otp group investor presentation...
TRANSCRIPT
László BencsikChief Financial and Strategic Officer, OTP Bank Plc
OTP Group
Investor Presentation
OTP Group has maintained strong profitability, capital adequacy and liquidity
Moscow, 17 March 2011
OTP Group is offering universal banking services to more than 12 million customers in 9 countries across the CEE Region
Major Group Members in Europe
Number of Branches
Total Assets
Headcount
7%
12%
Montenegro
2%
Serbia
1%
Slovakia
4%Croatia
5%Romania
4%Russia
Ukraine 7%
Bulgaria
Hungary57%
Total Assets: EUR 35.0 billion*
Montenegro
33
Serbia
55Slovakia
76Croatia105
Romania 106
Russia155
Ukraine
189Bulgaria
387
Hungary
380
Total number of branches: 1,486 Total headcount: 25,009**
19%
17%
Other
4%
Montenegro
2%
Serbia
3%
Slovakia
2%Croatia
4%Romania 4%
Russia
Ukraine12%
Bulgaria
Hungary32%
OTP Banka Slovensko
OTP banka Hrvatska
OTP banka Srbija Serbia DSK Bank Bulgaria
OTP Bank Romania
OTP Bank JSCUkraine
CKB Montenegro
OTP Bank Russia
* Assuming EURHUF rate at 278.75 (31 December 2010)** Excluding selling agents employed at OTP Russia
2
Gross Loans
Customer Deposits
6%
40%
Car-financing
5%
Corporate loans
31%
SME loansConsumer loans
18%
Mortgage loans
8%
19%25%
SME deposit
Retail term deposit
49%
Retail sight deposit
Corporate
Total Deposits: EUR 20.8 billion*
Total Loans: EUR 26.7 billion*
OTP offers a unique investment opportunity for acce ssing the CEE banking sector through a well diversified and transparent player with highly liqu id stock
* State Enterprises, Foreign individuals and International Development Institutions (including EBRD).** in the last half year (end date: 21/02/2011) on the primary stock exchange
(Q-o-Q change)
9%Rahimkulov Family
47%
Lazard AssetManagement
Other*
3%
TreasuryShares
2%
Employees & Senior Officer
2%Domestic Individual7%
Domestic Institutional
8%
MOL (Hungarian Oil & Gas Company)
9%
6%
Groupama Group (France)
8%(0%)
(0%)
(+1%)
(-1%)
(-4%)
(-2%)
(0%)
(0%)
(0%)
OTP Group’s Capabilities
Key features
Total number of ordinary shares: 280,000,010, each having a nominal value of HUF 100 and representing the same rights
Diversified ownership structure without strategic investors
No state involvement, the Golden Share was abolished in 2007
The most important individual stakeholders: Groupama Group, MOL and the Rahimkulov family, all below 10% stake
Ownership structure of OTP Bank, as on 31 December 2010
11142124
3137
ErstePKOOTP RaiffeisenKomercniPekao
Other Foreign Institutions
Avg. daily turn-over to current market cap.
0.64% 0.24% 0.17% 0.20% 0.21% 0.13%
Average daily turnover in EUR million
OTP is the most liquid stock in a peer group comparison in termsof average daily turnover**
Best Bank In CEE 2008Best Bank In Hungary 2008, 2009
Retail Loan Product And Direct Banking
Services Of The Year In 2008
Bank of the Year 2009;
Best Bank in Crisis Management 2009
Best Bank in Hungaryin 2008, 2009 and 2010
Best Private Bank
in Central & Eastern
Europe, 2010
Bank of the Year in Hungary 2009
3
CAGR24%
ROE* %Consolidated Net Profits (HUF bn)
Strong and resilient profitability
steadily improving PAT until ’08;average ROE twice as high as the industrial average and almost matching it during the crisis
Outstanding capital strength
consolidated CAR at 17.5%; Tier1 at 14%; Bank-only HAR CAR at 18.1%; all major indicators are better than for regional peers without any external capital enhancement; 2nd best results on the CEBS stress test
Strong liquidity position
gross operating liquidity exceeds EUR 5.0 billion equivalent – 2.5 times as high as all outstanding external FX obligations until 2015
After many years of high growth and high profitabil ity before the crisis, OTP has proved to be successful during the crisis demonstrating sustaina ble earning capacity over the business cycle
151
219209187
158132
83594939
1529
10
162
118
09080706050403020100
Tangible equity/tangible assets ratesin international comparison***
OTP Group’s capital adequacy ratios in regional comparison***
14.0%9.7% 10.2% 9.7%
Tier1
Tier2
Unicredit
13.0%
3.3%
Erste
13.6%
3.4%
Raiffeisen
13.6%
3.9%
OTP
17.5%
3.5%
4Q10 4Q10 2Q10 3Q104Q103Q10 3Q10 4Q10 3Q104Q10
4.1%4.2%4.3%5.0%7.1%
11.0%
Uni-credit
Intesa SP
ErsteKBCRaiffe-isen
OTP
***Source: Bloomberg, OTP **** Bonds issued by the National Bank of Hungary + government bonds + liquid asset surplus within 1 month
* Calculated from the Group’s adjusted net profit, excluding one-timers as the result of the sale of OTP Garancia in 2008 and goodwill write-offs in 2008 and 2010 as well as the result of the strategic open FX position between 2007 and 2009, consolidated dividends and net cash transfers, and special bank tax in 2010. ** Average between 2Q 2003 - 2007
432 1252510
500
1,000
1,500
2013-2015
610
264221
2012
311
35
25
2011
1,278
12
834
Bond
Bilateral Loan
Covered BondGroup level FX maturities (EUR mn)
2,852
2,166
Repoable bonds (mortg. & muni)
Primary****Total
5,018
Total liquidity breakdown (31 January 2011, equivalent in EUR million)
15.4
9.4
13.4
29.8
1.22.4
2000-2008�aver
age
Comm. Bank�avera
ge**
2010
12.9
2009
Banking taxGoodwill write-off
4
30% average ROE pre-crisis and 13%* during the cris is due to strong revenue margins, strict cost control and a relatively stress-resilient loan book
ROE*
Net Interest Margin
Risk Cost Rate
Capital Adequacy Ratio (CAR)*****
Total Assetsin HUF billion
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
5.03% 5.23% 5.36% 5.70% 6.84% 6.34% 5.81% 5.64% 5.79% 6.17%
0.89% 0.81% 0.82% 0.64% 0.70% 0.95% 0.62% 0.82% 1.69% 3.57%
- 16.6% 17.1% 13.3% 13.5% 12.9% 11.7% 13.4% 15.4% 17.2%
2,053 2,290 2,717 3,461 4,162 5,216 7,097 8,462 9,368 9,775
31.6% 32.6% 30.3% 31.1% 35.3% 32.3% 27.9% 24.7% 22.5% 13.4%
Average
CAGR
29.8%
5.75%
0.88%
20.9%
14.2%
* Calculated from the Group’s adjusted after tax profit, excluding one-timers as the result of the sale of OTP Garancia and goodwill write-offs in 2008 and 2010, the special bank tax in 2010, the result of the strategic open FX position in 2007-2009 and consolidated dividends and net cash transfers. ** Adjusted for one-off revenue and risk cost items in 2009 and 2010 *** Hypothetical calculation: with 8% CAR both in 2009 and 2010, ROE would be 28.1% - without the effect of the yield of excess capital. **** Insurance premiums and insurance expenses are netted and shown on other non interest income line ***** CAR: consolidated, under Hungarian Accounting Standards until 2004, from 2005 under IFRS Definitions.
2010
6.16%**
12.9%
8.0%***
28.1%***
2010
3.77%**
17.5%
9,781
5
Total Revenue Margin 7.60% 7.88% 8.24% 8.55% 9.49% 9.28% 8.03% 8.09% 8.22% 7.93%** 8.09%**
8.38%
Costs / Average Assets Ratio****
4.88% 4.81% 4.96% 4.87% 4.98% 4.59% 4.01% 4.26% 4.08% 3.65% 3.62%
4.60%
Continuous operational efficiency improvement
Focusing on the „high margin content” retail business as well as on the underpenetrated, fast growing CEE markets secured continuously high Net Interest- and Total Revenue Margin for the Group
Full-year 2010 consolidated adjusted profit reached HUF 162 billion, representing a yearly growth of 7%, the accounting profit declined by 22%, mainly a s a consequence of the Hungarian bank tax
6
151
219
29162
Goodwill writedown
Bank tax
2010
118
15
20092008
-22%
-31% +7%
After tax profit (consolidated, adjusted 1)(in HUF billion)
ROE, adjusted 1
(%)
9.4
13.4
22.5
2.4 Goodwill writedown
Bank tax
2010
12.9
1.2
20092008
1After-tax profit without one-off items (result of the strategic open position, goodwill impairment, consolidated dividends, result on the sale of OTP Garancia and special tax on financial institutions).2 Without one-off items (Upper Tier2 buyback, FX-swap revaluation, revaluation of FX provisions at OTP Core, FX-result offsetting the revaluation of FX-provisions at OTP Core and FX-gain related to FX-hedging of the provisions of some FX-loans of OJSC Ukraine).
Financial highlights of OTP Group(consolidated, IFRS)
2008 2009 2010
Operating profit (adj.) in HUF billion
369 409 436
Total income margin (adj.2) 8.22% 7.93% 8.09%
Net interest margin (adj.2) 5.79% 6.17% 6.16%
Operating cost / avg. assets 4.08% 3.65% 3.62%
Risk cost rate (adj.2) 1.69% 3.57% 3.77%
DPD90+ ratio (%) 4.5% 9.8% 13.7%
Change of DPD90+ ratio (y-o-y, %-point)
0.9% 5.3% 3.9%
DPD90+ coverage (%) 85.8% 73.6% 74.4%
Change of DPD90+ coverage (y-o-y, %-pont)
0.8% -12.2% 0.8%
Loan volume change (y-o-y) 15% -3% -0,3%
After tax profit, accounting
ROE calculated from accounting profit
Capital adequacy ratios of both OTP Group (consolid ated) and OTP Bank (unconsolidated) are above regulatory minimum and remained outstandi ngly high in international comparison
*Source: Bloomberg, OTP
Capital Adequacy Ratio – OTP Bank unconsolidated (HA R)Capital Adequacy Ratio – OTP Group consolidated (IFR S)
OTP Group’s capital adequacy ratio in international comparison*
3.5%
3.9% 3.3% 3.6%
3.9%3.4%
Tier1
Tier2
KBC
16.5%
12.6%
Intesa SP
12.5%
8.9%
Unicredit
13.0%
9.7%
Raiffeisen
13.6%
9.7%
Erste
13.6%
10.2%
OTP
17.5%
14.0%
4Q 10 3Q 10 3Q 10 3Q 10 4Q 104Q 10
15.4%17.5%17.2%
2010
14.0%
2009
13.7%
2008
11.3%
2007
13.4%
8.3%
+2.0%p
+0.3%p+1.8%p 12.0%
18.1%16.2%
2010
15.4%
2009
13.1%
2008
9.0%
2007
11.0%
7.0%
+1.1%p
+1.9%p
+4.2%p
Tier1
Tier2
Tier1
Tier2
Amount of capital received from the state*(in EUR billion)
7.0
2.01.2
0.0
KBCRaiffeisenErsteOTP
7
CEBS stress test results of OTP Group are sound and well above the expected 6% level.Under the most adverse scenario OTP’s Tier1 ratio i s the 2 nd best in Europe
16.2
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The EU-wide stress testing exercise of financial institutions, coordinated by the Committee of European Banking Supervisors (CEBS) has been carried out by 91 banks from 20 EU Member States. Among others OTP Bank Plc. has represented Hungary in the test.
Based on the parameters defined by ECB and CEBS, under the most adverse scenario OTP Group’s Tier1 ratio would stand at 16.2% by the end of 2011, which is more than four times the mandatory minimum level of 4% and which was the 2nd best in international comparison.
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6%*
* 6% threshold used exclusively for the purpose of this stress test exercise.
Tier1 ratios under the most adverse scenario (2011)
OTP Group, 4Q 2010 actualCAR: 17.5%Tier1: 14.0%
8
Capital adequacy ratios („CAR”)(according to local regulations)
Min. CAR 2008 2009 3Q10 4Q10
OTP Group (IFRS) 8% 15.4% 17.2% 18.0% 17.5%
Hungary 8% 12.0% 16.2% 17.8% 18.1%
Russia 11% 17.4% 13.3% 16.7% 17.0%
Ukraine 10% 10.3% 17.8% 20.0% 22.1%
Bulgaria 12% 18.0% 21.9% 25.4% 23.7%
Romania 10% 14.0% 14.3% 11.8% 14.0%
Serbia 12% 32.9% 27.1% 21.4% 16.4%
Croatia 10% 12.3% 13.4% 14.2% 14.2%
Slovakia 8% 10.5% 10.7% 11.0% 11.1%
Montenegro 10% 12.1% 13.4% 11.8% 14.1%
Stable capital adequacy across the Group, unconsoli dated CAR ratios above regulatory minimum
1
2
1
2
3
In order to secure the safe operation of the bank, at the end ofJune 2010 OTP Bank injected EUR 35 million capital into its Montenegrin subsidiary.
3
On 16 November 2010 the statutory capital of OTP Bank Romania was increased in the amount of RON 80 million(~EUR 18.7 million).
Capital transactions within OTP Group in 2010
On 30 September 2010 OTP Bank Croatia paid a dividend to OTP Bank (Hungary), the mother company in the amount of HRK 200 million (~EUR 27.4 million).
9
Since 2008, consolidated net loan-to-deposit ratio follows a downward trajectory as a result of a 5% annual contraction in net loans and unbroke n growth in deposits
10
Net Loan-to-Deposit Ratio*(%, consolidated)
Net Loans
CAGR of Consolidated Net Loans, Deposits andRetail Bonds*(2008-2010)
* In order to adjust for changes in the exchange rate, 2008 and 2009 year end volumes are translated to HUF by using end 2010 exchange rates of the HUF. Consolidated deposits include retail bonds sold in Hungary between 2007 and 2010, and are adjusted for the one off deposit withdrawal of OTP Fund Management at end 2010 (the letter volumes were deposited again in January 2011).
108%114%
136%
201020092008
-29%p
Deposits
and Retail Bonds 7%
-5%
Continuous internal FX liquidity generation by the business lines since the beginning of the crisis, the newly generated average monthly FX liquidity ex ceeded EUR 90 million in the last 10 month
Cumulated internal FX liquidity generation (from 29/12/2007, in HUF billion)
0
300
600
900
1200
Jan
-09
Mar
-09
May
-09
Jul-
09
Sep
-09
Nov
-09
Jan
-10
Mar
-10
May
-10
Jul-
10
Sep
-10
Nov
-10
Jan
-11
Sources of the intra-group FX liquidity generation:
�Retail FX lending in Hungary and in the Ukraine was stopped, the repayments from the outstanding FX loan books are continuously generating FX liquidity
�The corporate loan portfolio does not need additional FX liquidity, new disbursements and repayments are balanced
�From May 2010, the pace of FX liquidity generation decelerated, the reason behind is the group-wide re-pricing of FX deposits
Average monthlyliquidity generation
+ EUR 186 million
+ EUR 94 million
11
Since the beginning of the crisis, external redempt ions of OTP Group have been covered by intra-group generated liquidity instead of new whol esale issuances
12
Gross Liquidity Buffer*(EUR million equivalent)
Issuances
900*
420116
1.600
Gross operating liquidity is 2.5 times as high as all outstanding external FX obligations until 2015
* Preliminary plans, mortgage bond issuances are planned both in EUR and CHF terms.
2011.01.31
5.018
2009
6.006
2008
2.855
Wholesale Funding Transactions at OTP Parent Level(in EUR million, equivalent)
Repayments
2015F
139
2014F
372
2013F
23
2012F
285
2011F
1.254
2010
2.120
2009
1.516
2008
477
Lower Tier2 Capital
Syndicated Loans
Mortgage Bonds (EUR)
Senior Notes
1313
Last updated: 30/12/2010Country ratings: long term foreign currency government bond ratings, Bank ratings: long term foreign currency deposit ratings Abbreviations: BG - Bulgaria, CR - Croatia, HU - Hungary, MN - Montenegro, RO - Romania, RU - Russia, SRB - Serbia, SK - Slovakia, UA - Ukraine
+ positive- negative0 stable
(rating outlook)Despite strong profitability, capital and liquidity position, rating map of countries and subsidiaries in OTP Universe suggest the strong sovereign ceiling effect
Sovereign and OTP Bank rating
LATEST RATING NEWS
Fitch downgraded OTP Bank 's Support Rating to '3' from '2‘ and affirmed the Long-term Issuer Default Rating (IDR) of OJSC OTP Bank at 'BB' with a Negative Outlook. (30 December 2010)Fitch downgraded Hungary 's Long-term foreign currency Issuer Default Rating (IDR) to 'BBB-’from 'BBB' and its Long-term local currency IDR to 'BBB' from 'BBB+'. The Outlooks on the Long-term IDRs remained negative. (23 December 2010)S&P lowered its long-term sovereign credit rating on the Republic of Croatia to 'BBB-' from 'BBB'. The outlook is negative. (21 December 2010)Moody's Investors Service downgraded the foreign currency deposit ratings of OTP Bank and OTP Mortgage Bank to 'Baa3/Prime-3' from 'Baa1/Prime-2‘. (7 December 2010)Moody's Investors Service downgraded Hungary 's foreign- and local-currency government bond ratings by two notches to Baa3 from Baa1. (6 December 2010)Fitch Ratings has revised Serbia 's Outlooks to Stable from Negative. Its ratings have been affirmed at 'BB-' (11 November 2010)S&P affirmed its ratings on Hungary 'BBB-/A-3', the outlook stays negative on concerns about deficit and medium-term growth. (03 November 2010)Moody's changed the outlook on Ukraine's 'B2' government bond ratings to stable from negative and also changed to stable from negative the outlooks on Ukraine 's 'B1' foreign currency bond ceiling and its 'B3' foreign currency deposit ceiling. (11 October 2010)Fitch affirmed Russia 's long-term foreign and local currency IDRs at 'BBB'. The outlooks for the long-term IDRs have been revised to positive from stable. (8 September 2010)After having placed Ukraine’s sovereign credit ratings on CreditWatch with positive implications on 22 July 2010, S&P raised its long-term sovereign foreign and local currency ratings onUkraine by one notch to 'B+' from 'B' and to 'BB-' from 'B+', respectively. Furthermore, the 'B' short-term local and foreign currency ratings were affirmed. The outlook is stable. (29 July 2010)
Aaa AAA AAAAa1 AA+ AA+Aa2 AA AAAa3 AA- AA-A1 SK(0) A+ SK(0) A+ SK(0)A2 A AA3 A- A-
Baa1 RU(0) BBB+ BBB+
Baa2 BBB RU(0), BG(0) BBB RU(+)
Baa3BG(+), CR(0), RO(0), HU(-)
BBB- HU(-), CR(-) BBB-HU(-), BG(-), CR(-)
Ba1 BB+ RO(0) BB+ RO(0)
Ba2 BB BB
Ba3 MN(-) BB- SRB(0) BB- SRB(0)B1 B+ B+B2 UA(0) B BB3 B- B-
UA(0)
Caa1 CCC+
UA(0)
CCC+
Moody’s Standard & Poor’s Fitch
OTP Bank (Hungary)OTP Mortgage Bank (HU)OTP Banka Slovensko (SK)DSK Bank (Bulgaria)OAO OTP Bank (Russia)OTP Bank JSC (Ukraine)
Baa3 (-)Baa3 (-)Baa3 (-)Baa3 (-)Ba1 (-)B3 (0)
BB+ (0)BB+ (0)
BB (-)
Moody’s S&P Fitch
MN(-)
6,8
6
7,17,2
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
OTP Moody's OTP S&P Sov Moody's Sov S&P S&P
AA-A+AA-BBB+BBBBBB-BB+BB
Moody's
Aa3A1A2A3
Baa1Baa2Baa3
Ba1Ba2
14
Investor Relations
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Fax: + 36 1 473 5951
E-mail: [email protected]
www.otpbank.hu
Forward looking statementsThis presentation contains certain forward-looking statements with respect to the financial condition, results of operations, and businesses of OTP Bank. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements and forecasts. The statements have been made with reference to forecast price changes, economic conditions and the current regulatory environment. Nothing in this announcement should be construed as a guaranteed profit forecast.