OLB Bank Company Presentation
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OLB Bank Company Presentation March 2021 OLB / March 2021 1
01. OLB Overview And
Strategy
OLB / March 2021 2OLB At A Glance
Modern Customer-focused Financial Institution With Operations Throughout Germany
Operating Throughout Germany Sustainable Strategy Our Divisions
– Headquartered In The Northwest ▪ We offer our clients integrated solutions
▪ With our strong and prestigious OLB Bank and Bankhaus
Neelmeyer brands, we are a modern customer-focused, from a single source across three divisions:
financial institution with operations throughout Germany
Oldenburg 1 Private Customers
▪ Strong market position in retail products in the ▪ Retail Banking
Hamburg
Northwest
▪ Private Banking and Wealth Management
Bremen
▪ Multi-channel accessibility (regional branches & ▪ Self-employed Professionals
Hanover Berlin nationwide via telephone, video chat, online and mobile
banking) 2 Corporates & SME
Dusseldorf ▪ Distinctive nationwide footprint in corporate banking ▪ Corporates
areas complemented by selective international ▪ SME
expertise in specialized financing ▪ Football Finance
Frankfurt
▪ We offer (i) modern services for private and business
3 Specialized Lending (“SL“)
customers, including competent advice and complex
Ludwigsburg / financing solutions in private banking and wealth ▪ Acquisition Financing
Stuttgart management, (ii) customized solutions for our corporate ▪ Commercial Real Estate Financing
& SME customers, and (iii) particular expertise in ▪ Ship Financing
Munich
specialized lending
Key Stats € 21.5bn € 136m € 79m 12.2% 6.9%
(2020A) Total Assets Net Operating Result Net Profit For The Fiscal Year Common Equity Tier 1 Ratio After Tax Return On Equity(1)
Note: Financials presented in accordance with HGB GAAP.
(1) Calculated on Net Profit / Net Loss For The Fiscal Year divided by average Equity for the year
OLB / March 2021 3OLB Shareholder Structure
Strong, Long-Term Focus With Established Track-Record Of Financial Institutions Investments
U.S. state governmental pension plan Apollo Global Management(1) Grovepoint Investment Management(2)
U.S. state governmental pension plan which
provides retirement compensation and related
benefits to in excess of 1.5 million payers and
recipients (present or former government
Leading global asset manager for equity, loan and A specialist private investment firm focused on
employees and their beneficiaries)
real estate investments with $455bn AUM private equity, credit and special situations,
regulated by the Financial Conduct Authority
Headquartered in Delaware,
Headquartered in the USA Headquartered in London,
USA Great Britain
The U.S. state governmental pension plan Over three decades of experience investing Successful track record of investments in the
has invested ~$1.5bn across 25+ in financial services. Selected investments financial services sector across banking,
investments in the financial services sector include NKBM, Aspen, Athora, Brit insurance, bulk annuities and insurance-
over the last 10+ years Insurance, and OneMain Financial linked securities
32.00% of shares via Texas Bildung Holding 35.72% of shares via Champ Luxembourg 32.28% of shares via GIM Strategische
GmbH & Co. KG Holdings S.à r.l. Investition VI S.à r.l.
(1) Funds indirectly managed by Apollo Global Management, Inc.
(2) Funds affiliated with Grovepoint Investment Management, LLP.
OLB / March 2021 4Strategic Development Of The Bank
Combining Trusted Brands And Diverse Banking Capabilities
1968 2019
Foundation of Merged with OLB
the bank Retail partnership platform
and online banking
Partnership platform
with W&W Group
1907 1997 2005 2017 2018
“Fonds- und Takeover of affiliate’s Acquired by “UniCredit Acquired by “BKB Bank” Merged with OLB
Effektenmaklerbüro P.F. “Geestemünder Bank Bank AG” Wealth Management and
Neelmeyer“ was founded AG” operations Private Banking
1869 1933 1978 2008 2018 2018
Founded by Frankfurt- Takeover and merger Majority interest Allianz Group takes Acquired by BKB Bank OLB “new” after
based banking house with “Oldenburgische acquired by “Dresdner direct ownership and subsequently merger with BKB and Retail Banking,
“Erlanger & Söhne” Spar- & Leihbank“ Bank AG” delisted from stock Bankhaus Neelmeyer Corporate Banking
exchange
1863 1945 1982 1999 2014 2018
Foundation as an Merger with “Bankverein für Majority of stock Renamed as “KBC Bank Renamed under new Merged with OLB
advance payment Nordwest-deutschland” to acquired by Deutschland AG” ownership as “Bremer
association form “Bankverein Bremen“ “Kredietbank NV”, Kreditbank AG (BKB Corporate Banking,
(“Vorschussverein“) Brussels Bank)” Specialized Lending
Track record of inorganic value creation
OLB / March 2021 51 Private Customers: Nationwide, Customer-Oriented Bank, With Leading
Presence In Northwest Germany
Geographical Focus Overview Of Business Division
▪ Offers a diverse product suite to private clients, corporate clients and self-employed
Strong presence in the core
professionals; whilst also providing private banking and wealth management services
business area of Weser- ▪ 16 centers of expertise throughout the Northwest
Ems
▪ Advisory and support services via our branch network and the new Oldenburg Advisory
Operations across Germany
with distribution partners and
Center (“BCO”)
brokerage options ▪ Comprehensive multi-channel offering and customer reach
▪ Bankhaus Neelmeyer has highly specialized competence in private banking and wealth
management
Diversified Products Key Stats (2020A)
Others
20%
€ 8.0bn
Total Loan Volume
Consumer
Loans
6%
€ 8.0bn
FY20 Total Loan Asset & Wealth
c. 645k
Volume Current Accounts & Management: €7bn Customers
Credit Cards Assets Under
Management
Mortgages
74% € 8.1bn
Total Deposits
Note: Financials presented in accordance with managements internal reporting unless otherwise stated. Follows IFRS principles with certain adjustments made to pro forma the 2018 and 2019 mergers.
OLB / March 2021 62 Corporates & SME: Providing Banking Solutions Across Germany And
Europe
Geographical Focus Overview Of Business Division
Corporates: Across ▪ In the Northwest of Germany – focus on traditional lending business with medium-sized corporate
Germany customers
Aurich Bremen
Oldenburg ▪ Leading banking partner to our customers, providing lending, account and payment services
Hamburg
Cloppenburg ▪ Provide focused services to large corporates across the whole of Germany
Lingen Hanover Berlin
▪ Key products include investment / project financing, working capital financing, international
Osnabrück
Dusseldorf payments and liquidity management
SME: Weser-Ems Frankfurt
Region
Ludwigsburg /
Munich
Stuttgart
Football Finance Overview – A Niche
Diversified Client Exposure Key Stats (2020A)
Offering
Football
Finance
▪ Transfer financing within football clubs
5%
Corporates
€ 5.6bn ▪ Loan financing or purchase of receivables
49% Total Loan Volume ▪ Focus on the top 5 financially strong football
leagues in Europe
€ 5.6bn c. 13k
FY20 Total Loan Premier
Volume Customers League
Bundesliga
SME € 3.8bn
46%
Total Deposits Ligue 1
Serie A
Primera
División
Note: Financials presented in accordance with managements internal reporting unless otherwise stated. Follows IFRS principals with certain accommodations made to pro forma the 2018 and 2019 mergers.
OLB / March 2021 73 Specialized Lending: Expertise In Tailored Products
Dedicated sourcing and underwriting teams for situations requiring unique solutions
Broad product competency – direct lending, syndicated financing, asset backed solutions
Expansion of market share and earnings potential on the basis of existing long-term business relationships
Acquisition Finance Commercial Real Estate Shipping
▪ Active for more than a decade as a leading ▪ Well established for over ten years in the ▪ Extensive, sector-specific know-how in this
structured finance provider in the DACH German market, as well as the Dutch market segment, including risk analysis and
LBO market market for the last three years and other risk monitoring systems
markets on a selected basis
▪ Providing debt financing for the acquisition ▪ Selective and conservative, involving
of medium-sized companies in Germany, ▪ Equally focused on short-term bridge freight rate-dependent vessels (exclusively
Austria, Switzerland and other markets on a financing and medium to long-term multi-purpose vessels)
selected basis investor financing for property and project
developers
c. 50% of SL Loan Volume c. 38% of SL Loan Volume c. 12% of SL Loan Volume
Key Stats (2020A)
€ 2.2bn c. 800
Total Loan Volume Customers
Note: Financials presented in accordance with managements internal reporting unless otherwise stated. Follows IFRS principals with certain accommodations made to pro forma the 2018 and 2019 mergers.
OLB / March 2021 802. Key Credit
Highlights
OLB / March 2021 9OLB Credit Highlights
1 Operates in an attractive and stable German banking market, supported by good macro fundamentals
A well balanced & diversified banking platform, underpinned by strong client relationships and multi-
2 channel distribution capabilities
Diversified product set and expertise across the yield spectrum generating income in an extended
3 low interest rate environment
4 Ongoing improvement in operating efficiency leading to profitable growth
Strong credit risk management capabilities resulting in resilient credit performance through the
5 cycle and across business divisions
6 Sound capital position with access to a diverse base of competitively priced funding
7 Highly experienced management team backed by a strong shareholder base with a long-term focus
OLB / March 2021 101 Positive Economic Momentum, Underpinned By Strong Macro
Fundamentals
Stable GDP Growth (Constant Prices) Low Unemployment Levels (% Of Total Labour Force)
5.2%
4.2%
10.0%
2.2% 2.6% 2.6% 9.1% 9.1%
1.9% 1.3% 1.8% 1.3% 8.9%
0.6% 8.2%
7.6%
4.2% 3.8% 4.3% 4.2%
3.4% 3.1%
(6.0%)
(8.3%)
2016 2017 2018 2019 2020E 2021E 2016 2017 2018 2019 2020E 2021E
Germany Euro Area Germany Euro Area
Low Levels Of Government Debt (As % Of GDP) Household & Corporate Debt As % Of GDP (2019)
150.2%
142.8%
101.1% 100.0%
90.0% 87.6% 85.7% 84.0%
69.2% 73.3% 72.2% 92.8%
65.0% 61.6% 84.0% 88.6%
59.5%
68.4% 70.6%
61.7%
54.4% 59.2% 56.9%
41.2%
2016 2017 2018 2019 2020E 2021E Germany Italy UK Spain Sweden France
Germany Euro Area Household Corporate
Source: International Monetary Fund, World Economic Outlook Database, October 2020
OLB / March 2021 111 Germany’s Banking Sector Has Shown Considerable Resilience During
The COVID-19 Crisis
Credit Demand For Mortgages And Overall Lending Remained Resilient Throughout 2020
Mortgage Lending To Households And Domestic Businesses (€bn) Total Lending To Non-Banks (€bn)
1,512 1,602 1,533 1,559 1,580 1,602
3,768 3,745 3,755 3,768
1,304 1,382 3,717
3,632
9.4%
3,479
3,336 4.3% 4.4% 2.3%
6.0% 6.0% 3.7%
1.4% 1.7% 1.3% 1.4% 0.7%
3.5% 0.3% 0.4%
1.9%
2017 2018 2019 2020 Q1-20 Q2-20 Q3-20 Q4-20 2017 2018 2019 2020 Q1-20 Q2-20 Q3-20 Q4-20
(1) (1)
Mortgages Growth 2020 Quarterly Development Lending Growth 2020 Quarterly Development
Overall Deposit Growth Has Also Remained Strong, Further Reinforcing Customers’ Faith In The Banking System
Savings Deposits Of Domestic Households (€bn) Total Deposits Of Non-Banks (€bn)
2,477 2,477 3,885 3,885
3,834
2,391 2,419 3,766
4.9% 3,717
2,331 2,335 3,661
4.1% 6.3% 6.1%
2,223 3,538
4.9% 2.4% 2.4% 3,421
2,119
1.5% 1.8%
1.2% 3.4% 3.5% 1.3% 1.3%
2.8%
0.2%
2017 2018 2019 2020 Q1-20 Q2-20 Q3-20 Q4-20 2017 2018 2019 2020 Q1-20 Q2-20 Q3-20 Q4-20
Deposits Growth(1) 2020 Quarterly Development Deposits Growth(1) 2020 Quarterly Development
Source: Deutsche Bundesbank Banking statistics
(1) YoY growth between 2017 and 2020; QoQ growth in 2020.
OLB / March 2021 121 Highly Fragmented, But Stable With Ongoing Consolidation
Market Shares In Germany By Total Assets Comments
By Individual Banks By Type Of Banks
▪ The German banking market is highly
Building Other
Top 5: 33%
Deutsche Bank
societies 15% fragmented
15%
market share 3% Large
DZ Bank Mortgage
6%
27% ▪ No dominant players
3%
2019 Total Commerzbank 2019 Total
Assets: € 8.7tn 5% Cooperatives Assets: € 8.7tn ▪ Ability to achieve significant local market
Others Hypovereinsbank 11%
67% LBBW
3% Regional share
3% 12%
Savings Foreign ▪ OLB’s strength in Northwest Germany
25% 4% provides a robust base to provide
The Banking System Has Also Been The Subject Of Significant Consolidation
specialist services nationally
Number Of Domestic Banks
-14% ▪ Consolidation of banks in Germany is
continuing
1,775
1,711
1,631
1,583
1,534
2015 2016 2017 2018 2019
Source: Company filings, Deutsche Bundesbank Banking statistics
OLB / March 2021 132 A Well Balanced & Diversified Banking Platform, Underpinned By
Strong Client Relationships And Multi-channel Distribution Capabilities
Retail / SME Offerings Large Corporate & Specialized Offerings
# Customers Large number of individual customers (c.655k) Relatively small number of customers (c.4k)
# Transactions Significant number of single transactions Comparably small number of transactions
Mass-market business: More individual business:
Volume
Relatively small volume per transaction / deal High volume per transaction / deal
Relatively low capital requirements and RWA
Risk Costs Higher capital requirements and RWA for each transaction
for each transaction
High level of standardization, automatization Highly individual and made-to-measure solutions required
Characteristics
and digitalization possible resulting in low level of standardization
Focus on adequate margin and absolute profitability with strong
Guiding Principle Strong focus on efficiency paired with high quality
risk management
OLB / March 2021 143 Complementary Product Set And Expertise Across The Yield Spectrum
Generating Income In An Extended Low Interest Rate Environment
Private Customers Corporates & SME Specialized Lending
› Branch, centers of expertise & online retail › Small-scale business banking in Northwestern › Acquisition Financing: Arranging and structuring
banking in Northwestern Germany Germany of debt financing with focus on LBOs for SMEs
in Germany, Austria and Switzerland
› Digital online proposition nationwide and access › Corporate banking nationwide with selective
to nationwide exclusive distribution network of business in Austria and Switzerland › Commercial Real Estate Financing: Financing for
W&W Group investors and developers
› Football Finance: Primarily transfer financing with
› Private Banking & Wealth Management focus on the top 5 financially strong football leagues › Ship Financing: Selective new business with
proposition with focus in Northwest Germany in Europe well-known clients focussed on small & mid-sized
sea vessels and multi-purpose vessels
Key Metrics 2019A 2020A Key Metrics 2019A 2020A Key Metrics 2019A 2020A
Total Loan Volume (€m) 7,603 7,993 Total Loan Volume (€m) 5,384 5,607 Total Loan Volume (€m) 2,084 2,151
RWA (Credit And OR; €m) 1,944 2,069 RWA (Credit And OR; €m) 4,256 3,959 RWA (Credit And OR; €m) 2,277 2,374
Revenue (€m) 218.1 237.3 Revenue (€m) 124.5 134.1 Revenue (€m) 80.5 91.5
t/o Net Interest Income 66.2% 62.1% t/o Net Interest Income 80.0% 79.9% t/o Net Interest Income 80.4% 86.1%
t/o Net Commission Income 32.6% 35.7% t/o Net Commission Income 14.1% 14.9% t/o Net Commission Income 18.6% 13.3%
Note: Financials presented in accordance with managements internal reporting unless otherwise stated. Follows IFRS principles with certain adjustments made to pro forma the 2018 and 2019 mergers.
OLB / March 2021 154 The Bank Is Continuously Improving Efficiency And Streamlining The
Business Model…
Retail Business Transformation
Launched in 2019 ongoing until 2021 › Enables OLB to streamline and
▪1 Opening dedicated Advisory Center Oldenburg ▪3 Headcount reduction Private customers front enhance the existing sales model
(“BCO”) – live since September 15, 2020, offering office and back-office functions
personal client advisory services and digital channels
▪4 Access to open market platforms
▪2 Branch reduction with increased digital offering
› Delivering enhanced growth through a
differentiated go-to-market strategy
Value Chain Efficiency
› Streamlined branch network and
Ongoing until 2023 digitalization of processes
▪1 Retail and Private Banking – rationalize the value chain 2▪ SME – reengineer and streamline › Establishing complementary sales
▪ “pivot”-reposition advice driven securities business Manufacturing business – reduce complexity
channels through regional branch
3▪
network and open market platforms
▪ modernize cards/mobile payment product offering 4▪ Back-office & staff functions – reduce complexity
▪ capture product and cost synergies in payments 5▪ Non-personnel costs – rationalize office space › Re-structure OLB’s operating base,
transforming the key value chains
▪ reposition and transform service/admin activities
and drive down cost base
IT-Modernization › Deliver a modular IT platform
Ongoing until 2021 enabling OLB to transform the way it
interacts with clients, leverage third-
▪1 Renovate IT and update infrastructure ▪3 Agile application development, deployment party solutions and reduce time-to-
and operation market
▪2 Inject flexibility into processes and organization
OLB / March 2021 164 …With Proof Points Already Visible…
Realization Of Medium Term Ambitions Underway… …As Already Evidenced In Branch Network Optimization…
-40%
2020A Medium-Term Ambition
126
Cost-Income
Ratio(1)
65.6% 11-12% …And FTE Reductions
-4%
1,860
1,777
CET 1 Capital
Ratio 12.2% ~12%
2019ye 2020ye
Note: Financials presented in accordance HGB GAAP.
(1) Excludes restructuring costs.
OLB / March 2021 174 …Resulting In Significant Improvement In Operating Efficiency, Leading
To Profitable Growth
Cost-Income Ratio(1) Comments
-10.5 ppts ▪ Personnel expenses increased by 2.8% CAGR
from FY18 to FY20, principally driven by the
76.1% 74.0% integration of BKB and BHN with OLB in 2018, and
65.6%
the migration and merger of Wüstenrot Bank AG
Pfandbriefbank in 2019
2018A 2019A 2020A ▪ However, these were offset by other efficiency
measures, resulting in a reduction in cost income
ratio
▪ The reduction in headcount has also enabled a
Operating Expenses rationalization of administrative expenses
(€m) Opex As % Of Recievables From Customers Opex As % Of Liabilities To Customers ▪ Closure of branches, and the conversion of a
2.5% 2.4% 2.3% number of sites to self-service locations
2.1% 2.1% 1.9%
287 311 295
16 15 14
107 119 108
164 178 173
2018A 2019A 2020A
Personnel Admin D&A
Note: Financials presented in accordance HGB GAAP.
(1) Excludes restructuring costs.
OLB / March 2021 185 Strong Credit Risk Management Capabilities Resulting In Resilient
Credit Performance Through The Cycle
The Bank Has Taken Diverse Measures To Understand And Reduce The Credit And Liquidity Risk Caused By The COVID-19
Crisis
Comprehensive portfolio and single client impact-analysis
✓ for all segments based on various scenarios to determine
✓ Task Force for SME and Private Clients to support our customers
and grant forbearance measures according to the legal moratorium
individual impact of COVID-19 for each client (where necessary)
✓ At least quarterly updates of the impact analysis based on ✓ Strengthening of the restructuring department to make sure that
latest company and macro-economic updates the potential increasing number of problem loans can be handled
with regard to quantity as well as quality
Focus on customers:
✓ − Regular request of updated liquidity forecasts ✓ Simulations on PD, EL, SLLP/GLLP-models to better understand
− Control over cash outflows by implementation of an the effects and derive adequate forecasts on Risk Costs, RWAs
approval process for RCF-draw downs and NPLs
− Implementation of new system-based monitoring tool
escalate customers with “unusual” drawdown behaviour on
existing credit lines
✓ Integration of all gained insights on the crisis into the Business
Plan Revision 2020 and the Business Plan 2021-23
Usage of state support programs (e.g. KfW) to support
✓ customers and reduce risk positions
OLB / March 2021 195 Strong Credit Risk Management Capabilities Resulting In Resilient Credit
Performance Through The Cycle
OLB Net Profit For The Fiscal Year(1) Comments
(€m) 110 ▪ Sustainable level of profitability over the
historic period
79
▪ OLB’s sound portfolio composition ensures
48
that risk profile stays on acceptable levels
35
28 even in crisis scenarios; OLB has exhibited
18 21
a significantly lower risk profile compared to
the wider German and EU banking systems
2015 2016 2017 2018 2019 2020
Profit After Tax Average ▪ OLB manages the bank on a low loss
principle, even if defaults occur OLB’s
Significantly Lower Risk Profile Compared To The Wider German And EU Banking collateral and collection strategies minimize
Systems losses
P&L provisions as % of total loans(1,2)
7.66% 7.83%
6.74% After Tax Return On Equity
4.67% 4.33%
2.35% 10.4%
1.90% 1.51% 6.9%
1.32%
0.36% 0.35% 0.29% 0.68% 2.0% 2.2% 1.7%
0.05% 0.04% 0.20%
2015 2016 2017 2018 2019 2020 2018A 2019A (3)
2020A
OLB German banks EU OLB German banks
Source: Company information, European Central Bank
Note: Financials presented in accordance with HGB GAAP.
(1) OLB standalone figures prior to the merger with BKB, BHN and WBP; combined figures shown per HGB GAAP reporting for relevant periods.
(2) OLB figures calculated as Risk Provisions For Lending Business divided by Receivables From Customers; 2020A based on net provisions.
(3) European Central Bank data
OLB / March 2021 206 Sound Capital Position With Diverse Base Of Competitively Priced
Funding
Capital Ratios Well Above Regulatory Minimums
Development Of Required Capital (HGB, Regulatory View) Comments
Aggregate Min. Total Capital
▪ The capital ratios of OLB for the historic
14.5%
Capital Ratio 14.1% 14.2% Requirement(1) period have constantly been well above
11.38% Aggregate regulatory requirements
Capital Ratio
▪ The capital position provides a strong
foundation for further growth of the banking
platform
7.84% Common ▪ Leverage ratio stood at 5.2% as of FY20,
11.8% 12.2% Equity Tier 1
Common Equity Tier 1 11.4% Capital Ratio well above regulatory requirements
Capital Ratio
2018A 2019A 2020A
€m
CET 1 Capital 966.3 1,041.6 1,055.9
Total Capital 1,234.0 1,238.3 1,228.7
Total Risk Weighted Assets 8,482.9 8,805.6 8,659.0
Leverage Ratio 5.0% 5.3% 5.2%
Note: Financials presented in accordance with HGB GAAP.
(1) In accordance with the final SREP and Capital targets decision for 2020.
OLB / March 2021 216 Diversified Sources Of Low-cost Funding Fueling Profitable Growth Of
Loan Book
OLB’s Funding Pillars Comments
▪ Overall low funding cost – especially due to
long term relationships to private and
corporate customers
Covered Uncovered ▪ Customer deposits are largely on-demand,
Customer
Institutional Institutional Promotional Banks but customer behaviour exhibits strong
Deposits
Refinancing Refinancing tendency for long-term holding and
stickiness over financial cycles
▪ Low liquidity cost inst. refinancing ▪ Inst. refinancing with market-
▪ Low cost and “sticky” base of ▪ Funding by German promotional
funding from long-term customers ▪ Includes covered bonds dependant liquidity costs
banks (esp. KfW)
▪ The maturity profile of institutional funding is
▪ Includes on demand, time deposits
(Pfandbriefe) and ABS as well as ▪ Unsecured short term banking
▪ Matched assets focus on sustai- well balanced with no significant maturity
open market transactions with liabilities, promissory notes and
and savings accounts nability and societal development peaks
ECB/Bundesbank and repos subordinated debt
▪ €12.3bn ▪ €2.8bn
▪ €3.9 bn ▪ €0.9bn
▪ c.57% of total liabilities
▪ c.18% of total liabilities ▪ c.4% of total liabilities
▪ c.13% of liabilities
Directly matched
▪ OLB may expand its capital market
to assets presence by issuing Pfandbrief (Covered
Cost Of Funding(1) Bond) and senior notes in the future and
thus further enhance strategic funding
0.33%
possibilities
0.18%
▪ Funding costs continued to decrease –
negative interest rates for private customer
0.07% deposits are not common in the German
market
2018A 2019A 2020A
Note: Financials presented in accordance with HGB GAAP.
(1) Net interest expenses divided by interest bearing liabilities (excluding KfW funding, AT1 and tier 2 capital instruments)
OLB / March 2021 227 Highly Experienced Management Team Backed By A Strong Shareholder
Base With A Long-term Focus
Members Of The OLB Leadership Team
Dr. Wolfgang Klein Dr. Rainer Polster Stefan Barth Hilger Koenig Peter Karst
Chairman of the Board of Managing Member of the Board of Managing Member of the Board of Managing Member of the Board of Managing General Manager
Directors Directors Directors Directors
▪ Joined the Board of Managing ▪ Joined OLB in October 2018 ▪ Joined OLB in January 2021 ▪ Joined OLB in January 2000, ▪ Joined OLB in November
Directors of OLB in as a General Manager before as Chief Risk Officer and a responsible for the Corporate 2018 and has served as
September 2018 and has being appointed to the Board Member of the Board of & SME business unit General Manager since
acted as Chairman since of Managing Directors in April Managing Directors January 2020, responsible for
October 2019 2020, acting as Chief ▪ In 2012, he was appointed a Private Customers business
Financial Officer ▪ Previously CRO of BAWAG General Manager and has
▪ Dr Wolfgang Klein has spent Group AG, Austria been a Member of the Board ▪ Previously Head of Marketing
more than 20 years in bank ▪ Dr Rainer Polster spent the of Managing Directors of OLB and products division of
leadership at institutions majority of his career at ▪ Over 15 years in bank since January 2014 BAWAG Group AG, Austria
including Deutsche Postbank Deutsche Bank where he held leadership positions for risk
and BAWAG PSK Bank in positions including Chief management ▪ Previously Head of Human ▪ Over 15 years in bank
Austria Country Officer for Austria, Resources from 2004 to 2012 management leadership
▪ Broad international positions
and Director for Germany, experience ▪ Previously HR manager at
▪ Started his career at Austria, and Switzerland in
McKinsey & Co before joining Commerzbank ▪ Studied business
their Financial Institutions ▪ OLB responsibilities: Credit administration at University of
Dresdner Bank in 1996 Group Risk Management, ▪ Over 25 years experience in Applied Sciences Rhineland-
▪ Studied economics and Restructuring, Risk German banking Palatinate
▪ Studied economics at Passau Controlling
earned a doctorate alongside and Montréal (Canada)
his professional commitments
OLB / March 2021 2303. Historic Financials OLB / March 2021 24
Summary Financials
Overview Of Key Income Statement Metrics
Operating Income & Net Interest Margin(1) Cost-Income Ratio (“CIR”)(2)
(€m) 2.4% 2.2% 2.2% -10.5 ppts
+9.1% CAGR
76.1% 74.0%
450 65.6%
421
378
2018A 2019A 2020A 2018A 2019A 2020A
Cost Of Risk(3) Net Profit For The Fiscal Year & After Tax Return On Equity(4)
€m
2.0% 10.4% 6.9%
Positively impacted by significant 110
Impacted by COVID-19; risk exceptional gain in liquidity reserve
provisions in-line with budget 0.20% (€21m) and other result (€20m) 79
0.05% 0.04% 21
2018A 2019A 2020A 2018A 2019A 2020A
OLB has achieved sustained profitable historic performance through targeted lending and margin growth
Note: Financials presented in accordance with HGB GAAP (3) Calculated as Risk Provisions For Lending Business divided by Receivables From Customers; 2020A
(1) Calculated as Net Interest Income divided by average Receivables From Customers for the year based on net provisions.
(2) Excludes restructuring costs. (4) Calculated as Net Profit / Net Loss For The Fiscal Year divided by Average Equity for the year.
OLB / March 2021 25Summary Financials (Cont.)
Overview Of Key Balance Sheet Metrics
Total Customer Loans(1) Total Funding & Liquidity Coverage Ratio
€bn +5.5% CAGR €bn 172% 159% 143%
18.2 18.9 19.8
15.1 15.5
1.1 1.2
14.0 1.0
5.1 5.6
5.9
11.3 12.7 13.0
2018A 2019A 2020A 2018A 2019A 2020A
(2) (3)
Customer Deposits Wholesale Funding Equity
Total Assets Total Equity(4) & Common Equity Tier 1 Capital Ratio(5)
€bn +6.1% CAGR €m
11.4% 11.8% 12.2%
21.5 1,157
1,129
19.1 19.6
1,019
2018A 2019A 2020A 2018A 2019A 2020A
Conservative historic scaling of the balance sheet whilst maintaining a significant buffer to regulatory capital requirements
Note: Financials presented in accordance with HGB GAAP.
(1) Receivables From Customers. (4) Equity And Fund For General Banking Risks.
(2) Liabilities To Customers (5) Calculated as Common Equity Tier 1 Capital divided by Risk Weighted Assets.
(3) Consists of Liabilities To Banks, Securitized Liabilities, and Subordinated Debt, of which €2.7bn KfW / other Förderbanken. Excludes IHS Retail.
OLB / March 2021 26Overview Of Income
Strong Operating Performance And Sustainable Profit Generation
Key Income Statement Figures (€m)(1) Comments
18-20 ▪ OLB achieved consistent growth of 7.1% CAGR in net
Results 2018A 2019A 2020A
CAGR interest income FY18-20A, driven primarily by the
Interest Income(2) 435.4 453.7 444.6 1.1%
expansion of the loan portfolio despite a challenging
macro banking environment
Interest Expenses (142.2) (136.5) (108.3) (12.7%)
− Significant lending growth resulting from the merger
Net Interest Income 293.3 317.2 336.3 7.1%
of BKB and BHN with OLB in 2018, and the merger
Net Commision Income 84.4 103.6 113.3 15.9% of Wustenrot Bank Pfandbriefbank in 2019
Net Trading Income / Other Income (0.1) 0.0 0.1 - − Targeted yet conservative growth of lending book
Operating Income 377.6 420.8 449.7 9.1% also achieved on an organic basis, with OLB realising
improvement in profitability following increases in
Personnel Expenses (164.0) (177.6) (173.2) 2.8%
new business margins on primary loan products
Other Administrative Expenses (107.1) (119.0) (108.1) 0.5%
▪ Net commission growth of 15.9% FY18-20A CAGR,
Depreciation, Amortization, And Impairment(3) (16.3) (14.8) (13.8) (8.1%) principally resulting from the Wüstenrot Bank AG
Operating Expenses (287.4) (311.3) (295.1) 1.3% Pfandbriefbank migration (~€10m), in addition to growth
in the payment transaction business
Net Other Operating Income And Expenses 2.0 5.0 3.6 34.3%
Risk Provisions For The Lending Business (6.5) (6.8) (30.7) 117.9% ▪ On a net profit / net loss for the fiscal year basis, OLB
achieved growth of 95.5% FY18-20A CAGR to €78.6m,
Gain / (Loss) On Securities In The Liquidity Reserve (4.5) 21.0 8.0 - reflective of the banks favourable business operating
Net Operating Result 81.2 128.8 135.5 29.1% model and 2018 / 2019 mergers
Other Result (0.1) 20.2 (0.0) - ▪ Profitability positively impacted by ongoing efficiency
Extraordinary Result (38.5) 2.0 (20.6) (26.8%) measures following integration of recent acquisitions,
including headcount reductions and branch closures
Profit Before Tax 42.6 151.0 114.9 64.1%
Net Profit / Net Loss For The Fiscal Year 20.6 109.8 78.6 95.5%
After Tax Return On Equity(4) 2.0% 10.4% 6.9% +4.9ppts
Note: Financials presented in accordance with HGB GAAP. The income statement for 2020 shows net retained profits of €78.6m. The Board of Managing Directors and the Supervisory Board propose (3) Depreciation, Amortization, And Impairment Of Intangible And Tangible Fixed Assets.
that a total amount of €48.6m be allocated to the other revenue reserves and to carry forward the remaining amount of €30.0m to new account. (4) Calculated as Net Profit divided by Net Loss For The Fiscal Year / average Equity for the year..
(1) Abbreviated Income Statement showing only the main components i.e. certain line items are grouped versus the audited statements.
(2) Includes Interest Income, Income From profit Pooling, Profit Transfer Or Partial Profit Transfer Agreements, and Profit Earned For The Account Of Others From The Transferring Legal Entity.
OLB / March 2021 27Overview Of Costs
Costs Have Been Efficiently Managed Since The Recent Acquisitions, With Ongoing Programmes In Place To Improve Profits
Key Cost Line Items (€m) Comments
18-20 ▪ Personnel expenses increased by 2.8% CAGR FY18-20A, principally driven by
Results 2018A 2019A 2020A the combination of staff following the mergers, with efficiency measures largely
CAGR
offsetting costs and resulting in a reduction in cost-income ratio
Personnel Expenses 164.0 177.6 173.2 2.8%
− OLB has taken steps to manage costs, enacting headcount reductions since
Salaries / Wages 132.1 142.8 143.4 4.2%
the mergers, achieving a reduction in personnel costs as a percentage of
operating income
Social Security Expenses 20.6 22.0 21.9 3.0%
▪ The reduction in headcount has also enabled a rationalisation of administrative
expenses
Pension And Other Benefits 11.3 12.9 7.9 (16.0%)
▪ Closure of branches, and the conversion of a number of sites to self-service
Administrative Expenses 107.1 119.0 108.1 0.5% locations, has enabled further cost-savings
Building Costs 15.5 15.2 15.5 0.1% ▪ Administrative expenses include a number of one-off costs associated with the
headcount reductions and integrations of the businesses
Costs Of IT 24.1 24.7 29.6 10.8%
Information Costs & Supplies 8.5 10.9 9.1 3.1%
Split Of Operating Expenses (€m; 2020A)
Consulting & Legal Costs 20.0 24.1 11.5 (24.3%)
5%
Costs Of Outsourced Services(2) 5.8 10.8 7.8 15.9%
Deposit Guarantee Costs 11.5 10.3 12.5 4.4%
36% Personnel
Other Office Expenses 9.6 10.8 10.5 4.6%
Admin
59%
Other(3) 12.1 12.1 11.7 12.2% Depreciation
Depreciation 16.3 14.8 13.8 (8.1%)
Note: Financials presented in accordance with HGB GAAP.
(1) Note the acquisitions and migration introduced additional cost in to the OLB group; on a normalized basis the cost saving measures had a more significant impact. Wustenrot Bank Pfandbriefbank alone brought ~€10m of additional costs.
(2) Includes marketing spends, communication costs, and digital banking costs.
(3) Includes other third-party services.
OLB / March 2021 28Development Of Risk Provisioning
Prudent Risk Provisioning Undertaken In Light Of The COVID-19 Pandemic
Risk Provisioning For The Lending Business (€m) Comments
▪ Continuous and intensive analysis of the economic
effects of the COVID-19 pandemic
50.7 ▪ No noticeable increase in the number of loan deferrals
or significantly increased value adjustments (or
impairments)
Management buffer − Total increase in risk provisioning to €50.7m in 2020
(20) ▪ The release of reserves (or provisions) from the fund for
23.7
general banking risks in accordance with Section 340g
of the German Commercial Code (HGB) of €20m has a
30.7 compensatory effect on the total risk provisioning
undertaken by OLB
▪ Risk provisions as of December 31, 2020: €30.7m
(previous year €6.8m)
27.0
6.8
2019A 2020A (Gross Provision) Compensating Release (Sec. 340g 2020A (Net Provision)
HGB)
Note: Financials presented in accordance with HGB GAAP.
OLB / March 2021 29One-Off Impacts From Financial Investments And Extraordinary Result
Result From Financial Investments(1) (€m) Extraordinary Result (€m)
41.3 2.0
(20.6)
2019A 2020A
8.0
2019A 2020A
Note: Financials presented in accordance with HGB GAAP.
(1) Consists of Gain / (Loss) On Securities In The Liquidity Reserve and Other Result.
OLB / March 2021 30Robust Balance Sheet Structure
Liquid Low Cost Funding Based On Strong Customer Market Position
Balance Sheet Overview(1) (2020A) Comments
(€bn)
▪ High proportion of granular, small-scale deposits from
21.5 21.5
private customers
− The stable and sticky deposit base means that OLB
is not overly reliant on capital markets
▪ OLB has also strengthed its longer-term refinancing
through the issuance of Pfandbriefe (i.e. Covered bonds)
which has expanded the funding mix
12.8 13.0 ▪ OLB‘s investment portfolio has been constructed with a
strong focus on the bank‘s liquidity reserve position. The
portfolio is almost exclusively comprised of public sector
bonds with excellent ratings
▪ Liabilities to banks are driven by opportunistic TLTRO III
utilization (€1.8bn)
Receivables From Customers Liabilities To Customers
(Own Funds) ▪ OLB has a large cash reserve position
Refinancing Development Programs
Receivables From Customers
(Development Program) 2.8 2.8 Securitized Liabilities
Securities(2) Liabilities To Banks (excl. Refinancing
0.3
Development Programs) Loan-To-Deposit (“L / D”) Ratio(1)
Cash Reserve 2.9
2.5 Other Items(3) L/D
Receivables From Banks 99% 98% 98%
ratio
Subordinated Debt
Other Items(3) 1.7 1.6 12.5 12.7 12.8 13.0
Equity And Reserves Per Sec. 11.3 11.3
0.8 0.2
0.6 1.2 340g HGB
2018A 2019A 2020A
Total Assets Total Equity And Liabilities
Recievables From Customers (€bn) Liabilities To Customers (€bn)
Note: Financials presented in accordance with HGB GAAP.
(1) Accounts for Development Program receivables and refinancing.
(2) Includes Bonds And Other Fixed Income Securities, Shares And Other Non-Fixed Income Securities, and Trading Portfolio
(3) Includes all other balance sheet assets or liabilities, respectively.
OLB / March 2021 31Funding Overview – Maturity And Liquidity Profile
Well Balanced Funding Sources
Comments LCR NSFR
▪ The maturity profile of the funding base is well balanced with regard to wholesale
funding sources, with no significant maturity peaks 172%
109%
159% 107% 106%
▪ Customer deposits are largely on-demand, but customer behavior exhibits strong 143%
tendency for long-term holding and stickiness over financial cycles
− Customer deposits have increased significantly over the historic period despite
unfavorable deposit conditions
▪ LCR and NSFR ratios were at a good level in 2020. OLB has maneuvered LCR
closer to ~130% by not prolonging relatively expensive institutional term deposits
2018A 2019A 2020A 2018A 2019A 2020A
Funding Maturity Profile (2020A)
55.6%
2.4% 1.7% 0.3%
42.5%
31.5%
20.0%
14.6% 16.9%
11.4%
7.5%
95.6%
3M - 1Y >1Y - 5Y >5Y
3m-1Y >1Y-5Y >5Y Due To Banks Promissory Notes; Covered Bonds
Note: Financials presented in accordance with HGB GAAP.
OLB / March 2021 32Funding Structure Optimized By Pfandbrief Issuance
Low Cost, Sustainable Funding Structure
Liability Structure By Instruments Comments
(€bn)
▪ Starting 2019, WBP is included, adding around €0.9bn of
21.5 customer deposits
▪ OLB’s long standing customer base provides a strong and
19.6 2.4
19.1 sticky base of retail deposits. Customer deposits have
1.9 0.6 remained OLB’s most important liquidity source
0.2
2.8
0.7
▪ OLB opportunistically used ECB’s TLTRO III program, which
0.2 2.8 led to the substantial increase of liabilities to banks and
0.9 lower funding costs
0.3 2.8 0.1 Liabilites To Banks (1)
1.6 Promissory Notes ▪ OLB’s funding base has been strategically diversified with
2.8 0.1
0.6 Subordinated Debt
the issuance of mortgage covered bonds (Pfandbriefe),
reducing funding costs
0.1 Development Banks
0.8
Securitized Liabilities (1) ▪ Continued close collaboration with KfW and other
promotional banks (matched asset position)
Other Liabilities
Customer Deposits (2)
Covered Bonds
12.3
11.9
Equity
10.5
0.3 0.4
1.0 1.1 1.2
2018A 2019A 2020A
Note: Financials presented in accordance with HGB GAAP.
(1) Includes portion of the covered bonds outstanding.
(2) Adjusted for refinancing under Development Banks and portion of the outstanding covered bonds outstanding.
OLB / March 2021 3304. Appendix OLB / March 2021 34
Key Ratios
Strong Ratios, Consistently Maintained, Demonstrate Robust Management Of Balance Sheet Risk
Key Ratios (% Unless Otherwise Specified) Comments
18-20 ▪ The proportion of NPLs has decreased over the historic
Ratio 2018A 2019A 2020A
Growth period and the coverage ratio remains strong
Risk Management ▪ Consistently strong balance sheet from the perspectives
of asset quality, liquidity, funding and capital
NPL Ratio(1) 2.9% 2.5% 2.7% -0.2ppts − The capital ratios have consistently been well above
BaFin requirements as laid out in the SREP-Process
NPL Coverage Ratio(2) 96.8% 85.8% 74.8% -22.0ppts
− Capital position provides OLB with a strong platform
Capital Metrics for growth
− Proposed transaction further solidifies OLB’s strong
Total Risk Weighted Assets (€m) 8,482.9 8,805.6 8,659.0 1.0%
capital position through a CET 1 capital injection to
the OLB regulated group
Common Equity Tier 1 Capital Ratio 11.4% 11.8% 12.2% +0.8ppts
▪ OLB has maintained high quality funding, focused on the
Total Capital Ratio 14.5% 14.1% 14.2% -0.4ppts strong loyal customers’ deposit base
− Customer deposits are largely on-demand, but have
Balance Sheet Metrics
been shown to be long-term and reliable
Loan-To-Deposit Ratio(3) 99.5% 97.8% 98.2% -1.1ppts ▪ Strong leverage ratios and very good risk-based capital
adequacy
Leverage Ratio 5.0% 5.3% 5.1% -
− Regulatory Common Equity Tier 1 capital is mainly
Cost Of Funding 0.33% 0.18% 0.07% -0.3ppts comprised of equity capital on the balance sheet
Fee Income 22.3% 24.6% 25.2% +2.9ppts
Return On Assets(4) 0.1% 0.6% 0.4% +0.3ppts
Note: Financials presented in accordance with HGB GAAP.
(1) Proportion of non-performing customer receivables. (4) Removes impact of TLTRO II/III funding in 2020.
(2) Taking collateral and postponed interest into account.
(3) Accounts for Development Program receivables and refinancing.
OLB / March 2021 35Glossary Of Key Terms
ABS Asset-Backed Security NPL Coverage Ratio Loan loss provisions divided by non-performing loans
Gross non-performing loans as % of Total Gross Loans (NPL defined as a loan that is past due
AQF Acquisition Financing NPL Ratio
a certain amount of time - usually 90 days)
Net Stable Funding Ratio; requires banks to maintain a stable funding profile in relation to the
AUM Assets Under Management NSFR composition and duration of their assets and off-balance sheet activities in order to limit any
overreliance on short-term wholesale funding and erosion of liquidity
Bundesanstalt für Finanzdienstleistungsaufsicht or Federal Financial Supervisory Authority;
BaFin OR Operational Risk
financial regulatory authority for Germany
BCO Oldenburg Advisory Center PD Probability of default
BHN Bankhaus Neelmeyer AG QoQ Quarter over quarter
Risk weighted assets, a measure of a bank’s assets and off balance sheet exposures, weighted
BKB Bremer Kreditbank AG RWA
according to risk, which is used to determine a bank’s regulatory capital requirements
Common Equity Tier 1 Capital, the primary measure of a bank’s financial strength from a
CET 1 Capital SL Specialized lending
regulatory perspective. It is composed mainly of equity capital, net of regulatory deductions
Specific and General Loan Loss Provisions; balance sheet provisions for anticipated losses on
issued loans. Specific provisions arise when a certain counterparty enters repayment difficulties
DACH Geographic region; comprises the countries Austria, Germany and Switzerland SLLP / GLLP
while general provisions arise in the normal course of lending and are based on estimates of
historical defaults on various types of risks
ECB The European Central Bank SME Small and Medium-Sized Enterprises
Fee Income The ratio of Net Commission Income to Operating Income SPV Special Purpose Vehicle
Supervisory Review and Evaluation Process; annual supervisory examination of banks’ risks and
GDP Gross Domestic Product SREP determination of individual capital requirements and guidance, in addition to legally required
minimums
HGB Handelsgesetzbuch A measure of a bank’s financial strength from a regulatory perspective. It consists of CET 1
Tier 1 Capital
GAAP German Generally Accepted Accounting Practices Capital and Additional Tier 1 capital
Targeted longer-term refinancing operations; Eurosystem operations that provide financing to
LBO Leveraged Buy-Out TLTRO banks by offering them long-term funding at attractive rates, preserving favourable borrowing
conditions
Liquidity Coverage Ratio; requires a bank to hold enough High Quality Liquid Assets (‘HQLA’,
Includes CET 1 Capital as well as other hybrid and unsecured financing instruments such as
LCR cash and cash-like assets that can readily be sold or converted to cash) in order to survive a Total Capital
Additional Tier 1 Capital and Tier 2 Capital notes
significant stress scenario lasting for 30 days
Leverage Ratio CET 1 Capital as a % of total assets WBP Wüstenrot Bank AG Pfandbriefbank
NCI Net commission income YoY Year over year
NII Net interest income
OLB / March 2021 36Disclaimer All details and information contained in this presentation have been carefully researched and checked by Oldenburgische Landesbank AG. However, we assume no liability for the accuracy, completeness and topicality. In particular, the information in this document does not constitute an offer, recommendation, investment research or investment advice. For additional information on all products mentioned in this presentation, please contact your advisor. This document is protected by copyright. You may use it for your own information, but you may not pass it on to third parties or make public use of it in any form. OLB / March 2021 37
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