Corporate Presentation For the six months ended 30 June 2015 0
Disclaimer Disclaimer: This presentation and the information contained herein are provided solely for information purposes, and are not to be construed as a solicitation or an offer to buy or sell any securities or other financial instruments in the EU, the United States or any other jurisdiction. No investment decision relating to securities of or relating to BHF Kleinwort Benson Group SA ( BHF KB or the Company ) or its affiliates should be made on the basis of this document. BHF KB undertakes no obligation to update the information contained herein. Cautionary statement regarding forward looking statements This presentation contains certain forward-looking statements concerning BHF KB s operations, economic performance and financial condition. Such forward-looking statements are based on management's current expectations, estimates and projections and are subject to a number of assumptions and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The Company has no obligation to publicly update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this presentation. Rounding Numbers presented throughout this presentation may not add up precisely to the totals provided in the tables and text. Percentages, percent changes and absolute variances are calculated based on the underlying figures and not on the rounded figures which are displayed in the tables and text and may not precisely reflect the percentages, percent changes and absolute variances that would be derived based on figures that are rounded. Basis of preparation BHF-BANK was acquired by BHF Kleinwort Benson Group on 26 March 2014. To facilitate a meaningful period on period comparison, all figures throughout this document are presented on a pro-forma basis as if the acquisition had taken place on 1 January 2014, except if stated otherwise. 1
Agenda 1 Key highlights 2 BHF Kleinwort Benson segmental results 3 BHF-BANK segmental results 4 Kleinwort Benson segmental results 2
BHF Kleinwort Benson Group operating profit, confirming a steady turnaround Strong focus on Private Banking, Asset Management and Financial Markets & Corporate Banking Momentum maintained with strong growth in operating profit Strategic focus on delivering long term profitabiity Become a leading wealth management and corporate banking platform in Europe Target sophisticated private and corporate clients and family offices Solid and simple business model connecting international capital with (U)HNWI client segments Building on international investment expertise and leveraging distribution capabilities Assets under Management (AuM) grew to 58.5 billion (+ 4.2 billion or 7.8%) Operating income rose by 18.3 million or 11 % to 191.3 million, including a gain of 7.9m on BHF BANK s subordinated debt Operating expenses down by 3.0 million to 172.8 million, excluding foreign exchange translation impact of 6.5 million, ahead of initial cost saving target of 20 million since the acquisition of BHF-BANK Operating profit of 8.0 million improves by 23.8 million Robust capital position with a Tier 1 capital ratio of 17% Consolidated net asset value of 820 million or 6.20 per share Enhance distribution of high quality investments in the Middle East and India through strategic partnership with Samena (pending regulatory approval) Maintained strong momentum in corporate advisory business at Kleinwort Benson and BHF BANK Further develop Asset Management across Group, Financial Markets & Corporate Banking at BHF-BANK Strengthened business through the sale of Kleinwort Benson s non-core Fund Administration business with a gain of 12.7 million Transform client platform at KBWM with enhanced online and digital offering 3
Key highlights 4
BHF Kleinwort Benson: A European Financial services proposition Deeply rooted in our markets Private since 1854: BHF-BANK s tradition as a private bank goes back 160 years. During this long period of time, the Bank has proven its skill in initiating and recognising new developments. For over 200 years Kleinwort Benson has offered private banking and wealth management services to private clients, families, business owners and entrepreneurs, and to institutions including pension funds, endowments and charities A combination of tradition with a modern forward looking approach to merchant banking Client centric Assist our clients both personal and corporate - to grow and protect their wealth Strong belief in building long-term relationships Experienced and committed teams across the organisation A focused business model Comprehensive suite of Wealth Management Services Experienced Asset Management with complementary capabilities, channels and focus Strategic advice for entrepreneurs and access to the institutional and family office investment community Financial Markets & Corporates focused on entrepreneurs 5
We are on track to reach our set targets for 2017 BHF Kleinwort Benson Pro-Forma Actual 1 H1 2014 H1 2015 Post-transformation End 2017 Operating profit Net new money 2 Cumulative costs savings (annualised) ( 15.8m) 8.0m > 60m 4.6% 3.8% 4-6% 17.0m 23m > 20m Sustained improvement of operating profit by 23.8 million to 8.0 million across key business lines Net new money benefited from strong inflows from international investors and continued growth in private banking net new assets Continued progress in delivering Operational efficiencies with cost income ratio at 94% Target of more than 60 million profit before tax in 2017 1. BHF KB Group results restated to include the results of BHF-BANK as if it had been part of the group from 1 January 2014 2. Net new money includes BHF-BANK, KBI and KBWM AuM movement, excluding market impact and foreign exchange expressed as a % of AuM at the start of the year. AuMs have been restated to exclude fixed term advisory mandate from KBI s former parent KBC Asset Management NV Source: BHF KB Group Management 6
Significant operational progress improves results across the group Consolidated income statement (In EUR millions) Pro-Forma 1 30 Jun 15 30 Jun 14 Delta % chg Net fee and commission income 140.3 122.8 17.5 14.3% Net interest income 36.0 32.6 3.4 10.5% Gains / losses on financial instruments at fair value 10.4 10.0 0.3 3.2% Other operating income 4.6 7.6 (3.0 ) -39.3% Operating income 191.3 173.0 18.3 10.6% Operating expenses (179.3 ) (175.8 ) (3.5 ) 2.0% Movements in loan loss provisions (1.3 ) (1.7 ) 0.4-24.1% Adjusted operating profit / (loss) 10.7 (4.6 ) 15.2 334.1% Non-recurring items 2 (2.6 ) (11.3 ) 8.6 76.6% Operating profit / (loss) 8.0 (15.8 ) 23.8 150.7% Client assets (In EUR millions) 30 Jun 15 Year 31 Dec 14 Assets under Management 58,481 54,242 4,239 7.8% Loans 3,922 4,091 (169 ) -4.1% Assets under control 62,403 58,332 4,071 7.0% AuM increased by 4.2 billion or 8% to 58.5 billion during the period Total operating income increased by 10.6% to 191.3 million driven by an improvement of both net fees and commissions as well as net interest income Net fee and commission income increased by 14.3% to 140.3 million in line with the increase in AuM across the group together with continued strengthening of margins Gains realised on repurchase of subordinated debt of 7.9 million are included within 10.4 million of gains /losses on financial instruments Operating expenses increased by 3.5 million (2.0%), mainly attributable to variable performance based compensation, pensions and IT-consulting 1. BHF KB Group results restated to include the results of BHF-BANK as if it had been part of the group from 1 January 2014 2. Non-recurring items include items that distort the understanding of the underlying operational performance i.e. reorganisation costs, one-off or unusual income receipts Source: BHF KB Group Management 7
Strong growth in group AuM to 58.5 billion AuM by category 1 ( m) 60,000 50,000 40,000 30,000 20,000 10,000 52,229 2,647 22,713 3.9% 54,242 2,808 23,754 7.8% 58,481 2,987 25,348 26,870 27,679 30,146 At the headline level, AuM increased by 4.2 billion or 7.8% to 58.5 billion during the period This increase was driven by net new money ( 1.0 billion) and positive market and foreign exchange movements Private banking assets in Germany continued to benefit from solid net inflows while KBI saw strong inflows from wholesale and institutional investors in US and the UK largely offset by the decline in lower margin mandates in Irish market 0 H1 2014 Financial Markets & Corporates YE 2014 Asset Management H1 2015 Private Banking 1. Comparative AuMs have been restated to exclude fixed term advisory mandate from KBI s former parent KBC Asset Management NV Source: BHF KB Group Management 8
Balance Sheet & capital ratios remain strong Consolidated Balance Sheet overview 1 ( m) Dec 2014 Jun 2015 Total assets increased by 148 million 9,376 2,531 5,867 9,376 7,341 9,524 2,576 6,038 9,524 7,739 On a pro-forma basis, 5% growth of stable customer deposit base to 7.7 billion will support long term lending growth At 30 June 2015, our group tier one ratio was 17% and loan to deposit ratio 33% Consolidated net asset value increases to 6.20 per share 313 665 736 451 51 798 334 576 46 820 319 601 Assets 2 Loans and advances to customers Investable assets Derivative financial assets Other assets Deposits Liabilities & Equity Assets Derivative financial liabilities Provisions for liabilities Other liabilities Total equity Liabilities & Equity 1. Statutory Balance Sheet 2. Lending KPI includes off balance sheet guarantees provided to customers Source: BHF KB Group Management 9
Continued strong capital ratios and capacity to leverage the balance sheet Tier 1 ratio (%) 1 Loan to deposit ratio (%) 25% 20% 15% 10% 14% 14%14% 14% 11% 11% 10% 11% 12% 12%12% 17%17% 19%19% 20% 22% 160% 140% 120% 100% 80% 60% 101% 92% 71% 74%74% 76% 82% 54%56% 61% 112% 128% 144% 5% 40% 26% 29%33%36% 20% 0% 0% BHF Kleinwort Benson is well capitalised with a solid Tier 1 ratio compared to its peers Low loan to deposit ratio provides opportunity to leverage the balance sheet further 1. Figures as reported under Basel III 2. As of 30 June 2015 Source: Bloomberg and Company information 10
Significant operational progress across the group Divisional operating profit (In EUR millions) Pro-Forma 1 30 Jun 15 30 Jun 14 BHF-BANK 15.5 5.5 Kleinwort Benson 3.2 (1.5 ) Group (8.0 ) (8.5 ) Adjusted Operating profit / (loss) 10.7 (4.6 ) BHF-BANK Kleinwort Benson 2 Group Good performance within Private Banking segment with strong net new money inflows mainly from discretionary mandates 11% increase in operating income built on significant growth in AuMs by 3.2 billion to 43.6 billion Total AuM up 17% in the last 12 months, benefiting from strong net new asset growth in asset management (KBI) 12% increase in operating income Growth in variable costs (linked to income growth) partially offset by continued cost management discipline reflecting both efficiencies from moving to a more streamlined operating model in private banking (KBWM) and benefits of an established scalable platform (KBI) Total costs decreased by another 6% to 8.0 million, continuing the trend from 2014 (a 14% reduction) Recurring fixed holding costs reduced by 19% to 6.5 million, in part reflecting further subletting of two entire floors in the London building until the end of the lease period 1. BHF KB Group results restated to include the results of BHF-BANK as if it had been part of the group from 1 January 2014 2. Kleinwort Benson refers to the combination of Kleinwort Benson Bank, Kleinwort Benson Channel Islands, and Kleinwort Benson Investors Source: BHF KB Group Management 11
BHF Kleinwort Benson segmental results 12
BHF-BANK 13
BHF-BANK Key messages Good growth in Assets under Management Profitability Business Segments AuM rose by 8% to 43.6 billion (2014: 40.4 billion) Private Banking AuM increased by 10% to 22.7 billion driven by strong inflows (2014: 20.7 billion) Asset Management AuM grew by 6% to 17.9 billion with good market performance (2014: 16.9 billion) Operating profit of 16.5 million (H1 2014: 10.1 million) Adjusted operating profit of 15.5 million (H1 2014: 5.5 million): improved by 10.0 million Strong growth in net fees and commissions of 7.6 million (10%) to 81.1 million Increase in operating expenses is attributable to variable performance based compensation, pensions and IT-consulting Strong contribution from Private Banking activities to the operational progress Private Banking revenue increase underpinned by 2.0 billion growth in AuM: including 1.0 billion of net new assets and 1.0 billion of strong market and investment performance Asset Management benefited from good market performance of the funds and rising demand for asset allocation solutions ( 0.9 billion) Financial Markets driven by higher income from treasury activities and includes repurchase gain of sub debt ( 7.9 million) Corporate Banking benefited from successful corporate finance activities Strong balance sheet BHF-BANK with a tier 1 ratio of 14.1% Loan to deposit ratio of 36.2% 14
BHF-BANK Results 6 months ended 30 June 2015 (In EUR millions) Key P&L figures and KPIs 30 Jun 15 30 Jun 14 Delta % chg Net fee and commission income 81.1 73.5 7.6 10% Net interest income 22.0 22.3 (0.4 ) -2% Gains / losses on financial instruments at fair value 16.9 11.3 5.5 49% Other operating income 3.8 4.4 (0.6 ) -15% Operating income 123.7 111.6 12.2 11% Operating expenses (107.0 ) (104.3 ) (2.7 ) 3% Movements in loan loss provisions (1.3 ) (1.8 ) 0.5-26% Adjusted operating profit / (loss) 15.5 5.5 10.0 182% Non-recurring items 2 1.0 4.6 (3.6 ) -77% Operating profit / (loss) 16.5 10.1 6.4 63% Client assets (In EUR millions) Pro-Forma 1 30 Jun 15 Year 31 Dec 14 Assets under Management 43,552 40,377 3,175 8% Loans 3,192 3,413 (221 ) -6% Assets under control 46,744 43,790 2,953 7% Adjusted operating profit has increased by 10 million due to favourable development of net fee and commission income Net fee and commission income increased in line with AuM and the focus on additional higher margin discretionary mandates Excluding the 7.9 million gain on repurchase of subordinated debt, small decrease across other income lines compared to the same period in 2014 Operating expenses above previous year (3%) due to variable performance based compensation, pensions and IT-consulting AuM rose by 3.2 billion or 8% to 43.6 billion 1. BHF-BANK numbers pro-forma for 2014 period 2. Non-recurring items includesitems that distort the understanding of the underlying operational performance i.e. reorganisation costs, one-off or unusual income receipts Source: BHF-BANK Management 15
BHF-BANK Assets under Management Assets under Management by segment ( m) 50,000 +8% +2% 40,000 30,000 20,000 10,000 0 39,481 40,377 2,647 2,808 16,821 16,879 20,013 20,690 H1 2014 YE 2014 43,552 2,987 17,859 22,706 H1 2015 AuM increased by 3.2 billion or 8% to 43.6 billion in 2015 This was driven by 1.2 billion net new and 2.0 billion of favourable market related movements and strong investment performance Private Banking AuM increased by 10% to 22.7 billion, with 1.0 billion from an increase in net new assets and 1.0 billion positive market movements and strong investment performance Asset Management AuM totalled 17.9 billion, representing an increase of 6% underpinned by strong market and investment performance ( 0.9 billion) Corporate Banking Asset Management Private Banking Source: BHF-BANK Management 16
BHF-BANK operating income Operating income by driver ( m) 1 150 100 50 111.6 4.4 11.3 22.3 73.5 +11% 123.7 3.8 16.9 22.0 81.1 Increase in total operating income of 12.2 million (11%) compared to same period last year Significant increase (10%) in net fee and commission income reflecting growth in AuM, change to higher discretionary asset management fees and higher corporate finance fees Gains / losses on financial instruments at fair value revenue of 16.9 million includes 7.9 million gain on repurchase of subordinated debt Stable net interest income 0 H1 2014 H1 2015 Other operating income Gains / losses on financial instruments at fair value Net interest income Net fee and commission income 1. BHF-BANK numbers pro-forma for 2014 period Source: BHF-BANK Management 17
BHF-BANK operating expenses Operating expenses 1 ( m) 150 100 +3% 104.3 107.0 50.9 51.8 Operating expenses 3% above previous year due to variable performance based compensation, pensions and IT-consulting The continuing cost reduction programme has seen operating expenses reduced by 25% since H1 2011 50 53.5 55.1 0 H1 2014 H1 2015 Operating costs Personnel costs 1. BHF-BANK numbers pro-forma for 2014 period Source: BHF-BANK Management 18
BHF-BANK divisional overview (In EUR millions) Private Banking Asset Management Financial Markets Corporate Banking Other Total Operating income 51.6 18.3 26.7 23.6 3.5 123.7 Operating expenses (27.5) (11.4) (10.0) (7.9) (50.1) (107.0) Movements in loan loss provisions (0.2) 0.0 0.0 (0.8) (0.4) (1.3) Contribution 24.0 6.9 16.7 14.9 (47.0) 15.5 Allocated costs (15.4) (3.6) (9.2) (18.8) 47.0 0.0 Adjusted operating profit / (loss) 8.6 3.3 7.5 (3.8) 0.0 15.5 Non-recurring items 2 1.4 (0.4) 0.0 0.0 0.0 1.0 Operating profit / (loss) 10.0 2.9 7.5 (3.8) 0.0 16.5 (In EUR millions) Private Banking Asset Management 30 Jun 15 30 Jun 14 1 Financial Markets Corporate Banking Other Total Operating income 46.0 16.0 19.4 22.0 8.2 111.6 Operating expenses (25.2) (9.3) (11.7) (8.0) (50.1) (104.3) Movements in loan loss provisions (0.1) 0.0 0.0 (1.6) (0.1) (1.8) Contribution 20.8 6.6 7.7 12.3 (42.0) 5.5 Allocated costs (13.3) (2.6) (9.1) (17.0) 42.0 0.0 Adjusted operating profit / (loss) 7.5 4.0 (1.4) (4.7) 0.0 5.5 Non-recurring items 2 1.2 0.2 1.7 1.5 0.0 4.6 Operating profit / (loss) 8.7 4.3 0.3 (3.2) 0.0 10.1 Good underlying performance of all divisions Strong performance of Private Banking driven by increase in AuM by 10% to 22.7 billion, with 1.0 billion from an increase in net new assets and 1.0 billion positive market movements and strong investment performance Financial Markets included a gain of 7.9 million on the repurchase of the subdebt Corporate Banking benefitted from new corporate finance mandate wins and strong distributions from private equity fund investments 1. BHF-BANK numbers pro-forma for 2014 period 2. Non-recurring items include items that distort the understanding of the underlying operational performance i.e. reorganisation costs, one-off or unusual income receipts Source: BHF-BANK Management 19
BHF-BANK Private Banking Key P&L figures and KPIs (In EUR millions) 30 Jun 15 30 Jun 14 Delta % chg Net fee and commission income 45.3 41.3 3.9 9% Net interest income 3.9 3.7 0.2 6% Gains / losses on financial instruments at fair value 1.6 0.8 0.8 98% Other operating income 0.9 0.2 0.7 308% Operating income 51.6 46.0 5.6 12% Operating expenses (27.5 ) (25.2 ) (2.3 ) 9% Movements in loan loss provisions (0.2 ) (0.1 ) (0.1 ) 87% Contribution 24.0 20.8 3.2 15% Allocated costs (15.4 ) (13.3 ) (2.1 ) 16% Adjusted operating profit / (loss) 8.6 7.5 1.1 14% Non-recurring items 2 1.4 1.2 0.2 21% Operating profit / (loss) 10.0 8.7 1.3 15% Client assets (In EUR millions) Pro-Forma 1 30 Jun 15 Year 31 Dec 14 Assets under Management 22,706 20,690 2,016 10% Loans 697 650 47 7% Assets under control 23,403 21,340 2,064 10% Private Banking revenues increased by 12% to 51.6 million during the period underpinned by growth in AuM and the continued change in mix to higher margin discretionary portfolio management Private Banking benefited from a 2.0 billion growth in AuM with 1.0 billion from an increase in net new assets and 1.0 billion positive market movements and strong investment performance The bank was again ranked number one in discretionary portfolio management by First Five for the performance over a three year horizon Furthermore, the bank was placed first in DISQ Test 2015 which confirmed quality leadership for advisory services 1. BHF-BANK numbers pro-forma for 2014 period 2. Non-recurring items include items that distort the understanding of the underlying operational performance i.e. reorganisation costs, one-off or unusual income receipts Source: BHF-BANK Management 20
BHF-BANK Private Banking AuM with strong growth Private Banking AuM by category ( m) 25,000 20,000 15,000 10,000 5,000 0 22,706 20,013 20,690 4,009 3,570 3,720 4,044 3,383 3,651 5,080 5,192 6,142 7,980 8,127 8,511 H1 2014 YE 2014 H1 2015 Institutional clients & ext. advisors Discretionary Family Office Advisory & Execution only Private Banking experienced an overall growth of 2.0 billion with 1.0 billion from an increase in net new assets and 1.0 billion positive market movements and strong investment performance The focus on higher margin discretionary portfolio management is reflected in the growth of assets within this category in the six months to June 2015 Net new assets were acquired mainly in the target segment of UHNWI 0.5 billion net new assets were acquired in discretionary portfolio management The increase in Family Office assets amounted to more than 390 million in 2015 Source: BHF-BANK Management 21
BHF-BANK Asset Management Key P&L figures and KPIs (In EUR millions) Pro-Forma 1 30 Jun 15 30 Jun 14 Delta % chg Net fee and commission income 17.8 15.7 2.0 13% Net interest income (0.1 ) 0.0 (0.1 ) -2180% Gains / losses on financial instruments at fair value 0.0 0.0 0.0 Other operating income 0.6 0.3 0.3 111% Operating income 18.3 16.0 2.3 14% Operating expenses (11.4 ) (9.3 ) (2.0 ) 22% Movements in loan loss provisions 0.0 0.0 0.0 Contribution 6.9 6.6 0.2 3% Allocated costs (3.6 ) (2.6 ) (1.0 ) 38% Adjusted operating profit / (loss) 3.3 4.0 (0.8 ) -19% Non-recurring items 2 (0.4 ) 0.2 (0.6 ) -262% Operating profit / (loss) 2.9 4.3 (1.4 ) -32% Operating income rose by 14% to 18.3 million for the period to June 2015. This was the result of growth in AuM of 1 billion to 17.9 billion and a progressive change in mix towards higher margin mandates AuM growth should allow further improvement in operating margins Good fund performance as recognised by Morningstar which ranked 15 of 31 FT-funds they analysed in the first quartile of their peer group (1y) Client assets (In EUR millions) 30 Jun 15 Year 31 Dec 14 Assets under Management 17,859 16,879 980 6% Loans 0 0 0 Assets under control 17,859 16,879 980 6% 1. BHF-BANK numbers pro-forma for 2014 period 2. Non-recurring items include items that distort the understanding of the underlying operational performance i.e. reorganisation costs, one-off or unusual income receipts Source: BHF-BANK Management 22
BHF-BANK Asset Management continues to improve Asset Management AuM by source ( m) 20,000 +6% 0% 16,000 12,000 8,000 4,000 16,821 16,879 5,190 5,103 6,508 6,525 17,859 5,693 6,378 5,123 5,252 5,788 A 6% increase in AuMs from prior year end, with retail funds and administrative funds both showing significant growth of more than 10% Growth in AuMs is underpinned by strong market and investment performance of 0.9 billion in the period Strong inflows into the BHF TRUST advised asset allocation products (e.g. BHF Flexible Allocation FT) as well as in FT-managed funds such as FT EuropaDynamik. 0 H1 2014 YE 2014 H1 2015 Retail funds Institutional mandates Administration mandates Source: BHF-BANK Management 23
BHF-BANK Awards winning investment performance 170 160 150 140 130 120 110 100 Performance of BHF Flexible Allocation FT 1,2 90 06/2010 06/2011 06/2012 06/2013 06/2014 06/2015 BHF Flexible Allocation FT Peergroup 1,2 25 th Percentile 37,6 % 50 th Percentile 24,9 % Performance Benchmark 3 06/10-06/11 06/11-06/12 06/12-06/13 + 59.7 % + 28.4 % + 26.0 % Peergroup Performance details 1,2 06/13-06/14 06/14-06/15 Awards 4 Stars A Rating Top Funds 2014 (Fund of Funds) Top 15 of 2000 Overall 9.5 % 9.0 % 9.2 % 7.8 % 13.7 % + 59.7 % The Bank was awarded first place asset manager in Germany by German institute for service quality (DISQ) The performance ranking institute first five awarded the bank a #1 position for discretionary portfolio management across all risk categories for a three year horizon in the German speaking region 75 th Percentile 13,1 % BHF Flexible 59.7 % Benchmark 3 Outperform. 5.9 % - 0.7 % 5.9 % 8.5 % 6.3 % + 28.4 % + 3.7 % + 9.7 % + 3.4 % - 0.8 % +7.4 % +31.3 % 1. All data based on past analyses and not indicative of future performance 2. Source: Morningstar; Data base: month-end total return values in EUR; : 30/06/2010 30/06/2015 3. Benchmark: 45% STOXX Europe 50 / 55% JPM Euro Cash 1 Month 24
BHF-BANK Financial Markets Key P&L figures and KPIs (In EUR millions) Pro-Forma 1 30 Jun 15 30 Jun 14 Delta % chg Net fee and commission income 8.2 7.6 0.5 7% Net interest income 2.5 4.9 (2.4 ) -48% Gains / losses on financial instruments at fair value 15.2 6.1 9.1 150% Other operating income 0.8 0.7 0.0 4% Operating income 26.7 19.4 7.3 38% Operating expenses (10.0 ) (11.7 ) 1.6-14% Movements in loan loss provisions 0.0 0.0 0.0 Contribution 16.7 7.7 8.9 115% Allocated costs (9.2 ) (9.1 ) (0.1 ) 1% Adjusted operating profit / (loss) 7.5 (1.4 ) 8.8 639% Non-recurring items 2 0.0 1.7 (1.7 ) -100% Operating profit / (loss) 7.5 0.3 7.1 2189% Gain of 7.9 million realised on repurchase of subordinated debt included within the 38% increase in revenues, period on period Lower Net interest income resulting from decreased size of bond portfolio and low interest rate environment 1. BHF-BANK numbers pro-forma for 2014 period 2. Non-recurring items includesitems that distort the understanding of the underlying operational performance i.e. reorganisation costs, one-off or unusual income receipts Source: BHF-BANK Management 25
BHF-BANK Corporate Banking Key P&L figures and KPIs (In EUR millions) 30 Jun 15 30 Jun 14 Delta % chg Net fee and commission income 10.1 8.9 1.2 14% Net interest income 13.5 13.1 0.5 4% Gains / losses on financial instruments at fair value 0.0 0.0 0.0 Other operating income (0.0 ) 0.0 (0.0 ) -508% Operating income 23.6 22.0 1.7 8% Operating expenses (7.9 ) (8.0 ) 0.1-1% Movements in loan loss provisions (0.8 ) (1.6 ) 0.9-53% Contribution 14.9 12.3 2.6 21% Allocated costs (18.8 ) (17.0 ) (1.8 ) 11% Adjusted operating profit / (loss) (3.8 ) (4.7 ) 0.8 18% Non-recurring items 2 0.0 1.5 (1.5 ) -100% Operating profit / (loss) (3.8 ) (3.2 ) (0.7 ) -21% Client assets (In EUR millions) Pro-Forma 1 30 Jun 15 Year 31 Dec 14 Assets under Management 2,987 2,808 179 6% Loans 2,494 2,763 (269 ) -10% Assets under control 5,481 5,571 (90 ) -2% 18% improvement in adjusted operating profitability, supported by a 1.7 million increase in operating income for the 6 month period ending 30 June 2015 Total assets under management increased by 6% to 3 billion (2014: 2.8 billion) during the period Continued progress of Structured Export Finance lending activities and growing business in Structured Trade and Commodity Finance Corporate Finance: contribution from successfully executed M&A deals and strong distributions from private equity fund investments 1. BHF-BANK numbers pro-forma for 2014 period 2. Non-recurring items include items that distort the understanding of the underlying operational performance i.e. reorganisation costs, one-off or unusual income receipts Source: BHF-BANK Management 26
Clean balance sheet with strong capital ratios Balance Sheet Overview ( m) Dec 2014 Jun 2015 6,687 1,848 6,687 6,470 1,842 6,470 The small reduction in the balance sheet is due among other things to the repurchase of the subordinated debt in Q1 2015. 5,046 5,094 Over the year total additions to the loan loss provisions amounted to 1.3 million 3,962 3,821 As at 30 June 2015, the tier one capital ratio was 14.1% (2014: 14.7%) 660 217 92 492 718 339 236 571 93 507 588 187 Assets Liabilities & Equity Assets Liabilities & Equity Loans and advances to customers Investable assets Derivative financial assets Other assets Deposits Derivative financial liabilities Provisions for liabilities Other liabilities Total equity Source: BHF-BANK Management 27
Kleinwort Benson 28
Kleinwort Benson 1 Key messages Strong growth in Assets under Management Improved profitability Business segments Strong balance sheet AuM increased by 8% from year end reflecting strong inflows of higher margin mandates in both the US and the UK reflected the further internationalisation of the Kleinwort Benson Investors client base in institutional and wholesale channels AuM performance benefitting from 0.6 million market performance uplift AuM growth also benefiting from strong investment performance with all business units continuing to receive industry recognition and performance awards Excluding foreign exchange impact, operating performance of all divisions improved significantly Operating income up 12% driven by growth in Asset Management revenues Operating expenses increased by 4% with growth in variable costs (linked to income growth) partially offset by operational efficiencies Operating profits of KBI doubled for the 6 month period reflecting continued strong growth in both AuM and margins Good improvement in the underlying operating result at KBWM, with cost savings from operational efficiencies partly offset by fair value movements due to market volatility Solid capital and liquidity position of Kleinwort Benson Wealth Management 2 ( KBWM ) with a Tier 1 ratio of 22.1% and a Loan to Deposit Ratio of 28% in the top quartile of European banking peer set 1. Kleinwort Benson is the combination of Kleinwort Benson Bank, Kleinwort Benson Channel Islands and Kleinwort Benson Investors 2. Kleinwort Benson Wealth Management is the combination of Kleinwort Benson Bank and Kleinwort Benson Channel Islands Source: BHF Kleinwort Benson Group Management 29
Kleinwort Benson 1 Results 6 months ended 30 June 2015 Key P&L figures and KPIs (In EUR millions) 30 Jun 15 30 Jun 14 Delta % chg Net fee and commission income 59.2 49.3 9.9 20% Net interest income 14.1 9.7 4.4 45% Gains / losses on financial instruments at fair value (6.0 ) 0.9 (6.9 ) -753% Other operating income 0.2 0.1 0.1 42% Operating income 67.4 60.0 7.4 12% Operating expenses (64.2 ) (61.6 ) (2.6 ) 4% Movements in loan loss provisions 0.0 0.1 (0.1 ) -100% Operating profit 3.2 (1.5 ) 4.7 307% Non-recurring items 2 (1.7 ) (3.9 ) 2.2 55% Profit before tax 1.4 (5.4 ) 6.9 127% Client assets (In EUR millions) 30 Jun 15 Year 31 Dec 2014 Assets under Management 14,929 13,864 1,065 8% Loans 731 678 53 8% Assets under control 15,660 14,542 1,118 8% Operating profit at 1.4 million, has achieved a 6.9 million turnaround in the period, supported by a 7.4 million uplift to income Operating income up 12% benefiting from strong growth in Asset Management revenues Excluding the FX impact on GBP denominated cost base, operating expenses reduced by 3.9 million. Whilst ongoing cost control initiatives have resulted in a 6.5 million cost savings at KBWM, increase in variable costs (linked to income growth) is driving the 2.6 million increase in costs at KBI AuM and Loans up by 8% each with an increased focus on higher margin mandates 1. Kleinwort Benson is the combination of Kleinwort Benson Bank, Kleinwort Benson Channel Islands and Kleinwort Benson Investors 2. Non-recurring items include items that distort the understanding of the underlying operational performance i.e. reorganisation costs, one-off or non-recurring income receipts Source: BHF Kleinwort Benson Group Management 30
Kleinwort Benson 1 Assets under Management AuM by category ( m) +8% 15,000 12,748 +9% 13,864 14,929 AuM increased significantly by 2.2 billion (+17%) in the last twelve months (increased by 8% from 31 December 2014) 12,000 9,000 6,000 5,891 6,875 7,489 KBI maintained its strong momentum with continued growth across both wholesale and institutional channels in North America and the UK Within KBWM, growth in higher margin discretionary AuM was offset by outflows from lower margin mandates 3,000 6,857 6,990 7,440 0 H1 2014 YE 2014 H1 2015 Asset Management (KBI) Private Banking (KBWM) 1. Kleinwort Benson is the combination of Kleinwort Benson Bank, Kleinwort Benson Channel Islands and Kleinwort Benson Investors Source: BHF Kleinwort Benson Group Management 31
Kleinwort Benson 1 Operating income Operating income by driver ( m) 80 60 40 20 60.0 0.9 0.1 9.7 49.3 +12% 67.4 0.2 14.1 59.2 Total income up 7.4 million (12%) Growth driven by Asset Management fee income and margin improvement A 45% increase in Net interest income is attributable to an overall improvement in margins and a 8% increase in the size of the loan book Unrealized fair value losses of 6 million reflect market movements on bond portfolio 0-6.0-20 H1 2014 H1 2015 Other operating income Gains / losses on financial instruments at fair value Net interest income Net fee and commission income 1. Kleinwort Benson is the combination of Kleinwort Benson Bank, Kleinwort Benson Channel Islands and Kleinwort Benson Investors Source: BHF Kleinwort Benson Group Management 32
Kleinwort Benson 1 Operating expenses Operating expenses ( m) Total expenses increased by 4% 100 +4% Excluding the FX impact on GBP denominated cost base, ongoing cost control initiatives have resulted in a 6.5 million cost savings at KBWM 50 61.6 22.8 64.2 23.1 KBI operating costs have increased by 2.6 million due to volume and activity based costs linked to growth in the Asset Management business 38.8 41.2 0 H1 2014 H1 2015 Operating costs Personnel costs 1. Kleinwort Benson is the combination of Kleinwort Benson Bank, Kleinwort Benson Channel Islands and Kleinwort Benson Investors Source: BHF Kleinwort Benson Group Management 33
Kleinwort Benson 1 balance sheet Balance Sheet 2 Overview ( m) 2,638 683 1,887 Dec 2014 Jun 2015 2,638 3,006 734 2,314 2,197 3,006 2,655 Solid capital and liquidity position with a tier 1 ratio of 22% and loan to deposit ratio of 28% in the top quartile of European Banking Peer group on period growth in balance sheet, including impact of foreign exchange rate movements, reflects a 341 million (15%) growth in deposits. This growth has enabled a 7% growth in the loan book whilst increasing margins across the deposit and loan books 64 5 16 36 18 256 70 5 47 13 13 277 Assets Liabilities & Equity Assets Liabilities & Equity Loans and advances to customers Investable assets Derivative financial assets Other assets Deposits Derivative financial liabilities Provisions for liabilities Other liabilities Total equity 1. Kleinwort Benson is the combination of Kleinwort Benson Bank, Kleinwort Benson Channel Islands and Kleinwort Benson Investors 2. Kleinwort Benson Balance Sheet pro-forma for 2015 and 2014 Source: BHF KB Group Management 34
Kleinwort Benson Operating Entities (In EUR millions) KB Wealth Management Kleinwort Benson Investors Operating income 51.6 15.9 67.4 Operating expenses (53.9) (10.3) (64.2) Movements in loan loss provisions 0.0 0.0 0.0 Adjusted operating profit / (loss) (2.4) 5.5 3.2 Non-recurring items 1 (1.7) 0.0 (1.7) Operating profit / (loss) (4.1) 5.5 1.4 (In EUR millions) KB Wealth Management Year 30 Jun 15 Year 30 Jun 14 Kleinwort Benson Investors Operating income 49.5 10.6 60.0 Operating expenses (53.9) (7.8) (61.6) Movements in loan loss provisions 0.1 0.0 0.1 Adjusted operating profit / (loss) (4.4) 2.8 (1.5) Non-recurring items 1 (3.9) 0.0 (3.9) Operating profit / (loss) (8.2) 2.8 (5.4) Total Total Operating profits within Kleinwort Benson Investors almost doubled, benefiting from continued strong growth in both AuM and margins Excluding the impact of foreign exchange movements, results showed steady improvement within Kleinwort Benson Wealth Management. Operating costs have reduced by 6.4 million period on period along with a lager than 50% reduction in the operating loss to 4.1 million (details slide 38) 1. Non-recurring items include items that distort the understanding of the underlying operational performance i.e. reorganisation costs, one-off or non-recurring income Source: BHF Kleinwort Benson Group Management 35
KB Wealth Management Key messages 1 Assets under Management Deposit base increased by 3% with growth in long term accounts Total AuM down 3% with strong inflows offset by outflows from lower margin mandates 2 Profitability Total income up by 1.6m, excluding losses of 4.4 million on financial instruments due to market volatility Income growth was supported by an associated reduction in operating costs, with a 4.8 million (11%) improvement year on year 3 Investment Performance 4 Well positioned for further growth Robust investment performance is at the heart of our value proposition to clients The last few years have been successful in delivering positive real returns for clients across all core strategies Our performance continues to be recognised by the broader industry and our teams received the Platinum award for Cautious Portfolio Manager of the year in 2015 from Portfolio Adviser Entered into a strategic partnership with Samena Capital to further strengthen relationship driven merchant banking in new markets As part of the strategy to move to a more focused and streamlined operating model KBWM announced the sale of its non-core Fund Administration business to JTC for a minimum cash consideration of 14.7 million, yielding a net gain of approximately 8.9m Going forward, we expect continued operational progress as the business continues to focus on efficiencies and revenue growth. In addition to the online offering, Kleinwort Benson is close to finalising a strategic partnership with a firm to launch a digital private banking platform by the second quarter of 2016 36
KB Wealth Management Results 6 months ended 30 June 2015 Key P&L figures and KPIs (In millions) 30 Jun 15 30 Jun 14 30 Jun 15 30 Jun 14 Net fee and commission income 43.6 39.0 31.9 32.0 Net interest income 14.0 9.6 10.3 7.9 Gains / losses on financial instruments at fair value (6.0 ) 0.9 (4.4 ) 0.8 Other operating income (0.1 ) (0.1 ) (0.0 ) (0.1 ) Operating income 51.6 49.5 37.8 40.6 Operating expenses (53.9 ) (53.9 ) (39.5 ) (44.2 ) Movements in loan loss provisions 0.0 0.1 0.0 0.0 Adjusted operating profit / (loss) (2.4 ) (4.4 ) (1.7 ) (3.6 ) Non-recurring items 1 (1.7 ) (3.9 ) (1.3 ) (3.2 ) Operating profit / (loss) (4.1 ) (8.2 ) (3.0 ) (6.8 ) Client assets 1.284 1.199 (In millions) KB WM (EUR) 30 Jun 15 Year 31 Dec 2014 KB WM (GBP) 30 Jun 15 Year 31 Dec 2014 Assets under Management 7,440 6,990 5,293 5,444 Loans 731 678 520 528 Assets under control 8,170 7,667 5,812 5,972 Total income up by 1.6m, excluding losses of 4.4 million on financial instruments due to market volatility Operating expenses further reduced by 4.8 million (11%) over same period last year As a result, the operating result before tax showed significant improvement, with the business positioned to benefit from the ongoing transition to a more streamlined operating model Whilst loan numbers have not increased in the 6 month period to June 2015, margins have significantly improved over the same period 1. Non-recurring items includesitems that distort the understanding of the underlying operational performance i.e. reorganisation costs, one-off or unusual income receipts Source: Kleinwort Benson Management 37
KB Wealth Management Operating expenses Operating expenses ( m) 75 Total expenses reduced by 11% over the same period last year, as the business continues on the path to a more streamlined and focused operating model 50 25 44.2 16.5-11% 39.5 14.3 Key enablers behind the reduction in expenses included: Process improvements Rationalisation and consolidation of IT infrastructure 27.7 25.2 0 H1 2014 H1 2015 Operating costs Personnel costs Source: Kleinwort Benson Management 38
Stable core AuMs 6,000 5,000 4,000 3,000 2,000 Wealth Management AuM by category ( m) -4% 5,496 5,444 5,293 1,433 1,322 1,364 76 69 63 2,951 2,999 2,861 Whilst deposits increased by 3% in the six months to June 2015, total AuM reduced by 151million (3%). Net flows for the period were impacted by outflows from lower margin mandates Growth in the deposit base in H1 due to the successful launch of longer duration deposit products, evidencing the ability to attract new money at competitive rates 1,000 0 1,035 1,053 1,005 H1 2014 YE 2014 H1 2015 Deposits Family Office Discretionary Advisory & Execution only Source: Kleinwort Benson Management 39
Clean balance sheet with strong capital ratios KB Wealth Management Balance Sheet ( m) 2,036 Dec 2014 Jun 2015 2,036 2,118 2,118 Solid capital and liquidity position with tier 1 ratio of 22.1% and loan to deposit ratio 28% in top quartile of European Banking Peer set 532 1,806 522 1,894 Small growth in balance sheet from Dec 2014 is driven by a 4.9% ( 88 million) increase in deposits Stable lending volumes, but tangible opportunities to support growth in the second half of 2015 1,457 17 12 14 1,551 22 9 9 43 4 187 42 4 185 Assets Liabilities & Equity Assets Liabilities & Equity Loans and advances to customers Investable assets Derivative financial assets Other assets Deposits Derivative financial liabilities Provisions for liabilities Other liabilities Total equity Source: Kleinwort Benson Management 40
Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Kleinwort Benson: Award - winning investment performance Performance of KB's Sterling Balanced Index relative to the ARC PCI Performance of KB Balanced Index relative to the ARC PCI 150 145 140 135 130 125 120 115 110 105 100 95 KB Balanced ARC Sterling Balanced PCI Robust investment performance is at the heart of the value proposition to clients The balanced strategy, a core flagship offering to clients, continues to deliver a strong performance and outperform the peer group Our performance continues to be recognised by the broader industry and our teams received the Platinum award for Cautious Portfolio Manager of the year in 2015 from Portfolio Adviser Awards won Winner of the Platinum Award for Best Cautious Portfolio in the Large category at the inaugural Portfolio Adviser Wealth Manager Awards in 2013 and again in 2015 Winner of the Total Wealth Solutions Provider HNW category at the 2014 UK PAM awards. Winner of the Image and Reputation HNW category at the 2013 UK PAM awards. Source: Asset Risk Consultants PCI www.assetrisk.com, as at 30 June 2015. Based on Q2 2015 PCI report produced by ARC. ARC Private Client Indices ( PCI ) are based on historical information and past performance is not indicative of future performance. The Private Client Indices (PCI) as compiled by Asset Risk Consultants provide an insight into the actual returns being generated by investment managers for a sample of their UK discretionary private client portfolios. The PCI performance series is based on real performance numbers provided by participating investment managers. PCI provides a reflection of the returns that a private client could expect for a given risk appetite and if they had been invested in the strategies for the time periods shown. The PCI shows a composite of the performance of many portfolios and as such actual performance of individual portfolios will have varied over the time period/s shown. 41
KB Investors Key messages 1 1 Assets under Management Significant progress in both wholesale and institutional channels which extends and deepens the international client base and KBI s geographic footprint The first half of the year saw strong inflows of higher margin mandates primarily in the US and the UK reflected the ongoing focus on providing specialist equity product for international investors which was offset by a decline in the lower margin domestic AuM From the level in H1 2014, AuM increased by 27%, which comprised of a 1.0 billion uplift attributable to investment gains and 0.6 billion in net inflows 1 2 Profitability 50% increase in revenue to 15.9 million with operating profit almost doubling to 5.5 million Costs increase by 33% to 10.3 million, largely driven by variable costs linked to AuM and higher personnel related costs to support continuing business growth Scalability of the business model reflected by the uplift in operating margin from 27% in H1 2014 to 35% in H1 2015 3 Investment Performance 4 Well positioned for further international expansion The solid long-term investment performance history across all strategies seen in previous periods remains intact. Recent performance has been more challenging, particularly across environmental equity strategies Received the World Finance award for the Best Investment Management Company, Ireland and Best Institutional Asset Manager Ireland, 2015. The KBI Water fund also received a Lipper Fund Award in 2015 Stable business with differentiated products, experienced team and well established distribution capabilities in multiple geographic markets Operationally robust with scope to leverage specialist expertise and the operating model further driven by strong pipeline of new business prospects into the remainder of 2015 and 2016 Launched a small cap equity strategy and a global resources strategy leveraging from the existing capabilities in the equity team First Australian institutional mandates won in H1 2015 1. Comparative AuMs have been restated to exclude fixed term advisory mandate from KBI s former parent KBC Asset Management NV Source: KBI Management 42
KB Investors Results 6 months ended 30 June 2015 Key P&L figures and KPIs (In EUR millions) 30 Jun 15 30 Jun 14 Delta % chg Net fee and commission income 15.6 10.3 5.2 51% Net interest income 0.0 0.0 (0.0 ) -9% Gains / losses on financial instruments at fair value 0.0 0.0 0.0 n/a Other operating income 0.2 0.2 0.0 19% Operating income 15.9 10.6 5.3 50% Operating expenses (10.3 ) (7.8 ) (2.6 ) 33% Movements in loan loss provisions 0.0 0.0 0.0 n/a Adjusted operating profit / (loss) 5.5 2.8 2.7 97% Non-recurring items 1 0.0 0.0 0.0 Operating profit / (loss) 5.5 2.8 2.7 97% Client assets (In EUR millions) 30 Jun 15 Year 31 Dec 2014 Assets under Management 7,489 6,875 614 9% Loans 0 0 0 n/a Assets under control 7,489 6,875 614 9% Continued momentum in H1 2015 with operating profit almost doubling to 5.5 million Revenue increased by 50% to 15.9 million over the same period in 2014, benefiting from both AuM growth and strengthening of underlying margins Costs increased by 2.6 million to 10.3 million, largely driven by variable costs linked to AuM growth as well as higher personnel related costs to support higher activity levels Operating margin improved from 27% in H1 2014 to 35% in H1 2015 1. Non-recurring items include items that distort the understanding of the underlying operational performance i.e. reorganisation costs, one-off or unusual income receipts Source: KBI Management 43
KB Investors -Strong growth in specialist equity strategies Asset Management AuM by Category 1 ( m) 7,500 6,000 4,500 5,891 1,035 1,241 +17% 6,875 957 1,481 +9% 7,489 654 1,494 The increase in AuM over the first six months of 2015 was underpinned by a stable net asset base together with market performance driven growth of 0.6 billion The strongest growing product segment was global equity strategies where AuM increased by 20% supported by positive long-term track record and consistent flows from institutional and wholesale channels 3,000 1,500 3,616 4,437 5,341 Multi asset strategies impacted by outflows due to restructuring in the Irish pensions market Environmental equity strategies stable with momentum from wholesale channel slowing down in line with short term market performance 0 H1 2014 YE 2014 H1 2015 Multi Asset Environmental Global Equity 1. Comparative AuMs have been restated to exclude fixed term advisory mandate from KBI s former parent KBC Asset Management NV Source: KBI Management 44
45 About BHF Kleinwort Benson Group SA BHF Kleinwort Benson (Euronext: BHFKB) is a limited liability company incorporated under the laws of Belgium, having its registered office at Avenue Louise 326, 1050 Brussels, Belgium. BHF Kleinwort Benson is a merchant bank with principal activities in private banking, asset management and financial markets & corporates. For further information visit: www.bhfkleinwortbenson.com