Otp Bank Nyrt · BET:OTP
Otp Bank Nyrt — Otp Bank S/Adr R — Q1 2023 Earnings Presentation
28 slides from Otp Bank Nyrt's earnings presentation, May 10, 2023
Slide 1: OTP Group 1Q 2023 results
OTP Group 1Q 2023 results Conference call – 10 May 2023 László Bencsik Chief Financial and Strategic Officer
Slide 2: Group profit after tax and ROE indicators
The Group's profit after tax exceeded the previous quarter by 69%. The balance of adjustments was positive, as the NKBM acquisition and the recovery of additional payments on the Sberbank bankruptcy in Hungary offset the special bank taxes Consolidated profit after tax OTP Group’s Return on Equity i
Slide 3: OTP Group consolidated P&L and performance indicators
The 1Q adjusted profit was boosted by the 2 months contribution from NKBM (HUF 13 billion). Operating profit grew 5% q-o-q organically and FX-adjusted, whereas provision charges moderated significantly. 1Q adjusted ROE was 23% OTP Group (consolidated) Q-o-Q Y-o-Y Q-o-Q P&L (in HUF billion) 1Q 2022 4
Slide 4: OTP Core profit and ROE indicators
OTP Core realized HUF 37 billion loss in 1Q 2023 excluding dividends received from subsidiaries, primarily OTP CORE as a result of lump-sum accounting of special taxes in 1Q OTP Core (milliárd profit after tax forintban) OTP Core’s Return on Equity indicators (without dividends received from subsidi
Slide 5: Foreign subsidiaries profit, ROE and cost/income
In 1Q 2023 the foreign subsidiaries typically increased their profit after tax q-o-q, with ROEs on average in the range of 15-25%, except for Romania. Operating cost efficiency improved across the board Profit after tax1 (HUF billion) Q-o-Q, ROE Cost / income ratio 4Q 2022 1Q 2023 FX-adjusted 1Q 202
Slide 6: OTP Russia and OTP Ukraine
The Russian and Ukrainian loan volumes decreased y-o-y, while deposits expanded. In both countries there is a substantial free capital above the regulatory minimum requirement. In Ukraine, the provisioning level further improved OTP Russia OTP Ukraine Y-o-y change of volumes Gross intragroup financi
Slide 7: Acquisition of Ipoteka Bank in Uzbekistan
The acquisition of Ipoteka Bank is expected to be completed by the end of 2Q. Ipoteka is the 5th largest player Uzbekistan in the Uzbek banking sector, while it is the market leader in mortgage lending Main features of the transaction Financial highlights of Ipoteka Bank (IFRS, in HUF billion equiva
Slide 8: Total income by subsidiary
Effect of Total income increased by 3% q-o-q organically and adjusted for the FX-effect, driven primarily by Hungary, NKBM Bulgaria, Slovenia and Albania acquisition 1Q 2023 Y-o-Y Q-o-Q TOTAL INCOME (HUF billion) (HUF billion, %) (HUF billion, %) OTP Group 457 73 23 96 27%/16%1 -17 23 6 1%/3%1 OTP C
Slide 9: Net interest income by subsidiary
Effect of Net interest income grew 18% y-o-y organically and FX-adjusted, as the weaker OTP Core performance was NKBM offset by stellar foreign performances acquisition NET INTEREST 1Q 2022 4Q 2022 1Q 2023 1Q 2023 Y-o-Y 1Q 2023 Q-o-Q 1 The 15% y-o-y drop in net interest INCOME (HUF billion) (HUF bil
Slide 10: Net interest margin by subsidiary
Foreign operations in the CEE region played a major role in the net interest margin improvement q-o-q, as the rising but significantly lower interest rate environment than in Hungary has a favorable effect on margins 1 In the steeply increasing rate NET INTEREST MARGIN 1Q 2022 4Q 2022 1Q 2023 enviro
Slide 11: Quarterly performing loan volume changes
Consolidated performing loan growth was 11% q-o-q, out of which 10%-point was explained by the NKBM acquisition. In Bulgaria and Montenegro lending remained strong, but other CEE countries slowed down. Russian corporate exposures kept melting down Q-o-Q performing (Stage 1 + 2) LOAN volume changes,
Slide 12: Year-on-year performing loan volume changes
Consolidated performing loans expanded by 10% organically over the last twelve months. Strong growth in the CEE countries was partly offset by contraction in Russia, Ukraine and Moldova Y-o-Y performing (Stage 1 + 2) LOAN volume changes, adjusted for FX-effect Cons. Core2 DSK SKB+ OBH OBSrb OBA CKB
Slide 13: Deposits: quarterly volume changes
Consolidated deposits remained stable q-o-q without the NKBM acquisition. In Hungary the slowly declining underlying trend continued in retail, but the 13th month pension paid in February gave a one-off boost; large corporate outflows were partly offset by a seasonal jump in municipal deposits. The
Slide 14: Deposits: year-on-year volume changes
Consolidated deposits grew by 9% organically over the last 12 months Y-o-Y DEPOSIT volume changes, adjusted for FX-effect Cons. Core3 DSK SKB+ OBH OBSrb OBA CKB OBR OBRu OBU OBM (Hungary) (Bulgaria) NKBM (Croatia) (Serbia) (Albania) (Monten.) (Romania) (Russia) (Ukraine) (Moldova) (Slovenia) Y-o-Y n
Slide 15: Deposit franchise, market shares and insured deposits
OTP Group’s deposit collection franchise is featured by strong market shares and high share of insured retail deposits TOTAL customer deposits RETAIL deposits NON-RETAIL deposits 1Q 2023 Volume, Weight, Market Insured, Market Insured, Share of Market Insured, HUF billion % share, % % share, % % term
Slide 16: Net fee income by subsidiary
Effect of In 1Q the 6% decrease in net fees was driven primarily by base effect and negative one-offs in Hungary, NKBM as well as seasonality acquisition NET FEE 1Q 2022 4Q 2022 1Q 2023 1Q 2023 Y-o-Y 1Q 2023 Q-o-Q 1 At OTP Core net fees went up by 7% INCOME (HUF billion) (HUF billion) (HUF billion)
Slide 17: Other net non-interest income
Effect of Other net non-interest income improved by 3% q-o-q on an FX-adjusted basis, driven mainly by OTP Core NKBM acquisition OTHER 1Q 2022 4Q 2022 1Q 2023 1Q 2023 Y-o-Y 1Q 2023 Q-o-Q 1 At OTP Core the q-o-q increase was INCOME (HUF billion) (HUF billion) (HUF billion) (HUF billion, %) (HUF billi
Slide 18: Operating costs growth
Amid the high inflationary environment, operating costs grew by 22% y-o-y, adjusted for the FX-effect and Effect of NKBM the NKBM acquisition acquisition 1Q 2023 Y-o-Y Y-o-Y, FX-adjusted 1 OPERATING COSTS Drivers behind the 25% cost growth: (HUF 2023Q1 billion) CUM (HUF billion, %) (HUF billion, %)
Slide 19: Capital and liquidity position
The Group’s capital and liquidity position is stable, even though capital adequacy ratios declined q-o-q, partly driven by regulatory changes and the consolidation of NKBM. Series of successful bond issues were executed in recent months Regulatory minimum CAR and CET1 ratio Stable liquidity position
Slide 20: Stage 3 ratio and provisioning coverage
The Stage 3 ratio decreased in the past four consecutive quarters, despite the various headwinds. The management's provisioning policy remained conservative compared to regional banking groups Development of the Group's main credit quality Own coverage of Stage 1+2 loans compared to regional peers a
Slide 21: OTP Core: mortgage and cash loan market shares
In Hungary applications for mortgage loans dropped 79% y-o-y; OTP’s market share declined in 1Q 2023. OTP CORE OTP’s market share in cash loan sales was 41%, our market share in retail deposits further improved Y-o-y change of mortgage loan applications and disbursements Performing (Stage 1+2) cash
Slide 22: OTP Core: baby loans and Green Home Programme
The baby loans contractual amounts declined q-o-q. The green housing loans generated huge demand last OTP CORE year, but actual disbursements come with a certain time delay Baby loans Green Home Programme2 Contractual amount (HUF billion) Applications for green housing loans (HUF billion) Market1 27
Slide 23: OTP Core: corporate loan market share
In Hungary, the growth rate of corporate loans slowed down, OTP's market share remained above 19%. OTP CORE Amid the high interest rate environment, there is a strong demand for subsidized schemes in particular Performing corporate loan volume changes OTP Group’s market share in loans to (DPD0-90 lo
Slide 24: ESG results, targets and ratings
The delivery of ESG obligations and goals set by the Bank’s ESG strategy are on track according to schedule, with several new initiatives already in the field of green finance ESG RESULTS AND TARGETS ESG RATINGS 2022 Actual Long-term KPIs OTP Bank’s improving sustainability performance has been reco
Slide 25: Macroeconomic outlook for OTP Group countries
Due to the effects of the war, high inflation and tight monetary conditions economic growth is expected to be moderate in 2023, but the countries of OTP Group may avoid recession. In 2024 growth may pick up in the region Hungary Bulgaria Slovenia Croatia 2022 2023F 2024F 2022 2023F 2024F 2022 2023F
Slide 26: Updated management guidance for 2023
In 2023 the adjusted ROE may be close to the 2022 level due to new acquisitions, continued organic growth, stable risk profile and increasing cost pressure amid high inflation Updated management guidance for 2023 Compared to the management guidance published on 10 March 2023 the current one forecast
Slide 27: 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
Slide 28: Questions and Answers session
Questions and Answers session 28