Investor presentation December 2018

Transcription

1 Investor presentation December 208 Cover pool reporting as of 30 September 208

2 Agenda. Company profile and financials 3 Lettres de Gage legal framework 7 Cover pool 22 Contact / Website 33 Appendix 36 2

3 Company profile and financials NORD/LB CBB at a glance. Centre of competence for the issuance of Lettres de Gage publiques and énergies renouvelables 00% subsidiary of NORD/LB with letter of comfort and over 45 years in Luxembourg The Luxembourgish Pfandbrief Act is the basis of NORD/LB CBB s business model Excellent knowledge in lending business with public enterprises and renewable energy projects Over 0 years of experience in public finance via Lettres de Gage publiques Sustainability is part of NORD/LB CBB s business strategy since 203 3

4 Company profile and financials Owners of NORD/LB a strong community. Strong support from our owners¹ Headquarters and ownership region Saxony-Anhalt Savings Banks Holding Association 5.3% 5,3% 3.7% 3,7% Special Purpose Holding Association of the Mecklenburg-Western Pomerania Savings Banks Hannover Braunschweig Magdeburg Lower Saxony Savings Banks and Giro Association 26.4% 26,4% State of Saxony-Anhalt 5.6% 5,6% 59.% 59,% State of Lower Saxony Total differences are rounding differences 4

5 Company profile and financials Business segments of NORD/LB Group. 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 Corporate Customers Corporate customer business Agricultural Banking Finance with public and cooperative housing associations Corporate Finance Leasing Savings Bank Network Customers Savings Bank Network/ extended network Corporate customers/ syndication loans Municipal customers Markets Business with Institutional customers Savings banks/ financial institutions Public-sector customers Energy and Infrastructure Customers Renewable energy finance Infrastructure finance Real Estate Banking Customers Commercial real estate finance International social care property finance Ship Customers Ship finance Container vessels Bulker Tanker Multi purpose vessels Aircraft Customers Aircraft finance Narrow-/Widebodies Freighters Regional Jets Turboprops Offshore Oil & Gas Cruise ships / Ferries Helicopter Spare Engines Finance/Operating Lease 5

6 Company profile and financials NORD/LB subsidiaries and holdings. Private and Commercial Customers Corporate Customers Markets Ship, Aircraft, Energy/Infrastructure, Real Estate Banking Leasing Savings Bank Network Letter of comfort 00% % 2 Commercial real estate finance Private and commercial customers Public and project finance and issuance of Lettres de Gage ¹ For additional information about subsidiaries and affiliated companies please consult or our Group Annual Reports 207, note (84) ² NORD/LB ensures that the companies mentioned in the Annual Report 207 note (75) are able to meet their obligations ³ Incorporated under public law with partial legal capacity 6

7 Company profile and financials Ratings. NORD/LB Luxembourg Covered Bond Bank as of /2/208 as of 9/2/208 Lettres de Gage publiques / outlook AAA Aa3 2 Issuer Rating A- Baa2 2 Short-term debt F P-2 3 Deposit / outlook - Baa2 2 Rating Watch Negative 2 Review Direction Uncertain 3 Review for Downgrade 7

8 Company profile and financials Financials of NORD/LB CBB at a glance, H According to IFRS 9 - Income statement (in KEUR) Jan 30 Jun 208 Jan 30 Jun 207 Change (in %) Net interest income 53,9 56,034-4 Net comission income -22,002-5, Result from fair value measurement -8,952 5,928 < -00 Impairment loss from financial instruments not recognized in, < -00 profit or loss Disposal result from financial instruments not measured at < -00 fair value through profit or loss Result from hedge accounting -7,734-3,756 > 00 Foreign exchange results < -00 Administrative expenses -7,876-8,984-6 Depreciation -,300 -,354-4 Other operating profit/loss -4,802-4,993-4 Results negatively affected by temporary valuation effects. Decline in net interest income from expiring business and low market interest rates Net comission income: The result is negatively influenced by an adjusted margin allocation with the parent company The result from fair value measurement is mainly due to negative cross-currency basis effects from hedging transactions Significant negative result from hedge accounting due to market interest rates and CVA/DVA Administrative expenses: The Group-wide restructuring and efficiency enhancement program resulted in tangible savings The other operating result includes the bank levy of EUR 5.4 million Income taxes 4,509-3,780 < -00 Profit/loss after tax -2,877,485 < -00 The charts may contain rounding differences for computational reasons 8

9 Company profile and financials Further Financials of NORD/LB CBB at a glance, H According to IFRS 9 - (EUR bn) 30/06/208 3/2/207 Total assets Equity capital RoRaC %. % Cost-Income-Ratio 4 3,404. % 64.8 % Core capital ratio 4.2 % 4.7 % Overall coefficient 4.3 % 4.8 % Total differences are rounding differences 2 The RoRaC is equal to the quotients from the earnings before taxes and the maximum value from limit for tied-up capital or tied-up capital 3 The cost-income ratio (CIR) is calculated by dividing administrative expenses by the result from the sum of net interest, net commission income, result from financial instruments measured at fair value, foreign exchange result, result from hedge accounting, addition and reversal of provisions as well as other operating result.. 9

10 Company profile and financials Financials of NORD/LB CBB at a glance. - According to IAS 39 - (EUR mn) 3/2/207 3/2/206 3/2/205 Net interest income Loan loss provisions Net commission income Profit/loss from financial instruments at fair value Other operating profit/loss Administrative expenses Profit/Loss from financial assets Earnings before taxes (EUR bn) Total assets Equity capital RoRaC 3.%.0% 9.2% Cost-Income-Ratio % 49.% 50.7% Core capital ratio 4.7% 4.8% 5.2% Overall coefficient 4.8% 5.4% 6.3% Total differences are rounding differences 2 Profit/loss from financial instruments at fair value incl. Hedge accounting 3 The RoRaC is equal to the quotients from the earnings before taxes and the maximum value from limit for tied-up capital or tied-up capital 4 The cost/income ratio (CIR) is the ratio of administrative expenses to the total of net interest income, net commission income, trading profit/loss, valuation result (excluding profit/loss from financial assets) and other operating profit/loss. 0

11 Company profile and financials Capital ratios are significantly above the regulatory requirements. Capital ratios CET Total capital 6.3% 5.4% 4.8% 4.2% 5.2% 4.8% 4.7% 4.3% Capital ratios (30 Jun 208) CET: 4.2 per cent Total capital: 4.3 per cent 3 Dec Dec Dec Risk-weighted assets (RWA) NPL Quote LCR mn 4,40 4,20 4,244 4, % 0.3% 0.% 0,% 5% 03% 03% 66% before credit protection

12 Company profile and financials Business strategy NORD/LB CBB. NORD/LB Luxembourg Covered Bond Bank is an integral part of NORD/LB Group and thus closely linked to the strategic and sustainable focus of NORD/LB Girozentrale. The business strategy includes: Close co-operation with NORD/LB Girozentrale in lending business to expand the Group s strategic customer lending business Bundling of cover pool-eligible lending business of the Group in Luxembourg Generation of added value through the refinancing of cover pool eligible assets¹ via issuance of Lettres de Gage publiques Sales and distribution of Fixed Income and Structured Products for NORD/LB Group s European client base Expansion B2B-distribution of the modern and efficient IT platform as service provider within NORD/LB Group Responsible and future oriented action through the consideration of sustainable goals in the fields of economics, ecology and social affairs in order to contribute to a positive sustainable development according to Luxembourg Law 2

13 Business activities NORD/LB CBB focuses on three business segments. Loans Lending business and factoring in cooperation with the Corporate Customer and Structured Finance divisions of NORD/LB Group as service provider Loans to corporate customers and public enterprises, project finance (renewable energy projects and public infrastructure projects) and ECA-guaranteed financing Financial Markets Centre of competence for the issuance of covered bonds according to Luxembourgish law as a complementary component of the group s funding: Lettres de Gage publiques and Lettres de Gage énergies renouvelables Sales and distribution of Fixed Income and Structured Products for NORD/LB Group s European client base B2B Inhouse Distribution of additional services via our state-of-the-art IT platform within NORD/LB Group 3

14 Company profile and financials Financing criteria. Strategic key financing areas are Corporate Customers Public enterprises, public utility companies (Stadtwerke) and savings banks Public infrastructure projects, such as expansion of the power supply system, renewable energy, ports, airports, highways, schools and social housing Participation in ECA guaranteed transactions Lending is subject to strict financing criterias of the NORD/LB Group: Lending is conditional upon a solid transaction and financing structure, a comprehensive analysis of creditworthiness and appraisal of the company s business model as well as the economic environment Rating based on Basel III-compliant rating tool, developed in cooperation with Deutscher Sparkassen- und Giroverband (DSGV), Dekabank and other Landesbanks Final approval of the transaction by NORD/LB Luxembourg Covered Bond Bank The main scope for new commitments with a public background are transactions in the investment grade range, with a geographical focus of core European countries as well as selected new business outside Europe 4

15 Company profile and financials Funding strategy. Acquisition of the Luxemburg cover pool-eligible¹ public lending business and inclusion in the public cover pool of NORD/LB Luxembourg Covered Bond Bank Refinancing of the receivables through issuance of Lettres de Gage publiques Concentration of refinancing activities on the issuance of Lettres de Gage in medium to long term maturities, in bearer or registered format Launch of to 2 Lettres de Gage-benchmarks in EUR or other currencies to establish or enlarge funding curves Issuance of private placements as a frequent issuer in various currencies and coupon types Demand orientated issuance of unsecured debt by issuing bearer bonds or promissory note loans in medium term maturities, in the market or within the Group Benchmark issues Q5 4Q5 Q6 2Q6 4Q6 Q7 Q8 Lettres de Gage 5y, 500m 0.25% Lettres de Gage 3y, 500m 0.25% Lettres de Gage 7y, 500m 0.375% Lettres de Gage 4 ½ y, 500m 0.250% Lettres de Gage 3 y, USD 650m 2.875% according to Luxembourg Law 5

16 Agenda. Company profile and financials 3 Lettres de Gage legal framework 7 Cover pool 22 Contact / Website 33 Appendix 36 6

17 Lettres de Gage legal framework Legal setup. Specialized banking licence Commission de Surveillance du Secteur Financier European Central Bank Reviseur spécial (Trustee) Preferential claim in case of bankruptcy 2 Art. 2-8 Insolvency remoteness 2 Art. 2-9 to day liquidity buffer 2 Art. 2-5 Focused and transparent bank structure, mainly assets which are eligible for LdG publiques cover pool Competent and proactive supervisory authority with legal commitment for the LdG-segment Direct supervision of the largest European banks including the NORD/LB Group by the ECB Monitoring of the cover pool through an internationally operating auditor Segregation of cover pool assets and legal preferential claim for Lettres de Gage investors After segregation going concern of the cover pool as covered bond bank with limited business activity according to legal definition Coverage of accumulated net outflows over the next 80 days through liquid funds is ensured The legal framework for Lettres de Gage (LdG) in Luxembourg was put into force on 2 November 997 and modified on 22 June 2000, 24 October 2008, 27 June 203 and on 22 June according to Luxembourg Law 7

18 Lettres de Gage legal framework NEW Features of Luxembourg Covered Bond Law at a glance. Defintion Renewable Energy Definition of RE-Assets corresponds with EU directive 2009/28 Art. 2 (a) Includes transmission and storage equipment, if more than 50% of its effective transmission or storage is connected to renewable energy sources 80 day liquidity buffer Luxembourgish law Lettres de Gage 3 4 Requirement to mitigate liquidity risk in the covered bond program by making liquid assets available at all times to cover the cumulative net outflows of the covered bond program over 80 days 2 Collateral Framework and LtV concept Renewable Energy Implementation of a collateral framework (properties, rights, pledges, etc.) Determination of the loan to value ( earnings value / discounted cash flow) will be defined in an additional Reglement Reporting and Transparency The reporting will be defined by a separate Transparency Circular The reporting template will be provided on a quarterly basis not yet published 8

19 Lettres de Gage legal framework Legal comparison of core legislations summary. Copyright of the name Lettres de Gage publiques, -hypothécaires, - mobilières und -mutuelles NEW: énergie renouvelable Special legislative framework Cover pool eligible assets Luxembourg Germany France Öffentliche Pfandbriefe, Hypotheken-, Schiffsund Flugzeugpfandbrief Yes Yes Yes Public sector loans, mortgage loans, registered rights, exposure to credit institutions, MBS, group receivables NEW: renewable energy assets Mortgage loans, public sector loans, ship loans, aircraft loans, exposure to credit institutions Special bank principle Yes No Yes Geographical scope EEA, OECD, other countries with a high quality rating by recognized rating agencies ÖPFE: EEA, CH, USA, CA, JP, (HYPFE add AU, NZ, SG) SCHIPFE/FLUPFE: no restrictions, under certain conditions Preferential claim by law Yes Yes Yes Obligations Foncières (OF), Caisse de Refin. de l Habitat (CRH), Obligations à l Habitat (OH) OF: Mortgage loans, public sector loans, MBS CRH: Mortgage loans OH: Mortgage loans, guaranteed loans, MBS OF: EEA, CH, USA, CA, JP, AU, NZ, other countries acc. to min. requirements CRH: France OH: EEA, other countries acc. to min. requirements Cover pool register Yes Yes OF, OH: No CRH: Yes 80-day liquidity buffer Yes Yes Yes Substitution assets Yes Yes OF, OH: Yes CRH: No Quantitative restriction for substitution assets Mandatory overcollateralisation 20% 0% ÖPFE 20% HYPFE/SCHIPFE/FLUPFE 2% on net present value and nominal basis, additional self commitment at NORD/LB CBB 2% on net present value basis, subject to Cover Add-On acc. to Section 4 4 PfandBG CRR guidelines fulfilled Depending on program, at NORD/LB CBB: No Yes, except of Flugzeugpfandbriefe Yes UCITS guidelines fulfilled Yes Yes Yes Transparency guidelines Yes, details to be finalised by CSSF, takes place with self commitment Yes OF, OH: 5% CRH: None OF, OH: 5% nominal CRH: 25% nominal Yes Source: ECBC, Legislative framework of particular countries, NORD/LB CBB 9

20 Lettres de Gage legal framework Detailed comparison.. German Pfandbrief Act Luxembourg Covered Bond Law Issuer profile Universal bank principle Specialized bank principle Cover pool eligible assets for Lettres de Gage publiques German public bodies incl. regions, municipalities and other institutions with statutory guarantees or explicit guarantees by a public body and the legal right to raise taxes etc. No public guarantee required, the dominance or controlling influence over the public entity as defined under public enterprises is decisive PfandBG: 20 Cover pool eligible assets for Lettres de Gage énergie renouvelable / Finance sector law Art. 2-3 "Renewable energy" shall mean energy from renewable non-fossil sources, pursuant to EU directive 2009/28 Art. 2 (a) definition renewable energy Finance sector law Art. 2-3 Geographical breakdown All member states of the EU and EEA, Switzerland, USA, Canada, Japan (for mortgages add Australia, New Zealand and Singapore) PfandBG: 20 ().b and d; 3 () Entire OECD, EU, EEA and countries with highest and high quality rating by recognized rating agencies Finance sector law Art. 2- and

21 Agenda. Company profile and financials 3 Lettres de Gage legal framework 7 Cover pool 22 Contact / Website 33 Appendix 36 2

22 Cover pool Business activities. A/ A6 Municipal utilities in Germany Airports in Germany Verkehrsverbund Mittelsachsen GmbH Kirklees Social Housing A A6 Diemen Muiderberg Almere Harendreef Investment financing in a sustainable urban energy infrastructure Investment financing in the capacity of airport infrastructure Financing of a vehicle pool for the e-network in Central Saxony Financing of housing for the local council in Kirklees, UK Financing of a stretch of motorway near Schiphol airport in Amsterdam 22

23 Cover pool Additional safeguards to Lettres de Gage creditors. Self commitments in completion of legal framework Institutional quota By compliance with institutions quota the conditions are created whereby the Lettres de Gage meet the quality attributes of LCR 2,3 eligible assets according to the prevailing rules.. 80-day liquidity buffer 4. Compliance with institution quota 2 Self commitment 2. Compliance with transparency guidelines 2 3. Overcollateralisation of 22 percent Transparency regulations The transparency regulations according to German and Luxembourg covered bond law will be adhered to NORD/LB CBB and will be published on the web page regularly. Consideration in the legal framework for Lettres de Gage (LdG) in Luxembourg as of 22 Juni Pursuant to Article29()(c) and 29(7) of Regulation 575/203 of the European Parliament and subject to future amendments to pertinent statutory and regulatory provisions. 3 LCR = Liquidity Coverage Ratio 4 Please note, that the question whether or not exposures in form of covered bonds are LCR-eligible is a matter to be determined by a relevant investor. The issuer does not accept any responsibility in this regard. 23

24 Cover pool Breakdown by ratings. Nominal values as of 30 Sep 208: 5,548 mn BBB- 2.9% Sub-IG 3.0% 00% 3.0% BBB 3.4% AAA 28.2% 80% 7.0% BBB+ 0.6% 60% 34.7% A- 22.4% AA+ 4.4% AA 4.3% 40% 20% 45.3% A 3.0% A+ 9.4% AA- 8.4% 0% Rating 2,3 AAA 28.2% AA Area 7.0% A Area 34.7% 97.0% 80.0% 45.3% AAA / AA Area A Area BBB Area Sub-IG BBB Area 7.0% Sub-Investmentgrade 3.0% except derivatives 2 The charts may contain rounding differences for computational reasons 3 Rating assessment see appendix 24

25 Cover pool Breakdown by countries. Nominal values as of 30 Sep 208: 5,548 mn SE.8% PL.4% AT 2.% NL 2.7% NZ 0.% LU 0.5% CA 3.7% SUP 2.0% JP 0.3% US CZ 4.3% 0.3% IE 0.2% GB 6.5% VAE 2.3% FR.4% BE.2% FI 3.4% CN 0.6% DK 0.4% DE 44.7% 00% 80% 60% 40% 20% 0% 0.% 3.% 8.0% 78.8% Region 2,3 Europe 78.8% North America 8.0% Asia 3.% Others 0.% Europe North America Asia Others except derivatives 2 The charts may contain rounding differences for computational reasons 3 Country of public guarantor, offtaker or owner 25

26 Cover pool Breakdown by borrower type. Nominal values as of 30 Sep 208: 5,548 mn Central governments 2.2% Regions and provinces 7.6% Cities and municipalities 7.4% Private banks 5.0% Supranational enterprises 2.0% Public enterprises 56.6% 00% 80% 60% 40% 20% 2.0% 5.0% 7.4% 2.2% 7.6% 9.2% 56.6% Public banks 9.2% 0% Public enterprises Public banks Regions and provinces Central governments Cities and municipalities Private banks Supranational enterprises except derivatives 2 The charts may contain rounding differences for computational reasons 26

27 Cover pool Country concentration in the cover pool. TOP 0 breakdown by countries,2,3 as of30 Sep 208 Rank Country of residence Volume in mn %-share of CP State Regional Authority Local Authority Other TOTAL Germany , , % 2 United Kingdom % 3 USA % 4 Canada % 5 Finland % 6 Netherlands % 7 United Arab Emirates % 8 Austria % 9 Supranational % 0 Sweden % except derivatives 2 Transparency guidelines according to the Luxembourg law, published on webpage 3 Country of public guarantor, offtaker or owner 27

28 Cover pool More cover pool details. Currencies,2 Individual segment sizes as of30 Sep 208 as of30 Sep 208 Currency Assets Liabilities Individual segment sizes Assets Liabilities EUR 4,048,374, ,392,274,994.2 GBP 3,80, JPY 4,478, NOK 0 0,563, USD,49,357,07.2,065,229,80.46 Average residual term 7.0 years 6.2 years Number of assets Number of debtors 208 n.a. Number of registered issues n.a. 9 Number of bearer issues n.a. 7 Average size in 4,477, ,024, Transparency guidelines according to the Luxembourg law, published on webpage 2 including derivatives 28

29 Cover pool Development of overcollateralisation over time. Significant higher overcollateralisation as stipulated by law As of 30 Sep % Overcollateralisation (OC) by law 25% 25.7% 2.0 % OC nominal (including derivatives) 20% 22.0% 25.7 % OC net present value (including derivatives) 5% Overcollateralisation nominal Overcollateralisation by law % Substitution collateral 0% Fitch 2 Moody's mn / 6.2 % 5% 3 Self commitment 7.0% Most recent overcollateralisation 0% 2.0 Self commitment 3 as of 3 May 205 Requirement Moody s as of 0 Nov % 8.5% 4.5% Requirement Fitch 2 as of 26 Jan 208 OC net present value except derivatives 2 OC nominal except derivatives 3 OC nominal including derivatives 29

30 >2038 Cover pool Asset-Liability-Management ALM. ALM structure of the cover pool mn Liabilities Assets As of 30 Sep 208 Outstanding Lettres de Gage volume (except derivatives) 4,43 mn Outstanding Lettres de Gage volume (including derivatives) 4,468 mn Cover pool assets (including derivatives) 5,64 mn 0 except derivatives 30

31 Cover pool Quality safeguard measures. Solid performance of cover pool Broad diversification of borrowers Granular asset and liability structure No loans with outstanding payments No loan defaults Lettres de Gage rating Fitch: AAA Moody s: Aa3 Strong legal framework Additional self commitment Broad diversification of countries Macro hedging of interest and foreign currency risks By natural hedging and use of compliant derivatives 3

32 Agenda. Company profile and financials 3 Lettres de Gage legal framework 7 Cover pool 22 Contact / Website 33 Appendix 36 32

33 Contact / Website Contact. NORD/LB Luxembourg Covered Bond Bank Investor & Public Relations 7, rue Lou Hemmer L-748 Luxemburg-Findel InvestorRelations@nordlb.lu Thomas Keith (Head of Financial Markets & Sales) thomas.keith@nordlb.lu Tel.: Oliver Mazur (Senior Funding Manager) oliver.mazur@nordlb.lu Tel.: Hagen Schmidt (Senior Funding Manager) hagen.schmidt@nordlb.lu Tel.: Carolyn Groß (Investor & Public Relations) carolyn.gross@nordlb.lu Tel.: Bitte hier Ihr Foto einfügen 33

34 Contact / Website Transparency is our business. 34

35 Agenda. Company profile and financials 3 Lettres de Gage legal framework 7 Cover pool 22 Contact / Website 33 Appendix 36 35

36 Appendix Letter of comfort. Unrestricted letter of comfort of NORD/LB Hannover is included in its annual report 207, note (75): NORD/LB ensures that the following companies are able to meet their obligations: NORD/LB Luxembourg S.A. Covered Bond Bank, Luxemburg-Findel/Luxemburg 36

37 Appendix Formal definition of Public Enterprises. Amendment of Lettres de Gage law in 203 adopts the legal definition of Council Regulation 3603/93 Art. 8, of for Public Enterprises in local law Excerpt for the Luxembourg Law of 5 April 993 on the financial sector, Art. 2-3, para. 3 d: Public undertaking shall mean: any undertaking over which the State or other territorial authorities may directly or indirectly exercise a dominant influence by virtue of their ownership of it, their financial participation therein or the rules which govern it. A dominant influence shall be presumed when the State or other territorial authorities, directly or indirectly in relation to an undertaking: hold the major part of the undertaking s subscribed capital, or control the majority of the votes attached to the shares issued by the undertaking, or can appoint more than half of the members of the undertaking s administrative, managerial or supervisory body. English translation for informal purposes only exclusively French original version is legally binding 37

38 Appendix Formal definition of Renewable Energy. Amendment of Lettres de Gage law as of 22 June 208 adopts the legal definition according to EU-Regulation 2009/28 Art. 2 (a) for Renewable Energy in local law Excerpt for the Luxembourg Law of 5 April 993 on the financial sector, Art. 2-3, para. 3 f) h): f) "Renewable energy" shall mean energy from renewable non-fossil sources, namely wind, solar, aerothermal, geothermal, hydrothermal and ocean energy, hydropower, biomass, landfill gas, sewage treatment plant gas, biogases and energy from similar sources. g) ( ) any equipment necessary for the production, storage and transmission, including electricity storage facilities, transformers and power lines, whether completed or under construction, used to produce such energy, provided such production equipment is used exclusively in connection with renewable energy, and any transmission or storage equipment is used for more than 50% of its effective transmission and storage activity in connection with renewable energy. ( ) h) "Free of charge renewable energy sources" shall mean any renewable energy sources that are available without generating any additional inherent cost, such as for example wind or sun. English translation for informal purposes only exclusively French original version is legally binding 38

39 Appendix Risk strategy. The risk and business strategy of NORD/LB CBB as well as the steering of the liquidity situation and the banks liquidity management are embedded in the Group-wide strategies of NORD/LB Group On the basis of the risk bearing capacity analysis and the business strategy of NORD/LB CBB, the risk policy for the banks credit risk bearing business segments is specified. The limit management is deliberately aligned to be restristrictive Hedging of market risks through natural hedging and use of derivative financial instruments Management ofliquidity risk through issuance of Lettres de Gage demand driven issuance of senior unsecured debt, in the form of bearer bonds or promissory notes on the market or within the Group Steering of credit risks via Refinement of limit allocation Examining measures to improve the portfolio Increased use of products with customization options to the respective risk development within the given scope of NORD/LB Active risk oriented controlling of concentrations in respect of the corresponding limit targets 39

40 Appendix Balance sheet data at a glance, H According to IFRS 9 - Balance sheet data (in mn) 30/06/208 3/2/207 Change (in %) Total assets 5, ,382.3 Mandatory financial assets at fair value trough profit or loss Financial assets at fair value through other comprehensive income Financial assets measured at amortized cost Financial liabilities designated at fair value through profit or loss Financial liabilities measured at amortised cost, ,03.9 2,99.8-4,448.5,350.9,607.6, , , Reported equity The balance sheet total remains almost unchanged compared to the previous year The mandatory financial assets at fair value through profit or loss increased slightly compared to the previous year The financial assets measured at fair value through other comprehensive income are exclusively bonds and other fixed-income securities Financial assets measured at amortized cost include debt securities and other fixed income securities The financial liabilities designated as at fair value through profit or loss include exclusively own issues that have been designated at fair value due to an accounting mismatch Financial liabilities measured at amortized cost EUR 2,676.7 million (previous year: EUR 2,97.7 million) include Liabilities to banks EUR 5,525.4 million (previous year: EUR 6,0. million), Liabilities to customers EUR 3,404.8 Million (previous year: EUR 3,20.7 million) and securitized liabilities EUR 3,746.5 million (previous year: EUR 3,750.0 million). The charts may contain rounding differences for computational reasons 40

41 Appendix Balance sheet data at a glance. - According to IAS 39 - Balance sheet data (in mn) Change (in %) Total assets 5, , Loans and advances to banks Loans and advances to customers 796.4, , , Financial assets 4,78.2 5, Liabilities to banks 6,0. 6, Customer deposits 3,20.7 3, Reported equity Reduction in balance sheet total, mainly resulting from reduction in financial assets and loans and advances to banks Loans and advances to banks: Decreased assets from money market transactions Loans and advances to customers: Slightly positive development resulting from a increased volume of loans to corporate customers Financial assets: Reduction mainly resulting from securities heldto-maturity Liabilities to banks decreased mainly due to held-to-maturity issued debt securities and a decline in the business with repo transactions. Liabilities to customers decreased mainly due to decline in money market transactions. The charts may contain rounding differences for computational reasons 4

42 Appendix Self commitment of NORD/LB CFB in addition to the legal framework. Self-imposed safeguards for covered bond creditors. 42

43 Appendix Rating assessment. The rating selection is based on the worst external bond rating (either Moody's or S&P). If no external bond rating exists, the worst external issuer rating will be used (either Moody's or S&P). In the absence of an external bond or external issuer rating (by either Moody's or S&P) the issuer s/borrower s internal rating will be selected using an approved rating tool. If neither an external nor an internal rating exists, the exposure will be rated by applying an internal rating bypass methodology to determine the credit quality of the relevant transaction. However, these creditworthiness ratings do not comply with the Basel III rules. 43

44 Disclaimer. This presentation and the information contained herein, as well as any additional documents and explanations (together the material ), are issued by NORD/LB Luxembourg S.A. Covered Bond Bank ( NORD/LB CBB ). This presentation contains certain forward-looking statements and forecasts reflecting NORD/LB CBB 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 CBB s future financial position and results of operations, strategy, plans, objectives, goals and targets and future developments in the markets where NORD/LB CBB 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 Luxembourg, 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 forwardlooking statements included herein are based on information available to NORD/LB CBB as of the date hereof. NORD/LB CBB 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 CBB 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 CBB 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 CBB 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 CBB 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 CBB s institutional clients only. The information contained in the material should not be relied on by any person. 44

45 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 CBB s present opinions only. The material is based upon information that NORD/LB CBB considers reliable, but NORD/LB CBB 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 CBB 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 CBB. 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 CBB. 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 CBB 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 CBB 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 CBB. 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 CBB and will contain detailed information about NORD/LB CBB, its management and its financial statements. None of NORD/LB CBB s securities may be offered or sold in the United States, without registration under the U.S. Securities Act of 993, 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. 45

46 NORD/LB Luxembourg S.A. Covered Bond Bank 46