Investor Presentation. May 2018

Transcription

1 Investor Presentation May 2018

2 Disclaimer This presentation and the information contained therein (herein referred to as the Document ) have been prepared by Banque Internationale à Luxembourg S.A. (herein referred to as BIL ), a Luxembourg bank licensed and supervised by the CSSF (the Luxembourg Commission de Surveillance du Secteur Financier) and the ECB (European Central Bank). It has been produced for information purposes only and may not be complete. This Document cannot be construed as investment advice as it has been prepared without regard to the individual financial and other circumstances of persons who receive it. This Document does not constitute an offer to sell or the solicitation to buy any securities issued by BIL or any entity of the BIL group and does not constitute a public offer under any applicable legislation. In particular, this Document is not an offer to sell or the solicitation of an offer to purchase securities in the United States. Securities may not be sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. This Document may include future expectation and/or forward-looking statements and assumptions related to the possible evolutions of business environment. By their very nature, statements contained in this Document involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution readers not to place undue reliance on these statements as a number of important factors could cause our actual results to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such statements. Such important factors may include, but are not limited to, general economic conditions, general competitive factors, changes in the availability or costs of liquidity, general market conditions, changes in laws and regulations (including accounting principles), changes in the policies of regulatory authorities, changes in interest rates and/or exchange rates, and other factors not specified herein. In any event, such forward-looking statements speak only as of the date on which they are made, and BIL does not undertake any obligation to update or revise such statements as a result of new information, future events or otherwise. BIL makes every effort to ensure the contents of this Document have been compiled from sources believed reliable. All opinions, estimates and projections contained in this Document are those of BIL as of the date hereof and are subject to change without notice. BIL or any other entity of BIL s Group is not liable for any damages that may result from any inaccuracy or incompleteness in/of this information. BIL or any other affiliate of BIL is not liable for any investment decisions of whatever nature, which are in any way based on this Document by the user thereof. This Document or any part of it may not be reproduced, distributed or published without the prior written consent of BIL. 2

3 Agenda Section 1 Overview 4 2 Financial Performance 17 3 Asset Quality 20 4 Solvency and Liquidity 24 5 Key Takeaways 28 6 Addendum & contacts 30 Participants Nico Picard CFO Pierre Malevez Olivier Habay Head of Finance and Risks Head of Long Term Funding 3

4 Section 1 Overview

5 Overview BIL is the Oldest Bank in Luxembourg Creation 1856 Banque Internationale à Luxembourg, the first public limited bank in the country, was founded on 8 th of March 1856 to provide financing for the railways and the iron and steel industry of a country that was purely agricultural. In the same year, it undertook its first issue of banknotes, a privilege which it was to retain up until the introduction of the euro Key milestones 1963 BIL was underwriter of the first eurobond listed on the Luxembourg Stock Exchange, in July 1963 (one of the key factors behind the success of the financial center) 1970 BIL is one of the founding members of CEDEL, which grew to become the clearing firm Clearstream International 1985 The Bank commenced its private banking activities in Switzerland 2000 The Bank commenced its private banking activities in Denmark 2002 Experta was formed to offer custom investment and holding structure solutions 2012 Precision Capital and The Grand Duchy of Luxembourg bought BIL from Dexia Creation of BIL Manage Invest in Luxembourg Founding of Belair House, a family office offering investment advice and wealth management Opening of the BIL Middle East branch in Dubai 2015 Merger of the private banking business of KBL (Switzerland) into BIL Switzerland 2016 Opening of a representative office in Sweden 2017 Legend Holdings announces intention to buy Precision Capital s stake in BIL 5

6 Overview Shareholding structure Precision Capital Precision Capital is a Bank Holding Company incorporated in Luxembourg and is subject to the supervision of the Commission de Surveillance du Secteur Financier and the European Central Bank Precision Capital also owns 99.9% of KBL European Private Bankers Precision Capital is ultimately owned by the Al Thani family of Qatar (HE Sheikh Hamad bin Jassim bin Jabor Al-Thani) Precision Capital s paid up capital is EUR 1.7bn after the acquisition of BIL Precision Capital is represented on BIL's Board of Directors The Grand Duchy of Luxembourg The Grand Duchy of Luxembourg views BIL as a bank of systemic importance and will contribute to consolidating BIL s position as a strategic player in the financial services sector (1) The Grand Duchy of Luxembourg is one of two countries in the Eurozone still enjoying a AAA rating assigned by S&P, Fitch and Moody s The Grand Duchy of Luxembourg is represented on BIL's Board of Directors PRECISION CAPITAL (89.94%) THE GRAND DUCHY OF LUXEMBOURG (9.99%) PUBLIC (0.02%) BIL (0.05%) New expected shareholding structure (subject to regulatory approval) - next page As of 31/12/2016 (1) Please refer to BIL press release dated 5 October 2012 : Precision Capital and the Grand Duchy of Luxembourg announce the closing of the acquisition of Banque Internationale à Luxembourg (BIL) 6

7 Overview Sale of Precision Capital s majority stake in BIL to Legend Holdings Sale On September 1 st 2017, Precision Capital signed an agreement, subject to regulatory approval, to sell its majority stake in BIL to Legend Holdings (1) The Grand Duchy of Luxembourg will remain an important shareholder in BIL and will retain its 9.99% stake Legend Holdings considers BIL as a long-term strategic investment Legend Holdings intends to maintain and invest further in the development of the BIL brand, in Luxembourg, Europe and internationally BIL governance and management will remain unchanged: Luc Frieden will remain BIL Chairman while Hugues Delcourt will remain CEO On January 16 th 2018, Legend Holdings Shareholders vote and approve the transaction at the EGM. Legend Holdings Legend Holdings is an investment holding company headquartered in Beijing, China, and listed on the Hong Kong Stock Exchange (June 2015) As at 31 December 2017, Legend Holdings had assets of EUR 42.95bn (2), annual revenues of EUR 42bn (3) and close to 60,000 employees worldwide Legend Holdings founded Lenovo and developed it into a global leader following Lenovo s acquisition of IBM s global PC business in 2004 Legend Holdings has a 33-year history of continued growth and expansion Legend Holdings is rated AAA in China (United Credit Ratings CO., Ltd) New expected shareholding structure (subject to regulatory approval) LEGEND HOLDINGS (89.94%) THE GRAND DUCHY OF LUXEMBOURG (9.99%) PUBLIC (0.02%) BIL (0.05%) (1) Please refer to BIL press release dated 1 September 2017 : Legend Holdings to acquire Precision Capital s stake in Banque Internationale à Luxembourg (2) Based on EUR/CNY of as at 29 December 2017; (3) Based on 2017 average EUR/CNY of Legend Holdings presentation from page 31 to page 34 7

8 Overview Building great companies Rationale for Legend s strategic investment in BIL Profitable business: BIL s asset scale, profit and revenue growth potential and business stability BIL s long history and deep roots in Luxembourg A well-run bank with a diversified business mix and a focused, longterm strategy A well-capitalised bank with strong corporate governance and risk management. Legend offers advantages as a shareholder Long-term investment horizon and capital support Access to China: business opportunities for BIL with Chinese companies and individuals overseas Potential business synergies with other companies in Legend s portfolio Experience and network in artificial intelligence, internet, big data and financial technology, etc. Legend Holdings presentation from page 31 to page 34 8

9 Overview Key Data December bn euro Assets under Management +4.5% compared with bn euro Loans +10.8% compared with bn euro Deposits +1.2% compared with mn euro Net Income BIL Group #3 in Luxembourg (market share) Service points in Luxembourg 23.8 bn euro Total Balance Sheet BIL Group Point of services in Automated Luxembourg teller machines Next generation machines allowing real-time deposits 12.48% CET1 (Fully Phased In) 14.73% Tier 1 (Fully Phased In) 136 9

10 Overview Commercial Activities in Luxembourg Luxembourg: a fully integrated multi-channel approach Haquarters HEADQUARTERS NETWORK (RETAIL BANKING) DIRECT BANKING Corporate & Institutional Banking Corporate Banking, Financial Institutions, Large Corporates & Structured Finance 41 Branches 8 Private Banking centres 7 SME centres Internet Banking (BILnet) Full banking access Private Banking Private Private Banking Banking is / organised Wealth Management in 6 commercial WM business Luxembourg divisions: WM Domestic Europe markets (Luxembourg & Germany), WM Core Mediterranean Europe (Belgium Markets, & France), MENA & CIS WM Northern UHNWI Europe, & Family Offices WM South Professional Europe, Intermediaries Products International & Solutions markets (East Europe, Middle East, North Africa, Asia, Russia, Latin America, etc) Professional Intermediaries Services Centre BELGIUM WEISWAMPACH GERMANY GERMANY ETTELBRUCK ECHTERNACH Mobile Banking (BILnet Mobile) 1 st bank in Luxembourg offering mobile banking : iphone, ipad & Android MultiLine Internet banking dedicated to corporate money transfers & Sepa Direct Debit Treasury & Financial Markets Treasury Assets & Liabilities Management Investment Portfolio Financial Markets GREVENMACHER ARLON LUXEMBOURG ESCH/ALZETTE THIONVILLE TRIER Self-Banking Network of 136 ATMs of which new generation ATMs with real time deposit facilities Digital Recognized as one of the leading banks in digital by Deloitte FRANCE METZ Branches Private Banking & SME Centres 10

11 Overview A Leading Bank in the Luxembourg Economy Leading independent bank in Luxembourg offering a full service SME & Retail Corporate Nr 3 Nr 2 Private Public Nr 3 Nr 3 Banks Institutional Number 1 independent bank in Luxembourg Systemic importance in Luxembourg Leading bank among local clients: retail, SME & corporate and institutional clients Leading private bank in Luxembourg market International diversification, with strong focus on HNWI in specific markets Loan book of EUR 13.3bn of which EUR 4.4bn are mortgage loans as of December 2017 Strong expertise in Retail, Private, Corporate and Financial Markets sectors Reputation for operational excellence among professionals Nr 3 Financial participations in major national companies STE DE LA BOURSE LUXBG Stock Exchange 21.41% LUXAIR National airline 13.14% As of 31/12/

12 Overview Our International Presence Luxembourg Retail, Private, Corporate and Institutional Banking and Treasury and Financial services. Experta, providing corporate and investment structures BIL Manage Invest, independent structuring specialist Belair House, Multi-Family Office BIL Lease Switzerland Private Banking activities Switzerland remains the #1 destination for international wealth with increasing exposure to high-growth geographies A sizeable private bank with offices in Zurich, Geneva, Lugano Specialising in financial analysis and management. Middle East Focus on Private Banking clients (HNWI), long term relationships with wealthy local investors International financial services on an open architecture basis. Booking centres in Switzerland and Luxembourg Denmark Private Banking centre specialising in Scandinavian wealth management and asset management services. Offering bespoke investment solutions A key market for BIL Sweden Representative office to promote BIL s financial services in Sweden Provide BIL with a local office for the collection and transmission of marketrelated information 12

13 Overview Commercial Activities Business Lines and Geographical Breakdown Assets under Management Clients loans Retail 15% Corporate 18% Private 67% Corporate 38% Private 21% Retail 41% Franchise & Revenues Overview (December 2017) in EUR mn Assets under Management Clients loans * Revenues Private 26,285 2, Luxembourg ** 21,913 2, Switzerland 3, Other 1, Retail 5,899 5, Corporate 7,207 4, TFM & Group Center Corporate9% 21% Private 45% Revenues Other Switzerland 2% 7% Commercial activities 39,391 13, Revenues TFM n/a n/a 82 Group Center n/a n/a (30) Total ,391 13, Total ,688 12, * excluding impairments and institutional banking clients loans from TFM ** excluding international branches (BIL Denmark and BIL Dubai) Retail 25% Luxembourg 91% 13

14 Overview Commercial Activities Assets under Management, Loans and Deposits Assets under Management (in EUR bn) Loans (in EUR bn) (2) +36% Private Banking Corporate Banking Retail Banking % Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Deposits (in EUR bn) % Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec (1) 2012 AuM recalculated following the withdrawal by an institutional customer at the start of 2013 (-0.9 bn) Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 (2) Limited to commercial business lines and excluding impairment and institutional banking clients loans from TFM which explains the discrepancies with the consolidated figures 14

15 Overview Client Base NUMBER OF CLIENTS CRITERIA FOR SEGMENTATION OVERVIEW Corporate Retail Retail Basic Retail Core Affluent Private Banking Wealth UHNW ~ 6,800 ~ 192,000 ~ 27,000 AuM AuM Turnover EUR > 2mn EUR < 2k EUR 2k - 125k EUR 125k - 500k EUR 500k 10mn EUR > 10mn Full life cycle services to the entire spectrum of commercial & industrial companies and their owners, from small to large scale, in key economic sectors in Luxembourg Treasury and refinancing solutions to public entities and their satellite companies One-stop-shop services to financial sector companies 3 rd largest bank in Luxembourg with 13.3% on global market shares 13.6% estimated market share in both lending and deposits Significant increase in AuM in 2016 & 2017 Focus on Luxembourg and greater region clients Wealth management operations conducted in Luxembourg, Switzerland, Denmark and Dubai Client base currently from Luxembourg and neighboring European countries with a growing international component 15

16 Overview BIL 2020 Reloaded - Strategy reaffirmed with new supporting initiatives New set of initiatives mapped and agreed by business / function Retail Banking Focus RMs on highest potential clients Free-up capacity in the front office through E2E process review Free-up sales time through digital (and CBS implementation) Right-size support to Retail activity Continuous branch network optimization IT & Ops Wealth Management Other support functions Ongoing streamline of general support functions Perform full pricing review Develop MiFID compliant value proposition Launch frontline excellence program (investment penetration review of RM pool) Focus on increasing lending penetration Foster semi-organic growth Optimize efficiency on frontline support and digital Focused development of subsidiaries for increased profit contribution CBS implementation IT and technological support to Digital and commercial value proposition Regulatory Improved execution of regulatory waves Corporate and Institutional Banking Implement an economic value analysis approach Foster process reengineering (in particular for loans) Push forward on the focus on clusters and un-explored client segments Treasury and Financial Markets Continuous optimisation of TFM organisation (ALM, treasury, investment portfolio, correspondent banking reallocation) Leverage unique TFM capabilities for other banks (e.g. bond issuing for companies, bank for banks) Strategy / implementation support 16

17 Section 2 Financial Performance

18 Financial Performance Global View Income Statement global view Income Statement core activities in EUR mn December 2016 December 2017 Revenues Interest and Dividend Incomes Fee Income Other Income Operating Costs (369) (397) Gross Operating Income Value Adjustments (17) (20) Profit before Tax Tax (46) (19) Net Income after Tax Cost Income Ratio (CIR) 68% 72% Comments BIL reported a solid net income after tax of EUR 117mn in 2017, compared with EUR 110mn in 2016 (+5.7%). This positive evolution stems primarily from the strong core operating activities and limited tax expenses partially offset by non-recurring items. Core revenues from commercial business lines progressed by EUR 37mn above 2016 (+7.9%) supported by good results of the three business lines. Strong contribution from Private Banking (EUR 22mn) due to several initiatives such as cash cleaning with a positive shift in product mix, negative interest rate charges and AuM growth. Core operating net income before tax reached EUR 135mn in 2017, 9.3% higher than 2016 figures of EUR 124mn. This increase was driven by commercial activities and TFM contributions (EUR 20mn more compared with 2016), and was partly offset by a lower contribution from the Group Center (EUR 9mn). Non-recurring items were mainly influenced by the signing of the sale agreement between Legend Holdings and Precision Capital on September 1, 2017, as BIL recognized all expected costs related to this transaction in its 2017 accounts. Tax expenses reached EUR 19 million in 2017 compared with EUR 46mn in The tax change that occurred in the various jurisdictions was limited to 1.7% growth offset by a write-back of impairments on tax losses carried forward. Return on Equity (1) reached 14% in Numbers have been rounded on exact numbers in EUR mn December December Change 2017/2016 Total revenues incl. Capital gains and nonrecurring items Core operational activities EUR mn % % Core revenues % Private Banking clients % Retail clients % Corporate clients % Treasury & Financial Markets (6) (12.2%) Group Center (6) (16) (10) ns. Core expenses (363) (372) (9) 2.6% Core gross operating profit % Core value adjustments (19) (20) (1) 2.3% Core operating profit % Capital gains % Non-recurring items (net of revenues and expenses) (7) (39) (32) ns. Profit before tax (20) (12.9%) Tax (46) (19) 26 (57.8%) Net income after tax % Core Cost Income Ratio (CIR) 71.7% 70.6% RWA (Risk Weighted Assets) 5,819 6,640 CET1 ratio before profit allocation Transitory 12.98% 12.21% CET1 ratio after profit allocation Transitory 13.72% 12.89% (1) Return On Equity calculated as RoATE (Return on Average Tangible Equity) based on 2017 Net Profit and Average of 2017 and 2016 Core Shareholders Equity excluding Intangible Assets & Goodwill and Deferred Tax Assets 18

19 Financial Performance Global View Balance Sheet December December % in EUR mn Change Change Assets 23,149 23, % Loans and Advances to Credit Institutions and Cash and Balances with Central Banks 3,157 3, % Loans and Advances to Customers 12,043 13,344 1, % Financial Investments 6,917 5,932 (986) (14.2)% Positive Fair Value of Derivative Products (18) (7.4)% Other Assets 0,785 0,799 (14) 1.8% Liabilities 23,149 23, % Amounts due to Credit Institutions 2,216 2, % Amounts due to Customers 16,129 16, % Negative Fair Value of Derivative Products (52) (12.0)% Debt Securities and Financial Liabilities 2,410 2,356 (53) (2.2)% Subordinated Debts (12) (4.1)% Other Liabilities (63) (15.6)% Shareholders Equity 1,260 1, % Assets Customer loans increased by EUR 1.3bn (+10.8%), stemming partly from commercial activities (EUR 0.9bn) and partly from the institutional banking activities of Treasury & Financial Markets. Outstanding mortgage loans increased by EUR 0.4bn (+9.4%) and investment loans by EUR 0.4bn (+6.8%). Financial Investments reached EUR 5.9bn (-14.2%) in line with the decrease of the Investment Portfolio, notably due to sales, positions reaching maturity and limited replacements in new investments within the same timeframe. Liabilities Amounts due to credit institutions increased by EUR 0.6bn (+25.8%) resulting from long-term refinancing operations (TLTRO), short-term interbank deposits and repos. Customer deposits increased by EUR 0.2bn (+1.2%), a modest evolution essentially due to an increase in term deposits (EUR 0.5bn). During the second semester of 2017, the Bank further encouraged clients to convert deposits into higher yielding products as reflected in the increase in Assets under Management. Shareholders equity increased by EUR 27mn (+2.1%) due to the 2017 net profit of EUR 117mn partially offset by the dividend payment of EUR 60mn in April 2017 and the decrease of revaluation reserves on assets available for sale of EUR 34mn following the realisation of capital gains. Numbers have been rounded on exact numbers 19

20 Section 3 Asset quality

21 Asset Quality Global Exposure Exposure by Geographic Region December 2017 in EUR mn December 2016 MCRE (*) Percentage Europe 23,590 24, % Luxembourg 13,306 13, % France 3,045 2, % Belgium 1,428 1, % Germany 1,344 1, % Switzerland 938 2, % Spain % United Kingdom % Netherlands % Ireland % Austria % Italy % Denmark % Sweden % Portugal % Greece % Other EU countries % Supra-National % Rest of Europe % Asia % China % Central and South Americas % United States and Canada % Rest of the world 1, % Australia % Qatar % Total 25,675 25, % Comments on Global Exposure High concentration on Core Europe: The top 5 countries (Luxembourg, France, Switzerland, Belgium and Germany) represented 80.4% of BIL s total exposure as of December Sovereign Exposure to PIIGS (debt instruments) MCRE (in EUR mn) December 2017 Risk Country Switzerland 8.4% Germany 5.2% Belgium 5.6% Others 19.6% France 10.3% Luxembourg 50.9% PIIGS sovereign exposures represent 3.4% of the total exposure. Sovereign Exposure Ireland 277 Italy 0 Spain 593 Portugal 0 Greece 0 TOTAL 870 Numbers have been rounded on exact numbers (*) Credit risk exposure refers to the Bank s internal concept of Maximum Credit Risk Exposure (MCRE) 21

22 Asset Quality Non-Performing Loans and Cost of Risk Non-Performing Loans Core and Non-Core Business in EUR mn December 2015 December 2016 December 2017 Total Exposure 15,646 16,504 17,061 NPL Comments on Non-Performing Loans Global NPL ratio 2017 roughly in line with previous year at 2.86% limited to the core activities. The total Non-Performing exposure decreased by EUR 13mn while the total exposure increased by EUR 557mn (+ 3.4%). o/w Impaired Loans o/w Not Impaired Loans NPL ratio 3.99% 4.22% 4.00% NPL ratio excluding Non-Core 2.44% 2.78% 2.86% Cost of Risk in EUR mn December 2015 December 2016 December 2017 Gross amount of non-impaired Loans 11,330 12,003 13,289 Impaired loans to customers Provisions on impairment on Loans and for Credit Commitments (18.6) (16.9) (20.0) Provision / Gross amount of nonimpaired loans ratio (in bps) Asset Quality ratio (*) 2.95% 2.85% 2.43% Comments on Cost of Risk As of December 2017, the 1-year Cost of Risk was mainly impacted by specific provisions on Corporates, SMEs and individuals. A low risk profile with a stable ratio provision / gross amount of non-impaired loans of 1.51 bps for Asset quality ratio to 2.43% as at December 2017 (2.85% in 2016). (*) Impaired loans as a percentage of total loans outstanding (gross amount + impaired loans) 22

23 Asset Quality Investment Portfolio (December 2017) Investment Portfolio by Issuer Type European Government Bonds Portfolio by Geographic Region Financials / Corporate / Securitization 19% Gulf Region 1% Austria / Germany 9% Ireland 8% Other 4% Belgium 28% Covered bonds 7% Local Authorities 3% Other Govies 2% US Govies 6% Agencies / Supras 9% European Govies 53% Central Europe 10% Spain 19% France 22% The total size of the portfolio is EUR 5.5bn Investment Portfolio by Rating Investment Portfolio by Maturity BBB AAA >10yrs 13% [0;3yrs] 16% 2% 20% A 20% ]7;10yrs] 34% AA 51% ]5;7yrs] 17% ]3;5yrs] 27% The average rating of the portfolio is A+ The average maturity of the portfolio is 5.6 years Non-rated Belgian Local Authorities have been assigned the Belgian Government s rating minus 1 notch 23

24 Section 4 Solvency and Liquidity

25 Solvency and Liquidity Solvency Position (Fully Phased-in) Solvency Ratios (2016 and 2017 figures before profit allocation) Last Improvements (December 2017) in EUR mn Basel III Basel III December 2016 December 2017 (*) WEIGHTED RISKS (**) 5,848 6,664 Capital Position Integration of net profit 2016 less dividend (EUR +43mn) Integration of interim 2017 net profit (EUR +64mn) IAS 19 actuarial increase (EUR +7mn) Investment in new software (EUR -41mn) AFS reserves decrease (EUR -34mn) Credit risk 4,971 5,737 Market risk Operational risk RWA growth (EUR 816 million) mainly driven by the Credit Risk Changes in the credit risk models (EUR +455mn) Commercial loans portfolio growth (EUR +337mn) Credit Value Adjustment TOTAL CAPITAL 1,080 1,115 Leverage Ratio (fully phased-in) BIL leverage ratio is 3.97% Common Equity Tier Additional Tier Capital Breakdown (December 2017) (in EUR mn) Tier SOLVENCY RATIOS CET1 ratio 13.42% 12.48% Tier 1 ratio 15.99% 14.73% 1, ,115 Total regulatory capital ratio 18.46% 16.73% (402) (*) 2017 CET1 including partial profit allocation for EUR 64 million (**) Following an on-site JST (Joint Supervisory Team) review of the real estate promotion exposures which ended March 2018, the Bank is waiting for the final report from ECB (European Central Bank). It may lead to an increase of credit-related RWA, which is currently estimated to approximately EUR 200 million. This would reduce the CET1 ratio by around 35bps. Core Shareholder's Equity Deductions and Prudential Filters Core Equity Tier 1 AT1 Tier 1 Capital Tier 2 Total Capital 25

26 Solvency and Liquidity Liquidity Position, Amortizing Profile and Outstanding Programmes A Strong Liquidity Position (December 2017) More than 80% of the bond portfolio is ECB eligible as of December 2017 Excess cash at Central Banks for EUR 2.57bn Loan-Deposits ratio: 82% LCR stands at 131% as of December 2017 thanks to current excess cash and to a largely ECB eligible bond portfolio NSFR stands at 109% as of December 2017 thanks to the outstanding debt profile and to the existence of a highly liquid portfolio BIL s Diversified Sources of Funding Retail, Private Banking, Corporate deposits and Schuldscheindarlehen EMTN Programme: BSPs (2) : Debt issuances distributed in BIL s own network (Retail, Private Banking, Corporate) Private placements to Third Party Investors Subordinated (Tier II) BIL Debt Maturity Profile (in EUR mn) 2, , ,797 1, ,226 Available Funding Programmes Senior Unsecured Funding Segment Money Market Debt Capital Markets Issuer BIL BIL Programme notional 5bn 10bn Currency EUR EUR Maturity 0-12 months 12 months + 0 December 2017 June 2018 December PPs to Third Party Investors Sub-debt BSPs (1) (2) Format ECP EMTN Documentation Luxembourg law Luxembourg or English law (1) This amortizing profile does not take into account customer deposits longer than 1 year (2) BSPs: BIL Structured Products 26

27 Solvency and Liquidity BIL s Credit Ratings Latest rating actions Fitch (December 7, 2017) : BBB+ affirmed / outlook revised to positive S&P (November 23, 2017) : A- and stable outlook confirmed Moody s (May 7, 2018) : A2 affirmed / outlook revised to stable S&P Fitch Moody's Long-Term Rating A- BBB+ A2 Outlook Stable Positive Stable Short-Term Rating A-2 F2 P-1 Stand-Alone Rating bbb+ bbb+ baa2 Publications Nov-2017 Dec-2017 May-2018 Rating Agencies Comments Fitch (December 7, 2017) Outlook revised to positive The Positive Outlook reflects on-going progress in the implementation of management's strategy to strengthen BIL's domestic franchise and measures to improve cost efficiency. Over the past five years, BIL has been rebuilding its domestic retail and commercial franchise and has created a positive momentum in its private banking business, leading to higher revenue. Fitch views positively the expected change in the majority ownership of BIL and expects the strengthening of earnings generation to continue. S&P (November 23, 2017) Ratings confirmed with stable outlook The stable outlook reflects S&P Global Ratings' view that Banque Internationale à Luxembourg's (BIL's) financial profile will continue to improve in the next two years. In particular, we project that, by the end of 2018, BIL will strengthen its additional loss-absorbing capacity (ALAC) buffer to protect senior unsecured creditors to above 5.5% of S&P Global Ratings' risk-weighted assets (RWAs), our threshold for a one notch of ALAC uplift for BIL. We expect the bank to do so by maintaining stable core capitalization and issuing bail-in-able subordinated instruments. Moody s (May 7, 2018) Ratings confirmed with stable outlook The outlook on BIL's long-term issuer, deposit and debt ratings is stable, reflecting Moody's view that the bank's commercial development, even supported by its new shareholder, will take time before delivering higher profits. The rating agency expects BIL's asset risk to remain low in the current benign macroeconomic environment, while its profitability will continue to be constrained by low interest rates and high operating expenses. 27

28 Section 5 Key Takeaways

29 Key Takeaways Systemic bank in the Grand Duchy of Luxembourg rated AAA by S&P, Moody s and Fitch Strong financial results & commercial franchise in line with BIL2020 Strategy initiatives with a good trackrecord since 2012 Leading independent bank in Luxembourg with excellent brand Strong local client base among retail, private and corporate clients, and internationally diversified in key markets Strong capital position Strong liquidity position with no wholesale funding dependence Solid profitability with a 14% return on equity in

30 Section 6 Addendum & contacts

31 Addendum Introducing Legend Holdings as new shareholder of BIL Legend Holdings, founded in 1984, is a leading diversified investment group that is headquartered in Beijing, China, and listed on the Hong Kong Stock Exchange (HKSE Stock Code: 3396). Legend Holdings goal is to build an investment portfolio with sustainable long term, stable growth potential. For strategic investments, Legend aims to invest and develop its portfolio companies to become a pillar asset of Legend Group. Strong financials: As at 31 December 2017, Legend Holdings had assets of EUR billion*, annual revenues of EUR 42 billion** and close to 60,000 employees worldwide. Legend Holdings has a AAA rating in China (United Credit Ratings Co., Ltd.). A history of solid investments: Lenovo Group Limited (HKSE Stock Code: 992), one of its portfolio companies, was founded by Legend Holdings in 1984 and is now one of the world s leading vendors of personal computers. Lenovo successfully acquired IBM s global PC business in 2004, subsequently growing the brand into a global leader. A diversified portfolio: Legend Holdings has built an innovative two-wheel-drive business model which combines both strategic investments and financial investments. Strategic investments business focuses on several major sectors including financial services such as the BIL acquisition, innovative consumer services, agriculture and food, and IT. Financial investments business includes angel, venture capital and private equity investments covering all stages of a company s life cycle. Creation of long-term value and sustainable growth through commitment to strong and compliant governance, rigorous risk control and long-term financial and operational support across the investment portfolio. *based on EUR/CNY of as at 29 December 2017; **based on 2017 average EUR/CNY of

32 Addendum Stable, diversified shareholders of Legend Holdings Shareholder Since 1984 CAS Holdings Shareholder Since 2001 Lian Chi Zhi Yuan Shareholder Since 2009 China Oceanwide Holdings Key staff Core Management Team and others 29.04% 20.37% 16.97% 7.55% 9.43% Free float H shareholders traded on Hong Kong Stock Exchange 16.64% All major shareholders are long-term investors. They provide a stable and diversified shareholder base for Legend Holdings. 32

33 Addendum Legend Holdings Investment Portfolio with Sustainable Long-Term Growth Legend Holdings Major Strategic Investments Major Financial Investments Angel Investments IT Financial Services Consumer services / TMT Agriculture and Food High-Tech Incubation & Start-Ups e.g. Artificial Intelligence, machine learning, big data,gene technology Lakala Payment Kaola Technology Venture Capital Early Stage and Innovation e.g. smart electric drive and driver assistance system, internet,big data,fintech Significant or controlling shareholder Long-term shareholder Provide value added services Build leading companies in our target industries Private Equity Growth Capital and crossborder investment in various sectors 33

34 Addendum Legend Holding s expertise in financial services A commercial bank in Central China 156 branches and sub-branches as of Dec 31, 2017 CNY 281bn (EUR 36bn) total assets as of Dec 31, 2017 About 6,416 corporate customers, over 1,860 hightechnology enterprise customers, 12.2 mn debit cards, and 282,000 credit cards issued as of Dec 31, 2017 An internet-based financial services provider in China Over 10 million merchants and more than 10 million individuals users in over 330 cities across China Specialise in online and offline payment services and online consumer lending Other service offerings include credit rating and wealth management A specialty finance company providing financial services and intellectual support for SMEs Over 5,000 SME clients totally served CNY 6bn outstanding loan balance and CNY 5bn outstanding leasing balance as of Dec 31, 2017 Financial services provided to SMEs include direct loans, financial leasing, factoring, credit guarantees, and other services A financial leasing service provider in China Focuses on healthcare, small and mid-sized manufacturing companies, public utility, clean energy, environmental protection, transportation sectors Major products are direct financial leasing, sale-lease back Founded by Legend in Nov CNY 9.9bn outstanding leasing balance as of Dec 31, A specialized UK pension insurance company Lender in the growing UK wholesale pension insurance sector, with about 30% market share Major products are Buy-in and Buy-out of define benefit schemes. PIC has insured the benefits of more than 150,000 pension fund members and has 37 billion in assets (at the end of 2017). Customers include London Stock Exchange, EMI, Total, Philips and Cadbury 34

35 Contacts Banque Internationale à Luxembourg SA 69, route d Esch L-2953 Luxembourg RCS Luxembourg B-6307 Claude Schon Head of Treasury and Financial Markets T: (+352) claude.schon@bil.com Olivier Habay Head of Long Term Funding T: (+352) olivier.habay@bil.com T: (+352) F: (+352) Nico Picard CFO T: (+352) nico.picard@bil.com Jérôme Nèble Head of ALM T: (+352) jerome.neble@bil.com DISCLAIMER - The information contained in this document is provided purely for information purposes. BIL may not be held responsible for the use of this information and of its direct or indirect consequences. 35