Otp Bank Nyrt · BET:OTP
Otp Bank Nyrt — Q1 2024 Earnings Presentation
37 slides from Otp Bank Nyrt's earnings presentation, 2024
Slide 1: OTP Group – Strong results and capital yield high returns
OTP Group – Strong results and capital yield high returns Investor presentation Based on 1Q 2024 results
Slide 2: OTP Group - Highlights
OTP Group - Highlights Dominant position in CEE countries: No.1 in 5 countries based on net loans; ~3.5-fold loan growth and 11 acquisitions in 7 years. >42% of net loans in Eurozone + ERM2 countries, ~80% within the EU Outstanding profitability: 2023 ROE exceeded 27% and reached 23% in 1Q 2024 Stro
Slide 3: OTP Group profit after tax increased by 23% y-o-y
OTP Group profit after tax increased by 23% y-o-y. The improvement stemmed mainly from the dynamic increase in core banking income and more favorable risk costs Consolidated profit after tax Key performance indicators of the OTP Group (HUF billion) (%) +23% Return on equity NIM Cost / income Credit
Slide 4: In 1Q 2024 the profit before tax grew by 42% y-o-y
In 1Q 2024 the profit before tax grew by 42% y-o-y without acquisitions and FX-adjusted fueled by robust income growth OTP Group (consolidated) P&L (in HUF billion) 2023 1Q 2023 4Q 2023 1Q 2024 Q-o-Q Y-o-Y FX-adj. FX-adj. w/o acq. Net interest income 1,462 311 426 435 2% 30% Net fees and commissions
Slide 5: OTP Group's total assets exceeded EUR 100 billion
OTP Group's total assets exceeded EUR 100 billion driven by successful acquisitions and dynamic organic growth. Profit contribution of foreign subsidiaries showed a trend-like increase over the last several years and hit 74% in 1Q 2024 Total assets development of OTP Group (in EUR billion) Flags rep
Slide 6: OTP Core realized HUF 50 billion profit after tax in 1Q 2024
OTP Core realized HUF 50 billion profit after tax in 1Q 2024 without dividends received from subsidiaries OTP CORE OTP Core profit after tax Highlighted key performance indicators of OTP Core (without dividends received from subsidiaries, HUF bn) (%) -67% Return on equity Net interest Cost / income
Slide 7: Mortgage loan contractual amounts tripled y-o-y at OTP Core
In 1Q 2024 mortgage loan contractual amounts tripled y-o-y at OTP Core, outperforming the market. OTP CORE OTP’s market share in mortgage and cash loan flows, plus in retail deposits reached multi-year heights Y-o-y change in mortgage loan contractual amounts in 1Q 2024 Y-o-y change in cash loan con
Slide 8: OTP Core micro, small business and corporate loans stable
At OTP Core, micro and small business loans as well as corporate loans remained stable during 1Q 2024. OTP CORE Subsidized lending schemes continued to generate significant new loan disbursements Performing corporate loan volume changes OTP Group’s market share in loans to Hungarian (DPD0-90 loan ch
Slide 9: Foreign subsidiary banks were profitable in 1Q 2024
In the first quarter of 2024 foreign subsidiary banks were profitable. Foreign profit contribution gradually increased in recent years reaching 74% in 1Q 2024 Profit after tax1 (HUF billion) ROE1 Cost / income ratio 1Q 2023 1Q 2024 1Q 2023 1Q 2024 1Q 2023 1Q 2024 DSK Group (Bulgaria) 35 43 19% 19% 4
Slide 10: Net interest income grew 2% q-o-q
Effect of Net interest income grew 2% q-o-q driven by Bulgaria, Uzbekistan and Russia acquisitions NET INTEREST 1Q 2023 4Q 2023 1Q 2024 1Q 2024 Y-o-Y 1Q 2024 Q-o-Q 1 OTP Core NII declined by 1% q-o-q, INCOME (HUF billion) (HUF billion) (HUF billion) (HUF billion) (HUF billion) as a result of the bas
Slide 11: Consolidated NIM picked up by 65 bps y-o-y
Consolidated NIM picked up by 65 bps y-o-y driven mostly by the bounce-back in Hungary and the improvement in EUR-linked countries NET INTEREST 1Q 2023 4Q 2023 1Q 2024 MARGIN 1 At OTP Core net interest margin hit OTP Group all-time low in 1Q 2023, but, partly 3.65% 4.27% 4.30% thanks to the central
Slide 12: Consolidated performing loan volumes grew by 2% q-o-q
Consolidated performing loan volumes grew by 2% q-o-q without Romania, to a great extent driven by the strong performance in Bulgaria and Croatia. In Hungary mortgage loan growth accelerated and corporate exposures stabilized Q-o-Q performing (Stage 1+2) LOAN volume changes, adjusted for FX effect C
Slide 13: Consolidated deposits grew by 1% q-o-q
Consolidated deposits grew by 1% q-o-q due to the Hungarian household deposits turning into growth mode from 4Q 2023, expanding by 3% q-o-q in the first quarter Q-o-Q DEPOSIT volume changes, adjusted for FX-effect Cons. Core2 DSK SKB+ OBH OBSrb Ipoteka OBU CKB OBA OBM OBRu OBR (Hungary) (Bulgaria) N
Slide 14: 14% y-o-y FX-adjusted growth in net fees
The 14% y-o-y FX-adjusted growth in net fees was driven mainly by the Hungarian operation, OTP Core Effect of and Fund Management. The quarterly drop was mostly seasonal and one-off driven acquisitions NET FEE 1Q 2023 4Q 2023 1Q 2024 1Q 2024 Y-o-Y 1Q 2024 Q-o-Q 1 At OTP Core the 11% y-o-y fee INCOME
Slide 15: Other income decreased by 39% q-o-q
Effect of Other income decreased by 39% q-o-q, driven mainly by the lower FVA of subsidized loans at OTP Core acquisitions OTHER INCOME 1Q 2023 4Q 2023 1Q 2024 1Q 2024 Y-o-Y 1Q 2024 Q-o-Q (HUF billion) (HUF billion) (HUF billion) (HUF billion) (HUF billion) OTP Group -121 -15 -23%/-26%2 -26 1 53 67
Slide 16: FX-adjusted operating costs increased by 9% y-o-y
Amid high inflationary environment, FX-adjusted operating costs increased by 9% y-o-y without acquisitions Effect of acquisitions 9M 2023 1Q 2024 Y-o-Y Y-o-Y, FX-adjusted OPERATING COSTS (HUF (HUF billion) billion) (HUF billion) (HUF billion) 1 At OTP Core the 4% y-o-y growth was driven by: OTP Grou
Slide 17: Total risk costs turned positive in 1Q
The sign of total risk costs turned into positive in 1Q with releases in Hungary and Croatia, and moderating risk costs in Uzbekistan 2023 1Q 2024 TOTAL RISK COST 2023 credit risk 1Q 2023 4Q 2023 1Q 2024 credit risk (HUF billion) cost rate1 (HUF billion) (HUF billion) (HUF billion) cost rate1 OTP Gr
Slide 18: Stage 3 ratio stayed flat q-o-q
The Stage 3 ratio stayed flat q-o-q. Provisioning policy remained conservative compared to regional peers Development of the Group's main credit Own coverage of Stage 1+2 loans compared to regional peers at quality indicators the end of 1Q 2024 84.9% 85.1% 84.5% 82.7% 83.1% 1.9% 1.5% Stage 1 ratio 0
Slide 19: Development of the Stage 1, 2 and 3 ratios
Development of the Stage 1, Stage 2 and Stage 3 ratios Cons. Core DSK SKB+ OBH OBSrb Ipoteka OBU CKB OBA OBM OBRu OBR Merk. (Hungary) (Bulgaria) NKBM (Croatia) (Serbia) (Uzbek.) (Ukraine) (Monten.) (Albania) (Moldova) (Russia) (Romania) (Hung. (Slovenia) leasing) 4Q 21 81.5% 78.0% 84.0% 86.0% 80.0%
Slide 20: Development of own provision coverage ratios
Development of the own provision coverage ratios in different Stage categories Cons. Core DSK SKB+ OBH OBSrb Ipoteka OBU CKB OBA OBM OBRu OBR Merk. (Hungary) (Bulgaria) NKBM (Croatia) (Serbia) (Uzbek.) (Ukraine) (Monten.) (Albania) (Moldova) (Russia) (Romania) (Hung. (Slovenia) leasing) 4Q 21 1.0% 1
Slide 21: Group capital and liquidity position remained stable
The Group’s capital and liquidity position remained stable, capital ratios improved even further q-o-q supported by the strong first quarter results Capital adequacy Regulatory Decomposition of the q-o-q change in the CET1 ratio and MREL ratios (%)1 requirements* (based on the prudential scope of co
Slide 22: Robust liquidity position: 73% net loan to deposit ratio
Robust liquidity position: 73% net loan to deposit ratio, 243% LCR, 159% NSFR and relatively benign redemption profile OTP Bank outstanding FX wholesale bonds OTP Bank FX MREL-eligible bond maturity Issued Amt. / profile2 (in EUR million) Issue Maturity Actual Issuance Date Instrument Call Date Date
Slide 23: OTP Bank ratings closely correlate with the sovereign ceilings
OTP Bank ratings closely correlate with the sovereign ceilings Hungarian sovereign, OTP Bank and OTP Mortgage Bank ratings Composition of main ratings by Moody’s and S&P Moody’s S&P Macro Factors Macro Factors Weighted Macro Profile Moderate- Anchor bbb- Financial Profile Bank-Specific Factors Combi
Slide 24: Delivery of ESG obligations and goals on track
The delivery of ESG obligations and goals set by the Bank’s ESG strategy is on track according to schedule Green loan stock1 ESG RESULTS AND TARGETS (consolidated, HUF billion) 1Q 2024 Actual Long-term KPIs Plan Building the Corporate: HUF 544 billion Green loans of HUF 1,500 1,500 green loan billio
Slide 25: OTP Group's performance recognized by professional organizations
OTP Group’s outstanding performance has traditionally been recognized by professional organizations ’Best Bank in CEE 2024’ ’Best Bank in Hungary in 2024’ ‘Bank of the Year Grand Prize’ since 2012 in all consecutive ‘Bank of the Year Main Prize’ years ’Best Bank in Croatia in 2024’ ’Best Bank in Mon
Slide 26: Management sees no reason to change the guidance for 2024
Management sees no reason to change the guidance for 2024 Management guidance for 2024 – OTP Group We expect improving GDP growth rate, declining inflationary and rate environment, which may have positive impact on loan demand and portfolio quality. Therefore: FX-adjusted organic performing loan v
Slide 27: Further details and financials
Further details and financials 27
Slide 28: OTP Group offers universal banking services in 12 countries
OTP Group offers universal banking services to 17 million active customers in 12 countries, in many of them with dominant market position Major Group Members Total Assets1 Systemic position in Hungary Moldova Russia OTP Bank 1Q 2024 market share (%) Albania Romania Russia Montenegro 4% Total assets
Slide 29: OTP Bank offers a unique investment opportunity in CEE banking
OTP Bank offers a unique investment opportunity to access the CEE banking sector. The Bank is a well-diversified and transparent player without strategic investors Market capitalization: EUR 13.3 billion1 Total number of ordinary shares: 280,000,010, each having a nominal value of HUF 100 and repres
Slide 30: Around 80% of net loan book invested in EU countries
Around 80% of the total net loan book is invested in EU countries, while Hungary’s share within the Group stood at 31% Breakdown of the consolidated net loan book Net loan book, 1Q 2024 By country By product Hungary1 HUF 7,020 bn Bulgaria HUF 4,212 bn Slovenia HUF 2,885 bn Leasing Leasing Leasing Co
Slide 31: 37% of the deposit book is held in Hungary
37% of the consolidated deposit book is held in Hungary, while Bulgaria and Slovenia together hold another third. Household volumes account for 55% of the total deposit base Breakdown of the consolidated deposit base Deposit base, 1Q 2024 By country By product Hungary1 HUF 11,252 bn Bulgaria HUF 5,4
Slide 32: The consolidated ROE was close to 23% in 1Q 2024
The consolidated ROE was close to 23% in 1Q 2024 2003-2008 2009-2013 1Q average average 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 ROE 29.4% 8.3% -7.4% 5.1% 15.4% 18.5% 18.7% 20.3% 10.9% 17.0% 11.0% 27.2% 22.7% ROE (adjusted) 29.0% 11.6% 8.5% 9.6% 15.4% 18.7% 19.1% 20.6% 13.0% 18.5% 18.8
Slide 33: Economic growth expected to accelerate in most operating countries
In 2024 economic growth is expected to accelerate in most operating countries Hungary Bulgaria Slovenia Croatia 2022 2023E 2024F 2022 2023E 2024F 2022 2023E 2024F 2022 2023E 2024F GDP growth (annual, %) 4.6 -0.9 2.52 3.9 1.8 2.1 2.5 1.6 2.4 7.0 3.1 3.2 Unemployment (%) 3.6 4.1 4.7 4.2 4.1 4.1 4.0 3.
Slide 34: Hungarian loan penetration levels still low in regional comparison
Hungarian loan penetration levels are still low in regional comparison implying good volume growth potential. This is also the case for the Bulgarian housing loan segment Market penetration levels in Hungary in ... Net customer loan to deposit ratio in the 4Q 2023 data for other CEE/CIS Hungarian cr
Slide 35: Acquisitions drove ~3.5-fold growth in net loan book
Successful acquisitions played a great role in the ~3.5-fold growth in consolidated net loan book over the last 7 years. At the same time, the composition of the Group shifted towards Eurozone / ERM 2 countries Consolidated net loan growth Share of Hungary in the Group's net loan portfolio (FX-adjus
Slide 36: In the last 7 years 11 acquisitions were completed
In the last 7 years 11 acquisitions were completed. As a result of the Ipoteka Bank acquisition in Uzbekistan, OTP Group entered the Central Asian region Target Net loans Market share Book value (seller, date of closing) (HUF billion) (before/after acq.1, %) (EUR million) Splitska banka, Croatia (No
Slide 37: Important information, disclaimers and contacts
Important information, disclaimers and contacts Referring to both equity and fixed income investors: This presentation has been prepared by OTP Bank Nyrt. ("OTP Bank") and is the sole responsibility of OTP Bank. This presentation and the information contained herein is strictly confidential to the r