NIBC Bank Additional Tier-1 Investor Presentation - September 2017
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NIBC Bank Additional Tier-1 Investor Presentation September 2017
DISCLAIMER
This document is only provided for information purposes and does not constitute, nor must it be interpreted as, an offer to sell or exchange or acquire, or an invitation for offers to buy securities in any
jurisdiction where, or to any person to whom, it is unlawful to make such an offer or sale. Any decision to buy or invest in securities in relation to a specific issue must be made solely and exclusively on
the basis of the information set out in the relevant offering circular filed by the Issuer in relation to such specific issue. Nobody who becomes aware of the information contained in this report must
regard it as definitive, because it is subject to changes and modifications. The Issuer makes no representation or warranty, express or implied, as to the accuracy or completeness of the information
contained herein.
This document contains or may contain forward looking statements regarding intentions, expectations or projections of NIBC Bank N.V. or of its management on the date thereof, that refer to
miscellaneous aspects, including projections about the future earnings of the business and involve significant elements of subjective judgment and analysis that may or may not be correct. The statements
contained herein are based on our current projections, although the said earnings may be substantially modified in the future by certain risks, uncertainty and others factors relevant that may cause the
results or final decisions to differ from such intentions, projections or estimates. These factors include, without limitation, (1) the market situation, macroeconomic factors, regulatory, political or
government guidelines, (2) domestic and international stock market movements, exchange rates and interest rates, (3) competitive pressures, (4) technological changes, (5) alterations in the financial
situation, creditworthiness or solvency of our customers, debtors or counterparts. These factors could condition and result in actual events differing from the information and intentions stated,
projected or forecast in this document and other past or future documents. NIBC Bank N.V. does not undertake to publicly revise the contents of this or any other document, either if the events are
not exactly as described herein, or if such events lead to changes in the stated strategies and intentions. The contents of this statement must be taken into account by any persons or entities that may
have to make decisions or prepare or disseminate opinions about securities issued by NIBC Bank N.V. and, in particular, by the analysts who handle this document and any recipient thereof should
conduct its own independent analysis of the Issuer and the data contained or referred to herein. This document contains summarised information or information that has not been audited, and its
recipients are invited to consult the documentation and public information filed by NIBC Bank N.V. with stock market supervisory bodies, in particular, the offering circular and in any periodical
information.
The securities referred to in this document have not been and will not be registered under the U.S. Securities Act of 1933, as amended and are not to be offered or sold in the United States or to, for
the account or benefit of, U.S. persons absent registration or an exemption from registration under such Act. The Issuer does not intend to register any portion of the proposed offering under the
applicable securities laws of the United States or to conduct a public offering of any securities in the United States.
This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services
and Markets Act 2000 (Financial Promotion) Order 2005 or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, failing within Article 49(2)(a) to (d) of such Order
(all such persons together being referred to as "relevant persons"). Any investment activity to which this communication may relate is only available to, and any invitation, offer, or agreement to engage in
such investment activity will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. The information in this
presentation is given in confidence and the recipients of this presentation should not engage in any behaviour in relation to qualifying investments or related investments (as defined in the Financial
Services and Markets Act 2000 (FSMA) and the Code of Market Conduct made pursuant to FSMA) which would or might amount to market abuse for the purposes of FSMA.
This document is only being distributed to and is only directed at (i) persons outside the European Economic Area (EEA) or (ii) persons in member states of the EEA who are "qualified investors" within
the meaning of Article 2(1)(e) of the Directive 2003/71/EC (as amended).
2
DISCLAIMER (Cont’d)
The securities referred to in this document (the Capital Securities) are complex financial instruments and are not a suitable or appropriate investment for all investors. In some jurisdictions, regulatory
authorities have adopted or published laws, regulations or guidance with respect to the offer or sale of securities such as the Capital Securities to retail investors.
In particular, in June 2015, the U.K. Financial Conduct Authority (the FCA) published the Product Intervention (Contingent Convertible Instruments and Mutual Society Shares) Instrument 2015 (as
amended or replaced from time to time, the PI Instrument), which took effect from 1 October 2015. Under the rules set out in the PI Instrument (as amended or replaced from time to time, the PI
Rules):
(a) certain contingent write-down or convertible securities (including any beneficial interests therein), such as the Capital Securities, must not be sold to retail clients in the EEA; and
(b) there must not be any communication or approval of an invitation or inducement to participate in, acquire or underwrite such securities (or the beneficial interest in such securities) where
that invitation or inducement is addressed to or disseminated in such a way that it is likely to be received by a retail client in the EEA (in each case, within the meaning of the PI Rules), other
than in accordance with the limited exemptions set out in the PI Rules.
The Managers (and/or their respective affiliates) are required to comply with the PI Rules. By purchasing, or making or accepting an offer to purchase, any Capital Securities (or a beneficial interest in
such Capital Securities) from the Issuer and/or the Managers, each prospective investor will be deemed to represent, warrant, agree with, and undertakes to the Issuer and each of the Managers that:
(a) it is not a retail client in any jurisdiction of the EEA (as defined in the PI Rules);
(b) whether or not it is subject to the PI Rules, it will not:
(i) sell or offer the Capital Securities (or any beneficial interest in such securities) to retail clients in any jurisdiction of the EEA; or
(ii) communicate (including the distribution of this Prospectus) or approve an invitation or inducement to participate in, acquire or underwrite the Capital Securities (or any beneficial
interests therein) where that invitation or inducement is addressed to or disseminated in such a way that it is likely to be received by a retail client in any jurisdiction of the EEA (in each
case within the meaning of the PI Rules),
in any such case other than (i) in relation to any sale of or offer to sell Capital Securities (or any beneficial interests therein) to a retail client in or resident in the United Kingdom, in
circumstances that do not and will not give rise to a contravention of the PI Rules by any person and/or (ii) in relation to any sale of or offer to sell Capital Securities (or any beneficial
interests therein) to a retail client in any EEA member state other than the United Kingdom, where (a) it has conducted an assessment and concluded that the relevant retail client
understands the risks of an investment in the Capital Securities (or any beneficial interests therein) and is able to bear the potential losses involved in an investment in the Capital Securities
(or any beneficial interests therein) and (b) it has at all times acted in relation to such sale or offer in compliance with the Markets in Financial Instruments Directive (2004/39/EC) (MiFID)
to the extent it applies to it or, to the extent MiFID does not apply to it, in a manner which would be in compliance with MiFID if it were to apply to it; and
(c) it will at all times comply with all applicable laws, regulations and regulatory guidance (whether inside or outside the EEA) relating to the promotion, offering, distribution and/or sale of the
Capital Securities (or any beneficial interests therein), including (without limitation) any such laws, regulations and regulatory guidance relating to determining the appropriateness and/or
suitability of an investment in the Capital Securities (or any beneficial interests therein) by investors in any relevant jurisdiction.
Where acting as agent on behalf of a disclosed or undisclosed client when purchasing, or making or accepting an offer to purchase, any Capital Securities (or any beneficial interest in such securities)
from the Issuer and/or the Managers, the foregoing representations, warranties, agreements and undertakings will be given by and be binding upon both the agent and its underlying client.
Distribution of this document in other jurisdictions may be prohibited, and recipients into whose possession this document comes shall be solely responsible for informing themselves about, and
observing any such restrictions. By accepting this document you agree to be bound by the foregoing restrictions.
3Table of Contents
Transaction Overview: Investment Thesis 5
1. NIBC: Moving Ahead
Overview 6
Rating and Capital 12
Objectives 14
2. Transaction Details 16
Appendix I Mortgage Reclassification: expected IFRS 9 impact 22
Appendix II Key Figures and Balance Sheet 24
Appendix III Asset Quality 29
4Transaction Overview: Investment Thesis
Group structure NIBC Summary terms
NIBC Issuance Structure Additional Tier 1 Capital issued by NIBC Bank N.V.
Group Consolidated (5.125% AT1 Trigger)
Perpetual maturity
EUR denominated
NIBC Holding N.V.
Callable after [5-7] years and semi-annually thereafter
5.125% CET1 trigger at Group and/or Issuer
NIBC Bank N.V. (Issuer) Temporary write-down loss absorption mechanism
Discretionary, semi-annual, non-cumulative coupons
Bank sub-consolidated (5.125% AT1 Trigger) Expected rating B+ (S&P)
AT1 transaction rationale Investment thesis1
Capital optimisation and fulfilment of the 1.5% AT1 requirement Solid fully-loaded CET1 ratios: 20.3% (18.1%)
Reinforcing already strong leverage ratio (fully-loaded 7.4% at Ample headroom to trigger: 15.2% (13.0%)
H1 2017)
Large buffer to MDA restrictions: 7.8% (5.6%)
RAC eligibility
Robust level of ADIs: over 135x coupon coverage2
Contributing to future MREL requirements
Limited amount of AT1 to be issued by NIBC
Growing franchise and increasing profitability
1: All numbers as of H1 2017; Holding numbers in brackets
2: Coupon coverage calculated on the basis of €200 million issuance size, conservative coupon estimate and €1.6bn ADIs as of FY 2016 51. NIBC: Moving Ahead
6Focused mid-market corporate and retail franchise with differentiated approach
Our business model Key indicators
Mid-market corporate client offering Retail client offering
€23.6bn Total assets
Full spectrum from advising, structuring, Mortgages ranging from residential to
financing, and co-investing across debt buy-to-let
and equity Focus on entrepreneurs and small
businesses
Leasing €1.9bn Equity
Online savings
(1) (1)
CET1 ratio
€10.2bn client exposure1 €9.1bn client exposure1
before impact
of c. -4% for
Typical ticket size: €10-50m Typical ticket size: €100k – 2.5m 18.1%
mortgage
reclassification
Our differentiated approach (IFRS 9)2
Agile organisation with an entrepreneurial spirit
Focus on profitable niches and (sub)sectors +58% NPS
Modest corporate portfolio size and limited number of clients allow more complete insight
and overview
Culture of empowerment, accountability and action
Tailored and disciplined risk management culture and risk-adjusted returns strategy 8.9% ROE1
No current accounts offered and no branch network
Note: Financials for NIBC Holding as of H1 2017, unless otherwise stated.
1: NIBC Bank, H1 2017. Client exposure includes drawn & undrawn lending.
2: In addition, the impact for NIBC of the IFRS 9 impairment model change from incurred loss to expected loss is expected to come out below the expected market average as 7
reported by EBA.Targeted growth backed by resilient Northwestern European markets
Focus on Northwestern Europe Growing and transforming client exposures…
United Kingdom (32 FTEs) Netherlands (570 FTEs1) CAGR
Corporate client Savings: €4.0bn +3.3% 19.3
exposure: €1.7bn Mortgages: €9.0bn 17.7
> €1bn
Corporate client exposure: origination p.a.
€6.3bn 8.1 9.1
c. €3bn
10.2 origination p.a.
9.7
2014 H1 2017
Corporate exposure (€bn) Mortgages (€bn)
… driving revenues expansion
CAGR
+14%
381
CAGR
295 +37%
226
165
Belgium (4 FTEs) Germany (85 FTEs)
Savings: €1.1bn Savings: €4.5bn
2014 2016 H1 2016 H1 2017
Corporate client
exposure: €2.2bn Operating income (€m)
Note: Financials for NIBC Bank as of H1 2017.
1: Including BEEQUIP. 8Efficient, entrepreneurial and agile culture
Our purpose Our heritage Key indicators
Founded in 1945 to help rebuild the
Netherlands after World War Two
Making a difference Evolved from a pure-play longterm lending
at decisive moments bank to an enterprising bank offering advisory
services, financing and co-investing to our
clients
691 FTEsI
Our values
Employee
80% engagement2
Professional Entrepreneurial Inventive
In-depth sector knowledge Sound, enterprising bank Bespoke solutions
Cost to
Expert financial solutions Decisive moments in Think creatively to meet
46% income
clients’ business and life clients’ financial needs
Tailored risk management ratio3
Agile execution Structuring DNA
1: NIBC Holding, as of H1 2017.
2: NIBC Bank, as of FY 2016 (internal measurement supported by third party service provider). 9
3: NIBC Bank, as of H1 2017.Continuously anticipating trends and adapting our offering to the future
2017
2014
Innovation
Acquisitions
Start-ups Partnering with, and
Partnering Strengthening footprint investing in Fintech
New Products Facilitating and investing in Germany companies
Leveraging platform and in start-up businesses
Developing future generating fees NIBC Bank
revenue generators
Deutschland AG
Introduction of Majority stake +
“Originate-to- +
Manage” offering + (founding partner) Broadening product
Buy-to-Let mortgages
+ offering
Agreement with EIB SNS Securities
Cash flow financing guaranteeing loans up Minority stake
(factoring) to €500m
Building and transforming upon our core product offering
Financing Corporate Finance Retail Solutions Investing
Debt financing & Capital Markets Mortgages Mezzanine and equity
Leasing Mergers & acquisitions Online savings and solutions
Capital structuring brokerage
DCM & ECM
10Flexibility to adapt origination focus ensures attractive risk adjusted returns
Corporate Commercial real Infrastructure & Shipping & Mortgages
lending1 estate Renewables Intermodal (incl. buy-to-let)
€4.2bn2 €1.4bn2 €1.6bn2 €1.4bn2 €9.1bn2
Recent initiatives focused Exit of legacy files, focus of Transition to shorter term Moderate portfolio size Shift from bias to main
on receivables lending as origination on value added financing of digital allows for close stream NHG (State
well as selected equity and non-standard solutions in infrastructure assets and monitoring of dry bulk guarantee) backed
mezzanine opportunities, Dutch market with typical renewable projects exposure while new focus mortgages to non-NHG
eliminating outsized smaller ticket sizes is on wet bulk and niche mortgages and niches such
exposures segments as “buy to let”
Cost of risk3 Impairment ratio4
1.16% 0.63%
0.71% 0.39% 0.34%
0.60%
0.27% 0.14%
2014 2015 2016 H1 2017 5 2014 2015 2016 H1 2017
5
Note: selected examples. Financials for NIBC Bank. 3: Impairments & credit losses mortgages in net trading income / average total RWA
1: Category consists of Food, Agri, Retail & Health; Telecom, Media, Technology & Services 4: Impairments / average carrying value of loans & mortgages.
and Industry & Manufacturing. 5: H1 2017 annualised. 11
2: Exposure as of H1 2017.Improved rating outlook and decreasing cost of funding
Solid and diversified funding base Positive rating development
Retail savings Total funding1
9% (H1 2017):
BBB-
€22.3bn
ESF BBB- Positive
BBB- BBB-
20% 43% Stable Stable Stable
BBB-
Secured (wholesale)
Positive
BBB- BBB-
Unsecured (wholesale) BBB- Stable Stable
Negative
21%
Equity 7%
2013 2014 2015 2016
Improved funding: ready for the future Reducing cost of funding
Repaid all government guaranteed funding
1.30%
Restarted issuing wholesale senior unsecured 1.22%
1.01%
0.92%
Added new funding instruments ESF3 and (T)LTRO
Softened redemption scheme funding
2
2014 2015 2016 H1 2017
Note: Financials for NIBC Bank.
1: Liabilities excluding derivatives.
2: H1 2017 annualised. 12
3: German SSD benefitting from the depositary guarantee schemeStrong capital generation allowing attractive dividend capacity
Significant improvement of performance… … with solid capital position
NIBC Bank NIBC Holding – Basel III fully loaded
Dividend Leverage
25 30 6.5% 6.6%
Payout (€m) Ratio
102 20.7%
87 BIS 18.0% 2.6%
T2 2.9% 18.1%
71 2
8.9%
15.1% 12.0%
SREP3
42
5.4%
3.9% CET1
2.3%
1
2014 2015 2016 H1 2017 2016 H1 2017
Net Profit (€m) ROE (%)
CET1 ratio before impact of c. -4% for mortgage reclassification (IFRS 9)4
Note: Financials for NIBC Bank and NIBC Holding.
1: 2014 before one-off SNS levy of €18m related to the nationalisation of SNS Reaal that was paid to the State of the Netherlands.
2: 1H 2017 annualised. 13
3: SREP requirement for total capital excluding Capital Conservation Buffer. SREP requirement for CET1 excluding Capital Conservation Buffer is 8.5%.
4: See appendix for further details on IFRS 9 impact.Strong fundamentals supporting 10%+ ROE going forward…
Earnings
resilience and
near-term 10%+
Strong capital ROE objective
Prudent risk position ROE and Net profit
Lean management CET1 ratio €m 1
8.9%
Improving cost organisation Cost of risk2 Holding
2.3%
Sustainable of funding Cost / income 18.1% CAGR1
revenue growth Cost of funding Incl. Bank Levy 13.7% 61%
Growing portfolio 1.16%
Total income 87
-7% 42
€m
Commercial CAGR1
1.30% 53% = 2014
3
H1 2017
assets 46% 0.27%
€bn
15%
0.92% +
2014 H1 2017 Efficient operating
295
226
+ 2014 H1 2017
1
model and strong
19.3 Transition to
17.7
+ 2014 H1 2017 IFRS 9 momentum
Steering to lower
+ 2014 H1 2017 1 Operating risk portfolios Basel IV towards a
sustainable 10%+
+ Stable and
leverage Risk DNA and manageable
return on equity
2014 H1 2017
Flexibility to employee
2014 H1 2017 Focus on higher diversified
invest in growth accountability
Supportive macro margin products funding profile
and innovation
fundamentals through risk- BBB+ rating
Qualitatively adjusted model objective
sound growth in
corporate loans
and mortgage
portfolios
Note: Financials for NIBC Bank, unless otherwise stated.
1: H1 2017 annualised.
2: Impairments & credit losses mortgages in net trading income / average total RWA. 14
3: 2014 before one-off SNS levy of €18m related to the nationalisation of SNS Reaal that was paid to the State of the Netherlands....with clear targets and near-term objectives…
Current Targets Near-term
H1 2017 2015-20171 objectives
8.9% 8-10% >10%
ROE
Innovation Bank
46% 47-54% 12% >14%
CET1
Holding
Core
product + Start-ups
6.6%
offering >5.0% >4.5%
Leverage ratio
Holding
Partnering BBB BBB+
BBB-
Rating
Bank
~
€30m
New
products Dividends Future dividend policy to be defined
BACKED BY OUR CURRENT SHAREHOLDER WE HAVE RECENTLY COMMENCED A REVIEW OF OUR
STRATEGIC ALTERNATIVES, WHICH MAY INCLUDE A POTENTIAL INITIAL PUBLIC OFFERING
Note: Financials for NIBC Bank and NIBC Holding.
1: Targets set out in 2014 annual report.
152. Transaction Details
16Transaction Overview: Investment Thesis
Group structure NIBC Summary terms
NIBC Issuance Structure Additional Tier 1 Capital issued by NIBC Bank N.V.
Group Consolidated (5.125% AT1 Trigger)
Perpetual maturity
EUR denominated
NIBC Holding N.V.
Callable after [5-7] years and semi-annually thereafter
5.125% CET1 trigger at Group and/or Issuer
NIBC Bank N.V. (Issuer) Temporary write-down loss absorption mechanism
Discretionary, semi-annual, non-cumulative coupons
Bank sub-consolidated (5.125% AT1 Trigger) Expected rating B+ (S&P)
AT1 transaction rationale Investment thesis1
Capital optimisation and fulfilment of the 1.5% AT1 requirement Solid fully-loaded CET1 ratios: 20.3% (18.1%)
Reinforcing already strong leverage ratio (fully-loaded 7.4% at Ample headroom to trigger: 15.2% (13.0%)
H1 2017)
Large buffer to MDA restrictions: 7.8% (5.6%)
RAC eligibility
Robust level of ADIs: over 135x coupon coverage2
Contributing to future MREL requirements
Limited amount of AT1 to be issued by NIBC
Growing franchise and increasing profitability
1: All numbers as of H1 2017; Holding numbers in brackets
2: Coupon coverage calculated on the basis of €200 million issuance size, conservative coupon estimate and €1.6bn ADIs as of FY 2016 17Distance to Trigger & MDA Restrictions
Capital requirements vs current capital structure:
ample headroom to trigger1 Large buffer to MDA restrictions1
25.3%
4.9%
20.7%
2.6%
AT1 inefficiencies
14.5% 7.1%
15.2% 5.6% €627m
13.0% €1.3bn €494m
2.0%
€1.1bn
1.5%
2.5% 20.3% 18.1%
11.0% fully-loaded CET1 requirement2
18.1%
4.0%
5.125%
Trigger
4.5%
Regulatory Capital NIBC Holding (FL) NIBC Bank (FL) H1 2017 NIBC Holding Buffer to MDA Buffer to MDA (with filled
Requirements (FL) CET1 Ratio (FL) AT1 bucket)
CET1 P2R CCB AT1 T2 MDA Buffer
1: CET1 ratios exclude expected IFRS 9 impact from reclassification of NIBC residential mortgage portfolio from fair-value-through-P&L to amortised cost. If NIBC were to implement
IFRS 9 based on the H1 2017 figures, the impact is estimated to be approximately 4%. In addition, the impact for NIBC of the IFRS 9 impairment model change from incurred loss to
expected loss is expected to come out below the expected market average as reported by EBA 18
2: Includes 2.5% Capital Conservation BufferCapital Management Philosophy & Distribution Capacity
Dividend policy and capital hierarchy statement
Future dividend policy to be defined
Management intends to give due consideration to the capital hierarchy and preserve seniority of claims
Available Distributable Items (ADI)
Comfortable ADIs relative to estimated AT1 coupon costs
Growing franchise and increasing profitability support sustainability of coupon distributions
€1.6bn
Coupon Coverage
Ratio: >135x1
[~€12m]
Distributable Items (FY 2016) Est. AT1 Coupon
1: Coupon coverage calculated on the basis of €200 million issuance size, conservative coupon estimate and €1.6bn ADIs as of FY 2016. After the
expected impact of IFRS9 the Coupon Coverage Ratio is expected to stay above 100x. 19Summary of the Terms & Conditions of the Transaction
Summary terms of the additional tier 1 capital securities
Issuer NIBC Bank N.V.
Instrument € [ ] Undated Deeply Subordinated Additional Tier 1 Fixed Rate Resettable Callable Securities (the “Capital Securities”)
Issuer Senior Rating1 Baa1 (stable) / BBB- (pos.) / BBB- (pos.) - Moody’s / S&P / Fitch
Expected Issue Rating NR / B+ / NR
Unsecured and deeply subordinated obligations of the Issuer; senior only to the rights and claims of share capital and subordinated obligations ranking, or
Status
expressed to rank, junior to the Capital Securities
Tenor Perpetual NC [5-7]
Redeemable at the option of the issuer at the Prevailing Principal Amount on the first call date [ ] or on any Interest Payment Date thereafter, or upon the
Optional Redemption
occurrence of a Tax Event (loss of tax-deductibility or application of Additional Amounts) or Capital Event (full or partial loss of Additional Tier 1 treatment for
the Issuer or the Group). Redemptions subject to prior regulatory approval and Applicable Banking Regulations
Interest [ ]% semi-annually payable in arrear, reset at the First Call Date and every fifth anniversary thereafter at the 5-year Mid-Swap Rate plus the Initial Margin
Non-Cumulative Interest At any time at the Issuer’s discretion. Mandatory cancellation upon insufficient Distributable Items or if payment exceeds the Maximum Distributable Amount
Cancellation or if competent authority orders cancellation
Loss Absorption Temporary write-down upon breach of 5.125% CET1 ratio at Group and/or Issuer; discretionary write-up (subject to certain conditions/restrictions). Subject
Mechanism to statutory PONV
Governing Law Laws of the Netherlands
Denominations / Listing € 200,000 x 1,000 / Luxembourg Stock Exchange
1: Moody’s rating is unsolicited and non-participative
20AT1 Structural Comparison
Comparison with selected AT1 precedents
IssueDate [ ] 2017 Jul 2017 May 2017 Nov 2016 Sep 2015 Nov 2014
Coupon [] 6.125% 6.25% 6.875% 5.75% 7.625%
Size & Currency €[] €650m €750m US$1bn €1bn €300m
Maturity / First Call PerpNC[5-7] PerpNC5 PerpNC7 PerpNC5.5 PerpNC5 PerpNC5.5
Discretionary, Disrectionary, Disrectionary, Disrectionary, Disrectionary, Disrectionary,
Coupon Cancellation
non-cumulative non-cumulative non-cumulative non-cumulative non-cumulative non-cumulative
Issue Ratings NR / B+ / NR
NR / BB / NR Ba3 / B+ / B+ Ba1 / NR / BBB- NR / BB / BB+ NR / NR / BB-
(M / S&P / F) expected
5.125% 7% Group, 5.125%
CET1 Trigger Level 5.125% Bank / Group 5.125% Bank / Group 7% Group 7%
(Bank / Group) Bank Solo & Sub
Loss Absorption Temporary Termporary Temporary Temporary Temporary
Conversion
Mechanism Write-down Write-down Write-down Write-down Write-down
PONV Statutory Statutory Statutory Statutory Statutory Statutory
Format Reg S Reg S Reg S Reg S Reg S Reg S
21Appendix I
Mortgage Reclassification: expected IFRS 9
impact
22Expected impact of mortgage reclassification (IFRS 9)
Mortgage reclassification from IFRS 9 on 1-Jan-2018 Mortgage portfolio evolution
As of 30-Jun-2017, NIBC’s mortgage portfolio consists of:
Mortgages originated since 2013: held to maturity and accounted for at amortised cost (AC) -
€4.0bn 8.8 9.1
8.6
Mortgages originated before the crisis: valued at fair value through profit or loss 8.1 0.5
0.1 0.4
(FVtPL) - €5.1bn
1.1 2.3
FVtPL chosen when IFRS first adopted reflecting NIBC ‘originate to distribute’ business model at that 3.0 3.5
time
FVtPL mortgages in practice now hold to maturity
€104m positive pre-tax revaluation accounted on balance sheet as of 30/06/017, consisting of
a €362m pre-tax revaluation gain on the mortgages, and 7.0
a €258m pre-tax revaluation loss on the related hedging swaps 6.2 5.5 5.1
As of 1/1/2018, NIBC intends to reclassify its FVtPL mortgage portfolio to AC, in line with its
hold to maturity business model and general market practice, resulting in a one-off loss through
shareholders’ equity
If NIBC were to implement IFRS 9 based on the 30/06/2017 figures, the reclassification would result in 2014 2015 2016 H1-17
an estimated negative impact on NIBC’s CET1 ratio of approximately 4%, and
a future positive pull-to-par effect through the income statement over the remaining life of FVtPL mortgages (€bn) AC mortgages (€bn) Buy-to-Let (€bn)
the portfolio
Preliminary pro forma financial impact of mortgages reclassification (IFRS 9)
First time adoption impact: Removal of the negative pull-to-par from mortgages Combination of first time ROE affected by
Difference between FVtPL previously accounted at FVtPL while the positive adoption impact on equity • Reduced equity
and AC pull-to-par from the swap portfolio remains intact and higher net profit • Improved earnings
over the remaining life of the mortgage portfolio portfolio remaining life
18.1%
>14% >10%
c. -4%
CET I ratio Expected Pro forma Net profit Expected Pro forma ROE Expected pro forma
H1 2017 impact impact impact
Note: Financials for NIBC Holding.
23Appendix II
Key Figures and Balance Sheet
24Key figures NIBC Bank
Earnings and assets Asset quality, solvency and funding & liquidity
€m 2014 2015 2016 H1 2017 €m 2014 2015 2016 H1 2017
Earnings Asset quality
Operating income 295 316 381 226 Risk-weighted assets 9,646 10,162 10,109 8,773
Operating expenses 155 177 194 105 Cost of risk3 1.18% 0.71% 0.60% 0.27%
Net profit attributable to parent shareholder 24 71 102 87 Impairment ratio4 0.63% 0.39% 0.34% 0.14%
Net profit before special items 42 71 104 87 NPL ratio5 3.4% 3.7% 3.8% 2.8%
Net interest income 247 286 306 177 Impaired exposure 454 503 629 396
Net fee and commission income 27 36 32 20 Impaired coverage ratio6 38% 34% 33% 49%
Net trading income 3 (12) 12 2 Top-20 exposure / Common Equity Tier-1 104% 86% 79% 75%
Impairments 93 63 57 12
Exposure corporate loans that display an arrear > 90 days 0.8% 0.7% 0.9% 0.9%
Net interest margin1 1.28% 1.37% 1.44% 1.54%
Exposure residential mortgages that display an arrear > 90 days 1.0% 0.7% 0.6% 0.5%
Dividend payout ratio 0% 0% 25% 35%
Loan to value Dutch Residential mortgages7 82% 84% 85% 84%
Cost-to-income ratio 53% 56% 51% 46%
Loan to value BTL mortgages n/a 61% 56% 61%
Return on equity2 1.3% 3.9% 5.4% 8.9%
Solvency information8
Corporate & consumer banking assets Shareholder's equity 1,831 1,886 1,969 2,023
Corporate Banking Assets (Drawn + Undrawn) Subordinated liabilities 320 400 398 387
Infrastructure & Renewables 2,070 1,990 1,618 1,582 Group capital base 2,151 2,286 2,367 2,409
Industries & Manufacturing 1,118 1,266 1,514 1,766 Balance sheet total 23,331 23,229 23,580 23,769
Shipping & Intermodal 1,357 1,537 1,512 1,366 Common Equity Tier-1 ratio 15.5% 15.6% 16.8% 20.3%
Commercial Real Estate 1,321 1,293 1,375 1,388 Tier-1 ratio 15.5% 15.6% 16.8% 20.3%
Telecom, Media, Technology & Services 744 968 1,257 1,142
BIS ratio 19.3% 20.0% 21.3% 25.3%
Oil & Gas Services 1,316 1,282 1,233 1,055
Food, Agri, Retail & Health 864 896 1,149 1,260 Leverage ratio 7.0% 7.2% 7.3% 7.4%
Total corporate loans (drawn + undrawn) 8,789 9,232 9,658 9,560 Funding & liquidity9
Lease receivables 361 221 123 88 LCR 128% 201% 124% 261%
Investment loans 154 161 246 258 NSFR 108% 113% 112% 118%
Equity investments 377 300 262 278 Loan-to-deposit ratio 154% 143% 148% 146%
Total corporate banking assets (drawn + undrawn) 9,681 9,914 10,289 10,184 Asset encumbrance ratio10 35% 29% 29% 27%
Retail savings / Total funding 47% 48% 45% 43%
Corporate banking assets (drawn + undrawn) per region Secured funding / Total funding 30% 24% 22% 21%
The Netherlands 2,983 3,304 3,849 4,285 ESF / Total funding 5% 6% 6% 7%
Germany 2,293 2,229 2,378 2,182 BBB- / BBB- / BBB- / BBB-
United Kingdom 1,788 1,700 1,678 1,723 S&P rating & outlook Stable Stable Positive /Positive
Other 2,617 2,681 2,384 1,994
BBB- / BBB- / BBB- / BBB-
Total corporate banking assets (drawn + undrawn) 9,681 9,914 10,289 10,184
Fitch rating & outlook Stable Stable Positive /Positive
Baa3 / Baa1 / Baa1 / Baa1/
Retail banking assets
Moody’s rating & outlook (unsolicited and non-participative) Stable Stable Stable Stable
Mortgages - The Netherlands 7,891 8,463 8,847 9,008
Mortgages - Germany 167 117 84 67 Other information
Total consumer banking assets 8,058 8,580 8,831 9,075 Assets under management for third parties 1,732 1,703 1,538 1,787
25Key figures NIBC Bank (continued)
Notes to the key figures
1. 12 months net interest income / 12 months average interest-bearing assets
2. Net profit attributable to parent shareholder / total shareholder’s equity at the beginning of the year
3. Impairments & credit losses mortgages in net trading income / average total risk weighted assets (RWA)
4. Impairments / average carrying value of loans and mortgages
5. Total non-performing exposure (corporate and consumer loans); non-performing exposure determined at customer level
6. Impairment amounts recognised on corporate and retail exposures / impaired corporate and retail exposures. Impairment amounts includes
amounts recognised as IBNR
7. Loan-To-Indexed-Market-Value (LTIMV), excluding NHG guaranteed mortgages
8. The solvency information is based on the CRR / CRD IV regulation, calculated for NIBC Bank consolidated on a fully loaded base and
including the half-year net profit and taking into account the proposed dividend payment
9. All funding & liquidity ratios with exception of loan-to-deposit are calculated at NIBC Holding level; loan-to-deposit ratio is calculated at
NIBC Bank level
10. Encumbered assets & total collateral received re-used / total assets & total collateral re-used
26Balance Sheet NIBC Bank
Assets Liabilities
€m 2015 2016 H1 2017 €m 2015 2016 H1 2017
Retail funding 10,016 9,721 9,571
Cash and banks 2,491 2,346 3,385
Funding from securitised
2,062 1,337 759
mortgages
Loans 7,790 8,380 8,113
Covered bonds 1,513 2,028 2,008
Lease receivables 212 123 88
ESF 1,127 1,230 1,503
Residential mortgages 8,767 9,020 9,263 All other senior funding
3,735 4,650 5,876
(Wholesale)
Tier 1 & Subordinated
Debt investments 1,377 1,375 1,019 400 398 387
funding
Derivatives 2,350 2,006 1,499
Equity investments 277 252 271
All other liabilities 139 241 144
Derivatives 2,151 1,817 1,499
Total liabilities 21,343 21,611 21,746
All other assets 165 267 131
Shareholder’s equity 1,886 1,969 2,023
Total assets 23,229 23,580 23,769 Total liabilities &
23,229 23,580 23,769
shareholder’s equity
27Balance Sheet NIBC Holding
Assets Liabilities
€m 2015 2016 H1 2017 €m 2015 2016 H1 2017
Retail funding 10,016 9,721 9,571
Cash and banks 2,512 2,386 3,399
Funding from securitised
2,062 1,337 759
mortgages
Loans 7,397 7,931 7,703
Covered bonds 1,513 2,028 2,008
Lease receivables 212 123 88
ESF 1,127 1,230 1,503
Residential mortgages 8,767 9,020 9,263 All other senior funding
3,786 4,674 5,868
(Wholesale)
Tier 1 & Subordinated
Debt investments 1,377 1,375 1,019 400 398 387
funding
Derivatives 2,350 2,006 1,499
Equity investments 277 252 271
All other liabilities 158 281 162
Derivatives 2,141 1,811 1,499
Total liabilities 21,418 21,676 21,757
All other assets 470 597 396
Shareholder’s equity 1,735 1,819 1,881
Total assets 23,153 23,495 23,638 Total liabilities &
23,153 23,495 23,638
shareholder’s equity
28Appendix III
Asset Quality
29Strong and Diversified Asset Base (H1 2017)
Well diversified client assets (€19.3bn) Focus on north-western Europe
Food, Agri, Retail Other, 3%
& Health, 7%
Technology,
Media, Telecom 10%
& Services, 6%
Industries &
9%
Netherlands
Manufacturing, Residential
9% Mortgages, 45% Germany
12%
Oil & Gas UK
Services, 5%
69% Other
Commercial Real
Estate, 7%
Shipping &
Intermodal, 7% Buy-to-Let
Infrastructure & Mortgages, 3%
Renewables, 8%
Declining cost-of-risk1 Declining NPL
3.8%
1.16% 3.7%
3.4%
0.71%
0.60%
0.27% 2.8%
2014 2015 2016 H1 2017 2014 2015 2016 H1 2017
1: H1 2017 annualised
30Corporate Loan Portfolio Performance (H1 2017)
Performing / Non-Performing Forborne Defaulted Impaired
€10,184m €1,104m €453m €396m
Forborne
€655m
Performing
€9,701m
Not Forborne
€9,046m Impaired
€364m
Defaulted
€419m
Not Impaired
€55m
Forborne
€448m
Non- Defaulted Not Impaired
€30m €30m
Non - Peforming
€483m Impaired
€33m
Defaulted
€34m
Not Impaired
Not Forborne €2m
€34m
Non-Defaulted Not Impaired
Nil Nil
31Impaired, Defaulted, Non-Performing and Forborne Reference Card:
Determination Guidance
Performing Non-Performing
Fully performing • 90 days past due, or
• Unlikeliness to pay, or
Loans and debt securities that are not past-due and without risk of non-repayment and • Additional forbearance measures or 30 days past due on forborne facility under
performing off-balance sheet items probation
Defaulted
• 90 days past due, or
Forborne • Unlikeliness to pay
• Concession is granted, and
• Financial difficulties of the obligor
Performing facilities
past due below 90 days Concession:
• Modification terms or conditions to Impaired
allow sufficient debt service capacity
• Refinancing • Observed impairment trigger, and
• Impairment amount
Renegotiated facilities that do not qualify as Forborne
32Asset Quality: Corporate Banking (H1 2017)
Impaired exposure: €396m Outstanding impairments: €194m
Commercial Real Estate Commercial Real Estate
14% 15%
Industries & Manufacturing Industries & Manufacturing
28%
35% 8%
13% Oil & Gas Services Oil & Gas Services
6% 13%
Food, Agri, Retail & Health 9% Food, Agri, Retail & Health
5%
Infrastructure & Renewables Infrastructure & Renewables
28% 28%
Shipping & Intermodal Shipping & Intermodal
Top-20 exposures at €1.3bn, split per sector1 Top-20 exposures at €1.3bn, split per region
Commercial Real Estate The Netherlands
4% 8%
10% Industries & Manufacturing Germany
4%
Oil & Gas Services 5% Other
35%
5% 42%
18% Telecom, Media, Technology & Services United Kingdom
4%
Food, Agri, Retail & Health North America
18% Infrastructure & Renewables 27% Rest of Europe
15%
Asia / Pacific
Shipping & Intermodal
1: Top-20 exposures exclude equity exposures. Commercial Real Estate sector includes exposures
33
of high granularity (multi-family / multi-property residential exposures)Industries & Manufacturing
Credit quality
2014 2015 2016 H1 2017
Exposure (€m) 1,118 1,266 1,514 1,766
Non-performing exposure 3.3% 3.2% 2.0% 1.2%
Impaired exposure 2.9% 2.4% 1.8% 1.1%
Coverage ratio 18% 41% 53% 77%
Exposure per sector Exposure per region
Automotive,
land and air United
Other, 8% Kingdom, 6%
vehicles, 4%
Chemicals, 4%
Wholesale, 8%
Transportation
and storage, Industrial Germany, 25%
11% products, 28%
Roads and Rest of Europe,
railways, 4% 6%
The
Rental and Netherlands,
leasing 63%
activities, 34%
34Infrastructure & Renewables
Credit quality
2014 2015 2016 H1 2017
Exposure (€m) 2,070 1,990 1,618 1,582
Non-performing exposure 2.5% 2.6% 3.2% 3.2%
Impaired exposure 2.2% 2.2% 3.2% 3.2%
Coverage ratio 21% 31% 28% 29%
Exposure per sector Exposure per region
Water supply,
waste and
sewerage, 5% Other, 2%
Telecommunic Education, 23% Germany, 21%
ations, 9%
Roads and
railways, 9% Rest of Europe,
4%
Healthcare,
The
19% United Netherlands,
Renewable Kingdom, 63% 12%
energy, 18%
Other
infrastructure,
14%
35Commercial Real Estate
Credit quality
2014 2015 2016 H1 2017
Exposure (€m) 1,321 1,293 1,375 1,388
Non-performing exposure 25.2% 29.6% 26.4% 9.9%
Impaired exposure 23.0% 26.0% 26.4% 9.9%
Coverage ratio 33% 27% 21% 36%
Exposure per sector Exposure per region
Construction
Other, 4% companies,
Retail, 5% 11% Germany, 25%
Development
companies,
11%
Residential
commercial Hotels, 5%
real estate,
34% Mixed-use, 4%
The
Other Offices, 20% Netherlands,
commercial 75%
real estate, 6%
36Shipping & Intermodal
Credit quality
2014 2015 2016 H1 2017
Exposure (€m) 1,357 1,537 1,512 1,366
Non-performing exposure 3.6% 2.4% 3.8% 5.4%
Impaired exposure 3.6% 0.6% 3.8% 4.0%
Coverage ratio 75% 20% 48% 48%
Exposure per sector Exposure per region
United Asia / Pacific,
Kingdom, 11% 11%
Bulker, 23%
The Germany, 7%
Netherlands,
16%
Tanker, 44% Container
boxes, 4%
Container North
vessels, 4% America, 22%
Rest of Europe,
Specialised 26% Other, 7%
vessels, 25%
37Food, Agri, Retail & Health
Credit quality
2014 2015 2016 H1 2017
Exposure (€m) 864 896 1,149 1,260
Non-performing exposure 1.3% 1.3% 2.6% 2.6%
Impaired exposure 1.2% 1.2% 2.6% 1.7%
Coverage ratio 61% 63% 55% 100%
Exposure per sector Exposure per region
Agriculture, 6% United
Chemicals, 3% Kingdom, 7%
Other, 11%
Germany, 30%
Wholesale,
17%
Food &
beverages, 29%
North
America, 1%
Retail, 13% Other, 4%
The
Other services, Healthcare, 7% Netherlands,
4% 58%
Other financial
services, 9%
38Telecom, Media, Technology & Services
Credit quality
2014 2015 2016 H1 2017
Exposure (€m) 744 968 1,257 1,142
Non-performing exposure 3.8% 3.3% 1.0% 1.8%
Impaired exposure 1.9% 2.4% 1.0% 0.0%
Coverage ratio 40% 60% 53% 100%
Exposure per sector Exposure per region
Telecommunications, Other, 4% United
2% Education, 4% Kingdom, 14%
Rental and leasing
activities, 11%
IT Services, 23%
Germany, 43%
Other services, 20%
Leisure, 4%
The
Netherlands,
34%
Other, 1%
Other financial Rest of Europe,
services, 32% 9%
39Oil & Gas Services
Credit quality
2014 2015 2016 H1 2017
Exposure (€m) 1,316 1,282 1,233 1,055
Non-performing exposure 0.0% 3.8% 9.2% 13.7%
Impaired exposure 0.0% 3.8% 7.0% 10.5%
Coverage ratio n/a 47% 36% 44%
Exposure per sector Exposure per region
Seismic, 4%
United Asia / Pacific,
Production, Kingdom, 20% 15%
15% Drilling, 26%
North
Passenger America, 12%
transport, 1%
The
Netherlands,
13%
Offshore
support, 21% Other, 10%
Engineering &
Construction,
18%
Exploration & Rest of Europe,
Production, 31%
14%
40Equity and Investment Loans
Introduction
Investment portfolio is concentrated in the Netherlands
Investment portfolio of €0.54bn at 30 June 2017, split between €278m equity exposure and €258m investment loan exposure
Exposure per sector Exposure per region
North
Rest of Europe,
America, 7%
Infrastructure 1%
Food, Agri,
& Renewables, United
Retail & Health,
28% Kingdom, 5%
27%
Oil & Gas Industries &
Services, 3% Manufacturing,
6%
Telecom, Commercial The
Media, Real Estate, 8% Netherlands,
Technology & 86%
Services, 27%
41Asset Quality: Retail Banking (H1 2017)
Mortgage loan arrears, impairments and credit losses Portfolio indexed LtMV decreased over the past few
trending down years: 84% for H1 2017
1.0%
34%
33%
32%
0.7%
12 0.6%
22%
0.5%
21%
20%
19%
8
16%
15%
14%
12%
11%
10%
10%
0.16%
9%
9%
5
8%
0.11%
7%
0.06%
0.03%
1
2014 2015 2016 H1 2017 NHG 100%
Impairments & Credit Losses (€m)
Arrears > 90 days (%) 2014 2016 H1 2017
Impairments & Credit Losses (%)
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