DVB Bank Group Investor Presentation Frankfurt/Main, November 2015 Slide 1
Contents 01/ DVB Financials and outlook 4 Financial figures 8 Own funds and refinancing 10 Rating 11 Macroeconomic environment and targets 2015 14 Financial calendar 04/ DVB Further information 32 Shareholder base 33 Board of Managing Directors 34 Staff 35 Disclaimer 36 Imprint 02/ DVB Business model 16 Competitive strengths 03/ DVB Lending volume and portfolio data 22 Lending volume and new business 24 Shipping portfolio 25 Aviation portfolio 26 Offshore portfolio 27 Land Transport portfolio 28 Financial Institutions and Syndications portfolio 29 Corporate portfolio 30 Investment Management portfolio Slide 2
01/ DVB Financials and outlook 4 Financial figures 8 Own funds and refinancing 10 Rating 11 Macroeconomic environment and targets 2015 14 Financial calendar Slide 3
Preliminary remarks All statements made regarding net worth, financial position & results relate to DVB Bank Group. All amounts are disclosed in euro and on the basis of IFRS/IAS if not stated otherwise. Unless indicated otherwise, all financial data apply to 30 September 2015 and are not certified by auditors. Investors Presentation, November 2015 Financial figures Slide 4
At a glance Income statement [IFRS] 1 Jan 2015 30 Sep 2015 1 Jan 2014 30 Sep 2014 % Net interest income 151.6 mn 162.5 mn -6.7 Allowance for credit losses -62.7 mn -28.5 mn Net interest income after allowance for credit losses 88.9 mn 134.0 mn -33.7 Net fee and commission income 76.9 mn 73.2 mn 5.1 Results from investments in companies accounted for using the equity method 3.8 mn 7.9 mn -51.9 Net other operating income/expenses -50.3 mn 2.2 mn Total income (before IAS 39) 119.3 mn 217.3 mn -45.1 General administrative expenses -132.4 mn -130.4 mn 1.5 Consolidated net income before IAS 39, bank levy, BVR 1) and taxes -13.1 mn 86.9 mn Net result from financial instruments in according with IAS 39 87.8 mn -8.2 mn Consolidated net income before bank levy, BVR 1) and taxes 74.7 mn 78.7 mn -5.1 Consolidated net income before taxes 59.8 mn 72.6 mn -17.6 Consolidated net income (after taxes) 51.3 mn 58.1 mn -11.7 1) National Association of German Co-operative Banks Investors Presentation, November 2015 Financial figures Slide 5
Consolidated net income, as at 30 September ( million) 2014 2015 217.3 119.3-130.4-8.2-6.1-14.5 58.1 +87.8-14.9-8.5 51.3 Total income 1) General administrative expenses Net result from financial instruments in accordance with IAS 39 incl. result from investment securities Expenses for the bank levy and the BVR 2) Deposit Guarantee Scheme (9 month) Income taxes Consolidated net income -132.4 Total income 1) General administrative expenses Net result from financial instruments in accordance with IAS 39 incl. result from investment securities Expenses for the bank levy and the BVR 2) Deposit Guarantee Scheme (fiscal year) Income taxes Consolidated net income 1) Composing net interest income after allowance for credit losses, net fee and comission income, result from investments in companies accounted for using the equity method and net other operating income/expences 2) National Association of German Co-operative Banks Investors Presentation, November 2015 Financial figures Slide 6
Development of key ratios Return on equity before taxes [%] Cost/income ratio [%] Economic Value Added [ mn] 7.6 7.6 49.1 54.9 15.8-54.9 30 Sep 2015 30 Sep 2014 30 Sep 2015 30 Sep 2014 30 Sep 2015 30 Sep 2014 Investors Presentation, November 2015 Financial figures Slide 7
Total capital (CRR) and capital ratios [ mn] 30 Sep 2015 1,607.0 1,164.7 442.3 0.0 Common equity tier 1 Additional tier 1 Tier 2 Modified available equity Capital ratios Basel III Common equity tier 1 ratio: 17.1% Total capital ratio: 23.6% Investors Presentation, November 2015 Own funds and refinancing Slide 8
Funding composition (30 Sep 2015: 23.4 billion) Products 1) Investors 2) Short-term funding 5.6% thereof: 3.2% Short-term deposits from clients/banks 2.4% Cash collateral Banks 11.4% Retail 2.1% DZ BANK 38.2% Institutional investors 41.5% Long-term funding 94.4% thereof: 53.8% Uncovered bearer debt securities 35.1% Promissory notes/long-term deposits 3.1% Subordinated liabilities 2.4% Ship covered bonds Diversified, granular funding base Approx. 1,000 investors 1) Nominal volume 2) Estimates Volksbanken Raiffeisenbanken co-operative financial network 6.8% Investors Presentation, November 2015 Own funds and refinancing Slide 9
Rating development Dec 2011 Mar 2011 Jan 2009 Dec 2006 Aug 2006 2005 2004 2001 1999 Long-term Counterparty Credit Rating A+ A A A A- A- BBB+ BBB+ A- Short-term Credit Rating A-1 A-1 A-1 A-1 A-2 A-2 A-2 A-2 A-2 Outlook stable stable negative stable positive stable stable negative stable Mar 2015 Aug 2012 Jun 2009 Jan 2009 Long-term Issuer Default Rating AA- A+ A+ A+ Short-term Issuer Default Rating F1+ F1+ F1+ F1 Debt-Issuance-Programm: Long-term Senior Unsecured Short-term Senior Unsecured AA- F1+ A+ F1+ Since 1999 DVB has been rated by Standard & Poor's (S&P) at regular intervals. Within the scope of the German Co-operative Financial Services Network's rating, DVB has also been evaluated by Fitch Ratings since 2005. Investors Presentation, November 2015 Rating Slide 10
Macroeconomic environment (1) The recovery of the global economy continues to show a mixed picture in the industrial nations and developing economies. The International Monetary Fund (IMF) forecasts global economic growth of 3.1% in the year 2015 slightly below the previous year's level and IMF s forecast in July 2015. In an environment of declining commodity prices, reduced capital flows to emerging markets and pressure on their currencies, and increasing financial market volatility, downside risks to the outlook have risen, particularly for emerging markets and developing economies. While the growth slowdown in China is so far broadly in line with forecasts, its cross-border repercussions appear larger than previously envisaged. This is reflected in weakening commodity prices (especially those for metals) and weak exports to China. In August 2015 the crude oil price (Brent Crude) hit a trough at US$42.57. It slightly recovered, moving in a range between US$45 and US$55 per barrel. Looking at the most recent oil market developments, there is no discernible trend towards higher prices. More resilient supply and weaker global activity likely have been the main factors behind the renewed downward pressure on prices. The adjustment to excess flow supply conditions is now expected to take longer, and prices are projected to remain below the levels assumed a few months ago. Financial market volatility spiked in August, with an increase in global risk aversion triggered by concerns about China s outlook, uncertainty about the implementation of its new exchange rate regime, and emerging market prospects more generally. This was associated with lower equity prices, higher interest rate spreads, declining yields on safe assets, and sharp declines in commodity prices and currency depreciation for most emerging markets. Investors Presentation, November 2015 Macroeconomic environment and targets 2015 Slide 11
Macroeconomic environment (2) The following trends are evident in the industrial nations: Despite a strong second quarter, growth of the US economy was weaker than expected. This reflected setbacks to activity in the first quarter, caused by one-off factors, notably harsh winter weather and port closures, as well as much lower capital spending in the oil sector. In this context, domestic demand remains the biggest contributor to US GDP growth which is being supported by lower oil prices, an improving housing market and continued low interest rate policy of the US Federal Reserve. Although interest rates are expected to rise in the medium term, the economy appears to have gained stability at present with GDP growth projected to be 2.6% in 2015. Euro-zone GDP growth is projected to remain positive, albeit at a low level, with the 2015 growth rate forecast at 1.5%. This raises the risk of a drawn-out phase of weak growth and low inflation. The difficult political climate between various member countries, however, holds significant risks for the region's overall economic growth. Investors Presentation, November 2015 Macroeconomic environment and targets 2015 Slide 12
Targets 2015 We keep on working intensely on reducing our risk positions in parts of our shipping lending business. We will further reinforce our new clients approach, particularly in our Shipping division. We expect a significant contribution from our Investment Management activities. We focus on additional service offers for our clients, with a particular focus on the capital markets business. We continuously expand our funding sources, as well as funding tools and structures. Investors Presentation, November 2015 Macroeconomic environment and targets 2015 Slide 13
Financial calendar 2015 2016 4 December 2015 Publication of the 14 th Declaration of Compliance for 2015/2016 25 February 2016 Annual Accounts Press and Analyst Conference, Frankfurt/Main 23 June 2016 Annual General Meeting at the Deutsche Nationalbibliothek, Adickesallee 1, Frankfurt/Main Past events from 2015 can be found on DVB s website: www.dvbbank.com > Investors > Financial calendar section. Investors Presentation, November 2015 Financial calender Slide 14
02/ DVB Business model 16 Competitive strengths Slide 15
DVB s mission statement The leading specialist in international transport finance At DVB, we make deals work. This means striving to seek and develop intelligent and appropriate solutions that meet and even exceed our clients needs and expectations. We go the extra mile to constantly and thoroughly research and study our industry. Often, this leads us to challenge conventional wisdom when offering our focused range of financing services. Investors Presentation, November 2015 Competitive strengths Slide 16
DVB s unique business model Structured Asset Financing Shipping Aviation Offshore Land Transport Asset Management Client Account Risk Distribution Corporate Solutions Private Equity Sourcing & Investments Loan Participations Asset & Market Research Investors Presentation, November 2015 Competitive strengths Slide 17
DVB s ten competitive strengths Business model clearly focused, distinctively specialised, cycle-neutral and international in scope Business policy conservative and sustainable Organisation transparent structures, swift information flow and prompt decision-making Human resources highly specialised and experienced Products & services customised and beyond the typical scope of banking Asset & Market Research sophisticated, renowned and award-winning Credit portfolio diversified by multiple criteria and categories Risk management consistent and forward-thinking Funding maturity-matched Own funds strong capital base Investors Presentation, November 2015 Competitive strengths Slide 18
OPPORTUNITIES STRENGTHS 01/ Financials and outlook 02/ Business model 03/ Lending volume and portfolio data 04/ Further information DVB s SWOT analysis Unique business model with a clear focus, cycle-neutral business approach and global presence in all key transport markets Conservative and sustainable business policy Flat hierarchies, high degree of flexibility and lean decision-making Highly qualified and experienced staff Customised products and services, high level of client service and close contacts to manufacturers and leasing companies Extensive market and asset expertise Credit portfolio diversified by multiple criteria and categories Advanced risk management and pricing systems Maturity matched funding Strong capital base due to own funds Realisation of margins in line with risks taken Expansion of anti-cyclical Investment Management activities Building new client relationships Several new initiatives have been introduced to increase the product range in order to generate more cross selling Funding available through the extensive liquidity offered by the German Cooperative Financial Services Network Expanding the advisory and other services offered to clients, investors, and banks Boosting DVB s reputation as a reliable partner to the international transport industry Higher cost of liquidity in comparison with most competitors Direct correlation between our business and GDP growth Currently mono-product (senior secured loans) Relatively high sector exposure Global presence requires high staff resources High staff costs due to high levels of employee qualification No material client deposits Exposure to the euro/us dollar exchange rate, with an impact on growth and results Distortions on the money and capital markets, in the broadest sense Decline in transport asset values, in various market segments High level of re- and prepayments negatively impacting the net interest margin Impact of the global financial markets crisis and the sovereign debt crisis in Europe Increasing debt levels in some industrial countries and emerging markets Unanticipated rise of the US dollar against the euro Further government support for DVB's direct competitors and increasing regulatory requirements Oil price volatility WEAKNESSES THREATS Investors Presentation, November 2015 Competitive strengths Slide 19
Instruments for sustainable dealing with credit risks Intensive DVB in-house research Close contact with clients Close monitoring of compliance with all lending agreements Quarterly portfolio stress tests Early Warning List Closely Monitored List Watch List Forecasting future market developments and asset values forms the basis of our portfolio strategy and individual deal decisions Increased visit frequency depending on risk situation e. g. specific covenants in the Shipping contracts, like value maintenance clauses Identification of potentially higher risks in case the market environment continues to deteriorate Basis: changing asset values (specific haircuts) and counterparties creditworthiness (increase of probability of default) Early detection of increased risks of potential problem exposures Close monitoring of transactions that have to be restructured and/or of transactions with a potential or already existing need to recognise allowance for credit losses Investors Presentation, November 2015 Competitive strengths Slide 20
03/ DVB Lending volume and portfolio data 22 Lending volume and new business 24 Shipping portfolio 25 Aviation portfolio 26 Offshore portfolio 27 Land Transport portfolio 28 Financial Institutions and Syndications portfolio 29 Corporate portfolio 30 Investment Management portfolio Slide 21
Customer lending volume [ bn] 30 Sep 2015 31 Dec 2014 Shipping 11.3 10.1 11.9 Aviation 7.6 7.1 7.0 Offshore 2.4 2.3 4.3 Land Transport 1.8 2.0-10.0 ITF Suisse 1.0 1.0 Investment Management 0.6 0.6 Business no longer in line with DVB s strategy 0.2 0.2 Total 24.9 23.3 6.9 [US$ bn] 30 Sep 2015 31 Dec 2014 % % Aviation 30.5% by business division Investment Management 2.4% ITF Suisse 4.0% Land Transport 7.2% Offshore 9.7% by region Business no longer in line with DVB s strategy 0.8% Shipping 45.4% Shipping 12.7 12.3 3.3 Aviation 8.5 8.6-1.2 Offshore 2.7 2.8-3.6 Land Transport 2.0 2.4-16.7 ITF Suisse 1.1 1.2-8.3 Investment Management 0.7 0.7 Business no longer in line with DVB s strategy 0.2 0.3-33.3 Total 27.9 28.3-1.4 Middle East & Africa 4.8% South America 5.6% Asia 18.1% North America 22.9% Offshore 3.6% Australia & New Zealand 0.4% Europe 44.6% Investors Presentation, November 2015 Lending volume and new business Slide 22
New Transport business Shipping Aviation Offshore Land Transport New business in Transport 30 Sep 2015 New business in Transport 30 Sep 2014 No. of new deals 68 49 12 87 137 122 Underwriting 2,393.9 mn 1,787.6 mn 494.5 mn 361.2 mn 5,037.2 mn 4,152.6 mn Syndicated 50.9 mn 50.9 mn 135.6 mn Final take 2,343.0 mn 1,787.6 mn 494.5 mn 361.2 mn 4,986.3 mn 4,017.0 mn Avg. deal size 35.2 mn 36.5 mn 41.2 mn 45.2 mn 36.8 mn 34.0 mn Leading role 85.6% 74.7% 79.8% 42.9% 78.1% 88.2% Investors Presentation, November 2015 Lending volume and new business Slide 23
Shipping portfolio (30 Sep 2015: 11.3 billion) Total lending volume by asset type Total lending volume by region Ferries, passenger vessels 2.2% Cruiser 2.3% Containerboxes 2.8% Car Carrier 3.9% Others 0.5% Tankers 45.8% thereof: 14.5% Crude oil tankers 11.7% Product tankers 10.9% Gas tankers 8.7% Chemical tankers Middle East & Africa 6.1% Offshore 3.7% Central America & Caribes 2.2% Container carriers 17.5% Asia & Australia 18.4% Europe 48.7% Bulk carriers 25.0% North America 20.9% Investors Presentation, November 2015 Shipping portfolio Slide 24
Aviation portfolio (30 Sep 2015: 7.6 billion) Total lending volume by asset type Total lending volume by region Freighters 5.9% thereof: 5.3% Boeing 0.6% Airbus Regional jets 5.6% thereof: 5.1% Embraer 0.5% Bombardier Turboprops 2.2% thereof: 1.8% ATR 0.4% Bombardier Narrowbody pax 53.6% thereof: 29.7% Boeing 23.9% Airbus 0.0% Embraer South & Central America 4.1% Middle East & Africa 5.3% Offshore 2.6% Australia & Oceania 0.9% Europe 35.0% Asia 24.7% Widebody pax 32.7% thereof: 17.5% Boeing 15.2% Airbus North America 27.4% Investors Presentation, November 2015 Aviation portfolio Slide 25
Offshore portfolio (30 Sep 2015: 2.4 billion) Total lending volume by asset type Total lending volume by region Multi-function service vessels 4.8% Seismic survey vessels 4.9% Drillships 5.2% Others 8.1% Platform supply vessels 23.7% North America 7.0% Offshore 7.7% Middle East & Africa 0.6% Europe 50.2% FPSOs 6.4% Asia 15.0% Offshore construction vessels 8.7% Rigs 14.7% Anchor handlers 23.5% Central America & Caribes 19.5% Investors Presentation, November 2015 Offshore portfolio Slide 26
Land Transport portfolio (30 Sep 2015: 1.8 billion) Total lending volume by asset type Total lending volume by region Rail-related 10.2% thereof: 10.0% Container chassis 0.2% Tank containers Australia & Oceania 2.8% Central America 1.4% North America 38.2% Europe 57.6% On rail 89.8% thereof: 57.7% Freight cars 20.0% Locomotives 10.9% Regional train sets 0.9% Passenger coaches 0.3% City/commuter traffic Investors Presentation, November 2015 Land Transport portfolio Slide 27
Financial Institutions and Syndications portfolio (30 Sep 2015: 352.6 million) Total sell-down volume by business division Offshore 7.6% Shipping 61.5% Aviation 30.9% Investors Presentation, November 2015 Financial Institutions and Syndications portfolio Slide 28
Corporate portfolio (30 Sep 2015) Revenue by business division Revenue by products Offshore 12.0% Land Transport 2.0% Advisory and Mergers & Acquisitions 22.0% Aviation 42.0% Shipping 44.0% thereof: 34.0% Tanker Group 9.0% Container, Car Carrier, Intermodal & Ferry Group 1.0% Dry Bulk Carrier Capital Markets, 78.0% Investors Presentation, November 2015 Corporate portfolio Slide 29
Investment Management Investment volume (30 Sep 2015) Breakdown of the investment volume by fund Car carriers 5.0% Offshore vessels 10.1% Bulkers 16.2% SIIM 40.8% thereof: 37.3% NFC Shipping Funds 2.7% Container Funds 0.8% Stephenson Capital SIIM-shipping portfolio by asset type 287.5 million Other investments 5.5% Tankers 42.3% thereof: 18.3% Chemical tankers 15.6% LPG tankers 8.4% Product tankers AIM 59,2 % Freighter widebody 15.9% Passenger widebody 17.0% ABS equity note 2.0% Other 0.5% AIM by asset type 456.4 million Mature/end of life passenger aircraft 41.2 % Container ships 20.9% Passenger narrowbody 23.4% Investors Presentation, November 2015 Investment Management portfolio Slide 30
04/ DVB Further information 32 Shareholder base 33 Board of Managing Directors 34 Staff 35 Disclaimer 36 Imprint Slide 31
Current shareholder base Other shareholders 4.53% 95.47% Investors Presentation, November 2015 Shareholder Base Slide 32
Responsibilities of DVB s Board of Managing Directors Client areas in business divisions Client areas at affiliates Product/service areas Ralf Bedranowsy CEO and Chairman of the Board of Managing Directors Bertrand Grabowski Member of the Board of Managing Directors L.H. (Bart) Veldhuizen Member of the Board of Managing Directors Shipping and Offshore Credit Shipping and Offshore Research Aviation Land Transport Shipping Offshore Aviation Credit Aviation Research Strategic Management and Restructering Aviation Financial Consultancy Shipping & Intermodal Investment Management Corporate Land Transport Credit Land Transport Research Aviation Investment Management Financial Institutions and Syndications Shipping Execution Management ITF International Transport Suisse AG LogPay Financial Services GmbH TES Holdings Ltd 1) DVB Transport Ltd DVB Capital Markets LLC Group Compliance Office Group Human Resources Group Audit Group Treasury Business Process Support Group Controlling Group Legal Transaction & Loan Services Group Information Technology Group Corporate Communica -tions Group Risk Management 1) 40 % Aktienanteil Investors Presentation, November 2015 Board of Managing Directors Slide 33
Employees at DVB 30 Sep 2015: 594 active employees LogPay Financial Services 60 305 Transport / Investment Management Norwegian 2.9% Greek 3.2% US-American 4.9% 34 other nationalities 15.0% German 43.3% 229 Singaporean 6.4% Service areas British 11.9% Dutch 12.4% Investors Presentation, November 2015 Staff Slide 34
Disclaimer This presentation has been prepared by DVB Bank SE. This presentation does not contain or constitute an offer, or the solicitation of an offer, to buy or subscribe for securities to any person. This document is not a prospectus. The presentation is a short summary description of certain aspects in respect of DVB Bank SE. It may not contain all relevant information in respect of the topics covered. This presentation is therefore not a sufficient basis for any investment decision in respect of any securities of DVB Bank SE. This presentation contains forward-looking statements which include statements about our beliefs and expectations as well as the assumptions underlying them. Such statements speak only as of the day they are made since they are based on plans, estimates and projections currently available to the management of DVB Bank SE. Forward-looking statements contain risks and uncertainties, and it cannot be guaranteed that they will turn out to be correct in light of future events or developments. Information and opinions contained in this presentation have been compiled or arrived from sources believed by DVB Bank SE to be reliable. Any statements about DVB Bank SE s market position are based on DVB Bank SE s own estimates, unless explicitly stated otherwise herein. Although the information shown herein has been taken from sources which are believed to be reliable or is based on DVB Bank SE s own estimates, no warranty or representation is made as to the correctness, completeness and accuracy of the information or the assessments made on its basis. DVB Bank SE accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this presentation. Investors Presentation, November 2015 Disclaimer Slide 35
Imprint For further information please visit www.dvbbank.com > Investors After scanning this QR with your smartphone, you will have direct access to our website. Contact: Elisabeth Winter Head of Group Corporate Communications Managing Director Phone: +49 69 9750 4329 E-mail: elisabeth.winter@dvbbank.com Lisa Boose-Kirwel Group Corporate Communications Manager Investor Relations Phone: +49 69 9750 4435 E-mail: lisa.boose-kirwel@dvbbank.com DVB Bank SE Platz der Republik 6 60325 Frankfurt/Main, Germany info@dvbbank.com, www.dvbbank.com Investors Presentation, November 2015 Imprint Slide 36