers
Diversified funding mix and solid liquidity buffers Funding mix at 31/12/2021 Redemption profile* (100% = €16.3 billion) €m € 900 3% 9% € 800 3% Client savings and € 700 deposits Debt securities € 600 13% € 500 Interbank funding € 400 € 300 Shareholders' 72% equity € 200 Other funding € 100 €0 2022
Slide 32: Long track record of issuing secured and unsecured debt instruments
Long track record of issuing secured and unsecured debt instruments • Strong funding position based on a stable level of bond issuance, our presence in wholesale markets and accordingly experienced with secured funding related (reporting) tasks • Experienced player in setting up new funding programm
Slide 33: Mortgage loan portfolio
Mortgage loan portfolio
Slide 34: Offering mortgages to private banking clients
Offering mortgages to private banking clients • We are a specialist wealth manager offering multiple services to our clients: investment allocation, estate planning and financing – and we also offer mortgages to our private banking clients • Our private bankers can offer personalised service thanks
Slide 35: Growth in loan portfolio +5%, decrease in impaired loans
Growth in loan portfolio +5%, decrease in impaired loans €m Lo an Lo an % change Impaired Pro visio n Impaired Co verage po rtfo lio po rtfo lio lo ans ratio ratio 31/12/2021 31/12/2020 Mortgages 6,337 6,039 5% 30 2 0.5% 5% Other loans 2,199 1,997 10% 121 40 5.5% 33% Lo an po rtfo lio 8, 536 8, 036
Slide 36: Improvement in credit quality leads to decrease in loan loss provisions
Improvement in credit quality leads to decrease in loan loss provisions Loan loss provision per stage Additions to loan loss provisions €m €m 31/12/2020 31/12/2021 % change - 27 bps* + 4 bps* - 29 bps* Stage 1 3.4 3.6 6% Stage 2 8.7 3.5 -60% 1.9 Stage 3 51.9 42.4 -18% Total 64.1 49.5 -23% -12.1 -11.
Slide 37: Soft Bullet Covered Bond Programme
Soft Bullet Covered Bond Programme
Slide 38: Highlights & key benefits
Highlights & key benefits Highlights - summary Key benefits Robust structure • Registered programme with DNB Issuer Van Lanschot Kempen NV • Strong programme tests (asset cover Programme size €5.0bn test & amortisation test) • No interest rate swap counterparties* Format Soft Bullet (SB) • Exempted
Slide 39: Transaction structure
Transaction structure Subordinated Loan Swap provider* Provider Servicing Swap (Sub-) Servicer agreement Agreements CBC Account Bank Administrator Van Lanschot Kempen SB Covered Bond Security Trustee Administration Company B.V. Parallel Debt agreement and Pledge of Receivables Asset monitoring Asset
Slide 40: Key parties & transaction structure
Key parties & transaction structure Key Programme Parties Key pool characteristics as of 31 March 2022 Originator Van Lanschot Kempen Net principal balance €737,677,200 Transferor Van Lanschot Kempen Construction deposits €0 Issuer Van Lanschot Kempen Fixed rate 98.50% Servicer Van Lanschot Kempen V
Slide 41: Cover pool characteristics as of 31 March 2022
Cover pool characteristics as of 31 March 2022 Current loan balance per borrower Geographical distribution as % of outstanding € thousand amount 30% Noord-Holland 30.76% 25% Zuid-Holland 21.34% 20% 15% Utrecht 17.50% 10% Noord-Brabant 13.92% 5% Gelderland 8.27% 0% Limburg 2.41% <= 250 <= 500 <= 750
Slide 42: Cover pool characteristics as of 31 March 2022
Cover pool characteristics as of 31 March 2022 Time to interest reset date (in years) Seasoning (in years) 20% 35% 30% 15% 25% 20% 10% 15% 5% 10% 5% 0% 0% <1 <2 <3 <4 <5 <6 <7 <8 <9 < 10 >= 10 0-5 5-10 10-15 15-20 20-25 25-30 Interest rate (%) Product type as of 31 March 2022 40% 35% 5% 5% 17% 30% A
Slide 43: Soft Bullet mechanism
Soft Bullet mechanism Going-concern Soft Bullet Mechanics No • The covered bonds (CBs) are bullet securities due on the Issuer Event of Default Bullet Maturity specified maturity date and the Issuer makes the coupon and principal payments to the investors • The ACT ensures that the cover pool meets
Slide 44: Comparison - Dutch covered bond programmes
Comparison - Dutch covered bond programmes Main highlights* Issuer Rating BBB+/NR/BBB+ A/A1/A A-/NR/A A/NR/A- A+/A1/AA- BBB+/NR/BBB A-/NR/NR A+/Aa2/A+ A-/A2/A- (S/M/F) Programme Rating 1. AAA/NR/AAA 1. NR/Aaa/AAA 1. AAA/NR/NR 1. AAA/Aaa/AAA 1. AAA/NR/AAA NR/Aaa/AAA AAA/NR/NR NR/Aaa/NR NR/Aaa/AAA (S/
Slide 45: Van Lanschot Kempen investor reporting
Van Lanschot Kempen investor reporting Investor Reporting for Covered Bonds • Van Lanschot Kempen is a member of the Dutch Association of Covered Bond issuers (DACB). The objective of the DACB is to continuously improve the quality of the Dutch covered bond product offering (See also www.dacb.nl) •
Slide 46: Annex I - Sustainability
Annex I - Sustainability
Slide 47: Our achievements as a sustainable wealth manager in 2021
Our achievements as a sustainable wealth manager in 2021 • Based on our net-zero commitment we reduced our carbon footprint further: • AuM: footprint per euro AuM down by 44% • Mortgage portfolio: footprint per euro invested down by 6.1% • Own organisation: by 6.2% per FTE • In 2018 we started scori
Slide 48: Our main focus is on our clients' investments
Our main focus is on our clients’ investments • Because of our wealth management strategy, the impact that can be associated with our client investments is substantially larger than the impact that be associated with our on-balance sheet activities or own operations. Our carbon footprint • In our su
Slide 49: Progress on our non-financial KPIs
Progress on our non-financial KPIs • To monitor whether we are on track to deliver on our ambitions, we define KPIs and targets • The KPIs are focused on value creation, both financial and non-financial, financial KPIs are referred to on slide 7 Theme KPI Target 2021 Score 2021 Score 2020 Clients NP
Slide 50: High scores on external ESG ratings
High scores on external ESG ratings Good score on Governance / Transparency Other ESG ratings and benchmarks 1st in our peer group of Top decile medium-sized banks 8th place in league table 4th in group of 97 peers rated of 486 entrants on sustainability 18th in a league table of 77 A+ score for res
Slide 51: How we create value for our stakeholders
How we create value for our stakeholders 51
Slide 52: Annex II - Dutch Housing Market
Annex II - Dutch Housing Market
Slide 53: Economy in the Netherlands
Economy in the Netherlands Gross Domestic Product (GDP) – Y-o-Y change • Compared to 2021, the Dutch economy is expected to grow at a 7.0% slower pace for 2022 and 2023. For 5.0% 2022 economic growth of 3.1% is assumed and for 2023 1.2%. The 3.0% purchasing power of consumers and 1.0% business’ inve
Slide 54: Inflation, wage growth and house price increase
Inflation, wage growth and house price increase ▪ In recent months inflation has risen sharply. Furthermore, due to the Russia-Ukraine war, it is expected that inflation will rise further and stay high for a longer period of time. For 2022 an average consumer price inflation of 5.5% is forecasted. F
Slide 55: Mortgage debt outstanding & mortgage rates
Mortgage debt outstanding & mortgage rates Residential Mortgages outstanding (in €bn) • The mortgage debt outstanding for the Netherlands continues to rise along side the increase observed in 825 the house prices 775 • In the Netherlands and in other 725 European countries, the gap between income an
Slide 56: House price increase
House price increase ▪ In March 2022, sold houses were on average €19.000 more expensive than in January 2021 ▪ For 2022, house prices are expected to climb by 17.3%, followed by a slower, but still increased, 5.5% in price for 2023. Since 1977 house prices have not risen as sharply as is currently
Slide 57: Dutch mortgage lending standards
Dutch mortgage lending standards Evolution of Dutch mortgage lending standards 2007 2011 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 • Reduction LTV • Limited tax deduction cap of 100% of prepayments • New legislation on interest mediation • Gradual further reduction • Highest tax rate reduces
Slide 58: Payment arrears and foreclosures
Payment arrears and foreclosures ▪ Mortgage payment arrears in Europe have been declining over the last couple of years, where the Netherlands remains the best in class with the lowest arrears in the area with a decreasing trend since the second half of 2014 ▪ A trend of declining public auctions ha
Slide 59: Annex III - Product offering and underwriting
Annex III - Product offering and underwriting
Slide 60: Product offering
Product offering Private banking services to wealthy individuals and to individuals starting to build their wealth • Advice on financial planning and wealth management • Focus on relevant advice and high-quality service • Mortgage loans offered to clients as part of full-service financial solutions
Slide 61: Underwriting (1/2)
Underwriting (1/2) Dutch Code of Conduct Governance Our mortgage underwriting criteria have evolved over time in line with the Dutch Code of Conduct, national law and general market practices. The criteria below are those currently applied Maximum loan to value • Mortgage loans up to and including €
Slide 62: Underwriting (2/2)
Underwriting (2/2) • Various fraud checks are carried out (BKR, SFH, VIS, EVA, employer’s certificate)* Fraud & insurance • Continuous contact between banker and client requirements • Mandatory hazard insurance based on reconstruction value • Mandatory property valuation by independent appraiser • F
Slide 63: Van Lanschot Kempen: arrears management
Van Lanschot Kempen: arrears management Arrears management/timeline • Mortgage loans are considered in arrears if one or more regular payments have been missed by the client • After approximately two weeks a reminder letter is sent by the service provider. Every month another letter is sent, for as
Slide 64: Restructuring approach
Restructuring approach • All arrears of over 45 days are monitored by the Early Prevention Team. They focus on analysing the situation of the client in order to find a permanent solution, rather than just acting on signals. Within 60 days it must be clear whether a problem can be easily solved, or w
Slide 65: Contact
Contact Funding Management Ralf van Betteraij Head of Funding Management T +31 20 348 97 13 M +31 6 12 04 10 89 r.vanbetteraij@vanlanschotkempen.com Marrit Oudeboon Funding Management T +31 20 348 97 14 M +31 6 10 02 17 12 m.oudeboon@vanlanschotkempen.com 65
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