2024-03-14 21:33:08 ET
OTP Bank Nyrt. (OTPGF)
Q4 2023 Earnings Conference Call
March 08, 2024, 09:00 AM ET
Company Participants
Laszlo Bencsik - Chief Financial and Strategic Officer.
Conference Call Participants
Mikhail Butkov - Goldman Sachs
Gabor Kemeny - Autonomous Research
Mehmet Sevim - JPMorgan Securities
Mate Dudas - Erste Asset Management
Simon Nellis - Citigroup
Robert Brzoza - Pko BP Securities
Presentation
Operator
Dear ladies and gentlemen, welcome to the OTP Bank Fourth Quarter 2023 Conference Call. This conference will be recorded. [Operator Instructions]. May I now hand you over to Laszlo Bencsik, Chief Financial and Strategic Officer. Laszlo, Please go ahead.
Laszlo Bencsik
Thank you, and good morning or good afternoon, depending where you are. Thank you for joining us today on OTP Group's 2023 full year results presentation. As usual, the presentation that I'm going to use is available on the website for you to download, but we are also kind of pro-acting it parallel to the discussion, what we have in my presentation.
As usual, we go through -- and first, I try to go through better quickly this presentation, which is the kind of usual structure, and then we have -- we can have Q&A. So the highlights of the group. We had a good year last year in Hungary and outside Hungary. And in general, I mean, this is probably not a surprise because most of the banks had a quite good year in '23.
But nevertheless, in terms of OTP history, I think this is a kind of major milestone where we as we exceeded EUR 100 billion balance sheet and exceeded EUR 2.5 billion profit after tax. And we kind of fully defied our position in the region as one of the dominant multinational banking groups. And certainly, we have a unique position in a sense that we are pretty much the only one of the banking groups across the region who actually originated from the region and come from the region.
So we have strong positions in the -- in five countries, which was strengthened last year by the -- especially with the acquisition in Slovenia, our second acquisition, and we entered a new country in case of Uzbekistan and -- not last year, but at the end of January, early February this year, we signed an agreement to sell our Romanian businesses which is also kind of hasn't been a big part of the group. But strategically, it was a kind of difficult decision to make, but I think we made the right decision.
And certainly, the financial impact of that decision has already been reflected in the '23 numbers. Profitability was quite good, I think. I mean, 27% all-in compared to the around 14%, 15% expected return level, and somewhat declining expected to return level given the -- especially in half rates there, has been a strong decline in the risk-free rates.
There's some normalization in the cost of capital as well. And very stable kind of foundations in terms of liquidity, in terms of capital, both of these positions strengthened considerably last year. Liquidity coverage ratio around 250%, that's 2.5 times higher than the requirement.
And we managed to strengthen our capital position despite doing these two rather sizable acquisitions in Slovenia and Uzbekistan. So the year-end common equity Tier 1 ratio was 16.6%, and that means 20 bps improvement year-on-year, including the acquisitions that we have made. And we managed to meet and somewhat exceed the MREL requirements as well. So the year-end ratio was 25.1%....
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OTP Bank Nyrt. (OTPGF) Q4 2023 Earnings Call Transcript