Otp Bank Nyrt · BET:OTP
Otp Bank Nyrt — Q2 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 2Q 2024 results
Slide 2: OTP Group - Highlights
OTP Group - Highlights Dominant position in CEE countries: No.1 in 5 countries based on net loans; 3.6-fold loan growth and 11 acquisitions in 7 years. 42% of net loans in Eurozone + ERM2 countries, ~80% within the EU Outstanding profitability: 2023 ROE exceeded 27% and reached 23.6% in 1H 2024 Stro
Slide 3: OTP Group's semi-year profit after tax decreased by 12%
OTP Group’s semi-year profit after tax decreased by 12%, basically due to the HUF 179 billion positive one-off effect of the acquisitions completed in the first half of 2023 Consolidated profit after tax Key performance indicators of OTP Group (HUF billion) (%) -12% Direct effect of acquisitions Ret
Slide 4: In 1H 2024 profit after tax went up by 22% without one-offs
In 1H 2024 the profit after tax went up by 22% without the one-off directs effects and on-going contribution of acquisitions Y-o-Y Q-o-Q Consolidated P&L (in HUF billion) 2023 1H 2023 1H 2024 1Q 2024 2Q 2024 FX-adj. w/o acq. FX-adj. Net interest income 1,462 651 878 25% 435 442 1% Net fees and commi
Slide 5: OTP Group's 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 72% in 1H 2024 Total assets development of OTP Group (in EUR billion) Flags rep
Slide 6: OTP Core realized HUF 112 billion profit after tax in 1H 2024
OTP Core realized HUF 112 billion profit after tax in 1H 2024 without dividends received from subsidiaries. OTP CORE The y-o-y doubling profit was due to the normalization of NIM and declining tax burden OTP Core profit after tax Key performance indicators of OTP Core (without dividends received fro
Slide 7: OTP Core market share in mortgage and cash loans
In 1H 2024, mortgage loan contractual amounts at OTP Bank increased to more than two and a half times, OTP CORE while cash loan contractual amounts grew more than 50% Y-o-y change in mortgage loan contractual amounts in 1H 2024 Y-o-y change in cash loan contractual amounts in 1H 2024 OTP 2.6x Market
Slide 8: Corporate loans and market share in Hungary
Demand for medium and large corporate loans remained moderate, but the stock of micro and small enterprises OTP CORE loans started to grow 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, FX-adjusted) c
Slide 9: Profit contribution of foreign subsidiary banks continued to improve
In the first half of 2024, the profit contribution of foreign subsidiary banks continued to improve Profit after tax1 (HUF billion) ROE1 Cost / income ratio 1H 2023 1H 2024 1H 2023 1H 2024 1H 2023 1H 2024 DSK Group (Bulgaria) 88 98 24% 22% 35% 35% SKB + NKBM (Slovenia) 382 10 49 57 20% 17% 39% 42% O
Slide 10: Semi-annual net interest income grew 25% y-o-y
Effect of Semi-annual net interest income grew 25% y-o-y organically and FX-adjusted, including a 1% q-o-q growth acquisitions NET INTEREST 1H 2024 2Q 2024 1H 2024 Y-o-Y 2Q 2024 Q-o-Q INCOME (HUF billion) (HUF billion) (HUF billion) (HUF billion) 1 The 50% jump in OTP Core’s net OTP Group 878 442 15
Slide 11: Consolidated NIM picked up by 51 bps y-o-y
Consolidated NIM picked up by 51 bps y-o-y driven mostly by the bounce-back in Hungary and the improvement in EUR-linked countries. Similarly to 1Q, the margin in EUR-linked countries continued to erode in the second quarter NET INTEREST 2Q 2023 1Q 2024 2Q 2024 1 MARGIN At OTP Core partly thanks to
Slide 12: Consolidated net interest margin shrank by 4 bps q-o-q
The consolidated net interest margin shrank by 4 bps q-o-q due to lower margins in Bulgaria, Slovenia and Uzbekistan, partly offset by better Hungary. The sensitivity to EUR rate cuts moderated further Drivers behind the q-o-q change of the consolidated net interest margin Sensitivity to rate change
Slide 13: Consolidated performing loans grew by 3% q-o-q
Consolidated performing loans grew by 3% q-o-q, mainly due to the strong performance in Bulgaria, Croatia and Serbia, but Ukrainian volumes picked up, too. In Hungary mortgage loan growth accelerated Q-o-Q performing (Stage 1+2) LOAN volume changes, adjusted for FX effect Cons. Core2 DSK SKB+ OBH OB
Slide 14: Consolidated performing loans grew by 5% ytd without Romania
Consolidated performing loans grew by 5% ytd without Romania, mainly as a result of strong performance in Bulgaria and Croatia. Corporate lending growth lagged behind retail across the Group YTD performing (Stage 1+2) LOAN volume changes, adjusted for FX effect Cons. Core2 DSK SKB+ OBH OBSrb Ipoteka
Slide 15: Consolidated deposit book grew by 2% q-o-q
The consolidated deposit book grew by 2% q-o-q. The uptrend in Hungarian household deposits continued Q-o-Q DEPOSIT volume changes, adjusted for FX-effect Cons. Core2 DSK SKB+ OBH OBSrb Ipoteka OBU CKB OBA OBM OBRu OBR (Hungary) (Bulgaria) NKBM (Croatia) (Serbia) (Uzbek.) (Ukraine) (Monten.) (Albani
Slide 16: Deposits – Net loans gap
Consolidated deposits grew by 3% over the first six months. The deposit collection efforts in Serbia paid off with their deposit to net loan gap narrowing to negligible level against more than -HUF 430 billion in 2021 YTD DEPOSIT volume changes, adjusted for FX-effect Cons. Core2 DSK SKB+ OBH OBSrb
Slide 17: Net fee income growth of 14% y-o-y
The 14% y-o-y organic and FX-adjusted growth in net fees was driven mainly by the Hungarian operation. Effect of The 14% q-o-q increase in 2Q was mainly driven by OTP Core and seasonality acquisitions NET FEE 1H 2024 2Q 2024 1H 2024 Y-o-Y 2Q 2024 Q-o-Q INCOME (HUF billion) (HUF billion) (HUF billion
Slide 18: Other income dynamics and fair value adjustment
Other income dynamics were to a great extent determined by the volatility of subsidized loans’ fair value Effect of adjustment in Hungary and dividend income realized in 2Q acquisitions 1H 2024 2Q 2024 1H 2024 Y-o-Y 2Q 2024 Q-o-Q OTHER INCOME (HUF billion) 1 The y-o-y HUF 56.7 billion decline in (HU
Slide 19: FX-adjusted operating costs increased by 10% y-o-y
FX-adjusted operating costs increased by 10% y-o-y without acquisitions Effect of acquisitions 9M 2023 1H 2024 Y-o-Y Y-o-Y, FX-adjusted OPERATING COSTS (HUF billion) (HUF billion) (HUF billion) (HUF billion) 1 OTP Group 530 421 77 17%/10%1 431 77 17%/10%1 At OTP Core the 6% y-o-y growth was driven b
Slide 20: Additional impairments on Russian government bonds; risk costs
In line with supervisory expectations additional impairments were created on Russian government bonds in Hungary and Bulgaria. The impact of rate cap extension was booked amongst risk costs. The Uzbek risk costs further moderated in 2Q 2023 1H 2024 TOTAL RISK COST 2023 credit risk 1Q 2024 2Q 2024 1H
Slide 21: Stage 3 ratio stayed flat q-o-q
The Stage 3 ratio stayed flat q-o-q. 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 2Q 2024 85.1% 84.5% 82.7% 83.1% 83.6% 1.9% 1.4% Stage 1 ratio 0
Slide 22: Development of Stage 1, Stage 2 and Stage 3 ratios
Development of the Stage 1, Stage 2 and Stage 3 ratios Cons. Core DSK SKB+ OBH OBSrb Ipoteka OBU CKB OBA OBM OBRu OBR Merk. (Hungary) (Bulgaria) NKBM (Croatia) (Serbia) (Uzbek.) (Ukraine) (Monten.) (Albania) (Moldova) (Russia) (Romania) (Hung. (Slovenia) leasing) 4Q 21 81.5% 78.0% 84.0% 86.0% 80.0%
Slide 23: Development of own provision coverage ratios
Development of the own provision coverage ratios in different Stage categories Cons. Core DSK SKB+ OBH OBSrb Ipoteka OBU CKB OBA OBM OBRu OBR Merk. (Hungary) (Bulgaria) NKBM (Croatia) (Serbia) (Uzbek.) (Ukraine) (Monten.) (Albania) (Moldova) (Russia) (Romania) (Hung. (Slovenia) leasing) 4Q 21 1.0% 1
Slide 24: The Group's capital and liquidity position is strong
The Group’s capital and liquidity position is strong. The CET1 ratio improved in the first half thanks to strong underlying capital generating capability. The sale of OTP Bank Romania is not yet reflected in capital adequacy ratios Capital adequacy Regulatory Decomposition of the year-to-date change
Slide 25: Robust liquidity position: 74% net loan to deposit ratio
Robust liquidity position: 74% net loan to deposit ratio, 220% LCR, 152% 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 Instrument Call Date External
Slide 26: Composition of main ratings by Moody's and S&P
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: Delivery of ESG obligations and goals 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) 2Q 2024 Actual Long-term KPIs Plan Building the Corporate: HUF 575 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: Management guidance for 2024 – OTP Group
Management guidance for 2024 – OTP Group Based on the developments in the first six months, in 2024 the consolidated net interest margin may be higher than in 2023 (3.93%). The guidance for all other performance indicators was upheld by the management: • FX-adjusted organic performing loan volume gr
Slide 30: Further details and financials
Further details and financials 30
Slide 31: 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 Moldova Russia 2Q 2024 market share (%) Russia Albania Romania Monteneg
Slide 32: OTP Bank offers a unique investment opportunity to access the CEE banking sector
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 12.4 billion1 Total number of ordinary shares: 280,000,010, each having a nominal value of HUF 100 and repres
Slide 33: 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 31% Breakdown of the consolidated net loan book Net loan book, 2Q 2024 By country By product Hungary1 HUF 7,114 bn Bulgaria HUF 4,410 bn Slovenia HUF 2,857 bn Leasing Leasing Leasing
Slide 34: 36% of consolidated 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 55% of the total deposit base Breakdown of the consolidated deposit base Deposit base, 2Q 2024 By country By product Hungary1 HUF 11,130 bn Bulgaria HUF 5,6
Slide 35: The consolidated ROE was close to 24% in 1H 2024
The consolidated ROE was close to 24% in 1H 2024 2003-2008 2009-2013 1H 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% 23.6% ROE (adjusted) 29.0% 11.6% 8.5% 9.6% 15.4% 18.7% 19.1% 20.6% 13.0% 18.5% 18.8
Slide 36: In 2024 economic growth expected to accelerate in most operating countries
In 2024 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 1.5 2.8 3.9 1.8 2.3 2.8 2.5 2.1 1.7 2.2 7.0 3.1 3.5 3.0 Unemployment
Slide 37: Hungarian loan penetration levels are 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 ~3.6-fold growth in net loan book
Successful acquisitions played a great role in the ~3.6-fold growth in consolidated net loan book over the last 7 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: In the last 7 years 11 acquisitions were completed
In the last 7 years 11 acquisitions were completed. As a result of the Ipoteka Bank acquisition in Uzbekistan, 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, Croatia (No
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