Otp Bank Nyrt · BET:OTP
Otp Bank Nyrt — Q2 2021 Earnings Presentation
41 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 2Q 2021 results
Slide 2: Semi-annual accounting profit hit HUF 215 billion
The semi-annual accounting profit hit HUF 215 billion, almost three times larger than a year earlier. Both the first half and the second quarter adjusted result soared to record levels. The q-o-q growth in adjusted net result was boosted by the foreign Group members After taxforintban) (milliárd pro
Slide 3: Adjustment items in 1Q 2021
In 1Q 2021 the balance of adjustment items was -HUF 7.2 billion, mostly due to the extension of the moratorium in Hungary (in HUF billion) 1H 20 1H 21 Y-o-Y 2Q 20 1Q 21 2Q 21 Q-o-Q Y-o-Y Consolidated after tax profit (accounting) 74.6 215.1 188% 78.7 93.3 121.8 31% 55% Adjustments (total) -39.5 -31.
Slide 4: Semi-annual adjusted profit shaped by lower risk costs and higher revenues
The semi-annual adjusted profit was shaped mainly by the lower total risk costs and the double-digit increase in revenues. In 2Q the total income grew by 5% q-o-q, while total risk costs remained favourably low Y-o-Y (HUF billion) 1H 2020 1H 2021 Y-o-Y FX-adjusted, 1Q 2021 2Q 2021 Q-o-Q w/o the sale
Slide 5: Group members posted significant y-o-y profit improvement
All major Group members posted significant y-o-y improvement in their semi-annual profit with Hungary, Bulgaria, Russia and Serbia delivering the largest nominal increase y-o-y Adjusted profit after tax (in HUF billion) 1H 2020 1H 2021 Y-o-Y OTP Group 114.1 246.3 116%1 / 112%2 OTP Core (Hungary) 54.
Slide 6: Semi-annual total income grew by 10% organically
The semi-annual total income grew by 10% organically. The quarterly increase was driven by Hungary, Effect of Croatia and Ukraine OBS sale TOTAL INCOME 1H 2021 2Q 2021 1H 2021 Y-o-Y 2Q 2021 Q-o-Q without one-off items (HUF billion) (HUF billion) (HUF billion, %) (HUF billion, %) OTP Group 618 316 -8
Slide 7: Net interest income grew by 7% organically
The 1H net interest income grew by 7% organically, whereas the quarterly improvement reached 4%, with Effect of bulk of the q-o-q growth coming from Hungary, Ukraine and Croatia OBS sale NET INTEREST 1H 2021 2Q 2021 1H 2021 Y-o-Y 2Q 2021 Q-o-Q 1 In 1H the net interest income surged INCOME (HUF billi
Slide 8: Consolidated net interest margin remained stable q-o-q
The consolidated net interest margin remained stable q-o-q: the Ukrainian improvement was offset by other minor effects. The standalone Russian margin widened due to changes in intragroup funding, but it was neutral on consolidated level Consolidated net interest margin development Serbia Ukraine FX
Slide 9: Q-o-Q performing loan growth accelerated to 5%
The q-o-q growth of the consolidated performing (Stage 1+2) loans accelerated to 5% (FX-adjusted). The expansion of the Hungarian consumer loans was remarkable, while the growth of Hungarian housing and corporate loan volumes continued Q-o-Q performing (Stage 1 + 2) LOAN volume changes adjusted for
Slide 10: Performing loans expanded 6% year-to-date
The consolidated performing (Stage 1+2) loans expanded 6% year-to-date (FX-adjusted). The outstanding expansion of the Hungarian loan portfolio was supported mainly by the subsidized programmes (baby loans and Funding for Growth Go!) YTD performing (Stage 1 + 2) LOAN volume changes adjusted for FX-e
Slide 11: Consolidated deposits grew by 1% q-o-q
Consolidated deposits grew by 1% q-o-q mainly due to the 3% increase in retail deposits in Hungary and the successful Croatian deposit collection Q-o-Q DEPOSIT volume changes adjusted for FX-effect Cons.1 Core DSK OBH OBSrb SKB OBR OBU OBRu CKB OBA OBM (Hungary) (Bulgaria) (Croatia) (Serbia) (Sloven
Slide 12: Consolidated deposits grew by 4% in first six months
Consolidated deposits grew by 4% in the first six months, within that Hungarian deposits increased by 6%. In Russia there was an outflow of 8% ytd in an increasing rate environment, in order to optimize funding costs YTD DEPOSIT volume changes adjusted for FX-effect Cons. Core DSK OBH OBSrb SKB OBR
Slide 13: Net fees grew by 14% y-o-y
In the first six month net fees grew by 14% y-o-y (w/o OBS sale and FX-adjusted). In 2Q net fees rose by Effect of 12% q-o-q mostly due to stronger business activity and the drop-out of negative one-off items in Hungary OBS sale 1H 2021 2Q 2021 1H 2021 Y-o-Y 2Q 2021 Q-o-Q 1 At OTP Core the net fees
Slide 14: Other net non-interest income leaped by 40% y-o-y
Other net non-interest income leaped by 40% y-o-y in the first half, whereas in 2Q it remained practically Effect of flat q-o-q OBS sale OTHER INCOME 1H 2021 2Q 2021 1H 2021 Y-o-Y 2Q 2021 Q-o-Q 1 In the first half-year, other net non- without one-off items (HUF billion) (HUF billion) (HUF billion, %
Slide 15: Consolidated operating costs grew by 5.8% organically
Consolidated operating costs grew by 5.8% y-o-y organically, adjusted for FX and the shifting of the Effect of Hungarian local business tax to the corporate tax line OBS sale 1H 2021 Y-o-Y Y-o-Y, FX-adjusted 1 At OTP Core part the underlying cost OPERATING COSTS (HUF 2021Q2 billion) CUM (HUF billion
Slide 16: Hungarian mortgage applications jumped by 63% in 1H
In Hungary mortgage applications jumped by 63% in 1H, partly due to the exemption of duties for customers using the Housing Subsidy for Families, and to the home renovation loan. The growth of cash loans follows OTP CORE an accelerating trends. OTP maintained its over 30% market share in new mortgag
Slide 17: Demand for baby loans strengthened in 2Q
Demand for baby loans strengthened in 2Q, with four out of ten families choosing OTP Bank. OTP CORE The Bank also actively participates in the sale of subsidized loan products introduced in 2021 Baby loans Contractual amounts OTP Bank's market share calculated (HUF billion) from the contractual amou
Slide 18: Micro and small enterprise loans grew by 26% ytd
OTP's micro and small enterprises loans grew by 26% ytd due to the outstanding performance in the Funding for Growth Go! scheme, which was recognized by the central bank with the FGS Excellence Award both in 1Q OTP CORE and 2Q. OTP's corporate loan market share continued its upward trend and exceede
Slide 19: Portfolio quality remained stable in 1H 2021
In 1H 2021 portfolio quality remained stable. 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 demonstrated through a peer group comparison 88.8% 80.4% 81.5% Stage 1 ratio Own c
Slide 20: Loans under repayment moratoria reached HUF 1,600 billion
The total volume of loans at Group level under the loan repayment moratoria reached HUF 1,600 billion at the end of June, representing 11% of the consolidated total gross loan book. The Hungarian payment holiday was extended by 3 months until the end of September with unchanged conditions Details of
Slide 21: 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 (2
Slide 22: 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 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 23: 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 24: 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% 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% Stage 2 3Q 20 11.0% 16.8% 21.9% 9.8%
Slide 25: 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% 2Q 20 2.2% 1.8% 0.8% 0.6% 0.6% 0.8% 0.6% 0.9% 0.6% 3.5% 2.0
Slide 26: 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 2Q 2021 Effects impacting the CET1 ratio in 2Q 2021 (changes in pp) • In 1H the CET1 capital was boosted by the interim accounting profit -0,6% +0.1 -0,3% (HUF 215 bill
Slide 27: Main macroeconomic indicators in CEE region
Main macroeconomic indicators in the CEE region’s countries: in terms of growth a 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 7.3 -4.2 4.6 -8.0 6.5 -1.0 6.5 Unemployment (%) 4.1 4.
Slide 28: Updated management guidance for 2021
The updated management guidance for 2021 reckons with further dynamic loan growth and full-year profitability around the 1H level 2021 management Guidance For the first six months Group-level trends overall played out positively. At the same time, the potential 4th wave of the pandemic justifies to
Slide 29: Further details and financials
Further details and financials 29
Slide 30: OTP Group offers universal banking to over 16 million customers
OTP Group offers universal banking services to more than 16 million active customers in 11 countries across the CEE/CIS Region Major Group Members in Europe Total Assets Systemic position in Hungary… Montenegro Albania Russia Moldova 2Q 2021 market share (%) OTP Bank Russia Ukraine 3% 1% Total asset
Slide 31: Unique investment opportunity to access the CEE banking sector
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 13.1 billion1 Total number of ordinary shares: 280,000,010, each having a nominal Ownership structure of OTP Bank
Slide 32: Net loan book dominated by Hungary and retail lending
The net loan book is dominated by Hungary and tilted to retail lending; almost 80% of the total book is invested in EU countries with stable earning generation capabilities Breakdown of the consolidated net loan book Hungary1 5,245 billion Bulgaria 2,457 billion Leasing Leasing (in HUF billion) Mort
Slide 33: Deposit base dominated by Hungary and retail segment
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 8,529 billion Bulgaria 3,525 billion (in HUF billion) Corporate Corporate 16% Retail sight Retail sight MSE B
Slide 34: ROE and margin development
In 2020 the accounting ROE was hit mainly by the temporary surge in risk costs. In 1H 2021 the adjusted ROE recovered 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 1H 2021 avera
Slide 35: 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 ... 1Q 2021 data for other H
Slide 36: Performing loans grew 2.4-fold between 2016 and 2Q 2021
OTP Group’s performing loans grew to 2.4-fold between 2016 and 2Q 2021, driven by both organic growth and acquisitions OTP Group – performing (DPD0-90) loan growth1 FX-adjusted, in HUF billion 2016 5,942 Organic 616 +26% Acquisitions 931 Components of OTP Group’s 2017 7,489 performing loan growth Or
Slide 37: Acquisitions completed in the last few years
Acquisitions completed in the last few years materially improved OTP’s positions in many countries. The financial closure of the Slovenian Nova KBM acquisition might be completed in 2Q 2022, subject to regulatory approval Target Net loan volumes Market share in total assets Book value (seller, date
Slide 38: DPD90+ volumes increased by HUF 15 billion in 2Q
In 2Q the DPD90+ volumes increased by HUF 15 billion (adjusted for FX effect and sales and write-offs). The improving Russian risk profile resulted in lower formation. In Croatia mainly the corporate segment showed deterioration in 2Q FX-adjusted quarterly change in DPD90+ loan volumes (without the
Slide 39: Ratings of OTP Bank and subsidiaries
+ positive While OTP Bank ratings closely correlate with the sovereign ceilings, subsidiaries’ ratings (rating outlook) - negative 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 40: 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 • The overall risk exposure is medium and is similar to subindustry average. Ranked No. 172 out of 1,011 (industry rank). 20.3 SEVERE HIGH MEDIUM LOW NEGLIGIBLE • The compan
Slide 41: 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