Otp Bank Nyrt · BET:OTP
Otp Bank Nyrt — Q3 2024 Earnings Presentation
40 slides from Otp Bank Nyrt's earnings presentation, 2024
Slide 1: OTP Group – Strong results and capital yield high returns
OTP Group – Strong results and capital yield high returns Investor presentation Based on 3Q 2024 results
Slide 2: OTP Group - Highlights
OTP Group - Highlights Dominant position in CEE countries: Dominant position in 5 countries; 3.5-fold loan growth and 11 acquisitions in 7 years. 44% of net loans in Eurozone + ERM2 countries, 77% within the EU Outstanding profitability: ROE exceeded 27% in 2023 and reached 24.9% in 1-9M 2024 Strong
Slide 3: First-nine months profit after tax increased by 19% y-o-y
OTP Group’s first-nine months profit after tax increased by 19% y-o-y without the HUF 166 billion positive one-off effect of the acquisitions completed in 2023 Consolidated profit after tax Key performance indicators of OTP Group (HUF billion) (%) -4% Direct effect of acquisitions Return on equity N
Slide 4: 9M 2024 profit after tax increased 14% organically
In 9M 2024 the profit after tax increased by 14% organically, while the q-o-q improvement reached 15% Y-o-Y Q-o-Q Consolidated P&L (in HUF billion) 2023 9M 2023 9M 2024 1 2Q 2024 3Q 2024 FX-adj., organic FX-adj., w/o OBR Net interest income 1,462 1,036 1,322 25% 442 444 3% Net fees and commissions 4
Slide 5: Total assets exceeded EUR 100 billion
OTP Group's total assets exceeded EUR 100 billion driven by successful acquisitions and dynamic organic growth. Profit contribution of foreign subsidiaries showed a trend-like increase over the last several years and hit 69% in 9M 2024 Total assets development of OTP Group (in EUR billion) Flags rep
Slide 6: OTP Core realized HUF 210 billion profit after tax in 9M 2024
OTP Core realized HUF 210 billion profit after tax in 9M 2024, +29% y-o-y, without dividends received from OTP CORE subsidiaries and the HUF 113 billion one-off positive effect of the Slovenian merger OTP Core profit after tax Key performance indicators of OTP Core (without dividends received from s
Slide 7: Mortgage and cash loan contractual amounts growth at OTP Bank
In 9M 2024, mortgage loan contractual amounts at OTP Bank increased by almost two and a half times, while OTP CORE cash loan contractual amounts grew more than 60% Y-o-y change in mortgage loan contractual amounts in 9M 2024 Y-o-y change in cash loan contractual amounts in 9M 2024 OTP 2.4x Market 2.
Slide 8: Corporate loan demand modest; micro and small enterprise loans expanded
Demand for medium and large corporate loans remained modest, but the stock already grew 1% ytd. OTP CORE Micro and small enterprises loans expanded by 4% Performing corporate loan volume changes (%) OTP Group’s market share in loans to Hungarian (DPD0-90 loan changes until 2018, Stage 1+2 from 2019,
Slide 9: Foreign subsidiaries continued to deliver decent performance
In the first nine months 2024, foreign subsidiaries continued to deliver decent performance Profit after tax1 (HUF billion) ROE1 Cost / income ratio 9M 2023 9M 2024 9M 2023 9M 2024 9M 2023 9M 2024 DSK Group (Bulgaria) 150 147 26% 22% 32% 33% OTP Bank Slovenia 75 83 19% 16% 39% 42% OTP Bank Croatia 4
Slide 10: 9M net interest income grew 25% y-o-y organically
9M net interest income grew 25% y-o-y organically and FX-adjusted. The 3% q-o-q growth was driven by Inorganic improving Hungarian margins, volume expansion in Bulgaria and Croatia, and positive one-offs in Uzbekistan effects NET INTEREST 9M 2024 3Q 2024 9M 2024 Y-o-Y 3Q 2024 Q-o-Q 1 The 45% y-o-y j
Slide 11: Consolidated NIM picked up by 26 bps y-o-y
Consolidated NIM picked up by 26 bps y-o-y driven mostly by the improvement in Hungary, which continued into 3Q. The margin in EUR-linked countries continued to erode q-o-q NET INTEREST 3Q 2023 2Q 2024 3Q 2024 1 MARGIN At OTP Core the margin started to gradually bounce back from 2Q 2023, OTP Group 4
Slide 12: Consolidated net interest margin remained stable q-o-q
The consolidated net interest margin remained stable q-o-q as the lower margin in Slovenia and Bulgaria was offset by improving NIM in Hungary. The sensitivity to EUR rate cuts significantly moderated over the past several quarters Sensitivity to rate 3Q 2024 – drivers behind the q-o-q change of the
Slide 13: Consolidated performing loans increased 2% q-o-q
Consolidated performing loans increased by 2% q-o-q without the sale of Romania. In Hungary, without the repayment of a large foreign loan, corporate loans increased by 2%, and the dynamic growth of household loans also continued Q-o-Q performing (Stage 1+2) LOAN volume changes, adjusted for FX effe
Slide 14: Performing loans grew 7% organically in 1-9M 2024
Consolidated performing loans grew by 7% organically in 1-9M 2024, with strong household and modest corporate loan dynamics. Ukrainian corporate and consumer loans have already grown more than 20% ytd YTD performing (Stage 1+2) LOAN volume changes, adjusted for FX effect Cons. Core2 DSK OBS OBH OBSr
Slide 15: Customer deposits grew 2% q-o-q organically
Consolidated customer deposits grew by 2% q-o-q organically. The stock of Hungarian retail deposits remained stable Q-o-Q DEPOSIT volume changes, adjusted for FX-effect Cons. Core2 DSK OBS OBH OBSrb Ipoteka OBU CKB OBA OBM OBRu (Hungary) (Bulgaria) (Slovenia) (Croatia) (Serbia) (Uzbek) (Ukraine) (Mo
Slide 16: Customer deposits increased 5% in first nine months
Consolidated customer deposits increased by 5% during the first nine months without the impact of the Romanian sale, matching the dynamics of Hungarian retail deposits. The Uzbek deposit portfolio grew by almost a quarter this year YTD DEPOSIT volume changes, adjusted for FX-effect Cons. Core2 DSK O
Slide 17: 14% y-o-y organic growth in net fees
The 14% y-o-y organic and FX-adjusted growth in net fees was driven mainly by Hungary, however net fees Inorganic dropped in Hungary in 3Q as the impact of increased financial transaction tax rates kicked in from August effects NET FEE 9M 2024 3Q 2024 9M 2024 Y-o-Y 3Q 2024 Q-o-Q 1 The 11% y-o-y incr
Slide 18: Quarterly other income dynamics
Quarterly other income dynamics were largely influenced by the HUF 10.5 billion gain on the sale of the Inorganic Romanian bank presented on consolidated level, and other larger items booked in Hungary effects 9M 2024 3Q 2024 9M 2024 Y-o-Y 3Q 2024 Q-o-Q OTHER INCOME 1 The y-o-y HUF 77 billion declin
Slide 19: FX-adjusted operating costs increased 13% y-o-y
Inorganic FX-adjusted operating costs increased by 13% y-o-y without inorganic effects effects 2023 9M 2024 Y-o-Y Y-o-Y, FX-adjusted OPERATING COSTS 1 (HUF (HUF billion) billion) (HUF billion) (HUF billion) At OTP Core the 8% y-o-y growth was driven by: OTP Group 791 881 98 14%/14%1 861 96 14%/13%1
Slide 20: Consolidated risk costs decreased q-o-q
Consolidated risk costs decreased q-o-q partly due to lower impairments on Russian bonds. Uzbek risk costs were close to zero in 3Q due to positive one-offs 2023 9M 2024 TOTAL RISK COST 2023 credit risk 2Q 2024 3Q 2024 9M 2024 credit risk 1 At OTP Core risk costs were 0 in 3Q. (HUF billion) cost rat
Slide 21: Stage 3 ratio decreased to 4%
The Stage 3 ratio decreased to 4%. Provisioning policy remained conservative compared to regional peers Development of the Group's main credit Own coverage of Stage 1+2 loans compared to regional peers at quality indicators the end of 3Q 2024 84.5% 82.7% 83.1% 83.6% 83.8% 1.8% 1.4% Stage 1 ratio 0.8
Slide 22: Development of the Stage 1, 2 and 3 ratios
Development of the Stage 1, Stage 2 and Stage 3 ratios Cons. Core DSK OBS OBH OBSrb Ipoteka OBU CKB OBA OBM OBRu Merk. (Hungary) (Bulgaria) (Slovenia) (Croatia) (Serbia) (Uzbek.) (Ukraine) (Monten.) (Albania) (Moldova) (Russia) (Hung. leasing) 4Q 21 81.5% 78.0% 84.0% 86.0% 80.0% 89.9% - 87.1% 76.7%
Slide 23: Development of own provision coverage ratios
Development of the own provision coverage ratios in different Stage categories Cons. Core DSK OBS OBH OBSrb Ipoteka OBU CKB OBA OBM OBRu Merk. (Hungary) (Bulgaria) (Slovenia) (Croatia) (Serbia) (Uzbek.) (Ukraine) (Monten.) (Albania) (Moldova) (Russia) (Hung. leasing) 4Q 21 1.0% 1.0% 1.0% 0.3% 0.6% 0
Slide 24: CET1 ratio improved in the first nine months
The CET1 ratio improved in the first nine months thanks to strong underlying capital generating capability and the sale of OTP Bank Romania (+53 bps) Capital adequacy Regulatory Decomposition of the year-to-date change in the CET1 ratio and MREL ratios (%)1 requirements* (based on the prudential sco
Slide 25: Robust liquidity position and bond maturity profile
Robust liquidity position: 73% net loan to deposit ratio, 231% LCR, 154% NSFR and relatively benign redemption profile OTP Bank outstanding FX wholesale bonds OTP Bank FX MREL-eligible bond maturity profile2 Issued Amt. / (in EUR million) Issue Maturity Actual Issuance 1,170 Instrument Call Date Ext
Slide 26: OTP Bank ratings closely correlate with sovereign ceilings
OTP Bank ratings closely correlate with the sovereign ceilings Hungarian sovereign, OTP Bank and OTP Mortgage Bank ratings Composition of main ratings by Moody’s and S&P Moody’s S&P Macro Factors Macro Factors Weighted Macro Profile Moderate- Anchor bbb- Financial Profile Bank-Specific Factors Combi
Slide 27: ESG strategy delivery on track
The delivery of ESG obligations and goals set by the Bank’s ESG strategy is on track according to schedule Green loan stock1 ESG RESULTS AND TARGETS (consolidated, HUF billion) 3Q 2024 Actual Long-term KPIs Plan Building the Corporate: HUF 699 billion Green loans of HUF 1,500 1,500 green loan billio
Slide 28: Outstanding performance recognized by professional organizations
OTP Group’s outstanding performance has traditionally been recognized by professional organizations ’Best Bank in CEE 2024’ ’Best Bank in Hungary in 2024’ since 2012 in all consecutive ‘Bank of the Year Grand Prize’ years ‘Bank of the Year Main Prize’ ’Best Bank in Croatia in 2024’ ’Best Bank in Mon
Slide 29: Economic growth expected to accelerate in 2025
In 2025 economic growth is expected to accelerate in most operating countries Hungary Bulgaria Slovenia Croatia 2022 2023 2024F 2025F 2022 2023 2024F 2025F 2022 2023 2024F 2025F 2022 2023 2024F 2025F GDP growth (annual, %) 4.6 -0.9 0.5 2.0 3.9 1.8 2.3 2.8 2.7 2.1 1.7 2.2 7.0 3.1 3.5 3.0 Unemployment
Slide 30: No change in the management guidance for 2024
No change in the management guidance for 2024 Based on the developments in the first 9 months of 2024, the management reaffirmed its 2024 guidance made in the Half-year Financial Report, accordingly: The net interest margin may exceed the 2023 level (3.93%). FX-adjusted organic performing loan v
Slide 31: Further details and financials
Further details and financials 31
Slide 32: OTP Group provides universal banking services to almost 17 million customers
Currently OTP Group provides universal banking services to almost 17 million active customers in 11 countries, in many of them with dominant market position Major Group members Total assets1 Systemic position in Hungary OTP Bank Albania Moldova 3Q 2024 market share (%) Russia Montenegro Russia Ukrai
Slide 33: OTP Bank offers a unique investment opportunity in CEE banking
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 13.3 billion1 Total number of ordinary shares: 280,000,010, each having a nominal value of HUF 100 and repres
Slide 34: Close to 80% of net loan book invested in EU countries
Close to 80% of the total net loan book is invested in EU countries, while Hungary’s share within the Group stood at 32% Breakdown of the consolidated net loan book Net loan book, 3Q 2024 By country By product Hungary1 HUF 7,216 bn Bulgaria HUF 4,447 bn Slovenia HUF 2,835 bn Leasing Leasing Leasing
Slide 35: 36% of deposit book held in Hungary
36% of the consolidated deposit book is held in Hungary, while Bulgaria and Slovenia together hold another third. Household volumes account for 56% of the total deposit base Breakdown of the consolidated deposit base Deposit base, 3Q 2024 By country By product Hungary1 HUF 10,967 bn Bulgaria HUF 5,8
Slide 36: Consolidated ROE close to 25% in first nine months of 2024
The consolidated ROE was close to 25% in the first nine months of 2024 2003-2008 2009-2013 9M average average 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 ROE 29.4% 8.3% -7.4% 5.1% 15.4% 18.5% 18.7% 20.3% 10.9% 17.0% 11.0% 27.2% 24.9% ROE (adjusted) 29.0% 11.6% 8.5% 9.6% 15.4% 18.7% 19.1%
Slide 37: Hungarian loan penetration still low in regional comparison
Hungarian loan penetration levels are still low in regional comparison implying good volume growth potential. This is also the case for the Bulgarian housing loan segment Market penetration levels in Hungary in ... Net customer loan to deposit ratio in the 2Q 2024 data for other CEE/CIS Hungarian cr
Slide 38: Acquisitions drove ~3.5-fold growth in net loan book
Successful acquisitions played a great role in the ~3.5-fold growth in consolidated net loan book over the last 8 years. At the same time, the composition of the Group shifted towards Eurozone / ERM 2 countries Consolidated net loan growth Share of Hungary in the Group's net loan portfolio (FX-adjus
Slide 39: 11 acquisitions completed in the last 7 years
In the last 7 years 11 acquisitions were completed. As a result of the Ipoteka Bank acquisition in Uzbekistan, in 2023 OTP Group entered the Central Asian region Target Net loans Market share Book value (seller, date of closing) (HUF billion) (before/after acq.1, %) (EUR million) Splitska banka, Cro
Slide 40: Important information, disclaimers and contacts
Important information, disclaimers and contacts Referring to both equity and fixed income investors: This presentation has been prepared by OTP Bank Nyrt. ("OTP Bank") and is the sole responsibility of OTP Bank. This presentation and the information contained herein is strictly confidential to the r