Nn Group N.v. · EURONEXT:NN
Nn — Nationale-Nederlanden Bank — Debt Investor Presentation (May 2023)
58 slides from Nn's debt investor presentation, May 2023
Slide 1: Nationale-Nederlanden Bank Investor Presentation - soft bullet covered bonds
Nationale-Nederlanden Bank Investor Presentation - soft bullet covered bonds May 2023
Slide 2: Important Notice
IMPORTANT NOTICE IMPORTANT: You must read the following before continuing. The following applies to the investor presentation following this page, and you are therefore advised to read this carefully before reading, accessing or making any other use of the investor presentation. In accessing the inv
Slide 3: Executive summary
Executive summary Nationale-Nederlanden Bank N.V. Purpose, ambition and strategy Financials at 31 December 2022¹ Funding diversification • Top 5 retail bank in the • Purpose: to help people care for • Total assets of EUR 24.2bn; • Diversified funding mix, in terms of Netherlands (based on balance wh
Slide 4: Contents
Contents 1 Strategy and business highlights 5 2 Capital, liquidity and funding 16 3 Covered bond programme 25 4 Mortgage business 34 Appendices A Mortgage loans: origination and underwriting criteria 41 B NN Bank funding programmes 44 C Dutch economy and housing market 45 D Corporate history 50 E Gl
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 close to one million retail clients in the Ne
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 several European countries and Japan • Around 16,000 employees, providing retirement services, pensions, insurance, banking and investme
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 Financial highlights at year-end 2022 Non-Financial KPIs at year-end 2022 Return on equity Cost/income ratio Net result Net promoter score Employee engagement Average Internal and external FTE 7.6% 62.9% EUR 81.5m +19.6 7.6 1,312 2021: 9.1% 2021: 59.5% 2021: EUR 101.8m 2021: +21.
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, savings, investments and bank annuities • National player, with coverage of all Dutch regions, operating under a strong and well-known household name, Nationale
Slide 12: Financially sound bank with diversified income model
Financially sound bank with diversified income model Net interest margin1 • Net interest margin supported by Summary profit and loss account increasing market interest rates reflected in higher client mortgage rates, although (Amounts in EUR m)² 2022 2021 the pace of mortgage rate rises is held Inte
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 of below 55% in 2025 meeting all capital targets • C/I ratio increased to 62.9%, • Total Capital Ratio target of compared with
Slide 14: Sustainability is one of the cornerstones of our strategy
Sustainability is one of the cornerstones of our strategy NN Bank focuses on two key topics: Our climate journey: 1. Customer empowerment: • Providing customers with the tools and resources needed to make better informed financial choices and exercise greater control over their personal financial si
Slide 15: Sustainability is embedded in our governance
Sustainability is embedded in our governance Our Governance: • ESG Office providing ESG knowledge, programme management and monitoring of NN Bank’s ESG strategy • The Bank’s CEO is accountable for ESG matters, the Management Team is responsible for strategic direction and implementing the ESG strate
Slide 16: NN Bank enhancing sustainability & social responsibility
NN Bank enhancing sustainability & social responsibility PLANET HEALTHY LIVING • 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 t
Slide 17: Intermediate target setting for our mortgage portfolio
Intermediate target setting for our mortgage portfolio in order to steer towards net-zero in 2050 Intermediate target setting: • We used the tool of Carbon Risk Real Estate Monitor (CRREM) to analyse our portfolio against science-based decarbonisation pathways aligned with the Paris agreement. The C
Slide 18: 2. Capital, liquidity and funding
2. Capital, liquidity and funding 18
Slide 19: Balance sheet composition
Balance sheet composition Assets Balance sheet at 31 December 2022 (in EUR bn) • Dutch residential mortgage loans (84% of the balance sheet) 24.2 24.2 • High Quality Liquid Assets (HQLA) portfolio of EUR 1.0bn consisting of 0.6 1.0 0.4 0.1 1.0 (semi)sovereign bonds and covered bonds 0.3 0.1 2.2 1.8
Slide 20: Solid capital position
Solid capital position Total capital ratio (TCR, transitional CRD IV)1 Risk weighted assets (EUR bn) Leverage ratio 18.9% 18.7% 1.5% 16.6% > 15.7% 1.4% 1.3% 17.4% 17.3% 6.0 6.1 6.4 4.0% 4.3% 15.3% 3.8% > 3.0% 2020 2021 2022 TCR target 2020 2021 2022 2020 2021 2022 Regulatory CET1 Tier 2 minimum Soli
Slide 21: Conservative approach to liquidity management
Conservative approach to liquidity management Liquidity adequacy (31 December 2022) Investment securities portfolio / HQLA portfolio insight o In 2022, the rising market interest rates led to higher unrealised losses 12% Amortised Cost 183% on investment securities 139% 134% o EUR 43.1m (after tax E
Slide 22: Funding strategy geared to optimisation and diversification
Funding strategy geared to optimisation and diversification Wholesale funding strategy Funding mix (as at 31 December 2022) Attract 8% 0% retail funding Retail 19% Secured Savings, deposits bank annuities Unsecured Allocate 72% Diversification newly originated 2Subordinated of wholesale mortgage loa
Slide 23: Minimum Required Eligible Liabilities
Minimum Required Eligible Liabilities NN Bank meeting MREL requirements Total Risk Exposure Amount (TREA)1 Total Exposure Measure (TEM) • Intending to meet MREL requirements with a combination of equity, Tier 2 and senior (non) preferred 34.2% 8.4% • In December 2022, The Dutch National Resolution A
Slide 24: 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) 2018 edition1 Use of Proceeds Process for Project Management of Proceeds Reporting External Review Green Buildings Evaluation and Selection Portfolio approach: the Eligible On the allocation
Slide 25: 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 Dutch residential properties built prior to 31 December 2020: consultant who helped to develop the • Existing residenti
Slide 26: Credit ratings
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 positive • Short-term credit rating of A-1 by Standard & Poor’s (S&P) LT issuer rating, A- outlook positive • Long-term credit rating of A- (positi
Slide 27: 3. Covered bond programme
3. Covered bond programme 27
Slide 28: NN Bank Soft Bullet Covered Bond Programme
NN Bank Soft Bullet Covered Bond Programme Soft Bullet Covered Bond Programme launched in 2020 First green covered bond issued in May 2022 • Soft Bullet Programme established and officially registered with the Dutch • In May 2022 NN Bank issued a EUR 500m, 10-year Soft Bullet Covered Central Bank in
Slide 29: 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 30: 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 31: 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 32: 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 33: 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 34: Eligible Green Mortgage Loans in Cover Pool
Eligible Green Mortgage Loans in Cover Pool Overview eligible green mortgage loans (in EUR bn) 1 Overview Energy Label (in %s) 22.1 9% 24% 9% 8% 100% 9% 14% 6.4 4.3 27% 1.7 1.3 Energy label A A B C D E F G Mortgage portfolio Eligible Green Loan Cover Pool Soft Eligible Green Loans Green Covered Elig
Slide 35: Green Buildings Collateral Support Amount is green and relatively young
Green Buildings Collateral Support Amount is green and relatively young, other loan characteristics are similar Building years of Green Buildings Collateral Support Amount² Loan-to-value as % of Green Buildings Collateral Support Amount² 1,200 1% NHG 1,000 4% 11% 13% <60% 800 60% - 70% 600 70% - 80%
Slide 36: 4. Mortgage business
4. Mortgage business 36
Slide 37: 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 38: Distribution and servicing of mortgage loans
Distribution and servicing of mortgage loans Distribution of newly-originated mortgage loans in 2022 (EUR 8.7 bn) Mortgage loan portfolio serviced at 31 December 2022 (EUR 55.9bn) NN Bank 9% NN Bank 9% 1% 6% 9% NN Life NN Life 37% 42% NN Non-life + NN Belgium NN Non-life + NN Belgium 1 DRMF 43% DRMF
Slide 39: Amortising mortgage loans with long fixed reset tenors
Amortising mortgage loans with long fixed reset tenors Redemption types as % of NN Bank mortgage portfolio (31 December 2022)1 Majority of new mortgage origination is annuity type (average last 12 months) 3% Annuity and linear 11% Annuity and linear Bank savings and insurance savings Bank savings an
Slide 40: Strong historical mortgage loan performance
Strong historical mortgage loan performance Moderate LTVs … Weighted average current loan-to-indexed market value decreases1 • Since 2018 LTV-cap is 100% and 106% including sustainability measures • As per year-end 2022 the current loan-to-indexed market value is 53% • Lower average LTV due to highe
Slide 41: Loan loss provisioning and stage classification
Loan loss provisioning and stage classification Loan loss provisions (LLP) Loan loss provision by type (EURm) • In 2022, the loan loss provisions decreased by EUR 0.8m to EUR 10.1m • For mortgages, the provision increased by EUR 1.0m due to a management overlay of EUR 3.0m against the potential 11.5
Slide 42: Appendices
Appendices 42
Slide 43: 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 Skydoo (pre-screenin
Slide 44: 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 45: 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 46: 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 EUR 5.6bn issued • Under the Green Bond Framework NN Bank issues Green Bonds to finance an
Slide 47: C Dutch economy and housing market
C Dutch economy and housing market • Generous government support and increasing wages boost household spending at home and abroad, preventing a recession in 2022 • This will also lead to strong growth in the Dutch economy this year: an expected rate of 2.0 percent. Over the course of the year, growt
Slide 48: C Dutch economy and housing market
C Dutch economy and housing market • House prices are falling this year, as a portion of potential homebuyers has dropped out due to the increasing mortgage rates. In 2023, house prices are expected to fall 4.2 percent year-on-year. By the end of 2023, it is expected that house prices are 7.6 percen
Slide 49: C Dutch economy and housing market
C Dutch economy and housing market • Last year marked the end of a long period in which the market for existing owner-occupied homes continued to dry up. For the first time, more houses were put up for sale than were actually sold. In recent years, the number of transactions of existing owner-occupi
Slide 50: C Dutch economy and housing market
C Dutch economy and housing market • The development of house prices in 2022 was characterized by extremes. The year started with the highest house price increase (21.1 percent (January 2022), as measured since the start of 2015) but during the year the situation changed rapidly. Since August 2022 h
Slide 51: C Dutch economy and housing market
C Dutch economy and housing market • In 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 since 2012 that continued
Slide 52: 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 53: 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 54: 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 55: F Contact information
F Contact information Niek Allon Rolf-Pieter ter Horst NN Bank Treasury NN Bank Treasury M: +31 6 2013 7640 M: +31 6 2184 1550 E: niek.allon@nn.nl E: rolf-pieter.ter.horst@nn.nl Sander Roling NN Group Investor Relations NN Bank Treasury M: +31 (0)88 6706 647 M: +31 6 1066 6854 E: investor.relations@
Slide 56: Disclaimer
Disclaimer This material has been prepared by Nationale-Nederlanden Bank N.V. (“NN warranty, either express or implied, or undertaking of any nature, is transmitted into the United States of America, its territories or possessions Bank” or the “Company”) for informational purposes only. This materia
Slide 57: Disclaimer
Disclaimer known and unknown risks, uncertainties and other important factors beyond No licence or conveyance of any rights in any intellectual property owned the Company's control that could cause the actual results, performance or by the Company is granted or implied by the recipient’s use of the
Slide 58: Slide 58
Nationale-Nederlanden Bank — Debt Investor Presentation (May 2023) on 6ix