Investor Presentation BayernLB Group November 2014

Rating & Investor Relations
Investor Presentation
BayernLB Group
Operating business remains on track at the end of the first nine months
November 2014
Agenda
Page
Investor Presentation · November 2014 · Page 2
1
Earnings as at Sep 2014
3
2
EU requirements
21
3
High portfolio quality
23
4
Funding, liquidity and Pfandbriefs
31
5
Appendix: detailed charts
38
Earnings as at Sep 2014
First nine months of 2014 at a glance
BayernLB posts profit before taxes of EUR 561 m for first nine months of 2014
Earnings in core business a solid EUR 502 m despite tough market conditions
Sale of MKB to Hungarian government successfully closed;
almost no impact from sale on CET 1 ratio: 14.0%
ECB confirms capital base is very solid – good results in AQR and stress test
Outlook: Entire ABS portfolio sold in October and EUR 1.1 bn repaid to the Free State of
Bavaria; guarantee agreement terminated
Lawsuit filed against special law in Austria
Investor Presentation · November 2014 · Page 3
Earnings as at Sep 2014
Key figures
Profit before taxes marked by stable net interest income, higher net commission income, lower risk provisions
and decreased administrative expenses
9 m 2013 figure boosted by gain of EUR 351 m on the sale of the stake in GBW AG
All items adjusted for MKB (except balance sheet items for the previous year); Sale of MKB resulted in a loss of
EUR -1,071 m posted in gains or losses on discontinued operations
Profit before taxes
in EUR m
Gains or losses on
discontinued operations (MKB)
in EUR m
Profit after taxes
CIR
in EUR m
in %
+10.2 Pp
-3.3%
931
1 Jan –
30 Sep 2013
580
561
1 Jan –
30 Sep 2013
1 Jan –
30 Sep 2014
1 Jan –
30 Sep 2014
606
-561
-160
-1,071
1 Jan –
30 Sep 2013
1 Jan –
30 Sep 2014
45.3
55.5
1 Jan –
30 Sep 2013
1 Jan –
30 Sep 2014
Total assets
Risk positions
CET 1 ratio
RoE
in EUR bn
in EUR bn
in %
in %
-4.2%
-3.0 Pp
255.5
244.7
87.6
83.5
15.8
14.0
8.2
31 Dec 2013
30 Sep 2014
31 Dec 2013
(KWG)
30 Sep 2014
(CRR / CRD IV)
31 Dec 2013
(KWG)
30 Sep 2014
(CRR / CRD IV)
1 Jan –
30 Sep 2013
Earnings adjusted for GBW AG shares
Investor Presentation · November 2014 · Page 4
5.2
1 Jan –
30 Sep 2014
Earnings as at Sep 2014
Solid earnings in core business despite persistent low interest
rates and weak capital expenditures
Core business (EUR m)
Non-core business (EUR m)
1 Jan – 30 Sept 2014
All items adjusted for MKB
Total income
1,327
161
1,488
Administrative expenses
-734
-92
-825
502
58
561
Profit before taxes
Risk positions
Investor Presentation · November 2014 · Page 5
68,893
14,631
83,524
Earnings as at Sep 2014
Net interest income and net commission income higher
Item
Net interest
income
Earnings EUR m / %
Comments
+0.6%
Net interest income slightly
higher despite ongoing
targeted downsizing of
business volumes
1,244
1,251
1 Jan – 30 Sep 2013
1 Jan – 30 Sep 2014
+9.8%
Net
commission
income
153
168
1 Jan – 30 Sep 2013
1 Jan – 30 Sep 2014
Investor Presentation · November 2014 · Page 6
Net commission income
rose by EUR 15 m; primarily in
the lending business
Earnings as at Sep 2014
Risk provisions moderate due to good portfolio quality
Good portfolio quality overall and net writebacks on provisions at Banque LBLux on the transfer of its Corporate
Banking portfolio to the Restructuring Unit led to risk provisions of EUR -84 m, less than the year-before period
(9m 2013: EUR -115 m)
DKB's risk provisions of EUR -97 million below previous year's amount (9 m 2013: EUR -107 m)
Non-performing loan ratio at around 3.4%
Risk provisions
Breakdown by Group unit
in EUR m
in EUR m
1 Jan – 30 Sep 2013
1 Jan – 30 Sep 2014
67
8
-84
-16
-115
-54
-107
-97
-27.0%
BayernLB
Investor Presentation · November 2014 · Page 7
DKB
LBLux
Earnings as at Sep 2014
Volatility in gains or losses on fair value measurement item
decreases again
■ Gains or losses on fair value measurement decreased from EUR 223 m to EUR 186 m
■ Mark-to-market valuations of cross currency swaps and own credit spread, which have been highly volatile in past periods,
nearly offset each other in the first nine months of 2014 with a balance of EUR 1m (9 m 2013: EUR -44 m).
■ Fair value adjustments weighed on results by EUR 61 m in contrast to a positive contribution from writebacks of EUR 53 m
in the year-before period
-16.6%
in EUR m
223
186
82
75
ABS securities (trading book)
9
Currency-related transactions
26
Other fair value gains
Fair Value-Adjustments
106
159
Strategic liquidity reserve
Own Credit Spread
Cross Currency Swaps
53
0
-24
-20
3
23
-61
-22
1 Jan – 30 Sep 2013
Investor Presentation · November 2014 · Page 8
1 Jan – 30 Sep 2014
Earnings as at Sep 2014
Administrative expenses reduced despite of high regulatory
costs
Administrative expenses1
in EUR m
Administrative expenses cut 6% to
EUR 825 m
The cost-cutting programme initiated at
the end of 2013 is beginning to have an
impact
-6.0%
Around three quarters of the 440 job cuts
planned have already been contractually
agreed or are in final stage of negotiation
-878
1 Jan – 30 Sep 2013
1)
Group not including MKB
Investor Presentation · November 2014 · Page 9
-825
1 Jan – 30 Sep 2014
IT costs reduced
But: additional expenses for audit and
consultancy services, notably in
connection with the ECB's comprehensive
assessment
Earnings as at Sep 2014
Overview of segment earnings
Core units
Corporates,
Mittelstand &
Financial
Institutions
Real Estate &
Savings
Banks/
Association
DKB
Profit before taxes in EUR m
Non-Core Unit
Markets
1 Jan – 30 Sep 2013
Central Areas &
Others
RU
Others
LBLux
Consolidation
1 Jan – 30 Sep 2014
348 2)
235
210
213
198
169
157
122
114
33
18
-63 1)
-101
-163
1)
Credit value adjustments of EUR -77m for the derivatives business weighed heavily on segment earnings;
Good customer business: Earnings of EUR 183m, of which EUR 135m were posted in the customer business areas
2) Includes a one-time gain of EUR 351m on the disposal of GBW AG
Investor Presentation · November 2014 · Page 10
Earnings as at Sep 2014
Net commission income rises in business customer segment,
DKB second-largest internet bank in Germany
Business area
Comments
Profit before taxes EUR 210 m (9m 2013: EUR 235 m)
Net interest income in line with year-before period despite weak loan demand and
competitive pressure
Corporates, Mittelstand
& Financial Institutions
Net commission income significantly higher, especially in the lending business
Decline in administrative expenses boosted by cost-cutting measures
Customer relationships deepened by financing companies' entire value added chains
Fulfilled leading roles in major syndicated loans and DCM transactions
Profit before taxes EUR 114 m (9m 2013: EUR 122 m)
Total income on par with year-before period despite low interest rates
Administrative expenses rose due to non-stop growth and increasing
regulatory red tape
Lending volume grew to EUR 57.5 bn; customer deposits, a strategically important
component of funding, climbed nearly 8.6% to EUR 47.4 bn
Second-largest internet bank in Germany with 250,000 new customers (currently
more than 3 million total customers)
Investor Presentation · November 2014 · Page 11
Earnings as at Sep 2014
Real estate benefits from commission income,
debt capital markets business performs well
Business area
Comments
Profit before taxes climbed to EUR 198 m due particularly to successful real estate
business (9m 2013: EUR 157 m)
Real Estate &
Savings Banks /
Association
Earnings in the Real Estate division nearly double to EUR 127 m (9m 2013: EUR 71 m)
due to higher net interest income, rise in net commission income and writebacks of
risk provisions
Business with savings banks and public sector stable with profit before taxes of
EUR 24 m (9m 2013: EUR 24 m)
Pre-tax earnings at BayernLabo, which lends to municipal governments and provides
development loans, decreased to EUR 42 m (9m 2013: EUR 58 m) due to weaker net
interest income and higher administrative expenses for IT capital outlays
Markets
Investor Presentation · November 2014 · Page 12
Profit before taxes of EUR -63 m (9m 2013: EUR 18 m). Credit value adjustments of
EUR -77 m for the derivatives business weighed heavily on segment earnings
Debt Capital Markets business continues to perform well with corporate bonds and
Schuldschein notes
Earnings as at Sep 2014
Non-Core Unit: Wind down of non-core activities well on
schedule
Business area
Comments
Profit before taxes of EUR 33 m down from EUR 348 m in the year before period.
9 m 2013 results included a one-time gain of EUR 351 m from the disposal of GBW AG
Non Core Unit
(NCU)
Credit and securities portfolios in the RU reduced by a further EUR 3.5 bn in the first
half of the year through scheduled and early repayments and sales
Total volume in the RU as at 30 September EUR 21 bn, of which EUR 6.5 bn ABS
portfolio sold in October
MKB successfully sold, transaction closed on 29 September 2014
MKB
Impact on consolidated income under IFRS: A deconsolidation loss of EUR -1,071 m
recognised under gains or losses on discontinued operations
Only a minor impact on the CET 1 ratio
Investor Presentation · November 2014 · Page 13
Earnings as at Sep 2014
Systematic deleveraging through planned wind down of
portfolios
Significant deleveraging in the BayernLB Group since 2009:
Total assets:
-42% to EUR 245 bn
Risk positions:
-58% to EUR 84 bn
Leverage ratio*:
rose from 2.7% to 5.8%
CET 1 ratio CRR / CRD IV:
14.0%
Risk positions
Deleveraging
in EUR bn
in EUR bn / %
Non-core business
Core business
Total assets
Core capital ratio
CET 1 ratio
200
Total assets
EUR bn
-58%
Ratio
in %
-42%
150
15.8
600
14.0
12.9
100
198
84
136
50
10.9
400
11.2
11.4
16
12
9.2
15
124
118
8
100
88
200
69
0
422
339
316
309
287
256
245
0
Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Sep 14
* Leverage ratio = reported equity / total assets
Investor Presentation · November 2014 · Page 14
4
0
Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Sep 14
Earnings as at Sep 2014
Restructuring Unit continues to successfully wind down noncore portfolio
■ As at 1 Jan 2013: Transfer of an additional EUR 13 bn of non-strategic, non-core portfolios to the RU in accordance with EU
conditions, but rapid winddown of loan/investment portfolios continues
■ As at 1 July 2014: Transfer of LBLux's EUR 2 bn non-strategic, non-core portfolio to the RU. The resulting increase in RWA
was fully offset by accelerated run down of the portfolio
■ In October 2014: BayernLB sold its entire ABS portfolio of EUR 6.6 bn to international investors. This reduced the volume
to EUR 15 bn.
Gross credit volume/risk assets
Portfolio breakdown
Profit before taxes
in EUR bn
as at Sep 2014 in %
EUR m
Gross credit volume
-72%
70
Risk assets
67
30%
17%
60
18
5%
-52
5%
50
+68%
308
139
16%
15%
-34%
40
-35
12%
32
30
ABS securities
19
20
10
22
21
German public sector lending (outside Bavaria)
22
14
7
10
10
31 Dec 12
Real estate
Single Name Credit Investments
0
31 Jul 09
128
Corp. banking, project finance,
other lending business
(no connection to Germany)
01 Jan 13
31 Dec 13
Source: Restructuring Unit Report
Investor Presentation · November 2014 · Page 15
30 Sep 14
110
Residential term loans
Financial institutions/public sector (abroad)
Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Sep 14
Total
Earnings as at Sep 2014
BayernLB sold its entire ABS portfolio in October 2014
In October 2014, BayernLB sold its entire ABS portfolio, which was guaranteed by the Free State of Bavaria, in an auction to
international investors
The sale also ends the guarantee agreement concluded by BayernLB with the Free State of Bavaria in December 2008 to
hedge the portfolio against risk and losses
RMBS prime
Nominal value
in EUR bn
RMBS non-prime
CDO/CLO
30
CMBS
26.3
ABS Consumer /
Commercial
25
8.3
20.7
20
-75%
17.9
6.1
15
14.4
5.0
7.8
12.1
4.2
7.1
10
2.2
5.0
6.1
4.4
5
0
2.1
31 Dec 2007
5.7
1.2
31 Dec 2008
Investor Presentation · November 2014 · Page 16
1.8
0.9
31 Dec 2009
2.1
1.5
1.5
0.5
31 Dec 2010
1.3
7.1
1.8
6.6
1.7
4.2
4.2
5.1
3.9
3.1
1.9
9.6
3.3
6.3
0.4
31 Dec 2011
1.0 0.3
1.0
31 Dec 2012
0.2
0.4 0.5
31 Dec 2013
0.1
0.3 0.3
30 Sep 2014
Earnings as at Sep 2014
Very solid capital base acts as foundation for growth
in the core business
Common Equity Tier 1 ratio (CET 1 ratio) 14.0%
"Fully loaded" incl. silent partner contribution by the Free State of Bavaria, the CET 1 ratio is 12.8%
The ratios as at 30 September include the full impact of the sale of MKB
For strictly supervisory purposes, a capital charge of approx. EUR 637 m against CET 1 capital or EUR 1,061 m
against fully loaded CET 1 capital had to be taken as from 1 April due to unrepaid loans of Hypo Alpe Adria
CRR/CRD IV– IFRS
Risk positions
CET 1 capital/ratio
CET 1 fully loaded capital/ratio
in EUR bn
in EUR bn/%
in EUR bn/%
Core business
Non-core business
-2.3%
15
14.4%
14.0%
10
100
86
84
50
69
69
0
17
15
30 Jun 2014
30 Sep 2014
Investor Presentation · November 2014 · Page 17
5
15
13.0%
12.8%
11.2
10.7
30 Jun 2014
30 Sep 2014
10
12.4
11.7
0
5
0
30 Jun 2014
30 Sep 2014
Earnings as at Sep 2014
Good results in bank stress test
ECB confirms good core capital ratio (CET 1):
13.2% as starting basis after AQR
12.4% in baseline scenario
9.4% in adverse scenario
BayernLB's leverage ratio was also good at 4.3%
AQR writedowns due to the quality and long-term value of assets were charge mainly against the Hungarian
subsidiary MKB which has since been sold; without MKB the outcome would have thus been much better
Rankings of German banks
CET 1 ratio - starting basis after
CET 1 ratio - adverse scenario
AQR (minimum 8%)
(minimum 5.5%)
13.2%
15
10
5
0
12
CET 1 ratio %
35
CET 1 ratio %
CET 1 ratio %
40
Leverage Ratio
9.4%
10
5
5
10
15
20
25 German Banks
Investor Presentation · November 2014 · Page 18
25
6
4.3%
4
2
0
1
8
0
1
5
10
15
25 German Banks
20
25
1
5
10
15
25 German Banks
20
25
Earnings as at Sep 2014
Outlook: 2014 will be a year of transition
Low interest rate environment, stiff competition and geopolitical risks: earnings in the
German banking market will remain under pressure
Nevertheless, we expect earnings in our core business to continue performing well
Consolidated net income in 2014 will be negative as expected due to the extraordinary charge
from the sale of MKB
As a result of the sale of the ABS portfolio, the Umbrella guarantee agreement ended and
state aid was repaid; expenses related to these transactions will lead to a net annual loss
under German GAAP (HGB)
Capital base remains solid after sale of MKB and ABS portfolio
Investor Presentation · November 2014 · Page 19
Agenda
Page
Investor Presentation · November 2014 · Page 20
1
Earnings as at Sep 2014
3
2
EU requirements
21
3
High portfolio quality
23
4
Funding, liquidity and Pfandbriefs
31
5
Appendix: detailed charts
38
EU requirements
Fast pace set in fulfilling EU conditions
Around EUR 5 bn in state aid to be repaid to the Free State of Bavaria by 2019
As a result of the sale of the ABS portfolio, BayernLB made another payment of around EUR 1,109m to the Free State in
November 2014. The payment completed the requirement to payback a clawback amount for the ABS portfolio guarantee
totalling EUR 1.96bn much earlier than planned.
This tranche brings the total amount repaid by the Bank to the Free State of Bavaria to nearly EUR 2.4bn of which EUR
1.96bn counts against the total amount of state-aid that has to be paid back.
The remaining amount of state-aid to be repaid amounts to EUR 3bn.
Repayment of state aid
Date
Payment to the Free of which silent partner
State of Bavaria
contributions
of which
clawback
Umbrella
fee
Remaining balance
of state aid
EUR m
Target
3,000
1,960
4,960
2009 to Oct 2012
95
-
-
95
4,960
Nov 2012
351
-
240
111
4,720
Feb 2013
451
-
451
-
4,269
Mai 2013
279
-
180
99
4,089
Aug 2013
50
-
30
20
4,059
Nov 2013
50
-
30
20
4,029
Nov 2014
1,109
-
1,029
80
3,000
Total
2,385
-
1,960
425
Investor Presentation · November 2014 · Page 21
Agenda
Page
Investor Presentation · November 2014 · Page 22
1
Earnings as at Sep 2014
3
2
EU requirements
21
3
High portfolio quality
23
4
Funding, liquidity and Pfandbriefs
31
5
Appendix: detailed charts
38
High portfolio quality
Investment grade share stable at around 77%
Gross credit volume
31 Dec 2013 total: EUR 285.2bn
77% investment grade
30 Jun 2014 total: EUR 282.5bn
160
155.9 155.0
140
120
100
80
63.8
60
61.2
36.8
40
35.8
14.9
20
14.4
4.7
5.1
2.7
2.7
6.2
8.4
0
Rating
0-7
8-11
Investment grade
Investor Presentation · November 2014 · Page 23
12-14
15-18
Non-investment grade
19-21
22-24
Core
22-24
Non-core
Default categories
High portfolio quality
Credit portfolio remains well diversified and focused on
Germany
In line with strategy, gross credit volume fell from EUR 285.2 bn to EUR 282.5 bn
Share in Germany stable at 74% thanks to new business gains and winding down of non-core transactions
Broad portfolio mix with high granularity in the sub-portfolios
Brunt of decrease occurred in the Countries/Public-Sector/Non-Profit Institutions sub-portfolio
Gross credit volume by region
Gross credit volume by sub-portfolio
EUR bn/% as at 30 Jun 2014
EUR bn/% as at 30 Jun 2014
EUR 35 bn
12%
17%
EUR 12 bn
EUR 15 bn
EUR 0.7 bn
EUR 49 bn
4%
EUR 73 bn
5%
74%
EUR 209 bn
26%
21%
EUR 58 bn
14%
EUR 38 bn
24%
Germany
Middle East / Africa (EUR 1.9 bn, <1%)
Western Europe
Latin America / Caribbean (EUR 0.6 bn, <1%)
North America
Eastern Europe / CIS
Asia / Australia (EUR 2.2 bn, <1%)
Supranational organisations (EUR 3 bn, ≤1%)
Investor Presentation · November 2014 · Page 24
EUR 67 bn
Financial institutions incl. ABS
Corporate customers
Commercial real estate
Retail customers
Countries/public sector/
non-profit organisations
Others (EUR 731 m, < 1%)
High portfolio quality
Satisfactory mix of sectors, largest sub portfolio is the Utilities
sector
A large part of the portfolio reduction took place at the LBLux subsidiary (decrease by 45 percent) / private banking
business sold
Volume grew at DKB by EUR 2 bn in accordance with strategy, mainly in the Corporates and Countries/Public Sector/NonProfit Organisations sub-portfolio
Satisfactory mix of sectors in the Corporates sub-portfolio. The largest sector, Utilities, is characterised by good and stable
portfolio quality, low cyclicality and high granularity
200
Gross credit volume by subsidiary
Top 10 business sectors as at 30 Jun 2014
EUR bn/% as at 30 Jun 2014
(Gross volume: EUR 59 bn)
31 Dec 2013 total: EUR 285.2 bn
69% 69%
30 Jun 2014 total: EUR 282.5 bn
6%
5% 5%
7%
7%
150
EUR 21 bn
35%
8%
100
198
9%
195
27% 27%
EUR 5 bn
9%
9%
EUR 5 bn
50
76
78
3%
8
0
BayernLB
DKB
Investor Presentation · November 2014 · Page 25
3%
7
MKB
1%
4
1%
2
LBLux
Utilities
Technology
Automotive
Pharmaceutical and healthcare
Logistics
Constructions
Consumer goods, wholesale and retail
Machine engineering
Aerospace, hotels, tourism
Oil and gas
High portfolio quality
Granularity up slightly; 78% of net credit volume from smaller
and medium-sized exposures
Granularity rose mainly as a result of decrease in volume and new low volume transactions
Moderate increase in large exposures (over EUR 2.5 bn) for purposes of liquidity management but decrease in EUR
1 to 2.5 bn exposure category
Only a few exposures in the over EUR 2.5 bn category. All of them are either exposures to other Landesbanks, (and nearly
all government backed), or investment grade government entities
Net credit volume
31 Dec 2013 Total: EUR 201.3 bn
78% of net credit volume under EUR 500 m
30 Jun 2014 Total: EUR 203.8 bn
60
48.4 50.1
40
31.6
34.5
24.2 24.5
21.3
21.0 20.2
19.9
20
28.5 29.3
16.2
10.0
12.7
12.5
0
> 2.5 billion
> 1 billion to
2.5 billion
> 500 million
to 1 billion
Volume > EUR 500 million
Investor Presentation · November 2014 · Page 26
> 250 million
to 500 million
> 100 million
to 250 million
> 50 million
to 100 million
Volume EUR 50 to 500 million
> 5 million
to 50 million
Up to 5 million
Volume < EUR 50 million
High portfolio quality
Real estate portfolio focused on Germany
■ Non-core business cut back, focus of cutbacks is on business abroad
■ Commercial real estate financing: highly granular portfolio with high levels of collateral
Gross credit volume by region
Gross credit volume by portfolio
in % as at 30 Jun 2014
EUR bn as at 30 Jun 2014
Germany
West Europe
East Europe
Other
50
49.2
BayernLB
Commercial real estate
financing
Private real estate financing
45
40
BayernLabo
DKB
17.9
MKB
35
30
5% 2%
12%
81%
7%
93%
LBLux
5.2
25
20
Real estate leasing
15
23.0
20.3
1.1
5.3
10
12.5
5
3%
97%
0
1.0
2.1
Commercial real
estate financing
Investor Presentation · November 2014 · Page 27
1.9
1.4
Private real
estate financing
0.2
1.8
Real estate leasing
High portfolio quality
GIIPS portfolio shrinking – portfolio quality stable
■ Gross credit volume to GIIPS scaled back further, particularly in Italy
■ General easing of euro sovereign debt crisis keeping portfolio quality stable
■ New business in GIIPS countries is being entered into only very selectively in carefully chosen segments
Gross credit volume EUR m
Gov. / public sector
Banks / savings banks / insurance
Corporates / real estate / ABS / others
4,061
3,797
Dec 2013
Jun 2014
448
43
56
349
272
20 43
209
Exposures significantly
scaled back, especially to
banks
Reductions focused on
Banking and Corporates
customers
Italy
400
Greece
5,422
1,225
3,121
462
1,267
1.819
414 112
1,392
1,294
Dec 2013
Jun 2014
81
5
80
0
76
80
Dec 2013
Jun 2014
Dec 2013
Jun 2014
379
36
35
373
32 37
3.050
209
904
2,878
209
759
308
304
1,936
1,910
Dec 2013
Jun 2014
Dec 2013
Jun 2014
Investor Presentation · November 2014 · Page 28
Stable portfolio with no
major changes
Spain
Ireland
Portugal
Total
-23%
7,078
750
2,267
Significant decrease in
government bonds and loans
to banks
Little remaining exposure
No new business
Cutbacks continuing but at a
slower pace
High portfolio quality
Decreasing portfolio in Russia and very low exposure to Ukraine
■ Volume in Ukraine is just EUR 4 m
■ Bulk of gross credit volume in Russia is with key, stable state-owned sectors and covered by ECA guarantees
Ukraine
Gross credit volume EUR m
Gov. / public sector
Banks / savings banks / insurance
No major changes; volume steady at a low level
4
4
Dec 2013
Jun 2014
1,930
Russia
2,090
96% of exposure consists of guarantees with Ukrainian banks
(short-term, low-risk documentary business)
Exposure has decreased slightly in line with defensive business
strategy
Investment grade share remains high at around 77%
87% of the exposure is to the stable banking and oil and gas sectors
Dec 2013
Investor Presentation · November 2014 · Page 29
Jun 2014
Agenda
Page
Investor Presentation · November 2014 · Page 30
1
Earnings as at Sep 2014
3
2
EU requirements
21
3
High portfolio quality
23
4
Funding, liquidity and Pfandbriefs
31
5
Appendix: detailed charts
38
Funding, liquidity and Pfandbriefs
Liquidity is very good
Dependence on capital markets continues to decrease due to reduced business activities
and expanded funding mix
Liquidity and
funding
Funding requirements from the capital markets in 2014 on a par with previous year
BayernLB will continue to issue 1 or 2 secured benchmark bonds a year in order to ensure
access to capital markets; it issued two public-sector Pfandbriefs, one for EUR 500 m with
ten-year maturity in April 2014 and one for EUR 500 m with 7-year maturity in July 2014
Issued
in
EUR bn
Capital
market
funding
10.3
6.7
Estimated need
6.2
6.0
12
10
secured
unsecured
8
(BayernLB core bank
not including
BayernLabo)
6.5
6
2.4
2.6
4
2
3.1
3.8
4.3
3.6
2.9
2011
2012
2013
2014e
0
Investor Presentation · November 2014 · Page 31
Funding, liquidity and Pfandbriefs
Maturity profile of grandfathered securities
No structural liquidity gaps out to 2015 or beyond, despite the decrease in liabilities
in EUR bn
34
32
32.1
30
28
26
24
23.0
22
20
18
16
14
12
10
8
6
4
1.4
2
1.1
1.0
0.9
0.8
0.6
0.6
0.5
0.5
0.4
0.4
0.2
0.2
0.1
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
0
2013
2014
2015
2016
2017
BayernLB core bank; outstanding volume as at the end of each year (as at 31 December 2013)
Investor Presentation · November 2014 · Page 32
Funding, liquidity and Pfandbriefs
German Pfandbriefs – a safe haven for investors
Legal basis provided by German Pfandbrief Act
Pfandbrief issuers are licensed and supervised by BaFin, the German Federal Financial Supervisory
Authority. Independent trustees monitor issuers
Strict criteria for cover-pool eligible assets
(only assets from the EU, EEC, Switzerland, USA, Canada and Japan are eligible)
Advantages of
German
Pfandbriefs
(covered
bonds)
2% overcollateralization of present value required by law
Maximum loan-to-value of 60% for mortgage-backed Pfandbriefs
Cover pool audited at least every 2 years
Special risk management requirements including a quarterly transparency report
Bankruptcy-remote assets protect Pfandbrief holders in case of insolvency
Bearer Pfandbriefs are exchange listed and traded on a liquid market
Pfandbriefs are eligible for ECB open-market operations and can be used for repo transactions
Investor Presentation · November 2014 · Page 33
Funding, liquidity and Pfandbriefs
Mortgage Pfandbrief - focus on private placements
Mortgage Pfandbrief
■ EUR 5.9 bn volume outstanding (nominal value)
■ AAA/Aaa by Fitch and Moody´s
Cover register
■ Nominal value:
EUR 10.1 bn
■ Net present value:
EUR 10.8 bn
■ OC nominal value:
70%
■ Maturities up to 1 year:
■ Maturing Pfandbriefs: EUR 1.6 bn
4%
3%
4%
■ Maturing volume cover register: EUR 2.9 bn
Germany
5%
UK
France
7%
USA
■ No Jumbos outstanding
9%
Germany
68%
Netherlands
Rest of Europe
Italy
30 Sep 2014
Investor Presentation · November 2014 · Page 34
Funding, liquidity and Pfandbriefs
Public sector Pfandbrief - German assets dominate
cover pools with 92%
Public sector Pfandbrief
Cover register
■ EUR 20.5 bn volume outstanding (nominal value)
■ AAA/Aaa by Fitch and Moody´s
■ Maturities up to 1 year:
■ Maturing Pfandbriefs: EUR 5.2 bn
■ Nominal value:
EUR 30.4 bn
■ Net present value:
EUR 33.0 bn
■ OC nominal value:
48%
■ Maturing volume cover register: EUR 6.5 bn
4%
Balanced maturity profile Jumbos
outstanding volume EUR 4.6 bn
1%
2%
<1%
Germany
UK
2.0
issue volume
in EUR bn
Switzerland
1.5
1.3
1.3
1.0
1.0
1.0
Germany
92%
0.5
0.0
26 Nov 2014
8 Jun 2015
maturity
Investor Presentation · November 2014 · Page 35
25 Jul 2016
4 Sep 2017
30 Sep 2014
Rest of Europe
Spain
Canada / USA
Funding, liquidity and Pfandbriefs
EUR 500 m 1.0% 7 year Public sector Pfandbrief
Issue details
Highlights
Size:
EUR 500 m
Type:
Public sector Pfandbrief
Rating:
Aaa (Moody‘s) / AAA (Fitch)
Pricing date:
2nd July 2014
Value date:
9th July 2014
Maturity date:
9th July 2021
Coupon:
1.0% p.a.
Joint Bookrunner:
BayernLB, BNP Paribas, ING,
Natixis, NordLB
Distribution by investor type
■
On July 2. 2014 BayernLB successfully entered the BenchmarkPfandbrief-Market with its second transaction for this year. After
the 10-year issuance in April (EUR 500 m 2014/24 at Ms+8), this
time the 7-year maturity was selected. The transaction was
launched in a constructive market environment.
■
After the announcement on Tuesday, the IOIs collection phase
started for a EUR 500 m (no grow) Public sector Pfandbrief at Initial
Price Thoughts of MS+5 area in the early morning (9:05 a.m.) of the
following day. The IPTs of Ms+5 represented a NIP of about 3-4
bps. When investors IOIs reached the desired issuance volume,
books were officially opened with a price guidance of Ms+3-4 bps.
The order book quickly reached more than EUR 1.1 bn and the
books were subsequently closed at 10:15 a.m. Based on the strong
investor response, pricing was fixed at Ms+3 bps, reducing the NIP
to 1-2 bps only.
Distribution by region
Germany
30%
33%
76%
Landes-/Savingsbanks
Banks
Asset Managers
Central Banks/Agencies
2%
6%
Corporates
19%
10%
Investor Presentation · November 2014 · Page 36
Insurances
Luxemburg
Scandinavia
Other Europe
2% 2%
Austria / Switzerland
4%
7%
Asia
9%
Agenda
Page
Investor Presentation · November 2014 · Page 37
1
Earnings as at Sep 2014
3
2
EU requirements
21
3
High portfolio quality
23
4
Funding, liquidity and Pfandbriefs
31
5
Appendix: detailed charts
38
Appendix
Year-on-year earnings comparison
1 Jan - 30 Sep 2014
1 Jan - 30 Sep 2013
1,251
1,244
0.6
-84
-115
-26.6
1,167
1,129
3.4
Net commission income
168
153
9.8
Gains or losses on fair value measurement
186
223
-16.7
Gains or losses on hedge accounting
-51
-31
61.6
-140
234
-
0
-1
-
Administrative expenses
-825
-878
-6.0
Expenses for bank levies
-2
-5
-57.4
Other income and expenses
74
117
-36.9
Gains or losses on restructuring
-16
-9
82.2
Earnings before taxes
561
931
-39.8
Income taxes
-51
-165
-69.1
Gains or losses on continuing operations
509
766
-33.5
-1,071
-160
>100.0
-561
606
-
Cost/income ratio (CIR)
55.5%
45.3%
10.2 Pp
1)
Return on equity (RoE)
5.2%
8.2%
-3.0 Pp
2)
in EUR m
Net interest income
Risk provisions in the credit business
Net interest income after risk provisions
Gains or losses on financial investments
Income from interests in companies measured at equity
Gains or losses on discontinued operations
Profit after taxes
1)
Change in % /pp
CIR = administrative expenses/net interest income + net commission income + gains or losses on fair value measurement + gains or losses on hedge accounting + gains or losses on
financial investments + gains or losses on interests in companies valued at equity + other income and expenses
2) Profit before taxes/average reported equity. Up to and including 2012, excludes the share of earnings and equity from BayernLabo which is a non-competitive business.
Investor Presentation · November 2014 · Page 38
Appendix
Quarterly earnings comparison
in EUR m
Net interest income
Q3 2014
Q2 2014
Q1 2014
421
450
381
-129
17
28
291
466
409
Net commission income
52
62
53
Gains or losses on fair value measurement
46
87
53
Gains or losses on hedge accounting
-37
-11
-2
Gains or losses on financial investments
-48
-52
-40
0
0
0
Administrative expenses
-288
-256
-281
Expenses for bank levies
0
0
-2
Other income and expenses
20
32
21
Gains or losses on restructuring
-3
-9
-3
Earnings before taxes
34
320
207
Income taxes
13
-53
-11
Gains or losses on continuing operations
46
267
196
Gains or losses on discontinued operations
-760
-303
-7
Profit after taxes
-714
-36
189
Risk provisions in the credit business
Net interest income after risk provisions
Income from interests in companies measured at equity
Investor Presentation · November 2014 · Page 39
Appendix
286
216
467
43
186
154
-101
1,251
Risk provisions in the credit business
-32
28
-87
15
-3
-5
0
-84
Net commission income
118
60
-24
-6
-4
24
0
168
37
26
31
44
-13
90
-28
186
Gains or losses on hedge accounting
0
3
-32
-24
0
1
1
-51
Gains or losses on financial investments
0
0
2
0
8
-175
25
-140
Income from interests in companies measured at equity
0
0
0
0
0
0
0
0
Administrative expenses
-200
-154
-242
-125
-13
-91
0
-825
Expenses for bank levies
0
0
-2
0
0
0
0
-2
Other income and expenses
2
20
3
-9
16
41
1
74
Gains or losses on restructuring
0
0
0
0
-10
-6
0
-16
Earnings before taxes
210
198
114
-63
169
33
-101
561
Return on equity (RoE) (% )
12.1
31.3
5.1
-8.6
-
2.2
-
5.2
Cost/income ratio (CIR) (% )
45.3
47.5
54.3
>100.0
-
67.3
-
55.5
Gains or losses on fair value measurement
Investor Presentation · November 2014 · Page 40
Markets
DKB
Group
Consolidation
Net interest income
in EUR m
1 Jan - 30 Sep 2014
Central Areas
& Others
Non-Core Unit
Real Estate &
Savings Banks/
Association
Corporates, Mittelstand
& Financial Institutions
Segment Overview
Appendix
Balance sheet overview
in EUR bn
Loans and advances to banks
30 Sep 2014
31 Dec 2013
Change in %
42.9
43.5
-1.3
132.5
138.0
-4.0
Assets held for trading
23.5
25.3
-7.4
Financial investments including interests in companies valued at equity
38.0
39.7
-4.4
244.7
255.6
-4.2
Liabilities to banks
65.3
71.2
-8.2
Liabilities to customers
85.6
86.2
-0.6
Securitised liabilities
48.9
53.0
-7.7
Liabilities held for trading
17.3
16.7
3.6
Equity
14.2
14.9
-4.7
5.0
5.0
-0.4
Loans and advances to customers
Total assets
Subordinated capital
Investor Presentation · November 2014 · Page 41
BayernLB's Rating & Investor Relations Team
Petra Trinkies
Financial Office
Financial Office
Financial Office
Brienner Strasse 18
Brienner Strasse 18
Brienner Strasse 18
80333 Munich
80333 Munich
Tel +49 89 2171-27278
Volker Karioth
[email protected]
Head of Finance
Sebastian Appeldorn
www.bayernlb.de
80333 München
Alexandra Heik
[email protected]
Rating & Investor Relations
www.bayernlb.de
Tel +49 89 2171-23431
[email protected]
Rating & Investor Relations
www.bayernlb.de
Financial Office
Financial Office
Financial Office
Brienner Strasse 18
Brienner Strasse 18
Brienner Strasse 18
80333 Munich
80333 München
Tel +49 89 2171-21452
Katharina von Merkatz
www.bayernlb.de
Investor Presentation · November 2014 · Page 42
Tel +49 89 2171-23434
80333 Munich
Marijana Cuic
[email protected]
[email protected]
Rating & Investor Relations
Tel +49 89 2171-23441
Rating & Investor Relations
www.bayernlb.de
Tel +49 89 2171-23489
[email protected]
Rating & Investor Relations
www.bayernlb.de
Disclaimer
The information in this presentation constitutes neither an offer nor an invitation
to subscribe to or purchase securities or a recommendation to buy. It is solely
intended for informational purposes and does not serve as a basis for any kind of
obligation, contractual or otherwise.
Rounding differences may occur in the presentation.
Investor Presentation · November 2014 · Page 43
BayernLB
BayernLB
Investor
Relations
Rating & Investor Relations
Telephone: +49 (0)89/2171/23448
Telephone:
+49 (0)89/2171/23448
Email:
[email protected]
Email: [email protected]
Rating & Investor Relations · September
2012
· Page
October 2012
· Page
44 44
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