Nn Group N.v. · EURONEXT:NN
Nn — Nationale-Nederlanden Bank — Debt Investor Presentation (September 2021)
52 slides from Nn's debt investor presentation, September 2021
Slide 1: Nationale-Nederlanden Bank Debt Investor Presentation
Nationale-Nederlanden Bank Debt Investor Presentation September 2021
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 30 June 2021 Funding diversification • Fifth largest Dutch retail banking • Purpose: to help people care for • Total assets of EUR 24.8bn; • Diversified funding mix, in terms of franchise (based on balance
Slide 4: Contents
Contents 1 Strategy and business highlights 5 2 Capital, liquidity and funding 16 3 Mortgage business 24 Appendices A Mortgage loan origination and underwriting 31 B NN Bank funding programmes 35 C Dutch economy and housing market 36 D Secured funding: soft bullet covered bonds 42 E Corporate histor
Slide 5: 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 more than one million retail clients in the N
Slide 7: Parent company: NN Group
Parent company: NN Group International footprint Overview of NN Group • International financial services company, active in 19 countries with a strong presence in Europe and Japan • Provides retirement services, pensions, insurance, investments and banking to approximately 18 million customers • Fin
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 as per 1H21 Non-Financial as per end of 2020 Return on equity Cost/income ratio Net result Net promotor score Employee engagement Internal and external FTE 11.1% 50.7% EUR 64.6m +18.9 7.7 1,179 1H20: 11.9% 1H20: 51.0% 1H20: € 61.7m 2019: +11.0 2019: 7.5 2019: 1,159 Net
Slide 10: Creating long-term value for our stakeholders
Creating long-term value for our stakeholders Strategic priorities NN Bank Strong customer relationships Transitioning from a customer focused mortgage and savings bank to a relationship-oriented bank Broadening of the business model Developing additional sources of income and collaborating more wit
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 and bank annuities, supplemented by retail investment and consumer loan products • National player, with coverage of all Dutch regions, operating under
Slide 12: Financially sound bank with diversified income model
Financially sound bank with diversified income model Net interest margin1 Summary profit and loss account • Lower interest expenses following lower (Amounts in EUR m) 1H21 1H20 wholesale funding costs and a decrease in Interest income 295 313 client rates on the savings portfolio Interest expense (1
Slide 13: Long-term financial targets
Long-term financial targets Total capital ratio (transitional CRD IV)1 Cost/income ratio • NN Bank steers its capital on • NN Bank has a cost/income Total Capital Ratio (TCR) and (C/I) ratio target of below meets all capital targets 55% in 2023 20.0% < 55.0% > 16.8% • NN Bank aims to have a Total 50
Slide 14: Sustainable company & society is one of five strategic priorities of NN Bank
Sustainable company & society is one of five strategic priorities of NN Bank • To underline our ambition, NN Group endorsed various NN Bank’s commitment to the climate agreement: commitments, such as the commitment of the financial sector to the Dutch Climate Agreement (Klimaatakkoord) • We have ins
Slide 15: NN Bank enhancing sustainability & social responsibility
NN Bank enhancing sustainability & social responsibility Sustainable housing • As a mortgage provider, NN Bank wants to contribute to the reduction of greenhouse gas emission in houses we finance • NN Bank offers financing options to make homes more sustainable and to source green mortgages for ours
Slide 16: Capital, liquidity and funding
2. Capital, liquidity and funding 16
Slide 17: Balance sheet composition
Balance sheet composition Assets Balance sheet at 30 June 2021 (in EUR bn) • Dutch residential mortgage loans (83% of the balance sheet) 24.4 24.4 • High Quality Liquid Assets (HQLA) portfolio of EUR 1.3bn 1.3 1.1 0.1 1.2 • 33% of outstanding mortgage amounts are guaranteed through NHG 1.3 0.7 0.1 1
Slide 18: Strong capital position provides significant buffer
Strong capital position provides significant buffer Total capital ratio (TCR, transitional CRD IV)1 Risk weighted assets (EUR bn) Leverage ratio 20.0% > 16.8% 18.9% 17.2% 1.4% 1.5% 1.5% 5.9 6.0 6.0 4.0% 4.5% 17.4% 18.6% 3.7% 15.7% > 3.0% 2019 2020 1H21 TCR target 2019 2020 1H21 2019 2020 1H21 Regula
Slide 19: Conservative approach to liquidity management
Conservative approach to liquidity management Liquidity adequacy (30 June 2021) Measurement and monitoring of funding position • NSFR ratio1: o Incentive to fund NN Bank’s activities from stable sources of funding on an ongoing basis 168% 138% 126% o On 30 June 2021, NN Bank had a NSFR ratio of 138%
Slide 20: Focus funding strategy on optimisation and diversification
Focus funding strategy on optimisation and diversification Wholesale funding strategy Funding mix (as at 30 June 2021) Attract 7% 0% retail funding Retail 21% Secured Savings, deposits bank annuities Unsecured Allocate 72% Diversification newly originated 2Subordinated of wholesale mortgage loans fu
Slide 21: Minimum Required Eligible Liabilities
Minimum Required Eligible Liabilities NN Bank meeting MREL requirements Total Risk Exposure Amount (TREA)1 Leverage Ratio Exposure (LRE)2 • NN Bank intends to meet MREL requirements with a combination of equity, Tier 2 and senior (non) preferred 32.6% 27.0% 7.6% • The interim (1 Jan 2022) and final
Slide 22: 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 edition • Use of Proceeds • Reporting Green Buildings meeting the Use of Proceeds eligibility criteria Reporting on the allocation of net proceeds to the Eligible Green Loan Portfolio af
Slide 23: Credit ratings
Credit ratings Credit rating reflects NN Bank’s “highly strategic importance” for NN Group NN Bank N.V. ST issuer rating, A-1 outlook stable • Short-term credit rating of A-1 by Standard & Poors (S&P) LT issuer rating, A- outlook stable • Long-term credit rating of A- (stable outlook) by S&P, reflec
Slide 24: Mortgage business
3. Mortgage business 24
Slide 25: 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 26: Distribution and servicing of mortgage loans
Distribution and servicing of mortgage loans Distribution of newly-originated mortgage loans in 1H21 (EUR 4.4 bn) Mortgage loan portfolio serviced at 30 June 2021 (EUR 53.2bn) NN Bank 1 NN Bank 15% 8% 2% 9% NN Life 6% 37% NN Life 37% NN Non-life + NN Belgium NN Non-life + NN Belgium 2 DRMF 42% DRMF
Slide 27: Amortising mortgage loans with long fixed reset tenors
Amortising mortgage loans with long fixed reset tenors Redemption types as % of NN Bank mortgage portfolio (30 June 2021)1 Majority of new mortgage origination is annuity type (average last 12 months) 2% Annuity and linear 5% Annuity and linear Bank savings and insurance savings 28% Bank savings and
Slide 28: Strong historical mortgage loan performance
Strong historical mortgage loan performance Trend towards lower LTV and higher (p)repayments … Weighted average current loan-to-indexed market value decreases1 • LTV cap lowered by 1%-point p.a. from 105% in 2013 to 100% in 2018 • Lower average LTV due to higher amortisation and increased house pric
Slide 29: Loan loss provisioning and stage classification
Loan loss provisioning and stage classification • On 1 January 2021, the new guidelines on the definition of default became effective • The new definition of default has been applied as of 1 January 2021 in the stage classification, delinquency buckets and non-performing loan (NPL) ratio • The new d
Slide 30: Appendices
Appendices 30
Slide 31: 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 32: 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 33: 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 34: Mortgage loans: limited impact of COVID-19
A Mortgage loans: limited impact of 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 p
Slide 35: NN Bank funding programmes
B NN Bank funding programmes Secured funding (collateralised by prime Dutch residential mortgage portfolios) Unsecured funding Soft Bullet Covered Bond Programme Debt Issuance Programme (EMTN1) • EUR 7.5bn programme, of which EUR 1.75bn issued • EUR 5.0bn programme, of which EUR 1.5bn of senior pref
Slide 36: Dutch economy and housing market
C Dutch economy and housing market • The extensive government support measures since the start of COVID-19 ensured a solid rebound of GDP in H2 2020 (+7.7 percent). The Dutch economy is expected to grow by 2.1% in 2021 and 3.7% in 2022, compared to the 3.8% contraction in 2020. • The recovery will d
Slide 37: Dutch economy and housing market
C Dutch economy and housing market Measures taken by Government to support economy¹ “NOW 4” “TOZO 5” “TVL” Temporary Emergency Scheme for Job Temporary self-employment income support Reimbursement Fixed Costs Scheme for companies Retention • Temporary social assistance “bijstand” • Compensation for
Slide 38: Dutch economy and housing market
C Dutch economy and housing market • Despite the impact of COVID-19 Dutch house prices for the year 2021 are expected to outpace last year’s average of 7.8%. The main drivers will be the continuing supply shortages, the low interest rate environment and the improvement in economic outlook since year
Slide 39: Dutch economy and housing market
C Dutch economy and housing market • When comparing Q2 2021 figures with Q2 2020, the Dutch house price index increased by 13% for Netherlands, with the sharpest increases recorded outside the ‘Randstad’ in the less urbanized provinces. Among the 12 provinces, the highest increase was recorded in Fl
Slide 40: 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 period from Q2 2021 was no exception to this. • In 2021 further relaxation of lending criteria were introduced. Since this year, house buyers younger
Slide 41: 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. This trend was halted due to COVID-19, which caused an increase in arrears. The Netherlands has the lowest level of arrears in Europe since 2014 • There is a trend of decli
Slide 42: Secured funding: soft bullet covered bonds
D Secured funding: soft bullet covered bonds Soft Bullet covered bond programme launched in 2020 … … to replace Conditional Pass-Through as main secured funding source • In June 2020 NN Bank established a EUR 7.5bn Soft Bullet Programme, which • In 2017 NN Bank established its CPT1 Programme in orde
Slide 43: Secured funding: soft bullet covered bonds
D Secured funding: soft bullet covered bonds 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 7.5bn • LCR eligible (level 1) • Soft bullet structure • Solvency
Slide 44: Secured funding: soft bullet covered bonds
D Secured funding: soft bullet covered bonds Programme 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 45: Secured funding: soft bullet covered bonds
D Secured funding: soft bullet covered bonds 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
Slide 46: 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 47: 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 48: Glossary
F 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 49: 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 NN Group Investor Relati
Slide 50: 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 51: 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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