1. dia - OTP Bank

Partner presentation
February 2009
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 2007 – 1.5 million direct
customers
 Operates in 8 countries in the CEE region via its
subsidiaries:
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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
Contents
 Operational Environment
How OTP Bank manages it
Overview of OTP Bank
Business Profile and Activities
Financial Performance
AML & KYC Procedures
UKRAINE
State governance:
Territory:
Population:
Capital:
Parliamentary-presidential republic
603,700 sq. km. (5.7% of Europe's territory)
~ 46 mln. (7.3% of Europe's population)
Kyiv (~ 3 mln.)
Official language: Ukrainian
Central Bank:
The National Bank of Ukraine
Currency: Hryvnya (UAH)
1 USD = 7.7 UAH as of 01.01.2009
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
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
 IMF forecasts 5% GDP decline in 2009, and
annual inflation rate growth of 18.8%.
Inflation accelerated, % YoY
 Inflation accelerated to 22.3% YoY in 2008
(up from 16.6% in 2007)
 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
Ukrainian Banking Sector
 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
 As of 01.01.2009, 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 01.01.2009
($32.5B year ago)
Sector‟s net assets, bln $ *
NBU monetary reserves, bln $ *
* official USD/UAH rate = 7.7 as of 31.12.2008, and 5.05 as of 31.12.2007 and 2006
Source: the NBU
6
Local currency
 Established in 1996, Ukrainian local currency, Hryvnya, was stable at the level 5.05
(UAH per 1 USD) during 2006-2007
 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 4.50-4.70)
 Since January 2009 USD/UAH stabilized in wide range of 7.70-8.30
 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
TOP 10 Banks
 As of 01.01.2009 OTP Bank Ukraine was on the 7th place by assets and
investments portfolio according to the Association of Ukrainian Banks (AUB)
 TOP 10 Ukrainian banks by assets, in USD mln:
Source : AUB official site, according to local accounting standards; official USD/UAH rate = 7.7 as of 01.01.2009
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Contents
Operational Environment
 How OTP Bank manages it
Financial Performance
Business and Activities
Contacts
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
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;
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Careful monitoring of market trends and
maintaining adequate pricing of assetand liability-side products;
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Restructuring of loan portfolio, careful
provisioning policy;
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Development
programs
For all Business Lines
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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
of
deposit
collection
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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
Continuing the corporate repricing program started in 2008
Improving deposit collection
efforts
Major actions
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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
 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
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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
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
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Contents
Operational Environment
How OTP Bank manages it
 Financial Performance
Business and Activities
Contacts
Main balance figures
Assets, USD mln
5 000
4 478
3 000
3 072
3 000
2 260
1 918
1 455
2 000
853
1 000
1 000
0
1 175
631
0
2004
2005
2006
2007
2008*
Deposits from customers, USD mln
1 400
1 200
1 000
800
600
400
200
0
3 930
4 000
3 618
4 000
2 000
Loan portfolio (after provisioning), USD mln
2005
Share Capital, USD mln
2006
2007
2008*
Shareholders' Equity, USD mln
500
1 011
887
785
2004
670
428
380
400
300
358
183
165
200
100
269
227
62
85
107
107
0
2004
2005
2006
2007
2008*
2004
2005
2006
2007
2008*
Source: IFRS Accounts, * Under IFRS, consolidated, non-audited, based on December monthly data supply
14
Assets Quality
 Historically, OTP Bank has high quality level of its loan portfolio
 As of 31.12.2008 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/gross loan portfolio, %
Provision for possible loan losses, USD mln
140
120
100
80
60
40
20
0
121
15
17
2004
2005
29
2006
3.0%
2.3%
2.0%
1.5%
1.0%
0.5%
0.0%
28
2007
3.5%
3.0%
2.5%
2008*
1.4%
1.5%
0.9%
2004
2005
2006
2007
2008*
Source: IFRS Accounts, * Under IFRS, consolidated, non-audited, based on December monthly data supply
15
Income figures and results
Net interest income, USD mln
250
194
160
200
110
150
22
0
2004
2005
2006
140
120
100
80
60
40
20
0
70
100
50
Net non-interest income, USD mln
2007
2008*
115
12
15
2004
2005
Operating income (before provisioning), USD mln
309
350
300
250
200
150
100
50
0
193
153
87
45
2004
2005
2006
2007
2008*
30
33
2006
2007
Net profit after tax, USD mln
75
80
70
60
50
40
30
20
10
0
63
2008*
68
38
13
2004
2005
2006
2007
2008*
Source: IFRS Accounts, * Under IFRS, consolidated, non-audited, based on December monthly data supply
16
Major ratios
ROAA, %
ROAE, %
35.0%
30.0%
25.0%
29.7%
32.1%
24.8%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
23.5%
20.5%
20.0%
15.0%
10.0%
5.0%
0.0%
2004
2005
2006
2007
3.2%
2.6%
2.3%
1.8%
2004
2008*
3.4%
2005
2006
2007
2008*
Cost/Income Ratio, %
46.2%
50.0%
40.0%
36.2%
39.7%
35.9%
34.8%
30.0%
20.0%
10.0%
0.0%
2004
2005
2006
2007
2008*
Source: IFRS Accounts, * Under IFRS, consolidated, non-audited, based on December monthly data supply
17
Capitalization
 Strong and growing capital base
Share Capital, USD mln
 Historically high capital
adequacy ratios
Shareholders' Equity, USD mln
500
380
400
300
62
85
 Actual YE 2008 – 10.3%
183
165
107
 Actual Q2 2008 – 10.8%
269
227
200
100
Capital adequacy ratio under local standards (NBU)
(should be no less than 10%):
428
Capital adequacy ratio under Basel accord (BIS)
107
 2008 – 12.9%
0
Capital Adequcy, %
2004
2005
2006
2007
2008*
20
2009 Capitalization Plan:
15
1) February 2009 – attraction of subordinated loan in amount of
$50 million from the parent company
10
2) March-April 2009 – share capital increase by equivalent of
$100 million and its registration with the NBU
Tier 1 ratio, %
16
14
13
14 13
11
14
13
11
11
2007
2008*
5
0
2004
2005
2006
Source: IFRS Accounts, * Under IFRS, consolidated, non-audited, based on December monthly data supply
18
Contents
Operational Environment
How OTP Bank manages it
Financial Performance
 Business and Activities
Contacts
BUSINESS PROFILE
KEY HIGHLIGHTS, as of 01.01.2009
 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)
 Corporate Loans US$1,639M (#9 according
to AUB rating)
 Corporate Deposits US$3,381M (#1
according to AUB rating)
 24 branches, 137 outlets, 29 rep.offices
nationwide
 Over 200 000 retail clients (the Bank
doubled its customer base in 2 years)
Market Share by Segment (as of 2008), %
7.0
6.1
6.0
5.0
4.3
4.0
3.6
3.1
3.0
2.7
2.0
1.0
0.0
Total Assets
Total Loans
Retail Loans
Corporate Loans Corporate Deposits
 Over 19 000 SME clients
 Over 3 500 corporate clients
Source Company Reports, NBU
Source Company Reports, AUB
20
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 tailor-
made 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
Competitive Advantages
+ Advanced and well-established processes
+ Nationwide distribution platform
+ Corporate banking is one of the principal business segments
+ Over 3 500 corporate customers as of 1 December 2008
+ 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
History at a glance
September 2007 – Restyling. OTP Bank in
Ukraine has now new
modern image
November 2006 – OTP Bank
Plc, Hungary, became a
100% owner of
Raiffeisenbank Ukraine
and the bank was renamed
to OTP Bank accordingly
1998 – Raiffeisenbank Ukraine
was founded.
March 2, 1998 – registration with
the NBU
1994 – Representative office of
Raiffeisen ZentralBank,
RZB, Austria in Ukraine
23
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
Awards in 2008
 «Best Company of Finance Market»
«InvestGazeta» magazine
 «The Most Professional Bank»
«Business» financial magazine
 «Best Kyiv Commercial Bank»
«Kyiv Post» magazine
 «10 Best Learning Companies»
Leading HR-magazine
«Personnel Training»
 The Best of «50 Best Employers»
«Delovoy» magazine
 Top 5 of the «Best Employers
in Banking»
«Correspondent» magazine
 «The Most Transparent Bank»
Standard and Poor’s
 «The Most Styled Bank»
 «Best Service Quality Bank»
«Delo» newspaper
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Branch Network
 Over 150 banking
units and 35
representative
offices throughout
Ukraine
 Present in every
major region of
Ukraine
 Growing number of
branches:
KYIV
Lviv
Kharkiv
Vinnitsa
Dnipropetrovsk
Donetsk
330
280
Zaporizhie
Odesa
203
123
12
2004
35
41
2005
2006
Simferopol
2007
2008
2009E
2010E
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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
Professional expertise
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
Segmentation
Income earning assets 3Q 2008
15%
2%
 Comparing with Q2 2008 interest
income in 3Q increased by UAH 99.08
mio.
39%
Corporate Business
Retail Business
Treasury
42%
SME
Net commission result
2%
In 3Q 2008:
3Q 2008
18%
13%
77%
Note: non-allocated net commission result is UAH -11.55 mio (-10%)
Trading result increased by UAH 21.17 mio.
Total amount of operating costs didn‟t change
significantly (UAH - 0.84 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.
Source: OTP Bank Internal Data
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Strong Position in Corporate Banking
1800
Loans to Legal Entities, US$ mln
1561
1600
1639
19 030 Corporate and
3 635 SME Customers
1400
1200
(as of 01/12/2008)
984
1000
882
800
600
562
Well-experienced team in Project
400
and Structured Trade Finance
200
0
2004
2005
2006
2007
2008*
High flexibility to achieve
Source: IFRS accounts, *AUB rating
tailor-made solutions
Exposure details:



Source: OTP Bank internal data
Project Finance – 31.94%
Structured Trade Finance – 26.92%
10 biggest corporate borrowers – 23.15%
30
Retail Banking
250 000
Number of clients - Individuals
Retail Lending Structure,
210 017
As of 01.01.2008, IFRS
200 000
179 476
150 000
Other
21%
127 877
Consumer
finance
1%
100 000
64 361
50 000
25 181
Car loans
19%
0
2004
2005
2006
2007
Mortgages
59%
01.12.2008
Source: OTP Bank internal data
2500
Loans to individuals, US$ mln
2 177
 5th in Ukraine by Retail Loans
2000
 Thorough expanded range of attractive
products
1 510
1500
 Market-leading banking expertise
933
1000
500
 Successful introduction new products
and penetration new geographic areas
310
 Making prudent credit decisions
85
0
2004
2005
2006
2007
2008*
Source: IFRS Accounts, *AUB rating
31
Banking cards
Number of issued cards
As of 3Q 2008:
 329 POS terminals
 169 ATMs
 914 salary projects
160000
140000
120000
100000
80000
60000
40000
20000
0
103559
106386
17998
31128
25288
2006
2007
3Q2008
OTP Bank
issues and services cards
of the largest payment
world-wide systems,
including:
 VISA INTERNATIONAL
 EUROPAY (Master card,
Cirrus/Maestro)
 AMERICAN EXPRESS
69845
Credit cards
Debit cards
(distribution)
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
Master
Card
51.19%
VISA
48.79%
Debit card product:
•
Average balance on debit card is 235 euro
Internet Banking:
•
AMEX
0.02%
New innovative product: otpdirect
32
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
Main achievements in debt capital markets
 May 2007 – debut syndicated loan facility:
 US$ 150 million
 1 year
 Libor + 1.25%
 MLA: RZB.
 Successfully repaid in 2008
 September 2008 – syndicated loan facility:
 US$ 100 million
 Tranche A: 1Y US$ 63 million, Libor + 1.25%
 Tranche B: 2Y US$ 37 million, Libor + 1.65%
 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
Contents
Operational Environment
How OTP Bank manages it
Financial Performance
Business and Activities
 Contacts
Contacts
Member of the Board
Mr. Igor Belomitcev
Closed Joint Stock Company
OTP Bank
[email protected]
Tel.: +380 44 490 05 00
Head of Treasury and Financial Institutions
Mr. Vladislav Anisimov
[email protected]
Tel: +380 44 490 05 43
Fax: +380 44 490 05 45
Mail address:
43 Zhylyanska St.
Kyiv 01033
Ukraine
Head of Debt Origination and Capital Markets
Mr. Mykhaylo Vidyakin
Head of Financial Institutions
Mrs. Tetiana Petruniok
[email protected]
Tel: + 380 44 490 04 26
Tel/Fax: +380 44 247 45 56
[email protected]
Tel/Fax: +380 44 490 05 59
36
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