Strong capital ratios despite a challenging environment
Sustainable core business earnings based on good market positioning
Significant deposit growth over the course of the year
December 2016
HYPO NOE Investor Presentation
2
Dear Ladies and Gentlemen,
Welcome to the world of HYPO NOE Group - the financial centre of Lower Austria!
HYPO NOE Group is a proven source for tailor made Public Finance solutions in
Austria and the Danube region as well as a reliable local bank partner to our
customers in Lower Austria and Vienna.
Backed by the ownership of the State of Lower Austria, we see our responsibility of
living up to our corporate values - safety, excellence and trustworthy partnership - as
our top priority. These strengths and the strongly rooted market position of HYPO NOE
Group as an Austrian commercial bank with a clear strategic focus are underscored by
our credit ratings of 'A/A-1' by Standard Poor´s.
Our clients deserve a reliable partner – with us you can enjoy the opportunity of
profiting from more than 125 years of banking experience and expertise.
We are looking forward to supporting you with our service at its best!
Dr. Peter Harold
Chairman of the Management Board
Sustainable and risk sensitive business model
3
HYPO NOE Group: more than 125 years of track record and expertise
Regional market leader in Public Finance
Local banking partner for retail customers in Lower Austria and Vienna
Fully integrated service chain in the real estate business
Focused on Austria, Germany and on a selective basis in EU-countries in the
neighbouring Danube region
Strong ratings
Issuer Rating: 'A/A-1' from Standard & Poor’s with stable outlook
Public Sector Covered Bonds: 'Aa1' from Moody’s
Mortgage Covered Bonds: 'Aa1' from Moody’s
Sustainability: 'C' from oekom research with status 'Prime'
Committed and reliable shareholder: State of Lower Austria owns 100 %
A leading issuer of Pfandbriefe in Austria
HYPO NOE Group at a glance
4
Page
Economic Update – Core Market 5
Group Structure 6
Ratings 7
Business Strategy 10
Key Facts and Ratios 15
Capitalization 16
Loan Book 17
Securities Portfolio 18
Funding Strategy 19
Contacts 30
Annex
Balance Sheet, Income Statement 32
Note: Liabilities guaranteed by the State of Lower Austria 36
Note: HETA 37
Content
5 1 EIU, GDP per capita at purchase price parity
Austria
Positive GDP development
2016e + 1.3 % (EU19: 1.6 %)
2017f + 1.0 % (EU19: 1.3 %)
GDP per capita1 above average
2016e EUR 45,138 (EU19: EUR 37,621)
2017f EUR 46,060 (EU19: EUR 38,777)
One of the lowest unemployment rates within the EU
2016e 6.2 % (EU19: 9.9 %)
2017f 6.1 % (EU19: 9.4 %)
Public debt below EU average
2016e 86.4 % (EU19: 91.8%)
2017f 84.4 % (EU19: 90.7%)
Level of corporate and household indebtedness
substantially below Euro-zone average
Attractive yield spreads relative to Germany
No bubble in the housing market
Lower Austria / Vienna
40 % of Austria‘s population live and work in
Lower Austria and Vienna
Region with highest population growth potential
2015-2075
41 % of Austrian GDP is generated in Lower Austria and
Vienna
Highest gross income from employment
Lower Austria (# 1) EUR 33,118
Vienna (# 3) EUR 31,330
Highest purchase power per inhabitant
Lower Austria (# 1) EUR 21,048
Vienna (# 3) EUR 20,870
Fiscal equalization scheme secures strong and prudent
framework for investors
Privileged access to international financial markets
through Federal Financing Agency (ÖBFA)
Core Market: Well Positioned and Competitive Economy (November 2016)
6
Lower Austria
Vienna
100 % ownership by the State of Lower Austria
Founded in 1888 as „Landes-Hypothekenanstalt“
Partial privatization in 1996
Share buy back in 2007
HYPO NOE Group serves as preferred service
provider for the State of Lower Austria
Administrator of subsidized private housing loans
Main bank of the State of Lower Austria
State of
Lower Austria
100 %
100 %
State of Lower Austria: Committed and Stable Shareholder
7
Type of Rating Standard & Poor’s Moody’s
Issuer Credit Rating 'A/A-1' (stable) -
Public Sector Covered Bond - 'Aa1'
Mortgage Covered Bond - 'Aa1'
State of Lower Austria Issuer Credit Rating 'AA' (stable)1 'Aa1' (stable)
Republic of Austria Issuer Credit Rating 'AA+' (stable) 'Aa1' (stable)
Issuer rating 'A/A-1' confirmed by Standard & Poor’s in August 2016
Strong capital position, GRE status, strong link to and important role for the State of Lower Austria as reliable owner
Public Sector Covered Bonds and Mortgage Covered Bonds both rated 'Aa1' by Moody’s – confirmed in October 2016
Credit strength of the issuer, credit quality of the assets, strength of the Austrian legal framework and OC level
On October 14th, 2016 Moody's Investors Service confirmed the 'Aa1' ratings for both mortgage covered bonds and public sector covered bonds issued by HYPO NOE
Gruppe Bank AG. Following the announcement by Kärntner Ausgleichszahlungs-Fonds ("KAF") on October 10th, 2016 that the required two-third acceptance rate for its tender
offer for Heta Asset Resolution AG's ("HETA") debt obligations was comfortably met (acceptance overall was 98.71%, of which 99.55% for senior debt and 89.42% for
subordinated debt), the rating agency has concluded the various rating reviews-of-Austrian-regional-mortgage-banks. On October 14th, 2016 the over-collateralisation can be
displayed as follows:
HYPO NOE Group’s public sector covered bonds have an over-collateralisation (OC) of 51.8% with a minimum OC level of 20.5%, of which 0% is on a "committed" basis.
HYPO NOE Group’s mortgage covered bonds have an over-collateralisation (OC) of 63.9% with a minimum OC level of 12.0%, of which 0% is on a "committed" basis.
In August 2016 Moody's upgraded the outlook for the Austrian banking system from negative to stable.
1 Unsolicited Rating
Solid Ratings
8
Sustainability ratings are an important evaluation with regards to corporate social responsibility performance and as such for a
holistic and future-orientated corporate governance. Therefore, sustainability ratings become an increasingly important aspect
of socially responsible investment decisions.
The corporate social responsibility performance of HYPO NOE Group is currently assessed by the sustainability rating agencies
oekom research, imug and rfu.
As part of a successful sustainability programme HYPO NOE Group was in 2015 awarded
for the first time a 'C' rating with the status of 'Prime' .
'Prime' is awarded for an above-average commitment in the areas of environmental and
social responsibility.
HYPO NOE Group was rated in 2016 by the Austrian rating agency rfu and awarded with
the status of "rfu qualified" (rating result: ba ). rfu is an Austrian company specialising in
sustainable investment and in particular sustainability analysis .
The best performing companies are awared with the status "rfu qualified“ and added to
the rfu sustainable investment universe.
Sustainability Ratings (oekom, rfu)
9
HYPO NOE Group is among the top 3 of all rated issuers of Public Pfandbriefe ( Public Sector
Covered Bonds) .
HYPO NOE Group is the best of all rated issuers of Public Pfandbriefe in the savings bank
sector .1
1 As an issuer HYPO NOE is assigned to the savings bank sector (incl. Landesbanks and mortgage banks).
HYPO NOE Group is in the top 10 percent of all rated issuers of mortgage bonds (Mortgage
Covered Bonds ).
HYPO NOE Group is the second best of all rated issuers in the savings bank sector .1
HYPO NOE Group is among the top 15 of all rated financial institutions (excluding development
banks).
HYPO NOE Group is the second best of all rated issuers in the savings bank sector .1
Sustainability Ratings (imug)
10
Public Finance
Financing and leasing solutions for the public sector
Corporate & Structured Finance
Corporate and structured finance solutions
Project and infrastructure finance
Local SMEs
Church Bodies, Interest Groups & Agriculture
Financing solutions
Ethical investments
Property & facility management
Real Estate Finance
Financing of commercial projects and housing developers
Real Estate Services
Project development and management
Property management
Facility management
Retail Customers
Experts on mortgages and housing for private customers
and special services for professionals
Public Finance
Corporate & Structured Finance
Religious Communities,
Interest Groups &
Agriculture
Real Estate Finance
Real Estate Services
Retail Customers
Competences and Experience drive Business Focus
11
32%
16% 28%
24%
HYPO NOE Group – Total Revenues2
Public Finance
Corporate and Structured Finance
Real Estate Finance
Retail Customers
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015 2014 2013 2012
HYPO NOE Group – Total Assets1
Retail Customers
Real Estate Finance
Corporate and Structured Finance
Public Finance
Business position
Partner of local and regional authorities, public agencies and
infrastructure companies
Public construction projects including leasing solutions and
PPP (Public-private-partnership)
Focus on Lower Austria and Vienna, active in selected
countries of Danube region
Long-standing cooperation with EIB, KfW, EBRD
Recent developments
Key revenue generator
Reference project Mistelbach-Gänserndorf State Hospital:
design-build general contractor solution that brought the
project in on budget and on schedule
Strategy
Remaining core business of HYPO NOE Gruppe
Expanding market share in Austria
Syndications
1 Pro-forma analytical breakdown over all IFRS segments 2 Fee income + interest income
Public Finance
12
Business position
Corporate and structured corporate finance solutions for the mid-cap and large corporate segments
Regional focus Austria, Germany and defined markets of the Danube region
International business focus on infrastructure and corporates of strategic relevance.
Specialized team for target group religious communities, interest groups and agriculture
Recent developments
Intense competition and subdued credit demand
Focus on SME business in core markets
Financing of the renovation of sacral buildings
Selective financing of renewable energy projects
Strategy
Structured corporate lending will remain a high priority
Drive Danube strategy forward by partnering Austrian and local businesses in the region
Build up a palette of ethical investment products
1 SME business (33% of corporate portfolio) is part of HYPO NOE Landesbank
Corporate & Structured Finance1
32%
16%
28%
24%
HYPO NOE Group – Total Revenues3
Public Finance
Corporate and Structured Finance
Real Estate Finance
Retail Customers
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015 2014 2013 2012
HYPO NOE Group – Total Assets2
Retail Customers
Real Estate Finance
Corporate and Structured Finance
Public Finance
2 Pro-forma analytical breakdown over all IFRS segments 3 Fee income + interest income
13
Business position
Financing solutions for the asset classes:
office, logistics, warehouse and residential property, shopping
centers, retail parks, hotels, rental apartment
properties/portfolios
Active in Austria, Germany and Danube region
Promoted housing developers (Wohnbaugenossenschaften) –
low risk business
Recent developments
Rising demand across all real estate categories due to low
interest rates
A number of early repayments, mainly as a result of early
refinancing or property disposals by customers
Strategy
Growth in Austria and Germany
Close watch on regional real estate trends
in Danube region
Maintaining strong relationships with
promoted housing developers in Austria
1 Promoted housing business (45% of real estate portfolio) is part of HYPO NOE Landesbank
Real Estate Finance and Promoted Housing1
32%
16% 28%
24%
HYPO NOE Group – Total Revenues3
Public Finance
Corporate and Structured Finance
Real Estate Finance
Retail Customers
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015 2014 2013 2012
HYPO NOE Group – Total Assets2
Retail Customers
Real Estate Finance
Corporate and Structured Finance
Public Finance
2 Pro-forma analytical breakdown over all IFRS segments 3 Fee income + interest income
14
Business position
Universal bank services for 70,000 customers
Branches in Lower Austria and Vienna
Strategic focus on finance & housing, saving & investment and
accounts & cards
Specialized services for professionals like doctors, pharmacists or
lawyers
Recent developments
Increases of retail deposits
Customer-focused efforts led to significant cut in the number of
foreign currency loans
Improved reachability via service centers
Roll out of user friendly homepage including new mobile services
Strategy
Focus on growth of the customer base and retail deposits
Repositioning with focus on regional identity
Retail Customers and Professionals
32%
16% 28%
24%
HYPO NOE Group – Total Revenues2
Public Finance
Corporate and Structured Finance
Real Estate Finance
Retail Customers
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015 2014 2013 2012
HYPO NOE Group – Total Assets1
Retail Customers
Real Estate Finance
Corporate and Structured Finance
Public Finance
1 Pro-forma analytical breakdown over all IFRS segments 2 Fee income + interest income
15
Key Facts (EUR ´000) 09/20166 06/2016 2015 2014 2013
Total assets 16,264,862 16,248,359 15,895,645 15,926,960 14,209,746
Loans and advances to customers 11,062,769 10,940,802 11,557,287 11,194,066 10,590,574
Deposits from customers 1 4,181,659 4,170,940 3,260,856 2,305,056 2,149,698
Financial assets 2,217,319 2,173,887 2,108,456 2,249,653 1,805,667
Net interest income 93,145 53,328 130,840 129,909 2 122,052 2
Net fee and commission income 10,282 7,044 13,850 13,979 13,294
Profit (+)/ Loss (-) before tax 38,191 17,224 11,659 -39,810 75,021
Profit (+)/ Loss (-) after tax 28,634 13,074 6,404 -30,988 53,695
Key Ratios 09/20166 2015
Return on equity before tax 8.5 % 2.0 %
Return on equity before tax (operating) 4 12.5 % 5.7 %
Cost income ratio 68.6 %3 92.5 %
Cost income ratio (operating) 5 55.9 % 77.0 %
Tier 1 Capital Ratio (CRR) 13.44 % 13.45 %
Equity Ratio (total, CRR) 14.39 % 15.16 %
Levies in respect of public authorities:
Financial stability contribution (“bank tax“)
Q1-Q3/2016: EUR 11.2 mn (2015: EUR 14.7 mn)
Deposit insurance contribution
and resolution fund
Q1-Q3/2016: EUR 8.1 mn (2015: EUR 6.5 mn)
Notes on major one-off effects :
2014-H1/16: Cumulated write-down (HETA): EUR 73.3 mn including impairment
hedge adjustment (29.85 % of face value EUR 225 mn)
2013: Reimbursement of penalty interests by FMA from 2010
based on Austrian Banking Act (EUR 58 mn)
1 including promissory notes placed with customers
2 adjusted net gains & losses on investments accounted for using the equity method disclosed in a separate line
3 as per Sept. 30th 2016 total contributions to the Deposit insurance and resolution fund are included, accrued CIR would be at 67.9 %
4 ROE before tax excl. financial stability contribution, contributions to resolution and deposit insurance funds, and regulatory costs/ave.
equity adjusted for financial stability contribution, contributions to resolution and deposit insurance funds, and regulatory costs
5 Cost/income ratio excl. financial stability contribution, contributions to resolution and deposit insurance funds, and regulatory costs
6 acc. unaudited management accounts of HYPO NOE Gruppe Bank AG (of 30.09.2016)
Key Facts and Ratios (September 2016)
16
18.79%
16.31%
17.89%
14.85% 15.16% 15.12%
13.25%12.33%
14.71%
12.26%13.45% 13.88%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
2011 2012 2013 Basel III 2014 2015 06/2016
Equity Ratio Tier 1 Capital Ratio Basel III Requirement
Tier 1 Capital Ratio 13.88 %
LCR > 100 %
Leverage Ratio 3.45 %
NSFR (indicative) between 96 % (Basel 2010)
and 105 % (Basel 2014)
Equity Ratios phased-in vs. fully-loaded
(CRR/CRD IV) per 30.06.2016:
15.16% 15.70%
phased-in fully-loaded
Tier 1 Capital Ratio Equity Ratio (total)
15.52 %
13.88 % 14.29 %
Capital base (EUR ´000) 06/2016 2015
Total eligible core capital 585,909 597,675
Capital requirement (CRR/CRD IV) 309,940 315,497
Surplus capital 275,696 282,178
Basel III (CRR/CRD IV) Basel II (BWG) 15.12 %
Strong Capitalisation (June 2016)
Difference between phased-in and fully
loaded CET Ratios due to 100% eligibility of
AFS-reserve
Regulatory required core and total capital
ratio of 4.5 % and 8.0 % again considerably
exceeded
17
Breakdown of loans and advances to customer
(EUR ´000) 06/2016 NPL
Public sector customers 5,010,825 2.15 %
Business customers 1,872,927 9.78 %1
Housing associations 1,541,736 0.01 %
Retail customers 2,456,253 2.45 %
Professionals 59,061 5.56 %
Total 10,940,802 3.24 %
Waterfall of risk provisions
01.01.-30.06.2016
1 4.46 % excl. HETA claims deriving from Pfandbriefbank
Loan Book (June 2016)
88%
7% 4%
<1%
Breakdown by country
Austria EU & CH Germany Others
89%
11% <1%
Breakdown by currency
EUR CHF GBP
Industries
Leasing / Insurance companies 66 %
Retail 19 %
Corporates 10 %
States / Municipalities 5 %
Details on CHF loan portfolio
Internal Rating
1A-2E 78 %
3A-4E 21 %
5A-5E 1 %
18
By sector
Banks 729,452,000 39 %
Sovereigns 794,105,010 43 %
Public sector entities 55,000,000 3 %
Corporates 172,510,049 9 %
Sub-sovereings and municipalities 83,000,000 4 %
Supranational banks 19,000,000 1%
Insurance companies 4,000,000 < 1 %
Total 1,857,067,060 100 %
1 Based on nominal values (30.06.2016)
2 Including Heta Asset Resolution AG bonds at nominal value of EUR 145,71 mln (post impairment)
Regional distribution
TOP 5 sovereign exposures in Austria, France, Poland,
UK and Belgium: > 60 %
100 % EUR denominated
Rest of portfolio well diversified within 20 countries
Average rating of the portfolio: 'A1‚
90 % in the investment grade range
By rating
Aaa 415,472,549 22 %
Aa1 362,655,000 20 %
Aa2 95,050,000 5 %
Aa3 - -
A1 125,500,000 7 %
A2 300,100,000 16 %
A3 25,500,000 1 %
Baa1 284,000,000 15 %
Baa2 29,500,010 2 %
Baa3 31,802,000 2 %
< Baa32 187,487,500 10 %
Total 1,857,067,060 100%
Securities Portfolio1 (June 2016)
19
Money Markets and Debt Capital Markets Funding
(as of June 2016, EUR ’000)
Covered bonds 4,245,223 29 %
Senior unsecured bonds 3,722,564 26 %
Subordinated debt 204,557 1 %
Deposits from customers1 4,170,940 29 %
Deposits from banks 1,580,504 11 %
Promissory notes placed with banks 542,000 4 %
Repo / GC-Pooling 0 0 %
Total 14,465,788 100 %
1 including promissory notes placed with customers in the amount of EUR 682 mn
Diversified Funding Base Regular use of all available funding instruments
Solid track record as top tier Pfandbrief issuer
Frequent issuer of senior unsecured debt and
promissory notes
“tailor-made” private placements for institutional clients
HYPO NOE Landesbank generates retail deposits
through their branch network in Lower Austria and
Vienna
Highlights 2016
CHF 100 mn, senior unsecured benchmark , 7 years, ms +55 bps
EUR 100 mn public sector covered bond private placement 30Y NC 8Y
Significant increase in customer deposits (currently ~ EUR 1,45 bn)
Increased repurchase of own issues with final maturity 2017
Outlook 2017
Funding volume of around EUR 1,150 mn
Focus on senior unsecured and covered bond benchmark (public sector)
Continous geographical expansion of investor base
Funding Strategy (June 2016)
20
Public Sector Pfandbrief
Volume of outstanding bonds EUR 2,963 mln
Cover pool EUR 4,338 mln
Rating (Moody’s) 'Aa1'
Effective Overcollateralisation 20.5 %
Overcollateralisation (PV)1 51.8 %
Bloomberg HYNOE <Corp>
Tenor: 5 – 30 years
HYPO NOE Group among leading Austrian issuers of public sector Pfandbriefe
1 PV total cover pool / PV of total outstanding bonds (%)
Outstanding HYPO NOE Pfandbrief benchmark issues
EUR 500 mln 1.625% Pfandbrief 2012-19 due September 2019 XS0829215838
EUR 500 mln 1.75% Pfandbrief 2013-20 due October 2020 XS0981808933
EUR 500 mln 3.00% Pfandbrief 2012-22 due May 2022 XS0780267406
HYPO NOE Public Sector Covered Bond (September 2016)
21
Types of Debtors and Guarantors (EUR mln)
Guaranteed by federal states 2,173 51 %
Federal states 1,512 35 %
Municipalities 264 6 %
Guaranteed by municipalities 228 5 %
States 86 2 %
Guaranteed by states 55 1 %
Total 4,318 100 %
Loans vs. Bonds (EUR mln)
Loans 4,318 100 %
Bonds 0 0 %
Total 4,318 100%
Cover Pool by Geography (EUR mln)
Austria 4,265 98.8%
Slovakia 20 0.6%
Poland 20 0.5%
Czech Republik 13 0.2%
Total 4,318 100 %
Average Size Cover Asset
EUR 10 mln per debtor
EUR 3.7 mln per loan 51%
35%
6%
5% 2% 1%
Guaranteed by Federal States
Federal States
Municipalities
Guaranteed by Municipalities
States
Guaranteed by States
by Rating (EUR mln)
AAA 3,502 81 %
AA 572 13 %
A 197 5 %
< A 47 1 %
Total 4,318 100 %
HYPO NOE Public Sector Covered Bond (June 2016)
22
Research center for cancer treatment
Client: EBG MedAustron
Facility: EIB-Loan
Amount: 100 mln Euro
Role: Arranger
Location: Wiener Neustadt, Lower Austria
Boat Terminal & World Heritage Centre
Client: Kremser Immobiliengesellschaft (KIG)
Facility: Loan
Amount: 2 mln Euro
Role: Lender & Project Manager
Location: Krems-Stein, Lower Austria
Copyright: Welterbezentrum
Examples: Classic and Social Infrastructure
Mortgage Covered Bonds
Volume of outstanding bonds EUR 885 mln
Cover pool EUR 1,450 mln
Rating (Moody’s) 'Aa1'
Effective Overcollateralisation 12.0 %
Overcollateralisation ** 63.9 %
Bloomberg HYNOE <Corp>
Cover Pool by Currencies (EUR mln)
EUR 1.425,8 95 %
CHF 60,7 5 %
JPY + USD 1,2 < 1%
Total 1.487,6 100 %
1 based on nominal value: total cover pool / volume of bonds outstanding (%)
Outstanding HYPO NOE Pfandbrief benchmark issues
EUR 500 mln 0.75% Pfandbrief 2014-21 due September 2021 XS1112184715
EUR 300 mln 0.50% Pfandbrief 2015-20 due November 2020 XS1290200325
23
Cover Pool by Country (EUR mln)
Austria 1.158,4 78 %
Germany 329,2 22 %
Total 1,487,6 100 %
HYPO NOE Mortgage Covered Bond (September 2016)
38%
32%
8%
22% Austrian promoted housing loans
Austrian residential loans
Austrian commercial loans
German commercial loans
Distribution by Asset Type
Cover Pool by Maturities (Years)
Seasoning 5.7
Remaining average life – total 8.4
Remaining average life – residential 10.8
Remaining average life – commercial 3.8
LTV* Distribution
LTV 0-40 13.8 %
LTV 40-50 23.6 %
LTV 50-60 15.9 %
LTV 60-70 17.3 %
LTV 70-80 26.9 %
LTV >80 2.5 %
Average LTV (acc. Moody‘s)** 58.8 %
Average LTV (acc. to austrian definition)* 56.5 %
1 LTV Austria Definition: (amount covered per receivable (including subtracted total of prior encumbrances)) ÷
current property value ; 2 LTV based on rating agency definition: (total receivables per borrower group + total prior
encumbrances) ÷ total current property values
Regional Distribution
24
57%
17%
6%
6%
3% 4%
7%
Lower Austria
Vienna
Bavaria
North Rhine-Westphalia
Berlin
Other Austrian Federal States
Other German Federal States
Cover Pool by Loan Size (EUR mln) Number
< 100,000 188 4.462
100,000 - 300,000 258 1.643
300,000 - 500,000 84 215
500,000 - 1,000,000 177 252
1,000,000 - 5,000,000 299 176
> 5,000,000 427 33
Total 1,433 6,781
HYPO NOE Mortgage Covered Bond (June 2016)
25
Werderscher Markt
Client: Quartier am Auswärtigen Amt
Amount: 37 mln Euro
Size: 19,470 m²
Tenants: Arcotel (53%), Office + Retail (37%),
Residential (8%)
Location: Berlin, Germany
Promoted Housing in Lower Austria
Client: Siedlungsgenossenschaft Neunkirchen
Amount: 5.75 mln Euro
Size: 4,033 m²
Location: Neunkirchen, Lower Austria
Winner of the Lower Austrian Housing award 2011
Examples: Commercial and Promoted Housing
26
Mortgage Cover Pool
Assets located exclusively in Austria and Germany
Austrian Pfandbrief Act
Mandatory monitoring of the cover pool assets by a
trustee, who is appointed by the Ministry of Finance
Monthly reporting to the trustee, no asset removal
without his approval
2 % mandatory minimum nominal overcollateralization
based on statutory requirements
Moody’s rating: 'Aa1'
Quarterly reporting to the rating agency
Minimum effective OC 12.0 %
Cover Pool Management
Commitment of no NPLs in the cover pool
Regular internal control of loans in arrears < 90 days
Public Cover Pool
98 % of assets located in Austria
Austrian Pfandbrief Act
Mandatory monitoring of the cover pool assets by a
trustee, who is appointed by the Ministry of Finance
Monthly reporting to the trustee, no asset removal
without his approval
2 % mandatory minimum nominal overcollateralization
based on statutory requirements
Moody’s rating: 'Aa1'
Quarterly reporting to the rating agency
Minimum effective OC 20.5 %
Cover Pool Management
Commitment of no NPLs in the cover pool
Regular internal control of loans in arrears < 90 days
Strengths of HYPO NOE Cover Pools
27
Pfandbriefe Fundierte
Bankschuldverschreibungen
Hypothekenbankgesetz
(Mortgage Banking Act 1899)
Pfandbriefgesetz
(Pfandbrief Act 1927)
Gesetz betreffend Fundierte
Bankschuldverschreibungen
(Covered Bond Act 1905)
Erste Group Bank Bank Austria
Österreichische Landes-Hypothekenbanken
HYPO NOE Gruppe
BAWAG P.S.K Kommunalkredit Raiffeisenbanken
VOLKSBANK WIEN
Austrian Legal Framework for Covered Bonds
28
Austria Germany
Pfandbrief law in place YES YES
Mortgage and public sector collateral assets in separate pools YES YES
Cover register YES YES
Collateral assets limited to EEA, CH YES NO
Legally required minimum overcollateralisation YES YES
Cover pool monitoring (Trustee) YES YES
Special proceedings in case of insolvency YES YES
Pfandbriefe remain outstanding in case of issuers‘s bankruptcy YES YES
NPV matching YES * YES
Austrian Pfandbrief law was initially based on German legislation
Important changes to the German Pfandbrief law were followed by Austrian legislation
Main differences: Germany allows collateral from non-European countries; NPV matching is compulsory in
Germany and voluntary in Austria (self-commitment by issuing bank in Articles of Association)
* if included in the Articles of Association of the respective credit institution
Comparison of Austrian vs. German Pfandbrief Law
29
More than 125 years of track record and market knowledge
Solid credit ratings
Conservative business model and strategy
Controlled growth in accordance with capital and funding capacity
Committed and reliable shareholder: 100% Federal State of Lower Austria
High quality loan and securities portfolio
Effective risk reporting and risk management systems
Investor friendly legal framework in Austria (Pfandbrief Act 1927)
Top issuer of Pfandbriefe in Austria
High quality cover pool assets supported by strong covered bond ratings
Why invest in HYPO NOE Group?
30
Treasury & ALM Investor Relations /
Financial Institutions
Thomas Fendrich
Head of Group Treasury & ALM
+43 (0) 590 910 1233
Polina Christova
Head of Group Financial Institutions
& Business Support
+43 (0) 590 910 1225
Markus Payrits
Head of Liquidity Management
+43 (0) 590 910 1222
Martin Leppin
Head of Financial Institutions & Sovereigns
+43 (0) 590 910 1054
Peter Olsacher
Treasury Solutions Team
+43 (0) 590 910 1597
Agnieszka Feiler
Investor Relations Manager
+43 (0) 590 910 1489
Harald Klimt
Treasury Solutions Team
+43 (0) 590 910 1581
Contacts
31
Annex
32
EUR '000 06/2016 12/2015 12/2014 2014/2015 Δ
absolut
2014/2015
Δ %
Cash and balances at central banks 280,421 68,986 99,025 -30,039 -30.3 %
Loans and advances to banks 1,047,572 922,091 944,046 -21,955 -2.3 %
Loans and advances to customers 10,940,802 11,557,287 11,194,066 363,221 3.2 %
Risk provisions -109,209 -100,423 -108,562 8,139 -7.5 %
Assets held for trading 653,511 586,811 652,995 -66,184 -10.1 %
Positive fair value of hedges (hedge accounting) 628,269 509,458 663,827 -154,369 -23.3 %
Available-for-sale financial assets 2,173,887 2,104,338 2,245,409 -141,071 -6.3 %
Financial assets designated as at fair value through profit or loss 24,707 4,118 4,244 -126 -3.0 %
Investments accounted for using the equity method 21,970 20,937 27,105 -6,168 -22.8 %
Investment property 73,923 68,704 67,752 952 1.4 %
Intangible assets 918 1,411 1,352 59 4.4 %
Property, plant and equipment 78,640 80,159 80,913 -754 -0.9 %
Current tax assets 19,838 19,653 10,856 8,797 81.0 %
Deferred tax assets 1,392 2,105 2,417 -312 -12.9 %
Other assets 411,718 50,010 41,515 8,495 20.5 %
Total assets 16,248,359 15,895,645 15,926,960 -31,315 -0.2 %
HYPO NOE Group Balance Sheet – Assets (consolidated)
33
EUR '000 06/2016 12/2015 12/2014 2014/2015
Δ absolut
2014/2015
Δ %
Deposits from banks 1,580,504 2,217,495 2,627,730 -410,235 -15.6 %
Deposits from customers 4,170,940 3,260,856 2,305,056 955,800 41.5 %
Debts evidenced by certificates 7,968,056 8,165,837 8,553,311 -387,474 -4.5 %
Liabilities held for trading 606,992 516,969 591,140 -74,171 -12.5 %
Negative fair value of hedges (hedge accounting) 931,838 740,962 877,867 -136,905 -15.6 %
Provisions 53,299 55,794 49,291 6,503 13.2 %
Current tax liabilities 8,069 10,073 10,753 -680 -6.3 %
Deferred tax liabilities 36,039 34,434 30,651 3,783 12.3 %
Other liabilities 89,437 106,297 104,376 1,921 1.8 %
Subordinated capital 204,557 205,449 206,059 -610 -0.3 %
Equity (including minority interests) 598,628 581,479 570,726 10,753 1.9 %
Owners‘ equity 589,826 572,855 562,355 10,500 1.9 %
Non-controlling interests 8,802 8,624 8,371 253 3.0 %
Total equity and liabilities 16,248,359 15,895,645 15,926,960 -31,315 -0.2 %
HYPO NOE Group Balance Sheet – Liabilities (consolidated)
34
EUR '000 06/2016 12/2015 12/2014 2014/2015
Δ absolut
2014/2015
Δ %
Interest and similar income 285,489 583,757 592,781 -9,024 -1.5 %
Interest and similar expense -222,534 -452,917 -465,393 12,476 -2.7 %
Net interest income 62,955 130,840 127,388 3,452 2.7 %
Credit provisions -9,627 1,171 -6,717 7,888 > 100 %
Net interest income after risk provisions 53,328 132,011 120,671 11,340 9.4 %
Fee and commission income 8,448 16,638 16,882 -244 -1.4 %
Fee and commission expense -1,404 -2,788 -2,903 115 -4.0 %
Net fee and commission income 7,044 13,850 13,979 -129 -0.9 %
Net trading income -7,836 3,242 -1,815 5,057 > 100 %
General administrative expenses -69,595 -129,111 -127,092 -2,019 1.6 %
Net other operating expenses 21,563 25,000 23,659 1,341 5.7 %
Income from investments accounted for using the equity method 1,444 -4,744 -2,521 -2,223 88.2 %
Net gains or losses on available-for-sale financial assets 13,828 -27,825 -64,958 37,133 -57.2 %
Net gains or losses on financial assets designated as at fair value through
profit or loss -35 -126 44 -170 < -100 %
Net gains or losses on hedges -2,635 -1,887 -2,369 482 -20.3 %
Net gains or losses on other financial investments 118 1,249 -1,930 3,179 > 100 %
Profit (+)/ Loss (-) before tax 17,224 11,659 -39,810 51,469 > 100 %
Income tax expense -4,150 -5,255 8,822 -14,077 < -100 %
Profit (+)/ Loss (-) after tax 13,074 6,404 -30,988 37,392 > 100 %
Non-controlling interests -140 -252 -350 98 -28.0 %
Profit (+)/ Loss (-) for the year 12,934 6,152 -31,338 37,490 > 100 %
Consolidated Statement of Comprehensive Income
35
Deficiency guarantee by the State of Lower Austria
WITHOUT time limitation:
All liabilities originated before 03/04/2003
Deficiency guarantee by the State of Lower Austria
WITH time limitation:
All liabilities originated after 03/04/2003 and before 01/04/2007 and maturing before 30/09/2017
NO deficiency guarantee by the State of Lower Austria:
All liabilities originated between 03/04/2003 and 01/04/2007 and maturing after 30/09/2017
All liabilities originated after 01/04/2007
Guarantee WITHOUT Limitation Guarantee WITH Limitation NO Guarantee
Originated < 03/04/2003 > 03/04/2003
< 01/04/2007 > 01/04/2007
Maturity > 30/09/2017 < 30/09/2017 n/a
Liabilities guaranteed by the State of Lower Austria
36
HETA moratorium
Moratorium on HETA debt repayments imposed by the Austrian
Financial Market Authority on March 1, 2015
HYPO NOE holds EUR 225mn of HETA debt securities on its
own portfolio
Cumulated write-down in 2014-H1/16 based on model
calculations: EUR 73.3 mn including impairment hedge
adjustment (29.85 % of face value EUR 225 mn)
Pfandbriefbank (Österreich) AG – formerly Pfandbriefstelle
All eight member banks and their guarantors – Austria’s federal
states – bear joint and several liability
All members agreed on providing sufficient liquidity,
i.e. 1/8 each (= 12.5 % or approx. EUR 155 mn)
HYPO NOE has explicit backing of the State of Lower Austria
for its part of joint and several liability for “Pfandbriefstelle“
issues, therefore no further risk provisioning required
An expense of EUR 10.9 mn was recognised in relation to the
corresponding debtor warrant
37
HETA moratorium – legal implications
Recent developments (FMA)
The FMA issued a special notice imposing a moratorium on debt repayments by HETA until 31 May 2016.
By decision of 10 April 2016 a haircut was imposed by the FMA .
Recent developments (Tender offer)
Tender offer for repurchase of HETA bonds at an envisaged discounted value (75% of face value) by “Kärntner
Ausgleichszahlungsfonds” (KAF) was denied by the creditors and did not reach a necessary two-third majority in March 2016.
On 18 May 2016, the Republic of Austria and a majority of HETA creditors underwent a MoU to create an out-of-court settlement. A new
tender offer of approx. 90% of the nominal value was expected to be disclosed in autumn 2016, which required a significantly lower
depreciation compared to the FMA haircut mentioned above.
Under the new tender offer which was announced by the “Kärntner Ausgleichszahlungsfonds” (KAF) on 6 October 2016, and which was
valid until 7 October, creditors had a choice between a cash payment totalling around EUR 7.8bn and an or zero-coupon notes with a
total nominal value of EUR 10.4bn.
Following the announcement by “Kärntner Ausgleichszahlungs-Fonds” ("KAF") on 10 October 2016 that the required two-third
acceptance rate for its tender offer for HETA Asset Resolution AG's debt obligations was comfortably met (acceptance overall was
98.71%, of which 99.55% for senior debt and 89.42% for subordinated debt).
The HYPO NOE Group accepted the exchange for a zero-coupon bond with an abstract, explicit, unconditional and irrevocable
guarantee by the Federal Republic of Austria upon first demand.
38
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