OTP Bank First Half 2 Performance Presented by: Dr. Zoltán Spéder CFO September 2
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 profit forecast. OTP Bank 1H 2 results
Macro assessment 2 2 24 (tax cut) 24 (no tax cut) Real GDP growth 3.3% 2.7% 2.6% 2.2% Inflation (average) 5.% 4.7% 6.7% 6.7% Nominal wage increase 16.% 8.% 5.% Consumption 7.8% 6.% 1.8% 1.% Household consumption 8.8% 6.4% 1.9% 1.% Investment growth 5.9% 3.% 3.2% 3.2% ESA95 Balance HUF -1,574 bn HUF -1,4 bn HUF -897 bn HUF -897 bn as a % of GDP -8.4% -5.4% -4.5% -4.5% Current Account Balance EUR -2.8 bn EUR -4.5 bn EUR -4.7 bn EUR -4.7 bn as a % of GDP -4.4% -5.2% -4.6% -4.6% 1yr T-bill yield (average) 9.% 8.6% 8.6% OTP Bank 1H 2 results
Interest rate environment 2 1.% 9.5% 9.% 8.5% 8.% 7.5% 7.% 6.5% 6.% 5.5% 5.% 4.5% 4.% 2-Jan Jan 27-Feb 27-Mar 24-Apr 22-May 19-Jun 17-Jul 14-Aug 11-Sep M3 M6 Y1 Y3 Y5 Y1 Y15 2w repo OTP Bank 1H 2 results
EUR/HUF environment 2 274 % -1% 269 264 259 254 249 244 239-2% -3% -4% -5% -6% -7% -8% -9% -1% -11% -12% -13% -14% 234 2- Jan 6- Feb 13- Mar 17- Apr 27- May 2- Jul 6- Aug -15% rate bottom of band from center (Rh) OTP Bank 1H 2 results
Evolution of banking system 18, 9% 16, 14, 16,6 65.1% 65.3% 65.1% 64.% 64.5% 14,9 63.9% 65.2% 8% 7% 12, 13,75 6% 1, 8, 8,54 1,87 11,499 32.3% 32.2% 36.7% 5% 4% 6, 6,893 22.6% 24.7% 24.6% 26.3% 3% 4, 2% 2, 1% 4,488 5,577 6,571 7,373 8,427 9,521 1,825 1996 1997 1998 1999 2 2 2 Total banking assets GDP Toal assets as % of GDP Loan/GDP Source: NBH, NSB, OTP Note> GDP data for 31 March 2 is annualized % OTP Bank 1H 2 results
Loan growth in 2* (Y-on-Y) 45% 4% 35% Corporate 42.% 36.8% 34.7% 3% 26.6% 25% 29.8% 22.6%22.% 2.2% 18.6% 2% 14.1% 19.7% 13.3% 15% 1% 14.7% 11.9%11.3% 11.3% 5% 9.6% 7.2% 5.8% 7.5% % 7% 6% 5% 4% 3% Municipality 25.4%31.3%35.5%35.6% 29.3% 2% 7.7% 11.8%12.2% 25.5% 1% 14.9% % 7.1% 3.4% 4.8% 27.4% 47.5% 38.2% 41.5% 58.3% 5.4% 44.5% Bank system OTP Bank system OTP Retail Total loans 8% 63.4% 67.6%72.2% 71.% 7% 71.3% 6% 45.3% 47.8% 52.2% 49.1% 46.1% 46.9% 5% 54.8% 4% 43.3% 41.7% 3% 37.2% 3.2% 2% 27.7% 23.2% 22.4% 1% % -3.2% -1% 5% 45% 4% 35% 3% 25% 2% 15% 1% 5% % 39.2% 4.9% 45.5% 29.6% 3.5% 31.7% 23.3% 25.3% 24.% 19.7% 23.7% 25.3% 19.8% 19.4% 21.4% 18.8% 21.4% 11.5% 15.6% 13.9% Bank system OTP *Based on new NBH specification used since 1 January 2. Source for sector data: NBH OTP Bank 1H 2 results Bank system OTP
Macro: Selected components of RFA 4, 3,6 3,435 97 CAGR (Rh-scale) 8% 7% 3,2 67.2% 6% 2,8 5% 2,4 31.2% 3.5% 4% 2, 3% 1,6 16.3% 1,639 11% 14.2% 2% 1,2 8 4 494 1,9 -.3% 58 57 Cash HUF Cash FX Bank dep HUF 3.3% 622 525 Bank dep FX 474 95 Non eq. securities -11.2% 283 152 BSE shares 2 841 Mutual funds 154 624 Life ins. Reserves 57 854 Pension fund assets 1% % -1% -2% OTP Bank 1H 2 results
Market share total assets 14, 3% 12, 1, 8, 6, 25.% 24.%24.% 23.3% 22.8%22.9% 22.8% 22.7% 22.1% 22.3%22.3% 23.2% 22.7% 22.1% 22.5% 2.7% 15.5%16.6%16.6%17.3%18.1% 16.3% 15.9%15.8% 15.6%15.3% 15.7% 14.5% 14.6% 15.% 15.% 14.% 25% 2% 15% 4, 2, 1,754 1,768 1,865 1,813 1,865 1,931 1,945 1,969 2,4 2,127 2,164 2,185 2,258 2,39 2,534 2,522 5% 1% 99 99 % Bank sector OTP Bank Market share-total assets Market share-total loans OTP Bank 1H 2 results
Balance sheet, interest income 3, Assets, liabilities +15.4% 2,5 Loans, deposits +12.2% 2,5 2, 1,5 1, 5 13% 12% 11% 1% 9% 8% 7% 6% 5% 4% 3% 921 1H assets 1,8 1H liabilities 952 2 assets 2, 2 liabilities 997 1H assets 2,5 1H liabilities customer treasury non interest earning/yielding 11.9% 11.2%11.1%11.2%11.2%11.%11.%1.9% 9.7% 9.5% 9.6% 9.7% 8.5% 8.5% 6.8% 6.5% 6.3% 6.2% 5.7% 5.6% 5.6% 5.5% 4.7% 4.5% 4.5% 4.5% 3.9% 3.5% 4.8% 4.54% 4.78% 5.4% 5.8% 4.6% 4.94% 5.6% 4.6% 4.63% 4.7% 4.7% 4.31% 4.59% 1Q 1H 9M 12M Yields, spread 1Q 1H Asset yield Spread 9M 12M 1Q 1H 9M 12M Liability yield Margin 1Q 1H 2, 145 1 1 342 359 284 +1.8% 1,5 1, 53 63 67 1,4 1,524 548 559 621 5 1,548 32 33 39 1H loans 1H 2 loans 2 1H loans 1H deposits deposits deposits retail corporate municipal other Net interest income 1 9 8 7 42.2 43.9 38.4 6 5 97.5 91.2 4 95.1 3 49.1 53.6 56.7 2 1 1H inc. 1H exp. 1H NII 2H inc. 2H exp. 2H NII 1H inc. 1H exp. 1H NII OTP Bank 1H 2 results
Non interest income 45 4 35 3 25 2 15 1 5-5 25 Non interest income components +59.1% 32 4 1H 2H 1H Non int. income/total income Other Property transactions Forex trading Securities trading Net fees & commissions Fee and commission income 5 +6.1% 4 3 2 1 1H 2H 1H account management loans Deposits Retail current acc. Securities. Card business Other Non int. income/average total assets 45% 4% 35% 3% 25% 2% 15% 1% 5% % 41.1% 42.7% 35.% 1H 2H 1H 4.% 3.5% 3.% 2.5% 2.% 1.5% 1.%.5%.% 3.33% 3.43% 2.51% 1H 2H 1H non interest / total income non interest income/ total assets (annualized) OTP Bank 1H 2 results
Non interest expenses Non interest expenses Cost/income ratio 55 5 45 4 35 3 25 2 15 1 5 22.1 5.4 16.4 +13.8% 24.8 5.7 25.3 5.8 21.2 18.8 1H 2H 1H personnel depreciation operational 6% 58% 56% 54% 52% 5% 48% 46% - 755 bp 58.% 56.7% 5.4% 1H 2H 1H cost income ratio Non int. expenses/total assets 2.5% 2.2% 2.1% 2.1% 2.% 1.9% 1.5% 1.5% 1.5% 1.%.5%.5%.5%.5%.% 1H 2H 1H personnel depreciation operational annualized Cost rationalization 9,4 14% 9, 12% 1.% 9.8% 9.2% 12.1% 8,6 1% 8,2 9.7% 8% 7,8 5.3% 8,77 6% 7,4 5.4% 8,293 8,497 4% 4.1% 8,137 7, 2% 9,6 8,435 8,188 8,569 6,6 % 1999 2 2 2 Average employment Year end employment Inflation Growth in non-interest expenses OTP Bank 1H 2 results
Provisioning/loan losses HUF mn Provision structure Provisions/Operating income 8, 6, +49.% 21% 18% 15% 17.4% 2.1% 16.9% 4, 2, 5,376 3,435 3,67 1H 2H 1H loan loss HAR mandatory+other general risk 12% 9% 6% 3% % 1H 2H 1H provisions&loan losses / operating income Provision/Total receivables Provisions/Average total assets 1.2% 1.%.8%.82% 1.5%.72%.8%.7%.6%.5%.52%.71%.67%.6%.4%.4%.3%.2%.2%.1%.% 1H 2H 1H loan loss provisions / receivables (annualized).% 1H 2H 1H total provision / average total assets (annualized) OTP Bank 1H 2 results
Loan quality Qualified receivables as % of total receivables Qualified receivables as % of customer receivables 6% 8% 5% 4% 2.% 1.% 2.1% 1.4% 1.4% 1.6% 1.6% 1.2% 1.5% 6% 1.4% 2.7% 2.4% 2.2% 2.7% 1.6% 1.8% 1.7% 1.7% 3% 4% 2% 2% 1% % 3.7% 3.4% 2.4% 2.6% 2.6% 3.% 2.7% 3.2% 3.1% % 5.% 4.5% 3.4% 3.4% 3.3% 3.8% 3.4% 3.9% 3.7% Problem To be monitored Problem To be monitored OTP Bank 1H 2 results
Loan quality Qualified loans Provisions, coverage 6 6 59.2% 6% 55 5 45 4 35 19 2 17 16 15 13 11 15 9 18 8 8 18 17 5 4 5.2% 48.6%48.% 4.4%4.3%4.1% 37.8% 37.3% 5% 4% 3 25 2 15 1 13 2 12 2 2 1 8 3 3 18 18 4 26 15 12 13 6 17 18 17 17 3 2 1 43.7 54.5 44.6 47.3 57.1 57.3 51.4 55.7 55. 25.8 27.3 21.7 22.7 23.1 23.1 2.6 21.1 2.5 3% 2% 1% 5 1 To be monitored Below average Doubtful Bad Qualified Provision Coverage % OTP Bank 1H 2 results
Retail deposits Volumes, market share Retail current account deposits 1,4 1,2591,255 1,279 1,2 4.8% 1,77 1,981,1131,138 39.9% 988 995 1, 44% 42% 4% 6 5 4 3 2 395 235 253 422 443 311 316 468 378 59 8 6 4 39.1% 39.4%39.4% 39.1%39.2% 37.6%37.5% 37.2% 36.9% 36.2%36.2% 35.8% 36.% 35.4% 35.7% 35.6% 38% 36% 34% 1 sight term Yields, spread 2 317 324 329 312 289 284 265 262 269 HUF HUF market share FX FX market share 32% 3% 2% 18% 16% 14% 12% 1% 8% 6% 4% 2% % 17.6% 13.2% 15.9% 11.4% 4.4% 4.5% 4.7% 15.1% 15.1% 14.9% 1.5% 11.4% 3.7% 12.% 2.9% 2Q 3Q 4Q 1Q 2Q asset yield liability yield spread OTP Bank 1H 2 results
Retail loans 3 25 2 15 1 5 46.6%46.7% 49.% 42.7% 151 152 2 273 43.4% 44.3% 212 2 187 129 115 35% 119 124 117 122 123 1 17 112 27.2% 91 25.1% 24.3% 21.% 21.9% 21.8% 25% 21.1%21.2%2.9% 19.8%18.4% Housing Housing market share Volumes, market share Consumer 17.1% Consumer market share 65% 55% 45% 15% 6 5 4 3 2 1 99 6 5 4 3 2 1 Old 1989 1994 2 2+2 Mortgage bank 35 25 31 31 35 31 29 29 Housing loans Subsidized housing loans 42 44 45 45 37 31 27 35 35 Jan- Feb- Apr- May- 57 39 39 Approval Disboursement Transfer to MB 34 Jul- OTP Bank 1H 2 results
Distribution technology Bank cards ATMs 2,, 1,25 1,228 51% 1,75, 1,5, 1,25, 1,2 1,15 1,112 1,127 1,151 1,168 1,183 48% 45% 42% 1,, 75, 1,1 1,72 1,83 1,91 39% 1,5 5, 36% 25, 1, 33% 95 3% Cirrus maestro EC/MC Visa FX Other corp. Othr HUF ATM Market share (est) POS terminals HáziB@NK users 2,2 7% 19,4 65% 24, 18,6 17,8 6% 2, 17, 55% 16, 16,2 15,4 5% 12, 14,6 13,8 45% 4% 8, 13, 12,2 35% 4, 11,4 POS Market share (est.) 3% 99 99 99 OTP Bank 1H 2 results
Corporate business Corporate loans Corporate deposits 58 4 15.7% 6 551 14.% 37 541 57 519 341 35 321 5 13.3% 13.5% 3 27 263 12.9% 4 13.% 25 3 12.2% 12.5% 2 13.1% 12.8% 11.9% 15 12.6% 12.5% 2 11.7% 12.% 1 1 11.5% 5 14 18 21 17 18 11.% 16.% 15.% 14.% 13.% 12.% 11.% Corporate SME Entrepreneurs Non-profit market share Yields, spread 1% 8.62% 8.43% 8.69% 8% 6.86% 6.8% 5.71% 5.27% 5.57% 6% 3.8% 3.9% 4% 2% 2.91% 3.16% 3.12% 3.6% 2.91% % 2Q 3Q 4Q 1Q 2Q 7 6 5 4 3 2 1 542 HUF deposits FX deposits market share 588 557 579 62 3.6% 34.2% 36.1% 33.2% 32.4% 37 4 38 43 43 11 14 14 14 14 Loan quality 6% 5% 4% 3% 2% 1% % asset yield liability yield spread total rec. qualified provision Coverage OTP Bank 1H 2 results
Municipality business Municipal loans Municipal deposits 8 7 6 5 4 3 2 1 63.3 66.5 6.7 53. 53.7 64.% 63.3% 58.8% 55.4% 55.6% 68% 66% 64% 62% 6% 58% 56% 54% 52% 18 16 14 12 1 8 6 4 2 169 154 145 78.8% 73.8% 1 74.1% 1 66.5% 6.4% 85% 8% 75% 7% 65% 6% 55% 5% loans market share deposits market share Yields, spread Loan quality 12% 1% 8% 6% 4% 2% % 1.6% 8.8% 9.4% 8.5% 6.7% 4.8% 4.9% 4.8% 4.5% 5.8% 2.9% 4.1% 4.5% 4.% 3.8% 2Q 3Q 4Q 1Q 2Q asset yield liability yield spread 1 9 8 7 6 5 4 3 2 1 75 77 56.3% 55.4% 85 83 65.1% 89 66.4% 1.%.3.3 1.9.3.2.2.2.2.2.2 9% 8% 7% 6% 5% 4% 3% 2% 1% total rec. qualified provision Coverage % OTP Bank 1H 2 results
Equity, CAR 25 225 2 175 15 125 1 8.% 8.2% 8.6% 8.7% 9.5% 175 185 26 219 238 Equity, gearing equity gearing 9.9% 9.7% 9.5% 9.3% 9.1% 8.9% 8.7% 8.5% 8.3% 8.1% 7.9% 7.7% 7.5% HUF 9 8 7 6 5 4 3 2% 16% 12% 8% 4% % 595 1.1% 625 1.% 662 735.8% 784.8% 852.8% 11.5% 11.3% 12.6% 14.% 14.9% Book value per share Capital adequacy Tier 1 Tier 2 OTP Bank 1H 2 results
Efficiency, productivity HUF mn 3 9, HUF mn 12 8,9 29 8,836 287 293 8,9 8,8 11 8,8 8,752 8,8 28 27 8,566 8,789 8,77 273 8,6 8,7 8,6 8,5 1 9 8 8,5 8,569 1.4 8,7 8,6 8,5 26 255 257 8,4 8,3 7 8,44 8. 8,4 25 8,2 8,1 6 5 5.2 6.1 5.9 8,3 8,2 24 8, 4 2Q 3Q 4Q 1Q 2Q 8,1 Total assets/employee Employees average employees PAT/employee OTP Bank 1H 2 results
Performance indicators Non-interest vs. total income Cost income ratio 5% 45% 4% 35% 3% 25% 2% 15% 1% 5% % 44.3% 42.7% 35.3% 36.7% 38.6% 1H2 9M 2 2 1Q 2 1H2 7% 6% 5% 4% 3% 2% 1% % 57.8% 56.7% 57.2% 48.1% 5.4% 1H2 9M 2 2 1Q 2 1H2 Provisioning vs. operating income Provisioning vs. customer receivables 21% 19% 17% 15% 17.4% 18.4% 18.9% 16.9% 1.2% 1.%.8%.82%.93%.95% 1.%.72% 13% 12.%.6% 11% 9% 7%.4%.2% 5% 1H2 9M 2 2 3M2 1H2.% 1H 2 9M 2 2 3M2 1H2 OTP Bank 1H 2 results
Bank ROA, ROE ROAE annualized ROAA annualized 4% 3.3% 35% 3.1% 3% 2.9% 25% 2.7% 2% 2.5% 2.3% 15% 2.1% 1% 1.9% 5% 1.7% % 2 1H 2 1H ROAE nominal ROAE real Strategic target (real, min.) 1.5% 2 1H 2 1H ROAA Strategic target OTP Bank 1H 2 results
Consolidated subsidiaries HUF million rounded 1H2 1H2 1H/1H Merkantil Bank Ltd. 1,2 1,111-7.4% Merkantil Car Ltd. 354 55 42.7% Merkantil Bérlet Ltd. 39 71 82.1% OTP Building Society Ltd. 997 334-66.5% OTP Mortgage Bank 315 3,511 14.6% OTP Banka Slovensko a. s. (84) 1 221.4% OTP-Garancia Insurance Ltd. 85 1,2 28.2% OTP Fund Management Ltd. 1,621 2,68 27.6% HIF Ltd. 14 148 5.7% OTP Real Estate Ltd. 486 649 33.5% OTP Factoring Management Ltd. 29 24-17.2% OTP Factoring Ltd. 487 382-21.6% Bank Center No I. Ltd. 79 42-94.7% OTP Fund Servicing and Consulting Ltd. 3 2-33.3% OTP Mérleg Ltd. (53) 53 2.% Other subsidiaries 67 222 231.3% Pre-tax profits of subsidiaries 7,223 1,274 42.2% Consolidated pre-tax profits 31,319 5,774 62.1% Subsidiaries' proportion 23.1% 2.2% -2.8% OTP Bank 1H 2 results
Results of selected subsidiaries Results before consolidation for 1H 2 HUF million Merkantil Bank Ltd. Merkantil- Car Ltd. Merkantil Bérlet Ltd. OTP Building Society Ltd. OTP Mortgage Bank Ltd. OTP Banka Slovensko a.s. OTP- Garancia Insurance Ltd. OTP Fund Managemen t Ltd. HIF Ltd. OTP Real Estate Ltd. OTP Factoring Ltd. Total interest income 4,541 4,57 1,876 23, 4,44 379 18 Total interest expense 1,351 1,741 641 11,199 2,292 128 15 Net interest income 3,189 2,829 1,235 11,831 2,148 251 2 Net fees & commissions -766-1,143-2 -285-6,657 449-1,76 2,181 56-17 -1 Non interest income -57-87 1,411-293 -6,693 877 29,14 2,452 16 2,89 1,241 Share of non interest income in total income -18.9% -44.4% 1.% -31.1% -13.3% 29.% 1.% 1.% 29.7% 1.% 99.8% Total income 2,683 1,959 1,411 942 5,137 3,5 29,14 2,452 357 2,89 1,244 Operating costs 1,434 55 1,341 61 1,627 3,192 27,991 385 278 1,45 598 Cost/Income ratio 53.4% 28.1% 95.% 64.8% 31.7% 15.5% 96.2% 15.7% 77.7% 69.4% 48.1% Operating income 1,249 1,49 7 332 3,511-167 1,113 2,67 8 639 645 Provisions and loan losses 139 9-2 -27 81-68 -11 263 Income before income taxes 1,111 55 7 334 3,511 1 1,2 2,67 148 649 382 Taxes 167 177 13 149 632 25 39 44 117 7 After tax profits 944 328 58 185 2,879 1 827 1,677 1 532 312 OTP Bank 1H 2 results
Consolidated indicators 45 4 35 3 25 2 15 1 5 After tax profits 4.9 29.2 25.8 1H 2H 1H HUF 16 15 14 13 12 11 1 9 8 7 6 5 Undiluted EPS 159.16 114.9 1.59 1H 2H 1H ROAA (annualized) ROAE (annualized) 3.1% 2.6% 2.2% 1.7% 2.14% 2.2% 2.18% 2.9% 2.9% 35% 3% 25% 2% 33.3% 32.2% 28.7% 26.7% 27.1% 27.9% 26.2% 21.7% 2.8% 2.9% 1.3% 15%.9% 1%.4% 5%.% 1H 9M 2 1Q 1H % 1H 9M 2 1Q 1H OTP Bank 1H 2 results Nominal Real
2 Bank targets Balance sheet Year end HUF mn 2 2 Change Target Balance sheet total 2,39,12 2,586,921 8.2% 2,522,64 Loans 951,747 1,82,714 13.8% 997,6 Retail 329,829 31,127-6.% 39,368 - Housing 212,39 173,524-18.3% 186,775 - Consumer 117,439 136,593 16.3% 122,593 Corporate 558,59 7,259 25.9% 621,15 Municipal 63,328 69,328 9.5% 66,533 Loan to asset ratio 39.8% 41.9% 5.1% 39.5% Shareholders equity 25,843 289,181 4.5% 238,438 OTP Bank 1H 2 results
2 Bank targets Profit generation HUF billion 2 Target Change 1H 2 Interest income 188.8 17.6-9.6% 95.1 Interest expenses 86.1 63.5-26.2% 38.4 Net interest income 1.7 17.1 4.2% 56.7 Net fee and commission income 64.4 85.2 32.1% 4. Total income 167.2 192.2 15.% 99. Personnel expenses 37.6 4. 6.6% 18.8 Total non-interest expenses 95.6 18.8 13.9% 49.9 Operating profit 71.6 83.4 16.5% 49.1 Risk expenses 13.5 13.6.3% 8.3 Pre-tax profit 58.1 69.8 2.2% 48.1 After tax profit 47.2 57.4 21.6% 4.3 OTP Bank 1H 2 results
2 Bank targets BSC indicators 2 2 Target Change 1H 2 Net interest margin 4.7% 4.45% -.25% 4.59% Non interest income/total income 38.6% 44.3% 5.7% 42.7% Cost income ratio 57.2% 56.6% -.6% 5.4% ROAA 2.9% 2.31%.22% 3.28% ROAE 25.9% 25.4% -.5% 36.3% Real ROE 2.6% 2.4% -.2% 32.% Dividend payout ratio (per share) HUF 6 HUF 6 n. m. OTP Bank 1H 2 results