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Ecological ESG Pfandbrief Roadshow Presentation

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Ecological ESG Pfandbrief Roadshow Presentation Ecological ESG Pfandbrief Roadshow Presentation October 2018 Münchener Hypothekenbank eG Contents Introducing MünchenerHyp 3 Sustainability 10 Ecological ESG Pfandbrief 18 Appendix 28 Contents 2 “Royal Bank of Bavaria” founded in 1896 strongly enabled and supported by the former Bavarian royal family 122 years successful within the mortgage business Crown of the Kings of Bavaria independent from any corporate group but member of the cooperative FinanzGruppe headquarters in Munich benefit from a strong foothold in Bavaria MünchenerHyp’s Headquarters Introducing MünchenerHyp 3 Key Facts at a Glance systemic important bank under direct ECB supervision: - 39.4 bn Euro total assets - around 500 employees - broad based ownership; no predominant owner - Moody’s issuer rating: Aa3 senior unsecured, A2 junior senior unsecured (03/08/2018) favourable funding by Pfandbrief privilege: - Pfandbrief licence: continuous issuing of benchmark bonds and private placements - second biggest volume of outstanding mortgage Pfandbriefe in Germany - Moody’s Pfandbrief rating: Aaa both public sector and mortgage deep roots within the Cooperative Financial Network (“FinanzGruppe”): - partner of Volksbanken and Raiffeisenbanken in the mortgage lending business - Volksbanken and Raiffeisenbanken as most important business partners and biggest owner group - excellent access to liquidity via the cooperative institutions - strong protection scheme with guarantee fund and guarantee network in the worldwide oldest exclusively private financed protection scheme for banks sustainable business model: - long-term and risk conservative business model - focus on co-operative mission, no profit maximisation - sustainability as integral part of our business activities Date of information: 30/06/2018 Introducing MünchenerHyp 4 Ownership membership: Equity Components 30/06/2018 - 68,090 members in € million Common Equity Tier 1 1,336.5 - 14.453 million co-operative shares Paid-up capital 1,011.7 - 70 Euro nominal value, no trading Reserves 304.5 - 1,011.7 million Euro total amount of non- Special items for general banking risk 35.0 terminated co-operative shares Deductible items -14.7 - “one man, one vote” Additional Equity Tier 1 - - declaration to terminate membership Tier 2 Capital 77.4 Total Equity 1,413.9 impact on strategy and business: Ownership structure - long-term profitability and business 31/12/2012 30/06/2018 sustainability EUR 160.8 mn EUR 1,011.7 mn - conservative risk policy 36.5% 21.6% - no major shareholder - stable and continuous dividend payments 4.7% 61.8% 1.7% 73.7% Co-operative primary banks Other FinanzGruppe companies Customers and other members Date of information: 30/06/2018 Introducing MünchenerHyp 5 Business Performance 30/06/2018 30/06/2017 net interest income (mn EUR) 138.1 124.8 growth new property loans 5.9% 7.8% mortgage portfolio (bn EUR) 30.3 28.6 loan loan business LCR 144.5% 154.7% NSFR 100.2% 105.2% leverage ratio 3.43% 3.44% regulation SREP minimum ratio 7.88% 7.25% common equity tier 1 capital ratio 23.0% 23.7% tier 1 capital ratio 23.0% 23.7% capital total capital ratio 24.3% 25.2% Introducing MünchenerHyp 6 Financial Figures 2011 2012 2013 2014 2015 2016 2017 30/06/2018 e2018 Net interest income 117.9 129.0 143.6 170.6 221.5 233.4 256.6 138.1 270.5 Commission income -38.3 -50.6 -49.3 -60.1 -66.8 -74.2 -74.5 -35.3 -71.8 Total administrative expenses -63.5 -65.5 -73.5 -81.5 -88.9 -92.2 -99.6 -53.4 -106.3 Operating profit before risk provisions 10.7 10.6 22.4 27.0 61.4 63.5 78.7 44.2 85.4 Operating profit after risk provisions 6.5 9.8 21.2 26.8 56.3 67.3 85.1 35.6 71.4 Payment to fund for general banking risks -1.7 -2.5 -5.0 -5.4 -8.4 -7.0 -5.0 0.0 -11.0 Net Income 4.9 5.4 6.7 16.1 22.2 31.9 46.3 22.7 32.8 Cost-Income-Ratio 62.0 62.3 60.7 60.5 52.0 55.9 54.7 51.9 53.5 ROE (Return on equity before tax) 4.2% 5.0% 6.3% 5.1% 6.7% 6.1% 6.5% 5.3% 5.3% CET 1 Ratio 12.5% 17.3% 22.9% 23.8% 23.0% 21.6% Tier 1 Ratio 8.9% 9.1% 11.7% 14.2% 19.5% 22.9% 23.8% 23.0% 21.6% Total assets 37,348.0 36,642.9 34,898.5 36,340.1 38,098.8 38,509.0 38,905.0 39,350.8 40,000.0 2011 2012 2013 2014 2015 2016 2017 30/06/2018 e2018 New mortgage loan commitments 3,390.8 3,620.4 3,618.3 4,436.1 4,849.5 4,929.9 5,053.9 2,186.1 5,300.0 - of which residential mortgage loans 2,807.9 2,958.7 2,879.0 3,677.6 3,834.8 3,958.2 3,882.9 1,542.7 3,250.0 - of which commercial mortgage loans 582.9 661.7 739.3 758.5 1,014.7 971.7 1,171.0 643.4 2,050.0 New public-sector and municipal loan commitments 1,449.0 662.9 552.2 861.4 670.9 109.0 25.0 0.0 0.0 Figures in EUR millions Introducing MünchenerHyp 7 Ratings Date of information: 30/09/2018 Introducing MünchenerHyp 8 Asset Quality Total mortgage loan portfolio mortgage loan portfolio: L.-t.-sust.-value ratio *) EUR millions % % cumulative - 30.3 bn Euro Up to 60% 13,560 44.68% 44.68% - 198,073 individual loans Over 60 to 70% 6,131 20.20% 64.88% - volume: Over 70 to 80% 6,500 21.42% 86.30% 84.9% residential mortgage loans Over 80 to 90% 2,280 7.51% 93.82% Over 90 to 100% 1,057 3.48% 97.30% 15.1% commercial mortgage loans Over 100% 813 2.68% 99.98% - average size: Without 7 0.02% 100.00% about 131,000 Euro residential mortgage loans Total 30,348 100.00% *)The terms of the German Pfandbrief Act (PfandBG) define the about 3,700,000 Euro commercial mortgage loans sustainable value of property as, being generally 10-15% below the open market value of the property. - average loan-to-value ratio: 45 400 59.7% residential mortgage loans 35 74.0% commercial mortgage loans Date of information: 31/12/2017 300 - geographic split: 25 46.2% Bavaria, Baden-Württemberg, Hesse 15 200 and North Rhine-Westphalia 28.1% other German States 5 100 5.0% Berlin -5 20.7% non-domestic (mainly Switzerland) -15 2011 2012 2013 2014 2015 2016 2017 0 - NPL-Ratio at 0.31% Net loan provisions and direct write-downs in EUR millions (LS) Number of loans (RS) Date of information: 30/06/2018 Introducing MünchenerHyp 9 Sustainability within MünchenerHyp sustainable business modell: - sustainability as integral part of our business activities exclusion of business activities to certain critical sectors: Gambling Tobacco Pornography Alcohol Military Weapons Uranium Mining 2014 issuance of the first ESG Pfandbrief: - pioneer in the market segment for sustainable Pfandbriefe integration of sustainable loan products into our core business: - November 2015 MünchenerHyp Green Loan - January 2018 MünchenerHyp Family Loan MünchenerHyp‘s investment into sustainability via own products: - reduced interest rates as incentive for customers Membership in EeMAP (Energy efficient Mortgage Aktion Plan): - founding member and pilot bank Sustainability 10 Sustainability Timeline Sustainability 11 Integration of Sustainability sustainability management of MünchenerHyp sustainable funding through sustainable mortgage lending ESG Pfandbriefe Sustainability 12 Sustainability Ratings Sustainability 13 Sustainability within Core Business basis: holistic sustainability approach all assets are originated and managed according to sustainability principles ecological criteria social criteria oe pool cover MünchenerHyp Commercial loans MünchenerHyp loans to housing green loan with sustainability family loan cooperatives (retail customers) certificate (retail customers) regular issuance of ecological and social ESG Pfandbriefe Sustainability 14 MünchenerHyp Green Loan green loan for retail customers: - strict energy standards for sustainable financing - MünchenerHyp is granting the full loan on a discounted interest rate to incentivise customers - available for new construction, purchase, modernisation or restructuring - loans are certified by ISS-oekom loans represent the top 10% in energy efficiency performance in the German housing market: - annual primary energy consumption not more than 70 kWh/m² - current median in German residential housing is about 140 kWh/m² per year1 positive climate impact: - energy saved is approx. 330 tons of CO2 emission per year sustainable strategy: - currently every 9th loan granted was already green - permanently growing cover pool for future ESG Pfandbriefe 1source: energy values according to dena Gebäudereport 2015 Sustainability 15 Certified Commercial Mortgage Lending financing commercial assets with sustainability certificates evaluation on the basis of the four most important certification systems minimum criteria subject to eligibilty of the sustainability rating agency ISS-oekom: - DGNB (min. Gold or Platinum) - BREEAM (min. Very good, Excellent or Outstanding) - LEED (min. Gold or Platinum) - HQE (min. Excellent or Exceptional) Sustainability 16 Alignment with the SDGs Use of Proceeds Alignment with the UN Sustainable Development Goals (SDGs) Goals Targets 7.3: Double the global rate of improvement in energy efficiency Primary alignment Primary Green Loans / Certified Environmental Loans 11.6: Reduce the adverse per capita environmental impact of cities 13.2: Integrate climate change measure into national policies, corporate strategies and planning Secondary contributionSecondary Sustainability 17 Reasons for an ESG Pfandbrief Reasons for the issuer Reasons for the investor sustainability as integral part of MünchenerHyp investment in sustainable products (sustainable values and corporate governance) investing in the future, the society and climate contribution to climate protection and protection commitment for the society protection of competitive advantages realisation and performance of sustainable mandates extension of the product range, integral supply optimisation of the ecological footprint reputation complying with regulatory requirements broadening of the investor base good secondary market utilisation of assets Ecological ESG Pfandbrief 18 Sustainable Funding MünchenerHyp Green Bond Framework developing and issuing green bonds „MünchenerHyp Ecological ESG Pfandbrief“ → financing of green retail and commercial mortgage loans in line with ICMA Green Bond Principles (GBP) 2018 1) Use of Proceeds 2) Process for Project Evaluation and Selection 3) Management of Proceeds 4) Reporting 5) External Review Ecological ESG Pfandbrief 19 1.
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