46 slides from Kempen European High Dividend Fund N.V. N's earnings presentation, 2016
Slide 1: Investor Presentation: Next phase of our wealth management strategy
Investor Presentation Next phase of our wealth management strategy 2016 half-year results
Slide 2: Van Lanschot at a glance
Van Lanschot at a glance Van Lanschot’s profile Solid performance on all key financials H1 2016 H2 2015 H1 2015 • Clear choice for wealth management targeting institutional and private clients • Net profit €31.5m €5.1m €37.7m • Underlying result €37.7m €22.4m €37.7m • Strong brand names, reliable re
Slide 3: Van Lanschot is a specialist, independent wealth manager
Van Lanschot is a specialist, independent wealth manager
Slide 4: Van Lanschot's rich history reaches back over 275 years
Van Lanschot’s rich history reaches back over 275 years 1737 1991 1999 2004 2007 2013 2014 2015 2016 Cornelis van Lanschot founds Van Lanschot in ‘s-Hertogenbosch Strategy Acquisition Strategic review Foundation Van update Lanschot Belgium CenE Bankiers Introduction 2020 Launch of Vermogensregie Evi
Slide 5: As a wealth manager Van Lanschot builds on the experience of its core activities
As a wealth manager Van Lanschot builds on the experience of its core activities Private Banking Asset Management Merchant Banking • Private Bank for entrepreneurs, family • Specialist European investment • Offers specialist services including equites businesses and high net-worth individuals manage
Slide 6: Core activities have individual strengths which are mutually reinforcing
Van Lanschot’s core activities have individual strengths which are mutually reinforcing Private Investment beliefs Asset allocation Banking Manager selection Discretionary management Structured products Product development Order execution CLIENTS Asset EMPLOYEES Merchant Management Banking Selective
Slide 7: Our strategic update of April 2016: responding to a changing world
Our strategic update of April 2016 is about how we are responding to a changing world For our clients For our industry Opportunity for Van Lanschot Appetite for investment products Low yield environment Increased client needs for advice and wealth planning Increasing individual Attractiveness of Evi
Slide 8: Next phase of our wealth management strategy
Next phase of our wealth management strategy Key themes for core activities: Private Banking Evi • Enhance client experience through omni- • To play into trend of increased individual channel servicing model responsibility for pensions and other needs • Foster AuM growth by enhancing front-line • Wi
Slide 9: Key drivers of result development
Key drivers of result development One-off investment programme of €60 million for period mid 2016 – 2019 to invest in omnichannel offering and finalise overhaul of IT platform Reduced impairments • Reduction of loan Cost loss provisions reduction • Corporate Banking run-off • FTE reduction • Normali
Slide 10: On balance, costs expected to decrease
On balance, costs expected to decrease (excluding €60 million investments) Indicative timing 2016 2020 Regionalisation of Private Banking branch network Optimising mortgages and payments; shut down mainframe IT run & change costs Combination support staff / integration Van Lanschot/Kempen Corporate
Slide 11: One-off investment programme of €60 mn to finalise transformation
One-off investment programme of €60 mn to finalise transformation and develop omnichannel platform €60 million additional IT expenditure • Period: mid 2016 – 2019 • Rationale: finalise IT transformation of the Private Bank Comprising: • Digital transformation to omnichannel servicing model • Acceler
Slide 12: Excess capital expected of at least €250 million up to 2020
Excess capital expected of at least €250 million up to 2020, to be returned to shareholders Risk-weighted assets • CET I ratio at 17.3 % (16.9% fully loaded) € billion per 30 June 2016 • Corporate bank run-off offers further upside potential (RWA H1 2016 = €1.6 bn) - - + • Impact Basel III tightenin
Slide 13: 2016 half-year results
2016 half-year results
Slide 14: Highlights 2016 half-year results
Highlights 2016 half-year results Client assets €66.2 billion (+5%) Stable underlying net result of €37.7 million in challenging Assets under management market €54.3 billion (+8%) Capital ratios continue Good progress on Strategy 2020 to improve Acquisition private banking CET I ratio: 17.3% (+1.0%)
Slide 15: Market developments at a glance
Market developments at a glance AEX Index • First half of 2016 has seen major volatility for equity markets, 500 e.g. uncertainty on China, oil and Brexit 475 +19.3% +7.5% • Meanwhile, bond markets are still strongly affected by ECB 450 monetary policy 425 -8.3% 400 -8.5% • Savings rates in the Dutc
Slide 16: Summary of 2016 half-year results
Summary of 2016 half-year results Underlying net result stable at €37.7 million (H1 2015: €37.7 million) Stable result in • Net result amounts to €31.5 million (H1 2015: €37.7 million) challenging • Commission income under pressure due to less trading activity by clients, especially at Merchant Bank
Slide 17: 2016 half-year results by segment
2016 half-year results by segment Strong profit improvement, assets under management stable • Underlying net result increases to €16.8 million (H1 2015: €4.5 million) on the back of substantially lower loan loss Private provisioning and cost reduction Banking • Assets under management stable at €17.
Slide 18: Key figures 2016 half-year results
Key figures 2016 half-year results € million H1 2016 H1 2015 H1 2016 vs. H1 2015 Commission income 117.4 141.0 -17% Interest income 110.3 102.0 8% Other income 12.5 31.1 -60% Income from operating activities 240.2 274.1 -12% Operating expenses -194.8 -193.9 0% Gross result 45.4 80.2 -43% Loan loss p
Slide 19: All activities contribute to underlying net result
All activities contribute to underlying net result Income from operating activities by segment Underlying net result amounts to €37.7 € million million (H1 2015: €37.7 million) • Core activities Private Banking, Asset Management and Merchant Banking generate 83% of combined income from operating act
Slide 20: Management fees hold up well, while commission income under pressure
Management fees hold up well, while market circumstances put pressure on commission income Commission income by category • Total commission income down 17% as € million transaction fees and other commissions are under pressure in uncertain markets • Less trading activity by clients at Private Bankin
Slide 21: Interest margin improves on lower hedge cost and balance sheet management
Interest margin improves on the back of lower cost of hedges and active balance sheet management Interest income Increase in net interest income and net € million interest margin due to: • Lower amortisation costs on discontinued interest hedges • Lower savings rates • Active balance sheet managemen
Slide 22: Other income decreases to €12.5 million
Other income decreases to €12.5 million Profit on financial transactions Profit on financial transactions € million • Profit on financial transactions in H1 2016 decreases compared with H1 2015 as a result of lower profit on the investment portfolio Income from securities and associates • Valuation
Slide 23: Operating expenses stable, with underlying structural reduction achieved
Operating expenses stable, with underlying structural reduction achieved Operating expenses • Operating expenses fairly stable at € million €194.8 million • Recurring costs down by €8.7 million; primarily driven by lower IT costs • Regulatory costs increase as expected (by €6.4 million), partly due
Slide 24: Client assets grow 5% to €66.2 billion
Client assets grow 5% to €66.2 billion Client assets * • Assets under management rose 8% in € billion H1 2016 due to inflow from new mandates and positive market performance at Asset Management • Savings and deposits declined by €0.2 billion, mainly at deposits * Assets under administration have bee
Slide 25: Assets under management at Private Banking are stable
Assets under management at Private Banking are stable Net inflow assets under management* Private Banking AuM Private Banking at €17.2 billion € billion • Inflow of discretionary mandates balances outflow of non-discretionary mandates • Share of discretionary assets under management in AuM at Privat
Slide 26: New mandates generate net inflow at Asset Management
New mandates generate net inflow at Asset Management Net inflow AuM Asset Management AuM at Asset Management up to € billion €37.1 billion • New mandates won in H1 2016 add €2.7 billion • Largest new mandates are a fiduciary mandate for Univé Group (€1 billion) and a mandate for corporate bonds of F
Slide 27: Private Banking loan book stable; Corporate Banking run-off continues
Private Banking loan book stable; run-off of Corporate Banking continues € million 30-6-2016 31-12-2015 % Change Private Banking Mortgages 5,940 5,980 -1% • Stable mortgage book. New mortgage Other loans 2,393 2,375 1% business almost compensates for repayments and prepayments Private Banking 8,333
Slide 28: Better credit quality leads to net release of loan loss provisions
Better credit quality and further run-off of Corporate Banking loans lead to net release of loan loss provisions Additions to loan loss provision Net release of €1.7 million versus net € million addition of €31.9 million in H1 2015 Private Banking • Provisioning level down to €2.4 million, compared
Slide 29: Strengthening of capital position continues
Strengthening of capital position continues Development of Common Equity Tier I ratio* phase-in CET 1 ratio phase-in grows from 16.3% to % 17.3% • Risk-weighted assets reduced to €6.1 billion (H1 2015: €6.4 billion ) supported by Corporate Banking run-off • Improved credit quality leads to smaller s
Slide 30: Overview of group targets
Overview of group targets Common Equity Tier I ratio (phase-in)* Dividend payout ratio** % % 50-70% 15-17% 16.3% 17.3% 14.6% 13.1% 37% 36% 11.0% 28% 0% 2012 2013 2014 2015 H1 2016 2020 2012 2013 2014 2015 2020 Efficiency ratio Return on Common Equity Tier I** % % 10-12% 60-65% 81.1% 2.5% 4.0% 4.9% 6
Slide 31: Good progress on Strategy 2020
Good progress on Strategy 2020
Slide 32: Van Lanschot intends to acquire the private banking activities of Staalbankiers
Private Banking Van Lanschot intends to acquire the private banking activities of Staalbankiers Description of • Acquisition of a maximum €1.7 billion in AuM, €280 million in savings and a limited announced number of securities-backed loans • Transfer of Staalbankiers’ private bankers and investment
Slide 33: Moving from dedicated service offering per channel to integrated offering
Private Banking Moving from dedicated service offering per channel to integrated offering across channels • Rationale: • Stay abreast of technological developments • Enhance client experience • Drive revenue growth/retention • Lower service costs • Omnichannel offering to reflect our DNA: client-cen
Slide 34: Good progress on selecting outsourcing partners for mortgages and payments
Private Banking Good progress on selecting outsourcing partners for mortgages and payments Private Banking offering Integrated financial advice and estate planning Financial planning Increasing differentiation / tailoring Discretionary management • Ongoing product development/evolution to Investment
Slide 35: Evi to become the 4th pillar of our wealth management strategy
Evi van Lanschot Evi to become the 4th pillar of our wealth management strategy Evi Netherlands and Belgium will be combined and managed as a separate segment to develop its full potential, with a dedicated budget and development team Evi offers: Evi will be expanded: • Discretionary asset managemen
Slide 36: Sales force of Asset Management strengthened to increase focus on UK, Germany, France
Asset Management Sales force of Asset Management strengthened to increase focus on the UK, Germany and France Asset Management activities AuM breakdown by client type H1 2016; 100% = €45.9 bn Solutions - Van Lanschot Investment strategies clients Investment funds - Van • High quality niche investmen
Slide 37: Merchant Banking has entered into new, specialist niche territory
Merchant Banking Merchant Banking has entered into new, specialist niche territory Kempen & Co – Merchant Bank Corporate Finance Equity Capital Markets Securities Full alignment Debt solutions Trading Research Capital market transactions between activities M&A transactions Corporate access Structure
Slide 38: Appendix
Appendix
Slide 39: Balance sheet shows strong capital and funding position
Balance sheet shows strong capital and funding position Significant capital buffer Balance sheet 30 June 2016 • Total equity of €1.3 billion € billion, balance sheet total = €15.4 billion • Common Equity Tier I ratio (phase-in) 17.3%* • Leverage ratio (fully loaded) 6.4% Cash and balances Due to ban
Slide 40: Significant reduction of recurring IT 'run' cost realised
Significant reduction of recurring IT ‘run’ cost realised This trend is expected to continue Development ‘out of pocket’ recurring IT cost* (run cost) • This excludes: € million • Cost increase in staff cost resulting from back sourcing 57.1 of activities • Decrease in IT related depreciation cost K
Slide 41: Investment programme against backdrop of reduced IT 'change' costs
Investment programme against backdrop of reduced IT ‘change’ costs Development out of pocket IT project cost (change cost) • IT project cost have decreased over € million 31.4 the last years Other 0.3 • Our targeted ‘normalised’ level of 28.1 change cost is around €20 mn Investment 4.3 programme • I
Slide 42: Executive Board
Executive Board Karl Guha (1964) Constant Korthout (1962) Arjan Huisman (1971) Chairman of the Board CFO/CRO COO Appointed Appointed Appointed Appointed chairman of the Statutory Board of Appointed member of the Statutory Board of Appointed member of the Statutory Board of Van Lanschot on 2 January
Slide 43: Executive Board
Executive Board Richard Bruens (1967) Paul Gerla (1966) Joof Verhees (1960) Private Banking CEO Kempen & Co Merchant Banking Asset Management Appointed Appointed Appointed Appointed member of the Statutory Board of Van Appointed member of the Management Board of Appointed Managing Director Securitie
Slide 44: Supervisory Board
Supervisory Board • Honorary Chairman of KBC • Former CEO of Monuta Willy Duron Group (1945) Jeanine Helthuis • Former member Management Chairman • Former CEO KBC Group Board Fortis Bank (1962) • Member board of directors Agfa- • Member of the supervisory board Gevaert and Tigenix at Prorail • Forme
Slide 45: Free float and liquidity increased following secondary placement in June 2016
Van Lanschot’s free float and liquidity have increased following the secondary placement in June 2016 Overview of principal shareholders Share price and daily volume € € mln 26 3.0 APG Rabobank 2.5 13.3% 22 Wellington 2.0 36.8% 12.1% LDDM Holding Reggeborgh Invest 18 1.5 FMR 1.0 9.9% Invesco 14 9.8%
Slide 46: Disclaimer
Disclaimer Disclaimer and cautionary note on forward-looking statements This document contains forward-looking statements on future events and developments. These forward-looking statements are based on the current information and assumptions of Van Lanschot’s management about known and unknown risk