Nn Group N.v. · EURONEXT:NN
Nn — Nationale-Nederlanden Bank — Debt Investor Presentation (September 2020)
50 slides from Nn's debt investor presentation, September 2020
Slide 1: Nationale-Nederlanden Bank
Nationale-Nederlanden Bank Investor Presentation - Soft Bullet Covered Bond Programme September 2020
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 NN Bank1 at a glance NN Bank strategy NN Bank financials at 30 June 2020 Funding diversification • Fifth Dutch retail banking • To support retail customers to • Total assets of EUR 24.7bn; • Funding comprises retail savings franchise (based on balance sheet secure their financial f
Slide 4: Contents
Contents 1 Strategy and business highlights 5 2 Mortgage business 13 3 Covered bond programme 18 4 Balance sheet and capital position 26 Appendices A Preliminary cover pool: key characteristics 32 B Mortgage origination and underwriting 34 C Creating value for our stakeholders 37 D Dutch economy and
Slide 5: Strategy and business highlights
1 Strategy and business highlights 5
Slide 6: NN Bank profile
NN Bank profile • Fifth Dutch retail banking franchise (based on balance sheet size) • Significant player in Dutch residential mortgage loan and retail savings markets • Established in 2011 • Built around long-standing Nationale-Nederlanden mortgage business (since 1963) • Distribution both direct (
Slide 7: Parent company: NN Group
Parent company: NN Group International footprint Overview of NN Group • International financial services company, active in 18 countries with a strong presence in a number of European countries and Japan • Offering innovative solutions and value-added products and services to retail, SME, large corp
Slide 8: Position of the bank within NN Group
Position of the bank within NN Group NN Bank adding value to NN Group in the Netherlands • Operating under the Nationale-Nederlanden brand since its start in 2011 • Sharing client base, distribution and marketing with other NN entities • Offering banking products complementary to Nationale-Nederland
Slide 9: Retail-focused business model
Retail-focused business model NN Bank is a significant financial services provider in the Dutch retail market • Core activities are providing retail customers with mortgage loans, savings and bank annuities, supplemented by retail investment and consumer loan products • National player, with coverag
Slide 10: Marketing campaigns
Marketing campaigns New construction mortgage loan On demand savings and fixed-term deposits Various financial solutions that are tailored to fit today’s life Senior citizens mortgage loan Pension savings (bank annuities) Source: NN Bank (www.nn.nl) 10
Slide 11: Retail savings: two strong pillars
Retail savings: two strong pillars Dutch banks held EUR 387bn in household savings in June 2020, this is EUR 17.7bn (+4.8%) up on the previous year. Most of the growth is attributable to higher net deposits and only a small part contributes to credited interest1 Savings on demand Pension savings (ba
Slide 12: COVID-19
COVID-19 NN Bank’s priorities are to safeguard the well-being of our Payment holidays employees and provide an uninterrupted service to our customers • Payment holidays (postponement of payments) are offered on an individual basis to borrowers who face temporary payment difficulties on their mortgag
Slide 13: Mortgage business
2. Mortgage business 13
Slide 14: 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 15: Mortgage loans: distribution and servicing
Mortgage loans: distribution and servicing Newly-originated mortgage loans1 distributed to several entities … Mortgage loans serviced for multiple entities … Economic ownership of new mortgage production in 1H20 (EUR 4.4bn) Mortgage portfolio at 30 June 2020 (EUR 51.7bn) 3% 16% 6% 9% 34% NN Bank NN
Slide 16: Mortgage loans: growth and trends
Mortgage loans: growth and trends NN Bank annual mortgage loan origination (in EUR bn) 1 NN Bank mortgage loan book (in EUR bn)1 18.0 18.1 19.1 19.6 1.0 0.9 7.9 3.5 3.2 6.1 4.5 4.0 0.7 0.1 3.8 0.2 7.9 14.6 15.5 12.4 13.0 5.3 3.6 4.4 2017 2018 2019 1H20 2017 2018 2019 1H20 NN Bank Delta Lloyd HQ 50 N
Slide 17: Strong mortgage loan performance
Strong mortgage loan performance Trend to lower LTV and higher (p)repayments … ... to support historically good performance numbers at NN Bank • LTV cap lowered by 1%-point p.a. from 105% in 2013 to 100% in 2018 weighted average current loan-to-indexed market value has gradually decreased over time
Slide 18: Covered bond programme
3. Covered bond programme 18
Slide 19: NN Bank Soft Bullet Programme
NN Bank Soft Bullet Programme Established Covered Bond issuer Commencing a Soft Bullet Programme • In 2017 NN Bank established its CPT1 Programme in order to replace • In June 2020 NN Bank established a EUR 7.5 bn Soft Bullet Programme, RMBS as the primary source of funding and to further diversify
Slide 20: 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 • UCITS and CRR article 129 compliant Programme size EUR 7.5 bn • LCR eligible (level 1) • Soft bullet structure • Solvency II
Slide 21: NN Bank Soft Bullet preliminary cover pool
NN Bank Soft Bullet preliminary cover pool 1 Cut-off date 31-07-2020 Redemption type2 2% 2% 1% 3% Annuity Principal balance (EUR) 1,714,073,958 Interest Only Value of saving deposits (EUR) 86,705,840 14% Bank Savings 42% Investment Net principal balance (EUR) 1,627,368,118 Life Linear Number of loan
Slide 22: 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 23: 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 24: 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 25: 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 • 88.5% Asset Percentage Bonds • 80% Indexed LTV cut-off 3. Second regulatory c
Slide 26: Balance sheet and capital position
4. Balance sheet and capital position 26
Slide 27: Balance sheet composition
Balance sheet composition Assets Balance sheet at 30 June 2020 EUR bn • Mainly mortgage loans, small consumer loan portfolio and liquid 24.7 24.7 assets (HQLA) • At 30 June 2020, gross mortgage portfolio consists of EUR 15.5bn NN- labelled mortgages, EUR 3.2bn Delta Lloyd mortgages and EUR 0.9bn Qui
Slide 28: Capital and liquidity position
Capital and liquidity position Capital ratios (transitional CRD IV)1 Risk weighted assets (EUR bn) Liquidity metrics 30 June 2020 16.9% 17.9% 17.2% 18.1% 5.7 5.9 5.9 5.5 1.6% 1.4% Liquidity Coverage Ratio (LCR)2 193% 1.5% 1.5% Net Stable Funding Ratio (NSFR)3 130% 15.4% 16.3% 15.7% 16.7% Loan-to-dep
Slide 29: Funding diversification
Funding diversification Total Equity & Liabilities1 Redemption profile3 30 June 2020 Equity EUR m 1,000 9% 4% Regular Savings 849 0% 8% Bank Annuities 29% Bank Annuities (mortgage-linked) 570 560 5% 500 Covered Bonds 381 381 11% Securitisations 204 Senior Unsecured debt 25 48 6% Subordinated 28% Oth
Slide 30: NN Bank funding programmes
NN Bank funding programmes Secured funding (collateralised by prime Dutch residential mortgage portfolios) Unsecured funding Soft Bullet Covered Bond Programme • EUR 7.5bn programme, of which EUR 0.5bn issued Debt Issuance Programme (EMTN1) • Registered with the Dutch Central Bank • EUR 3.0bn progra
Slide 31: Appendices
Appendices 31
Slide 32: Preliminary cover pool: key characteristics
A Preliminary cover pool: key characteristics1 Current loan to indexed market value (loans) Interest rate buckets 22% 21% 62% 18% 15% 9% 8% 4% 3% 19% 0% 1% 0% 12% 5% 0% 2% 0% 0% 0.0% - 1.0% 1.0% - 2.0% 2.0% - 3.0% 3.0% - 4.0% 4.0% - 5.0% 5.0% - 6.0% 6.0% - 7.0% > 7.0% Current loan to original market
Slide 33: Preliminary cover pool: key characteristics (cont'd)
A Preliminary cover pool: key characteristics (cont’d) 1,2 Current loan balance3 Interest Payment Type 46% 0.5% Fixed 24% Floating 13% 8% 4% 3% 99.5% 1% 0-150k 150-300k 300k-450k 450k-600k 600k-750k 750k-900k >= 900k Geographical distribution 28% Pool Distribution Population Distribution 21% 16% 17%
Slide 34: Mortgage loan origination and underwriting: process
B Mortgage loan origination and underwriting: process1 Loan origination Regular loan servicing Special loan servicing Borrower Interest rate renewals Client back on track Electronic archives Preventive actions Intermediary / own advisors Conversions Arrears Origination position Skydoo (pre-screening
Slide 35: Mortgage loan origination and underwriting: criteria
B Mortgage loan origination and underwriting: criteria1 All mortgage production is originated via intermediary channels All intermediaries are licensed • NN Bank’s mortgage origination network comprises over 1,700 active • Dedicated team for initiating and maintaining contacts with intermediaries in
Slide 36: Mortgage loan origination and underwriting: criteria
B Mortgage loan origination and underwriting: criteria1 Code of conduct Borrower criteria Collateral criteria • NN Bank complies with the Financial • Credit history is checked in several registers • All properties must be located in the Supervision Act, the Mortgage Credit (e.g. BKR and Fraud Regist
Slide 37: Creating value for our stakeholders
C Creating value for our stakeholders 37
Slide 38: Dutch economy and housing market
D Dutch economy and housing market • During Q2 2020, the Dutch GDP experienced a significant contraction of 8.5 per cent. International trade activity, consumption and the amount of investments decreased significantly as a result of COVID-19. Overall the impact was less compared to other countries i
Slide 39: Dutch economy and housing market
D Dutch economy and housing market • The Dutch housing market is currently still running at full speed, despite • However, it is expected1 that COVID-19 effects could materialize later on. COVID-19. For the period up to and including July, house prices rose on Due to an expected increase in unemploy
Slide 40: Dutch economy and housing market
D Dutch economy and housing market • For most regions, the rise in house prices is higher during Q2 2020 when compared to Q2 2019. Only Limburg and Friesland display a slower price rise. The highest price rise can be observed in Groningen, where the increase between Q2 2020 and 2019 is 11.0% • The a
Slide 41: Dutch economy and housing market
D Dutch economy and housing market • House prices increased almost every year since the start of the recovery of the Dutch Housing Market in 2014, the period from January to July 2020 was no exception to this. The price of the average existing owner-occupied home increased by 7.1 per cent • Year to
Slide 42: Dutch economy and housing market
D Dutch economy and housing market • In Europe, the mortgage payment arrears have been declining over the last couple of years. The Netherlands remains the best in class with the lowest arrears in the area and a decreasing trend since the second half of 2014 • There is a trend of declining public au
Slide 43: Corporate history
E 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 44: Corporate history
E 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 45: Profit & Loss
F Profit & Loss Summary profit and loss account1 (Amounts in EUR m) 1H19 1H20 Interest income 309 313 Interest expense (190) (179) Interest result 120 133 Net fee and commission income 55 51 Gains and losses on financial transactions and other income 12 11 Valuation results on non-trading derivative
Slide 46: Glossary
G Glossary Abbreviation Definition Abbreviation Definition ACT Asset Cover Test FTE Full-time Equivalent AT Amortisation Test GHF Code of Conduct Mortgage Loans AFM Dutch Authority for the Financial Markets HDN Hypotheek Data Network APE Annual Premium Equivalent HTT Harmonised Transparency Template
Slide 47: Contact information
H Contact information Niek Allon Rolf-Pieter ter Horst Sander Roling NN Bank Treasury NN Bank Treasury NN Bank Treasury M: +31 6 2013 7640 M: +31 6 2184 1550 M: +31 6 1066 6854 E: niek.allon@nn.nl E: rolf-pieter.ter.horst@nn.nl E: sander.roling@nn.nl Geraldine Bakker - Grier Investor Relations Offic
Slide 48: 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 49: 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 50: Slide 50
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