Mbh Mortgage Bank Co. Plc. · BET:TAKAREKJZB
Mbh Mortgage Bank — Takarék Mortgage Bank — Debt Investor Presentation (June 2020)
48 slides from Mbh Mortgage Bank's debt investor presentation, June 2020
Slide 1: Investor Presentation
INVESTOR PRESENTATION Takarék Mortgage Bank Co. Plc. June 2020
Slide 2: Content
Content 1. IOCCI – slide 4 2. Company Overview, Ownership & Organization Structure, Strategy – slide 11 3. Cover Pool characteristics and risk profile – slide 19 4. Investor protection within the Integration – slide 25 5. Funding & Liquidity – slide 29 6. Financial information – slide 35 7. Appendix
Slide 3: Abbreviations
Abbreviations CCI: Co-operative Credit Institutions TMB: Takarék Mortgage Bank Co. Plc TCB: Takarék Commercial Bank Ltd. MTB or Takarékbank: Magyar Takarékszövetkezeti Bank Ltd. Also the central bank of Integration SZHISZ (IOCCI): Organization of Cooperative Credit Institutions Integration: members
Slide 4: 1. Integration Organization of Cooperative Credit Institutions
1. Integration Organization of Cooperative Credit Institutions
Slide 5: Takarék Group's evolution
Takarék Group’s evolution Integration, mergers By the end of 2017, the number of Cooperative Pre-integration Credit Institutions (CCIs) are significantly decrea- Saving No. of Saving Cooperatives: 122 sed through the mergers of 52 CCIs, thus only 12+3 regional CCIs remained besides Takarék Coope
Slide 6: Legal transformation of Takarék Group
By 31.10.2019, fourteen Cooperative Credit Institutions (CCIs) and Takarék Commercial Bank fused in Takarékbank, while MTB’s loan and deposit portfolio was transferred Legal transformation of Takarék Group 1. Phase 2. Phase Baseline (till 30.04.2019) (till 31.10.2019) B3 3 CCIs (fusion) Mohács M
Slide 7: Management structure of Takarék Group
Management structure of Takarék Group National Bank Supervisory of Hungary role Integration Organization Central entity, of Cooperative Credit primarily regulatory Institutions (IOCCI) and supervisory roles Central entity, business governance Takarék United Cooperative in a new form, Cooperative own
Slide 8: Main goals of Takarék Group strategy 2019-2023
Main goals of Takarék Group strategy 2019-2023 are increasing competitiveness and profitability Modernization, business renewal A banking group with New product strategy increasing profitability and New segment strategy financially sustainable New service model operations Main goals of Digit
Slide 9: Integration in numbers – one of the largest market player
Integration in numbers – one of the largest market player* Municipalities Total assets 1 200 2 600 billion No. of branches Corporate clients HUF more than 170 000 750 Employees Retail clients 1 000 000 6 500 TAKARÉK GROUP Agriculture market share Loans 22% 1 500 billion Deposit HUF 1 850 billion MFB
Slide 10: Strategic cooperation between MTB, MKB Bank and Budapest Bank in May 2020
Strategic cooperation was formed between MTB, MKB Bank and Budapest Bank in May 2020 A strategic cooperation between the 3 banking groups was formed in May 2020 by signing a letter of intent to establish a joint financial holding company. The exact form and timeline of the cooperation is under exami
Slide 11: 2. Company Overview, Ownership & Organization Structure, Strategy
2. Company Overview, Ownership & Organization Structure, Strategy
Slide 12: Dominant debt security issuer in Hungary
Dominant debt security issuer in Hungary Pioneer of the domestic mortgage bond market • Debt Securities Issuer of the Year award won 9 times in the last17 years– Budapest Stock Exchange Mortgage bond issuer of the year in 2019 • The first Hungarian mortgage bond was issued by Takarék Mortgage Bank (
Slide 13: 22-year activity on local and international capital markets
22-year activity on local and international capital markets Long standing experience, proven track record in capital market More than HUF 1600bn total issue of covered and unsecured bonds since 2005, nominal amount of issues reaches HUF 60-120bn on annual basis, 16-20 transactions per year Stron
Slide 14: History of Takarék Mortgage Bank – Road to the Integration
History of Takarék Mortgage Bank (TMB) – Road to the Integration Year / Milestones /Strategic cooperations Acquisitions/Investments 1997/ FHB Mortgage Bank was established, as a state-owned specialized financial 2011/ Allianz Bank – full merger with Takarék (ex-FHB) institution Commercial Bank Co. P
Slide 15: TMB's Ownership structure
TMB’s Ownership structure – Share of Integration members is close to 90% Takarék Mortgage Bank Co. Plc. ownership stucture (25.02.2020) Composition of the board of directors Other (including József Vida: Chairman (Chairman and CEO of foreing and domestic MTB since 30 November 2016) individuals) 9,6%
Slide 16: Organisational structure since 2017
Organisational structure since 2017 – Takarék Mortgage Bank (‚Refinancing mortgage bank’) CEO Deputy CEO Risk management Legal Collateral book IT HR Capital markets ALM Refinancing Department management Property valuation Functions retained at TMB: Non-core functions are under common coordination wi
Slide 17: Strategy, growth targets – Takarék Mortgage Bank
Strategy, growth targets – Takarék Mortgage Bank Business strategy since 2017 Market position and initiatives • Deeper embeddedness into the Integration. • The most active player in refinancing and mortgage bond issuance on the domestic market • Subsidiary from Group leader: TMB handed over its grou
Slide 18: Market position - dominant player on the local mortgage refinancing market
Market position - dominant player on the local mortgage refinancing market Market share of local mosrtgage banks based on • First mortgage bank in Hungary engaged in mortgage refinancing issued mortgage bond volume (2020 Q1) (2001) • Market leader in terms of number of partner banks: 11 partners cur
Slide 19: 3. Cover pool characteristics and risk profile
3. Cover pool characteristics and risk profile
Slide 20: Cover pool composition: refinancing plays an increasing role
Cover pool composition: refinancing plays an increasing role Weight of components Composition of cover pool and OC developments OC % 100% 35,0% 90% Central bank announced Purchase the termination of CB program I. steams 30,0% purchase program 80% out, new TMB OC regime 70% 25,0% 60% 20,0% 50% 15,0%
Slide 21: Cover pool characteristics Q1 2020
Cover pool characteristics Q1 2020 Asset types of cover pool Interest rate distribution of cover FX distribution of cover pool pool 0,0% 14% 2020Q1 1,5% 2% 14% 2020Q1 2% 2019Q4 2019Q4 45% 47% 55% 53% 84% 84% 98,5% Residential loans Commercial loans Substitute assets Floating rate Fixed rate HUF EUR
Slide 22: Cover bond portfolio characteristics Q1 2020 and rating
Cover bond portfolio characteristics Q1 2020 and rating Interest rate distribution of covered FX distribution of bonds outstanding covered bonds 2,3% 20% 2020Q1 16% 2019Q4 84% 97,7% 80% HUF EUR Fixed rate Floating rate Category S&P rating Date of new rating Local and foreign-currency BBB stable 2020
Slide 23: Risk mitigating factors of TMB's covered bonds
Risk mitigating factors of TMB’s covered bonds Integration: Guarantee community covers TMB’s mortgage bonds, mechanism for financial REGULATORY ENVIRONMENT stability significantly decreases PD Voluntary obligations: Hungarian Mortgage Min 2% OC, 6m liquidity Bank Act Act on Price Bank CRR: quotation
Slide 24: Risk profile of Takarék covered bonds
Risk profile of Takarék covered bonds Risk mitigation factors Regulation: - Act no. XXX of 1997 on mortgage banks and mortgage bonds (Jht.) see: Appendix I. - Specialized credit institution principal - Limited activity - No bail in (pursuant Act XXXVII of 2014) see: Appendix I. - Eligible for repo t
Slide 25: 4. Investor Protection within the Integration
4. Investor Protection within the Integration
Slide 26: Investor protection within the Integration I.
Investor protection within the Integration I. The cross-guarantee system Szhitv. or Integration Law CXXXV. of 2013: IOCCI and its members are jointly liable for their obligations independent from the date of liabilities incurred. The joint and several liability is the most important investor prote
Slide 27: Investor protection within the Integration II.
Investor protection within the Integration II. Legal background Szhitv. or Integration Law: Act CXXXV of 2013 on the Integration of Co-operative Credit Institutions (CCIs) The Board of Directors of the Integration Organization adopts obligatory regulations for the members of the Integration Organi
Slide 28: Investor protection within the Integration III.
Investor protection within the Integration III. Capital Guarantee Fund (Fund) Capital Guarantee Fund (Fund): Base pillar of the cross-guarantee system, established in 2014 The Fund’s goal to first settle the proven claims against members of a cooperative credit institution on the basis of the jo
Slide 29: 5. Funding & Liquidity
5. Funding & Liquidity $8 TAKAREKCSOPORT f NS
Slide 30: Asset composition and funding structure (TMB standalone HAS)
1. Asset composition and funding structure (TMB standalone HAS) Interest earning assets Funding structure 0,0% 5,2% 1,4% 0,0% 2019 YE 2019 YE 4,3% 5,4% 17,5% 10,4% 0,0% 24,3% 2018 YE 2018 YE 64,4% 13,0% 58,1% 13,4% 84,3% 98,6% Interbank borrowings Own issued senior unsecured bonds Interbank loans Ow
Slide 31: Funding relationship within Integration
2. Funding relationship within Integration • Centralized liquidity management and funding Capital Money Interbank depo / strategy within the Integration market IRS market • MTB as the only entity raising MM funding in the Integration from the market • TMB, as a specialized institution provides refin
Slide 32: Long-term funding strategy
3. Long-term funding strategy • TMB focuses primarily on covered bond issuance vs unsecured bonds • TMB acts the issuer entity to secure MFAR compliance on Integration level • Target maturities for covered bond issuances: 3Y and longer skewing to 5Y-10Y, depending on market depth, floating rate cove
Slide 33: Covered bond and unsecured bond maturity profile and investor base
4. Covered bond and unsecured bond maturity profile and investor base Maturity profile, as of 26 May, 2020 Takarék Covered Bond investors (HUFm) as of 31 March 2020 (in % of outstanding amount at the time of issuance) Foreign Insurance co. investors Retail 2,79% 2,41% 0,10% Pension funds 89 871 0,57
Slide 34: Covered bond issuance: volumes and spreads vs HGB benchmark
5. Covered bond issuance: volumes and spreads vs HGB benchmark 2019: regular public tenders, modest increase in spreads vs HGB 2020: New central bank mortgage bond purchase program could stabilize covered bond spreads vs government bond benchmarks at lower levels Public Covered Bond Issuances auctio
Slide 35: 6. Financial information
6. Financial information $3 TAKAREKCSOPORT ~~
Slide 36: Financial performance I. - major indicators
Financial performance I. - major indicators (TMB standalone, IFRS) in HUF million 31/12/2019 31/12/2018 Change (%) Balance sheet total 342,897 333,787 2.7% Financial assets valued at amortized costs 294,526 256,012 15.0% o/w gross loans 275,801 246,407 11.9% Financial liabilities valued at amortized
Slide 37: Financial performance II. – balance sheet, P&L
Financial performance II. – balance sheet, P&L (TMB standalone, IFRS) Shareholder's equity (HUF million) Balance sheet total(HUF million) 65 043 342 897 63 863 333 488 329 084 62 184 31/12/2018 30/06/2019 31/12/2019 31/12/2018 30/06/2019 31/12/2019 Securities issued (HUF million) 265 929 247 797 244
Slide 38: Financial performance III. – balance sheet, P&L
Financial performance III. – balance sheet, P&L (TMB standalone, IFRS) Own originated loans (millió HUF) Refinanced mortgage loans (HUF million) 217 000 190 182 169 286 77 100 68 103 58 800 31/12/2018 30/06/2019 31/12/2019 31/12/2018 30/06/2019 31/12/2019 *Own originated loans are not granted from A
Slide 39: Capital position (consolidated, Takarék Group)
Capital position (consolidated,Takarék Group) ● According to the resolution no. H-EN-I-36./2017 (on 1 January 2017) the National Bank of Hungary authorized Takarék Group to apply individual exemption and terminated the obligation for compliance with sub-consolidated level requirements. 31 December 2
Slide 40: Appendix
APPENDIX $3 TAKAREKCSOPORT ~ f
Slide 41: MNB's measures to mitigate the negative economic effects of COVID-19
MNB’s measures to mitigate the negative economic effects of COVID-19 – steps affecting the Issuer 1) Moratoria The National Bank (MNB) and Hungarian Government announced a moratorium for all mortgage and corporate loans until 31st December. This represent a payment holiday for principal, interest an
Slide 42: Regulatory framework - Act on mortgage banks and mortgage bonds I.
Regulatory framework - Act no. XXX of 1997 on mortgage banks and mortgage bonds (Jht) I. • Special status of covered bond investors in case of insolvency • Special treatment of claims from mortgage bonds if liquidation process starts • Assigned cover pool administrator to manage claims in case of in
Slide 43: Regulatory framework - Act on mortgage banks and mortgage bonds II.
Regulatory framework - Act no. XXX of 1997 on mortgage banks and mortgage bonds (Jht) II. The cover system - Mandatory over-collateralization: Mortgage banks shall at all times have sufficient cover assets of a value higher than the sum of the face value of and the interest on outstanding mortgage b
Slide 44: Regulatory framework - Resolution Law
Regulatory framework - Resolution Law - In accordance with Article 58 (1) (c) point of the Act on the Bank Recovery and Resolution (Act. no. XXXVII. of 2014) creditors’ bail-in does not include liabilities from covered bonds and mortgage bonds, up to the extent of the coverage. The above means that
Slide 45: Mortgage Funding Adequacy Ratio (MFAR)
Mortgage Funding Adequacy Ratio (MFAR) to decrease the maturity mismatch in the mortgage lending market MFAR increases the role of mortgage Calculation and reviews of MFAR banks: The regulation aims at increasing financial stability by reducing the maturity New mortgage banks were established (Erste
Slide 46: Harmonization of covered bond regulations in the EU
Harmonization of covered bond regulations in the EU The current Hungarian regulation is mainly compliant with the planned new requirements, however there must be some amendments in the Mortgage Act. The most important changes may be the following: • Minimum mandatory OC 2-5% (in Hungary only volunta
Slide 47: Contacts
Contacts: Rita Bozzai Senior Advisor Debt Capital Markets Department E-mail address: bozzai.rita@takarek.hu Illes Tóth Head of Debt Capital Markes Department E-mail: toth.illes@takarek.hu
Slide 48: Disclaimer
Disclaimer: This presentation contains forward-looking statements and information. There are many factors, which could cause actual results and process to differ materially from those expressed in this document. The forward-looking statements are based on the on the present legal and regulatory envi
Takarék Mortgage Bank — Debt Investor Presentation (June 2020) on 6ix