Otp Bank Nyrt · BET:OTP
Otp Bank Nyrt — Q2 2022 Earnings Presentation
39 slides from Otp Bank Nyrt's earnings presentation, 2022
Slide 1: OTP Group – Strong results and capital provide resilience in turbulent times
OTP Group – Strong results and capital provide resilience in turbulent times Investor presentation Based on 2Q 2022 results
Slide 2: Group posted HUF 42.7 billion profit after tax in first half-year
The Group posted HUF 42.7 billion profit after tax in the first half-year, representing an 80% drop y-o-y. In 1H adjustments amounted to -HUF 208 billion (after tax), mainly relating to the Russian exposures and the Hungarian government measures Profit development (milliárd forintban) Y-o-Y (HUF bil
Slide 3: Capital adequacy ratios and liquidity reserves significantly exceeded regulatory minimum requirements
Capital adequacy ratios and liquidity reserves significantly exceeded regulatory minimum requirements Regulatory minimum CAR and CET1 ratio The CET1 ratio increased by 0.2 pp q-o-q: requirements1 actual values2 • CET1 capital increased by HUF 415 billion, of which: +HUF 313 billion effect arising fr
Slide 4: Balance of adjustment items in 2Q 2022
In 2Q 2022 the balance of adjustment items was -HUF 86 billion, mostly due to the special tax on financial institutions in Hungary (in HUF billion) 1H 21 2021 1Q 22 2Q 22 1H 22 Q-o-Q Y-o-Y Consolidated profit after tax 215.1 456.4 -33.4 76.1 42.7 -38% Adjustments (total) -31.1 -40.5 -122.0 -86.1 -20
Slide 5: OTP Group consolidated P&L
The q-o-q improvement in the Group's profit after tax was mainly due to lower risk costs and lower corporate tax burden, while the operating profit increased by 3% (adjusted for FX rate changes) partly boosted by the 3% credit expansion OTP Group (consolidated) P&L (in HUF billion) 1H 2021 2021 1Q 2
Slide 6: Group result without Russian and Ukrainian operations
The Group's result without the Russian and Ukrainian operations in 2Q 2022 was helped by positive risk costs. In the high inflation environment, the q-o-q growth rate of costs exceeded the exchange rate-adjusted growth dynamics of revenues OTP Group without Russia and Ukraine P&L (in HUF billion) 1H
Slide 7: Russian and Ukrainian subsidiaries results
The Russian and Ukrainian subsidiaries made losses in the first half-year, despite improving net results in 2Q. The combined weight of the Russian and Ukrainian net loans within the Group was 7.8% at the end of June OTP Bank Russia OTP Bank Ukraine Total assets 2Q 1H 2Q 1H (2Q 2022, in HUF billion)
Slide 8: OTP's performance recognized by awards
OTP’s outstanding performance is traditionally recognized not only by capital markets, but professional organizations, too ’Best Bank in CEE 2022’ ‘Bank of the Year in 2021’ ’Best Bank in Hungary in 2022’ ‘Mobile Banking Solution of since 2012 in all consecutive the Year 2021’ years ‘UX Solution of
Slide 9: OTP's way to a sustainable world
OTP’s way to a sustainable world: dedicated permanent ESG organization, strategic focus, and visible results: the ESG rating by Sustainalytics improved recently ORGANIZATION STRATEGY RATINGS The whole organization of the Bank and its OTP Bank has successfully started implementing its OTP Bank’s impr
Slide 10: Adjusted profit after tax by subsidiary
The FX-adjusted 106% q-o-q increase in 2Q adjusted profit after tax was mainly due to the improving Bulgarian results, while the Russian and Ukrainian earnings turned into positive against the significant losses suffered in 1Q. The adjusted profit of OTP Core declined by 20% q-o-q 2Q 2021 1H 2021 20
Slide 11: Total income by subsidiary
The semi-annual total income grew by 22%. The quarterly increase was driven by Bulgaria, Russia and Ukraine TOTAL INCOME 1H 2022 2Q 2022 1H 2022 Y-o-Y 2Q 2022 Q-o-Q without one-off items (HUF billion) (HUF billion) (HUF billion, %) (HUF billion, %) OTP Group 755 394 138 22%/17%1 33 9%/3%1 OTP CORE (
Slide 12: Net interest income by subsidiary
The semi-annual net interest income grew by 22% y-o-y with bulk of the growth coming from Hungary, Ukraine, Bulgaria and Romania. The 11% quarterly improvement was related mainly to Hungary and the FX translation effect – on constant FX rates the quarterly growth would have been 4% NET INTEREST 1H 2
Slide 13: Consolidated net interest margin drivers
The consolidated net interest margin improved by 14 bps q-o-q, mainly due to the exchange rate effect Drivers behind the q-o-q increase of the consolidated net interest margin +20 bps -7 bps 3.57% +4 bps -4 bps 3.43% +1 bp 1Q 2022 OTP Core OTP Bank OTP Bank FX effect Others 2Q 2022 Russia Ukraine •
Slide 14: Q-o-Q performing loan volume changes
The consolidated performing loan growth reached 3% q-o-q, but without the Russian and Ukrainian operations it was 5%. In Hungary corporate and consumer lending was particularly strong, however housing loan volumes also grew by 2% Q-o-Q performing (Stage 1 + 2) LOAN volume changes adjusted for FX-eff
Slide 15: YTD performing loan volume changes
The consolidated performing loans expanded by 6% over the first six months of 2022. The performance of the CEE operations remained favourable across the board, but volumes dropped in Russia and Ukraine YTD performing (Stage 1 + 2) LOAN volume changes adjusted for FX-effect – 1H 2022 Cons. Core2 DSK
Slide 16: Q-o-Q deposit volume changes
Consolidated deposits grew by 2% q-o-q. Hungarian retail deposits slightly eroded in 2Q, following the strong 1Q growth of 5% fuelled by the personal income tax refund, too. In 2Q deposits grew both in Ukraine and Russia Q-o-Q DEPOSIT volume changes adjusted for FX-effect – 2Q 2022 Cons. Core DSK OB
Slide 17: YTD deposit volume changes
Consolidated deposits grew by 5% in the first six months, within that Hungarian deposits increased by 8% YTD DEPOSIT volume changes adjusted for FX-effect – 1H 2022 Cons. Core DSK OBH OBSrb SKB OBR OBU OBRu CKB OBA OBM (Hungary) (Bulgaria) (Croatia) (Serbia) (Slovenia) (Romania) (Ukraine) (Russia) (
Slide 18: Net fee income by subsidiary
In 1H 2022 the 19% y-o-y improvement in net fees was driven by Hungary and Bulgaria. In 2Q net fees rose by 6% q-o-q on an FX-adjusted basis, driven by the better Hungarian result explained mainly by one-off items, and seasonally stronger figures especially in tourism-exposed countries such as Croat
Slide 19: Other net non-interest income
The semi-annual other net non-interest income jumped by 31% y-o-y, whereas in 2Q it contracted by 11% q-o-q OTHER 1H 2022 2Q 2022 1H 2022 Y-o-Y 2Q 2022 Q-o-Q 1 OTP Core’s 1H other income doubled, INCOME (HUF billion) (HUF billion) (HUF billion, %) (HUF billion, %) partly owing to base effect (a larg
Slide 20: Operating costs growth
Amid the high inflationary environment, the semi-annual operating costs grew by 10.8% y-o-y adjusted for FX effect 1H 2022 Y-o-Y Y-o-Y, FX-adjusted 1 At OTP Core the cost growth was 18% or OPERATING COSTS (HUF 2022Q2 billion) CUM (HUF billion, %) (HUF billion, %) HUF 24 billion y-o-y, of which HUF 5
Slide 21: OTP Core mortgage and cash loan market shares
In Hungary the semi-annual mortgage loan applications surged by 10% y-o-y, mainly due to the subsidized OTP CORE green housing loans, whereas market based mortgage loan requests halved Y-o-y change of mortgage loan applications and disbursements Performing (Stage 1+2) cash loan volume growth in 1H 2
Slide 22: Baby loans and Green Home Programme
OTP Bank maintained its market share above 40% in baby loan flows; the scheme has been recently extended until the end of 2023. The subsidized green housing loans generated huge demand, thus the total available OTP CORE amount of HUF 300 billion has already been exhausted; actual disbursements come
Slide 23: Corporate and SME loans in Hungary
The micro and small enterprise loans grew by 12% ytd. The Széchenyi Card Go! scheme, introduced in last July and already replaced by the newly launched Széchenyi Card MAX programme available from August, OTP CORE had a favourable effect on loan dynamics. OTP's corporate loan market share improved fu
Slide 24: OTP Core repayment moratorium volumes
At OTP Core loans under the moratorium comprised HUF 201 billion, representing 3.7% of the total loan book. OTP CORE Eligible clients who applied for the moratorium by the end of July can remain in the scheme till the end of 2022 OTP Core – volumes participating in the repayment moratorium (in HUF b
Slide 25: Stage 3 rate and coverage vs regional peers
The Stage 3 rate slightly increased in 2Q because of increasing Stage 3 ratios in Russia and Ukraine, as well as their rising weight within the Group due to the FX rate changes. The management's provisioning policy remained conservative compared to regional banking groups, especially regarding the c
Slide 26: Development of Stage 1, 2 and 3 ratios
Development of the Stage 1, Stage 2 and Stage 3 ratios Cons. Core DSK OBH OBSrb SKB2 OBR OBU OBRu CKB OBA OBM 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% 88.8
Slide 27: 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 OBM 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% 1.3%
Slide 28: Hungarian sovereign and OTP Bank 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 29: Management guidance for 2022
Without the impact of the Russian and Ukrainian operations the management expectations for 2022 remained unchanged except for the growth outlook of the performing loan portfolio Management guidance for 2022 The management’s expectations for the 2022 performance of the Group without the Russian and U
Slide 30: Further details and financials
Further details and financials 30
Slide 31: OTP Group offers universal banking services in 11 countries
OTP Group offers universal banking services to around 16 million active customers in 11 countries with majority of its operations located in European Union countries that offer attractive growth opportunities versus EU average Major Group Members in Europe Total Assets1 Systemic position in Hungary…
Slide 32: Unique investment opportunity to access the CEE banking sector
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 6.7 billion1 Total number of ordinary shares: 280,000,010, each having a Ownership structure of OTP Bank on 4
Slide 33: Net loan book breakdown by country and product
Almost 80% of the total net loan book is invested in EU countries, with Hungary having the dominant share. Retail lending remains the leading product Breakdown of the consolidated net loan book Net loan book 2Q 2022 Hungary1 HUF 6,239bn Bulgaria HUF 3,234bn By country By product Leasing Leasing 6% M
Slide 34: Deposit base breakdown by country and product
Hungary represents almost half of the deposit book, Bulgaria is the second largest deposit holder in the Group. Retail volumes account for 55% of the total deposit base Breakdown of the consolidated deposit base Deposit base 2Q 2022 Hungary1 HUF 11,129bn Bulgaria HUF 4,260bn By country By product Co
Slide 35: Adjusted ROE decreased to 17.0%
The adjusted ROE for the period decreased to 17.0% shaped by higher risk costs but improved cost efficiency 2003-2008 2009-2013 average 2014 2015 2016 2017 2018 2019 2020 2021 1H 2022 average ROE 2.9% 29.4% 8.3% -7.4% 5.1% 15.4% 18.5% 18.7% 20.3% 10.9% 17.0% (from profit after tax) 7.1%5 ROE 17.0% 2
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 ... 2Q 2022 data for other H
Slide 37: Performing loans grew 2.8-fold between 2016 and 2Q 2022
OTP Group’s performing loans grew to 2.8-fold between 2016 and 2Q 2022, driven by both organic growth and acquisitions OTP Group – performing (DPD0-90) loan growth1 FX-adjusted, in HUF billion 2016 6,655 Organic 831 +27% Acquisitions 955 2017 8,441 Components of the Group’s Organic 1,269 performing
Slide 38: Acquisitions completed in the last five years
Acquisitions completed in the last five years materially improved OTP’s positions in many countries. In July 2022 the Albanian deal was completed, thus OTP became the third largest market player with a 15% share in term of net loans. The closure of the NKBM transaction in Slovenia is expected in 4Q
Slide 39: 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