Nn Group N.v. · EURONEXT:NN
Nn — Nationale-Nederlanden Bank — Debt Investor Presentation (October 2024)
60 slides from Nn's debt investor presentation, October 2024
Slide 1: Nationale-Nederlanden Bank
Nationale-Nederlanden Bank Investor Presentation - soft bullet covered bonds October 2024
Slide 2: Important Notice
IMPORTANT NOTICE IMPORTANT: You must read the following before continuing. The following applies to this investor presentation, any information or opinion therein, and any statement made in connection therewith (the Presentation), and you are therefore advised to read this carefully before reading,
Slide 3: Executive summary
Executive summary Nationale-Nederlanden Bank N.V. Purpose, ambition and strategy Financials at 30 June 2024¹ Funding diversification • Top 5 retail bank in the • Purpose: to help people care for • Total assets of EUR 25.0bn; • Diversified funding mix, in terms of Netherlands (based on balance what m
Slide 4: Contents
Contents 1 Strategy and business highlights 5 2 Sustainability business and society 14 3 Capital, liquidity and funding 22 4 Covered bond programme 29 5 Mortgage business 38 Appendices A Mortgage loans: origination and underwriting criteria 45 B NN Bank funding programmes 48 C Dutch economy and hous
Slide 5: 1 Strategy and business highlights
1 Strategy and business highlights 5
Slide 6: NN Bank profile
NN Bank profile • Nationale-Nederlanden Bank (‘NN Bank’) is the fifth largest Dutch retail banking franchise, based on balance sheet size • 100% subsidiary of NN Group N.V. • Significant player in Dutch residential mortgage loans and retail savings, with approximately 1.2 million retail clients in t
Slide 7: Parent company: NN Group
Parent company: NN Group International footprint Overview of NN Group • International financial services company, active in 11 countries, with a strong presence in Europe and Japan • Around 16,000 employees, providing retirement services, pensions, insurance, banking and investments to approximately
Slide 8: NN Bank's added value to NN Group
NN Bank’s added value to NN Group NN Bank is highly strategically important for NN Group • Operating under the Nationale-Nederlanden brand since its start in 2011 • Fully-owned subsidiary of NN Group N.V. and a fellow subsidiary of the Dutch insurance entities, i.e. NN Life and NN Non-life • NN Bank
Slide 9: NN Bank key figures
NN Bank key figures 1H24 financial highlights Non-Financial KPIs at year-end 2023 Net interest income EUR 198.2m 1.58% EUR 61.9m 58.3% (1H23: EUR 202.0m) (1H23: 1.66%) (1H23: EUR 64.8m) (1H23: 54.5%) Origination Net growth 10.6% 18.3% EUR 1.8bn EUR 0.5bn (1H23: Origination EUR 2.2m) (1H23: EUR 0.1bn
Slide 10: Creating long-term value for our stakeholders
Creating long-term value for our stakeholders 10
Slide 11: Retail-focused business model
Retail-focused business model NN Bank is the fifth largest Dutch retail banking franchise • Providing retail customers with mortgage loans, (internet) savings, bank annuities, bancassurance and retail investment products • National player, with coverage of all Dutch regions, operating under a strong
Slide 12: Financially sound bank with a diversified income model
Financially sound bank with a diversified income model Net interest margin • Net interest income was driven by higher Summary profit and loss account funding expenses through increased savings rates, partially offset by increased (Amounts in EUR m)1 1H24 1H23 margins on new mortgage loans Interest i
Slide 13: Long-term financial targets
Long-term financial targets Total capital ratio (transitional CRD IV) • Steering capital on Total Cost/income ratio • Cost/income (C/I) ratio target capital ratio (TCR) and meeting of below 55% in 2025 all capital targets • C/I ratio increased to 58.3%, • Total capital ratio target of compared with
Slide 14: 2. Sustainability business and society
2. Sustainability business and society 14
Slide 15: Sustainability is one of the cornerstones of our strategy
Sustainability is one of the cornerstones of our strategy Our sustainability strategy Our climate journey: • Incorporating climate action across NN Bank’s business. Not only to the benefit of the environment, but also creating sustainable long-term value for all our stakeholders • As a large mortgag
Slide 16: Sustainability is embedded in our governance
Sustainability is embedded in our governance Our Governance: • The Bank’s CEO is accountable for ESG matters, the Management Team is responsible for strategic direction and implementing the ESG strategy and the Supervisory Board performs structural oversight on ESG matters on the Board level • ESG O
Slide 17: NN Bank enhancing sustainability & social responsibility
NN Bank enhancing sustainability & social responsibility PLANET FINANCIAL HEALTH • As a mortgage provider, NN Bank wants to contribute to the reduction of • NN Bank wishes to help customers greenhouse gas emissions in houses we finance who have financial difficulties • One of the ways in which we do
Slide 18: Carbon footprint
Carbon footprint Monitoring the carbon footprint of our mortgages and investment portfolio: Mortgages: • Accounting for the scope 1 and 2 emissions1 of each house • Measuring the carbon footprint of every house based on energy label, floor space, building type and corresponding emission factor • The
Slide 19: Steering our mortgage portfolio towards net-zero in 2050
Steering our mortgage portfolio towards net-zero in 2050 Share of label A in NN Bank’s portfolio increased to 25% Actual emission intensity versus CRREM pathway NL 2021 1.5° NN Bank portfolio: energy label distribution 35 NN Bank Performance2 2021 27.8 kg CO2/m (based on number of houses) 30 NN Bank
Slide 20: NN Bank's Green Bond Framework
NN Bank’s Green Bond Framework The NN Bank Green Bond Framework follows the ICMA Green Bond Principles (GBP) 2021 edition Use of Proceeds Process for Project Management of Proceeds Reporting External Review Green Buildings Evaluation and Selection Portfolio approach: the Eligible On the allocation o
Slide 21: Use of Proceeds
Use of Proceeds Green Buildings that meet one of the following criteria: Definition top 15% low-carbon residential buildings in the Netherlands CFP green buildings is a specialised consultant who developed a methodology for identifying the top 15% in the Netherlands. See also the Green Residential B
Slide 22: 3. Capital, liquidity and funding
3. Capital, liquidity and funding 22
Slide 23: Balance sheet composition
Balance sheet composition Assets Balance sheet at 31 December 2023 (in EUR bn) • Dutch residential mortgage loans (86% of the balance sheet) 25.0 25.0 0.1 • High Quality Liquid Assets (HQLA) portfolio of EUR 0.75bn consisting of 0.4 0.8 1.2 0.1 0.1 (semi) sovereign bonds and covered bonds 2.4 1.1 •
Slide 24: Solid capital position
Solid capital position Total capital ratio (TCR, transitional CRD IV) Risk weighted assets (EUR bn) Leverage ratio 18.3% 17.8% > 17.7% 1.1% 16.6% 1.3% 1.3% 6.4 6.5 6.4 3.8% 4.0% 4.1% 17.2% > 3.0% 16.5% 15.3% 2022 2023 1H24 TCR target 2022 2023 1H24 2022 2023 1H24 Regulatory CET1 Tier 2 minimum Solid
Slide 25: Conservative approach to liquidity management
Conservative approach to liquidity management Liquidity adequacy (30 June 2024) Investment securities portfolio / HQLA portfolio insight o Macro fair value hedge accounting 7% used to hedge interest risk Amortised Cost o Majority of bonds have a duration 193% 137% 133% of 1 - 5 years Fair Value thro
Slide 26: Funding strategy geared to optimisation and diversification
Funding strategy geared to optimisation and diversification Wholesale funding strategy Funding mix (as at 30 June 2024) Attract 4%0% retail funding Retail 23% Secured Savings, deposits bank annuities Unsecured Allocate 72% Diversification newly originated 2Subordinated of wholesale mortgage loans fu
Slide 27: Minimum Required Eligible Liabilities
Minimum Required Eligible Liabilities NN Bank meeting MREL requirements Total Risk Exposure Amount (TREA)1 Total Exposure Measure (TEM)2 • Intending to meet MREL requirements with a 28.1% 6.8% combination of equity, Tier 2 and senior (non) preferred 1.9% Sr pref 0.5% Sr pref • Effective MREL require
Slide 28: S&P Credit ratings
S&P Credit ratings Credit rating reflects NN Bank’s “highly strategic importance” for NN Group Nationale-Nederlanden Bank N.V. ST issuer rating, A-1 outlook stable • Long-term credit rating of A (stable outlook) by S&P, reflecting that NN Bank: LT issuer rating, A o is a fully owned subsidiary of NN
Slide 29: 4. Covered bond programme
4. Covered bond programme 29
Slide 30: NN Bank Soft Bullet Covered Bond Programme
NN Bank Soft Bullet Covered Bond Programme Soft Bullet Covered Bond Programme Green covered bonds Retained Covered Bonds • Soft Bullet Programme established and • In May 2022 NN Bank issued a EUR 500m, • Soft Bullet covered bond programme officially registered with the Dutch Central 10-year Soft Bul
Slide 31: NN Bank Soft Bullet covered bond features
NN Bank Soft Bullet covered bond features Robust structure Regulatory treatment for investors Issuer Nationale-Nederlanden Bank • Dutch law and Dutch Central Bank registered • Covered Bond Directive and CRR article 129 compliant Programme size EUR 12.5 bn • European Covered Bond (Premium) compliant
Slide 32: Soft Bullet programme structure
Soft Bullet programme structure Indicative transaction structure Key transaction parties Originators NN Bank and NN Life2 Swap provider1 Servicing Transferor, Issuer NN Bank agreement Swap Servicer Director CBC Servicer NN Bank agreements Administrator NN Bank Administration NN Covered Bond Security
Slide 33: Soft Bullet mechanism
Soft Bullet mechanism Going concern Event diagram of a single series • Under going-concern conditions, the covered bonds (CBs) are bullet securities due on the Final Maturity Date and the Issuer will ensure the coupon and principal payments to the investors Issuer Event No Bullet • The Asset Cover T
Slide 34: Cover Pool Eligibility Criteria
Cover Pool Eligibility Criteria Eligibility Criteria Each mortgage is either a Bank Savings Mortgage Loan, Life Mortgage Loan, Investment Mortgage Loan, Linear Mortgage Loan, Annuity Mortgage Loan, Interest-only Mortgage Loan, Savings Mortgage Loan, Switch Mortgage Loan or a combination thereof
Slide 35: Asset Cover Test
Asset Cover Test Asset Monitoring Agreement Calculation specification: 1. Adjusted Aggregate Asset Amount ≥ outstanding Covered Bonds ‘A’ includes: 2. First regulatory current balance amount ≥ 105% of outstanding Covered • 96% Asset Percentage Bonds • 80% Indexed LTV cut-off 3. Second regulatory cur
Slide 36: Eligible Green Mortgage Loans in Cover Pool
Eligible Green Mortgage Loans in Cover Pool Overview eligible green mortgage loans (in EUR bn) 1 Distribution Green Buildings Distribution energy labels in Cover Pool NN Bank 22.8 3% 9% 25% 22% 8% 8% 8.8 9% 75% 14% 5.8 27% 2.7 1.3 Energy label A Top 15% NZEB - 10% A B C D E F G Mortgage portfolio El
Slide 37: Green Buildings Collateral Support Amount is green, largely newly build
Green Buildings Collateral Support Amount is green, largely newly build and has on average higher notional Building years of Green Buildings Collateral Support Amount² Loan-to-value as % of Green Buildings Collateral Support Amount² 1,400 1% 1,200 5% 2% 14% NHG 1,000 13% <60% 800 600 60% - 70% 400 2
Slide 38: 5. Mortgage business
5. Mortgage business 38
Slide 39: Long-standing history in mortgage business
Long-standing history in mortgage business Successful NN-labelled mortgage business can be traced back to 1963 • Nationale-Nederlanden was founded in 1845, and evolved as a well-known brand in the Netherlands • In 1963, Nationale-Nederlanden started originating mortgage loans (‘NN-labelled mortgage
Slide 40: Distribution and servicing of mortgage loans
Distribution and servicing of mortgage loans Distribution of newly-originated mortgage loans in 1H24 (EUR 1.8bn) Mortgage loan portfolio serviced at 30 June 2024 (EUR 55.4bn) NN Bank 5% 6% NN Bank 9% 1% 9% NN Life NN Life 38% NN Non-life + NN Belgium 50% 39% NN Non-life + NN Belgium DRMF 1 DRMF 1 43
Slide 41: Amortising mortgage loans with long fixed reset tenors
Amortising mortgage loans with long fixed reset tenors Redemption types as % of NN Bank mortgage portfolio (30 June 2024)1 Majority of new mortgage origination is annuity type (average last 12 months) 2% Annuity and linear 7% Annuity and linear 16% 33% Bank savings and insurance savings Bank savings
Slide 42: Strong historical mortgage loan performance
Strong historical mortgage loan performance Moderate Loan-to-Values … Weighted average current loan-to-indexed market value trend decreases1 • Since 2018 LTV-cap is 100% and 106% including sustainability measures • As per year-end 2023 the current loan-to-indexed market value is 57% • Trend in LTV d
Slide 43: Loan loss provisioning and stage classification
Loan loss provisioning and stage classification Loan loss provisions (LLP) Loan loss provision by type (EURm) • Compared with 31 December 2023, the loan loss provision for mortgages increased by EUR 0.4 million to EUR 3.3 million in the first half of 2024 • The increase in provisions is largely driv
Slide 44: Appendices
Appendices 44
Slide 45: A Mortgage loans: origination and underwriting process
A Mortgage loans: origination and underwriting process1 Loan origination Regular loan servicing Special loan servicing Borrower Interest rate renewals Preventive actions Client back on track Electronic archives Intermediary / own advisors Conversions Arrears Origination position Pre-screening Deposi
Slide 46: A Mortgage loans: origination and underwriting criteria
A Mortgage loans: origination and underwriting criteria1 All mortgage production is originated via intermediary channels Intermediaries need to be licensed • NN Bank’s mortgage origination network comprises over 1,700 active • Dedicated team for initiating and maintaining contacts with intermediarie
Slide 47: A Mortgage loans: origination and underwriting criteria
A Mortgage loans: origination and underwriting criteria1 Code of conduct Borrower criteria Collateral criteria • NN Bank complies with the Financial Supervision • Credit history is checked in several registers (e.g. • All properties must be located in the Act, the Mortgage Credit Directive and speci
Slide 48: B NN Bank funding programmes
B NN Bank funding programmes Secured funding (collateralised by prime Dutch residential mortgage portfolios) Green Bonds Soft Bullet Covered Bond Programme Green Bond Framework • EUR 12.5bn programme, of which issued EUR 5.6bn for funding and EUR 2.0bn for • Under the Green Bond Framework NN Bank is
Slide 49: C Dutch economy and housing market
C Dutch economy and housing market • The Dutch economy contracted by 0.1% in the first quarter of 2024 • It is expected that the economy will grow 0.4% in 2024 followed by a 1.3% growth in 2025. The estimated growth is driven mainly by government and private consumption, while it is expected that ex
Slide 50: C Dutch economy and housing market
C Dutch economy and housing market • Dutch house prices are expected to rise by an average of 6.7% in 2024. For 2025, a house price increase of 5.2% is expected. It is expected that in Q4 of 2025, homebuyers are expected to pay over EUR 32,000 more for the average owner-occupied home than in April 2
Slide 51: C Dutch economy and housing market
C Dutch economy and housing market • In Q1 2024 almost all Dutch regions saw existing house prices rise, both compared to the previous quarter and compared to the same quarter one year earlier • Despite recent house price increases, in most Dutch regions owner-occupied houses are still cheaper than
Slide 52: C Dutch economy and housing market
C Dutch economy and housing market • In Q2 2024 the Dutch housing market recovery continued. In April 2024, existing homes for sale were, for the first time, more expensive than at the July 2022 price peak. The cooling down of the housing market (starting at the end of 2022) and the subsequent recov
Slide 53: C Dutch economy and housing market
C Dutch economy and housing market • In most of Europe, the mortgage payment arrears have been declining over the last couple of years. The Netherlands ranks amongst the countries with the lowest levels of arrears in Europe since 2014 • There is a trend of declining public auctions, present since 20
Slide 54: D Corporate history
D Corporate history NN Group 1845 - De Nederlanden established as a fire insurance company 1863 - De Nationale Levensverzekering-Bank founded as a Dutch life insurance company 1963 - The two biggest Dutch insurers at the time – De Nederlanden and De Nationale – merge to form Nationale-Nederlanden 19
Slide 55: D Corporate history
D Corporate history NN Bank 2011 – NN Bank launched as a savings bank to take advantage of opportunities in the Dutch banking market and respond to the declining individual life insurance market 2013 – Growth accelerated via the acquisition of selected parts of ING Bank (WestlandUtrecht Bank), predo
Slide 56: E Glossary
E Glossary Abbreviation Definition Abbreviation Definition ACT Asset Cover Test LLP Loan Loss Provisioning AT Amortisation Test LCR Liquidity Coverage Ratio AFM Dutch Authority for the Financial Markets LTV Loan-to-Value APE Annual Premium Equivalent MCD Mortgage Credit Directive AuM Assets under Ma
Slide 57: F Contact information
F Contact information Niek Allon Rolf-Pieter ter Horst NN Bank Treasury NN Bank Treasury E: niek.allon@nn.nl E: rolf-pieter.ter.horst@nn.nl Sander Roling Dorianne van Dijk NN Bank Treasury E: investor.relations@nn-group.com E: sander.roling@nn.nl Web: NN Group - Investor Relations contact (nn-group.
Slide 58: Disclaimer
Disclaimer This investor presentation, any information or opinion therein and any warranty, either express or implied, or undertaking of any nature, is transmitted into the United States of America, its territories or possessions statement made in connection therewith (the Presentation), has been pr
Slide 59: Disclaimer
Disclaimer Certain of the statements contained herein are not historical facts, including, or inadequate controls including in respect of third parties with which the No licence or conveyance of any rights in any intellectual property owned without limitation, certain statements made of future expec
Slide 60: Slide 60
Nationale-Nederlanden Bank — Debt Investor Presentation (October 2024) on 6ix