HYPO NOE Investor Presentation

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
Sustainable and risk sensitive business model
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
2
HYPO NOE Group at a glance
 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
3
Content
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
4
Core Market: Well Positioned and Competitive Economy
(November 2016)
Austria
Lower Austria / Vienna
Positive GDP development
40 % of Austria‘s population live and work in
Lower Austria and Vienna
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 %)
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
Public debt below EU average
Highest purchase power per inhabitant
2016e
86.4 % (EU19: 91.8%)
Lower Austria (# 1)
EUR 21,048
2017f
84.4 % (EU19: 90.7%)
Vienna (# 3)
EUR 20,870
Level of corporate and household indebtedness
substantially below Euro-zone average
Attractive yield spreads relative to Germany
No bubble in the housing market
1
EIU, GDP per capita at purchase price parity
Fiscal equalization scheme secures strong and prudent
framework for investors
Privileged access to international financial markets
through Federal Financing Agency (ÖBFA)
5
State of Lower Austria: Committed and Stable Shareholder
State of
Lower Austria
100 %
Lower Austria
Vienna
100 %
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
6
Solid Ratings
Standard & Poor’s
Moody’s
'A/A-1' (stable)
-
Public Sector Covered Bond
-
'Aa1'
Mortgage Covered Bond
-
'Aa1'
Type of Rating
Issuer Credit Rating
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
7
Sustainability Ratings
(oekom, rfu)
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.
8
Sustainability Ratings
(imug)
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
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
1
As an issuer HYPO NOE is assigned to the savings bank sector (incl. Landesbanks and mortgage banks).
9
Competences and Experience drive Business Focus
Public Finance

Corporate &
Structured
Finance
Retail
Customers
Public
Finance
Financing and leasing solutions for the public sector
Corporate & Structured Finance
Religious
Communities,
Interest
Groups &
Agriculture

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
Real Estate
Services
Real Estate
Finance

Project development and management

Property management

Facility management
Retail Customers

Experts on mortgages and housing for private customers
and special services for professionals
10
Public Finance
HYPO NOE Group – Total Assets1
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
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Retail Customers
Real Estate Finance
Corporate and Structured
Finance
Public Finance
2015
2014
2013
2012
HYPO NOE Group – Total Revenues2
24%
32%
Strategy
Public Finance
Corporate and Structured Finance
 Remaining core business of HYPO NOE Gruppe
 Expanding market share in Austria
 Syndications
Real Estate Finance
28%
1
2
16%
Retail Customers
Pro-forma analytical breakdown over all IFRS segments
Fee income + interest income
11
Corporate & Structured Finance1
HYPO NOE Group – Total Assets2
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
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Retail Customers
Real Estate Finance
Corporate and Structured
Finance
Public Finance
2015
2014
2013
2012
 Intense competition and subdued credit demand
 Focus on SME business in core markets
HYPO NOE Group – Total Revenues3
 Financing of the renovation of sacral buildings
 Selective financing of renewable energy projects
24%
32%
Strategy
Public Finance
Corporate and Structured Finance
 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
Real Estate Finance
28%
16%
2
SME business (33% of corporate portfolio) is part of HYPO NOE Landesbank
3
Retail Customers
Pro-forma analytical breakdown over all IFRS segments
Fee income + interest income
12
Real Estate Finance and Promoted Housing1
HYPO NOE Group – Total Assets2
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
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Retail Customers
Real Estate Finance
Corporate and Structured
Finance
Public Finance
2015
2014
2013
2012
HYPO NOE Group – Total Revenues3
24%
32%
Public Finance
Strategy
Corporate and Structured Finance
 Growth in Austria and Germany
 Close watch on regional real estate trends
in Danube region
 Maintaining strong relationships with
promoted housing developers in Austria
Real Estate Finance
28%
2
1
Promoted housing business (45% of real estate portfolio) is part of HYPO NOE Landesbank
3
16%
Retail Customers
Pro-forma analytical breakdown over all IFRS segments
Fee income + interest income
13
Retail Customers and Professionals
HYPO NOE Group – Total Assets1
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
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Retail Customers
Real Estate Finance
Corporate and Structured
Finance
Public Finance
2015
2014
2013
2012
HYPO NOE Group – Total Revenues2
24%
 Roll out of user friendly homepage including new mobile services
32%
Public Finance
Corporate and Structured Finance
Strategy
 Focus on growth of the customer base and retail deposits
Real Estate Finance
 Repositioning with focus on regional identity
28%
1
2
16%
Retail Customers
Pro-forma analytical breakdown over all IFRS segments
Fee income + interest income
14
Key Facts and Ratios
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
Return on equity before tax
09/20166
2015
Levies in respect of public authorities:
8.5 %
2.0 %
12.5 %
5.7 %
68.6 %3
92.5 %
55.9 %
77.0 %
Tier 1 Capital Ratio (CRR)
13.44 %
13.45 %
Equity Ratio (total, CRR)
14.39 %
15.16 %
Return on equity before tax (operating) 4
Cost income ratio
Cost income ratio (operating) 5
1
2
3
4
(September 2016)
including promissory notes placed with customers
adjusted net gains & losses on investments accounted for using the equity method disclosed in a separate line
as per Sept. 30th 2016 total contributions to the Deposit insurance and resolution fund are included, accrued CIR would be at 67.9 %
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)

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)
15
Strong Capitalisation
Equity Ratios phased-in vs. fully-loaded
(CRR/CRD IV) per 30.06.2016:
(June 2016)
 Basel III (CRR/CRD IV)
Basel II (BWG)
15.16%
15.12
%
20%
18.79%
18%
17.89%
16.31%
14.85%
16%
14%
12%
15.70%
15.52
%
15.16%
14.71%
13.25%
10%
12.33%
15.12%
13.45%
13.88%
2015
06/2016
13.88 %
12.26%
14.29 %
8%
6%
4%
2%
0%
2011
2012
Equity Ratio
2013
Basel III
2014
Tier 1 Capital Ratio
Capital base (EUR ´000)
phased-in
Tier 1 Capital Ratio
Basel III Requirement
06/2016
fully-loaded
Equity Ratio (total)
2015
Total eligible core capital
585,909
597,675
Capital requirement (CRR/CRD IV)
309,940
315,497
Surplus capital
275,696
282,178

Tier 1 Capital Ratio
13.88 %

LCR
> 100 %

Leverage Ratio
3.45 %

NSFR (indicative)
between 96 % (Basel 2010)
and 105 % (Basel 2014)

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
16
Loan Book
(June 2016)
Waterfall of risk provisions
01.01.-30.06.2016
Breakdown of loans and advances to customer
06/2016
(EUR ´000)
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 %
59,061
5.56 %
10,940,802
3.24 %
Professionals
Total
Breakdown by country
Breakdown by currency
4%<1%
11%
7%
<1%
Details on CHF loan portfolio
Industries
88%
Austria
1
EU & CH
Germany
89%
Others
4.46 % excl. HETA claims deriving from Pfandbriefbank
EUR
CHF
Leasing / Insurance companies
Retail
Corporates
States / Municipalities
Internal Rating
66 %
19 %
10 %
5%
1A-2E
3A-4E
5A-5E
78 %
21 %
1%
GBP
17
Securities Portfolio1
(June 2016)
By sector
By rating
Banks
729,452,000
39 %
Aaa
415,472,549
22 %
Sovereigns
794,105,010
43 %
Aa1
362,655,000
20 %
55,000,000
3%
Aa2
95,050,000
5%
Aa3
-
-
172,510,049
9%
A1
125,500,000
7%
Sub-sovereings and municipalities
83,000,000
4%
A2
300,100,000
16 %
Supranational banks
19,000,000
1%
A3
25,500,000
1%
Insurance companies
4,000,000
<1%
Baa1
284,000,000
15 %
1,857,067,060
100 %
Baa2
29,500,010
2%
Baa3
31,802,000
2%
187,487,500
10 %
1,857,067,060
100%
Public sector entities
Corporates
Total
Regional distribution
Total

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
1
2
< Baa32
Based on nominal values (30.06.2016)
Including Heta Asset Resolution AG bonds at nominal value of EUR 145,71 mln (post impairment)
18
Funding Strategy
(June 2016)
Money Markets and Debt Capital Markets Funding
(as of June 2016, EUR ’000)
Diversified Funding Base

Regular use of all available funding instruments
26 %

Solid track record as top tier Pfandbrief issuer
204,557
1%

Deposits from customers1
4,170,940
29 %
Frequent issuer of senior unsecured debt and
promissory notes
Deposits from banks
1,580,504
11 %

“tailor-made” private placements for institutional clients
542,000
4%

0
0%
14,465,788
100 %
HYPO NOE Landesbank generates retail deposits
through their branch network in Lower Austria and
Vienna
Covered bonds
4,245,223
29 %
Senior unsecured bonds
3,722,564
Subordinated debt
Promissory notes placed with banks
Repo / GC-Pooling
Total
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



1
Funding volume of around EUR 1,150 mn
Focus on senior unsecured and covered bond benchmark (public sector)
Continous geographical expansion of investor base
including promissory notes placed with customers in the amount of EUR 682 mn
19
HYPO NOE Public Sector Covered Bond
(September 2016)
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>
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

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 (%)
20
HYPO NOE Public Sector Covered Bond
(June 2016)
Types of Debtors and Guarantors (EUR mln)
by Rating (EUR mln)
Guaranteed by federal states
2,173
51 %
AAA
Federal states
1,512
35 %
Municipalities
264
Guaranteed by municipalities
3,502
81 %
AA
572
13 %
6%
A
197
5%
228
5%
<A
47
1%
States
86
2%
Total
4,318
100 %
Guaranteed by states
55
1%
4,318
100 %
Total
5%
Loans vs. Bonds (EUR mln)
Loans
4,318
100 %
Bonds
0
0%
4,318
100%
Total
2% 1%
Guaranteed by Federal
States
6%
Federal States
Municipalities
Guaranteed by
Municipalities
States
35%
51%
Guaranteed by States
Cover Pool by Geography (EUR mln)
Austria
4,265
98.8%
Slovakia
20
0.6%
Poland
20
0.5%
Czech Republik
13
0.2%
4,318
100 %
Total
Average Size Cover Asset
EUR 10 mln per debtor
EUR 3.7 mln per loan
21
Examples: Classic and Social Infrastructure
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
22
HYPO NOE Mortgage Covered Bond
(September 2016)
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>
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
Cover Pool by Currencies (EUR mln)
EUR
1.425,8
95 %
CHF
60,7
5%
1,2
< 1%
1.487,6
100 %
JPY + USD
Total
1
Cover Pool by Country (EUR mln)
based on nominal value: total cover pool / volume of bonds outstanding (%)
Austria
Germany
Total
1.158,4
78 %
329,2
22 %
1,487,6
100 %
23
HYPO NOE Mortgage Covered Bond
(June 2016)
Regional Distribution
4%
3%
Distribution by Asset Type
7%
22%
Lower Austria
Austrian promoted housing loans
38%
Vienna
6%
Austrian residential loans
Bavaria
6%
8%
Austrian commercial loans
North Rhine-Westphalia
57%
17%
German commercial loans
Berlin
32%
Other Austrian Federal States
Other German Federal States
Cover Pool by Maturities (Years)
LTV* Distribution
Seasoning
5.7
Remaining average life – total
8.4
LTV 0-40
13.8 %
Remaining average life – residential
10.8
LTV 40-50
23.6 %
Remaining average life – commercial
3.8
LTV 50-60
15.9 %
LTV 60-70
17.3 %
< 100,000
188
4.462
LTV 70-80
26.9 %
100,000 - 300,000
258
1.643
2.5 %
300,000 - 500,000
84
215
LTV >80
Cover Pool by Loan Size (EUR mln)
Number
Average LTV (acc. Moody‘s)**
58.8 %
500,000 - 1,000,000
177
252
Average LTV (acc. to austrian definition)*
56.5 %
1,000,000 - 5,000,000
299
176
> 5,000,000
427
33
1,433
6,781
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
Total
24
Examples: Commercial and Promoted Housing
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
25
Strengths of HYPO NOE Cover Pools
Public Cover Pool
Mortgage Cover Pool

98 % of assets located in Austria

Assets located exclusively in Austria and Germany

Austrian Pfandbrief Act

Austrian Pfandbrief Act


Mandatory monitoring of the cover pool assets by a
trustee, who is appointed by the Ministry of Finance
trustee, who is appointed by the Ministry of Finance


Monthly reporting to the trustee, no asset removal

2 % mandatory minimum nominal overcollateralization

Moody’s rating: 'Aa1'
2 % mandatory minimum nominal overcollateralization
based on statutory requirements
based on statutory requirements

Monthly reporting to the trustee, no asset removal
without his approval
without his approval

Mandatory monitoring of the cover pool assets by a

Moody’s rating: 'Aa1'

Quarterly reporting to the rating agency

Quarterly reporting to the rating agency

Minimum effective OC 20.5 %

Minimum effective OC 12.0 %
Cover Pool Management

Cover Pool Management

Commitment of no NPLs in the cover pool

Commitment of no NPLs in the cover pool

Regular internal control of loans in arrears < 90 days

Regular internal control of loans in arrears < 90 days
26
Austrian Legal Framework for Covered Bonds
Fundierte
Bankschuldverschreibungen
Pfandbriefe
Hypothekenbankgesetz
(Mortgage Banking Act 1899)
Erste Group Bank
Bank Austria
Pfandbriefgesetz
(Pfandbrief Act 1927)
Österreichische
Landes-Hypothekenbanken
HYPO NOE Gruppe
Gesetz betreffend Fundierte
Bankschuldverschreibungen
(Covered Bond Act 1905)
BAWAG P.S.K
Kommunalkredit
Raiffeisenbanken
VOLKSBANK WIEN
27
Comparison of Austrian vs. German Pfandbrief Law
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
28
Why invest in HYPO NOE Group?
 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
29
Contacts
Treasury & ALM
Thomas Fendrich
Head of Group Treasury & ALM
+43 (0) 590 910 1233
[email protected]
Markus Payrits
Head of Liquidity Management
+43 (0) 590 910 1222
[email protected]
Peter Olsacher
Treasury Solutions Team
+43 (0) 590 910 1597
[email protected]
Investor Relations /
Financial Institutions
Polina Christova
Head of Group Financial Institutions
& Business Support
+43 (0) 590 910 1225
[email protected]
Martin Leppin
Head of Financial Institutions & Sovereigns
+43 (0) 590 910 1054
[email protected]
Agnieszka Feiler
Investor Relations Manager
+43 (0) 590 910 1489
[email protected]
Harald Klimt
Treasury Solutions Team
+43 (0) 590 910 1581
[email protected]
30
Annex
31
HYPO NOE Group Balance Sheet – Assets (consolidated)
EUR '000
Cash and balances at central banks
06/2016
12/2015
12/2014
2014/2015 Δ
absolut
2014/2015
Δ%
280,421
68,986
99,025
-30,039
-30.3 %
1,047,572
922,091
944,046
-21,955
-2.3 %
10,940,802
11,557,287
11,194,066
363,221
3.2 %
-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 %
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 %
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 %
Loans and advances to banks
Loans and advances to customers
Risk provisions
Available-for-sale financial assets
Intangible assets
32
HYPO NOE Group Balance Sheet – Liabilities (consolidated)
2014/2015
Δ absolut
2014/2015
Δ%
EUR '000
06/2016
12/2015
12/2014
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 %
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 %
589,826
572,855
562,355
10,500
1.9 %
8,802
8,624
8,371
253
3.0 %
16,248,359
15,895,645
15,926,960
-31,315
-0.2 %
Provisions
Owners‘ equity
Non-controlling interests
Total equity and liabilities
33
Consolidated Statement of Comprehensive Income
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 %
7,044
13,850
13,979
-129
-0.9 %
-7,836
3,242
-1,815
5,057
> 100 %
-69,595
-129,111
-127,092
-2,019
1.6 %
21,563
25,000
23,659
1,341
5.7 %
1,444
-4,744
-2,521
-2,223
88.2 %
13,828
-27,825
-64,958
37,133
-57.2 %
-35
-126
44
-170
< -100 %
-2,635
-1,887
-2,369
482
-20.3 %
Net fee and commission income
Net trading income
General administrative expenses
Net other operating expenses
Income from investments accounted for using the equity method
Net gains or losses on available-for-sale financial assets
Net gains or losses on financial assets designated as at fair value through
profit or loss
Net gains or losses on hedges
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 %
-140
-252
-350
98
-28.0 %
12,934
6,152
-31,338
37,490
> 100 %
Non-controlling interests
Profit (+)/ Loss (-) for the year
34
Liabilities guaranteed by the State of Lower Austria
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

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
35
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
36
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.
37
DISCLAIMER
This document does not constitute an offer to sell, or the solicitation of an offer to subscribe for or buy, any securities, investments or any other financial instruments, in or of HYPO
NOE Gruppe Bank AG, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision. This
document does not constitute an investment analysis or a recommendation to buy or to sell and is not intended to substitute any individual investment advice. Any such offers will
only be made when a prospectus in relation to the Offering is published in due course. This presentation will only be part of an offer, when it is explicitly referenced in the respective
offer.
No reliance may be placed for any purposes whatsoever on the information contained in this document or on its completeness. No representation or warranty, expressed or implied,
is given by or on behalf of HYPO NOE Gruppe Bank AG or the banks represented in this presentation or any of such institutions’ affiliates, directors, officers or employees, advisors
or any other person as to the accuracy or completeness of the information or opinions contained in this document and no liability whatsoever is accepted for any such information or
opinions or any use which may be made of them.
This document is intended for distribution in the United Kingdom only to persons who have professional experience in matters relating to investments falling within Article 19(5) of the
Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended, or to those persons to whom it may otherwise lawfully be distributed. Neither this document
nor any copy of it may be taken or transmitted in or into the United States or to any US person (as defined by Regulation S of the US Securities Act of 1933 (the “Securities Act”)) or
transmitted in or into Australia, Canada or Japan or to Australian, Canadian or Japanese persons. Securities of HYPO NOE Gruppe Bank AG have not been and – as of the date of
this presentation – will not be registered under the Securities Act and may not be offered or sold in the United States absent registration under the Securities Act or exemption from
the registration requirements thereof. There will be no public offer of securities of HYPO NOE Gruppe Bank AG in the United States. The distribution of this document in or into other
jurisdictions may be restricted by law and persons into whose possession this document comes should inform themselves about and observe, any such restrictions. Any failure to
comply with this restriction may constitute a violation of applicable securities law and regulations.
Certain market data and financial and other figures (including percentages) in this document were rounded in accordance with commercial principles. Figures rounded in this manner
may not in any and all cases add up to the stated totals or the statements made in the underlying sources. For the calculation of percentages used in the text, the actual figures,
rather than the commercially rounded figures, were used. Accordingly, in some cases, the percentages provided in the text may deviate from percentages based on rounded figures.
Certain statements in this presentation are forward-looking statements. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that
could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could
adversely affect the outcome and financial effects of the plans and events described herein. HYPO NOE Gruppe Bank AG does not undertake any obligation to update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak as
only of the date of this presentation. Statements contained in this presentation regarding past trends or activities should not be taken as a representation that such trends or activities
will continue in the future.
Although due care has been taken in compiling this document it cannot be excluded that it is incomplete or contains errors.
HYPO NOE Gruppe Bank AG, its shareholders, advisors and employees are not liable for the accuracy and completeness of the statements, estimations and the conclusions
contained in this document. Possible errors or incompleteness do not constitute any grounds for liability, neither with regard to indirect nor direct damages. For the avoidance of
doubt HYPO NOE Gruppe Bank AG points out that it is not liable for any losses, damages or disadvantages including direct, indirect, financial, immaterial, special or consequential
loss or damage (whether for loss of profit or otherwise) due to this document or any of the statements contained therein.
By reading / downloading this presentation, you explicitly agree to be bound by the above.
NOT FOR DISTRIBUTION IN THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA AND JAPAN.
38