Mbh Mortgage Bank Co. Plc. · BET:TAKAREKJZB
Mbh Mortgage Bank — Takarék Mortgage Bank — Debt Investor Presentation (September 2020)
50 slides from Mbh Mortgage Bank's debt investor presentation, Sep 30, 2020
Slide 1: Investor Presentation
INVESTOR PRESENTATION Takarék Mortgage Bank Co. Plc. September 30, 2020
Slide 2: Content
CONTENT 1. INTEGRATION ORGANIZATION – SLIDE 4. 2. COMPANY OVERVIEW, OWNERSHIP & ORGANIZATION STRUCTURE, STRATEGY – SLIDE 10. 3. COVER POOL CHARACTERISTICS AND RISK PROFILE – SLIDE 20. 4. INVESTOR PROTECTION WITHIN THE INTEGRATION – SLIDE 26. 5. FUNDING & LIQUIDITY – SLIDE 29. 6. FINANCIAL INFORMATIO
Slide 3: Abbreviations
ABBREVIATIONS TMB: Takarék Mortgage Bank Co. Plc OBA: National Deposit Insurance MTB: MTB Magyar Takarékszövetkezeti Bank Ltd. Jht.: Act on Mortgage Bank and Mortgage Bonds Takarekbank: Universal commercial bank of Takarek HCSO: Hungarian Central Statistical Office Group GDMA: Government Debt Manage
Slide 4: 1. Integration Organization
1. INTEGRATION ORGANIZATION 4
Slide 5: Takarék Group's evolution
Takarék Group’s evolution Integration, mergers By the end of 2017, the number of Cooperative 2020 Pre-integration Credit Institutions (CCIs) are significantly decrea- sed through the mergers of 52 CCIs, thus only No. of Saving Cooperatives: 122 12+3 regional CCIs remained besides Takarék Saving
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 were transferred Legal transformation of Takarék Group 2. Phase 1. Phase Baseline (till 31.10.2019) (till 30.04.2019) ) B3 3 CCIs (fusion) Mohács
Slide 7: New structure – Members of the Integration
New structure – Members of the Integration National Bank Supervisory role of Hungary Central entity, primarily Central Body of Integrated regulatory and Credit Institutions (CBICI) supervisory roles Business governance and Takarék United Cooperative in a new form, Cooperative ownership functions MTB
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 increasing New product strategy profitability and financially New segment strategy sustainable operations New service model Main goals of Digit
Slide 9: Strategic cooperation between MTB, MKB Bank and Budapest Bank
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 10: 2. Company Overview, Ownership & Organization Structure, Strategy
2. COMPANY OVERVIEW, OWNERSHIP & ORGANIZATION STRUCTURE, STRATEGY 10
Slide 11: Dominant debt security issuer in Hungary
Dominant debt security issuer in Hungary Pioneer of the domestic mortgage bond market • The first Hungarian mortgage • Best Structured Borrower – 2004, Euromoney bond was issued by Takarék • Best Companies in Central & Eastern Europe – 2005, Euromoney Mortgage Bank (or TMB, former FHB in 1998) • Ban
Slide 12: 22-year activity on local and international capital markets
22-year activity on local and international capital markets • More than HUF 1900bn total issue of covered and unsecured bonds since 2002, nominal amount of issues reaches HUF 60-130bn on annual basis, 16-20 transactions per year • Strong know-how basis: fundamentals of • mortgage covered bonds, • un
Slide 13: History of Takarék Mortgage Bank – Road to the Integration
History of Takarék Mortgage Bank (TMB) – Road to the Integration Year / Milestones /Strategic cooperations 1997/ FHB Mortgage Bank was established, as a state- FHB) Commercial Bank Ltd. become member s of (IOCCI) on owned specialized financial institution September 23, 2015 2006/ FHB Commercial Bank
Slide 14: TMB's Ownership structure
TMB’s Ownership structure – Share of Integration members is over 85% Takarék Mortgage Bank Co. Plc. ownership stucture (30.06.2020) Composition of the board of directors Takarék Other (including József Vida: Chairman (Chairman and CEO of MTB since Zártkörű foreing and domestic 30 November 2016) Befe
Slide 15: Organizational structure since 2017
Organizational structure since 2017 – Takarék Mortgage Bank (‚Refinancing mortgage bank’) General Supervisory Board Assembly Board of Directors Internal Audit CEO Deputy CEO Assett-liability and Human Treasury Mid- Compliance and Cover pool Legal dep. resources Capital markets Liquidity Office Bank
Slide 16: Strategy, growth targets – Takarék Mortgage Bank
Strategy, growth targets – Takarék Mortgage Bank Business strategy Main goals • Pure refinancing mortgage bank model: TMB operates exclusively as mortgage bond issuer and refinancing center Covered bonds issuance • Competitive pricing • Expanding mortgage refinancing business: TMB provides mortgage
Slide 17: Strategic services: AVM
Strategic services: AVM AVM Automatic valuation Developing the methodology which serves as a basis for lending decisions in Western Europe TMB expects to offset some effects of narrowing margins. AI Artificial intelligence The state-of-the-art methodology using the latest data analysis methods allow
Slide 18: TMB's exclusive short term strategic targets
TMB’s exclusive short term strategic targets Sustainability, energy efficiency mortgage lending, social responsibility National Bank of Hungary (MNB) announced a Green Program in February 2019. TMB joined the MNB’s Programme Main goals: • TMB participates actively in the „green” dialogue initiated b
Slide 19: Market position - dominant player on the local mortgage refinancing market
Market position - dominant player on the local mortgage refinancing market Market share of local mortgage banks based on 18%-20% market share in issued mortgage bond volume (2020 H1) outstanding covered bonds in K&H MB TMB the local market 9,8% 18,2% UC MB 13,3% Outstanding mortgage bond volume Erst
Slide 20: 3. Cover Pool Characteristics and Risk Profile
3. COVER POOL CHARACTERISTICS AND RISK PROFILE 20
Slide 21: Cover pool composition
Cover pool composition 400 000 000 000 400 000 000 000 MNB cb purchase MNB cb purchase MNB cb purchase program I. starts program I. ends program II. starts 350 000 000 000 350 000 000 000 300 000 000 000 300 000 000 000 250 000 000 000 250 000 000 000 200 000 000 000 200 000 000 000 150 000 000 000
Slide 22: Cover pool characteristics, H1 2020
Cover pool characteristics, H1 2020 Asset types of cover pool Interest rate distribution of cover pool FX distribution of cover pool 0,01% 2% 8% 1,51% 14% 2020Q2 2020Q2 37% 2% 2020Q1 47% 53% 2020Q1 84% 63% 90% 98,48% Residential loans Commercial loans Substitute assets Floating rate Fixed rate HUF E
Slide 23: Cover bond portfolio characteristics and rating, H1 2020
Cover bond portfolio characteristics and rating, H1 2020 Interest rate distribution of FX distribution of outstanding covered bonds covered bonds 2,2% 21% 79% 97,8% HUF EUR Fixed rate Floating rate Date of rating Category S&P's rating action BBB stable Local and foreign-currency Investment 2020.05.1
Slide 24: Risk mitigating factors of TMB's covered bonds I.
Risk mitigating factors of TMB’s covered bonds I. Instrument and market specific factors Regulatory environment Issuer specific factors Price quotation Hungarian Mortgage Bank Act Integration membership – guarantee community Act on Bank Recovery and Resolution Overcollateralization and 6M liquidity
Slide 25: Risk mitigating factors of TMB's covered bonds II.
Risk mitigating factors of TMB’s covered bonds II. Risk mitigating factors Regulation: Cover assets: • Act no. XXX of 1997 on mortgage banks and mortgage bonds • LTV - Loans secured by a residential real estate can be taken (Jht.) see: Appendix I. in cover up to 70% of the mortgage lending value of
Slide 26: 4. Investor Protection within the Integration
4. INVESTOR PROTECTION WITHIN THE INTEGRATION 26
Slide 27: Investor protection within the Integration I.
Investor protection within the Integration I. System of joint and several liability Szhitv. or Integration Law (CXXXV. of 2013): The members of the In case of the termination of the membership, the joint and several liability Integration Organization: the integrated credit institutions, the busi
Slide 28: Investor protection within the Integration II.
Investor protection within the Integration II. Amendment of the Szhitv (Act CXXXV. Of 2013.) or Integration Law Effects of the amendment of the Szhitv. or Integration Law The most important governing members of the Integration • The Parliament adopted the Act LXXX of 2020 (03.07.2020) on the amendme
Slide 29: 5. Funding & Liquidity
5. FUNDING & LIQUIDITY 29 SS TAKAREKJELZALOGBANK
Slide 30: Asset composition and funding structure
Asset composition and funding structure (TMB standalone, IFRS) Interest earning assets Funding structure 0,2% 3,5% 12,6% 2020 H1 2020 H1 5,2% 27,5% 17,5% 1,4% 64,4% 2019 YE 2019 YE 13,0% 30,5% 72,3% 98,6% 53,4% Interbank loans Own originated Loans Securities Refinancing loans Interbank borrowings Ow
Slide 31: Structure of financial transaction within the Integration
Structure of financial transaction within the Integration Money Interbank depo / market IRS • Centralized liquidity management and funding strategy within the Integration • MTB as the only entity raising MM funding in the Integration from the market MTB • TMB, as a specialized institution provides r
Slide 32: Long-term funding strategy
Long-term funding strategy General strategy • TMB focuses primarily on covered bond issuance vs unsecured bonds, • TMB acts as the issuer entity to support compliance to MFAR compliance for partner banks and Takarék Group, • Target maturities for covered bond issuances: min. 3Y and longer skewing to
Slide 33: Covered bond and unsecured bond maturity profile and investor base
Covered bond and unsecured bond maturity profile and investor base Takarék Covered Bond investors Maturity profile, as of 1 st of September, 2020 as of September 01, 2020 (HUFm) (in % of outstanding amount at the time of issuance) Insurance co. Retail 1,79% 0,09% Pension funds 0,51% Investment funds
Slide 34: Covered bond issuance: volumes and spreads vs HGB benchmark
Covered bond issuance: volumes and spreads vs HGB benchmark Public Covered Bond Issuances auctions/subscriptions HUFm bps MNB mortgage bond purchase program I. MNB mortgage bond purchase program II. 28 000 . 100 77 76 74 24 000 80 70 72 70 69 67 59 57 20 000 60 52 52 51 50 46 46 42 41 40 35 34 16 00
Slide 35: 6. Financial Information
6. FINANCIAL INFORMATION 35 SS TAKAREKJELZALOGBANK
Slide 36: Financial performance I. - major indicators
Financial performance I. - major indicators (TMB standalone, IFRS) Change : end-2020./end- HUF million H1 2019 End-2019 H1 2020 Change: H1 2020/H1 2019 2019 Major indicators Total assets 329 084 342 897 435 129 32.2% 26.9% Refinanced loans 190 348 216 983 230 957 21.3% 6.4% Own originated loans (gro
Slide 37: Financial performance II. - major indicators
Financial performance II. - major indicators (TMB standalone, IFRS) Change: H1 Change : end- millió forintban H1 2019 End-2019 H1 2020 2020/H1 2019 2020./end-2019 Profitability indicators HUF 1.1bn profit after Net interest income 1 165 1 398 1 309 12.4% -6.4% tax in H1 2020 Net interest margin 0.71
Slide 38: Financial performance III. - major indicators
Financial performance III. - major indicators (TMB standalone, IFRS) Balance sheet total (HUF million) Shareholder's equity (HUF million) 65 043 65 109 435 129 333 488 342 897 63 863 329 084 62 184 31/12/2018 30/06/2019 31/12/2019 30/06/2020 31/12/2018 30/06/2019 31/12/2019 30/06/2020 Mortgage bond
Slide 39: Financial performance IV. - major indicators
Financial performance IV. - major indicators (TMB standalone, IFRS) Refinanced mortgage loans Own originated loans (HUF million) (HUF million) 230 957 217 000 190 182 169 286 77 100 68 103 58 800 54 550 31/12/2018 30/06/2019 31/12/2019 30/06/2020 31/12/2018 30/06/2019 31/12/2019 30/06/2020 The large
Slide 40: Capital position (consolidated, Takarék Group)
Capital position (consolidated,Takarék Group) HUF million End-2019 End-2018 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 Own funds 269 529 244 955 terminated the obligation for compliance
Slide 41: 7. Appendix
7. APPENDIX SS TAKAREKJELZALOGBANK
Slide 42: MNB's measures to mitigate economic effects of COVID-19
MNB’s measures to mitigate the negative economic effects of COVID- 19 – measures affecting the Issuer Restart of MNB’s mortgage covered bonds purchasing Moratoria program announcement April 28 2020, start May 18 2020 The National Bank (MNB) and Hungarian Government announced a moratorium for all mor
Slide 43: Regulatory framework I.
Regulatory framework I. Act no. XXX of 1997 on mortgage banks and mortgage bonds (Jht) I. Mortgage bond owners enjoys a special status versus other a) ordinary and supplementary cover recognized in the creditors in the case of Issuer’s insolvency register of cover at the starting date of liquidatio
Slide 44: Regulatory framework II.
Regulatory framework II. Act no. XXX of 1997 on mortgage banks and mortgage bonds (Jht) II. The cover system Strict coverage ratios Mandatory over-collateralization: Mortgage banks shall Mortgage banks have to ensure the existence of cover at all times have sufficient cover assets of a value
Slide 45: Regulatory framework
Regulatory framework Resolution Law - Act on the Bank Recovery and Resolution (Act. no. XXXVII. of 2014) that results from a reverse repurchase agreement under which the institution has purchased from the counterparty non- accessory - In accordance with Article 58 (1) (c) point of the Act on the Ban
Slide 46: 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 • Issued mortgage bonds, mortgage banks refinancing loans, re-purchase price • The regulation aims at increasing obligation rela
Slide 47: 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 new requirements of the EU regulation approved in November 2019, however there must be some amendments in the Mortgage Act with regard the clarification of those Articles which remains i
Slide 48: Contacts
CONTACTS Bozzai Rita Senior Advisor / Capital markets E-mail: bozzai.rita@takarek.hu Telefon: +36 20 429 4002 Tóth Illés Head of Capital markets E-mail: toth.illes@takarek.hu Telefon: +36 30 417 4356
Slide 49: Thank you for your attention!
THANK YOU FOR YOUR ATTENTION!
Slide 50: 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 envir
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