Partner presentation. February 2009

Transcription

1 Partner presentation February 2009

2 OTP Bank Group, Hungary OTP Bank Plc is the largest retail bank in Hungary and one of the largest financial groups in Central and Eastern Europe Over 10 million customers in CEE, including 5 million in Hungary Almost 1300 banking units in CEE, including over 400 branches in Hungary Nearly 2,000 ATMs in Hungary Direct Bank of the Year in million direct customers Operates in 8 countries in the CEE region via its subsidiaries: in Bulgaria - DSK Bank in Croatia - OTP Banka Hrvatska in Romania - OTP Bank Romania in Serbia - OTP Banka Srbija in Slovakia - OTP Banka Slovensko in Ukraine - CJSC OTP Bank in Montenegro - Crnogorska komercijalna banka in Russia - OAO OTP Bank OTP Bank Plc, Hungary, long-term ratings in FC: Moody s: A3 S&P: BBB+ Fitch: BBB 2

3 Contents Operational Environment How OTP Bank manages it Overview of OTP Bank Business Profile and Activities Financial Performance AML & KYC Procedures

4 UKRAINE State governance: Parliamentary-presidential republic Territory: 603,700 sq. km. (5.7% of Europe's territory) Population: ~ 46 mln. (7.3% of Europe's population) Capital: Kyiv (~ 3 mln.) Official language: Ukrainian Central Bank: The National Bank of Ukraine Currency: Hryvnya (UAH) 1 USD = 7.7 UAH as of Ukraine Ratings (S&P / Moody's / Fitch): B+ / B2 / B+ GDP (2008): ~$100B, +2.1% y/y Banks Assets (2008): ~$120B CPI (2008): 22.3% Source: Official Statistics; the NBU 4

5 Macroeconomics GDP growth continues, % YoY In 2008 real GDP grew by 2.1% YoY (down from 7.6% in 2007 and 7.3% in 2006) The highest growth rates were in agricultural sector, forestry, transportation and telecommunication Inflation accelerated to 22.3% YoY in 2008 (up from 16.6% in 2007) IMF forecasts 5% GDP decline in 2009, and annual inflation rate growth of 18.8%. Inflation accelerated, % YoY Real disposable income of the population rose by 11.4% YoY in 11M 08 During 3Q 08 unemployment rate decreased to 6.0% (down from 6.2% in 3Q 07) Source: the NBU 5

6 The National Bank of Ukraine (the NBU) is the independent regulatory body The NBU has been carefully following all the latest developments in the international standards of banking supervision and control over financial markets (recommendations of the Basel Committee) Ukrainian banking law is one of the most advanced in the Ukrainian legislation Ukrainian Banking Sector Sector s net assets, bln $ * As of , 184 banks were licensed by the NBU Sector s branch network consists of 1,314 banking active branches Banks capital amounted to almost $16B, or 13.1% of total liabilities Sector s liabilities amounted to $104.6B and consisted of: 26.5% - retail accounts/deposits, or $27.7B 17.9% - corporate accounts/deposits, or $4.9B Sector s net assets amounted to approximately $120B. Granted loans amounted to 81.5% of the banks total assets Income amounted to $15.7B and included: 73.3% - interest income, or $11.5B 16.2% - fee income, or $2.5B Expenses amounted to $14.4B and consisted of: 45.8% - interest expenses, or $6.6B 2.0% - fee expenses, or $0.3B The NBU s foreign reserves decreased to $31.5B as of ($32.5B year ago) * official USD/UAH rate = 7.7 as of , and 5.05 as of and 2006 NBU monetary reserves, bln $ * Source: the NBU 6

7 Local currency Established in 1996, Ukrainian local currency, Hryvnya, was stable at the level 5.05 (UAH per 1 USD) during During 2008 USD/UAH exchange rate rose sharply by over 50% from 5.05 to 7.70 October December 2008 were the most dynamic months - 1 USD even topped 10 UAH (over 100% of growth compared with the previous levels of ) Since January 2009 USD/UAH stabilized in wide range of Many analysts predict Hryvnya could fall again to 9-10 UAH for 1 USD in 2009 The NBU s official USD/UAH rate Interbank bid rate Interbank ask arte 7

8 As of OTP Bank Ukraine was on the 7 th place by assets and investments portfolio according to the Association of Ukrainian Banks (AUB) TOP 10 Ukrainian banks by assets, in USD mln: TOP 10 Banks Source : AUB official site, according to local accounting standards; official USD/UAH rate = 7.7 as of

9 Contents Operational Environment How OTP Bank manages it Financial Performance Business and Activities Contacts

10 Flexible strategy for current environment Various scenarios have been discussed with further detailed plan elaboration stipulating particular actions to be taken with regard to key business priorities under certain circumstances Key business-priorities: Loan portfolio quality Stable liquidity Client base growth, new clients attraction Existing clients loyalty, fee income increasing Keeping and increasing of deposit base Additional capitalization plan (main shareholder with the participation of large multinational financial organizations) Restructuring of loan portfolio For all Business Lines Centralization of decision making process Crisis Amendments to Credit Policies Stress test of Credit Portfolio Restructuring Policies Organizational Steps Taken Daily ALCO and ALM meetings in new environment Strict monitoring of the Bank s liquidity position on a daily basis; ALCO decides on daily loan disbursements Establishing contingency liquidity stock in both FCY and LCY (equivalent of EUR 106 mln and EUR 92 mln as of the EoY 2008) More provisions for loans Active Liquidity Management Strategy Going Forward Maintain the liquidity buffer for both LCY and FCY and accummulate liquidity for financing interbank liabilities coming due in 2009; Continuing practice of adjusting loan portfolio growth to deposit dynamics and available funding options; Further work on new external funding, maintaining relationships with key creditors; Careful monitoring of market trends and maintaining adequate pricing of assetand liability-side products; Restructuring of loan portfolio, careful provisioning policy; Development of deposit collection programs 10

11 Priorities for 2009 Preparing for the challenges of 2009, OTP Bank s management set clear priorities by focusing on a few key areas Top priority areas Implementing wide scale of risk management tools Immediate launch of cost cutting initiatives Major actions Restructuring of Loan Portfolio in all segments Tighting credit policy Improvement of collection Collateral management / monitoring LLP provisions Reviewing rental contracts and reducing the rental fees (appr. -25% of the rental fees) Optimization of marketing costs Head count optimization (Personal cost cutting, fulfillment of H.O. recommendation) appr. 10% of total staff Continuing the corporate repricing program started in 2008 Maintaining the re-pricing process during renewal and restructuring of existing limits Constant re-pricing of UAH and foreign currency denominated tranches and overdrafts in accordance with market conditions in terms of interest rate and maturity New KPIs focusing on re-pricing to be introduced into Motivation System Improving deposit collection efforts Implementing a Term deposit roll-over service Implementing a Deposit constructor for PB clients Implementing a Fresh money product Developing a structured deposit product Running product campaigns on a regular basis 11 11

12 Direction of Investments Our customer is our priority in doing business We have strong position and performance in Ukrainian corporate business Our corporate customers are among TOP 100 largest enterprises and corporate holdings in Ukraine TOP Ukrainian exporters are among our clients: Manufacturing; Metallurgy; Mining; Food producers; etc. Funds available for investments in OTP Bank goes to support our corporate clients which are base for stable growth of Ukrainian economy 12

13 Contents Operational Environment How OTP Bank manages it Financial Performance Business and Activities Contacts

14 Main balance figures Assets, USD mln Loan portfolio (after provisioning), USD mln * * Deposits from customers, USD mln Source: IFRS Accounts, * Under IFRS, consolidated, non-audited, based on December monthly data supply * Share Capital, USD mln Shareholders' Equity, USD mln * 14

15 Assets Quality Historically, OTP Bank has high quality level of its loan portfolio As of the NPL level was approximately 3.6% of total loans Due to the current market conditions NPL is expected to grow, but such increase is being managed and controled Provision for possible loan losses, USD mln Provision/gross loan portfolio, % * 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 3.0% 2.3% 1.4% 1.5% 0.9% * Source: IFRS Accounts, * Under IFRS, consolidated, non-audited, based on December monthly data supply 15

16 Income figures and results Net interest income, USD mln Net non-interest income, USD mln * * Operating income (before provisioning), USD mln * Source: IFRS Accounts, * Under IFRS, consolidated, non-audited, based on December monthly data supply Net profit after tax, USD mln * 68 16

17 Major ratios 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% ROAE, % 32.1% 29.7% 24.8% 23.5% 20.5% * 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% ROAA, % 3.2% 3.4% 2.6% 2.3% 1.8% * 50.0% 40.0% Cost/Income Ratio, % 39.7% 36.2% 35.9% 46.2% 34.8% 30.0% 20.0% 10.0% 0.0% * Source: IFRS Accounts, * Under IFRS, consolidated, non-audited, based on December monthly data supply 17

18 Capitalization Strong and growing capital base Historically high capital adequacy ratios Share Capital, USD mln Shareholders' Equity, USD mln Capital adequacy ratio under local standards (NBU) (should be no less than 10%): Actual Q % Actual YE % Capital adequacy ratio under Basel accord (BIS) % * 2009 Capitalization Plan: 1) February 2009 attraction of subordinated loan in amount of $50 million from the parent company 2) March-April 2009 share capital increase by equivalent of $100 million and its registration with the NBU Capital Adequcy, % Tier 1 ratio, % * Source: IFRS Accounts, * Under IFRS, consolidated, non-audited, based on December monthly data supply 18

19 Contents Operational Environment How OTP Bank manages it Financial Performance Business and Activities Contacts

20 BUSINESS PROFILE KEY HIGHLIGHTS, as of Total Assets: US$4,379M (# 7 according to AUB rating) Gross customer loans: US$3,888M (# 7 according to AUB rating) Retail Loans: US$2,177M (#5 according to AUB rating) Market Share by Segment (as of 2008), % Corporate Loans US$1,639M (#9 according to AUB rating) Corporate Deposits US$3,381M (#1 according to AUB rating) branches, 137 outlets, 29 rep.offices nationwide 1.0 Over retail clients (the Bank doubled its customer base in 2 years) Over SME clients 0.0 Total Assets Total Loans Retail Loans Corporate Loans Corporate Deposits Over corporate clients Source Company Reports, NBU Source Company Reports, AUB 20

21 OTP Bank is Universal dynamically growing bank, acknowledged leader of financial market in Ukraine, which is a part of strong European OTP group Full service commercial bank, as independent participant of the international market providing tailormade products Known by the high quality of services, efficiency and professional team Complies with Basle norms Positions itself as one of the leading banks in Ukraine 21

22 Competitive Advantages + Advanced and well-established processes + Nationwide distribution platform + Corporate banking is one of the principal business segments + Over corporate customers as of 1 December No extra-large companies who require specific risk management + Focus on market leaders with transparent strategies and strong management teams + Effective cross-selling of banking products + Customer-focused relationship managers + HQ-based product expert teams + Significant accumulated expertise + Client solutions focused approach 22

23 History at a glance September 2007 Restyling. OTP Bank in Ukraine has now new modern image 1998 Raiffeisenbank Ukraine was founded. March 2, 1998 registration with the NBU November 2006 OTP Bank Plc, Hungary, became a 100% owner of Raiffeisenbank Ukraine and the bank was renamed to OTP Bank accordingly 1994 Representative office of Raiffeisen ZentralBank, RZB, Austria in Ukraine 23

24 International Ratings CJSC OTP Bank has the following international ratings by Moody s: Bank Deposits Foreign Currency (Long/Short-term) Bank Deposits Local Currency (Long/Short-term) NSR Bank Deposits Local Currency (Long-term) Bank Financial Strength Rating B2/NP Ba1/NP Aa1.ua D the highest possible ratings among Ukrainian banks 24

25 Awards in 2008 «Best Company of Finance Market» «The Most Professional Bank» «Best Kyiv Commercial Bank» «10 Best Learning Companies» The Best of «50 Best Employers» Top 5 of the «Best Employers in Banking» «The Most Transparent Bank» «InvestGazeta» magazine «Business» financial magazine «Kyiv Post» magazine Leading HR-magazine «Personnel Training» «Delovoy» magazine «Correspondent» magazine Standard and Poor s «The Most Styled Bank» «Best Service Quality Bank» «Delo» newspaper 25

26 Branch Network Over 150 banking units and 35 representative offices throughout Ukraine Lviv KYIV Kharkiv Present in every major region of Ukraine Growing number of branches: Vinnitsa Odesa Dnipropetrovsk Zaporizhie Donetsk Simferopol E 2010E 26

27 Main areas of activity Corporate banking OTP Bank, being one of the largest financial institutions in Ukraine, renders the full range of services, constantly broadening spheres of activity Retail banking SME banking Financial services International activity 27

28 CJSC OTP Bank, Ukraine, provides its clients with a full range of services, including among others: Financial markets services Structured Trade Finance Documentary operations Corporate bonds Deposits Custody services Current accounts Incoming/outgoing payments in local currency Incoming/outgoing payments in foreign currency Foreign currency exchange operations Cash operations Cash management Payment card products Salary projects Investment expertise Securities brokerage DEPO deals & REPO transactions Bond origination and underwriting Repatriation of investments Professional expertise

29 Income earning assets 15% 2% 42% 3Q % Corporate Business Treasury Segmentation Comparing with Q interest income in 3Q increased by UAH mio. Retail Business SME Net commission result 3Q % 18% 13% 77% Note: non-allocated net commission result is UAH mio (-10%) Source: OTP Bank Internal Data In 3Q 2008: Trading result increased by UAH mio. Total amount of operating costs didn t change significantly (UAH mio). Staff expenses rose by UAH 0.60 mio Depreciation rose by UAH 2.08 mio Other administrative costs decreased by UAH 3.5 mio. 29

30 Strong Position in Corporate Banking Loans to Legal Entities, US$ mln Corporate and SME Customers (as of 01/12/2008) Well-experienced team in Project and Structured Trade Finance * Source: IFRS accounts, *AUB rating High flexibility to achieve tailor-made solutions Exposure details: Project Finance 31.94% Structured Trade Finance 26.92% 10 biggest corporate borrowers 23.15% Source: OTP Bank internal data 30

31 Retail Banking Number of clients - Individuals Retail Lending Structure, As of , IFRS Other 21% Consumer finance 1% Car loans 19% Mortgages 59% Source: OTP Bank internal data 2500 Loans to individuals, US$ mln * 5 th in Ukraine by Retail Loans Thorough expanded range of attractive products Market-leading banking expertise Successful introduction new products and penetration new geographic areas Making prudent credit decisions Source: IFRS Accounts, *AUB rating 31

32 Banking cards As of 3Q 2008: 329 POS terminals 169 ATMs 914 salary projects Credit card product: Cross-selling time-deposit + Visa credit card was launched starting from February 2008 The new credit cards sales channel using OBU corporate website was launched starting from the end of March Debit card product: Average balance on debit card is 235 euro Internet Banking: New innovative product: otpdirect Number of issued cards Q2008 Credit cards Debit cards VISA 48.79% AMEX 0.02% OTP Bank issues and services cards of the largest payment world-wide systems, including: VISA INTERNATIONAL EUROPAY (Master card, Cirrus/Maestro) AMERICAN EXPRESS (distribution) Master Card 51.19% 32

33 International activity Strong relationships with world-known financial institutions Increase and diversification of stable long-term sources of funding in the international markets Perfect credit history Access to International Capital Markets Several hundreds of US$ mln utilized clean limits Leading Financial Institutions OTP customers Over 40 correspondent banks world-wide A number of partner banks established limits for trade finance and money market operations on short-term basis as the result of trust and even at present are ready to finalize the deals on a case-by case basis 33

34 Main achievements in debt capital markets May 2007 debut syndicated loan facility: US$ 150 million 1 year Libor % MLA: RZB. Successfully repaid in 2008 September 2008 syndicated loan facility: US$ 100 million Tranche A: 1Y US$ 63 million, Libor % Tranche B: 2Y US$ 37 million, Libor % MLAs: RZB and BayernLB The last successful deal for a Ukrainian bank in 2008 October 2008 agreement with EBRD under Energy Efficiency Program (UKEEP): US$ 50 million 5 years 34

35 Contents Operational Environment How OTP Bank manages it Financial Performance Business and Activities Contacts

36 Contacts Member of the Board Mr. Igor Belomitcev Tel.: Closed Joint Stock Company OTP Bank Head of Treasury and Financial Institutions Mr. Vladislav Anisimov Tel: Fax: Mail address: 43 Zhylyanska St. Kyiv Ukraine Head of Debt Origination and Capital Markets Mr. Mykhaylo Vidyakin Head of Financial Institutions Mrs. Tetiana Petruniok Tel: Tel/Fax: Tel/Fax:

37 Disclaimer This presentation has been prepared by CJSC OTP Bank, Ukraine (the Bank ). The Bank does not accept any responsibility or liability for any loss (whether direct, indirect, consequential or other) arising from any use of this document or its contents. This presentation does not constitute an invitation to acquire, or an offer for subscription, purchase or otherwise of any securities of the Bank or for the benefit of the Bank and is not intended to provide the basis for any credit and should not be considered as a recommendation that any investor or partner should subscribe for or purchase any securities or perform any other actions. Information contained in this presentation shall not be distributed in the United States or appear in a publication with a general circulation in the United States. The information contained herein is subject to change without notice and past performance is not indicative of future results. No person is authorised to give any information or to make any representation not contained in and not consistent with this presentation and, if given or made, such information or representation must not be relied upon as having been authorised by or on behalf of the Bank. This presentation may not be reproduced (in whole or in part) to any other person without the prior written consent of the Bank. This presentation contains forward-looking statements. The words believe, expect, anticipate, intend and plan and similar expressions identify forward-looking statements. All statements other than statements of historical facts included in this presentation including, without limitation, those regarding the Bank s financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to our products), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Bank s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Bank s present and future business strategies and the environment in which the Bank will operate in the future. Further, certain forward-looking statements are based upon assumptions of future events which may not prove to be accurate. The forward-looking statements in this presentation speak only as at the date of this presentation. This presentation is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. 37