Nn Group N.v. · EURONEXT:NN
Nn — Nationale-Nederlanden Bank — Debt Investor Presentation (June 2020)
50 slides from Nn's debt investor presentation, June 2020
Slide 1: Nationale-Nederlanden Bank Investor Presentation - Soft Bullet Covered Bond Programme
Nationale-Nederlanden Bank Investor Presentation - Soft Bullet Covered Bond Programme June 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 31 Dec 2019 Funding diversification • Fifth Dutch retail banking • To support retail customers to • Total assets of EUR 24.7bn; • Funding for two-thirds retail franchise (based on balance sheet secure their financial futur
Slide 4: Contents
Contents 1 Strategy and business highlights 5 2 Mortgage business 14 3 Covered bond programme 19 4 Balance sheet and capital position 27 Appendices A Preliminary cover pool: key characteristics 33 B Mortgage origination and underwriting 35 C Dutch economy and housing market 38 D Corporate history 43
Slide 5: 1 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 368bn in household savings in 2019, this is EUR 13bn (+3.5%) up on the previous year, despite the fact that the interest rates for savings have been low for many years and consumer savings are under pressure of taxes and rising inflation (CPI).
Slide 12: Operating in a dynamic environment
Operating in a dynamic environment Developments that impact our operational environment and enable NN Bank to meet its stakeholders’ expectations Data and privacy • Data driven initiatives will contribute to improve customer services and generate greater efficiency for NN Bank • New products and ser
Slide 13: COVID-19
COVID-19 NN Bank’s priorities are to safeguard the well-being of our employees, Payment holidays serve our customers and ensure business continuity • Payment holidays are being offered to borrowers who face temporary Expected impact on NN Bank payment difficulties on their mortgage loans, subject to
Slide 14: 2. Mortgage business
2. Mortgage business 14
Slide 15: 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 16: 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 2019 (EUR 7.9bn) Mortgage portfolio at 31 December 2019 (EUR 50.2bn) 3% 9% 5% 8% 10% 31% NN B
Slide 17: Mortgage loans: growth and trends
Mortgage loans: growth and trends NN Bank annual mortgage loan production (in EUR bn) NN Bank mortgage loan book (in EUR bn)1 7.9 18.0 18.1 19.1 6.1 1.0 1.1 1.0 0.1 3.5 3.8 4.5 4.0 0.7 0.2 7.9 5.3 13.0 14.6 12.4 3.6 2017 2018 2019 2017 2018 2019 NN Bank Delta Lloyd HQ 50 NN Bank Delta Lloyd HQ 50 Mo
Slide 18: Strong mortgage loan performance
Strong mortgage loan performance Trend to lower LTV and higher (p)repayments … ... to further support historically good performance numbers • 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 • L
Slide 19: 3. Covered bond programme
3. Covered bond programme 19
Slide 20: NN Bank launches a new Soft Bullet Programme
NN Bank launches a new Soft Bullet Programme Established Covered Bond issuer Commencing a Soft Bullet Programme • In 2017 NN Bank established its CPT1 Programme in order to replace • EUR 7.5bn Soft Bullet Programme established in 2020, under which RMBS as the primary source of funding and to further
Slide 21: 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 22: NN Bank Soft Bullet preliminary cover pool
NN Bank Soft Bullet preliminary cover pool 1 Cut-off date 31-05-2020 Redemption type2 2% 2% 1% 3% Annuity Principal balance (EUR) 1,737,463,746 Interest Only 14% Bank Savings Value of saving deposits (EUR) 86,454,193 42% Investment Net principal balance (EUR) 1,651,009,554 Life Linear Number of loan
Slide 23: 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 24: 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 25: 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 26: 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 27: 4. Balance sheet and capital position
4. Balance sheet and capital position 27
Slide 28: Balance sheet composition
Balance sheet composition Assets Balance sheet at 31 December 2019 EUR bn • Mainly mortgage loans, small consumer loan portfolio and liquid 24.7 24.7 assets (HQLA) • At year-end 2019, gross mortgage portfolio consists of EUR 14.6bn NN-labelled mortgages, EUR 3.5bn Delta Lloyd mortgages and EUR 1.0bn
Slide 29: Capital and liquidity position
Capital and liquidity position Capital ratios (transitional CRD IV)1 Risk weighted assets (EUR bn)2 Liquidity metrics 31 December 2019 16.9% 17.9% 17.2% 5.9 Liquidity Coverage Ratio (LCR) 173% 5.7 5.5 1.6% 1.5% 1.5% Net Stable Funding Ratio (NSFR)3 132% 15.4% 16.3% 15.7% Loan-to-deposit ratio4 128%
Slide 30: Funding diversification
Funding diversification Total Equity & Liabilities1 Redemption profile3 31 December 2019 Equity EUR m 1,041 1,000 10% 4% Regular Savings 0% 839 8% Bank Annuities 27% Bank Annuities (mortgage-linked) 570 560 7% 500 Covered Bonds Securitisations 258 270 11% Senior Unsecured debt 48 25 6% Subordinated
Slide 31: 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, undrawn Debt Issuance Programme (EMTN1) • Registered with the Dutch Central Bank • EUR 3.0bn programme, of which EUR
Slide 32: Appendices
Appendices 32
Slide 33: A Preliminary cover pool: key characteristics
A Preliminary cover pool: key characteristics1 Current loan to indexed market value (loans) Interest rate buckets 21% 62% 21% 18% 13% 11% 8% 4% 3% 18% 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 marke
Slide 34: A Preliminary cover pool: key characteristics (cont'd)
A Preliminary cover pool: key characteristics (cont’d) 1,2 Current loan balance3 Interest Payment Type 46% 1% Fixed 24% Floating 13% 9% 4% 3% 99% 1% 0-150k 150-300k 300k-450k 450k-600k 600k-750k 750k-900k >= 900k Geographical distribution 28% Pool Distribution Population Distribution 21% 16% 17% 15%
Slide 35: B 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 36: B 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 37: B 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 38: C Dutch economy and housing market
C Dutch economy and housing market • The rate of growth of the Dutch economy has significantly outpaced many other European countries over the second half of 2019. However, as forecasted by Rabobank1, the uncertainty around the COVID-19 crisis is expected to cause a contraction of the Dutch GDP by 5
Slide 39: C Dutch economy and housing market
C Dutch economy and housing market • The Dutch housing market is not immune for the COVID-19 crisis, • In 2019 mortgage interest rates have fallen significantly, except predicted is that house sales will decrease and also house prices will for a small spike in November. Several mortgage providers ha
Slide 40: C Dutch economy and housing market
C Dutch economy and housing market • For most regions, the rise in house prices is slower than it has been in previous years. The trend of slower price rises is not so marked everywhere in the country: in Q4 2019 in Groningen, the prices in fact rose more sharply than in the first quarters of 2019:
Slide 41: C Dutch economy and housing market
C 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 first quarter of 2020 was no exception to this. The price of the average existing owner-occupied home increased by 6.2 per cent in the last year • Ho
Slide 42: 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 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: 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 44: 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 45: E Profit and Loss
E Profit and Loss Summary profit and loss account1 (Amounts in EUR m) 2018 2019 Interest income 600 631 Interest expense (383) (383) Interest result 217 248 Net fee and commission income 86 97 Gains and losses on financial transactions and other income 15 41 Valuation results on non-trading derivati
Slide 46: F Glossary
F 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: G Contact information
G 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
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