Otp Bank Nyrt · BET:OTP
Otp Bank Nyrt — OTP Bank — Q1 2007 Earnings Presentation
33 slides from Otp Bank Nyrt's earnings presentation, May 2007
Slide 1: OTP Bank - 2007 first quarter results
May, 2007 OTP Bank - 2007 first quarter results Investor Presentation Dr. László Urbán, CFO
Slide 2: Agenda
Macroeconomic environment and financial 3-7 intermediary Financial performance (consolidated, IFRS) 9-15 OTP Bank in Hungary 17-24 OTP Bank in the Region 26-29 Segment reporting 31-32
Slide 3: Major factors influencing the Group's activity and results in 1Q 2007
May, 2007 3 Major factors influencing the Group’s activity and results in 1Q 2007 Macroeconomic and market environment • Lending activity in the retail sector turned out to be stronger against pessimistic predictions; basically all major segments were dominated by FX-linked products; slight moderati
Slide 4: NBH base rate kept at 8%; HUF continued its strengthening
May, 2007 4 NBH base rate kept at 8%; HUF continued its strengthening Interest rates 9% 03-Jul-06, 8.20% 25-Oct-06, 8.00% 30-Mar-07, 8.00% Changes of base rate 8% 31-Mar-06, 7.11% 2003 + 400 bp 31-Mar-06, 6.80% 26-Sep-06, 7.75% 2004 - 300 bp 7% 29-Aug-06, 7.25% 2005 - 350 bp 25-Jul-06, 6.75% 30-Mar-
Slide 5: Despite of the austerity package, loan growth expected to remain double digit
May, 2007 5 Despite of the austerity package, loan growth expected to remain double digit Expected macroeconomic indicators of Hungary in 2007 2005 2006 P 2007 F 2008 F Real GDP 4.2% 4.1% 2.7% 3.3% Final household consumption 3.8% 1.5% -0.9% 0.4% Public consumption 0.2% -4.7% -3.5% -1.5% Investment
Slide 6: Economic growth will remain buoyant in the economies of OTP's subsidiaries
May, 2007 6 Economic growth will remain buoyant in the economies of OTP’s subsidiaries in the coming years Bulgaria Croatia 05 06 07 F 08 F 05 06 07 F 08 F Real GDP growth 5,5% 6,7% 6,0% 6,0% Real GDP growth 4.3% 4.4% 4.2% 3.8% Inflation (CPI) 5,0% 7,3% 5,0% 4,0% Inflation (CPI) 3.3% 3.2% 2.9% 3.0%
Slide 7: In the countries of foreign subsidiaries the expected market growth is higher than in Hungary
May, 2007 7 In the countries of foreign subsidiaries the expected market growth is higher than in Hungary Bulgaria Croatia 05 06 07 F 08 F 05 06 07 F 08 F Loan growth (%) 36.4% 16.1% 18.3% 15.8% Loan growth (%) 20.1% 22.6% 0.3% 12.0% Retail loans (%) 39.6% 30.8% 27.1% 24.1% Retail loans (%) 20.4% 21
Slide 8: Agenda
Macroeconomic environment and financial 3-7 intermediary Financial performance (consolidated, IFRS) 9-15 OTP Bank in Hungary 17-24 OTP Bank in the Region 26-29 Segment reporting 31-32
Slide 9: OTP Bank realised HUF 50.5 bn consolidated profit after tax in 1Q 2007
May, 2007 9 OTP Bank realised HUF 50.5 bn consolidated profit after tax in 1Q 2007 Financial highlights of OTP Group (consolidated, IFRS) 2006 20061Q 1Q 2006 20064Q 4Q 2007 20071Q 1Q Q-o-Q Q-o-Q Y-o-Y Y-o-Y Total Totalassets assets(HUF (HUFbn) bn) 5,444.8 5,444.8 7,097.4 7,097.4 7,480.6 7,480.6 5.4%
Slide 10: The consolidation of the new foreign banks had a significant impact on the consolidated results
May, 2007 10 The consolidation of the new foreign banks had a significant impact on the consolidated results Profit after tax 21.2% -49.1% Dividend from HUF bn subsidiaries • Contribution of the foreign subsidiaries to the 13.6% 10.7 1.9 consolidated after tax profit grew significantly, from 12.0% 6
Slide 11: Open FX position stemming from acquisitions will contribute to the volatility of IFRS profit
May, 2007 11 Open FX position stemming from acquisitions will contribute to the volatility of IFRS profit, as closing would be costly and would increase medium-run FX exposure IFRS Open Position Changes in HUF/EUR in 2007 Q1 Profit impact HUF bn • Acquisitions with Q4 2006 closings 2,548 • 570 milli
Slide 12: The swap-adjusted consolidated net interest margin increased by 22 bps in 1Q 2007
May, 2007 12 The swap-adjusted consolidated net interest margin increased by 22 bps in 1Q 2007 Net interest income Net interest margin, consolidated Change Q/Q HUF bn -65 bp 104.6 102.9 6.30% 5.35% 5.65% 21.1 7.3 +22 bp 71.3 5.60% 5.03% 5.25% 74.6 83.5 95.7 -3.3 1Q 2006 4Q 2006 1Q 2007 1Q 2006 4Q 20
Slide 13: Consolidated cost/income ratio improved by 8.8%-points compared to the previous quarter
May, 2007 13 Consolidated cost/income ratio improved by 8.8%-points compared to the previous quarter Total revenues Cost/income ratio, consolidated Change Q/Q 176.4 Change Q/Q HUF bn +21.8% -8.8%p 144.8 Other non-interest 35.9 income 129.6 24.1 2.3 62.3% +48.7% 25.5 29.4 35.3 FX gains, net 5.5 -- 53
Slide 14: The portfolio quality improved, NPL ratio stood at 4.4% at the end of 1Q 2007
May, 2007 14 The portfolio quality improved, NPL ratio stood at 4.4% at the end of 1Q 2007 Qualified and NPL ratio* NPL ratio at the major Group members* 25% 10% 8.2% 20% 8% 6.8% 13.7% 14.0% 13.8% 15% 12.5% 12.2% 6% 4.9% 4.2% 4.3% 4.4% 3.7% 3.9% 3.8% 10% 3.9% 4.5% 4% 3.0% 2.5% 5% 8.6% 9.5% 9.7% 9.4%
Slide 15: Loan volume grew by 37.9% y/y; deposits increased by 23.5%
May, 2007 15 Loan volume grew by 37.9% y/y (+5.4% q/q); deposits increased by 23.5% on a yearly base (+2.7% q/q) Change Distribution Gross loan volume by business lines Change Gross loan volume by countries Ytd Ytd HUF bn HUF bn … 2.3% 4,714 +4.2% 5,000 4,714 5,000 4,475 4,475 Montenegro +0.4% 4.6%
Slide 16: Agenda
Macroeconomic environment and financial 3-7 intermediary Financial performance (consolidated, IFRS) 9-15 OTP Bank in Hungary 17-24 OTP Bank in the Region 26-29 Segment reporting 31-32
Slide 17: Stable core banking activity in Hungary
May, 2007 17 Stable core banking activity* in Hungary Loans, gross • Despite of the austerity measures local loan market contracted less so than HUF bn 2,695 2,692 expected, however both the volume of household deposits and corporate deposits declined q/q. 2,426 • In most of the market segments OTP
Slide 18: OTP Group maintained its leading position on the Hungarian market, with some painful losses
May, 2007 18 While OTP Group maintained its leading position on the Hungarian market, there were some painful losses 1 Market share Change Market share Change (31/03/2007) Q/Q ( Y/Y) (31/03/2007) Q/Q ( Y/Y) Total assets 25.3% +0.5%p (+1.6%p) Total deposits 23.7% 0.0%p (-1.6%p) Total loans 20.4% -0.2
Slide 19: Share of FX-loans increased in mortgages, but declined within consumer and corporate loans
May, 2007 19 Share of FX-loans increased in mortgages, but declined within consumer and corporate loans Share of FX-loans at OTP Group in 1Q 2007* Mortgage loans (OTP Group in Hungary) Corporate 44.3% 1,200 60% OTP Bank Mortgage 41.7% 1,148 1,150 1,131 1,135 45% Consumer 33.2% 1,117 Total 37.4% 1,10
Slide 20: Net interest margin decreased by 23 bps excluding the impact of swaps and funding cost
May, 2007 20 Net interest margin* decreased by 23 bps excluding the impact of swaps and funding cost 2 Net interest income 72.3 HUF bn 2.3 Funding cost 50.1 18.6 56.9 3.1 Swap interest result 4.9 Net interest income w/o Net interest margin swaps and funding cost 54.8 51.3 5.21% 48.9 Change Q/Q -129
Slide 21: Cost/income ratio improved by 4.5%-points compared to the previous quarter
May, 2007 21 Cost/income ratio* improved by 4.5%-points compared to the previous quarter 3 Total revenues Change Q/Q HUF bn 109.8 -6.5% Other non-interest income 29.6 102.7 94.6 -33.4% 19.8 FX gains, net 15.5 23.7 1.5 -- 6.1 24.5 22.8 +3.4% Cost/income ratio Net fees Change Q/Q 72.3 -21.2% 50.1 56.9
Slide 22: Capital adequacy ratio stood at 12.53%, exceeding management mid-term target
May, 2007 22 Capital adequacy ratio*, according to Hungarian regulation, stood at 12.53% exceeding management mid-term target 4 Shareholders’ equity, HAR Tier 2 capital elements Guarantee capital HUF bn HUF bn HUF bn 800 800 800 28.8 -1.0 +27.9 600 4.1 600 600 -262.2 287.6 -241.7 -28.4 -15.7 400 400
Slide 23: OTP Bank's consolidated capital adequacy ratio stood at 14.43%
May, 2007 23 OTP Bank’s consolidated capital adequacy ratio, according to Hungarian regulation, stood at 14.43% Consolidated guarantee capital of OTP Bank HUF bn 2005 HUF bn 2006 1000 1000 800 800 195.3 28.8 291.8 26.3 100.0 87.5 600 47.2 58.7 600 35.2 0.0 8.2 2.8 400 400 598.2 585.7 627.1 200 468.8
Slide 24: All Hungarian subsidiaries, but Garancia Insurance, performed as expected
May, 2007 24 All Hungarian subsidiaries, but Garancia Insurance, performed as expected OTP Bank OTP Mortgage Bank Merkantil Group OTP Garancia Insurance OTP Fund Management (non-consolidated) Main balance sheet items, HUF b 1Q 2007 Q-o-Q Y-o-Y 1Q 2007 Q-o-Q Y-o-Y 1Q 2007 Q-o-Q Y-o-Y 1Q 2007 Q-o-Q Y-
Slide 25: Agenda
Macroeconomic environment and financial 3-7 intermediary Financial performance (consolidated, IFRS) 9-15 OTP Bank in Hungary 17-24 OTP Bank in the Region 26-29 Segment reporting 31-32
Slide 26: OTP Bank is represented in nine countries in the region
May, 2007 26 OTP Bank is represented in nine countries in the region OTP Group OTP Banka Slovensko CJSC OTP Bank Investsberbank Branches* 1,315 Branches 90 Branches 72 Branches 78 Employees 28,535 Employees 805 Employees 2.427 Employees 5,523 Number of clients* ~10.5 m Number of clients ~162 th Numb
Slide 27: Contribution of foreign subsidiaries to consolidated after-tax profit grew to 24.8%
May, 2007 27 Contribution of foreign subsidiaries to consolidated after-tax profit grew to 24.8% in 1Q 2007... DSK Group OTP banka Hrvatska OTP Banka Slovensko OTP Bank Romania Main balance sheet items, HUF bn 1Q 2007 Q-o-Q Y-o-Y 1Q 2007 Q-o-Q Y-o-Y 1Q 2007 Q-o-Q Y-o-Y 1Q 2007 Q-o-Q Y-o-Y Total asse
Slide 28: 13.6% came from the newly consolidated banks
May, 2007 28 …within that 13.6% came from the newly consolidated banks Share of newly Contribution of foreign consolidated Serbian subsidiaries CJSC OTP Bank ISB CKB subsidiaries banks Main balance sheet items, HUF bn 1Q 2007 Q-o-Q 1Q 2007 Q-o-Q 1Q 2007 1Q 2007 1Q 2007 Q-o-Q Y-o-Y 1Q 2007 Total asse
Slide 29: From the foreign countries, Bulgaria remained the main contributor
May, 2007 29 From the foreign countries, Bulgaria remained the main contributor 31 March 2007 HU BG RO SK CR SE UA RU MO Consolidated Foreign ratio Assets 6,568,947 882,485 190,803 372,154 374,242 107,656 456,228 328,727 160,990 7,480,623 38.4% Loans 2,965,961 545,075 113,296 231,162 210,949 50,524
Slide 30: Agenda
Macroeconomic environment and financial 3-7 intermediary Financial performance (consolidated, IFRS) 9-15 OTP Bank in Hungary 17-24 OTP Bank in the Region 26-29 Segment reporting 31-32
Slide 31: OTP Garancia's market shares are deteriorating
May, 2007 31 OTP Garancia’s market shares are deteriorating, however more than 96% of total premium income is still from Hungary Life and non-life premium income (Hungary) Life and non-life premium income (OTP Garancia) HUF bn HUF bn 300 30 230.3 233.4 23.3 240 24 206.8 201.5 20.8 191.8 19.5 18.2 18
Slide 32: Net asset value of OTP Funds increased by 6.5% on a quarterly base
May, 2007 32 Net asset value of OTP Funds increased by 6.5% on a quarterly base, while there is a significant growth potential in foreign markets Value creation – OTP Asset Management (HU) Net asset value of OTP Funds Change HUF bn HUF bn Q/Q 3,000 750 Other funds +45.8% 615 579 600 543 +0.4% 2,500
Slide 33: Forward looking statements
Forward looking statements This presentation contains certain forward-looking statements with respect to the financial condition, results of operations, and businesses of OTP Bank. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances