Otp Bank Nyrt · BET:OTP
Otp Bank Nyrt — OTP Bank — FY2006 Earnings Presentation
29 slides from Otp Bank Nyrt's earnings presentation, Feb 14, 2007
Slide 1: OTP Bank 2006 preliminary results
OTP Bank 2006 preliminary results Presentation for Analysts Presented by: Dr. László Urbán, CFO
Slide 2: Major factors influencing the Group's activity and results in 2006
2 Major factors influencing the Group’s activity and results in 2006 • Highest-ever budget deficit Deteriorating • Weakening of HUF in the first half of 2006; significant correction in 4Q, exchange rate of 252.3 macroeconomic conditions HUF/EUR at the end of the year, increasing volatility in Hungar
Slide 3: 2006 profit after tax of OTP Group meets the average of analysts expectation
3 2006 profit after tax of OTP Group meets the average of analysts expectation Analysts expectations for consolidated IFRS profit after tax for 2006 HUF bn Profit forecasts for 2006 195 Consensus 193 OTP Bank consolidated profit after tax Profit after tax excluding one-offs of 3Q 191 189 187.5 187 1
Slide 4: OTP Bank realised HUF 187.5 bn consolidated profit after tax in 2006
4 OTP Bank realised HUF 187.5 bn consolidated profit after tax in 2006 Financial highlights of OTP Group (consolidated, IFRS) 2005 20054Q 4Q 2006 20063Q 3Q 2006 20064Q 4Q Q-o-Q Q-o-Q Y-o-Y Y-o-Y 2005 2005 2006P 2006P Y-o-Y Y-o-Y Total Totalassets assets(HUF (HUFbn) bn) 5,215.9 5,215.9 6,174.7 6,174.
Slide 5: Loan volume grew by 35.8% y/y; deposits increased by 23.4%
5 Loan volume grew by 35.8% y/y (+16.4% q/q); deposits increased by 23.4% on a yearly base (+13.0% q/q) Change Distribution Gross loan volume by business lines Change Gross loan volume by countries y/y HUF bn y/y HUF bn 5000 5000 4,477 ... 4.8% 4,477 +49.9% Russia 3,847 4000 3,847 Ukraine ... 8.2% 4
Slide 6: NPL ratio stood at 5.6% on December 31, 2006
6 NPL ratio stood at 5.6% on December 31, 2006 Volume of qualified loans Share of qualified loans HUF bn 915 25% 1000 20.4% 77 800 20% 111 5.6% 541 13.7% 14.0% 600 506 15% 12.8% 12.5% 421 429 77 4.3% 71 3.6% 4.2% 400 10% 3.9% 64 87 663 14.8% 200 350 377 5% 9.1% 8.6% 9.5% 9.7% 302 294 0 0% 4Q 2005 1Q
Slide 7: Net interest margin decreased by 97 bps
7 Net interest margin decreased by 97 bps, however without swaps it declined only by 57 bps compared to 3Q 2006 Net interest income Net interest margin HUF bn 354 360 8.0% 297 34 7.18% 7 280 7.0% 6.32% 6.21% 6.34% 200 5.90% 6.0% 5.60% 5.50% 5.75% 107 103 6.03% 4.93% 120 80 73 71 25 21 6.20% 5.0% 5.3
Slide 8: Non-interest income decreased by 7.3%, while non-interest expenses grew by 7.5%
8 Non-interest income decreased by 7.3%, while non-interest expenses grew by 7.5% compared to 3Q 2006 Non-interest income Non-interest expenses HUF bn HUF bn 400 400 350.2 293.6 300 300 245.5 216.5 200 200 84.4 91.6 98.5 100 64.5 71.5 100 79.4 75.6 56.3 56.8 52.7 y/y: +13.4% y/y: +19.3% 0 0 4Q 2005
Slide 9: In 2006, non-interest income increased by 13.4%, operating costs by 16.2%
9 In 2006, non-interest income increased by 13.4%, operating costs by 16.2% Non-interest income Change Operating costs Change HUF bn Q/Q HUF bn Q/Q 60 80 75.2 49.6 30.8 -4.5% 65.6 +14.7% 39.9 42.5 29.4 61.3 62.5 38.2 10.7 53.7 40 13.6 7.6 60 5.5 -28.8% 39.2 27.3 29.7 30.8 -42.7% 40 24.4 20 +27.2% 24
Slide 10: Consolidated ROA declined to 3.04%, ROE to 28.1% in 2006
10 Consolidated ROA declined to 3.04%, ROE to 28.1% in 2006 After-tax profit EPS, diluted HUF bn HUF 200 187.5 800 One-offs 715 158.3 After tax profit without one-offs 599 150 600 100 400 181.3 53.6 158.3 46.2 46.7 179 180 207 40.9 40.9 155 156 50 200 46.2 46.7 53.6 40.9 40.9 0 0 4Q 2005 1Q 2006 2Q
Slide 11: Capital adequacy ratio, according to Hungarian regulation, stood at 9.91%
11 Capital adequacy ratio, according to Hungarian regulation, stood at 9.91% Shareholders’ equity, HAR Tier 2 capital elements Guarantee capital HUF bn HUF bn HUF bn 600 600 600 +27.0 -264.5 -235.8 127.8 -1.7 18.4 242,3 400 400 400 -28.6 -21.8 553.8 126.2 553.8 200 407.6 200 200 75.7 314.5 248.1 270
Slide 12: OTP Group maintains its leading position on the Hungarian market
12 Despite losing market share in some segments, OTP Group maintains its leading position on the Hungarian market Market share Change Market share Change (31/12/2006) Q/Q ( Y/Y) (31/12/2006) Q/Q ( Y/Y) Total assets 24.7% +0.3%p (+0.6%p) Total deposits 23.7% -0.7%p (-3.2%p) Total loans 20.6% 0.0%p (-
Slide 13: Hungarian subsidiaries: OTP Garancia Insurance and Merkantil Group profits
13 Among Hungarian subsidiaries, OTP Garancia Insurance reached HUF 7.2 bn and Merkantil Group HUF 6.9 bn after-tax profit OTP Bank OTP Mortgage Bank Merkantil Group OTP Garancia Insurance OTP Fund Management (non-consolidated) 2006 2006 2006 2006 2006 Main balance sheet items, HUF bn Y-o-Y Y-o-Y Y-
Slide 14: Contribution of foreign subsidiaries to consolidated after-tax profit was 13.7%
14 Contribution of foreign subsidiaries to consolidated after-tax profit amounted to 13.7% in 2006 Contribution of OTP Banka Niska Zepter CJSC OTP Invest- foreign subsidiaries DSK Csoport OTP banka Hrvatska OTP Bank Romania Slovensko banka banka Bank sberbank 2006 2006 2006 2006 2006 2006 2006 2006
Slide 15: OTP Banking Group's 2007 plans
OTP Banking Group’s 2007 plans Presentation for Analysts Presented by: Dr. László Urbán, CFO
Slide 16: Forward looking statements
16 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 circumstan
Slide 17: Agenda
17 Agenda Regional macroeconomic outlook and market growth Key operational actions and targets in 2007 Financial targets 2007 Presentation for Analysts
Slide 18: Fiscal tightening will set back domestic demand and accelerate inflation in Hungary
18 Fiscal tightening will set back domestic demand and accelerate inflation in Hungary Households tend to smooth consumption (yoy % growth) Key economic indicators Fact Forecast Net real wage 2004 2005 2006 2007 2008 14 Nominal GDP (HUF bn) 20 712 22 027 23 472 25 457 26 861 growth 12 Real GDP 4.9%
Slide 19: Households to smooth consumption in response to declining real disposable income
19 Households are to smooth consumption in response to the decline in real disposable income, leading to a temporary drop in the savings rate and new loan demand Gross household saving % change in year end (in percent of GDP) volumes -35% 10.1 8.3 8.0 8.1 7.5 7.4 8.8 8.6 Net household saving 6.3 5.6
Slide 20: Economic growth will remain buoyant in the economies of OTP's subsidiaries
20 Economic growth will remain buoyant in the economies of OTP’s subsidiaries in the coming years Bulgaria Croatia 05 06 07 F 08 F 05 06 07 F 08 F Real GDP growth 5,5% 6,7% 6,0% 6,0% Real GDP growth 4.3% 4.4% 4.2% 3.8% Inflation (CPI) 5,0% 7,3% 5,0% 4,0% Inflation (CPI) 3.3% 3.2% 2.9% 3.0% Net nomin
Slide 21: Loan penetrations in CEE likely to repeat the Mediterranean experience
21 Developments in loan penetrations in CEE economies are likely to repeat the Mediterranean experience New household debt creation in OTP subsidiaries’ economies and the Mediterranean countries (PFL flow as a percent of GDP) Personal Financial Liabilities’ (PFL) flow in OTP subsidiaries’ Minimum, m
Slide 22: International expansion and priority actions in Hungary in 2007
22 Although international expansion requires significant management efforts, OTP launches several initiatives in Hungary as well in 2007 Selected priority actions of OTP Banking Group in Hungary, 2007 • Campaigns to introduce the Group’s new logo and image to strengthen OTP brand Improvement of • Cl
Slide 23: Rapid integration of Russian and Ukrainian operations in 2007
23 Rapid integration and transformation of Russian and Ukrainian operations in the forefront of management attention in 2007 Key strategic objectives Strategic position 2007 priority actions (2007–2010) Russia • Turn into a leading mortgage and • Strengthen local management team consumer finance pla
Slide 24: Local managements target business performance improvement
24 Local managements target business performance improvement following clear guidelines where transformation is advanced and in smaller markets Key strategic objectives 2007 priority actions (2007–2010) Bulgaria • Maintain market leader position in retail mass segment • Refine branch network incenti
Slide 25: Foreign markets drive strong increase in business volumes
25 Rocketing foreign markets and improved share lead to a strong increase in business volumes; loan portfolio of foreign banks increases to ~45% of total Total loans of OTP Group Total deposits of OTP Group (consolidated, 2007 plan) (consolidated, 2007 plan) HUF bn HUF bn 80 32 52 18 6000 33 5000 45
Slide 26: New foreign subsidiaries contribute to 2007 bottom line growth
26 The new foreign subsidiaries significantly contribute to 2007 bottom line growth Profit after tax of Hungarian group members* Consolidated profit after tax HUF bn HUF bn 16.7% 250 6.5% 9.0% 250 14.6% 200 28,1 200 6.1 150 150 100 183,9 168,7 100 211.6 158,5 181.3 158.3 50 50 0 0 2005 2006 2007 200
Slide 27: Aim to reach solid bottom line growth in 2007, the year of consolidation
27 After last year’s acquisitions, the aim of the Group is to reach solid bottom line growth already in 2007, the year of consolidation ROAE, consolidated* Consolidated cost/income ratio** 35% 70% 30% 60% 25% 50% 20% 40% 32,3% 15% 28,1% 30% 56,7% 57,3% 55,4% 22,5% 10% 20% 5% 10% 0% 0% 2005 2006 2007
Slide 28: Planned HUF 212 billion consolidated profit after tax for 2007
28 The planned HUF 212 billion consolidated profit after tax for 2007 slightly exceeds the recently published analysts’ expectations Profit forecasts for OTP Bank consolidated profit after tax in 2007 HUF bn Profit forecasts for 2007 230 Consensus OTP Bank 2007 profit after tax plan 220 211.6 210 21
Slide 29: OTP Bank Investor Relations
29 OTP Bank Investor Relations Tel: + 36 1 473 5460; + 36 1 473 5457 Fax: + 36 1 473 5951 E-mail: investor.relations@otpbank.hu www.otpbank.hu Presentation for Analysts