Otp Bank Nyrt · BET:OTP
Otp Bank Nyrt — Q3 2021 Earnings Presentation
45 slides from Otp Bank Nyrt's earnings presentation, 2021
Slide 1: OTP Group - Ideally positioned for post-COVID rebound
OTP Group - Ideally positioned for post-COVID rebound Investor presentation Based on 3Q 2021 results
Slide 2: Accounting profit after tax for nine months of 2021 surpassed HUF 335 billion
The accounting profit after tax for the first nine months of 2021 surpassed HUF 335 billion, up by 78% y-o-y. The adjusted nine-month profit was 61% higher than in the base period; the contribution of foreign group members increased further After taxforintban) (milliárd profit development y-o-y (in
Slide 3: 3Q 2021 balance of adjustment items was -HUF 7.1 billion
In 3Q 2021 the balance of adjustment items was -HUF 7.1 billion, mostly related to the Hungarian payment moratorium (in HUF billion) 9M 20 9M 21 Y-o-Y 3Q 20 2Q 21 3Q 21 Q-o-Q Y-o-Y Consolidated after tax profit (accounting) 188.2 335.3 78% 113.6 121.8 120.2 -1% 6% Adjustments (total) -43.5 -38.3 -12
Slide 4: 9M adjusted profit improvement driven by lower risk costs and revenue growth
The 9M adjusted profit improvement was equally driven by lower risk costs and double-digit revenue dynamics entailing 20% operating income growth. In 3Q the continued increase in core banking revenues was offset by higher risk costs Y-o-Y (HUF billion) 9M 2020 9M 2021 Y-o-Y FX-adjusted, 2Q 2021 3Q 2
Slide 5: Main Group members posted significant y-o-y improvement in nine-month profit
The main Group members posted significant y-o-y improvement in their nine-month profit with Hungary, Bulgaria, Russia, Croatia and Serbia delivering the largest nominal increase Adjusted profit after tax (in HUF billion) 9M 2020 9M 2021 Y-o-Y OTP Group 231.7 373.6 61% / 60%1 OTP Core (Hungary) 107.9
Slide 6: Nine-month total income grew by 12% organically
The nine-month total income grew by 12% organically. In 3Q the quarterly increase was driven by Hungary, Effect of Bulgaria and Ukraine OBS sale TOTAL INCOME 9M 2021 3Q 2021 9M 2021 Y-o-Y 3Q 2021 Q-o-Q without one-off items (HUF billion) (HUF billion) (HUF billion, %) (HUF billion, %) OTP Group 951
Slide 7: 9M net interest income grew by 10% organically
The 9M net interest income grew by 10% organically. In 3Q the quarterly improvement reached 6%, with bulk Effect of of the q-o-q growth coming from Hungary and Ukraine OBS sale NET INTEREST 9M 2021 3Q 2021 9M 2021 Y-o-Y 3Q 2021 Q-o-Q 1 In the first nine months the NII surged INCOME (HUF billion) (HU
Slide 8: Consolidated net interest margin declined marginally q-o-q
The consolidated net interest margin declined marginally q-o-q: at OTP Core it slightly decreased due to fast deposit inflows – the full impact of higher rates is yet to be seen. The Ukrainian margin improvement continued on the back of the increasing rate environment; in Russia, however, the margin
Slide 9: Q-o-q growth of consolidated performing loans reached 4%
The q-o-q growth of the consolidated performing loans reached 4% (FX-adjusted). The dynamic expansion in Hungary continued in every segments. The Russian growth was tilted to lower-margin products such as car loans and corporate Q-o-Q performing (Stage 1 + 2) LOAN volume changes adjusted for FX-effe
Slide 10: Consolidated performing loans expanded 11% year-to-date
The consolidated performing loans expanded 11% year-to-date. The outstanding 15% expansion of the Hungarian loan portfolio was supported mainly by the subsidized lending programmes (baby loans and Funding for Growth Go!) YTD performing (Stage 1 + 2) LOAN volume changes adjusted for FX-effect Cons. C
Slide 11: Consolidated deposits grew by 6% q-o-q
Consolidated deposits grew by 6% q-o-q mainly due to the 8% increase in Hungary Q-o-Q DEPOSIT volume changes adjusted for FX-effect Cons.1 Core DSK OBH OBSrb SKB OBR OBU OBRu CKB OBA OBM (Hungary) (Bulgaria) (Croatia) (Serbia) (Slovenia) (Romania) (Ukraine) (Russia) (Monten.) (Albania) (Moldova) Q-o
Slide 12: Consolidated deposits grew by 10% in the first nine months
Consolidated deposits grew by 10% in the first nine months, within that Hungarian deposits increased by 15%. In the course of the first nine months the nominal growth of deposits exceeded that of loans by almost HUF 400 billion YTD DEPOSIT volume changes adjusted for FX-effect Cons. Core DSK OBH OBS
Slide 13: Net fees grew by 15% y-o-y in nine months
In the first nine month net fees grew by 15% y-o-y (w/o OBS sale and FX-adjusted). In 3Q net fees rose by Effect of 7% q-o-q mostly due to the continued rebound in economic activity and reviving tourism in some countries OBS sale 9M 2021 3Q 2021 9M 2021 Y-o-Y 3Q 2021 Q-o-Q 1 At OTP Core the net fees
Slide 14: Other net non-interest income up 24% y-o-y
Effect of The cumulated other net non-interest income leaped by 24% y-o-y, whereas in 3Q it slightly declined q-o-q OBS sale OTHER INCOME 9M 2021 3Q 2021 9M 2021 Y-o-Y 3Q 2021 Q-o-Q 1 without one-off items (HUF billion) (HUF billion) (HUF billion, %) (HUF billion, %) In the first nine months, OTP Co
Slide 15: Consolidated operating costs grew by 6.1% y-o-y organically
Consolidated operating costs grew by 6.1% y-o-y organically, adjusted for FX and the shifting of the Effect of Hungarian local business tax to the corporate tax line OBS sale 9M 2021 Y-o-Y Y-o-Y, FX-adjusted 1 At OTP Core the underlying cost OPERATING COSTS (HUF 2021Q3 billion) CUM (HUF billion, %)
Slide 16: Hungary mortgage applications jumped by 47% in nine months
In Hungary mortgage applications jumped by 47% in the first nine month, partly due to the exemption of duties for customers using the Housing Subsidy for Families, and to the home renovation loan. Cash loan growth OTP CORE continued. OTP maintained its over 30% market share in new mortgage and cash
Slide 17: OTP maintained above 40% market share in baby loan flows
OTP Bank maintained its above 40% market share in baby loan flows. The Bank has also actively participated OTP CORE in the sale of subsidized loan products newly launched in 2021 Baby loans Contractual amounts OTP Bank's market share calculated (HUF billion) from the contractual amount Market1 OTP B
Slide 18: Micro and small enterprise loans grew by 29% ytd
OTP's micro and small enterprises loans grew by 29% ytd due to the outstanding performance in the phased-out Funding for Growth Go! scheme, but the Széchenyi Card Go! scheme, introduced in July, had a favourable effect, OTP CORE too. OTP's corporate loan market share continued its upward trend and e
Slide 19: Loan moratorium participation at OTP Core
Eligible debtors who applied for the moratorium at their banks in October can remain in the scheme until the end of June 2022. In the case of OTP Core loans worth HUF 224 billion may participate in the moratorium from OTP CORE November, which is 4.2% of the total outstanding loan portfolio OTP Core
Slide 20: Accelerating digitalisation
Accelerating digitalisation: in addition to the mobile channel becoming more popular, the proportion of OTP CORE digitally active customers and the number of digital transactions showed a substantial increase DIGITAL ACTIVITY The digital activity of OTP customers jumped significantly, supported by o
Slide 21: Portfolio quality remained stable in first nine months of 2021
In the first nine months of 2021 the portfolio quality remained stable. The provision coverage levels at OTP screen favourably compared to its regional peers Changes in different Stage categories OTP Group’s conservative provisioning policy is demonstrated through a peer group comparison 88.8% 80.4%
Slide 22: Group loans under repayment moratoria exceeded HUF 1,400 billion
At the end of September the total loans at Group level under the loan repayment moratoria exceeded HUF 1,400 billion, representing 9% of the consolidated total gross loan book. From November, given that the Hungarian moratorium is available only for eligible borrowers who have opted in during Octobe
Slide 23: Development of Stage 1, Stage 2 and Stage 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) (Hungary 4Q 19 88.8% 91.4% 88.6% 83.2% 96.0% 98.9% 83.9% 73.8% 75.0% 88.8
Slide 24: Development of 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) (Hungary 4Q 19 1.1% 0.8% 1.1% 0.8% 0.4% 0.4% 1.3%
Slide 25: Development of Stage 2 and Stage 3 ratios
Development of the Stage 2 and Stage 3 ratios 4Q 19 5.3% 8.4% 11.1% 9.8% 6.9% 10.7% 6.5% 7.5% 14.5% 12.8% 14.1% 11.7% 4.8% 4Q 20 13.9% 18.5% 17.9% 9.9% 17.8% 15.1% 14.8% 13.0% 17.1% 14.7% 15.7% 11.3% 4.1% Stage 2 ratio1 1Q 21 13.2% 18.8% 15.7% 9.8% 16.6% 15.2% 15.1% 7.2% 16.2% 14.4% 15.0% 12.5% 4.2%
Slide 26: Development of provision coverage ratios in IFRS 9 categories
Development of the provision coverage ratios in IFRS 9 impairment categories Group Group w/o Russia 4Q 19 1.6% 1.2% 0.5% 0.5% 0.2% 0.4% 0.5% 0.8% 0.6% 2.7% 1.8% 1.7% 1.4% n/a Stage 1+2 4Q 20 2.4% 2.1% 0.9% 0.7% 0.6% 0.9% 0.6% 1.2% 0.7% 4.4% 1.6% 1.8% 1.5% 0.9% own coverage 1Q 21 2.4% 2.1% 0.9% 0.7%
Slide 27: Strong capital position, ratios well above regulatory requirements
Strong capital position, all capital ratios are well above the regulatory requirements. The effect of the ICES redemption was reflected in the 3Q 2021 numbers, whereas the related sale of treasury shares to the Special Employee Partial Ownership Plan Organizations was executed in December with an ex
Slide 28: Updated 2021 management guidance
The updated 2021 management guidance reckons with continuing loan growth and full-year profitability around the first nine months level 2021 management Guidance For the first nine months Group-level trends played out overall positively. According to the management guidance: • Based on the ytd perfor
Slide 29: Further details and financials
Further details and financials 29
Slide 30: OTP Group offers universal banking to more than 16 million customers
OTP Group offers universal banking services to more than 16 million active customers in 11 countries across the CEE/CIS Region Major Group Members in Europe Total Assets Systemic position in Hungary… Montenegro Albania 3Q 2021 market share (%) OTP Bank Russia Russia Moldova Ukraine 1% Total assets 2
Slide 31: Unique investment opportunity to access the CEE banking sector
OTP 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 14.5 billion1 Total number of ordinary shares: 280,000,010, each having a nominal value of HUF 100 and representin
Slide 32: Net loan book dominated by Hungary and tilted to retail
The net loan book is dominated by Hungary and tilted to retail lending; almost 80% of the total book is invested in EU countries with stable earning generation capabilities Breakdown of the consolidated net loan book Hungary1 5,486 billion Bulgaria 2,581 billion (in HUF billion) Leasing Leasing 7% M
Slide 33: Deposit book dominated by Hungary and retail segment
In the deposit book Hungary and the retail segment is dominant. In Hungary and Bulgaria OTP is the largest retail deposit holder Breakdown of the consolidated deposit base Hungary1 9,286 billion Bulgaria 3,673 billion (in HUF billion) Corporate Retail sight Retail sight MSE 14% Corporate By countrie
Slide 34: Adjusted ROE recovered to 2017-2019 levels
After the temporary decline in 2020, in the first nine month of 2021 the adjusted ROE recovered to the 2017-2019 levels due to modest risk cost rate and cost efficiency gains offsetting revenue margin pressure 2003-2008 2009-2013 2014 2015 2016 2017 2018 2019 2020 9M 2021 average average Accounting
Slide 35: Hungarian loan penetration still low 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 ... 3Q 2021 data for other H
Slide 36: Performing loans grew 2.5-fold between 2016 and 3Q 2021
OTP Group’s performing loans grew to 2.5-fold between 2016 and 3Q 2021, driven by both organic growth and acquisitions OTP Group – performing (DPD0-90) loan growth1 FX-adjusted, in HUF billion 2016 6,052 Organic 632 +26% Acquisitions 955 Components of OTP Group’s 2017 7,638 performing loan growth Or
Slide 37: Acquisitions completed in recent years improved OTP's positions
Acquisitions completed in the last few years materially improved OTP’s positions in many countries. The financial closure of the Slovenian Nova KBM and Albanian acquisitions might be completed in 2Q 2022, subject to regulatory approvals Target Net loan volumes Market share in total assets Book value
Slide 38: Moderate credit quality deterioration in 3Q, DPD90+ volumes
In 3Q the underlying credit quality deterioration remained moderate, with DPD90+ volumes increasing by HUF 10 billion (adjusted for FX effect and sales and write-offs) FX-adjusted quarterly change in DPD90+ loan volumes (without the effect of sales / write-offs, in HUF billion) OTP Core DSK Group OB
Slide 39: OTP Bank and subsidiaries' ratings
+ 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 40: Update on ESG strategy and recent developments
Update on ESG strategy and recent developments 40
Slide 41: ESG organization
A dedicated organizational framework is being set up to ensure representation of ESG management responsibility in breadth and depth Our sustainability governance ESG organization We are working towards fully integrating sustainability mindset both in our daily operation and business decision making,
Slide 42: Main pillars of OTP Group's ESG Strategy
We have defined the main pillars of OTP Group’ ESG Strategy OTP GROUP ESG STRATEGY OTP Group is aiming to be the regional leader in financing a fair and gradual transition to a low-carbon economy and building a sustainable future through our responsible solutions. IMPLEMENTATION TIMELINE KPIs TO MEA
Slide 43: Sustainability performance recognized with improving ESG ratings
OTP Bank’s sustainability performance to date has been recognized with improving ratings by several major ESG rating agencies and initiatives OTP’s overall exposure is medium and is similar to the sub- industry average. Our 2021 score of 20.3 marks an improvement of more than 3.2 points from the las
Slide 44: Recent developments in OTP Bank's ESG program
Mortgage bond issues, launch of corporate and retail green lending and commitment to UN PRB are some of the recent highlights underlining our commitment to sustainable finance Recent developments in OTP Bank’s ESG program: Green mortgage bonds: The Green Mortgage Bond Purchase Program, launched by t
Slide 45: 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