Annual Report
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:2)(cid:21)
OTP Bank
Annual Report
2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:2)(cid:21)
Contents
4
8
13
14
89
90
96
97
98
99
100
101
230
236
237
237
238
239
240
335
336
338
340
342
345
345
Message from the Chairman and Chief Executive Officer
Macroeconomic and financial environment in 2020
Management’s Analysis
Management’s analysis of the 2020 results of the OTP Group
Financial Statements
Independent Auditors’ report (consolidated, in accordance with IFRS)
Statement of Financial Position (consolidated, in accordance with IFRS)
Statement of Profit or Loss (consolidated, in accordance with IFRS)
Statement of Comprehensive Income (consolidated, in accordance with IFRS)
Statement of Changes in Equity (consolidated, in accordance with IFRS)
Statement of Cash-flows (consolidated, in accordance with IFRS)
Notes to the Consolidated IFRS Financial Statements for the year ended 31 December 2020
Independent Auditors’ report (separate, in accordance with IFRS)
Statement of Financial Position (separate, in accordance with IFRS)
Statement of Profit or Loss (separate, in accordance with IFRS)
Statement of Comprehensive Income (separate, in accordance with IFRS)
Statement of Changes in Equity (separate, in accordance with IFRS)
Statement of Cash-flows (separate, in accordance with IFRS)
Notes to the separate IFRS financial statements for the year ended 31 December 2020
Corporate Governance
Senior management and executive members of the Board of Directors of OTP Bank
Non-executive members of the Board of Directors of OTP Bank
Members of the Supervisory Board of OTP Bank
Information for Shareholders
Anti-money laundering measures
Corporate social responsibility
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:2)(cid:21)
Message from the Chairman & CEO
D E A R S H A R E H O L D E R S ,
It would be no exaggeration to say that 2020 was an extraordinary year. In relation
to the year just past it is not chiefly our financial results that I would like to highlight
– although given the circumstances, we have every reason to be proud of these too –
but first and foremost the fact that we have triumphed in the face of the considerable
challenges posed by Covid-19. The Bank Group passed the test presented by the
pandemic with flying colours: we did everything possible to ensure the safety of
our employees and customers while ensuring our services remained uninterrupted
throughout. In line with public expectations and our market-leading position, we
mobilised our financial resources and capital strength to buttress the economy and
ensure its speedy recovery, contributed fully to the implementation of the various
government and central bank support programmes, and ensured that our lending
operations remained strong and robust. At the same time, we mustered the energy to continue and in some cases accelerate
our internal development drives, above all in terms of digital services. No further acquisitions were made in 2020; however, we
successfully completed the post-merger integration processes in Bulgaria and Montenegro, continued the integration in Serbia,
and completed the sale of our subsidiary bank in Slovakia. In accordance with our long-term strategy, OTP Bank intends to
remain a key player in the consolidation of the regional banking sector.
As expected, the significant economic down-
the first wave of the pandemic was followed by
turn and increased uncertainty caused by the
a significant correction in the autumn of 2020,
Covid-19 pandemic were mainly reflected in
finishing the year at HUF 13,360, which equates
a rise in the cost of risk: due to the fourfold
to a market cap of more than EUR 10 billion.
year-on-year increase in risk costs, the Bank
Group’s adjusted after tax profit fell by 26%,
though at the same time our 13% return on
equity remains outstanding by international
standards. The OTP Group’s operating profit
Overview of performance in the
financial year 2020
improved by 5%, and our operating expenses/
The Bank Group’s adjusted profit of HUF 310
balance sheet total ratio fell from 3.31% to
billion in 2020 was primarily determined by
2.9%. In 2020, our consolidated FX-adjusted
the surge in the cost of risk: deteriorating
performing loan portfolio was 9% higher than
economic performance caused by the
in the previous year – also a commendable
pandemic was met with prudent risk
achievement. Although the capital strength
management. Firstly, the share of loans in
of the Bank Group is excellent and secure
the Stage 2 category, denoting higher risk,
– the CET1 rate of 15.4% at the end of 2020
increased significantly (from 5.3% to 13.9%)
already includes the amount of net earnings
and it was mainly in relation to this portfolio
for the year less dividends – following the
that higher risk costs were incurred (due to
recommendation of the National Bank of
additional provisioning). At the same time,
Hungary, no dividend will be paid until
the share of non-performing loans (Stage 3)
30 September 2021.
improved from 5.9% to 5.7% year-on-year and
The market/investor perception of the Bank’s
the growth of loans overdue for more than
performance and growth strategy remains
90 days also slowed. It is important to
favourable: the fall in the share price following
emphasise that the provisioning rate for the
4
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:2)(cid:21)
performing portfolios (Stage 1+2) increased
the group-level net loan-to-deposit ratio fell
from 1.6% to 2.4% year-on-year, placing us well
from 79% to 76% over the past year.
above our competitors in terms of this ratio.
The consolidated basic Tier 1 capital ratio (CET1)
The change in portfolio quality was
of the OTP Group according to IFRS was 15.4%
significantly affected by the introduction of
at the end of 2020 (+1 ppt year-on-year).
loan repayment moratoriums for all group
This already reflects the impact of net
members except Ukraine; however, based on
earnings for the year less proposed dividends
OTP’s traditionally conservative and prudent
(HUF 140.2 billion) The HUF 119 billion
risk management and lending practices,
deducted from the regulatory capital is
we believe that portfolio quality will not
equal to the overall dividends that the
deteriorate significantly after the expiry of the
management would have proposed to the
moratoriums, and we even expect some Stage
General Meeting, had the National Bank of
2 loans to return to the Stage 1 category.
Hungary (MNB) not put all dividend payments
The pandemic resulted in a significant decline
on hold until 30 September 2021. The sum
in business activity and in the development
of dividends deducted partly includes the
of the performing portfolios, mainly in the
HUF 69.44 billion in dividends that were
second quarter of 2020, but despite this, the
not paid for 2019 but that the management
volume of the consolidated performing loan
had planned to pay. After 30 September,
portfolios increased by 9% in 2020 as a whole
the payment of an advance on dividends may
(on an FX-adjusted basis), and loan volumes
be considered by the Board of Directors.
increased in all countries of operation except
In addition, a secure capital position allows
Russia. It is gratifying that over the period of
management to continue to seek acquisition
the pandemic, the volumes of mortgage loans
opportunities in line with the strategic
grew in virtually all countries of operation
objectives.
(+10% year-on-year), and the corporate
As in previous years, the Bank Group’s key
portfolios also increased significantly (+8%
objectives for 2020 were largely met, and
year-on-year). The 9% growth in consumer
accordingly:
loans marks a slowdown compared to the
(cid:588) our profit rate was significantly higher
previous year, and was the result of physical
than the target ROE of more than 10%.
closures related to Covid and to more cautious
The actual figure was 13%;
spending on the part of consumers.
(cid:588) the cost-of-risk ratio turned out to be lower
Despite net interest margins falling by 50 bps
(115 bp) than we had previously forecast
year-on-year, the substantial growth in
(125 bp);
performing loans meant that net interest
(cid:588) performing loans increased organically by
income actually increased by 12% while fee and
HUF 1,129 billion, or 9%. It is pleasing that
commission income was up 4%.
the growth rate in Hungary (17%) exceeded
In 2020, adjusted after tax profit decreased
a row, but volume growth in Serbia and
year-on-year at all operations, except at the
Ukraine was also outstanding.
the group average for the fourth year in
Moldovan subsidiary. The contribution of
the foreign subsidiaries to the overall profit
figure fell from 46% in the previous year to 41%
Acquisitions
last year. The declining profit at virtually all
operations can be explained by the temporary
No new acquisitions were made in 2020,
increase in the costs of risk.
following the six bank acquisitions that were
Consolidated, FX-adjusted deposit volumes at
of consolidation:
the Bank Group increased by 13% year-on-year,
(cid:588) In Bulgaria, the integration process was
i.e. by more than HUF 2,000 billion, and thus
completed on 4 May 2020, and this during
completed in 2019, 2020 was a year
Message from the Chairman & CEO
5
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:2)(cid:21)
a period of restrictive measures due to the
The Banker’s rankings, OTP Bank was named
first wave of the epidemic;
Bank of the Year in 2020, and our Bulgarian
(cid:588) In Montenegro, the merger of the two banks
and Slovenian subsidiaries received the same
was completed in early December 2020;
recognition. OTP Bank was awarded the title
(cid:588) In Serbia, the merger process is also
of Safest Bank in Hungary by Global Finance.
progressing according to plan, and is
In addition, OTP Bank’s private banking division
expected to be completed in the second
holds the title of Best Private Banking Service
quarter of 2021;
Provider in Hungary at both The Banker and
(cid:588) In Slovenia, Albania and Moldova, where the
Global Finance. OTP Treasury won the title of
Group was not previously present, the newly
Best Foreign Exchange Provider and the Bank
acquired banks were integrated into the
won the title of Best Digital Bank for Consumer
Group;
Loans from Global Finance. In addition, Global
(cid:588) The sale of the Slovak subsidiary announced
Finance chose OTP LAB as one of the best
in early 2020 was completed at the end of
financial innovation workshops in the world
November.
in 2020 as well. At the same time, we achieved
recognition not only for the high quality of our
As we have indicated many times in the
services but also for our continuously out-
past in relation to our acquisition strategy,
standing financial achievements: our innovative,
our goal is to improve our existing market
digital solutions, environmentally conscious
positions through acquisitions and to
business policy, efforts to develop domestic
increase the profitability of specific banks by
bond markets, and transparent information
achieving optimal market size and exploiting
practices were also recognised (MNB: Innovative
cost synergies. I am pleased to report that
Bank Award, BSE: Growth Bond Programme
the realisation of these goals is well under
Investment Service Provider Award, Transpar-
way. We are currently looking into three
ency Award, Social Responsibility Award).
acquisition options, one of which is within the
Today, OTP holds dominant market positions
geographical scope of the existing Bank Group.
in many countries and segments. This did not
We hope to make a specific announcement
come free: we have worked very hard for it
in the second half of 2021 with regard to two
over the past decades and now we are reaping
transactions.
Industry awards, innovation,
corporate social responsibility
the rewards in many respects. At the same
time, we cannot sit back and relax: a leading
position today is no guarantee of the same
tomorrow, and so development and innovation
must be a continuous process! In the future, IT
will not only have to perform service tasks, but
The results, safe operation and successful
will also increasingly have to fulfil business
strategy of the Bank Group are chiefly reflected
functions. In order for IT to be brought to bear
in the development of the share price. In
in product development at an early stage, in
addition, its excellent performance and
2019, ‘agile operations’ were introduced at
innovative services have earned it countless
OTP Bank – as a first in Hungary. By the end
professional accolades: OTP Bank has for every
of 2020, this had involved more than 1,000
year in almost a decade now been named best
of our employees (+30% year-on-year) and
domestic bank by Global Finance, and in 2020
allowed many high-priority developments to
our subsidiary banks in Slovenia and Montenegro
be implemented significantly more rapidly
received the same title. OTP Bank won the
(e.g. Apple Pay, the launch of a new mobile and
Best Bank in Hungary award in Euromoney’s
internet banking platform, loan repayment
Awards for Excellence, and the Montenegrin
moratorium, gradual introduction of new
and Albanian subsidiary banks also received
mortgage applications etc.). As a result, not
Euromoney’s best bank award. According to
only has the overall customer experience
6
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:2)(cid:21)
and customer satisfaction improved, but our
helping the disadvantaged and those in need,
market position has remained stable or even
as well as supporting culture and the arts and
improved in several segments.
on value creation and preservation. We have
In addition to the challenges it has presented,
made a significant contribution to alleviating
the pandemic has also brought about huge
the difficulties caused by the coronavirus
changes, accelerating the transformation
by supporting healthcare and educational
of customers’ banking habits. The number
institutions. We consider it our responsibility
of OTP SmartBank mobile banking users
to always act ethically and to reduce the
reached 1.3 million by the end of 2020, a
environmental impact of our company.
whole order of magnitude ahead of our local
The OTP Group is a stable company, one of the
competitors. The number of transactions via
largest employers in Hungary, which strives
our digital channels increased significantly,
to contribute to sustainable economic growth
and the number of digitally active retail
and a sustainable future in all areas.Our goal
customers grew by 18% in the space of just
is to provide responsible, equitable financial
one year. Robotic process automation is
services that can also adapt effectively to
playing an increasingly important role, and
customer needs.
some of the back-office operations required
for babaváró lending (subsidised loans for
Dear Shareholders,
expectant parents) and the management of
I am confident that our Bank has all the core
the loan repayment moratorium were already
values, resources and commitment needed to
being performed by robots programmed by
enable us to achieve our long-term strategic
us. Launched years ago, the Simple service
goals. As a key regional bank and a financial
has now grown into a veritable ecosystem of
institution that holds leading positions in
applications (Simple Business, SimplePay),
many countries, we have a major responsibility
and its range of services and customers is
towards all players in the real economy in
constantly expanding.
terms of the financing of micro and small
Aspects of corporate social responsibility,
businesses, medium and large companies,
environmentally responsible operations and
municipalities and other stakeholders, as
corporate governance (commonly known as
well as retail customers, and for providing
ESG) are increasingly important in terms of
advanced financial services to them.In addition,
how the Bank is perceived among the public,
the past decades have proven that in difficult
regulators and investors. In 2020, the Bank
times, our management has been able to
received several ESG ratings: we have a rating
successfully address the latest challenges,
of Average from Sustainalytics and “A” from
assuring appropriate responses to them, and
MSCI, which is broadly on a par with other
in doing so we have been able to consistently
banking groups active in the region. Investment
rely on the commitment of our staff and the
strategies focusing on sustainability are
loyalty of our customers.
becoming increasingly important; we cannot
I trust that our stated goals and strategic
ignore the long-term prospects of climate
objectives will meet with your approval. I ask
change and the associated risks, and the shift
for your continued assistance and support for
towards a zero-emission economy is also
their implementation!
reflected in our business model.
OTP Bank is traditionally one of the largest
donors in Hungary; our targeted donations
are focused primarily on developing financial
literacy, raising awareness of social and
Dr. Sándor Csányi
environmental issues, creating opportunities,
Chairman & CEO
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:2)(cid:21)
Message from the Chairman & CEO
7
Macroeconomic and financial
environment in 2020
The Covid-19 pandemic turned the world
better shape than in 2007, with a much better
upside down in 2020, putting to the test not
vulnerability profile. Economic policy reactions
only health care, but causing interruptions
were extremely aggressive throughout the
in many areas of everyday life as well as the
region. Until now, we have not detected large-
economy. Initially, it was the possibility of
scale capital flight from developing countries.
supply chain disruptions that caused worries,
The labour market and credit market reaction
then the uncertainty resulting from the
were not intense. Most countries showed a
measures to stymie the spread of the virus
decent recovery in 3Q. Contrary to the initial
that alarmed markets. The first, spring wave
expectations of a renewed recession due
of the pandemic was like a cold shower for
to second-wave lockdowns, almost all OTP
Europe and the USA, where unprecedented
countries posted positive q-o-q growth rates
distancing measures limited free movement,
for 4Q 2020. This stems from the facts that
practically bringing life to a standstill for a
(I) industry remained resilient (II) consumer
while. The summer offered a short time to
sentiment did not collapse (III) the service
take a breather and prepare for the next wave,
sector adapted somewhat to the pandemic.
which peaked between October and December
in the developed world. Meanwhile, fiscal
Among the countries where OTP is active,
and monetary policies made great efforts
Serbia performed by far the best, with just 1%
to get the economy back on its feet, offering
recession, due to strong investment activity
practically unlimited liquidity, low-interest
and FDI inflows. GDP dropped between
loans, wage and investment subsidies, and tax
3 and 5% in of the OTP universe countries;
credit. As a result of hard work, the first covid
Hungary (–5.0%), Slovenia (–5.5%), Bulgaria
vaccines have been developed and authorized
(–4.2%), Romania (–3.9%), Russia (–3.1%), Ukraine
by December, to be followed by similar
(–4.0%). In these countries the value added
preparations very soon.
of the manufacturing industry is relatively
high, while that of tourism is less significant.
This was not a ‘usual’ financial crisis; the
Moldova (–7.0%) would also belong to this
recession is very fast and huge, like never
group if there had not been a major drought,
before. In 1Q 2020, the CEE region fared
which significantly worsened the performance
better than Western Europe, as the pandemic
of the really important agriculture sector.
arrived somewhat later, and growth dynamic
was in better shape in most parts of the CEE
While almost all industries have been
region than in the EZ. The second quarter
negatively affected by the spread of Covid-19,
brought big recession to all OTP countries.
it has had a bigger impact on some of them.
Countries where the share of the auto and
Tourism is one of the sectors hardest hit by
related industry is higher have suffered a
the coronavirus crisis, with some parts of the
sharper drop in industrial production. The
sector and some regions affected more than
CEE region’s countries were usually in a much
others. Most tourist facilities were closed
8
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:2)(cid:21)
during the peak of the crisis, with events
were not as tight as in the spring. Hungary’s
cancelled or postponed. This is also true
budget deficit slightly exceeded 8.0% of GDP,
for the most tourism-driven OTP countries.
and public debt ballooned to 81% of GDP.
Montenegro (–15.2%) and Croatia (–8.4%)
The lockdowns hit the labour market hard,
suffered the biggest losses in this field.
but most of this effect proved to be transitory,
except for some sectors.
Year 2020 was dominated by the pandemic
The recent years’ double-digit increase in
also in Hungary, where the epidemy, and thus
wages has significantly decelerated, but
the lockdowns started later. Based on detailed
household saving rate has markedly increased,
data, the economy sank into 5.0% recession;
because of a drop in consumption. Despite
the smaller-than-feared contraction owes
the economic downturn and the lockdowns/
a lot to the supportive fiscal policy and to the
restrictions, dwelling construction hit a ten-
fact that restrictions in the fourth quarter
year high.
Use side decomposition of the GDP growth (%)
8
4
0
–4
–8
–12
0
0
0
2
1
0
0
2
2
0
0
2
3
0
0
2
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
Consumption expenditure of households
Gross fixed investment
Inventories
Government consumption
GDP
Net export
8
4
0
–4
–8
–12
Public debt and deficit (in % of GDP)
10
Budget balance
Public debt
8
6
4
2
0
–2
–4
–6
–8
–10
100
90
80
70
60
50
40
30
3
0
0
2
/
1
Q
4
0
0
2
/
1
Q
5
0
0
2
/
1
Q
6
0
0
2
/
1
Q
7
0
0
2
/
1
Q
8
0
0
2
/
1
Q
9
0
0
2
/
1
Q
0
1
0
2
/
1
Q
1
1
0
2
/
1
Q
2
1
0
2
/
1
Q
3
1
0
2
/
1
Q
4
1
0
2
/
1
Q
5
1
0
2
/
1
Q
6
1
0
2
/
1
Q
7
1
0
2
/
1
Q
8
1
0
2
/
1
Q
9
1
0
2
/
1
Q
0
2
0
2
/
1
Q
Source: KSH, OTP Research
Source: KSH, OTP Research
Despite the coronavirus, both retail (14%) and
second quarter, due to the collapse in oil
corporate loan (nearly 13%) volumes expanded
prices, inflation slowed to 2.2% from ‘above–4%
in 2020. Within retail loans, the subsidized ‘baby
territory’ at the beginning of the year. After
loan’ was the engine of growth, the volume of
reopening, the inflation has started to pick up
which has jumped by 130%. Despite the declin-
again in the summer months. Due to the lock-
ing new business figures stock of the personal
down measures, there has been a significant
loans surged also by 12% thanks mainly to
rearrangement in the structure of demand;
the moratorium which resulted in lower
decreased services and increased demand
instalments. Housing loans increased by 10%,
for products. The latter, supplemented by the
while home equity loans shrank by almost 5%.
weakening forint exchange rate, contributed
significantly to the rise in industrial goods
In Hungary, inflation slowed to 3.3% from 3.4%
inflation.
in 2019. Constant tax core inflation, which
is particularly monitored by the MNB,
As a result of the changed external environ-
accelerated to 3.7% from 3.4% in 2019. In the
ment, Hungary’s monetary policy adjusted
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:2)(cid:21)
Macroeconomic and financial environment in 2020
9
it’ monetary policy tools. Amid the stronger
2020, almost 10% higher than a year earlier.
risk appetite at the time when the covid crisis
Due to the rising budget deficit, it is becoming
broke out, the forint weakened, trading at
increasingly important for monetary policy
360 versus the euro, before the exchange
to provide cheap financing to government and
rate stabilized, though with marked volatility.
the corporate sector through asset purchase
The EUR/HUF stood at 365 at the end of the
programs.
Hungarian yield curve (%)
4.5
3M
3Y
5Y
10Y
15Y
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
–0.5
Exchange rate development in the CEE countries
35.0
EURHRK
EURCZK
EURHUF
EURPLN
USDUAH
EURRON
USDRUB
(31.12.2019=0)
30.0
25.0
20.0
15.0
10.0
5.0
0.0
–5.0
9
1
0
2
1
0
.
9
1
0
2
3
0
.
9
1
0
2
5
0
.
9
1
0
2
7
0
.
9
1
0
2
9
0
.
9
1
0
2
1
1
.
0
2
0
2
1
0
.
0
2
0
2
3
0
.
0
2
0
2
5
0
.
0
2
0
2
7
0
.
0
2
0
2
9
0
.
0
2
0
2
1
1
.
1
2
0
2
1
0
.
1
2
0
2
3
0
.
9
1
0
2
2
1
.
0
2
0
2
1
0
.
0
2
0
2
2
0
.
0
2
0
2
3
0
.
0
2
0
2
4
0
.
0
2
0
2
5
0
.
0
2
0
2
6
0
.
0
2
0
2
7
0
.
0
2
0
2
8
0
.
0
2
0
2
9
0
.
0
2
0
2
0
1
.
0
2
0
2
1
1
.
0
2
0
2
2
1
.
1
2
0
2
1
0
.
1
2
0
2
2
0
.
Source: MNB, AKK, OTP Research
Source: Reuters, OTP Research
10
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Macroeconomic and financial environment in 2020
11
OTP Bank
Annual Report
2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Management’s Analysis
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Management’s analysis of the
2020 results of the OTP Group
C O N S O L I D AT E D F I N A N C I A L H I G H L I G H T S 1
A N D S H A R E D ATA
Main components of the adjusted Statement of recognised income
Consolidated after tax profit
Adjustments (total)
Consolidated adjusted after tax profit without the effect of adjustments
Pre-tax profit
Operating profit
Total income
Net interest income
Net fees and commissions
Other net non-interest income
Operating expenses
Total risk costs
One-off items
Corporate taxes
Main components of the adjusted balance sheet closing balances
Total assets
Total customer loans (net, FX-adjusted)
Total customer loans (gross, FX-adjusted)
Allowances for possible loan losses (FX-adjusted)
Total customer deposits (FX-adjusted)
Issued securities
Subordinated loans
Total shareholders’ equity
Indicators based on adjusted earnings
ROE (from accounting net earnings)
ROE (from adjusted net earnings)
ROA (from adjusted net earnings)
Operating profit margin
Total income margin
Net interest margin
Cost-to-asset ratio
Cost/income ratio
Provision for impairment on loan and placement losses-to-average gross loans ratio
Total risk cost-to-asset ratio
Effective tax rate
Net loan/(deposit+retail bond) ratio (FX-adjusted)
Capital adequacy ratio* (consolidated, IFRS) – Basel3
Tier 1 ratio* – Basel3
Common Equity Tier1 (‘CET1’) ratio* – Basel3
Share Data
EPS diluted (HUF) (from unadjusted net earnings)
EPS diluted (HUF) (from adjusted net earnings)
Closing price (HUF)
Highest closing price (HUF)
Lowest closing price (HUF)
Market Capitalization (EUR billion)
Book Value Per Share (HUF)
Tangible Book Value Per Share (HUF)
Price/Book Value
Price/Tangible Book Value
P/E (trailing, from accounting net earnings)
P/E (trailing, from adjusted net earnings)
Average daily turnover (EUR million)
Average daily turnover (million share)
2019
HUF million
412,582
(6,470)
419,052
465,973
510,045
1,077,727
706,298
282,504
88,926
(567,682)
(47,107)
3,034
(46,921)
2019
20,121,767
12,902,518
13,605,264
(702,746)
16,260,599
393,167
249,938
2,291,288
2019
20.3%
20.6%
2.4%
2.97%
6.28%
4.12%
3.31%
52.7%
0.28%
0.27%
10.1%
79%
16.8%
14.4%
14.4%
2019
1,575
1,602
15,430
15,600
11,270
13.1
8,183
7,362
1.9
2.1
10.5
10.3
16
0.4
2020
HUF million
259,636
(50,631)
310,268
351,802
537,437
1,169,920
788,079
293,112
88,729
(632,483)
(187,995)
2,360
(41,534)
2020
23,335,841
13,528,586
14,363,281
(834,695)
17,890,863
464,213
274,704
2,537,112
2020
10.9%
13.0%
1.4%
2.47%
5.37%
3.61%
2.90%
54.1%
1.15%
0.86%
11.8%
76%
17.7%
15.4%
15.4%
2020
1,003
1,200
13,360
15,630
8,010
10.2
9,061
8,436
1.5
1.6
14.4
12.1
22
0.7
Change
%
(37)
683
(26)
(25)
5
9
12
4
0
11
299
(22)
(11)
%
16
5
6
19
10
18
10
11
pps
(9.4)
(7.6)
(1.0)
(0.51)
(0.92)
(0.50)
(0.41)
1.4
0.87
0.59
1.7
(3)
1.0
1.0
1.0
%
(36)
(25)
(13)
0
(29)
(22)
11
15
(21)
(24)
37
17
38
75
1 Structural adjustments made on consolidated IFRS profit and loss statement as well as balance sheet, together with the calculation methodology of adjusted indicators
are detailed in the Supplementary data section of this Report.
* Concerning 4Q 2019 capital adequacy ratios, the figures presented in this report do not include deducted dividend. This is consistent with the decision made by the Board
of Directors on the 30th of April 2020, acting on behalf of the AGM, about the retainment of profit generated in 2019. These capital adequacy ratios differ from those
presented in the Summary of the Group’s 4Q 2019 results, and the 2019 Annual Report.
General note: in the tables of the Business Report those changes aren’t presented that are deemed not to carry a meaningful economic substance (for example, if the
absolute value of the change exceeds 1000%).
14
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
S&P GLOBAL RATINGS
MOODY’S
FITCH
Actual credit ratings
OTP Bank and OTP Mortgage Bank
FX Long-term credit rating
OTP Bank
FX long-term deposits
OTP Bank
Subordinated Foreign Currency Debt
OTP Mortgage Bank
Covered mortgage bond
OTP Bank Russia
Long-term credit rating
Actual ESG ratings
BBB
Baa1
Ba1
A2
BB+
(cid:40)(cid:54)(cid:42)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:3)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)
(cid:40)(cid:54)(cid:42)(cid:3)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)
(cid:40)(cid:54)(cid:42)(cid:3)(cid:86)(cid:70)(cid:82)(cid:85)(cid:72)
(cid:58)(cid:82)(cid:85)(cid:86)(cid:87)(cid:3)(cid:79)(cid:72)(cid:89)(cid:72)(cid:79)
(cid:37)(cid:72)(cid:86)(cid:87)(cid:3)(cid:79)(cid:72)(cid:89)(cid:72)(cid:79)
(cid:54)(cid:40)(cid:57)(cid:40)(cid:53)(cid:40)
(cid:43)(cid:44)(cid:42)(cid:43)
(cid:48)(cid:40)(cid:39)(cid:44)(cid:56)(cid:48)
(cid:47)(cid:50)(cid:58)
(cid:49)(cid:40)(cid:42)(cid:47)(cid:44)(cid:42)(cid:44)(cid:37)(cid:47)(cid:40)
(cid:38)(cid:38)(cid:38)
(cid:37)
(cid:37)(cid:37)
(cid:37)(cid:37)(cid:37)
(cid:36)
(cid:36)(cid:36)
(cid:36)(cid:36)(cid:36)
(cid:19)(cid:16)(cid:21)(cid:28)
(cid:58)(cid:72)(cid:68)(cid:78)
(cid:22)(cid:19)(cid:16)(cid:23)(cid:28)
(cid:47)(cid:76)(cid:80)(cid:76)(cid:87)(cid:72)(cid:71)
(cid:24)(cid:19)(cid:16)(cid:24)(cid:28)
(cid:53)(cid:82)(cid:69)(cid:88)(cid:86)(cid:87)
(cid:25)(cid:19)(cid:16)(cid:20)(cid:19)(cid:19)
(cid:36)(cid:71)(cid:89)(cid:68)(cid:81)(cid:70)(cid:72)(cid:71)
(cid:16)
(cid:16)
(cid:21)(cid:22)(cid:17)(cid:24)
(cid:36)
(cid:26)(cid:20)
(cid:37)(cid:16)
(cid:38)(cid:39)(cid:51)(cid:3)(cid:86)(cid:70)(cid:82)(cid:85)(cid:72)
(cid:39)(cid:76)(cid:86)(cid:70)(cid:79)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)
(cid:36)(cid:90)(cid:68)(cid:85)(cid:72)(cid:81)(cid:72)(cid:86)(cid:86)
(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:47)(cid:72)(cid:68)(cid:71)(cid:72)(cid:85)(cid:86)(cid:75)(cid:76)(cid:83)
(cid:39)
(cid:38)
(cid:37)(cid:16)
(cid:36)
(cid:80)(cid:82)(cid:86)(cid:87)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:81)(cid:87)(cid:3)
(cid:88)(cid:83)(cid:71)(cid:68)(cid:87)(cid:72)
Share price performance
19,000
OTP
Bloomberg EMEA Banks Index (relative to OTP)
CECE Banking Sector Index (relative to OTP)
17,000
15,000
13,000
11,000
9,000
7,000
5,000
31.12.2018
30.06.2019
31.12.2019
30.06.2020
31.12.2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Management’s analysis of the 2020 results of the OTP Group
15
M A N A G E M E N T ’ S A N A LY S I S O F T H E
F U L L - Y E A R 2 0 2 0 R E S U LT S O F O T P G R O U P
According to the detailed GDP data published
a positive impact on exposures, since there
on 2 March 2021, in 4Q the Hungarian economy
was no principal amortization. Within
grew by 1.4% q-o-q, as a result, the annual GDP
household volumes the key engine was the
declined by 5.0% y-o-y.
subsidized baby loans, the total outstanding
The lower than expected erosion was mainly
book grew by 130% y-o-y on sector level and
due to the targeted and successful measures
their volumes reached HUF 1,064.5 billion
implemented by the Government and the
by the end of 2020. Cash loans advanced
National Bank of Hungary (NBH) in order to
by 12%, housing loans by 10%, respectively;
contain the economic contraction. Those steps
on the other hand, home equity loans eroded
were essential to moderate the increase of
by 5% y-o-y.
unemployment; by the end of 2020 employment
Most of the local economies within OTP Group
level practically matched the previous year’s
suffered lower contraction than originally
figure. The family supporting schemes and
anticipated, especially in countries with a
housing subsidies, as well as measures boosting
relatively low weight of tourism or service
local ventures created the preconditions for a
sector, like Russia, Ukraine and Serbia.
meaningful economic kick start in 2021.
In order to efficiently cure the recession,
Monetary policy conditions remained loose
massive government measures were
in 2020, and the NBH increased the available
implemented, and in several countries, that
amounts within the framework of both the
was coupled with numerous and larger
Funding for Growth Go! scheme and the Bond
scale interest rate cuts by the central banks.
Funding for Growth programme, and increased
Moreover, with the exception of Ukraine,
the weight of government bonds in its balance
all other countries introduced payment
sheet. With temporary easing of the capital
moratoriums with different conditions and
buffer requirements, NBH supported the
duration.
lending activity of banks.
Out of the numerous measures made at the
end of 2020, the extension of the payment
moratorium by the Parliament on 20 December
until 30 June 2021, leaving participation
conditions unchanged, had a paramount
importance.
The average inflation for 2020 was 3.3%.
Consolidated earnings:
HUF 310 billion adjusted annual
after tax profit, stable portfolio
quality, 9% y-o-y performing
FX-adjusted organic loan growth
The policy rate came down by 30 bps to 60 bps,
Despite the extraordinary challenges triggered
while interbank rates shifted upward: the
by the pandemic, in 2020 the overall operation
reference rate (3M BUBOR) increased y-o-y
of the Group remained uninterrupted. It was
from 16 bps to 75 bps. The Hungarian Forint
quite an achievement that out of the previous
on average weakened against the euro by
acquisitions, the Bulgarian integration was
8% y-o-y amid substantial volatility.
completed in early May 2020, as well as
According to the Central Bank’s report
the Montenegrin one in December. The sale
published on 3 February 2021, despite the
of the Slovakian subsidiary was completed
economic recession caused by the pandemic,
by the end of November.
in 2020 both household and corporate loan
The total volume of adjustment items in
volumes expanded dynamically: the former
2020 represented –HUF 50.6 billion (after tax)
increased by 14%, while the latter by 13%,
within the HUF 260 billion accounting profit,
respectively. The payment moratorium had
underpinning a sizeable increase y-o-y.
16
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
The larger adjustment items occurring in
and Montenegro; also, provisions made in
2020 were as follows:
4Q 2019 for the divestment of the subsidiary
(cid:588) In 2020 as a whole the one-off impact
were released with a positive impact of
of the loan repayment moratoria was
HUF 6 billion (after tax).
–HUF 28.3 billion. In Hungary the first phase
of the moratorium on loan payments was
The full-year 2020 consolidated adjusted after
effective from 19 March 2020 to 31 December
tax profit exceeded HUF 310 billion (–26% y-o-y).
2020. The moratorium was extended in
The adjusted ROE stood at 13%.
unchanged form for the period between
Since the after tax results were heavily
1 January 2021–30 June 2021. During the
distorted by the volume of total risk costs
term of the moratorium OTP Bank accrues
(HUF 188 billion related mainly to the pandemic
the unpaid interest in its statement of
situation), general trends are better illustrated
recognized income, amongst the revenues.
and easier compared to base periods through
At the same time, due to the fact that interest
the development of operating income.
cannot be charged on the unpaid interest,
In 2020 OTP Group posted HUF 537.4 billion
and the unpaid interest will be repaid later,
consolidated operating income underpinning
altogether HUF 28.3 billion (after tax) loss
a 5% y-o-y increase (–4%, without acquisitions,
emerged in Hungary and Serbia. Out of
FX-adjusted2). Total income increased dynami-
this amount the expected one-off negative
cally (+9% y-o-y) with net interest income
impact of the extended moratorium
surging by 12% y-o-y, while net fees & commis-
in Hungary (effective from 1 January to
sions grew at a slower pace (+4%) and other
30 June 2021) represented –HUF 9.1 billion
net non-interest income remained flat y-o-y.
(after tax), calculated on the base of year-end
The weaker increase in net fees & commissions
participation rate: at the end of December
on one hand was shaped by a drop in business
37% of the combined gross loan portfolio at
activity in the first half of the year induced
OTP Core and Merkantil Group was under the
by the pandemic, and also by a lower success
moratorium representing HUF 1,881 billion.
fee income compared to a record high per-
This amount was recognized in December
formance in 2019 at OTP Fund Management
2020. Also, within that amount there was a
(Hungary).
–HUF 1.7 billion (after tax) negative impact in
The consolidated NIM eroded substantially
relation to the Serbian deferral scheme, as
(2020: 3.61%, –50 bps y-o-y) due to several
the original interest calculation method was
reasons: on one hand the interest rate
changed by the local regulator (originally
environment declined substantially in a few
the compound interest method was allowed
countries (Russia, Ukraine, Romania, Serbia);
by the law in Serbia, but charging interest
furthermore, new subsidiaries consolidated
on deferred interest was retrospectively
into OTP Group usually operated with lower
disallowed by the regulator). In case of other
margins than the Group as a whole. Also, as a
foreign subsidiaries the Bank didn’t assume
side-effect of the pandemic, demand for the
any meaningful negative NPV impact as a
higher margin consumer loans dropped, while
result of the moratoria;
the competition intensified. That was only
(cid:588) –HUF 17.4 billion negative impact of banking
partially offset by the positive impact of FX rate
tax paid at the Hungarian and Slovakian
moves related to weaker HUF. The annual
subsidiaries (after tax), the latter was paid
net interest income adjusted for acquisitions
only until 30 June 2020;
effects grew by 2% y-o-y (FX-adjusted), as a
(cid:588) –HUF 6.9 billion appeared on the effect of
result of higher performing loan volumes.
acquisitions line (after tax) which, among
Consolidated annual operating costs nominally
others, incorporated the integration costs in
advanced by 11% y-o-y, however adjusted
Bulgaria, Serbia, Slovenia, Albania, Moldova
for the acquisitions (2Q 2019: the Albanian
2 On 11 December 2020, Podgorička banka AD Podgorica was merged into Crnogorska komercijalna banka a.d., thus separate
financial statements for Podgorička were not available for December. Therefore, profit dynamics without acquisitions are based
on estimated numbers.
Management’s analysis of the 2020 results of the OTP Group
17
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
subsidiary, 2H 2019: the Montenegrin, Moldovan,
As for the major credit categories in 2020
Serbian and from January 2020 the Slovenian
the FX-adjusted Stage 1+2 micro and small
subsidiaries) and for the sale of Slovakia, the
enterprise book advanced organically the
FX-adjusted expense growth was only 2.4% y-o-y.
fastest y-o-y (+11%), followed by the mortgage
The COVID-related measures, as well as the
loan portfolio (+10%), the consumer exposures
donations resulted in around HUF 7.5 billion
(+9%) and the large corporate book (+8%).
extra expenses on a Group level. The consoli-
During the course of 2020 lending activity to
dated cost-to-income ratio stood at 54.1%
a great extent was shaped by easing/lifting
(+1.4 pps y-o-y).
lockdowns and limitations, but targeted
Except the Moldovan operation, adjusted
Government programmes helped, too.
earnings declined everywhere across the Group
The second wave of COVID-19 pandemic had a
y-o-y. Out of the adjusted annual profit the
more limited impact on business activity, also,
contribution of the non-Hungarian operations
seasonality affected lending.
dropped from 46% to 41%.
One of the side effects of the pandemic was
Apart from Russian performing (Stage 1+2)
that while household consumption and
loan book where the y-o-y drop exceeded 10%,
investment activity of corporates suffered
and the marginal decline of the Slovenian
setback, savings demonstrated steady
portfolio, all other Group members demon-
growth. The FX-adjusted deposit portfolio
strated loan growth (FX-adjusted). Out of the
grew by 10% y-o-y. Such yearly increase
major Group members the Hungarian (+17%),
translated into more than HUF 2,000 billion
Serbian (+16%), Romanian (+13%) and Ukrainian
deposit volume surge (already adjusted for
(+11%) organic loan expansion rates were the
the Slovakian deposit volumes). Out of the
most remarkable. In Hungary the excellent
major operations the Ukrainian, Romanian,
volume dynamics were coupled with improving
Hungarian, Slovenian and Serbian subsidiaries
market share in most of the loan categories.
captured double digit volume increase.
18
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
The consolidated net loan-to-deposit ratio
Bulgarian, Croatian, Romanian and Serbian
declined to 76% q-o-q.
operations.
At the end of 2020 the gross operative
In 4Q the Group further fine-tuned its Stage
liquidity reserves of the Group comprised
2 classification methodology: in case of
EUR 8.9 billion equivalent. The NBH acting
corporate exposures it identified clients with
as resolution authority on 16 October 2020
higher risk profile within the framework of its
informed the Bank about the consolidated
monitoring process on a case by case basis,
minimum requirement for own funds and
whereas for household loans it rather used its
eligible liabilities (MREL requirement) of
internal ratings. As a result, Stage 2 volumes
OTP Group. NBH didn’t set intermediate target
increased at certain operations. The extension
to be met by end of 2020, but determined
of the moratorium and the EBA guidance
a mandatory intermediate target for the
issued on 2 December 2020 on the treatment
consolidated MREL requirement that
of exposures within existing or extended
OTP Group has to comply with by 1 January
payment moratoria schemes (EBA/GL/2020/15)
2022. This level is 11.55% of the Group’s
induced further tightening in the methodology
total liabilities and own funds (TLOF) which
compared to 3Q; particularly in the case of
corresponds to 17.16% of the Group’s total risk
OTP Core.
exposure amount (TREA or RWA). In 2020 no
The adjusted total risk costs represented
international bond transaction was executed.
–HUF 188 billion in 2020 as a whole. Within that
The consolidated loan portfolio quality – partly
credit risk costs increased to –HUF 158.4 billion
due to the existing or extended payment
and the annual credit risk cost rate was 1.15%
moratoria – remained relatively stable in 2020:
of the average gross loan volumes.
the DPD90+ volume growth (adjusted for FX
and the effect of sales and write-offs, as well
as for the revaluation of Factoring claims in
Hungary) amounted to HUF 85 billion, against
HUF 66 billion in 2019. The consolidated DPD90+
Consolidated capital adequacy
ratio (in accordance with BASEL III)
ratio declined below 4% (3.8%, –0.4 pp y-o-y).
At the end of December 2020 the consolidated
The Stage 1+2 exposures (HUF 13,544 billion)
Common Equity Tier1 ratio under IFRS was
comprised 94.3% of total gross loans. Within
15.4% (+1 pp y-o-y). This ratio equals to the Tier 1
that Stage 1 loans represented 80.4% of total
ratio.
gross loans and the Stage 2 ratio was 13.9%.
The amount of eligible profit included into
The Stage 3 ratio under IFRS 9 was 5.7% at end
regulatory capital equals to the annual profit
of 2020 (–0.2 pp y-o-y). The own coverage of
(HUF 259 billion) reduced by the deducted
Stage 1, 2 and 3 exposures was 1.0%, 10.4% and
dividend (HUF 119 billion). The deducted
62.3%, respectively.
dividend amount for 2020 was determined in
Within the consolidated loan portfolio in 1Q a
accordance with the Commission Delegated
significant volume of corporate exposures was
Regulation (EU) No. 241/2014. Article 2. (7)
shifted from Stage 1 into the riskier Stage 2
Paragraph. Accordingly, in the absence of
category on a collective base, whereas in case
a stated dividend policy, the amount of the
of retail exposures the Bank implemented
dividend to be deducted should be calculated
higher provision coverage during the first
as follows: out of the previous three years’
two quarters. In 3Q a practice similar to that
average dividend payment ratio and that
used in the case of corporate exposures was
of the preceding year the higher ratio must
followed in case of the household portfolio.
be applied. The dividend amount must be
Mainly those exposures were reclassified
calculated from OTP Group’s consolidated
where the Bank presumed higher potential risk,
accounting profit, and this must be deducted
though this had not materialized yet due to
from the consolidated regulatory capital.
the moratoria, in particular at the Hungarian,
However, the deducted dividend also included
Management’s analysis of the 2020 results of the OTP Group
19
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
HUF 69.44 billion, the original dividend pro-
the outlook from stable into positive on
posal by the management after the 2019 fiscal
OTP Bank Plc.’s long-term FX deposit rating;
year, which wasn’t paid out in accordance
furthermore, on 10 December Moody’s
with the National Bank of Hungary’s
upgraded OTP Bank Plc.’s long-term FX deposit
recommendation.
rating from ‘Baa3’ to ‘Baa1’ with stable outlook.
Credit rating, shareholder
structure
On 2 April 2020 Moody’s changed the outlook
on OTP Mortgage Bank’s issuer rating (‘Baa2’)
from stable into negative. OTP Mortgage Bank’s
covered bond rating remained ‘Baa1’.
OTP Bank Russia’s ‘BB+’ rating by Fitch is
On 27 January 2020 S&P Global Ratings
unchanged, on 23 April 2020, however, the
upgraded OTP Bank Plc.’s and OTP Mortgage
outlook was changed from stable to negative.
Bank’s short- and long-term issuer credit
Regarding the ownership structure of the Bank,
ratings from ‘BBB–/A–3’ to ‘BBB/A–2’. At the
on 31 December 2020 the following investors
same time S&P affirmed its ‘BBB/A–2’ long-
had more than 5% influence (voting rights)
and short-term resolution counterparty
in the Company: MOL (the Hungarian Oil and
ratings on OTP and OTP Mortgage Bank.
Gas Company, 8.71%), the Kafijat Group (7.20%),
The outlook remained stable for both banks.
OPUS Securities SA (5.26%) and Groupama
On 29 September 2020 Moody’s changed
Group (5.20%).
P O S T - B A L A N C E S H E E T E V E N T S 3
Hungary
contributions, overhead costs, general
operating expenses and inventory financing.
(cid:588) Effective from 13 January 2021 the National
Client interest rate is 0%, the loan tenor can
Bank of Hungary extended the available
be up to 10 years, and the servicing of the
amount for the Bond Funding for Growth
loan will start after a 3 year grace period.
scheme by HUF 750 billion to HUF 1,150 billion.
The scope of eligible entities will be discussed
At the same time it decided to increase the
with the Hungarian Chamber of Commerce
maximum maturity of corporate bonds that
and Industry.
can be purchased by the central bank from
(cid:588) On 16 February 2021 the Hungarian
20 to 30 years. Also, the central bank’s
Statistical Office revealed the preliminary
exposure limit to a company group was
4Q 2020 GDP statistics. Accordingly, in the
revised from HUF 50 billion to HUF 70 billion.
fourth quarter the Hungarian economy
(cid:588) On 4 February 2021 the Prime Minister
grew by 1.1% q-o-q (seasonally and working
announced an interest-free loan programme
day adjusted), but contracted by 5.1% y-o-y
for companies in trouble in the wake of
in 2020 as a whole.
the pandemic. According to Government
Resolution 1038/2021. (II. 5.) the programme
will be administered by the Hungarian
Bulgaria
Development Bank, and the available
amount under the programme will be
(cid:588) On 19 February 2021 Fitch Ratings reaffirm-
HUF 100 billion. Companies can take out
ing Bulgaria’s sovereign ‘BBB’ debt rating,
maximum HUF 10 million each for the
and changed the outlook from stable to
purpose of covering wages and social
positive.
3 Post-balance sheet events cover the period until 19 February 2021.
20
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Croatia
Romania
(cid:588) On 4 February 2021 the European Central
(cid:588) On 15 January 2021 the National Bank
Bank and the Croatian National Bank agreed
of Romania decided to reduce the key
to extend the euro liquidity line until the
interest rate by 25 bps to 1.25%.
end of March 2022.
Serbia
Russia
(cid:588) On 20 January 2021 the Central Bank
(cid:588)(cid:631) On 4 February 2021, the European Central
of Russia published its 2021–2022 road
Bank extended the maintenance of a repo
map for regulating consumer lending,
facility providing euro-based liquidity to the
as a result loosening measures taken in
National Bank of Serbia in order to help with
2020 to facilitate lending will be reversed
possible liquidity needs in euros during
through higher risk weights being
post-epidemic market disruptions.
introduced.
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Management’s analysis of the 2020 results of the OTP Group
21
CONSOLIDATED AF T ER TAX PROFIT
BREAKDOWN BY SUBSIDIARIES (IFRS) 4
Consolidated after tax profit
Adjustments (total)
Consolidated adjusted after tax profit without the effect of adjustments
Banks total1
OTP Core (Hungary)2
DSK Group (Bulgaria)3
OBH (Croatia)4
OTP Bank Serbia5
SKB Banka (Slovenia)
OTP Bank Romania6
OTP Bank Ukraine7
OTP Bank Russia8
CKB Group (Montenegro)9
OTP Bank Albania
Mobiasbanca (Moldova)
OBS (Slovakia)10
Leasing
Merkantil Group (Hungary)11
Asset Management
OTP Asset Management (Hungary)
Foreign Asset Management Companies (Ukraine, Romania, Bulgaria)12
Other Hungarian Subsidiaries
Other Foreign Subsidiaries13
Corporate Centre14
Eliminations
Total adjusted after tax profit of HUNGARIAN subsidiaries15
Total adjusted after tax profit of FOREIGN subsidiaries16
Share of foreign profit contribution
2019
HUF million
412,582
(6,470)
419,052
382,144
190,956
67,879
30,719
10,430
–
6,309
35,223
28,127
6,377
2,616
1,936
1,575
7,115
7,115
15,208
15,104
104
9,498
232
3,478
1,377
227,527
191,525
46%
2020
HUF million
259,636
(50,631)
310,268
285,103
159,303
40,957
14,830
7,298
9,665
1,558
26,104
16,317
4,307
1,959
3,973
(1,169)
7,661
7,661
9,824
9,747
77
8,241
108
(569)
(101)
184,282
125,986
41%
Change
%
(37)
683
(26)
(25)
(17)
(40)
(52)
(30)
(75)
(26)
(42)
(32)
(25)
105
(174)
8
8
(35)
(35)
(26)
(13)
(53)
(116)
(107)
(19)
(34)
(5)
4 Belonging footnotes are in the Supplementary data section of the Report.
22
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
C O N S O L I D AT E D S TAT E M E N T
O F P R O F I T O R L O S S
Main components of the adjusted Statement of recognized income
Consolidated after tax profit
Adjustments (total)
Dividends and net cash transfers (after tax)
Goodwill/investment impairment charges (after tax)
Special tax on financial institutions (after corporate income tax)
Expected one-off negative effect of the debt repayment moratorium
in Hungary and Serbia (after corporate income tax)
Impact of fines imposed by the Hungarian Competition Authority (after tax)
Effect of acquisitions (after tax)
One-off impact of regulatory changes related to FX consumer contracts in Serbia
Consolidated adjusted after tax profit without the effect of adjustments
Before tax profit
Operating profit
Total income
Net interest income
Net fees and commissions
Other net non-interest income
Foreign exchange result, net
Gain/loss on securities, net
Net other non-interest result
Operating expenses
Personnel expenses
Depreciation
Other expenses
Total risk costs
Provision for impairment on loan and placement losses
Other provision
Total one-off items
Gain on the repurchase of own Upper and Lower Tier2 Capital
Result of the treasury share swap agreement at OTP Core
Corporate taxes
Indicators
ROE (from accounting net earnings)
ROE (from adjusted net earnings)
ROA (from adjusted net earnings)
Operating profit margin
Total income margin
Net interest margin
Net fee and commission margin
Net other non-interest income margin
Cost-to-asset ratio
Cost/income ratio
Provision for impairment on loan and placement losses-to-average gross loans
Total risk cost-to-asset ratio
Effective tax rate
Non-interest income/total income
EPS base (HUF) (from unadjusted net earnings)
EPS diluted (HUF) (from unadjusted net earnings)
EPS base (HUF) (from adjusted net earnings)
EPS diluted (HUF) (from adjusted net earnings)
Comprehensive Income Statement
Consolidated after tax profit
Fair value changes of financial instruments measured at fair value
through other comprehensive income
Fair value adjustment of derivative financial instruments designated as cash-flow hedge
Net investment hedge in foreign operations
Foreign currency translation difference
Change of actuarial costs (IAS 19)
Net comprehensive income
o/w Net comprehensive income attributable to equity holders
Net comprehensive income attributable to non-controlling interest
Average exchange rate* of the HUF
HUF/EUR
HUF/CHF
HUF/USD
2019
HUF million
412,582
(6,470)
505
(8,427)
(16,170)
2020
HUF million
259,636
(50,631)
213
886
(17,365)
Change
%
(37)
683
(58)
(111)
7
0
0
19,265
(1,644)
419,052
465,973
510,045
1,077,727
706,298
282,504
88,926
45,177
12,372
31,376
(567,682)
(280,002)
(56,383)
(231,298)
(47,107)
(29,474)
(17,633)
3,034
0
3,034
(46,921)
2019
20.3%
20.6%
2.4%
2.97%
6.28%
4.12%
1.65%
0.52%
3.31%
52.7%
0.28%
0.27%
10.1%
34%
1,576
1,575
1,602
1,602
2019
412,582
30,224
11
(2,526)
79,440
(161)
519,570
518,802
768
2019
HUF
325
292
291
(28,262)
749
(6,852)
0
310,268
351,802
537,437
1,169,920
788,079
293,112
88,729
44,927
14,193
29,610
(632,483)
(312,495)
(70,286)
(249,702)
(187,995)
(158,421)
(29,574)
2,360
0
2,360
(41,534)
2020
10.9%
13.0%
1.4%
2.47%
5.37%
3.61%
1.34%
0.41%
2.90%
54.1%
1.15%
0.86%
11.8%
33%
1,004
1,003
1,200
1,200
2020
259,636
(4,764)
(2)
(8,591)
68,593
144
315,016
315,239
(223)
2020
HUF
351
328
308
(136)
(100)
(26)
(25)
5
9
12
4
0
(1)
15
(6)
11
12
25
8
299
437
68
(22)
(22)
(11)
%/pps
(9.4)
(7.6)
(1.0)
(0.50)
(0.91)
(0.51)
(0.31)
(0.11)
(0.41)
1.4
0.87
0.59
1.7
(1)
(36)
(36)
(25)
(25)
%
(37)
(116)
(118)
240
(14)
(189)
(39)
(39)
(129)
Change
%
7
11
6
* Exchange rates presented in the tables of this report should be interpreted as follows: the value of a unit of the other currency expressed in Hungarian forint terms, i.e.
HUF/EUR represents the HUF equivalent of one EUR.
Management’s analysis of the 2020 results of the OTP Group
23
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
A S S E T - L I A B I L I T Y M A N A G E M E N T
Similar to previous periods
OTP Group maintained a strong
and safe liquidity position…
OTP Bank Plc. and OTP Mortgage Bank Ltd.
Due to the forint liabilities on OTP Bank’s
balance sheet, which respond to yield
changes only to a moderate extent, the Bank
The primary objective of OTP Group in terms of
has an interest-rate risk exposure resulting
asset-liability management has not changed,
from its business operations. The Bank
that is to ensure that the Group’s liquidity is
considers the reduction and closing of this
maintained at a safe level.
exposure as a strategic matter. Consequently,
Refinancing sources of the European Central
it has been reducing its interest-rate risk
Bank are still available for OTP (ECB repo
exposure through the purchase of fixed-rate
eligible security portfolio on Group level is
government securities in order to offset the
close to EUR 1.3 billion).
negative impact of declining yields on net
Total liquidity reserves of OTP Bank remained
interest income.
steadily and substantially above the safety
level. As of 31 December 2020 the gross
liquidity buffer was around EUR 8.9 billion
equivalent. In addition to this, significant
part of the Bulgarian excess liquidity
Market Risk Exposure
of OTP Group
(ca. EUR 1.2 billion) was placed locally due
The consolidated capital requirement of the
to the Bulgarian regulation at the end of
trading book positions, the counterparty
December. Level of these buffers is
risk and the FX risk exposure represented
significantly higher than the maturing debt
HUF 28.9 billion in total.
within one year and the reserves required to
OTP Group is an active participant of the
protect against possible liquidity shocks.
international FX and derivative market. Open
The volume of issued securities increased by
FX positions of group members are restricted
HUF 150 billion y-o-y, mainly because of the
to individual and global net open position
change of net volume of mortgage bonds
limits (overnight and intraday), and to stop-
issued by OTP Mortgage bank due to the
loss limits. The open positions of the group
issuance and cancellation of mortgage bonds
members outside Hungary except for the
in 2020. In 2020 HUF 22 billion retail and
Bulgarian DSK Bank – the EUR/BGN exposure
structured bond have been matured, now the
of DSK under the current exchange rate regime
volume is HUF 16 billion.
does not represent real risk – were negligible
The volume of subordinated debt increased
measured against either the balance sheet
by HUF 17 billion y-o-y, mainly due to the
total or the regulatory capital. Therefore,
HUF weakening against the EUR, since
the group level FX exposure was concentrated
subordinated bond issuance did not happen
at OTP Bank.
in 2020.
…and kept its interest-rate risk
exposures low
The main part of the FX exposure booked at
OTP Bank – in line with the previous years’
practice – was the strategic open FX position
(EUR 310 million), kept to hedge the currency
risk of the expected FX-denominated net
earnings of the main foreign subsidiaries.
Interest-rate risk exposure of OTP Group is
The strategic open FX position was partially
determined primarily by the positions of
closed in 4Q 2020.
24
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
C O N S O L I D AT E D S TAT E M E N T
O F F I N A N C I A L P O S I T I O N O F O T P G R O U P
Main components of the adjusted balance sheet
TOTAL ASSETS
Cash, amounts due from Banks and balances with the National Banks
Placements with other banks, net of allowance for placement losses
Financial assets at fair value through profit or loss
Securities at fair value through other comprehensive income
Net customer loans
Net customer loans (FX-adjusted*)
Gross customer loans
Gross customer loans (FX-adjusted*)
o/w Retail loans
Retail mortgage loans (incl. home equity)
Retail consumer loans
SME loans
Corporate loans
Loans to medium and large corporates
Municipal loans
Car financing loans
Allowances for loan losses
Allowances for loan losses (FX-adjusted*)
Associates and other investments
Securities at amortized costs
Tangible and intangible assets, net
o/w Goodwill, net
Tangible and other intangible assets, net
Other assets
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
Amounts due to banks, the National Governments, deposits from
the National Banks and other banks, and Financial liabilities designated
at fair value through profit or loss
Deposits from customers
Deposits from customers (FX-adjusted*)
o/w Retail deposits
Household deposits
SME deposits
Corporate deposits
Deposits to medium and large corporates
Municipal deposits
Accrued interest payable related to customer deposits
Liabilities from issued securities
o/w Retail bonds
Liabilities from issued securities without retail bonds
Other liabilities
Subordinated bonds and loans**
Total shareholders’ equity
Indicators
Loan/deposit ratio (FX-adjusted*)
Net loan/(deposit + retail bond) ratio (FX-adjusted*)
Stage 1 loan volume under IFRS 9
Stage 1 loans under IFRS 9/gross customer loans
Own coverage of Stage 1 loans under IFRS 9
Stage 2 loan volume under IFRS 9
Stage 2 loans under IFRS 9/gross customer loans
Own coverage of Stage 2 loans under IFRS 9
Stage 3 loan volume under IFRS 9
Stage 3 loans under IFRS 9/gross customer loans
Own coverage of Stage 3 loans under IFRS 9
90+ days past due loan volume
90+ days past due loans/gross customer loans
2019
HUF million
20,121,767
1,841,963
410,433
251,991
2,427,537
12,247,519
12,902,518
12,942,009
13,605,264
7,930,058
3,671,413
3,235,843
1,022,802
5,101,177
4,694,688
406,490
574,029
(694,490)
(702,746)
20,822
1,995,627
605,673
105,298
500,375
320,201
20,121,767
2020
HUF million
23,335,841
2,432,314
1,148,987
235,194
2,140,118
13,528,586
13,528,586
14,363,281
14,363,281
8,309,033
3,818,847
3,484,172
1,006,014
5,409,732
4,935,682
474,049
644,516
(834,695)
(834,695)
52,443
2,625,952
589,878
101,393
488,485
582,368
23,335,841
846,158
1,219,446
15,522,654
16,260,599
11,805,158
9,722,990
2,082,168
4,440,881
3,637,487
803,394
14,560
393,167
3,237
389,930
818,561
249,937
2,291,288
2019
84%
79%
11,489,554
88.8%
1.1%
685,885
5.3%
10.7%
766,570
5.9%
65.2%
541,467
4.2%
17,890,863
17,890,863
12,810,762
10,614,696
2,196,066
5,071,626
4,218,727
852,899
8,474
464,213
1,326
462,888
949,502
274,704
2,537,112
2020
80%
76%
11,544,766
80.4%
1.0%
1,998,867
13.9%
10.4%
819,647
5.7%
62.3%
543,713
3.8%
Change
%
16
32
180
(7)
(12)
10
5
11
6
5
4
8
(2)
6
5
17
12
20
19
152
32
(3)
(4)
(2)
82
16
44
15
10
9
9
5
14
16
6
(42)
18
(59)
19
16
10
11
%/pps
(4)
(3)
0
(8.4)
0.0
191
8.6
(0.3)
7
(0.2)
(2.9)
0
(0.4)
* For the FX adjustment, the closing cross currency rates for the current period were used to calculate the HUF equivalent of loan and deposit volumes in the base periods.
** The ICES bonds are considered as Tier2 debt, but accounting-wise they are treated as part of the shareholders’ equity.
Management’s analysis of the 2020 results of the OTP Group
25
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Consolidated capital adequacy – Basel3
Capital adequacy ratio (consolidated, IFRS)
Tier 1 ratio
Common Equity Tier1 (CET1) capital ratio
Regulatory capital (consolidated)
o/w Tier 1 Capital
o/w Common Equity Tier1 capital
Tier2 Capital
o/w Hybrid Tier2
Consolidated risk weighted assets (RWA)
(Credit&Market&Operational risk)
o/w RWA (Credit risk)
RWA (Market & Operational risk)
Closing exchange rate of the HUF
HUF/EUR
HUF/CHF
HUF/USD
2019
16.8%
14.4%
14.4%
2,390,688
2,055,106
2,055,106
335,582
89,935
14,262,197
12,529,878
1,732,319
2019
HUF
331
304
295
2020
17.7%
15.4%
15.4%
2,669,806
2,316,118
2,316,118
353,688
89,935
15,046,888
13,389,536
1,657,352
2020
HUF
365
337
297
%/pps
1.0
1.0
1.0
12
13
13
5
0
6
7
(4)
Change
%
10
11
1
O T P B A N K ’ S H U N G A R I A N C O R E B U S I N E S S
OTP Core Statement of recognized income:
Main components of the Statement of recognised income
After tax profit without the effect of adjustments
Corporate income tax
Pre-tax profit
Operating profit
Total income
Net interest income
Net fees and commissions
Other net non-interest income
Operating expenses
Total risk costs
Provision for impairment on loan and placement losses
Other provisions
Total one-off items
Revaluation result of the treasury share swap agreement
Indicators
ROE
ROA
Operating profit margin
Total income margin
Net interest margin
Net fee and commission margin
Net other non-interest income margin
Operating costs to total assets ratio
Cost/income ratio
Provision for impairment on loan and placement
losses/average gross loans*
Effective tax rate
2019
HUF million
190,956
(12,668)
203,624
173,995
432,013
261,754
126,911
43,349
(258,018)
26,594
30,332
(3,737)
3,034
3,034
2019
11.7%
2.1%
1.9%
4.82%
2.92%
1.42%
0.48%
2.9%
59.7%
(0.88%)
6.2%
2020
HUF million
159,303
(16,558)
175,860
181,178
453,634
286,448
130,470
36,717
(272,457)
(7,677)
2,374
(10,052)
2,360
2,360
2020
9.3%
1.5%
1.7%
4.34%
2.74%
1.25%
0.35%
2.6%
60.1%
(0.06%)
9.4%
Change
%
(17)
31
(14)
4
5
9
3
(15)
6
(129)
(92)
169
(22)
(22)
pps
(2.4)
(0.6)
(0.2)
(0.48)
(0.18)
(0.17)
(0.13)
(0.3)
0.3
0.82
3.2
* Negative Provision for impairment on loan and placement losses/average gross loans ratio implies positive amount on the Provision for impairment on loan and placement
losses line.
26
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Main components of OTP Core’s Statement of financial position:
Main components of balance sheet closing balances
Total Assets
Net customer loans
Net customer loans (FX-adjusted)
Gross customer loans
Gross customer loans (FX-adjusted)
Retail loans
Retail mortgage loans (incl. home equity)
Retail consumer loans
SME loans
Corporate loans
Loans to medium and large corporates
Municipal loans
Provisions
Provisions (FX-adjusted)
Deposits from customers + retail bonds
Deposits from customers + retail bonds (FX-adjusted)
Retail deposits + retail bonds
Household deposits + retail bonds
o/w Retail bonds
SME deposits
Corporate deposits
Deposits to medium and large corporates
Municipal deposits
Liabilities to credit institutions
Issued securities without retail bonds
Total shareholders’ equity
Loan Quality
Stage 1 loan volume under IFRS 9 (in HUF million)
Stage 1 loans under IFRS 9/gross customer loans
Own coverage of Stage 1 loans under IFRS 9
Stage 2 loan volume under IFRS 9 (in HUF million)
Stage 2 loans under IFRS 9/gross customer loans
Own coverage of Stage 2 loans under IFRS 9
Stage 3 loan volume under IFRS 9 (in HUF million)
Stage 3 loans under IFRS 9/gross customer loans
Own coverage of Stage 3 loans under IFRS 9
90+ days past due loan volume (in HUF million)
90+ days past due loans/gross customer loans
Market Share
Loans
Deposits
Total Assets
Performance Indicators
Net loans to (deposits + retail bonds) (FX-adjusted)
Leverage (closing Shareholder's Equity/Total Assets)
Leverage (closing Total Assets/Shareholder's Equity)
Capital adequacy ratio (OTP Bank, non-consolidated, Basel3, IFRS)
Common Equity Tier1 ratio (OTP Bank, non-consolidated, Basel3, IFRS)
2019
HUF million
9,641,692
3,740,975
3,809,093
3,883,412
3,954,333
2,377,561
1,383,805
746,272
247,483
1,576,772
1,475,017
101,756
(142,437)
(145,240)
6,770,161
6,861,433
4,562,600
3,609,460
3,237
953,140
2,298,834
1,658,191
640,643
445,301
436,340
1,720,872
2019
3,550,841
91.4%
0.8%
163,954
4.2%
12.4%
168,618
4.3%
55.4%
123,895
3.2%
2019
22.2%
27.7%
28.8%
2019
56%
17.8%
5.6x
27.6%
23.6%
2020
HUF million
11,492,949
4,415,778
4,415,778
4,631,974
4,631,974
2,955,288
1,534,013
1,043,634
377,642
1,676,685
1,577,900
98,785
(216,196)
(216,196)
8,083,488
8,083,488
5,369,294
4,231,931
1,326
1,137,363
2,714,194
1,961,483
752,711
858,230
513,860
1,766,639
2020
3,606,490
77.9%
0.8%
833,163
18.0%
10.1%
192,321
4.2%
54.5%
144,816
3.1%
2020
23.0%
25.4%
25.7%
2020
55%
15.4%
6.5x
26.7%
22.5%
Change
%
19
18
16
19
17
24
11
40
53
6
7
(3)
52
49
19
18
18
17
(59)
19
18
18
17
93
18
3
%/pps
2
(13.5)
0.0
408
13.8
(2.3)
14
(0.1)
(0.9)
17
(0.1)
pps
0.8
(2.3)
(3.1)
pps
(1)
(2.5)
0.9x
(0.8)
(1.0)
(cid:588) In 2020 as a whole, OTP Core's adjusted profit amounted to HUF 159.3 billion,
marking a y-o-y decline of 17%, owing to higher risk costs
(cid:588) All components of the total income margin declined in 2020 (–48 bps y-o-y)
(cid:588) Whereas the underlying loan quality trends remained favourable, the rise in the ratio
of Stage 2 loans stemmed from the Bank's more conservative customer assessment.
The ratio of Stage 3 loans even decreased y-o-y
(cid:588) Performing loans grew dynamically (+19% y-o-y FX-adjusted), mostly driven by the
subsidized baby loans and FGS Go! loans. Deposits rose by 18% y-o-y
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Management’s analysis of the 2020 results of the OTP Group
27
Starting from 1Q 2020, OTP eBIZ Ltd. became
end of 2019, while its annual average rate rose
part of OTP Core. It reported HUF 0.4 billion
by 50 bps, to 69 bps.
loss in full-year 2019.
The annual net fees and commissions grew by
Starting from 1Q 2020, the accounting method
HUF 3.6 billion, or 3% y-o-y. The main reason
of the termination of swap contracts has
for the modest growth was the pandemic-
changed. Upon the termination of swap deals,
induced decline in economic activity and trans-
until the end of 2019, the FVA booked within
action volumes: reversing a 15% y-o-y growth
other income was shifted to the net interest
in 1Q, there was 7% decline in 2Q, 3% drop in
income line. From 1Q 2020 this shift does not
3Q from the previous year, but the growth
occur. In the case of OTP Core, the intra-group
rate returned to positive territory in 4Q, even
swaps, typically with DSK Bank, are being
without a one-off item booked in 4Q 2020: the
terminated. In 2019 the other income
shifting of subsidized retail loans to loans at
of OTP Core was boosted, whereas the net
fair value had HUF 2.7 billion positive effect6
interest income was reduced by the above
on net fees. Among the components of the
accounting method.
annual fee income, deposits, transactions-
P&L developments
and card-related fee revenues rose modestly,
while commissions from securities dropped,
particularly those relating to the distribution
of investment funds and retail government
In 2020, OTP Core's adjusted after tax profit
bonds. The latter was partly explained by base
amounted to HUF 159.3 billion, 17% less than a
effect: thanks to the outstanding sales per-
year earlier. The drop owed a lot to higher total
formance, the volume of the MÁP Plus retail
risk costs, while operating profit improved by 4%,
government bonds expanded significantly
largely benefiting from a continued dynamic
after its launch in June 2019. Secondly,
loan growth.
revenues realized in 2020 declined in relation
Within full-year total income, net interest
to the distribution fee structure, largely as
income grew at the strongest rate, 9%, thanks
average retail government bond volumes
to a dynamic organic growth in loans – this
shrank q-o-q in the second quarter of 2020,
was somewhat offset by the 18 bps y-o-y
bringing down retail government bond
erosion of net interest margin. The latter was
distribution fee revenues in 2Q.
reasoned mainly by lower lending interest rate
Full-year other net non-interest income (without
levels, owing to the strong competition. In the
one-offs) dropped by 15% y-o-y, or HUF 6.6 bil-
fourth quarter, net interest income benefited
lion, dragged down by lower gain on securities
a total HUF 0.5 billion from items that arose
in 1Q 2020, and by the fact that recoveries
in 4Q when, under the modification of its
realized on claims bought by OTP Factoring
accounting policy, the Bank re-classified retail
from non-Group parties were presented under
loans with subsidized interest rates from loans
risk costs, rather than other income, starting
at amortized cost to loans measures at fair
from 2020. In 2020, nearly HUF 3.8 billion
value through profit or loss5.
revaluation result appeared within other
Short-term interbank rates, which are the
income in the wake of the revision of Visa Inc.‘s
reference rates for variable rate loans, rose
class C shares’ accounting classification.
overall in 2020: the 3M BUBOR's closing value
In 2020, operating expenses grew by 6%,
rose to 75 bps by end-2020, from 16 bps at the
or HUF 14.4 billion, chiefly because of higher
5 The modification of the accounting policy was applied retroactively: the P&L items that concerned the previous years were
accounted against shareholders’ equity, while the reporting year's items were booked in the P&L, in one lump sum in 4Q 2020.
6 Because of the reclassification of loans, two major items appeared among net fees: first, the commissions due in 2020, which
would have been amortized over the whole maturity according to the previous method, were recognized in the P&L in one lump
sum in December (HUF 1.3 billion). Second, the fees received after the end-of-the-year volume of baby loans were recorded
amongst the net fees and commissions (HUF 1.4 billion), while under the previous accounting policy, this amount would have
been recognized in the outstanding baby loan volumes at amortized cost.
7 In 2Q 2020, because of technical reasons, lower fee income was booked from the sales of investment funds. At OTP Core, much of
this type of income is related to the funds managed by the Group's Hungarian fund managers, and is presented at these asset
management companies as commission expenditure, thus at Group level, this item did not affect the q-o-q dynamics of net fees
and commissions.
28
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
depreciation, and to a lesser extent due to
in 2Q, 3Q, and 4Q (FX-adjusted, without
administrative expenses, including hardware
sales/write-offs, adjusted for the revaluation
and office equipment costs, as well as super-
of OTP Factoring’s claims in 4Q). This led to
visory fees (the latter jumped by HUF 3 billion
a HUF 5 billion decrease in full-year 2020,
y-o-y, to HUF 13.3 billion). In 2020 as a whole,
the same as the 2019 figure. In the whole of
the extra cost of protection against the
2020, HUF 10 billion non-performing loans
pandemic and OTP Bank’s donations entailed
were sold/written off (FX-adjusted).
HUF 4 billion extra expenses. As a favourable
Predominantly as a result of the abovemen-
development, personnel expenses slightly
tioned reclassifications, the ratio of Stage 2
dropped y-o-y, in part because of lower
loans grew to 18% by the end of December,
bonus payments and partly as employers’
up from 4.2% at the end of 2019, and from 11.7%
contributions were reduced by a further two
in the previous quarter. Even though those
pps from July 2020. The average number of
reclassifications into Stage 2 reduced the own
employees grew by 5% y-o-y.
coverage of both Stage 1 and Stage 2 loans in
In 2020, total risk costs amounted to
2020, but the total Stage 1+2 portfolio's own
–HUF 7.7 billion, as opposed to +HUF 26.6 billion
provision coverage nearly doubled in 2020
in 2019. The main reason for the higher risk
(2019: 1.3%, 2020: 2.5%).
costs was that the pandemic-induced change
in the macroeconomic environment was
incorporated in the calculation of impairments.
Balance sheet trends
As a result, the IFRS 9 impairment model
parameters were revised several times in the
In 2020, the balance sheet total expanded
course of 2020, entailing higher risk costs.
by 19% (+HUF 1.851 billion). A larger part of
Throughout 2020, the Bank steadily monitored
that growth came from customer deposits
changes to customers’ financial position and
(+HUF 1.315 billion), and a smaller increase was
behaviour even during the loan repayment
caused by a y-o-y growth in liabilities to credit
moratorium, and sought to identify debtors
institutions (+HUF 413 billion). One reason
with increased risk profile. As a result, certain
for the latter was that the repo volumes,
exposures – some of them under the debt
previously presented on the medium and large
repayment moratorium – were reclassified
corporate deposits line, picked up from zero
as Stage 2 during 2020, which also added
at the end of 2019, and was moved to this line,
to risk costs. These effects were mitigated by
starting from 2020.
the positive risk costs booked in relation to
Gross loans and performing (Stage 1+2) loans
the portfolio managed by OTP Factoring, the
grew at similar rates, by 17% in 2020 (FX-adjusted),
Hungarian work-out company, largely relating
while performing loans surged 21% in 2019.
to claims toward households. This included the
OTP Core's performing loans rose by 5% q-o-q
continued recoveries realized on these claims,
in 1Q, by 2% in 2Q, by 5% in 3Q, and by 4% 4Q
whereas in 4Q 2020 another positive item
(all FX-adjusted) – that is, the pandemic and
emerged as a result of the revision of the
the related restrictions somewhat decelerated
expected future recoveries from OTP Factoring's
loan growth in 2Q, but it could climb back
claims; the upward revaluation of such claims
to average pre-pandemic quarterly levels
also resulted in a growth in net loan volumes
in the second half-year. This was mostly the
classified as Stage 3 (while the stock of impair-
result of the effective economy protection
ments in the balance sheet did not change).
measures, particularly of the government's
Regarding loan quality trends, new defaults
and the National Bank of Hungary’s subsidized
did not seem to have jumped: while the volume
lending programs: in full-year 2020, growth
of more than 90 days past due (DPD90+)
in subsidized loans (baby loans, FGS Go!,
loans grew by HUF 4 billion in 1Q 2020, these
CSOK Housing Subsidy for Families scheme)
volumes contracted by HUF 3 billion each
contributed 84% of the total FX-adjusted
Management’s analysis of the 2020 results of the OTP Group
29
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
increase in performing loans. Meanwhile,
was launched in July 2019, owing to the
the dynamic lending activity helped OTP Bank
features of the structure (1Q 2020: HUF 72 billion,
preserve, or in some cases even improve, its
2Q: HUF 59 billion, 3Q: HUF 65 billion,
market share in the main loan categories.
4Q: HUF 61 billion).
In addition, starting from the second quarter
Market-based cash loan disbursements fell by
of 2020, existing loan volumes also benefited
46% overall in 2020. The declining disburse-
from the fact that, in the case of loans that
ments from 2Q 2020 can be attributed to
participated in the debt repayment morato-
the introduction of a cap on interest rates
rium, the principal was not amortized, and
on newly disbursed, non-mortgage-backed
the deferred interest was presented as part
consumer loans, effective from 19 March 2020
of the gross loan volume (however, the
until end-2020, as well as to the related
regulation bans charging interest on the
tightening in lending standards. OTP Bank's
unpaid interest).
markets share calculated from cash loan
Regarding the individual product categories,
placements was 34.8% in full-year 2020, down
the subsidized baby loan was the engine
from 38.9% in 2019. The stock of performing
of consumer loan growth: in 2020, the
cash loans expanded by 15% y-o-y, partly
contractual amount of baby loans at OTP Bank
supported by the declining amortization due
hit HUF 257 billion, thus the Bank's market
to the repayment moratorium.
share reached 41.7% in 2020. In line with
As for mortgage loans, the steady growth
expectations, the quarterly contractual
in performing volumes continued, bringing
amount of baby loans has been following
the y-o-y dynamics to 11%. Within that, housing
a slightly declining path since the product
loans, which make up 85% of the overall
30
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
mortgage stock, expanded by 14% y-o-y, while
acceleration from the 14% growth in 2019.
home equity loans, which were less popular
This owed a lot to the National Bank of
in recent years, shrank further (–6% y-o-y).
Hungary’s Funding for Growth Go! scheme,
In full year 2020, applications for mortgage
which has been available at OTP Bank
loans subsided 7% y-o-y. However, the
since the end of April 2020. By the end of
disbursed amount grew by 15% y-o-y in
December 2020, their contractual amount
2020, owing to the surge in subsidized loan
reached HUF 362 billion, thus OTP Bank's
placement.
market share has surpassed 25% since the
OTP Bank's market share in new mortgage
programme started.
loan contractual amounts hit 32.0% in 2020
The share of investments in subsidiaries,
(up from 31.4% in 2019). The improvement
held on OTP Core's asset side, within the
owed mainly to the CSOK family housing
balance sheet total rose by an average
benefit scheme, which was expanded in July
of 1 pp y-o-y in 2020, to 13.1%, fundamentally
2019, thus bolstering demand for subsidized
driving the growing share of non-interest-
loans: in the subsidized housing loan segment,
bearing assets in the balance sheet.
OTP's market share has been traditionally
OTP Core's customer deposits increased by
strong.
18% y-o-y (FX-adjusted). Household deposits
Regarding corporate lending activity,
remained on a dynamic growth path (+3%
performing corporate loans reversed the
q-o-q in 1Q 2020, +6% in 2Q, +2% in 3Q, and
strong growth seen in recent years and in the
+5% in 4Q). The net loan/(deposit + retail bond)
first quarter of 2020 (+5% q-o-q): they declined
ratio stood at 55% at the end of 2020,
by 1% q-o-q in 2Q 2020, then picked up that
which is consistent with 1 pp y-o-y decline.
much in 3Q, and grew 3% q-o-q in 4Q. This
OTP Bank's capital adequacy ratio (CAR)
brought the annual growth rate to 7% in 2020.
stood at 26.7% at the end of 2020, while the
The outstanding expansion in loans to
CET1 = Tier 1 ratio was at 22.5%. The Bank's
micro and small enterprises continued:
regulatory capital at the end of the reporting
their performing loan volumes grew by 55%
period did not include the eligible profit made
y-o-y (FX-adjusted), marking an impressive
in the reporting period.
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Management’s analysis of the 2020 results of the OTP Group
31
O T P F U N D M A N A G E M E N T ( H U N G A R Y )
Changes in assets under management and financial performance of OTP Fund Management:
Main components of P&L account
After tax profit without the effect of adjustments
Income tax
Profit before income tax
Operating profit
Total income
Net interest income
Net fees and commissions
Other net non-interest income
Operating expenses
Other provision
Main components of balance sheet closing balances
Total assets
Total shareholders’ equity
Asset under management
Assets under management, total (w/o duplicates)*
Volume of investment funds (closing, w/o duplicates)
Volume of managed assets (closing)
Volume of investment funds (closing, with duplicates)**
absolute return fund
bond
security
mixed
commodity market
guaranteed
money market
derivative
other
2019
HUF million
15,104
(1,438)
16,542
16,542
20,433
0
19,800
633
(3,891)
0
2019
33,688
24,828
2019
HUF billion
1,119
793
326
1,073
434
315
188
73
30
28
6
0
0
2020
HUF million
9,747
(915)
10,662
10,662
14,453
0
14,154
299
(3,791)
(1)
2020
33,210
16,425
2020
HUF billion
1,201
828
373
1,183
374
376
248
133
28
20
5
0
0
Change
%
(35)
(36)
(36)
(36)
(29)
0
(29)
(53)
(3)
0
%
(1)
(34)
Change
%
7
4
14
10
(14)
19
32
82
(7)
(29)
(17)
0
0
In 2020, OTP Fund Management generated
lows hit in the first quarter, the situation
HUF 9.7 billion profit, 35% less than in the
consolidated, and the turbulent changes
previous year.
reshuffled investment funds’ structure as well.
The y-o-y drop in full-year net fees and com-
Following its extraordinary performance in
missions was caused by a base effect: it largely
2019, Hungary's largest absolute return fund,
reflected the effect of the income from an
OTP Supra Derivative Fund made negative
outstanding success fee at the end of 2019.
yield in 2020, but it worked off some of
Unlike in 2019, when the success fee was
the losses after hitting its lowest in March.
mostly related to the OTP Supra Derivative
Absolute return funds, as well as technology
Fund's performance, in 2020 it was the
and climate change related funds were
OTP Treasures of the Earth Derivative Fund,
particularly popular in 2020.
and a number of other derivative and absolute
The positive capital flow and yields helped
return funds’ performance that determined it.
OTP Fund Management increase the total
The OTP Treasures of the Earth Derivative Fund
wealth managed in y-o-y terms (by +4%).
absolute return fund's yield exceeded 49% in
Of the funds managed, demand for bond funds
2020, and the success fee is 20% of the positive
remained steady; their volume expanded by
difference between the fund's yield and the
nearly 20% y-o-y. Following the slump in stock
ZMAX benchmark index.
prices in March, demand for equity funds has
The main reason for the y-o-y drop in the annual
increased, thus their volumes grew by 32% y-o-y,
other income was the negative fair value
on account of capital inflow and favourable
adjustment of own investment units, recorded
yield developments.
in 1Q 2020.
The Company's market share rose by 1 pp y-o-y,
Operating expenses dropped by 3% y-o-y in 2020.
to 24.6% by the end of December 2020, thus
In Hungary, the market environment for invest-
preserving its top position in the domestic
ment funds was rather hectic; following the
securities funds market.
* The cumulative net asset value of investment funds and managed assets of OTP Fund Management, eliminating the volume of own investment funds (duplications) being
managed in other investment funds and managed assets of OTP Fund Management.
** The cumulative net asset value of investment funds with duplications managed by OTP Fund Management.
32
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
M E R K A N T I L G R O U P ( H U N G A R Y )
Performance of Merkantil Group:
Main components of P&L account
After tax profit without the effect of adjustments
Income tax
Profit before income tax
Operating profit
Total income
Net interest income
Net fees and commissions
Other net non-interest income
Operating expenses
Total provisions
Provision for impairment on loan and placement losses
Other provision
Main components of balance sheet closing balances
Total assets
Gross customer loans
Gross customer loans (FX-adjusted)
Retail loans
Corporate loans
Car financing loans
Allowances for possible loan losses
Allowances for possible loan losses (FX-adjusted)
Deposits from customers
Deposits from customer (FX-adjusted)
Retail deposits
Corporate deposits
Liabilities to credit institutions
Total shareholders’ equity
Loan Quality
Stage 1 loan volume under IFRS 9 (in HUF million)
Stage 1 loans under IFRS 9/gross customer loans
Own coverage of Stage 1 loans under IFRS 9
Stage 2 loan volume under IFRS 9 (in HUF million)
Stage 2 loans under IFRS 9/gross customer loans
Own coverage of Stage 2 loans under IFRS 9
Stage 3 loan volume under IFRS 9 (in HUF million)
Stage 3 loans under IFRS 9/gross customer loans
Own coverage of Stage 3 loans under IFRS 9
Provision for impairment on loan and placement losses/average gross loans
90+ days past due loan volume (in HUF million)
90+ days past due loans/gross customer loans
Performance Indicators
ROA
ROE
Total income margin
Net interest margin
Cost/income ratio
2019
HUF million
7,115
(632)
7,747
7,372
14,369
14,013
(104)
461
(6,997)
375
143
232
2019
491,399
366,064
368,689
30,528
128,707
209,454
(10,072)
(10,143)
10,414
10,414
8,051
2,364
420,076
44,441
2019
345,339
94.3%
0.4%
7,459
2.0%
4.7%
13,267
3.6%
63.4%
(0.04%)
7,364
2.0%
2019
1.6%
17.4%
3.20%
3.12%
48.7%
2020
HUF million
7,661
(956)
8,617
10,280
21,283
17,688
40
3,555
(11,004)
(1,663)
(1,491)
(171)
2020
667,120
416,987
416,987
57,018
119,725
240,244
(12,874)
(12,874)
9,344
9,344
6,071
3,273
584,944
52,553
2020
343,668
82.4%
0.2%
58,592
14.1%
3.8%
14,727
3.5%
66.5%
0.38%
8,971
2.2%
2020
1.3%
15.7%
3.58%
2.97%
51.7%
Change
%
8
51
11
39
48
26
(138)
671
57
(543)
(174)
%
36
14
13
87
(7)
15
28
27
(10)
(10)
(25)
38
39
18
%/pps
0
(11.9)
(0.1)
686
12.0
(0.8)
11
(0.1)
3.1
0.42
22
0.1
pps
(0.3)
(1.6)
0.37
(0.15)
3.0
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Management’s analysis of the 2020 results of the OTP Group
33
The column for 2020 in the table display
by 5%. Merkantil Group's total risk cost
the partially consolidated performance of
amounted to –HUF 1.7 billion in 2020.
Merkantil Group, including Merkantil Bank Ltd.,
The stock of DPD90+ loans did not change over
Merkantil Bérlet Ltd., NIMO 2002 Ltd., SPLC-P
2020 (FX-adjusted, without sales/write-offs).
Ingatlanfejlesztő, Ingatlanhasznosító Ltd.,
The ratio of Stage 2 loans grew by 4.6 pps q-o-q.
SPLC Vagyonkezelő Ltd., and OTP Ingatlan-
The own provision coverage of Stage 2 loans
lízing Ltd. In the 2019 base period, the
stood at 3.8% (–0.7 pp q-o-q). Stage 3 loans
standalone performance of Merkantil Bank Ltd.
made up 3.5% of gross loan volumes (–0.7 pp
was presented.
q-o-q), and their own provision coverage was
66.5% (+10.4 pps q-o-q).
In 2020 Merkantil Group generated
Merkantil Group's FX-adjusted performing
HUF 7.7 billion adjusted after tax profit, of
(Stage 1+2) loans increased by 12% y-o-y.
which HUF 6.7 billion was Merkantil Bank's
Merkantil Bank's individual performing loan
contribution, which therefore showed
stock grew by 4% y-o-y. The full-year dynamics
a decrease y-o-y. In 2020, the Group's ROE
was positively affected by the National Bank of
stood at 15.7%.
Hungary’s FGS Go! programme, made available
The main reason for the y-o-y rise in the
in April 2020. By the end of December 2020,
income and expense lines is that, starting from
contractual amount reached HUF 41 billion
1Q 2020, the figures reflect the performance of
at Merkantil Bank. Merkantil Bank retained
the entire Hungarian leasing group. Merkantil
its market leading position both in terms
Bank's individual net interest income rose by
of new disbursements and outstanding
4% y-o-y, and its operating expenses dropped
leasing volumes.
34
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS reports of the main foreign
subsidiaries of OTP Bank
D S K G R O U P ( B U L G A R I A )
Performance of DSK Group:
Main components of P&L account
After tax profit without the effect of adjustments
Income tax
Profit before income tax
Operating profit
Total income
Net interest income
Net fees and commissions
Other net non-interest income
Operating expenses
Total provisions
Provision for impairment on loan and placement losses
Other provision
Main components of balance sheet closing balances
Total assets
Gross customer loans
Gross customer loans (FX-adjusted)
Retail loans
Corporate loans
Car financing loans
Allowances for possible loan losses
Allowances for possible loan losses (FX-adjusted)
Deposits from customers
Deposits from customers (FX-adjusted)
Retail deposits
Corporate deposits
Liabilities to credit institutions
Total shareholders’ equity
Loan Quality
Stage 1 loan volume under IFRS 9 (in HUF million)
Stage 1 loans under IFRS 9/gross customer loans
Own coverage of Stage 1 loans under IFRS 9
Stage 2 loan volume under IFRS 9 (in HUF million)
Stage 2 loans under IFRS 9/gross customer loans
Own coverage of Stage 2 loans under IFRS 9
Stage 3 loan volume under IFRS 9 (in HUF million)
Stage 3 loans under IFRS 9/gross customer loans
Own coverage of Stage 3 loans under IFRS 9
Provision for impairment on loan and placement losses/average gross loans
90+ days past due loan volume (in HUF million)
90+ days past due loans/gross customer loans
Performance Indicators
ROA
ROE
Total income margin
Net interest margin
Cost/income ratio
Net loans to deposits (FX-adjusted)
FX rates
HUF/BGN (closing)
HUF/BGN (average)
2019
HUF million
67,879
(7,199)
75,078
83,495
155,567
109,030
42,019
4,517
(72,071)
(8,418)
(5,216)
(3,201)
2019
3,669,766
2,350,694
2,596,088
1,597,408
953,025
45,655
(135,640)
(149,830)
3,015,805
3,315,475
2,780,781
534,694
59,867
528,759
2019
2,081,790
88.6%
1.1%
99,917
4.3%
8.5%
168,986
7.2%
62.0%
0.24%
108,600
4.6%
2019
1.9%
13.7%
4.28%
3.00%
46.3%
74%
2019
HUF
169.0
166.3
2020
HUF million
40,957
(3,707)
44,665
89,775
166,668
111,239
45,453
9,975
(76,893)
(45,110)
(44,875)
(235)
2020
4,283,625
2,634,870
2,634,870
1,614,561
938,117
82,191
(185,829)
(185,829)
3,587,364
3,587,364
3,012,074
575,290
17,010
620,379
2020
2,142,644
81.3%
1.0%
297,292
11.3%
12.6%
194,934
7.4%
65.6%
1.79%
126,242
4.8%
2020
1.0%
7.0%
4.13%
2.75%
46.1%
68%
2020
HUF
186.7
179.5
Change
%
(40)
(49)
(41)
8
7
2
8
121
7
436
760
(93)
%
17
12
1
1
(2)
80
37
24
19
8
8
8
(72)
17
%/pps
3
(7.3)
(0.1)
198
7.0
4.1
15
0.2
3.6
1.55
16
0.2
pps
(0.9)
(6.7)
(0.15)
(0.25)
(0.2)
(6)
Change
%
10
8
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Management’s analysis of the 2020 results of the OTP Group
35
(cid:588) The Bulgarian banking group generated HUF 41.0 billion adjusted profit, 40% less than
a year earlier, owing to the higher provisions
(cid:588) The integration of Expressbank was successfully completed at the beginning of May 2020.
The number of branches dropped by 24%, and the headcount fell by 9% y-o-y
The P&L of the Bulgarian operation was
The Stage 2 ratio has significantly increased
adjusted for the one-off items directly related
over the past 12 months (+7 pps y-o-y),
to the Expressbank acquisition; these
predominantly because the Bank reclassified
corrections are presented at consolidated
the loans most exposed to the pandemic,
level, among adjustment items. The balance
first corporate and then retail loans were
sheet items were not adjusted for these effects.
reclassified from Stage 1 (performing) category
In 2020 DSK Group generated HUF 41.0 billion
under IFRS 9 into Stage 2 (increased risk).
after tax profit, 40% less than in 2019.
The ratio of Stage 3 loans increased by 0.2 pp
The integration of Expressbank was successfully
over the previous year. The own provision
completed at the beginning of May 2020.
coverage of Stage 3 loans rose in y-o-y terms.
Certain cost synergies had already been
In 2020, HUF 45.1 billion total risk costs
extracted during the integration process,
weighed on profit. The reason for the y-o-y
and this has continued since then. The number
higher figure was the extra provisioning owing
of branches in Bulgaria fell by 143 units (–30%)
to the pandemic. The 12-month credit risk cost
since the end of 1Q 2019, when Expressbank
ratio was 1.79% of average gross loan volumes.
became part of the Group. The number of
Overall, loan quality indicators have improved:
employees dropped by 566 (–9%) in 2020.
the more than 90 days past due (DPD90+)
Full-year operating expenses declined by 1%
loans grew by HUF 22 billion (FX-adjusted,
y-o-y in local currency.
without sales/write-offs) in full year 2020
The Bulgarian operation's full-year operating
(of which 4Q: +HUF 5 billion). During 2019 this
profit grew by 8% in HUF (but dropped 1% in
volume increased by HUF 11 billion without
BGN terms). Within total income, cumulated
the technical effect of the acquisition of
net interest income declined by 6% in BGN
Expressbank. In 2020 as a whole HUF 13 billion
terms, as a result of the 24 bps erosion in net
worth of problem loans were sold/written off.
interest margin. The full-year net interest
Regarding the lending activity, performing
income was also negatively affected by a
(Stage 1+2) loans rose by an FX-adjusted 1%
regulatory change that banned charging
in y-o-y terms. In 2020, car financing loans
penalty interest on late payment during the
grew by 80% y-o-y, partly because of the
emergency, from 13 March to 14 May 2020.
reclassification of some leasing exposures
In 2020, net fees and commissions stagnated
from corporate loans onto this line.
y-o-y in BGN, predominantly in connection with
The Bulgarian operation’s liquidity position
the drop in economic and business activity
remained stable. The FX-adjusted net
from the second quarter.
loan/deposit ratio stood at 68% at the end of
In 2020, other net non-interest income surged
December. At the end of December 2020, the
by 121% y-o-y, chiefly because of higher swap
capital adequacy ratio of DSK Bank, calculated
result and foreign exchange gains. Another
according to local rules, stood at 21.4%.
reason was that, following the revision of Visa
In the course of 2020, DSK Bank did not pay
Inc.‘s class C shares’ accounting classification,
dividend to OTP Bank from its 2019 profit, in
the equivalent of HUF 0.7 billion positive
accordance with the Bulgarian National Bank's
amount boosted other income in 2Q 2020.
recommendation.
36
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
OT P B A N K C R OAT I A
Performance of OTP Bank Croatia:
Main components of P&L account
After tax profit without the effect of adjustments
Income tax
Profit before income tax
Operating profit
Total income
Net interest income
Net fees and commissions
Other net non-interest income
Operating expenses
Total provisions
Provision for impairment on loan and placement losses
Other provision
Main components of balance sheet closing balances
Total assets
Gross customer loans
Gross customer loans (FX-adjusted)
Retail loans
Corporate loans
Car financing loans
Allowances for possible loan losses
Allowances for possible loan losses (FX-adjusted)
Deposits from customers
Deposits from customers (FX-adjusted)
Retail deposits
Corporate deposits
Liabilities to credit institutions
Total shareholders’ equity
Loan Quality
Stage 1 loan volume under IFRS 9 (in HUF million)
Stage 1 loans under IFRS 9/gross customer loans
Own coverage of Stage 1 loans under IFRS 9
Stage 2 loan volume under IFRS 9 (in HUF million)
Stage 2 loans under IFRS 9/gross customer loans
Own coverage of Stage 2 loans under IFRS 9
Stage 3 loan volume under IFRS 9 (in HUF million)
Stage 3 loans under IFRS 9/gross customer loans
Own coverage of Stage 3 loans under IFRS 9
Provision for impairment on loan and placement losses/average gross loans
90+ days past due loan volume (in HUF million)
90+ days past due loans/gross customer loans
Performance Indicators
ROA
ROE
Total income margin
Net interest margin
Cost/income ratio
Net loans to deposits (FX-adjusted)
FX rates
HUF/HRK (closing)
HUF/HRK (average)
2019
HUF million
30,719
(6,681)
37,400
42,925
85,069
56,812
17,032
11,225
(42,144)
(5,525)
(2,835)
(2,691)
2019
2,098,951
1,370,057
1,503,015
812,239
617,623
73,152
(68,701)
(75,254)
1,478,223
1,613,110
1,213,410
399,700
253,176
292,649
2019
1,140,495
83.2%
0.8%
143,843
10.5%
3.5%
85,719
6.3%
63.6%
0.22%
51,012
3.7%
2019
1.6%
10.9%
4.35%
2.91%
49.5%
89%
2019
HUF
44.4
43.9
2020
HUF million
14,830
(2,771)
17,600
40,329
84,907
58,199
16,093
10,615
(44,578)
(22,728)
(19,491)
(3,238)
2020
2,325,669
1,642,170
1,642,170
853,245
722,320
66,606
(100,920)
(100,920)
1,634,652
1,634,652
1,231,516
403,136
287,647
328,165
2020
1,257,492
76.6%
0.8%
241,962
14.7%
5.7%
142,716
8.7%
53.9%
1.27%
68,712
4.2%
2020
0.7%
4.7%
3.93%
2.69%
52.5%
94%
2020
HUF
48.4
46.6
Change
%
(52)
(59)
(53)
(6)
0
2
(6)
(5)
6
311
588
20
%
11
20
9
5
17
(9)
47
34
11
1
1
1
14
12
%/pps
10
(6.7)
0.0
68
4.2
2.2
66
2.4
(9.6)
1.05
35
0.5
pps
(0.9)
(6.2)
(0.42)
(0.21)
3.0
6
Change
%
9
6
(cid:588) Full-year 2020 profit neared HUF 15 billion (–52% y-o-y), with 6% lower operating profit
and a jump in risk costs
(cid:588) Net interest income rose by 2% y-o-y; performing (Stage 1+2) loans increased in FX-adjusted
terms and interest margin shrank 21 bps in 2020
(cid:588) As to loan quality, the Stage 3 ratio upped 2.4 pps, to 8.7% y-o-y
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Management’s analysis of the 2020 results of the OTP Group
37
In 2020, the Croatian operation generated
In 2020, operating expenses surged by 6%
HUF 14.8 billion after tax profit, 52% less than
y-o-y in HUF, and were stable in local currency.
a year earlier, owing to a jump in risk costs
The 3 pps rise in full-year cost/income ratio
and a decline in operating profit.
brought the y-o-y figure to 52.5%.
Following a halt in lending activity in the
In 2020, nearly HUF 23 billion risk cost weighed
second quarter, disbursement dynamics have
on profit, which was four times the figure
been steadily improving. In 4Q 2020, mortgage
posted in 2019. A smaller part of that was
loan disbursements grew by 72% q-o-q; this
recorded in 1Q, in view of the possible effects
brought the full-year disbursement growth to
of the pandemic, while loan loss provision
8% y-o-y. Even though cash loans rebounded
in 3Q was even higher than in 1Q, owing to
after the first wave of the coronavirus
the revision of the IFRS 9 impairment model
pandemic, the full-year disbursed volume
parameters. In 4Q 2020 under the instruction
was 25% short of its 2019 level.
of the local regulator exposures with longer
Performing (Stage 1+2) loans grew by an
than 9 months moratorium participation in
FX-adjusted 6% y-o-y.
total shall be classified as Stage 3.
Beside loan volume growth, and the Croatian
The stock of more than 90 days past due loans
bank's liquidity position remained stable.
grew by HUF 15 billion (FX-adjusted, without
Deposit volumes rose by an FX-adjusted 1%
sales/write-offs) in 2020. This brought the
y-o-y, thus the net loan/deposit ratio went up
DPD90+ ratio to 4.2% by the end of December
by 6 pps y-o-y, to 94%, in FX-adjusted terms.
(+0.5 pp y-o-y). The Stage 3 ratio rose by more
In 2020, operating profit was 6% (in local
than 2 pps in y-o-y terms (4Q: 8.7%), as the
currency terms 11%) less than a year earlier.
Bank reclassified the exposures with longer
Core banking income dropped in y-o-y terms,
than 9 months moratorium participation
as a combined effect of the 21 bps erosion
to Stage 3 (forborne) category, in accordance
in net interest margin (2.69%), and the
with local regulation.
pandemic's effect on business and economic
In March and April 2020, the Croatian National
activity. Net fees and commissions were
Bank issued a set of recommendations,
dragged down by the lost revenue from
based on the EBA's guidance, on the basis
tourism-related activities. Despite the
of which commercial banks developed rules
HUF 1.5 billion one-off revaluation result on
for their own loan repayment moratorium.
Visa Inc.‘s class C shares booked in 2Q 2020,
On 1 October 2020, a new moratorium period
other non-interest income was 5% short of
was opened; the deadline for receiving
the base period.
applications is 31 March 2021.
38
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
OT P B A N K S E R B I A
Performance of OTP Bank Serbia:
Main components of P&L account
After tax profit without the effect of adjustments
Income tax
Profit before income tax
Operating profit
Total income
Net interest income
Net fees and commissions
Other net non-interest income
Operating expenses
Total provisions
Provision for impairment on loan and placement losses
Other provision
Main components of balance sheet closing balances
Total assets
Gross customer loans
Gross customer loans (FX-adjusted)
Retail loans
Corporate loans
Car financing loans
Allowances for possible loan losses
Allowances for possible loan losses (FX-adjusted)
Deposits from customers
Deposits from customers (FX-adjusted)
Retail deposits
Corporate deposits
Liabilities to credit institutions
Subordinated debt
Total shareholders’ equity
Loan Quality
Stage 1 loan volume under IFRS 9 (in HUF million)
Stage 1 loans under IFRS 9/gross customer loans
Own coverage of Stage 1 loans under IFRS 9
Stage 2 loan volume under IFRS 9 (in HUF million)
Stage 2 loans under IFRS 9/gross customer loans
Own coverage of Stage 2 loans under IFRS 9
Stage 3 loan volume under IFRS 9 (in HUF million)
Stage 3 loans under IFRS 9/gross customer loans
Own coverage of Stage 3 loans under IFRS 9
Provision for impairment on loan and placement losses/average gross loans
90+ days past due loan volume (in HUF million)
90+ days past due loans/gross customer loans
Performance Indicators
ROA
ROE
Total income margin
Net interest margin
Cost/income ratio
Net loans to deposits (FX-adjusted)
FX rates
HUF/RSD (closing)
HUF/RSD (average)
2019
HUF million
10,430
459
9,970
13,143
43,276
30,809
9,506
2,962
(30,133)
(3,173)
(1,634)
(1,539)
2019
1,659,483
1,199,580
1,325,734
633,684
642,532
49,518
(18,904)
(20,907)
910,623
1,003,698
604,453
399,245
436,449
24,460
249,461
2019
1,151,763
96.0%
0.4%
21,447
1.8%
5.8%
26,370
2.2%
50.0%
0.25%
20,702
1.7%
2019
1.1%
7.6%
4.70%
3.35%
69.6%
130%
2019
HUF
2.8
2.8
2020
HUF million
7,298
(1,157)
8,455
35,898
79,001
59,514
14,766
4,721
(43,102)
(27,443)
(22,170)
(5,273)
2020
2,052,332
1,539,738
1,539,738
747,715
737,969
54,054
(43,597)
(43,597)
1,147,712
1,147,712
676,599
471,112
548,354
31,033
273,046
2020
1,367,313
88.8%
0.8%
132,427
8.6%
8.5%
39,998
2.6%
53.6%
1.62%
22,697
1.5%
2020
0.4%
2.7%
4.25%
3.20%
54.6%
130%
2020
HUF
3.1
3.0
Change
%
(30)
(352)
(15)
173
83
93
55
59
43
765
243
%
24
28
16
18
15
9
131
109
26
14
12
18
26
27
9
%/pps
19
(7.2)
0.4
517
6.8
2.7
52
0.4
3.6
1.37
10
(0.2)
pps
(0.7)
(4.9)
(0.45)
(0.15)
(15.1)
0
Change
%
11
8
(cid:588) The annual after tax profit amounted to HUF 7.3 billion in 2020 (–30%); in 4Q, HUF 3.1 billion
loss emerged and nearly HUF 13 billion provision was put aside
(cid:588) The integration is progressing well, the full-year cost/income ratio sank to 54.6%
(cid:588) Performing (Stage1+2) loansexpanded by 3% y-o-y
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Management’s analysis of the 2020 results of the OTP Group
39
The financial closure of Société Générale
the HUF's average exchange rate against the
banka Srbija transaction was completed on
Serbian dinar.
24 September 2019. Following the transaction,
The underlying business development trends
the name of the acquired bank was changed
can be captured the best by analysing the
to OTP banka Srbija. The Serbian financial
4Q 2020 y-o-y developments, as those are
statements present the acquired bank's
comparable with the base period and
balance sheet starting from 3Q 2019, and
undistorted by the acquisition effects. The 4Q
its P&L account starting from 4Q 2019.
operating profit improved by 16% y-o-y, as
The Serbian P&L account was adjusted for
income rose by 6% and operating expenses
the one-off items directly related to the
declined. In 4Q, the y-o-y dynamics of net
acquisition; these corrections are shown at
interest income was positively affected by
consolidated level, among the adjustment
the outstanding expansion of (Stage 1+2) loan
items. The balance sheet items were not
volumes (+16% y-o-y; FX-adjusted), even as net
adjusted for these effects.
interest margin eroded by 32 bps y-o-y, to 3.1%,
In 2020, the Serbian banking group generated
reflecting the effect of the lower interest rate
HUF 7.3 billion adjusted after tax profit.
environment. Net fees and commissions were
Following the financial closure of the
stable y-o-y in 4Q 2020.
acquisition at the end of September 2019,
In 4Q, operating expenses dropped by
the Serbian operation's total markets share
1% y-o-y, while the bank's cost/income ratio
by balance sheet total jumped to 13.5% on
improved by 3.8 pps y-o-y, to 54.9% in the
pro forma basis, based on the latest available
fourth quarter.
data from end-September 2020.
In 2020, total risk cost amounted to
The integration of the bank acquired in 2019 is
–HUF 27.4 billion, of which –HUF 12.5 billion
in progress. Since the end of September 2019,
was booked in the fourth quarter. In 2020,
the total number of branches in Serbia dropped
the credit risk cost ratio was 1.62%.
by 23 (–10%). The number of employees declined
As regards loan quality, the volume of more
by 140 workers y-o-y (–4%).
than 90 days past due loans (FX-adjusted,
Both deposits and performing loans (Stage 1+2)
without sales/write-offs) rose by HUF 3.3 billion
showed double-digit y-o-y growth rates
in full year 2020.
(FX-adjusted), thus the Serbian bank's net
The ratio of Stage 3 loans rose by 0.4 pp y-o-y,
loan/deposit ratio remained flat at 130% y-o-y.
their own provision coverage ratio improved
Both the retail and the corporate loan
by 3.6 pps y-o-y, to 53.6% by the end of
segments posted growth: consumer loans
December. Stage 2 loans were affected by a
expanded by 22% y-o-y (FX-adjusted), and
number factors: in 1Q, the corporate portfolios
mortgage loans increased by 13%, while
most exposed to the pandemic were
corporate loans, which make up nearly half
reclassified to Stage 2 (increased risk), while
of the performing (Stage 1+2) portfolio, rose
in the second quarter those were mostly retail
by 14% y-o-y. Recovering from the low hit in
loans that were shifted.
the second quarter, the volume of new loan
In Serbia, there were three phases of the
disbursements has been steadily rising.
loan repayment moratorium. The application
The y-o-y dynamics of P&L lines were predomi-
deadline for the third one is the end of April
nantly determined by the acquisition, and they
2021; the maximum term of the moratorium
were also affected by the 8% weakening of
can be up to six months.
40
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:19)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
S K B B A N K A ( S LOV E N I A )
Performance of SKB Banka (Slovenia):
Main components of P&L account
After tax profit w/o dividends and net cash transfer
2019
HUF million
Income tax
Profit before income tax
Operating profit
Total income
Net interest income
Net fees and commissions
Other net non-interest income
Operating expenses
Total provisions
Provision for impairment on loan and placement losses
Other provision
Main components of balance sheet closing balances
Total assets
Gross customer loans
Gross customer loans (FX-adjusted)
Retail loans
Corporate loans
Car financing loans
Allowances for possible loan losses
Allowances for possible loan losses (FX-adjusted)
Deposits from customers
Deposits from customers (FX-adjusted)
Retail deposits
Corporate deposits
Liabilities to credit institutions
Total shareholders’ equity
Loan Quality
Stage 1 loan volume under IFRS 9 (in HUF million)
Stage 1 loans under IFRS 9/gross customer loans
Own coverage of Stage 1 loans under IFRS 9
Stage 2 loan volume under IFRS 9 (in HUF million)
Stage 2 loans under IFRS 9/gross customer loans
Own coverage of Stage 2 loans under IFRS 9
Stage 3 loan volume under IFRS 9 (in HUF million)
Stage 3 loans under IFRS 9/gross customer loans
Own coverage of Stage 3 loans under IFRS 9
Provision for impairment on loan and placement losses/average gross loans
90+ days past due loan volume (in HUF million)
90+ days past due loans/gross customer loans
Performance Indicators
ROA
ROE
Total income margin
Net interest margin
Cost/income ratio
Net loans to deposits (FX-adjusted)
FX rates
HUF/EUR (closing)
HUF/EUR (average)
2019
1,130,871
831,139
918,174
540,374
249,584
128,216
(4,051)
(4,475)
880,839
971,653
853,172
118,481
94,909
132,667
2019
822,118
98.9%
0.4%
0
0.0%
0.0%
9,020
1.1%
8.7%
2,967
0.4%
2019
94%
2019
HUF
330.5
325.3
2020
HUF million
9,665
(2,439)
12,104
19,787
40,388
28,103
11,127
1,158
(20,601)
(7,683)
(6,244)
(1,440)
2020
1,353,772
909,439
909,439
539,678
248,855
120,906
(14,876)
(14,876)
1,136,666
1,136,666
973,276
163,390
29,524
166,124
2020
753,584
82.9%
0.5%
142,015
15.6%
4.3%
13,840
1.5%
36.3%
0.70%
3,620
0.4%
2020
0.8%
6.3%
3.18%
2.21%
51.0%
79%
2020
HUF
365.1
351.2
Change
%
%
20
9
(1)
0
0
(6)
267
232
29
17
14
38
(69)
25
%/pps
(8)
(16.0)
0.1
53
0.4
27.6
22
0.0
pps
(15)
Change
%
10
8
OTP Group's financial statements include
The balance sheet items were not adjusted for
the Slovenian bank's balance sheet starting
the acquisition effects.
from end-2019, and its P&L from the first
OTP Group's Slovenian subsidiary generated
quarter of 2020.
HUF 9.7 billion adjusted after tax profit
The Slovenian P&L account was adjusted
in full year 2020. The full-year ROE was 6.3%
for the one-off items directly related to the
in 2020, with 51% cost/income ratio, 2.21%
acquisition; these corrections are shown at
net interest margin, and 70 bps credit risk
consolidated level, among adjustment items.
cost ratio.
Management’s analysis of the 2020 results of the OTP Group
41
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:19)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
At the end of 2020, the ratio of Stage 3 loans
sales/write-offs) grew by HUF 0.6 billion.
remained steady at 1.5%. The own provision
The FX-adjusted volume of Stage 1+2 loans
coverage ratio of Stage 3 loans stood at 36.3%.
dropped by 1% y-o-y; within that, retail loans
When the Slovenian bank was consolidated
shrank by 9%, while corporate loan volumes
into the Group, Stage 3 loans were netted
expanded by 18%.
with the related provisions. In full year 2020,
The FX-adjusted deposit stock grew by 17% y-o-y.
DPD90+ loan volumes (FX-adjusted, without
The net loan/deposit ratio stood at 79%.
OT P B A N K R O M A N I A
Performance of OTP Bank Romania:
Main components of P&L account
After tax profit without the effect of adjustments
Income tax
Profit before income tax
Operating profit
Total income
Net interest income
Net fees and commissions
Other net non-interest income
Operating expenses
Total provisions
Provision for impairment on loan and placement losses
Other provision
Main components of balance sheet closing balances
Total assets
Gross customer loans
Gross customer loans (FX-adjusted)
Retail loans
Corporate loans
Car financing loans
Allowances for possible loan losses
Allowances for possible loan losses (FX-adjusted)
Deposits from customers
Deposits from customers (FX-adjusted)
Retail deposits
Corporate deposits
Liabilities to credit institutions
Total shareholders’ equity
Loan Quality
Stage 1 loan volume under IFRS 9 (in HUF million)
Stage 1 loans under IFRS 9/gross customer loans
Own coverage of Stage 1 loans under IFRS 9
Stage 2 loan volume under IFRS 9 (in HUF million)
Stage 2 loans under IFRS 9/gross customer loans
Own coverage of Stage 2 loans under IFRS 9
Stage 3 loan volume under IFRS 9 (in HUF million)
Stage 3 loans under IFRS 9/gross customer loans
Own coverage of Stage 3 loans under IFRS 9
Provision for impairment on loan and placement losses/average gross loans
90+ days past due loan volume (in HUF million)
90+ days past due loans/gross customer loans
Performance Indicators
ROA
ROE
Total income margin
Net interest margin
Cost/income ratio
Net loans to deposits (FX-adjusted)
FX rates
HUF/RON (closing)
HUF/RON (average)
42
OTP Bank Annual Report 2020
2019
HUF million
6,309
(598)
6,906
12,314
37,530
28,254
3,180
6,097
(25,216)
(5,408)
(3,018)
(2,390)
2019
953,345
708,299
773,358
522,937
237,111
13,311
(39,327)
(42,997)
546,350
590,707
442,397
148,310
257,404
116,432
2019
593,922
83.9%
1.3%
61,556
8.7%
5.7%
52,821
7.5%
53.7%
0.47%
35,416
5.0%
2019
0.7%
6.6%
4.37%
3.29%
67.2%
124%
2019
HUF
69.1
68.6
2020
HUF million
1,558
91
1,467
11,811
43,748
32,739
3,813
7,195
(31,937)
(10,344)
(7,840)
(2,504)
2020
1,162,183
861,393
861,393
587,724
257,860
15,809
(48,174)
(48,174)
710,047
710,047
506,773
203,274
284,173
127,238
2020
690,664
80.2%
1.0%
114,615
13.3%
9.0%
56,113
6.5%
54.6%
0.99%
38,713
4.5%
2020
0.1%
1.3%
4.18%
3.13%
73.0%
115%
2020
HUF
75.0
72.6
Change
%
(75)
(115)
(79)
(4)
17
16
20
18
27
91
160
5
%
22
22
11
12
9
19
22
12
30
20
15
37
10
9
%/pps
16
(3.7)
(0.3)
86
4.6
3.3
6
(1.0)
0.9
0.52
9
(0.5)
pps
(0.6)
(5.3)
(0.19)
(0.16)
5.8
(9)
Change
%
9
6
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:19)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
OTP Bank Romania generated HUF 1.6 billion
supported by both the retail and corporate
after tax profit in 2020, 75% less than in the
segments. The net loan/deposit ratio stood at
base period. In 2020, operating profit dropped
115% at the end of 2020 (–9 pps y-o-y). In 2020,
by 4% in HUF (by 9% in local currency), as a
OTP Bank Romania increased its market share
result of a 17% y-o-y increase in total income,
in all segments. In the stock of housing loans,
and a 27% surge in operating expenses.
the Romanian operation increased its market
Net interest income grew by 16%, bolstered
share from 3.7% to 4.2% y-o-y.
by a dynamic expansion in performing loan
Regarding loan quality, in 2020 the volume
volumes, while the net interest margin
of DPD90+ loans grew by HUF 7 billion
dropped by 16 bps last year.
(FX-adjusted, without sales and write-offs),
In 2020, operating expenses grew by 27% y-o-y
much of which was caused by corporate loans
(by 20% in local currency), largely because
that slipped into delinquency in 2Q 2020.
of the growth strategy launched in 2019: IT
The ratio of Stage 2 loans grew by 4.6 pps y-o-y,
and digital developments boosted IT costs,
largely affected by the reclassification of Stage
while personnel expenses were 27% higher
1 loans (–3.7 pps y-o-y) owing to the pandemic.
than a year earlier, owing to the general wage
The own coverage of Stage 1+2 loans increased
inflation, as well as the 15% rise in annual
in y-o-y terms.
average headcount. As a result of the rising
The ratio of Stage 3 loans remained on a down-
costs, the cost/income ratio increased by
ward trend in 2020. At the end of the year, Stage 3
5.8 pps, to 73.0% in 2020.
loans made up 6.5% of gross loan volume
As a result of the growth strategy, both loan
(–0.9 pp y-o-y). Reasons for the decline included
and deposit volumes grew dynamically in
the sale/write-off of bad loans, as well as the
2020. Due to the increased lending activity,
rapid growth of loans. The own coverage of
performing (Stage 1+2) mortgage loan
Stage 3 loans grew over the fourth quarter,
volumes increased by 15% y-o-y (FX-adjusted).
bringing the ratio to 54.6% by the end of the year.
Performing (Stage 1+2) loans to micro and
In 2020, total provisions grew by 91% y-o-y.
small enterprises grew by 15%, and corporate
Within that, loan loss provisions increased
exposures rose by 10% y-o-y. The FX-adjusted
significantly (by HUF 4.8 billion) owing to the
deposit volumes expanded by 20% y-o-y,
Covid-19 pandemic effects.
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:19)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Management’s analysis of the 2020 results of the OTP Group
43
O T P B A N K U K R A I N E
Performance of OTP Bank Ukraine:
Main components of P&L account
After tax profit without the effect of adjustments
Income tax
Profit before income tax
Operating profit
Total income
Net interest income
Net fees and commissions
Other net non-interest income
Operating expenses
Total provisions
Provision for impairment on loan and placement losses
Other provision
Main components of balance sheet closing balances
Total assets
Gross customer loans
Gross customer loans (FX-adjusted)
Retail loans
Corporate loans
Car financing loans
Allowances for possible loan losses
Allowances for possible loan losses (FX-adjusted)
Deposits from customers
Deposits from customers (FX-adjusted)
Retail deposits
Corporate deposits
Liabilities to credit institutions
Total shareholders’ equity
Loan Quality
Stage 1 loan volume under IFRS 9 (in HUF million)
Stage 1 loans under IFRS 9/gross customer loans
Own coverage of Stage 1 loans under IFRS 9
Stage 2 loan volume under IFRS 9 (in HUF million)
Stage 2 loans under IFRS 9/gross customer loans
Own coverage of Stage 2 loans under IFRS 9
Stage 3 loan volume under IFRS 9 (in HUF million)
Stage 3 loans under IFRS 9/gross customer loans
Own coverage of Stage 3 loans under IFRS 9
Provision for impairment on loan and placement losses/average gross loans
90+ days past due loan volume (in HUF million)
90+ days past due loans/gross customer loans
Performance Indicators
ROA
ROE
Total income margin
Net interest margin
Cost/income ratio
Net loans to deposits (FX-adjusted)
FX rates
HUF/UAH (closing)
HUF/UAH (average)
2019
HUF million
35,223
(6,937)
42,160
44,353
67,451
48,128
14,877
4,446
(23,098)
(2,194)
(1,433)
(761)
2019
646,295
468,715
431,920
136,749
252,194
42,977
(69,785)
(64,223)
431,944
394,459
176,949
217,509
79,331
109,128
2019
345,955
73.8%
0.9%
41,847
8.9%
8.3%
80,913
17.3%
77.9%
0.34%
51,913
11.1%
2019
7.0%
42.5%
13.38%
9.55%
34.2%
93%
2019
HUF
12.4
11.3
2020
HUF million
26,104
(5,485)
31,589
42,030
67,385
48,581
13,540
5,264
(25,355)
(10,441)
(6,286)
(4,155)
2020
729,012
443,031
443,031
118,709
274,187
50,136
(46,200)
(46,200)
493,884
493,884
222,112
271,772
91,059
117,071
2020
365,266
82.4%
1.9%
31,726
7.2%
15.9%
46,039
10.4%
74.3%
1.39%
28,401
6.4%
2020
3.8%
23.0%
9.78%
7.05%
37.6%
80%
2020
HUF
10.5
11.4
Change
%
(26)
(21)
(25)
(5)
0
1
(9)
18
10
376
339
446
%
13
(5)
3
(13)
9
17
(34)
(28)
14
25
26
25
15
7
%/pps
6
8.6
1.0
(24)
(1.7)
7.6
(43)
(6.9)
(3.6)
1.05
(45)
(4.7)
pps
(3.2)
(19.5)
(3.60)
(2.50)
3.4
(13)
Change
%
(15)
1
44
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:19)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
OTP Bank Ukraine's financial data in HUF terms
the base rate fell by a total of 750 bps,
were affected by the HUF/UAH exchange rate
to 6% in 2020.
moves: by the end of 2020, the UAH's closing
In 2020, operating expenses grew by 9% in
rate against the HUF depreciated by 16% y-o-y.
UAH, largely because of higher wage costs,
The full-year average rate firmed 1%. As a
and a 7% rise in administrative expenses.
result, the balance sheet and P&L dynamics
In 2020, total risk cost amounted to
expressed in HUF terms differ from those in
–HUF 10.4 billion. In 2020, risk cost ratio
local currency.
was at 1.39% (+105 bps y-o-y).
OTP Bank Ukraine generated HUF 26.1 billion
In Ukraine, there was no compulsory debt
after tax profit in 2020. The 26% y-o-y
repayment moratorium. As to loan quality,
contraction stems from stronger provisioning,
more than 90 days past due loan volumes
and a 6% drop in operating profit, in UAH.
increased in 2020 by HUF 1 billion (FX-adjusted,
After the second quarter, which was an
without sales/write-offs), compared to
intra-year low in lending, disbursement
HUF 4 billion in 2019.
dynamics have steadily improved. Corporate
In 2020 the Stage 3 loans’ share in the whole
loan disbursement expanded by an impressive
portfolio shrank by 6.9 pps y-o-y to 10.4%. By the
38% y-o-y in 2020. By the end of the year,
end of 2020, the own provision coverage of
performing (Stage 1+2) loans grew by 11% y-o-y
Stage 3 loans dropped by 3.6 pps y-o-y, to 74.3%,
(FX-adjusted). Net loan/deposit ratio stood at
as loans with high coverage were the sold/written
80% at the end of 2020.
off. The own provision coverage of Stage 2 loans
Operating profit dropped by 6% y-o-y in local
grew to 15.9%, and that of Stage 1 loans has
currency in full-year 2020. In 2020, total
nearly doubled y-o-y, to 1.9%. This is resulting
income shrank by 1% y-o-y in local currency,
from the following: as precautionary move in
chiefly because net fees and commissions fell
the first half of the year corporate loans were
by 10%. Net interest income was stable y-o-y,
reclassified from Stage 1 to Stage 2. Now, in 4Q,
even if net interest margin shrank 2.5 pp,
these were returned to Stage 1 category, but
nearing 7%. This is predominantly due to the
the previously created higher impairment for
significantly lower interest rate environment:
these loans was retained, as general provisions.
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:19)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Management’s analysis of the 2020 results of the OTP Group
45
O T P B A N K R U S S I A
Performance of OTP Bank Russia:
Main components of P&L account
After tax profit without the effect of adjustments
Income tax
Profit before income tax
Operating profit
Total income
Net interest income
Net fees and commissions
Other net non-interest income
Operating expenses
Total provisions
Provision for impairment on loan and placement losses
Other provision
Main components of balance sheet closing balances
Total assets
Gross customer loans
Gross customer loans (FX-adjusted)
Retail loans
Corporate loans
Car financing loans
Allowances for possible loan losses
Allowances for possible loan losses (FX-adjusted)
Deposits from customers
Deposits from customers (FX-adjusted)
Retail deposits
Corporate deposits
Liabilities to credit institutions
Total shareholders’ equity
Loan Quality
Stage 1 loan volume under IFRS 9 (in HUF million)
Stage 1 loans under IFRS 9/gross customer loans
Own coverage of Stage 1 loans under IFRS 9
Stage 2 loan volume under IFRS 9 (in HUF million)
Stage 2 loans under IFRS 9/gross customer loans
Own coverage of Stage 2 loans under IFRS 9
Stage 3 loan volume under IFRS 9 (in HUF million)
Stage 3 loans under IFRS 9/gross customer loans
Own coverage of Stage 3 loans under IFRS 9
Provision for impairment on loan and placement losses/average gross loans
90+ days past due loan volume (in HUF million)
90+ days past due loans/gross customer loans
Performance Indicators
ROA
ROE
Total income margin
Net interest margin
Cost/income ratio
Net loans to deposits (FX-adjusted)
FX rates
HUF/RUB (closing)
HUF/RUB (average)
2019
HUF million
28,127
(8,272)
36,399
84,946
146,582
113,572
31,012
1,998
(61,636)
(48,547)
(46,123)
(2,424)
2019
908,388
786,241
661,721
573,592
80,304
7,825
(152,741)
(128,479)
471,735
403,021
301,897
101,124
155,306
202,761
2019
589,553
75.0%
5.3%
94,413
12.0%
27.4%
102,274
13.0%
93.4%
6.61%
96,484
12.3%
2019
3.4%
15.7%
17.53%
13.58%
42.0%
132%
2019
HUF
4.7
4.5
2020
HUF million
16,317
(5,092)
21,409
65,068
123,198
99,872
22,503
823
(58,130)
(43,659)
(41,160)
(2,499)
2020
688,980
597,849
597,849
505,902
74,239
17,708
(127,598)
(127,598)
350,608
350,608
288,058
62,550
90,852
183,402
2020
447,094
74.8%
4.6%
67,394
11.3%
43.1%
83,361
13.9%
93.4%
6.36%
77,929
13.0%
2020
2.1%
8.9%
16.03%
13.00%
47.2%
134%
2020
HUF
4.0
4.3
Change
%
(42)
(38)
(41)
(23)
(16)
(12)
(27)
(59)
(6)
(10)
(11)
3
%
(24)
(24)
(10)
(12)
(8)
126
(16)
(1)
(26)
(13)
(5)
(38)
(42)
(10)
%/pps
(24)
(0.2)
(0.7)
(29)
(0.7)
15.7
(18)
0.9
0.0
(0.25)
(19)
0.7
pps
(1.3)
(6.8)
(1.50)
(0.58)
5.2
2
Change
%
(15)
(4)
46
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:19)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
OTP Bank Russia's financial figures in HUF
increase from a relatively low base,
terms were affected by the moves in the
FX-adjusted.
HUF/RUB pair: at the end of 2020, the RUB's
Meanwhile, customer deposits declined by
exchange rate against the HUF weakened
an FX-adjusted 13% y-o-y. The FX-adjusted net
16% y-o-y. The average exchange rate
loan/deposit ratio rose by 2 pps y-o-y, to 134%.
depreciated by 5% in 2020. Therefore, the
In 2020, total income declined by 12% y-o-y
balance sheet and P&L dynamics in HUF
in RUB terms, including an 8% drop in net
terms differ from those in local currency.
interest income, and a 24% fall in net fees
OTP Bank Russia generated HUF 16.3 billion
and commissions. Total income margin eroded
profit in 2020, which is 39% less than in the
by 1.5 pps y-o-y, while net interest margin
base period (in local currency). The y-o-y drop
came down 59 bps, to 13%.
in after tax profit is a result of a 20% fall in
Due to lower administrative expenses,
operating profit and a 6% decline in risk cost,
operating expenses declined by 1% y-o-y in full
in local currency.
year 2020 in RUB, thus the annual cost/income
Ending three quarters of decline in the first
ratio rose by 5.1pps, to 47.2%.
three quarters of 2020, the performing (Stage
In 2020, total risk cost dropped by 6% in RUB,
1+2) loan volume grew by an FX-adjusted 9%
and the credit risk cost ratio declined 0.25 pp
q-o-q in 4Q, resulting in a 11% y-o-y decline
y-o-y, to 6.36%.
for 2020 as a whole. Performing consumer
The ratio of Stage 3 loans upped by 0.9 pp y-o-y,
loan volumes shrank by 14% y-o-y; while the
to 13.9%; while nearly HUF 38 billion non-
mid- and large corporate segment fell by 6%.
performing loans were sold or written off
There was a steady growth in car financing
in 2020 (FX-adjusted), which is 10% increase
throughout the year, resulting in a 126% y-o-y
compared to full year 2019.
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:19)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Management’s analysis of the 2020 results of the OTP Group
47
C K B G R O U P ( M O N T E N E G R O )
Performance of CKB Group:
Main components of P&L account
After tax profit w/o dividends and net cash transfer
Income tax
Profit before income tax
Operating profit
Total income
Net interest income
Net fees and commissions
Other net non-interest income
Operating expenses
Total provisions
Provision for impairment on loan and placement losses
Other provision
Main components of balance sheet closing balances
Total assets
Gross customer loans
Gross customer loans (FX-adjusted)
Retail loans
Corporate loans
Car financing loans
Allowances for possible loan losses
Allowances for possible loan losses (FX-adjusted)
Deposits from customers
Deposits from customers (FX-adjusted)
Retail deposits
Corporate deposits
Liabilities to credit institutions
Total shareholders’ equity
Loan Quality
Stage 1 loan volume under IFRS 9 (in HUF million)
Stage 1 loans under IFRS 9/gross customer loans
Own coverage of Stage 1 loans under IFRS 9
Stage 2 loan volume under IFRS 9 (in HUF million)
Stage 2 loans under IFRS 9/gross customer loans
Own coverage of Stage 2 loans under IFRS 9
Stage 3 loan volume under IFRS 9 (in HUF million)
Stage 3 loans under IFRS 9/gross customer loans
Own coverage of Stage 3 loans under IFRS 9
Provision for impairment on loan and placement losses/average gross loans
90+ days past due loan volume (in HUF million)
90+ days past due loans/gross customer loans
Performance Indicators
ROA
ROE
Total income margin
Net interest margin
Cost/income ratio
Net loans to deposits (FX-adjusted)
FX rates
HUF/EUR (closing)
HUF/EUR (average)
2019
HUF million
6,377
(679)
7,056
5,692
16,120
11,464
4,215
441
(10,428)
1,364
1,293
71
2019
439,836
319,836
353,327
178,523
174,707
97
(19,518)
(21,562)
318,216
350,637
228,438
122,199
36,733
66,188
2019
283,959
88.8%
1.1%
12,509
3.9%
4.8%
23,369
7.3%
68.2%
(0.56%)
17,058
5.3%
2019
1.9%
11.9%
4.86%
3.45%
64.7%
95%
2019
HUF
330.5
325.3
2020
HUF million
4,307
(302)
4,609
8,353
22,095
17,188
4,446
461
(13,743)
(3,743)
(3,434)
(309)
2020
477,676
362,067
362,067
173,693
188,299
75
(24,510)
(24,510)
324,671
324,671
213,067
111,604
58,967
76,556
2020
294,548
81.4%
1.3%
41,390
11.4%
9.3%
26,129
7.2%
63.9%
0.99%
17,538
4.8%
2020
0.9%
6.0%
4.70%
3.65%
62.2%
104%
2020
HUF
365.1
351.2
Change
%
(32)
(56)
(35)
47
37
50
5
5
32
(374)
(366)
(535)
%
9
13
2
(3)
8
(23)
26
14
2
(7)
(7)
(9)
61
16
%/pps
4
(7.4)
0.2
231
7.5
4.5
12
(0.1)
(4.3)
1.55
3
(0.5)
pps
(1.0)
(5.9)
(0.16)
0.20
(2.5)
9
Change
%
10
8
48
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:19)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
On 27 February 2019 Crnogorska komercijalna
was consolidated from 3Q 2019. The operating
banka a.d. signed an agreement to purchase
profit surged by 47% (including the 50%
the 90.56% stake from Société Générale banka
jump in net interest income), and operating
Montenegro a.d., the Montenegrin subsidiary
expenses grew by 32%. Furthermore, total
of the Société Générale Group. The financial
provisions were released in the base period,
closure of the transaction was completed on
while the pandemic necessitated creating
16 July 2019. On 11 December 2020, Podgorička
provisions in 2020. In 2020, ROE (6.0%) and the
banka AD Podgorica was merged into
cost/income ratio (62.2%) fell y-o-y, while net
Crnogorska komercijalna banka a.d.
interest margin (3.65%) increased.
The Montenegrin operation's P&L account
In full year 2020, DPD90+ loan volumes
was adjusted for the one-off items directly
(FX-adjusted, without sales and write-offs)
related to the acquisition; these corrections
increased by HUF 1.5 billion. The DPD90+ ratio
are presented at consolidated level, among
(4.8%) declined by 0.5 pp y-o-y; meanwhile
the adjustment items. The balance sheet items
HUF 2.8 billion non-performing loans were
were not adjusted for these effects.
sold/written off in 2020. At the end of 2020, the
In full year 2020, the Montenegrin CKB Group
ratio of Stage 3 loans stood at 7.2% (–0.1 pp y-o-y),
generated HUF 4.3 billion adjusted profit,
their own provision coverage was at 63.9%.
which was 32% less than in the base period.
Performing (Stage 1+2) loans expanded 3% y-o-y
What affected the y-o-y comparability of P&L
(FX-adjusted).
lines was that the financial closure of the
The FX-adjusted loan book contracted by
acquisition was completed on 25 July 2019,
7% y-o-y. The net loan/deposit ratio stood at
therefore the acquired bank’s contribution
104% at the end of year (+9 pps y-o-y).
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:19)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Management’s analysis of the 2020 results of the OTP Group
49
OT P B A N K A L B A N I A ( A L B A N I A )
Performance of OTP Bank Albania:
Main components of P&L account
After tax profit w/o dividends and net cash transfer
Income tax
Profit before income tax
Operating profit
Total income
Net interest income
Net fees and commissions
Other net non-interest income
Operating expenses
Total provisions
Provision for impairment on loan and placement losses
Other provision
Main components of balance sheet closing balances
Total assets
Gross customer loans
Gross customer loans (FX-adjusted)
Retail loans
Corporate loans
Car financing loans
Allowances for possible loan losses
Allowances for possible loan losses (FX-adjusted)
Deposits from customers
Deposits from customers (FX-adjusted)
Retail deposits
Corporate deposits
Liabilities to credit institutions
Total shareholders’ equity
Loan Quality
Stage 1 loan volume under IFRS 9 (in HUF million)
Stage 1 loans under IFRS 9/gross customer loans
Own coverage of Stage 1 loans under IFRS 9
Stage 2 loan volume under IFRS 9 (in HUF million)
Stage 2 loans under IFRS 9/gross customer loans
Own coverage of Stage 2 loans under IFRS 9
Stage 3 loan volume under IFRS 9 (in HUF million)
Stage 3 loans under IFRS 9/gross customer loans
Own coverage of Stage 3 loans under IFRS 9
Provision for impairment on loan and placement losses/average gross loans
90+ days past due loan volume (in HUF million)
90+ days past due loans/gross customer loans
Performance Indicators
ROA
ROE
Total income margin
Net interest margin
Cost/income ratio
Net loans to deposits (FX-adjusted)
FX rates
HUF/ALL (closing)
HUF/ALL (average)
2019
HUF million
2,616
(459)
3,075
3,702
7,953
6,697
1,007
248
(4,250)
(627)
(249)
(379)
2019
247,997
147,777
161,373
72,937
86,138
2,299
(3,657)
(4,001)
179,755
196,492
167,088
29,404
36,901
25,605
2019
138,579
93.8%
1.2%
4,593
3.1%
10.1%
4,604
3.1%
33.1%
0.23%
2,270
1.5%
2019
1.4%
14.1%
4.27%
3.59%
53.4%
80%
2019
HUF
2.7
2.6
2020
HUF million
1,959
(489)
2,448
5,904
11,597
9,824
1,278
495
(5,693)
(3,455)
(2,515)
(940)
2020
286,606
180,815
180,815
83,948
94,275
2,592
(8,089)
(8,089)
214,808
214,808
179,853
34,956
37,151
28,781
2020
143,701
79.5%
1.3%
31,620
17.5%
10.4%
5,494
3.0%
54.2%
1.55%
3,984
2.2%
2020
0.7%
7.3%
4.32%
3.66%
49.1%
80%
2020
HUF
2.9
2.8
Change
%
(25)
7
(20)
59
46
47
27
100
34
451
910
148
%
16
22
12
15
9
13
121
102
20
9
8
19
1
12
%/pps
4
(14.3)
0.1
588
14.4
0.3
19
(0.1)
21.1
1.32
76
0.7
pps
(0.7)
(6.8)
0.05
0.07
(4.3)
0
Change
%
7
8
50
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:23)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
OTP Group's financial statements included the
At the end of 2020, the ratio of Stage 3 loans
Albanian bank's P&L account since 2Q 2019.
was 3.0%, reflecting a marginal y-o-y drop.
The P&L statement of the Albanian operation
The own provision coverage of Stage 3 loans
was adjusted for the one-off items directly
improved to 54.2%. When the Albanian bank
related to the acquisition; these corrections
was consolidated, Stage 3 loans were netted
are presented at consolidated level, among
with provisions. In full-year 2020, the volume
adjustment items. The balance sheet items
of DPD90+ loans (FX-adjusted, without sales
were not adjusted for these effects.
and write-offs) rose by HUF 1.5 billion.
The y-o-y dynamics of balance sheet and P&L
The FX-adjusted volume of Stage 1+2 loans
lines were predominantly determined by the
expanded by 12% y-o-y; within that, retail loans
acquisition.
surged 15%, while corporate and car financing
OTP Bank Albania generated HUF 2.0 billion
loans expanded by a combined 10%.
after tax profit in full year 2020, which was 25%
The FX-adjusted deposit ratio surged 9% y-o-y,
less than in the base period, owing
mostly fuelled by the strong growth in large
to higher risk costs; operating profit grew
corporate deposits. The net loan/deposit ratio
by 59% on yearly basis.
remained flat at 80% y-o-y.
Full-year ROE (7.3%) declined, while cost/income
ratio (49.1%) and net interest margin (3.66%)
increased y-o-y.
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:23)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Management’s analysis of the 2020 results of the OTP Group
51
M O B I A S B A N C A ( M O L D O V A )
Performance of Mobiasbanca:
Main components of P&L account
After tax profit w/o dividends and net cash transfer
Income tax
Profit before income tax
Operating profit
Total income
Net interest income
Net fees and commissions
Other net non-interest income
Operating expenses
Total provisions
Provision for impairment on loan and placement losses
Other provision
Main components of balance sheet closing balances
Total assets
Gross customer loans
Gross customer loans (FX-adjusted)
Retail loans
Corporate loans
Car financing loans
Allowances for possible loan losses
Allowances for possible loan losses (FX-adjusted)
Deposits from customers
Deposits from customers (FX-adjusted)
Retail deposits
Corporate deposits
Liabilities to credit institutions
Total shareholders’ equity
Loan Quality
Stage 1 loan volume under IFRS 9 (in HUF million)
Stage 1 loans under IFRS 9/gross customer loans
Own coverage of Stage 1 loans under IFRS 9
Stage 2 loan volume under IFRS 9 (in HUF million)
Stage 2 loans under IFRS 9/gross customer loans
Own coverage of Stage 2 loans under IFRS 9
Stage 3 loan volume under IFRS 9 (in HUF million)
Stage 3 loans under IFRS 9/gross customer loans
Own coverage of Stage 3 loans under IFRS 9
Provision for impairment on loan and placement losses/average gross loans
90+ days past due loan volume (in HUF million)
90+ days past due loans/gross customer loans
Performance Indicators
ROA
ROE
Total income margin
Net interest margin
Cost/income ratio
Net loans to deposits (FX-adjusted)
FX rates
HUF/MDL (closing)
HUF/MDL (average)
2019
HUF million
1,936
(174)
2,110
2,929
5,902
3,959
891
1,052
(2,974)
(819)
(737)
(82)
2019
211,043
104,763
108,490
58,167
48,781
1,542
(1,790)
(1,857)
161,071
167,509
115,397
52,111
12,342
34,518
2019
102,460
97.8%
1.0%
880
0.8%
23.6%
1,424
1.4%
39.7%
1.58%
383
0.4%
2019
2.1%
12.6%
6.31%
4.23%
50.4%
64%
2019
HUF
17.1
16.6
2020
HUF million
3,973
(540)
4,513
7,707
14,596
8,889
2,137
3,570
(6,889)
(3,193)
(2,695)
(499)
2020
249,921
132,081
132,081
71,552
58,467
2,062
(4,578)
(4,578)
203,176
203,176
133,395
69,781
5,906
37,287
2020
121,459
92.0%
1.1%
6,670
5.1%
19.5%
3,952
3.0%
48.0%
2.23%
2,109
1.6%
2020
1.7%
10.7%
6.24%
3.80%
47.2%
63%
2020
HUF
17.3
17.8
Change
%
105
210
114
163
147
125
140
239
132
290
266
509
%
18
26
22
23
20
34
156
147
26
21
16
34
(52)
8
%/pps
19
(5.8)
0.1
658
4.3
(4.1)
178
1.6
8.3
0.65
451
1.2
pps
(0.4)
(1.9)
(0.07)
(0.43)
(3.2)
(1)
Change
%
1
7
52
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:23)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
The Moldovan bank was consolidated in 3Q 2019.
provisions were set aside in the wake of the
The P&L statement of the Moldovan operation
pandemic. At the end of 3Q 2020, the ratio
was adjusted for the one-off items directly
of Stage 3 loans was 3.0% (+1.6 pps y-o-y);
related to the acquisition; these corrections
their own provision coverage stood at 48.0%.
are shown at consolidated level, among
When the Moldovan bank was consolidated,
adjustment items. The balance sheet items
Stage 3 loans were netted with provisions.
were not adjusted for these effects.
In full-year 2020, the volume of DPD90+ loans
The y-o-y dynamics of balance sheet and
(FX-adjusted, without sales and write-offs)
P&L lines were basically determined by the
grew by HUF 1.7 billion.
acquisition. In full-year 2020, Mobiasbanca
At the end of 2020, the FX-adjusted volume of
contributed to OTP Group's performance
performing (Stage 1+2) loans grew by 20% y-o-y;
with HUF 4.0 billion after tax profit. Full-year
within that, both retail and corporate loans
ROE (10.7%) and net interest margin (3.80%)
surged 20%.
declined, while cost/income ratio (47.2%)
FX-adjusted deposit volumes grew by 21% y-o-y.
increased y-o-y.
The FX-adjusted 34% y-o-y growth in corporate
In 2020, total provisions have nearly
deposits owes a lot to the Banks’ new
quadrupled y-o-y. This was affected by the fact
customers. The net loan/deposit ratio stood
that as the financial closure was completed on
at 63%, below the Group's average.
25 July 2019, the acquired bank’s contribution
At the end of December 2020, the market share
was consolidated from 3Q 2019. Also, in
of OTP Group's Moldovan operation by balance
contrast to the provision release in 3Q 2019,
sheet total, was 13.8%. This ranks it the fourth
in 2020 as a whole significant amount pf
largest bank in Moldova.
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:23)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Management’s analysis of the 2020 results of the OTP Group
53
OT P B A N K A S LOV E N S KO ( S LOVA K I A )
Performance of OTP Banka Slovensko:
Main components of P&L account
After tax profit without the effect of adjustments
Income tax
Profit before income tax
Operating profit
Total income
Net interest income
Net fees and commissions
Other net non-interest income
Operating expenses
Total provisions
Provision for impairment on loan and placement losses
Other provision
Main components of balance sheet closing balances
Total assets
Gross customer loans
Gross customer loans (FX-adjusted)
Retail loans
Corporate loans
Car financing loans
Allowances for possible loan losses
Allowances for possible loan losses (FX-adjusted)
Deposits from customers
Deposits from customers (FX-adjusted)
Retail deposits
Corporate deposits
Liabilities to credit institutions
Total shareholders’ equity
Loan Quality
Stage 1 loan volume under IFRS 9 (in HUF million)
Stage 1 loans under IFRS 9/gross customer loans
Own coverage of Stage 1 loans under IFRS 9
Stage 2 loan volume under IFRS 9 (in HUF million)
Stage 2 loans under IFRS 9/gross customer loans
Own coverage of Stage 2 loans under IFRS 9
Stage 3 loan volume under IFRS 9 (in HUF million)
Stage 3 loans under IFRS 9/gross customer loans
Own coverage of Stage 3 loans under IFRS 9
Provision for impairment on loan and placement losses/average gross loans
90+ days past due loan volume (in HUF million)
90+ days past due loans/gross customer loans
Performance Indicators
ROA
ROE
Total income margin
Net interest margin
Cost/income ratio
Net loans to deposits (FX-adjusted)
FX rates
HUF/EUR (closing)
HUF/EUR (average)
2019
HUF million
1,575
(240)
1,815
1,625
14,714
10,505
3,884
325
(13,089)
190
604
(414)
2019
473,660
392,793
433,900
371,538
62,355
7
(24,338)
(26,886)
351,722
387,890
353,851
34,039
50,669
38,078
2019
336,650
85.7%
0.7%
29,307
7.5%
11.7%
26,836
6.8%
68.8%
(0.15%)
21,890
5.6%
2019
0.3%
5.2%
3.20%
2.29%
89.0%
105%
2019
HUF
330.5
325.3
2020
HUF million
(1,166)
(304)
(862)
1,677
12,419
8,523
3,208
688
(10,742)
(2,539)
(2,731)
192
2020
Change
%
(174)
27
(147)
3
(16)
(19)
(17)
112
(18)
(552)
(146)
%
2020
%/pps
0.76%
0.91
2020
(0.3%)
(3.4%)
2.98%
2.04%
86.5%
2020
HUF
365.1
351.2
pps
(0.6)
(8.6)
(0.22)
(0.25)
(2.5)
Change
%
10
8
On 26 November 2020, the sale of
balance sheet does not appear in the
OTP Banka Slovensko a.s. to KBC Group N.V.
Group's end of 2020 balance sheet.
was concluded.
Between January and October 2020,
The Slovak bank was deconsolidated
the Slovak entity realised an adjusted loss
at the end of November, so its end of 2020
of HUF 1.2 billion.
54
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:23)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
S TA F F L E V E L A N D O T H E R I N F O R M AT I O N
31/12/2019
31/12/2020
Branches
ATM
361
440
136
231
53
95
88
1,936
1,140
480
338
83
141
166
134
223
48
37
53
58
1,373
128
76
145
157
3,077
OTP Core
DSK Group (Bulgaria)
OBH (Croatia)
OTP Bank Serbia
SKB Banka (Slovenia)
OTP Bank Romania
OTP Bank Ukraine
(w/o employed agents)
OTP Bank Russia
(w/o employed agents)
CKB Group (Montenegro)
OTP Bank Albania
Mobiasbanca (Moldova)
OTP Banka Slovensko (Slovakia)
Foreign subsidiaries, total
Other Hungarian and foreign subsidiaries
OTP Group
(w/o employed agents)
OTP Bank Russia – employed agents
OTP Bank Ukraine – employed agents
POS Headcount
(closing)
10,083
6,186
2,251
3,162
863
1,496
77,962
12,915
10,856
18,424
3,982
5,125
331
715
6,908
0
0
159
59,415
2,399
5,343
681
424
755
671
24,231
590
34,902
5,083
663
40,650
POS Headcount
(closing)
10,189
5,619
2,228
3,022
889
1,693
125,800
14,329
11,037
16,657
4,167
6,256
Branches
ATM
362
334
124
217
51
95
86
1,920
1,094
488
323
83
149
161
135
280
34
38
54
0
1,168
115
80
148
0
2,921
402
704
6,421
0
0
0
59,973
2,313
5,127
514
447
830
0
22,682
557
33,427
4,402
618
38,448
OTP Group (aggregated)
1,734
5,013
137,377
1,530
4,841
185,773
Definition of headcount number: closing, active FTE (full-time employee). The employee is considered as full-time employee in case his/her employment conditions
regarding working hours are in line with a full time employment defined in the Labour Code in the reporting entity's country. Part-time employees are taken into account
proportional to the full time working hours being effective in the reporting entity’s country.
Definition of branch numbers: data reported from 2020 are not comparable with previous quarters at OTP Core due to a methodological change. The introduction of the
new methodology increased the number of branches by 9 units (ceteris paribus).
According to the NBH's definition, from 3Q 2020 the number of POS terminals includes all terminals where OTP is the acquirer, including terminals that are not exclusively
authorized by OTP.
S TAT E M E N T O N C O R P O R AT E G O V E R N A N C E
P R A C T I C E
Corporate governance practice
Meeting, this declaration is published on
the websites of both the Stock Exchange
OTP Bank Plc., being registered in Hungary,
(www.bet.hu) and the Bank (www.otpbank.hu).
has a corporate governance policy that
complies with the provisions on companies of
the act applicable (Civil Code). As the company
System of internal controls
conducts banking operations, it also adheres
to the statutory regulations pertaining to
OTP Bank Plc., as a provider of financial
credit institutions.
and investment services, operates a closely
Beyond fulfilling the statutory requirements,
regulated and state-supervised system of
as a listed company on the Budapest Stock
internal controls.
Exchange (BSE), the company also makes an
OTP Bank Plc. has detailed risk management
annual declaration on its compliance with
regulations applicable to all types of risks
the BSE’s Corporate Governance Recommen-
(liquidity, market, country, counterparty, credit,
dations. After being approved by the General
operational, compliance), which are in compliance
Management’s analysis of the 2020 results of the OTP Group
55
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:23)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
with the legal regulations on prudent banking
In line with the regulations of the European
operations. Its risk management system
Union, the applicable Hungarian laws and
extends to cover the identification of risks,
supervisory recommendations, OTP Bank Plc.
the assessment and analysis of their impact,
established an independent organisational
elaboration of the required action plans and
unit with the task of identifying and managing
the monitoring of their effectiveness and
compliance risks.
results. The business continuity framework is
intended to provide for the continuity of
services. Developed on the basis of interna-
General meeting
tional methodologies, the lifecycle model
includes process evaluation, action plan
The General Meeting is the supreme governing
development for critical processes, the regular
body of OTP Bank Plc. The regulations pertaining
review and testing of these, as well as related
to its operation are set forth in the Company’s
DRP activities.
Bylaws, and comply fully with both general
To ensure effective auditing, the OTP Bank Plc.‘s
and special statutory requirements.
internal audit system is realised on several
Information on the General Meeting is
levels of control built on each other. The system
available in the Corporate Governance Report.
of internal checks and balances includes
In accordance with the provisions of the
a combination of process-integrated and
Government Decree 102/2020 (IV. 10.), the
management control, independent internal
resolutions on the published agenda items
audit organisation and executive information
were made by the Company’s Board of Directors
system. The independent internal audit
acting in the competence of the General
organisation as an element of internal lines of
Meeting, which was originally announced
defence promotes the statutory and efficient
to be on 17 April 2020, but cancelled on
management of assets and liabilities, the
26 March 2020 and then convened again
defence of property, the safe course of business,
to be held on 30 April 2020.
the efficient, economical and productive
operation of internal control systems, the
minimisation of risks, moreover – beside
compliance organisation – it reveals and
reports deviations from statutory regulations
and internal rules, makes proposal to abolish
deficiencies and follows up the execution
of actions. The independent internal audit
organisation annually and quarterly prepares
group-level reports on control actions for the
executive boards. Once a year, the internal
Regulations and information
to be presented in the Business
Report concerning securities
conferring voting rights issued by
the Company and senior officials,
according to the effective Articles
of Association, and ownership
structure
audit organisation draws up, for the Supervisory
The Company’s registered capital is
Board, objective and independent reports in
HUF 28,000,001,000, that is twenty-eight
respect of the operation of risk management,
thousand million one thousand Hungarian
internal control mechanisms and corporate
forint, divided into 280,000,010 that is
governance functions and, in line with the
Two hundred and eighty million and ten
provisions of the Credit Institutions Act,
dematerialised ordinary shares with a nominal
reports, once a year, to the Supervisory Board
value of HUF 100 each, and a total nominal
and the Board of Directors on the regularity of
value of HUF 28,000,001,000, that is twenty
internal audit tasks, professional requirements
eight billion one thousand Hungarian forint.
and the conduct of audits, and on the review
The ordinary shares of the Company specified
of compliance with IT and other technical
all have the same nominal value and bestow
conditions needed for the audits.
the same rights in respect of the Company.
56
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:23)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
There are no restrictions in place concerning
Shareholder group: the shareholder and
the transfer of issued securities constituting
another shareholder, in which the former
the registered capital of the Company.
has either a direct or indirect shareholding
No securities with special control rights have
or has an influence without a shareholding
been issued by the Company.
(collectively: a direct and/or indirect influence);
The Company does not run control systems
furthermore: the shareholder and another
prescribed by an employee ownership program,
shareholder who is exercising or is willing to
where control rights are not exercised directly
exercise its voting rights together with the
by the employees.
former shareholder, regardless of what type of
Rules on the restrictions of the voting rights:
agreement between the participants underlies
The Company’s ordinary shares confer one vote
such concerted exercising of rights.
per share.
For determining the existence and extent
An individual shareholder or group of
of the indirect holding, the rules of the Credit
shareholders may not exercise voting rights
Institutions Act relating to the calculation
in respect of in an extent exceeding 25%, or
of indirect ownership shall be applied.
– if the voting rights of another shareholder or
If the voting rights that may be exercised by
group of shareholders exceed 10% – exceeding
a shareholder group exceed the threshold
33% of the total voting rights represented
stipulated in the first paragraph of this section,
by the shares conferring voting rights at the
the voting rights shall be reduced in such
Company’s General Meeting.
a way that the voting rights relating to the
The shareholder is obliged to notify the
shares most recently acquired by the group
Company’s Board of Directors without delay if
of shareholders shall not be exercisable.
the shareholder directly or indirectly, or together
If there are substantive grounds to presume
with other shareholders in the same group of
that the exercising of voting rights by any
shareholders, holds more than 2% of the voting
shareholder or shareholders might result in a
rights represented by the shares conferring
breach of the rules of the Capital Markets Act
voting rights at the Company’s General Meeting.
relating to the acquisition of a controlling
Concurrently with this, the shareholder is
interest, the Board of Directors’ authorised
obliged to designate the shareholders through
representative responsible for the registration
which the indirect voting right exists, or the
of shareholders at the venue of the General
members of the group of shareholders. In the
Meeting, or the Chairman of the General
event of a failure to provide such notification, or
Meeting, may exclude the affected share-
if there are substantive grounds for assuming
holders from attending the General Meeting
that the shareholder has made a misleading
or exercising voting rights.
declaration regarding the composition of the
The General Meeting has exclusive authority
shareholder group, then the shareholder’s
with respect to the decision regarding the
voting right shall be suspended and may not
delisting of the shares (qualified majority).
be exercised until the shareholder has met the
When making the decisions, shares embodying
above obligations. The notification obligation
multiple voting rights shall represent one
stipulated in this paragraph and the related
share.
legal consequences are also incumbent
The Company is not aware of any kind of
upon individuals who are classified or may
agreements among the owners that could give
be classified as the Company’s shareholders
rise to the restriction of the transfer of issued
under Article 61 of the Capital Markets Act.
securities and/or the voting rights.
The Company must also be provided with
Rules on the appointment and removal
proof of the conditions for exemption from
of executive officers, and rules on amendment
the notification obligation in accordance with
of the Articles of Association:
Section 61 (7)–(8) and Section 61 (10)–(11)–(12),
The Board of Directors has at least 5, and up to
of the Capital Markets Act.
11 members.
Management’s analysis of the 2020 results of the OTP Group
57
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:23)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
When making the decisions, shares embodying
(cid:588) Except in the cases referred by these Articles
multiple voting rights shall represent one
of Association to the authority of the Board
share. The members of the Board of Directors
of Directors, the establishment and amend-
are elected by the General Meeting based on
ment of the Articles of Association; (qualified
its decision uniformly either for an indefinite
majority); the General Meeting decides on
period or for five years; in the latter case
proposals concerning the amendment
the mandate ends with the General Meeting
of the Articles of Association – based on
concluding the fifth financial year following
a resolution passed by shareholders with
the election. The mandate of a member elected
a simple majority – either individually or
during this period expires together with the
en masse.
mandate of the Board of Directors.
The Board of Directors elects a Chairman and,
The Board of Directors is exclusively authorised
may elect one or more Deputy Chairmen,
to make decisions regarding any change in the
from among its own members, whose period
Company’s name, registered office, permanent
of office shall be equal to the mandate of
establishments and branches, and in the
the Board of Directors. The Chairman of the
Company’s activities – with the exception of its
Board of Directors is also the Chief Executive
core activity – and, in relation to this, to modify
Officer (Chairman & CEO) of the Company,
the Articles of Association should it become
unless the Board of Directors decides within
necessary to do so on the basis of the Civil
its competence that the position of Chairman
Code or the Articles of Association.
of the Board of Directors and the Chief
Executive Officer of the Company are held
The Board of Directors is obliged to
by separate persons.
(cid:588) prepare the Company’s financial statements
in accordance with the Accounting Act, and
The membership of the Board of Directors
make a proposal for the use of the profit
ceases to exist by
a) expiry of the mandate,
b) resignation,
c) recall,
d) death,
after taxation;
(cid:588) prepare a report once a year for the General
Meeting, and once every three months
for the Supervisory Board, concerning
management, the status of the Company’s
e) the occurrence of grounds for
assets and business policy;
disqualification as regulated by law,
(cid:588) provide for the proper keeping of the
f) termination of the employment of internal
Company's business books;
(executive) Board members.
(cid:588) perform the tasks referred to its authority
under the Credit Institutions Act, in
The General Meeting has exclusive authority
particular:
with respect to the following matters:
(cid:588)(cid:631)(cid:631) (cid:156)(cid:202)(cid:228)(cid:241)(cid:224)(cid:177)(cid:202)(cid:168)(cid:631)(cid:236)(cid:174)(cid:156)(cid:631)(cid:177)(cid:202)(cid:236)(cid:156)(cid:168)(cid:224)(cid:177)(cid:236)(cid:259)(cid:631)(cid:209)(cid:167)(cid:631)(cid:236)(cid:174)(cid:156)(cid:631)(cid:133)(cid:146)(cid:146)(cid:209)(cid:241)(cid:202)(cid:236)(cid:177)(cid:202)(cid:168)(cid:631)
(cid:588) the recall of members of the Board of
and financial reporting system;
Directors, the Supervisory Board and Audit
(cid:588)(cid:631)(cid:631) (cid:156)(cid:195)(cid:133)(cid:145)(cid:209)(cid:224)(cid:133)(cid:236)(cid:177)(cid:202)(cid:168)(cid:631)(cid:236)(cid:174)(cid:156)(cid:631)(cid:133)(cid:221)(cid:221)(cid:224)(cid:209)(cid:221)(cid:224)(cid:177)(cid:133)(cid:236)(cid:156)(cid:631)(cid:228)(cid:236)(cid:224)(cid:133)(cid:236)(cid:156)(cid:168)(cid:259)(cid:631)(cid:133)(cid:202)(cid:152)(cid:631)
Committee, and of the auditor; (qualified
determining risk tolerance levels for each
majority).
business unit concerned;
More than one third of the members of the
(cid:588)(cid:631)(cid:631) (cid:228)(cid:156)(cid:236)(cid:236)(cid:177)(cid:202)(cid:168)(cid:631)(cid:224)(cid:177)(cid:228)(cid:192)(cid:631)(cid:133)(cid:228)(cid:228)(cid:241)(cid:201)(cid:221)(cid:236)(cid:177)(cid:209)(cid:202)(cid:631)(cid:195)(cid:177)(cid:201)(cid:177)(cid:236)(cid:228)(cid:581)
Board of Directors and the non-executive
(cid:588)(cid:631)(cid:631) (cid:221)(cid:224)(cid:209)(cid:252)(cid:177)(cid:152)(cid:177)(cid:202)(cid:168)(cid:631)(cid:236)(cid:174)(cid:156)(cid:631)(cid:202)(cid:156)(cid:146)(cid:156)(cid:228)(cid:228)(cid:133)(cid:224)(cid:259)(cid:631)(cid:224)(cid:156)(cid:228)(cid:209)(cid:241)(cid:224)(cid:146)(cid:156)(cid:228)(cid:631)(cid:167)(cid:209)(cid:224)(cid:631)(cid:236)(cid:174)(cid:156)(cid:631)
members of the Supervisory Board may
management or risk, the valuation of assets,
be recalled within a 12-month period only
the use of external credit ratings and the
if any shareholder holds more than 33%
application of internal models.
of the shares issued by the Company, which
have been obtained by the shareholder by
The following, in particular, come under the
way of a public purchase offer.
exclusive authority of the Board of Directors:
58
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:23)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
(cid:588) election of the Chairman & Chief Executive
(cid:588) decision on steps to hinder a public takeover
Officer of the Company, and exercising
procedure;
employer’s right in respect thereof;
(cid:588) decision on the acceptance of a public
(cid:588) election of one or more Deputy Chairmen
purchase offer received in respect of
of the Board of Directors;
treasury shares;
(cid:588) determination of the annual plan;
(cid:588) decision on the commencement of trading
(cid:588) the analysis and assessment of the imple-
in the shares in a regulated market
mentation of business-policy guidelines,
(flotation);
on the basis of the Company’s quarterly
(cid:588) decision on the cessation of trading in
balance sheet;
the shares in a given regulated market,
(cid:588) decisions on transactions referred to the
provided that the shares are traded in
authority of the Board of Directors by the
another regulated market (hereinafter:
Company's organisational and operational
transfer).
regulations;
(cid:588) decision on launching, suspending, or
The Board of Directors is exclusively
terminating the performance of certain
authorised to:
banking activities within the scope of the
(cid:588) decide, in the cases specified in the Civil
licensed activities of the Company;
Code, on acceptance of the Company’s
(cid:588) designation of the employees entitled to
interim balance sheet, subject to the prior
sign on behalf of the Company;
approval of the Supervisory Board;
(cid:588) decision on the increasing of registered
(cid:588) decide, instead of the General Meeting,
capital at the terms set out in the relevant
to pay an advance on dividends, subject to
resolution of the General Meeting;
the preliminary approval of the Supervisory
(cid:588) decision to acquire treasury shares at
Board;
the terms set out in the relevant resolution
(cid:588) make decisions regarding any change in
of the General Meeting;
the Company’s name, registered office,
(cid:588) decision on approving internal loans in
permanent establishments and branches,
accordance with the Credit Institutions Act;
and in the Company’s activities – with the
(cid:588) decision on the approval of regulations
exception of its core activity – and,
that fundamentally determine banking
in relation to this, to modify the Articles
operations, or are referred to its authority
of Association should it become necessary
by the Credit Institutions Act.
to do so on the basis of the Civil Code
The following shall qualify as such
or the Articles of Association;
regulations:
(cid:588) make decision on mergers (if, according
(cid:588)(cid:631)(cid:631) (cid:236)(cid:174)(cid:156)(cid:631)(cid:146)(cid:209)(cid:195)(cid:195)(cid:133)(cid:236)(cid:156)(cid:224)(cid:133)(cid:195)(cid:631)(cid:156)(cid:252)(cid:133)(cid:195)(cid:241)(cid:133)(cid:236)(cid:177)(cid:209)(cid:202)(cid:631)(cid:224)(cid:156)(cid:168)(cid:241)(cid:195)(cid:133)(cid:236)(cid:177)(cid:209)(cid:202)(cid:228)(cid:579)
to the provisions of the law on the
(cid:588)(cid:631)(cid:631) (cid:236)(cid:174)(cid:156)(cid:631)(cid:224)(cid:177)(cid:228)(cid:192)(cid:606)(cid:133)(cid:228)(cid:228)(cid:241)(cid:201)(cid:221)(cid:236)(cid:177)(cid:209)(cid:202)(cid:631)(cid:224)(cid:156)(cid:168)(cid:241)(cid:195)(cid:133)(cid:236)(cid:177)(cid:209)(cid:202)(cid:228)(cid:579)
transformation, merger and demerger of
(cid:588)(cid:631)(cid:631) (cid:236)(cid:174)(cid:156)(cid:631)(cid:146)(cid:241)(cid:228)(cid:236)(cid:209)(cid:201)(cid:156)(cid:224)(cid:631)(cid:224)(cid:133)(cid:236)(cid:177)(cid:202)(cid:168)(cid:631)(cid:224)(cid:156)(cid:168)(cid:241)(cid:195)(cid:133)(cid:236)(cid:177)(cid:209)(cid:202)(cid:228)(cid:579)
legal entities, the approval of the General
(cid:588)(cid:631)(cid:631) (cid:236)(cid:174)(cid:156)(cid:631)(cid:146)(cid:209)(cid:241)(cid:202)(cid:236)(cid:156)(cid:224)(cid:221)(cid:133)(cid:224)(cid:236)(cid:259)(cid:631)(cid:224)(cid:133)(cid:236)(cid:177)(cid:202)(cid:168)(cid:631)(cid:224)(cid:156)(cid:168)(cid:241)(cid:195)(cid:133)(cid:236)(cid:177)(cid:209)(cid:202)(cid:228)(cid:579)
Meeting is not required in order for the
(cid:588)(cid:631)(cid:631) (cid:236)(cid:174)(cid:156)(cid:631)(cid:177)(cid:202)(cid:252)(cid:156)(cid:228)(cid:236)(cid:201)(cid:156)(cid:202)(cid:236)(cid:631)(cid:224)(cid:156)(cid:168)(cid:241)(cid:195)(cid:133)(cid:236)(cid:177)(cid:209)(cid:202)(cid:228)(cid:579)
merger to take place).
(cid:588)(cid:631)(cid:631) (cid:236)(cid:174)(cid:156)(cid:631)(cid:224)(cid:156)(cid:168)(cid:241)(cid:195)(cid:133)(cid:236)(cid:177)(cid:209)(cid:202)(cid:228)(cid:631)(cid:209)(cid:202)(cid:631)(cid:133)(cid:228)(cid:228)(cid:156)(cid:236)(cid:631)(cid:146)(cid:195)(cid:133)(cid:228)(cid:228)(cid:177)(cid:167)(cid:177)(cid:146)(cid:133)(cid:236)(cid:177)(cid:209)(cid:202)(cid:579)(cid:631)
impairment and provisioning,
The Board of Directors directly exercises
(cid:588)(cid:631)(cid:631) (cid:236)(cid:174)(cid:156)(cid:631)(cid:209)(cid:224)(cid:168)(cid:133)(cid:202)(cid:177)(cid:228)(cid:133)(cid:236)(cid:177)(cid:209)(cid:202)(cid:133)(cid:195)(cid:631)(cid:133)(cid:202)(cid:152)(cid:631)(cid:209)(cid:221)(cid:156)(cid:224)(cid:133)(cid:236)(cid:177)(cid:209)(cid:202)(cid:133)(cid:195)(cid:631)
employer's rights in respect of the Chairman
regulations, which contain the regulations
& CEO. The person affected by a decision
on the procedure for assessing requests
may not participate in the decision making.
related to large loans,
Employer rights in respect of the executive
(cid:588)(cid:631)(cid:631) (cid:236)(cid:174)(cid:156)(cid:631)(cid:224)(cid:156)(cid:168)(cid:241)(cid:195)(cid:133)(cid:236)(cid:177)(cid:209)(cid:202)(cid:228)(cid:631)(cid:209)(cid:202)(cid:631)(cid:236)(cid:174)(cid:156)(cid:631)(cid:236)(cid:224)(cid:133)(cid:202)(cid:228)(cid:167)(cid:156)(cid:224)(cid:631)(cid:209)(cid:167)(cid:631)
directors of the Company are exercised by
signatory rights;
the Board of Directors through the Chairman
(cid:588) the decision on approving the Rules
& CEO, with the proviso that the Board of
of Procedure of the Board of Directors;
Directors must be notified in advance of the
Management’s analysis of the 2020 results of the OTP Group
59
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:23)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
appointment and dismissal of the Deputy
The Board of Directors may delegate, to
CEOs. With regard to issues related to the
individual members of the Board of Directors,
exercising of employer's rights in respect
to executive directors employed by the Company,
of employees, the Company is represented
and to the heads of the individual service
by the Chief Executive Officer and by the
departments, any task that does not come
senior company employees defined in the
under the exclusive authority of the Board
Organisational and Operational Regulations
of Directors in accordance with these Articles
of the Company, in accordance with the
of Association or a General Meeting resolution.
delegation of authority approved by the Board
The Company may acquire treasury shares
of Directors. If the Chairman of the Board
in accordance with the rules of the Civil Code.
of Directors and the CEO are different persons,
The prior authorisation of the General Meeting
the employer rights in respect of the other
is not required for the acquisition of treasury
executive directors of the Company (CEO, deputy
shares if the acquisition of the shares is
CEOs) are exercised by the Board of Directors
necessary in order to prevent a direct threat of
through the Chairman of Board of Directors,
severe damage to the Company (this provision
with the proviso that the Board of Directors
is not applicable in the event of a public pur-
shall be notified in advance of the appointment
chase offer aimed at buying up the Company’s
and dismissal of the CEO and Deputy CEOs.
shares), as well as if the Company acquires
With regard to issues related to the exercising
the treasury shares in the context of a judicial
of employer's rights in respect of employees,
procedure aimed at the settlement of a claim
the Company is represented by the persons
to which the Company is entitled, or in the
defined in the Organisational and Operational
course of a transformation.
Regulations of the Company, in accordance
The Company has not made agreements in the
with the delegation of authority approved by
meaning of points (j) and (k) in paragraph 95/A
the Board of Directors.
of Act No. C of 2000 on Accounting.
Ownership structure of OTP Bank Plc.:
Description of owner
Total equity
January 2020
31 December 2020
Quantity
1
Quantity
1
Domestic institution/company
Foreign institution/company
Domestic individual
Foreign individual
Employees, senior officers
Treasury shares2
Government held owner
International Development Institutions
Other3
Total
Ownership
share
18.84%
77.01%
2.98%
0.13%
0.80%
0.12%
0.08%
0.04%
0.00%
100.00%
Voting
rights
18.86%
77.10%
2.98%
0.13%
0.80%
0.00%
0.08%
0.04%
0.00%
100.00%
52,750,611
215,635,699
8,344,202
356,377
2,240,465
323,520
219,372
122,218
7,546
280,000,010
Ownership
share
20.93%
71.60%
4.79%
0.11%
0.85%
1.55%
0.08%
0.04%
0.04%
100.00%
Voting
rights
21.26%
72.73%
4.87%
0.12%
0.87%
0.00%
0.08%
0.04%
0.04%
100.00%
58,605,628
200,480,153
13,424,090
319,346
2,393,390
4,334,140
219,800
108,981
114,482
280,000,010
1 Voting rights in the General Meeting of the Issuer for participation in decision-making.
2 Treasury shares do not include the OTP shares held by ESOP (OTP Bank Employee Stock Ownership Plan Organization). Pursuant to Act V of 2013 on the Civil Code,
OTP shares held by the ESOP are not classified as treasury shares, but the ESOP must be consolidated in accordance with IFRS 10 Consolidated Financial Statements
standard. On 31 December 2020 ESOP owned 5,097,255 OTP shares.
3 Non-identified shareholders according to the shareholders’ registry.
Number of treasury shares held in the year under review (2020):
OTP Bank
Subsidiaries
Total
1 January
323,520
0
323,520
31 March
1,667,632
0
1,667,632
30 June
2,313,939
0
2,313,939
30 September
4,395,242
0
4,395,242
31 December
4,334,140
0
4,334,140
60
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:18)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Shareholders with over/around 5% stake as at 31 December 2020:
Name
MOL (Hungarian Oil and Gas Company Plc.)
KAFIJAT Group
OPUS Securities S.A.
Groupama Group
Number
of shares
24,000,000
19,835,748
14,496,476
14,330,632
Ownership1 Voting rights1, 2
8.57%
7.08%
5.18%
5.12%
8.71%
7.20%
5.26%
5.20%
1 Rounded to two decimals.
2 Voting rights in the General Meeting of the Issuer for participation in decision-making.
Committees8
Members of the Board of Directors
Members of the Supervisory Board
Members of the Audit Committee
Dr. Sándor Csányi – Chairman
Mr. Tibor Tolnay – Chairman
Dr. József Gábor Horváth – Chairman
Mr. Tamás György Erdei – Deputy Chairman
Dr. József Gábor Horváth – Deputy Chairman
Mr. Tibor Tolnay – Deputy Chairman
Mr. Mihály Baumstark
Dr. Tibor Bíró
Dr. István Gresa
Mr. Antal Kovács
Dr. Antal Pongrácz
Dr. László Utassy
Dr. József Vörös
Mr. László Wolf
Mr. András Michnai
Mrs. Klára Bella
Dr. Márton Gellért Vági
Mr. Olivier Péqueux
Dr. Márton Gellért Vági
Mr. Olivier Péqueux
The résumés of the committee and board members are available
in the Corporate Governance Report/Annual Report. .
Personal and organizational
changes
Company until the Annual General Meeting
of the Company closing the 2022 business year,
but not later than 30 April 2023.
Concerning the audit of OTP Bank Plc.’s separate
On 30 April 2020 the Board of Directors acting
and consolidated annual financial statements
in the competency of the Annual General
in accordance with International Financial
Meeting, elects Mr. Olivier Péqueux as member
Reporting Standards for the year 2020, the
of the Supervisory Board of the Company until
Board of Directors acting in the competency
the Annual General Meeting of the Company
of the Annual General Meeting is electing
closing the 2022 business year, but not later
Deloitte Auditing and Consulting Ltd. (000083,
than 30 April 2023.
H–1068 Budapest, Dózsa György út 84/C)
On 30 April 2020 the Board of Directors acting
as the Bank’s auditor from 1 May 2020 until
in the competency of the Annual General
30 April 2021.
Meeting, elects dr. Márton Gellért Vági as
On 30 April 2020 the Board of Directors acting
member of the Supervisory Board of the
in the competency of the Annual General
Company until the Annual General Meeting
Meeting, elects Mr. Tibor Tolnay as member
of the Company closing the 2022 business year,
of the Supervisory Board of the Company until
but not later than 30 April 2023.
the Annual General Meeting of the Company
On 30 April 2020 the Board of Directors acting
closing the 2022 business year, but not later
in the competency of the Annual General
than 30 April 2023.
Meeting, elects Mrs. Klára Bella as member
On 30 April 2020 the Board of Directors acting
of the Supervisory Board of the Company until
in the competency of the Annual General
the Annual General Meeting of the Company
Meeting, elects dr. József Gábor Horváth
closing the 2022 business year, but not later
as member of the Supervisory Board of the
than 30 April 2023.
8 Personal changes can be found in the “Personal and organizational changes” chapter.
Management’s analysis of the 2020 results of the OTP Group
61
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:18)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
On 30 April 2020 the Board of Directors acting
function, while the Supervisory Board is the
in the competency of the Annual General
management body in its supervisory function
Meeting, elects Mr. András Michnai as member
of the Company. It controls the supervision of
of the Supervisory Board of the Company until
the lawfulness of the Company’s operation,
the Annual General Meeting of the Company
its business practices and management,
closing the 2022 business year, but not later
performs oversight tasks and accepts the
than 30 April 2023.
provisions of the Bank Group’s Remuneration
On 30 April 2020 the Board of Directors acting
Policy. The effective operation of Supervisory
in the competency of the Annual General
Board is supported by the Audit Committee, as
Meeting, elects Mr. Tibor Tolnay as member
a committee, which also monitors the internal
of the Audit Committee of the Company until
audit, the risk management, the reporting
the Annual General Meeting of the Company
systems and the activities of the auditor.
closing the 2022 business year, but not later
In order to assist the performance of the
than 30 April 2023.
governance functions the Board of Directors
On 30 April 2020 the Board of Directors acting
founded and operates, as permanent or
in the competency of the Annual General
other committees, such as the Management
Meeting, elects dr. József Gábor Horváth
Committee, the Remuneration Committee,
as member of the Audit Committee of the
the Nomination Committee and the Risk
Company until the Annual General Meeting
Assumption and Risk Management Committee.
of the Company closing the 2022 business
To ensure effective operation OTP Bank Plc.
year, but not later than 30 April 2023.
also has a number of further permanent
On 30 April 2020 the Board of Directors acting
committees.
in the competency of the Annual General
OTP Bank Plc. gives an account of the activities
Meeting, elects Mr. Olivier Péqueux as member
of the executive boards and the committees
of the Audit Committee of the Company until
every year in its Corporate Governance Report.
the Annual General Meeting of the Company
The Board of Directors held 8, the Supervisory
closing the 2022 business year, but not later
Board held 6 meetings, while the Audit
than 30 April 2023.
Committee held 1 meeting in 2020. In addition,
On 30 April 2020 the Board of Directors acting
resolutions were passed by the Board
in the competency of the Annual General
of Directors on 155, by the Supervisory Board
Meeting, elects dr. Márton Gellért Vági as
on 108 and by the Audit Committee on 39
member of the Audit Committee of the
occasions by written vote.
Company until the Annual General Meeting
of the Company closing the 2022 business year,
but not later than 30 April 2023.
On 20 July 2020 the labour contract of
Policy of diversity
Dr. Zsolt Barna, Deputy Chief Executive Officer
OTP Bank Plc. determines and regulates the
had been terminated by mutual agreement.
criteria for the selection of senior executives
Along with the termination of the labour
in line with European Union as well as
contract with OTP Bank Plc., Dr. Zsolt Barna
domestic legal requirements and directives
resigned from his positions held in different
fundamentally determining the operation
member companies of OTP Group.
of credit institutions.
When designating members of the manage-
ment bodies (Board of Directors, Supervisory
Operation of the executive boards
Board) as well as appointing members of the
Board of Directors and administrative members
OTP Bank Plc. has a dual governance structure,
(Management), OTP Bank Plc. considers the
in which the Board of Directors is the Company’s
existence of professional preparation, the
executive management body in its managerial
high-level human and leadership competence,
62
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:18)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
the versatile educational background, the
members of the management bodies falls
widespread business experience and business
within the exclusive competence of the General
reputation of the utmost importance, at the
Meeting upon which – beyond its capacity
same time, it is also highly committed to taking
to designate enforcing the above aspects
efficient measures in order to ensure diversity
to maximum effect – OTP Bank Plc. has no
with regard to corporate operation, including
substantive influence.
the gradual improvement in women’s partici-
For the purposes of OTP Bank Plc.’s Articles
pation rate.
of Association, a Board of Directors comprising
With this in mind, OTP Bank Plc.’s Nomination
5–11 members and a Supervisory Board
Committee continuously keeps tracking the
comprising 5–9 members are set up at the Bank.
European Union and domestic legislation
The Board of Directors in its current form
relating to women’s quota on its agenda, in that
operates with 10 members and has no female
when unambiguously worded expectations are
member, while the Supervisory Board comprises
announced, it promptly takes the necessary
6 members and has one female member as of
measures.
12 April, 2019. The management of OTP Bank Plc.
It is important to note, however, that, as a
currently comprises 7 members and has no
public limited company, the selection of the
female member.
E N V I R O N M E N TA L P O L I C Y,
E N V I R O N M E N TA L P R OJ E C T S
Environmental protection
principles
The schemes overseen by it focus on the
embedding of environmental and climate
protection considerations into financial services
OTP Group is committed to the protection
and on the related disclosures; and as such,
of the environment, the combating of climate
among other things, the Committee launched
change and its impacts, and the preservation
an ESG lending project and created the Green
and low-impact use of natural resources.
Programme Directorate.
OTP Bank’s environmental activities are
regulated in its Environmental Regulation.
The Regulation ensures legal compliance and
the consideration and integration of environ-
mental criteria into the Bank’s business
operations in order to minimise the environ-
Environmental protection
in relation to the provision
of banking services
mental impacts of operating and maintaining
By 2023, OTP Bank aims to become the Central
the Bank’s organisation. It also sets out
European bank best equipped to provide green
the rules on implementing the principles of
financing. The Green Programme Directorate
sustainable procurement. OTP Group members
was created to achieve this goal; its main
operate in full compliance with environmental
purpose is to take full advantage of the
legislation and received no fines in 2020 either.
opportunities inherent in green financing,
In CDP’s Climate Change Questionnaire,
helping OTP Group build as large a green
OTP Group achieved a rating of B–, improving
portfolio as possible and exploit the market
on its performance in the year before.
potential of green financing certification.
OTP Bank set up an ESG Steering Committee in
Pursuant to our internal regulations, our
2020 (see the Non-financial statement section
banking group conducts its lending activities
about the operations of the committee).
expecting – and always verifying – compliance
Management’s analysis of the 2020 results of the OTP Group
63
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:18)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
with the applicable environmental regulations.
(improving energy efficiency and increasing
At the time of the internal approval by the bank
the reliance on renewables). In 2020, loans
of the financing of a project and before first
of a total of HUF 16.0 billion were disbursed;
disbursement, the availability of the required
of this, 98.6% was retail lending, since the
permits and authorisations and compliance with
corporate credit facility had been depleted.
the provisions thereof is always verified by one
In the period between 2017 and 2020, the total
or more external consultants (legal and/or
of disbursed loan contracts amounted to
technical experts); the Bank subsequently ensures
HUF 43.4 billion, representing 28.4% of all
compliance by obtaining regular declarations
loans granted via MFB Points.
from the customer and conducting its own
OTP Jelzálogbank was the first credit institution
monitoring. The credit agreements stipulate
in Hungary to join the Energy Efficient
sanctions for any breaches of commitments
Mortgages Initiative (EEMI) pilot. The aim
made or requirements imposed. The long-term
of the programme is to allow participants to
sustainability of environmental impacts is
jointly develop best practices in green lending
taken into consideration as a subjective factor
and to support the overhaul and energy
in the credit ratings of large corporate clients.
modernisation of the housing stock.
With regards to project financing, our group
In 2020, our subsidiaries in Croatia, Moldova,
gives high priority to financing projects aimed
Albania and Slovakia offered preferential
at the utilisation of renewable energy sources.
loans incentivising energy efficiency and the
In 2020, our lending policy was to increase the
use of renewables.
support for lending to this sector even further;
The objective of the OTP Climate Change
we also reviewed our lending guidelines
130/30 Fund of OTP Fund Management is
applicable to the solar energy sector. In 2020,
to provide an opportunity to invest in the
we lent HUF 9.2 billion to the renewables
shares of developed and developing market
sector, financing a total of 30 MW in solar
companies that may be the beneficiaries of
power capacities. In terms of project financing,
the directives, the legislation and the changes
we also give special attention and preference
in economic policy aimed at reducing climate
to office building projects with sustainability/
change impacts. As of the end of 2020, the Fund
environmental certification.
had HUF 31.3 billion net asset value, nearly
As far as sectors with environmental benefits
four times higher than in the year before.
are concerned, our corporate lending policy
Our efforts to reduce the direct environmental
is expressly supportive of the financing
impact of OTP Group’s operations are centred
of agriculture and solar power. Starting from
around improving its energy efficiency and
2020, we reclassified the paper, paper products
reducing its paper usage. The environmental
and packaging material industry as a category
risks associated with our operations are
requiring increased caution. The creation
analysed and managed within our operational
of a new agricultural limit framework based
risk management process. Potential risks are
on quantity indicators has the potential for
identified in the course of the annual process-
accelerating lending from 2021, especially in
based self-assessment, and the assessment
the case of smaller farms.
of climate change risks is also included in the
OTP Bank leads a consortium offering products
scenario analysis of risks with low probability
of the Hungarian Development Bank (MFB),
but high impact.
including both EU-refinanced and those of
MFB’s own origination, at the MFB Points set
up in our branches. Environmental protection
has been assigned priority in our available
loan products since 2017. Households and
Energy consumption and business
travel
businesses can access preferential terms under
OTP Group uses state-of-the-art technology in
these products to implement energy projects
new construction and renovation projects; we
64
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:18)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
also expand our use of LED lighting technology
employees continued to work on site at all our
on an ongoing basis. As part of the renovation
organisations, albeit in smaller numbers.
process, we are replacing air conditioning
The number of business trips and the size of
units, always ensuring that the new units use
the vehicle fleet are determined by the needs
environmentally-friendly coolants. In 2020,
of the business. Our Group’s vehicle policy sets
OTP Bank identified the branches with the
carbon limits; also, there are environmentally-
highest relative energy consumption; all
friendly vehicles among the cars available to
immediate remedial actions were completed
choose from in all the vehicle categories. Our
at these locations. The refurbishment of 16
Montenegrin subsidiary installed an electric
branches at the parent bank also yielded
car charging station in front of its head office
energy savings. At the subsidiaries, branch
building during the year. Group-level total
refurbishment projects also included energy
mileage decreased, mainly because of the
efficiency measures; our Montenegrin sub-
Covid-19 pandemic. The total distance covered
sidiary continued installing LED lighting and
by all OTP Bank vehicles fell by 5% even though
motion detectors at its head office building.
the fleets of two subsidiaries with high vehicle
We are intensifying our reliance on renewable
use rates (Monicomp, OTP Faktoring) were
energy based on cost-efficiency criteria.
transferred to the parent bank.
Whenever a branch of the parent bank is
Video conferencing helps cut down on the
renovated, we always examine the possibility
amount of business travel and is a solution
of installing solar panels and heat pumps.
that we are using ever more extensively year
We installed solar panels at three branches
after year. The number of video conferencing
in 2020. Our systems generated a total of
rooms rose again in 2020, and the rooms were
1,250 GJ energy from solar power. Our central
increasingly busy. Our existing bicycle storage
archives facility has been using geothermal
facilities continued to be available to both
energy for several years (the facility used
customers and employees in 2020. In addition,
to be owned by Monicomp Zrt., which merged
48 new storage spaces were created at
into the parent bank during the year).
OTP Bank’s head office buildings; our Serbian
The solar panels of our subsidiaries in Croatia
and Montenegrin subsidiaries provided new
and in Serbia generated a total of 383 GJ
storage at their head offices; our Bulgarian
of solar power.
subsidiary provided storage at three locations
Energy use across the Banking Group was
for employees and customers alike; and the
greatly impacted by the pandemic. As regards
Ukrainian subsidiary installed storage in three
ventilation and fresh air in our buildings, air
locations.
recirculation was suspended and ventilation
Energy consumption figures are presented in
was intensified instead; this increased our
respect of OTP Bank. The bank’s overall energy
energy usage. Although the high rate of staff
consumption decreased by 3% compared to the
working from home reduced our electricity
previous year. However, due to our workforce
consumption, heating and cooling consumption
expansion, this represents an 8% reduction in
was only marginally lower because our
per-capita energy consumption.
Volume of energy consumption:
OTP Bank
Total energy consumption (GJ)
Per-capita energy consumption (GJ)
2020
242,390
25,76
2019
250,610
28.14
Energy consumption data are derived from readings; the measured consumption volumes are converted to energy using local
average calorific values. (Excluding Monicomp Zrt. Consumption data.)
The projection basis for the per-capital figure is the average statistical headcount in 2019 and the average full-time employee
count (FTE) in 2020.
2019 figures were slightly revised.
Management’s analysis of the 2020 results of the OTP Group
65
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:18)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Efforts to reduce paper use
FSC-certified paper for its account statements
and marketing publications, and we use
OTP Group has been making a consistent
only ECO Label personal hygiene products.
effort to reduce paper use and printing.
Due to the merger of Monicomp the paper
OTP Bank reduced its office paper usage
usage at OTP Bank increased significantly.
by approximately 30%; the pandemic and
Our Serbian subsidiary also uses FSC-certified
increased rates of working from home
paper, whereas our Slovenian subsidiary uses
played a significant role in this development.
paper with PEFC certification. Further factors
Nevertheless, our percentage of recycled
leading to lower paper usage included the
paper relative to total office paper usage
introduction of lower-weight office paper at
increased to 20% and we plan to increase
our Bulgarian subsidiary, and the transitioning
that figure even further in the future.
to electronic signatures at our Moldovan
Since 2020, OTP Bank has been using
subsidiary.
Paper usage quantities:
OTP Bank
Total amount of paper used (t) (office, packaging, indirect)
Per capita paper use* (kg)
2020
1,137
121
2019
764
86
Sustainable use and waste
management
Waste collection remained unchanged in most
respects in 2020. All members of OTP Group
collect and manage hazardous waste and
We follow a principle of using all our equipment,
paper containing business secrets selectively,
devices and machines for the longest time
in compliance with the relevant laws and
reasonably possible. We explicitly aim to use
regulations. The selective collection of non-
furniture until the end of its lifecycle, reusing it
confidential paper waste, PET bottles and
multiple times and ensuring the compatibility
– in a number of locations – glass is available
of replacements. OTP Bank, DSK Bank, OTP Bank
in the head office buildings of OTP Bank.
Romania and OTP banka Srbija all follow
Our Ukrainian subsidiary operates selective
the practice of making charitable donations
paper collection at its head office building.
of any furniture no longer used but in good
Our Serbian subsidiary collects paper waste
condition, alongside functioning IT equipment
selectively in its branches and head office
(mostly computers and laptops) to institutions
buildings. Our Albanian subsidiary collects
and organisations in need.
paper waste selectively. Our Romanian
In order to cut the use of plastics in its
subsidiary collects all paper, metal, glass and
archiving practices, our parent bank replaced
plastic selectively. Our Slovenian subsidiary
ethylene bags and plastic wallets with paper
also collects communal waste selectively
products and introduced filtered water
(including biodegradable food waste). Our
fountains. In 2020, we expanded the use
Croatian subsidiary has collected paper and
of stamps made of recycled plastic. A number
plastic waste selectively for years, whereas the
of our subsidiaries drew up schemes to reduce
Slovakian subsidiary does so at the locations
the use of plastics; implementation is expected
where this is facilitated by the municipality.
in 2021.
DSK Bank operates selective waste collection
Our subsidiaries in Serbia, Montenegro and
at its sites in Sofia and Varna and expanded
Moldova use toner refills to reduce toner and
the selective collection of paper waste
ink cartridge waste.
during the year. Our Montenegrin subsidiary
* For 2019 the average statistical headcount was used in the numerator, whereas for 2020 it was the average full-time employee
(FTE) count.
66
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:18)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
introduced selective paper waste collection
our continued participation in the nation-
at its head office and its archives facility.
wide PET bottle cap collection scheme
Attitude shaping
(the caps are used for producing wheelchairs).
(cid:588) Our Croatian subsidiary sponsored the
Adriatic Sea clean-up programme of the
scuba diving club in Split.
Most members of our Banking Group have a
(cid:588) Our Serbian subsidiary highlighted the
tradition of raising awareness and taking joint
importance of the responsible use of
action to protect environmental and natural
resources in the context of the pandemic.
resources. The programmes implemented with
Our employees also planted trees.
the help of our employees are increasingly
(cid:588) At our Russian subsidiary, environmental
wide-ranging, covering almost all aspects
awareness messages were displayed on
of nature conservation and environmental
computer screens and in the offices.
protection:
(cid:588) The employees of our Ukrainian subsidiary
(cid:588) In 2020, OTP Bank continued to support
planted trees at several locations in 2020.
the Hungarian Hikers’ Association’s efforts
(cid:588) Volunteers from our Romanian subsidiary
to popularise hiking.
participated in the “Let’s Do It, Romania!”
(cid:588) DSK Bank introduced its “Green Week”
cleanup day.
campaign. Water was the central theme of
(cid:588) Our Slovenian subsidiary keeps bees outside
the first campaign week, when interesting
its head office building as part of the Nature
information and water conservation advice
in the City scheme, contributing to the
was shared, and our employees submitted
preservation of a Slovenian species of bee.
more than 30 recommendations on how the
(cid:588) Our Montenegrin subsidiary used posters
Bank could help reduce water consumption.
and newsletters as regular environmental
A photo competition was announced
awareness reminders for its employees.
and over 200 submissions were received.
In 2020, the bank once again participated in
The subject of the second campaign week
nationwide afforestation and environmental
was waste; this involved, among other things,
protection campaigns.
N O N - F I N A N C I A L S TAT E M E N T
O T P B A N K P L C . ( S E P A R AT E )
The social, environmental and wider economic
mainly in the chapter on Environmental Policy
performance and impacts of OTP Group are
and Environmental Protection Measures.
also reported in its dedicated Sustainability
OTP Bank set up an ESG Steering Committee
Report. The Sustainability Report for 2020
in 2020. The Committee is the governing body
is a group-level report that meets the GRI
of ESG programmes and serves as a decision-
(Global Reporting Initiative) Standard, and
making forum. It determines the objectives
is certified by an independent third party.
for these programmes, prioritises projects
It is available as a digital version on
and allocates resources. The implementation
OTP Bank’s website. The information in this
of ESG programmes is supported by the
chapter is provided in order to comply with
Operational Committee, the Programme
the Accounting Act, while also aiming to keep
Management Team, the ESG team of experts
the duplication of information to a minimum.
and the Group Management Body.
Information concerning environmental
OTP Bank is committed to ethical business
protection and climate change is provided
conduct in all respects; our principles are set
Management’s analysis of the 2020 results of the OTP Group
67
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:18)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
out in our Code of Ethics, which is binding for
prohibited gambling, drug trade, or any
all our employees and agents. Our financial
other illegal activity);
services and our operations have significant
(cid:588) transactions that fail to meet environmental
social and environmental impacts; our objective
standards.
is to manage risks responsibly while taking
We ensure adherence to our principles,
advantage of opportunities and delivering
and maintain this balance through:
positive outcomes.
Providing responsible financial
services and managing credit risk
(cid:588) our strict Risk Management Policy,
(cid:588) our annually revised Lending Policy,
(cid:588) our continuously developed credit approval
system.
Our Lending Policy clearly defines the industries,
business lines and activities where we pursue
Transparent and prudent operations are the
active business operations, as well as the areas
cornerstone of all our activities, and maintain-
where we do not wish to assume risks.
ing the stability of the Banking Group remains
We offer our customers banking options to
a high priority. Our Compliance Policy formu-
suit their individual needs, and provide our
lates our principles and guidelines for the
services with the highest standard of quality,
fair treatment of customers, as well as our
while continuing to improve and innovate.
compliance with consumer protection
While recommending and encouraging the
requirements. We follow the principles of
use of online channels, we also kept most
ethical product design when designing our
of our branches open during the pandemic,
products, and our New Product Policy requires
albeit with shorter hours. We took numerous
– among other things – that we investigate any
protective measures to improve safety.
potential risks affecting consumers.
Our objective is to provide equal access for
We fulfil our role as financial intermediary
persons living with disability, through services
in a way that guarantees the security of our
adapted to their special needs, in line with the
customers’ savings throughout the entire
Accessibility Strategy of OTP Bank. Accessibility
process. Our rules ensure that we comply with
is integrated into our website, which supports
the responsible lending standards concerning
one-handed use and provides accessibility
the prevention of excessive debt, the provision
options including text-to-speech software and
of fair, clear, comprehensive and easily visible
video content transcripts. Physical accessibility
information, and the recommendation
was provided in all our branches but one in
of appropriate products.
2020 as well. Tactile guide strips are available
We invest and lend the money deposited
in 41% of our branches. Our customers can
with us, ensuring that it will not serve illegal
request special-needs services at the queue
purposes, or those contrary to the values
management machine, with physical push
of society. OTP Bank will not finance
buttons and tactile strips also assisting them
(cid:588) customers whose financing is forbidden
in using the device. KONTAKT Interpreter
in international accords, EU acts or national
Services are available at 166 branches; this is
laws;
a service allowing a sign language interpreter
(cid:588) those whose activity is likely to violate public
to assist with administration tasks through live
morals or social value systems, or is
video chat. Induction loop amplifier systems
connected to crime;
are also available (in 109 branches), while 25 of
(cid:588) those who are connected, directly or
our high-traffic branches have employees who
indirectly, to criminal activities or to the
can serve customers using sign language. We
deliberate violation or evasion of legal
have made text-to-speech software available
regulations;
on 765 of our ATMs.
(cid:588) transactions classified as prohibited
OTP Bank’s stated objective is to serve its
business sectors (e.g. the illegal arms trade,
customers without fault. In order to improve
68
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:18)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
the satisfaction of our customers, we are
Directive; instant payments, once they had
also improving our complaint management
been introduced; and numerous customer
practices on an ongoing basis. Our Complaint
queries and complaints regarding the payment
Management Policy, Complaint Management
holiday granted in the coronavirus pandemic.
Regulation and a Glossary are available
The number of complaints regarding card
to view in our branches as well as on our
purchases was also high; some of those
website.
complaints were attributable to online fraud.
Complaints in 2020 tended to concern the
Where errors or gaps were identified by the
major changes introduced last year, such as
investigation into complaints, the responsible
the statement of charges, sent to customers
departments carried out the necessary
early in the year as per the Payment Accounts
improvements and developments.
Customer complaint data:
OTP Bank*
Number of warranted complaints
Ratio of warranted complaints
Compensation paid (HUF million)
2020
202,040
67%
419
2019
125,242
66%
144
We use TRI*M methodology to measure the
and the data protection officer (reporting
satisfaction of our retail customers. OTP Bank’s
directly to the top management of the data
client retention power stood at 66 points in
controller or the data processor and not
2020, falling short of the level in the preceding
accepting instructions from anyone regarding
six-month period. In order to understand this
the discharging of duties) are responsible for
result, consideration must be given to the
data processing at the bank and the protection
change in methodology (personal inquiry
of customers’ personal data.
being replaced by sampling online and by
Our 24/7 Security Operations Center (SOC)
telephone) and the impact of the pandemic,
was put into operation in 2020 and provides
which also reduced the average value of the
continuous monitoring, detection and thus
market as a whole. The average satisfaction
prompt alerts of IT security events. In 2020,
score of banks in Central Europe was 71.
we received hundreds of reports of phishing.
Security and data protection
Whenever an actual phishing event occurred,
we had the phishing website blocked; where
the incident was of greater magnitude, we
informed our customers and employees as
Security is a top concern for us. The principles
well. The Bank issued regular press releases
and main guidelines concerning security at
on this subject. We took action several times
the bank are set forth in the Security Policy,
against fraudulent websites and malware
which is approved by the Board of Directors.
(a virus or link sent by email).
The Policy covers all aspects of security,
We prioritise raising awareness among our
including IT and cyber security, which
employees and customers. A full review and
have become increasingly important.
revision of the security awareness training
The processing and protection of personal
materials for employees was completed
data is covered by the Compliance Policy,
in 2020. As a result of the pandemic, the
which is also approved by the Board
heightened security of working from home
of Directors. Both Policies prescribe the
was a priority during the year. We improved
regular evaluation of risks, and the need
our employees’ security awareness through
for maintaining and enhancing awareness.
in-house practices. Our awareness-raising
The Deputy CEO responsible for the IT Division
programmes linked to the European
* Also includes OTP Lakástakarék and OTP Jelzálogbank data.
Management’s analysis of the 2020 results of the OTP Group
69
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:18)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Cybersecurity Month focused on the
institution, the Bank and its management are
preparations for tackling phishing attempts.
fully committed to ensuring observance of all
In addition, we compiled training materials
relevant legislation, including anti-corruption
for customers on how to avoid phishing
statutes”.
and how to use smartphones safely.
The Bank has set up an ethics reporting system
No bank card information was leaked from
(whistleblowing), which is for the reporting
OTP Bank’s systems; data were only revealed
and the handling of the reports on suspected
by our customers in response to phishing.
or actual violation of the values set forth in the
The continued low rate of bank card fraud
Code of Ethics, where anonymous reporting
demonstrates the effective operation of
of ethics issues is also possible. The Bank
our systems. OTP Bank’s percentage of
conducts inquiries for the purpose of detecting,
fraud cases involving Bank-issued cards
preventing anomalies in connection with
relative to turnover was significantly lower
reports made or anomalies it became aware
(0.0058%) than the European average
of otherwise.
published by Mastercard (0.0378%).
Through the Bank's ethics reporting system
We prevented losses from fraud in the
a total of 23 reports were received in 2020,
amount of HUF 2.1 billion.
5 of them was reclassified as complaints and
Suspected money laundering was reported
3 case’s investigation resulted in declaring
262 times during the year. Expected loss from
ethics offense – though not due to corruption,
financial fraud amounted to HUF 680 million,
bribery or discrimination.
while losses prevented to HUF 138 billion;
The Bank has created and maintains its
expected loss relating to branches, ATM
Code of Ethics to keep reputational risk and
equipment and facilities and equipment
financial losses, which may incur in relation
to HUF 6 million, with prevented losses
to corruption, bribery and discrimination,
amounting to HUF 65 million.
on a minimum level. Both employees and
Fight against corruption and
against the practice of bribery
newcomers receive education on the Code
of Ethics, and in addition, the acceptance
to be bound by it is a prerequisite for their
employment.
Any requests from third parties affecting
The Code of Ethics and the Anti-Corruption
human rights are treated by the Bank as a
Policy of OTP Bank contains provisions on
priority.
the fight against corruption and against the
We manage the risks regarding the fight
practice of bribery, also on the acceptance
against corruption and bribery within the
of individual differences and the denial of
framework of our operational risk management
discrimination (https://www.otpbank.hu/
process. Our quarterly compliance reports
portal/en/EthicalDeclaration,
cover the changes in risks as well as the steps
https://www.otpbank.hu/static/portal/
necessary steps to manage them. The reports
sw/file/OTP_EtikaiKodex_EN.pdf,
are presented to the Management Committee
https://www.otpbank.hu/static/portal/sw/file/
and the Board of Directors; the annual report
OTP_Korrupcioellenes_Politika_202007.pdf).
is also submitted to the Supervisory Board.
As it can be read in the foreword of the Code
and the Anti-Corruption Policy as well, the
Bank and its management have adopted the
Citizenship
principle of zero tolerance towards corruption
and bribery, taking a definite stance against
As one of the most generous charitable
all forms of corruption and giving full support
donors in Hungary, OTP Bank gave a total of
to the fight against corruption. In addition, the
HUF 3.7 billion in charitable donations. Playing
Code states that “As an ethical and compliant
an active role in managing the hardship
70
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:16)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
generated by the coronavirus pandemic was
materials and a games app. The learning
a priority for us in 2020. Our Bank gave
materials produced during the year were
HUF 1.7 billion in donations to healthcare
used by 2,000 students by the end of the year,
institutions, financing the acquisition of medical
while the games app (Platypus: A Finlit Story)
devices at several hospitals, including some
had over 30 thousand downloads. The app
operating in disadvantaged areas of the
is available without any limitations and free
country; we also handed out 20 ventilators as
of charge even outside the school context.
donations in kind.
Four age-specific outdoor training programmes,
We aim to provide genuine and effective help
each two hours long, were developed to meet
by supporting programmes and causes that
the needs of schools. During the year, the Centre
serve the interests of society. We cooperate
also ran a regional educational programme
with a number of local non-governmental
as well as summer camps, and also developed
organisations, concentrating our donated funds
adult educational materials. In order to shape
and monitoring their usage and the results
social attitudes and raise awareness, three
achieved. Besides our support to the
short films were broadcast 800 times on
healthcare sector, our efforts were focused
national commercial channels; these films
on the following areas:
touched on the subjects of self-provision,
(cid:588) developing financial literacy, attitude-
digital banking solutions and consumer
shaping;
empowerment. The refurbishment of the
(cid:588) sponsoring culture and the arts: creating
OK Educational and Innovation Centre was
and preserving values;
completed, ensuring that the Foundation
(cid:588) equal opportunities: helping the
can deliver its educational programmes with
disadvantaged and those in need;
even greater capacities and relying on an even
(cid:588) sports.
more modern infrastructure.
During the pandemic, only a limited set of our
Our aim with the short film Keep it in the Family!
voluntary programmes remained possible; in
was also to improve financial literacy and
2020 1,400 employees spent 5,500 hours doing
shape attitudes; in this film, two sets of parents
voluntary work.
and children spoke about money and their
The Humanitas Social Foundation supports
relationship with it. The video is available
vulnerable communities and individuals
online and has been viewed more than
with a focus on healthcare and education;
400,000 times. We also joined the “Life without
donation recipients are selected through
Leftoversl!” campaign of the Hungarian Food
an application process. Its most important
Bank Association, which encourages reducing
activity in 2020 involved priority support to
food waste.
hospitals.
The OTP Fáy András Foundation provides
financial and economic education services,
Responsible employment
a key element of which is operating the
OK Educational and Innovation Centre.
Our employees play a key role in OTP Bank’s
The activities of the Foundation in 2020 were
success. The pandemic has forced us to adopt
determined mostly by the coronavirus pan-
unprecedented measures to protect the safety
demic and the refurbishment of the educational
of our employees. We created the conditions
centre in Budapest, which had been started
for work from home for thousands of our
in 2019. 2,212 persons attended classroom
employees within a short timeframe, and
training, instead of which emphasis shifted to
introduced emergency measures relating to
digital education programmes. The Fáy digital
working on site in our offices. We also helped
educational programme was created for
our employees recharge their emotional,
students in Years 5 to 12 and comprises live
mental and physical batteries in these difficult
presentations, online videos, e-learning
working conditions.
Management’s analysis of the 2020 results of the OTP Group
71
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:16)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
OTP Bank’s employees:
Employees, total (individuals)
Distribution by gender
Turnover rate*
31 december 2020
Total
9,826
100%
10.5%
Men
3,402
34.6%
9.3%
Women
6,424
65.4%
11.2%
31 december 2019
Total
9,318
100%
13.0%
Men
2,975
31.9%
13.2%
Women
6,343
68.1%
12.8%
The central objective of our human resource
We regularly measure employee satisfaction.
strategy is to intensify employee experience
In 2020, we surveyed head office employees
and commitment. Development projects
to find out their experience of the pandemic.
furthering the achievement of the goals set
The employees judged the Bank’s performance
in accordance with predefined priorities were
as very good, both in terms of how efficiently
implemented in 2020, supporting, among
we were dealing with the situation (96%) and
others, a consistent and relevant management
how we communicated (90%). As a pilot, we
development process, talent and succession
measured engagement within a certain subset
planning with talent identification and selection
of our staff. The 86% engagement score is high,
and the measurement of competencies along
even in comparison with the international
consistent principles, and also the development
benchmarks.
of performance management, with clear
targets and continuous feedback. The growth
and development of our employees is a
priority for us. All our employees attend
Short description of the business
model of the company
professional training courses and competency
development, based on their performance
OTP Bank is the market-leading credit institution
assessments.
in Hungary. As for its business model, the Bank
Ethical conduct and compliance with the law
offers high-quality financial services to retail,
remain core principles in our human resource
private banking, micro and small business,
management as well. OTP Bank analyses and
medium and large corporate, as well as
manages the risks pertaining to employment
municipality clients through both its branch
within its operational risk management
network and its steadily developing digital
process. The interests of our employees are
channels. The Bank provides comprehensive
represented by their trade union, with a
retail and corporate banking services: its
Collective Agreement setting out the rights
activities include deposit collection from
and obligations of every employee.
customers and raising money from the money
In our Code of Ethics, our Bank declares its
and capital markets. On the asset side,
commitment to providing a safe and healthy
OTP Bank offers mortgage loans, consumer
working environment and states its expectation
credits, working capital and investment loans to
of mutual respect between executive officers
companies, as well as loans to municipalities,
and employees, including the prohibition of
whereas its liquidity reserves are invested
discrimination and harassment. We consistently
in money and capital market instruments.
apply the principle of “equal pay for equal work”,
Moreover, the Bank provides a wide range
including providing equal pay to men and
of state-of-the-art services, including the areas
women for the same position and performance.
of wealth management, investment services,
Within the objective limitations of specific job
payment services, treasury and other services.
descriptions, we allow for flexible working
In addition, OTP Bank's Hungarian subsidiaries
hours and part-time employment options.
deliver a wide range of further financial
We encourage healthy lifestyle choices, offering
services. The Bank owns foreign subsidiaries in
a complex health insurance package, and
many countries of Central and Eastern Europe
subsidising recreation and sports activities.
through capital investments.
* Compared to the end-of-year headcount; includes termination of employment both by employee and by employer, as well as
retirement.
72
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:16)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Non-financial performance
indicators
(cid:588) Bank security: expected damages arising
from crimes detected: HUF 680 million,
prevented damages: HUF 813 million;
(cid:588) Internal audit: 181 closed investigations,
reported criminal charges on suspicion
1,127 proposals, 1,126 accepted proposals;
of money laundering: 471; the ratio
(cid:588) Compliance with Budapest Stock Exchange
of bank card abuses 0.0058% which is
(BSE) Recommendations (yes/no ratio):
better than the European average
72 yes, 0 no;
(European average 0.0378%, world average
(cid:588) Compliance: 19 closed consumer protection
0.0679%);
related investigations, 4,838 reports due to
(cid:588) Ethics issues: 23 ethics reports, establishing
suspicion of money laundering;
ethics offense in 3 cases.
L I S T O F N O N - A U D I T S E R V I C E S B Y S E R V I C E
C AT E G O R I E S U S E D B Y T H E B A N K
The statutory audit of OTP Bank is carried
(cid:588) Assurance engagements other than audits
out by Deloitte Auditing and Consulting Ltd.,
or reviews of historical financial information
in addition to which the following services
(ISAE 3000);
were contracted:
(cid:588) Issue of Comfort letters;
(cid:588) Engagements carried out according to
standards on review engagements
(cid:588) Engagements to perform agreed-upon
(ISRE 2400, 2410).
procedures regarding financial information
(AUP according to ISRS 4400);
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:16)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Management’s analysis of the 2020 results of the OTP Group
73
S U P P L E M E N TA R Y D ATA
Footnotes to the table
‘consolidated net profit breakdown
by subsidiaries (IFRS)’
Express Group) were included into
the Bulgarian operation. From 1Q 2019
the statement of recognised income and
balance sheet of DSK Leasing AD was
General note: regarding OTP Core and other
included.
subsidiaries, profit after tax is calculated
(4) From 1Q 2019 the statement of recognised
without received dividends and net cash
income and balance sheet of OTP Leasing
transfers (and other adjustment items).
d.d. and SB Leasing d.o.o. was included.
Dividends and net cash transfers received
In February 2020 the company name of
from non-group member companies are
OTP banka Hrvatska dioničko društvo was
shown on a separate line in one sum in the
changed to OTP banka dioničko društvo.
table, regardless to the particular receiver
(5) The financial performance of OTP Factoring
or payer group member company.
Serbia d.o.o is included. From 1Q 2019
(1) Aggregated adjusted after tax profit of
the statement of recognised income
OTP Core and foreign banks.
and balance sheet of OTP Lizing d.o.o
(2) OTP Core is an economic unit for measuring
and OTP Services d.o.o. was included.
the result of core business activity
The balance sheet of the newly acquired
of OTP Group in Hungary. Financials of
OTP banka Srbija was included in 3Q 2019,
OTP Core are calculated from the partially
its P&L from 4Q 2019.
consolidated IFRS financial statements of
(6) The statement of recognised income and
certain companies engaged in OTP Group’s
balance sheet of OTP Faktoring SRL was
operation in Hungary. These companies
included. From 1Q 2019 the statement
include OTP Bank Hungary Plc.,
of recognised income and balance sheet
OTP Mortgage Bank Ltd., OTP Building
of OTP Leasing Romania IFN S.A. was
Society Ltd., OTP Factoring Ltd.,
included.
OTP Financial Point Ltd., and companies
(7) Figures are based on the aggregated
providing intragroup financing; OTP Bank
financial statements of OTP Bank JSC,
Employee Stock Ownership Plan
LLC OTP Leasing Ukraine, and OTP Factoring
Organization was included from 4Q 2016;
Ukraine LLC.
OTP Card Factory Ltd., OTP Facility
(8) The statement of recognised income and
Management Llc., MONICOMP Ltd. and
balance sheet of LLC MFO “OTP Finance” is
OTP Real Estate Lease Ltd. were included
included in the Russian performance.
from 1Q 2017 (from 1Q 2019 OTP Real Estate
(9) From 3Q 2019 the statement of recognised
Lease Ltd. was eliminated from OTP Core);
income and balance sheet of Podgorička
OTP Mobile Service Llc. and OTP Ingatlan-
banka was included.
pont Llc. were included from 1Q 2019;
(10) P&L data and related indicators are adjusted
OTP eBIZ Ltd. was included from 1Q 2020.
for the special banking tax and the Slovakian
The consolidated accounting results
Deposit Protection Fund contributions
of these companies are segmented into
being introduced again in 2014, as well as
OTP Core and Corporate Centre. Latter is
the contribution into the Resolution Fund.
a virtual entity.
Including the financial performance of
(3) The result and balance sheet of
OTP Faktoring Slovensko s.r.o. The sale
OTP Factoring Bulgaria EAD is included.
of the Slovakian subsidiary was concluded
From 1Q 2019 Expressbank AD and its
at the end of November 2020.
subsidiaries, OTP Leasing EOOD and
(11) Until the end of 2019 the after tax profit
Express Factoring EOOD (altogether:
of Merkantil Bank without dividends, net
74
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:16)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
cash transfer and other adjustment items,
since 1Q 2020 the sub-consolidated after
tax profit of Merkantil Group (Merkantil
Bank Ltd., Merkantil Bérlet Ltd., OTP Real
Estate Leasing Ltd., NIMO 2002 Ltd.,
SPLC-P Ltd., SPLC Ltd.) was presented.
(12) LLC AMC OTP Capital, OTP Asset Management
SAI S.A. (Romania), DSK Asset Management
Calculation of the adjusted lines
of IFRS profit and loss statements,
as well as the adjusted balance
sheet lines presented in the
business report, and the
methodology for calculating the
FX-adjusted volume changes
EAD (Bulgaria).
In order to present Group level trends in
(13) OTP Buildings s.r.o. (Slovakia), Velvin
a comprehensive way in the Report, the
Ventures Ltd. (Belize), R.E. Four d.o.o., Novi
presented consolidated and separate profit and
Sad (Serbia), SC Aloha Buzz SRL, SC Favo
loss statements of this report were adjusted
Consultanta SRL, SC Tezaur Cont SRL
in the following way, and the adjusted P&Ls
(Romania), Cresco d.o.o. (Croatia),
are shown and analysed in the Report.
OTP Osiguranje d.d. (Croatia), OTP Solution
Consolidated accounting figures together
Fund (Ukraine).
with Separate accounting figures of OTP Bank
(14) Within OTP Group, the Corporate Centre
are still disclosed in the Supplementary
acts as a virtual entity established by
Data section.
the equity investment of OTP Core for
managing the wholesale financing activity
Adjustments affecting the income statement:
for all the subsidiaries within OTP Group
(cid:588) The after tax effect of adjustment items
but outside OTP Core. Therefore the balance
(certain, typically non-recurring items from
sheet of the Corporate Centre is funded by
banking operations’ point of view) are shown
the equity and intragroup lending received
separately in the Statement of Recognised
from OTP Core, the intragroup lending
Income. The following adjustment items
received from other subsidiaries, and the
emerged in the period under review and the
subordinated debt and senior notes issued
previous year: received dividends, received
by OTP Bank. From this funding pool, the
and paid cash transfers, the effect of
Corporate Centre is to provide intragroup
goodwill/investment impairment charges,
lending to, and hold equity stakes in
special tax on financial institutions, the
OTP subsidiaries outside OTP Core.
expected one-off negative effect of the debt
Main subsidiaries financed by Corporate
repayment moratorium in Hungary and
Centre are as follows: Hungarians:
Serbia, the impact of fines imposed by the
Merkantil Bank Ltd., Merkantil Leasing Ltd.,
Hungarian Competition Authority, the effect
OTP Fund Management Ltd., OTP Real
of acquisitions, and the one-off impact of
Estate Fund Management Ltd., OTP Life
regulatory changes related to FX consumer
Annuity Ltd; foreigners: banks, leasing
contracts in Serbia.
companies, factoring companies.
Beside the Slovakian banking levy, the total
(15) Total Hungarian subsidiaries: sum of the
amount of the special banking tax includes
adjusted after tax results of Hungarian
and the Slovakian Deposit Protection Fund
group members, Corporate Centre and
contributions being introduced again in 2014,
related eliminations.
and the contribution into the Resolution
(16) Total Foreign subsidiaries: sum of the
Fund in Slovakia, too. Within banking taxes,
adjusted after tax profits of foreign
the special tax booked by the Romanian
subsidiaries.
subsidiary was also included in 4Q 2019.
(cid:588) Until 4Q 2017 other non-interest income
elements stemming from provisioning release
in connection with provisions on loans
originated before the acquisitions of the
Management’s analysis of the 2020 results of the OTP Group
75
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:16)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
subsidiaries have been reclassified to and
to the previous method of recording the
deducted from the volume of Provision for
funds at book value (initial book value less
impairment on loan and placement losses
impairments), starting from 3Q 2019 the
line in the income statement. Starting from
funds are evaluated based on their net asset
1Q 2018 this income from the release of
value. The change in the carrying value was
pre-acquisition provisions was presented
reclassified to the Net other non-interest
amongst the Provision for impairment on
result (adj.) without one-offs line in the
loan and placement losses line both in the
adjusted P&L structure. Furthermore,
accounting and adjusted P&L structure.
received cash transfers within the frame-
(cid:588) In 4Q 2019 the following items have been
work of the subsidy programme targeting
moved from the Other operating expenses
the expansion of POS network in Hungary
line among the Net interest income after
were reclassified from the After tax dividends
loss allowance, impairment and provisions
and net cash transfers line to the Net other
line: Release of loss allowance on securities
non-interest result (adj.) without one-offs line.
at fair value through other comprehensive
(cid:588) Other provisions are separated from other
income and on securities at amortized cost,
expenses and shown on a separate line in
Provision for commitments and guarantees
the adjusted profit or loss statement.
given, Release of impairment of assets
(cid:588) Other administrative expenses have been
subject to operating lease and of investment
adjusted in the following way in order to
properties. In the adjusted P&L structure
create a category comprising administrative
these items are presented amongst the Other
cost items exclusively. Other costs and
provisions (adj.) line (through the Structural
expenses and other non-interest expenses
correction between Provision for loan losses
were included into the adjusted Other non-
and Other provisions adjustment line).
interest expenses. At the same time, the
(cid:588) Other non-interest income is shown
following cost items were excluded from
together with Gains and losses on real
adjusted other non-interest expenses: paid
estate transactions, Net insurance result,
cash transfers (except for movie subsidies
Gains and losses on derivative instruments,
and cash transfers to public benefit
and Gains and losses on non-trading
organisations, whereas from 2019 certain
securities mandatorily at fair value through
part of cash transfers to public benefit
profit or loss lines in 2019, but without the
organizations was presented amongst
above mentioned income from the release
net fees and commissions), Other other
of pre-acquisition provisions and without
non-interest expenses stemming from
received cash transfers. However other
non-financial activities, and special tax on
non-interest expenses stemming from non-
financial institutions.
financial activities are added to the adjusted
(cid:588) Tax deductible transfers (offset against
net other non-interest income line, therefore
corporate taxes) paid by Hungarian group
the latter incorporates the net amount
members were reclassified from Other
of other non-interest income from non-
non-interest expenses to Corporate income
financial activities.
tax. As a result, the net P&L effect of these
(cid:588) OTP Bank’s share in the change in the share-
transfers (i.e. the paid transfer less the related
holders’ equity of companies consolidated
corporate tax allowances) is recognised in the
with equity method is reclassified from the
corporate income tax line of the adjusted
After tax dividends and net cash transfers
P&L. The amount of tax deductible transfers
line to the Net other non-interest result (adj.)
offset against the special tax on financial
without one-offs line. In the addition to
institutions is shown on a net base on the
this, OTP Bank has changed the way how
special tax on financial institutions line.
private equity funds managed by PortfoLion
(cid:588) The financial transaction tax paid from the
are recorded. As a result of this, as opposed
beginning of 2013 in Hungary is reclassified
76
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:16)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
from other (administrative) expenses to
structure from the FX result to the net fees
net fee and commission income, both on
and commissions line, retroactively for the
consolidated and OTP Core level.
2019 base period as well. In the adjusted
(cid:588) OTP Group is hedging the revaluation result
P&L structure this
of the FX provisions on its FX loans and
(cid:588) Performance indicators (such as cost/income
interest claims by keeping hedging open
ratio, net interest margin, risk cost to average
FX positions. In the accounting statement of
gross loans as well as ROA and ROE ratios
recognized income, the revaluation of FX
etc.) presented in this report are calculated
provisions is part of the risk costs (within line
on the basis of the adjusted profit and loss
“Provision for loan losses”), other provisions
statement excluding adjustment items
and net interest income lines, whereas the
(unless otherwise indicated).
revaluation result of the hedging open FX
(cid:588) Within the report, FX-adjusted statistics for
positions is made through other non-interest
business volume developments and their
income (within line “Foreign exchange result,
product breakdown, as well as the FX-adjusted
net”). The two items have the same absolute
stock of allowances for loan losses are
amount but an opposite sign. As an adjust-
disclosed, too. For FX adjustment, the closing
ment to the accounting statement of income,
cross currency rates for the current period
these items are eliminated from the adjusted
were used to calculate the HUF equivalent
P&L. By modifying only the structure of the
of loan and deposit volumes in the base
income statement, this correction does not
periods. Thus the FX-adjusted volumes will
have any impact on the bottom line net profits.
be different from those published earlier.
(cid:588) The Compensation Fund (established in
Regarding the FX-adjusted volume change
Hungary in order to indemnify the victims
of DPD90+ loans (adjusted for sales and
of Quaestor and Hungarian Securities Ltd.)
write-offs), instead of the previously applied
contributions are recognized on the
3Q 2009 FX rates, from 4Q 2020 onwards
Other administrative expenses line of the
the actual end of period FX rates are used
accounting income statement, and are
for calculating the FX-adjusted figures.
presented on the financial transaction tax
and/or Special tax on financial institutions
Adjustments affecting the balance sheet:
line the in the adjusted P&L structure
(cid:588) On 17 February 2020 OTP Bank announced
(due to the tax deductibility).
the signing of the sale agreement of its
(cid:588) In case of OTP Banka Slovensko and OTP Bank
Slovakian subsidiary. According to IFRS
Romania the total revaluation result of
5 the Slovakian bank was presented as a
intra-group swap deals – earlier booked
discontinued operation in the consolidated
partly within the net interest income, but
income statement and balance sheet. With
also on the Foreign exchange gains and Net
regards to the consolidated accounting
other non-interest result lines within total
balance sheet, all assets and liabilities of
Other non-interest income – is presented on
the Slovakian bank was shown on one-one
a net base on the net interest income line.
line of the 2019 and 9M 2020 balance sheet
(cid:588) Due to the introduction of IFRS 16 from 2019,
(there was no change in the 2018 closing
certain items previously presented on the
balance sheet structure, whereas by the
Other non-interest expenses line (rental
end of 4Q 2020 the Slovakian entity was
fees) were moved to the interest expenses
deconsolidated). As for the consolidated
and depreciation lines in the accounting
accounting income statement, the Slovakian
income statement. These items were shifted
contribution for 2018, 2019 and 2020
back to the Other non-interest expenses line
(in 2020 the January-October contribution
in the adjusted P&L structure.
was consolidated) was shown separately
(cid:588)(cid:631) (cid:92)(cid:236)(cid:133)(cid:224)(cid:177)(cid:202)(cid:168)(cid:631)(cid:167)(cid:224)(cid:209)(cid:201)(cid:631)(cid:497)(cid:495)(cid:497)(cid:495)(cid:631)(cid:236)(cid:174)(cid:156)(cid:631)(cid:146)(cid:241)(cid:224)(cid:224)(cid:156)(cid:202)(cid:146)(cid:259)(cid:631)(cid:156)(cid:258)(cid:146)(cid:174)(cid:133)(cid:202)(cid:168)(cid:156)(cid:631)
from the result of continued operation, on
result was shifted in the accounting P&L
the Loss from discontinued operation line,
Management’s analysis of the 2020 results of the OTP Group
77
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:16)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
i.e. the particular P&L lines in the ‘continuing
presented in the Stock Exchange Report
operations’ section of the accounting P&L
incorporated the company’s balance sheet
don’t incorporate the contribution from the
and P&L contribution in the relevant
Slovakian subsidiary. As opposed to this,
respective lines, in line with the structure
the adjusted financial statements presented
of the financial statements monitored
in the Stock Exchange Report incorporated
by the management.
the Slovakian banks’ balance sheet and P&L
(cid:588) Finance lease receivables – earlier presented
contribution in the relevant respective lines,
within customer loans – are shown on a
in line with the structure of the financial
separate line in the accounting balance
statements monitored by the management.
sheet from 2019. As for the adjusted balance
(cid:588) At the end of 2020, OTP Osiguranje d.d. was
sheet, net customer loans continue to include
presented as asset classified as held for
the stock of finance lease receivables.
sale in the accounting financial statements.
(cid:588) In the adjusted balance sheets presented
Accordingly, its assets and liabilities
in the analytical section of the report, the
were shown on a separate line in the
total amount of accrued interest receivables
consolidated balance sheet. Regarding the
related to Stage 3 loans under IFRS 9
2020 accounting statement of recognized
were netted with the provisions created in
income, the entity’s annual result was
relation to the total exposure toward those
presented on the Gains from held for trading
particular clients, in case of the affected
operations line, therefore the particular P&L
Group members. Therefore, this adjustment
lines in the ‘continuing operations’ section
made on the accounting balance sheet
of the accounting P&L don’t incorporate the
has an impact on the consolidated gross
contribution from this entity. As opposed
customer loans and allowances for loan
to this, the adjusted financial statements
losses.
78
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:16)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:16)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Management’s analysis of the 2020 results of the OTP Group
79
Adjustments on the Consolidated Statement of Profit or Loss (IFRS):
Net interest income
(–) Revaluation result of FX provisions
(+) Presentation of the revaluation result of intra-group swaps on the net interest
income line realized at the Romanian and Slovakian operations
(–) Netting of interest revenues on DPD90+ loans with the related provision
(booked on the Provision for loan losses line) at OTP Core and CKB
(–) Effect of acquisitions
(–) Initial NPV gain on the monetary policy interest rate swap (MIRS) deals
(–) Reclassification due to the introduction of IFRS 16
(–) Netting of the interest subsidy repaid by OTP Mortgage Bank to the State by the already created
other provision for that purpose (and other related items) in 3Q 2019
(+) Presentation of the contribution from discontinued operation on the adjusted P&L lines
(–) Expected one-off negative effect of the debt repayment moratorium in Hungary and Serbia
(–) Adjustment in 2019 due to the reclassification of amounts related to mandatorily measured
at fair value through profit or loss
Net interest income (adj.)
Net fees and commissions
(+) Financial Transaction Tax
(–) Effect of acquisitions
(+) Shifting of certain cash transfers to public benefit organisations to the Net fees and commissions line
(–) Netting of the interest subsidy repaid by OTP Mortgage Bank to the State by the already created
other provision for that purpose (and other related items) in 3Q 2019
(+) Presentation of the contribution from discontinued operation on the adjusted P&L lines
(–) Structural shift of income from currency exchange from net fees to the FX result
Net fees and commissions (adj.)
Foreign exchange result
(–) Revaluation result of FX positions hedging the revaluation of FX provisions
(–) Presentation of the revaluation result of intra-group swaps on the net interest income line
realized at the Romanian and Slovakian operations
(–) Effect of acquisitions
(+) Presentation of the contribution from discontinued operation on the adjusted P&L lines
(+) Structural shift of income from currency exchange from net fees to the FX result
Foreign exchange result (adj.)
Gain/loss on securities, net
(–) Shifting of Non-trading securities mandatorily at fair value through profit or loss line
to Net other non-interest income from 1Q 2019 until 4Q 2019
(–) Effect of acquisitions
(+) Presentation of the contribution from discontinued operation on the adjusted P&L lines
Gain/loss on securities, net (adj.) with one-offs
(–) Revaluation result of the treasury share swap agreement
(booked as Gain on securities, net [adj.] at OTP Core)
Gain/loss on securities, net (adj.) without one-offs
Result of discontinued operation and gains from disposal of subsidiaries classified as held for sale
(–) Effect of acquisitions
Result of discontinued operation and gains from disposal of subsidiaries classified as held for sale (adj.)
Gains and losses on real estate transactions
Result of discontinued operation and gains from disposal of subsidiaries classified as held for sale (adj.)
(+) Other non-interest income
(+) Gains and losses on derivative instruments
(+) Net insurance result
(+) Losses on loans measured mandatorily at fair value through other comprehensive income
and on securities at amortized cost
(–) Received cash transfers
(+) Other other non-interest expenses
(+) Change in shareholders’ equity of companies consolidated with equity method, and the change
in the net asset value of the private equity funds managed by PortfoLion
(–) Investment impairment in relation to the sale of Express Life Bulgaria
(presented on the Goodwill/investment impairment charges adjustment line on consolidated level)
(–) Effect of acquisitions
(–) Presentation of the revaluation result of intra-group swaps on the net interest income line realized
at the Romanian and Slovakian operations
(–) One-off impact of the CHF mortgage loan conversion programme and regulatory changes related
to mortgage loans in Romania
(–) Impact of fines imposed by the Hungarian Competition Authority
(–) Netting of refunds related to legal cases (accounted for on the Net other non-interest result line)
with the release of provisions created earlier for these cases (accounted for on the Other provisions line)
from 1Q 2017 at OTP Bank Romania
80
OTP Bank Annual Report 2020
2020
HUF million
782,671
(57)
2019
HUF million
699,041
30
337
5,951
(600)
0
(1,623)
0
8,755
15
788,079
397,633
(61,588)
(145)
0
0
3,210
46,290
293,112
7,864
11,195
(1,964)
0
3
46,290
44,927
16,106
–
(98)
349
16,553
2,360
14,193
5,590
7,496
(1,907)
3,631
(1,907)
29,109
11,339
721
(2,396)
65
(5,800)
128
0
7,264
2,301
(226)
823
(216)
76
3,135
1,583
0
(1,652)
(1,535)
10,733
1,992
706,298
374,180
(61,920)
(42)
0
(30)
3,906
33,736
282,504
5,734
(5,166)
(477)
1
66
33,736
45,177
11,611
1,914
9,697
(2,675)
12,373
(4,668)
(6,037)
1,369
8,231
1,369
102,015
1,048
849
(849)
174
(6,778)
1,862
(163)
79,538
553
(277)
0
(483)
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:24)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Adjustments on the Consolidated Statement of Profit or Loss (IFRS) – continued
2020
HUF million
2019
HUF million
(+) Shifting of Non-trading securities mandatorily at fair value through profit or loss line
to Net other non-interest income from 1Q 2019 until 4Q 2019
(+) Presentation of the contribution from discontinued operation on the adjusted P&L lines
(–) Expected one-off negative effect of the debt repayment moratorium in Hungary and Serbia
(+) Adjustment in 2019 due to the reclassification of amounts related to mandatorily measured
at fair value through profit or loss
Net other non-interest result (adj.) with one-offs
(–) Gain on the repurchase of own Upper and Lower Tier2 Capital
(booked as Net other non-interest result [adj.] at OTP Core and at the Corporate Centre)
Net other non-interest result (adj.) without one-offs
Provision for impairment on loan and placement losses
(+) Change in the fair value attributable to changes in the credit risk
of loans mandatorily measured at fair value through profit of loss
(+) Loss allowance on securities at fair value through other comprehensive income
and on securities at amortized cost
(+) Provision for commitments and guarantees given
(+) Impairment of assets subject to operating lease and of investment properties
(+) Non-interest income from the release of pre-acquisition provisions
(–) Revaluation result of FX provisions
(–) One-off impact of the CHF mortgage loan conversion programme and regulatory changes
related to mortgage loans in Romania
(+) Netting of interest revenues on DPD90+ loans with the related provision
(booked on the Provision for loan losses line) at OTP Core and CKB
(–) Effect of acquisitions
(–) One-off impact of regulatory changes related to FX consumer contracts in Serbia
(–) Structural correction between Provision for loan losses and Other provisions
(+) Presentation of the contribution from discontinued operation on the adjusted P&L lines
(–) Expected one-off negative effect of the debt repayment moratorium in Hungary and Serbia
(–) Adjustment in 2019 due to the reclassification of amounts related to mandatorily measured
at fair value through profit or loss
Provision for impairment on loan and placement losses (adj.)
Dividend income
(+) Received cash transfers
(+) Paid cash transfers
(–) Sponsorships, subsidies and cash transfers to public benefit organisations
(–) Dividend income of swap counterparty shares kept under the treasury share swap agreement
(–) Change in shareholders’ equity of companies consolidated with equity method,
and the change in the net asset value of the private equity funds managed by PortfoLion
(+) Presentation of the contribution from discontinued operation on the adjusted P&L lines
After tax dividends and net cash transfers
Depreciation and goodwill impairment charges
(–) Goodwill impairment charges
(–) Effect of acquisitions
(–) Reclassification due to the introduction of IFRS 16
(+) Presentation of the contribution from discontinued operation on the adjusted P&L lines
Depreciation (adj.)
Personnel expenses
(–) Effect of acquisitions
(+) Presentation of the contribution from discontinued operation on the adjusted P&L lines
Personnel expenses (adj.)
Income taxes
(–) Corporate tax impact of goodwill/investment impairment charges
(–) Corporate tax impact of the special tax on financial institutions
(+) Tax deductible transfers (offset against corporate taxes)
(–) Corporate tax impact of the effect of fines imposed by the Hungarian Competition Authority
(–) Corporate tax impact of the effect of acquisitions
(–) Corporate tax impact of the one-off impact of regulatory changes related
to FX consumer contracts in Serbia
(–) Netting of the interest subsidy repaid by OTP Mortgage Bank to the State by the already created
other provision for that purpose (and other related items) in 3Q 2019 (corporate tax impact)
(+) Presentation of the contribution from discontinued operation on the adjusted P&L lines
(–) Corporate tax impact of the expected one-off negative effect of the debt repayment moratorium
in Hungary and Serbia
Corporate income tax (adj.)
–
3,149
(1,646)
29,610
0
29,610
(200,315)
(3,262)
(7,309)
(8,662)
877
–
(10,997)
459
5,951
(2,149)
0
(15,094)
(3,024)
(29,543)
–
(158,421)
527
65
(12,768)
(12,508)
0
128
8
213
(92,762)
0
(7,415)
(16,447)
(1,385)
(70,286)
(308,643)
(2,785)
(6,638)
(312,495)
(27,376)
886
1,773
(8,083)
(74)
497
0
0
(80)
2,913
1,914
(1,072)
2,131
31,376
0
31,376
(44,605)
(4,376)
9
(7,995)
280
–
5,176
263
3,135
(19,868)
(2,127)
(7,705)
(46)
139
(29,474)
7,955
174
(13,195)
(13,139)
5,710
1,862
3
505
(81,935)
(4,887)
(7,881)
(14,280)
(1,495)
(56,383)
(276,755)
(3,777)
(7,024)
(280,002)
(49,902)
(3,378)
1,623
(3,802)
0
(5,713)
483
146
(56)
(41,534)
(46,921)
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:24)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Management’s analysis of the 2020 results of the OTP Group
81
Adjustments on the Consolidated Statement of Profit or Loss (IFRS) – continued
Other operating expense
(–) Other costs and expenses
(–) Other non-interest expenses
(–) Effect of acquisitions
(–) Revaluation result of FX provisions
(–) One-off impact of the CHF mortgage loan conversion programme and regulatory changes related
to mortgage loans in Romania
(–) Netting of refunds related to legal cases (accounted for on the Net other non-interest result line)
with the release of provisions created earlier for these cases (accounted for on the Other provisions line)
from 1Q 2017 at OTP Bank Romania
(–) Netting of the interest subsidy repaid by OTP Mortgage Bank to the State by the already created
other provision for that purpose (and other related items) in 3Q 2019
(+) Structural correction between Provision for loan losses and Other provisions
(+) Presentation of the contribution from discontinued operation on the adjusted P&L lines
(–) Expected one-off negative effect of the debt repayment moratorium in Hungary and Serbia
Other provisions (adj.)
Other general expenses
(+) Other costs and expenses
(+) Other non-interest expenses
(–) Paid cash transfers
(+) Film subsidies and cash transfers to public benefit organisations
(–) Shifting of certain cash transfers to public benefit organisations to the Net fees
and commissions line
(–) Other other non-interest expenses
(–) Special tax on financial institutions (recognised as other administrative expenses)
(–) Tax deductible transfers (offset against corporate taxes)
(–) Financial Transaction Tax
(–) Effect of acquisitions
(+) Reclassification due to the introduction of IFRS 16
(+) Presentation of the contribution from discontinued operation on the adjusted P&L lines
Other non-interest expenses (adj.)
2020
HUF million
(39,447)
(7,506)
(18,568)
1,022
(141)
(233)
216
0
(15,094)
(243)
0
(29,574)
(306,263)
(7,506)
(18,568)
(12,768)
(12,508)
2019
HUF million
(44,758)
(9,172)
(19,973)
(7,575)
(40)
14
483
1,420
(7,705)
(12)
(17,633)
(282,528)
(9,172)
(19,973)
(13,195)
(13,139)
0
0
(5,800)
(19,138)
(8,083)
(61,588)
(9,940)
(18,069)
(4,105)
(249,702)
(6,778)
(17,792)
(3,802)
(61,920)
(10,963)
(15,933)
(5,003)
(231,298)
82
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:24)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Adjustments of Consolidated IFRS Balance Sheet Lines:
Cash, amounts due from Banks and balances with the National Banks
(+) Allocation of Assets classified as held for sale among balance sheet lines
Cash, amounts due from Banks and balances with the National Banks (adjusted)
Placements with other banks, net of allowance for placement losses
(including net repo receivables in 2019)
(+) Allocation of Assets classified as held for sale among balance sheet lines
Placements with other banks, net of allowance for placement losses (adjusted)
Financial assets at fair value through profit or loss
(+) Allocation of Assets classified as held for sale among balance sheet lines
Financial assets at fair value through profit or loss (adjusted)
Securities at fair value through other comprehensive income
(+) Allocation of Assets classified as held for sale among balance sheet lines
Securities at fair value through other comprehensive income (adjusted)
Gross customer loans (incl. loans at amortized cost and loans mandatorily at fair value
through profit or loss) (incl. accrued interest receivables related to loans)
Gross finance lease receivables
Gross customer loans (incl. finance lease receivables and accrued interest
receivables related to loans)
(–) Accrued interest receivables related to DPD90+/Stage 3 loans
(+) Allocation of Assets classified as held for sale among balance sheet lines
Gross customer loans (adjusted)
Allowances for loan losses (incl. impairment of finance lease receivables)
(–) Allocated provision on accrued interest receivables related to DPD90+/Stage 3 loans
(+) Allocation of Assets classified as held for sale among balance sheet lines
Allowances for loan losses (adjusted)
Securities at amortized costs
(+) Allocation of Assets classified as held for sale among balance sheet lines
Securities at amortized costs (adjusted)
Tangible and intangible assets, net
(+) Allocation of Assets classified as held for sale among balance sheet lines
Tangible and intangible assets, net (adjusted)
Other assets (including net repo receivables in 2020)
(+) Allocation of Assets classified as held for sale among balance sheet lines
Other assets (adjusted)
Amounts due to banks, the National Governments, deposits from the National Banks
and other banks, and Financial liabilities designated at fair value through profit or loss
(including repo liabilities in 2019)
(+) Allocation of Liabilities directly associated with assets classified
as held for sale among balance sheet lines
Amounts due to banks, the National Governments, deposits from the National Banks
and other banks, and Financial liabilities designated at fair value through profit or loss (adjusted)
Deposits from customers
(+) Allocation of Liabilities directly associated with assets classified
as held for sale among balance sheet lines
Deposits from customers (adjusted)
Other liabilities (including repo liabilities in 2020)
(+) Allocation of Liabilities directly associated with assets classified
as held for sale among balance sheet lines
Other liabilities (adjusted)
Subordinated bonds and loans
(+) Allocation of Liabilities directly associated with assets classified
as held for sale among balance sheet lines
Subordinated bonds and loans (adjusted)
2020
HUF million
2,432,312
3
2,432,314
2019
HUF million
1,784,378
57,586
1,841,963
1,148,744
244
1,148,987
234,006
1,188
235,194
2,136,709
3,410
2,140,118
410,078
354
410,433
251,991
251,991
2,426,779
759
2,427,537
13,326,189
11,603,116
1,075,742
982,853
14,401,930
12,585,969
38,650
0
14,363,281
(873,344)
(38,650)
0
(834,695)
2,624,921
1,031
2,625,952
589,743
135
589,878
588,378
(6,010)
582,368
35,450
391,490
12,942,009
(706,907)
(35,450)
(23,033)
(694,490)
1,968,072
27,555
1,995,627
595,128
10,545
605,673
785,456
(465,255)
320,201
1,219,446
844,261
0
1,898
1,219,446
846,158
17,890,863
15,171,308
0
351,346
17,890,863
15,522,654
949,502
1,171,805
0
(353,244)
949,502
274,704
0
818,561
249,938
274,704
249,938
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:24)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Management’s analysis of the 2020 results of the OTP Group
83
Statement of Profit or Loss of OTP Bank Plc., according to IFRS standards as adopted by the
european union (separate)*:
NET INTEREST INCOME
Interest incomes and similar to interest incomes
Interest expenses total
Risk cost total
Loss allowance on loan, placement and repo receivables losses
Loss allowance/(Release of loss allowance) on securities
at fair value through other comprehensive income
and on securities at amortised cost
Provision for loan commitments and financial guarantees given
Change in the fair value attributable to changes in the credit risk
of loans mandatorily measured at fair value through profit of loss
NET INTEREST INCOME AFTER RISK COST
MODIFICATION LOSS
NET PROFIT FROM FEES AND COMMISSIONS
Income from fees and commissions
Expenses from fees and commissions
NET OPERATING INCOME
Foreign exchange (losses) and gains
Gains on securities, net
from this: gain from derecognition of securities at amortised cost
Gains on financial instruments at fair value through profit or loss
Gains on deivative instruments, net
Dividend income
Other operating income
Other operating expenses
OTHER ADMINISTRATIVE EXPENSES
Personnel expenses
Depreciation and amortization
Other general expenses
PROFIT BEFORE INCOME TAX
Income tax
NET PROFIT FOR THE YEAR
2020
HUF million
221,666
321,296
(99,630)
(66,765)
(61,310)
(1,848)
(3,202)
(405)
154,901
(17,358)
219,031
259,781
(40,750)
60,632
(4,518)
17,955
360
(671)
7,057
60,973
7,900
(28,064)
(323,960)
(118,498)
(38,948)
(166,514)
93,246
(772)
92,474
2019
HUF million
204,512
323,896
(119,384)
(39,881)
(29,056)
401
(5,794)
(5,432)
164,631
–
213,363
248,954
(35,591)
130,358
3,288
8,188
714
1,260
4,715
78,887
7,505
26,515
(305,158)
(115,035)
(29,925)
(160,198)
203,194
(9,840)
193,354
Change
%
8
(1)
(17)
67
111
(561)
(45)
(93)
(6)
3
4
14
(53)
(237)
119
(50)
(153)
50
(23)
5
(206)
6
3
30
4
(54)
(92)
(52)
* The rows of the table are based on audited numbers, but the structure of the table can differ from the IFRS financial statements presented in the Annual Report (certain
rows might be merged or represent different level of aggregation).
84
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:24)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Statement of Financial Position of OTP Bank Plc., according to IFRS standards
as adopted by the European Union (separate)*:
2020
HUF million
2019
HUF million
Change
%
Cash, amounts due from banks and balances
with the National Bank of Hungary
Placements with other banks, net of allowance for placement losses
Repo receivables
Financial assets at fair value through profit or loss
Financial assets at fair value through other comprehensive income
Securities at amortised cost
Loans at amortised cost and mandatorily measured
at fair value through profit or loss
Investments in subsidiaries
Property and equipment
Intangible assets
Right of use assets
Investments properties
Current tax assets
Derivative financial assets designated as hedge
accounting relationships
Other assets
TOTAL ASSETS
Amounts due to banks and deposits from
the National Bank of Hungary and other banks
Repo liabilities
Deposits from customers
Leasing liabilities
Liabilities from issued securities
Financial liabilities at fair value through profit or loss
Derivative financial liabilities designated as held for trading
Derivative financial liabilities designated as hedge
accounting relationships
Deferred tax liabilities
Current tax liabilities
Other liabilities
Subordinated bonds and loans
TOTAL LIABILITIES
Share capital
Retained earnings and reserves
Treasury shares
TOTAL SHAREHOLDERS’ EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
579,120
1,535,884
183,364
160,483
911,950
2,007,692
3,898,697
1,548,972
77,974
57,639
13,479
1,936
593
6,817
169,794
11,154,394
766,977
109,612
7,895,735
14,106
28,435
25,902
99,987
3,104
3,062
-
224,897
304,243
9,476,060
28,000
1,697,133
(46,799)
1,678,334
11,154,394
289,686
1,560,142
45,539
172,229
1,485,977
1,447,224
3,315,069
1,542,538
77,754
53,282
13,607
2,381
–
16,677
116,699
10,138,804
738,054
462,621
6,573,550
13,660
43,284
28,861
83,088
10,023
5,875
2,896
243,780
279,394
8,485,086
28,000
1,628,354
(2,636)
1,653,718
10,138,804
100
(2)
303
(7)
(39)
39
18
0
0
8
(1)
(19)
(59)
45
10
4
(76)
20
3
(34)
(10)
20
(69)
(48)
(8)
9
12
0
4
1
10
* The rows of the table are based on audited numbers, but the structure of the table can differ from the IFRS financial statements presented in the Annual Report (certain
rows might be merged or represent different level of aggregation).
Management’s analysis of the 2020 results of the OTP Group
85
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:24)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Statement of Profit or Loss of OTP Bank Plc., according to IFRS standards
as adopted by the European Union (consolidated)*:
2020
HUF million
2019
HUF million
Change
%
CONTINUING OPERATIONS
Interest income calculated using the effective interest method
Income similar to interest income
Interest incomes
Interest expenses
NET INTEREST INCOME
Risk cost total
Loss allowance/Release of loss allowance on loans,
placements and repo receivables
Loss allowance/Release of loss allowance on securities at fair value
through other comprehensive income and on securities at amortized cost
Loss allowance/Release of loss allowance on securities at fair value
through other comprehensive income and on securities at amortized cost
Provision for commitments and guarantees given
Impairment/(Release of impairment) of assets subject to operating lease
and of investment properties
NET INTEREST INCOME AFTER LOSS ALLOWANCE, IMPAIRMENT
AND PROVISIONS
Income from fees and commissions
Expense from fees and commissions
Net profit from fees and commissions
Foreign exchange gains/losses, net
Foreign exchange result
Gains and losses on derivative instruments
Gains/Losses on securities, net
Gains/Losses on financial assets/liabilities measured at fair value
through profit or loss
Dividend income and gain/loss from associated companies
Other operating income
Gains and losses on real estate transactions
Other non-interest income
Net insurance result
Other operating expense
Net operating income
Personnel expenses
Depreciation and amortization
Goodwill impairment
Other general expenses
Other administrative expenses
PROFIT BEFORE INCOME TAX
Income tax expense
NET PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS
From this, attributable to:
Non-controlling interest
Owners of the company
DISCONTINUED OPERATIONS
Gains from disposal of subsidiaries classified as held for sale
Loss from discontinued operation
PROFIT FROM CONTINUING AND DISCOUNTINUED OPERATION
841,901
135,986
977,887
(195,216)
782,671
(218,670)
(200,315)
(3,262)
(7,309)
(8,662)
878
564,001
486,529
(88,896)
397,633
19,204
7,864
11,339
16,106
(2,396)
527
33,461
3,631
29,109
721
(39,447)
27,455
(308,642)
(92,761)
0
(306,264)
(707,667)
281,422
(27,376)
254,046
220
253,826
199
5,391
259,636
762,639
133,497
896,136
(197,095)
699,041
(56,687)
(44,605)
(4,376)
9
(7,995)
280
642,354
447,084
(72,903)
374,181
6,782
5,734
1,048
11,611
(849)
7,955
111,093
8,231
102,015
849
(44,758)
91,834
(276,754)
(77,048)
(4,887)
(282,528)
(641,217)
467,152
(49,902)
417,250
341
416,909
0
(4,668)
412,582
10
2
9
(1)
12
286
349
(25)
8
214
(12)
9
22
6
183
37
982
39
182
(93)
(70)
(56)
(71)
(15)
(12)
(70)
12
20
(100)
8
10
(40)
(45)
(39)
(35)
(39)
(215)
(37)
* The rows of the table are based on audited numbers, but the structure of the table can differ from the IFRS financial statements presented in the Annual Report (certain
rows might be merged or represent different level of aggregation).
86
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:24)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Statement of Financial Position of OTP Bank Plc., according to IFRS standards
as adopted by the European Union (consolidated)*:
Cash, amounts due from banks and balances with the National Banks
Placements with other banks, net of loss allowance for placements
Repo receivables
Financial assets at fair value through profit or loss
Securities at fair value through other comprehensive income
Loans at amortized cost and mandatorily at fair value
through profit or loss
Finance lease receivables
Associates and other investments
Securities at amortized cost
Property and equipment
Intangible assets and goodwill
Right-of-use assets
Investment properties
Derivative financial assets designated as hedge accounting
Deferred tax assets
Current income tax receivable
Other assets
Assets classified as held for sale
TOTAL ASSETS
Amounts due to banks, the National Governments,
deposits from the National Banks and other banks
Repo liabilities
Financial liabilities at fair value through profit or loss
Deposits from customers
Liabilities from issued securities
Derivative financial liabilities held for trading
Derivative financial liabilities designated as hedge accounting
Leasing liabilities
Deferred tax liabilities
Current income tax payable
Other liabilities
Subordinated bonds and loans
Liabilities directly associated with assets classified as held for sale
TOTAL LIABILITIES
Share capital
Retained earnings and reserves
Treasury shares
Non-controlling interest
TOTAL SHAREHOLDERS’ EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
2020
HUF million
2,432,312
1,148,743
190,849
234,007
2,136,709
12,477,447
1,051,140
52,443
2,624,920
322,766
239,004
46,283
38,601
6,820
22,317
38,936
266,474
6,070
23,335,841
1,185,315
117,991
34,131
17,890,863
464,213
104,823
11,341
48,451
25,990
27,684
607,737
274,704
5,486
20,798,729
28,000
2,629,076
(124,080)
4,116
2,537,112
23,335,841
2019
HUF million
1,784,378
342,922
67,157
251,990
2,426,779
10,909,799
969,263
20,822
1,968,072
320,430
242,219
52,950
41,560
7,463
26,543
12,769
214,580
462,071
20,121,767
812,911
488
30,862
15,171,308
393,167
86,743
10,709
54,194
29,195
35,928
592,540
249,938
362,496
17,830,479
28,000
2,319,263
(60,931)
4,956
2,291,288
20,121,767
Change
%
36
235
184
(7)
(12)
14
8
152
33
1
(1)
(13)
(7)
(9)
(16)
205
24
(99)
16
46
11
18
18
21
6
(11)
(11)
(23)
3
10
(98)
17
0
13
104
(17)
11
16
* The rows of the table are based on audited numbers, but the structure of the table can differ from the IFRS financial statements presented in the Annual Report (certain
rows might be merged or represent different level of aggregation).
Management’s analysis of the 2020 results of the OTP Group
87
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:24)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
OTP Bank
Annual Report
2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:24)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Financial Statements
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:24)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
90
90
OTP Bank Annual Report 2020
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:21)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:21)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
91
92
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:21)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:21)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
93
94
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:21)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:21)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
95
Statement of Financial Position
(consolidated, in accordance with IFRS, as at 31 December 2020, in HUF mn)
Cash, amounts due from banks and balances with the National Banks
Placements with other banks, net of loss allowance for placements
Repo receivables
Financial assets at fair value through profit or loss
Securities at fair value through other comprehensive income
Securities at amortized cost
Loans at amortized cost and mandatorily at fair value
through profit or loss
Finance lease receivables
Associates and other investments
Property and equipment
Intangible assets and goodwill
Right-of-use assets
Investment properties
Derivative financial assets designated as hedge accounting
Deferred tax assets
Current income tax receivables
Other assets
Assets classified as held for sale/discontinued operations
TOTAL ASSETS
Amounts due to banks, the National Governments,
deposits from the National Banks and other banks
Repo liabilities
Financial liabilities designated at fair value through profit or loss
Deposits from customers
Liabilities from issued securities
Derivative financial liabilities held for trading
Derivative financial liabilities designated as hedge accounting
Leasing liabilities
Deferred tax liabilities
Current income tax payable
Other liabilities
Subordinated bonds and loans
Liabilities directly associated with assets classified
as held for sale/discontinued operations
TOTAL LIABILITIES
Share capital
Retained earnings and reserves
Treasury shares
Non-controlling interest
TOTAL SHAREHOLDERS’ EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
Budapest, 17 March 2021
Note
5
6
7
8
9
10
2020
2,432,312
1,148,743
190,849
234,007
2,136,709
2,624,920
2019
1,784,378
342,922
67,157
251,990
2,426,779
1,968,072
11
35
12
13
13
35
14
15
34
16
49
17
18
19
20
21
22
23
35
34
24
25
49
26
27
28
29
12,477,447
10,909,799
1,051,140
52,443
322,766
239,004
46,283
38,601
6,820
22,317
38,936
266,474
6,070
23,335,841
1,185,315
117,991
34,131
17,890,863
464,213
104,823
11,341
48,451
25,990
27,684
607,737
274,704
969,263
20,822
320,430
242,219
52,950
41,560
7,463
26,543
12,769
214,580
462,071
20,121,767
812,911
488
30,862
15,171,308
393,167
86,743
10,709
54,194
29,195
35,928
592,540
249,938
5,486
362,496
20,798,729
28,000
2,629,076
(124,080)
4,116
2,537,112
23,335,841
17,830,479
28,000
2,319,263
(60,931)
4,956
2,291,288
20,121,767
The accompanying notes to consolidated financial statements on pages 101 to 229 form an integral part of these Consolidated
Financial Statements prepared in accordance with International Financial Reporting Standards as adopted by EU.
96
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:21)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Statement of Profit or Loss
(consolidated, in accordance with IFRS, for the year ended 31 December 2020, in HUF mn)
Note
2020
2019
CONTINUING OPERATIONS
Interest income calculated using the effective interest method
Income similar to interest income
Interest income and income similar to interest income
Interest expense
NET INTEREST INCOME
Loss allowance on loans, placements and on repo receivables
from this: gain/(loss) from derecognition of impaired financial assets
Change in the fair value attributable to changes in the credit risk
of loans mandatorily measured at fair value through profit of loss
(Loss allowance)/Release of loss allowance on securities at fair value
through other comprehensive income and on securities at amortized cost
Provision for commitments and guarantees given
Release of impairment of assets subject to operating lease
and of investment properties
Risk cost total
NET INTEREST INCOME AFTER RISK COST
Income from fees and commissions
Expense from fees and commissions
Net profit from fees and commissions
Foreign exchange gains, net
Gains on securities, net
from this: gain from derecognition of securities at amortized cost
Loss on financial assets/liabilities measured at fair value
through profit or loss
Dividend income
Other operating income
Other operating expense
Net operating income
Personnel expenses
Depreciation and amortization
Goodwill impairment
Other general expenses
Other administrative expenses
PROFIT BEFORE INCOME TAX
Income tax expense
NET PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS
From this, attributable to:
Non-controlling interest
Owners of the company
DISCONTINUED OPERATIONS
Gains from disposal of subsidiary classified as held for sale
Gains/(Loss) from discontinued operations
PROFIT FROM CONTINUING AND DISCOUNTINUED OPERATION
Earnings per share (in HUF)
From continuing operations
Basic
Diluted
From continuing and discontinued operations
Basic
Diluted
30
30
31
31
31
31
32
32
33
33
33
13
13
33
34
49
49
45
45
45
45
841,901
135,986
977,887
(195,216)
782,671
(200,315)
1,978
(3,262)
(7,309)
(8,662)
878
(218,670)
564,001
486,529
(88,896)
397,633
19,204
16,106
1,402
(2,396)
527
33,461
(39,447)
27,455
(308,642)
(92,761)
–
(306,264)
(707,667)
281,422
(27,376)
254,046
220
253,826
199
5,391
259,636
982
982
1,004
1,003
762,639
133,497
896,136
(197,095)
699,041
(44,605)
(15,137)
(4,376)
9
(7,995)
280
(56,687)
642,354
447,084
(72,903)
374,181
6,782
11,611
714
(849)
7,955
111,093
(44,758)
91,834
(276,754)
(77,048)
(4,887)
(282,528)
(641,217)
467,152
(49,902)
417,250
341
416,909
–
(4,668)
412,582
1,594
1,593
1,576
1,575
The accompanying notes to consolidated financial statements on pages 101 to 229 form an integral part of these Consolidated
Financial Statements prepared in accordance with International Financial Reporting Standards as adopted by EU.
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:21)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
97
Statement of Comprehensive Income
(consolidated, in accordance with IFRS, for the year ended 31 December 2020, in HUF mn)
NET PROFIT FOR THE YEAR
Items that may be reclassified subsequently to profit or loss
Fair value adjustment of securities at fair value through
other comprehensive income
Deferred tax related to fair value adjustment of securities
at fair value through other comprehensive income
Derivative financial instruments designated as cash-flow hedge
Net investment hedge in foreign operations
Deferred tax related to net investment hedge in foreign operations
Foreign currency translation difference
Items that will not be reclassified subsequently to profit or loss
Fair value changes of equity instruments at fair value
through other comprehensive income
Deferred tax related to equity instruments at fair value
through other comprehensive income
Remeasurement of net defined benefit asset/(liability)
Deferred tax related to remeasurement of net
defined benefit asset/(liability)
Subtotal
NET COMPREHENSIVE INCOME
From this, attributable to:
Non-controlling interest
Owners of the company
Note
2020
259,636
2019
412,582
27
27
27
(3,175)
918
(2)
(9,440)
849
68,593
(2,890)
383
143
1
55,380
315,016
(223)
315,239
26,164
(2,915)
11
(2,776)
250
79,440
7,619
(644)
(173)
12
106,988
519,570
768
518,802
The accompanying notes to consolidated financial statements on pages 101 to 229 form an integral part of these Consolidated
Financial Statements prepared in accordance with International Financial Reporting Standards as adopted by EU.
98
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:21)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Statement of Changes in Equity
(consolidated, in accordance with IFRS, for the year ended 31 December 2020, in HUF mn)
Balance as at 1 January 2019
Net profit for the year
Other Comprehensive Income
Total comprehensive income
Increase due to business
combinations
Share-based payment
Dividend for the year 2018
Correction due to MRP**
Sale of Treasury shares
Treasury shares – loss on sale
Treasury shares – acquisition
Payments to ICES holders
Balance as at 31 December 2019
Balance as at 1 January 2020
Net profit for the year
Other Comprehensive Income
Total comprehensive income
Purchasing of non-controlling
interest
Decrease due to discontinued
operation
Share-based payment
Sale of Treasury shares
Treasury shares – loss on sale
Treasury shares – acquisition
Payments to ICES holders
Balance as at 31 December 2020
Note
Share
capital
Capital
reserve
28,000
–
–
–
–
–
–
–
–
–
–
–
28,000
28,000
–
–
–
–
–
–
–
–
–
–
28,000
39
28
28
28
27
49
39
28
28
28
27
52
–
–
–
–
–
–
–
–
–
–
–
52
52
–
–
–
–
–
–
–
–
–
–
52
Retained
earnings
and other
reserves
*
1,864,152
412,241
106,561
518,802
Treasury
shares
Total
attributable to
shareholders’
Non-
controlling
interest
Total
(67,999)
–
–
–
1,824,205
412,241
106,561
518,802
2,452
341
427
768
1,826,657
412,582
106,988
519,570
–
–
–
1,736
1,736
3,547
(61,320)
376
–
(5,012)
–
(1,334)
2,319,211
2,319,211
259,416
55,823
315,239
–
–
3,394
–
(3,967)
–
(4,853)
2,629,024
–
–
–
15,956
–
(8,888)
–
(60,931)
(60,931)
–
–
–
–
–
–
22,773
–
(85,922)
–
(124,080)
3,547
(61,320)
376
15,956
(5,012)
(8,888)
(1,334)
2,286,332
2,286,332
259,416
55,823
315,239
–
–
3,394
22,773
(3,967)
(85,922)
(4,853)
2,532,996
–
–
–
–
–
–
–
4,956
4,956
220
(443)
(223)
(382)
(235)
–
–
–
–
–
4,116
3,547
(61,320)
376
15,956
(5,012)
(8,888)
(1,334)
2,291,288
2,291,288
259,636
55,380
315,016
(382)
(235)
3,394
22,773
(3,967)
(85,922)
(4,853)
2,537,112
The accompanying notes to consolidated financial statements on pages 101 to 229 form an integral part of these Consolidated
Financial Statements prepared in accordance with International Financial Reporting Standards as adopted by EU.
* See details in Note 27, where the Retained earnings and other reserves category contains the capital reserve, share-based payment reserve and option reserve.
** Based on MRP's Articles of Association, dividend on members’ shares paid back to the Founder i.e. OTP Bank.
IFRS consolidated financial statements
99
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:21)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Statement of Cash-flows
(consolidated, in accordance with IFRS, for the year ended 31 December 2020, in HUF mn)
Note
2020
2019
OPERATING ACTIVITIES
Net profit for the year (attributable to the owners of the company)
Net accrued interest
Dividend income
Depreciation and amortization
Goodwill impairment
Loss allowance/(Release of loss allowance) on securities
Loss allowance on loans and placements and on repo receivables
(Release of loss allowance)/Loss allowance on investments
Release of loss allowance on investment properties
Impairment on tangible and intangible assets
Loss allowance on other assets
Provision on off-balance sheet commitments and contingent liabilities
Share-based payment
Unrealized losses on fair value change of securities held for trading
Unrealized (gains)/losses on fair value change
of derivative financial instruments
(Gain)/Loss on discontinued operations
Net changes in assets and liabilities in operating activities
Net decrease/(increase) in financial assets at fair value
through profit or loss
Net decrease/(increase) in compulsory reserves at the National Banks
Net increase in loans at amortized cost before loss allowance for loans
and in loans at fair value
Net (increase)/decrease in other assets before loss allowance
Net increase in deposits from customers
Cash payments for the interest portion of the lease liability
Net increase in other liabilities
Income tax paid
Net Cash Provided by Operating Activities
INVESTING ACTIVITIES
(Increase)/Decrease in placement with other banks,
before loss allowance for placements
Purchase of securities at fair value through other comprehensive income
Proceeds from sale of securities at fair value through other comprehensive income
Net increase in investments
Dividends received
Purchase of securities at amortized cost
Redemption of securities at amortized cost
Purchase of property, equipment and intangible assets
Proceeds from disposals of property, equipment and intangible assets
Net increase in investment properties before loss allowance
Net change in cash and cash equivalents from discontinued operation
Net cash paid for acquisition
Net Cash Used in Investing Activities
FINANCING ACTIVITIES
Net increase/(decrease) in amounts due to banks, the National Governments,
deposits from the National Banks and other banks and repo liabilities
Net increase/(decrease) in financial liabilities designated at fair value
through profit or loss
Cash received from issuance of securities
Cash used for redemption of issued securities
Cash payments for the principal portion of the lease liability
Increase in subordinated bonds and loans
Payments to ICES holders
Sale of Treasury shares
Purchase of Treasury shares
Dividends paid
Net Cash Provided by/(Used in) Financing Activities
Cash and cash equivalents at the beginning of the year
Foreign currency translation
Net change in cash and cash equivalent
Adjustment due to discontinued operation
Cash and cash equivalents at the end of the year
13
13
9, 10
6, 11
12
14
13
16
24
3, 39
8
5
11
16
20
35
24
34
6
9
9
12
10
10
13
13
14
49
41
17
19
21
21
35
25
27
28
28
27
5
5
259,416
(9,040)
(527)
98,385
–
7,309
251,440
(381)
(741)
51
7,416
14,792
3,394
762
(25,068)
(5,391)
24,406
17,839
412,241
(6,590)
(7,958)
78,864
4,887
(10)
57,058
3,342
(123)
2,078
6,258
3,767
3,547
6,975
14,232
6,032
(30,651)
(48,081)
(1,534,658)
(1,402,625)
(88,225)
2,374,251
(1,592)
60,723
(37,729)
1,416,832
7,037
1,476,678
(1,604)
169,290
(30,170)
724,474
(929,815)
203,483
(1,864,934)
2,147,495
(31,112)
399
(6,655,496)
6,020,315
(136,130)
67,988
(1,924)
5,544
–
(1,377,670)
(2,392,184)
2,258,296
(3,908)
6,096
(4,749,976)
4,600,424
(267,652)
31,612
(3,022)
–
(38,410)
(355,241)
488,795
(239,947)
4,647
149,105
(78,487)
(16,856)
24,766
(4,853)
18,806
(85,922)
(10)
499,991
1,049,737
69,036
539,153
16,851
1,674,777
(6,833)
9,732
(31,969)
(12,440)
140,387
(1,334)
10,943
(8,888)
(61,307)
(201,656)
819,979
79,034
167,577
(16,853)
1,049,737
The accompanying notes to consolidated financial statements on pages 101 to 229 form an integral part of these Consolidated
Financial Statements prepared in accordance with International Financial Reporting Standards as adopted by EU.
100
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:3)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
N O T E S T O T H E C O N S O L I D AT E D
F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 2 0
NOTE 1:
ORGANIZATION AND BASIS OF CONSOLIDATED
FINANCIAL STATEMENTS
1.1 General information
In 1995, the shares of the Bank were introduced
on the Budapest and the Luxembourg Stock
OTP Bank Plc. (the “Bank” or “OTP Bank”) was
Exchanges and were also traded on the SEAQ
established on 31 December 1990, when
board on the London Stock Exchange and on
the previously State-owned company was
PORTAL in the USA.
transformed into a public liability company.
The Bank’s registered office address is
were approved by the Board of Directors and
16 Nádor Street, Budapest H–1051.
authorised for issue on 17 March 2021.
These Consolidated Financial Statements
The structure of the Share capital by shareholders:
Domestic and foreign private and institutional investors
Employees
Treasury shares
Total
2020
97%
1%
2%
100%
2019
99%
1%
–
100%
The Bank’s Registered Capital consists of
range of commercial banking services through
280.000.010 pieces of ordinary shares with the
a wide network of 1,530 branches in the
nominal value of HUF 100 each, representing
following countries Hungary, Bulgaria, Serbia,
the same rights to the shareholders.
Croatia, Russia, Romania, Ukraine, Albania,
Montenegro, Moldova and Slovenia, as well as
The Bank and its subsidiaries (“Entities of the
provides other services in the Netherlands,
Group“, together the “Group”) provide a full
Cyprus and Malta.
The number of the active employees without long-term breaks,
and with part-time employees taken into account proportionately,
at the Group:
The number of employees at the Group
The average number of employees at the Group
2020
38,626
39,943
2019
39,971
40,795
1.2 Basis of Accounting
remain in business for the foreseeable
future and that the Bank won’t be forced
These Consolidated Financial Statements
to halt operations and liquidate its assets
were prepared based on the assumptions
in the near term at what may be very low
of the Management that the Bank will
fire-sale prices.
IFRS consolidated financial statements
101
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:3)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
The Entities of the Group maintain their
(cid:588) Amendments to IAS 1 “Presentation
accounting records and prepare their statutory
of Financial Statements” and IAS 8
accounts in accordance with the commercial,
“Accounting Policies, Changes in Accounting
banking and fiscal regulations prevailing
Estimates and Errors” – Definition of Material
in Hungary and in case of foreign subsidiaries
– adopted by EU on 29 November 2019
in accordance with the commercial, banking
(effective for annual periods beginning on
and fiscal regulations of the country in which
or after 1 January 2020),
they are domiciled.
(cid:588) Amendments to IFRS 9 “Financial
Instruments”, IAS 39 “Financial Instruments:
The Bank’s functional currency is the Hungarian
Recognition and Measurement”, IFRS 7
Forint (“HUF”). It is also presentation currency
“Financial Instruments: Disclosures” –
for the Group.
Interest rate Benchmark Reform – adopted
The financial statements of the subsidiaries
by EU on 15 January 2020 (effective for
used during the preparation of Consolidated
annual periods beginning on or after
Financial Statements of the Group have
1 January 2020),
the same reporting period – starting from
(cid:588) Amendments to IFRS 16 “Leases” –
1 January ending as at 31 December – like the
Covid-19-Related Rent Concessions adopted
reporting period of the Group.
by EU on 9 October 2020 (effective for annual
Due to the fact that the Bank is listed on
periods beginning on or after 1 June 2020),
international and national stock exchanges,
(cid:588) Amendments to IFRS 3 “Business
the Bank is obliged to present its financial
Combinations” – adopted by EU on 21 April
statements in accordance with International
2020 (effective for annual periods beginning
Financial Reporting Standards (“IFRS”) as
on or after 1 January 2020).
adopted by the European Union (the “EU”).
Certain adjustments have been made to the
The adoption of these amendments to the
Entities’ statutory accounts in order to present
existing standards has not led to any material
the Consolidated Financial Statements of the
changes in the Group’s consolidated financial
Group in accordance with all standards and
statements.
interpretations approved by the International
Accounting Standards Board (“IASB”).
The Consolidated Financial Statements have
been prepared in accordance with IFRS as
adopted by the EU.
1.2.1 The effect of adopting new
and revised International Financial
Reporting Standards effective from
1 January 2020
1.2.2 New and revised Standards
and Interpretations issued by IASB
and adopted by the EU but not yet
effective
At the date of authorization of these financial
statements there are new standards,
amendments to the existing standards nor
interpretations which are issued by IASB and
adopted by the EU which are not yet effective:
The following amendments to the existing
(cid:588) Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4
standards and new interpretation issued by
and IFRS 16 “Interest Rate Benchmark
the International Accounting Standards Board
Reform – Phase 2 adopted by EU on
(IASB) and adopted by the EU are effective
13 January 2021 (effective for annual periods
for the current reporting period:
beginning on or after 1 January 2021),
(cid:588) Amendments to References to the Conceptual
(cid:588) Amendments to IFRS 4 “Insurance
Framework in IFRS Standards – adopted by EU
Contracts” deferral of IFRS 9 adopted by EU
on 29 November 2019 (effective for annual
on 15 December 2020 (effective for annual
periods beginning on or after 1 January 2020),
periods beginning on or after 1 January 2021).
102
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:3)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
The Group does not adopt these new standards
(cid:588) Amendments to IAS 1 “Presentation
and amendments to existing standards before
of Financial Statements” – Classification
their effective date. The Group anticipates
of Liabilities as Current or Non-Current
that the adoption of these new standards,
(effective for annual periods beginning
amendments to the existing standards and
on or after 1 January 2023),
new interpretations will have no material
(cid:588) Amendments to IAS 1 “Presentation
impact on the consolidated financial
of Financial Statements” and IFRS Practice
statements of the Group in the period of initial
Statement 2 – Disclosure of Accounting
application.
policies (effective for annual periods
beginning on or after 1 January 2023),
(cid:588) Amendments to IAS 8 “Accounting policies,
1.2.3 Standards and Interpretations
issued by IASB, but not yet adopted
by the EU
Changes in Accounting Estimates and
Errors” – Definition of Accounting Estimates
(effective for annual periods beginning on
or after 1 January 2023),
At present, IFRS as adopted by the EU do not
(cid:588) Amendments to IFRS 10 “Consolidated
significantly differ from regulations adopted by
Financial Statements” and IAS 28
the International Accounting Standards Board
“Investments in Associates and Joint
(IASB) except for the following new standards,
Ventures” – Sale or Contribution of Assets
amendments to the existing standards and
between an Investor and its Associate or
new interpretation, which were not endorsed
Joint Venture and further amendments
for use in EU as at the publication of these
(effective date deferred indefinitely until the
consolidated financial statements:
research project on the equity method has
(cid:588) IFRS 17 “Insurance Contracts” including
been concluded).
amendments to IFRS 17 (effective for annual
periods beginning on or after 1 January 2023),
The Group anticipates that the adoption
(cid:588) Amendments to IFRS 3 “Business
of these new standards, amendments
Combinations”; IAS 16 “Property, Plant and
to the existing Standards and new inter-
Equipment”; IAS 37 “Provisions, Contingent
pretations will have no significant impact
Liabilities and Contingent Assets” – Annual
on the Consolidated Financial Statements
Improvements (effective for annual periods
of the Group in the period of initial
beginning on or after 1 January 2022),
application.
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:3)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
103
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies applied in the
retranslated at the exchange rates quoted
preparation of the accompanying Consolidated
by the National Bank of Hungary (“NBH”),
Financial Statements are summarized below:
or if there is no official rate, at exchange rates
2.1 Basis of Presentation
quoted by OTP Bank as at the date of the
Consolidated Financial Statements.
Non-monetary items carried at fair value that
These Consolidated Financial Statements
are denominated in foreign currencies are
have been prepared under the historical
retranslated at the rates prevailing at the
cost convention with the exception of certain
date when the fair value was determined.
financial instruments, which are recorded
Non-monetary items that are measured in
at fair value. Revenues and expenses are
terms of historical cost in a foreign currency
recorded in the period in which they are
are not retranslated.
earned or incurred. The Group does not offset
assets and liabilities or income and expenses
Exchange differences on monetary items are
unless it is required or permitted by an IFRS
recognized in profit or loss in the period in
standard.
which they arise except for:
(cid:588) exchange differences on foreign currency
The presentation of Consolidated Financial
borrowings relating to assets under
Statements in conformity with IFRS as adopted
construction for future productive use,
by the EU requires the Management of the
which are included in the cost of those
Group to make estimates and assumptions
assets when they are regarded as an
that affect the reported amounts of assets and
adjustment to interest costs on those
liabilities and disclosure of contingent assets
foreign currency borrowings;
and liabilities as of the date of the financial
(cid:588) exchange differences on transactions
statements and their reported amounts of
entered into in order to hedge certain
revenues and expenses during the reporting
foreign currency risks (see note 2.7 below
period. Actual results could differ from those
for hedging accounting policies); and
estimates.
(cid:588) exchange differences on monetary items
Future changes in economic conditions,
receivable from or payable to a foreign
business strategies, regulatory requirements,
operation for which settlement is neither
accounting rules and other factors could
planned nor likely to occur (therefore
result in a change in estimates that could
forming part of the net investment in the
have a material impact on future financial
foreign operation), which are recognized
statements.
initially in Other Comprehensive Income
and reclassified from equity to profit or loss
on repayment of the monetary items.
2.2 Foreign currency translation
For the purposes of presenting Consolidated
In preparing the financial statements of
Financial Statements, the assets and
each individual group entity, transactions in
liabilities of the Group’s foreign operations
currencies other than the entity’s functional
are translated into HUF using exchange rates
currencies are translated into functional
prevailing at the end of each reporting period.
currencies at the rates of exchange prevailing
Income and expense items are translated at
at the dates of the transactions. At the end
the average exchange rates for the period,
of each reporting period, monetary items
unless exchange rates fluctuate significantly
denominated in foreign currencies are
during that period, in which case the exchange
104
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:3)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
rates at the dates of the transactions are used.
All intra-group transactions are consolidated
Exchange differences arising, if any, are
fully on a line-by-line basis while under
recognized in Other Comprehensive Income
equity method other consolidation rules are
and accumulated in equity (attributed to non-
applied. Determination of the entities which
controlling interests as appropriate).
are involved into the consolidation procedures
based on the determination of the Group’s
On the disposal of a foreign operation
Control over another entity. The control exists
(i.e. a disposal of the Group’s entire interest
when the Bank has power over the investee,
in a foreign operation, or a disposal involving
is able to use this power and is exposed or has
loss of control over a subsidiary that includes
right to variable returns. Consolidation of a
a foreign operation, a disposal involving loss
subsidiary should begin from the date when
of joint control over a jointly controlled entity
the Group obtains control and cease when the
that includes a foreign operation, or a disposal
Group loses control. Therefore, income and
involving loss of significant influence over an
expenses of a subsidiary should be included
associate that includes a foreign operation),
in the Consolidated Financial Statements
all of the exchange differences accumulated in
from the date the Group gains control of the
equity in respect of that operation attributable
subsidiary until the date when the Group
to the owners of the Group are reclassified to
ceases to have control of the subsidiary.
profit or loss.
The list of the major fully consolidated
subsidiaries, the percentage of issued capital
In addition, in relation to a partial disposal of
owned by the Bank and the description of their
a subsidiary that does not result in the Group
activities is provided in Note 42.
losing control over the subsidiary, the pro-
portionate share of accumulated exchange
differences are re-attributed to non-controlling
2.4 Accounting for acquisitions
interests and are not recognized in profit or loss.
Business combinations are accounted for using
Goodwill and fair value adjustments on
acquisition method. Any goodwill arising on
identifiable assets and liabilities acquired
acquisition is recognized in the Consolidated
arising on the acquisition of a foreign operation
Statement of Financial Position and accounted
are treated as assets and liabilities of the
for as indicated below.
foreign operation and translated at the rate
The acquisition date is the date on which the
of exchange prevailing at the end of each
acquirer effectively obtains control over the
reporting period. Exchange differences arising
acquiree. Before this date, it should be presented
are recognized in Other Comprehensive Income
as Advance for investments within Other assets.
and accumulated in equity.
Goodwill, which represents the residual cost of
the acquisition after obtaining the control over
the acquiree in the fair value of the identifiable
2.3 Principles of consolidation
assets acquired and liabilities assumed is held
as an intangible asset and recorded at cost
As the ultimate parent, OTP Bank is preparing
less any accumulated impairment losses in the
Consolidated Financial Statements of the
Consolidated Financial Statements. The Group
Group.
tests goodwill for impairment by comparing
its recoverable amount with its carrying
These Consolidated Financial Statements
amount, and recognising any excess of the
combine the assets, liabilities, equity, income,
carrying amount over the recoverable amount
expenses and cash-flows of the Bank and
an impairment loss. The recoverable amount
of those subsidiaries of the Bank in which
of goodwill is the higher of its fair value less
the Bank exercises control.
costs of disposal and its value in use.
IFRS consolidated financial statements
105
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:3)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
If the Group loses control of a subsidiary,
these securities at fair value. Securities at
derecognizes the assets (including any goodwill)
amortized cost are subsequently measured
and liabilities of the subsidiary at their carrying
using the effective interest (EIR) method and
amounts at the date when control is lost and
are subject to impairment. The amortisation
recognizes any difference as a gain or loss
of any discount or premium on the acquisition
on the sale attributable to the parent in
of a security at amortized cost is part of the
Statement of Profit or Loss on Net income
amortized cost and is recognized as interest
from discontinued operation.
income so that the revenue recognized in
each period represents a constant yield on
Goodwill acquired in a business combination
the investment. Securities at amortized cost
is tested for impairment annually or more
are accounted for on a trade date basis.
frequently if events or changes in circumstances
Such securities comprise mainly securities
indicate. The goodwill is allocated to the cash-
issued by the Hungarian and foreign Govern-
generating units that are expected to benefit
ments, corporate bonds and discounted
from the synergies of the combinations.
treasury bills.
The Group calculates the fair value of identified
assets and liabilities assumed on discounted
cash-flow model. The 3 year period explicit
cash-flow model serves as a basis for the
impairment test by which the Group defines
2.6 Financial assets at fair value
through profit or loss
the impairment need on goodwill based on
2.6.1 Securities held for trading
the strategic factors and financial data of its
cash-generating units.
Investments in securities are accounted for on
a trade date basis and are initially measured
The Group, in its strategic plan, has taken into
at fair value. Securities held for trading are
consideration the effects of the present global
measured at subsequent reporting dates at
economic situation, the present economic
fair value, so unrealized gains and losses on
growth and outlook, the associated risks and
held for trading securities are recognized in
their possible effect on the financial sector as
profit or loss and included in the Consolidated
well as the current and expected availability
Statement of Profit or Loss for the period. The
of wholesale funding.
Group holds held for trading securities within
the business model to obtain short-term gains,
Negative goodwill (gain from bargain purchase),
consequently realized and unrealized gains
when the interest of the acquirer in the net fair
and losses are recognized in the net operating
value of the acquired identifiable net assets
income, while interest income is recognized in
exceeds the cost of the business combination,
income similar to interest income. The Group
is recognized immediately in the Consolidated
applies the FIFO1 inventory valuation method
Statement of Profit or Loss as other income.
for securities held for trading.
2.5 Securities at amortized cost
foreign government bonds, discounted
treasury bills and other securities.
Such securities consist of equity instruments,
shares in investment funds, Hungarian and
The Group measures at amortized cost those
securities which are held for contractual
cash collecting purposes, and contractual
terms of these securities give rise to cash-flows
that are solely payment of principal and
2.6.2 Financial assets designated
as fair value through profit or loss
interest on the principal amount out-
The Group may – at initial recognition –
standing. The Group initially recognizes
irrevocable designate a financial asset as
1 First In First Out
106
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:3)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
measured at fair value through profit or loss
collateralised as the Group has almost all of its
that would otherwise be measured at fair
open derivative transactions collateralised.
value through other comprehensive income or
Changes in the fair value of derivative financial
at amortized cost.
instruments that do not qualify for hedge
The Group may use fair value designation only
accounting are recognized in profit or loss and
in the following cases:
are included in the Consolidated Statement of
(cid:588) if the classification eliminates or significantly
Profit or Loss for the period. Each derivative
reduces a measurement or recognition
deal is determined as asset when fair value
inconsistency that would otherwise arise
is positive and as liability when fair value is
from measuring assets or liabilities or
negative.
recognising the gains and losses on them
on different bases (‘accounting mismatch’).
Certain derivative transactions, while
providing effective economic hedges under
The use of the fair value designation is based
the risk management policy of the Group,
only on direct decision of management of the
do not qualify for hedge accounting under
Group.
2.6.3 Derivative financial
instruments
the specific rules of IFRS 9 and are therefore
treated as derivatives held for trading with
fair value gains and losses charged directly to
the Consolidated Statement of Profit or Loss.
In the normal course of business, the Group
Foreign currency contracts
Foreign currency contracts are agreements
is a party to contracts for derivative financial
to exchange specific amounts of currencies
instruments, which represent a low initial
at a specified rate of exchange, at a spot date
investment compared to the notional value
(settlement occurs two days after the trade
of the contract and their value depends on
date) or at a forward date (settlement occurs
value of underlying asset and are settled in
more than two days after the trade date).
the future. The derivative financial instruments
The notional amount of these forward contracts
used include interest rate forward or swap
does not represent the actual market or credit
agreements and currency forward or swap
risk associated with these contracts.
agreements and options. These financial
Foreign currency contracts are used by the
instruments are used by the Group both for
Group for risk management and trading
trading purposes and to hedge interest rate
purposes. The risk management foreign
risk and currency exposures associated with
currency contracts of the Group were used
its transactions in the financial markets.
to hedge the exchange rate fluctuations
of loans and deposits to credit institutions
Derivative financial instruments are accounted
denominated in foreign currency.
for on a trade date basis and are initially
measured at fair value and at subsequent
reporting dates also at fair value. Fair values
are obtained from quoted market prices,
Foreign exchange swaps
and interest rate swaps
The Group enters into foreign exchange swap
discounted cash-flow models and option
and interest rate swap (“IRS”) transactions.
pricing models as appropriate. The Group
The swap transaction is an agreement
adopts multi curve valuation approach for
concerning the swap of certain financial
calculating the net present value of future
instruments, which usually consists of spot
cash-flows – based on different curves used
and one or more forward contracts.
for determining forward rates and used for
IRS transactions oblige two parties to
discounting purposes. It shows the best
exchange one or more payments calculated
estimation of such derivative deals that are
with reference to fixed or periodically reset
IFRS consolidated financial statements
107
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:3)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
rates of interest applied to a specific notional
positions and by establishing and monitoring
principal amount (the base of the interest
limits on unmatched positions. Credit risk
calculation). Notional principal is the amount
is managed through approval procedures
upon which interest rates are applied to
that establish specific limits for individual
determine the payment streams under IRS
counterparties. The Group’s forward rate
transactions. Such notional principal amounts
agreements were transacted for management
often are used to express the volume of these
of interest rate exposures and have been
transactions but are not actually exchanged
accounted for at mark-to-market fair value.
between the counterparties.
IRS transactions are used by the Group for risk
management and trading purposes.
Foreign exchange options
A foreign exchange option is a derivative
Cross-currency interest rate swaps
The Group enters into cross-currency interest
financial instrument that gives the owner the
right to exchange money denominated in one
currency into another currency at a pre-agreed
rate swap (CCIRS) transactions which have
exchange rate at a specified future date.
special attributes, i.e. the parties exchange the
The transaction, for a fee, guarantees a worst-
notional amount at the beginning and also at
case exchange rate for the futures purchase
the maturity of the transaction. A special type
of one currency for another. These options
of these deals is the mark-to-market CCIRS
protect against unfavourable currency
agreements. At this kind of deals the parties
movements while preserving the ability to
– in accordance with the foreign exchange
participate in favourable movements.
prices – revalue the notional amount during
lifetime of the transaction.
2.7 Hedge accounting
Equity and commodity swaps
Equity swaps obligate two parties to exchange
more payments calculated with reference
periodically reset rates of interest and perform-
Derivative financial instruments
designated as a fair-value hedge
Changes in the fair value of derivatives
ance of indexes. A specific notional principal
that are designated and qualify as hedging
amount is the base of the interest calculation.
instruments in fair value hedges and that
The payment of index return is calculated on
prove to be highly effective in relation to the
the basis of current market price compared
hedged risk, are recorded in the Consolidated
to the previous market price. In case of
Statement of Profit or Loss along with the
commodity swaps payments are calculated
corresponding change in fair value of the
on the basis of the strike price of a predefined
hedged asset or liability that is attributable
commodity compared to its average market
to the specific hedged risk. Changes in the
price in a period.
Forward rate agreements (FRA)
A forward rate agreement is an agreement
fair value of hedging instrument in fair value
hedges is charged directly to the Consolidated
Statement of Profit or Loss.
to settle amounts at a specified future date
The conditions of hedge accounting applied by
based on the difference between an interest
the Bank are the following: formally designated
rate index and an agreed upon fixed rate.
as hedge relationship, proper hedge documen-
Market risk arises from changes in the market
tation is prepared, effectiveness test is per-
value of contractual positions caused by
formed and based on it the hedge is qualified
movements in interest rates.
as effective.
The Group limits its exposure to market risk by
The Group implemented hedge accounting
entering into generally matching or offsetting
rules prescribed by IFRS 9 in 2018.
108
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:3)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Derivative financial instruments
designated as cash-flow hedge
Changes in fair value of derivatives that are
2.9 Embedded derivatives
Sometimes, a derivative may be a component
designated and qualify as hedging instrument
of a combined or hybrid contracts that includes
in cash-flow hedges and that prove to be
a host contract and a derivative (the embedded
highly effective in relation to the hedged risk
derivative) affecting cash-flows or otherwise
are recognized in their effective portion as
modifying the characteristics of the host
reserve in Other Comprehensive Income.
instrument. An embedded derivative must be
The ineffective element of the changes in
separated from the host instrument and
fair value of hedging instrument is charged
accounted for as a separate derivative if, and
directly to the Consolidated Statement of
only if:
Profit or Loss.
(cid:588) The economic characteristics and risks
of the embedded derivative are not closely
The Group terminates the hedge relationship
related to the economic characteristics and
if the hedging instrument expires or is sold,
risks of the host contract;
terminated or exercised, or the hedge no
(cid:588) A separate financial instrument with the
longer meets the criteria for hedge accounting.
same terms as the embedded derivative
In case of cash-flow hedges – in line with the
would meet the definition of a derivative as
standard -hedge accounting is still applied by
a stand-alone instrument; and
the Group as long as the underlying asset is
(cid:588) The host instrument is not measured at
derecognized.
Net investment hedge in foreign
operations
Hedges of a net investment in a foreign
fair value or is measured at fair value but
changes in fair value are recognized in
Other Comprehensive Income.
As long as a hybrid contract contains a host that
operation, including a hedge of a monetary
is a financial asset the general accounting
item that is accounted for as part of the net
rules for classification, recognition and meas-
investment, shall be accounted for similarly
urement of financial assets are applicable
to cash-flow hedges.
for the whole contract and no embedded
derivative is separated.
On disposal of the foreign operation, the
Derivatives that are required to be separated
cumulative value of any gains and losses
are measured at fair value at initial recognition
recognized in Other Comprehensive Income
and subsequently.If the Group is unable to
is transferred to the Consolidated Statement
measure the embedded derivative separately
of Profit or Loss.
2.8 Offsetting
either at acquisition or at the end of a subse-
quent financial reporting period, the Group
shall designate the entire hybrid contract as
at fair value through profit or loss. The Group
shall assess whether an embedded derivative
Financial assets and liabilities are offset
is required to be separated from the host con-
and the net amount is reported in the
tract and accounted for as a derivative when
Consolidated Statement of Financial Position
the Bank first becomes a party to the contract.
when the Group has a legally enforceable
right to set off the recognized amounts and
the transactions are intended to be reported
in the Consolidated Statement of Financial
Position on a net basis. The Group does
2.10 Securities at fair value through
other comprehensive income
not offset any financial assets and financial
Securities at fair value through other com-
liabilities.
prehensive income are held within a business
IFRS consolidated financial statements
109
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:3)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
model whose objective is achieved by both
collecting of contractual cash-flows and selling
securities. Furthermore contractual terms of
these securities give rise on specified dates
Fair value through other
comprehensive income option
for equity instruments
The Group has elected to present in the State-
to cash-flows that are solely payment of
ment of Other Comprehensive Income changes
principal and interest on the principal amount
of fair value of those equity instruments which
outstanding.
are neither held for trading nor recognized
under IFRS 3.
Debt instruments
Investments in debt securities are accounted
In some cases the Group made an irrevocable
election at initial recognition for certain
for on a trade date basis and are initially
equity instruments to present subsequent
measured at fair value. Securities at fair value
changes in fair value of these securities in the
through other comprehensive income are
consolidated other comprehensive income
measured at subsequent reporting dates
instead of in profit or loss.
at fair value. Unrealized gains and losses on
The use of the fair value option is based only
securities at fair value through other com-
on direct decision of management of the
prehensive income are recognized directly
Group.
in Other Comprehensive Income, except for
interest and foreign exchange gains/losses
on monetary items, unless such financial asset
at fair value through other comprehensive
income is part of an effective hedge. Such
gains and losses are reported when realized
in Consolidated Statement of Profit or Loss for
2.11 Loans, placements with other
banks, repo receivables and loss
allowance for loan and placements
and repo receivable losses
the applicable period. The Group applies the
The Group measures at amortized cost those
FIFO inventory valuation method for securities
Loans and placements with other banks and
at fair value through other comprehensive
repo receivables, which are held to collect
income.
contractual cash-flows, and contractual terms
of these assets give rise on specified dates
For debt securities at fair value through other
to cash-flows that are solely payments of
comprehensive income the loss allowance
principal and interest on the principal amount
is calculated based on expected credit loss
outstanding. The Group recognizes as loans
model. The expected credit loss is accounted
measured at fair value through profit or loss
for against Other Comprehensive Income.
those financial assets, which are held for
Securities at fair value through other compre-
trading or the contractual cash-flows that are
hensive income are remeasured at fair value
not solely payments of principal and interest
based on quoted prices or amounts derived
on the principal amount outstanding.
from cash-flow models. In circumstances
Those Loans and placements with other banks
where the quoted market prices are not readily
and repo receivables that are accounted at
available, the fair value of debt securities is
amortized cost, stated at the principal amounts
estimated using the present value of future
outstanding (including accrued interest), net
cash-flows and the fair value of any unquoted
of allowance for loan or placement losses,
equity instruments are calculated using the
respectively.
EPS ratio.
Transaction fees and charges adjust the
Such securities consist of Hungarian and
carrying amount at initial recognition and are
foreign government bonds, corporate bonds,
included in effective interest calculation.
mortgage bonds, discounted Treasury bills
Loans and placements with other banks and
and other securities.
repo receivables are derecognized when the
110
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:15)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
contractual rights to the cash-flows expire or
wise (in case of significant credit risk increase)
they are transferred. When a financial asset
lifetime expected credit losses should be
is derecognized the difference of the carrying
calculated. The expected credit loss is the
amount and the consideration received is
present value of the difference between the
recognized in the profit or loss. When the
contractual cash-flows that are due to the
contractual cash-flows of a financial asset are
Group under the contract and the cash-flows
modified and the modification does not result
that the Group expects to receive.
in the derecognition of the financial asset the
Bank recalculate the gross carrying amount of
Write-offs are generally recorded after
the financial asset by discounting the expected
all reasonable restructuring or collection
future cash-flows with the original effective
activities have taken place and the possibility
interest rate of the asset. The difference
of further recovery is considered to be remote.
between the carrying amount and the present
The loan is written off against the related
value of the expected cash-flows is recognized
account “Loss allowance on loans, placements
as a modification gain or loss in the profit
and on repo receivables/from this: gain/loss
or loss.
from derecognition” in the Consolidated
Statement of Profit or Loss.
Interest and amortized cost are accounted
using effective interest rate method.
The Group applies partial or full write-off for
loans based on the definitions and prescrip-
Initially financial assets shall be recognized at
tions of financial instruments in accordance
fair value which is usually equal to transaction
with IFRS 9. If the Group has no reasonable
value in case of loans and placements.
expectations regarding a financial asset (loan)
However, when the amounts are not equal,
to be recovered, it will be written off partially
the initial fair value difference should be
or fully at the time of emergence.
recognized. This difference is amortized with
effective interest rate.
The gross amount and impairment loss of
Initial fair value of loans lent at interest below
the loans shall be written off in the same
market conditions is lower than their trans-
amount to the estimated maximum recovery
action price. As a consequence the Group is
amount while the net carrying value remains
deferring the difference between the fair value
unchanged. In those cases when on the
at initial recognition and the transaction price
previously partially or fully written-off loans or
relating to loans and receivables because
placements, which perhaps were derecognized
input data for measuring the fair values are
from the books no having been reasonable
not available on observable markets.
expectations later nevertheless recoveries
could be determined then it will be reversal of
The Group recognizes a loss allowance for
loss allowance in the Consolidated Statement
expected credit losses on a financial asset at
of Profit or Loss on “Income from recoveries of
each reporting date. The loss allowance for a
written-off, but legally existing loans”.
financial asset equals to 12-month expected
credit loss or equals to the lifetime expected
credit losses. The maximum period over which
2.12 Modified assets
expected credit losses shall be measured is the
maximum contractual period over which the
If the net present value of the contracted
Group is exposed to credit risk.
cash-flows changes due to the modification
If the credit risk on a financial asset has not
as derecognition, modification gain or loss
increased significantly since initial recognition
should be calculated and accounted for in the
then 12-month expected credit losses, other-
consolidated statement of profit or loss.
of the contractual terms and it is not qualified
IFRS consolidated financial statements
111
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:15)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Among the possible contract amendments,
example, following a substantial modification
the Group considers as a derecognition and a
of a distressed financial asset that resulted
new recognition when the discounted present
in the derecogniton of the original financial
value – discounted at the original effective
asset.
interest rate – of the cash-flows under the new
terms is at least 10 per cent different from the
In the case of POCI financial assets, interest
discounted present value of the remaining
income is always recognized by applying the
cash-flows. In case of derecognition and
credit-adjusted effective interest rate.
new recognition the unamortized fees of the
derecognized asset should be presented as
For POCI financial assets, in subsequent
Income similar to interest income. The newly
reporting periods an entity is required to
recognized financial asset is initially measured
recognize:
at fair value and is placed in stage 1 if the
(cid:588) the cumulative changes in lifetime expected
derecognized financial asset was in stage 1
credit losses since initial recognition as a
or stage 2 portfolio. The newly recognized
loss allowance,
financial asset will be purchased or originated
(cid:588) the impairment gain or loss which is the
credit impaired financial asset (“POCI”) if the
amount of any change in lifetime expected
derecognized financial asset was in stage 3
credit losses.
portfolio or it was POCI.
An impairment gain is recognized (with the
parallel increase of the net amortized cost of
The modification gain or loss shall be calculated
receivable) if due to the favourable changes
at each contract amendments unless they
after initial recognition the lifetime expected
are handled as a derecognition and new
credit loss estimation is becoming lower
recognition. In case of modification the Group
than the original estimated credit losses at
recalculates the gross carrying amount of the
initial recognition.
financial asset. To do this, the new contractual
cash-flows should be discounted using the
The POCI qualification remains from initial
financial asset’s original effective interest rate
recognition to derecognition in the Group’s
(or credit-adjusted effective interest rate for
books.
POCI financial asset). Any costs or fees incurred
adjust the carrying amount of the modified
financial asset are amortized over the remaining
2.14 Loss allowance
term of the modified financial asset.
Loss allowance for loans and placements with
other banks and repo receivables is recognized
2.13 Purchased or originated credit
impaired financial assets
by the Group based on the expected credit
loss model in accordance with IFRS 9. Based
on the three stage model the recognized loss
Purchased or originated financial assets
allowance equals to 12-month expected credit
are credit-impaired on initial recognition.
loss from the initial recognition. On financial
A financial asset is credit-impaired when one
assets with significantly increased credit risk
or more events that have a detrimental impact
or credit impaired financial assets (based
on the estimated future cash-flows of that
on objective evidences) the recognized loss
financial asset have occurred.
allowance is the lifetime expected credit loss.
A purchased credit-impaired asset is likely to
In case of purchased or originated credit
be acquired at a deep discount. In unusual
impaired financial assets loss allowance is
circumstances, it may be possible that an
recognized in amount of lifetime expected
entity originates a credit-impaired asset, for
credit loss since initial recognition. Impairment
112
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:15)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
gain in the Consolidated Statement of Profit
measured at amortized cost, at fair value
or Loss is recognized if lifetime expected
through other comprehensive income and
credit loss for purchased or originated credit
loan commitments and financial guarantees
impaired financial assets at measurement date
into the following stages:
are less than the estimated credit loss at initial
(cid:588) stage 1 – performing financial instruments
recognition.
without significant increase in credit risk
since initial recognition
Loss allowance for loans and placements with
(cid:588) stage 2 – performing financial instruments
other banks and repo receivables represent
with significant increase in credit risk since
Management assessment for potential losses
initial recognition but not credit-impaired
in relation to these activities.
(cid:588) stage 3 – non-performing, credit-impaired
financial instruments
Impairment losses on credit and placement
(cid:588) POCI – purchased or originated credit impaired
losses are determined at a level that provides
coverage for individually identified credit
In the case of trade receivables and contract
losses. For loans for which it is not possible
assets the Group applies the simplified approach
to determine the amount of the individually
and calculates only lifetime expected credit
identified credit loss in the absence of objective
loss. Simplified approach is the following:
evidence, a collective impairment loss is
(cid:588) for the past 3 years the average annual
recognized. With this, the Bank reduces the
balance of receivables under simplified
carrying amount of financial asset portfolios
approach is calculated,
with similar credit risk characteristics to
(cid:588) the written-off receivables under simplified
the amount expected to be recovered based
approach are determined in the past 3 years,
on historical experience.
(cid:588) the loss allowance ratio will be the sum of
the written-off amounts divided by the sum
At subsequent measurement the Group
of the average balances,
recognizes impairment gain or loss through
(cid:588) the loss allowance is multiplied by the end-
“Impairement gain on POCI loans” in the
of-year balance and it will be the actual loss
Consolidated Statement of Profit or Loss as an
allowance on these receivables,
amount of expected credit losses or reversal
(cid:588) loss allowance should be recalculated
that is required to adjust the loss allowance
annually.
at the reporting date to the amount that is
required to be recognized in accordance with
Stage 1: financial instruments for which the
IFRS 9.
events and conditions specified in respect
of Stage 2 and Stage 3 do not exist on the
If a financial asset, for which previously there
reporting date.
were no indicators of significant increase
in credit risk (i.e. classified in Stage 1) is
A client or loan must be qualified as default
subsequently classified in Stage 2 or Stage 3
if one or both the following two conditions
then loss allowance is adjusted to lifetime
occur:
expected credit loss. If a financial asset, which
(cid:588) The client delays more than 90 days.
previously was classified in Stage 2 or Stage 3
This is considered a hard trigger.
is subsequently classified in Stage 1 then loss
(cid:588) There is reasonable probability that the
allowance is adjusted to the level of 12 month
client will not pay all of its obligation.
expected credit loss.
This condition is examined on the basis
Classification into risk classes
According to the requirements of the IFRS 9
The subject of default qualification is that
standard Group classifies the financial assets
exposure (on-balance and off-balance) which
of probability criteria of default.
IFRS consolidated financial statements
113
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:15)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
originates credit risk (so originated from loan
(cid:588) the monitoring classification of corporate
commitments, risk-taking contracts).
and municipal clients above different
thresholds defined on group level (including
A financial instruments shows significant
but not limited to):
increase in credit risk, and is allocated to
– breaching of contracts,
stage 2, if in respect of which any of the
– significant financial difficulties of the
following triggers exist on the reporting
debtor (like capital adequacy, liquidity,
date, without fulfilling any of the conditions
deterioration of the instrument quality),
for the allocation to the non-performing stage
– bankruptcy, liquidation, debt settlement
(stage 3):
processes against debtor,
(cid:588) the payment delay exceeds 30 days,
– forced strike-off started against debtor,
(cid:588) it is classified as performing forborne,
– termination of loan contract by the bank,
(cid:588) based on individual decision, its currency
– occurrence of fraud event,
suffered a significant “shock” since the
– termination of the active market of the
disbursement of the loan,
financial instrument.
(cid:588) the transaction/client rating exceeds a
predefined value or falls into a determined
If the exposure is no longer considered as
range, or compared to the historic value it
credit impaired, the Group allocates this
deteriorates to a predefined degree,
exposure to Stage 2.
(cid:588) in the case retail mortgage loans, the
loan-to-value ratio exceeds a predefined rate,
When loss allowance is calculated at
(cid:588) default on another loan of the retail client,
exposures categorized into stages the
if no cross-default exists,
following process is needed by stages:
(cid:588) monitoring classification of corporate and
(cid:588) stage 1 (performing): loss allowance at an
municipal clients above different thresholds
amount equal to 12-month expected credit
defined on group level (without aiming to
loss should be recognized,
give an exhaustive list):
(cid:588) stage 2 (significant increase in credit risk):
– financial difficulties at the debtor (capital
loss allowance at an amount equal to
adequacy, liquidity, deterioration of the
lifetime expected credit loss should be
instrument quality),
recognized,
– significant decrease of the liquidity or
(cid:588) stage 3 (non-performing): loss allowance
the activity on the active market of the
at an amount equal to lifetime expected
financial instrument can be observed,
credit loss should be recognized.
– the rating of the client reflects high risk
but it is better than the default one,
For lifetime expected credit losses, an entity
– significantly decrease in the value of the
shall estimate the risk of a default occurring
recovery from which the debtor would
on the financial instrument during its expected
disburse the loan,
life. 12-month expected credit losses are a
– clients under liquidation.
portion of the lifetime expected credit losses
and represent the lifetime cash shortfalls that
A financial instrument is non-performing
will result if a default occurs in the 12 months
and it is allocated to Stage 3 when any of the
after the reporting date (or a shorter period
following events or conditions exists on the
if the expected life of a financial instrument
reporting date:
is less than 12 months), weighted by the
(cid:588) defaulted (based on the group level default
probability of that default occurring.
definition),
(cid:588) classified as non-performing forborne
An entity shall measure expected credit
(based on the group level forborne
losses of a financial instrument in a way that
definition),
reflects:
114
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:15)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
(cid:588) an unbiased and probability-weighted
Under the equity method, the investment is
amount that is determined by evaluating
initially recognized at cost, and the carrying
a range of possible outcomes
amount is adjusted subsequently for:
(cid:588) the time value of money and
(cid:588) the Group’s share of the post-acquisition
(cid:588) reasonable and supportable information
profits or losses of the investee, which are
that is available without undue cost or effort
recognized in the Group’s profit or loss; and
at the reporting date about past events,
(cid:588) the distributions received from the investee,
current conditions and forecasts of future
which reduce the carrying amount of the
economic conditions.
investment.
2.15 Sale and repurchase
agreements, security lending
The Group’s share of the profits or losses of
the investee, or other changes in the investee’s
equity, is determined on the basis of its
proportionate ownership interest. The Group
Where debt or equity securities are sold
recognizes its share of the investee’s income
under a commitment to repurchase them at
and losses based on the percentage of the
a pre-determined price, they remain on the
equity interest owned by the Group.
Consolidated Statement of Financial Position
and the consideration received is recorded
Gains and losses on the sale of investments
in Other liabilities or Amounts due to banks,
are determined on the basis of the specific
the National Governments, deposits from the
identification of the cost of each investment.
National Banks and other banks. Conversely,
debt or equity securities purchased under
a commitment to resell are not recognized
in the Consolidated Statement of Financial
Position and the consideration paid is recorded
2.17 Property and equipment,
Intangible assets
either in Placements with other banks or
Property and equipment and Intangible assets
Deposits from customers. Interest is accrued
are stated at cost, less accumulated depre-
based on the effective interest method evenly
ciation and amortization and impairment, if
over the life of the repurchase agreement.
any. The depreciable amount (book value less
In the case of security lending transactions the
residual value) of the non-current assets must
Group doesn’t recognize or derecognize the
be allocated over the useful lives.
securities because believes that the transferor
retains substantially all the risks and rewards
Depreciation and amortization are computed
of the ownership of the securities. Only a
using the straight-line method over the
financial liability or financial receivable is
estimated useful lives of the assets based on
recognized for the consideration amount.
the following annual percentages:
2.16 Associates and other
investments
Intangible assets
Software
Property rights
Property
3.33–52.63%
1.25–50.0%
0.1–33.3%
Companies where the Bank has the ability to
Office equipment and vehicles
1–50%
exercise significant influence are accounted
Vehicle
5.63–48%
for using the equity method. Subsidiaries and
associated companies that were not accounted
Depreciation and amortization on Property
for using the equity method and other invest-
and equipment and Intangible assets
ments where the Bank does not hold a signifi-
commence on the day such assets are ready
cant interest are recorded according to IFRS 9.
to use.
IFRS consolidated financial statements
115
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:15)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
At each balance sheet date, the Group reviews
incurred in bringing the inventories to their
the carrying value of its Property and equip-
present location and condition.
ment and Intangible assets to determine
The Group uses generally FIFO formulas to the
if there is any indication that those assets
measurement of inventories.
have suffered an impairment loss. If any such
Inventories shall be removed from books when
indication exists, the recoverable amount of
they are sold, unusable or destroyed. When
the asset is estimated to determine the extent
inventories are sold, the carrying amount
(if any) of the impairment loss.
of those inventories shall be recognized as
Where it is not possible to estimate the
revenue is recognized.
recoverable amount of an individual asset,
Repossessed assets are classified as inventories.
an expense in the period in which the related
the Group estimates the recoverable amount
of the cash-generating unit to which the asset
belongs.
2.19 Financial liabilities
Where the carrying value of Property and
The financial liabilities are presented within
equipment and Intangible assets is greater
financial liabilities at fair value through profit
than the estimated recoverable amount, it
or loss or financial liabilities measured at
is impaired immediately to the estimated
amortized cost.
recoverable amount.
The Group at initial recognition measures
financial liabilities at fair value plus or minus
The Group may conclude contracts for pur-
– in the case of a financial liability not at fair
chasing property, equipment and intangible
value through profit or loss – transaction costs
assets, where the purchase price is settled
that are directly attributable to the acquisition
in foreign currency. By entering into such
or issue of the financial liability.
agreements, firm commitment in foreign
currency due on a specified future date arises
Financial liabilities at fair value through profit
at the Group.
or loss are either financial liabilities held for
Reducing the foreign currency risk caused
trading or they are designated upon initial rec-
by firm commitment, forward foreign currency
ognition as at fair value through profit or loss.
contracts may be concluded to ensure the
In connection to the derivative financial
amount payable in foreign currency on a
liabilities measured at fair value through profit
specified future date on one hand and to
or loss, the Group presents the amount of
eliminate the foreign currency risk arising
change in their fair value originated from the
until settlement date of the contract on the
changes of market conditions and business
other hand.
environment.
In the case of an effective hedge the realized
profit or loss of the hedging instrument is
The Group designated some financial liabilities
stated as the part of the cost of the hedged
upon initial recognition to measure at fair
asset as it has arisen until recognizing
value through profit or loss. This classification
the asset.
2.18 Inventories
eliminates or significantly reduces a measure-
ment or recognition inconsistency that would
otherwise arise from measuring assets or
liabilities or recognising the gains and losses
on them on different bases (“accounting
The inventories shall be measured at the lower
mismatch”).
of cost and net realisable value. The cost of
inventories shall comprise all costs of pur-
In the case of financial liabilities measured at
chase, costs of conversion and other costs
amortized cost fees and commissions related
116
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:15)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
to the origination of the financial liability are
either a straight-line basis or another
recognized through profit or loss during the
systematic basis.
maturity of the instrument using effective
The depreciation policy for depreciable
interest method. In certain cases the Group
underlying assets subject to operating
repurchases a part of financial liabilities (mainly
leases is consistent with the Group’s normal
issued securities or subordinated bonds) and
depreciation policy for similar assets.
the difference between the carrying amount
The Group accounts for a modification to
of the financial liability and the amount paid for
an operating lease as a new lease from
it is recognized in the net profit or loss for the
the effective date of the modification,
period and included in other operating income.
considering any prepaid or accrued lease
payments relating to the original lease as
part of the lease payments for the new lease.
2.20 Leases
The Group as a lessor
Leases are classified as finance leases when-
The Group as a lessee
The Group recognizes a right-of-use asset and
a lease liability at the commencement of the
ever the terms of the lease transfer substan-
lease term except for short-term leases and
tially all the risks and rewards of ownership to
leases, where the underlying asset is of low
the lessee. All other leases are classified as
value (less than USD 5,000). For these leases,
operating leases. Lease classification is made
the Group recognizes the lease payments as an
at the inception date and is reassessed only
expense on either a straight-line basis over the
if there is a lease modification.
lease term or another systematic basis if that
basis is more representative of the pattern of
Finance leases
At the commencement date, a lessor derecog-
the lessee’s benefit.
nizes the assets held under a finance lease in
Deferred tax implication if the Group is lessee:
its statement of financial position and present
At inception of the lease, there is no net lease
them as a receivable at an amount equal to
asset or liability, no tax base and, therefore,
the net investment in the lease. The lessor
no temporary difference. Subsequently, as
shall use the interest rate implicit in the lease
depreciation on the right-of-use asset initially
to measure the net investment in the lease.
exceeds the rate at which the debt reduces,
Direct costs such as commissions are included
a net liability arises resulting in a deductible
in the initial measurement of the finance lease
temporary difference on which a deferred tax
receivables.
asset should be recognized if recoverable.
The Group as a lessor recognizes finance
Assuming that the lease liability is not repaid
income over the lease term, based on a pattern
in advance, the total discounted cash outflows
reflecting a constant periodic rate of return on
should equal the total rental payments
the Group’s net investment in the lease. The
deductible for income tax purposes.
Group applies the lease payments relating
to the period against the gross investment in
the lease to reduce both the principal and the
Right-of-use asset
The right-of-use assets are initially measured
unearned finance income.
at cost, subsequently the Group applies cost
The Group applies the derecognition and
model and these assets are depreciated on a
impairment requirements in IFRS 9 to the net
straight line basis from the commencement
investment in the lease.
date to the earlier of the end of the useful life
Operating leases
The Group as a lessor recognizes lease pay-
term. If the lease transfers ownership of the
underlying asset to the Group by the end of
ments from operating leases as income on
the lease term or if the cost of the right-of-use
of the right-of-use asset or the end of the lease
IFRS consolidated financial statements
117
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:15)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
asset reflects that the Group will exercise a
2.22 Share capital
purchase option, the right-of-use asset are
depreciated from the commencement date to
Share capital is the capital determined in the
the end of the useful life of the underlying
Articles of Association and registered by the
asset.
Budapest-Capital Regional Court. Share
capital is the capital the Bank raised by issuing
Lease liability
At the commencement date, the lease liability
common stocks at the date the shares were
issued. The amount of share capital has not
is measured at the present value of the lease
changed over the current period.
payments that are not paid at that date
discounted by using the rate implicit in the
lease, or if this cannot be determined, by using
2.23 Treasury shares
the incremental borrowing rate of the Group.
Variable lease payments that do not depend
Treasury shares are shares which are
on an index or a rate but e.g. on revenues
purchased on the stock exchange and the
or usage are recognized as an expense.
over-the-counter market by the Bank and
The Group always separates the non-lease
its subsidiaries and are presented in the
components of the lease contracts and
Consolidated Financial Position at cost as a
accounts them as an expense. Lease payments
deduction from Consolidated Shareholders’
must be included in the measurement of the
Equity.
lease liability without value added taxes. Non-
Gains and losses on the sale of treasury shares
deductible VAT is recognized as other expense.
are credited or charged directly to shareholder’s
equity. Derecognition of treasury shares is
The lease liability is remeasured in case of
based on the FIFO method.
reassessment of the lease liability or lease
modification
2.21 Investment properties
2.24 Non-current assets
held for sale and discontinued
operations
Investment properties of the Group are land,
The Group classifies a non-current asset
buildings, part of buildings which held (as the
(or disposal group) as held for sale if its carrying
owner or as the lessee under a finance lease)
amount will be recovered principally through
to earn rentals or for capital appreciation or
a sale transaction rather than through
both, rather than for use in the production
continuing use. The Group does not account for
or supply of services or for administrative
a non-current asset that has been temporarily
purposes or sale in the ordinary course of
taken out of use as if it had been abandoned.
business. The Group measures the investment
The Group measures a non-current asset (or
properties at cost less accumulated deprecia-
disposal group) classified as held for sale at
tion and impairment, if any.
the lower of its carrying amount and fair value
The depreciable amount (book value less
less costs to sell. When the sale is expected to
residual value) of the investment properties
occur beyond one year, the Group measures
must be allocated over their useful lives.
the costs to sell at their present value. Any
The depreciation and amortization are
increase in the present value of the costs to
computed using the straight-line method
sell that arises from the passage of time shall
over the estimated useful lives of the assets.
be presented in profit or loss. Immediately
The Group discloses the fair value of the
before the initial classification of the asset (or
investment properties in Note 14 established
disposal group) as held for sale, the carrying
mainly by external experts.
amounts of the asset (or all the assets and
118
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:15)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
liabilities in the group) shall be measured in
are reported separately in the consolidated
accordance with applicable IFRS.
statement of profit or loss as result from
discontinued operations.
The Group does not depreciate (or amortize) a
non-current asset while it is classified as held
for sale or while it is part of a disposal group
classified as held for sale. Interest and other
expenses attributable to the liabilities of a
disposal group classified as held for sale shall
2.25 Interest income and income
similar to interest income and
interest expense
continue to be recognized.
Interest income and expense are recognized
in profit or loss in the period to which they
If the Group has classified an asset (or disposal
relate, using the effective interest rate
group) as held for sale, but the criteria for
method. The time-proportional income similar
that are no longer met, the Group ceases to
to interest income of derivative financial
classify the asset (or disposal group) as held
instruments is calculated without using the
for sale. The Group measures a non-current
effective interest method and the positive fair
asset that ceases to be classified as held
value adjustment of interest rate swaps are
for sale (or ceases to be included in a disposal
included in income similar to interest income.
group classified as held for sale) at the
lower of:
Interest from loans and deposits are accrued
(cid:588) its carrying amount before the asset
on a daily basis. Interest income and expense
(or disposal group) was classified as held
include certain transaction costs and the
for sale, adjusted for any depreciation,
amortisation of any discount or premium
amortisation or revaluations that would
between the initial carrying amount of an
have been recognized had the asset
interest-bearing instrument and its amount
(or disposal group) not been classified
at maturity calculated on an effective interest
as held for sale, and
rate basis.
(cid:588) its recoverable amount at the date of the
subsequent decision not to sell.
All interest income and expense recognized
are arising from loans, placements with other
The Group presents a non-current asset
banks, repo receivables, securities at fair
classified as held for sale and the assets of
value through other comprehensive income,
a disposal group classified as held for sale
securities at amortized cost and amounts
separately from other assets in the
due to banks, repo liabilities, deposits from
Consolidated Statement of Financial Position.
customers, liabilities from issued securities,
The liabilities of a disposal group classified
subordinated bonds and loans are presented
as held for sale is presented separately from
under these lines of financial statements.
other liabilities in the Statement of Financial
Position. Those assets and liabilities shall not
be offset and presented as a single amount.
2.26 Fees and Commissions
The major classes of assets and liabilities
classified as held for sale shall be separately
Fees and commissions that are not involved
disclosed in the Notes.
in the amortized cost model are recognized
in the Consolidated Statement of Profit or
The Group presents separately any cumulative
Loss on an accrual basis according to IFRS 15
income or expense recognized in other com-
Revenue from contracts with customers
prehensive income relating to a non-current
(see more details in Note 32). These fees are
asset (or disposal group) classified as held for
related to deposits, cash withdrawals, security
sale. Results from discontinued operations
trading, bank card etc.
IFRS consolidated financial statements
119
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:15)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
2.27 Dividend income
that both of the following conditions are
satisfied:
Dividend income refers to any distribution of
(cid:588) the Bank is able to control the timing of the
an entity earnings to shareholders from stocks
reversal of the temporary difference, and
or mutual funds that is owned by the Group.
(cid:588) it is probable that the temporary difference
The Group recognizes dividend income in
will not reverse in the foreseeable future.
the Consolidated Financial Statements when
its right to receive payment is established.
2.29 Banking tax
2.28 Income tax
The Bank and some of its subsidiaries are
obliged to pay banking tax based on Act LIX of
The annual taxation charge is based on
2006. The calculation is based on the adjusted
the tax payable under fiscal regulations
total assets as reported in the Separate
prevailing in the country where the company is
Financial Statements of the Bank and its
incorporated, adjusted for deferred taxation.
entities for the second period preceding the
Deferred taxation is accounted for using the
Therefore, the banking tax is considered as an
balance sheet liability method in respect of
other administrative expense, not as income tax.
current tax year (not on the taxable profit).
temporary differences between the tax bases
of assets and liabilities and their carrying
value for financial reporting purposes,
measured at the tax rates that apply to the
future period when the asset is expected
to be realized or the liability is settled.
2.30 Off-balance sheet
commitments and contingent
liabilities
In the ordinary course of its business, the Group
Deferred tax assets are recognized by the
enters into off-balance sheet commitments
Group for the amounts of income taxes that
such as guarantees, letters of credit, commit-
are recoverable in future periods in respect of
ments to extend credit and transactions
deductible temporary differences as well as
with financial instruments. The provision on
the carryforward of unused tax losses and the
off-balance sheet commitments and contingent
carryforward of unused tax credits.
liabilities is maintained at a level adequate
The Group recognizes a deferred tax asset
probable and relate to present obligations.
to absorb future cash outflows which are
for all deductible temporary differences
arising from investments in subsidiaries,
In case of commitments and contingent
branches and associates, and interests in joint
liabilities, the management determines the
arrangements, to the extent that, and only to
adequacy of the loss allowance based upon
the extent that, it is probable that:
reviews of individual items, recent loss
(cid:588) the temporary difference will reverse in the
experience, current economic conditions, the
foreseeable future; and
risk characteristics of the various categories
(cid:588)(cid:631) taxable profit will be available against which
of transactions and other pertinent factors.
the temporary difference can be utilised.
The Group recognizes provision for off-balance
sheet commitment and contingent liabilities
The Group recognizes a deferred tax liability
in accordance with IAS 37 when it has a
for all taxable temporary differences
present obligation as a result of a past event;
associated with investments in subsidiaries,
it is probable that an outflow of resources
branches and associates, and interests
embodying economic benefits will be required
in joint arrangements, except to the extent
to settle the obligation; and a reliable estimate
120
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:2)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
can be made of the obligation. For financial
(cid:588) when the cash-flows reflect the activities
guarantees and loan commitments given
of the customer rather than those of the
which are under IFRS 9 the expected credit
Group, and
loss model is applied when the provision is
(cid:588) for items in which the turnover is quick,
calculated (see more details in Note 2.14).
the amounts are large, and the maturities
are short.
2.31 Share-based payment
For the purposes of reporting Consolidated
Statement of Cash-flows, cash and cash
The Bank has applied the requirements
equivalents include cash, due from banks and
of IFRS 2 Share-based Payment.
balances with the National Banks, excluding
the compulsory reserve established by the
The Bank issues equity-settled share-based
National Banks. Consolidated cash-flows
payment to certain employees. Equity-settled
from hedging activities are classified in the
share-based payment is measured at fair value
same category as the item being hedged.
at the grant date. The fair value determined
The unrealized gains and losses from the
at the grant date of the equity-settled share-
translation of monetary items to the closing
based payment is expensed on a straight-line
foreign exchange rates and unrealized gains
basis over the year, based on the Bank’s
and losses from derivative financial instru-
estimate of shares that will eventually vest.
ments are presented net in the statement of
Share-based payment is recorded in
cash-flows for the monetary items which have
Consolidated Statement of Profit or Loss as
been revaluated.
Personnel expenses.
Fair value is measured by use of a binomial
2.34 Segment reporting
model. The expected life used in the model has
been adjusted, based on Management’s best
IFRS 8 Operating Segments requires operating
estimate, for the effects of non-transferability,
segments to be identified on the basis of
exercise restrictions, and behavioural
internal reports about components of the
considerations.
Group that are regularly reviewed by the chief
operating decision maker in order to allocate
resources to the segments and to assess their
2.32 Employee benefits
performance.
Based on the above, the segments identified by
The Group has applied the requirement of
the Group are the business and geographical
IAS 19 Employee Benefits. IAS 19 requires
segments.
to recognize employee benefits to be paid
The Group’s operating segments under IFRS
as a liability and as an expense in the
8 are therefore as follows: OTP Core Hungary,
Consolidated Financial Statements.
Russia, Ukraine, Bulgaria, Romania, Serbia,
2.33 Consolidated Statement
of Cash-flows
Croatia, Montenegro, Albania, Moldova, Slovenia,
Merkantil Group, Asset Management subsidi-
aries, Other subsidiaries, Corporate Center.
Cash-flows arising from the operating,
2.35 Comparative figures
investing or financing activities are reported
in the Statement of Cash-Flows of the Group
Change in the classification and valuation
primarily on a gross basis. Net basis reporting
policy of certain subsidized retail loans and FX
are applied by the Group in the following cases:
margins
IFRS consolidated financial statements
121
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:2)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
In 2020, the Group changed its accounting
As a result of the change in accounting policy,
policy regarding the classification and
the Group adjusted the data of the compara-
valuation of a particular class of subsidized
tive period in the statement of profit or loss
retail loans. The interest payments on the retail
in accordance with the profit or loss items
loans are determined on the basis of the
of the fair valuation categories. Due to the
government bond reference yields and a
unchanged carrying amounts in the balance
multiplier. Previously, in accordance with the
sheet, this amendment resulted in the
Group’s accounting policy, these loans were
following reclassification between profit
measured at amortised cost. For the year
or loss categories:
ended 31 December 2020, the Group classified
(cid:588)(cid:631)(cid:631) The Group recognizes interest income on
this type of loan as measured at fair value
loans measured at fair value through
through profit or loss. The new accounting
profit or loss for the period in the Income
policy is in line with the practices of the
similar to Interest Income line at the value
majority of the players in the banking sector,
corresponding to transactional interest.
thus better facilitating comparability. Therefore,
The comparative value of the line of interest
in the Bank’s opinion, the change in accounting
income calculated using the effective interest
policy results in a more reliable, comparable
rate method has been reduced accordingly
and relevant presentation of the effects of
by the interest income of the respective loans
the loans in question on the Group’s financial
determined using the previously applied
position and financial performance in the
effective interest rate method.
financial statements.
(cid:588)(cid:631)(cid:631) The Group presents the amount of com-
mission income and commission expenses
In parallel with the change in accounting policy,
related to loans at fair value through
the Group also changed the structure of its
profit or loss in the Fee and commission
balance sheet. In the statement of financial
income and Fee and commission expense
position, presenting loans in a uniform manner,
lines.
based on the nature of the instruments, on the
(cid:588)(cid:631)(cid:631) The Group presents the change in the fair
line Loans at amortized cost and mandatorily
value of loans measured at fair value
at fair value through profit or loss, with further
through profit or loss, broken down into
details of classification and valuation category
two components:
provided in Note 11 and any other notes as
– The Group presents the portion of the
appropriate.
change in fair value arising from changes
in credit risk within Risk cost as Change
The new accounting policy is applied retro-
in the fair value attributable to changes
spectively by the Group as if it had always
in the credit risk of loans mandatorily
applied this accounting policy. The Group
measured at fair value through profit of
has made the following adjustments to the
loss. This amount is determined using
comparative figures. At the beginning of the
expected credit loss models used for
comparative period and at the end of the
loans measured at amortized cost. The
comparative period, the change in accounting
comparative amount of Loss allowance on
policy did not result in a material change in
loans, placements and repo receivables
the carrying amount of the loans involved or
has been reduced accordingly with the
equity. Therefore, the Group did not change
loss allowance and reversal amounts for
the related balance sheet values for the
the respective loans.
adjustment relating to periods before those
– The Group presents the remaining
presented, and the Consolidated Statement
component of the change in fair value
of Financial Position contains only the data
under the (Losses)/Gains on financial
at the end of the current period and at the
instruments at fair value through profit
end of the comparative period.
or loss.
122
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:2)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
The change in accounting policy did not
Amendments to the information published
impact the net profit for the comparative
in the supplementary annexes concerned the
period, nor the comparative earnings per
following supplementary notes:
ordinary share.
(cid:588)(cid:631)(cid:631) Note 11 Loans at amortized cost and at fair
value
The other reclassification shown below relates
(cid:588)(cid:631)(cid:631) Note 30 Interest income, income similar
to realized foreign exchange results which
to interest income and expenses
were previously presented within Net operating
(cid:588)(cid:631)(cid:631) Note 31 Loss allowances/impairment and
income. The change in presentation means that
provisions
the result recognized on these transactions
(cid:588)(cid:631)(cid:631) Note 36.1.1 Financial instruments by stages
is now presented in Income from fees and
(cid:588)(cid:631)(cid:631) Note 36.1.2 Movement table of loss
commissions.
allowance/provision on financial instruments
(cid:588)(cid:631)(cid:631) Note 36.1.3 Loan portfolio by countries
In accordance with the new accounting policy,
(cid:588)(cid:631)(cid:631) Note 36.2 Maturity analysis of assets,
the Bank has amended its respective disclosure
liabilities and liquidity risk
notes regarding the loans at amortized cost.
(cid:588)(cid:631)(cid:631) Note 36.4 Interest rate risk management
In the comparative figures, the Bank has
(cid:588)(cid:631)(cid:631) Note 46 Net gain or loss realized on financial
reduced the previously disclosed amortized
instruments
cost, gross carrying amount, impairment and
(cid:588)(cid:631)(cid:631) Note 47. a) Fair value of financial assets and
fair value data by the amounts related to the
liabilities
loans concerned. The Group has also amended
(cid:588)(cid:631)(cid:631) Note 48 Segment reporting by business and
its disclosures in the notes on assets at fair
geographical segments
value through profit or loss for comparative
information. These amendments have been
Except as described above, these consolidated
marked “Revised” by the Bank. The Bank has
financial statements are prepared in
also revised the presentation of the detailed
accordance with the same accounting policies
notes to the amended profit or loss line items
in all respects as the consolidated financial
for comparative information in accordance
statements prepared in accordance with IFRS
with the new values in the statement of profit
as adopted by the European Union for the year
or loss.
ended 31 December 2019.
Line item
2020
2019
Revised
presentation
Reclassification
of amounts related
to mandatorily
measured at fair value
through profit or loss
Reclassification
of gains
from foreign
exchange
margin
2019
As previously
presented
Interest income calculated using
the effective interest method
Income similar to interest income
Interest income and income similar
to interest income
Interest expense
Loss allowance on loans, placements
and on repo receivables
Change in the fair value attributable to changes
in the credit risk of loans mandatorily measured
at fair value through profit of loss
Further risk cost items
Risk cost total
NET INTEREST INCOME AFTER RISK COST
Income from fees and commissions
Net profit from fees and commissions
Foreign exchange gains, net
(Losses)/Gains on financial instruments
at fair value through profit or loss
Net operating income
841,901
135,986
977,887
762,639
133,497
896,136
(195,216)
(197,095)
(200,315)
(44,605)
(3,262)
(4,376)
(15,093)
(218,670)
564,001
486,529
397,633
19,204
(2,396)
27,455
(7,706)
(56,687)
642,354
447,084
374,181
6,782
(849)
91,834
(14,863)
16,855
1,992
–
4,515
(4,376)
–
139
2,131
–
–
–
(2,131)
(2,131)
–
–
–
–
–
–
–
–
–
33,736
33,736
(33,736)
–
777,502
116,642
894,144
(197,095)
(49,120)
–
(7,706)
(56,826)
640,223
413,348
340,445
40,518
1,282
(33,736)
127,701
IFRS consolidated financial statements
123
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:2)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 3:
SIGNIFICANT ACCOUNTING ESTIMATES AND DECISIONS
IN THE APPLICATION OF ACCOUNTING POLICIES
The presentation of financial statements in
conformity with IFRS as adopted by EU
requires the Management of the Group to
3.2 Valuation of instruments
without direct quotations
make judgement about estimates and
Financial instruments without direct
assumptions that affect the reported amounts
quotations in an active market are valued
of assets and liabilities and the disclosure
using the valuation model technique.
of contingent assets and liabilities as at the
The models are regularly reviewed and
date of the financial statements and their
each model is calibrated for the most recent
reported amounts of revenues and expenses
available market data. While the models are
during the reporting period. The estimates
built only on available data, their use is subject
and associated assumptions are based on
to certain assumptions and estimates
expected loss and other factors that are
(e.g. correlations, volatilities etc.). Changes
considered to be relevant. The estimates and
in the model assumptions may affect the
underlying assumptions are reviewed on
reported fair value of the relevant financial
an ongoing basis. Revisions to accounting
instruments.
estimates are recognized in the period.
IFRS 13 Fair Value Measurement seeks to
Actual results could differ from those
increase consistency and comparability in
estimates. Significant areas of subjective
fair value measurements and related
judgement include:
disclosures through a ‘fair value hierarchy’.
3.1 Loss allowances on
financial instruments exposed
to credit risk
The hierarchy categorises the inputs used
in valuation techniques into three levels.
The hierarchy gives the highest priority to
(unadjusted) quoted prices in active markets
for identical assets or liabilities and the lowest
priority to unobservable inputs. The objective
The Group regularly assesses its financial
of a fair value measurement is to estimate
instruments portfolio for loss allowance.
the price at which an orderly transaction to
Management determines the adequacy
sell the asset or to transfer the liability would
of the loss allowances based upon reviews
take place between market participants at
of individual loans and placements, recent
the measurement date under current market
loss experience, current economic conditions,
conditions.
the risk characteristics of the various
categories of loans and other pertinent
factors.
3.3 Provisions
The use of the three stage model was
Provision is recognized and measured for
implemented for IFRS 9 purposes.
commitments to extend credit and for
The impairment methodology is used to
warranties arising from banking activities
classify financial instruments in order
based on IFRS 9 Financial Instruments.
to determine whether credit risk has signifi-
Provision for these instruments is recognized
cantly increased since initial recognition
based on the credit conversion factor, which
and to identify the credit-impaired assets.
shows the proportion of the undrawn credit
For instruments with credit-impairment
line that will probably be drawn.
or significant increase of credit risk lifetime
Other provisions are recognized and measured
expected losses will be recognized
based on IAS 37 Provisions, Contingent
(see more details in Note 36.1)
Liabilities and Contingent Assets. The Group
124
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:2)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
is involved in a number of ongoing legal
based on the strategic factors and financial
disputes. Based upon historical experience
data of its cash-generating units. In the
and expert reports, the Group assesses the
calculation of the goodwill impairment, also
developments in these cases, and the
the expectations about possible variations in
likelihood and the amount of potential
the amount or timing of those future cash-flows,
financial losses which are appropriately
the time value of money, represented by the
provided for. (See Note 24.)
current market risk-free rate of interest and
Other provision includes provision for litiga-
other factors are reflected.
tion, provision for retirement and expected
liabilities and provision for confirmed letter
of credit.
3.5 Business model
A provision is recognized by the Group when
it has a present obligation as a result of a
The financial assets held by the Group are
past event, it is probable that an outflow of
classified into three categories depending on
resources embodying economic benefits will
the business model within the financial assets
be required to settle the obligation, and a
are managed.
reliable estimate can be made of the amount
(cid:588) Business model whose objective is to hold
of the obligation.
financial assets in order to collect
3.4 Impairment on goodwill
contractual cash-flows. Within this business
model the Group manages mainly loans
and advances and long-term securities and
other financial assets.
Goodwill acquired in a business combination
(cid:588) Business model whose objective is achieved
is tested for impairment annually or more
by both collecting contractual cash-flows
frequently when there is an indication that
and selling financial assets. Within this
the unit might be impaired, in accordance
business model the Group only manages
with IAS 36 “Impairment of assets”.
securities.
The Group calculates the fair value based on
(cid:588) Business model whose objective is to
discounted cash-flow model. The 3 year period
achieve gains in a short-term period.
explicit cash-flow model serves as a basis
Within this business model the Group
for the impairment test by which the Group
manages securities and derivative financial
defines the impairment need on goodwill
instrument.
NOTE 4:
IMPACT OF CORONA VIRUS (COVID-19)
Covid-19 has had substantial implications for
11 May 2020 only corporate loans exceeding
the operations of the Group during 2020. Below
HUF 1 billion can be used as collateral in the
are some of the more important Covid-19
liquidity providing operations.
related events that occurred by country of
(cid:588)(cid:631) In addition to the 1, 3, 6 and 12-month tenders
operation.
Hungary
announced every Monday in the same way,
the NBH announced one-week FX-swap
tenders providing forint liquidity on a daily
basis from 17 March 2020 until further
notice, in order to maintain the appropriate
(cid:588)(cid:631) On 16 March 2020 the NBH decided to
level of liquidity for the banking sector.
expand the range of eligible collaterals with
(cid:588)(cid:631) On 18 March 2020 the NBH took measures
performing corporate loans. Effective from
to support the operation of banks and
IFRS consolidated financial statements
125
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:2)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
strengthen the banking system. Among
tenor, together with the due instalments.
others the NBH requested banks and their
Following the moratorium, the tenor will
owners to make sure that dividends are
be prolonged in a way that the sum of the
neither approved, nor paid until the end
due instalment and the unpaid interest
of September of 2020.
during the moratorium (which is to be
(cid:588)(cid:631) On 18 March 2020 the Prime Minister
repaid in equal instalments) in total should
of Hungary announced the first stage
not exceed the instalment according to the
of economic and job protection measures.
original contract. Rules applicable to the
The steps, among others, included:
interest must also be applied to the fees.
– a blanket debt repayment moratorium;
The borrower’s participation was automatic,
– the introduction of the annual percentage
but the moratorium did not affect the
rate “APR” caps on new consumer loans:
debtors’ right to continue to pay according
pursuant to the relevant Government
to the original contractual terms.
Decrees, APR is temporarily capped
(cid:588)(cid:631) On its 24 March 2020 meeting the Monetary
at central bank base rate + 5 pps in
Council decided to introduce a new fixed-
the case of loans to consumers that
rate collateralized loan instrument with
are not collateralized by a mortgage
maturities of 3, 6 and 12 months and 3 and
and are disbursed based on a contract
5 years. Lending will be provided by the
concluded after 19 March 2020.
NBH at a fixed interest rate (the NBH defines
This provision must be applied until
the interest rate of the instrument at each
31 December 2020, then following this
tender, but the rate may not be lower than
deadline the APR set out in the given
the base rate).
lender’s Terms & Conditions effective at
(cid:588)(cid:631) On 1 April 2020 the NBH decided to
the time of the signing of the contract
announce one-week deposit tenders at
will be applicable;
a weekly frequency. The interest rate on
– the extension of short-term business
the instrument equals to the central bank
loans until 30 June.
base rate.
(cid:588)(cid:631) Pursuant to Government Decree No. 47/2020.
(cid:588)(cid:631) On 1 April 2020 the NBH announced that
(III. 18.) and Government Decree No. 62/2020.
effective from 1 July the capital buffer
(III. 24.), a moratorium on payments was
requirements for systemically important
introduced in Hungary concerning both
banks will be released. The banks must
principal, interest and fee payment
rebuild their capital buffer initially
obligations arising from both credit, loan
prescribed for 2020 gradually in three
and finance lease amounts that have already
years from 2022 onwards. At the time
been disbursed until 18 March 2020.
of the decision the O-SII buffer applicable
The moratorium did not involve debt
for OTP Bank was 2%.
forgiveness element. The first moratorium
(cid:588)(cid:631) On 4 April 2020 the Minister of Prime
was effective until 31 December 2020.
Minister's Office revealed that the
The scope of the moratorium included,
Government expects banks to contribute
among others, both retail and corporate
HUF 55 billion into the new epidemic
debtors. Regarding details and technical
fund. Pursuant to the Government Decree
provisions, the non-paid interest during the
108/2020 published on 14 April, the new
payment holiday cannot be capitalized to
special tax levied on banks is to be paid in
the outstanding principal (neither during the
the 2020 tax year, in three equal instalments
moratorium, nor afterwards). The amount
(in June, September and December).
of delayed interest accumulated during
The base of the new special tax is that part
the moratorium must be repaid after the
of the adjusted total assets (as defined in
moratorium in equal instalments, evenly
the legislation on the “old” bank tax) that
spread over the remaining years of the loan
exceeds HUF 50 billion. The tax rate is 19 bps.
126
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:2)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
(cid:588)(cid:631) On 9 June 2020 the law allowing the
Details of the programmes including the
deductibility of the new special banking levy
timing and strategic parameters were
payable in 2020 was promulgated. The new
revealed on 28 April: accordingly, the NBH
once-off special banking tax will be returned
launched its government securities and
to the banking system over the next five
mortgage bonds purchase programmes
years through deductions from the nominal
on 4 May 2020, and it will continue to
amount of the “old” bank tax (in the form of
purchase securities as long as economic
tax withholding).
and financial developments arising from
(cid:588)(cid:631) The new special tax amounts to HUF 14.2
the coronavirus pandemic require it.
billion in the case of the Hungarian Group
The NBH did not set a total amount of
members of OTP Group. Pursuant to IFRS
purchases for either programme.
standards, parallel with the accounting
– The NBH launched the Funding for Growth
of this new bank levy amongst the other
Scheme Go! scheme on 20 April 2020.
expenses, the Group recognized the net
Including HUF 500 billion undrawn under
present value of the related tax claims
the FGS fix, the NBH made available up to
amongst the other income. Therefore, the
HUF 1,500 billion to the SME sector under
new special tax did not materially affect
the FGS Go!.
the Group’s bottom line earnings neither in
– Within the framework of the Bond Funding
2020, nor will it do so over the next 5 years.
for Growth Scheme, the so far unutilized
(cid:588)(cid:631) On 7 April 2020 the NBH adjusted its policy
over HUF 200 billion was still available
instruments and modified its operational
for the NBH to purchase bonds issued by
framework. The Monetary Council decided to
non-financial corporations headquartered
make the interest rate corridor symmetrical,
in Hungary.
and left the base rate and the overnight
(cid:588)(cid:631) On 16 April 2020 the Minister of Finance
deposit rate unchanged at 0.9% and –0.05%,
revealed further tax concessions amounting
respectively, and raised the overnight and
to HUF 200 billion. Among others, the social
one-week collateralized lending rates
security contributions payable by employers
to 1.85%. The one-week deposit rate, at the
were cut to 15.5% from 17.5% effective from
time of the announcement, was equal to
July 2020.
the 0.9% base rate; however, the Monetary
(cid:588)(cid:631) On 2 July 2020, the NBH decided to expand
Council decided to allow the interest rate
the loan purposes available in the FGS Go!
on the instrument to deviate from the
structure.
base rate upward or downward within the
(cid:588)(cid:631) On 10 September 2020 the National Bank
interest rate corridor. The NBH said that it
of Hungary, in the wake of increased
will set the interest rate on the instrument
uncertainties amid the pandemic, called
each week, at the time of the actual tender’s
upon credit institutions to extend the
announcement.
previously applied restriction on dividend
(cid:588)(cid:631) As part of the comprehensive set of
payments and decisions, which was effective
measures outlined by the NBH on 7 April
until 30 September 2020, until 1 January 2021.
2020, it decided to
(cid:588)(cid:631) On 22 September 2020 the NBH increased
– launch a government security purchase
the available amount under the Bond
programme in the secondary market to
Funding for Growth programme from
restore the stable liquidity position of
HUF 450 to 750 billion.
the government securities market and
(cid:588)(cid:631) As the utilisation of the Funding for Growth
influence the longer part of the yield
Go! scheme exceeded HUF 1,000 billion
curve, and to relaunch its mortgage
by mid-November, on 17 November 2020
bond purchase programme to improve
the Monetary Council decided to raise the
the long-term supply of funding to the
total available amount by HUF 1,000 billion
banking sector.
(to HUF 2,500 billion).
IFRS consolidated financial statements
127
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:2)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
(cid:588)(cid:631) As set out in Government Decree 518/2020.
2020 financial year, or from previous
(XI. 25.), published in the Gazette on
years’ profits, until 30 September 2021.
25 November 2020, starting from 1 January
Furthermore, the central bank suggested
2021 the Hungarian Government provides a
that credit institutions should refrain from
non-refundable home renovation subsidy
treasury share purchases for shareholder
to families raising or expecting children by
remuneration purposes until the same
way of refunding certain part of their home
date (share buybacks for management
renovation costs. Eligible families can get
remuneration purposes are an exemption).
back 50% of their proven improvement
The related guideline was set out in
expenses following the completion of the
a management circular published on
renewal, but maximum HUF 3 million.
8 January 2021.
The subsidy can be applied for within 60 days
– The NBH decided to amend the relevant
after completing the home renovation and
detailed guidelines set out in its IFRS
also paying the bills by the families, or until
circular about the application of non-
31 December 2022 the latest.
performing and forborne categories in
(cid:588)(cid:631) On 19 December 2020 the Prime Minister
connection with the payment moratorium,
announced the following measures directly
and based on this, its guidelines for
affecting banking operations:
creating provisions. The amended circular
– Extension of the payment moratorium in
was released on 22 January 2021.
unchanged form: pursuant to Government
(cid:588)(cid:631) Effective from 13 January 2021 the National
Decree 637/2020. (XII. 22.) those borrowers
Bank of Hungary extended the available
are eligible for the moratorium effective
amount for the Bond Funding for
between 1 January 2021 –30 June 2021
Growth scheme by HUF 750 billion to
that have principal, interest and fee
HUF 1,150 billion. At the same time it
payment obligations arising from a credit
decided to increase the maximum maturity
contract that have already been disbursed
of corporate bonds that can be purchased
until 18 March 2020 (also considering
by the central bank from 20 to 30 years.
Subsection [1] of Section 3 of Act CVII
Also, the central bank’s exposure limit
of 2020). With the above Decree the
to a company group was revised from
eligibility conditions stipulated in Act CVII
HUF 50 billion to HUF 70 billion.
of 2020 (published on 28 October 2020)
(cid:588)(cid:631) On 4 February 2021 the Prime Minister
for retail and corporate borrowers were
announced an interest-free loan programme
repealed.
for companies in trouble in the wake of the
– Subsidized home renovation loan:
pandemic. According to Government
in order to help eligible families to take
Resolution 1038/2021. (II. 5.) the programme
advantage of the non-refundable home
will be administered by the Hungarian
renovation subsidy (for details, see
Development Bank, and the available
Government Decree 518/2020. [XI. 25.]),
amount under the programme will be
a subsidized home renovation loan
HUF 100 billion. Companies can take out
(for details, see Government Decree
maximum HUF 10 million each for the
641/2020 [XII. 22.]) was introduced
purpose of covering wages and social
by the Government.
contributions, overhead costs, general
(cid:588)(cid:631) On 28 December 2020 the National Bank
operating expenses and inventory financing.
of Hungary announced that the following
Client interest rate is 0%, the loan tenor
decisions were made:
can be up to 10 years, and the servicing
– The central bank recommended credit
of the loan will start after a 3 year grace
institutions not to pay dividends or not
period. The scope of eligible entities will
to make any irrevocable commitment
be discussed with the Hungarian Chamber
to pay dividends after the 2019 and
of Commerce and Industry.
128
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:2)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Bulgaria
(cid:588)(cid:631) On 11 December 2020, the National Bank of
Bulgaria approved the extension of the debt
(cid:588)(cid:631) On 19 March 2020 the Bulgarian National
repayment moratorium. The deadline to
Bank (BNB) announced its decisions with the
apply for the moratorium is 23 March 2021.
aim to strengthen the capital and liquidity
Borrowers can take advantage of the
position of the banking system:
deferral until 31 December 2021, but for
– to cancel the increase of the countercyclical
maximum nine months altogether. Debtors
capital buffer to 1% planned for 2020 and
who are not more than 90 days past due
to 1.5% planned for 2021;
at the application date can benefit from
– credit institutions shall not distribute
the moratorium. In cases where the request
dividends from the 2019 realized profit nor
for deferral was submitted before
distribute other elements of the capital
30 September 2020, further deferral is
which are retained from the financial
possible, provided that the total duration of
results from previous years.
the moratorium does not exceed nine months.
(cid:588)(cid:631) On 24 March 2020 key tax and spending
measures were implemented: it was dis-
allowed to accrue penalty interest and to
Croatia
carry out any action that may have negative
consequences for borrowers due to non-
(cid:588)(cid:631) On 20 March 2020 the Croatian National
payment. Legal enforcement and eviction
Bank (HNB) imposed measures on credit
procedures were also frozen during the
institutions regarding the retention of net
emergency period.
income for 2019.
(cid:588)(cid:631) On 10 April 2020 the BNB approved the draft
(cid:588)(cid:631) On 20 March 2020 the HNB reduced the
of the payment moratorium, which provides
mandatory reserve requirement ratio from
specific terms of the deferred payment.
12 to 9%, and started purchasing Republic
Accordingly, banks could voluntarily offer
of Croatia bonds with an aim of maintaining
the moratorium to their clients. The eligible
stability in the market of government
clients are those private individuals or
securities.
companies who did not have more than
(cid:588)(cid:631) A payment moratorium on loans has not been
90 days of delay as at 1 March 2020, and
implemented in Croatia through legislation.
have faced difficulties in meeting their
Therefore, the application for moratorium
obligations due to the Covid-19 pandemic.
is voluntary and has to be requested by the
Participation was not automatic, clients had
client.
to indicate their intention to participate.
(cid:588)(cid:631) However, on 1 April 2020 the Croatian Banking
(cid:588)(cid:631) On 10 July 2020 Bulgaria officially joined
Association outlined a non-binding regime
the ERM-II currency mechanism.
which could serve as a basis for setting the
(cid:588)(cid:631) On 14 July 2020 the Bulgarian National Bank
conditions of banks’ own moratoria offered
decided to extend the deadlines of the mor-
to their clients.
atorium on payments. Accordingly, the dead-
(cid:588)(cid:631) Furthermore, all banks agreed not to initiate
line for submitting a request by customers
forced collection measures for the collection
for postponing payments and their approval
of debt from their debtors who, in the period
by banks was extended until 30 September
of three months starting from April 2020,
2020; the deadline for postponing payments
failed to meet their payment obligations.
was extended until 31 March 2021. The exten-
The measure applied to both legal and
sion of the deadlines applies to exposures for
natural persons.
which no request for moratorium participa-
(cid:588)(cid:631) On 10 July 2020 Croatia officially joined the
tion was submitted before 22 June 2020.
ERM-II currency mechanism.
(cid:588)(cid:631) DSK Bank is supervised by the ECB starting
(cid:588)(cid:631) On 1 October 2020, the loan repayment
from 1 October 2020.
moratorium was extended (applications
IFRS consolidated financial statements
129
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:2)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
will be accepted until 31 March 2021).
moratorium. Payment moratorium could
The extension of the moratorium is available
be granted at the request of customers,
to customers whose primary source of
in the case of loans disbursed before the
income is the tourism sector, those living in
declaration of an emergency, for both
earthquake-hit areas, and whose income has
retail and corporate customers. Banks
decreased by at least 30% compared to 2019.
were obliged to provide a moratorium
The duration of the moratorium can be up
on loan repayments if the debtor proves
to 9 months except for those living in the
that it had payment difficulties due to the
area affected by the earthquake, for those
epidemiological situation. The suspension
borrowers it is 12 months.
of repayment may not exceed 12 months,
Serbia
the original term being extended by the
duration of the suspension.
(cid:588)(cid:631) On 10 April 2020 the Bank of Slovenia issued
the Resolution on macroprudential measures
(cid:588)(cid:631) On 18 March 2020 the National Bank
for banks, in which it imposed restrictions on
of Serbia adopted decisions imposing a
dividend and bonus payments.
moratorium on debt payments:
(cid:588)(cid:631) At the end of 2020 the option to apply for
a) the moratorium was available for all
the moratorium has been extended to
debtors (natural persons, farmers and
26 February 2021. Banks have to approve
entrepreneurs, corporates);
applications until 31 March 2021. After the
b) it implied a suspension of debt payments
approval by the bank, the deferral of
for at least 90 days and/or for the duration
payments for eligible borrowers can be
of the emergency state;
9 months.
c) lessors will not charge any default interest
on past due outstanding receivables and
will not initiate enforcement or enforced
Romania
collection procedures, or take other legal
actions to collect receivables from their
(cid:588)(cid:631) On 24 March 2020 the National Bank of
clients.
Romania (NBR) allowed banks to operate
(cid:588)(cid:631) On 27 July 2020 National Bank of Serbia has
with a capital level excluding the capital
adopted a regulation that offers borrowers
buffer requirements.
one more suspension in the settlement of
(cid:588)(cid:631) On 24 March 2020 the NBR decided to allow
their liabilities to banks, maturing in the period
banks to operate with a Liquidity Coverage
between 1 August 2020 and 30 September
Ratio (LCR) below its minimum threshold
2020, as well as a suspension in the payment
(100%).
of liabilities that matured in July 2020, and
(cid:588)(cid:631) Starting from 30 March 2020 a moratorium
which the borrower has not settled.
on loan payments was introduced. Based on
(cid:588)(cid:631) In December 2020 the Serbian central bank
client request, payment obligations arising
decided to introduce the third round of
from loans (including capital, interest and
payment moratorium with an effect between
fees) could be suspended for maximum
1 January – 30 June 2021. The participation is
9 months, but until 31 December 2020 the
opt-in. The deadline for submitting request
latest.
by borrowers is 30 April 2021.
(cid:588)(cid:631) Conditions for the applicant include that
Slovenia
the income of the debtor was directly or
indirectly affected by the pandemic. Legal
entities had to prove that their activities
were interrupted fully or partially; they
(cid:588)(cid:631) On 20 March 2020 the Slovenian Parliament
suffered a more than 25% income decrease
passed an act regarding the debt payment
in March compared to the average of
130
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:22)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
January and February 2020; and that they
(cid:588)(cid:631) In June 2020 Ukraine made a USD 5 billion
were not in insolvency at the date of the
deal with the IMF, which was designed to
request.
help the Ukrainian economy overcome the
(cid:588)(cid:631) In May 2020 the deadline for applying for
shocks of the coronavirus crisis.
the moratorium was extended by one month,
(cid:588)(cid:631) In September the NBU pre-announced
to 15 June.
plans to increase risks weights on consumer
(cid:588)(cid:631) On 2 April, based on the European Central
lending from 100% up to 150% starting in
Bank advice, the NBR recommended
the second half of 2021.
local commercial banks not to distribute
dividends in 2020.
(cid:588)(cid:631) On 30 December 2020 the government
Russia
decided to prolong the loan repayment
moratorium, but borrowers can spend
(cid:588)(cid:631) Through March and April, the Central Bank
altogether up to 9 months in the moratoria.
of Russia (CBR) engaged in repo auctions
The application deadline is 15 March 2021
of more than 2,000 billion rubles to ensure
and requests should be processed by
sufficient liquidity in the banking sector.
31 March.
Ukraine
On 20 March the suspension of add-on risk
weights was introduced by the CBR in case
of restructured loans, mortgage loans, loans
under equity construction contracts, and
loans with low down payments.
(cid:588)(cid:631) On 30 January 2020 the National Bank of
(cid:588)(cid:631) To support lending, effective until 1 January
Ukraine (NBU) decided to lower the base rate
2021, the CBR entitled credit institutions
by 250 bps, from 13.5% to 11%. The referemce
to recognize equity and debt securities,
rate was further cut to 10% on 23 March,
acquired before 1 March 2020, at fair value
followed by another 200 bps cut to 8% on
in the accounting records; and to recognize
23 April. Effective from 12 June the base rate
debt securities, acquired from 1 March 2020
was further reduced by 200 bps to 6%.
through 30 September 2020, at fair value as
(cid:588)(cid:631) On 25 March 2020 the NBU delayed the
of the acquisition date.
schedule for banks to create the following
(cid:588)(cid:631) On 27 March CBR announced that banks do
capital buffers:
not have to increase loan loss provisions
– the capital conservation buffer, which was
if the loan was restructured due to
to be created from 1 January 2020 in the
consequences of the pandemic.
amount of 0.625% of regulatory capital and
(cid:588) The period from 30 March until 30 April was
would gradually rise to 2.5% by 1 January
declared a nationwide paid holiday (banks
2023 according to the original schedule;
were recognized as continuously working
– the systemically important institutions
organizations). This period was later
buffer, which originally was to be created
extended until 12 May.
the banks from 1 January 2021.
(cid:588) Starting from 3 April a debt repayment
(cid:588)(cid:631) The NBU recommended banks to refrain
holiday came into effect for private
from paying out dividend until October 2020
individuals, sole proprietors and SMEs
(later extended until the end of 2020).
facing difficulties in connection with the
(cid:588)(cid:631) On 30 March 2020 the Ukrainian Parliament
coronavirus epidemic. Borrowers were able
adopted a prohibition on lenders to increase
to apply at the lender for a moratorium
interest rates under loan agreements for
on their mortgage and consumer loan
the duration of the pandemic. The law
payments (including interest and principal)
forbids the banks from charging any penal-
for up to six months if their respective
ties and fines on consumer loans during
income fell by at least 30% in the month
this period.
preceding the application compared with
IFRS consolidated financial statements
131
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:22)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
the average monthly income in the previous
(cid:588)(cid:631) On 20 January 2021 the Central Bank
year. Applications could be registered until
of Russia published its 2021–2022 road
30 September 2020.
map for regulating consumer lending,
(cid:588)(cid:631) During the second quarter of 2020 the CBR
as a result loosening measures taken in
cut the policy rate in three steps by 125 bps
2020 to facilitate lending will be reversed
to 4.5%, and on 24 July a futher 25 bps cut
through higher risk weights being
was announced.
introduced.
(cid:588)(cid:631) On 10 August 2020 the CBR announced
that it reduced risk weights for unsecured
The following table below shows the
consumer loans issued after 1 September
volume of loans in moratorium as
2020, and cancelled additional capital
at 31 December 2020 in OTP Group and
requirements for consumer loans issued
the ratio of these loans of the portfolio
until 31 August 2019.
by countries:
Current volume
in moratorium
(million LCY)
Current volume
in moratorium
(million HUF)
Gross loans
(million HUF)
Current
participation
ratio
OTP Core
Merkantil Group
DSK Bank EAD (Bulgaria)
OTP banka d.d. (Croatia)
JSC “OTP Bank” (Russia)
SKB Banka d.d. Ljubljana
(Slovenia)
OTP Bank Romania S.A.
(Romania)
Crnogorska komercijalna
banka a.d. (Montenegro)
Total
1,760,231
120,379
60
3,372
734
150
545
13
1,760,231
120,379
11,190
163,052
2,907
4,631,974
416,987
2,634,870
1,642,170
597,849
54,835
909,439
40,853
861,393
4,589
362,067
2,158,036
12,056,749
38.00%
28.87%
0.42%
9.93%
0.49%
6.03%
4.74%
1.27%
Financial assets modified during the period related to moratorium
for the year ended 31 December 2020:
Gross carrying amount before modification
Loss allowance before modification
Net amortised cost before modification
Modification loss due to covid moratoria
Net amortised cost after modification
2020
Hungary
1,119,943
(61,445)
1,058,498
(26,774)
1,031,724
Serbia
53,080
(9,881)
43,199
(239)
42,960
132
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:22)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 5:
CASH, AMOUNTS DUE FROM BANKS AND BALANCES
WITH THE NATIONAL BANKS (in HUF mn)
Cash on hand
In HUF
In foreign currency
Amounts due from banks and balances with the National Banks
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
In foreign currency
Total
Compulsory reserve set by the National Banks
Cash and cash equivalents
2020
2019
113,492
372,972
486,464
208,074
1,675,628
1,883,702
–
62,146
62,146
2,432,312
(757,535)
1,674,777
186,172
337,245
523,417
79,295
1,130,023
1,209,318
–
51,643
51,643
1,784,378
(734,641)
1,049,737
NOTE 6:
PLACEMENTS WITH OTHER BANKS, NET OF LOSS ALLOWANCE
FOR PLACEMENTS (in HUF mn)
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
In foreign currency
Loss allowance on placements
Total
An analysis of the change in the loss allowance on placements
with other banks is as follows:
Balance as at 1 January
Loss allowance for the period
Release of loss allowance for the period
Foreign currency translation difference
Closing balance
Interest conditions of placements with other banks:
2020
2019
251,206
729,249
980,455
136,418
33,359
169,777
(1,489)
1,148,743
2020
478
16,476
(15,629)
164
1,489
35,804
194,985
230,789
102,048
10,563
112,611
(478)
342,922
2019
485
3,463
(3,602)
132
478
Interest rates on placements with other banks denominated
in HUF
Interest rates on placements with other banks denominated
in foreign currency
Average interest rates on placements with other banks (%)
2020
2019
0.0%–3.84%
(1.5)%–3.84%
(17.33)%–5.50%
(2.39)%–15.5%
0.70%
2.06%
* Foreign subsidiary banks within the Group have to comply with country specific regulation of local National Banks. Each country
within the Group has its own regulation for compulsory reserve calculation and maintenance. Based on that banks are obliged
to place compulsory reserve at their National Bank in a specified percentage of their liabilities considered in compulsory reserve
calculation.
IFRS consolidated financial statements
133
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:22)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 7:
REPO RECEIVABLES (in HUF mn)
Within one year:
In HUF
In foreign currency
Loss allowance on repo receivables
Total
2020
183,656
7,485
191,141
(292)
190,849
An analysis of the change in the loss allowance on repo receivables is as follows:
Balance as at 1 January
Loss allowance for the period
Release of loss allowance for the period
Foreign currency translation difference
Closing balance
2020
62
362
(125)
(7)
292
2019
45,545
21,674
67,219
(62)
67,157
2019
12
98
(48)
–
62
Interest conditions of repo receivables:
Interest rates on repo receivables denominated in HUF
Interest rates on repo receivables denominated
in foreign currency
2020
(0.1)%–0.9%
2019
(0.1)%–0.715 %
(0.55)%–4.15%
(0.25)%–16.0%
NOTE 8:
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
(in HUF mn)
Securities held for trading:
Government bonds
Discounted Treasury bills
Equity instruments and fund units
Other interest bearing securities
Other non-interest bearing securities
Non-trading securities mandatorily at fair value
through profit or loss
Equity instruments, open-ended fund units
Bonds
Debt securities designated at fair value
through profit or loss
Total
2020
38,036
12,721
3,740
2,075
–
56,572
46,063
11,514
57,577
2,235
2019
71,194
50
1,076
20,212
7,516
100,048
34,915
4,402
39,317
2,001
116,384
141,366
134
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:22)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Positive fair value of derivative financial assets held for trading:
Foreign exchange swaps held for trading
Interest rate swaps held for trading
Foreign exchange forward contracts held for trading
CCIRS and mark-to-market CCIRS held for trading*
Held for trading option contracts
Held for trading forward security agreement
Held for trading forward rate agreements
Other derivative transactions held for trading**
Total
Total
An analysis of securities held for trading portfolio by currency:
Denominated in HUF
Denominated in foreign currency
Total
An analysis of government bond portfolio by currency:
Denominated in HUF
Denominated in foreign currency
Total
Interest conditions of held for trading securities:
2020
42,646
36,922
8,730
7,359
4,268
22
–
17,676
117,623
234,007
2020
19.7%
80.3%
100.0%
2020
16.9%
83.1%
100.0%
2019
35,602
61,198
3,543
1,216
3,404
5
13
5,643
110,624
251,990
2019
27.8%
72.2%
100.0%
2019
25.7%
74.3%
100.0%
Interest rates on securities held for trading denominated in HUF
Interest rates on securities held for trading denominated
in foreign currency
2020
0.5%–7.0%
2019
0.16% –7.50%
0.38%–6.38%
0.01%–8.25%
Interest conditions and the remaining maturities of securities held for trading
can be analysed as follows:
Within one year:
With variable interest
With fixed interest
Over one year:
With variable interest
With fixed interest
Non-interest bearing securities
Total
2020
78
17,147
17,225
1,370
34,237
35,607
3,740
56,572
2019
124
24,496
24,620
1,046
65,790
66,836
8,592
100,048
* CCIRS: Cross Currency Interest Rate Swaps (see Note 2.6.3).
** Other category includes: commodity and equity swaps, exchange traded futures and options.
IFRS consolidated financial statements
135
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:22)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Interest conditions and the remaining maturities of non-trading securities mandatorily
measured at fair value through profit or loss are as follows:
Within one year:
With variable interest
With fixed interest
Over one year:
With variable interest
With fixed interest
Non-interest bearing securities
Total
Dividend income from shares measured
at fair value through profit or loss
2020
–
–
–
–
5,492
5,492
52,085
57,577
75
2019
–
866
866
25
3,511
3,536
34,915
39,317
5,728
An analysis of non-trading securities mandatorily measured at fair value through
profit or loss portfolio by currency:
Denominated in HUF
Denominated in foreign currency
Total
Interest rates on non-trading securities mandatorily measured
at fair value through profit or loss
2020
57.1%
42.9%
100.0%
2019
70.6%
29.4%
100.0%
0.0%–2.50%
0.0%–4.95%
NOTE 9:
SECURITIES AT FAIR VALUE THROUGH OTHER COMPREHENSIVE
INCOME (in HUF mn)
Securities at fair value through
other comprehensive income
Government bonds
Mortgage bonds
Corporate bonds
Listed securities:
In HUF
In foreign currency
Non-listed securities:
In HUF
In foreign currency
Discounted Treasury bills
Total
Non-trading equity instruments to be measured
at fair value through other comprehensive income
Listed securities:
In HUF
In foreign currency
Non-listed securities:
In HUF
In foreign currency
Total
2020
2019
1,855,134
88,272
81,620
2,968
52,633
55,601
16,782
9,237
26,019
76,358
2,101,384
–
4,931
4,931
539
29,855
30,394
35,325
2,136,709
1,772,612
97,268
73,062
2,999
46,486
49,485
18,516
5,061
23,577
443,690
2,386,632
–
5,443
5,443
539
34,165
34,704
40,147
2,426,779
136
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:22)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
An analysis of securities at fair value through other comprehensive income by currency:
Denominated in HUF
Denominated in foreign currency
Total
2020
36.6%
63.4%
100.0%
2019
47.8%
52.2%
100.0%
Detailed information of the non-trading equity instruments to be measured
at fair value through other comprehensive income:
Strategic investments closely related to banking actitvity
Fair value
Dividend income from instruments held at the reporting date
Strategic investments originated to offset outstanding
Fair value
Dividend income from instruments held at the reporting date
Other strategic investments
Fair value
Dividend income from instruments held at the reporting date
Derecognition
Fair value of derecognized equity instrument, fund units
Dividend income from derecognized instruments
Cumulative gain/loss on disposal transferred
to retained earnings
Total
Total fair values
Dividend income from instruments held at the reporting date
Fair value of derecognized equity instrument, fund units
Dividend income from derecognized instruments
Cumulative gain/loss on disposal transferred
to retained earnings
2020
27,502
180
2,637
5
5,186
38
–
–
–
35,325
223
–
–
–
2019
27,621
200
2,091
–
10,435
36
3,002
7
1,613
40,147
236
3,002
7
1,613
An analysis of government bonds by currency:
Denominated in HUF
Denominated in foreign currency
Total
2020
35.8%
64.2%
100.0%
2019
39.5%
60.5%
100.0%
Interest conditions of securities at fair value through other comprehensive income:
Interest rates on securities at fair value through other
comprehensive income denominated in HUF
Interest rates on securities at fair value through other
comprehensive income denominated in foreign currency
Average interest rates securities at fair value through other
comprehensive income denominated in HUF (%)
Average interest rates on securities at fair value through other
comprehensive income denominated in foreign currency (%)
2020
2019
0.5%–7.5%
0.16%–7.5%
0.0%–18.0%
0.25%–17.25%
2.17%
2.34%
1.96%
2.24%
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:22)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
137
Interest conditions and the remaining maturities of securities at fair value
through other comprehensive income can be analysed as follows:
Within one year:
With variable interest
With fixed interest
Over one year:
With variable interest
With fixed interest
Non-interest bearing securities
Total
2020
2019
4,780
346,928
351,708
62,068
1,687,608
1,749,676
35,325
2,136,709
7,799
878,644
886,443
60,974
1,439,215
1,500,189
40,147
2,426,779
Certain securities are hedged against interest rate risk. See Note 36.4.
NOTE 10:
SECURITIES AT AMORTIZED COST (in HUF mn)
Government bonds
Corporate bonds
Discounted Treasury bills
Mortgage bonds
Loss allowance on securities at amortized cost
Total
2020
2,545,476
74,632
10,469
–
2,630,577
(5,657)
2,624,920
2019
1,933,837
22,719
6,516
7,739
1,970,811
(2,739)
1,968,072
Interest conditions and the remaining maturities of securities at amortized cost
can be analysed as follows:
Within one year:
With variable interest
With fixed interest
Over one year:
With variable interest
With fixed interest
Total
An analysis of securities at amortized cost by currency:
Denominated in HUF
Denominated in foreign currency
Total
2020
2019
–
156,532
156,532
–
2,474,045
2,474,045
2,630,577
–
261,358
261,358
–
1,709,453
1,709,453
1,970,811
2020
86.9%
13.1%
100.0%
2019
86.5%
13.5%
100.0%
138
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:22)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Interest conditions of securities at amortized cost:
Interest rates of securities at amortized cost
with variable interest
Interest rates of securities at amortized cost
with fixed interest
Average interest rates on securities at amortized cost (%)
2020
–
2019
–
0.5%–7.0%
0.5%–13.5%
2.83%
3.36%
An analysis of the change in the loss allowance on securities at amortized cost is as follows:
Balance as at 1 January
Loss allowance for the period
Release of loss allowance
Use of loss allowance
Foreign currency translation difference
Closing balance
2020
2,739
6,863
(4,061)
12
104
5,657
2019
2,939
593
(755)
(52)
14
2,739
NOTE 11:
LOANS AT AMORTIZED COST AND AT FAIR VALUE (in HUF mn)
Loans at amortized cost:
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
In foreign currency
Loss allowance on loans
Total
2020
1,154,223
2,445,006
3,599,229
2,002,814
6,902,342
8,905,156
12,504,385
(829,543)
11,674,842
2019
Revised
2019
As previously
presented
1,040,207
2,127,581
3,167,788
1,761,761
6,168,291
7,930,052
11,097,840
(684,319)
10,413,521
1,068,899
2,127,581
3,196,480
2,205,543
6,168,291
8,373,834
11,570,314
(693,317)
10,876,997
An analysis of the gross loan portfolio at amortized cost by currency:
In HUF
In foreign currency
Total
2020
25.25%
74.75%
100.0%
2019
Revised
25.25%
74.75%
100.0%
2019
As previously
presented
28.30%
71.70%
100.0%
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:22)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
139
Interest rates of the loan portfolio at amortized cost are as follows:
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
In foreign currency
Average interest rates on loans at amortized cost denominated
in HUF (%)
Average interest rates on loans at amortized cost denominated
in foreign currency (%)
2020
2019
0.0%–47.7%* 0.0%–37.5%*
(0.5)%–90.0%** (0.45)%–90.0%**
0.0%–37.45%* 0.0%–37.45%*
(0.5)%–60.0%** (0.45)%–90.0%**
6.04%
5.56%
6.13%
5.76%
An analysis of the change in the loss allowance on loans is as follows:
Balance as at 1 January
Reclassification
Opening change due to finance lease
Balance as at 1 January
Loss allowance for the period
Release of loss allowance
Use of loss allowance
Partial write-off***
Decrease due to IFRS 5
Foreign currency translation difference
Closing balance
2020
684,319
–
–
684,319
650,165
(382,800)
(100,711)
(12,503)
–
(8,927)
829,543
2019
Revised
685,364
(4,483)
(9,005)
671,876
488,802
(290,134)
(94,458)
(112,198)
(27,616)
48,047
684,319
2019
As previously
presented
685,364
–
(9,005)
676,359
480,962
(277,779)
(94,458)
(112,198)
(27,616)
48,047
693,317
Movement in loss allowance on loans and placements is summarized as below:
Loss allowance/(Release of loss allowance)
on placements and gains from write-off and sale
of placements
Loss allowance on loans and gains
from write-off and sale of loans
Total****
2020
2019
Revised
2019
As previously
presented
789
(235)
(235)
192,506
193,295
43,888
43,653
44,027
43,792
Loans mandatorily at fair value through profit or loss:
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
In foreign currency
Total
2020
48,770
–
48,770
750,211
3,624
753,835
802,605
2019
Revised
27,166
–
27,166
466,042
3,070
469,112
496,278
2019
As previously
presented
2,566
–
2,566
27,166
3,070
30,236
32,802
* The highest interest rate relates to HUF loans regarding purchasing products and services.
** The highest interest rate relates to loans in foreign currency regarding POS services in Russia.
*** See details in Note 2.11.
**** See details in Note 31.
140
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
An analysis of the loan portfolio mandatorily at fair value through profit or loss by currency:
In HUF
In foreign currency
Total
2020
99.55%
0.45%
100.00%
2019
Revised
99.38%
0.62%
100.00%
2019
As previously
presented
90.64%
9.36%
100.00%
Interest rates of the loan portfolio mandatorily at fair value through
profit or loss are as follows:
Interest rates on loans denominated in HUF
Interest rates on loans denominated in foreign currency
2020
0.77%–12.83%
2.5%–7.89%
2019
1.19%–10.08%
2.5%–4.5%
NOTE 12:
ASSOCIATES AND OTHER INVESTMENTS (in HUF mn)
Investments
Investments in associates (non-listed)
Other investments (non-listed)
Impairment on investments
Total
2020
14,149
44,158
58,307
(5,864)
52,443
2019
14,254
15,384
29,638
(8,816)
20,822
The investments in associates and other
are not significant neither on their own as
investments which are not consolidated
separate entities nor in aggregate.
An analysis of the change in the impairment on investments is as follows:
Balance as at 1 January
(Release of impairment )/Impairment for the period
Reclassification to securities at fair value through
other comprehensive income
Foreign currency translation difference
Closing balance
2020
8,816
(381)
(2,654)
83
5,864
2019
5,592
3,342
(80)
(38)
8,816
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
141
NOTE 13:
PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (in HUF mn)
For the year ended 31 December 2020:
Cost
Intangible
assets
Goodwill
Property
Office
equipment
Vehicle
Construction
in progress
Balance as at 1 January
Additions
Foreign currency
translation differences
Disposals
Reclassified
as held for sale
Closing balance
320,749
92,313
111,687
1,413
279,538
7,342
192,369
27,533
23,079
2,208
7,769
(5,319)
12,987
4,094
215
22,717
36,835
538
(56,183)
(6,388)
(14,361)
(11,737)
(1,609)
(36,687)
(12,061)
(139,026)
(153)
–
–
(154)
–
–
–
(307)
364,495
101,393
285,506
212,105
23,893
23,403
28,926
1,039,721
Tangible
assets subject
to operating
lease
31,799
6,586
Total
981,938
174,230
2,602
22,886
Depreciation
and amortization
Intangible
assets
Property
Office
equipment
Vehicle
Balance as at 1 January
Charge for the period
Foreign currency
translation differences
Disposals
Reclassified as held for sale
Closing balance
183,026
44,115
3,875
(6,733)
(103)
224,180
71,085
8,981
2,540
(4,853)
–
77,753
139,813
22,195
2,681
(9,302)
(95)
155,292
5,508
1,570
150
(987)
–
6,241
Impairment
Intangible
assets
Goodwill
Property
Office
equipment
Balance as at 1 January
Charge for the period
Foreign currency translation
differences
Disposals
Closing balance
803
2,328
85
(512)
2,704
6,388
–
–
(6,388)
–
–
1,601
129
(608)
1,122
1,337
–
5
(1,300)
42
Carrying value
Intangible
assets
Goodwill
Property
Office
equipment
Vehicle
Construction
in progress
Tangible assets
subject to
operating lease
10,889
5,064
Total
410,321
81,925
1,113
10,359
(6,787)
–
10,279
(28,662)
(198)
473,745
Total
8,968
3,929
253
(8,944)
4,206
Total
Tangible assets
subject to
operating lease
440
–
34
(136)
338
Tangible
assets subject
to operating
lease
Balance as at
1 January
Closing balance
136,920
105,299
208,453
51,219
17,571
137,611
101,393
206,631
56,771
17,652
22,717
23,403
20,470
562,649
18,309
561,770
Carrying value of the investment and goodwill allocated to the appropriate cash generating
units:
Subsidiaries
DSK Bank EAD*
(Bulgaria)
OTP banka d.d. (Croatia)
JSC “OTP Bank” (Russia)
POK-DSK Rodina a.d.
(Bulgaria)
n
o
i
l
l
i
m
F
U
H
n
i
y
r
a
i
d
i
s
b
u
s
e
h
t
f
o
s
t
n
u
o
m
a
g
n
i
y
r
r
a
C
280,692
205,349
124,410
943
n
o
i
l
l
i
m
F
U
H
n
i
s
e
u
l
a
v
l
l
i
w
d
o
o
G
42,984
21,196
37,202
11
611,394
101,393
y
c
n
e
r
r
u
c
n
i
s
e
u
l
a
v
l
l
i
w
d
o
o
G
l
a
n
o
i
t
c
n
u
f
n
o
i
l
l
i
m
28,541
58
9,395
11
y
c
n
e
r
r
u
c
l
a
n
o
i
t
c
n
u
f
f
o
e
p
y
T
HUF
EUR
RUB
HUF
* DSK Bank EAD after merge with the previous Expressbank.
142
OTP Bank Annual Report 2020
d
e
t
a
d
i
l
o
s
n
o
C
t
s
e
r
e
t
n
i
i
p
h
s
r
e
n
w
o
i
p
h
s
r
e
n
w
o
h
t
i
W
d
e
i
l
p
p
A
m
r
e
t
-
g
n
o
l
e
t
a
r
w
o
r
g
y
n
a
p
m
o
c
d
e
t
s
u
d
a
j
n
o
i
l
l
i
m
F
U
H
n
i
e
u
l
a
v
99.91%
717,318
100%
97.91%
99.75%
336,403
173,315
941
3.00%
2.69%
1.89%
3.00%
d
e
i
l
p
p
A
m
r
e
t
-
g
n
o
l
e
t
a
r
t
n
u
o
c
s
i
d
8.13%
9.37%
13.26%
8.13%
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
An analysis of the intangible assets for the year ended 31 December 2020 is as follows:
Intangible assets
Gross values
Accumulated amortization
Impairment
Carrying value
Self-developed
8,117
(3,675)
–
4,442
Purchased
356,378
(220,505)
(2,704)
133,169
Total
364,495
(224,180)
(2,704)
137,611
The Bank decided that the recoverable amount
tax profit of the companies. The calculation is
of goodwill is determined based on fair value
highly sensitive to the level of discount rate
less cost of disposal. When the Bank prepares
and growth rate used. For calculating the
goodwill impairment tests of the subsidiaries,
discount factor as risk free rates in case of
the method which is used based on discounted
OTP Bank JSC (Ukraine) the government bond
cash-flow calculation. On one hand is the free
yield in foreign currency with a period of three
cash-flow method (FCF) that calculates the
year was applied, while in case of the other
value of the subsidiaries by discounting their
subsidiaries the ten-year local government
expected cash-flow; on the other hand the
bonds in foreign currency or swap yields were
economic value added (EVA) method estimates
considered as presented in the actual macro
the value of the subsidiaries from the initial
forecasts. The Bank calculated risk premiums
invested capital and the present value of
on the basis of information from the country
the economic profit that the companies are
risk premiums that are published by Aswath
expected to generate in the future.
Damodaran – New York STERN University,
which were modified with CDS spread in
On the basis of the internal regulation of
case of Crnogorska komercijalna banka a.d.,
the Bank as at 31 December 2020 impairment
since according to the Bank’s assumption
test was prepared where a three-year cash-flow
the risk free interest rate includes the country-
model was applied with an explicit period
dependent risks in an implicit way. In case
between 2021–2023. The basis for the
the subsidiary owns subordinated debt, the
estimation was the financial preliminary
discount rate is calculated as a weighted
estimations for December 2020, and based
average of the expected return on equity
on the prepared medium-term (2021–2023)
presented previously and the subordinated
forecasts. When the Bank prepared the
debt’s interest rate.
calculations for the period 2021–2023, it
The growth rate in the explicit period is
considered the actual worldwide economic
the growth rate of the profit after tax
situations, the expected economic growth
adjusted by the interest rate of the cash and
for the following years, their possible effects
subordinated loans. The supposed growth
on the financial sector, the plans for growing
rates for the periods of residual values reflect
which result from these, and the expected
the long-term economic expectations in case
changes of the mentioned factors. In case
of every country.
of OTP Bank Romania S.A. a five-year explicit
The values of the subsidiaries in the FCF
period (2021–2025) was used to be able
method were then calculated as the sum of
to include the expected effects of the local
the discounted cash-flows of the explicit
strategic growth program more in detail.
period, the present value of the terminal
This five year period presents the achievement
values and the initial free capital assuming
of a supposedly stable cost to income ratio,
an effective capital structure.
a stabilized risk cost ratio and a positive free
cash-flow to equity (FCFE).
Present value calculation
with the FCF method
The Bank calculated the expected cash-flow for
Summary of the impairment test for
the year ended 31 December 2020
Based on the valuations of the subsidiaries
as at 31 December 2020 no goodwill
impairment was needed to recorded by
the given period based on the expected after
the Group.
IFRS consolidated financial statements
143
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
For the year ended 31 December 2019:
Cost
Intangible
assets
Goodwill
Property
Office
equipment
Vehicle
Construction
in progress
225,541
97,728
239,639
174,060
20,980
–
38,869
7,132
6,776
7,298
16,565
24,827
6,144
4,804
513
3,374
313
Balance as at 1 January
Increase due to
acquisition
Additions
Foreign currency
translation differences
Disposals
Reclassified
as held for sale
Change in consolidation
scope
Closing balance
47,100
64,019
12,405
(16,407)
(12,692)
783
(115)
(12,517)
(11,075)
(2,101)
(55,837)
(16,422)
(114,474)
–
–
(9,188)
(7,646)
26
267
–
–
(91)
4
–
–
(29,617)
1,080
320,749
111,687
279,538
192,369
23,079
22,717
31,799
981,938
Tangible
assets subject
to operating
lease
37,845
Total
818,674
2,197
98,057
7,301
175,928
878
32,290
22,881
2,246
53,066
448
Depreciation and amortization
Intangible
assets
Property
Office
equipment
Balance as at 1 January
Charge for the period
Foreign currency translation
differences
Disposals
Reclassified as held for sale
Change in consolidation scope
Closing balance
Impairment
Balance as at 1 January
Charge for the period
Foreign currency translation
differences
Disposals
Closing balance
148,396
35,247
831
–
(1,619)
171
183,026
Intangible
assets
2,200
803
–
(2,200)
803
68,223
7,830
2,932
(3,016)
(4,885)
1
71,085
130,063
18,944
4,135
(7,473)
(6,021)
165
139,813
Vehicle
5,439
1,508
140
(1,579)
–
–
5,508
Goodwill
Property
Office
equipment
5,962
6,388
–
(5,962)
6,388
28
–
(28)
–
34
1,294
9
–
1,337
Carrying value
Intangible
assets
Goodwill
Property
Office
equipment
Vehicle
Construction
in progress
Balance as at 1 January
Closing balance
74,945
136,920
91,766
105,299
171,388
208,453
43,963
51,219
15,541
17,571
22,881
22,717
Tangible assets
subject to
operating lease
14,467
5,397
Total
366,588
68,926
110
8,148
(9,085)
–
–
10,889
Tangible assets
subject to
operating lease
585
1,991
12
(2,148)
440
Tangible
assets subject
to operating
lease
22,793
20,470
(21,153)
(12,525)
337
410,321
Total
8,809
10,476
21
(10,338)
8,968
Total
443,277
562,649
Carrying value of the investment and goodwill allocated to the appropriate cash generating
units:
Subsidiaries
DSK Bank EAD* (Bulgaria)
Expressbank AD (Bulgaria)
OTP banka d.d. (Croatia)
JSC “OTP Bank” (Russia)
POK-DSK Rodina a.d.
(Bulgaria)
n
o
i
l
l
i
m
F
U
H
n
i
y
r
a
i
d
i
s
b
u
s
e
h
t
f
o
s
t
n
u
o
m
a
g
n
i
y
r
r
a
C
280,692
177,638
205,349
124,409
n
o
i
l
l
i
m
F
U
H
n
i
s
e
u
l
a
v
l
l
i
w
d
o
o
G
28,541
13,030
19,187
44,530
y
c
n
e
r
r
u
c
n
i
s
e
u
l
a
v
l
l
i
w
d
o
o
G
l
a
n
o
i
t
c
n
u
f
n
o
i
l
l
i
m
28,541
77
58
9,395
943
11
11
789,031
105,299
y
c
n
e
r
r
u
c
l
a
n
o
i
t
c
n
u
f
f
o
e
p
y
T
HUF
BGN
EUR
RUB
HUF
* DSK Bank EAD after merge with the previous Expressbank.
144
OTP Bank Annual Report 2020
d
e
t
a
d
i
l
o
s
n
o
C
t
s
e
r
e
t
n
i
i
p
h
s
r
e
n
w
o
i
p
h
s
r
e
n
w
o
h
t
i
W
y
n
a
p
m
o
c
d
e
t
s
u
d
a
j
n
o
i
l
l
i
m
F
U
H
n
i
e
u
l
a
v
100.00%
99.74%
100.00%
97.91%
99.75%
648,176
175,023
418,384
252,205
941
d
e
i
l
p
p
A
m
r
e
t
-
g
n
o
l
e
t
a
r
w
o
r
g
3.40%
3.40%
2.69%
1.89%
3.40%
d
e
i
l
p
p
A
m
r
e
t
-
g
n
o
l
e
t
a
r
t
n
u
o
c
s
i
d
8.11%
8.11%
8.85%
14.42%
8.11%
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
An analysis of the intangible assets for the year ended 31 December 2019 is as follows:
Intangible assets
Gross values
Accumulated amortization
Impairment
Carrying value
Self-developed
6,917
(3,083)
–
3,834
Purchased
313,832
(179,943)
(803)
133,086
Total
320,749
(183,026)
(803)
136,920
Summary of the impairment test for the year ended 31 December 2019
Based on the valuations of the subsidiaries as at 31 December 2019 HUF 4,887 million goodwill
impairment for OTP Bank Romania S.A. was needed to book by the Group.
NOTE 14:
INVESTMENT PROPERTIES (in HUF mn)
An analysis of the change in gross values of investment properties is as follows:
Gross values
Balance as at 1 January
Increase due to transfer from inventories
or owner-occupied properties
Increase from purchase
Increase due to transfer from held for sale properties
Increase from acquisition
Other additions
Transfer to held for sale properties
Transfer to inventories or owner-occupied properties
Disposal due to sale
Other disposal
Foreign currency translation difference
Closing balance
2020
53,906
6,896
574
86
–
–
(118)
(936)
(8,725)
–
2,471
54,154
2019
49,256
3,752
2,516
366
299
12
(999)
(778)
(1,278)
(7)
767
53,906
The applied depreciation and amortization rates were the following:
Depreciation and amortization rates
2020
1%–20%
2019
1%–22.2%
An analysis of the movement in the depreciation and amortization on investment properties
is as follows:
Depreciation and amortization
Balance as at 1 January
Additions due to transfer from inventories
or owner-occupied properties
Charge for the period
Additions due to transfer from held for sale properties
Transfer to inventories or owner-occupied properties
Disposal due to sale
Foreign currency translation difference
Closing balance
2020
8,352
1,657
908
–
(10)
(322)
798
11,383
2019
7,139
1,482
926
2
(710)
(655)
168
8,352
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
145
An analysis of the movement in the impairment on investment properties is as follows:
Depreciation and amortization
Balance as at 1 January
Impairment for the period
Release of impairment for the period
Use of impairment
Additions due to transfer from inventories
or owner-occupied properties
Foreign currency translation difference
Closing balance
Carrying values
Balance as at 1 January
Closing balance
Fair values
2020
3,994
178
(919)
–
587
330
4,170
2020
41,560
38,601
37,842
2019
4,002
255
(378)
(27)
–
142
3,994
2019
38,115
41,560
45,768
The Group chose the cost model for measuring
investment properties would have been
investment properties but estimates and
presented on level 3 in the fair value hierarchy
reviews the fair value of the investment
if the Group didn’t apply cost method for
properties by external experts, these
these recognition.
Income and expenses
Rental income
Direct operating expense of investment properties
– income generating
Direct operating expense of investment properties
– non income generating
2020
2,520
455
8
2019
2,061
687
8
NOTE 15:
POSITIVE FAIR VALUE OF DERIVATIVE FINANCIAL ASSETS
DESIGNATED AS HEDGE ACCOUNTING (in HUF mn)
Positive fair value of derivative financial assets designated as fair value hedge:
CCIRS and mark-to-market CCIRS designated
as fair value hedge
Interest rate swaps designated as fair value hedge
Total
2020
6,179
641
6,820
2019
3,705
3,758
7,463
146
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 16:
OTHER ASSETS* (in HUF mn)
Other financial assets
Other advances
Receivables from card operations
Prepayments and accrued income on other financial assets
Trade receivables
Accrued day one gain of loans provided
at below-market interest
Receivables from investment services
Stock exchange deals
Receivables due from pension funds and investment funds
Giro clearing accounts
Advances for securities and investments
Receivables from leasing activities
Other financial assets
Loss allowance on other financial assets
Total
Other non-financial assets
Inventories
Prepayments and accrued income
on other non financial assets
Settlement and suspense accounts
Receivables, subsidies from the State, Government
Receivable from the National Asset Management
Other non-financial assets
Impairment on other non-financial assets
Total
2020
26,806
24,816
23,521
17,039
14,465
10,716
10,632
8,323
2,441
774
431
19,057
(18,459)
140,562
78,488
19,307
16,355
11,767
–
11,748
(11,753)
125,912
2019
18,294
28,749
25,498
17,861
10,227
3,896
6,058
15,668
2,817
746
1,768
6,088
(14,617)
123,053
58,420
6,946
6,282
17,910
62
13,778
(11,871)
91,527
An analysis of the movement in the loss allowance on other financial assets is as follows:
Balance as at 1 January
Loss allowance for the period
Use of loss allowance
Reclassified as held for sale
Foreign currency translation difference
Closing balance
2020
14,617
5,302
(1,607)
–
147
18,459
2019
15,053
2,876
(3,455)
(420)
563
14,617
An analysis of the movement in the impairment on other non-financial assets is as follows:
Balance as at 1 January
Impairment for the period
Use of impairment
Transfer to tangible assets subject to operating lease
Foreign currency translation difference
Closing balance
2020
11,871
1,537
(2,219)
–
564
11,753
2019
12,550
2,401
(2,890)
(585)
395
11,871
* Other assets – except income tax receivable and fair value of derivative financial assets designated as fair value hedge – are
expected to be recovered or settled no more than twelve months after the reporting period. Unrealized gains/losses on derivative
financial instruments are recovering in accordance with their maturity.
IFRS consolidated financial statements
147
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 17:
AMOUNTS DUE TO BANKS, THE NATIONAL GOVERNMENTS,
DEPOSITS FROM THE NATIONAL BANKS AND OTHER BANKS
(in HUF mn)
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
In foreign currency
Total
2020
2019
132,182
117,672
249,854
741,772
193,689
935,461
1,185,315
274,871
166,813
441,684
151,415
219,812
371,227
812,911
Interest rates on amounts due to banks, the National Governments,
deposits from the National Banks and other banks are as follows:
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
In foreign currency
Average interest rates on amounts due to banks,
the National Governments, deposits from the National Banks
and other banks denominated in HUF
Average interest rates on amounts due to banks,
the National Governments, deposits from the National Banks
and other banks denominated in foreign currency
2020
2019
0.0%–20.0%
(0.56)%–5.0%
(0.03)%–0.9%
(0.89)%–21.5%*
(2.4)%–2.73%
(2.4)%–17.6%
0.0%–3.84%
(0.45)%–17.6%*
1.00%
1.14%
2.32%
2.05%
NOTE 18:
REPO LIABILITIES (in HUF mn)
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
In foreign currency
Total
2020
–
8,379
8,379
–
109,612
109,612
117,991
2019
488
–
488
–
–
–
488
Interest rates on repo liabilities are as follows:
Interest rates on repo liabilities denominated in HUF (%)
Interest rates on repo liabilities denominated
in foreign currency (%)
2020
–
0.0%–3.85%
2019
(0.85)%
–
* The highest interest rate for within and over one year due to banks relate to loans taken from EBRD in Ukraine.
148
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 19:
FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH
PROFIT OR LOSS (in HUF mn)
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
In foreign currency
Total
2020
2,010
–
2,010
29,886
2,235
32,121
34,131
2019
2,679
–
2,679
28,183
–
28,183
30,862
Interest conditions of financial liabilities designated at fair value through
profit or loss can be analysed as follows:
Interest rates on financial liabilities designated
at fair value denominated in HUF within one year
Interest rates on financial liabilities designated
at fair value denominated in HUF over one year
2020
2019
0.51%–2.5%
0.01%–2.59%
0.0%–2.5%
0.01%–2.59%
NOTE 20:
DEPOSITS FROM CUSTOMERS (in HUF mn)
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
In foreign currency
Total
Interest rates on deposits from customers are as follows:
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
In foreign currency
Average interest rates on deposits from customers
denominated in HUF
Average interest rates on deposits from customers
denominated in foreign currency
An analysis of deposits from customers by type is as follows:
2020
2019
6,383,882
10,990,543
17,374,425
327,165
189,273
516,438
17,890,863
5,454,729
8,977,145
14,431,874
302,049
437,385
739,434
15,171,308
2020
2019
(4.58)%–7.96%
(0.58)%–16.5%
(3.13)%–7.96%
(0.6)%–9.70%
0.01%–3.0%
0.0%–7.75%
(5.09)%–7.96%
0.0%–15%
0.10%
0.47%
0.08%
0.69%
2020
2019
Retail deposits
Corporate deposits
Municipality deposits
Total
10,695,792
6,298,143
896,928
17,890,863
59.8%
35.2%
5.0%
100.0%
9,195,778
5,171,579
803,951
15,171,308
60.6%
34.1%
5.3%
100.0%
* The highest interest rate regarding foreign currency deposits relate to individually agreed deposits in Ukraine.
IFRS consolidated financial statements
149
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 21:
LIABILITIES FROM ISSUED SECURITIES (in HUF mn)
With original maturity
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
In foreign currency
Total
2020
2019
130,676
1,366
132,042
332,125
46
332,171
464,213
26,139
3,816
29,955
363,159
53
363,212
393,167
Interest rates on liabilities from issued securities are as follows:
Issued securities denominated in HUF
Issued securities denominated in foreign currency
Average interest rates on issued securities denominated in HUF
Average interest rates on issued securities denominated
in foreign currency
2020
0.0%–2.5%
0.01%–1.11%
1.82%
2019
0.0%–9.0%
0.74%–6.70%
1.80%
1.44%
0.06%
Issued securities denominated in HUF as at 31 December 2020 (in HUF mn):
Name
Date
of issue
OTPX2021A
OTPX2021B
OTPX2021C
OTPX2021D
OTPX2022A
OTPX2022B
OTPX2022C
OTPX2022D
OTPX2023A
OTPX2023B
OTPX2024A
OTPX2024B
OTPX2024C
OTPRF2021A
OTPRF2021B
OTPRF2021C
OTPRF2021D
OTPRF2021E
OTPRF2022A
OTPRF2022B
OTPRF2022C
OTPRF2022D
OTPRF2022E
OTPRF2022F
OTPRF2023A
OJB2021_I
OJB2023_I
OJB2024_A
OJB2024_C
OJB2024_II
OJB2025_II
OJB2027_I
Other
Total issued securities in HUF
01/04/2011
17/06/2011
19/09/2011
21/12/2011
22/03/2012
18/07/2012
29/10/2012
28/12/2012
22/03/2013
28/06/2013
18/06/2014
10/10/2014
15/12/2014
05/07/2011
20/10/2011
21/12/2011
21/12/2011
21/12/2011
22/03/2012
22/03/2012
28/06/2012
28/06/2012
29/10/2012
28/12/2012
22/03/2013
15/02/2017
05/04/2018
17/09/2018
24/02/2020
10/10/2018
03/02/2020
23/07/2020
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
Maturity
01/04/2021
21/06/2021
24/09/2021
27/12/2021
23/03/2022
18/07/2022
28/10/2022
27/12/2022
24/03/2023
26/06/2023
21/06/2024
16/10/2024
20/12/2024
13/07/2021
25/10/2021
30/12/2021
30/12/2021
30/12/2021
23/03/2022
23/03/2022
28/06/2022
28/06/2022
31/10/2022
28/12/2022
24/03/2023
27/10/2021
24/11/2023
20/05/2024
24/10/2024
24/10/2024
26/11/2025
27/10/2027
Nominal
value
(in HUF mn)
183
245
231
259
201
172
201
248
324
198
241
295
242
2,607
2,894
527
372
76
2,065
831
190
260
761
623
787
114,000
44,120
46,771
64,379
96,800
17,650
65,800
213
464,766
Amortized
cost
(in HUF mn)
246
370
192
325
214
440
233
299
327
225
237
284
232
2,807
2,954
544
381
74
1,920
772
196
251
715
592
740
113,732
44,623
46,639
64,175
95,645
17,499
64,705
213
462,801
Interest conditions
(actual interest rate
in % p.a.)
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
2
1.75
1.35
1.05
2.5
1.5
1.25
NaN
NaN
NaN
NaN
NaN
1.7
1.7
1.7
1.7
0.6
1.3
0.7
0.6
NaN
NaN
NaN
NaN
NaN
1.7
1.7
1.7
1.7
1.7
1.7
1.7
fixed
fixed
floating
floating
fix
fix
fix
Hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
150
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:23)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Issued securities denominated in HUF as at 31 December 2019 (in HUF mn):
Name
Date
of issue
OTPX2020A
OTPX2020B
OTPX2020C
OTPX2020D
OTPX2020E
OTPX2020F
OTPX2020G
OTPX2021A
OTPX2021B
OTPX2021C
OTPX2021D
OTPX2022A
OTPX2022B
OTPX2022C
OTPX2022D
OTPX2023A
OTPX2023B
OTPX2024A
OTPX2024B
OTPX2024C
OTPRF2020A
OTPRF2020B
OTPRF2020C
OTPRF2021A
OTPRF2021B
OTPRF2021C
OTPRF2021D
OTPRF2021E
OTPRF2022A
OTPRF2022B
OTPRF2022C
OTPRF2022D
OTPRF2022E
OTPRF2022F
OTPRF2023A
OJB2020_I
OJB2020_II
OJB2021_I
OJB2023_I
OJB2024_A
OJB2024_B
OJB2024_II
Other
Total issued securities in HUF
25/03/2010
28/06/2010
11/11/2010
16/12/2010
18/06/2014
10/10/2014
15/12/2014
01/04/2011
17/06/2011
19/09/2011
21/12/2011
22/03/2012
18/07/2012
29/10/2012
28/12/2012
22/03/2013
28/06/2013
18/06/2014
10/10/2014
15/12/2014
12/07/2010
12/07/2010
11/11/2010
05/07/2011
20/10/2011
21/12/2011
21/12/2011
21/12/2011
22/03/2012
22/03/2012
28/06/2012
28/06/2012
29/10/2012
28/12/2012
22/03/2013
19/11/2004
31/05/2011
15/02/2017
05/04/2018
17/09/2018
18/09/2018
10/10/2018
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
Hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
Maturity
30/03/2020
09/07/2020
05/11/2020
18/12/2020
22/06/2020
16/10/2020
21/12/2020
01/04/2021
21/06/2021
24/09/2021
27/12/2021
23/03/2022
18/07/2022
28/10/2022
27/12/2022
24/03/2023
26/06/2023
21/06/2024
16/10/2024
20/12/2024
20/07/2020
20/07/2020
05/11/2020
13/07/2021
25/10/2021
30/12/2021
30/12/2021
30/12/2021
23/03/2022
23/03/2022
28/06/2022
28/06/2022
31/10/2022
28/12/2022
24/03/2023
12/11/2020
12/11/2020
27/10/2021
24/11/2023
20/05/2024
24/05/2024
24/10/2024
Nominal
value
(in HUF mn)
238
267
166
177
2,939
2,650
2,372
192
255
231
274
217
183
217
265
340
214
241
311
259
2,152
1,276
2,622
2,402
2,655
505
357
67
1,869
728
171
249
661
538
760
5,503
1,487
114,000
43,600
48,475
55,829
92,000
218
390,132
Amortized
cost
(in HUF mn)
326
285
221
193
2,903
2,551
2,273
253
424
198
305
235
318
278
379
370
268
253
302
249
2,252
1,429
2,662
2,804
2,858
558
385
68
1,797
698
205
278
645
532
746
5,599
1,502
112,979
44,137
48,130
55,461
90,771
218
389,298
Interest conditions
(actual interest rate
in % p.a.)
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
9
9
2
1.75
0.72
0.72
2.5
NaN
NaN
NaN
NaN
0.7
0.2
0.3
NaN
NaN
NaN
NaN
NaN
1.7
1.7
1.7
1.7
0.6
1.3
0.7
0.6
NaN
NaN
NaN
NaN
NaN
NaN
NaN
NaN
1.7
1.7
1.7
1.7
1.7
1.7
1.7
fixed
fixed
fixed
fixed
floating
floating
fix
Issued securities denominated in foreign currency as at 31 December 2020 (in HUF mn):
Name
1
2
3
4
5
OTP_VK1_21/1
OTP_VK1_21/2
OTP_VK1_21/3
OTP_VK1_21/4
Other*
Total issued securities in FX
Total issued securities
Date
of issue
Maturity
20/02/2020
02/04/2020
14/05/2020
18/06/2020
20/02/2021
02/04/2021
14/05/2021
18/06/2021
Type
of FX
USD
USD
USD
USD
Nominal value
FX HUF
mn mn
414
370
351
221
47
1,403
1.39
1.24
1.18
0.74
12
16.55
Amortized cost
FX HUF
mn mn
414
370
351
221
56
1,412
464,213
1.39
1.24
1.18
0.74
14
18.55
Interest conditions
(actual interest rate
in % p.a.)
1.1
0.1
0.01
1.1
floating
floating
floating
floating
* Other category includes promissory notes issued by JSC “OTP Bank” (Russia) in the amount of HUF 56 million as at 31 December 2020 and HUF 116 million as at
31 December 2019.
IFRS consolidated financial statements
151
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:23)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Issued securities denominated in foreign currency as at 31 December 2019 (in HUF mn):
Name
Date
of issue
Maturity
Type
of FX
1
2
3
4
5
6
7
8
9
OTP_VK1_20/1
OTP_VK1_20/2
OTP_VK1_20/3
OTP_VK1_20/4
OTP_VK1_20/5
OTP_VK1_20/6
OTP_VK1_20/7
OTP_VK1_20/8
Other*
Total issued securities in FX
Total issued securities
21/02/2019
04/04/2019
16/05/2019
27/06/2019
15/08/2019
26/09/2019
07/11/2019
19/12/2019
21/02/2020
04/04/2020
16/05/2020
27/06/2020
15/08/2020
26/09/2020
07/11/2020
19/12/2020
USD
USD
USD
USD
USD
USD
USD
USD
Nominal value
FX HUF
mn mn
450
727
263
552
589
220
494
448
103
3,846
1.53
2.47
0.89
1.87
2
0.75
1.68
1.52
22
34.71
Amortized cost
FX HUF
mn mn
452
731
263
552
591
221
495
448
116
3,869
393,167
1.54
2.48
0.89
1.87
2.01
0.75
1.68
1.52
24
36.74
Interest conditions
(actual interest rate
in % p.a.)
1.48
1.42
1.32
1.32
1.2
1.2
1.1
1.1
floating
floating
floating
floating
floating
floating
floating
floating
Hedge accounting
Certain issued structured securities are
volatility of the quoted interest rates of EUR
and HUF. The interest rate risk and foreign
hedged by the Bank with interest rate swaps
exchange risk related to these securities are
(“IRS”) which exchange the fixed and floating
hedged with EUR and HUF IRS transactions,
interest rate with the interest rate of the
where the fixed interests were swapped to
securities between the parties at a notional
payments linked to 3 month HUF BUBOR
amount that equals the nominal amount of
and EURIBOR, resulting in a decrease in the
the hedged securities. These are considered
interest rate and foreign exchange exposure
as fair value hedge relationships as they cover
of issued securities.
the interest rate risk arising from the coupons
of the hedged securities. OTP Bank does not
intend to be exposed to the risk embedded in
the structured bonds, consequently as part of
interest rate swap transaction the structured
Term Note Program in the value
of HUF 200 billion for the year
of 2020/2021
On 21 April 2020 the Bank initiated term
interest payments are swapped to floating
note program in the value of HUF 200 billion
interest rate.
with the intention of issuing registered
dematerialized bonds in public. The NBH
This hedging relationship meets all of the
approved on 9 July 2020 the prospectus
following hedge effectiveness requirements:
of Term Note Program and the disclosure
(cid:588) there is an economic relationship between
as at 10 July 2020. The prospectus is valid for
the hedged item and the hedging
12 months following the disclosure.
instrument
The Issuer can initiate to introduce the bonds
(cid:588) the effect of credit risk does not dominate
issued under the program to the Hungarian
the value changes that result from that
and to other stock exchanges without any
economic relationship
obligations.
(cid:588) the hedge ratio of the hedging relationship
is the same as that resulting from the
quantity of the hedged item that the Bank
actually hedges and the quantity of the
hedging instrument that the Bank actually
Term Note Program in the value
of HUF 200 billion for the year
of 2019/2020
On 23 April 2019 the Bank initiated term
uses to hedge that quantity of hedged item
note program in the value of HUF 200 billion
The cash-flows of the fixed rate securities
dematerialized bonds in public. The NBH
issued by the Bank are exposed to the changes
approved on 25 June 2019 the prospectus
in the HUF/EUR foreign exchange rate and the
of Term Note Program and the disclosure
with the intention of issuing registered
* Other category includes promissory notes issued by JSC “OTP Bank” (Russia) in the amount of HUF 56 million as at 31 December 2020 and HUF 116 million as at
31 December 2019.
152
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:23)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
as at 28 June 2019. The prospectus is valid
issued under the program to the Hungarian,
for 12 months following the disclosure.
Slovakian, Romanian, Bulgarian and Croatian
The Issuer can initiate to introduce the bonds
Stock Exchange without any obligations.
NOTE 22:
DERIVATIVE FINANCIAL LIABILITIES HELD FOR TRADING
(in HUF mn)
Negative fair value of derivative financial liabilities held for trading by type of contracts:
Foreign exchange swaps held for trading
Interest rate swaps held for trading
Foreign exchange forward contracts held for trading
CCIRS and mark-to-market CCIRS held for trading
Held for trading option contracts
Held for trading forward security agreement
Held for trading forward rate agreements
Other derivative transactions held for trading*
Total
2020
39,103
32,960
10,750
7,419
3,843
116
–
10,632
104,823
2019
28,453
46,717
5,561
1,037
3,128
8
32
1,807
86,743
NOTE 23:
NEGATIVE FAIR VALUE OF DERIVATIVE FINANCIAL LIABILITIES
DESIGNATED AS HEDGE ACCOUNTING (in HUF mn)
The negative fair value of derivative financial liabilities designated
as hedge accounting by type of contracts:
CCIRS and mark-to-market CCIRS designated as fair value hedge
Interest rate swaps designated as fair value hedge
Total
2020
6,007
5,334
11,341
2019
1,870
8,839
10,709
* Other category includes: commodity and equity swaps, exchange traded futures and options.
IFRS consolidated financial statements
153
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:23)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 24:
OTHER LIABILITIES* (in HUF mn)
Other financial liabilities
Liabilities connected to Cafeteria benefits
Liabilities from investment services
Accrued expense on other financial liabilities
Accounts payable
Liabilities from card transactions
Giro clearing accounts
Accrued day one gain of loan liabilities
at below-market interest
Advances received from customers
Liabilities due to short positions
Loans from government
Dividend payable
Liabilities due to refunding assets
Other financial liabilities
Subtotal
Other non-financial liabilities
Provision on off-balance sheet commitments
and contingent liabilities
Clearing and giro settlement accounts
Salaries and social security payable
Liabilities related to housing loans
Accrued expense on other non-financial liabilities
Insurance technical reserve
Provision due to CHF loans conversion
at foreign subsidiaries
Other non-financial liabilities
Subtotal
Total
The provisions are detailed as follows:
Commitments and guarantees given
Total provision according to IFRS 9
Pending legal issues and tax litigation
Pensions and other retirement benefit obligations
Other long-term employee benefits
Provision due to CHF loans conversion
at foreign subsidiaries
Restructuring
Other provision
Total provision according to IAS 37
Total
2020
2019
121,711
62,667
42,212
41,460
20,402
14,589
14,391
11,259
9,131
3,435
119
–
48,526
389,902
80,003
101,417
6,638
50,974
20,563
3,935
10,177
15,555
7,040
1,291
108
9,133
31,186
338,020
114,518
102,449
38,912
25,207
8,868
6,997
4,545
1,949
16,839
217,835
607,737
2020
54,810
54,810
34,894
10,975
2,396
1,949
1,531
9,912
61,657
116,467
35,393
24,937
6,055
41,610
10,396
1,985
31,695
254,520
592,540
2019
48,662
48,662
28,650
11,253
2,343
1,985
2,626
8,915
55,772
104,434
2019
28,144
50,919
(42,924)
(1)
5,693
(451)
5,259
2,023
48,662
The movements of provisions according to IFRS 9 can be summarized as follows:
Balance as at 1 January
Provision for the period
Release of provision for the period
Use of provision
Change due to acquisition
Reclassified as held for sale
Transfer
Foreign currency translation differences
Closing balance
2020
48,662
98,703
(90,041)
(2,276)
–
–
–
(238)
54,810
* Other liabilities – except deferred tax and corporate tax liabilities and fair value of derivative financial liabilities designated as
fair value hedge – are expected to be recovered or settled no more than twelve months after the reporting period. Unrealized
gains/losses on derivative financial instruments is recovering in accordance with their maturity. Besides the total other liabilities
mentioned above, which are expected to be recovered or settled more than twelve months after the reporting period are the
following: accrued contractual liabilities, compulsory pension reserve, loans from government and liabilities from preferential
dividend shares.
154
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:23)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
The movements of provisions according to IAS 37 can be summarized as follows:
Balance as at 1 January
Provision for the period
Release of provision for the period
Use of provision
Change due to actuarial gains or losses related
to employee benefits
Change due to acquisition
Reclassified as held for sale
Transfer
Foreign currency translation differences
Closing balance
2020
55,772
23,381
(17,251)
(4,501)
(143)
–
–
–
4,399
61,657
NOTE 25:
SUBORDINATED BONDS AND LOANS (in HUF mn)
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
In foreign currency
Total
Types of subordinated bonds and loans:
Debt securities issued
Deposits
Total
2019
57,285
11,196
(7,538)
(4,438)
173
4,005
(904)
(5,259)
1,252
55,772
2019
–
2,700
2,700
2020
–
2,843
2,843
271,861
271,861
274,704
247,238
247,238
249,938
2020
269,566
5,138
274,704
2019
244,924
5,014
249,938
Interest rates on subordinated bonds and loans are as follows:
Denominated in HUF
Denominated in foreign currency
Average interest rates on subordinated bonds and loans
2020
–
2.5%–5.0%
2.83%
2019
–
2.6%–5.0%
2.82%
Subordinated bonds and loans can be detailed as follows:
Type
Nominal
value
Date of
issuance
Date
of maturity
Issue
price
Interest
conditions
Interest rate
as at
31 December 2020
Subordinated
bond
Subordinated
bond
Subordinated
loan
EUR 231.34 million 07/11/2006
Perpetual
99.875%
EUR 499.8 million 15/07/2019
15/07/2029
99.738%
USD 17.0 million
05/06/2018
30/06/2025
100.00%
Three-month EURIBOR + 3%,
variable after year 10
(payable quarterly)
Fixed 2.875% annual in the
first 5 years and callable after 5 years,
variable after year 5 (payable annually)
calculated as a sum of the initial
margin (320 bp) and the
5 year mid-swap rate prevailing
at the end of the 5 year
Bullet repayment, once at the end
of the loan agreement
2.48%
2.88%
5.00%
IFRS consolidated financial statements
155
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:23)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 26:
SHARE CAPITAL (in HUF mn)
Authorized, issued and fully paid:
Ordinary shares
2020
2019
28,000
28,000
The nominal value of the shares is HUF 100
shareholders. Furthermore there are no
per shares. All of the shares are ordinary
restrictions on the distribution of dividends
shares representing the same rights to the
and the repayment of capital.
NOTE 27:
RETAINED EARNINGS AND RESERVES* (in HUF mn)
NBH warns the financial institutions in an
at the subsidiaries and due to consolidation
executive circular dated 8 January 2021
as well as translation of foreign exchange
not to pay or enter into an irrevocable
differences.
obligation of dividend payment based on
the performance for the financial years ended
In the Consolidated Financial Statements the
2019 and 2020, or any reserves cumulated
Group recognizes the non-monetary items
from previous years until 30 September
at historical cost. The difference between the
2021. Furthermore NBH warns to stop treasury
historical cost of the non-monetary items
share purchases (except share purchase
in forint amount and the translated foreign
related to share based payment programs)
currencies into the presentation currency
until 30 September 2021 too.
using the exchange rate at the balance sheet
date, is presented in the shareholders’ equity
The intention of the Management is paying
as a translation difference. The accumulated
HUF 119,248 million dividend (for the year
amounts of exchange differences were
ended 2019 HUF 69,440 million and for
HUF (3,369) million and HUF (72,404) million
the year ended 2020 HUF 49,808 million)
as at 31 December 2020 and 31 December 2019
regarding which – in accordance with the
respectively.
NBH circular – the Bank doesn’t enter into an
irrevocable obligation. Accordingly it remains
as part of the shareholders’ equity until the
Share capital
Share capital is the portion of the Bank’s
obligation hasn’t been settled.
equity that has been obtained by the issue
of shares in the corporation to a shareholder,
The retained earnings and reserves according
usually for cash.
to IFRS contains the retained earnings
(HUF 744,802 million and HUF 632,436 million)
and reserves (HUF 1,884,274 million and
Retained earnings
Profit of previous years generated by the
HUF 1,686,827 million) as at 31 December 2020
Group that are not distributed to shareholders
and 31 December 2019 respectively. The reserves
as dividends.
include mainly the option reserve, other
reserves, the fair value adjustment of financial
instruments at fair value through other
Other reserves
The other reserves contain separated reserves
comprehensive income, share-based payment
due to statutory provisions.
reserve, fair value of hedge transactions,
additional reserves of Income Certificates
Exchangeable for Shares (“ICES”), changes
Put option reserve
OTP Bank Plc. and MOL Plc. entered into
in equity accumulated in the previous years
a share swap agreement in 16 April 2009,
* See more details about the Consolidated Statement of Comprehensive Income and about the Consolidated statement of Changes
in equity on page 98 and 99.
156
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:23)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
whereby OTP has changed 24,000,000 OTP
ordinary shares for 5,010,501 “A series” MOL
shares. The final maturity of the share swap
Net investment hedge in foreign
operations
Reserve presented as net investment hedge
agreement is 11 July 2022, until which any
in foreign operations in the sharholders’ equity
party can initiate cash or physical settlement
is related to DSK Bank EAD, OTP banka d.d.
of the transaction.
and Crnogorska komercijalna banka a.d.
Put option reserve represents the written put
option over OTP ordinary shares were
accounted as a deduction from equity at the
Extra reserves
The result of ICES bond issuance is presented
date of OTP-MOL share swap transaction.
as extra reserve in the consolidation books
Share-based payment reserve
Share-based payment reserve represents the
due to the detailed conditions below (see the
details below in this note) and therefore any
payment to the owner of the ICES will be
increase in the equity due to the goods or
booked as decreasing item in the reserves.
services were received by the Bank in an
equity-settled share-based payment trans-
action, valued at the fair value of the goods or
services received (see details in Note 39).
Changes in equity accumulated in
the previous year at the subsidiaries
and due to consolidation
The accumulated changes at the subsidiaries
Other comprehensive income
Other comprehensive income comprises
contain the accumulated gains and losses of
the subsidiaries from the first day when they
items of income and expense (including reclas-
were included in the consolidation process.
sification adjustments) that are not recognised
The changes due to consolidation contain the
in profit or loss as required or permitted by
effect on the result of the eliminations in the
other IFRSs.
consolidation process of the previous years.
Retained earnings
Capital reserve
Option reserve
Other reserves
Fair value of financial instruments measured at fair value
through other comprehensive income
Share-based payment reserve
Fair value of derivative financial instruments designated
as cash-flow hedge
Net investment hedge in foreign operations
Extra reserves
Net profit for the year
Changes in equity accumulated in the previous year
at the subsidiaries and due to consolidation
Foreign currency translation differences
Retained earnings and other reserves
Fair value adjustment of securities at fair value through
other comprehensive income
Balance as at 1 January
Change of fair value correction
Deferred tax related to change of fair value correction
Transfer to profit or loss due to reclassification
to FVTPL securities
Transfer to profit or loss due to derecognition
Deferred tax related to accumulated transfer
to profit or loss
Foreign currency translation difference
Closing balance
2020
744,802
52
(55,468)
93,056
61,396
42,573
–
(27,405)
89,935
259,416
2019
632,436
52
(55,468)
87,035
68,314
39,179
2
(18,814)
89,935
412,241
1,424,088
1,136,755
(3,369)
2,629,076
(72,404)
2,319,263
2020
2019
50,272
(10,897)
1,403
(144)
3,329
(472)
467
43,958
29,311
16,258
(1,904)
(15)
7,382
(760)
–
50,272
IFRS consolidated financial statements
157
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:23)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Expected credit loss on securities at fair value through
other comprehensive income
Balance as at 1 January
Increase of loss allowance
Release of loss allowance
Decrease due to sale, derecognition
Foreign currency translation difference
Closing balance
Fair value changes of equity instruments as at fair value
through other comprehensive income
Balance as at 1 January
Change of fair value correction
Deferred tax related to change of fair value correction
Transfer to retained earnings due to derecognition
Foreign currency translation difference
Closing balance
Net investment hedge in foreign operations
Balance as at 1 January
Change of fair value correction on hedging item
Deferred tax related to change of fair value correction
Closing balance
2020
2019
2,927
6,303
(1,441)
(724)
(81)
6,984
3,360
1,368
(1,652)
(149)
–
2,927
2020
2019
15,115
(3,336)
363
(1,746)
58
10,454
10,092
4,026
(616)
1,613
–
15,115
2020
2019
(18,814)
(9,440)
849
(27,405)
(16,288)
(2,776)
250
(18,814)
On 19 October 2006, the Bank sold 14.5 million
shares. The EUR denominated exchangeable
Treasury shares owned by the Group through
bonds are perpetual and the investors can
an issue of ICES. Within the transaction
exercise the conversion right between years
10 million shares owned by OTP Bank, and a
6 and 10. The bonds carry a fixed coupon of
further 4.5 million shares owned by the Group
3.95% during the first 10 years, and thereafter
were sold during the underwriting period
the Issuer has the right to redeem the bonds at
of ICES on the weighted average market price
face value. Following year 10, the bonds carry a
(HUF 7,080) of the Budapest Stock Exchange.
coupon of 3 month EURIBOR +3%. OTP Bank has
The shares have been purchased by Opus
a discretional right to cancel the interest pay-
Securities S.A. (“OPUS”), which issued an
ments. The interest payable is non-cumulative.
exchangeable bond with a total face value
Due to the conditions described above, ICES
of EUR 514,274,000 backed by those shares.
was accounted as an equity instrument and
The exchangeable bonds have been sold at
therefore any payment was accounted
a 32% premium over the selling price of the
as equity distribution paid to ICES holders.
158
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:23)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 28:
TREASURY SHARES (in HUF mn)
Nominal value (Ordinary shares)
Carrying value at acquisition cost
2020
2,392
124,080
2019
1,778
60,931
The changes in the carrying value of treasury
transactions on market authorised by the
shares are due to repurchase and sale
General Assembly.
Change in number of shares
Number of shares as at 1 January
Additions
Disposals
Closing number of shares
Change in carrying value
Balance as at 1 January
Additions
Disposals
Closing balance
2020
17,779,845
8,296,388
(2,151,333)
23,924,900
2020
60,931
85,922
(22,773)
124,080
2019
18,475,833
906,194
(1,602,182)
17,779,845
2019
67,999
8,887
(15,955)
60,931
NOTE 29:
NON-CONTROLLING INTEREST (in HUF mn)
Balance as at 1 January
Increase due to business combination
Non-controlling interest included in net profit for the year
Changes due to ownership structure
Purchase of non-controlling interest
Decrease due to discontinued operation
Foreign currency translation difference
Closing balance
2020
4,956
–
221
–
(382)
(235)
(444)
4,116
2019
2,452
1,736
341
(10)
–
–
437
4,956
The non-controlling interest is not significant in respect of the whole OTP Group.
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:23)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
159
NOTE 30:
INTEREST INCOME, INCOME SIMILAR TO INTEREST INCOME
AND EXPENSE (in HUF mn)
2020
2019
Interest income calculated using the effective
interest method from/on
Loans
Securities at amortized cost
Finance lease receivables
Securities at fair value through other
comprehensive income
Placements with other banks
Banks and balances with the National Banks
Liabilities (negative interest expense)
Repo receivables
Subtotal
Income similar to interest income from
Swap deals related to placements with other banks
Loans mandatorily at fair value through profit or loss
Swap deals related to credit institutions
Rental income
Non-trading securities mandatorily at fair value through
profit or loss
Subtotal
Total interest income and income similar
to interest income
Interest expense due to/from/on
Swaps related to banks, National Governments
and to deposits from the National Banks
Deposits from customers
Swaps related to deposits from customers
Banks, National Governments and on deposits
from the National Banks
Issued securities
Subordinated and supplementary bonds and loans
Depreciation of assets subject to operating lease
and investment properties
On financial assets (negative interest income)
Leases
Repo liabilities
Other
Total interest expense
658,579
69,905
54,046
44,782
7,572
5,103
1,628
286
841,901
78,577
28,251
20,322
8,363
473
135,986
977,887
82,301
53,196
17,226
13,785
7,750
7,718
5,624
5,014
1,623
653
326
195,216
599,390
62,468
40,914
46,521
8,989
2,037
1,532
788
762,639
78,113
16,653
28,710
9,819
202
133,497
896,136
81,261
59,242
24,789
10,173
6,749
4,743
6,147
2,036
1,652
148
155
197,095
160
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:18)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 31:
LOSS ALLOWANCES/IMPAIRMENT AND PROVISIONS (in HUF mn)
2020
2019
Loss allowance on loans
Loss allowance for the period
Release of loss allowance
Income from loan recoveries
Modification loss on loans measured
at amortized cost
Change in the fair value attributable to changes
in the credit risk of loans mandatorily measured
at fair value through profit of loss
Loss allowance on finance lease
Loss on financial lease
Loss allowance/(Release of loss allowance)
on placements and on repo receivables
Allowance for the period
Release of allowance
Gains on placements due to write-off and sale
Loss allowance/(Release of loss allowance)
on securities at fair value through other comprehensive
income and on securities at amortized cost
Allowance for the period
Release of allowance
Release of impairment of intangible, tangible assets
subject to operating lease and of investment properties
Impairment for the period
Release of impairment
Provision for commitments and guarantees given
Provision for the period
Release of provision
Loss allowances/Impairment and provisions
647,873
(390,102)
(98,300)
29,773
3,262
9,972
310
202,788
16,476
(15,691)
4
789
11,370
(4,061)
7,309
178
(1,056)
(878)
98,703
(90,041)
8,662
218,670
NOTE 32:
NET PROFIT FROM FEES AND COMMISSIONS (in HUF mn)
Income from fees and commissions:
Fees and commissions related to lending*
Deposit and account maintenance fees and commissions
Fees and commissions related to the issued bank cards
Currency exchange gains and losses
Fees related to cash withdrawal
Fees and commissions related to fund management
Fees and commissions related to security trading
Insurance fee income
Other
Fees and commissions from contracts with customers
Total
2020
33,233
173,578
83,474
46,290
39,120
28,800
25,830
13,603
42,601
453,296
486,529
398,022
(297,925)
(60,735)
150
4,376
4,440
888
49,216
3,561
(3,650)
(146)
(235)
746
(755)
(9)
2,246
(2,526)
(280)
49,832
(41,837)
7,995
56,687
2019
25,687
166,483
76,247
33,736
40,206
35,354
24,293
14,670
30,408
421,397
447,084
* Such kinds of fees and commissions related to lending which aren’t included in the effective interest rate calculation due to their
nature.
IFRS consolidated financial statements
161
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:18)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Fee type
Deposit and account
maintenance fees
and commissions
and fees related to
cash withdrawal
Fees and commission
related to the issued
bank cards
Fees and commissions
related to security
account management
services
Nature and timing of obligation settlement,
and the significant payment terms
The Group provides a number of account management services for both retail and
corporate customers in which they charge a fee. Fees related to these services can be
typically account transaction fees (money transfer fees, direct debit fees, money standing
order fees etc.), internet banking fees (e.g. OTP Direct fee), account control fees (e.g. SMS
fee), or other fees for occasional services (account statement fees, other administration
fees etc.).
Fees for ongoing account management services are charged to the customer’s account
on a monthly basis. The fees are commonly fix amounts that can be vary per account
package and customer category.
In the case of the transaction based fees where the services include money transfer the
fee is charged when the transaction takes place. The rate of the fee is typically determined
in a certain % of the transaction amount. In case of other transaction-based fees (e.g. SMS
fee), the fee is settled monthly.
In case of occasional services the Group basically charges the fees when the services are
used by the customer. The fees can be fixed fees or they can be set in %.
The rates are reviewed by the Group regularly.
The Group provides a variety of bank cards to its customers, for which different fees are
charged. The fees are basically charged in connection with the issuance of cards and the
related card transactions.
The annual fees of the cards are charged in advance in a fixed amount. The amount of the
annual card fee depends on the type of card.
In case of transaction-based fees (e.g. cash withdrawal/payment fee, merchant fee,
interchange fee etc.), the settlement of the fees will take place immediately after the
transaction or on a monthly basis. The fee is typically determined in % of the transaction
with a fixed minimum amount.
For all other cases where the Group provides a continuous service to the customers
(e.g. card closing fee), the fees are charged monthly. The fee is calculated in a fix amount.
The rates are reviewed by the Group regularly.
The Group provides its clients security account management services. Fees will be charged
for account management and transactions on accounts.
Account management fees are typically charged quarterly or annually. The amount is
determined in %, based on the stocks of securities managed by the clients on the account
in a given period.
Fees for transactions on the securities account are charged immediately after the
transaction. They are determined in %, based on the transaction amount.
Fees for complex services provided to clients (e.g. portfolio management or custody) are
typically charged monthly or annually. The fees are fixed monthly amounts and in some
cases a bonus fee are charged.
Fees and commissions
related to fund
management
Fees from fund management services provided to investment funds and from portfolio
management provided to insurance companies, funds. The fee income are calculated
on the basis of net asset value of the portfolio and by the fee rates determined in the
contracts about portfolio management.
Revenue recognition
under IFRS 15
Fees for ongoing account
management services
are charged on a monthly
basis during the period
when they are provided.
Transaction-based fees
are charged when the
transaction takes place
or charged monthly at the
end of the month.
Fees for ongoing services
are charged on a monthly
basis during the period
when they are provided.
Transaction-based fees
are charged when the
transaction takes place
or charged monthly at the
end of the month.
Fees for ongoing services
are charged quarterly
or annually during the
period when they are
provided. The fees are
accrued monthly.
Transaction-based fees
are charged when the
transaction takes place.
Fees for ongoing services
are charged usually on
monthly (mutual funds)
or semi-annually (venture
capital funds) during the
period when they are
provided but accrued
monthly.
Fees for ongoing services
are charged on a monthly
basis during the period
when they are provided.
Net insurance fee
income
Other
Due to the fact that the Group rarely provides insurance services to its clients, only acts
as an agent, the fee income charged to the customers and fees payable to the insurance
company are presented net in the fee income.
In addition, agency fee charged for the sale of insurance contracts is also recorded in this
line. The fee is charged on a monthly basis and determined in %.
Fees that are not significant in the Group total income are included in Other fees category.
Such fees are safe lease, special procedure fee, account rent fee, fee of a copy of document
etc.
Other fees may include charges for continuous services or for ad hoc administration
services. Continuous fees are charged monthly (e.g., safe lease fees) at the beginning of
the period, typically at a fixed rate. Fees for ad hoc services are charged immediately after
the service obligation were met, usually in a fixed amount.
Fees for ongoing services
are charged on a monthly
basis during the period
when they are provided.
Fees for ad hoc services
are charged when the
transaction takes place.
162
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:18)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Expense from fees and commissions:
Fees and commissions paid on loans
Fees and commissions related to issued bank cards
Interchange fees
Fees and commissions related to deposits
Fees and commissions related to security trading
Cash withdrawal transaction fees
Fees and commissions related to collection of loans
Insurance fees
Postal fees
Money market transaction fees and commissions
Other
Total
Net profit from fees and commissions
2020
6,974
32,487
18,958
7,000
3,776
3,696
1,447
1,036
714
113
12,695
88,896
397,633
NOTE 33:
OTHER OPERATING INCOME AND EXPENSES
AND OTHER ADMINISTRATIVE EXPENSES (in HUF mn)
Other operating income
Negative goodwill due to acquisition
Gains on transactions related to property activities
Rental income
Income from computer programming
Income from real estate management
Gains on transactions related to insurance activity
Non-repayable assets received
Other income from non-financial activities
Total
Other operating expenses
Financial support for sport association and organization of public utility
Provision for off-balance sheet commitments and contingent liabilities
Loss allowance on other financial assets
Impairment on other non-financial assets
Non-repayable assets contributed
Expense from losses due to foreign currency loan conversion at foreign subsidiaries
Impairment on tangible and intangible assets
Fine imposed by Competition Authority
Release of provision due to foreign currency loan conversion at foreign subsidiaries
(Release of impairment)/Impairment on investments
Other
Other expense from non-financial activities
Other costs
Total
Other administrative expenses
Personnel expenses
Wages
Taxes related to personnel expenses
Other personnel expenses
Subtotal
Depreciation, amortization of tangible, intangible assets,
right-of-use assets and goodwill impairment*
Other administrative expenses
Taxes, other than income tax**
Services
Professional fees
Administration expenses
Advertising
Rental fees
Subtotal
Total
2020
7,504
3,631
1,835
1,529
1,092
721
65
17,084
33,461
12,080
6,336
6,036
1,537
688
224
51
25
(206)
(381)
13,057
5,551
7,506
39,447
242,970
42,576
23,096
308,642
92,761
103,343
100,031
44,542
35,552
17,913
4,883
306,264
707,667
2019
3,146
29,528
15,405
5,422
3,132
3,642
948
1,122
975
73
9,510
72,903
374,181
2019
80,667
8,230
1,308
1,080
446
848
174
18,340
111,093
9,568
3,827
3,774
2,481
3,627
274
2,358
143
(169)
3,342
15,533
6,361
9,172
44,758
214,409
40,902
21,443
276,754
81,935
96,932
88,579
38,362
32,041
18,794
7,820
282,528
641,217
* See details in Note 13.
** Special tax of financial institutions was paid by the Group in the amount of HUF 17,665 million for the year 2020 and HUF 12,043 million for the year 2019, recognized as
an expense thus decreased the corporate tax base. For the year ended 31 December 2020 financial transaction levy was paid by the Bank in the amount of HUF 60 billion
while for the year ended 31 December 2019 the same dutiy was HUF 61 billion.
IFRS consolidated financial statements
163
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:18)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
The table below contains the detailing of the fees for non-audit services:
Deloitte Auditing and Consulting Ltd.
OTP – annual audit – separate financial statements
OTP – annual audit – consolidated financial statements
Other audit services based on statutory provisions
to OTP Group members
Other services providing assurance
Other non-audit services
Total
Deloitte Network
Audit based on statutory provisions
Other services providing assurance
Tax consulting services
Other non-audit services
Total
2020
95
14
861
4
76
1,050
2020
885
157
67
508
1,617
2019
53
14
970
4
92
1,133
2019
779
27
46
710
1,562
NOTE 34:
INCOME TAXES (in HUF mn)
The Group is presently liable for income tax at
10% in Bulgaria, 12% in Moldova, 12.5% in Cyprus,
rates between 9% and 35% of taxable income.
15% in Serbia and Albania, 16% in Romania,
Deferred tax is calculated at the income tax
20% in Russia, 25.5% in the Netherlands and
rate of 9% in Hungary and Montenegro,
35% in Malta.
18% in Ukraine and Croatia, 19% in Slovenia,
The breakdown of the income tax expense is:
Current tax expense
Deferred tax expense
Total
A reconciliation of the net deferred tax asset/liability is as follows:
Balance as at 1 January
Deferred tax expense in profit or loss
Deferred tax receivable/(liability) related to items recognized
directly in equity and in Comprehensive Income
Due to merge of subsidiary
Due to sale of subsidiary
Foreign currency translation difference
Closing balance
2020
25,543
1,833
27,376
2020
(2,652)
(1,833)
3,555
(919)
–
(1,824)
(3,673)
2019
42,591
7,311
49,902
2019
13,904
(7,311)
(877)
–
(9,068)
700
(2,652)
164
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:18)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
A breakdown of the deferred tax assets are as follows:
Provision for off-balance sheet commitments
and contingent liabilities, derivative financial instruments
Premium and discount amortization on bonds
Loss allowance on granted loans
Loss allowance/impairment on other financial,
non-financial assets
Unused tax allowance
Fair value adjustment of derivative financial instruments
Difference in depreciation and amortization
Difference due to IFRS 9
Difference in accounting for leases
Amounts unenforceable by tax law
Tax accrual caused by negative taxable income
Adjustment from effective interest rate method
Temporary differences arising on consolidation
Fair value adjustment of securities at fair value through
profit or loss and through other comprehensive income
Other
Deferred tax asset
A breakdown of the deferred tax liabilities are as follows:
Fair value adjustment of securities at fair value through
profit or loss and through other comprehensive income
Difference in depreciation and amortization
Deferred tax due to acquisition
Provision for off-balance sheet commitments
and contingent liabilities, derivative financial instruments
Loss allowance on granted loans
Fair value adjustment of derivative financial instruments
Amounts unenforceable by tax law
Loss allowance/impairment on other financial,
non-financial assets
Difference due to IFRS 9
Temporary differences arising on consolidation
Premium and discount amortization on bonds
Other
Deferred tax liabilities
Net deferred tax asset/(liability)
(the amounts presented in the statement of financial positions)
Deferred tax assets
Deferred tax liabilities
A reconciliation of the income tax income/expense is as follows:
Profit before income tax
Income tax expense at statutory tax rates
Income tax adjustments due to permanent differences
are as follows
Share-based payment
Correction on tax basis due to change of accounting policy
Amounts unenforceable by tax law
Permanent differences from unused tax losses
Deferred use of tax allowance
Use of tax allowance in the current year
Other
Income tax expense
Effective tax rate
2020
4,650
4,198
4,083
3,440
1,552
1,351
1,061
356
298
247
238
127
120
93
2,895
24,709
2019
3,948
4,975
12,187
3,238
398
553
1,074
483
156
210
902
254
827
2,766
6,825
38,796
2020
2019
(11,836)
(13,798)
(7,858)
(1,425)
(534)
(489)
(105)
(102)
(83)
(52)
–
–
(5,898)
(28,382)
(3,673)
22,317
(25,990)
2020
281,422
36,847
305
230
(38)
(167)
(1,039)
(2,023)
(6,739)
27,376
9.73%
(9,200)
(9,720)
(408)
(23)
–
(104)
(75)
(70)
(598)
(2,588)
(4,864)
(41,448)
(2,652)
26,543
(29,195)
2019
467,152
55,812
319
–
(58)
–
5,046
(6,975)
(4,242)
49,902
10.68%
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:18)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
165
NOTE 35:
LEASE (in HUF mn)
The Group as a lessee
Right-of-use assets by class of underlying assets as at 31 December 2020:
2020
Depreciation expense of right-of-use assets
Additions to right-of-use assets
Carrying amount of right-of-use assets
at the end of the reporting period
Property
15,933
17,999
45,642
Office
equipment and
vehicles
514
250
641
Right-of-use assets by class of underlying assets as at 31 December 2019:
2019
Depreciation expense of right-of-use assets
Additions to right-of-use assets
Carrying amount of right-of-use assets
at the end of the reporting period
Property
13,272
21,081
52,038
Office
equipment and
vehicles
1,008
842
912
Total
16,447
18,249
46,283
Total
14,280
21,923
52,950
The total cash outflow for leases was
The Group mainly leases real estate, a
HUF 23,028 million and HUF 20,603 million
significant part of its right-of-use assets are
in year 2020 and 2019, respectively.
related to branch offices, a smaller part to
office buildings and office space.
Leasing liabilities by maturities:
Within one year
Over one year
Total
Lease liabilities by payments:
Arising from fixed lease payments
Arising from variable lease payments
Total
2020
10,937
37,514
48,451
2020
35,018
13,433
48,451
2019
9,789
44,405
54,194
2019
42,751
11,443
54,194
On 31 December 2020, HUF 126 million is the
leases not yet commenced to which the Group
lease payment to be paid in the future due to
is committed.
Amounts recognized in profit or loss:
Interest expense on lease liabilities
Expense relating to short-term leases
Expense relating to leases of low value assets
Expense relating to variable lease payments not included
in the measurement of lease liabilities
Income from subleasing right-of-use assets
2020
1,623
3,857
721
2
405
2019
1,652
5,923
382
4
6
166
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:18)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
The Group as a lessor
The Group’s leasing activities are most
commercial vehicles, vessels and
construction machinery.
significant in Hungary, Bulgaria, Slovenia,
The Group manages the risk associated
Ukraine and Croatia. The main activity
with the rights held in the underlying assets
of the leasing companies is finance leasing.
by, inter alia, buy-back agreements,
About half of the underlying assets are
determining the residual values on level lower
passenger cars, besides this the Group
than future market values and registering
leases mainly agricultural machinery,
pledge on the underlying asset.
The Group as a lessor,
finance lease
Amounts receivable under finance leases:
In less than 1 year
Between 1 and 2 years
Between 2 and 3 years
Between 3 and 4 years
Between 4 and 5 years
More than 5 years
Total receivables from undiscounted lease payments
Unguaranteed residual values
Gross investment in the lease
Less: unearned finance income
Present value of minimum lease payments receivable
Loss allowance
Net investment in the lease
2020
410,639
298,354
211,257
127,052
71,428
44,473
1,163,203
796
1,163,999
(88,257)
1,075,742
(24,602)
1,051,140
An analysis of the change in the gross values on finance receivables is as follows:
Balance as at 1 January
Increase due to acquisition
Additions due to new contracts
Additions due to interest income and amortized fees
Increase in residual value guarantees
Decrease in residual value guarantees
Decrease due to regular lease payment
Decrease due to sale
Decrease due to write-off
Decrease due to early repayment
Decrease due to repossession of the asset
Foreign currency translation difference
Closing balance
2020
982,853
–
372,664
54,110
–
–
(328,357)
(3,924)
(349)
(52,703)
(4,422)
55,870
1,075,742
An analysis of the change in the loss allowance on finance receivables is as follows:
Balance as at 1 January
Loss allowance for the period
Release of loss allowance
Use of loss allowance
Partial write-off
Foreign currency translation difference
Closing balance
2020
13,590
23,807
(13,240)
(21)
(50)
516
24,602
2019
317,799
238,249
196,142
139,292
93,361
49,639
1,034,482
401
1,034,883
(52,030)
982,853
(13,590)
969,263
2019
519,004
344,286
432,625
52,380
4,430
(2,657)
(346,289)
(3,629)
(848)
(20,906)
(3,961)
8,418
982,853
2019
9,005
13,415
(8,535)
(809)
–
514
13,590
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:18)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
167
Result from finance leases:
Selling profit or loss
Finance income on the net investment in the lease
Income relating to variable lease payments not included
in the measurement of the net investment in the lease
2020
249
54,046
–
2019
(78)
40,914
–
The Group as a lessor,
operating lease
Amounts receivable under operating leases:
In less than 1 year
Between 1 and 2 years
Between 2 and 3 years
Between 3 and 4 years
Between 4 and 5 years
More than 5 years
Total receivables from undiscounted lease payments
2020
11,285
8,634
4,856
2,692
1,653
20
29,140
2019
11,990
6,928
5,033
3,955
1,781
491
30,178
Result from operating leases:
Lease income
Therein lease income relating to variable lease payments
that do not depend on an index or a rate
2020
9,861
–
2019
11,127
–
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn)
A financial instrument is any contract that
further restricted by sub-limits covering on and
gives rise to a financial asset of one entity and
off-balance sheet exposures and daily delivery
a financial liability or equity instrument of
risk limits in relation to trading items such as
another entity.
forward foreign exchange contracts. Actual
Financial instruments may result in certain
exposures against limits are monitored daily.
risks to the Group. The most significant risks
the Group faces include:
Exposure to credit risk is managed through
36.1 Credit risk
regular analysis of the ability of borrowers
and potential borrowers to meet interest and
principal repayment obligations and by
changing these lending limits when appropriate.
The Group takes on exposure to credit risk
Exposure to credit risk is managed by obtaining
which is the risk that a counter-party will be
collateral, corporate and personal guarantees.
unable to pay amounts in full when due.
The Group structures the levels of credit risk
it undertakes by placing limits on the amount
of risk accepted in relation to one borrower,
or banks of borrowers, and to geographical
Defining the expected credit loss
on individual and collective basis
areas and loan types. Such risks are monitored
On individual basis:
on a periodical basis and subject to an annual
Individually assessed are the non-retail or
or more frequent review. The exposure to
non, micro and small enterprise exposure of
any borrower including banks and brokers is
significant amount on a stand-alone basis:
168
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:18)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
(cid:588) exposure in stage 3,
(cid:588) exposure which are not in stage 3,
(cid:588) exposure in workout management
significant on a stand-alone basis,
(cid:588) purchased or originated credit-impaired
(cid:588) purchased or originated credit-impaired
instruments which are in accordance with
instruments which are in accordance
the conditions mentioned above
with the conditions mentioned above.
The calculation of impairment must be
In the collective impairment methodology
prepared and approved by the risk manage-
credit risk and the change of credit risk can
ment functional areas. The calculation, all
be correctly captured by understanding the
relevant factors (amortized cost, original and
risk characteristics of the portfolio. In order
current EIR, contracted and expected cash-flows
to achieve this the main risk drivers shall be
(from business and/or collateral) for the
identified and used to form homogeneous
individual periods of the entire lifecycle, other
segments having similar risk characteristics.
essential information enforced during the
The segmentation is expected to stay stable
valuation) and the criteria thereof (including
from month to month however a regular
the factors underlying the classification as
(at least yearly) revision of the segmentation
stage 3) must be documented individually.
process should be set up to capture the change
of risk characteristics. The segmentation must
The expected credit loss of the exposure equals
be performed separately for each parameter,
the difference of the items’ AC (gross book
since in each case different factors may have
value) on the valuation date and the present
relevance.
value of the receivable's expected cash-flows
The Bank's Headquarter Group Reserve
discounted to the valuation date by the
Committee stipulates the guidelines related
exposure's original effective interest rate (EIR)
to the collective impairment methodology
(calculated at the initial recognition, or in the
at group level. In addition, it has right of
case of variable rate, recalculated due to the
agreement in respect of the risk parameters
last interest rate change). The estimation of the
(PD – probability of default, LGD – loss given
expected future cash-flows should be forward
default, EAD – exposure at default) and
looking, it must also contain the effects of the
segmentation criteria proposed by the group
possible change of macroeconomic outlook.
members.
At least two scenarios must be used for the
The review of the parameters must be
estimation of the expected cash-flow. It should
performed at least annually and the results
be at least one scenario in which the entity
should be approved by the Group Reserve
anticipates that realized cash-flows will be
Committee. Local Risk Managements are
significantly different from the contractual
responsible for parameter estimations/updates,
cash-flows. Probability weights must be
macroeconomic scenarios are calculated by
allocated to the individual scenarios.
OTP Bank Headquarter for each subsidiary
The estimation must reflect the probability
and each parameter. Based on the consensus
of the occurrence and non-occurrence of the
proposal of Local Risk Management and
credit loss, even if the most probable result
OTP Bank Headquarter, the Group Reserve
is the non-occurrence of the loss.
Committee decides on the modification of
parameters (all parameters for impairment
On collective basis:
calculation).
The following exposures are subject to
At least on a yearly basis the impairment
collective assessment:
parameters should be backtested as well.
(cid:588) retail exposure irrespective of the amount,
The expected loss calculation should be
(cid:588) micro and small enterprise exposures
forward looking, including forecasts of future
irrespective of the amount,
economic conditions. This may be achieved
(cid:588) all other exposure which are insignificant
by applying 3–5 different macroeconomic
on a stand-alone basis and not part of the
scenarios, which may be integrated in the PD,
workout management,
LGD and EAD parameters.
IFRS consolidated financial statements
169
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:18)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
36.1.1 Financial instruments by stages
Gross carrying amount and accumulated loss allowance of financial assets at amortized
cost and of interest bearing securities at fair value through other comprehensive income
and financial commitments and provision on them by stages:
As at 31 December 2020:
Placements with other banks
Repo receivables
Mortgage loans
Loans to medium and large corporates
Consumer loans
Loans to micro and small enterprises
Car-finance loans
Municipal loans
Loans at amortized cost
Finance lease receivable
Interest bearing securities at fair value through other comprehensive income*
Securities at amortized cost
Financial assets total
Loan commitments given
Financial guarantees given
Other commitments given
Financial liabilities total
As at 31 December 2019:
Placements with other banks
Repo receivables
Mortgage loans
Loans to medium and large corporates
Consumer loans
Loans to micro and small enterprises
Car-finance loans
Municipal loans
Loans at amortized cost
Finance lease receivable
Interest bearing securities at fair value through other comprehensive income*
Securities at amortized cost
Financial assets total
Loan commitments given
Financial guarantees given
Other commitments given
Financial liabilities total
Carrying amount/
Exposure
1,148,743
190,849
3,311,651
4,342,003
2,689,621
521,578
362,425
447,564
11,674,842
1,051,140
2,101,384
2,624,920
18,791,878
3,151,051
796,961
954,544
4,902,556
Carrying amount/
Exposure
342,922
67,157
2,882,136
3,842,864
2,629,730
408,813
306,228
343,750
10,413,521
969,263
2,386,632
1,968,072
16,147,567
2,955,152
641,925
601,412
4,198,489
Stage 1
1,150,113
191,141
2,729,387
3,758,377
2,317,004
391,810
292,973
445,039
9,934,590
857,452
2,099,713
2,629,778
16,862,787
3,034,782
777,513
931,515
4,743,810
Stage 1
343,224
67,219
2,675,104
3,672,225
2,458,980
371,093
272,230
343,370
9,793,002
867,905
2,386,632
1,970,083
15,428,065
2,937,741
635,410
600,052
4,173,203
Gross carrying amount/
Stage 2
1
–
522,312
604,480
397,170
141,197
71,576
5,501
1,742,236
183,719
1,671
–
1,927,627
141,527
28,646
28,214
198,387
Gross carrying amount/
Stage 2
147
–
134,459
136,145
209,035
35,128
34,352
3,257
552,376
86,222
–
–
638,745
37,380
11,864
4,478
53,722
* Interest bearing securities at fair value through other comprehensive income are recognized in the Consolidated statement of financial position as at fair value (see in Note 8).
Loss allowances for securities at fair value through other comprehensive income that are in Stage 1 and/or in Stage 2 is recognized in the Other comprehensive income.
It is included in the accumulated loss allowance of this table showed above.
170
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:16)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Notinal value
Stage 3
118
-
174,137
167,402
318,448
34,721
8,370
616
703,694
33,606
-
799
738,217
5,827
5,065
4,277
15,169
Notinal value
Stage 3
29
-
203,089
168,671
274,696
38,668
6,189
403
691,716
26,967
-
728
719,440
4,447
5,740
8,110
18,297
POCI
-
-
70,809
31,744
13,988
4,105
3,219
-
123,865
965
-
-
124,830
-
-
-
-
POCI
-
-
19,760
25,399
7,109
4,116
4,362
-
60,746
1,759
-
-
62,505
-
-
-
-
Total
1,150,232
191,141
3,496,645
4,562,003
3,046,610
571,833
376,138
451,156
12,504,385
1,075,742
2,101,384
2,630,577
19,653,461
3,182,136
811,224
964,006
4,957,366
Total
343,400
67,219
3,032,412
4,002,440
2,949,820
449,005
317,133
347,030
11,097,840
982,853
2,386,632
1,970,811
16,848,755
2,979,568
653,014
612,640
4,245,222
Stage 1
1,377
292
10,486
43,544
42,050
5,671
1,732
2,668
106,151
4,141
6,856
4,858
123,675
19,914
10,044
7,339
37,297
Stage 1
451
62
6,877
39,412
53,266
5,656
1,922
2,788
109,921
3,805
2,927
2,014
119,180
21,254
6,927
8,316
36,497
Accumulated loss allowance/Provision
Stage 3
111
-
101,972
98,800
232,138
24,654
5,735
271
463,570
12,188
-
799
476,668
2,539
2,769
1,150
6,458
Stage 2
1
-
29,970
67,479
75,111
17,982
3,746
653
194,941
8,103
128
-
203,173
8,632
1,450
973
11,055
POCI
-
-
42,566
10,177
7,690
1,948
2,500
-
64,881
170
-
-
65,051
-
-
-
-
Accumulated loss allowance/Provision
Stage 3
22
-
99,533
100,178
222,937
28,469
4,904
225
456,246
7,320
-
725
464,313
1,665
3,188
2,655
7,508
Stage 2
5
-
4,926
15,169
39,808
4,934
1,286
267
66,390
2,383
-
-
68,778
1,497
974
257
2,728
POCI
-
-
38,940
4,817
4,079
1,133
2,793
-
51,762
82
-
-
51,844
-
-
-
-
Total
1,489
292
184,994
220,000
356,989
50,255
13,713
3,592
829,543
24,602
6,984
5,657
868,567
31,085
14,263
9,462
54,810
Total
478
62
150,276
159,576
320,090
40,192
10,905
3,280
684,319
13,590
2,927
2,739
704,115
24,416
11,089
11,228
46,733
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:16)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
171
36.1.2 Movement table of loss allowance/provision
on financial instruments
Movement of loss allowance on financial assets at amortized cost and on interest bearing
securities at fair value through other comprehensive income and of provision of financial
commitments:
As at 31 December 2020:
Stage 1
Placements with other banks
Repo receivables
Loans at amortized cost
Finance lease receivables
Interest bearing securities at fair value through other
comprehensive income and securities at amortized cost
Stage 2
Placements with other banks
Repo receivables
Loans at amortized cost
Finance lease receivables
Interest bearing securities at fair value through other
comprehensive income and securities at amortized cost
Stage 3
Placements with other banks
Repo receivables
Loans at amortized cost
Finance lease receivables
Interest bearing securities at fair value through other
comprehensive income and securities at amortized cost
Loss allowance on financial assets subtotal
POCI
Loans at amortized cost
Finance lease receivables
Loss allowance on financial assets total
Loan commitments and financial guarantees given – stage 1
Loan commitments and financial guarantees given – stage 2
Loan commitments and financial guarantees given – stage 3
Provision on financial liabilities total
Opening
balance
119,180
451
62
109,921
3,805
4,941
68,778
5
–
66,390
2,383
–
464,313
22
–
456,246
7,320
725
652,271
51,844
51,762
82
704,115
36,497
2,728
7,508
46,733
Increases due
to origination
and acquisition
Decreases due to
derecognition
141,735
10,430
306
125,137
1,884
3,978
57,383
–
–
53,445
3,938
–
119,894
–
–
117,198
2,696
–
319,012
16,933
16,933
–
335,945
20,712
3,984
1,071
25,767
(42,569)
(263)
–
(40,604)
(739)
(963)
(15,678)
–
–
(15,537)
(141)
–
(99,345)
–
–
(98,810)
(535)
–
(157,592)
(11,752)
(11,752)
–
(169,344)
(2,118)
(458)
(570)
(3,146)
172
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:16)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Transfers
between
stages (net)
(185,201)
–
–
(183,599)
(1,602)
–
83,013
–
–
81,777
1,236
–
99,117
–
–
98,813
304
–
(3,071)
3,071
3,009
62
–
(900)
351
549
–
Changes due to
change in
credit risk
(net)
Changes due to
modifications
without
derecognition
(net)
Decrease in loss
allowance
account due to
write-offs
Other
adjustments
Closing
balance
84,111
(12,805)
(76)
92,372
1,034
3,586
3,297
–
–
2,802
367
128
(15,385)
45
–
(15,913)
483
–
72,023
1,527
1,501
26
73,550
(15,344)
4,474
(3,545)
(14,415)
(4,294)
–
–
(4,132)
(162)
–
6,130
–
–
6,208
(78)
–
364
–
–
373
(9)
–
2,200
489
489
–
2,689
(453)
237
257
41
(56)
–
–
(55)
(1)
–
(98)
–
–
(98)
–
–
(92,476)
–
–
(92,226)
(250)
–
(92,630)
(735)
(735)
–
(93,365)
(1,785)
–
–
(1,785)
10,769
3,564
–
7,111
(78)
172
348
(4)
–
(46)
398
–
186
44
–
(2,111)
2,179
74
11,303
3,674
3,674
–
14,977
688
(261)
1,188
1,615
123,675
1,377
292
106,151
4,141
11,714
203,173
1
–
194,941
8,103
128
476,668
111
–
463,570
12,188
799
803,516
65,051
64,881
170
868,567
37,297
11,055
6,458
54,810
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:16)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
173
As at 31 December 2019:
Opening
balance
Increases due
to origination
and acquisition
Decreases due to
derecognition
Stage 1
Placements with other banks
Loans at amortized cost
Interest bearing securities at fair value through other
comprehensive income and securities at amortized cost
Stage 2
Placements with other banks
Loans at amortized cost
Interest bearing securities at fair value through other
comprehensive income and securities at amortized cost
Stage 3 and POCI
Placements with other banks
Loans at amortized cost
Interest bearing securities at fair value through other
comprehensive income and securities at amortized cost
Loss allowance on financial assets subtotal
Loan commitments and financial guarantees given – stage 1
Loan commitments and financial guarantees given – stage 2
Loan commitments and financial guarantees given – stage 3
Provision on financial liabilities total
96,264
463
90,469
5,332
58,460
12
58,448
–
532,691
22
531,964
705
687,415
21,457
2,821
3,775
28,053
103,075
3,975
97,486
1,614
19,435
2
19,433
–
28,342
–
27,617
725
150,852
16,460
1,188
3,283
20,931
(26,715)
(144)
(25,619)
(952)
(14,881)
–
(14,881)
–
(75,635)
–
(74,853)
(782)
(117,231)
(4,010)
(92)
(2,138)
(6,240)
174
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:16)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Transfers
between
stages (net)
Changes due to
change in
credit risk
(net)
Changes due to
modifications
without
derecognition
(net)
Decrease in loss
allowance
account due to
write-offs
Other
adjustments
Closing
balance
(70,826)
(1)
(70,820)
(5)
(2,818)
1
(2,824)
5
73,644
–
73,644
–
–
192
(265)
73
–
16,342
(1,165)
19,575
(2,068)
12,219
3
12,221
(5)
(16,854)
–
(16,820)
(34)
11,707
(2,120)
(1,226)
2,479
(867)
(5,070)
9
(5,079)
–
406
–
406
–
4,647
–
4,647
–
(17)
(903)
55
(163)
(1,011)
(960)
–
(960)
–
(388)
–
(388)
–
(79,597)
–
(79,597)
–
(80,945)
(1)
(1)
(100)
(102)
7,070
(2,624)
8,674
1,020
(3,655)
(13)
(3,642)
–
48,919
–
48,808
111
52,334
5,422
248
299
5,969
119,180
513
113,726
4,941
68,778
5
68,773
–
516,157
22
515,410
725
704,115
36,497
2,728
7,508
46,733
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:16)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
175
36.1.3 Loan portfolio by countries
An analysis of the non-qualified and qualified gross loan portfolio by country is as follows:
Country
2020
2019
Gross amount of loan, finance
lease receivable at amortized
cost, placement with other banks
and repo receivable portfolio
Loss
allowance
Gross amount of loan, finance
lease receivable at amortized
cost, placement with other banks
and repo receivable portfolio
Loss
allowance
Hungary
Bulgaria
Croatia
Serbia
Romania
Slovenia
Russia
Ukraine
Montenegro
France
Albania
Germany
Moldova
Slovakia
United States of America
Switzerland
Austria
Belgium
The Netherlands
Italy
Luxembourg
United Kingdom
Canada
Cyprus
Ireland
Norway
Denmark
Australia
Poland
Turkey
Spain
Greece
Czech Republic
Bosnia and Herzegovina
Sweden
Israel
United Arab Emirates
Kazakhstan
Egypt
Iceland
Latvia
Other*
Total
4,513,208
2,722,998
1,663,534
1,557,129
915,030
905,881
626,269
449,503
376,351
231,122
185,711
151,101
132,163
74,614
70,901
61,804
54,009
49,401
31,144
25,614
25,062
21,692
17,026
16,890
14,053
7,525
5,817
3,649
2,006
1,567
996
989
902
795
536
455
388
193
78
56
34
3,304
14,921,500
209,216
202,018
101,640
48,429
52,016
14,022
133,293
50,393
23,440
645
8,243
485
4,586
225
67
615
58
119
497
164
46
1,282
5
3,102
211
39
15
1
119
93
55
141
9
248
54
5
31
8
6
56
20
209
855,926
Loans at fair value:
Country
Hungary
Bosnia-Herzegovina
Croatia
Total
3,650,513
2,419,203
1,380,175
1,215,038
747,026
823,611
812,703
484,678
333,697
92,791
152,279
46,553
104,796
69,158
11,471
34,232
2,129
24,042
6,491
5,811
347
47,618
222
16,221
401
568
427
214
525
433
893
2,147
454
382
437
384
34
73
14
51
29
3,041
12,491,312
2020
798,981
2,535
1,089
802,605
125,245
148,053
68,906
23,021
41,319
4,025
159,045
74,650
20,198
63
3,688
189
1,797
24,769
56
635
16
98
167
125
13
1,171
1
431
118
36
10
1
21
46
23
132
24
44
45
2
24
21
1
49
15
156
698,449
2019
493,208
2,581
489
496,278
* Other category as at 31 December 2020 includes e.g.: Japan, China, Malta, Singapore, Macedonia, Algeria, Portugal, Finland, Saudi Arabia, Lithuania , Qatar, Belorussia,
Republic of South-Africa, Tunisia, Armenia, Brazil, India, Syria, Hong Kong, South-Korea, Jordan, Estonia, Iran, Georgia, Kosovo, Morocco, Nigeria, Vietnam, Republic
of Pakistan, Kyrgyzstan, Saint Vincent, Seychelles.
176
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:16)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
36.1.4 Collateral
The values of collateral held by the Group
The collateral covers loans as well as
by type are as follows (total collateral).
off-balance sheet exposures.
Types of collateral
Mortgages
Guarantees of state or organizations owned by state
Assignments (revenue or other receivables)
Guarantees and warranties
Cash deposits
Securities
Other
Total
2020
12,346,773
731,529
486,670
178,139
163,489
156,857
2,159,894
16,223,351
2019
11,113,017
486,112
447,820
423,035
130,913
186,154
2,216,505
15,003,556
The values of collateral held by the Group by type
The collaterals cover loans as well as
are as follows (to the extent of the exposures).
off-balance sheet exposures.
Types of collateral
Mortgages
Guarantees and warranties
Assignments (revenue or other receivables)
Guarantees of state or organizations owned by state
Securities
Cash deposits
Other
Total
2020
5,902,854
984,532
344,716
190,700
115,269
67,158
1,244,771
8,850,000
2019
5,184,997
303,711
306,863
439,148
137,613
70,910
1,331,823
7,775,065
The coverage level of the loan portfolio
coverage level to the extent of the exposures
(total collateral) decreased by 3.76% but the
increased by 0.58% as at 31 December 2020.
36.1.5 Restructured loans
Loans to medium
and large corporations
Retail consumer loans
Retail mortgage loans
Loans to micro and small enterprises
Municipal
Other loans
Total
2020
Gross
portfolio
Loss
allowance
2019
Gross
portfolio
Loss
allowance
58,271
31,108
15,159
11,782
41
4,412
120,773
(12,260)
(14,714)
(2,754)
(1,237)
(16)
(791)
(31,772)
22,418
16,344
16,564
9,344
9
305
64,984
3,948
3,748
1,218
1,728
3
32
10,677
The forborne definition used by the Group is based on EBA (EU) 2015/227 regulation.
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:16)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
177
36.1.6 Financial instruments by rating categories*
Securities at fair value through other comprehensive income as at 31 December 2020:
Government bonds
Discounted Treasury bills
Equity instruments and fund units
Other interest bearing securities
Total
Aaa
–
–
535
–
535
A2
–
–
36
–
36
A3
–
–
33
495
528
Baa1
Baa2
Baa3
Ba1
9,138
–
45
–
9,183
2,155
–
7
–
2,162
5,734
1,233
36
998
8,001
7,247
–
–
–
7,247
Non-trading securities mandatorily at fair value through profit or loss
as at 31 December 2020:
Non-trading debt instruments mandatorily
at fair value through profit or loss
Non-trading equity instruments mandatorily
at fair value through profit or loss
Debt securities designated at fair value through
profit or loss
Total
Aa3
2,794
–
–
2,794
A1
–
–
2,235
2,235
Baa3
Not
rated
Total
1,457
7,263
11,514
–
–
46,063
46,063
–
2,235
1,457
53,326
59,812
Securities at fair value through other comprehensive income as at 31 December 2020:
Aaa
Aa2
Aa3
A2
A3
Baa1
Baa2
Government bonds
Mortgage bonds
Corporate bonds
Discounted Treasury bills
Non-trading equity instruments
Total
20,639
–
–
–
–
20,639
8,215
–
–
–
–
8,215
–
–
–
–
3,875
3,875
37,195
63,577
–
–
–
100,772
120,112
–
4,815
–
–
124,927
192,994
–
–
–
47
193,041
–
–
2,336
–
–
2,336
Securities at amortized cost as at 31 December 2020:
Aa2
A1
A3
Baa1
Baa3
Ba1
Ba3
Government bonds
Corporate bonds
Discounted Treasury bills
Total
45,975
–
–
45,975
10,953
–
–
10,953
38,987
–
–
38,987
38,627
–
–
38,627
2,310,965
14,619
–
2,325,584
10,874
10,527
–
21,401
4,147
–
–
4,147
* Moody’s ratings.
178
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:16)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Ba2
Ba3
–
–
7
7
13,762
11,428
–
–
25,190
B1
–
–
5
–
5
Not
rated
–
60
3,036
582
3,678
Total
38,036
12,721
3,740
2,075
56,572
Baa3
Ba1
959,133
–
39,179
9,957
898
1,009,167
182,685
–
4,997
66,401
–
254,083
Ba2
–
–
979
–
–
979
Ba3
B1
B3
Caa1
200,478
–
12,532
–
–
213,010
18,166
–
–
–
–
18,166
69,248
–
–
–
–
69,248
46,269
–
–
–
–
46,269
Not
rated
–
24,695
16,782
–
30,505
71,982
Total
1,855,134
88,272
81,620
76,358
35,325
2,136,709
B1
B3
10,174
–
–
10,174
74,774
–
10,469
85,243
Not
rated
–
49,486
–
49,486
Total
2,545,476
74,632
10,469
2,630,577
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:16)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
179
Securities held for trading as at fair value through profit or loss as at 31 December 2019:
Government bonds
Equity instruments and fund units
Discounted Treasury bills
Other interest bearing securities
Other non-interest bearing securities
Total
Aaa
–
–
–
123
–
123
Aa3
–
27
–
–
–
27
A1
–
41
–
–
–
41
A2
–
52
–
–
–
52
A3
–
18
–
602
–
620
Baa1
Baa2
–
30
–
–
–
30
30,070
6
–
8,807
–
38,883
Non-trading securities mandatorily at fair value through profit or loss
as at 31 December 2019:
Baa1
Baa2
Baa3
Ba2
Non-trading debt instruments mandatorily
at fair value through profit or loss
Non-trading equity instruments mandatorily
at fair value through profit or loss
Debt securities designated at fair value through
profit or loss
Total
–
8,204
–
8,204
–
461
–
461
866
–
–
866
Not
rated
Total
3,536
4,402
26,250
34,915
–
–
2,001
2,001
–
2,001
29,786
41,318
Securities at fair value through other comprehensive income as at 31 December 2019:
Aaa
Aa2
Aa3
A2
A3
Baa1
Baa2
Government bonds
Discounted Treasury bills
Mortgage bonds
Corporate bonds
Non-trading equity instruments
Total
12,213
–
–
–
–
12,213
7,103
–
–
–
–
7,103
–
–
–
–
6,370
6,370
38,730
–
–
–
–
38,730
6,536
–
–
4,700
–
11,236
114,296
–
65,086
–
–
179,382
180,974
–
–
3,529
–
184,503
Securities at amortized cost as at 31 December 2019:
Government bonds
Corporate bonds
Mortgage bonds
Discounted Treasury bills
Total
Aa2
Baa1
Baa3
Ba2
41,010
–
–
–
41,010
42,454
–
–
–
42,454
1,722,028
–
7,739
–
1,729,767
1,444
9,975
–
–
11,419
Ba3
5,520
–
–
–
5,520
B1
B3
26,442
–
–
–
26,442
5,218
–
–
6,516
11,734
180
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:24)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Baa3
23,715
18
12
5,377
–
29,122
Ba1
–
–
–
1,404
–
1,404
Ba2
11,211
–
–
3,078
–
14,289
Ba3
6,198
7
38
–
–
6,243
Not
rated
–
877
–
821
7,516
9,214
Total
71,194
1,076
50
20,212
7,516
100,048
Baa3
1,013,472
339,398
7,841
34,900
1,139
1,396,750
Ba1
–
–
–
4,950
–
4,950
Ba2
Ba3
B1
Caa1
137,353
104,292
–
892
–
242,537
156,000
–
–
–
–
156,000
60,930
–
–
–
–
60,930
45,005
–
–
–
–
45,005
Not
rated
–
–
24,341
24,091
32,638
81,070
Total
1,772,612
443,690
97,268
73,062
40,147
2,426,779
Caa1
89,721
–
–
–
89,721
Not
rated
–
12,744
–
–
12,744
Total
1,933,837
22,719
7,739
6,516
1,970,811
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:24)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
181
36.2 Maturity analysis of assets,
liabilities and liquidity risk
management methodology is an annual
process. The monitoring of liquidity reserves
for both centralized and decentralized liquid
Liquidity risk is a measure of the extent to
asset portfolio has been built into the daily
which the Group may be required to raise
reporting process.
funds to meet its commitments associated
with financial instruments. The Group
Due to the balance sheet adjustment process
maintains its liquidity profiles in accordance
(deleveraging) experienced in the last few
with regulations prescribed by the NBH.
years, the liquidity reserves of the Group
increased significantly while the liquidity
The essential aspect of the liquidity risk
risk exposure has decreased considerably.
management strategy is to identify all relevant
Currently the (over)coverage of potential
systemic and idiosyncratic sources of liquidity
liquidity risk exposure by high quality liquid
risk and to measure the probability and
assets is high. There were no material changes
severity of such events. During liquidity risk
in the liquidity risk management process for
management the Group considers the effect of
the year ended 31 December 2020.
liquidity risk events caused by reasons arising
in the bank business line (deposit withdrawal),
The contractual amounts disclosed in the
the national economy (exchange rate shock
maturity analyses are the contractual
yield curve shock) and the global financial
undiscounted cash-flows like gross finance
system (capital market shock).
lease obligations (before deducting finance
charges); prices specified in forward
In line with the Group’s risk management
agreements to purchase financial assets for
policy liquidity risks are measured and
cash; net amounts for pay-floating/receive-
managed on multiply hierarchy levels and
fixed interest rate swaps for which net
applying integrated unified VaR based
cash-flows are exchanged; contractual
methodology. The basic requirement is that
amounts to be exchanged in a derivative
the Group must keep high quality liquidity
financial instrument for which gross cash-flows
reserves which means it can fulfill all
are exchanged; gross loan commitments.
liabilities when they fall due without material
additional costs.
Such undiscounted cash-flows differ from the
amount included in the statement of financial
The liquidity reserves can be divided in two
position because the amount in that statement
parts. There are separate decentralized liquid
is based on discounted cash-flows. When
asset portfolios at subsidiary level and a
the amount payable is not fixed, the amount
centralized flexible liquidity pool at a Group
disclosed is determined by reference to the
level. The reserves at subsidiary levels are held
conditions existing at the end of the reporting
to cover the relevant shocks of the subsidiaries
period. For example, when the amount
which may arise in local currencies (deposit
payable varies with changes in an index, the
withdrawal, local capital market shock,
amount disclosed may be based on the level
unexpected business expansion), while the
of the index at the end of the period.
centralized liquidity pool is held to cover the
Bank’s separate shocks (deposit-, yield curve-
The following tables provide an analysis of
and exchange rate shocks) and all group
assets and liabilities about the non-discounted
member’s potential shocks that may arise in
cash-flow into relevant maturity groupings
foreign currencies (deposit withdrawal, capital
based on the remaining period from the
market shock).
balance sheet date to the contractual maturity
date. It is presented under the most prudent
The recalculation of shocks is made at least
consideration of maturity dates where options
quarterly while the recalibration of shock
or repayment schedules allow for early
measurement models and review of the risk
repayment possibilities.
182
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:24)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
2020
Cash, amounts due from banks
and balances with the National Banks
Placements with other banks,
net of loss allowance for placements
Repo receivables
Trading securities at fair value through
profit or loss
Non–trading instruments mandatorily
at fair value through profit or loss
Debt securities designated
at fair value through profit or loss
Securities at fair value through
other comprehensive income
Securities at amortized cost
Loans at amortized cost
Finance lease receivable
Loans measured at fair value through
profit or loss
Associates and other investments
Other financial assets*
TOTAL ASSETS
Amounts due to banks, the National
Governments, deposits from the
National Banks and other banks
Repo liabilities
Financial liabilities designated
at fair value through profit or loss
Deposits from customers
Liabilities from issued securities
Leasing liabilities
Other financial liabilities*
Subordinated bonds and loans
TOTAL LIABILITIES
NET POSITION
Receivables from derivative financial
instruments held for trading
Liabilities from derivative financial
instruments held for trading
Net position of financial instruments
held for trading
Receivables from derivative financial
instruments designated as hedge accounting
Liabilities from derivative financial
instruments designated as hedge accounting
Net position of financial instruments
designated as hedge accounting
Net position of derivative financial
instruments total
Commitments to extend credit
Bank guarantees
Confirmed letters of credit
Factoring loan commitment
Off–balance sheet commitments
Within
3 months
Within
one year and
over 3 months
Within
5 years and
over one year
Over
5 years
Without
maturity
Total
2,370,130
36
41,471
20,675
–
2,432,312
902,977
191,143
77,646
134,780
34,502
635
1,150,540
–
–
–
14,546
16,163
15,093
8,032
–
777
191,143
54,611
28
2,235
–
–
–
–
9,590
42,879
52,497
–
–
2,235
136,746
278,017
984,596
644,612
31,688
2,075,659
121,993
1,720,314
127,856
47,251
2,130,394
274,143
1,577,822
5,190,401
659,682
819,600
4,219,165
42,439
24,352
25,193
159,934
607,274
–
–
–
–
–
134,672
5,746,992
–
3,520
2,852,363
–
4,551
8,768,330
–
1,902
6,407,791
58,307
14,376
148,662
165,619
86,991
695,707
254,897
8,379
3,159
–
109,612
–
1,421
8,350
21,201
–
–
–
2,300,365
15,065,456
130,445
1,971
8,163
2,859
19,447
374,525
–
2,843
15,624,811
2,546,832
(9,877,819) ** 305,531
305,074
269,133
27,776
3,239
6,838
1,425,729
7,342,601
221,028
65,841
11,169
89
267,083
841,308
5,566,483
–
–
–
10,496
–
10,496
138,166
2,566,666
13,260,274
1,104,120
816,753
58,307
159,021
23,924,138
1,203,214
117,991
34,131
17,891,923
467,390
49,967
407,796
276,764
20,449,176
3,474,962
594,663
3,080,660
532,012
246,922
–
4,454,257
(473,510)
(3,302,801)
(441,330)
(200,525)
(31)
(4,418,197)
121,153
(222,141)
90,682
46,397
(31)
36,060
186
8,082
169,339
173,109
(41,382)
(118,914)
(468,378)
(88,720)
(41,196)
(110,832)
(299,039)
84,389
–
–
–
350,716
(717,394)
(366,678)
79,957
(332,973)
(208,357)
130,786
(31)
(330,618)
2,375,279
225,440
13,670
305,269
2,919,658
609,431
280,625
8,916
–
898,972
350,195
416,293
1,476
–
767,964
85,813
137,739
11,377
–
234,929
–
99,602
276
–
99,878
3,420,718
1,159,699
35,715
305,269
4,921,401
* Without derivative financial instruments
** Analysis for net position of assets and liabilities are calculated in accordance with IFRS 7, therefore certain financial instruments are presented in the earliest period in
which the Group could be required to pay. On-demand deposits are presented in the earliest (within 3 month) period category, however based on the Management’s
discretion the Group has appropriate liquidity reserves as maintenance and management of liquidity risk.
IFRS consolidated financial statements
183
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:24)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
2020
Cash, amounts due from banks
and balances with the National Banks
Placements with other banks,
net of loss allowance for placements
Repo receivables
Trading securities at fair value through
profit or loss
Non-trading instruments mandatorily
at fair value through profit or loss
Debt securities designated
at fair value through profit or loss
Securities at fair value through
other comprehensive income
Securities at amortized cost
Loans at amortized cost
Finance lease receivable
Loans measured at fair value through
profit or loss
Associates and other investments
Other financial assets
TOTAL ASSETS
Amounts due to banks, the National
Governments, deposits from the
National Banks and other banks
Repo liabilities
Financial liabilities designated
at fair value through profit or loss
Deposits from customers
Liabilities from issued securities
Leasing liabilities
Other financial liabilities*
Subordinated bonds and loans
TOTAL LIABILITIES
NET POSITION
Receivables from derivative financial
instruments held for trading
Liabilities from derivative financial
instruments held for trading
Net position of financial instruments
held for trading
Receivables from derivative financial
instruments designated as hedge accounting
Liabilities from derivative financial
instruments designated as hedge accounting
Net position of financial instruments
designated as hedge accounting
Net position of derivative financial
instruments total
Commitments to extend credit
Bank guarantees
Confirmed letters of credit
Factoring loan commitment
Off-balance sheet commitments
Within
3 months
Within
one year and
over 3 months
Within
5 years and
over one year
Over
5 years
Without
maturity
Total
1,671,732
19,884
92,762
–
–
1,784,378
151,893
65,792
110,150
16,206
1,257
345,298
63,728
10,398
227
–
3,491
13,875
–
–
–
–
–
53,442
13,277
3,203
67,219
94,195
3,309
10,935
19,920
34,391
2,001
–
–
2,001
327,488
572,117
952,654
486,814
40,186
2,379,259
143,579
1,707,326
99,876
124,320
2,297,158
246,072
1,097,138
4,176,950
624,206
530,139
3,583,573
37,250
–
29,721
–
1,895,176
11,794,728
1,007,404
6,602
20,160
113,724
358,665
–
499,151
–
109,999
4,292,848
–
3,826
3,366,695
–
3,233
7,229,569
–
405
5,037,264
29,638
18,748
142,673
29,638
136,211
20,069,049
285,246
61,745
334,553
143,979
488
677
–
–
–
1,928
11,606
16,651
–
–
–
1,301,904
12,372,360
24,902
1,850
7,647
2,210
13,998
310,060
–
2,695
12,975,586
1,412,124
(8,682,738) ** 1,954,571
1,150,368
368,266
30,540
4,246
–
1,899,579
5,329,990
356,471
104
14,087
23
249,532
780,847
4,256,417
–
–
5
9,693
–
9,698
132,975
825,523
488
30,862
15,181,103
395,122
54,489
338,020
252,227
17,077,834
2,991,215
2,010,040
1,583,020
698,897
441,348
–
4,733,305
(2,177,179)
(1,255,660)
(776,359)
(352,566)
(234)
(4,561,998)
(167,139)
327,360
(77,462)
88,782
(234)
171,307
2,253
94,227
151,825
156,010
(8,737)
(250,345)
(231,794)
(76,210)
(6,484)
(156,118)
(79,969)
79,800
–
–
–
404,315
(567,086)
(162,771)
(173,623)
171,242
(157,431)
168,582
(234)
8,536
2,240,364
164,575
12,587
228,145
2,645,671
337,644
281,387
5,887
–
624,918
351,136
259,246
2,147
–
612,529
92,511
145,286
7,433
–
245,230
5,457
116,155
5,242
–
126,854
3,027,112
966,649
33,296
228,145
4,255,202
* Without derivative financial instruments
** Analysis for net position of assets and liabilities are calculated in accordance with IFRS 7, therefore certain financial instruments are presented in the earliest period in
which the Group could be required to pay. On-demand deposits are presented in the earliest (within 3 month) period category, however based on the Management’s
discretion the Group has appropriate liquidity reserves as maintenance and management of liquidity risk.
184
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:24)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
36.3 Net foreign currency position
and foreign currency risk
As at 31 December 2020:
Assets
Liabilities
Derivative financial instruments
Net position
As at 31 December 2019:
Assets
Liabilities
Derivative financial instruments
Net position
USD
717,819
(878,916)
259,993
98,896
EUR
7,003,090
(5,926,666)
(921,666)
154,758
CHF
73,344
(87,551)
32,905
18,698
Other
6,435,309
(5,195,693)
(147,436)
1,092,180
Total
14,229,562
(12,088,826)
(776,204)
1,364,532
USD
599,946
(708,409)
182,049
73,586
EUR
5,532,766
(4,808,619)
(735,690)
(11,543)
CHF
72,366
(75,407)
(755)
(3,796)
Other
5,701,836
(4,639,952)
(116,723)
945,161
Total
11,906,914
(10,232,387)
(671,119)
1,003,408
The table above provides an analysis of the
of time for which the rate of interest is fixed on
main foreign currency exposures of the Group
a financial instrument, therefore, indicates to
that arise in the non-functional currency of the
what extent it is exposed to interest rate risk.
entities constituting the Group. The remaining
foreign currencies are shown within ‘Others’.
The majority of the interest bearing assets
‘Others’ category contains mainly foreign
and liabilities of the Group are structured to
currencies in RON, RSD, HRK, UAH, RUB, BGN,
match either short-term assets and short-term
ALL and MDL. The Group monitors its foreign
liabilities, or long-term assets and liabilities
exchange position for compliance with
with repricing opportunities within one
the regulatory requirements of the National
year, or long-term assets and corresponding
Banks and its own limit system established
liabilities where repricing is performed
in respect of limits on open positions.
simultaneously.
The measurement of the open foreign currency
position of the Group involves monitoring
In addition, the significant spread existing
the “VaR” limit on the foreign exchange
between the different types of interest bearing
exposure of the Group. The derivative financial
assets and liabilities enables the Group to
instruments detailed in the table above are
benefit from a high level of flexibility in
presented at fair value.
adjusting for its interest rate matching and
36.4 Interest rate risk
management
interest rate risk exposure.
The following table presents the interest
repricing dates of the Group. Variable yield
assets and liabilities have been reported in
Interest rate risk is the risk that the value of
accordance with their next repricing date.
a financial instrument will fluctuate due to
Fixed income assets and liabilities have been
changes in market interest rates. The length
reported in accordance with their maturity.
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:24)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
185
As at 31 December 2020:
ASSETS
Within 1 month
Trading instruments at fair value
through profit or loss
1,261
9,247
Cash, amounts due from banks and
balances with the National Banks
fixed rate
variable rate
non-interest-bearing
Placements with other banks, net
of allowance for placements losses
fixed rate
variable rate
non-interest-bearing
Repo receivables
fixed rate
variable rate
non-interest-bearing
fixed rate
variable rate
non-interest-bearing
Non-trading instruments mandatorily
at fair value through profit or loss
fixed rate
variable rate
non-interest-bearing
Financial assets designated
at fair value through profit or loss
fixed rate
variable rate
non-interest-bearing
Securities at fair value through
other comprehensive income
fixed rate
variable rate
non-interest-bearing
Securities at amortized cost
fixed rate
variable rate
non-interest-bearing
Loans at amortized cost, net
of allowance for loan losses
Loans mandatorily at fair value
through profit or loss
fixed rate
variable rate
non-interest-bearing
Fair value adjustment of
derivative financial instruments
fixed rate
variable rate
non-interest-bearing
Other financial assets
fixed rate
variable rate
non-interest-bearing
Over 1 month and
Within 3 months
Currency
HUF
Over 3 months and
Within 12 months
Currency
HUF
Over 1 year and
Within 2 years
Currency
HUF
Over 2 years
Non-interest-
bearing
Total
Total
HUF
Currency
HUF
Currency
HUF
Currency
1
–
1
–
4,647
2,008
14,793
4,647
2,008
14,793
–
–
–
–
–
–
–
–
–
–
240,397
339,537
104
103,038
665
194,919
2,003
220,155
197,680
104
102,080
665
194,919
2,003
958
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
9,277
9,277
–
–
5
5
–
–
–
–
–
–
–
–
–
–
21,056
168,850
1,283,869
321,566
2,110,746
2,432,312
21,056
–
–
–
–
–
–
151709
729,407
881,116
1,007
97,470
98,477
168,850
1,283,869
168,850
1,283,869 1,452,719
124,478
7,633
19,253
116,711
386,900
761,843
1,148,743
–
124,478
5,750
1,883
–
–
–
–
222,927
500,434
723,361
144,720
144,698
289,418
–
–
–
–
–
–
–
–
–
–
19,253
116,711
19,253
116,711
135,964
–
–
–
–
–
–
–
–
183,364
183,364
7,485
7,485
190,849
190,849
–
–
–
–
–
–
9,013
614
14,644
1,280
2,753
5,270
8,463
2,473
1,267
11,185
45,387
56,572
9,013
614
14,644
1,280
2,753
5,254
8,463
–
–
1,006
1,006
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
16
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,235
–
2,235
–
–
–
–
–
2,473
1,267
7,790
922
2,473
43,594
51,384
526
1,267
1,448
3,740
30,674
21,410
30,674
26,903
57,577
–
–
–
–
–
–
5,465
5,465
–
–
30,674
21,410
30,674
21,410
52,084
–
–
–
–
–
–
–
–
–
–
–
–
2,235
2,235
–
–
2,235
2,235
–
–
HUF
Currency
150,707
777,104
149,701
679,634
1,006
97,470
–
–
20,242
141,857
–
183,364
183,364
–
–
–
7,485
7,485
–
–
355
906
–
–
–
–
–
–
–
–
–
8,721
526
–
4,487
4,459
28
–
–
–
–
–
–
–
–
–
–
–
287
287
–
–
–
–
–
–
–
–
–
–
47,073
11,706
673
95,897
118,558
183,940
49,095
200,651
567,675
826,116
536
34,789
783,610
1,353,099
2,136,709
600
11,706
673
83,363
117,558
183,940
49,095
200,631
567,675
819,295
46,473
–
–
–
–
–
–
–
79,401
79,401
–
–
–
–
–
–
–
–
12,534
1,000
–
–
21,055
21,055
37,771
37,771
–
–
–
–
20
–
–
–
6,821
4,574
398,158
40,066
1,844,129
199,766
4,574
398,158
40,066
1,837,731
199,766
–
–
–
–
–
–
–
–
–
–
6,398
–
–
–
–
–
–
–
735,601
1,298,935 2,034,536
47,473
536
19,375
34,789
66,848
35,325
–
536
34,789
–
–
–
–
– 2,280,058
344,862
2,624,920
– 2,273,660
344,862 2,618,522
–
–
6,398
–
–
–
6,398
–
656,665
4,758,061
340,558 1,115,958
52,487
998,326
49,217
349,978
1,723,813 1,442,688
125,865
61,226 2,948,605
8,726,237 11,674,842
fixed rate
variable rate
68,714
854,962
2,048
264,431
13,026
488,106
36,198
288,272
772,219
806,553
587,951
3,903,099
338,510
851,527
39,461
510,220
13,019
61,706
951,594
636,135
–
–
–
892,205
2,702,324 3,594,529
– 1,930,535
5,962,687 7,893,222
non-interest-bearing
–
–
–
–
Finance lease receivables
285,219
281,683
34,926
134,848
fixed rate
variable rate
167,083
113,778
8,141
6,117
118,136
167,905
26,785
128,731
– 107,412
non-interest-bearing
–
–
–
18
18
–
134,266
26,854
24,871
1,159
–
24,871
–
70
1,089
–
–
68
–
68
–
–
141
141
–
–
–
498
–
498
–
–
634
634
–
–
–
–
–
–
–
710
–
710
–
–
–
–
125,865
61,226
125,865
61,226
187,091
69,096
25,036
44,060
5,685
103,954
–
41,005
5,685
62,949
–
–
–
218
772,833
1,473
218
–
–
–
1,473
772,833
–
–
–
–
–
–
–
–
–
–
–
1,445
325,848
725,292
1,051,140
–
–
175,242
212,790
388,032
150,606
511,057
661,663
1,445
–
1,445
1,445
–
–
–
–
798,980
3,625
802,605
–
798,980
–
2,536
1,089
–
2,536
800,069
–
945,704
699,341
880,168
378,971
557,280
416,304
26,776
5,084
40,243
97,805
742,345
245,973 3,192,516
1,843,478
5,035,994
929,702
561,503
658,754
183,337
559,388
387,848
26,799
5,084
40,490
97,487
16,002
137,838
221,414
195,634
(2,108)
28,456
(23)
–
–
10,221
10,221
–
–
16,335
10,982
5,353
–
–
155
–
155
–
–
16
14
2
–
–
–
–
–
–
–
270
19
251
–
–
–
–
–
–
–
–
–
–
–
–
(247)
318
–
–
– 2,215,133
1,235,259 3,450,392
–
235,038
362,246
597,284
–
–
–
–
–
–
742,345
245,973
742,345
245,973
988,318
47
–
47
–
50,991
62,527
–
–
–
–
61,367
10,221
155
79,195
11,015
5,653
140,562
21,236
5,808
50,991
62,527
50,991
62,527
113,518
186
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:24)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
LIABILITIES
Within 1 month
HUF
Currency
Over 1 month and
Within 3 months
Currency
HUF
Over 3 months and
Within 12 months
Currency
HUF
Over 1 year and
Within 2 years
Currency
HUF
Over 2 years
Non-interest-
bearing
Total
Total
HUF
Currency
HUF
Currency
HUF
Currency
Amounts due to banks,
the Hungarian Government,
deposits rom the National Bank
of Hungary and other banks
fixed rate
variable rate
non-interest-bearing
Repo liabilities
fixed rate
variable rate
non-interest-bearing
Financial liabilities designated
at fair value through profit or loss
fixed rate
variable rate
non-interest-bearing
75,420
72,092
12,005
109,125
3,741
78,752
39,270
13,770
742,198
27,016
114
11,812
872,748
312,567
1,185,315
6,185
69,235
–
–
–
–
–
25,902
79
25,823
0
41,403
30,689
–
2,019
2,019
–
–
–
–
–
–
12,005
–
–
–
–
–
–
–
–
–
–
78,467
30,658
–
6,360
6,360
–
–
–
–
–
–
3,422
319
–
–
–
17,551
61,201
–
109,612
–
– 109,612
–
5,994
5,994
–
–
–
–
–
–
–
39,270
13,770
735,267
24,708
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,931
2,308
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,235
–
2,235
–
–
–
–
–
796,149
175,899
972,048
76,485
124,856
201,341
114
11,812
114
11,812
11,926
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
117,991
117,991
8,379
8,379
109,612
109,612
–
–
31,896
2,235
34,131
6,073
25,823
–
6,073
2,235
28,058
–
–
–
Deposits from customers
6,143,610 8,390,678
101,521
633,365
142,203
880,099
68,741
171,992
239,805
502,668
15,169
601,012 6,711,049 11,179,814 17,890,863
fixed rate
variable rate
non-interest-bearing
413,308 2,873,541
101,521
633,233
142,203
879,857
68,741
171,989
239,805
502,658
5,730,302 5,517,137
–
–
–
–
132
–
–
–
242
–
–
–
Liabilities from issued securities
fixed rate
variable rate
3,090
213
2,877
221
11,691
414
223,762
721
46,451
–
–
– 111,565
–
46,451
221
11,691
414
112,197
non-interest-bearing
–
–
–
–
–
721
–
–
–
3
–
–
–
–
–
–
–
177,807
177,807
–
–
10
–
46
46
–
–
–
–
–
965,578
5,061,278 6,026,856
– 5,730,302
5,517,524 11,247,826
15,169
601,012
15,169
601,012
616,181
–
–
–
–
10
462,801
1,412
464,213
–
–
10
336,036
126,765
46
336,082
1,356
128,121
–
10
10
Fair value adjustment of
derivative financial instruments
fixed rate
variable rate
non-interest-bearing
Leasing liabilities
fixed rate
variable rate
non-interest-bearing
Other financial liabilities
fixed rate
variable rate
non-interest-bearing
Subordinated bonds and loans
fixed rate
variable rate
non-interest-bearing
1,264,893
385,359 1,035,006
208,880
479,592
492,998
9,260
24,904
48,555
90,112
732,937
255,219 3,570,243
1,457,472
5,027,715
1,111,465
376,893
648,487
189,185
481,603
469,867
9,321
24,904
48,802
89,931
153,428
8,466
386,519
19,695
(2,011)
23,131
–
1,131
1,085
46
–
4,091
4,072
19
–
–
–
–
–
–
6,748
6,572
176
–
30,795
30,762
33
–
–
–
–
–
–
465
401
64
–
512
–
512
–
–
–
–
–
–
739
322
417
–
234
228
6
–
84,833
–
–
536
536
–
–
–
–
–
–
–
–
–
6,823
4,911
1,912
–
333
148
185
–
184,090
–
84,833
– 184,090
–
–
–
(61)
–
467
467
–
–
–
–
–
–
–
–
–
–
–
–
5,388
4,219
1,169
–
417
417
–
–
–
–
–
–
(247)
–
1,213
433
780
–
–
–
–
–
–
–
–
–
181
–
–
– 2,299,678
1,150,780 3,450,458
–
537,628
51,473
589,101
–
732,937
255,219
732,937
255,219
988,156
19,644
18,310
1,334
–
255
87
168
–
–
–
–
5,297
–
–
5,297
3,812
2,922
890
–
44,639
34,334
5,008
5,297
48,451
37,256
5,898
5,297
261,223
92,042
265,826
124,076
389,902
–
–
–
–
4,072
531
31,642
35,714
392
923
–
261,223
92,042
261,223
92,042
353,265
5,781
5,684
97
–
–
–
–
–
–
–
–
–
–
–
–
–
274,704
274,704
5,684
5,684
269,020
269,020
–
–
Net position
(4,972,655)
(1,902,366)
95,740
820,640
(85,929)
209,242
363,050
460,657
3,874,548 2,063,479
131,544
863,825
(593,702)
2,515,477
1,921,775
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:24)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
187
As at 31 December 2019:
ASSETS
Within 1 month
HUF
Currency
Over 1 month and
Within 3 months
Currency
HUF
Over 3 months and
Within 12 months
Currency
HUF
Over 1 year and
Within 2 years
Currency
HUF
Over 2 years
Non-interest-
bearing
Total
Total
HUF
Currency
HUF
Currency
HUF
Currency
Cash, amounts due from banks and
balances with the National Banks
fixed rate
variable rate
non-interest-bearing
Placements with other banks, net
of allowance for placements losses
41,319
576,425
2,106
7,513
40,555
534,313
2,102
7,513
764
42,112
–
–
4
–
–
–
–
–
–
–
18,818
18,818
–
–
–
–
–
–
4,385
89,457
14,823
34,598
1,988
30,258
98,889
14,823
34,597
903
22,722
98,889
8,690
8,690
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
19,457
19,457
–
–
15,205
222,042
892,260
265,467
1,518,911
1,784,378
15,205
–
–
–
–
–
–
42,657
584,539
627,196
768
42,112
42,880
222,042
892,260
222,042
892,260 1,114,302
7,076
17,603
43,845
137,688
205,234
342,922
6,254
822
–
–
–
–
–
–
–
–
–
17,603
43,845
528
803
–
–
–
–
528
803
119,000
121,998
240,998
1,085
17,603
45,483
44,955
–
528
39,391
43,845
21,674
20,871
–
803
40,476
61,448
67,157
65,826
–
1,331
1
–
–
–
–
–
1,085
7,536
–
–
–
–
–
–
3,444
3,444
–
–
–
–
–
–
–
–
5,929
4,497
12,483
4,400
21,646
10,571
27,214
7,542
1,050
27,784
72,264
100,048
5,529
400
–
25
–
25
–
–
–
–
–
4,497
12,483
4,400
21,646
10,571
27,214
–
–
–
–
–
–
–
–
–
–
–
–
866
866
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,542
1,050
19,487
70,799
90,286
755
7,542
415
1,050
1,170
8,592
–
–
3,511
27,810
7,105
27,810
11,507
39,317
3,511
–
–
–
–
–
–
–
–
–
–
–
–
4,377
25
4,377
25
27,810
7,105
27,810
7,105
34,915
–
–
–
–
2,001
–
–
2,001
–
–
–
–
2,001
2,001
–
–
–
–
2,001
2,001
fixed rate
variable rate
non-interest-bearing
Repo receivables
fixed rate
variable rate
non-interest-bearing
Trading instruments at fair value
through profit or loss
fixed rate
variable rate
non-interest-bearing
Non-trading instruments mandatorily
at fair value through profit or loss
fixed rate
variable rate
non-interest-bearing
Financial assets designated
at fair value through profit or loss
fixed rate
variable rate
non-interest-bearing
Securities at fair value through
other comprehensive income
fixed rate
variable rate
non-interest-bearing
Securities at amortized cost
fixed rate
variable rate
non-interest-bearing
Loans at amortized cost, net
of allowance for loan losses
4,385
–
–
–
–
–
–
650
18
632
58,425
31,032
–
17,427
17,427
–
–
3,942
3,927
15
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
55,863
33,312
–
–
–
–
101,371
– 101,371
–
–
–
–
–
–
25,498
25,498
–
–
124
1
123
–
–
–
–
–
–
–
–
–
–
–
–
–
–
89,175
51,659
138,245
68,746
428,028
171,582
94,464
213,344
401,659
713,667
867
55,343 1,152,438
1,274,341
2,426,779
51,659
123,562
68,197
413,278
171,034
93,464
212,521
401,659
713,667
– 1,087,826
1,217,078 2,304,904
14,683
549
14,750
548
1,000
–
–
–
–
823
–
–
–
–
–
–
63,745
867
55,343
867
1,920
55,343
65,665
56,210
–
–
19,739
111,029
19,739
111,029
12,506
12,506
38,195
38,195
43,189
1,553,408
43,189
1,553,408
88,635
88,635
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 1,702,632
265,440
1,968,072
– 1,702,632
265,440 1,968,072
–
–
–
–
–
–
–
–
534,956 3,767,934
596,440 1,190,169
440,588 1,277,264
90,627
345,604
838,117 1,136,245
144,221
51,356 2,644,949
7,768,572 10,413,521
fixed rate
variable rate
6,228
755,305
2,307
320,082
14,141
524,853
28,983
299,680
1,066,868
789,762
528,728 3,012,629
594,133
870,087
426,447
752,411
61,644
45,924
(228,751)
346,483
–
–
– 1,118,527
2,689,682 3,808,209
– 1,382,201
5,027,534 6,409,735
non-interest-bearing
–
–
–
–
–
–
–
–
–
–
144,221
51,356
144,221
51,356
195,577
Finance lease receivables
135,777
232,181
29,361
134,811
3,663
132,638
fixed rate
variable rate
non-interest-bearing
Loans mandatorily at fair value
through profit or loss
fixed rate
variable rate
non-interest-bearing
Fair value adjustment of
derivative financial instruments
fixed rate
variable rate
non-interest-bearing
Other financial assets
fixed rate
variable rate
non-interest-bearing
2,767
92,561
1,018
5,886
3,663
23,387
133,010
139,620
28,343
128,925
– 109,251
–
30,021
–
30,021
–
–
543
54
489
–
–
221
–
221
–
–
–
–
108
108
–
–
1,508
–
1,508
–
487
487
–
–
13,177
13,177
–
–
924
–
924
–
74,996
30,419
44,577
111,789
109,188
2,601
99,504
45,316
54,188
–
–
–
316
460,534
1,616
316
–
–
–
1,616
460,534
–
–
–
1
–
–
1
–
–
–
–
1,365
293,768
675,495
969,263
–
–
129,813
197,569
327,382
163,954
476,561
640,515
1,365
1
1,365
1,366
–
–
–
–
493,208
3,070
496,278
0
2,581
2,581
493,208
489
493,697
–
–
–
966,352
432,710
847,077
359,143
765,880
459,987
15,461
273,274
20,584
85,850
167,569
362,920 2,782,923
1,973,884
4,756,807
930,477
423,788
697,547
335,985
766,569
425,038
15,461
273,274
20,584
85,850
35,875
8,922
149,530
23,158
(689)
34,949
–
16,988
16,859
129
–
–
2,343
2,343
–
–
–
94
–
94
–
–
367
331
36
–
–
–
–
–
–
–
5
1
4
–
–
–
–
–
–
–
–
–
3
3
–
–
–
–
–
–
–
–
–
–
1
1
–
–
–
–
– 2,430,638
1,543,935 3,974,573
–
184,716
67,029
251,745
167,569
362,920
167,569
362,920
530,489
48,574
54,678
–
–
–
–
65,656
16,859
223
57,397
123,053
2,679
19,538
40
263
48,574
54,678
48,574
54,678
103,252
188
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:24)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
LIABILITIES
Within 1 month
HUF
Currency
Over 1 month and
Within 3 months
Currency
HUF
Over 3 months and
Within 12 months
Currency
HUF
Over 1 year and
Within 2 years
Currency
HUF
Over 2 years
Non-interest-
bearing
Total
Total
HUF
Currency
HUF
Currency
HUF
Currency
Amounts due to banks,
the Hungarian Government,
deposits from the National Bank
of Hungary and other banks
fixed rate
variable rate
non-interest-bearing
Repo liabilities
fixed rate
variable rate
non-interest-bearing
Financial liabilities designated
at fair value through profit or loss
fixed rate
variable rate
non-interest-bearing
265,224
84,798
2,633
130,754
5,086
112,533
1,834
78,312
103,826
18,079
19
9,813
378,622
434,289
812,911
212,975
78,022
2,633
52,249
6,776
–
488
–
488
–
28,862
102
28,760
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
63,143
67,611
–
–
–
–
–
–
–
–
–
5,085
1
–
–
–
–
–
–
–
–
–
27,300
85,233
–
–
–
–
–
–
–
–
–
1,834
76,875
103,826
17,715
–
–
–
–
–
–
–
–
–
–
1,437
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
364
–
–
–
–
–
–
–
–
–
–
–
19
–
–
–
–
–
–
–
–
–
–
9,813
–
–
–
–
326,353
263,055
589,408
52,250
161,421
213,671
19
488
–
488
–
9,813
–
–
–
–
9,832
488
–
488
–
2,000
28,862
2,000
30,862
–
–
102
28,760
–
–
2,000
–
2,000
102
28,760
2,000
Deposits from customers
5,124,112 6,546,522
183,647
570,419
127,494
830,168
45,174
325,413
239,092
426,589
37,258
715,420 5,756,777
9,414,531 15,171,308
fixed rate
variable rate
non-interest-bearing
Liabilities from issued securities
fixed rate
variable rate
non-interest-bearing
Fair value adjustment of
derivative financial instruments
fixed rate
variable rate
non-interest-bearing
Leasing liabilities
fixed rate
variable rate
non-interest-bearing
Other financial liabilities
fixed rate
variable rate
non-interest-bearing
Subordinated bonds and loans
fixed rate
variable rate
non-interest-bearing
434,026 2,729,694
183,647
570,286
127,494
828,984
45,174
325,411
239,092
426,583
4,690,086 3,816,828
–
16,708
218
16,490
–
–
592
40
552
–
–
–
133
–
–
–
1,184
–
–
–
144,381
1,273
–
8
144,381
1,265
8,347
6,901
1,446
–
–
–
1,936
112,697
– 112,697
1,936
–
–
–
2
–
–
–
–
–
–
–
106,267
106,267
–
–
6
–
53
53
–
–
–
–
– 1,029,433
4,880,958 5,910,391
– 4,690,086
3,818,153 8,508,239
37,258
715,420
37,258
715,420
752,678
898
15
389,298
3,869
393,167
–
–
898
–
–
15
226,083
162,317
898
101
226,184
3,753
166,070
15
913
1,275,341
129,626
828,476
357,746
623,403
588,552
281,358
8,789
37,297
72,359
370,245
167,431 3,416,120
1,324,503
4,740,623
1,224,793
123,378
687,545
341,726
623,287
567,367
281,358
8,789
37,297
72,148
50,548
6,248
140,931
16,020
116
21,185
–
1,252
1,252
–
–
4,920
4,177
743
–
–
–
–
–
–
4,951
4,878
73
–
171
136
35
–
–
–
–
–
–
126
126
–
–
575
–
575
–
–
–
–
–
–
1,113
902
211
–
1,816
1,816
–
–
77,934
–
–
1,120
1,120
–
–
–
–
–
–
–
–
–
7,393
6,551
842
–
2,039
2,039
–
–
166,602
–
77,934
– 166,602
–
–
–
–
–
924
924
–
–
–
–
–
–
–
–
–
–
–
–
6,082
5,026
1,056
0
255
239
16
–
–
–
–
–
–
–
5
5
–
–
–
–
–
–
–
–
–
–
211
–
–
– 2,854,280
1,113,408 3,967,688
–
191,595
43,664
235,259
–
370,245
167,431
370,245
167,431
537,676
24,800
21,374
3,426
–
503
503
–
–
5,397
5,397
–
–
99
–
–
99
6,329
–
–
6,329
3,526
3,427
–
99
50,668
38,731
5,608
6,329
54,194
42,158
5,608
6,428
230,989
96,752
236,484
101,536
338,020
–
–
–
–
4,177
1,318
4,733
51
8,910
1,369
230,989
96,752
230,989
96,752
327,741
–
–
–
–
5
–
–
5
–
–
–
–
249,938
249,938
5,397
5,397
244,536
244,536
5
5
Net position
(4,897,284)
(1,490,668)
494,151
680,093
991,731
411,115
(85,850)
562,211
2,929,632 1,630,744
(2,751)
474,961
(570,371)
2,268,456
1,698,085
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:24)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
189
36.5 Market risk
The VaR methodology is a statistically
defined, probability-based approach that
The Group takes on exposure to market risks.
takes into account market volatilities as
Market risks arise from open positions in interest
well as risk diversification by recognizing
rate, currency and equity products, all of which
offsetting positions and correlations between
are exposed to general and specific market
products and markets. Risks can be measured
movements. The Group applies a ‘Value-at-Risk’
consistently across all markets and products,
(VaR) methodology to estimate the market risk
and risk measures can be aggregated to
of positions held and the maximum losses
arrive at a single risk number. The one-day
expected, based upon a number of assumptions
99% VaR number used by the Group reflects
for various changes in market conditions. The
the 99% probability that the daily loss will
Management Board sets limits on the value of
not exceed the reported VaR.
risk that may be accepted, which is monitored
on a daily basis. (Analysis of liquidity risk, foreign
VaR methodologies are employed to
currency risk and interest rate risk is detailed
calculate daily risk numbers include
in Notes 36.2, 36.3 and 36.4, respectively.)
the historical and variance-covariance
36.5.1 Market Risk sensitivity
analysis
approach. The diversification effect has not
been validated among the various market
risk types when capital calculation
happens.
In addition to these two methodologies,
The VaR risk measure estimates the potential
Monte Carlo simulations are applied to
loss in pre-tax profit over a given holding
the various portfolios on a monthly basis
period for a specified confidence level.
to determine potential future exposure.
The VaR of the trading portfolio can be summarized as follows (in HUF million):
Historical VaR
(99%, one-day) by risk type
Foreign exchange
Interest rate
Equity instruments
Diversification
Total VaR exposure
Average
2020
1,530
146
141
–
1,817
2019
479
172
21
–
672
The table above shows the VaR figures by
sensitivity analysis complements VaR and
asset classes. Since processes driving the value
helps the Group to assess its market risk
of the major asset classes are not independent
exposures. Details of sensitivity analysis for
(for example the depreciation of HUF against
foreign currency risk are set out in Note 36.5.2,
the EUR mostly coincide with the increase of
for interest rate risk in Note 36.5.3 and for
the yields of Hungarian Government Bonds),
equity price sensitivity analysis in Note 36.5.4.
a diversification impact emerges, so the
overall VaR is less than the sum of the VaR
of each individual asset class.
36.5.2 Foreign currency sensitivity
analysis
While VaR captures the Group’s daily exposure
to currency and interest rate risk, sensitivity
The following table details the Group’s sensi-
analysis evaluates the impact of a reasonably
tivity to the rise and fall in the HUF exchange
possible change in interest or foreign currency
rate against EUR and USD, over a 3 months
rates over a year. The longer time frame of
period. Monte Carlo simulation is used when
190
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:21)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
reporting foreign currency risk internally to
closing the former EUR –310 million strategic
key management personnel and represents
open position. As a result of the partial close,
Management’s assessment of the reasonably
an open position of EUR –132 million remained
possible change in foreign exchange rates.
in the Bank's book evaluated against profit or
The sensitivity analysis includes only the
loss as at 31 December 2020.
residual foreign currency denominated
monetary items as partially closed strategic
A positive number below indicates an increase
open positions related to foreign activities.
in profit where the HUF strengthens against
In accordance with the Bank’s decision, the
the EUR. For a weakening of the HUF against
subsidiaries’ profit or loss measured in EUR is
the EUR, there would be an equal and opposite
going to have a higher weight than measured
impact on the profit, and the balances below
in HUF. Thus, a decision was made about
would be negative.
Probability
1%
5%
25%
50%
25%
5%
1%
Note:
Effects to the Consolidated Statement
of Profit or Loss in 3 months period
in HUF million
2020
(5,900)
(4,100)
(1,700)
(200)
1,200
3,200
4,600
2019
(12,200)
(8,400)
(3,500)
(400)
2,600
6,800
9,700
repriced with two-weeks delay, assuming
Monte Carlo simulation is based on the
no change in the margin compared to the
empirical distribution of the historical exchange
last repricing date.
rate movements between 2002 and 2020.
(cid:588)(cid:631) (cid:1)(cid:228)(cid:228)(cid:156)(cid:236)(cid:228)(cid:631)(cid:133)(cid:202)(cid:152)(cid:631)(cid:195)(cid:177)(cid:133)(cid:145)(cid:177)(cid:195)(cid:177)(cid:236)(cid:177)(cid:156)(cid:228)(cid:631)(cid:253)(cid:177)(cid:236)(cid:174)(cid:631)(cid:133)(cid:202)(cid:631)(cid:177)(cid:202)(cid:236)(cid:156)(cid:224)(cid:156)(cid:228)(cid:236)(cid:631)(cid:224)(cid:133)(cid:236)(cid:156)(cid:631)
36.5.3 Interest rate sensitivity
analysis
lower than 0.3% were assumed to be
unchanged for the whole period.
The sensitivity of interest income to changes in
BUBOR was analysed by assuming two interest
The sensitivity analyses below have been
rate path scenarios:
determined based on the exposure to interest
1) HUF base rate and BUBOR decreases
rates for both derivatives and non-derivative
gradually by 15 bps over the next year
instruments at the balance sheet date.
(probable scenario)
The analysis is prepared assuming the amount
2) HUF base rate and BUBOR decreases
of assets and liabilities outstanding at the
gradually by 60 bps over the next year
balance sheet date was outstanding for the
(alternative scenario)
whole year. The analysis was prepared by
assuming only adverse interest rate changes.
The net interest income in a one year period
The main assumptions were as follows:
after 1 January 2021 would be decreased
(cid:588) Floating rate assets and liabilities were
by HUF 1,301 million (probable scenario)
repriced to the modelled benchmark yields at
and HUF 5,732 million (alternative scenario)
the repricing dates assuming the unchanged
as a result of these simulation. A similar
margin compared to the last repricing.
simulation indicated HUF 1,205 million
(cid:588) Fixed rate assets and liabilities were repriced
(probable scenario) and HUF 3,060 million
at the contractual maturity date.
(alternative scenario) decrease in the
(cid:588) As for liabilities with discretionary repricing
Net interest income in a one year period
feature by the Bank were assumed to be
after 1 January 2020.
IFRS consolidated financial statements
191
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:21)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
This effect is counterbalanced by capital
Furthermore, the effects of an instant 10bps
gains HUF 584 million (or probable scenario),
parallel shift of the HUF, EUR and USD
HUF 2,329 million (for alternative scenario)
yield-curves on net interest income over
as at 31 December 2020 and (HUF 223 million
a one-year period and on the market value
for probable scenario, HUF 2,670 million for
of the hedge government bond portfolio
alternative scenario as at 31 December 2019)
booked against capital was analysed.
on the government bond portfolio held for
The results can be summarized as follows
hedging (economic).
(in HUF million):
Description
2020
2019
HUF (0.1%) parallel shift
EUR (0.1%) parallel shift
USD (0.1%) parallel shift
Total
Effects to the net
interest income
(one-year period)
(1,809)
(2,179)
(497)
(4,485)
Effects to capital
(Price change of
government bonds at
fair value through other
comprehensive income)
389
–
–
389
Effects to the net
interest income
(one-year period)
(1,742)
(1,261)
(253)
(3,256)
Effects to capital
(Price change of
government bonds at
fair value through other
comprehensive income)
558
–
–
558
36.5.4 Equity price sensitivity
analysis
by recognizing offsetting positions and
correlations between products and markets.
The daily loss will not exceed the reported VaR
The following table shows the effect of the
number with 99% of probability.
equity price sensitivity. The Group uses VaR
The stress test assumes the largest price
calculation with 1 day holding period and
movement of the last year and calculates with
a 99% confidence level. The VaR methodology
it as the adverse direction. These scenarios
is a statistically defined, probability-based
show the loss of the portfolio when all prices
approach that takes into account market
change with the maximum amount of the
volatilities as well as risk diversification
last year.
Description
VaR (99%, one day, HUF million)
Stress test (HUF million)
2020
141
(233)
2019
21
(52)
36.6 Capital management
continuous monitoring of their capital
position, in the long run the strategic
Capital management
The primary objective of the capital manage-
and the business planning, which includes
the monitoring and forecast of the capital
ment of the Group is to ensure the prudent
position.
operation, the entire compliance with the
The Group members maintain the capital
prescriptions of the regulator for a persistent
adequacy required by the regulatory bodies
business operation and maximising the
and the planned risk taking mainly by means
shareholder value, accompanied by an optimal
of ensuring and developing their profitability.
financing structure.
In case the planned risk level of a Group
The capital management of the Group members
member exceeded its Core and the previously
includes the management and evaluation of the
raised Supplementary capital, it ensures
shareholders’ equity available for hedging risks,
the prudent operation by occasional
other types of funds to be recorded in the equity
measures. A further tool in the capital
and all material risks to be covered by the capital.
management of the Bank is the dividend
The basis of the capital management of the
policy, and the transactions performed with
Group members in the short run is the
the treasury shares.
192
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:21)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Capital adequacy
The Capital Requirements Directive package
The Group uses the standard method for deter-
mining the regulatory capital requirements
(CRDIV/CRR) transposes the new global
of the credit risk and market risk, and parallel
standards on banking regulation (known as
to that, the base indicator method and the
the Basel III agreement) into the EU legal
advanced method (AMA) in case of the opera-
framework. The new rules are applied from
tional risk.
1 January 2014. They set stronger prudential
For international comparison purposes,
requirements for institutions, requiring them
the Group calculated the Regulatory capital
to keep sufficient capital reserves and liquidity.
based on IFRS data as adopted by the EU, and
This new framework makes institutions in the
the consolidated Capital adequacy ratio based
EU more solid and strengthens their capacity
on this in accordance with the regulations of
to adequately manage the risks linked to
Basel III. The Capital adequacy ratio of the Group
their activities, and absorb any losses they may
(IFRS) was 17.7%, the Regulatory capital was
incur in doing business.
HUF 2,669,806 million and the Total regulatory
The capital adequacy of the Group is supervised
capital requirement was HUF 1,203,751 million
based on the financial statements data
as at 31 December 2020. The same ratios
prepared in accordance with IFRS applying the
calculated as at 31 December 2019 were the
current directives, rulings and indicators from
following: 16.8%, HUF 2,390,688 million and
1 January 2014.
HUF 1,140,976 million.
The Group has entirely complied with the
regulatory capital requirements in year 2020
as well as in year 2019.
Calculation on IFRS basis (in HUF million)
Core capital (Tier 1) = Common Equity Tier1 (CET1)
Issued capital
Reserves
Fair value corrections
Other capital components
Non-controlling interests
Treasury shares
Goodwill and other intangible assets
Other adjustments
Additional Tier 1 (AT1)
Supplementary capital (Tier2)
Subordinated bonds and loans
Other issued capital components
Components recognized in T2 capital issued by subsidiaries
Regulatory capital*
Credit risk capital requirement
Market risk capital requirement
Operational risk capital requirement
Total requirement regulatory capital
Surplus capital
CET1 ratio
Tier 1 ratio
Capital adequacy ratio
2020
2,316,118
28,000
2,342,166
33,991
39,204
1,795
(145,939)
(174,997)
191,898
353,688
263,439
89,935
314
2,669,806
1,071,163
19,170
113,418
1,203,751
1,466,055
15.40%
15.40%
17.70%
2019
2,055,106
28,000
2,208,519
49,501
(33,225)
2,571
(60,931)
(230,017)
90,688
–
335,582
244,536
89,935
1,111
2,390,688
1,002,390
15,905
122,681
1,140,976
1,249,712
14.40%
14.40%
16.80%
* Due to the Covid-19 pandemic, in order to strengthen the banking system, National Bank of Hungary recommended banks that
dividends are neither approved, nor paid until 30 September 2021. But the potential amount of dividend is deducted from the
regulatory capital due to prudential reasons (in accordance with regulation 241/2014 EU). The final amount of dividend payment
depends on the decision of the Annual General Meeting and may change the capital adequacy ratios.
IFRS consolidated financial statements
193
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:21)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Basel III
The components of the Common Equity Tier1
foreign operations), Non-controlling interest,
Treasury shares, Goodwill and other Intangible
capital (CET1) are the following: Issued capital,
assets, other adjustments (due to prudential
Reserves (Profit reserves, Other reserves,
filters, due to deferred tax receivables, due to
Changes in the equity of subsidiaries, Net Profit
temporary regulations).
for the year, Changes due to consolidation) Fair
Supplementary capital (Tier2): Subordinated
value adjustments, Other capital components,
loan capital, Supplementary loan capital,
(Revaluation reserves, Share based payments,
Other issued capital components, Components
Cash-flow hedges, Net investment hedge in
recognized in T2 capital issued by subsidiaries.
NOTE 37:
RECLASSIFICATION AND TRANSFER OF FINANCIAL
INSTRUMENTS (in HUF mn)
Reclassification from securities held for trading to securities at fair value through
other comprehensive income as at 31 December 2020:
Date of
reclassification
Reason for
reclassification
Type
of securities
Nominal
value at
reclassification
Fair value
at the date of
reclassification
EIR at the
date of
reclassification
Interest
income
1 September 2018
Change in
business model
Retail Hungarian
government bonds
1,069
1,087
2%–3%
28
During the year 2018, securities issued by the
collecting the future contractual cash-flows
Hungarian Government with the nominal
and/or selling them.
value of HUF 66,506 million were transferred
In 2018, the terms and conditions of sale of
from the trading portfolio to the securities
retail government bonds and the pricing
at fair value through other comprehensive
environment have changed significantly,
income of which HUF 1,087 million remaining
as a result of which the Bank is no longer
amount was presented as at 31 December 2020.
able to maintain its sole trading intent with
The Bank has previously held retail government
these securities that the Bank applied earlier.
bonds in the portfolio at fair value through
Furthermore there is an option-agreement
other comprehensive income. During 2018
between the Bank and the Government Debt
the Bank changed the business model of the
Management Agency (“GDMA”) that GDMA will
retail government bonds to manage all on
buy back this portfolio therefore it has been
the basis of a single business model aimed at
reclassified.
Financial assets transferred but not derecognized:
2020
2019
Transferred
assets
Carrying amount
Associated
liabilities
Transferred
assets
Associated
liabilities
Carrying amount
48,176
48,176
136,316
1,171
137,487
185,663
44,287
44,287
119,789
–
119,789
164,076
40,912
40,912
–
5,263
5,263
46,175
40,253
40,253
–
2,555
2,555
42,808
Financial assets at fair value through
other comprehensive income
Debt securities
Total
Financial assets at amortized cost
Debt securities
Loans and advances
Total
Total
194
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:21)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
As at 31 December 2020 and 2019, the Group
of the Group in the appropriate securities
had obligation from repurchase agreements
category. The related liability is measured
(repo liability) of HUF 109,612 million and
at amortized cost in the Consolidated
HUF 111 million respectively. Securities sold
Statement of Financial Position as “Amounts
temporarily under repurchase agreements
due to the National Governments, to the
will continue to be recognized in the
National Banks and other banks and repo
Consolidated Statement of Financial Position
liabilities”.
NOTE 38:
OFF-BALANCE SHEET ITEMS AND DERIVATIVE FINANCIAL
INSTRUMENTS (in HUF mn)
In the normal course of business, the Group
and are referred to as off-balance sheet
becomes a party to various financial
financial instruments. The following represent
transactions that are not reflected on the
notional amounts of these off-balance sheet
Consolidated Statement of Financial Position
financial instruments, unless stated otherwise.
Contingent liabilities:
Commitments to extend credit
Guarantees arising from banking activities
Factoring loan commitment
Confirmed letters of credit
Other
Contingent liabilities and commitments total in accordance with IFRS 9
Legal disputes (disputed value)
Other
Contingent liabilities and commitments total in accordance with IAS 37
Total
2020
3,420,718
1,159,699
305,269
35,715
35,965
4,957,366
53,486
22,164
75,650
5,033,016
2019
3,027,112
966,649
228,145
33,296
–
4,255,202
30,844
57,151
87,995
4,343,197
Legal disputes
At the balance sheet date the Group was
Commitments to extend credit,
guarantees and letters of credit
involved in various claims and legal
The primary purpose of these instruments
proceedings of a nature considered normal to
is to ensure that funds are available to a
its business. The level of these claims and legal
customer as required. Guarantees and standby
proceedings corresponds to the level of claims
letters of credit, which represent irrevocable
and legal proceedings in previous years.
assurances that the Group will make payments
The Group believes that the various asserted
obligations to third parties, carry the same
in the event that a customer cannot meet its
claims and litigations in which it is involved
credit risk as loans.
will not materially affect its financial position,
future operating results or cash-flows,
Documentary and commercial letters of credit,
although no assurance can be given with
which are written undertakings by the Group
respect to the ultimate outcome of any such
on behalf of a customer authorising a third
claim or litigation. Provisions due to legal
party to draw drafts on the Group up to a
disputes were HUF 34,894 million as at
stipulated amount under specific terms and
31 December 2020 and HUF 28,650 million as at
conditions, are collateralised by the underlying
31 December 2019, respectively. (See Note 24.)
shipments of goods to which they relate
IFRS consolidated financial statements
195
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:21)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
and therefore carry less risk than a direct
the primary obligor or principal to perform
borrowing.
its obligations under a contract is in question,
or when there is some public or private
Commitments to extend credit represent
interest which requires protection from the
unused portions of authorisations to extend
consequences of the principal's default or
credit in the form of loans, guarantees or
delinquency.
letters of credit. With respect to credit risk
on commitments to extend credit, the Group
A contract of guarantee is subject to the
is potentially exposed to loss in an amount
statute of frauds (or its equivalent local laws)
equal to the total unused commitments.
and is only enforceable if recorded in writing
However, the likely amount of loss is less than
and signed by the surety and the principal.
the total unused commitments since most
If the surety is required to pay or perform
commitments to extend credit are contingent
due to the principal's failure to do so, the
upon customers maintaining specific credit
law will usually give the surety a right of
standards.
subrogation, allowing the surety to use the
surety's contractual rights to recover the cost
Guarantees, irrevocable letters of credit and
of making payment or performing on the
undrawn loan commitments are subject
principal's behalf, even in the absence of an
to similar credit risk monitoring and credit
express agreement to that effect between
policies as utilised in the extension of loans.
the surety and the principal.
The Management of the Group believes the
market risk associated with guarantees,
irrevocable letters of credit and undrawn loan
Derivatives
commitments are minimal.
Guarantees, payment undertakings
arising from banking activities
The Group maintains strict control limits on
net open derivative positions, i.e. the difference
between purchase and sale contracts, by both
amount and term. At any time the amount
subject to credit risk is limited to the current
Payment undertaking is a promise
fair value of instruments that are favourable
by the Group to assume responsibility for
to the Group (i.e. assets), which in relation
the debt obligation of a borrower if that
to derivatives is only a small fraction of the
borrower defaults until a determined
contract or notional values used to express the
amount, until a determined date, in case of
volume of instruments outstanding. This credit
fulfilling conditions, without checking the
risk exposure is managed as part of the overall
underlying transactions. The guarantee’s
lending limits with customers, together with
liability is joint and primary with the principal,
potential exposures from market movements.
in case of payment undertaking, while the
Collateral or other security is not usually
Group assumes the obligation derived from
obtained for credit risk exposures on these
guarantee independently by the conditions
instruments, except for trading with clients,
established by the Group. A guarantee is
where the Group in most of the cases requires
most typically required when the ability of
margin deposits.
196
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:21)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 39:
SHARE-BASED PAYMENTS AND EMPLOYEE BENEFITS
(in HUF mn)
Previously approved option program required
HUF 2,000 discount at the assessment date,
a modification thanks to the introduction of
and earnings for the shares at the payment
the Bank Group Policy on Payments accepted
date is maximum HUF 4,000. Employee
in resolution of Annual General Meeting
benefits are all forms of consideration given
regarding to the amendment of CRD III.
by an entity in exchange for service rendered
Directives and Act on Credit Institutions and
by employees or for the termination of
Financial Enterprises.
employment. IAS 19 Employee Benefits shall
Key management personnel affected by the
be applied in accounting for all employee
Bank Group Policy receive compensation
benefits, except those to which IFRS 2 Share-
based on performance assessment generally
based Payment applies.
in the form of cash bonus and equity shares
in a ratio of 50–50%. Assignment is based on
Short-term employee benefits are employee
OTP shares, furthermore performance based
benefits (other than termination benefits)
payments are deferred in accordance with
that are expected to be settled wholly before
the rules of Credit Institutions Act.
twelve months after the end of the annual
The Bank ensures the share-based payment
reporting period in which the employees
part for the management personnel of the
render the related service. Post-employment
Group members.
benefits are employee benefits (other than
During implementation of the Remuneration
termination and short-term employee benefits)
Policy of the Group appeared that in case of
that are payable after the completion of
certain foreign subsidiaries it is not possible
employment. Post-employment benefit plans
to ensure the originally determined share-
are formal or informal arrangements under
based payment because of legal reasons
which an entity provides post-employment
– incompatible with relevant EU-directives –,
benefits for one or more employees. Post-
therefore a decision was made to cancel the
employment benefit plans are classified as
share-based payment in affected countries, and
either defined contribution plans or defined
virtual share based payment – cash payment
benefit plans, depending on the economic
fixed to share price – was made from 2017.
substance of the plan as derived from its
The quantity of usable shares for individuals
principal terms and conditions.
calculated for settlement of share-based
payment shall be determined as the ratio of
Termination benefits are employee benefits
the amount of share-based payment and share
provided in exchange for the termination
price determined by Supervisory Board2.
of an employee’s employment as a result of
The value of the share-based payment at
either: an entity’s decision to terminate an
the performance assessment is determined
employee’s employment before the normal
within 10 days by Supervisory Board based on
retirement date or an employee’s decision to
the average of the three previous trade day’s
accept an offer of benefits in exchange for the
middle rate of OTP Bank’s equity shares fixed
termination of employment. Other long-term
on the Budapest Stock Exchange.
employee benefits are all employee benefits
At the same time the conditions of discounted
other than short-term employee benefits,
share-based payment are determined, and
postemployment benefits and termination
share-based payment shall contain maximum
benefits.
2 Until the end of 2014 Board of Directors.
IFRS consolidated financial statements
197
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:21)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
The parameters for the share-based payment relating to years from 2015 by
the Supervisory Board for periods of each year as follows:
Year
Share purchasing
at a discounted
price
Price of
remuneration
exchanged
to share
Share purchasing
at a discounted
price
Price of
remuneration
exchanged
to share
Share purchasing
at a discounted
price
Price of
remuneration
exchanged
to share
Exercise
price
Maximum
earnings
Exercise
price
Maximum
earnings
Exercise
price
Maximum
earnings
2016
2017
2018
2019
2020
2021
2022
for the year 2015
2,500
3,000
3,000
3,000
–
–
–
4,892
4,892
4,892
4,892
–
–
–
6,892
6,892
6,892
6,892
–
–
–
HUF per share
for the year 2016
–
7,200
7,200
7,200
7,200
–
–
–
2,500
3,000
3,500
4,000
–
–
–
9,200
9,200
9,200
9,200
–
–
for the year 2017
–
–
8,064
8,064
8,064
8,064
8,064
–
–
3,000
3,500
4,000
4,000
4,000
–
–
10,064
10,064
10,064
10,064
10,064
Year
2019
2020
2021
2022
2023
2024
2025
2026
Share purchasing
at a discounted
price
Price of
remuneration
exchanged
to share
Share purchasing
at a discounted
price
Price of
remuneration
exchanged
to share
Exercise
price
Maximum
earnings
Exercise
price
Maximum
earnings
for the year 2018
for the year 2019
HUF per share
10,413
10,413
10,413
10,913
10,913
10,913
10,913
–
4,000
4,000
4,000
4,000
4,000
4,000
4,000
–
12,413
12,413
12,413
12,413
12,413
12,413
12,413
–
–
9,553
9,553
9,553
9,553
9,553
9,553
9,553
–
4,000
4,000
4,000
4,000
4,000
4,000
4,000
–
11,553
11,553
11,553
11,553
11,553
11,553
11,553
Based on parameters accepted by Supervisory Board relating to the year 2016
effective pieces are follows as at 31 December 2020:
Share-purchasing period started in 2017
Remuneration exchanged to share
provided in 2017
Share-purchasing period started in 2018
Remuneration exchanged to share
provided in 2018
Share-purchasing period started in 2019
Remuneration exchanged to share
provided in 2019
Share-purchasing period started in 2020
Remuneration exchanged to share
provided in 2020
Approved
pieces
of shares
Exercised until
31 December
2020
147,984
4,288
321,528
8,241
147,984
4,288
321,528
8,241
161,446
161,446
4,033
4,033
166,231
164,039
4,303
4,303
Weighted average
share price at the
date of exercise
(in HUF)
9,544
9,194
10,387
10,098
12,415
11,813
13,585
11,897
Expired
pieces
Exercisable as
at 31 December
2020
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,192
–
198
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:21)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Based on parameters accepted by Supervisory Board relating to the year 2017
effective pieces are follows as at 31 December 2020:
Share-purchasing period started in 2018
Remuneration exchanged to share
provided in 2018
Share-purchasing period started in 2019
Remuneration exchanged to share
provided in 2019
Share-purchasing period started in 2020
Remuneration exchanged to share
provided in 2020
Share-purchasing period starting in 2021
Remuneration exchanged to share
applying in 2021
Share-purchasing period starting in 2022
Remuneration exchanged to share
applying in 2022
Approved
pieces
of shares
Exercised until
31 December
2020
108,243
11,926
212,282
26,538
101,571
11,584
–
–
–
–
108,243
11,926
212,282
26,538
94,830
11,584
–
–
–
–
Weighted average
share price at the
date of exercise
(in HUF)
11,005
10,098
12,096
11,813
11,878
11,897
–
–
–
–
Expired
pieces
Exercisable as
at 31 December
2020
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,741
–
120,981
12,838
42,820
3,003
Based on parameters accepted by Supervisory Board relating to the year 2018
effective pieces are follows as at 31 December 2020:
Share-purchasing period started in 2019
Remuneration exchanged to share
provided in 2019
Share-purchasing period started in 2020
Remuneration exchanged to share
provided in 2020
Share-purchasing period starting in 2021
Remuneration exchanged to share
applying in 2021
Share-purchasing period starting in 2022
Remuneration exchanged to share
applying in 2022
Share-purchasing period starting in 2023
Remuneration exchanged to share
applying in 2023
Remuneration exchanged to share
applying in 2024
Remuneration exchanged to share
applying in 2025
Approved
pieces
of shares
Exercised until
31 December
2020
82,854
17,017
150,230
33,024
82,854
17,017
3,448
33,024
Weighted average
share price at the
date of exercise
(in HUF)
13,843
11,829
12,471
11,897
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Expired
pieces
Exercisable as
at 31 December
2020
–
–
–
–
–
–
–
–
–
–
–
–
–
–
146,782
–
74,529
16,167
99,341
17,042
45,155
4,114
864
432
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:15)(cid:21)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
199
Based on parameters accepted by Supervisory Board relating to the year 2019
effective pieces are follows as at 31 December 2020:
Share-purchasing period started in 2020
Remuneration exchanged to share
provided in 2020
Share-purchasing period starting in 2021
Remuneration exchanged to share
applying in 2021
Share-purchasing period starting in 2022
Remuneration exchanged to share
applying in 2022
Share-purchasing period starting in 2023
Remuneration exchanged to share
applying in 2023
Share-purchasing period starting in 2024
Remuneration exchanged to share
applying in 2024
Remuneration exchanged to share
applying in 2025
Remuneration exchanged to share
applying in 2026
Approved
pieces
of shares
Exercised until
31 December
2020
91,403
22,806
91,403
22,806
Weighted average
share price at the
date of exercise
(in HUF)
12,218
11,897
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Expired
pieces
Exercisable as
at 31 December
2020
–
–
–
–
–
–
–
–
–
–
–
–
–
–
202,386
32,238
109,567
15,554
125,771
18,025
44,421
6,279
1,000
500
Effective pieces relating to the periods
Defined benefit plan
starting in 2021–2026 settled during valuation
of performance of year 2017–2019, can be
Defined benefit plan is post-employment
modified based on risk assessment and
benefit plans other than defined contribution
personal changes.
plan. The Group's net obligation is calculated
by estimating the amount of employee's future
In connection with the share-based compen-
benefit based on their servicies for the current
sation for Board of Directors and connecting
and prior periods. The future value of benefit is
compensation, shares given as a part of pay-
being discounted to present value.
ments detailed above and based on performance
The Group has small number of plans and
assessment accounted as equity-settled share
mainly in Bulgaria, Serbia, Montenegro and
based transactions, HUF 3,394 million and
Slovenia. These plans are providing retirement
HUF 3,548 million was recognized as expense
benefits upon pension age as lump-sum
for the year ended 31 December 2020 and 2019
payment based either on fixed amounts or
respectively.
certain months of salary.
These plans are unfunded consequently there
are no significant plan assets associated with
these plans.
Balance as at 1 January
Increase due to acquisition
Current service cost
Interest cost
Actuarial gains from changes in demographic
assumptions
Actuarial (gains)/losses from changes
in financial assumptions
Benefits paid
Past service cost
Other increases
Closing balance
2020
4,809
–
402
66
(14)
(203)
(261)
(274)
497
5,022
2019
1,966
2,359
290
75
(137)
130
(128)
(5)
259
4,809
200 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:3)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Amounts recognized in profit or loss:
Current service cost
Net interest expense
Actuarial losses
Past service cost
Total
Actuarial assumptions:
2020
402
66
14
(274)
208
2019
290
75
29
(5)
389
The following are the main actuarial assumptions
Discount rate
Future salary increases
2020
0.46%–3%
0.4%–5%
2019
0.46%–3.5%
0.0%–5%
OTP Group expects to make insignificant amount of contribution to the defined benefit plans
during the year 2021.
NOTE 40:
RELATED PARTY TRANSACTIONS (in HUF mn)
The compensation of key management
subsidiaries involved in the decision-making
personnel, such as the members of the Board of
process in accordance with the compensation
Directors, members of the Supervisory Board,
categories defined in IAS 24 Related Party
key employees of the Bank and its major
Disclosures, is summarised below:
Compensations
Short-term employee benefits
Share-based payment
Other long-term employee benefits
Termination benefits
Post-employment benefits
Total
Loans provided to companies owned by the Management
(normal course of business)
Commitments to extend credit and guarantees
Credit lines of the members of Board of Directors
and the Supervisory Board and their close family members
(at normal market conditions)
2020
10,093
2,619
870
508
–
14,090
87,791
36,758
361
2019
8,453
2,732
636
40
35
11,896
55,517
27,708
666
Types of transactions
2020
2019
Loans provided
Client deposits
Net interest income on loan provided
Net fee income
Non-consolidated
subsidiaries
16,395
6,541
150
26
Associated
companies
523
80
10
1
Non-consolidated
subsidiaries
2,656
5,335
32
30
Associated
companies
513
–
–
–
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:3)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
201
An analysis of overdraft loan credit line is as follows:
Members of Board of Directors and their close family members
Members of Supervisory Board and their close family members
Executives and their close family members
Total
2020
130
21
159
310
2019
153
4
–
157
An analysis of credit limit related to Mastercard Gold/Mastercard Bonus Gold is as follows:
Members of Board of Directors and their close family members
Members of Supervisory Board and their close family members
Executives and their close family members
Total
2020
23
11
73
107
2019
39
–
1
40
An analysis of credit limit related to Mastercard Classic/Mastercard Bonus is as follows:
Members of Board of Directors and their close family members
Members of Supervisory Board and their close family members
Total
An analysis of credit limit related to Visa Card is as follows:
Members of Board of Directors and their close family members
Members of Supervisory Board and their close family members
Total
2020
2
1
3
2020
48
5
53
An analysis of credit limit related to AMEX Gold credit card loan is as follows:
Members of Board of Directors and their close family members
Executives and their close family members
Total
2020
3
–
3
2019
–
–
–
2019
39
2
41
2019
7
33
40
An analysis of credit limit related to Visa Infinite/AMEX Platinum credit card loan is as follows:
Members of Board of Directors and their close family members
Members of Supervisory Board and their close family members
Executives and their close family members
Total
An analysis of Lombard loans, Personal loans is as follows:
Members of Board of Directors and their close family members
Members of Supervisory Board and their close family members
Executives and their close family members
Total Lombard loans
Members of Board of Directors and their close family members
Members of Supervisory Board and their close family members
Executives and their close family members
Total Personal loans
202
OTP Bank Annual Report 2020
2020
27
5
110
142
2020
54,050
–
1,442
55,492
105
4
14
123
2019
20
5
69
94
2019
53,661
10
1,419
55,090
214
–
7
221
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:3)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
An analysis of “Baby expecting loan” and AXA real estate loans at the Bank is as follows:
Members of Board of Directors and their close family members
Executives and their close family members
Total “Baby expecting loan”
Executives and their close family members
Total Axa real estate loans
An analysis of payment to executives of the Group related to their activity
in Board of Directors and Supervisory Board is as follows:
Members of Board of Directors
Members of Supervisory Board
Total
2020
9
66
75
34
34
2020
2,502
204
2,706
2019
–
–
–
–
–
2019
3,060
227
3,287
In the normal course of business, the Bank
statements taken as a whole. Related
enters into other transactions with its
party transactions were made on terms
unconsolidated subsidiaries of the Group,
equivalent to those that prevail in arm’s
the amounts and volumes of which are not
length transactions and such terms
significant to these consolidated financial
can be substantiated.
NOTE 41:
ACQUISITION (in HUF mn)
Purchase and consolidation
of subsidiaries
A comprehensive due diligence was performed
before every acquisition decision, where in
accordance with the main statements of
The Société Générale Group made a strategic
the due diligence, the market environment,
decision about the disposal of its bank
the historical performance of the target
subsidiaries in the Central and Eastern
and the expected profit-making capacity of
European countries and the Balkan Region,
the target for the period after the closing
in order to be able to strengthen its position
according to the business plan, the realistic
in other regions. The strategic goal of
range of the purchase price was defined.
OTP Group is to strengthen its presence in
Having taken into consideration some other
the Central and Eastern European region
aspects, management laid down the proposed
and to enter other markets of strategic
purchase price. Purchasing an entity with
importance. By completing these transactions
positive or negative goodwill is reasoned by
the parties achieved part of their strategic
altogether the expected cost synergies arising
goals. Based on market standards, OTP Group
from the market situation and the survey of
made the due diligence of the subsidiaries
joint profit-making capacity, the size of the
using data provided by the Vendor, then
marge typical for the markets, and other
in line with the process defined by the Vendor,
strategic considerations (gain of new market
after several biddings, the decision was
shares or increasing them).
made about the selected subsidiaries.
Individually the purchase prices were not
Following the agreement in principles the
made public – as it was agreed with the
parties finalized the details of the purchase
Vendor – however, the aggregated purchase
agreements which were fixed in contracts.
price was HUF 460,077 million.
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:3)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
203
On 13 December 2019 the financial closure of
subsidiary of Société Générale Group and
the Slovenian transaction has been completed
other local subsidiaries held by SGS, so it was
(after the acquisition agreement was signed on
consolidated from September 2019.
2 May 2019). As a result, OTP Bank has become
99.73% owner of SKB Banka, the Slovenian
In line with the purchase agreement signed
subsidiary of Société Générale Group and other
on 1 August 2018 by OTP Bank and the Société
local subsidiaries held by SKB Banka, so it was
Générale Group, on 29 March 2019 the financial
consolidated from December 2019.
closure of the Albanian transaction has been
completed and it was consolidated. As a result,
On 25 July 2019 the financial closure of the
OTP Bank has become the 100% owner of
Moldovan transaction has been completed
Banka Société Générale Albania SH.A.
(after the acquisition agreement was signed
(“SGAL”), the Albanian subsidiary of Société
on 5 February, 2019). As a result, OTP Bank
Générale Group, so it was consolidated from
has become 96.69% owner of Mobiasbanca
March 2019.
– Groupe Société Générale S.A. (“MBSG”),
the Moldovan subsidiary of Société Générale
The financial closure of the transaction, based
Group, so it was consolidated from July 2019.
on the acquisition agreement on purchasing
99.74% shareholding of Société Générale
The financial closure of the transaction,
Expressbank (“SGEB”), the Bulgarian subsidiary
based on the acquisition agreement on
of Société Générale Group (“SG”), and other
purchasing 90.56% shareholding of Société
local subsidiaries held by SGEB, between
Générale banka Montenegro a.d. (“SGM”),
Société Générale Group and DSK Bank EAD
the Montenegrin subsidiary of Société
(“DSK Bank”), the Bulgarian subsidiary of
Générale Group between Crnogorska
OTP Bank, has been completed on 15 January
komercijalna banka a.d., the Montenegrin
2019, so it was consolidated from January
subsidiary of OTP Bank and Société Générale
2019. The acquisition agreement between SG
Group, has been completed on 16 July 2019.
and DSK Bank was signed on 1 August 2018.
The acquisition agreement between SG and
CKB was signed on 27 February 2019 and the
The Bulgarian Expressbank AD merged with
Montenegrin subsidiary was consolidated
its parent DSK Bank AD, which was entered in
from July 2019.
the company register on the 30th of April 2020.
The integration of whole bank systems
On 24 September 2019 the financial closure
and information was completed on the
of the Serbian transaction has been completed
4th of May 2020. Podgorička banka AD Podgorica
(after the acquisition agreement was signed
in Montenegro merged with its parent bank on
on 19 December 2018). As a result, OTP Bank
the 11th of December 2020, named Crnogorska
has become 100% owner of Société Générale
komercijalna banka a.d. Podgorica after the
banka Srbija a.d. Beograd (“SGS”), the Serbian
merger.
204 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:3)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
The fair value of the assets and liabilities acquired is as follows:
Cash amounts and due from banks
and balances with the National Banks
Placements with other banks,
net of loss allowance for placements
and net of repo receivables
Financial assets at fair value
through profit or loss
Securities at fair value through
other comprehensive income
Loans at amortized cost
Loans mandatorily at fair value
through profit or loss
Associates and other investments
Securities at amortized cost
Property and equipment
Intangible assets
Right-of-use assets
Investment properties
Derivative financial assets
designated as hedge accounting
Other assets
Total assets
Amounts due to the banks, the
National Governments, deposits from
the National Banks and other banks
and repo liabilities
Financial liabilities designated
at fair value through profit or loss
Deposits from customers
Liabilities from issued securities
Derivative financial liabilities
held for trading
Derivative financial liabilities
designated as hedge accounting
Leasing liabilities
Other liabilities
Subordinated bonds and loans
Total liabilities
Net assets
SKB Banka d.d.
Ljubljana
Group
Mobiasbanca
– OTP Group S.A.
Podgorička
banka AD
Podgorica
OTP banka
Srbija a.d.
Beograd
Group
Banka OTP
Albania SH.A.
Expressbank
Group
(86,661)
(8,171)
(48,951)
(123,247)
(35,048)
(119,589)
(177)
(74,906)
(733)
(13)
(3,951)
(113,360)
(5,148)
(93,807)
(56)
(673)
(3,706)
–
(20,110)
–
(10,272)
(106,992)
(50,424)
(116,786)
(997,417)
(96,837)
(127,867)
(694,521)
(125,400)
(793,134)
(2,586)
–
(83,625)
(11,896)
(14,874)
(1,905)
(300)
–
–
–
(17,050)
(3,424)
(879)
(1,733)
–
–
–
–
–
(3,095)
(1,224)
(263)
–
–
–
–
(5,402)
(10,052)
(11,457)
(2,430)
–
–
–
–
–
(626)
(1,746)
(1,256)
–
–
–
(803)
–
(19,178)
(15,793)
(4,838)
–
–
(10,289)
(1,308,685)
(1,013)
(204,069)
(751)
(193,829)
(5,062)
(962,882)
(1,373)
(219,824)
(5,487)
(1,209,078)
260,395
15,870
30,518
229,216
18,762
139,753
2,005
886,419
–
–
3,016
1,909
16,976
–
1,170,720
(137,965)
Net assets total
Non-controlling interest
Negative goodwill
Net cash
–
–
–
–
–
152,145
–
127,663
–
541,005
–
175,534
–
–
–
–
3,305
–
171,320
(32,749)
–
–
246
11,739
–
170,166
(23,663)
–
–
2,422
16,425
24,244
813,312
(149,570)
–
–
1,257
1,838
–
197,391
(22,433)
874,910
–
3,497
–
4,838
16,886
3,878
1,043,762
(165,316)
2019
(531,696)
4,103*
67,516
(460,077)
* Non-controlling interest was measured at its proportionate share of net assets of the acquiree.
IFRS consolidated financial statements
205
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:3)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Breakdown of the acquired entity’s income, profit/loss from the date of the acquisition:
SKB Banka d.d. Ljubljana Group
Mobiasbanca – OTP Group S.A.
Podgorička banka AD Podgorica
OTP banka Srbija a.d. Beograd Group
Banka OTP Albania SH.A.
Expressbank Group
Total
Interest income
–
5,309
3,991
9,820
7,418
34,204
60,742
Net result
–
1,508
691
2,720
1,173
16,682
22,774
One-off expense*
4,972
778
978
2,610
1,606
5,752
16,696
Breakdown of the acquired entity’s income, profit/loss if the Group would have acquired
from the beginning of year 2019:
SKB Banka d.d. Ljubljana Group
Mobiasbanca – OTP Group S.A.
Podgorička banka AD Podgorica
OTP banka Srbija a.d. Beograd Group
Banka OTP Albania SH.A.
Expressbank Group
Total
Interest income
30,254
11,553
8,574
39,195
9,944
34,204
133,724
Net result
21,350
4,255
2,755
18,519
2,075
16,682
65,636
One-off expense*
4,972
778
978
2,610
1,606
5,752
16,696
With the acquisitions the following shares were purchased:
SKB Banka d.d. Ljubljana
SKB Leasing d.o.o.
SKB Leasing Select d.o.o.
Mobiasbanca-OTP Group S.A.
Podgorička banka AD Podgorica
OTP banka Srbija a.d. Beograd
OTP Leasing Srbija d.o.o. Beograd
OTP Osiguranje ADO Beograd
Banka OTP Albania SH.A.
Expressbank AD
OTP Leasing EOOD
Express Factoring EOOD
Express Life insurance Joint-Stock
Company
Number of shares
12,614,965
–
–
9,669,155
87,602
5,331,016
–
305,408
67,409
33,584,555
–
–
Type
ordinary share
–
–
ordinary share
ordinary share
ordinary share
–
ordinary share
ordinary share
ordinary share
–
–
Voting rights
99.72%
100.00%
100.00%
96.69%
90.56%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
29,918
ordinary share
100.00%
* The net result was decreased by the loss allowance on loans in accordance with IFRS 9 after the first day of the acquisition (Day 1).
206 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:3)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 42:
SIGNIFICANT SUBSIDIARIES AND ASSOCIATES (in HUF mn)
The control is established when the Group
If the control can’t be obviously determined
has the right and exposure over the variable
then it should be supposed that the control
positive yield of the investee but the same
does not exist.
time put up with the consequences of the
negative returns and the Group by its decisions
Significant influence is presumed by the Group
is able to influence the extent of the yields.
to exist – unless the contrary case is proven –
The Group primarily considering the following
when the Group holds 20% or more of the
factors in the process of determining the
voting power of an investee but does not have
existing of the control:
a control.
(cid:588)(cid:631) (cid:177)(cid:202)(cid:252)(cid:156)(cid:228)(cid:236)(cid:177)(cid:168)(cid:133)(cid:236)(cid:177)(cid:209)(cid:202)(cid:631)(cid:209)(cid:167)(cid:631)(cid:236)(cid:174)(cid:156)(cid:631)(cid:152)(cid:156)(cid:146)(cid:177)(cid:228)(cid:177)(cid:209)(cid:202)(cid:631)(cid:201)(cid:133)(cid:192)(cid:177)(cid:202)(cid:168)(cid:631)
mechanism of the entity,
Investments in companies in which the Bank
(cid:588)(cid:631) (cid:133)(cid:241)(cid:236)(cid:174)(cid:209)(cid:224)(cid:177)(cid:236)(cid:259)(cid:631)(cid:209)(cid:167)(cid:631)(cid:236)(cid:174)(cid:156)(cid:631)(cid:13)(cid:209)(cid:133)(cid:224)(cid:152)(cid:631)(cid:209)(cid:167)(cid:631)(cid:20)(cid:177)(cid:224)(cid:156)(cid:146)(cid:236)(cid:209)(cid:224)(cid:228)(cid:579)(cid:631)
has a controlling interest are detailed below.
Supervisory Board and General meeting
They are fully consolidated companies and
based on the deed of association,
incorporated in Hungary unless otherwise
(cid:588)(cid:631) (cid:156)(cid:258)(cid:177)(cid:228)(cid:236)(cid:156)(cid:202)(cid:146)(cid:156)(cid:631)(cid:209)(cid:167)(cid:631)(cid:177)(cid:202)(cid:252)(cid:156)(cid:228)(cid:236)(cid:201)(cid:156)(cid:202)(cid:236)(cid:228)(cid:631)(cid:253)(cid:177)(cid:236)(cid:174)(cid:631)(cid:221)(cid:224)(cid:156)(cid:167)(cid:156)(cid:224)(cid:156)(cid:202)(cid:236)(cid:177)(cid:133)(cid:195)(cid:631)
stated. The Bank considers the subsidiaries as
voting rights.
cash generating units.
Significant subsidiaries
Name
DSK Bank EAD (Bulgaria)
OTP Bank JSC (Ukraine)
JSC “OTP Bank” (Russia)
OTP banka d.d. (Croatia)
OTP Bank Romania S.A. (Romania)
Vojvodjanska banka a.d. Novi Sad (Serbia)
OTP banka Srbija a.d. Beograd (Serbia)
Crnogorska komercijalna banka a.d. (Montenegro)
Banka OTP Albania SH.A. (Albania)
Mobiasbanca – OTP Group S.A. (Moldova)
SKB Banka d.d. Ljubljana (Slovenia)
OTP Financing Malta Company Ltd. (Malta)
OTP Financing Netherlands B.V. (the Netherlands)
OTP Holding Ltd. (Cyprus)
OTP Financing Cyprus Ltd. (Cyprus)
OTP Factoring Ltd.
OTP Mortgage Bank Ltd.
OTP Real Estate Ltd.
Merkantil Bank Ltd.
OTP Building Society Ltd.
OTP Fund Management Ltd.
Bank Center No. 1. Ltd.
Inga Kettő Ltd.
OTP Funds Servicing and Consulting Ltd.
OTP Real Estate Leasing Ltd.
Ownership (Direct and Indirect)
2019
100.00%
100.00%
97.91%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
98.26%
99.66%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
2020
99.91%
100.00%
97.91%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
98.26%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
Activity
commercial banking services
commercial banking services
commercial banking services
commercial banking services
commercial banking services
commercial banking services
commercial banking services
commercial banking services
commercial banking services
commercial banking services
commercial banking services
refinancing activities
refinancing activities
refinancing activities
refinancing activities
work-out
mortgage lending
real estate management
and development
finance lease
housing savings and loan
fund management
real estate lease
property management
fund services
real estate leasing
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:3)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
207
Significant associates and joint ventures*
Summarized financial and non-financial information of associates and joint ventures
which are not significant on Group level and are accounted according to IAS 28 (Szallas.hu
and D-ÉG Thermoset Ltd.) or accounted on cost (Company for Cash Services Ltd.) is as follows:
2020
Total assets
Total liabilities
Shareholders’ equity
Total revenues
Ownership
Country/Headquarter
Activity
2019
Total assets
Total liabilities
Shareholders’ equity
Total revenues
Ownership
Country/Headquarter
Szallas.hu Ltd.
5,855
1,358
4,497
3,833
47.4%
Hungary, Miskolc
Web portal
services
Szallas.hu Ltd.
4,939
1,429
3,510
3,405
50.0%
Hungary, Miskolc
D-ÉG Thermoset Ltd. ** Company for Cash Services Ltd.
2,856
147
2,709
1,531
25.0%
Bulgaria, Sofia
Other financial services,
except insurance
and pension funding
3,883
4,629
(746)
2,386
24.6%
Hungary, Budapest
Wholesale of hardware,
plumbing and heating
equipment and supplies
D-ÉG Thermoset Ltd. ** Company for Cash Services Ltd.
2,736
186
2,550
1,315
25.0%
Bulgaria, Sofia
3,883
4,629
(746)
2,386
24.6%
Hungary, Budapest
Total
12,594
6,134
6,460
7,750
Total
11,558
6,244
5,314
7,106
NOTE 43:
TRUST ACTIVITIES (in HUF mn)
The Bank acts as a trustee for certain loans
As these loans and related funds are not
granted by companies or employers to their
considered to be assets or liabilities of the
employees, mainly for housing purposes.
Group, they have been excluded from
The ultimate risk for these loans rests with
the accompanying Consolidated Statement
the party advancing the funds.
of Financial Position.
The amount of loans managed by the Group as a trustee
2020
36,811
2019
37,320
* Based on unaudited financial statements.
** Main figures of D-ÉG Thermoset Ltd. based on the latest unaudited financial statements as at 31 October 2017.
208 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:3)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 44:
CONCENTRATION OF ASSETS AND LIABILITIES
In the percentage of the total assets
Receivables from, or securities issued
by the Hungarian Government or the NBH
2020
14.45%
2019
15.63%
There were no other significant concentrations
which related to exposures of clients. The Bank
of the assets or liabilities of the Group either as
makes a difference between clients or clients
at 31 December 2020 or 2019 respectively.
who are economically connected with each
other, partners, partners operating in the
The Group continuously provides the NBH
same geographical region or in the same
with reports on the extent of dependency
economic sector, exposures from customers.
on large depositors as well as the exposure
Limit-management regulation includes a
of the biggest 50 depositors towards the
specific range provision system used by the
Group.
Bank to control risk exposures. This regulation
Further to this obligatory reporting to the
has to be used by the Bank for its business
NBH, the Group pays particular attention on
(lending) risk-taking activity both in retail and
the exposure of its largest partners and cares
corporate sector.
for maintaining a closer relationship with
these partners in order to secure the stability
To specify credit risk limits Group strives their
of the level of deposits.
clients get an acceptable margin of risk based
on their financial situation. In the Group
The organisational unit of the Bank in charge
limit system has to be provided a lower level
of partner-risk management analyses the
decision-making delegation.
biggest partners on a constant basis and sets
If a Group member takes risk against a
limits on the Bank’s and the Group’s exposure
client or group of clients (either inside the
separately partner-by-partner. If necessary,
local economy or outside), the client will be
it modifies partner-limits in due course
qualified as a group level risk and these limits
thereby reducing the room for manoeuvring
will be specified at group level.
of the Treasury and other business areas
The validity period of this policy is 12 months.
The limit shall be reviewed prior to the expiry
The Bank’ internal regulation (Limit-manage-
date but at least once a year – based on the rele-
ment regulation) controls risk management
vant information required to limit calculations.
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:3)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
209
NOTE 45:
EARNINGS PER SHARE (in HUF mn)
Consolidated Earnings per share attributable
preference dividends, by the weighted average
to the ordinary shares of the Group are
number of ordinary shares outstanding during
determined by dividing consolidated Net
the year. Dilutive potential ordinary shares are
profit for the year attributable to ordinary
deemed to have been converted into ordinary
shareholders, after the deduction of declared
shares.
Earnings per share from continuing and discontinued operations
Consolidated net profit for the year attributable to ordinary
shareholders (in HUF mn)
Weighted average number of ordinary shares outstanding
during the year for calculating basic EPS (number of share)
Basic Earnings per share (in HUF)
Consolidated net profit for the year attributable to ordinary
shareholders (in HUF mn)
Modified weighted average number of ordinary shares outstanding
during the year for calculating diluted EPS (number of share)
Diluted Earnings per share (in HUF)
2020
2019
259,416
412,241
258,461,554
261,593,299
1,004
259,416
1,576
412,241
258,543,088
261,660,993
1,003
1,575
Earnings per share from continuing operations
Consolidated net profit for the year attributable to ordinary
shareholders (in HUF mn)
Weighted average number of ordinary shares outstanding
during the year for calculating basic EPS (number of share)
Basic Earnings per share (in HUF)
Consolidated net profit for the year attributable to ordinary
shareholders (in HUF mn)
Modified weighted average number of ordinary shares outstanding
during the year for calculating diluted EPS (number of share)
Diluted Earnings per share (in HUF)
2020
2019
253,826
416,909
258,461,554
261,593,299
982
253,826
1,594
416,909
258,543,088
261,660,993
982
1,593
Earnings per share from discontinued operations
Consolidated net profit for the year attributable to ordinary
shareholders (in HUF mn)
Weighted average number of ordinary shares outstanding
during the year for calculating basic EPS (number of share)
Basic Earnings per share (in HUF)
Consolidated net profit for the year attributable to ordinary
shareholders (in HUF mn)
Modified weighted average number of ordinary shares outstanding
during the year for calculating diluted EPS (number of share)
Diluted Earnings per share (in HUF)
2020
5,590
2019
(4,668)
258,461,554
261,593,299
22
5,590
(18)
(4,668)
258,543,088
261,660,993
22
(18)
Weighted average number of ordinary shares
Average number of Treasury shares
Weighted average number of ordinary shares outstanding
during the year for calculating basic EPS
Dilutive effects of options issued in accordance with the
remuneration policy and convertible into ordinary shares*
The modified weighted average number of ordinary shares
outstanding during the year for calculating diluted EPS
2020
280,000,010
21,538,456
2019
280,000,010
18,406,711
258,461,554
261,593,299
81,534
67,694
258,543,088
261,660,993
210
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:15)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 46:
2020
NET GAIN OR LOSS REALIZED ON FINANCIAL INSTRUMENTS
(in HUF mn)
Net interest/
similar to interest
gain and loss
Net
non-interest
gain and loss
Loss
allowance
Other
Comprehensive
Income
Cash, amounts due from banks
and balances with the National Banks
Placements with other banks,
net of loss allowance for placements
Repo receivables
Trading securities at fair value through
profit or loss
Non–trading instruments mandatorily
at fair value through profit or loss
Securities at fair value through other
comprehensive income
Securities at amortized cost
Loans at amortized cost
Finance lease receivables
Loans mandatorily at fair value through
profit or loss
Other financial assets
Derivative financial instruments
Total result on financial assets
Amounts due to banks, the National Governments,
deposits from the National Banks and other banks
Repo liabilities
Financial liabilities designated at fair value
through profit or loss
Deposits from customers
Liabilities from issued securities
Leasing liabilities
Subordinated bonds and loans
Total result on financial liabilities
Total result on financial instruments
5,103
9,200
286
–
473
44,782
69,905
658,579
54,046
28,251
1,402
26,254
–
2,125
2,739 *** –
(628)*** 13,734
55,824
872,736
(18,492)
(653)
(307)
(53,522)
(7,750)
(1,623)
(7,718)
(90,065)
782,671
–
–
1,270
234,030
–
–
–
235,300
291,124
–
–
–
2,745
7,239
–
(851)
62
–
–
–
–
–
–
–
2,325 ** (4,507)
(6,931)
(2,802)
(189,554)
(9,972)
(3,262)
878
–
(210,008)
–
–
–
–
–
–
–
–
(210,008)
–
–
–
–
–
–
(6,931)
–
–
–
–
–
–
–
–
(6,931)
* Both in the year 2020 and 2019 the dilutive effect is in connection with the Remuneration Policy and the Management Option Program.
** For the year 2020 HUF 2,325 million net non-interest gain on securities at fair value through other comprehensive income was transferred from other comprehensive
income to profit or loss.
*** Gains from other financial assets and derivative financial instruments recognised in net interest income as Income similar to interest income.
IFRS consolidated financial statements
211
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:15)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
2019
Cash, amounts due from banks
and balances with the National Banks
Placements with other banks,
net of loss allowance for placements
Repo receivables
Trading securities at fair value through
profit or loss
Non-trading instruments mandatorily
at fair value through profit or loss
Securities at fair value through other
comprehensive income
Securities at amortized cost
Loans at amortized cost
Finance lease receivables
Loans mandatorily at fair value through
profit or loss
Other financial assets
Derivative financial instruments
Total result on financial assets
Amounts due to banks, the National Governments,
deposits from the National Banks and other banks
Repo liabilities
Financial liabilities designated at fair value
through profit or loss
Deposits from customers
Liabilities from issued securities
Leasing liabilities
Subordinated bonds and loans
Total result on financial liabilities
Total result on financial instruments
Net interest/
similar to interest
gain and loss
Net
non-interest
gain and loss
Loss
allowance
Other
Comprehensive
Income
2,037
10,521
788
–
202
46,521
62,468
598,534
40,914
17,509
714
22,541
–
(2,131)
3,672 ** –
773** (996)
33,069
783,939
(11,842)
(148)
(367)
(59,397)
(6,749)
(1,652)
(4,743)
(84,898)
699,041
–
–
(21)
228,939
–
–
–
228,918
261,987
–
–
–
2,542
1,914
–
235
–
–
–
–
–
–
–
–
8,485 * (153)
30,224
162
(40,271)
(4,440)
(2,953)
280
–
(47,140)
–
–
–
–
–
–
–
–
(47,140)
–
–
–
–
–
–
30,224
–
–
–
–
–
–
–
–
30,224
NOTE 47:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn)
In determining the fair value of a financial
value of issued securities and subordinated
asset or liability the Group in the case of
bonds is based on quoted prices (e.g. Reuters).
instruments that are quoted on an active market
Cash and amounts due from banks and
uses the market price. In most cases market
balances with the National Banks represent
price is not publicly available so the Group
amounts available immediately thus the fair
has to make assumptions or use valuation
value equals to the cost.
techniques to determine the fair value of a
financial instrument. See Note 47. d) for more
The assumptions used when calculating
information about fair value classes applied
the fair value of financial assets and liabilities
for financial assets and liabilities measured
when using valuation technique are the
at fair value in these financial statements.
following:
(cid:588) the discount rates are the risk free rates
To provide a reliable estimate of the fair
related to the denomination currency
value of those financial instrument that are
adjusted by the appropriate risk premium
originally measured at amortized cost, the
as of the end of the reporting period,
Group used the discounted cash-flow analyses
(cid:588) the contractual cash-flows are considered
(loans, placements with other banks, repo
for the performing loans and for the non-
receivables, amounts due to banks, repo
performing loans, the amortized cost less
liabilities, deposits from customers). The fair
impairment is considered as fair value,
* For the year ended 31 December 2019 HUF 8,485 million net non-interest gain on securities at fair value through other comprehensive income was transferred from other
comprehensive income to profit or loss.
** Gains from other financial assets and derivative financial instruments recognised in net interest income as Income similar to interest income.
212
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:15)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
(cid:588) the future cash-flows for floating interest
classes of assets and liabilities not measured
rate instruments are estimated from the
at fair value measured based on Reuters
yield curves as of the end of the reporting
market rates, and fair value of other classes
period,
not measured at fair value of the statement
(cid:588) the fair value of the deposit which can be
of financial position is measured at discounted
due in demand cannot be lower than the
cash-flow method. Fair value of loans, net of
amount payable on demand.
loss allowance for loans measured at discount
rate adjustment technique, the discount rate
Classes of assets and liabilities not measured
is derived from observed rates of return for
at fair value in the statement of financial
comparable assets or liabilities that are traded
position, the income approach was used to
in the market.
convert future cash-flows to a single current
Fair value measurements – in relation to
amount. Fair value of current assets is equal
instruments measured not at fair value – are
to carrying amount, fair value of liabilities
mainly categorized in level 2 of the fair value
from issued securities and other bond-type
hierarchy.
a) Fair value of financial assets and liabilities
Cash, amounts due from banks
and balances with the National Banks
Placements with other banks,
net of loss allowance for placements
Repo receivables
Financial assets at fair value
through profit or loss
Trading securities at fair value
through profit or loss
Fair value of derivative financial assets
held for trading
Non-trading instruments mandatorily
at fair value through profit or loss
Financial assets designated at fair value
through profit or loss
Securities at fair value through
other comprehensive income
Securities at amortized cost
Loans at amortized cost*
Finance lease receivables
Loans measured at fair value
through profit or loss
Derivative financial assets designated
as hedge accounting
Other financial assets
Financial assets total
Amounts due to the National Governments,
to the National Banks and other banks
Repo liabilities
Financial liabilities designated
at fair value through profit or loss
Deposits from customers
Liabilities from issued securities
Held for trading derivative financial liabilities
Derivative financial liabilities designated
as hedge accounting
Leasing liabilities
Other financial liabilities
Subordinated bonds and loans
Financial liabilities total
2020
2019
Carrying
amount
Fair
value
Carrying
amount
Fair
value
2,432,312
2,432,312
1,784,378
1,784,378
1,148,743
1,150,081
342,922
316,298
190,849
234,007
191,149
234,007
67,157
67,157
251,990
251,990
56,572
56,572
100,048
100,048
117,623
117,623
110,624
110,624
57,577
57,577
39,317
39,317
2,235
2,235
2,001
2,001
2,136,709
2,136,709
2,426,779
2,426,779
2,624,920
11,674,842
1,051,140
2,384,933
12,802,818
1,070,528
1,968,072
10,413,521
969,263
2,087,633
11,113,687
969,263
802,605
802,605
496,278
496,278
6,820
6,820
7,463
7,463
140,562
22,443,509
140,562
23,352,524
123,053
18,850,876
123,053
19,643,979
1,185,315
1,172,036
812,911
1,070,948
117,991
34,131
17,890,863
464,213
104,823
119,927
34,131
17,905,676
529,723
104,823
488
30,862
488
30,862
15,171,308
393,167
86,743
15,240,968
494,196
86,743
11,341
11,341
10,709
10,709
48,451
389,902
274,704
20,521,734
48,451
389,902
265,679
20,581,689
54,194
338,020
249,938
17,148,340
54,194
338,020
237,381
17,564,509
* Higher discount rate due to the lower yield environment resulted in higher fair value comparing to the carrying values.
IFRS consolidated financial statements
213
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:15)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
b) Fair value of derivative instruments
Economic relationship is justified if the change
The Group regularly enters into hedging
of the fair value of the hedged item and
transactions in order to decrease its financial
the hedging instrument are in the opposite
risks. However some economically hedging
direction and the absolute changes are similar
transaction do not meet the criteria to
amounts. The hedge ratio is determined as
account for hedge accounting, therefore these
the ratio of the notional of the hedged item
transactions were accounted as derivatives
and the notional of the hedging instrument.
held for trading.
The sources of hedge ineffectiveness are the
The assessment of the hedge effectiveness
not hedged risk components (e.g. change of
(both for fair value hedges and cash-flow
cross currency basis spreads in case of interest
hedges) to determine the economic relation-
rate risk hedges), slight differences in maturity
ship between the hedged item and the hedging
dates and interest payment dates in case
instrument is accomplished with prospective
of fair value hedges, and differences between
scenario analysis via different rate shift
the carrying amount of the hedged item and
scenarios of the relevant risk factor(s) of the
the carrying amount of the hedging instru-
hedged risk component(s). The fair value change
ment in case of FX hedges (e.g. caused by
of the hedged item and the hedging instru-
interest rate risk components in the fair value
ment is compared in the different scenarios.
of the hedging instrument).
The summary of the derivatives held for trading and derivatives designated
as hedge accounting of the Group are as follows:
2020
Assets
Liabilities
Assets
Liabilities
2019
Held for trading derivative financial instruments
Interest rate derivatives
Interest rate swaps
Cross currency interest rate swaps
OTC options
Forward rate agreement
Total interest rate derivatives (OTC derivatives)
Foreign exchange derivatives
Foreign exchange swaps
Foreign exchange forward contracts
OTC options
Foreign exchange spot conversion
Total foreign exchange derivatives (OTC derivatives)
Equity stock and index derivatives
Commodity Swaps
Equity swaps
OTC derivatives total
Exchange traded futures and options
Total equity stock and index derivatives
Derivatives held for risk management
not designated in hedge
Interest rate swaps
Foreign exchange swaps
Forward contracts
Cross currency interest rate swaps
Total derivatives held for risk management
not designated in hedge
Total held for trading derivative financial instruments
Derivative financial instruments designated
as hedge accounting
Derivatives designated in fair value hedges
Interest rate swaps
Cross currency interest rate swaps
Total derivatives designated in fair value hedges
Total derivatives held for risk management
(OTC derivatives)
214
OTP Bank Annual Report 2020
24,979
7,315
359
–
32,653
41,838
8,689
3,909
553
54,989
9,695
7,071
16,766
379
17,145
11,943
808
41
44
12,836
(24,752)
(7,419)
(8)
–
(32,179)
(35,537)
(10,750)
(3,835)
(657)
(50,779)
(8,269)
(560)
(8,829)
(1,262)
(10,091)
(8,208)
(3,566)
–
–
(11,774)
117,623
(104,823)
641
6,179
6,820
6,820
(5,334)
(6,007)
(11,341)
(11,341)
33,203
1,141
306
13
34,663
32,845
3,522
3,098
16
39,481
1,097
4,530
5,627
5
5,632
27,995
2,757
21
75
30,848
110,624
3,758
3,705
7,463
7,463
(31,471)
(1,037)
(14)
(32)
(32,554)
(26,244)
(5,504)
(3,114)
(55)
(34,917)
(954)
(558)
(1,512)
(248)
(1,760)
(15,246)
(2,209)
(57)
–
(17,512)
(86,743)
(8,839)
(1,870)
(10,709)
(10,709)
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:15)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
c) Types of hedge accounting
“OTP Bank’s Group-Level Regulations on the
Interest rate risk management is centralized at
Management of Liquidity Risk and Interest
the Group. Interest rate risk exposures in major
Rate Risk of Banking Book”. The interest rate
currencies are managed at OTP Headquarter
risk management activity aims to stabilize NII
on consolidated level. Although risk exposures
within the approved risk limits
in local currencies are managed at subsidiary
The risk management objective of these hedge
level, the respective decisions are subject
relationships is to mitigate the risk of clean fair
to Headquarter ALCO approval. Interest rate
value (i.e. excluding accrued interest) change
risk is measured by simulating NII and EVE
of MIRS loans due to the change of interest
under different stress and plan scenarios,
rate reference indexes (BUBOR, EURIBOR,
the established risk limits are described in
LIBOR etc.) of the respective currency.
Amount, timing of future cash-flows and types of risk – hedging instruments:
As at 31 December 2020:
Type of
hedge
Type of
risk
Type of
instrument
Within
one month
Within three
months and
over one month
Within one
year and over
three months
Within five
years and
over one year
More than
five years
Total
Fair Value
Hedge
Interest
rate risk
Interest
rate swap
HUF
Notional
Average
Interest Rate (%)
EUR
–
–
Notional
Average
Interest Rate (%)
15
(0.11)%
–
–
–
–
–
Fair Value
Hedge
Foreign
exchange &
Interest rate
risk
Fair Value
Hedge
Foreign
exchange risk
USD
Notional
Average
Interest Rate (%)
RUB
Notional
Average
Interest Rate (%)
Cross currency
interest rate swap
EUR/HUF
Notional
Average
Interest Rate (%)
Average
FX Rate
Cross currency
interest rate swap
EUR/HUF
Notional
Average
FX Rate
RON/HUF
Notional
Average
FX Rate
RUB/HUF
Notional
Average
FX Rate
Other
Interest rate swap
HUF
Notional
–
–
–
–
–
–
–
–
–
60,000
(89,622)
173,810
144,188
1.31%
1.06%
1.35%
5
102
10
132
0.09%
0.24%
0.22%
21
2.00%
171
29
221
2.38%
2.35%
–
–
2
2,100
7.38%
2,100
–
–
12
14
28
(1.55)%
(1.59)%
(1.60)%
(1.63)%
(1.67)%
311.08
310.95
310.82
310.14
308.15
1
92
123
613
360.19
354.92
360.47
356.03
–
–
–
–
–
–
–
–
–
–
–
–
–
1,550
72.6
4,100
4.46
(183)
6,940
8,342
–
–
–
–
–
–
–
829
1,550
4,100
15,099
IFRS consolidated financial statements
215
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:15)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
As at 31 December 2019:
Type of
hedge
Type of
risk
Type of
instrument
Within
one month
Within three
months and
over one month
Within one
year and over
three months
Within five
years and
over one year
More than
five years
Total
Fair Value
Hedge
Interest rate
risk
Fair Value
Hedge
Foreign
exchange &
Interest rate
risk
Interest
rate swap
HUF
Notional
Average
Interest Rate (%)
EUR
Notional
Average
Interest Rate (%)
USD
Notional
Average
Interest Rate (%)
RUB
Notional
Average
Interest Rate (%)
Cross currency
interest rate swap
EUR/HUF
Notional
Average
Interest Rate (%)
Average FX
Rate
Fair Value
Hedge
Foreign
exchange risk
Cross currency
interest rate swap
RON/HUF
Notional
Average
FX Rate
RUB/HUF
Notional
Average
FX Rate
Fair Value
Hedge
Other
Interest rate swap
HUF
Notional
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
20
3.88%
–
–
–
–
–
–
–
–
–
–
–
229,600
65,268
145,510
440,378
1.84%
1.29%
1.26%
–
–
8
177
27
224
0.14%
0.61%
437
29
474
2.64%
1.92%
2.35%
–
–
2
2,100
7.38%
2,100
–
–
15
14
31
(1.60)%
(1.63)%
(1.66)%
310.37
309.79
308.69
150
67.5
2,000
4.2
1,050
68.83
9,100
4.33
1,200
11,100
–
–
–
–
(310)
13,644
15,763
–
29,097
216
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:15)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
As at 31 December 2020:
Type of
hedge
Type of
instrument
Type of
risk
Fair value
hedge
Nominal
amount of
the hedging
instrument
Carrying amount
of the hedging instrument
as at 31 December 2020
Assets
Liabilities
Line item in the
statement of
financial position
where the
hedging instrument
is located
Changes in fair
value used for
calculating hedge
ineffectiveness for
the year ended as at
31 December 2020
Interest rate
swap
Interest rate
risk
468,574
111
(5,267)
Cross-currency
swap
Cross-currency
swap
Interest rate
swap
FX & IR risk
8,874
–
(1,618)
FX risk
438,401
6,179
(4,456)
Other
16,224
530
–
Derivative financial
instruments designated
as hedge accounting
Derivative financial
instruments designated
as hedge accounting
Derivative financial
instruments designated
as hedge accounting
Derivative financial
instruments designated
as hedge accounting
Fair value hedges total
932,073
6,820
(11,341)
(370)
(36)
(809)
2
(1,213)
As at 31 December 2019:
Type of
hedge
Type of
instrument
Type of
risk
Nominal
amount of
the hedging
instrument
Carrying amount
of the hedging instrument
as at 31 December 2019
Assets
Liabilities
Line item in the
statement of
financial position
where the
hedging instrument
is located
Changes in fair
value used for
calculating hedge
ineffectiveness for
the year ended as at
31 December 2019
Fair value
hedge
Interest rate
swap
Interest rate
risk
687,820
2,251
(8,839)
Cross-currency
swap
Cross-currency
swap
Interest rate
swap
FX & IR risk
11,681
–
(488)
FX risk
137,390
3,705
(1,382)
Other
30,983
1,507
–
Derivative financial
instruments designated
as hedge accounting
Derivative financial
instruments designated
as hedge accounting
Derivative financial
instruments designated
as hedge accounting
Derivative financial
instruments designated
as hedge accounting
Fair value hedges total
867,874
7,463
(10,709)
341
(103)
(271)
7
(26)
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:15)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
217
As at 31 December 2020:
Type of
hedge
Type of
risk
Fair value
hedges
Loans
Government
bonds
Government
bonds
Interest rate
risk
Interest rate
risk
Interest rate
risk
Government
bonds
Interest rate
risk
Other
securities
Loans
Loans
Other
securities
Interest rate
risk
Foreign
exchange &
Interest rate risk
Foreign
exchange risk
Carrying amount
of the hedged item as at
31 December 2020
Accumulated amount of fair
value hedge adjustments on the
hedged item included in the
carrying amount of the hedged item
for the year ended 31 December 2020
Line item in
the statement
of financial position
in which the hedged
item is included
Assets
Liabilities
Assets
Liabilities
35,256
(100,299)
177,888
91,950
–
47,560
96,972
303,572
–
–
–
–
–
–
507
884
1,154
–
793
10,855
(151)
Loans
–
–
–
–
–
(3,144)
(4,929)
Securities at
amortized cost
Securities at fair
value through other
comprehensive income
Financial assets
at fair value through
profit or loss
Securities at fair
value through other
comprehensive income
Loans
Loans
Liabilities from
issued securities
9
(1,634)
Other risk
–
(15,032)
–
Fair value hedges total
753,198
(115,331)
14,202
As at 31 December 2019:
Type of
hedge
Type of
risk
Carrying amount
of the hedged item as at
31 December 2019
Accumulated amount of fair
value hedge adjustments on the
hedged item included in the
carrying amount of the hedged item
for the year ended 31 December 2019
Line item in
the statement
of financial position
in which the hedged
item is included
Assets
Liabilities
Assets
Liabilities
Fair value
hedges
Loans
Government
bonds
Interest rate
risk
Interest rate
risk
Government
bonds
Interest rate
risk
Government
bonds
Interest rate
risk
36,709
578,026
144,234
–
Other
securities
Loans
Loans
Other
securities
Interest rate
risk
85,231
Foreign
exchange &
Interest rate risk
Foreign
exchange risk
Other risk
12,242
136,088
–
992,530
Fair value hedges total
218
OTP Bank Annual Report 2020
–
–
–
–
–
–
–
(29,018)
(29,018)
521
109
1,074
–
166
2
1,465
–
3,337
–
–
–
–
–
–
–
(5,765)
(5,765)
Loans
Securities at amortized
cost
Securities at fair
value through other
comprehensive income
Financial assets
at fair value through
profit or loss
Securities at fair
value through other
comprehensive income
Loans
Loans
Liabilities from
issued securities
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:15)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
As at 31 December 2019:
Type of
instrument
Type of
risk
Interest rate
swap
Interest rate
risk
Change in the value
of the hedging
instrument recognized in
cash-flow hedge reserve
Hedge
ineffectiveness
recognized in
profit or loss
2,086
(98)
Line item in profit or loss
that includes hedge
ineffectiveness
Interest income from
placements with other banks
On Group level there weren’t any cash-flow
the former EUR 310 million strategic open
hedges for the year ended 31 December 2020.
position which was presented at the end of
According to the strategic direction designated
so at the end of 2020 regarding net investment
by the Management Committee, a decision was
hedges for foreign subsidiaries there aren’t
made about closing in accounting meaning
any disclosure requirements to be presented.
2019 in the consolidated financial statements,
Net investment hedge for foreign subsidiaries as at 31 December 2019 is as follows:
Type of
hedge
Type of
risk
Carrying amount
of the hedged item as
at 31 December 2019
Type of hedging
instrument
EUR million
Changes in fair value used
for calculating hedge
ineffectiveness for the
year ended 31 December 2019
HUF million
Net investment hedge in
foreign operations
Fx assets in foreign
subsidiaries
Foreign
exchange risk
310 * OTP HB Perpetual bonds
2,776.3
d) Fair value levels
observable for the asset or liability
Methods and significant assumptions used
either directly or indirectly.
to determine fair value of the different levels
Fair value measurements – in relation
of financial instruments:
with instruments measured not
Level 1: quoted prices (unadjusted) in active
at fair value – are categorized in
markets for identical assets or
level 2;
liabilities;
Level 3: inputs for the asset or liability that are
Level 2: inputs other than quoted prices
not based on observable market data
included within Level 1, that are
(unobservable inputs).
* Companies included: DSK Bank EAD, OTP banka Hrvatska d.d., OTP Banka Slovensko, a.s., Crnogorska komercijalna banka a.d.
IFRS consolidated financial statements
219
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:15)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
The following table shows an analysis of financial instruments recorded
at fair value by level of the fair value hierarchy:
2020
Financial assets at fair value through profit or loss
Trading securities at fair value through profit or loss
Positive fair value of derivative financial
assets held for trading
Non-trading instruments mandatorily
at fair value through profit or loss
Financial assets designated at fair value
through profit or loss
Securities at fair value through other
comprehensive income
Loans mandatorily measured at fair value
through profit or loss
Positive fair value of derivative financial assets
designated as fair value hedge
Financial assets measured at fair value total
Financial liabilities designated at fair value
through profit or loss
Negative fair value of held for trading
derivative financial liabilities
Negative fair value of derivative financial liabilities
designated as fair value hedge
Financial liabilities measured at fair value total
2019
Financial assets at fair value through profit or loss
Trading securities at fair value through profit or loss
Positive fair value of derivative financial
assets held for trading
Non-trading instruments mandatorily
at fair value through profit or loss
Financial assets designated at fair value
through profit or loss
Securities at fair value through other
comprehensive income
Loans mandatorily measured at fair value
through profit or loss
Positive fair value of derivative financial assets
designated as fair value hedge
Financial assets measured at fair value total
Financial liabilities designated at fair value
through profit or loss
Negative fair value of held for trading
derivative financial liabilities
Negative fair value of derivative financial liabilities
designated as fair value hedge
Financial liabilities measured at fair value total
Total
234,007
56,572
117,623
Level 1
67,820
30,333
388
Level 2
156,090
26,227
117,235
Level 3
10,097
12
–
57,577
37,099
10,393
10,085*
2,235
–
2,235
–
2,136,709
1,137,821
941,982
56,906**
802,605
1,089
2,535
798,981
6,820
–
6,820
–
3,180,141
1,206,730
1,107,427
865,984
34,131
–
2,235
31,896
104,823
1,386
103,437
–
11,341
150,295
Total
251,990
100,048
110,624
–
1,386
Level 1
105,246
75,963
6
39,317
29,277
2,001
–
11,341
117,013
Level 2
143,233
24,085
110,618
6,529
2,001
–
31,896
Level 3
3,511
–
–
3,511
–
2,426,779
1,591,882
775,202
59,695***
496,278
7,463
490
–
2,581
493,207
7,463
–
3,182,510
1,697,618
928,479
556,413
30,862
86,743
10,709
128,314
–
249
–
249
2,001
28,861
86,494
10,709
99,204
–
–
28,861
* The portfolio includes mainly Visa C shares.
** The portfolio includes mainly HUF 46,124 million albanian government bonds.
*** The portfolio includes mainly Visa Inc. “C” convertible preferred stock and common shares and HUF 44,098 million albanian government bonds.
220
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:2)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Movements in Level 3 financial
instruments measured at fair value
The following table shows a reconciliation of the opening and closing amount
of Level 3 financial assets and liabilities which are recorded at fair value:
2020
Trading securities
at fair value through
profit or loss
Securities at fair value
through other
comprehensive income
Loans mandatorily
measured at fair value
through profit or loss
Financial assets
measured at fair
value total
Financial liabilities
designated at fair value
through profit or loss
Financial liabilities
designated at
fair value total
2019
Trading securities
at fair value through
profit or loss
Securities at fair value
through other
comprehensive income
Loans mandatorily
measured at fair value
through profit or loss
Financial assets
measured at fair
value total
Financial liabilities
designated at fair value
through profit or loss
Financial liabilities
designated at
fair value total
)
–
(
e
s
o
l
C
/
t
n
e
m
e
l
t
t
e
S
)
–
(
e
l
a
S
)
–
/
+
(
A
V
F
)
–
/
+
(
r
e
f
s
n
a
r
T
n
o
i
t
a
u
l
a
v
e
R
r
e
h
t
O
g
n
i
s
o
l
C
e
c
n
a
l
a
b
i
g
n
n
e
p
O
e
c
n
a
l
a
b
3,511
)
+
(
e
s
a
h
c
r
u
P
–
59,695
11,076
/
e
c
n
a
u
s
s
I
)
+
(
t
n
e
m
e
s
r
u
b
s
i
D
–
–
(5,043)
–
(362)
9,973
2,018
(9,398)
(162)
1,637
(10,812)
4,870
–
–
–
10,097
56,906
798,981
493,207
–
333,908
(21,397)
–
(6,737)
–
–
556,413
11,076
333,908
(35,838)
(162)
(5,462)
(839)
6,888
–
865,984
28,861
28,861
i
g
n
n
e
p
O
e
c
n
a
l
a
b
–
–
)
+
(
e
s
a
h
c
r
u
P
–
–
(1,689)
(1,689)
)
–
(
e
s
o
l
C
/
t
n
e
m
e
l
t
t
e
S
/
e
c
n
a
u
s
s
I
)
+
(
t
n
e
m
e
s
r
u
b
s
i
D
–
–
)
–
(
e
l
a
S
–
–
3,511
–
–
10,690
47,213
949
(217)
(1,295)
(1,270)
(1,270)
)
–
/
+
(
A
V
F
–
–
263,534
–
266,091
(30,513)
–
(5,905)
274,224
47,213
270,551
(30,730)
(1,295)
(5,905)
32,231
32,231
–
–
–
–
(3,349)
(3,349)
–
–
–
–
–
–
)
–
/
+
(
r
e
f
s
n
a
r
T
–
–
–
–
–
–
–
–
n
o
i
t
a
u
l
a
v
e
R
–
2,355
–
2,355
(21)
(21)
5,994
31,896
5,994
31,896
r
e
h
t
O
g
n
i
s
o
l
C
e
c
n
a
l
a
b
–
–
–
–
–
–
3,511
59,695
493,207
556,413
28,861
28,861
There were no movements among the levels of fair value hierarchy either in the
year ended 31 December 2020 or 31 December 2019 respectively.
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:2)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
221
NOTE 48:
SEGMENT REPORTING BY BUSINESS
AND GEOGRAPHICAL SEGMENTS (in HUF mn)
The Group distinguishes business and
Within the Group, the Corporate Centre
geographical segments. The report on the
acts as a virtual entity established by the
base of the business and geographical
equity investment of OTP Core for managing
segments is reported below.
the wholesale financing activity for all the
subsidiaries within the Group but outside
The operations in the Slovakian segment
OTP Core. Therefore the balance sheet of the
were discontinued. The segment information
Corporate Centre is funded by the equity and
reported on the next pages does not
intragroup lending received from OTP Core,
include any amounts for these discontinued
the intragroup lending received from other
operations neither in the current year nor in
subsidiaries, and the subordinated debt
the previous one, which are described in more
and senior notes arranged by OTP under its
details in Note 49.
running EMTN program.
The reportable segments of the Group on the
From this funding pool, the Corporate Centre
base of IFRS 8 are the following:
is to provide intragroup lending to, and hold
OTP Core Hungary, Russia, Ukraine, Bulgaria,
equity stakes in OTP subsidiaries outside
Romania, Serbia, Croatia, Montenegro, Albania,
OTP Core. Main subsidiaries financed by
Moldova, Slovenia, Merkantil Group, Asset
Corporate Centre are as follows: Hungarians:
Management subsidiaries, Other subsidiaries
Merkantil Bank Ltd., Merkantil Leasing Ltd.,
and Corporate Center.
OTP Fund Management Ltd., OTP Real Estate
Fund Management Ltd., OTP Life Annuity Ltd.;
OTP Core is an economic unit for measuring
foreigners: banks, leasing companies,
the result of core business activity of the
factoring companies.
Group in Hungary. Financials for OTP Core
are calculated from the partially consolidated
The results of OTP Factoring Ukraine LLC,
financial statements of the companies
OTP Factoring SRL, OTP Factoring Bulgaria LLC,
engaged in the Group’s underlying banking
OTP Factoring Serbia d.o.o. and OTP Factoring
operation in Hungary. These companies
Montenegro d.o.o. are included into the
include OTP Bank Hungary Plc.,
foreign banks segment.
OTP Mortgage Bank Ltd., OTP Building
Society Ltd., OTP Factoring Ltd.,
From the first quarter of 2019 Expressbank AD
OTP Financial Point Ltd., and companies
and its subsidiaries, OTP Leasing EOOD and
providing intragroup financing.
Express Factoring EOOD (altogether: Express
The Bank Employee Stock Ownership Plan
Group) were included into the Bulgarian
Organization was included from the fourth
operation, so from the first quarter of 2019 the
quarter of 2016; OTP Card Factory Ltd.,
statement of recognized income and balance
OTP Facility Management Llc., Monicomp Ltd.
sheet of DSK Leasing AD was included into this
and OTP Real Estate Lease Ltd. were included
segment too.
from the first quarter of 2017 (from the first
The Bulgarian Expressbank AD merged with
quarter of 2019 OTP Real Estate Lease Ltd.
its parent DSK Bank AD in April 2020.
was eliminated from OTP Core); OTP Mobile
The Serbian segment, OTP banka Srbija a.d.
Service Llc., OTP Ingatlanpont Llc. were
Beograd and Vojvodjanska Banka a.d. Novi
included from the first quarter of 2019 and
Sad includes from the first quarter of 2019
OTP eBIZ Ltd. was included from the first
the statements of profit or loss and financial
quarter of 2020. The consolidated accounting
positions of OTP Lizing d.o.o, OTP Services
results of these companies are segmented
d.o.o. and from the third quarter of 2019 the
into OTP Core and Corporate Centre. Latter
financial position of the newly acquired
is a virtual entity.
OTP banka Srbija a.d. Beograd and from the
222
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:2)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
fourth quarter of 2019 its statement of profit
in OTP Bank Romania S.A. on which
or loss too.
HUF 886 million positive tax effect was
The Montenegrin segment, Crnogorska
recognized. As at 31 December 2019
komercijalna banka a.d. and Podgorička
HUF 8,427 million was recognized on
banka AD includes from the third quarter
goodwill/investment impairment from
of 2019 the statement of profit or loss
which HUF 4,887 million was recognized
and financial position of the newly acquired
on OTP Bank Romania S.A as goodwill
Podgorička banka AD In December 2020
impairment and HUF 3,540 million negative
Podgorička banka AD merged into Crnogorska
tax effect was recognized due to the
komercijalna banka a.d.
impairment and release of impairment
In the first quarter of 2019 the Albanian, and
on investments, which is mainly related to
from the second half of year 2019 the Moldovan
the release of the previously recognized
and Slovenian segments were included as new
impairment on OTP Bank JSC (Ukraine).
segments in the consolidated segment report.
Special tax on financial institutions
The activities of the other subsidiaries are out
(after income tax):
of the leasing and fund management and
Special tax on financial institutions
factoring activity, such as: OTP Real Estate Ltd.,
includes the special tax paid by the Hungarian
OTP Life Annuity Ltd, OTP Funds Servicing and
financial institutions, the net present value
Consulting Ltd., OTP Building s.r.o., OTP Real
effect of the once-off additional banking tax
Slovensko s.r.o.
payable into the pandemic fund in 2020 (the
The reportable business and geographical
payments are deductible from future banking
segments of the Group are those components
taxes), the Slovakian banking levy and as well
where:
as in the fourth quarter of 2019 the banking
(cid:588) separated income and expenses, assets and
tax paid by the Romanian bank, subsidiary
liabilities can be identified and assignable
of OTP Group. Besides, it also contains the
to the segments,
Slovakian Deposit Protection Fund contribu-
(cid:588) transactions between the different
tions being introduced again in 2014, and
segments were eliminated,
the contribution into the Resolution Fund in
(cid:588) the main decisive board of the Group
Slovakia, too.
regularly controls the operating results,
(cid:588) separated financial information is available.
Effect of acquisitions (after income tax):
Adjustments
The following main items appear on this line:
the negative goodwill related to acquisitions
which improves the accounting result,
integration costs of the newly acquired banks
Goodwill/investment impairment and their
and other direct effects due to the acquisitions
tax saving effect:
(such as customer base value amortisation)
As at 31 December 2020 HUF 9,841 million
and effects related to the sale of the Slovakian
impairment was booked on the investment
bank.
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:2)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
223
Information regarding the Group’s reportable segments is presented below:
As at 31 December 2020:
Main components of the
Consolidated Statement
of Profit or Loss
in HUF million
Net profit for the year from continued
and discontinued operations
Net profit for the year from
discontinued operations
Net profit for the year
from continued opearations
Adjustments (total)
Dividends and net cash transfers
(after income tax)
Goodwill/investment impairment
(after income tax)
Bank tax on financial institutions
(after income tax)
Effect of acquisition (after income tax)
Impact of fines imposed by the Hungarian
Competition Authority (after income tax)
Expected one-off negative effect
of the debt repayment moratorium
in Hungary (after income tax)
Consolidated adjusted net profit
for the year
Profit before income tax
Adjusted operating profit
Adjusted total income
Adjusted net interest income
Adjusted net profit from fees
and commissions
Adjusted other net non-interest
income
Adjusted other administrative
expenses
Total risk costs
Adjusted provision for impairment
on loan and placement losses
(without the effect of revaluation of FX)
Other provision (adjustment)
Total other adjustments
(one-off items)*
Income tax
)
y
r
a
g
n
u
H
(
E
R
O
C
P
T
O
l
a
t
o
t
b
u
s
s
k
n
a
b
n
g
i
e
r
o
F
)
s
t
n
e
m
t
s
u
d
a
t
u
o
h
t
i
j
w
(
)
a
i
r
a
g
l
u
B
(
D
A
k
n
a
b
s
s
e
r
p
x
E
i
g
n
d
u
l
c
n
i
p
u
o
r
G
K
S
D
.
.
d
d
a
k
s
t
a
v
r
H
a
k
n
a
b
P
T
O
)
a
i
t
a
o
r
C
(
)
i
a
b
r
e
z
S
(
d
a
r
g
o
e
B
.
.
d
a
a
j
i
b
r
S
a
k
n
a
b
P
T
O
+
.
.
d
a
a
k
n
a
b
a
k
s
n
a
d
o
v
j
o
V
j
2
3=4+...+13
4
5
6
p
u
o
r
G
P
T
O
d
e
t
a
d
i
l
o
s
n
o
c
–
d
e
t
a
d
i
l
o
s
n
o
C
e
h
t
n
i
–
t
i
f
o
r
P
f
o
t
n
e
m
e
t
a
t
S
f
o
e
r
u
t
c
u
r
t
s
–
s
s
o
L
r
o
s
t
r
o
p
e
r
g
n
i
t
n
u
o
c
c
a
a
259,636
5,590
254,047
n
o
s
t
n
e
m
t
s
u
d
A
j
n
i
g
n
i
t
n
u
o
c
c
a
e
h
t
e
m
o
c
n
I
d
e
z
i
n
g
o
c
e
R
p
u
o
r
G
P
T
O
d
e
t
a
d
i
l
o
s
n
o
c
–
t
i
f
o
r
P
f
o
t
n
e
m
e
t
a
t
S
d
e
t
a
d
i
l
o
s
n
o
C
e
h
t
n
i
–
f
o
e
r
u
t
c
u
r
t
s
–
s
s
o
L
r
o
s
t
r
o
p
e
r
t
n
e
m
e
g
a
n
a
m
1=a+b
1= 2+3+14+18+19
b
259,636
5,590
254,047
(56,220)
213
886
(17,365)
(12,441)
749
(56,220)
213
886
(17,365)
(12,441)
749
(28,262)
(28,262)
254,046
56,222
310,268
159,302
126,967
281,422
500,092
1,207,759
782,671
70,380
37,345
(37,839)
5,408
351,802
537,437
1,169,920
788,079
175,860
181,178
453,635
286,448
148,858
326,660
653,581
474,148
40,957
44,664
89,774
166,667
111,239
14,829
17,600
40,329
84,907
58,199
7,299
8,456
35,899
79,001
59,514
397,633
(104,521)
293,112
130,470
135,156
45,453
16,093
14,766
27,455
61,274
88,729
36,717
44,277
9,975
10,615
4,721
(707,667)
75,184
(632,483)
(272,457)
(326,921)
(76,893)
(44,578)
(43,102)
(218,670)
30,675
(187,995)
(7,678)
(177,802)
(45,110)
(22,729)
(27,443)
(218,670)
60,249
(158,421)
2,374
(156,710)
(44,875)
(19,491)
(22,170)
0
0
(29,574)
2,360
(29,574)
(10,052)
(21,092)
(235)
(3,238)
(5,273)
2,360
2,360
0
0
0
0
(27,376)
(14,158)
(41,534)
(16,558)
(21,891)
(3,707)
(2,771)
(1,157)
Total Assets**
Total Liabilities***
23,329,771
20,793,243
0
0
23,329,771
11,492,949
13,609,776
4,283,625
2,325,669
2,052,332
20,793,243
9,726,310
11,651,728
3,663,247
1,997,504
1,779,286
( ) used at: provisions, impairment and expenses.
* One-off item in the total amount consists the result of the treasury share swap agreement at OTP Core.
** Relating to the discontinued operations the assets were HUF 6,070 million.
*** Relating to the discontinued operations the liabilities were HUF 5,486 million.
224
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:2)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
)
i
a
n
e
v
o
l
S
(
.
.
d
d
a
k
n
a
B
B
K
S
.
.
i
A
S
a
n
a
m
o
R
k
n
a
B
P
T
O
)
i
a
n
a
m
o
R
(
)
i
e
n
a
r
k
U
(
C
S
J
k
n
a
B
P
T
O
k
n
a
B
h
c
u
o
T
d
n
a
)
a
i
s
s
u
R
(
”
k
n
a
B
P
T
O
“
C
S
J
a
k
s
r
o
g
o
n
r
C
)
o
r
g
e
n
e
t
n
o
M
(
.
.
d
a
a
k
n
a
b
a
n
l
a
j
i
c
r
e
m
o
k
D
A
a
k
n
a
b
a
k
č
i
r
o
g
d
o
P
+
.
.
i
A
H
S
a
n
a
b
l
A
P
T
O
a
k
n
a
B
)
i
a
n
a
b
l
A
(
)
a
v
o
d
l
o
M
(
a
c
n
a
b
s
a
b
o
M
i
.
.
A
S
p
u
o
r
G
P
T
O
–
l
a
t
o
t
b
u
s
s
e
i
r
a
i
d
i
s
b
u
s
g
n
i
k
n
a
b
-
n
o
N
)
y
r
a
g
n
u
H
(
p
u
o
r
G
l
i
t
n
a
k
r
e
M
s
e
i
r
a
i
d
i
s
b
u
s
t
n
e
m
e
g
a
n
a
M
t
e
s
s
A
r
e
h
t
O
s
e
i
r
a
i
d
i
s
b
u
s
e
r
t
n
e
C
e
t
a
r
o
p
r
o
C
s
t
n
e
m
t
s
u
d
a
j
d
n
a
s
n
o
i
t
a
n
m
i
i
l
E
7
8
9
10
11
12
13
14=15+16+17
15
16
17
18
19
9,664
1,557
26,104
16,317
12,103
19,787
40,388
28,103
1,466
11,810
43,747
32,739
31,589
42,030
67,385
48,581
21,409
65,068
123,198
99,872
4,307
4,609
8,352
22,095
17,188
1,960
2,449
5,904
11,597
9,824
3,973
4,513
7,707
14,596
8,889
11,127
3,813
13,540
22,503
4,446
1,278
2,137
25,830
7,661
9,824
8,617
10,279
21,283
17,688
10,749
10,765
15,248
5
28,483
28,889
59,158
19,020
25,212
8,345
9,117
7,845
22,627
1,327
40
14,883
10,289
1,158
7,195
5,264
823
461
495
3,570
14,926
3,555
360
11,011
(20,601)
(31,937)
(25,355)
(58,130)
(13,743)
(5,693)
(6,889)
(30,269)
(11,004)
(4,483)
(14,782)
(945)
(1,891)
(7,684)
(10,344)
(10,441)
(43,659)
(3,743)
(3,455)
(3,194)
(406)
(1,662)
(16)
1,272
(6,244)
(7,840)
(6,286)
(41,160)
(3,434)
(2,515)
(2,695)
(1,487)
(1,491)
(1,440)
(2,504)
(4,155)
(2,499)
(309)
(940)
(499)
1,081
(171)
0
(2,439)
0
91
0
0
0
0
0
0
0
(5,485)
(5,092)
(302)
(489)
(540)
(2,653)
(956)
1,353,772 1,162,183
1,187,648 1,034,945
729,012
611,941
688,980
505,578
477,676
401,119
286,606
257,826
249,921
212,634
1,118,927
842,473
667,120
614,566
0
(16)
0
(925)
35,584
17,052
4
1,268
0
(772)
416,223
2,865,511 (5,757,392)
210,855
1,504,289 (2,931,557)
(569)
(526)
(526)
419
419
0
0
(1,262)
(873)
1,236
3,127
8,044
2,274
(7,191)
0
0
0
0
(2,109)
(2,598)
489
0
(43)
(389)
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:2)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
225
As at 31 December 2019:
Main components of the
Consolidated Statement
of Profit or Loss
in HUF million
Net profit for the year from continued
and discontinued operations
Net profit for the year from
discontinued operations
Net profit for the year from
continued opearations
Adjustments (total)
Dividends and net cash transfers
(after income tax)
Goodwill/investment impairment
(after income tax)
Bank tax on financial institutions
(after income tax)
Effect of acquisition (after income tax)
One-off impact of regulatory changes
related to FX consumer contracts
in Serbia (after income tax)
Consolidated adjusted net profit
for the year
Profit before income tax
Adjusted operating profit
Adjusted total income
Adjusted net interest income
Adjusted net profit from fees and
commissions
Adjusted other net non-interest
income
Adjusted other administrative
expenses
Total risk costs
Adjusted provision for impairment
on loan and placement losses
(without the effect of revaluation of FX)
Other provision (adjustment)
Total other adjustments
(one-off items)*
Income tax
Total Assets**
Total Liabilities***
)
y
r
a
g
n
u
H
(
E
R
O
C
P
T
O
l
a
t
o
t
b
u
s
s
k
n
a
b
n
g
i
e
r
o
F
)
s
t
n
e
m
t
s
u
d
a
t
u
o
h
t
i
j
w
(
)
a
i
r
a
g
l
u
B
(
D
A
k
n
a
b
s
s
e
r
p
x
E
i
g
n
d
u
l
c
n
i
p
u
o
r
G
K
S
D
.
.
d
d
a
k
s
t
a
v
r
H
a
k
n
a
b
P
T
O
)
a
i
t
a
o
r
C
(
)
i
a
b
r
e
z
S
(
d
a
r
g
o
e
B
.
.
d
a
a
j
i
b
r
S
a
k
n
a
b
P
T
O
+
.
.
d
a
a
k
n
a
b
a
k
s
n
a
d
o
v
j
o
V
j
2
3=4+...+13
4
5
6
p
u
o
r
G
P
T
O
d
e
t
a
d
i
l
o
s
n
o
c
–
d
e
t
a
d
i
l
o
s
n
o
C
e
h
t
n
i
–
t
i
f
o
r
P
f
o
t
n
e
m
e
t
a
t
S
f
o
e
r
u
t
c
u
r
t
s
–
s
s
o
L
r
o
s
t
r
o
p
e
r
g
n
i
t
n
u
o
c
c
a
a
412,582
4,668
417,250
n
o
s
t
n
e
m
t
s
u
d
A
j
n
i
g
n
i
t
n
u
o
c
c
a
e
h
t
e
m
o
c
n
I
d
e
z
i
n
g
o
c
e
R
p
u
o
r
G
P
T
O
d
e
t
a
d
i
l
o
s
n
o
c
–
t
i
f
o
r
P
f
o
t
n
e
m
e
t
a
t
S
d
e
t
a
d
i
l
o
s
n
o
C
e
h
t
n
i
–
f
o
e
r
u
t
c
u
r
t
s
–
s
s
o
L
r
o
s
t
r
o
p
e
r
t
n
e
m
e
g
a
n
a
m
1=a+b
1= 2+3+14+18+19
b
412,582
4,668
417,250
(1,803)
505
(8,427)
(16,170)
23,933
(1,803)
505
(8,427)
(16,170)
23,933
(1,644)
(1,644)
417,250
467,152
523,839
1,165,056
699,041
1,802
(1,179)
(13,793)
(87,328)
7,257
419,052
193,991
189,612
465,973
510,046
1,077,728
706,298
206,659
177,030
435,048
261,754
220,152
293,500
565,450
408,725
67,879
75,078
83,495
155,566
109,030
30,718
10,430
37,399
42,925
85,069
56,812
9,971
13,144
43,277
30,809
374,181
(91,677)
282,504
126,911
123,739
42,019
17,032
9,506
91,834
(2,908)
88,926
46,383
32,986
4,517
11,225
2,962
(641,217)
73,535
(567,682)
(258,018)
(271,950)
(72,071)
(42,144)
(30,133)
(56,687)
9,580
(47,107)
26,595
(73,348)
(8,417)
(5,526)
(3,173)
(56,687)
27,213
(29,474)
30,332
(59,952)
(5,216)
(2,835)
(1,634)
0
0
(49,902)
19,659,696
17,467,983
(17,633)
(17,633)
(3,737)
(13,396)
(3,201)
(2,691)
(1,539)
3,034
2,981
0
0
3,034
3,034
0
0
0
(46,921)
(12,668)
(30,540)
(7,199)
(6,681)
0
459
19,659,696
9,641,692
11,965,975
3,669,766
2,098,951
1,659,483
17,467,983
7,920,820
10,207,807
3,141,007
1,806,302
1,410,022
( ) used at: provisions, impairment and expenses.
* One-off item in the total amount consists the result of the treasury share swap agreement at OTP Core.
** Relating to the discontinued operations the assets were HUF 462,071 million.
*** Relating to the discontinued operations the liabilities were HUF 362,496 million.
226
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:2)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
)
i
a
n
e
v
o
l
S
(
.
.
d
d
a
k
n
a
B
B
K
S
)
i
e
n
a
r
k
U
(
)
i
a
n
a
m
o
R
(
C
S
J
k
n
a
B
P
T
O
.
.
i
A
S
a
n
a
m
o
R
k
n
a
B
P
T
O
k
n
a
B
h
c
u
o
T
d
n
a
)
a
i
s
s
u
R
(
”
k
n
a
B
P
T
O
“
C
S
J
a
k
s
r
o
g
o
n
r
C
)
o
r
g
e
n
e
t
n
o
M
(
.
.
d
a
a
k
n
a
b
a
n
l
a
j
i
c
r
e
m
o
k
D
A
a
k
n
a
b
a
k
č
i
r
o
g
d
o
P
+
.
.
i
A
H
S
a
n
a
b
l
A
P
T
O
a
k
n
a
B
)
i
a
n
a
b
l
A
(
)
a
v
o
d
l
o
M
(
a
c
n
a
b
s
a
b
o
M
i
.
.
A
S
p
u
o
r
G
P
T
O
–
l
a
t
o
t
b
u
s
s
e
i
r
a
i
d
i
s
b
u
s
g
n
i
k
n
a
b
-
n
o
N
)
y
r
a
g
n
u
H
(
p
u
o
r
G
l
i
t
n
a
k
r
e
M
s
e
i
r
a
i
d
i
s
b
u
s
t
n
e
m
e
g
a
n
a
M
t
e
s
s
A
r
e
h
t
O
s
e
i
r
a
i
d
i
s
b
u
s
e
r
t
n
e
C
e
t
a
r
o
p
r
o
C
s
t
n
e
m
t
s
u
d
a
j
d
n
a
s
n
o
i
t
a
n
m
i
i
l
E
7
8
9
10
11
12
13
14=15+16+17
15
16
17
18
19
0
0
0
0
0
0
0
0
0
0
0
0
0
6,309
35,222
28,127
6,907
12,315
37,531
28,254
42,159
44,353
67,451
48,128
36,399
84,946
146,582
113,572
6,377
7,056
5,692
16,120
11,464
2,615
3,074
3,702
7,952
6,697
1,935
2,109
2,928
5,902
3,959
32,182
7,116
15,335
9,731
34,829
34,754
68,079
18,807
7,748
7,373
14,370
14,013
16,782
16,642
21,186
3
10,299
10,739
32,523
4,791
3,180
14,877
31,012
4,215
1,007
891
29,118
(104)
20,475
8,747
6,097
4,446
1,998
441
248
1,052
20,154
461
708
18,985
3,478
3,906
3,906
4,490
4,490
0
0
(211)
427
856
4,661
12,522
2,736
(10,597)
(25,216)
(23,098)
(61,636)
(10,428)
(4,250)
(2,974)
(33,325)
(6,997)
(4,544)
(21,784)
(584)
(3,805)
(5,408)
(2,194)
(48,547)
1,364
(628)
(819)
(3,018)
(1,433)
(46,123)
1,293
(2,390)
(761)
(2,424)
0
0
0
71
0
(249)
(379)
0
(737)
(82)
0
(598)
(6,937)
(8,272)
(679)
(459)
(174)
1,130,871
998,204
953,345
836,912
646,295
537,167
908,388
705,628
439,836
373,648
247,997
222,393
211,043
176,524
75
52
23
0
375
143
232
0
140
(440)
0
140
0
(91)
(349)
0
0
0
0
0
(429)
94
(523)
0
(2,647)
909,128
653,521
(632)
491,399
446,958
(1,447)
35,846
(568)
(428)
(638)
381,883
2,946,936 (5,804,035)
9,123
197,440
1,599,877 (2,914,042)
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:2)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
227
NOTE 49:
DISCONTINUED OPERATIONS (in HUF mn)
On 31 December 2020, the Group classified
sold within 12 months, have been classified
the operations of its Croatian subsidiary,
as a discontinued operation, so the assets,
OTP Osiguranje d.d. as discontinued
liabilities of these discontinued operations
operations. The classification was needed
and their losses are presented separately
because there is intention for the sale.
in both the statement of financial position
These operations, which are expected to be
and statement of profit or loss.
The major classes of assets and liabilities comprising the operations classified
as held for sale are as follows:
Cash, amounts due from banks and balances with the National Banks
Placements with other banks, net of loss allowance for placements, net of repo receivables
Non-trading instruments mandatorily at fair value through profit or loss
Securities at fair value through other comprehensive income
Securities at amortized cost
Tangible assets on net value
Right-of-use assets on net value
Other assets on net value
Non-current assets and disposal group classified as held for sale
Leasing liabilities
Other liabilities
Disposal group liabilities classified as held for sale
Income
Expense
Profit before income tax
Income tax expense of OTP Osiguranje d.d.
Gain from non-current assets and disposal groups classified
as held-fo-sale not qualifying as discontinued operations
2020
2
244
1,188
3,410
1,031
92
42
61
6,070
44
5,442
5,486
2020
1,548
(1,334)
214
(15)
199
2019
–
221
1,143
4,122
719
88
62
79
6,434
63
5,098
5,161
2019
2,029
(1,733)
296
(25)
271
The Croatian insurance company cash-flow
eliminations during the consolidation
contributed to the Group’s operating activity
by HUF 988 million as at 31 December 2020.
with HUF 431 million, to the Group’s investing
The financial transaction regarding the sale
activity with HUF 327 million, and in respect
of the Slovakian subsidiary was closed,
of the Group’s financing activity with
presented in these consolidated financial
HUF 232 million which were modified by the
statements as discontinued operations.
The results of the discontinued operations, which have been included in the profit
for the year, were as follows:
Income
Expense
Profit before income tax
Income tax expense of OTP Banka Slovensko a.s.
Expected gain/(loss) of the sale of OTP Banka Slovensko a.s.
Income tax effect of the discontinued operation
Gain/(Loss) from sale of the Slovakian subsidiary
2020
15,503
(17,216)
(1,713)
(142)
7,887
(641)
5,391
2019
16,942
(15,522)
1,420
(56)
(6,032)
–
(4,668)
The Slovakian subsidiary bank cash-flow
Group’s financing activity with HUF 86,281
contributed to the Group’s operating activity
and (1,086) million which were modified
with HUF (8,231) and (48,377) million, to the
by the eliminations during the consolidation
Group’s investing activity with HUF (9,653)
by HUF (67,767) and 23,788 million as at
and (1,197) million, and in respect of the
31 December 2020 and 2019, respectively.
228
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:2)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 50:
SIGNIFICANT EVENTS DURING THE YEAR ENDED
31 DECEMBER 2020
1) Term Note Program
See details in Note 21.
2) Sale of OTP Osiguranje d.d.
The Croatian subsidiary of the Bank,
3) Sale of OTP Banka Slovensko a.s.
The transaction, based on the share
purchase agreement signed with
KBC Bank NV on 17 February 2020,
has been financially closed, as a result
OTP banka d.d., has signed a share
of which the 99.44% shareholding in its
purchase agreement to sell its 100% stake
Slovakian subsidiary, OTP Banka Slovensko
in the Croatian insurance company OTP
was acquired by KBC Bank NV.
Osiguranje d.d. to Groupama Biztosító Zrt.
The financial closure of the transaction
is expected to take place in first half
of 2021, subject to obtaining the necessary
supervisory approvals.
NOTE 51:
POST BALANCE SHEET EVENTS
1) Determination of expected
credit loss
Compliance with the executive circular
the judgments of the Supreme Court
of the Republic of Croatia and the High
Commercial Court of the Republic of
issued in January 2021 by the National Bank
Croatia in a collective dispute initiated by
of Hungary on the “use of macroeconomic
the Consumer Association due to unfair
information in applying IFRS 9 and factors
contractual provisions related to the
indicating a significant increase in credit
Swiss franc.
risk” does not significantly impact the
In the Group's view, in this regard, since the
determination of expected credit losses
decisions of the Supreme Court as well as
as at 31 December 2020.
the decisions of lower courts are final and
2) Supreme Court ruling in Croatia
In September 2019, the Supreme Court
the courts are already acting on them, there
has been no increase in consumer rights
(CHF loan clients) or an increase in liabilities
of the Republic of Croatia made a ruling,
on the part of banks. Accordingly, the Group
which to a large extent confirms the earlier
does not expect an increase in the number
ruling of the High Commercial Court of the
of lawsuits that would result in additional
Republic of Croatia dated June 2018 in the
provisions above the amounts reserved
case of protection of collective interest and
and provided for as of 31 December 2020.
rights of the consumers who had taken
Possible liabilities of the Group arising
loans with principals indexed to Swiss
from decisions of the courts related to
franc (Ruling No. Rev–2221/2018- 11 of the
such individual consumer lawsuits are
Supreme Court of the Republic of Croatia,
considered unforeseeable liabilities.
hereinafter referred to as “the Ruling”).
As permitted by IAS 37.92, in order not to
In February 2021, the Constitutional Court
prejudice the outcomes of the proceedings
of the Republic of Croatia rejected and
and the interests of the Group, no further
dismissed the constitutional complaints
disclosures are made about the contingent
of seven Croatian banks filed against
liabilities in connection with the Ruling.
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:2)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS consolidated financial statements
229
230 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:22)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:22)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS separate financial statements
231
232
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:22)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:22)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS separate financial statements
233
234
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:22)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:22)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS separate financial statements
235
Statement of Financial Position
(separate, in accordance with IFRS, as at 31 December 2020, in HUF mn)
Cash, amounts due from banks and balances
with the National Bank of Hungary
Placements with other banks, net of allowance for placement losses
Repo receivables
Financial assets at fair value through profit or loss
Financial assets at fair value through other comprehensive income
Securities at amortised cost
Loans at amortised cost and mandatorily measured
at fair value through profit or loss
Investments in subsidiaries
Property and equipment
Intangible assets
Right of use assets
Investments properties
Current tax assets
Derivative financial assets designated
as hedge accounting relationships
Other assets
TOTAL ASSETS
Amounts due to banks and deposits from
the National Bank of Hungary and other banks
Repo liabilities
Deposits from customers
Leasing liabilities
Liabilities from issued securities
Financial liabilities at fair value through profit or loss
Derivative financial liabilities designated as held for trading
Derivative financial liabilities designated as hedge accounting relationships
Deferred tax liabilities
Current tax liabilities
Other liabilities
Subordinated bonds and loans
TOTAL LIABILITIES
Share capital
Retained earnings and reserves
Treasury shares
TOTAL SHAREHOLDERS’ EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
Budapest, 17 March 2021
Note
5
6
7
8
9
12
10
11
13
13
34
14
15
16
17
18
19
20
21
22.
23
33
24
24
25
26
27
28
2020
579,120
1,535,884
183,364
160,483
911,950
2,007,692
3,898,697
1,548,972
77,974
57,639
13,479
1,936
593
6,817
169,794
11,154,394
766,977
109,612
7,895,735
14,106
28,435
25,902
99,987
3,104
3,062
–
224,897
304,243
9,476,060
28,000
1,697,133
(46,799)
1,678,334
11,154,394
2019
289,686
1,560,142
45,539
172,229
1,485,977
1,447,224
3,315,069
1,542,538
77,754
53,282
13,607
2,381
–
16,677
116,699
10,138,804
738,054
462,621
6,573,550
13,660
43,284
28,861
83,088
10,023
5,875
2,896
243,780
279,394
8,485,086
28,000
1,628,354
(2,636)
1,653,718
10,138,804
The accompanying notes to separate financial statements on pages 240 to 333 form an integral part of these separate financial
statements.
236
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:22)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Statement of Profit or Loss
(separate, in accordance with IFRS, for the year ended 31 December 2020, in HUF mn)
Interest Income:
Interest income calculated using the effective interest method
Income similar to interest income
Interest income and similar to interest income
Interest Expense:
Interest expense
NET INTEREST INCOME
Loss allowance on loan, placement and repo receivables losses
from this: loss from derecognition of loans at amortised cost
Loss allowance/(Release of loss allowance) on securities
at fair value through other comprehensive income
and on securities at amortised cost
Provision for loan commitments and financial guarantees given
Change in the fair value attributable to changes in the credit risk of loans
mandatorily measured at fair value through profit of loss
Risk cost total
NET INTEREST INCOME AFTER RISK COST
MODIFICATION LOSS
Income from fees and commissions
Expenses from fees and commissions
NET PROFIT FROM FEES AND COMMISSIONS
Foreign exchange (losses) and gains
Gains on securities, net
from this: gain from derecognition of securities at amortised cost
(Losses)/Gains on financial instruments at fair value through profit or loss
Gains on derivative instruments, net
Dividend income
Other operating income
Other operating expenses
NET OPERATING INCOME
Personnel expenses
Depreciation and amortization
Other general expenses
OTHER ADMINISTRATIVE EXPENSES
PROFIT BEFORE INCOME TAX
Income tax
NET PROFIT FOR THE YEAR
Earnings per share (in HUF)
Basic
Diluted
Note
29
29
29
6, 7, 10, 30
9, 12, 30
24, 30
4
31
31
11
32
32
32
32
32
33
42
42
Statement of Comprehensive Income
(separate, in accordance with IFRS, for the year ended 31 December 2020, in HUF mn)
NET PROFIT FOR THE YEAR
Items that may be reclassified subsequently to profit or loss:
Fair value adjustment of debt instruments at fair value
through other comprehensive income
Deferred tax (9%) related to debt instruments at fair value
through other comprehensive income
(Losses)/Gains on separated currency spread of financial
instruments designated as hedging instrument
Deferred tax (9%) related to separated currency spread
of financial instruments designated as hedging instrument
(Losses)/Gains on derivative financial instruments designated
as cash-flow hedge
Deferred tax (9%) related to derivative financial instruments
designated as cash-flow hedge
Items that will not be reclassified to profit or loss:
Fair value adjustment of equity instruments at fair value
through other comprehensive income
Deferred tax (9%) related to equity instruments at fair value
through other comprehensive income
Other comprehensive income total
NET COMPREHENSIVE INCOME
Note
33
33
33
33
2020
239,633
81,663
321,296
(99,630)
221,666
(61,310)
(3,638)
(1,848)
(3,202)
(405)
(66,765)
154,901
(17,358)
259,781
(40,750)
219,031
(4,518)
17,955
360
(671)
7,057
60,973
7,900
(28,064)
60,632
(118,498)
(38,948)
(166,514)
(323,960)
93,246
(772)
92,474
333
333
2020
92,474
(14,459)
1,262
(1,526)
137
(296)
27
(3,275)
310
(17,820)
74,654
2019
235,679
88,217
323,896
(119,384)
204,512
(29,056)
(19,831)
401
(5,794)
(5,432)
(39,881)
164,631
–
248,954
(35,591)
213,363
3,288
8,188
714
1,260
4,715
78,887
7,505
26,515
130,358
(115,035)
(29,925)
(160,198)
(305,158)
203,194
(9,840)
193,354
691
691
2019
193,354
16,732
(1,332)
367
(33)
2,086
(188)
3,867
(348)
21,151
214,505
The accompanying notes to separate financial statements on pages 240 to 333 form an integral part of these separate financial
statements.
IFRS separate financial statements
237
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:22)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Statement of Changes in Equity
(separate, in accordance with IFRS, for the year ended 31 December 2020, in HUF mn)
Balance as at 1 January 2019
Net profit for the period
Other comprehensive income
Total comprehensive income
Share-based payment
Payments to ICES holders
Sale of treasury shares
Acquisition of treasury shares
Loss on sale of treasury shares
Dividend for the year 2018
Other transaction with owners
Balance as at 1 January 2020
Net profit for the period
Other comprehensive income
Total comprehensive income
Share-based payment
Payments to ICES holders
Sale of treasury shares
Acquisition of treasury shares
Loss on sale of treasury shares
Dividend for the year 2019
Other transaction with owners
Balance as at 31 December 2020
Note
Share
Capital
Capital
reserve
38
28
28
28
38
28
28
28
28,000
–
–
–
–
–
–
–
–
–
–
28,000
–
–
–
–
–
–
–
–
–
–
28,000
52
–
–
–
–
–
–
–
–
–
–
52
–
–
–
–
–
–
–
–
–
–
52
Retained
earnings and
other reserves
1,484,854
193,354
21,151
214,505
3,547
(1,334)
–
–
(11,950)
(61,320)
(71,057)
1,628,302
92,474
(17,820)
74,654
3,394
(4,853)
–
–
(4,416)
–
(5,875)
1,697,081
Treasury
Shares
Total
(1,964)
–
–
–
–
–
33,513
(34,185)
–
–
(672)
(2,636)
–
–
–
–
–
41,759
(85,922)
–
–
(44,163)
(46,799)
1,510,942
193,354
21,151
214,505
3,547
(1,334)
33,513
(34,185)
(11,950)
(61,320)
(71,729)
1,653,718
92,474
(17,820)
74,654
3,394
(4,853)
41,759
(85,922)
(4,416)
–
(50,038)
1,678,334
The accompanying notes to separate financial statements on pages 240 to 333 form an integral part of these separate financial
statements.
238 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:22)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Statement of Cash-flows
(separate, in accordance with IFRS, for the year ended 31 December 2020, in HUF mn)
OPERATING ACTIVITIES
Profit before income tax
Net accrued interest
Depreciation and amortization
Loss allowance on loans and placements
Loss allowance/(Release of loss allowance) on securities
at fair value through other comprehensive income
Impairment loss/(Reversal of impairment loss) on investments in subsidiaries
Loss allowance/(Release of loss allowance) on securities at amortised cost
Loss allowance/(Release of loss allowance) on other assets
Provision on off-balance sheet commitments and contingent liabilities
Share-based payment
Unrealised losses/(gains) on fair value adjustment
of financial instruments at fair value through profit or loss
Unrealised losses on fair value adjustment
of derivative financial instruments
Interest expense from leasing liabilities
Net changing in assets and liabilities in operating activities
Changes in held for trading securities
Change in financial instruments mandatorily measured
at fair value through profit or loss
Changes in derivative financial instruments at fair value through profit or loss
Net increase in loans
Increase in other assets, excluding advances
for investments and before provisions for losses
Net increase in deposits from customers
(Decrease)/Increase in other liabilities
Net increase in the compulsory reserve established
by the National Bank of Hungary
Dividend income
Income tax paid
Net cash provided by operating activities
INVESTING ACTIVITIES
Net increase in placements with other banks and repo
receivables before allowance for placement losses
Purchase securities at fair value through other comprehensive income
Proceeds from sale of securities at fair value through other comprehensive income
Change in derivative financial instruments designated as hedge accounting
Increase in investments in subsidiaries
Decrease in investments in subsidiaries
Dividend income
Increase in securities at amortised cost
Redemption of securities at amortised cost
Additions to property, equipment and intangible assets
Disposal of property, equipment and intangible assets
Net decrease/(increase) in investment properties
Net increase in advances for investments included in other assets
Net cash used in investing activities
FINANCING ACTIVITIES
Net (decrease)/increase in amounts due to banks and deposits
from the National Bank of Hungary and other banks and repo liabilities
Financial liabilities designated as fair value through profit or loss
Leasing payments
Cash received from issuance of securities
Cash used for redemption of issued securities
Increase in subordinated bonds and loans
Decrease in subordinated bonds and loans
Payments to ICES holders
Increase of Treasury shares
Decrease of Treasury shares
Dividends paid
Net cash (used in)/provided by financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Note
2020
2019
13
30
9
11
12
16
24
38
8
8
8
10
16
19
24
5
11
93,246
(34,365)
38,997
61,310
3
10,042
1,845
3,521
3,110
3,394
3,549
4,011
(257)
34,091
(9,015)
2,895
(604,138)
(56,532)
1,322,243
(25,145)
(10,978)
(60,913)
(1,449)
779,465
203,194
6,760
29,925
33,728
(176)
(38,807)
(225)
(186)
5,411
3,547
(1,379)
6,777
(244)
(23,247)
(984)
483
(743,665)
(7,312)
832,785
495
(7,558)
(72,972)
(628)
225,722
6, 7
(115,862)
(518,327)
9
9
11
11
12
12
13
13
14
16
17, 18
21
20
20
25
25
27
28
28
27
5
(1,079,151)
1,623,498
(190)
(32,961)
16,485
60,913
(680,089)
119,642
(68,885)
29,433
396
–
(126,771)
(322,365)
(4,219)
(3,919)
7,119
(21,984)
29,945
(5,373)
(4,853)
(85,923)
37,344
(10)
(374,238)
278,456
224,631
503,087
(1,078,031)
1,068,081
–
(326,158)
–
72,972
(146,771)
127,671
(48,381)
1,969
(48)
–
(847,023)
461,774
(3,331)
(3,927)
10,201
(13,584)
166,704
–
(1,334)
(34,185)
21,563
(61,307)
542,574
(78,727)
303,358
224,631
The accompanying notes to separate financial statements on pages 240 to 333 form an integral part of these separate financial
statements.
IFRS separate financial statements
239
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:22)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
N O T E S T O S E PA R AT E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 2 0
NOTE 1:
ORGANIZATION AND BASIS OF FINANCIAL STATEMENTS
1.1 General information
OTP Bank Plc. (“Bank” or “OTP Bank”) was
Deloitte Auditing and Consulting Ltd. (000083),
established on 31 December 1990, when
84/C Dózsa György Street, Budapest H–1068.
the previously State-owned company was
Registered under 01-09-071057 by Budapest-
transformed into a limited liability company.
Capital Regional Court, as registry court.
Statutory registered auditor: Tamás Horváth,
The Bank’s registered office address is
registration number: 003449.
16 Nádor Street, Budapest H–1051.
Internet homepage: www.otpbank.hu
Audit service fee agreed by the Annual General
Meeting of the Bank for the year ended 2020 is
Signatory of the separate financial statements
an amount of HUF 70 million + VAT.
is the Chief Executive Officer, dr. Sándor Csányi
(Budapest).
All other fees charged by the Auditor for
Responsible person for the control and
non-audit services during the financial year
management of accounting services:
are disclosed in the consolidated financial
Zoltán Tuboly (Budapest), Managing Director
statements of the Bank.
of Accounting and Financial Directorate,
Registration Number: 177289, IFRS qualified
In 1995, the shares of the Bank were introduced
chartered accountant.
on the Budapest and the Luxembourg Stock
Due to Hungarian legislation audit services
Exchanges and were also traded on the SEAQ
are statutory for OTP Bank. Disclosure
board on the London Stock Exchange and
information about the auditor:
PORTAL in the USA.
The structure of the Share capital by shareholders:
Domestic and foreign private and institutional investors
Employees
Treasury shares
Total
2020
97%
1%
2%
100%
2019
99%
1%
0%
100%
The Bank’s Registered Capital consists of
The Bank provides a full range of
280.000.010 pieces of ordinary shares with the
commercial banking services through
nominal value of HUF 100 each, representing
a nationwide network of 364 branches in
the same rights to the shareholders.
Hungary.
Number of branches:
2020
364
2019
370
240 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:19)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Number of the employees of the Bank:
Number of employees
Average number of employees
2020
9,829
9,654
2019
9,318
8,981
1.2 Basis of accounting
(cid:588) Amendments to IFRS 9 “Financial
Instruments”, IAS 39 “Financial Instruments:
These Separate Financial Statements were
Recognition and Measurement”, IFRS 7
prepared based on the assumption of the
“Financial Instruments: Disclosures”
Management that the Bank will remain in
– Interest rate Benchmark Reform
business for the foreseeable future. The Bank
– adopted by EU on 15 January 2020
will not be forced to halt operations and
(effective for annual periods beginning
liquidate its assets in the near term at what
on or after 1 January 2020),
may be very low fire-sale prices.
(cid:588) Amendments to IFRS 16 “Leases” – Covid-19-
Related Rent Concessions adopted by EU
The Bank maintains its accounting records
on 9 October 2020 (effective for annual
and prepares their statutory accounts in
periods beginning on or after 1 June 2020),
accordance with the commercial, banking
(cid:588) Amendments to IFRS 3 “Business
and fiscal regulations prevailing in Hungary.
Combinations” – adopted by EU on 21 April
The presentation and functional currency
2020 (effective for annual periods beginning
of the Bank is the Hungarian Forint (“HUF”).
on or after 1 January 2020).
The separate financial statements have been
prepared in accordance with International
The adoption of these amendments to the
Financial Reporting Standards (“IFRS”)
existing standards has not led to any material
as adopted by the European Union (“EU”).
changes in these Separate Financial Statements.
1.2.1 The effect of adopting new
and revised IFRS standards effective
from 1 January 2020
1.2.2 New and revised Standards and
Interpretations issued by IASB and
adopted by the EU but not yet effective
The following amendments to the existing
(cid:588) Amendments to IFRS 9, IAS 39, IFRS 7,
standards and new interpretation issued by
IFRS 4 and IFRS 16 “Interest Rate
the International Accounting Standards Board
Benchmark Reform – Phase 2 adopted by
(IASB) and adopted by the EU are effective
EU on 13 January 2021 (effective for annual
for the current reporting period:
periods beginning on or after 1 January 2021)
(cid:588) Amendments to References to the
(cid:588) Amendments to IFRS 4 “Insurance
Conceptual Framework in IFRS Standards
Contracts” deferral of IFRS 9 adopted by EU
– adopted by EU on 29 November 2019
on 15 December 2020 (effective for annual
(effective for annual periods beginning
periods beginning on or after 1 January 2021)
on or after 1 January 2020),
(cid:588) Amendments to IAS 1 “Presentation
of Financial Statements” and IAS 8
“Accounting Policies, Changes in
Accounting Estimates and Errors”
– Definition of Material – adopted by EU on
1.2.3 Standards and Interpretations
issued by IASB but not yet adopted
by the EU
29 November 2019 (effective for annual
At present, IFRS as adopted by the EU do not
periods beginning on or after 1 January 2020),
significantly differ from regulations adopted
IFRS separate financial statements
241
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:19)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
by the IASB except for the following new
policies (effective for annual periods
standards, amendments to the existing
beginning on or after 1 January 2023),
standards and new interpretation, which
(cid:588) Amendments to IAS 8 “Accounting policies,
were not endorsed for use in EU as at date
Changes in Accounting Estimates and
of publication of these financial statements:
Errors” – Definition of Accounting Estimates
(cid:588) IFRS 17 “Insurance Contracts” (effective
(effective for annual periods beginning
for annual periods beginning on or after
on or after 1 January 2023),
1 January 2021),
(cid:588) Amendments to IFRS 10 “Consolidated
(cid:588) Amendments to IFRS 3 “Business
Financial Statements” and IAS 28 “Invest-
Combinations”; IAS 16 “Property, Plant and
ments in Associates and Joint Ventures”
Equipment”; IAS 37 “Provisions, Contingent
– Sale or Contribution of Assets between
Liabilities and Contingent Assets” – Annual
an Investor and its Associate or Joint
Improvements (effective fog annual periods
Venture and further amendments (effective
beginning on or after 1 January 2022),
date deferred indefinitely until the research
(cid:588) Amendments to IAS 1 “Presentation
project on the equity method has been
of Financial Statements” – Classification
concluded).
of Liabilities as Current or Non-Current
(effective for annual periods beginning
The Bank anticipates that the adoption of these
on or after 1 January 2023),
new standards, amendments to the existing
(cid:588) Amendments to IAS 1 “Presentation
standards and new interpretations will have
of Financial Statements” and IFRS Practice
no material impact on the financial statements
Statement 2 – Disclosure of Accounting
of the Bank in the period of initial application.
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies applied
as at the date of the financial statements
in the preparation of the accompanying
and their reported amounts of revenues and
separate financial statements are
expenses during the reporting period. Actual
summarized below:
results could differ from those estimates.
2.1 Basis of presentation
Future changes in economic conditions,
business strategies, regulatory requirements,
accounting rules and other factors could result
These separate financial statements have been
in a change in estimates that could have a
prepared under the historical cost convention
material impact on future separate financial
with the exception of certain financial
statements.
instruments, which are recorded at fair value.
Revenues and expenses are recorded in the
period in which they are earned or incurred.
2.2 Foreign currency translation
The Bank does not offset assets and liabilities
or income and expenses unless it is required
Monetary assets and liabilities denominated
or permitted by an IFRS standard.
in foreign currencies are translated into HUF
that is the presentation currency, at exchange
The presentation of separate financial state-
rates quoted by the National Bank of Hungary
ments in conformity with IFRS requires the
(“NBH”) as at the date of the separate financial
Management of the Bank to make estimates
statements. Income and expenses arising
and assumptions that affect the reported
in foreign currencies are converted at the
amounts of assets and liabilities and
rate of exchange on the transaction date.
disclosure of contingent assets and liabilities
Resulting foreign exchange gains or losses
242
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:19)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
are recorded to the separate statement
explicit cash-flow model serves as a basis
of profit or loss.
2.3 Consolidated financial
statements
for the impairment test by which the Bank
defines the impairment need on investment in
subsidiaries based on the strategic factors and
financial data of its cash-generating units.
OTP Bank in its strategic plan has taken into
These financial statements present the
consideration the cautious recovery of global
separate financial position and results of
economic situation and outlook, the associated
operations of the Bank. Consolidated financial
risks and their possible effect on the financial
statements are prepared by the Bank and
sector as well as the current and expected
consolidated net profit for the year and share-
availability of wholesale funding.
holders’ equity differs significantly from that
presented in these separate financial state-
ments. See Note 2.4 for the description of the
2.5 Securities at amortised cost
method of accounting for investments in sub-
sidiaries and associated companies in these
The Bank measures at amortized cost those
separate financial statements. The consolidated
securities which are held for contractual cash
financial statements and the separate financial
collecting purposes, and contractual terms
statements will be published on the same date.
of these securities give rise to cash-flows that
2.4 Investments in subsidiaries,
associated companies and other
investments
are solely payment of principal and interest
on the principal amount outstanding.
The Bank initially recognizes these securities
at fair value. Securities at amortized cost are
subsequently measured using the effective
interest (EIR) method and are subject to
Investments in subsidiaries comprise those
impairment. The amortisation of any discount
investments where OTP Bank, through direct
or premium on the acquisition of a security
and indirect ownership interest, controls the
at amortized cost is part of the amortized
investee. Control is achieved when the Bank
cost and is recognized as interest income
has power over the investee, is exposed or has
(Eir based) so that the revenue recognized
rights, to variable returns from its involvement
in each period represents a constant yield
with the investee and has the ability to use its
on the investment. Securities at amortized
power to affect its returns.
cost are accounted for on a trade date basis.
Investments in subsidiaries are recorded
issued by the Hungarian Government bonds
at the cost of acquisition, less impairment
and corporate bonds.
Such securities comprise mainly securities
for permanent diminution in value, when
appropriate. After initial measurement invest-
ments in subsidiaries are measured at cost,
in the case of foreign currency denominated
2.6 Financial assets at fair value
through profit or loss
investments for the measurement the
Bank uses the exchange rate at the date
2.6.1 Securities held for trading
of transaction.
Investments in securities are accounted for on
Impairment is determined based on the future
a trade date basis and are initially measured
economic benefits of the subsidiary and macro-
at fair value. Securities held for trading are
economic factors.
measured at subsequent reporting dates at
fair value. Unrealised gains and losses on
OTP Bank calculates the fair value based on
held for trading securities are recognized in
discounted cash-flow model. The 3 year period
profit or loss and are included in the separate
IFRS separate financial statements
243
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:19)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
statement of profit or loss for the period.
collateralised. Changes in the fair value of
The Bank holds held for trading securities
derivative financial instruments that do not
within the business model to obtain short-term
qualify for hedge accounting are recognized
gains. Consequently realised and unrealised
in profit or loss and are included in the
gains and losses are recognized in the net
separate statement of profit or loss for the
operating income. The Bank applies FIFO1
period. Each derivative deal is determined as
inventory valuation method for securities
asset when fair value is positive and as liability
held for trading. Such securities consist of
when fair value is negative.
discounted and interest bearing Treasury bills,
Hungarian Government bonds, mortgage
Certain derivative transactions, while
bonds, shares in non-financial commercial
providing effective economic hedges under
companies, shares in investment funds, shares
risk management positions of the Bank, do
in venture capital funds and shares in financial
not qualify for hedge accounting under the
institutions.
2.6.2 Derivative financial
instruments
specific rules of IFRS 9 and are therefore
treated as derivatives held for trading with fair
value gains and losses charged directly to the
separate statement of profit or loss.
In the normal course of business, the Bank
Foreign currency contracts
Foreign currency contracts are agreements
is a party to contracts for derivative financial
to exchange specific amounts of currencies
instruments, which represent a low initial
at a specified rate of exchange, at a spot date
investment compared to the notional value
(settlement occurs two days after the trade
of the contract and their value depends on
date) or at a forward date (settlement occurs
value of underlying asset and are settled in
more than two days after the trade date).
the future. The derivative financial instruments
The notional amount of forward contracts
used include interest rate forward or swap
does not represent the actual market or credit
agreements and currency forward or swap
risk associated with these contracts. Foreign
agreements and options. These financial
currency contracts are used by the Bank for
instruments are used by the Bank both for
risk management and trading purposes.
trading purposes and to hedge interest rate
The Bank’s risk management foreign currency
risk and currency exposures associated with its
contracts were used to hedge the exchange
transactions in the financial markets.
rate fluctuations of loans and deposits
denominated in foreign currency.
Derivative financial instruments are accounted
for on a trade date basis and are initially
measured at fair value and at subsequent
reporting dates also at fair value. Fair values
Foreign exchange swaps
and interest rate swaps
The Bank enters into foreign-exchange swap
are obtained from quoted market prices,
and interest rate swap (“IRS”) transactions.
discounted cash-flow models and option
The swap transaction is a complex agreement
pricing models as appropriate. OTP Bank
concerning the swap of certain financial
adopts multi curve valuation approach for
instruments, which usually consists of a spot
calculating the net present value of future
and one or more forward contracts.
cash-flows – based on different curves used
for determining forward rates and used for
Interest rate swaps obligate two parties to
discounting purposes. It shows the best
exchange one or more payments calculated
estimation of such derivative deals that are
with reference to fixed or periodically reset
collateralised as OTP Bank has almost its
rates of interest applied to a specific notional
entire open derivative transactions
principal amount (the base of the interest
1 First In First Out
244
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:19)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
calculation). Notional principal is the amount
limits on unmatched positions. Credit risk is
upon which interest rates are applied to
managed through approval procedures that
determine the payment streams under interest
establish specific limits for individual counter-
rate swaps.
parties. The Bank’s forward rate agreements
Such notional principal amounts are often
were transacted for management of interest
used to express the volume of these trans-
rate exposures.
actions but are not actually exchanged
between the counterparties. The Bank’s
interest rate swap contracts can be hedging
Foreign exchange options
A foreign exchange option is a derivative
or held for trading contracts.
financial instrument that gives the owner the
Cross-currency interest rate swaps
The Bank enters into cross-currency interest
right to exchange money denominated in one
currency into another currency at a pre-agreed
exchange rate at a specified future date.
rate swap (“CCIRS”) transactions which have
The transaction, for a fee, guarantees a worst-
special attributes, i.e. the parties exchange the
case exchange rate for the futures purchase
notional amount at the beginning and also
of one currency for another. These options
at the maturity of the transaction. A special
protect against unfavourable currency
type of these deals is the mark-to-market
movements while preserving the ability to
CCIRS agreements. At this kind of deals the
participate in favourable movements.
parties – in accordance with the foreign
exchange prices – revalue the notional amount
during lifetime of the transaction.
Equity and commodity swaps
Equity swaps obligate two parties to exchange
2.7 Derivative financial instruments
designated as a fair value
or cash-flow hedge
more payments calculated with reference
Changes in the fair value of derivatives
periodically reset rates of interest and
that are designated and qualify as hedging
performance of indices. A specific notional
instruments fair value hedges and that prove
principal amount is the base of the interest
to be highly effective in relation to the hedged
calculation. The payment of index return is
risk, are recorded in the separate statement
calculated on the basis of current market price
of profit or loss along with the corresponding
compared to the previous market price. In case
change in fair value of the hedged asset or
of commodity swaps payments are calculated
liability that is attributable to the specific
on the basis of the strike price of a predefined
hedged risk. Changes in the fair value of the
commodity compared to its average market
hedging instrument in fair value hedges are
price in a period.
Forward rate agreements (“FRA”)
A forward rate agreement is an agreement
charged directly to the separate statement
of profit or loss. The conditions of hedge
accounting applied by the Bank are the
following: formally designated as hedging
to settle amounts at a specified future date
relationship, proper hedge documentation is
based on the difference between an interest
prepared, effectiveness test is performed and
rate index and an agreed upon fixed rate.
based on it the hedge is qualified as effective.
Market risk arises from changes in the market
value of contractual positions caused by
Changes in fair value of derivatives that
movements in interest rates.
are designated and qualify as hedging
The Bank limits its exposure to market risk by
prove to be highly effective in relation to
entering into generally matching or offsetting
hedged risk are recognized as reserve in other
positions and by establishing and monitoring
comprehensive income. Amounts deferred in
instrument in cash-flow hedges and that
IFRS separate financial statements
245
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:19)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
other comprehensive income are transferred
(cid:588) A separate financial instrument with the
to the separate statement of profit or loss
same terms as the embedded derivative
and classified as revenue or expense in the
would meet the definition of a derivative as
periods during which the hedged assets and
a stand-alone instrument; and
liabilities effect the separate statement of
(cid:588) The host instrument is not measured at fair
recognized and comprehensive income for the
or is measured at fair value but changes
period. The ineffective element of the hedge is
in fair value are recognised in other
charged directly to the separate statement of
comprehensive income.
profit or loss. The Bank terminates the hedge
accounting if the hedging instrument expires
As long as a hybrid contract contains a
or is sold, terminated or exercised, or the
host that is a financial asset the general
hedge no longer meets the criteria for hedge
accounting rules for classification, recognition
accounting. In case of cash-flow hedges
and measurement of financial assets are
– in line with the standard – hedge accounting
applicable for the whole contract and no
is still applied as long as the underlying asset
embedded derivative is separated.
is derecognised.
2.8 Offsetting
2.10 Securities at fair value
through other comprehensive
income (“FVOCI securities”)
Financial assets and liabilities may be offset
and the net amount is reported in the
FVOCI securities are held within a business
statement of financial position when the Bank
model whose objective is achieved by both
has a legally enforceable right to set off the
collecting of contractual cash-flows and selling
recognised amounts and the transactions are
securities. Furthermore contractual terms of
intended to be reported in the statement
FVOCI securities give rise on specified dates
of financial position on a net basis. In the case
to cash-flows that are solely payment of
of the derivative financial instruments the
principal and interest on the principal amount
Bank applies offsetting and net presentation
outstanding.
in the Statement of Financial Position when
the Bank has the right and the ability to settle
the assets and liabilities on a net basis.
2.9 Embedded derivatives
Debt instruments
Investments in debt securities are accounted
for on a trade date basis and are initially
measured at fair value. Securities at fair
value through other comprehensive income
are measured at subsequent reporting dates
Sometimes, a derivative may be a component
at fair value. Unrealised gains and losses on
of a combined or hybrid contract that includes
FVOCI financial instruments are recognized
a host contract and a derivative (the embedded
in other comprehensive income, except for
derivative) affecting cash-flows or otherwise
interest and foreign exchange gains/losses on
modifying the characteristics of the host
monetary items, unless such FVOCI security
instrument. An embedded derivative must
is part of an effective hedge. Such gains and
be separated from the host instrument and
losses will be reported when realised in profit
accounted for as a separate derivative if,
or loss for the applicable period. The Bank
and only if:
applies FIFO inventory valuation method for
(cid:588) The economic characteristics and risks of
FVOCI securities.
the embedded derivative are not closely
related to the economic characteristics and
For debt securities at fair value through other
risks of the host contract;
comprehensive income the loss allowance
246 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:19)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
is calculated based on expected credit loss
including accrued interest, net of allowance
model. The expected credit loss is accounted
for loan or placement losses, respectively.
for against Other Comprehensive Income.
Transaction fees and charges should adjust
the carrying amount at initial recognition and
FVOCI securities are remeasured at fair value
be included in effective interest calculation.
based on quoted prices or values derived from
Loans, placements with other banks and
cash-flow models. In circumstances where the
repo receivables are derecognised when the
quoted market prices are not readily available,
contractual rights to the cash-flows expire or
the fair value of debt securities is estimated
they are transferred. When a financial asset
using the present value of the future cash-flows
is derecognised the difference of the carrying
and the fair value of any unquoted equity
amount and the consideration received is
instruments are calculated using the EPS ratio.
recognised in the profit or loss. When the
Fair value through other
comprehensive income option
for equity instruments
In some cases the Bank made an irrevocable
contractual cash-flows of a financial asset are
modified and the modification does not result
in the derecognition of the financial asset the
Bank recalculate the gross carrying amount of
the financial asset by discounting the expected
election at initial recognition for certain non-
future cash-flows with the original effective
trading investments in an equity instrument
interest rate of the asset. The difference
to present subsequent changes in fair value
between the carrying amount and the present
of these securities in other comprehensive
value of the expected cash-flows is recognised
income instead of in profit or loss.
as a modification gain or loss in the profit
The use of the fair value option is based only
accounted for using the effective interest rate
on direct decision of management of the Bank.
method.
or loss. Interest and amortised cost are
2.11 Loans, placements with other
banks, repo receivables and loss
allowance for loan, placements
and repo receivables losses
Initially, financial assets shall be recognized
at fair value which is usually equal to the
transaction value of loans and receivables.
Initial fair value of loans and receivables lent
at interest below market conditions is lower
than their transaction price. As a consequence
The Bank measures Loans, placements with
the Bank is deferring the difference between
other banks and repo receivables at amortised
the fair value at initial recognition and the
cost, which are held to collect contractual
transaction price relating to loans and
cash-flows, and contractual terms of these
receivables because input data for measuring
assets give rise on specified dates to cash-flows
the fair values is not available on observable
that are solely payments of principal and
markets.
interest on the principal amount outstanding.
The Bank recognises financial assets, which are
Allowance for losses on loans, placements
not held for trading and do not give rise con-
with other banks and repo receivables
tractual cash-flows that are solely payments of
represent management assessment for
principal and interest on the principal amount
potential losses in relation to these activities.
outstanding as loans measured at fair value
through profit or loss.
Write-offs are generally recorded after all
reasonable restructuring or collection
Loans, placements with other banks and repo
activities have taken place and the possibility
receivables are accounted at amortised cost,
of further recovery is considered to be remote.
stated at the principal amounts outstanding
The loan is written off against the related
IFRS separate financial statements
247
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:19)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
account “Loss allowance on loan, placement
The changes of net present value should
and repo receivables losses” in the Statement
be calculated on Bank level in case of retail
of Profit or loss.
portfolio. Each retail contract is restructured
based on restructuring frameworks.
OTP Bank applies partial or full write-off
The Bank has to evaluate these frameworks
for loans based on the definitions and
(and not individual contracts). The changes
prescriptions of financial instruments in
of net present value should be calculated
accordance with IFRS 9. If OTP Bank has no
individually on contract level in case of
reasonable expectations regarding a financial
corporate portfolio.
asset (loan) to be recovered, it will be written
off partially or fully at the time of emergence.
2.12 Loss allowance
The gross carrying amount and loss allowance
of the loans shall be written off in the same
Allowance for losses on loans and place-
amount to the estimated maximum recovery
ments with other banks are recognised by
amount while the net carrying value remains
the Bank based on the expected credit loss
unchanged.
model in accordance with IFRS 9. Based on
the three stage model loss allowance is
If there are reasonable expectations of recovery
recognised in amount of 12 month expected
for a financial asset that is written-off fully or
credit loss from the initial recognition.
partially, OTP Bank shall re-estimate cash-flows
Financial assets with significantly increased
of a financial asset and write-off reversal is
credit risk or credit impaired financial assets
applied in the financial statements.
(based on objective evidences) loss allowance
Modification of contractual
cash-flows
If contractual cash-flows of a financial asset
is recognised in amount of lifetime expected
credit loss.
In case of purchased or originated credit
change and it is not qualified as derecognition,
impaired financial assets loss allowance is
modification gain or loss should be calculated
recognised in amount of lifetime expected
in the separate statement of profit or loss in
credit loss since initial recognition. Impairment
those cases like restructuring – as defined in
gain is recognised if lifetime expected credit
internal policies of the Bank – prolongation,
loss for purchased or originated credit
renewal with unchanged terms, renewal
impaired financial assets at measurement date
with shorter terms and prescribing capital
are less than the estimated credit loss at initial
repayment rate, if it doesn’t exist or has not
recognition.
been earlier.
The allowances for loan and placement
When the contractual cash-flows of a financial
losses are determined to cover losses that
asset are renegotiated or otherwise modified
have been specifically identified. Collective
and the renegotiation or modification does
impairment losses of portfolios of loans, for
not result in the derecognition of that financial
which no objective evidence of loss allowance
asset in accordance with IFRS 9, the Bank
has been identified on an individual basis,
recalculates the gross carrying amount
are determined to reduce the carrying amount
of the financial asset and shall recognizes
of the portfolios of financial assets with similar
a modification gain or loss in profit or loss.
credit risk characteristics to their estimated
The modification indicates an insignificant
recoverable amounts at the balance sheet
change (the significance is assessed at
date. The expected cash-flows for portfolios
the financial statement level of the Bank
of similar assets are estimated based on
(and not at contract level).
historical loss experience.
248 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:19)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
At subsequent measurement the Bank
(cid:588) the loss allowance is multiplied by the
recognises through “Loss allowance on loan,
end-of-year balance and it will be the actual
placement and repo receivables losses” in the
loss allowance on these receivables,
Statement of Profit or Loss impairment gain
(cid:588) loss allowance should be recalculated
or loss as an amount of expected credit losses
annually.
or reversal that is required to adjust the loss
allowance at the reporting date to the amount
Credit risk of financial assets increases
that is required to be recognised in accordance
significantly at the following conditions:
with IFRS 9.
(cid:588) the payment delay exceeds 30 days,
(cid:588) it is classified as performing forborne,
If a financial asset, which previously classified
(cid:588) based on individual decision, its currency
in the first stage, classified subsequently in
suffered a significant “shock” since the
the second or third stage than loss allowance
disbursement of the loan,
is adjusted to lifetime expected credit loss.
(cid:588) the transaction/client rating exceeds a
If a financial asset, which previously classified
predefined value or falls into a determined
in the second or third stages, classified
range, or compared to the historic value
subsequently in the first stage than loss
it deteriorates to a predefined degree,
allowance is adjusted to level of 12 month
(cid:588) in the case household mortgage loans,
expected credit loss.
the loan-to-value ratio (“LTV”) exceeds
a predefined rate,
Classification into risk classes
According to the requirements of the IFRS 9
(cid:588) default on another loan of the retail client,
if no cross-default exists,
standard, the Bank classifies financial assets
(cid:588) in case of corporate and municipal clients:
measured at amortised cost and fair value
– financial difficulty (capital requirements,
through other comprehensive income, and
liquidity, impairment of asset quality),
loan commitments and financial guarantees
– significant decrease of activity and
into the following categories in accordance
liquidity in the market of the asset,
with IFRS 9:
Stage 1 Performing
– client’s rating reflects higher risk,
but better than default,
Stage 2 Performing, but compared to the
– collateral value drops significantly,
initial recognition it shows significant
from which the client pays the loan,
increase in credit risk
– more than 50% decrease in owner’s
Stage 3 Non-performing
equity due to net losses,
POCI
Purchased or originated credit
– client under dissolution,
impaired
– negative information from Central Credit
Information System: the payment delay
In the case of trade receivables, contract
exceeds 30 days.
assets and lease receivables the Group applies
the simplified approach and calculates only
Financial assets classifies as non-performing,
lifetime expected credit loss. Simplified
if the following conditions are met:
approach is the following:
(cid:588) default,
(cid:588) for the past 3 years the average annual
(cid:588) non-performing forborne exposures,
balance of receivables under simplified
(cid:588) in case of corporate and municipal clients:
approach is calculated,
– breach of contract terms and conditions
(cid:588) the written-off receivables under simplified
– critical financial difficulty of the
approach are determined in the past 3 years,
client (capital requirements, liquidity,
(cid:588) the loss allowance ratio will be the sum of
impairment of asset quality),
the written-off amounts divided by the sum
– liquidation, dissolution or debt clearing
of the average balances,
procedures against client,
IFRS separate financial statements
249
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:19)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
– forced deregistration procedures from
would otherwise arise from measuring
company registry,
assets or liabilities or recognising the gains
– terminated loans by the Bank,
and losses on them on different bases
– in case of fraud,
(cid:588) if the group of financial liabilities or assets is
– negative information from Central Credit
managed and its performance is evaluated
Information System: the payment delay
on a fair value basis, in accordance with
exceeds 90 days,
a documented risk management or invest-
– cessation of active markets of the
ment strategy, and information about the
financial asset,
group is provided internally on that basis
– default of ISDA based contracts.
to the Bank’s key management personnel.
For lifetime expected credit losses, the Bank
The use of the fair value option is limited only
shall estimate the risk of a default occurring
to special situations, and it can be based only
on the financial instrument during its expected
on direct decision of management of the Bank.
life. 12-month expected credit losses are a
portion of the lifetime expected credit losses
and represent cash-flow shortfalls that will
result if a default occurs in the 12 months after
the reporting date (or a shorter period fi the
2.14 Sale and repurchase
agreements, security lending
expected life of the financial instrument is less
Where debt or equity securities are sold
than 12 months), weighted by the probability
under a commitment to repurchase them
of that default occurring.
at a pre-determined price, they remain
on the statement of financial position and
Expected credit losses are measured in a way
the consideration received is recorded
that reflects:
in Other liabilities or Amounts due to banks
(cid:588) an unbiased and probability-weighted
and deposits from the National Bank of
amount that is determined by evaluating
Hungary and other banks, or Deposits
a range of possible outcomes,
from customers. Conversely, debt or equity
(cid:588) the time value of money, and
securities purchased under a commitment
(cid:588) reasonable and supportable information
to resell are not recognized in the statement
that is available without undue cost of effort
of financial position and the consideration
at the reporting date about past events,
paid is recorded either in Placements with
current conditions and forecasts of future
other banks or Deposits from customers.
economic conditions.
Interest is accrued evenly over the life
2.13 Option to designate a
financial asset/liability measured
at fair value through profit or loss
(FVTPL option)
of the repurchase agreement. In the case
of security lending transactions the Bank does
not recognize or derecognize the securities
because it is believed that the transferor
retains substantially all the risks and rewards
of the ownership of the securities. Only a
financial liability or financial receivable is
The Bank may, at initial recognition, irrevocably
recognized for the consideration amount.
designate a financial asset or liability as
measured at fair value through profit or loss.
The Bank may use FVTPL option in the
following cases:
(cid:588) if doing so eliminates or significantly
2.15 Property, equipment
and intangible assets
reduces a measurement or recognition
Property, equipment and intangible assets are
inconsistency (accounting mismatch) that
stated at cost, less accumulated depreciation
250 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:23)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
and amortization and impairment, if any.
generally FIFO formulas to the measurement
The depreciable amount (book value less
of inventories. Inventories shall be removed
residual value) of the non-current assets
from books when they are sold, unusable
must be allocated over their useful lives.
or destroyed. When inventories are sold, the
Depreciation and amortization are calculated
carrying amount of those inventories shall
using the straight-line method over the
be recognized as an expense in the period
estimated useful lives of the assets based
in which the related revenue is recognized.
on the following annual percentages:
Repossessed assets are classified as
inventories.
Intangible assets
Software
Property rights
Property
20–33.3%
16.7–33.3%
2.17 Investment properties
1–2%
Office equipment and vehicles
9–33.3%
Investment properties of the Bank are land,
buildings, part of buildings which are held
Depreciation and amortization on properties,
(as the owner or as the lessee under a
equipment and intangible assets starts on
finance lease) to earn rentals or for capital
the day when such assets are placed into
appreciation or both, rather than for use in
service. At each balance sheet date, the Bank
the production or supply of services or for
reviews the carrying value of its tangible and
administrative purposes or sale in the ordinary
intangible assets to determine if there is any
course of business. The Bank measures
indication that those assets have suffered an
the investment properties at cost less
impairment loss.
accumulated depreciation and impairment,
if any. The depreciable amount (book value
If such indication exists, the recoverable
less residual value) of the investment
amount of the asset is estimated to determine
properties must be allocated over their useful
the extent (if any) of the impairment loss.
lives. Depreciation and amortization are
Where it is not possible to estimate the
calculated using the straight-line method over
recoverable amount of an individual asset,
the estimated useful lives of the assets based
the Bank estimates the recoverable amount
on the 1–2% annual percentages.
of the cash-generating unit to which the asset
belongs.
The fair value of the investment properties
is established mainly by external experts.
Where the carrying value of property,
According to the opinion of the Management
equipment, other tangible fixed assets and
there is no significant difference between
intangible assets is greater than the
the fair value and the carrying value of these
estimated recoverable amount, it is impaired
properties.
immediately to the estimated recoverable
amount.
2.16 Inventories
2.18 Financial liabilities
The financial liabilities are presented within
financial liabilities at fair value through profit
The inventories shall be measured at the lower
or loss or financial liabilities measured at
of cost and net realisable value. The cost of
amortised cost. In connection to the financial
inventories shall comprise all costs of
liabilities at fair value through profit or loss,
purchase, costs of conversion and other costs
the Bank presents the amount of change in
incurred in bringing the inventories to their
their fair value originated from the changes of
present location and condition. The Bank uses
market conditions and business environment.
IFRS separate financial statements
251
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:23)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Financial liabilities at fair value through profit
At their date of initial recognition, lease
or loss are either financial liabilities held for
payments contained in the measurement of
trading or they are designated upon initial
lease liabilities comprise the following types
recognition as at fair value through profit
of payments for the right to use the underlying
or loss. In the case of financial liabilities
asset for the life of the lease:
measured at amortised cost, fees and
(cid:588) fixed lease payments less any lease
commissions related to the origination of
incentives,
the financial liability are recognised
(cid:588) variable lease payments which are
through profit or loss during the maturity
dependent on market indices,
of the instrument. In certain cases the Bank
(cid:588) amounts expected to be payable by the
repurchases a part of financial liabilities
lessee under residual value guarantees,
(mainly issued securities or subordinated
(cid:588) the strike price of a purchase option,
bonds) and the difference between the
if it is reasonably certain that the option
carrying amount of the financial liability
will be exercised, and
and the amount paid for it is recognised in
(cid:588) payment of contractual penalties for
the statement of profit or loss and included
terminating the lease, if the lease period
in other operating income.
reflects that the lessee used the option
of terminating the lease.
2.19 Leases
The Bank makes use of expedients with respect
to short-term leases (less than 12 months)
An agreement is a lease or contains a lease if
as well as in the case of leases in respect
it transfers the rights to control the use of an
of which the underlying asset has a low value
identified asset for a given period in exchange
(less than HUF 1.4 million) and for which
for compensation.
agreements it will not recognise financial
liabilities nor any respective right-of-use
Expenses related to the use of lease assets, the
assets. These types of lease payments will be
majority of which were previously recognised
recognised as costs using the straight-line
in external services costs, will be currently
method during the life of the lease.
classified as depreciation/amortisation and
interest costs. Usufruct rights are depreciated
using a straight line method, while lease
Recognition of right-of-use assets
Right-of-use assets are initially measured
liabilities are settled using an effective
at cost.
discount rate.
The cost of a right-of-use asset comprises:
(cid:588) the amount of the initial measurement
Recognition of lease liabilities
The Bank will recognise lease liabilities related
of lease liabilities,
(cid:588) any lease payments made at or before
to leases which were previously classified
the commencement date, less any lease
as “operating leases” in accordance with IAS 17
incentives received,
Leases. These liabilities will be measured at
(cid:588) any initial direct costs incurred by the lessee,
the present value of lease payments receivable
(cid:588) estimates of costs to be incurred by the
as at the date of commencement of the
lessee as a result of an obligation to
application of IFRS 16. Lease payments
disassemble and remove an underlying
shall be discounted using the interest rate
asset or to carry out renovation/restoration.
implicit in the lease or, if that rate cannot
be readily determined, the incremental
Average weighted amount of the implicit
borrowing rate. Interest rate applied by the
interest rate/incremental borrowing rate
Bank: weighted average lessee’s incremental
applied as at 1 January 2019 to recognize
borrowing rate: ~1,62%
the lease liabilities: ~1,61 %
252
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:23)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
2.20 Share capital
in the Separate Statement of Profit or Loss
on an accrual basis according to IFRS 15.
Share capital is the capital determined in
(See further details in Note 31). These fees are
the Articles of Association and registered by
related to deposits, cash withdrawal, security
the Budapest-Capital Regional Court. Share
trading, bank card etc.
capital is the capital the Bank raised by issuing
common stocks at the date the shares were
issued. The amount of share capital has not
2.24 Dividend income
changed over the current period.
2.21 Treasury shares
Dividend income refers to any distribution of
entity’s earnings to shareholders from stocks
or mutual funds that is owned by the Bank.
The Bank recognizes dividend income in the
Treasury shares are shares which are purchased
separate financial statements when its right
on the stock exchange and the over-the-counter
to receive the payment is established.
market by the Bank and are presented in the
separate statement of financial position
at acquisition cost as a deduction from share-
2.25 Income tax
holders’ equity. Gains and losses on the sale
of treasury shares are recognised directly to
The annual taxation charge is based on
shareholder’s equity. Derecognition of treasury
the tax payable under Hungarian fiscal law,
shares is based on the FIFO method.
adjusted for deferred taxation. Deferred
2.22 Interest income and interest
expense
taxation is accounted for using the balance
sheet liability method in respect of temporary
differences between the tax bases of assets
and liabilities and their carrying value
for financial reporting purposes, measured
Interest income and expenses are recognised in
at the tax rates that are expected to apply
profit or loss in the period to which they relate,
when the asset is realised or the liability is
using the effective interest rate method except
settled.
derivative financial instruments. Interest from
loans and deposits are accrued on a daily basis.
Deferred tax assets are recognized by the
Interest income and expenses include relevant
Bank for the amounts of income tax that are
transaction costs and the amortisation of any
recoverable in future periods in respect
discount or premium between the initial carry-
of deductible temporary differences as well
ing amount of an interest-bearing instrument
as the carry forward of unused tax losses and
and its amount at maturity calculated on
the carryforward of unused tax credits.
an effective interest rate basis.
The time-proportional interest income of
derivative financial instruments calculated not
2.26 Banking tax
using the effective interest method and the
positive fair value adjustment of interest rate
The Bank is obliged to pay banking tax
swaps are also included in interest income.
based on Act LIX of 2006. As the calculation
2.23 Fees and Commissions
is not based on the taxable profit (but the
adjusted Assets total calculated based
on the Separate Financial Statements for
the second period preceding the current
Fees and commissions that are not involved in
tax year), banking tax is not considered as
the amortised cost model are recognised
income tax.
IFRS separate financial statements
253
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:23)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
2.27 Off-balance sheet
commitments and contingent
liabilities
settled share-based payments is expensed
on a straight-line basis over the year, based
on the Bank’s estimate of shares that will
eventually vest. Fair value is measured by use
In the ordinary course of its business, the Bank
of a binomial model. The expected life used
has entered into off-balance sheet commit-
in the model has been adjusted, based on
ments such as guarantees, commitments to
Management’s best estimate, for the effects
extend credit, letters of credit and transactions
of non-transferability, exercise restrictions,
with financial instruments. The provision
and behavioural considerations. The Bank has
on off-balance sheet commitments and
applied the requirement of IAS 19 Employee
contingent liabilities is maintained at a level
Benefits. IAS 19 requires to recognise employee
adequate to absorb probable future losses
benefits to be paid as a liability and as an
which are probable and relate to present
expense in financial statements.
obligations.
Those commitments and contingent liabilities
Management determines the adequacy of the
2.29 Separate statement
of cash-flows
provision based upon reviews of individual
items, recent loss experience, current economic
Cash-flows arising from the operating,
conditions, the risk characteristics of the
investing or financing activities are reported
various categories of transactions and other
in the Statement of Cash-flows of the Bank
pertinent factors.
primarily on a gross basis. Net basis reporting
are applied by the Bank in the following cases:
The Bank recognizes a provision for off-balance
(cid:588) when the cash-flows reflect the activities
sheet commitment and contingent liabilities
of the customer rather than those of the
in accordance with IAS 37 when it has a
Bank, and
present obligation as a result of a past event;
(cid:588) for items in which the turnover is quick, the
it is probable that an outflow of resources
amounts are large, and the maturities are
embodying economic benefits will be required
short.
to settle the obligation; and a reliable estimate
can be made of the obligation.
For the purposes of reporting cash-flows, cash
and cash equivalents include cash, due from
Expected credit loss model is applied for given
banks and balances with the NBH excluding
financial guarantees and loan commitments
compulsory reserve. Cash-flows from hedging
which are under IFRS 9 the, when the provision
activities are classified in the same category as
is calculated (see more details in Note 2.12).
the item being hedged. The unrealised gains
2.28 Share-based payment
and employee benefit
and losses from the translation of monetary
items to the closing foreign exchange rates
and the unrealised gains and losses from
derivative financial instruments are presented
net in the statement of cash-flows for the
The Bank has applied the requirements
monetary items which have been revalued.
of IFRS 2 Share-based Payment.
The Bank issues equity-settled share-based
2.30 Segment reporting
payments to certain employees. Equity-settled
share-based payments are measured at fair
IFRS 8 Operating Segments requires operating
value at the grant date. The fair value
segments to be identified on the basis of
determined at the grant date of the equity-
internal reports about components of the
254
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:23)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Bank that are regularly reviewed by the chief
of the balance sheet. In the statement of
operating decision maker in order to allocate
financial position, the Bank presents loans in
resources to the segments and to assess their
a uniform manner, based on the nature of the
performance.
instruments, on the line Loans, regardless
of their classification and valuation category.
At separate level, the Management does not
The amounts presented under Loans are
separate and makes decisions based on
disclosed in the relevant Note by valuation
different segments; the segments are
category.
identified by the Bank only at consolidated
level in line with IFRS 8 paragraph 4. At Group
The new accounting policy is applied
level the segments identified by the Bank are
retrospectively by the Bank as if it had always
the business and geographical segments.
applied this accounting policy. The Bank has
The Group’s operating segments under IFRS 8
made the following adjustments to the
are therefore as follows: OTP Core Hungary,
comparative figures. At the beginning of the
Russia, Ukraine, Bulgaria, Romania, Serbia,
comparative period and at the end of the
Croatia, Montenegro, Albania, Moldova,
comparative period, the change in accounting
Slovenia, Merkantil Group, Asset Management
policy did not result in a material change
subsidiaries, other subsidiaries, Corporate Centre.
in the carrying amount of the loans involved
2.31 Comparative figures
Change in the classification and
valuation policy of certain subsidized
retail loans and FX margins
In 2020, the Bank changed its accounting
or equity. Therefore, the Bank did not change
the related balance sheet values for the
adjustment relating to periods before those
presented, the statement, the statement
of financial position contains only the data
at the end of the current period and at the
end of the comparative period.
policy regarding the classification and
As a result of the change in accounting policy,
valuation of a particular class of subsidized
the Bank adjusted the data of the comparative
retail loans. The interest payments on the
period in the statement of profit or loss in
retail loans are determined on the basis of
accordance with the profit or loss items of the
the government bond reference yields and
fair valuation categories. Due to the unchanged
a multiplier. Previously, in accordance with
carrying amounts in the balance sheet,
the Bank's accounting policy, these loans
this amendment resulted in the following
were measured at amortised cost. For the
reclassification between profit or loss categories:
year ended 31 December 2020, the Bank
(cid:588) The Bank recognizes interest income on
classified this type of loan as measured at
loans measured at fair value through profit
fair value through profit or loss. The new
or loss for the period in the Income similar
accounting policy is in line with the practices
to Interest Income line at the value
of the majority of the players in the banking
corresponding to transactional interest.
sector, thus better facilitating comparability.
The comparative value of the line of interest
Therefore, in the Bank's opinion, the change in
income calculated using the effective
accounting policy results in a more reliable,
interest rate method has been reduced
comparable and relevant presentation of the
accordingly by the interest income of the
effects of the loans in question on the Bank's
respective loans determined using the
financial position and financial performance in
previously applied effective interest rate
the financial statements.
method.
In parallel with the change in accounting
income and commission expenses related to
policy, the Bank also changed the structure
loans at fair value through profit or loss in
(cid:588) The Bank presents the amount of commission
IFRS separate financial statements
255
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:23)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
the Fee and commission income and
period, nor the comparative earnings per
Fee and commission expense lines.
ordinary share.
(cid:588) The Bank presents the change in the fair
value of loans measured at fair value
The other reclassification relates to realized
through profit or loss, broken down into
foreign exchange results which were
two components:
previously presented within Net operating
– The Bank presents the portion of the
income. The change in presentation means
change in fair value arising from changes
that the result recognized on these trans-
in credit risk within Risk cost as Change
actions is now presented in Income from fees
in the fair value attributable to changes
and commissions.
in the credit risk of loans mandatorily
measured at fair value through profit of
In accordance with the new accounting
loss. This amount is determined using
policy, the Bank has amended its respective
expected credit loss models used for
disclosure notes. In the comparative figures,
loans measured at amortized cost.
the Bank has reduced the previously disclosed
The comparative amount of Loss
amortized cost, gross carrying amount,
allowance on loans, placements and repo
impairment and fair value data by the
receivables has been reduced accordingly
amounts related to the loans concerned.
with the loss allowance and reversal
The Bank has also amended its disclosures
amounts for the respective loans.
in the notes on assets at fair value through
– The Bank presents the remaining
profit or loss for comparative information.
component of the change in fair value
These amendments have been marked
under the (Losses)/Gains on financial
“Revised” by the Bank. The Bank has also
instruments at fair value through profit
revised the presentation of the detailed notes
or loss.
to the amended profit or loss line items
for comparative information in accordance
The change in accounting policy did not
with the new values in the statement of profit
impact the net profit for the comparative
or loss.
Amendments to the information published in the supplementary annexes concerned
the following supplementary notes:
Note
10
29
30
35
35.1
35.1.1
35.1.1
35.1.1.
35.1.2
35.2
35.4
43
44
44 a)
44 d)
Name of the Note
Loans
Interest income and interest expenses
Risk cost
Financial risk management
Credit risk
Gross carrying amount and accumulated loss allowance of financial assets at amortized cost
and fair value through other comprehensive income
Changes in the Loss allowance of financial assets at amortised cost and fair value through other
comprehensive income by IFRS 9 stages
Loan portfolio by countries
Collaterals
Maturity analysis of assets and liabilities and liquidity risk
Interest rate risk management
Net gain or loss realised on financial instruments
Fair value of financial instruments
Fair value of financial assets and liabilities
Fair value classes
256
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:23)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Line item
2020
2019
Revised
presentation
Reclassification
of amounts related
to mandatorily
measured at fair value
through profit or loss
Reclassification
of gains from
foreign exchange
margin
2019
As previously
presented
Interest income calculated using
the effective interest method
Income similar to interest income
Interest incomes and similar
to interest incomes
Interest expense
Loss allowance on loan,
placement and repo receivables
losses
Change in the fair value
attributable to changes in the
credit risk of loans mandatorily
measured at fair value through
profit of loss
Further risk cost items
Risk cost total
NET INTEREST INCOME
AFTER RISK COST
Income from fees
and commissions
NET PROFIT FROM FEES
AND COMMISSIONS
Foreign exchange (losses)
and gains, net
(Losses)/Gains on financial
instruments at fair value through
profit or loss
NET OPERATING INCOME
239,633
81,663
321,296
(99,630)
235,679
88,217
323,896
(119,384)
(61,310)
(27,511)
(3,716)
5,106
1,390
–
4,672
(405)
(5,432)
(5,432)
(5,050)
(66,765)
154,901
(6,938)
(39,881)
164,631
259,781
248,954
219,031
213,363
(4,518)
(671)
3,288
1,260
60,632
130,358
–
(760)
630
–
–
–
(630)
(630)
–
–
–
–
–
–
–
–
–
9,959
9,959
239,395
83,111
322,506
(119,384)
(32,183)
–
(6,938)
(39,121)
164,001
238,995
203,404
(9,959)
13,247
–
1,890
(9,959)
140,947
NOTE 3:
SIGNIFICANT ACCOUNTING ESTIMATES AND DECISIONS
IN THE APPLICATION OF ACCOUNTING POLICIES
The presentation of separate financial
statements in conformity with IFRS requires
3.1 Loss allowance on financial
instruments
the Management of the Bank to make
judgements about estimates and assumptions
The Bank regularly assesses its financial
that affect the reported amounts of assets
instruments for impairment. Management
and liabilities and the disclosure of contingent
determines the adequacy of the allowances
assets and liabilities as at the date of the
based upon reviews of individual loans and
financial statements and their reported
placements, recent loss experience, current
amounts of revenues and expenses during the
economic conditions, the risk characteristics
reporting period. The estimates and associated
of the various categories of loans and other
assumptions are based on expected loss
pertinent factors. The use of a new, three
and other factors that are considered to
stage model was implemented for IFRS 9
be relevant. The estimates and underlying
purposes. The new impairment methodology
assumptions are reviewed on an on-going
is used to classify financial instruments in
basis. Revisions to accounting estimates are
order to determine whether credit risk has
recognized in the period. Actual results could
significantly increased since initial recognition
differ from those estimates. Significant areas
and able to identify credit-impaired assets.
of subjective judgements include:
For instruments with credit-impairment or
significant increase of credit risk lifetime
expected losses will be recognized.
(For details see note 35.1.1.)
IFRS separate financial statements
257
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:23)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
3.2 Valuation of instruments
without direct quotations
Liabilities and Contingent Assets. The Bank
is involved in a number of ongoing legal
disputes. Based upon historical experience
Financial instruments without direct quotations
and expert reports, the Bank assesses
in an active market are valued using the
the developments in these cases, and the
valuation model technique. The models are
likelihood and the amount of potential
regularly reviewed and each model is
financial losses which are appropriately
calibrated for the most recent available market
provided for. (See Note 24.)
data. While the models are built only on
available data, their use is subject to certain
Other provision for off-balance sheet
assumptions and estimates (e.g. for correla-
items includes provision for litigation,
tions, volatilities etc). Changes in the model
provision for retirement and expected
assumptions may affect the reported fair value
liabilities and provision for Confirmed
of the relevant financial instruments.
letter of credit.
IFRS 13 Fair Value Measurement seeks to
A provision is recognised by the Bank
increase consistency and comparability in fair
when it has a present obligation as a result
value measurements and related disclosures
of a past event, it is probable that an outflow
through a ‘fair value hierarchy’. The hierarchy
of resources embodying economic benefits
categorises the inputs used in valuation
will be required to settle the obligation,
techniques into three levels. The hierarchy
and a reliable estimate can be made of the
gives the highest priority to (unadjusted)
amount of the obligation.
quoted prices in active markets for identical
assets or liabilities and the lowest priority to
unobservable inputs. The objective of a fair
3.4 Business models
value measurement is to estimate the price at
which an orderly transaction to sell the asset
The financial assets held by the Bank are
or to transfer the liability would take place
classified into three categories depending on
between market participants at the measure-
the business model within the financial assets
ment date under current market conditions.
are managed.
3.3 Provisions
(cid:588) Business model whose objective is to
hold financial assets in order to collect
contractual cash-flows. Within this business
model the Bank manages mainly loans and
Provision is recognised and measured for
advances and long-term securities and other
commitments to extend credit and for
financial assets.
warranties arising from banking activities
(cid:588) Business model whose objective is achieved
based on IFRS 9 Financial Instruments.
by both collecting contractual cash-flows and
Provision for these instruments is recognised
selling financial assets. Within this business
based on the credit conversion factor, which
model the Bank only manages securities.
shows the proportion of the undrawn facility
(cid:588) Business model whose objective is to
that will be probably funded.
achieve gains in a short-term period.
Other provision is recognised and measured
manages securities and derivative financial
based on IAS 37 Provisions, Contingent
instrument.
Within this business model the Bank
258 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:23)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 4:
COVID-19 (in HUF mn)
Covid-19 has had substantial implications for
(III. 24.), a moratorium on payments was
the operations of the Bank during 2020. Below
introduced in Hungary concerning both
are some of the more important Covid-19
principal, interest and fee payment
related events that occurred in Hungary:
obligations arising from both credit, loan
(cid:588) On 16 March 2020 the NBH decided to
and finance lease amounts that have
expand the range of eligible collaterals with
already been disbursed until 18 March 2020.
performing corporate loans. Effective from
The moratorium did not involve debt
11 May 2020 only corporate loans exceeding
forgiveness element. The first moratorium
HUF 1 billion can be used as collateral in the
was effective until 31 December 2020.
liquidity providing operations.
The scope of the moratorium included, among
(cid:588) In addition to the 1, 3, 6 and 12-month
others, both retail and corporate debtors.
tenders announced every Monday in the
Regarding details and technical provisions,
same way, the NBH announced one-week
the non-paid interest during the payment
FX-swap tenders providing forint liquidity
holiday cannot be capitalized to the out-
on a daily basis from 17 March 2020 until
standing principal (neither during the
further notice, in order to maintain
moratorium, nor afterwards). The amount
the appropriate level of liquidity for the
of delayed interest accumulated during
banking sector.
the moratorium must be repaid after the
(cid:588) On 18 March 2020 the NBH took measures
moratorium in equal instalments, evenly
to support the operation of banks and
spread over the remaining years of the loan
strengthen the banking system. Among
tenor, together with the due instalments.
others the NBH requested banks and their
(cid:588) Following the moratorium, the tenor will
owners to make sure that dividends
be prolonged in a way that the sum of the
are neither approved, nor paid until the
due instalment and the unpaid interest
end of September of 2020.
during the moratorium (which is to be
(cid:588) On 18 March 2020 the Prime Minister of
repaid in equal instalments) in total should
Hungary announced the first stage of
not exceed the instalment according to the
economic and job protection measures.
original contract. Rules applicable to the
The steps, among others, included:
interest must also be applied to the fees.
– a blanket debt repayment moratorium;
The borrower’s participation was automatic,
– the introduction of the annual percentage
but the moratorium did not affect the
rate “APR” caps on new consumer loans:
debtors’ right to continue to pay according
pursuant to the relevant Government
to the original contractual terms.
Decrees, APR is temporarily capped
(cid:588) On its 24 March 2020 meeting the Monetary
at central bank base rate +5 pps in
Council decided to introduce a new fixed-rate
the case of loans to consumers that
collateralized loan instrument with
are not collateralized by a mortgage
maturities of 3, 6 and 12 months and 3 and
and are disbursed based on a contract
5 years. Lending will be provided by the
concluded after 19 March 2020.
NBH at a fixed interest rate (the NBH defines
This provision must be applied until
the interest rate of the instrument at each
31 December 2020, then following this
tender, but the rate may not be lower than
deadline the APR set out in the given
the base rate).
lender’s Terms & Conditions effective
(cid:588) On 1 April 2020 the NBH decided to
at the time of the signing of the contract
announce one-week deposit tenders at a
will be applicable;
weekly frequency. The interest rate on
– the extension of short-term business
the instrument equals to the central bank
loans until 30 June.
base rate.
(cid:588) Pursuant to Government Decree No. 47/2020.
(cid:588) On 1 April 2020 the NBH announced that
(III. 18.) and Government Decree No. 62/2020.
effective from 1 July the capital buffer
IFRS separate financial statements
259
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:23)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
requirements for systemically important
interest rate on the instrument to deviate
banks will be released. The banks must
from the base rate upward or downward
rebuild their capital buffer initially
within the interest rate corridor. The NBH
prescribed for 2020 gradually in three
said that it will set the interest rate on the
years from 2022 onwards. At the time of the
instrument each week, at the time of the
decision the O-SII buffer applicable for
actual tender’s announcement.
OTP Bank was 2%.
(cid:588) As part of the comprehensive set
(cid:588) On 4 April 2020 the Minister of Prime
of measures outlined by the NBH on
Minister's Office revealed that the
7 April 2020, it decided to
Government expects banks to contribute
– Launch a government security purchase
HUF 55 billion into the new epidemic
programme in the secondary market
fund. Pursuant to the Government Decree
to restore the stable liquidity position
108/2020 published on 14 April, the new
of the government securities market and
special tax levied on banks is to be paid in
influence the longer part of the yield
the 2020 tax year, in three equal instalments
curve, and to relaunch its mortgage
(in June, September and December).
bond purchase programme to improve
The base of the new special tax is that part of
the long-term supply of funding to the
the adjusted total assets (as defined in the
banking sector.
legislation on the “old” bank tax) that exceeds
– Details of the programmes including
HUF 50 billion. The tax rate is 19 bps.
the timing and strategic parameters
(cid:588) On 9 June 2020 the law allowing the
were revealed on 28 April: accordingly,
deductibility of the new special banking levy
the NBH launched its government
payable in 2020 was promulgated. The new
securities and mortgage bonds purchase
once-off special banking tax will be returned
programmes on 4 May 2020, and it will
to the banking system over the next five
continue to purchase securities as long
years through deductions from the nominal
as economic and financial developments
amount of the “old” bank tax (in the form
arising from the coronavirus pandemic
of tax withholding).
require it.
(cid:588) The new special tax amounts to HUF 14.2
– The NBH did not set a total amount of
billion in the case of the Hungarian Group
purchases for either programme.
members of OTP Group. Pursuant to IFRS
– The NBH launched the Funding for Growth
standards, parallel with the accounting
Scheme Go! scheme on 20 April 2020.
of this new bank levy amongst the other
Including HUF 500 billion undrawn under
expenses, the Group recognized the net
the FGS fix, the NBH made available up to
present value of the related tax claims
HUF 1,500 billion to the SME sector under
amongst the other income. Therefore, the
the FGS Go!.
new special tax did not materially affect
– Within the framework of the Bond
the Group’s bottom line earnings neither in
Funding for Growth Scheme, the so far
2020, nor will it do so over the next 5 years.
unutilized over HUF 200 billion was still
(cid:588) On 7 April 2020 the NBH adjusted its policy
available for the NBH to purchase bonds
instruments and modified its operational
issued by non-financial corporations
framework. The Monetary Council
headquartered in Hungary.
decided to make the interest rate corridor
(cid:588) On 16 April 2020 the Minister of Finance
symmetrical, and left the base rate and
revealed further tax concessions amounting
the overnight deposit rate unchanged at
to HUF 200 billion. Among others, the social
0.9% and –0.05%, respectively, and raised
security contributions payable by employers
the overnight and one-week collateralized
were cut to 15.5% from 17.5% effective from
lending rates to 1.85%. The one-week deposit
July 2020.
rate, at the time of the announcement,
(cid:588) On 2 July 2020, the NBH decided to expand
was equal to the 0.9% base rate; however,
the loan purposes available in the FGS Go!
the Monetary Council decided to allow the
structure.
260 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:18)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
(cid:588) On 10 September 2020 the National Bank
– Subsidized home renovation loan:
of Hungary, in the wake of increased
in order to help eligible families to take
uncertainties amid the pandemic, called
advantage of the non-refundable home
upon credit institutions to extend the
renovation subsidy (for details, see
previously applied restriction on dividend
Government Decree 518/2020. [XI. 25.]),
payments and decisions, which was
a subsidized home renovation loan
effective until 30 September 2020, until
(for details, see Government Decree
1 January 2021.
641/2020 [XII. 22.]) was introduced by the
(cid:588) On 22 September 2020 the NBH increased
Government.
the available amount under the Bond
(cid:588) On 28 December 2020 the National Bank
Funding for Growth programme from
of Hungary announced that the following
HUF 450 to 750 billion.
decisions were made:
(cid:588) As the utilisation of the Funding for Growth
– The central bank recommended credit
Go! scheme exceeded HUF 1,000 billion
institutions not to pay dividends or not
by mid-November, on 17 November 2020
to make any irrevocable commitment to
the Monetary Council decided to raise the
pay dividends after the 2019 and 2020
total available amount by HUF 1,000 billion
financial year, or from previous years’
(to HUF 2,500 billion).
profits, until 30 September 2021. Further-
(cid:588) As set out in Government Decree 518/2020.
more, the central bank suggested that
(XI. 25.), published in the Gazette on
credit institutions should refrain from
25 November 2020, starting from 1 January
treasury share purchases for shareholder
2021 the Hungarian Government provides a
remuneration purposes until the same
non-refundable home renovation subsidy
date (share buybacks for management
to families raising or expecting children by
remuneration purposes are an exemption).
way of refunding certain part of their home
The related guideline was set out in
renovation costs. Eligible families can get
a management circular published on
back 50% of their proven improvement
8 January 2021.
expenses following the completion of the
– The NBH decided to amend the relevant
renewal, but maximum HUF 3 million. The
detailed guidelines set out in its IFRS
subsidy can be applied for within 60 days
circular about the application of non-
after completing the home renovation and
performing and forborne categories in
also paying the bills by the families, or until
connection with the payment moratorium,
31 December 2022 the latest.
and based on this, its guidelines for
(cid:588) On 19 December 2020 the Prime Minister
creating provisions. The amended circular
announced the following measures directly
was released on 22 January 2021.
affecting banking operations:
(cid:588) Effective from 13 January 2021 the National
– Extension of the payment moratorium in
Bank of Hungary extended the available
unchanged form: pursuant to Government
amount for the Bond Funding for Growth
Decree 637/2020. (XII. 22.) those borrowers
scheme by HUF 750 billion to HUF 1,150 billion.
are eligible for the moratorium effective
At the same time it decided to increase the
between 1 January 2021 – 30 June 2021
maximum maturity of corporate bonds
that have principal, interest and fee
that can be purchased by the central bank
payment obligations arising from a credit
from 20 to 30 years. Also, the central bank’s
contract that have already been disbursed
exposure limit to a company group was
until 18 March 2020 (also considering
revised from HUF 50 billion to HUF 70 billion.
Subsection (1) of Section 3 of Act CVII
(cid:588) On 4 February 2021 the Prime Minister
of 2020). With the above Decree the
announced an interest-free loan programme
eligibility conditions stipulated in Act CVII
for companies in trouble in the wake of
of 2020 (published on 28 October 2020)
the pandemic. According to Government
for retail and corporate borrowers were
Resolution 1038/2021. (II. 5.) the programme
repealed.
will be administered by the Hungarian
IFRS separate financial statements
261
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:18)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Development Bank, and the available
contributions, overhead costs, general
amount under the programme will be
operating expenses and inventory financing.
HUF 100 billion. Companies can take
Client interest rate is 0%, the loan tenor can
out maximum HUF 10 million each for
be up to 10 years, and the servicing of the
the purpose of covering wages and social
loan will start after a 3 year grace period.
Participation in Covid moratorium:
OTP Bank
Current volume
in moratorium
1,059,428
Current
participation
ratio
26.2%
Financial assets modified during the period related to moratorium:
Gross carrying amount before modification
Loss allowance before modification
Net amortised cost before modification
Modification loss due to Covid moratoria
Net amortised cost after modification
2020
676,764
(47,658)
629,106
(17,358)
611,748
2019
594,938
(14,075)
580,863
–
580,863
NOTE 5:
CASH, AMOUNTS DUE FROM BANKS AND BALANCES
WITH THE NATIONAL BANK OF HUNGARY (in HUF mn)
Cash on hand:
In HUF
In foreign currency
Amounts due from banks and balances with National Bank of Hungary:
Within one year:
In HUF
In foreign currency
Subtotal
Average amount of compulsory reserve
Total
Rate of the compulsory reserve
2020
2019
107,523
18,899
126,422
204,942
247,756
452,698
579,120
76,033
503,087
1%
180,259
16,385
196,644
39,871
53,171
93,042
289,686
65,055
224,631
1%
The Bank shall deposit compulsory reserve in
rate, which are determined by the NBH in a
a determined percent of its liabilities at NBH.
specific decree. The Bank is required to
Liabilities considered in compulsory reserve
complete compulsory reserve requirements in
calculation are as follows:
average in the second month after the reserve
a) deposits and loans,
b) debt instruments,
c) repo transactions.
calculation period, requirements shall be
completed once a month on the last calendar
day. The Bank complies with the compulsory
The amount of the compulsory reserve is
reserve requirements by the deposit of
the multiplication of the daily average
the adequate amount of cash as the calculated
of the liabilities considered in the compulsory
compulsory reserve on the bank account at
reserve calculation and compulsory reserve
NBH in monthly average.
262
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:18)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 6:
PLACEMENTS WITH OTHER BANKS, NET OF ALLOWANCE
FOR PLACEMENT LOSSES (in HUF mn)
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
In foreign currency
Total placements
Loss allowance on placement losses
Total
2020
2019
905,241
329,633
1,234,874
267,291
39,538
306,829
1,541,703
(5,819)
1,535,884
732,283
476,314
1,208,597
325,308
29,829
355,137
1,563,734
(3,592)
1,560,142
An analysis of the change in the loss allowance on placement losses is as follows:
Balance as at 1 January
Loss allowance
Release of loss allowance
Closing balance
2020
3,592
12,724
(10,497)
5,819
2019
2,047
5,068
(3,523)
3,592
Interest conditions of placements with other banks:
Placements with other banks in HUF
Placements with other banks in foreign currency
Average interest of placements with other banks
2020
0%–3.84%
(0.76%)–29%
0.81%
2019
0%–3.84%
(0.76%)–3.81%
0.56%
NOTE 7:
REPO RECEIVABLES (in HUF mn)
Within one year:
In HUF
Total gross amount
Loss allowance
Total repo receivables
2020
183,656
183,656
(292)
183,364
An analysis of the change in the loss allowance on repo receivables is as follows:
Balance as at 1 January
Loss allowance
Release of loss allowance
Closing balance
2020
6
362
(76)
292
2019
45,545
45,545
(6)
45,539
2019
12
42
(48)
6
Interest conditions of repo receivables:
Repo receivables in HUF
Average interest of repo receivables
2020
(0.1%)–0.9%
0.09%
2019
(0.1%)–0.2%
0.32%
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:18)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS separate financial statements
263
NOTE 8:
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
(in HUF mn)
Held for trading securities:
Government bonds
Other non-interest bearing securities
Hungarian government discounted Treasury Bills
Corporate shares and investments
Other securities
Subtotal
Securities mandatorily measured at fair value
through profit or loss
Equity instruments, open-ended fund units
Bonds
Subtotal
Held for trading derivative financial instruments:
Foreign currency swaps
Interest rate swaps
CCIRS and mark-to-market CCIRS swaps*
Other derivative transactions**
Subtotal
Total
2020
6,031
1,964
1,233
426
2,075
11,729
26,594
5,342
31,936
41,852
34,256
7,359
33,351
116,818
160,483
2019
18,269
7,516
12
369
20,089
46,255
17,100
5,180
22,280
38,213
52,516
1,216
11,749
103,694
172,229
Interest conditions and the remaining maturities of securities held for trading
are as follows:
Within one year:
variable interest
fixed interest
Over one year:
variable interest
fixed interest
Non-interest bearing securities
Total
Securities held for trading denominated in HUF
Securities held for trading denominated in foreign currency
Securities held for trading total
Government bonds denominated in HUF
Government bonds denominated in foreign currency
Government securities total
Interest rates on securities held for trading in HUF
Interest rates on securities held for trading in foreign currency
Average interest on securities held for trading
2020
78
2,319
2,397
1,355
5,587
6,942
2,390
11,729
71%
29%
100%
68%
32%
100%
0.5%–6.75%
0.5%–6.38%
0.63%
2019
2
12,323
12,325
1,030
25,014
26,044
7,886
46,255
55%
45%
100%
87%
13%
100%
0.16%–7.5%
0.01%–8.25%
0.67%
* CCIRS: Cross Currency Interest Rate Swap (see Note 2.6.2).
** Incl.: FX, equity, commodity and index futures; FX forward; commodity and equity swap; FRA; FX option (see Note 2.6.2).
264 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:18)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Interest conditions and the remaining maturities of securities mandatorily measured
at fair value through profit or loss are as follows:
Within one year variable interest
Over one year variable interest
Non-interest bearing securities
Total
Securities mandatorily measured at fair value through
profit or loss denominated in HUF
Securities mandatorily measured at fair value through
profit or loss denominated in foreign currency
Total
Interest rates on securities mandatorily measured
at fair value through profit or loss
Average interest on securities mandatorily measured
at fair value through profit or loss
NOTE 9:
SECURITIES AT FAIR VALUE THROUGH OTHER
COMPREHENSIVE INCOME (in HUF mn)
Government bonds
Mortgage bonds
Interest bearing treasury bills
Other securities
Listed securities
in HUF
in foreign currency
Non-listed securities
in HUF
in foreign currency
Subtotal
Non-trading equity instruments
Non-listed securities
in HUF
in foreign currency
Securities at fair value through other comprehensive income total
2020
28
5,314
26,594
31,936
58%
42%
100%
2.49%
2.49%
2020
488,459
332,667
9,957
65,136
42,776
2,968
39,808
22,360
16,782
5,578
896,219
15,731
528
15,203
15,731
911,950
Detailed information of the non-trading equity instruments to be measured
at fair value through other comprehensive income:
Garantiqa
Hage/Közvil/Pénzügykut
OBS
VISA A Preferrred
EASTWESTVC*
TCEEFUNDIII*
VISA C*
Total
HUF
HUF
EUR
USD
EUR
EUR
USD
2020
392
136
12,081
3,122
–
–
–
15,731
2019
25
5,155
17,100
22,280
77%
23%
100%
2.60%
2.60%
2019*
826,054
220,004
339,397
78,202
39,601
2,999
36,602
38,601
18,516
20,085
1,463,657
22,320
528
21,792
22,320
1,485,977
2019
392
136
12,413
–
158
4,486
4,735
22,320
* During 2020 these securities were reclassified to mandatorily FVTPL instruments.
IFRS separate financial statements
265
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:18)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Interest conditions and the remaining maturities of FVOCI securities can be analysed
as follows:
Within one year:
variable interest
fixed interest
Over one year:
variable interest
fixed interest
Non-interest bearing securities
Total
FVOCI securities denominated in HUF
FVOCI securities denominated in foreign currency
FVOCI securities total
Interest rates on FVOCI securities denominated in HUF
Interest rates on FVOCI securities denominated in foreign currency
Average interest on FVOCI securities
2020
2019
3,779
123,481
127,260
101,555
667,404
768,959
15,731
911,950
83%
17%
100%
0.5%–11%
0.63%–7.25%
2.75%
6,709
609,207
615,916
84,935
762,806
847,741
22,320
1,485,977
83%
17%
100%
0.16%–11%
0.49%–7.25%
2.32%
Certain fixed-rate mortgage bonds and other securities are hedged against interest rate risk.
(See Note 35.4.)
Net gain/(loss) reclassified from other comprehensive income to
statement of profit or loss
Fair value of the hedged securities:
Government bonds
2020
(2,008)
–
399,441
2019
229
–
1,465,143
During the year ended 31 December 2020 the
other comprehensive income. During 2019 the
Bank didn’t sell any of equity instruments
Bank sold shares in Kisvállalkozásfejlesztési Ltd.,
designated to measure at fair value through
net gain on the transaction was not significant.
NOTE 10:
LOANS (in HUF mn)
Loans measured at fair value through profit or loss:
Within one year
Over one year
Loans measured at fair value through
profit or loss total
2020
25,732
455,205
480,937
2019
Revised
9,682
228,856
238,538
2019
As previously
presented
2,873
26,858
29,731
Loans measured at fair value through profit or loss are mandatorily measured at fair value
through profit or loss.
Loans measured at amortised cost, net of allowance for loan losses:
Within one year
Over one year
Loans at amortised cost gross total
Loss allowance on loan losses
Loans at amortised cost total
2020
1,793,352
1,748,078
3,541,430
(123,670)
3,417,760
2019
Revised
1,625,352
1,523,245
3,148,597
(72,066)
3,076,531
2019
As previously
presented
1,632,245
1,733,010
3,365,255
(79,917)
3,285,338
266 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:18)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
An analysis of the loan portfolio by currency:
In HUF
In foreign currency
Total
2020
61%
39%
100%
2019
57%
43%
100%
Interest rates of the loan portfolio mandatorily measured at fair value through
profit or loss are as follows:
Loans denominated in HUF
Average interest on loans denominated in HUF
2020
1.5%–9.85%
4.20%
2019
1.19%–10.08%
3.76%
Interest rates of the loan portfolio measured at amortised cost are as follows:
Loans denominated in HUF, with a maturity within one year
Loans denominated in HUF, with a maturity over one year
Loans denominated in foreign currency
Average interest on loans denominated in HUF
Average interest on loans denominated in foreign currency
2020
0%–37.5%
0%–37.45%
(0.50%)–13%
6.09%
2.11%
2019
0%–37.5%
0%–37.45%
(0.45%)–13%
6.30%
2.09%
An analysis of the loan portfolio by type, before loss allowance on loan losses, is as follows:
Retail loans
Retail consumer loans
Retail mortgage backed loans*
Corporate loans
Loans to medium and large corporates
Municipality loans
Loans at amortised cost total
Loans at fair value total
Gross loans total
2020
662,675
564,698
97,977
2,878,755
2,790,742
88,013
3,541,430
480,937
4,022,367
16%
14%
2%
72%
70%
2%
88%
12%
100%
2019
Revised
626,927
514,179
112,748
2,521,670
2,433,080
88,590
3,148,597
238,538
3,387,135
18%
15%
3%
75%
72%
3%
93%
7%
100%
2019
As previously presented
25%
21%
4%
74%
71%
3%
99%
1%
100%
843,585
720,471
123,114
2,521,670
2,433,080
88,590
3,365,255
29,731
3,394,986
An analysis of the change in the loss allowance on loans at amortised cost is as follows:
Balance as at 1 January
Reclassification
Balance as at 1 January
Other movements
Loss allowance
Release of loss allowance
Use of loss allowance
Partial write-off
Closing balance
* Incl. housing loans.
2020
72,066
–
72,066
–
217,012
(156,383)
(6,228)
(2,797)
123,670
2019
Revised
66,241
(3,308)
62,933
1,621
125,090
(112,051)
–
(5,527)
72,066
2019
As previously
presented
66,241
–
66,241
1,621
134,583
(117,001)
–
(5,527)
79,917
IFRS separate financial statements
267
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:18)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Loss allowance on loans at amortised cost and placements with other banks
is summarized as below:
Loss allowance on placements with other banks
Loss allowance on loans at amortised cost
Total
2020
2,227
59,083
61,310
2019
1,545
32,184
33,729
The Bank sells non-performing loans without recourse at estimated fair value to a wholly owned
subsidiary, OTP Factoring Ltd. (See Note 39.)
NOTE 11:
INVESTMENTS IN SUBSIDIARIES, ASSOCIATES,
JOINT VENTURES AND OTHER INVESTMENTS (in HUF mn)
Investments in subsidiaries
Controlling interest
Other
Subtotal
Provision for impairment
Total
2020
2019
1,965,197
8,938
1,974,135
(425,163)
1,548,972
1,962,010
8,298
1,970,308
(427,770)
1,542,538
Other investments contain certain securities accounted at cost. These instruments do not have
a quoted market price in an active market and whose fair value cannot be reliably measured.
Significant subsidiaries
Investments in companies in which the Bank has a controlling interest (direct) are detailed below.
All companies are incorporated in Hungary unless indicated otherwise:
2020
% Held
(direct/indirect)
100%
100%
100%
100%
100%
100%
100%
100%
98%
100%
100%
100%
100%
-
100%
100%
98%
100%
100%
100%
100%
100%
100%
100%
Gross book
value
311,390
280,692
205,349
154,294
131,164
133,987
127,140
107,689
74,335
72,784
50,074
32,359
29,150
-
26,063
25,411
24,159
23,663
36,748
17,892
15,300
10,023
11,865
9,234
54,432
1,965,197
2019
% Held
(direct/indirect)
100%
100%
100%
100%
100%
100%
100%
100%
98%
100%
100%
100%
100%
99%
100%
100%
98%
100%
100%
100%
100%
100%
100%
100%
Gross book
value
311,390
280,692
205,349
154,294
131,164
133,987
127,140
107,372
74,335
72,784
50,074
32,359
29,150
29,134
26,063
25,411
24,159
23,663
21,748
17,892
15,300
10,023
11,865
9,234
37,428
1,962,010
OTP Bank JSC (Ukraine)
DSK Bank EAD (Bulgaria)
OTP banka Hrvatska d.d. (Croatia)
OTP Mortgage Bank Ltd.
Vojvodjanska Banka a.d. Novi Sad (Serbia)
OTP Bank Romania S.A. (Romania)
OTP banka Srbija a.d. (Serbia)
SKB Banka d.d. Ljubljana (Slovenia)
JSC “OTP Bank” (Russia)
Crnogorska komercijalna banka a.d. (Montenegro)
LLC Alliance Reserve (Russia)
OTP Holding Malta Ltd.
Balansz Private Open-end Investment Fund
OTP Banka Slovensko a.s. (Slovakia)
Bank Center No. 1. Ltd.
OTP Factoring Ltd.
Mobiasbanca – OTP Group S.A. (Moldavia)
Merkantil Bank Ltd.
Air-Invest Llc.
Inga Kettő Ltd.
OTP Life Annuity Ltd.
OTP Real Estate Ltd.
OTP Bank Albania (Albania)
Monicomp Ltd.
Other
Total
268 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:18)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
An analysis of the change in the impairment loss is as follows:
Balance as at 1 January
Provision for the period
Release of provision
Use of provision
Closing balance
2020
427,770
10,052
(10)
(12,649)
425,163
2019
536,075
12,503
(51,310)
(69,498)
427,770
The Bank decided that the recoverable amount
companies are expected to generate in the
is determined based on fair value less cost of
future. Applying the EVA method was more
disposal. The Bank prepared impairment tests
practically than DCF method because it gives
of the subsidiaries based on two different
a more realistic picture about how the explicit
net present value calculation methods that
period and the residual value can contribute
show the same result; however they represent
to the value of the company.
different economical logics. On one hand is
the discount cash-flow method (“DCF”) that
The Bank, in its strategic plan, has taken into
calculates the value of the subsidiaries by
consideration the effects of the present global
discounting their expected cash-flow; on the
economic situation, the cautious recovery of
other hand the economic value added (“EVA”)
economic situation and outlook, the associated
method estimates the value of the subsidiaries
risks and their possible effect on the financial
from the initial invested capital and the
sector as well as the current and expected
present value of the economic profit that the
availability of wholesale funding.
An analysis of the impairment loss by significant subsidiaries is as follows:
OTP Bank JSC (Ukraine)
OTP Mortgage Bank Ltd.
OTP banka Srbija a.d. (Serbia)
Crnogorska komercijalna banka a.d. (Montenegro)
OTP Bank Romania S.A. (Romania)
OTP Banka Slovensko a.s. (Slovakia)
Air-Invest Ltd.
OTP Life Annuity Ltd.
R.E. Four d.o.o. (Serbia)
OTP Real Estate Ltd.
OTP Buildings s.r.o (Romania)
Total
2020
207,397
65,096
53,383
23,324
38,416
–
10,491
10,969
3,763
5,557
3,327
421,723
Dividend income from significant subsidiaries and shares held for trading
and shares measured at fair value through other comprehensive income is as follows:
OTP Factoring Ltd.
OTP Holding Malta Ltd.
OTP Funds Servicing and Consulting Ltd.
OTP Card Factory Ltd.
OTP Real Estate Investment Fund Management Ltd.
Inga Kettő Ltd.
OTP Building Society Ltd.
OTP Mortgage Bank Ltd.
OTP banka Hrvatska d.d. (Croatia)
Other
Subtotal
Dividend from shares held for trading
Dividend from shares fair value through other comprehensive income
Total
2020
45,463
4,823
1,894
25
4,000
–
–
–
–
908
60,913
60
–
60,973
2019
207,397
65,096
53,383
23,324
28,575
12,649
10,491
10,969
3,763
5,557
3,327
424,531
2019
14,665
–
–
–
1,500
4,500
3,000
27,500
21,170
637
72,972
5,728
187
78,887
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:18)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS separate financial statements
269
Significant associates and joint ventures
The main figures of the Bank’s indirectly owned associates and joint ventures at cost*:
As at 31 December 2020:
Assets
Liabilities
Shareholders’ equity
Total income
% Held
Country/
Headquarter
Activity
D-ÉG Thermoset Ltd. ** Szallas.hu Ltd.
5,855
1,358
4,497
3,833
47%
3,883
4,629
(746)
2,386
25%
Company for Cash Services LLC
2,856
147
2,709
1,531
25%
Total
12,594
6,134
6,460
7,750
Hungary, Budapest
Hungary, Miskolc
Bulgaria, Sofia
Wholesale of hardware, plumbing
and heating equipment and supplies
Web portal services
Other financial services, except
insurance and pension funding
As at 31 December 2019:
Assets
Liabilities
Shareholders’ equity
Total income
% Held
Country/
Headquarter
D-ÉG Thermoset Ltd. ** Szallas.hu Ltd.
4,939
1,429
3,510
3,405
50%
3,883
4,629
(746)
2,386
25%
Company for Cash Services LLC
2,736
186
2,550
1,315
25%
Hungary, Budapest
Hungary, Miskolc
Bulgaria, Sofia
Total
11,558
6,244
5,314
7,106
The transaction, based on the share purchase
as a result of which the 99.44% shareholding in
agreement signed with KBC Bank NV on
its Slovakian subsidiary, OTP Banka Slovensko
17 February 2020, has been financially closed,
was acquired by KBC Bank NV.
NOTE 12:
SECURITIES AT AMORTISED COST (in HUF mn)
Government bonds
Other bonds
Subtotal
Loss allowance
Total
2020
1,947,821
63,159
2,010,980
(3,288)
2,007,692
2019
1,436,455
12,212
1,448,667
(1,443)
1,447,224
Interest conditions and the remaining maturities of securities at amortised cost
can be analysed as follows:
Within one year:
fixed interest
Over one year:
fixed interest
Total
2020
57,746
57,746
1,953,234
1,953,234
2,010,980
2019
102,296
102,296
1,346,371
1,346,371
1,448,667
* Based on unaudited financial statements.
** D-ÉG Thermosek Kft. is under liquidation. The figures are the last figures available.
270
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:16)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
The distribution of the securities at amortised cost by currency:
Securities at amortised cost denominated in HUF
Securities at amortised cost denominated in foreign currency
Securities at amortised cost total
Interest rates on securities at amortised cost
Average interest on securities at amortised cost denominated in HUF
2020
99%
1%
100%
0,5%–7%
2.69%
2019
100%
–
100%
0,5%–7,5%
3.31%
An analysis of change in the loss allowance on securities at amortised cost:
Balance as at 1 January
Loss allowance
Release of loss allowance
Closing balance
2020
1,443
4,822
(2,977)
3,288
2019
1,668
338
(563)
1,443
NOTE 13:
PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (in HUF mn)
For the year ended 31 December 2020:
Intangible
assets
Property
Office
equipment
Vehicles
Construction
in progress
Right of
use assets
Cost
Balance as at 1 January
Additions
Disposals
Balance as at
31 December
Depreciation and Amortization
Balance as at 1 January
Charge for the year
Disposals
Balance as at
31 December
Net book value
Balance as at 1 January
Balance as at
31 December
139,026
54,651
(28,802)
164,875
85,744
21,492
–
107,236
53,282
57,639
69,380
3,858
(961)
72,277
22,948
3,192
(351)
25,789
46,432
46,488
87,235
10,766
(4,123)
93,878
66,506
9,495
(4,102)
71,899
20,799
22,065
126
35
(1)
160
56
19
(1)
74
10,523
13,556
(14,658)
9,421
–
–
–
–
20,729
21,979
10,523
9,421
17,827
4,764
(148)
22,443
4,220
4,750
(6)
8,964
13,607
13,479
For the year ended 31 December 2019:
Intangible
assets
Property
Office
equipment
Vehicles
Construction
in progress
Right of
use assets
Cost
Balance as at 1 January
Additions
Disposals
Balance as at
31 December
Depreciation and Amortization
Balance as at 1 January
Charge for the year
Disposals
Balance as at
31 December
Net book value
Balance as at 1 January
Balance as at
31 December
115,272
28,104
(4,350)
139,026
75,389
14,682
(4,327)
85,744
39,883
53,282
66,925
5,993
(3,538)
69,380
21,718
2,867
(1,637)
22,948
45,207
46,432
80,862
10,744
(4,371)
87,235
62,694
8,137
(4,326)
66,505
18,168
20,730
99
27
–
126
42
15
–
57
57
69
7,010
20,375
(16,862)
10,523
–
–
–
–
7,010
10,523
16,296
1,638
(107)
17,827
–
4,224
(4)
4,220
16,296
13,607
The Bank has no intangible assets with indefinite useful life.
Total
324,117
87,630
(48,693)
363,054
179,474
38,948
(4,460)
213,962
144,643
149,092
Total
286,464
66,881
(29,228)
324,117
159,843
29,925
(10,294)
179,474
126,621
144,643
IFRS separate financial statements
271
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:16)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 14:
INVESTMENT PROPERTIES (in HUF mn)
For the year ended 31 December 2020 and 2019, respectively:
Property
Cost
Balance as at 1 January
Additions result from subsequent expenditure
Disposals
Balance as at 31 December
Depreciation and Amortization
Balance as at 1 January
Charge for the year
Disposals
Balance as at 31 December
Net book value
Balance as at 1 January
Balance as at 31 December
2020
3,061
38
(522)
2,577
680
51
(90)
641
2,381
1,936
2019
2,964
97
–
3,061
631
49
–
680
2,333
2,381
According to the opinion of the Management there is no significant difference between
the fair value and the carrying value of these properties.
Income and Expenses:
Rental income
Depreciation
2020
6
49
2019
6
48
NOTE 15:
FAIR VALUE OF DERIVATIVE FINANCIAL ASSETS DESIGNATED
AS HEDGE ACCOUNTING (in HUF mn)
Positive fair value of derivative financial assets designated as hedge accounting:
Interest rate swaps designated as fair value hedge
CCIRS designated as fair value hedge
Interest rate swaps designated as cash-flow hedge
Total
2020
637
6,180
–
6,817
2019
3,758
3,705
9,214
16,677
272
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:16)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 16:
OTHER ASSETS* (in HUF mn)
Other financial assets
Receivables from OTP Employee Stock Ownership Program
(OTP ESOP)
Receivables from card operations
Accrued day one gain of loans provided at below-market interest
Stock exchange deposit
Prepayments and accrued income
Trade receivables
Receivables from suppliers
Receivables from OTP Mortgage Bank Ltd.
Other
Loss allowance
Other financial assets total
Other non-financial assets
Prepayments and accrued income
Receivable related to Hungarian Government subsidies
Other
Provision for impairment on other assets
Other non-financial assets total
Total
2020
2019
53,338
8,453
14,465
9,667
14,396
8,233
5,885
1,823
18,847
135,107
(7,928)
127,179
17,732
10,622
14,743
43,097
(482)
42,615
169,794
33,722
9,804
10,227
5,708
2,938
17,200
3,520
3,823
8,186
95,128
(5,646)
89,482
6,986
16,793
3,902
27,681
(464)
27,217
116,699
An analysis of the movement in the loss allowance on other financial assets is as follows:
Balance as at 1 January
Other movements**
Charge for the period
Release of loss allowance
Use of loss allowance
Balance as at 31 December
2020
5,646
–
6,790
(3,971)
(537)
7,928
2019
7,362
(1,621)
3,383
(2,391)
(1,087)
5,646
An analysis of the movement in the loss allowance on other non-financial assets is as follows:
Balance as at 1 January
Charge for the period
Release of provision
Balance as at 31 December
2020
464
81
(63)
482
2019
59
443
(38)
464
NOTE 17:
AMOUNTS DUE TO BANKS AND DEPOSITS FROM THE
NATIONAL BANK OF HUNGARY AND OTHER BANKS (in HUF mn)
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
In foreign currency
Subtotal
Total*
2020
2019
172,798
41,643
214,441
457,883
94,653
552,536
766,977
766,977
358,641
136,922
495,563
94,823
147,668
242,491
738,054
738,054
* Other assets are expected to be recovered or settled no more than twelve months after the reporting period.
** For further information please see the analysis of the change in the loss allowance on loans at amortised cost in Note 10.
*** It contains the loans lent among the frame of Funding for Growth Scheme.
IFRS separate financial statements
273
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:16)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Interest rates on amounts due to banks and deposits from the NBH and other banks
are as follows:
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
In foreign currency
Average interest on amounts due to banks in HUF
Average interest on amounts due to banks in foreign currency
2020
2019
0%–20%
(0.56%)–0.26%
(0.03%)–0.9%
(0.89%)–8.49%
(2.4%)–1.43%
(2.4%)–4.84%
(0.94%)
(2.11%)
0%–0.71%
(0.42%)–6.87%
1.00%
2.05%
NOTE 18:
REPO LIABILITIES (in HUF mn)
Within one year:
In HUF
Over one year:
In HUF
In foreign currency
Subtotal
Total
2020
–
–
–
109,612
109,612
109,612
109,612
2019
20,575
20,575
263,554
178,492
442,046
462,621
462,621
Interest rates on repo liabilities are as follows:
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
In foreign currency
Average interest on repo liabilities in HUF
Average interest on repo liabilities in foreign currency
2020
2019
–
–
(0.85%)–0.14%
(1%)
–
0.63%–3.85%
1.21%
1.05%
0.39%–0.71%
(0.45%)–1.92%
1.19%
1.24%
NOTE 19:
DEPOSITS FROM CUSTOMERS (in HUF mn)
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
Subtotal
2020
2019
6,412,898
1,438,254
7,851,152
44,583
44,583
7,895,735
5,437,453
1,092,329
6,529,782
43,768
43,768
6,573,550
Interest rates on deposits from customers are as follows:
Within one year in HUF
Over one year in HUF
In foreign currency
Average interest on deposits from customers in HUF
Average interest on deposits from customers in foreign currency
2020
(4.58%)–7.96%
0.01%–0.4%
(0.58%)–15.5%
(0.07%)
(0.04%)
2019
(3.13%)–7.96%
(5.09%)–7.96%
(0.6%)–21%
0.04%
0.21%
274
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:16)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
An analysis of deposits from customers by type, not including accrued interest, is as follows:
2020
2019
Retail deposits
Household deposits
Corporate deposits
Deposits to medium and large
corporates
Municipality deposits
Total
3,840,950
3,840,950
4,054,785
3,301,434
753,351
7,895,735
49%
49%
51%
41%
10%
100%
3,204,450
3,204,450
3,369,100
2,729,209
639,891
6,573,550
NOTE 20:
LIABILITIES FROM ISSUED SECURITIES (in HUF mn)
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
Total
2020
11,115
1,356
12,471
15,964
15,964
28,435
Interest rates on liabilities from issued securities are as follows:
49%
49%
51%
42%
10%
100%
2019
18,340
3,753
22,093
21,191
21,191
43,284
Issued securities denominated in HUF
Issued securities denominated in foreign currency
Average interest on issued securities denominated in HUF
Average interest on issued securities denominated in foreign
currency
2020
0%–1.7%
0.01%–0.01%
1.18%
2019
0%–1.7%
1.1%–1.48%
0.39%
1.12%
1.87%
Term Note Program in the value
of HUF 200 billion for the year
of 2020/2021
On 21 April 2020 the Bank initiated term
dematerialized bonds in public. The NBH
approved on 28 June 2019 the prospectus
of Term Note Program and the disclosure as
at 16 August 2019. The prospectus is valid
note program in the value of HUF 200 billion
for 12 months following the disclosure.
with the intention of issuing registered
dematerialized bonds in public. The NBH
The Issuer can initiate to introduce the
approved on 9 July 2020 the prospectus
bonds issued under the program to the
of Term Note Program and the disclosure as
Hungarian, Slovakian, Romanian, Bulgarian
at 10 July 2020. The prospectus is valid for
and Croatian Stock Exchange without any
12 months following the disclosure.
obligations.
The Issuer can initiate to introduce the bonds
issued under the program to the Hungarian
Hedge accounting
Certain issued structured securities are
and to other stock exchanges without any
hedged by the Bank with interest rate swaps
obligations.
Term Note Program in the value
of HUF 200 billion for the year
of 2019/2020
On 25 June 2019 the Bank initiated term
(“IRS”) which exchange the fixed and floating
interest rate with the interest rate of the
securities between the parties at a notional
amount that equals the nominal amount of
the hedged securities. These are considered
as fair value hedge relationships as they cover
note program in the value of HUF 200 billion
the interest rate risk arising from the coupons
with the intention of issuing registered
of the hedged securities. OTP Bank does not
IFRS separate financial statements
275
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:16)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
intend to be exposed to the risk embedded in
actually hedges and the quantity of the
the structured bonds, consequently as part of
hedging instrument that the Bank actually
interest rate swap transaction the structured
uses to hedge that quantity of hedged item
interest payments are swapped to floating
interest rate. This hedging relationship meets
The cash-flows of the fixed rate securities
all of the following hedge effectiveness
issued by the Bank are exposed to the changes
requirements:
in the HUF/EUR foreign exchange rate and the
(cid:588) there is an economic relationship between
volatility of the quoted interest rates of EUR
the hedged item and the hedging
and HUF. The interest rate risk and foreign
instrument
exchange risk related to these securities are
(cid:588) the effect of credit risk does not dominate
hedged with EUR and HUF IRS transactions,
the value changes that result from that
where the fixed interests were swapped to
economic relationship
payments linked to 3 month HUF BUBOR
(cid:588) the hedge ratio of the hedging relationship
and EURIBOR, resulting in a decrease in the
is the same as that resulting from the
interest rate and foreign exchange exposure of
quantity of the hedged item that the Bank
issued securities.
Issued securities denominated in HUF as at 31 December 2020 (in HUF mn):
Name
Date of
issuance
Maturity
31/05/2021
31/05/2022
25/10/2021
13/07/2021
23/03/2022
31/05/2023
31/05/2022
23/03/2022
24/03/2023
31/10/2022
31/05/2023
28/12/2022
31/05/2024
31/05/2025
30/12/2021
18/07/2022
31/05/2024
30/12/2021
21/06/2021
31/05/2026
24/03/2023
27/12/2021
27/12/2022
16/10/2024
28/06/2022
01/04/2021
21/06/2024
28/10/2022
20/12/2024
26/06/2023
23/03/2022
28/06/2022
24/09/2021
31/05/2025
31/05/2027
30/12/2021
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
15/12/2018
29/05/2020
20/10/2011
05/07/2011
22/03/2012
29/05/2020
15/12/2018
22/03/2012
22/03/2013
29/10/2012
15/12/2018
28/12/2012
29/05/2020
29/05/2020
21/12/2011
18/07/2012
30/05/2019
21/12/2011
17/06/2011
29/05/2020
22/03/2013
21/12/2011
28/12/2012
10/10/2014
28/06/2012
01/04/2011
18/06/2014
29/10/2012
15/12/2014
28/06/2013
22/03/2012
28/06/2012
19/09/2011
30/05/2019
29/05/2020
21/12/2011
OTP_DK_21/I
OTP_DK_22/II
OTPRF2021B
OTPRF2021A
OTPRF2022A
OTP_DK_23/II
OTP_DK_22/I
OTPRF2022B
OTPRF2023A
OTPRF2022E
OTP_DK_23/I
OTPRF2022F
OTP_DK_24/II
OTP_DK_25/II
OTPRF2021C
OTPX2022B
OTP_DK_24/I
OTPRF2021D
OTPX2021B
OTP_DK_26/I
OTPX2023A
OTPX2021D
OTPX2022D
OTPX2024B
OTPRF2022D
OTPX2021A
OTPX2024A
OTPX2022C
OTPX2024C
OTPX2023B
OTPX2022A
OTPRF2022C
OTPX2021C
OTP_DK_25/I
OTP_DK_27/I
OTPRF2021E
Other
Subtotal issued securities in HUF
Total
276
OTP Bank Annual Report 2020
Nominal
value in
HUF million
3,520
3,175
2,894
2,607
2,065
997
993
831
787
761
717
623
592
592
527
172
426
372
245
392
324
259
248
295
260
183
241
201
242
198
201
190
231
104
95
76
213
26,849
28,205
Amortised
cost in
HUF million
3,501
3,133
2,954
2,807
1,920
970
965
772
740
715
679
592
566
555
544
440
390
381
370
361
327
325
299
284
251
246
237
233
232
225
214
196
192
91
85
74
213
27,079
28,435
Interest conditions
Hedged
discount
discount
indexed
indexed
indexed
discount
discount
indexed
indexed
indexed
discount
indexed
discount
discount
indexed
indexed
discount
indexed
indexed
discount
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
discount
discount
indexed
indexed
–
–
1.70
1.70
1.70
1.70
1.70
–
1.70
–
–
1.70
–
1.70
0.70
1.70
–
1.30
1.70
0.60
0.60
–
1.70
–
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
–
hedged
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:16)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Interest conditions
Hedged
0.70
hedged
Issued securities denominated in HUF as at 31 December 2019 (in HUF mn):
Name
Date of
issuance
Maturity
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
18/06/2014
15/12/2018
20/10/2011
10/10/2014
11/11/2010
05/07/2011
15/12/2014
15/12/2018
12/07/2010
22/03/2012
12/07/2010
22/03/2013
22/03/2012
29/10/2012
15/12/2018
15/12/2018
28/12/2012
21/12/2011
30/05/2019
21/12/2011
22/03/2013
10/10/2014
21/12/2011
28/06/2010
28/12/2012
15/12/2014
17/06/2011
28/06/2012
18/06/2014
25/03/2010
19/09/2011
22/03/2012
29/10/2012
28/06/2013
01/04/2011
18/07/2012
16/12/2010
28/06/2012
11/11/2010
30/05/2019
21/12/2011
OTPX2020E
OTP_DK_21/I
OTPRF2021B
OTPX2020F
OTPRF2020C
OTPRF2021A
OTPX2020G
OTP_DK_20/I
OTPRF2020A
OTPRF2022A
OTPRF2020B
OTPRF2023A
OTPRF2022B
OTPRF2022E
OTP_DK_22/I
OTP_DK_23/I
OTPRF2022F
OTPRF2021C
OTP_DK_24/I
OTPRF2021D
OTPX2023A
OTPX2024B
OTPX2021D
OTPX2020B
OTPX2022D
OTPX2024C
OTPX2021B
OTPRF2022D
OTPX2024A
OTPX2020A
OTPX2021C
OTPX2022A
OTPX2022C
OTPX2023B
OTPX2021A
OTPX2022B
OTPX2020D
OTPRF2022C
OTPX2020C
OTP_DK_25/I
OTPRF2021E
Other
Subtotal issued securities in HUF
Total
22/06/2020
31/05/2021
25/10/2021
16/10/2020
05/11/2020
13/07/2021
21/12/2020
31/05/2020
20/07/2020
23/03/2022
20/07/2020
24/03/2023
23/03/2022
31/10/2022
31/05/2022
31/05/2023
28/12/2022
30/12/2021
31/05/2024
30/12/2021
24/03/2023
16/10/2024
27/12/2021
09/07/2020
27/12/2022
20/12/2024
21/06/2021
28/06/2022
21/06/2024
30/03/2020
24/09/2021
23/03/2022
28/10/2022
26/06/2023
01/04/2021
18/07/2022
18/12/2020
28/06/2022
05/11/2020
31/05/2025
30/12/2021
Nominal
value in
HUF million
2,939
3,520
2,654
2,650
2,622
2,402
2,371
3,295
2,152
1,869
1,276
760
728
661
993
717
538
505
426
357
340
311
274
267
265
259
255
249
241
238
231
217
217
214
192
183
177
171
166
104
67
218
38,291
42,034
Amortised
cost in
HUF million
2,903
3,451
2,858
2,551
2,662
2,804
2,273
3,282
2,252
1,797
1,429
746
698
645
946
664
532
558
380
385
370
302
305
285
379
249
424
278
253
326
198
235
278
268
253
318
193
205
221
89
68
218
39,531
43,284
indexed
discount
indexed
indexed
indexed
indexed
indexed
discount
indexed
indexed
indexed
indexed
indexed
indexed
discount
discount
indexed
indexed
discount
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
discount
indexed
0.20
0.30
1.70
1.70
1.70
1.70
1.70
1.70
0.70
1.70
0.60
1.70
1.30
1.70
0.60
1.70
1.70
Issued securities denominated in foreign currency as at 31 December 2020 (in HUF mn):
Name
Date of
issuance
Maturity
1
2
3
4
OTP_VK1_21/1
OTP_VK1_21/2
OTP_VK1_21/3
OTP_VK1_21/4
Subtotal issued securities in foreign currency
20/02/2020 20/02/2021
02/04/2020 02/04/2021
14/05/2020 14/05/2021
18/06/2020 18/06/2021
Currency Nominal value in
FX HUF
million million
414
370
351
221
1,356
1.39
1.24
1.18
0.74
4.55
USD
USD
USD
USD
Nominal value in
FX HUF
million million
414
370
351
221
1,356
1.39
1.24
1.18
0.74
4.55
Interest
conditions
(in % actual)
variable
variable
variable
variable
0.01
0.01
0.01
0.01
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
Hedged
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:16)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS separate financial statements
277
Issued securities denominated in foreign currency as at 31 December 2019 (in HUF mn):
Name
Date of
issuance
Maturity
1
2
3
4
5
6
7
8
OTP_VK1_20/2
OTP_VK1_20/5
OTP_VK1_20/4
OTP_VK1_20/7
OTP_VK1_20/1
OTP_VK1_20/8
OTP_VK1_20/3
OTP_VK1_20/6
Subtotal issued securities in foreign currency
04/04/2019 04/04/2020
15/08/2019 15/08/2020
27/06/2019 27/06/2020
07/11/2019 07/11/2020
21/02/2019 21/02/2020
19/12/2019 19/12/2020
16/05/2019 16/05/2020
26/09/2019 26/09/2020
Currency Nominal value in
FX HUF
million million
727
589
552
494
450
448
263
220
3,743
2.47
2.00
1.87
1.68
1.53
1.52
0.89
0.75
12.71
USD
USD
USD
USD
USD
USD
USD
USD
Nominal value in
FX HUF
million million
731
591
552
495
452
448
263
221
3,753
2.48
2.01
1.87
1.68
1.54
1.52
0.89
0.75
12.74
Interest
conditions
(in % actual)
Hedged
variable
variable
variable
variable
variable
variable
variable
variable
1.42
1.20
1.32
1.10
1.48
1.10
1.32
1.20
NOTE 21:
FINANCIAL LIABILITIES DESIGNATED AS FAIR VALUE THROUGH
PROFIT OR LOSS (in HUF mn)
Within one year:
In HUF
Over one year:
In HUF
Subtotal
2020
2,010
2,010
23,892
23,892
25,902
2019
2,679
2,679
26,182
26,182
28,861
Interest rates on financial liabilities designated as fair value through profit or loss
are as follows:
Within one year:
In HUF
Over one year:
In HUF
Average interest on amounts due to banks in HUF
2020
2019
0.51%–2.5%
0.01%–2.59%
0%–2.5%
2.46%
0.01%–2.59%
1.34%
NOTE 22:
HELD FOR TRADING DERIVATIVE FINANCIAL LIABILITIES
(in HUF mn)
Negative fair value of held for trading derivative financial liabilities by deal types:
Interest rate swaps
Foreign currency swaps
CCIRS and mark-to-market CCIRS
Other derivative contracts*
Total
2020
28,812
34,327
7,285
29,563
99,987
2019
42,841
29,084
1,037
10,126
83,088
* Incl.: FX, equity, commodity and index futures; FX forward; commodity and equity swap; FRA; FX option.
278
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:16)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 23:
FAIR VALUE OF DERIVATIVE FINANCIAL LIABLITIES DESIGNATED
AS HEDGE ACCOUNTING (in HUF mn)
Fair value of derivative financial liabilities designated as hedge accounting
is detailed as follows:
IRS designated as fair value hedge
CCIRS designated as fair value hedge
IRS designated as cash-flow hedge
Total
NOTE 24:
OTHER LIABILITIES* (in HUF mn)
Other financial liabilities
Liabilities from investment services
Accounts payable
Accrued expenses
Provision on off-balance sheet commitments, contingent liabilities
Liabilities from customer's credit card payments
Accrued day one gain of loan liabilities at below-market interest
Liabilities due to short positions
Other
Other financial liabilities total
Other non-financial liabilities
Technical accounts
Current income tax payable
Social contribution
Provision on off-balance sheet commitments, contingent liabilities
Other
Other non-financial liabilities total
Other liabilities total
2020
5,266
5,865
(8,027)
3,104
2019
8,265
1,758
–
10,023
2020
2019
62,490
24,121
15,473
17,490
11,195
14,391
9,131
13,249
167,540
37,304
9,680
3,746
2,416
4,211
57,357
224,897
101,417
20,742
16,517
14,288
10,753
10,177
7,040
10,157
191,091
34,025
9,633
4,130
2,508
2,393
52,689
243,780
The provision on other liabilities, off-balance sheet commitments and contingent liabilities
are detailed as follows:
Provision for losses on other off-balance sheet commitments and
contingent liabilities
Provisions in accordance with IFRS 9
Provision for litigation
Provision for retirement pension and severance pay
Provision on other liabilities
Provisions in accordance with IAS 37
Total
2020
17,490
17,490
199
1,300
917
2,416
19,906
2019
14,288
14,288
663
1,000
845
2,508
16,796
Movements in the provision for losses on commitments and contingent liabilities
in accordance with IFRS 9 can be summarized as follows:
Opening balance
Provision for the period
Release of provision for the period
Closing balance
2020
14,288
57,246
(54,044)
17,490
2019
8,494
29,517
(23,723)
14,288
* Other liabilities are expected to be recovered or settled no more than twelve months after the reporting period.
IFRS separate financial statements
279
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:16)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Movements in the provision for losses on commitments and contingent liabilities
in accordance with IAS 37 can be summarized as follows:
Opening balance
Provision for the period
Release of provision
Use of provision
Closing balance
2020
2,508
20,970
(21,062)
–
2,416
2019
2,891
1,252
(130)
(1,505)
2,508
NOTE 25:
SUBORDINATED BONDS AND LOANS (in HUF mn)
Within one year:
In foreign currency
Over one year:
In foreign currency
Total
2020
2,972
301,271
304,243
2019
2,695
276,699
279,394
Interest rates on subordinated bonds and loans are as follows:
Subordinated bonds and loans denominated in foreign currency
Average interest on subordinated bonds
and loans denominated in foreign currency
2020
2.5%–2.9%
2.74%
2019
2.6%–2.9%
2.73%
Subordinated loans and bonds are detailed as follows as at 31 December 2020:
Type
Nominal value
Subordinated
bond
EUR 327.8 million
Date of
issuance
7 November
2006
Date of
maturity
Issue price
Interest conditions
Perpetual
99.875%
Three-month EURIBOR + 3%,
variable (payable quarterly)
Fixed 2.875% annual in the first 5 years
and callable after 5 years, variable after
year 5 (payable annually) calculated
as a sum of the initial margin
(320 bp) and the 5 year mid-swap rate
prevailing at the and of the 5 year
Current
interest rate
2.484%
2,875%
Subordinated
bond
EUR 499.8 million 15 July 2019
15 July 2029
99.738%
NOTE 26:
SHARE CAPITAL (in HUF mn)
Authorized, issued and fully paid:
Ordinary shares
2020
2019
28,000
28,000
The nominal value of the shares is HUF 100
shareholders. Furthermore there are no
per shares. All of the shares are ordinary
restrictions on the distribution of dividends
shares representing the same rights to the
and the repayment of capital.
280 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:24)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 27:
RETAINED EARNINGS AND RESERVES (in HUF mn)
Based on the instructions of Act C of 2000
The EUR denominated exchangeable bonds
on accounting (“Act on Accounting”) financial
are perpetual and the investors can exercise
statements of the Bank are prepared in
the conversion right between year 6 and
accordance with IFRS as issued by the IASB as
10. The bonds carry a fixed coupon of 3.95%
adopted by the EU.
during the first 10 years thereafter the Issuer
has the right to redeem the bonds at face
NBH warns the financial institutions in an
value. Following the year 10, the bonds carry
excecutive circular dated 8 January 2021 not to
a coupon of 3 month EURIBOR +3%. OTP Bank
pay or enter into an irrevocable obligation of
has discretional right to cancel the payments.
dividend payment based on the performance
The interest payable is non-cumulative.
for the financial years ended 2019 and 2020, or
any reserves cumulated from previous years
Due to the conditions described above, ICES
until 30 September 2021. Furthermore NBH
was accounted as an equity instrument and
warns to stop treasury share purchases (except
therefore any payment was accounted as equity
share purchase related to share based payment
distribution paid to ICES holders.
programs) until 30 September 2021 too.
Equity correlation table shall contain the
The intention of the Management is paying
opening and closing balances of the share-
HUF 119,248 million dividend (for the year
holder’s equity in accordance with IFRS,
ended 2019 HUF 69,440 million and for the year
furthermore deducted from this the opening
ended 2020 HUF 49,808 million) regarding
and closing balances of the specified equity
which – in accordance with the NBH circular –
elements. Equity correlation table shall contain
the Bank doesn’t enter into an irrevocable
also untied retained earnings available for
obligation. Accordingly it remains as part
the payment of dividends, covering retained
of the shareholders’ equity until the obligation
earnings from the last financial year for which
hasn’t been settled.
accounts have been adopted comprising net
profit for the period of that financial year
Based on paragraph 114/B of Act on Accounting
minus cumulative unrealized gains claimed
Equity Correlation Table is prepared and
in connection with any increase in the fair
disclosed as a part of the explanatory notes
value of investment properties, as provided
for the reporting date by the Bank.
in IAS 40 – Investment Property, reduced
by the cumulative income tax accounted for
On 19 October 2006 the Bank sold 14.5 million
under IAS 12 – Income Taxes.
Treasury shares owned by OTP Group through
an issue of Income Certificates Exchangeable
for Shares (“ICES”). Within the transaction
Share capital
10 million shares owned by OTP Bank and
4.5 million OTP shares owned by OTP Fund
Share capital is the portion of the Bank’s equity
Management Ltd. were sold during the under-
that has been obtained by the issue of shares in
writing period of ICES on the weighted average
the corporation to a shareholder, usually for cash.
market price (HUF 7,080) of the Budapest Stock
Exchange. The shares have been purchased by
Opus Securities S.A. (“OPUS”), which issued an
Share-based payment reserve
exchangeable bond with a total face value of
EUR 514,274,000 backed by those shares. The
Share-based payment reserve represents
exchangeable bonds have been sold at a 32%
the increase in the equity due to the goods
premium over the selling price of the shares.
or services were received by the Bank in an
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:24)(cid:15)
281
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
equity-settled share-based payment trans-
Other comprehensive income
action, valued at the fair value of the goods or
services received.
Retained earnings
Other comprehensive income comprises items
of income and expense (including reclassifica-
tion adjustments) that are not recognised
in profit or loss as required or permitted by
other IFRSs.
Profit of previous years generated by the Bank
that are not distributed to shareholders as
dividends.
General reserve
Put option reserve
The Bank shall place ten per cent of the after
tax profit of the year into general reserve
prescribed by the Act CCXXXVII of 2013 on
OTP Bank Plc. and MOL Plc. entered into a share
Credit Institutions and Financial Enterprises.
swap agreement in 16 April 2009, whereby OTP
The Bank is allowed to use general reserves
has changed 24,000,000 OTP ordinary shares
only to cover operating losses arising from
for 5,010,501 “A series” MOL shares. The final
their activities.
maturity of the share swap agreement is
11 July 2022, until which any party can initiate
cash or physical settlement of the transaction.
Tied-up reserve
Put option reserve represents the written
put option over OTP ordinary shares were
The tied-up reserve shall consist of sums tied
accounted as a deduction from equity at the
up from the capital reserve and from the
date of OTP-MOL share swap transaction.
retained earnings.
The equity correlation table of the Bank based on paragraph 114/B of Act on Accounting
as at 31 December 2020:
31 December 2020
Share
Capital
Capital
reserve
Share-
based
payment
reserve
Retained
earnings
and
reserves
Option
reserve
Treasury
Shares
Revaluation
reserve
Tied-up
reserve
Net profit
for the
year
Total
28,000
52
42,573
1,709,976 (55,468)
(46,799)
–
– 1,678,334
–
–
–
–
–
–
–
–
–
(55,468)
(46,799)
–
–
–
–
42,573
(42,573)
(998)
(44,356)
–
–
–
–
–
–
–
–
(92,474)
(105,371)
1,466,777
–
–
–
–
55,468
–
–
46,799
–
–
–
–
–
–
–
–
–
–
44,356
–
–
–
998
–
–
–
–
–
–
–
–
–
–
–
– 105,371
92,474
–
–
–
–
–
–
–
–
28,000 (59,642)
44,356 106,369
92,474 1,678,334
Components of
Shareholder’s equity
in accordance with
IFRS
Unused portion
of reserve for
developments
Other comprehensive
income
Option reserve
Treasury shares
Share based
payments
Net profit for the year
General reserve
Components of
Shareholder’s equity
in accordance with
paragraph 114/B
of Act on Accounting
282
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:24)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
The equity correlation table of the Bank based on paragraph 114/B of Act on Accounting
as at 1 January 2020:
31 December 2020
Share
Capital
Capital
reserve
Share–
based
payment
reserve
Retained
earnings
and
reserves
Option
reserve
Treasury
Shares
Revaluation
reserve
Tied–up
reserve
Net profit
for the
year
Total
Components of
Shareholder’s equity
in accordance with
IFRS
Unused portion
of reserve for
developments
Other comprehensive
income
Portion of
supplementary
payment recognised
as an asset
Option reserve
Treasury shares
Share based
payments
Net profit for the year
General reserve
Components of
Shareholder’s equity
in accordance with
paragraph 114/B
of Act on Accounting
28,000
52
39,179
1,644,591 (55,468)
(2,636)
–
–
–
–
–
–
–
–
–
–
–
(55,468)
(2,636)
–
–
–
–
–
39,179
(39,179)
(1,473)
(62,975)
(310)
–
–
–
–
–
–
–
–
(193,354)
(96,115)
1,290,364
28,000 (18,873)
–
–
–
–
–
–
55,468
–
–
2,636
–
–
–
–
–
–
–
–
–
–
62,975
–
–
–
–
–
–
–
– 1,653,718
1,473
–
–
–
–
–
–
–
–
–
–
–
–
96,115
193,354
–
–
–
(310)
–
–
–
–
–
62,975
97,588
193,354 1,653,408
Calculated untied retained earnings in accordance with paragraph 114/B of Act on Accounting:
Calculated retained earnings
Net profit for the year
Untied retained earnings
Items of retained earnings and other reserves:
Retained earnings
Capital reserve
Option reserve
Other reserves
Fair value of financial instruments measured at fair value
through other comprehensive income
Share-based payment reserve
Fair value of derivative financial instruments designated
as cash-flow hedge
Net profit for the period
Retained earnings and other reserves
2020
1,466,777
92,474
1,559,251
2019
1,290,364
193,354
1,483,718
2020
1,465,037
52
(55,468)
105,370
44,356
42,573
2,739
92,474
1,697,133
2019
1,289,112
52
(55,468)
96,115
62,975
39,179
3,035
193,354
1,628,354
Fair value adjustment of securities at fair value through other comprehensive income:
Balance as at 1 January
Change of fair value correction
Deferred tax related to change of fair value correction
Transfer to profit or loss due to derecognition
Deferred tax related to accumulated transfer to profit or loss
Closing balance
2020
51,011
(22,069)
1,973
6,073
(547)
36,441
2019
35,675
8,481
(796)
8,408
(757)
51,011
IFRS separate financial statements
283
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:24)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Expected credit loss on securities at fair value through other comprehensive income:
Balance as at 1 January
Increase of loss allowance
Release of loss allowance
Closing balance
Fair value changes of equity instruments as at fair value through
other comprehensive income:
Balance as at 1 January
Change of fair value correction
Deferred tax related to change of fair value correction
Transfer to retained earnings
Closing balance
NOTE 28:
TREASURY SHARES (in HUF mn)
2020
1,702
795
(783)
1,714
2020
10,262
(3,276)
310
(1,095)
6,201
2019
1,859
550
(707)
1,702
2019
6,743
3,867
(348)
–
10,262
Nominal value (ordinary shares)
Carrying value at acquisition cost
2020
433
46,799
2019
32
2,636
The changes in the carrying value of treasury shares are due to repurchase and sale transactions
on market authorised by the General Assembly.
Change in number of shares:
Number of shares as at 1 January
Additions
Disposals
Number of shares at the end of the period
2020
320,165
8,296,388
(4,285,384)
4,331,169
2019
169,852
2,979,754
(2,829,441)
320,165
Change in carrying value:
Balance as at 1 January
Additions
Disposals
Closing Balance
Number of treasury shares held by OTP Group members
(except the Bank)
2020
2,636
85,922
(41,759)
46,799
2020
1,959
2019
1,964
34,185
(33,513)
2,636
2019
1,746
284 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:24)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
NOTE 29:
INTEREST INCOME AND EXPENSES (in HUF mn)
2020
2019
Interest income accounted for using the effective
interest rate method from/on
Loans at amortised cost
FVOCI securities
Securities at amortised cost
Placements with other banks
Financial liabilities
Amounts due from banks and balances
with National Bank of Hungary
Repo receivables
Subtotal
Income similar to interest income
Loans mandatorily measured at fair value through profit or loss
Swap and forward deals related to Placements with other banks
Swap and forward deals related to Loans at amortised cost
Swap and forward deals related to FVOCI securities
Investment properties
Subtotal
Interest incomes and similar to interest incomes total
Interest expense due to/from/on
Amounts due to banks and deposits from
the National Bank of Hungary and other banks
Deposits from customers
Leasing liabilities
Liabilities from issued securities
Subordinated bonds and loans
Investment properties (deprecation)
Financial assets
Repo liabilities
Subtotal
NOTE 30:
RISK COST (in HUF mn)
Loss allowance of loans at amortised cost
Loss allowance
Release of loss allowance
Loss allowance of placements with other banks
Loss allowance
Release of loss allowance
Loss allowance of FVOCI securities
Loss allowance
Release of loss allowance
Loss allowance of securities at amortised cost
Loss allowance
Release of loss allowance
Provision on loan commitments and financial guarantees
Provision for the period
Release of provision
Change in the fair value attributable to changes in the credit
risk of loans mandatorily measured at fair value through
profit of loss
Risk cost total
143,652
29,095
48,654
12,248
1,544
4,391
49
239,633
15,094
56,341
14,011
(3,789)
6
81,663
321,296
67,747
19,598
257
414
8,327
49
1,622
1,616
99,630
137,183
40,332
47,119
8,034
1,720
1,196
95
235,679
5,106
65,090
24,114
(6,099)
6
88,217
323,896
78,644
28,146
244
224
5,323
48
2,278
4,477
119,384
2020
2019
215,544
(156,461)
59,083
12,724
(10,497)
2,227
2,119
(2,116)
3
4,822
(2,977)
1,845
57,246
(54,044)
3,202
405
66,765
143,175
(115,664)
27,511
5,068
(3,523)
1,545
1,295
(1,471)
(176)
338
(563)
(225)
29,517
(23,723)
5,794
5,432
39,881
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:24)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
IFRS separate financial statements
285
NOTE 31:
NET PROFIT FROM FEES AND COMMISSIONS (in HUF mn)
Income from fees and commissions:
Fees and commissions related to lending
Deposit and account maintenance fees and commissions
Fees and commission related to the issued bank cards
Fees and commissions related to security trading
Fees and commissions paid by OTP Mortgage Bank Ltd.
Net insurance fee income
Other
Fees and commissions from contracts with customers
Total Income from fees and commissions:
2020
11,141
106,341
77,115
25,414
8,725
7,155
23,890
248,640
259,781
2019
5,999
104,123
76,296
27,332
11,836
6,013
17,355
242,955
248,954
Contract balances:
Receivables, which are included in other assets
Loss allowance
Liabilities which are included in other liabilities
2020
14,721
(570)
–
2019
6,228
(88)
–
Performance obligations and revenue recognition policies:
Fee type
Deposit and account
maintenance fees
and commissions
Fees and commission
related to the issued
bank cards
Fees and commissions
related to security
account management
services
Nature and timing of satisfaction of performance obligations,
and the significant payment terms
The Bank provides a number of account management services for both retail and
corporate customers in which they charge a fee. Fees related to these services
can be typically account transaction fees (money transfer fees, direct debit
fees, money standing order fees etc.), internet banking fees (e.g. OTPdirect fee),
account control fees (e.g. sms fee), or other fees for occasional services (account
statement fees, other administration fees etc.).
Fees for ongoing account management services are charged to the customer’s
account on a monthly basis. The fees are commonly fix amounts that can be
vary per account package and customer category.
In the case of the transaction based fees where the services include money
transfer the fee is charged when the transaction takes place. The rate of the
fee is typically determined in a certain % of the transaction amount. In case
of other transaction-based fees (e.g. SMS fee), the fee is settled monthly.
In case of occasional services the Bank basically charges the fees when the services
are used by the customer. The fees can be fixed fees or they can be set in %.
The rates are reviewed by the Bank regularly.
The Bank provides a variety of bank cards to its customers, for which different
fees are charged. The fees are basically charged in connection with the issuance
of cards and the related card transactions.
The annual fees of the cards are charged in advance in a fixed amount.
The amount of the annual card fee depends on the type of card.
In case of transaction-based fees (e.g. cash withdrawal/payment fee, merchant
fee, interchange fee etc.), the settlement of the fees will take place immediately
after the transaction or on a monthly basis. The fee is typically determined in %
of the transaction with a fixed minimum amount.
For all other cases where the Bank provides a continuous service to the customers
(e.g. card closing fee), the fees are charged monthly. The fee is calculated in a
fix amount.
The rates are reviewed by the Bank regularly.
The Bank provides its clients with security account management services.
Fees will be charged for account management and transactions on accounts.
Account management fees are typically charged quarterly or annually.
The amount is determined in%, based on the stocks of securities managed
by the clients on the account in a given period.
Fees for transactions on the securities account are charged immediately after
the transaction. They are determined in%, based on the transaction amount.
Fees for complex services provided to clients (e.g. portfolio management or
custody) are typically charged monthly or annually. The fees are fixed monthly
amounts and in some cases a bonus fee are charged.
Revenue recognition
under IFRS 15
Fees for ongoing account
management services are
charged on a monthly basis
during the period when they
are provided.
Transaction-based fees are
charged when the transaction
takes places or charged
monthly at the end of the month.
Fees for ongoing services are
charged on a monthly basis
during the period when they
are provided.
Transaction-based fees are
charged when the transaction
takes places or charged
monthly at the end of the month.
Fees for ongoing services are
charged quarterly or annually
during the period when they
are provided. The fees are
accrued monthly.
Transaction-based fees are
charged when the transaction
takes places.
286 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:24)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:3)
Performance obligations and revenue recognition policies (continued):
Fee type
Fees and commissions
paid by OTP Mortgage
Bank Ltd.
Net insurance fee
income
Other
Nature and timing of satisfaction of performance obligations,
and the significant payment terms
The Bank provides a number of services to its subsidiaries, in connection with fees
are charged. These fees typically include services related to various warranties
and guarantees, credit account management, agency activities, and marketing
activities.
The credit account management fee granted to OTP Mortgage Bank is settled
on a monthly basis. It has a fixed part that is based on the number of the
managed credit accounts, and a variable one determined by the profit split
method.
The fees for the guarantee services provided by the Bank are charged monthly.
The fee is determined by% and based on the stock being guaranteed.
Fees for agent services are charged monthly. The rate is %, based on the
products sold during the period.
Due to the fact that the Bank does not provide insurance services to its clients,
only acts as an agent, the fee income charged to the customers and fees
payable to the insurance company are presented net in the fee income.
In addition, agency fee charged for the sale of insurance contracts is also
recorded in this line. The fee is charged on a monthly basis and determined in %.
Fees that are not significant in the Banks total income are included in Other fees
category. Such fees are safe lease, special procedure fee, account rent fee,
adlak service fee, fee of a copy of document etc.
Other fees may include charges for continuous services or for ad hoc
administration services. Continuous fees are charged monthly (e.g., safe lease
fees) at the beginning of the period, typically at a fixed rate. Fees for ad hoc
services are charged immediately after the service obligation had been met,
typically also in a fixed amount.
Revenue recognition
under IFRS 15
Fees for ongoing services are
charged on a monthly basis
during the period when they
are provided.
Transaction-based fees are
charged when the transaction
takes places.
Fees for ongoing services are
charged on a monthly basis
during the period when they
are provided.
Fees for ongoing services are
charged on a monthly basis
during the period when they
are provided.
Fees for ad hoc services are
charged when the transaction
takes places.
Fees and commissions:
Other fees and commissions related to issued bank cards
Insurance fees
Fees and commissions related to lending
Fees and commissions related to security trading
Fees and commissions relating to deposits
Trust activities related to securities
Postal fees
Money market transaction fees and commissions
Other
Total
2020
31,701
758
3,432
983
1,355
1,167
202
91
1,061
40,750
219,031
2019
29,204
720
1,839
598
1,199
1,001
253
41
736
35,591
213,363
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:24)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
IFRS separate financial statements
287
NOTE 32:
OTHER OPERATING INCOME AND EXPENSES
AND OTHER ADMINISTRATIVE EXPENSES (in HUF mn)
Other Operating Income
Intermediary and other services
Income from lease of tangible assets
Gains on derecognition of deposits
Gains on sale of receivables
Gains on transactions related to property activities
Income from written off receivables
Gains on discount from advertising agency fees
Gains on sale of tangible assets
Non-repayable assets received
Other operating income from OTP Employee Stock Ownership Program (OTP ESOP)
Collateral valuation service fee received from OTP Building Society Ltd.
Other
Total
Net Other Operating Expenses
Release of loss allowance/(Loss allowance) on investments in subsidiaries
Financial support for sport association and organization of public utility
Non-repayable assets contributed
Release of loss allowance on other assets
Losses on other assets
Fine imposed by Competition Authority
Release of provision for off-balance sheet commitments and contingent liabilities
Other
Total
Other Administrative Expenses
Personnel expenses
Wages
Taxes related to personnel expenses
Other personnel expenses
Subtotal
Depreciation and amortization
Other administrative expenses
Taxes, other than income tax*
Services
Administration expenses, including rental fees
Professional fees
Advertising
Subtotal
Total
2020
2,677
749
710
377
266
206
171
150
26
236
-
2,332
7,900
(10,042)
(7,999)
(4,055)
(3,521)
(697)
(25)
92
(1,817)
(28,064)
89,705
16,308
12,485
118,498
38,948
85,733
44,090
15,517
13,769
7,405
166,514
323,960
NOTE 33:
INCOME TAX (in HUF mn)
The Bank is presently liable for income tax at a rate of 9% of taxable income.
A breakdown of the income tax expense is:
Current tax expense
Deferred tax (benefit)/expense
Total
A reconciliation of the deferred tax liability is as follows:
Balance as at 1 January
Deferred tax benefit/(expense)/
Tax effect of fair value adjustment of FVOCI securities and ICES recognised in comprehensive income
Closing balance
2020
1,849
(1,077)
772
2020
(5,875)
1,077
1,736
(3,062)
2019
1,921
590
486
163
203
257
170
271
264
2,244
396
540
7,505
38,807
(4,069)
(4,187)
186
(1,095)
(143)
383
(3,367)
26,515
84,122
17,861
13,052
115,035
29,925
81,178
43,369
15,943
11,091
8,617
160,198
305,158
2019
4,625
5,215
9,840
2019
1,241
(5,215)
(1,901)
(5,875)
* Special tax of financial institutions was paid by OTP Bank in the amount of HUF 11.6 and 7.9 billion for the year ended 31 December 2020 and 2019, recognized as an expense
thus decreased the corporate tax base. For the year ended 31 December 2020 financial transaction duty was paid by the Bank in the amount of HUF 60 billion.
288 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:24)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
A breakdown of the deferred tax liability is as follows:
Unused tax allowance
Amounts unenforceable by tax law
Deferred tax asset
Fair value adjustment of held for trading and securities
at fair value through other comprehensive income
Difference in depreciation and amortization
Amounts unenforceable by tax law
Deferred tax liabilities
Net deferred tax liabilities
A reconciliation of the income tax (income)/expense is as follows:
Profit before income tax
Income tax at statutory tax rate
Income tax adjustments due to permanent differencies are as follows:
Deferred use of tax allowance
Tax effect related to accounting policy change
Share-based payment
Use of tax losses
Deferred tax asset due to unused tax allowance
Amounts unenforceable by tax law
Use of tax allowance in the current year
Dividend income
Other
Income tax
Effective tax rate
2020
1,321
247
1,568
(4,199)
(329)
(102)
(4,630)
(3,062)
2020
93,246
8,392
–
69
305
(167)
(1,038)
(39)
(2,023)
(5,488)
761
772
0.8%
2019
283
210
493
(5,935)
(329)
(104)
(6,368)
(5,875)
2019
203,194
18,287
5,046
–
319
–
–
(58)
(6,975)
(7,100)
321
9,840
4.8%
NOTE 34:
LEASE (in HUF mn)
The Bank as a lessee
At initial application of IFRS 16 the Bank as lessee chose the modified retrospective approach
(see Note 2.19), so there are no comparative figures for 31 December 2018.
Amounts recognised at initial application:
Lease liability
Prepaid or accrued lease payments as at 31 December 2018
Right-of-use asset
Cumulative impact recognized as an adjustment to the equity
at the date of initial application
1 January 2019
16,150
145
16,295
–
Average weighted amount of the implicit interest rate/incremental borrowing rate applied
as at 1 January 2019 to recognise the lease liabilities: ~1.61%.
Amounts recognised in profit and loss:
Interest expense on lease liabilities
Expense relating to short-term leases
Expense relating to leases of low value assets
Expense relating to variable lease payments not included in the measurement of lease liabilities
2020
257
2,128
–
1,084
2019
244
4,212
12
874
IFRS separate financial statements
289
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:24)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
Leasing liabilities by maturities:
Within one year
Over one year
Total
2020
4,423
9,683
14,106
2019
3,826
9,834
13,660
An analysis of movement in the carrying amount of right-of-use assets by category is as follows:
Gross carrying amount
Balance as at 1 January
Additions due to new contracts
Derecognition due to matured contracts
Change due to revaluation and modification
Balance as at 31 December 2019
Additions due to new contracts
Derecognition due to matured contracts
Change due to revaluation and modification
Balance as at 31 December 2020
Depreciation
Balance as at 1 January
Depreciation charge
Derecognition due to matured contracts
Balance as at 31 December 2019
Depreciation charge
Derecognition due to matured contracts
Balance as at 31 December 2020
Net carrying amount
Balance as at 31 December 2019
Balance as at 31 December 2020
Right-of-use
of real estate
Right-of-use
of machinery
and equipment
16,259
786
(107)
852
17,790
3,706
(18)
928
22,406
–
4,218
(4)
4,214
4,744
(6)
8,952
13,576
13,454
37
–
–
–
37
–
–
–
37
–
6
–
6
6
–
12
31
25
Total
16,296
786
(107)
852
17,827
3,706
(18)
928
22,443
–
4,224
(4)
4,220
4,750
(6)
8,964
13,607
13,479
NOTE 35:
FINANCIAL RISK MANAGEMENT (in HUF mn)
A financial instrument is any contract that
areas and loan types. Such risks are monitored
gives rise to a financial asset of one entity and
on a periodical basis and subject to an annual
a financial liability or equity instrument of
or more frequent review. The exposure to
another entity.
any borrower including banks and brokers is
Financial instruments may result in certain
further restricted by sublimit covering on- and
risks to the Bank. The most significant risks the
off-balance sheet exposures and daily delivery
Bank faces include:
35.1 Credit risk
risk limits in relation to trading items such as
forward foreign exchange contracts. Actual
exposures against limits are monitored daily.
Exposure to credit risk is managed through
The Bank takes on exposure to credit risk
regular analysis of the ability of borrowers
which is the risk that a counter-party will be
and potential borrowers to meet interest and
unable to pay amounts in full when due.
capital repayment obligations and by changing
The Bank structures the levels of credit risk it
these lending limits when appropriate.
undertakes by placing limits on the amount
Exposure to credit risk is partly managed
of risk accepted in relation to one borrower,
obtaining collateral, corporate and personal
or banks of borrowers, and to geographical
guarantees.
290 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:21)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
35.1.1 Analysis by loan types
(cid:588) retail exposure irrespective of the amount,
Defining the expected credit loss
on individual and collective basis
(cid:588) micro and small enterprise exposures
irrespective of the amount,
(cid:588) all other exposure which are insignificant
on a stand-alone basis and not part of the
On individual basis:
workout management,
Individually assessed are the non-retail
(cid:588) exposure which are not in stage 3, significant
or micro and small enterprise exposure of
on a stand-alone basis,
significant amount on a stand-alone basis:
(cid:588) purchased or originated credit-impaired
(cid:588) exposure in stage 3,
instruments which are in accordance with
(cid:588) exposure in workout management
the conditions mentioned above.
(cid:588) purchased or originated credit-impaired
instruments which are in accordance with
In the collective impairment methodology
the conditions mentioned above
credit risk and the change of credit risk can
The calculation of impairment must be prepared
be correctly captured by understanding the
and approved by the risk management
risk characteristics of the portfolio. In order
functional areas. The calculation, all relevant
to achieve this the main risk drivers shall be
factors (amortised cost, original and current
identified and used to form homogeneous
EIR, contracted and expected cash-flows (from
segments having similar risk characteristics.
business and/or collateral) for the individual
The segmentation is expected to stay stable
periods of the entire lifecycle, other essential
from month to month however a regular
information enforced during the valuation)
(at least yearly) revision of the segmentation
and the criteria thereof (including the factors
process should be set up to capture the
underlying the classification as stage 3) must
change of risk characteristics. The segmentation
be documented individually.
must be performed separately for each
The expected credit loss of the exposure equals
parameter, since in each case different factors
the difference of the receivable's AC (gross book
may have relevance.
value) on the valuation date and the present
value of the receivable's expected cash-flows
The Bank's Headquarters Group Reserve
discounted to the valuation date by the
Committee stipulates the guidelines related
exposure's original effective interest rate (EIR)
to the collective impairment methodology
(calculated at the initial recognition, or in the
at group level. In addition, it has right of
case of variable rate, recalculated due to the
agreement in respect of the risk parameters
last interest rate change). The estimation of the
(PD – probability of default, LGD – loss given
expected future cash-flows should be forward
default, EAD – exposure at default) and
looking, it must also contain the effects of the
segmentation criteria proposed by the group
possible change of macroeconomic outlook.
members.
At least two scenarios must be used for the
estimation of the expected cash-flow. At least
The review of the parameters must be
one scenarios should anticipate that realised
performed at least annually and the results
cash-flows will be significantly different from
should be approved by the Group Reserve
the contractual cash-flows. Probability weights
Committee. Local Risk Managements is
must be allocated to the individual scenarios.
responsible for parameter estimations and
The estimation must reflect the probability
updates, macroeconomic scenarios are
of the occurrence and non-occurrence of the
calculated by OTP Bank Headquarters for
credit loss, even if the most probable result is
each subsidiary and each parameter. Based
the non-occurrence of the loss.
on the consensus proposal of Local Risk
On collective basis:
Management and OTP Bank Headquarters,
the Group Reserve Committee decides on
The following exposures are subject to collective
the modification of parameters (all parameters
assessment:
for impairment calculation).
IFRS separate financial statements
291
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:21)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
The impairment parameters should be
economic conditions. This may be achieved
backtested at least annually.
by applying 3–5 different macroeconomic
The expected loss calculation should be
scenarios, which may be integrated in the PD,
forward looking, including forecasts of future
LGD and EAD parameters.
Gross carrying amount and accumulated loss allowance of financial assets at amortized
cost and fair value through other comprehensive income by IFRS 9 stages:
As at 31 December 2020:
Cash, amounts due from banks and balances
with the National Bank of Hungary
Placements with other banks, net of allowance
for placement losses
Repo receivables
Retail consumer loans
Mortgage loans
Municipal loans
Corporate loans
Loans at amortised cost
FVOCI securities*
Securities at amortised cost
Other financial assets
Total as at 31 December 2020
Loan commitments
Financial guarantees
Factoring loan commitments
Bill of credit
Loan commitments and financial guarantees total
As at 31 December 2019:
Cash, amounts due from banks and balances
with the National Bank of Hungary
Placements with other banks, net of allowance
for placement losses
Repo receivables
Retail consumer loans
Mortgage loans
Municipal loans
Corporate loans
Loans at amortised cost
FVOCI securities*
Securities at amortised cost
Other financial assets
Total as at 31 December 2019
Loan commitments
Financial guarantees
Factoring loan commitments
Bill of credit
Loan commitments and financial guarantees total
Carrying amount/
Exposure
Gross carrying amount/
Stage 1
Stage 2
Stage 3
579,120
579,120
1,535,884
1,540,240
183,364
531,115
95,762
86,061
2,704,822
3,417,760
911,950
2,007,692
127,179
8,762,949
1,429,732
1,412,663
304,993
5,026
3,152,414
183,656
456,034
29,857
72,406
2,361,979
2,920,276
911,950
2,010,980
93,491
8,239,713
1,369,379
1,409,766
299,908
5,039
3,084,092
–
2
–
98,027
58,609
15,564
380,458
552,658
–
–
40,452
593,112
69,998
8,609
3,551
–
82,158
–
1,461
–
10,632
6,602
43
37,177
54,454
–
–
1,133
57,048
1,683
161
1,810
–
3,654
Carrying amount/
Exposure
Gross carrying amount/
Stage 1
Stage 2
Stage 3
289,686
289,686
1,560,142
1,563,732
45,539
500,153
111,064
86,907
2,378,407
3,076,531
1,485,977
1,447,224
89,482
7,994,581
1,487,112
1,079,896
227,871
747
2,795,626
45,545
492,435
91,058
83,136
2,294,436
2,961,065
1,485,977
1,448,667
56,577
7,851,249
1,485,861
1,080,423
225,703
749
2,792,736
–
2
–
16,157
12,619
122
92,411
121,309
–
–
37,499
158,810
8,136
4,276
589
–
13,001
–
–
–
5,583
6,031
5,332
36,020
52,966
–
–
1,015
53,981
511
1,813
1,853
–
4,177
* FVOCI securities are measured at fair value in the Statement of Financial Position (see Note 9). Loss allowance for FVOCI securities is recognised in the Statement of Other
Comprehensive Income, which is included in the accumulated loss allowance of this table.
292
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:21)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
Notional amount
Purchased or
originated
credit impaired
Total
Stage 1
Stage 2
Stage 3
Purchased or
originated
credit impaired
Loss allowance
Write–off
–
–
–
5
2,909
–
11,128
14,042
–
–
31
14,073
–
–
–
–
–
579,120
–
1,541,703
183,656
564,698
97,977
88,013
2,790,742
3,541,430
911,950
2,010,980
135,107
8,903,946
1,441,060
1,418,536
305,269
5,039
3,169,904
4,356
292
5,945
20
227
16,314
22,506
1,714
3,288
2,407
34,563
5,442
5,087
175
13
10,717
–
2
–
20,866
688
1,709
43,034
66,297
–
–
4,504
70,803
5,047
738
35
–
5,820
–
1,461
–
6,770
1,313
16
25,127
33,226
–
–
996
35,683
839
48
66
–
953
–
–
–
2
194
–
1,445
1,641
–
–
21
1,662
–
–
–
–
–
–
–
–
6
3,038
–
10,213
13,257
–
–
37
13,294
–
–
–
–
–
289,686
–
1,563,734
45,545
514,181
112,746
88,590
2,433,080
3,148,597
1,485,977
1,448,667
95,128
8,077,334
1,494,508
1,086,512
228,145
749
2,809,914
3,590
6
5,135
19
435
21,188
26,777
1,702
1,443
583
34,101
6,577
4,784
201
2
11,564
–
2
–
5,542
234
8
12,894
18,678
–
–
4,291
22,971
620
456
1
–
1,077
–
–
–
3,348
1,314
1,240
19,939
25,841
–
–
754
26,595
199
1,376
72
–
1,647
–
–
–
3
115
–
652
770
–
–
18
788
–
–
–
–
–
Total
–
5,819
292
33,583
2,215
1,952
85,920
123,670
1,714
3,288
7,928
142,711
11,328
5,873
276
13
17,490
–
–
–
–
–
–
25,720
25,720
–
–
–
25,720
–
–
–
–
–
Total
–
3,592
6
14,028
1,682
1,683
54,673
72,066
1,702
1,443
5,646
84,455
7,396
6,616
274
2
14,288
–
–
–
–
–
–
34,770
34,770
–
–
–
34,770
–
–
–
–
–
Notional amount
Purchased or
originated
credit impaired
Total
Stage 1
Stage 2
Stage 3
Purchased or
originated
credit impaired
Loss allowance
Write–off
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:21)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
IFRS separate financial statements
293
Changes in the Loss allowance of financial assets at amortised cost and fair value through
other comprehensive income by IFRS 9 stages:
Loans at amortised cost:
Loss allowance as at 1 January 2019
Transfer to Stage 1
Transfer to Stage 2
Transfer to Stage 3
Net remeasurement of loss allowance
New financial assets originated or purchased
Financial assets derecognised (other than write-offs)
Unwind of discount
Write-offs
Other movements
Loss allowance as at 31 December 2019
Transfer to Stage 1
Transfer to Stage 2
Transfer to Stage 3
Net remeasurement of loss allowance
New financial assets originated or purchased
Financial assets derecognised (other than write-offs)
Unwind of discount
Write-offs
Loss allowance as at 31 December 2020
Stage 1
16,498
369
(979)
(91)
1,295
14,474
(4,826)
–
(61)
98
26,777
51
(4,374)
(188)
(2,154)
11,393
(8,975)
–
(24)
22,506
Stage 2
13,860
(4,053)
7,012
(1,071)
(855)
4,836
(2,501)
–
(32)
1,482
18,678
(612)
45,995
(1,683)
(149)
7,498
(3,354)
–
(76)
66,297
Stage 3
31,608
(181)
(431)
3,795
(6,235)
3,014
(3,086)
874
(3,558)
41
25,841
(21)
(1,308)
6,670
4,397
2,918
(3,717)
1,613
(3,167)
33,226
Loan commitments and financial guarantees:
Provision as at 1 January 2019
Transfer to Stage 1
Transfer to Stage 2
Transfer to Stage 3
Net remeasurement of loss allowance
New financial assets originated or purchased
Decrease
Provision as at 31 December 2019
Transfer to Stage 1
Transfer to Stage 2
Transfer to Stage 3
Net remeasurement of loss allowance
New financial assets originated or purchased
Decrease
Provision as at 31 December 2020
Stage 1
6,331
84
(21)
(9)
1,245
5,204
(1,270)
11,564
10
(501)
(9)
(807)
2,843
(2,383)
10,717
Stage 2
1,928
(1,029)
413
(21)
291
98
(603)
1,077
(125)
4,279
(28)
(106)
796
(73)
5,820
Placements with other banks, net of allowance for placement losses:
Loss allowance as at 1 January 2019
Net remeasurement of loss allowance
New financial assets originated or purchased
Financial assets derecognised
(other than write-offs)
Loss allowance as at 31 December 2019
Net remeasurement of loss allowance
New financial assets originated or purchased
Financial assets derecognised
(other than write-offs)
Loss allowance as at 31 December 2020
Stage 1
2,035
290
2,202
(937)
3,590
515
2,321
(2,070)
4,356
Stage 2
12
–
2
(12)
2
–
–
–
2
POCI
967
–
–
–
(183)
6
(12)
320
(328)
–
770
–
–
–
839
45
(11)
217
(219)
1,641
Stage 3
235
(15)
(15)
1,514
(7)
31
(96)
1,647
(17)
(21)
731
(1,336)
67
(118)
953
Stage 3
–
–
–
–
–
–
1,461
–
1,461
Total
62,933
(3,865)
5,602
2,633
(5,978)
22,330
(10,425)
1,194
(3,979)
1,621
72,066
(582)
40,313
4,799
2,933
21,854
(16,057)
1,830
(3,486)
123,670
Total
8,494
(960)
377
1,484
1,529
5,333
(1,969)
14,288
(132)
3,757
694
(2,249)
3,706
(2,574)
17,490
Total
2,047
290
2,204
(949)
3,592
515
3,782
(2,070)
5,819
294 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:21)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
Repo Receivables:
Loss allowance as at 1 January 2019
New financial assets originated or purchased
Financial assets derecognised (other than write-offs)
Loss allowance as at 31 December 2019
New financial assets originated or purchased
Financial assets derecognised (other than write-offs)
Loss allowance as at 31 December 2020
Securities at amortised cost:
FVOCI Securities:
Loss allowance as at 1 January 2019
Net remeasurement of loss allowance
New financial assets originated or purchased
Financial assets derecognised (other than write-offs)
Loss allowance as at 31 December 2019
Net remeasurement of loss allowance
New financial assets originated or purchased
Financial assets derecognised (other than write-offs)
Loss allowance as at 31 December 2020
Loss allowance as at 1 January 2019
Net remeasurement of loss allowance
New financial assets originated or purchased
Financial assets derecognised (other than write-offs)
Loss allowance as at 31 December 2019
Net remeasurement of loss allowance
New financial assets originated or purchased
Financial assets derecognised (other than write-offs)
Loss allowance as at 31 December 2020
Loan portfolio by countries
Stage 1
12
42
(48)
6
362
(76)
292
Stage 1
1,668
(149)
58
(134)
1,443
1,334
595
(84)
3,288
Stage 1
1,859
(148)
550
(559)
1,702
286
509
(783)
1,714
Total
12
42
(48)
6
362
(76)
292
Total
1,668
(149)
58
(134)
1,443
1,334
595
(84)
3,288
Total
1,859
(148)
550
(559)
1,702
286
509
(783)
1,714
An analysis of carrying amount of the non-qualified and qualified gross loan portfolio
by country is as follows:
Country
Hungary
Malta
Croatia
Serbia
Bulgaria
Slovakia
Montenegro
Other
Loans, placements with other banks and repo
receivables at amortised cost total
Hungary
Other
Loans at fair value total
Loans, placements with other banks and repo
receivables total
31 December 2019
Loss
allowance
31 December 2020
Gross loan
and placements
with other
banks portfolio
3,797,729
759,425
126,886
126,431
102,067
73,808
66,319
214,124
(99,295)
(3,985)
(917)
(5,151)
(9,158)
(207)
(686)
(10,382)
Gross loan
and placements
with other
banks portfolio
3,189,583
746,431
68,887
255,525
80,708
114,758
37,021
264,963
5,266,789
(129,781)
4,757,876
480,933
4
480,937
–
–
–
238,538
–
238,538
Loss
allowance
(59,242)
(4,225)
(35)
(4,163)
(2,798)
(293)
(56)
(4,852)
(75,664)
–
–
–
5,747,726
(129,781)
4,996,414
(75,664)
IFRS separate financial statements
295
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:21)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
35.1.2 Collaterals
The collateral value held by the Bank by collateral types is as follows (total collateral value).
The collaterals cover loans as well as off-balance sheet exposures.
Types of collateral
Mortgages
Guarantees and warranties
Deposit
from this: Cash
Securities
Other
Total
2020
1,450,951
1,074,420
191,268
62,469
128,799
563
2,717,202
2019
1,258,217
609,357
185,537
46,293
135,202
794
2,053,905
The collateral value held by the Bank by collateral types is as follows (to the extent of the
exposures). The collaterals cover loans as well as off-balance sheet exposures.
Types of collateral
Mortgage
Guarantees and warranties
Deposit
from this: Cash
Securities
Other
Total
2020
687,688
836,874
94,397
8,204
86,193
423
1,619,382
2019
478,265
492,747
118,387
13,318
101,578
632
1,090,031
The coverage level of loan portfolio to the extent of the exposures increased from 23.13% to 31.86%
as at 31 December 2020, while the coverage to the total collateral value decreased from 43.59%
to 53.46%.
The collateral value (total collateral value) held by the Bank related to non-performing
loan portfolio is as follows:
As at 31 December 2020:
Retail consumer loans
Mortgage loans
Municipal loans
Corporate loans
Total
Gross carrying
amount
10,632
6,602
43
37,177
54,454
As at 31 December 2019:
Retail consumer loans
Mortgage loans
Municipal loans
Corporate loans
Total
Gross carrying
amount
5,583
6,031
5,332
36,020
52,966
Loss
allowance
(6,770)
(1,313)
(16)
(25,127)
(33,226)
Loss
allowance
(3,348)
(1,314)
(1,240)
(19,939)
(25,841)
Carrying
amount
3,862
5,289
27
12,050
21,228
Carrying
amount
2,235
4,717
4,092
16,081
27,125
Collateral
value
128
32,302
104
46,210
78,744
Collateral
value
291
26,239
9,526
37,435
73,491
296 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:21)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
35.1.3 Restructured loans
Consumer loans
Mortgage loans
Corporate loans*
SME loans
Municipal loans
Total
31 December 2020
31 December 2019
Gross
portfolio
5,399
2,156
27,963
6,295
41
41,854
Loss
allowance
(2,575)
(68)
(8,283)
(1,278)
(16)
(12,220)
Gross
portfolio
5,188
7,934
7,087
7,111
–
27,319
Loss
allowance
(2,107)
(238)
(2,062)
(1,332)
–
(5,739)
Restructured portfolio definition
Restructured definition used by the Bank is in accordance with EBA (EU) 2015/227 regulation.
Financial instruments
by rating categories**
Held for trading securities as at 31 December 2020:
Other non-interest
bearing securities
Government bonds
Mortgage bonds
Hungarian government
discounted Treasury Bills
Hungarian government
interest bearing
Treasury Bills
Shares
Other bonds
Total
A2
A3
B1
Ba2
Ba3
Baa1
Baa2
Baa3
Not
rated
Total
–
–
–
–
–
36
–
36
–
–
–
–
–
33
495
528
–
–
–
–
–
5
–
5
–
–
–
–
–
7
–
7
–
465
–
–
–
–
–
465
–
–
–
–
–
45
–
45
–
–
–
–
–
7
–
7
–
1.964
1.964
5.566
–
1.233
–
36
998
7.833
–
–
–
–
6.031
–
1.233
–
257
582
2.803
426
2.075
11.729
Securities mandatorily measured at fair value through profit or loss as at 31 December 2020:
Government bonds
Mortgage bonds
Shares
Total
Not rated
23,818
5,342
2,776
31,936
Total
23,818
5,342
2,776
31,936
FVOCI securities as at 31 December 2020:
A2
A3
Ba1
Ba3
Baa2
Baa3
Mortgage bonds
Government bonds
Hungarian Treasury Bills
Non-treading equity instruments
Other bonds
Total
63,577
226
–
–
–
63,803
–
7,391
–
–
4,815
12,206
–
4,624
–
–
3,958
8,582
–
15,055
–
–
–
15,055
250,673
–
–
–
1,620
252,293
–
461,163
9,957
–
37,961
509,081
Not
rated
18,417
–
–
15,731
16,782
50,930
Total
332,667
488,459
9,957
15,731
65,136
911,950
* Incl.: project and syndicated loans.
** Moody’s ratings.
IFRS separate financial statements
297
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:21)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
Securities at amortised cost as at 31 December 2020:
Government bonds
Mortgage bonds
Total
Ba2
2,816
–
2,816
Baa3
1,941,855
14,579
1,956,434
Not rated
–
48,442
48,442
Total
1,944,671
63,021
2,007,692
An analysis of securities (held for trading, mandatorily FVTPL, FVOCI and amortised cost)
in a country breakdown is as follows:
Country
31 December 2020
31 December 2019
Hungary
Russia
United States of America
Luxembourg
Securities at amortised cost total
Hungary
Luxembourg
Slovakia
Russia
Slovenia
Romania
Serbia
Sweden
Croatia
Lithuania
Poland
Bulgaria
United States of America
Germany
FVOCI securities total
Austria
Luxembourg
Hungary
Portugal
United States of America
Non–trading equity instruments designated to measure
at fair value through other comprehensive income
Hungary
Luxembourg
Russia
Serbia
Germany
Ireland
Romania
Netherlands
United States of America
Australia
United Kingdom
Held for trading securities total
Hungary
United States of America
Luxembourg
Portugal
Securities mandatorily measured at fair value
through profit or loss
Securities total
Gross carrying
amount
1,986,362
2,757
1,069
20,792
2,010,980
761,472
85,006
–
29,697
7,391
–
–
–
–
–
–
–
12,653
–
896,219
12,079
–
530
–
3,122
15,731
8,613
771
808
465
410
32
(1)
–
625
1
5
11,729
18,470
2,776
10,428
262
31,936
Loss
allowance
(3,194)
(3)
(4)
(87)
(3,288)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Gross carrying
amount
1,448,667
–
–
–
1,448,667
1,341,792
–
15,025
40,120
6,984
13,126
6,902
1,503
1,657
6,536
15,636
10,817
–
3,559
1,463,657
12,412
4,486
530
157
4,735
22,320
28,027
10,482
7,279
–
306
–
8
153
–
–
–
46,255
17,100
–
5,180
–
22,280
Loss
allowance
(1,443)
–
–
–
(1,443)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,966,595
(3,288)
3,003,179
(1,443)
298 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:21)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
35.2 Maturity analysis of assets
and liabilities and liquidity risk
process. The monitoring of liquidity reserves
for both centralized and decentralized liquid
asset portfolio has been built into the daily
Liquidity risk is a measure of the extent to
reporting process.
which the Bank may be required to raise funds
to meet its commitments associated with
Due to the balance sheet adjustment process
financial instruments. The Bank maintains its
(deleveraging) experienced in the last few
liquidity profiles in accordance with regulations
years, the liquidity reserves of the Bank
laid down by the NBH.
increased significantly while the liquidity
risk exposure has decreased considerably.
The essential aspect of the liquidity risk
Currently the (over)coverage of risk liquidity
management strategy is to identify all relevant
risk exposure by high quality liquid assets
systemic and idiosyncratic sources of liquidity
is at all-time record highs. There were
risk and to measure the probability and
no material changes in the liquidity risk
severity of such events. During liquidity risk
management process for the year ended
management the Bank considers the effect of
31 December 2020.
liquidity risk events caused by reasons arising
in the bank business line (deposit withdrawal),
The following tables provide an analysis of
the national economy (exchange rate shock,
assets and liabilities about the non-discounted
yield curve shock) and the global financial
cash-flow into relevant maturity groupings
system (capital market shock).
based on the remaining period from the
balance sheet date to the contractual maturity
In line with the Bank’s risk management policy
date. It is presented under the most prudent
liquidity risks are measured and managed
consideration of maturity dates where options
on multiply hierarchy levels and applying
or repayment schedules allow for early
integrated unified VaR based methodology.
repayment possibilities.
The basic requirement is that the Bank must
keep high quality liquidity reserves by means
The contractual amounts disclosed in the
it can fulfil all liabilities when they fall due
maturity analyses are the contractual
without material additional costs.
undiscounted cash-flows like gross finance
lease obligations (before deducting finance
The liquidity reserves can be divided into
charges); prices specified in forward agree-
two parts. There are separate decentralized
ments to purchase financial assets for cash;
liquid asset portfolios at subsidiary level and
net amounts for pay-floating/receive-fixed
a centralized flexible liquidity pool at Group
interest rate swaps for which net cash-flows
level. The reserves at subsidiary levels are held
are exchanged; contractual amounts to be
to cover the relevant shocks of the subsidiaries
exchanged in a derivative financial instrument
which may arise in local currencies (deposit
for which gross cash-flows are exchanged;
withdrawal, local capital market shock,
gross loan commitments.
unexpected business expansion), while the
centralized liquidity pool is held to cover the
Such undiscounted cash-flows differ from the
OTP Bank’s separate shocks (deposit-, yield
amount included in the statement of financial
curve- and exchange rate shocks) and all group
position because the amount in that statement
member’s potential shocks that may arise in
is based on discounted cash-flows. When
foreign currencies (deposit withdrawal, capital
the amount payable is not fixed, the amount
market shock).
disclosed is determined by reference to the
conditions existing at the end of the reporting
The recalculation of shocks is made at least
period. For example, when the amount payable
quarterly while the recalibration of shock
varies with changes in an index, the amount
measurement models and review of the risk
disclosed may be based on the level of the
management methodology is an annual
index at the end of the period.
IFRS separate financial statements
299
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:2)(cid:21)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
As at 31 December 2020:
Cash, amounts due from banks and balances
with the National Bank of Hungary
Placements with other banks,
net of allowance for placement losses
Repo receivables
Financial assets at fair value through
profit or loss
Securities at fair value through
other comprehensive income
Loans at amortised cost
Loans mandatorily measured
at fair value through profit or loss
Securities at amortised cost
Investment properties
Investments in subsidiaries, associates
and other investments
Other financial assets
TOTAL ASSETS
Amounts due to banks and deposits from
the National Bank of Hungary and other banks
Deposits from customers
Repo liabilities
Liabilities from issued securities
Subordinated bonds and loans
Financial liabilities at fair value through
profit or loss
Leasing liabilities
Other financial liabilities
TOTAL LIABILITIES
NET POSITION*
Receivables from derivative financial
instruments classified as held for trading
Liabilities from derivative financial instruments
classified as held for trading
Net position of derivative financial instruments
classified as held for trading
Receivables from derivative financial
instruments designated as hedge accounting
Liabilities from derivative financial instruments
designated as hedge accounting
Net position of derivative financial instruments
designated as hedging accounting
Net position of derivative financial
instruments total
Commitments to extend credit
Confirmed letters of credit
Factoring loan commitment
Bank guarantees
Off–balance sheet commitments
Within
3 months
Within
one year
and over
3 months
Within
5 years
and over
one year
Over
5 years
Without
maturity
Total
579,120
–
–
–
578,907
656,143
273,834
33,027
183,656
–
–
–
–
–
–
579,120
1,541,911
183,656
1,401
1,151
3,576
9,042
22,121
37,291
14,453
111,117
402,797
305,507
15,731
849,605
–
–
3,641,015
495,299
1,134,542
728,410
1,132,083
645,980
14,850
19,735
–
–
11,674
37,950
–
–
85,000
383,775
1,354,479
–
559,171
–
–
1,936
1,971,335
1,936
–
–
1,548,972
1,548,972
133,832
2,660,496
1,277
1,547,722
–
3,251,769
–
1,936,502
–
1,588,760
135,109
10,985,249
152,633
62,871
492,291
73,574
7,716,000
–
636
2,972
131,890
–
11,835
–
30,628
109,612
15,256
–
14,115
–
487
302,182
3,159
1,421
6,115
15,207
–
–
–
–
–
–
1,073
161,652
8,038,125
(5,377,629)
3,350
4,877
216,244
1,331,478
7,213
1,417
662,532
2,589,237
2,470
–
408,035
1,528,467
–
–
–
1,588,760
160,910
3,156,604
552,687
270,557
(88,685)
(3,774,109)
(490,468)
(226,529)
72,225
(617,505)
62,219
44,028
183
7,286
168,912
173,109
(40,485)
(114,512)
(472,245)
(88,720)
(40,302)
(107,226)
(303,333)
84,389
31,923
(724,731)
(241,114)
128,417
1,441,060
5,039
305,269
115,485
1,866,853
–
–
–
136,569
136,569
–
–
–
305,714
305,714
–
–
–
861,775
861,775
–
–
–
–
–
–
–
–
–
–
–
–
781,369
7,892,633
109,612
28,214
305,154
25,902
14,106
167,946
9,324,936
1,660,313
4,140,758
(4,579,791)
(439,033)
349,490
(715,962)
(366,472)
(805,505)
1,441,060
5,039
305,269
1,419,543
3,170,911
* Analysis for net position of assets and liabilities are calculated in accordance with IFRS 7, therefore certain financial instruments are presented in the earliest period in
which the Bank could be required to pay. On-demand deposits are presented in the earliest (within 3 month) period category, however based on Management’s discretion
the Bank has appropriate liquidity reserves as maintenance and management of liquidity risk.
300 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:3)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
As at 31 December 2019:
Cash, amounts due from banks and balances
with the National Bank of Hungary
Placements with other banks,
net of allowance for placement losses
Repo receivables
Financial assets at fair value through
profit or loss
Securities at fair value through other
comprehensive income
Loans at amortised cost
Loans mandatorily measured
at fair value through profit or loss
Securities at amortised cost
Investment properties
Investments in subsidiaries, associates
and other investments
Other financial assets
TOTAL ASSETS
Amounts due to banks and deposits from
the National Bank of Hungary and other banks
Deposits from customers
Repo liabilities
Liabilities from issued securities
Subordinated bonds and loans
Financial liabilities at fair value through
profit or loss
Leasing liabilities
Other financial liabilities
TOTAL LIABILITIES
NET POSITION*
Receivables from derivative financial
instruments classified as held for trading
Liabilities from derivative financial instruments
classified as held for trading
Net position of derivative financial instruments
classified as held for trading
Receivables from derivative financial
instruments designated as hedge accounting
Liabilities from derivative financial instruments
designated as hedge accounting
Net position of derivative financial instruments
designated as hedging accounting
Net position of derivative financial
instruments total
Commitments to extend credit
Confirmed letters of credit
Factoring loan commitment
Bank guarantees
Off-balance sheet commitments
–
–
–
289,686
1,563,735
45,545
58,308
–
–
3,152,291
243,823
Within
3 months
Within
one year
and over
3 months
Within
5 years
and over
one year
Over
5 years
Without
maturity
Total
289,686
–
–
–
314,057
892,859
251,037
105,782
45,545
6,347
–
–
–
5,855
17,810
12,678
15,618
200,724
408,955
499,697
268,379
22,360
1,400,115
919,347
702,458
905,776
624,710
2,529
16,828
–
–
7,368
84,903
–
–
50,113
183,813
895,227
–
399,029
–
–
2,381
1,395,987
2,381
–
–
1,542,538
1,542,538
93,158
1,888,221
475
2,102,873
30
2,619,690
6
1,594,397
1,460
1,584,357
95,129
9,789,538
477,237
17,302
202,653
40,862
6,407,569
20,419
4,193
2,695
121,985
–
17,912
–
28,404
442,202
19,817
–
15,592
–
104
277,591
677
1,928
9,605
16,651
–
–
–
–
–
–
593
176,696
7,090,079
(5,201,858)
3,234
105
162,466
1,940,407
8,086
–
710,767
1,908,923
1,747
–
352,547
1,241,850
–
–
–
1,584,357
1,784,183
1,498,417
957,269
502,071
(2,271,319)
(1,202,620)
(903,040)
(396,707)
(487,136)
295,797
54,229
105,364
238
93,792
151,536
164,409
(6,611)
(249,914)
(233,863)
(74,862)
(6,373)
(156,122)
(82,327)
89,547
(493,509)
139,675
(28,098)
194,911
1,494,508
749
228,145
49,506
1,772,908
–
–
–
104,474
104,474
–
–
–
170,493
170,493
–
–
–
762,827
762,827
–
–
–
–
–
–
–
–
–
–
–
–
738,054
6,573,550
462,621
42,026
280,286
28,861
13,660
176,801
8,315,859
1,473,679
4,741,940
(4,773,686)
(31,746)
409,975
(565,250)
(155,275)
(187,021)
1,494,508
749
228,145
1,087,300
2,810,702
* Analysis for net position of assets and liabilities are calculated in accordance with IFRS 7, therefore certain financial instruments are presented in the earliest period in
which the Bank could be required to pay. On-demand deposits are presented in the earliest (within 3 month) period category, however based on Management’s discretion
the Bank has appropriate liquidity reserves as maintenance and management of liquidity risk.
IFRS separate financial statements
301
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:3)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
35.3 Net foreign currency position
and foreign currency risk
As at 31 December 2020:
Assets*
Liabilities
Derivative financial instruments
Net position
As at 31 December 2019:
Assets*
Liabilities
Derivative financial instruments
Net position
USD
174,993
(291,985)
116,987
(5)
EUR
1,929,758
(1,623,605)
(350,237)
(44,084)
CHF
17,509
(35,701)
18,614
422
Others
251,877
(105,346)
(146,208)
323
Total
2,374,137
(2,056,637)
(360,844)
(43,344)
USD
257,687
(297,771)
45,528
5,444
EUR
1,762,176
(1,418,426)
(427,768)
(84,018)
CHF
28,949
(35,679)
6,977
247
Others
247,647
(164,325)
(85,447)
(2,125)
Total
2,296,459
(1,916,201)
(460,710)
(80,452)
The table above provides an analysis of the
to what extent it is exposed to interest
Bank’s main foreign currency exposures.
rate risk.
The remaining foreign currencies are shown
within ‘Others’. The Bank monitors its foreign
The majority of the Bank's interest bearing assets
exchange position for compliance with the
and liabilities are structured to match either
regulatory requirements of the NBH and its
short-term assets and short-term liabilities, or
own limit system established in respect of
long-term assets and liabilities with repricing
limits on open positions. The measurement of
opportunities within one year, or long-term
the Bank’s open its currency position involves
assets and corresponding liabilities where
monitoring the VaR limit on the foreign
repricing is performed simultaneously.
exchange exposure of the Bank.
In the table Derivative financial instruments
between the different types of interest bearing
are stated at fair value.
assets and liabilities enables the Bank to
In addition, the significant spread existing
35.4 Interest rate risk
management
benefit from a high level of flexibility in
adjusting for its interest rate matching and
interest rate risk exposure.
The following table presents the interest
Interest rate risk is the risk that the value
repricing dates of the Bank. Variable yield
of a financial instrument will fluctuate due
assets and liabilities have been reported in
to changes in market interest rates. The length
accordance with their next repricing date.
of time for which the rate of interest is fixed
Fixed income assets and liabilities have been
on a financial instrument, therefore, indicates
reported in accordance with their maturity.
* The assets category contains foreign currency investments in subsidiaries that are measured at cost, and are deducted from the net position calculation.
302 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:3)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
As at 31 December 2020:
within 1 month
within 3 months
over 1 month
HUF
Foreign
currency
HUF
Foreign
currency
within 1 year
over 3 months
Foreign
currency
HUF
within 2 years
over 1 year
HUF
Foreign
currency
over 2 years
Non–interest–
bearing
Total
HUF
Foreign
currency
HUF
Foreign
currency
HUF
Foreign
currency
Total
ASSETS
Cash, amounts due from banks
and balances with the
National Bank of Hungary
fixed interest
non-interest-bearing
144,030
239,960
144,030 239,960
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Placements with other banks
783,024
80,732
177,155
189,231
43,239
64,447
23,378
220,175
17,719
15,106
179,174
562,849
63,013 162,049
10,057
13,934
29,305
fixed interest
variable interest
non-interest-bearing
Repo receivables
fixed interest
Securities held for trading
fixed interest
variable interest
non-interest-bearing
Securities mandatorily measured
at fair value through profit or loss
variable interest
non-interest-bearing
Securities at fair value through
other comprehensive income
fixed interest
variable interest
non-interest-bearing
Loans measured
at amortised cost
fixed interest
variable interest
–
–
–
567
567
–
–
–
–
–
–
–
183,364
183,364
1,260
354
906
–
–
–
–
–
–
–
526
–
526
–
5,342
5,342
–
–
–
–
287
287
–
–
–
–
–
79,240
5,717
16,218
600
5,717
78,640
–
–
–
673
15,545
–
2,769
8,967
1,285
74,088
552,542 243,715 390,010 1,037,915
non-interest-bearing
Loans mandatorily measured
at fair value through profit or loss
variable interest
Securities at amortised cost
fixed interest
Other financial assets
non-interest-bearing
–
24,870
24,870
–
–
–
–
–
–
–
–
–
–
–
–
59
59
–
–
–
–
–
–
–
– 168,435
26,695
312,465
266,655
579,120
–
–
–
144,030
239,960
383,990
– 168,435
26,695
168,435
26,695
195,130
122,035
27,080
19,194
2,740 1,168,025
367,859 1,535,884
64,447
23,378
–
–
–
–
–
–
–
–
122,035
27,080
–
–
–
–
–
–
–
–
465
465
1,250
1,250
298
298
2,983
2,983
1,095
1,095
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
394,628
292,049
686,677
754,203
73,070
827,273
19,194
2,740
19,194
2,740
21,934
–
–
–
–
183,364
183,364
1,926
464
–
–
–
–
1,926
464
8,314
5,482
906
1,926
–
–
3,415
2,425
526
464
183,364
183,364
11,729
7,907
1,432
2,390
18,470
8,124
18,470
13,466
31,936
–
–
–
18,470
8,124
18,470
5,342
8,124
5,342
26,594
–
–
–
608
608
–
–
–
–
–
111,153
10,223
3,533
19,578
551,328
99,229
528
15,203
762,000
149,950
911,950
– 100,003
10,223
3,533
19,578
551,328
99,229
–
–
11,150
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
656,137
134,747
790,884
105,335
–
105,335
528
15,203
528
15,203
15,731
8,970
33,604
15,984
700,585
56,172
11,731
42,532
–
334
334
–
–
–
58,028
11,935
–
–
–
–
368
368
–
–
–
–
9,344
–
455,306
455,306
1,065
1,065
38,112
38,112
– 393,442
1,092
1,551,614
22,367
– 393,442
1,092 1,551,614
22,367
–
–
–
749,974
164,181
914,155
– 1,006,363 1,339,658 2,346,021
– 125,861
31,723
125,861
31,723
157,584
–
–
–
–
–
–
480,937
480,937
–
–
480,937
480,937
– 1,983,168
24,524 2,007,692
– 1,983,168
24,524 2,007,692
–
–
–
–
–
–
–
–
–
–
– 112,055
15,124
112,055
15,124
127,179
– 112,055
15,124
112,055
15,124
127,179
39,765
101,640 733,551 248,095 3,173,724 1,861,463 5,035,187
–
–
–
–
Derivative financial instruments
936,413
706,442
880,140
378,405
557,115
419,548
26,738
fixed interest
variable interest
non-interest-bearing
–
–
–
–
–
–
16,010 138,790 221,387
195,178
–2,143
31,607
920,404 567,652 658,754
183,228 559,258 387,941
26,799
40,012 101,640
555,311
252,682
391,295 1,112,003
54,263
66,998
45,539
15,984
709,929
56,172 125,861
31,723 1,882,198 1,535,562 3,417,760
LIABILITIES
Amounts due to banks and
deposits with the National Bank
of Hungary and other banks
fixed interest
variable interest
non-interest-bearing
Financial liabilities designated
to measure at fair value through
profit or loss
fixed interest
variable interest
Repo liabilities
variable interest
fixed interest
variable interest
non-interest-bearing
Liabilities from issued securities
fixed interest
variable interest
Subordinated bonds and loans
variable interest
Leasing liabilities
fixed interest
variable interest
Other financial liabilities
non-interest-bearing
106,883
86,885
12,008
40,429
3,363
7,491
39,270
36,937
69,946
–
25,902
79
25,823
–
–
15,136
71,749
–
–
–
–
–
–
12,008
–
–
–
–
–
–
–
8,569
31,860
–
–
–
–
–
–
3,363
–
–
–
–
–
–
1,490
6,001
–
–
–
–
109,612
– 109,612
325,464 116,385 133,886
15,540 101,496
13,367
5,885,626 1,287,977
–
3,090
213
2,877
–
–
149
103
46
–
–
–
–
–
221
11,691
–
–
221
11,691
–
–
414
–
414
–
–
4,502
3,500
1,002
–
–
721
–
721
–
–
187
11
176
–
–
–
–
120,153
120,153
–
184,090
– 184,090
260
69
191
–
–
477
40
437
–
–
1,267
528
739
–
–
2,082
170
1,912
–
–
Deposits from customers
6,211,090 1,404,362
133,886
15,540
101,496
13,367
–247
–
467,479
467,479
–
–
–
–
–
–
–
–
–
–
–
3,698
3,698
–
–
–
5,747
2,796
2,951
–
–
–
–
– 2,205,227 1,247,793 3,453,020
–
234,945
365,575
600,520
– 733,551 248,095
733,551
248,095
981,646
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,371
37
1,334
1,678
1,491
630,681
136,296
766,977
–
–
–
–
559,057
25,195
584,252
69,946
109,610
179,556
1,678
1,491
1,678
1,491
3,169
–
–
–
–
–
–
–
–
–
–
25,902
79
25,823
–
–
–
25,902
79
25,823
–
–
109,612
109,612
109,612
109,612
10,782
4,985 6,457,481 1,438,254 7,895,735
–
–
–
561,073
145,292
706,365
– 5,885,626 1,287,977 7,173,603
10,782
4,985
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
10,782
27,079
11,509
15,570
4,985
1,356
–
1,356
15,767
28,435
11,509
16,926
–
–
304,243
304,243
304,243
304,243
8,756
4,203
4,553
5,350
14,106
323
5,027
4,526
9,580
– 138,508
29,032
138,508
29,032
167,540
– 138,508
29,032
138,508
29,032
167,540
–
–
–
3,629
3,629
–
–
–
–
–
–
7,333
7,333
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–61
–
39,270
–
–
–
–
–
–
–
227
227
–
–
4,098
4,098
–
–
–
1,333
1,233
707
626
–
–
9,453
9,514
(61)
–
65
1,168
–
–
24,907
24,907
–
–
Derivative financial instruments
1,264,723
383,260 1,035,481
206,796
479,506
492,403
fixed interest
variable interest
non-interest-bearing
1,111,371 376,748 648,762
188,722 481,293 469,699
153,351
6,512 386,719
18,074
(1,787)
22,704
–
–
–
–
–
–
49,757
89,983 724,945 253,430 3,563,865 1,450,778 5,014,643
50,004
89,802
(247)
–
181
–
–
– 2,300,945 1,149,878 3,450,822
–
537,975
47,471
585,446
– 724,945 253,430
724,945
253,430
978,374
NET POSITION
(4,904,324)
(583,514)
271,828 1,297,462
214,690 (248,085) 439,867
21,774
2,906,279
216,230 304,108
59,231
(767,552)
763,097
(4,455)
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:3)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
IFRS separate financial statements
303
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
As at 31 December 2019:
within 1 month
within 3 months
over 1 month
HUF
Foreign
currency
HUF
Foreign
currency
within 1 year
over 3 months
Foreign
currency
HUF
within 2 years
over 1 year
HUF
Foreign
currency
over 2 years
Non–interest–
bearing
Total
HUF
Foreign
currency
HUF
Foreign
currency
HUF
Foreign
currency
Total
ASSETS
Cash, amounts due from banks
and balances with the
National Bank of Hungary
fixed interest
non-interest-bearing
3,997
44,924
3,997
44,924
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Placements with other banks
279,847
102,963
409,557
192,520
182,348
172,320
27,926
1,041
39,292
33,137
151,361
637 168,730
27,926
278,806
63,671 376,420
41,159 181,711
3,590
–
–
–
– 216,133
24,632
220,130
69,556
289,686
–
–
–
3,997
44,924
48,921
– 216,133
24,632
216,133
24,632
240,765
137,228
30,155
18,324
6,954 1,055,230
504,912 1,560,142
fixed interest
variable interest
non-interest-bearing
Repo receivables
fixed interest
Securities held for trading
fixed interest
variable interest
non-interest-bearing
Securities mandatorily measured
at fair value through profit or loss
variable interest
non-interest-bearing
Securities at fair value through
other comprehensive income
fixed interest
variable interest
non-interest-bearing
Loans measured
at amortised cost
fixed interest
variable interest
–
45,539
45,539
632
–
632
–
–
–
–
–
–
–
458
458
–
–
–
–
–
–
–
–
1
1
–
–
–
–
–
–
–
–
5,929
5,529
400
–
5,180
5,180
–
–
–
–
–
–
–
137,228
30,155
–
–
–
–
–
–
–
–
2,124
2,124
3,908
3,908
4,400
4,400
9,166
9,166
10,571
10,571
1,181
1,181
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
199,969
389,538
589,507
836,937
108,420
945,357
18,324
6,954
–
–
–
–
7,541
344
–
–
–
–
7,541
344
18,324
45,539
45,539
25,269
17,096
632
7,541
6,954
25,278
–
–
20,986
45,539
45,539
46,255
20,242
37,338
400
344
1,032
7,885
17,100
–
17,100
–
–
–
17,100
5,180
22,280
–
5,180
5,180
17,100
–
17,100
110,186
9,073
138,245
6,845
425,639
2,443 108,947
93,663
445,303
123,313
528
21,792 1,228,848
257,129 1,485,977
47,975
62,211
–
9,073 123,562
6,845 410,889
2,443 108,947
93,663
445,303 123,313
–
–
14,683
–
–
–
14,750
–
–
–
–
–
–
–
–
–
–
–
–
–
– 1,136,676
235,337 1,372,013
–
91,644
–
528
21,792
528
21,792
91,644
22,320
364,280
50,168
359,142
273,935
340,521 1,023,840
29,577
6,595
439,199
55,290 113,446
20,538 1,646,165 1,430,366 3,076,531
152
28,661
814
107,804
10,851
7,685
25,644
6,595
433,294
55,290
364,128
21,507 358,328
166,131 329,670 1,016,155
3,933
non-interest-bearing
Loans mandatorily measured
at fair value through profit or loss
variable interest
Securities at amortised cost
fixed interest
Other financial assets
non-interest-bearing
–
29,826
29,826
–
–
–
–
–
–
–
–
–
–
–
–
121
121
–
–
–
–
–
–
–
–
–
–
–
–
379
379
86,578
86,578
–
–
–
–
–
–
–
–
–
–
463
463
38,125
38,125
–
–
–
–
–
–
–
5,905
–
207,749
207,749
1,322,521
– 1,322,521
–
–
–
–
–
–
–
470,755
206,035
676,790
– 1,061,964 1,203,793 2,265,757
– 113,446
20,538
113,446
20,538
133,984
–
–
–
–
–
–
–
–
–
–
–
–
238,538
238,538
– 1,447,224
– 1,447,224
–
–
238,538
238,538
– 1,447,224
– 1,447,224
80,862
80,862
8,620
8,620
80,862
80,862
8,620
8,620
89,482
89,482
Derivative financial instruments
963,211
434,210
847,077
359,966
765,879
460,639
15,461
273,268
20,355
85,686 326,585 206,753 2,938,568 1,820,522 4,759,090
fixed interest
variable interest
927,322 424,177 697,547
335,776 766,569 424,851
15,461 273,268
20,355
85,686
35,889
10,033 149,530
24,190
–690
35,788
–
–
– 2,427,254 1,543,758 3,971,012
–
184,729
70,011
254,740
non-interest-bearing
–
–
–
–
–
–
– 326,585 206,753
326,585
206,753
533,338
–
–
–
–
–
–
Deposits from customers
5,210,837 1,059,229
170,649
19,293
92,329
10,290
LIABILITIES
Amounts due to banks and
deposits with the National Bank
of Hungary and other banks
fixed interest
variable interest
non-interest-bearing
Financial liabilities designated
to measure at fair value through
profit or loss
fixed interest
variable interest
Repo liabilities
fixed interest
fixed interest
variable interest
non-interest-bearing
Liabilities from issued securities
fixed interest
variable interest
Subordinated bonds and loans
variable interest
Leasing liabilities
fixed interest
Other financial liabilities
non-interest-bearing
285,808
189,729
65,914
76,986
4,820
17,091
1,102
231,909
83,070
65,914
53,899 106,659
–
28,861
102
28,759
20,574
20,574
–
–
–
–
–
–
–
–
–
–
–
–
–
3,430
73,556
–
–
–
–
–
–
4,820
5,053
1,102
12,038
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 263,554
178,493
– 263,554 178,493
215
215
–
–
3,451
3,451
–
–
–
–
–
–
–
–
–
–
–
–
392,749 124,384 170,649
19,293
92,329
10,290
4,818,088
934,845
–
–
–
–
552
12,565
1,265
–
–
–
552
12,565
1,265
–
–
4,728
3,282
1,446
–
–
1,936
–
1,936
–
–
112,792
112,792
–
166,602
– 166,602
–
16,708
218
16,490
–
–
62
62
–
–
–
–
–
136
136
–
–
1,107
1,107
2,126
2,126
1,147
1,147
1,702
1,702
4,399
4,399
2,586
2,586
123
123
–
–
272
272
–
–
–
–
–
–
–
–
8
–
–
8
–
–
–
–
–
1,647
452,601
285,453
738,054
–
–
398,694
91,553
490,247
53,899
192,253
246,152
1,647
8
1,647
1,655
–
–
–
–
–
28,861
102
28,759
–
–
–
28,861
102
28,759
284,128
178,493
462,621
284,128
178,493
462,621
7,192
3,516 5,481,222 1,092,328 6,573,550
–
–
–
655,942
153,967
809,909
– 4,818,088
934,845 5,752,933
7,192
3,516
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,192
39,531
9,030
30,501
3,516
3,753
–
10,708
43,284
9,030
3,753
34,254
–
–
279,394
279,394
279,394
279,394
6,838
6,838
6,822
6,822
13,660
13,660
–
–
8,783
8,783
–
–
–
–
– 139,657
51,434
139,657
51,434
191,091
– 139,657
51,434
139,657
51,434
191,091
36,475
72,359 278,557 255,503 3,322,400 1,409,430 4,731,830
36,475
72,148
211
–
–
–
–
– 2,852,545 1,111,057 3,963,602
–
191,298
42,870
234,168
– 278,557 255,503
278,557
255,503
534,060
Derivative financial instruments
1,272,904
127,050
829,127
357,480
623,979
588,255 281,358
fixed interest
variable interest
non-interest-bearing
1,222,356 121,202 688,335
341,669 624,021 567,255 281,358
50,548
5,848 140,792
15,811
(42)
21,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
94,949
94,949
–
–
–
–
–
–
–
–
–
–
–
2,079
2,079
–
–
–
NET POSITION
(5,038,236)
(734,900)
675,765
276,287 1,076,505
876,850 (325,928)
193,714
2,445,024
220,680 355,105 (22,467)
(811,765)
810,164
(1,601)
304 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:3)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
35.5 Market risk
a given holding period for a specified
confidence level. The VaR methodology is
The Bank takes on exposure to market risks.
a statistically defined, probability-based
Market risks arise from open positions in interest
approach that takes into account market
rate, currency and equity products, all of which
volatilities as well as risk diversification
are exposed to general and specific market
by recognising offsetting positions and
movements. The Bank applies a Value-at-Risk
correlations between products and markets.
(“VaR”) methodology to estimate the market
Risks can be measured consistently across
risk of positions held and the maximum losses
all markets and products, and risk measures
expected, based upon a number of assumptions
can be aggregated to arrive at a single
for various changes in market conditions.
risk number. The one-day 99% VaR number
The Management Board sets limits on the value
used by the Group reflects the 99%
of risk that may be accepted, which is monitored
probability that the daily loss will not
on a daily basis. (Analysis of liquidity risk, foreign
exceed the reported VaR.
currency risk and interest rate risk is detailed
in Notes 35.2, 35.3 and 35.4 respectively.)
VaR methodologies are employed to calculate
daily risk numbers include the historical
and variance-covariance approaches.
35.5.1 Market risk sensitivity analysis
In addition to these two methodologies,
Monte Carlo simulations are applied
The VaR risk measure estimates the
to the various portfolios on a monthly basis
potential loss in pre-taxation profit over
to determine potential future exposure.
The VaR of the trading portfolio can be summarized as follows (in HUF million):
Historical VaR (99%, one-day) by risk type
Average
Foreign exchange
Interest rate
Equity instruments
Diversification
Total VaR exposure
2020
1,507
77
141
–
1,725
2019
337
97
21
–
455
While VaR captures the OTP’s daily exposure
exchange rate against EUR, over a 3 months
to currency and interest rate risk, sensitivity
period. Monte Carlo simulation is used when
analysis evaluates the impact of a reasonably
reporting foreign currency risk internally to
possible change in interest or foreign currency
key management personnel and represents
rates over a year. The longer time frame
Management’s assessment of the reasonably
of sensitivity analysis complements VaR
possible change in foreign exchange rates.
and helps the OTP Bank to assess its market
The sensitivity analysis includes only the
risk exposures. Details of sensitivity analysis
residual foreign currency denominated
for foreign currency risk are set out in
monetary items as partially closed strategic
Note 35.5.2, for interest rate risk in Note 35.5.3
open positions related to foreign activities.
and for equity price sensitivity analysis in
In accordance with the Bank’s decision, the
Note 35.5.4.
subsidiaries’ P&L measured in EUR is going to
have a higher weight than measured in HUF.
Thus, a decision was made about closing
35.5.2 Foreign currency sensitivity
analysis
the former EUR (310) million strategic open
position. As a result of the partial close, an
open position of EUR (132) million remained in
The following table details the Group’s
the Bank's book evaluated against profit
sensitivity to the rise and fall in the HUF
or loss as of 31 December 2020.
IFRS separate financial statements
305
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:3)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
A positive number below indicates an increase
the EUR, there would be an equal and opposite
in profit where the HUF strengthens against
impact on the profit, and the balances below
the EUR. For a weakening of the HUF against
would be negative.
Probability
Effects to the P&L in 3 months period
in HUF billion
1%
5%
25%
50%
25%
5%
1%
Notes:
31 December
2020
(5.9)
(4.1)
(1.7)
(0.2)
1.2
3.2
4.6
31 December
2019
(12.2)
(8.4)
(3.5)
(0.4)
2.6
6.8
9.7
(cid:588) The assets and liabilities with interest rate
1) The short-term loss on the strategic open
lower than 0.3% assumed to be unchanged
position is compensated by the long-term
during the whole period.
exchange rate gain on the foreign operations.
2) Monte Carlo simulation is based on the
The sensitivity of interest income to changes
empirical distribution of the historical
in BUBOR was analysed assuming two interest
exchange rate movements between 2002
rate path scenarios:
and 2020.
1. HUF base rate and BUBOR decreases
gradually by 15 bps over the next year
(probable scenario)
35.5.3 Interest rate sensitivity
analysis
2. HUF base rate and BUBOR decreases
gradually by 60 bps over the next year
(alternative scenario)
The sensitivity analyses below have been
determined based on the exposure to interest
The net interest income in a one year period
rates for both derivatives and non-derivative
after 1 January 2021 would be decreased by
instruments at the balance sheet date.
HUF 1,476 million (probable scenario) and
The analysis is prepared assuming the amount
HUF 6,420 million (alternative scenario) as a
of assets and liabilities outstanding at the
result of these simulation. The same simulation
balance sheet date were outstanding for the
indicated HUF 1,261 million (probable scenario)
whole year. The analysis was prepared by
and HUF 3,256 million (alternative scenario)
assuming only the adverting interest rate
decrease in the Net interest income in a one
changes. The main assumptions were as
year period after 1 January 2020. This effect is
follows:
counterbalanced by capital gains HUF 584 mil-
(cid:588) Floating-rate assets and liabilities were
lion (or probable scenario), HUF 2,329 million
repriced to the modelled benchmark
(for alternative scenario) as at 31 December 2020
yields at the repricing dates assuming the
and (HUF 223 million for probable scenario,
unchanged margin compared to the last
HUF 2,670 million for alternative scenario as
repricing.
at 31 December 2019) on the government bond
(cid:588) Fixed-rate assets and liabilities were
portfolio held for hedging (economic).
repriced at the contractual maturity date.
Furthermore, the effects of an instant 10bps
(cid:588) As for liabilities with discretionary repricing
parallel shift of the HUF, EUR and USD yield-
feature by the Bank were assumed to be
curves on net interest income over a one-year
repriced with two-weeks delay, assuming no
period and on the market value of the hedge
change in the margin compared to the last
government bond portfolio booked against
repricing date.
capital was analysed.
306 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:3)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
Description
2020
2019
HUF (0.1%) parallel shift
EUR (0.1%) parallel shift
USD (0.1%) parallel shift
Total
Effects to the net
interest income
(one-year period)
Effects to
shareholder’s equity
(Price change of FVOCI
government bonds)
Effects to the net
interest income
(one-year period)
Effects to
shareholder’s equity
(Price change of FVOCI
government bonds)
(1,991)
(676)
(165)
(2,832)
389
–
–
389
(1,793)
(673)
(104)
(2,570)
558
–
–
558
35.5.4 Equity price sensitivity
analysis
by recognising offsetting positions and
correlations between products and markets.
The daily loss will not exceed the reported
The following table shows the effect of the
VaR number with 99% of probability.
equity price sensitivity. The Group uses VaR
The stress test assumes the largest price
calculation with 1 day holding period and
movement of the last year and calculates
99% confidence level. The VaR methodology
with it as the adverse direction. These scenario
is a statistically defined, probability-based
shows the loss of the portfolio when all
approach that takes into account market
prices change with the maximum amount
volatilities as well as risk diversification
of the last year.
Description
VaR (99%, one day, million HUF)
Stress test (million HUF)
2020
141
(233)
2019
21
(52)
35.6 Capital management
ensuring and developing its profitability.
In case the planned risk level of the Bank
Capital management
The primary objective of the capital manage-
exceeded its Core and Supplementary capital,
the Bank ensures the prudent operation
ment of the Bank is to ensure the prudent
by occasional measures. A further tool in
operation, the entire compliance with the
the capital management of the Bank is
prescriptions of the regulator for a persistent
the dividend policy, and the transactions
business operation and maximising the share-
performed with the treasury shares.
holder value, accompanied by an optimal
financing structure.
Capital adequacy
The Capital Requirements Directive package
The capital management of the Bank includes
(CRDIV/CRR) transposes the global standards
the management and evaluation of the share-
on banking regulation (commonly known
holders’ equity available for hedging risks, other
as the Basel III agreement) into the EU legal
types of funds to be recorded in the equity and
framework. The rules are applied from
all material risks to be covered by the capital.
1 January 2014. They set stronger prudential
requirements for institutions, requiring them
The basis of the capital management of
to keep sufficient capital reserves and liquidity.
the Bank in the short run is the continuous
This framework makes institutions in the EU
monitoring of its capital position, in the long
more solid and strengthens their capacity to
run the strategic and the business planning,
adequately manage the risks linked to their
which includes the monitoring and forecast
activities, and absorb any losses they may
of the capital position of the Bank.
incur in doing business.
The Bank maintains the capital adequacy
The Bank has entirely complied with the
required by the regulatory bodies and the
regulatory capital requirements in 2020 as
planned risk taking mainly by means of
well as in 2019.
IFRS separate financial statements
307
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:3)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
The Bank’s capital adequacy calculation is
regulatory capital requirements of the credit
in line with IFRS and based on Basel III as at
risk and market risk while in case of the
31 December 2020 and 2019. The Bank uses
operational risk the Advanced Measurement
the standard method for determining the
Approach (AMA).
The calculation of the Capital Adequacy ratio as at 31 December 2020 and 2019 is as follows:
Core capital (Tier 1)
Primary core capital (CET1)
Supplementary core capital (AT1)
Supplementary capital (Tier2)
Regulatory capital
Credit risk capital requirement
Market risk capital requirement
Operational risk capital requirement
Total eligible regulatory capital
Surplus capital
CET1 ratio
Capital adequacy ratio
Basel III
2020*
1,598,295
1,598,295
–
295,795
1,894,090
526,283
11,550
27,597
565,430
1,328,660
22.61%
26.80%
2019
1,559,656
1,559,656
–
276,699
1,836,355
511,588
9,628
31,569
552,785
1,283,570
22.57%
26.58%
Basel III
Common equity Tier 1 capital (CET1):
Tier2 capital:
Issued capital, Capital reserve, useable part of
Subsidiary loan capital, Subordinated loan
Tied-up reserve, General reserve, Profit reserve,
capital, deductions due to repurchased
Profit for the year, Treasury shares, Intangible
loan capital and Subordinated loan capital
assets, deductions due to investments,
issued by the OTP Bank, adjustments due
adjustments due to temporary disposals
to temporary disposals.
NOTE 36:
TRANSFER AND RECLASSIFICATION OF FINANCIAL
INSTRUMENTS (in HUF mn)
Reclassification from securities held for trading to securities measured at fair value through
other comprehensive income:
As at 31 December 2020
Date of
reclassification
Reason
Type of securities
Nominal
value
Fair
value
EIR at
the date
Interest
income
1 September 2018
Change in
business model
Retail hungarian
government bonds
1,069
1,087
2%–3%
28
During the year 2018, securities issued by the
amount was presented as at 31 December 2020.
Hungarian Government with the nominal value
The Bank has previously held retail
of HUF 66.506 million were transferred from
government bonds in the portfolio measured
the trading portfolio to the securities measured
at fair value through other comprehensive
at fair value through other comprehensive
income. During 2018 the Bank changed the
income, of which HUF 1,087 million remaining
business model of the retail government
* Due to the Covid-19 pandemic, in order to strengthen the banking system, National Bank of Hungary recommended banks that
dividends are neither approved, nor paid until 30 September 2021. But the potential amount of dividend is deducted from the
regulatory capital due to prudential reasons (in accordance with regulation 241/2014 EU). The final amount of dividend payment
depends on the decision of the Annual General Meeting.
308 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:3)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
bonds to manage all on the basis of a single
the Bank is no longer able to maintain its
business model aimed at collecting the future
sole trading intent with these securities that
contractual cash-flows and/or selling them.
the Bank applied earlier. Furthermore there
is an option-agreement between the Bank
In 2018, the terms and conditions of sale of retail
and the Government Debt Management
government bonds and the pricing environment
Agency (“GDMA”) that GDMA will buy back this
have changed significantly, as a result of which
portfolio therefore it has been reclassified.
Derecognition
Financial assets transferred but not derecognised
Securities measured at fair value through
other comprehensive income
Securities measured at amortised cost
Total
2020
2019
Transferred
assets
Associated
liabilities
Transferred
assets
Associated
liabilities
Carrying amount
–
125,244
125,244
–
109,612
109,612
110
438,846
438,956
111
462,510
462,621
As at 31 December 2020 and 2019, the Bank
securities category. The related liability is
had obligation from repurchase agreements
measured at amortized cost in the Statement
about HUF 110 billion and HUF 463 billion
of Financial Position as ’Amounts due to
respectively. Securities sold temporarily under
banks and deposits from the National Bank
repurchase agreements will continue to
of Hungary and other banks’. Under these
be recognized in the Statement of Financial
repurchase agreements only Hungarian and
Position of the Bank in the appropriate
foreign government bonds were transferred.
NOTE 37:
OFF-BALANCE SHEET ITEMS (in HUF mn)
In the normal course of business, the
referred to as off-balance sheet financial
Bank becomes a party to various financial
instruments. The following represents notional
transactions that are not reflected on the
amounts of these off-balance sheet financial
statement of financial position and are
instruments, unless stated otherwise.
Contingent liabilities and commitments
Loan commitments
Guarantees arising from banking activities
from this: Payment undertaking liabilities (related to issue
of mortgage bonds) of OTP Mortgage Bank
Factoring loan commitments
Confirmed letters of credit
Contingent liabilities and commitments total
in accordance with IFRS 9
Legal disputes (disputed value)
Liabilities due to venture capital fund contribution
Other
Contingent liabilities and commitments total
in accordance with IAS 37
Total
2020
1,441,060
1,419,543
683,736
305,269
5,039
2019
1,494,508
1,087,300
558,100
228,145
749
3,170,911
2,810,702
4,720
32,712
602
38,034
5,233
17,142
2,665
25,040
3,208,945
2,835,742
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:3)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
IFRS separate financial statements
309
Legal disputes
the total unused commitments since most
commitments to extend credit are contingent
At the balance sheet date the Bank was involved
upon customers maintaining specific credit
in various claims and legal proceedings of
standards.
a nature considered normal to its business.
The level of these claims and legal proceedings
Guarantees, irrevocable letters of credit and
corresponds to the level of claims and legal
undrawn loan commitments are subject
proceedings in previous years.
to similar credit risk monitoring and credit
policies as utilised in the extension of loans.
The Bank believes that the various asserted
The Management of the Bank believes the
claims and litigations in which it is involved
market risk associated with guarantees,
will not materially affect its financial position,
irrevocable letters of credit and undrawn
future operating results or cash-flows, although
loan commitments are minimal.
no assurance can be given with respect
to the ultimate outcome of any such claim
or litigation.
Provision due to legal disputes was HUF 199
million and HUF 663 million as at 31 December
Guarantees, payment
undertakings arising from
banking activities
2020 and 2019, respectively. (See Note 24.)
Payment undertaking is a promise by the
Commitments to extend credit,
guarantees and letter of credit
Bank to assume responsibility for the debt
obligation of a borrower if that borrower
defaults until a determined amount and
until a determined date, in case of fulfilling
conditions, without checking the underlying
The primary purpose of these instruments
transactions. The guarantee’s liability is joint
is to ensure that funds are available to a
and primary with the principal, in case of
customer as required. Guarantees and standby
payment undertaking, while the Bank assumes
letters of credit, which represent irrevocable
the obligation derived from guarantee
assurances that the Bank will make payments
independently by the conditions established
in the event that a customer cannot meet its
by the Bank. A guarantee is most typically
obligations to third parties, carry the same
required when the ability of the primary
credit risk as loans.
obligor or principal to perform its obligations
under a contract is in question, or when
Documentary and commercial letters of credit,
there is some public or private interest which
which are written undertakings by the Bank on
requires protection from the consequences
behalf of a customer authorising a third party
of the principal's default or delinquency.
to draw drafts on the Bank up to a stipulated
A contract of guarantee is subject to the
amount under specific terms and conditions,
statute of frauds (or its equivalent local laws)
are collateralised by the underlying shipments
and is only enforceable if recorded in writing
of goods to which they relate and therefore
and signed by the surety and the principal.
carry less risk than a direct borrowing.
If the surety is required to pay or perform
Commitments to extend credit represent
due to the principal's failure to do so, the
unused portions of authorisations to extend
law will usually give the surety a right of
credit in the form of loans, guarantees or
subrogation, allowing the surety to use the
letters of credit. With respect to credit risk
surety's contractual rights to recover the cost
on commitments to extend credit, the Bank
of making payment or performing on the
is potentially exposed to loss in an amount
principal's behalf, even in the absence of an
equal to the total unused commitments.
express agreement to that effect between the
However, the likely amount of loss is less than
surety and the principal.
310
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:15)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
Contingent liabilities related
to OTP Mortgage Bank Ltd.
non-performing. The repurchase guarantee
contract of non-performing loans between
OTP Mortgage Bank Ltd. and OTP Bank Plc.
Under a syndication agreement with its wholly
was modified in 2010. According to the
owned subsidiary, OTP Mortgage Bank Ltd.,
new arrangement the repurchase guarantee
the Bank had guaranteed, in return for an
was cancelled and OTP Bank Plc. gives bail
annual fee, to purchase all mortgage loans
to the loans originated or purchased by
held by OTP Mortgage Bank Ltd. that become
the Bank.
NOTE 38:
SHARE-BASED PAYMENT AND EMPLOYEE BENEFIT (in HUF mn)
Previously approved option program required
the amount of share-based payment and share
a modification thanks to the introduction of
price determined by Supervisory Board2.
the Bank Group Policy on Payments accepted
in resolution of Annual General Meeting
The value of the share-based payment at
regarding to the amendment of CRD III.
the performance assessment is determined
Directives and Act on Credit Institutions
within 10 days by Supervisory Board based on
and Financial Enterprises.
the average of the three previous trade day’s
middle rate of OTP Bank’s equity shares fixed
Key management personnel affected by the
on the Budapest Stock Exchange.
Bank Group Policy receive compensation based
on performance assessment generally in the
At the same time the conditions of discounted
form of cash bonus and equity shares in a ratio
share-based payment are determined, and
of 50–50%. Assignment is based on OTP shares,
share-based payment shall contain maximum
furthermore performance based payments are
HUF 2,000 discount at the assessment date,
deferred in accordance with the rules of Credit
and earnings for the shares at the payment
Institutions Act.
date is maximum HUF 4,000.
OTP Bank ensures the share-based payment
Employee benefits are all forms of considera-
part for the management personnel of
tion given by an entity in exchange for service
OTP Group members.
rendered by employees or for the termination
of employment. IAS 19 Employee Benefits shall
During implementation of the Remuneration
be applied in accounting for all employee
Policy of the Group it became apparent
benefits, except those to which IFRS 2 Share-
that in case of certain foreign subsidiaries
based Payment applies.
it is not possible to ensure the originally
determined share-based payment because
Short-term employee benefits are employee
of legal reasons – incompatible with relevant
benefits (other than termination benefits)
EU-directives –, therefore a decision was made
that are expected to be settled wholly before
to cancel the share-based payment in affected
twelve months after the end of the annual
countries, and virtual share based payment
reporting period in which the employees
– cash payment fixed to share price – was
render the related service. Post-employment
made from 2017.
benefits are employee benefits (other than
termination and short-term employee
The quantity of usable shares for individuals
benefits) that are payable after the completion
calculated for settlement of share-based
of employment. Post-employment benefit plans
payment shall be determined as the ratio of
are formal or informal arrangements under
2 Until the end of 2014 Board of Directors.
IFRS separate financial statements
311
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:15)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
which an entity provides post-employment
of an employee’s employment as a result of
benefits for one or more employees. Post-
either: an entity’s decision to terminate an
employment benefit plans are classified as
employee’s employment before the normal
either defined contribution plans or defined
retirement date or an employee’s decision to
benefit plans, depending on the economic
accept an offer of benefits in exchange for the
substance of the plan as derived from its
termination of employment. Other long-term
principal terms and conditions.
employee benefits are all employee benefits
Termination benefits are employee benefits
postemployment benefits and termination
provided in exchange for the termination
benefits.
other than short-term employee benefits,
The parameters for the share-based payment relating to the years from 2015
by Supervisory Board for periods of each year as follows:
Year
Share purchasing
at a discounted
price
Price of
remuneration
exchanged
to share
Share purchasing
at a discounted
price
Price of
remuneration
exchanged
to share
Share purchasing
at a discounted
price
Price of
remuneration
exchanged
to share
Exercise
price
Maximum
earnings
per share
Exercise
price
Maximum
earnings
per share
HUF per share
Exercise
price
Maximum
earnings
per share
for the year 2015
for the year 2016
for the year 2017
2016
2017
2018
2019
2020
2021
2022
4,892
4,892
4,892
4,892
–
–
–
2,500
3,000
3,000
3,000
–
–
–
6,892
6,892
6,892
6,892
–
–
–
–
7,200
7,200
7,200
7,200
–
–
–
2,500
3,000
3,500
4,000
–
–
–
9,200
9,200
9,200
9,200
–
–
–
–
8,064
8,064
8,064
8,064
8,064
–
–
3,000
3,500
4,000
4,000
4,000
–
–
10,064
10,064
10,064
10,064
10,064
Year
2019
2020
2021
2022
2023
2024
2025
2026
Share purchasing
at a discounted
price
Price of
remuneration
exchanged
to share
Share purchasing
at a discounted
price
Price of
remuneration
exchanged
to share
Exercise
price
Maximum
earnings
per share
Exercise
price
Maximum
earnings
per share
HUF per share
for the year 2018
for the year 2019
10,413
10,413
10,413
10,913
10,913
10,913
10,913
–
4,000
4,000
4,000
4,000
4,000
4,000
4,000
–
12,413
12,413
12,413
12,413
12,413
12,413
12,413
–
–
9,553
9,553
9,553
9,553
9,553
9,553
9,553
–
4,000
4,000
4,000
4,000
4,000
4,000
4,000
–
11,553
11,553
11,553
11,553
11,553
11,553
11,553
312
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:15)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
Based on parameters accepted by Supervisory Board, relating to the year 2016
effective pieces are follows as at 31 December 2020:
Share-purchasing period started in 2017
Remuneration exchanged to share
provided in 2017
Share-purchasing period started in 2018
Remuneration exchanged to share
provided in 2018
Share-purchasing period started in 2019
Remuneration exchanged to share
provided in 2019
Share-purchasing period starting in 2020
Remuneration exchanged to share
applying in 2020
Approved
pieces of
shares
147,984
4,288
321,528
8,241
161,446
4,033
166,231
4,303
Exercised until
31 December 2020
147,984
4,288
321,528
8,241
161,446
4,033
164,039
4,303
Weighted average
share price at the date
of exercise (in HUF)
9,544
9,194
10,387
10,098
12,415
11,813
13,585
11,897
Expired
pieces
Exercisable at
31 December 2020
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,192
–
Based on parameters accepted by Supervisory Board, relating to the year 2017
effective pieces are follows as at 31 December 2020:
Share-purchasing period started in 2018
Remuneration exchanged to share
provided in 2018
Share-purchasing period started in 2019
Remuneration exchanged to share
provided in 2019
Share-purchasing period starting in 2020
Remuneration exchanged to share
applying in 2020
Share-purchasing period starting in 2021
Remuneration exchanged to share
applying in 2021
Share-purchasing period starting in 2022
Remuneration exchanged to share
applying in 2022
Approved
pieces of
shares
108,243
11,926
212,282
26,538
101,571
11,584
–
–
–
–
Exercised until
31 December 2020
108,243
11,926
212,282
26,538
94,830
11,584
–
–
–
–
Weighted average
share price at the date
of exercise (in HUF)
11,005
10,098
12,096
11,813
11,878
11,897
–
–
–
–
Expired
pieces
Exercisable at
31 December 2020
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,741
–
120,981
12,838
42,820
3,003
Based on parameters accepted by Supervisory Board, relating to the year 2018
effective pieces are follows as at 31 December 2020:
Share-purchasing period started in 2019
Remuneration exchanged to share
provided in 2019
Share-purchasing period starting in 2020
Remuneration exchanged to share
applying in 2020
Share-purchasing period starting in 2021
Remuneration exchanged to share
applying in 2021
Share-purchasing period starting in 2022
Remuneration exchanged to share
applying in 2022
Share-purchasing period starting in 2023
Remuneration exchanged to share
applying in 2023
Remuneration exchanged to share
applying in 2024
Remuneration exchanged to share
applying in 2025
Approved
pieces of
shares
82,854
17,017
150,230
33,024
Exercised until
31 December 2020
82,854
17,017
3,448
33,024
Weighted average
share price at the date
of exercise (in HUF)
13,843
11,829
12,471
11,897
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Expired
pieces
Exercisable at
31 December 2020
–
–
–
–
–
–
–
–
–
–
–
–
–
–
146,782
–
74,529
16,167
99,341
17,042
45,155
4,114
864
432
IFRS separate financial statements
313
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:15)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
Based on parameters accepted by Supervisory Board, relating to the year 2019
effective pieces are follows as at 31 December 2020:
Share-purchasing period started in 2019
Remuneration exchanged to share
provided in 2019
Share-purchasing period starting in 2020
Remuneration exchanged to share
applying in 2020
Share-purchasing period starting in 2021
Remuneration exchanged to share
applying in 2021
Share-purchasing period starting in 2022
Remuneration exchanged to share
applying in 2022
Share-purchasing period starting in 2023
Remuneration exchanged to share
applying in 2023
Remuneration exchanged to share
applying in 2024
Remuneration exchanged to share
applying in 2025
Approved
pieces of
shares
91,403
22,806
Exercised until
31 December 2020
91,403
22,806
Weighted average
share price at the date
of exercise (in HUF)
12,218
11,897
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Expired
pieces
Exercisable at
31 December 2020
–
–
–
–
–
–
–
–
–
–
–
–
–
–
202,386
32,238
109,567
15,554
125,771
18,025
44,421
6,279
1,000
500
Effective pieces relating to the periods
and connecting compensation, shares given
starting in 2021–2026 settled during
as a part of payments detailed above and
valuation of performance of year 2017–2019,
for the year 2020 based on performance
can be modified based on risk assessment
assessment accounted as equity-settled
and personal changes.
share based transactions HUF 3,394 million
In connection with the share-based
was recognized as expense for the year ended
compensation for Board of Directors
31 December 2020.
NOTE 39:
RELATED PARTY TRANSACTIONS (in HUF mn)
The Bank provides loans to related parties, and collects deposits.
Transactions with related parties (subsidiaries), other than increases in share capital
or dividend received, are summarized below:
39.1 Loans provided to related parties
OTP Financing Malta Company Ltd. (Malta)
OTP Mortgage Bank Ltd.
Merkantil Bank Ltd.
OTP banka dioničko drustvo (Croatia)
OTP Employee Stock Ownership Program
(OTP ESOP)
Crnogorska komercijalna banka a.d. (Montenegro)
OTP Real Estate Leasing Ltd.
OTP banka Srbija a.d. (Serbia)
Vojvodjanska Banka a.d. Novi Sad
OTP Bank Romania S.A. (Romania)
Air-Invest Llc.
JN Parkolóház Llc.
Other
Total
314
OTP Bank Annual Report 2020
2020
Gross carrying
amount
726,619
585,732
341,436
114,385
53,580
50,635
48,555
37,670
37,556
1,544
1,150
4,324
82,699
2,085,885
Loss
allowance
(3,903)
(1,356)
(2,161)
–
–
(351)
(505)
(128)
(171)
(1,461)
(1,150)
(628)
(490)
(12,304)
2019
Gross carrying
amount
716,721
676,761
361,671
–
Loss
allowance
(4,053)
(956)
(1,348)
–
–
3,304
32,936
123,244
86,756
9,911
–
4,284
202,888
2,218,476
–
–
(566)
(523)
(347)
–
–
(30)
(432)
(8,255)
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:15)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
39.2 Deposits from related parties
OTP Funds Servicing and Consulting Ltd.
JSC “OTP Bank” (Russia)
Merkantil Bank Ltd.
OTP Building Society Ltd.
Bank Center Llc.
Inga Kettő Ltd.
OTP Factoring Ltd.
OTP Holding Ltd./OTP Financing Ciprus Co. Ltd. (Ciprus)
Air-Invest Llc.
OTP Employee Stock Ownership Program (OTP ESOP)
Balansz Private Open-end Investment Fund
OTP Mortgage Bank Ltd.
OTP Real Estate Investment Fund Management Ltd.
Crnogorska komercijalna banka a.d. (Montenegro)
OTP banka Hrvatska d.d. (Croatia)
DSK Bank EAD (Bulgaria)
OTP Bank JSC (Ukraine)
OTP Bank Romania S.A. (Romania)
Expressbank AD (Bulgaria)
Other
Total
39.3 Interests received by the Bank*
OTP Financing Malta Company Ltd. (Malta)
Merkantil Bank Ltd.
OTP Mortgage Bank Ltd.
Other
Total
39.4 Interests paid by the Bank*
JSC “OTP Bank” (Russia)
Merkantil Bank Ltd.
OTP Funds Servicing and Consulting Ltd.
OTP Financial Point Ltd.
DSK Bank EAD (Bulgaria)
OTP banka Hrvatska d.d. (Croatia)
Expressbank AD (Bulgaria)
Other
Total
39.5 Commissions received
by the Bank
From OTP Building Society Ltd. (agency fee in relation to finalised customer contracts)
From OTP Real Estate Investment Fund Management Ltd. in relation to trading activity
From OTP Fund Management Ltd. in relation to trading activity
OTP Mobile Service Llc.
OTP Funds Servicing and Consulting Ltd.
From OTP banka Srbija a.d. Beograd Ljubljana in relation to loans, deposits and money transfer
From SKB Banka d.d. Ljubljana in relation to loans, deposits and money transfer
Other
Total
* Derivatives and interest on securities are not included.
2020
126,867
79,685
29,866
25,982
21,938
18,404
16,112
7,937
6,904
6,284
5,662
4,692
4,411
1,988
1,736
1,125
402
331
–
40,324
400,650
2020
10,445
5,312
3,931
1,308
20,996
2020
4,790
287
226
176
110
32
–
603
6,224
2020
6,820
3,941
3,667
2,873
554
325
286
1,407
19,873
2019
84,035
108,691
7,289
41,383
22,214
10,615
16,064
17,095
4,033
7,089
6,745
31,789
4,370
8,864
21,964
363,072
11,493
43,608
134,235
42,337
986,985
2019
15,538
4,621
1,416
1,057
22,632
2019
7,688
12
225
2
3,532
94
1,448
472
13,473
2019
4,550
4,886
4,596
1,656
512
100
–
1,077
17,377
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:15)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
IFRS separate financial statements
315
39.6 Commissions paid by the Bank
OTP Faktoring Ltd. related to commission fee
OTP Pénzügyi Pont Ltd.
Total
39.7 Transactions related
to OTP Mortgage Bank Ltd.
2020
151
593
744
2019
224
173
397
Fees and commissions received from OTP Mortgage Bank Ltd.
relating to the loans
2020
8,725
2019
11,836
39.8 Transactions related
to OTP Factoring Ltd.
The gross book value of the loans sold
Loss allowance for loan losses on the loans sold
Loans sold to OTP Factoring Ltd. without recourse
(including interest)
Loss on these transaction (recorded in the separate
financial statements as loan and placement loss)
2020
6,339
4,443
1,115
781
2019
16,410
10,950
3,304
2,156
The underlying mortgage rights were also transferred to OTP Factoring Ltd.
39.9 Transactions related
to OTP Banka Slovensko a.s. (Slovakia)
Securities issued by OTP Banka Slovensko a.s. (Slovakia) held
by OTP Bank (nominal value in HUF million)
2020
–
2019
14,873
39.10 Related party transactions
with key management
The compensation of key management,
making process in accordance with the
such as the members of the Board of Directors,
compensation categories defined in IAS 24
the members of the Supervisory Board
Related Party Disclosures, is summarised
and the employees involved in the decision-
below:
Short-term employee benefits
Share-based payment
Long-term employee benefits (on the basis of IAS 19)
Total
Loans provided to companies owned by the Management
(in the normal course of business)
Commitments to extend credit and bank guarantees
2020
2,923
2,619
278
5,820
2020
87,791
36,738
2019
2,143
2,732
304
5,179
2019
54,325
27,624
316
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:15)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
Outstanding balances and of banking products provided to key management:
As at 31 December 2020:
Type of
product
Total
r
i
e
h
t
d
n
a
s
r
o
t
c
e
r
i
D
f
o
d
r
a
o
B
f
o
s
r
e
b
m
e
M
s
r
e
b
m
e
m
y
l
i
m
a
f
e
s
o
l
c
s
r
e
b
m
e
m
y
l
i
m
a
f
e
s
o
l
c
r
i
e
h
t
d
n
a
d
r
a
o
b
y
r
o
s
i
v
r
e
p
u
S
f
o
s
r
e
b
m
e
M
r
i
e
h
t
d
n
a
e
v
i
t
u
c
e
x
E
s
r
e
b
m
e
m
y
l
i
m
a
f
e
s
o
l
c
Interest
conditions
Handling
charges
Annual
fee
Collateral
73
26.37%–31.77%
– 12,038–20,596 HUF
–
26.85%–30.45%
–
6,656 HUF
110
29.73%–29.85%
– 12,038–20,916 HUF
Income received
to bank account
Income received
to bank account
Income received
to bank account
183
159
5,59%–30%
1%
1.442
2.26%–3.26%
14
5.67%–11.99%
–
–
–
0.00%
3.19%–3.56%
1%
Income received
to bank account
Government
bond, Shares in
investment funds
Income received
to bank account
Income received to
bank account and
state guarantee
Property
–
–
–
–
–
Interest
conditions
Handling
charges
Annual
fee
Collateral
Mastercard BonusGold/
Mastercard Arany
Mastercard Bonus/
Mastercard Klasszik
Visa Infinite
Credit cards total
Overdraft loans
87
3
142
232
254
12
2
27
41
91
Lombard loans
55,486
54,044
Personal loans
Baby expecting loans
Mortgage loan
22
75
34
8
9
–
2
1
5
8
4
–
–
–
–
As at 31 December 2019:
Type of
product
Total
r
i
e
h
t
d
n
a
s
r
o
t
c
e
r
i
D
f
o
d
r
a
o
B
f
o
s
r
e
b
m
e
M
s
r
e
b
m
e
m
y
l
i
m
a
f
e
s
o
l
c
s
r
e
b
m
e
m
y
l
i
m
a
f
e
s
o
l
c
r
i
e
h
t
d
n
a
d
r
a
o
b
y
r
o
s
i
v
r
e
p
u
S
f
o
s
r
e
b
m
e
M
Mastercard Arany
Mastercard BonusGold
Visa Infinite
Credit cards total
Overdraft loans
12
38
94
144
87
11
5
20
36
84
Lombard loans
55,080
53,661
Personal loans
7
–
–
–
5
5
3
–
–
66
34
r
i
e
h
t
d
n
a
e
v
i
t
u
c
e
x
E
s
r
e
b
m
e
m
y
l
i
m
a
f
e
s
o
l
c
1
33
69
103
–
floating,
monthly 2.23%
floating,
monthly 2.46%
floating,
monthly 2.49%
central bank
base rate+5%
1,419
0.66%–2.39%
7
11.99%–17.99%
–
–
–
1%
–
–
15,834 HUF
16,966 HUF
20,288 HUF
Income received
to bank account
Income received
to bank account
Income received
to bank account
–
–
–
Income received
to bank account
Government bond,
Long-term Invest–
ment Account,
Shares in invest–
ment funds
Income received
to bank account
IFRS separate financial statements
317
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:15)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
An analysis of payment to Executives related to their activity in Board of Directors
and Supervisory Board is as follows (in HUF mn):
Members of Board of Directors
Members of Supervisory Board
Total
2020
1,012
116
1,128
2019
1,310
113
1,423
In the normal course of business, OTP Bank enters into other transactions with its subsidiaries, the
amounts and volumes of which are not significant to these financial statements taken as a whole.
NOTE 40:
TRUST ACTIVITIES (in HUF mn)
The Bank acts as a trustee for certain
As these loans and related funds are
loans granted by companies or employers
not considered to be assets or liabilities
to their employees, mainly for housing
of the Bank, they have been excluded from
purposes. The ultimate risk for these loans
the accompanying separate statement
rests with the party advancing the funds.
of financial position.
In the percentage of the total assets
Loans managed by the Bank as a trustee
2020
28,055
2019
29,296
NOTE 41:
CONCENTRATION OF ASSETS AND LIABILITIES
In the percentage of the total assets
Receivables from, or securities issued
by the Hungarian Government or the NBH
Securities issued by the OTP Mortgage Bank Ltd.
Loans at amortised cost
2020
22.69%
2.24%
6.48%
2015
23.18%
1.76%
7.03%
There were no other significant concentrations
separately partner-by-partner. If necessary, it
of the assets or liabilities of the Bank as at
modifies partner-limits in due course thereby
31 December 2020 or 31 December 2019.
reducing the room for manoeuvring of the
Treasury and other business areas.
OTP Bank continuously provides the Authority
with reports on the extent of dependency
The Bank’s internal regulation (Limit-
on large depositors as well as the exposure
management regulation) controls risk
of the largest 50 depositors towards OTP Bank.
management which related to exposures
Further to this obligatory reporting to the
of clients. Bank makes a difference between
Authority. OTP Bank pays particular attention
clients or clients who are economically
on the exposure of its largest partners and
connected with each other, partners, partners
cares for maintaining a closer relationship
operating in the same geographical region or
with these partners in order to secure the
in the same economic sector, exposures from
stability of the level of deposits.
customers. Limit-management regulation
includes a specific range provisions system
The organisational unit of OTP Bank in charge
used by Bank to control risk exposures.
of partner-risk management analyses the
This regulation has to be used by the Bank
largest partners on a constant basis and sets
for its business (lending) risk-taking activity
limits on OTP Bank’s and the Group’s exposure
in both the retail and corporate sector.
318
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:15)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
To specify credit risk limits, the Bank strives
The validity period of this policy is 12 months.
their clients get an acceptable margin of risk
The limit shall be reviewed prior to the expiry
based on their financial situation. In the Bank
date but at least once a year based on the rele-
limit system a lower level decision-making
vant information required to limit calculations.
delegation has to be provided.
The maximum credit exposure to any client
If an OTP Group member takes risk against
or counterparty among Loans at amortised
a client or group of clients (either inside the
cost was HUF 722 billion and HUF 713 billion
local economy or outside), the client will be
as at 31 December 2020 and 2019 respectively,
qualified as a group level risk and these limits
before taking into account collateral or other
will be specified at group level.
credit enhancements.
NOTE 42:
EARNINGS PER SHARE
Earnings per share attributable to the
weighted average number of ordinary
Bank’s ordinary shares are determined by
shares outstanding during the year.
dividing Net profit for the year attributable
Dilutive potential ordinary shares are
to ordinary shareholders, after the deduction
deemed to have been converted into
of declared preference dividends, by the
ordinary shares.
Net profit for the year attributable to ordinary shareholders
(in HUF mn)
Weighted average number of ordinary shares outstanding
during the year for calculating basic EPS (number of share)
Basic Earnings per share (in HUF)
Separate net profit for the year attributable
to ordinary shareholders (in HUF mn)
Modified weighted average number of ordinary shares
outstanding during the year for calculating diluted EPS
(number of share)
Diluted Earnings per share (in HUF)
Weighted average number of ordinary shares
Average number of Treasury shares
Weighted average number of ordinary shares outstanding
during the year for calculating basic EPS
Dilutive effect of options issued in accordance with
the Remuneration Policy/Management Option Program
and convertible into ordinary shares*
The modified weighted average number of ordinary shares
outstanding during the year for calculating diluted EPS
2020
92,474
2019
193,354
277,301,936
279,697,301
333
92,474
691
193,354
277,310,069
279,721,775
333
691
2020
280,000,010
(2,698,074)
2019
280,000,010
(302,709)
277,301,936
279,697,301
8,133
24,474
277,310,069
279,721,775
The ICES bonds could potentially dilute basic EPS in the future, but were not included in the
calculation of diluted EPS because they are antidilutive for the period presented.
* In 2020 and 2019 dilutive effect is in connection with the Remuneration Policy.
IFRS separate financial statements
319
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:15)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
NOTE 43:
NET GAIN OR LOSS REALISED ON FINANCIAL INSTRUMENTS
(in HUF mn)
For the year ended 31 December 2020
Financial assets measured at amortised cost
Cash, amounts due from banks and balances
with the National Bank of Hungary
Placements with other banks, net of allowance
for placement losses
Repo receivables
Loans
Securities at amortised cost
Financial assets measured at amortised cost total
Financial assets measured at fair value
Securities held for trading
Securities at fair value through other
comprehensive income
Loans mandatorily measured at fair value
through profit or loss
Financial assets measured at fair value total
Financial liabilities measured at amortised cost
Amounts due to banks and deposits from
the National Bank of Hungary and other banks
Repo liabilities
Deposits from customers
Leasing liabilities
Liabilities from issued securities
Subordinated bonds and loans
Financial liabilities measured at amortised cost total
Financial liabilities designated to measure
at fair value through profit or loss
Derivative financial instruments**
Total
Net interest
income and
expense
Net non-interest
gain and loss
Loss
allowance
Other
comprehensive
income
4,369
10,650
49
143,650
48,654
207,372
–
368
29,095
15,094
44,557
(9,862)
(1,476)
(3,985)
(244)
(598)
(8,327)
(24,492)
(307)
(5,053)
222,077
–
–
–
23,298
360
23,658
–
2,251
–
2,227
286
55,444
1,845
59,802
–
–
–
–
–
–
–
–
–
–
6,073 * 3
(17,734)
2,125
10,449
–
–
216,512
–
–
–
216,512
1,270
5,818
257,707
–
3
–
–
–
–
–
–
–
–
–
(17,734)
–
–
–
–
–
–
–
–
–
59,805
–
(17,734)
* For the year ended 31 December 2020 HUF 6,073 million net non-interest gain on securities at fair value through other comprehensive income was transferred from other
comprehensive income to profit or loss.
** Gains/losses from derivative financial instruments recognised in net interest income as Income similar to interest income.
320 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:2)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
For the year ended 31 December 2020
Financial assets measured at amortised cost
Cash, amounts due from banks and balances
with the National Bank of Hungary
Placements with other banks, net of allowance
for placement losses
Repo receivables
Loans
Securities at amortised cost
Financial assets measured at amortised cost total
Financial assets measured at fair value
Securities held for trading
Securities at fair value through other
comprehensive income
Loans mandatorily measured at fair value
through profit or loss
Financial assets measured at fair value total
Financial liabilities measured at amortised cost
Amounts due to banks and deposits from
the National Bank of Hungary and other banks
Repo liabilities
Deposits from customers
Leasing liabilities
Liabilities from issued securities
Subordinated bonds and loans
Financial liabilities measured at amortised cost total
Financial liabilities designated to measure
at fair value through profit or loss
Derivative financial instruments**
Total
Net interest
income and
expense
Net non-interest
gain and loss
Loss
allowance
Other
comprehensive
income
1,188
5,789
95
137,161
47,119
191,352
231
40,329
5,106
45,666
–
(11,300)
(3,995)
(3,726)
(244)
(2,214)
(5,323)
(26,802)
(367)
(5,064)
204,785
–
–
–
19,674
714
20,388
739
–
1,545
(6)
7,680
(225)
8,994
–
8,408 * (176)
(418)
8,729
–
–
–
210,822
–
–
–
210,822
(21)
3,675
243,593
–
(176)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
20,599
–
20,599
–
–
–
–
–
–
–
–
–
–
8,818
–
20,599
* For the year ended 31 December 2019 HUF 8,408 million net non-interest gain on securities at fair value through other comprehensive income was transferred from other
comprehensive income to profit or loss.
** Gains/losses from derivative financial instruments recognised in net interest income as Income similar to interest income.
IFRS separate financial statements
321
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:2)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
NOTE 44:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn)
In determining the fair value of a financial
(cid:588) the contractual cash-flows are considered
asset or liability the Bank in the case of
for the performing loans and for the
instruments that are quoted on an active
non-performing loans, the amortised cost
market uses the market price. In most
less impairment is considered as fair value,
cases market price is not publicly available
(cid:588) the future cash-flows for floating interest
so the Bank has to make assumptions or
rate instruments are estimated from the
use valuation techniques to determine
yield curves as of the end of the reporting
the fair value of a financial instrument.
period,
See Note 43. d) for more information about
(cid:588) the fair value of the deposit which can be
fair value classes applied for financial
due in demand cannot be lower than the
assets and liabilities measured at fair
amount payable on demand.
value in these financial statements.
For classes of assets and liabilities not
To provide a reliable estimate of the fair
measured at fair value in the statement of
value of those financial instrument that
financial position, the income approach was
are originally measured at amortised cost,
used to convert future cash-flows to a single
the Bank used the discounted cash-flow
current amount. Fair value of current assets
analysis (loans, placements with other
is equal to carrying amount, fair value of
banks, amounts due to banks, deposits
liabilities from issued securities and other
from customers). The fair value of issued
bond-type classes of assets and liabilities not
securities and subordinated bonds is based
measured at fair value measured based on
on quoted prices (e,g, Reuters), Cash and
Reuters market rates and, fair value of other
amounts due from banks and balances with
classes not measured at fair value of the
the National Bank of Hungary represent
statement of financial position are measured
amounts available immediately thus the fair
using the discounted cash-flow method. Fair
value equals to the cost.
value of loans, net of allowance for loan losses
measured using discount rate adjustment
The assumptions used when calculating the
technique, the discount rate is derived from
fair value of financial assets and liabilities
observed rates of return for comparable assets
when using valuation technique are the
or liabilities that are traded in the market.
following:
(cid:588) the discount rates are the risk free rates
Fair value measurements – in relation to
related to the denomination currency
instruments measured not at fair value –
adjusted by the appropriate risk premium
are categorized in level 2 of the fair value
as of the end of the reporting period,
hierarchy.
322
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:2)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
a) Fair value of financial assets
and liabilities
Cash, amounts due from banks and balances
with the National Bank of Hungary
Placements with other banks, net of allowance
for placement losses
Repo receivables
Financial assets at fair value through
profit or loss
Held for trading securities
Held for trading derivative financial
instruments
Securities mandatorily measured
at fair value through profit or loss
Securities at fair value through other
comprehensive income
Loans at amortised cost
Loans mandatorily measured
at fair value through profit or loss
Securities held-to-maturity
Derivative financial assets designated
as hedging accounting
Other financial assets
FINANCIAL ASSETS TOTAL
Amounts due to banks and Hungarian Government,
deposits from the National Bank of Hungary
and other banks
Deposits from customers
Repo receivables
Leasing liabilities
Liabilities from issued securities
Derivative financial liabilities designated
as hedging accounting
Financial liabilities at fair value
through profit or loss
Financial liabilities from OTP-MOL
transaction
Subordinated bonds and loans
Other financial liabilities
FINANCIAL LIABILITIES TOTAL
2020
Carrying
amount
Fair
value
2019
Carrying
amount
Fair
value
579,120
579,120
289,686
289,686
1,535,884
1,550,747
1,560,142
1,532,900
183,364
160,483
11,729
116,818
183,664
160,483
11,729
116,818
45,539
172,229
46,255
103,694
45,546
172,229
46,255
103,694
31,936
31,936
22,280
22,280
911,950
911,950
1,485,977
1,485,977
3,417,760
3,710,048
3,076,531
3,400,670
480,937
480,937
238,538
238,538
2,007,692
2,085,881
1,447,224
1,570,899
6,817
6,817
127,179
9,411,186
127,179
9,796,826
16,677
89,482
8,422,025
16,677
89,482
8,842,604
766,977
754,573
738,054
737,235
7,895,735
109,612
14,106
28,435
3,104
25,902
99,987
304,243
167,540
9,415,641
7,895,211
111,548
14,105
31,588
3,104
25,902
99,987
295,218
167,540
9,398,776
6,573,550
462,621
13,660
43,284
10,023
28,861
83,088
279,394
191,091
8,423,626
6,574,041
464,901
13,660
49,282
10,023
28,861
83,088
276,838
191,091
8,429,020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:2)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
IFRS separate financial statements
323
b) Derivative financial instruments
hedging instrument is compared in the
OTP Bank regularly enters into hedging
different scenarios. Economic relationship
transactions in order to decrease its financial
is justified if the change of the fair value of
risks. However some economically hedging
the hedged item and the hedging instrument
transaction do not meet the criteria to
are in the opposite direction and the absolute
account for hedge accounting, therefore these
changes are similar amounts. The hedge
transactions were accounted as derivatives
ratio is determined as the ratio of the notional
held for trading. Net investment hedge
of the hedged item and the notional of the
in foreign operations is not applicable in
hedging instrument. The sources of hedge
separate financial statements.
ineffectiveness are the not hedged risk
components (e,g, change of cross currency
The assessment of the hedge effectiveness
basis spreads in case of interest rate risk
(both for fair value hedges and cash-flow
hedges), slight differences in maturity dates
hedges) to determine the economic relation-
and interest payment dates in case of fair
ship between the hedged item and the
value hedges, and differences between
hedging instrument is accomplished with
the carrying amount of the hedged item
prospective scenario analysis via different
and the carrying amount of the hedging
rate shift scenarios of the relevant risk factor(s)
instrument in case of FX hedges (e,g, caused
of the hedged risk component(s). The fair
by interest rate risk components in the fair
value change of the hedged item and the
value of the hedging instrument).
324
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:2)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
Fair value of derivative financial
instruments
The Bank has the following held for trading derivatives and derivatives designated
as hedge accounting:
Before netting
Assets
Liabilities
2020
Netting*
After netting
2019
Before netting
Assets
Liabilities
Assets
Liabilities
Held for trading derivative
financial instruments
Interest rate derivatives
Interest rate swaps
Cross currency interest rate swaps
OTC options
Forward rate agreement
Total interest rate derivatives
(OTC derivatives)
From this: Interest rate derivatives
cleared by NBH
Foreign exchange derivatives
Foreign exchange swaps
Foreign exchange forward
OTC options
Foreign exchange spot conversion
Total foreign exchange derivatives
(OTC derivatives)
From this: Foreign exchange
derivatives cleared by NBH
Equity stock and index derivatives
Commodity Swaps
Equity swaps
OTC derivatives
Exchange traded futures
and options
Total equity stock and index
derivatives
Derivatives held for risk
management not designated
in hedges
30,216
7,315
356
–
(28,474)
(7,285)
(356)
–
37,887
(36,115)
5
(72)
39,644
6,990
3,909
619
(30,374)
(9,869)
(3,836)
(704)
51,162
(44,783)
5,211
(1,852)
13,999
7,071
21,070
(12,901)
(560)
(13,461)
379
(1,262)
21,449
(14,723)
8,984
–
–
–
8,984
21,232
7,315
356
–
(19,490)
(7,285)
(356)
–
29,008
1,141
298
13
(26,622)
(1,037)
(298)
(32)
28,903
(27,131)
30,460
(27,989)
–
–
–
–
–
–
–
–
–
–
–
–
5
(72)
–
(61)
39,644
6,990
3,909
619
(30,374)
(9,869)
(3,836)
(704)
31,666
2,538
3,126
18
(24,607)
(4,839)
(3,129)
(50)
51,162
(44,783)
37,348
(32,625)
5,211
(1,852)
4,166
(259)
13,999
7,071
21,070
(12,901)
(560)
(13,461)
379
(1,262)
1,213
4,530
5,743
5
(960)
(558)
(1,518)
(248)
21,449
(14,723)
5,748
(1,766)
Interest rate swaps
Foreign exchange swaps
Forward
Cross currency interest rate swaps
25,760
2,208
28
44
(22,058)
(3,953)
(75)
–
12,736
–
–
–
13,024
2,208
28
44
(9,322)
(3,953)
(75)
–
23,508
6,547
8
75
(16,219)
(4,477)
(12)
–
Total derivatives held for risk
management not designated
in hedges
From this: Total derivatives cleared
by NBH held for risk management
Total Held for trading derivative
financial instruments
Derivative financial instruments
designated as hedge accounting
relationships
Derivatives designated
in cash-flow hedges
Interest rate swaps
Total derivatives designated
in cash-flow hedges
Derivatives designated
in fair value hedges
Interest rate swaps
Cross currency interest rate swaps
Total derivatives designated
in fair value hedges
From this: Total derivatives cleared
by NBH held for hedging
Total derivatives held for risk
management (OTC derivatives)
Total
28,040
(26,086)
12,736
15,304
(13,350)
30,138
(20,708)
759
(6,269)
–
759
(6,269)
1,305
(6,689)
138,538
(121,707)
21,720
116,818
(99,987)
103,694
(83,088)
8,027
8,027
–
–
2,432
6,180
(7,061)
(5,865)
8,612
(12,926)
–
(1,691)
16,639
(12,926)
155,177
(134,633)
8,027
8,027
1,795
–
1,795
–
9,822
31,542
–
–
8,027
8,027
637
6,180
6,817
(5,266)
(5,865)
(11,131)
9,214
9,214
3,758
3,705
7,463
–
–
(8,265)
(1,758)
(10,023)
–
(1,691)
–
(2,886)
6,817
(3,104)
16,677
(10,023)
123,635
(103,091)
120,371
(93,111)
* Certain derivative financial assets and liabilities are offset and the net amount is presented in accordance with IAS 32 in the Statement of Financial Position. The Bank has
the ability and the intention to settle those instruments on a net basis, which are settled through the same clearing house.
IFRS separate financial statements
325
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:2)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
c) Hedge accounting
Regulations on the Management of Liquidity
Interest rate risk management is centralized
Risk and Interest Rate Risk of Banking Book”.
at OTP Group. Interest rate risk exposures
The interest rate risk management activity aims
in major currencies are managed at HQ on
to stabilize NII within the approved risk limits.
consolidated level. Although risk exposures
in local currencies are managed at subsidiary
The risk management objective of these hedge
level, the respective decisions are subject to
relationships is to mitigate the risk of clean
HQ approval. Interest rate risk is measured by
fair value (i.e. excluding accrued interest)
simulating NII and EVE under different stress
change of MIRS loans due to the change of
and plan scenarios, the established risk limits
interest rate reference indexes (BUBOR, EURIBOR,
are described in “OTP Bank’s Group-Level
LIBOR etc.) of the respective currency.
Amount, timing and uncertainty of future cash-flows – hedging instruments:
As at 31 December 2020:
Type of
hedge
Type of
risk
Type of
instrument
Fair Value
Hedge
Interest
rate risk
Interest
rate swap
HUF
Within
one month
Within three
months and
over one month
Within one year
and over
three months
Within five
years and
over one year
More than
five years
Total
Notional
Average
Interest Rate (%)
EUR
–
–
Notional
Average
Interest Rate (%)
15
(0.11%)
USD
Notional
Average
Interest Rate (%)
RUB
Notional
Average
Interest Rate (%)
Fair Value
Hedge
FX & IR risk
Cross currency
interest rate swap
EUR/HUF
Notional
Average
Interest Rate (%)
Average FX Rate
Fair Value
Hedge
FX risk
Cross currency
interest rate swap
EUR/HUF
Notional
Average FX Rate
RON/HUF
Notional
Average FX Rate
RUB/HUF
Notional
Average FX Rate
Interest rate
swap
HUF
Notional
Interest rate
swap
HUF
Notional
Average FX Rate
Fair Value
Hedge
Other
Cash–flow
hegdes
Interest
rate risk
326
OTP Bank Annual Report 2020
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
60,000
(89,622)
173,810
144,188
1.31%
1.06%
1.35%
5
102
10
132
0.09%
0.24%
0.22%
21
2.00%
171
29
221
2.38%
2.35%
–
–
2
2,100
7.38%
2,100
–
–
12
14
28
(1.55%)
311.08
(1.59%)
310.95
(1.60%)
310.82
(1.63%)
(1.67%)
310.14
308.15
1
360.19
92
354.92
123
360.47
–
–
–
–
–
–
–
–
613
356.03
1,550
72.60
4,100
4.46
(183)
6,940
8,342
–
–
–
–
–
–
–
829
1,550
4,100
15,099
–
–
–
–
12,194
1.77
28,027
2.46
40,221
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:2)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
As at 31 December 2019:
Type of
hedge
Type of
risk
Type of
instrument
Fair Value
Hedge
Interest
rate risk
Interest
rate swap
HUF
Notional
Average
Interest Rate (%)
EUR
Notional
Average
Interest Rate (%)
USD
Notional
Average
Interest Rate (%)
RUB
Notional
Average
Interest Rate (%)
Fair Value
Hedge
FX & IR risk
Cross currency
interest rate swap
Fair Value
Hedge
FX risk
EUR/HUF
Notional
Average
Interest Rate (%)
Average FX Rate
Cross currency
interest rate swap
RON/HUF
Notional
Average FX Rate
RUB/HUF
Notional
Average FX Rate
Fair Value
Hedge
Other
Interest rate swap
Cash-flow
hegdes
Interest
rate risk
HUF
Notional
Interest rate swap
HUF
Notional
Average FX Rate
Within
one month
Within three
months and
over one month
Within one year
and over
three months
Within five
years and
over one year
More than
five years
Total
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
20
3.88%
–
–
–
–
–
–
–
–
–
–
–
229,600
65,268
145,510
440,378
1.84%
1.29%
1.26%
–
–
8
177
27
224
0.14%
0.61%
437
29
474
2.64%
1.92%
2.35%
–
–
2
2,100
7.38%
2,100
–
–
15
14
31
(1.60%)
310.37
(1.63%)
(1.66%)
309.79
308.69
150
67.50
2,000
4.20
1,050
68.83
9,100
4.33
–
–
–
–
–
1,200
11,100
29,097
(310)
13,644
15,763
–
–
–
–
12,194
1.77
28,027
2.46
40,221
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:2)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
IFRS separate financial statements
327
Amount, timing and uncertainty of future cash-flows – hedging instruments:
Type of
instrument
Type
of risk
Nominal
amount of
the hedging
instrument
Carrying amount of the hedging instrument
for the year ended 31 December 2020
After
Before
netting
netting
Netting
Assets Liabilities
Assets Liabilities
Line item in
the statement
of financial
position where
the hedging
instrument
is located
Changes in fair
value used for
calculating hedge
ineffectiveness
for the year ended
31 December 2020
Fair value
hedge
Interest
rate swap
Interest
rate risk
468,574
1,900
(7,062)
1,795
105
(5,267)
Cross–
currency
swap
Cross–
currency
swap
Interest
rate swap
Cash-flow
hedge
FX & IR risk
8,874
–
(1,408)
–
–
(1,408)
FX risk
438,401
6,182
(4,456)
– 6,182
(4,456)
Other
16,224
530
–
–
530
–
Interest
rate swap
Interest
rate risk
133,379
8,027
–
8,027
–
8,027
Derivative assets
(liabilities) held for
risk management
Derivative assets
(liabilities) held for
risk management
Derivative assets
(liabilities) held for
risk management
Derivative assets
(liabilities) held for
risk management
Derivative assets
(liabilities) held for
risk management
(370)
(36)
(809)
2
(85)
31 December 2020
Type
of risk
Carrying amount
of the hedged item
Assets
Liabilities
35,256
(100,299)
177,888
91,950
–
47,560
10,378
303,572
–
–
–
–
–
–
–
(15,032)
666,604
(115,331)
Accumulated amount of fair value
hedge adjustments on the hedged
item included in the carrying
amount of the hedged item
Assets
Liabilities
Line item in the
statement of
financial position
in which the hedged
item is included
507
884
1,154
–
793
9
10,855
–
14,202
(151)
Loans
Securities at
amortised cost
Securities at fair
value through other
comprehensive income
Financial assets at fair
value through profit or loss
Securities at fair
value through other
comprehensive income
Loans
Loans
Liabilities from
issued securities
–
–
–
–
–
–
(3,144)
(3,295)
40,221
–
58
–
Loans
Fair value
hedges
Loans
Goverment
bonds
Goverment
bonds
Goverment
bonds
Other
securities
Loans
Loans
Other
securities
Fair value
hedges total
Cash-flow
hedges
Loans
Interest rate
risk
Interest rate
risk
Interest rate
risk
Interest rate
risk
Interest rate
risk
FX & IR risk
FX risk
Other risk
Interest rate
risk
328 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:2)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
Type of
instrument
Type of
risk
Nominal
amount of
the hedging
instrument
Carrying amount of the
hedging instrument for the
year ended 31 December 2019
Assets
Liabilities
Line item in
the statement
of financial
position where the
hedging instrument
is located
Changes in fair
value used for
calculating hedge
ineffectiveness
for the year ended
31 December 2019
Interest
rate swap
Interest
rate risk
663,949
2,251
(8,265)
Cross–currency
swap
Cross–currency
swap
Interest
rate swap
FX & IR risk
9,523
–
(376)
FX risk
137,390
3,705
(1,382)
Other
30,983
1,507
Interest
rate swap
Interest
rate risk
133,379
9,214
Derivative assets
(liabilities) held for
risk management
Derivative assets
(liabilities) held for
risk management
Derivative assets
(liabilities) held for
risk management
Derivative assets
(liabilities) held for
risk management
Derivative assets
(liabilities) held for
risk management
341
(113)
(271)
7
(98)
–
–
Fair value
hedge
Cash-flow
hedge
Type of
risk
Interest
rate risk
Interest
rate risk
Fair value
hedges
Loans
Government
bonds
Government
bonds
Interest
rate risk
Government
bonds
Interest
rate risk
Other
securities
Loans
Loans
Other
securities
Fair value
hedges total
Cash-flow
hedges
Loans
Interest
rate risk
FX & IR risk
FX risk
Other risk
Interest
rate risk
Carrying amount
of the hedged item for
the year ended
31 December 2019
Accumulated amount of fair value
hedge adjustments on the hedged item
included in the carrying amount
of the hedged item for the year ended
31 December 2019
Line item in
the statement of
financial position in
which the hedged
item is included
Assets
Liabilities
Assets
Liabilities
36,709
578,026
144,234
–
85,231
10,076
136,088
–
–
–
–
–
–
–
–
(29,018)
990,364
(29,018)
521
109
1,074
–
166
2
1,465
–
3,337
–
–
–
–
–
–
–
(5,765)
(5,765)
Loans
Securities at
amortised cost
Securities at fair
value through other
comprehensive income
Financial assets
at fair value through
profit or loss
Securities at fair
value through other
comprehensive income
Loans
Loans
Liabilities from
issued securities
40,221
–
32
–
Loans
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:2)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
IFRS separate financial statements
329
31 December 2020:
Type of
instrument
Type of
risk
Interest
rate swap
Interest
rate risk
31 December 2019:
Type of
instrument
Type of
risk
Interest
rate swap
Interest
rate risk
Change in the value of
the hedging instrument
recognised in cash-flow
hedge reserve
Hedge
ineffectiveness
recognised in
profit or loss
296
(85)
Line item in
profit or loss that
includes hedge
ineffectiveness
Interest Income from Placements with other
banks, net of allowance for placement losses
Change in the value of
the hedging instrument
recognised in cash-flow
hedge reserve
Hedge
ineffectiveness
recognised in
profit or loss
2,086
(98)
Line item in
profit or loss that
includes hedge
ineffectiveness
Interest Income from Placements with other
banks, net of allowance for placement losses
d) Fair value classes
Methods and significant assumptions used
observable for the asset or liability
to determine fair value of the different classes
either directly or indirectly, Fair value
of financial instruments:
measurements – in relation with
Level 1: quoted prices (unadjusted) in
instruments measured not at fair
active markets for identical assets
value – are categorized in level 2;
or liabilities;
Level 3: inputs for the asset or liability that
Level 2: inputs other than quoted prices
are not based on observable market
included within Level 1 that are
data (unobservable inputs).
The following table shows an analysis of financial instruments recorded at fair value
by level of the fair value hierarchy:
As at 31 December 2020
Loans at fair value through other comprehensive income
Financial assets at fair value through profit or loss
from this: securities held for trading
from this: positive FVA of derivative financial instruments
designated as held for trading
from this: securities mandatorily measured at fair value
through profit or loss
Securities at fair value through other comprehensive income
Positive fair value of derivative financial instruments
designated as hedge accounting
Financial assets measured at fair value total
Financial liabilities at fair value through profit or loss
Negative fair value of derivative financial instruments
classified as held for trading
Short position
Negative fair value of derivative financial instruments
designated as hedge accounting
Financial liabilities measured at fair value total
Total
480,937
160,483
11,729
116,818
31,936
911,950
6,817
1,560,187
25,902
99,987
9,131
3,104
Level 1
–
34,643
10,453
378
Level 2
–
123,064
1,276
116,440
Level 3
480,937
2,776
–
–
23,812
5,348
2,776
426,566
485,384
–
461,209
–
1,263
9,131
–
6,817
615,265
–
98,724
–
–
–
483,713
25,902
–
–
3,104
–
138,124
10,394
101,828
25,902
330 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:22)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
As at 31 December 2019
Loans at fair value through other comprehensive income
Financial assets at fair value through profit or loss
from this: securities held for trading
from this: positive FVA of derivative financial instruments
designated as held for trading
from this: securities mandatorily measured
at fair value through profit or loss
Securities at fair value through other comprehensive income
Positive fair value of derivative financial instruments
designated as hedge accounting
Financial assets measured at fair value total
Financial liabilities at fair value through profit or loss
Negative fair value of derivative financial instruments
classified as held for trading
Short position
Negative fair value of derivative financial instruments
designated as hedge accounting
Financial liabilities measured at fair value total
Total
238,538
172,229
46,255
103,694
Level 1
–
52,247
29,961
6
Level 2
–
119,982
16,294
103,688
22,280
22,280
–
1,485,977
1,082,071
399,171
16,677
–
1,704,614
28,861
1,134,318
–
83,088
7,040
10,023
129,012
249
7,040
–
7,289
16,677
535,830
–
82,839
–
10,023
92,862
Level 3
238,538
–
–
–
–
4,735
–
34,466
28,861
–
–
–
28,861
Valuation techniques and
sensitivity analysis on Level 3
instruments
as well as the availability and reliability of
observable proxy and historical date and
the impact of using alternative models.
The calculation is based on range or spread
Sensitivity analysis is performed on products
data of reliable reference source or a scenario
with significant unobservable inputs (Level 3)
based on relevant market analysis alongside
to generate a range of reasonably possible
the impact of using alternative models.
alternative valuations. The sensitivity
Sensitivities are calculated without reflecting
methodologies applied take account of the
the impact of any diversification in the
nature of the valuation techniques used,
portfolio.
Unobservable inputs used in measuring fair value:
Type of financial
instrument
VISA C shares
Loans mandatory measured at
fair value through profit and loss
Valuation
technique
Significant
unobservable input
Range of estimates for
unobservable input
Market approach combined
with expert judgement
Discount applied due
to illiquidity and litigation
Discounted cash-flow model
Probability of default
+/–12%
+/–20%
The effect of unobservable inputs
on fair value measurement
assumptions could lead to different
measurements of fair value. For fair value
measurements in Level 3 changing the
Although the Bank believes that its
assumptions used to reasonably possible
estimates of fair value are appropriate,
alternative assumptions would have the
the use of different methodologies or
following effects.
As at 31 December 2020
VISA C shares
Loans mandatory measured at fair value
through profit and loss
Total
Fair values
Favourable
1,514
Unfavourable
1,154
Effect on profit and loss
Favourable
180
Unfavourable
(180)
28,656
30,170
28,430
29,584
113
293
(113)
(293)
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:22)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
IFRS separate financial statements
331
As at 31 December 2019
VISA C shares
Loans mandatory measured at fair value
through profit and loss
Total
Fair values
Favourable
2,609
Unfavourable
1,983
Effect on profit and loss
Favourable
313
Unfavourable
(313)
29,951
32,560
29,511
31,494
220
533
(220)
(533)
The favourable and unfavourable effects
In the case of loans mandatory measured
of using reasonably possible alternative
at fair value through profit and loss the
assumptions for the valuation of Visa C
Bank calculated the favourable and
shares have been calculated by modifying
unfavourable effects of using reasonably
the discount rate used for the valuation
possible alternative assumptions by
by +/–12% as being the best estimates of
modifying the rates of probability of default by
the management as at 31 December 2020
+/–20% as the most significant unobservable
and 31 December 2019 respectively.
input.
Reconciliation of the opening and closing balances of Level 3 instruments for the year ended
31 December 2020:
Loans at fair value through
other comprehensive income
Securities mandatorily measured
at fair value through profit or loss
Securities at fair value through
other comprehensive income
Financial liabilities at fair value
through profit or loss
Total
Opening
balance
Issuance/
Disbursement
FVA
Reclassification
Settlement
Closing
balance
238,538
257,055
(2,555)
–
(12,101)
480,937
–
4,735
(28,861)
214,412
–
–
–
257,055
523
453
1,270
(309)
5,188
(2,935)
2,776
(5,188)
–
–
–
–
1,689
(25,902)
(13,347)
457,811
Reconciliation of the opening and closing balances of Level 3 instruments for the year ended
31 December 2019:
Loans at fair value through other
comprehensive income
Securities at fair value through
other comprehensive income
Financial liabilities at fair value
through profit or loss
Total
Opening
balance
42,037
3,146
(32,231)
12,952
Issuance/
Disbursement
FVA
Settlement
Closing
balance
208,952
(6,198)
(6,253)
238,538
–
–
1,589
–
4,735
21
3,349
(28,861)
208,952
(4,588)
(2,904)
214,412
332
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:22)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
NOTE 45:
SIGNIFICANT EVENTS DURING THE YEAR ENDED
31 DECEMBER 2020
1) Sale of the Slovakian subsidiary
See details about the event above in Note 11.
NOTE 46:
SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD
Compliance with the executive circular
indicating a significant increase in credit
issued in January 2021 by the National Bank
risk” does not significantly impact the
of Hungary on the “use of macroeconomic
determination of expected credit losses
information in applying IFRS 9 and factors
as at 31 December 2020.
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:22)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
IFRS separate financial statements
333
OTP Bank
Annual Report
2020
334
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:22)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
Corporate Governance
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:22)(cid:23)
335
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
Senior management and
executive members of the
Board of Directors1 of OTP Bank
Dr. Sándor Csányi
Chairman & CEO
Dr. Zsolt Barna
General Deputy CEO until 20 July 2020
Group Governance and Operations
Division
László Bencsik
Deputy CEO
Strategy and Finance Division
In 1996, Mr. László Bencsik graduated from
the Faculty of Business Administration at
the Budapest University of Economic
Sciences, and in 1999 he obtained a
Masters in Business Administration (MBA)
from INSEAD Business School in France.
Between 1996 and 2000 he worked as
a consultant at Andersen Consulting
(now Accenture). From 2000 to 2003 he
was a project manager at consulting
firm McKinsey & Company. He joined
OTP Bank in 2003, when he became
managing director of the Bank Operations
Management Directorate, and the
manager with overall responsibility for
controlling and planning. He has been
deputy CEO of OTP Bank, and head of the
Strategy and Finance Division, since
August 2009. Since 13 March 2012 he has
been Chairman of the Supervisory Board
of DSK Bank.
As of 31 December 2020 he held 43,037
ordinary OTP shares.
Dr. Zsolt Barna started his professional
career at the State Financial and Capital
Market Supervisory Commission, and
rising through the ranks he became
managing director of the Financial and
Capital Market Supervisory Directorate in
2006. In this position, he was responsible
for the supervision of banks and banking
groups. Between 2006 and 2010, he was
a member and permanent invitee to the
CESR’s, CEBS’s management bodies and
professional committees. From 2008 to
2009 he was one of the decisive figures
in crisis management activities conducted
in the banking sector. Between 2010 and
20 July 2020, he held the following
offices at the OTP Group: He was initially
the Chairman of the Board of Directors of
CKB Bank in Montenegro, where he was
in charge or the bank’s reorganisation.
He was Chairman & CEO of OTP Real
Estate Investment Fund Management Ltd.
between 8 June 2016 and 31 August 2018.
From September 2016 to 31 August 2018,
he was the Chairman of the Board of
Directors of OTP Fund Management Ltd.
He was Chairman of the Board of Directors
of OTP Real Estate Investment Fund
Management Ltd. between 8 June 2016
and 20 July 2020. Between 10 September
2018 and 29 March 2019, he was Chairman
of the Supervisory Board of OTP Real
Estate Ltd. Between 1 September 2018
and 20 July 2020, he was the General
Deputy CEO in charge of OTP Bank’s Group
Governance and Operations Division.
Between 29 March 2019 and 20 July 2020,
he was Chairman of the Board of
Directors of OTP Real Estate Ltd. Between
13 December 2019 and 20 July 2020, he
was a member of the Board of Directors,
and between 16 December 2019 and
20 July 2020, he was Chairman of the
Board of SKB Banka in Slovenia.
Dr. Sándor Csányi graduated from the
College of Finance and Accountancy in
1974 with a bachelor’s degree in business
administration and in 1980 from the Karl
Marx University of Economic Sciences
with a degree in economics. He is an
economist with a specialisation in finance,
and a certified auditor. After graduation
he worked at the Revenue Directorate
and then at the Secretariat of the Ministry
of Finance, after which, between 1983
and 1986, he was a departmental head
at the Ministry of Agriculture and Food
Industry. From 1986 to 1989 he worked
as a head of department at Magyar Hitel
Bank. He was deputy CEO of K&H Bank
from 1989 to 1992. He has been
Chairman & CEO of OTP Bank Plc. since
1992. He is Deputy Chairman of the Board
of Directors of MOL Plc., Co-Chairman of
the National Association of Entrepreneurs
and Employers (VOSZ), and Co-Chairman
of the Chinese-Hungarian Business
Council. He has been Chairman of the
Hungarian Football Association (MLSZ)
since 2010, and a member of the UEFA
Executive Committee since March 2015;
has been the Deputy Chairman of the
UEFA Executive Committee in 2019. Since
2017 he has been a member of the FIFA
Council and the Deputy Chairman of the
FIFA Council since 2018. Since 1995 he
has been the Deputy Chairman of the
Board of Trustees of the International
Child Rescue Service, and since 2003
he has been the Chairman of the Board
of Trustees of the Prima Primissima
Foundation. In 2005, he established
the Csányi Foundation for Children from
his own assets. Since 2009, he has been
a member of the Board of Trustees of
the Media Union Foundation for Social
Consciousness Shaping. Since 2020,
he has been the chairman of the Board
of Trustees of the Foundation for the
University of Sopron. In 2021, he became
chairman of the Board of Trustees of the
Foundation for the Hungarian University
of Agricultural and Life Sciences.
As of 31 December 2020 he held 926,378
ordinary OTP shares (while the total
number of OTP shares held by him directly
and indirectly was 4,712,505).
1 The members of the Board of Directors are elected by the General Meeting for a term of five years.
336 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:22)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
Tibor András Johancsik
Deputy CEO
IT Division
György Kiss-Haypál
Deputy CEO
Credit Approval and Risk
Management Division
Antal György Kovács
Deputy CEO
Retail Division
László Wolf
Deputy CEO
Commercial Banking Division
Mr. Tibor András Johancsik graduated from
the Budapest Technical University with a
degree in electrical engineering in 1988,
and then in 1993 earned a further degree
in foreign trade business administration
from the College of Foreign Trade. He began
his professional career at as a researcher
in the field of industrial automation at the
Hungarian Academy of Sciences Institute
for Computer Science and Control (MTA
SZTAKI). From 1994 onwards he held
management positions at the Hungarian
subsidiaries of international IT develop-
ment companies (ICL, Unisys, Cap Gemini).
From 2001 he worked as an advisor in the
fields of IT and organisational develop-
ment, then from 2003, as managing
director of JET-SOL Kft., he participated in
the development of numerous systems in
Hungary and abroad. Since 24 February
2016 he has been Deputy CEO in charge
of OTP Bank’s IT Division. He has been
Chairman of the Supervisory Board of
Monicomp Zrt. since 1 April 2016.
As of 31 December 2020 he held 31,055
ordinary OTP shares.
Mr. György Kiss-Haypál is a qualified
economist. He graduated from the Buda-
pest University of Economic Sciences in
1996. He started his career as a project
finance analyst for Budapest Bank Plc.,
and by 2007 he had been appointed
head of the bank’s risk management
department. Between 2002 and 2006 he
also worked in Ireland as corporate credit
risk portfolio manager for GE Consumer
Finance, and in Austria as GE Money
Bank’s consumer loans portfolio manager.
From 2015 he was deputy head of the
Credit Approval and Risk Management
Division of OTP Bank Plc., and was then
appointed acting head of the Division.
Since 3 May 2017, he has been deputy CEO
of the Credit Approval and Risk Manage-
ment Division.
As of 31 December 2020 he held 7,592
ordinary OTP shares.
Mr. Antal György Kovács graduated from
the Karl Marx University of Economic
Sciences with a degree in economics.
He began his professional career in 1990
at the Nagyatád branch of K&H Bank,
where he worked as a branch manager
between 1993 and 1995. He has been
working at OTP Bank Plc. since 1995, first
as a county director and from 1998 as the
executive director of OTP Bank’s South
Transdanubian Region. Since 1 July 2007
he has served as OTP Bank’s Deputy CEO.
He has received additional training at the
International Training Centre for Bankers
and on various courses held by the World
Trade Institute. Between April 2007 and
April 2012 he was Chairman of the Super-
visory Board of OTP banka Hrvatska d.d.
He has been Chairman of the Supervisory
Board of OTP Bank Romania SA since
12 December 2012. He has been Chairman
of the Board of Directors of OTP Mortgage
Bank Ltd. and OTP Building Society Ltd.
since 24 April 2014. He is Chairman of the
Supervisory Board of OTP Fund Manage-
ment and OTP Mobile Kft. He was a
member of OTP Bank’s Supervisory Board
from 2004 to 14 April 2016. He has been a
member of OTP Bank's Board of Directors
since 15 April 2016.
As of 31 December 2020 he held 46,651
ordinary OTP shares.
Mr. László Wolf graduated from the Karl
Marx University of Economic Sciences
in 1983. After graduation, he worked at
the Bank Relations Department of the
National Bank of Hungary for 8 years,
and then served as head of Treasury at
BNP-KH-Dresdner Bank between 1991 and
1993. From April 1993 he was managing
director of OTP Bank’s Treasury Directorate,
and since 1994 he has been Deputy CEO
of the Commercial Banking Division.
Member of DSK Bank’s Supervisory Board.
He has been Chairman of the Board
of Directors of OTP banka Srbija since
10 December 2010. He has been a member
of OTP Bank's Board of Directors since
15 April 2016.
As of 31 December 2020 he held 571,925
ordinary OTP shares.
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:22)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
Corporate governance
337
Non-executive members of the
Board of Directors of OTP Bank
Tamás György Erdei
Deputy Chairman
BSc Business Administration
Mihály Baumstark
BSc Agricultural Business
Administration, MSc Economics
Dr. Tibor Bíró
College Associate Professor
Mr. Mihály Baumstark graduated with a
degree in agricultural business administ-
ration at Gödöllő University of Agriculture
(1973), and went on to do a masters in
economics at the Karl Marx University of
Economic Science (1981). He was employed
by the Ministry of Agriculture and Food
Industry between 1978 and 1989. When
he left the Ministry he was deputy head
of the Investment Policy Department.
After this he was managing director
of Hubertus Bt., and from 1999 to 2011
he was deputy CEO and then Chairman
& CEO of Villányi Winery Ltd. (now Csányi
Winery Ltd.). He is currently retired.
He was a member of OTP Bank’s Super-
visory Board from 1992 to 1999, and
has been a non-executive member of
OTP Bank’s Board of Directors since 1999.
He has been Chairman of OTP Bank's
Ethics Committee since 2010, as well as a
member of its Remuneration Committee
since 2011. He was the member of the
Nomination Committee between 2014
and 2020.
As of 31 December 2020 he held 53,200
ordinary OTP shares.
Dr. Tibor Bíró graduated from the College
of Finance and Accountancy (1974) and from
the Karl Marx University of Economics
(1978) with a degree in business administ-
ration. He has been a certified auditor
and chartered accountant since 1986.
He was the Head of the Financial Depart-
ment of the City Council of Tatabánya
from 1978 to 1982. From 1982, he was a
professor at the College of Finance and
Accounting, and between 1990 and 2013
head of department at the Budapest
Business School. Since his retirement in
2015, he has been a visiting lecturer, and
working actively in his auditing and con-
sulting company. From 2000 onwards,
for a period of ten years, he was a member
of the Presidium of the Budapest branch
of the Chamber of Hungarian Auditors,
and also worked as a member of the
Chamber’s Education Committee for
five years. He has been a non-executive
member of OTP Bank’s Board of Directors
since 1992. He has been a member of
OTP Bank's Remuneration Committee
since 2009, and he was the chairman
of the Nomination Committee between
2014 and 2020.
As of 31 December 2020 he held 38,600
ordinary OTP shares.
Mr. Tamás György Erdei graduated in 1978
with a degree from the College of Finance
and Accounting. He began his professional
career at OTP, in a variety of administ-
rative roles (his last position was branch
manager), before going on to work at the
Ministry of Finance in the area of bank
supervision. Since 1983 he has been
employed by the Hungarian Foreign Trade
Bank (today MKB), where he gradually
worked his way up through the ranks.
In 1985 he became managing director,
in 1990 he was appointed deputy CEO,
then in 1994 he was made CEO, and from
1997 until the end of March 2012 he was
chairman and CEO. Between 1997 and
2008, and between 2009 and 2011, he was
the elected president of the Hungarian
Banking Association. He is the chairman
of the Supervisory Board of the Inter-
national Children’s Safety Service.
He has been a member of OTP Bank’s
Board of Directors since 27 April 2012.
He has been the chairman of OTP Bank's
Risk Assumption and Risk Management
Committee, and he was a member of the
Nomination Committee between 2014
and 2020. He has been Deputy Chairman
of the Board of Directors of OTP Bank Plc.
since April 2019 and the Deputy Chairman
of the Work-out Committee since October
2019. He has been Chairman of the Board
of Directors at OTP Factoring Ltd. between
since December 2019.
As of 31 December 2020 he held 29,657
ordinary OTP shares.
338 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:22)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
Dr. István Gresa
PhD Business Administration
and Economics
Dr. Antal Pongrácz
PhD Economics
Dr. László Utassy
Chairman & CEO
Merkantil Bank Ltd.
Dr. József Vörös
Professor, academician
University of Pécs
Dr. László Utassy graduated from the
Faculty of Law of Eötvös Loránd University
in Budapest in 1978. He held various
positions at the State Insurance Company
between 1978 and 1995 and then went on
to work at ÁB-Aegon Rt. He was Chairman
& CEO of OTP Garancia Insurance from
1996 to 2008. He was managing director
of OTP Bank between 2009 and 2010.
Since 1 January 2011 he has been Chairman
& CEO of Merkantil Bank Ltd. He has been
a member of OTP Bank’s Board of Directors
since 2001. He has been a member of
OTP Bank's Risk Assumption and Risk
Management Committee since 2014.
He has been Chairman of the Board of
Directors of OTP Real Estate Leasing Ltd.
since 28 November 2019.
As of 31 December 2020 he held 190,847
ordinary OTP shares.
Dr. József Vörös earned a degree in
economics from the Karl Marx University
of Economic Science in 1974. In 1984
he earned a PhD in economics from the
Hungarian Academy of Sciences, and
a Doctor of Science degree in 1993.
He has been a member of the Hungarian
Academy of Sciences since 2013. Between
1990 and 1993 he was the dean of the
Faculty of Business and Economics, Janus
Pannonius University (JPTE) in Pécs.
In 1993 he attended a course in manage-
ment for senior executives at Harvard
University. From 1994 he was a professor
at JPTE, and was the senior Vice Rector of
the University from 2004–2007, between
2007 and 2011 he was Chairman of the
Economic Council of the University of Pécs.
He has been a non-executive member of
OTP Bank’s Board of Directors since 1992.
He has been Chairman of OTP Bank's
Remuneration Committee since 2009,
and of its Risk Assumption and Risk
Management Committee since 2014.
As of 31 December 2020 he held 164,514
ordinary OTP shares.
Dr. István Gresa graduated from the
College of Finance and Accountancy in
1974 and received a degree in economics
from the Karl Marx University of Economic
Sciences in 1980. He earned a PhD from
the University of Economic Sciences in
1983. He has worked in the banking sector
since 1989. Between 1989 and 1993 he was
branch Dr. István Gresa graduated from
the College of Finance and Accountancy in
1974 and received a degree in economics
from the Karl Marx University of Economic
Sciences in 1980. He earned a PhD from
the University of Economic Sciences in
1983. He has worked in the banking sector
since 1989. Between 1989 and 1993 he
was branch manager of Budapest Bank’s
Zalaegerszeg branch. From 1993 he was
director of OTP Bank’s Zala County Direc-
torate, and from 1998 he served as the
managing director of the bank’s West
Transdanubian Region. From 1 March 2006
until 14 April 2016 – when he retired – he
was deputy CEO of the Credit Approval
and Risk Management Division. He was
Chairman of the Board of Directors at
OTP Factoring Ltd. between 2006 and 2017.
He has been a member of OTP Bank’s
Board of Directors since 27 April 2012.
As of 31 December 2020 he held 163,658
ordinary OTP shares.
Dr. Antal Pongrácz graduated from the
Karl Marx University of Economic Sciences
in 1969 and earned a PhD in 1971. From
1969 he worked as an analyst at the
Petrochemical Investment Company,
then as a group manager at the Revenue
Directorate until 1975. From 1976 he held
various executive positions at the Ministry
of Finance. After that, he was the first
Deputy Chairman of the State Office for
Youth and Sports. Between 1988 and 1990
he was the first Deputy CEO of OTP Bank.
Between 1991 and 1994 he was CEO, and
then Chairman & CEO, of the European
Commercial Bank Rt. Between 1994
and 1998 he was Chairman & CEO of
Szerencsejáték Rt, then in 1998–1999 he
served as CEO of Hungarian flagship
carrier, Malév. Since 2001 he has been
managing director of OTP Bank’s Staff
Division and more recently – up until his
retirement on 14 April 2016 – Deputy CEO.
1992–1999: Chairman of the Supervisory
Board of Gemenc Zrt., 2002–2010: Chairman
of the Board of Directors, 1999–2007:
Chairman of the Supervisory Board of
British American Tobacco (BAT), 2002–2008:
Chairman of the Board of Directors of
Casinos Hungary, Between 2007–2012,
he was Chairman of OTP Bank Romania’s
Supervisory Board. He has been Chairman
of the Supervisory Board of OTP banka
Hrvatska d.d. since 12 April 2012,
and was Chairman of the Supervisory
Board of Splitska banka from 2 May 2017
until its successful integration
(on 30 November 2018). He has been a
member of OTP Bank’s Board of Directors
since 2002. He was Deputy Chairman
of OTP Bank’s Board of Directors from
9 June 2009 to 14 April 2016.
As of 31 December 2020 he held 70,000
ordinary OTP shares.
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:22)(cid:21)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
Corporate governance
339
Members of the
Supervisory Board2 of OTP Bank
Independent members:
Tibor Tolnay
Chairman of the Supervisory Board
Dr. József Gábor Horváth
Deputy Chairman of the
Supervisory Board
Lawyer
Olivier Péqueux
Chairman
Groupama-Avic Property Insurance
Company Ltd.
Dr. Márton Gellért Vági
General Secretary
Hungarian Football Association
Mr. Tibor Tolnay graduated from the
Budapest University of Technology with
a degree in civil engineering in 1978 and
then in economic engineering in 1983,
and subsequently received a degree in
economics from the Budapest University
of Economics in 1993. From 1989 to 1992,
he was Director of State Construction
Company No. 21. From 1992 to 1994 he
was CEO, then from 1994 to 2015 he was
Chairman & CEO of Magyar Építő Rt.
He has been the managing director of
ÉRTÉK Kft. since 1994, From 2001 to 2015,
he was President of the National
Association of Building Contractors.
From 2018, President of the National
Association of Entrepreneurs and
Employers. and a member of OTP Bank's
Supervisory Board since 1992, and
Chairman of the same Board since 1999.
He was a member and Deputy Chairman
of OTP Bank’s Audit Committee between
2007 and 2011, and has been again since
2014, He has been the chairman of
OTP Bank’s Nomination Committee
since 2020.
As of 31 December 2020 he held 54
ordinary OTP shares.
Dr. József Gábor Horváth earned a degree
in law from Eötvös Loránd University in
Budapest in 1980. From 1983 he worked
for the Hungarian State Development Bank.
From 1986 he worked for the Hungarian
State Development Bank. He has been a
lawyer since 1986, and since 1990 has run
his own law firm, which specialises in cor-
porate finance and corporate governance.
His main fields of expertise are corporate
finance and corporate governance.
He has been a member of the Supervisory
Board of OTP Bank since 1995, and was a
member of MOL Plc.’s Board of Directors
between 1999 and 2014. He has been
Deputy Chairman of OTP Bank's Super-
visory Board since 2007. He was a member
of OTP Bank's Audit Committee between
2007 and 2011, and has been again since
2014. He has been a member of OTP Bank’s
Nomination Committee since 2020. He was
a member of the Board of Directors of INA
Industrija Nafte d.d. from 2014 to 2018.
As of 31 December 2020 he held no
ordinary OTP shares.
Mr. Olivier Péqueux graduated from the
Institute of Actuaries of France and Poly-
technique School and ENSAE Paris Tech.
He started work in 1998 as an insurance
commissioner for the French Insurance
Supervisory Authority. In 2003, he joined
the French Ministry of Finance to take
part in the reform of the pension laws
and the establishment of a pension fund
for French civil servants. He then became
technical adviser to the French Minister
of Health and Pensions. In 2005, he joined
Groupama Group, first in charge of the
actuary and accounting department of
Gan Patrimoine, a life insurance company,
and then in 2007 as Chief Financial Officer
of Groupama Paris Val de Loire. He moved
to China in March 2011 as deputy CEO of
Groupama China, where he was in charge
of finance, actuary matters and invest-
ments in the joint venture between
Groupama and AVIC. From 2015 to 2017,
he was the CEO of Groupama AVIC.
Since March 2018, he has been the Inter-
national Director of Groupama Assurances
Mutuelles. Since September 2020, he has
been Deputy CEO of Groupama Assurances
Mutuelles. He has been a member of the
Supervisory Board and Audit Committee
of OTP Bank since 2018.
As of 31 December 2020 he held no
ordinary OTP shares.
Dr. Márton Gellért Vági graduated in 1987
from the department of foreign economics
at the Karl Marx University of Economic
Science (today the Corvinus University
of Budapest). From 1987 to 2000 he was
a member of the university faculty, in the
capacity of associate professor and head
of department from 1994 onwards.
He holds a university doctorate and a PhD
in economics. He has authored or co-
authored more than 80 research papers,
essays and books. Between 2000 and
2006 he worked at the State Holding and
Privatisation Co. (ÁPV Zrt.), as managing
director, deputy CEO and then CEO.
Between 2006 and 2010 he was Chairman
of the National Development Agency. In
various periods between 2000 and 2010,
he was the Chairman of the Board of
Directors of Magyar Villamos Művek, Paks
Nuclear Power Plant and the National
Textbook Publishing House. Between
2002 and 2010, he was a member of the
Board of Directors of Földhitel és Jelzálog-
bank Nyrt., and the Chairman of the
Board of Directors for 4 years. Since 2010
he has been general secretary of the
Hungarian Football Association.
He has been a member of UEFA’s HatTrick
Financial Assistance Committee since
2011. He has been a member of FIFA’s
Financial Committee since 2017. He has
been a member of OTP Bank Plc.’s Super-
visory Board since 2011. He has been
a member of OTP Bank Plc.’s Audit
Committee since 2014. He has been a
member of OTP Bank Plc.’s Nomination
Committee since 2020.
As of 31 December 2020 he held 2,000
ordinary OTP shares.
2 Supervisory Board members are elected by the General Meeting for a term of three years.
340 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:19)(cid:3)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
Employee delegates:
Klára Bella
Director
Corporate Directorate
András Michnai
Managing Director
Mrs. Klára Bella graduated from the
College of Finance and Accountancy and
later received a degree from the Budapest
University of Economic Sciences. From
1992 to 1994 she worked as a clerk at the
Fertőszentmiklós branch of OTP Bank.
From 1994 to 1995 she was a lending
consultant at Polgári Bank. From 1995
to 1996 she worked as a risk manager at
the Central Branch of OTP Bank. From
1996 to 1997 she was a credit authorizer
in the Credit Approval and Risk Manage-
ment Division. From 1997 to 2010 she was
Deputy Executive Director at the Central
Branch. From 2010 to 2016 she was
Director at the Central Branch. Between
2017 and 2020, he was Director of the
Corporate Directorate. Since 1 July 2020,
she has been the Director of the Corporate
Department of the Special Financing
Directorate. She has been a member
of OTP Bank’s Supervisory Board, and
representative of the Bank’s employees,
since 12 April 2019.
As of 31 December 2020 she held 93
ordinary OTP shares.
Mr. András Michnai graduated in 1981 from
the College of Finance and Accounting
with a degree in business administration.
He has been an employee of the Bank
since 1974, and until 1981 held a variety of
posts in the branch network. Following
this he held a management position in
the central network coordination depart-
ment before returning to work in the
branch network. From 1994, as deputy
management director, he participated in
the central coordination of the branch
network. Between 2005 and 2014 he
headed the Bank’s Compliance Depart-
ment as a managing director. He further
expanded his professional skills, earning
a Master’s degree at the Budapest Business
School, and is a registered tax advisor.
He has been a member of OTP Bank’s
Supervisory Board, and representative
of the Bank’s employees, since 2008.
He has been Secretary of OTP Bank’s
Employees’ Trade Union since December
2011.
As of 31 December 2020 he held 100
ordinary OTP shares.
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:19)(cid:15)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
Corporate governance
341
Information
for Shareholders
General company data
Date of foundation:
Registered head office
31 December 1990, registered by the
of OTP Bank Plc.:
Metropolitan Court of Budapest as Court
H–1051 Budapest, Nádor utca 16.
of Registration on 28 October 1991 under
Telephone: +36 1 473 5000
company registration number 01-10-041585.
Fax: +36 1 473 5955
The latest Bylaws may be requested from
the company or may be downloaded from
Share capital:
the Bank’s website.
OTP Bank’s share capital as at 31 December 2020
Legal predecessor:
280,000,010 ordinary shares of nominal value
Országos Takarékpénztár, founded 1 March 1949.
HUF 100 each.
was HUF 28,000,001,000, consisting of
Ownership structure of OTP Bank Plc. as at 31 December 2020:
Description of owner
Total equity
Domestic institution/company
Foreign institution/company
Domestic individual
Foreign individual
Employees, senior officers
Treasury shares2
Government held owner
International Development Institutions
Other3
Total
1 January 2020
31 December 2020
Ownership
share
18.84%
77.01%
2.98%
0.13%
0.80%
0.12%
0.08%
0.04%
0.00%
100.00%
Voting
1
rights
18.86%
77.10%
2.98%
0.13%
0.80%
0.00%
0.08%
0.04%
0.00%
100.00%
Quantity
52,750,611
215,635,699
8,344,202
356,377
2,240,465
323,520
219,372
122,218
7,546
280,000,010
Ownership
share
20.93%
71.60%
4.79%
0.11%
0.85%
1.55%
0.08%
0.04%
0.04%
100.00%
Voting
1
rights
21.26%
72.73%
4.87%
0.12%
0.87%
0.00%
0.08%
0.04%
0.04%
100.00%
Quantity
58,605,628
200,480,153
13,424,090
319,346
2,393,390
4,334,140
219,800
108,981
114,482
280,000,010
Stock exchange listing
bank for OTP GDRs is the Bank of New York,
and the safekeeping bank is OTP Bank Plc.
The ordinary shares of OTP Bank Plc. are
(Stock exchange symbol for OTP Bank shares:
listed on the Budapest Stock Exchange under
OTP, Reuters: OTP.BU)
category “Premium Equity”, and the global
depository receipts (GDRs) representing the
ordinary shares that are traded abroad are
listed on the Luxemburg Stock Exchange.
(2 GDR represents 1 ordinary shares)
Participation and voting rights
at the Annual General Meeting
Regulation S GDRs are traded on the London
According to the current situation due
SEAQ International, and Rule 144A GDRs are
to the virus epidemic, on 22 February 2021
traded in the PORTAL system. The custodian
the Parliament passed Act I of 2021 on
1 Voting rights in the General Meeting of the Issuer for participation in decision-making.
2 Treasury shares do not include the OTP shares held by ESOP (OTP Bank Employee Stock Ownership Plan Organization). Pursuant to Act V of 2013 on the Civil Code,
OTP shares held by the ESOP are not classified as treasury shares, but the ESOP must be consolidated in accordance with IFRS 10 Consolidated Financial Statements
standard. On 31 December 2020 ESOP owned 5,097,255 OTP shares.
3 Non-identified shareholders according to the shareholders’ registry.
342
OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:19)(cid:2)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
the prevention of the coronavirus pandemic,
of the general meeting convened pursuant
which extends the validity of Government
to Section 9 (7), if it is not subsequently
Decree no. 502/2020 (XI. 16.) on the
approved by the general meeting.
re-introduction of various provisions on the
b) Pursuant to Section 9 (6) of the Government
operation of personal and property pooling
Decree, the convening of the general
organizations in the event of a State of
meeting may be initiated pursuant to
Danger (hereinafter: Government Decree)
Section 9 (7) for the purpose of subsequent
until 22 May 2021. Pursuant to Section 9 of
approval of the decision on the financial
the Government Decree, during its force, a
statements and the use of the after tax
general meeting with personal attendance
profit, with the exception that shareholders
may not be held at a public limited company.
have the right to convene the general
Pursuant to Section 9 of the Government
meeting within 30 days of the publication of
Decree, the management (Board of Directors)
the decision of the management on
of a public limited company may decide
the financial statements and the use of
on all issues on the published agenda,
the after tax profit. Failure to meet this
including amendments to the Articles of
deadline, including if the shareholder's
Association, as well as on matters specified
application is not received by the public
in the Government Decree according to which
limited company by the last day of the
the Board of Directors are entitled to pass
deadline, will result in forfeiture. In case
resolutions in the competency of the General
of initiating the convening of the general
Meeting. According to the above, the Board
meeting, the announcement of the general
of Directors shall decide acting within
meeting shall be published within 45 days
the competency of the General Meeting
after the termination of the state of danger,
on the agendas of the General Meeting on
if the state of danger has already ceased
16 April 2021 (Friday).
upon receipt of the shareholder's request,
within 45 days of receiving the shareholder's
The Board of Directors shall publish the
request.
resolutions brought within the competency
c) Pursuant to Section 9 (7) of the Government
of the General Meeting immediately, but
Decree, within 30 days after the termination
not later than within one working day,
of the state of danger, shareholders holding
in accordance with the Articles of Association
at least 1% of the votes may request the
of the Company on the website of the
convening of the general meeting for the
Company (www.otpbank.hu), on the website
subsequent approval of resolutions, on
of the Budapest Stock Exchange (BSE)
agendas not mentioned in Section 9 (5), of
(www.bet.hu), and on the website operated
the management acting in the competency
by the National Bank of Hungary
of the general meeting during the state
(www.kozzetetelek.hu).
of danger. The right to convene a general
meeting shall be vested to shareholders
The Company informs its Shareholders that
who are included in the share register
a) Pursuant to Section 9 (4) of the Government
of the public limited company on the
Decree, if the shareholders request the
basis of the shareholder identification
convening of the general meeting in
procedure requested and carried out in
accordance with Section 9 (7) of the
connection with the general meeting
Government Decree, for the subsequent
originally announced or published under
approval of the amendment of the articles
this Government Decree. The provisions
of association pursuant to Section 9 (2)
on registration in the share register
of the Board of Directors, the amendment
prior to the general meeting shall apply
of the articles of association shall cease
to the shareholder identification procedure
to be valid on the day following the date
and registration in the share register
Corporate governance
343
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:19)(cid:22)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
carried out pursuant to the announcement.
at the earliest, on the working day following
The announcement to the general meeting
the closure of the decisions of the Board of
shall be published within 45 days of the
Directors acting in the competency of the
receipt of the shareholder's request within
Annual General Meeting.
the forfeiture period.
Only persons whose names are registered in
d) Pursuant to Section 9 (8) of the Government
the Share Register at the time of its closure
Decree, if the period between the
are entitled to exercise shareholder rights.
termination of the state of danger and
The closure of the Share Register will not limit
1 April of the following calendar year is less
the right of any person registered in the Share
than 180 days, the convening of the general
Register in respect of the transfer of his/her
meeting according to Section 9 (6) and
shares following the closure of the Share
Section 9 (7)is not possible, however, the
Register. Any transfer of shares prior to the
approval of the resolutions of the general
initial day of the Annual General Meeting shall
meeting passed by the management of the
not preclude the right of a person registered
company during the state of danger may
in the Share Register to exercise the rights as
be put on the agenda at the next general
Government Decree to which he/she is entitled
meeting.
as a shareholder.
The Company requests the KELER Central
Depository Private Company Limited by
Announcements
Shares (hereinafter: KELER Ltd.) to perform
shareholder identification for the date of the
OTP Bank Plc. fulfils its disclosure obligations
decision of Board of Directors acting in the
related to corporate events and prescribed
competency of the General Meeting, as a
in Act CXX of 2001 on the website of the
corporate event. The date of the shareholder
OTP Bank Plc. (www.otpbank.hu), on the
identification is 9 April 2021 (Friday).
website of the Budapest Stock Exchange
The rules pertaining to the shareholder
(www.bet.hu), and on the website operated
identification process are set out in the latest
by the National Bank of Hungary
effective regulations of KELER Ltd.
(www.kozzetetelek.hu).
The Company, at 18:00 Budapest time on
the second working day before the decision
Investor relations
of the Board of Directors acting in the
competency of the Annual General Meeting,
Institutional shareholders of OTP Bank Plc.
shall delete all the data in the Share Register,
should contact the following address if they
and concurrently with this it shall register
require further information:
the results of the shareholder identification
OTP Bank Plc. Investor Relations & DCM
process in the Share Register, and shall
H–1051 Budapest, Nádor utca 16.
close it with the results of the shareholder
Telephone: +36 1 473 5460
identification. After this any entry related to a
Fax: +36 1 473 5951
shareholder’s shareholding may only be made,
Email: investor.relations@otpbank.hu
344 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:19)(cid:19)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
Anti-money laundering measures
Money laundering is any act or attempted act
banking or financial transactions that might
by criminals or other persons to conceal or
enable, or in themselves constitute, money
disguise the identity of obtained proceeds of
laundering.
criminal offences so that they appear to have
(cid:588) It has internal regulations, in accordance
originated from legitimate sources, for which
with the Anti-money Laundering Act, MNB
they may try using the services of financial
Decree 26/2020. (VIII. 25.) and NGM Decree
institutions.
21/2017. (VIII. 3.)
(cid:588) The employees of the bank must fulfil their
In order to prevent the use of our bank for
customer due diligence and reporting
money-laundering purposes, we do our best
obligations.
to ascertain the true identities of those who
(cid:588) Compliance with the reporting obligations
would use our services and the rationale
is not construed as a breach of bank,
of using the services. OTP Bank establishes
securities, insurance or business secrets.
business relationship only with those clients
(cid:588) Failure to fulfil the reporting obligation may
who give evidence of their true identities in
result in prosecution under criminal law.
accordance with the relevant legal provisions.
(cid:588) OTP Bank cooperates with the criminal
investigation authorities in the investigation
In keeping with the provisions of Act LIII of 2017
of all circumstances suggestive of money
on the Prevention and Combating of Money
laundering.
Laundering and Terrorist Financing OTP Bank
has introduced, and applies, the following
OTP Bank discloses the customer identification
measures and rules:
procedure applied by the bank and the related
(cid:588) It operates an internal control and
data processing in an Announcement posted
information system designed to prevent
in all rooms open for serving customers.
With trust and responsibility
for each other
Corporate social responsibility
In 2020, OTP Bank gave a total of
educational institutions and disadvantaged
HUF 3.704 billion in charitable donations
families. Through the Humanitás Social
for empowerment and community building.
Foundation, OTP Bank provided HUF 1.7 billion
Dealing with the difficulties of the pandemic
in donations to health care institutions,
was a priority for us; in a challenging period,
supporting several hospitals, including
we helped those who were our first line
hospitals in the most disadvantaged areas
of defense, as well as those who were already
of the country, with medical devices and
in a very difficult situation: healthcare and
20 ventilators.
Corporate governance
345
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:19)(cid:23)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
As one of Hungary's primary donors, our bank
a school context. Four age-specific outdoor
channels its charitable donations mainly
training programmes, each two hours long,
through its own foundations, contributing to
were developed to meet the needs of schools.
empowerment (Humanitás Social Foundation)
During the year, the Centre also ran a regional
and education (OTP Fáy András Foundation).
educational programme as well as summer
The Príma Primissima Foundation has in
camps, and also developed adult educational
particular donated to 10 organizations that
materials. In order to shape social attitudes
have been disadvantaged by the extraordinary
and raise awareness, three short films were
circumstances that have arisen from the
broadcast 800 times on national commercial
pandemic. In order to ensure the efficient and
channels; these films touched on the subjects
effective use of our resources, our bank has
of self-care, digital banking solutions and
also continued its cooperation with several
consumer empowerment. The refurbishment
local NGOs and major strategic partners.
of the OK Educational and Innovation Centre
was completed, ensuring that the Foundation
can deliver its educational programmes at
Developing financial literacy
even greater capacities and relying on an even
more modern infrastructure.
OTP Bank remains committed to improving
financial literacy, which remains the focal
In addition to its charitable donations, the bank
point of its social responsibility schemes.
believes in the importance of shaping social
In 2019, it spent a total of HUF 950 million
attitudes; in 2020, it highlighted the problems
on education, which was more than half of
of overconsumption. Our aim with the short
its total charitable donations. The activities
film Keep it in the Family! was also to improve
of the Foundation in 2020 were determined
financial literacy and shape attitudes; in this
mostly by the coronavirus pandemic and the
film, two sets of parents and children spoke
refurbishment of the educational centre in
about money and their relationship with it.
Budapest, which had been started in 2019.
The video is available online and has been
Digital Training modules developed
joined the “Élj maradéktalanul!” campaign
in-house, using a unique methodology
of the Hungarian Food Bank Association, which
The OTP Fáy András Foundation’s OK
encourages reducing food waste.
viewed more than 400,000 times. We also
Education Centre has been playing an active
role in the development of young people’s
financial, economic and management
Empowerment
skills, also offering career advice in 2020.
Replacing in-person classroom training
In addition to improving public financial
– due to the pandemic, only 2,212 persons
literacy, empowerment continues to be a focal
were in attendance – emphasis shifted to
point of OTP Bank’s CSR endeavours. As part
digital education programmes. The Fáy digital
of its socially responsible activities, OTP Bank
educational programme was created for
supports valuable initiatives, encourages its
students from Years 5 through 12 and consists
employees to volunteer, and is ready to stand
ofes live presentations, online videos, e-learning
by private individuals who strive to serve
materials and a game application. By the end
noble causes, thus highlighting social issues.
of the year, the learning materials that had
been produced during the year were used
Volunteering – OTP Local Value
by 2,000 students, while the games app
Volunteering has been a tradition at our bank
(Platypus: A Finlit Story) had over 30 thousand
for over ten years. Our employees work with
downloads. The app is available without any
local communities to help those in need;
limitations and free of charge even outside
they can apply for funding to the programme
346 OTP Bank Annual Report 2020
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:19)(cid:18)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
twice a year. In addition to the programmes
and persons, in a tender system. In 2020,
implemented through application funding,
focused donations to hospitals were its most
they have also organised volunteering events,
significant activity.
with over 2,000 employees taking part.
The Foundation's traditional programmes
In addition to local employee initiatives, our
and activities continued last year. With the
Bank also joined the Jótett Bank sector-wide
Bank’s financial support, the Foundation was
joint volunteer program announced by the
able to donate 265 PCs and computer screens
Hungarian Banking Association, in the frame-
in 2020 to schools, hospitals, children’s homes,
work of which the members of the organization
institutions serving the disabled, and hospitals.
cooperate in various socially beneficial activities.
Employees of OTP Bank took part in Blood
Play for Prevention
Donors Week, a joint initiative of the Hungarian
OTP Bank has been a sponsor of the “Play for
Banking Association, member organizations,
Prevention” programme of the Hungarian
the National Blood Supply Service and the
Charity Service of the Order of Malta since
Hungarian Red Cross. At the initiative of the
2011. Over the past years, the programme
Banking Association’s Digital Accelerator,
reached out to almost 25,000 children in 825
our bank has helped educational, social and
of Hungary’s “most disadvantaged” small
health care institutions and individuals by
communities. In the Christmas seasons over
offering digital devices for remote education.
the last 8 years, our bank donated a total
of HUF 250 million to support this initiative,
Humanitás Social Foundation
using the five mobile playgrounds (minibuses)
The Foundation’s main objective is to support
received from OTP Bank to bring the experience
those in need due to social conditions or
of play to children. This is important because
health problems, by providing funding for
most children from an underprivileged
the purchase of medicines, medical aids and
background are unable to bridge the gap
treatments. In accordance with the principle
on their own.
of equal opportunity, the Foundation
– in cooperation with its founder OTP Bank –
Through the Charity Service, we offered
regularly publishes calls for applications on
additional donations and computers to
its website, where private individuals can
disadvantaged families’ children to enable
apply for the Foundation’s grants.
their participation in remote schooling.
By concentrating on healthcare and education,
For more information about OTP Bank’s
the Humanitás Social Foundation provides
CSR principles, objectives and current events,
support for disadvantaged communities
please visit www.otpfenntarthatosag.hu
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:19)(cid:16)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)
Corporate governance
347
Publisher: OTP Bank Plc.
Responsible: Investor Relations & DCM
Cover Design: László Lelkes
Pre-press, production: OTP Bank Plc. Printing Department
(cid:2)(cid:3)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:4)(cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:14)(cid:4)(cid:4)(cid:4)(cid:22)(cid:19)(cid:24)
(cid:15)(cid:16)(cid:17)(cid:3)(cid:18)(cid:17)(cid:2)(cid:15)(cid:4)(cid:4)(cid:4)(cid:15)(cid:19)(cid:20)(cid:22)(cid:15)