first quarter 2004 performance based on har - otp bank · 2018. 10. 30. · otp bank first quarter...

OTP Bank

First Quarter 2004 PerformanceBased on HAR

Presented by:Dr. Zoltán Spéder CFO

May 2004

OTP Bank First Quarter 2004 results 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.


Interest rate environment 2003-2004

4%

5%

6%

7%

8%

9%

10%

11%

12%

13%

14%

1/2/03 2/2/03 3/5/03 4/5/03 5/6/03 6/6/03 7/7/03 8/7/03 9/7/03 10/8/03 11/8/03 12/9/03 1/9/04 2/9/04 3/11/04 4/11/04

M3 M6 Y1 Y3 Y5 Y10 Y15 2w repo

200 bp rate increase 19 June

100 bp rate increase 11 June

100-100 bp rate cut to defend HUF 16&17 January

wider repo band straightening of yield curve

inverse yield curve3M rate + 300 bpY15 rate +127 bp

300 bp rate increase 28 November

25-25 bp rate decrease 23/03/04 and 6/04/04


EUR/HUF environment 2003-2004

234.69

234

239

244

249

254

259

264

269

274

1/2/03 2/6/03 3/13/03 4/17/03 5/27/03 7/2/03 8/6/03 9/11/03 10/16/03 11/24/03 1/5/04 2/9/04 3/16/04 4/21/04-15%

-14%

-13%

-12%

-11%

-10%

-9%

-8%

-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%

rate bottom of band from center (Rh)

240.01

Moving of center of band (devaluation)

stro

ng H

UF

polic

y to

pu

sh d

own in

flation

spec

ula

tive

run for

ap

prec

iation

inte

rest

rat

e cu

t in

terv

ention

slow

withdra

wal

of

„hot

” m

oney

rate

incr

ease tim

ing o

f E

RM

II

annou

nce

d

volatility due to contradictory actions and statements by government

Ren

ewed

sp

ecula

tion

rate

incr

ease


Evolution of banking system

4,488 5,577 6,571 7,373 8,427 9,521 10,841 13,561

6,893

8,540

18,600

10,087

11,499

13,075

14,900

16,980

65.1% 65.3% 65.1% 64.0% 64.5% 63.8%

72.9%

22.6%24.7% 24.6% 26.3%

32.3% 32.2%35.8%

42.4%

63.9%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

1996 1997 1998 1999 2000 2001 2002 20030%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Total banking assets GDP Toal assets as % of GDP Loan/GDP

HUF bn

Source: NBH, NSB, OTPNote: GDP data for 2003 is estimated

Intermediation started to grow due to mortgage lending and wage increases


Loan growth* (Y-on-Y)

30%

20%

15%

10%7%

12% 11%

6%8%

11%

19%

7%

15%

27% 26%

42%

37%35%

20%

14% 13%

7%

24%

17%

10%

20%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Mar-01

Jun-01

Sep-01

Dec-01

Mar-02

Jun-02

Sep-02

Dec-02

Mar-03

Jun-03

Sep-03

Dec-03

Mar-04

Bank system OTP

32%

24%20%

16%14%

19%21%19%

21%25%24%

31%30%

10%14%

23%23% 24%

18%

8%

-2%

14%12%

32%

43%45%

52%

45%49%48%

41%

50%

41%

41%

42%

47%

-10%

0%

10%

20%

30%

40%

50%

60%

Mar-01

Jun-01

Sep-01

Dec-01

Mar-02

Jun-02

Sep-02

Dec-02

Mar-03

Jun-03

Sep-03

Dec-03

Mar-04

Bank system OTP OTP + MB

45% 48% 49% 46% 47%52%

63% 68% 72% 71%64% 61%

55%

13% 12%18% 20%

42%

55%

71%

28%22%

0%

63%

86%97%

116%108%

89%82%

67%

-4%-19%-3%

48%

43%

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

140%

Mar-01

Jun-01

Sep-01

Dec-01

Mar-02

Jun-02

Sep-02

Dec-02

Mar-03

Jun-03

Sep-03

Dec-03

Mar-04

Bank system OTP OTP + MB

8%12% 12%

27%

38%42%

48%

58%

50%

45% 46%

28%32%

21%

9% 8%12%

25%

31%36% 36%

29%26% 26% 25%

30%

0%

10%

20%

30%

40%

50%

60%

70%

Mar-01

Jun-01

Sep-01

Dec-01

Mar-02

Jun-02

Sep-02

Dec-02

Mar-03

Jun-03

Sep-03

Dec-03

Mar-04

Bank system OTP

*Based on new NBH specification used since 1 January 2000. Source for sector data: NBH

shift from FX to HUF shift from HUF

to FX

transfer of mortgage loans to

mortgage bank

Corporate Municipality

Retail Total loans


Rising Real Wages

Retail Loans Outstanding (HUF billion) vs. Real Wage Growth

170 176 196 189 172 153 140 130 131195

336

802

1,376

33 4484 82 81

139184

287

410

551

684

802

-7.0%

-1.4%

-3.9%

7.2%

-5.0%

4.9%3.6%

2.5%1.5%

6.4%

13.6%

9.4%

-12.2%

0

200

400

600

800

1,000

1,200

1,400

1,600

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 F-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Housing Loans Consumer loans Real Wage Growth


Macro: Selected components of RFA

494

58

525 474283 202 154

57

4,039

589

1,099

158

668 706

1,016

1,639

1,234

57

1.9%

15.1%

28.9%

-9.2%

61.4%

16.5% 11%

-0.1%

22.0%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Cash HUF Cash FX Bank depHUF

Bank depFX

Non eq.securities

BSE shares Mutualfunds

Life ins.Reserves

Pensionfund assets

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%31-Dec-97 31-Dec-03 CAGR (Rh-scale)

HUF bn

Strong growth in non-banking savings


Macro assessment

7.7%10.4%8.0%1yr T-bill yield (average)

-7.0%-7.8%-8.7%as a % of GDP

EUR -6.3 bnEUR -6.3 bnEUR -6.5 bnCurrent Account Balance*

-5.1%-6.3%-5.7%as a % of GDP

(cash flow based) HUF -1,160 bnHUF -1,285 bnHUF -1,064 bn

Budget deficit

7.4%8.1%4.7%Investment growth

2.0%2.8%6.5%Household consumption

1.9%2.3%5.9%Final consumption

6.0%7.0%14.3%Nominal wage increase

4.5%6.7%4.7%Inflation (average)

3.6%3.6%2.9%Real GDP growth

2005F2004F2003

* Reinvested earnings calculated as FDIPrepared by OTP Research Center in May 2004 based on sources from NSB, NBH


Market share–total assets

1,931

1,945

1,9742,024

2,127

2,164

2,185

2,258

2,390

2,5342,522

2,6362,759

2,782

22.8%22.1% 22.3%

20.1%

15.3%14.6%

15.0%15.5%

16.1%16.6%

17.0%

18.1%

16.0%

15.0%

14.0%13.6% 13.4%

12.8%

23.9% 23.9%23.3% 23.5% 23.5%

24.5%24.1% 24.3%

25.1%

26.1%25.3%

26.2% 26.2% 26.3%

22.3%23.2%22.8% 22.7% 22.7%

22.1%

20.7%

22.5%

21.0%20.3%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

31-Dec-00

31-Mar-01

30-Jun-01

30-Sep-01

31-Dec-01

31-Mar-02

30-Jun-02

30-Sep-02

31-Dec-02

31-Mar-03

30-Jun-03

30-Sep-03

31-Dec-03

31-Mar-04

7%

10%

13%

16%

19%

22%

25%

28%

Bank sector OTP Bank Market share-total assetsMarket share-total loans Group Market share-total assets

HUF bn

Mortgage lending causes strong increase in bank system’s B/S


Balance sheet, interest income

964

2,082

1,088

2,241

1,077

2,218

0

500

1,000

1,500

2,000

2,500

3,000

1Q03assets

1Q03liabilities

12/31/03assets

12/31/03liabilities

1Q04assets

1Q04liabilities

customer treasury non interest earning/yielding

+9.8%HUF bn

323

1,517

318

1,656

322

1,646580

387

691

421

676

411

1,020

2,074

1,094

2,235

1,082

2,213

0

500

1,000

1,500

2,000

2,500

1Q03 loans 1Q03

deposits

12/31/03

loans

12/31/03

deposits

1Q04 loans 1Q04

deposits

retail corporate municipal other

47.3

21.0

26.4

27.1

70.2

35.9

34.4

58.6

31.5

-5

5

15

25

35

45

55

65

75

1Q 03income

expense NII 4Q 03income

expense NII 1Q 04inc.

exp. NII

Net interest income

+6.7%

+6.0%

HUF bn

HUF bn

Assets, liabilities Loans, deposits

4.60% 4.63% 4.95%4.59%4.31%

3%

4%5%

6%

7%8%

9%

10%11%

12%

1Q 03 1H 03 9M 03 12M 03 1Q04

Asset yield Liability yield

Spread Margin

Yields, spread


Non interest income

44.1%

43.1%

44.0%

42.4%

42.8%

43.2%

43.6%

44.0%

44.4%

1Q 03 4Q 03 1Q 04

non interest / total income

3.39%

3.58%

3.89%

3.0%

3.2%

3.4%

3.6%

3.8%

4.0%

1Q 03 4Q 03 1Q 04

non interest income/ total assets

2.2 2.7 2.3

6.910.3 10.7

4.8

6.2 6.020.7

27.5 26.4

0

5

10

15

20

25

30

1Q 03 4Q 03 1Q 04account management loansDeposits Retail current acc.Securities. Card businessOther total

+27.2%

1923 24

20.8

23.827.0

-5

0

5

10

15

20

25

30

1Q 03 4Q 03 1Q 04

Other

Propertytransactions

Forextrading

Securitiestrading

Net fees &commissions

+30.2%

Non int. income/Total income Non int. income/Average total assets

HUF bn HUF bn

Driver: mortgage lending

Non interest income components Fee and commission income


Non interest expensesNon interest expenses Cost/income ratio

HUF bn

48.3%

65.0%

40.7%

30%

34%

38%

42%

46%

50%54%

58%

62%

66%

70%

1Q 03 4Q 03 1Q 04cost income ratio

1.4%

2.2%

1.6%

0.5%0.3% 0.3%

2.9%

1.7%1.8%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

1Q 03 4Q 03 1Q 04

personnel depreciation operational

Cost rationalization

- 760 bp

8.714.9

10.7

2.8

2.1

2.2

19.0

12.0

22.734

35.962

24.961

11.2

0

10

20

30

40

1Q 03 4Q 03 1Q 04personnel depreciation operational

+9.8%

9,026 8,435 8,188 8,569 8,501

7,9808,293

8,7708,497 8,137

10.0% 9.8% 9.2%

5.3% 4.7%

9.7%

12.1%

15.4%

4.1%5.4%

6,600

7,000

7,400

7,800

8,200

8,600

9,000

9,400

1999 2000 2001 2002 20030%

2%

4%

6%

8%

10%

12%

14%

16%

Average employment Year end employmentInflation Growth in non-interest expenses

Non int. expenses/Total assetsannualized


Provisioning/loan losses

2,582

4,3663,174

358

917

330

0

1,000

2,000

3,000

4,000

5,000

6,000

1Q 03 4Q 03 1Q 04

Loan loss Other General risk

Provisioning structureHUF mn

+35.3%

12.1%

29.7%

11.0%

0%

5%

10%

15%

20%

25%

30%

1Q 03 4Q 03 1Q 04

provisions&loan losses / operating income

0.48%

0.86%

0.58%

0.2%

0.4%

0.6%

0.8%

1.0%

1Q 03 4Q 03 1Q 04

total provision / total assets (annualized)

Provisioning/Operating income

Provisioning/Average total assets

1.58%

0.78%

1.01%

0.5%

0.7%

0.9%

1.1%

1.3%

1.5%

1.7%

1Q 03 4Q 03 1Q 04

loan loss provisions / receivables (annualized)

Provisioning/Total receivables


Loan quality

Qualified receivables as % of customer receivables

Qualified receivables as % of total receivables

3.4% 3.8% 3.9%

2.2%2.7% 1.6%

1.8%1.7%

1.7%1.4%

1.3%1.9%

3.4% 3.3% 3.8% 3.7%3.9%3.4%0%

2%

4%

6%

8%

31-Mar-02

30-Jun-02

30-Sep-02

31-Dec-02

31-Mar-03

30-Jun-03

30-Sep-03

31-Dec-03

31-Mar-04

NPL Watch

2.8% 3.3% 3.3%

1.6%

2.1%

1.2% 1.5%

1.4%1.4%

1.1%

1.1%

1.6%

2.6% 2.6% 3.0% 3.1%3.2%2.7%0%

1%

2%

3%

4%

5%

6%

31-Mar-02

30-Jun-02

30-Sep-02

31-Dec-02

31-Mar-03

30-Jun-03

30-Sep-03

31-Dec-03

31-Mar-04

NPL Watch


Loan quality

Qualified loans Provisions, coverageHUF bn HUF bn

18

26

17 18 17 17 15 14

21

3

4

156

12 1312

19

18

10

1315

18

18 1717

15

17

16

1511

9

8 8

6

8

7

0

10

20

30

40

50

60

31-Mar-02

30-Jun-02

30-Sep-02

31-Dec-02

31-Mar-03

30-Jun-03

30-Sep-03

31-Dec-03

31-Mar-04

Watch Below average Doubtful Bad

47.3

57.1 57.351.4

55.7 55.050.5

55.8

63.2

22.7 23.1 23.1 20.6 21.1 20.5 18.1 20.6 21.1

48.0%

40.4%40.3%40.1%37.8%37.3%

35.9%36.9%

33.3%

0

10

20

30

40

50

60

31-Mar-02

30-Jun-02

30-Sep-02

31-Dec-02

31-Mar-03

30-Jun-03

30-Sep-03

31-Dec-03

31-Mar-04

0%

10%

20%

30%

40%

50%

60%

Qualified Provision Coverage


Retail deposits

1,0 9 8 1,113 1,13 8

1,2 5 9 1,2 5 5 1,2 7 9 1,2 7 5

1,4 10 1,4 11

312 289 284 265 262 269 252 246 235

34.7%35.8%

0

200

400

600

800

1,000

1,200

1,400

1,600

31-Mar-02

30-Jun-02

30-Sep-02

31-Dec-02

31-Mar-03

30-Jun-03

30-Sep-03

31-Dec-03

31-Mar-04

32%

34%

36%

38%

40%

42%

44%

46%

48%

HUF FX

HUF market share FX market share

Group retail deposit market share

HUF bn

253 245 244296 280 312 302

415374

422491 491

538 558 557 570 581652

0

100

200

300

400

500

600

700

31-Mar-02

30-Jun-02

30-Sep-02

31-Dec-02

31-Mar-03

30-Jun-03

30-Sep-03

31-Dec-03

31-Mar-04

sight term

HUF bnVolumes, market share Retail current account deposits

15.1% 14.9%16.1% 16.7% 17.3%

3.7% 2.9% 3.5% 3.9%5.4%

11.4% 12.0% 12.6% 12.8%11.9%

0%2%4%6%8%

10%12%14%16%18%20%

1Q 03 2Q 03 3Q 03 4Q 03 1Q 04

asset yield liability yield spread

Yields, spread


Retail loans

0

200

400

600

800

Dec-99

Jun-00

Dec-00

Jun-01

Dec-01

Jun-02

Dec-02

Jun-03

Dec-03

Old 1989 1994 2000 2001+2003 Mortgage bank

3542 44 45 46

36

52

34 3125

36

27

1529 35 35 39 44

3543 40 35 35

24 2821

3731

57

3440 38

51

36 35

26 26 2327

0

10

20

30

40

50

60

Mar-

03

Apr-

03

May-

03

Jun-

03

Jul-

03

Aug-

03

Sep-

03

Oct-

03

Nov-

03

Dec-

03

Jan-

04

Feb-

04

Mar-

04

Approval Disboursement Transfer to MB

Subsidized housing loans

Housing loansHUF bn

HUF bn

Existing loans also transferred to OTPMB

Volumes, market share

15 2

2 0 0

2 7 3

2 122 0 1

18 719 5

18 4 18 0

119 12 4117 12 2 12 3

12 813 5

14 2

112

12.3%

18.0%

57.1%

37.2%

0

5 0

10 0

15 0

2 0 0

2 5 0

3 0 0

3 1-Ma r-0 2

3 0 -J un-0 2

3 0 -S e p-0 2

3 1-D e c -0 2

3 1-Ma r-0 3

3 0 -J un-0 3

3 0 -S e p-0 3

3 1-D e c -0 3

3 1-Ma r-0 4

10%

20%

30%

40%

50%

60%

70%

Housing ConsumerHousing market share Consumer market shareHousing group market share Consumer group market share

HUF bn


Mortgage Loans at OTP Group

8 11 11 14 17 20 28 3371

127187 216

246 271306 335

390 421459

494542 575

605 627650 669

12 15 26 41 65 94 116143

140116

8883

8286

8692

7682

7782

7069

7169

7271

4.56.4

10.3

18.5

26.3

32.2

29.6

32.934.7

31.2 32.1

25

28.529.4

34.9 35.3

38.9

43.8

34.5

43.2

40.4

35.2 34.9

24

28.2

20.9

0

100

200

300

400

500

600

700

800

900

Feb-02

Mar-02

Apr-02

May-02

Jun-02

Jul-02

Aug-02

Sep-02

Oct-02

Nov-02

Dec-02

Jan-03

Feb-03

Mar-03

Apr-03

May-03

Jun-03

Jul-03

Aug-03

Sep-03

Oct-03

Nov-03

Dec-03

Jan-04

Feb-04

Mar-04

0

5

10

15

20

25

30

35

40

45

Mortgage Bank Parent bank Granted amount (Rh scale) 12 mo moving average volume

MonthlyCumulative HUF bn.


OTP Mortgage Bank selected data

All data as of 31 March 2004

Distribution of mortgage portfolio by size Distribution of portfolio by maturity

39.7%

42.7%

3.2%3.3%

11.1%

up to HUF 5m HUF 5-10m HUF 10-15m

HUF 15-20m over HUF 20m

14.2%

16.7%39.7%

25.9% 0.0%3.5%

under 5 yrs 5 - 10 yrs 10 - 15 yrs15 - 20 yrs 20 - 25 yrs over 25 yrs

3.1%

65.0% 10.7%

21.2%

0-1 Yr 1-5 Yrs 5-10 Yrs 10- Yrs

Mortgage bond maturity distribution Market share of mortgage banks

674.665%

308.130%

51.15%

OTP MB FHB HVB


Representative margin on mortgage loans

Validity before 16 June 2003

after 16 June 2003

after 22 December 2003

Rate paid by customer 6% (4+2%) max. 5% (3+2%) max. 8%** (max. GBBY * 1.1 + 4% - GBBY * 0.6)

Liability side subsidy 10% (CMB coupon + 2% but max. 10%)

9.03% (GBBY * 1.05)

5.16% (GBBY* 0.6)

Total bank interest income 16% max. 14.03% max. 13.46% (max GBBY * 1.1 +4%)

GBBY 8.60% 8.60% 8.60%

CMB spread over GBBY 100 bp. 100 bp. 100 bp.

Coupon of CMB 8% 8% 8%

Funding cost (Yield of CMB) 9.6% (8.6% + 1%) 9.6% (8.6% + 1%) 9.6% (8.6% + 1%)

Margin (asset side, CMB funded)

6.40% 4.43% 3.86%

Loan volume at MBank31 March 2004

HUF497.6 bn. HUF142.5 bn. HUF0.8 bn.

*GBBY = Government Bond Benchmark Yield based on CMB maturity

** for new lending varies monthly


Distribution technology

ATMs

0

250,000

500,000

750,000

1,000,000

1,250,000

1,500,000

1,750,000

2,000,000

Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04

Cirrus maestro EC/MC Visa FX Other corp. Other HUF

Bank cards

1,0911,112

1,1271,151

1,1681,183

1,228

1,2851,305 1,303

950

1,000

1,050

1,100

1,150

1,200

1,250

1,300

1,350

Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-0439%

40%

41%

42%

43%

44%

45%

ATM Market share (est)

13,200

14,200

15,200

16,200

17,200

18,200

19,200

20,200

21,200

Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-0446%

48%

50%

52%

54%

56%

58%

60%

62%

POS Market share (est.)

0

50,000

100,000

150,000

200,000

250,000

300,000

Jun-9

9Sep

-99

Dec-9

9M

ar-0

0Ju

n-00

Sep-0

0Dec

-00

Mar

-01

Jun-0

1Sep

-01

Dec-0

1M

ar-0

2Ju

n-02

Sep-0

2Dec

-02

Mar

-03

Jun-0

3Sep

-03

Dec-0

3M

ar-0

4

HáziB@NK usersPOS terminals


Corporate business

321

370341 358

402 389

21 17 18 18 19 22

12.8%

15.7%

13.1%

14.3% 14.6%

13.4%

0

100

200

300

400

500

Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-0410%

12%

14%

16%

18%

20%

HUF deposits FX deposits market share

579620 633

686 667

43 43 39 44 5014 14 11 14 14

27.5%

31.2%29.3%32.4%33.2%

0

200

400

600

800

31-Mar-03 30-Jun-03 30-Sep-03 31-Dec-03 31-Mar-0410%

20%

30%

40%

50%

total rec. qualified provision Coverage

Corporate deposits

Loan quality

HUF bn

HUF bn

Corporate loansHUF bn

541580 591

645 628

11.7% 11.6%

11.9%

11.4%

11.9%

0

100

200

300

400

500

600

700

31-Mar-03 30-Jun-03 30-Sep-03 31-Dec-03 31-Mar-0411.0%

11.5%

12.0%

12.5%

13.0%

13.5%

14.0%

14.5%

Corporate SME Entrepreneurs Non-profit market share

6.86% 6.80%7.27%

8.02%8.72%

4.75%

6.87%

3.80% 3.90%

3.06% 2.91%

3.87%

3.40% 1.85%3.27%

0%

2%

4%

6%

8%

10%

1Q 03 2Q 03 3Q 03 4Q 03 1Q 04


HUF bnYields, spread


60.766.5 67.6

78.9 79.0

55.4%

54.3% 54.4%

55.4%55.6%

0

20

40

60

80

100


54%

55%

56%

57%

58%

loans market share

169

100

158 157 156

74.1%

60.4%

75.2% 74.9%

68.7%

0

30

60

90

120

150

180


62%

66%

70%

74%

78%

82%

deposits market share

8.5%

6.7%

9.4%10.7%

13.2%

4.5%

2.9%

5.1%6.0%

7.9%

4.0% 3.8% 4.3% 4.7%5.3%

0%

2%

4%

6%

8%

10%

12%

14%

1Q 03 2Q 03 3Q 03 4Q 03 1Q 04


8389 92

101 101

0.2 0.2 0.1 0.1 0.10.10.10.10.20.3

65.1% 66.4%

50.0% 50.4% 51.0%

0

20

40

60

80

100

120

Mar-03 Jun-03 Sep-03 Dec-03 Mar-040%

15%

30%

45%

60%

75%

90%

total rec. qualified provision Coverage

Municipal loans Municipal depositsHUF bn

HUF bnLoan quality

HUF bn

strong

seasonality

Municipality business

Yields, spread


Equity, CAR

219 238 257 262 277

326305

294271254

8.7%

9.5%

9.7%

9.5%

10.0%

8.8%

9.3%

9.7%

8.7%

9.1%

0

50

100

150

200

250

300

350

31-Mar-03

30-Jun-03 30-Sep-03

31-Dec-03

31-Mar-04

8.0%

8.3%

8.6%

8.9%

9.2%

9.5%

9.8%

10.1%

Bank equity Group equityBank gearing Group gearing

Equity, gearingHUF bn

784852

917 935990

909969

1,052 1,0901,165

300

500

700

900

1,100

1,300

31-Mar-03 30-Jun-03 30-Sep-03 31-Dec-03 31-Mar-04

Bank Group

Capital adequacy

Book value per shareHUF

14.0% 14.9% 16.2%

9.4% 10.4%

1.1%1.1%

1.1%0.8%0.8%

0%

4%

8%

12%

16%

20%

31-Mar-03

30-Jun-03

30-Sep-03

31-Dec-03

31-Mar-04

Tier 1 Tier 2


Efficiency, productivity

273287 293

315

353

216.1227

243

205 210.5

346

228.5

8,836 8,601

12,650 12,809 12,707 12,504

17,044

8,7708,368

7,9807,888

17,086

0

50

100

150

200

250

300

350

400

31-Dec-02

31-Mar-03

30-Jun-03

30-Sep-03

31-Dec-03

31-Mar-04

7,000

8,500

10,000

11,500

13,000

14,500

16,000

17,500

19,000

Bank assets/employeeGroup assets/employee

Bank Employees (period end)Group Employees (period end)

8,458 8,778 7,891

16,707

8,803 8,6698,724

11,883

12,644

12,628

12,587

13,768

9.2

4.6

6.4 6.4

7.27.6

8.0

5.6

13.2

9.6

8.3

6.0

2

4

6

8

10

12

14

2002 3M 03 1H 03 9M 03 2003 3M 046,000

8,000

10,000

12,000

14,000

16,000

18,000

Bank Average employeesGroup Average employeesBank PAT/employee; annualizedGroup PAT/employee; annualized

HUF mn HUF mn


Performance indicators

Non-interest vs. total income Cost income ratio

44.1%

42.5%41.6% 42.0%

44.0%

47.1% 46.6%

44.1%42.8%

37.2%

34%

36%

38%

40%

42%

44%

46%

48%

3M2003 1H2003 9M 2003 2003 3M2004Bank Group

48.3%50.6% 50.0%

54.1%

40.7%

60.5% 60.4% 59.6%62.0%

50.6%

40%

45%

50%

55%

60%

65%

3M2003 1H2003 9M 2003 2003 3M2004Bank Group

Provisioning vs. operating income

12.1%

17.0%

10.1%

14.2%

11.0%

5.4%

7.7%

11.1%

13.0%

11.4%

5%

7%

9%

11%

13%

15%

17%

19%

3M2003 1H2003 9M 2003 2003 3M2004

Provisioning vs. customer receivables

0.72%0.78%

0.99%

0.78%

0.64%

0.90%0.95%1.01%

0.26%

0.42%

0.82%

0.61%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

2002 3M2003 1H2003 9M 2003 2003 3M2004


ROA, ROE

33.0%

36.3% 36.0%38.1%

31.3%

32.2%34.0%

39.6%

28.7% 27.9% 29.3% 25.9% 32.8%

30.6%

28.4%32.0% 31.3%

25.9%

33.3%

30.6%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1Q 03 1H 03 9M 03 2003 1Q 04

Bank nominal Bank real Group nominal Group real

ROAE annualized ROAA annualized

2.09%

2.85%

3.28% 3.31%

2.78%

2.18%

2.90%

2.66%

3.14%

2.90%

1.5%

2.0%

2.5%

3.0%

3.5%

2002 1Q 03 1H 03 9M 03 2003

Bank only Consolidated


Consolidated subsidiaries

1Q 2003 4Q2003 1Q 2004 1Q04/1Q03Merkantil Bank Ltd. 547 748 606 10.8%Merkantil-Car Ltd. 304 454 797 162.2%Merkantil Bérlet Ltd. 74 48 70 -5.4%NIMO 2002 Ltd. -- (38) 1 --

Merkantil Group 925 1,212 1,474 59.4%OTP Building Society Ltd. 337 (12) 101 -70.0%OTP Mortgage Bank Ltd. 1,467 2,507 1,851 26.2%OTP Banka Slovensko a. s. 33 (111) 92 178.8%

DSK Bank EAD -- 1,587 2,738 --DSK subsidiaries -- (14) (27) --

DSK Group -- 1,573 2,711 --OTP-Garancia Insurance Ltd. 503 1,044 760 51.1%OTP Fund Management Ltd. 961 1,169 639 -33.5%HIF Ltd. 53 80 48 -9.4%OTP Real Estate Ltd. 287 348 291 1.4%

OTP Factoring Management Ltd. 2 25 (21) --OTP Factoring Ltd. 139 882 189 36.0%

OTP Factoring Group 141 907 168 19.1%Bank Center No. l. Ltd. 27 16 39 44.4%OTP Fund Servicing and Consulting Ltd. 2 15 21 950.0%Other subsidiaries 85 157 81 -4.7%Subsidiaries total 4,821 8,905 8,276 71.7%Consolidated pre-tax profits 25,423 19,373 37,845 48.9%Subsidiaries' proportion 19.0% 46.0% 21.9% 2.9%


The 2008 vision for DSK Bank is a vision of leadership

Vision

Bulgaria's largest bank

The undisputed #1 in retailbanking

The performance leaderin Bulgarian banking

Among top 3 banks incorporate banking

Innovation engine inBulgarian banking

The bank mostrespected by customers

Pre-tax profit > EUR 100 mnROE after tax > 25%

Cost to indome ratio ~50%Market share by assets > 18%

Number of cards and current accounts~1.7 millionRetail loans market share ~ 42%Retail deposits market share ~ 30%

Corporate loans market share 8-10%

Introduction of new products andupgrades to existing products atleast once a month

Customer satisfaction index> 80%

Definition of success

1. Retain the leading role inhousehold savings market

2. Remain the top lender tohouseholds in Bulgaria

3. Expand market position inhouseholds transaction banking

4. Achieve market position in SMEbanking that is in line with theinfrastructural market share

5. Establish a significant positionlarge and midsize corporate banking

6. Introduce promptly new financialservices for households andcorporates

Key strategic direction


In 2004, DSK will continue its aggressive growth

BGN millions

2,019

2,8182,391

2002 2003 2004f

145.7167.3

225.1

2002 2003 2004f

91.8104.5 110.6

2002 2003 2004f

52.963.9

107.5

2002 2003 2004f

* Includes currency revaluation adjustments but does not include provisions

Total assets Net revenues *

Operating costs Operating profit (no restructuring and tax)

+18%

+6%

+35%

+68%


2004 financial targets of DSK Bank

Financial indicators (BGN millions) 2003 2004 Change 1Q04y-o-y %

Net interest income 141.0 177.6 +26 41.4Net non-interest income* 26.3 47.5 +81 10.8Total revenues 167.3 225.1 +35 52.2Operating cost 104.4 110.6** +6 27.9Gross operating income 62.8 114.5 +82 24.3Net provisions/write downs -1.1 7 n.m. 0.6Operating profit before restr. costs, taxes 63.9 107.5 +68Restructuring cost, investment, taxes 30.5 n.m.Pre-tax profits 63.9 77 +21 24.9

Selected ratiosNet interest income/Average earning assets 6.4% 6.8% +0.4*** 6.7%Net non-interest income/Total revenues 15.7% 21.1% +5.4*** 20.7%Cost income (operating costs/total revenues) 62.5% 49.1% -13.4*** 53.5%ROAA 2.2% 2.4% +0.2 *** 3.2%ROAE 17.2% 18.5% +1.3 *** 25.2%

* Includes net commissions, trading income and currency revaluation adjustments. Fees based on BAS, not IFRS** Excluding restructuring cost, restructuring-related reserves and taxes*** Represents percentage-points change

25% of the increase due to pricing changes; 75% are due to volume increase

Repricing, new fee carrying

products, penetration

Cost control, personnel cuts, efficiency gains

through integrated IT

Higher prudence level


2004 target growth ratesHUF bn Growth rate HUF bn Growth rate

Total assets 3,162.4 14.6% 4,087.0 16.7%Total loans 1,168.0 7.3% 2,385.6 17.8%Corporate loans 767.1 11.0%Retail loans 327.6 3.0%Mortgage loans 166.3 -9.4% 20.0%Consumer loans 161.3 19.8%

Municipality loans 73.3 -7.0%Total deposits 2,462.0 10.2% 2,987.9 10.5%P&L related growth ratesNet interest income 133.2 12.7% 196.3 10.9%Non interest income 105.4 23.2% 181.7 37.3%Fee & commission income 104.1 22.3% 15.0%Insurance fee income n.a. 12.0%Real estate trading income n.a. 100.0%Total income 238.6 17.1% 378.0 22.2%Cost base with goodwill 127.6 14.4% 240.7 24.1%Cost base without goodwill 117.3 6.4% 230.5 20.1%Personnel expenses 48.4 10.5% 8.0%Other expenses 58.3 3.2% 7-8%Other expenses w/o DSK n.a. 5.0%Provisions 13.7 3.2% 14.3 6.7%Profits before taxes (incl dividend received) 108.2 28.4% 123.0 19.7%Profits after taxes (incl dividend received) 92.9 29.8% 102.8 23.9%Profit related performance indicatorsROE 32.1% + 146 bp 30.7% + 10 bpROA 3.14% +36 bp 2.71% + 5 bpCost/income ratio 51.1% -300 bp 61.0% - 100 bpNet interest margin 4.50% -15 bp 5.7-5.8%

ConsolidatedBankBalance sheet related growth rates


Market shares of the subsidiaries(at 31 March 2004)

Mortgage Bankby loan volume

DSK Bankby deposits

OTP Banka Slovenskoby deposits

OTP MB, 64.0%

Others, 36.0%

OBS, 2.5%

Bank system, 87.5%

Bank system, 84.5%

DSK, 15.5%

Mortgage Bank by bonds issued

DSK Bankby loans

OTP Banka Slovenskoby loans

OBS, 4.6%Bank

system, 95.4%

OTP MB, 65.0%Others,

35.0%

DSK, 13.6%

Bank system, 86.4%



OTP-Garanciainsurance

OTP-Garancialife insurance

OTP-Garancia non-life insurance

Garancia, 7.8%

Others, 92.2%

Garancia, 7.1%

Others, 92.9%

Garancia, 9.2%

Others, 90.8%

OTP Fund Management OTP Building Society

by volume of contracts*

OTP Building Society

by deposits*

OTP Fund

Management, 42.2%

Others, 57.8%

OTP BS, 44.0%

Funda-menta, 56.0%

OTP BS, 42.0%

Funda-menta, 58.0%

* on Dec 31, 2003



Others, 72.0%

OTP, 28.0%

OTP, 25.2%

Others, 74.8%

OTP, 14.3%

Others, 85.7%

Private pension fund*

by membership

Voluntary pension fund*

by membership

Private pension fund*

by managed assets

Voluntary pension fund*

by managed assets

OTP, 11.4%

Others, 88.6%

* on Dec 31, 2003

first quarter 2004 performance based on har - otp bank · 2018. 10. 30. · otp bank first quarter...

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