Otp Bank Nyrt · BET:OTP
Otp Bank Nyrt — OTP Mortgage Bank — Debt Investor Presentation (2004)
46 slides from Otp Bank Nyrt's debt investor presentation, 2004
Slide 1: OTP Mortgage Bank Ltd. Inaugural Covered Mortgage Bond Issue
Hungary’s Leading Mortgage Bank OTP Mortgage Bank Ltd. Inaugural Covered Mortgage Bond Issue European Roadshow Page 1
Slide 2: Legal statement
Hungary’s Leading Mortgage Bank Legal statement This Document must not be distributed in the United States or any U.S. persons as defined in the regulations of the Securities Act of 1933, as amended. This Document must not be distributed in Canada or to Canadian persons. The securities offered hereb
Slide 3: Agenda
Hungary’s Leading Mortgage Bank Agenda Company Profile CoveredMortgage Bonds in Hungary Mortgage Business Inaugural Issue Conclusion Appendices Page 3
Slide 4: Introduction
Hungary’s Leading Mortgage Bank Introduction Page 4
Slide 5: OTP Mortgage Bank is launching its 1st EURO denominated Covered Mortgage Bond
Hungary’s Leading Mortgage Bank The Act XXX of 1997 on Mortgage Loan Companies and on Mortgage Bonds contains legislation which enables qualifying Hungarian Banks to issue Covered Mortgage Bonds OTP Mortgage Bank is launching its 1st EURO denominated Covered Mortgage Bond OTP Mortgage Bank is the la
Slide 6: Company profile
Hungary’s Leading Mortgage Bank Company profile Page 6
Slide 7: Introduction of OTP Mortgage Bank
Hungary’s Leading Mortgage Bank Introduction of OTP Mortgage Bank OTP Mortgage Bank commenced operations on February 1, 2002 Member of OTP Group - the largest financial service provider in Hungary One of the Highest rated Hungarian Credit Institution: Moody’s A2 / P1 Specialised credit institution R
Slide 8: Strategy of OTP Mortgage Bank
Hungary’s Leading Mortgage Bank Strategy of OTP Mortgage Bank Products: Subsidized and non-subsidized mortgage loans Land mortgage loans Home equity loans (in EUR and CHF) Maintain the market leader position Deliver high quality services as the largest provider Distribution channels: Broad network o
Slide 9: Our Successful Business Model
Hungary’s Leading Mortgage Bank What could lead OTP Mortgage Bank to be the No.1 mortgage provider ? Our Successful Business Model 3. OTP Bank Clients 1-2. 4. 1. Conducting the mortgage business OTP MB under one umbrella. 2. Loan granting after approval of OTP MB according to its rules;. 3. Regular
Slide 10: Rapidly growing… asset growth
Hungary’s Leading Mortgage Bank Rapidly growing… Asset growth Total assets development 3500 3000 EUR Million 2500 2000 1500 1000 500 0 2002 2003 1Q 2003 2004 1Q 2004 3Q The Government’s new Housing Policy stimulates the market OTP Bank’s leadership in the housing sector for more than 50 years Produc
Slide 11: Financial performance of OTP Mortgage Bank
Hungary’s Leading Mortgage Bank … and deleivering excellent financial figures. Financial performance of OTP Mortgage Bank Profit before tax ROAEDevelopment 14,00 50 45 12,00 40 10,00 HUF Billion 35 8,00 30 % 6,00 25 4,00 20 2,00 15 0,00 10 2001 2002 2003 2004 forecast 2002 2003 2004 forecast Capital
Slide 12: Covered Mortgage Bonds in Hungary
Hungary’s Leading Mortgage Bank Covered Mortgage Bonds in Hungary Background to the Hungarian Mortgage Market Characteristics of the Current Housing Market Unique Government Subsidy System Page 12
Slide 13: Legal Framework
Hungary’s Leading Mortgage Bank Legal Framework Special law on mortgage banking: Act XXX. 1997 Basis: German model strict ratios - 60% LTV (OTP MB average: 42-48%) specialist principle ( Mortgage Bank – as issuer of MBs ) subject to special supervision (Trustee - coverage supervisor) Special propert
Slide 14: Three Operating Mortgage Banks
Hungary’s Leading Mortgage Bank Three Operating Mortgage Banks FHB (1998) Partially (53 %) state owned main focus on residential mortgage, refinancing predominantly public placements HVB Mortgage Bank(1999) owned by HVB Group commercial and residential mortgage private and public placements OTP Mort
Slide 15: Competition
Hungary’s Leading Mortgage Bank Competition Market shares (loans) 70,0% 60,0% 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% 2002 1H 2003 2003 1H 2004 3Q 2004 OTP MB FHB MB HVB MB OTP Mortgage Bank is undisputed No.1 Based on the comprehensive network of OTP Bank Strategic plan is to remain over 50% marketshare
Slide 16: Agenda
Hungary’s Leading Mortgage Bank Agenda Background to the Hungarian Mortgage Market Characteristics of the Current Housing Market Unique Government Subsidy System Page 16
Slide 17: Comparison of indicators
Hungary’s Leading Mortgage Bank Comparison of indicators Outstanding Residential Mortgage Loans as a Home ownership ratios across Europe (%) % of GDP Hungary 95 80% Ireland 82 70% Spain 80 60% Belgium 72 Italy 68 50% UK 67 40% Denmark 60 30% Portugal 59 France 54 20% Netherlands 46 10% Germany 40 0%
Slide 18: Housing Construction is Gaining Momentum
Hungary’s Leading Mortgage Bank Housing Construction is Gaining Momentum New Dwellings / 1000 Residents in Hungary 4 3,5 3 2,5 2 1,5 1 0,5 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 F Source: CSO Page 18
Slide 19: Interest rate environment 2003-2004
Hungary’s Leading Mortgage Bank Interest rate environment 2003-2004 25-25 bp rate 14% decrease 23 March 300 bp rate increase 50 bp rate cut 4 May, and 6 April 2004 200 bp rate increase 28 November 2003 17 Aug & 19 October 13% 19 June 2003 2004 100-100 bp rate cut 12% to defend HUF 16&17 January 2003
Slide 20: Rising Real Wages
Hungary’s Leading Mortgage Bank Rising Real Wages Retail Loans Outstanding (HUF billion) vs. Real Wage Growth 2 500 20% 13,6% 2 165 15% 2 000 1 814 7,2% 10% 6,4% 9,4% 4,9% 3,6% 1 519 2,5% 2,0% 2,2% 5% 1 500 1,5% -1,4% 1143 0% -3,9% -5,0% 982 1 000 -7,0% 802 844 -5% 684 -12,2% 551 -10% 500 410 336 28
Slide 21: Macro assessment
Hungary’s Leading Mortgage Bank Macro assessment 2003 2004F 2005F Real GDP growth 2.9% 3.9% 3.8% Inflation (average) 4.7% 6.8% 4.5% Nominal wage increase 14.3% 7.2% 7.7% Final consumption 5.9% 3.3% 2.2% Household consumption 6.5% 3.5% 2.9% Investment growth 4.7% 10.2% 6.9% Budget deficit HUF -1,159
Slide 22: Agenda
Hungary’s Leading Mortgage Bank Agenda Background to the Hungarian Mortgage Market Characteristics of the Current Housing Market Unique Government Subsidy System Page 22
Slide 23: Government Subsidy System in Hungary
Hungary’s Leading Mortgage Bank Government Subsidy System in Hungary Direct subsidies For families with children Disabled people VAT refund (EUR 1600) Income tax deductibility Indirect subsidies (Interest Rate Subsidies) Asset side Interest rate subsidy (so called„supplementary”) Liability side Inte
Slide 24: Mortgage Business
Hungary’s Leading Mortgage Bank Mortgage Business Page 24
Slide 25: Mortgage Loans at OTP Group
Hungary’s Leading Mortgage Bank Mortgage Loans at OTP Group Cumulative HUF bn. Monthly 800 5 0 ,0 4 5 ,0 700 4 3 ,8 4 3 ,2 4 0 ,4 4 0 ,0 600 3 4 ,5 3 5 ,2 3 4 ,9 3 5 ,0 500 2 9 ,3 3 0 ,0 400 2 4 ,9 2 5 ,0 2 2 ,5 2 0 ,0 2 0 ,0 300 1 6 ,5 1 7 ,0 1 6 ,3 1 5 ,1 1 6 ,0 1 5 ,4 1 5 ,0 200 1 0 ,0 100 5 ,0 0
Slide 26: Diversified Mortgage Loan Portfolio
Hungary’s Leading Mortgage Bank Diversified Mortgage Loan Portfolio All data as of 30 Sept. 2004 Distribution of mortgage portfolio by size Distribution of portfolio by maturity 3,5% 0,6% 3,0% 2,9% 13,0% 12,1% 40,1% 24,9% 16,9% 42,0% 41,2% in 1 year 1 - 5 years 5 - 10 years up to HUF 5M 5-10M 10-15M
Slide 27: Diversified Mortgage Loan Portfolio
Hungary’s Leading Mortgage Bank Diversified Mortgage Loan Portfolio All data as of 30 Sept. 2004 Distribution of mortgage portfolio by Geographic concentratin of loans purpose 12% 21% Region % Budapest 23,08% South-Alföld 9,03% North-Hungary 6,64% 9% North-Alföld 14,79% Middle-Hungary 14,24% 58% Wes
Slide 28: LTV ratio
Hungary’s Leading Mortgage Bank Conservative risk management, LTV ratio 19,0% 8,8% 10,1% 10,1% 35,0% 17,1% under 30% 30-40% 41-50% 51-60% 61-70% over 70% LTV ratio: max. 60% In case of civil servants the government provides suretyship above 60 % LTV Average LTV-Ratio (based on original valuation): 4
Slide 29: Breakdown of the Coverpool & Asset Classification
Hungary’s Leading Mortgage Bank … results low risk profile. Breakdown of the Coverpool & Asset Classification E U R M illio n 0 9 .3 0 .2 0 0 4 N o m in a l a m o u n t o f C M B s 2 947 135 N o m in a l a m o u n t o f th e o r d in a r y c o v e r p o o l 2 928 696 G o v e r n m e n t G u a r a n
Slide 30: Investor Protection
Hungary’s Leading Mortgage Bank InvestorProtection OTP Mortgage Bank further enhances investor protection through the following product features: The Cover Asset Pool consists of only Residential Mortgage Assets The Bank is providing voluntary over-collaterisation All market risk in the Cover Asset
Slide 31: Property valuation, underlying principles
Hungary’s Leading Mortgage Bank Property valuation, underlying principles Valuations are organised by OTP Real-estate PLC. (according to Mortgage Bank internal regulation) Valuations methods are defined by Mortgage Bank, The comparative value method The real value method The income value method Expe
Slide 32: In practice:
Hungary’s Leading Mortgage Bank In practice: Page 32
Slide 33: Price comparison based on actual market data
Hungary’s Leading Mortgage Bank Price comparision based on actual market data supplied by Stamp Duties Office Page 33
Slide 34: Selection of comparative price data
Hungary’s Leading Mortgage Bank Selection of comparative price data Page 34
Slide 35: Analysing photos
Hungary’s Leading Mortgage Bank Analysing photos Page 35
Slide 36: Loan Book Summary
Hungary’s Leading Mortgage Bank Loan Book Summary Prudent credit policy No undue risk concentration LTV risk profile – very strong mark to market Highly overcollaterised 30% State gurantee behind the pool Obligation of parent bank to repurchase the non-performing loans Page 36
Slide 37: OTP Mortgage Bank Inaugural € CMB
Hungary’s Leading Mortgage Bank OTP Morgage Bank Inaugural € CMB Page 37
Slide 38: OTP Mortgage Bank Funding Strategy
Hungary’s Leading Mortgage Bank Entering the € market is cornerstone OTP Mortgage Bank Funding Strategy Funding facilities in HUF 100% 2% 0% 3% 7% Investor base 5% 7% 12% 90% 18% 18% 11% 80% 9% 9% Issuance Programs 70% 60% OTP Group financing 50% 86% 79% Domestic Institutional Investors 40% 68% 67%
Slide 39: OTP Mortgage Bank Issuance Strategy
Hungary’s Leading Mortgage Bank Entering the € market is cornerstone OTP Mortgage Bank Issuance Strategy The successful implementation of OTP € CMBs will be characterised by the followings: Continued liquidity via regular issuace Strong secondary market performance Ongoing product development to ens
Slide 40: Summary of the transaction
Hungary’s Leading Mortgage Bank Summary of the transaction Issuer: OTP Mortgage Bank Ltd. 100% owned by OTP Bank Ltd. Amount: € 200 Mn Maturity: 7 – 10 years Expected rating: A1 Moody’s Listing: Luxembourg Stock Exchange Documentation: Under the € 1Bn EMTN Program Law: Hungarian Coverage Supervisor:
Slide 41: Conclusion
Hungary’s Leading Mortgage Bank Conclusion Page 41
Slide 42: Key Considerations
Hungary’s Leading Mortgage Bank Key Considerations OTP Mortgage Bank – The largest Hungarian Mortgage Provider OTP Mortgage Bank – High Quality Assets originated by a market leader Hungarian Mortgage Legislation – Investor focused with very strong CMB investor protection OTP Mortgage Bank € CMB issu
Slide 43: Appendix
Hungary’s Leading Mortgage Bank Appendix Page 43
Slide 44: Government Subsidy Scheme
Hungary’s Leading Mortgage Bank Appendix Government Subsidy Scheme Old S ubsid y S c he m e - s ubs idy s c he m e fo r lo a ns g ra nte d be fo re 16.06.2003 Re fina nc ing Lo a n In te re s t Lo a n Co n ditio ns As se t S ide S ubs idy Lia bility S ide S ubs idy S ubsidy Co nditio ns CMB MIN(c ou
Slide 45: Government Subsidy Scheme
Hungary’s Leading Mortgage Bank Appendix Government Subsidy Scheme Mos t Recent Subs idy Scheme - s ubs idy s cheme for loans granted after 22 December 2003 Refinancing Loan Interest Loan Conditions Asset Side Subsidy Liability Side Subsidy Subsidy Conditions max 15 million HUF available for the fir
Slide 46: Margins on mortgage loans
Hungary’s Leading Mortgage Bank Margins on mortgage loans Validity before after after 16 June 2003 16 June 2003 22 December 2003 Rate paid by customer 6% (4+2%) max. 5% (3+2%) max. 8%** (max. GBBY * 1.1 + 4% - GBBY * 0.6) Liability side subsidy 10% (CMB coupon + 2% 9.03% (GBBY * 5.16% (GBBY* 0.6) bu
OTP Mortgage Bank — Debt Investor Presentation (2004) on 6ix