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OTP Bank – 10 Years on the Stock Exchange

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OTP Bank – 10 Years on the Stock Exchange Development of the OTP Group in the Past 10 Years OTP Bank – 10 Years on the Stock Exchange Dr. Sándor Csányi Chairman and CEO August 10, 2005 OTP has been transformed from an inefficient state monopoly intoan innovative market leader OTP in 1991 OTP Group’s net profit OTP Group – present • The beginning of Million EUR, IAS* days transformation from a • The only independent national saving collector to bank group in the region, a universal retail bank The fundamentals of the successful 37.8% with a high level of • The entrance of Western transformation transparency European banks resulted Product development • 560 • Leading financial group in a sharp drop of market • Technological innovation with market share of share after liberalization 31.1% ~25% based on total • Large inefficient network • Performance-oriented corporate culture assets, ~30% based on of branches and 30.3% 521** • Focused local management deposits and ~40% based overrepresentation of 32.6% 329 on profits poorer rural districts • Approaching Western • Lack of experience in FX 31.6% 251 European benchmarks in markets and corporate 30.0% 191 terms of operating banking 35.3% 149 efficiency, risk- • Low profitability (2% 122 111 117 management and ROE), high amount of 56 marketing qualified loans outstanding 49 45 • ROE grew to 38% along • Reputation of an inflexible 6 with a decreasing share of and outdated bank 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 qualified loans • Successful foreign Privatisation: IPO Acquisition of Sale of the 25% IRB(OBS) DSK and Robank acquisitions first round Merkantil Group share by the state acquisition acquisitions • Permanently reaching/beating market ROAE expectations * HUF/EUR annual average exchange rates between 1995 and 2004: 162,65; 191,15; 210,93; 240,98; 252,80; 260,04; 256,68; 242,97; 253,51; 251,68 “The most developing bank of the ** According to new IFRS standards decade in Central Eastern Europe” – EUROMONEY OTP Bank - 10 Years on the Stock Exchange 2 The share of the state fell to one golden share by October 1999 after the three stages of privatisation Current owners Date Event New owner Price March 31, 2005 Public limited company with 1992 Dec. 1990 International 100% state ownership 1993 2,0 development inst. Selling of dividend preferred State (0.3%) Sept. Hungarian private shares (3.9% of equity) 1992 investors 1994 6,7 Own shares Privatisation in exchange for 1995 compensation coupons Apr. 1994 Hungarian private Employees, 3,3 1996 20% ownership is sold by the investors management state Social security 1,7 Domestic private May 1995 1997 funds 2,0 investors Initial public offering (33%) Domestic institutions 1998 July 17- Private and HUF 1,200 21, 1995 institutional ($ 9.5) 83,9 Foreign institutions 1999 First trading day on the investors Aug 10, Budapest Stock Exchange 2000 1995 Issue of preferred (golden) 2001 Sept. 3 share Hungarian State 1997 2002 Second public offer Oct. 14- (25%) Private and HUF 6,010 2003 21, 1997 institutional ($ 30.4) investors 2004 Third public offer Oct. 18- (14%) Private and HUF 9,900 2005 22, 1999 institutional ($ 40.98) investors *Source: OTP’s stock exchange quarterly report, based on total private equity OTP Bank - 10 Years on the Stock Exchange 3 OTP Bank was the first to enter many new and innovative product segments and has retained its market leader position in most of them Market Services Market share in Hungary, 2004 eoy ranking 1992 Securities 24.8%(1) No. 1 1993 trading 1994 1995 9.4%(2) No. 4 Insurance 1996 1997 Investment 39.6%(3) No. 1 funds 1998 1999 Pension funds(4) 21.8%(5) No. 1 2000 (6) 2001 Car leasing 20.0% No. 2 2002 2003 Bankcards 56.0% No. 1 2004 Mortgage loans 2005 49.7%(7) No. 1 (1) Estimate based on households’ non-financial institution securities holdings; (2) Share calculated on insurance reserves; (3) Ratio calculated on investment funds’ net asset value; (4) The Bank established its voluntary pension fund in 1994, mandatory pension fund in 1997 and voluntary health fund in 2002; (5) Based on pension funds’ managed assets; (6) New vehicle sales market; (7) OTP Bank Group Source: MNB, BAMOSZ, PSZÁF data OTP Bank - 10 Years on the Stock Exchange 4 OTP adopts state-of-the-art IT and business solutions to enhance its efficiency and customer satisfaction Increase in the number of Market share Main IT investments contracts (estimated) 1992 Telebanking Telebanking Automated TeleBANK, Thousand 1993 Integrated Information System 613 537 phase I. 435 1994 345 41 TeleBANK Center 179 58 1995 (live voice), Integrated Information System 1999 2000 2001 2002 2003 2004 1996 phase II. Internet banking 1997 Passive mobile bank Internet banking Thousand 1998 HomeB@NK 312 210 278 1999 60 133 74 Development of housing loans 0 2000 administration: PreLak 1999 2000 2001 2002 2003 2004 2001 SAP I., SUBA, Data Mobile banking Warehouse I. Mobile banking 2002 Thousand Active mobile bank 2003 43 SAP II., Data Warehouse II. 201 270 97 152 2004 Central Back Office supporting 4 35 2005 system Individual level performance 1999 2000 2001 2002 2003 2004 measurement OTP Bank - 10 Years on the Stock Exchange 5 Today OTP Bank Group provides almost 4 million customers Introduced after 1991 with financial services in Hungary Existed in 1991 OTP Bank’s market segments, distribution channels and products End of 2004 Customers Municipalities Retail banking customers Corporate customers 43,000 Mass retail Private banking Small and Large corporates accounts* market ~10.000 private medium ~300 customers enterprises Over 3 million banking customers customers ~200,000 customers Channels Branches ATM /POS Telebanking Internet Mobile Business Banking 437 1,400 ATMs 613,000 312,000 banking terminals consultants, 21,600 POSs; contracts contracts 270,000 ~13,000 Customer 50.2 mn ATM contracts referees transactions Products Accounts Loans Retail Credit/Debit Investment Mortgage loans Insurance financing cards fund EUR 3.9 bn 1.5 million More than EUR 9.7 bn EUR 600 333,350 credit management* outstanding** insurance 4 million loans million cards, EUR 3.1 million contracts retail outstanding outstanding 3.2 million debit assets managed current cards accounts * Including municipal and pension funds ** With housing loans OTP Bank - 10 Years on the Stock Exchange 6 Besides expansion the improvement of efficiency has been a priority of the management OTP Group OTP Group Cost/income ROAE Profit growth IFRS, percent IFRS, percent 1995-2004, percent 1995 73.1* 19.2* 1,922% 1996 74.2* 24.2* OTP Group 1997 71.1 36.5 * 1998 70.4 35.3 1999 69.8 30.0 2000 70.1 31.6 Hungarian banking 67.2 2001 32.6 sector** 684% 2002 66.7 30.3 2003 62.9 31.1 100% 2004 55.5 37.8 2005 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 * OTP Bank, non-consolidated IFRS ** Excluding Hungarian Development Bank (MFB) in 1998 and 2002 and excluding Postabank in 1998 Source: OTP Annual Report; HFSA Annual Report OTP Bank - 10 Years on the Stock Exchange 7 OTP Bank has made significant progress towards establishing a regional financial group OTP Bank Group in Central-Eastern Europe 2004 data, according to IFRS 1992 OTP Group * Number of branches ** 843 OTP subsidiaries OTP Banka Slovensko Number of clients ** ~8 million 1993 Total assets EUR16.9 bn Number of branches 68 Target countries Net profit EUR 560 m Number of clients 0.3 million Lengyelo . 1994 ROAE 37.8% Total assets EUR 0.9 bn Czech R. Cost/income ratio 55.5% Net profit EUR 2 m Ukra ine OTP Bank Romania /RoBank / 1995 ROAE 3.5% 15 Cost/income ratio Number of branches 95.6% Slovakia 0.03 million 1996 Market share in total Number of clients Total assets EUR 0.2 bn assets 2.8% Hungary MoldovaNet profit EUR 0.2 m 1997 0.7% Target countries of ROAE Cost/income ratio 80.6 % successful - 1998 Croatia Market share in total acquisitions Rom ania assets ~1% Bosnia - Serbia & 1999 Slovakia Nova Banka* ( Croatia ) Her zegovina Montenegro Number of branches 92 Serbia - Montenegro 2000 Number of clients ~0.3 million Bulgaria DSK*** ( Bulgaria ) Bulgaria Total assets EUR 1.1 bn Bulgaria Number of branches 323 Net profit EUR 20 m Number of clients ~3.7 million 2001 ROAE 21.2% OTP Bank Total assets EUR 1.7 bn 2002 Cost/income ratio 84.0% Number of branches 437 Net profit EUR 37 m Romania Market share in total Number of clients ~3.5 million ROAE 21.4% assets 3.8% Total assets EUR12.4 bn Cost/income ratio 56.8% 2003 Net profit EUR 506 m Market share in total ROAE 38.2% assets 13.1% 2004 Croatia Cost/income ratio 44.2% Market share in total 2005 assets 19.4% * Consolidated data excluding Nova Banka ** Banks only *** DSK Group, according to Bulgarian IFRS OTP Bank - 10 Years on the Stock Exchange 8 Continuous trust of our clients is the greatest acknowledgement of our work in the past 10 years OTP Bank has an outstanding reputation among retail clients Answers given in a questionnaire of GfK* in May 2005 „The financial institution has a good reputation” „Expert in financial issues” percent percent 2 51 2 49 2nd ranked bank 1 14 2nd ranked bank 1 13 0 102030405060 0 102030405060 „It has more attractive and interesting „I can recommend it to my best offers than other banks” friend” percent percent 2 2 48 55 2nd ranked bank 1 13 2nd ranked bank 1 14 0204060 0204060 * GfK Hungary Market Research Ltd. OTP Bank - 10 Years on the Stock Exchange 9 Several foreign awards indicate OTP Bank’s success at the international level Awards Adjudicator 1992 …… 1993 Best Bank in Hungary Global Finance Best Bank in Hungary EUROMONEY 1994 Best Bank in Hungary Global Finance Real Estate Developer of
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