9M 2004 presentation

Transcription

Hungary’s Leading Mortgage Bank
OTP Mortgage Bank Ltd.
Inaugural Covered Mortgage Bond Issue
European Roadshow
Page 1
Legal statement
This Document must not be distributed in the United States
or any U.S. persons as defined in the regulations of the
Securities Act of 1933, as amended. This Document must
not be distributed in Canada or to Canadian persons. The
securities offered hereby have not been and will not be
registered under the U.S. Securities Act of 1933 and may
not be offered or sold in the United States or to U.S.
persons.
Page 2
Agenda
Company Profile
CoveredMortgage Bonds in Hungary
Mortgage Business
Inaugural Issue
Conclusion
Appendices
Page 3
Introduction
Page 4
The Act XXX of 1997 on Mortgage Loan Companies and on Mortgage
Bonds contains legislation which enables qualifying Hungarian Banks to
issue Covered Mortgage Bonds
OTP Mortgage Bank is launching its 1st EURO denominated Covered
Mortgage Bond
OTP Mortgage Bank is the largest Hungarian mortgage bank with
assets of € 3.3 Bn
OTP Mortgage Bank is the No.1 Hungarian mortgage provider
Page 5
Company profile
Page 6
Introduction of OTP Mortgage Bank
OTP Mortgage Bank commenced operations on February 1, 2002
Member of OTP Group - the largest financial service provider in
Hungary
One of the Highest rated Hungarian Credit Institution:
Moody’s
A2 / P1
Specialised credit institution
Registered capital: 80 Million EUR (30.09.2004)
Asset quality: low risk profile
Auditor: Deloitte & Touche
Coverage Supervisor: PWC
Page 7
Strategy of OTP Mortgage Bank
Products:
Subsidized and non-subsidized mortgage loans
Land mortgage loans
Home equity loans (in EUR and CHF)
Maintain the market leader position
Deliver high quality services as the largest provider
Distribution channels:
Broad network of branches (in 250 out of 400 branches )
Alternative distribution channel: insurance agents, mobile bankers
Additional partners
Page 8
What could lead OTP Mortgage Bank to be the No.1 mortgage provider ?
Our Successful Business Model
3.
Clients
OTP Bank
1-2.
OTP MB
4.
1. Conducting the mortgage business
under one umbrella.
2. Loan granting after approval of OTP
MB according to its rules;.
Capital Markets
OTP Factoring
3. Regular loan purchase and
refinancing through CMB issuance.
4. Credit enhancement.
OTP Real Estate
Company
Page 9
Rapidly growing…
Asset growth
Total assets development
3500
3000
EUR Million
2500
2000
1500
1000
500
0
2002
2003 1Q
2003
2004 1Q
2004 3Q
The Government’s new Housing Policy stimulates the market
OTP Bank’s leadership in the housing sector for more than 50 years
Product enhancement
Page 10
… and deleivering excellent financial figures.
Financial performance of OTP Mortgage Bank
Profit before tax
ROAEDevelopment
50
45
14,00
10,00
8,00
%
HUF Billion
12,00
6,00
4,00
2,00
0,00
2001
2002
2003
40
35
30
25
20
15
10
2004 forecast
Capital Adequecy Ratio stands at 9.41%
Average Net Interest Margin stands at 4.84%
Page 11
2002
2003
2004 forecast
Covered Mortgage Bonds in Hungary
Background to the Hungarian Mortgage
Market
Characteristics of the Current Housing
Market
Unique Government Subsidy System
Page 12
Legal Framework
Special law on mortgage banking: Act XXX. 1997
Basis: German model
strict ratios - 60% LTV (OTP MB average: 42-48%)
specialist principle ( Mortgage Bank – as issuer of MBs )
subject to special supervision (Trustee - coverage supervisor)
Special property valuation (three methods)
Mortgage Bonds: priority status for MB holders (claim against liquid
assets)
Recent developments
Balance principle (NPV rule)
Derivatives are allowed for hedging purposes
EU citizens are eligible for subsidized mortgage loans
Repurchase of CMBs is allowed
Interest Rate Subsidy scheme (accepted by EU)
Page 13
Three Operating Mortgage Banks
FHB (1998)
Partially (53 %) state owned
main focus on residential mortgage, refinancing
predominantly public placements
HVB Mortgage Bank(1999)
owned by HVB Group
commercial and residential mortgage
private and public placements
OTP Mortgage Bank (2002)
owned by OTP Group, own distribution channels (400 branches)
only residental mortgage loans
private and public placements
Page 14
Competition
Market shares (loans)
70,0%
60,0%
50,0%
40,0%
30,0%
20,0%
10,0%
0,0%
2002
1H 2003
2003
OTP MB
1H 2004
FHB MB
3Q 2004
HVB MB
OTP Mortgage Bank is undisputed No.1
Based on the comprehensive network of OTP Bank
Strategic plan is to remain over 50% marketshare
Page 15
Agenda
Market
Market
Page 16
Comparison of indicators
Outstanding Residential Mortgage Loans as a
% of GDP
Home ownership ratios across Europe (%)
Hungary
80%
95
Ireland
70%
82
Spain
60%
80
72
Belgium
50%
40%
30%
Italy
68
UK
67
Denmark
60
Portugal
59
54
France
20%
46
Netherlands
10%
Germany
Switzerland
0%
NL
DK UK
D
S
PT
NO EU15 IRL
ES
FIN
B
FR
I
EL
HU
A
CZK PL
40
28
SK
Source: European Mortgage Federation, Eurostat
Page 17
Housing Construction is Gaining Momentum
New Dwellings / 1000 Residents in Hungary
4
3,5
3
2,5
2
1,5
1
0,5
0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
F
Source: CSO
Page 18
Interest rate environment 2003-2004
14%
200 bp rate increase
19 June 2003
13%
12%
25-25 bp rate
decrease 23 March
and 6 April 2004
28 November 2003
50 bp rate cut 4 May,
17 Aug & 19 October
2004
100-100 bp rate cut
to defend HUF
16&17 January 2003
11%
10%
9%
11 June 2003
8%
7%
6%
5%
straightening of yield curve
inverse yield curve
3M rate + 300 bp
Y15 rate +127 bp
4%
1.2.03 2.2.033.2.03 4.2.035.2.03 6.2.037.2.03 8.2.03 9.2.0310.2.0311.2.03
1 2.2.031.2.04 2.2.043.2.04 4.2.045.2.04 6.2.047.2.04 8.2.04 9.2.0410.2.04
M3
Page 19
M6
Y1
Y3
Y5
Y10
Y15
2w repo
Rising Real Wages
Retail Loans Outstanding (HUF billion) vs. Real Wage Growth
2 500
20%
2 165
13,6%
2 000
1 814
7,2%
6,4%
3,6%
1 500
2,5%
10%
9,4%
4,9%
1 519
2,0%
1,5%
-1,4%
1 000
2,2%
1143
-3,9%
-5,0%
15%
5%
0%
982
-7,0%
-5%
844
802
684
551
-12,2%
500
410
287
170
196
176
33
189
44
172
84
82
153
81
140 139 130 184 131
-10%
336
-15%
195
-20%
0
1991
1992
1993
Housing Loans
Page 20
1994
1995
1996
1997
Consumer loans
1998
1999
2000
2001
Real Wage Growth
2002
2003
2004 F 2005F
Loan Growth rate
Macro assessment
Real GDP growth
Inflation (average)
Nominal wage increase
Final consumption
Household consumption
Investment growth
Budget deficit
(ESA)
as a % of GDP
2003
2.9%
4.7%
14.3%
5.9%
6.5%
4.7%
2004F
3.9%
6.8%
7.2%
3.3%
3.5%
10.2%
2005F
3.8%
4.5%
7.7%
2.2%
2.9%
6.9%
HUF -1,159
bn
-6.2%
HUF -1,170
bn
-5.8%
HUF -1,182
bn
-5.4%
Current Account Balance*
as a % of GDP
1yr T-bill yield (average)
EUR -6.5 bn
-8.7%
8.0%
EUR -7.4 bn
-9.4%
10.9%
EUR -7.8 bn
-8.7%
8.2%
* Reinvested earnings calculated as FDI
Prepared by OTP Research Center in May 2004 based on sources from NSB, NBH
Page 21
Agenda
Market
Market
Page 22
Government Subsidy System in Hungary
Direct subsidies
For families with children
Disabled people
VAT refund (EUR 1600)
Income tax deductibility
Indirect subsidies (Interest Rate Subsidies)
Asset side Interest rate subsidy (so called„supplementary”)
Liability side Interest rate subsidy
Page 23
Mortgage Business
Page 24
Mortgage Loans at OTP Group
HUF bn.
Cumulative
Monthly
800
5 0 ,0
700
4 5 ,0
4 3 ,8
4 3 ,2
4 0 ,4
4 0 ,0
600
3 5 ,2
3 4 ,5
3 5 ,0
3 4 ,9
500
3 0 ,0
2 9 ,3
400
2 5 ,0
2 4 ,9
2 2 ,5
2 0 ,0
300
1 6 ,5
1 7 ,0
1 6 ,3
1 6 ,0
1 5 ,1
1 5 ,4
2 0 ,0
1 5 ,0
200
1 0 ,0
100
5 ,0
0
M o nthly dis burs e me nt
0
1
.3
20
04
.0
9
.0
8
04
20
20
04
.0
7
.0
6
.3
.3
1
0
.3
1
20
04
.0
5
04
20
20
04
.0
4
.0
3
.3
.3
0
1
.3
9
20
04
.0
2
20
04
.0
1
20
04
.1
2
O TP B a nk
.2
1
.3
1
.3
0
20
03
.1
1
20
03
.1
0
.3
1
.3
0
03
20
20
03
.0
9
.3
.0
8
03
20
O TP M B
Page 25
.3
1
1
.3
.0
7
03
20
20
03
.0
6
.3
0
0 ,0
Diversified Mortgage Loan Portfolio
All data as of 30 Sept. 2004
Distribution of mortgage portfolio by size
12,1%
3,0%
Distribution of portfolio by maturity
3,5%
2,9%
40,1%
0,6%
13,0%
24,9%
16,9%
42,0%
41,2%
up to HUF 5M
15-20M
5-10M
over 20M
10-15M
in 1 year
10 - 15 years
Over 25 years
1 - 5 years
15- 20 years
5 - 10 years
20 - 25 years
Average loan size: € 17K
Average maturity: 19 year
Page 26
Diversified Mortgage Loan Portfolio
All data as of 30 Sept. 2004
Distribution of mortgage portfolio by
purpose
12%
Geographic concentratin of loans
21%
9%
58%
Home building
Purchase of used home
Page 27
Purchase of new home
Home improvement
Region
Budapest
South-Alföld
North-Hungary
North-Alföld
Middle-Hungary
West-Dunántúl
Middle-Dunántúl
South-Dunántúl
%
23,08%
9,03%
6,64%
14,79%
14,24%
10,60%
11,90%
9,72%
Conservative risk management,
LTV ratio
8,8%
19,0%
10,1%
10,1%
17,1%
35,0%
under 30%
30-40%
41-50%
51-60%
61-70%
over 70%
LTV ratio: max. 60%
In case of civil servants the government provides suretyship above 60 % LTV
Average LTV-Ratio (based on original valuation): 46.71%
Average loan size is € 17K
Page 28
… results low risk profile.
Breakdown of the Coverpool & Asset Classification
E U R M illio n
N
N
G
G
o m in a l
o m in a l
overnm
overnm
am ount of C M B s
a m o u n t o f th e o r d in a r y c o v e r p o o l
e n t G u a r a n te e o u t o f o r d e n a r y c o v e r
e n t S e c u r itie s (S u p p le m e n ta r y c o v e r )
S ta te r is k in o r d e n a r y a n d s u p p le m e n ta r y c o v e r
O v e r c o lla te r is a tio n
0 9 .3 0 .2 0 0 4
2 947 135
2 928 696
746 346
163 091
2 9 ,4 1 %
1 0 4 ,9 1 %
A v e r a g e d u r a tio n o f c o v e r p o o l
5 .8 6
A s s e t s C l a s s i f i c a t i o n 2 0 0 4 .0 9 .3 0
T o ta l H U F
0
703 082 512 150
1 -3 0
29 695 386 633
N orm al
732 777 898 783
W a tc h
11 441 665 111
R e p u r c h a se d b y th e O T P
3 664 707 245
W a tc h a s a % o f th e w h o le p o r tfo lio
Sum
Page 29
1 ,5 4 %
744 219 563 894
%
9 4 ,4 7 %
3 ,9 9 %
9 8 ,4 6 %
1 ,5 4 %
0 ,4 9 %
1 0 0 ,0 0 %
InvestorProtection
OTP Mortgage Bank further enhances investor protection
through the following product features:
The Cover Asset Pool consists of only Residential
Mortgage Assets
The Bank is providing voluntary over-collaterisation
All market risk in the Cover Asset Pool is hedged
Counterparty risk will be mitigated according to rating
agency requirements (CSA in derivative products)
Page 30
Property valuation, underlying principles
Valuations are organised by OTP Real-estate
PLC. (according to Mortgage Bank internal
regulation)
Valuations methods are defined by Mortgage
Bank,
The comparative value method
The real value method
The income value method
Experts’ performances are quaterly assesed
Page 31
In practice:
Page 32
Price comparision based on actual market data
supplied by Stamp Duties Office
Page 33
Selection of comparative price data
Page 34
Analysing photos
Page 35
Loan Book Summary
Prudent credit policy
No undue risk concentration
LTV risk profile – very strong mark to market
Highly overcollaterised
30% State gurantee behind the pool
Obligation of parent bank to repurchase the non-performing loans
Page 36
OTP Morgage Bank Inaugural € CMB
Page 37
Entering the € market is cornerstone
OTP Mortgage Bank Funding Strategy
Funding facilities in HUF
100%
0%
2%
12%
90%
3%
5%
Investor base
11%
80%
70%
Issuance Programs
60%
OTP Group financing
50%
Domestic Institutional Investors 40%
30%
Retail
20%
International Institutional Investors10%
86%
7%
7%
18%
18%
9%
9%
68%
67%
79%
0%
2003.12.31
OTP Bank
2004.03.31
Other OTP Group members
2004.06.30
2004.09.30
Institutional investors
Outstading CMB amounts HUF 728 Bn (~€ 3 Bn)
Limited domestic financing strength of investors
Page 38
Retail investors
Entering the € market is cornerstone
OTP Mortgage Bank Issuance Strategy
The successful implementation of OTP € CMBs will
be characterised by the followings:
Continued liquidity via regular issuace
Strong secondary market performance
Ongoing product development to ensure CMB
remains investor focused
Page 39
Summary of the transaction
Issuer:
Amount:
Maturity:
Expected rating:
Listing:
Documentation:
Law:
Coverage Supervisor:
Status:
Clearing:
Joint Lead Managers:
Dealers:
Page 40
OTP Mortgage Bank Ltd. 100%
owned by OTP Bank Ltd.
€ 200 Mn
7 – 10 years
A1 Moody’s
Luxembourg Stock Exchange
Under the € 1Bn EMTN Program
Hungarian
PWC
Securities will be unsubordinated obligations of the Issuer
ranking pari passu among themselves and will be covered in
accordance with the Hungarian Act on Mortgage Loan Credit
Institutions and on Mortgage Bonds
Keler, Clearstream
Deutsche Bank, OTP Bank
ABN Amro, BNP Paribas, Citibank,
DZ Bank, JP Morgan
Conclusion
Page 41
Key Considerations
OTP Mortgage Bank – The largest Hungarian Mortgage Provider
OTP Mortgage Bank – High Quality Assets originated by a market
leader
Hungarian Mortgage Legislation – Investor focused with very
strong CMB investor protection
OTP Mortgage Bank € CMB issue – Opportunity for investors to
diversify their holdings and aquire high quality bonds with a strong
credit rating
Page 42
Appendix
Page 43
Appendix
Government Subsidy Scheme
Old S ubsid y S c he m e - s ubs idy s c he m e fo r lo a ns g ra nte d be fo re 16.06.2003
Re fina nc ing
Lo a n In te re s t
Lo a n Co n ditio ns
As se t S ide S ubs idy
CMB
MIN(c oupon of CMB - 2% ; 6% )
m a x 30 m illion HUF
No
CMB
m a x 10 m illion HUF;
only for ne w prope rtie s ;
only for m a rrie d pe ople
be nc hm a rk - 3,5%
othe r tha n CMB
m a x (be nc hm a rk + 4% )
m a x 10 m illion HUF;
be nc hm a rk - 2%
No
Ne w S ubs idy S c he m e - sub sidy sc he m e fo r lo a ns g ra nte d a fte r 16.06.2003
Re fina nc ing
Lo a n In te re s t
Lo a n Co n ditio ns
As se t S ide S ubs idy
CMB
m a x 6%
m a x 15 m illion HUF ;
No
for us e d prope rtie s
CMB
m a x 5%
No
only for ne w prope rtie s
CMB
m a x 5%
be nc hm a rk - 3,5%
or for s ingle s with
c hildre n
othe r tha n CMB
m a x (be nc hm a rk + 4% )
be nc hm a rk - 2%
or for s ingle s with
c hildre n
Benchmark: Linked to the yield of Hungarian government bonds
For more details of the subsidy scheme see Decree 12/2001.(I.31.)
Page 44
Lia bility S ide S ubs idy
MIN(c oupon of CMB + 2% ; 10% )
S ubsidy Co nditio ns
a va ila ble for the firs t
20 ye a rs of the loa n;
a fte r the firs t 5 ye a rs
of the loa n s ubs idy
a c c ording to the ne w
s hc e m e
20 ye a rs of the loa n;
a fte r the firs t 5 ye a rs
of the loa n s ubs idy
a c c ording to the ne w
s hc e m e
20 ye a rs of the loa n
Lia bility S ide S ubs idy
S ubsidy Co nditio ns
MIN(c oupon of CMB; 105% of be nc hm a rk) - 1% a va ila ble for the firs t
MIN(c oupon of CMB; 105% of be nc hm a rk)
MIN(c oupon of CMB; 105% of be nc hm a rk) - 3% a va ila ble for the firs t
No
Appendix
Government Subsidy Scheme
Mos t Recent Subs idy Scheme - s ubs idy s cheme for loans granted after 22 December 2003
Refinancing
Loan Interest
CMB
MAX(110 % of benchmark+4%)
CMB
MAX(110 % of benchmark+4%)
Loan Conditions
max 15 million HUF
only for new
properties
max 5 million HUF
only for used
properties
Benchmark: Linked to the yield of Hungarian government bonds
For more details of the subsidy scheme see Decree 12/2001.(I.31.)
Page 45
Asset Side Subsidy Liability Side Subsidy
Subsidy Conditions
No
60% of benchmark
available for the first 20
years of the loan
No
40% of benchmark
available for the first 20
years of the loan
Margins on mortgage loans
Validity
Rate paid by customer
Liability side subsidy
Total bank interest income
GBBY
CMB spread over GBBY
before
16 June 2003
6% (4+2%) max.
10% (CMB coupon + 2%
but max. 10%)
16% max.
Margin (asset side, CMB
funded)
Loan volume at MBank
30 September 2004
Page 46
5% (3+2%) max. 8%** (max. GBBY * 1.1 +
4% - GBBY * 0.6)
9.03% (GBBY *
1.05)
5.16% (GBBY* 0.6)
14.03% max. 13.46% (max GBBY * 1.1
+4%)
8,60%
8,60%
100 bp.
100 bp.
100 bp.
8%
8%
8%
9.6% (8.6% + 1%)
9.6% (8.6% + 1%)
9.6% (8.6% + 1%)
6,40%
4,43%
3,86%
HUF525 bn.
HUF188 bn.
HUF31 bn.
*GBBY = Government Bond Benchmark Yield based on CMB maturity
** for new lending varies monthly
after
22 December 2003
8,60%
Coupon of CMB
Funding cost (Yield of CMB)
after
16 June 2003

9M 2004 presentation

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