Strong foreign subsidiaries, domestic performance power Q3 of OTP
OTP Bank achieved a return on equity of 24.9% in the first nine months of 2024. Almost 70% of the group profit is attributable to the foreign subsidiaries, said Deputy CEO László Bencsik at a press conference in Budapest on Friday. Liquidity and capital positions are stable, while the ratio of non-performing loans improved by 0.3 points to 4.0%.
Boom in private loans
The Hungarian private customer business is developing positively. The volume of mortgage loans increased two and a half times year-on-year, clearly outperforming the general market dynamics. Disbursements of personal loans increased by more than 60%. Demand on the housing market has returned and households are showing healthy demand for credit. The situation in the corporate client business is more subdued. Demand for credit is subdued, the portfolio of micro and small loans rose slightly by 4%.
International expansion bears fruit
In the current quarter, the sale of the Romanian bank was finalised and the legal and operational merger of the two Slovenian subsidiaries was completed. The foreign subsidiary banks are consistently performing well and showing stable profitability. Ipoteka Bank in Uzbekistan, which was acquired in the previous year, already generated profits totalling around EUR 105 million in the first three quarters. Consolidated loans increased by 2% on a quarterly basis. In the Ukraine, corporate and consumer loans have already recorded growth of over 20% this year and are set to continue rising.
Special tax puts pressure on profits
The domestic ‘transaction fee’, which has just been massively increased again, is unique in the world and has reached a level, the OTP top manager complained, that leads to a significant market distortion for banks compared to fintech companies such as Revolut. OTP Bank’s consolidated adjusted after-tax profit totalled 318.5 billion forints in the third quarter, an increase of 8% compared to the same period last year. In the first nine months of the year, however, consolidated adjusted profit after tax fell by 4% to 826.4 billion forints.
