IKB Deutsche Industriebank AG 23 November 2018, Düsseldorf
Disclaimer 2 This document has been prepared by IKB Deutsche Industriebank AG ( IKB ) as an Investor Relation presentation for your information only. The presentation is designed to provide an outline of IKB and its business segments for professional and institutional counterparties. IKB assumes no liability for the accuracy or completeness of any given Balance Sheet or Profit and Loss figures. Please refer to IKB s annual reports as published on our internet website (www.ikb.de) for current and audited financial figures. This presentation is no substitute for any specific product information or any other information relevant for business purposes. Accordingly IKB expresses no intent to enter into any contract or even pre-contract negotiation. Hence, IKB assumes no responsibility or liability whatsoever for any expense, loss or damage directly or indirectly incurred in connection with the use of this presentation or parts of it. This presentation may contain forward-looking statements. You are cautioned not to place undue reliance on such statements regarding, e.g. expectations, projections or estimations, because the statements are based on current beliefs and expectations which may transpire as materially wrong. This document is copyright protected. It must not be amended or modified. It must not be used for commercial purposes, in whole or in part, without the prior written consent of IKB. IKB assumes no obligation or guarantee to update this presentation regularly. IKB reserves the right to amend or adjust the presentation or any of its content at any time without further notice.
Highlights in the First Half-Year 2018/19 1) 3 1 Positive Result Consolidated net income: 18 million 2 Stable New Business New business volume stable at 1.8 billion Share of the business with public programme loans extended 3 Successful Cost Control Administrative costs down by 10% Further cost-cutting and optimisation measures planned 4 Low Risk Profile NPL ratio (in accordance with EBA): 1.3% Total NPA ratio: 0.7% 5 Solid Capital Position Common Equity Tier 1 ratio: 11.1% (fully loaded) Leverage ratio: 7.2%: (fully loaded) 6 Ample Liquidity Liquidity Coverage Ratio: 331% 7 Outlook Confirmed For the full financial year 2018/19 moderately positive net income after taxes expected 1) as at 30 September 2018; IKB half-year from 1 April to 30 September 2018
Key Performance Indicators 1) 4 Operating Result excl. Net Other Income 2) ( million) 90 63 40 6 21 2015/16 2016/17 2017/18 2018/19 6 months (without Leasing) Total Assets ( billion) 19.6 19.2 17.2 16.1 10 Profit after Tax 3) ( million) 26 71 18 CET 1 Ratio 6) (in %) 10.9 11.1 11.6 11.1-215 6 months (without Leasing) 2015/16 2016/17 2017/18 2018/19 Cost Income Ratio 4) (in %) 95 86 83 78 75 Leverage Ratio 7) (in %) 6.5 6.7 7.0 7.2 2015/16 2016/17 2017/18 2018/19 6 months (without Leasing) 4.8 NPL Ratio 5) (in %) 2.5 1.0 1.3 1.4 Non-strategic Portfolio Volume ( billion) 0.3 0.2 0.2 1) IKB financial year: 1 April to 31 March. Data as at 31 March from annual reports audited and confirmed. 2) Net interest and lease income + Net fee and commission income - Administrative expenses + Net risk provisioning 3) Including results from IKB Leasing. Sale of IKB Leasing has been closed in February 2018. 4) Administrative expenses/(net interest income + Net fee and commission income). 5) 31 Mar. 2017, 31 Mar. 2018 and 30 Sep. 2018: NPL ratio according EBA definition; 31 Mar. 2016: credit volume to corporates 6) IKB Group fully loaded CET 1 ratios 7) IKB Group fully loaded Leverage Ratios, not audited
At the Center of the German Mittelstand 5 IKB at a Glance Growth Revenue Potential, German MidCaps Financing partner for MidCaps for more than 90 years 758 FTE Very high Shareholder: Lone Star 100% High Total assets: 16.1 billion Common Equity Tier 1 ratio: 11.1% (fully loaded) Leverage ratio: 7.2% (fully loaded) Average Below average IKB offices Bank for the Mittelstand The only bank in Germany to operate throughout the country with exclusive focus on corporate customers Strong lending expertise Long-standing experience in public programme loans Capital markets and advisory services Access to > 4,000 focus clients German MidCaps MidCap growth significantly higher compared to broader German economy Strong domestic sales with high potential for international expansion Operating margins prove to be resilient through the cycle
A Strong German Mittelstand Franchise 1 2 Focused Low Risk Pure MidCap lender in the German market with welldefined client segments Focus on high-end Mittelstand companies with annual turnover above 50 million High-end Mittelstand: internationally successful companies, backbone of the German economy Long-standing client relationships, profound market knowledge and deep insight in industry sectors Clients Significant Market Potential ca. 4,000 Nonclients 6 3 Profitable Outstanding expertise in customized transactions driving higher margins Lending business with strict price and risk discipline 4 Solid Solid capital position, diversified funding 5 Lean Strict cost control, further improvement of Cost Income Ratio 6 Growing Solid equity position enabling growth in loan book
Successful Niche Player in Lending Business 7 1 Strategy Tailor-made solutions for clients allowing for higher margins Good credit assessment thanks to long-term relationships and stringent lending process Streamlined approval process 2 Public Programme Loan Schemes Delivers resilient margins without associated funding and liquidity risk or duration mismatch Close relationships with KfW and the regional development banks with approx. 11% market share 1) in relevant KfW public programme loans 3 Corporate Loans Profitable lending business with new and existing clients Focus on managing and structuring loans Complex transactions generating structurally higher margins 4 Acquisition Financing Leading provider of acquisition financing in the German MidCap market Focus on structuring, underwriting and syndication Strict risk criteria 1) 1 January to 31 December 2017
Lending Business with Strong Domestic Focus and Highly Diversified across Sectors 1) 8 Portfolio Volume ( billion) New Business Volume 3) ( billion) 7.8 8.8 9.2 9.6 3.0 3.3 3.6 1.8 1.8 Portfolio by Geography (in %) 2015/16 2016/17 2017/18 2018/19 6 months Portfolio by Product (in %) Other 23.2% Germany 76.8% Acquisition Finance 11% Commercial Lending 35% Public Programme Loans 54% Portfolio by Internal Rating 2) (in %) CCC+ or less 0.7% BB+/B- 39.5% NPL 1.3% AAA/A- 15.9% BBB+/BBB- 42.5% Other 28.6% Healthcare 3.0% Construction 3.1% Paper 3.5% Portfolio by Sector 4) (in %) Basic Metals 3.9% Metalware 4.2% Retail 4.3% Chemicals 8.1% Energy 7.5% Machinery & equip. 7.5% Food Industry 6.3% Wholesale 5.5% Automotive 5.3% Real Estate 5.0% Services 4.4% 1) all figures without Leasing 2) Before risk relief (Hermes guarantees, indemnifications, risks transferred); NPL-ratio after risk relief: 1.2% 3) Includes also revolving credit facilitiies volumes in billion: 0.3 (2015/16), 0.4 (2016/17), 0.3 (2017/18) 0.1 (6 months 2018/19). Excluding IKB Leasing new business volume in billion: 0.8 (2015/16), 0.9 (2016/17), 0.9 (2017/18) 4) Other consists of 29 different industries each below 3.0% of total portfolio.
Tailor-made Financing Solutions Selected Transactions Public Programme Loans Commercial Lending 9 October 2018 August 2018 June 2018 May 2018 October 2018 October 2018 July 2018 March 2018 31,500,000 KfW Energy Efficiency Programme Manufactoring Plants and Processes, Waste Heat Advisor & Financier 95,000,000 KfW Energy Efficiency Programme Waste Heat Advisor & Financier 12,500,000 Financing of the Administration Building Renovation by KfW Public Programme Loans Advisor, Arranger & Financier 27,500,000 Investment Financing by KfW Public Programme Loans Financier 35,000,000 Syndicated Loan incl. KfW Public Programme Loans MLA & Agent 90,500,000 Syndicated Loan Bookrunner & MLA 480,000,000 Syndicated Loan Lead Arranger 52,000,000 Project Financing Modernisation CCGT Power Plant Mandated Lead Arranger Acquisition Financing Capital Market Solutions September 2018 April 2018 April 2018 February 2018 October 2018 July 2018 July 2018 July 2018 Undisclosed Leveraged Buy-out of mybrand by Conclusion (NPM Capital) Undisclosed Leveraged Buy-out of Amann Girrbach by Capvis and Partners Group 200,000,000 Leveraged Buy-out of Royal Sanders by 3i Undisclosed Leveraged Buy-out of coeo by Waterland Private Equity 20,000,000 Bond Coupon: 6.000% Maturity: 2023 250,000,000 High-Yield Bond Coupon: 5.500% Maturity: 2024 25,000,000 Bond Coupon: 4.000% Maturity: 2024 60,000,000 Schuldscheindarlehen Maturities: 2021, 2022, 2023 Mandated Lead Arranger Mandated Lead Arranger Mandated Lead Arranger Mandated Lead Arranger Sole Bookrunner Co-Manager Sole Bookrunner Sole Arranger
Diversified Funding 1) 10 Funding Mix Funding Sources Senior unsecured bonds 4% Subordinated, Hybrids, Other 12% Public programme loan schemes 35% Public Programme Loan Schemes Deposits Channelling loans by KfW, regional development banks and EIB Volume of 5.2 billion 2) Stable and cost effective private customer deposits: 2.7 billion Stable business customer deposits: 1.8 billion Promissory note loans: 1.2 billion Promissory note loans 8% Senior Bonds Outstanding 0.6 billion 3) Distributed in German retail market Repo funding transactions with EUREX and central banks 12% Repos/ECB LCR Financing of liquidity portfolio Portfolio serves as collateral 1.65 billion funded in ECB s TLTRO II Liquidity Position Group LCR with 331% well above target Business customer deposits 12% Private customer deposits 18% Liquidity Reserve Approx. 1.5 billion free and unencumbered available liquidity reserve Thereof 0.8 billion at ECB overnight account 1) as at 30 September 2018 2) including 0.1 billion global loans 3) including redemptions
Well Diversified Liquidity Portfolio Structure of the Liquidity Portfolio 1) (in %) 11 Financial Senior Unsecured 3% Agencies 7% EU and Supras 13% Covered Bonds 24% Bond Class Allocation Corporate 2% Government and Regional Bonds 51% BBB 3% BBB+ 4% A- 20% A 1% Issue Rating Allocation A+ 5% BBB- 10% AA- 2% AA 7% AAA 25% AA+ 23% Country Allocation Volume of the Liquidity Portfolio ( billion) Slovakia 3% Nordic 3% Other EU 5% UK 3% Portugal 4% Italy 4% Austria 4% North America 5% Poland 5% France 5% Romania 5% Germany 20% Spain 14% EU and Supras 13% Netherlands 6% 5.4 5.7 4.3 3.7 1) as at 30 September 2018
Solid Equity Position 1) 12 Total Assets and Risk-weighted Assets ( billion) Capital Ratios 2) (in %) 18.0 19.6 19.2 16.2 16.2 17.2 16.1 6.4 5.3 5.1 12.8 12.9 11.7 12.2 17.2 6.1 10.9 11.1 11.6 11.1 Total Assets RWA CET 1 Tier 2 Key Measures Reduction of total assets primarily by sale of IKB Leasing IKB Group uses standardised approaches for calculating RWA IKB currently plans a transition from the standardised approach for measuring RWAs to the IRB-F approach to reduce overall risk density Stable CET 1 ratio Key Measures Leverage Ratio as at 30 September 2018: 7.2% 2) 1) Capital ratios based on IKB Group. 2) Fully loaded CET 1 ratio shown/applied; CET 1 ratios as published in IKB s financial reports (based on legal status as of respective date including transitional provisions): 11.6% (31 March 2016), 11.7% (31 March 2017), 11.8% (31 March 2018). Leverage Ratio (based on legal status as at 31 March 2018 including transitional provisions): 7.3% (31 March 2018)
Continued Focus on Cost Cutting Administrative Expenses ( million) 299 284 271 Employees (number FTE) 13 116 111 118 1,554 497 1,433 469 183 172 153 105 42 94 42 1,057 964 817 758 63 52 2015/16 2016/17 2017/18 2018/19 1) Personnel Other 6 months (without Leasing) IKB AG IKB Leasing Some totals may be subject to discrepancies due to rounding differences. 1) including 11 months IKB Leasing
Outlook 14 1 Focus on Mittelstand Leverage strong position in the German Mittelstand Increase of number of new customers 2 Increase in Profitability Continued focus on profitable new lending business Conservative risk approach 3 Cost Reduction Continued focus on cost cutting Process optimisation and reduction of complexity 4 Solid Equity and Liquidity Position CET 1 ratio 1) at about 11% Total Capital ratio well above 15 % Liquidity Coverage ratio well above 100% 1) IKB Group fully loaded
Appendix
Consolidated Income Statement 6 Months 2018/19 16 in million 1 Apr. 2018 to 30 Sep. 2018 1 Apr. 2017 to 30 Sep. 2017 1) Change Net interest and lease income 106 114-8 Net fee and commission income 19 21-3 Administrative expenses -94-105 11 Personnel expenses -52-63 11 Other administrative expenses -42-42 - Net other income 1 43-42 Net risk provisioning -10 10-20 Result from ordinary business activities 22 83-61 Tax expenses -3-12 9 Consolidated result 18 71-53 Some totals may be subject to discrepancies due to rounding differences. 1) Prior-year figures restated to reflect significant changes in the consolidated group, particularly IKB Leasing
Balance Sheet of IKB Group as at 30 September 2018 17 ASSETS in million 30 Sep. 2018 31 Mar. 2018 Cash reserve 38 31 Receivables from banks 1,659 2,521 Receivables from customers 9,885 9,709 Bonds and other fixed-income securities 3,490 3,905 Equities and other non-fixed-income securities 395 396 Assets held for trading - - Equity investments 1 1 Investments in associates - - Investments in affiliated companies 0 0 Assets held in trust - - Lease assets 7 8 Intangible assets 3 3 Tangible assets 201 219 Other assets 120 162 Prepaid expenses 75 77 Deferred tax assets 180 180 Excess of plan assets over post-employment benefit liability 8 8 Total assets 16,062 17,218 EQUITY AND LIABILITIES in million 30 Sep. 2018 31 Mar. 2018 Liabilities to banks 7,068 7,432 Liabilities to customers 5,768 6,448 Securitised liabilities 601 721 Liabilities held for trading - - Liabilities held in trust - - Other liabilities 137 123 Deferred income 50 50 Provisions 186 206 Subordinated liabilities 826 831 Profit participation capital - - Fund for general banking risks 585 585 Equity 840 822 Subscribed capital 1,621 1,621 Capital reserves 1,751 1,751 Revenue reserves -1-1 Difference in equity from currency translation 0 0 Net accumulated losses -2,532-2,551 Non-controlling interests 1 2 Total equity and liabilities 16,062 17,218 Some totals may be subject to discrepancies due to rounding differences.
Contact 18 Armin Baltzer IKB Deutsche Industriebank AG Wilhelm-Bötzkes-Straße 1 40474 Düsseldorf GERMANY Telephone +49 211 8221-6236 Fax +49 211 8221-6336 E-mail Armin.Baltzer@ikb.de Copyright: November 2018 Publisher: IKB Deutsche Industriebank AG, Wilhelm-Bötzkes-Straße 1, 40474 Düsseldorf, Germany Legal Form: Aktiengesellschaft Registered Office: Düsseldorf Commercial Register (Handelsregister): Amtsgericht Düsseldorf, HR B 1130 Chairman of the Supervisory Board: Dr Karl-Gerhard Eick Chairman of the Board of Managing Directors: Dr Michael H. Wiedmann Board of Managing Directors: Claus Momburg, Dr Jörg Oliveri del Castillo-Schulz, Dirk Volz