Kempen European High Dividend Fund N.V. N · EURONEXT:KEHDF
Kempen European High Dividend Fund N.V. N — Van Lanschot Kempen — H1 2020 Earnings Presentation
33 slides from Kempen European High Dividend Fund N.V. N's earnings presentation, Aug 26, 2020
Slide 1: 2020 half-year results
2020 half-year results 26 August 2020
Slide 2: Covid-19 has been a defining factor for the first half of this year
Covid-19 has been a defining factor for the first half of this year • For our clients, this has been a period of profound uncertainty about the present and future. Our past investments in omni-channel capabilities have served us well; in the sense that we were able to serve our clients well and be t
Slide 3: Our strategic framework
Our strategic framework Business model Value proposition Van Lanschot Kempen is a wealth • We follow a solutions-led approach that management house focuses on the longer-term needs of our clients • In being client-centric we benefit from using data and analytics to improve our quality of service Pre
Slide 4: Our progress as a sustainable wealth manager in H1 2020
Our progress as a sustainable wealth manager in H1 2020 AuM at Private Banking invested 65% of fund managers in dedicated sustainable or impact on the approved list meet investing solutions grew by more the sustainability criteria than 10% to €2.3 billion We engaged with From 2023, we’ll actively 68
Slide 5: 2020 half-year results
2020 half-year results
Slide 6: Exceptional market circumstances in H1 2020
Exceptional market circumstances in H1 2020 10-year swap rate AEX VIX index MSCI-Europe 3-month Euribor • Covid-19 triggered a chain of events in the markets that has led to an increase in the volatility and illiquidity of these markets • Markets showed some recovery during the second quarter of 202
Slide 7: Second quarter of 2020: Back on track
Second quarter of 2020: Back on track • Our wealth management model works… • Net inflow of €4.7bn in AuM and savings, of which €0.8bn at Private Banking and €3.8bn at Asset Management • Relatively low addition to loan losses, thanks to our low risk profile • Continuous deal flow at Corporate Finance
Slide 8: Van Lanschot Kempen takes key step in growth strategy by taking over Hof Hoorneman
Van Lanschot Kempen takes key step in growth strategy by taking over Hof Hoorneman • Accelerate growth – organically and inorganically is one of our four strategic pillars • This acquisition is an important step in our growth strategy • The acquisition of Hof Hoorneman adds €1.9bn to our client asse
Slide 9: H1 2020: Steady overall performance
H1 2020: Steady overall performance Net result €9.5m Commission income €148.9m (+5%) (H1 2019: €83.6m, Interest income €77.0m (-9%) H1 2019 normalised*: €31.4m) Operating expenses Efficiency ratio 93.2% €187.5m (-2%) Client assets €103.4bn (+1%) Net inflow in AuM and AuM €89.2bn (+2%) savings €4.7bn
Slide 10: Overview net result
Overview net result €m H1 2020 H2 2019* % chang e H1 2019* % chang e Commission 148.9 148.2 0% 142.2 5% Interest 77.0 90.6 -15% 84.7 -9% Other income -24.7 16.8 9.1 Income fr om op er ating activities 201.3 255.6 - 21% 236.0 - 15% Operating expenses -187.5 -193.7 -3% -190.4 -2% Gr oss r esult 13.7 6
Slide 11: Net result amounts to €9.5m
Net result amounts to €9.5m Key drivers of net result €m • Result impacted by the losses on structured product activities and co-investments • Other items includes costs for restructuring charges in H1 2019 (€2.5m) and taxes (€7.3m) 11
Slide 12: Private Banking net inflow AuM and savings at €0.8bn
Private Banking net inflow AuM and savings at €0.8bn Net result Private Banking Private Banking client assets* €m € bn • Client assets decreased to €33.1bn, with negative market performance partly offset by net inflow • Positive inflow in AuM at €0.5bn (H1 2019: -€0.1bn) shows sentiment among our cl
Slide 13: Omni-channel service model available for our clients in Belgium
Omni-channel service model available for our clients in Belgium • We have successfully completed our work on phasing out our Belgian IT infrastructure. Private Banking clients and employees were successfully migrated to the group structure • Our omni-channel service model, including all the digital
Slide 14: Net inflow at Asset Management amounted to €3.8bn
Net inflow at Asset Management amounted to €3.8bn Net result Asset Management AuM Asset Management €m € bn • Net inflow more than compensated for negative market performance in H1 2020 • Inflow in new and existing mandates, both within the Netherlands and the UK • End of active government bond funds
Slide 15: Annualised recurring management fees show recovery
Annualised recurring management fees show recovery Development annualised recurring management fees +16% -13% +8% End 2018 End 2019 March 2020 June 2020 • Private Banking’s AuM margin fairly stable, slight decline at Asset Management due to mix effect • At Private Banking ~60% of AuM consists of equ
Slide 16: Evi’s net result improved, client assets increased
Evi’s net result improved, client assets increased Net result Evi Evi’s AuM €m €m • Client assets grew to €1.6bn (end 2019: €1.5bn) • Partnership with a.s.r. bank succesfully concluded, bringing in €157m in AuM, €51m in savings and 7,000 clients • Further improvement in net result to -€0.4m (H1 2019
Slide 17: Good deal flow at Merchant Banking
Good deal flow at Merchant Banking Net result Merchant Banking Commission €m €m • Involvement in 16 completed deals (M&A, capital market transactions) • Our focus on the Nordic region is paying off with capital raisings for three companies in the life sciences sector • Net result amounted to -€16.9m
Slide 18: Continuous margin pressure due to low interest rate environment
Continuous margin pressure due to low interest rate environment Interest Interest margin (12-mth moving average)* €m % incl. interest claim DSB Bank*** incl. interest +€3.9m expense Kifid -€2.9m • Continuous margin pressure as a result of low interest rate climate and a smaller corporate banking and
Slide 19: Income from securities and associates impacted by current exceptional market circumstances
Income from securities and associates impacted by current exceptional market circumstances Income from securities and associates €m €m Book value Book value Income 31/12/2019 30/06/2020 H1 2020 VLP (minority interests) 41.3 50.6 10.2 Bolster Investments Coöperatief U.A. 19.3 28.1 1.6 Co-investments
Slide 20: Lower result on financial transactions
Lower result on financial transactions Results on investment portfolio Other results Total result on financial transactions €m €m €m • Result on financial transactions decreased to -€25.3m (H1 2019: -€8.1m), driven by the loss on structured products activities (€27.3m) – see next slide • Positive re
Slide 21: Result on structured products impacted by exceptional volatility and illiquidity
Result on structured products impacted by exceptional volatility and illiquidity Structured products • Structured products involve using company-issued debt with embedded derivates linked to equity indices • The structured products cater to the need of our Private Banking clients, offering an altern
Slide 22: Additional cost-saving measures introduced in Q1
Additional cost-saving measures introduced in Q1 Operating expenses €m • As previously indicated, we expected operating expenses to rise slightly in 2020. However, due to the cost-saving measures in the past six months, we have turned this expected increase into a slight decrease • Strategic investm
Slide 23: Loan portfolio relatively stable, impaired loans decreased
Loan portfolio relatively stable, impaired loans decreased €m Loan Loan % change Impaired Provision Impaired Coverage portfolio portfolio loans ratio ratio 30/06/2020 31/12/2019 Mortgages 5,992 5,885 2% 53 4 0.9% 8% Other loans 1,785 1,906 -6% 71 36 4.0% 51% Private Banking loans 7,777 7,791 0% 124
Slide 24: Addition to loan loss provision relatively limited
Addition to loan loss provision relatively limited Loan loss provision per stage Additions to loan loss provisions €m 31/12/2019 30/06/2020 % change €m Stage 1 3.7 6.5 78% - 33 bps* - 21 bps* + 6 bps* Stage 2 5.5 5.4 -3% Stage 3 54.6 53.9 -1% Total 63.8 65.8 3% • Addition to loan loss provisions at
Slide 25: Continuing strong capital position
Continuing strong capital position Strong capital ratios • CET 1 ratio increased from 23.8% to 24.0% in H1 2020, with a 2023 target of 15–17% • Total capital ratio increased from 26.9% to 27.0% Payment of the 2019 dividend postponed • 2019 dividend is adopted by the general meeting and deducted from
Slide 26: Overview of 2023 group financial targets
Overview of 2023 group financial targets Common Equity Tier 1 ratio Dividend pay-out ratio* % % 50-70% 15-17% 23.8% 24.0% 64% 18.6% 20.3% 21.1% 56% 61% 57% 2016 2017 2018 2019 H1 2023 2016 2017 2018 2019 2020 Efficiency ratio Return on Common Equity Tier 1* % % 70-72% 10-12% 93.2% 79.6% 76.2% 79.4%
Slide 27: H1 2020: Steady overall performance
H1 2020: Steady overall performance Net result €9.5m Commission income €148.9m (+5%) (H1 2019: €83.6m, Interest income €77.0m (-9%) H1 2019 normalised*: €31.4m) Operating expenses Efficiency ratio 93.2% €187.5m (-2%) Client assets €103.4bn (+1%) Net inflow in AuM and AuM €89.2bn (+2%) savings €4.7bn
Slide 28: Appendix
Appendix
Slide 29: Key figures H1 2020 by segment
Key figures H1 2020 by segment €m Private Evi Asset Merchant Other Total Banking Management Banking Commission income 66.4 2.4 52.1 27.0 1.0 148.9 Interest income 69.5 1.5 0.1 -0.0 6.1 77.0 Other income 0.6 - -0.3 -27.2 2.2 -24.7 Income from operating activities 136.4 3.9 51.9 -0.3 9.3 201.3 Operati
Slide 30: Private Banking’s AuM margin fairly stable, decline at Asset Management due to mix effect
Private Banking’s AuM margin fairly stable, decline at Asset Management due to mix effect AuM margin – Private Banking AuM margin – Asset Management bps bps 30
Slide 31: High scores on external ESG ratings
High scores on external ESG ratings 1st Sustainability certificates in our peer group of on responsible investment policy medium-sized banks and balance sheet screening 10th B rating Transparantiebenchmark: place in league table of assessed by Carbon Disclosure 250 entrants Project C+ rating A and A
Slide 32: KPI table
Theme KPI Target 2020 Score H1 2020 Score 2019 KPI table 1. CET 1 ratio 15-17% 24.0% 23.8% Financial and risk 2. Return on equity (CET 1) 10-12% 1.2% 10.5% management 3. Efficiency ratio 70-72% 93.2% 75.5% 4. Net Promotor Score (NPS): a. Private Banking 10 22 23 b. Evi 10 6 10 c. Asset Management 20
Slide 33: Disclaimer
Disclaimer Disclaimer and cautionary note on forward-looking statements This document may contain forward-looking statements on future events and developments. These forward-looking statements are based on the current insights, information and assumptions of Van Lanschot Kempen’s management about kn