Post on 09-Jan-2017
1
NORD/LB Group Presentation November 2017
2
Agenda.
NORD/LB at a glance 3
Financials 10
Segments 19
Outlook 36
Appendix 41
3
Established commercial bank in northern Germany.
NORD/LB at a glance
Market leader in Northern Germany in its business units private, commercial and corporate customers
Excellent knowledge in renewable energy and infrastructure projects
Over 30 years of experience in ship and aircraft finance
Represented in important financial centres worldwide
Member of the extended Guarantee Funds of landesbanks and savings banks
Among the top seven German banks
Successful universal bank for over 250 years in the market
4
Ownership structure and regional network.
NORD/LB at a glance
¹ Total differences are rounding differences
59.1% 5.6%
26.4%
5.3%
3.7%
Saxony-Anhalt Savings Banks Holding Association
Special Purpose Holding Association of the Mecklenburg-Western Pomerania Savings Banks
State of Lower Saxony
Lower Saxony Savings Banks and Giro
Association
State of Saxony-Anhalt
Strong support from our owners¹ Headquarters and ownership region
Hanover Brunswick
Magdeburg
5
Represented in important financial and trade centres worldwide.
NORD/LB at a glance
Addresses and more details: www.nordlb.com/nordlb/about-us/locations-worldwide
Head offices Hanover, Brunswick, Magdeburg
Branches worldwide London, New York, Singapore, Shanghai
German branches Bremen, Duesseldorf, Hamburg, Munich, Oldenburg Schwerin, Stuttgart and approx. 100 branches of Braunschweigische Landessparkasse
Subsidiaries and bank holdings Deutsche Hypothekenbank, NORD/LB Asset Management, NORD/LB Luxembourg Covered Bond Bank
London
Amsterdam
Paris Luxembourg
Frankfurt
Munich
Nuremberg
Bremen
Hamburg
Brunswick Magdeburg Hanover
Duesseldorf
Schwerin
Warsaw
New York
Shanghai
Singapore
Stuttgart
Oldenburg
6
Our business segments.
NORD/LB at a glance
Corporate
Customers
Corporate customer business
Agricultural Banking
Finance with public and cooperative housing associations
Syndication business with associated savings banks
Corporate Finance
Private and Commercial Customers
Private customer business
Private Banking
Commercial customer business
Insurance services for private customers in cooperation with public insurances in Lower Saxony
Energy and Infrastructure
Customers
Renewable energy finance
Infrastructure finance
Leasing
Real Estate Banking
Customers
Commercial real estate finance
Social care property finance
Markets
Business with
Institutional customers
Savings banks/ financial institutions
Public-sector customers
Municipal customers
Aircraft Customers
Aircraft finance
Narrowbodies
Widebodies
Freighters
Regional Jets
Turboprops
Helicopter
Spare Engines
Finance and Operating Lease
Ship Customers
Ship finance
Container Vessels
Bulker
Tanker
Multi-Purpose
Offshore Oil & Gas
Cruise/ Ferries
7
Holding structure and brands.1
NORD/LB at a glance
100%2 100%2 100%2
Private and Commercial Customers Corporate Customers Markets Ship, Aircraft, Energy/Infrastructure, Real
Estate Banking
Private and commercial customers
Loans Financial Markets & Sales Client services & B2B
Commercial real estate finance
3
Asset Management for institutional clients
Asset Management
¹ For additional information about subsidiaries and affiliated companies please consult https://www.nordlb.com/nordlb/about-us/investments/ or our Group Annual Reports 2016, note 84 ² NORD/LB ensures that the companies mentioned in the Annual Report 2016 note (75) are able to meet their obligations ³ Incorporated under public law with partial legal capacity
8
Long Term (senior unsecured) Baa3 / negative A- / negative
Deposits Baa2 / negative A-
Short Term (Notes/Deposit) P-2 / P-2 F1 / F1
Adjusted Baseline Credit Assessment / Viability Rating ba3 bb
Tier 2 B1 -
Tier 1 Caa2(hyb) -
Public-Sector / Mortgage / Aircraft Pfandbriefe Aa1 / Aa1 / A3 -
Our ratings.
NORD/LB at a glance
NORD/LB credit ratings
NORD/LB sustainability ratings
Corporate Rating C+ Prime AA 64 of 100 points
Unsecured Bonds CCC Public-Sector Pfandbriefe BBB Mortgage Pfandbriefe BB Shipping Pfandbriefe CCC
9
Agenda.
NORD/LB at a glance 3
Financials 10
Segments 19
Outlook 36
Appendix 41
10
Financials
Earnings before taxes of €326m significantly exceed previous year’s result (€-624m) due to lower loan loss provisions and one-off effects shown in other operating income
Positive operating results reflect satisfactory earnings in all market segments, with the exception of Shipping Finance
Net allocation to loan loss provisions amounting to € 683m (€ 1,347m) Predominantly caused by shipping portfolio. Only marginal loan loss provisions from the other segments
Downsizing of the shipping portfolio Portfolio reduction on track. Within the first nine months the portfolio was reduced by additional €3.5bn, reaching its 2018 target range of €12-14bn
Strengthened capital ratios With an CET1 ratio at 11.5 per cent (11.2 per cent fully loaded) and total capital ratio at 16.9 per cent (16.6 per cent fully loaded) we are significantly above the regulatory requirements (8.33 per cent resp. 11.83 per cent)
Assets further reduced Total assets reduced to €165.2bn (from €174.8bn) through reduction of the shipping and securities portfolios
(Previous year’s figures in brackets)
NORD/LB with positive nine-month figures.
11
Financials
NORD/LB with positive nine-month figures.
Income statement (in €m) 1 Jan –
30 Sep 2017 1 Jan –
30 Sep 2016
Change in %
Net interest income 1,065 1,357 -22
Loan loss provisions (llps) 683 1,651 -59
Net commission income 89 164 -46
Profit/loss from financial instruments at fair value incl. hedge accounting
253 354 -29
Profit/loss from financial assets
133 61 >100
Profit/loss from investments accounted for using the equity method
29 -18 >100
Administrative expenses 883 835 6
Other operating profit/loss 372 -47 >100
Earnings before reorganisation and taxes
375 -615 >100
Reorganisation expenses 49 9 >100
Earnings before taxes 326 -624 >100
Income taxes 98 112 -13
Consolidated profit 228 -736 >100
Net interest income: Decrease due to persistently low interest rates
and declining assets on average (esp. shipping)
Loan loss provisions: Especially from the shipping portfolio,
unremarkable in all other segments
Net commission income: Decreased loan acquisition fees, increased
guarantee premiums, special effects in 2016
Profit/loss from financial instruments at fair value incl. hedge
accounting: Decrease in trading profits due to increased EUR
interest-rate level and tightening of EUR/USD basis spread
Profits from sale of financial assets classified as Available-for-Sale
Profit/loss from investments accounted for using the equity
method: Previous year disproportionately burdened by
impairments, sales profits occur this year
Administrative expenses: Higher costs for data processing (IT
Roadmap) und slightly increased staff expenses; incl. €17m for the
security reserve for Landesbank and EZB levy
Other operating profit/loss: Profits from promissory notes and
repurchases of own issues, contribution for Single Resolution Fund
€53m p.a.
Reorganisation expenses for full takeover of Bremer Landesbank
12
694 697 726
2,702
1,624
599
55 19
-67 -217 -145
2 97 19 39
471
172
82
2013¹ 2014¹ 2015¹ 2016¹ 30 Sep 2016 30 Sep 2017
Allocation to specific valuation allowance Allocation to general loan loss provisions Other²
Significant decrease in loan loss provisions.
Financials
¹ Including proportion of Group Management / Others and Reconciliation ² Include: provisions, additions to receivables written off, direct write-offs of bad debts, premium payments for credit insurance, lump-sum specific loan loss provisions (see Group annual report 2016, Note (22))
in €m
Provisions for lending business
2,956
846 735 698
1,651
683
13
Total assets further reduced.
Financials
Balance sheet (in €m) 30 Sep 2017 31 Dec 2016 Change in %
Total assets 165,220 174,797 -5
Loans and advances to banks 28,045 21,747 29
Loans and advances to customers
97,643 105,640 -8
Financial assets 27,836 31,574 -12
Liabilities to banks 44,886 49,241 -9
Liabilities to customers 56,920 57,301 -1
Equity capital (balance sheet) 6,398 6,247 2
Reduction of total assets as scheduled (i.e. reduction of the
shipping portfolio and financial assets)
Loans and advances to banks: Increase especially due to
short-term loans and advances from money market
transactions to German banks
Loans and advances to customers: With 59 per cent still
largest balance sheet item. Decrease of receivables from
public-sector promissory notes, strategic reduction of the
shipping portfolio
Financial assets: Reduction through maturities and
repayments
Liabilities to banks: Funding needs declined due to reduced
assets, especially decrease of liabilities from money market
transactions
Liabilities to customers: Fewer money market transactions
Equity capital (balance sheet): Strengthened by retained
earnings
14
3.7% 4.2% 4.7% 5.5% 5.4%
158.7 160.9 146.3 147.6 145.4
17.8 15.4
13.9 16.6 16.2
11.6 9.9
9.9 8.7 6.9
9.0 8.6
7.7 5.3 3.6
3.3 3.3
3.2 1.8 1.2
4.5 4.1
3.7 4.1 2.7
7.8 8.8
9.1 10.7 10.1
2013 2014² 2015 2016² 30 Sep 2017
default (=NPL)
very high risk
high risk
increased risk
reasonable/satisfactory
good/satisfactory
very good to good
High quality of total portfolio: 78 per cent in the highest category.
Financials
1 Total differences are rounding differences 2 Figures were adjusted, see Interim Report as at 30 Jun 2015, page 28 and Interim Report as at 30 Sep 2017, page 30
in €bn
193.7 194.8
212.7
in %
211.0
NPL ratio
Total exposure1 186.1
15
Money market instruments
1%
Mortgage Pfandbriefe
33%
Public sector Pfandbriefe
26%
Other debt securities
40%
Funding structure.
Financials
¹ Carrying amount
< 1 year 13%
1 to < 5 years 69%
> 5 years 18%
as at 30 Sep 2017
Securitised liabilities1
€33.6bn as at 30 Sep 2017
Subordinated capital
€3.8bn
Subordi-nated
liabilities 87%
Partici-patory capital
1%
Silent partici-pations
12%
16
Capital ratios strengthened through active balance sheet management.
Financials
Successfully closed securitisations strengthen the bank‘s capital ratios, further placements to come, e.g. Northvest
Capital ratios are at target range between 11 – 12 per cent and significantly above the regulatory requirements
97% 101% 110%
188% 186%
31 Dec 14 31 Dec 15 31 Dec 16 30 Jun 17 30 Sep 17
10.7% 13.1% 11.3% 11.5% 11.5%
13.2%
16.7% 16.3% 16.1% 16.9%
31 Dec 14 31 Dec 15 31 Dec 16 30 Jun 17 30 Sep 17
CET1 Total capital
3.5% 4.3% 3.7% 3.5% 3.4%
31 Dec 14 31 Dec 15 31 Dec 16 30 Jun 17 30 Sep 17
Capital ratios (transitional)
69.2 63.7 59.9 53.2 51.8
31 Dec 14 31 Dec 15 31 Dec 16 30 Jun 17 30 Sep 17
Risk-weighted assets (RWA)
in €bn
Leverage ratio LCR
SREP ratios required as at 30 Sep 2017 CET1: 8.33 per cent
Buffer to CET1-ratio (Trans.): 3.2 percentage points Total capital: 11.83 per cent
Buffer to total capital ratio (Trans.): 5.1 percentage points Capital ratios (fully loaded)
CET1: 11.2 per cent Buffer to SREP-CET1-requirements: 2.9 percentage points
Total capital: 16.6 per cent Buffer to SREP-requirements: 4.8 percentage points
17
NORD/LB Group capital.
Financials
Comments on selected items
(1) Deductible items (€463) include primarily the shortfall from the shipping portfolio. Audited loan loss provisions have a decreasing effect
(2) Grandfathered AT1 mainly containing our old-style “Fürstenberg”-bonds, partly accounted for in AT1; Eligibility is reduced by 10 percentage points every year, currently at 50 per cent
(3) Paid-up instruments of Tier 2 capital comprise subordinated liabilities including “Fürstenberg”-bonds
Monitoring of upcoming capital requirements like Minimum Requirements of Own Funds and Eligible Liabilities (MREL)
¹ The chart may include minor differences that occur in the reproduction of mathematical operations
Regulatory capital (in €m)1 30 Sep 2017 31 Dec 2016
Paid-up capital including premium 4,930 4,930
Reserves 1,475 1,439
Eligible components of CET 1 capital at subsidiaries
- 207
Other components of CET 1 capital -151 -68
- Deductible items (from CET 1 capital) -463 -580
Adjustments due to transition rules 180 825
Common Equity Tier 1 capital (1) 5,971 6,752
Paid-up instruments of AT 1 capital 50
Transitional adjustments due to grandfathered AT1 Capital instruments
443 451
Eligible components of Additional Tier 1 Capital at subsidiaries
- 24
Adjustments due to transition rules -53 -105
Additional Tier 1 Capital (2) 440 369
Tier 1 Capital 6,411 7,122
Paid-up instruments of Tier 2 capital 2,762 2,568
Eligible components of Tier 2 capital at subsidiaries
- 282
Other capital components - 267
- Deductible items (from Tier 2 capital) -10 -10
Adjustments due to transition rules -429 -452
Tier 2 Capital (3) 2,323 2,656
Own funds 8,733 9,777
18
Agenda.
NORD/LB at a glance 3
Financials 10
Segments 19
Outlook 36
Appendix 41
19
Our solid and diversified business model proved its strength against market distortions.
Segments
in €m as at 30 Sep 2017
Private and Commercial Customers
Corporate Customers
Markets
Energy and Infrastructure
Customers
Ship Customers
Aircraft Customers
Real Estate
Banking Customers
Portfolio share1 8.9% 29.6% 8.3% 16.5% 14.6% 10.3% 11.8%
Operative
earnings2 34 209 141 127 133 66 113
Earnings share2 9.9% 54.1% 38.1% 29.9% -139.5% 17.3% 28.5%
Loan loss provisions -3 6 -2 15 656 1 6
Earnings before taxes
37 203 143 112 -523 65 107
1 Risk-weighted assets without Group Management/Others, Reconciliations (83 per cent) 2 Earnings before taxes without Group Management/Others, Reconciliations (€140m out of total of €375m)
Positive development of bank’s core business continues
Only 15 per cent of the bank’s portfolio are allotted to shipping – approx. 85 per cent of the portfolio is profitable!
A diversified portfolio of business segments with only marginal correlation is a key factor of business model’s stability
20
1,651
-44
-7
1
1,590
29
0
82
0
683
4
6
1
656
15
-2
6
-3 30 Sep 2017
30 Sep 2016
Positive development in segment results. Loan loss provisions still affected by ship financing.
Segments
1 Minor differences might occur in the reproduction of mathematical operations ² Earnings before provisions, reorganisation and taxes ³ Before reorganisation
in €m
Loan loss provisions1 Earnings before taxes1,3
in €m
-614
139
132
70
-1.372
92
158
126
40
375
229
107
65
-523
112
143
203
37 30 Sep 2017
30 Sep 2016
NORD/LB Group
Aircraft Customers
Ship Customers
Energy & Infrastructure Customers
Markets
Corporate Customers
Private & Commercial Customers
Real Estate Banking Customers
Group Controlling/ Others
Operative earnings of the segments compensate the negative impact from loan loss provisions
Ship Customers: Loan loss provisions still on high level (€656m), significantly below previous year’s level
EBT rose strongly to €375m (30 Sep 2016: €-614m)
1,036
95
125
71
218
121
158
208
40
1,056
233
113
66
133
127
141
209
34 30 Sep 2017
30 Sep 2016
Operative earnings1,2
in €m
21
Private and Commercial
Customers 7%
Corporate Customers
23%
Markets 11%
Energy- and Infra-
structure Customers
15%
Ship Customers
12%
Aircraft Customers 6%
Real Estate Banking
Customers 15%
Group Management/
Others 11%
Well diversified business model.
Segments
Private and Commercial
Customers 7%
Corporate Customers 24%
Markets 7%
Energy and Infrastructure
Customers 14%
Ship Customers 12%
Aircraft Customers
9%
Real Estate Banking Customers
10%
Group Management/ Others
17%
as at 30 Sep 2017 as at 30 Sep 2017
Customer loans Total risk exposure amount by business units
€97.6bn €51.8bn
22
Private and Commercial Customers. Deeply rooted in the home region.
Segments
¹ The chart may include minor differences that occur in the reproduction of mathematical operations
as at 30 Sep 2017
Exposure by industry1
Exposure at default: €7.8bn
With nearly 100 branches well represented in the Brunswick region for over 250 years
We offer customer-oriented consulting and selected products and services for private and commercial customers within the region of Braunschweigische Landessparkasse, in Hanover, in Hamburg as well as in Bremen and Oldenburg
NORD/LB and Braunschweigische Landessparkasse offer inheritance optimisation, trust management, portfolio management and individual asset management for private banking clients
Our related partners, Öffentliche Versicherung Braunschweig, Versicherungsgruppe Hannover (insurance companies), Landesbausparkasse (building society) and Deka complete our services in these businesses
Other 12%
Land, housing 19%
Public administration, defence, social insurance 12%
Private household 45%
Other service industry 12%
€m 30 Sep 2017 30 Sep 2016
Earnings 166 175 Expenses 132 135 Operative earnings 34 40 Loan loss provisions -3 0 Earnings before taxes 37 40
23
Corporate customer business. Stable and well diversified portfolio.
Segments
¹ The chart may include minor differences that occur in the reproduction of mathematical operations
Manufacturing industry
16%
Energy, water and mining
15%
Construction 2%
Trade, maintenance and
repairs 12%
Agriculture, forestry and fishing 8%
Transport/ communications
6%
Financing institutes/ insurance companies
9%
Service industries/other
32%
as at 30 Sep 2017
Exposure by industry1
Exposure at default: €28.3 bn
Corporate customer business increased through successful implementation of strategic initiatives
Strong position and high competence in acquisition finance business confirmed
As market leader in agricultural banking partner in all industry cycles
Successful marketing of asset- and structuring expertise in public housing segment
SME: Traditional loan financing for corporate customers, also in close cooperation with regional savings banks
Corporate finance: Complex solutions for strategic positioning and financing, change management, transaction- and receivables management as well as corporate lending structures
€m 30 Sep 2017 30 Sep 2016
Earnings 336 315 Expenses 127 107 Operative earnings 209 208 Loan loss provisions 6 82 Earnings before taxes 203 126
24
Markets. Frequent issuer of benchmarks.
Segments
1 NORD/LB AöR 2 Issued on 15 Feb 2016 (€500m), increased on 15 Jul 2016 3 PB - Pfandbrief (Covered Bond)
Issuer of Pfandbriefe (public-sector, mortgage, ship and aircraft), Lettres de Gage (covered bonds according to Luxemburg law), bearer bonds, promissory notes, money market securities
Successful positioning as lead manager/arranger of bond issues, particularly covered bonds
Comprehensive , customized range of money and capital market products in private placement segment
International funding programmes1: €25bn euro MTN Programme, €10bn euro CP Programme, €4bn euro French CD Programme, $3bn US dollar CP Programme
As at 30 Sep 2017 €28.4bn ECB eligible securities concerning NORD/LB Group, thereof €20.8bn for NORD/LB AöR
Recent issues
Sen. Unsec,
3y, €1bn 0.625% TAP
Sen. Unsec, 5y, €750m
1.000%
Lettres de Gage 3y, €500m
0.125%
Mortgage PB3
6y, €500m 0.250%
4Q15 1Q16 2Q16 4Q16 1Q17 2Q17 3Q17 4Q17
Mortgage PB 2, 3
7y, €750m 0.25%
Mortgage PB3
8y, €750m 0.25%
Lettres de Gage 7y, €500m
0.375%
Public Sector PB3
10y, €500+300m 0,625%
Public Sector PB3
10y, €500m 0,250%
Lettres de Gage 4 ½y, €500m
0,25%
€m 30 Sep 2017 30 Sep 2016
Earnings 245 259 Expenses 104 101 Operative earnings 141 158 Loan loss provisions -2 0 Earnings before taxes 143 158
Mortgage PB3
8y, €500m 0.375%
Public Sector PB3
7y, €500m 0,375%
Green Bond PB3
6y, €500m 0,125%
25
Energy- and Infrastructure Customers. Stability and expansion in growth industries.
Segments
¹ The chart may include minor differences that occur in the reproduction of mathematical operations
Expansion and strengthening of our market position through long-term expertise and customised structuring in renewable energy finance; our focus is on energy from wind and solar, leading financer in European core markets Germany, France, Ireland and UK. Expansion of customer base in North America and Asia in energy sector
Concentration on social infrastructure projects in the fields of education, accommodation, blue light and transportation; Public Finance Initiative (PFI) as well as public project finance business
For over 25 years we are one of the leading lenders for leasing companies
Manufacturing industry
2%
Media and IT 1%
Transportation 3%
Financial Services 11%
Public Sector 4%
Supply and disposal 3%
Other energy 10%
Gas / biogas 4%
Solar energy 8%
Wind onshore 40%
Trade and Services 14%
as at 30 Sep 2017
By industry1
Exposure at default: €18.9.bn
€m 30 Sep 2017 30 Sep 2016
Earnings 207 193 Expenses 80 72 Operative earnings 127 121 Loan loss provisions 15 29 Earnings before taxes 112 92
26
Industry outlook ships: Continued recovery of demand with positive effects on charter rates.
Segments
→ Improved market environment leads to a decrease of ship breakings → Shifting effects expected for 2018
→ Capital markets include the developments on shipping markets already in its prices
→ Container- und bulker segments are driven by developments in Q3 2017 → Negative development in crude oil tankers’ market → Lay-ups reached year-low in Q3 2017
Bloomberg Shipping Indices
Performance 1Q16 1H16 9M16 2016 1Q171 2Q171 3Q171
Container Index -8% -14% -20% -24% -13% -7% 4%
Bulker Index -31% -43% -34% -23% 6% -7% 1%
Tanker Index -10% -17% -20% -20% -14% -22% -24%
1 Subscripted to 1 Jan 2016
Delivery schedule
no
. o
f ve
sse
ls
no
. o
f ve
sse
ls
Demolitions
delivered
27
Bulk Carrier - 10,000 - 40,000 tdw; 5%
Bulk Carrier - 40,000 - 60,000 tdw; 4%
Bulk Carrier - 60,000 - 100,000 tdw; 3%
Bulk Carrier - > 100,000 tdw; 4%
Container ships – >900 TEU 4%
Container ships 900-1300 TEU 5%
Containerships – 1300 – 2000 TEU 5%
Container ships – 2000 – 3000 TEU 5%
Container ships – 3000 – 5000 TEU 7%
Container ships - >5000 TEU 4%
Chemical tankers; 4%
Corporates; 9%
Gas-/Prod.- tankers; 8%
Cruise ships / ferries ; 2%
LPG/LNG tankers; 3%
MPP General Cargo; 9%
MPP Heavy Lift; 8%
Offshore; 5%
Crude oil tankers; 3%
Other ships; 3%
Ship financing. Diversified portfolio.
Segments
¹ The chart may include minor differences that occur in the reproduction of mathematical operations
as at 30 Sep 2017
By type of ships1
Exposure at default: €13.3bn
Operative earnings fell by €85m. This is due to the reduction of the shipping portfolio: Since 30 Sep 2016 the portfolio fell by €3.7bn
Selective new business In the segments cruises, ferries and special tonnage (e.g. cement and asphalt carrier)
Transformation Business strategy development through further segmentation and geographic diversification as well as by the expansion of the product range
€m 30 Sep 2017 30 Sep 2016
Earnings 221 298 Expenses 88 80 Operative earnings 133 218 Loan loss provisions 656 1,590 Earnings before taxes -523 -1,372
28
Successful transformation and reduction of ship financings.
Segments
¹ The chart may include minor differences that occur in the reproduction of mathematical operations 2 Incl. USD development (approx. €0.4bn)
Reduction by €3.5bn in the first nine months of 2017 (represents 180 shipping loans), reduction by €1.3bn (51 shipping loans) in the third quarter
Scheduled reduction of financings in weaker segments of MPPs and container ships
Reduction is achieved by: decrease in balloon financing, extraordinary repayments and outplacements
Target exposure is €12-14bn by end 2018. Reached the goal!
EaD shipping loans
Dec 2016
Redemptions2
NORD/LB Group – planned exposure reduction1
Already negotiated reductions of loans
EaD shipping loans
Sep 2017
in €bn
Focused reduction of
ship loans
Non-commercial shipping
13.3
16.8
1.7 1.7
-0.6 -0.6
1.3
15.1 12.3 11.0
0.7 0.9
14.5
EaD shipping loans
June 2017
29
31 Dez 2016 30 Sep 2017
Rating class 16-18
Rating class 11-15
Rating class 1-10
Shipping portfolio.
1 The chart may include minor differences that occur in the reproduction of mathematical operations
€16.8m
€13.3m
Segments
Container; €3,139; 34%
Bulker; €1.411m; 16% Others;
€207m; 2%
Off shore; €351m; 4%
MPP heavy lift ; €911m; 10%
MPP general cargo;
€835m; 9%
Chemical tankers;
€320m; 4%
LNG/LPG tankers;
€164m; 2%
Product tankers €609m; 7%
Crude oil tankers;
€24m; 0%
Corporates; €1,134m; 12%
as at 30 Sep 2017
NPL-ship financings (exposure)1
€9.1bn
Compared to 31 Dec 2016 new allocations to the NPL portfolio of €2.2bn, whereas €2.5bn NPLs were reduced in the same time period
Shipping portfolio by rating1
€bn
9.4
3.8
1.9
9.1
3.6 2.3
30
Shipping portfolio by types1.
1 The chart may include minor differences that occur in the reproduction of mathematical operations 2 Single loan loss provisions and market value acc. to non-performing portfolio
in €m Containers Tankers Bulkers MPP Others Total
Total 3,964 2,371 2,073 2,265 2,613 13,286
Performing portfolio 825 1,253 662 519 921 4,180
Non-Performing portfolio 3,139 1,118 1,411 1,746 1,692 9,106
Non-Performing ratio 79% 47% 68% 77% 65% 69%
Market value 1,306 640 715 935 466 4,062
Cash flow 408 171 271 308 16 1,174
Single loan loss provisions 1,425 307 425 504 1,209 3,869
Cover ratio2 87% 85% 81% 82% 99% 87%
Segments
31
Ship Customers. Portfolio reduction continues.
Segments
1 Due to roundings, slight differences may occur
16.6 17.7
19.0
16.8
14.5 13.3
2013 2014 2015 2016 30 Jun 17 30 Sep 17
in €bn
Ship exposure
1,698 1,544 1,481
1,363 1,235 1,183
2013 2014 2015 2016 30 Jun 17 30 Sep 17
Number of ships
Ships
NPL portfolio
5.4 6.5
7.3
9.4 9.1 9.1
2013 2014 2015 2016 30 Jun 17 30 Sep 17
in €bn
1,208 1,822
2,369
4,320 3.960 3.869 368
421 345
151 150 127
2013 2014 2015 2016 30 Jun 17 30 Sep 17
Single loan loss provisions portfolio loan loss provisions
2,714 2,243
4,471
in €m
Loan loss provisions for shipping (balance sheet)
3,996
1,576
4,110
32
Cautious optimism justified by stable sectors at the end of the year 2017.
Segments
Source: NORD/LB sector research based on charter rates and market values (new constructions and second hand) / as at September 2017
Current market level:
weak
Current market level:
weak
Expected market development:
up to 12 mths / 12-36 mths
unchanged/ slight increase
Current market level:
weak
Current market level:
weak
Neo-/Postpanamax Containerships >(6-14,9/
>15K TEU
Expected market development:
up to12 mths / 12-36 mths
unchanged / slight increase
Expected market development:
up to12 mths / 12-36 mths
unchanged / unchanged
Expected market development:
up to 12 mths / 12-36 mths
unchanged/ slight increase
Expected market development:
up to12 mths / 12-36 mths
slight decrease / unchanged
Current market level:
weak
Cruise ships and ferries
Current market level:
increased
Current market level:
weak
Current market level:
weak
Expected market development:
up to12 mths / 12-36 mths
unchanged / slight increase
Expected market development:
up to 12 mths / 12-36 mths
unchanged / slight increase
Feeder Containerships < 3K TEU
Intermediate Containerships 3-5,9K TEU
Multi-Purpose Heavy Lift & General Cargo
Crude oil tankers
Product tankers
Other tankers
Off shore
Bulker
Current market level:
low
Current market level:
medium
Expected market development:
up to12 mths / 12-36 mths
unchanged / unchanged
Expected market development:
up to12 mths / 12-36 mths
unchanged / slight increase
Expected market development:
up to 12 mths / 12-36 mths
unchanged/ slight increase
33
Aircraft customers. High-quality portfolio. Well diversified.
Segments
¹ The chart may include minor differences that occur in the reproduction of mathematical operations
Aircraft portfolio with 556 aircrafts, 6 helicopters and 3 spare engines is well diversified.
Considering only long-standing and fungible assets (aircrafts and turbines)
Exposure has very high collateralisation ratio (approx. 95 per cent)
Average age of roughly 6 years
Warehouse and operating lease structures
During the past 20 years established as a market leader in aircraft finance: broad range of commercial and covered financing of Widebody, Narrowbody, Regional Jets and Helicopters
Conservative risk approach in line with our financing principles and high risk awareness as well as ensuring appropriate redemption payments/finance structures
Focus on reliable and well-known partners
Narrow-bodies
46%
Widebodies 21%
Ultra Large Aircraft
7%
Regional Jets 6%
Freighter 14%
Turboprop 6%
as at 30 Sep 2017
By type of aircraft and year of manufacture1
Exposure at default: €6.2bn
9%
41% 48%
2%
Construction year2006 and earlier
Construction year2007 - 2011
Construction year2012 - 2016
New delivery since2017
€m 30 Sep 2017 30 Sep 2016
Earnings 91 91 Expenses 25 20 Operative earnings 66 71 Loan loss provisions 1 1 Earnings before taxes 65 70
34
Real Estate Banking Customers. Focus on commercial real estate in Germany.
Segments
¹ The chart may include minor differences that occur in the reproduction of mathematical operations
Deutsche Hypothekenbank is the competence centre for commercial real estate (CRE) within NORD/LB Group
Tailored financial solutions and individual, high quality customer consultation
Emphasis is on financing of office buildings, shopping malls, hotels, logistics facilities and multi-story residential properties in preferred urban centres with good tenant structure and above average cash flow
Financing is focussed on Europe especially on Germany and finance of commercial real estate in UK, France, Benelux and Poland
Bremer Landesbank financed the first affordable housing project in the 1980`s. Today, the bank is one of the leading institutes to finance affordable housing projects nationwide
Successful strategic cooperation with pension funds as financing partners for high-volume projects
Spain 1%
France 7%
USA 1%
UK 9%
Benelux 20%
Germany 60%
Other 2%
as at 30 Sep 2017
By country1
Exposure at default: €16.3bn
€m 30 Sep 2017 30 Sep 2016
Earnings 158 172
Expenses 45 47
Operative earnings 113 125
Loan loss provisions 6 -7
Earnings before taxes 107 132
35
Agenda.
NORD/LB at a glance 3
Financials 10
Segments 19
Outlook 36
Appendix 41
36
Outlook
Targets for 2017 will be achieved.
Common Equity Tier I ratio > 11,0 %
Return to profit zone
Reduction shipping portfolio
Integration BLB and
transformation „One Bank“
Capital ratio significantly strengthened through active management (e.g. disciplined RWA- and balance sheet management). Common Equity Tier 1 ratio at 11.5 per cent per 30 Sep 2017, significantly above regulatory requirements (8.3 per cent)
Consolidated profit before taxes with €326m as at 30 Sep 2017 well above previous years figures (€-624m). NORD/LB on track to show profit again in 2017
Reduction of shipping portfolio achieved faster than expected; with an exposure of approx. €13bn, the original goal of the portfolio reduction to €12-14bn will already be reached by the end of 2017
Full merger accomplished as planned by 1 Sep 2017. Transformation programme „One Bank“ successfully started to reduce further costs and to identify new and future earnings targets.
37
Our goals.
Outlook
Simplification of the Group structure, just as started with full integration of Bremer Landesbank
Enhancing the operating model and significant improving of the
bank‘s efficiency
Focus on core business segments, portfolio reduction in Shipping
Customers‘ segment
Group structure Operating model Business model
CET1
ca. 12 per cent
Revenue level at
roughly €2bn
Sustainable earnings
Sound capital base
Cost-income ratio
< 50 per cent Higher efficiency €150-200m
until the end of 2020
Target level
< €1bn
Administrative expenses
Cost reduction (incl. synergies of
BLB1 merger)
Cost synergies Target of BLB1 merger
up to €80m
¹ Bremer Landesbank
38
Our challenges 2018.
Outlook
Strengthening of
capital ratios
Transformation
Shipping portfolio
Regulatory requirements
All regulatory requirements will be fully fulfilled! Strengthening of capital ratios has top priority since regulatory requirements will increase further
The bank strives to become more profitable! Systematic execution of the transformation program „One Bank“ which includes cost-reduction targets of €150-200m by the end of 2020 through synergies
Continuation of consequent and successful portfolio reduction with increased focus on the reduction resp. management of the NPLs
Fulfillment of new regulatory requirements like IFRS 9 or Basel IV plus successful completion of EU-wide stress test in 2018
39
Financial calendar.
Outlook
Interim Report as at 30 September 2017 29 Nov 2017
Annual Report 2017 17 Apr 2018
40
Agenda.
NORD/LB at a glance 3
Financials 10
Segments 19
Outlook 36
Appendix 41
41
106 505
3,962
392 949
4,969
NORD/LB ShipPfandbriefe
NORD/LB AircraftPfandbriefe
NORD/LB CBBLettres de Gage
Total outstanding
Total cover pool
2,695
7,738
5,266
9,325
NORD/LB Dt. Hypo
Total outstanding
Total cover pool
Pfandbriefe (covered bonds) at a glance.
Appendix
16,941
4,700
19,155
5,881
NORD/LB Dt. Hypo
Total outstanding
Total cover pool
Total cover pool: €25.0 bn as at 30 Sep 2017
Public Sector Pfandbriefe
Total cover pool: €14.6bn as at 30 Sep 2017
Mortgage Pfandbriefe
Total cover pool: €6.3bn as at 30 Sep 2017
Other Pfandbriefe/Covered Bonds
After the merger between NORD/LB and BLB on 1 Sep 2017 BLB does not have a separate cover pool anymore. Cover pools of NORD/LB and BLB have been merged and will be released together in der transparency guidelines for the first time as at 30 Sep 2017.
42
Countries 8%
Regional authorities
24%
Local authorities 37%
Other 28%
Loans acc. To § 20, sec. 2/2 3%
Pfandbriefe (covered bonds): first class and secure collateral (1/2).
Appendix
1 Nominal value NORD/LB AöR 2 Debtors incl. statutory overcollateralisation 3 94 per cent in Germany 4 Moody‘s Performance Overview, 30 Jun 2017
Office buildings
10% Commercial
Buildings 7%
Industrial buildings
1% Other commerial buildings
13%
Condomi-niums
5% One and two family
houses 17%
Apartment buidings
47%
as at 30 Sep 2017 as at 30 Sep 2017
Mortgage Pfandbrief (by building type) Public-Sector Pfandbrief (by debtor)2 3
€5.3bn1 €19.2bn1
Outstandings 2,694.7
Cover pool total 5,265.6
Over-collateralisation 2,570.9 / 95.4%
Weighted average life of outstanding Pfandbriefe 4
2.9 years
Weighted average life of the cover pool4
4.6 years
Outstandings 16,941.3
Cover pool total 19,155.2
Over-collateralisation 2,213.9 / 13.1%
Weighted average life of outstanding Pfandbriefe 4
6.4 years
Weighted average life of the cover pool4
6.5 years
43
Pfandbriefe (covered bonds): first class and secure collateral (2/2).
Appendix
1 Nominal value, NORD/LB AöR 2 Moody‘s Performance Overview, 30 Jun 2017
Freighter 23%
Narrowbody 42%
Regional Jet 7%
Turboprop 6%
Ultralarge 11%
Widebody 11%
Bulker 8%
Containers 14%
MPP 17%
Tankers 45%
Others 16%
as at 30 Sep 2017 as at 30 Sep 2017
Ship Pfandbrief (by type) Flugzeugpfandbrief (nach Typ)
€392m1 €949m1
Outstandings 106.1
Cover pool total 392.4
Over-collateralisation 286.3 / 269.8%
Outstandings 505.0
Cover pool total 949.0
Over-collateralisation 444.0 / 87.9%
Weighted average life of outstanding Pfandbriefe 2
0.9 years
Weighted average life of the cover pool2
4.3 years
44
NORD/LB Group - Pfandbriefe at a glance.
Appendix
1 Outstandings 30 Sep 2016 versus 30 Sep 2017
Nominal values as at 30 Sep 2017 (in €m)
Outstandings Cover pool
total Over-collateralisation
Over-collateralisation in %
Change of outstandings in 20161
NORD/LB AöR Public-Sector Pfandbrief
16,941.3 19,155.2 2,213.9 13.1 3,579.4
NORD/LB AöR Mortgage Pfandbrief
2,694.7 5,265.6 2,570.9 95.4 789.1
NORD/LB AöR Ship Pfandbrief
106.1 392.4 286,3 269.8 26.1
NORD/LB AöR Aircraft Pfandbrief
505.0 949.0 444.0 87.9 -501.0
Deutsche Hypo Public-Sector Pfandbrief
4,700.3 5,881.4 1,181.1 25.1 -959.0
Deutsche Hypo Mortgage Pfandbrief
7,737.8 9,324.7 1,586.9 20.5 -625.5
NORD/LB Luxembourg Lettres de Gage Publique
3,961.9 4,968.7 1,006.8 25.4 375.2
Total 36,647.1 45,937.0 9,289.9 2,684.3
45
Income statement (in €m) 1 Jan –
30 Sep 2017 1 Jan –
30 Sep 20161
1 Jan – 31 Dec 2016
1 Jan – 31 Dec 2015
1 Jan – 31 Dec 2014
1 Jan – 31 Dec 2013¹
Net interest income 1,065 1,357 1,735 1,974 1,985 1,931
Loan loss provisions 683 1.651 2,956 698 735 846
Net commission income 89 165 219 234 185 163
Profit/loss from financial instruments at fair value incl. hedge accounting
253 354 415 280 130 73
Profit/loss from financial assets 133 61 49 72 -3 11
Profit/loss from investments accounted for using the equity method
29 -18 -2 8 -37 33
Administrative expenses 883 835 1,113 1,114 1,125 1,167
Other operating profit/loss 372 -47 -173 -97 -75 49
Earnings before reorganisation and taxes 375 -614 -1,826 659 325 247
Reorganisation expenses 49 9 39 6 49 107
Earnings before taxes 326 624 -1,865 653 276 140
Income taxes 98 112 94 135 71 -84
Consolidated profit 228 -735 -1,959 518 205 224
CIR 48.8% 46.1% 50.7% 46.4% 51.4% 51.9%
RoE 7.6% -10.4% -24.5% 8.7% 3.8% 1.8%
Income statement overview.
Appendix
¹ Some previous year figures were adjusted, see Group Annual Reports 2013 and 2014, Note (2)
46
Balance sheet development at a glance.
Appendix
¹ Some previous year figures were adjusted, see Annual Report 2014, Note (2)
Balance sheet (in €m) 30 Sep 2017 31 Dec 2016 31 Dec 2015 31 Dec 2014 31 Dec 2013¹
Total assets 165,220 174,797 180,998 197,607 200,823
Loans and advances to banks 28,045 21,747 21,194 23,565 27,481
Loans and advances to customers 97,643 105,640 107,878 108,255 107,604
Financial assets 27,836 31,574 34,515 45,120 47,043
Liabilities to banks 44,886 49,241 48,810 58,986 59,181
Customer deposits 56,920 57,301 60,597 57,966 54,859
Equity capital (balance sheet) 6,398 6,041 8,513 7,902 8,169
47
Institutional protection and deposit guarantee schemes of NORD/LB.
Appendix
Basic protective measures to avoid bankruptcy The Capital Requirements Regulation (CRR , “Kapitaladäquanzverordnung”) is a EU
regulation in banking containing requirements for capital adequacy under Basel III
Institutional Protection Scheme of the Savings Banks Finance Group was founded in the 1970s Since July 2015 the Institutional Protection Scheme is recognised as a deposit
guarantee scheme under Germany’s Deposit Guarantee Act (EinSiG) 13 guarantee funds: of the Landesbanken (1), of the regional savings banks (11) and of
the building associations (1)
Bail-in of shareholders and creditors Equity: Tier 1, AT 1, Tier 2, subordinated capital Liabilities: Senior unsecured and other (structured) liabilities
Excluded: i.a. deposits (under Deposit Guarantee Act: up to 100,000€/person), covered bonds as well as money market instruments
The Single Resolution Mechanism (SRM) is augmented by the Single Resolution Fund (SRF), which can provide the financial resources needed for resolution.
European deposit guarantee scheme: The German banking industry defeats the proposed regulations of the EU commission. There is a compromise proposal from the EU parliament. But it is still quite uncertain, whether this proposal will come into effect.
Legal responsibility
Institutional Protection Scheme of the Savings Banks Finance Group
German Act on the Recovery and Resolution of Credit Institutions
European Scheme
Capital requirements
48
Important links.
Appendix
Declaration of Norddeutsche Landesbank Girozentrale on the German Corporate Governance Codex:
www.nordlb.com/legal-information/legal-notices/corporate-governance/
NORD/LB protection scheme
www.nordlb.com/legal-information/legal-notices/security-mechanisms/
Sustainability (report, ratings)
www.nordlb.com/nordlb/sustainability/
NORD/LB supervisory board
www.nordlb.com/nordlb/investor-relations/committees-and-executive-bodies/
NORD/LB Annual, Interim Reports and Disclosure Reports
www.nordlb.com/reports
49
Contact.
NORD/LB Norddeutsche Landesbank Girozentrale Investor Relations Georgsplatz 1 30159 Hanover, Germany ir@nordlb.de www.nordlb.de/www.nordlb.com
Bitte hier Ihr Foto einfügen
Gabriele Bödeker (Head of Investor Relations) gabriele.boedeker@nordlb.de Tel.: ++49 511 361-4338
Thomas Breit thomas.breit@nordlb.de Tel.: ++49 511 361-5382
Marcel Mock, CIIA, CEFA marcel.mock@nordlb.de Tel.: ++49 511 361-8914
Svenja Pohlmann svenja.pohlmann@nordlb.de Tel.: ++49 511 361-4683
50
Disclaimer.
This presentation and the information contained herein, as well as any additional documents and explanations (together the “material“), are issued by NORDDEUTSCHE LANDESBANK GIROZENTRALE (“NORD/LB”).
This presentation contains certain forward-looking statements and forecasts reflecting NORD/LB management’s current views with respect to certain future events. These forward-looking statements include, but are not limited to, all statements other than statements of historical facts, including, without, limitation, those regarding NORD/LB’s future financial position and results of operations, strategy, plans, objectives, goals and targets and future developments in the markets where NORD/LB participates or is seeking to participate. The NORD/LB Group’s ability to achieve its projected results is dependent on many factors which are outside management’s control. Actual results may differ materially from (and be more negative than) those projected or implied in the forward-looking statements. Such forward-looking information involves risks and uncertainties that could significantly affect expected results and is based on certain key assumptions. The following important factors could cause the Group’s actual results to differ materially from those projected or implied in any forward-looking statements:
– the impact of regulatory decisions and changes in the regulatory environment;
– the impact of political and economic developments in Germany and other countries in which the Group operates;
– the impact of fluctuations in currency exchange and interest rates; and
– the Group’s ability to achieve the expected return on the investments and capital expenditures it has made in Germany and in foreign countries.
The foregoing factors should not be construed as exhaustive. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements as a prediction of actual results. All forward-looking statements included herein are based on information available to NORD/LB as of the date hereof. NORD/LB undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by applicable law. All subsequent written and oral forward-looking statements attributable to NORD/LB or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements.
The material is provided to you for informational purposes only, and NORD/LB is not soliciting any action based upon it. The material is not intended as, shall not be construed as and does not constitute, an offer or solicitation for the purchase or sale of any security or other financial instrument or financial service of NORD/LB or of any other entity. Any offer of securities, other financial instruments or financial services would be made pursuant to offering materials to which prospective investors would be referred. Any information contained in the material does not purport to be complete and is subject to the same qualifications and assumptions, and should be considered by investors only in light of the same warnings, lack of assurances and representations and other precautionary matters, as disclosed in the definitive offering materials. The information herein supersedes any prior versions hereof and will be deemed to be superseded by any subsequent versions, including any offering materials. NORD/LB is not obliged to update or periodically review the material. All information in the material is expressed as at the date indicated in the material and is subject to changes at any time without the necessity of prior notice or other publication of such changes to be given. The material is intended for the information of NORD/LB´s institutional clients only. The information contained in the material should not be relied on by any person.
51
Disclaimer.
In the United Kingdom this communication is being issued only to, and is directed only at, intermediate customers and market counterparties for the purposes of the Financial Services Authority’s Rules ("relevant persons"). This communication must not be acted on or relied on by persons who are not relevant persons. To the extent that this communication can be interpreted as relating to any investment or investment activity then such investment or activity is available only to relevant persons and will be engaged in only with relevant persons.
Viewing the following material involves no obligation or commitment of any kind by any person. Viewers of he following material are not to construe information contained in it as a recommendation that an investment is a suitable investment or that any recipient should take any action, such as making or selling an investment, or that any recipient should refrain from taking any action. Prior to making an investment decision, investors should conduct such investigations as they consider necessary to verify information contained in the relevant offering materials and to determine whether the relevant investment is appropriate and suitable for them. In addition, investors should consult their own legal, accounting and tax advisers in order to determine the consequences of such investment and to make an independent evaluation of such investment. Opinions expressed in the material are NORD/LB´s present opinions only. The material is based upon information that NORD/LB considers reliable, but NORD/LB does not represent, guarantee, or warrant, expressly or implicitly, that the material or any part of it is valid, accurate or complete (or that any assumptions, data or projections underlying any estimates or projections contained in the material are valid, accurate or complete), or suitable for any particular purpose, and it should not be relied upon as such. NORD/LB accepts no liability or responsibility to any person with respect to, or arising directly or indirectly out of the contents of or any omissions from the material or any other written or oral communication transmitted to the recipient by NORD/LB.
Neither the material nor any part thereof may be reproduced, distributed, passed on, or otherwise divulged directly or indirectly by the party that receives it, to any other person without the prior written consent of NORD/LB.
The distribution of the material in certain jurisdictions may be restricted by law and persons into whose possession the material comes are required by NORD/LB to inform themselves about, and to observe, any such restrictions.
This presentation does not constitute an offer to sell or the solicitation of an offer to purchase or subscribe for any securities of NORD/LB in the United States. No part of this presentation should form the basis of or be relied upon in connection with any investment decision or any contract or commitment to purchase or subscribe for any securities of NORD/LB. Any offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from NORD/LB and will contain detailed information about NORD/LB, its management and its financial statements. None of NORD/LB’s securities may be offered or sold in the United States, without registration under the U.S. Securities Act of 1993, as amended, or pursuant to an exemption from registration therefrom.
By viewing the following material, the recipient acknowledges, and agrees to abide by, the aforementioned.