Aegon Ltd. · EURONEXT:AGN
Aegon — Aegon Bank — Debt Investor Presentation (May 2021)
50 slides from Aegon's debt investor presentation, May 2021
Slide 1: Aegon Bank N.V. Investor Presentation Soft Bullet Covered Bond Programme
Aegon Bank N.V. Investor Presentation Soft Bullet Covered Bond Programme May 2021 Helping people achieve a lifetime of financial security
Slide 2: Disclaimer 1/2
Disclaimer Disclaimer 1/2 This presentation was prepared by Aegon Bank N.V. (“Aegon Bank” or the “Company”) and may contain marketing materials and may be qualified as an advertisement within the meaning of Article 22 of the Prospectus Regulation ((EU) 2017/1129). In relation to the Securities (as d
Slide 3: Disclaimer 2/2
Disclaimer 2/2 This presentation is provided for discussion purposes only, does not constitute an offer or invitation for the sale, purchase, exchange or transfer of any securities or a recommendation to enter into transactions hereby contemplated and it does not constitute a prospectus or offering
Slide 4: Contents
Contents Executive Summary Financials Aegon Bank N.V. 01 04 Slides 5 Slides 22 – 29 Introduction Aegon N.V. The Dutch economy and housing market 02 05 Slides 6 -12 Slides 30 - 41 Introduction Aegon Bank N.V. Soft Bullet Covered Bond Programme 03 06 Slides 13 - 21 Slides 42 - 49 4
Slide 5: Executive summary
Executive summary Soft Bullet Programme summary Strategy • Aegon Bank N.V. is core to the strategy of Aegon Nederland N.V. Issuer Aegon Bank N.V. • Aegon Bank N.V. is one of the strategic assets of Aegon Nederland N.V., and is Programme size EUR 5 billion to be positioned as a digital gateway to ind
Slide 6: Introduction Aegon N.V.
Introduction Aegon N.V. 6
Slide 7: Aegon N.V. at a glance
Aegon N.V. at a glance Earnings (Operating result1, FY 2020, in EUR millions) What we do Life insurance, pensions & asset management for approximately 182 30.4 million customers (FY 2020) 165 History 792 144 Our roots date back more than 175 years EUR 1.712 billion Employees Over 22,300 employees (F
Slide 8: Aegon the Netherlands at a glance
Aegon the Netherlands at a glance Earnings What we do (Operating result, FY 2020, in percentages) In the Netherlands, Aegon is one of the best-known names in the Dutch financial sector, and a leading provider of life insurance, pensions and mortgages. Our operations in the Netherlands also include b
Slide 9: Position of the bank within Aegon
Position of the bank within Aegon Aegon Bank N.V. is core to the strategy of Aegon Nederland N.V. Position of the bank within Aegon N.V. Simplified organization structure • Contributor to Aegon’s growth strategy - One of the fastest-growing banks in the Netherlands for self-employed through Knab (on
Slide 10: Successful Dutch mortgage loan operation
Successful Dutch mortgage loan operation Mortgage debt outstanding 4th largest mortgage lender in the Netherlands Source: Dutch Central Bank, FY 2020 Source: Land Registry (Kadaster), FY 2020, in percentages In EUR billions YoY RHS% 21.8% Total mortgage debt outstanding (LHS) Year-on-year change (RH
Slide 11: Diversified funding of Aegon's mortgage loans
Diversified funding of Aegon's mortgage loans Competitive advantages Nominal mortgage amounts per FY 2020 Main characteristics ( (in EUR billions) • Strong position with independent • New EUR 5.0 billion SB CB Programme registered by financial advisors DNB as of May 6, 2021 • All new CB issuances ar
Slide 12: Aegon ratings
Aegon ratings Objective to maintain strong long-term ratings Insurance Financial A+, Strength rating, outlook stable Aegon N.V. A-, Issuer credit rating, outlook stable Aegon Bank N.V. A, Issuer credit rating, outlook stable Aegon SB Covered Bond AAA1 Programme Aegon Bank N.V. Issuer February 22, 20
Slide 13: Introduction
Introduction Aegon Bank N.V. 13
Slide 14: Aegon Bank N.V. at a glance
Aegon Bank N.V. at a glance Capital position What we do (FY 2020, in percentages) Retail banking with payment services, savings and investment products for 516k customers (FY 2020) 21.2% Total Capital Ratio History Launched new online banking platform Knab in 2012 Size Total assets EUR 17.1 billion
Slide 15: Aegon Bank N.V.'s strategy execution
Aegon Bank N.V.’s strategy execution Successfully grew organization and built the first online bank in the Netherlands 2012 Restructured Aegon Bank N.V. and launched new online banking platform Knab 2013 First consumer loans on balance sheet 2015 Aegon Bank N.V. issued its first Conditional Pass-Thr
Slide 16: The business model of the bank
The business model of the bank Focusing on growing retail and small business customers Retail banking services Net interest margin • Focus on being a scalable, modular retail bank with strong strategic • Asset mix mainly consists of high-quality alliances mortgages originated and serviced through Ae
Slide 17: Full migration of two labels into Knab
Full migration of two labels into Knab Strong market position in self-employed market and bank savings Aegon Bank N.V. provides: Knab customer base In number of customers, in thousands • Through its Knab label over 287k1 retail and small business customers with insight 279 310 in their personal fina
Slide 18: Clear goals and targets for the future
Clear goals and targets for the future Medium-term KPI target • Maintain excellent service and high NPS Customer Net Promotor Customer • + 40 Continue growth in self-employed, small business and Score (NPS) growth and entrepreneurial retail customers high NPS • Integrate our daily banking and wealth
Slide 19: Risk management
Risk management Aegon Bank N.V.’s response to COVID-19 Managing the impact of COVID-19 Mitigating credit and liquidity risks • The COVID-19 outbreak has caused significant disruption to • Aegon Bank N.V. incurred impairment charges of EUR 92 million in 2020, society, impacting our customers, employe
Slide 20: Risk management
Risk management Impact of COVID-19 on mortgage loans; full compliance with KYC legislation Payment Holidays Know Your Customer legislation (KYC) • Mortgage customers with (expected) payment difficulties are being • KYC is a top priority for Aegon Bank N.V. and is executing a large-scale handled on a
Slide 21: Agreement in principle on settling securities lease claims
Agreement in principle on settling securities lease claims Settling proceedings brought by Leaseproces for Vliegwiel and Sprintplan Security lease products Agreement in principle and internal governance • Aegon Bank N.V. has been in litigation for over 15 years with • In December 2020, Aegon Bank N.
Slide 22: Financials
Financials Aegon Bank N.V. 22
Slide 23: Balance sheet composition - Assets
Balance sheet composition - Assets Roughly 70% of total assets allocated to prime Dutch residential mortgage portfolio Balance sheet (FY 2020, in EUR billions) 17.1 17.1 Mortgage loans • Low-risk, high-quality mortgage portfolio, with low LtV and high NHG Mortgage loans coverage1 • Prime Dutch resid
Slide 24: Balance sheet composition - Liabilities & Equity
Balance sheet composition - Liabilities & Equity Predominantly funded through savings and Covered Bonds Balance sheet (FY 2020, in EUR billions) 17.1 17.1 Wholesale funding • Approximately 80% of wholesale funding consists of covered bonds, collateralized by prime Dutch residential mortgage portfoli
Slide 25: Capital and liquidity position
Capital and liquidity position Strong capital and liquidity position exceeding regulatory requirements Capital position (FY 2020, in percentages) • Strong Total Capital Ratio of 21.2%, which is well above the Total SREP Capital Requirement (TSCR) Ratio of 12.0% during 2020 • Solid CET1 Ratio in plac
Slide 26: Development of capital ratios over time
Development of capital ratios over time The bank maintains a strong capital position Total Capital Ratio1 Total Risk Exposure Amount (TREA) Leverage Ratio2 (In percentages) (In EUR millions) (In percentages) 3,682 3,329 21.9% 20.0% 21.2% 2,863 4.4% 4.6% 4.1% 2018 2019 2020 2018 2019 2020 2018 2019 2
Slide 27: P&L results
P&L results Aegon Bank N.V. Net interest • Net interest margin decreased mainly due to the Income Statement1 (2019 - 2020, in EUR millions) margin decreasing market interest rates 2019 2020 Net interest margin 238.8 232.0 Results from • Profit on financial transactions improved, mainly driven by the
Slide 28: Key financial metrics over time
Key financial metrics over time Balance sheet growth and expense reduction initiatives, targeting a RoC of 9% Cost-to-income ratio1 Return on Capital2 84% 85% 79% 9.0% 60% 4.4% 4.0% 3.3% 2018 2019 2020 Medium-term target 2018 2019 2020 Medium-term target • The cost-to-income ratio increased to 85% a
Slide 29: Summary
Summary • Customer satisfaction is a core strategic priority of the bank, aiming to maintain a Net Promotor Score at +40 Strategic priorities • The bank needs to grow its customer base to achieve scale, targeting a net growth of 40k core customers per year and KPIs • Merging the two labels into Knab
Slide 30: The Dutch economy and housing market
The Dutch economy and housing market 30
Slide 31: Benefiting from resilience of the Dutch mortgage portfolio
Benefiting from resilience of the Dutch mortgage portfolio • Structural features of economy and strict bankruptcy laws lead to limited loan losses - The Netherlands has strong social security and adequate unemployment benefits - Homeowners separating from each other is the main cause of defaults - M
Slide 32: Dutch economy has been impacted by COVID-19
Dutch economy has been impacted by COVID-19 GDP growth (YoY change) Unemployment rate (%) 10% 4% 2% 8% 0% 2010 2012 2014 2016 2018 2020 6% -2% 4% -4% -6% 2% -8% 0% 2010 2012 2014 2016 2018 2020 -10% Dutch EMU Debt & Balance (%GDP) Inflation (%) 80% 4% 70% 3% 60% 50% 2% 40% 30% 1% 20% 0% 10% 2010 201
Slide 33: Government support in response to COVID-19
Government support in response to COVID-19 A comprehensive package to support the economy • “NOW 3” in place until July 1, 2021, divided into 3 quarters Temporary Emergency • Payroll subsidy to compensate for up to 85% of a company’s payroll Scheme for Job Retention “NOW 3” • Since January 2021 demo
Slide 34: COVID-19 impact
COVID-19 impact Impact of COVID-19 on mortgage business has been limited so far General Dutch measures • Several actions have been taken by the Dutch government to preserve jobs and incomes - i.e. allowance in labor costs, temporary income support for self-employed persons, tax reliefs, bridge finan
Slide 35: Facts and figures Dutch mortgage market
Facts and figures Dutch mortgage market Overview FY 2020 Total mortgage Strongest growth in the Residential property Average transaction production increased to refinancing segment supply has increased by price came to a record record level of €155bn (+48.5%) 75,000 in 2020 (+0.95%) level of €334,50
Slide 36: Policy developments Dutch mortgage market
Policy developments Dutch mortgage market Implementation of Aegon Interest rate averaging automatic LTV migration Temporary stricter specific underwriting criteria in offered to customers Aegon stops offering response to COVID-19 developments interest rate averaging LTV: 102% LTV: 101% LTV: 100% LTV
Slide 37: Dutch housing market
Dutch housing market Changing household composition requires more supply Dutch household composition Dutch house supply 8.5 100% 8.0 60% Millions Millions 90% 8.0 80% 7.5 70% 7.5 60% 50% 7.0 55% 7.0 40% 30% 6.5 6.5 20% 10% 6.0 0% 6.0 50% 2000 2005 2010 2015 2016 2017 2018 2019 2020 2012 2013 2014 20
Slide 38: Dutch house price index
Dutch house price index Significant increase over recent years 180 Belgium France Spain Netherlands Denmark Germany 160 • For FY 2020, the increase in house prices was 7.8%, up from 6.9% for FY 2019, 140 according to CBS • The pandemic makes the outlook for the 120 Dutch housing market uncertain. Th
Slide 39: Focus on ESG
Focus on ESG We enable our customers to make conscious financial decisions for a lifetime of financial security A greener environment and lifetime of financial security through: • Investing responsibly Focus Aegon NL • Enabling customers in making conscious financial decisions • Caring for our emplo
Slide 40: ESG targets Aegon mortgages
Appendix ESG targets Aegon mortgages Step-by-step moving towards an energy-neutral mortgage portfolio in 2050 Short term targets (2021 - 2022) • Setting up infrastructure required to fully support customers in improving the energy efficiency of their homes - Setting up partner network sustainable im
Slide 41: Responsibility
Responsibility Aegon Bank N.V. It is our mission to make our customers feel comfortable about their finances Environmental Investments carbon footprint • Focus on measuring and reducing the greenhouse gas emissions (and (FY 2020) Value Carbon Coverage Relative footprint intensity CO2 emissions in pa
Slide 42: Soft Bullet Covered Bond Programme
Soft Bullet Covered Bond Programme Aegon Bank N.V. 42
Slide 43: Soft Bullet Covered Bond Programme
Soft Bullet Covered Bond Programme Programme summary Key benefits Issuer Aegon Bank N.V. (Aegon Bank) • Highly rated issuer: Aegon Bank N.V. ‘A’ (S&P) Programme size EUR 5 billion • Obligation for Aegon Bank N.V. to redeem the Cover Pool EUR 611 million1 Dual recourse bond at expected maturity date
Slide 44: Highlights Soft Bullet Covered Bond Programme
1 Highlights Soft Bullet Covered Bond Programme Key Programme Parties Transaction Structure Aegon Hypotheken / Aegon Leven / Aegon Originators Bank Swap Transferor Aegon Bank Custodian provider*1 Issuer Aegon Bank (Sub-) Servicing Swap Account Servicer Aegon Hypotheken Servicer agreement Agreements
Slide 45: Soft Bullet mechanism
Soft Bullet mechanism Event Diagram Event of Default • The Asset Cover Test (ACT) will be replaced by the Amortisation Test • If on the Final Maturity Date of the SB CB an Issuer Event of Default takes Issuer Event of No place and the CBC has insufficient funds to redeem the Covered Bonds Bullet Mat
Slide 46: Highlights Soft Bullet Covered Bond Programme
Highlights Soft Bullet Covered Bond Programme Cover Pool characteristics1 Product Types1 1% Principal balance EUR 632,953,918 Value of saving deposits EUR 22,196,919 5% Net principal balance EUR 610,756,999 6% Number of loans 3,731 Number of loan parts 6,959 Average principal balance (borrower) 163,
Slide 47: Highlights Cover Pool
Highlights Cover Pool Interest rate buckets1 Time to interest reset date (yrs)1 56% 36% 31% 21% 15% 7% 7% 5% 5% 4% 1% 1% 2% 1% 2% 1% 2% 1% 1% 0% 0% 0% - 1% 1% - 2% 2% - 3% 3% - 4% 4% - 5% 5% - 6% > 6% 0-1 1-2 2-3 3-4 4-5 5-6 6-7 7-8 8-9 9-10 10-15 15-20 20-25 25-30 CLtIMV1 Current loan balance (in E
Slide 48: Asset Cover Test
Asset Cover Test Asset Monitoring Agreement Adjusted Aggregate Asset Amount = A + B + C + D - Z • Adjusted Aggregate Asset Amount1 >= outstanding Covered Bonds • The calculation of ‘A’ includes: • First Regulatory Current Balance Amount >= 105% of outstanding - 96.7% asset percentage Covered Bonds -
Slide 49: Comparison to other Dutch Covered Bond programmes
Comparison to other Dutch Covered Bond programmes ABN AMRO Achmea Aegon Van Lanschot ING NIBC NN Bank Rabobank de Volksbank Kempen Van Lanschot Kempen Wealth Nationale-Nederlanden Coöperatieve de Volksbank N.V Issuer ABN AMRO Bank N.V. Achmea Bank N.V. Aegon Bank N.V. ING Bank N.V. NIBC Bank N.V. Ba
Slide 50: For questions and information relating to the Programme please contact
For questions and information relating to the Aegon Bank Soft Bullet Covered Bond Programme please contact: Otto Venhuis Jeroen Dekkers Senior funding specialist Senior Structurer Aegon Bank N.V. Aegon Nederland N.V. T: +31 6 2782 1036 T: +31 6 8298 0306 E: [email protected] E: Jeroen.Dekkers@aeg