Otp Bank Nyrt · BET:OTP
Otp Bank Nyrt — FY2009 Earnings Presentation
31 slides from Otp Bank Nyrt's earnings presentation, Mar 2, 2010
Slide 1: OTP Group 2009 Results and 2010 Guidance
OTP Group 2009 Results and 2010 Guidance Conference call presentation – 2 March 2010 Presented by: László Bencsik, CFO
Slide 2: Content
Content Summary of 2009 result 3 Macroeconomic overview 5-9 OTP Group financial performance 11-23 Liquidity and capital position 25-28 2010 expectations 30 2
Slide 3: HUF 151 billion net results in line with management expectations, strong operating profit
HUF 151 billion net results (-31% y-o-y) in line with management expectations, strong operating profit (HUF 438 billion, +19% y-o-y) with increasing risk cost and stringent cost control Consolidated adjusted after- (HUF billion) 219 tax profit* 4Q 08 3Q 09 4Q 09 2008 2009 151 ROE 16.3% 15.9% 6.9% 22
Slide 4: Content
Content Summary of 2009 result 3 Macroeconomic overview 5-9 OTP Group financial performance 11-23 Liquidity and capital position 25-28 2010 expectations 30 4
Slide 5: Hungary 1/2: fiscal discipline, strong adjustment in the C/A balance
Hungary 2/1: fiscal discipline, strong adjustment in the C/A balance and domestic demand made room for rate cuts, while industrial production and exports are picking up GDP growth (%) Budget deficit Due Due toto the the crisis crisis external external demand demand (in % of GDP, 2005-2007 and 2009-2
Slide 6: Hungary 2/2: moderating budget deficit; stable local currency
Hungary 2/2: moderating budget deficit; stable local currency in 2H 2009; GDP performance approaching the bottom; revitalizing government securities market Budget deficit (12M moving average in % of GDP) EURHUF exchange rate and NBH base rate (%) 0 320 12.5 Deficit and fact forecast 300 10.0 -2 -3.9
Slide 7: Ukraine, Russia and Bulgaria macro overview
Ukraine: FX reserves of USD 25 bn is sufficient to defend the UAH. Russia: industrial production and consumption is picking up. Bulgaria: stability is the main priority Ukraine Industrial production and steel Steel price FX reserves Demand for key export goods have increased, manufacturing (2006 = 1
Slide 8: Romania, Croatia and Slovakia macro overview
Romania: strong external demand, IMF cooperation is back on track. Croatia: stability and fiscal tightening remains. Slovakia: manufacturing and exports bounced back Romania Industrial production and EUR/RON Base rate and After After the the Presidential Presidential elections elections and and the
Slide 9: Serbia and Montenegro macro overview
Serbia: solid deposit growth and rebounding industrial production. Montenegro: good tourist season, only 4.0% GDP contraction in the first three quarter of 2009 Industrial Production C/A balance Deposit stocks Serbia (2008=100) (% of GDP) (RSD bn) Industrial Production back back to to 110 0 1050 its
Slide 10: Content
Content Summary of 2009 result 3 Macroeconomic overview 5-9 OTP Group financial performance 11-23 Liquidity and capital position 25-28 2010 expectations 30 10
Slide 11: Quarterly decrease of operating profit; provisions for loan losses grew
2% quarterly decrease of operating profit is the result of the 6% growth of total income and 17% increase of operating expenses, provisions for loan losses grew by 21% q-o-q Operating profit 438 369 +19% -2% 117 110 108 Consolidated adjusted after-tax profit* (in HUF billion) 219 4Q 08 3Q 09 4Q 09 2
Slide 12: Total income grew by 6% q-o-q
Total income grew by 6% q-o-q, partly due to one-off items, partly to the outstanding performance of the Russian subsidiary; net interest and F&C income increased by 12% and 4% q-o-q respectively, other non-interest income dropped by 32% q-o-q due to lower profit realised on the security portfolio a
Slide 13: Net fee income decreased slightly on a yearly base
The consolidated net fee income decreased slightly (-5%) on a yearly base reflecting the negative effect of the weaker lending activity, but deposit and card related fee income showed relative resilience Net fee income (HUF billion) Net fee income was driven by the development of deposits and the re
Slide 14: Total income grew in Hungary and Bulgaria
The total income grew in Hungary and Bulgaria, the 20% y-o-y increase in Hungary is mainly due to one-off items, net interest margin increased by 5%. Total income Net interest margin* (in HUF billion) 446 5,62% 5,58% 5,88% 5,66% 5,95% OTP Core 371 +5% +20% Hungary 95 111 110 4Q08 3Q09 4Q09 2008 2009
Slide 15: Loan-to-deposit ratio decreased significantly q-o-q
Loan-to-deposit ratio on group level decreased significantly q-o-q, highest adjustment was observed in countries with high LTD ratios (Ukraine, Romania, Russia) Gross loan to deposit ratio at YE 2009(%) Gross loans/Deposits 100% Y-o-Y Q-o-Q Net loan/Deposits* -13%p -3%p OTP Group 108% 121% Retail bo
Slide 16: FX-adjusted consolidated loan book slightly declined in 2009
FX-adjusted consolidated loan book slightly declined (-3%) in 2009. Remarkable volume growth could be observed in case of corporate loans in Hungary and consumer loans in Russia. Breakdown of consolidated loan book (HUF billion) Q-o-Q loan volume changes in 4Q 2009, adjusted for FX-effect 7,001 7,71
Slide 17: Consolidated FX-adjusted deposit base grew by 7% y-o-y
Consolidated FX-adjusted deposit base grew by 7% y-o-y (+2% q-o-q); the Russian, Romanian and Ukrainian unit showed an outstanding expansion. Breakdown of consolidated customer deposits (HUF billion) Q-o-Q deposit volume changes in 4Q 2009 adjusted for FX-effect 5,219 5,551 5,297 5,517 5,646 Total 2
Slide 18: Stringent cost control; cost/income ratio well below plan
The lover level of business activity coupled with stringent cost control. Cost/income ratio for 2009 (44.3%) well below the full-year plan (~50%); outstandingly efficient operation in Bulgaria and Ukraine Cost/income (%) Change of consolidated operating expenses* (%) 30 40 50 60 Y-o-Y Q-o-Q 2009/200
Slide 19: Conservative provisioning resulted in significantly higher coverage ratio
Conservative provisioning at the year-end resulted a significantly higher coverage ratio (4Q 2009: 73.8%, +5.2%-points q-o-q), 0.9%-points q-o-q increase of consolidated DPD90+ rate lagged behind the previous quarters Consolidated risk costs and its ratio to average gross loans Quality deterioration
Slide 20: Improving provision coverage of 90+ days overdue loans
Significantly improving provision coverage of 90+ days overdue loans across the Group due to the increasing risk costs in 4Q. In Bulgaria and Russia DPD90+ ratio improved q-o-q, in Ukraine the portfolio-deterioration moderated on a quarterly base, stable loan quality in case of OTP Core OTP Core DSK
Slide 21: Stabilizing portfolio quality in Hungarian mortgage segment
Stabilizing portfolio quality in the Hungarian mortgage segment, improving Russian and Bulgarian loan book, significant deceleration of new DPD90+ formation in Ukraine DPD90+ loan volumes DPD90+ loan volumes OTP Core 084Q 091Q 092Q 093Q 094Q Q/Q OTP Bank 084Q 091Q 092Q 093Q 094Q Q/Q Russia Total 4.3
Slide 22: Rescheduling of retail loans in Ukraine, Romania, Bulgaria
In 2009 material retail loan rescheduling in Ukraine (39%) Romania (8%), Bulgaria (6%) and at OTP Core (4%), in case of other subsidiaries the measure of rescheduling is negligible Development of rescheduled retail portfolio* (as % of outstanding retail loan portfolio*) 0 10 20 30 40 Altogether 6.5%
Slide 23: Substantial decline in new DPD90+ formation
Substantial decline in new DPD90+ formation on the consolidated level (FX adjusted) in 4Q 2009 FX adjusted quarterly change in DPD90+ loan volumes (in HUF billion) FX adjusted DPD90+ formation – similarly to the DPD90+ ratio – reflects a strong Consolidated OTP Core (Hungary) DSK (Bulgaria) decelera
Slide 24: Content
Content Summary of 2009 result 3 Macroeconomic overview 5-9 OTP Group financial performance 11-23 Liquidity and capital position 25-28 2010 expectations 30 24
Slide 25: Net liquidity buffer of the Group is very robust
Net liquidity buffer of the Group is very robust – around EUR 4.85 billion at year end – and increasing Current liquidity buffer is EUR 4.85 billion above debt maturing within 1 year Maturing debt was repaid in due time: (EUR million) EUR 750 million senior bond at 27/02/2009 3Q 2009 4Q 2009 E
Slide 26: Capital adequacy of mother bank strengthened significantly y-o-y
Capital adequacy of mother bank strengthened significantly y-o-y, the quarterly drop is attributable to higher RWA and the capital increase in OTP Romania. The consolidated CAR is supported by the consecutive profitable operation. The EBRD deal has a further potential positive impact on CAR (the fac
Slide 27: OTP's capital position compared to peers
In international comparison, OTP’s capital position compares favourably to its peers and seems more than adequate considering its risk profile Capital adequacy ratio counted according to Capital Adequacy Ratio and Tier1 ratio (%) Standard & Poor’s internal methodology* (%) (in 4Q 2009* – members of
Slide 28: Stable capital adequacy across the Group
Stable capital adequacy across the Group, unconsolidated CAR ratios above regulatory minimum Capital adequacy ratios (according to local regulations) Under HAR, the OTP-MOL share exchange concluded in April increased the unconsolidated CAR of OTP Bank by Min. CAR 2008 3Q 09 2009 170 bps compared to
Slide 29: Content
Content Summary of 2009 result 3 Macroeconomic overview 5-9 OTP Group financial performance 11-23 Liquidity and capital position 25-28 2010 expectations 30 29
Slide 30: Expectations for 2010: improving macro environment, single digit loan growth
Expectations for 2010: improving macro environment, single digit loan and deposit growth, stringent cost control, eroding income margin Macro expectations OTP Group expectations 2009 Export Real GDP 2010 growth growth -9.6% -6.2% The development of risk cost may result in Hungary 7.8% -0.2% -7.5% -7
Slide 31: Forward looking statements
Forward looking statements This 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