Otp Bank Nyrt · BET:OTP
Otp Bank Nyrt — Q4 2021 Earnings Presentation
40 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 4Q 2021 results
Slide 2: 2021 adjusted profit up 60%; capital and liquidity stable
In 2021, the adjusted profit of OTP Group increased by 60% due to better operating results and lower risk costs. The Group's capital and liquidity positions are outstandingly stable After tax profit (HUF billion) Operating profit (HUF billion) Total risk cost (HUF billion) Adjusted Accounting +23% +
Slide 3: 4Q 2021 balance of adjustment items
In 4Q 2021 the balance of adjustment items was -HUF 2.2 billion, mostly related to the effect of acquisitions line (in HUF billion) 2020 2021 Y-o-Y 4Q 20 3Q 21 4Q 21 Q-o-Q Y-o-Y Consolidated profit after tax 259.6 456.4 76% 71.5 120.2 121.1 1% 69% Adjustments (total) -50.6 -40.5 -20% -7.1 -7.1 -2.2
Slide 4: Annual adjusted profit improvement driven by revenue and lower risk costs
The annual adjusted profit improvement was equally driven by double-digit revenue dynamics and lower risk costs, entailing 19% clean operating income growth. In 4Q the continued increase in core banking revenues was offset by the seasonal peak in operating expenses and higher risk costs Y-o-Y (HUF b
Slide 5: Awards and recognition of OTP's performance
The outstanding performance of OTP 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 Solutio
Slide 6: Sustainability promoted into most important strategic priorities
Sustainability has been promoted into OTP Bank’s most important strategic priorities. OTP Bank’s Green Lending Framework was the first one in Hungary to receive NBH’s approval ORGANIZATION STRATEGY RATINGS The whole organization of the Bank and its OTP Bank has successfully started implementing its
Slide 7: Group members' 2021 profit improvement by subsidiary
The main Group members posted significant y-o-y improvement in their 2021 profit with Serbia, Romania and Albania delivering the most dynamic y-o-y profit growth Adjusted profit after tax (in HUF billion) 2020 2021 Y-o-Y OTP Group 310.3 496.9 60%/59%1 OTP Core (Hungary) 159.3 213.4 34% DSK Group (Bu
Slide 8: 2021 total income grew 13% organically
The 2021 total income grew by 13% organically. In 4Q the quarterly increase was driven by Hungary, Effect of Russia and Ukraine, as well as by other Group members OBS sale TOTAL INCOME 2021 4Q 2021 2021 Y-o-Y 4Q 2021 Q-o-Q without one-off items (HUF billion) (HUF billion) (HUF billion, %) (HUF billi
Slide 9: 2021 net interest income grew 13% organically
The 2021 net interest income grew by 13% organically. In 4Q the quarterly improvement reached 11%, Effect of with bulk of the q-o-q growth coming from Hungary OBS sale NET INTEREST 2021 4Q 2021 2021 Y-o-Y 4Q 2021 Q-o-Q 1 NII growth in 2021 was driven by the INCOME (HUF billion) (HUF billion) (HUF bi
Slide 10: Consolidated net interest margin improved q-o-q
The consolidated net interest margin improved q-o-q: at OTP Core the rising interest rates had a favourable impact (while there is a certain time-lag regarding the repricing of variable rate assets), but one-off positive items helped, too Consolidated net interest margin development Quarterly Annual
Slide 11: Q-o-Q performing loan volume changes, 4Q 2021
The q-o-q growth of the consolidated performing loans remained robust (+4% FX-adjusted). The Hungarian growth was held back by the shifting of loans under the moratorium into Stage 3 owing to the moratorium extension Q-o-Q performing (Stage 1 + 2) LOAN volume changes adjusted for FX-effect – 4Q 2021
Slide 12: Y-o-Y performing loan volume changes, 2021
The consolidated performing loans expanded 15% y-o-y. The outstanding 19% expansion of the Hungarian loan portfolio was supported mainly by the subsidized lending programmes, whereas the direct volume-boosting effect of the moratorium explained 3 pps out of the 19% growth in Hungary Y-o-Y performing
Slide 13: Q-o-Q deposit volume changes, 4Q 2021
Consolidated deposits grew by 5% q-o-q mainly due to the 9% increase in Hungary Q-o-Q DEPOSIT volume changes adjusted for FX-effect – 4Q 2021 Cons.1 Core DSK OBH OBSrb SKB OBR OBU OBRu CKB OBA OBM (Hungary) (Bulgaria) (Croatia) (Serbia) (Slovenia) (Romania) (Ukraine) (Russia) (Monten.) (Albania) (Mo
Slide 14: Y-o-Y deposit volume changes, 2021
Consolidated deposits grew by 16% in 2021, within that Hungarian deposits surged by 25% Y-o-Y DEPOSIT volume changes adjusted for FX-effect – 2021 Cons. Core DSK OBH OBSrb SKB OBR OBU OBRu CKB OBA OBM (Hungary) (Bulgaria) (Croatia) (Serbia) (Slovenia) (Romania) (Ukraine) (Russia) (Monten.) (Albania)
Slide 15: 2021 net fees grew 12% y-o-y
In 2021 net fees grew by 12% y-o-y (w/o OBS sale and FX-adjusted). The moderate 2% growth in 4Q was Effect of owing to negative one-offs in Hungary and seasonally weaker Croatia, offset by the reviving fee revenues OBS sale in Russia and the success fee revenues realized by OTP Fund Management (Hung
Slide 16: Other net non-interest income up 17% y-o-y
Effect of The cumulated other net non-interest income leaped by 17% y-o-y, and by 13% q-o-q in 4Q OBS sale OTHER INCOME 2021 4Q 2021 2021 Y-o-Y 4Q 2021 Q-o-Q 1 without one-off items (HUF billion) (HUF billion) (HUF billion, %) (HUF billion, %) The annual drop in other net non- interest income can be
Slide 17: Consolidated operating costs grew 7.7% organically
Consolidated operating costs grew by 7.7% 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 2021 Y-o-Y Y-o-Y, FX-adjusted 1 OPERATING COSTS At OTP Core the FX-adjusted cost (HUF 2021Q4 billion) CUM (HUF billion, %) (H
Slide 18: OTP Core retail business results and market share
In 2021 the retail business delivered excellent results, the Bank’s market share in new mortgage and cash loan placements remained stable or improved. The demand for mortgages was supported by the newly launched OTP CORE home renovation loans and green mortgage loans, too Y-o-Y change of mortgage lo
Slide 19: Baby loans and Home Renovation loans market share
OTP Bank maintained its above 40% market share in baby loan contractual amounts. The Bank has also been OTP CORE actively participating in the distribution of newly launched subsidized loan products Baby loans Home Renovation loan and Home Renovation cash loan 2 Contractual amount (HUF billion) Amou
Slide 20: OTP Core corporate business and MSE lending
The corporate business also achieved outstanding results: the corporate loan market share hit nearly 19%. MSE lending was helped by the already phased out FGS Go and the Széchenyi Card program launched in July OTP CORE Performing corporate loan volume changes OTP Group’s market share in loans to com
Slide 21: OTP Core volumes in repayment moratorium
Eligible clients who applied for the moratorium by end-October can remain in the scheme until 30 June 2022. OTP CORE At OTP Core such loans comprised HUF 237 billion representing 4.3% of the total outstanding loan portfolio OTP Core – volumes participating in the repayment moratorium (in HUF billion
Slide 22: Digital channels gaining ground in Hungary
Digital channels kept on gaining ground in Hungary: the share of digitally active, especially mobile banking customers increased, similar to the number of digital transactions. Our market share in the card business OTP CORE remained stably high DIGITAL ACTIVITY The digital activity of OTP clients ha
Slide 23: Digital developments and innovations in 2021
Innovations in 2021: the InternetBank and the MobileBank has been renewed, and the Bank has won many OTP CORE professional awards DIGITAL DEVELOPMENTS There was no obstacle to digital developments thanks to agile operation, therefore we were able to launch new services and processes New Internet- &
Slide 24: Stable portfolio quality and conservative provisioning
In 2021 the 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
Slide 25: 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 26: 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 27: Strong capital position above regulatory requirements
Strong capital position, all capital ratios are well above the regulatory requirements. The effect of the ICES redemption was reflected in the 3Q 2021 numbers and the related sale of treasury shares to the Special Employee Partial Ownership Plan Organizations was executed in December Decomposition o
Slide 28: Ratings of OTP Bank and sovereigns
+ 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: Ukraine and Russia exposure within the Group
The combined weight of total assets in Ukraine and Russia within the Group is 6.5% Adjusted profit after tax Total assets Net loans Shareholders’ equity (2021, HUF billion) (4Q 2021, HUF billion) (4Q 2021, HUF billion) (4Q 2021, HUF billion) in % of the Group 497 27,553 15,744 3,037 7.9% 7.6% 3.6% 2
Slide 30: Management expectations met; 2022 guidance and dividend
Management expectations for 2021 were fulfilled. Concerning 2022 outlook, there is a high degree of uncertainty. On 13 April 2021 the dividend proposal of HUF 120.2 billion was approved by the AGM Management expectations for 2021 were met Expectations 2021 Fact 1. Assuming that positive risk trends
Slide 31: Further details and financials
Further details and financials 31
Slide 32: OTP Group universal banking services in 11 countries
OTP Group offers universal banking services to around 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 4Q 2021 market share (%) OTP Bank Russia Russia Moldova Ukraine 2% Total assets 27 R
Slide 33: Unique investment opportunity to access 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 7.4 billion1 Total number of ordinary shares: 280,000,010, each having a Ownership structure of OTP Bank on 3
Slide 34: Net loan book breakdown by country and product
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 5,741 billion Bulgaria 2,730 billion (in HUF billion) Leasing Leasing 7% M
Slide 35: Deposit base breakdown by country and product
In the deposit book Hungary and the retail segment is dominant. In Hungary and Bulgaria OTP is the largest retail deposit holder Breakdown of the consolidated deposit base Hungary1 10,133 billion Bulgaria 3,875 billion (in HUF billion) Corporate MSE 12% Retail sight Corporate Retail sight By countri
Slide 36: 2021 adjusted ROE recovered
The 2021 adjusted ROE recovered as the margin pressure was offset by modest risk cost rate and improved cost efficiency 2003-2008 2009-2013 2014 2015 2016 2017 2018 2019 2020 2021 average average Accounting ROE 29.4% 8.3% -7.4% 5.1% 15.4% 18.5% 18.7% 20.3% 10.9% 17.0% Adjusted ROE 29.0% 11.6% 8.5% 9
Slide 37: Low Hungarian loan penetration implies growth potential
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 2021 data for other H
Slide 38: Performing loans grew 2.6-fold between 2016 and 2021
OTP Group’s performing loans grew to 2.6-fold between 2016 and 2021, driven by both organic growth and acquisitions OTP Group – performing (DPD0-90) loan growth1 FX-adjusted, in HUF billion 2016 6,146 Organic 666 +26% Acquisitions 955 Components of OTP Group’s 2017 7,766 performing loan growth Organ
Slide 39: Acquisitions completed in recent years improved positions
Acquisitions completed in the last few years materially improved OTP’s positions in many countries. The financial closure of the Slovenian Nova KBM and Albanian acquisitions might be completed in 2Q 2022, subject to regulatory approvals Target Net loan volumes Market share in total assets Book value
Slide 40: 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