Capital Market Activity

Funding strategy

Background

Traditionally, within OTP Group’s funding sources the customer deposit base has a significant role, primarily due to the strong positions reached by the Group on the Hungarian and Bulgarian deposit markets.

OTP Group put much emphasis on maintaining its strong customer deposit base. FX-adjusted performing (Stage 1 + Stage 2) loan portfolio increased by 20% in 4Q 2023 y-o-y, while deposit base increased by 21%. Due to joint effect of these factors the net loan-to-deposit ratio of the Group changed to 72.4%, it is 1.6 pps FX-adjusted decrease on the yearly base. The capital position of the Group is stable with CET1 ratio standing at 16.6% at the end of 4Q 2023.

Funding Sources

OTP Group applies wide range of money market and capital market sources to cover the funding need of its domestic and foreign customer loans. The Group is active primarily on the local capital markets through OTP Bank and OTP Mortgage Bank by issuing several instruments with varying maturity, denomination and structure.

Through its EMTN Programme established in May 2020 and updated on a yearly basis, OTP Bank has a flexible tool to access to the international eurobond markets. Beyond the bond market instruments, from time-to-time OTP Bank uses syndicated and bilateral loans to diversify its funding structure. Out of the foreign subsidiary banks of the OTP Group, the two banks acquired in 2023, NKBM and Ipoteka Bank has outstanding international bonds.