OJSC "OTP Bank" Presentation for investors. 9 September 2011

Transcription

1 OJSC "OTP Bank" Presentation for investors 9 September 2011

2 Team Overview Alexey Korovin, Chairman of the Management Board and President Sandor Pataki, Director of Sandor Pataki, Director of Investor Relations and Debt and Capital Markets Department of OTP Bank Plc.

3 Table of Contents 1. Overview of OJSC "OTP Bank" 1 2. Key Business Segments 6 3. Financial Overview 8

4 1. Overview of OJSC OTP Bank

5 OJSC OTP Bank Overview OJSC OTP Bank, hereinafter OTP Bank (Investsberbank before February 2008) was established in In December 2006 the bank became a member of OTP Group, an international financial group OTP Bank Plc. controls 95.9% of OJSC OTP Bank Key focus: To grow as a universal financial institution with main focus on retail business To be the key subsidiary of OTP Group and top-20 Russian bank by profitability Ratings: Ba1(Moody s) / BB (Fitch) Key Financials, 1H11 RUB bln Total Assets 92.5 Total Shareholder s Equity 17.2 Customer Loans 77.5 Customer Deposits 56.4 Net Income 2.6 Provisions 8.7 NIM, % 17.9% ROA, % 5.4% ROE, % 32.5% Source: IFRS 1H11 Wide geographical presence in Russia: Kaliningrad St.Petersburg Moscow Tver Yaroslavl Lipetsk N. Novgorod Rostov Krasnodar Perm Samara Yekaterinburg Novorossiysk Chelyabinsk Tyumen Sochi Kurgan Omsk Tomsk Krasnoyarsk Barnaul Novosibirsk Irkutsk Novokuznetsk Ulan-Ude Chita Ulan-Ude Regional branches & POS POS only No presence 2,500,000 permanent clients Over 3,300 cities (inc. 36 cities presence of classic network) More than 4,900 employees (excluding selling agents) More than 17,300 agents employed by the bank More than 22,000 points of sales 158 retail branches 216 АТМs Approved for trade facilitation programs and added to the Confirming banks list by both EBRD and IFC Source: OJSC "OTP Bank" information and 1H11 IFRS financials, OTP Group 1H11 management report 2

6 History of Development Moving Ahead With OTP Group OTP Bank placed it s debut 3Y bond for the amount of RUB 2.5 bln on March 29, 2011 On August 2, 2011 the Bank placed the second 3Y bond for the amount of RUB 5 bln The Bank has additional RUB bond program registered on MICEX for the total amount of RUB 10 bln The Bank strengthens its positions in POS loans, Cash loans and Credit cards (more than 5 mln credit cards at the end of 2010) The 2 nd by profit in OTP Group after OTP Bank Hungarian Core Business Donskoi Narodny Bank was acquired and became Rostovsky branch of OTP Bank POS loan origination started in large retail stores, ranked 2 nd in this segment 2 national awards Financial Olympus and Brand of the year After rebranding ranked 8th in NAFI loyalty rating and 22 nd in the rating of most recognized banks 1st Russian bank accepted The Model Code developed by ACI 1st Russian bank issued 1 million Visa credit cards Before Acquisition by OTP Group 2006 OTP Group bought controlling stake of Investsberbank Acquisition of Omskpromstroibank and Promfinservicebank which became Omsk and Novorossiysk branches of OTP Bank respectively Investsberbank merged with Russkiy Generalniy Bank. The new Investsberbank became top-40 bank in Russia by assets Investsberbank was one of the first Russian banks developing retail business Germes Savings Bank was established and received a banking license from CBR in The bank was renamed to Investsberbank the same year Source: OJSC "OTP Bank" information, Frank Research Group, RBC 3

7 Key Selling Points Improving Performance and Assets Growth The Bank has the third strong lucrative quarter in a row. The ROA/ROE in the 2Q11, 1Q11 and 4Q10 were robust 5.4%/32.5%, 4.8%/30.8% and 4.2%/29.8% respectively Total income margin and net interest margin hit 20.2% and 17.9% respectively as of 1H11, up 6.6% and 5.6% YoY More than 70% retail loan portfolio growth since 3Q08 and 50% YoY growth as of 2Q11 126% YoY increase in cash loans portfolio in 1H11 69% YoY growth of the credit cards portfolio in 2Q11 Liquidity Limits from MinFin and State Corp. GKH Fund for RUB 9.5 bln in total Liquidity ratios: N2 41.9% ( 15%), N % ( 50%), N4 49.1% ( 120%) Debut RUB 2.5 bln, 3Y bond placed on March 29, 2011 with 6 times oversubscription Second RUB 5 bln 3Y bond placed on 2 Aug (YTM 8.11%) Parent Support Funding strategy is supported by the OTP Group which has committed to provide long term funding if necessary USD 200 mln money market line available from the Parent Bank Strong Retail Market Positions 2 nd major player in POS-loans as of 1 st August th by Loans without collateral in the 1H11 4 th by Credit cards portfolio as of 1 st August 2011 Leader on MICEX by volume of FX operations (EUR/RUB and EUR/USD) 13 th the most profitable Russian bank as of 1H11 30 th Russian bank by Retail deposits as of 1H11 42 th Russian bank by Net assets as of 1H11 Geographical Presence 7 out of 8 federal districts (open FE in 4Q11) 216АТМs 2,500,000 permanent clients Over 3,300 cities More than 17,300 agents More than 22,000 POS 158 retail branches High Capital Adequacy N1 Regulatory CAR 19.6% as of 2Q11 (RAS) OTP Group sticks to high internal CAR requirements: 15.1% Tier 1 Ratio and 18.0% CAR as of 2Q11 OTP Bank Plc. is 3 rd best capitalized bank in Europe in the EU-wide stress tests 2011 by capital adequacy Source: OJSC "OTP Bank" information, Frank Research Group, MICEX, RBC 4

8 OTP Bank Position in the Russian Banking Sector Founded Credit ratings Moody s/s&p/fitch Total assets RUB mln Net income RUB mln Ba1/ /BB Ba3/B+/ Ba3/B+/B+ B1/ /B+ /BB-/BB Ba3/ /BB- Ba2/B+/BB / / 92, , , , , , , ,253 3,099 6,097 3, ,351 1,600 1,162 N1 Ratio (CAR) 19.6% 22.7% 17.2% 11.14% 18.0% 12.45% 13.9% 11,1% ROA 3.34% 5% 2.21% 0.45% 0.22% 2.26% 0.46% 0.75% ROE 19.9% 25.5% 11.9% 4.5% 1.35% 17.9% 2.62% 11.7% Credit Cards POS Loans No. Bank Market share No. Bank Market share 1 Russian Standard Bank 17.9% 2 Sberbank 13.0% 3 VTB % 4 OTP Bank 5.5% 5 Tinkoff Credit Systems 5.4% 1 Home Credit and Finance Bank 27.3% 2 OTP Bank 19.2% 3 Alfa Bank 17.3% 4 Rusfinance Bank 9.3% 5 Russian Standard Bank 7.8% Source: OJSC "OTP Bank" information, Frank Research Group as of 1 st August 2011 CBR, RAS as of 1 st July

9 2. Key Business Segments

10 Main Business Segments Strategy Network of Agents The Bank s Own Network POS Loans Current positions: 2 nd in POS loans market as of 2Q11 Over 22,000 points of sales Goals: To strengthen market positions To extend client base Instruments: Setting up aggressive trade marketing activities and efficiency improvement Control of POS service quality Implementation of Credit Bureau s and own score models to assess borrowers solvency Corporate Business Current positions: Loan portfolio of RUB 9.5 bln Portfolio structure: Commercial real estate & Construction 29%, Project Finance 26%, Food & non-food production 17%, Food & non-food retail, Oil & gas Goals: To expand loan portfolio with more scrutiny over client risks Instruments: Portfolio diversification per industry and per currency Focus on reliable corporate borrowers Intensification of business with existing corporate clients Credit Cards Current positions: 4 th by credit card loans as of 2Q11 Credit cards portfolio of RUB 17.4 bln Goals: To strengthen leading positions in the market Instruments: Increase volumes of cards dispatch and level of cards activation Alternative distribution channels and active marketing campaigns More advanced internet banking system Classic Network Current positions: RUB 12.6 bln cash loans portfolio as of 2Q retail branches Goals: To increase sales through own branch network with focus on high margin/high quality portfolio Instruments: Proactive credit products sales with simple underwriting procedures High level of automation to accelerate loan decision making Implementation of effective geographic expansion model aimed to offering banking services for existing POS clients in minibranches Source: OJSC "OTP Bank" information, RBC, Frank Research Group 7

11 3. Financial Overview

12 Financial Overview Financial Overview H11 Increasing a bond s funding: Debut RUB 2.5 bln bond was placed for 3Y on March 29, 2011 with 6 times oversubscription (200 b.p. over IRS) Second RUB 5 bln bond was placed for 3Y on August 2, 2011 with a decrease 30 b.p. in the coupon rate vs. debut Gross loans portfolio increased by 34% compared to 2009 due to a strong disbursement of consumer loans in 2010 and 1H11 Net Interest Income before Provisions grew by 47% YoY in 1H11 Net Income up 6 times YoY in 2010 due to: Effective cost control Substantial increase in Net Interest Income (+36%) thanks to increasing share of highmargin products along with decreasing share of corporate and mortgage loans Surge in Net Non-Interest Income, +44% YoY in 2010 Net Income for 2Q11 increased on 17% QoQ which is in line with the 2010 upward trend and for 1H11 raised in 3.9 times YoY Condensed Balance Sheet (RUB mln) 1H Gross Customer Loans 77,499 74,398 57,865 57,485 Provision for Loans (8,664) (8,012) (6,059) (4,653) Due from Banks 7,953 14,017 21,498 14,179 Securities Portfolio 8,963 9,807 9,918 4,847 Other Assets 6,746 7,067 6,791 7,820 Total Assets / Liabilities 92,497 97,277 90,013 79,678 Deposits from Customers 56,425 58,599 46,294 32,610 Liabilities to Credit Institutions 9,435 17,200 26,220 33,165 Issued bonds and promissory notes 5,260 3,340 2,514 1,279 Other Liabilities 4,177 3,774 3,743 3,362 Total Shareholders Equity 17,199 14,365 11,242 9,262 Condensed P&L Statement (RUB mln) 1H Net Interest Income before Provisions 8,413 13,005 9,468 8,810 Loan Loss Provisions (1,622) (3,540) (3,369) (2,721) Net Non-Interest Income 1,095 1,695 1,177 1,846 Personnel Expense (2,603) (4,105) (3,542) (3,638) Other Expense (1,832) (3,087) (3,023) (2,697) Pre tax Profit 3,452 3, ,600 Net Income 2,623 3, ,202 Source: OJSC "OTP Bank" IFRS financials H11 9

13 Financial Overview Performance Indicators H11 Gross loans to deposits ratio slightly increased in 1H11 due to shrink in corporate loans and the maturing high interest corporate deposits Net Interest Margin improved to 17.9% in 1H11 due to strong dynamics of consumer lending Cost-to-Income ratio reduced to 46.6% in 1H11 thanks to cost optimization measures N1 Regulatory CAR exceeds pre-crisis level due to sound profits Non-performing loans ratio of 1H11 has decreased on 3.4% to 13.3% YoY due to new loan origination, existing loans quality improvement, writing-offs and positive effect of the Technosila debt sale Provisions to NPL ratio is stable QoQ and high (84.1% in 1H11) Indicators 1H Gross Loans/Deposits, % 137.3% 127.0% 125.0% 176.3% Cost/Income Ratio, % 46.6% 49.3% 61.7% 59.5% Net Interest Margin,% 17.9% 14.3% 10.9% 12.9% ROA, % 5.4% 3.3% 0.6% 1.9% ROE, % 32.5% 24.3% 4.7% 17.4% N1 Regulatory CAR, % (RAS) 19.6% 17.0% 13.3% 17.3% Provisions / Gross Loans, % 11.2% 10.8% 10.4% 7.9% Non performing loans 1H Share of NPL, % 13.3% 12.3% 12.4% 8.4% Provisions / NPL, % 84.1% 87.4% 83.6% 94.0% Source: OJSC "OTP Bank" IFRS financials H11, OTP Group management reports H11 10

14 Retail Loan Portfolio Portfolio Dynamics by Segment Loan Portfolio Growth RUB bln % Retail portfolio volume increased 72% since the 3Q08 and by 50% YoY in 1H11 to RUB 67.6 bln Dynamics of POS lending remained strong in 2Q11 48% QoQ / 126% YoY increase of cash loans portfolio on 1H11 17% QoQ / 69% YoY growth of credit cards portfolio on 1H11 Stable mortgage portfolio YoY 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 POS loans Credit cards Cash loans Mortgages Car loans Other Maturity Breakdown Currency Breakdown 5.0% 9.0% 6.9% 2.6% < 6 months 15.0% 6-12 months RUB 58.0% 1-3 years 3-5 years USD Other 13.0% > 5 years 90.5% Source: OJSC "OTP Bank" IFRS financials H11, breakdowns as of 1 st July

15 Corporate Loan Portfolio Portfolio Breakdown by Segment Loan Portfolio Attributes Large enterprise segment remains a priority due to higher predictability of risks in this segment with focus on reliable borrowers with clear financial statement RUB bln 10 5 The portfolio is spread by maturity to employ both short-term (liquidity management) and long-term (higher interest rates) benefits 0 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Large Corporates Project Finance SME 1Q11 2Q11 Project finance is slowly decreasing thus reflecting current trend in banking sector not to finance long-term projects with essential risk level Maturity Breakdown Currency Breakdown 13.0% 13.5% 24.0% 3.0% < 6 months 6-12 months 1-3 years 11.7% RUB USD 27.0% 3-5 years 52.7% EUR > 5 years 22.0% CHF 32.0% Source: OJSC "OTP Bank" IFRS financials H11, breakdowns as of 1 st July

16 Loan Quality and Capital Adequacy Improved Loan Portfolio Quality Ratio DPD90+ loans has improved to 13.3% in 2Q11 on -0.8% QoQ and -3.4% YoY Sharp decline of DPD90+ volume in 4Q10 as a result of both new loan origination, existing loans quality improvement and writing-offs The provision coverage of problem loans is stably high 84.1% as of 1H2011 Current level of DPD90+ is level-headed with Provisions and Net interest margin of the Bank High Capital Adequacy High emphasis on compliance with OTP Group s regulatory CAR standards N1 Regulatory CAR is well above the CBR required minimum and stands at 19.6% as of the end of 1H11 (RAS) The Parent bank will provide long-term funding if necessary Decline in 2Q09-2Q10 is a result of loan portfolio growth without respective capital growth and, therefore, growth of risk-weighted assets N1 Regulatory CAR calculation has changed since 3Q10 (implementation of 110-I Instruction), thus leading to a sharp increase in the ratio DPD90+/Gross Loans, % 19% 17% 15% 13% 11% 9% 7% 5% 8.1% 8.4% 13.9% 13.8% 13.0% 12.4% 11.1% 16.7% 16.1% 14.1% 13.3% 12.3% 110% 103% 96% 89% 82% 75% Provisions/DPD90+, % Equity (IFRS), RUB bln % 18% 16% 14% 12% 10% N1 Regulatory CAR, % 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 DPD90+/Gross Loans Provisions/DPD90+ Equity N1 Regulatory CAR Source: OTP Group management reports H11, OJSC "OTP Bank" IFRS and RAS financials H11 13

17 Profitability and Efficiency Outstanding Efficiency of the Business Owing to the extremely strong operating profit accumulation in the last 3 months, cost/income ratio improved significantly in 2Q11, dropping below 45% (2Q11: 44.8%, -5.1% QoQ) Despite the high inflation operating expenses decreased by 2% QoQ Branch net optimization in 2011: headcount decreased by 10.2% YoY, number of branches decreased from 176 to 158 NIM further strengthened and exceeded 18% in 2Q11 (+0.5% QoQ) due to the outstanding profitability of POS loans and credit card loans Consistently high profitability Net Income in 3Q10-2Q11 substantially exceeded the precrisis levels as a result of increasing in retail loan portfolio (50% growth YoY) and soaring interest margin (+5.6% YoY): POS-loans origination remained outstandingly strong in 1H11; the average monthly disbursement was by 31% higher than the 1H 2010 average The Bank s credit card business continued its massive expansion, in 2Q11 the credit card portfolio grew by 17% QoQ almost 750 thousand of cards were sent out Cash loans kept growing in 2Q11 (+48% QoQ), the average loan size grew by 22% QoQ in 2Q11 CIR, % 70% 65% 60% 55% 50% 45% 40% 63.4% 63.3% 62.4% 61.8% 58.4% 58.4% 55.5% 50.1% 48.0% 49.9% 45.2% 44.8% 20% 19% 18% 17% 16% 15% 14% 13% 12% 11% 10% NIM, % % 35% 30% 25% 20% 15% 10% 5% 0% ROA, ROE, % 3Q08 4Q08 1Q09 2Q09 3Q09 3Q08 4Q08 1Q09 2Q09 3Q09 Net Income, RUB mln 4Q09 1Q10 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 2Q10 3Q10 4Q10 1Q11 2Q11 CIR NIM Net Income ROA ROE Source: OTP Group management reports H11, OJSC "OTP Bank" IFRS financials H11 14

18 Main Risk Business Management Segments System Strategy POS scoring Various scoring models are applied for POS loans depending on the region Models are refreshed in every 6 months In grey zone decision is based on client NPV Hunter System More scrutiny over the process out of borrowers personal data verification 3D-Scoring System Internal scoring in combination with scoring models of 2 credit bureaus In cash loans own credit bureau model is used 6 debt collection agencies External collection agencies are involved to optimize work of internal collection unit Fraud verification depending on implied credit loss The most risky loan applications are subject to additional manual verification Good clients are auto-approved to optimize process Tallyman System Tallyman technology to reinforce efficiency of internal collection unit New strategy based on Collection score is in progress Source: OJSC "OTP Bank" information 15

19 Important Notice To provide the investors with the detailed quarterly dynamics of OJSC "OTP Bank" performance, this presentation uses quarterly BS and P&L statements sent to OTP Group for consolidation into public Group s results. This quarterly data has some discrepancies with the annual IFRS reports of OTP Bank, however, we suppose that the advantages of detailed analysis outweigh the discrepancies. All reports are based on IFRS and are audited by Deloitte&Touche either in the Russian Federation and in Hungary Core Deposit is an intangible asset, which is reflected in the consolidated accounts of OTP Group: if the loyal customer maintains a floor balance on his on-demand account during a certain period, then the Bank has cheap funding during this period. As the asset makes up a substantial part of the BS (RUB 1,526 mln) and amortizes within 5 years, P&L Statement for consolidation significantly differs from the Bank s unconsolidated accounts. The effect is RUB 305 mln a year Disclaimer The information contained in this Presentation has been supplied by or on behalf of OJSC "OTP Bank" (the Issuer ). Neither ZAO Citibank or CJSC VTB Capital or any of their affiliates (collectively, Arrangers ) has independently verified such information and the same is being provided by Arrangers for informational purposes only. Arrangers do not make any representation or warranty as to the accuracy or completeness of such information and does not assume any undertaking to supplement such information as further information becomes available or in light of changing circumstances. Arrangers shall not have any liability for any representations or warranties (express or implied) contained in, or any omissions from, the Presentation or any other written or oral communication transmitted to the recipient in the course of its evaluation of the proposed financing or otherwise. The information contained herein has been prepared to assist interested parties in making their own evaluation of their participation in the proposed issuance of the bonds by the Issuer. The information does not purport to be all-inclusive or to contain all information that a prospective investor may desire. It is understood that each recipient of this Presentation will perform its own independent investigation and analysis of the proposed bond issuance and the creditworthiness of the Issuer, based on such information, as it deems relevant and without reliance on Arrangers. The information contained herein is not a substitute for the recipient s independent investigation and analysis. Recipients of this Presentation must check and observe all applicable legal requirements and, for the avoidance of doubt, receipt of this Presentation and the information contained herein may not be taken as discharging the regulatory or statutory responsibilities under applicable legislation (including but not limited to anti-money laundering legislation) of any such recipient. Arrangers expressly disclaim any and all liability, which is based on the information and statements or any part thereof contained in (or omitted from) the Presentation. The information contained in the Presentation has certain statements, assessment and forecasts made by the Issuer in respect of its future business operations. Such statements, assessment and forecasts reflect various assumptions of the Issuer on expected results, and the assumptions may be either correct or incorrect. Actual results may differ significantly and negatively from the projected results contained in the present document. Please be advised that ZAO Citibank has various relationships with the Issuer and its affiliates, including FX and derivatives counterparty relationship, brokerage relationship, cash clearing client relationship. In such capacities, ZAO Citibank may have obtained certain confidential information involving the Issuer and its affiliates that is not contained herein nor that is otherwise being disclosed by the Issuer to prospective lenders. 16