The consolidated after-tax profit of OTP Bank reached HUF250bn (€630mn) in Q4, climbing 17% after adjustments, in line with forecasts.

Hungary's biggest commercial lender booked a record HUF1.08 trillion for the full year, up 19% on increased lending, the impact of new acquisitions and cost efficiencies. Two-thirds of net income came from foreign units. OTP's earnings made up half of the total profit generated by Hungary's banking sector.

Sector-specific levies reduced profits by HUF172bn.

Net interest income rose 22% to HUF1.8 trillion and net revenue from commissions and fees increased by 14% to HUF546bn in 2024. Risk costs climbed 83% to HUF158.5bn.

Diluted earnings per share from adjusted after-tax profit came to HUF952.

Total assets rose 10% y/y to HUF43.4 trillion at the end of 2024.

Gross stock of client loans edged up 3% to HUF24.4 trillion and deposit stock inched up 2% to HUF31.7 trillion. The non-performing loan ratio declined 0.7pp to 3.6%.

The CET1 ratio edged up 2.3pp to 18.9%.

OTP’s core Hungarian unit had HUF270bn in profit, up 16%, followed by DSK Group in Bulgaria with HUF201bn, up 1%. In Russia and Slovenia, OTP booked HUF 137bn (+43%)  and HUF113bn, respectively (+1%). In its first full year of operation, the Uzbek unit (Ipoteka Bank) generated HUF53bn in net profit.

OTP has significantly reduced its exposure in Russia, halting corporate lending and U.S. dollar transactions in May 2023, while also limiting outbound euro transactions, deputy CEO Laszlo Bencsik said at a press conference after the earnings report.

The Russian subsidiary paid out RUB42bn (€400mn) in dividends between 2023 and 2024, with the primary goal being to extract as much profit as possible from Russia.

OTP holds $340mn in Russian bonds, with a coverage ratio of 73%, but due to sanctions, the funds are held in a blocked account. If sanctions are eased, OTP could access these funds, potentially releasing close to HUF100bn in provisions, Mr Bencsik said.

OTP said the Q4 capital adequacy ratio calculation included a HUF270bn, or HUF964-per-share, dividend, based on the latest decision of the management committee. This translates to a 3.9% dividend yield. The board will make its final decision on the dividend proposal later this month, to be published on April 3. 

OTP paid HUF150bn in dividends in 2024.

Management also signalled that OTP eyes new acquisition targets.

In guidance for 2025, OTP expects "marginal improvement" in the operating environment. Organic performing loan volume growth could be over 9% in 2024, while the net interest margin is expected to remain close to last year’s 4.28%. The cost-to-income ratio may rise above 41.3%, while ROE could dip below 23.5% in 2024 due to the expected decrease in leverage.