investor presentation the helaba group · consolidated financial statements consolidated financial...

Investor Presentation The Helaba Group | April 2020

Values with impact.

Investor Presentation The Helaba Group Frankfurt / Main, April 2020

Investor Presentation The Helaba Group | April 2020 2

1. Helaba’s Business Model

2. Helaba as Sparkassen Central Bank

3. Business Development

4. Asset Quality

5. Sustainability in Helaba Group

6. Funding

Agenda


Sparkassen – German savings banks

Central S-Group institution for savings

banks and S-Group bank, acting as a

partner rather than a competitor

Core markets

Germany with a regional focus and a

selected international presence

Pre-tax profit: € 533 m

Employees: approx. 6,200

Ratings: Moody’s Aa3 / Fitch A+ / S&P A

Owners

12% Federal States of Hesse & Thuringia

88% German savings bank sector

Customer base

Long-term relationships with corporates,

institutional clients, the public sector and

retail customers

Total assets: € 207 bn

RWA: € 60 bn

CET1 ratio1: 14.2%

1) Fully-loaded As of: 31 December 2019

Helaba

At a glance

S


Helaba’s strategic business model


Helaba‘s strategic business model

Commercial bank Central S-Group institution Development bank

As a commercial bank, Helaba is active in

both Germany and abroad. Stable, long-term

customer relationships are the hallmarks of

Helaba’s approach. It works with companies,

institutional customers and the public sector.

Helaba is the central S-Group institution as

well as the preferred service provider and

product supplier for Sparkassen in Hesse,

Thuringia, North Rhine-Westphalia and

Brandenburg, which account for 40% of all

Sparkassen in Germany. Helaba act as a

partner rather than a competitor of the

Sparkassen.

As the central development bank of the State

of Hesse, Helaba bundles the administration

of public development programmes through

its WIBank subsidiary.


Real Estate Corporates & Markets Retail & Asset Management Development Business Other

Commercial real estate

finance

Corporate Banking

Asset Finance

Joint lending activities

with Sparkassen

Capital market and treasury

products

Cash management

Public finance

International business

Retail banking

Private banking

Home loans and

savings business

Asset management

Residential real estate

portfolio

Custodian banking services

Public development

programmes on behalf of

the State of Hesse

Project development and

co-ordination as well as

real estate management for

large-scale properties

Issuance of own debt

instruments for

institutional and retail

customers

A comprehensive product portfolio for our customers


Strongly characterised by the Sparkassen sector with 88 % of share capital

Helaba’s ownership structure

Sparkassen sector S

Savings Banks and Giro

Association Hesse-Thuringia (68.85 %)

Savings Banks Association Westphalia-Lippe (4.75 %)

Savings Banks and Giro Association of the Rhineland (4.75 %)

FIDES Alpha GmbH (4.75 %)1

FIDES Beta GmbH (4.75 %)2

Federal States

State of Hesse (8.1 %)

Free State of Thuringia (4.05 %)

1) FIDES Alpha GmbH, trustee of the guarantee funds of the regional savings banks associations, represented by the German Savings Banks Association (DSGV) 2) FIDES Beta GmbH, trustee of the guarantee fund of the Landesbanken, represented by the German Savings Banks Association (DSGV)

12% 88%

Helaba is closely and permanently integrated into the Sparkassen-Finanzgruppe





4. Asset Quality


6. Funding

Agenda


Consolidated financial statements

Consolidated financial statements since 2003

Profit before taxes 2018 (IFRS): € 958 m

Group ratings from Fitch Ratings (A+) and Standard &

Poor’s (A)

Joint group reserve fund

Integrated in joint risk management system

Around € 555 m in addition to existing nationwide

institutional protection schemes as of 31 December 2018

Direct protection for creditors in addition to institutional

protection

Joint risk management

Uniform risk management strategy

Risk monitoring system with early warning indicators

Risk-adjusted contributions to group’s guarantee fund

Joint market presence

Joint business strategy

Full market coverage

(retail and wholesale business)

Clear division of customer responsibility

Co-ordinated range of products

The S Group concept in Hesse & Thuringia

A single economic unit with unique franchise

Platform for products and services

Joint risk management Wholesale business

Access to global markets SME & retail customers

in the region

S

Facts & figures in 2018 of S Group Hesse & Thuringia

Total assets of € 259 bn

Profit before taxes (IFRS) of € 958 m

24,000 employees

1,532 branches and offices incl. self-service terminals


Co-operation agreements with S-Group associations in

NRW and Brandenburg

Central S-Group institution for Sparkassen in North Rhine-

Westphalia and Brandenburg

Joint sales and marketing strategy

1. Helaba is preferred S-Group partner

2. Target S-Group ratio of 60 – 80 %

3. Clear customer segmentation

4. Co-ordinated range of products

Risk and S-Group advisory board

Consultation role, but no rights of inspection or

intervention

Regional reserve fund (only in NRW), contributions by

Sparkassen in NRW

S-Group concept in Hesse & Thuringia based on business

model of a single economic unit

Central S-Group institution for Sparkassen in Hesse and

Thuringia

Joint sales and marketing strategy

1. Helaba is preferred S-Group partner

2. Target S-Group ratio of 60 – 80 %

3. Clear customer segmentation

4. Co-ordinated range of products

Joint risk monitoring system with traffic-light early

warning indicators

Risk Committee and S-Group Committee

with rights of inspection and intervention

Regional reserve fund to cover mutual risks and directly

protect creditors; contributions by S-Group members

Consolidated group financial statements under IFRS,

joint group rating

S-Group concept in Hesse-Thuringia, co-operation agreements with S Group associations in NRW

and Brandenburg


The leading S-Group Bank within the German S Finanzgruppe

Hesse-Thuringia

Home region with central S-Group

function for associated Sparkassen

Sparkassen and federal states are

among Helaba’s shareholders

“S-Group concept” with business

model of a single economic unit, joint

reserve fund as well as consolidated

financial statements and group

ratings

Head offices in Frankfurt and Erfurt

North Rhine-Westphalia

Home region with central S-

Group function for associated

Sparkassen

Savings banks associations in

NRW are among Helaba’s

shareholders

S-Group agreements form basis

for co-operation; regional reserve

funds in NRW

Dusseldorf branch office, Münster

sales office

Other regions

Focus on Rhineland-Palatinate,

Bavaria and Baden-Württemberg

Sales offices in Munich, Stuttgart

and Berlin

Brandenburg

Home region with central S-Group function

for associated Sparkassen and S-Group

agreements

Berlin sales office

Head office Branch office Sales office

Stuttgart

Münster

Berlin

Frankfurt

Erfurt Düsseldorf

München

Kassel

Helaba is the central S-Group

institution for around 40 % of

German Sparkassen


1. Helaba’s business model



4. Asset Quality


6. Funding

Agenda


Management Summary

Helaba satisfied with 2019 financial year

13

Consolidated net profit before tax of € 533 m, considerably higher than prior period - partly due to one-off effects

Integration of KOFIBA and DVB portfolio successfully completed, all milestones in Project Alpha achieved, Scope efficiency programme launched

CET1 ratio (fully-loaded) of 14.2% and total capital ratio of 19.0% still comfortably above regulatory requirements

2019 a satisfactory year: new business as well as net interest and net fee and commission income significantly above the previous year

Implementation of regulatory and strategic business requirements continues to weigh on general and administrative expenses

Increase in risk provisioning, which also includes a management adjustment, reflects the general deterioration in the economy as a whole and represents a return to a normal level


Requirement 2019

Target ratio Ratio 2019

CET1 ratio (fully-loaded) 9.85%2 12.5% 14.2%

Liquidity Coverage Ratio 100% >125% 225%

CET1 ratio (fully-loaded) and Liquidity Coverage Ratio

Profit before tax in € m

Total assets in € bn

Cost-income ratio Return on equity

Satisfactory development in key financial ratios for 2019 financial year

14

1) Derived from SREP requirement for 2019 taking capital buffers into account

Target ratio 2019

< 70%

Target range 2019

5.0–7.0%

1) Full consideration of bank levy and contributions paid into the guarantee schemes of the S-Finance Group

163

207

0

50

100

150

200

250

2018 2019

443

533

0

100

200

300

400

500

600

2018 2019

71.1%

0% 100% 0% 12%

6.3%


Total volume of lending by default rating category (RC)

RK 14-24: Sufficient to lower

financial performance;

corresponding S&P Rating: < BB

RK 0-1: No default risk to excellent

and sustainable financial performance; corresponding S&P

Rating: AAA / AA+

RK 8-13: Very good to satisfactory

financial performance;

corresponding S&P Rating: BBB+

to BB

RK 2-7: Exceptionally high to

outstanding financial performance; corresponding S&P Rating: AA to A-

5%

35%

33%

27%

Further decline in NPL ratio while rating structure remains stable

As of December 31, 2019, NPL ratio had fallen further to 0.44%

Of “total loans and advances” of € 150.4 bn, € 0.7 bn were classified as non-

performing exposures

Total lending volume of € 208.3bn

95% of total lending volume with excellent to satisfactory creditworthiness

Development of NPL1 ratio

1) The NPL ratio is the share of non-performing exposures according the EBA definition in relation to loans and advances to customers/banks. Based on Finrep data

15

1.7%

0.8% 0.7%

0.4%

31/12/2016 31/12/2017 31/12/2018 31/12/2019


Net additions increased compared to previous year, but still below long -term average

Net additions to impairments mainly in segment Corporates & Markets

Management adjustment reflected in the Other segment

Risk provisioning above previous year, mainly due to additions to level 2

(according to IFRS 9), and also includes the recognition of a management

adjustment in an amount of € 31 m

The increase reflects the general deterioration in the economic environment and

returns risk provisioning to a normal level, but net additions remain low overall

Composition of loan loss provisions 2019 2018

€ m € m

Risk provisioning on financial assets -78 43

Provisions for off-balance lending business -8 2

Net risk provisioning -86 45

16

Breakdown by segments in € m

0

-28

0

-3

-68

13

-80 -60 -40 -20 0 20 40

Consolidation/Reconciliation

Other

Development Business

Retail & Asset Management

Corporates & Markets

Real Estate


5.7

118.5

207.0

Increase in balance sheet total to € 207.0 bn (2018: € 163.0 bn) primarily a result

of the addition of KOFIBA

Share of loans and advances to customers at 60% of total assets following

significant increase in balance sheet total (2018: 63%)

At € 21.5 bn, volume of new medium and long-term business considerably

above previous year‘s level of € 19.0 bn

Includes acquisition of DVB's land transport finance portfolio

(approx. € 1.0 bn in new medium/long-term business)

New medium and long-term business: € 21.5 bn1 in € bn

1) New medium and long-term business excl. WIBank

Closely intertwined with the real economy in € bn

Loans and advances to

customers

Loans and advances to

affiliated Sparkassen

Customer business dominates balance sheet structure

17

Loans and advances to customers

Total assets

124.2 60% of total assets

Real Estate Finance

10.0

1.7

Retail & Asset Management

9.7

Corporates & Markets

0.1 Other


14.20%

4.50%

1.10%

1.75%

3.70%

3.60%

1.50%

2.00%

Capital ratio31.12.2019

Requirement2019

CET1

AT1

T2

Capital ratios significantly exceed regulatory capital requirements

CET1 ratios at very good level, decline due to increase in risk-weighted assets

CRD IV / CRR transitional arrangements have no impact on CET1 ratio since 2018

Leverage ratio at 4.5% (phased-in) and 4.3% (fully-loaded)

Risk-weighted assets amount to € 59.8 bn

Helaba enjoys comfortable capital backing, significantly exceeding all regulatory

requirements:

CET1 ratio of 14.2% after 2019 well above derived regulatory CET1

requirement of 9.85% for 2019

Total capital ratio of 19.0% also considerably higher than 13.35% required

for 2019

Development of capital ratios Capital requirements and components

Comb. buffer

Pillar 1 min.

requirement

Pillar 2

requirement

18

9.85%

T2

AT1

13.1% 13.8%

15.2% 14.9% 14.2%

19.8% 20.5%

21.8% 20.6%

19.0%

13.8% 14.3% 15.4%

14.9% 14.2%

2015 2016 2017 2018 2019

CET1 ratio (fully-loaded) Total capital ratio (phased-in) CET1 ratio (phased-in)


24.9% 19.0%

30.3%

12.2%

MREL requirement(as of 31.12.2018)

Actual MREL level(as of 31.12.2019)

MREL requirement still comfortably exceeded

19

∑ 61.6%

MREL requirement and actual level in % of RWA

• Expected requirement based on data as of 31 December 2018 of 8.94 % based

on TLOF11, which corresponds to 24.9 % based on RWA

• Actual MREL level as of 31 December 2019 of 20.1% in respect of TLOF

(equivalent to 61.6% in respect of RWA) significantly above regulatory

requirements

• Helaba able to meet the required ratio almost completely with its own funds

• High level of subordinated eligible liabilities (senior non-preferred) not only

effectively protects higher-ranking senior preferred class against losses, but

also provides extensive protection within senior non-preferred class itself

1) MREL requirement first announced by authorities in July 2019 as mandatory ratio of 8.46% based

on Total Liabilities and Own Funds (TLOF)

Draft of mandatory MREL requirement for 2020 is available; update of mandatory MREL requirement for 2020 therefore expected in the near future to rise to 8.94 % TLOF

MREL requirement

Senior non-preferred

Regulatory capital

Senior Preferred – thereof eligible





4. Asset Quality


6. Funding

Agenda


Breakdown by customers

Corporates

Public Sector

Real Estate

Financial Institutions

WIBank

Retail Customers

Breakdown by region

Diversified credit portfolio with focus on Germany

21

Total volume of lending € 208.3 bn

27%

24% 20%

19%

1%

9%

Germany

Rest of Europe

64%

25%

11%

North America

1%

Other


By type of use

Office buildings

Retail

Other

45%

22%

8%

4%

21%

Residential

Logistics

By region

Germany

North America

41%

25%

18%

GB/France

16%

Rest of Europe

Real Estate Finance Portfolio

Business volume of € 35.8 bn

22

Balanced portfolio by regions and type of use

As of December 31st , 2019


Corporate Finance Portfolio

Business volume of € 49.4 bn

By region

Germany

Rest of Europe

North America

Great Britain

Other

By product area

Corporate loans

Transport Finance

Asset Backed Finance

Acquisition Finance

Structured Trade & Export Finance

Leasing Finance

Project Finance

23

Broadly diversified portfolio with focus on Europe

France

56%

20%

9%

7%

3%

10%

4% 34%

11% 17%

21%

5%

6%

6%






4. Asset Quality


6. Funding

Agenda


Helaba's alignment to corporate sustainability

Helaba is committed to the ten principles of the UN Global

Compact and has established principles for responsible

corporate management in its group-wide binding

sustainability guidelines

Helaba actively promotes sustainable financing and has

established binding sustainability criteria for lending in

its risk strategies. In addition, the Code of Conduct serves

as a guideline for all employees for responsible

cooperation

Helaba reports extensively and transparently on its

sustainability performance using the German

Sustainability Code and publishes a non-financial

statement

Link to the website: nachhaltigkeit.helaba.de


Rating score: C (Prime)

Rating scale: from D- to A+

Among the top 10 % in the

peer group of 243banks

Rating score B- for partial

rating “Social & Governance"

Rating score: BB (Positive)

Rating scale: from D to AAA

Among the top 5 in the peer

group of 24 banks

Rating score BBB (Positive)

for partial rating “Mortgage

bonds“

Rating score: A

Rating scale: from CCC to AAA

Ranked in the upper midfield

in the peer group of 210

banks

Top-Score for partial rating

“Financial Product Safety”

• Rating score 20.7

• Scale: 0 (best) to 100

• Among the top 5% in the peer

group of 375 banks

• Top-Score for partial rating

“Corporate Governance”

26

Helaba's alignment to corporate sustainability reflected in sustainability ratings

C C C

2018 2019 2020

Development

B B BB

2018 2019 2020

Development

A A A

2018 2019 2020

Development

23.5

20.7

2018 2019 2020

Development

As of January 2020

https://www.google.de/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=2ahUKEwi56rTEkoPnAhUDy6QKHXPrC-AQjRx6BAgBEAQ&url=https://en.wikipedia.org/wiki/MSCI&psig=AOvVaw1Q7IDIhRtKz0GBXAliBXjN&ust=1579093074613847





4. Asset Quality


6. Funding

Agenda


Strong national refinancing base

Funding Programmes

€ 35 bn Medium Term Note-Programme

Domestic issues (base prospectus)

€ 10 bn Euro-CP/CD-Programme

€ 6 bn NEU CP- (former French CD) Programme

$ 5 bn USCP-Programme

Funding Strategy

Continued matched funding of new business

Further expansion in strong position among German investors and targeted growth in international investor base

Focus Helaba’s sound “credit story” in and outside Germany

Further development of product and structuring capacity using issuance programmes

Broad Access to Liquidity

€ 50 bn cover pool for covered bonds

€ 31 bn securities eligible for ECB/ central bank funding

€ 20 bn retail deposits within Helaba Group

28

Funding Volume

Covered Unsecured Total

2019 € 6.7 bn € 11.3 bn € 18.0 bn

2020 planned € 6.5 bn € 10.5 bn € 17.0 bn


Outstanding medium and long-term funding ( ≥ 1 year): € 99.7 bn

Promissory notes

Miscellaneous

Mortgage Pfandbriefe

Bank bonds (unsecured)

Public Pfandbriefe

* Subordinated bonds/ participation certificates/ silent partnership contributions/earmarked funds

Long-term liquidity management and high degree of market acceptance

Year-on-year comparison 2019 2018 2017

€ m € m € m

Covered bonds (“Pfandbriefe”) 38,450 26,851 26,334

thereof public sector 27,492 15,263 16,482

thereof mortgage backed 10,958 11,588 9,852

Senior unsecured bonds 23,181 22,891 20,906

Promissory notes 26,816 24,421 23,197

Miscellaneous* 11,217 10,874 12,283

Total 99,664 85,037 82,720

29

27%

11%

28%

23%

11%



Medium and long-term funding (≥ 1 year) 2019

Medium/long-term funding volume until 2019: € 18.0 bn

By investors

Domestic and international Institutional Investors

Retail Direct (Sparkassen via Depot B)

54%

14%

32%

Retail Indirect (Sparkassen via Depot A)

By products in € bn

Mortgage Pfandbriefe

Unsecured bank bonds

Public Pfandbriefe

2.3

5.8

3.8

Earmarked funds 4.4

Promissory notes and other loans

1.7

30



Helaba Ratings on a high level

Deposits in protection scheme (< € 100,000) (covered deposits pursuant to deposit guarantee scheme)

Covered bonds

Inso

lve

ncy

/ li

ab

ilit

y c

asc

ad

e

CET1

AT1

Tier 2

Deposits from private customers and SMEs (> € 100,000) (eligible deposits pursuant to deposit guarantee scheme)

Senior Preferred

Derivates Structured Notes Other Deposits Senior Preferred

Notes

Senior Non-Preferred

Senior Non-Preferred Notes (statutory)

Senior Non-Preferred Notes (contractual)

Aaa Public sector CB

Baa2

A2

Aa3

AAA Covered bonds

A

A+

AA-

A-

A

1) Joint group rating for the S-Group Hesse-Thuringia

1

31

Issuer Rating Aa3

L/t Issuer Default Rating1 A+

L/t Issuer Credit Rating A

Insolvency hierarchy in Germany

As of March 10th, 2020


Dirk Mewesen

General Manager, Head of Treasury

Phone +49 69/91 32 – 46 93

[email protected]

Henning Wellmann

Head of Liability Management & Funding

Phone +49 69/91 32 – 31 42

[email protected]

Martin Gipp

Head of Funding

Phone +49 69/91 32 – 11 81

[email protected]

Nadia Landmann

Debt Investor Relations / Funding

Phone +49 69/91 32 – 23 61

[email protected]

Your contacts

Helaba

Neue Mainzer Straße 52 – 58

60311 Frankfurt /Main

Phone +49 69/91 32 – 01

www.helaba.com


Disclaimer

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 2019 group financial information are based on the attested and approved by the owners of the bank IFRS

group accounts. All calculations based upon these figures should be regarded as informative only.

All forms of distribution of this document require the prior written approval by Helaba.

33

© Landesbank Hessen-Thüringen Girozentrale, Frankfurt /Main and Erfurt

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