Mbh Mortgage Bank Co. Plc. · BET:TAKAREKJZB
Mbh Mortgage Bank — Takarék Mortgage Bank — Debt Investor Presentation (September 2019)
50 slides from Mbh Mortgage Bank's debt investor presentation, September 2019
Slide 1: Investor Presentation
INVESTOR PRESENTATION Takarék Mortgage Bank Co. Plc. September 2019
Slide 2: Content
Content 1. IOCCI – slide 4 2. Company Overview, Ownership & Organization Structure, Strategy – slide 12 3. Cover Pool characteristics and risk profile – slide 20 4. Investor protection within the Integration – slide 21 5. Funding & Liquidity – slide 30 6. Financial information – slide 37 7. Appendix
Slide 3: Abbreviations
Abbreviations CCI: Co-operative Credit Institutions TMB: Takarék Mortgage Bank Co. Plc TCB: Takarék Commercial Bank Ltd. MTB or Takarékbank: Magyar Takarékszövetkezeti Bank Ltd. Also the central bank of Integration SZHISZ (IOCCI): Organization of Cooperative Credit Institutions Integration: members
Slide 4: 1. Integration Organization of Cooperative Credit Institutions
1. Integration Organization of Cooperative Credit Institutions
Slide 5: Takarék Group's evolution
1. Takarék Group’s evolution Integration, mergers Takarék Mortgage Bank and Takarék Commercial bank became members of the Integration in 2015 By the end of 2017 only 12+3 regional Corporate Credit Institutions (CCIs) remained due to mergers Pre-integration According to the new group strategy a
Slide 6: Strategy, growth targets – major change, revised strategy 2019-2023
2. Strategy, growth targets – Takarék Group is under a major change, a revised strategy was formed for 2019-2023 Q2 2017 Q2 2017-Q2 2018 Q2-Q3 2018 2019 Starting the execution of the Necessity for strategy Transformation of the Group by Creation of Takarék Group’s measures required for strategy revi
Slide 7: Main goals of the new Group strategy 2019-2023
3. Strategy, growth targets – Main goals of the new Group strategy 2019-2023: Increasing competitiveness and profitability A banking group with increasing profitability and financially sustainable operations I. Modernization, business renewal Main goals of Takarék Group’s strategy 2019-2023 II. Orga
Slide 8: Roadmap of the Group's legal transformation
4. Strategy, growth targets – By the end of 2019, the final form of the new universal bank will be established by the merger of current CCIs, Takarék Commercial Bank and MTB’s portfolio transfer Roadmap of the Group’s legal transformation 1. Phase 2. Phase 0. Phase (till 30.04.2019) (till 31.10.2019
Slide 9: Planned new structure and functions in the Takarék Group
5. Strategy, growth targets – The planned new structure and functions in the Takarék Group Central entity, primarily Central bodies Common Equity Fund regulatory and IOCCI supervisory roles Supplementing the guarantee community Central entity tasks, Takarék United ownership functions (formerly calle
Slide 10: Takarék Group's centralized holding management structure
6. Organisational structure – Takarék Group’s centralized holding management structure National Bank of Hungary Integration Organization of Cooperative Credit Institutions (IOCCI) Integration MTB (Central Bank) Subsidiary or Supervised Company 11 Cooperative Takarék Takarék Takarékbank Credit Instit
Slide 11: Integration in numbers - 5th largest market player
7. Integration in numbers - 5th largest market player* Municipalities Total assets 1 165 2 500 billion No. of branches Corporate clients HUF more than 170 000 750 Employees Retail clients 950 000 6 600 TAKARÉK GROUP Agriculture market share Loans 22% 1 300 billion Deposit HUF 1 800 billion MFB Pont
Slide 12: 2. Company Overview, Ownership & Organization Structure, Strategy
2. Company Overview, Ownership & Organization Structure, Strategy
Slide 13: Dominant debt security issuer in Hungary
Dominant debt security issuer in Hungary Pioneer of the domestic mortgage bond market • Debt Securities Issuer of the Year award won 8 times in 11 years– Budapest Stock Exchange • The first Hungarian mortgage bond was issued by • Bank of the year in 2010 Takarék Mortgage Bank (or TMB, former FHB in
Slide 14: 20-year activity on local and international capital markets
20-year activity on local and international capital markets Long standing experience, proven track record in capital market More than HUF 1600bn total issue of covered and unsecured bonds since 2005, nominal amount of issues reaches HUF 60-120bn on annual basis, 16-20 transactions per year Stron
Slide 15: History of Takarék Mortgage Bank – Road to the Integration
History of Takarék Mortgage Bank (TMB) – Road to the Integration Year / Milestones /Strategic cooperations Acquisitions/Investments 1997/ FHB Mortgage Bank was established, as a state-owned specialized financial 2011/ Allianz Bank – full merger with Takarék (ex-FHB) institution Commercial Bank Co. P
Slide 16: TMB's Ownership structure
TMB’s Ownership structure – Share of Integration members is close to 90% Takarék Mortgage Bank Co. Plc. ownership stucture (30.06.2019) Composition of the board of directors Other (including József Vida: Chairman (Chairman and CEO of foreing and domestic MTB since 30 November 2016) individuals) 7,3%
Slide 17: Organisational structure – Takarék Mortgage Bank
Organisational structure – Takarék Mortgage Bank (‚Refinancing mortgage bank’) CEO Deputy CEO Risk management Legal Collateral book IT HR Capital markets ALM Refinancing Department management Property valuation Functions retained at TMB: - Refinancing Non-core functions are under common coordination
Slide 18: Strategy, growth targets – Takarék Mortgage Bank
Strategy, growth targets – Takarék Mortgage Bank Business strategy since 2017 Market position and initiatives • Deeper embeddedness into the Integration. • The most active player in refinancing and mortgage bond issuance on the domestic market • Subsidiary from Group leader: TMB handed over its grou
Slide 19: Market position - dominant player on mortgage refinancing market
Market position - dominant player on the local mortgage refinancing market • First mortgage bank in Hungary engaged in mortgage Outstanding mortgage bond volume refinancing (2001) 23,6% • Market leader in terms of number of partner banks: 11 21,2% 21,6% 19,8% 19,4% 17,9% 19,0% 18,3% 18,5% partners c
Slide 20: 3. Cover pool characteristics and risk profile
3. Cover pool characteristics and risk profile
Slide 21: Cover pool composition: refinancing plays an increasing role
Cover pool composition: refinancing plays an increasing role Weight of components Composition of cover pool and OC developments OC % 100% 35,0% 90% 30,0% 80% 70% 25,0% 60% 20,0% 50% 15,0% 40% CB purchase 30% program starts Purchase 10,0% 20% CB issuances Central bank announced programe accelerate th
Slide 22: Cover pool characteristics Q2 2019
Cover pool characteristics Q2 2019 Asset types of cover pool Interest rate distribution of cover FX distribution of cover assets assets 0,0% 9% 2,8% 3% 2019Q2 10% 2019Q2 4% 35% 2018Q2 2018Q2 47% 53% 65% 86% 97,2% 88% Residential loans Commercial loans Substitute assets Floating rate Fixed rate HUF E
Slide 23: Cover bond portfolio characteristics H1 2019 and rating
Cover bond portfolio characteristics H1 2019 and rating FX distribution of outstanding covered bonds 3,3% Interest rate distribution of covered bonds 4% 96,7% HUF EUR Category S&P rating Date of new rating 96% Local and foreign-currency BBB 2019.03.28. denominated covered bonds Fixed rate Floating r
Slide 24: Risk mitigating factors of TMB's covered bonds
Risk mitigating factors of TMB’s covered bonds Integration: Guarantee community covers TMB’s mortgage bonds, mechanism for financial REGULATORY ENVIRONMENT stability significantly decreases PD Voluntary obligations: Hungarian Mortgage Min 2% OC, 6m liquidity Bank Act Act on Price Bank CRR: quotation
Slide 25: Risk profile of Takarék covered bonds
Risk profile of Takarék covered bonds Risk mitigation factors Regulation: - Act no. XXX of 1997 on mortgage banks and mortgage bonds (Jht.) see: Appendix I. - Specialized credit institution principal - Limited activity - No bail in (pursuant Act XXXVII of 2014) see: Appendix I. - Eligible for repo t
Slide 26: 4. Investor Protection within the Integration
4. Investor Protection within the Integration
Slide 27: Investor protection within the Integration I.
Investor protection within the Integration I. The cross-guarantee system Szhitv. or Integration Law CXXXV. of 2013: IOCCI and its members are jointly liable for their obligations independent from the date of liabilities incurred. The joint and several liability is the most important investor prote
Slide 28: Investor protection within the Integration II.
Investor protection within the Integration II. Legal background Szhitv. or Integration Law: Act CXXXV of 2013 on the Integration of Co-operative Credit Institutions (CCIs) The Board of Directors of the Integration Organization adopts obligatory regulations for the members of the Integration Organi
Slide 29: Investor protection within the Integration III.
Investor protection within the Integration III. Capital Guarantee Fund (Fund) Capital Guarantee Fund (Fund): Base pillar of the cross-guarantee system, established in 2014 The Fund’s goal to first settle the proven claims against members of a cooperative credit institution on the basis of the jo
Slide 30: 5. Funding & Liquidity
5. Funding & Liquidity $8 TAKAREKCSOPORT f NS
Slide 31: Asset composition and funding structure
1. Asset composition and funding structure (TMB standalone HAS) Interest earning assets Funding structure 0,0% 4,7% 4,8% 2018 YE 2018 YE 10,2% 1,0% 20,0% 24,1% 3,7% 30,3% 4,5% 57,8% 2017 YE 2017 YE 50,0% 75,6% 15,0% 13,4% 85,0% Interbank borrowings Own issued senior unsecured bonds Interbank loans O
Slide 32: Funding relationship within Integration
2. Funding relationship within Integration • Diversified funding-mix and centralized Capital Money Interbank depo / funding strategy within the Integration market IRS market • MTB has a central role, as the only entity raising MM funding in the Integration from the market • TMB, as a specialized ins
Slide 33: Liquidity management
3. Liquidity management Liquidity management is centralized in MTB Liquid asset portfolio: • TMB’s and TCB’s liquidity management is centralized at MTB • Liquid assets: HUF 29.5bn (EUR 91m – Q2 2019) • Takarék Group members hedge their liquidity positions within the Group • 100% of instruments is el
Slide 34: Long-term funding strategy
4. Long-term funding strategy • TMB focuses primarily on covered bond issuance vs unsecured bonds • TMB acts the issuer entity to secure MFAR compliance on Integration level • Target maturities for covered bond issuances: 3Y and longer skewing to 5Y-10Y, depending on market depth, floating rate cove
Slide 35: Covered bond and unsecured bond maturity profile and investor base
5. Covered bond and unsecured bond maturity profile and investor base Takarék Covered Bond investors as of 30 June 2019 Maturity profile, as of June 30, 2019 (in % of outstanding amount at the (EURm) time of issuance) Foreign Insurance co. investors Retail 3,12% 2,75% 0,12% Pension funds 0,44% 62 Ba
Slide 36: Covered bond issuance: volumes and spreads vs HGB benchmark
6. Covered bond issuance: volumes and spreads vs HGB benchmark Covered bond spreads vs government bond benchmarks increased as MNB’s covered bond purchase program ceased. Public Covered Bond Issuances auctions/subscriptions Central bank's CB purchase programe bps HUFm 140 121 18 000 120 102 102 100
Slide 37: 6. Financial information
6. Financial information $3 TAKAREKCSOPORT ~~
Slide 38: Financial performance I. - major indicators
Financial performance I. - major indicators (TMB standalone, IFRS) in HUF million 31/12/2018 30/06/2019 Change (%) Balance sheet total 333,488 329,084 -1.32% Own originated loans 86,726 68,103 -21.47% Refinanced mortgage loans 169,286 190,182 12.34% Mortgage bonds outstanding 228,151 224,780 -1.48%
Slide 39: Financial performance II. – balance sheet, P&L
Financial performance II. – balance sheet, P&L (TMB standalone, IFRS) Shareholder's equity Balance sheet total (HUF million) (HUF million) 333 488 63 863 329 084 62 184 304 368 57 610 01/01/2018 31/12/2018 30/06/2019 01/01/2018 31/12/2018 30/06/2019 Securities issued (HUF million) 255 235 244 833 19
Slide 40: Financial performance III. – balance sheet, P&L
Financial performance III. – balance sheet, P&L (TMB standalone, IFRS) ‚Old’ TMB originated loans Refinanced mortgage loans (HUF million)* (HUF million) 190 182 94 190 86 726 169 286 68 103 135 031 01/01/2018 31/12/2018 30/06/2019 01/01/2018 31/12/2018 30/06/2019 originated loans *Own originated loa
Slide 41: Evolution of lending 2014-2018
Evolution of lending 2014- 2018 (TMB, standalone HAS) Refinancing and own loans (HUF million) Composition of refinanced loan portfolio by partner banks 169 300 2019 Q2 1% 1% 2% 1% 0% 129 791 134 972 2% 2% 3% 103 103 100 791 91 190 81 638 70 716 42% 21% 2015YE 2016YE 2017YE 2018YE Own loans Refinanci
Slide 42: Capital position (consolidated, Takarék Group)
Capital position (consolidated,Takarék Group) ● According to the resolution no. H-EN-I-36./2017 (on 1 January 2017) the National Bank of Hungary – with the acceptance of application provided by IOCCI, MTB Magyar Takarékszövetkezeti Bank Zrt., and Takarék Mortgage Bank - authorized Takarék Group to a
Slide 43: Appendix
APPENDIX $3 TAKAREKCSOPORT ~ f
Slide 44: Regulatory framework - Act on mortgage banks and mortgage bonds I.
Regulatory framework - Act no. XXX of 1997 on mortgage banks and mortgage bonds (Jht) I. • Special status of covered bond investors in case of insolvency • Special treatment of claims from mortgage bonds if liquidation process starts • Assigned cover pool administrator to manage claims in case of in
Slide 45: Regulatory framework - Act on mortgage banks and mortgage bonds II.
Regulatory framework - Act no. XXX of 1997 on mortgage banks and mortgage bonds (Jht) II. The cover system - Mandatory over-collateralization: Mortgage banks shall at all times have sufficient cover assets of a value higher than the sum of the face value of and the interest on outstanding mortgage b
Slide 46: Regulatory framework - Resolution Law
Regulatory framework - Resolution Law - In accordance with Article 58 (1) (c) point of the Act on the Bank Recovery and Resolution (Act. no. XXXVII. of 2014) creditors’ bail-in does not include liabilities from covered bonds and mortgage bonds, up to the extent of the coverage. The above means that
Slide 47: Mortgage Funding Adequacy Ratio (MFAR)
Mortgage Funding Adequacy Ratio (MFAR) to decrease the maturity mismatch in the mortgage lending market MFAR increases the role of mortgage Calculation and reviews of MFAR banks: The regulation aims at increasing financial stability by reducing the maturity New mortgage banks were established (Erste
Slide 48: EU harmonization
EU harmonization The current Hungarian regulation is mainly compliant with the planned new requirements, however there must be some amendments in the Mortgage Act. The most important changes may be the following: • Minimum mandatory OC 2-5% (in Hungary only voluntary or contractual OC exists) (129 C
Slide 49: Contacts
Contacts: Rita Bozzai Debt Capital Markets Department E-mail address: bozzai.rita@takarek.hu Illes Tóth Head of Debt Capital Markes Department E-mail: toth.illes@takarek.hu
Slide 50: Disclaimer
Disclaimer: This presentation contains forward-looking statements and information. There are many factors, which could cause actual results and process to differ materially from those expressed in this document. The forward-looking statements are based on the on the present legal and regulatory envi
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