OTP Bank Nyrt · BET:OTP
OTP Bank Nyrt — OTP Mortgage Bank — Debt Investor Presentation (July 2011)
31 slides from OTP Bank Nyrt's debt investor presentation, July 2011
Slide 1: OTP Mortgage Bank Investor Presentation
OTP Mortgage Bank Investor Presentation July 2011 Csaba Nagy Deputy CEO, OTP Mortgage Bank András Botos Senior legal advisor, OTP Mortgage Bank Rita Mayerné Kósa Deputy Director, IR&DCM, OTP Bank
Slide 2: Contents
Contents OTP Mortgage Bank – Operating Environment OTP Mortgage Bank – Portfolio & Risks OTP Group Introduction 2
Slide 3: OTP Mortgage Bank – Operating Environment
OTP Mortgage Bank – Operating Environment Legal Framework Housing Market in Hungary Mortgage Market in Hungary 3
Slide 4: Legal Framework in Hungary: An Overview
Legal Framework in Hungary: An Overview • Act on Mortgage Banks and the Mortgage Bond – based on German legislation • Specialised credit institution principle General • Limited business activity – loan origination is restricted to mortgage loans, no deposits, etc. • Derivatives – for hedging and ris
Slide 5: Legal Framework in Hungary: Insolvency Procedure
Legal Framework in Hungary: Insolvency Procedure • Collateralisation requirements – both on nominal value and NPV basis, stress testing Cover pool • Substitute collateral allowed – maximum 20% of coverage • No mandatory OC • Pari passu rank of mortgage bonds Hungarian mortgage • Issuance under Prosp
Slide 6: Comparison of the Hungarian and the German Covered Bond Legislation
Comparison of the Hungarian and the German Covered Bond Legislation Key provisions Hungary Germany Specialised Credit Yes No, but special licence required Institution Principle Supervision Hungarian FSA BaFin Coverage Supervisor Yes Yes NPV coverage is maintained under either NPV coverage is maintai
Slide 7: New Mortgage Relief Programme – The Home Protection Action Plan
New Mortgage Relief Programme – The Home Protection Action Plan The Plan aims at protecting all mortgage borrowers through offering solutions to different client groups, reinstate payment discipline of borrowers as well as kick starting the mortgage market. Key elements: I. Exchange rate fixing prog
Slide 8: Home Protection Action Plan expected to revive mortgage lending and moderate NPL formation
The recently announced Home Protection Action Plan of the government is expected to revive mortgage lending and moderate NPL formation Home Protection Action Plan Expected impact of the measures… I. Exchange rate fixing programme …for FX debtors - fixed exchange rates until 31 December 2014: CHF/HUF
Slide 9: Housing market: drop in demand, declining construction, falling prices
Housing market: drop in demand followed by declining construction activity, with real estate prices falling due to temporary excess of supply Housing Market Activity Inidactors • Period of rapidly growing house prices was short Building permits and did take place earlier compared to other CEE 70,000
Slide 10: Mortgage market in Hungary: shrinking FX loan portfolio, low indebtedness
Mortgage market in Hungary: shrinking FX loan portfolio, low level of indebtedness in international comparison Development of mortgage loans in Hungary (in EUR billion) 25 Ratio of FX loans (%), (rhs) ban on FX lending FX 100 • Boom in mortgage loan market between 2005 and 20 HUF 2008 80 15 60 • Gro
Slide 11: Asset quality analysis: slow deterioration, moderate risk levels
Asset quality analysis: slow deterioration, moderate risk levels, ample DPD90+ coverage DPD90+ ratio for certain poduct types (%) 10 Housing loans - HUF 9 Housing loans - FX • Appreciation of CHF lead to 8 Home equity loans - HUF - deterioration of assets, 7 Home equity loans - FX 6 - higher LTV lev
Slide 12: OTP Mortgage Bank – Portfolio & Risks
OTP Mortgage Bank – Portfolio & Risks Mortgage Lending Process Financials Portfolio 12
Slide 13: OTP Mortgage Bank: the leading mortgage lender in Hungary
OTP Mortgage Bank: the leading mortgage lender in Hungary • Started operations in 2002 Company • Fully owned subsidiary of OTP Bank profile • Biggest Hungarian mortgage bank, 7th largest bank in Hungary by total assets • First Hungarian issuer to sell Jumbo size series in the Euro market (2008) • Sp
Slide 14: Lending process: risk-aware solutions, centralised arrears management
Lending process: risk-aware solutions from the first steps, developed monitoring and reporting, centralised and strongly regulated arrears management Loan Soft & hard Origination Underwriting Monitoring Provisioning servicing collection Origination Origination &&Underwriting Underwriting Loanservici
Slide 15: Changing workout structure in 2010: irrevocable payment undertaking of OTP Bank
Changing workout structure in 2010: irrevocable payment undertaking of OTP Bank in respect of mortgage bonds issued by OTP Mortgage Bank Workout Businessstructure until model until 1Q 2010 2010 Q1 Workout Business stucture model since since 20101Q Q12010 DPD 90+ loans OTP Mortgage Provisioning Ban
Slide 16: OTP Mortgage Bank – Balance sheet
OTP Mortgage Bank – Balance sheet Audited year-end IFRS data in HUF billion 2008 2009 2010 2011Q1 Cash, placements with other banks 93 319 105 79 • Asset side dominated by mortgage loans Government securities 31 216 2 2 Loans, net of allowance for loan losses 1,455 1,443 1,562 1,471 • Apart from gov
Slide 17: Financial highlights
OTP Mortgage Bank – Financial highlights Audited year-end IFRS data in HUF billion, unless indicated 2008 2009 2010 2011Q1 Total interest income 133 161 146 59 • Shrinking net interest income due to Total interest expense 104 105 100 40 decreasing volume of loans receiving state subsidy, growing fun
Slide 18: Portfolio breakdown (as at 31 March 2011)
Portfolio breakdown (as at 31 March 2011) Development of the loan portfolio (in EUR billion) Denomination 6 EUR 2% EUR 10% 5 JPY JPY CHF CHF 4 HUF HUF 3 46% 2 1 42% 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q1 Maturity - Portfolio average 15.3 years Seasoning – portfolio average 4.5 years
Slide 19: Portfolio breakdown (as at 31 March 2011)
Portfolio breakdown (as at 31 March 2011) Size - Portfolio average HUF 4.7 million (in HUF million) Geographical distribution - 100% Hungarian residential properties 6% 4% 15% 22% 35% 15% 12% under 5 Southeast 5 - 10 18% Southwest 10 - 15 Budapest & Central 15 - 20 Northwest 33% 39% over 20 Northeas
Slide 20: Profitable loan portfolio, high over-collateralisation level
Profitable loan portfolio, high over-collateralisation level Over-collateralization based on nominal value (in EUR billion) 3.3% 5 4 HUF • OC TEST: aggregate outstanding amount of the 3 CHF cover pool must be at least equal to the EUR outstanding amount of covered bonds 2 JPY 1 • INTEREST COVERAGE T
Slide 21: Asset quality analysis: low level of NPLs compared to Hungarian banking sector
Asset quality analysis: low level of NPLs compared to the Hungarian banking sector DPD90+ loans (in EUR million) • OTP Mortgage Bank‟s portfolio outperforms the ratio of DPD90+ loans (%) (rhs) Hungarian banking sector: ratio of DPD90+ loans is 180 4,0 JPY CHF 162 162 163 161 still low (3.45% vs. Hun
Slide 22: Funding structure
Funding structure Net issuance of covered bonds (in EUR million) 1,200 HUF 1,000 EUR • OTP Mortgage Bank has a strategic function of a 800 mortgage funding vehicle of OTP Bank 600 400 • Liabilities contain mainly covered bonds, owned by 200 international and domestic institutional investors, 0 compl
Slide 23: OTP Mortgage Bank – Highlights
OTP Mortgage Bank – Highlights Regulatory framework Strict regulatory framework – based on German Pfandbriefe legislation • OTP Group has a unique position in Hungary and CEE – strong financial background, market leading position, strong capitalization Unique position of OTP Group • „National champi
Slide 24: OTP Group Introduction
OTP Group Introduction 24
Slide 25: OTP Group offers universal banking services to more than 13 million customers in 9 countries
OTP Group is offering universal banking services to more than 13 million customers in 9 countries Major Group Members in Europe Total Assets Systemic position in Hungary… Slovakia Serbia 1Q 2011 market share (%) Croatia Montenegro Romania 3% Total assets 25 4% 5% 1% OTP Bank Russia Russia Retail loa
Slide 26: Strong and resilient profitability
After many years of high growth and high profitability before the crisis, OTP has proved to be resilient to the crisis demonstrating sustainable earning capacity over the business cycle Consolidated Net Profits (HUF bn) ROE* % Banking tax Strong and resilient profitability CAGR 209 219 29.8 Goodwill
Slide 27: Capital strength in international comparison
10% 15% 20% 0% 5% 27 Diada Agric. Bank of Greece Diada Cajasur Agric. Bank of Greece Unnim Cajasur 6%* Banca Civica Unnim Hypo Real Estate Banca Civica comparison. Espiga Hypo Real Estate Piraeus Espiga Pastor Piraeus Caja Sol Pastor CAR: 17.5% Caja3 Guipuzcoano Caja Sol Caja3 Tier1: 14.0% NordLB Gu
Slide 28: Capital adequacy ratios of OTP Bank and OTP Group above regulatory minimum
Capital adequacy ratios of both OTP Bank (unconsolidated) and OTP Group (consolidated) are above regulatory minimum and remained outstandingly high in international comparison Capital Adequacy Ratio – OTP Bank unconsolidated (HAR) Capital Adequacy Ratio – OTP Group consolidated (IFRS) Tier2 Tier2 Ti
Slide 29: External redemptions of OTP Core covered by intra-group liquidity
Since the beginning of the crisis, external redemptions of OTP Core have been covered by intra-group generated liquidity instead of new wholesale issuances Gross operating liquidity Wholesale funding transactions at OTP Core level (EUR million equivalent) (in EUR million, equivalent) Senior Notes 6,
Slide 30: Contact
Contact OTP Bank OTP Mortgage Bank 1051 Budapest, Nádor utca 16., Hungary 1051 Budapest, Nádor utca 21., Hungary www.otpbank.hu www.otpjzb.hu Rita Mayerné Kósa Csaba Nagy Deputy Director Deputy CEO Tel: 36 - 1 - 473 5460 Tel: 36 - 1 - 354 7444 Fax: 36 - 1 - 473 5951 Fax: 36 - 1 - 354 7449 Email: inv
Slide 31: Disclaimer
Disclaimer This material has been prepared by OTP Mortgage Bank (the “Company”) and has not been independently verified. This material has been prepared for the information of the parties to whom it is delivered and is being delivered to you solely in your capacity as a relevant person (as defined b
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