Mbh Mortgage Bank Co. Plc. · BET:TAKAREKJZB
Mbh Mortgage Bank — Takarék Mortgage Bank — Debt Investor Presentation (September 2021)
51 slides from Mbh Mortgage Bank's debt investor presentation, Sep 30, 2021
Slide 1: Investor Presentation
INVESTOR PRESENTATION Takarék Mortgage Bank Co. Plc. September 30, 2021
Slide 2: Content
CONTENT 1. THE GROUP – SLIDE 4. 2. COMPANY OVERVIEW, OWNERSHIP & ORGANIZATION STRUCTURE – SLIDE 10. 3. STRATEGY AND SUSTAINABILITY – SLIDE 17. 4. COVER POOL CHARACTERISTICS AND RISK PROFILE – SLIDE 23. 5. FUNDING & LIQUIDITY – SLIDE 30. 6. FINANCIAL INFORMATION – SLIDE 36. 7. APPENDIX – SLIDE 42. 2
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. The Group
1. THE GROUP $$ TAKAREKMORTGAGEBANK
Slide 5: Takarék Group's evolution: from saving cooperations to the Hungarian Bankholding
Takarék Group’s evolution: from saving cooperations to the member of the Hungarian Bankholding Integration, mergers ▪ By 2017 the number of Cooperative Credit Institutions Pre-integration (CCIs) (from 2020: "integrated credit institutions") are ▪ No. of Saving Cooperatives: 122 significantly decreas
Slide 6: Hungarian Bankholding: the milestones
Hungarian Bankholding: the milestones May 15, 2020 May 26, 2020 Oct 30, 2020 Dec 15, 2020 Dec 30, 2020 March 18, 2021 MTB and MKB Bank Budapest Bank Hungarian Hungarian Hungarian Hungarian agreement on joines the Bankholding Ltd. Bankholding Ltd. Bankholding Ltd. Bankholding founding a holding agree
Slide 7: Roles and responsibilities within the Hungarian Bankholding Group in 2021
In 2021 Bankholding will develop the detailed merger roadmap and business strategy for the banking group, while the banks will operate separately and running the daily business Roles and responsibilities within the Hungarian Bankholding Group (HBG) in 2021 BANKHOLDING BANKS (MKB, BB, TAKARÉK) CBICI
Slide 8: Hungarian Bankholding Group
Hungary's 2nd largest banking group has been established by the share transfer of the key owners of MTB, MKB Bank and Budapest Bank to Hungarian Bankholding HUNGARIAN BANKHOLDING GROUP Starting a strategic cooperation Size of the new banking Group (20201) 1 ▪ A strategic cooperation was formed betwe
Slide 9: Standalone management structure of Takarék Group
Standalone management structure of Takarék Group Central Body of Central body, primarily regulatory Integrated Credit and supervisory Institutions (CBICI) roles Business governance and Takarék United Cooperative in a new Cooperative form, ownership functions MTB ownership functions (formerly called
Slide 10: 2. Company Overview, Ownership & Organization Structure
2. COMPANY OVERVIEW, OWNERSHIP & ORGANIZATION STRUCTURE 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 bond • Best Structured Borrower – 2004, Euromoney was issued by Takarék Mortgage Bank (or TMB, former FHB in 1998) • Best Companies in Central & Eastern Europe – 2005, Euromoney • Ban
Slide 12: 23-year activity on local and international capital markets
23-year activity on local and international capital markets • Frequent mortgage bond issuer, nominal amounts of issues reaches HUF 60-130bn on annual basis • Strong know-how basis: fundamentals of • mortgage covered bonds, • unsecured bonds, • rating process, • Local and international issue programs
Slide 13: History of Takarék Mortgage Bank (TMB) – 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 presence on domestic mortgage bond market
TMB’s presence on domestic mortgage bond market Market share of local mortgage banks based on issued mortgage bond volume (2021 Q2) Market share around 20% is K&H MB 9,6% TMB 19,7% retained in outstanding covered UC MB 12,4% bonds on the local market Erste MB 10,4% Outstanding mortgage bond volume 2
Slide 15: TMB's Ownership structure
TMB’s Ownership structure – Share of Integration members is over 85% Takarék Mortgage Bank Co. Plc. ownership stucture (30.06.2021) 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 16: 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 17: 3. Strategy and Sustainability
3. STRATEGY AND SUSTAINABILITY 17
Slide 18: Strategy objectives, growth targets
Strategy objectives, growth targets Business strategy Main goals • Pure refinancing mortgage bank model: TMB operates exclusively as mortgage bond issuer and Covered bonds issuance refinancing centre • Competitive pricing • Increasing market volume • Expanding mortgage refinancing business: TMB prov
Slide 19: Green financial requirements influencing the TMB strategy
Green financial requirements influencing the TMB strategy ICMA Green Bond Principles 2021 Green Mortgage MNB sustainability Funding Adequacy expectations Ratio BSE proposal for ESG Green covered bond reporting TMB purchase program SIGNIFICANT IMPACT ON BOTH REFINANCING BUSINESS AND COVERED BOND ISSU
Slide 20: Results of TMB's green project so far
Results of TMB’s green project so far 1. Preparation of the Green Framework - the Green Bond Principles (GBP), developed by the International Capital Market Association (ICMA), were used as one of the two international standards recognized by the MNB, and prepared with the assistance of a German tec
Slide 21: Takarék Mortgage Bank Green Mortgage Bond Framework
Takarék Mortgage Bank Green Mortgage Bond Framework Main parameters and content of the framework • Definition of green buildings • Structure according to Green Bond Principles (2021) • Portfolio analysis o Use of proceeds from the issue, • Impact assessment report o Evaluation and selection process
Slide 22: ESG project – details
ESG project – details Key results of the ESG project so far: • Request for proposals from three advisories at the beginning of June for the performance of the two key tasks: (i) Conduct ESG gap analysis and develop ESG strategy by 30/12/2021, (ii) BSE ESG report due in first half of 2022 • TJB compl
Slide 23: 4. Cover Pool Characteristics and Risk Profile
4. COVER POOL CHARACTERISTICS AND RISK PROFILE 23
Slide 24: Cover pool composition
Cover pool composition Substitute asset size MNB cb 400 000 000 000 purchase has been 400 000 000 000 MNB cb program II. cut to zero MNB cb purchase MNB cb purchase program I. starts program I. ends purchase ends 350 000 000 000 program II. 350 000 000 000 starts 300 000 000 000 300 000 000 000 250
Slide 25: Cover pool characteristics, Q3 2021
Cover pool characteristics, Q3 2021 Asset types of cover pool Interest rate distribution of cover pool FX distribution of cover pool 2% 0% 1,3% 2021Q3 10% 26% 2021Q3 29% 2% 2021Q2 2021Q2 71% 88% 74% 98,7% 98% Residential loans Commercial loans Substitute aseets Floating rate Fixed rate HUF Other Cur
Slide 26: Cover bond portfolio characteristics and rating, Q3 2021
Cover bond portfolio characteristics and rating, Q3 2021 Interest rate distribution of FX distribution of outstanding covered bonds covered bonds 1,8% 10% 98,2% 90% HUF EUR Fixed rate Floating rate Date of rating Category S&P's rating action BBB stable Local and foreign-currency Investment 2021.06.0
Slide 27: Covered bond maturity profile
Covered bond maturity profile Maturity profile, as of 30th of September, 2021 (HUFm) 81 871 71 200 67 034 39 610 Maturity extension in 2021: 19 320 10Y and 15Y segment of the 5 347 9 486 6 650 curve in focus 7 979 2 000 Év 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 20
Slide 28: 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 29: Risk mitigating factors of TMB's covered bonds II.
Risk mitigating factors of TMB’s covered bonds II. Regulatory environment Cover assets - Act no. XXX of 1997 on mortgage banks and mortgage bonds (Jht.) see: Appendix I. - LTV - Loans secured by a residential real estate can be taken in cover up to 70% of - Specialized credit institution principal t
Slide 30: 5. Funding & Liquidity
5. FUNDING & LIQUIDITY 30 $$ TAKAREKMORTGAGEBANK
Slide 31: Asset composition and funding structure (TMB standalone, IFRS)
Asset composition and funding structure (TMB standalone, IFRS) Interest earning assets Funding structure 1,1% 6,7% 2021 H1 2021 H1 3,5% 12,6% 27,6% 40,9% 53,4% 2020 H1 44,2% 2020 H1 59,1% 30,5% 72,4% 48,0% Interbank borrowings Own issued covered bonds Interbank loans Own originated Loans Securities
Slide 32: Takarék mortgage covered bonds' investor base
Takarék mortgage covered bonds’ investor base (based on data available at the time of issuance), Q3 2021 Insurance co. Retail Pension funds 3,01% 0,00% 0,42% Investment Banks, Magyar Nemzeti Bank (central funds 13,85% bank), investment funds dominate the market of Takarék mortgage Home Savings Funds
Slide 33: 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. . 110 28 000 . 120 24 000 100 84 82 77 76 74 70 80 72 70 70 69 69 68 67 20 000 61 61 59 57 57 53 60 5
Slide 34: Long-term funding strategy, new focus on the Green CB
Long-term funding strategy, new focus on the Green CB General strategy follows the green pathway • TMB focuses primarily on covered bond issuance (vs unsecured bonds), however in the near future the most important target is the green covered bond issuance, of which share is to increase gradually ove
Slide 35: The process of green covered bond issuance and green refinancing
The process of green covered bond issuance and green refinancing Green Covered Green Covered Bond Second party Green covered Reports, post- Green CB issuance Bond Committee Framework Opinion bond issuance issuance monitoring TMB established its Created based on the Green External review provider, Af
Slide 36: 6. Financial Information
6. FINANCIAL INFORMATION 36 $$ TAKAREKMORTGAGEBANK
Slide 37: Financial performance I. - major indicators
Financial performance I. - major indicators (TMB standalone, IFRS) Change : HUF million End-2019 H1 2020 End-2020 H1 2021 30/06/2021./- 30/06/2020 Major indicators Total assets 342 897 435 129 612 141 634 834 48.0% Refinanced loans 216 983 230 957 287 061 296 059 28.2% Own originated loans 58 807 54
Slide 38: Financial performance II. - major indicators
Financial performance II. - major indicators (TMB standalone, IFRS) H1 2021 / H1 millió forintban End-2020 H1 2020 H1 2021 2020 Profitability indicators Net interest income 3 212 1 309 1 954 49.3% HUF 1.1bn profit after Net fee and commissions income 167 85 48 (43.5%) tax in H1 2021, similar Operati
Slide 39: Financial performance III. - major indicators
Financial performance III. - major indicators (TMB standalone, IFRS) Balance sheet total (HUF million) Shareholder's equity (HUF million) 67 507 643 834 612 141 66 684 65 043 65 109 435 129 63 863 333 488 329 084 342 897 62 184 31/12/2018 30/06/2019 31/12/2019 30/06/2020 31/12/2020 06/30/2021 31/12/
Slide 40: Financial performance IV. - major indicators
Financial performance IV. - major indicators (TMB standalone, IFRS) Refinanced mortgage loans Own originated loans (HUF million) (HUF million) 287 061 296 059 230 957 217 000 190 182 169 286 77 100 68 103 58 800 54 550 45 223 41 126 31/12/2018 30/06/2019 31/12/2019 30/06/2020 31/12/2020 06/30/2021 3
Slide 41: Capital position and Basel II approach
Capital position and Basel II approach Takarék Mortgage Bank Consolidated capital adequacy HUFmn 30 June 2021 31 December 2020 30 June 2021 31 December 2020 • National Bank of Hungary has waived the Own Funds 65 868 63 717 268 604 276 185 application of the requirements set out in Parts Two to Eight
Slide 42: 7. Appendix
7. APPENDIX $$ TAKAREKMORTGAGEBANK
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 Harmonization of EU Covered Bond Directive with i) The coverage domestic mortgage bank act been completed by Mortgage banks shall at all times have sufficient cover assets of a value higher t
Slide 45: Regulatory framework III.: Resolution Act
Regulatory framework III.: Resolution Act Special status of the covered bonds based on the Resolution Act Hungarian regulation: European regulation: The Act XXXVII of 2014 on the further development of institutional protection for The Part Four (Capital requirement for market risk, large exposures)
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 effective from April 1, 2017 and 20% banks and 25% effective from October 1 • The regulation aims at increasing 2018 and October
Slide 47: New JMM regulation - details
New JMM regulation - details Tightening – JMM to reach 30% from 1 October 2022 Mitigation – From 1 July 2021, green funds (in the case of Partner Bank, refinanced green mortgages) can be counted at 150% Limitation – green refinancing sources ≤ face value of green mortgage bonds → if the face value o
Slide 48: MNB launched Green Covered Bond Purchase program
MNB launched Green Covered Bond Purchase program • The MNB’s mortgage covered bonds purchasing program announced in April 2020, started from May 2020, while the central bank ceased its participation at auction in November 2020. • The MNB stopped its secondary market purchases late from July 2021 in
Slide 49: 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 50: Thank you for your attention!
THANK YOU FOR YOUR ATTENTION!
Slide 51: 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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