Otp Bank Nyrt · BET:OTP
Otp Bank Nyrt — Q3 2022 Earnings Presentation
44 slides from Otp Bank Nyrt's earnings presentation, 2022
Slide 1: OTP Group – Strong results and capital provide resilience in turbulent times
OTP Group – Strong results and capital provide resilience in turbulent times Investor presentation Based on 3Q 2022 results
Slide 2: First nine months HUF 231.9 billion profit after tax, adjustments exceeded -HUF 207 billion
In the first nine months OTP Group posted HUF 231.9 billion profit after tax, 31% lower than a year before. Adjustments exceeded -HUF 207 billion (after tax), mainly relating to the war and the Hungarian government measures Cumulated profit development Y-o-Y (HUF billion) (milliárd forintban) Quarte
Slide 3: OTP Group consolidated P&L and performance indicators
The increase in the Group's nine-month adjusted profit after tax was mainly shaped by the dynamic growth in core banking revenues, partly offset by the operating cost pressure and tripling total risk costs OTP Group (consolidated) P&L (in HUF billion) 9M 2021 2021 2Q 2022 3Q 2022 9M 2022 3Q Q-o-Q 9M
Slide 4: Group result without Russian and Ukrainian operations
The Group’s 3Q result without the Russian and Ukrainian operations was shaped by the 10% stronger operating profit and the higher total risk costs OTP Group without Russia and Ukraine P&L (in HUF billion) 9M 2021 2021 2Q 2022 3Q 2022 9M 2022 3Q Q-o-Q 9M Y-o-Y FX adj. FX adj. Net interest income 527
Slide 5: Adjusted profit contribution of Hungarian and foreign operations
In the first nine months of 2022 the adjusted profit contribution of both the Hungarian and foreign operation in the Central and Eastern European countries improved, latter by 30%. Russia delivered stable results, but Ukraine turned into negative Adjusted profit after tax development of Hungarian an
Slide 6: Russian and Ukrainian operations results
While the Russian operation posted the same profit as last year in HUF terms, in local currency it lagged behing last year’s perfomance by 84%. Ukraine remained in red for the first nine months despite the profit achieved in 3Q OTP Bank Russia OTP Bank Ukraine 3Q 2022 9M 2022 3Q 2022 9M 2022 Total a
Slide 7: Performance of foreign subsidiary banks in CEE
In the first nine months of 2022 the performance of the Albanian, Serbian and Croatian banks improved the most amongst foreign subsidiary banks in the CEE region 9M 2021 9M 2022 2021 2Q 2022 3Q 2022 3Q Q-o-Q 9M Y-o-Y HUF billion FX-adjusted DSK Group (Bulgaria) 66,0 76,5 76.8 28.5 26.9 -8% 7% OTP Ba
Slide 8: Total income development by subsidiary
In the first nine months the Group’s total income advanced by 27%. The quarterly increase reached 10% Effect of q-o-q (organically and FX-adjusted), driven by Bulgaria, Russia and an asset sale in the Other segment acquisitions TOTAL INCOME 9M 2022 3Q 2022 9M 2022 Y-o-Y 3Q 2022 Q-o-Q without one-off
Slide 9: Net interest income development
The cumulated net interest income grew 16% FX-adjusted, with bulk of the growth coming from Hungary, Effect of Ukraine, Bulgaria, Russia and Romania. The 5% FX-adjusted quarterly improvement was related mainly to acquisitions Bulgaria and Russia, whereas Hungary showed a 2% contraction due to corpor
Slide 10: Net interest margin drivers q-o-q
The consolidated net interest margin eroded by 4 bps q-o-q, largely as a result of the Hungarian margin compression and the growing weight of OTP Core within the Group, partly offset by the FX effect mostly induced by the RUB strengthening Drivers behind the q-o-q increase of the consolidated net in
Slide 11: Q-o-Q performing loan volume changes
The consolidated performing loan growth reached 5% q-o-q. In Hungary and Croatia corporate lending was particularly strong. The Russian consumer lending gained momentum with volumes rebounding by 3% q-o-q Q-o-Q performing (Stage 1 + 2) LOAN volume changes adjusted for FX-effect – 3Q 2022 Cons. Core2
Slide 12: YTD performing loan volume changes
The consolidated performing loans without Russia and Ukraine expanded by 13% organically over the first nine months. Volumes declined significantly in Russia and Ukraine YTD performing (Stage 1 + 2) LOAN volume changes adjusted for FX-effect – 9M 2022 Cons. Core2 DSK OBH OBSrb SKB OBR OBU OBRu CKB O
Slide 13: Q-o-Q deposit volume changes
Consolidated deposits grew by 5% q-o-q. In Hungary corporate deposit inflows remained strong. The quarterly decline in deposits in Russia and Ukraine was induced by pricing measures Q-o-Q DEPOSIT volume changes adjusted for FX-effect – 3Q 2022 Cons. Core DSK OBH OBSrb SKB OBR OBU OBRu CKB OBA OBM (H
Slide 14: YTD deposit volume changes
Consolidated deposits grew by 11% in the first nine months. Within the 12% expansion in Hungary, corporate deposit growth was particularly strong. Overall in the first nine months the Russian and Ukrainian banks enjoyed inflows YTD DEPOSIT volume changes adjusted for FX-effect – 9M 2022 Cons. Core D
Slide 15: Net fee income development
In the first nine months of 2022 the 14% FX-adjusted y-o-y improvement in net fees was driven by Hungary and Bulgaria. The 7% clean growth in 3Q was driven by the seasonally stronger Croatia, and the reviving consumer lending in Russia 9M 2022 3Q 2022 9M 2022 Y-o-Y 3Q 2022 Q-o-Q 1 NET FEE INCOME At
Slide 16: Other net non-interest income
The 9M other net non-interest income jumped by 50% y-o-y, and improved by 67% q-o-q in 3Q, on an FX-adjusted basis OTHER 9M 2022 3Q 2022 9M 2022 Y-o-Y 3Q 2022 Q-o-Q INCOME (HUF billion) (HUF billion) (HUF billion, %) (HUF billion, %) 1 At OTP Core the cumulative other income increased by 75% y-o-y,
Slide 17: Operating costs growth
Amid the high inflationary environment, the nine-months operating costs grew by 12.3% y-o-y, Effect of adjusted for the FX effect and the Albanian acquisition acquisitions 9M 2022 Y-o-Y Y-o-Y, FX-adjusted 1 OPERATING COSTS At OTP Core the cost growth of 20% was (HUF 2022Q3 billion) CUM (HUF billion,
Slide 18: OTP Core mortgage loan applications and market share
In Hungary applications for mortgage loans remained broadly at around the last year’s level, mainly due to OTP CORE the subsidized green housing loans, whereas market-based mortgage loan requests halved Y-o-y change of mortgage loan applications and disbursements Performing (Stage 1+2) cash loan vol
Slide 19: Baby loans and Green Home Programme
OTP Bank maintained its above 40% market share in baby loan flows; the scheme has been extended until the end of 2024. The subsidized green housing loans generated huge demand and the total available amount of OTP CORE HUF 300 billion has already been exhausted; actual disbursements come with a cert
Slide 20: Corporate loan volumes and market share
Large corporate loan volumes grew by 28% ytd, lifting OTP’s market share to 19.5%. Under the Széchenyi OTP CORE Card schemes the contracted amount reached HUF 460 billion overall Performing corporate loan volume changes OTP Group’s market share in loans to (DPD0-90 loan changes until 2018, Stage 1+2
Slide 21: Loans under the repayment moratorium at OTP Core
At OTP Core loans under the moratorium stood at HUF 185 billion in total (o/w HUF 40 bn agricultural), making up 2.9% of gross loans. The general payment holiday expired at the end of 2022, whereas the moratorium for OTP CORE agricultural companies introduced because of the severe drought will remai
Slide 22: Stage 3 rate and provisioning coverage versus peers
The Stage 3 rate decreased in 3Q, mainly driven by lower ratios across the board except for Russia, Ukraine and Moldova. The management's provisioning policy remained conservative compared to regional banking groups, especially regarding the coverage of performing loans Development of the Group's ma
Slide 23: Development of Stage 1, 2 and 3 ratios
Development of the Stage 1, Stage 2 and Stage 3 ratios Cons. Core DSK OBH OBSrb SKB2 OBR OBU OBRu CKB OBA OBM Merk.3 (Hungary) (Bulgaria) (Croatia) (Serbia) (Slovenia) (Romania) (Ukraine) (Russia) (Monten.) (Albania) (Moldova) (Hungarian leasing) 4Q 19 88.8% 91.4% 88.6% 83.2% 96.0% 98.9% 83.9% 73.8%
Slide 24: Own provision coverage ratios by Stage
Development of the own provision coverage ratios in different Stage categories Cons. Core DSK OBH OBSrb SKB1 OBR OBU OBRu CKB OBA OBM Merk.2 (Hungary) (Bulgaria) (Croatia) (Serbia) (Slovenia) (Romania) (Ukraine) (Russia) (Monten.) (Albania) (Moldova) (Hungarian leasing) 4Q 19 1.1% 0.8% 1.1% 0.8% 0.4
Slide 25: Capital adequacy ratios and liquidity reserves
The Group’s capital adequacy ratios and liquidity reserves significantly exceeded regulatory minimum requirements; in 3Q the Bank executed two MREL-eligible bond issuances with a total amount of EUR 460 million equivalent Regulatory minimum CAR and CET1 ratio The CET1 ratio stayed unchanged q-o-q: r
Slide 26: Credit ratings of OTP Bank and sovereigns
+ positive While OTP Bank ratings closely correlate with the sovereign ceilings, subsidiaries’ ratings - negative (rating outlook) 0 stable enjoy the positive impact of parental support +* on watch possible upgrade -* on watch possible downgrade Hungarian sovereign, OTP Bank and OTP Mortgage Bank ra
Slide 27: OTP's way to a sustainable world
OTP’s way to a sustainable world: dedicated permanent ESG organization, strategic focus, and visible results ORGANIZATION STRATEGY RATINGS The whole organization of the Bank and its OTP Bank has successfully started implementing its OTP Bank’s improving sustainability Subsidiaries are involved in th
Slide 28: Awards and recognitions
OTP’s outstanding performance is traditionally recognized not only by capital markets, but professional organizations, too ’Best Bank in CEE 2022’ ‘Bank of the Year in 2021’ ’Best Bank in Hungary in 2022’ ‘Mobile Banking Solution of since 2012 in all consecutive the Year 2021’ years ‘UX Solution of
Slide 29: Updated management guidance for 2022
Many elements of the management guidance for 2022 were upgraded Updated management guidance for 2022 The management expectations for the Group’s 2022 performance without the Russian and Ukrainian operations are as follows: • Performing (Stage 1+2) organic loan volume growth might reach 15% y-o-y (FX
Slide 30: Further details and financials
Further details and financials 30
Slide 31: Universal banking services to 15.6 million customers in 11 countries
OTP Group offers universal banking services to around 15.6 million active customers in 11 countries with majority of its operations located in European Union member states that offer attractive growth opportunities versus core EU countries Major Group Members in Europe Total Assets1 Systemic positio
Slide 32: 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 6.8 billion1 Total number of ordinary shares: 280,000,010, each having a Ownership structure of OTP Bank on 3
Slide 33: Breakdown of the consolidated net loan book
Almost 80% of the total net loan book is invested in EU countries, with Hungary having dominant share Breakdown of the consolidated net loan book Net loan book 3Q 2022 Hungary1 HUF 6,735 bn Bulgaria HUF 3,505 bn By country By product Leasing Leasing 6% 8% Mortgage Mortgage HUF 19,480 bn HUF 19,480 b
Slide 34: Breakdown of the consolidated deposit base
Hungary represents almost half of the deposit book, Bulgaria is the second largest deposit holder in the Group. Household volumes account for around 55% of the total deposit base Breakdown of the consolidated deposit base Deposit base 3Q 2022 Hungary1 HUF 11,681 bn Bulgaria HUF 4,864 bn By country B
Slide 35: Consolidated adjusted ROE and margins over time
The consolidated adjusted ROE for the period reached 19.1%, whereas this number was 22.1% without Russia and Ukraine 2003-2008 2009-2013 average 2014 2015 2016 2017 2018 2019 2020 2021 9M 2022 average ROE 10.1% 29.4% 8.3% -7.4% 5.1% 15.4% 18.5% 18.7% 20.3% 10.9% 17.0% (from profit after tax) 17.7%4
Slide 36: Loan penetration levels in regional comparison
The Hungarian loan penetration levels are still low in regional comparison implying good volume growth potential. This is also the case for Romania, as well as for the Bulgarian housing loan segment Net loan to deposit ratio in the Market penetration levels in Hungary in ... 2Q 2022 data for other H
Slide 37: Performing loan growth 2016 to 3Q 2022
OTP Group’s performing loans grew to 2.9-fold between 2016 and 3Q 2022, driven by both organic growth and acquisitions OTP Group – performing (DPD0-90) loan growth1 FX-adjusted, in HUF billion 2016 6,900 Organic 922 +27% Acquisitions 955 2017 8,778 Components of the Group’s Organic 1,316 performing
Slide 38: Acquisitions completed in the last five years
Acquisitions completed in the last five years materially improved OTP’s positions in many countries. The financial closure of the Nova KBM deal in Slovenia happened in February 2023, after receiving all the necessary regulatory approvals. On 12 December 2022 OTP Bank agreed on the purchase of the ma
Slide 39: Key highlights of the Ipoteka Bank transaction in Uzbekistan
Key highlights of the Ipoteka Bank transaction in Uzbekistan Uzbekistan OTP is entering a promising, fast-growing market with a relatively low penetration of banking services • On 12 December 2022 OTP Bank signed a purchase and sale contract on the privatization of Ipoteka Bank in Uzbekistan • Accor
Slide 40: Uzbekistan GDP and external trade
Steadily growing GDP and export; the external trade is mainly commodity driven Uzbekistan GDP structure of Uzbekistan (2021) Export volume growth 19.7% Industry 14.7% 14.8% 16.2% 26% Agriculture 10.6% 11.8% 25% Taxes 4.3% 5.3% 1.6% 2.1% Construction Trade Transportation -5.1% 7% -7.1% Info&Com. 23%
Slide 41: Uzbekistan population and education
Fast growing and young population, educational spending compares favourably to Emerging Markets Uzbekistan countries Steadily growing population Comparison of the median age (2020) 33.3 33.9 34.6 48 32.1 32.7 44 45 31.6 40 40 41 43 43 43 44 44 38 38 34 30 32 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Kazakhsta
Slide 42: Uzbek banking sector and market participants
The Uzbek banking sector is characterized by high level of state ownership (~80%) and dynamic credit growth Uzbekistan Major market participants and market shares Main trends in the Uzbek banking system Total Assets, 3Q 2022 Market Loan volumes, 3Q 2022 Total Assets (USD bn) Total Capital Ratio (%)
Slide 43: Financial highlights of Ipoteka Bank
Ipoteka Bank achieved around 20% ROE in 2021 and even exceeded that in the first half of 2022 Uzbekistan Financial highlights of Ipoteka Bank (IFRS, in HUF billion equivalent) Statement of recognized income 2018 2019 2020 2021 1H 2022 Naturals 2020 1H 2022 Operating profit 11 23 34 48 29 Total incom
Slide 44: Disclaimers and contacts
Disclaimers and contacts This presentation contains statements that are, or may be deemed to be, “forward-looking statements” which are prospective in nature. These forward-looking statements may be identified by the use of forward-looking terminology, or the negative thereof such as “plans", "expec