Investor Presentation The Helaba Group Frankfurt / Main, September 2018
Agenda 2 1. Helaba Business Model 2. Helaba as Sparkassen Central Bank 3. Business Development 4. Asset Quality 5. Funding
Helaba At a glance 3 Owner 12 % Federal States Hesse & Thuringia 88 % Sparkassen-Finance Group S Sparkassen Sparkassen central institute and S- Group business, partner rather than competitor Customer Long-term customer relationships with corporates, institutional clients, the public sector and retail customers Core Markets Regional focus on Germany and international markets Total assets: 167 bn RWA: 52 bn CET1 ratio 1 : 15.5 % Pre-tax profit: 200 m Employees: ca 6,100 Ratings: Moody s Aa3 / Fitch A+ / S&P A 1 ) Fully loaded As of June 30, 2018
Helaba s strategic Business Model 4
Helaba s strategic Business Model 5 As a commercial bank Helaba is active both in Germany and abroad. Helaba works together with companies, institutional clients, the public sector as well as municipal corporations. Stable, long-term customer relationships are what characterise Helaba. Helaba is Sparkassen central bank and preferred service provider and product supplier for Sparkassen in Hesse, Thuringia, North Rhine-Westphalia and Brandenburg, accounting for 40 % of all Sparkassen in Germany. Helaba is a partner of the Sparkassen rather than a competitor. As the central development bank of the State of Hesse, Helaba bundles the administration of public development programmes through WIBank
Comprehensive Range of Products for our Customers 6 Real Estate Corporates & Markets Retail & Asset Management Development Business Other Commercial Real Estate lending Corporate Finance Sparkassen lending business Capital Markets and Treasury products Cash Management Retail Banking Private Banking Home loans and savings business Asset Management Administration of public development programs for the federal state of Hesse Project development and management Retail issues and structured bonds Issuance of own debt instruments Public Finance Foreign Trade Finance Residential Real Estate portfolio Custody services
Helaba s Ownership Structure Dominated by the Sparkassen sector (88%) 7 Sparkassen Finance Group S Savings Banks and Giro Association Hesse-Thuringia (68.85 %) Savings Banks Association Westphalia-Lippe (4.75 %) Rhineland Savings Banks and Giro Association (4.75 %) Federal States State of Hesse (8.1 %) Free State of Thuringia (4.05 %) FIDES Alpha GmbH (4.75 %) 1 FIDES Beta GmbH (4.75 %) 2 88% 12% Helaba is tightly integrated into the Sparkassen-Finance Group 1 ) FIDES Alpha GmbH, operating as trustee of the regional Savings Banks Associations in its capacity as supporting institution of the regional savings banks guarantee fund 2 ) FIDES Beta GmbH, Beta GmbH operating as trustee of the German Savings Banks and Giro Association (DSGV) in its capacity as supporting institution of the Guarantee Fund of the Landesbanken and Girozentralen
Agenda 8 1. Helaba Business Model 2. Helaba as Sparkassen Central Bank 3. Business Development 4. Asset Quality 5. Funding
Helaba and Sparkassen in Hesse-Thuringia A single economic unit with a unique franchise A single Economic Unit 9 S Group Hesse-Thuringia S Helaba S S Group Hesse-Thuringia Results 2017 Total assets: 252 bn SME / Retail Customers in the Region Platform for Products and Services Joint Risk Management Wholesale Business International Markets Earnings before taxes (IFRS): 1,441 m Employees: 24,700 Locations/Branches: 1,543 Joint Market Presence Joint Risk Management Joint business strategy Full market coverage (retail and wholesale business) Clear allocation of customer responsibility Co-ordinated range of products Uniform risk management strategy Risk monitoring system with early warning indicators Risk-adjusted contributions to the group s reserve fund Joint Group Reserve Fund Integrated in joint risk management system Approx. 518 m in addition to existing nationwide voluntary support mechanisms as at 31.12.2017 Direct legal investor protection in addition to institutional support Consolidated Accounts Audited consolidated group accounts since 2003 Earnings before taxes in 2017 (IFRS): 1,441 m Group rating from Fitch Ratings (A+) and Standard & Poor s (A)
The S-Group concept in Hesse-Thuringia Cooperation agreements with S-Organisations in NRW and Brandenburg 10 S-Group concept in Hesse-Thuringia based on the business model as single economic unit Cooperation agreements with S-Organisations in NRW and Brandenburg Helaba is central institute for Sparkassen in Hesse and Thuringia Helaba is central institute for Sparkassen in North Rhine-Westphalia (NRW) and Brandenburg (BB) Joint sales and market strategy 1. Helaba is preferred S-Group partner 2. Target S-Group ratio 60 80 % 3. Clear customer segmentation 4. Co-ordinated range of products Cooperation agreement Joint sales and market strategy 1. Helaba is preferred S-Group partner 2. Target S-Group ratio 60 80 % 3. Clear customer segmentation 4. Co-ordinated range of products Corporate Risk monitoring system with early warning indicators S-Group Concept in Hesse-Thuringa Risk committee and S-Group committee with inspection and intervention rights Regional support funds for the coverage of mutual risks and direct investor protection in North Rhine-Westphalia and Brandenburg Risk and S-Group advisory board Consultation but no inspection and intervention rights Regional support funds (only in NRW), allocation by Sparkassen in NRW Consolidated IFRS group accounts, joint group rating
Leading S-Group Bank within the German S-Finance Group 11 Hesse-Thuringia North Rhine-Westphalia Home Region with central institute function for associated Sparkassen Sparkassen and the Federal States of Hesse and Thuringia are Helaba s shareholders Successful business model of a single economic entity with S-Group s Sparkassen; regional support funds, consolidated annual accounts and group-ratings Head offices in Frankfurt / Main and Erfurt Münster Düsseldorf Kassel Frankfurt Erfurt Berlin Home Region with central institute function for associated Sparkassen Savings banks associations of NRW are Helaba s shareholders S-Group agreement as basis for cooperation; regional support funds in NRW Branch office in Düsseldorf, sales office in Münster Brandenburg Home Region with central institute function for associated Sparkassen and S-Group agreements Sales Office Berlin Stuttgart Other regions Munich Head Office Branches Sales Office Focus on Rhineland-Palatinate, Bavaria and Baden-Wuerttemberg Sales offices in Munich, Stuttgart and Berlin Helaba is S-Group Bank for about 40% of the German Sparkassenr rund 40 % aller deutschen As of January 2018
Agenda 12 1. Helaba Business Model 2. Helaba as Sparkassen Central Bank 3. Business Development 4. Asset Quality 5. Funding
Management Summary Helaba generates profit before tax of 200 m in H1 2018 13 Profit before tax on target level Conditions continue to be challenging and weigh in particular on the net interest income. In this context, the consolidated profit before tax of 200 m was 38 m below H1 2017 Risk situation remains comfortable and, as in the previous quarters, the risk provisioning requirement is low Second quarter saw a noticeable rise in the volume of new business Implementation of regulatory requirements weighing on general and administration expenses CET1 ratio (phased-in and fully loaded) of 15.5 % and total capital ratio of 21.5 % both remain significantly above regulatory requirements
Development of key financial ratios reflects the challenging market environment 14 Profit before tax Total assets Cost-income ratio Return on equity in m in bn Target ratio 2018 < 70% Target range 2018 5.0-7.0% 158 167 79.4% 1) 5.0% 1) 238 200 0% 100% 0% 12% 1) Full consideration of bank levy and contributions paid into the guarantee schemes of the S-Finance Group as of March 31, 2018 CET1 ratio (fully loaded) and Liquidity Coverage Ratio Requirement 2018 Target ratio/ range Ratio H1 2018 CET1 ratio (fully loaded) 8.89% 2) 12% 15.5% H1 2017 H1 2018 2017 H1 2018 Liquidity Coverage Ratio 100% >120% 141.9% 2) Derived from SREP requirement for 2017 taking capital buffers into account
Further Reduction in NPL Ratio and stable Rating Structure 15 Total volume of lending by default rating category (RC) RC 14-24 5% Development NPL 1 ratio 2.1% RC 0-1 32% RC 2-7 37% RC 8-13 26% 1.7% RC 0-1: No default risk to excellent and sustainable financial security; corresponding S&P Rating: AAA / AA+ RC 2-7: Exceptionally high to outstanding financial security; corresponding S&P Rating: AA to A- RC 8-13: Very good to satisfactory financial security; corresponding S&P Rating BBB+ to BB RC 14-24: Sufficient and lower financial security; corresponding S&P Rating < BB Total lending volume of 186.5 bn 95% of total lending volume with excellent to satisfactory creditworthiness As of June 30, 2018, NPL ratio had fallen further to 0.6 % Of total loans and advances of 121.0 bn, 0.8 bn were classified as non-performing exposures 0.8% 0.6% 31 Dec 2015 31 Dec 2016 31 Dec 2017 30 Jun 2018 1) The NPL ratio is the share of non-performing exposures as of the EBA definition in relation to loans and advances
High Quality of Portfolio reflected in low Net Additions to Loan Loss Provisions 16 Composition of loan loss provisions (in m) 01 Jan 30 Jun 2017 Net risk provisioning -2 01 Jan 30 Jun 2018 Net risk provisioning 13 Risk provisioning on loans and advances 16 Risk provisioning on liquidity securities 0 Provisions for off-balance lending business -3 Thanks to the high quality of the credit portfolio and the good economic environment, small increases were overcompensated by reversals and recoveries on loans and advances previously written off Breakdown by segment in m Real Estate Corporates & Markets -6 2 Low level of net additions to impairments in segment of Corporates & Markets mainly from Corporate Finance activities Retail & Asset Management Development Business 0 0 Other segment includes reversals of portfolio impairments on credit exposures with no significant risk of default Other 17 Consolidation/ Reconciliation 0-10 -5 0 5 10 15 20
Customer Business dominates Balance Sheet Structure Closely intertwined with the real economy Medium- and long-term new business volume: 7.8 bn 1 17 Total assets 166.9 bn in bn Real Estate Loans and advances to customers 96.0 bn Corporates & Markets 3.51.4 5.6 1.1 3.7 8.7 Loans and advances to customers 90.6 bn 58% of total assets Retail & Asset Management 2.5 0.50.3 Loans and advances to affiliated Sparkassen 5.4 bn In H1 2018 degree of interconnectedness with real economy slightly decreased to 58 % due to an increase in total assets (2017: 60 %) Small increase in loans and advances to customers to 96.0 bn (2017: 95.3 bn) Other 1 Medium- and long-term new business volume without WIBank 0.1 Recovery in new business volume in the second quarter; volume of new medium and long-term business (duration greater than one year) at 7.8 bn, but still below volume in H1 2017 of 9.1 bn
Capital Ratios significantly exceeds Regulatory Capital Requirements 18 Development of capital ratios Capital requirements and components CET1 ratio (fully-loaded) Total capital ratio (phased-in) CET1 ratio (phased-in) 19.8% 20.5% 21.8% 21.5% T2 5.20% 18.5% AT1 0.80% 13.4% 11.8% 13.8% 13.1% 14.3% 13.8% 15.2% 15.4% 15.5% 15.5% CET1 15.50% 8.89% 2.00% 1.50% 2.635% 1.75% T2 AT1 Comb. buffer Pillar 2 requirement 4.50% Pillar 1 min. requirement 2014 2015 2016 2017 H1 2018 Continuous improvement in capital ratios to a very high level There will be no further differences in 2018 for Helaba s CET1 ratio as a result of CRD IV / CRR transitional arrangements Leverage ratio at 4.8% (phased-in) and 4.5% (fully loaded) Risk-weighted assets of 51.9 bn Capital ratio 30.06.2018 Derived CET1 capital requirement 2018 consists of following components: Pillar 1: minimum capital requirement of 4.50% Pillar 2: capital requirement of 1.75% Total capital buffer of 2.64% Capital requirement 2018
Agenda 19 1. Helaba Business Model 2. Helaba as Sparkassen Central Bank 3. Business Development 4. Asset Quality 5. Funding
Helaba Risk Profile Total Volume of Lending ( 186.5 bn) Diversified portfolio with focus on Germany 20 Breakdown by customers Breakdown by region Corporates Germany Retail customers 1% Others 1% WIBank 8% 26% 25% North America 11% Financial Institutions Real Estate 20% 22% 21% 23% 25% Rest of Europe 3% 61% 63% 3% Scandinavia 19% Public Sector Western Europe As of June 30, 2018
Real Estate Lending Portfolio Lending volume of 33.7 bn 21 Breakdown by usage Breakdown by region Office buildings Germany Logistics 5% Rest of Europe Residential 43% 44% 14% 44% 43% Other 21% 6% 24% UK / France 20% 22% 23% Retail North America Balanced portfolio by regions and type of use As of June 30, 2018
Corporate Finance Portfolio Lending volume of 40.4 bn 22 Breakdown by product area Breakdown by region Corporate loans Germany Leasing Finance Others Structured Trade & Export Finance 6% 5% 5% 3% France 3% Acquisition Finance Asset Backed Finance Project Finance 19% 18% 9% 38% United Kingdom North America 6% 9% 22% 57% Transport Finance Rest of Europe Broadly diversified portfolio with focus on Europe As of June 30, 2018
Agenda 23 1. Helaba Business Model 2. Helaba as Sparkassen Central Bank 3. Business Development 4. Asset Quality 5. Funding
Funding Strategy Strong regional engagement as success factor and anchor of stability 24 Funding Strategy Continued matched funding of new business Expand the already strong position within the German investor base and further develop the international investor base Intensive marketing of Helaba s solid Credit Story inside and outside of Germany Further develop the product and structuring capacity through the issuance programmes Funding Volume Covered Unsecured Total 2017 4.8 bn 12.7 bn 17.5 bn 2018 planned 5.0 bn 8.0 bn 13.0 bn Funding Programmes EUR 35 bn Euro Medium Term Note Programme Domestic issuance (Basisprospekt) EUR 10 bn Euro-CP/CD Programme EUR 6 bn NEU CP (former French CD) Programme USD 5 bn USCP Programme Broad Liquidity Access 34 bn collateral pool for German covered bonds ( Pfandbriefe ) 32 bn securities eligible for ECB / central bank funding 19 bn retail deposits within Helaba Group 97 bn deposits within the S Finance Group Hesse-Thuringia (as of Dec. 31, 2017)
Funding Sustainable liquidity management and high level of acceptance in the market 25 Outstanding medium- and long-term funding ( 1 year): 84.1 bn H1 2018 2017 2016 Covered securities ( Pfandbriefe ) in m in m in m 26,666 26,334 27,477 - Public sector 15,253 16,482 17,605 13% 18% Public Sector Pfandbriefe Mortgage Pfandbriefe - Mortgage backed 11,413 9,852 9,872 29% 14% Bank Bonds (unsecured) Senior, unsecured bonds 21,976 20,906 20,113 Borrower's notes 24,096 23,197 21,050 26% Borrower s Notes Miscellaneous * 11,342 12,283 12,852 Miscellaneous Summe 84,080 82,720 81,492 * Subordinated bonds / participation rights certificates / silent deposits / earmarked funds As of June 30, 2018
Medium- and long-term funding ( 1 year) in H1 2018 Diversified funding mix 26 Breakdown by Investor Breakdown by Product Retail indirect (Sparkassen via Depot A ) 0.5 bn Borrower s notes and other loans Public Pfandbriefe 42% 1.8 bn 39 % 1.8 bn Mortgage Pfandbriefe Retail direct (Sparkassen via Depot B ) 19 % 0.6 bn 2.4 bn Unsecured bank bonds Domestic & International customers Earmarked funds ( EIB, KFW, LfA) Medium- and long-term funding volume in H1 2017 : 7.1 bn As of June 30, 2018
Helaba s Ratings on a high Level 27 Moody s Fitch Standard & Poor s 1) Outlook Stable Outlook Stable Outlook Stable Issuer Rating Aa3 Long-term Issuer Default Rating 1) A+ Long-term Issuer Credit Rating A Baseline Credit Assessment baa2 Viability-Rating 1) a+ Standalone Credit Profile A Short-term Deposit Rating 2) P-1 Short-term Issuer Default Rating 1), 2) F1+ Short-term Issuer Credit Rating 2) A-1 Public-Sector Covered Bonds Aaa Public Sector Pfandbriefe AAA Mortgage Pfandbriefe AAA Counterparty Risk Assessment 3) Aa3(cr) Derivative Counterparty Rating 1), 3) AA- (dcr) Long-term Deposit Rating 3) Aa3 Long-term Deposit Rating 1), 3) AA- Long-Term Senior Unsecured 3) Aa3 Long-term Senior Unsecured 3) A Long-Term Junior Senior Unsecured 4) A2 Senior Unsecured 1), 4) A+ Long-term Senior Subordinated 4) A- Subordinate Rating 5) Baa2 Subordinated debt 1), 5) A Ratings for Helaba liabilities covered by statutory guarantee 6) Moody s Fitch Standard & Poor s Long-term ratings Aaa AAA AA- 1) Joint group rating for the S-Group Hesse-Thuringia 2) Corresponds to short-term liabilities 3) Corresponds in principle to long-term senior unsecured debt according to 46f (5 and 7) KWG ( with preferential right to payment ) 4) Corresponds in principle to long-term senior unsecured debt according to 46f (6) KWG ( without preferential right to payment ) 5) Corresponds to subordinated liabilities 6) Applies to all liabilities in place on 18 July 2001 (indefinitely)
Contacts 28 Dirk Mewesen General Manager Head of Asset & Liability Management Tel (+49) 69 / 91 32 46 93 Dirk.Mewesen@helaba.de Henning Wellmann Head of Liability Management & Funding Tel (+49) 69 / 91 32 31 42 Henning.Wellmann@helaba.de Martin Gipp Head of Funding Tel (+49) 69 / 91 32 11 81 Martin.Gipp@helaba.de Nadia Landmann Debt Investor Relations / Funding Tel (+49) 69 / 91 32 23 61 Nadia.Landmann@helaba.de Landesbank Hessen-Thüringen Neue Mainzer Strasse 52-58 60311 Frankfurt am Main, Germany
Disclaimer 29 This presentation and the information contained herein do not constitute or form part of a prospectus or other offering document in whole or in part and should not be construed as an offer or solicitation to buy or sell any securities or any related financial instruments and should be regarded as informative only. All information is as of the date of publication and can change without any further notice. Whilst every effort has been taken to ensure the accuracy of the presentation material, no guarantee is given nor liability assumed for the information contained herein. Helaba does not offer any advice as regards to taxation and accounting or legal matters. From the past result, performance or achievements no conclusions as to the future results, performance or achievements can be drawn. The H1 2018 group financial information are based on the audited, non-attested IFRS group accounts. Therefore, all calculations based upon these figures are preliminary and should be regarded as informative only. All forms of distribution of this document require the prior written approval by Helaba. Landesbank Hessen-Thüringen Girozentrale, Frankfurt am Main / Erfurt