Aegon Ltd. · EURONEXT:AGN
Aegon — Aegon Bank — Debt Investor Presentation (November 2015)
52 slides from Aegon's debt investor presentation, November 2015
Slide 1: Conditional Pass-Through Covered Bond Programme
Aegon Bank N.V. Conditional Pass-Through Covered Bond Programme November 2015 aegon.com
Slide 2: Disclaimer
Disclaimer This presentation was prepared by Aegon Bank N.V. (“Aegon Bank” or the “Company”). Although the information in this presentation has been obtained from sources which the Company believes to be reliable, the Company does not represent or warrant its accuracy or completeness, and such infor
Slide 3: Content
Content Aegon Bank N.V.’s Aegon Bank N.V. Introduction mortgage loan at a glance portfolio Aegon Bank N.V. Dutch mortgage Conditional and housing Pass-Through market Covered Bond Programme 2
Slide 4: Introduction
Introduction 3
Slide 5: Executive Summary
Executive Summary Aegon Bank N.V.’s profile Mortgage portfolio Aegon Bank N.V is strategically important to Aegon N.V. Aegon NL has a high quality and low risk mortgage lending business The activities of Aegon Bank N.V. show sound financials and the operations ► Predominantly NHG guaranteed mo
Slide 6: Aegon N.V. at a glance
Aegon N.V. at a glance Focus History Employees ⃰ Life insurance, pensions & Our roots date back to first half of the Around 28,000 employees asset management 19th century Underlying earnings before tax ⃰ Revenue-generating investments ⃰ Paid out in claims and benefits ⃰ 12% 25% New 6% Markets UK NL
Slide 7: Aegon Netherlands N.V. (Aegon NL)
Aegon Netherlands N.V. (“Aegon NL”) Underlying earnings before tax Aegon NL is wholly owned by Aegon N.V. and a core member of the Aegon group EUR millions YTD 2015 Aegon NL offers a wide range of financial products and Life and Savings 242 services to its clients, including pensions, insurance
Slide 8: Aegon NL's successful Dutch mortgage loan operation
Aegon NL’s successful Dutch mortgage loan operation Mortgage debt outstanding Mortgage lending market shares in the Netherlands Source: Dutch Central Bank (YTD 2015); Source: Land Registry (Kadaster) EUR bn total mortgage debt outstanding (LHS) ABNAMRO 20.7% EUR bn 700 year-on-year change (RHS) 60 I
Slide 9: Diversified funding supports strong mortgage origination capabilities
Diversified funding supports strong mortgage origination capabilities Nominal mortgage amounts per Sept 2015 Comments (in EUR bn) Mostly short interest rate reset periods Competitive advantages Bank 6⃰ Offering products to clients on both Strong position with IFAs sides of the balance sheet (I
Slide 10: Ratings reflective of strong capitalization and prudent risk management
Ratings reflective of strong capitalization and prudent risk management Aegon N.V. Issuer Credit ratings Ratings Long-term Short-term Standard & Poor’s A-, Stable A-2 Moody’s A3, Stable P-2 Fitch A, Stable F1 Aegon Insurance Financial Strength ratings Ratings Aegon USA Aegon NL Aegon UK Standard & P
Slide 11: Aegon Conditional Pass-Through Covered Bond Programme
Aegon Conditional Pass-Through Covered Bond Programme * Key Features Aegon Conditional Pass-Through Programme Summary Dutch Covered Bond Framework [AAA / AAA] (S&P / Fitch) In general: Dutch law based, registration with Dutch Central Bank Less principal based more rule based Overcollateral
Slide 12: Comparison to other Dutch Covered Bond programmes
Comparison to other Dutch Covered Bond programmes Issuer Van Lanschot NIBC Aegon Bank N.V. ABN ING5 SNS Size programme EUR 5bn EUR 5bn EUR 5bn EUR 30bn EUR 5bn EUR 15bn Conditional Conditional Conditional Type programme Soft bullet Soft bullet Soft bullet Pass-Through Pass-Through Pass-Through Issue
Slide 13: Aegon Bank N.V. at a glance
Aegon Bank N.V. at a glance 12
Slide 14: Aegon NL committed to Aegon Bank N.V.
Aegon NL committed to Aegon Bank N.V. Bank Aegon Bank N.V. is a core asset of Aegon NL: Aegon Bank N.V. is Aegon NL’s entity for offering savings and investment products Aegon NL benefits from Aegon Bank N.V.’s large valuable customer base Aegon NL benefits from online traffic generated by Aeg
Slide 15: Aegon Bank N.V. at a glance
Aegon Bank N.V. at a glance Aegon Bank N.V. Bank General Is an online retail internet bank Is a new, disruptive online banking initiative for retail and small business clients Role in Aegon Develops third and fourth pillar products Helps people to better understand their strategy for future
Slide 16: How Aegon Bank helps customers build their financial future
How Aegon Bank N.V. helps customers build their financial future Shift from company pension into individual wealth accumulation One of the largest providers of life insurance and pensions, with multi- channel distribution ► Independent intermediaries ► Banks ► Online & direct marketing Knab is part
Slide 17: Knab delivered considerable growth during the last year
Knab delivered considerable growth during the last year Number of customers Assets under Management (EUR million) From January 1st 2014 until September 27st 2015 (in weeks) From January 1st 2014 until September 27st 2015 (in weeks) 75000 2500 60000 2000 45000 1500 30000 1000 15000 500 0 0 1- 13- 26-
Slide 18: Execution of Aegon Bank N.V.'s strategy
Execution of Aegon Bank N.V.’s strategy Focus on Mortgage loans Consumer customer Introduction on Aegon Bank loans on Aegon satisfaction online sale of Successful Discontinuation of N.V. balance Bank N.V. and continuous Execution Only financial turn non-core activities sheet balance sheet improvemen
Slide 19: Aegon Bank is key in the execution of Aegon NL's strategy
Aegon Bank N.V. is key in the execution of Aegon NL’s income & living strategy Key conclusions Key transitions Aegon Bank N.V. In the Dutch wealth accumulation market a Shift from spread business to fee business retail banking activity is essential and improve customer focus Savings and mortga
Slide 20: Aegon Bank N.V. in a snapshot
Aegon Bank N.V. in a snapshot BIS LCR NSFR Balance sheet (EUR billion) 17.7% 130% 16.7% 16.5% 9.9 143% 9.0 137% 8.1 106% 115% 109% 2013 2014 Sept 2015 2013 2014 Sept 2015 2013 2014 Sept 2015 2013 2014 Sept 2015 Ratings Long-term Short-term Standard & Poor’s A+, Stable A-1 Fitch A-, Stable F2 Aegon
Slide 21: Conservative risk profile and strong risk management
Conservative risk profile and strong risk management ► Solid BIS ratio in place to ensure sufficient capitalisation Prudent ► Equity funding to increase – anticipated growth matched by retained earnings and client participations capitalisation ► Leverage ratio targeted above 3% requirement ► Sizeabl
Slide 22: Balance Sheet
Aegon Bank N.V. Balance Sheet Composition of assets IFRS Balance Sheet as of September 2015 Mortgage loans are an important asset class on the (EUR billion) balance sheet. They offer attractive risk-adjusted- returns Consumer loans currently represent around 5% of total assets. Aim is to increas
Slide 23: Profit & Loss Account
Aegon Bank N.V. Profit & Loss Account ► Interest margin is improving as a result of an Continued Profit & Loss Account increasing balance sheet, lower savings rates improvement and the addition of mortgages and consumer in income loans Amounts EUR millions YTD 2015 2014 2013 2012 Total interest ► Op
Slide 24: Aegon Bank N.V.'s mortgage loan portfolio
Aegon Bank N.V.’s mortgage loan portfolio 23
Slide 25: Performance of Aegon Bank N.V.'s mortgage loan portfolio
Performance of Aegon Bank N.V.’s mortgage loan portfolio Recovery & Losses Mortgage loans are originated through Aegon Hypotheken B.V. and distributed over various Aegon entities including Aegon Bank N.V. Approximately 71% of the mortgage loans is NHG guaranteed Recovery rate on NHG mortgage l
Slide 26: Overview of Aegon Bank N.V.'s conservative mortgage loan portfolio
Overview of Aegon Bank N.V.’s conservative mortgage loan portfolio Current Loan to Indexed Market Value (September 2015) Loan-to-income (September 2015) 30% 80% 70% 25% 60% 20% 50% 40% 15% 30% 10% 20% 5% 10% 0% 0% <0.5 >6.5 0.5-1.0 1.0-1.5 1.5-2.0 2.0-2.5 2.5-3.0 3.0-3.5 3.5-4.0 4.0-4.5 4.5-5.0 5.0-
Slide 27: Dutch mortgage and housing market
Dutch mortgage and housing market 26
Slide 28: Key characteristics of the Dutch residential mortgage market
Key characteristics of the Dutch residential mortgage market ► Predominantly prime, owner occupied Products ► Virtually no buy-to-let, non-conforming and sub-prime ► Mainly fixed rate mortgage loans ► Mortgage loans are provided predominantly on the basis of income (LTMV’s are a less significant bas
Slide 29: Changes in Aegon's underwriting criteria
Changes in Aegon’s underwriting criteria 2008 ► Credit mortgage loan discontinued 2009 ► LTMV capped at 109% 2010 ► Investment mortgage loan discontinued 2011 ► LTMV capped at 106% by all market participants ► Introduction of bank savings mortgage loan ► Interest-only part capped at 50% of market va
Slide 30: The Dutch housing market: supply and demand
The Dutch housing market: supply and demand Supply dynamics Building permits and newly built homes Source: CBS, Ministry of Housing, VROM Source: CBS Annual new house requirement Supply in the Dutch housing market is relatively inelastic: according to Ministry of Housing ► Limited land available f
Slide 31: Dutch household financials
Dutch household financials Overview Source: Eurostat, Dutch Central Bank The vast majority of household debt in the Netherlands is residential mortgage debt (EUR 635 bn as per June 2015) vs other consumer credit (EUR 20 bn as per June 2015) The incentive for consumers to maximise their mortgage
Slide 32: NHG mortgage loan guarantee
NHG mortgage loan guarantee NHG NHG (Nationale Hypotheek Garantie) refers to the public mortgage loan insurance scheme supporting home ownership in the Netherlands WEW (Stichting Waarborgfonds Eigen Woningen) is the foundation responsible for granting NHG guarantees All people in the Netherlan
Slide 33: NHG Statistics
NHG Statistics NHG Mortgage lending market share NHG statistics Source: NHG Annual Report 2014 Source: NHG Annual Report 2014 Aegon 15% 11% 14% Aegon has originated 15% (14% in 2013) of the total number of NHG Rabobank 16% guaranteed mortgage loans in 2014 ABN AMRO Hypotheken 10% 6% ABN AMRO Bank
Slide 34: Summary
Summary - Aegon Bank N.V. Conditional Pass-Through Covered Bond Programme Aegon Bank N.V. is key in the execution of Aegon’s Strategy The activities of Aegon Bank N.V. show sound financials and the operations are strongly tied into Aegon N.V. Aegon NL is one of the top 5 lenders in the Dutch r
Slide 35: Conditional Pass-Through Covered Bond Programme
Aegon Bank N.V. Conditional Pass-Through Covered Bond Programme 34
Slide 36: Summary
Summary Key features of the Covered Bond Programme Key benefits Issuer Aegon Bank N.V. Dual recourse: Highly rated issuer: Aegon Bank A+/A- (S&P/Fitch) Programme size EUR 5 bn Obligation for Aegon Bank to redeem the bond at expected maturity date Currency Euro Recourse to CBC in case of defa
Slide 37: Programme highlights
Programme highlights Key Programme Parties Transaction Structure Originators: Aegon Bank / Aegon Hypotheken / Aegon Leven Transferor: Aegon Bank Swap Issuer: Aegon Bank Custodian provider* Servicer: Aegon Bank / Aegon Hypotheken / Aegon Leven (Sub-) Servicing Swap Servicer agreement Agreements Accou
Slide 38: Conditional Pass-Through vs Hard and Soft Bullet Covered Bonds
Conditional Pass-Through vs Hard and Soft Bullet Covered Bonds The Conditional Pass-Through structure ensures an orderly wind-down of the Cover Pool and avoids the risk of a fire sale The Covered Bonds are bullet obligations of the issuer. Ahead of issuer default, Aegon Bank will make both coupo
Slide 39: Four Potential Scenarios - Conditional Pass-Through Covered Bonds
Four Potential Scenarios - Conditional Pass-Through Covered Bonds CPTCB A - CPTCB B - CPTCB Bank default To illustrate the CPT Outstanding Outstanding mechanism this slide shows CB repayments for Bond I Bond I various scenarios. Here we assume a programme Bond II Bond II with two bonds outstandi
Slide 40: Four Potential Scenarios - Conventional Covered Bonds
Four Potential Scenarios - Conventional Covered Bonds Conventional CB A - conventional CB B - conventional CB Bank default Conventional CB (hard Outstanding Outstanding bullets) and CPTCB are very similar, only under Bond I Bond I severe stress the work-out scenario differs Bond II Bond II For t
Slide 41: Key Triggers in a Conditional Pass-Through Covered Bond
Key Triggers in a Conditional Pass-Through Covered Bond Normal Issuer meets all interest and principal payment Expenses paid by Issuer performance obligations in respect of the Covered Bonds No asset cashflows through CBC An Assignment Notification Event takes place upon, amongst others: The b
Slide 42: Key Triggers in a Conditional Pass-Through Covered Bond
Key Triggers in a Conditional Pass-Through Covered Bond The CBC receives all cashflows in relation to the Cover Pool Non-payment by the Issuer of an interest or principal The CBC is responsible for all payments related to the Covered Bonds Issuer payment due on the Covered Bonds (= also one of
Slide 43: Priority of Payments
Priority of Payments CBC Priority of Payments Post CBC Acceleration Priority of Payments 1 Security Trustee (excl. Parallel Debt) 1 Security Trustee (excl. Parallel Debt) 2 Tax authority 2 Paying agent, Registrar and Calculation agent expenses 3 Paying agent, Registrar and Calculation agen
Slide 44: Asset Cover Test
Asset Cover Test 1 2 Adjusted aggregate asset amount* >= Minimum OC level outstanding Covered Bonds Adjusted aggregate asset amount = A+B+C–Z The Net Outstanding Principal Amount of all Mortgage Receivables The calculation of ‘A’ includes: - Any Defaulted Receivables ► 93% asset percentage + Subst
Slide 45: Amortisation Test
Amortisation Test 1 2 Amortisation Test Aggregate Asset Amount* >= Minimum OC level outstanding Covered Bonds Adjusted aggregate asset amount = A+B+C–Z The Net Outstanding Principal Amount of all Mortgage Receivables The calculation of ‘A’ includes: - Any Defaulted Receivables ► 80% LTMV cut-off +
Slide 46: Cover Pool characteristics
Cover Pool characteristics 45
Slide 47: Cover Pool characteristics
Cover Pool characteristics Key characteristics as at 31 October 2015 Key eligibility criteria Principal balance (EUR) 949,412,591 Each mortgage loan is either an Interest-only Mortgage Value of saving deposits (EUR) 45,521,741 Loan, Linear Mortgage Loan, Annuity Mortgage Loan, Investment Mortgage
Slide 48: Cover Pool characteristics
Cover Pool characteristics Redemption Type Outstanding Loan Amount (in EUR mn) 11% 250 236.9m Annuity 207.5m 5% Bank Savings 200 1% 3% 40% Interest Only 145.4m 150 130.1m Investments Life Insurance 100 56.4m 63.1m Linear 32% 50 28.5m 22.0m Savings 14.0m 8% 0 <75k 100k 150k 200k 250k 300k 350k 400k >
Slide 49: Cover Pool characteristics
Cover Pool characteristics Original Loan to Original Market Value Current Loan to Indexed Market Value 70% 63.9% 70% 63.9% 60% 60% 50% 50% 40% 40% 30% 30% 20% 15.0% 20% 9.7% 10% 5.6% 5.8% 10% 5.6% 6.1% 4.3% 1.1% 1.6% 1.8% 2.7% 2.7% 2.0% 3.0% 3.9% 1.5% 0% 0% NHG < 40% 40% - 50% - 60% - 70% - 80% - 90
Slide 50: Cover Pool characteristics
Cover Pool characteristics Mortgage Rates Remaining Interest Rate Fixed Period 35% 30% 27.5% 30.1% 30% 25% 25% 20% 17.6% 17.7% 20% 15% 15.3% 15% 13.4% 12.4% 10.8% 10% 8.4% 10% 8.3% 6.4% 6.0% 5% 3.7% 3.7% 3.8% 3.9% 5% 3.1% 2.5% 2.5% 2.6% 0.1% 0% 0% 2.0% - 2.5% - 3.0% - 3.5% - 4.0% - 4.5% - 5.0% - 5.5
Slide 51: For questions and information please contact
For questions and information relating to Aegon Bank N.V.’s Conditional Pass-Through Covered Bond Programme please contact: Erik Leseman Head of Risk & Capital Management Aegon Bank N.V. T: +31 70 344 8116 E: [email protected] Thomas Bezemer Risk & Capital Manager Aegon Bank N.V. T: +31 6 2275 8739
Slide 52: Thank you
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