Otp Bank Nyrt · BET:OTP
Otp Bank Nyrt — OTP Bank — Q1 2021 Earnings Presentation
42 slides from Otp Bank Nyrt's earnings presentation, 2021
Slide 1: OTP Group - Ideally positioned for post-COVID rebound
OTP Group - Ideally positioned for post-COVID rebound Investor presentation Based on 1Q 2021 results
Slide 2: 1Q 2021 accounting profit exceeded HUF 93 billion; adjusted profit HUF 117 billion
In 1Q 2021 the accounting profit exceeded HUF 93 billion, while the adjusted profit comprised HUF 117 billion. The adjusted profit grew both y-o-y and q-o-q as a result of lower risk costs After taxforintban) (milliárd profit development y-o-y (in HUF billion) After tax profit development (in HUF bi
Slide 3: 1Q 2021 adjustments hit -HUF 24 billion in total
In 1Q 2021 the adjustments hit -HUF 24 billion in total, mostly due to the lump-sum recognition of the Hungarian bank tax (in HUF billion) 1Q 20 4Q 20 1Q 21 Q-o-Q Y-o-Y Consolidated after tax profit (accounting) -4.1 71.5 93.3 31% Adjustments (total) -35.9 -7.1 -24.0 238% -33% Dividends and net cash
Slide 4: Improvement of adjusted profit supported by lower risk costs and higher revenues
The improvement of adjusted profit was supported by lower risk costs and higher revenues Q-o-Q Y-o-Y (in HUF billion) 1Q 2020 4Q 2020 1Q 2021 FX-adjusted, and without the sale of Slovakia Consolidated adjusted after tax profit 31.8 78.6 117.3 50% 242% 56% 257% Profit before tax 35.8 88.6 138.4 51%1
Slide 5: Almost all major Group members posted significant y-o-y profit improvement
Almost all major Group members posted a significant y-o-y improvement in their quarterly profit Adjusted profit after tax (in HUF billion) 1Q 2020 1Q 2021 Y-o-Y OTP Group 31.8 117.3 268%1 / 250%2 OTP Core (Hungary) 16.9 56.0 232%1 DSK Group (Bulgaria) 4.4 18.3 314% / 239%3 OBH (Croatia) 2.6 5.1 93%
Slide 6: Total income grew 7% y-o-y organically
Total income grew by 7% y-o-y organically, but declined by 2% compared to the previous quarter, Effect of the mainly because of the absence of the success fee income at OTP Fund Management booked in 4Q sale of OBS TOTAL INCOME 1Q 2021 Y-o-Y Q-o-Q without one-off items (HUF billion) (HUF billion, %)
Slide 7: 3% quarterly growth in net interest income driven by OTP Core Hungary
The 3% quarterly growth in net interest income was driven by OTP Core Hungary, supported by both Effect of the expanding volumes and improving margins sale of OBS NET INTEREST 1Q 2021 Y-o-Y Q-o-Q 1 At OTP Core the NII was boosted by INCOME (HUF billion) (HUF billion, %) (HUF billion, %) the continue
Slide 8: Consolidated net interest margin improved by 5 bps q-o-q
The consolidated net interest margin improved by 5 bps q-o-q mainly due to the Hungarian operation where the margin expansion was driven by regulatory-induced repricing of certain consumer loans after the expiry of the temporary rate cap on newly granted unsecured loans, and the technical effect of
Slide 9: Consolidated performing loans grew 2% q-o-q
The consolidated performing loans grew 2% q-o-q. 60% of the growth came from Hungary, led by the reviving cash loan sales and the continued strong demand for baby loans and the loans under the Funding for Growth scheme Q-o-Q performing (Stage 1 + 2) LOAN volume changes in 1Q 2021, adjusted for FX-ef
Slide 10: Consolidated performing loans increased 8% y-o-y
Consolidated performing loans increased by 8% y-o-y without the effect of the sale of Slovakia (FX-adjusted). The 15% expansion in Hungary was mainly due to the subsidized baby loans and MSE loans granted under the FGS scheme Y-o-Y performing (Stage 1 + 2) LOAN volume changes in 1Q 2021, adjusted fo
Slide 11: Consolidated deposits increased by 3% q-o-q
Consolidated deposits increased by 3% q-o-q or almost HUF 500 billion, driven by Hungary Q-o-Q DEPOSIT volume changes in 1Q 2021, adjusted for FX-effect Cons. Core DSK OBH OBSrb SKB OBR OBU OBRu CKB OBA Mobias (Hungary) (Bulgaria) (Croatia) (Serbia) (Slovenia) (Romania) (Ukraine) (Russia) (Monten.)
Slide 12: Consolidated deposits grew 15% y-o-y organically
Consolidated deposits grew by 15% y-o-y organically, within that the Hungarian deposits grew by 22%. The decline in the Russian portfolio was in line with the shrinking loan portfolio. The nominal expansion of Romanian deposits exceeded the growth in loan volumes Y-o-Y DEPOSIT volume changes in 1Q 2
Slide 13: 1Q 2021 net fees rose 5% y-o-y
In 1Q 2021 net fees rose by 5% y-o-y (w/o OBS sale and FX-adjusted), mostly due to higher activity in Effect of the Hungary. The 13% q-o-q drop was mainly due to negative one-offs at OTP Core and the base effect of sale of OBS success fees booked at OTP Fund Management (Hungary) 1Q 2021 Y-o-Y Q-o-Q
Slide 14: Other net non-interest income up more than 80% y-o-y
Effect of the The 1Q other net non-interest income leaped by more than 80% y-o-y and showed a slight decline q-o-q sale of OBS OTHER INCOME 1Q 2021 Y-o-Y Q-o-Q 1 Other income at OTP Core dropped without one-off items (HUF billion) (HUF billion, %) (HUF billion, %) by 9% (HUF 1 billion) q-o-q, largel
Slide 15: Consolidated operating costs grew 3% y-o-y organically
Consolidated operating costs grew by 3% y-o-y organically (also adjusted for FX and the shift of Effect of the Hungarian deductible taxes to the corporate tax line) sale of OBS 1Q 2021 Y-o-Y Y-o-Y, FX-adjusted 1 At OTP Core the operating expenses OPERATING COSTS 2021Q1 (HUF CUM billion) (HUF billion
Slide 16: OTP Core: mortgage applications and market share
In Hungary the mortgage applications advanced by 35% y-o-y, partly due to the exemption from duties introduced for customers using the Housing Subsidy for Families, and also to the home renovation loan. OTP OTP CORE Bank had a market share over 30% in new mortgage and cash loan disbursements, as wel
Slide 17: OTP Core: subsidized baby loans market share above 40%
In the case of subsidized baby loans, OTP Bank's market share is steadily above 40%. The Bank also actively OTP CORE participates in the sale and intermediation of subsidized loan products launched in 2021 Baby loans Contractual amounts OTP Bank's market share calculated (HUF billion) from the contr
Slide 18: OTP Core: corporate and micro/small enterprise loans
OTP's micro and small enterprises loans grew by 14% q-o-q due to the outstanding performance in the Funding for Growth Go! scheme, which was recognized by the central bank with the FGS Excellence Award. OTP CORE OTP's corporate loan market share continued its upward trend and exceeded 17% Performing
Slide 19: Integration of the two Serbian banks completed
On April 30 2021 the integration process of the two Serbian banks was successfully completed, creating the No. 1 bank in Serbia in terms of gross customer loans. The dynamic expansion of business volumes Serbia continued during the integration period Market share and equity of Serbian banks Net loan
Slide 20: OTP Group's conservative provisioning policy
Portfolio quality remained basically stable, partly due to the economy protection measures, in particular the payment moratoria. 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
Slide 21: Loans under repayment moratoria reached HUF 1,873 billion
The total volume of loans at Group level under the loan repayment moratoria reached HUF 1,873 billion at the end of March, representing 13% of the consolidated total gross loan book Details of the currently running payment holiday schemes in Currently Interest charged on Application Participation Op
Slide 22: Corporate exposures classified by COVID-19 vulnerability
Based on macro scenarios and the potential COVID-19 impact on specific sectors, OTP Group classified the corporate exposures into four categories. 71% of the portfolio is in sectors with light / no impact expected Classification of the corporate1 exposures based on their anticipated vulnerability (1
Slide 23: Development of Stage 1, Stage 2 and Stage 3 ratios
Development of the Stage 1, Stage 2 and Stage 3 ratios Cons. Core DSK OBH OBSrb SKB2 OBR OBU OBRu CKB OBA Mobias Merk.3 (Hungary) (Bulgaria) (Croatia) (Serbia) (Slovenia) (Romania) (Ukraine) (Russia) (Monten.) (Albania) (Moldova) (Hungary 4Q 19 88.8% 91.4% 88.6% 83.2% 96.0% 98.9% 83.9% 73.8% 75.0% 8
Slide 24: Development of own provision coverage ratios by Stage
Development of the own provision coverage ratios in different Stage categories Cons. Core DSK OBH OBSrb SKB1 OBR OBU OBRu CKB OBA Mobias Merk.2 (Hungary) (Bulgaria) (Croatia) (Serbia) (Slovenia) (Romania) (Ukraine) (Russia) (Monten.) (Albania) (Moldova) (Hungary 4Q 19 1.1% 0.8% 1.1% 0.8% 0.4% 0.4% 1
Slide 25: Development of Stage 2 and Stage 3 ratios
Development of the Stage 2 and Stage 3 ratios 4Q 19 5.3% 8.4% 11.1% 9.8% 6.9% 10.7% 6.5% 7.5% 14.5% 12.8% 14.1% 11.7% 1Q 20 8.6% 10.7% 21.4% 9.2% 9.5% 11.0% 7.0% 8.7% n/a 13.6% 13.9% 13.0% Stage 2 2Q 20 8.6% 16.2% 23.6% 9.7% 12.5% 15.6% 8.0% 9.6% 17.5% 13.4% 15.0% 13.9% ratio1 3Q 20 11.0% 16.8% 21.9
Slide 26: Provision coverage ratios in IFRS 9 impairment categories
Development of the provision coverage ratios in IFRS 9 impairment categories Group Group w/o Russia 4Q 19 1.6% 1.2% 0.5% 0.5% 0.2% 0.4% 0.5% 0.8% 0.6% 2.7% 1.8% 1.7% 1.4% 1Q 20 2.1% 1.7% 0.6% 0.6% 0.2% 0.7% 0.6% 0.9% 0.6% n/a 2.1% 1.8% 1.7% Stage 1+2 own 2Q 20 2.2% 1.8% 0.8% 0.6% 0.6% 0.8% 0.6% 0.9%
Slide 27: Strong capital position, ratios above regulatory requirements
Strong capital position, all capital ratios are well above the regulatory requirements Decomposition of the change in CET1 ratio in 1Q 2021 Effects impacting the CET1 ratio in 1Q 2021 (changes in pp) • The CET1 capital in 1Q was boosted by the interim accounting profit -0,6% (HUF 93 billion) reduced
Slide 28: Macroeconomic indicators in the CEE region
Main macroeconomic indicators in the CEE region’s countries: in terms of growth substantial rebound is expected in all countries in 2021 Hungary Bulgaria Croatia Serbia 2020A 2021F 2020A 2021F 2020A 2021F 2020A 2021F GDP growth (y-o-y, %) -5.0 4.9 -4.2 3.4 -8.0 5.5 -1.0 5.0 Unemployment (%) 4.1 4.0
Slide 29: Management expectations for 2021
For 2021 the management expects improving profitability and cost efficiency, and continued strong loan growth. The management remained committed to pay dividend, within the framework set by the National Bank of Hungary Management expectations for 2021 (as communicated along with the 4Q 2020 report r
Slide 30: Further details and financials
Further details and financials 30
Slide 31: OTP Group offers universal banking to 16.5 million customers in 11 countries
OTP Group offers universal banking services to 16.5 million active1 customers in 11 countries across the CEE/CIS Region Major Group Members in Europe Total Assets Systemic position in Hungary… Montenegro Albania 1Q 2021 market share (%) OTP Bank Russia Russia Moldova Ukraine 1% 3% Total assets 27 Ro
Slide 32: OTP Group's Capabilities
OTP 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 10.9 billion1 Total number of ordinary shares: 280,000,010, each having a nominal Ownership structure of OTP Bank
Slide 33: Net loan book dominated by Hungary and tilted to retail
The net loan book is dominated by Hungary and tilted to retail lending; approximately 78% of the total book is invested in EU countries with stable earning generation capabilities Breakdown of the consolidated net loan book Hungary1 4,959 billion Bulgaria 2,451 billion (in HUF billion) Leasing Leasi
Slide 34: Deposit book: Hungary and retail segment dominant
In the deposit book Hungary and the retail segment is dominant. In Hungary and Bulgaria OTP and DSK are the largest retail deposit holders Breakdown of the consolidated deposit base Hungary1 8,460 billion Bulgaria 3,614 billion (in HUF billion) Corporate 15% Retail sight Corporate Retail sight MSE B
Slide 35: Accounting and adjusted ROE development
In 2020 the accounting ROE was hit mainly by the temporary surge in risk costs. In 1Q 2021 the adjusted ROE already got close to the 2017-2019 levels due to modest risk cost rate and cost efficiency gains offsetting revenue margin pressure 2003-2008 2009-2013 2014 2015 2016 2017 2018 2019 2020 1Q 20
Slide 36: 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 ... 4Q 2020 data for other H
Slide 37: Performing loans grew 2.3-fold between 2016 and 1Q 2021
OTP Group’s performing loans grew to 2.3-fold between 2016 and 1Q 2021, driven by both organic growth and acquisitions OTP Group – performing (DPD0-90) loan growth1 FX-adjusted, in HUF billion 2016 6,058 Organic 629 +26% Acquisitions 960 Components of OTP Group’s 2017 7,646 performing loan growth Or
Slide 38: Acquisitions improved OTP's positions in many countries
Acquisitions completed in the last few years materially improved OTP’s positions in many countries Target Net loan volumes Market share in total assets Book value (seller, date of closing) (in HUF billion) (before/after acquisition2, %) (in EUR million) Splitska banka, Croatia (Nov 18) 631 4.8 11.2
Slide 39: DPD90+ volumes increased by HUF 9 billion in 1Q 2021
In 1Q 2021 the DPD90+ volumes increased by HUF 9 billion (adjusted for FX effect and sales and write-offs) FX-adjusted quarterly change in DPD90+ loan volumes (without the effect of sales / write-offs, in HUF billion) Consolidated OTP Core DSK Group OBH OBSrb (Hungary) (Bulgaria) (Croatia) (Serbia)
Slide 40: OTP Bank ratings correlate with sovereign ceilings
+ positive While OTP Bank ratings closely correlate with the sovereign ceilings, subsidiaries’ ratings enjoy (rating outlook) - negative the positive impact of parental support 0 stable Hungarian sovereign, OTP Bank and OTP Mortgage Bank ratings Moody’s S&P Fitch Moody's S&P OTP Bank Baa1 (0) BBB (0
Slide 41: OTP Bank's ESG ratings have improved recently
OTP Bank’s ESG ratings have improved recently at Sustainalytics and the CDP score was upgraded as well Worst level Best level • Medium exposure and average score for the management of material ESG issues; • Ranked No. 45 out of 372 – 13rd percentile in the 23.5 SEVERE HIGH MEDIUM LOW NEGLIGIBLE dive
Slide 42: 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