The five big international banking group (Erste, Raiffeisen, Intesa, UniCredit and KBC) operating in Hungary and OTP realised a combined €28b.4bn in net profit, up 2.4% from the previous year, a historic high, according to the compilation of financial website Portfolio.hu. Compared to 2021, net profit surged 41% from €20.2bn.

Banks boosted their earnings despite declining interest rates and stagnating loan volumes and high government levies as net interest income continued to rise, reflecting banks’ successful adaptation, the website adds.

Net interest income rose by 5.1%, with OTP Bank seeing an 18% increase in euro terms.

Raiffeisen was the only bank to post a loss, primarily due to legal issues involving its Russian subsidiary, lawsuits related to Polish foreign currency loans, and the sale of its Belarusian unit.

OTP Bank achieved the highest return on equity. Italy’s UniCredit and Intesa saw improvements that supported their continued dividend payouts and share buybacks.

Most banks maintained relatively strong ROE performance in the 15-17% range in 2024, with OTP Bank substantially outperforming the rest of the group, even as it decreased slightly from 27.2% in 2023 to 23.5% in 2024. Raiffeisen Bank saw its ROE fall from 14.3% in 2023 to 9.7% in 2024.

OTP Bank had the highest net interest margin (NIM) among six banks, increasing from 3.9% in 2023 to 4.3% in 2024, followed by Raiffeisen up from 2.9% to 3.0%. Erste Bank's NIM remained stable at 2.5% across both years, while KBC shows the lowest margin at 2.1% for both periods.

The lending activity of the leading banks was weak, particularly in corporate lending as companies remained cautious due to subdued demand. State-subsidised loans remain a major driver of SME lending and the government has made steps to extend these schemes.

OTP Bank's loan portfolio grew by just 1.1% in euro terms, ranking Hungary's leading lender third among the six banks. Erste and KBC posted growth of 4.5-5%, while UniCredit and Intesa saw declines of 2-3%.

The health of the loan stock remains healthy as NPL of the six lenders remained low.

OTP Bank's Stage3 loans decreased from 4.3% in 2023 to 3.6% in 2024. UniCredit (Gross NPE) maintained a consistent level at 2.7% in 2023 and 2.6% in 2024. Erste (NPL) saw a slight increase from 2.3% to 2.6%.