Otp Bank Nyrt · BET:OTP
Otp Bank Nyrt — OTP Bank — Investor Presentation (November 2021)
34 slides from Otp Bank Nyrt's investor presentation, Nov 16, 2021
Slide 1: OTP Group - Ideally positioned for post-COVID rebound
OTP Group - Ideally positioned for post-COVID rebound 16 November 2021, Budapest László Bencsik Chief Financial and Strategic Officer
Slide 2: Contents
Contents Overview of OTP Group's performance in 3Q 2021 Update on ESG strategy and recent developments 2
Slide 3: OTP's profitability has excelled in peer group comparison
OTP’s profitability has excelled in peer group comparison Return on Equity – peer group comparison (%) Adjusted ROE Accounting ROE 2019 2020 9M 2021 20.3 20.6 10.9 13.0 16.9 18.8 12.7 7.0 13.0 9.7 4.8 12.1 10.0 -6.0 12.0 10.5 6.6 11.1 1 7.6 5.4 8.0 2 9.5 4.5 8.0 3 5.8 -4.6 7.9 Source: OTP and 2019,
Slide 4: OTP's P/B ratio marks a premium to its peers
OTP’s P/B ratio marks a premium to its peers, while its P/2021E matches the peer average. P/B based valuation (share price / book value of equity per share) Market capitalization in EUR billion Market cap relative to OTP 1.9 14.2 1.0 1.7 36.0 2.5 1.1 17.9 1.3 0.8 47.8 3.4 0.7 9.5 0.7 0.5 25.7 1.8 P/
Slide 5: OTP Group recognized by industry awards
The outstanding performance of OTP Group has traditionally been recognized by industry awards ‘Bank of the Year in 2020’ ’Best Private Bank in Ukraine’ ’The Most Innovative Bank of the Year in 2020’ ’The Socially Responsible Bank of the Year in 2020’ ’The Digital Banking Service of the Year in 2020’
Slide 6: Performing loans grew 2.5-fold between 2016 and 3Q 2021
Performing loans grew to 2.5-fold between 2016 and 3Q 2021, driven by both organic growth and acquisitions. The pending Slovenian and Uzbek deals could add 15% to the loan book, elevating the weight of Slovenia to 15% and Uzbekistan to 4% OTP Group – performing loan growth1 OTP Group - geographical
Slide 7: Acquisitions improved OTP's positions in many countries
Acquisitions completed in the last few years materially improved OTP’s positions in many countries. The financial closure of the Slovenian Nova KBM acquisition might be completed in 2Q 2022, subject to regulatory approval Target Net loan volumes Market share in total assets Book value (seller, date
Slide 8: Hungarian loan penetration still low in regional comparison
The Hungarian loan penetration levels are still low in regional comparison implying good volume growth potential. This is also the case for Romania, as well as for the Bulgarian housing loan segment Net loan to deposit ratio in the Market penetration levels in Hungary in ... 2Q 2021 data for other H
Slide 9: Adjusted ROE recovered to 2017-2019 levels in 9M 2021
After the temporary decline in 2020, in the first nine month of 2021 the adjusted ROE recovered to the 2017-2019 levels due to modest risk cost rate and cost efficiency gains offsetting revenue margin pressure 2003-2008 2009-2015 2016 2017 2018 2019 2020 9M 2021 average average Accounting ROE 29.4%
Slide 10: Accounting profit after tax for 9M 2021 surpassed HUF 335 billion
The accounting profit after tax for the first nine months of 2021 surpassed HUF 335 billion, up by 78% y-o-y. The adjusted nine-month profit was 61% higher than in the base period; the contribution of foreign group members increased further After taxforintban) (milliárd profit development y-o-y (in
Slide 11: 3Q 2021 adjustment items balance
In 3Q 2021 the balance of adjustment items was -HUF 7.1 billion, mostly related to the Hungarian payment moratorium (in HUF billion) 9M 20 9M 21 Y-o-Y 3Q 20 2Q 21 3Q 21 Q-o-Q Y-o-Y Consolidated after tax profit (accounting) 188.2 335.3 78% 113.6 121.8 120.2 -1% 6% Adjustments (total) -43.5 -38.3 -12
Slide 12: 9M adjusted profit improvement driven by lower risk costs and revenue
The 9M adjusted profit improvement was equally driven by lower risk costs and double-digit revenue dynamics entailing 20% operating income growth. In 3Q the continued increase in core banking revenues was offset by higher risk costs Y-o-Y (HUF billion) 9M 2020 9M 2021 Y-o-Y FX-adjusted, 2Q 2021 3Q 2
Slide 13: 9M net interest income grew by 10% organically
The 9M net interest income grew by 10% organically. In 3Q the quarterly improvement reached 6%, with bulk Effect of of the q-o-q growth coming from Hungary and Ukraine OBS sale NET INTEREST 9M 2021 3Q 2021 9M 2021 Y-o-Y 3Q 2021 Q-o-Q 1 In the first nine months the NII surged INCOME (HUF billion) (HU
Slide 14: Consolidated net interest margin development
The consolidated net interest margin declined marginally q-o-q: at OTP Core it slightly decreased due to fast deposit inflows – the full impact of higher rates is yet to be seen. The Ukrainian margin improvement continued on the back of the increasing rate environment; in Russia, however, the margin
Slide 15: Consolidated performing loans expanded 11% year-to-date
The consolidated performing loans expanded 11% year-to-date. The outstanding 15% expansion of the Hungarian loan portfolio was supported mainly by the subsidized lending programmes (baby loans and Funding for Growth Go!) YTD performing (Stage 1 + 2) LOAN volume changes adjusted for FX-effect Cons. C
Slide 16: Consolidated deposits grew by 10% in nine months
Consolidated deposits grew by 10% in the first nine months, within that Hungarian deposits increased by 15%. In the course of the first nine months the nominal growth of deposits exceeded that of loans by almost HUF 400 billion YTD DEPOSIT volume changes adjusted for FX-effect Cons. Core DSK OBH OBS
Slide 17: Net fees grew by 15% y-o-y in nine months
In the first nine month net fees grew by 15% y-o-y (w/o OBS sale and FX-adjusted). In 3Q net fees rose by Effect of 7% q-o-q mostly due to the continued rebound in economic activity and reviving tourism in some countries OBS sale 9M 2021 3Q 2021 9M 2021 Y-o-Y 3Q 2021 Q-o-Q 1 At OTP Core the net fees
Slide 18: Consolidated operating costs grew by 6.1% organically
Consolidated operating costs grew by 6.1% y-o-y organically, adjusted for FX and the shifting of the Effect of Hungarian local business tax to the corporate tax line OBS sale 9M 2021 Y-o-Y Y-o-Y, FX-adjusted 1 At OTP Core the underlying cost OPERATING COSTS (HUF 2021Q3 billion) CUM (HUF billion, %)
Slide 19: Hungarian mortgage applications jumped by 47%
In Hungary mortgage applications jumped by 47% in the first nine month, partly due to the exemption of duties for customers using the Housing Subsidy for Families, and to the home renovation loan. Cash loan growth OTP CORE continued. OTP maintained its over 30% market share in new mortgage and cash
Slide 20: OTP maintained above 40% market share in baby loan flows
OTP Bank maintained its above 40% market share in baby loan flows. The Bank has also actively participated OTP CORE in the sale of subsidized loan products newly launched in 2021 Baby loans Contractual amounts OTP Bank's market share calculated (HUF billion) from the contractual amount Market1 OTP B
Slide 21: Micro and small enterprise loans grew by 29% ytd
OTP's micro and small enterprises loans grew by 29% ytd due to the outstanding performance in the phased-out Funding for Growth Go! scheme, but the Széchenyi Card Go! scheme, introduced in July, has also favourable OTP CORE effect. OTP's corporate loan market share continued its upward trend and exc
Slide 22: Repayment moratorium volumes at OTP Core
Eligible debtors who applied for the moratorium at their banks in October can remain in the scheme until the end of June 2022. In the case of OTP Core loans worth HUF 224 billion may participate in the moratorium from OTP CORE November, which is 4.2% of the total outstanding loan portfolio OTP Core
Slide 23: Accelerating digitalisation
Accelerating digitalisation: in addition to the mobile channel becoming more popular, the proportion of OTP CORE digitally active customers and the number of digital transactions showed a substantial increase DIGITAL ACTIVITY The digital activity of OTP customers jumped significantly, supported by o
Slide 24: Portfolio quality remained stable in 9M 2021
In the first nine months of 2021 the portfolio quality remained stable. The provision coverage levels at OTP screen favourably compared to its regional peers Changes in different Stage categories OTP Group’s conservative provisioning policy is demonstrated through a peer group comparison 88.8% 80.4%
Slide 25: Strong capital position, ratios above regulatory requirements
Strong capital position, all capital ratios are well above the regulatory requirements. The effect of the ICES redemption was reflected in the 3Q 2021 numbers, explaining the q-o-q decline in the CET1 ratio, as the other effects offset each other Decomposition of the change in CET1 ratio in 3Q 2021
Slide 26: OTP Bank and sovereign ratings
+ positive While OTP Bank ratings closely correlate with the sovereign ceilings, subsidiaries’ ratings - negative (rating outlook) 0 stable enjoy the positive impact of parental support +* on watch possible upgrade -* on watch possible downgrade Hungarian sovereign, OTP Bank and OTP Mortgage Bank ra
Slide 27: Updated 2021 management guidance
The updated 2021 management guidance reckons with continuing loan growth and full-year profitability around the first nine months level 2021 management Guidance For the first nine months Group-level trends played out overall positively. According to the management guidance: • Based on the ytd perfor
Slide 28: Contents
Contents Overview of OTP Group's performance in 3Q 2021 Update on ESG strategy and recent developments 28
Slide 29: ESG organization
A dedicated organizational framework ha been set up to ensure representation of ESG management responsibility in breadth and depth Our sustainability governance ESG organization We are working towards fully integrating sustainability mindset both in our daily operation and business decision making,
Slide 30: OTP Group defined the main pillars of its ESG Strategy
OTP Group defined the main pillars of its ESG Strategy OTP GROUP ESG STRATEGY OTP Group is aiming to be the regional leader in financing a fair and gradual transition to a low-carbon economy and building a sustainable future through our responsible solutions. IMPLEMENTATION TIMELINE KPIs TO MEASURE
Slide 31: Sustainability performance recognized with improving ESG ratings
OTP Bank’s sustainability performance to date has been recognized with improving ratings by several major ESG rating agencies and initiatives OTP’s overall exposure is medium and is similar to the sub- industry average. Our 2021 score of 20.3 marks an improvement of more than 3.2 points from the las
Slide 32: Recent developments in sustainable finance
Mortgage bond issues, launch of corporate and retail green lending and commitment to UN PRB are some of the recent highlights underlining our commitment to sustainable finance Recent developments in OTP Bank’s ESG program: Green mortgage bonds: The Green Mortgage Bond Purchase Program, launched by t
Slide 33: Disclaimers and contacts
Disclaimers and contacts This presentation contains statements that are, or may be deemed to be, “forward-looking statements” which are prospective in nature. These forward-looking statements may be identified by the use of forward-looking terminology, or the negative thereof such as “plans", "expec
Slide 34: Questions and Answers session
Questions and Answers session 34