BNG Bank N.V. reports...آ MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS Key indicators Exhibit...
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CREDIT OPINION 22 November 2019
BNG Bank N.V. Domicile Netherlands
Long Term CRR Aaa
Type LT Counterparty Risk Rating - Fgn Curr
Outlook Not Assigned
Long Term Debt Aaa
Type Senior Unsecured - Fgn Curr
Long Term Deposit Aaa
Type LT Bank Deposits - Fgn Curr
Please see the ratings section at the end of this report for more information. The ratings and outlook shown reflect information as of the publication date.
Guillaume Lucien- Baugas
VP-Senior Analyst email@example.com
Delphine Larrousse +33.1.5330.3361 Associate Analyst firstname.lastname@example.org
Alain Laurin +33.1.5330.1059 Associate Managing Director email@example.com
BNG Bank N.V. Update to credit analysis
Summary BNG Bank N.V.'s (BNG Bank) Baseline Credit Assessment (BCA) of a1 reflects the bank's (1) role as the largest lender to the Dutch public sector; (2) entrenched franchise in a niche market which results in exceptional stability in its fundamentals; (3) very high asset quality because its portfolio is mostly comprised of loans to Dutch public entities; 4) high capitalisation; and (5) adequate funding profile and liquidity position with limited maturity mismatches.
BNG Bank's Aaa deposit and senior unsecured ratings reflect (1) the bank's a1 standalone credit strength; (2) the application of our Advanced Loss Given Failure (LGF) analysis, resulting in a two-notch LGF uplift from the bank's Adjusted BCA of a1, given its significant volume of senior unsecured debt; and (3) a two-notch government support uplift, reflecting a very high support probability from the Government of Netherlands (Aaa stable) owing to the bank's public ownership and its role as one of the main providers of financing to the Dutch public sector. The Counterparty Risk (CR) Assessment of Aaa(cr)/Prime-1(cr) assigned to BNG Bank is four notches above the bank's BCA, reflecting the substantial volume of bail-in-able liabilities and the very high probability of government support.
Rating Scorecard - Key financial ratios
0.1% 32.1% 0.2%
Asset Risk: Problem Loans/
Capital: Tangible Common
Profitability: Net Income/
Funding Structure: Market Funds/
Tangible Banking Assets
Liquid Resources: Liquid Banking
Assets/Tangible Banking Assets
Solvency Factors (LHS) Liquidity Factors (RHS)
BNG Bank N.V. (BCA: a1) Median a1-rated banks
n c y F
a c to
a c to
Source: Moody's Financial Metrics
http://www.surveygizmo.com/s3/1133212/Rate-this-research?pubid=PBC_1202335 https://www.moodys.com/credit-ratings/BNG-Bank-NV-credit-rating-140500 https://www.moodys.com/credit-ratings/Netherlands-Government-of-credit-rating-543005
MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS
» Largest lender to the Dutch public sector, fully owned by Dutch public entities
» High asset quality, reflected in the very low level of nonperforming loans (NPLs)
» Financial performance commensurate with the bank's public policy role
» Large volume of senior debt, resulting in the bank's deposit and senior unsecured debt ratings benefiting from a very low loss given failure rate and a two-notch uplift from the BCA
» Very high probability of government support, resulting in a two-notch uplift for the bank's debt and deposit ratings
» Borrower concentration, given the bank's narrow public policy mandate
» Mismatches between assets and liabilities, mitigated by an ample liquidity portfolio and diverse funding
Outlook We do not expect any significant change in BNG Bank's creditworthiness in the near term, as reflected in the stable outlook on the bank's ratings. Our view is also underpinned by a benign economic environment in the Netherlands.
Factors that could lead to an upgrade Upward pressure on BNG Bank's BCA could result from a lower reliance on wholesale funding; however, this is unlikely given the bank's business model. An upgrade of the bank's BCA will not trigger any upgrade of the bank's deposit and senior unsecured ratings, which are already at Aaa.
Factors that could lead to a downgrade Downward pressure on BNG Bank's BCA could result from (1) a deterioration in the creditworthiness of the Dutch public sector, (2) a significant increase in the bank's non-0% risk-weighted assets, (3) a significant increase in its funding gaps, or (4) a deterioration in its solvency. A downward movement of the bank's BCA could result in a downgrade of all the ratings. BNG Bank's ratings could also be downgraded if the ratings of the Government of Netherlands were to be downgraded.
This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
2 22 November 2019 BNG Bank N.V.: Update to credit analysis
MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS
BNG Bank N.V. (Consolidated Financials) 
06-192 12-182 12-172 12-162 12-152 CAGR/Avg.3
Total Assets (EUR Million) 134,456.0 118,025.0 118,253.0 128,308.0 124,489.0 2.24
Total Assets (USD Million) 153,118.0 134,919.6 141,997.9 135,333.1 135,231.8 3.64
Tangible Common Equity (EUR Million) 3,839.0 3,892.0 3,759.0 3,475.0 3,168.0 5.64
Tangible Common Equity (USD Million) 4,371.8 4,449.1 4,513.8 3,665.3 3,441.4 7.14
Problem Loans / Gross Loans (%) 0.1 0.1 0.1 0.2 0.1 0.15
Tangible Common Equity / Risk Weighted Assets (%) -- 32.1 32.3 28.2 24.8 29.36
Problem Loans / (Tangible Common Equity + Loan Loss Reserve) (%) 2.4 1.4 1.5 3.9 4.0 2.65
Net Interest Margin (%) 0.3 0.3 0.3 0.3 0.3 0.35
PPI / Average RWA (%) -- 3.7 4.2 3.4 3.1 3.66
Net Income / Tangible Assets (%) 0.2 0.3 0.3 0.3 0.2 0.25
Cost / Income Ratio (%) 21.4 21.4 18.8 21.5 22.7 21.25
Market Funds / Tangible Banking Assets (%) 90.3 90.7 91.0 90.4 90.9 90.65
Liquid Banking Assets / Tangible Banking Assets (%) 15.7 10.8 14.6 17.2 13.9 14.45
Gross Loans / Due to Customers (%) 1079.3 1466.9 1588.4 1159.4 1301.7 1319.15 All figures and ratios are adjusted using Moody's standard adjustments. Basel III - fully-loaded or transitional phase-in; IFRS. May include rounding differences due to scale of reported amounts. Compound Annual Growth Rate (%) based on time period presented for the latest accounting regime. Simple average of periods presented for the latest accounting regime. Simple average of Basel III periods presented. Source: Moody's Investors Service; Company Filings
Profile Founded in 1914 and headquartered in the Hague, BNG Bank is a Dutch credit institution specialised in lending to (semi)-publicly owned institutions.
BNG Bank has no branches and does not provide financing to private customers. The bank's clients are mainly local authorities and public-sector institutions in the area of housing, healthcare, education and public utilities.
The bank’s shareholders are Dutch public authorities exclusively; 50% of the bank's shares are held by the Dutch State and the remaining 50% are held by municipal authorities, provincial authorities and a district water board.
Detailed credit considerations BNG Bank is the largest lender to the Dutch public sector, fully owned by Dutch public entities BNG Bank's by- laws restrict its ownership to the Dutch public sector. This ownership structure has been stable since 1925 and is unlikely to change, given the bank's mandate to act as a lender to the Dutch public sector. The bank's long-term loan portfolio was €80.8 billion as of year-end 2018, up slightly from €79.9 billion as of year-end 2017, and total new long-term lending amounted to €11.6 billion in 2018 (€2.1 billion higher than in 2017) and €6.2 billion in the first half of 2019 (a 7% increase year-on-year). The bank's market share of lending to local governments, housing associations and healthcare institutions (core clients) was 71% in terms of long- term lending production in 2018 (stable compared with that in 2017). We expect the bank to maintain its position in the Dutch public- sector financing business, given its mandate, ownership and advantageous funding costs compared with those of commercial banks.
As a bank established with an explicit public policy mandate, BNG Bank benefits from an entrenched franchise in a niche market. These conditions may result in exceptional stability in terms of asset quality, capital and profitability, supporting the bank's ongoing operating performance and resulting in a very low risk profile. This feature is reflected in a qualitative positive adjustment of one notch in our scorecard.
High asset quality, reflected in the very low level of NPLs Despite market volatility, BNG Bank has consistently been able to lend to the Dutch public sector at advantageous rates, given the bank's low funding costs compared