The Co-operative BankSubordinated Notes

Investor Presentation

1Lead Manager

Agenda

• Disclosure

• Offer Summary

• Introducing The Co-operative Bank

– Overview

– Our Board

– Business Profile & Financial Performance

• Features of the Subordinated Notes

• Key Dates and Contacts

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Offer summary

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Offer Summary

• Co-operative Bank issuing this note to raise Tier 2 Capital to support growth strategy and current trajectory

• $30 million, unsecured, subordinated, loss absorbing, debt securities

• 10 year maturity with 5 year early redemption optionality

• Interest rate is [x]% for first 5 years. Floating thereafter.

• BB Fitch Credit Rating and Listed on NZX Debt Market

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Introducing The Co-operative Bank

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Overview

• Registered bank since October 2011 and formed in 1928

• Mass market retail banking

• 150,000 customers

• 300+ staff

• 34 branches from Whangarei to Invercargill

• Bank rated BBB- (Positive Outlook) by Fitch

• Co-operative company – owned by customers

• Group comprised of Co-operative Bank and subsidiary Co-operative Life

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Co-operative Status

• Registered under the Co-operative Companies Act

• Customers become either Class A or Class B shareholders

• All shareholders have one nominal value share which entitles them to participate democratically

• Shareholders are also eligible to a share of any rebate based on certain eligibility criteria - product holdings, tenure, account status

• Unique part of brand appeal

• The Co-operative Bank is built on the beliefs of Fairness, Individuality, Mutual Benefit, and Future Focus

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Insert infographic highlighting our award winning with Canstar

Services We Offer

• Home Loans

• Personal Loans

• Transaction and Saving Accounts

• Internet and Mobile Banking

• Life & Loan Insurance

• House, Contents & Car Insurance

• Kiwisaver

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Our Directors

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Steven FyfeChairman

Paul GoulterDeputy Chairman

Sarah HaydonChairwoman – Audit

Committee

Sam RobinsonChairman – Risk

Committee

Brendon O’DonovanChairman Co-op Life

Diane KiddDirector

Marion CowdenDirector

Our Leadership Team

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Bruce McLachlanChief Executive

Jeremy ValentineGM Risk, Legal and

Governance

Declan WalshGM HR

Grant JenningsGM Marketing and Online

Gareth FlemingChief Financial Officer

David CunninghamGM Customer Banking

Annette NattaGM IT

Financial Performance Summary

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FY16 FY15 FY14

Profit before Rebates and Tax ($m) 10.2 8.9 7.1

NIM (%) 2.72 2.84 2.76

Cost to Income Ratio (%) 75.8 78.2 81.1

Customer Rebates ($m) 2.1 1.8 1.3

Return on Equity – NPAT (%) 6.7 6.1 5.1

Gross Lending Assets ($b) 1.8 1.6 1.4

Deposits ($b) 1.8 1.6 1.4

Total Capital Adequacy Ratio (%) 15.8 16.5 16.8

Bad Debts ($m) 1.4 1.5 1.0

Profitability

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• 4 year CAGR 25%

• Rebate distributed historically at 13% Profit Before Rebate & Tax

• Profit uplift driven by revenue growth

• Key capital investments made across all distribution channels and closing out product gaps

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2012 2013 2014 2015 2016

Net Profit Before Rebates and Tax $mSince Banking Licence

Funding and Liquidity

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• Bank primarily funded by retail deposits – core funding ratio 101%

• No offshore funding

• $[191]m portfolio of liquid assets, wellin excess of Reserve Bank’s minimum requirement

• Liquid asset portfolio 80% AA- or higher credit rating. 96% A- credit rating or higher. All liquid assets investment grade.

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2012 2013 2014 2015 2016

Retail Deposits $b Since Banking License

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2012 2013 2014 2015 2016

Liquidity % ofTotal Assets

Capital

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• Capital adequacy ratio highest of New Zealand banks

• Capital ratio is 15.8% against Reserve Bank minimum of 8%

• Primary source of capital is retained earnings

• Retained earnings and further issuances of Tier 2 capital, enables continued growth

Loan Quality

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• 100% of lending in New Zealand

• $1.7b mortgages & $0.14b of personal lending

• Geographically spread, owner occupied mortgage portfolio

• Different loan profile to other major banks in New Zealand

• Low loss rates reflects market participation

Features of the Subordinated Notes

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Investment Summary & Purpose

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• Unsecured subordinated, loss absorbing debt securities issued by The Co-operative Bank Limited

• The minimum investment size is $5,000 and multiples of $1,000 thereafter

• 10 Year Maturity

• Early Redemption Date is 5 years from issue or any Scheduled Interest Payment Date thereafter. The Notes may also be called if a Regulatory Event or Tax Event occurs

• Proceeds of the Offer will be used to support growth strategy and meet Co-operative Bank’s Tier 2 Capital requirements, as required by the Reserve Bank of New Zealand

Loss absorbency

• To qualify as Tier 2 Capital, an instrument must have the ability to absorb losses through conversion to common equity or write-off

• The Co-operative Bank’s Subordinated Note offer will contain loss-absorption by write-off

• Trigger Events occur:

– if the RBNZ directs Co-operative Bank to write down the Subordinated Notes; or

– a statutory manager is appointed to Co-operative Bank and decides Co-operative Bank must write down the Subordinated Notes.

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Interest Payments

• The fixed interest rate will be [ ]%

• Interest is scheduled to be paid quarterly in arrears

• The interest rate for subsequent periods will be the Floating Rate, which will be equal to the 3 Month Bank Bill Rate plus the Margin of [ ]%.

• The bank is only obliged to pay interest on the Notes if it can remain solvent immediately after the payment is made (Solvency Condition)

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Issue date

First Optional Redemption Date

Maturity date

Fixed interest rate

Floating interest rate

Credit Rating & Listing

• The investment will be listed under the code COO010 on the NZX Debt Market.

• The Subordinated Notes are rated BB by Fitch

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Key dates and contacts

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Key dates

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Roadshow [8] to [10] June 2016

Reserved Application Bids Due 12pm, [Thursday 16] June 2016

Rate Set and Allocations Advised Thursday [16] June 2016

Opening Date Monday, [20] June 2016

Closing Date Tuesday, 26 July 2016

Issue Date / NZClear Settlement Thursday, 28 July 2016

Expected Date of Initial Quotation Friday, 29 July 2016

Key contacts

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Issuer

The Co-operative BankCo-operative Bank House, Level 12Cnr Featherston and Ballance StreetsWellington 6011P O Box 54Wellington 6140

Andrew GrayTreasurerandrewgray@co-operativebank.co.nz

Lead Manager

ANZ Bank New Zealand Limited ANZ Centre, Level 10, 171 FeatherstonStreet Wellington 6011PO Box 540Wellington 6140

Chris O’NealeDirector Debt Capital Marketschris.oneale@anz.com

Questions

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