OTP Group First half 2017 results

Transcription

1 OTP Group First half 7 results Conference call August 7 László Bencsik Chief Financial and Strategic Officer

2 The semi-annual accounting result grew by 6% y-o-y despite the balance of adjustments turned negative y-o-y. CEE Group members contribution grew by %, while the Russian and Ukrainian contribution increased by 56% (in HUF billion) Accounting profit after tax Adjusted profit after tax Adjusted after tax results in the CEE countries % 6. +6%. +9% H 6 H 7 H 6 H 7 H 6 H 7 Adjusted after tax results in Russia and Ukraine (including Touch Bank) Adjustments (after tax) H 6 H 7 Banking tax Visa % 7. Other.5. Total. -.5 H 6 H 7 Total result of CEE operations does not include the result of Corporate Centre, foreign asset management companies, other Hungarian and foreign subsidiaries and eliminations. Their aggregated results amounted to HUF -. billion in H 6 and HUF. billion in H 7.

3 In Q the aggregated profit of CEE Group members grew by % q-o-q, led by OTP Core and the Croatian operation. Romania and Serbia turned loss-making mainly due to higher risk costs reasoned by one-off provisions created in connection with changes in the provisioning policy H 6 H 7 Y-o-Y Q 6 Q 7 Q 7 Q-o-Q Y-o-Y in HUF billion in HUF billion Consolidated adjusted after tax profit. 5. 9% % 8% CEE operation (adjusted) % % % OTP Core (Hungary) % % 6% DSK (Bulgaria) %... -% -6% OBR (Romania).6.9-6%.. -. OBH (Croatia). 5. % % OBS (Slovakia) OBSrb (Serbia) CKB (Montenegro) Leasing (HUN, RO, BG, CR).. 5%.5.. 5% 95% OTP Fund Management (Hungary).9. 8% % 5% Russian and Ukrainian operation (adjusted) % % -% OBRU % % 5% Touch Bank % % 7% OBU (Ukraine) %...5 -% -7% Corporate Centre and others %

4 In Q 7 four adjustment items emerged with an aggregated amount of HUF. billion H 6 H 7 Y-o-Y Q 6 Q 7 Q 7 Q-o-Q Y-o-Y in HUF billion in HUF billion Consolidated after tax profit (accounting) % % % Adjustments (total) % Dividends and net cash transfers (after tax).. 6%... 5% % Goodwill/investment impairment charges (after tax) Special tax on financial institutions (after corporate income tax) % % % Impact of fines imposed by the Hungarian Competition Authority (after tax) % Gain on the sale of Visa Europe shares (after tax).. -%... -% Effect of acquisitions (after tax)..... Of which customer base value, fair value adjustment of loans and their amortization (after tax) Consolidated adjusted after tax profit. 5. 9% % 8% HUF.8 billion negative tax effect related to the write-back of impairment losses at three Hungarian subsidiaries. Certain, mainly one-off items emerged in relation to the Splitska banka transaction in Q (in particular: badwill adjusted for specific provisions in the books of Splitska banka, other provisions on expected integration expenses, customer base value, fair value adjustment of loans) were presented on consolidated level on the Effect of acquisition line among the adjustment items under the adjusted P&L structure. In Q 7 +HUF. billion was booked on this line (after tax). Within the Effect of acquisition the sum of initial value of customer base value (an intangible asset) and fair value adjustment of loans, as well as the amortization of these items booked in May and June (+HUF 6.8 billion in total, after tax) was presented on a separate line. Accordingly, the on-going amortization of these items will appear within the Effect of acquisitions on the Customer base value, fair value adjustment of loans and their amortization line until the end of the amortization periods.

5 The Q profit after tax without one-off items went up by 5% q-o-q, mainly on the back of improving core banking revenues, but also the further declining risk costs H 6 H 7 Y-o-Y Q 6 Q 7 Q 7 Q-o-Q Y-o-Y in HUF billion in HUF billion Consolidated adjusted after tax profit. 5. 9% % 8% Corporate tax % % -% O/w tax shield of subsidiary investments % Before tax profit % % 8% Total one-off items.9.8 -% % Gain on the repurchase of own capital instruments..... Result of the Treasury share swap agreement.9.8 -% % Before tax profit without one-off items % % 9% Operating profit w/o one-off items % % % Total income w/o one-off items % % % Net interest income w/o one-off items % % 6% Net fees and commissions % % % Other net non interest income without one-offs % % 79% Operating costs % % 7% Total risk costs % % -9% 5

6 Strong capital and liquidity position coupled with robust internal capital generation make room for further acquisitions Development of the fully loaded CET ratio of OTP Group -.%p Net liquidity reserves (in EUR billion equivalent) 7. Net liquidity buffer / total assets (%) 8.%.5%.% 5.8%.%.% 5.%..7% 8 Q 7 8 Q 7 Reported Including profit less indicated dividend Reported Q 6 H 7 Leverage ratio (average equity / average assets) Q 7 Q 7 Q 7 Q 7 Q 7 Q 7 Q 7 6.% 7.8% 7.% 6.8% 6.6% Including profit less indicated dividend.6%.6% External debt (in EUR billion equivalent) % -5.5 Consolidated net loan to deposit + retail bond ratio 8 Group FX liquid assets (in EUR billion equivalent) 7% H Q 7 8 Q 7 Senior bonds, mortgage bonds, bilateral loans. Positive amount implies FX liquidity placement. 6

7 OTP Bank Romania In Romania OTP signed and agreement on purchasing the th biggest local bank, Banca Romaneasca (BROM); as a result the market share of the combined entity will reach.8% Market Croatia shares in the Romanian banking sector (6, HUF billion) Bank Total assets. BCR,9. Banca Transilvania,58 Market share by total assets before and after the acquisition* (based on Q 6 data).% +.7%p.8%. BRD,7. Raiffeisen,9 5. UniCredit, OBR OBR + BROM 6. CEC Bank,9 7. ING Bank,9 8. OTP+BROM*, 8. Alpha Bank,. OTP Bank 56 Number of branches before and after the acquisition Citibank 67. Piraeus Bank 5. Banca Romaneasca (BROM) 7 OBR OBR+BROM * Including other assets being part of the transaction 7

8 OTP banka Srbija In Serbia OTP signed and agreement on purchasing the 9 th biggest local bank, Vojvodjanska banka (VOBAN); as a result the market share of the combined entity will increase to 5.7%. The purchase price was EUR 5 million Market Croatia shares in the Serbian banking sector (6, HUF billion) Bank. Intesa,89. Komercijalna,7. Unicredit 87. AIK Banka Raiffeisen 6 6. SG OBSr + Vojvodjanska Eurobank Erste 6 9. Vojvodjanska (VOBAN) 7. Postanska 5 Total assets 6. OBSr Market share by total assets before and after the acquisition (based on Q 6 data).5% OBSr 5 OBSr +.%p % OBSr + VOBAN Number of branches before and after the acquisition 57 OBSr + VOBAN 8

9 Over the last year announced acquisitions add % to the Group gross loan increase and 6% to performing loan increase, whereas the organic performing loan volume growth reached 8% since 5 The acquisitions impact on consolidated loan volumes (in HUF billion) Gross volumes Performing volumes Loan volume (Q 5) without recent acquisitions* 6,68 5,8 Hungary AXA** 77 Croatia Splitska banka** 66 +% +6% Romania Banca Romaneasca*** 57 Serbia Vojvodjanska banka*** 5 Pro-forma loan volume including the effect of recent acquisitions (Q 5) 7,88 6,65 * Q 5 consolidated loan volume, which does not reflect the impact of recent acquisitions. ** Loan volumes at the time of the consolidation. *** Data as at end of 6. 9

10 Consolidated total income increased by 8% q-o-q, half of that was due to the Splitska acquisition. The increase in Hungarian core banking revenues was the other key driving factor TOTAL INCOME Q 7 without one-off items (HUF billion) Y-o-Y (HUF bn) Y-o-Y (%) Q-o-Q (HUF bn) Q-o-Q (%) OTP Group 5 % 6 8% OTP CORE (Hungary) % 7 8% DSK (Bulgaria) 8 - -% 5% OBRU 7 5%/7% -%/-% Touch Bank n/a n/a OBU (Ukraine) 8 - -%/-% - -7%/-6% OBH (Croatia) 6 8 6% 8 7% OBS (Slovakia) -% -% OBR (Romania) 7 7% -% CKB (Montenegro) -% -% OBSrb (Serbia) 7% 9% Others 9 % - 7% Changes in local currency Other group members and eliminations.

11 The net interest income went up by % q-o-q mainly due to the contribution by the newly consolidated Splitska banka. At the Core division the positive impact of expanding volumes outpaced the headwinds from further NIM erosion NET INTEREST INCOME Q 7 (HUF billion) OTP Group OTP CORE (Hungary) DSK (Bulgaria) % % % Q-o-Q (HUF billion) 5 Q-o-Q (%) % % -% Adjusted for the calendar effect the NII still grew by % q-o-q partially as a result of dynamically expanding performing loan volumes; this was only partially muted by the q-o-q bps margin erosion occurred in Q. OBRU Touch Bank OBU (Ukraine) 9% % % % -% Net interest income decreased by % as the lower funding costs could not counterbalance the lower gross interest income realized amid decreasing market interest rates. OBH (Croatia) OBS (Slovakia) OBR (Romania) CKB (Montenegro) OBSrb (Serbia) Merkantil (Hungary) Corporate Centre Others and eliminations 8% % % % % % % % 5-6 9% -% % % % % -69% The q-o-q decline was partly explained by the q-o-q higher volume of restructured corporate and mortgage loans, because at the time of the restructuring the total NPV decline for the whole duration of the loan was accounted for in one sum on the net interest income line. In Croatia the q-o-q increase was driven by the consolidation of the May and June performance of Splitska banka, adding HUF 5.6 billion to the Croatian NII in Q.

12 The H consolidated net interest margin eroded by 9 bps compared to the full-year 6 level; in Q all major Group members suffered NIM attrition, however at both OTP Core and DSK the NIM erosion decelerated materially q-o-q Net interest margin (%) OTP Group -9 bps The M BUBOR moderated by bps q-o-q demonstrating a much smaller drop compared to Q 7, however, due to the time lag in the repricing of business volumes the larger drop in Q had a spill-over effect and took its toll in Q. DSK s NIM remained stable q-o-q as a result of lower total assets and a more effective utilisation of excess liquidity through stronger disbursement activity. In Russia lower quarterly NIMs can be explained by lower overall APRs charged by consumer lender banks amid declining interest rate environment. 5 6 H 7 Q 6 Q 6 Q 6 Q 7 Q 7 The q-o-q decline in Ukrainian NIM was partly due to higher volume of restructured loans, because at the time of the restructuring the total NPV decline for the whole duration of the loan is booked in one sum on the NII line. OTP Core Hungary OTP Bank Croatia H 7 Q 6 Q 6 Q 6 Q 7 Q H 7 Q 6 Q 6 Q 6 Q 7 Q 7 DSK Bank Bulgaria OTP Bank Romania H 7 Q 6 Q 6 Q 6 Q 7 Q H 7 Q 6 Q 6 Q 6 Q 7 Q 7 OTP Bank Russia OTP Bank Ukraine H 7 Q 6 Q 6 Q 6 Q 7 Q H 7 Q 6 Q 6 Q 6 Q 7 Q 7

13 Consolidated performing loans increased by % q-o-q (adjusted for the Splitska acquisition effect the organic increase was %); loan growth at OTP Core accelerated, mortgage volumes stabilized; the retail portfolio started growing at DSK DPD-9 volumes Q-o-Q loan volume changes in Q 7, adjusted for FX-effect Total Consumer % 6% % % % % % 59% 5% 5% 6% % % 7% % 7% 8% 7% % % % % 59% % 5% 8% % % 7% % Mortgage 6% 6% % % -6% -5% % 87% % 87% % % 5% % Corporate 9% % 9% % % % 5% 6% % % -% -% 8% -% Cons. Core (Hungary) DSK (Bulgaria) OBRu Touch Bank OBU (Ukraine) OBR (Romania) OBH (Croatia) OBS (Slovakia) OBSr (Serbia) CKB (Montenegro) Y-o-Y loan volume changes in Q 7, adjusted for FX-effect Total Consumer % 6% 6% % 8% 6% % % % 7% 7% 6% 7% % 8% % % % % 9% 6% % % % 8% % % % 8% % Mortgage 5% 5% 6% % % 6% % % -9% -% -% % % % % 6% Corporate 8% % 8% % 7% 6% % 7% 5% % 6% -% 8% -7% Loans to MSE and MLE clients and local governments Without the Splitska-effect Without the AXA-effect Without the AXA-effect and Splitska-effect

14 Retail loan disbursement showed strong y-o-y dynamics in H 7 at OTP Core and mostly all subsidiaries Y-o-Y change of new disbursements (in local currency) H 7 Core (Hungary) DSK (Bulgaria) OBRu OBU (Ukraine) OBR (Romania) OBH (Croatia) OBS (Slovakia) OBSr (Serbia) CKB (Montenegro) Mortgage loan % % 5% % -6% % % Cash loan* 6% % % 59% 89% 89% -% 9% % * Including POS loan disbursements in case of DSK (Bulgaria), OBRu and OBU (Ukraine)

15 The consolidated deposit base increased by 8% y-o-y, without Splitska by 8%; volume growth at OTP Core was the engine behind the consolidated deposit base expansion Q-o-Q deposit volume changes in Q 7, adjusted for FX-effect Total % 6% % % -% -% 6% -% % 6% -% % % % % Retail % % 5% % -% 6% % -% % -% % % % % Corporate 7% 9% 7% -% -% -5% -5% 7% 9% -% % % -% % Cons. Core (Hungary) DSK (Bulgaria) OBRu Touch Bank OBU (Ukraine) OBR (Romania) OBH (Croatia) OBS (Slovakia) Y-o-Y deposit volume changes in Q 7, adjusted for FX-effect OBSr (Serbia) CKB (Montenegro) Y-o-Y deposit volume changes in Q 7, adjusted for FX-effect Total 8% 68% 8% % % -6% 6% % % 68% -% 7% % 8% % Retail % 5% % 7% 7% -9% 6% -% % 5% -% % -% % % Corporate 6% 6% 6% 5% 8% -9% 5% 8% -% 6% 7% % % 6% including SME, LME and municipality deposits Without the Splitska-effect 5

16 The net fee and commission income showed a strong momentum q-o-q (+%) on the back of two technical items and higher business activity at OTP Core, and the consolidation of Splitska banka NET FEE AND COMMISSION INCOME Q 7 (HUF billion) OTP Group OTP CORE (Hungary) DSK (Bulgaria) OBRU Touch Bank OBU (Ukraine) OBH (Croatia) OBS (Slovakia) OBR (Romania) CKB (Montenegro) % 56% % % % % 6% % % % Q-o-Q (HUF billion) Q-o-Q (%) % % 8% 8% n/a 5% 6% -% -% % The quarterly increase was explained predominantly by the q-o-q lower financial transaction tax obligation, but the higher business activity and the usual seasonality played a role, too. The quarterly decline of FTT was due to two items. Firstly, similar to previous years, the financial transaction tax on cardtransactionshadtobepaid in a lump-sum in the first quarter for the whole year, based on the annual volume of previous year s transactions. This item amounted to -HUF.6 billion both in Q 7 and Q 6. Secondly, part of the contributions into the Compensation Fund booked in Q 7 were presented amongst the financial transaction taxes, thus reducing the net fee and commission income in Q. On the contrary, the tax deductions related to the contributions booked in Q exerted an opposite effect (+HUF.6 billion q-o-q effect). OBSrb (Serbia) Fund mgmt. (Hungary) % % % 6% In Croatia the entire q-o-q growth was related to the consolidation of Splitska banka from May 7. 6

17 The other net non-interest income increased by 5% q-o-q OTHER NET NON-INTEREST INCOME Q 7 without one-off items (HUF billion) Q-o-Q (HUF billion) Q-o-Q (%) OTP Group OTP CORE (Hungary) DSK (Bulgaria) % 8% 7% % 8% 6% At OTP Core the gain on the sale of real estate investment units was the main contributor to the quarterly improvement. OBRU %.. n/a Touch Bank OBU (Ukraine) OBH (Croatia) % % % n/a -% 69% DSK Bank booked higher revaluation gains on derivatives and securities portfolio, but gains on real estate transactions added to the other income line, too. OBS (Slovakia) %.. 8% OBR (Romania) CKB (Montenegro) 6% -% % -7% The bulk of the q-o-q increase in Croatia was sparked by the Splitska acquisition. OBSrb (Serbia) %.. 8% Others % % Other group members and eliminations 7

18 Operating costs grew by 7% y-o-y in Q (+5% adjusted for FX rate changes), explained mainly by the additional on-going costs of Splitska banka. In H 7 the FX-adjusted consolidated cost growth without Splitska banka reached.5% y-o-y OPERATING COSTS Q 7 (HUF billion) OTP Group OTP CORE (Hungary) DSK (Bulgaria) OBRU Touch Bank OBU (Ukraine) OBH (Croatia) OBS (Slovakia) OBR (Romania) CKB (Montenegro) OBSrb (Serbia) Merkantil (Hungary) % 8% % % % % 8% % % % % % Y-o-Y (HUF bn) 7 Y-o-Y (%) 7% -5% % 8% 6% % 95% -7% -5% -8% -% % Y-o-Y (FX-adj., HUF bn) - 5 Y-o-Y (FX-adj., %) 5% -% 8% 9% -% % 8% -5% -8% -% % % 5 The Q cost dynamics of OTP Core were mainly shaped by the following factors: () in April 7 there was a base salary increase for employees working in the sales network; () social and health care contributions were reduced by 5 pps effective from January 7; () the cost base in Q 6 was affected by one-off costs emerged due to organizational changes. At DSK the 8% growth was reasoned by advisory costs mainly related to the business development project in the retail segment, higher marketing costs and charges paid to supervisory authorities, and increase in the number of employees. At OBRU apart from the high inflationary environment and stronger sales figures, reclassification played a role, too (+HUF. billion impact y-o-y). At OBU salary increases and marketing costs played a role. 5 On-going costs of Splitska banka reached HUF. billion in Q. Since Q 6 deposit protection fund contributions have been reclassified from the other net non-interest income line to operating expenses. 8

19 OTP CORE H before tax profit at OTP Core picked up by 6% y-o-y amid moderating corporate tax burden; such performance was shaped by improving operating profit and risk cost releases OTP CORE (in HUF billion) H 6 H 7 Y-o-Y Q 6 Q 7 Q 7 Q-o-Q Y-o-Y Profit after tax % % 6% Corporate tax % % -9% Before tax profit % % 5% Operating profit w/o one-off items % % % Total income w/o one-off items % % 9% Net interest income w/o one-off items % % % Net fees and commissions % % 7% Other net non interest income without one-offs..7 5% % 76% Operating costs % % -5% Total risk costs % % 6% Total one-off items % The H effective corporate income tax rate was.%, marking a sharp drop y-o-y (H 6: 6.%). The main reason behind was that effective from January 7 the Hungarian corporate tax rate was reduced to 9%. Also, the tax shield effect on the revaluation of subsidiary investments resulted in additional tax payment in H (HUF.6 billion). Since the switch from Hungarian Accounting Standards into IFRS financials became effective from January 7 in Hungary, the corporate tax line of OTP Core won t be distorted by this tax shield effect related to the HUF exchange rate movements. Adjusted for the calendar effect the NII still grew by % q-o-q partially as a result of dynamically expanding performing loan volumes; this was only partially muted by the q-o-q bps margin erosion occurred in Q. The strong momentum was due to increasing business activity and seasonality, but base effect (-HUF.6 billion financial transaction tax booked in Q) and a technical effect (+HUF.6 billion q-o-q effect: part of the contributions into the Compensation Fund booked in Q 7 were presented amongst the FTT, thus reducing the NF&C in Q. On the contrary, the tax deductions booked in Q exerted an opposite effect in Q). Similar to the last couple of quarters there was a provision release in Q, thanks to the continuation of benign credit quality trends. 9

20 OTP Core Mortgage loan applications and disbursements accelerated further. OTP s market share remained strong in new loan disbursements, corporate loans and also in retail savings Change of mortgage loan applications and disbursement of OTP Bank (H 7, y-o-y changes) New applications 8% OTP Group s market share in loans to Hungarian companies (%) % Disbursement % OTP s market share in mortgage loan contractual amounts 8.9% 5.6%.8% 9.% 6.9% 9.% 8.8% 5 6 H 7 OTP Bank s market share in household savings 9.8%.7%.% 7.% 7.9% 8.7% 7.% Q 7 Activity of OTP Group in the Funding for Growth Scheme FGS I. FGS II. FGS+ FGS III. Changes of SME loan volumes (FX-adjusted y-o-y changes).% Contracted volumes (in HUF billion) 6 5.% 9 7.% 7.%.7% 66.%.% Market share.% 9.% 7.%.9% 9.9% YTD 9.8% 5 6 H Q 7 Including the performance of OTP Building Society. Raw, unadjusted data are used for the calculation of market shares. Aggregated market share of OTP Bank, OTP Mortgage Bank, OTP Building Society and Merkantil, based on central bank data (Supervisory Balance Sheet data provision until 6 and Monetary Statistics from Q 7). The source of the sector statistics is the central bank s publications on FGS. The y-o-y increase in was influenced by reclassification, too.

21 OTP launches its customer-friendly housing loan product. The central bank s initiative is expected to give further impetus to the demand for housing loans on sector-level On 9 March 7 the National Bank of Hungary (NBH) published an announcement according to which NHB is going to introduce a customerfriendly housing loan certification and only those banks whose housing loan products meet certain conditions laid down by NBH can use the customer-friendly housing loan approval rating. Following intensive consultations with market participants, on 9 May 7 the NBH published the customer-friendly housing loan criteria for the newly issued housing loans (i.e. the below criteria apply only to new production of fixed-rate housing loans, therefore home equity loans and variable rate loans are not part of the initiative). This scheme is a recommendation, and not a binding regulation. According to the conditions set by the Financial Stability Board of the NBH, the fair housing loan rating requires the fulfilment of the following criteria:. newly disbursed housing loans should be an annuity, i.e. with constant monthly instalments. interest rates should be fixed either with a repricing periods of, 5 or years, or for the whole tenor of the loan. the maximum tenor of the housing loan cannot exceed years. the credit decision should take place within 5 working days after obtaining the appraisal of the collateral 5. the deadline of disbursement is working days following the credit approval 6. the interest premium over the reference rate (more precisely, over the interest rate alteration indicator serving as a reference rate) cannot exceed 5 basis points. As for the reference rate, it will be the discretion of the lender to decide which reference rate should be applied out of the potential reference rates verified and published by the NBH. The list of potential interest rate alteration indicators for HUF loans include: () Hungarian government bond yields *.5, () Budapest Interest Rate Swap (BIRS), () Hungarian government bond yields. 7. initial disbursement fees will be capped at.75% of the total loan amount, or maximum HUF 5,. 8. early repayment fees cannot exceed.% of the prepaid amount Banks can apply for the customer-friendly housing loan approval rating at the NBH from June 7. Starting from autumn 7 the NBH will create a website where customers will be able to compare the pricing and other information of the various mortgages being provided under the scheme. On August 7 OTP Mortgage Bank received the approval of NBH to sell its qualified customer friendly mortgage loan product. The new product will be available from the second half of August.

22 DSK Bank Bulgaria DSK Bank retained its outstanding profitability. Favourable credit quality trends remained intact and the bank released provision in Q. NIM remained stable q-o-q Income statement (in HUF billion) 6 Q 7 Q 7 Q Q-o-Q Y-o-Y Profit after tax (adjusted)... -% -6% Profit before tax % -5% Operating profit % -% Total income % -% Net interest income % -% Net fees and commissions % -% Other income % % Operating costs % % Total risk cost % 5% Net interest margin 5.7%.6% 6% 5% % % % % % 5.6% 5.67% 5.55% 5.9%.78%.69%.55%.9% Q Q Q Q Q Q Q Q 5 6.9%.9% Q Q 7 Return on Equity.6%.% 6.7%.% 9.8%.8% Risk cost rate.5%.9%.% -.7% 5 6 H H 7 According to the old calculation methodology until and the new calculation methodology from 5.

23 OTP Bank Russia The Russian subsidiary generated almost the same profit in Q as in the first quarter. FX-adjusted performing POS and cash loan volumes as well as corporate loans grew y-o-y due to strong disbursement activity Income statement (in HUF billion) 6 Q 7 Q 7 Q Q-o-Q Y-o-Y Profit after tax (adjusted) % 5% Profit before tax % % Operating profit % % Total income % 5% Net interest income % % Net fees and commissions % 79% Other income % Operating costs % 8% Total risk cost % 6% DPD-9 loan volumes (FX-adjusted, in HUF billion) POS Cash loan +% % 9 Q 6 Q 7 Q 6 Q 7 Credit card Other loans 95-7% 8 +% 5 Q 6 Q 7 Q 6 Q 7 Return on Equity 8.%.%.%.7% OTP Bank Russia - risk cost rates in different segments POS Credit card Cash loan Mikro- és kisvállalkozói hitelállomány y/y változása (árfolyamszűrt állományalakulás) 9.7% 9.6% -.% -.5% 8.7% 5 6 H According to the old calculation methodology until and the new calculation methodology from 5.

24 OTP Bank Russia In Q 7 POS and cash loan disbursements grew on a yearly basis, but performing credit card volumes declined further. Deposits decreased q-o-q in RUB terms. Average RUB term deposit rates kept shrinking POS loan disbursements (RUB billion) % DPD-9 credit card loan volume q-o-q changes (RUB billion) Cash loan disbursements (RUB billion, including quick cash loans) % Q QQQ Q QQQ Q QQQ Q QQQ Q QQQ Q Q Q Q Q QQQ Q QQQ Q QQQ Q QQQ Q QQQ Q Q Q Q Development of customer deposits (RUB billion) 77 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Average interest rates for stock and new RUB deposits 6% % % % 9.% 8% 6% % Stock of term deposits New term deposit placements Q %.%.%.%.%.6%.%.%.5%.%.6%.% 9.% 9.5% 9.5%.%.%.% 9.9%.% 9.% 9.% 9.5% 7.7% 8.8% 7.% 7.% 7.9% 6.7% 7.% 6.7% Q Q Q Q Q Q Stock of total deposits Q Q Q Q 7 8.9% 8.% 6.% Q 66 Share of term deposits (stock), % 8.% 8.% 5.8% Q % 7.9% 5.5% Q 6

25 OTP banka Hrvatska The Q performance of the Croatian operation was also boosted by the performance of on May consolidated Splitska banka. The market share by total assets of OTP increased to.% on based May data (in HUF billion) H 6 H 7 Y-o-Y Q 6 Q 7 Q 7 Q-o-Q Y-o-Y Profit after tax. 5. % % Profit before tax.7 6. % % Operating profit % % % Total income % % 6% DPD-9 loan volumes (FX-adjusted, in HUF billion) Mortgage loans Consumer loans Corporate loans Car-financing Q 7, Q 7 Net interest income Net fees and commissions % % %.5.5 8%... 6% 6% Market share by total assets. Other income.6. % % 7% +7.%p Operating costs % % 95% Total risk cost % Q 7 5M 7 5

26 The consolidated DPD9+ ratio declined further. The risk cost rate sank to multi-year lows Consolidated risk cost for possible loan losses and its ratio to average gross loans Risk cost for possible loan losses (in HUF bn).8% Risk cost to average gross loans.66% (%).%.5%.%.98%.7% %.% % 7.56%.65% 8 5.5% Q Q Q Q Q Q Q Q Q Q Q Q Q Change in DPD9+ loan volumes (consolidated, adjusted for FX and sales and write-offs, in HUF billion) Contribution of Russia and Ukraine Contribution of Splitska banka H 7 Q Q Q Q Q Q Q Ratio of consolidated DPD9+ loans to total loans.6%.8% 9.% 8.% 9.% 8.% 7.% 7.% 6.% 5.8%.7%.%.% Consolidated provision coverage ratio Consolidated allowance for loan losses (FX-adjusted, in HUF billion) 8.% 8.8% DPD9+ coverage ratio 88.8% 89.6% 8.% 9.% 9.5% 89.% 95.% 95.% 96.8% 98.8% 97.7%,6,,7,7,56,97,5, Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q According to the old calculation methodology until Q 5 and the new calculation methodology from Q 6. 6

27 In Q 7 the FX-adjusted DPD9+ formation sank to HUF 7 billion (without the Splitska-effect). The Russian inflow was below the quarterly average of the last couple of years FX-adjusted quarterly change in DPD9+ loan volumes (without the effect of sales / write-offs, in HUF billion) Consolidated 68 OTP Core (Hungary) OBRu OBU (Ukraine) DSK (Bulgaria) OBR (Romania) FX-adjusted sold or written-off loan volumes: Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 6 7 FX-adjusted sold or written-off loan volumes: Q Q Q Q Q Q Q Q Q 5 6 Technical effect of settlement in Q 5 Out of the DPD9+ volume growth in Q 6, HUF 5 billion was attributable to the consolidation of AXA portfolio. Out of the DPD9+ volume growth in Q 7, HUF 5 billion was attributable to the consolidation of Splitska banka portfolio. 7 OBH (Croatia) OBS (Slovakia) 5 FX-adjusted sold or written-off loan volumes: Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q OBSr (Serbia) - - Q Q Q Q Q Q Q Q Q CKB (Montenegro) Q Q Q Q Q Q Q Q Q Merkantil Bank+Car (Hungary) Q Q Q Q Q Q Q Q Q 7 7

28 The risk cost rate and the DPD9+ ratio declined q-o-q all across the board with the provision coverage ratios remaining conservative OTP Core Hungary DSK Bank Bulgaria OTP Bank Russia OTP Bank Ukraine Risk cost for possible loan losses / Average gross customer loans*, % (6) (H 7) -. Q Q Q Q Q.8 Q. (6). Q.8 Q. Q -. (H 7) -. Q 7. Q 8. (6) 6.9 Q 8.5 Q 7.9 (H 7) 7.9 Q 7.9 Q. Q. (6). Q. Q. (H 7) -. Q. Q DPD9+ loans / Gross customer loans, % Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Total provisions / DPD9+ loans, % Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q * Negative amount implies provision releases. 8

29 At the main operations the DPD9+ ratios decreased q-o-q mainly as a result of DPD9+ portfolio sales and write-offs DPD9+ ratio (%) DPD9+ ratio (%) OTP Core (Hungary) Q6 Q6 Q6 Q7 Q7 Q-o-Q (%-point) OTP Bank Russia Q6 Q6 Q6 Q7 Q7 Q-o-Q (%-point) Total.%.% 9.8% 9.% 8.%.8 Retail.%.%.%.9%.%.6 Mortgage.8%.%.%.% 9.8%. Consumer 7.% 6.% 5.%.%.%. MSE 6.8% 6.% 6.% 6.5% 6.5%. Corporate 8.5% 8.% 7.9% 6.8% 5.%. Municipal.%.%.%.%.%. Total.6%.%.% 9.% 8.%.9 Mortgage 5.5% 7.% 6.9% 6.% 7.5%. Consumer.7%.% 9.9% 9.% 8.%.7 Credit card.%.8%.8%.5% 9.%. POS loan 5.9%.%.%.7%.5%.9 Personal loan 6.9%.%.7% 8.7% 5.8%.9 DPD9+ ratio (%) DPD9+ ratio (%) DSK Bank (Bulgaria) Q6 Q6 Q6 Q7 Q7 Q-o-Q (%-point) OTP Bank Ukraine Q6 Q6 Q6 Q7 Q7 Q-o-Q (%-point) Total.%.5%.5%.%.%. Mortgage.%.% 6.7% 6.5% 5.9%.6 Consumer 8.% 8.5% 7.7% 8.% 8.%. MSE.8%.6% 7.% 7.5% 5.9%.6 Corporate.%.% 9.6% 8.7% 8.6%. Total.9%.9%.9%.% 7.5%.7 Mortgage 7.% 7.% 7.6% 7.% 7.6%.5 Consumer.6% 8.%.6%.8%.5%.7 SME 86.% 87.8% 87.% 87.6% 87.8%. Corporate.% 9.% 8.6% 7.6%.%. Car-financig 7.9% 6.6%.6%.% 5.5% 5.7 9

30 Restructured retail volumes slightly increased q-o-q on group level Definition of retail restructured loans: In comparison with the original terms and conditions, more favourable conditions are given to clients for a definite period of time or the maturity is prolonged. The exposure is not classified as restructured, if: the restructuring period with more favourable conditions is over and the client is servicing his loan according to the original terms for more than months, and/or the client is servicing his contract according to the prolonged conditions for more than months. Loans once restructured but currently with delinquency of more than 9 days are not included, either. Restructured retail loans with less than 9 days of delinquency Share out of retail + car-financing portfolio (without SME). OTP Flat Lease; included into OTP Core from Q 7. Q 6 Q 6 Q 6 Q 7 Q 7 HUF mn % HUF mn % HUF mn % HUF mn % HUF mn % OTP Core (Hungary),799.% 5,69.% 6,8.% 8,6.% 5,896.% OBRu,5.%,85.%,897.9% 5,9.% 5,5.% DSK (Bulgaria),9.%,7.7%,55.7%,5.7% 9,97.6% OBU (Ukraine) 8,8.7%,6 9.%,8 9.7%,87 9.%,7 9.5% OBR (Romania),56.%,78.9%,87.7%,9.6%,68.5% OBH (Croatia),897.%,5.9%,67.%,97.% 5,75.9% OBS (Slovakia),89.5% 78.% 878.% 68.% 8.% OBSr (Serbia) 7.8%.%.8% 6.6%.6% CKB (Montenegro) 57.% 7.%.%.% 9.% Merkantil (Hungary),58.7%,9.8%,566.9%,67.%,99.7% Other leasing (Hungary).% 5.6%.% TOTAL 7,8.8% 6,7.6% 6,85.6% 66,6.6% 6,585.%

31 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 that will occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements and forecasts. The statements have been made with reference to forecast price changes, economic conditions and the current regulatory environment. Nothing in this announcement should be construed as a guaranteed profit forecast. Investor Relations & Debt Capital Markets Tel: ; Fax: investor.relations@otpbank.hu