Kempen European High Dividend Fund N.V. N · EURONEXT:KEHDF
Kempen European High Dividend Fund N.V. N — Van Lanschot Kempen — Debt Investor Presentation (March 2023)
64 slides from Kempen European High Dividend Fund N.V. N's debt investor presentation, March 2023
Slide 1: Van Lanschot Kempen Soft Bullet Covered Bond Programme
Ee March 2023 Van Lanschot Kempen Soft Bullet Covered Bond Programme
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 Van Lanschot Kempen at a glance 5 2022 annual results 14 Van Lanschot Kempen’s diversified funding profile and 32 solid capital buffers Mortgage loan portfolio 38 Soft Bullet Covered Bond Programme 42 Annexes Annex I Sustainability 51 Annex II Dutch housing mark
Slide 4: Executive summary - Soft Bullet Covered Bond Programme
Executive summary - Soft Bullet Covered Bond Programme Issuer Van Lanschot Kempen N.V. Van Lanschot Kempen N.V. Programme size €5.0bn • Strong balance sheet and attractive capital strategy Format Soft Bullet (SB) • Credit rating of BBB+/BBB+ (S&P/Fitch) Extension Period Maximum of 12 months AAA rate
Slide 5: Van Lanschot Kempen at a glance
Van Lanschot Kempen at a glance Who we are Solid performance on all key financials • Well-capitalised, profitable, wealth manager with a strong 2022 2021 specialist position in the market • Net result €84.2m €143.8m • Clear choice for wealth management, targeting private, wholesale, • CET 1 ratio 20
Slide 6: Van Lanschot Kempen at a glance
Van Lanschot Kempen at a glance An independent, specialist wealth manager with the aim to create and preserve wealth for our clients and society in a sustainable way Focus on private, institutional and corporate clients Core activities private banking, professional solutions, investment management a
Slide 7: Our wealth management strategy
Our wealth management strategy Our ambitions Financial Targets Supported by our strong client relationships we are a leading player Target 2022 2021 in our relevant markets and geographies: Common Equity Tier 1 ratio 15%* 20.6% 23.7% • A leading wealth manager in the Netherlands and Belgium that Ret
Slide 8: We have a clear focus on our client groups
We have a clear focus on our client groups Private Clients Wholesale & Institutional Investment Banking Clients Clients • Offices in NL, BE and CH • Fiduciary wealth management for • Equities research and trading, • Wealth management services for institutional clients capital market transactions, en
Slide 9: We are an independent specialist wealth manager with clear ambitions
We are an independent specialist wealth manager with clear ambitions 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, combining online with a personal
Slide 10: Continuous capital-light growth
Continuous capital-light growth Organic growth Bolt-on acquisitions Market performance
Slide 11: Our mid-term financial targets - A solid business model
Our mid-term financial targets - A solid business model CET 1 ratio Efficiency ratio Return on CET 1 15% 70% 12% Plus M&A add-on 2.5% Through the cycle 11
Slide 12: Our journey to a modern integrated and specialist wealth manager
Our journey to a modern integrated and specialist wealth manager Strategy review Assets under management €bn • In 2013 we started our journey from universal bank to a specialist wealth manager with focus on private banking, investment management and investment banking 163% 107.8 • We simplified our
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 carbon footpr
Slide 14: 2022 annual results
ee 2022 annual results
Slide 15: 2022: Key financial highlights
2022: Key financial highlights • Net profit of €84.3m • Underlying net profit of €117.8m • Net AuM inflow at €13.7bn • AuM at €107.8bn Medium-term financial targets: • CET 1 ratio at 20.6% (target: 15% + M&A add-on of 2.5%) • RoCET 1 at 12.3% (target: 12% through the cycle) • Efficiency ratio at 73.
Slide 16: 2022: Key messages
2022: Key messages Net profit: €84.3m (2021: €143.8m), underlying net profit €117.8m (2021: €159.9m) • Commission income (+6%); stable margins – Private Clients: 63 bps, Wholesale & Institutional Clients: 12 bps • Increase in interest income (+6%) • Operating expenses up (+7%) Net AuM inflow of €13.
Slide 17: 2022: Performance
2022: Performance Net result €84.3m Operating expenses AuM €107.8bn Strong capital position (2021: €143.8m) €438.2m (2021: €115.6bn) CET 1 ratio 20.6% (+7%) (2021: 23.7%) Underlying net result €117.8m RoCET 1 at 12.3% (2021: €159.9m) (2021: 15.7%) Commission Efficiency ratio Client assets €124.2bn R
Slide 18: Net result amounts to €84.3m
Net result amounts to €84.3m Key drivers of net result (€ m) 9.1 22.3 -26.4 -28.2 -18.6 166.1 -11.7 143.8 143.8 148.7 -5.9 120.5 101.9 90.2 84.3 84.3 2021 Commission Interest Other income Operating One-off Reverse Tax and 2022 income income expenses charge for impairments other** Mercier and NSI* Va
Slide 19: Overview of net result
Overview of net result €m 2022 2021 % change Commission 407.8 385.5 6% Interest 162.7 153.6 6% Other income 29.2 55.6 -48% Income from operating activities 599.7 594.7 1% Operating expenses -438.2 -409.9 7% Gross result 161.5 184.8 -13% Loan loss provision 7.7 11.7 -34% Other impairments -1.1 6.5 Op
Slide 20: Private Clients: Continued high net inflows
Private Clients: Continued high net inflows AuM (€ bn) 2.0 • Net inflows: 55% non-discretionary, 42% -6.3 discretionary and 3% investment strategies • Net inflows well spread across NL, BE and CH • Operating profit before tax at €117.1m (2021: 44.8 44.8 €114.3m) 40.5 40.5 • Underlying operating prof
Slide 21: Private Clients: Strong net AuM inflow in Belgium of €0.7bn
Private Clients: Strong net AuM inflow in Belgium of €0.7bn • Van Lanschot Kempen acquired a 70% stake in Mercier Vanderlinden in 2021 and will add the remaining 30% stake in Q1 2023 • Ambition: to become a top-three player in the independent private banking market in Belgium • Van Lanschot Belgium
Slide 22: Wholesale & Institutional Clients: €11.6bn net inflow
Wholesale & Institutional Clients: €11.6bn net inflow AuM (€ bn) 12.0 -0.2 -0.2 -15.2 82.7 82.5 70.9 70.9 67.3 67.3 31/12/2021 Net fiduciary Net Net asset class Market 31/12/2022 management investment solutions performance inflows strategies inflows inflows • Two large new clients: BPF Schilders pen
Slide 23: Stable margins at both Private Clients and Wholesale & Institutional Clients
Stable margins at both Private Clients and Wholesale & Institutional Clients Annualised recurring fees* (€ m) AuM breakdown (~%) 11% 23% Private Clients 65% 359.5 329.6 339.8 306.9 270.3 23% 27% Wholesale & Institutional Clients YE2020 HY2021 YE2021 HY2022 YE2022 50% Equities Bonds Other • Stable Au
Slide 24: Investment Banking Clients: Stable commission income in challenging markets
Investment Banking Clients: Stable commission income in challenging markets Commission income (€ m) 48.9 55.3 56.0 2020 2021 2022 • Operating profit before tax fell to €9.7m (2021: €18.8m) in the wake of higher staff costs, lower income from securities trading and a book profit from the sale of Glob
Slide 25: Interest margins improved in H2 2022
Interest margins improved in H2 2022 Interest income (€ m) Interest margin (12-mth moving average, %) 93.0 1.01% 0.98% 0.95% 77.0 75.1 76.1 77.5 69.7 0.88% 0.94% 0.92% 0.94% 0.86% H1 2020 H2 2020 H1 2021 H2 2021 H1 2022 H2 2022 H1 2021 H2 2021 H1 2022 H2 2022 Clean interest margin* Interest margin •
Slide 26: Convergence path of savings rate to ECB deposit rate main driver of interest income
Convergence path of savings rate to ECB deposit rate main driver of interest income in the next few years Potential convergence paths of client rate on savings to ECB Interest income to benefit from slow convergence to deposit facility rate ECB deposit facility rate (€ m – delta to total interest in
Slide 27: Operating expenses developed in line with organic and inorganic growth
Operating expenses developed in line with organic and inorganic growth Operating expenses (€ m) 20.5 7.2 0.6 409.9 409.9 430.4 437.6 438.2 2021 Staff costs Mercier Other 2022 Vanderlinden • Staff costs up, mainly driven by a higher number of FTEs at 1,780 (2021: 1,654), reflecting our growth ambitio
Slide 28: Strong CET 1 ratio at 20.6%
Strong CET 1 ratio at 20.6% Dividend proposal of €1.75 per share (total €74.2m) Common Equity Tier 1 ratio (%) -2.8 1.1 -1.4 23.7 20.9 19.5 19.5 20.6 31/12/2021 DNB Capital Other 31/12/2022 Mortgage return floor Expected CET 1 ratio developments in 2023: • Impact of +0.8 percentage points related to
Slide 29: Solid capital position
Solid capital position Continued commitment to return excess capital • Our target for the CET 1 ratio: 15% plus an M&A add-on of 2.5% • At the time of announcement of the target, excess capital amounted to €145m (May 2022) • €61m excess capital returned in December 2022 • Plan to return €2.00 per sh
Slide 30: Financial targets overview
Financial targets overview Common Equity Tier 1 ratio Dividend pay-out ratio* 50-70% 15% + 2.5% 23.8% 24.3% 23.7% 21.1% 20.6% 65% 67% 61% 57% 53% 2018 2019 2020 2021 2022 Medium 2018 2019 2020 2021 2022 Medium term term Efficiency ratio Return on Common Equity Tier 1* 70.0% 12.0% 79.4% 85.7% 75.5% 6
Slide 31: Acquisition of Robeco online investment platform
Acquisition of Robeco online investment platform Positioning Evi van Lanschot for further growth Evi van Lanschot and Robeco The combined activities The future Evi van Lanschot • Online and personal • Become leader in mass- • €1.3bn in AuM • Combined €6.0bn in AuM affluent market • c. 25,000 clients
Slide 32: Van Lanschot Kempen's diversified funding profile and solid capital buffers
ee Van Lanschot Kempen’s diversified funding profile and solid capital buffers
Slide 33: 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 long-term credit rating: Stable • Short-term credit rating of issue
Slide 34: Balance sheet shows strong capital and funding position
Balance sheet shows strong capital and funding position Balance sheet 31 December 2022 Significant capital buffer € bn, balance sheet total = €17.0bn – Total equity of €1.38bn 0.4 - Due to banks – CET1 ratio 20.6% Cash and cash equivalents 3.2 and balances at banks – Leverage ratio 5.7% Low-risk ass
Slide 35: 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 Debt Issuance Programme / MTN funding purposes • €5.0 billion programme • Residential mortgage loan portfolio, fully originated • Used for wholesale funding
Slide 36: Diversified funding mix and solid liquidity buffers
Diversified funding mix and solid liquidity buffers Funding mix 31 December 2022 Redemption profile* (100% = €17.0 billion) €m 1,600 3% 8% 1,400 2% Client savings and 1,200 12% deposits 1,000 Debt securities 800 Interbank funding 600 75% Shareholders' equity 400 Other funding 200 0 2023 2024 2025 ≥2
Slide 37: 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 38: Mortgage loan portfolio
ee Mortgage loan portfolio
Slide 39: Offering mortgages to private banking clients
Offering mortgages to private banking clients • We are a specialist wealth manager offering multiple services to our Mortgage loans: new production by type (%) clients: investment allocation, estate planning and financing – and we also offer mortgages to our private banking clients • Our private ban
Slide 40: Loan portfolio
Loan portfolio €m Loan Loan % change Impaired Provision Impaired Coverage portfolio portfolio loans ratio ratio 31/12/2022 31/12/2021 Mortgages 6,341 6,337 0% 24 1 0.4% 6% Other loans 2,371 2,199 8% 82 25 3.5% 31% Loan portfolio 8,712 8,536 2% 106 27 1.2% 25% Mortgages distributed by third parties 3
Slide 41: Release from loan loss provisions
Release from loan loss provisions Additions to loan loss provisions (€ m) Loan loss provision per stage €m 31/12/2021 31/12/2022 % change + 4 bps* -29 bps* -19 bps* Stage 1 3.6 6.1 69% 1.9 Stage 2 3.5 7.0 101% Stage 3 42.4 26.9 -36% Total 49.5 40.0 -19% -7.7 • Current management overlay amounts to -
Slide 42: Soft Bullet Covered Bond Programme
ee Soft Bullet Covered Bond Programme
Slide 43: Highlights & key benefits
Highlights & key benefits Highlights - summary Key benefits Issuer Van Lanschot Kempen NV Robust structure Registered programme with DNB Strong programme tests (asset cover test & Programme size €5.0 bn amortisation test) Format Soft Bullet (SB) No interest rate swap counterparties* Extension Period
Slide 44: 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 Company Security Trustee Administration B.V. Parallel Debt agreement and Pledge of Receivables Asset Monitor Asset mo
Slide 45: Key parties & transaction structure
Key parties & transaction structure Key Programme Parties Key pool characteristics as of 31 December 2022 Originator Van Lanschot Kempen Net principal balance €677,121,400 Transferor Van Lanschot Kempen Construction deposits €247,090 Issuer Van Lanschot Kempen Fixed rate 98.38% Servicer Van Lanschot
Slide 46: Cover pool characteristics as of 31 December 2022
Cover pool characteristics as of 31 December 2022 Current loan balance per borrower Geographical distribution as % of € thousand outstanding amount 30% 25% Noord-Holland 30.71% 20% 15% Zuid-Holland 22.03% 10% Utrecht 16.78% 5% 0% Noord-Brabant 14.05% <= 250 <= 500 <= 750 <= 1,000 <= 2,000 <= 3,000 >
Slide 47: Cover pool characteristics as of 31 December 2022
Cover pool characteristics as of 31 December 2022 Remaining interest rate fixed period (in years) Seasoning (in years) 20% 40% 15% 30% 10% 20% 5% 10% 0% 0% <1 <2 <3 <4 <5 <6 <7 <8 <9 <10 <20 0-5 5-10 10-15 15-20 20-25 25-30 >30 Interest rate (%) Product type 35% 30% 4% 5% 17% 25% Annuity 20% 4% Inve
Slide 48: Soft Bullet mechanism
Soft Bullet mechanism Going-concern Soft Bullet Mechanics • The covered bonds (CBs) are bullet securities due on the specified maturity No date and the Issuer makes the coupon and principal payments to the Issuer Event of Default Bullet Maturity investors • The ACT ensures that the cover pool meets
Slide 49: Comparison - Dutch covered bond programmes
Comparison - Dutch covered bond programmes Main highlights* Issuer Rating (S/M/F) 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- 1. AAA/Aaa/AAA 1. AAA/NR/NR 1. NR/Aaa/AAA 1. AAA/NR/NR 1. AAA/NR/NR Programme Rating (S/M/F) NR/Aaa/AAA 2. AAA/NR/AAA AAA/NR/NR NR/A
Slide 50: Van Lanschot Kempen investor reporting
Van Lanschot Kempen investor reporting • 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) • The public Conditional Pass Through a
Slide 51: Annex I | Sustainability
ee Annex I | Sustainability
Slide 52: Progress on our non-financial KPIs
Progress on our non-financial KPIs KPI Targets Performance in 2022 Performance in 2021 Manufactured Three-year relative performance of our managed propositions > benchmark 0.2% n/a capital Human and Employer Net Promoter Score (eNPS) >10 18 13 intellectual Employee engagement score (EES) > 80% 88% 8
Slide 53: High scores on external ESG ratings
High scores on external ESG ratings Governance: 1 B- rating Lower governance risk = 1 Higher governance risk = 10 ISS ESG Corporate Rating 8th place in league table of AA rating 486 entrants on resilience to ESG risks 21st place in a league table 4 and 5 stars (out of 5) for of 78 multinationals res
Slide 54: Annex II | Dutch Housing Market
ee Annex II | Dutch Housing Market
Slide 55: House price development
House price development House Prices Index % % In 2021 and also in the first months of 2022, the number of home sales 30 8.0 transactions decreased mainly due to a lack of supply. However for the 20 6.0 coming years, it is expected that the number of home sales will decrease 4.0 due to a buyers drop
Slide 56: 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 2023 ▪ LTV cap: 100% ▪ Limited tax ▪ Highest tax ▪ Highest tax rate ▪ Highest tax rate ▪ Highest tax rate deduction of rate reduces reduced to: 43% reduced to: 4
Slide 57: Economy in the Netherlands
Economy in the Netherlands Gross Domestic Product (GDP) – Y-o-Y change 7% For 2023 and 2024, the Dutch economy is expected to have a 5% moderate growth following two years of impressive recovery 3% growth in 2021 and 2022. For 2022 the economic growth rate 1% is expected to end on 4.2%. For 2023 the
Slide 58: Annex III | Product offering and underwriting
ee Annex III | Product offering and underwriting
Slide 59: 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 60: 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 61: 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 62: Arrears management
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 long as the arrears c
Slide 63: 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 64: Contact
Contact Ralf van Betteraij Marrit Oudeboon Head of Funding Management Funding Management T +31 20 348 97 13 T +31 20 348 97 14 M +31 6 12 04 10 89 M +31 6 10 02 17 12 r.vanbetteraij@vanlanschotkempen.com m.oudeboon@vanlanschotkempen.com
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