OTP Group considering all options regarding OTP Bank, notes difficulty of selling due to Russian president's decree

MOSCOW. March 10 (Interfax) - OTP Group is still considering all strategic options regarding its Russian subsidiary OTP Bank , but may have difficulty selling it due to a Russian presidential decree, the Hungarian group said in its annual report.

"In the case of Ukraine and Russia OTP management applies a 'going concern' approach, however in Russia the management is still considering all strategic options, though a Russian presidential decree in October 2022 prohibited the sale of foreign owned banks," the group said.

At the end of October 2022, Russia's president approved a list of 45 lending institutions that nonresidents from "unfriendly" countries can exit only with special permission. The list includes OTP Bank.

OTP Bank's IFRS net profit rose 40% to 18.8 billion forints, or about 3.6 billion rubles in Q4 2022, the group reported. The Russian bank's profit for 2022 overall grew 13% to 42.5 billion forints, or about 8.2 billion rubles; the result in rubles was down 57% from the previous year.

The Russian bank's results were strongly affected by changes in the forint/ruble exchange rate, so changes expressed in local currency provide a more accurate picture of balance sheet and profit and loss developments, the group said.

Therefore, OTP Bank's net profit in 2022 decreased 57% to 3.9 billion rubles compared to 9.1 billion rubles in 2021, the Group's presentation said.

OTP Bank's provisioning grew to almost 15 billion forints or about 2.9 billion rubles in Q4 from 414 million forints in Q4 2021. In 2022 overall, provisioning costs surged 290% to 51 billion forints, or 9.8 billion rubles.

The total loan portfolio of OTP Bank before provisions as of December 31, 2022 amounted to 152 billion rubles, having decreased by 12% from 173 billion rubles in 2021. Corporate loans in 2022 decreased by 75% - to 7 billion rubles from 28 billion rubles

Customer funds at the Russian bank reached 112 billion rubles, having increased by 19% over the year, the 2022 results show.

OTP Group in 2022 reduced intra-group financing by 66 billion forints, or about 12.7 billion rubles. At the end of 2022, OTP Bank had only a subordinated debt of 10 billion forints, or about 1.9 billion rubles.

"In accordance with the new strategy, the corporate loan portfolio and intra-group funding have been deliberately reduced," the presentation says.

In Russia, OTP Group is represented by its OTP Bank subsidiary. According to the results of 2021, it ranked 45th in terms of assets in the Interfax-100 ranking prepared by Interfax-CEA.