OTP Bank Annual Report OTP Bank Annual Report

149 Pages·2016·4.92 MB·English

OOTTPP BBaannkk
AAnnnnuuaall RReeppoorrtt
22001155

Summary
2 Message from the Chairman of the Supervisory Board
5 Financial Highlights
6 Main indicators of OTP Group
7 Main indicators of OTP Bank Romania S.A.
8 Macroeconomic and financial environment
13 Business Results
14 History of OTP Bank Romania
15 OTP Bank Romania’s approach
16 Targets
16 Objectives
16 OTP Bank Romania’s Strategy
19 OTPdirekt
22 Bank Card Business
23 Products for Individuals (Liabilities and Loans)
27 Small and Mediul Enterprises
28 Private Banking
29 Corporate Banking
30 Treasury
30 OTP Bank Subsidiaries Present in Romania
34 Activities of other Foreign Subsidiaries of OTP Group
43 Financial Statements
44 Separate Financial Statements
44 Separate Statement of Comprehensive Income
45 Separate Statement of Financial Position
46 Separate Statement of Cash Flows
47 Separate Statement of Changes in Equity
48 Notes to the Separate Financial Statements
119 Corporate Governance
120 Supervisory Board
128 Management Board
135 Corporate Social Responsibility
142 Compliance Function – Provisions Against Money Laundering
1
Message from the
Chairman of the
Supervisory Board
The Romanian market has a strategic importance for OTP Group,
which is why we have aimed at growing our local business since
the beginning of our activity on this market. The promise we
made, the one of offering quality up to the level of excellence in
the financial – banking industry to our clients and partners, has
met a strategic moment in the company’s evolution, through
the acquisition and completion of the integration process of
Millennium Bank within OTP Bank Romania.
Therefore, in 2015 we reinforced our its evolution being influenced by the
position on the local market as a solid consolidation of Millennium Bank
and stable provider of universal financial and by the lower interest rates of
services, as part of one of the the most clients with mortgage loans in Swiss
important European banking groups, Francs. Furthermore, the integration
in terms of market capitalization. of Millennium Bank has significantly
Moreover, the integration of Millennium contributed to the increase of net fee
Bank brought us closer to our strategic and commission income as well (up 55%
medium-term goal: entering top 10 banks year-on-year).
at national level and achieving a 5%
market share. We continued to develop the product
portfolio and services, in order to respond
In financial terms, OTP Bank Romania in the best way possible to the current
was among the subsidiaries with the needs of our clients, by focusing on the
best results in the region in 2015, having development of dedicated solutions
an after tax profit of RON 21.9 million (a addressed to individuals, SMEs and
Group consolidated result, according to corporates, as well as on digital apps and
the consolidation rules of OTP Group), the internet banking service.
with a 97% increase compared to the
previous year, including the results of In December 2015, OTP Bank Romania
Millennium Bank. has launched a conversion program
addressed to a number of 10,500 clients
The net interest income increased by with CHF mortgage loans. Through
18%, compared to the previous year, the program, clients can benefit from
22 OTP Bank Annual Report 2015
a significant discount for the current OTP Bank Romania has invested in
loans balances, with the possibility that, this approach throughout the solutions
following the conversion, they pay lower it offers to clients and the projects
rates than the equivalent in RON from developed by “The Right to Education”
December, 2014. Our highest priority was Foundation, projects which are meant
and continues to be solving the problems to develop the financial, economic and
of our customers with CHF loans. Thus, management skills of high school and
our long term solution is meant to rapidly gymnasium students.
assure a balanced management of each
CHF loan, by offering personalized and We will continue to deploy such projects
sustainable solutions to our clients. that can generate benefits to both the
population and the business environment
We continued to be a responsible and and to support our clients through
active member in the community we live our dedicated products, services and
in. We believe that financial education specialized consultancy.
is a mission that all the companies in
the banking industry should undertake. Kovács Antal György
Chairman of the Supervisory Board
Message from the Chairman of the Supervisory Board 33
OTP BANK ROMÂNIA S.A.
Notes to the Separate Financial Statements for the period ended December 31, 2015
OTP BANK ROMÂNIA S.A.
Notes to the Separate Financial Statements for the period ended December 31, 2015
OTP Annual Report
Financial Highlights
2015
5
OTP BANK ROMÂNIA S.A.
OTP Group
Main components of the Statement of recognised income
2014 2015 Y-o-Y
in RON million
Consolidated after tax profit -1,472 906 -162%
Adjustments (total)* -3,172 -819 -74%
Consolidated adjusted after tax profit
1,699 1,724 1%
without the effect of adjustments
Pre-tax profit 2,050 2,095 2%
Operating profit 5,969 5,200 -13%
Total income 11,894 10,827 -9%
Net interest income 9,160 7,940 -13%
Net fees and commissions 2,442 2,399 -2%
Other net non-interest income 292 488 67%
Operating expenses -5,926 -5,626 -5%
Total risk costs -3,956 -3,165 -20%
One off items 37 60 63%
Corporate taxes -350 -370 6%
Main components of balance sheet
2014 2015 YTD
closing balances in RON million
Total assets 156,216 154,852 -1%
Total customer loans (net, FX adjusted) 82,993 78,156 -6%
Total customer loans (gross, FX adjusted) 99,164 92,800 -6%
Allowances for possible loan losses (FX adjusted) -16,171 -14,643 -9%
Total customer deposits (FX adjusted) 108,562 115,351 6%
Issued securities 3,803 3,458 -9%
Subordinated loans 4,015 3,392 -16%
Total shareholders' equity 18,000 17,822 -1%
Indicators based on one-off adjusted earnings % 2014 2015 Y-o-Y
ROE (from adjusted net earnings) 8.5% 9.6% 1.1%p
ROA (from adjusted net earnings) 1.1% 1.1% 0.0%p
Operating profit margin 3.88% 3.34% -0.54%p
Total income margin 7.74% 6.96% -0.78%p
Net interest margin 5.96% 5.11% -0.85%p
Cost-to-asset ratio 3.85% 3.62% -0.24%p
Cost/income ratio 49.8% 52.0% 2.2%p
Risk cost to average gross loans 3.68% 3.18% -0.49%p
Total risk cost-to-asset ratio 2.57% 2.04% -0.54%p
Effective tax rate 17.1% 17.7% 0.6%p
Net loan/(deposit+retail bond) ratio (FX adjusted) 75% 67% -9%p
Capital adequacy ratio (consolidated, IFRS) - Basel3 17.5% 16.2% -1.3%p
Tier1 ratio - Basel3 14.1% 13.3% -0.9%p
Common Equity Tier 1 ('CET1') ratio - Basel3 14.1% 13.3% -0.9%p
Share Data 2014 2015 Y-o-Y
EPS diluted (HUF) (from unadjusted net earnings) -382 242 -164%
EPS diluted (HUF) (from adjusted net earnings) 441 458 4%
Closing price (HUF) 3,811 6,000 57%
Highest closing price (HUF) 4,875 6,065 24%
Lowest closing price (HUF) 3,555 3,479 -2%
Market Capitalization (EUR billion) 3.4 5.4 58%
Book Value Per Share (HUF) 4,515 4,406 -2%
Tangible Book Value Per Share (HUF) 3,948 3,840 -3%
Price/Book Value 0.8 1.4 61%
Price/Tangible Book Value 1.0 1.6 62%
P/E (trailing, from accounting net earnings) -10.4 26.6 -355%
P/E (trailing, from adjusted net earnings) 9.0 14.0 55%
Average daily turnover (EUR million) 14 15 7%
Average daily turnover (million share) 1.1 0.9 -12%
* The impact of CHF loans conversion provisions and Millennium integration expenses.
6 OTP Annual Report
OTP BANK ROMÂNIA S.A.
OTP Bank Romania SA
Main components of the Statement of recognised income
2014 2015 Y-o-Y
in RON million
Profit after tax -74.9 -110.2 47%
Adjustments (total)* -106.2 0%
Adjusted profit after tax
-74.9 -4.0 -95%
without the effect of adjustments
Pre-tax profit -74.8 -3.7 -95%
Operating profit 87.6 138.4 58%
Total income 285.1 402.6 41%
Net interest income 175.4 269.6 54%
Net fees and commissions 57.0 74.9 31%
Other net non-interest income 52.7 58.1 10%
Operating expenses -197.5 -264.2 34%
Total risk costs -162.4 -142.0 -13%
One off items 0.0 0.0 0%
Corporate taxes -0.1 -0.3 146%
Main components of balance sheet
2014 2015 YTD
closing balances in RON million
Total assets 4,737 8,557 81%
Total customer loans (net) 3,270 6,252 91%
Total customer loans (gross) 3,577 6,630 85%
Allowacces for possible loan losses -306 -378 23%
Total customer deposits 3,976 6,447 62%
Issued securities 0 0 0%
Subordinated loans 0 0 0%
Total shareholders' equity 488 869 78%
Indicators based on one-off adjusted earnings % 2014 2015 Y-o-Y
ROE (from adjusted net earnings) -15.4% -0.5% 14.89%p
ROA (from adjusted net earnings) -1.6% 0.0% 1.53%p
Operating profit margin 1.8% 1.6% -0.23%p
Total income margin 6.0% 4.7% -1.31%p
Net interest margin 3.7% 3.2% -0.55%p
Cost-to-asset ratio 4.2% 3.1% -1.08%p
Cost/income ratio 69.3% 65.6% -3.6%p
Risk cost to average gross loans 4.5% 2.1% -2.40%p
Total risk cost-to-asset ratio 3.4% 1.7% -1.77%p
Effective tax rate -0.2% -8.6% -8.5%p
Net loan/(deposit+retail bond) ratio 82% 97% 15%p
Capital adequacy ratio (IFRS) - Basel3 12.7% 14.1% 1.4%p
Tier1 ratio - Basel3 12.7% 14.1% 1.4%p
Common Equity Tier 1 ('CET1') ratio - Basel3 12.7% 14.1% 1.4%p
* The impact of regulatory changes, methodological changes, special tax on financial institutions,
effect of acquisitions, FX loans conversion, etc.
Financial Highlight 7
OTP BANK ROMÂNIA S.A.
MACROECONOMIC AND FINANCIAL ENVIRONMENT
Romania’s economy grew 3.8%, fueled by
domestic demand
indicator for assessing the underlying
In 2015, Romania’s Gross Domestic Product
increased by 3.8% in real terms, accelerating dynamics of the economy, as it excludes the
from its 3.0% advance in 2014. Similarly to impact of volatile sectors such as agriculture
the previous years, the country’s economy and public services) rose by 4.6% in 2015,
outperformed by a large margin the European
following its 2.9% gain a year earlier.
Union’s average (1.9%). What is more, non-
farm private sector GDP (probably a better
Real GDP growth (%)
8
6
4
2
0
-2
EU 28
-4
Romania
-6
-8
8 9 0 1 2 3 4 5
0 0 1 1 1 1 1 1
0 0 0 0 0 0 0 0
2 2 2 2 2 2 2 2
Sources: Eurostat, OTP Research
Households’ consumption expenditures record an 8.8% increase last year. The positive
remained the main drivers of the growth dynamics were helped primarily by higher EU
(6.1%), fueled by more favourable labour fund absorption and to a lesser extent by the
market conditions, significant gains in average modestly rising capital expenses of the public
wages, as well as record low inflation and budget. In addition, facing with definitely strong
improved consumer sentiment. Beyond demand, companies seemingly intensified
households’ consumption, the other main their investment efforts, too. Nevertheless, net
component of domestic demand, gross fixed exports had a negative impact, as the growth
capital formation had an important positive rate of imports outpaced that of exports on the
effect on growth as well, gaining steam to back of rebounding consumption.
8 OTP Annual Report 2015