OTP BANK PLC
ANNUAL REPORT 2021
(AS DEFINED IN ACT CXX OF 2001 ON THE CAPITAL MARKET)
BUDAPEST, 13 APRIL 2022
Dear Shareholders!
OTP Bank Plc. hereby provides you with the Annual Report of OTP Bank Plc. for the year 2021,
which is based on the audited financial statements approved by the Annual General Meeting of the
Company on 13 April 2022.
On behalf of OTP Bank Plc. we declare that, to the best of our knowledge, the separate and
consolidated financial statements which have been prepared in accordance with the applicable
accounting standards, present a true and fair view of the assets, liabilities, financial position and
profit and loss of OTP Bank Plc. and its consolidated subsidiaries and associates, and give a fair
view of the position, development and performance of OTP Bank Plc. and its consolidated
subsidiaries and associates, describing the principal risks and uncertainties, and do not conceal facts
or information which are relevant to the evaluation of the Issuer’s position.
13 April 2022, Budapest
dr. Sándor Csányi
Chairman & CEO
László Bencsik
Deputy CEO
CONTENTS
BUSINESS REPORT 2021 (SEPARATE)
BUSINESS REPORT 2021 (CONSOLIDATED)
INDEPENDENT AUDITORS’ REPORT (SEPARATE AND CONSOLIDATED, IN ACCORDANCE
WITH IFRS)
SEPARATE FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS (2021)
CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS (2021)
OTHER INFORMATIONS
ANNUAL REPORT 2021
BUSINESS REPORT 2021 (SEPARATE)
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
SEPARATE STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2021
(IN HUF MILLION)
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
Loans mandatorily measured at fair value through profit or loss
Investments in subsidiaries
Property and equipment
Intangible assets
Right of use assets
Investment properties
Current tax assets
Derivative financial assets designated as hedge accounting relationships
Other assets
2021
2020
474,945
2,567,212
33,638
246,462
641,939
3,071,038
4,032,465
662,012
1,573,008
81,817
62,161
17,231
4,328
-
17,727
224,488
579,120
1,535,884
183,364
160,483
911,950
2,007,692
3,417,760
480,937
1,548,972
77,974
57,639
13,479
1,936
593
6,817
169,794
TOTAL ASSETS
13,710,471
11,154,394
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
1,051,203
86,580
9,948,532
17,932
22,153
20,133
192,261
18,690
1,507
4,776
259,964
271,776
766,977
109,612
7,895,735
14,106
28,435
25,902
99,987
3,104
3,062
1,464
223,433
304,243
11,895,507
9,476,060
28,000
1,845,836
(58,872)
28,000
1,697,133
(46,799)
1,814,964
1,678,334
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
13,710,471
11,154,394
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
SEPARATE STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED
31 DECEMBER 2021
(IN HUF MILLION)
Interest Income:
Interest income calculated using the effective interest method
Income similar to interest income
Interest income and similar to interest income total
Interest Expense:
Interest expenses total
NET INTEREST INCOME
Loss allowance on loan, placement and repo receivables losses
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
LOSSES ARISING FROM DERECOGNITION OF FINANCIAL ASSETS
MEASURED AT AMORTISED COST
MODIFICATION LOSS
Income from fees and commissions
Expenses from fees and commissions
NET PROFIT FROM FEES AND COMMISSIONS
Foreign exchange losses
Gains on securities, net
Losses 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 administrative expenses
OTHER ADMINISTRATIVE EXPENSES
PROFIT BEFORE INCOME TAX
Income tax
NET PROFIT FOR THE YEAR
Earnings per share (in HUF)
Basic
Diluted
ANNUAL REPORT 2021
2021
2020
302,373
105,663
408,036
239,633
81,663
321,296
(155,491)
(99,630)
252,545
221,666
(38,841)
(57,671)
(1,484)
(130)
(1,848)
(3,202)
(16,255)
(56,710)
(405)
(63,126)
195,835
158,540
(2,700)
(3,279)
(7,017)
(17,358)
300,803
(52,276)
248,527
(5,638)
2,104
(6,494)
3,436
99,037
11,265
(41,636)
62,074
(136,126)
(40,692)
(178,611)
(355,429)
141,290
(15,951)
125,339
259,781
(40,750)
219,031
(4,518)
17,595
(671)
7,057
60,973
7,900
(28,064)
60,272
(118,498)
(38,948)
(154,165)
(311,611)
105,595
(13,121)
92,474
455
455
333
333
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
SEPARATE STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED
31 DECEMBER 2021
(IN HUF MILLION)
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 fair value adjustment of debt instruments at fair value
through other comprehensive income
Gains / (Losses) on separated currency spread of financial instruments designated as
hedging instrument
Deferred tax (9%) related to (losses) / gains on 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 gains on 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
Total
NET COMPREHENSIVE INCOME
2021
2020
125,339
92,474
(37,163)
(14,459)
3,410
1,262
1,681
(1,526)
(151)
137
(6,307)
(296)
-
27
1,407
(3,275)
(281)
310
(37,404)
(17,820)
87,935
74,654
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
POST-BALANCE SHEET EVENTS
Post-balance sheet events cover the period until 17 February 2022.
Hungary
Against the initially planned 2 pps social security contribution cut effective from July 2022, the government
reduced employers’ taxes by 4 pps already from 1 January 2022 (the 1.5% vocational training contribution
was abolished and the social contribution taxes were cut by 2.5 pps).
On 25 January 2022 the NBH hiked the base rate by 50 bps to 2.9%.
On 27 January 2022 the NBH hiked the rate of the 1-week central bank deposit by 30 bps to 4.3%.
On 15 February 2022 the CSO revealed the final GDP growth figures: accordingly, in 4Q 2021 the quarterly
expansion of 2.1% was stronger than expected, lifting the annual growth rate to 7.1% in 2021 as a whole
(seasonally and working day adjusted). Mr. Mihály Varga (Minister of Finance) announced that the
government expects 5.9% growth for 2022.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
MACROECONOMIC OVERVIEW
The Hungarian economy grew by 7.2% in 2021, stronger than had been expected. The rapid expansion
was supported by both an intensive vaccination campaign and strong fiscal and monetary support measures.
Rapid growth could continue in 2022, and it can draw near 6%, thanks to the government's economic support
measures and, hopefully, the recovery of tourism after the pandemic.
As a result of the rapid growth of demand, coupled with the rise of the global inflation, Hungary's central
bank started a monetary tightening cycle in June 2021, to prevent the increasing inflation risks. As part of
this, the Monetary Council raised the central bank base rate to 0.9% on 22 June from 0.6%, and also raised
the one-week deposit rate to 0.9%. By the end of 2021, the base rate had risen to 2.4% and the one-week
deposit rate to 4%. As inflation rose steadily and reached 7.9% in January 2022, interest rate hikes continued
in January and February 2022, with 50-basis-points increases each time.
According to the MNB's data, both retail and non-financial corporate loan portfolios expanded dynamically,
at double-digit rates in 2021. The former grew by 15% and the latter by almost 11%. Within retail loans, one
of the main drivers was the subsidized baby loan, which amounted to HUF 1,569 billion at the end of 2021.
Housing loans increased by 15% in 2021, and the value of new contracts also hit record in 2021,
approaching HUF 1,300 billion, supported by the increase in home renovation loans. The stock of cash loans
increased by 16.6% in 2021, while the stock of home equity loans shrank by about 4.0%, following the trend
of the previous years.
In connection with the favourable developments observed in the domestic banking sector and the improved
assessment of the Hungarian macroeconomic situation, on 13 July 2021 Moody’s improved the Hungarian
“macro profile” effective for banks operating in Hungary, which resulted in rating upgrades for several
domestic banks (Budapest Bank, MKB Bank, Raiffeisen Bank) and also contributed to the placement on
review for upgrade of OTP Bank’s baseline credit assessment (BCA). In September 2021 Moody’s upgraded
the Hungarian sovereign rating to ‘Baa2’ underpinned by the strong growth rebound throughout the first half
of 2021 and the projected strong growth outlook over the coming years, which will support fiscal
consolidation and reduction in the government's debt burden.
DIGITAL AND IT INNOVATIONS
We announced the SmartBank mobile application’s phase-out for retail customers, which will be replaced
with Digital Contract’s new channels, OTP internet- & mobile banking applications. By the end of 2021, more
than 600,000 OTP customers registered for the new Digital Contract. During the pandemic digital activity of
OTP clients has increased significantly, which was supported by online campaigns, customer education in
branches and continuous development of our digital services.
In 2021 new end-to-end processes were launched in new internet- & mobile banking applications such as
online personal loan request, installment payment for credit card, purchase of government securities,
prepaid mobile phone top-up, QR payment of postal cheques (including not completely filled cheques).
Several innovative features serve customer needs such as open banking function to view foreign bank
account balances, donation opportunity for money transfers, Apple Pay card digitization, branch
appointment feature, profile picture setting and maintenance of notification settings.
We pay special attention for improvements of Personal Finance Manager to support financial awareness,
and for launch of other innovative features (such as payment and other beyond banking services).
As an important milestone of banking chat platform extension we launched chat opportunity in new
internetbank in 2021, so we can serve several client needs also in identified chats. We automated the most
often topics: 15 new automated chatbot processes went live in 2021, with which our customers can get help
without human intervention in 7x24 hours.
As the end of a multi-annual process we renewed our branch and Contact Center front-end system.
Remote Expert from Home service launched in December 2021 which ensures to clients the consultation
video call not only in branches but also from home at a pre-arranged time.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
BRANCH NETWORK OF OTP BANK
The Bank provides a full range of commercial banking services through a nationwide network and its
branches are available to customers in Hungary.
1013 Budapest, Alagút utca 3.
1011 Budapest, Iskola utca 38-42.
1015 Budapest, Széna tér 7.
1012 Budapest, Vérmező út 4.
1024 Budapest, Fény utca 11-13.
1025 Budapest, Törökvész út 1/a
1026 Budapest, Szilágyi Erzsébet
fasor 121.
1087 Budapest, Könyves Kálmán krt.
76-1. sz.
1148 Budapest, Nagy Lajos király útja
19-21.
1081 Budapest, Népszínház utca 3-5.
1149 Budapest, Fogarasi út 15/b.
1083 Budapest, Futó utca 35-45
1149 Budapest, Bosnyák tér 17.
1191 Budapest, Üllői út 201.
1146 Budapest, Thököly út 102/b.
1094 Budapest, Ferenc krt. 13.
1152 Budapest, Szentmihályi út 131.
1085 Budapest, Kálvin tér 12-13.
1151 Budapest, Fő utca 64.
1097 Budapest, Könyves Kálmán krt.
12-14.
1157 Budapest, Zsókavár utca 28.
1021 Budapest, Hüvösvölgyi út 138.
1163 Budapest, Jókai Mór utca 3/b.
1033 Budapest, Flórián tér 15.
1025 Budapest, Szépvölgyi út 4/b.
1095 Budapest, Soroksári út 32-34.
1102 Budapest, Kőrösi Csoma sétány
6.
1161 Budapest, Rákosi út 118.
1173 Budapest, Ferihegyi út 93.
1039 Budapest, Heltai Jenő tér 2.
1103 Budapest, Sibrik Miklós utca 30.
1173 Budapest, Pesti út 5-7.
1032 Budapest, Bécsi út 154.
1106 Budapest, Örs vezér tere 25
1181 Budapest, Üllői út 377.
1033 Budapest, Szentendrei utca
115.
1106 Budapest, Örs Vezér tere 25/A
1.em
1041 Budapest, Erzsébet utca 50.
1115 Budapest, Bartók Béla út 92-94.
1048 Budapest, Kordován tér 4.
1042 Budapest, Árpád út 63-65.
1117 Budapest, Móricz Zsigmond
körtér 18.
1118 Budapest, Rétköz utca 5.
1052 Budapest, Deák Ferenc utca 7-
9.
1117 Budapest, Hunyadi János út 19.
1117
huszonharmadika utca 8-10.
Budapest,
Október
1188 Budapest, Vasút utca 48.
1183 Budapest, Üllői út 440.
1195 Budapest, Üllői út 285.
1195 Budapest, Vak Bottyán út 75 a-
c
1204 Budapest, Kossuth Lajos utca
44-46.
1238 Budapest, Grassalkovich út
160.
1055 Budapest, Szent István krt. 1.
1051 Budapest, Nádor utca 16.
1054 Budapest, Széchenyi rkp. 19.
1066 Budapest, Oktogon tér 3.
1077 Budapest, Király utca 49.
1073 Budapest, Erzsébet krt. 41.
1075 Budapest, Károly krt. 1.
1076 Budapest, Thököly út 4
1075 Budapest, Károly krt. 25.
1085 Budapest, József krt. 33.
1085 Budapest, József krt. 53.
1126 Budapest, Böszörményi út 9-11.
1203 Budapest, Bíró Mihály utca 7.
1123 Budapest, Alkotás utca 53
1239 Budapest, Bevásárló utca 2.
1124 Budapest, Apor Vilmos tér 11.
1055 Budapest, Nyugati tér 9.
1137 Budapest, Pozsonyi út 38.
1062 Budapest, Váci út 1-3.
1138 Budapest, Váci út 135-139
1133 Budapest, Váci út 80.
1134 Budapest, Váci út 17.
1135 Budapest, Lehel út 70-76.
ANNUAL REPORT 2021
1211 Budapest, Kossuth Lajos utca
86.
1211 Budapest, Kossuth Lajos utca
99.
1221 Budapest, Kossuth Lajos utca
31.
1222 Budapest, Nagytétényi út 37-45.
7621 Pécs, Rákóczi út 44.
7621 Pécs, Rákóczi út 1.
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
7632 Pécs, Pécs-Kertváros,Diana tér
14.
6000 Kecskemét, Dunaföldvári út 2.
3580 Tiszaújváros, Szent István út
30.
7633 Pécs, Pécs-Újmecsekalja,Ybl
Miklós utca 7/3.
7300 Komló, Kossuth Lajos utca 95/1.
6320 Solt, Kossuth Lajos utca 48-50.
6080 Szabadszállás, Dózsa György
út 1.
5600 Békéscsaba, Szt István tér 3.
3600 Ózd, Városház tér 1/a.
3980 Sátoraljaújhely, Széchenyi tér
13.
7700 Mohács, Jókai utca 1.
3900 Szerencs, Kossuth tér 3/a.
7800 Siklós, Felszabadulás utca 60-
62.
7900 Szigetvár, Vár utca 4.
7720 Pécsvárad, Bem utca 2/b
5700 Gyula, Bodoky utca 9.
5800 Mezőkovácsháza, Árpád utca
177.
5900 Orosháza, Kossuth Lajos utca
20.
7370 Sásd, Dózsa György utca 2.
5540 Szarvas, Kossuth Lajos tér 1.
7960 Sellye, Köztársaság tér 4.
5520 Szeghalom, Tildy Zoltán utca 4-
8.
7940 Szentlőrinc, Munkácsy utca
16/A
5630 Békés, Széchenyi tér 2.
7773 Villány, Baross Gábor utca 36.
5830 Battonya, Fő utca 86.
7754 Bóly, Hősök tere 8/b.
5510 Dévaványa, Árpád utca 32.
6000 Kecskemét, Korona utca 2.
5742 Elek, Gyulai út 5.
6000 Kecskemét, Szabadság tér 5.
5500 Gyomaendrőd, Szabadság tér 7
6500 Baja, Deák Ferenc utca 1.
5650 Mezőberény, Kossuth Lajos tér
12.
6300 Kalocsa, Szent István király út
43-45.
5820 Mezőhegyes, Zala Gy ltp. 7.
6200 Kiskőrös, Petőfi tér 13.
5720 Sarkad, Árpád fejedelem tér 5.
6400 Kiskunhalas, Sétáló utca 7
5940 Tótkomlós, Széchenyi utca 4-6.
3700 Kazincbarcika, Egressy Béni út
50.
3950 Sárospatak, Eötvös József utca
2.
3630 Putnok, Kossuth Lajos út 45.
3800 Szikszó, Kassai utca 16.
3770 Sajószentpéter, Bethlen Gábor
utca 1/a.
3450 Mezőcsát, Hősök tere 23.
3910 Tokaj, Rákóczi utca 37.
3527 Miskolc, József Attila utca 87.
6720 Szeged, Takaréktár utca 7.
6720 Szeged, Aradi vértanúk tere 3.
6791 Szeged, Negyvennyolcas utca
3.
6600 Szentes, Kossuth Lajos utca 26.
6640 Csongrád, Szentháromság tér
2-6.
6100 Kiskunfélegyháza, Petőfi tér 1
6430 Bácsalmás, Szt János utca 32.
6087 Dunavecse, Fő út 40.
6070 Izsák, Szabadság tér 1.
6440 Jánoshalma, Rákóczi utca 10.
6237 Kecel, Császártöltési utca 1.
6120 Kiskunmajsa, Csendes köz 1.
6090 Kunszentmiklós, Kálvin tér 11.
5661 Újkígyós, Kossuth Lajos utca
38.
6800 Hódmezővásárhely, Andrássy
út 1.
5530 Vésztő, Kossuth Lajos utca 72.
6900 Makó, Széchenyi tér 14-16.
5525 Füzesgyarmat, Szabadság tér
1.
5600 Békéscsaba, Andrássy út 37-
43.
6760 Kistelek, Kossuth Lajos utca 6-8
6782 Mórahalom, Szegedi út 3.
6724 Szeged, Rókusi krt. 42-64.
3530 Miskolc, Uitz B. utca 6.
6724 Szeged, Londoni krt. 3.
3530 Miskolc, Rákóczi út 1.
8000 Székesfehérvár, Ősz utca 13.
3531 Miskolc, Győri kapu 51.
2060 Bicske, Bocskai köz 1.
6050 Lajosmizse, Dózsa György utca
102/a.
3535 Miskolc, Árpád út 2.
6449 Mélykút, Petőfi tér 18.
3780 Edelény, Tóth Árpád út 1.
3860 Encs, Bem József utca 1.
6230 Soltvadkert, Szentháromság
utca 2.
6060 Tiszakécske, Béke tér 6.
2400 Dunaújváros, Dózsa György út
4/e.
8060 Mór, Deák Ferenc utca 2.
7000 Sárbogárd, Ady Endre út 172.
3400 Mezőkövesd, Mátyás király utca
149.
2457 Adony, Petőfi Sándor utca 2.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
8130 Enying, Kossuth Lajos utca 43.
4087 Hajdúdorog, Petőfi tér 9-11.
2483 Gárdony, Szabadság út 18.
4138 Komádi, Fő utca 1-3.
8154 Polgárdi, Deák Ferenc utca 16.
4181 Nádudvar, Fő utca 119.
8000 Székesfehérvár, Fő utca 7.
4090 Polgár, Barankovics tér 15.
8000 Székesfehérvár, Holland fasor
2.
4242 Hajdúhadház, Kossuth utca 2.
9022 Győr, Teleki László utca 51.
9011 Győr, Győr-Szentiván, Déryné
út 77.
4032 Debrecen, Egyetem tér 1.
4254 Nyíradony, Árpád tér 6.
4025 Debrecen, Hatvan utca 2-4.
3070 Bátonyterenye, Bányász utca
1/a.
3170 Szécsény, Feszty Árpád utca 1.
2700 Cegléd, Szabadság tér 6.
2370 Dabas, Bartók Béla út 46.
2100 Gödöllő, Szabadság tér 12-13.
2200 Monor, Kossuth Lajos utca 88/b.
2760 Nagykáta, Bajcsy-Zsilinszky
utca 1.
9400 Sopron, Teleki Pál út 22./A
3300 Eger, Törvényház utca 4.
2300 Ráckeve, Szt István tér 3.
9300 Csorna, Soproni út 58.
3390 Füzesabony, Rákóczi utca 77.
2000 Szentendre, Pannónia út 1-3.
9200 Mosonmagyaróvár, Fő utca 24
3200 Gyöngyös, Fő tér 1.
2600 Vác, Széchenyi utca 3-7.
9400 Sopron, Várkerület 96. fszt. 1.
3360 Heves, Hősök tere 4.
2120 Dunakeszi, Barátság utca 29.
9330 Kapuvár, Szt István király utca
4-6.
3000 Hatvan, Kossuth tér 8. fszt. 1.
2030 Érd, Budai út 24.
9431 Fertőd, Fő utca 7.
9317 Szany, Ady Endre utca 2.
9024 Győr, Bartók Béla út 53/b.
9024 Győr, Kormos István utca 6.
9026 Győr, Egyetem tér 1.
9027 Győr, Budai út 1.
4025 Debrecen, Pásti utca 1-3.
4025 Debrecen, Piac utca 45-47.
4032 Debrecen, Füredi út 43.
4100 Berettyóújfalu, Oláh Zsigmond
utca 1.
4150 Püspökladány, Kossuth utca 2.
4220 Hajdúböszörmény, Kossuth
Lajos utca 3.
4080 Hajdúnánás, Köztársaság tér
17-18/a.
3021 Lőrinci, Szabadság tér 25/A
2750 Nagykőrös, Szabadság tér 2.
3250 Pétervására, Szt Márton utca 9.
2440 Százhalombatta, Szent István
tér 8.
3245 Recsk, Kossuth Lajos út 93.
3300 Eger, Széchenyi utca 2.
2800 Tatabánya, Fő tér 32.
2510 Dorog, Bécsi út 33.
2900 Komárom, Mártirok útja 23.
2890 Tata, Ady Endre utca 1-3.
2500 Esztergom, Rákóczi tér 2-4.
2840 Oroszlány, Rákóczi utca 84.
2941 Ács, Gyár utca 14.
2740 Abony, Kossuth Lajos tér 3.
2730 Albertirsa, Vasút utca 4/a.
2170 Aszód, Kossuth Lajos utca 42-
46.
2040 Budaörs, Szabadság utca
131/a.
2330 Dunaharaszti, Dózsa György
utca 25.
2230 Gyömrő, Szt István utca 17.
2340 Kiskunlacháza, Dózsa György
utca 219.
2870 Kisbér, Batthyány tér 5.
2364 Ócsa, Szabadság tér 1.
2536 Nyergesújfalu, Kossuth Lajos
utca 126.
2721 Pilis, Rákóczi utca 9.
2800 Tatabánya, Bárdos László utca
2.
4200 Hajdúszoboszló, Szilfákalja utca
6-8.
3100 Salgótarján, Rákóczi út 22.
4060 Balmazújváros, Veres Péter
utca 3.
2660
fejedelem utca 44.
Balassagyarmat,
Rákóczi
2085 Pilisvörösvár, Fő utca 60
2310 Szigetszentmiklós, Ifjúság útja
17.
2220 Vecsés, Fő utca 170.
2360 Gyál, Kőrösi út 160.
4110 Biharkeresztes, Kossuth utca 4.
3060 Pásztó, Fő utca 73/a.
2143 Kistarcsa, Hunyadi utca 7.
4130 Derecske, Köztársaság utca
111.
2651 Rétság, Rákóczi Ferenc utca
28-30.
2119 Pécel, Kossuth tér 4.
2092 Budakeszi, Fő utca 174.
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OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
2141 Csömör, Határ út 6.
4492 Dombrád, Szabadság tér 7.
2040 Budaörs, Sport út 2-4.
2120 Dunakeszi, Nádas utca 6.
2310 Szigetszentmiklós, Háros utca
120.
2013 Pomáz, József Attila utca 17.
2083 Solymár, Szent Flórián utca 2.
2220 Vecsés, Fő utca 246-248
2112 Veresegyház, Fő út 52
2234 Maglód, Esterházy utca 1.
2030 Érd, Iparos út 5.
2225 Üllő, Pesti út 92/b.
7400 Kaposvár, Széchenyi tér 2.
7400 Kaposvár, Honvéd utca 55.
8700 Marcali, Rákóczi utca 6-10.
7500 Nagyatád, Korányi Sándor utca
6.
8600 Siófok, Fő tér 10/a
7570 Barcs, Séta tér 5.
8630 Balatonboglár, Dózsa György
utca 1.
8840 Csurgó, Petőfi tér 20.
8640 Fonyód, Ady Endre utca 25.
8693 Lengyeltóti, Csalogány utca 2.
8660 Tab, Kossuth Lajos utca 96.
7561 Nagybajom, Fő út 107
8638 Balatonlelle, Rákóczi út 202-204
4400 Nyíregyháza, Rákóczi utca 1.
4900
Zsigmond utca 4.
Fehérgyarmat,
Móricz
4600 Kisvárda, Szt László utca 30.
4700 Mátészalka, Szalkay László
utca 34.
4300 Nyírbátor, Zrínyi utca 1.
4800 Vásárosnamény, Szabadság tér
33.
4561 Baktalórántháza, Köztársaság
tér 4.
7030 Paks, Dózsa György utca 33.
4233 Balkány, Szakolyi utca 5.
4765 Csenger, Ady Endre utca 1.
4501 Kemecse, Móricz Zsigmond
utca 18.
7090 Tamási, Szabadság utca 33
7150 Bonyhád, Szabadság tér 10.
7200 Dombóvár, Dombó Pál utca 3.
7020 Dunaföldvár, Béke tér 11.
7081 Simontornya, Petőfi utca 68.
4320 Nagykálló, Árpád utca 10.
7130 Tolna, Kossuth Lajos utca 31.
4450 Tiszalök, Kossuth Lajos utca
52/a.
4440 Tiszavasvári, Kossuth Lajos
utca 6.
4244 Újfehértó, Fő tér 15.
4625 Záhony, Ady Endre út 27-29.
5000 Szolnok, Szapáry utca 31.
5000 Szolnok, Nagy Imre krt. 2/a.
5100 Jászberény, Lehel vezér tér 28.
5440 Kunszentmárton, Kossuth Lajos
utca 2.
5350 Tiszafüred, Piac tér 3.
5200 Törökszentmiklós, Kossuth
Lajos út 141.
7030 Paks, Kishegyi út 44/a
7140 Bátaszék, Budai út 13.
9700 Szombathely, Fő tér 3-5.
9700 Szombathely, Rohonci út 52.
9900 Körmend, Vida József utca 12.
9600 Sárvár, Batthyány utca 2.
9500 Celldömölk, Kossuth Lajos utca
18.
9730 Kőszeg, Kossuth Lajos utca 8.
9970 Szentgotthárd, Mártírok út 2.
9800 Vasvár, Alkotmány utca 2.
9737 Bük, Kossuth Lajos utca 1-3.
5300 Karcag, Kossuth Lajos tér 15.
9700 Szombathely, Király utca 10.
5310 Kisújszállás, Szabadság tér 6.
9970 Szentgotthárd, Füzesi út 15.
5400 Mezőtúr, Szabadság tér 29.
5420 Túrkeve, Széchenyi utca 32-34.
5130 Jászapáti, Kossuth Lajos út 2-8.
5123
Ferenc utca 4-6.
Jászárokszállás,
Rákóczi
8200 Veszprém, Brusznyai Árpád
utca 1.
8400 Ajka, Szabadság tér 18.
8500 Pápa, Fő tér 22.
8300 Tapolca, Fő tér 2.
5055 Jászladány, Kossuth Lajos utca
77.
8230 Balatonfüred, Petőfi Sándor
utca 8.
5340 Kunhegyes, Szabadság tér 4.
8100 Várpalota, Újlaky út 2.
5321 Kunmadaras, Karcagi út 2-4.
5435 Martfű, Szolnoki út 142
5430 Tiszaföldvár, Kossuth Lajos út
191.
8220 Balatonalmádi, Baross Gábor
utca 5/a.
8460 Devecser, Kossuth Lajos utca
13.
8330 Sümeg, Kisfaludy Sándor tér 1.
5000 Szolnok, Széchenyi krt. 135.
8420 Zirc, Rákóczi tér 15.
7100 Szekszárd, Szent István tér 5-7.
8900 Zalaegerszeg, Kisfaludy utca
15-17.
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8800 Nagykanizsa, Deák tér 15.
8868 Letenye, Szabadság tér 8.
8380 Hévíz, Erzsébet királyné utca
11.
8960 Lenti, Dózsa György utca 1.
8360 Keszthely, Kossuth Lajos utca
38.
8790 Zalaszentgrót, Batthyány utca
11.
1054 Budapest, Szabadság tér 7-8.
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STATEMENT ON CORPORATE GOVERNANCE PRACTICE
Corporate governance practice
OTP Bank Plc., being registered in Hungary, has a corporate governance policy that complies with the
provisions on companies of the act applicable (Civil Code). As the company conducts banking operations, it
also adheres to the statutory regulations pertaining to credit institutions.
Beyond fulfilling the statutory requirements, as a listed company on the Budapest Stock Exchange (BSE), the
company also makes an annual declaration on its compliance with the BSE’s Corporate Governance
Recommendations. After being approved by the General Meeting, this declaration is published on the websites
of both the Stock Exchange (www.bet.hu) and the Bank (www.otpbank.hu).
System of internal controls
OTP Bank Plc., as a provider of financial and investment services, operates a closely regulated and state-
supervised system of internal controls.
OTP Bank Plc. has detailed risk management regulations applicable to all types of risks (credit, country,
counterparty, market, liquidity, operational, compliance), which are in compliance with the regulations on
prudent banking operations. Its risk management system extends to cover the identification of risks, the
assessment and analysis of their impact, elaboration of the required action plans and the monitoring of their
effectiveness and results. The business continuity framework is intended to provide for the continuity of
services. Developed on the basis of international methodologies, the lifecycle model includes process
evaluation, action plan development for critical processes, the regular review and testing of these, as well as
related DRP activities.
OTP Bank Plc.'s internal audit system is realised on several levels of control built on each other. The system
of internal checks and balances includes process-integrated control, management control, independent
internal audit organisation and executive information system. The independent internal audit organisation as
an element of internal lines of defence promotes the statutory and efficient management of assets and
liabilities, the defence of property, the safe course of business, the efficient operation of internal control
systems, the minimisation of risks, moreover 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 audit organisation with the prior opinion of the Audit Committee
draws up, for the Supervisory Board and the Board of Directors, objective and independent reports in respect
of the operation of risk management, internal control mechanisms and corporate governance functions.
Furthermore, in line with the provisions of the Credit Institutions Act, reports, once a year, to the Supervisory
Board and the Board of Directors on the regularity of internal audit tasks, professional requirements and the
conduct of audits, and on the review of compliance with IT and other technical conditions needed for the audits.
In line with the regulations of the European Union, the applicable Hungarian laws and supervisory
recommendations, OTP Bank Plc. operates an independent organisational unit with the task of identifying and
managing compliance risks.
IT Controls
Applications are developed by both in-house group resources and by third parties. OTP Bank applies
administrative, logical and physical control measures commensurate with the risk to protect the IT systems
storing and processing data, as follows:
• access to data/systems is only possible on the basis of a predefined authorisation management process
that applies the principle of least privilege, ensures segregation of responsibilities, that has regular access
right reviews and ensures that dismissed employees’ access is revoked;
• user authentication, authorisation and password management processes are controlled by policies and
•
audited;
the systems have well-separated test and development environments, which ensures that program
developments or modifications are only deployed to the operational environment after proper, controlled
testing and approval;
• systems are protected by appropriate network perimeter protection, various security devices and network
•
segmentation, furthermore all network communications are protected;
the IT systems that store and process data are regularly backed up and stored in controlled premises with
adequate protection for long-term retention, and the organisation carries out regular back-up tests;
• adequate redundancy is applied for IT systems that store and process data to ensure business continuity
and disaster resiliency;
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• has developed a BCP for critical systems and processes, which is regularly tested and reviewed;
•
the Bank collects and retains the complete log of all data processing activities and the confidentiality,
availability, integrity and non-repudiation of these audit logs are ensured;
there is a continuous, up-to-date protection against malicious codes;
it ensures the regular implementation of vendor patches and updates for the environments used;
it uses a data leakage protection solution to reduce the risk of data loss;
it ensures the continuous monitoring of the operation of the physical and virtual environment system
elements, and the detection and management of events, where possible automatically;
the above measures are documented at an appropriate level, which ensures the traceability of the
implementation of data security requirements in a transparent manner;
it ensures the irretrievable deletion of the data stored on the media, the destruction of the media and the
documentation of the destruction of the media during secure operational media disposal processes;
it enforces data protection requirements already at the design stage of the implementation of the
IT systems storing and processing personal data and of the systems operational processes related to
them;
it ensures that its employees have adequate knowledge of data protection requirements and provides
regular data protection and information security training for them.
•
•
•
•
•
•
•
•
General meeting
The General Meeting is the supreme governing body of OTP Bank Plc. The regulations pertaining to its
operation are set forth in the Company’s Articles of Association, and comply fully with both general and special
statutory requirements. Information on the General Meeting is available in the Corporate Governance Report.
In view of the situation caused by the epidemic, on 22 February 2021 the Parliament voted Act I of 2021 on
the prevention of the coronavirus pandemic, which extended the scope of the Government Decree 502/2020
(XI.16.) (Government Decree) until 22 May 2021. Pursuant to such, in line with Section 9 of the Government
Decree, the resolutions on the published agenda items were passed by OTP Bank Plc’s Board of Directors
acting in the competence of the General Meeting on 16 April 2021.
The Extraordinary General Meeting was held on 15 October 2021 in accordance with the general rules,
traditionally, with the personal participation of the shareholders, subject to Section 3 (1) of the Government
Decree, also in line with the Act I of 2021 on the prevention of the coronavirus pandemic.
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
The Company’s registered capital is HUF 28,000,001,000, that is twenty-eight thousand million one
thousand Hungarian forint, divided into 280,000,010 that is Two hundred and eighty million and ten
dematerialised ordinary shares with a nominal value of HUF 100 each, and a total nominal value of
HUF 28,000,001,000, that is twenty eight billion one thousand Hungarian forint.
The ordinary shares of the Company specified all have the same nominal value and bestow the same rights
in respect of the Company.
There are no restrictions in place concerning the transfer of issued securities constituting the registered
capital of the Company.
No securities with special control rights have been issued by the Company.
Special Employee Partial Ownership Plan Organization No. I. of OTP Employees and Special Employee
Partial Ownership Plan Organization No. II. of OTP Employees (hereinafter referred to as: OTP SEPOPs)
were established based on the decision of the Company’s certain employees and executives considered as
employees pursuant to the Act XLIV of 1992 on Employee Partial Ownership Plan. Management rights of
OTP SEPOPs are exercised by a trust named Alapítvány az OTP Munkavállalók Különleges Résztulajdonosi
Programjáért, founded by the same employees setting up OTP SEPOPs. The Company did not participate
either in foundation or in management of OTP SEPOPs.
The Company in line with the ESOP Act initiated an employee share ownership plan having a remuneration
purpose and founded OTP Bank ESOP Organization for its execution (hereinafter referred to as ESOP
Organization). Pursuant to the laws, the management rights over the ESOP Organization are exercised by
a law firm, the so called trustee. In the case of the ESOP Organization Szűcs Law Firm is entitled to exercise
the authorities of the trustee. The Company participated in the foundation of the ESOP Organization,
however, after its foundation it cannot participate in its management, and according to the laws, it is not
entitled to either give orders or to recall the trustee.
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Rules on the restrictions of the voting rights:
The Company’s ordinary shares confer one vote per share.
An individual shareholder or group of shareholders may not exercise voting rights in respect of in an extent
exceeding 25%, or – if the voting rights of another shareholder or group of shareholders exceed 10% –
exceeding 33% of the total voting rights represented by the shares conferring voting rights at the Company’s
General Meeting.
The shareholder is obliged to notify the Company’s Board of Directors without delay if the shareholder
directly or indirectly, or together with other shareholders in the same group of shareholders, holds more than
2% of the voting rights represented by the shares conferring voting rights at the Company’s General Meeting.
Concurrently with this, the shareholder is obliged to designate the shareholders through which the indirect
voting right exists, or the members of the group of shareholders. In the event of a failure to provide such
notification, or if there are substantive grounds for assuming that the shareholder has made a misleading
declaration regarding the composition of the shareholder group, then the shareholder’s voting right shall be
suspended and may not be exercised until the shareholder has met the above obligations. The notification
obligation stipulated in this paragraph and the related legal consequences are also incumbent upon
individuals who are classified or may be classified as the Company’s shareholders under Article 61 of the
Capital Markets Act. The Company must also be provided with proof of the conditions for exemption from
the notification obligation in accordance with Section 61 (7)-(8) and Section 61 (10)-(11)-(12), of the Capital
Markets Act.
Shareholder group: the shareholder and another shareholder, in which the former has either a direct or
indirect shareholding or has an influence without a shareholding (collectively: a direct and/or indirect
influence); furthermore: the shareholder and another shareholder who is exercising or is willing to exercise
its voting rights together with the former shareholder, regardless of what type of agreement between the
participants underlies such concerted exercising of rights.
For determining the existence and extent of the indirect holding, the rules of the Credit Institutions Act
relating to the calculation of indirect ownership shall be applied.
If the voting rights that may be exercised by a shareholder group exceed the threshold stipulated in the first
paragraph of this section, the voting rights shall be reduced in such a way that the voting rights relating to
the shares most recently acquired by the group of shareholders shall not be exercisable.
If there are substantive grounds to presume that the exercising of voting rights by any shareholder or
shareholders might result in a breach of the rules of the Capital Markets Act relating to the acquisition of a
controlling interest, the Board of Directors’ authorised representative responsible for the registration of
shareholders at the venue of the General Meeting, or the Chairman of the General Meeting, may exclude
the affected shareholders from attending the General Meeting or exercising voting rights.
The General Meeting has exclusive authority with respect to the decision regarding the delisting of the
shares (qualified majority). When making the decisions, shares embodying multiple voting rights shall
represent one share.
The Company is not aware of any kind of agreements among the owners that could give rise to the restriction
of the transfer of issued securities and/or the voting rights.
Rules on the appointment and removal of executive officers, and rules on amendment of the Articles of
Association:
The Board of Directors has at least 5, and up to 11 members.
When making the decisions, shares embodying multiple voting rights shall represent one share. The
members of the Board of Directors are elected by the General Meeting based on its decision uniformly either
for an indefinite period or for five years; in the latter case the mandate ends with the General Meeting
concluding the fifth financial year following the election. The mandate of a member elected during this period
expires together with the mandate of the Board of Directors.
The Board of Directors elects a Chairman and, may elect one or more Deputy Chairmen, from among its
own members, whose period of office shall be equal to the mandate of the Board of Directors. The Chairman
of the Board of Directors is also the Chief Executive Officer (Chairman & CEO) of the Company, unless the
Board of Directors decides within its competence that the position of Chairman of the Board of Directors and
the Chief Executive Officer of the Company are held by separate persons.
The membership of the Board of Directors ceases to exist by
a. expiry of the mandate,
b.
resignation,
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c.
recall,
d. death,
e.
f.
the occurrence of grounds for disqualification as regulated by law.
termination of the employment of internal (executive) Board members.
The General Meeting has exclusive authority with respect to the following matters:
the recall of members of the Board of Directors, the Supervisory Board and Audit Committee, and of the
auditor; (qualified majority)
More than one third of the members of the Board of Directors and the non-executive members of the
Supervisory Board may be recalled within a 12-month period only if any shareholder holds more than
33% of the shares issued by the Company, which have been obtained by the shareholder by way of
a public purchase offer.
except in the cases referred by these Articles of Association to the authority of the Board of Directors,
the establishment and amendment of the Articles of Association; (qualified majority); the General
Meeting decides on proposals concerning the amendment of the Articles of Association – based on a
resolution passed by shareholders with a simple majority – either individually or en masse.
The Board of Directors is obliged to
prepare the Company’s financial statements in accordance with the Accounting Act, and make a
proposal for the use of the profit after taxation;
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 assets and business policy;
provide for the proper keeping of the Company's business books;
perform the tasks referred to its authority under the Credit Institutions Act, in particular:
- ensuring the integrity of the accounting and financial reporting system;
- elaborating the appropriate strategy and determining risk tolerance levels for each business unit
concerned;
- setting risk assumption limits;
- providing the necessary resources for the management or risk, the valuation of assets, the use of
external credit ratings and the application of internal models.
The following, in particular, come under the exclusive authority of the Board of Directors:
election of the Chairman & Chief Executive Officer of the Company, and exercising employer’s right in
respect thereof;
election of one or more Deputy Chairmen of the Board of Directors;
determination of the annual plan;
the analysis and assessment of the implementation of business-policy guidelines, on the basis of the
Company’s quarterly balance sheet;
decisions on transactions referred to the authority of the Board of Directors by the Company's
organisational and operational regulations;
decision on launching, suspending, or terminating the performance of certain banking activities within
the scope of the licensed activities of the Company;
designation of the employees entitled to sign on behalf of the Company;
decision on the increasing of registered capital at the terms set out in the relevant resolution of the
General Meeting;
decision to acquire treasury shares at the terms set out in the relevant resolution of the General Meeting;
decision on approving internal loans in accordance with the Credit Institutions Act;
decision on the approval of regulations that fundamentally determine banking operations, or are referred
to its authority by the Credit Institutions Act. The following shall qualify as such regulations:
-
-
-
-
-
-
-
the collateral evaluation regulations,
the risk-assumption regulations,
the customer rating regulations,
the counterparty rating regulations,
the investment regulations,
the regulations on asset classification, impairment and provisioning,
the organisational and operational regulations, which contain the regulations on the procedure for
assessing requests related to large loans,
the regulations on the transfer of signatory rights;
-
the decision on approving the Rules of Procedure of the Board of Directors;
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decision on steps to hinder a public takeover procedure;
decision on the acceptance of a public purchase offer received in respect of treasury shares;
decision on the commencement of trading in the shares in a regulated market (flotation);
decision on the cessation of trading in the shares in a given regulated market, provided that the shares
are traded in another regulated market (hereinafter: transfer).
The Board of Directors is exclusively authorised to:
decide, in the cases specified in the Civil Code, on acceptance of the Company’s interim balance sheet,
subject to the prior approval of the Supervisory Board;
decide, instead of the General Meeting, to pay an advance on dividends, subject to the preliminary
approval of the Supervisory Board;
make decisions regarding any change in the Company’s name, registered office, permanent
establishments and branches, and in the Company’s activities – with the exception of its core activity –
and, in relation to this, to modify the Articles of Association should it become necessary to do so on the
basis of the Civil Code or the Articles of Association;
make decision on mergers (if, according to the provisions of the law on the transformation, merger and
demerger of legal entities, the approval of the General Meeting is not required in order for the merger to
take place).
The Board of Directors directly exercises employer's rights in respect of the Chairman & CEO. The person
affected by a decision may not participate in the decision making. Employer rights in respect of the executive
directors of the Company are exercised by the Board of Directors through the Chairman & CEO, with the
proviso that the Board of Directors must be notified in advance of the appointment and dismissal of the
Deputy CEOs. With regard to issues related to the exercising of employer's rights in respect of employees,
the Company is represented by the Chief Executive Officer and by the senior company employees defined
in the Organisational and Operational Regulations of the Company, in accordance with the delegation of
authority approved by the Board of Directors. If the Chairman of the Board of Directors and the CEO are
different persons, the employer rights in respect of the other executive directors of the Company (CEO,
deputy CEOs) are exercised by the Board of Directors through the Chairman of Board of Directors, with the
proviso that the Board of Directors shall be notified in advance of the appointment and dismissal of the CEO
and Deputy CEOs. With regard to issues related to the exercising of employer's rights in respect of
employees, the Company is represented by the persons defined in the Organisational and Operational
Regulations of the Company, in accordance with the delegation of authority approved by the Board of
Directors.
The Board of Directors may delegate, to individual members of the Board of Directors, to executive directors
employed by the Company, and to the heads of the individual service departments, any task that does not
come under the exclusive authority of the Board of Directors in accordance with these Articles of Association
or a General Meeting resolution.
The Company may acquire treasury shares in accordance with the rules of the Civil Code. The prior
authorisation of the General Meeting is not required for the acquisition of treasury shares if the acquisition
of the shares is necessary in order to prevent a direct threat of severe damage to the Company (this
provision is not applicable in the event of a public purchase offer aimed at buying up the Company’s shares),
as well as if the Company acquires the treasury shares in the context of a judicial procedure aimed at the
settlement of a claim to which the Company is entitled, or in the course of a transformation.
The Company has not made agreements in the meaning of points (j) and (k) in paragraph 95/A of
Act No. C of 2000 on Accounting.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
Ownership structure of OTP Bank Plc.
Description of owner
Total equity
1 January 2021
Voting
rights1
Quantity
Ownership
share
Voting
rights 1
Quantity
31 December 2021
Ownership
share
20.93%
71.60%
4.79%
0.11%
0.85%
1.55%
0.08%
0.04%
0.04%
100.00%
Domestic institution/company
Foreign institution/company
Domestic individual
Foreign individual
Employees, senior officers
Treasury shares2
Government held owner
International Development Institutions
Other3
TOTAL
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 2021 ESOP owned 7.656.897 OTP shares.
74,637,180
186,733,858
12,805,389
319,712
1,941,018
3,251,484
188,326
120,871
2,172
280,000,010
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
26.97%
67.47%
4.63%
0.12%
0.70%
0.00%
0.07%
0.04%
0.00%
100.00%
21.26%
72.73%
4.87%
0.12%
0.87%
0.00%
0.08%
0.04%
0.04%
100.00%
26.66%
66.69%
4.57%
0.11%
0.69%
1.16%
0.07%
0.04%
0.00%
100.00%
3 Non-identified shareholders according to the shareholders’ registry.
Number of treasury shares held in the year under review (2021)
OTP Bank
Subsidiaries
TOTAL
1 January
4,334,140
0
4,334,140
31 March
4,330,609
0
4,330,609
30 June
1,120,786
0
1,120,786
30 September
1,077,322
0
1,077,322
31 December
3,251,484
0
3,251,484
SHAREHOLDERS WITH OVER/AROUND 5% STAKE AS AT 31 DECEMBER 2021
Name
Nationality1
Activity2
MOL (Hungarian Oil and Gas Company Plc.)
KAFIJAT Group
KAFIJAT Ltd.
MGTR Alliance Ltd.
Groupama Group
Groupama Gan Vie SA
Groupama Biztosító Ltd.
D
D
D
D
F/D
F
D
C
C
C
C
C
C
C
Number of
shares
24,000,000
19,661,409
9,839,918
9,836,491
14,311,769
14,140,000
171,769
Ownership3
Voting
rights3,4
Notes5
8.57%
7.02%
3.51%
3.51%
5.11%
5.05%
0.06%
8.67%
7.10%
3.56%
3.55%
5.17%
5.11%
0.06%
-
-
-
-
-
-
-
1 Domestic (D), Foreign (F).
2 Custodian (CU), Public Institution (PU), International Development Institutions (ID), Institutional (I), Company (C), Private (PR),
Employee or senior officer (E).
3 Rounded to two decimals.
4 Voting rights in the General Meeting of the Issuer for participation in decision-making.
5 Eg: professional investor, financial investor, etc.
Senior officers, strategic employees and their shareholding of OTP shares as at 31 December 2021
Type1
Name
Position
IT
IT
IT
IT
IT
IT
IT
IT
IT
IT
IT
FB
FB
FB
FB
FB
FB
SP
SP
dr. Sándor Csányi 2
Chairman and CEO
Deputy Chairman
Tamás Erdei
member
Gabriella Balogh
member
Mihály Baumstark
member, Deputy CEO
Péter Csányi
member
dr. István Gresa
member, Deputy CEO
Antal Kovács
György Nagy 3
member
dr. Márton Gellért Vági member
member
dr. József Vörös
member, Deputy CEO
László Wolf
Chairman
Tibor Tolnay
Deputy Chairman
dr. Gábor Horváth
member
Klára Bella
member
dr. Tamás Gudra
member
András Michnai
member
Olivier Péqueux
Deputy CEO
László Bencsik
Deputy CEO
György Kiss-Haypál
TOTAL No. of shares held by management:
1 Employee in strategic position (SP), Board Member (IT), Supervisory Board Member (FB)
2 Number of OTP shares owned by Dr. Sándor Csányi directly or indirectly: 4,080,034
3 Number of OTP shares owned by György Nagy directly or indirectly: 600,000
Commencement
date of the term
15/05/1992
27/04/2012
16/04/2021
29/04/1999
16/04/2021
27/04/2012
15/04/2016
16/04/2021
16/04/2021
15/05/1992
15/04/2016
15/05/1992
19/05/1995
12/04/2019
16/04/2021
25/04/2008
13/04/2018
Expiration/termination
of the term
2026
2026
2026
2026
2026
2026
2026
2026
2026
2026
2026
2023
2023
2023
2023
2023
2023
Number of
shares
293,907
32,285
1,393
44,000
1
173,258
79,244
0
0
171,114
532,143
54
0
344
0
100
0
10,038
3,137
1,341,018
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
Committees1
Members of the Board of Directors
Dr. Sándor Csányi – Chairman
Mr. Tamás Erdei – Deputy Chairman
Ms. Gabriella Balogh2
Mr. Mihály Baumstark
Dr. Tibor Bíró3
Mr. Péter Csányi2
Dr. István Gresa
Mr. Antal Kovács
Mr. György Nagy2
Dr. Antal Pongrácz3
Dr. László Utassy3
Dr. Márton Gellért Vági2
Dr. József Vörös
Mr. László Wolf
Members of the Supervisory Board
Mr. Tibor Tolnay – Chairman
Dr. József Gábor Horváth – Deputy Chairman
Ms. Klára Bella
Dr. Tamás Gudra4
Mr. András Michnai
Mr. Olivier Péqueux
Dr. Márton Gellért Vági5
Members of the Audit Committee
Dr. József Gábor Horváth – Chairman
Mr. Tibor Tolnay – Deputy Chairman
Dr. Tamás Gudra6
Mr. Olivier Péqueux
Dr. Márton Gellért Vági7
The résumés of the committee and board members are available in the Corporate Governance Report/Annual
Report.
Personal and organizational changes
On 12 March 2021, the labour contract of Mr. Tibor Johancsik, Deputy CEO in charge of IT had been terminated
by mutual agreement. The new head of the Digital Division (IT Division until 1 May 2021) is Mr. Péter Csányi,
who had been in charge of digital developments and sales as managing director until his appointment. Key task
of the area in transition is going to be the efficient support of the Bank’s digital transformation through further
improving customer experience. The new strategy of the division is aimed at creating such an IT that has
business competence, but also serving as a platform for other business areas while setting the pace of
digitalization in accordance with the National Bank of Hungary’s digital recommendations.
On 16 April 2016 the Board of Directors acting in the competency of the Annual General Meeting elected Ernst
& Young Ltd. as the Bank’s auditor concerning the audit of OTP Bank Plc.’s separate and consolidated annual
financial statements in accordance with International Financial Reporting Standards for the year 2021, from
1 May 2021 until 30 April 2022.
On 16 April the Board of Directors acting in the competency of the Annual General Meeting, elects Dr. Tamás
Gudra as member of the Supervisory Board (SB) and of Audit Committee (AC) of the Company until the Annual
General Meeting of the Company closing the 2022 business year, but not later than 30 April 2023.
1 Personal changes can be found in the „Personal and organizational changes” chapter.
2 From 16 April 2021, she/he is a member of the Board of Directors of OTP Bank Plc.
3 His term of office expired on 16 April 2021.
4 From 16 April 2021, he is a member of the Supervisory Board of OTP Bank Plc.
5 His position on the Supervisory Board was terminated on 16 April 2021.
6 From 16 April 2021, he is a member of the Audit Committe of OTP Bank Plc.
7 His position on the Audit Committee was terminated on 16 April 2021.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
On 16 April 2021 the Board of Directors acting in the competency of the Annual General Meeting, elects
Dr. Sándor Csányi
Mr. Antal György Kovács
Mr. László Wolf
Mr. Tamás György Erdei
Mr. Mihály Baumstark
Dr. István Gresa
Dr. József Zoltán Vörös
Mr. Péter Csányi
Mrs. Gabriella Balogh
Mr. György Nagy
Dr. Gellért Márton Vági
as members of the Board of Directors (BoD) of the Company until the Annual General Meeting of the Company
closing the 2025 business year, but not later than 30 April 2026.
On 16 April 2021, Dr. Sándor Csányi was elected as Chairman of the Bank’s Board of Directors and in
accordance with subsection 4 of section 9 of the Articles of Association of the Company as Chief Executive
Officer (Chairman & CEO).
Dr. Sándor Csányi performs his duties until the closing AGM of the fiscal year 2025 but latest until 30 April 2026.
On 16 April 2021 Mr. Tamás György Erdei, the member of the Board of Directors, was elected a Deputy
Chairman of the Board of Directors.
Mr. Tamás György Erdei performs his duties until the closing AGM of the fiscal year 2025 but latest until
30 April 2026
Operation of the executive boards
OTP Bank Plc. has a dual governance structure, in which the Board of Directors is the Company’s executive
management body in its managerial function, while the Supervisory Board is the management body in its
supervisory function of the Company. It controls the supervision of the lawfulness of the Company’s operation,
its business practices and management, performs oversight tasks and accepts the provisions of the Bank
Group's Remuneration Policy. The effective operation of Supervisory Board is supported by the Audit
Committee, as a committee, which also monitors the internal audit, the risk management, the reporting systems
and the activities of the auditor.
In order to assist the performance of the governance functions the Board of Directors founded and operates,
as permanent or other committees, such as the Management Committee, the Remuneration Committee, the
Nomination Committee and the Risk Assumption and Risk Management Committee. To ensure effective
operation OTP Bank Plc. also has a number of further permanent committees.
OTP Bank Plc. gives an account of the activities of the executive boards and the committees every year in its
Corporate Governance Report.
The Board of Directors held 9, the Supervisory Board held 6 meetings, while the Audit Committee held
2 meetings in 2021. In addition, resolutions were passed by the Board of Directors on 180, by the Supervisory
Board on 90 and by the Audit Committee on 28 occasions by written vote.
Policy of diversity
OTP Bank Plc. determines and regulates the criteria for the selection of senior executives in line with European
Union as well as domestic legal requirements and directives fundamentally determining the operation of credit
institutions.
When designating members of the management bodies (Board of Directors, Supervisory Board) as well as
appointing members of the Board of Directors and administrative members (Management), OTP Bank Plc.
considers the existence of professional preparation, the high-level human and leadership competence, the
versatile educational background, the widespread business experience and business reputation of the utmost
importance, at the same time, it is also highly committed to taking efficient measures in order to ensure diversity
with regard to corporate operation, including the gradual improvement in women’s participation rate.
OTP Bank Plc.’s Nomination Committee continuously keeps tracking the European Union and domestic
legislation relating to women’s quota on its agenda, in that when unambiguously worded expectations are
announced, it promptly takes the necessary measures. In accordance with OTP Bank Plc.’s currently approved
strategy, the goal is to have at least one female member in both the Bord of Directors and the Supervisory
Board.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
It is important to note, however, that, as a public limited company, the selection of the members of the
management bodies falls within the exclusive competence of the General Meeting upon which – beyond its
capacity to designate enforcing the above aspects to maximum effect – OTP Bank Plc. has no substantive
influence.
According to OTP Bank Plc.’s Articles of Association, a Board of Directors comprising 5-11 members and a
Supervisory Board comprising 5-9 members are set up at OTP Bank Plc. Currently the Board of Directors
operates with 11 members and has one female member, the Supervisory Board comprises 6 members and
has one female member. The management of OTP Bank Plc. currently comprises 6 members and has no
female member.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
ENVIRONMENTAL POLICY, ENVIRONMENTAL PROJECTS
Environmental protection principles
OTP Group is committed to the protection of the environment, the combating of climate change and its impacts,
and the preservation and low-impact use of natural resources. OTP Bank’s environmental activities are
regulated in its Environmental Regulation, which is revised annually. The Regulation ensures legal compliance
and the consideration and integration of environmental criteria into the Bank’s business operations in order to
minimise the environmental impacts of operating and maintaining the Bank’s organisation. It also sets out the
rules on implementing the principles of sustainable procurement. OTP Group members operate in full
compliance with environmental legislation and received no fines in 2020.
In CDP’s Climate Change Questionnaire, OTP Group was rated at B- in 2021, thus retaining its previous rating.
The environmental impacts of the OTP Group are related to the provision of financial services and directly from
its operations. In connection with the provision of financial services, the management of environmental risks
and the exploitation of environmental opportunities take place within the framework of the Environmental,
Social and Governance (ESG) strategy; therefore, these activities are presented in the chapter Non-financial
Report.
Our efforts to reduce the direct environmental impact of OTP Group’s operations are centred around improving
energy efficiency and reducing paper usage. The environmental risks associated with our operations are
analysed and managed within our operational risk management process. Potential risks are identified during
the annual process-based self-assessment, and the assessment of climate change risks is also included in
the scenario analysis of risks with low probability but high impact.
Energy consumption and business travel
OTP Group uses state-of-the-art technology in new construction and renovation projects; we are also
continually expanding our use of LED lighting technology. We are constantly seeking opportunities to increase
energy efficiency, by analysing the energy efficiency and consumption characteristics of our buildings. As part
of our renovation process, we are replacing air conditioning units, always ensuring that the new units use
environmentally-friendly coolants. Thanks to its energy efficiency investments in 2021, OTP Bank consumed
1,400 GJ less energy.
Whenever a branch of the parent bank is renovated, we always examine the possibility of installing solar panels
and heat pumps. In 2021, we installed solar panels at two branches and a holiday resort. Our systems
generated a total of 842 GJ energy from solar power. Moreover, our central archives facility has been using
geothermal energy for several years, amounting to 3,499 GJ in 2021. The solar panels of our subsidiaries
generated a total of 893 GJ of solar power. We are committed to using green electricity. One of DSK Bank's
data centres in Sofia procures electricity from 100% renewable sources, and from 2022, we will cover 100%
of the electricity demand of the parent bank and our Serbian and Croatian subsidiaries in the same way.
Energy use across the Banking Group has been greatly impacted by the pandemic. Regarding ventilation and
fresh air in our buildings, air recirculation was suspended and ventilation was intensified instead, which
increased our energy usage; however, the high percentage of staff working from home reduced our electricity
consumption.
The number of business trips and the size of the vehicle fleet are determined by the needs of the business.
Our Group’s vehicle policy sets carbon limits; moreover, the choice of cars includes environmentally-friendly
vehicles in all vehicle categories. In 2021, our Romanian subsidiary purchased two electric cars, our Bulgarian
bank seven and our Croatian bank three hybrid cars. The number of kilometres travelled also decreased at
group level and for OTP Bank, partly due to the measures related to the pandemic and partly due to business
reasons. The amount of business travel has been reduced significantly by the use of online meetings, which
has become common practice due to hybrid work.
Our existing bicycle storage facilities continued to be available to both customers and employees in 2021.
OTP Bank provided new storage facilities at three branches and the new Record Office, our Bulgarian and
Ukrainian subsidiaries have each created new bicycle storage spaces at two locations, while the Albanian
bank provided bicycle storage at five locations at the capital's branches.
Energy consumption figures are presented for OTP Bank. The bank’s overall energy consumption decreased
by 5% compared to the previous year. Energy consumption per capita is unchanged.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
Volume of energy consumption, OTP Bank
Total energy consumption (GJ)
Per capita energy consumption (GJ)
Energy consumption data are derived from readings; the measured consumption volumes are converted to energy using local average
calorific values
The projection of the per capita value is the average number of full-time employees (TMD).
1 Data adjusted for the consumption of Monicomp merged into OTP Bank, which was not available at the time of the previous year's
statement.
2020
251,7301
26.75
2021
263,228
26.75
Efforts to reduce paper use
OTP Group has been consistently endeavouring to reduce paper use and printing. OTP Bank reduced its office
paper usage by 17% over 2020, with the pandemic and increased rates of working from home playing a
significant role in this development. Thanks to a change in printing technology, paper consumption decreased
by 6.5%; however, at the group level, there was no further decrease compared to the drop in 2020. At our
Romanian, Ukrainian and Russian subsidiaries, the use of paper has decreased with the expansion of digital
processes.
OTP Bank and its Romanian subsidiary increased its share of recycled paper in paper use. OTP Bank uses
FSC-certified paper for its invoices and marketing flyers, as well as recycled paper for DM letters. Our Serbian
subsidiary also uses FSC-certified paper and our Slovenian subsidiary PEFC-certified paper.
Paper usage quantities, OTP Bank
Total amount of paper used (t) (office, packaging, indirect)
Per capita paper use (kg)1
1 The projection is based on the average number of full-time employees (TMD).
2020
1,137
121
2021
978
99
Sustainable use and waste management
We follow the principle of using all our equipment, devices and machines for the longest time reasonably
possible. We explicitly aim to use furniture until the end of its lifecycle, reusing it multiple times and ensuring
the compatibility of replacements. OTP Bank, DSK Bank, OTP Bank Romania and OTP Banka Srbija all follow
the practice of making charitable donations of any furniture no longer used but in good condition, as well as
functioning IT equipment (mostly computers and laptops), to institutions and organisations in need.
OTP Bank was the first bank in Hungary to issue a bank card made largely (85%) of recycled plastic. The card
was available to junior customers, and we issued 50,000 recycled cards to our customers over the year.
In 2021, our Serbian subsidiary reduced its purchases of plastic packaging products and began using paper
cups for water dispensers. Our Romanian, Croatian, Serbian, Montenegrin and Moldovan subsidiaries also
use refilled toners to reduce waste from the use of toners and ink cartridges.
All members of OTP Group collect and manage hazardous waste and paper containing business secrets
selectively, in compliance with the relevant laws and regulations. The selective collection of non-confidential
paper waste, PET bottles and glass is available in the head office buildings of OTP Bank, while the collection
of packaging metal has also been available since 2021. During the year, we also set up selective waste
collection in ten bank branches. Our Ukrainian subsidiary operates selective paper collection at its head office
building. Our Serbian subsidiary collects paper waste selectively in its branches and head office buildings. Our
Albanian subsidiary collects paper waste selectively. Our Romanian subsidiary collects all paper, metal, glass
and plastic selectively. Our Slovenian subsidiary also collects communal waste selectively (including
biodegradable food waste). Our Croatian subsidiary has collected paper and plastic waste selectively for years,
and from 2021, metal and glass waste will also be collected separately. DSK Bank operates selective waste
collection at its sites in Sofia and Varna and has expanded the selective collection of paper waste during the
year. Our Montenegrin subsidiary has introduced selective paper waste collection at its head office and its
archives facility.
Most members of our Banking Group have a tradition of raising awareness and taking joint action to protect
environmental and natural resources. In 2021, we supported several environmental initiatives and encouraged
the environmentally conscious behaviour of our employees.
OTP Bank and OTP Bank Serbia have joined the Mastercard Priceless Planet Coalition, launched in 2020,
and are participating in a campaign that encourages consumers to protect the environment and actively
contribute to this goal themselves. The Priceless Planet Coalition aims to preserve the environment through
the restoration of 100 million trees over five years and to help mitigate the adverse effects of climate change.
By 2022, three afforestation sites have been selected in Kenya, Brazil and Australia, but more will be added
later. OTP Bank has supported the Priceless Planet Coalition with a donation of 100,000 euros, while our
Serbian subsidiary has committed to planting a tree for each bank account opened.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
DSK Bank was the first bank in Bulgaria to join the Mastercard Wildlife Impact Card programme. The bank and
Mastercard support the issuance of all Mastercard Wildlife Impact cards with one dollar spent on protecting
and restoring natural habitats. The credit card is made of environmentally friendly material.
DSK Bank also supported the One Tree Initiative, which aims to create an interactive map of Sofia’s tree stock.
The tree survey was conducted by volunteers, registering a total of more than 12,000 trees. The bank also
supported the initiative of the Hungarian Cultural Institute, within the framework of which bicycle storage
spaces will be installed in front of cultural institutions. The aim of the project was to ensure the environmentally
friendly accessibility of cultural institutions.
Our Croatian subsidiary also supported the “Drop into the Sea” ecological action of the Telašćica Nature
Reserve, which drew attention to the threat to marine ecosystems and fish stocks due to increasing amounts
of waste. The bank also supported Ekotlon, the biggest plogging competition. In addition to collecting litter, the
event also supported a kindergarten with eco-equipment purchased from its registration fees.
Generator (Gamechanger), our Serbian subsidiary’s local start-up programme, launched the Generator Zero
competition in 2021, specifically seeking and rewarding innovative solutions to reduce its carbon footprint.
Organisations had until the end of the year to apply for the competition, and the winner will receive mentoring
for further development and promotion in addition to the cash prize. Ten finalists were selected from the
72 projects nominated.
We are also extending the scope of our employee involvement programmes:
To promote environmental awareness, we wrote about the reduction in paper use and disposable plastics
in the OTP Bank’s online magazine.
Our Croatian subsidiary has reduced its use of plastics and implemented even more responsible waste
management in three cities under the “Green Way to Green” programme.
Our Serbian bank has launched an awareness-raising initiative among employees to increase
environmentally and business-friendly behaviour and reduce CO2 emissions. The bank also supported the
Green Serbia 2021 campaign, which planted trees in ten cities.
In order to make employees more sensitive to the environment, our Slovenian subsidiary bank organised
a workshop and presentation for managers and e-learning for employees. In 2021, the Bank joined the
Slovenian Green Network, which brings together more than 400 companies, educational institutions,
institutes and other organisations with a variety of projects for sustainable development and social
responsibility.
Our Ukrainian subsidiary has joined the “Batteries, inward” campaign, in which used batteries are collected
and delivered to a recycling plant in Romania. The bank sent more than 200 kg of batteries to be recycled.
Following its energy renovations, our Montenegrin subsidiary will also train its employees in the energy-
conscious use of the systems.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
NON-FINANCIAL STATEMENT – OTP BANK PLC. (SEPARATE)
The social, environmental and wider economic performance and impacts of OTP Group are also reported in
its dedicated Sustainability Report. The Sustainability Report for 2021 is a group-level report that meets the
GRI (Global Reporting Initiative) Standard and is certified by an independent third party. It is available as a
digital version on OTP Bank’s website. The information in this chapter is provided in order to comply with the
Accounting Act, while also aiming to keep the duplication of information to a minimum. Information concerning
environmental protection and climate change is provided mainly in the chapter on environmental Policy and
Environmental Protection Measures.
OTP Bank is committed to ethical business conduct in all respects; our principles are set out in our Code of
Ethics, which is binding for all our employees and agents. Our financial services and operations have significant
social and environmental impacts; thus, our objective is to manage risks responsibly while taking advantage
of opportunities and delivering positive outcomes.
In 2021, OTP Bank signed the UN Environment Programme Finance Initiative (UNEP FI), a framework for the
sustainable banking sector. The Principles are the leading framework for ensuring that banks’ strategy and
practice align with the vision society has set out for its future in the UN Sustainable Development Goals and
the Paris Climate Agreement. Banks who have signed the Principles commit to be ambitious in their
sustainability strategies, working to mainstream and embed sustainability into the heart of their business.
The integration of sustainability is supported by a strong organisational background, which was completed in
2021. The ESG transformation covers both OTP Bank and its subsidiaries and is managed by an ESG
Committee established by the Board of Directors. The Committee is the decision-making body responsible for
ESG strategy, plans and policies and for supporting the Bank's governing bodies in the performance of ESG
tasks. The Chairman of the Committee is appointed by the Board of Directors. The ESG Committee has
established an ESG Operational Subcommittee, which provides operational support to the ESG Committee
and help in the preparation of decisions. The head of the Subcommittee - also the head of ESG Business
Transformation - is the Director of the Green Programme Directorate. The three key areas of ESG integration
are ESG business transformation, ESG risk management and ESG control function.
The ESG Strategy of the OTP Group was approved by the Management Committee in 2021. The OTP Group
wishes to play a leading role regionally in financing a fair and gradual transition to a low-carbon economy as
well as building a sustainable future by offering balanced financing opportunities. OTP Group approaches ESG
from three main perspectives: as a responsible service provider, as a responsible employer and as a
responsible social player. In addition to business opportunities, the strategy includes the management of
relevant risks as well as social and corporate governance objectives. The strategy covers the period up to
2024, and our goal is to achieve full ESG integration at group level.
Green Finance
We have taken significant steps towards exploiting the potential of green finance. Green mortgage loans
(distributed by OTP Bank, and held in the balance sheet of OTP Mortgage Bank) and green covered bonds
(issued by OTP Mortgage Bank) help achieve real estate goals for sustainability. OTP Mortgage Bank has set
the strategic goal of increasing the proportion of green loans within new loan disbursements and has also
created a framework for green mortgage bonds. The bank was the first in the domestic market to issue a green
mortgage bond, building on the Hungarian National Bank's (MNB) green mortgage purchase programme. The
company issued securities with a total nominal value of HUF 95 billion in 2021, so in addition to the previously
disbursed green loans, the company also provided funds to finance the green loans to be disbursed after the
issue.
The Mortgage Bank publishes the most important financial and environmental impact data relating to mortgage
bonds annually. The first report presenting information for the year 2021 will be published at the same time as
the company’s annual report.
The MNB Green Home Programme was launched in the second half of 2021 as part of the Growth Loan
Programme. These loans with a maximum interest rate of 2.5% help customers buy and build energy-efficient
new homes. Under the programme, the Hungarian National Bank provides refinancing sources to credit
institutions at 0% interest rates, provided that the energy requirements for the financed property are met. The
central bank provides a total of HUF 200 billion in funds for the programme. We experienced interest in this
loan structure that exceeded expectations, and by the end of 2021, our bank group had concluded contracts
in the amount of HUF 20.1 billion and disbursed loans in the amount of HUF 4.9 billion.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
Loan products of the Hungarian Development Bank (MFB) financed by both EU and from MFB’s own sources
were still available at OTP Bank in 2021. The population had access to preferential loans through these
structures in order to implement energy improvements. During the year, we entered into loan agreements
amounting to HUF 5 billion, accounting for 7% of all loans contracted through MFB Points.
We have developed four new products for corporate lending to help meet renewable energy production,
electro-mobility, green agricultural goals and high-energy office investments. The total amount of loans cleared
under the green housing, corporate and municipal capital relief programme provided by the MNB in OTP Bank
is approximately HUF 74.5 billion.
A significant proportion of green loans comprise projects for the utilisation of renewable energy sources within
the framework of project financing. Renewable energy projects represent a considerable share of green
lending in our project financing. In 2021, we signed contracts for eight new projects at OTP Group level in the
amount of HUF 81.5 billion, a significant increase compared to previous years.
The projects are located in Hungary, Bulgaria, Romania and Croatia, and the financing was partly implemented
with the involvement of the subsidiaries. The projects generated 1,175 MW of renewable capacity, but funding
is not always provided by OTP Group alone. At group level, the project financing portfolio related to renewable
energy projects had reached HUF 84.2 billion by the end of the year, of which OTP Bank's share was
HUF 57.8 billion.
In 2021, loans promoting energy efficiency, the use of renewable energy and e-mobility were available from
our subsidiaries in Croatia, Romania, Montenegro, Albania and Moldova.
Our goal for 2025 is to have green products available in all segments for OTP Core, while the development of
green financing plans at subsidiaries will take place in 2022. OTP Bank plans to issue green bonds in 2022 to
finance group-level projects.
The purpose of the OTP Fund Management OTP Climate Change 130/30 Fund is to provide investment
opportunities in the shares of developed and emerging market companies that may be the winners of
directives, legal regulations and economic policy changes aimed at mitigating the effects of climate change.
The net asset value of the Fund at the end of 2021 was HUF 36.3 billion. In 2021, together with the
OTP Omega Fund, we started to amend the management regulations of the OTP Climate Change 130/30
Fund in order to meet the criteria of a fund promoting environmental or social characteristics or a combination
thereof, i.e. Sustainable Finance Disclosure Regulation (SFDR) Article 8.
The table below shows the disclosures of the OTP Group and banks operating in EU member states in
accordance with Regulation (EU) 2020/852 (Taxonomy Regulation).
Disclosure under Article 8 Delegated art 10
OTP Group consolidated
Art 10 (3) a, Eligible proportion *
Art 10 (2) a, Non-eligible proportion*
Art 10 (2) b, Proportion of derivatives *
Art 10 (2) b, Proportion to central gov., central bank,
supranational issuer*
Art 10 (2) c, Proportion of non-NFRD undertakings*
Art 10 (2)
Proportion of trading portfolio*
Art 10 (2)
Proportion of on-demand
loans*
inter-bank
ANNUAL REPORT 2021
0.15%
67.29%
0.93%
27.14%
8.48%
1.17%
4.77
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
Disclosure under Article 8 Delegated art 10
DSK Bank
OTP Bank
Croatia
SKB Bank
OTP Bank
Romania
0.41%
0.21%
0%
0.11%
Art 10 (3) d, XI. Annex disclosures
information
towards
Contextual
quantitative indivators incl. scope of
assets and activities covered, data
sources and limitation.
year
from
second
Starting
of
implementationonly: Explanations of the
nature and objectives of Taxonomy-
the
aligned economic activities and
Taxonomy-aligned
evouolution
of
economic
time,
distingiushing between business related
and methodological and data-related
elements.
activities
over
Description of
the compliance with
Regulation
(EU) 2020/852
the
business
undertaking’s
financial
startegy, product design process and
engagement
and
with
counterparties.
clients
in
exposures:
for credit institutions that are not required
to dsiclose quantitative information fo
trading
Quakitative
information ont he alignment of trading
(EU)
portfolios
2020/852,
overall
composition,
trendsm objectives and
policy;
Regulation
includong
with
among
examined
Exposures to taxonomy-eligible activities
were
non-financial
corporations. Companies covered by the
NFRD were defined as listed companies with
more than 500 employees based on Nace
code
*Excluding exposures to be excluded from
the denominator of KPIs by the Regulation.
Taxonomy elgible activities were examined.
Our goals for green funding and the activities
we have implemented can be found in the
text pf NFRD.
Our goals for green funding and the activities
we have implemented can be found in the
text pf NFRD.
Taxonomy eligible activities were examined.
the weight of other or additional
information in support of the financial
undertaking’s strategy and the financing
of taxonomic activities in relation to their
total activity.
Taxonomy eligible activities were examined.
Our goals for green funding and the activities
we have implemented can be found in the
text pf NFRD.
Green asset ratio in corporate lending:
In relation to the mitigation and adaptation objectives of the taxonomy regulation, we have examined the
corporate portfolio based on the NACE codes that can be attributed to activities in the delegated act.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
OTP Bank Group's corporate lending activities are linked to environmentally sustainable economic activities in
the EU Member States8 in the followings scope:
Share of the taxonomy-adjusted corporate portfolio of EU core and subsidiary banks in total non-segmented
exposures at group level: 8.3%
Share of the taxonomy-adjusted corporate portfolio of EU core and subsidiary banks in the total EU core and
subsidiary corporate portfolio: 42.3%.
ESG risk management
In order to integrate ESG aspects, comply with legal obligations and the Hungarian National Bank's Green
Programme, we continued to develop our ESG lending policy in 2021. At group level, we have introduced a
lending and monitoring ESG risk management framework for non-retail and non-motorised leasing assets. The
framework also includes the ESG Exclusion List, which comprises activities excluded from financing by
OTP Group, as well as the industry ESG risk heat map. In 2021, ESG credit risk exposure became part of
internal reporting. In accordance with the Hungarian National Bank’s Green Programme, we will continue to
include ESG factors in the rest of the portfolio and in respect of collateral.
The purpose of ESG risk management in lending is to identify ESG risks and reduce transaction risks arising
from the environmental and social risk factors associated with financing. By integrating these issues into our
lending process, we are also emphasising the importance of our clients adopting excellent environmental and
social practices.
We invest and lend the money deposited with us in a way ensuring that it will not serve illegal purposes, or
those contrary to the values of society.
OTP Bank will not finance:
customers whose financing is forbidden in international agreements, EU acts or national laws;
those whose activity is likely to violate public morals or social value systems, or is connected to crime;
those who are connected, directly or indirectly, to criminal activities or to the deliberate violation or evasion
of legal;
regulations;
transactions classified as prohibited business sectors (e.g. the illegal arms trade, prohibited gambling,
drug trade, or any other illegal activity); and
transactions that fail to meet environmental standards.
The OTP Bank Group does not finance transactions that violate the laws of the country concerned or
international law.
In accordance with our regulations, our banking group always expects and examines compliance with
environmental regulations during lending. Violation of commitments and expectations is sanctioned in the
framework credit agreements.
In accordance with the SFDR's expectations, we have developed an investment risk management policy for
all relevant group members, so that investment risk management has been integrated into decision-making
processes during investment advisory and portfolio management activities, and information on this has been
provided to clients. Our statements on the integration of sustainability risks and the adverse effects of
investment decisions on sustainability factors (PAIs) are available on our websites. In addition to the legal
requirements, the prospectuses containing the product characteristics of the investment funds also include the
ESG score calculated by the bank, helping customers make decisions and orient themselves.
We have strengthened the assessment of ESG risks in our operational risk management scenario analyses
by analysing a separate scenario related to climate change, and we have also indicated the risks affected by
ESG in both the risk self-assessment and the loss database.
Responsible customer service
In carrying out our financial intermediary duties we ensure that the savings of our customers remain safe at all
times. Our rules guarantee that the standards of responsible lending are observed regarding the avoidance of
over-indebtedness, fair, understandable, complete and attentive information provision and adequate product
offers.
8 EU core and subsidiary banks means: OTP Nyrt, DSK Banka EAD, OTP Bank Romania S.A., OTP banka Hrvatska d.d., SKB banka d.d.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
Our principles and guidelines on the fair treatment of customers and the compliance of consumer protection
are set out in our Compliance Policy. In designing our products, we follow the principles of ethical product
development. Our New Product Policy prescribes the assessment of potential risks to consumers.
We offer personalised administrative options to our customers with the highest level of service quality and
continuous innovations. The coronavirus pandemic increased the use of online channels, and our Banking
Group also encouraged this trend.
We use TRI*M methodology to measure the satisfaction of our retail customers. OTP Bank’s client retention
power increased by three points to 69 points in 2021, while the average satisfaction score among
competitors also increased slightly. The average TRI*M of banks in Central Europe was 77 points.
OTP Bank’s stated objective is to serve its customers without fault. In order to improve customer satisfaction,
we are also continuously improving our complaint management practices. Our Complaint Management
Policy, Complaint Management Regulation and a Glossary are available to view in our branches as well as
on our website.
In 2021, the most typical complaints at OTP Bank were related to the payment moratorium and unapproved
payment transactions.
The number of both complaints and legitimate complaints decreased significantly in 2021 compared to the
outstanding values of 2020, which could be attributed to the significant changes made during the year. The
declining trend also prevailed at group level. In 2021, we continued to improve our complaint management
practices, including expanding our complaint analysis process and the range of complaints that can be
resolved immediately.
Customer complaint data, OTP Bank1
Number of warranted complaints
Ratio of warranted complaints
Compensation paid (HUF million)
1 Includes data from OTP Housing Savings and OTP Mortgage Bank.
2 Corrected data.
2020
202,040
67%
842
2021
155,298
62%
36
Our objective is to provide equal access for persons living with disability, through services adapted to their
special needs, in line with the Accessibility Strategy of OTP Bank. Accessibility is integrated into our website,
which supports one-handed use and provides accessibility options including text-to-speech software and video
content transcripts. Physical accessibility was also provided in every branch but one in 2021. Tactile guide
strips are available in 38% of our branches. Our customers can request special-needs services at the queue
management machine, with physical push buttons and tactile strips also assisting them in using the device.
Interpreter Services are available at 167 branches; this is a service allowing a sign language interpreter to
assist with administration tasks through a live video chat. Induction loop amplifier systems are also available
in 38% of branches. Moreover, we have made text-to-speech software available on 910 of our ATMs.
Security and data protection
Security is a top concern for us. The principles and main guidelines concerning security at the bank are set
forth in the Security Policy, which is approved by the Board of Directors. The policy covers all aspects of
security, including IT and cyber security, which have become increasingly important. OTP Bank's Group-level
Information Security Policy and Cyber Security Strategy of OTP Bank were completed in 2021, and the
development of a Group-level cyber security strategy was launched. The processing and protection of personal
data is covered by the Compliance Policy, which is also approved by the Board of Directors. Both policies
prescribe the regular evaluation of risks and the need to maintain and enhance awareness.
The handling and protection of personal data is covered by the Compliance Policy also approved by the Board
of Directors. We also developed security processes and applied solutions in 2021, with our innovations
focusing on the cyber security centre, the central log analysis system, authorisation management and virus
protection. In addition we made customer communication more effective in detecting suspicious transactions.
The number of distributed denial-of-service (DDoS) and phishing attacks increased significantly at group level
compared to previous years. We published several awareness campaigns for our customers, providing
information on our intranet and through security awareness training, which was also focused on phishing.
Besides protecting against phishing activities, the European Cyber Security Month programmes focused on
presenting the security challenges of modern application development and operations.
White-collar crime, which causes significant losses to customers and the banking group, decreased at most
subsidiaries due to our continuous development, more efficient employee action and stricter controls. We have
reviewed our anti-money laundering training material to ensure our employees gain greater knowledge of this
and have started to develop harmonised training at group level. The number of suspected money laundering
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
reports by bank employees increased by eight percent. During the year, OTP Bank reported 68 cases of
suspected money laundering.
Our Banking Group has experienced numerous card-related attacks; in these cases the sharing of important
information was extremely helpful in the prevention of fraudulent transactions. The number of successful card
fraud cases has been kept low continuously, which demonstrates that our systems operate effectively.
The ratio of bank card fraud to turnover is significantly lower than the European average published by
MasterCard (for OTP Bank it is 0.0071% and the consolidated ratio of subsidiaries is 0.00986%, while the
European average stands at 0.0414%). In the case of OTP Bank we were able to prevent bank card fraud of
HUF 5.5 billion.
Losses expected from the detected criminal activities amounted to HUF 447 million in the case of OTP Bank
and HUF 2.2 billion at Group level. The amount of loss prevented was HUF 457 million at OTP Bank and
HUF 2.0 billion at OTP Group.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
Fight against corruption and against the practice of bribery
discrimination
The Code of Ethics and the Anti-Corruption Policy of OTP Bank contains provisions on the fight against
corruption and against the practice of bribery, also on the acceptance of individual differences and the denial
of
(https://www.otpbank.hu/portal/en/EthicalDeclaration
https://www.otpbank.hu/static/portal/sw/file/OTP_EtikaiKodex_EN.pdf,
https://www.otpbank.hu/static/portal/sw/file/OTP_Anti_Corruption_Policy_202102.pdf). 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 principle of zero tolerance towards corruption and bribery, taking a definite stance against all forms of
corruption and giving full support to the fight against corruption. In addition, the Code states that "As an ethical
and compliant institution, the Bank and its management are fully committed to ensuring observance of all
relevant legislation, including anti-corruption statutes."
The Bank has set up an ethics reporting system (whistleblowing), which is for the reporting and the handling
of the reports on suspected or actual violation of the values set forth in the Code of Ethics, where anonymous
reporting of ethics issues is also possible. The Bank conducts inquiries for the purpose of detecting, preventing
anomalies in connection with reports made or anomalies it became aware of otherwise.
Through the Bank's ethics reporting system a total of 26 reports were received in 2021, 8 of them was
reclassified as complaints and 2 case’s investigation resulted in declaring ethics offense – though not due to
corruption, bribery or discrimination.
The Bank has created and maintains its Code of Ethics to keep reputational risk and financial losses, which
may incur in relation to corruption, bribery and discrimination, on a minimum level. Both employees and
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 human rights are treated by the Bank as a priority.
We manage the risks regarding the fight against corruption and bribery within the framework of our operational
risk management process. Our quarterly compliance reports cover the changes in risks as well as the steps
necessary steps to manage them. The reports are presented to the Management Committee and the Board of
Directors; the annual report is also submitted to the Supervisory Board.
Citizenship
OTP is one of the most generous charitable donors in Hungary, giving a total of HUF 2.3 billion in charitable
donations, almost half of which was for educational purposes, primarily the development of financial culture.
We aim to provide genuine and effective help by supporting programmes and causes that serve the interests
of society. We cooperate with a number of local non-governmental organisations, concentrating our donated
funds and monitoring their usage and the results achieved.
Our efforts were focused on the following areas:
developing financial literacy: attitude shaping;
sponsoring culture and the arts: creating and preserving values;
equal opportunities: helping the disadvantaged and those in need; and
sport.
We consider donation habits a part of financial literacy; therefore, in 2021 we took a significant step forward in
encouraging our customers to support the social initiatives that they consider important financially. Under the
digital donation programme we enabled them to make donations simply and easily while taking care of their
day-to-day finances. Donation has become possible on our digital platforms, including our website, the
internetbank, the mobile application, the Simple application, as well as through 750 ATMs and the digital points
of 80 branches. Our Bank assumes all extra costs of the donation, including both the transaction tax of
customers and the costs of NGOs. Our Bank also cooperates with the supported organisations and we
supplement the donations of our customers. In addition, in our experience, our customers view the Bank’s
participation as a guarantee that their donations will truly go to the right beneficiary. In 2021 we supported the
initiatives of 6 foundations through customer donations in the amount of HUF 250 million.
The Humanitas Social Foundation supports vulnerable communities and individuals with a focus on healthcare
and education; donation recipients are selected through an application process. Its most important activity in
2020 involved priority support to hospitals. We supported 30 hospitals, 18 educational institutions and one
foundation through the Foundation in 2021. In order to provide more effective assistance, we provided
targeted, tailored asset support to institutions.
The OTP Fáy András Foundation provides financial and economic education services, a key element of which
is operating the OK Educational and Innovation Centre. The Foundation provides youth, adult and vocational
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
training. The activities of the Foundation in 2021 were determined mostly by the coronavirus pandemic and
several planned activities could not be organised as a result. However, the Foundation developed 30 curricula
in 2021.
Digital education continued to be the focus of the year, with more than 17,000 students attending online and
nearly 2,500 classroom training. Roma youth also participated in financial and economic training through the
Roma Education Fund. Significant progress has been made in the development and testing of the Financial
Basic Education Programme in adult education. During the training, in which participation is free of charge and
without prior knowledge, users acquire essential personal money management and general economic
knowledge and improve their financial literacy. The Foundation also continued its previous programmes, so
the teacher training programme of Eötvös Loránd University (ELTE), the regular Teachers' Club and the
summer camps took place. The Foundation's national awareness-raising programme also continued, with
screenings of short films on national commercial television channels around 400 times, covering topics such
as housing renovation, business start-ups and data security.
Responsible employment
Our goal is to create value for our employees by focusing on them in a constantly changing environment. The
central objective of our human resource strategy is to intensify employee experience and commitment.
In 2021 we conducted an employee satisfaction survey at Group level with a high response ratio of 92%. Based
on the results, the rate of employee satisfaction was 70%, slightly lower than the average of the international
financial sector. The action plans prepared in response to the feedback for all areas that needed improvement
were approved by the Management Committee.
We developed our activities during the year along the lines of the six priorities stated in our strategy, also
relying on the results of the employee satisfaction survey. We launched numerous projects that will result in
significant changes; for example, we developed the framework of Group-level dialogue, and placed
management development on new foundations. Although the pandemic slightly delayed the implementation of
the international talent programme, we created a uniform talent framework at Group level and operated local
talent programmes. All of our employees participate in trainings; in addition to network and head office
management development, we rejuvenated the frameworks of our employees’ skills development.
Due to the pandemic situation, hybrid work performance became typical in 2021. We maintained access to the
tools promoting our employees’ emotional, mental and physical health and their ability to stand firm under
harsh circumstances, and once again in 2021, numerous employees took recourse to them.
OTP Bank’s employees (31 December)
2020
2021
9,826
Employees, total (individuals)
100%
Distribution by gender
Turnover rate1
10.5%
1 Compared to the end-of-year headcount; includes termination of employment both by employee and by employer, as well as
retirement.
10,078
100%
14.3%
Total Men Women
6,424
65.4%
11.2%
3,402
34.6%
9.3%
Total Men Women
6,531
64,8%
14.1%
3,547
35.2%
14.5%
Ethical conduct and legal compliance also remain core principles in our human resource management.
OTP Bank analyses and manages the risks relating to employment within its operational risk management
process. Our employees’ interests are represented by their trade union, with a Collective Agreement setting
out the rights and obligations of every employee.
The Bank’s Code of Ethics declares its commitment to providing a safe and healthy working environment and
states its expectation of mutual respect between executive officers and employees, including the prohibition of
discrimination and harassment. We consistently apply the principle of “equal pay for equal work”, including
providing equal pay to men and women for the same position and performance. Within the objective limitations
of specific job descriptions, we allow for flexible working hours and part-time employment options. We
encourage healthy lifestyle choices, offering a complex health insurance package, and subsidising recreation
and sporting activities.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
Short description of the business model of the company
OTP Bank is the market-leading credit institution in Hungary. As for its business model, the Bank offers high-
quality financial services to retail, private banking, micro and small business, medium and large corporate, as
well as municipality clients through both its branch network and its steadily developing digital channels. The
Bank provides comprehensive retail and corporate banking services: its activities include deposit collection
from customers and raising money from the money and capital markets. On the asset side, OTP Bank offers
mortgage loans, consumer credits, working capital and investment loans to companies, as well as loans to
municipalities, whereas its liquidity reserves are invested in money and capital market instruments. Moreover,
the Bank provides a wide range of state-of-the-art services, including the areas of wealth management,
investment services, payment services, treasury and other services.
In addition, OTP Bank's Hungarian subsidiaries deliver a wide range of further financial services. The Bank
owns foreign subsidiaries in many countries of Central and Eastern Europe through capital investments.
Non-financial performance indicators
Internal audit: 203 closed audits, 1,478 recommendations, 1,478 accepted recommendations
Compliance with Budapest Stock Exchange (BSE) Recommendations (yes/no ratio): 72 yes, 0 no;
Compliance: 18 closed consumer protection related investigations
Bank security: the expected value of damages resulting from detected criminal offenses is
HUF 447,124,093, HUF 460,655,117. In 2021, we filed an official complaint in 620 cases on suspicion of
money laundering. There is a slight decrease in 2021, when this number changed from 4438 in the
previous year to 4,432, a decrease of 8.4%. In the case of OTP, the ratio of bank card misuse to turnover
is still lower than the European average published by MasterCard (last year's figures: OTP Bank 0.0071%,
European average 0.0414%).
Ethics issues: 26 ethics reports, establishing ethics offense in 2 cases.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (SEPARATE)
LIST OF NON-AUDIT SERVICES BY SERVICE CATEGORIES USED BY THE BANK
The statutory audit of OTP Bank is carried out by Ernst and Young Ltd., in addition to which the following
services were contracted:
Issue of Comfort letters
Engagements to review historical financial statements and interim financial statements (ISRE 2400,
2410)
Consultation relating to interpretation and implementation of accounting standards and relating to
accounting of potential future transaction
Pre- or post-transaction due diligence services relating to acquisition of assets or entites or sales
transactions or other transactions: financial, accounting, taxation, legal and IT specific services -
except for buy-side lead advisory, transactional and negotiation support
ANNUAL REPORT 2021
BUSINESS REPORT 2021 (CONSOLIDATED)
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
CONSOLIDATED FINANCIAL HIGHLIGHTS9 AND SHARE DATA
2020
HUF million
259,636
(50,631)
Main components of the adjusted Statement of recognised income
Consolidated after tax profit
2021
HUF million
456,428
(40,474)
Change
%
76
(20)
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)
Performing (Stage 1+2) 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
Tier1 ratio - Basel3
Common Equity Tier 1 ('CET1') ratio - Basel3
Share Data
EPS base (HUF) (from unadjusted net earnings)
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)
310,268
496,902
351,802
537,437
1,169,920
788,079
293,112
88,729
(632,483)
(187,995)
2,360
(41,534)
587,853
660,391
1,313,124
884,012
325,548
103,563
(652,733)
(72,538)
-
(90,951)
2020
2021
23,335,841
13,715,487
27,553,384
15,743,922
14,575,916
16,634,454
13,736,409
15,756,503
(860,429)
(890,532)
18,152,563
464,214
274,704
2,537,112
2020
10.9%
13.0%
1.4%
2.47%
5.37%
3.61%
2.90%
54.1%
21,068,644
436,325
278,334
3,036,766
2021
17.0%
18.5%
2.0%
2.62%
5.21%
3.51%
2.59%
49.7%
1.15%
0.30%
0.86%
11.8%
76%
17.7%
15.4%
15.4%
2020
1,004
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
0.29%
15.5%
75%
19.1%
17.5%
17.5%
2021
1,739
1,738
1,896
16,600
19,400
12,920
12.6
10,846
10,190
1.5
1.6
10.2
9.4
19
0.4
60
67
23
12
12
11
17
3
(61)
119
%
18
15
14
15
3
16
(6)
1
20
pps
6.1
5.5
0.5
0.16
(0.15)
(0.11)
(0.31)
(4.4)
(0.84)
(0.57)
3.7
(1)
1.4
2.1
2.1
%
73
73
58
24
24
61
23
20
21
4
3
(29)
(22)
(12)
(38)
9 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.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
ACTUAL CREDIT RATINGS
S&P GLOBAL
OTP Bank and OTP Mortgage Bank – FX long-term issuer credit rating
MOODY'S
OTP Bank – FX long term deposits
OTP Bank – Dated subordinated FX debt
OTP Mortgage Bank – Covered bonds
SCOPE
OTP Bank – Issuer rating
OTP Bank – Covered bonds
FITCH
OTP Bank Russia – Long term credit rating
BBB
Baa1
Ba1
A1
BBB+
BB+
B
ACTUAL ESG RATINGS
AWARDS
In the Euromoney Awards for Excellence 2021 OTP Bank received the “Best Bank in Central and Eastern
Europe” award. In addition, the Bank won the title of “Best Bank in Hungary” and its subsidiaries also proved to
be the best in Bulgaria, Montenegro and Albania. Global Finance named again in 2021 OTP Bank the safest
bank in Hungary, thus it joined the group the World’s Safest Banks, furthermore OTP Bank received the “Best
Bank Award” again in Hungary in 2021. In the annual ranking of The Banker magazine, member of Financial
Times Group, the OTP Group has become the “Best Bank in Central and Eastern Europe”. In addition, the
Hungarian, Montenegrin, Croatian and Slovenian subsidiaries of the OTP Group received the “Bank of the
Year” award.
SHARE PRICE PERFORMANCE
OTP
Bloomberg EMEA Banks Index (relative to OTP)
CECE Banking Sector Index (relative to OTP)
HUF
21,000
19,000
17,000
15,000
13,000
11,000
9,000
7,000
31/12/2019
30/06/2020
31/12/2020
30/06/2021
31/12/2021
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
MANAGEMENT’S ANALYSIS OF THE FULL-YEAR 2021 RESULTS OF OTP GROUP
According to the preliminary Hungarian GDP data published on 15 February 2022, the annual growth rate
was 7.1% y-o-y.
The faster than originally expected GDP-growth was mainly due to the targeted and successful measures
initiated by the Government and the Hungarian Central Bank aimed at safeguarding the economy. These
steps to a large extent helped the economy to reach its pre-Covid performance by 3Q 2021 with the
employment level reaching new heights. Acknowledging the results in restoring the economy, in January
2022 Fitch affirmed the sovereign rating (‘BBB’) and its stable outlook.
As for 2022, the Government expects 5.9% annual GDP growth, 4.9% budget deficit with the public debt to
GDP ratio declining further; the average inflation may be 4.8%. The recent inflation figures, however
manifest upward risk.
During the course of the year there have been significant changes in the monetary policy: as a respond to
elevating inflation NBH started a tightening trend and the base rate was increased from 0.6% to 2.4%,
whereas the 1-week deposit rate reached 4% by the end of 2021. Following a 50 bps rate hike on
22 February, the base rate stood at 3.4%, whereas on 24 February the 1-week deposit rate was hiked to
4.6%. The 3M Bubor, i.e. the reference rate for floating rate loans started 2021 at 0.75% and closed at
4.21% (+346 bps y-o-y) and by mid-February stood at 4.58%.
The 10-year Government bond yielded 4.51% at the end of 2021, since then it increased further. The local
currency was volatile during 2021 and finally closed at 369.0 against the EUR. As a meaningful change, two
essential tools playing important role during the last couple of years in boosting economic performance
through supporting the local corporate sector, namely the Funding for Growth Go! Scheme and the Bond
Funding for Growth Scheme, have been gradually phased out in the second half of 2021. At the same time
NBH launched its FGS Green Home programme focused on sustainable household funding.
According to the report published by the NBH on 2 February 2022, in 2021 both the household loan volumes
and corporate exposures expanded steadily: the former grew by 11% y-o-y, and the corporate portfolio by
15%, respectively, supported also by the payment moratorium putting on hold principal amortization. Within
the retail segment the main engine was the subsidized baby loans; total sector level volumes reached
HUF 1,569 billion by the end of December underpinning an almost 50% y-o-y growth. Cash loan volumes
leaped by 17.0% y-o-y, whereas housing loan volumes grew by 15% y-o-y; home equity exposures kept
eroding by 4% y-o-y following the trend of recent years.
On a Group level all economies enjoyed favourable trends in 2021 coupled with numerous rating upgrades
or improving outlooks. Alongside the improving GDP and employment statistics, in a few countries local
central banks had to react to surging inflation with definite monetary tightening: the Ukrainian and Russian
base rate was increased by 300 bps and 425 bps y-o-y, and in Romania by 50 bps, respectively.
With regard to the recent pandemic developments, despite the significant differences in vaccination levels
across the Group, the general trend is rather the gradual easing/relaxing of restriction measures.
Consolidated earnings: HUF 497 billion adjusted profit after tax, stabilizing NIM, stable credit quality,
improving efficiency, with performing
increasing by 15% y-o-y
(FX-adjusted)
loan volumes organically
The annual performance was clean of new acquisitions, however the y-o-y dynamics were affected by the
sale of the Slovakian subsidiary at the end of 2020. The integration process of the second Serbian
acquisition was completed in 2Q 2021, the anticipated cost synergies have been utilized.
In 2021 the total amount of adjustments comprised -HUF 40.5 billion within the accounting earnings of
HUF 456.4 billion (after tax), by HUF 10 billion less than in 2020. The major items were as follows:
-HUF 18.9 billion special banking tax on financial institutions (after tax) paid by the Hungarian operation;
-HUF 15.5 billion effect of acquisitions (after tax) related mainly to the Bulgarian, Serbian and Slovenian
integration expenses;
-HUF 15 billion related to the expected negative one-off effect of the debt repayment moratorium in
Hungary and Serbia (after tax);
+HUF 6 billion related to the treasury share swap agreement between MOL and OTP, reflecting the
share price changes and the updated model calculation for dividend pay-outs.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
+HUF 1.9 billion tax shield related to the recognition or reversal of impairment charges booked in
relation to the revaluation of investments in certain subsidiaries (after tax);
In 2021 OTP Group posted HUF 588 billion the pre-tax profit (+67% y-o-y). The corporate tax burden was
more than twice as big as in the base period mainly due to the higher pre-tax earnings. Besides, starting
from 2021, in the adjusted P&L structure the Hungarian local business tax and innovation contribution (IPA)
payable by Hungarian Group members was presented on the corporate taxes line against the previous
practice of showing it as part of operational expenses10. That particular amount in 2020 comprised HUF16.5
billion (in the stock exchange report it was presented amongst operational expenses), while in 2021 it was
HUF 19.2 billion (shown on the corporate tax line).
The Group posted HUF 496.9 billion consolidated adjusted profit in 2021 (+60% y-o-y), the adjusted ROE
for the period reached 18.5% (+5.5 pps y-o-y).
The size of the bottom-line profit to a large extent was shaped by total risk costs, their volume of
HUF 72.5 billion was around a third of that in the base period. The operating profit showed a decent picture:
in 2021 the Group posted HUF 660.4 billion, 23% more than in 2020. Adjusted for FX, the sale of OBS and
IPA reclassification the increase would be 19.5% y-o-y.
Total income advanced dynamically, by 13% y-o-y (without the effect of the sale of the Slovakian unit,
FX-adjusted) with net interest income growing by the same magnitude, whereas the net fee & commission
income grew somewhat slower (+12% y-o-y). Other net non-interest income surged by 17% y-o-y.
Despite the annual net interest margin eroded further (2021: 3.51%, y-o-y -11 bps). The declining interest
rate environment prevailing for years turned around in several markets, and in 2021 first the Ukrainian and
Russian central banks, later the Hungarian, and most recently the Romanian hiked rates. However, the
favourable impact of the higher interest rates for the interest income will be gradual and stretched out for
several quarters given the time lag in repricing of variable rate assets. At the same time, there were several
developments affecting the net interest margin negatively. On one hand FX changes had negative impact
on annual NIM: during 2021 the HUF was 2.7% stronger y-o-y against the Ukrainian hryvna and by 3.8%
against RUB, respectively. Also, NIM was negatively affected by the steady increase of deposit volumes
through the dilution impact of higher total assets and the higher weight of low margin liquid assets. As for
the whole Group, the annual NIM improved y-o-y at OTP Core, Ukraine and Russia, whereas other Group
members suffered margin erosion at different scale.
In 2021 operating expenses nominally grew by 3% y-o-y. However, adjusted for IPA and the sale of the
Slovakian subsidiary the FX-adjusted y-o-y increase would be 7.7%. The annual cost-to-income ratio was
49.7% (-4.4 pps), whereas the cost to total assets ratio stood at 2.59% (-31 bps y-o-y).
As for the overall performance of the Group, all operations but the Hungarian Fund Management and CKB
(Montenegro) posted y-o-y improving adjusted profit after-tax. The profit contribution of non-Hungarian
Group members leaped from 41% to 51% y-o-y.
2021 performing loan volumes grew 15% y-o-y (FX-adjusted). The Hungarian payment moratorium had a
1 pp positive impact on the consolidated portfolio growth (the principal is not amortizing, and the accrued
interest adds to the outstanding principal). As a result, in 2021 the performing loan portfolio expansion
exceeded HUF 2,000 billion. Last year all Group members posted y-o-y volume increase. Out of the major
Group members the fastest loan growth was posted at the Ukrainian (+41%), Hungarian (+19%), the
Russian (+18%) and Bulgarian (+11%) operations, but the Romanian, Serbian, Croatian and Slovenian
dynamics were also outstanding. It was positive that strong volumes were coupled with improving market
shares in several countries and segments.
As for the major loan segments, during the last twelve months the consolidated FX-adjusted performing
corporate exposures increased the fastest (+19%), followed by the expansion of the mortgage portfolio
(+15%) and the consumer book (+14%) and leasing exposures (+11%). The MSE portfolio, however, shrank
by 6% partly as a result of the phase-out of the Hungarian subsidized structures and also the reclassification
between MLE and MSE segments during the course of the year.
One of the side-effects of pandemic is the more cautious attitude in household spending and corporate
investment activity, as a result the volume of overall savings increased. The FX-adjusted consolidated
deposits grew by 16% y-o-y or HUF 2,916 billion, i.e. increased faster than loan volumes. The Hungarian,
Ukrainian, Romanian and Croatian operations demonstrated double-digit deposit expansion. The
consolidated net loan-to-deposit ratio decreased to 75% (-1 pp y-o-y).
10 The Hungarian local tax and innovation contribution was uniformly booked within the Corporate tax line in the accounting income
statement and the consolidated IFRS report for 2020 and 2021, as well.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
At the end of December 2021, the gross operative liquidity reserves of the Group comprised EUR 9.1 billion
equivalent (+EUR 0.2 billion y-o-y).
The quality of the consolidated loan book remained stable in 2021, the major trends shaping the risk profile
were overall favourable.
By the end of 2021 the Stage 3 ratio under IFRS 9 was 5.3% underpinning a 0.4 pp y-o-y improvement. The
own coverage of Stage 1, 2 and 3 exposures were 1.0%, 10.1% and 60.5%, respectively.
In Hungary the payment moratorium was extended again until 30 June 2022, true, the scope of available
clients was narrowed and clients had to opt-in until 31 October 2021. By the end of 2021 the total household
and corporate exposure remaining under the moratorium comprised HUF 245 billion at OTP Core and
Merkantil Group, which was 4.1% of total gross loan portfolio of those two entities. As a result of the
moratorium extension retail and corporate exposures were shifted into Stage 3, elevating the Stage 3 ratio
at OTP Core.
The volume of credit risk costs for the whole year comprised -HUF 46 billion versus -HUF 158.4 billion in
the base period. The annual credit cost ratio was 0.30%.
Russian-Ukrainian situation
In the second half of February 2022 the military conflict between Russia and Ukraine escalated.
It is difficult to quantify the effect of the Ukrainian-Russian conflict regarding the Ukrainian and the Russian
operations, the possible scenarios are covering a wide range of spectrum. According to the worst possible
scenario, the Bank may lose its control over its investments, which under extreme conditions could result in
the full write-off of the invested amount.
The Consolidated Financial Statements do not contain any write-offs as possible consequences of the
Ukrainian-Russian conflict, the Group recognizes it as not adjusting, post balance sheet event.
OTP Group’s Ukrainian operation incorporates the Ukrainian bank, as well as the leasing and factoring
companies. The country-consolidated Ukrainian total assets represented HUF 984 billion at the end of 2021
(3.6% of total consolidated assets), while net loans comprised HUF 614 billion (3.9% of consolidated net
loans) and shareholders’ equity HUF 160 billion (5.3% of the consolidated total equity). At the end of 2021
the book value of the capital investment in the Ukrainian subsidiaries comprised HUF 105 billion; there was
no goodwill at all, it was already written down entirely in 2014.
The gross intragroup funding towards the Ukrainian operation represented HUF 72 billion, and taking into
account the Ukrainian deposits placed with the HQ, i.e. the net group funding represented HUF 29 billion
equivalent. According to the 28 February 2022 figures, the gross funding amounted to HUF 75 billion
equivalent and the net intragroup funding stood at HUF 9 billion equivalent.
The Ukrainian sub-consolidated RWA (“risk-weighted asset”) was HUF 1,115 billion by the end of 2021
(6.7% of the total consolidated RWA).
The consolidated maximum capital effect on the potential write-off of the Ukrainian operation, taking into
account the equity, the intragroup funding and the Ukrainian risk weighted assets, is estimated at 27 bps on
the consolidated CET1 ratio, according to year-end figures.
The Ukrainian operation posted HUF 39.0 billion adjusted profit in 2021 which represented 7.9% of
OTP Group’s adjusted annual profit.
The total assets of the Group’s Russian operation represented HUF 800 billion at the end of 2021 (2.9% of
consolidated total assets), while net loans comprised HUF 621 billion (3.9% of consolidated net loans) and
shareholders’ equity HUF 241 billion (7.9% of consolidated total equity). At the end of 2021 the book value
of the capital investment in the Russian subsidiaries comprised directly HUF 74 billion and indirectly
HUF 50 billion.
The gross intragroup funding towards the Russian operation represented HUF 73 billion, and taking into
account the Russian deposits placed with the Headquarter, i.e. the net group funding represented
HUF 14 billion equivalent. On 28 February 2022 the gross intragroup funding reached HUF 52 billion
equivalent, which equalled the net figure because there was no deposit placement by the Russian operation
at other Group members.
The Russian sub-consolidated RWA was HUF 822 billion by the end of 2021 (4.9% of the total consolidated
RWA).
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
The consolidated maximum capital effect on the potential write-off of the Russian operation, taking into
account the equity, the intragroup funding and the Russian risk weighted assets, is estimated at 116 bps on
the consolidated CET1 ratio, according to year-end figures.
The Russian operation posted HUF 37.6 billion adjusted profit in 2021 which represented 7.9% of OTP
Group’s adjusted annual profit.
According to the estimation of the Bank’s Management the Ukrainian-Russian conflict does not have
considerably negative impact on the business activity, financial position, efficiency, liquidity and capital
position of OTP Bank. Even after the recognition of the potential losses and write-offs outlined above, the
Group's capital adequacy remains above the expected regulatory level. There is no sign of significant
uncertainties having been arisen regarding carrying out its business as a going concern.
The Bank’s Management is monitoring the situation of the Ukrainian-Russian conflict continuously and will
take the necessary steps in order to moderate the business risk.
Consolidated capital adequacy ratio (in accordance with BASEL III)
At the end of 2021, the consolidated CET1 under the accounting scope of consolidation according to IFRS
was 17.5% (+2.1 pps y-o-y). This ratio equals to the Tier1 ratio and includes the eligible annual profit.
Effective from 1 July 2020 the original level of O-SII capital buffer (2%) was modified to 0% by the NBH until
31 December 2021. Afterwards, this buffer shall be rebuilt gradually, between 1 January 2022 and
31 December 2023. At the end of 2021 the countercyclical capital buffer requirement was 0% in Hungary,
and the central bank stated that it does not plan to raise it in the short term. However, in Bulgaria the local
central bank prescribed a 0.5% buffer for the local subsidiary, thus, the institution-specific countercyclical
buffer requirement for OTP Group was 0.1%. As a result, the effective regulatory minimum requirement for
the Tier 1 capital adequacy ratio for OTP Group was 9.6% for end-2021 (which also incorporated the
effective SREP rate of 117.25%), whereas the minimum CET1 requirement was 7.9%. According to the
decision of NBH, effective from March 2022 the SREP rate increased to 125%.
Credit rating, shareholder structure
In 2021 there was no change in S&P Global Ratings, accordingly, OTP Bank Plc.’s long-term issuer rating
is ꞌBBBꞌ with stable outlook.
On 13 July the ꞌBa1ꞌ dated subordinated debt rating of OTP Bank was placed on review for downgrade by
Moody’s, while its ꞌBa3(hyb)ꞌ junior subordinated debt rating, the BCA (baseline credit assessment) and the
adjusted BCA were placed on review for upgrade. The outlook on OTP Bank’s long-term deposit ratings was
changed to positive from stable. At the same time, Moody’s placed on review for downgrade the ꞌBaa2ꞌ long-
term issuer rating of OTP Mortgage Bank Ltd., while all other ratings and assessments of OTP Mortgage
Bank were affirmed. On 28 September OTP Bank’s Counterparty Risk Assessment (CRA) was upgraded
from ꞌBaa2ꞌ to ꞌBaa1ꞌ, at the same time the long-term deposit rating of ꞌBaa1ꞌ and the long-term Counterparty
Risk Ratings (CRR) were put on credit watch with potential upgrade. Furthermore, Moody’s upgraded OTP
Mortgage Bank’s CRA rating from ꞌBaa2ꞌ to ꞌBaa1ꞌ and put on credit watch with potential upgrade its long-
term CRR rating. Finally, OTP MB’s mortgage bond rating was also upgraded from ꞌA2ꞌ to ꞌA1ꞌ.
On 15 November Scope Ratings assigned an issuer rating of ꞌBBB+ꞌ, preferred senior unsecured debt rating
of ꞌBBB+ꞌ, non-preferred senior unsecured debt rating of ꞌBBBꞌ and Tier 2 debt rating of ꞌBB+ꞌ to OTP Bank.
The outlook for all ratings is stable.
On 4 March 2022 Fitch downgraded OTP Bank Russia’s rating to ꞌBꞌ and put the ratings on Rating Watch
Negative.
Regarding the ownership structure of the Bank, on 31 December 2021 the following investors had more than
5% influence (voting rights) in the Company: MOL (the Hungarian Oil and Gas Company, 8.67%), the Kafijat
Group (7.10%) and Groupama Group (5.17%). On 29 October 2021 OPUS Securities S.A.’s previous holding
and influence (voting rights) in the Company dropped to nil.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
SUMMARY OF ECONOMIC POLICY MEASURES MADE IN THE LAST PERIOD AND OTHER
IMPORTANT DEVELOPMENTS, AS WELL AS POST-BALANCE SHEET EVENTS
Post-balance sheet events cover the period until 17 February 2022.
Hungary
Against the initially planned 2 pps social security contribution cut effective from July 2022, the government
reduced employers’ taxes by 4 pps already from 1 January 2022 (the 1.5% vocational training contribution
was abolished and the social contribution taxes were cut by 2.5 pps).
On 25 January 2022 the NBH hiked the base rate by 50 bps to 2.9%.
On 27 January 2022 the NBH hiked the rate of the 1-week central bank deposit by 30 bps to 4.3%.
On 15 February 2022 the CSO revealed the final GDP growth figures: accordingly, in 4Q 2021 the quarterly
expansion of 2.1% was stronger than expected, lifting the annual growth rate to 7.1% in 2021 as a whole
(seasonally and working day adjusted). Mr. Mihály Varga (Minister of Finance) announced that the
government expects 5.9% growth for 2022.
Slovenia
On 2 February 2022, the Slovenian Parliament passed a law requiring banks to compensate customers
for losses arising from FX rate depreciation of more than 10% in the case of CHF mortgages disbursed
between 2004 and 2010. The law came into force 15 days after its Parliamentary approval, and under the
law banks have 60 days to notify their customers about the reimbursement and the recalculated new
instalments. SKB Banka intends to file a constitutional objection against the law, and plans to submit the
appeal to the local Constitutional Court after the law’s entry into force. A provision is expected to be made
in March 2022 for the potential negative impact.
Russia
On 11 February 2022 CBR hiked the base rate by 100 bps to 9.5%.
In the second half of February 2022 an armed conflict erupted between Russia and Ukraine.
Ukraine
On 20 January 2022 the National Bank of Ukraine raised its key interest rate by 1 pp to 10%.
In the second half of February 2022 an armed conflict erupted between Russia and Ukraine.
Romania
The National Bank of Romania raised the key interest rate by 25 bps on 10 January 2022, and by further
50 bps on 10 February 2022 to 2.5%.
Moldova
On 13 January 2022, the National Bank of Moldova raised the key interest rate by 2 pps to 8.5%.
On 15 February 2022, the National Bank of Moldova raised the key interest rate by 2 pps to 10.5%.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
CONSOLIDATED AFTER TAX PROFIT BREAKDOWN BY SUBSIDIARIES (IFRS)11
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
OTP Bank 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
2020
HUF million
259,636
(50,631)
2021
HUF million
456,428
(40,474)
Change
%
76
(20)
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%
496,901
468,962
213,377
76,790
33,448
32,104
16,822
4,253
39,024
37,624
4,140
5,522
5,858
-
7,998
7,998
6,321
6,116
205
10,205
50
2,887
479
241,062
255,839
51%
60
64
34
87
126
340
74
173
49
131
(4)
182
47
4
4
(36)
(37)
166
24
(54)
(608)
(574)
31
103
11
11 Belonging footnotes are in the Supplementary data section of the Report.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
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)
Effect of acquisitions (after tax)
Result of the treasury share swap agreement (after tax)
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
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 rate1 of the HUF
HUF/EUR
HUF/CHF
HUF/USD
2020
259,636
(50,631)
213
886
(17,365)
(28,262)
(6,852)
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
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
2021
456,428
(40,474)
729
1,909
(18,893)
(15,040)
(15,506)
6,326
496,902
587,853
660,391
1,313,124
884,012
325,548
103,563
44,251
9,726
49,586
(652,733)
(340,201)
(72,816)
(239,716)
(72,538)
(46,006)
(26,532)
-
-
(90,951)
2021
17.0%
18.5%
2.0%
2.62%
5.21%
3.51%
1.29%
0.41%
2.59%
49.7%
0.30%
0.29%
15.5%
33%
1,739
1,738
1,896
1,896
2021
456,428
(4,764)
(44,877)
(2)
(8,591)
68,593
144
315,016
315,239
(223)
2020
HUF
351
328
308
0
0
61,729
42
473,322
472,281
1,041
2021
HUF
359
332
303
Change
%
76
(20)
243
116
9
(47)
126
60
67
23
12
12
11
17
(2)
(31)
67
3
9
4
(4)
(61)
(71)
(10)
119
%/pps
6.1
5.5
0.5
0.16
(0.15)
(0.11)
(0.05)
0.00
(0.31)
(4.4)
(0.84)
(0.57)
3.7
0
73
73
58
58
%
76
842
(100)
(100)
(10)
(71)
50
50
(567)
Change
%
2
1
(2)
1 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.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
ASSET-LIABILITY MANAGEMENT
Similar to previous periods OTP Group maintained a strong and safe liquidity position…
The primary objective of OTP Bank in terms of asset-liability management has not changed, that is to ensure
that the Group’s liquidity is maintained at a safe level.
Refinancing sources of the European Central Bank are available for OTP (ECB repo eligible security portfolio
on Group level exceeded EUR 2 billion).
Total liquidity reserves of OTP Bank remained steadily and substantially above the safety level. As of 31
December 2021 the gross liquidity buffer was around EUR 9.1 billion equivalent. The level of these buffers
is significantly higher than the maturing debt within one year and the reserves required to manage possible
liquidity shocks.
As of 30 December 2021 OTP Group consolidated liquidity coverage (LCR) ratio was 180% (4Q 2020: 214%,
2Q 2021: 212%) while NSFR compliance has remained comfortable (2Q 2021: 135%, 4Q 2021: 137%).
The volume of issued securities decreased on a consolidated basis by HUF 28 billion y-o-y, mainly because
of the change of net volume of mortgage bonds issued by OTP Mortgage Bank and the redemption of corporate
and retail bonds issued by OTP Bank in the total amount of approximately HUF 9 billion. The redemption of
ICES bonds issued by OPUS Securities S.A. was accounted for in the equity. The temporary negative effect
of ICES redemption on the Group’s liquidity position was counterbalanced as OTP Bank treasury shares were
transferred from OPUS Securities, the issuer of ICES, to OTP Bank, which thus have become saleable and
majority of those were sold to the Special Employee Partial Ownership Plan Organizations in December 2021.
…and kept its interest-rate risk exposures low
Interest-rate risk exposure of OTP Group is determined primarily by the positions of 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 has an interest-rate risk exposure resulting from its business operations.
The Bank considers the reduction and closing of this exposure as a strategic matter. Consequently, it has been
reducing its interest-rate risk exposure through the purchase of fixed-rate government securities in order to
offset the negative impact of declining yields on net interest income.
The increase of BUBOR is almost completely reflected in the interest rate of the variable rate forint assets of
the Bank within 6 months: the loans get repriced typically in 3 months, the interest rate swaps (IRS) in 6
months, and other liquid assets within 1-3 months. On the deposit side the repricing is not automatic, its extent
and speed depends on the level of interest rates and the liquidity postition of the Bank.
The already manifested rate and yield increases in 2021 in Hungary exert a positive effect on the net interest
income.
Market Risk Exposure of OTP Group
The consolidated capital requirement of the trading book positions, the counterparty risk and the FX risk
exposure represented HUF 31.3 billion in total.
OTP Group is an active participant of the international FX and derivative market. Open FX positions of group
members are restricted to individual and global net open position limits (overnight and intraday), and to
stop-loss limits. The open positions of the group members outside Hungary except for the Bulgarian DSK Bank
– the EUR/BGN exposure of DSK under the current exchange rate regime does not represent real risk – were
negligible measured against either the balance sheet total or the regulatory capital. Therefore, the group level
FX exposure was concentrated at OTP Bank.
In the last couple of years the main part of the FX exposure at OTP Bank was the strategic open FX position
(EUR 310 million), kept in order to hedge the currency risk of the expected FX-denominated net earnings of
the main foreign subsidiaries. In the course of 2021 the strategic open FX position was fully closed in
accounting meaning.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION OF OTP GROUP
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 adjusted1)
Gross customer loans
Gross customer loans (FX adjusted1)
Gross performing (Stage 1+2) customer loans (FX-adjusted1)
o/w Retail loans
Retail mortgage loans (incl. home equity)
Retail consumer loans
SME loans
Corporate loans
Leasing
Allowances for loan losses
Allowances for loan losses (FX adjusted1)
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 adjusted1)
o/w Retail deposits
Household deposits
SME deposits
Corporate 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 loans2
Total shareholders' equity
Indicators
Loan/deposit ratio (FX adjusted1)
Net loan/(deposit + retail bond) ratio (FX adjusted1)
Stage 1 loan volume under IFRS 9
Stage 1 loans under IFRS9/gross customer loans
Own coverage of Stage 1 loans under IFRS 9
Stage 2 loan volume under IFRS 9
Stage 2 loans under IFRS9/gross customer loans
Own coverage of Stage 2 loans under IFRS 9
Stage 3 loan volume under IFRS 9
Stage 3 loans under IFRS9/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
Consolidated capital adequacy - Basel3
Capital adequacy ratio (consolidated, IFRS)
Tier1 ratio
Common Equity Tier 1 ('CET1') capital ratio
Regulatory capital (consolidated)
o/w Tier1 Capital
o/w Common Equity Tier 1 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
2020
HUF million
23,335,841
2,432,314
1,148,987
235,194
2,140,118
13,528,586
13,730,752
14,363,281
14,575,916
13,736,409
7,619,159
3,585,272
3,290,818
743,068
5,065,053
1,052,197
(834,695)
(845,164)
52,444
2,625,952
589,878
101,393
488,485
582,368
23,335,841
2021
HUF million
27,553,384
2,556,035
1,584,860
341,397
2,224,510
15,743,922
15,743,922
16,634,454
16,634,454
15,756,503
8,560,531
4,123,484
3,739,128
697,919
6,025,106
1,170,866
(890,532)
(890,532)
67,223
3,891,335
689,290
105,640
583,650
454,811
27,553,384
1,219,446
1,608,533
17,890,863
18,152,563
12,992,703
10,774,361
2,218,342
5,151,386
8,474
464,214
1,326
462,888
949,502
274,704
2,537,112
2020
80%
76%
11,544,791
80.4%
1.0%
1,998,867
13.9%
10.4%
819,622
5.7%
62.3%
543,733
3.8%
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
365
337
297
21,068,644
21,068,644
14,297,453
11,897,580
2,399,873
6,762,795
8,396
436,325
0
436,325
1,124,782
278,334
3,036,766
2021
79%
75%
13,561,883
81.5%
1.0%
2,194,620
13.2%
10.0%
877,951
5.3%
60.5%
535,445
3.2%
2021
19.1%
17.5%
17.5%
3,191,765
2,926,882
2,926,882
264,883
0
16,691,315
14,992,797
1,698,518
2021
369
357
326
Change
%
18
5
38
45
4
16
15
16
14
15
12
15
14
(6)
19
11
7
5
28
48
17
4
19
(22)
18
32
18
16
10
10
8
31
(1)
(6)
(100)
(6)
18
1
20
pps
(1)
(1)
17
1.2
0.0
10
(0.7)
(0.4)
7
(0.4)
(1.8)
(2)
(0.6)
%/pps
1.4
2.1
2.1
20
26
26
(25)
(100)
11
12
2
Change
%
1
6
10
1 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.
2 The ICES bonds were considered as Tier2 debt, but accounting-wise they were treated as part of the shareholders’ equity until 2Q 2021, but in 3Q 2021
the ICES bonds are no longer part of the shareholders’ equity. In the wake of the redemption of the ICES bonds announced on 14 September 2021, at the
end of 3Q the HUF equivalent of ICES bonds (using the FX rate of 14 September) was recognized within the Other liabilities (HUF 179.8 billion) both on OTP
Bank standalone and consolidated level, and within the consolidated shareholders’ equity the other reserves declined by HUF 89.9 billion and the retained
earnings by HUF 89.9 billion. The ICES bonds were redeemed on 29 October 2021.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
OTP BANK’S HUNGARIAN CORE BUSINESS
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 loans1
Effective tax rate
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%
2021
HUF million
213,377
(40,594)
253,972
257,182
546,215
369,309
150,578
26,328
(289,034)
(3,210)
(1,116)
(2,094)
-
-
2021
11.6%
1.6%
2.0%
4.22%
2.85%
1.16%
0.20%
2.2%
52.9%
0.02%
16.0%
Change
%
34
145
44
42
20
29
15
(28)
6
(58)
(147)
(79)
pps
2.3
0.1
0.3
(0.12)
0.11
(0.08)
(0.15)
(0.4)
(7.1)
0.08
6.6
1 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.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
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)
Stage 1+2 customer loans (FX-adjusted)
Retail loans
Retail mortgage loans (incl. home equity)
Retail consumer loans
SME loans
Corporate 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
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)
2020
HUF million
11,492,949
4,415,778
4,425,421
4,631,974
4,642,248
4,449,398
2,797,121
1,437,243
995,361
364,517
1,652,277
(216,196)
(216,828)
8,083,488
8,122,814
5,394,876
4,254,102
1,326
1,140,774
2,727,938
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
22.9%
25.3%
25.8%
2020
54%
15.4%
6.5x
26.7%
22.5%
2021
HUF million
14,207,399
5,310,327
5,310,327
5,549,248
5,549,248
5,293,960
3,320,579
1,613,416
1,246,723
460,440
1,973,381
(238,921)
(238,921)
10,124,795
10,124,795
6,261,808
4,870,560
0
1,391,247
3,862,988
1,117,086
531,471
2,011,932
2021
4,327,232
78.0%
1.0%
966,727
17.4%
8.9%
255,288
4.6%
42.7%
136,003
2.5%
2021
24.4%
28.2%
26.9%
2021
52%
14.1%
7.1x
25.1%
21.8%
Change
%
24
20
20
20
20
19
19
12
25
26
19
11
10
25
25
16
14
(100)
22
42
30
3
14
%/pps
20
0.1
0.3
16
(0.6)
(1.2)
33
0.4
(11.8)
(6)
(0.7)
pps
1.5
2.9
1.1
pps
(2)
(1.2)
0.6x
(1.6)
(0.7)
In June 2021, OTP Home Solutions was added to the range of companies that make up OTP Core; its
balance sheet total was HUF 1.6 billion at the end of 2021.
P&L developments
In 2021 OTP Core's adjusted after-tax profit amounted to HUF 213.4 billion, 34% more than a year earlier.
Starting from 2021, the local business tax and the innovation contribution paid by Hungarian Group members
are presented on the corporate income tax line, rather than under operating expenses, in the adjusted P&L
structure. At OTP Core, the local business tax and the innovation contribution amounted to HUF 15.2 billion
in 2020 (presented under operating expenses), and to HUF 17.4 billion in 2021 (shown on the corporate
income tax line). This item caused much of the increase in the annual effective corporate income tax rate.
The above item explained 3.2 pps from the 7.1 pps improvement in the annual cost/income ratio, which
would have decreased nearly 4 pps even without this technical effect, as income growth outpaced that of
operating expenses.
The full-year operating profit jumped by 42%. Even without the above reclassification affecting operating
expenses, operating profit would have improved by 34%.
Net interest income grew at an accelerating pace, by 29% y-o-y in 2021. This could be largely ascribed to
the continued dynamic growth in business volumes, as well as to last year’s reversal of net interest margin’s
erosion: it has risen by 11 bps y-o-y in full year 2021.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
The main reason for the favourable turn in the net interest margin development was that rising reference
rates’ benign effect on interest revenues was more and more visible in the second half of the year. Overall,
the effect of rising reference rates is reflected in the asset-side interest rates with a certain delay; what is
more, the time lag in the repricing of variable-rate assets (mortgage and corporate loans with variable rates,
central bank deposits, and government securities swapped to variable-rate) is also different. Of the short-
term interbank interest rates, which are typically the reference rates for variable rate loans, the 3M BUBOR
increased to 77 bps by end-March, to 105 bps by end-June, to 176 bps by end-September, and to 421 bps
by end-December (from 75 bps at the end of 2020), while its quarterly average was 76 bps in 1Q, 87 bps in
2Q, 139 bps in 3Q, and 277 bps in 4Q 2021. The 3M BUBOR hit 459 bps on 17 February 2022. Likewise,
the 6M BUBOR printed a similar pattern, hitting 479 bps on 17 February. Most of the deposits kept with the
central bank was held in its one-week instrument; it amounted to HUF 750 billion at the end of 2021.
Also, two one-off effects emerging in 1Q 2021 (a technical effect relating to the accounting of the loan
repayment moratorium, and the repricing of cash loans for regulatory reasons) exerted a positive impact on
the margin development, as they elevated the margin level in the first quarter, but have not helped the
margin dynamics since then.
On the other hand, partly as a result of the strong competition, the erosion of product-level spreads typically
continued in the case of newly disbursed loans, adversely affecting the margin development.
In 2021 as a whole, the changes in the balance sheet structure had an overall neutral effect on the y-o-y
margin dynamics: although due to the sustained dynamic growth in deposits the weight of financial assets
carrying lower margins than loans increased in the balance sheet (partly at the expense of loans), but the
share of non-interest-bearing assets was in downtrend in recent quarters, and the weight of consumer loans
within total loans grew, too.
As a negative development, for the period between 1 January – 30 June 2022 the government introduced
an interest rate cap for variable-rate retail mortgage loans, and with its decision announced on 18 February,
for housing purposes financial leasing contracts, too. Accordingly, the affected exposures’ reference rate
cannot be higher than the relevant reference rate as at 27 October 2021. Furthermore, according to
Government Decree 537/2021. (IX. 15.) published on 15 September, credit institutions shall re-calculate the
interest deferred during the period spent in the moratorium in the case of overdraft loans and credit card
exposures. The base for the re-calculation shall be the NBH’s statistical data for the average annualized
cash loan interest rate published for February 2020. The difference between the deferred interest booked
according to the original contract and the re-calculated amount shall be refunded to the borrowers by way
of crediting the borrowers’ account with the due amount. In the adjusted P&L structure, the negative effect
of this regulatory change wa presented amongst the adjustment items, on the Expected one-off negative
effect of the debt repayment moratorium in Hungary and Serbia line.
Net fees and commissions rose by 15% y-o-y in 2021. The improvement can be attributed to the double-
digit growth rate of commissions on deposits, transactions, cards, lending, as well as securities sales, fuelled
by the strengthening economic activity compared to the base period. One-off items reduced the y-o-y growth
of net fees and commissions by a total of HUF 3 billion.
The annual other net non-interest income dropped by 28%, or nearly HUF 10 billion. This can be explained
mainly by two items: the weaker foreign exchange result in 2Q 2021, and the weaker securities result in 4Q
2021, latter owing to the sale of government securities. The development of other income was also
influenced by the fact that, starting from 2021, the recoveries from claims written off at OTP Factoring for
legal reasons (e.g. irretraceable borrower, time-barred debt) are presented amongst other income, rather
than under risk costs.
Operating expenses grew by 6% y-o-y in 2021. In the reporting period, there were three major one-off or
technical items that affected costs: first, starting from 2021, the local business tax and the innovation
contribution (HUF 17.4 billion in 2021) are presented as part of corporate income tax, rather than under
operating expenses. Second, in the second quarter, the provisions for untaken holidays on a pro rata
temporis basis were moved to personnel expenses from the other risk costs line, and simultaneously, the
HUF 3.1 billion amount for all such untaken holidays was recorded in 2Q. Third, in 4Q 2021, in the case of
certain expected future bonus payments, the expected amount on a longer time horizon and according to
model calculations was booked in a lump sum, against the previous practice of recognising the expected
payments over the next12 months. This item explained HUF 5.4 billion increase in personnel expenses in
2021 y-o-y. Without
items, expenses would have grown by 9%
y-o-y, partly owing to higher personnel expenses (due to a 2% increase in annual average headcount and
the implemented wage hikes), the steady rise in depreciation on the back of IT and digital development, as
well as higher other expenses (due to stronger business activity, higher cost of hardware, office equipment,
and other services, and supervisory fees increased by HUF 3.8 billion y-o-y).
the effect of
these
three
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
On the whole, underlying credit quality trends were favourable in 2021. In 2021 total risk costs amounted to
-HUF 3.2 billion (down from -HUF 7.7 billion in 2020), including -HUF 2.1 billion other risk costs partly relating
to provisions for securities, while credit risk costs amounted to -HUF 1.1 billion. The main reason for the
positive amount of total risk costs in the first two quarters was the continued recoveries on retail claims
managed by OTP Faktoring, but these recoveries followed a declining path during the year. In the third
quarter, nearly HUF 3 billion additional credit risk cost emerged as a result of the reclassification of certain
corporate loans participating in the moratorium into the riskier Stage 2 bucket, in accordance with the more
conservative approach applied by the Bank. In the fourth quarter, HUF 7.8 billion credit risk cost (the highest
since 1Q 2020) weighed on profit. In the last quarter, credit risk costs were adversely affected by the
additional provisions allocated to exposures participating in the extended moratorium: borrowers who
applied for the extended loan repayment moratorium starting from November were reclassified into riskier
categories (Stage 2 or Stage 3), based on the Bank’s assessment; moreover, the impairment parameters
were also revised.
In 2021, the loan repayment moratorium was first extended by three months (until the end of September
2021), then by one more month (until end-October), with unchanged terms and conditions. Between
November 2021 and June 2022, only eligible borrowers who had applied for it at their bank in October 2021
are entitled to participate in the moratorium. At OTP Core, the volume of loans subject to the debt repayment
moratorium was in downtrend in 2021: At the end of 2020 HUF 1,760 billion, at the end of 3Q 2021
HUF 1,286 billion, and at the end of 2021 HUF 237 billion worth of loans participated in the loan repayment
moratorium; the latter makde up 4.3% of OTP Core’s total gross loan portfolio.
Partly as a result of the above mentioned one-timer effects, at the end of 2021 the ratio of Stage 3 loans
stood at 4.6%, while the Stage 2 ratioat 17.4%. At the end of the year the aggregated own provision coverage
of the Stage 1+2 portfolio stood at 2.5%, while the own provision coverage of Stage 3 loans at 42.7%.
The volume of more than 90 days past due (DPD90+) loans declined by HUF 5 billion both in full year 2020
and by HUF 1 billion in 2021 as a whole (FX-adjusted, without sales/write-offs and the revaluation of
Faktoring’s claims). In 2021, HUF 10 billion non-performing loans were sold/written off (FX-adjusted).
Balance sheet trends
OTP Core’s balance sheet total grew by 24% y-o-y or more than HUF 2,700 billion in 2021. Most of this
year-over-year increase stemmed from the inflow of deposits (+25%, or +HUF 2,040 billion), and a smaller
part came from interbank liabilities’ increase (+30% y-o-y, +HUF 260 billion); the latter was partly explained
by the expansion of loan volumes under the Funding for Growth scheme refinanced by the central bank.
In full year 2021, the nominal growth in customer deposits significantly exceeded the increase in loans,
which crystallized in the further rise in the volume of financial and other liquid assets. In 2021, the share of
financial assets on OTP Core’s assets side rose by 4.3 pps y-o-y on average, while that of non-interest-
bearing assets dropped by 2.6 pps, and the weight of net loans shrank by 1.7 pps.
Performing (Stage 1+2) loans increased dynamically, this brought the full-year growth to 19% (FX-adjusted),
of which 3 pps increase could be ascribed to the volume-boosting effect of the moratorium. Much of the
yearly growth came from the government's and the national bank’s subsidized loan programmes (baby loan,
CSOK subsidized housing loan, green mortgage loan, home renovation loan, Funding for Growth Go!,
Széchenyi Card Go!).
Regarding individual product categories, performing consumer loans jumped by 25% y-o-y.
Within consumer loans, baby loans remained highly popular: in whole year 2021, the newly contracted
amount at OTP Bank hit HUF 232 billion; this was consistent with a market share of 42.1% in 2021.
In the case of cash loans, market pricing has been in effect since the beginning of 2021, as the regulatory
interest rate cap expired. New cash loan placements grew by 50% last year. OTP Bank's market share in
cash loan disbursements reached 38.4% in 2021, against 34.8% in full year 2020. All in all, performing cash
loan volumes expanded by 17% y-o-y.
To help borrowers take advantage of the government's home renovation subsidy, OTP made available both
the mortgage-backed subsidized home renovation loan (from the beginning of February 2021) and the
Bank's own unsecured home renovation cash loan product (from March 2021). By the end of December,
loan applications for the unsecured product amounted to HUF 16 billion, and those for the secured product
was close to HUF 37 billion. Because of its collateralized nature, the subsidized home renovation loan is
presented among mortgage loans in the product structure, whereas the unsecured home renovation loan is
shown under consumer loans.
As for mortgage loans, the strong demand persisted: applications grew by 55% in full year 2021 HUF 43
billion of the applications () were for green housing loans with subsidized interest rates, under the central
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
bank’s FGS Green Home programme launched in October 2021. OTP Bank's market share in new mortgage
loan contractual amounts was 31.5% in 2021 (against 32% in 2020).
The Bank's corporate lending activity remained strong, largely because of the Funding for Growth Go!
scheme launched by the Magyar Nemzeti Bank in April 2020. By the end of September 2021, the FGS Go!
contracted amount reached the HUF 3,000 billion available amount at sector level, thus the programme was
phased out by the central bank. Since the launch of this scheme, OTP Bank’s contracted amounts exceeded
HUF 752 billion, which resulted in a market share of 26%.
Because of the phasing out of the FGS Go! programme, in July 2021 the government introduced subsidized
lending programmes for micro and small enterprises through the KAVOSZ Széchenyi Card scheme. Under
the programme, by the end of December OTP Bank signed loan agreements worth more than
HUF 130 billion.
Overall, in 2021 at OTP core the outstanding expansion of loans to micro and small enterprises continued:
their performing volumes surged 26% y-o-y (FX-adjusted), partly bolstered by the FGS Go! programme,
which has already been ended.
Performing corporate loans grew by 19% y-o-y (FX-adjusted).
OTP Core’s 12-month customer deposit growth rate was 25% (FX-adjusted). Within this, the 42% jump in
corporate deposits was outstanding, but retail deposits also increased by 14%.
The net loan/deposit ratio stood at 52% at the end of 2021, marking a 2 pps y-o-y contraction.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
OTP FUND MANAGEMENT (HUNGARY)
Changes in assets under management and financial performance of OTP Fund Management:
After tax profit w/o dividends and net cash transfer
Main components of P&L account
Income tax
Profit before income tax
Operating profit
Total income
Net fees and commissions
Other net non-interest income
Operating expenses
Other provisions
Main components of balance sheet
closing balances
Total assets
Total shareholders' equity
Asset under management
Assets under management, total (w/o duplicates)1
Volume of investment funds (closing, w/o duplicates)
Volume of managed assets (closing)
Volume of investment funds (closing, with duplicates)2
bond
absolute return fund
equity
mixed
commodity market
guaranteed
money market
2020
HUF million
9,747
(915
10,662
10,662
14,453
14,154
299
(3,791)
(1)
2021
HUF million
6,116
(788)
6,904
6,918
10,044
9,799
245
(3,125)
(14)
2020
2021
33,210
16,425
2020
HUF billion
1,201
828
373
1,183
376
374
248
133
28
20
5
24,988
12,792
2021
HUF billion
1,331
942
389
1,479
444
300
342
345
37
5
4
Change
%
(37)
(14)
(35)
(35)
(31)
(31)
(18)
(18)
%
(25)
(22)
%
11
14
4
25
18
(20)
38
160
33
(73)
(21)
1 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.
2 The cumulative net asset value of investment funds with duplications managed by OTP Fund Management.
In 2021, OTP Fund Management generated more than HUF 6 billion profit, 37% less than in 2020.
The annual profit was shaped by the 31% y-o-y drop in fees and commissions, as the success fee revenues
from funds with above-benchmark performance fell short of the 4Q 2020 level: while HUF 7.3 billion success
fee was recorded in the 2020 base period, less than a third of that, HUF 1.9 billion was realized on the fund
management activity in 2021.
Last year the other income dropped by 18% y-o-y owing to two factors: the revaluation result of the
investment units in the Company’s own books improved, which was offset by the decline in foreign exchange
result.
Last year 18% cost saving was achieved within that personnel expenses came down 21% y-o-y, in sync
with the decline in bonus payments for funds’ performance.
In 2021, the market of Hungarian investment funds was rather hectic: the accelerating inflation and interest
rate hikes by the central banks transformed the structure of investment funds. Equity funds were the most
successful ones last year: two of Hungary’s top three equity funds by assets under management, OTP
Quality Fund and OTP Climate Change Fund, are both managed by the Company. Although bond funds’
performance was adversely affected by the rising yield environment, the capital influx helped their volumes
further expand y-o-y. Overall, regarding the whole portfolio, the total wealth managed by OTP Fund
Management expanded further, by 25% y-o-y.
The Company's markets share rose by 1.3 pps y-o-y, to 26.0% by end-December 2021, thus preserving its
leadership in the securities funds market.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
MERKANTIL GROUP (HUNGARY)
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)
Stage 1+2 customer loans (FX-adjusted)
Retail loans
Corporate loans
Leasing
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
Operating costs / Average assets
Cost/income ratio
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
417,282
402,526
6,993
51,520
344,013
(12,874)
(12,888)
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%
1.8%
51.7%
2021
HUF million
Change
%
7,998
(918)
8,916
11,961
23,291
20,680
116
2,495
(11,330)
(3,045)
(3,093)
48
2021
782,222
444,549
444,549
431,714
4,866
46,870
379,977
(14,230)
(14,230)
8,198
8,198
5,166
3,032
688,675
59,246
2021
334,732
75.3%
0.4%
96,982
21.8%
5.3%
12,836
2.9%
60.0%
0.71%
5,852
1.3%
2021
1.0%
14.3%
3.05%
2.71%
1.5%
48.6%
4
(4)
3
16
9
17
187
(30)
3
83
107
(128)
%
17
7
7
7
(30)
(9)
10
11
10
(12)
(12)
(15)
(7)
18
13
%/pps
(3)
(7.1)
0.2
66
7.8
1.5
(13)
(0.6)
(6.5)
0.33
(35)
(0.8)
pps
(0.2)
(1.4)
(0.52)
(0.26)
(0.4)
(3.1)
The table presents the sub-consolidated performance of Merkantil Group, whose members are: Merkantil
Bank Ltd., Merkantil Bérlet Ltd., NIMO 2002 Ltd., SPLC-P Ingatlanfejlesztő, Ingatlanhasznosító Ltd., SPLC
Vagyonkezelő Ltd., and OTP Ingatlanlízing Ltd.
In 2021, Merkantil Group posted HUF 8 billion adjusted after-tax profit, which brought its ROE to 14.3%.
The 4% y-o-y profit growth stemmed from the 16% y-o-y improvement in operating profit, which was offset
by the jump in risk costs.
In 2021, net interest income grew by 17% y-o-y driven by the 7% y-o-y increase in performing loans and a
32% surge in financial assets, while annual net interest margin declined by 26 bps y-o-y.
Annual operating expenses rose by 3% y-o-y. Without the effect of the local business tax and innovation
contribution being presented on the corporate income tax line instead of costs starting from 2021, this rate
would be 8%. Most of the underlying cost growth could be attributed to personnel and vehicle-related
expenses, as well as higher supervisory fees.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
In 2021 total risk costs amounted to -HUF 3 billion. This was predominantly the result of the revision of the
IFRS 9 model parameters, and of the additional loan loss provisions for the loans that remained in the
extended moratorium from November 2021. Customers who had indicated their decision to remain in the
moratorium were reclassified to riskier categories (Stage 2 or Stage 3), which resulted in additional loan loss
provisions. At the end of the year, Merkantil Group’s loan volumes that participated in the moratorium
amounted to HUF 8.3 billion, which represented 2% of total gross loans.
As a result, the ratio of Stage 3 loans was 2.9% as at the end of 2021, yet it fell by 0.6 pp y-o-y. The own
provision coverage of Stage 3 loans dropped to 60.6%. The own provision coverage of Stage 2 loans stood
at 5.4% (+1.6 pps y-o-y).
The volume of 90 days past due loans fell by HUF 0.7 billion (FX-adjusted, without sales/write-offs) in 2021.
FX-adjusted performing (Stage 1+2) loans increased by 7% y-o-y Its dynamics benefited from the central
bank’s Funding for Growth Scheme Go! programme launched in April 2020, under which Merkantil Bank’s
contracted amount hit HUF 74 billion. Due to the termination of FGS Go!, since the beginning of July 2021
the government has been providing preferential, interest-subsidized funds to micro- and small enterprises
through the KAVOSZ Széchenyi Card scheme. Under the programme, Merkantil Bank contracted more than
HUF 32 billion in loans by the end of December.
Merkantil Bank remained the market leader in both new loan placements and volumes.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
IFRS REPORTS OF THE MAIN FOREIGN SUBSIDIARIES OF OTP BANK
DSK GROUP (BULGARIA)
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)
Stage 1 + 2 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
Operating costs / Average assets
Cost/income ratio
Net loans to deposits (FX-adjusted)
HUF/BGN (closing)
HUF/BGN (average)
FX rates
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)
2021
HUF million
76,790
(8,454)
85,244
106,241
178,470
112,869
54,508
11,093
(72,230)
(20,997)
(18,938)
(2,059)
2020
2021
4,283,625
2,634,870
2,663,462
2,466,457
1,375,184
913,099
178,174
(185,829)
(187,812)
3,587,364
3,642,801
3,056,883
585,918
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%
1.9%
46.1%
68%
2020
HUF
186.7
177.9
4,627,132
2,922,886
2,922,886
2,741,964
1,609,216
927,478
205,270
(193,180)
(193,180)
3,785,300
3,785,300
3,342,569
442,730
86,606
699,375
2021
2,454,806
84.0%
1.0%
287,157
9.8%
15.5%
180,922
6.2%
68.2%
0.70%
114,362
3.9%
2021
1.8%
11.8%
4.07%
2.58%
1.6%
40.5%
72%
2021
HUF
188.7
182.3
Change
%
87
128
91
18
7
1
20
11
(6)
(53)
(58)
777
%
8
11
10
11
17
2
15
4
3
6
4
9
(24)
409
13
%/pps
15
2.7
0.1
(3)
(1.5)
2.9
(7)
(1.2)
2.5
(1.09)
(9)
(0.9)
pps
0.7
4.8
(0.05)
(0.18)
(0.3)
(5.7)
4
Change
%
1
2
In 2021, DSK Group reached HUF 76.8 billion cumulated after-tax profit, 87% more than in 2020, due to
improving operating results and lower risk costs.
Annual operating profit grew by 18% y-o-y, mainly driven by a 20% surge in net fees and commissions. The
improvement partly stemmed from a 6% y-o-y decline in operating expenses (in local currency terms): the
cost synergies resulting from the integration of Expressbank were observable also in 2021, and the continuing
decrease in average headcount brought down personnel costs. In 2021 the bank launched a comprehensive
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
project in order to transform its business and operational model, and develop its digital capabilities, which
also supported the operational efficiency.
With regard to the annual income, cumulated net interest income stagnated in BGN terms, as a joint result of
the 18 bps erosion in net interest margin and increasing volumes. Net fee income grew by 18% in local
currency last year, mainly as a result of stronger business activity and the introduction of new fees on
deposits. Furthermore, fees related to loans and investment services also increased.
The annual cost efficiency indicators showed an improving trend, with the cost-to-income ratio declining by
5.7 pps to 40.5% and operating expenses/average assets ratio declining by 0.3 pp to 1.6%.
Performing (Stage 1+2) loan volumes grew by 11% y-o-y (FX-adjusted). The retail loan book expanded by
17% last year, supported by 29% y-o-y growth in new cash loan disbursement, as well as a 47% jump in
mortgage loan disbursements. Performing corporate loan volumes rose by 2% last year.
At the end of 2021, the bank’s market share by total asset value was 18.03%, which ranked it second on the
market.
In 2021, HUF 21 billion total risk cost weighed on profit, 53% less than in 2020. The 12-month credit risk cost
ratio stood at 0.70% (-1.09 pps y-o-y).
The ratio of Stage 2 loans declined by 1.5 pps (to 9.8%) from the previous year; the large corporate and the
mortgage loan portfolios improved.
Deposit volumes expanded by a total of 4% over the past 12 months. The FX-adjusted net loan/deposit ratio
stood at 72% at the end of December.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
OTP BANK CROATIA
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)
Stage 1+2 customer loans (FX-adjusted)
Retail loans
Corporate loans
Leasing
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
Operating costs / Average assets
Cost/income ratio
Net loans to deposits (FX-adjusted)
HUF/HRK (closing)
HUF/HRK (average)
FX rates
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
1,664,491
1,519,909
770,976
640,362
108,572
(100,920)
(102,293)
1,634,652
1,664,844
1,255,438
409,406
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%
2.06%
52.5%
94%
2020
HUF
48.4
46.6
2021
HUF million
33,448
(7,618)
41,065
43,422
88,736
60,933
18,183
9,619
(45,313)
(2,357)
1,767
(4,124)
2021
2,576,445
1,811,376
1,811,376
1,667,213
875,737
676,124
115,351
(109,575)
(109,575)
1,899,671
1,899,671
1,416,254
483,417
228,733
351,023
2021
1,448,458
80.0%
0.6%
218,754
12.1%
5.9%
144,163
8.0%
61.4%
(0.11%)
73,826
4.1%
2021
1.4%
10.0%
3.73%
2.56%
1.90%
51.1%
90%
2021
HUF
49.1
47.6
Change
%
126
175
133
8
5
5
13
(9)
2
(90)
(109)
27
%
11
10
9
10
14
6
6
9
7
16
14
13
18
(20)
7
%/pps
15
3.4
(0.2)
(10)
(2.7)
0.1
1
(0.7)
7.5
(1.38)
7
(0.1)
pps
0.7
5.3
(0.20)
(0.13)
(0.16)
(1.4)
(4)
Change
%
2
2
The Croatian bank realized HUF 33.5 billion after-tax profit in 2021, more than doubling its profit y-o-y., This
was primarily caused by a favourable development in credit risk costs, but operating profit also improved
(+8% y-o-y).
Within annual income, net interest income expanded by 5%. The dynamic organic growth of loans was partly
offset by a further erosion in net interest margin (-13 bps y-o-y).
Net fees and commissions surged 13% y-o-y in 2021, mainly as a result of stronger economic activity and
tourism, starting from the second quarter.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
Other income contracted by 9% y-o-y last year, largely because of the 31% q-o-q decline in the fourth quarter.
The latter stemmed from the seasonally lower income from foreign currency exchange, as well as from the
negative revaluation result owing to an IT-system-related write-off and unfavourable exchange rate
fluctuations.
Operating expenses rose by 2% (but dropped by 1% in local currency) in 2021, thus cost efficiency indicators
improved.
In 2021, HUF 2.4 billion total risk cost weighed on profit, which was a tenth of what was recorded in the base
year.
In the past quarter, the share of Stage 3 loans in the portfolio sank to 8.0%, while their own provision coverage
grew to 61.4% (+7.5 pps y-o-y).
The volume of 90 days past due loans grew by HUF 8.7 billion (FX-adjusted, without sales/write-offs) in 2021.
It was in 4Q when considerable non-performing loans were sold/written off last year (nearly HUF 4 billion,
FX-adjusted).
As to lending activity, performing (Stage 1+2) loans surged 10% y-o-y (FX-adjusted).
In the retail segment, mortgage (+67% y-o-y) and cash (+40%) loan disbursement volumes grew dynamically.
Despite the strong fourth quarter, the volume of corporate loan disbursement contracted by 6% from the
previous year.
The FX-adjusted deposit volumes increased by 14% compared to end-2020, largely driven by the corporate
segment, but the growth in the on-demand retail deposits also continued.
The Croatian bank's liquidity position remained stable; the net loan/deposit ratio stood at 90% at the end of
December (-4 pps y-o-y).
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
OTP BANK SERBIA
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)
Stage 1+2 customer loans (FX-adjusted)
Retail loans
Corporate loans
Leasing
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
Operating costs / Average assets
Cost/income ratio
Net loans to deposits (FX-adjusted)
HUF/RSD (closing)
HUF/RSD (average)
FX rates
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
1,555,706
1,515,269
716,486
711,244
87,538
(43,597)
(44,054)
1,147,712
1,162,891
686,059
476,832
548,354
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%
2.32%
54.6%
130%
2020
HUF
3.1
3.0
2021
HUF million
32,104
(3,610)
35,714
40,754
83,494
62,497
14,410
6,586
(42,740)
(5,040)
(387)
(4,653)
2021
2,224,715
1,715,347
1,715,347
1,665,924
786,945
794,091
84,889
(44,587)
(44,587)
1,238,864
1,238,864
750,275
488,589
584,453
306,630
2021
1,542,170
89.9%
0.7%
123,754
7.2%
6.1%
49,423
2.9%
53.6%
0.02%
33,405
1.9%
2021
1.6%
11.4%
4.07%
3.05%
2.09%
51.2%
135%
2021
HUF
3.1
3.0
Change
%
340
212
322
14
6
5
(2)
40
(1)
(82)
(98)
(12)
%
8
11
10
10
10
12
(3)
2
1
8
7
9
2
7
12
%/pps
13
1.1
(0.1)
(7)
(1.4)
(2.4)
24
0.3
0.0
(1.59)
47
0.5
pps
1.2
8.6
(0.17)
(0.15)
(0.23)
(3.4)
5
Change
%
1
2
The Serbian banking group’s adjusted after-tax profit exceeded HUF 32 billion in 2021, almost 4.5 times more
than in the previous year. This dynamic profit growth was largely the result of a sharp fall in risk costs, and
14% improvement in operating profit.
Following the financial closure of the second Serbian acquisition at the end of September 2019, the integration
continued as planned, and was successfully accomplished on 30 April 2021. The Serbian operation's total
market share by balance sheet total jumped to 13.0% on pro forma basis (ranking No. 2), and it remained
market leader in net loans (with 16.6% market share), according to the most recent data of end-September
2021.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
The total network in Serbia consists of 187 branches. Since the end of September 2019, it has contracted by
a total of 53 units. At the end of 2021 the network had 2,707 employees, 16% (525 workers) less than at the
end of September 2019.
Operating expenses in 2021 stagnated y-o-y in HUF but dropped by 3% in local currency. The Bank’s annual
cost/income ratio improved by 3.4 pps y-o-y, to 51.2%.
Both the full-year and the fourth-quarter changes in after-tax profit were largely shaped by the size of risk costs.
In 2021, total risk cost volume fell by 82% y-o-y, from more than HUF 27 billion in the previous year. The 2021
amount on the other risk cost line were mostly induced by legal disputes.
In full year 2021, the income side grew by 6% y-o-y, supported by a 5% increase in net interest income, and a
40% jump in other income. Annual net fees and commissions contracted by 2% from the previous year’s level.
As regards loan quality, the share of Stage 3 loans in the whole portfolio was at 2.9% at the end of December
(+0.3 pp y-o-y). The DPD90+ volume (FX-adjusted, without sales/write-offs) grew by a total of HUF 13 billion
in 2021. This brought the DPD90+ ratio 0.5 pp higher, to 1.9% y-o-y by the end of December.
Performing (Stage 1+2) loan volumes increased by 10% y-o-y (FX-adjusted), while the deposit base
increased by 7%. The bank’s net loan/deposit ratio rose in y-o-y terms, hitting 135%.
In Serbia, borrowers could apply for the third phase of the loan moratorium until the end of April 2021; the
moratorium (maximum six months from the date of entrance) ended at the end of October.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
SKB BANKA (SLOVENIA)
Performance of SKB Banka (Slovenia):
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)
Stage 1+2 customer loans (FX-adjusted)
Retail loans
Corporate loans
Leasing
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
Operating costs / Average assets
Cost/income ratio
Net loans to deposits (FX-adjusted)
HUF/EUR (closing)
HUF/EUR (average)
FX rates
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
919,331
905,333
507,762
230,038
167,533
(14,876)
(15,040)
1,136,666
1,150,365
985,148
165,217
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%
1.62%
51.0%
79%
2020
HUF
365.1
351.2
2021
HUF million
16,822
(3,838)
20,660
19,595
42,354
27,673
13,258
1,423
(22,759)
1,065
1,819
(754)
2021
1,433,206
984,605
984,605
971,578
475,971
328,691
166,915
(16,271)
(16,271)
1,213,698
1,213,698
895,652
318,046
15,565
179,515
2021
846,646
86.0%
0.3%
124,932
12.7%
5.0%
13,027
1.3%
56.1%
(0.20%)
4,353
0.4%
2021
1.2%
10.0%
3.13%
2.04%
1.68%
53.7%
80%
2021
HUF
369.0
358.5
Change
%
74
57
71
(1)
5
(2)
19
23
10
(48)
%
6
8
7
7
(6)
43
0
9
8
7
6
(9)
93
(47)
8
%/pps
12
3.1
(0.2)
(12)
(2.9)
0.7
(6)
(0.2)
19.8
(0.90)
20
0.0
pps
0.5
3.7
(0.05)
(0.17)
0.06
2.7
1
Change
%
1
2
In 2021, OTP’s Slovenian subsidiary generated HUF 16.8 billion adjusted profit, 74% more than in the base
period. This substantial improvement was driven by the decline in risk costs.
Operating profit was marginally smaller in 2021 than in the base period. The 5% growth in income largely
stemmed from strong fees and commissions, mostly because of higher fee income from payment services
and from deposits: the Bank introduced commissions for corporate and retail deposits above a certain
amount. Full-year net interest income dropped by 4% in local currency as the growth in business volumes
was offset by the 17 bps y-o-y erosion of net interest margin, to 2.04%, owing to the strong competition and
the low interest rate environment.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
Operating expenses increased by 10% last year, mostly because of higher personnel expenses and
administrative costs: annual supervisory costs rose, as did IT spending; amortization stagnated.
The favourable development of the quality of the loan portfolio throughout the year enabled the release of
provisions for loan losses and resulted in moderate risk cost.
At the end of 2021, the ratio of Stage 3 loans (1.3%) improved by 0.2 pp y-o-y. The own provision coverage
of Stage 3 loans grew by almost 20 pps y-o-y, to 56.1%, thus it is already nearing the Group average.
The performing loan volumes grew by 7% y-o-y. One reason for the y-o-y increase in corporate deposits
and loans was the change in the definition of the MSE and corporate segments in 3Q 2021 (just like in 1Q),
thus part of the MSE loan stock (customers above a certain annual income) was reclassified into the
corporate segment.
Mortgage loan volumes grew by 8% y-o-y, disbursements jumped by more than 70%. Corporate loans and
credit card loan volumes surged by double-digit rates y-o-y.
The bank’s market share in cash loans improved y-o-y, but it slightly declined in mortgage and corporate
loans, owing to the strong price competition.
The FX-adjusted deposit book expanded by 6% y-o-y. The net-loan-to-deposit ratio stood at 80% at the end
of the quarter (+1 pp y-o-y).
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
OTP BANK ROMANIA
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)
Stage 1+2 customer loans (FX-adjusted)
Retail loans
Corporate loans
Leasing
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
Operating costs / Average assets
Cost/income ratio
Net loans to deposits (FX-adjusted)
HUF/RON (closing)
HUF/RON (average)
FX rates
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
863,037
806,492
552,550
216,060
37,881
(48,174)
(48,519)
710,047
712,274
508,556
203,718
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%
3.05%
73.0%
114%
2020
HUF
75.0
72.6
2021
HUF million
4,253
(1,444)
5,697
8,937
46,699
36,270
4,143
6,285
(37,762)
(3,240)
(6,821)
3,581
2021
1,438,484
1,035,400
1,035,400
976,556
500,791
429,245
46,520
(54,780)
(54,780)
830,717
830,717
436,727
393,990
402,553
164,914
2021
826,518
79.8%
1.0%
150,038
14.5%
8.4%
58,844
5.7%
57.5%
0.74%
35,921
3.5%
2021
0.3%
3.0%
3.75%
2.92%
3.04%
80.9%
118%
2021
HUF
74.6
72.8
Change
%
173
288
(24)
7
11
9
(13)
18
(69)
(13)
(243)
%
24
20
20
21
(9)
99
23
14
13
17
17
(14)
93
42
30
%/pps
20
(0.4)
0.0
31
1.2
(0.6)
5
(0.8)
2.9
(0.25)
(7)
(1.0)
pps
0.2
1.8
(0.43)
(0.21)
(0.02)
7.9
4
Change
%
(1)
0
In 2021 OTP Bank Romania generated HUF 4.3 billion after-tax profit, which is consistent with 3% ROE.
The tripling annual profit benefited from the 69% fall in risk costs.
The annual operating profit dropped by 24%, as a result of y-o-y 7% higher total income, and 18% growth
in operating expenses.
The twelve-month net interest income surged 10% y-o-y in local currency. The annual dynamics was
supported by the vigorous, 21% growth in performing (Stage 1+2) loan volumes, while net interest margin
shrank by 21 bps y-o-y.
Operating expenses surged by 18% y-o-y. Most of the higher costs stemmed from the growth strategy
launched in 2019. The increase in personnel expenses was partly the result of the 8% y-o-y growth in the
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
average number of employees and wage hikes. The higher depreciation was due to the CAPEX requirement
of developments, in line with the growth strategy. Within other expenses, supervisory fees grew at the
strongest rate (+HUF 0.7 billion y-o-y).
In 2021, total risk cost amounted to -HUF 3.2 billion. The 69% y-o-y decline stemmed from the lower credit
risk cost than in the base period, and from the release of other provisions.
As to loan quality, the volume of 90 days past due loans fell by HUF 1 billion (FX-adjusted, without
sales/write-offs) last year. The ratio of Stage 3 loans declined by 1.4 pps y-o-y, to 5.7%, their own provision
coverage stood at 57.5% at the end of 2021 (+2.9 pps y-o-y). The ratio of Stage 2 loans fell by 1.2 pps y-o-
y, to 14.5%. The growth was driven by the revision of IFRS model parameters, during which a substantial
retail volume was reclassified as Stage 2. The own provision coverage of Stage 2 loans edged higher (+0.6
pp y-o-y), and stood at 8.4% at the end of 2021.
As to business activity, both new placements and volumes grew dynamically, in accordance with the Bank’s
strategy. In 2021, mortgage loan placements increased by 25% y-o-y. Performing (Stage 1+2) loan volumes
rose by 21% y-o-y (FX-adjusted). In the third quarter of 2021, group-level definitions were adopted for MSE
and large corporate loans. As a result, certain exposures were reclassified between the two categories.
Despite the successful deposit-taking (+17% y-o-y; FX-adjusted), the net loan/deposit ratio grew by 4 pps
y-o-y, to 118%.
The 30% y-o-y increase in total shareholders’ equity was largely the result of the capital increases by the
parent bank (RON 250 million in March and RON 200 million in December).
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
OTP BANK UKRAINE
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)
Stage 1 + 2 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
Operating costs / Average assets
Cost/income ratio
Net loans to deposits (FX-adjusted)
HUF/UAH (closing)
HUF/UAH (average)
FX rates
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)
2021
HUF million
39,024
(8,242)
47,266
54,760
83,567
62,051
14,494
7,022
(28,806)
(7,494)
(5,827)
(1,667)
2020
729,012
443,031
491,631
440,021
90,510
227,872
121,640
(46,200)
(51,699)
493,884
546,495
244,679
301,815
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%
3.68%
37.6%
81%
2020
HUF
10.5
11.4
2021
983,557
662,173
662,173
620,582
115,140
341,118
164,324
(47,830)
(47,830)
671,002
671,002
275,196
395,805
115,714
159,756
2021
576,876
87.1%
1.9%
43,707
6.6%
18.5%
41,590
6.3%
69.6%
1.09%
21,914
3.3%
2021
4.7%
28.8%
10.06%
7.47%
3.47%
34.5%
92%
2021
HUF
11.9
11.1
Change
%
49
50
50
30
24
28
7
33
14
(28)
(7)
(60)
%
35
49
35
41
27
50
35
4
(7)
36
23
12
31
27
36
%/pps
58
4,7
0,0
38
(0,6)
2,6
(10)
(4,1)
(4,8)
(0,30)
(23)
(3,1)
pps
0.9
5.8
0.28
0.42
(0.21)
(3.2)
11
Change
%
14
(3)
OTP Bank Ukraine's financial figures in HUF terms were affected by the UAH/HUF exchange rate moves: by
the end of 4Q 2021, the hryvnia appreciated by 14% y-o-y and by 2% q-o-q against the HUF. The UAH’s
annual average exchange rate weakened 3%. Therefore, the balance sheet and P&L dynamics in HUF terms
differ from the ones expressed in local currency.
OTP Bank Ukraine generated HUF 39 billion after-tax profit in 2021. Most of the 49% y-o-y growth stemmed
from a 30% y-o-y improvement in operating profit. This was a result of a dynamic growth in income (+24%
y-o-y in HUF terms), including the outstanding 28% growth of net interest income. All this offset the 14%
increase in operating expenses, which was fuelled by a hike in personnel expenses.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
The Ukrainian base rate grew by a total of 300 bps, to 9% in 2021. The rising interest rate environment
supported the steady improvement of net interest margin, which grew by 42 bps y-o-y, to 7.47%.
The Ukrainian operation could further improve its cost efficiency: the cost/income ratio sank by 3.2 pps y-o-y,
to 34.5%, as did the ratio of operating expenses to average balance sheet total, compared to the previous year
(to 3.4%). Based on average shareholders’ equity and twelve-month profit in 2021, ROE was 28.8%, the
highest ratio in the Group again.
Total risk costs fell 28% y-o-y, to -HUF 7.5 billion in full year 2021. The annual risk cost rate stood at 1.09%.
Owing to the improved loan quality, the volume of 90 days past due loans fell by HUF 6.5 billion (FX-adjusted,
without sales/write-offs).
Loan sales grew robustly in 2021. The FX-adjusted volume of performing (Stage 1+2) loans expanded by 41%
last year, owing to a 50% jump in corporate loans, and a 27% surge in retail loans. Leasing activity was likewise
strong in 2021, growing by 35% y-o-y. Thanks to the steady improvement in consumer loan sales, the Ukrainian
bank could increase its market share in this segment, as well as in the performing corporate loan market.
While loan volumes increased, the Ukrainian operation's liquidity position remained stable; the net loan/deposit
ratio remained stable at 92%.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
OTP BANK RUSSIA
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)
Stage 1 + 2 customer loans (FX-adjusted)
Retail loans
Corporate 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
Operating costs / Average assets
Cost/income ratio
Net loans to deposits (FX-adjusted)
HUF/RUB (closing)
HUF/RUB (average)
FX rates
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
656,236
564,686
486,612
78,074
(127,598)
(140,026)
350,608
383,877
315,780
68,097
90,852
22,580
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%
7.56%
47.2%
134%
2020
HUF
4.0
4.3
2021
HUF million
37.624
(9.690)
47.313
62.368
118.158
91.364
25.728
1.066
(55.790)
(15.055)
(13.075)
(1.979)
2021
799,965
753,373
753,373
667,347
542,886
124,461
(131,878)
(131,878)
411,633
411,633
307,663
103,970
85,485
8,842
240,724
2021
576,404
76.5%
3.8%
90,944
12.1%
31.1%
86,025
11.4%
95.1%
2.05%
87,550
11.6%
2021
5.4%
18.2%
17.02%
13.16%
8.04%
47.2%
151%
2021
HUF
4.4
4.1
Change
%
131
90
121
(4)
(4)
(9)
14
30
(4)
(66)
(68)
(21)
%
16
26
15
18
12
59
3
(6)
17
7
(3)
53
(6)
(61)
31
%/pps
29
1.7
(0.9)
35
0.8
(12.0)
3
(2.5)
1.7
(4.31)
12
(1.4)
pps
3.3
9.3
0.99
0.16
0.47
0.0
17
Change
%
10
(4)
OTP Bank Russia's financial figures in HUF terms were affected by the HUF/RUB exchange rate's moves:
in 4Q 2021, the rouble's closing exchange rate against the forint appreciated by 2% q-o-q, and 10% y-o-y.
The annual average exchange rate weakened 4% y-o-y. Therefore, the balance sheet and the P&L dynamics
in HUF terms differ from the ones expressed in local currency.
OTP Bank Russia posted HUF 37.6 billion profit in 2021, 131% more than in the base period.
The bank’s operating profit in local currency stagnated from the previous year, just like operating expenses.
In RUB terms, 2021 total income did not change from 2020, because the 19% y-o-y growth in net fees and
commissions offset the 5% contraction in net interest income. Net interest income was adversely affected
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
by the lower average interest rate on loans (in part because of the strong competition, partly because of
regulatory reasons, partly because of composition effect), and this led to lower interest income on loans,
despite growing volumes. Net interest margin crawled up y-o-y last year, partially supported by the overall
decline in deposit interest expenses. The yield environment grew over the past year: the base rate increased
by a total of 425 bps, to 8.5%.
Operating expenses stagnated y-o-y in RUB. The annual cost/income ratio was 47.2%, similar to the
previous year.
Risk costs fell by 66% y-o-y 2021, owing to the pandemic-induced loan loss provisions set aside in the base
period, the favourable portfolio quality trend in 2021, and the release of provisions owing to the revision of
the IFRS 9 depreciation model parameters in 4Q 2021.
The ratio of Stage 3 loans declined by 2.5 pps, to 11.4%, while that of Stage 1 loans upped by 1.7 pps, to
76.5%. The credit risk cost ratio dropped by 4.31 pps, to 2.05% y-o-y.
The performing (Stage 1+2) loan volume expanded by 18% y-o-y (FX-adjusted), bolstered by the 12% retail
and 59% corporate volume growth rates. During 2021, the composition of the portfolio shifted towards lower-
margin corporate loans and car financing, while the ratio of retail consumer loans with higher risk profile
dropped. New retail loan disbursements in 2021 were 28% higher y-o-y than in the previous year, while
interest rates headed down.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
CKB GROUP (MONTENEGRO)
Performance of CKB 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)
Stage 1+2 customer loans (FX-adjusted)
Retail loans
Corporate 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
Operating costs / Average assets
Cost/income ratio
Net loans to deposits (FX-adjusted)
HUF/EUR (closing)
HUF/EUR (average)
FX rates
2020
HUF million
4,307
(302)
4,609
8,353
22,095
17,188
4,446
461
(13,743)
(3,743)
(3,434)
(309)
2021
HUF million
4,140
(817)
4,957
10,240
22,046
16,553
4,880
613
(11,805)
(5,283)
647
(5,930)
2020
477,676
362,067
365,907
339,502
164,896
174,606
(24,510)
(24,772)
324,671
329,051
216,100
112,951
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%
2.92%
62.2%
104%
2020
HUF
365.1
351.2
2021
513,522
366,369
366,369
340,776
162,018
178,758
(23,504)
(23,504)
386,572
386,572
235,340
151,232
19,698
82,029
2021
280,910
76.7%
1.0%
59,866
16.3%
6.5%
25,593
7.0%
66.0%
(0.18%)
16,472
4.5%
2021
0.9%
5.2%
4.62%
3.47%
2.48%
53.5%
89%
2021
HUF
369.0
358.5
Change
%
(4)
170
8
23
0
(4)
10
33
(14)
41
(119)
%
8
1
0
0
(2)
2
(4)
(5)
19
17
9
34
(67)
7
%/pps
(5)
(4.7)
(0.4)
45
4.9
(2.8)
(2)
(0.2)
2.1
(1.17)
(6)
(0.3)
pps
0.0
(0.7)
(0.08)
(0.18)
(0.45)
(8.6)
(15)
Change
%
1
2
In full year 2021, the Montenegrin CKB Group generated HUF 4.1 billion adjusted profit, which marked a
4% y-o-y decrease compared to the base period.
The twelve-month operating profit grew by 23% y-o-y as operating expenses fell by 14%, while income was
stable. One reason for the lower operating expenses was the synergies from the merger of the acquired
Podgoricka banka: average headcount fell by 155 y-o-y, and the number of branches dropped to 34, from
48 at the end of 3Q 2020. Marketing, real estate-related, and hardware costs also subsided. Thus, the
twelve-month cost/income ratio (53.5%) improved by 8.6 pps y-o-y.
Full-year total income declined by 1% in local currency: owing to the narrowing margins the net interest
income fell 5%, while net fees and commissions grew by 8% as tourism re-started and business activity
intensified.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
Total risk cost in 2021 increased 41% y-o-y, primarily due to other risk costs generated in relation to an
operational risk event.
Performing (Stage 1+2) loans stayed flat y-o-y (FX-adjusted). In y-o-y comparison: cash loan disbursement
grew by 11%, while mortgage loans increased by 27%.
In full year 2021, the volume of DPD90+ loans dropped by HUF 0.3 billion (FX-adjusted, without sales and
write-offs). The DPD90+ ratio (4.5%) declined 0.3 pp y-o-y, simultaneously with the sale/write-off of the HUF
1 billion ) worth of non-performing loans in 2021. At the end of 2021, the ratio of Stage 3 loans was 7.0% (-
0.2 pp y-o-y); their own coverage stood at 66%.
The FX-adjusted deposit book expanded by 17% y-o-y. The net loan/deposit ratio stood at 89% at the end
of the year (-15 pps y-o-y).
At the end of December 2021, the total market share of OTP Group's Montenegrin operation by balance
sheet total was 26.8%. The Bank retained its market leading position in Montenegro.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
OTP BANK ALBANIA
Performance of OTP Bank Albania:
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)
Stage 1+2 customer loans (FX-adjusted)
Retail loans
Corporate loans
Leasing
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
Operating costs / Average assets
Cost/income ratio
Net loans to deposits (FX-adjusted)
HUF/ALL (closing)
HUF/ALL (average)
FX rates
2020
HUF million
1,959
(489)
2,448
5,904
11,597
9,824
1,278
495
(5,693)
(3,455)
(2,515)
(940)
2021
HUF million
5,522
(986)
6,508
7,213
13,398
10,619
1,843
936
(6,186)
(705)
(880)
175
2020
286,606
180,815
185,390
179,767
83,135
93,097
3,536
(8,089)
(8,285)
214,808
220,322
184,605
35,717
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%
2.12%
49.1%
80%
2020
HUF
3.0
2.8
2021
350,848
219,890
219,890
212,699
84,207
124,691
3,801
(10,096)
(10,096)
251,270
251,270
210,200
41,070
53,257
35,134
2021
191,308
87.0%
1.2%
21,391
9.7%
11.4%
7,190
3.3%
73.3%
0.46%
3,624
1.6%
2021
1.8%
17.6%
4.43%
3.51%
2.05%
46.2%
83%
2021
HUF
3.1
2.9
Change
%
182
102
166
22
16
8
44
89
9
(80)
(65)
(119)
%
22
22
19
18
1
34
7
25
22
17
14
14
15
43
22
%/pps
33
7.5
0.0
(32)
(7.8)
1.0
31
0.2
19.1
(1.08)
(9)
(0.6)
pps
1.1
10.3
0.11
(0.15)
(0.08)
(2.9)
3
Change
%
4
3
On 6 December 2021, OTP Bank announced to purchase a 100% stake in Alpha Bank Albania, for
EUR 55 million, which corresponds to a price / end of 2020 book value of 0.7. The closure of the transaction
is expected in 2Q 2022, depending on regulatory approvals, therefore Alpha Bank Albania’s figures were
not consolidated until the end of 2021.
OTP Bank Albania generated HUF 5.5 billion after-tax profit in full year 2021; it has nearly tripled y-o-y.
In 2021, operating profit grew by 22% y-o-y, supported by 16% expansion in total income, while operating
expenses increased by 9%.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
The 8% expansion in annual net interest income was driven by volume growth, while interest margin
narrowed. The 44% y-o-y jump in annual net fees and commissions can be put down to higher fee income
from bank card transactions and from loan-related fees. The reason for the y-o-y jump in other net non-
interest income was a technical one: the full-year revaluation gain on foreign currency-denominated
provisions due to exchange rate fluctuations was reclassified from risk costs to other income in 3Q. This
move is neutral to the net result, and the presentation of this item is thus in line with the practice of the
Group’s other subsidiaries.
The 9% y-o-y jump in annual operating expenses was influenced by higher personnel cost and depreciation,
as well as rising supervisory fees among other expenses.
Annual total credit risk cost amounted to -HUF 0.7 billion, in 80% y-o-y slump.
In full year 2021, the volume of DPD90+ loans (FX-adjusted, without sales and write-offs) dropped by
HUF 0.4 billion.
The ratio of Stage 3 loans upped by 0.2 pp y-o-y to 3.3% by the end of 2021. The own provision coverage
of Stage 3 loans increased by 19.1 pps y-o-y to 73.3%. The ratio of Stage 2 loans dropped by 7.8 pps
y-o-y; their own provision coverage was 11.4% at the end of 2021.
The FX-adjusted performing (Stage 1+2) loan volume expanded by 18% y-o-. In the third quarter of 2021,
group-level definitions were introduced for MSE and large corporate loans. As a result, some volumes were
reclassified between the two categories in the third quarter.
The net loan/deposit ratio stood at 83% at the end of December 2021.
Based on its balance sheet total, the market share of OTP’s Albanian operation was 6.4% at the end of
December 2021; this ranks it the fifth biggest bank in the country
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
OTB BANK MOLDOVA
Performance of OTB Bank Moldova:
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)
Stage 1+2 customer loans (FX-adjusted)
Retail loans
Corporate loans
Leasing
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
Operating costs / Average assets
Cost/income ratio
Net loans to deposits (FX-adjusted)
HUF/MDL (closing)
HUF/MDL (average)
FX rates
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)
2021
HUF million
5,858
(802)
6,660
7,835
15,271
9,698
2,344
3,230
(7,437)
(1,175)
(663)
(512)
2020
249,921
132,081
138,650
134,504
72,740
58,146
3,618
(4,578)
(4,804)
203,176
213,302
139,838
73,465
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%
2.95%
47.2%
63%
2020
HUF
17.3
17.8
2021
310,511
166,573
166,573
163,525
90,473
69,231
3,820
(5,020)
(5,020)
247,610
247,610
160,603
87,008
15,886
42,701
2021
153,157
91.9%
1.3%
10,368
6.2%
13.6%
3,048
1.8%
54.3%
0.46%
2,164
1.3%
2021
2.2%
15.2%
5.86%
3.72%
2.85%
48.7%
65%
2021
HUF
18.4
17.2
Change
%
47
48
48
2
5
9
10
(10)
8
(63)
(75)
3
%
24
26
20
22
24
19
6
10
5
22
16
15
18
169
15
%/pps
26
0.0
0.1
55
1.2
(5.9)
(23)
(1.2)
6.3
(1.76)
3
(0.3)
pps
0.5
4.5
(0.39)
(0.08)
(0.09)
1.5
2
Change
%
6
(4)
In full year 2021, OTP Bank Moldova contributed to OTP Group's performance by HUF 5.9 billion profit.
This is consistent with 47% y-o-y improvement, mostly caused by lower risk costs. ROE rose by 4.5 pps, to
15.2% in 2021.
In 2021 operating profit rose by 2% y-o-y, driven by a 5% increase in total income; operating expenses
surged 8%. Of core banking incomes, net interest income grew by 9% and net fees jumped by 10% y-o-y,
which was related to revenues from cash and card transactions.
Other net non-interest income dropped by 6% y-o-y in local currency, owing to lower gains on foreign
currency exchange in 2021.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
The 8% y-o-y rise in twelve-month operating expenses was caused by fees paid to supervisory authorities12,
as well as by the 8% increase in average headcount, and the resulting higher personnel expenses.
In 2021, total risk cost fell by 63% y-o-y, as a result of the base effect of the loan loss provisions necessitated
by the pandemic in 2020.
In full-year 2021, the DPD90+ loan portfolio stagnated (FX-adjusted, without the impact of sales and write-
offs). The ratio of Stage 3 loans was 1.8% (-1.2 pps y-o-y) at the end of 2021. The own provision coverage
of Stage 3 loans was 54.3%.
In 2021 the FX-adjusted stock of performing (Stage 1+2) loans expanded by 22% y-o-y. Within that, retail
loans jumped by 24%, and corporate loans surged by 19%. In the third quarter of 2021, group-level
definitions were introduced for MSE and large corporate loans. As a result, some volumes were reclassified
between the two categories.
The FX-adjusted deposit volume grew by 16% y-o-y. The net loan/deposit stood at 65% at the end of
December, which is consistent 2 pps y-o-y growth.
Based on total assets, the market share of OTP’s Moldavian operation was 14.2% at the end of December
2021; this ranks it the third biggest bank in Moldova.
12In 2021, payments were made not only the Deposit Protection Fund, but also to the Resolution Fund established in 2020, which had stipulated lower
contribution in the base period.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
STAFF LEVEL AND OTHER INFORMATION
31/12/2020
31/12/2021
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
OTP Bank Moldova
Foreign subsidiaries, total
Other Hungarian and foreign
subsidiaries
OTP Group (w/o employed agents)
OTP Bank Russia -
employed agents
OTP Bank Ukraine -
employed agents
OTP Group (aggregated)
Branches ATM
POS
362 1,920
334 1,094
488
124
323
217
83
51
149
95
86
161
135
224
34
38
54
115
80
148
1,168 2,865
125,800
14,329
11,037
16,657
4,167
6,256
402
704
6,421
0
0
59,973
Branches ATM
POS
Headcount
(closing)
10,189
5,619
2,228
3,022
889
1,693
356 1,906
311 1,046
467
114
298
187
82
49
148
95
2,313
85
176
134
220
34
39
51
117
86
151
1,099 2,791
5,127
514
447
830
22,681
557
33,427
4,402
618
135,901
15,580
11,384
15,038
4,940
7,843
293
607
7,251
0
0
62,936
Headcount
(closing)
10,506
5,539
2,279
2,707
864
1,740
2,341
4,992
517
454
899
22,332
568
33,406
3,783
657
1,530 4,785
185,773
38,447
1,455 4,697
198,837
37,846
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.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
STATEMENT ON CORPORATE GOVERNANCE PRACTICE
Corporate governance practice
OTP Bank Plc., being registered in Hungary, has a corporate governance policy that complies with the
provisions on companies of the act applicable (Civil Code). As the company conducts banking operations, it
also adheres to the statutory regulations pertaining to credit institutions.
Beyond fulfilling the statutory requirements, as a listed company on the Budapest Stock Exchange (BSE), the
company also makes an annual declaration on its compliance with the BSE’s Corporate Governance
Recommendations. After being approved by the General Meeting, this declaration is published on the websites
of both the Stock Exchange (www.bet.hu) and the Bank (www.otpbank.hu).
System of internal controls
OTP Bank Plc., as a provider of financial and investment services, operates a closely regulated and state-
supervised system of internal controls.
OTP Bank Plc. has detailed risk management regulations applicable to all types of risks (credit, country,
counterparty, market, liquidity, operational, compliance), which are in compliance with the regulations on
prudent banking operations. Its risk management system extends to cover the identification of risks, the
assessment and analysis of their impact, elaboration of the required action plans and the monitoring of their
effectiveness and results. The business continuity framework is intended to provide for the continuity of
services. Developed on the basis of international methodologies, the lifecycle model includes process
evaluation, action plan development for critical processes, the regular review and testing of these, as well as
related DRP activities.
OTP Bank Plc.'s internal audit system is realised on several levels of control built on each other. The system
of internal checks and balances includes process-integrated control, management control, independent
internal audit organisation and executive information system. The independent internal audit organisation as
an element of internal lines of defence promotes the statutory and efficient management of assets and
liabilities, the defence of property, the safe course of business, the efficient operation of internal control
systems, the minimisation of risks, moreover 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 audit organisation with the prior opinion of the Audit Committee
draws up, for the Supervisory Board and the Board of Directors, objective and independent reports in respect
of the operation of risk management, internal control mechanisms and corporate governance functions.
Furthermore, in line with the provisions of the Credit Institutions Act, reports, once a year, to the Supervisory
Board and the Board of Directors on the regularity of internal audit tasks, professional requirements and the
conduct of audits, and on the review of compliance with IT and other technical conditions needed for the audits.
In line with the regulations of the European Union, the applicable Hungarian laws and supervisory
recommendations, OTP Bank Plc. operates an independent organisational unit with the task of identifying and
managing compliance risks.
IT Controls
Applications are developed by both in-house group resources and by third parties. OTP Bank applies
administrative, logical and physical control measures commensurate with the risk to protect the IT systems
storing and processing data, as follows:
• access to data/systems is only possible on the basis of a predefined authorisation management process
that applies the principle of least privilege, ensures segregation of responsibilities, that has regular access
right reviews and ensures that dismissed employees’ access is revoked;
• user authentication, authorisation and password management processes are controlled by policies and
•
audited;
the systems have well-separated test and development environments, which ensures that program
developments or modifications are only deployed to the operational environment after proper, controlled
testing and approval;
• systems are protected by appropriate network perimeter protection, various security devices and network
•
segmentation, furthermore all network communications are protected;
the IT systems that store and process data are regularly backed up and stored in controlled premises with
adequate protection for long-term retention, and the organisation carries out regular back-up tests
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
• adequate redundancy is applied for IT systems that store and process data to ensure business continuity
and disaster resiliency;
• has developed a BCP for critical systems and processes, which is regularly tested and reviewed;
•
the Bank collects and retains the complete log of all data processing activities and the confidentiality,
availability, integrity and non-repudiation of these audit logs are ensured;
there is a continuous, up-to-date protection against malicious codes;
it ensures the regular implementation of vendor patches and updates for the environments used;
it uses a data leakage protection solution to reduce the risk of data loss;
it ensures the continuous monitoring of the operation of the physical and virtual environment system
elements, and the detection and management of events, where possible automatically;
the above measures are documented at an appropriate level, which ensures the traceability of the
implementation of data security requirements in a transparent manner;
it ensures the irretrievable deletion of the data stored on the media, the destruction of the media and the
documentation of the destruction of the media during secure operational media disposal processes;
it enforces data protection requirements already at the design stage of the implementation of the IT
systems storing and processing personal data and of the systems operational processes related to them;
it ensures that its employees have adequate knowledge of data protection requirements and provides
regular data protection and information security training for them.
•
•
•
•
•
•
•
•
General meeting
The General Meeting is the supreme governing body of OTP Bank Plc. The regulations pertaining to its
operation are set forth in the Company’s Articles of Association, and comply fully with both general and special
statutory requirements. Information on the General Meeting is available in the Corporate Governance Report.
In view of the situation caused by the epidemic, on 22 February 2021 the Parliament voted Act I of 2021 on
the prevention of the coronavirus pandemic, which extended the scope of the Government Decree 502/2020
(XI.16.) (Government Decree) until 22 May 2021. Pursuant to such, in line with Section 9 of the Government
Decree, the resolutions on the published agenda items were passed by OTP Bank Plc’s Board of Directors
acting in the competence of the General Meeting on 16 April 2021.
The Extraordinary General Meeting was held on 15 October 2021 in accordance with the general rules,
traditionally, with the personal participation of the shareholders, subject to Section 3 (1) of the Government
Decree, also in line with the Act I of 2021 on the prevention of the coronavirus pandemic.
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
The Company’s registered capital is HUF 28,000,001,000, that is twenty-eight thousand million one
thousand Hungarian forint, divided into 280,000,010 that is Two hundred and eighty million and ten
dematerialised ordinary shares with a nominal value of HUF 100 each, and a total nominal value of
HUF 28,000,001,000, that is twenty eight billion one thousand Hungarian forint.
The ordinary shares of the Company specified all have the same nominal value and bestow the same rights
in respect of the Company.
There are no restrictions in place concerning the transfer of issued securities constituting the registered
capital of the Company.
No securities with special control rights have been issued by the Company.
Special Employee Partial Ownership Plan Organization No. I. of OTP Employees and Special Employee
Partial Ownership Plan Organization No. II. of OTP Employees (hereinafter referred to as: OTP SEPOPs)
were established based on the decision of the Company’s certain employees and executives considered as
employees pursuant to the Act XLIV of 1992 on Employee Partial Ownership Plan. Management rights of
OTP SEPOPs are exercised by a trust named Alapítvány az OTP Munkavállalók Különleges Résztulajdonosi
Programjáért, founded by the same employees setting up OTP SEPOPs. The Company did not participate
either in foundation or in management of OTP SEPOPs.
The Company in line with the ESOP Act initiated an employee share ownership plan having a remuneration
purpose and founded OTP Bank ESOP Organization for its execution (hereinafter referred to as ESOP
Organization). Pursuant to the laws, the management rights over the ESOP Organization are exercised by
a law firm, the so called trustee. In the case of the ESOP Organization Szűcs Law Firm is entitled to exercise
the authorities of the trustee. The Company participated in the foundation of the ESOP Organization,
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
however, after its foundation it cannot participate in its management, and according to the laws, it is not
entitled to either give orders or to recall the trusteeRules on the restrictions of the voting rights:
The Company’s ordinary shares confer one vote per share.
An individual shareholder or group of shareholders may not exercise voting rights in respect of in an extent
exceeding 25%, or – if the voting rights of another shareholder or group of shareholders exceed 10% –
exceeding 33% of the total voting rights represented by the shares conferring voting rights at the Company’s
General Meeting.
The shareholder is obliged to notify the Company’s Board of Directors without delay if the shareholder
directly or indirectly, or together with other shareholders in the same group of shareholders, holds more than
2% of the voting rights represented by the shares conferring voting rights at the Company’s General Meeting.
Concurrently with this, the shareholder is obliged to designate the shareholders through which the indirect
voting right exists, or the members of the group of shareholders. In the event of a failure to provide such
notification, or if there are substantive grounds for assuming that the shareholder has made a misleading
declaration regarding the composition of the shareholder group, then the shareholder’s voting right shall be
suspended and may not be exercised until the shareholder has met the above obligations. The notification
obligation stipulated in this paragraph and the related legal consequences are also incumbent upon
individuals who are classified or may be classified as the Company’s shareholders under Article 61 of the
Capital Markets Act. The Company must also be provided with proof of the conditions for exemption from
the notification obligation in accordance with Section 61 (7)-(8) and Section 61 (10)-(11)-(12), of the Capital
Markets Act.
Shareholder group: the shareholder and another shareholder, in which the former has either a direct or
indirect shareholding or has an influence without a shareholding (collectively: a direct and/or indirect
influence); furthermore: the shareholder and another shareholder who is exercising or is willing to exercise
its voting rights together with the former shareholder, regardless of what type of agreement between the
participants underlies such concerted exercising of rights.
For determining the existence and extent of the indirect holding, the rules of the Credit Institutions Act
relating to the calculation of indirect ownership shall be applied.
If the voting rights that may be exercised by a shareholder group exceed the threshold stipulated in the first
paragraph of this section, the voting rights shall be reduced in such a way that the voting rights relating to
the shares most recently acquired by the group of shareholders shall not be exercisable.
If there are substantive grounds to presume that the exercising of voting rights by any shareholder or
shareholders might result in a breach of the rules of the Capital Markets Act relating to the acquisition of a
controlling interest, the Board of Directors’ authorised representative responsible for the registration of
shareholders at the venue of the General Meeting, or the Chairman of the General Meeting, may exclude
the affected shareholders from attending the General Meeting or exercising voting rights.
The General Meeting has exclusive authority with respect to the decision regarding the delisting of the
shares (qualified majority). When making the decisions, shares embodying multiple voting rights shall
represent one share.
The Company is not aware of any kind of agreements among the owners that could give rise to the restriction
of the transfer of issued securities and/or the voting rights.
Rules on the appointment and removal of executive officers, and rules on amendment of the Articles of
Association:
The Board of Directors has at least 5, and up to 11 members.
When making the decisions, shares embodying multiple voting rights shall represent one share. The
members of the Board of Directors are elected by the General Meeting based on its decision uniformly either
for an indefinite period or for five years; in the latter case the mandate ends with the General Meeting
concluding the fifth financial year following the election. The mandate of a member elected during this period
expires together with the mandate of the Board of Directors.
The Board of Directors elects a Chairman and, may elect one or more Deputy Chairmen, from among its
own members, whose period of office shall be equal to the mandate of the Board of Directors. The Chairman
of the Board of Directors is also the Chief Executive Officer (Chairman & CEO) of the Company, unless the
Board of Directors decides within its competence that the position of Chairman of the Board of Directors and
the Chief Executive Officer of the Company are held by separate persons.
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OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
The membership of the Board of Directors ceases to exist by
g. expiry of the mandate,
resignation,
h.
i.
recall,
j. death,
k.
l.
the occurrence of grounds for disqualification as regulated by law.
termination of the employment of internal (executive) Board members.
The General Meeting has exclusive authority with respect to the following matters:
the recall of members of the Board of Directors, the Supervisory Board and Audit Committee, and of the
auditor; (qualified majority)
More than one third of the members of the Board of Directors and the non-executive members of the
Supervisory Board may be recalled within a 12-month period only if any shareholder holds more than
33% of the shares issued by the Company, which have been obtained by the shareholder by way of
a public purchase offer.
except in the cases referred by these Articles of Association to the authority of the Board of Directors,
the establishment and amendment of the Articles of Association; (qualified majority); the General
Meeting decides on proposals concerning the amendment of the Articles of Association – based on a
resolution passed by shareholders with a simple majority – either individually or en masse.
The Board of Directors is obliged to
prepare the Company’s financial statements in accordance with the Accounting Act, and make a
proposal for the use of the profit after taxation;
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 assets and business policy;
provide for the proper keeping of the Company's business books;
perform the tasks referred to its authority under the Credit Institutions Act, in particular:
- ensuring the integrity of the accounting and financial reporting system;
- elaborating the appropriate strategy and determining risk tolerance levels for each business unit
concerned;
- setting risk assumption limits;
- providing the necessary resources for the management or risk, the valuation of assets, the use of
external credit ratings and the application of internal models.
The following, in particular, come under the exclusive authority of the Board of Directors:
election of the Chairman & Chief Executive Officer of the Company, and exercising employer’s right in
respect thereof;
election of one or more Deputy Chairmen of the Board of Directors;
determination of the annual plan;
the analysis and assessment of the implementation of business-policy guidelines, on the basis of the
Company’s quarterly balance sheet;
decisions on transactions referred to the authority of the Board of Directors by the Company's
organisational and operational regulations;
decision on launching, suspending, or terminating the performance of certain banking activities within
the scope of the licensed activities of the Company;
designation of the employees entitled to sign on behalf of the Company;
decision on the increasing of registered capital at the terms set out in the relevant resolution of the
General Meeting;
decision to acquire treasury shares at the terms set out in the relevant resolution of the General Meeting;
decision on approving internal loans in accordance with the Credit Institutions Act;
decision on the approval of regulations that fundamentally determine banking operations, or are referred
to its authority by the Credit Institutions Act. The following shall qualify as such regulations:
-
-
-
-
the collateral evaluation regulations,
the risk-assumption regulations,
the customer rating regulations,
the counterparty rating regulations,
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BUSINESS REPORT 2021 (CONSOLIDATED)
-
-
-
the investment regulations,
the regulations on asset classification, impairment and provisioning,
the organisational and operational regulations, which contain the regulations on the procedure for
assessing requests related to large loans,
the regulations on the transfer of signatory rights;
-
the decision on approving the Rules of Procedure of the Board of Directors;
decision on steps to hinder a public takeover procedure;
decision on the acceptance of a public purchase offer received in respect of treasury shares;
decision on the commencement of trading in the shares in a regulated market (flotation);
decision on the cessation of trading in the shares in a given regulated market, provided that the shares
are traded in another regulated market (hereinafter: transfer).
The Board of Directors is exclusively authorised to:
decide, in the cases specified in the Civil Code, on acceptance of the Company’s interim balance sheet,
subject to the prior approval of the Supervisory Board;
decide, instead of the General Meeting, to pay an advance on dividends, subject to the preliminary
approval of the Supervisory Board;
make decisions regarding any change in the Company’s name, registered office, permanent
establishments and branches, and in the Company’s activities – with the exception of its core activity –
and, in relation to this, to modify the Articles of Association should it become necessary to do so on the
basis of the Civil Code or the Articles of Association;
make decision on mergers (if, according to the provisions of the law on the transformation, merger and
demerger of legal entities, the approval of the General Meeting is not required in order for the merger to
take place).
The Board of Directors directly exercises employer's rights in respect of the Chairman & CEO. The person
affected by a decision may not participate in the decision making. Employer rights in respect of the executive
directors of the Company are exercised by the Board of Directors through the Chairman & CEO, with the
proviso that the Board of Directors must be notified in advance of the appointment and dismissal of the
Deputy CEOs. With regard to issues related to the exercising of employer's rights in respect of employees,
the Company is represented by the Chief Executive Officer and by the senior company employees defined
in the Organisational and Operational Regulations of the Company, in accordance with the delegation of
authority approved by the Board of Directors. If the Chairman of the Board of Directors and the CEO are
different persons, the employer rights in respect of the other executive directors of the Company (CEO,
deputy CEOs) are exercised by the Board of Directors through the Chairman of Board of Directors, with the
proviso that the Board of Directors shall be notified in advance of the appointment and dismissal of the CEO
and Deputy CEOs. With regard to issues related to the exercising of employer's rights in respect of
employees, the Company is represented by the persons defined in the Organisational and Operational
Regulations of the Company, in accordance with the delegation of authority approved by the Board of
Directors.
The Board of Directors may delegate, to individual members of the Board of Directors, to executive directors
employed by the Company, and to the heads of the individual service departments, any task that does not
come under the exclusive authority of the Board of Directors in accordance with these Articles of Association
or a General Meeting resolution.
The Company may acquire treasury shares in accordance with the rules of the Civil Code. The prior
authorisation of the General Meeting is not required for the acquisition of treasury shares if the acquisition
of the shares is necessary in order to prevent a direct threat of severe damage to the Company (this
provision is not applicable in the event of a public purchase offer aimed at buying up the Company’s shares),
as well as if the Company acquires the treasury shares in the context of a judicial procedure aimed at the
settlement of a claim to which the Company is entitled, or in the course of a transformation.
The Company has not made agreements in the meaning of points (j) and (k) in paragraph 95/A of
Act No. C of 2000 on Accounting.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
OWNERSHIP STRUCTURE OF OTP BANK PLC.
Description of owner
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 2021
31 December 2021
Total equity
Ownership
share
20.93%
71.60%
4.79%
0.11%
0.85%
1.55%
0.08%
0.04%
0.04%
100.00%
Voting
rights1
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
Ownership
share
Voting
rights 1
26.66%
66.69%
4.57%
0.11%
0.69%
1.16%
0.07%
0.04%
0.00%
100.00%
26.97%
67.47%
4.63%
0.12%
0.70%
0.00%
0.07%
0.04%
0.00%
100.00%
Quantity
74,637,180
186,733,858
12,805,389
319,712
1,941,018
3,251,484
188,326
120,871
2,172
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 2021 ESOP owned 7,656,897 OTP shares.
3 Non-identified shareholders according to the shareholders’ registry.
NUMBER OF TREASURY SHARES HELD IN THE YEAR UNDER REVIEW (2021)
OTP Bank
Subsidiaries
TOTAL
1 January
4,334,140
0
4,334,140
31 March
4,330,609
0
4,330,609
30 June
1,120,786
0
1,120,786
30 September
1,077,322
0
1,077,322
31 December
3,251,484
0
3,251,484
SHAREHOLDERS WITH OVER/AROUND 5% STAKE AS AT 31 DECEMBER 2021
Name
Nationality1
Activity2
MOL (Hungarian Oil and Gas Company Plc.)
KAFIJAT Group
KAFIJAT Ltd.
MGTR Alliance Ltd.
Groupama Group
Groupama Gan Vie SA
Groupama Biztosító Ltd.
D
D
D
D
F/D
F
D
C
C
C
C
C
C
C
Number of
shares
24,000,000
19,661,409
9,839,918
9,836,491
14,311,769
14,140,000
171,769
Ownership3
Voting
rights3,4
Notes5
8.57%
7.02%
3.51%
3.51%
5.11%
5.05%
0.06%
8.67%
7.10%
3.56%
3.55%
5.17%
5.11%
0.06%
-
-
-
-
-
-
-
1 Domestic (D), Foreign (F).
2 Custodian (CU), Public Institution (PU), International Development Institutions (ID), Institutional (I), Company (C), Private (PR),
Employee or senior officer (E).
3 Rounded to two decimals.
4 Voting rights in the General Meeting of the Issuer for participation in decision-making.
5 Eg: professional investor, financial investor, etc.
Senior officers, strategic employees and their shareholding of OTP shares as at 31 December 2021
Type1
Name
Position
IT
IT
IT
IT
IT
IT
IT
IT
IT
IT
IT
FB
FB
FB
FB
FB
FB
SP
SP
dr. Sándor Csányi 2
Chairman and CEO
Deputy Chairman
Tamás Erdei
member
Gabriella Balogh
member
Mihály Baumstark
member, Deputy CEO
Péter Csányi
member
dr. István Gresa
member, Deputy CEO
Antal Kovács
György Nagy 3
member
dr. Márton Gellért Vági member
member
dr. József Vörös
member, Deputy CEO
László Wolf
Chairman
Tibor Tolnay
Deputy Chairman
dr. Gábor Horváth
member
Klára Bella
member
dr. Tamás Gudra
member
András Michnai
member
Olivier Péqueux
Deputy CEO
László Bencsik
Deputy CEO
György Kiss-Haypál
TOTAL No. of shares held by management:
1 Employee in strategic position (SP), Board Member (IT), Supervisory Board Member (FB)
2 Number of OTP shares owned by Dr. Sándor Csányi directly or indirectly: 4,080,034
3 Number of OTP shares owned by György Nagy directly or indirectly: 600,000
Commencement
date of the term
15/05/1992
27/04/2012
16/04/2021
29/04/1999
16/04/2021
27/04/2012
15/04/2016
16/04/2021
16/04/2021
15/05/1992
15/04/2016
15/05/1992
19/05/1995
12/04/2019
16/04/2021
25/04/2008
13/04/2018
Expiration/termination
of the term
2026
2026
2026
2026
2026
2026
2026
2026
2026
2026
2026
2023
2023
2023
2023
2023
2023
Number of
shares
293,907
32,285
1,393
44,000
1
173,258
79,244
0
0
171,114
532,143
54
0
344
0
100
0
10,038
3,137
1,341,018
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
Committees13
Members of the Board of Directors
Dr. Sándor Csányi – Chairman
Mr. Tamás Erdei – Deputy Chairman
Mrs. Gabriella Balogh14
Mr. Mihály Baumstark
Dr. Tibor Bíró15
Mr. Péter Csányi6
Dr. István Gresa
Mr. Antal Kovács
Mr. György Nagy6
Dr. Antal Pongrácz7 15
Dr. László Utassy7
Dr. Márton Gellért Vági6
Dr. József Vörös
Mr. László Wolf
Members of the Supervisory Board
Mr. Tibor Tolnay – Chairman
Dr. József Gábor Horváth – Deputy Chairman
Ms. Klára Bella
Dr. Tamás Gudra16
Mr. András Michnai
Mr. Olivier Péqueux
Dr. Márton Gellért Vági17
Members of the Audit Committee
Dr. József Gábor Horváth – Chairman
Mr. Tibor Tolnay – Deputy Chairman
Dr. Tamás Gudra18
Mr. Olivier Péqueux
Dr. Márton Gellért Vági19
The résumés of the committee and board members are available in the Corporate Governance Report/Annual
Report.
Personal and organizational changes
On 12 March 2021, the labour contract of Mr. Tibor Johancsik, Deputy CEO in charge of IT had been terminated
by mutual agreement. The new head of the Digital Division (IT Division until 1 May 2021) is Mr. Péter Csányi,
who had been in charge of digital developments and sales as managing director until his appointment. Key task
of the area in transition is going to be the efficient support of the Bank’s digital transformation through further
improving customer experience. The new strategy of the division is aimed at creating such an IT that has
business competence, but also serving as a platform for other business areas while setting the pace of
digitalization in accordance with the National Bank of Hungary’s digital recommendations.
On 16 April 2016 the Board of Directors acting in the competency of the Annual General Meeting elected Ernst
& Young Ltd. as the Bank’s auditor concerning the audit of OTP Bank Plc.’s separate and consolidated annual
financial statements in accordance with International Financial Reporting Standards for the year 2021, from
1 May 2021 until 30 April 2022.
On 16 April the Board of Directors acting in the competency of the Annual General Meeting, elects Dr. Tamás
Gudra as member of the Supervisory Board (SB) and of Audit Committee (AC) of the Company until the Annual
General Meeting of the Company closing the 2022 business year, but not later than 30 April 2023.
13 Personal changes can be found in the „Personal and organizational changes” chapter.
14 From 16 April 2021, she is a member of the Board of Directors of OTP Bank Plc.
15 His term of office expired on 16 April 2021.
16 From 16 April 2021, he is a member of the Supervisory Board of OTP Bank Plc.
17 His position on the Supervisory Board was terminated on 16 April 2021.
18 From 16 April 2021, he is a member of the Audit Committe of OTP Bank Plc.
19 His position on the Audit Committee was terminated on 16 April 2021.
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BUSINESS REPORT 2021 (CONSOLIDATED)
On 16 April 2021 the Board of Directors acting in the competency of the Annual General Meeting, elects
Dr. Sándor Csányi
Mr. Antal György Kovács
Mr. László Wolf
Mr. Tamás György Erdei
Mr. Mihály Baumstark
Dr. István Gresa
Dr. József Zoltán Vörös
Mr. Péter Csányi
Mrs. Gabriella Balogh
Mr. György Nagy
Dr. Gellért Márton Vági
as members of the Board of Directors (BoD) of the Company until the Annual General Meeting of the Company
closing the 2025 business year, but not later than 30 April 2026.
On 16 April 2021, Dr. Sándor Csányi was elected as Chairman of the Bank’s Board of Directors and in
accordance with subsection 4 of section 9 of the Articles of Association of the Company as Chief Executive
Officer (Chairman & CEO).
Dr. Sándor Csányi performs his duties until the closing AGM of the fiscal year 2025 but latest until 30 April 2026.
On 16 April 2021 Mr. Tamás György Erdei, the member of the Board of Directors, was elected a Deputy
Chairman of the Board of Directors.
Mr. Tamás György Erdei performs his duties until the closing AGM of the fiscal year 2025 but latest until
30 April 2026
Operation of the executive boards
OTP Bank Plc. has a dual governance structure, in which the Board of Directors is the Company’s executive
management body in its managerial function, while the Supervisory Board is the management body in its
supervisory function of the Company. It controls the supervision of the lawfulness of the Company’s operation,
its business practices and management, performs oversight tasks and accepts the provisions of the Bank
Group's Remuneration Policy. The effective operation of Supervisory Board is supported by the Audit
Committee, as a committee, which also monitors the internal audit, the risk management, the reporting systems
and the activities of the auditor.
In order to assist the performance of the governance functions the Board of Directors founded and operates,
as permanent or other committees, such as the Management Committee, the Remuneration Committee, the
Nomination Committee and the Risk Assumption and Risk Management Committee.
To ensure effective operation OTP Bank Plc. also has a number of further permanent committees.
OTP Bank Plc. gives an account of the activities of the executive boards and the committees every year in its
Corporate Governance Report.
The Board of Directors held 9, the Supervisory Board held 6 meetings, while the Audit Committee held
2 meetings in 2021. In addition, resolutions were passed by the Board of Directors on 180, by the Supervisory
Board on 90 and by the Audit Committee on 28 occasions by written vote.
Policy of diversity
OTP Bank Plc. determines and regulates the criteria for the selection of senior executives in line with European
Union as well as domestic legal requirements and directives fundamentally determining the operation of credit
institutions.
When designating members of the management bodies (Board of Directors, Supervisory Board) as well as
appointing members of the Board of Directors and administrative members (Management), OTP Bank Plc.
considers the existence of professional preparation, the high-level human and leadership competence, the
versatile educational background, the widespread business experience and business reputation of the utmost
importance, at the same time, it is also highly committed to taking efficient measures in order to ensure diversity
with regard to corporate operation, including the gradual improvement in women’s participation rate.
OTP Bank Plc.’s Nomination Committee continuously keeps tracking the European Union and domestic
legislation relating to women’s quota on its agenda, in that when unambiguously worded expectations are
announced, it promptly takes the necessary measures. In accordance with OTP Bank Plc.’s currently approved
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
strategy, the goal is to have at least one female member in both the Bord of Directors and the Supervisory
Board.
It is important to note, however, that, as a public limited company, the selection of the members of the
management bodies falls within the exclusive competence of the General Meeting upon which – beyond its
capacity to designate enforcing the above aspects to maximum effect – OTP Bank Plc. has no substantive
influence.
According to OTP Bank Plc.’s Articles of Association, a Board of Directors comprising 5-11 members and a
Supervisory Board comprising 5-9 members are set up at OTP Bank Plc. Currently the Board of Directors
operates with 11 members and has one female member, the Supervisory Board comprises 6 members and
has one female member. The management of OTP Bank Plc. currently comprises 6 members and has no
female member.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
ENVIRONMENTAL POLICY, ENVIRONMENTAL PROJECTS
OTP Group is committed to the protection of the environment, the combating of climate change and its impacts,
and the preservation and low-impact use of natural resources. OTP Bank’s environmental activities are
regulated in its Environmental Regulation, which is revised annually. The Regulation ensures legal compliance
and the consideration and integration of environmental criteria into the Bank’s business operations in order to
minimise the environmental impacts of operating and maintaining the Bank’s organisation. It also sets out the
rules on implementing the principles of sustainable procurement. OTP Group members operate in full
compliance with environmental legislation and received no fines in 2020.
In CDP’s Climate Change Questionnaire, OTP Group was rated at B- in 2021, thus retaining its previous rating.
The environmental impacts of the OTP Group are related to the provision of financial services and directly from
its operations. In connection with the provision of financial services, the management of environmental risks
and the exploitation of environmental opportunities take place within the framework of the Environmental,
Social and Governance (ESG) strategy; therefore, these activities are presented in the chapter Non-financial
Report.
Our efforts to reduce the direct environmental impact of OTP Group’s operations are centred around improving
energy efficiency and reducing paper usage. The environmental risks associated with our operations are
analysed and managed within our operational risk management process. Potential risks are identified during
the annual process-based self-assessment, and the assessment of climate change risks is also included in
the scenario analysis of risks with low probability but high impact.
Energy consumption and business travel
OTP Group uses state-of-the-art technology in new construction and renovation projects; we are also
continually expanding our use of LED lighting technology. We are constantly seeking opportunities to increase
energy efficiency, by analysing the energy efficiency and consumption characteristics of our buildings. As part
of our renovation process, we are replacing air conditioning units, always ensuring that the new units use
environmentally-friendly coolants. Thanks to its energy efficiency investments in 2021, OTP Bank consumed
1,400 GJ less energy.
Whenever a branch of the parent bank is renovated, we always examine the possibility of installing solar panels
and heat pumps. In 2021, we installed solar panels at two branches and a holiday resort. Our systems
generated a total of 842 GJ energy from solar power. Moreover, our central archives facility has been using
geothermal energy for several years, amounting to 3,499 GJ in 2021. The solar panels of our subsidiaries
generated a total of 893 GJ of solar power. We are committed to using green electricity. One of DSK Bank's
data centres in Sofia procures electricity from 100% renewable sources, and from 2022, we will cover 100%
of the electricity demand of the parent bank and our Serbian and Croatian subsidiaries in the same way.
Energy use across the Banking Group has been greatly impacted by the pandemic. Regarding ventilation and
fresh air in our buildings, air recirculation was suspended and ventilation was intensified instead, which
increased our energy usage; however, the high percentage of staff working from home reduced our electricity
consumption.
The number of business trips and the size of the vehicle fleet are determined by the needs of the business.
Our Group’s vehicle policy sets carbon limits; moreover, the choice of cars includes environmentally-friendly
vehicles in all vehicle categories. In 2021, our Romanian subsidiary purchased two electric cars, our Bulgarian
bank seven and our Croatian bank three hybrid cars. The number of kilometres travelled also decreased at
group level and for OTP Bank, partly due to the measures related to the pandemic and partly due to business
reasons. The amount of business travel has been reduced significantly by the use of online meetings, which
has become common practice due to hybrid work.
Our existing bicycle storage facilities continued to be available to both customers and employees in 2021.
OTP Bank provided new storage facilities at three branches and the new Record Office, our Bulgarian and
Ukrainian subsidiaries have each created new bicycle storage spaces at two locations, while the Albanian
bank provided bicycle storage at five locations at the capital's branches.
Energy consumption figures are presented for OTP Bank. The bank’s overall energy consumption decreased
by 5% compared to the previous year. Energy consumption per capita is unchanged.
ANNUAL REPORT 2021
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BUSINESS REPORT 2021 (CONSOLIDATED)
Volume of energy consumption, OTP Bank
Total energy consumption (GJ)
Per capita energy consumption (GJ)
Energy consumption data are derived from readings; the measured consumption volumes are converted to energy using local average
calorific values
The projection of the per capita value is the average number of full-time employees (TMD).
1 Data adjusted for the consumption of Monicomp merged into OTP Bank, which was not available at the time of the previous year's
statement.
2020
251,7301
26.75
2021
263,228
26.75
Efforts to reduce paper use
OTP Group has been consistently endeavouring to reduce paper use and printing. OTP Bank reduced its office
paper usage by 17% over 2020, with the pandemic and increased rates of working from home playing a
significant role in this development. Thanks to a change in printing technology, paper consumption decreased
by 6.5%; however, at the group level, there was no further decrease compared to the drop in 2020. At our
Romanian, Ukrainian and Russian subsidiaries, the use of paper has decreased with the expansion of digital
processes.
OTP Bank and its Romanian subsidiary increased its share of recycled paper in paper use. OTP Bank uses
FSC-certified paper for its invoices and marketing flyers, as well as recycled paper for DM letters. Our Serbian
subsidiary also uses FSC-certified paper and our Slovenian subsidiary PEFC-certified paper.
Paper usage quantities, OTP Bank
Total amount of paper used (t) (office, packaging, indirect)
Per capita paper use (kg)1
1 The projection is based on the average number of full-time employees (TMD).
Sustainable use and waste management
2020
1.137
121
2021
978
99
We follow the principle of using all our equipment, devices and machines for the longest time reasonably
possible. We explicitly aim to use furniture until the end of its lifecycle, reusing it multiple times and ensuring
the compatibility of replacements. OTP Bank, DSK Bank, OTP Bank Romania and OTP Banka Srbija all follow
the practice of making charitable donations of any furniture no longer used but in good condition, as well as
functioning IT equipment (mostly computers and laptops), to institutions and organisations in need.
OTP Bank was the first bank in Hungary to issue a bank card made largely (85%) of recycled plastic. The card
was available to junior customers, and we issued 50,000 recycled cards to our customers over the year.
In 2021, our Serbian subsidiary reduced its purchases of plastic packaging products and began using paper
cups for water dispensers. Our Romanian, Croatian, Serbian, Montenegrin and Moldovan subsidiaries also
use refilled toners to reduce waste from the use of toners and ink cartridges.
All members of OTP Group collect and manage hazardous waste and paper containing business secrets
selectively, in compliance with the relevant laws and regulations. The selective collection of non-confidential
paper waste, PET bottles and glass is available in the head office buildings of OTP Bank, while the collection
of packaging metal has also been available since 2021. During the year, we also set up selective waste
collection in ten bank branches. Our Ukrainian subsidiary operates selective paper collection at its head office
building. Our Serbian subsidiary collects paper waste selectively in its branches and head office buildings. Our
Albanian subsidiary collects paper waste selectively. Our Romanian subsidiary collects all paper, metal, glass
and plastic selectively. Our Slovenian subsidiary also collects communal waste selectively (including
biodegradable food waste). Our Croatian subsidiary has collected paper and plastic waste selectively for years,
and from 2021, metal and glass waste will also be collected separately. DSK Bank operates selective waste
collection at its sites in Sofia and Varna and has expanded the selective collection of paper waste during the
year. Our Montenegrin subsidiary has introduced selective paper waste collection at its head office and its
archives facility.
Awareness-raising
Most members of our Banking Group have a tradition of raising awareness and taking joint action to protect
environmental and natural resources. In 2021, we supported several environmental initiatives and encouraged
the environmentally conscious behaviour of our employees.
OTP Bank and OTP Bank Serbia have joined the Mastercard Priceless Planet Coalition, launched in 2020,
and are participating in a campaign that encourages consumers to protect the environment and actively
contribute to this goal themselves. The Priceless Planet Coalition aims to preserve the environment through
the restoration of 100 million trees over five years and to help mitigate the adverse effects of climate change.
By 2022, three afforestation sites have been selected in Kenya, Brazil and Australia, but more will be added
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
later. OTP Bank has supported the Priceless Planet Coalition with a donation of 100,000 euros, while our
Serbian subsidiary has committed to planting a tree for each bank account opened.
DSK Bank was the first bank in Bulgaria to join the Mastercard Wildlife Impact Card programme. The bank and
Mastercard support the issuance of all Mastercard Wildlife Impact cards with one dollar spent on protecting
and restoring natural habitats. The credit card is made of environmentally friendly material.
DSK Bank also supported the One Tree Initiative, which aims to create an interactive map of Sofia’s tree stock.
The tree survey was conducted by volunteers, registering a total of more than 12,000 trees. The bank also
supported the initiative of the Hungarian Cultural Institute, within the framework of which bicycle storage
spaces will be installed in front of cultural institutions. The aim of the project was to ensure the environmentally
friendly accessibility of cultural institutions.
Our Croatian subsidiary also supported the “Drop into the Sea” ecological action of the Telašćica Nature
Reserve, which drew attention to the threat to marine ecosystems and fish stocks due to increasing amounts
of waste. The bank also supported Ekotlon, the biggest plogging competition. In addition to collecting litter, the
event also supported a kindergarten with eco-equipment purchased from its registration fees.
Generator (Gamechanger), our Serbian subsidiary’s local start-up programme, launched the Generator Zero
competition in 2021, specifically seeking and rewarding innovative solutions to reduce its carbon footprint.
Organisations had until the end of the year to apply for the competition, and the winner will receive mentoring
for further development and promotion in addition to the cash prize. Ten finalists were selected from the
72 projects nominated.
We are also extending the scope of our employee involvement programmes:
To promote environmental awareness, we wrote about the reduction in paper use and disposable plastics
in the OTP Bank’s online magazine.
Our Croatian subsidiary has reduced its use of plastics and implemented even more responsible waste
management in three cities under the “Green Way to Green” programme.
Our Serbian bank has launched an awareness-raising initiative among employees to increase
environmentally and business-friendly behaviour and reduce CO2 emissions. The bank also supported the
Green Serbia 2021 campaign, which planted trees in ten cities.
In order to make employees more sensitive to the environment, our Slovenian subsidiary bank organised
a workshop and presentation for managers and e-learning for employees. In 2021, the Bank joined the
Slovenian Green Network, which brings together more than 400 companies, educational institutions,
institutes and other organisations with a variety of projects for sustainable development and social
responsibility.
Our Ukrainian subsidiary has joined the “Batteries, inward” campaign, in which used batteries are collected
and delivered to a recycling plant in Romania. The bank sent more than 200 kg of batteries to be recycled.
Following its energy renovations, our Montenegrin subsidiary will also train its employees in the energy-
conscious use of the systems.
ANNUAL REPORT 2021
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BUSINESS REPORT 2021 (CONSOLIDATED)
NON-FINANCIAL STATEMENT – OTP BANK PLC.
The social, environmental and wider economic performance and impacts of OTP Group are also reported in
its dedicated Sustainability Report. The Sustainability Report for 2021 is a group-level report that meets the
GRI (Global Reporting Initiative) Standard and is certified by an independent third party. It is available as a
digital version on OTP Bank’s website. The information in this chapter is provided in order to comply with the
Accounting Act, while also aiming to keep the duplication of information to a minimum. Information concerning
environmental protection and climate change is provided mainly in the chapter on environmental Policy and
Environmental Protection Measures.
OTP Bank is committed to ethical business conduct in all respects; our principles are set out in our Code of
Ethics, which is binding for all our employees and agents. Our financial services and operations have significant
social and environmental impacts; thus, our objective is to manage risks responsibly while taking advantage
of opportunities and delivering positive outcomes.
In 2021, OTP Bank signed the UN Environment Programme Finance Initiative (UNEP FI), a framework for the
sustainable banking sector. The Principles are the leading framework for ensuring that banks’ strategy and
practice align with the vision society has set out for its future in the UN Sustainable Development Goals and
the Paris Climate Agreement. Banks who have signed the Principles commit to be ambitious in their
sustainability strategies, working to mainstream and embed sustainability into the heart of their business.
The integration of sustainability is supported by a strong organisational background, which was completed in
2021. The ESG transformation covers both OTP Bank and its subsidiaries and is managed by an ESG
Committee established by the Board of Directors. The Committee is the decision-making body responsible for
ESG strategy, plans and policies and for supporting the Bank's governing bodies in the performance of ESG
tasks. The Chairman of the Committee is appointed by the Board of Directors. The ESG Committee has
established an ESG Operational Subcommittee, which provides operational support to the ESG Committee
and help in the preparation of decisions. The head of the Subcommittee - also the head of ESG Business
Transformation - is the Director of the Green Programme Directorate. The three key areas of ESG integration
are ESG business transformation, ESG risk management and ESG control function.
The ESG Strategy of the OTP Group was approved by the Management Committee in 2021. The OTP Group
wishes to play a leading role regionally in financing a fair and gradual transition to a low-carbon economy as
well as building a sustainable future by offering balanced financing opportunities. OTP Group approaches ESG
from three main perspectives: as a responsible service provider, as a responsible employer and as a
responsible social player. In addition to business opportunities, the strategy includes the management of
relevant risks as well as social and corporate governance objectives. The strategy covers the period up to
2024, and our goal is to achieve full ESG integration at group level.
Green Finance
We have taken significant steps towards exploiting the potential of green finance. Green mortgage loans
(distributed by OTP Bank, and held in the balance sheet of OTP Mortgage Bank) and green covered bonds
(issued by OTP Mortgage Bank) help achieve real estate goals for sustainability. OTP Mortgage Bank has set
the strategic goal of increasing the proportion of green loans within new loan disbursements and has also
created a framework for green mortgage bonds. The bank was the first in the domestic market to issue a green
mortgage bond, building on the Hungarian National Bank's (NBH) green mortgage purchase programme. The
company issued securities with a total nominal value of HUF 95 billion in 2021, so in addition to the previously
disbursed green loans, the company also provided funds to finance the green loans to be disbursed after the
issue.
The Mortgage Bank publishes the most important financial and environmental impact data relating to mortgage
bonds annually. The first report presenting information for the year 2021 will be published at the same time as
the company’s annual report.
The NBH Green Home Programme was launched in the second half of 2021 as part of the Growth Loan
Programme. These loans with a maximum interest rate of 2.5% help customers buy and build energy-efficient
new homes. Under the programme, the Hungarian National Bank provides refinancing sources to credit
institutions at 0% interest rates, provided that the energy requirements for the financed property are met. The
central bank provides a total of HUF 200 billion in funds for the programme. We experienced interest in this
loan structure that exceeded expectations, and by the end of 2021, our bank group had concluded contracts
in the amount of HUF 20.1 billion and disbursed loans in the amount of HUF 4.9 billion.
Loan products of the Hungarian Development Bank (MFB) financed by both EU and from MFB’s own sources
were still available at OTP Bank in 2021. The population had access to preferential loans through these
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
structures in order to implement energy improvements. During the year, we entered into loan agreements
amounting to HUF 5 billion, accounting for 7% of all loans contracted through MFB Points.
We have developed four new products for corporate lending to help meet renewable energy production,
electro-mobility, green agricultural goals and high-energy office investments. The total amount of loans cleared
under the green housing, corporate and municipal capital relief programme provided by the NBH in OTP Bank
is approximately HUF 74.5 billion.
A significant proportion of green loans comprise projects for the utilisation of renewable energy sources within
the framework of project financing. Renewable energy projects represent a considerable share of green
lending in our project financing. In 2021, we signed contracts for eight new projects at OTP Group level in the
amount of HUF 81.5 billion, a significant increase compared to previous years. The projects are located in
Hungary, Bulgaria, Romania and Croatia, and the financing was partly implemented with the involvement of
the subsidiaries. The projects generated 1,175 MW of renewable capacity, but funding is not always provided
by OTP Group alone. At group level, the project financing portfolio related to renewable energy projects had
reached HUF 84.2 billion by the end of the year, of which OTP Bank's share was HUF 57.8 billion.
In 2021, loans promoting energy efficiency, the use of renewable energy and e-mobility were available from
our subsidiaries in Croatia, Romania, Montenegro, Albania and Moldova.
Our goal for 2025 is to have green products available in all segments for OTP Core, while the development of
green financing plans at subsidiaries will take place in 2022. OTP Bank plans to issue green bonds in 2022 to
finance group-level projects.
The purpose of the OTP Fund Management OTP Climate Change 130/30 Fund is to provide investment
opportunities in the shares of developed and emerging market companies that may be the winners of
directives, legal regulations and economic policy changes aimed at mitigating the effects of climate change.
The net asset value of the Fund at the end of 2021 was HUF 36.3 billion. In 2021, together with the
OTP Omega Fund, we started to amend the management regulations of the OTP Climate Change 130/30
Fund in order to meet the criteria of a fund promoting environmental or social characteristics or a combination
thereof, i.e. Sustainable Finance Disclosure Regulation (SFDR) Article 8.
The table below shows the disclosures of the OTP Group and banks operating in EU member states in
accordance with Regulation (EU) 2020/852 (Taxonomy Regulation).
Disclosure under Article 8 Delegated art 10
OTP Group consolidated
Art 10 (3) a, Eligible proportion *
Art 10 (2) a, Non-eligible proportion*
Art 10 (2) b, Proportion of derivatives *
Art 10 (2) b, Proportion to central gov., central bank,
supranational issuer*
Art 10 (2) c, Proportion of non-NFRD undertakings*
Art 10 (2)
Proportion of trading portfolio*
Art 10 (2)
Proportion of on-demand inter-bank loans*
DSK Bank
OTP Bank
Croatia
SKB Bank
0.41%
0.21%
0%
ANNUAL REPORT 2021
0.15%
67.29%
0.93%
27.14%
8.48%
1.17%
4.77
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
Disclosure under Article 8 Delegated art 10
OTP Bank
Romania
0.11%
Art 10 (3) d, XI. Annex disclosures
information
Contextual
towards
quantitative indivators incl. scope of assets
and activities covered, data sources and
limitation.
year
from
second
of
Starting
implementationonly: Explanations of the
nature and objectives of Taxonomy-
aligned economic activities and
the
evouolution
Taxonomy-aligned
of
time,
economic
distingiushing between business related
and methodological and data-related
elements.
activities
over
among
examined
Exposures to taxonomy-eligible activities
non-financial
were
corporations. Companies covered by the
NFRD were defined as listed companies with
more than 500 employees based on Nace
code
*Excluding exposures to be excluded from
the denominator of KPIs by the Regulation.
Taxonomy elgible activities were examined.
Our goals for green funding and the activities
we have implemented can be found in the
text pf NFRD.
Description of
the compliance with
Regulation (EU) 2020/852 in the financial
undertaking’s business startegy, product
design process and engagement with
clients and counterparties.
information
for credit institutions that are not required
to dsiclose quantitative
fo
trading exposures: Quakitative information
ont he alignment of trading portfolios with
Regulation
includong
(EU) 2020/852,
overall composition, trendsm objectives
and policy;
the weight of other or additional
information in support of the financial
undertaking’s strategy and the financing of
taxonomic activities in relation to their total
activity.
Our goals for green funding and the activities
we have implemented can be found in the
text pf NFRD.
Taxonomy eligible activities were examined.
Taxonomy eligible activities were examined.
Our goals for green funding and the activities
we have implemented can be found in the
text pf NFRD.
Green asset ratio in corporate lending:
In relation to the mitigation and adaptation objectives of the taxonomy regulation, we have examined the
corporate portfolio based on the NACE codes that can be attributed to activities in the delegated act.
OTP Bank Group's corporate lending activities are linked to environmentally sustainable economic activities in
the EU Member States20 in the followings scope:
Share of the taxonomy-adjusted corporate portfolio of EU core and subsidiary banks in total non-segmented
exposures at group level: 8.3%
Share of the taxonomy-adjusted corporate portfolio of EU core and subsidiary banks in the total EU core and
subsidiary corporate portfolio: 42.3%.
20 EU core and subsidiary banks means: OTP Nyrt, DSK Banka EAD, OTP Bank Romania S.A., OTP banka Hrvatska d.d., SKB banka d.d.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
ESG risk management
In order to integrate ESG aspects, comply with legal obligations and the Hungarian National Bank's Green
Programme, we continued to develop our ESG lending policy in 2021. At group level, we have introduced a
lending and monitoring ESG risk management framework for non-retail and non-motorised leasing assets. The
framework also includes the ESG Exclusion List, which comprises activities excluded from financing by OTP
Group, as well as the industry ESG risk heat map. In 2021, ESG credit risk exposure became part of internal
reporting. In accordance with the Hungarian National Bank’s Green Programme, we will continue to include
ESG factors in the rest of the portfolio and in respect of collateral.
The purpose of ESG risk management in lending is to identify ESG risks and reduce transaction risks arising
from the environmental and social risk factors associated with financing. By integrating these issues into our
lending process, we are also emphasising the importance of our clients adopting excellent environmental and
social practices.
We invest and lend the money deposited with us in a way ensuring that it will not serve illegal purposes, or
those contrary to the values of society.
OTP Bank will not finance:
customers whose financing is forbidden in international agreements, EU acts or national laws;
those whose activity is likely to violate public morals or social value systems, or is connected to crime;
those who are connected, directly or indirectly, to criminal activities or to the deliberate violation or evasion
of legal;
regulations;
transactions classified as prohibited business sectors (e.g. the illegal arms trade, prohibited gambling,
drug trade, or any other illegal activity); and
transactions that fail to meet environmental standards.
The OTP Bank Group does not finance transactions that violate the laws of the country concerned or
international law.
In accordance with our regulations, our banking group always expects and examines compliance with
environmental regulations during lending. Violation of commitments and expectations is sanctioned in the
framework credit agreements.
In accordance with the SFDR's expectations, we have developed an investment risk management policy for
all relevant group members, so that investment risk management has been integrated into decision-making
processes during investment advisory and portfolio management activities, and information on this has been
provided to clients. Our statements on the integration of sustainability risks and the adverse effects of
investment decisions on sustainability factors (PAIs) are available on our websites. In addition to the legal
requirements, the prospectuses containing the product characteristics of the investment funds also include the
ESG score calculated by the bank, helping customers make decisions and orient themselves.
We have strengthened the assessment of ESG risks in our operational risk management scenario analyses
by analysing a separate scenario related to climate change, and we have also indicated the risks affected by
ESG in both the risk self-assessment and the loss database.
Responsible customer service
In carrying out our financial intermediary duties we ensure that the savings of our customers remain safe at all
times. Our rules guarantee that the standards of responsible lending are observed regarding the avoidance of
over-indebtedness, fair, understandable, complete and attentive information provision and adequate product
offers.
Our principles and guidelines on the fair treatment of customers and the compliance of consumer protection
are set out in our Compliance Policy. In designing our products, we follow the principles of ethical product
development. Our New Product Policy prescribes the assessment of potential risks to consumers.
We offer personalised administrative options to our customers with the highest level of service quality and
continuous innovations. The coronavirus pandemic increased the use of online channels, and our Banking
Group also encouraged this trend.
We use TRI*M methodology to measure the satisfaction of our retail customers. OTP Bank’s client retention
power increased by three points to 69 points in 2021, while the average satisfaction score among
competitors also increased slightly. The average TRI*M of banks in Central Europe was 77 points.
ANNUAL REPORT 2021
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BUSINESS REPORT 2021 (CONSOLIDATED)
OTP Bank’s stated objective is to serve its customers without fault. In order to improve customer satisfaction,
we are also continuously improving our complaint management practices. Our Complaint Management
Policy, Complaint Management Regulation and a Glossary are available to view in our branches as well as
on our website.
In 2021, the most typical complaints at OTP Bank were related to the payment moratorium and unapproved
payment transactions. The number of both complaints and legitimate complaints decreased significantly in
2021 compared to the outstanding values of 2020, which could be attributed to the significant changes made
during the year. The declining trend also prevailed at group level. In 2021, we continued to improve our
complaint management practices, including expanding our complaint analysis process and the range of
complaints that can be resolved immediately.
Customer complaint data, OTP Bank1
Number of warranted complaints
Ratio of warranted complaints
Compensation paid (HUF million)
1 Includes data from OTP Housing Savings and OTP Mortgage Bank.
2 Corrected data.
2020
202,040
67%
842
2021
155,298
62%
36
Our objective is to provide equal access for persons living with disability, through services adapted to their
special needs, in line with the Accessibility Strategy of OTP Bank. Accessibility is integrated into our website,
which supports one-handed use and provides accessibility options including text-to-speech software and video
content transcripts. Physical accessibility was also provided in every branch but one in 2021. Our customers
can request special-needs services at the queue management machine, with physical push buttons and tactile
strips also assisting them in using the device. Tactile guide strips are available in 38% of our branches.
Interpreter Services are available at 167 branches (47%); this is a service allowing a sign language interpreter
to assist with administration tasks through a live video chat. Moreover, we have made text-to-speech software
available on 910 of our ATMs (48%).
Security and data protection
Security is a top concern for us. The principles and main guidelines concerning security at the bank are set
forth in the Security Policy, which is approved by the Board of Directors. The policy covers all aspects of
security, including IT and cyber security, which have become increasingly important. OTP Bank's Group-level
Information Security Policy and Cyber Security Strategy of OTP Bank were completed in 2021, and the
development of a Group-level cyber security strategy was launched. The processing and protection of personal
data is covered by the Compliance Policy, which is also approved by the Board of Directors. Both policies
prescribe the regular evaluation of risks and the need to maintain and enhance awareness.
The handling and protection of personal data is covered by the Compliance Policy also approved by the Board
of Directors. We also developed security processes and applied solutions in 2021, with our innovations
focusing on the cyber security centre, the central log analysis system, authorisation management and virus
protection. In addition we made customer communication more effective in detecting suspicious transactions.
The number of distributed denial-of-service (DDoS) and phishing attacks increased significantly at group level
compared to previous years. We published several awareness campaigns for our customers, providing
information on our intranet and through security awareness training, which was also focused on phishing.
Besides protecting against phishing activities, the European Cyber Security Month programmes focused on
presenting the security challenges of modern application development and operations.
White-collar crime, which causes significant losses to customers and the banking group, decreased at most
subsidiaries due to our continuous development, more efficient employee action and stricter controls. We have
reviewed our anti-money laundering training material to ensure our employees gain greater knowledge of this
and have started to develop harmonised training at group level. The number of suspected money laundering
reports by bank employees increased by eight percent. During the year, OTP Bank reported 68 cases of
suspected money laundering.
Our Banking Group has experienced numerous card-related attacks; in these cases the sharing of important
information was extremely helpful in the prevention of fraudulent transactions. The number of successful card
fraud cases has been kept low continuously, which demonstrates that our systems operate effectively. The
ratio of bank card fraud to turnover is significantly lower than the European average published by MasterCard
(for OTP Bank it is 0.0071% and the consolidated ratio of subsidiaries is 0.00986%, while the European
average stands at 0.0414%). In the case of OTP Bank we were able to prevent bank card fraud of
HUF 5.5 billion.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
Losses expected from the detected criminal activities amounted to HUF 447 million in the case of OTP Bank
and HUF 2.2 billion at Group level. The amount of loss prevented was HUF 457 million at OTP Bank and
HUF 2.0 billion at OTP Group.
Fight against corruption and against the practice of bribery
discrimination
The Code of Ethics and the Anti-Corruption Policy of OTP Bank contains provisions on the fight against
corruption and against the practice of bribery, also on the acceptance of individual differences and the denial
of
(https://www.otpbank.hu/portal/en/EthicalDeclaration
https://www.otpbank.hu/static/portal/sw/file/OTP_EtikaiKodex_EN.pdf,
https://www.otpbank.hu/static/portal/sw/file/OTP_Anti_Corruption_Policy_202102.pdf). 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 principle of zero tolerance towards corruption and bribery, taking a definite stance against all forms of
corruption and giving full support to the fight against corruption. In addition, the Code states that "As an ethical
and compliant institution, the Bank and its management are fully committed to ensuring observance of all
relevant legislation, including anti-corruption statutes."
The Bank has set up an ethics reporting system (whistleblowing), which is for the reporting and the handling
of the reports on suspected or actual violation of the values set forth in the Code of Ethics, where anonymous
reporting of ethics issues is also possible. The Bank conducts inquiries for the purpose of detecting, preventing
anomalies in connection with reports made or anomalies it became aware of otherwise.
Through the Bank's ethics reporting system a total of 26 reports were received in 2021, 8 of them was
reclassified as complaints and 2 case’s investigation resulted in declaring ethics offense – though not due to
corruption, bribery or discrimination.
The Bank has created and maintains its Code of Ethics to keep reputational risk and financial losses, which
may incur in relation to corruption, bribery and discrimination, on a minimum level. Both employees and
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 human rights are treated by the Bank as a priority.
We manage the risks regarding the fight against corruption and bribery within the framework of our operational
risk management process. Our quarterly compliance reports cover the changes in risks as well as the steps
necessary steps to manage them. The reports are presented to the Management Committee and the Board of
Directors; the annual report is also submitted to the Supervisory Board.
Citizenship
OTP is one of the most generous charitable donors in Hungary, giving a total of HUF 2.3 billion in charitable
donations, almost half of which was for educational purposes, primarily the development of financial culture.
We aim to provide genuine and effective help by supporting programmes and causes that serve the interests
of society. We cooperate with a number of local non-governmental organisations, concentrating our donated
funds and monitoring their usage and the results achieved.
Our efforts were focused on the following areas:
developing financial literacy: attitude shaping;
sponsoring culture and the arts: creating and preserving values;
equal opportunities: helping the disadvantaged and those in need; and
sport.
We consider donation habits a part of financial literacy; therefore, in 2021 we took a significant step forward in
encouraging our customers to support the social initiatives that they consider important financially. Under the
digital donation programme we enabled them to make donations simply and easily while taking care of their
day-to-day finances. Donation has become possible on our digital platforms, including our website, the
internetbank, the mobile application, the Simple application, as well as through 750 ATMs and the digital points
of 80 branches. Our Bank assumes all extra costs of the donation, including both the transaction tax of
customers and the costs of NGOs. Our Bank also cooperates with the supported organisations and we
supplement the donations of our customers. In addition, in our experience, our customers view the Bank’s
participation as a guarantee that their donations will truly go to the right beneficiary. In 2021 we supported the
initiatives of 6 foundations through customer donations in the amount of HUF 250 million.
The Humanitas Social Foundation supports vulnerable communities and individuals with a focus on healthcare
and education; donation recipients are selected through an application process. Its most important activity in
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
2020 involved priority support to hospitals. We supported 30 hospitals, 18 educational institutions and one
foundation through the Foundation in 2021. In order to provide more effective assistance, we provided
targeted, tailored asset support to institutions.
The OTP Fáy András Foundation provides financial and economic education services, a key element of which
is operating the OK Educational and Innovation Centre. The Foundation provides youth, adult and vocational
training. The activities of the Foundation in 2021 were determined mostly by the coronavirus pandemic and
several planned activities could not be organised as a result. However, the Foundation developed 30 curricula
in 2021.
Digital education continued to be the focus of the year, with more than 17,000 students attending online and
nearly 2,500 classroom training. Roma youth also participated in financial and economic training through the
Roma Education Fund. Significant progress has been made in the development and testing of the Financial
Basic Education Programme in adult education. During the training, in which participation is free of charge and
without prior knowledge, users acquire essential personal money management and general economic
knowledge and improve their financial literacy. The Foundation also continued its previous programmes, so
the teacher training programme of Eötvös Loránd University (ELTE), the regular Teachers' Club and the
summer camps took place. The Foundation's national awareness-raising programme also continued, with
screenings of short films on national commercial television channels around 400 times, covering topics such
as housing renovation, business start-ups and data security.
Responsible employment
Our goal is to create value for our employees by focusing on them in a constantly changing environment. The
central objective of our human resource strategy is to intensify employee experience and commitment.
In 2021 we conducted an employee satisfaction survey at Group level with a high response ratio of 92%. Based
on the results, the rate of employee satisfaction was 70%, slightly lower than the average of the international
financial sector. The action plans prepared in response to the feedback for all areas that needed improvement
were approved by the Management Committee.
We developed our activities during the year along the lines of the six priorities stated in our strategy, also
relying on the results of the employee satisfaction survey. We launched numerous projects that will result in
significant changes; for example, we developed the framework of Group-level dialogue, and placed
management development on new foundations. Although the pandemic slightly delayed the implementation of
the international talent programme, we created a uniform talent framework at Group level and operated local
talent programmes. All of our employees participate in trainings; in addition to network and head office
management development, we rejuvenated the frameworks of our employees’ skills development.
Due to the pandemic situation, hybrid work performance became typical in 2021. We maintained access to the
tools promoting our employees’ emotional, mental and physical health and their ability to stand firm under
harsh circumstances, and once again in 2021, numerous employees took recourse to them.
OTP Bank’s employees (31 December)
2020
2021
9,826
Employees, total (individuals)
100%
Distribution by gender
Turnover rate1
10.5%
1 Compared to the end-of-year headcount; includes termination of employment both by employee and by employer, as well as
retirement.
10,078
100%
14.3%
Total Men Women
6,424
65.4%
11.2%
3,402
34.6%
9.3%
Total Men Women
6,531
64,8%
14.1%
3,547
35.2%
14.5%
Ethical conduct and legal compliance also remain core principles in our human resource management. OTP
Bank analyses and manages the risks relating to employment within its operational risk management process.
Our employees’ interests are represented by their trade union, with a Collective Agreement setting out the
rights and obligations of every employee.
The Bank’s Code of Ethics declares its commitment to providing a safe and healthy working environment and
states its expectation of mutual respect between executive officers and employees, including the prohibition of
discrimination and harassment. We consistently apply the principle of “equal pay for equal work”, including
providing equal pay to men and women for the same position and performance. Within the objective limitations
of specific job descriptions, we allow for flexible working hours and part-time employment options. We
encourage healthy lifestyle choices, offering a complex health insurance package, and subsidising recreation
and sporting activities.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
Short description of the business model of the company
OTP Bank is the market-leading credit institution in Hungary. As for its business model, the Bank offers high-
quality financial services to retail, private banking, micro and small business, medium and large corporate, as
well as municipality clients through both its branch network and its steadily developing digital channels. The
Bank provides comprehensive retail and corporate banking services: its activities include deposit collection
from customers and raising money from the money and capital markets. On the asset side, OTP Bank offers
mortgage loans, consumer credits, working capital and investment loans to companies, as well as loans to
municipalities, whereas its liquidity reserves are invested in money and capital market instruments. Moreover,
the Bank provides a wide range of state-of-the-art services, including the areas of wealth management,
investment services, payment services, treasury and other services.
In addition, OTP Bank's Hungarian subsidiaries deliver a wide range of further financial services. The Bank
owns foreign subsidiaries in many countries of Central and Eastern Europe through capital investments.
Non-financial performance indicators – OTP Bank Plc. (standalone)
Internal audit: 203 closed audits, 1,478 recommendations, 1,478 accepted recommendations
Compliance with Budapest Stock Exchange (BSE) Recommendations (yes/no ratio): 72 yes, 0 no;
Compliance: 18 closed consumer protection related investigations
Bank security: the expected value of damages resulting from detected criminal offenses is HUF
447,124,093, HUF 460,655,117. In 2021, we filed an official complaint in 620 cases on suspicion of money
laundering. There is a slight decrease in 2021, when this number changed from 4438 in the previous year
to 4432, a decrease of 8.4%. In the case of OTP, the ratio of bank card misuse to turnover is still lower
than the European average published by MasterCard (last year's figures: OTP Bank 0.0071%, European
average 0.0414%).
Ethics issues: 26 ethics reports, establishing ethics offense in 2 cases.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
LIST OF NON-AUDIT SERVICES BY SERVICE CATEGORIES USED BY THE BANK
The statutory audit of OTP Bank is carried out by Ernst and Young Ltd., in addition to which the following
services were contracted:
Issue of Comfort letters
Engagements to review historical financial statements and interim financial statements (ISRE 2400,
2410)
Consultation relating to interpretation and implementation of accounting standards and relating to
accounting of potential future transaction
Pre- or post-transaction due diligence services relating to acquisition of assets or entites or sales
transactions or other transactions: financial, accounting, taxation, legal and IT specific services -
except for buy-side lead advisory, transactional and negotiation support
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
SUPPLEMENTARY DATA
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
FOOTNOTES OF THE TABLE ‘CONSOLIDATED AFTER TAX PROFIT BREAKDOWN BY SUBSIDIARIES
(IFRS)’
General note: regarding OTP Core and other subsidiaries, profit after tax is calculated without received dividends and net
cash transfers (and other adjustment items). Dividends and net cash transfers received from non-group member
companies are shown on a separate line in one sum in the table, regardless to the particular receiver or payer group
member company.
(1) Aggregated adjusted after tax profit of OTP Core and foreign banks.
(2) OTP Core is an economic unit for measuring the result of core business activity of OTP Group in Hungary. Financials
of OTP Core are calculated from the partially consolidated IFRS financial statements of certain companies engaged in
OTP Group’s operation in Hungary. These companies include OTP Bank Hungary Plc., OTP Mortgage Bank Ltd, OTP
Building Society Ltd, OTP Factoring Ltd, OTP Financial Point Ltd., and companies providing intragroup financing; OTP
Bank Employee Stock Ownership Plan Organization was included from 4Q 2016; OTP Card Factory Ltd., OTP Facility
Management Llc., MONICOMP Ltd. and OTP Real Estate Leasing Ltd. were included from 1Q 2017 (from 1Q 2019 OTP
Real Estate Lease Ltd. was eliminated from OTP Core); OTP Mobile Service Llc. and OTP Ingatlanpont Llc. were included
from 1Q 2019; OTP eBIZ Ltd. was included from 1Q 2020; OTP OTP Home Solutions was included from 2Q 2021. The
consolidated accounting results of these companies are segmented into OTP Core and Corporate Centre. Latter is a virtual
entity.
(3) The result and balance sheet of OTP Factoring Bulgaria EAD and DSK Leasing AD is included. From 1Q 2019
Expressbank AD and its subsidiarieswere included into the Bulgarian operation.
(4) The statement of recognised income and balance sheet of OTP Leasing d.d. and SB Leasing d.o.o. was included. In
February 2020 the company name of OTP banka Hrvatska dioničko društvo was changed to OTP banka dioničko društvo.
(5) The financial performance of OTP Factoring Serbia d.o.o, OTP Lizing d.o.o, OTP Services d.o.o. and the newly acquired
OTP banka Srbija is included.
(6) The statement of recognised income and balance sheet of OTP Faktoring SRL and OTP Leasing Romania IFN S.A.was
included.
(7) Figures are based on the aggregated financial statements of OTP Bank JSC, LLC OTP Leasing, and OTP Factoring
Ukraine LLC.
(8) The statement of recognised income and balance sheet of LLC MFO “OTP Finance” is included in the Russian
performance.
(9) The statement of recognised income and balance sheet of the acquired Podgoricka banka was included, which merged
into the Montenegrin bank in 4Q 2020.
(10) P&L data are adjusted for the special banking tax and the Slovakian Deposit Protection Fund contributions being
introduced again in 2014, as well as the contribution into the Resolution Fund. Including the financial performance of OTP
Faktoring Slovensko s.r.o. The sale of the Slovakian subsidiary was concluded at the end of November 2020.
(11) The subconsolidated adjusted 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 (w/o dividends, net cash transfers and other
adjustment items).
(12) LLC AMC OTP Capital, OTP Asset Management SAI S.A. (Romania), DSK Asset Management EAD (Bulgaria).
(13) OTP Buildings s.r.o. (Slovakia), Velvin Ventures Ltd. (Belize), R.E. Four d.o.o., Novi Sad (Serbia), SC Aloha Buzz
SRL, SC Favo Consultanta SRL, SC Tezaur Cont SRL (Romania), Cresco d.o.o. (Croatia), OTP Osiguranje d.d. (Croatia),
OTP Solution Fund (Ukraine).
(14) Within OTP Group, the Corporate Centre acts as a virtual entity established by the equity investment of OTP Core for
managing the wholesale financing activity for all the subsidiaries within OTP Group but outside OTP Core. Therefore the
balance sheet of the Corporate Centre is funded by the equity and intragroup lending received from OTP Core, the
intragroup lending received from other subsidiaries, and the subordinated debt and senior notes issued by OTP Bank.
From this funding pool, the Corporate Centre is to provide intragroup lending to, and hold equity stakes in OTP subsidiaries
outside OTP Core. Main subsidiaries financed by Corporate Centre are as follows: Hungarians: Merkantil Bank Ltd,
Merkantil Leasing Ltd, OTP Fund Management Ltd, OTP Real Estate Fund Management Ltd, OTP Life Annuity Ltd;
foreigners: banks, leasing companies, factoring companies.
(15) Total Hungarian subsidiaries: sum of the adjusted after tax results of Hungarian group members, Corporate Centre
and related eliminations.
(16) Total Foreign subsidiaries: sum of the adjusted after tax profits of foreign subsidiaries.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
CALCULATION OF THE ADJUSTED LINES OF IFRS PROFIT AND LOSS STATEMENTS, AS WELL AS
THE ADJUSTED BALANCE SHEET LINES PRESENTED IN THE REPORT, AND THE METHODOLOGY
FOR CALCULATING THE FX-ADJUSTED VOLUME CHANGES
In order to present Group level trends in a comprehensive way in the Report, the presented consolidated and separate
profit and loss statements of this report were adjusted in the following way, and the adjusted P&Ls are shown and analysed
in the report. Consolidated accounting figures together with Separate accounting figures of OTP Bank are still disclosed in
the Supplementary Data section.
Adjustments affecting the income statement:
The after tax effect of adjustment items (certain, typically non-recurring items from banking operations’ point of view) are
shown separately in the Statement of Recognised Income. The following adjustment items emerged in the period under
review and the previous year: received dividends, received and paid cash transfers, the effect of goodwill/investment
impairment charges, special tax on financial institutions, the expected one-off negative effect of the debt repayment
moratorium in Hungary and Serbia, the impact of fines imposed by the Hungarian Competition Authority, the effect of
acquisitions, and from 2021 the result of the treasury share swap agreement (earlier the latter was presented amongst
the one-off revenue items in the adjusted income statement structure).
Beside the Slovakian banking levy payable until 2Q 2020, the total amount of the special banking tax includes and the
Slovakian Deposit Protection Fund contributions being introduced again in 2014, and the contribution into the Resolution
Fund in Slovakia, too.
In 4Q 2019 the following items have been moved from the Other operating expenses line among the Net interest income
after loss allowance, impairment and provisions line: 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. In the adjusted P&L structure these
items are presented amongst the Other provisions (adj.) line (through the Structural correction between Provision for
loan losses and Other provisions adjustment line). From 1Q 2021 the Provision for commitments and guarantees given
line contains lending activity-related amounts, therefore this line is no longer shifted from 1Q 2021. In 3Q 2021
(retrospectively from 3Q 2020) the components of the new Gain from derecognition of financial assets at amortized cost
line in the accounting P&L were shifted back in the adjusted P&L structure to the lines on which they were presented
previously.
Other non-interest income is shown together with Gains and losses on real estate transactions, Net insurance result
(appearing in the accounting P&L structure from 3Q 2017), Gains and losses on derivative instruments, and Gains and
losses on non-trading securities mandatorily at fair value through profit or loss lines between 1Q 2019 – 4Q 2019, but
without the above mentioned income from the release of pre-acquisition provisions and without received cash transfers.
However other non-interest expenses stemming from non-financial activities are added to the adjusted net other non-
interest income line, therefore the latter incorporates the net amount of other non-interest income from non-financial
activities.
OTP Bank’s share in the change in the shareholders’ equity of companies consolidated with equity method is reclassified
from the After tax dividends and net cash transfers line to the Net other non-interest result (adj.) without one-offs line. In
the addition to this, OTP Bank has changed the way how private equity funds managed by PortfoLion are recorded. As
a result of this, as opposed to the previous method of recording the funds at book value (initial book value less
impairments), the funds are now evaluated based on their net asset value. The change in the carrying value was
reclassified to the Net other non-interest result (adj.) without one-offs line in the adjusted P&L structure. Furthermore,
received cash transfers within the framework of the subsidy programme targeting the expansion of POS network in
Hungary were reclassified from the After tax dividends and net cash transfers line to the Net other non-interest result
(adj.) without one-offs line.
Other provisions are separated from other expenses and shown on a separate line in the adjusted profit or loss statement.
Other administrative expenses have been adjusted in the following way in order to create a category comprising
administrative cost items exclusively. Other costs and expenses and other non-interest expenses were included into the
adjusted Other non-interest expenses. At the same time, the following cost items were excluded from adjusted other non-
interest expenses: paid cash transfers (except for movie subsidies and cash transfers to public benefit organisations,
whereas from 2019 certain part of cash transfers to public benefit organizations was presented amongst net fees and
commissions), Other other non-interest expenses stemming from non-financial activities, and special tax on financial
institutions.
Tax deductible transfers (offset against corporate taxes) paid by Hungarian group members were reclassified from Other
non-interest expenses to Corporate income tax. As a result, the net P&L effect of these transfers (i.e. the paid transfer
less the related corporate tax allowances) is recognised in the corporate income tax line of the adjusted P&L. The amount
of tax deductible transfers offset against the special tax on financial institutions is shown on a net base on the special tax
on financial institutions line.
The financial transaction tax paid in Hungary is reclassified from other (administrative) expenses to net fee and
commission income, both on consolidated and OTP Core level.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
OTP Group is hedging the revaluation result of the FX provisions on its FX loans and interest claims by keeping hedging
open FX positions. In the accounting statement of recognized income, the revaluation of FX provisions is part of the risk
costs (within line “Provision for loan losses”), other provisions and net interest income lines, whereas the revaluation
result of the hedging open FX positions is made through other non-interest income (within line “Foreign exchange result,
net”). The two items have the same absolute amount but an opposite sign. As an adjustment to the accounting statement
of income, these items are eliminated from the adjusted P&L. By modifying only the structure of the income statement,
this correction does not have any impact on the bottom line net profits.
The Compensation Fund contributions are recognized on the Other administrative expenses line of the accounting
income statement, and are presented on the financial transaction tax and/or Special tax on financial institutions line the
in the adjusted P&L structure (due to the tax deductibility).
In case of OTP Banka Slovensko and OTP Bank Romania the total revaluation result of intra-group swap deals – earlier
booked partly within the net interest income, but also on the Foreign exchange gains and Net other non-interest result
lines within total Other non-interest income – is presented on a net base on the net interest income line.
Due to the introduction of IFRS16, certain items previously presented on the Other non-interest expenses line (rental
fees) were moved to the interest expenses and depreciation lines in the accounting income statement. These items were
shifted back to the Other non-interest expenses line in the adjusted P&L structure.
Staring from 2020 the currency exchange result was shifted in the accounting P&L structure from the FX result to the net
fees and commissions line, retroactively for the 2019 base period as well. In the adjusted P&L structure this item is moved
to the FX result line.
In 4Q 2021 the Modification gains or losses line (one of the components of the Provision for impairment on loan and
placement losses) was presented on a separate line in the accounting P&L structure, retroactively from 1Q 2020. In the
adjusted P&L this line was shifted back to the Provision for impairment on loan and placement losses line. Secondly, in
4Q 2021 the Gains and losses on non-trading securities mandatorily at fair value through profit or loss line was moved
from the Gains / losses on securities to the Fair value adjustment on financial instruments measured at fair value through
profit or loss line in the accounting P&L structure, retroactively from 1Q 2020. In the adjusted P&L this item remained
part of the Gains / losses on securities. Thirdly, from 1Q 2021 the local business taxes and the innovation contribution
payable by Hungarian Group members were booked on the Income tax expenses line, whereas these items were
recognised amongst the Other general expenses. In 4Q 2021 this change was retrospectively reflected in the full-year
2020 accounting P&L, too, but in the adjusted P&L structure for the 2020 base period we continue to present these items
amongst the Other non-interest expenses.
Performance indicators (such as cost/income ratio, net interest margin, risk cost to average gross loans as well as ROA
and ROE ratios, etc.) presented in this report are calculated on the basis of the adjusted profit and loss statement
excluding adjustment items (unless otherwise indicated).
Within the report, FX-adjusted statistics for business volume developments and their product breakdown, as well as the
FX-adjusted stock of allowances for loan losses are disclosed, too. For 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. Thus
the
the
FX-adjusted volume change of DPD90+ loans (adjusted for sales and write-offs), instead of the previously applied 3Q
2009 FX rates, from 4Q 2020 onwards the actual end of period FX rates are used for calculating the FX-adjusted figures.
earlier. Regarding
volumes will
FX-adjusted
published
different
those
from
be
Adjustments affecting the balance sheet:
On 17 February 2020 OTP Bank announced the signing of the sale agreement of its Slovakian subsidiary. According to
IFRS 5 the Slovakian bank was presented as a discontinued operation in the consolidated income statement and balance
sheet until it was sold. With regards to the consolidated accounting balance sheet, all assets and liabilities of the
Slovakian bank were shown on one line until 9M 2020 in the balance sheet (by the end of 4Q 2020 the Slovakian entity
was deconsolidated). As for the consolidated accounting income statement, the Slovakian contribution for 2020 (in 2020
the January-October contribution was consolidated) was shown separately from the result of continued operation, on the
Loss from discontinued operation line, i.e. the particular P&L lines in the ‘continuing operations’ section of the accounting
P&L don’t incorporate the contribution from the Slovakian subsidiary. As opposed to this, the adjusted financial
statements presented in the Stock Exchange Report incorporated the Slovakian banks’ balance sheet and P&L
contribution in the relevant respective lines, in line with the structure of the financial statements monitored by the
management.
From the end of 2020, OTP Osiguranje d.d. was presented as asset classified as held for sale in the accounting financial
statements. Accordingly, from end-2020 until its deconsolidation, i.e. until 2Q 2021 its assets and liabilities were shown
on a separate line in the consolidated balance sheet. Regarding the 2020 and 2021 accounting statement of recognized
income, the entity’s result was presented on the Gains from held for trading operations line, therefore the particular P&L
lines in the ‘continuing operations’ section of the accounting P&L don’t incorporate the contribution from this entity. As
opposed to this, the adjusted financial statements presented in the Stock Exchange Report incorporated the company’s
balance sheet and P&L contribution in the relevant respective lines, in line with the structure of the financial statements
monitored by the management.
Finance lease receivables – earlier presented within customer loans – are shown on a separate line in the accounting
balance sheet from the end of 2019. As for the adjusted balance sheet, net customer loans continue to include the stock
of finance lease receivables.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
In the adjusted balance sheets presented in the analytical section of the report, the Stage 3 loans under IFRS 9 were
netted with the provisions created in relation to the total exposure toward those particular clients, in case of the affected
Group members. Therefore, this adjustment made on the accounting balance sheet has an impact on the consolidated
gross customer loans and allowances for loan losses.
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
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 IFRS16
(+) 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
Net interest income (adj.)
Net fees and commissions
(+) Financial Transaction Tax
(-) 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
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
(-) Effect of acquisitions
(+) Presentation of the contribution from discontinued operation on the adjusted P&L lines
(-) Revaluation result of the treasury share swap agreement
(+) Structural adjustment due to the Gain from derecognition of financial assets at amortized cost line (against Gain/loss
on securities, net)
(+) Shifting of the Gains and losses on non-trading securities mandatorily at fair value through profit or loss line from the
Net other non-interest income to the Gains or losses from securities line
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
(-) Shifting of the Gains and losses on non-trading securities mandatorily at fair value through profit or loss line from the
Net other non-interest income to the Gains or losses from securities line
(-) 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
(-) 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
(+) 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
Net other non-interest result (adj.) without one-offs
Gain from derecognition of financial assets at amortized cost
(-) Structural adjustment due to the Gain from derecognition of financial assets at amortized cost line (against Gain/loss
on securities, net)
(-) Structural adjustment due to the Gain from derecognition of financial assets at amortized cost line (against Provision
for impairment on loan and placement losses)
Gain from derecognition of financial assets at amortized cost (adj.)
2021
HUF million
874,310
0
2020
HUF million
782,673
(57)
625
337
1,131
(2,680)
0
(1,556)
46
(5,925)
884,012
442,177
(68,818)
(33)
0
47,843
325,548
(4,075)
0
(492)
0
(10)
47,843
44,251
5,559
(1,077)
14
2,766
1,031
4,812
9,726
-
9,726
116
(165)
282
6,424
282
74,246
6,797
657
(532)
4,812
165
(44,882)
11,155
(4)
1,117
(948)
0
(194)
387
0
49,586
1,884
1,031
854
0
5,951
(600)
0
(1,623)
8,755
15
788,079
397,635
(61,588)
(145)
3,210
46,290
293,112
7,864
11,195
(1,964)
0
3
46,290
44,927
7,464
(98)
349
1,402
7,239
16,553
2,360
14,193
5,590
7,496
(1,907)
3,631
(1,907)
29,109
11,339
721
4,843
7,239
65
(5,800)
128
7,264
2,301
(226)
823
(216)
3,149
(1,646)
29,610
3,380
1,402
1,978
0
Provision for impairment on loan and placement losses
(+) Modification gains or losses
(+) Change in the fair value attributable to changes in the credit risk of loans mandatorily measured at fair
value through profit of loss
(27,723)
(13,672)
(16,289)
(172,520)
(29,773)
(3,262)
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
(+) 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
(-) 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
(-) 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
(+) Structural adjustment due to the Gain from derecognition of financial assets at amortized cost line (against Provision
for impairment on loan and placement losses)
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
(-) Effect of acquisitions
(-) Reclassification due to the introduction of IFRS16
(+) 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
(+) 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 tax impact of the result of the treasury share swap agreement
(-) Shifting of the Hungarian local business tax and innovation contribution for 2020 between corporate income tax and
other non-interest expenses
Corporate income tax (adj.)
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
(+) 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 administrative expenses
(+) Other costs and expenses
(+) Other non-interest expenses
(-) Paid cash transfers
(+) Film subsidies and cash transfers to public benefit organisations
(-) 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 IFRS16
(+) Presentation of the contribution from discontinued operation on the adjusted P&L lines
(+) Shifting of the Hungarian local business tax and innovation contribution for 2020 between corporate income tax and
other non-interest expenses
(-) Expected one-off negative effect of the debt repayment moratorium in Hungary and Serbia
Other non-interest expenses (adj.)
2021
HUF million
2020
HUF million
(3,974)
(99)
438
0
339
1,131
0
(3,536)
0
(10,131)
854
(46,006)
15,648
165
(11,992)
(11,873)
3,809
11,155
0
729
(94,995)
(6,134)
(16,064)
(20)
(72,816)
(340,684)
(781)
(298)
(340,201)
(72,123)
1,909
1,787
(8,137)
0
5,738
(18)
1,487
(249)
(90,951)
(85,733)
(6,508)
(56,874)
0
0
609
194
(3,536)
4
(153)
(26,532)
(311,931)
(6,508)
(56,874)
(11,992)
(11,873)
(44,882)
(20,680)
(8,137)
(68,818)
(10,370)
(17,620)
(106)
(318)
(239,716)
(7,309)
(8,662)
877
(10,997)
459
5,951
(2,149)
(15,094)
(3,024)
(29,543)
1,978
(158,421)
527
65
(12,768)
(12,508)
0
128
8
213
(92,762)
(7,415)
(16,447)
(1,385)
(70,286)
(308,643)
(2,785)
(6,638)
(312,495)
(43,918)
886
1,773
(8,083)
(74)
497
(80)
2,913
(16,542)
(41,534)
(39,447)
(7,506)
(18,568)
1,022
(141)
(233)
216
(15,094)
(243)
0
(29,574)
(289,721)
(7,506)
(18,568)
(12,768)
(12,508)
(5,800)
(19,138)
(8,083)
(61,588)
(9,940)
(18,069)
(4,105)
(16,542)
(249,702)
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
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
(+) 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. 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
(+) Allocation of Assets classified as held for sale among balance sheet lines
Other assets (adjusted)
2021
HUF million
2,556,035
0
2,556,035
1,584,860
0
1,584,860
341,397
0
341,397
2,224,510
0
2,224,510
16,670,469
36,015
0
16,634,454
(926,547)
(36,015)
0
(890,532)
3,891,335
0
3,891,335
689,290
0
689,290
454,811
0
454,811
2020
HUF million
2,432,312
3
2,432,314
1,148,744
244
1,148,987
234,006
1,188
235,194
2,136,709
3,410
2,140,118
14,401,930
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
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
(+) 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)
1,608,533
1,219,446
0
0
1,608,533
1,219,446
Deposits from customers
(+) Allocation of Liabilities directly associated with assets classified as held-for-sale among balance sheet
lines
Deposits from customers (adjusted)
21,068,644
17,890,863
0
0
21,068,644
17,890,863
Other liabilities
(+) Allocation of Liabilities directly associated with assets classified as held-for-sale among balance sheet
lines
Other liabilities (adjusted)
1,124,782
0
1,124,782
949,502
0
949,502
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
STATEMENT OF PROFIT OR LOSS OF OTP BANK PLC., ACCORDING TO IFRS STANDARDS AS
ADOPTED BY THE EUROPEAN UNION (CONSOLIDATED)1
2021
HUF million
2020
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
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
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
Modification gain or loss
Foreign exchange gains / losses, net
Foreign exchange result
Gains and losses on derivative instruments
Gains / Losses on securities, net
Gain from derecognition of financial assets at amortized cost
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
Other administrative expenses
Other administrative expenses
PROFIT BEFORE INCOME TAX
Income tax expense
NET PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS
922,539
194,920
1,117,459
(243,149)
874,310
(47,645)
841,901
135,986
977,887
(195,216)
782,671
(190,875)
(27,721)
(172,520)
(16,289)
(3,262)
(3,974)
(99)
(7,309)
(8,662)
438
878
826,665
554,113
(111,939)
442,174
(13,672)
2,723
(4,075)
6,798
5,560
1,885
(532)
15,648
81,328
6,424
74,246
657
(85,732)
20,880
(340,684)
(94,996)
(311,932)
(747,612)
528,435
(72,123)
456,312
591,796
486,529
(88,896)
397,633
(29,773)
19,204
7,864
11,340
7,465
3,380
4,843
527
33,461
3,631
29,109
721
(39,447)
29,433
(308,642)
(92,761)
(289,722)
(691,125)
297,964
(43,918)
254,046
10
43
14
25
12
(75)
(84)
399
(46)
(99)
(50)
40
14
26
11
(54)
(86)
(152)
(40)
(26)
(44)
(111)
143
77
155
(9)
117
(29)
10
2
8
8
77
64
80
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
1 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).
0
116
456,428
199
5,391
259,636
836
455,476
220
253,826
(98)
76
280
79
ANNUAL REPORT 2021
OTP BANK
BUSINESS REPORT 2021 (CONSOLIDATED)
STATEMENT OF FINANCIAL POSITION OF OTP BANK PLC., ACCORDING TO IFRS STANDARDS AS
ADOPTED BY THE EUROPEAN UNION (CONSOLIDATED)1
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
Loans 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 / discontinued operations
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 / discontinued
operation
TOTAL LIABILITIES
Share capital
Retained earnings and reserves
Treasury shares
Non-controlling interest
TOTAL SHARHOLDERS' EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
2021
HUF million
2,556,035
1,584,861
61,052
341,397
2,224,510
13,493,183
1,068,111
1,182,628
67,222
3,891,335
411,136
248,631
50,726
29,882
18,757
15,109
29,978
276,785
2,046
27,553,384
2020
HUF million
2,432,312
1,148,743
190,849
234,007
2,136,709
11,674,842
802,605
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
1,567,348
1,185,315
79,047
41,184
21,068,644
436,325
202,716
11,228
53,286
24,045
36,581
717,880
278,334
117,991
34,131
17,890,863
464,213
104,823
11,341
48,451
25,990
27,684
607,737
274,704
Change
%
5
38
(68)
46
4
16
33
13
28
48
27
4
10
(23)
175
(32)
(23)
4
(66)
18
32
(33)
21
18
(6)
93
(1)
10
(7)
32
18
1
0
5,486
(100)
24,516,618
28,000
3,109,509
(106,941)
6,198
3,036,766
27,553,384
20,798,729
28,000
2,629,076
(124,080)
4,116
2,537,112
23,335,841
18
0
18
(14)
51
20
18
1 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).
ANNUAL REPORT 2021
INDEPENDENT AUDITORS’ REPORT
(CONSOLIDATED AND SEPARATE, IN ACCORDANCE WITH IFRS)
ANNUAL REPORT 2021
Ernst & Young Kft.
Ernst & Young Ltd.
H-1132 Budapest Váci út 20.
1399 Budapest 62. Pf.632, Hungary
Tel: +36 1 451 8100
Fax: +36 1 451 8199
www.ey.com/hu
Cg. 01-09-267553
This is a translation of the Hungarian Report
Independent Auditors' Report
To the Shareholders of OTP Bank Nyrt.
Report on the audit of the separate financial statements
Opinion
in
(“the
Company”)
We have audited the accompanying 2021 separate financial statements of OTP Bank
Nyrt.
accompanying
included
Nem_konsz_IFRS_beszamolo_20211231_hun03.11.xhtml1 digital
file, which
comprise the separate statement of financial position as at 31 December 2021 -
showing a balance sheet total of HUF 13,710,471 million and a total comprehensive
income for the year of HUF 87,935 million -, the related separate profit or loss,
separate statement of comprehensive income, separate statement of changes in
equity, separate statement of cash flows for the year then ended and notes to the
separate financial statements, including a summary of significant accounting
policies.
the
In our opinion the separate financial statements give a true and fair view of the
financial position of the Company as at 31 December 2021 and of its financial
performance and its cash flows for the financial year then ended in accordance with
International Financial Reporting Standards as adopted by the EU (“EU IFRSs”) and
have been prepared, in all materials respects, in accordance with the supplementary
requirements of Act C of 2000 on Accounting (“Hungarian Accounting Law”)
relevant for separate financial statements prepared in accordance with EU IFRSs.
Basis for opinion
We conducted our audit in accordance with Hungarian National Auditing Standards
and with applicable laws and regulations in Hungary, including also Regulation (EU)
No. 537/2014 of the European Parliament and of the Council of 16 April 2014 on
specific requirements regarding statutory audit of public-interest entities
(“Regulation (EU) No. 537/2014“). Our responsibilities under those standards are
further described in the “Auditor’s responsibilities for the audit of the separate
financial statements” section of our report.
1 Digital identification of the above referred
Nem_konsz_IFRS_beszamolo_20211231_hun03.11.xhtml separate financial statements,
using SHA 256 HASH algorithm is
7B70D0042C4F288106C404CF838A2307C84AF2D88D6DE5A53C3599286E52C4ED
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Page 1 / 9
We are independent of the Company in accordance with the applicable ethical
requirements according to relevant laws in effect in Hungary and the policy of the
Chamber of Hungarian Auditors on the ethical rules and disciplinary proceedings
and, concerning matters not regulated by any of these, with the International Ethics
Standards Board of Accountants’ (IESBA) International Code of Ethics for
Professional Accountants (including International Independence Standards) (IESBA
Code), and we have fulfilled our other ethical responsibilities in accordance with
these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Emphasis of matter
We draw attention to Note 47 of notes to the separate financial statements, which
describes the risk and potential impact of the Ukrainian-Russian conflicts on the
Company and the entire OTP Group’s operation in Ukraine and Russia. Our opinion
is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the separate financial statements of the current period.
These matters were addressed in the context of our audit of the separate financial
statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. For each matter below, our description of how
our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the “Auditor’s responsibilities for
the audit of the separate financial statements section” of our report, including in
relation to these matters. Accordingly, our audit included the performance of
procedures designed to respond to our assessment of the risks of material
misstatement of the separate financial statements. The results of our audit
procedures, including the procedures performed to address the matters below,
provide the basis for our audit opinion on the accompanying separate financial
statements.
Determination of expected credit losses relating to loans at amortised cost
due
to
Material misstatements
fraudulent financial reporting often
result from understatement of expected
credit losses.
Credit impairment is a highly subjective
area due to the level of judgement
We involved valuation specialists to
assist us
in performing our audit
procedures on ECL and related credit
impairments. Our audit procedures
included among others the following
procedures.
A member firm of Ernst & Young Global Limited
Page 2 / 9
the
applied by management in determining
expected credit
losses (“ECL”). The
identification of impairment and the
determination of
recoverable
amount are an inherently uncertain
process involving various assumptions
including the financial
and factors,
condition of the counterparty, expected
future cash flows, and expected net
selling prices of collaterals. The
portfolios which give rise to the greatest
uncertainty are typically those where
impairments are derived from estimates
of future cash flows and realizable value
of collateral, calculated using collective
impairment models, are unsecured or
are subject
to potential collateral
shortfalls. These models require the
of
significant
management
correct
segmentation,
identification of
significant changes in credit risk, the
inclusion of forward-looking elements as
well as the application of management
overlay to reflect on circumstances
beyond the modelling capabilities.
Due to the significance of loans at
amortised cost (representing 29% of
Total Assets as of 31 December 2021)
and the related estimation uncertainty,
this is considered a key audit matter.
regarding
judgment
periodic
the
the
over
identification
We assessed the design and tested the
operating effectiveness of
internal
controls over the approval, recording
and monitoring of loans at amortized
cost and controls over ECL calculations
including the quality of underlying data
and applications. We assessed the
general
controls
IT
environment of
the applications
from audit perspective
relevant
related to the determination of ECL.
For ECL calculated on an individual
basis, we tested the assumptions used
by the management underlying the
impairment
and
quantification focusing on loan cases
with the most significant potential
impact on the separate
financial
statements. We also assessed the
management’s assumptions on the
expected future cash flows, including
the value of realisable collateral and
estimates of recovery on default based
on our own understanding and
available market information.
For ECL calculated on collective basis
we evaluated the model governance,
and
methodologies,
management
used
(probability of default,
loss given
default, significant changes in credit
risk and forward-looking elements).
We
regulatory
measures on the assumptions applied
by the Company for ECL estimation
purposes.
We also assessed whether
the
disclosures in the separate financial
statements appropriately reflect the
Company’s exposure to credit risk and
are compliant with the EU IFRSs.
The Company’s disclosures about its
risk management policies are included
in Note 2.12 and 36.1 Credit risk which
assumptions
considered
inputs
the
A member firm of Ernst & Young Global Limited
Page 3 / 9
the
specifically
key
explains
assumptions used when determining
credit risk and their evaluation are
detailed in Note 11 Loans and Note 30
Risk cost.
General Information Technology controls
over the financial reporting process
recognition
A significant part of the Company's
financial reporting process,
including
revenue
is significantly
reliant on IT systems with embedded
automated processes and controls over
the capture, storage and extraction of
information. A fundamental component
of these processes and controls
is
ensuring appropriate user access and
change management protocols exist and
are being adhered to.
These protocols are important because
they ensure that access and changes to
IT systems and related data are made
and authorized
in an appropriate
manner.
As our audit of the financial statements
sought to place a high level of reliance
on IT systems and application controls
related to financial reporting, a high
proportion of the overall audit effort has
been
to
out
understand and test IT infrastructure
relevant
and applications
application controls. Furthermore, the
complexity of IT systems and nature of
application controls requires special
technology expertise and specialized
skills to be involved in the audit we
therefore consider this as a key audit
matter.
regarding
including
carried
We focused our audit on those IT
systems and controls
that are
significant for the Company’s financial
reporting. As audit procedures over
the IT systems and application controls
require specific expertise, we involved
IT audit specialists to assist us in
performing our audit procedures. Our
included among
audit procedures
others the following procedures.
We understood and assessed the
overall IT control environment and the
included
in place which
controls
controls over access to systems and
data, as well as system changes. We
adjusted our audit approach based on
the financial significance of the system
and whether there were automated
procedures supported by that system.
As part of our audit procedures we
tested the operating effectiveness of
controls over appropriate access rights
to assess whether only appropriate
users had the ability to create, modify
or delete user accounts for the
relevant in-scope applications. We also
tested the operating effectiveness of
controls around system development
and program changes to establish that
changes
system were
the
appropriately authorized, developed
and
implemented. Additionally, we
assessed and tested the design and
the
effectiveness
operating
application controls embedded in the
processes relevant to our audit.
to
of
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The Company’s disclosures about its IT
systems and related IT general and
application controls are included in
section System of internal controls and
IT Controls of the Business report.
Other matters
The separate financial statements as at 31 December 2020 were audited by another
auditor who expressed an unmodified opinion on those financial statements on
17 March 2021.
Management is responsible for the presentation of the separate financial statements
in the format that complies with the Article 3 of Commission (EU) Regulation
2019/815 of 17 December 2018 (“ESEF Regulation”). The scope of our audit was
the human-readable content of the electronically identified digital file, which
contains the separate financial statements. The scope of our audit did not include to
review and consequently we do not report on, whether the digitalized information
complies in all material respect with the requirements of ESEF Regulation.
Other information
Other information consists of the 2021 business report of the Company and the
“Management’s Analysis” section of the annual report which have been made
available to us before the date of our independent auditor’s report and of the
“Message to the Shareholders”, “Corporate Governance” and “Macroeconomic and
financial environment in 2021” sections of the annual report which are expected to
be made available after the date of our independent auditor’s report but do not
include the separate financial statements and our independent auditor’s report.
Management is responsible for the other information, including preparation of the
business report in accordance with the Hungarian Accounting Law and other
relevant legal requirements, if any. Our opinion on the separate financial statements
does not cover the other information.
In connection with our audit of the separate financial statements, our responsibility
is to read the business report and, in doing so, consider whether 1) the other
information is materially inconsistent with the separate financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated and
2) the business report has been prepared in accordance with the Hungarian
Accounting Law and other relevant legal requirements, if any.
Our opinion on the business report should include the information required according
to Subsection (2) e) and f) of Section 95/B of the Hungarian Accounting Law and we
are required to confirm also whether the information prescribed in Subsection (2) a)-
d) and g)-h) of Section 95/B of the Hungarian Accounting Law have been made
available and whether the business report includes the non-financial statement as
required by Section 95/C of the Hungarian Accounting Law.
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In our opinion, the business report of the Company, including the information
required according to Subsection (2) e) and f) of Section 95/B of the Hungarian
Accounting Law for 2021 is consistent, in all material respects, with the 2021
separate financial statements of the Company and the relevant requirements of the
Hungarian Accounting Law.
Since no other legal regulations prescribe for the Company further requirements
with regard to its business report, we do not express opinion in this regard.
We also confirm that the Company have made available the information required
according to Subsection (2) a)-d) and g)-h) of Section 95/B of the Hungarian
Accounting Law and that the business report includes the non-financial statement as
required by Section 95/C of the Hungarian Accounting Law.
Further to the above, based on the knowledge we have obtained about the Company
and its environment in the course of the audit we are required to report whether we
have identified any material misstatement in the business report, and if so, the
nature of the misstatement in question. We have nothing to report in this regard.
When we read the sections of the annual report, which had not yet been made
available to us at the date of this report, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to those charged
with governance.
Responsibilities of management and those charged with governance for the
separate financial statements
Management is responsible for the preparation and fair presentation of the separate
financial statements in accordance with EU IFRSs and for the preparation in
accordance with the supplementary requirements of the Hungarian Accounting Law
relevant for separate financial statements prepared in accordance with EU IFRSs,
and for such internal control as management determines is necessary to enable the
preparation of separate financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the separate financial statements, management is responsible for
assessing the Company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis of
accounting unless management either intends to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s
financial reporting process.
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Page 6 / 9
Auditor’s responsibilities for the audit of the separate financial statements
Our objectives are to obtain reasonable assurance about whether the separate
financial statements as a whole are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with Hungarian National Auditing Standards and with
applicable laws and regulations in Hungary, including also Regulation (EU) No.
537/2014 will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of these separate financial statements.
As part of an audit in accordance with Hungarian National Auditing Standards and
with applicable laws and regulations in Hungary, including also Regulation (EU) No.
537/2014, we exercise professional judgment and maintain professional scepticism
throughout the audit. We also:
► Identify and assess the risks of material misstatement of the separate
financial statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
► Obtain an understanding of internal control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control.
► Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by
management.
► Conclude on the appropriateness of management’s use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a
material uncertainty exists related to events or conditions that may cast
significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the separate
financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the
date of our auditor’s report. However, future events or conditions may cause
the Company to cease to continue as a going concern.
► Evaluate the overall presentation, structure and content of the separate
financial statements, including the disclosures, and whether the separate
financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
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We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our
audit.
We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable, actions taken to
eliminate threats or safeguards applied.
From the matters communicated with those charged with governance we determine
those matters that were of most significance in the audit of the separate financial
statements of the current period and are therefore the key audit matters.
Report on other legal and regulatory requirements
Reporting requirements on content of auditor’s report in compliance with Regulation
(EU) No. 537/2014:
Appointment and Approval of Auditor
We were appointed as the statutory auditor of the Company by the General Assembly
of Shareholders of the Company on 16 April 2021. Total uninterrupted engagement
period, including previous renewals (extension of the period for which we were
originally appointed) and reappointments for the statutory auditor, has lasted for
one year.
Consistency with Additional Report to Audit Committee
Our audit opinion on the separate financial statements expressed herein is consistent
with the additional report to the audit committee of the Company, which we issued
in accordance with Article 11 of the Regulation (EU) No. 537/2014 on the same date
as the date of this report.
Non-audit Services
We declare that no prohibited non-audit services referred to in Article 5(1) of
Regulation (EU) No. 537/2014 were provided by us to the Company and its
controlled undertakings and we remained independent from the Company in
conducting the audit.
In addition to statutory audit services and services disclosed in the business report
and in the separate financial statements, no other services were provided by us to
the Company and its controlled undertakings.
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The engagement partner on the audit resulting in this independent auditor’s report
is Kónya Zsolt.
Budapest, 17 March 2022
The original Hungarian version has been signed.
Kónya Zsolt
Engagement partner
Ernst & Young Kft.
1132 Budapest, Váci út 20.
Registration No. 001165
Nagyváradiné Szépfalvi Zsuzsanna
Registered auditor
Chamber membership No.: 005313
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Ernst & Young Kft.
Ernst & Young Ltd.
H-1132 Budapest Váci út 20.
1399 Budapest 62. Pf.632, Hungary
Tel: +36 1 451 8100
Fax: +36 1 451 8199
www.ey.com/hu
Cg. 01-09-267553
This is a translation of the Hungarian Report
Independent Auditors' Report
To the Shareholders of OTP Bank Nyrt.
Report on the audit of the consolidated financial statements
Opinion
We have audited the accompanying 2021 consolidated financial statements of OTP Bank
Nyrt. (“the Company”) and its subsidiaries (altogether “the Group”) included in the
accompanying CON 2021-12-31_HU_final_v5_119_1_preview.xhtml1 digital file, which
comprise the consolidated statement of financial position as at 31 December 2021 -
showing a balance sheet total of HUF 27,553,384 million and a total
comprehensive income for the year of HUF 473,322 million -, the related consolidated
statement of profit or loss, the consolidated statement of comprehensive income,
consolidated statement of changes in equity, consolidated statement of cash flows for the
year then ended and notes to the consolidated financial statements, including a summary
of significant accounting policies.
In our opinion the consolidated financial statements give a true and fair view of the
consolidated financial position of the Group as at 31 December 2021 and of its
consolidated financial performance and its consolidated cash flows for the financial year
then ended in accordance with International Financial Reporting Standards as adopted by
the EU (“EU IFRSs”) and have been prepared, in all material respects, in accordance with
the supplementary requirements of Act C of 2000 on Accounting (“Hungarian Accounting
Law”) relevant for consolidated financial statements prepared in accordance with EU
IFRSs.
Basis for opinion
We conducted our audit in accordance with Hungarian National Auditing Standards and
with applicable laws and regulations in Hungary, including also Regulation (EU) No.
537/2014 of the European Parliament and of the Council of 16 April 2014 on specific
requirements regarding statutory audit of public-interest entities (“Regulation (EU) No.
537/2014“). Our responsibilities under those standards are further described in the
“Auditor’s responsibilities for the audit of the consolidated financial statements” section of
our report.
1 Digital identification of the above referred CON 2021-12-31_HU_final_v5_119_1_preview.xhtml
consolidated financial statements, using SHA 256 HASH algorithm is
072C2A820D46B8755FFE07F5A12CBC2A0899FFDA58EF9B5C9B355C22A95903DB
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We are independent of the Group in accordance with the applicable ethical requirements
according to relevant laws in effect in Hungary and the policy of the Chamber of Hungarian
Auditors on the ethical rules and disciplinary proceedings and, concerning matters not
regulated by any of these, with the International Ethics Standards Board of Accountants’
(IESBA) International Code of Ethics for Professional Accountants (including International
Independence Standards) (IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Emphasis of matter
We draw attention to Note 51 of notes to the consolidated financial statements, which
describes the risk and potential impact of the Ukrainian-Russian conflicts on the Group’s
operation in Ukraine and Russia. Our opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the consolidated financial statements of the current period.
These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the “Auditor’s responsibilities for the
audit of the consolidated financial statements section” of our report, including in relation
to these matters. Accordingly, our audit included the performance of procedures designed
to respond to our assessment of the risks of material misstatement of the consolidated
financial statements. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the
accompanying consolidated financial statements.
Determination of expected credit losses relating to loans at amortised cost
Material misstatements due to fraudulent
financial reporting often result
from
understatement of expected credit losses.
Credit impairment is a highly subjective
area due to the level of judgement applied
by management in determining expected
credit losses (“ECL”). The identification of
impairment and the determination of the
inherently
recoverable amount are an
uncertain
various
process
assumptions and factors, including the
involving
We involved valuation specialists to assist
us in performing our audit procedures on
ECL and related credit impairments. Our
audit procedures included among others
the following procedures.
We assessed the design and tested the
operating effectiveness of
internal
controls over the approval, recording and
monitoring of loans at amortized cost and
controls over ECL calculations including
the quality of underlying data and
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financial condition of the counterparty,
expected future cash flows, and expected
net selling prices of collaterals. The
portfolios which give rise to the greatest
uncertainty are typically those where
impairments are derived from estimates of
future cash flows and realizable value of
collateral, calculated using collective
impairment models, are unsecured or are
subject to potential collateral shortfalls.
the significant
These models require
of management
periodic
the
regarding
identification of significant changes
in
credit risk, the inclusion of forward-looking
elements as well as the application of
to
management overlay
reflect on
the modelling
circumstances beyond
capabilities.
Due to the significance of
loans at
amortised cost (representing 49% of Total
Assets as of 31 December 2021) and the
related estimation uncertainty, this
is
considered a key audit matter.
judgment
correct
segmentation,
realisable
the model
applications.
We assessed the controls over the general
the applications
IT environment of
relevant from audit perspective related to
the determination of ECL.
For ECL calculated on an individual basis,
we tested the assumptions used by the
management underlying the impairment
identification and quantification focusing
on loan cases with the most significant
potential
impact on the consolidated
financial statements. We also assessed
the management’s assumptions on the
expected future cash flows, including the
value of
collateral and
estimates of recovery on default based on
our own understanding and available
market information.
For ECL calculated on collective basis we
evaluated
governance,
methodologies, inputs and management
assumptions used (probability of default,
loss given default, significant changes in
credit risk and forward-looking elements).
We considered the regulatory measures
on the assumptions applied by the
Company for ECL estimation purposes.
We also assessed whether the disclosures
in the consolidated financial statements
appropriately
Group’s
reflect
exposure to credit risk and are compliant
with the EU IFRSs.
The Group’s disclosures about its risk
management policies are included in Note
2.14 Loss allowance and Note 37.1 Credit
risk which specifically explains the key
assumptions used when determining
credit risk and their evaluation are
detailed in Note 11 Loans at amortised
cost and at fair value and Note 31 Loss
allowance / Impairment / Provisions.
the
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General Information Technology controls
over the financial reporting process
including
embedded
A significant part of the Group's financial
reporting process,
revenue
recognition is significantly reliant on IT
automated
systems with
processes and controls over the capture,
storage and extraction of information. A
fundamental component of these processes
and controls is ensuring appropriate user
access and change management protocols
exist and are being adhered to.
These protocols are important because they
ensure that access and changes to IT systems
and related data are made and authorized in
an appropriate manner.
As our audit of the financial statements
sought to place a high level of reliance on IT
systems and application controls related to
financial reporting, a high proportion of the
overall audit effort has been carried out
regarding to understand and test
IT
infrastructure and applications including
relevant application controls. Furthermore,
the complexity of IT systems and nature of
application
special
technology expertise and specialized skills
to be involved in the audit we therefore
consider this as a key audit matter.
requires
controls
audit
and whether
We focused our audit on those IT systems
and controls that are significant for the
Group’s financial reporting. As audit
procedures over the IT systems and
application controls
require specific
expertise, we involved IT audit specialists
to assist us in performing our audit
procedures
procedures. Our
included among others the following
procedures.
We understood and assessed the overall
IT control environment and the controls in
place which included controls over access
to systems and data, as well as system
changes. We adjusted our audit approach
based on the financial significance of the
system
there were
automated procedures supported by that
system.
As part of our audit procedures, we tested
the operating effectiveness of controls
over appropriate access rights to assess
whether only appropriate users had the
ability to create, modify or delete user
accounts
in-scope
applications. We also tested the operating
effectiveness of controls around system
development and program changes to
establish that changes to the system were
appropriately authorized, developed and
implemented. Additionally, we assessed
and tested the design and operating
effectiveness of the application controls
embedded in the processes relevant to
our audit.
IT
The Group’s disclosures about
IT general and
systems and related
application controls are
in
included
section System of internal controls and IT
Controls in the consolidated business
report.
relevant
the
for
its
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Other matters
The consolidated financial statements as at 31 December 2020 were audited by another
auditor who expressed an unmodified opinion on those financial statements on 17 March
2021.
Management is responsible for the presentation of the consolidated financial statements
in the format that complies with the Articles 3 and 4 of Commission (EU) Regulation
2019/815 of 17 December 2018 (“ESEF Regulation”). The scope of our audit was the
human-readable content of the electronically identified digital file, which contains the
consolidated financial statements. The scope of our audit did not include to review and
consequently we do not report on, whether the digitalized information complies in all
material respect with the requirements of ESEF Regulation.
Other information
Other information consists of the 2021 consolidated business report of the Group and the
“Management’s Analysis” section of the annual report which have been made available to
us before the date of our independent auditor’s report and of the “Message to the
Shareholders”, “Corporate Governance” and “Macroeconomic and financial environment
in 2021” sections of the annual report which are expected to be made available after the
date of our independent auditor’s report but do not include the consolidated financial
statements and our independent auditor’s report. Management is responsible for the other
information, including preparation of the consolidated business report in accordance with
the Hungarian Accounting Law and other relevant legal requirements, if any. Our opinion
on the consolidated financial statements does not cover the other information.
In connection with our audit of the consolidated financial statements, our responsibility is
to read the other information and, in doing so, consider whether 1) the other information
is materially inconsistent with the consolidated financial statements or our knowledge
obtained in the audit or otherwise appears to be materially misstated and 2) the
consolidated business report has been prepared in accordance with the Hungarian
Accounting Law and other relevant legal requirements, if any.
Our opinion on the consolidated business report should include the information required
according to Subsection (2) e) and f) of Section 95/B of the Hungarian Accounting Law and
we are required to confirm also whether the information prescribed in Subsection (2) a)-d)
and g)-h) of Section 95/B of the Hungarian Accounting Law have been made available and
whether the consolidated business report includes the non-financial statement as required
by Subsection (5) of Section 134 of the Hungarian Accounting Law.
In our opinion, the consolidated business report of the Group, including the information
required according to Subsection (2) e) and f) of Section 95/B of the Hungarian Accounting
Law for 2021 is consistent, in all material respects, with the 2021 consolidated financial
statements of the Group and the relevant requirements of the Hungarian Accounting Law.
Since no other legal regulations prescribe for the Group further requirements with regard
to its consolidated business report, we do not express opinion in this regard.
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We also confirm that the Group have made available the information required according to
Subsection (2) a)-d) and g)-h) of Section 95/B of the Hungarian Accounting Law and that
the consolidated business report includes the non-financial statement as required by
Subsection (5) of Section 134 of the Hungarian Accounting Law.
Further to the above, based on the knowledge we have obtained about the Group and its
environment in the course of the audit we are required to report whether we have identified
any material misstatement in the other information, and if so, the nature of the
misstatement in question. We have nothing to report in this regard.
When we read the sections of the annual report, which had not yet been made available to
us at the date of this report, if we conclude that there is a material misstatement therein,
we are required to communicate the matter to those charged with governance.
Responsibilities of management and those charged with governance for the consolidated
financial statements
Management is responsible for the preparation and fair presentation of the consolidated
financial statements in accordance with the EU IFRSs and for the preparation in accordance
with the supplementary requirements of the Hungarian Accounting Law relevant for
consolidated financial statements prepared in accordance with EU IFRSs, and for such
internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the consolidated financial statements, management is responsible for
assessing the Group’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial
reporting process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated
financial statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with Hungarian National Auditing Standards and with applicable laws and regulations in
Hungary, including also Regulation (EU) No. 537/2014 will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these consolidated
financial statements.
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As part of an audit in accordance with Hungarian National Auditing Standards and with
applicable laws and regulations in Hungary, including also Regulation (EU) No. 537/2014,
we exercise professional judgment and maintain professional scepticism throughout the
audit. We also:
► Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or
the override of internal control.
► Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Group’s internal control.
► Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by management.
► Conclude on the appropriateness of management’s use of the going concern basis
of accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on
the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the consolidated financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Group to cease to continue as a going concern.
► Evaluate the overall presentation, structure and content of the consolidated
financial statements, including the disclosures, and whether the consolidated
financial statements represent the underlying transactions and events in a manner
that achieves fair presentation.
► Obtain sufficient appropriate audit evidence regarding the financial information of
the entities or business activities within the Group to express an opinion on the
consolidated financial statements. We are responsible for the direction, supervision
and performance of the group audit. We remain solely responsible for our audit
opinion.
We communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied
with relevant ethical requirements regarding independence, and to communicate with
them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, actions taken to eliminate threats or safeguards
applied.
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From the matters communicated with those charged with governance we determine those
matters that were of most significance in the audit of the consolidated financial statements
of the current period and are therefore the key audit matters.
Report on other legal and regulatory requirements
Reporting requirements on content of auditor’s report in compliance with Regulation (EU)
No. 537/2014:
Appointment and Approval of Auditor
We were appointed as the statutory auditor of OTP Bank Nyrt. by the General Assembly of
Shareholders of the Company on 16 April 2021. Total uninterrupted engagement period,
including previous renewals (extension of the period for which we were originally
appointed) and reappointments for the statutory auditor, has lasted for one year.
Consistency with Additional Report to Audit Committee
Our audit opinion on the consolidated financial statements expressed herein is consistent
with the additional report to the audit committee of the Company, which we issued in
accordance with Article 11 of the Regulation (EU) No. 537/2014 on the same date as the
date of this report.
Non-audit Services
We declare that no prohibited non-audit services referred to in Article 5(1) of Regulation
(EU) No. 537/2014 were provided by us to the Company and its controlled undertakings
and we remained independent from the Group in conducting the audit.
In addition to statutory audit services and services disclosed in the consolidated business
report and in the consolidated financial statements, no other services were provided by us
to the Company and its controlled undertakings.
The engagement partner on the audit resulting in this independent auditor’s report is
Kónya Zsolt.
Budapest, 17 March 2022
The original Hungarian version has been signed.
Kónya Zsolt
Engagement partner
Ernst & Young Kft.
1132 Budapest, Váci út 20.
Registration No. 001165
Nagyváradiné Szépfalvi Zsuzsanna
Registered auditor
Chamber membership No.: 005313
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SEPARATE FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS (2021)
ANNUAL REPORT 2021
OTP BANK PLC.
SEPARATE FINANCIAL STATEMENTS
IN ACCORDANCE WITH
INTERNATIONAL FINANCIAL REPORTING STANDARDS
AS ADOPTED BY THE EUROPEAN UNION
FOR THE YEAR ENDED
31 DECEMBER 2021
OTP BANK PLC.
CONTENTS
SEPARATE STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2021 .................................... 5
SEPARATE STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 DECEMBER 2021 ............. 6
SEPARATE STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER
2021 (in HUF mn) ............................................................................................................................. 7
SEPARATE STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEAR ENDED 31
DECEMBER 2021 (in HUF mn) ...................................................................................................... 8
SEPARATE STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2021 .................... 9
NOTE 1: ORGANIZATION AND BASIS OF FINANCIAL STATEMENTS ................................................ 11
1.1.
1.2.
General information ........................................................................................................................... 11
Basis of accounting ............................................................................................................................ 11
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ......................................................... 13
Basis of presentation .......................................................................................................................... 13
2.1.
2.2.
2.3.
2.4.
2.5.
2.6.
2.7.
2.8.
2.9.
2.10.
2.11.
2.12.
2.13.
2.14.
2.15.
2.16.
2.17.
2.18.
2.19.
2.20.
2.21.
2.22.
2.23.
2.24.
2.25.
2.26.
Foreign currency translation .............................................................................................................. 13
Consolidated financial statements ..................................................................................................... 13
Investments in subsidiaries, associated companies and other investments ........................................ 13
Securities at amortised cost................................................................................................................ 14
Financial assets at fair value through profit or loss ........................................................................... 14
Derivative financial instruments designated as a fair value or cash flow hedge ................................ 16
Offsetting ........................................................................................................................................... 16
Embedded derivatives ........................................................................................................................ 16
Securities at fair value through other comprehensive income (“FVOCI securities”) ........................ 17
Loans, placements with other banks, repo receivables and loss allowance for loan, placements and
repo receivables losses ....................................................................................................................... 17
Loss allowance .................................................................................................................................. 20
Option to designate a financial asset/liability measured at fair value through profit or loss (FVTPL
option) ................................................................................................................................................ 22
Sale and repurchase agreements, security lending ............................................................................. 22
Property, equipment and intangible assets ......................................................................................... 22
Inventories ......................................................................................................................................... 22
Investment properties ......................................................................................................................... 23
Financial liabilities............................................................................................................................. 23
Leases ................................................................................................................................................ 23
Share capital ...................................................................................................................................... 24
Treasury shares .................................................................................................................................. 24
Interest income, income similar to interest income and interest expense .......................................... 24
Fees and Commissions ...................................................................................................................... 24
Dividend income ................................................................................................................................ 25
Income tax ......................................................................................................................................... 25
Banking tax ........................................................................................................................................ 25
2
2.27.
2.28.
2.29.
2.30.
Off-balance sheet commitments and contingent liabilities, provisions .............................................. 26
Share-based payment and employee benefits .................................................................................... 26
Separate statement of cash flows ....................................................................................................... 27
Segment reporting .............................................................................................................................. 27
2.31.
NOTE 3: SIGNIFICANT ACCOUNTING ESTIMATES AND DECISIONS IN THE APPLICATION OF
Comparative figures........................................................................................................................... 28
ACCOUNTING POLICIES .............................................................................................................. 29
3.1.
3.2.
3.3.
3.4.
Loss allowance on financial instruments ........................................................................................... 29
Valuation of instruments without direct quotations ........................................................................... 29
Provisions .......................................................................................................................................... 29
Business models ................................................................................................................................ 30
3.4.
Contractual cash-flow characteristics of financial assets ................................................................... 30
NOTE 4: COVID-19 (in HUF mn) ................................................................................................................... 31
NOTE 5: CASH, AMOUNTS DUE FROM BANKS AND BALANCES WITH THE NATIONAL BANK OF
HUNGARY (in HUF mn) ................................................................................................................. 37
NOTE 6: PLACEMENTS WITH OTHER BANKS, NET OF ALLOWANCE FOR PLACEMENT LOSSES
(in HUF mn) ...................................................................................................................................... 38
NOTE 7: REPO RECEIVABLES (in HUF mn) ............................................................................................... 39
NOTE 8: FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (in HUF mn) .............. 40
NOTE 9: SECURITIES AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (in HUF
mn) ..................................................................................................................................................... 41
NOTE 10: SECURITIES AT AMORTISED COST (in HUF mn) ..................................................................... 43
NOTE 11: LOANS (in HUF mn) ........................................................................................................................ 44
NOTE 12: INVESTMENTS IN SUBSIDIARIES, ASSOCIATES, JOINT VENTURES AND OTHER
INVESTMENTS (in HUF mn) .......................................................................................................... 46
NOTE 13: PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (in HUF mn) ...................................... 51
NOTE 14: INVESTMENT PROPERTIES (in HUF mn) .................................................................................... 53
NOTE 15: FAIR VALUE OF DERIVATIVE FINANCIAL ASSETS DESIGNATED AS HEDGE
ACCOUNTING (in HUF mn) ........................................................................................................... 53
NOTE 16: OTHER ASSETS (in HUF mn) ......................................................................................................... 54
NOTE 17: AMOUNTS DUE TO BANKS AND DEPOSITS FROM THE NATIONAL BANK OF HUNGARY
AND OTHER BANKS (in HUF mn) ................................................................................................ 55
NOTE 18: REPO LIABILITIES (in HUF mn) ................................................................................................... 55
NOTE 19: DEPOSITS FROM CUSTOMERS (in HUF mn) .............................................................................. 56
NOTE 20: LIABILITIES FROM ISSUED SECURITIES (in HUF mn) ............................................................ 56
NOTE 21: FINANCIAL LIABILITIES DESIGNATED AS FAIR VALUE THROUGH PROFIT OR LOSS (in
HUF mn) ............................................................................................................................................ 60
NOTE 22: HELD FOR TRADING DERIVATIVE FINANCIAL LIABILITIES (in HUF mn) ........................ 60
NOTE 23: FAIR VALUE OF DERIVATIVE FINANCIAL LIABLITIES DESIGNATED AS HEDGE
ACCOUNTING (in HUF mn) ........................................................................................................... 60
NOTE 24: OTHER LIABILITIES AND PROVISIONS (in HUF mn) .............................................................. 61
NOTE 25: SUBORDINATED BONDS AND LOANS (in HUF mn) ................................................................ 62
NOTE 26: SHARE CAPITAL (in HUF mn) ....................................................................................................... 62
NOTE 27: RETAINED EARNINGS AND RESERVES (in HUF mn) .............................................................. 63
NOTE 28: TREASURY SHARES (in HUF mn) ................................................................................................ 68
NOTE 29: INTEREST INCOME AND EXPENSES (in HUF mn) .................................................................... 69
NOTE 30: RISK COST (in HUF mn) ................................................................................................................. 70
3
NOTE 31: NET PROFIT FROM FEES AND COMMISSIONS (in HUF mn) .................................................. 70
NOTE 32: GAINS AND LOSSES (in HUF mn) ................................................................................................ 73
NOTE 33: OTHER OPERATING INCOME AND EXPENSES AND OTHER ADMINISTRATIVE
EXPENSES (in HUF mn) .................................................................................................................. 74
NOTE 34: INCOME TAX (in HUF mn)............................................................................................................. 75
NOTE 35: LEASE (in HUF mn) ......................................................................................................................... 77
NOTE 36: FINANCIAL RISK MANAGEMENT (in HUF mn) ........................................................................ 78
36.1.
36.2.
36.3.
36.4.
36.5.
36.5.1.
36.5.2.
36.5.3.
36.5.4.
36.6.
Credit risk .......................................................................................................................................... 78
Maturity analysis of assets and liabilities and liquidity risk .............................................................. 92
Net foreign currency position and foreign currency risk ................................................................... 95
Interest rate risk management ........................................................................................................... 95
Market risk ....................................................................................................................................... 102
Market risk sensitivity analysis ........................................................................................................ 102
Foreign currency sensitivity analysis ............................................................................................... 103
Interest rate sensitivity analysis ....................................................................................................... 104
Equity price sensitivity analysis ...................................................................................................... 105
Capital management ........................................................................................................................ 105
NOTE 37: TRANSFER AND RECLASSIFICATION OF FINANCIAL INSTRUMENTS (in HUF mn) ...... 107
NOTE 38: OFF-BALANCE SHEET ITEMS (in HUF mn) .............................................................................. 108
NOTE 39: SHARE-BASED PAYMENT AND EMPLOYEE BENEFIT (in HUF mn) ................................... 109
NOTE 40: RELATED PARTY TRANSACTIONS (in HUF mn) .................................................................... 114
NOTE 41: TRUST ACTIVITIES (in HUF mn) ................................................................................................ 115
NOTE 42: CONCENTRATION OF ASSETS AND LIABILITIES ................................................................. 116
NOTE 43: EARNINGS PER SHARE ............................................................................................................... 117
NOTE 44: NET GAIN OR LOSS REALISED ON FINANCIAL INSTRUMENTS (in HUF mn) ................. 118
NOTE 45: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) ................................................... 120
NOTE 46: SIGNIFICANT EVENTS DURING THE YEAR ENDED 31 DECEMBER 2021 ........................ 134
NOTE 47: SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD ................................................... 136
4
OTP BANK PLC.
SEPARATE STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2021
(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
Loans mandatorily measured at fair value through profit or loss
Investments in subsidiaries
Property and equipment
Intangible assets
Right of use assets
Investment 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
Provisions
Other liabilities
Subordinated bonds and loans
TOTAL LIABILITIES
Share capital
Retained earnings and reserves
Treasury shares
Note
2021
2020
Reclassified
5.
6.
7.
8.
9.
10.
11.
11.
12.
13.
13.
35.
14.
34.
15.
16.
17.
18.
19.
35.
20.
21.
22.
23.
34.
34.
24.
24.
25.
26.
27.
28.
474,945
2,567,212
33,638
246,462
641,939
3,071,038
4,032,465
662,012
1,573,008
81,817
62,161
17,231
4,328
-
17,727
224,488
579,120
1,535,884
183,364
160,483
911,950
2,007,692
3,417,760
480,937
1,548,972
77,974
57,639
13,479
1,936
593
6,817
169,794
13,710,471
11,154,394
1,051,203
86,580
9,948,532
17,932
22,153
20,133
192,261
18,690
1,507
4,776
21,527
238,437
271,776
766,977
109,612
7,895,735
14,106
28,435
25,902
99,987
3,104
3,062
1,464
19,906
203,527
304,243
11,895,507
9,476,060
28,000
1,845,836
(58,872)
28,000
1,697,133
(46,799)
TOTAL SHAREHOLDERS' EQUITY
1,814,964
1,678,334
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
13,710,471
11,154,394
Budapest, 17 March 2022
Dr. Sándor Csányi
Chairman and Chief Executive Officer
5
OTP BANK PLC.
SEPARATE STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED
31 DECEMBER 2021
(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 total
Interest Expense:
Interest expenses total
NET INTEREST INCOME
Loss allowance on loan, placements and repo receivables losses
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
Note
29.
29.
Year ended
31 December
2021
Year ended 31
December
2020
Reclassified
302,373
105,663
408,036
239,633
81,663
321,296
29.
(155,491)
(99,630)
252,545
221,666
6., 7., 11.,
30.
9., 10., 30.
24., 30.
45.4.
(38,841)
(57,671)
(1,484)
(130)
(16,255)
(56,710)
(1,848)
(3,202)
(405)
(63,126)
NET INTEREST INCOME AFTER RISK COST
195,835
158,540
LOSSES ARISING FROM DERECOGNITION OF FINANCIAL
ASSETS MEASURED AT AMORTISED COST
MODIFICATION LOSS
Income from fees and commissions
Expenses from fees and commissions
NET PROFIT FROM FEES AND COMMISSIONS
Foreign exchange losses
Gains on securities, net
Losses 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 administrative expenses
OTHER ADMINISTRATIVE EXPENSES
PROFIT BEFORE INCOME TAX
Income tax
NET PROFIT FOR THE YEAR
Earnings per share (in HUF)
Basic
Diluted
32.
4.
31.
31.
32.
32.
32.
32.
32.
33.
33.
33.
33.
33.
34.
43.
43.
(2,700)
(3,279)
(7,017)
(17,358)
300,803
(52,276)
248,527
(5,638)
2,104
(6,494)
3,436
99,037
11,265
(41,636)
62,074
(136,126)
(40,692)
(178,611)
(355,429)
141,290
(15,951)
125,339
259,781
(40,750)
219,031
(4,518)
17,595
(671)
7,057
60,973
7,900
(28,064)
60,272
(118,498)
(38,948)
(154,165)
(311,611)
105,595
(13,121)
92,474
455
455
333
333
6
OTP BANK PLC.
SEPARATE STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED
31 DECEMBER 2021
(in HUF mn)
NET PROFIT FOR THE YEAR
125,339
92,474
Note
Year ended 31
December
2021
Year ended 31
December
2020
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 related to fair value adjustment of debt instruments at fair
value through other comprehensive income
Gains / (Losses) on separated currency spread of financial instruments
designated as hedging instrument
Deferred tax related to (losses) / gains on separated currency spread of
financial instruments designated as hedging instrument
(Losses) / Gains on derivative financial instruments designated as cash flow
hedge
Deferred tax related to gains on 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 related to equity instruments at fair value through other
comprehensive income
34.
34.
34.
34.
Total
TOTAL COMPREHENSIVE INCOME
(37,163)
(14,459)
3,410
1,262
1,681
(1,526)
(151)
137
(6,307)
(296)
-
27
1,407
(3,275)
(281)
310
(37,404)
(17,820)
87,935
74,654
7
OTP BANK PLC.
SEPARATE STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEAR ENDED
31 DECEMBER 2021
(in HUF mn)
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 treasury shares
Other transaction with owners
Note Share Capital
Capital
reserve
Retained
earnings and
other reserves
Treasury
Shares
Total
28,000
52
1,628,302
(2,636)
1,653,718
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
92,474
(17,820)
74,654
3,394
(4,853)
-
-
(4,416)
(5,875)
-
-
-
-
-
41,759
(85,922)
-
(44,163)
92,474
(17,820)
74,654
3,394
(4,853)
41,759
(85,922)
(4,416)
(50,038)
39.
28.
28.
28.
Balance as at 31 December 2020
28,000
52
1,697,081
(46,799)
1,678,334
Balance as at 1 January 2021
Other modification
Balance as at 1 January 2021
Net profit for the period
Other comprehensive income
Total comprehensive income
Share-based payment
Payments to ICES holders
Increase due to termination of ICES bonds
Sale of treasury shares
Acquisition of treasury shares
Loss on sale of treasury shares
Other transaction with owners
39.
28.
28.
28.
28,000
-
28,000
-
-
-
-
-
-
-
-
-
-
52
-
52
-
-
-
-
-
-
-
-
-
-
1,697,081
(46,799)
1,678,334
1,034
-
1,034
1,698,115
(46,799)
1,679,368
125,339
(37,404)
87,935
3,589
(3,734)
75,422
-
-
-
-
-
-
125,339
(37,404)
87,935
3,589
(3,734)
75,422
-
-
264,360
264,360
(276,433)
(276,433)
(15,543)
-
59,734
(12,073)
(15,543)
47,661
Balance as at 31 December 2021
28,000
52
1,845,784
(58,872)
1,814,964
8
OTP BANK PLC.
SEPARATE STATEMENT OF CASH FLOWS FOR THE YEAR ENDED
31 DECEMBER 2021
(in HUF mn)
OPERATING ACTIVITIES
Profit before income tax
141,290
93,246
Note
Year ended 31
December
2021
Year ended 31
December
2020
Net accrued interest
Depreciation and amortization
Loss allowance on loans and placements
(Release of loss allowance) / Loss allowance on securities at fair value
through other comprehensive income
Impairment loss on investments in subsidiaries
Loss allowance on securities at amortised cost
(Release of loss allowance) / 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
Gains on securities
Interest expense from leasing liabilities
Foreign exchange loss
Gains on sale of tangible and intangible assets
Net changing in assets and liabilities in operating activities
Net (increase) / decrease in placements with other banks and repo
receivables before allowance for placement losses
Changes in held for trading securities
Change in securities 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 / (decrease) in amounts due to banks and deposits from the
National Bank of Hungary and other banks and repo liabilities
Net decrease of financial liabilities designated as fair value through profit
or loss
Net increase in deposits from customers
Increase/(decrease) in other liabilities
Net increase in the compulsory reserve established by the National Bank of
Hungary
Dividend income
Income tax paid
13.
30.
9.
12.
10.
16.
24.
39.
6.
8.
8.
8.
11.
16.
17.
21.
19.
24.
5.
12.
(2,205)
40,784
38,841
(551)
27,420
2,035
(961)
1,473
3,589
23,051
30,962
6,212
(214)
35,136
82
(34,365)
38,997
61,310
3
10,042
1,845
3,521
3,110
3,394
3,549
4,011
(6,433)
(257)
(4,476)
72
(879,438)
(24,178)
(78,996)
34,976
6,687
(7,278)
(1,303)
2,895
(835,520)
(499,065)
(49,201)
(43,471)
224,661
(363,140)
(1,853)
(4,219)
1,989,941
1,218,775
114,259
(17,368)
(23,270)
(99,037)
(15,259)
(10,978)
(60,913)
(12,950)
Net cash provided by operating activities
753,433
335,837
9
OTP BANK PLC.
SEPARATE STATEMENT OF CASH FLOWS FOR THE YEAR ENDED
31 DECEMBER 2021
(in HUF mn) [continued]
INVESTING ACTIVITIES
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 (increase) / decrease in investment properties
Net (used in) / provided by cash investing activities
FINANCING ACTIVITIES
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
Note
Year ended 31
December
2021
Year ended 31
December
2020
9.
9.
12.
12.
10.
10.
13.
13.
14.
20.
20.
25.
25.
27.
28.
28.
27.
(850,030)
(1,079,151)
1,081,372
1,341
(51,456)
-
98,091
(1,253,830)
214,963
(46,081)
529
(2,484)
1,652,131
(190)
(32,961)
16,485
60,913
(680,089)
122,146
(68,885)
29,433
396
(807,585)
20,228
(5,136)
5,897
(9,051)
1,874
(35,518)
(3,735)
(276,433)
248,819
(10)
(4,590)
7,119
(22,096)
773
(5,373)
(4,853)
(85,923)
37,344
(10)
Net cash used in financing activities
(73,293)
(77,609)
Net (decrease) / increase in cash and cash equivalents
(127,445)
278,456
Cash and cash equivalents at the beginning of the year
503,087
224,631
Cash and cash equivalents at the end of the year
375,642
503,087
Interest received
Interest paid
345,504
98,395
306,646
88,237
10
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 1:
ORGANIZATION AND BASIS OF FINANCIAL STATEMENTS
1.1.
General information
OTP Bank Plc. ("Bank" or "OTP Bank") was established on 31 December 1990, when the previously State-
owned company was transformed into a limited liability company.
The Bank’s
http://www.otpbank.hu/
registered office address
is 16, Nádor Street, Budapest 1051.
Internet homepage:
Signatory of the separate financial statements is the Chief Executive Officer, dr. Sándor Csányi (Budapest).
The Bank’s owners have the power to amend the separate financial statements after issue if applicable.
These financial statements are authorised for issue on 17 March 2022 by the Board of Directors.
Responsible person for the control and management of accounting services: Zoltán Tuboly (Budapest),
Managing Director of Accounting and Financial Directorate, Registration Number: 177289, IFRS qualified
chartered accountant.
Due to Hungarian legislation audit services are statutory for OTP Bank. Disclosure information about the
auditor: Ernst & Young Audit Ltd. (001165), 1132 Budapest Váci Street 20. Registered under 01-09-267553 by
Budapest-Capital Regional Court, as registry court. Statutory registered auditor: Zsuzsanna Nagyváradiné
Szépfalvi, registration number: 005313.
Audit service fee agreed by the Annual General Meeting of the Bank for the year ended 2021 is an amount of
HUF 162 million + VAT.
All other fees charged by the Auditor for non-audit services during the financial year are disclosed in the
consolidated financial statements of the Bank.
In 1995, the shares of the Bank were introduced on the Budapest and the Luxembourg Stock Exchanges and
were also traded on the SEAQ board on the London Stock Exchange and PORTAL in the USA.
The structure of the Share capital by shareholders (%):
Domestic and foreign private and institutional investors
Employees
Treasury shares
Total
2021
98%
1%
1%
100%
2020
97%
1%
2%
100%
The Bank’s Registered Capital consists of 280.000.010 pieces of ordinary shares with the nominal value of HUF
100 each, representing the same rights to the shareholders.
The Bank provides a full range of commercial banking services through a nationwide network of 356 branches in
Hungary.
Number of employees
Average number of employees
1.2.
Basis of accounting
2021
2020
10,078
9,934
9,829
9,654
These Separate Financial Statements were prepared based on the assumption of the Management that the Bank
will remain in business for the foreseeable future. The Bank will not be forced to halt operations and liquidate its
assets in the near term at what may be very low fire-sale prices.
The Bank maintains its accounting records and prepares their statutory accounts in accordance with the
commercial, banking and fiscal regulations prevailing in Hungary.
The presentation and functional currency of the Bank is the Hungarian Forint ("HUF").
The separate financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRS”) as adopted by the European Union (“EU”).
11
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 1:
ORGANIZATION AND BASIS OF FINANCIAL STATEMENTS [continued]
1.2.1. The effect of adopting new and revised IFRS standards effective from 1 January 2021
The following amendments to the existing standards and new interpretation issued by the International
Accounting Standards Board (IASB) and adopted by the EU are effective for the current reporting period:
• Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform –
Phase 2 adopted by EU on 13 January 2021 (effective for annual periods beginning on or after 1 January
2021)
• Amendments to IFRS 4 “Insurance Contracts” – “Deferral of IFRS 9” - adopted by EU on 15
December 2020 (effective for annual periods beginning on or after 1 January 2021)
•
IFRS 17 “Insurance Contracts” (effective for annual periods beginning on or after 1 January 2021),
• Amendments to IFRS 16 “Leases” – “Covid 19-Related Rent Concessions beyond 30 June 2021”
(effective for annual periods beginning on or after 1 April 2021),
The adoption of these amendments to the existing standards has not led to any material changes in these Separate
Financial Statements.
1.2.2. New and revised Standards and Interpretations issued by IASB and adopted by the EU but not
yet effective
• Amendments to IFRS 1 “First-time Adoption of International Financial Reporting Standards”, IFRS
9 “Financial Instruments”, IAS 41 “Agriculture”– “Annual Improvements to IFRSs 2018-2020 Cycle” -
adopted by EU on 28 June 2021 (effective for annual periods beginning on or after 1 January 2022),
• Amendments to IFRS 3 “Business Combinations”; IAS 16 “Property, Plant and Equipment”; IAS 37
“Provisions, Contingent Liabilities and Contingent Assets” – adopted by the EU on 28 June 2021
Annual Improvements (effective fog annual periods beginning on or after 1 January 2022)
• Amendments to IFRS 17 “Insurance Contracts” (effective for annual periods beginning on or after 1
January 2023),
1.2.3. Standards and Interpretations issued by IASB but not yet adopted by the EU
At present, IFRS as adopted by the EU do not significantly differ from regulations adopted by the IASB except
for the following new standards, amendments to the existing standards and new interpretation, which were not
endorsed for use in EU as at date of publication of these financial statements:
• Amendments to IAS 1 “Presentation of Financial Statements” - Classification of Liabilities as Current
or Non-Current (effective for annual periods beginning on or after 1 January 2023),
• Amendments to IAS 1 “Presentation of Financial Statements” and IFRS Practice Statement 2-
Disclosure of Accounting policies (effective for annual periods beginning on or after 1 January 2023),
• Amendments to IAS 8 “Accounting policies, Changes in Accounting Estimates and Errors” –
Definition of Accounting Estimates (effective for annual periods beginning on or after 1 January 2023),
• Amendments to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in
Associates and Joint Ventures” - Sale or Contribution of Assets between an Investor and its Associate or
Joint Venture and further amendments (effective date deferred indefinitely until the research project on the
equity method has been concluded).
• Amendments to IAS 12 “Income Taxes” – Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (effective for annual periods beginning on or after 1 January 2023),
• Amendments to IFRS 17 “Insurance Contracts” – Initial application of IFRS 17 and IFRS 9 –
Comparative Information (effective date for annual periods beginning on or after 1 January 2023)
The Bank anticipates that the adoption of these new standards, amendments to the existing standards and new
interpretations will have no material impact on the financial statements of the Bank in the period of initial
application.
12
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies applied in the preparation of the accompanying separate financial statements are
summarized below:
2.1. Basis of presentation
These separate financial statements have been prepared under the historical cost convention with the exception
of certain financial instruments, which are recorded at fair value. Revenues and expenses are recorded in the
period in which they are earned or incurred. The Bank does not offset assets and liabilities or income and
expenses unless it is required or permitted by an IFRS standard.
During the preparation of separate financial statements assets and liabilities, income and expenses are presented
separately, except in certain cases, when one of the IFRS standards prescribes net presenting related to certain
items. (See below 2.8.)
The presentation of separate financial statements in conformity with IFRS requires the Management of the Bank
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as at the date of the financial statements and their reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those estimates.
Future changes in economic conditions, business strategies, regulatory requirements, accounting rules and other
factors could result in a change in estimates that could have a material impact on future separate financial
statements.
2.2. Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are translated into HUF that is the presentation
currency, at exchange rates quoted by the National Bank of Hungary ("NBH") as at the date of the separate
financial statements. Income and expenses arising in foreign currencies are converted at the rate of exchange on
the transaction date. Resulting foreign exchange gains or losses are recorded to the separate statement of profit or
loss.
2.3. Consolidated financial statements
These financial statements present the separate financial position and results of operations of the Bank.
Consolidated financial statements are prepared by the Bank and consolidated net profit for the year and
shareholders’ equity differs significantly from that presented in these separate financial statements. See Note 2.4
for the description of the method of accounting for investments in subsidiaries and associated companies in these
separate financial statements. The consolidated financial statements and the separate financial statements will be
published on the same date.
2.4. Investments in subsidiaries, associated companies and other investments
Investments in subsidiaries comprise those investments where OTP Bank, through direct and indirect ownership
interest, controls the investee. Control is achieved when the Bank has power over the investee, is exposed or has
rights, to variable returns from its involvement with the investee and has the ability to use its power to affect its
returns.
Investments in subsidiaries are recorded at the cost of acquisition, less impairment for permanent diminution in
value, when appropriate. After initial measurement investments in subsidiaries are measured at cost, in the case
of foreign currency denominated investments for the measurement the Bank uses the exchange rate at the date of
transaction.
Impairment is determined based on the future economic benefits of the subsidiary and macroeconomic factors.
OTP Bank calculates the fair value based on discounted cash flow model. The 3 year period explicit cash flow
model serves as a basis 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 consideration the cautious recovery of global economic situation
and outlook, the associated risks and their possible effect on the financial sector as well as the current and
expected availability of wholesale funding.
13
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.5. Securities at amortised cost
The Bank 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 interest
on the principal amount outstanding. The Bank initially recognises these securities at fair value. Securities at
amortised cost are subsequently measured using the effective interest (EIR) method and are subject to
impairment. The amortisation of any discount or premium on the acquisition of a security at amortized cost is
part of the amortized cost and is recognised as interest income so that the revenue recognized in each period
represents a constant yield on the investment. Securities at amortized cost are accounted for on a trade date basis.
Such securities comprise mainly securities issued by the Hungarian Government bonds and corporate bonds.
2.6. Financial assets at fair value through profit or loss
2.6.1. Securities held for trading
Investments in securities are accounted for on a trade date basis and are initially measured at fair value.
Securities held for trading are measured at subsequent reporting dates at fair value. Unrealised gains and losses
on held for trading securities are recognized in profit or loss and are included in the separate statement of profit
or loss for the period. The Bank holds held for trading securities within the business model to obtain short-term
gains, consequently realised and unrealised gains and losses are recognized in the net operating income, while
interest income is recognised in income similar to interest income. The Bank applies FIFO1 inventory valuation
method for securities held for trading. Such securities consist of discounted and interest bearing Treasury bills,
Hungarian Government bonds, mortgage bonds, shares in non-financial commercial companies, shares in
investment funds, shares in venture capital funds and shares in financial institutions.
2.6.2. Derivative financial instruments
In the normal course of business, the Bank is a party to contracts for derivative financial instruments, which
represent a low initial investment compared to the notional value of the contract and their value depends on
value of underlying asset and are settled in the future. The derivative financial instruments used include interest
rate forward or swap agreements and currency forward or swap agreements and options. These financial
instruments are used by the Bank both for trading purposes and to hedge interest rate risk and currency
exposures associated with its transactions in the financial markets.
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 are obtained from quoted market prices,
discounted cash flow models and option pricing models as appropriate. OTP Bank adopts multi curve valuation
approach for calculating the net present value of future cash flows – based on different curves used for
determining forward rates and used for discounting purposes. It shows the best estimation of such derivative
deals that are collateralised as OTP Bank has almost its entire open derivative transactions collateralised.
Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are
recognized in profit or loss and are included in the separate statement of profit or loss for the period. Each
derivative deal is determined as asset when fair value is positive and as liability when fair value is negative.
Certain derivative transactions, while providing effective economic hedges under risk management positions of
the Bank, do not qualify for hedge accounting under 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 separate statement of profit or
loss.
Foreign currency contracts
Foreign currency contracts are agreements to exchange specific amounts of currencies at a specified rate of
exchange, at a spot date (settlement occurs two days after the trade date) or at a forward date (settlement occurs
more than two days after the trade date). The notional amount of forward contracts does not represent the actual
market or credit risk associated with these contracts.
Foreign currency contracts are used by the Bank for risk management and trading purposes. The Bank’s risk
management foreign currency contracts were used to hedge the exchange rate fluctuations of loans and deposits
denominated in foreign currency.
1 First In First Out
14
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.6.2 Derivative financial instruments [continued]
Foreign exchange swaps and interest rate swaps
The Bank enters into foreign-exchange swap and interest rate swap (“IRS”) transactions. The swap transaction is
a complex agreement concerning the swap of certain financial instruments, which usually consists of a spot and
one or more forward contracts.
Interest rate swaps obligate two parties to exchange one or more payments calculated with reference to fixed or
periodically reset rates of interest applied to a specific notional principal amount (the base of the interest
calculation). Notional principal is the amount upon which interest rates are applied to determine the payment
streams under interest rate swaps.
Such notional principal amounts are often used to express the volume of these transactions but are not actually
exchanged between the counterparties. The Bank’s interest rate swap contracts can be hedging or held for
trading contracts.
Cross-currency interest rate swaps
The Bank enters into cross-currency interest rate swap (“CCIRS”) transactions which have special attributes, i.e.
the parties exchange the notional amount at the beginning and also at the maturity of the transaction. A special
type of these deals is the mark-to-market CCIRS agreements. At this kind of deals the 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 more payments calculated with reference periodically reset rates
of interest and performance of indices. A specific notional principal amount is the base of the interest
calculation. The payment of index return is calculated on the basis of current market price compared to the
previous market price. In case of commodity swaps payments are calculated on the basis of the strike price of a
predefined commodity compared to its average market price in a period.
Forward rate agreements (“FRA”)
A forward rate agreement is an agreement to settle amounts at a specified future date based on the difference
between an interest rate index and an agreed upon fixed rate. Market risk arises from changes in the market value
of contractual positions caused by movements in interest rates.
The Bank limits its exposure to market risk by entering into generally matching or offsetting positions and by
establishing and monitoring limits on unmatched positions. Credit risk is managed through approval procedures
that establish specific limits for individual counter-parties. The Bank’s forward rate agreements were transacted
for management of interest rate exposures.
Foreign exchange options
A foreign exchange option is a derivative financial instrument that gives the owner the right to exchange money
denominated in one currency into another currency at a pre-agreed exchange rate at a specified future date. The
transaction, for a fee, guarantees a worst-case exchange rate for the futures purchase of one currency for another.
These options protect against unfavourable currency movements while preserving the ability to participate in
favourable movements.
15
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.7. Derivative financial instruments designated as a fair value or cash flow hedge
Changes in the fair value of derivatives that are designated and qualify as hedging instruments fair value hedges
and that prove to be highly effective in relation to the hedged risk, are recorded in the separate statement of profit
or loss along with the corresponding change in fair value of the hedged asset or liability that is attributable to the
specific hedged risk. Changes in the fair value of the hedging instrument in fair value hedges are 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 relationship, proper hedge documentation is prepared, effectiveness
test is performed and based on it the hedge is qualified as effective.
Changes in fair value of derivatives that are designated and qualify as hedging instrument in cash flow hedges
and that prove to be highly effective in relation to hedged risk are recognized as reserve in other comprehensive
income. Amounts deferred in other comprehensive income are transferred to the separate statement of profit or
loss and classified as revenue or expense in the periods during which the hedged assets and liabilities effect the
separate statement of recognized and comprehensive income for the period. The ineffective element of the hedge
is charged directly to the separate statement of profit or loss. The Bank terminates the hedge accounting if the
hedging instrument expires or is sold, terminated, or exercised, or the hedge no longer meets the criteria for
hedge accounting. In case of cash flow hedges - in line with the standard – hedge accounting is still applied as
long as the underlying asset is derecognised.
2.8. Offsetting
Financial assets and liabilities may be offset and the net amount is reported in the statement of financial position
when the Bank has a legally enforceable right to set off the recognised amounts and the transactions are intended
to be reported in the statement of financial position on a net basis. In the case of the derivative financial
instruments the Bank applies offsetting and net presentation 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
Sometimes, a derivative may be a component of a combined or hybrid contract that includes a host contract and
a derivative (the embedded derivative) affecting cash flows or otherwise modifying the characteristics of the host
instrument. An embedded derivative must be separated from the host instrument and accounted for as a separate
derivative if, and only if:
- The economic characteristics and risks of the embedded derivative are not closely related to the
economic characteristics and risks of the host contract;
- A separate financial instrument with the same terms as the embedded derivative would meet the
definition of a derivative as a stand-alone instrument; and
- The host instrument is not measured at fair or is measured at fair value but changes in fair value are
recognised in other comprehensive income.
As long as a hybrid contract contains a host that is a financial asset the general accounting rules for
classification, recognition and measurement of financial assets are applicable for the whole contract and no
embedded derivative is separated.
Derivatives that are required to be separated are measured at fair value at initial recognition and subsequently. If
the Bank is unable to measure the embedded derivative separately either at acquisition or at the end of a
subsequent financial reporting period, the Group shall designate the entire hybrid contract as at fair value
through profit or loss. The Bank shall assess whether an embedded derivative is required to be separated from
the host contract and accounted for as a derivative when the Bank first becomes a party to the contract.
16
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.10. Securities at fair value through other comprehensive income (“FVOCI securities”)
FVOCI securities are held within a business model whose objective is achieved by both collecting of contractual
cash flows and selling securities. Furthermore contractual terms of FVOCI securities give rise on specified dates
to cash flows that are solely payment of principal and interest on the principal amount outstanding.
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 at fair
value. Unrealised gains and losses on FVOCI financial instruments are recognized in other comprehensive
income, except for interest and foreign exchange gains/losses on monetary items, unless such FVOCI security is
part of an effective hedge. Such gains and losses will be reported when realised in profit or loss for the
applicable period. The Bank applies FIFO1 inventory valuation method for FVOCI securities.
For debt securities at fair value through other comprehensive income the loss allowance is calculated based on
expected credit loss model. The expected credit loss is accounted for against Other Comprehensive Income.
FVOCI securities are remeasured at fair value based on quoted prices or values derived from cash flow models.
In circumstances where the quoted market prices are not readily available, the fair value of debt securities is
estimated using the present value of the future cash flows and the fair value of any unquoted equity instruments
are calculated using the EPS ratio.
Fair value through other comprehensive income option for equity instruments
In some cases the Bank made an irrevocable election at initial recognition for certain non-trading investments in
an equity instrument to present subsequent changes in fair value of these securities in other comprehensive
income instead of in profit or loss.
The use of the fair value option is based only on direct decision of management of the Bank.
2.11. Loans, placements with other banks, repo receivables and loss allowance for loan, placements and
repo receivables losses
The Bank measures Loans, placements with other banks and repo receivables at amortised cost, which are held
to collect contractual cash flows, and contractual terms of these assets give rise on specified dates to cash flows
that are solely payments of principal and interest on the principal amount outstanding. The Bank recognises
loans, which are not held for trading and do not give rise contractual cash flows that are solely payments of
principal and interest on the principal amount outstanding as loans measured at fair value through profit or loss
(“FVTPL loans”).
Loans, placements with other banks and repo receivables are accounted at amortised cost, stated at the principal
amounts outstanding including accrued interest, net of allowance for loan or placement losses, respectively.
In case of the above mentioned financial assets measured at amortised cost transaction fees and charges adjust
the carrying amount at initial recognition and are included in effective interest calculation. In case of FVTPL
loans fees and charges are recognised when incurred in the separate statement of profit or loss.
Loans, placements with other banks and repo receivables loans are derecognised when the contractual rights to
the cash flows expire or they are transferred. When a financial asset is derecognised the difference of the
carrying amount and the consideration received is recognised in the profit or loss. In case of the above mentioned
financial assets at amortised cost gains or losses from derecognition are presented in “Gains/losses arising from
derecognition of financial assets at amortised cost” line. In case of FVTPL loans gains or losses from
derecognition are presented in “Net operating income”.
Change in the fair value of FVTPL loans is broken down into two components and presented in the separate
statement of profit or loss as follows:
• Portion of the change in fair value arising from changes in credit risk are presented within “Risk cost”
as “Change in the fair value attributable to changes in the credit risk of loans mandatorily measured at
fair value through profit of loss”.
• The remaining component of the change is presented in fair value within “Net operating income” as
“Gains/(Losses) on financial instruments at fair value through profit or loss”.
1 First In First Out
17
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.11. Loans, placements with other banks, repo receivables and loss allowance for loan, placements and
repo receivables losses [continued]
Initially, financial assets shall be recognised at fair value which is usually equal to the transaction value in case
of loans and placements. However, when the amounts are not equal, the initial fair value difference should be
recognized.
If the fair value of financial assets is based on a valuation technique using only inputs observable in market
transactions, the Bank recognises the initial fair value difference in the Separate Statement of Profit or Loss.
When the fair value of financial assets is based on models for which inputs are not observable, the difference
between the transaction price and the fair value is deferred and only recognised in profit or loss when the
instrument is derecognised or the inputs became observable.
Initial fair value of loans lent at interest below market conditions is lower than their transaction price.
Allowance for losses on loans, placements with other banks and repo receivables represent management
assessment for potential losses in relation to these activities.
The Bank recognises a loss allowance for expected credit losses on a financial asset at each reporting date. The
loss allowance for a financial asset equals to 12-month expected credit loss or equals to the lifetime expected
credit losses. The maximum period over which expected credit losses shall be measured is the maximum
contractual period over which the Bank is exposed to credit risk.
If the credit risk on a financial asset has not increased significantly since initial recognition then 12-month
expected credit losses, otherwise (in case of significant credit risk increase) lifetime expected credit losses
should be calculated. The expected credit loss is the present value of the difference between the contractual cash
flows that are due to the Bank under the contract and the cash flows that the Bank expects to receive.
When the 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 future cash flows with the original effective interest rate of the asset. The difference
between the carrying amount and the present value of the expected cash flows is recognised as a “Modification
gain or loss” in the statement of profit or loss. Interest income and amortised cost are accounted for using the
effective interest rate method.
Write-offs are generally recorded after all reasonable restructuring or collection activities have taken place and
the possibility of further recovery is considered to be remote. The loan is written off against the related account
“Loss allowance on loan, placement and repo receivables losses” in the Statement of Profit or loss.
OTP Bank applies partial or full write-off for loans based on the definitions and prescriptions of financial
instruments in accordance with IFRS 9. If OTP Bank has no reasonable expectations regarding a financial asset
(loan) to be recovered, it will be written off partially or fully at the time of emergence.
The gross amount and loss allowance of the loans shall be written off in the same amount to the estimated
maximum recovery amount while the net carrying value remains unchanged.
If there are reasonable expectations of recovery for a financial asset that is written-off fully or partially, OTP
Bank shall re-estimate cash flows of a financial asset and write-off reversal is applied in the financial statements.
18
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.11. Loans, placements with other banks, repo receivables and loss allowance for loan, placements and
repo receivables losses [continued]
Modification of contractual cash flows
If the net present value of the contracted cash flows changes due to the modification of the contractual terms and
it is not qualified as derecognition, modification gain or loss should be calculated and accounted for in the
separate statement of profit or loss. Modification gain or loss is accounted in cases like restructuring – as defined
in internal policies of the Bank – prolongation, renewal with unchanged terms, renewal with shorter terms and
prescribing capital repayment rate, if it doesn’t exist or has not been earlier.
The changes of net present value should be calculated on portfolio level in case of retail exposures. Each retail
contract is restructured based on restructuring frameworks. The Bank has to evaluate these frameworks (and not
individual contracts). The changes of net present value should be calculated individually on contract level in case
of corporate portfolio.
Among the possible contract amendments, the Bank considers as a derecognition and a new recognition when
the discounted present value – discounted at the original effective interest rate – of the cash flows under the new
terms is at least 10 per cent different from the discounted present value of the remaining cash flows. In case of
derecognition and new recognition the unamortised fees of the derecognised asset should be presented as Income
similar to interest income. The newly recognised financial asset is initially measured at fair value and is placed in
stage 1 if the derecognised financial asset was in stage 1 or stage 2 portfolio. The newly recognised financial
asset will be purchased or originated credit impaired financial asset (“POCI”) if the derecognised financial asset
was in stage 3 portfolio or it was POCI.
The modification gain or loss shall be calculated at each contract amendments unless they are handled as a
derecognition and new recognition. In case of modification the Bank recalculates the gross carrying amount of
the financial asset. To do this, the new contractual cash flows should be discounted using the financial asset’s
original effective interest rate (or credit-adjusted effective interest rate for POCI financial asset). Any costs or
fees incurred adjust the carrying amount of the modified financial asset are amortized over the remaining term of
the modified financial asset.
Purchased or originated credit impaired financial assets
Purchased or originated financial assets are credit-impaired on initial recognition. A financial asset is credit-
impaired when one or more events that have a detrimental impact on the estimated future cash flows of that
financial asset have occurred.
A purchased credit-impaired asset is likely to be acquired at a deep discount. In unusual circumstances, it may be
possible that an entity originates a credit-impaired asset, for example, following a substantial modification of a
distressed financial asset that resulted in the derecognition of the original financial asset.
In the case of POCI financial assets, interest income is always recognized by applying the credit-adjusted
effective interest rate.
For POCI financial assets, in subsequent reporting periods an entity is required to recognize:
-
-
the cumulative changes in lifetime expected credit losses since initial recognition as a loss allowance,
the impairment gain or loss which is the amount of any change in lifetime expected credit losses.
An impairment gain is recognized (with the parallel increase of the net amortized cost of receivable) if due
to the favourable changes after initial recognition the lifetime expected credit loss estimation is becoming
lower than the original estimated credit losses at initial recognition.
The POCI qualification remains from initial recognition to derecognition in the Bank’s books.
19
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.12. Loss allowance
Loss Allowance for loans and placements with other banks and repo receivables are recognised by the Bank
based on the expected credit loss model in accordance with IFRS 9. Based on the three stage model loss
allowance is recognised in amount of 12 month expected credit loss from the initial recognition. Financial assets
with significantly increased credit risk or credit impaired financial assets (based on objective evidences) loss
allowance is recognised in amount of lifetime expected credit loss.
In case of purchased or originated credit impaired financial assets loss allowance is recognised in amount of
lifetime expected credit loss since initial recognition. Impairment gain is recognised if lifetime expected credit
loss for purchased or originated credit impaired financial assets at measurement date are less than the estimated
credit loss at initial recognition.
Loss allowance for loan and placements are determined at a level that provides coverage for individually
identified credit losses. Collective impairment loss is recognised for loans with similar credit risk characteristics
when it is not possible to determine the amount of the individually identified credit loss in the absence of
objective evidence. The expected cash flows for loan portfolios are estimated based on historical loss experience.
At subsequent measurement the Bank recognises through “Loss allowance on loan, placement and repo
receivables losses” in the Statement of Profit or Loss impairment gain or loss as an amount of expected credit
losses or reversal that is required to adjust the loss allowance at the reporting date to the amount that is required
to be recognised in accordance with IFRS 9.
If a financial asset, which previously classified in the first stage, classified subsequently in the second or third
stage than loss allowance is adjusted to lifetime expected credit loss. If a financial asset, which previously
classified in the second or third stages, classified subsequently in the first stage than loss allowance is adjusted to
level of 12 month expected credit loss.
Classification into risk classes
According to the requirements of the IFRS9 standard, the Bank classifies financial assets measured at amortised
cost and fair value through other comprehensive income, and loan commitments and financial guarantees into
the following categories in accordance with IFRS9:
Stage 1
Stage 2
Stage 3
POCI
Performing
Performing, but compared to the initial recognition it shows significant increase in credit risk
Non-performing
Purchased or originated credit impaired
In the case of trade receivables, contract assets and lease receivables the Group applies the simplified approach
and calculates only lifetime expected credit loss. Simplified approach is the following:
•
•
•
•
•
•
for the past 3 years the average annual balance of receivables under simplified approach is
calculated,
the written-off receivables under simplified approach are determined in the past 3 years,
the loss allowance ratio will be the sum of the written-off amounts divided by the sum of the
average balances,
historical losses are adjusted to reflect information about current conditions and reasonable
forecasts of future economic conditions,
the loss allowance is multiplied by the end-of-year balance and it will be the actual loss allowance
on these receivables,
loss allowance should be recalculated annually.
20
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.12. Loss allowance [continued]
Classification into risk classes [continued]
The Bank assumes that the credit risk on a financial instrument has not increased significantly since initial
recognition if the financial asset is determined to have low credit risk at the reporting date. This might occur if
the financial asset has a low risk of default, the borrower has a strong capacity to meet its contractual cash flow
obligations in the near term and adverse changes in economic and business conditions in the longer term may,
but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations. The
Bank considers souvereign exposures having low credit risk.
Credit risk of financial assets increases significantly at the following conditions:
•
•
•
•
•
•
•
the payment delay exceeds 30 days,
it is classified as performing forborne,
based on individual decision, its currency suffered a significant "shock" since the disbursement of the
loan,
the transaction/client rating exceeds a predefined value or falls into a determined range, or compared to
the historic value it deteriorates to a predefined degree,
in the case household mortgage loans, the loan-to-value ratio (“LTV”) exceeds a predefined rate,
default on another loan of the retail client, if no cross-default exists,
in case of corporate and municipal clients:
financial difficulty (capital requirements, liquidity, impairment of asset quality),
significant decrease of activity and liquidity in the market of the asset,
client’s rating reflects higher risk, but better than default,
collateral value drops significantly, from which the client pays the loan,
o
o
o
o
o more than 50% decrease in owner’s equity due to net losses,
o
o negative information from Central Credit Information System: the payment delay exceeds 30
client under dissolution,
days
Financial assets classifies as non-performing, if the following conditions are met:
•
•
•
default,
non-performing forborne exposures,
in case of corporate and municipal clients:
o breach of contract terms and conditions
o
critical financial difficulty of the client (capital requirements, liquidity, impairment of asset
quality),
liquidation, dissolution or debt clearing procedures against client,
forced deregistration procedures from company registry,
terminated loans by the Bank,
in case of fraud,
o
o
o
o
o negative information from Central Credit Information System: the payment delay exceeds 90
days,
cessation of active markets of the financial asset,
o
o default of ISDA based contracts.
For lifetime expected credit losses, the Bank shall estimate the risk of a default occurring on the financial
instrument during its expected 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 expected life of the financial instrument is less than 12 months), weighted by the
probability of that default occurring.
Expected credit losses are measured in a way that reflects:
•
•
an unbiased and probability-weighted amount that is determined by evaluating a range of possible
outcomes,
the time value of money, and
reasonable and supportable information that is available without undue cost of effort at the reporting date about
past events, current conditions and forecasts of future economic conditions.
21
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.13. Option to designate a financial asset/liability measured at fair value through profit or loss (FVTPL
option)
The Bank may, at initial recognition, irrevocably 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:
-
-
if doing so eliminates or significantly reduces a measurement or recognition inconsistency (accounting
mismatch) that would otherwise arise from measuring assets or liabilities or recognising the gains and
losses on them on different bases
if the group of financial liabilities or assets is managed and its performance is evaluated on a fair value
basis, in accordance with a documented risk management or investment strategy, and information about
the group is provided internally on that basis to the Bank’s key management personnel.
The use of the fair value option is limited only to special situations, and it can be based only on direct decision of
management of the Bank.
2.14. Sale and repurchase agreements, security lending
Where debt or equity securities are sold under a commitment to repurchase them at a pre-determined price, they
remain on the statement of financial position and the consideration received is recorded in Other liabilities or
Amounts due to banks and deposits from the National Bank of Hungary and other banks, or Deposits from
customers. Conversely, debt or equity securities purchased under a commitment to resell are not recognized in
the statement of financial position and the consideration paid is recorded either in Placements with other banks
or Deposits from customers. Interest is accrued evenly over the life 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 recognized for the consideration amount.
2.15. Property, equipment and intangible assets
Property, equipment and intangible assets are stated at cost, less accumulated depreciation and amortization and
impairment, if any. The depreciable amount (book value less residual value) of the non-current assets must be
allocated over their useful lives. Depreciation and amortization are calculated using the straight-line method over
the estimated useful lives of the assets based on the following annual percentages:
Intangible assets
Software
Property rights
Property
Office equipment and vehicles
20-33.3%
16.7-33.3%
1-2%
9-33.3%
Depreciation and amortization on properties, equipment and intangible assets starts on the day when such assets
are placed into service. At each balance sheet date, the Bank reviews the carrying value of its tangible and
intangible assets to determine if there is any indication that those assets have suffered an impairment loss.
If such indication exists, the recoverable amount of the asset is estimated to determine the extent (if any) of the
impairment loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Bank
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Where the carrying value of property, equipment, other tangible fixed assets and intangible assets is greater than
the estimated recoverable amount, it is impaired immediately to the estimated recoverable amount.
2.16. Inventories
The inventories shall be measured at the lower of cost and net realisable value. The cost of inventories shall
comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their
present location and condition. The Bank uses generally FIFO formulas to the measurement of inventories.
Inventories shall be removed from books when they are sold, unusable or destroyed. When inventories are sold,
the carrying amount of those inventories shall be recognized as an expense in the period in which the related
revenue is recognized. Repossessed assets are classified as inventories.
22
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.17. Investment properties
Investment properties of the Bank are land, buildings, part of buildings which are held (as the owner or as the
lessee under a finance lease) to earn rentals or for capital appreciation or both, rather than for use in the
production or supply of services or for administrative purposes or sale in the ordinary course of business. The
Bank measures the investment properties at cost less accumulated depreciation and impairment, if any. The
depreciable amount (book value less residual value) of the investment properties must be allocated over their
useful lives. Depreciation and amortization are calculated using the straight-line method over the estimated
useful lives of the assets based on the 1-2% annual percentages.
The fair value of the investment properties is established mainly by external experts. According to the opinion of
the Management there is no significant difference between the fair value and the carrying value of these
properties.
2.18. Financial liabilities
The financial liabilities are presented within financial liabilities at fair value through profit or loss or financial
liabilities measured at amortised cost. In connection to the financial liabilities at fair value through profit or loss,
the Bank presents the amount of change in their fair value originated from the changes of market conditions and
business environment. Financial liabilities at fair value through profit or loss are either financial liabilities held
for trading or they are designated upon initial recognition as at fair value through profit or loss. In the case of
financial liabilities measured at amortised cost, fees and commissions related to the origination of the financial
liability are recognised through profit or loss during the maturity of the instrument. In certain cases the Bank
repurchases a part of financial liabilities (mainly issued securities or subordinated bonds) and the difference
between the carrying amount of the financial liability and the amount paid for it is recognised in the statement of
profit or loss and included in other operating income.
2.19. Leases
An agreement is a lease or contains a lease if it transfers the rights to control the use of an identified asset for a
given period in exchange for compensation.
Expenses related to the use of lease assets, the majority of which were previously recognised in external services
costs, will be currently classified as depreciation/amortisation and interest costs. Usufruct rights are depreciated
using a straight line method, while lease liabilities are settled using an effective discount rate.
Recognition of lease liabilities
The Bank will recognise lease liabilities related to leases which were previously classified as "operating leases"
in accordance with IAS 17 Leases. These liabilities will be measured at the present value of lease payments
receivable as at the date of commencement of the application of IFRS 16. Lease payments shall be discounted
using the interest rate implicit in the lease or, if that rate cannot be readily determined, the incremental
borrowing rate. Interest rate applied by the Bank: weighted average lessee’s incremental borrowing rate: ~1,62%
At their date of initial recognition, lease payments contained in the measurement of lease liabilities comprise the
following types of payments for the right to use the underlying asset for the life of the lease:
-
-
-
-
-
fixed lease payments less any lease incentives,
variable lease payments which are dependent on market indices,
amounts expected to be payable by the lessee under residual value guarantees,
the strike price of a purchase option, if it is reasonably certain that the option will be exercised, and
payment of contractual penalties for terminating the lease, if the lease period reflects that the lessee
used the option of terminating the lease.
The Bank makes use of expedients with respect to short-term leases (less than 12 months) as well as in the case
of leases in respect of which the underlying asset has a low value (less than HUF 1.4 million) and for which
agreements it will not recognise financial liabilities nor any respective right-of-use assets. These types of lease
payments will be recognised as costs using the straight-line method during the life of the lease.
23
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.20. Leases [continued]
Recognition of right-of-use assets
Right-of-use assets are initially measured at cost.
The cost of a right-of-use asset comprises:
-
-
-
-
the amount of the initial measurement of lease liabilities,
any lease payments made at or before the commencement date, less any lease incentives received,
any initial direct costs incurred by the lessee,
estimates of costs to be incurred by the lessee as a result of an obligation to disassemble and remove an
underlying asset or to carry out renovation/restoration.
Right-of-use assets are presented separately in the financial statements.
2.20. Share capital
Share capital is the capital determined in the Articles of Association and registered by the Budapest-Capital
Regional Court. Share 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 changed over the current period.
2.21. Treasury shares
Treasury shares are shares which are purchased on the stock exchange and the over-the-counter market by the
Bank and are presented in the separate statement of financial position at acquisition cost as a deduction from
shareholders’ equity. Gains and losses on the sale of treasury shares are recognised directly to shareholder’s
equity. Derecognition of treasury shares is based on the FIFO method.
2.22. Interest income, income similar to interest income and interest expense
Interest income and expenses are recognised in profit or loss in the period to which they relate, using the
effective interest rate method.
For exposures categorized into stage 1 and stage 2 the interest income is recognized on a gross basis. For
exposures categorized into stage 3 (using effective interest rate) and for POCI (using credit-adjusted effective
interest rate) the interest income is recognized on a net basis.
The time-proportional income similar to interest income of derivative financial instruments calculated without
using the effective interest method and the positive fair value adjustment of interest rate swaps are also included
in income similar to interest income. Interest income of FVTPL loans is calculated based on interest fixed in the
contract and presented in “Income similar to interest income” line.
Interest from loans and deposits are accrued on a daily basis. Interest income and expense include certain
transaction cost and the amortisation of any discount and premium between the initial carrying amount of an
interest-bearing instrument and its amount at maturity calculated on an effective interest rate basis.
All interest income and expense recognised are arising from loans, placements with other banks, repo
receivables, securities at fair value through other comprehensive income, securities at amortised cost, and
amounts due to banks, repo liabilities, deposits from customers, liabilities from issued securities, subordinated
bonds and loans are presented under these lines of financial statements
2.23. Fees and Commissions
Fees and commissions that are not involved in the amortised cost model are recognised in the Separate Statement
of Profit or Loss on an accrual basis according to IFRS 15. These fees are related to deposits, cash withdrawal,
security trading, bank card, etc.
The Bank recognise income if performance obligations related to the certain goods or service are satisfied,
performed, and control over the asset is transferred to the customer, and it is probable that consideration payable
will probably flow to the entity. In case of those service, where the Bank transfer control over the asset
continuously, income is recognised on accrual basis. (For more details see note 31)
The Bank provides foreign exchange trading services to its customers, the profit margin achieved on these
transactions is presented as Net profit from fees and commissions in the Separate Statement of Profit or Loss.
24
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.24. Dividend income
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 separate financial statements when its right
to receive the payment is established.
2.25. Income tax
The Bank considers corporate income tax and local business tax and the innovation contribution as income tax in
Hungary. The annual taxation charge is based on the tax payable under Hungarian fiscal law, adjusted for
deferred taxation. Deferred 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 at the tax rates that are expected to apply when the asset is realised or the liability
is settled.
Deferred tax assets and liabilities are presented in a net way in the statement of financial position. Current tax
asset or current tax liability is presented related to income tax and innovation contribution separately in the
statement of financial position.
Deferred tax assets are recognized by the Bank for the amounts of income tax that are recoverable in future
periods in respect of deductible temporary differences as well as the carry forward of unused tax losses and the
carryforward of unused tax credits.
The Bank recognizes a deferred tax asset for all deductible temporary differences arising from investments in
subsidiaries, branches and associates, and interests in joint arrangements, to the extent that, and only to the extent
that, it is probable that:
- the temporary difference will reverse in the foreseeable future; and
- taxable profit will be available against which the temporary difference can be utilised.
The Bank considers the availability of qualifying taxable temporary differences and the probability of other
future taxable profits to determine whether future taxable profits will be available.
The Bank recognizes a deferred tax liability for all taxable temporary differences associated with investments in
subsidiaries, branches and associates, and interests in joint arrangements, except to the extent that both of the
following conditions are satisfied:
-
the Bank is able to control the timing of the reversal of the temporary difference, and
- it is probable that the temporary difference will not reverse in the foreseeable future.
The Bank only offsets its deferred tax liabilities against deferred tax assets when:
-
-
there is a legally enforceable right to set-off current tax liabilities against current tax assets, and
the taxes are levied by the same taxation authorities on either
the same taxable entity or
•
• different taxable entities which intend to settle current tax liabilities and assets on a net basis.
2.26. Banking tax
The Bank is obliged to pay banking tax based on Act LIX of 2006. As the calculation 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 tax year), banking tax is not considered as income tax. Therefore, the banking tax is
considered as an other administrative expense, not as income tax.
25
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.27. Off-balance sheet commitments and contingent liabilities, provisions
In the ordinary course of its business, the Bank has entered into off-balance sheet commitments such as
guarantees, commitments to extend credit, letters of credit and transactions with financial instruments. The
provision on off-balance sheet commitments and contingent liabilities is maintained at a level adequate to absorb
probable future losses which are probable and relate to present obligations.
Those commitments and contingent liabilities Management determines the adequacy of the provision based upon
reviews of individual items, recent loss experience, current economic conditions, the risk characteristics of the
various categories of transactions and other pertinent factors.
The Bank recognizes a provision for off-balance sheet commitment and contingent liabilities in accordance with
IAS 37 when it has a present obligation as a result of a past event; it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation; and a reliable estimate can be made of the
obligation.
Expected credit loss model is applied for given financial guarantees and loan commitments which are under
IFRS 9 the, when the provision is calculated (see more details in Note 2.12.). After initial recognition the Group
subsequently measures those contracts at a higher of the amount of the loss allowance or of the amount initially
recognised less the cumulative amount of income recognized in accordance with IFRS 15.
2.28. Share-based payment and employee benefits
The Bank has applied the requirements of IFRS 2 Share-based Payment.
The Bank issues equity-settled share-based payments to certain employees. Equity-settled share-based payments
are measured at fair value at the grant date. The fair value determined at the grant date of the equity-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 of a binomial model. The expected life used in the model has been adjusted, based
on Management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural
considerations.
The Bank has applied the requirement of IAS 19 Employee Benefits. The Bank’s short-term employee benefits
are wages, salaries and bonuses, premium, paid annual leave and paid sick leave and other free services (health
care, reward holiday). Short-term employee benefits are expected to pay by the Bank within 12 month. These
benefits are recognised as an expense and liability undiscounted in the separate financial statements.
Long-term employee benefits are mostly the jubilee reward. Long-term employee benefits are recognised as an
expense and liability in the separate financial statements. Liabilities are regularly remeasured. Gains or losses
due to the remeasurement are recognised in the separate statement of profit or loss.
26
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.29. Separate statement of cash flows
Cash flows arising from the operating, investing or financing activities are reported in the Statement of Cash-
Flows of the Bank primarily on a gross basis. Net basis reporting are applied by the Bank in the following cases:
▪ when the cash flows reflect the activities of the customer rather than those of the Bank, and
▪
for items in which the turnover is quick, the amounts are large, and the maturities are short.
For the purposes of reporting cash flows “Cash, due from banks and balances with the NBH” line item excluding
compulsory reserve are considered as cash and cash equivalents by the Bank. This line item shows balances of
HUF and foreign currency cash amounts, and sight depos from NBH and from other banks, furthermore balances
of current accounts.
Cash flows from hedging activities are classified in the same category as the item being hedged. The unrealised
gains 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 separately net in the statement of cash flows
for the monetary items which have been revaluated.
2.30. Segment reporting
IFRS 8 Operating Segments requires operating segments to be identified on the basis of internal reports about
components of the Bank that are regularly reviewed by the chief operating decision maker in order to allocate
resources to the segments and to assess their performance.
At separate level, the Management does not separate and makes decisions based on different segments; the
segments are identified by the Bank only at consolidated level in line with IFRS 8 paragraph 4. At Group level
the segments identified by the Bank are the business and geographical segments.
The Group’s operating segments under IFRS 8 are therefore as follows: OTP Core Hungary, Russia, Ukraine,
Bulgaria, Romania, Serbia, Croatia, Montenegro, Albania, Moldova, Slovenia, Merkantil Group, Asset
Management subsidiaries, other subsidiaries, Corporate Centre.
27
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.31. Comparative figures
Reclassification of certain local taxes
The Bank has reviewed prescriptions related to local taxes, the determination of their tax base and their effects
on payment obligation. As a result of the review the local business tax and innovation contribution have been
reclassified to income tax in line with banking industry practice. In the financial statements prepared for the year
ended 31 December 2021 the Bank presents these taxes as income tax and reclassified the financial information
for comparative periods.
Derecognition of financial assets at amortized cost is presented separately in the separate statement of profit or
loss. Those items are to be separated from those results which previously contained them. In the separate
financial position there is provision for conditional liability to be separated from other liabilities which
previously contained them. All these reclassifications were necessary to improve presentation.
The impact of the reclassification of comparative information is summarized in the following tables:
Statement of Financial Position
Line item
31 December
2021
31 December
2020 after
reclassification
Reclassification of
amounts related to
local taxes
31 December 2020
Previously
presented
Current tax liabilities
Other liabilities
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY
Statement of Profit or Loss
4,776
238,437
1,464
223,433
1,464
(1,464)
-
224,897
13,710,471
11,154,394
-
11,154,394
Line item
Year ended 31
December
2021
Taxes, other than income tax
Other administrative expenses
(81,171)
(178,611)
Year ended 31
December 2020
After
reclassification
(73,384)
(154,165)
Reclassification of
amounts related to
local taxes
(12,349)
(12,349)
Year ended 31
December 2020
Previously
presented
(85,733)
(166,514)
OTHER ADMINISTRATIVE
EXPENSES
PROFIT BEFORE INCOME
TAX
Income tax
NET PROFIT FOR THE YEAR
(355,429)
(311,611)
(12,349)
(323,960)
141,290
(15,951)
125,339
105,595
(13,121)
92,474
(12,349)
12,349
-
93,246
(772)
92,474
Amendments to the information published in the supplementary annexes concerned the following
supplementary notes
Note
24
33
34
Other liabilities and provisions
Other operating income and expenses and other administrative expenses
Income tax
Name of the Note
The Bank has reclassified the presentation of the detailed notes to the amended statement of financial position
and statement of profit or loss line items for comparative information in accordance with the new values. These
amendments have been marked “Reclassified” by the Bank.
28
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 3:
SIGNIFICANT ACCOUNTING ESTIMATES AND DECISIONS IN THE
APPLICATION OF ACCOUNTING POLICIES
The presentation of separate financial statements in conformity with IFRS requires the Management of the Bank
to make judgements about estimates and assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities as at the date of the financial statements and their reported
amounts of revenues and expenses during the reporting period. The estimates and associated assumptions are
based on expected loss and other factors that are considered to be relevant. The estimates and underlying
assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognized in the period.
Actual results could differ from those estimates. Significant areas of subjective judgements include:
3.1.
Loss allowance on financial instruments
The Bank regularly assesses its financial instruments for impairment. Management determines the adequacy of
the allowances based upon reviews of individual loans and placements, recent loss experience, current economic
conditions, the risk characteristics of the various categories of loans and other pertinent factors. The use of a
new, three stage model was implemented for IFRS 9 purposes. The new impairment methodology is used to
classify financial instruments in order to determine whether credit risk has significantly increased since initial
recognition and able to identify credit-impaired assets. For instruments with credit-impairment or significant
increase of credit risk lifetime expected losses will be recognized. (For details see note 36.1.1.)
3.2.
Valuation of instruments without direct quotations
Financial instruments without direct quotations in an active market are valued using the valuation model
technique. The models are regularly reviewed and each model is calibrated for the most recent available market
data. While the models are built only on available data, their use is subject to certain assumptions and estimates
(e.g. for correlations, volatilities, etc). Changes in the model assumptions may affect the reported fair value of
the relevant financial instruments.
IFRS 13 Fair Value Measurement seeks to increase consistency and comparability in fair value measurements
and related disclosures through a 'fair value hierarchy'. 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 Bank evaluates the
levelling at each reporting period on an instrument-by-instrument basis and reclassifies instruments when
necessary, based on the facts at the beginning of the reporting period. The objective of a fair value measurement
is to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place
between market participants at the measurement date under current market conditions.
3.3.
Provisions
Provision is recognised and measured for commitments to extend credit and for warranties arising from banking
activities based on IFRS 9 Financial Instruments. Provision for these instruments is recognised based on the
credit conversion factor, which shows the proportion of the undrawn credit line that will be probably drawn.
Other provision is recognised and measured based on IAS 37 Provisions, Contingent Liabilities and Contingent
Assets. The Bank is involved in a number of ongoing legal disputes. Based upon historical experience and expert
reports, the Bank assesses the developments in these cases, and the likelihood and the amount of potential
financial losses which are appropriately provided for. (See Note 24.)
Other provision for off-balance sheet items includes provision for litigation, provision for retirement and
expected liabilities and provision for Confirmed letter of credit.
A provision is recognised by the Bank when it has a present obligation as a result of a past event, it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable
estimate can be made of the amount of the obligation.
29
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 3:
SIGNIFICANT ACCOUNTING ESTIMATES AND DECISIONS IN THE
APPLICATION OF ACCOUNTING POLICIES [continued]
3.4.
Business models
A business model refers how the Bank manages its financial instruments in order to generate cash flows. It is
determined at a level that reflects how groups of financial instruments are managed rather than at an instrument
level.
The financial assets held by the Bank are classified into three categories depending on the business model within
the financial assets are managed.
• Business model whose objective is to hold financial assets in order to collect contractual cash flows.
Some sales can be consistent with hold to collect business model and the Bank assesses the nature,
frequency and significance of any sales occurring. The Bank does not consider the sale frequent when at
least six months have elapsed between sales. The significant sales are those when the sales exceed 2%
of the total hold to collect portfolio. Within this business model the Bank manages mainly loans and
advances and long term securities and other financial assets.
• Business model whose objective is achieved by both collecting contractual cash flows and selling
financial assets. Within this business model the Bank only manages securities.
• Business model whose objective is to achieve gains in a short term period. Within this business model
the Bank manages securities and derivative financial instrument.
If cash flows are realised in a way that is different from the expectations at the date that the Bank assessed the
business model, that does not give rise to a prior error in the Bank’s financial statements nor does it change the
classification of the remaining financial assets held in that business model.
When, and only when the Bank changes its business model for managing financial assets it reclassifies all
affected assets. Such changes are determined by the Bank’s senior management as a result of external or internal
changes and must be significant to the Bank’s operations and demonstrable to external parties. The Bank shall
not reclassify any financial liability.
3.4.
Contractual cash-flow characteristics of financial assets
Classification of a financial asset is based on the characteristics of its contractual cash flows if the financial asset
is held within a business model whose objective is to hold assets to collect contractual cash flows or within a
business model whose objective is achieved by both collecting contractual cash flows and selling financial
assets.
The Bank should determine whether the asset’s contractual cash flows are solely payments of principal and
interest on the principal amount outstanding (SPPI test). Contractual cash flows that are solely payments of
principal and interest on the principal amount outstanding are consistent with a basic lending arrangement.
Contractual terms that introduce exposure to risks or volatility in the contractual cash flows that is unrelated to a
basic lending arrangement, such as exposure to changes in equity prices or commodity prices, do not give rise to
contractual cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Bank assesses whether contractual cash flows are solely payments of principal and interest on the principal
amount outstanding for the currency in which the financial asset is denominated.
Time value of money is the element of interest that provides consideration for only the passage of time.
However, in some cases, the time value of money element may be modified. In such cases, the Bank assesses the
modification to determine whether the contractual cash flows represent solely payments of principal and interest
on the principal amount outstanding.
When assessing a modified time value of money element, the objective is to determine how different the
undiscounted contractual cash flows could be from undiscounted cash flows that would arise if the time value of
money element was not modified (the benchmark cash flows). The benchmark instrument can be an actual or a
hypothetical financial asset. If the undiscounted contractual cash flows significantly – above 2% – differ from
the undiscounted benchmark cash flows, the financial asset should be subsequently measured at fair value
through profit or loss.
30
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 4:
COVID-19 (in HUF mn)
Covid-19 has had substantial implications for the operations of the Bank during 2021. Below are some of the
more important Covid-19 related events that occurred in Hungary:
• Effective from 13 January 2021 the National Bank of Hungary extended the available amount for the Bond
Funding for Growth scheme by HUF 750 billion to HUF 1,150 billion. At the same time it decided to
increase the maximum maturity of corporate bonds that can be purchased by the central bank from 20 to 30
years. Also, the central bank’s exposure limit to a company group was revised from HUF 50 billion to HUF
70 billion.
• On 4 February 2021 the Prime Minister announced an interest-free loan programme for companies in trouble
in the wake of the pandemic. According to Government Resolution 1038/2021. (II. 5.) the programme will be
administered by the Hungarian Development Bank, and the available amount under the programme will be
HUF 100 billion. Companies can take out maximum HUF 10 million each for the purpose of covering wages
and social contributions, overhead costs, general operating expenses and inventory financing. Client interest
rate is 0%, the loan tenor can be up to 10 years, and the servicing of the loan will start after a 3 year grace
period. The scope of eligible entities was determined in agreement with the Hungarian Chamber of
Commerce and Industry.
• On 1 April 2021 Moody’s rating agency upgraded the outlook on the Hungarian banking sector from
negative to stable
• On 6 April 2021 the NBH raised the available amount for the Funding for Growth Go! Scheme by HUF 500
billion to HUF 3,000 billion.
• On 18 May 2021 the Hungarian Development Bank revealed that the interest-free, maximum HUF 10 million
loan for micro- and small enterprises (the so-called interest-free restart quick loan) can be applied for by
companies whose revenues in 2020 plummeted by more than 30%, irrespective of the scope of activities
(certain other criteria must be met).
• On 25 May 2021 the National Bank of Hungary did not touch the benchmark interest rates, but stressed that
the central bank is ready to tighten monetary conditions in a proactive manner to the extent necessary in order
to ensure price stability and to mitigate inflation risks.
• On 9 June 2021 Viktor Orbán Prime Minister announced that their actual personal income tax payments (up
to the tax burden of the average wage) will be refunded to families raising kids in early-2022 provided that
the 2021 GDP growth surpasses 5.5%.
• According to Government Decree No. 317/2021. (VI. 9.) released on 9 June 2021 the payment moratorium
was extended with unchanged conditions until 30 September 2021.
• On 9 June 2021 Viktor Orbán Prime Minister announced that once the central bank phases out its Funding
for Growth scheme, the government will have to shoulder the financial burden of providing cheap (not higher
than 0.5% interest rate) subsidized loans to domestic micro and small enterprises, through the Széchenyi
Card programme by KAVOSZ. On 9 June László Krisán, CEO of KAVOSZ revealed the details of the
Széchenyi Card GO! programme launched on 1 July 2021.
• On its 22 June 2021 meeting the Monetary Council embarked on a rate hike cycle: the base rate was
increased by 30 bps to 0.9%. Also, effective from 24 June 2021 the National Bank of Hungary raised the one-
week deposit rate to the level of the base rate.
31
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 4:
COVID-19 (in HUF mn) [continued]
• The Monetary Council has started to transform the use of instruments having an effect at longer maturities.
Accordingly, with the exhaustion of the HUF 3,000 billion available amount, the Funding for Growth Go!
programme will be phased out. However, the central bank continues to consider the government securities
purchase programme to be crucial in its set of monetary policy instruments. The central bank will continue to
use the programme by maintaining a lasting presence in the market, taking a flexible approach to changing
the quantity and structure of weekly securities purchases, to the extent and for the time necessary.
• On 2 July 2021 the National Bank of Hungary recommended in its circular that financial institutions should
abstain from charging prepayment fees in the case of full or partial prepayment of deferred interest and fee
accumulated during the term of the moratorium. The central bank also recommended free of charge loan
contract modification if borrowers voluntarily undertake higher monthy instalments in order to shorten the
remaining maturity.
• On 6 July 2021 the National Bank of Hungary announced that with the aim of boosting green mortgage
lending, it decided to launch the Green Mortgage Bond Purchase Programme and the FGS Green Home
Programme as the first steps of the implementation of the new Green Monetary Policy Toolkit Strategy:
The strategic goal of the Green Mortgage Bond Purchase Programme is to contribute to the development of
the domestic green mortgage bond market through targeted purchases and, through this, encourage green
mortgage loan activities. The central bank will review the programme when the HUF 200 billion purchase
volume has been reached. Additionally, the central bank also decided to re-launch the Mortgage Bond
Rollover Facility for mortgage bonds without green rating.
The central bank will launch the Green Home Programme in October 2021 with a total limit of HUF 200
billion as part of the Funding for Growth Scheme (FGS). As in the previous phases of the FGS, the MNB
will provide refinancing operation to credit institutions at 0% interest, which will be lent to residential
customers at a maximum of 2.5%, fixed interest rate until the end of the maturity period. Under the scheme,
loans of up to HUF 70 million and a maximum term of 25 years can be granted for constructions or purchases
of new, highly energy-efficient residential real estates.
• On 23 July 2021 the European Central Bank announced that restrictions concerning dividend payments won’t
be prolonged beyond the previously effective deadline of 30 September 2021.
• A Government Decree was published on 23 July 2021 facilitating the VAT refund in the case of newly built
houses in brownfield sites.
• On 27 July 2021 the National Bank of Hungary raised the base rate by 30 bps to 1.2%, then on 29 July the
one-week deposit rate was hiked to the same level, by the same magnitude.
• On 30 July 2021 the results of the 2021 EU-wide stress test conducted by the European Banking Authority
were revealed. The fully loaded consolidated Common Equity Tier 1 (CET1) ratio of OTP Bank Plc. would
change to 16.3% under the baseline scenario and to 11.2% under the adverse scenario in 2023, compared to
14.2% as at the end of 2020.
• On 12 August 2021 the National Bank of Hungary announced that its management circular has been
reviewed. According to one of the amendments, the central bank extended the deadline concerning
restrictions on dividend payment and treasury share purchases until the end of 2021. Credit instititions might
be exempted from the dividend payment ban only if they meet certain strict conditions.
• On 24 August 2021 the National Bank of Hungary raised the base rate by 30 bps to 1.5%. Additionally, the
central bank decided to begin gradually withdrawing the government securities purchase programme while
considering aspects of maintaining market stability. Also, the central bank increased the available amount
under the Bond Funding for Growth scheme by HUF 400 billion to HUF 1,550 billion.
• Pursuant to Government Decree 536/2021. (IX. 15.) published on 15 September, the Government decided to
extend the debt repayment moratorium with the following conditions:
• The blanket moratorium was extended by an additional month, until the end of October, in an unchanged
form.
32
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 4:
COVID-19 (in HUF mn) [continued]
• From the beginning of November 2021 until 30 June 2022 only the eligible borrowers can participate in the
moratorium provided that they submitted a request to their banks about their intention to stay. So, the
extension beyond October is not automatic: borrowers had to submit a notification to their bank (opt-in).
Eligible retail borrowers include private individuals whose income fell compared to the previous period,
unemployed people, fostered workers, families raising children below the age of 25 or expecting a baby, and
pensioners (for details see the relevant decree). Eligible companies shall fulfil the following criteria: more
than 25% decline in revenues in the 18 months period preceding the submission of the request to participate,
and if the company has not concluded a new subsidized loan contract since 18 March 2020.
• During the term of the one-month extension until the end of October, eligible clients could submit the
necessary documents to their banks in order to stay in the scheme until June 2022, so this one-month
lengthening could be regarded as technical.
• According to Government Decree 537/2021. (IX. 15.) published on 15 September, credit institutions shall re-
calculate the interest deferred during the period spent in the moratorium in the case of overdraft loans and
credit card exposures. The base for the re-calculation shall be the NBH’s statistical data for the average
annualized cash loan interest rate published for February 2020. The difference between the deferred interest
booked according to the original contract and the re-calculated amount shall be refunded to the borrowers by
way of crediting the borrowers’ account with the due amount.
• On 21 September 2021 the National Bank of Hungary hiked the base rate by 15 bps to 1.65%. Furthermore,
the NBH continued to gradually withdraw the government securities purchase programme.
• On 4 October 2021 the National Bank of Hungary launched the FGS Green Home Programme as part of its
green monetary policy toolkit strategy.
• On 19 October 2021 the National Bank of Hungary increased the base rate by 15 bps to 1.8%.
• On 16 November 2021 the Monetary Council of the NBH hiked the base rate by 30 bps to 2.1%. The Deputy
Governor of NBH stressed after the Monetary Council meeting that the NBH is ready to set the rate of the 1-
week central bank deposit above the level of the base rate already from 18 November. Accordingly, on 18
November the NBH raised the rate of the 1-week deposit facility to 2.5%, and the central bank accepted all
offers at the tender. Consequently, the 1-week deposit has become the effective rate for the banking sector
determining the marginal asset yields.
• On its weekly one-week deposit tender on 25 November 2021 the NBH offered an interest rate of 2.9%.
• On 30 November 2021 the NBH’s Monetary Council widened the interest rate corridor and also decided to
make it asymmetric. Accordingly, the lower bound of the corridor was raised by 45 bps and the upper one by
105 bps.
• On 2 December 2021 the NBH hiked the rate of the 1-week central bank deposit by 20 bps to 3.1%.
33
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 4:
COVID-19 (in HUF mn) [continued]
• On 9 December 2021 the NBH hiked the rate of the 1-week central bank deposit by 20 bps to 3.3%.
• On 14 December 2021 the NBH’s Monetary Council raised the base rate by 30 bps to 2.4% and made a
decision to phase out both the Bond Funding for Growth programme and the government bond purchase
programme.
• On 16 December 2021 the NBH hiked the rate of the 1-week central bank deposit by 30 bps to 3.6%.
• Mr. Viktor Orbán Prime Minister announced on 22 December 2021 that the government will introduce an
interest rate cap for certain retail mortgage loans (for example whose pricing is linked to a reference rate, but
the legislation does not apply to those with longer fixation periods) for the period between 1 January and 30
June 2022. Accordingly, the affected mortgages’ reference rate cannot be higher than the relevant reference
rate as at 27 October 2021. Furthermore, banks had to inform their borrowers about the interest rate risk and
offer amendments to the contract until 31 January 2022. Details were laid down by Government Decree
782/2021 (XII. 24.) and Decree 1/2022 (I. 3.) by the Prime Minister’s Office.
• On 23 December 2021 the NBH hiked the rate of the 1-week central bank deposit by 20 bps to 3.8%.
•
In its release published on 27 December 2021 the NBH said that from 1 January 2022 Hungarian credit
institutions can pay dividends and buy back shares with shareholder remuneration purposes again. Thus, the
NBH did not extend these restrictions in line with the similar step taken by the ECB at the end of September.
• On 30 December 2021 the NBH hiked the rate of the 1-week central bank deposit by 20 bps to 4.0%.
• Against the initially planned 2 pps social security contribution cut effective from July 2022, the government
reduced employers’ taxes by 4 pps already from 1 January 2022 (the 1.5% vocational training contribution
was abolished and the social contribution taxes were cut by 2.5 pps).
• On 25 January 2022 the NBH hiked the base rate by 50 bps to 2.9%.
• On 27 January 2022 the NBH hiked the rate of the 1-week central bank deposit by 30 bps to 4.3%.
• On 15 February 2022 the CSO revealed the final GDP growth figures: accordingly, in 4Q 2021 the quarterly
expansion of 2.1% was stronger than expected, lifting the annual growth rate to 7.1% in 2021 as a whole
(seasonally and working day adjusted). Mr. Mihály Varga (Minister of Finance) announced that the
government expects 5.9% growth for 2022.
34
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 4:
COVID-19 (in HUF mn) [continued]
Interest rate cap
For the period between 1 January and 30 June 2022 the government introduced an interest rate cap for variable-
rate retail mortgage loans, and with its decision announced on 18 February, for housing purposes financial
leasing contracts, too. Accordingly, the affected exposures’ reference rate cannot be higher than the relevant
reference rate as at 27 October 2021.
The modification loss related to the interest rate cap for variable rate mortgage loans announced on 22 December
2021 was recognized in the Bank’s 2021 financial accounts. The extension of the interest rate cap to housing
purposes financial leasing contracts does not have a significant negative effect.
Moratorium one-off effect
In Hungary the first phase of the moratorium on loan payments was effective from 19 March 2020 to 31
December 2020. At the end of 2020 the moratorium was extended in unchanged form for the period between 1
January 2021 and 30 June 2021. Furthermore, according to Government Decree No. 317/2021. (VI. 9.) released
on 9 June 2021 the payment moratorium was extended with unchanged conditions until 30 September 2021.
Pursuant to Government Decree 536/2021. (IX. 15.) published on 15 September, the Government decided to
extend the debt repayment moratorium: the blanket moratorium was extended by an additional month, until the
end of October, in an unchanged form. Furthermore, from the beginning of November 2021 until 30 June 2022
only the eligible borrowers can participate in the moratorium provided that they submitted a request to their
banks about their intention to stay.
During the term of the moratorium OTP Bank accrues the unpaid interest in its statement of recognized income,
amongst the revenues. At the same time, due to the fact that interest cannot be charged on the unpaid interest,
and the unpaid interest will be repaid later, in the course of 2020 and 2021 altogether HUF 43.3 billion after tax
loss emerged in Hungary and Serbia altogether. Within that amount there was a -HUF 1.7 billion (after tax)
negative impact booked in December 2020 in relation to the Serbian deferral scheme, as the original interest
calculation method was changed by the local regulator (originally the compound interest method was allowed by
the law in Serbia, but charging interest on deferred interest was later retroactively disallowed by the regulator).
Loan volumes under the Hungarian payment holiday followed a declining trend till the end of October 2021,
then from November the participation dropped materially due to the changes to the structure. At the end of 2021
the total household and corporate exposures remaining under the moratorium comprised HUF 245 billion at OTP
Core and Merkantil Group, which made up 4.1% of the total gross loan portfolio of those two entities.
Participation in COVID moratorium as at 31 December 2021
OTP Bank
113,639
2.3%
Current volume in moratorium
Current participation ratio
Participation in COVID moratorium as at 31 December 2021
OTP Bank
1,059,428
26.2%
Current volume in moratorium
Current participation ratio
35
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 4:
COVID-19 (in HUF mn) [continued]
Financial assets modified during the year ended 31 December 2021 related to covid moratorium
Modification due to prolongation of deadline of covid moratoria till 30 September
Gross carrying amount before modification
Modification loss due to covid moratoria
Gross carrying amount after modification
Loss allowance before modification
Net amortised cost after modification
Modification due to prolongation of deadline of covid moratoria till 31 October
Gross carrying amount before modification
Modification loss due to covid moratoria
Gross carrying amount after modification
Loss allowance before modification
Net amortised cost after modification
668,312
(5,284)
663,028
(55,180)
607,848
665,620
(1,292)
664,328
(58,412)
605,916
In case of credit card and overdraft loans interest charged during the moratoria period should be refunded to
the debtors in amount determined as a difference between the charged interest and a premoratoria personal loan
interest at 11,99%. The Bank has managed this government measure as loan agreement modification in the
financial statements.
Gross carrying amount before modification
Modification loss due to covid moratoria
Gross carrying amount after modification
Loss allowance before modification
Net amortised cost after modification
Modification due to prolongation of deadline of covid moratoria till 30 June 2022
Gross carrying amount before modification
Modification loss due to covid moratoria
Gross carrying amount after modification
Loss allowance before modification
Net amortised cost after modification
57,892
(1,983)
55,909
(9,234)
46,675
82,438
(1,614)
80,824
(23,516)
57,308
On 24 December 2021 new regulation was issued on fixing of retail loan product’s interest, under that interest
rates of mortgage loans with variable interest shall be fixed at reference rates of 27 October 2021, predictably
till 30 June 2022.
Gross carrying amount before modification
Modification loss due to covid moratoria
Gross carrying amount after modification
Loss allowance before modification
Net amortised cost after modification
67,108
(703)
66,405
(1,625)
64,780
36
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
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
Loss allowance
Subtotal
Average amount of compulsory reserve
Total
Rate of the compulsory reserve
2021
2020
82,839
21,182
104,021
81,512
289,596
371,108
107,523
18,899
126,422
204,942
247,756
452,698
(185)
-
474,944
579,120
99,303
76,033
375,641
503,087
1%
1%
The Bank shall deposit compulsory reserve in a determined percent of its liabilities at NBH. Liabilities
considered in compulsory reserve calculation are as follows:
a) deposits and loans,
b) debt instruments,
c)
repo transactions.
The amount of the compulsory reserve is the multiplication of the daily average of the liabilities considered in
the compulsory reserve calculation and compulsory reserve rate, which are determined by the NBH in a specific
decree. The Bank is required to complete compulsory reserve requirements in average in the second month after
the reserve calculation period, requirements shall be completed once a month on the last calendar day. The Bank
complies with the compulsory reserve requirements by the deposit of the adequate amount of cash as the
calculated compulsory reserve on the bank account at NBH in monthly average.
An analysis of the change in the loss allowance on placement losses is as follows:
2021
2020
Balance as at 1 January
Loss allowance
Closing balance
-
185
185
-
-
-
37
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
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
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
Use of loss allowance
FX movement
Closing balance
2021
2020
1,388,709
372,361
1,761,070
747,871
65,761
813,632
905,241
329,633
1,234,874
267,291
39,538
306,829
2,574,702
1,541,703
(7,490)
(5,819)
2,567,212
1,535,884
2021
2020
5,819
20,524
(18,911)
(2)
60
7,490
3,592
12,548
(10,497)
-
176
5,819
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
2021
2020
0% - 5.9%
(0.59%) - 29%
1.63%
0% - 3.84%
(0.76%) - 29%
0.78%
38
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 7:
REPO RECEIVABLES (in HUF mn)
Within one year:
In HUF
Total gross amount
Loss allowance on repo receivables
Total repo receivables
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
Interest conditions of repo receivables (%):
Repo receivables in HUF
Average interest of repo receivables
2021
2020
33,710
33,710
183,656
183,656
33,710
183,656
(72)
(292)
33,638
183,364
2021
2020
292
449
(669)
72
6
362
(76)
292
2021
2020
2%-3.2%
0.29%
(0.1%) - 0.9%
0.09%
39
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 8:
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (in HUF mn)
2021
2020
Held for trading securities:
Government bonds
Other non-interest bearing securities
Hungarian government discounted Treasury Bills
Corporate shares and investments
Mortgage bonds
Other securities
Subtotal
Securities mandatorily measured at fair value through profit or loss
Shares in investment funds
Bonds
Shares
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
30,827
1,134
869
599
116
2,088
35,633
25,126
-
2,935
28,061
38,811
59,097
11,649
73,211
182,768
6,031
1,964
1,233
426
-
2,075
11,729
23,818
5,342
2,776
31,936
41,852
34,256
7,359
33,351
116,818
246,462
160,483
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
2021
111
4,163
4,274
1,544
28,083
29,627
1,732
2020
78
2,319
2,397
1,355
5,587
6,942
2,390
35,633
11,729
81%
19%
100%
83%
17%
100%
71%
29%
100%
68%
32%
100%
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
0%-6.75%
0%-5.75%
1.17%
0.5%-6.75%
0.5%-6.375%
0.63%
40
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 8:
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (in HUF mn)
[continued]
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
Securities mandatorily measured at fair value through profit or loss
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
2021
2020
-
-
28
5,314
28,061
26,594
28,061
31,936
67%
33%
58%
42%
100%
100%
-
-
2.49%
2.49%
NOTE 9:
SECURITIES AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
(in HUF mn)
2021
2020
Securities at fair value through other comprehensive income
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
278,876
217,941
63,115
64,870
43,759
2,896
40,863
21,111
15,487
5,624
624,802
17,137
528
16,609
17,137
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
Securities at fair value through other comprehensive income total
641,939
911,950
41
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 9:
SECURITIES AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
(in HUF mn) [continued]
Detailed information of the non-trading equity instruments to be measured at fair value through other
comprehensive income:
Name
Garantiqa
Hage / Közvil / Pénzügykut
OBS
VISA A Preferred
Currency
HUF
HUF
EUR
USD
2021
392
136
13,221
3,388
2020
392
136
12,081
3,122
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
2021
2020
1,089
66,970
68,059
71,344
485,398
556,742
3,779
123,481
127,260
101,555
667,404
768,959
17,138
15,731
641,939
911,950
73%
27%
100%
83%
17%
100%
Interest rates on FVOCI securities denominated in HUF
Interest rates on FVOCI securities denominated in foreign currency
1.25%-11%
0.5%-11%
0%-16% 0.625%-7.25%
Average interest on FVOCI securities
2.85%
2.17%
Certain fixed-rate mortgage bonds and other securities are hedged against interest rate risk. (See Note 45.4.)
Net gain / (loss) reclassified from other comprehensive income to statement
of profit or loss
Fair value of the hedged securities:
Government bonds
2021
2020
(26,440)
(2,008)
201,530
201,530
399,441
399,441
During the year ended 31 December 2021 and 2020 the Bank didn’t sell any of equity instruments designated to
measure at fair value through other comprehensive income.
42
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 10:
SECURITIES AT AMORTISED COST (in HUF mn)
Government bonds
Other bonds
Mortgage bonds
Subtotal
Loss allowance
Total
2021
2020
2,863,259
190,155
24,309
3,077,723
1,947,821
63,159
-
2,010,980
(6,685)
(3,288)
3,071,038
2,007,692
Interest conditions and the remaining maturities of securities at amortised cost can be analysed as follows:
2020
2021
Within one year:
variable interest
fixed interest
Over one year:
variable interest
fixed interest
Total
8,101
305,694
313,795
5,122
2,758,806
2,763,928
-
57,746
57,746
-
1,953,234
1,953,234
3,077,723
2,010,980
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
2021
83%
17%
100%
0.1%-12.75%
2.84%
2020
99%
1%
100%
0.5%-7%
2.42%
An analysis of change in the loss allowance on securities at amortised cost:
Balance as at 1 January
Reclassification
Balance as at 1 January
Loss allowance
Release of loss allowance
FX movement
Closing balance
2021
2020
3,288
1,281
4,569
4,404
(2,370)
82
6,685
1,443
-
1,443
4,820
(2,977)
2
3,288
43
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 11:
LOANS (in HUF mn)
Loans measured at fair value through profit or loss
Within one year
Over one year
2021
2020
32,091
629,921
25,732
455,205
Loans measured at fair value through profit or loss total
662,012
480,937
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
2021
2020
2,125,908
2,062,114
4,188,022
1,793,352
1,748,078
3,541,430
Loss allowance on loan losses
(155,557)
(123,670)
Loans at amortised cost total
4,032,465
3,417,760
An analysis of the loan portfolio by currency (%):
In HUF
In foreign currency
Total
2021
62%
38%
100%
2020
61%
39%
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
2021
2020
1.5% - 9.85%
4.56%
1.5% - 9.85%
4.20%
Interest rates of the loan portfolio measured at amortised cost are as follows (%):
Loans denominated in HUF
Loans denominated in foreign currency
2021
2020
0%-37.5%
(0.59%)-13%
0%-37.5%
(0.50%)-13%
Average interest on loans denominated in HUF
Average interest on loans denominated in foreign currency
6.64%
1.48%
6.41%
2.24%
44
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 11:
LOANS (in HUF mn) [continued]
For an analysis of the loan portfolio by type please see Note 36.1.
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
Loss allowance
Release of loss allowance
Use of loss allowance
Partial write-off
FX movement
Closing balance
2021
2020
123,670
(1,281)
122,389
221,084
(180,291)
(6,951)
(1,733)
1,059
155,557
72,066
-
72,066
213,618
(156,383)
(6,228)
(2,797)
3,394
123,670
The Bank sells non-performing loans without recourse at estimated fair value to a wholly owned subsidiary, OTP
Factoring Ltd.
45
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 12:
INVESTMENTS IN SUBSIDIARIES, ASSOCIATES, JOINT VENTURES AND
OTHER INVESTMENTS (in HUF mn)
Investments in subsidiaries:
Controlling interest
Other
Subtotal
Impairment loss
Total
2021
2020
2,006,178
16,086
2,022,264
1,965,197
8,938
1,974,135
(449,256)
(425,163)
1,573,008
1,548,972
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:
2021
2020
% Held
(direct/indirect)
Gross book
value
% Held
(direct/indirect)
Gross book
value
OTP Bank JSC (Ukraine)
DSK Bank EAD (Bulgaria)
OTP banka Srbija akcionarsko drustvo Novi
Sad (Serbia)
OTP banka Hrvatska d.d. (Croatia)
OTP Bank Romania S.A. (Romania)
OTP Mortgage Bank Ltd.
SKB Banka d.d. Ljubljana (Slovenia)
JSC "OTP Bank" (Russia)
Crnogorska komercijalna banka a.d.
(Montenegro)
LLC Alliance Reserve (Russia)
Air-Invest Llc.
OTP Holding Malta Ltd.
Balansz Private Open-end Investment Fund
Bank Center No. 1. Ltd.
OTP Factoring Ltd.
OTP banka Srbija a.d. (Serbia)
Other
Total
100%
100%
100%
100%
100%
100%
100.00%
98%
100%
100%
100%
100%
100%
100%
100%
-
311,390
280,692
262,759
205,349
167,764
154,294
107,689
74,337
72,784
50,074
39,248
32,359
29,150
26,063
25,411
-
166,815
2,006,178
100%
100%
100%
100%
100%
100%
100%
98%
100%
100%
100%
100%
100%
100%
100%
100%
311,390
280,692
131,164
205,349
133,987
154,294
107,689
74,335
72,784
50,074
36,748
32,359
29,150
26,063
25,411
127,140
166,568
1,965,197
46
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 12:
INVESTMENTS IN SUBSIDIARIES, ASSOCIATES, JOINT VENTURES AND
OTHER INVESTMENTS (in HUF mn) [continued]
An analysis of the change in the impairment loss is as follows:
Balance as at 1 January
Impairment loss for the period
Reversal of impairment loss
Use of impairment loss
Closing balance
2021
2020
425,163
59,132
(31,712)
(3,327)
449,256
427,770
10,052
(10)
(12,649)
425,163
The Bank decided that the recoverable amount is determined based on fair value less cost of disposal. The Bank
prepared impairment tests of the subsidiaries based on two different net present value calculation methods that
show the same result; however they represent different economical logics. On one hand is the discount cash flow
method (“DCF”) that calculates the value of the subsidiaries by discounting their expected cash flow; on the
other hand the economic value added (“EVA”) method estimates the value of the subsidiaries from the initial
invested capital and the present value of the economic profit that the companies are expected to generate in the
future. Applying the EVA method was more practically than DCF method because it gives a more realistic
picture about how the explicit period and the residual value can contribute to the value of the company.
The Bank, in its strategic plan, has taken into consideration the effects of the present global economic situation,
the cautious recovery of economic situation and outlook, the associated risks and their possible effect on the
financial sector as well as the current and expected availability of wholesale funding.
An analysis of the impairment loss by significant subsidiaries is as follows:
OTP Bank JSC (Ukraine)
OTP Bank Romania S.A. (Romania)
OTP Mortgage Bank Ltd.
OTP banka Srbija a.d. (Serbia)
OTP Life Annuity Ltd.
Air-Invest Ltd.
Monicomp Ltd.
Crnogorska komercijalna banka a.d. (Montenegro)
Balansz Private Open-end Investment Fund
OTP Real Estate Ltd.
R.E. Four d.o.o. (Serbia)
OTP Buildings s.r.o (Romania)
Total
2021
207,397
77,962
65,096
43,477
10,969
10,491
8,632
6,697
5,566
5,557
3,763
-
445,607
2020
207,397
38,416
65,096
53,383
10,969
10,491
-
23,324
-
5,557
3,763
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 Bank JSC (Ukraine)
OTP banka dioničko društvo (Croatia)
Inga Kettő Llc.
OTP Holding Malta Ltd.
OTP Real Estate Investment Fund Management Ltd.
Monicomp Ltd.
Other
Subtotal
Dividend from shares held-for-trading
Dividend from shares fair value through other comprehensive income
Total
2021
44,000
12,853
12,244
11,000
5,531
3,500
1,173
4,741
95,042
3,844
151
99,037
2020
45,463
-
-
-
4,823
4,000
3,800
2,827
60,913
8
52
60,973
47
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 12:
INVESTMENTS IN SUBSIDIARIES, ASSOCIATES, JOINT VENTURES AND
OTHER INVESTMENTS (in HUF mn) [continued]
Significant associates and joint ventures
The main figures of the Bank’s indirectly owned associates and joint ventures at cost1:
Carrying
amount
Ownership
of OTP
Bank
Profit after
tax
Country /
Headquarter
Activity
As at 31 December 2021
List of associated entities
OTP Kockázati Fund I.
OTP-DayOne Magvető Fund
D-ÉG Thermoset Ltd. 'u.l.'
Company for Cash Services AD
Edrone spółka z ograniczoną
odpowiedzialnością
Graboplast Closed Co. Plc.
NovaKid Inc.
Banzai Cloud Closed Co. Plc.
ClodeCool Ltd.
Pepita.hu Closed Co. Plc.
Seon Holdings Ltd.
Starschema Ltd.
VCC Live Group Closed Co. Plc.
Virtual Solutaion Ltd.
Yieldigo s.r.o.
Szallas.hu Closed Co. Plc.2
Cursor Insight LTD
Fabetker Ltd.
OneSoil Ag.
Packhelp Spółka Akcyjna
526
288
-
392
779
700
2,006
374
1,770
516
4,756
3,944
1,672
-
76
8,809
146
1
318
2,160
44.12%
22.00%
46.99%
25.00%
17.34%
7.00%
4.17%
17.42%
20.15%
34.00%
23.86%
36.19%
49.56%
8.33%
1.97%
51.19%
6.75%
20.48%
3.72%
1.00%
21.69%
21.69%
14.54%
(52) Hungary /Budapest
13 Hungary /Budapest
Trusts, funds and similar financial entities
Trusts, funds and similar financial entities
- Hungary / Dunaújváros Wholesale of hardware, plumbing and heating equipment and supplies
(183) Bulgaria / Sofia
Other financial service activities, exc. insurance and pension funding
(293) Poland / Krakow
n.a. Hungary / Győr
(4,621) USA / San Francisco
n.a. Hungary /Budapest
1 Hungary /Budapest
(132) Hungary / Szeghalom
Computer programming activities
Manufacture of builders’ ware of plastic
Online kids English learning platform operator
Computer programming activities
Other education n.e.c.
Retail sale via mail order houses or via Internet
Computer programming activities
Computer consultancy activities
Computer programming activities
Computer programming activities
(168) Czech Republic/Prague Computer programming activities
1,278 Hungary / Miskolc
(247) UK / London
(4) UK / London
n.a. Hungary /Budapest
(203) Hungary /Budapest
n.a. Hungary /Budapest
132 Hungary / Nádudvar
(1,058) Switzerland / Zurich
(3,038) Poland / Warsaw
Web portals
Computer programming activities
Manufacture of concrete products for construction purposes
Computer programming activities
Manufacture of corrugated paper and paperboard
and of containers of paper and paperboard
PHOENIX PLAY Invest closed Co. Plc.
ALGORITHMIQ Invest Closed Co. Plc.
NGY Propertiers Investment SRL
3,081
8,996
12,331
(1) Hungary /Budapest
792 Hungary /Budapest
(22,567) Romania / Bucharest
Activities of holding companies
Activities of holding companies
Renting and operating of own or leased real estate
1 Based on unaudited financial statements.
2 The Group does not control the entity even though it holds more than half of the voting rights.
48
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 12:
INVESTMENTS IN SUBSIDIARIES, ASSOCIATES, JOINT VENTURES AND
OTHER INVESTMENTS (in HUF mn) [continued]
Significant associates and joint ventures [continued]
As at 31 December 2020
List of associated entities
OTP Kockázati Fund I.
OTP-DayOne Magvető Fund
D-ÉG Thermoset Ltd. 'u.l.'
Company for Cash Services AD
Edrone spółka z ograniczoną
odpowiedzialnością
Graboplasr Closed Co. Plc.
NovaKid Inc.
Banzai Cloud Closed Co. Plc.
ClodeCool Ltd.
Pepita.hu Closed Co. Plc.
Seon Holdings Ltd.
Starschema Ltd.
Tresorit S.A.
VCC Live Group Closed Co. Plc.
Virtual Solutaion Ltd.
Yieldigo s.r.o.
Szallas.hu Closed Co. Plc.1
Carrying
amount
Ownership
of OTP
Bank
Profit after
tax
Country / Headquarter
Activity
531
674
-
392
497
711
497
1,008
1,797
575
378
1,310
1,501
1,599
72
79
7,456
44.12%
22.00%
46.99%
25.00%
17.34%
7.00%
4.17%
17.42%
20.15%
34.00%
23.86%
36.19%
7.77%
49.56%
8.33%
1.97%
51.19%
(2) Hungary /Budapest
(37) Hungary /Budapest
- Hungary / Dunaújváros
(254) Bulgaria / Sofia
Trusts, funds and similar financial entities
Trusts, funds and similar financial entities
Wholesale of hardware, plumbing and heating equipment and supplies
Other financial service activities,
except insurance and pension funding n.e.c.
(79) Poland / Krakow
(1,349) Hungary / Győr
(398) USA / San Francisco
13,430 Hungary /Budapest
132 Hungary /Budapest
3 Hungary / Szeghalom
37 UK / London
Computer programming activities
Manufacture of builders’ ware of plastic
Online kids English learning platform operator
Computer programming activities
Other education n.e.c.
Retail sale via mail order houses or via Internet
Computer programming activities
454 Hungary /Budapest
Computer consultancy activities
232 Luxembourg/Luxembourg Activities of holding companies
(58) Hungary /Budapest
(86) Hungary /Budapest
103 Czech Republic / Prague
595 Hungary / Miskolc
Computer programming activities
Computer programming activities
Computer programming activities
Web portals
1 The Group does not control the entity even though it holds more than half of the voting rights.
49
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 12:
INVESTMENTS IN SUBSIDIARIES, ASSOCIATES, JOINT VENTURES AND
OTHER INVESTMENTS (in HUF mn) [continued]
Significant event related to investments
The Romanian Court of Registration registered a capital increase at OTP Bank Romania SA, the Romanian
subsidiary of OTP Bank. Accordingly, the registered capital of the Romanian subsidiary of OTP Bank was
increased to RON 2,079,253,200 from RON 1,829,253,120.
TP Bank signed a share sale and purchase agreement on purchasing 100% shareholding of Nova KBM d.d. and
its subsidiaries, which are 80% owned by funds managed by affiliates of Apollo Global Management, Inc. and
20% by EBRD. With a market share of 20.5% by total assets as of December 2020, Nova KBM d.d. is the 2nd
largest bank in the Slovenian banking market and as a universal bank it has been active in the retail and
corporate segments as well.
Serbian Court of Registration registered a capital increase at OTP banka Srbija a.d. Novi Sad, the Serbian
subsidiary of OTP Bank. Accordingly, the registered capital of the Serbian subsidiary of OTP Bank was
increased to RSD 56,830,752,260 from RSD 55,330,780,140.
OTP Bank signed a non-binding Memorandum of Agreement regarding the potential acquisition of the majority
stake of Ipoteka Bank and its subsidiaries with the Ministry of Finance of the Republic of Uzbekistan. Ipoteka
Bank is the fifth largest bank in Uzbekistan, with a market share of 8.5% based on total assets at the end of July
2021, with more than 1.2 million retail customers and a large corporate clientele.
OTP Bank signed an acquisition agreement with Alpha International Holdings Single Member S.A. on
purchasing 100% shareholding of Alpha Bank SH.A., the Albanian subsidiary of the Greek Alpha Bank S.A.
The purchase price has been agreed at Euro 55 million.
50
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 13:
PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (in HUF mn)
For the year ended 31 December 2021
Intangible assets
Property
Office equipment
and vehicles
Vehicles
Construction in
progress
Right of use
assets
Total
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
164,875
52,130
(28,152)
188,853
107,236
23,032
(3,576)
126,692
72,277
4,074
(1,845)
74,506
25,789
3,284
(757)
28,316
93,878
13,434
(3,843)
103,469
71,899
9,190
(3,685)
77,404
57,639
62,161
46,488
46,190
21,979
26,065
160
87
(48)
199
74
25
(37)
62
86
137
9,421
20,394
(20,390)
9,425
-
-
-
-
22,443
8,675
-
31,118
8,964
5,161
(238)
13,887
363,054
98,794
(54,278)
407,570
213,962
40,692
(8,293)
246,361
9,421
9,425
13,479
17,231
149,092
161,209
51
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 13:
PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (in HUF mn) [continued]
For the year ended 31 December 2020
Intangible assets
Property
Office equipment
and vehicles
Vehicles
Construction in
progress
Right of use
assets
Total
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
69,380
3,858
(961)
72,277
22,948
3,192
(351)
25,789
87,235
10,766
(4,123)
93,878
66,506
9,495
(4,102)
71,899
53,282
57,639
46,432
46,488
20,729
21,979
126
35
(1)
160
56
19
(1)
74
70
86
10,523
13,556
(14,658)
9,421
17,827
4,764
(148)
22,443
324,117
87,630
(48,693)
363,054
-
-
-
-
4,220
4,750
(6)
8,964
179,474
38,948
(4,460)
213,962
10,523
9,421
13,607
13,479
144,643
149,092
The Bank has no intangible assets with indefinite useful life.
52
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 14:
INVESTMENT PROPERTIES (in HUF mn)
For the year ended 31 December 2021 and 2020, respectively
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 period
Disposals
Balance as at 31 December
Net book value
Balance as at 1 January
Balance as at 31 December
2021
2020
2,577
3,061
2,640
(204)
5,013
38
(522)
2,577
641
92
(48)
685
680
51
(90)
641
1,936
4,328
2,381
1,936
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
2021
6
92
2020
6
49
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
2021
2020
13,276
5,471
(1,020)
17,727
637
6,180
-
6,817
53
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 16:
OTHER ASSETS1 (in HUF mn)
Other financial assets
Receivables from OTP Employee Stock Ownership Program (OTP ESOP)
Prepayments and accrued income
Receivables from investment services
Stock exchange deposit
Trade receivables
Receivables from card operations
Accrued day one gain of loans provided at below-market interest
Receivables from suppliers
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
2021
2020
84,304
16,391
16,074
11,643
10,519
10,423
-
5,812
3,729
158,895
(5,148)
153,747
44,411
14,281
12,563
71,255
(514)
70,741
53,338
14,721
9,472
9,667
9,731
8,453
14,465
5,885
9,375
135,107
(7,928)
127,179
17,732
10,622
14,743
43,097
(482)
42,615
Total
224,488
169,794
An analysis of the movement in the loss allowance on other financial assets is as follows:
Balance as at 1 January
Charge for the period
Release of loss allowance
Use of loss allowance
FX movement
Balance as at 31 December
2021
2020
7,928
3,888
(5,972)
(707)
11
5,148
5,646
6,663
(3,971)
(537)
127
7,928
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
FX movement
Balance as at 31 December
2021
2020
482
86
(74)
20
514
464
81
(67)
4
482
1 Other assets are expected to be recovered or settled no more than twelve months after the reporting period.
54
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
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
2021
2020
354,647
81,550
436,197
588,161
26,845
615,006
1,051,203
172,799
41,643
214,442
457,882
94,653
552,535
766,977
1,051,203
766,977
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
2021
2020
(2.4%) - 4.5%
(2.4%) - 8.5%
0%-20%
(0.56%)-0.26%
(2.4%) - 1.3%
(2.4%) - 1.5%
(2.4%)-1.43%
2.4%)-4.84%
Average interest on amounts due to banks in HUF
Average interest on amounts due to banks in foreign currency
1.26%
1.14%
0.72%
1.42%
NOTE 18:
REPO LIABILITIES (in HUF mn)
Within one year:
In HUF
Over one year:
In HUF
In foreign currency
Subtotal
Total
Interest rates on repo liabilities are as follows (%):
Within one year:
In HUF
Over one year:
In foreign currency
Average interest on repo liabilities in HUF
Average interest on repo liabilities in foreign currency
2021
2020
49,726
49,726
-
36,854
36,854
86,580
-
-
73
109,539
109,612
109,612
86,580
109,612
2021
2020
1.5% - 2.8%
-
(0.35%)
0.63%-3.85%
11.67%
0.67%
1.21%
1.05%
55
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 19:
DEPOSITS FROM CUSTOMERS (in HUF mn)
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
Subtotal
Interest rates on deposits from customers are as follows (%):
Within one year in HUF
Over one year in HUF
In foreign currency
2021
2020
7,823,118
2,079,643
9,902,761
45,771
45,771
6,412,897
1,438,255
7,851,152
44,583
44,583
9,948,532
7,895,735
2021
(2.48%)-7.96%
0.01%-2.4%
(0.6%)-17.2%
2020
(4.58%)-7.96%
0.01%-0.4%
(0.58%)-15.5%
Average interest on deposits from customers in HUF
Average interest on deposits from customers in foreign currency
0.16%
0.01%
(0.07%)
(0.04%)
An analysis of deposits from customers by type, not including accrued interest, is as follows:
Retail deposits
Household deposits
Corporate deposits
Deposits to medium and large corporates
Municipality deposits
Total
2021
2020
4,475,933
4,475,933
5,472,599
4,639,198
833,401
45%
45%
55%
47%
8%
9,948,532 100%
3,840,950
3,840,950
4,054,785
3,301,434
753,351
49%
49%
51%
42%
10%
7,895,735 100%
NOTE 20:
LIABILITIES FROM ISSUED SECURITIES (in HUF mn)
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
Total
Interest rates on liabilities from issued securities are as follows (%):
Issued securities denominated in HUF
Issued securities denominated in foreign currency
2021
2020
12,048
-
12,048
10,105
10,105
11,115
1,356
12,471
15,964
15,964
22,153
28,435
2021
0%-1.7%
-
2020
0%-1.7%
0.01%-1.11%
Average interest on issued securities denominated in HUF
Average interest on issued securities denominated in foreign currency
4.9%
-
1.03%
1.12%
56
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 20:
LIABILITIES FROM ISSUED SECURITIES (in HUF mn) [continued]
Term Note Program in the value of HUF 200 billion for the year of 2021/2022
On 28 May 2021 the Bank initiated term note program in the value of HUF 200 billion with the intention of
issuing registered dematerialized bonds in public. The NBH approved on 8 July 2021 the prospectus of Term
Note Program. The prospectus is valid for 12 months following the disclosure.
The Issuer can initiate to introduce the bonds issued under the program to the Hungarian and to other stock
exchanges without any obligations.
Term Note Program in the value of HUF 200 billion for the year of 2020/2021
On 21 April 2020 the Bank initiated term note program in the value of HUF 200 billion with the intention of
issuing registered dematerialized bonds in public. The NBH approved on 9 July 2020 the prospectus of Term
Note Program and the disclosure as at 10 July 2020. The prospectus is valid for 12 months following the
disclosure.
The Issuer can initiate to introduce the bonds issued under the program to the Hungarian and to other stock
exchanges without any obligations.
Hedge accounting
Certain issued structured securities are hedged by the Bank with interest rate swaps (“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 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 interest payments are swapped to floating interest rate. This hedging relationship meets all of the
following hedge effectiveness requirements:
•
•
•
there is an economic relationship between the hedged item and the hedging instrument
the effect of credit risk does not dominate the value changes that result from that economic relationship
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
uses to hedge that quantity of hedged item
The cash-flows of the fixed rate securities issued by the Bank are exposed to the changes in the HUF/EUR
foreign exchange rate and the volatility of the quoted interest rates of EUR and HUF. The interest rate risk and
foreign exchange risk related to these securities are hedged with EUR and HUF IRS transactions, where the
fixed interests were swapped to payments linked to 3 month HUF BUBOR and EURIBOR, resulting in a
decrease in the interest rate and foreign exchange exposure of issued securities.
57
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 20:
LIABILITIES FROM ISSUED SECURITIES (in HUF mn) [continued]
Issued securities denominated in HUF as at 31 December 2021
Name
Date of
issuance
Maturity
Nominal value
in HUF million
Amortised cost in HUF
million
Interest
conditions
Hedged
1 OTP_DK_22/II
2 OTPRF2022A
3 OTP_DK_25/3
4 OTPRF2022B
5 OTP_DK_22/I
6 OTP_DK_23/II
7 OTPRF2023A
8 OTPRF2022E
9 OTP_DK_24/3
10 OTPRF2022F
11 OTP_DK_27/II
12 OTP_DK_23/I
13 OTP_DK_26/II
14 OTP_DK_24/II
15 OTP_DK_28/I
16 OTP_DK_25/II
17 OTPX2022B
18 OTP_DK_24/I
19 OTP_DK_26/I
20 OTPX2023A
21 OTPX2024B
22 OTP_DK_29/I
23 OTPRF2022D
24 OTPX2022C
25 OTPX2022D
26 OTPX2024A
27 OTPX2024C
28 OTPX2023B
29 OTPRF2022C
30 OTPX2022A
31 OTP_DK_25/I
32 OTP_DK_27/I
33 OTP_DK_30/I
Other
29/05/2020
22/03/2012
31/05/2021
22/03/2012
15/12/2018
29/05/2020
22/03/2013
29/10/2012
31/05/2021
28/12/2012
31/05/2021
15/12/2018
31/05/2021
29/05/2020
31/05/2021
29/05/2020
18/07/2012
30/05/2019
29/05/2020
22/03/2013
10/10/2014
31/05/2021
28/06/2012
29/10/2012
28/12/2012
18/06/2014
15/12/2014
28/06/2013
28/06/2012
22/03/2012
30/05/2019
29/05/2020
31/05/2021
31/05/2022
23/03/2022
31/05/2025
23/03/2022
31/05/2022
31/05/2023
24/03/2023
31/10/2022
31/05/2024
28/12/2022
31/05/2027
31/05/2023
31/05/2026
31/05/2024
31/05/2028
31/05/2025
18/07/2022
31/05/2024
31/05/2026
24/03/2023
16/10/2024
31/05/2029
28/06/2022
28/10/2022
27/12/2022
21/06/2024
20/12/2024
26/06/2023
28/06/2022
23/03/2022
31/05/2025
31/05/2027
31/05/2030
3,173
2,321
1,216
934
993
997
899
862
883
708
795
717
707
592
669
592
164
426
392
312
295
403
286
177
238
241
242
198
209
175
104
95
104
211
3,164
2,513
1,138
1,011
985
981
977
933
848
773
703
694
644
573
572
564
549
400
366
366
336
332
324
317
290
277
275
272
266
236
94
87
82
211
discount
indexed 1.70 hedged
discount
indexed 1.70 hedged
discount
discount
indexed 1.70 hedged
indexed 1.70 hedged
discount
indexed 1.70 hedged
discount
discount
discount
discount
discount
discount
indexed 1.70 hedged
discount
discount
indexed 1.70 hedged
indexed 0.70 hedged
discount
indexed 1.70 hedged
indexed 1.70 hedged
indexed 1.70 hedged
indexed 1.30 hedged
indexed 0.60 hedged
indexed 0.60 hedged
indexed 1.70 hedged
indexed
- hedged
discount
discount
discount
indexed
Subtotal issued securities in HUF
Total
21,330
21,330
22,153
22,153
58
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 20:
LIABILITIES FROM ISSUED SECURITIES (in HUF mn) [continued]
Issued securities denominated in foreign currency as at 31 December 2020
Name
Date of
issuance Maturity Currency
Nominal
value in FX
million
Nominal
value in
HUF
million
Amortised
cost in FX
million
Amortised
cost in HUF
million
Interest
conditions
(in % actual) hedged
1 OTP_VK1_21/1
2 OTP_VK1_21/2
20/02/2020
02/04/2020
20/02/2021
02/04/2021
3 OTP_VK1_21/3
4 OTP_VK1_21/4
14/05/2020
18/06/2020
14/05/2021
18/06/2021
USD
USD
USD
USD
1.39
1.24
1.18
0.74
414
370
351
221
1.39
1.24
1.18
0.74
414 variable 0.01
370 variable 0.01
351 variable 0.01
221 variable 0.01
Subtotal issued securities in foreign currency
4.55
1,356
4.55
1,356
Issued securities denominated in HUF as at 31 December 2020
Name
Date of
issuance
Maturity
Nominal value
in HUF million
Amortised cost in HUF
million
Interest
conditions
Hedged
1 OTP_DK_21/I
2 OTP_DK_22/II
3 OTPRF2021B
4 OTPRF2021A
5 OTPRF2022A
6 OTP_DK_23/II
7 OTP_DK_22/I
8 OTPRF2022B
9 OTPRF2023A
10 OTPRF2022E
11 OTP_DK_23/I
12 OTPRF2022F
13 OTP_DK_24/II
14 OTP_DK_25/II
15 OTPRF2021C
16 OTPX2022B
17 OTP_DK_24/I
18 OTPRF2021D
19 OTPX2021B
20 OTP_DK_26/I
21 OTPX2023A
22 OTPX2021D
23 OTPX2022D
24 OTPX2024B
25 OTPRF2022D
26 OTPX2021A
27 OTPX2024A
28 OTPX2022C
29 OTPX2024C
30 OTPX2023B
31 OTPX2022A
32 OTPRF2022C
33 OTPX2021C
34 OTP_DK_25/I
35 OTP_DK_27/I
36 OTPRF2021E
37 Other
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
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
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
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
discount
discount
- hedged
indexed
indexed
- hedged
indexed 1.70 hedged
discount
discount
indexed 1.70 hedged
indexed 1.70 hedged
indexed 1.70 hedged
discount
indexed 1.70 hedged
discount
discount
- hedged
indexed
indexed 1.70 hedged
discount
indexed
indexed
discount
indexed 1.70 hedged
indexed
- hedged
indexed 1.70 hedged
indexed 0.70 hedged
indexed 1.70 hedged
indexed
- hedged
indexed 1.30 hedged
indexed 1.70 hedged
indexed 0.60 hedged
indexed 0.60 hedged
indexed
- hedged
indexed 1.70 hedged
- hedged
indexed
discount
discount
indexed
- hedged
- hedged
- hedged
Subtotal issued securities in HUF
Total
26,849
28,205
27,079
28,435
59
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
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
Total
Contractual amount outstanding
2021
1,784
1,784
18,349
18,349
2020
2,010
2,010
23,892
23,892
20,133
25,902
21,479
23,332
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
2021
2020
0.46%-2.46%
0.51% - 2.5%
0.01%-2.9%
0% - 2.5%
Average interest on amounts due to banks in HUF
2.15%
2.46%
Certain MFB refinanced loan receivables are categorised as fair value through profit or loss based on SPPI test.
Related refinancing loans at the liability side are categorised as fair value through profit or loss based on fair
value option due to accounting mismatch as provided by the IFRS 9 standard.
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
2021
2020
78,066
45,884
7,786
60,525
192,261
28,812
34,327
7,285
29,563
99,987
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
2021
2020
5,747
5,325
7,618
18,690
5,266
5,865
(8,027)
3,104
60
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 24:
OTHER LIABILITIES1 AND PROVISIONS (in HUF mn)
Other financial liabilities
Liabilities from investment services
Accrued expenses
Accounts payable
Liabilities due to short positions
Liabilities from customer's credit card payments
Accrued day one gain of loan liabilities at below-market interest
Other
Other financial liabilities total
Other non-financial liabilities
Technical accounts
Current income tax payable
Social contribution
Accrued expenses
Other
Other non-financial liabilities total
2021
87,582
27,546
18,754
16,904
14,574
-
11,383
176,743
41,186
10,080
4,516
3,062
2,850
61,694
2020
Reclassified
62,490
15,473
24,121
9,131
11,195
14,391
13,249
150,050
37,304
8,216
3,746
2,902
1,309
53,477
Other liabilities total
238,437
203,527
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 long-term employee benefits
Provision on other liabilities
Provisions in accordance with IAS 37
Total
2021
2020
17,768
17,768
259
975
-
2,525
3,759
21,527
17,490
17,490
199
1,300
723
194
2,416
19,906
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
FX revaluation
Closing balance
2021
2020
17,490
47,626
(47,496)
148
17,768
14,288
56,863
(54,044)
383
17,490
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
2021
2,416
14,286
(11,608)
(1,335)
3,759
2020
2,508
20,970
(21,062)
-
2,416
1 Other liabilities are expected to be recovered or settled no more than twelve months after the reporting period.
61
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 25:
SUBORDINATED BONDS AND LOANS (in HUF mn)
Within one year
In foreign currency
Over one year:
In foreign currency
Total
Interest rates on subordinated bonds and loans are as follows (%):
2021
2020
2,841
2,972
268,935
301,271
271,776
304,243
2021
2020
Subordinated bonds and loans denominated in foreign currency
2.5%-2.9% 2.5%-2.9%
Average interest on subordinated bonds and loans denominated in foreign currency
2.74%
2.85%
Subordinated loans and bonds are detailed as follows as at 31 December 2021:
Type
Nominal
value
Date of
issuance
Date of
maturity
Issue price
Interest conditions
Subordinated
bond
EUR 231
million
7 November
2006
Perpetual
99.375%
Subordinated
bond
EUR 500
million
15 July
2019
15 July
2029
99.738%
Three-month EURIBOR +
3%,
(payable
quarterly)
variable
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 basis
point) and the 5 year mid-
swap rate prevailing at the
and of the 5 year.
Current
interest rate
2.428%
2.875%
NOTE 26:
SHARE CAPITAL (in HUF mn)
Authorized, issued and fully paid:
Ordinary shares
2021
2020
28,000
28,000
The nominal value of the shares is HUF 100 per shares. All of the shares are ordinary shares representing the
same rights to the shareholders. Furthermore there are no restrictions on the distribution of dividends and the
repayment of capital.
62
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 27:
RETAINED EARNINGS AND RESERVES (in HUF mn)
Based on the instructions of Act C of 2000 on accounting (“Act on Accounting”) financial statements of the
Bank are prepared in accordance with IFRS as issued by the IASB as adopted by the EU.
In 2021, the Bank did not pay dividend based on the earlier NBH warnings issued due to covid moratoria. In
2022 dividend of HUF 119 billion from the profit of the years 2019 and 2020 and HUF 1 billion from the profit
of the year 2021 (totally HUF 120 billion) are expected to be proposed by the Management, which means HUF
425,89 (for the year 2019 and 2020) and HUF 3,57 (for the year 2021) dividend per share payable to
shareholders. In the opinion of the Management dividend is still considered to be payable, which will be decided
on the Bank’s Board meeting in March taken in consideration the Russian-Ukrainian conflict.
Based on paragraph 114/B of Act on Accounting Equity Correlation Table is prepared and disclosed as a part of
the explanatory notes for the reporting date by the Bank.
On 19 October 2006 the Bank sold 14.5 million Treasury shares owned by OTP Group through an issue of
Income Certificates Exchangeable for Shares ("ICES"). Within the transaction 10 million shares owned by OTP
Bank and 4.5 million OTP shares owned by OTP Fund Management Ltd. were sold during the underwriting
period of ICES on the weighted average market price (HUF 7,080) of the Budapest Stock Exchange. The shares
have been purchased by Opus Securities S.A. ("OPUS"), which issued an exchangeable bond with a total face
value of EUR 514,274,000 backed by those shares. The exchangeable bonds have been sold at a 32% premium
over the selling price of the shares. The EUR denominated exchangeable bonds were perpetual and the investors
could exercise the conversion right between year 6 and 10. The bonds carry a fixed coupon of 3.95% during the
first 10 years thereafter the Issuer had the right to redeem the bonds at face value. Following the year 10, the
bonds carry a coupon of 3 month EURIBOR +3%. OTP Bank had discretional right to cancel the payments. The
interest payable was non-cumulative.
Due to the conditions described above, ICES was accounted as an equity instrument and therefore any payment
was accounted as equity distribution paid to ICES holders.
On 14 September 2021 the Bank claimed to terminate the subordinated swap agreement related to ICES
transaction as at 29 October 2021, and to exercise its option for repurchasing approximately 14.5 million OTP
ordinary shares held by Opus at market price based on the agreement. On the same day the Bank recognised
liability due to Opus as a reduction of EUR 514 million in the shareholder’s equity.
Treasury shares were repurchased on 29 October 2021 on a price HUF 18.118 and on the same day the swap
transaction was financially settled. As a result of the closure of the subordinated swap agreement the Bank’s
shareholder’s equity increased by HUF 75.422 million as follows:
Recognition of liability against shareholder’s equity
Payment of price for treasury shares by Opus
Tax effect accounted in retained earnings
in HUF mn
179,767 equity decrease
262,648 equity increase
7,459 equity decrease
Approximately 12 million treasury shares were sold to OTP SECOP I. (‘OTP Special Employee Stock
Ownership Program’) and OTP SECOP II.
Equity correlation table shall contain the opening and closing balances of the shareholder’s equity in accordance
with IFRS, furthermore deducted from this the opening and closing balances of the specified equity elements.
Equity correlation table shall contain also untied retained earnings available for the payment of dividends,
covering retained earnings from the last financial year for which accounts have been adopted comprising net
profit for the period of that financial year minus cumulative unrealized gains claimed in connection with any
increase in the fair value of investment properties, as provided in IAS 40 - Investment Property, reduced by the
cumulative income tax accounted for under IAS 12 - Income Taxes.
63
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 27:
RETAINED EARNINGS AND RESERVES (in HUF mn) [continued]
Share capital
Share capital is the portion of the Bank’s equity that has been obtained by the issue of shares in the corporation
to a shareholder, usually for cash.
Share-based payment reserve
Share-based payment reserve represents the increase in the equity due to the goods or services were received by
the Bank in an equity-settled share-based payment transaction, valued at the fair value of the goods or services
received.
Retained earnings
Profit of previous years generated by the Bank that are not distributed to shareholders as dividends.
Put option reserve
OTP Bank Plc. and MOL Plc. entered into a share swap agreement in 16 April 2009, 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
agreement is 11 July 2022, until which any party can initiate cash or physical settlement of the transaction.
Put option reserve represents the written put option over OTP ordinary shares were accounted as a deduction
from equity at the date of OTP-MOL share swap transaction.
Other comprehensive income
Other comprehensive income comprises items of income and expense (including reclassification adjustments)
that are not recognised in profit or loss as required or permitted by other IFRSs.
General 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 Credit Institutions and Financial Enterprises. The Bank is allowed to use general
reserves only to cover operating losses arising from their activities.
Tied-up reserve
The tied-up reserve shall consist of sums tied up from the capital reserve and from the retained earnings.
64
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 27:
RETAINED EARNINGS AND RESERVES (in HUF mn) [continued]
The equity correlation table of the Bank based on paragraph 114/B of Act on Accounting as at 31 December 2021:
31 December 2021
Closing balance
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
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
46,162
1,855,090
(55,468)
(58,872)
-
-
-
-
-
-
-
-
-
(497)
-
-
(55,468)
(58,872)
46,162
-
-
-
-
-
(46,162)
-
-
(5,078)
-
-
-
(125,339)
(117,905)
-
55,468
-
-
-
-
-
-
-
58,872
-
-
-
-
-
-
497
-
5,078
-
-
-
-
-
-
-
-
- 117,905
-
-
-
-
-
-
125,339
-
1,814,964
-
-
-
-
-
-
-
28,000
(68,126)
-
1,606,271
-
-
5,078 118,402
125,339
1,814,964
65
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 27:
RETAINED EARNINGS AND RESERVES (in HUF mn) [continued]
The equity correlation table of the Bank based on paragraph 114/B of Act on Accounting as at 1 January 2021:
1 January 2021
Opening balance
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
42,573
1,709,976
(55,468)
(46,799)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(55,468)
(46,799)
42,573
-
-
-
-
(42,573)
-
-
(998)
(44,356)
-
-
-
-
(92,474)
(105,371)
-
-
-
55,468
-
-
-
-
-
-
-
-
46,799
-
-
-
-
-
44,356
-
-
-
-
-
-
-
998
-
-
-
-
-
-
105,371
-
-
-
-
-
-
-
92,474
-
1,678,334
-
-
-
-
-
-
-
-
28,000
(59,642)
-
1,466,777
-
-
44,356
106,369
92,474
1,678,334
66
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 27:
RETAINED EARNINGS AND RESERVES (in HUF mn) [continued]
Calculated untied retained earnings in accordance with paragraph 114/B of Act on Accounting
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 reserve of financial instruments measured at fair value through
other comprehensive income
Share-based payment reserve
Fair value reserve of derivative financial instruments designated as cash-flow
hedge
Net profit for the period
Retained earnings and other reserves
2021
2020
1,606,271
125,339
1,466,777
92,474
1,731,610
1,559,251
2021
1,606,770
52
(55,468)
117,903
8,646
46,162
(3,568)
125,339
1,845,836
2020
1,465,037
52
(55,468)
105,370
44,356
42,573
2,739
92,474
1,697,133
Fair value adjustment of securities at fair value through other comprehensive income
Balance as at 1 January
Change of fair value adjustment
Deferred tax related to change of fair value adjustment
Other transfer to retained earnings
Deferred tax related to other transfer to retained earnings
Transfer to p/l due to derecognition
Deferred tax related to accumulated transfer to p/l
Closing balance
2021
36,441
(34,484)
2,801
(5,070)
457
-
-
145
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
FX movement
Closing balance
2021
1,714
1,103
(1,654)
11
1,174
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
2021
6,201
1,407
(281)
-
7,327
2020
51,011
(22,069)
1,973
-
-
6,073
(547)
36,441
2020
1,702
795
(783)
-
1,714
2020
10,262
(3,276)
310
(1,095)
6,201
67
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 28:
TREASURY SHARES (in HUF mn)
Nominal value (ordinary shares)
Carrying value at acquisition cost
2021
2020
325
58,872
433
46,799
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
Change in carrying value:
Balance as at 1 January
Additions
Disposals
Closing Balance
Face value of treasury shares held by OTP Group members
2021
2020
4,331,169
16,251,451
(17,332,636)
3,249,984
320,165
8,296,388
(4,285,384)
4,331,169
2021
2020
46,799
276,433
(264,360)
58,872
2021
766
2,636
85,922
(41,759)
46,799
2020
1,959
68
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 29:
INTEREST INCOME AND EXPENSES (in HUF mn)
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
Other
Subtotal
Interest income 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
Other
Financial assets
Repo liabilities
Subtotal
2021
2020
168,388
21,456
61,085
33,544
3,337
14,245
318
302,373
26,045
68,975
11,487
(850)
6
105,663
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
408,036
321,296
107,928
33,403
214
377
7,890
92
2,193
3,394
155,491
67,747
19,598
257
414
8,327
49
1,622
1,616
99,630
69
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 30:
RISK COST (in HUF mn)
Loss allowance of loans at amortised cost
Loss allowance
Release of loss allowance
Loss allowance of sight deposits and placements with other banks
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
2021
2020
218,534
(181,270)
37,264
211,543
(156,385)
55,158
20,709
(18,912)
1,797
12,724
(10,497)
2,227
449
(669)
(220)
1,103
(1,654)
(551)
4,404
(2,369)
2,035
362
(76)
286
2,119
(2,116)
3
4,822
(2,977)
1,845
47,626
(47,496)
130
57,246
(54,044)
3,202
Change in the fair value attributable to changes in the credit risk of loans
mandatorily measured at fair value through profit of loss
16,255
405
Risk cost total
56,710
63,126
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
Fx margin
Fees and commissions paid by OTP Mortgage Bank Ltd.
Net insurance fee income
Other
Fees and commissions from contracts with customers
2021
2020
12,164
11,141
123,800
89,243
28,227
16,155
11,187
8,481
11,546
288,639
106,341
77,115
25,414
6,159
8,725
7,155
17,731
248,640
Total Income from fees and commissions:
300,803
259,781
Contract balances
Receivables, which are included in ‘other assets’
Loss allowance
2021
2020
16,391
196
7,625
(103)
70
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 31:
NET PROFIT FROM FEES AND COMMISSIONS (in HUF mn) [continued]
Performance obligations and revenue recognition policies:
Fee type
Deposit and
account
maintenance fees
and commissions
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. 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.
recognition
Revenue
under IFRS 15
Fees for ongoing account
management services are
charged on a monthly
basis during the period
when they are provided.
when
Transaction-based fees are
the
charged
transaction takes places or
charged monthly at the
end of the month.
transfer
In the case of the transaction based fees where the services
include money
the
the fee
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.
is charged when
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.
Fees and
commission
related to the
issued bank cards
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.
Fees for ongoing services
are charged on a monthly
basis during the period
when they are provided.
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.
of
fees
case
transaction-based
In
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.
(e.g.
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.
when
Transaction-based fees are
charged
the
transaction takes places or
charged monthly at the
end of the month.
71
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 31:
NET PROFIT FROM FEES AND COMMISSIONS (in HUF mn) [continued]
Performance obligations and revenue recognition policies: [continued]
Fee type
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
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.
Fees and
commissions paid
by OTP Mortgage
Bank Ltd.
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.
recognition
Revenue
under IFRS 15
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
the
charged
transaction takes places.
when
Fees for ongoing services
are charged on a monthly
basis during the period
when they are provided.
Transaction-based fees are
charged
the
transaction takes places.
when
Net insurance fee
income
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.
Fees for ongoing services
are charged on a monthly
basis during the period
when they are provided.
Other
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.
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.
72
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 31:
NET PROFIT FROM FEES AND COMMISSIONS (in HUF mn) [continued]
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
NOTE 32:
GAINS AND LOSSES (in HUF mn)
2021
39,835
771
5,011
618
2,610
1,652
224
265
1,290
52,276
2020
31,701
758
3,432
1,584
1,355
566
202
91
1,061
40,750
248,527
219,031
2021
2020
Losses arising from derecognition of financial assets measured at amortised
cost
Gain from loans
Loss from loans
Gain from securities
Loss from securities
Other
Losses arising from derecognition of financial assets measured at amortised
93
(818)
968
(2,520)
(423)
894
(4,533)
360
-
-
cost
(2,700)
(3,279)
Additional information to Gains or losses from operating income:
Foreign exchange losses
Loss from foreign exchange
Margin gains
Margin losses
Total
Gains on derivative instruments, net
Gains on FX spot, swap and option deals
Losses from FX spot, swap and option deals
Fees received related to option deals
Fees paid related to option deals
Gains on commodity deals
Losses from commodity deals
Gains on futures transactions
Losses from futures transactions
Losses from credit valuation adjustment related to FX spot, swap and option deals
held for trading
Losses from credit valuation adjustment related to commodity deals held for
trading
Total
Losses on financial instruments at fair value through profit or loss
Gains on securities mandatorily measured at fair value through profit or loss
Gains on loans mandatorily measured at fair value through profit or loss
Losses on loans mandatorily measured at fair value through profit or loss
Gains on financial liabilities designated at fair value through profit or loss
Losses on financial liabilities designated at fair value through profit or loss
Total
2021
(5,875)
3,597
(3,360)
(5,638)
2021
41,224
(34,716)
2,203
(2,830)
91,487
(91,474)
580
(208)
(2,643)
(187)
3,436
2021
2,285
12,069
(24,760)
4,353
(438)
(6,491)
2020
(5,302)
2,592
(1,808)
(4,518)
2020
53,171
(46,329)
17,983
(17,912)
22,122
(22,123)
1,555
(1,410)
-
-
7,057
2020
2,725
2,328
(4,453)
2,443
(3,713)
(670)
73
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 32:
GAINS AND LOSSES (in HUF mn) [continued]
Additional information to Gains or losses from operating income: [continued]
Gains on securities, net
Interest income from held for trading securities
Gains on held for trading securities
Losses on held for trading securities
Gains on FVOCI securities
Losses on FVOCI securities
Gains on derecognition of investments in subsidiaries
Losses on derecognition of investments in subsidiaries
Gains/losses from other securities
Total
Dividend income
Distribution from investments in subsidiaries
Distribution from held for trading securities
Distribution from FVOCI equity instruments
Total
Total gains and losses from operating income (without other operating
2021
277
8,018
(3,646)
2,138
(6,797)
1,311
(1,963)
2,766
2,104
2021
95,042
3,844
151
99,037
92,445
2020
368
5,948
(3,697)
6,639
(566)
23,028
(16,485)
2,360
17,595
2020
60,913
8
52
60,973
80,436
income)
NOTE 33:
OTHER OPERATING INCOME AND EXPENSES AND OTHER ADMINISTRATIVE
EXPENSES (in HUF mn)
Other operating income:
Intermediary and other services
Derecognition of financial liabilities at amortised cost
Non-repayable assets received
Income from lease of tangible assets
Gains on derecognition of deposits
Gains on discount from advertising agency fees
Income from written off receivables
Gains on sale of receivables
Gains on transactions related to property activities
Gains on IT services provided to subsidiaries
Other operating income from OTP Employee Stock Ownership Program
(OTP ESOP)
Gains on sale of tangible assets
Other
Total
Net other operating expenses:
2021
2,272
2,290
1,174
1,009
281
182
281
-
239
940
2,234
(81)
444
11,265
2020
2,677
710
26
749
710
171
206
377
266
-
236
150
1,772
7,900
2021
2020
Release of loss allowance on other assets
Non-repayable assets contributed
Release of provision for off-balance sheet commitments and contingent
liabilities
Financial support for sport association and organization of public utility
Losses on other assets
Loss allowance on investments in subsidiaries
Other
Total other operating expenses
961
(862)
(1,343)
(10,960)
-
(27,420)
(2,012)
(41,636)
(3,521)
(4,055)
92
(7,999)
(697)
(10,042)
(1,842)
(28,064)
74
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 33:
OTHER OPERATING INCOME AND EXPENSES AND OTHER ADMINISTRATIVE
EXPENSES (in HUF mn) [continued]
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 tax1
Services
Fees payable to authorities and other fees
Administration expenses, including rental fees
Professional fees
Advertising
Subtotal
Total
NOTE 34:
INCOME TAX (in HUF mn)
2021
2020
Reclassified
105,176
16,709
14,241
136,126
89,705
16,308
12,485
118,498
40,692
38,948
81,171
57,290
17,362
7,439
6,714
8,635
178,611
73,384
41,590
13,769
15,517
2,500
7,405
154,165
355,429
311,611
The Bank is presently liable for income tax at a rate of 9% of taxable income, local taxes at a rate of 2.3% of
taxable revenue.
A breakdown of the income tax expense is:
Current tax expense
Deferred tax expense/(benefit)
Total
A reconciliation of the deferred tax liability is as follows:
Balance as at 1 January
Deferred tax (expense)/ benefit
Tax effect of fair value adjustment of FVOCI securities and ICES recognised
in comprehensive income
Closing balance
2021
2020
Reclassified
14,528
1,423
15,951
14,198
(1,077)
13,121
2021
2020
(3,062)
(1,423)
2,978
(1,507)
(5,875)
1,077
1,736
(3,062)
1 Special tax of financial institutions was paid by OTP Bank in the amount of HUF 13.1 and 11.6 billion for the for the year ended 31
December 2021 and 2020, recognized as an expense thus decreased the corporate tax base. For the year ended 31 December 2021 financial
transaction duty was paid by the Bank in the amount of HUF 68 billion.
75
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 34:
INCOME TAX (in HUF mn) [continued]
A breakdown of the deferred tax liability is as follows:
Unused tax allowance
Provision for untaken leave
Provision for termination benefits and jubilee
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
Provision for developments
Amounts unenforceable by tax law
Deferred tax liabilities
2021
2020
-
282
644
-
926
(1,312)
(1,076)
(45)
-
(2,433)
1,321
-
-
247
1,568
(4,199)
(329)
-
(102)
(4,630)
Net deferred tax assets/(liabilities)
(1,507)
(3,062)
A reconciliation of the income tax (income) / expense is as follows:
Profit before income tax
Income tax at statutory tax rate (9%)
A reconciliation of effective tax rate as follows:
Share-based payment
Deferred use of tax allowance
Dividend income
Use of tax
Amounts unenforceable by tax law
Change due to accounting policy (Visa)
Use of tax losses
Deferred tax asset due to unused tax allowance
Other
Income tax
Effective tax rate
(as presented in the separate statement of financial position)
Current tax assets
Current tax liabilities
Net tax liabilities
2021
2020
141,290
12,717
93,246
8,392
323
90
(8,787)
(3,461)
(847)
-
-
-
1,618
1,653
1.2%
2021
-
4,776
(4,776)
305
-
(5,488)
(2,023)
(38)
69
(167)
(1,039)
761
772
0.8%
2020
593
1,464
(871)
76
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 35:
LEASE (in HUF mn)
The Bank as a lessee:
Amounts recognised in profit and loss
Interest expense on lease liabilities
Expense relating to short-term leases
Expense relating to variable lease payments not included in the measurement
of lease liabilities
Leasing liabilities by maturities:
Within one year
Over one year
Total
2021
214
2,143
1,271
2021
4,868
13,064
17,932
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 2020
Additions due to new contracts
Derecognition due to matured contracts
Change due to revaluation and modification
Balance as at 31 December 2020
Additions due to new contracts
Derecognition due to matured contracts
Change due to revaluation and modification
Balance as at 31 December 2021
Depreciation
Balance as at 1 January
Depreciation charge
Derecognition due to matured contracts
Balance as at 31 December 2021
Depreciation charge
Derecognition due to matured contracts
Balance as at 31 December 2021
Net carrying amount
Balance as at 31 December 2020
Balance as at 31 December 2021
Right-of-use of
real estate
17,790
3,707
(18)
927
22,406
5,788
(263)
3,150
31,081
4,214
4,744
(6)
8,952
5,155
(238)
13,869
13,454
17,212
Right-of-use of
machinery and
equipment
37
-
-
-
37
-
-
-
37
6
-
12
6
-
18
25
19
2020
257
2,128
1,084
2020
4,423
9,683
14,106
Total
17,827
3,707
(18)
927
22,443
5,788
(263)
3,150
31,118
4,220
4,750
(6)
8,964
5,161
(238)
13,887
13,479
17,231
77
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn)
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.
Financial instruments may result in certain risks to the Bank. The most significant risks the Bank faces include:
36.1. Credit risk
The Bank takes on exposure to credit risk which is the risk that a counter-party will be unable to pay amounts in
full when due. The Bank 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 areas and loan types. Such risks
are monitored on a periodical basis and subject to an annual or more frequent review. The exposure to any
borrower including banks and brokers is further restricted by sublimit covering on- and off-balance sheet
exposures and daily delivery 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 regular analysis of the ability of borrowers and potential borrowers to
meet interest and capital repayment obligations and by changing these lending limits when appropriate. Exposure
to credit risk is partly managed obtaining collateral, corporate and personal guarantees.
36.1.1. Financial instruments by stages
Defining the expected credit loss on individual and collective basis
On individual basis:
Individually assessed are the non-retail or micro- and small enterprise exposure of significant amount on a stand-
alone basis:
• exposure in stage 3,
• exposure in workout management
• purchased or originated credit-impaired instruments which are in accordance with the conditions
mentioned above
The calculation of impairment must be prepared and approved by the risk management functional areas. The
calculation, all relevant factors (amortised cost, original and current EIR, contracted and expected cash flows
(from business and/or collateral) for the individual periods of the entire lifecycle, other essential information
enforced during the valuation) and the criteria thereof (including the factors underlying the classification as stage
3) must be documented individually.
The expected credit loss of the exposure equals the difference of the receivable's AC (gross book value) on the
valuation date and the present value of the receivable's expected cash flows discounted to the valuation date by
the exposure's original effective interest rate (EIR) (calculated at the initial recognition, or in the case of variable
rate, recalculated due to the last interest rate change). The estimation of the expected future cash flows should be
forward looking, it must also contain the effects of the possible change of macroeconomic outlook.
At least two scenarios must be used for the estimation of the expected cash flow. At least one scenarios should
anticipate that realised cash flows will be significantly different from the contractual cash flows. Probability
weights must be allocated to the individual scenarios. The estimation must reflect the probability of the
occurrence and non-occurrence of the credit loss, even if the most probable result is the non-occurrence of the
loss.
On collective basis:
The following exposures are subject to collective assessment:
retail exposure irrespective of the amount,
•
• micro and small enterprise exposures irrespective of the amount,
• all other exposure which are insignificant on a stand-alone basis and not part of the workout
management,
• exposure which are not in stage 3, significant on a stand-alone basis,
• purchased or originated credit-impaired instruments which are in accordance with the conditions
mentioned above.
78
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.1. Financial instruments by stages [continued]
In the collective impairment methodology credit risk and the change of credit risk can be correctly captured by
understanding the risk characteristics of the portfolio. In order to achieve this the main risk drivers shall be
identified and used to form homogeneous segments having similar risk characteristics. The segmentation is
expected to stay stable from month to month however a regular (at least yearly) revision of the segmentation
process should be set up to capture the change of risk characteristics. The segmentation must be performed
separately for each parameter, since in each case different factors may have relevance.
The Bank's Headquarters Group Reserve Committee stipulates the guidelines related to the collective
impairment methodology at group level. In addition, it has right of agreement in respect of the risk parameters
(PD -probability of default, LGD - loss given default, EAD – exposure at default) and segmentation criteria
proposed by the group members.
The review of the parameters must be performed at least annually and the results should be approved by the
Group Reserve Committee. Local Risk Managements is responsible for parameter estimations and updates,
macroeconomic scenarios are calculated by OTP Bank Headquarters for each subsidiary and each parameter.
Based on the consensus proposal of Local Risk Management and OTP Bank Headquarters, the Group Reserve
Committee decides on the modification of parameters (all parameters for impairment calculation).
The impairment parameters should be backtested at least annually.
The expected loss calculation should be forward looking, including forecasts of future economic conditions. This
may be achieved by applying 3-5 different macroeconomic scenarios, which may be integrated in the PD, LGD
and EAD parameters.
79
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.1. Financial instruments by stages [continued]
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 2021:
Gross carrying amount / Notional amount
Loss allowance
Carrying
amount/
Exposure
Stage 1
Stage 2 Stage 3
Purchased or
originated credit
impaired
Total
Stage 1 Stage 2 Stage 3
Purchased or
originated credit
impaired
Write-off
Total
474,945
475,130
-
-
-
475,130
185
-
-
-
185
-
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 2021
Loan commitments
Financial guarantees
Factoring loan commitments
Bill of credit
-
-
2,573,226
33,710
33,254 39,220
1,346
70,311
2,567,212
33,638
598,699
81,471
71,328
3,280,967
4,032,465
641,939
3,071,038
153,748
1,476
-
488,639 139,193 33,687
8,377
-
2,909,439 384,223 66,915
3,501,643 563,982 108,979
-
-
735
10,974,985 10,409,322 616,169 111,190
-
3,064,500 13,223
119,174 38,964
641,939
1,665,288
1,500,977
423,267
30,380
1,615,196 56,838
1,491,470 14,883
5,847
-
412,692
30,381
4,996
244
5,133
-
Loan commitments and financial guarantees
total
3,619,912
3,549,739 77,568 10,373
-
-
3
2,724
-
10,691
13,418
-
-
23
13,441
-
-
-
-
-
-
-
25
223
309
106
6,014
72
83,575
71,657
2,574,702
33,710
1,476
-
661,522 11,168 27,597 24,056
1,503
-
3,371,268 17,945 39,260 31,528
4,188,022 29,361 67,272 57,087
-
-
598
11,150,122 44,384 70,915 59,161
641,939
3,077,723
158,896
-
803
2,840
1,174
5,882
1,696
1,677,030
1,506,597
423,672
30,381
5,620
4,820
228
1
3,968
749
32
-
2,154
51
145
-
3,637,680 10,669
4,749
2,350
-
-
2
267
-
1,568
1,837
-
-
14
1,851
-
-
-
-
-
7,490
72
62,823
2,104
329
90,301
155,557
1,174
6,685
5,148
176,311
11,742
5,620
405
1
17,768
-
-
-
-
-
21,838
21,838
-
-
-
21,838
-
-
-
-
-
80
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.1. Financial instruments by stages [continued]
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:
Gross carrying amount / Notional amount
Loss allowance
Assets measured at amortised cost and
FVOCI as at 31 December 2020
Carrying
amount/
Exposure
Stage 1
Stage 2 Stage 3 Purchased or
originated credit
impaired
Total
Stage 1 Stage 2 Stage 3 Purchased or
originated credit
impaired
Write-off
Total
579,120
579,120
-
-
-
579,120
-
-
-
-
-
-
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
1,535,884
183,364
531,115
95,762
86,061
2,704,822
3,417,760
911,950
2,007,692
127,179
8,762,949
1,540,240
183,656
456,034
29,857
72,406
2
-
98,027
58,609
15,564
2,361,979 380,458
2,920,276 552,658
-
-
40,452
8,239,713 593,112
911,950
2,010,980
93,491
1,429,732
1,412,663
304,993
5,026
1,369,379
1,409,766
299,908
5,039
69,998
8,609
3,551
-
1,461
-
10,632
6,602
43
37,177
54,454
-
-
1,133
57,048
1,683
161
1,810
-
Loan commitments and financial guarantees
total
3,152,414
3,084,092
82,158
3,654
-
-
5
2,909
-
11,128
14,042
-
-
31
14,073
-
-
-
-
-
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
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
2
-
20,866
688
1,709
43,034
66,297
-
-
4,504
70,803
5,047
738
35
-
1,461
-
6,770
1,313
16
25,127
33,226
-
-
996
35,683
839
48
66
-
3,169,904
10,717
5,820
953
-
-
2
194
-
1,445
1,641
-
-
21
1,662
-
-
-
-
-
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
-
-
-
-
-
81
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.1. Financial instruments by stages [continued]
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 2020
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
Modification
Loss allowance as at 31 December 2020
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 2021
Stage 1
26,777
633
(4,374)
(188)
(2,736)
11,393
(8,975)
-
(24)
22,506
-
22,506
12,289
(1,867)
(369)
(10,705)
15,197
(7,638)
-
(52)
29,361
Stage 2
18,678
(612)
5,682
(1,683)
40,164
7,498
(3,354)
-
(76)
66,297
(1,281)
65,016
(11,919)
3,241
(5,636)
18,125
6,326
(7,540)
-
(341)
67,272
Stage 3
25,841
(21)
(1,308)
1,871
9,196
2,918
(3,717)
1,613
(3,167)
33,226
-
33,226
(370)
(1,374)
6,005
20,779
4,292
(5,323)
947
(1,095)
57,087
Total
POCI
72,066
770
-
-
-
-
-
-
47,463
839
45
21,854
(11) (16,057)
1,830
217
(219)
(3,486)
1,641 123,670
(1,281)
1,641 122,389
-
-
-
28,420
25,816
(16) (20,517)
956
(1,507)
1,837 155,557
-
-
-
221
1
9
(19)
-
82
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.1. Financial instruments by stages [continued]
Changes in the Loss allowance of financial assets at amortised cost and fair value through other
comprehensive income by IFRS 9 stages [continued]
Loan commitments and financial guarantees
Provision as at 1 January 2020
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
Transfer to Stage 1
Transfer to Stage 2
Transfer to Stage 3
Net remeasurement of loss allowance
New financial assets originated or purchased
Decrease
Loss allowance as at 31 December 2021
Stage 1
11,564
142
(501)
(9)
(939)
2,843
(2,383)
10,717
2,910
(200)
(21)
(4,628)
3,215
(1,324)
10,669
Stage 2
1,077
(125)
522
(28)
3,651
796
(73)
5,820
(2,840)
322
(109)
1,371
904
(719)
4,749
Placements with other banks, net of allowance for placement losses
Loss allowance as at 1 January 2020
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
Net remeasurement of loss allowance
New financial assets originated or purchased
Financial assets derecognised (other than write-offs)
Loss allowance as at 31 December 2021
Stage 1
3,590
515
2,321
(2,070)
4,356
(303)
4,566
(2,605)
6,014
Stage 2
2
-
-
-
2
-
-
(2)
-
Stage 3
1,647
(17)
(21)
37
(642)
67
(118)
953
(70)
(122)
130
1,500
98
(139)
2,350
Stage 3
-
-
1,461
-
1,461
15
-
-
1,476
Total
14,288
-
-
-
2,070
3,706
(2,574)
17,490
-
-
-
(1,757)
4,217
(2,182)
17,768
Total
3,592
515
3,782
(2,070)
5,819
(288)
4,566
(2,607)
7,490
83
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.1. Financial instruments by stages [continued]
Changes in the Loss allowance of financial assets at amortised cost and fair value through other
comprehensive income by IFRS 9 stages [continued]
Repo Receivables
Loss allowance as at 1 January 2020
New financial assets originated or purchased
Financial assets derecognised (other than write-offs)
Loss allowance as at 31 December 2020
New financial assets originated or purchased
Financial assets derecognised (other than write-offs)
Loss allowance as at 31 December 2021
Securities at amortised cost
Loss allowance as at 1 January 2020
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
Modification
Loss allowance as at 31 December 2020
Net remeasurement of loss allowance
New financial assets originated or purchased
Financial assets derecognised (other than write-offs)
Loss allowance as at 31 December 2021
FVOCI Securities
Stage 1
Total
6
362
(76)
292
449
(669)
72
6
362
(76)
292
449
(669)
72
Stage 1
Stage 2 Total
1,443
1,334
595
(84)
3,288
-
3,288
898
1,761
(65)
5,882
-
-
-
-
-
1,281
1,281
(478)
-
-
803
1,443
1,334
595
(84)
3,288
1,281
4,569
420
1,761
(65)
6,685
Loss allowance as at 1 January 2020
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
Net remeasurement of loss allowance
New financial assets originated or purchased
Financial assets derecognised (other than write-offs)
Loss allowance as at 31 December 2021
Stage 1 Total
1,702
286
509
(783)
1,714
(483)
348
(405)
1,174
1,702
286
509
(783)
1,714
(483)
348
(405)
1,174
84
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.1. Financial instruments by stages [continued]
Loan portfolio by internal ratings
Internal rating grade
High grade (1-4)
Medium grade (5-7)
Low grade (8-9)
Non performing
Total
Internal rating grade
High grade (1-4)
Medium grade (5-7)
Low grade (8-9)
Non performing
Total
Stage1
1,930,488
1,459,861
111,294
-
3,501,643
Gross carrying amount
POCI
Stage3
-
224
- 10,522
253
-
108,979
2,419
108,979 13,418
Stage2
215,519
238,767
109,696
-
563,982
Total
2,146,231
1,709,150
221,243
111,398
4,188,022
Stage1
11,870
15,929
1,562
-
29,361
Accumulated loss allowance
POCI
Stage3
Stage2
21,906
24,853
20,513
-
67,272
-
-
-
57,087
57,087
4
1,234
12
587
1,837
Total
33,780
42,016
22,087
57,674
155,557
Loan portfolio by countries
An analysis of carrying amount of the non-qualified and qualified gross loan portfolio by country is as follows:
Country
Hungary
Malta
Serbia
Romania
France
Bulgaria
Russia
Slovakia
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 2021
31 December 2020
Gross loan and
placements with
other banks
portfolio
Loss allowance
Gross loan and
placements with
other banks
portfolio
Loss allowance
5,039,601
792,943
148,599
113,517
112,810
105,899
85,420
76,373
321,272
(130,588)
(2,556)
(2,048)
(3,695)
(321)
(11,786)
(961)
(263)
(10,901)
3,797,729
759,425
-
40,143
38,876
102,067
124
73,808
454,617
(99,295)
(3,985)
-
(4,220)
(8)
(9,158)
(5)
(207)
(12,903)
6,796,434
(163,119)
5,266,789
(129,781)
662,008
4
662,012
-
-
-
480,933
4
480,937
-
-
-
7,458,446
(163,119)
5,747,726
(129,781)
85
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
Loan portfolio classification by economic activities
Loans at amortised cost by economic activities
Retail
Agriculture, forestry and fishing
Manufacturing, mining and quarrying
and other industry
Construction
Wholesale and retail trade, transportation and
storage accommodation and food service activities
Information and communication
Financial and insurance activities
Real estate activities
Professional, scientific, technical, administration
Total
36.1.2. Collaterals
31 December 2021
Loss
Gross
allowance
amount
63,843
4,976
7,249
4,919
18,490
1,136
9,444
13,143
3,109
472
28,776
155,557
708,355
177,202
320,990
172,441
657,273
23,072
211,292
305,100
136,876
72,027
1,403,394
4,188,022
31 December 2020
Loss
Gross
allowance
amount
34,289
2,074
6,765
3,626
16,813
681
11,338
13,595
1,979
672
31,838
123,670
647,323
152,152
241,763
136,353
506,561
19,846
147,849
291,475
105,159
70,640
1,222,309
3,541,430
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
2021
1,602,913
1,554,921
229,041
80,598
148,443
387
3,387,262
2020
1,450,951
1,074,420
191,268
62,469
128,799
563
2,717,202
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
2021
753,222
1,196,385
106,620
12,756
93,864
305
2,056,532
2020
687,688
836,874
94,397
8,204
86,193
423
1,619,382
The coverage level of loan portfolio to the extent of the exposures increased from 31.86% to 30.41% as at 2021,
while the coverage to the total collateral value decreased from 53.46% to 50.09%.
86
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
The collateral value (total collateral value) held by the Bank related to impaired loan portfolio (Stage 3 and
POCI loans) is as follows:
For the year ended 31
December 2021
Retail consumer loans
Mortgage loans
Corporate loans
Total
For the year ended 31
December 2020
Retail consumer loans
Mortgage loans
Municipal loans
Corporate loans
Total
36.1.3. Restructured loans
Consumer loans
Mortgage loans
Corporate loans
SME loans
Municipal loans
Total
Restructured portfolio definition
Gross carrying
amount
Loss allowance Carrying amount Collateral value
33,690
11,101
77,606
122,397
(24,058)
(1,770)
(33,096)
(58,924)
9,632
9,331
44,510
63,473
387
39,263
56,960
96,610
Gross carrying
amount
Loss allowance Carrying amount Collateral value
10,637
9,511
43
48,305
68,496
(6,772)
(1,507)
(16)
(26,572)
(34,867)
3,865
8,004
27
21,733
33,629
128
32,302
104
46,210
78,744
31 December 2021
31 December 2020
Gross portfolio Loss allowance Gross portfolio
Loss allowance
118,094
36,413
193,571
33,388
-
381,466
(21,816)
(266)
(25,865)
(4,487)
-
(52,434)
5,399
2,156
27,963
6,295
41
41,854
(2,575)
(68)
(8,283)
(1,278)
(16)
(12,220)
The forborne definition used by the Group is based on EU regulation 2015/227. Restructuring (forbearance) is a
modification of the contract – initiated by either the client or the bank – that provides a concession or allowance
towards the client in respect to the client’s current or future financial difficulties. The table of restructured loans
contains exposures classified as performing forborne. An exposure is considered performing forborne if the
conditions of the non-performing status are not met at the time of the restructuring, or the exposure fulfilled the
requirements of the minimum one year cure period as non-performing forborne.
The significant increase of the performing forborne loan volume is due to the forborne classification rules set by
the MNB executive circulars of 21 January 2021 and 25 November 2021 for loans participating in phase 2 and
phase 3 of the moratoria. The loan volume classified as performing forborne exclusively due to moratoria
participation is HUF 290 billion. For the affected portfolios the earliest possible exit from the forborne status is 6
months after the exit from moratorium for retail and 2 years after the exit from moratorium for corporate
exposures.
87
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
Financial instruments by rating categories1
Held-for-trading securities as at 31 December 2021
Government bonds
Other bonds
Other non-interest bearing securities
Hungarian government discounted Treasury Bills
Shares
Mortgage bonds
Total
Held-for-trading securities 31 December 2020
A1 A2 A3 B1 Aa3
Ba2
Baa1
Baa2
Baa3
N/A
Total
- 16
-
-
-
-
- 485
-
-
-
-
35
49 59
-
-
49 75 520
-
-
-
-
-
6
-
6
-
-
-
-
19
-
19
3,634
-
-
-
2
-
3,636
-
-
-
-
12
-
12
26,024
1,348
-
869
24
16
28,281
1,153
97
-
-
83
-
1,333
-
158
1,134
-
310
100
1,702
30,827
2,088
1,134
869
599
116
35,633
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
-
-
-
-
-
36
-
36
-
-
-
-
-
33
495
528
-
-
-
-
-
5
-
5
-
-
-
-
-
7
-
7
-
465
-
-
-
-
-
465
Baa1
-
-
-
Baa2
Baa3 N/A Total
- 1,964 1,964
- 6,031
-
-
-
- 5,566
-
-
-
-
45
-
45
- 1,233
- 1,233
-
36
998
-
-
-
257
426
7
582 2,075
-
7 7,833 2,803 11,729
Securities mandatorily measured at fair value through profit or loss as at 31 December 2021
Government bonds
Mortgage bonds
Total
1 Moody’s ratings
N/A
25,126
2,935
28,061
Total
25,126
2,935
28,061
88
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
Financial instruments by rating categories1
Securities mandatorily measured at fair value through profit or loss as at 31 December 2020
Government bonds
Mortgage bonds
Shares
Total
FVOCI securities as at 31 December 2021
Government bonds
Mortgage bonds
Other bonds
Hungarian Treasury Bills
Non-treading equity instruments
Total
FVOCI securities as at 31 December 2020
Mortgage bonds
Government bonds
Hungarian interest bearing Treasury Bills
Shares
Other bonds
Total
1 Moody’s ratings
N/A
Total
23,818
5,342
2,776
31,936
23,818
5,342
2,776
31,936
A1
740
47,568
-
-
-
48,308
A2
2,471
-
-
-
-
2,471
A3
-
-
2,896
-
-
2,896
Ba1
15,209
-
4,001
-
-
19,210
Ba2
Baa1
Baa2
Baa3
N/A
Total
6,784
-
-
-
-
6,784
5,032
-
-
-
-
5,032
182,439
156,027
1,622
63,115
-
403,203
66,201
-
37,606
-
-
103,807
-
14,346
18,745
-
17,137
50,228
278,876
217,941
64,870
63,115
17,137
641,939
A2
63,577
-
226 7,391
-
-
-
-
- 4,815
63,803 12,206
A3
Ba1
Ba3
Baa2
Baa3
N/A
-
- 250,673
-
-
-
-
-
3,958
1,620
8,582 15,055 252,293
4,624 15,055
-
-
-
461,163
9,957
- 18,417
-
-
- 15,731
37,961 16,782
509,081 50,930
Total
332,667
488,459
9,957
15,731
65,136
911,950
89
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
Financial instruments by rating categories1
Securities at amortised cost as at 31 December 2021
Aaa
185,261
-
-
185,261
Government bonds
Corporate bonds
Mortgage bonds
Total
A1
9,002
-
12,992
21,994
-
8,210
-
8,210
A2
Ba1
18,871
-
-
18,871
Ba2
12,663
-
-
12,663
Baa1
25,986
7,343
-
33,329
Baa2
2,550,824
3,682
-
-
Baa3
55,256
14,780
-
70,036
N/A
-
154,886
11,282
166,168
Total
2,857,863
188,901
24,274
3,071,038
Securities at amortised cost as at 31 December 2020
Baa3
1,941,855
Ba2
2,816
-
2,816
N/A
Total
- 1,944,671
63,021
1,956,434 48,442 2,007,692
14,579 48,442
Government bonds
Mortgage bonds
Total
1 Moody’s ratings
90
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
An analysis of securities (held for trading, mandatorily FVTPL, FVOCI and amortised cost) in a country
breakdown is as follows:
2021
2020
Country
Gross carrying
amount
Loss
allowance
Hungary
United States of America
Portugal
Spain
Russia
Romania
Croatia
Luxembourg
Other
Securities at amortised cost total
Hungary
Russia
Croatia
Serbia
Spain
Luxembourg
Other
FVOCI securities total
Austria
United States of America
Other
Non-trading equity instruments designated to
measure at fair value through other
comprehensive income
Hungary
Serbia
Russia
Germany
Luxembourg
Other
Held for trading securities total
Hungary
Luxembourg
United States of America
Portugal
Securities mandatorily measured at fair value
through profit or loss
Securities total
Gross
carrying
amount
1,986,362
1,069
-
-
2,757
-
-
20,792
-
2,010,980
761,472
29,697
-
-
-
85,006
20,044
896,219
3,122
12,079
530
15,731
8,613
465
808
410
771
662
11,729
18,470
10,428
2,776
262
Loss
allowance
(3,194)
(4)
-
-
(3)
-
-
(87)
-
(3,288)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,709,786
194,518
36,268
33,659
32,901
22,527
18,917
-
29,147
3,077,723
517,462
65,275
15,209
6,784
5,032
-
15,040
624,802
13,223
3,388
526
17,137
29,814
3,634
1,278
420
-
487
35,633
18,807
5,542
2,935
777
(5,823)
(149)
(177)
(178)
(46)
(126)
(46)
-
(140)
(6,685)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
28,061
3,783,356
-
(6,685)
31,936
2,966,595
-
(3,288)
91
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.2. Maturity analysis of assets and liabilities and liquidity risk
Liquidity risk is a measure of the extent to which the Bank may be required to raise funds to meet its
commitments associated with financial instruments. The Bank maintains its liquidity profiles in accordance with
regulations laid down by the NBH.
The essential aspect of the liquidity risk management strategy is to identify all relevant systemic and
idiosyncratic sources of liquidity risk and to measure the probability and severity of such events. During liquidity
risk management the Bank considers the effect of liquidity risk events caused by reasons arising in the bank
business line (deposit withdrawal), the national economy (exchange rate shock, yield curve shock) and the global
financial system (capital market shock).
In line with the Bank’s risk management policy liquidity risks are measured and managed on multiply hierarchy
levels and applying integrated unified VaR based methodology. The basic requirement is that the Bank must
keep high quality liquidity reserves by means it can fulfil all liabilities when they fall due without material
additional costs.
The liquidity reserves can be divided into two parts. There are separate decentralized liquid asset portfolios at
subsidiary level and a centralized flexible liquidity pool at Group level. The reserves at subsidiary levels are held
to cover the relevant shocks of the subsidiaries which may arise in local currencies (deposit withdrawal, local
capital market shock, unexpected business expansion), while the centralized liquidity pool is held to cover the
OTP Bank’s separate shocks (deposit-, yield curve- and exchange rate shocks) and all group member’s potential
shocks that may arise in foreign currencies (deposit withdrawal, capital market shock).
The recalculation of shocks is made at least quarterly while the recalibration of shock measurement models and
review of the risk management methodology is an annual process. The monitoring of liquidity reserves for both
centralized and decentralized liquid asset portfolio has been built into the daily reporting process.
Due to the balance sheet adjustment process (deleveraging) experienced in the last few years, the liquidity
reserves of the Bank increased significantly while the liquidity risk exposure has decreased considerably.
Currently the (over)coverage of risk liquidity risk exposure by high quality liquid assets is at all-time record
highs. There were no material changes in the liquidity risk management process for the year ended 31 December
2021.
The following tables provide an analysis of assets and liabilities about the non-discounted cash flow into relevant
maturity groupings based on the remaining period from the balance sheet date to the contractual maturity date. It
is presented under the most prudent consideration of maturity dates where options or repayment schedules allow
for early repayment possibilities.
The contractual amounts disclosed in the maturity analyses are the contractual undiscounted cash flows like
gross finance lease obligations (before deducting finance charges); prices specified in forward agreements to
purchase financial assets for cash; net amounts for pay-floating/receive-fixed interest rate swaps for which net
cash flows are exchanged; contractual amounts to be exchanged in a derivative financial instrument for which
gross cash flows are exchanged; gross loan commitments.
Such undiscounted cash flows differ from the amount included in the statement of financial position because the
amount in that statement is based on discounted cash flows. When the amount payable is not fixed, the amount
disclosed is determined by reference to the conditions existing at the end of the reporting period. For example,
when the amount payable varies with changes in an index, the amount disclosed may be based on the level of the
index at the end of the period.
92
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.2. Maturity analysis of assets and liabilities and liquidity risk [continued]
As at 31 December 2021
Within one
year and
over 3
months
Within 5
years and
over one
year
Within 3
months
Over 5
years
Without
maturity
Cash, amounts due from banks and balances with
the National Bank of Hungary
475,130
-
-
-
Placements with other banks, net of allowance for
placement losses
Repo receivables
1,176,184
585,499
609,182
204,493
33,710
-
-
-
-
-
-
Financial assets at fair value through profit or loss
Securities at fair value through other
908
3,709
19,804
10,259
29,794
Total
475,130
2,575,358
33,710
64,474
comprehensive income
16,329
58,446
358,805
199,854
17,138
650,572
Loans at amortised cost
Loans mandatorily measured at fair value through
profit or loss
Securities at amortised cost
Investments in subsidiaries, associates and other
investments
Other financial assets
TOTAL ASSETS
Amounts due to banks and deposits from the
1,327,629
873,169
1,377,885
726,016
16,516
15,575
121,104
553,569
28,514
308,921
1,792,058
938,902
-
-
-
4,304,699
706,764
3,068,395
-
-
157,669
1,227
-
-
- 1,573,008
1,573,008
-
-
158,896
3,232,589
1,846,546
4,278,838 2,633,093 1,619,940
13,611,006
National Bank of Hungary and other banks
297,779
138,418
506,233
108,773
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
9,844,911
57,851
33,112
12,658
49,726
-
36,854
-
5,258
2,841
531
1,078
193,315
6,812
8,812
2,065
-
-
269,698
1,253
3,791
5,337
4,422
13,927
9,356
3,707
876
-
10,395,439
213,462
599,665
410,828
-
-
-
-
-
-
-
-
-
1,051,203
9,948,532
86,580
22,947
272,539
20,133
17,932
199,528
11,619,394
NET POSITION1
Receivables from derivative financial instruments
-7,162,850
1,633,084
3,679,173 2,222,265 1,619,940
1,991,612
classified as held for trading
4,573,312
1,957,498
339,869
135,728
Liabilities from derivative financial instruments
classified as held for trading
(4,581,312)
(1,951,622)
(328,607) (132,345)
Net position of derivative financial instruments
classified as held for trading
(8,000)
5,876
11,262
3,383
Receivables from derivative financial instruments
designated as hedge accounting
5,693
37,436
580,280
16,195
Liabilities from derivative financial instruments
designated as hedge accounting
(7,658)
(46,925)
(595,692)
(16,417)
Net position of derivative financial instruments
designated as hedging accounting
(1,965)
(9,489)
(15,412)
(222)
Net position of derivative financial instruments
total
(9,965)
(3,613)
(4,150)
3,161
Commitments to extend credit
Confirmed letters of credit
Factoring loan commitment
Bank guarantees
Off-balance sheet commitments
1,677,030
30,381
423,673
133,460
2,264,544
-
-
-
-
-
-
-
-
-
189,747
189,747
247,886
247,886
936,824
936,824
-
-
-
-
-
-
-
-
-
-
-
-
7,006,407
(6,993,886)
12,521
639,604
(666,692)
(27,088)
(14,567)
1,677,030
30,381
423,673
1,507,917
3,639,001
1 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.
93
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.2. Maturity analysis of assets and liabilities and liquidity risk [continued]
comprehensive income
14,453
111,117
402,797
305,507
15,731
849,605
National Bank of Hungary and other banks
152,633
62,871
492,291
Deposits from customers
7,716,000
131,890
30,628
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
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
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 POSITION1
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
Within 3
months
Within one
year and over
3 months
Within 5 years
and over one
year
Over 5
years
Without
maturity
579,120
578,907
183,656
1,401
-
-
-
656,143
273,834
33,027
-
-
-
1,151
3,576
9,042
22,121
37,291
1,134,542
728,410
1,132,083
645,980
11,674
85,000
383,775
37,950
1,354,479
559,171
-
-
-
-
-
-
1,936
1,936
- 1,548,972
1,548,972
-
-
135,109
133,832
1,277
2,660,496
1,547,722
3,251,769
1,936,502 1,588,760
10,985,249
14,850
19,735
-
-
-
636
2,972
3,159
1,073
161,652
73,574
14,115
-
487
-
109,612
11,835
15,256
-
1,421
3,350
4,877
-
302,182
6,115
7,213
1,417
15,207
2,470
-
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
Total
579,120
1,541,911
183,656
-
-
-
-
-
-
3,641,015
495,299
1,971,335
-
-
-
-
-
-
-
-
-
781,369
7,892,633
109,612
28,214
305,154
25,902
14,106
167,946
9,324,936
-
-
-
-
-
-
-
-
-
-
-
-
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
8,038,125
216,244
662,532
408,035
(5,377,629)
1,331,478
2,589,237
1,528,467 1,588,760
1,660,313
Commitments to extend credit
Confirmed letters of credit
Factoring loan commitment
Bank guarantees
Off-balance sheet commitments
1,441,060
5,039
305,269
115,485
1,866,853
-
-
-
-
-
-
-
-
-
136,569
136,569
305,714
305,714
861,775
861,775
1 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.
94
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.3. Net foreign currency position and foreign currency risk
As at 31 December 2021
Assets
Liabilities
Derivative financial instruments
Net position
As at 31 December 2020
Assets
Liabilities
Derivative financial instruments
Net position
EUR
USD
486,225
2,448,729
(296,903) (2,121,543)
(321,377)
(197,080)
5,809
(7,758)
CHF
14,989
(42,590)
27,953
352
Total
Others
290,504
3,240,447
(59,350) (2,520,386)
(719,593)
(229,089)
468
2,065
USD
EUR
1,929,758
174,993
(291,985) (1,623,605)
(350,237)
116,987
(44,084)
(5)
CHF
17,509
(35,701)
18,614
422
Others
Total
2,374,137
251,877
(105,346) (2,056,637)
(360,844)
(146,208)
(43,344)
323
The table above provides an analysis of the Bank’s main foreign currency exposures. The remaining foreign
currencies are shown within ‘Others’. The Bank monitors its foreign exchange position for compliance with the
regulatory requirements of the NBH and its own limit system established in respect of limits on open positions.
The measurement of the Bank’s open its currency position involves monitoring the VaR limit on the foreign
exchange exposure of the Bank.
In the table Derivative financial instruments are stated at fair value.
36.4.
Interest rate risk management
Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest
rates. The length of time for which the rate of interest is fixed on a financial instrument, therefore, indicates to
what extent it is exposed to interest rate risk.
The majority of the Bank's interest bearing assets and liabilities are structured to match either short-term assets
and short-term liabilities, or long-term assets and liabilities with repricing opportunities within one year, or long-
term assets and corresponding liabilities where repricing is performed simultaneously.
In addition, the significant spread existing between the different types of interest bearing assets and liabilities
enables the Bank to 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 repricing dates of the Bank. Variable yield assets and liabilities have
been reported in accordance with their next repricing date. Fixed income assets and liabilities have been reported
in accordance with their maturity.
95
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.4.
Interest rate risk management [continued]
As at 31 December 2021
ASSETS
Cash, amounts due from
banks and balances
with the National Bank
of Hungary
fixed interest
non-interest-bearing
Placements with other
banks
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
non-interest-bearing
Securities at fair value
through other
comprehensive income
fixed interest
variable interest
non-interest-bearing
within 1 month
within 3 months over 1
month
within 1 year over 3
months
within 2 years over 1
year
over 2 years
Non-interest -bearing
Total
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
Total
31,228
31,228
-
1,353,059
774,315
578,744
-
33,638
33,638
1,237
32
1,205
-
-
-
50,774
2,437
48,337
-
289,008
289,008
-
-
-
-
127,852 148,091
34,420
449
93,432 147,642
-
-
-
-
-
-
-
-
-
-
-
-
165,940 31,821
156,755 2,446
9,185 29,375
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
664
487
177
-
-
-
22,420
6,897
15,523
-
- 2,481
- 2,208
273
-
-
-
-
-
-
-
- 65,666
- 57,092
- 8,574
-
-
-
-
-
-
-
-
79,243 76,105
79,243 76,105
-
-
-
-
-
-
-
-
1,242
1,242
-
-
360
360
-
-
-
-
-
-
-
-
29,677 499,636
29,677 499,636
-
-
-
-
-
-
-
-
3,508
3,508
-
-
22,931
22,931
-
-
- 133,053
-
-
- 133,053
21,655
-
21,655
164,281
31,228
133,053
27,178 24,416
-
27,178
-
-
- 24,416
-
-
-
-
1,478
1,478
-
-
1,200
-
-
1,200
4,194 2,133,128
- 1,352,951
755,761
-
24,416
4,194
33,638
-
33,638
-
532
-
-
532
28,873
26,018
1,655
1,200
310,663
289,008
21,655
434,084
327,273
102,617
4,194
-
-
6,760
6,228
-
532
474,944
320,236
154,708
2,567,212
1,680,224
858,378
28,610
33,638
33,638
35,633
32,246
1,655
1,732
-
-
-
-
-
-
-
-
- 18,807
- 18,807
9,254
9,254
18,807
18,807
9,254
9,254
28,061
28,061
432 40,185
432 40,185
-
-
-
-
39,228 289,634
39,228 289,634
-
-
-
-
116,463
116,463
-
-
528
-
-
528
16,609
-
-
16,609
469,207
396,245
72,434
528
172,732
156,123
-
16,609
641,939
552,368
72,434
17,137
96
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.4.
Interest rate risk management [continued]
As at 31 December 2021
ASSETS [continued]
Loans measured at
amortised cost
fixed interest
variable interest
non-interest-bearing
-
Loans mandatorily
measured at fair value
through profit or loss
variable interest
Securities at amortised
cost
fixed interest
variable interest
Other financial assets
non-interest-bearing
Derivative financial
instruments
fixed interest
variable interest
non-interest-bearing
19,371
19,371
-
-
-
-
-
1,507,306
1,400,852
106,454
-
within 1 month
within 3 months over 1
month
within 1 year over 3
months
within 2 years over 1
year
over 2 years
Non-interest -bearing
Total
Total
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
639,477
339,611 424,299
1,161,425 53,018
126,963 185,264
10,912
829,049
89,993 121,277
51,177 2,252,384
1,780,081
4,032,465
295
286
894
9,746 13,723
57,602 183,818
10,912
819,629
89,993
639,182
339,325 423,405
1,151,679 39,295
69,361
1,446
-
-
-
7,609
-
7,609
-
-
-
136
136
-
-
-
-
-
-
-
-
-
829
829
-
-
-
-
755
755
-
-
-
-
9,420
-
640,921
640,921
4,811 304,051
1,069 215,615
- 304,051
1,069 215,615
343 2,044,502
343 2,044,502
4,811
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 1,018,359
168,539
1,186,898
- 1,112,748
1,560,365
2,673,113
-
- 121,277
51,177
121,277
51,177
172,454
-
-
493,038
493,038
-
-
-
-
-
-
-
-
662,012
662,012
-
-
662,012
662,012
- 2,564,168
506,870
3,071,038
- 2,564,168
494,450
3,058,618
-
-
12,420
12,420
- 133,896
- 133,896
19,852
133,896
19,852
133,896
19,852
19,852
153,748
153,748
1,256,601 395,623
936,093 675,976
863,692 10,760
57,437
183,617
54,913 181,095
675,035 2,954,377
3,843,771
6,798,148
1,133,429 188,144
551,308 570,718
861,983 10,760
57,378
183,617
54,913
123,172 207,479
384,785 105,258
-
-
-
-
1,709
-
-
-
59
-
-
-
-
-
- 2,354,091
2,659,011
5,013,102
-
419,191
509,725
928,916
-
- 181,095
675,035
181,095
675,035
856,130
97
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.4.
Interest rate risk management [continued]
As at 31 December 2021
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
variable interest
Repo liabilities
fixed interest
Deposits from customers
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
Derivative financial
instruments
fixed interest
variable interest
non-interest-bearing
within 1 month
within 3 months over 1
month
within 1 year over 3
months
within 2 years over 1
year
over 2 years
Non-interest -bearing
Total
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
Total
151,809
106,028
45,781
-
95,432
22,624
72,808
-
12,344
12,344
-
-
10,405 52,872
10,405 52,872
-
-
-
-
577 224,479
577 224,479
-
-
-
-
1,140
1,140
-
-
471,620
471,620
-
-
20,133
20,133
49,726
49,726
7,628,098
496,069
7,132,029
-
865
212
653
-
-
192
108
84
-
-
-
-
36,854
36,854
-
-
-
-
2,039,650 197,780
131,836 197,780
-
-
1,907,814
-
-
-
-
-
-
-
-
-
18,468 30,063
18,468 30,063
-
-
-
-
-
-
-
8,514
-
8,514
-
-
380
25
355
-
-
-
-
236
72
164
-
-
-
-
-
85,551
85,551
522
34
488
-
-
4,696
4,147
549
-
-
1,004
538
466
-
-
-
-
-
-
11,066
11,066
-
-
-
-
-
186,225
186,225
2,535
123
2,412
-
-
-
-
-
-
-
-
-
-
1,676
1,676
-
-
-
1,362
717
645
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,321
144
1,177
-
-
-
-
-
-
-
-
-
-
6,402
6,402
-
-
-
4,838
2,118
2,720
-
-
- 29,684
-
-
-
-
- 29,684
-
-
-
-
-
-
-
-
- 12,948
-
-
-
-
- 12,948
-
-
-
-
-
-
-
-
5,542
485
5,057
-
-
-
-
-
- 156,012
- 156,012
841
-
-
841
942,808
867,343
45,781
29,684
108,395
34,746
72,808
841
1,051,203
902,089
118,589
30,525
-
-
-
-
20,133
20,133
49,726
49,726
10,459 7,868,889
-
723,912
- 7,132,029
12,948
10,459
-
-
-
-
-
-
-
-
38,499
38,499
22,153
12,437
9,716
-
-
7,632
3,553
4,079
156,012
156,012
-
-
36,854
36,854
2,079,643
161,370
1,907,814
10,459
20,133
20,133
86,580
86,580
9,948,532
885,282
9,039,843
23,407
-
-
-
271,776
271,776
10,300
811
9,489
38,499
38,499
22,153
12,437
9,716
271,776
271,776
17,932
4,364
13,568
194,511
194,511
840,797
728,548
112,249
-
2,004,808 220,053
1,814,645 151,791
68,262
-
190,163
-
1,083,211 709,776
579,843 525,835
503,368 183,941
-
-
870,457 12,937
868,689 12,360
577
-
1,768
-
54,862
54,789
73
-
96,350
96,350
-
-
73,700 411,167
-
73,700
-
-
- 411,167
430,486 2,291,080
- 1,514,884
365,029
-
411,167
430,486
4,517,524
3,391,666
695,372
430,486
6,808,604
4,906,550
1,060,401
841,653
NET POSITION
(5,055,530)
(2,156,443) 552,306
1,070,112 335,431
1,781 288,590
83,782 3,931,080
703,821
4,461
318,023
56,338
21,076
77,414
98
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.4. Interest rate risk management [continued]
As at 31 December 2020
within 1 month
within 3 months over 1
month
within 1 year over 3
months
within 2 years over 1
year
over 2 years
Non-interest -bearing
Total
Total
ASSETS
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
Cash, amounts due from banks
and balances with the
National Bank of Hungary
fixed interest
non-interest-bearing
Placements with other banks
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
144,030
144,030
-
783,024
220,175
562,849
-
183,364
183,364
1,260
354
906
-
-
-
-
239,960
239,960
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 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
80,732 177,155
189,231 43,239
64,447 23,378
3,629 122,035
27,080 19,194
2,740 1,168,025
367,859 1,535,884
17,719 15,106
179,174 13,934
64,447 23,378
3,629 122,035
27,080
63,013 162,049
10,057 29,305
-
-
-
526
-
526
-
5,342
5,342
-
-
-
-
287
287
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
567
567
608
608
465 1,250
465 1,250
298
298
2,983
2,983
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 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
1,095
1,926
464
-
-
-
-
8,314
5,482
906
1,926
464
1,926
1,095
-
-
-
-
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
other comprehensive income
79,240
fixed interest
variable interest
non-interest-bearing
600
78,640
-
5,717 16,218
5,717
673
- 15,545
-
-
- 111,153
- 100,003
- 11,150
-
-
10,223 3,533
19,578 551,328
10,223 3,533
19,578 551,328
-
-
-
-
-
-
-
-
99,229
99,229
-
-
528
15,203 762,000
149,950
911,950
-
-
- 656,137
134,747
790,884
- 105,335
-
105,335
528
15,203
528
15,203
15,731
99
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.4.
Interest rate risk management [continued]
As at 31 December 2020
ASSETS [continued]
within 1 month
within 3 months over 1
month
within 1 year over 3
months
within 2 years over 1
year
over 2 years
Non-interest -
bearing
Total
Total
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency HUF
foreign
currency
HUF
foreign
currency
Loans measured at amortised cost
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
2,769
8,967
1,285
74,088 11,731
8,970 33,604
15,984
700,585
56,172
fixed interest
variable interest
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
552,542
243,715 390,010
1,037,915 42,532
58,028 11,935
-
24,870
24,870
-
-
-
-
-
-
-
-
-
-
-
-
59
59
-
-
-
-
-
-
-
-
334
334
1,065 38,112
1,065 38,112
-
-
-
-
-
-
-
-
368
368
- 393,442
- 393,442
-
-
-
-
Derivative financial instruments
936,413
706,442 880,140
378,405 557,115
419,548 26,738
fixed interest
variable interest
non-interest-bearing
920,404
16,010
-
567,652 658,754
183,228 559,258
387,941 26,799
138,790 221,387
195,178
(2,143)
31,607
(61)
-
-
-
-
-
-
-
-
-
-
9,344
-
455,306
455,306
-
-
-
1,092 1,551,614
1,092 1,551,614
22,367
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
-
-
7,333
7,333
-
-
-
-
39,765
40,012
(247)
-
- 112,055
15,124
112,055
15,124
127,179
- 112,055
15,124
112,055
15,124
127,179
101,640 733,551
248,095 3,173,724
1,861,463 5,035,187
101,640
-
-
-
- 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
100
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.4.
Interest rate risk management [continued]
As at 31 December 2020
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
Deposits from customers
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
Derivative financial instruments
fixed interest
variable interest
non-interest-bearing
within 1 month
within 3 months over 1
month
within 1 year over 3
months
within 2 years over 1
year
over 2 years
Non-interest -bearing
Total
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency
HUF
foreign
currency HUF
foreign
currency
HUF
foreign
currency
Total
106,883
36,937
69,946
-
25,902
79
25,823
-
-
6,211,090
325,464
5,885,626
-
3,090
213
2,877
-
-
149
103
46
-
-
1,264,723
1,111,371
153,351
-
86,885
15,136
71,749
-
12,008
12,008
-
-
40,429
8,569
31,860
-
3,363
3,363
-
-
7,491 39,270
1,490 39,270
-
6,001
-
-
-
-
-
-
467,479
467,479
-
-
-
-
-
-
1,678
-
-
1,678
1,491 630,681
- 559,057
69,946
-
1,678
1,491
136,296
25,195
109,610
1,491
766,977
584,252
179,556
3,169
-
-
-
-
-
-
-
-
-
-
1,404,362 133,886
116,385 133,886
-
-
11,691
-
11,691
-
-
260
69
191
-
-
383,260 1,035,481
376,748 648,762
6,512 386,719
-
1,287,977
-
221
-
221
-
-
187
11
176
-
-
-
-
-
-
-
-
-
-
-
-
-
15,540 101,496
15,540 101,496
-
-
-
-
4,502
414
3,500
-
1,002
414
-
120,153
-
120,153
1,267
477
528
40
739
437
-
-
-
-
206,796 479,506
188,722 481,293
(1,787)
-
18,074
-
-
-
-
109,612
109,612
13,367
13,367
-
-
721
-
721
184,090
184,090
2,082
170
1,912
-
-
492,403
469,699
22,704
-
-
-
-
-
-
227
227
-
-
4,098
4,098
-
-
-
1,333
707
626
-
-
9,453
9,514
(61)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,233
65
1,168
-
-
24,907
24,907
-
-
-
-
-
-
-
-
-
-
-
3,698
3,698
-
-
-
5,747
2,796
2,951
-
-
49,757
50,004
(247)
-
-
-
-
-
-
-
-
-
-
-
- 10,782
-
-
-
-
- 10,782
-
-
-
-
-
-
-
-
-
-
-
1,371
-
37
-
1,334
- 138,508
- 138,508
89,983 724,945
-
89,802
-
181
- 724,945
-
-
-
-
-
25,902
79
25,823
-
-
4,985 6,457,481
- 561,073
- 5,885,626
10,782
27,079
11,509
15,570
-
-
8,756
4,203
4,553
29,032 138,508
29,032 138,508
253,430 3,563,865
- 2,300,945
- 537,975
253,430 724,945
4,985
-
-
-
-
-
-
-
-
145,292
-
-
-
109,612
109,612
25,902
79
25,823
109,612
109,612
1,438,254 7,895,735
706,365
1,287,977 7,173,603
15,767
28,435
11,509
16,926
304,243
304,243
14,106
4,526
9,580
167,540
167,540
1,450,778 5,014,643
1,149,878 3,450,822
585,446
978,374
4,985
1,356
-
1,356
304,243
304,243
5,350
323
5,027
29,032
29,032
47,471
253,430
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)
101
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.5. Market risk
The Bank takes on exposure to market risks. Market risks arise from open positions in interest rate, currency and
equity products, all of which are exposed to general and specific market movements. The Bank applies a Value-
at-Risk ("VaR") methodology to estimate the market risk of positions held and the maximum losses expected,
based upon a number of assumptions for various changes in market conditions. The Management Board sets
limits on the value of risk that may be accepted, which is monitored on a daily basis. (Analysis of liquidity risk,
foreign currency risk and interest rate risk is detailed in Notes 36.2, 36.3 and 36.4 respectively.)
36.5.1. Market risk sensitivity analysis
The VaR risk measure estimates the potential loss in pre-tax profit over a given holding period for a specified
confidence level. The VaR methodology is a statistically defined, probability-based approach that takes into
account market volatilities as well as risk diversification by recognizing offsetting positions and correlations
between products and markets. Risks can be measured consistently across all markets and products, and risk
measures can be aggregated to arrive at a single risk number. The one-day 99% VaR number used by the Group
reflects the 99% probability that the daily loss will not exceed the reported VaR.
VaR methodologies are employed to calculate daily risk numbers include the historical and variance-covariance
approach. The diversification effect has not been validated among the various market risk types when capital
calculation happens.
The VaR of the trading portfolio can be summarized as follows (in HUF mn):
Historical VaR (99%, one-day) by risk type
Average
2021
2020
Foreign exchange
Interest rate
Equity instruments
Diversification
Total VaR exposure
1,560
135
20
-
1,715
1,507
77
141
-
1,725
While VaR captures the OTP’s daily exposure to currency and interest rate risk, sensitivity analysis evaluates the
impact of a reasonably possible change in interest or foreign currency rates over a year. The longer time frame of
sensitivity analysis complements VaR and helps the OTP to assess its market risk exposures. Details of
sensitivity analysis for foreign currency risk are set out in Note 36.5.2., for interest rate risk in Note 36.5.3., and
for equity price sensitivity analysis in Note 36.5.4.
102
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 35:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.5. Market risk [continued]
36.5.2. Foreign currency sensitivity analysis
The Bank changed its methodology of foreign currency sensitivity analysis and has been using a
historical VaR calculation since 31 March 2021. The former Monte Carlo simulation represented the
Group’s sensitivity to the rise and fall in the HUF exchange rate against EUR, over a 3 months period.
The sensitivity analysis included only outstanding foreign currency denominated monetary items as
strategic open positions related to foreign activities. In line with the Management's intention, the former
EUR -310 million strategic open position was fully closed as of 31 March 2021.
Since the closing of the strategic open position, the Group has been using a historical VaR calculation
with 1 day holding period. The analysis includes the same net open foreign exchange position as used
under the internal capital adequacy assessment process (ICAAP). The VaR methodology is a statistically
defined, probability-based approach that takes into account market volatilities as well as risk
diversification by recognizing offsetting positions and correlations between products and markets.
Additionally, the Bank determines the foreign currency risk of assets evaluated through the Other
Comprehensive Income (OCI), which includes securities valuated on FVOCI and the foreign currency
translation reserves.
The following table shows the result of the foreign currency sensitivity analysis. Numbers below indicate
the expected daily profit or loss of the portfolio beside the given confidence level.
Probability
1%
5%
25%
50%
25%
5%
1%
Effects to the P&L in 3 months period
2020
2021
In HUF billion
In HUF billion
(178)
(119)
(39)
2
49
126
187
(274)
(151)
(44)
4
57
157
197
Notes:
(1) Historical VaR simulation is based on the empirical distribution of the historical exchange rate
movements between 31 December 2020 and 31 December 2021.
103
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 35:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.5. Market risk [continued]
36.5.3. Interest rate sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives
and non-derivative instruments at the balance sheet date. The analysis is prepared assuming the amount of assets
and liabilities outstanding at the balance sheet date was outstanding for the whole year. The analysis was
prepared by assuming only adverse interest rate changes. The main assumptions were as follows:
● Floating rate assets and liabilities were repriced to the modelled benchmark yields at the repricing
dates assuming the unchanged margin compared to the last repricing.
● Fixed rate assets and liabilities were repriced at the contractual maturity date.
● As for liabilities with discretionary repricing feature by the Bank were assumed to be repriced with
two-weeks delay, assuming no change in the margin compared to the last repricing date.
● Deposits with an interest rate lower than 0.3% even at high market rates were assumed to be
unchanged for the whole period.
The sensitivity of interest income to changes in BUBOR was analysed by assuming two interest rate path
scenarios:
(1) HUF base rate and BUBOR increases gradually by 100 bps over the next year (probable scenario)
(2) HUF base rate and BUBOR decreases gradually by 50 bps over the next year (alternative scenario)
The net interest income in a one year period after 1 January 2022 would be increased by HUF 1,238 million
(probable scenario) and decreased by HUF 919 million (alternative scenario) as a result of these simulation. The
same simulation indicated HUF 1,476 million (probable scenario) and HUF 6,420 million (alternative scenario)
decrease in the Net interest income in a one year period after 1 January 2021. This effect is counterbalanced by
capital gains HUF -619 million (or probable scenario), HUF 322 million (for alternative scenario) as at 31
December 2021 and (HUF 584 million for probable scenario, HUF 2,329 million for alternative scenario as at 31
December 2020) on the government bond portfolio held for hedging (economic).
Furthermore, the effects of an instant 10bps parallel shift of the HUF, EUR and USD yield-curves on net interest
income over a one-year period and on the market value of the hedge government bond portfolio booked against
capital was analysed. The results can be summarized as follows (in HUF million):
2021
2020
Description
Effects to the net
interest income
(one-year period)
HUF (0.1%) parallel shift
HUF 0.1% parallel shift
EUR (0.1%) parallel shift
USD (0.1%) parallel shift
Total
(25)
(40)
(483)
(23)
(546)
Effects to the net
interest income (one-
year period)
64
(64)
-
-
(64)
Effects to the net
interest income
(one-year period)
(1,991)
1,715
(676)
(165)
(2,832)
Effects to the net
interest income
(one-year period)
389
389
-
-
389
104
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.5. Market risk [continued]
36.5.4. Equity price sensitivity analysis
The following table shows the effect of the equity price sensitivity. The Bank uses VaR calculation with 1 day
holding period and a 99% confidence level. The VaR methodology is a statistically defined, probability-based
approach that takes into account market volatilities as well as risk diversification by recognizing offsetting
positions and correlations between products and markets. The daily loss will not exceed the reported VaR
number with 99% of probability.
The stress test assumes the largest price movement of the last year and calculates with it as the adverse direction.
These scenarios show the loss of the portfolio when all prices change with the maximum amount of the last year.
Description
VaR (99%, one day, million HUF)
Stress test (million HUF)
2021
12
(21)
2020
141
(233)
36.6. Capital management
Capital management
The primary objective of the capital management of the Bank is to ensure the prudent operation, the entire
compliance with the prescriptions of the regulator for a persistent business operation and maximising the
shareholder value, accompanied by an optimal financing structure.
The capital management of the Bank includes the management and evaluation of the shareholders` equity
available for hedging risks, other types of funds to be recorded in the equity and all material risks to be covered
by the capital.
The basis of the capital management of the Bank in the short run is the continuous monitoring of its capital
position, in the long run the strategic and the business planning, which includes the monitoring and forecast of
the capital position of the Bank.
The Bank maintains the capital adequacy required by the regulatory bodies and the planned risk taking mainly by
means of ensuring and developing its profitability. In case the planned risk level of the Bank exceeded its Core
and Supplementary capital, the Bank ensures the prudent operation by occasional measures. A further tool in the
capital management of the Bank is the dividend policy, and the transactions performed with the treasury shares.
Capital adequacy
The Capital Requirements Directive package (CRDIV/CRR) transposes the global standards on banking
regulation (commonly known as the Basel III agreement) into the EU legal framework. The rules are applied
from 1 January 2014. They set stronger prudential requirements for institutions, requiring them to keep sufficient
capital reserves and liquidity. This framework makes institutions in the EU more solid and strengthens their
capacity to adequately manage the risks linked to their activities, and absorb any losses they may incur in doing
business.
The Bank has entirely complied with the regulatory capital requirements in 2021 as well as in 2020.
The Bank’s capital adequacy calculation is in line with IFRS and based on Basel III as at 31 December 2021 and
2020. The Bank uses the standard method for determining the regulatory capital requirements of the credit risk
and market risk while in case of the operational risk the Advanced Measurement Approach (AMA).
105
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.6. Capital management [continued]
Capital adequacy [continued]1
The calculation of the Capital Adequacy ratio as at 31 December 2021 and 2020 is as follows:
Core capital (Tier 1)
Primary core capital (CET1)
Supplementary capital (Tier 2)
Regulatory capital
Credit risk capital requirement
Market risk capital requirement
Operational risk capital requirement
Total eligible regulatory capital
Surplus capital
CET 1 ratio
Capital adequacy ratio
Basel III:
Common equity Tier 1 capital (CET1):
2021
Basel III
2020
Basel III
1,747,480
1,747,480
264,396
1,598,295
1,598,295
295,795
2,011,876
1,894,090
603,253
7,519
31,629
642,401
1,369,475
21.76%
25.05%
526,283
11,550
27,597
565,430
1,328,660
22.61%
26.80%
Issued capital, Capital reserve, useable part of Tied-up reserve, General reserve, Profit reserve, Profit for the
year, Treasury shares, Intangible assets, deductions due to investments, adjustments due to temporary disposals
Tier 2 capital:
Subsidiary loan capital, Subordinated loan capital, deductions due to repurchased loan capital and Subordinated
loan capital issued by the OTP Bank, adjustments due to temporary disposals.
1 The dividend amount planned to pay out after the profit of financial year 2019, 2020 and 2021 is also deducted from CET 1 capital.
106
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
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 2021
Date of
reclassification
Reason
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%
38
During the year 2018, securities issued by the Hungarian Government with the nominal value of HUF 66.506
million were transferred from the trading portfolio to the securities measured at fair value through other
comprehensive income, of which HUF 1,087 million remaining amount was presented as at 31 December 2021.
The Bank has previously held retail government bonds in the portfolio measured at fair value through other
comprehensive income. During 2018 the Bank changed the business model of the retail government bonds to
manage all on the basis of a single business model aimed at collecting the future contractual cash flows and/or
selling them.
In 2018, the terms and conditions of sale of retail government bonds and the pricing environment have changed
significantly, as a result of which the Bank is no longer able to maintain its sole trading intent with these
securities that the Bank applied earlier. Furthermore there is an option-agreement between the Bank and the
Government Debt Management Agency (“GDMA”) that GDMA will buy back this portfolio therefore it has
been reclassified.
Financial assets transferred but not derecognised
2021
2020
Transferred
assets
Associated
liabilities
Transferred
assets
Associated
liabilities
Carrying amount
Financial assets at amortised cost
Debt securities
Total:
Total:
88,181
88,181
86,580
86,580
125,244
125,244
109,612
109,612
88,181
86,580
125,244
109,612
As at 31 December 2021 and 2020, the Bank had obligation from repurchase agreements about HUF 87 billion
and HUF 110 billion respectively. Securities sold temporarily under repurchase agreements will continue to be
recognized in the Statement of Financial Position of the Bank in the appropriate securities category. The related
liability is measured at amortized cost in the Statement of Financial Position as ’Amounts due to banks and
deposits from the National Bank of Hungary and other banks’. Under these repurchase agreements only
Hungarian and foreign government bonds were transferred.
107
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 38:
OFF-BALANCE SHEET ITEMS (in HUF mn)
In the normal course of business, the Bank becomes a party to various financial transactions that are not reflected
on the statement of financial position and are referred to as off-balance sheet financial instruments. The
following represents notional amounts of these off-balance sheet financial 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)
Contingent liabilities related to payments from shares in venture capital fund
Other
Contingent liabilities and commitments total in accordance with IAS 37
Total
Legal disputes
2021
2020
1,677,030
1,507,917
746,476
423,673
30,381
3,639,001
3,204
47,550
408
51,162
3,690,163
1,441,060
1,419,543
683,736
305,269
5,039
3,170,911
4,720
32,712
602
38,034
3,208,945
At the balance sheet date the Bank was involved in various claims and legal proceedings of a nature considered
normal to its business. The level of these claims and legal proceedings corresponds to the level of claims and
legal proceedings in previous years.
The Bank believes that the various asserted claims and litigations in which it is involved will not materially
affect its financial position, future operating results or cash flows, although no assurance can be given with
respect to the ultimate outcome of any such claim or litigation.
Provision due to legal disputes was HUF 259 million and HUF 199 million as at 2021 and 2020, respectively.
(See Note 24.)
Commitments to extend credit, guarantees and letter of credit
The primary purpose of these instruments is to ensure that funds are available to a customer as required.
Guarantees and standby letters of credit, which represent irrevocable assurances that the Bank will make
payments in the event that a customer cannot meet its obligations to third parties, carry the same credit risk as
loans.
Documentary and commercial letters of credit, which are written undertakings by the Bank on behalf of a
customer authorising a third party to draw drafts on the Bank up to a stipulated amount under specific terms and
conditions, are collateralised by the underlying shipments of goods to which they relate and therefore carry less
risk than a direct borrowing.
Commitments to extend credit represent unused portions of authorisations to extend credit in the form of loans,
guarantees or letters of credit. With respect to credit risk on commitments to extend credit, the Bank is
potentially exposed to loss in an amount equal to the total unused commitments. However, the likely amount of
loss is less than the total unused commitments since most commitments to extend credit are contingent upon
customers maintaining specific credit standards.
Guarantees, irrevocable letters of credit and undrawn loan commitments are subject to similar credit risk
monitoring and credit policies as utilised in the extension of loans. The Management of the Bank believes the
market risk associated with guarantees, irrevocable letters of credit and undrawn loan commitments are minimal.
108
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 38:
OFF-BALANCE SHEET ITEMS (in HUF mn) [continued]
Guarantees, payment undertakings arising from banking activities
Payment undertaking is a promise by the 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 transactions. The guarantee’s liability is joint and primary with the principal, in
case of payment undertaking, while the Bank assumes the obligation derived from guarantee independently by
the conditions established by the Bank. A guarantee is most typically required when the ability of the primary
obligor or principal to perform its obligations under a contract is in question, or when there is some public or
private interest which requires protection from the consequences of the principal's default or delinquency. A
contract of guarantee is subject to the statute of frauds (or its equivalent local laws) and is only enforceable if
recorded in writing and signed by the surety and the principal.
If the surety is required to pay or perform due to the principal's failure to do so, the law will usually give the
surety a right of subrogation, allowing the surety to use the surety's contractual rights to recover the cost of
making payment or performing on the principal's behalf, even in the absence of an express agreement to that
effect between the surety and the principal.
Contingent liabilities related to OTP Mortgage Bank Ltd.
Under a syndication agreement with its wholly owned subsidiary, OTP Mortgage Bank Ltd., the Bank had
guaranteed, in return for an annual fee, to purchase all mortgage loans held by OTP Mortgage Bank Ltd. that
become non-performing. The repurchase guarantee contract of non-performing loans between OTP Mortgage
Bank Ltd. and OTP Bank Plc. was modified in 2010. According to the arrangement the repurchase guarantee
was cancelled and OTP Bank Plc. gives bail to the loans originated or purchased by the Bank.
NOTE 39:
SHARE-BASED PAYMENT AND EMPLOYEE BENEFIT (in HUF mn)
Previously approved option program required a modification thanks to the introduction of the Bank Group Policy
on Payments accepted in resolution of Annual General Meeting regarding to the amendment of CRD III.
Directives and Act on Credit Institutions and Financial Enterprises.
Key management personnel affected by the Bank Group Policy receive compensation based on performance
assessment generally in the form of cash bonus and equity shares in a ratio of 50-50%. Assignment is based on
OTP shares, furthermore performance based payments are deferred in accordance with the rules of Credit
Institutions Act.
OTP Bank ensures the share-based payment part for the management personnel of OTP Group members.
During implementation of the Remuneration Policy of the Group it became apparent that in case of certain
foreign subsidiaries it is not possible to ensure the originally determined share-based payment because of legal
reasons – incompatible with relevant EU-directives –, therefore a decision was made to cancel the share-based
payment in affected countries, and virtual share based payment – cash payment fixed to share price - was made
from 2017. In case of foreign subsidiaries virtual share based payment was made uniformly from 2021 (in case
of payments related to 2021).
The quantity of usable shares for individuals calculated for settlement of share-based payment shall be
determined as the ratio of the amount of share-based payment and share price determined by Supervisory Board.
The value of the share-based payment at the performance assessment is determined within 10 days by
Supervisory Board based on the average of the three previous trade day’s middle rate of OTP Bank’s equity
shares fixed on the Budapest Stock Exchange.
At the same time the conditions of discounted share-based payment are determined, and share-based payment
shall contain maximum HUF 6,000 discount at the assessment date, and earnings for the shares at the payment
date is maximum HUF 12,000.
Employee benefits are all forms of consideration given by an entity in exchange for service rendered by
employees or for the termination of employment. IAS 19 Employee Benefits shall be applied in accounting for
all employee benefits, except those to which IFRS 2 Share-based Payment applies.
Short-term employee benefits are employee benefits (other than termination benefits) that are expected to be
settled wholly before twelve months after the end of the annual reporting period in which the employees render
the related service. Post-employment benefits are employee benefits (other than termination and short-term
employee benefits) that are payable after the completion of employment. Post-employment benefit plans are
formal or informal arrangements under which an entity provides post-employment benefits for one or more
employees. Post-employment benefit plans are classified as either defined contribution plans or defined benefit
plans, depending on the economic substance of the plan as derived from its principal terms and conditions.
109
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 39:
SHARE-BASED PAYMENT AND EMPLOYEE BENEFIT (in HUF mn) [continued]
Termination benefits are employee benefits provided in exchange for the termination of an employee’s
employment as a result of either: an entity’s decision to terminate an employee’s employment before the normal
retirement date or an employee’s decision to accept an offer of benefits in exchange for the termination of
employment. Other long-term employee benefits are all employee benefits other than short-term employee
benefits, postemployment benefits and termination benefits.
The parameters for the share-based payment relating to ongoing years 2016-2020 by Supervisory Board for
periods of each year as follows:
Share purchasing at a
discounted price
Year
Exercise
price
Maximum
earnings per
share
Price of
remuneration
exchanged to
share
Share purchasing at a
discounted price
Exercise
price
Maximum
earnings per
share
Price of
remuneration
exchanged to
share
Share purchasing at a
discounted price
Exercise
price
Maximum
earnings per
share
Price of
remuneration
exchanged to
share
2017
2018
2019
2020
2021
2022
2023
2024
2025
for the year 2016
2,500
3,000
3,500
4,000
-
-
-
-
-
7,200
7,200
7,200
7,200
-
-
-
-
-
9,200
9,200
9,200
9,200
-
-
-
-
-
-
8,064
8,064
8,064
8,064
8,064
-
-
-
HUF per share
for the year 2017
for the year 2018
-
3,000
3,500
4,000
4,000
4,000
-
-
-
-
10,064
10,064
10,064
10,064
10,064
-
-
-
-
-
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
Share purchasing at a discounted price Price of remuneration
exchanged to share
Share purchasing at a discounted price Price of remuneration
exchanged to share
Year
Exercise price
Maximum earnings
per share
Exercise price
Maximum earnings
per share
for the year 2019
for the year 2020
HUF per share
2020
2021
2022
2023
2024
2025
2026
2027
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
-
-
12,644
12,644
13,644
13,644
13,644
13,644
13,644
-
9,000
8,000
8,000
8,000
8,000
8,000
8,000
-
16,644
16,644
16,644
16,644
16,644
16,644
16,644
Relevant factors considered during measurement of fair value related to share-based payment as follows:
Year
2017
2018
2019
2020
2021
Reference
price
Assumed
volatility
9,200
10,064
12,413
11,553
16,644
21.3%
26.0%
19.2%
33.6%
28.6%
1Y
0.1%
0.2%
0.2%
0.6%
1.0%
Risk-free interest rate (HUF)
4Y
1.0%
1.3%
1.1%
0.6%
1.9%
5Y
1.3%
1.6%
1.3%
0.8%
2.0%
3Y
0.7%
1.0%
0.9%
0.5%
1.8%
2Y
0.5%
0.6%
0.7%
0.4%
1.6%
6Y
1.3%
1.9%
1.4%
0.9%
2.1%
7Y
1.3%
2.1%
1.6%
1.0%
2.1%
Év
2017
2018
2019
2020
2021
1Y
219
219
252
219
371
Expected dividends (HUF/Share)
6Y
4Y
2Y
5Y
3Y
219
219
290
252
321
252
219
333
290
357
290
219
383
333
393
334
219
440
383
432
384
219
507
440
475
Pricing
model
7Y
442 Binomial
219 Binomial
583 Binomial
507 Binomial
523 Binomial
110
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 39:
SHARE-BASED PAYMENT AND EMPLOYEE BENEFIT (in HUF mn) [continued]
Based on parameters accepted by Supervisory Board, relating to the year 2016 effective pieces are follows As at 31
December 2021:
Approved
pieces of shares
Exercised until
31 December
2021
Weighted
average share
price at the
date of exercise
(in HUF)
Expired
pieces
Exercisable at 31
December 2021
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
147,984
147,984
4,288
4,288
321,528
321,528
8,241
8,241
161,446
161,446
4,033
4,033
166,231
166,231
4,303
4,303
9,544
9,194
10,387
10,098
12,415
11,813
13,629
11,897
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Based on parameters accepted by Supervisory Board, relating to the year 2017 effective pieces are follows As at 31
December 2021:
Approved
pieces of shares
Exercised until
31 December
2021
Weighted
average share
price at the
date of exercise
(in HUF)
Expired
pieces
Exercisable at 31
December 2021
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
108,243
11,926
212,282
26,538
101,571
11,584
109,460
11,531
-
-
108,243
11,926
212,282
26,538
101,565
11,584
106,719
11,531
-
-
11,005
10,098
12,096
11,813
12,084
11,897
16,441
16,477
-
-
-
-
-
-
6
-
-
-
-
-
-
-
-
-
-
-
2,741
-
42,820
3,003
111
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 39:
SHARE-BASED PAYMENT AND EMPLOYEE BENEFIT (in HUF mn) [continued]
Based on parameters accepted by Supervisory Board, relating to the year 2018 effective pieces are follows As at 31
December 2021:
Approved
pieces of shares
Exercised until
31 December
2021
Weighted
average share
price at the
date of exercise
(in HUF)
Expired
pieces
Exercisable at 31
December 2021
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
82,854
17,017
82,854
17,017
150,230
150,230
33,024
73,799
14,618
33,024
73,799
14,618
-
-
-
-
-
-
-
-
-
-
-
-
13,843
11,829
14,294
11,897
16,314
16,468
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
99,341
17,042
45,155
4,114
864
432
Based on parameters accepted by Supervisory Board, relating to the year 2019 effective pieces are follows As at 31
December 2021:
Approved
pieces of shares
Exercised until
31 December
2021
Weighted
average share
price at the
date of exercise
(in HUF)
91,403
22,806
201,273
30,834
91,403
22,806
192,577
30,834
12,218
11,897
16,523
17,618
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
Expired
pieces
Exercisable at 31
December 2021
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,696
-
109,567
15,554
125,771
18,025
44,421
6,279
1,000
500
112
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 39:
SHARE-BASED PAYMENT AND EMPLOYEE BENEFIT (in HUF mn) [continued]
Based on parameters accepted by Supervisory Board, relating to the year 2020 effective pieces are follows As at 31
December 2021:
Approved
pieces of shares
Exercised until
31 December
2021
Weighted
average share
price at the
date of exercise
(in HUF)
41,098
17,881
8,184
17,881
18,471
17,498
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Expired
pieces
Exercisable at 31
December 2021
-
-
-
-
-
-
-
-
-
-
-
-
32,914
-
82,826
19,390
47,826
9,292
51,002
9,518
13,080
3,443
680
680
Share-purchasing period started in 2021
Remuneration exchanged to share
provided 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
Share-purchasing period starting in 2025
Remuneration exchanged to share
applying in 2025
Remuneration exchanged to share
applying in 2026
Remuneration exchanged to share
applying in 2027
Effective pieces relating to the periods starting in 2022-2027 settled during valuation of performance of year
2017-2020, can be modified based on risk assessment and personal changes.
In connection with the share-based compensation for Board of Directors and connecting compensation, shares
given as a part of payments detailed above and for the year 2021 based on performance assessment accounted as
equity-settled share based transactions HUF 3,589 million was recognized as expense for the year ended 31
December 2021.
113
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 40:
RELATED PARTY TRANSACTIONS (in HUF mn)
Outstanding balances and transactions with related parties are summarized below in aggregate:
Statement of financial position
2021
2020
Associated
companies
and other
companies
Other
related
parties
Associated
companies
and other
companies
Other
related
parties
Cash, amounts due from banks and balances with the National
Bank of Hungary
1,675
-
7,301
Placements with other banks, net of allowance for placement
losses
Held for trading securities
Securities mandatorily measured at fair value through profit or
loss
Held for trading derivative financial instruments:
Financial assets at fair value through other comprehensive
income
Securities at amortised cost
Loans at amortised cost
Loans mandatorily measured at fair value through profit or loss
Right of use assets
Derivative financial assets designated as hedge accounting
1,557,437
16
-
19,397
156,162
-
960,288
-
5,713
- 1,177,504
526
-
-
-
5,342
21,587
596
- 250,673
-
105,503 834,555
-
6,567
9
-
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
Derivative financial liabilities designated as held for trading
Derivative financial liabilities designated as hedge accounting
relationships
Other liabilities
Total Liabilities
Off balance sheet items
Guarantees
Loan commitments
Factoring loan commitments
Total
Statement of Profit or Loss
(9)
101,569
2,802,248
-
5
-
67,077
106,113 2,371,132
(115,042)
(36,854)
(263,139)
(5,926)
(12,232)
(5,344)
- (151,254)
-
-
(27,174) (249,410)
(6,736)
(11,299)
(9,957)
-
-
-
(61)
(4,599)
(443,197)
-
(551)
-
(7,014)
(27,725) (435,670)
(921,818)
(85,810)
(1,475)
(1,009,103)
- (870,892)
(96,032)
(37)
(44,812) (966,961)
(44,812)
-
-
(37,051)
-
(37,051)
Interest Income
Interest Expense
Risk cost
(Losses)/Gains arising from derecognition of financial assets
measured at amortised cost
Income from fees and commissions
Expenses from fees and commissions
Other administrative expenses
2021
2020
42,706
(11,449)
904
39,193
(11,186)
(1,925)
(2,198)
33,128
(2,859)
(7,570)
914
28,951
(1,971)
(8,465)
114
-
-
-
-
-
-
590
92,889
10
-
-
557
94,046
-
-
(4,027)
-
-
-
-
(400)
(4,427)
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 40:
RELATED PARTY TRANSACTIONS (in HUF mn) [continued]
Related party transactions with key management
The compensation of key management, such as the members of the Board of Directors, the members of the
Supervisory Board and the employees involved in the decision-making process in accordance with the
compensation categories defined in IAS 24 Related Party Disclosures, is summarised below:
Short-term employee benefits
Share-based payment
Long-term employee benefits (on the basis of IAS 19)
Total
2021
2,957
2,740
246
5,943
2020
2,923
2,619
278
5,820
2021
2021
Loans provided to companies owned by the Management (in the
normal course of business)
Commitments to extend credit and bank guarantees
105,503
44,812
92,889
37,051
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
2021
1,489
173
1,662
2020
969
57
1,026
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 41:
TRUST ACTIVITIES (in HUF mn)
The Bank acts as a trustee for certain loans granted by companies or employers to their employees, mainly for
housing purposes. The ultimate risk for these loans rests with the party advancing the funds. As these loans and
related funds are not considered to be assets or liabilities of the Bank, they have been excluded from the
accompanying separate statement of financial position.
2021
2020
Loans managed by the Bank as a trustee
27,532
28,055
115
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 42:
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
2021
2020
22.79%
1.77%
6.51%
22.69%
2.24%
6.48%
There were no other significant concentrations of the assets or liabilities of the Bank as at 31 December 2021 or
31 December 2020.
OTP Bank continuously provides the Authority with reports on the extent of dependency on large depositors as
well as the exposure of the largest 50 depositors towards OTP Bank. Further to this obligatory reporting to the
Authority. OTP Bank pays particular attention on the exposure of its largest partners and cares for maintaining a
closer relationship with these partners in order to secure the stability of the level of deposits.
The organisational unit of OTP Bank in charge of partner-risk management analyses the largest partners on a
constant basis and sets limits on OTP Bank’s and the Group’s exposure separately partner-by-partner. If
necessary, it modifies partner-limits in due course thereby reducing the room for manoeuvring of the Treasury
and other business areas.
The Bank’s internal regulation (Limit-management regulation) controls risk management which related to
exposures of clients. Bank makes a difference between clients or clients who are economically connected with
each other, partners, partners operating in the same geographical region or in the same economic sector,
exposures from customers. Limit-management regulation includes a specific range provisions system used by
Bank to control risk exposures. This regulation has to be used by the Bank for its business (lending) risk-taking
activity in both the retail and corporate sector.
To specify credit risk limits, the Bank strives their clients get an acceptable margin of risk based on their
financial situation. In the Bank limit system a lower level decision-making delegation has to be provided.
If an OTP group member takes risk against a client or group of clients (either inside the local economy or
outside), the client will be qualified as a group level risk and these limits will be specified at group level.
The validity period of this policy is 12 months. The limit shall be reviewed prior to the expiry date but at least
once a year based on the relevant information required to limit calculations.
The maximum credit exposure to any client or counterparty among Loans at amortised cost was HUF 893 billion
and HUF 722 billion as at 31 December 2021 and 31 December 2020 respectively, before taking into account
collateral or other credit enhancements.
116
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 43:
EARNINGS PER SHARE
Earnings per share attributable to the Bank’s ordinary shares are determined by dividing Net profit for the year
attributable to ordinary shareholders, after the deduction of declared preference dividends, by the weighted
average number of ordinary shares outstanding during the year. Dilutive potential ordinary shares are deemed to
have been converted into 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 shares1
The modified weighted average number of ordinary shares outstanding
2021
2020
125,339
92,474
275,523,535
455
277,301,936
333
125,339
92,474
275,538,262
455
277,310,069
333
2021
2020
280,000,010
(4,476,475)
280,000,010
(2,698,074)
275,523,535
277,301,936
14,727
8,133
during the year for calculating diluted EPS
275,538,262
277,310,069
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.
1 In 2021 and 2020 dilutive effect is in connection with the Remuneration Policy.
117
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 44:
NET GAIN OR LOSS REALISED ON FINANCIAL INSTRUMENTS (in HUF mn)
Year ended 31 December 2021
Net interest
income and
expense
Net non-
interest gain
and loss
Loss
allowance
Other
comprehensive
income
Financial assets measured at amortised cost
Cash, amounts due from banks and balances with the
National Bank of Hungary
14,124
-
-
Placements with other banks, net of allowance for
placement losses
Repo receivables
Loans at amortised cost
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
-
-
-
-
-
-
-
31,981
315
167,882
61,085
275,387
-
-
13,591
(1,552)
12,039
1,797
(220)
37,264
2,035
40,876
277
6,657
-
21,456
(4,659)1
(551)
(35,756)
26,045
47,778
(8,671)
(6,673)
16,255
15,704
-
(35,756)
(11,177)
(2,860)
(10,162)
(214)
(1,166)
(7,890)
-
-
170,598
-
-
-
(33,469)
170,598
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial liabilities designated to measure at fair
value through profit or loss
(493)
3,916
Derivative financial instruments2
(36,295)
3,436
Total
252,908
183,316
56,580
(35,756)
1 For the year ended 31 December 2021 HUF (4,659) million net non-interest gain on securities at fair value through other comprehensive
income was transferred from other comprehensive income to profit or loss.
2 Gains/losses from derivative financial instruments recognised in net interest income as Income similar to interest income.
118
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 44:
NET GAIN OR LOSS REALISED ON FINANCIAL INSTRUMENTS
(in HUF mn) [continued]
Year ended 31 December 2020
Net interest
income and
expense
Net non-
interest gain
and loss
Loss
allowance
Other
comprehensive
income
Financial assets measured at amortised cost
Cash, amounts due from banks and balances with the
National Bank of Hungary
4,369
-
-
Placements with other banks, net of allowance for
placement losses
Repo receivables
Loans at amortised cost
Securities at amortised cost
10,650
49
143,650
48,654
-
-
23,298
360
2,227
286
55,444
1,845
Financial assets measured at amortised cost total
207,372
23,658
59,802
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
368
2,251
29,095
6,0731
15,094
44,557
2,125
10,449
(9,862)
(1,476)
(3,985)
(244)
(598)
(8,327)
-
-
216,512
-
-
-
(24,492)
216,512
Financial liabilities designated to measure at fair
value through profit or loss
(307)
1,270
Derivative financial instruments2
(5,053)
5,818
-
3
-
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(17,734)
-
(17,734)
-
-
-
-
-
-
-
-
-
Total
222,077
257,707
59,805
(17,734)
1 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.
2 Gains/losses from derivative financial instruments recognised in net interest income as Income similar to interest income.
119
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn)
In determining the fair value of a financial asset or liability the Bank in the case of instruments that are quoted on
an active market uses the market price. In most cases market price is not publicly available so the Bank has to
make assumptions or use valuation techniques to determine the fair value of a financial instrument. See Note 45.
d) for more information about fair value classes applied for financial assets and liabilities measured at fair value
in these financial statements.
To provide a reliable estimate of the fair value of those financial instrument that are originally measured at
amortised cost, the Bank used the discounted cash flow analysis (loans, placements with other banks, amounts
due to banks, deposits from customers). The fair value of issued securities and subordinated bonds is based on
quoted prices (e,g, Reuters), Cash and amounts due from banks and balances with the National Bank of Hungary
represent amounts available immediately thus the fair value equals to the cost.
The assumptions used when calculating the fair value of financial assets and liabilities when using valuation
technique are the following:
•
•
•
•
the discount rates are the risk free rates related to the denomination currency adjusted by the appropriate
risk premium as of the end of the reporting period,
the contractual cash flows are considered for the performing loans and for the non-performing loans, the
amortised cost less impairment is considered as fair value,
the future cash flows for floating interest rate instruments are estimated from the yield curves as of the
end of the reporting period,
the fair value of the deposit which can be due in demand cannot be lower than the amount payable on
demand.
For classes of assets and liabilities not measured at fair value in the statement of financial position, the income
approach was used to convert future cash flows to a single current amount. Fair value of current assets is equal to
carrying amount, fair value of liabilities from issued securities and other bond-type classes of assets and
liabilities not measured at fair value measured based on Reuters market rates and, fair value of other classes not
measured at fair value of the statement of financial position are measured using the discounted cash flow
method. Fair value of loans, net of allowance for loan losses measured using discount rate adjustment technique,
the discount rate is derived from observed rates of return for comparable assets or liabilities that are traded in the
market.
Fair value measurements – in relation to instruments measured not at fair value – are categorized in level 3 of the
fair value hierarchy.
120
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
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
Derivative financial instruments classified as held for
trading
Securities mandatorily measured at fair value through
profit or loss
Securities at fair value through other comprehensive
income
Securities at amortised cost
Loans at amortised cost
Loans mandatorily measured at fair value through profit
or loss
Derivative financial assets designated as hedge
accounting relationships
Other financial assets
FINANCIAL ASSETS TOTAL
Amounts due to banks, 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
Subordinated bonds and loans
Other financial liabilities
FINANCIAL LIABILITIES TOTAL
b) Derivative financial instruments
31 December 2021
31 December 2020
Carrying
amount
Fair value Carrying amount Fair value
474,945
474,945
579,120
579,120
2,567,212
33,638
246,462
35,633
2,548,809
33,707
246,462
35,633
1,535,884
183,364
160,483
11,729
1,550,747
183,664
160,483
11,729
182,768
182,768
116,818
116,818
28,061
28,061
31,936
31,936
641,939
3,071,038
4,032,465
641,939
2,877,380
3,576,519
911,950
2,007,692
3,417,760
911,950
2,085,881
3,178,368
662,012
662,012
480,937
480,937
17,727
153,747
11,901,185
17,727
153,747
11,233,248
6,817
127,179
9,411,186
6,817
127,179
9,265,147
1,051,203
86,580
9,948,532
17,932
22,153
20,133
958,463
86,543
9,946,444
17,928
21,006
20,133
766,977
109,612
7,895,735
14,106
28,435
25,902
754,573
111,548
7,895,211
14,105
31,588
25,902
192,261
192,261
99,987
99,987
18,690
271,776
194,511
11,823,771
18,690
278,151
194,511
11,734,130
3,104
304,243
167,540
9,415,641
3,104
295,218
167,540
9,398,776
OTP Bank regularly enters into hedging transactions in order to decrease its financial risks. However some
economically hedging transaction do not meet the criteria to account for hedge accounting, therefore these
transactions were accounted as derivatives held for trading. Net investment hedge in foreign operations is not
applicable in separate financial statements.
The assessment of the hedge effectiveness (both for fair value hedges and cash flow hedges) to determine the
economic relationship between the hedged item and the hedging instrument is accomplished with prospective
scenario analysis via different rate shift scenarios of the relevant risk factor(s) of the hedged risk component(s).
The fair value change of the hedged item and the hedging instrument is compared in the different scenarios.
Economic relationship is justified if the change of the fair value of the hedged item and the hedging instrument
are in the opposite direction and the absolute changes are similar amounts. The hedge ratio is determined as the
ratio of the notional of the hedged item and the notional of the hedging instrument. The sources of hedge
ineffectiveness are the not hedged risk components (e,g, change of cross currency basis spreads in case of
interest rate risk hedges), slight differences in maturity dates and interest payment dates in case of fair value
hedges, and differences between the carrying amount of the hedged item and the carrying amount of the hedging
instrument in case of FX hedges (e,g, caused by interest rate risk components in the fair value of the hedging
instrument).
121
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
b) Derivative financial instruments [continued]
Fair value of derivative financial instruments1
The Bank has the following held for trading derivatives and derivatives designated as hedge accounting:
Held for trading derivative financial instruments
Interest rate derivatives
Interest rate swaps
Cross currency interest rate swaps
OTC options
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
31 December 2021
31 December 2020
Before netting
Assets
Liabilities
Netting
After netting
Before netting
Assets
Liabilities
Assets
Liabilities
Netting
After netting
Assets
Liabilities
54,251
7,207
479
61,937
1,276
36,896
8,854
804
175
46,729
3,447
(53,720)
(7,618)
(479)
(61,817)
-
40,783
-
-
40,783
-
13,468
7,207
479
21,154
1,276
(12,937)
(7,618)
(479)
(21,034)
-
30,216
7,315
356
37,887
5
(40,639)
(6,819)
(180)
(246)
(47,884)
(1,480)
-
-
-
-
-
-
36,896
8,854
804
175
46,729
3,447
(40,639)
(6,819)
(180)
(246)
(47,884)
(1,480)
39,644
6,990
3,909
619
51,162
5,211
(28,474)
(7,285)
(356)
(36,115)
(72)
(30,374)
(9,869)
(3,836)
(704)
(44,783)
(1,852)
8,984
-
-
8,984
-
21,232
7,315
356
28,903
5
-
-
-
-
-
-
39,644
6,990
3,909
619
51,162
5,211
(19,490)
(7,285)
(356)
(27,131)
(72)
(30,374)
(9,869)
(3,836)
(704)
(44,783)
(1,852)
1 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.
122
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
b)
Derivative financial instruments [continued]1
Fair value of derivative financial instruments [continued]
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
Interest rate swaps
Foreign exchange swaps
Forward
Cross currency interest rate swaps
Total derivatives held for risk management not designated in
31 December 2021
31 December 2020
Before netting
Assets
Liabilities
Netting
After netting
Before netting
Assets
Liabilities
Assets
Liabilities
Netting
After netting
Assets
Liabilities
52,197
10,538
62,735
164
62,899
51,311
1,915
-
4,442
(52,166)
(357)
(52,523)
(278)
(52,801)
(70,811)
(5,245)
-
(168)
-
-
-
-
-
5,682
-
-
-
52,197
10,538
62,735
164
62,899
45,629
1,915
-
4,442
(52,166)
(357)
(52,523)
(278)
(52,801)
(65,129)
(5,245)
-
(168)
13,999
7,071
21,070
379
21,449
25,760
2,208
28
44
(12,901)
(560)
(13,461)
(1,262)
(14,723)
-
-
-
-
-
(22,058)
(3,953)
(75)
-
12,736
-
-
-
13,999
7,071
21,070
379
21,449
13,024
2,208
28
44
(12,901)
(560)
(13,461)
(1,262)
(14,723)
(9,322)
(3,953)
(75)
-
hedges
57,668
(76,224)
5,682
51,986
(70,542)
28,040
(26,086)
12,736
15,304
(13,350)
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)
35,226
229,233
(497)
(238,726)
-
46,465
35,226
182,768
(497)
(192,261)
759
138,538
(6,269)
(121,707)
-
21,720
759
116,818
(6,269)
(99,987)
-
-
(8,638)
(8,638)
1,020
1,020
(1,020)
(1,020)
(7,618)
(7,618)
8,027
8,027
25,407
5,471
30,878
-
30,878
(17,878)
(5,325)
(23,203)
(2,249)
(31,841)
12,131
-
12,131
-
13,151
13,276
5,471
18,747
-
17,727
(5,747)
(5,325)
(11,072)
(2,249)
(18,690)
2,432
6,180
8,612
-
16,639
-
-
(7,061)
(5,865)
(12,926)
(1,691)
(12,926)
8,027
8,027
1,795
-
1,795
-
9,822
-
-
637
6,180
6,817
-
6,817
8,027
8,027
(5,266)
(5,865)
(11,131)
(1,691)
(3,104)
1 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.
123
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
c)
Hedge accounting
Interest rate risk management is centralized at OTP Group. Interest rate risk exposures in major currencies are managed at
HQ on consolidated level. Although risk exposures in local currencies are managed at subsidiary level, the respective
decisions are subject to HQ approval. Interest rate risk is measured by simulating NII and EVE under different stress and
plan scenarios, the established risk limits are described in „OTP Bank’s Group-Level Regulations on the Management of
Liquidity Risk and Interest Rate Risk of Banking Book”. The interest rate risk management activity aims to stabilize NII
within the approved risk limits.
The risk management objective of these hedge relationships is to mitigate the risk of clean fair value (i.e. excluding accrued
interest) change of MIRS loans due to the change of interest rate reference indexes (BUBOR, EURIBOR, LIBOR, etc.) of
the respective currency.
124
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
c)
Hedge accounting [continued]
Amount, timing and uncertainty of future cash flows - hedging instruments as at 31 December 2021 (amounts in million currency)
31 December 2021
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
FX & IR risk
Fair Value Hedge
FX risk
Fair Value Hedge
Other
Cash flow Hedge
Interest rate risk
Interest rate swap
HUF
Notional
Average Interest Rate (%)
EUR
Notional
Average Interest Rate (%)
USD
Notional
Average Interest Rate (%)
JPY
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
JPY/HUF
Notional
Average FX Rate
USD/HUF
Notional
Average FX Rate
Interest rate swap
HUF
Notional
Interest rate swap
HUF
Notional
Average FX Rate
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,000
1.09%
-
-
-
-
-
-
1
(1.68%)
310.29
-6
354.22
-
-
-
-
-
-
-
-
900
0.49%
1
0.23%
-
-
-
-
2
(1.67%)
310.26
35
356.94
200
66.21
-
-
-
-
(3)
323.77
(52,474)
1.65%
111
0.24%
119
2.54%
4,500
0.22%
42,950
1.31%
50
0.05%
47
4.18%
(6,624)
162
166
4,500
-
-
12
(1.69%)
310.01
12
(1.82%)
307.81
27
572
355.93
2,225
73.08
11,200
4.15
4,500
2.79
306
323.77
601
2,425
11,200
4,500
303
-
-
-
-
-
-
-
-
-
-
3,345
1,823
3,093
-
8,261
-
-
-
-
7,819
1.80
28,027
2.46
35,846
125
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
c)
Hedge accounting [continued]
Amount, timing and uncertainty of future cash flows - hedging instruments as at 31 December 2020 (amounts in million currency)
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
Fair Value Hedge
FX & IR risk
Fair Value Hedge
FX risk
Fair Value Hedge
Other
Cash flow 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 (%)
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
Interest rate swap
HUF
Notional
Interest rate swap
HUF
Notional
Average FX Rate
-
-
15
(0.11%)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
60,000
1.31%
5
0.09%
21
2.00%
-
-
(89,622)
1.06%
102
0.24%
171
2.38%
2,100
7.38%
173,810 144,188
1.35%
10
0.22%
29
2.35%
132
221
2,100
-
-
2
(1.60%)
310.82
12
(1.63%)
310.14
14
(1.67%)
308.15
28
1
360.19
92
354.92
123
360.47
-
-
-
-
-
-
-
-
613
356.03
1,550
72.60
4,100
4.46
829
1,550
4,100
-
-
-
-
-
-
(183)
6,940
8,342
-
15,099
-
-
-
-
12,194
1.77
28,027
2.46
40,221
126
-
-
-
-
-
-
-
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2021
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
c) Hedge accounting [continued]
Derivative financial instruments designated as hedge accounting as follows:
Type of instrument
Type of risk
Fair value hedge
Nominal amount of
the hedging
instrument
Carrying amount of the hedging instrument for the year
ended 31 December 2021
Before netting
Assets
Liabilities
Netting
After netting
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 2021
Interest rate swap
Interest rate risk
409,595 23,976
(17,878)
12,131
11,845
(5,747)
management
Derivative assets (liabilities) held for risk
Cross-currency swap
FX & IR risk
8,175
-
(2,249)
Cross-currency swap
FX risk
566,936
5,471
(3,076)
Interest rate swap
Other
Cash flow hedge
8,261
1,431
-
Derivative assets (liabilities) held for risk
-
(2,249)
management
Derivative assets (liabilities) held for risk
5,471
(3,076)
management
Derivative assets (liabilities) held for risk
1,431
-
management
-
-
-
Derivative assets (liabilities) held for risk
Interest rate swap
Interest rate risk
35,846
-
(8,638)
1,020
(1,020)
(7,618)
management
6,494
4
(1,687)
3
(101)
31 December 2021
Type of risk
Carrying amount of the hedged
item
Accumulated amount of fair value hedge
adjustments on the hedged item included
in the carrying amount of the hedged
item
Line item in the statement of financial position in
which the hedged item is included
Assets
Liabilities
Assets
Liabilities
Fair value hedges
- Loans
- Loans
- Government bonds
- Government bonds
- Government bonds
- Other securities
- Loans
- Loans
- Government bonds
- Government bonds
- Other securities
Fair value hedges total
Interest rate risk
57,176
-
Interest rate risk
Interest rate risk
Interest rate risk
Interest rate risk
Interest rate risk
FX & IR risk
FX risk
FX risk
FX risk
Other risk
-
13,921
142,649
-
152,830
-
42,008
10,595
458,312
12,811
98,668
-
846,321
-
-
-
-
-
-
-
8,261
150,910
637
-
1,230
22,457
-
318
611
-
-
-
-
25,253
-
Loans
Amounts due to banks and deposits from the National
(16,858)
-
Bank of Hungary and other banks
Securities at amortised cost
Securities at fair value through other comprehensive
-
-
-
-
-
-
-
(161)
(17,019)
income
Financial assets at fair value through profit or loss
Securities at fair value through other comprehensive
income
Loans
Loans
Securities at amortised cost
Securities at fair value through other comprehensive
income
Liabilities from issued securities
127
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2021
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
c) Hedge accounting [continued]
Derivative financial instruments designated as hedge accounting as follows:
For the year ended 31 December 2021 OCI related to cash flow hedges as follows:
Type of risk
Interest rate
risk
Carrying amount of the
hedged item
Assets
Liabilities
Cash flow hedge reserve
Year ended 2021
Line item in the statement of
financial position in which
the hedged item is included
35,965
-
3,568 Loans at amortised cost
For the year ended 31 December 2020 OCI related to cash flow hedges as follows:
Type of risk
Interest rate
risk
Carrying amount of the
hedged item
Assets
Liabilities
Cash flow hedge reserve
Year ended 2021
Line item in the statement of
financial position in which
the hedged item is included
40,221
-
(2,739) Loans at amortised cost
For the year ended 31 December 2021 change in basis swap spread recognised in OCI related to fair value hedges as follows:
Type of risk
Carrying amount of the
hedged item
FX risk
FX risk
Assets
458,312
12,811
471,123
Liabilities
-
-
-
Items recognised in other
comprehensive income
Year ended 2021
Change in the items
recognized in other
comprehensive income Year
ended 2021
Line item in the statement
of financial position in
which the hedged item is
included
(1,032)
64
(968)
(1,681) Loans at amortised cost
FVOCI securities
-
(1,681)
For the year ended 31 December 2020 change in basis swap spread recognised in OCI related to fair value hedges as follows:
Type of risk
FX risk
Carrying amount of the
hedged item
Assets
303,572
303,572
Liabilities
-
-
Items recognised in other
comprehensive income
Year ended 2021
Change in the items
recognized in other
comprehensive income Year
ended 2021
Line item in the statement
of financial position in
which the hedged item is
included
713
713
- Loans at amortised cost
-
128
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2021
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
c) Hedge accounting [continued]
Derivative financial instruments designated as hedge accounting as follows:
Type of instrument
Type of risk
Fair value hedge
Nominal amount of
the hedging
instrument
Carrying amount of the hedging instrument for the year
ended 31 December 2020
Before netting
Assets
Liabilities
Netting
After netting
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
Interest rate swap
Interest rate risk
468,574
1,900
(7,062)
1,795
105
(5,267)
management
Derivative assets (liabilities) held for risk
Cross-currency swap
FX & IR risk
8,874
-
(1,408)
Cross-currency swap
FX risk
438,401
6,182
(4,456)
Interest rate swap
Other
16,224
530
Cash flow hedge
Interest rate swap
Interest rate risk
40,221
8,027
-
-
Derivative assets (liabilities) held for risk
-
(1,408)
management
Derivative assets (liabilities) held for risk
6,182
(4,456)
management
Derivative assets (liabilities) held for risk
530
-
management
-
-
-
8,027
-
8,027
management
Derivative assets (liabilities) held for risk
31 December 2020
Type of risk
Carrying amount of the
hedged item
Accumulated amount of fair value
hedge adjustments on the hedged
item included in the carrying
amount of the hedged item
Assets
Liabilities
Assets
Liabilities
Line item in the statement of financial position in which
the hedged item is included
Fair value hedges
- Loans
- Loans
Interest rate risk
35,256
-
1,679
Interest rate risk
-
100,299
- Government bonds
Interest rate risk
8,678
- Government bonds
Interest rate risk
269,838
- Other securities
Interest rate risk
- Loans
- Loans
- Other securities
FX & IR risk
FX risk
Other risk
47,560
10,378
303,572
-
15,032
-
-
-
-
-
-
(106)
2,518
781
284
-
-
Fair value hedges total
675,282
115,331
5,156
-
(235)
Loans
Loans
Securities at amortised cost
Securities at fair value through other comprehensive income
Securities at fair value through other comprehensive income
Loans
Loans
Liabilities from issued securities
-
-
-
-
-
(528)
(763)
(370)
(36)
(809)
2
-
(85)
129
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2021
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
c) Hedge accounting [continued]
31 December 2021
Type of
instrument
Type of risk
Change in the value
of the hedging
instrument
recognised in cash
flow hedge reserve
Hedge ineffectiveness
recognised in profit or
loss
Line item in profit or loss that
includes hedge ineffectiveness
Interest rate
swap
Interest rate
risk
6,307
Interest Income from Placements
with other banks, net of
allowance for placement losses
(101)
For the year ended 31 December 2021 an amount HUF 171 million reclassified from cash flow hedge reserve to
profit or loss due to termination of hedging relationship.
31 December 2020
Type of
instrument
Type of risk
Change in the value
of the hedging
instrument
recognised in cash
flow hedge reserve
Hedge ineffectiveness
recognised in profit or
loss
Line item in profit or loss that
includes hedge ineffectiveness
Interest rate
swap
Interest rate
risk
d) Fair value classes
296
Interest Income from Placements
with other banks, net of
allowance for placement losses
(85)
Methods and significant assumptions used to determine fair value of the different classes of financial
instruments:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or
liability either directly or indirectly, Fair value measurements – in relation with instruments
measured not at fair value – are categorized in level 2;
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
The following table shows an analysis of financial instruments recorded at fair value by level of the fair value
hierarchy:
31 December 2021
Total
Level 1
Level 2 Level 3
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
662,012
246,462
35,633
-
37,537
18,566
- 662,012
19,424
-
189,501
17,067
designated as held for trading
182,768
164
172,434
10,170
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
28,061
641,939
18,807
315,147
-
326,792
9,254
-
17,727
1,568,140
-
352,684
17,727
-
534,020 681,436
20,133
-
-
20,133
192,261
16,904
278
16,904
191,983
-
-
-
18,690
247,988
-
17,182
18,690
210,673
-
20,133
130
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2021
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
d) Fair value classes [continued]
As at 31 December 2020
Total
Level 1
Level 2 Level 3
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
480,937
160,483
11,729
-
34,643
10,453
- 480,937
14,710
-
111,130
1,276
designated as held for trading
116,818
378
109,854
6,586
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
31,936
911,950
23,812
426,566
-
485,384
8,124
-
6,817
1,560,187
-
461,209
6,817
-
603,331 495,647
25,902
-
-
25,902
99,987
9,131
1,263
9,131
98,724
-
-
-
3,104
138,124
-
10,394
3,104
101,828
-
25,902
Valuation techniques and sensitivity analysis on Level 3 instruments
Sensitivity analysis is performed on products with significant unobservable inputs (Level 3) to generate a range
of reasonably possible alternative valuations. The sensitivity methodologies applied take account of the nature of
the valuation techniques used, 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 data of reliable reference source or a scenario based on relevant
market analysis alongside the impact of using alternative models. Sensitivities are calculated without reflecting
the impact of any diversification in the portfolio.
Unobservable inputs used in measuring fair value
Type of financial
instrument
Valuation technique
Significant
unobservable input
Range of estimates for
unobservable input
Market approach
Discount applied due to
VISA C shares
combined with expert
judgement
Discounted cash flow
MFB refinancing loans
model
Subsidised personal loans
model
Discounted cash flow
Discounted cash flow
illiquidity and
litigation
Probability of default
Probability of default
Subsidised personal loans
model
Operational costs
Subsidised personal loans
model
Demography
Discounted cash flow
+/-12%
+/- 20%
+/- 20%
+/- 20%
Change in the cash
flow estimation +/- 5%
131
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2021
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
d) Fair value classes [continued]
The effect of unobservable inputs on fair value measurement
Although the Bank believes that its estimates of fair value are appropriate, the use of different methodologies or
assumptions could lead to different measurements of fair value. For fair value measurements in Level 3 changing
the assumptions used to reasonably possible alternative assumptions would have the following effects.
31 December 2021
VISA C shares
MFB refinancing loans
Subsidised personal loans
Subsidised personal loans
Subsidised personal loans
31 December 2020
VISA C shares
MFB refinancing loans
Subsidised personal loans
Subsidised personal loans
Subsidised personal loans
Unobservable
inputs
Illiquidity
Probability of
default
Probability of
default
Operational costs
Demography
Unobservable
inputs
Illiquidity
Probability of
default
Probability of
default
Operational costs
Demography
Fair values
Effect on profit and loss
Favourable Unfavourable Favourable Unfavourable
(405)
3,339
2,529
405
19,218
18,972
123
(123)
639,006
647,291
635,484
631,855
623,933
635,387
3,590
11,875
68
(3,561)
(11,483)
(29)
Fair values
Effect on profit and loss
Favourable Unfavourable Favourable Unfavourable
(374)
3,150
2,402
374
24,876
24,690
93
(93)
452,781
464,974
451,419
447,647
436,194
448,987
2,579
14,772
1,217
(2,555)
(14,008)
(1,215)
The favourable and unfavourable effects of using reasonably possible alternative assumptions for the valuation
of Visa C shares have been calculated by modifying the discount rate used for the valuation by +/-12% as being
the best estimates of the management as at 31 December 2021 and 2020 respectively.
In the case of MFB refinancing loans and subsidised personal loans the Bank calculated the favourable and
unfavourable effects of using reasonably possible alternative assumptions by modifying the rates of probability
of default by +/- 20% as one of the most significant unobservable input.
In case of subsidised personal loans operational cost and factors related to demography are considered as
unobservable inputs to the applied fair value calculation model in addition to credit risk.
The Bank calculated the favourable and unfavourable effects of using reasonably possible alternative
assumptions by modifying the rates of operational costs by +/- 20% as one of the most significant unobservable
input.
In case of subsidised personal loans cash flow estimation are based on assumption related to the future number
of childbirths performed by the debtors. According to the current assumptions 15% of the debtors will not fulfill
the conditions of the subsidy determined by the government after 5 years (“breach of conditions”), thereby
debtors will be obliged to pay back advanced interest subsidy given in advance. Furthermore, in this case
subsidised loans are converted to loans provided based on market conditions. Loans are prepaid by the
government as part of the subsidy after the second and the third childbirth following the signatory of the loan
contract. The Bank calculated the favourable and unfavourable effects of using reasonably possible alternative
assumptions by modifying the demographical assumption of breach of conditions by +/- 5% as one of the most
significant unobservable input in the cash flow estimation.
132
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2021
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
d) Fair value classes [continued]
The effect of unobservable inputs on fair value measurement [continued]
Reconciliation of the opening and closing balances of Level 3 instruments for the year ended 31 December 2021
Opening
balance
Issuance/
Disbursement
Change in
FVA due to
credit risk
Change in FVA
due to market
factors
Settlement
Closing
balance
Loans mandatorily
measured at fair
value through profit
or loss
Securities mandatorily
measured at fair
value through profit
or loss
Derivative financial
instruments
designated as held
for trading
Financial liabilities at
fair value through
profit or loss
Total
480,937
227,324
(16,255)
(12,692)
(17,302)
662,012
8,124
390
6,586
-
-
-
740
3,584
-
-
9,254
10,170
(25,902)
469,745
-
227,714
-
(16,255)
(3,916)
(12,284)
9,685
(7,617)
(20,133)
661,303
Reconciliation of the opening and closing balances of Level 3 instruments for the year ended 31 December 2020
Opening
balance
Issuance/
Disbursement
Change in
FVA due to
credit risk
Change in
FVA due
to market
factors
Reclassification Settlement
Closing
balance
Loans mandatorily
measured at fair
value through
profit or loss
Securities
mandatorily
measured at fair
value through
profit or loss
Securities at fair
value through
other
comprehensive
income
Derivative financial
instruments
designated as held
for trading
Financial liabilities at
fair value through
profit or loss
Total
238,538
257,055
(405)
(2,125)
-
(12,126) 480,937
23
5,188
(2,935)
8,124
4,644
1,204
4,735
4,227
-
-
-
-
-
(28,861)
223,283
-
258,259
-
(405)
1,270
1,980
453
(5,188)
2,359
-
-
-
-
-
-
6,586
1,689
(25,902)
(13,372) 469,745
133
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2021
NOTE 46:
SIGNIFICANT EVENTS DURING THE YEAR ENDED 31 DECEMBER 2021
1) Capital increase in OTP Bank Romania
2) Acquisition at Slovenia
3) Capital increase in OTP Bank Srbija
4) Potential acquisition of Uzbek Ipoteka Bank
5) Acquisition of Alpha Banka
See details about the event above in Note 11.
6) Discontinuance of international arbitration proceedings
On 30th June 2021 OTP Bank Plc. has jointly with the Republic of Croatia requested the discontinuance of the
international arbitration proceedings - registered on 16th October 2020 relating to mandatory exchange of FX
loans and FX based consumer loans - from the Centre for Settlement of Investment Disputes (ICSID), due to the
fact that the parties have resolved their disputes by way of mutual consent. The ICSID Secretary has on 30th
June 2021 acknowledged receipt of the joint claim of the contending parties relating the discontinuance of the
proceedings. According to the request of the parties, ICSID shall also formerly confirmed the termination of the
litigation during 2021.
7) Termination of ICES bond
See details about the event above in Note 27.
8) Resolutions made at OTP Bank’s Extraordinary General Meeting
The Extraordinary General Meeting hold on 15 October, 2021 resolved that, the Bank shall sell its treasury
shares on the stock exchange to those two Special Employee Stock Ownership Program organizations being
established by the Bank employees (“OTP SECOP I.” and “OTP SECOP II.”).
The Extraordinary General Meeting decided that if additional SECOP organisations will be initiated, those will
be given one-off support on a yearly basis, under defined conditions, defined extent and in specified manner.
9) Interest benchmark reform
OTP Bank was actively involved in industry efforts supporting transition to IBOR alternatives. The bank has
taken extensive steps to prepare for the discontinuation of IBORs and worked closely with clients to ensure
awareness and support transition activities. As the transition is complex, time-consuming process and relevant
for the whole Group, the management of Bank has evaluated the impacts of the interest rate benchmarks reform,
preparing itself for the transition through a dedicated internal group-wide project. As LIBOR’s five currencies
(USD, GBP, EUR, JPY and CHF) and EONIA will be replaced by Risk Free Rates – which are different in
nature compared to IBOR rates – OTP Group has implemented the relevant rates into the IT systems, and
reached out the clients. The Bank’s priority was to ensure that the Bank can continue to offer clients the products
and services they need, while also supporting them in the transition to the new alternative Risk Free Rates.
134
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2021
NOTE 46:
SIGNIFICANT EVENTS DURING THE YEAR ENDED 31 DECEMBER 2021
[continued]
9) Interest benchmark reform
During the IBOR reform the Bank identified several risks at the beginning of 2021, which the project had to
manage and monitor closely. These risks include but are not limited to the following:
▪ The abolution of LIBOR affected several transactions that may require automated IT solutions,
▪ The new reference rates are different in nature from LIBOR that cause difficulties to settle the value
▪
differences with the customers,
It was necessary to implement new processes not to develop LIBOR based products, and to develop a
strategy for removing or modifying the affected products handled by the Bank,
▪ After termination of LIBOR, the Bank has to act under the "Fallback clauses", the clauses that regulate the
replacement of the reference interest rates in the contract and the use of an alternative interest as a
reference. The content of these clauses needs to be clearly defined and checked from a business point of
view, ie which reference interest rate will be applied instead of LIBOR for the given contract and whether it
is commercially appropriate. In defining the fallback clauses, efforts had to be made to provide a viable
alternative to the termination of LIBOR that would not result in a business loss for the Bank.
▪ Legal risks related to the termination of LIBOR. Such risks can arise when Fallback clauses are not
included in the contracts, or the law governing the contract doesn’t contain a statutory reference rate. In
these cases the contracts can be cancelled due to impossibility or the termination by either party.
▪ Missing of contractual interest rates can result in settlement disputes, compensation cases or litigation.
▪ Business risks of the termination of LIBOR. The most significant of these are
o
the law governing the contract can set the applicable interest rate that can be result in a business loss
for the Bank,
o business loss due to negative customer experience,
o operational risk, when several unique contracts must be handled in a short time
Terminating interest rates ()
LIBOR USD* (1 week and 2 months settings), FedFund Rate
LIBOR GBP
LIBOR JPY
LIBOR EUR
LIBOR CHF**
EONIA
* The following USD LIBOR settings will be terminated after June 30, 2023: overnight and 1, 3, 6 and 12
Months. The affected USD LIBOR contracts will be handled on an ongoing basis until the remaining USD
LIBOR settings’ cessation date.
**In the case of CHF LIBOR, OTP Bank acts in accordance with the implementing regulation of the European
Commission (https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=PI_COM:C(2021)7488&from=EN).
Alternative Reference Rates
SOFR
SONIA
TONA
EURIBOR
SARON
€STR
Amounts effected by IBOR reform as at 31 December 2021
Reference rate
Type of the contract
Nominal value of the
contract
Pieces of contracts
USD LIBOR
USD LIBOR
USD LIBOR
Other LIBOR
Other LIBOR
Other LIBOR
Other LIBOR
Total
Loan
Deposit
Derivatives
Loan
Deposit
Derivatives
Bonds (assets)
49.116
3.579
802.854
1.166
25.864
25.464
13.162
921.205
12
7
190
42
98
4
3
356
The above LIBOR-based amounts outstanding as at 31 December 2021 will be managed at the first interest
period in 2022 therefore they do not cause a risk to the Bank or to the customers.
135
OTP BANK PLC.
NOTES TO SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2021
NOTE 47:
SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD
In the second half of February 2022 the military conflict between Russia and Ukraine escalated.
It is difficult to quantify the effect of the Ukrainian-Russian conflict regarding the Ukrainian and the Russian
operations, the possible scenarios are covering a wide range of spectrum. According to the worst possible
scenario, the Bank may lose its control over its investments, which under extreme conditions could result in the
full write-off of the invested amount. These Consolidated Financial Statements do not contain any write-offs as
possible consequences of the Ukrainian-Russian conflict, the Group recognizes it as not adjusting, post balance
sheet event.
Ukraine
OTP Group’s Ukrainian operation incorporates the Ukrainian bank, as well as the leasing and factoring
companies. The country-consolidated Ukrainian total assets represented HUF 984 billion at the end of 2021
(3.6% of total consolidated assets), while net loans comprised HUF 614 billion (3.9% of consolidated net loans)
and shareholders’ equity HUF 160 billion (5.3% of the consolidated total equity). At the end of 2021 the book
value of the capital investment in the Ukrainian subsidiaries comprised HUF 105 billion; there was no goodwill
at all, it was already written down entirely in 2014.
The gross intragroup funding towards the Ukrainian operation represented HUF 72 billion, and taking into
account the Ukrainian deposits placed with the HQ, i.e. the net group funding represented HUF 29 billion
equivalent. According to the 28 February 2022 figures, the gross funding amounted to HUF 75 billion equivalent
and the net intragroup funding stood at HUF 9 billion equivalent.
The Ukrainian RWA (“risk-weighted asset”) was HUF 230 billion by the end of 2021 (2.9% of the total RWA).
The maximum capital effect on the potential write-off of the Ukrainian operation, taking into account the equity,
the intragroup funding and the Ukrainian risk weighted assets, is estimated at 148 bps on the CET1 ratio,
according to year-end figures.
Russia
The total assets of the Group’s Russian operation represented HUF 800 billion at the end of 2021 (2.9% of
consolidated total assets), while net loans comprised HUF 621 billion (3.9% of consolidated net loans) and
shareholders’ equity HUF 241 billion (7.9% of consolidated total equity). At the end of 2021 the book value of
the capital investment in the Russian subsidiaries comprised directly HUF 74 billion and indirectly HUF 50
billion.
The gross intragroup funding towards the Russian operation represented HUF 73 billion, and taking into account
the Russian deposits placed with the Headquarter, i.e. the net group funding represented HUF 14 billion
equivalent. On 28 February 2022 the gross intragroup funding reached HUF 52 billion equivalent, which
equalled the net figure because there was no deposit placement by the Russian operation at other Group
members.
The Russian RWA was HUF 276.6 billion by the end of 2021 (3.4% of the total RWA).
The capital maximum effect on the potential write-off of the Russian operation, taking into account the equity,
the intragroup funding and the Russian risk weighted assets, is estimated at 173 bps on the CET1 ratio, according
to year-end figures.
Although the impact of the Russian-Ukrainian conflict on the Group’s Russian and Ukrainian operations is
currently difficult to quantify, and as such uncertain, based on the current estimation of the Bank’s Management
the Ukrainian-Russian conflict does not have considerably negative impact on the business activity, financial
position, efficiency, liquidity and capital position of OTP Bank. Even after the recognition of the potential losses
and write-offs outlined above, the Group's capital adequacy remains above the expected regulatory level. There
is no sign of significant uncertainties having been arisen regarding carrying out its business as a going concern.
The Bank’s Management is monitoring the situation of the Ukrainian-Russian conflict continuously and will take
the necessary steps in order to moderate the business risk.
136
CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS (2021)
ANNUAL REPORT 2021
OTP BANK PLC
CONSOLIDATED FINANCIAL STATEMENTS
IN ACCORDANCE WITH
INTERNATIONAL FINANCIAL REPORTING
STANDARDS AS ADOPTED BY THE EUROPEAN UNION AND
INDEPENDENT AUDITORS’ REPORT
FOR THE YEAR ENDED
31 DECEMBER 2021
Table of Contents
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31
DECEMBER 2021 ............................................................................................................................................. 4
CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR
ENDED 31 DECEMBER 2021 .......................................................................................................................... 5
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR
THE YEAR ENDED 31 DECEMBER 2021 ..................................................................................................... 6
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE
YEAR ENDED 31 DECEMBER 2021 .............................................................................................................. 7
CONSOLIDATED STATEMENT OF CASH-FLOWS FOR THE YEAR
ENDED 31 DECEMBER 2021 .......................................................................................................................... 8
1.1. General information
1.2. Basis of Accounting
NOTE 1: ORGANIZATION AND BASIS OF CONSOLIDATED FINANCIAL STATEMENTS ................ 10
10
10
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ......................................................... 12
12
13
14
14
15
15
17
17
18
18
2.1. Basis of Presentation
2.2. Foreign currency translation
2.3. Principles of consolidation
2.4. Accounting for acquisitions
2.5. Securities at amortized cost
2.6. Financial assets at fair value through profit or loss
2.7. Hedge accounting
2.8. Offsetting
2.9. Embedded derivatives
2.10. Securities at fair value through other comprehensive income
2.11. Loans, placements with other banks, repo receivables and loss allowance for loan and placements and
repo receivable losses
2.12. Modified assets
2.13. Purchased or originated credit impaired financial assets
2.14. Loss allowance
2.15. Sale and repurchase agreements, security lending
2.16. Associates and other investments
2.17. Property and equipment, Intangible assets
2.18. Inventories
2.19. Government grants and government assistance
2.20. Financial liabilities
2.21. Leases
2.22. Investment properties
2.23. Share capital
2.24. Treasury shares
2.25. Non-current assets held-for-sale and discontinued operations
2.26. Interest income and income similar to interest income and interest expense
2.27. Fees and Commissions
2.28. Profit from associates
19
20
21
21
24
24
24
25
25
25
26
27
28
28
28
28
29
29
2.29. Income tax
2.30. Banking tax
2.31. Off-balance sheet commitments and contingent liabilities
2.32. Share-based payment
2.33. Employee benefits
2.34. Biological assets and agricultural produce
2.35. Consolidated Statement of Cash-flows
2.36. Segment reporting
2.37. Comparative balances
29
30
30
30
31
31
31
32
32
NOTE 3: SIGNIFICANT ACCOUNTING ESTIMATES AND DECISIONS IN THE APPLICATION
OF ACCOUNTING POLICIES ......................................................................................................... 34
34
34
34
35
35
35
NOTE 4: IMPACT OF CORONA VIRUS ( COVID-19) ................................................................................ 36
3.1. Loss allowances on financial instruments exposed to credit risk
3.2. Valuation of instruments without direct quotations
3.3. Provisions
3.4. Impairment on goodwill
3.5. Business model
3.6. Contractual cash-flow characteristics of financial assets
NOTE 5: CASH, AMOUNTS DUE FROM BANKS AND BALANCES WITH THE NATIONAL
BANKS (in HUF mn) ........................................................................................................................ 44
NOTE 6: PLACEMENTS WITH OTHER BANKS, NET OF LOSS ALLOWANCE FOR
PLACEMENTS (in HUF mn) ............................................................................................................ 44
NOTE 7: REPO RECEIVABLES (in HUF mn) ................................................................................................ 45
NOTE 8: FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (in HUF mn) ............. 46
NOTE 9: SECURITIES AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (in
HUF mn) ............................................................................................................................................ 49
NOTE 10: SECURITIES AT AMORTIZED COST (in HUF mn) ..................................................................... 51
NOTE 11: LOANS AT AMORTIZED COST AND AT FAIR VALUE (in HUF mn) ...................................... 53
NOTE 12: A SSOCIATES AND OTHER INVESTMENTS (in HUF mn) ........................................................ 55
NOTE 13: PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (in HUF mn) ....................................... 56
NOTE 14: INVESTMENT PROPERTIES (in HUF mn) .................................................................................... 63
NOTE 15: DERIVATIVE FINANCIAL ASSETS DESIGNATED AS HEDGE ACCOUNTING (in HUF
mn) ..................................................................................................................................................... 64
NOTE 16: OTHER ASSETS (in HUF mn) ......................................................................................................... 64
NOTE 17: AMOUNTS DUE TO BANKS, THE NATIONAL GOVERNMENTS, DEPOSITS FROM
THE NATIONAL BANKS AND OTHER BANKS (in HUF mn) .................................................... 66
NOTE 18: REPO LIABILITIES (in HUF mn) .................................................................................................... 66
NOTE 19: FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR
LOSS (in HUF mn) ............................................................................................................................ 67
NOTE 20: DEPOSITS FROM CUSTOMERS (in HUF mn) .............................................................................. 68
NOTE 21: LIABILITIES FROM ISSUED SECURITIES (in HUF mn) ............................................................ 69
NOTE 22: DERIVATIVE FINANCIAL LIABILITIES HELD FOR TRADING (in HUF mn) ......................... 73
NOTE 23: DERIVATIVE FINANCIAL LIABILITIES DESIGNATED AS HEDGE ACCOUNTING (in
HUF mn) ............................................................................................................................................ 73
NOTE 24: PROVISIONS AND OTHER LIABILITIES (in HUF mn) ............................................................... 74
NOTE 25: SUBORDINATED BONDS AND LOANS (in HUF mn) ................................................................. 76
NOTE 26: SHARE CAPITAL (in HUF mn) ....................................................................................................... 77
NOTE 27: RETAINED EARNINGS AND RESERVES (in HUF mn) .............................................................. 77
NOTE 28: TREASURY SHARES (in HUF mn) ................................................................................................. 81
NOTE 29: NON-CONTROLLING INTEREST (in HUF mn) ........................................................................... 81
NOTE 30: INTEREST INCOME, INCOME SIMILAR TO INTEREST INCOME AND EXPENSE (in
HUF mn) ............................................................................................................................................ 82
NOTE 31: LOSS ALLOWANCES / IMPAIRMENT / PROVISIONS (in HUF mn) ......................................... 83
NOTE 32: NET PROFIT FROM FEES AND COMMISSIONS (in HUF mn) ................................................... 84
NOTE 33: GAIN AND LOSSES BY TRANSACTIONS (in HUF mn) ............................................................. 86
NOTE 34: OTHER OPERATING INCOME AND EXPENSES AND OTHER ADMINISTRATIVE
EXPENSES (in HUF mn) .................................................................................................................. 87
NOTE 35: INCOME TAXES (in HUF mn) ........................................................................................................ 89
NOTE 36: LEASES (in HUF mn) ...................................................................................................................... 92
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) ........................................................................ 95
95
112
117
117
126
129
NOTE 38: RECLASSIFICATION AND TRANSFER OF FINANCIAL INSTRUMENTS (in HUF mn) ...... 131
NOTE 39: OFF-BALANCE SHEET ITEMS AND DERIVATIVE FINANCIAL INSTRUMENTS (in
37.1. Credit risk
37.2. Maturity analysis of assets, liabilities and liquidity risk
37.3. Net foreign currency position and foreign currency risk
37.4. Interest rate risk management
37.5. Market risk
37.6. Capital management
HUF mn) .......................................................................................................................................... 132
NOTE 40: SHARE-BASED PAYMENTS AND EMPLOYEE BENEFITS (in HUF mn) ............................... 133
NOTE 41: RELATED PARTY TRANSACTIONS (in HUF mn) .................................................................... 139
NOTE 42: SIGNIFICANT SUBSIDIARIES AND ASSOCIATES (in HUF mn) ............................................ 141
NOTE 43: TRUST ACTIVITIES (in HUF mn) ................................................................................................ 144
NOTE 44: CONCENTRATION OF ASSETS AND LIABILITIES ................................................................. 144
NOTE 45: EARNINGS PER SHARE (in HUF mn) ......................................................................................... 145
NOTE 46: NET GAIN OR LOSS REALIZED ON FINANCIAL INSTRUMENTS (in HUF mn) .................. 146
NOTE 47: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) ................................................... 148
NOTE 48: SEGMENT REPORTING BY BUSINESS AND GEOGRAPHICAL SEGMENTS (in HUF
mn) ................................................................................................................................................... 168
NOTE 49: DISCONTINUED OPERATIONS (in HUF mn)............................................................................. 174
NOTE 50: SIGNIFICANT EVENTS DURING THE YEAR ENDED 31 DECEMBER 2021 ........................ 175
NOTE 51: POST BALANCE SHEET EVENTS .............................................................................................. 178
OTP BANK PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2021
(in HUF mn)
Note
2021
2020
Reclassified
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
Loans 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
Provisions
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
Total equity attributable to the parent
Total equity attributable to non-controlling interest
TOTAL SHAREHOLDERS' EQUITY
5.
6.
7.
8.
9.
10.
11.
11.
35.
12.
13.
13.
35.
14.
15.
35.
35.
16.
49.
17.
18.
19.
20.
21.
22.
23.
36.
35.
35.
24.
24.
25.
49.
26.
27.
28.
29.
2,556,035
1,584,861
61,052
341,397
2,224,510
3,891,335
13,493,183
1,068,111
1,182,628
67,222
411,136
248,631
50,726
29,882
18,757
15,109
29,978
276,785
2,046
2,432,312
1,148,743
190,849
234,007
2,136,709
2,624,920
11,674,842
802,605
1,051,140
52,443
322,766
239,004
46,283
38,601
6,820
22,317
39,171
266,239
6,070
27,553,384
23,335,841
1,567,348
79,047
41,184
21,068,644
436,325
202,716
11,228
53,286
24,045
36,581
119,799
598,081
278,334
1,185,315
117,991
34,131
17,890,863
464,213
104,823
11,341
48,451
25,990
29,528
116,467
489,426
274,704
-
5,486
24,516,618
20,798,729
28,000
3,109,509
(106,941)
3,030,568
6,198
3,036,766
28,000
2,629,076
(124,080)
2,532,996
4,116
2,537,112
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
27,553,384
23,335,841
Budapest, 17 March, 2022
The accompanying Notes to Consolidated Financial Statements on pages 10 to 179 form an integral part of these Consolidated
Financial Statements prepared in accordance with International Financial Reporting Standards as adopted by EU.
4
Dr. Sándor Csányi
Chairman and Chief Executive Officer
OTP BANK PLC
CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR
ENDED 31 DECEMBER 2021
(in HUF mn)
Note
2021
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
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
Release of impairment of assets subject to
operating lease and of investment properties
Risk cost total
NET INTEREST INCOME AFTER RISK COST
Gain from derecognition of financial assets
at amortized cost
Modification loss
Income from fees and commissions
Expense from fees and commissions
Net profit from fees and commissions
Foreign exchange result, net
Gains on securities, net
Fair value adjustment on financial instruments
measured at fair value through profit or loss
Gain on derivative instruments, net
Profit from associates
Other operating income
Other operating expenses
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
Gain from disposal of subsidiary classified as held for sale
Gain 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.
31.
33.
4.
32.
32.
33.
33.
33.
33.
8., 9.
34.
34.
34.
13.
13.
34.
35.
29.
49.
49.
45.
45.
45.
45.
2020
Reclassified
841,901
135,986
977,887
(195,216)
782,671
(172,520)
922,539
194,920
1,117,459
(243,149)
874,310
(27,721)
(16,289)
(3,262)
(3,974)
(99)
438
(47,645)
826,665
1,885
(13,672)
554,113
(111,939)
442,174
(4,075)
5,560
(532)
6,798
15,648
81,328
(85,732)
18,995
(340,684)
(94,996)
-
(311,932)
(747,612)
528,435
(72,123)
456,312
836
455,476
-
116
(7,309)
(8,662)
878
(190,875)
591,796
3,380
(29,773)
486,529
(88,896)
397,633
7,864
7,465
4,843
11,340
527
33,461
(39,447)
26,053
(308,642)
(92,761)
-
(289,722)
(691,125)
297,964
(43,918)
254,046
220
253,826
199
5,391
456,428
259,636
1,738
1,738
1,738
1,738
982
982
1,004
1,003
The accompanying Notes to Consolidated Financial Statements on pages 10 to 179 form an integral part of these Consolidated
Financial Statements prepared in accordance with International Financial Reporting Standards as adopted by EU.
5
OTP BANK PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR
ENDED 31 DECEMBER 2021
(in HUF mn)
Note
2021
2020
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
Change of actuarial loss related to
employee benefits
Deferred tax related to change of actuarial loss related to
employee benefits
Subtotal
TOTAL COMPREHENSIVE INCOME
From this, attributable to:
Non-controlling interest
Owners of the company
27.
27.
27.
27.
27.
27.
27.
27.
27.
27.
456,428
259,636
(50,789)
(3,175)
3,526
918
-
-
-
61,729
(2)
(9,440)
849
68,593
2,747
(2,890)
(361)
53
(11)
383
143
1
16,894
55,380
473,322
315,016
1,041
472,281
(223)
315,239
The accompanying Notes to Consolidated Financial Statements on pages 10 to 179 form an integral part of these Consolidated
Financial Statements prepared in accordance with International Financial Reporting Standards as adopted by EU.
6
OTP BANK PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2021
(in HUF mn)
Note
Share
capital
Capital
reserve
Retained earnings
and other reserves1
Treasury
shares
Total
attributable to
shareholders
Non-controlling
interest
Total
Balance as at 1 January 2020
Net profit for the period
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
Balance as at 1 January 2021
Net profit for the period
Other Comprehensive Income
Total comprehensive income
Increase due to business combination
Share-based payment
Adjustment of previous years' reserves
Sale of Treasury shares
Treasury shares - loss on sale
Treasury shares - acquisition
Payments to ICES holders
Increase due to termination of ICES
Balance as at 31 December 2021
28,000
-
-
-
-
-
-
-
-
-
28,000
28,000
-
-
-
-
-
-
-
-
-
-
-
28,000
49.
40.
28.
28.
28.
27.
40.
28.
28.
28.
27.
27.
52
-
-
-
-
-
-
-
-
-
52
52
-
-
-
-
-
-
-
-
-
-
-
52
2,319,211
259,416
55,823
315,239
-
-
3,394
-
(3,967)
-
(4,853)
2,629,024
2,629,024
455,592
16,689
472,281
-
3,589
1,034
-
(27,800)
-
(3,734)
35,063
3,109,457
(60,931)
-
-
-
-
-
-
22,773
-
(85,922)
-
(124,080)
(124,080)
-
-
-
-
-
-
293,572
-
(276,433)
-
-
(106,941)
2,286,332
259,416
55,823
315,239
-
-
3,394
22,773
(3,967)
(85,922)
(4,853)
2,532,996
2,532,996
455,592
16,689
472,281
-
3,589
1,034
293,572
(27,800)
(276,433)
(3,734)
35,063
3,030,568
4,956
220
(443)
(223)
(382)
(235)
-
-
-
-
-
4,116
4,116
836
205
1,041
1,041
-
-
-
-
-
-
-
6,198
2,291,288
259,636
55,380
315,016
(382)
(235)
3,394
22,773
(3,967)
(85,922)
(4,853)
2,537,112
2,537,112
456,428
16,894
473,322
1,041
3,589
1,034
293,572
(27,800)
(276,433)
(3,734)
35,063
3,036,766
1 See details in Note 27, where the Retained earnings and other reserves category contains the capital reserve, share-based payment reserve and option reserve.
The accompanying Notes to Consolidated Financial Statements on pages 10 to 179 form an integral part of these Consolidated Financial Statements prepared in accordance with International Financial Reporting
Standards as adopted by EU.
7
OTP BANK PLC
CONSOLIDATED STATEMENT OF CASH-FLOWS FOR THE YEAR
ENDED 31 DECEMBER 2021
(in HUF mn)
OPERATING ACTIVITIES
Note
2021
2020
Net profit for the period
(attributable to the owners of the company)
Net accrued interest
Dividend income
Depreciation and amortization
Loss allowance on securities
Loss allowance on loans and placements,
amounts due from banks and on repo receivables
Loss allowance / (Release of 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 financial
instrumentum at fair value through profit or loss
Non-realized foreign exchange loss / (gain)
Loss / (Gain) from sale of tangible and intangible assets
Unrealized losses / (gains) on fair value change of
derivative financial instruments
Gain on discontinued operations
Net changes in assets and liabilities in operating activities
Net (increase) / decrease in securities
at fair value through profit or loss
Net (increase) / decrease in compulsory reserves
at the National Banks
Increase in placement with other banks,
before loss allowance for placements
Net increase in loans at amortized cost before loss allowance
for loans and in loans at fair value
Net increase in other assets
before loss allowance
Net increase in amounts due to banks,
the National Governments, deposits from the National Banks
and other banks and repo liabilities
Net increase in financial liabilities designated
at fair value through profit or loss
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
27.
13.
9.,10.
5., 6., 7., 11.
12.
14.
13.
16.
24.
40.
33.
33.
13.
33.
49.
8.
5.
6.
11.
16.
455,592
14,854
(15,648)
100,321
3,974
27,721
6,640
(243)
2,772
1,986
10,856
3,589
11,404
22,258
129
18,982
(116)
259,416
(9,040)
(527)
98,385
7,309
251,440
(381)
(741)
51
7,416
14,792
3,394
762
(6,820)
(637)
(25,068)
(5,391)
(126,364)
23,928
(96,936)
17,839
(307,731)
(903,119)
(2,206,183)
(1,473,258)
(17,930)
(86,868)
17., 18.
299,138
470,671
19.
20.
36.
24.
35.
1,315
3,125,494
(935)
186,319
(47,876)
1,473,382
4,647
2,306,621
(1,592)
61,684
(37,729)
977,184
The accompanying Notes to Consolidated Financial Statements on pages 10 to 179 form an integral part of these Consolidated
Financial Statements prepared in accordance with International Financial Reporting Standards as adopted by EU.
8
OTP BANK PLC
CONSOLIDATED STATEMENT OF CASH-FLOWS FOR THE YEAR
ENDED 31 DECEMBER 2021
(in HUF mn)
[continued]
Note
2021
2020
INVESTING ACTIVITIES
Purchase of securities at fair value
through other comprehensive income
Proceeds from sale of securities at fair value
through other comprehensive income
Purchase of investments
Proceeds from sale of 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
Purchase of investment properties
Proceeds from sale of investment properties
Net change in cash and cash equivalents
from discontinued operation
Net cash paid for acquisition
Net Cash Used in Investing Activities
FINANCING ACTIVITIES
Cash received from issuance of securities
Cash used for redemption of issued securities
Cash payments for the principal portion of the lease liability
Cash received from issuance of subordinated bonds and loans
Cash used for redemption of 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
TOTAL NET CASH (USED IN) / PROVIDED BY
Cash and cash equivalents
at the beginning of the period
Foreign currency translation
Net change in cash and cash equivalent
Adjustment due to discontinued operation
Cash and cash equivalents
at the end of the period
9.
9.
12.
12.
27.
10.
10.
13.
13.
14.
14.
49.
21.
21.
36.
25.
25.
27.
28.
28.
27.
5.
5.
(2,342,772)
(1,864,934)
2,217,702
(32,626)
11,207
15,648
(6,249,137)
4,997,215
(300,715)
119,661
(134)
7,983
116
-
(1,555,852)
76,728
(106,350)
(14,149)
2,676
-
71,688
293,572
(276,433)
(10)
47,722
2,162,682
(33,494)
2,382
399
(6,655,496)
6,022,703
(136,130)
68,625
(574)
10,416
5,544
-
(417,877)
149,105
(78,597)
(16,856)
773
(2,600)
(4,853)
18,806
(85,922)
(10)
(20,154)
(34,748)
539,153
1,674,777
61,533
(34,748)
2
1,049,737
69,036
539,153
16,851
1,701,564
1,674,777
The accompanying Notes to Consolidated Financial Statements on pages 10 to 179 form an integral part of these Consolidated
Financial Statements prepared in accordance with International Financial Reporting Standards as adopted by EU.
9
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 1:
ORGANIZATION AND BASIS OF CONSOLIDATED FINANCIAL STATEMENTS
1.1. General information
OTP Bank Plc. (the “Bank” or “OTP Bank”) was established on 31 December 1990, when the previously State-
owned company was transformed into a public liability company. The Bank’s registered office address is 16,
Nador Street, Budapest 1051.
Due to Hungarian legislation audit services are a statutory requirement for OTP Bank. Disclosure information
about the auditor: Ernst & Young Audit Ltd. (001165), 1132 Budapest Váci Street 20. Registered under 01-09-
267553 by Budapest-Capital Regional Court, as registry court. Statutory registered auditor: Zsuzsanna
Nagyváradiné Szépfalvi, registration number: 005313.
These Consolidated Financial Statements were approved by the Board of Directors and authorised for issue on
17 March 2022. The Bank’s owners have the power to amend the Consolidated Financial Statements after issue
if applicable.
In 1995, the shares of the Bank were introduced on the Budapest and the Luxembourg Stock Exchanges and
were also traded on the SEAQ board on the London Stock Exchange and on PORTAL in the USA.
The structure of the Share capital by shareholders (%):
Domestic and foreign private and
institutional investors
Employees
Treasury shares
Total
2021
2020
97%
1%
2%
100%
97%
1%
2%
100%
The Bank’s Registered Capital consists of 280.000.010 pieces of ordinary shares with the nominal value of HUF
100 each, representing the same rights to the shareholders.
The Bank and its subsidiaries (“Entities of the Group“, together the “Group” or “OTP Group”) provide a full
range of commercial banking services through a wide network of 1,455 branches in the following countries
Hungary, Bulgaria, Serbia, Croatia, Russia, Romania, Ukraine, Albania, Montenegro, Moldova and Slovenia, as
well as provides other services in the Netherlands, Cyprus and Malta.
The number of the active employees without long-term breaks, and with part-time employees taken into account
proportionately, and the average number of active employees on monthly basis at the Group:
The number of employees at the Group
The average number of employees at the Group
1.2. Basis of Accounting
2021
37,866
37,890
2020
38,626
39,943
These Consolidated Financial Statements were prepared based on the assumptions of the Management that the
Bank will remain in business for the foreseeable future and that the Bank will not be forced to halt operations
and liquidate its assets in the near term at what may be very low fire-sale prices.
The Entities of the Group maintain their accounting records and prepare their statutory accounts in accordance
with the commercial, banking and fiscal regulations prevailing in Hungary and in case of foreign subsidiaries in
accordance with the commercial, banking and fiscal regulations of the country in which they are domiciled.
The Bank’s functional currency is the Hungarian Forint (“HUF”). It is also presentation currency for the Group.
The financial statements of the subsidiaries used during the preparation of Consolidated Financial Statements of
the Group have the same reporting period – starting from 1 January ending as at 31 December – like the
reporting period of the Group.
10
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 1:
ORGANIZATION AND BASIS OF CONSOLIDATED FINANCIAL STATEMENTS
[continued]
1.2. Basis of Accounting [continued]
Due to the fact that the Bank is listed on international and national stock exchanges, the Bank is obliged to
present its financial statements in accordance with International Financial Reporting Standards (“IFRS”) as
adopted by the European Union (the “EU”).
Certain adjustments have been made to the Entities’ statutory accounts in order to present the Consolidated
Financial Statements of the Group in accordance with all standards and interpretations approved by the
International Accounting Standards Board (“IASB”).
These 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 2021
The following amendments to the existing standards and new interpretation issued by the International
Accounting Standards Board (IASB) and adopted by the EU are effective for the current reporting period:
- Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform –
Phase 2 adopted by EU on 13 January 2021 (effective for annual periods beginning on or after 1 January
2021),
- Amendments to IFRS 4 “Insurance Contracts” – “Deferral of IFRS 9” adopted by EU on 15 December
2020 (effective for annual periods beginning on or after 1 January 2021),
- IFRS 17 “Insurance Contracts” (effective for annual periods beginning on or after 1 January 2021),
- Amendments to IFRS 16 “Leases” – “Covid 19-Related Rent Concessions beyond 30 June 2021”
(effective for annual periods beginning on or after 1 April 2021).
The adoption of these amendments to the existing standards has not led to any material changes in the Group’s
Consolidated Financial Statements.
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:
- Amendments to IFRS 1 “First-time Adoption of International Financial Reporting Standards”,
IFRS 9 “Financial Instruments”, IAS 41 “Agriculture”– “Annual Improvements to IFRSs 2018-2020
Cycle” - adopted by EU on 28 June 2021 (effective for annual periods beginning on or after 1 January
2022),
- Amendments to IFRS 3 “Business Combinations”; IAS 16 “Property, Plant and Equipment”; IAS
37 “Provisions, Contingent Liabilities and Contingent Assets” - adopted by the EU on 28 June 2021
Annual Improvements (effective for annual periods beginning on or after 1 January 2022),
- Amendments to IFRS 17 “Insurance Contracts” (effective for annual periods beginning on or after 1
January 2023).
The Group does not adopt these new standards and amendments to existing standards before their effective date.
The Group anticipates that the adoption of these new standards, amendments to the existing standards and new
interpretations will have no material impact on the Consolidated Financial Statements of the Group in the period
of initial application.
11
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 1:
ORGANIZATION AND BASIS OF CONSOLIDATED FINANCIAL STATEMENTS
[continued]
1.2. Basis of Accounting [continued]
1.2.3. Standards and Interpretations issued by IASB, but not yet adopted by the EU
At present, IFRS as adopted by the EU do not significantly differ from regulations adopted by the International
Accounting Standards Board (IASB) except for the following new standards, amendments to the existing
standards and new interpretation, which were not endorsed for use in EU as at the publication of these
Consolidated Financial Statements:
- Amendments to IAS 1 “Presentation of Financial Statements” - Classification of Liabilities as Current
or Non-Current (effective for annual periods beginning on or after 1 January 2023),
- Amendments to IAS 1 “Presentation of Financial Statements” and IFRS Practice Statement 2 –
Disclosure of Accounting policies (effective for annual periods beginning on or after 1 January 2023),
- Amendments to IAS 8 “Accounting policies, Changes in Accounting Estimates and Errors” –
Definition of Accounting Estimates (effective for annual periods beginning on or after 1 January 2023),
- Amendments to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in
Associates and Joint Ventures” – Sale or Contribution of Assets between an Investor and its Associate
or Joint Venture and further amendments (effective date deferred indefinitely until the research project on
the equity method has been concluded),
Amendments to IAS 12 “Income Taxes” – Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (effective for annual periods beginning on or after 1 January 2023),
Amendments to IFRS 17 “Insurance Contracts” – Initial application of IFRS 17 and IFRS 9 –
Comparative Information (effective date for annual periods beginning on or after 1 January 2023).
-
-
The Group anticipates that the adoption of these new standards, amendments to the existing Standards and new
interpretations will have no significant impact on the Consolidated Financial Statements of the Group in the
period of initial application.
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies applied in the preparation of the accompanying Consolidated Financial
Statements are summarized below:
2.1. Basis of Presentation
These Consolidated Financial Statements have been prepared under the historical cost convention with the
exception of certain financial instruments, which are recorded at fair value. Revenues and expenses are recorded
in the period in which they are earned or incurred. The Group does not offset assets and liabilities or income and
expenses unless it is required or permitted by an IFRS standard.
During the preparation of Consolidated Financial Statements assets and liabilities, income and expenses are
presented separately, except in certain cases, when one of the IFRS standards prescribes net presenting related to
certain items (see note 2.8. below).
The presentation of Consolidated Financial Statements in conformity with IFRS as adopted by the EU requires
the Management of the Group to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and their
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
Future changes in economic conditions, business strategies, regulatory requirements, accounting rules and other
factors could result in a change in estimates that could have a material impact on future financial statements.
12
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.2. Foreign currency translation
In preparing the financial statements of each individual group entity, transactions in currencies other than the
entity's functional currencies are translated into functional currencies at the rates of exchange prevailing at the
dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies
are retranslated at the exchange rates quoted by the National Bank of Hungary (“NBH”), or if there is no official
rate, at exchange rates quoted by OTP Bank as at the date of the Consolidated Financial Statements.
Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates
prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognized in profit or loss in the period in which they arise except
for:
- exchange differences on foreign currency borrowings relating to assets under construction for future
productive use, which are included in the cost of those assets when they are regarded as an adjustment to
interest costs on those foreign currency borrowings;
- exchange differences on transactions entered into in order to hedge certain foreign currency risks (see note
2.7. below for hedging accounting policies); and
- exchange differences on monetary items receivable from or payable to a foreign operation for which
settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign
operation), which are recognized initially in Other Comprehensive Income and reclassified from equity to
profit or loss on repayment of the monetary items.
For the purposes of presenting Consolidated Financial Statements, the assets and liabilities of the Group's foreign
operations are translated into HUF using exchange rates prevailing at the end of each reporting period. Income
and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate
significantly during that period, in which case the exchange rates at the dates of the transactions are used.
Exchange differences arising, if any, are recognized in Other Comprehensive Income and accumulated in equity
(attributed to non-controlling interests as appropriate).
On the disposal of a foreign operation (i.e. a disposal of the Group's entire interest in a foreign operation, or a
disposal involving loss of control over a subsidiary that includes a foreign operation, a disposal involving loss of
joint control over a jointly controlled entity that includes a foreign operation, or a disposal involving loss of
significant influence over an associate that includes a foreign operation), all of the exchange differences
accumulated in equity in respect of that operation attributable to the owners of the Group are reclassified to
profit or loss.
In addition, in relation to a partial disposal of a subsidiary that does not result in the Group losing control over
the subsidiary, the proportionate share of accumulated exchange differences are re-attributed to non-controlling
interests and are not recognized in profit or loss.
Goodwill and fair value adjustments on identifiable assets and liabilities acquired arising on the acquisition of a
foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of
exchange prevailing at the end of each reporting period. Exchange differences arising are recognized in Other
Comprehensive Income and accumulated in equity.
13
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.3. Principles of consolidation
As the ultimate parent, OTP Bank is preparing Consolidated Financial Statements of the Group.
These Consolidated Financial Statements combine the assets, liabilities, equity, income, expenses and cash flows
of the Bank and of those subsidiaries of the Bank in which the Bank exercises control.
All intra-group transactions are consolidated fully on a line-by-line basis while under equity method other
consolidation rules are applied. Determination of the entities which are involved into the consolidation
procedures based on the determination of the Group’s Control over another entity. Control exists when the Bank
has power over the investee, is able to use this power and is exposed or has right to variable returns.
Consolidation of a subsidiary should begin from the date when the Group obtains control and cease when the
Group loses control. Therefore, income and expenses of a subsidiary should be included in the Consolidated
Financial Statements from the date the Group gains control of the subsidiary until the date when the Group
ceases to have control of the subsidiary.
The list of the major fully consolidated subsidiaries, the percentage of issued capital owned by the Bank and the
description of their activities is provided in Note 42.
2.4. Accounting for acquisitions
Business combinations are accounted for using the acquisition method. Any goodwill arising on acquisition is
recognized in the Consolidated Statement of Financial Position and accounted for as indicated below.
The acquisition date is the date on which the acquirer effectively obtains control over the acquiree. Before this
date, it should be presented as Advance for investments within Other assets.
Goodwill, which represents the residual cost of the acquisition after obtaining the control over the acquiree in the
fair value of the identifiable assets acquired and liabilities assumed is held as an intangible asset and recorded at
cost less any accumulated impairment losses in the Consolidated Financial Statements. The Group tests goodwill
for impairment by comparing its recoverable amount with its carrying amount, and recognising any excess of the
carrying amount over the recoverable amount an impairment loss. The recoverable amount of goodwill is the
higher of its fair value less costs of disposal and its value in use.
If the Group loses control of a subsidiary, derecognizes the assets (including any goodwill) and liabilities of the
subsidiary at their carrying amounts at the date when control is lost and recognizes any difference as a gain or
loss on the sale attributable to the parent in the Consolidated Statement of Profit or Loss on Net income from
discontinued operations.
Goodwill acquired in a business combination is tested for impairment annually or more frequently if events or
changes in circumstances indicate. The goodwill is allocated to the cash-generating units that are expected to
benefit from the synergies of the combinations.
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
the impairment need on goodwill based on the strategic factors and financial data of its cash-generating units.
The Group, in its strategic plan, has taken into consideration the effects of the present global economic situation,
the present economic growth and outlook, the associated risks and their possible effect on the financial sector as
well as the current and expected availability of wholesale funding.
Negative goodwill (gain from bargain purchase), when the interest of the acquirer in the net fair value of the
acquired identifiable net assets exceeds the cost of the business combination, is recognized immediately in the
Consolidated Statement of Profit or Loss as “Other income”.
14
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.5. Securities at amortized cost
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 interest
on the principal amount outstanding. The Group initially recognizes these securities at fair value. Securities at
amortized cost are subsequently measured using the effective interest (“EIR”) method and are subject to
impairment. The amortisation of any discount or premium on the acquisition of a security at amortized cost is
part of the amortized cost and is recognized as interest income so that the revenue recognized in each period
represents a constant yield on the investment. Securities at amortized cost are accounted for on a trade date basis.
The Group applies the FIFO1 inventory valuation method for securities at amortized cost.
Such securities comprise mainly securities issued by the Hungarian and foreign Governments, corporate bonds,
mortgage bonds and discounted treasury bills.
2.6. Financial assets at fair value through profit or loss
2.6.1. Securities held for trading
Investments in securities are accounted for on a trade date basis and are initially measured at fair value.
Securities held for trading are measured at subsequent reporting dates at fair value, so unrealized gains and
losses on held for trading securities are recognized in profit or loss and included in the Consolidated Statement
of Profit or Loss for the period. The Group holds held for trading securities within the business model to obtain
short-term gains, consequently realized and unrealized gains and losses are recognized in the net operating
income, while interest income is recognized in income similar to interest income. The Group applies the FIFO
inventory valuation method for securities held for trading.
Such securities consist of equity instruments, shares in investment funds, Hungarian and foreign government
bonds, corporate bonds, discounted treasury bills, mortgage bonds and other securities.
2.6.2. Financial assets designated as fair value through profit or loss
The Group may - at initial recognition - irrevocable designate a financial asset as measured at fair value through
profit or loss that would otherwise be measured at fair value through other comprehensive income or at
amortized cost.
The Group may use fair value designation only in the following cases:
-
if the classification eliminates or significantly reduces a measurement or recognition inconsistency that
would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on
different bases (‘accounting mismatch’)
The use of the fair value designation is based only on direct decision of management of the Group.
2.6.3. Derivative financial instruments
In the normal course of business, the Group is a party to contracts for derivative financial instruments, which
represent a low initial investment compared to the notional value of the contract and their value depends on
value of underlying asset and are settled in the future. The derivative financial instruments used include interest
rate forward or swap agreements and currency forward or swap agreements and options. These financial
instruments are used by the Group both for trading purposes and to hedge interest rate risk and currency
exposures associated with its transactions in the financial markets.
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 are obtained from quoted market prices,
discounted cash-flow models and option pricing models as appropriate. The Group adopts a multi curve
valuation approach for calculating the net present value of future cash-flows – based on different curves used for
determining forward rates and used for discounting purposes. It shows the best estimation of such derivative
deals that are collateralised as the Group has almost all of its open derivative transactions collateralised.
Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are
recognized in profit or loss and are included in the Consolidated Statement of Profit or Loss for the period. Each
derivative deal is determined as asset when fair value is positive and as liability when fair value is negative.
1 First In First Out
15
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.6. Financial assets at fair value through profit or loss [continued]
2.6.3. Derivative financial instruments [continued]
Certain derivative transactions, while providing effective economic hedges under the risk management policy of
the Group, do not qualify for hedge accounting under 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.
Foreign currency contracts
Foreign currency contracts are agreements to exchange specific amounts of currencies at a specified rate of
exchange, at a spot date (settlement occurs two days after the trade date) or at a forward date (settlement occurs
more than two days after the trade date). The notional amount of these forward contracts does not represent the
actual market or credit risk associated with these contracts.
Foreign currency contracts are used by the Group for risk management and trading purposes. The risk
management foreign currency contracts of the Group were used to hedge the exchange rate fluctuations of loans
and deposits to credit institutions denominated in foreign currency.
Foreign exchange swaps and interest rate swaps
The Group enters into foreign exchange swap and interest rate swap (“IRS”) transactions. The swap transaction
is an agreement concerning the swap of certain financial instruments, which usually consists of spot and one or
more forward contracts.
IRS transactions oblige two parties to exchange one or more payments calculated with reference to fixed or
periodically reset rates of interest applied to a specific notional principal amount (the base of the interest
calculation). Notional principal is the amount upon which interest rates are applied to determine the payment
streams under IRS transactions. Such notional principal amounts often are used to express the volume of these
transactions but are not actually exchanged between the counterparties.
IRS transactions are used by the Group for risk management and trading purposes.
Cross-currency interest rate swaps
The Group enters into cross-currency interest rate swap (CCIRS) transactions which have special attributes, i.e.
the parties exchange the notional amount at the beginning and also at the maturity of the transaction. A special
type of these deals is the mark-to-market CCIRS agreements. For these kind of transactions the 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 more payments calculated with reference to periodically reset
rates of interest and performance of indices. A specific notional principal amount is the base of the interest
calculation. The payment of index return is calculated on the basis of current market price compared to the
previous market price. In case of commodity swaps payments are calculated on the basis of the strike price of a
predefined commodity compared to its average market price in a period.
Forward rate agreements (FRA)
A forward rate agreement is an agreement to settle amounts at a specified future date based on the difference
between an interest rate index and an agreed upon fixed rate. Market risk arises from changes in the market value
of contractual positions caused by movements in interest rates.
The Group limits its exposure to market risk by entering into generally matching or offsetting positions and by
establishing and monitoring limits on unmatched positions. Credit risk is managed through approval procedures
that establish specific limits for individual counterparties. The Group’s forward rate agreements were transacted
for management of interest rate exposures and have been accounted for at mark-to-market fair value.
16
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.6. Financial assets at fair value through profit or loss [continued]
2.6.3 Derivative financial instruments [continued]
Foreign exchange options
A foreign exchange option is a derivative financial instrument that gives the owner the right to exchange money
denominated in one currency into another currency at a pre-agreed exchange rate at a specified future date. The
transaction, for a fee, guarantees a worst-case exchange rate for the futures purchase of one currency for another.
These options protect against unfavourable currency movements while preserving the ability to participate in
favourable movements.
2.7. Hedge accounting
Derivative financial instruments designated as a fair-value hedge
Changes in the fair value of derivatives that are designated and qualify as hedging instruments in fair value
hedges and that prove to be highly effective in relation to the hedged risk, are recorded in the Consolidated
Statement of Profit or Loss along with the corresponding change in fair value of the hedged asset or liability that
is attributable to the specific hedged risk. Changes in the fair value of hedging instrument in fair value hedges is
charged directly to the Consolidated Statement of Profit or Loss.
The conditions of hedge accounting applied by the Bank are the following: formally designated as hedge
relationship, proper hedge documentation is prepared, effectiveness test is performed and based on it the hedge is
qualified as effective.
The Group implemented hedge accounting rules prescribed by IFRS 9 in 2018.
Derivative financial instruments designated as cash flow hedge
Changes in the fair value of derivatives that are designated and qualify as hedging instrument in cash-flow
hedges and that prove to be highly effective in relation to the hedged risk are recognized in their effective portion
as reserve in Other Comprehensive Income. The ineffective element of the changes in fair value of hedging
instrument is charged directly to the Consolidated Statement of Profit or Loss.
The Group terminates the hedge relationship if the hedging instrument expires or is sold, terminated or
exercised, or the hedge no longer meets the criteria for hedge accounting. In the case of cash-flow hedges – in
line with the standard -hedge accounting is still applied by the Group as long as the underlying asset is
derecognized.
Net investment hedge in foreign operations
Hedges of a net investment in a foreign operation, including a hedge of a monetary item that is accounted for as
part of the net investment, shall be accounted for similarly to cash flow hedges.
On the disposal of a foreign operation, the cumulative value of any gains and losses recognized in Other
Comprehensive Income is transferred to the Consolidated Statement of Profit or Loss.
2.8. Offsetting
Financial assets and liabilities are offset and the net amount is reported in the Consolidated Statement of
Financial Position 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. In
case of the derivative financial instruments the Group applies offsetting and net presentation in the Consolidated
Statement of Financial Position when the Group has the right and the ability to settle these assets and liabilities
on a net basis.
17
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.9. Embedded derivatives
Sometimes, a derivative may be a component of a combined or hybrid contracts that includes a host contract and
a derivative (the embedded derivative) affecting cash-flows or otherwise modifying the characteristics of the
host instrument. An embedded derivative must be separated from the host instrument and accounted for as a
separate derivative if, and only if:
The economic characteristics and risks of the embedded derivative are not closely related to the economic
characteristics and risks of the host contract;
A separate financial instrument with the same terms as the embedded derivative would meet the definition
of a derivative as a stand-alone instrument; and
The host instrument is not measured at 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 is a financial asset the general accounting rules for
classification, recognition and measurement of financial assets are applicable for the whole contract and no
embedded derivative is separated.
Derivatives that are required to be separated are measured at fair value at initial recognition and subsequently.If
the Group is unable to measure the embedded derivative separately either at acquisition or at the end of a
subsequent 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 is required to be separated from
the host contract and accounted for as a derivative when the Bank first becomes a party to the contract.
2.10. Securities at fair value through other comprehensive income
Securities at fair value through other comprehensive income are held within a business model whose objective is
achieved by both collecting of contractual cash flows and selling securities. Furthermore, the contractual terms
of these securities give rise on specified dates to cash flows that are solely payment of principal and interest on
the principal amount outstanding.
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 at fair
value. Unrealized gains and losses on securities at fair value through other comprehensive income are recognized
directly 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 the applicable
period. The Group applies the FIFO1 inventory valuation method for securities at fair value through other
comprehensive income.
For debt securities at fair value through other comprehensive income the loss allowance is calculated based on
expected credit loss model. The expected credit loss is accounted for against Other Comprehensive Income.
Securities at fair value through other comprehensive income are remeasured at fair value based on quoted prices
or amounts derived from cash-flow models. In circumstances where the quoted market prices are not readily
available, the fair value of debt securities is estimated using the present value of future cash-flows and the fair
value of any unquoted equity instruments are calculated using the EPS ratio.
Such securities consist of Hungarian and foreign government bonds, corporate bonds, mortgage bonds,
discounted and interest bearing Treasury bills, securities issued by the NBH and other securities.
1 First In First Out
18
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.10. Securities at fair value through other comprehensive income [continued]
Fair value through other comprehensive income option for equity instruments
The Group has elected to present in the Statement of Other Comprehensive Income changes of fair value of
those equity instruments which are neither held for trading nor recognized under IFRS 3.
In some cases, the Group made an irrevocable election at initial recognition for certain equity instruments to
present subsequent changes in fair value of these securities in the consolidated other comprehensive income
instead of in profit or loss.
The use of the fair value option is based only on direct decision of management of the Group.
2.11. Loans, placements with other banks, repo receivables and loss allowance for loan and placements
and repo receivable losses
The Group measures at amortized cost those Loans and placements with other banks and repo receivables, which
are held to collect contractual cash flows, and contractual terms of these assets give rise on specified dates to
cash flows that are solely payments of principal and interest on the principal amount outstanding. These loans
are recognized as Loans at amortized cost in the Consolidated Statement of Financial Position. The Group
recognizes those financial assets which are not held for trading and do not give rise to contractual cash flows that
are solely payments of principal and interest on the principal amount outstanding as loans measured at fair value
through profit or loss. These loans are recognized as Loans mandatorily at fair value through profit or loss in the
Consolidated Statement of Financial Position.
Those Loans and placements with other banks and repo receivables that are accounted at amortized cost, stated
at the principal amounts outstanding (including accrued interest), net of allowance for loan or placement losses,
respectively.
In case of the above mentioned financial assets measured at amortised cost transaction fees and charges adjust
the carrying amount at initial recognition and are included in effective interest calculation. In case of loans at fair
value through profit or loss fees and charges are recognised when incurred in the Consolidated Statement of
Profit or Loss.
Loans and placements with other banks and repo receivables are derecognized when the contractual rights to the
cash-flows expire or they are transferred. When a financial asset is derecognized the difference of the carrying
amount and the consideration received is recognized in the profit or loss in case of financial assets at amortised
cost the gains or losses from derecognition are presented in “Gains/losses from derecognition of financial assets
at amortised cost” line while in case of loans at fair value through profit or loss the gains or losses from
derecognition are presented in “Net operating income”.
Change in the fair value of loans at fair value through profit or loss is broken down into two components and
presented in the Consolidated Statement of Profit or Loss as follows:
• Portion of the change in fair value arising from changes in credit risk are presented within “Risk cost” as
“Change in the fair value attributable to changes in the credit risk of loans mandatorily measured at fair
value through profit of loss”.
• The remaining component of the change is presented in fair value within “Net operating income” as “Fair
value adjustment on financial instruments measured at fair value through profit or loss”.
Initially financial assets shall be recognized at fair value which is usually equal to transaction value in case of
loans and placements. However, when the amounts are not equal, the initial fair value difference should be
recognized.
If the fair value of financial assets is based on a valuation technique using only inputs observable in market
transactions, the Group recognizes the initial fair value difference in the Consolidated Statement of Profit or
Loss.
When the fair value of financial assets is based on models for which inputs are not observable, the difference
between the transaction price and the fair value is deferred and only recognized in profit or loss when the
instrument is derecognized or the inputs became observable.
Initial fair value of loans lent at interest below market conditions is lower than their transaction price.
19
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.11. Loans, placements with other banks, repo receivables and loss allowance for loan and placements
and repo receivable losses [continued]
The Group recognizes a loss allowance for expected credit losses on a financial asset at each reporting date. The
loss allowance for a financial asset equals to 12-month expected credit loss or equals to the lifetime expected
credit losses. The maximum period over which expected credit losses shall be measured is the maximum
contractual period over which the Group is exposed to credit risk.
If the credit risk on a financial asset has not increased significantly since initial recognition then 12-month
expected credit losses, otherwise (in case of significant credit risk increase) lifetime expected credit losses
should be calculated. The expected credit loss is the present value of the difference between the contractual cash
flows that are due to the Group under the contract and the cash flows that the Group expects to receive.
When the contractual cash flows of a financial asset are modified and the modification does not result in the
derecognition of the financial asset the Group recalculates the gross carrying amount of the financial asset by
discounting the expected future cash flows with the original effective interest rate of the asset. The difference
between the carrying amount and the present value of the expected cash flows is recognized as a modification
gain or loss in the profit or loss. Interest and amortized cost are accounted using effective interest rate method.
Write-offs are generally recorded after all reasonable restructuring or collection activities have taken place and
the possibility of further recovery is considered to be remote. The loan is written off against the related account
“Gain / (Loss) from derecognition of financial assets at amortized cost” in the Consolidated Statement of Profit
or Loss.
The Group applies partial or full write-off for loans based on the definitions and prescriptions of financial
instruments in accordance with IFRS 9. If the Group has no reasonable expectations regarding a financial asset
(loan) to be recovered, it will be written off partially or fully at the time of emergence.
The gross amount and loss allowance of the loans shall be written off in the same amount to the estimated
maximum recovery amount while the net carrying value remains unchanged. In those cases when on the
previously partially or fully written-off loans or placements, which perhaps were derecognized from the books
no having been reasonable expectations but later recoveries could be determined then reversal of written-off will
be booked in the Consolidated Statement of Profit or Loss on “Income from recoveries of written-off, but legally
existing loan” line in Risk cost.
2.12. Modified assets
If the net present value of the contracted cash flows changes due to the modification of the contractual terms and
it is not qualified as derecognition, modification gain or loss should be calculated and accounted for in the
Consolidated Statement of Profit or Loss. Modification gain or loss is accounted in cases like restructuring – as
defined in guidelines of the Group – prolongation, renewal with unchanged terms, renewal with shorter terms
and prescribing capital repayment rate, if it doesn’t exist or has not been earlier.
The changes of net present value should be calculated on portfolio level in case of retail exposures. Each retail
contract is restructured based on restructuring frameworks. The Group has to evaluate these frameworks (and not
individual contracts). The changes of net present value should be calculated individually on contract level in case
of corporate portfolio.
Among the possible contract amendments, the Group considers as a derecognition and a new recognition when
the discounted present value – discounted at the original effective interest rate – of the cash flows under the new
terms is at least 10 per cent different from the discounted present value of the remaining cash flows. In case of
derecognition and new recognition the unamortized fees of the derecognized asset should be presented as Income
similar to interest income. The newly recognized financial asset is initially measured at fair value and is placed
in stage 1 if the derecognized financial asset was in stage 1 or stage 2 portfolio. The newly recognized financial
asset will be purchased or originated credit impaired financial asset (“POCI”) if the derecognized financial asset
was in stage 3 portfolio or it was POCI.
20
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.12. Modified assets [continued]
The modification gain or loss shall be calculated at each contract amendments unless they are handled as a
derecognition and new recognition. In case of modification the Group recalculates the gross carrying amount of
the financial asset. To do this, the new contractual cash flows should be discounted using the financial asset’s
original effective interest rate (or credit-adjusted effective interest rate for POCI financial asset). Any costs or
fees incurred adjust the carrying amount of the modified financial asset are amortized over the remaining term of
the modified financial asset.
2.13. Purchased or originated credit impaired financial assets
Purchased or originated financial assets are credit-impaired on initial recognition. A financial asset is credit-
impaired when one or more events that have a detrimental impact on the estimated future cash flows of that
financial asset have occurred.
A purchased credit-impaired asset is likely to be acquired at a deep discount. In unusual circumstances, it may be
possible that an entity originates a credit-impaired asset, for example, following a substantial modification of a
distressed financial asset that resulted in the derecogniton of the original financial asset.
In the case of POCI financial assets, interest income is always recognized by applying the credit-adjusted
effective interest rate.
For POCI financial assets, in subsequent reporting periods an entity is required to recognize:
-
-
the cumulative changes in lifetime expected credit losses since initial recognition as a loss allowance,
the impairment gain or loss which is the amount of any change in lifetime expected credit losses.
An impairment gain is recognized (with the parallel increase of the net amortized cost of receivable) if due
to the favourable changes after initial recognition the lifetime expected credit loss estimation is becoming
lower than the original estimated credit losses at initial recognition.
The POCI qualification remains from initial recognition to derecognition in the Group’s books.
2.14. Loss allowance
A loss allowance for loans and placements with other banks and repo receivables is recognized by the Group
based on the expected credit loss model in accordance with IFRS 9. Based on the three stage model the
recognized loss allowance equals to 12-month expected credit loss from the initial recognition. On financial
assets with significantly increased credit risk or credit impaired financial assets (based on objective evidences)
the recognized loss allowance is the lifetime expected credit loss.
In the case of purchased or originated credit impaired financial assets, a loss allowance is recognized in the
amount of the lifetime expected credit loss since initial recognition. The impairment gain in the Consolidated
Statement of Profit or Loss is recognized if lifetime expected credit loss for purchased or originated credit
impaired financial assets at measurement date are less than the estimated credit loss at initial recognition.
A loss allowance for loans and placements with other banks and repo receivables represents Management’s
assessment for potential losses in relation to these activities.
Loss allowance for loan and placements are determined at a level that provides coverage for individually
identified credit losses. For loans for which it is not possible to determine the amount of the individually
identified credit loss in the absence of objective evidence, a collective impairment loss is recognized. With this,
the Group reduces the carrying amount of financial asset portfolios with similar credit risk characteristics to the
amount expected to be recovered based on historical loss experience.
At subsequent measurement the Group recognizes an impairment gain or loss through “Impairment gain on
POCI loans” in the Consolidated Statement of Profit or Loss as part of “Risk cost” line as an amount of expected
credit losses or reversal which is required to adjust the loss allowance at the reporting date to the amount that is
required to be recognized in accordance with IFRS 9.
21
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.14. Loss allowance [continued]
If a financial asset, for which previously there were no indicators of significant increase in credit risk (i.e.
classified in Stage 1) is subsequently classified in Stage 2 or Stage 3 then loss allowance is adjusted to lifetime
expected credit loss. If a financial asset, which was previously classified in Stage 2 or Stage 3 is subsequently
classified in Stage 1 then the loss allowance is adjusted to the level of 12 month expected credit loss.
Classification into risk classes
According to the requirements of the IFRS9 the Group classifies the financial assets measured at amortized cost,
at fair value through other comprehensive income and loan commitments and financial guarantees into the
following stages:
- Stage 1 – performing financial instruments without significant increase in credit risk since initial
recognition
- Stage 2 – performing financial instruments with significant increase in credit risk since initial recognition
but not credit-impaired
- Stage 3 – non-performing, credit-impaired financial instruments
- POCI – purchased or originated credit impaired
In the case of trade receivables and contract assets the Group applies the simplified approach and calculates only
lifetime expected credit loss. The simplified approach is the following:
-
-
-
for the past 3 years the average annual balance of receivables under simplified approach is calculated,
the written-off receivables under simplified approach are determined in the past 3 years,
historical losses are adjusted to reflect information about current conditions and reasonable forecasts of
future economic conditions,
the loss allowance ratio is the sum of the written-off amounts divided by the sum of the average balances,
the loss allowance is multiplied by the end-of-year balance and it is the actual loss allowance on these
receivables,
loss allowance should be recalculated annually.
-
-
-
The Group assumes that the credit risk on a financial instrument has not increased significantly since initial
recognition if the financial asset is determined to have low credit risk at the reporting date. This might occur if
the financial asset has a low risk of default, the borrower has a strong capacity to meet its contractual cash flow
obligations in the near term and adverse changes in economic and business conditions in the longer term may,
but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations. The
Group considers souvereign exposures as having low credit risk.
Stage 1: financial instruments for which the events and conditions specified in respect of Stage 2 and Stage 3 do
not exist on the reporting date.
A client or loan must be qualified as default if one or both the following two conditions occur:
The client delays more than 90 days. This is considered a hard trigger.
There is reasonable probability that the client will not pay all of its obligation. This condition is examined
on the basis of probability criteria of default.
The subject of default qualification is that exposure (on-balance and off-balance) which originates credit risk (so
originated from loan commitments, risk-taking contracts).
A financial instruments shows significant increase in credit risk, and is allocated to Stage 2, if in respect of
which any of the following triggers exist on the reporting date, without fulfilling any of the conditions for the
allocation to the non-performing stage (stage 3):
the payment delay exceeds 30 days,
it is classified as performing forborne,
based on individual decision, its currency suffered a significant "shock" since the disbursement of the
loan,
the transaction/client rating exceeds a predefined value or falls into a determined range, or compared to
the historic value it deteriorates to a predefined degree,
22
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.14. Loss allowance [continued]
Classification into risk classes [continued]
in the case retail mortgage loans, the loan-to-value ratio exceeds a predefined rate,
default on another loan of the retail client, if no cross-default exists,
monitoring classification of corporate and municipal clients above different thresholds defined on group
-
financial difficulties at the debtor (capital adequacy, liquidity, deterioration of the instrument
quality),
- significant decrease of the liquidity or the activity on the active market of the financial instrument
can be observed,
the rating of the client reflects high risk but it is better than the default one,
-
- significantly decrease in the value of the recovery from which the debtor would disburse the loan,
- clients under liquidation.
A financial instrument is non-performing and it is allocated to Stage 3 when any of the following events or
conditions exists on the reporting date:
default (based on the group level default definition),
classified as non-performing forborne (based on the group level forborne definition),
the monitoring classification of corporate and municipal clients above different thresholds defined on
group level (including but not limited to):
-
-
breaching of contracts,
significant financial difficulties of the debtor (like capital adequacy, liquidity, deterioration of the
instrument quality),
bankruptcy, liquidation, debt settlement processes against debtor,
forced strike-off started against debtor,
termination of loan contract by the bank,
occurrence of fraud event,
termination of the active market of the financial instrument.
-
-
-
-
-
-
If the exposure is no longer considered as credit impaired, the Group allocates this exposure to Stage 2.
When loss allowance is calculated at exposures categorized into stages the following process is needed by
stages:
Stage 1 (performing): loss allowance at an amount equal to 12-month expected credit loss should be
recognized,
Stage 2 (significant increase in credit risk): loss allowance at an amount equal to lifetime expected
credit loss should be recognized,
Stage 3 (non-performing): loss allowance at an amount equal to lifetime expected credit loss should be
recognized.
For lifetime expected credit losses, an entity shall estimate the risk of a default occurring on the financial
instrument during its expected life. 12-month expected credit losses are a portion of the lifetime expected credit
losses and represent the lifetime cash shortfalls that will result if a default occurs in the 12 months after the
reporting date (or a shorter period if the expected life of a financial instrument is less than 12 months), weighted
by the probability of that default occurring.
An entity shall measure expected credit losses of a financial instrument in a way that reflects:
-
-
-
an unbiased and probability-weighted amount that is determined by evaluating a range of possible
outcomes
the time value of money and
reasonable and supportable information that is available without undue cost or effort at the reporting
date about past events, current conditions and forecasts of future economic conditions.
23
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.15. Sale and repurchase agreements, security lending
Where debt or equity securities are sold under a commitment to repurchase them at a pre-determined price, they
remain on the Consolidated Statement of Financial Position and the consideration received is recorded in Other
liabilities or Amounts due to banks, the National Governments, deposits from the 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 either in Placements with
other banks or Deposits from customers. Interest is accrued based on the effective interest method evenly over
the life of the repurchase agreement.
In the case of security lending transactions the Group does not recognize or derecognize the securities because
believes that the transferor retains substantially all the risks and rewards of the ownership of the securities. Only
a financial liability or financial receivable is recognized for the consideration amount.
2.16. Associates and other investments
Companies where the Bank has the ability to exercise significant influence are accounted for using the equity
method. Subsidiaries and associated companies that were not accounted for using the equity method and other
investments where the Bank does not hold a significant interest are recorded according to IFRS 9. When an
investment in an associate is held indirectly through an entity that is a venture capital fund, the Group elects to
measure these investments in the associate at fair value through profit or loss in accordance with IFRS 9.
Under the equity method, the investment is initially recognized at cost, and the carrying amount is adjusted
subsequently for:
-
-
the Group’s share of the post-acquisition profits or losses of the investee, which are recognized in the
Group’s Consolidated Statement of Profit or Loss; and
the distributions received from the investee, which reduce the carrying amount of the investment.
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 recognizes its share of the investee’s income and
losses based on the percentage of the equity interest owned by the Group.
Gains and losses on the sale of investments are determined on the basis of the specific identification of the cost
of each investment.
2.17. Property and equipment, Intangible assets
Property and equipment and Intangible assets are measured at cost, less accumulated depreciation and
amortization and impairment, if any.
Internally generated intangibles, excluding capitalized development costs, are not capitalized – the related
expenditures are accounted as cost in the period in which they are incurred. Development costs are capitalized
only when the technical and commercial feasibility of the asset has been clearly demonstrated, the Group has the
intent and ability to complete the intangible asset and either use it or sell it and be able to demonstrate how the
asset will generate future economic benefits. Amortization of these type of assets begins when development is
complete and the asset is available for use. During the period of development, the asset is tested for impairment
annually.
The Group lists mainly self-developed softwares among internally generated intangible assets.
The depreciable amount (book value less residual value) of the non-current assets must be allocated over the
useful lives.
Depreciation and amortization are computed usually by using the straight-line method over the estimated useful
lives of the assets based on the following annual percentages:
Intangible assets
Software
Property right
Property
Machinery and office equipment
Vehicle
Annual
percentages
Useful life
period (years)
6.3% - 50.0%
16.7% - 33.3%
1.0% - 50.0%
3.3% - 63.0%
3.0% - 33.3%
2 – 15
3 – 6
2 – 100
1.5 – 30
3 – 33
24
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.17. Property and equipment, Intangible assets [continued]
Depreciation and amortization on Property and equipment and Intangible assets commence on the day such
assets are ready to use.
At each balance sheet date, the Group reviews the carrying value of its Property and equipment and Intangible
assets to determine if there is any indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated to determine the extent (if any) of the
impairment loss.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
Where the carrying value of Property and equipment and Intangible assets is greater than the estimated
recoverable amount, it is impaired immediately to the estimated recoverable amount.
The Group may conclude contracts for purchasing property, equipment and intangible assets, where the purchase
price is settled in foreign currency. By entering into such agreements, firm commitment in foreign currency due
on a specified future date arises at the Group.
Reducing the foreign currency risk caused by firm commitment, forward foreign currency contracts may be
concluded to ensure the amount payable in foreign currency on a specified future date on one hand and to
eliminate the foreign currency risk arising until settlement date of the contract on the other hand.
In the case of an effective hedge the realized profit or loss of the hedging instrument is stated as the part of the
cost of the hedged asset as it has arisen until recognizing the asset.
2.18. Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories comprise all costs
of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and
condition.
The Group uses generally FIFO formulas to the measurement of inventories.
Inventories are removed from books when they are sold, unusable or destroyed. When inventories are sold, the
carrying amount of those inventories are recognized as an expense in the period in which the related revenue is
recognized.
Repossessed assets are classified as inventories. The Group's policy is to sell repossessed assets and not to use
them for its internal operations.
2.19. Government grants and government assistance
The Group recognise government grants only when there is a reasonable assurance that the grant will be
received, and all attached conditions will be complied with.
The Group presents grants relating to assets as deferred income in the Consolidated Statement of Financial
Position, which is recognized in profit or loss on a systematic basis over the useful life of the asset.
Grants related to an expense item are recorded as an other operating income in those periods when the related
costs were recognized.
2.20. Financial liabilities
The financial liabilities are presented within these lines in the Consolidated Financial Statements:
Financial liabilities designated at fair value through profit or loss
- Amount due to banks, the National Governments, deposits from the National Banks and other banks
- Repo liabilities
-
- Deposits from customers
- Liabilities from issued securities
- Derivative financial liabilities held for trading
- Derivative financial liabilities designated as hedge accounting
- Other financial liabilities
25
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.20. Financial liabilities [continued]
At initial recognition, the Group measures financial liabilities at fair value plus or minus – in the case of a
financial liability not at fair value through profit or loss – transaction costs that are directly attributable to the
acquisition or issue of the financial liability.
Usually, the initial fair value of financial liabilities equals to transaction value. However, when the amounts are
not equal, the initial fair value difference should be recognized.
If the fair value of financial liabilities is based on a valuation technique using only inputs observable in market
transactions, the Group recognizes the initial fair value difference in the Consolidated Statement of Profit or
Loss.
When the fair value of financial liabilities is based on models for which inputs are not observable, the difference
between the transaction price and the fair value is deferred and only recognized in profit or loss when the
instrument is derecognized or the inputs became observable.
Financial liabilities at fair value through profit or loss are either financial liabilities held for trading or they are
designated upon initial recognition as at fair value through profit or loss.
In connection to the derivative financial liabilities measured at fair value through profit or loss, the Group
presents the amount of change in their fair value originated from the changes of market conditions and business
environment.
The Group designated some financial liabilities upon initial recognition to measure at fair value through profit or
loss. This classification eliminates or significantly reduces a measurement or recognition inconsistency that
would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on
different bases (“accounting mismatch”). The changes in fair value of these liabilities are recognized in profit or
loss, except the fair value changes attributable to credit risk which are recognized among other comprehensive
income.
In the case of financial liabilities measured at amortized cost fees and commissions related to the origination of
the financial liability are recognized through profit or loss during the maturity of the instrument using effective
interest method. In certain cases the Group repurchases a part of financial liabilities (mainly issued securities or
subordinated bonds) and the difference between the carrying amount of the financial liability and the amount
paid for it is recognized in the net profit or loss for the period and included in other operating income.
2.21. Leases
The Group as a lessor
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are classified as operating leases. Lease classification is
made at the inception date and is reassessed only if there is a lease modification.
Finance leases
At the commencement date, a lessor derecognizes the assets held under a finance lease in the Consolidated
Statement of Financial Position and present them as a receivable at an amount equal to the net investment in the
lease. The lessor shall use the interest rate implicit in the lease to measure the net investment in the lease. Direct
costs such as commissions are included in the initial measurement of the finance lease receivables.
The Group as a lessor recognizes finance income over the lease term, based on a pattern reflecting a constant
periodic rate of return on the Group’s net investment in the lease. The Group applies the lease payments relating
to the period against the gross investment in the lease to reduce both the principal and the unearned finance
income.
The Group applies the derecognition and impairment requirements in IFRS 9 to the net investment in the lease.
26
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.21. Leases [continued]
Operating leases
The Group as a lessor recognizes lease payments from operating leases as income on either a straight-line basis
or another systematic basis. Costs, including depreciation, incurred in earning the lease income are recognized
as an expense.
Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying
asset and recognized as an expense over the lease term on the same basis as the lease income.
The depreciation policy for depreciable underlying assets subject to operating leases is consistent with the
Group’s normal depreciation policy for similar assets. The Group accounts for a modification to an operating
lease as a new lease from the effective date of the modification, considering any prepaid or accrued lease
payments relating to the original lease as part of the lease payments for the new lease.
The Group as a lessee
The Group recognizes a right-of-use asset and a lease liability at the commencement of the lease term except for
short-term leases and leases, where the underlying asset is of low value (less than USD 5,000). For these leases,
the Group recognizes the lease payments as an expense on either a straight-line basis over the lease term or
another systematic basis if that basis is more representative of the pattern of the lessee’s benefit.
Deferred tax implication if the Group is lessee: At the inception of the lease, there is no net lease asset or
liability, no tax base and, therefore, no temporary difference. Subsequently, as depreciation on the right-of-use
asset initially exceeds the rate at which the debt reduces, a net liability arises resulting in a deductible temporary
difference on which a deferred tax asset should be recognized if recoverable. Assuming that the lease liability is
not repaid in advance, the total discounted cash outflows should equal the total rental payments deductible for
income tax purposes.
Right-of-use asset
The right-of-use assets are presented separately in the Consolidated Statement of Financial Position and initially
measured at cost, subsequently the Group applies the cost model and these assets are depreciated on a straight
line basis from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the
end of the lease term. If the lease transfers ownership of the underlying asset to the Group by the end of the lease
term or if the cost of the right-of-use asset reflects that the Group will exercise a purchase option, the right-of-
use asset are depreciated from the commencement date to the end of the useful life of the underlying asset.
Lease liability
At the commencement date, the lease liability is measured at the present value of the lease 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 the
incremental borrowing rate of the Group.Variable lease payments that do not depend on an index or a rate but
e.g. on revenues or usage are recognized as an expense. The Group always separates the non-lease components
of the lease contracts and accounts them as an expense. Lease payments must be included in the measurement of
the lease liability without value added taxes. Non-deductible VAT is recognized as other expense.
The lease liability is remeasured in the event of a reassessment of the lease liability or lease modification
2.22. Investment properties
Investment properties of the Group are land, buildings, part of buildings which held (as the owner or as the
lessee under a finance lease) to earn rentals or for capital appreciation or both, rather than for use in the
production or supply of services or for administrative purposes or sale in the ordinary course of business. The
Group measures the investment properties at cost less accumulated depreciation and impairment, if any.
The depreciable amount (book value less residual value) of the investment properties must be allocated over
their useful lives. The depreciation and amortization are computed using the straight-line method over the
estimated useful lives of the assets.
The Group discloses the fair value of the investment properties in Note 14 established mainly by external
experts.
27
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.23. Share capital
Share capital is the capital determined in the Articles of Association and registered by the Budapest-Capital
Regional Court. Share 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 changed over the current period.
2.24. Treasury shares
Treasury shares are shares which are purchased on the stock exchange and the over-the-counter market by the
Bank and its subsidiaries and are presented in the Consolidated Statement of Financial Position at cost as a
deduction from Consolidated Shareholders’ Equity.
Gains and losses on the sale of treasury shares are credited or charged directly to shareholder’s equity.
Derecognition of treasury shares is based on the FIFO method.
2.25. Non-current assets held-for-sale and discontinued operations
The Group classifies a non-current asset (or disposal group) as held for sale if its carrying amount will be
recovered principally through a sale transaction rather than through continuing use. The Group does not account
for a non-current asset that has been temporarily taken out of use as if it had been abandoned.
The Group measures a non-current asset (or disposal group) classified as held for sale at the lower of its carrying
amount and fair value less costs to sell. When the sale is expected to occur beyond one year, the Group measures
the costs to sell at their present value. Any increase in the present value of the costs to sell that arises from the
passage of time shall be presented in profit or loss. Immediately before the initial classification of the asset (or
disposal group) as held for sale, the carrying amounts of the asset (or all the assets and liabilities in the group)
are measured in accordance with applicable IFRS.
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 continue to be recognized.
If the Group has classified an asset (or disposal group) as held for sale, but the criteria for that are no longer met,
the Group ceases to classify the asset (or disposal group) as held for sale. The Group measures a non-current
asset that ceases to be classified as held for sale (or ceases to be included in a disposal group classified as held
for sale) at the lower of:
- its carrying amount before the asset (or disposal group) was classified as held for sale, adjusted for any
depreciation, amortisation or revaluations that would have been recognized had the asset (or disposal group)
not been classified as held for sale, and
- its recoverable amount at the date of the subsequent decision not to sell.
The Group presents a non-current asset classified as held for sale and the assets of a disposal group classified as
held for sale separately from other assets in the Consolidated Statement of Financial Position. The liabilities of a
disposal group classified as held for sale is presented separately from other liabilities in the Consolidated
Statement of Financial Position. Those assets and liabilities shall not be offset and presented as a single amount.
The major classes of assets and liabilities classified as held for sale are separately disclosed in the Notes.
The Group presents separately any cumulative income or expense recognized in other comprehensive income
relating to a non-current asset (or disposal group) classified as held for sale. Results from discontinued
operations are reported separately in the Consolidated Statement of Profit or Loss as result from discontinued
operations.
2.26. Interest income and income similar to interest income and interest expense
Interest income and expense are recognized in profit or loss in the period to which they relate, using the effective
interest rate method.
For exposures categorized into Stage 1 and Stage 2 the interest income is recognized on a gross basis. For
exposures categorized into Stage 3 (using effective interest rate) and for POCI (using credit-adjusted effective
interest rate) the interest income is recognized on a net basis.
The time-proportional income similar to interest income of derivative financial instruments is calculated without
using the effective interest method and the positive fair value adjustment of interest rate swaps are included in
income similar to interest income.
28
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.26. Interest income and income similar to interest income and interest expense [continued]
Interest income of loans at fair value through profit or loss is calculated based on interest fixed in the contract
and presented in “Income similar to interest income” line.
Interest from loans and deposits are accrued on a daily basis. Interest income and expense include certain
transaction costs and the amortisation of any discount or premium between the initial carrying amount of an
interest-bearing instrument and its amount at maturity calculated on an effective interest rate basis.
All interest income and expense recognized are arising from loans, placements with other banks, repo
receivables, securities at fair value through other comprehensive income, securities at amortized cost and
amounts due to banks, repo liabilities, deposits from customers, liabilities from issued securities, subordinated
bonds and loans are presented under these lines of Consolidated Financial Statements.
2.27. Fees and Commissions
Fees and commissions that are not involved in the amortized cost model are recognized in the Consolidated
Statement of Profit or Loss on an accrual basis according to IFRS 15 Revenue from contracts with customers
(see more details in Note 32). These fees are related to deposits, cash withdrawals, security trading, bank card
etc.
The Group recognizes income if performance obligations related to the certain goods or services are satisfied,
performed, and control over the asset is transferred to the customer, and it is probable that consideration payable
will probably flow to the entity. In case of those services, where the Group transfers control over the asset
continuously, income is recognised on accrual basis.
The Group provides foreign exchange trading services to its customers, the profit margin achieved on these
transactions is presented as Net profit from fees and commissions in the Consolidated Statement of Profit or
Loss.
2.28. Profit from associates
Profit from associates refers to any distribution of an entity earnings to shareholders from stocks or mutual funds
that is owned by the Group. The Group recognizes profit from associates in the Consolidated Financial
Statements when its right to receive payment is established.
2.29. Income tax
The Group considers corporate income tax as current tax according to IAS 12. The Group also considers local
business tax and the innovation contribution as income tax in Hungary.
The annual taxation charge is based on the tax payable under fiscal regulations prevailing in the country where
the company is incorporated, adjusted for deferred taxation. Deferred 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 at the tax rates that apply to the future period when the
asset is expected to be realized or the liability is settled.
Current tax asset or current tax liability is presented related to income tax and innovation contribution separately
in the Consolidated Statement of Financial Position.
Deferred tax assets are recognized by the Group for the amounts of income taxes that are recoverable in future
periods in respect of deductible temporary differences as well as the carryforward of unused tax losses and the
carryforward of unused tax credits.
The Group recognizes a deferred tax asset for all deductible temporary differences arising from investments in
subsidiaries, branches and associates, and interests in joint arrangements, to the extent that, and only to the extent
that, it is probable that:
- the temporary difference will reverse in the foreseeable future; and
- taxable profit will be available against which the temporary difference can be utilised.
29
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.29. Income tax [continued]
The Group considers the availability of qualifying taxable temporary differences and the probability of other
future taxable profits to determine whether future taxable profits will be available according to IAS 12.
The Group recognizes a deferred tax liability for all taxable temporary differences associated with investments in
subsidiaries, branches and associates, and interests in joint arrangements, except to the extent that both of the
following conditions are satisfied:
the Bank is able to control the timing of the reversal of the temporary difference, and
-
- it is probable that the temporary difference will not reverse in the foreseeable future.
The Group only offsets its deferred tax liabilities against deferred tax assets when:
-
-
there is a legally enforceable right to set-off current tax liabilities against current tax assets, and
the taxes are levied by the same taxation authorities on either
the same taxable entity or
different taxable entities which intend to settle current tax liabilities and assets on a net basis.
2.30. Banking tax
The Bank and some of its subsidiaries are obliged to pay banking tax based on Act LIX of 2006. As the
calculation is not based on the taxable profit but on the adjusted total assets as reported in the Separate Financial
Statements of the Bank and its entities for the second period preceding the current tax year, therefore, the
banking tax is considered as an other administrative expense, not as income tax.
2.31. Off-balance sheet commitments and contingent liabilities
In the ordinary course of its business, the Group enters into off-balance sheet commitments such as guarantees,
letters of credit, commitments to extend credit and transactions with financial instruments. The provision for off-
balance sheet commitments and contingent liabilities is maintained at a level adequate to absorb future cash
outflows which are probable and relate to present obligations.
In the case of commitments and contingent liabilities, the Management determines the adequacy of the loss
allowance based upon reviews of individual items, recent loss experience, current economic conditions, the risk
characteristics of the various categories of transactions and other pertinent factors. The Group recognizes
provision for off-balance sheet commitment and contingent liabilities in accordance with IAS 37 when it has a
present obligation as a result of a past event; it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation; and a reliable estimate can be made of the obligation. For
financial guarantees and loan commitments given which are under IFRS 9 the expected credit loss model is
applied when the provision is calculated (see more details in Note 2.14.). After initial recognition the Group
subsequently measures those contracts at a higher of the amount of the loss allowance or of the amount initially
recognised less the cumulative amount of income recognized in accordance with IFRS 15.
2.32. Share-based payment
The Group has applied the requirements of IFRS 2 Share-based Payment.
The Group issues equity-settled share-based payment to certain employees. Equity-settled share-based payment
is measured at fair value at the grant date. The fair value determined at the grant date of the equity-settled share-
based payment is expensed on a straight-line basis over the year, based on the Group’s estimate of shares that
will eventually vest. Share-based payment is recorded in Consolidated Statement of Profit or Loss as Personnel
expenses.
Fair value is measured by use of a binomial model. The expected life used in the model has been adjusted, based
on Management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural
considerations.
30
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.33. Employee benefits
The Group has applied the requirement of IAS 19 Employee Benefits. These benefits are recognised as an
expense and liability undiscounted in the Consolidated Financial Statements. Liabilities are regularly
remeasured. Gains or losses due to the remeasurement are recognised in the Consolidated Statement of Profit or
Loss.
Short-term employee benefits are employee benefits (other than termination benefits) that are expected to be
settled wholly before twelve months after the end of the annual reporting period in which the employees render
the related service. These can be wages, salaries and bonuses, premium, paid annual leave and paid sick leave
and other free services (health care, reward holiday). Long-term employee benefits are mostly the jubilee reward.
Post-employment benefits are employee benefits (other than termination and short-term employee benefits) that
are payable after the completion of employment. Post-employment benefit plans are formal or informal
arrangements under which an entity provides post-employment benefits for one or more employees. Post-
employment benefit plans are classified as either defined contribution plans or defined benefit plans, depending
on the economic substance of the plan as derived from its principal terms and conditions.
Defined benefit plan is post‑employment benefit plans other than defined contribution plan. The Group's net
obligation is calculated by estimating the amount of employee's future benefit based on their servicies for the
current and prior periods. The future value of benefit is being discounted to present value.
Termination benefits are employee benefits provided in exchange for the termination of an employee’s
employment as a result of either: an entity’s decision to terminate an employee’s employment before the normal
retirement date or an employee’s decision to accept an offer of benefits in exchange for the termination of
employment. Other long-term employee benefits are all employee benefits other than short-term employee
benefits, postemployment benefits and termination benefits.
2.34. Biological assets and agricultural produce
The Group recognises a biological asset or agricultural produce according to IAS 41 only when it controls the
asset as a result of past events, it is probable that future economic benefits will flow and the fair value or the cost
can be measured reliably.
Biological assets are measured on initial recognition and at subsequent periods at fair value less estimated costs
to sell, unless fair value cannot be reliably measured.
Agricultural produce is measured at fair value less estimated costs to sell at the point of harvest.
The gain on initial recognition of biological assets at fair value less costs to sell, and changes in fair value less
costs to sell of biological assets during a period are included in profit or loss for the period in which it arises as
other operating income.
2.35. Consolidated Statement of Cash-flows
Cash flows arising from the operating, investing or financing activities are reported in the Statement of Cash-
Flows of the Group primarily on a gross basis. Net basis reporting are applied by the Group in the following
cases:
- when the cash flows reflect the activities of the customer rather than those of the Group, and
- for items in which the turnover is quick, the amounts are large, and the maturities are short.
For the purposes of reporting Consolidated Statement of Cash-flows, cash and cash equivalents include cash, due
from banks and balances with the National Banks, excluding the compulsory reserve established by the National
Banks. This line item shows balances of HUF and foreign currency cash amounts, and sight deposit from NBH
and from other banks, furthermore balances of current accounts.
Consolidated cash-flows from hedging activities are classified in the same category as the item being hedged.
The unrealized gains and losses from the translation of monetary items to the closing foreign exchange rates and
unrealized gains and losses from derivative financial instruments are presented net as operating activity
separately in the Consolidated Statement of Cash-flows for the monetary items which have been revaluated.
31
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.36. Segment reporting
IFRS 8 Operating Segments requires operating segments to be identified on the basis of internal reports about
components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate
resources to the segments and to assess their performance.
Based on the above, the segments identified by the Group are the business and geographical segments.
The Group’s operating segments under IFRS 8 are therefore as follows: OTP Core Hungary, Russia, Ukraine,
Bulgaria, Romania, Serbia, Croatia, Montenegro, Albania, Moldova, Slovenia, Merkantil Group, Asset
Management subsidiaries, Other subsidiaries, Corporate Center.
2.37. Comparative balances
Reclassification of certain business tax, innovation contribution and other lines in the Consolidated
Statement of Profit or Loss
The Goup has reviewed prescriptions related to business tax and innovation contribution, the determination of
their tax base and their effects on payment obligation. As a result of the review the local business tax and
innovation contribution have been reclassified to income tax in line with banking industry practice. In these
Consolidated Financial Statements prepared for the year ended 31 December 2021 the Group presents these
taxes as income tax and reclassified the financial information for comparative periods.
There are other lines in the Consolidated Statement of Profit or Loss which are presented on separate lines like:
derecognition of financial assets at amortized cost, modification loss and net result on derivative instruments, in
the Consolidated Statement of Financial Position there is provision for conditional liability to be separated from
those items, results which previously contained them. While gains on securities mandatorily at fair value through
profi or loss was presented previously among Gains on securities now it is presented among Fair value
adjustment on financial instruments at fair value through profit or loss. All these reclassifications were necessary
to improve presentation.
The Group has reclassified the presentation of the detailed notes to the amended Consolidated Statement of
Financial Position and Consolidated Statement of Profit or Loss line items for comparative information in
accordance with the new values. These amendments have been marked “Reclassified” by the Group.
Amendments to the information published in the supplementary annexes concerned the following supplementary
notes:
- Note 16 Other assets
- Note 24 Other liabilities
- Note 31 Loss allowances / impairment / provisions
- Note 33 Gains and losses by transactions
- Note 35 Income tax
Except as described above these Consolidated Financial Statements are prepared in accordance with the same
accounting policies in all respects as the Consolidated Financial Statements prepared in accordance with IFRS as
adopted by the European Union for the year ended 31 December 2020.
Line item
2021
2020
Revised
presentation
Reclassification
of business tax
and innovation
contribution
Reclassification
of provisions
2020 As
previously
presented
Current income tax receivables
Other assets
Further assets items
TOTAL ASSETS
Current income tax payable
Provisions
Other liabilities
Further liability items
TOTAL LIABILITIES
29,978
276,785
27,246,621
27,553,384
36,581
119,799
598,081
23,762,157
24,516,618
39,171
266,239
23,030,431
23,335,841
29,528
116,467
489,426
20,163,308
20,798,729
235
(235)
-
-
1,844
-
(1,844)
-
-
-
-
-
-
-
116,467
(116,467)
-
-
38,936
266,474
23,030,431
23,335,841
27,684
-
607,737
20,163,308
20,798,729
32
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
2.37. Comparative balances [continued]
Line item
2021
2020 Revised
presentation
Reclassification of
business tax and
innovation
contribution
Reclassification of
amounts related to
derivative
instruments
Reclassification of
gains on securities
mandatorily at fair
value through profi
or loss
Reclassification of
amounts related to
modification losses
Reclassification of
amounts related to
derecognition of
financial assets at
amortized cost
2020 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
922,539
194,920
1,117,459
(243,149)
841,901
135,986
977,887
(195,216)
and on repo receivables
(27,721)
(172,520)
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
Gain from derecognition of financial assets
at amortized cost
Modification loss
Net profit from fees and commissions
Foreign exchange gains, net
Gains on securities, net
Fair value adjustment on financial instruments
at fair value through profit or loss
Gain on derivative instruments, net
Further non-operating items
Net operating income
Other general expenses
Further administrative expenses
Other administrative expenses
Profit before income tax
Income tax expense
Net profit for the year
(16,289)
(3,635)
(47,645)
(3,262)
(15,093)
(190,875)
826,665
591,796
1,885
(13,672)
442,174
(4,075)
5,560
(532)
6,798
11,244
18,995
(340,684)
(406,928)
(747,612)
528,435
(72,123)
456,312
3,380
(29,773)
397,633
7,864
7,465
4,843
11,340
(5,459)
26,053
(308,642)
(382,483)
(691,125)
297,964
(43,918)
254,046
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16,542
16,542
16,542
(16,542)
-
-
-
-
-
-
-
-
-
-
-
-
-
(11,340)
-
-
11,340
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(7,239)
7,239
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
841,901
135,986
977,887
(195,216)
29,773
(1,978)
(200,315)
-
-
29,773
29,773
-
(29,773)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,978)
(3,262)
(15,093)
(218,670)
(1,978)
564,001
3,380
-
-
-
(1,402)
-
-
-
(1,402)
-
-
-
-
-
-
-
-
397,633
19,204
16,106
(2,396)
(5,459)
27,455
(308,642)
(399,025)
(707,667)
281,422
(27,376)
254,046
33
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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 make judgement about estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities as at the date of the financial statements and their
reported amounts of revenues and expenses during the reporting period. The estimates and associated
assumptions are based on the expected loss and other factors that are considered to be relevant. The estimates
and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized
in the period. Actual results could differ from those estimates. Significant areas of subjective judgement include:
3.1. Loss allowances on financial instruments exposed to credit risk
The Group regularly assesses its financial instruments portfolio for loss allowance. Management determines the
adequacy of the loss allowances based upon reviews of individual loans and placements, recent loss experience,
current economic conditions, the risk characteristics of the various categories of loans and other pertinent factors.
The use of the three stage model was implemented for IFRS 9 purposes. The impairment methodology is used
to classify financial instruments in order to determine whether credit risk has significantly increased since
initial recognition and to identify the credit-impaired assets. For instruments with credit-impairment or
significant increase of credit risk lifetime expected losses are recognized (see more details in Note 37.1.)
3.2. Valuation of instruments without direct quotations
Financial instruments without direct quotations in an active market are valued using the valuation model
technique. The models are regularly reviewed and each model is calibrated for the most recent available market
data. While the models are built only on available data, their use is subject to certain assumptions and estimates
(e.g. correlations, volatilities, etc.). Changes in the model assumptions may affect the reported fair value of the
relevant financial instruments.
IFRS 13 Fair Value Measurement seeks to increase the consistency and comparability in fair value
measurements and related disclosures through a 'fair value hierarchy'. 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 Group
evaluates the levelling at each reporting period on an instrument-by-instrument basis and reclassifies instruments
when necessary, based on the facts at the beginning of the reporting period. The objective of a fair value
measurement is to estimate the price at which an orderly transaction to sell the asset or to transfer the liability
would take place between market participants at the measurement date under current market conditions.
3.3. Provisions
Provision is recognized and measured for commitments to extend credit and for warranties arising from banking
activities based on IFRS 9 Financial Instruments. Provision for these instruments is recognized based on the
credit conversion factor, which shows the proportion of the undrawn credit line that will probably be drawn.
Other provisions are recognized and measured based on IAS 37 Provisions, Contingent Liabilities and
Contingent Assets. The Group is involved in a number of ongoing legal disputes. Based upon historical
experience and expert reports, the Group assesses the developments in these cases, and the likelihood and the
amount of potential financial losses which are appropriately provided for. (See Note 24.)
Other provision includes provision for litigation, provision for retirement and expected liabilities and provision
for confirmed letter of credit.
A provision is recognized by the Group when it has a present obligation as a result of a past event, it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable
estimate can be made of the amount of the obligation.
34
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 3:
SIGNIFICANT ACCOUNTING ESTIMATES AND DECISIONS IN THE
APPLICATION OF ACCOUNTING POLICIES [continued]
3.4.
Impairment on goodwill
Goodwill acquired in a business combination is tested for impairment annually or more frequently when there is
an indication that the unit might be impaired, in accordance with IAS 36 “Impairment of assets”.
The Group calculates the fair value based 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 the impairment need on goodwill
based on the strategic factors and financial data of its cash-generating units. In the calculation of the goodwill
impairment, also the expectations about possible variations in the amount or timing of those future cash-flows,
the time value of money, represented by the current market risk-free rate of interest and other factors are
reflected.
3.5. Business model
A business model refers to how the Group manages its financial instruments in order to generate cash flows. It is
determined at a level that reflects how groups of financial instruments are managed rather than at an instrument
level.
The financial assets held by the Group are classified into three categories depending on the business model
within the financial assets are managed.
Business model whose objective is to hold financial assets in order to collect contractual cash flows.
Some sales can be consistent with hold to collect business model and the Group assesses the nature,
frequency and significance of any sales occurring. The Group does not consider the sale frequent when
at least six months have elapsed between sales. The significant sales are those when the sales exceed
2% of the total hold to collect portfolio. Within this business model the Group manages mainly loans
and advances and long term securities and other financial assets.
Business model whose objective is achieved by both collecting contractual cash flows and selling
financial assets. Within this business model the Group only manages securities.
Business model whose objective is to achieve gains in a short term period. Within this business model
the Group manages securities and derivative financial instrument.
If cash flows are realised in a way that is different from the expectations at the date that the Bank/Group assessed
the business model, that does not give rise to a prior error in the Group’s financial statements nor does it change
the classification of the remaining financial assets held in that business model.
When, and only when the Group changes its business model for managing financial assets it reclassifies all
affected assets. Such changes are determined by the Group’s senior management as a result of external or
internal changes and must be significant to the Group’s operations and demonstrable to external parties. The
Group shall not reclassify any financial liability.
3.6. Contractual cash-flow characteristics of financial assets
Classification of a financial asset is based on the characteristics of its contractual cash flows if the financial asset
is held within a business model whose objective is to hold assets to collect contractual cash flows or within a
business model whose objective is achieved by both collecting contractual cash flows and selling financial
assets.
The Group should determine whether the asset’s contractual cash flows are solely payments of principal and
interest on the principal amount outstanding (SPPI test). Contractual cash flows that are solely payments of
principal and interest on the principal amount outstanding are consistent with a basic lending arrangement.
Contractual terms that introduce exposure to risks or volatility in the contractual cash flows that is unrelated to a
basic lending arrangement, such as exposure to changes in equity prices or commodity prices, do not give rise to
contractual cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Group assesses whether contractual cash flows are solely payments of principal and interest on the principal
amount outstanding for the currency in which the financial asset is denominated.
35
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 3:
SIGNIFICANT ACCOUNTING ESTIMATES AND DECISIONS IN THE
APPLICATION OF ACCOUNTING POLICIES [continued]
3.6. Contractual cash-flow characteristics of financial assets [continued]
The time value of money is the element of interest that provides consideration for only the passage of time.
However, in some cases, the time value of money element may be modified. In such cases, the Group assesses
the modification to determine whether the contractual cash flows represent solely payments of principal and
interest on the principal amount outstanding.
When assessing a modified time value of money element, the objective is to determine how different the
undiscounted contractual cash flows could be from undiscounted cash flows that would arise if the time value of
money element was not modified (the benchmark cash flows). The benchmark instrument can be an actual or a
hypothetical financial asset. If the undiscounted contractual cash flows significantly – above 2% – differ from
the undiscounted benchmark cash flows, the financial asset should be subsequently measured at fair value
through profit or loss.
NOTE 4:
IMPACT OF CORONA VIRUS (COVID-19)
Risks relating to the impact of COVID-19 pandemic
The COVID-19 pandemic has had, and continues to have, a material impact on businesses around the world and
the economic environment. There are a number of factors associated with the COVID-19 pandemic and its
impact on global economies that could have a material adverse effect on (among other things) the profitability,
capital and liquidity of financial institutions such as the OTP Group.
The COVID-19 pandemic has caused disruption to the OTP Group’s customers, suppliers and staff. A number of
jurisdictions in which the OTP Group operates have implemented severe restrictions on the movement of their
respective populations, with a resultant significant impact on economic activity in those jurisdictions. These
restrictions are being determined by the governments of individual jurisdictions and impacts (including the
timing of implementation and any subsequent lifting of restrictions) may vary from jurisdiction to jurisdiction. It
remains unclear how this will evolve through 2020 and the OTP Group continues to monitor the situation
closely. However, the OTP Group's ability to conduct business may be adversely affected by disruptions to its
infrastructure, business processes and technology services, resulting from the unavailability of staff due to illness
or the failure of third parties to supply services. This may cause significant customer detriment, costs to
reimburse losses incurred by the OTP Group’s customers, and reputational damage.
Furthermore, the OTP Group relies on models to support a broad range of business and risk management
activities, including informing business decisions and strategies, measuring and limiting risk, valuing exposures,
conducting stress testing and assessing capital adequacy. Models are, by their nature, imperfect and incomplete
representations of reality because they rely on assumptions and inputs, and as such assumptions may later
potentially prove to be incorrect, this can affect the accuracy of their outputs. This may be exacerbated when
dealing with unprecedented scenarios, such as the COVID-19 pandemic, due to the lack of reliable historical
reference points and data.
Any and all such events mentioned above could have a material adverse effect on the OTP Group’s business,
financial condition, results of operations, prospects, liquidity, capital position and credit ratings, as well as on the
OTP Group’s customers, employees and suppliers.
Summary of economic policy measures made in response to the pandemic and other important
developments, as well as post-balance sheet events
In the section below, the measures and developments which have been made since the beginning of 2021, and –
in OTP Bank’s view – are relevant and have materially influenced / can materially influence the operation of the
Group members.
OTP Bank excludes any liability for the completeness and accuracy of the measures presented herein.
36
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 4:
IMPACT OF CORONA VIRUS (COVID-19) [continued]
Summary of economic policy measures made in response to the pandemic and other important
developments, as well as post-balance sheet events [continued]
Hungary
Effective from 13 January 2021 the National Bank of Hungary („NBH”) extended the available amount for
the Bond Funding for Growth scheme by HUF 750 billion to HUF 1,150 billion. At the same time it decided
to increase the maximum maturity of corporate bonds that can be purchased by the central bank from 20 to
30 years. Also, the NBH’s exposure limit to a specific group was revised from HUF 50 billion to HUF 70
billion.
On 4 February 2021, the Prime Minister announced an interest-free loan programme for companies in trouble
in the wake of the pandemic. According to Government Resolution 1038/2021. (II. 5.) the programme will be
administered by the Hungarian Development Bank, and the available amount under the programme will be
HUF 100 billion. Companies can take out maximum HUF 10 million each for the purpose of covering wages
and social contributions, overhead costs, general operating expenses and inventory financing. The client
interest rate is 0%, the loan tenor can be up to 10 years, and the servicing of the loan will start after a 3 year
grace period. The scope of eligible entities was determined in agreement with the Hungarian Chamber of
Commerce and Industry.
On 1 April 2021, Moody’s rating agency upgraded the outlook on the Hungarian banking sector from
negative to stable.
On 6 April 2021, the NBH raised the available amount for the Funding for Growth Go! Scheme by HUF 500
billion to HUF 3,000 billion.
On 18 May 2021, the Hungarian Development Bank revealed that the interest-free, maximum HUF 10
million loan for micro- and small enterprises (the so-called interest-free restart quick loan) can be applied for
by companies whose revenues in 2020 plummeted by more than 30%, irrespective of the scope of activities
(certain other criteria must be met).
On 25 May 2021, the National Bank of Hungary did not touch the benchmark interest rates, but stressed that
the central bank is ready to tighten monetary conditions in a proactive manner to the extent necessary in order
to ensure price stability and to mitigate inflation risks.
On 9 June 2021, Viktor Orbán Prime Minister announced that their actual personal income tax payments (up
to the tax burden of the average wage) will be refunded to families raising kids in early-2022 provided that
the 2021 GDP growth surpasses 5.5%.
According to Government Decree No. 317/2021. (VI. 9.) released on 9 June 2021 the payment moratorium
was extended with unchanged conditions until 30 September 2021.
On 9 June 2021, Viktor Orbán Prime Minister announced that once the central bank phases out its Funding
for Growth scheme, the government will have to shoulder the financial burden of providing cheap (not higher
than 0.5% interest rate) subsidized loans to domestic micro and small enterprises, through the Széchenyi
Card programme by KAVOSZ. On 9 June László Krisán, CEO of KAVOSZ revealed the details of the
Széchenyi Card GO! programme launched on 1 July 2021.
On its 22 June 2021 meeting the Monetary Council embarked on a rate hike cycle: the base rate was
increased by 30 bps to 0.9%. Also, effective from 24 June 2021 the National Bank of Hungary raised the one-
week deposit rate to the level of the base rate.
The Monetary Council has started to transform the use of instruments having an effect at longer maturities.
Accordingly, with the exhaustion of the HUF 3,000 billion available amount, the Funding for Growth Go!
programme will be phased out. However, the central bank continues to consider the government securities
purchase programme to be crucial in its set of monetary policy instruments. The central bank will continue to
use the programme by maintaining a lasting presence in the market, taking a flexible approach to changing
the quantity and structure of weekly securities purchases, to the extent and for the time necessary.
On 2 July 2021, the National Bank of Hungary recommended in its circular that financial institutions should
abstain from charging prepayment fees in the case of full or partial prepayment of deferred interest and fee
accumulated during the term of the moratorium. The central bank also recommended free of charge loan
contract modification if borrowers voluntarily undertake higher monthly instalments in order to shorten the
remaining maturity.
37
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 4:
IMPACT OF CORONA VIRUS (COVID-19) [continued]
Summary of economic policy measures made in response to the pandemic and other important
developments, as well as post-balance sheet events [continued]
Hungary [continued]
On 6 July 2021, the National Bank of Hungary announced that with the aim of boosting green mortgage
lending, it decided to launch the Green Mortgage Bond Purchase Programme and the FGS Green Home
Programme as the first steps of the implementation of the new Green Monetary Policy Toolkit Strategy:
o The strategic goal of the Green Mortgage Bond Purchase Programme is to contribute to the
development of the domestic green mortgage bond market through targeted purchases and, through
this, encourage green mortgage loan activities. The central bank will review the programme when the
HUF 200 billion purchase volume has been reached. Additionally, the central bank also decided to re-
launch the Mortgage Bond Rollover Facility for mortgage bonds without green rating.
o The National Bank of Hungary will launch the Green Home Programme in October 2021 with a total
limit of HUF 200 billion as part of the Funding for Growth Scheme (FGS). As in the previous phases
of the FGS, the NBH will provide refinancing operation to credit institutions at 0% interest, which
will be lent to residential customers at a maximum of 2.5%, fixed interest rate until the end of the
maturity period. Under the scheme, loans of up to HUF 70 million and a maximum term of 25 years
can be granted for constructions or purchases of new, highly energy-efficient residential real estates.
On 23 July 2021, the European Central Bank announced that restrictions concerning dividend payments
won’t be prolonged beyond the previously effective deadline of 30 September 2021.
A Government Decree was published on 23 July 2021 facilitating the VAT refund in the case of newly built
houses in brownfield sites.
On 27 July 2021, the National Bank of Hungary raised the base rate by 30 bps to 1.2%, then on 29 July the
one-week deposit rate was hiked to the same level, by the same magnitude.
On 30 July 2021, the results of the 2021 EU-wide stress test conducted by the European Banking Authority
were revealed. The fully loaded consolidated Common Equity Tier 1 („CET1”) ratio of OTP Bank Plc. would
change to 16.3% under the baseline scenario and to 11.2% under the adverse scenario in 2023, compared to
14.2% (fully loaded „CET1”) as at the end of 2020.
On 12 August 2021, the National Bank of Hungary announced that its management circular has been
reviewed. According to one of the amendments, the central bank extended the deadline concerning
restrictions on dividend payment and treasury share purchases until the end of 2021. Credit institutions might
be exempted from the dividend payment ban only if they meet certain strict conditions.
On 24 August 2021, the National Bank of Hungary raised the base rate by 30 bps to 1.5%. Additionally, the
central bank decided to begin gradually withdrawing the government securities purchase programme while
considering aspects of maintaining market stability. Also, the central bank increased the available amount
under the Bond Funding for Growth scheme by HUF 400 billion to HUF 1,550 billion.
Pursuant to Government Decree 536/2021. (IX. 15.) published on 15 September, the Government decided to
extend the debt repayment moratorium with the following conditions:
o The blanket moratorium was extended by an additional month, until the end of October, in an
unchanged form.
o From the beginning of November 2021 until 30 June 2022 only the eligible borrowers can participate
in the moratorium provided that they submitted a request to their banks about their intention to stay.
So, the extension beyond October is not automatic: borrowers had to submit a notification to their
bank (opt-in). Eligible retail borrowers include private individuals whose income fell compared to the
previous period, unemployed people, fostered workers, families raising children below the age of 25
or expecting a baby, and pensioners (for details see the relevant decree). Eligible companies shall
fulfil the following criteria: more than 25% decline in revenues in the 18 months period preceding the
submission of the request to participate, and if the company has not concluded a new subsidized loan
contract since 18 March 2020. During the term of the one-month extension until the end of October,
eligible clients could submit the necessary documents to their banks in order to stay in the scheme
until June 2022, so this one-month lengthening could be regarded as technical.
According to Government Decree 537/2021. (IX. 15.) published on 15 September, credit institutions shall re-
calculate the interest deferred during the period spent in the moratorium in the case of overdraft loans and
credit card exposures. The base for the re-calculation shall be the NBH’s statistical data for the average
annualized cash loan interest rate published for February 2020. The difference between the deferred interest
booked according to the original contract and the re-calculated amount shall be refunded to the borrowers by
way of crediting the borrowers’ account with the due amount.
38
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 4:
IMPACT OF CORONA VIRUS (COVID-19) [continued]
Summary of economic policy measures made in response to the pandemic and other important
developments, as well as post-balance sheet events [continued]
Hungary [continued]
On 21 September 2021, the National Bank of Hungary hiked the base rate by 15 bps to 1.65%. Furthermore,
the NBH continued to gradually withdraw the government securities purchase programme.
On 4 October 2021, the National Bank of Hungary launched the FGS Green Home Programme as part of its
green monetary policy toolkit strategy.
On 5 October 2021, OTP Mortgage Bank issued green covered bonds in the amount of HUF 90 billion.
On 19 October 2021, the National Bank of Hungary increased the base rate by 15 bps to 1.8%.
On 16 November 2021, the Monetary Council of the NBH hiked the base rate by 30 bps to 2.1%. The Deputy
Governor of NBH stressed after the Monetary Council meeting that the NBH is ready to set the rate of the 1-
week central bank deposit above the level of the base rate already from 18 November. Accordingly, on 18
November the NBH raised the rate of the 1-week deposit facility to 2.5%, and the central bank accepted all
offers at the tender. Consequently, the 1-week deposit has become the effective rate for the banking sector
determining the marginal asset yields.
On its weekly one-week deposit tender on 25 November 2021 the NBH offered an interest rate of 2.9%.
On 30 November 2021, the NBH’s Monetary Council widened the interest rate corridor and also decided to
make it asymmetric. Accordingly, the lower bound of the corridor was raised by 45 bps and the upper one by
105 bps.
On 2 December 2021, the NBH hiked the rate of the 1-week central bank deposit by 20 bps to 3.1%.
On 9 December 2021, the NBH hiked the rate of the 1-week central bank deposit by 20 bps to 3.3%.
On 14 December 2021, the NBH’s Monetary Council raised the base rate by 30 bps to 2.4% and made a
decision to phase out both the Bond Funding for Growth programme and the government bond purchase
programme.
On 16 December 2021, the NBH hiked the rate of the 1-week central bank deposit by 30 bps to 3.6%.
Mr. Viktor Orbán Prime Minister announced on 22 December 2021 that the government will introduce an
interest rate cap for certain retail mortgage loans (for example whose pricing is linked to a reference rate, but
the legislation does not apply to those with longer fixation periods) for the period between 1 January and 30
June 2022. Accordingly, the affected mortgages’ reference rate cannot be higher than the relevant reference
rate as at 27 October 2021. Furthermore, banks had to inform their borrowers about the interest rate risk and
offer amendments to the contract until 31 January 2022. Details were laid down by Government Decree
782/2021 (XII. 24.) and Decree 1/2022 (I. 3.) by the Prime Minister’s Office.
On 23 December 2021, the NBH hiked the rate of the 1-week central bank deposit by 20 bps to 3.8%.
In its release published on 27 December 2021 the NBH said that from 1 January 2022 Hungarian credit
institutions can pay dividends and buy back shares with shareholder remuneration purposes again. Thus, the
NBH did not extend these restrictions in line with the similar step taken by the ECB at the end of September.
On 30 December 2021, the NBH hiked the rate of the 1-week central bank deposit by 20 bps to 4.0%.
Against the initially planned 2 pps social security contribution cut effective from July 2022, the government
reduced employers’ taxes by 4 pps already from 1 January 2022 (the 1.5% vocational training contribution
was abolished and the social contribution taxes were cut by 2.5 pps).
On 25 January 2022, the NBH hiked the base rate by 50 bps to 2.9%.
On 27 January 2022, the NBH hiked the rate of the 1-week central bank deposit by 30 bps to 4.3%.
On 15 February 2022, the CSO revealed the final GDP growth figures: accordingly, in 4Q 2021 the quarterly
expansion of 2.1% was stronger than expected, lifting the annual growth rate to 7.1% in 2021 as a whole
(seasonally and working day adjusted). Mr. Mihály Varga (Minister of Finance) announced that the
government expects 5.9% growth for 2022.
39
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 4:
IMPACT OF CORONA VIRUS (COVID-19) [continued]
Summary of economic policy measures made in response to the pandemic and other important
developments, as well as post-balance sheet events [continued]
Bulgaria
On 19 February 2021, Fitch rating agency affirmed the credit rating of Bulgaria at ‘BBB’, while changing the
outlook from stable to positive.
The parliamentary elections held on 4 April 2021 were won by the GERB party led by Mr. Boyko Borisov,
the previous prime minister.
Serbia
On 12 March 2021, the credit rating of Serbia was upgraded by Moody’s from ’Ba3’ to ’Ba2’. The outlook is
stable.
At the end of April 2021 the integration process of the two Serbian banks was successfully completed, thus
the merger process came to an end from all legal, operational and organizational point of view.
Slovenia
On 2 February 2022, the Slovenian Parliament passed a law requiring banks to compensate customers for
losses arising from FX rate depreciation of more than 10% in the case of CHF mortgages disbursed between
2004 and 2010. The law came into force 15 days after its Parliamentary approval, and under the law banks
have 60 days to notify their customers about the reimbursement and the recalculated new instalments. SKB
Banka intends to file a constitutional objection against the law, and plans to submit the appeal to the local
Constitutional Court after the law’s entry into force. A provision is expected to be made in March 2022 for
the potential negative impact.
Romania
On 15 January 2021, the National Bank of Romania decided to reduce the key interest rate by 25 bps to
1.25%.
On 16 April 2021, Standard & Poor’s changed outlook on the country’s „BBB-" credit rating from negative
to stable.
On 5 October 2021, the central bank increased the reference rate by 25 bps to 1.5%.
The National Bank of Romania raised the key interest rate by 25 bps on 10 January 2022, and by further 50
bps on 10 February 2022 to 2.5%.
Ukraine
• On 4 March 2021, the Ukrainian central bank increased the base rate by 50 bps to 6.5%.
• On 15 April 2021, the Ukrainian central bank increased the base by 100 bps to 7.5%.
• On 23 July 2021 the National Bank of Ukraine increased the base rate by 50 bps to 8%.
• On 6 August 2021, Fitch Ratings changed outlook on the country’s „B" credit rating from stable to positive.
• On 9 September 2021, the National Bank of Ukraine raised the base rate by 50 bps to 8.5%.
• On 20 January 2022, the National Bank of Ukraine raised its key interest rate by 1 pp to 10%.
Russia
• On 20 January 2021, the Central Bank of Russia published its 2021-2022 road map for regulating consumer
lending, as a result loosening measures taken in 2020 to facilitate lending will be reversed through higher risk
weights being introduced.
• On 19 March 2021, the Russian central bank hiked the base rate from 4.25% to 4.5%.
• On 23 April 2021, the Russian central bank hiked the base rate from 4.5% to 5%.
• On 23 July 2021, the Central Bank of Russia hiked the base rate by 100 bps, to 6.5%.
• On 30 July 2021, the Central Bank of Russia announced that the risk weight of local currency denominated
unsecured consumer loans granted after 1 October will be increased.
• On 10 September 2021, the Russian national bank hiked the base rate by 25 bps to 6.75%.
• On 22 October 2021, the Russian central bank raised the base rate by 75 bps to 7.5%.
• On 11 February 2022, CBR hiked the base rate by 100 bps to 9.5%.
40
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 4:
IMPACT OF CORONA VIRUS (COVID-19) [continued]
Interest rate cap
For the period between 1 January and 30 June 2022 the government introduced an interest rate cap for variable-
rate retail mortgage loans, and with its decision announced on 18 February, for housing purposes financial
leasing contracts, too. Accordingly, the affected exposures’ reference rate cannot be higher than the relevant
reference rate as at 27 October 2021.
The modification loss related to the interest rate cap for variable rate mortgage loans announced on 22 December
2021 was recognized in the Bank’s 2021 financial accounts. The extension of the interest rate cap to housing
purposes financial leasing contracts does not have a significant negative effect.
Moratorium, one-off effect
In Hungary the first phase of the moratorium on loan payments was effective from 19 March 2020 to 31
December 2020. At the end of 2020 the moratorium was extended in unchanged form for the period between 1
January 2021 and 30 June 2021. Furthermore, according to Government Decree No. 317/2021. (VI. 9.) released
on 9 June 2021 the payment moratorium was extended with unchanged conditions until 30 September 2021.
Pursuant to Government Decree 536/2021. (IX. 15.) published on 15 September, the Government decided to
extend the debt repayment moratorium: the blanket moratorium was extended by an additional month, until the
end of October, in an unchanged form. Furthermore, from the beginning of November 2021 until 30 June 2022
only the eligible borrowers can participate in the moratorium provided that they submitted a request to their
banks about their intention to stay.
During the term of the moratorium OTP Bank accrues the unpaid interest in its statement of recognized income,
amongst the revenues. At the same time, due to the fact that interest cannot be charged on the unpaid interest,
and the unpaid interest will be repaid later, in the course of 2020 and 2021 altogether HUF 43.3 billion after tax
loss emerged in Hungary and Serbia altogether. Within that amount there was a -HUF 1.7 billion (after tax)
negative impact booked in December 2020 in relation to the Serbian deferral scheme, as the original interest
calculation method was changed by the local regulator (originally the compound interest method was allowed by
the law in Serbia, but charging interest on deferred interest was later retroactively disallowed by the regulator).
Loan volumes under the Hungarian payment holiday followed a declining trend till the end of October 2021,
then from November the participation dropped materially due to the changes to the structure. At the end of 2021
the total household and corporate exposures remaining under the moratorium comprised HUF 245 billion at OTP
Core and Merkantil Group, which made up 4.1% of the total gross loan portfolio of those two entities.
The following table below shows the volume of loans in moratorium as at 31 December 2021 in OTP Group and
the ratio of these loans of the portfolio by countries:
OTP Core
Merkantil Group
OTP banka Srbija Group
(Serbia)
DSK Group (Bulgaria)
SKB Banka d.d. Ljubljana
(Slovenia)
OTP banka d.d. (Croatia)
Crnogorska komercijalna
banka Group
(Montenegro)
JSC “OTP Bank” (Russia)
Total
Current volume in
moratorium
(million LCY)
237,027
8,281
Current volume
in moratorium
(million HUF)
237,027
8,281
276
2
0.02
55
0.08
269
868
342
7
2,722
28
1,170
Gross loans
(million HUF)
Current
participation
ratio
5,549,019
440,621
1,715,347
2,922,886
984,605
1,811,376
4.27%
1.88%
0.05%
0.01%
0.001%
0.15%
366,369
753,373
0.01%
0.16%
250,445
14,543,596
41
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 4:
IMPACT OF CORONA VIRUS (COVID-19) [continued]
The following table below shows the volume of loans in moratorium as at 31 December 2020 in OTP Group and
the ratio of these loans of the portfolio by countries:
OTP Core
OTP banka d.d. (Croatia)
Merkantil Group
SKB Banka d.d. Ljubljana
(Slovenia)
OTP Bank Romania S.A.
(Romania)
DSK Group (Bulgaria)
Crnogorska komercijalna
banka Group
(Montenegro)
JSC “OTP Bank” (Russia)
Total
Current volume in
moratorium
(million LCY)
1,760,231
3,372
120,379
Current volume
in moratorium
(million HUF)
1,760,231
163,052
120,379
Gross loans
(million HUF)
Current
participation
ratio
4,631,974
1,642,170
416,987
54,835
909,439
40,853
11,190
861,393
2,634,870
38.00%
9.93%
28.87%
6.03%
4.74%
0.42%
4,589
2,907
362,067
597,849
1.27%
0.49%
2,158,036
12,056,749
150
545
60
13
734
Financial assets modified during the period related to moratorium in the Group for the year ended 31
December 2021 (in HUF mn)
Modification due to prolongation of deadline of covid moratoria until 30 September:
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
Group
1,175,230
(66,066)
1,109,164
(6,620)
1,102,544
Modification due to prolongation of deadline of covid moratoria until 31 October:
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
Group
1,166,115
(69,415)
1,096,700
(2,104)
1,094,596
In the case of credit card and overdraft loans interest charged during the moratoria period should be refunded to
the debtors in amount determined as a difference between the charged interest and a premoratoria personal loan
interest at 11,99%. The Bank has managed this government measure as loan agreement modification in the
financial statements.
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
57,892
(9,234)
48,658
(1,983)
46,675
42
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 4:
IMPACT OF CORONA VIRUS (COVID-19) [continued]
Financial assets modified during the period related to moratorium in the Group for the year ended 31
December 2021 (in HUF mn) [continued]
Modification due to prolongation of deadline of covid moratoria until 30 June 2022:
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
Group
113,728
(25,428)
88,300
(2,838)
85,462
Modification due to temporarily fixing of loan with variable interest rate:
On 24 December 2021 new regulation was issued on fixing of retail loan product’s interest, under that interest
rates of mortgage loans with variable interest shall be fixed at reference rates of 27 October 2021, predictably till
30 June 2022.
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
Group
321,323
(9,317)
312,006
(3,397)
308,609
Financial assets modified during the period related to moratorium in the Group for the year ended 31
December 2020 (in HUF mn):
Gross carrying amount before modification
Loss allowance before modification
Net amortized cost before modification
Modification loss due to covid moratorium
Net amortized cost after modification
Hungary
Serbia
1,119,943
(61,445)
1,058,498
(26,774)
1,031,724
53,080
(9,881)
43,199
(239)
42,960
43
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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
Impairment on amounts due from bank and
balances with the National Banks
Total
Compulsory reserve set by
the National Banks1
Cash and cash equivalents
2021
2020
87,489
409,045
496,534
113,492
372,972
486,464
2021
2020
83,540
1,977,069
2,060,609
-
-
-
208,074
1,675,628
1,883,702
-
62,146
62,146
(1,108)
-
2,556,035
2,432,312
(854,474)
(757,535)
1,701,561
1,674,777
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
2021
2020
851,053
523,205
1,374,258
162,774
50,823
213,597
251,206
729,249
980,455
136,418
33,359
169,777
Loss allowance on placements
(2,994)
(1,489)
Total
1,584,861
1,148,743
1 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.
44
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 6:
PLACEMENTS WITH OTHER BANKS, NET OF LOSS ALLOWANCE FOR
PLACEMENTS (in HUF mn) [continued]
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
Use of loss allowance for the period
Foreign currency translation difference
Closing balance
Interest conditions of placements with other banks:
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 (%)
NOTE 7:
REPO RECEIVABLES (in HUF mn)
Within one year
In HUF
In foreign currency
2021
2020
1,489
25,133
(23,613)
(112)
97
2,994
478
16,476
(15,629)
-
164
1,489
2021
2020
(1.50)% - 5.90%
0.00% - 3.84%
(5.00)% - 29.00%
(17.33)% - 5.50%
2021
1.52%
2021
33,710
27,632
61,342
2020
0.93%
2020
183,656
7,485
191,141
Loss allowance on repo receivables
(290)
(292)
Total
61,052
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
2021
292
1,112
(1,124)
10
290
2020
62
362
(125)
(7)
292
45
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 7:
REPO RECEIVABLES (in HUF mn) [continued]
Interest conditions of repo receivables (%):
Interest rates on repo receivables denominated
in HUF
Interest rates on repo receivables denominated
in foreign currency
2021
2020
3.04% - 3.20 %
(0.10)% - 0.90%
(0.58)% - 9.62%
(0.55)% - 4.15%
NOTE 8:
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (in HUF mn)
Securities held for trading
Government bonds
Equity instruments and fund units
Corporate bonds
Discounted Treasury bills
Mortgage bonds
Other interest bearing securities
Other non-interest bearing securities
Non-trading securities mandatorily at
fair value through profit or loss
Equity instruments, shares and open-ended fund units
Bonds
Debt securities designated at
fair value through profit or loss
Total
Positive fair value of derivative financial assets held for trading
Foreign exchange swaps held for trading
Interest rate swaps held for trading
Commodity swaps
CCIRS and mark-to-market CCIRS
held -for trading 1
Foreign exchange forward contracts held for trading
Held-for-trading option contracts
Held-for-trading forward security agreement
Other derivative transactions held for trading2
Total
2021
97,531
1,173
740
923
101
1,347
1,695
103,510
44,894
8,509
53,403
2020
38,036
3,740
-
12,721
-
2,075
-
56,572
46,063
11,514
57,577
-
2,235
156,913
116,384
2021
38,728
59,504
51,523
11,758
10,790
1,285
-
10,896
184,484
2020
42,646
36,922
9,695
7,359
8,730
4,268
22
7,981
117,623
Total
341,397
234,007
1 CCIRS: Cross Currency Interest Rate Swaps (See Note 2.6.3.)
2 Other category includes: equity swaps, option and index futures.
46
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 8:
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (in HUF mn)
[continued]
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 (%):
Interest rates on securities held for trading
denominated in HUF
Interest rates on securities held for trading
denominated in foreign currency
2021
2020
30.46%
69.54%
100.0%
19.75%
80.25%
100.0%
2021
2020
28.31%
71.69%
100.00%
16.92%
83.08%
100.00%
2021
2020
0.00% - 6.75%
0.50% - 7.00%
0.00% - 9.57%
0.38% - 6.38%
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
2021
111
44,011
44,122
1,544
54,976
56,520
2,868
103,510
2020
78
17,147
17,225
1,370
34,237
35,607
3,740
56,572
47
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 8:
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (in HUF mn)
[continued]
Interest conditions and the remaining maturities of non-trading securities mandatorily measured at fair value
through profit or loss are as follows:
Over one year
With variable interest
With fixed interest
Non-interest bearing securities
Total
Profit from associates from shares measured
at fair value through profit or loss
2021
-
-
-
53,403
53,403
2021
3,893
2020
-
5,492
5,492
52,085
57,577
2020
75
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
2021
2020
57.11%
42.89%
100.00%
57.10%
42.90%
100.0%
2021
2020
Interest rates on non-trading securities mandatorily
measured at fair value through profit or loss
0.00% - 0.00%
0.00% - 2.50%
48
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 9:
SECURITIES AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (in
HUF mn)
Securities at fair value through other
comprehensive income
Government bonds
Corporate bonds
Listed securities:
In HUF
In foreign currency
Non-listed securities:
In HUF
In foreign currency
Mortgage bonds
Discounted Treasury bills
Interest bearing treasury bills
Securities issued by the National Bank of Hungary
Other securities
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
2021
2020
1,765,172
88,519
1,855,134
81,620
2,896
51,882
54,778
15,487
18,254
33,741
63,072
96,625
63,115
109,774
3,257
2,189,534
2,968
52,633
55,601
16,782
9,237
26,019
88,272
76,358
-
-
-
2,101,384
2021
2020
-
8,416
8,416
403
26,157
26,560
34,976
-
4,931
4,931
539
29,855
30,394
35,325
Total
2,224,510
2,136,709
An analysis of securities at fair value through other comprehensive income by currency (%):
Denominated in HUF
Denominated in foreign currency
Total
2021
2020
32.74%
67.26%
100.00%
36.62%
63.38%
100.0%
49
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 9:
SECURITIES AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
(in HUF mn) [continued]
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
Other strategic investments
Fair value
Dividend income from instruments held
at the reporting date
Total
Total fair values
Dividend income from instruments held
at the reporting date
2021
29,320
438
5,656
29
34,976
467
2020
27,502
180
7,823
43
35,325
223
During the year ended 31 December 2021 the Group sold HUF 65 million equity instruments designated to
measure at fair value through other comprehensive income while during the year ended 31 December 2020 there
wasn’t any sale transaction.
An analysis of government bonds by currency (%):
Denominated in HUF
Denominated in foreign currency
Total
2021
2020
24.29%
75.71%
100.00%
35.83%
64.17%
100.0%
Interest conditions of the security portfolio at fair value through other comprehensive income are as follows (%):
Interest rates on securities at fair value through
other comprehensive income denominated in HUF
1.25% - 7.00%
0.50% - 7.50%
2021
2020
Interest rates on securities at fair value through
other comprehensive income denominated
in foreign currency
0.00% - 17.25%
0.00% - 18.00%
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 (%)
2021
2.00%
2020
1.63%
2.51%
2.31%
50
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 9:
SECURITIES AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
(in HUF mn) [continued]
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
Certain securities are hedged against interest rate risk. See Note 37.4.
NOTE 10:
SECURITIES AT AMORTIZED COST (in HUF mn)
Government bonds
Corporate bonds
Discounted Treasury bills
Mortgage bonds
Other securities
2021
2020
1,091
522,939
524,030
51,211
1,614,293
1,665,504
4,780
346,928
351,708
62,068
1,687,608
1,749,676
34,976
35,325
2,224,510
2,136,709
2021
2020
3,651,508
172,526
15,705
24,356
36,353
3,900,448
2,545,476
74,632
10,469
-
-
2,630,577
Loss allowance on securities at amortized cost
(9,113)
(5,657)
Total
3,891,335
2,624,920
51
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 10:
SECURITIES AT AMORTIZED COST (in HUF mn) [continued]
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
2021
2020
8,101
480,296
488,397
5,122
3,406,929
3,412,051
-
156,532
156,532
-
2,474,045
2,474,045
Total
3,900,448
2,630,577
An analysis of securities at amortized cost by currency (%):
Denominated in HUF
Denominated in foreign currency
Total
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 (%)
2021
2020
75.42%
24.58%
100.00%
86.86%
13.14%
100.00%
2021
1.20% - 2.08%
2020
-
0.00% - 9.00%
0.50% - 7.00%
2021
2.46%
2020
3.07%
An analysis of the change in the loss allowance on securities at amortized cost is as follows:
Balance as at 1 January
Opening change due to modification
Balance as at 1 January after modification
Loss allowance for the period
Release of loss allowance
Use of loss allowance
Foreign currency translation difference
Closing balance
2021
5,657
1,281
6,938
6,634
(3,621)
(992)
154
9,113
2020
2,739
-
2,739
6,863
(4,061)
12
104
5,657
52
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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
2021
2020
1,243,635
2,901,682
4,145,317
2,359,485
7,840,375
10,199,860
1,154,223
2,445,006
3,599,229
2,002,814
6,902,342
8,905,156
14,345,177
12,504,385
Loss allowance on loans
(851,994)
(829,543)
Total
13,493,183
11,674,842
An analysis of the gross loan portfolio at amortized cost by currency (%):
In HUF
In foreign currency
Total
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 (%)
2021
2020
25.12%
74.88%
100.00%
25.25%
74.75%
100.0%
2021
2020
0.00% - 52.00%1
0.00% - 47.70%1
(0.59)% - 90.00%2 (0.50)% - 90.00%2
0.00% - 38.70%1
0.00% - 37.45%1
(0.59)% - 90.00%2 (0.50)% - 60.00%2
2021
6.49%
4.85%
2020
6.00%
5.53%
The amount of those loans which were written-off in the current year but they are still subject to enforcement
activity to be collected is still going on were HUF 104,940 million and HUF 94,197 million as at 31 December
2021 and 2020 respectively.
1 The highest interest rate relates to HUF loans within one year is overdraft loan, over one year is car loan.
2 The highest interest rate relates to loans in foreign currency regarding POS services in Russia.
53
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 11:
LOANS AT AMORTIZED COST AND AT FAIR VALUE (in HUF mn) [continued]
An analysis of the change in the loss allowance on loans is as follows:
2021
2020
Balance as at 1 January
Opening change due to modification
Balance as at 1 January after modification
Loss allowance for the period
Release of loss allowance
Loss allowance in the current period
from this: effect of change in parameters
used for loss allowance calculation
Use of loss allowance
Partial write-off 1
Unwinding
Foreign currency translation difference
Closing balance
Movement in loss allowance on loans and placements is summarized as below:
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 2
Loans mandatorily at fair value through profit or loss
829,543
(1,281)
828,262
546,284
(464,888)
81,396
(60,531)
(66,784)
(17,936)
345
26,711
851,994
2021
1,664
34,776
36,440
684,319
-
684,319
650,165
(382,800)
267,365
126,002
(100,711)
(12,503)
(8,927)
829,543
2020
851
162,733
163,584
Within one year
In HUF
In foreign currency
Over one year
In HUF
In foreign currency
2021
2020
61,537
-
61,537
1,006,293
281
1,006,574
48,770
-
48,770
750,211
3,624
753,835
Total
1,068,111
802,605
1 See details in Note 2.11.
2 See details in Note 31.
54
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 11:
LOANS AT AMORTIZED COST AND AT FAIR VALUE (in HUF mn) [continued]
An analysis of the loan portfolio mandatorily at fair value through profit or loss by currency (%):
In HUF
In foreign currency
Total
2021
2020
99.17%
0.83%
100.00%
99.55%
0.45%
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
2021
2020
1.21% - 10.83%
0.77% - 12.83%
4.00% - 4.00%
2.50% - 7.89%
Average interest rates on loan portfolio at fair value through
profit or loss denominated in HUF (%)
Average interest rates on loan portfolio at fair value through
profit or loss denominated in foreign currency (%)
NOTE 12:
ASSOCIATES AND OTHER INVESTMENTS (in HUF mn)
Investments
Investments in associates (non-listed)
Other investments (non-listed)
Impairment on investments
Total
An analysis of the change in the impairment on investments is as follows:
Balance as at 1 January
Impairment for the period
Release of impairment for the period
Modification due to merge
Reclassification to securities at fair value
through other comprehensive income
Foreign currency translation difference
Closing balance
2021
4.17%
1.82%
2021
42,409
37,327
79,736
2020
1.32%
0.00%
2020
14,149
44,158
58,307
(12,514)
(5,864)
67,222
52,443
2021
5,864
7,266
(626)
28
-
(18)
12,514
2020
8,816
43
(424)
-
(2,654)
83
5,864
55
NOTE 13:
PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (in HUF mn)
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
For the year ended 31 December 2021
Cost
Intangible
assets
Goodwill
Property
Machinery
and office
equipment
Vehicle
Construction
in progress
Total
Tangible
assets subject
to operating
lease
Balance as at 1 January
Additions
Foreign currency
translation differences
Disposals
Closing balance
364,495
90,887
101,393
-
4,656
(52,035)
408,003
4,247
105,640
285,506
28,684
3,609
(12,877)
304,922
212,105
37,266
3,237
(8,877)
243,731
23,893
19,135
163
(1,939)
41,252
Depreciation and amortization
Intangible
assets
Property Machinery
and office
equipment
Vehicle
Tangible assets
subject to
operating lease
28,926
13,427
1,039,721
300,715
422
(11,942)
30,833
16,470
(154,868)
1,202,038
23,403
111,316
136
(67,198)
67,657
Total
Balance as at 1 January
Charge for the period
Foreign currency
translation differences
Disposals
Closing balance
Impairment
224,180
44,973
77,753
9,219
3,263
(10,109)
262,307
1,266
(4,531)
83,707
155,292
22,753
2,394
(7,301)
173,138
6,241
1,986
102
(1,141)
7,188
10,279
4,212
262
(5,260)
9,493
473,745
83,143
7,287
(28,342)
535,833
Intangible
assets
Property
Machinery
and office
equipment
Tangible assets
subject to
operating lease
Total
Balance as at 1 January
Impairment for the period
Release of impairment for the period
Foreign currency
translation differences
Use of impairment
Closing balance
2,704
5
(4)
2,705
1,122
2,967
55
(591)
3,553
42
-
6
(5)
43
338
9
(204)
(1)
(5)
137
4,206
2,976
(204)
65
(605)
6,438
56
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 13:
PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (in HUF mn) [continued]
For the year ended 31 December 2021 [continued]
Intangible
assets
Goodwill
Property
Machinery
and office
equipment
Vehicle
Construction
in progress
Total
Tangible
assets subject
to operating
lease
Carrying value
Balance as at 1 January
Closing balance
137,611
142,991
101,393
105,640
206,631
217,662
56,771
70,550
17,652
34,064
23,403
67,657
18,309
21,203
561,770
659,767
Fair values
-
-
247,754
70,258
34,063
-
21,339
373,414
Carrying amount of the temporarily idle properties was HUF 3,057 million and HUF 4,211 million as at 31 December 2021 and 2020 respectively.
There were no restrictions on title and properties, plants or equipment pledged as security for liabilities as at 31 December 2021 and 2020.
As at 31 December 2021 and 2020 the amount of contractual commitments for the acquisition of tangible and intangible assets was HUF 1,595 million and HUF 200 million,
respectively.
Impairment for the propertied in the currenct period was needed as a result of the valuation performed by using the comparative value method (market analogy method) with
direct comparison to the market price of other similar properties. Actual market transactions were used based on the 6-month period prior to the valuation date where the
market price of the analogous property is adjusted by an expert coefficient for market adaptation (“ECMA”). Usually this range is from -25% to +25%, and reflects the
availability of sufficient market information for similar items but at these properties ECMA exceeded this range where the circumstances were exceptional although by
decision of the appraiser it was used only for unique properties with characteristics similar to the appraised ones, for which no sufficient market analogues are available. The
price was adjusted by coefficients reflecting the area, location, size and structure of the property, as well as a weighing factor reflecting the weight of the selected market
analogies in the determined fair value.
An analysis of the intangible assets for the year ended 31 December 2021 is as follows:
Intangible assets
Self-
developed
Purchased
Total
Gross values
Accumulated amortization
Impairment
Carrying value
12,700
(5,017)
-
7,683
395,303
(257,290)
(2,705)
135,308
408,003
(262,307)
(2,705)
142,991
57
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 13:
PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (in HUF mn) [continued]
For the year ended 31 December 2021 [continued]
Carrying value of the investment and goodwill allocated to the appropriate cash generating units
Subsidiaries
Carrying amounts
of the subsidiary in
HUF million
Goodwill
values in
HUF million
Goodwill values in
million functional
currency
Type of
functional
currency
Consolidated
ownership
interest
With ownership
adjusted company
value in
HUF million
Applied long
term grow rate
Applied long
term discount
rate
DSK Bank EAD
(Bulgaria)
OTP banka d.d.
(Croatia)
JSC “OTP Bank”
(Russia)
POK-DSK Rodina a.d.
(Bulgaria)
George Consult
(Croatia)
280,692
43,138
28,541 HUF
77 BGN
99.91%
832,445
3.00%
7.90%
205,349
21,421
58 EUR
100.00%
361,995
2.69%
8.83%
124,411
40,866
9,395 RUB
1,680
11
11 HUF
225
612,357
204
105,640
4 HRK
97.92%
99.85%
76.00%
187,552
1.89%
15.44%
15,299
171
3.00%
2.69%
7.90%
8.83%
58
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 13:
PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (in HUF mn) [continued]
For the year ended 31 December 2021 [continued]
The Bank decided that the recoverable amount of goodwill is determined based on fair value less cost of
disposal. In the fair value hierarchy goodwill is categorized into level 3. When the Bank prepares goodwill
impairment tests of the subsidiaries, the two methods which are used based on discounted cash-flow calculation
that shows the same result; however they represent different economical logics.
Based on the internal regulation of the Bank as at 31 December 2021 impairment test was prepared where a
three-year cash-flow model was applied with an explicit period between 2022-2024. The basis for the estimation
was the financial preliminary estimations for December 2021, and based on the prepared medium-term (2022-
2024) forecasts. When the Bank prepared the calculations for the period 2022-2024, it considered the actual
worldwide economic situations, the expected economic growth for the following years, their possible effects on
the financial sector, the plans for growing which result from these, and the expected changes of the mentioned
factors.
Present value calculation with the FCF method
The Bank calculated the expected cash-flow for the given period based on the expected after tax profit of the
companies. The calculation is highly sensitive to the level of discount rate and growth rate used. As discount
factor the Bank uses a zero coupon yield curve derived by the Headquarter Asse-Liability Management
department. This zero coupon curve is estimated for each related countries, based on the countries’ issued bonds
and segmented by the issuances’ currencies.
The Bank calculated risk premiums on the basis of information from the country risk premiums that are
published by Aswath Damodaran – New York STERN University, according to the Bank’s assumption the risk
free interest rate includes the country-dependent risks in an implicit way.
When the subsidiary owns subordinated debt, the discount rate is calculated as a weighted average of the
expected return on equity presented previously and the subordinated debt’s interest rate. At the end of the
calculation, the value of subordinated debt is being subtracted from the valuations’ result.
The growth rate in the explicit period is the growth rate of the profit after tax adjusted by the interest rate of the
cash and subordinated loans. The supposed growth rates for the periods of residual values reflect the long-term
economic expectations in case of every country.
The values of the subsidiaries in the FCF method were then calculated as the sum of the discounted cash-flows
of the explicit period, the present value of the terminal values and the initial free capital assuming an effective
capital structure.
Summary of the impairment test for the year ended 31 December 2021
Based on the valuations of the subsidiaries as at 31 December 2021 no goodwill impairment was needed to be
recorded by the Group.
59
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 13:
PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (in HUF mn) [continued]
For the year ended 31 December 2020
Cost
Intangible
assets
Goodwill
Property
Machinery
and office
equipment
Vehicle
Construction
in progress
Total
Tangible
assets subject
to operating
lease
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
7,769
(56,183)
(153)
364,495
(5,319)
(6,388)
-
101,393
279,538
7,342
12,987
(14,361)
-
285,506
192,369
27,533
4,094
(11,737)
(154)
212,105
23,079
2,208
215
(1,609)
-
23,893
22,717
36,835
538
(36,687)
-
23,403
31,799
6,586
2,602
(12,061)
-
28,926
981,938
174,230
22,886
(139,026)
(307)
1,039,721
Depreciation and amortization
Intangible
assets
Property Machinery
and office
equipment
Vehicle
Tangible assets
subject to
operating lease
Total
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
71,085
8,981
3,875
(6,733)
(103)
224,180
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
10,889
5,064
1,113
(6,787)
-
10,279
410,321
81,925
10,359
(28,662)
(198)
473,745
60
NOTE 13:
PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (in HUF mn) [continued]
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
For the year ended 31 December 2020 [continued]
Impairment
Intangible
assets
Goodwill
Property
Machinery
and office
equipment
Tangible
assets subject
to operating
lease
Total
Balance as at 1 January
Impairment for the period
Release of impairment for the period
Foreign currency
translation differences
Use of impairment
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
440
-
(137)
35
-
338
8,968
3,929
(137)
254
(8,808)
4,206
Intangible
assets
Goodwill
Property
Machinery
and office
equipment
Vehicle
Construction
in progress
Total
Tangible
assets subject
to operating
lease
Carrying value
Balance as at 1 January
Closing balance
136,920
137,611
105,299
101,393
208,453
206,631
51,219
56,771
17,571
17,652
22,717
23,403
20,470
18,309
562,649
561,770
Fair values
-
-
217,161
57,614
16,962
-
18,309
310,046
An analysis of the intangible assets for the year ended 31 December 2020 is as follows:
Intangible assets
Self-
developed
Purchased
Total
Gross values
Accumulated amortization
Impairment
Carrying value
8,117
(3,675)
-
4,442
356,378
(220,505)
(2,704)
133,169
364,495
(224,180)
(2,704)
137,611
61
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 13:
PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (in HUF mn) [continued]
For the year ended 31 December 2020 [continued]
Carrying value of the investment and goodwill allocated to the appropriate cash generating units
Subsidiaries
Carrying amounts
of the subsidiary in
HUF million
Goodwill
values in
HUF million
Goodwill values in
million functional
currency
Type of
functional
currency
Consolidated
ownership
interest
With ownership
adjusted company
value in
HUF million
Applied long
term grow rate
Applied long
term discount
rate
DSK Bank EAD
(Bulgaria)
OTP banka d.d.
(Croatia)
JSC “OTP Bank”
(Russia)
POK-DSK Rodina a.d.
(Bulgaria)
280,692
42,984
28,541 HUF
77 BGN
99.91%
717,318
3.00%
8.13%
205,349
21,196
58 EUR
100.00%
336,403
2.69%
9.37%
124,410
37,202
9,395 RUB
943
611,394
11
101,393
11 HUF
97.91%
99.75%
173,315
1.89%
13.26%
941
3.00%
8.13%
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 be recorded by the Group.
62
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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
Transfer to held-for-sale properties
Transfer to inventories or owner-occupied properties
Disposal due to sale
Foreign currency translation difference
Closing balance
The applied depreciation and amortization rates were as follows:
2021
54,154
3,425
134
-
(66)
(2,858)
(14,993)
445
40,241
2020
53,906
6,896
574
86
(118)
(936)
(8,725)
2,471
54,154
2021
2020
Depreciation and amortization rates
1.00% - 20.00%
1.00% - 20.00%
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
Transfer to inventories or owner-occupied properties
Disposal due to sale
Foreign currency translation difference
Closing balance
2021
11,383
1,296
1,113
(236)
(4,577)
132
9,111
An analysis of the movement in the impairment on investment properties is as follows:
Impairment
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
2021
4,170
54
(297)
(2,726)
-
47
1,248
2021
38,601
29,882
34,257
2020
8,352
1,657
908
(10)
(322)
798
11,383
2020
3,994
178
(919)
-
587
330
4,170
2020
41,560
38,601
37,842
63
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 14:
INVESTMENT PROPERTIES (in HUF mn) [continued]
The Group chose the cost model for measuring investment properties but estimates and reviews the fair value of
the investment properties by external experts, these investment properties would have been presented on level 3
in the fair value hierarchy if the Group didn’t apply cost method for these recognition.
Income and expenses
Rental income
Direct operating expenses of investment properties
– income generating
Direct operating expenses of investment properties
– non income generating
2021
2,621
318
14
2020
2,520
455
8
NOTE 15:
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
NOTE 16:
OTHER ASSETS1 (in HUF mn)
Other financial assets
Receivables from card operations
Prepayments and accrued income on other financial assets
Trade receivables
Receivables from investment services
Other advances
Stock exchange deals
Giro clearing accounts
Receivables due from pension funds and investment funds
Receivables from leasing activities
Advances for securities and investments
Accrued day one gain of loans
provided at below-market interest
Other financial assets
Loss allowance on other financial assets
Total
2021
2020
5,471
13,286
18,757
6,179
641
6,820
2021
27,820
27,778
24,951
15,077
21,043
12,255
2,635
3,250
363
525
-
17,019
(16,800)
135,916
2020
Reclassified
24,816
23,521
17,039
10,716
26,806
10,632
2,441
8,323
431
774
14,465
19,057
(18,459)
140,562
1 Other assets are expected to be recovered or settled no more than twelve months after the reporting period.
64
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 16:
OTHER ASSETS1 (in HUF mn) [continued]
Other non-financial assets
Prepayments and accrued income on other non-financial assets
Receivables, subsidies from the State, Government
Settlement and suspense accounts
Biological assets and agricultural produce
Other non-financial assets
Impairment on other non-financial assets
Total
Other assets (under IAS 2)
Inventories
Repossessed real estate
Repossessed other non-financial assets
Write-down of the assets measured under IAS 2
Total
Total other assets
2021
46,418
15,800
14,974
5,193
15,495
(4,413)
93,467
2021
43,843
6,354
1,069
(3,864)
47,402
2020
Reclassified
19,307
11,767
16,355
-
11,513
(4,699)
54,243
2020
Reclassified
66,748
9,706
2,034
(7,054)
71,434
276,785
266,239
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
Release of allowance for the period
Use of loss allowance
Foreign currency translation difference
Closing balance
2021
2020
18,459
8,569
(6,903)
(3,767)
442
16,800
14,617
10,057
(4,755)
(1,607)
147
18,459
An analysis of the movement in the impairment on other non-financial assets is as follows:
Balance as at 1 January
Transfer due to separation of assets under IAS 2
Impairment for the period
Release of impairment for the period
Use of impairment
Foreign currency translation difference
Closing balance
2021
4,699
-
949
(653)
(751)
169
4,413
2020
Reclassified
11,871
(7,419)
1,358
(522)
(516)
(73)
4,699
1 Other assets are expected to be recovered or settled no more than twelve months after the reporting period.
65
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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
2021
2020
277,397
225,398
502,795
900,948
163,605
1,064,553
132,182
117,672
249,854
741,772
193,689
935,461
Total
1,567,348
1,185,315
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
2021
2020
(2.04)% - 4.66%
(2.40)% - 17.60%1
0.00% - 20.00%
(0.56)% - 5.00%
(2.40)% - 4.66%
(2.40)% - 2.73%
(2.40)% - 12.00%2 (2,40)% - 17.60%2
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
in foreign currency
NOTE 18:
REPO LIABILITIES (in HUF mn)
Within one year
In HUF
In foreign currency
Over one year
In HUF
In foreign currency
Total
2021
2020
1.20%
1.00%
1.49%
2.11%
2021
49,726
29,321
79,047
-
-
-
2020
-
8,379
8,379
-
109,612
109,612
79,047
117,991
1 The highest interest rate for due to banks relate to loans taken from EBRD in Ukraine.
66
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 18:
REPO LIABILITIES (in HUF mn) [continued]
Interest rates on repo liabilities are as follows:
Interest rates on repo liabilities
denominated in HUF (%)
Interest rates on repo liabilities
2021
0.00% - 2.80%
2020
-
denominated in foreign currency (%)
(0.95)% - 0.00%
0.00% - 3.85%
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
Contractual amount outstanding
2021
2020
1,784
-
1,784
39,400
-
39,400
41,184
21,479
2,010
-
2,010
29,886
2,235
32,121
34,131
23,332
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
2021
2020
0.46% - 2.46%
0.51% - 2.50%
0.01% - 2.90%
0.00% - 2.50%
Certain MFB (“Hungarian Development Bank”) refinanced loan receivables are categorised as fair value through
profit or loss based on SPPI test. Related refinancing loans at the liability side are categorised as fair value
through profit or loss based on fair value option due to accounting mismatch as provided by the IFRS 9 standard.
The Group controls capital funds where it does not hold the 100% of the owner rights. The related non-
controlling interest is treated as financial liability designated at fair value through profit or loss as it is not
considered equity under IAS 32.
67
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 20:
DEPOSITS FROM CUSTOMERS (in HUF mn)
Within one year
In HUF
In foreign currency
Over one year
In HUF
In foreign currency
2021
2020
7,829,595
12,758,360
20,587,955
293,606
187,083
480,689
6,383,882
10,990,543
17,374,425
327,165
189,273
516,438
Total
21,068,644
17,890,863
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
2021
2020
(2.48)% - 7.96%
(1.01)% - 17.20%1
(4,58)% - 7.96%
(0.58)% - 16.50%
0.01% - 3.00%
0.01% - 3.00%
0.00% - 8.90%
0.00% - 7.75%
2021
0.18%
0.34%
2020
0.10%
0.49%
An analysis of deposits from customers by type is as follows:
Retail deposits
Corporate deposits
Municipality deposits
Total
2021
2020
11,982,784
8,093,206
992,654
21,068,644
56.88%
38.41%
4.71%
100.00%
10,695,792
6,298,143
896,928
17,890,863
59.78%
35.20%
5.01%
100.00%
1 The highest interest rate regarding foreign currency deposits for the current year relate to treasury deposit in Turkish lira in Hungary, in the
previous year relate to individually agreed deposits in Ukraine.
68
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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
2021
2020
9,332
13
9,345
426,929
51
426,980
130,676
1,366
132,042
332,125
46
332,171
Total
436,325
464,213
Interest rates on liabilities from issued securities are as follows:
Issued securities denominated in HUF
Issued securities denominated in foreign currency
0.60% - 4.26%
0.74% - 5.00%
0.00% - 2.50%
0.01% - 1.11%
2021
2020
Average interest rates on issued securities
denominated in HUF
Average interest rates on issued securities
denominated in foreign currency
2021
2.20%
0.25%
2020
1.83%
1.32%
69
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 21:
LIABILITIES FROM ISSUED SECURITIES (in HUF mn) [continued]
Issued securities denominated in HUF as at 31 December 2021 (in HUF mn)
Name
Date of issue
Maturity
Nominal
value
(in HUF
mn)
Amortized
cost
(in HUF
mn)
Interest conditions
Hedged
(actual interest rate in
% p.a.)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
OTPX2022A
OTPX2022B
OTPX2022C
OTPX2022D
OTPX2023A
OTPX2023B
OTPX2024A
OTPX2024B
OTPX2024C
OTPRF2022A
OTPRF2022B
OTPRF2022C
OTPRF2022D
OTPRF2022E
OTPRF2022F
OTPRF2023A
OJB2023_I
OJB2024_A
OJB2024_C
OJB2024_II
OJB2025_II
OJB2027_I
OJB2031_I
Other
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
22/03/2012
22/03/2012
28/06/2012
28/06/2012
29/10/2012
28/12/2012
22/03/2013
05/04/2018
17/09/2018
24/02/2020
10/10/2018
03/02/2020
23/07/2020
18/08/2021
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
23/03/2022
23/03/2022
28/06/2022
28/06/2022
31/10/2022
28/12/2022
24/03/2023
24/11/2023
20/05/2024
24/10/2024
24/10/2024
26/11/2025
27/10/2027
22/10/2031
175
164
177
238
312
198
241
295
242
2,321
934
209
286
862
708
899
44,120
57,067
80,125
96,800
22,550
76,850
82,000
211
236
549
317
290
366
272
277
336
275
2,513
1011
266
324
933
773
977
42,300
57,010
79,972
89,138
20,003
67,257
70,655
211
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
indexed
1.75
4.26
3.95
2.50
1.50
1.25
2.50
-
1.70
1.70
1.70
1.70
0.60
1.30
0.70
0.60
1.70
1.70
1.70
1.70
1.70
1.70
1.70
fix
floating
floating
fix
fix
fix
fix
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
Total issued securities in HUF
467,984
436,261
Issued securities denominated in foreign currency are promissory notes issued by JSC “OTP Bank” (Russia) in
the amount of HUF 64 million as at 31 December 2021.
70
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 21:
LIABILITIES FROM ISSUED SECURITIES (in HUF mn) [continued]
Issued securities denominated in HUF as at 31 December 2020 (in HUF mn)
Name
Date of issue
Maturity
Nominal
value
(in HUF
mn)
Amortized
cost
(in HUF
mn)
Interest conditions
Hedged
(actual interest rate in
% p.a.)
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
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
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
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
Total issued securities in HUF
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
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
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
2.00
1.75
1.35
1.05
2.50
1.50
1.25
NaN
NaN
NaN
NaN
NaN
1.70
1.70
1.70
1.70
0.60
1.30
0.70
0.60
NaN
NaN
NaN
NaN
NaN
1.70
1.70
1.70
1.70
1.70
1.70
1.70
fix
fix
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
71
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 21:
LIABILITIES FROM ISSUED SECURITIES (in HUF mn) [continued]
Issued securities denominated in foreign currency as at 31 December 2020 (in HUF mn)
Name
Date of
issue
Maturity
Type
of FX
Nominal value
Amortized cost
(FX
mn)
(HUF
mn)
(FX
mn)
(HUF
mn)
1
2
3
4
5
20/02/2020
02/04/2020
14/05/2020
18/06/2020
OTP_VK1_21/1
OTP_VK1_21/2
OTP_VK1_21/3
OTP_VK1_21/4
Other 1
Total issued securities in FX
20/02/2021
02/04/2021
14/05/2021
18/06/2021
USD
USD
USD
USD
1.39
1.24
1.18
0.74
12
414
370
351
221
47
1.39
1.24
1.18
0.74
14
414
370
351
221
56
16.55
1,403
18.55
1,412
Total issued securities
464,213
Interest
conditions
(actual interest rate
in % p.a.)
1.1
0.1
0.01
1.1
floating
floating
floating
floating
Hedge accounting
Certain issued structured securities are hedged by the Bank with interest rate swaps (“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 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 interest payments are swapped to floating interest rate.
This hedging relationship meets all of the following hedge effectiveness requirements:
•
•
•
there is an economic relationship between the hedged item and the hedging instrument
the effect of credit risk does not dominate the value changes that result from that economic relationship
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 uses
to hedge that quantity of hedged item
The cash-flows of the fixed rate securities issued by the Bank are exposed to the changes in the HUF/EUR
foreign exchange rate and the volatility of the quoted interest rates of EUR and HUF. The interest rate risk and
foreign exchange risk related to these securities are hedged with EUR and HUF IRS transactions, where the
fixed interests were swapped to payments linked to 3 month HUF BUBOR and EURIBOR, resulting in a
decrease in the interest rate and foreign exchange exposure of issued securities.
Term Note Program in the value of HUF 200 billion for the year of 2021/2022
On 28 May 2021 the Bank initiated term note program in the value of HUF 200 billion with the intention of
issuing registered dematerialized bonds in public. On 8 July 2021, the National Bank of Hungary approved the
prospectus of Term Note Program and the disclosure as at 9 July 2021. The prospectus is valid for 12 months
following the disclosure.
The Issuer can initiate to introduce the bonds issued under the program to the Hungarian and to other stock
exchanges without any obligations.
Term Note Program in the value of HUF 200 billion for the year of 2020/2021
On 21 April 2020 the Bank initiated term note program in the value of HUF 200 billion with the intention of
issuing registered dematerialized bonds in public. On 9 July 2020, the National Bank of Hungary approved the
prospectus of Term Note Program and the disclosure as at 10 July 2020. The prospectus is valid for 12 months
following the disclosure.
The Issuer can initiate to introduce the bonds issued under the program to the Hungarian and to other stock
exchanges without any obligations.
1 Other category includes promissory notes issued by JSC “OTP Bank” (Russia) in the amount of HUF 56 million as at 31 December 2020.
72
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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
Commodity swaps
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
Other derivative transactions held for trading 1
Total
2021
46,380
51,508
87,945
7,738
7,789
479
13
864
202,716
2020
39,103
8,269
32,960
10,750
7,419
3,843
116
2,363
104,823
NOTE 23:
DERIVATIVE FINANCIAL LIABILITIES DESIGNATED AS HEDGE ACCOUNTING
(in HUF mn)
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
2021
5,451
5,777
11,228
2020
6,007
5,334
11,341
1 Other category includes: fx spot, equity swaps, options and index futures.
73
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 24:
PROVISIONS AND OTHER LIABILITIES1 (in HUF mn)
Other financial liabilities
Liabilities connected to Cafeteria benefits
Liabilities from investment services
Accrued expenses on other financial liabilities
Liabilities from card transactions
Accounts payable
Liabilities due to short positions
Giro clearing accounts
Advances received from customers
Liabilities from wages and other salary related payments
Loans from government
Accrued day one gain of loan liabilities
at below-market interest
Dividend payable
Other financial liabilities
Subtotal
Other non-financial liabilities
Clearing and giro settlement accounts
Liabilities from social security contributions
Accrued expenses on other non-financial liabilities
Liabilities related to housing loans
Insurance technical reserve
Other non-financial liabilities
Subtotal
Total
2021
2020
Reclassified
114,867
92,612
58,247
31,484
46,243
16,904
14,830
11,903
13,092
5,851
-
135
79,603
485,771
2021
48,715
11,853
13,029
11,428
3,416
23,869
112,310
121,711
62,667
42,212
20,402
41,460
9,131
14,589
11,259
17,784
3,435
14,391
119
48,526
407,686
2020
Reclassified
38,912
7,423
6,997
8,868
4,545
14,995
81,740
598,081
489,426
1 Other liabilities are expected to be recovered or settled no more than twelve months after the reporting period. 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.
74
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 24:
PROVISIONS AND OTHER LIABILITIES1 (in HUF mn) [continued]
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
Restructuring
Provision due to CHF loans conversion
at foreign subsidiaries
Other provision
Total provision according to IAS 37
2021
51,990
51,990
35,354
9,308
910
1,801
1,285
19,151
67,809
2020
54,810
54,810
34,894
10,975
2,396
1,531
1,949
9,912
61,657
Total
119,799
116,467
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
Transfer
Foreign currency translation differences
Closing balance
2021
2020
54,810
28,869
(28,770)
(7)
(4,426)
1,514
51,990
48,662
98,703
(90,041)
(2,276)
-
(238)
54,810
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
Unwinding of the discounted amount
Transfer
Foreign currency translation differences
Closing balance
2021
2020
61,657
37,924
(27,167)
(10,953)
(42)
7
4,426
1,957
67,809
55,772
23,381
(17,251)
(4,501)
(144)
-
-
4,400
61,657
1 Other liabilities are expected to be recovered or settled no more than twelve months after the reporting period. 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.
75
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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
2021
-
2,841
2,841
-
275,493
275,493
2020
-
2,843
2,843
-
271,861
271,861
Total
278,334
274,704
Types of subordinated bonds and loans are as follows:
Debt securities issued
Loan received
Total
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
2021
2020
6,558
271,776
278,334
269,566
5,138
274,704
2021
2020
-
2.50% - 5.00%
-
2.50% - 5.00%
2021
2.75%
2020
2.94%
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
2021
Subordinated
bond
EUR 231
million
07/11/2006
Perpetual
99.375%
Three-month EURIBOR +
3%, variable after year 10
(payable quarterly)
2.428%
Subordinated
bond
EUR 500
million
15/07/2019 15/07/2029
99.738%
Subordinated
loan
USD 17.0
million
05/06/2018 30/06/2025
100.00%
Fixed 2.875% annual in
the first 5 years and
callable after 5 years,
starting from year 6 fix
coupon (payable annually)
is calculated as a sum of
the initial margin (320
basis point) 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
2.875%
5.00%
76
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 26:
SHARE CAPITAL (in HUF mn)
Authorized, issued and fully paid:
Ordinary shares
2021
28,000
2020
28,000
The nominal value of the shares is HUF 100 per shares. All of the shares are ordinary shares representing the
same rights to the shareholders. Furthermore there are no restrictions on the distribution of dividends and the
repayment of capital.
NOTE 27:
RETAINED EARNINGS AND RESERVES1 (in HUF mn)
In 2021, the Bank did not pay dividend based on the earlier NBH warnings issued due to covid moratoria. In
2022 dividend of HUF 119 billion from the profit of years 2019 and 2020 and HUF 1 billion from the profit of
year 2021 (totally HUF 120 billion) are expected to be proposed by the Management, which means HUF 425,89
(for the year 2019 and 2020) and HUF 3,57 (for the year 2021) dividend per share payable to shareholders,
respectively. In the opinion of the Management dividend is still considered to be payable, which will be decided
on the Bank’s Board meeting in March taken in consideration the Russian-Ukrainian conflict.
The retained earnings and reserves according to IFRS contains the retained earnings (HUF 841,261 million and
HUF 744,802 million) and reserves (HUF 2,265,262 million and HUF 1,884,274 million) as at 31 December
2021 and 31 December 2020 respectively. The reserves include mainly the option reserve, other reserves, the fair
value adjustment of financial instruments at fair value through other comprehensive income, share-based
payment reserve, fair value of hedge transactions, additional reserves of Income Certificates Exchangeable for
Shares (“ICES”), changes in equity accumulated in the previous years at the subsidiaries and due to
consolidation as well as translation of foreign exchange differences.
In the Consolidated Financial Statements the Group recognizes the non-monetary items at historical cost. The
difference between the historical cost of the non-monetary items in forint amount and the translated foreign
currencies into the presentation currency using the exchange rate at the balance sheet date, is presented in the
shareholders’ equity as a translation difference. The accumulated amounts of exchange differences were HUF
58,164 million and HUF (3,369) million as at 31 December 2021 and 2020, respectively.
On 19 October 2006, the Bank sold 14.5 million Treasury shares owned by the Group through an issue of ICES.
Within the transaction 10 million shares owned by OTP Bank, and a further 4.5 million shares owned by the
Group were sold during the underwriting period of ICES on the weighted average market price (HUF 7,080) of
the Budapest Stock Exchange. The shares have been purchased by Opus Securities S.A. (“OPUS”), which issued
an exchangeable bond with a total face value of EUR 514,274,000 backed by those shares. The exchangeable
bonds have been sold at a 32% premium over the selling price of the shares. The EUR denominated
exchangeable bonds were perpetual and the investors could have exercised the conversion right between years 6
and 10. The bonds carried a fixed coupon of 3.95% during the first 10 years, and thereafter the Issuer had the
right to redeem the bonds at face value. Following year 10, the bonds carried a coupon of 3 month EURIBOR
+3%. OTP Bank had a discretional right to cancel the interest payments. The interest payable was non-
cumulative.
Due to the conditions described above, ICES was accounted as an equity instrument and therefore any payment
was accounted as equity distribution paid to ICES holders.
On 14 September 2021 the Bank decided to terminate the subordinated swap agreement related to ICES
transaction as at 29 October 2021, and to exercise its option for repurchasing approximately 14.5 million OTP
ordinary shares held by Opus at market price based on the swap agreement. On the same day, the Bank
recognised liability due to Opus as a reduction of EUR 514 million in the shareholder’s equity.
Treasury shares were repurchased on 29 October 2021 on a price HUF 18,118 and on the same day the swap
transaction was financially settled. As a result of the closure of the subordinated swap agreement the Bank’s
shareholder’s equity increased by HUF 75,421 million, the Group’s shareholders’ equity increased by HUF
35,063 million.
Approximately 12 million pieces of treasury shares were sold to OTP SECOP I. (“OTP Special Employee Stock
Ownership Program”) and OTP SECOP II.
1 See more details in the Consolidated Statement of Comprehensive Income and in the Consolidated statement of Changes in equity on page
6 and 7.
77
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 27:
RETAINED EARNINGS AND RESERVES1 (in HUF mn) [continued]
Share capital
Share capital is the portion of the Bank’s equity that has been obtained by the issue of shares in the corporation
to a shareholder, usually for cash.
Retained earnings
Profit of previous years generated by the Group that are not distributed to shareholders as dividends.
Other reserves
The other reserves contain separated reserves due to statutory provisions.
Option reserve
OTP Bank Plc. and MOL Plc. entered into a share swap agreement in 16 April 2009, 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
agreement is 11 July 2022, until which any party can initiate cash or physical settlement of the transaction.
Option reserve represents the written put option over OTP ordinary shares were accounted as a deduction from
equity at the date of OTP-MOL share swap transaction.
Share-based payment reserve
Share-based payment reserve represents the increase in the equity due to the goods or services were received by
the Bank in an equity-settled share-based payment transaction, valued at the fair value of the goods or services
received (see details in Note 40).
Other comprehensive income
Other comprehensive income comprises items of income and expense (including reclassification adjustments)
that are not recognized in profit or loss as required or permitted by other IFRSs.
Net investment hedge in foreign operations
Reserve presented as net investment hedge in foreign operations in the sharholders’ equity is related to DSK
Bank EAD, OTP banka d.d. and Crnogorska komercijalna banka a.d.
Extra reserves
The result of ICES bond issuance was presented as extra reserve, any payment to the owner of the ICES was
booked as decreaseing item in the extra reserve in the consolidation books until the termination of the
subordinated swap agreement related to ICES transaction as it was detailed above in this note when the whole
extra reserve presented here was transferred to retained earnings.
1 See more details in the Consolidated Statement of Comprehensive Income and in the Consolidated statement of Changes in equity on page
6 and 7.
78
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 27:
RETAINED EARNINGS AND RESERVES1 (in HUF mn) [continued]
Changes in equity accumulated in the previous year at the subsidiaries and due to consolidation
The accumulated changes at the subsidiaries contain the accumulated gains and losses of the subsidiaries from
the first day when they were included in the consolidation process. The changes due to consolidation contain the
effect on the result of the eliminations in the consolidation process of the previous years.
Retained earnings
Capital reserve
Option reserve
Other reserves
Actuarial loss related to employee defined benefits
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 period
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
Deferred tax related to change of fair value
Transfer to profit or loss due to
reclassification to FVTPL securities
Other transfer to retained earnings
Deferred tax related to other transfer to retained earnings
Transfer to profit or loss due to derecognition
Deferred tax related to transfer to proft or loss
Foreign currency translation difference
Closing balance
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
2021
2020
844,343
52
(55,468)
129,208
(471)
11,690
46,162
-
(27,405)
-
455,592
744,802
52
(55,468)
93,569
(513)
61,396
42,573
-
(27,405)
89,935
259,416
1,647,642
58,164
3,109,509
1,424,088
(3,369)
2,629,076
2021
2020
43,958
(49,621)
3,035
-
(5,070)
457
(2,547)
491
1,644
(7,653)
2021
6,984
4,414
(3,453)
(1,749)
514
6,710
50,272
(10,897)
1,403
(144)
-
-
3,329
(472)
467
43,958
2020
2,927
6,303
(1,441)
(724)
(81)
6,984
1 See more details in the Consolidated Statement of Comprehensive Income and in the Consolidated statement of Changes in equity on page
6 and 7.
79
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 27:
RETAINED EARNINGS AND RESERVES1 (in HUF mn) [continued]
Fair value changes of equity instruments as
at fair value through other comprehensive income
Balance as at 1 January
Change of fair value
Deferred tax related to change of fair value
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 on hedging item
Deferred tax related to change of fair value
Closing balance
Actuarial loss related to employee benefits
Balance as at 1 January
Change of actuarial loss related to
employee benefits
Deferred tax related to change of actuarial loss related to
employee benefits
Foreign currency translation difference
Closing balance
2021
2020
10,454
2,465
(361)
(207)
282
12,633
15,115
(3,336)
363
(1,746)
58
10,454
2021
2020
(27,405)
-
-
(27,405)
(18,814)
(9,440)
849
(27,405)
2021
(513)
98
(11)
(45)
(471)
2020
(640)
126
1
-
(513)
Foreign currency translation difference
2021
2020
Balance as at 1 January
Change of foreign currency translation
Closing balance
(3,369)
61,533
58,164
(72,404)
69,035
(3,369)
1 See more details in the Consolidated Statement of Comprehensive Income and in the Consolidated statement of Changes in equity on page
6 and 7.
80
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 28:
TREASURY SHARES (in HUF mn)
Nominal value (Ordinary shares)
Carrying value at acquisition cost
2021
2020
1,091
106,941
2,392
124,080
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
Closing number of shares
Change in carrying value:
Balance as at 1 January
Additions
Disposals
Closing balance
2021
2020
23,924,900
16,251,451
(29,269,470)
10,906,881
17,779,845
8,296,388
(2,151,333)
23,924,900
2021
2020
124,080
276,433
(293,572)
106,941
60,931
85,922
(22,773)
124,080
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 period
Purchase of non-controlling interest
Decrease due to discontinued operation
Foreign currency translation difference
Closing balance
2021
4,116
1,041
836
-
-
205
6,198
2020
4,956
-
221
(382)
(235)
(444)
4,116
The non-controlling interest is not significant in respect of the whole OTP Group.
81
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 30:
INTEREST INCOME, INCOME SIMILAR TO INTEREST INCOME AND EXPENSE
(in HUF mn)
2021
2020
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
banks and balances with the National Banks
placements with other 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 incomes 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
financial assets (negative interest income)
depreciation of assets subject to operating lease
and investment properties
leases
repo liabilities
other
Total interest expense
692,432
79,602
59,084
49,473
16,527
20,922
3,672
827
922,539
128,519
40,131
15,557
8,964
1,749
194,920
658,579
69,905
54,046
44,782
5,103
7,572
1,628
286
841,901
78,577
28,251
20,322
8,363
473
135,986
1,117,459
977,887
2021
2020
116,895
50,645
23,860
17,467
9,822
7,598
7,275
5,325
1,556
2,299
407
243,149
82,301
53,196
17,226
13,785
7,750
7,718
5,014
5,624
1,623
653
326
195,216
82
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 31:
LOSS ALLOWANCES / IMPAIRMENT / PROVISIONS (in HUF mn)
Loss allowance on loans
Loss allowance for the period
Release of loss allowance
Income from loan recoveries
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
Release of loss allowance on finance lease
Loss allowance on due from banks, balances with National
Banks, on placements and on repo receivables
Allowance for the period
Release of allowance
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
2021
546,284
(475,067)
(51,876)
2020
Reclassified
650,165
(390,102)
(98,300)
16,289
20,694
(14,918)
41,406
27,341
(24,737)
2,604
11,048
(7,074)
3,974
63
(501)
(438)
28,869
(28,770)
99
3,262
23,807
(13,835)
174,997
16,476
(15,691)
785
13,166
(5,857)
7,309
178
(1,056)
(878)
98,703
(90,041)
8,662
Loss allowances / Impairment and provisions
47,645
190,875
83
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 32:
NET PROFIT FROM FEES AND COMMISSIONS (in HUF mn)
Income from fees and commissions
2021
2020
Fees and commissions related to lending1
36,999
33,233
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 security trading
Fees and commissions related to fund management
Insurance fee income
Other
Fees and commissions from contracts with customers
198,145
173,578
99,766
47,843
46,143
30,224
23,553
16,974
54,466
517,114
83,474
46,290
39,120
25,830
28,800
13,603
42,601
453,296
Total
554,113
486,529
Fee type
Deposit and
account
maintenance
fees and
commissions
and fees
related to cash
withdrawal
Nature and timing of obligation settlement, and the significant
payment terms
Revenue recognition
under IFRS 15
Fees for ongoing account
management services are
charged on a monthly
basis during the period
when they are provided.
fees
Transaction-based
are charged when
the
transaction takes place or
charged monthly at the
end of the month.
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 fixed
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 the case of other transaction-based fees (e.g.
SMS fee), the fee is settled monthly.
In the 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.
1 Such kinds of fees and commissions related to lending which aren’t included in the effective interest rate calculation due to their nature.
84
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 32:
NET PROFIT FROM FEES AND COMMISSIONS (in HUF mn) [continued]
Fee type
Fees and
commission
related to the
issued bank
cards
Fees and
commissions
related to
security
account
management
services
Fees and
commissions
related to fund
management
Net insurance
fee income
Other
Nature and timing of obligation settlement, and the significant
payment terms
Revenue recognition
under IFRS 15
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
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 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.
transactions on
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 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
the
annually
period when
they are
provided. The fees are
accrued monthly.
during
Transaction-based
are charged when
transaction takes place.
fees
the
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.
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
the
are charged when
transaction takes place.
85
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 32:
NET PROFIT FROM FEES AND COMMISSIONS (in HUF mn) [continued]
Expense from fees and commissions
2021
2020
Fees and commissions related to issued bank cards
Interchange fees
Fees and commissions paid on loans
Fees and commissions related to deposits
Cash withdrawal transaction fees
Fees and commissions related to security trading
Insurance fees
Fees and commissions related to collection of loans
Postal fees
Money market transaction fees and commissions
Other
Total
42,662
22,831
9,502
7,467
4,063
3,730
1,413
830
590
281
18,570
111,939
32,487
18,958
6,974
7,000
3,696
3,776
1,036
1,447
714
113
12,695
88,896
Net profit from fees and commissions
442,174
397,633
NOTE 33:
GAIN AND LOSSES BY TRANSACTIONS (in HUF mn)
Gains and losses by transactions
Gain by transactions
Loss by transactions
Gain from sale of loans, placements, finance lease
Gain by transactions
Loss by transactions
Gain from derecognition of securities at amortized cost
Gain from derecognition of financial assets
at amortized cost, net
2021
2020
Reclassified
5,662
(4,808)
854
3,552
(2,521)
1,031
1,885
6,479
(4,501)
1,978
1,402
-
1,402
3,380
Foreign exchange result consists revaluation difference from converting assets and liabilities in foreign
currencies into the presentation currency of the consolidation financial statements.
Gains and losses by transactions
2021
2020
Reclassified
Gain by transactions
Loss by transactions
Fx gain on securities at fair value through profit or loss
Gain by transactions
Loss by transactions
Fx gain on derecognition of investment
in subsidiaries, associates
Gain by transactions
Loss by transactions
Fx (loss) / gain on securities at fair value
through other comprehensive income
Gain by transactions
Loss by transactions
Fx gain on other securities
Gains on securities, net
9,553
(4,537)
5,016
2,405
(1,889)
516
10,505
(13,092)
(2,587)
2,847
(232)
2,615
5,560
4,855
(2,110)
2,745
-
-
-
8,831
(6,506)
2,325
10,486
(8,091)
2,395
7,465
86
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 33:
GAINS AND LOSSES (in HUF mn) [continued]
Gains and losses by transactions
2021
2020
Reclassified
Gain by transactions
Loss by transactions
Gain on non-trading securities mandatorily
at fair value through profit or loss
Gain by transactions
Loss by transactions
Loss on loans mandatorily at fair value through profit
or loss (adjustment resulting from
change in market factors)
Gain by transactions
Loss by transactions
Gain/ (Loss) on financial assets and liabilities
designated at fair value through profit or loss
Fair value adjustment on financial instruments measured
at fair value through profit or loss
Gains and losses by transactions
Gain by transactions
Loss by transactions
Gain from fx swap, swap and option deals
Gain by transactions
Loss by transactions
(Loss) / Gain from option deals
Gain by transactions
Loss by transactions
Loss from commodities deals
Gain by transactions
Loss by transactions
(Loss) / Gain from futures deals
Gain on derivative instruments, net
5,835
(1,023)
4,812
36,591
(44,346)
(7,755)
2,868
(457)
2,411
(532)
2021
74,582
(64,034)
10,548
2,684
(3,005)
(321)
94,639
(95,794)
(1,155)
745
(3,019)
(2,274)
6,798
14,781
(7,542)
7,239
999
(2,125)
(1,126)
-
(1,270)
(1,270)
4,843
2020
Reclassified
63,574
(52,890)
10,684
619
(50)
569
5,237
(5,264)
(27)
155
(41)
114
11,340
NOTE 34:
OTHER OPERATING INCOME AND EXPENSES AND OTHER ADMINISTRATIVE
EXPENSES (in HUF mn)
Other operating income
Income from agricultural activity
Income from tourism activity
Gains on transactions related to property activities
Rental income
Income from computer programming
Fair value adjustment of biological assets and agricultural produce
Income from real estate management
Gains on transactions related to insurance activity
Non-repayable assets received
Negative goodwill due to acquisition
Other income from non-financial activities
Total
2021
42,526
8,588
6,424
2,132
1,113
(2,551)
-
657
165
31
22,243
81,328
2020
-
-
3,631
1,835
1,529
-
1,092
721
65
7,504
17,084
33,461
87
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 34:
OTHER OPERATING INCOME AND EXPENSES AND OTHER ADMINISTRATIVE
EXPENSES (in HUF mn) [continued]
Other operating expenses
Expense related to agricultural activity
Provision for off-balance sheet commitments
and contingent liabilities
Financial support for sport association and
organization of public utility
Expenses related to tourism activity
Loss allowance and loan losses on
other financial assets
Expenses from losses due to foreign currency
loan conversion at foreign subsidiaries
Impairment / (Release of impairment) on investments1
Non-repayable assets contributed
Impairment on tangible and intangible assets
(Release of impairment) / Impairment, loan losses on
other non-financial assets and assets measured under IAS 2
Release of provision due to foreign currency
loan conversion at foreign subsidiaries
Other
Other expenses from non-financial activities
Other costs
Total
Other administrative expenses
Personnel expenses
Wages
Taxes related to personnel expenses
Other personnel expenses
Subtotal
2021
30,392
11,395
11,111
7,928
2,624
949
6,640
881
2,967
(638)
(638)
12,121
5,613
6,508
85,732
2021
2020
-
6,336
12,080
6,036
224
(381)
688
51
1,537
(206)
13,082
5,576
7,506
39,447
2020
271,497
44,049
25,138
340,684
242,970
42,576
23,096
308,642
Depreciation, amortization of tangible, intangible assets,
right-of-use assets and goodwill impairment2
94,996
92,761
Other general expenses
Taxes, other than income tax3
Services
Professional fees
Fees payable to authorities and other fees
Advertising
Administration expenses
Rental fees
Subtotal
Total
93,678
113,400
21,775
44,113
19,457
14,662
4,847
84,317
105,384
17,583
44,542
17,913
15,100
4,883
311,932
289,722
747,612
691,125
1 See details in Note 12.
2 See details in Note 13 and Note 36.
3 Special tax of financial institutions was paid by the Group in the amount of HUF 19,652 million for the year 2021 and HUF 17,665 million
for the year 2020, recognized as an expense thus decreased the corporate tax base. For the year ended 31 December 2021 financial
transaction duty was paid by the Bank in the amount of HUF 68 billion while for the year ended 31 December 2020 the same dutiy was HUF
60 billion.
88
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 34:
OTHER OPERATING INCOME AND EXPENSES AND OTHER ADMINISTRATIVE
EXPENSES (in HUF mn) [continued]
The table below contains the detailing of the fees for audit and non-audit services:
Ernst & Young Audit 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
Ernst & Young Network
Audit based on statutory provisions
Other services providing assurance
Tax consulting services
Other non-audit services
Total
2021
In thousand EUR
458
659
1,050
1,575
316
4,058
2021
In thousand EUR
1,788
-
29
209
2,026
NOTE 35:
INCOME TAXES (in HUF mn)
The Group is presently liable for income tax at rates between 9% and 35% of taxable income.
Deferred tax is calculated at the income tax rate of 9% in Hungary and Montenegro, 10% in Bulgaria, 12% in
Moldova, 12.5% in Cyprus, 15% in Serbia and Albania, 16% in Romania, 18% in Ukraine and Croatia, 19% in
Slovenia, 20% in Russia, 25.5% in the Netherlands and 35% in Malta.
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 related to items
recognized directly in equity and in Comprehensive Income
Due to merge of subsidiary
Due to acquisition of subsidiary
Foreign currency translation difference
Closing balance
2021
65,692
6,431
72,123
2021
(3,673)
(6,431)
1,294
-
(737)
611
(8,936)
2020
Reclassified
42,085
1,833
43,918
2020
(2,652)
(1,833)
3,555
(919)
-
(1,824)
(3,673)
89
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 35:
INCOME TAXES (in HUF mn) [continued]
A breakdown of the deferred tax assets are as follows:
Loss allowance on granted loans
Provision for off-balance sheet commitments and
contingent liabilities, derivative financial instruments
Securities at amortized cost
Difference in depreciation of tangible assets
Fair value adjustment of non-trading instruments
mandatorily at fair value though profit or loss
Fair value adjustment of derivative financial instruments
Provision on other financial, non-financial liabilities
Difference in accounting for leases
Fair value adjustment of securities at fair value
through other comprehensive income
Unused tax allowance
Loss allowance / impairment on other
financial, non-financial assets
Tax accrual caused by negative taxable income
Loss allowance on investment (goodwill)
Fair value adjustment of securities at fair value
through profit or loss
Amounts unenforceable by tax law
Other
Deferred tax asset
A breakdown of the deferred tax liabilities are as follows:
Difference in depreciation of tangible assets
Fair value adjustment of securities at fair value
through other comprehensive income
Fair value adjustment of securities at fair value
through profit or loss
Loss allowance on investment (goodwill)
Fair value adjustment of non-trading instruments
mandatorily at fair value though profit or loss
Securities at amortized cost
Provision for off-balance sheet commitments
and contingent liabilities, derivative financial instruments
Loss allowance on granted loans
Interbank placements and receivables
Fair value adjustment of derivative financial instruments
Amounts unenforceable by tax law
Loss allowance / impairment on other
financial, non-financial assets
Repurchase agreement and security lending
Provision on other financial, non-financial liabilities
Other
Deferred tax liabilities
2021
8,244
7,688
9
3,636
256
992
1,073
999
202
-
2,427
152
77
95
-
4,198
30,048
2021
(10,245)
(6,569)
(2,781)
(1,142)
-
(210)
(559)
(944)
(491)
(214)
-
(2,261)
-
(1,875)
(11,693)
(38,984)
2020
9,048
6,469
4,394
3,323
2,053
1,302
1,091
801
-
1,552
1,824
237
71
9
247
5,238
37,659
2020
(8,115)
(2,779)
(9,053)
(769)
(233)
-
(630)
(450)
(322)
(317)
(102)
(82)
(1)
(1)
(18,478)
(41,332)
90
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 35:
INCOME TAXES (in HUF mn) [continued]
A breakdown of the deferred tax liabilities are as follows [continued]
Net deferred tax liability
(amounts presented in the consolidated statement
of financial position)
Deferred tax assets
Deferred tax liabilities
2021
2020
(8,936)
(3,673)
15,109
(24,045)
22,317
(25,990)
Among deferred tax assets the tax accruals are included the following accruals by entities:
Tax accrual caused by negative
taxable income
Merkantil Bank Ltd.
OTP Real Estate Leasing Ltd.
Nagisz Ltd.
2021
40
55
57
152
2020
181
56
-
237
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:
Deferred use of tax allowance
Tax effect of transaction costs related to share-based payment
recognized directly in shareholders' equity
Correction on tax basis due to change of accounting policy
Permanent differences from unused tax losses
Amounts unenforceable by tax law
Use of tax allowance in the current year
Other
Income tax expense
Effective tax rate
Business tax and innovation contribution
Total income tax expense
Net current tax (liability) / asset
(amounts presented in the consolidated statement
of financial position)
Current income tax receivables
Current income tax payable
Date until
it can be used
31/12/2030
31/12/2030
31/12/2030
2020
Reclassified
297,964
36,847
(1,039)
305
230
(167)
(38)
(2,023)
(6,739)
27,376
9.19%
16,542
43,918
2020
9,643
2021
528,435
68,823
(8)
323
-
(103)
(846)
(4,036)
(11,250)
52,903
10.01%
19,220
72,123
2021
(6,603)
29,978
(36,581)
39,171
(29,528)
91
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
LEASES (in HUF mn)
The Group as a lessee:
Right-of-use assets by class of underlying assets as at 31 December 2021:
2021
Property
Office equipment
and vehicles
Total
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
15,710
13,915
50,265
355
245
461
16,065
14,160
50,726
Right-of-use assets by class of underlying assets as at 31 December 2020:
2020
Property
Office equipment
and vehicles
Total
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
15,933
17,999
45,642
514
250
641
16,447
18,249
46,283
The total cash outflow for leases was HUF 19,663 million as at 31 December 2021 and HUF 23,028 million as at
31 December 2020.
The Group mainly leases real estate, a significant part of its right-of-use assets are 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
2021
11,761
41,525
53,286
2021
36,047
17,239
53,286
2020
10,937
37,514
48,451
2020
35,018
13,433
48,451
On 31 December 2021 and 2020 HUF 123 million and HUF 126 million is the lease payment respectively to be
paid in the future due to leases not yet commenced to which the Group is committed. The future lease payment
not taken into account would be HUF 4,041 million arising from extension options if they had been taken into
account.
The most typical indexes/rates on which the variable lease payments depend are: Consumer Price Index,
Inflation Rate, BUBOR, EURIBOR.
92
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
LEASES (in HUF mn) [continued]
The Group as a lessee:
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
Income from subleasing right-of-use assets
Gains or losses arising from sale and leaseback transactions
The Group as a lessor:
2021
1,556
3,885
694
-
11
-
2020
1,623
3,857
721
2
405
-
The Group’s leasing activities are most significant in Hungary, Bulgaria, Slovenia, Ukraine and Croatia. The
main activity of the leasing companies is finance leasing. About half of the underlying assets are passenger cars,
besides this the Group leases mainly agricultural machinery, commercial vehicles, vessels and construction
machinery.
The Group manages the risk associated with the rights held in the underlying assets by, inter alia, buy-back
agreements, determining the residual values on level lower than future market values and registering pledge on
the underlying asset.
The Group as a lessor, finance lease:
Amounts receivable under finance leases
2021
2020
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
469,646
332,360
241,217
159,306
90,548
60,000
1,353,077
692
1,353,769
(141,138)
1,212,631
(30,003)
1,182,628
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
Additions due to new contracts
Additions due to interest income and amortized fees
Decrease due to write-off
Decrease due to repossession of the asset
Decrease due to sale
Decrease due to early repayment
Decrease due to regular lease payment
Foreign currency translation difference
Closing balance
2021
2020
1,075,742
656,055
64,168
(543)
(3,174)
(3,864)
(59,246)
(530,157)
13,650
1,212,631
982,853
372,664
54,110
(349)
(4,422)
(3,924)
(52,703)
(328,357)
55,870
1,075,742
93
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 36:
LEASES (in HUF mn) [continued]
The Group as a lessor [continued]:
The Group as a lessor, finance lease [continued]:
An analysis of the change in the loss allowance on finance receivables is as follows:
2021
2020
Balance as at 1 January
Loss allowance for the period
Release of loss allowance
Use of loss allowance
Partial write-off
Decrease due to sale
Foreign currency translation difference
Closing balance
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
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
Result from operating leases
Lease income
Therein lease income relating to variable lease
payments that do not depend on an index or a rate
24,602
20,694
(14,918)
(257)
-
(513)
395
30,003
2021
325
59,084
-
2021
10,383
5,172
3,527
2,704
2,019
904
24,709
2021
10,791
-
13,590
23,807
(13,240)
(21)
(50)
-
516
24,602
2020
249
54,046
-
2020
11,285
8,634
4,856
2,692
1,653
20
29,140
2020
9,861
-
94
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn)
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.
Financial instruments may result in certain risks to the Group. The most significant risks the Group faces
include:
37.1. Credit risk
The Group takes on exposure to credit risk which is the risk that a counter-party will be 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 areas and loan types. Such risks
are monitored on a periodical basis and are subject to an annual or more frequent review. The exposure to any
borrower including banks and brokers is further restricted by sub-limits covering on and off-balance sheet
exposures and daily delivery 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 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.
Exposure to credit risk is managed by obtaining collateral, corporate and personal guarantees.
Defining the expected credit loss on individual and collective basis
On individual basis:
Individually assessed are the non-retail or non- micro- and small enterprise exposure of significant amount on a
stand-alone basis:
exposure in stage 3,
exposure in workout management
purchased or originated credit-impaired instruments which are in accordance with the conditions
mentioned above
The calculation of impairment must be prepared and approved by the risk management functional areas. The
calculation, all relevant factors (amortized cost, original and current EIR, contracted and expected cash flows
(from business and/or collateral) for the individual periods of the entire lifecycle, other essential information
enforced during the valuation) and the criteria thereof (including the factors underlying the classification as stage
3) must be documented individually.
The expected credit loss of the exposure equals the difference of the items’ AC (gross book value) on the
valuation date and the present value of the receivable's expected cash flows discounted to the valuation date by
the exposure's original effective interest rate (EIR) (calculated at the initial recognition, or in the case of variable
rate, recalculated due to the last interest rate change). The estimation of the expected future cash flows should be
forward looking, it must also contain the effects of the possible change of macroeconomic outlook.
At least two scenarios must be used for the estimation of the expected cash flow. It should be at least one
scenario in which the entity anticipates that realized cash flows will be significantly different from the
contractual cash flows. Probability weights must be allocated to the individual scenarios. The estimation must
reflect the probability of the occurrence and non-occurrence of the credit loss, even if the most probable result is
the non-occurrence of the loss.
95
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
Defining the expected credit loss on individual and collective basis [continued]
On collective basis:
The following exposures are subject to collective assessment:
retail exposure irrespective of the amount,
micro and small enterprise exposures irrespective of the amount,
all other exposure which are insignificant on a stand-alone basis and not part of the workout
management,
exposure which are not in stage 3, significant on a stand-alone basis,
purchased or originated credit-impaired instruments which are in accordance with the conditions
mentioned above.
In the collective impairment methodology credit risk and the change of credit risk can be correctly captured by
understanding the risk characteristics of the portfolio. In order to achieve this the main risk drivers shall be
identified and used to form homogeneous segments having similar risk characteristics. The segmentation is
expected to stay stable from month to month, however a regular (at least yearly) revision of the segmentation
process should be set up to capture the change of risk characteristics. The segmentation must be performed
separately for each parameter, since in each case different factors may have relevance.
The Bank's Headquarter Group Reserve Committee stipulates the guidelines related to the collective impairment
methodology at group level. In addition, it has right of agreement in respect of the risk parameters (PD -
probability of default, LGD - loss given default, EAD – exposure at default) and segmentation criteria proposed
by the group members.
The review of the parameters must be performed at least annually and the results should be approved by the
Group Reserve Committee. Local Risk Managements are responsible for parameter estimations / updates,
macroeconomic scenarios are calculated by OTP Bank Headquarter for each subsidiary and each parameter.
Based on the consensus proposal of Local Risk Management and OTP Bank Headquarter, the Group Reserve
Committee decides on the modification of parameters (all parameters for impairment calculation).
At least on a yearly basis the impairment parameters should be back tested as well.
The expected loss calculation should be forward looking, including forecasts of future economic conditions. This
may be achieved by applying 3-5 different macroeconomic scenarios, which may be integrated in the PD, LGD
and EAD parameters.
96
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.1. 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 2021:
2021
Carrying
amount /
Exposure
Gross carrying amount / Notinal value
Accumulated loss allowance / Provision
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
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 1
Securities at amortized cost
Financial assets total
Loan commitments given
Financial guarantees given
Other commitments given
Financial liabilities total
1,584,861
61,052
3,822,426
1,587,827
61,342
3,173,491
5,294,170
2,963,112
4,680,180
2,585,014
-
-
559,939
657,586
422,975
500,991
446,341
466,143
13,493,183
1,182,628
412,247
370,790
444,944
11,666,666
959,361
76,131
79,965
23,890
1,820,486
210,955
2,189,534
3,891,335
22,402,593
3,776,768
913,038
1,174,462
5,864,268
2,187,835
3,879,749
20,342,780
3,665,153
887,585
1,127,354
1,699
20,699
2,053,839
128,603
35,648
44,064
5,680,092
208,315
28
-
178,066
158,773
356,485
54,458
9,675
816
758,273
41,944
-
-
800,245
14,805
4,568
8,260
27,633
-
-
57,988
1,587,855
61,342
3,969,484
24,117
12,856
5,520,656
3,377,330
2,339
2,452
-
99,752
371
545,175
462,882
469,650
14,345,177
1,212,631
-
-
100,123
211
7
-
218
2,189,534
3,900,448
23,296,987
3,808,772
927,808
1,179,678
5,916,258
2,966
290
10,450
51,724
49,104
4,751
2,988
1,372
120,389
4,432
6,566
7,789
142,432
20,539
11,814
3,170
35,523
-
-
25,590
69,724
84,158
9,707
4,978
1,475
195,632
11,140
144
1,324
208,240
7,482
1,408
1,140
10,030
28
-
84,937
98,017
274,098
28,351
6,508
660
492,571
14,243
-
-
506,842
3,961
1,542
906
6,409
-
-
26,081
7,021
6,858
1,375
2,067
-
43,402
188
-
-
43,590
22
6
-
28
2,994
290
147,058
226,486
414,218
44,184
16,541
3,507
851,994
30,003
6,710
9,113
901,104
32,004
14,770
5,216
51,990
1 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 9). 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.
97
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.1. Financial instruments by stages [continued]
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:
2020
Carrying
amount /
Exposure
Gross carrying amount / Notinal value
Accumulated loss allowance / Provision
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
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 1
Securities at amortized cost
Financial assets total
Loan commitments given
Financial guarantees given
Other commitments given
Financial liabilities total
1,148,743
190,849
3,311,651
1,150,113
191,141
2,729,387
4,342,003
2,689,621
3,758,377
2,317,004
1
-
522,312
604,480
397,170
521,578
362,425
447,564
11,674,842
1,051,140
391,810
292,973
445,039
9,934,590
857,452
141,197
71,576
5,501
1,742,236
183,719
2,101,384
2,624,920
18,791,878
3,151,051
796,961
954,544
4,902,556
2,099,713
2,629,778
16,862,787
3,034,782
777,513
931,515
1,671
-
1,927,627
141,527
28,646
28,214
4,743,810
198,387
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
-
-
70,809
1,150,232
191,141
3,496,645
31,744
13,988
4,562,003
3,046,610
4,105
3,219
-
123,865
965
571,833
376,138
451,156
12,504,385
1,075,742
-
-
124,830
-
-
-
-
2,101,384
2,630,577
19,653,461
3,182,136
811,224
964,006
4,957,366
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
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
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
-
-
42,566
10,177
7,690
1,948
2,500
-
64,881
170
-
-
65,051
-
-
-
-
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
1 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 9). 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.
98
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.2. 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 2021:
2021
Opening
balance
Modi-
fication
Increases
due to
origination
and
acquisition
Decreases due
to
derecognition
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
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
123,675
1,377
292
106,151
4,141
11,714
203,173
1
-
194,941
8,103
-
-
-
-
-
-
-
-
-
(1,281)
-
128
1,281
476,668
111
-
463,570
12,188
799
803,516
-
-
-
-
-
-
-
141,894
24,635
667
109,970
2,643
3,979
29,705
-
-
26,947
2,696
62
19,133
-
-
17,649
1,484
(37,619)
(4,383)
-
(29,761)
(255)
(3,220)
(21,813)
-
-
(21,200)
(613)
-
(44,871)
-
-
(43,539)
(1,332)
(103,930)
-
-
(91,303)
(12,106)
(521)
9,826
-
-
3,766
5,539
521
94,104
-
-
87,537
6,567
-
-
190,732
(104,303)
-
-
25,663
(18,854)
(669)
33,215
10,426
1,545
(27,800)
-
-
(23,004)
(4,229)
(567)
21,425
46
-
25,360
(3,981)
-
19,288
(4,885)
-
-
(4,442)
(443)
-
8,202
-
-
8,550
(348)
-
8,856
-
-
9,852
(996)
(102)
-
-
(102)
-
-
(498)
(1)
-
(497)
-
(69,523)
(240)
-
(67,453)
(1,022)
(2,264)
191
-
(3,339)
26
858
7,445
-
-
7,410
(8)
43
1,050
111
-
(405)
1,335
142,432
2,966
290
120,389
4,432
14,355
208,240
-
-
195,632
11,140
1,468
506,842
28
-
492,571
14,243
-
12,173
(808)
(70,123)
9
6,231
-
857,514
99
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.2. Movement table of loss allowance / provision on financial instruments [continued]
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 2021 [continued]:
2021
Opening
balance
Modi-
fication
Increases
due to
origination
and
acquisition
Decreases due
to
derecognition
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
POCI
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 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
Loan commitments and financial guarantees
given - poci
Provision on financial liabilities total
65,051
-
-
64,881
170
-
868,567
37,297
11,055
6,458
-
54,810
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,929)
(2,929)
-
-
-
-
190,652
(90,565)
-
-
-
-
-
-
-
(17,138)
6,004
-
(23,142)
-
(129)
(129)
-
-
-
(4,370)
(4,370)
-
-
-
3,105
1,424
-
1,663
18
43,590
-
-
43,402
188
-
2,150
-
12,044
-
-
(74,493)
(7,251)
-
901,104
23,514
(5,522)
1,446
(20,069)
(1,031)
3,804
(791)
(2,173)
(2,216)
932
(1,337)
727
31
28,281
(4)
(7,654)
-
-
196
3
(22,086)
436
(65)
(1)
(661)
-
-
-
-
-
(112)
35,523
(85)
10,030
(502)
6,409
(1)
(700)
28
51,990
100
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.2. Movement table of loss allowance / provision on financial instruments [continued]
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:
2020
Opening
balance
Increases
due to
origination
and
acquisition
Decreases due
to
derecognition
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
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
119,180
451
62
109,921
3,805
4,941
68,778
5
-
66,390
2,383
-
464,313
22
-
456,246
7,320
141,735
10,430
306
125,137
1,884
3,978
57,383
-
-
53,445
3,938
-
119,894
-
-
117,198
2,696
(42,569)
(263)
-
(40,604)
(739)
(963)
(15,678)
-
-
(15,537)
(141)
-
(99,345)
-
-
(98,810)
(535)
(185,201)
-
-
(183,599)
(1,602)
-
83,013
-
-
81,777
1,236
-
99,117
-
-
98,813
304
725
-
-
-
Loss allowance on financial assets subtotal
652,271
319,012
(157,592)
(3,071)
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
(4,294)
-
-
(4,132)
(162)
-
6,130
-
-
6,208
(78)
-
364
-
-
373
(9)
(56)
-
-
(55)
(1)
-
(98)
-
-
(98)
-
-
(92,476)
-
-
(92,226)
(250)
10,769
3,564
-
7,111
(78)
172
348
(4)
-
(46)
398
-
186
44
-
(2,111)
2,179
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
-
2,200
-
(92,630)
74
11,303
799
803,516
101
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.2. Movement table of loss allowance / provision on financial instruments [continued]
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 [continued]:
2020
Opening
balance
Increases
due to
origination
and
acquisition
Decreases due
to
derecognition
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
POCI
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
51,844
-
-
51,762
82
16,933
-
-
16,933
-
(11,752)
-
-
(11,752)
-
3,071
-
-
3,009
62
1,527
-
-
1,501
26
489
-
-
489
-
(735)
-
-
(735)
-
3,674
-
-
3,674
-
65,051
-
-
64,881
170
Loss allowance on financial assets total
704,115
335,945
(169,344)
Loan commitments and financial guarantees
-
-
-
-
-
-
73,550
-
2,689
-
(93,365)
-
14,977
-
868,567
given - stage 1
36,497
20,712
(2,118)
(900)
(15,344)
(453)
(1,785)
688
37,297
Loan commitments and financial guarantees
given - stage 2
2,728
3,984
(458)
Loan commitments and financial guarantees
given - stage 3
Provision on financial liabilities total
7,508
46,733
1,071
25,767
(570)
(3,146)
351
549
-
4,474
(3,545)
(14,415)
237
257
41
-
-
(1,785)
(261)
11,055
1,188
1,615
6,458
54,810
102
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.3. Loan portfolio by internal ratings
2021
Internal rating grade
Stage 1
Gross carrying amount
Stage 3
Stage 2
POCI
Total
Low risk grade (1-4)
Medium risk grade (5-7)
High risk grade (8-9)
Non performing
Total loans at amortized cost
7,644,341
4,692,656
289,030
-
631,138
869,200
526,928
4,175
-
-
-
800,217
2,921
46,708
2,563
47,931
8,278,400
5,608,564
818,521
852,323
and finance lease receivable
12,626,027
2,031,441
800,217
100,123 15,557,808
2021
Internal rating grade
Stage 1
Accumulated loss allowance
Stage 3
Stage 2
POCI
Low risk grade (1-4)
Medium risk grade (5-7)
High risk grade (8-9)
Non performing
Total loans at amortized cost
52,654
57,421
14,746
-
42,988
81,894
78,111
3,779
-
-
-
506,814
129
13,009
375
30,077
Total
95,771
152,324
93,232
540,670
and finance lease receivable
124,821
206,772
506,814
43,590
881,997
103
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1.4. Loan portfolio by countries
An analysis of the non-qualified and qualified gross loan portfolio by country is as follows:
2020
2021
Country
Hungary
Bulgaria
Croatia
Serbia
Romania
Slovenia
Russia
Ukraine
Montenegro
France
Albania
Moldova
Germany
Belgium
Austria
Slovakia
The Netherlands
Switzerland
United Kingdom
United States of America
Luxembourg
Poland
Italy
Ireland
Cyprus
Denmark
Czech Republic
Canada
Australia
Greece
Turkey
Spain
Israel
Bosnia and Herzegovina
Sweden
Norway
Saudi Arabia
United Arab Emirates
Egypt
Kazakhstan
Iceland
Latvia
Other1
Total
Loss
allowance
Gross amount of loan,
finance lease receivable
at amortized cost,
placement with other
banks and repo
receivable portfolio
Gross amount of loan,
finance lease receivable
at amortized cost,
placement with other
banks and repo
receivable portfolio
Loss
allowance
5,528,516
2,972,390
1,826,233
1,729,147
1,076,696
981,307
812,070
684,030
385,342
182,850
233,391
166,720
84,164
80,434
40,426
80,117
36,858
80,611
21,209
106,347
33,251
19,203
10,558
5,375
8,646
339
899
4,823
3,164
1,808
1,810
1,095
1,174
467
810
334
239
532
582
209
1
46
2,782
17,207,005
215,911
206,233
101,067
47,085
57,665
16,244
137,920
52,678
24,930
725
10,551
5,025
675
328
201
319
622
1,701
1,763
419
1,271
239
239
106
562
16
12
16
10
192
95
25
15
76
63
23
9
30
15
15
-
26
164
885,281
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
132,163
151,101
49,401
54,009
74,614
31,144
61,804
21,692
70,901
25,062
2,006
25,614
14,053
16,890
5,817
902
17,026
3,649
989
1,567
996
455
795
536
7,525
424
388
78
193
56
34
2,880
14,921,500
209,216
202,018
101,640
48,429
52,016
14,022
133,293
50,393
23,440
645
8,243
4,586
485
119
58
225
497
615
1,282
67
46
119
164
211
3,102
15
9
5
1
141
93
55
5
248
54
39
7
31
6
8
56
20
202
855,926
1 Other category as at 31 December 2021 mainly includes e.g.: Georgia, Japan, Saudi Arabia, Macedonia, Portugal, China, Brazil, Lithuania, Republic of South-
Africa, Algeria, Armenia, Belorussia, Finland, Tunisia, Morocco, South-Korea, Jordan, India, Iran, Estonia, Nigeria, Malta, Syria, Vietnam, Republic of
Pakistan, Kyrgyzstan and other countries.
104
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.4. Loan portfolio by countries [continued]
Country
Hungary
Croatia
Bosnia-Herzegovina
Total
2021
2020
Loans at fair value
1,067,830
281
-
1,068,111
798,981
1,089
2,535
802,605
37.1.5. Loan portfolio classification by economic activities
Gross loan at amortized cost and finance lease
receivable portfolio by economic activities
Retail
Agriculture, forestry and fishing
Manufacturing, mining and quarrying
and other industry
Construction
Wholesale and retail trade, transportation and
storage accommodation and food service activities
Information and communication
Financial and insurance activities
Real estate activities
Professional, scientific, technical, administration
and support service activities
Public administration, defence, education,
human health and social work activities
Other services
Total gross loans and finance lease receivable
2021
2020
7,392,496
607,122
1,721,170
593,682
2,474,616
195,561
268,748
562,227
6,575,162
508,175
1,436,038
481,402
2,133,063
155,055
217,982
524,665
440,381
370,454
416,634
885,171
15,557,808
401,932
776,199
13,580,127
105
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.5. Loan portfolio classification by economic activities [continued]
Loss allowance on loans at amortized cost and
finance lease receivable by economic activities
Retail
Agriculture, forestry and fishing
Manufacturing, mining and quarrying
and other industry
Construction
Wholesale and retail trade, transportation and
storage accommodation and food service activities
Information and communication
Financial and insurance activities
Real estate activities
Professional, scientific, technical, administration
and support service activities
Public administration, defence, education,
human health and social work activities
Other services
Total loss allowance on loans and
finance lease receivable
37.1.6. Collateral
2021
523,065
17,547
60,054
19,382
92,934
4,880
12,798
20,783
10,789
4,310
115,455
881,997
2020
493,759
15,013
57,804
18,170
84,141
4,457
14,773
24,058
11,245
4,821
125,904
854,145
The values of collateral received and held by the Group by type are as follows (total collateral). The collateral
covers loans as well as off-balance sheet exposures.
Types of collateral
2021
2020
Mortgages
Guarantees and warranties
Guarantees of state or organizations owned by state
Assignments (revenue or other receivables)
Securities
Cash deposits
Other
Total
13,367,891
1,296,415
1,070,479
422,030
237,076
187,934
2,211,671
18,793,496
12,346,773
178,139
731,529
486,670
156,857
163,489
2,159,894
16,223,351
The values of collateral received and held by the Group by type are as follows (to the extent of the exposures).
The collaterals cover loans as well as off-balance sheet exposures.
Types of collateral
2021
2020
Mortgages
Guarantees of state or organizations owned by state
Guarantees and warranties
Assignments (revenue or other receivables)
Securities
Cash deposits
Other
Total
6,479,871
832,432
799,775
290,066
156,715
76,338
1,295,740
9,930,937
5,902,854
190,700
984,532
344,716
115,269
67,158
1,244,771
8,850,000
106
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.6. Collateral [continued]
The coverage level of the loan portfolio (total collateral) increased by 2.74% and the coverage level to the extent
of the exposures was almost the same as at 31 December 2021.
The values of collateral given and held by the Group according to which financial asset is recognized as
collateral are as follows:
Financial assets as collaterals recognized
in the consolidated statement of financial position
Cash, amounts due from banks and balances
with the National Banks
Placements with other banks
Repo receivables
Securities at fair value through other comprehensive income
Securities at amortized cost
Loans at amortized cost
Finance lease receivables
Other financial assets
Total
37.1.7. Restructured loans
2021
2020
15,791
9,590
35,826
16,546
42,233
1,089,614
32,553
-
1,242,153
-
830
-
54,948
11,071
-
12,561
3,443
82,853
Retail mortgage loans
Loans to medium and large corporations
Retail consumer loans
Loans to micro and small enterprises
Municipal
Other loans
Total
2021
2020
Gross
portfolio
Loss
allowance
Gross
portfolio
Loss
allowance
269,700
276,796
149,469
57,403
75
27,092
780,535
(8,779)
(44,197)
(32,850)
(7,668)
(8)
(2,555)
(96,057)
15,159
58,271
31,108
11,782
41
4,412
120,773
(2,754)
(12,260)
(14,714)
(1,237)
(16)
(791)
(31,772)
The forborne definition used by the Group is based on EU 2015/227 regulation.
Restructuring (forbearance) is a modification of the contract – initiated by either the client or the bank – that
provides a concession or allowance towards the client in respect to the client’s current or future financial
difficulties. The table of restructured loans contains exposures classified as performing forborne. An exposure is
considered performing forborne if the conditions of the non-performing status are not met at the time of the
restructuring, or the exposure fulfilled the requirements of the minimum one-year cure period as non-performing
forborne.
The significant increase of the performing forborne loan volume is due to the forborne classification rules set by
the NBH executive circulars of 21 January 2021 and 25 November 2021 for loans participating in phase 2 and
phase 3 of the moratoria. The loan volume classified as performing forborne exclusively due to moratoria
participation is in the Group: HUF 544 bn (in OTP Core: HUF 503 bn, in OTP Bank: HUF 290 bn, in OTP
Mortgage Bank Ltd.: HUF 208 bn, in OTP Building Society Ltd.: HUF 5 bn). For the affected portfolios the
earliest possible exit from the forborne status is 6 months after the exit from moratorium for retail and 2 years
after the exit from moratorium for corporate exposures.
107
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.8. Financial instruments by rating categories1
Securities held for trading as at fair value through profit or loss as at 31 December 2021
2021
Aaa
Aa3
A1
A2
A3
Baa1
Baa2
Baa3
Ba1
Ba2
B1
B3
Not
rated
Total
Government bonds
Equity instruments and fund units
Corporate bonds
Discounted Treasury bills
Mortgage bonds
Other interest bearing securities
Other non-interest
bearing securities
Total
-
569
-
-
-
-
561
1,130
-
19
-
-
-
-
-
19
-
49
-
-
-
-
-
49
16
59
-
-
-
-
-
75
-
35
485
-
-
-
-
520
18,747
12
-
-
-
-
-
18,759
26,024
24
-
869
-
1,347
-
28,264
11,282
83
97
-
-
-
-
11,462
10,156
-
-
-
-
-
31,306
2
-
-
-
-
-
10,156
-
31,308
-
6
-
-
-
-
6
-
-
-
54
-
-
-
54
-
315
158
-
101
-
97,531
1,173
740
923
101
1,347
1,134
1,708
1,695
103,510
Non-trading securities mandatorily at fair value through profit or loss as at 31 December 2021
2021
Aa3
Baa3
Ba1
Not rated
Total
Non-trading equity instruments mandatorily at
fair value through profit or loss
Non-trading debt instruments mandatorily at
fair value through profit or loss
Total
-
-
7,811
37,083
44,894
3,498
3,498
1,043
1,043
56
7,867
3,912
40,995
8,509
53,403
1 Moody’s ratings
108
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.8. Financial instruments by rating categories1 [continued]
Securities at fair value through other comprehensive income as at 31 December 2021
2021
Aaa
Aa2
Aa3
A1
A2
A3
Baa1
Baa2
Baa3
Ba1
Ba2
Ba3
B1
B3
Caa1
Government bonds
Corporate bonds
Mortgage bonds
Discounted Treasury bills
National Bank of
Hungary bonds
Interest bearing treasury bills
Other securities
Non-trading
21,728
-
-
-
7,849
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17,808
-
47,568
-
28,492
-
-
-
99,425
2,896
-
-
203,172
-
-
-
495,231
6,152
-
44,924
372,198
44,606
-
-
188,395
4,144
-
51,701
162,477
12,630
-
-
-
-
-
-
76,732
-
-
-
91,487
-
-
-
178
-
-
-
Not
rated
-
18,091
15,504
-
Total
1,765,172
88,519
63,072
96,625
-
-
-
-
-
-
-
-
-
-
-
-
-
63,115
-
-
-
-
-
-
-
-
-
-
109,774
-
-
-
-
-
-
-
-
-
-
-
-
-
3,257
109,774
63,115
3,257
equity instruments
Total
-
21,728
-
7,849
6,112
6,112
349
65,725
-
28,492
-
102,321
-
203,172
-
609,422
305
417,109
-
244,240
-
175,107
-
109,774
-
76,732
-
91,487
-
178
28,210
65,062
34,976
2,224,510
Securities at amortized cost as at 31 December2021
2021
Aaa
Aa2
A1
A2
A3
Baa1
Baa2
Baa3
Ba1
Ba2
B1
B3
Government bonds
Corporate bonds
Discounted Treasury bills
Mortgage bonds
Other securities
Total
185,261
-
-
-
298
185,559
45,392
-
-
-
-
45,392
20,043
-
-
12,992
-
33,035
-
-
-
-
8,210
8,210
31,892
-
-
-
-
31,892
172,502
-
-
-
7,343
179,845
2,858,111
-
6
-
3,682
2,861,799
174,929
32,013
-
47
-
206,989
26,544
-
-
-
-
26,544
12,617
-
-
-
-
12,617
25,587
-
-
-
-
25,587
91,423
-
15,696
-
-
107,119
1 Moody’s ratings
Not
rated
-
138,862
-
11,282
16,603
166,747
Total
3,644,301
170,875
15,702
24,321
36,136
3,891,335
109
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.8. Financial instruments by rating categories1 [continued]
Securities held for trading as at fair value through profit or loss as at 31 December 2020
2020
Aaa
A2
A3
Baa1
Baa2
Baa3
Ba1
Ba2
Ba3
B1
Government bonds
Discounted Treasury bills
Equity instruments
and fund units
Other interest bearing securities
Total
-
-
535
-
535
-
-
36
-
36
-
-
33
495
528
9,138
-
45
-
9,183
2,155
-
7
-
2,162
5,734
1,233
36
998
8,001
7,247
-
-
-
7,247
-
-
7
-
7
13,762
11,428
-
-
25,190
Not
rated
Total
-
-
5
-
5
-
60
3,036
582
3,678
38,036
12,721
3,740
2,075
56,572
Non-trading securities mandatorily at fair value through profit or loss as at 31 December 2020
2020
Aa3
A1
Baa3
Not rated
Total
Non-trading equity instruments mandatorily at
fair value through profit or loss
Non-trading debt instruments mandatorily at
fair value through profit or loss
Debt securities designated
at fair value through profit or loss
Total
1 Moody’s ratings
-
2,794
-
2,794
-
-
-
46,063
46,063
1,457
7,263
11,514
2,235
2,235
-
1,457
-
53,326
2,235
59,812
110
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.8. Financial instruments by rating categories1 [continued]
Securities at fair value through other comprehensive income as at 31 December 2020
2020
Aaa
Aa2
Aa3
A2
A3
Baa1
Baa2
Baa3
Ba1
Ba2
Ba3
B1
B3
Caa1
C
Government bonds
Mortgage bonds
Corporate bonds
Discounted Treasury bills
Non-trading
equity instruments
Total
20,639
-
-
-
-
20,639
8,215
-
-
-
-
8,215
-
-
-
-
37,195
63,577
-
-
120,112
-
4,815
-
192,994
-
-
-
-
-
2,336
-
959,133
-
39,179
9,957
182,685
-
4,997
66,401
-
-
979
-
200,478
-
12,532
-
18,166
-
-
-
69,248
-
-
-
3,875
3,875
-
100,772
-
124,927
47
193,041
-
2,336
898
1,009,167
-
254,083
-
979
-
213,010
-
18,166
-
69,248
145
-
-
-
-
145
Not
rated
-
24,695
16,782
-
Total
1,855,134
88,272
81,620
76,358
46,124
-
-
-
-
46,124
30,505
71,982
35,325
2,136,709
Securities at amortized cost as at 31 December 2020
2020
Aa2
A1
A3
Baa1
Baa3
Ba1
Ba3
B1
B3
Government bonds
Corporate bonds
Discounted Treasury bills
Total
45,975
-
-
45,975
10,939
-
-
10,939
38,987
-
-
38,987
38,573
-
-
38,573
2,306,821
14,605
-
2,321,426
9,922
10,517
-
20,439
4,147
-
-
4,147
9,961
-
-
9,961
74,743
-
10,358
85,101
Not
rated
-
49,372
-
49,372
Total
2,540,068
74,494
10,358
2,624,920
1 Moody’s ratings
111
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.2. Maturity analysis of assets, liabilities and liquidity risk
Liquidity risk is a measure of the extent to which the Group may be required to raise funds to meet its
commitments associated with financial instruments. The Group maintains its liquidity profiles in accordance
with regulations prescribed by the NBH.
The essential aspect of the liquidity risk management strategy is to identify all relevant systemic and
idiosyncratic sources of liquidity risk and to measure the probability and severity of such events. During liquidity
risk management the Group considers the effect of liquidity risk events caused by reasons arising in the bank
business line (deposit withdrawal), the national economy (exchange rate shock yield curve shock) and the global
financial system (capital market shock).
In line with the Group’s risk management policy liquidity risks are measured and managed on multiply hierarchy
levels and applying integrated unified VaR based methodology. The basic requirement is that the Group must
keep high quality liquidity reserves which means it can fulfill all liabilities when they fall due without material
additional costs.
The liquidity reserves can be divided in two parts. There are separate decentralized liquid asset portfolios at
subsidiary level and a centralized flexible liquidity pool at a Group level. The reserves at subsidiary levels are
held to cover the relevant shocks of the subsidiaries which may arise in local currencies (deposit withdrawal,
local capital market shock, unexpected business expansion), while the centralized liquidity pool is held to cover
the Bank’s separate shocks (deposit-, yield curve- and exchange rate shocks) and all group member’s potential
shocks that may arise in foreign currencies (deposit withdrawal, capital market shock).
The recalculation of shocks is made at least quarterly while the recalibration of shock measurement models and
review of the risk management methodology is an annual process. The monitoring of liquidity reserves for both
centralized and decentralized liquid asset portfolio has been built into the daily reporting process.
Due to the balance sheet adjustment process (deleveraging) experienced in the last few years, the liquidity
reserves of the Group increased significantly while the liquidity risk exposure has decreased considerably.
Currently the (over)coverage of potential liquidity risk exposure by high quality liquid assets is high. There were
no material changes in the liquidity risk management process for the year ended 31 December 2021.
The contractual amounts disclosed in the maturity analyses are the contractual undiscounted cash-flows like
gross finance lease obligations (before deducting finance charges); prices specified in forward agreements to
purchase financial assets for cash; net amounts for pay-floating/receive-fixed interest rate swaps for which net
cash-flows are exchanged; contractual amounts to be exchanged in a derivative financial instrument for which
gross cash-flows are exchanged; gross loan commitments.
Such undiscounted cash-flows differ from the amount included in the Consolidated Statement of Financial
Position because the amount in that statement is based on discounted cash-flows. When the amount payable is
not fixed, the amount disclosed is determined by reference to the conditions existing at the end of the reporting
period. For example, when the amount payable varies with changes in an index, the amount disclosed may be
based on the level of the index at the end of the period.
The following tables provide an analysis of assets and liabilities about the non-discounted cash-flow into
relevant maturity groupings based on the remaining period from the balance sheet date to the contractual
maturity date. It is presented under the most prudent consideration of maturity dates where options or repayment
schedules allow for early repayment possibilities.
112
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.2. Maturity analysis of assets, liabilities and liquidity risk [continued]
2021
Within 3
months
Within one year
and over 3 months
Within 5 years
and over one year
Over 5 years
Without
maturity
Total
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 receivable
Loans measured at fair value through profit or loss
Associates and other investments
Other financial assets1
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 liabilities1
Subordinated bonds and loans
TOTAL LIABILITIES
NET POSITION
2,557,092
1,314,523
61,373
29,714
-
295,977
34,190
1,827,131
124,074
30,164
-
130,133
6,404,371
332,330
79,045
530
19,593,347
6,702
3,060
465,022
2,886
51
61,455
-
21,975
-
249,131
482,530
2,599,854
307,745
31,662
-
3,244
3,757,647
173,171
-
1,253
997,565
2,664
9,058
26,311
-
-
145,180
-
37,345
9,769
1,114,027
2,146,652
5,897,202
770,154
221,069
-
6,265
10,347,663
704,505
2
4,421
336,246
303,223
27,307
10,312
7,495
20,482,922
1,210,022
1,393,511
-
67,764
-
13,530
19
544,167
1,202,747
4,742,146
48,636
835,014
-
3,270
7,457,293
366,025
-
34,980
148,580
159,139
15,530
674
269,698
994,626
-
-
-
1,738
43,615
40,798
-
136,975
-
-
79,736
9,804
312,666
-
-
-
-
-
-
6,235
-
6,235
2,557,143
1,588,922
61,373
104,302
53,403
2,244,100
3,866,119
15,203,308
1,250,609
1,117,909
79,736
152,716
28,279,640
1,576,031
79,047
41,184
21,075,738
471,728
54,955
508,554
280,079
24,087,316
(14,078,551)2
2,547,625
8,954,152
6,462,667
298,142
4,184,035
1 Without derivative financial instruments
2 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.
113
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.2. Maturity analysis of assets, liabilities and liquidity risk [continued]
2021
Within 3
months
Within one year
and over 3 months
Within 5 years
and over one year
Over 5 years
Without
maturity
Total
Receivables from derivative financial instruments held for trading
Liabilities from derivative financial instruments held for trading
4,396,050
(4,349,598)
1,993,311
(1,991,763)
302,924
(296,648)
151,959
(146,398)
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
46,452
5,693
1,548
37,815
6,276
5,561
580,489
16,195
(7,765)
(47,374)
(595,938)
(16,417)
(2,072)
44,380
3,749,199
532,445
61,124
464,341
4,807,109
(9,559)
(8,011)
234,503
347,448
2,937
-
584,888
(15,449)
(9,173)
74,915
307,030
853
-
382,798
(222)
5,339
6,385
106,918
163
-
113,466
-
-
-
-
-
-
-
-
-
-
-
-
6,844,244
(6,784,407)
59,837
640,192
(667,494)
(27,302)
32,535
4,065,002
1,293,841
65,077
464,341
5,888,261
114
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.2. Maturity analysis of assets, liabilities and liquidity risk [continued]
2020
Within 3
months
Within one year
and over 3 months
Within 5 years
and over one year
Over 5 years
Without
maturity
Total
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 1
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 1
Subordinated bonds and loans
TOTAL LIABILITIES
NET POSITION
2,370,130
902,977
191,143
14,546
28
2,235
136,746
121,993
1,720,314
127,856
24,352
-
134,672
5,746,992
165,619
8,379
3,159
15,065,456
1,971
2,859
374,525
2,843
36
77,646
-
16,163
-
-
278,017
47,251
2,130,394
274,143
25,193
-
3,520
2,852,363
86,991
-
1,421
2,300,365
130,445
8,163
19,447
-
41,471
134,780
-
15,093
-
-
984,596
1,577,822
5,190,401
659,682
159,934
-
4,551
8,768,330
695,707
109,612
8,350
305,074
269,133
27,776
3,239
6,838
15,624,811
2,546,832
1,425,729
20,675
34,502
-
8,032
9,590
-
644,612
819,600
4,219,165
42,439
607,274
-
1,902
6,407,791
254,897
-
21,201
221,028
65,841
11,169
89
267,083
841,308
-
635
-
777
42,879
-
31,688
-
-
-
-
58,307
14,376
148,662
-
-
-
-
-
-
10,496
-
10,496
2,432,312
1,150,540
191,143
54,611
52,497
2,235
2,075,659
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
(9,877,819)2
305,531
7,342,601
5,566,483
138,166
3,474,962
1 Without derivative financial instruments
2 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.
115
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.2. Maturity analysis of assets, liabilities and liquidity risk [continued]
2020
Within 3
months
Within one year
and over 3 months
Within 5 years
and over one year
Over 5 years
Without
maturity
Total
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
594,663
(473,510)
121,153
3,080,660
(3,302,801)
(222,141)
532,012
(441,330)
90,682
246,922
(200,525)
46,397
186
8,082
169,339
173,109
(41,382)
(118,914)
(468,378)
(88,720)
(41,196)
79,957
2,375,279
225,440
13,670
305,269
2,919,658
(110,832)
(332,973)
609,431
280,625
8,916
-
898,972
(299,039)
(208,357)
350,195
416,293
1,476
-
767,964
84,389
130,786
85,813
137,739
11,377
-
234,929
-
(31)
(31)
-
-
-
(31)
-
99,602
276
-
99,878
4,454,257
(4,418,197)
36,060
350,716
(717,394)
(366,678)
(330,618)
3,420,718
1,159,699
35,715
305,269
4,921,401
116
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.3. Net foreign currency position and foreign currency risk
2021
USD
EUR
CHF
Egyéb
Total
Assets
Liabilities
Derivative financial
instruments
Net position
1,163,960
(1,013,972)
7,661,460
(6,769,472)
88,639
(107,902)
7,677,060
(5,971,941)
16,591,119
(13,863,287)
(186,774)
(36,786)
(371,225)
520,763
32,021
12,758
(101,951)
1,603,168
(627,929)
2,099,903
2020
USD
EUR
CHF
Egyéb
Total
Assets
Liabilities
Derivative financial
instruments
Net position
717,819
(878,916)
7,003,090
(5,926,666)
73,344
(87,551)
6,435,309
(5,195,693)
14,229,562
(12,088,826)
259,993
98,896
(921,666)
154,758
32,905
18,698
(147,436)
1,092,180
(776,204)
1,364,532
The table above provides an analysis of the main foreign currency exposures of the Group that arise in the non-
functional currency of the entities constituting the Group. The remaining foreign currencies are shown within
‘Others’. ‘Others’ category contains mainly foreign currencies in RON, RSD, HRK, UAH, RUB, BGN, ALL
and MDL. The Group monitors its foreign exchange position for compliance with the regulatory requirements of
the National Banks and its own limit system established in respect of limits on open positions. The measurement
of the open foreign currency position of the Group involves monitoring the “VaR” limit on the foreign exchange
exposure of the Group. The derivative financial instruments detailed in the table above are presented at fair
value.
37.4. Interest rate risk management
Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest
rates. The length of time for which the rate of interest is fixed on a financial instrument, therefore, indicates to
what extent it is exposed to interest rate risk.
The majority of the interest bearing assets and liabilities of the Group are structured to match either short-term
assets and short-term liabilities, or long-term assets and liabilities with repricing opportunities within one year,
or long-term assets and corresponding liabilities where repricing is performed simultaneously.
In addition, the significant spread existing between the different types of interest bearing assets and liabilities
enables the Group to 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 repricing dates of the Group. Variable yield assets and liabilities have
been reported in accordance with their next repricing date. Fixed income assets and liabilities have been reported
in accordance with their maturity.
117
Within 1 month
Over 1 month and
Within 3 months
Over 3 months and
Within 12 months
Over 1 year and
Within 2 years
Over 2 years
Non-interest-bearing
Total
Total
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
-
-
-
-
6,697
6,697
-
-
-
-
-
-
12,423
12,423
133,248
-
1,503,880
-
170,960
36,376
2,385,075
721,012
2,556,035
757,388
-
-
-
-
1,336
160,183
161,519
133,248
1,503,880
133,248
1,503,880
1,637,128
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.4. Interest rate risk management [continued]
As at 31 Deceember 2021
ASSETS
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
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
37,712
36,376
1,336
-
435,888
271,734
164,154
-
33,638
33,638
-
-
1,237
32
1,205
-
-
-
-
-
821,501
661,318
160,183
-
-
-
-
-
28,183
28,183
-
-
-
-
-
-
360,795
67,304
109,822
30,509
134,382
449
226,413
66,855
-
21,535
21,535
-
-
7,034
7,034
-
-
-
-
-
-
-
-
-
-
-
664
487
177
-
-
-
-
-
96,918
12,904
-
5,828
5,828
-
-
26,796
26,796
-
-
-
-
-
-
1,007
29,502
-
-
-
-
-
2,506
2,233
273
-
-
-
-
-
12,391
12,391
-
-
50,770
50,238
532
-
-
-
-
-
49,632
49,632
27,234
27,234
-
-
-
-
-
-
-
-
-
-
-
-
405,437
254,065
151,372
-
-
-
-
-
17,202
17,202
-
-
-
-
-
-
16,960
16,960
360
360
6,634
6,634
25,036
25,036
13,415
13,415
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24,415
5,853
1,013,185
571,676
1,584,861
-
-
-
-
24,415
5,853
-
-
-
-
1,770
-
-
1,770
51
-
-
51
1,098
-
-
1,098
576,887
411,883
24,415
33,638
33,638
-
-
31,573
28,148
1,655
1,770
325,974
239,849
5,853
27,414
27,363
-
51
71,937
70,839
-
1,098
902,861
651,732
30,268
61,052
61,001
-
51
103,510
98,987
1,655
2,868
28,074
25,329
28,074
25,329
53,403
-
-
-
-
-
-
-
-
-
-
28,074
25,329
28,074
25,329
53,403
118
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.4. Interest rate risk management [continued]
As at 31 Deceember 2021 [continued]
ASSETS [continued]
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
fixed rate
variable rate
non-interest-bearing
Finance lease receivables
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
Within 1 month
Over 1 month and
Within 3 months
Over 3 months and
Within 12 months
Over 1 year and
Within 2 years
Over 2 years
Non-interest-bearing
Total
Total
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
205,473
157,136
48,337
-
117
-
117
-
291,988
291,987
1
-
124,634
117,026
7,608
-
22,420
6,897
15,523
-
-
-
-
-
92,258
92,258
-
-
24,325
19,513
4,812
-
97,202
88,628
8,574
-
365,576
365,576
-
-
202,157
202,157
40,289
40,289
177,681
177,681
-
-
-
-
-
-
362,610
395,460
(32,850)
-
697,456
684,739
12,717
(353)
-
-
35,329
-
-
-
(353)
35,329
28,559
28,559
264,200
264,200
56,712
56,712
2,305,098
2,305,098
722,114
722,114
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
727,641
688,410
39,584
(353)
2,934,991
2,934,874
117
-
1,496,869
1,448,822
2,224,510
2,137,232
12,718
35,329
956,344
943,924
12,420
-
52,302
34,976
3,891,335
3,878,798
12,537
-
800,665
5,419,263
534,858
1,525,057
51,410
1,029,075
2,075
260,668
749,255
4,390,188
532,783
1,264,389
-
117,384
6,555
110,829
-
27,185
2
27,183
-
-
304,444
118,251
186,193
-
281
-
281
-
-
16,580
440
16,140
-
11,172
-
11,172
-
-
131,417
8,408
123,009
-
-
-
-
-
60,259
16,048
44,211
-
5,736
5,736
-
-
73,893
-
73,893
-
1,516,897
1,409,585
1,249,024
1,125,415
395,951
188,029
937,234
551,410
680,161
574,143
107,312
123,609
207,922
385,824
106,018
-
3,395
3,393
2
-
-
13,864
4,860
9,004
-
-
1,261
1,155
106
-
-
19
13
6
-
-
-
-
-
-
1,431,981
264,434
410,199
1,636,001
1,180,170
121,187
109,109
3,417,404
10,075,779
13,493,183
683,927
187,209
748,054
77,225
-
161,672
37,140
124,532
-
-
-
-
-
863,886
862,177
1,709
-
212
12
200
-
-
20,288
20,288
-
-
29,473
-
29,473
-
10,760
10,760
-
-
-
-
-
-
374,260
35,939
-
88,194
40,715
47,479
-
-
-
-
-
57,580
57,521
59
-
-
-
-
-
942,294
693,707
-
197,583
188,967
8,616
-
926,107
-
926,107
-
835,327
344,843
-
-
-
121,187
137,387
64,125
73,262
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,199,036
3,183,257
4,382,293
2,097,181
6,783,413
8,880,594
109,109
1,943
-
-
1,943
121,187
357,571
221,986
135,585
-
109,109
825,057
268,639
554,475
1,943
230,296
1,182,628
490,625
690,060
1,943
-
-
-
-
1,067,830
2
1,067,828
-
281
-
281
-
1,068,111
2
1,068,109
-
221,053
221,053
17,693
17,681
181,110
-
672,531
-
3,005,932
2,403,570
-
-
-
-
-
-
12
-
128
103
25
-
-
-
181,110
672,531
49,086
-
-
67,951
-
-
421,252
181,110
53,742
4,548
108
49,086
67,951
49,086
3,797,948
2,614,204
511,213
672,531
82,174
4,988
9,235
67,951
6,803,880
5,017,774
932,465
853,641
135,916
9,536
9,343
117,037
119
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.4. Interest rate risk management [continued]
As at 31 Deceember 2021 [continued]
LIABILITIES
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
Deposits from customers
fixed rate
variable rate
non-interest-bearing
Liabilities from issued securities
fixed rate
variable rate
non-interest-bearing
Within 1 month
Over 1 month and
Within 3 months
Over 3 months and
Within 12 months
Over 1 year and
Within 2 years
Over 2 years
Non-interest-bearing
Total
Total
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
26,401
26,356
45
616,005
615,961
44
35,951
13,474
1,178,345
-
-
-
-
35,951
13,474
103,123
58,913
44,210
-
49,726
49,726
-
-
20,133
-
20,133
-
200,292
103,240
97,052
-
29,321
29,321
-
-
-
-
-
-
41,404
12,367
29,037
56,912
23,208
33,704
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26,730
26,730
-
-
-
-
-
-
-
-
-
-
79,200
52,310
26,890
-
-
-
-
-
-
-
-
-
355,132
355,132
-
-
-
-
-
-
-
-
-
-
7,533,566
463,512
10,675,265
4,039,568
198,955
198,955
456,849
456,849
7,070,054
6,635,697
-
864
211
653
-
-
-
-
-
-
-
-
8,514
-
8,514
-
-
-
-
-
-
-
94,140
92,653
1,487
-
170,732
-
170,732
-
735,911
735,911
31,975
31,975
-
-
-
-
-
-
-
-
-
-
-
-
12,724
12,724
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
248,209
248,209
120,403
120,403
-
-
256,151
256,151
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
75,104
74,680
424
-
51
51
-
-
-
-
-
-
21,051
-
-
21,051
16,356
-
-
1,069,103
73,291
35,951
49,726
49,726
-
-
41,184
-
20,133
21,051
-
-
-
-
-
-
-
-
389,003
217,838
157,691
13,474
29,321
29,321
-
-
-
-
-
-
1,567,348
1,286,941
230,982
49,425
79,047
79,047
-
-
41,184
-
20,133
21,051
881,911
-
8,123,201
1,035,304
12,945,443
5,427,411
21,068,644
6,462,715
-
7,071,541
6,636,121
13,707,662
16,356
881,911
-
-
-
-
13
-
-
13
16,356
436,261
256,362
179,899
-
881,911
64
51
-
13
898,267
436,325
256,413
179,899
13
120
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.4. Interest rate risk management [continued]
As at 31 Deceember 2021 [continued]
LIABILITIES [continued]
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
Within 1 month
Over 1 month and
Within 3 months
Over 3 months and
Within 12 months
Over 1 year and
Within 2 years
Over 2 years
Non-interest-bearing
Total
Total
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
941,607
721,374
220,233
1,905,033
1,714,718
220,057
151,795
1,084,185
579,964
709,948
526,007
190,315
68,262
504,221
183,941
870,647
868,848
1,799
-
916
830
86
-
117,189
117,185
4
-
-
-
-
-
-
7,401
6,948
453
-
50,063
50,046
17
-
-
-
-
-
-
353
72
281
-
2,518
907
1,611
-
-
-
-
-
-
1,076
435
641
-
672
564
108
-
85,551
-
85,551
-
-
483
7
476
-
-
-
-
-
-
-
-
-
-
5,359
1,757
3,602
-
479
211
268
-
186,225
-
186,225
-
12,943
12,398
545
-
892
319
573
-
-
-
-
-
-
-
-
-
54,920
54,847
73
-
4,534
2,582
1,952
-
133
133
-
-
-
-
-
-
96,381
96,558
(177)
-
1,011
1,011
-
-
-
-
-
-
-
-
-
-
77,044
77,044
-
-
24,823
17,403
7,420
-
103
67
36
-
6,514
6,514
-
-
453,672
-
-
388,146
-
2,434,608
1,508,132
4,379,975
3,295,421
6,814,583
4,803,553
453,672
388,146
-
472,804
453,672
696,408
1,169,212
388,146
841,818
-
-
-
-
173,503
-
-
6,438
-
-
6,438
141,111
-
-
3,655
2,239
1,416
-
293,210
118,092
1,615
173,503
141,111
173,503
-
-
-
-
44
-
-
44
-
-
-
-
49,631
29,125
14,068
6,438
192,561
51,021
429
141,111
278,334
6,514
271,776
44
53,286
31,364
15,484
6,438
485,771
169,113
2,044
314,614
278,334
6,514
271,776
44
Net position
(5,587,533)
(4,253,012)
578,409
1,195,694
313,809
890,767
278,494
669,788
4,861,168
2,556,377
(161,996)
991,937
282,351
2,051,551
2,333,902
121
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.4. Interest rate risk management [continued]
As at 31 December 2020
ASSETS
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
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
Within 1 month
Over 1 month and
Within 3 months
Over 3 months and
Within 12 months
Over 1 year and
Within 2 years
Over 2 years
Non-interest-bearing
Total
Total
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
150,707
149,701
1,006
-
240,397
220,155
20,242
-
183,364
183,364
-
-
1,261
355
906
-
-
-
-
-
-
-
-
-
777,104
679,634
97,470
-
339,537
197,680
141,857
-
7,485
7,485
-
-
9,247
8,721
526
-
4,487
4,459
28
-
-
-
-
-
1
-
1
-
104
104
-
-
-
-
-
-
287
287
-
-
-
-
-
-
-
-
-
-
4,647
4,647
2,008
2,008
-
-
-
-
14,793
14,793
-
-
-
-
-
-
103,038
102,080
958
-
-
-
-
-
665
665
194,919
194,919
2,003
2,003
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,277
9,277
-
-
5
5
-
-
-
-
-
-
9,013
9,013
614
614
14,644
14,644
1,280
1,280
2,753
2,753
-
-
1,006
1,006
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
124,478
-
124,478
-
-
-
-
-
5,270
5,254
16
-
-
-
-
-
-
-
-
-
21,056
21,056
168,850
-
1,283,869
-
321,566
151,709
2,110,746
729,407
2,432,312
881,116
-
-
7,633
5,750
1,883
-
-
-
-
-
8,463
8,463
-
-
-
-
-
-
2,235
-
2,235
-
-
-
1,007
97,470
98,477
168,850
1,283,869
168,850
1,283,869
1,452,719
19,253
116,711
386,900
761,843
1,148,743
-
-
-
-
222,927
144,720
19,253
116,711
19,253
-
-
-
-
2,473
-
-
2,473
-
-
-
-
183,364
183,364
-
-
1,267
-
-
1,267
11,185
7,790
922
2,473
30,674
21,410
30,674
-
-
-
-
-
-
500,434
144,698
116,711
7,485
7,485
-
-
45,387
43,594
526
1,267
26,903
5,465
28
723,361
289,418
135,964
190,849
190,849
-
-
56,572
51,384
1,448
3,740
57,577
5,465
28
30,674
21,410
30,674
21,410
52,084
-
-
-
-
-
-
-
-
-
-
-
-
2,235
-
2,235
-
2,235
-
2,235
-
122
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.4. Interest rate risk management [continued]
As at 31 December 2020 [continued]
ASSETS [continued]
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
fixed rate
variable rate
non-interest-bearing
Finance lease receivables
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
47,073
600
46,473
-
-
-
-
-
656,665
68,714
587,951
-
285,219
167,083
118,136
-
24,871
-
24,871
-
945,704
929,702
16,002
-
10,221
10,221
-
-
Within 1 month
Over 1 month and
Within 3 months
Over 3 months and
Within 12 months
Over 1 year and
Within 2 years
Over 2 years
Non-interest-bearing
Total
Total
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
11,706
11,706
-
-
79,401
79,401
-
-
673
673
-
-
-
-
-
-
95,897
83,363
12,534
-
21,055
21,055
-
-
4,758,061
340,558
1,115,958
854,962
2,048
3,903,099
338,510
-
281,683
113,778
167,905
-
1,159
70
1,089
-
-
34,926
8,141
26,785
-
68
-
68
-
264,431
851,527
-
134,848
6,117
128,731
-
141
141
-
-
118,558
117,558
1,000
-
37,771
37,771
-
-
52,487
13,026
39,461
-
18
18
-
-
498
-
498
-
183,940
183,940
49,095
49,095
200,651
200,631
567,675
567,675
-
-
-
-
20
-
-
-
4,574
4,574
398,158
398,158
40,066
40,066
1,844,129
1,837,731
-
-
-
-
-
-
6,398
-
826,116
819,295
6,821
-
199,766
199,766
-
-
536
-
-
536
-
-
-
-
34,789
-
-
34,789
-
-
-
-
783,610
735,601
47,473
536
2,280,058
2,273,660
6,398
-
1,353,099
1,298,935
2,136,709
2,034,536
19,375
34,789
344,862
344,862
-
-
66,848
35,325
2,624,920
2,618,522
6,398
-
998,326
488,106
510,220
-
134,266
26,854
107,412
-
634
634
-
-
49,217
36,198
13,019
-
-
-
-
-
710
-
710
-
349,978
1,723,813
1,442,688
125,865
61,226
2,948,605
8,726,237
11,674,842
772,219
951,594
-
806,553
636,135
-
-
-
125,865
5,685
103,954
41,005
62,949
-
1,473
1,473
-
-
-
-
-
-
-
-
-
-
-
-
61,226
1,445
-
-
1,445
-
-
-
-
892,205
2,702,324
3,594,529
1,930,535
5,962,687
7,893,222
125,865
325,848
175,242
150,606
-
798,980
-
798,980
-
61,226
725,292
212,790
511,057
1,445
187,091
1,051,140
388,032
661,663
1,445
3,625
2,536
1,089
-
802,605
2,536
800,069
-
699,341
561,503
880,168
658,754
137,838
221,414
378,971
183,337
195,634
557,280
559,388
(2,108)
416,304
387,848
28,456
26,776
26,799
(23)
-
16,335
10,982
5,353
-
-
155
-
155
-
-
16
14
2
-
-
-
-
-
-
-
270
19
251
-
-
-
-
-
-
97,805
97,487
318
742,345
-
-
245,973
-
3,192,516
2,215,133
-
-
47
-
47
-
742,345
245,973
50,991
-
-
62,527
-
-
50,991
62,527
235,038
742,345
61,367
10,221
155
50,991
1,843,478
1,235,259
362,246
245,973
79,195
11,015
5,653
62,527
5,035,994
3,450,392
597,284
988,318
140,562
21,236
5,808
113,518
123
288,272
61,706
-
69,096
25,036
44,060
-
218
218
-
-
5,084
5,084
-
-
-
-
-
-
-
5,685
-
772,833
-
772,833
-
40,243
40,490
(247)
-
-
-
-
-
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.4. Interest rate risk management [continued]
As at 31 December 2020 [continued]
LIABILITIES
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
Deposits from customers
fixed rate
variable rate
non-interest-bearing
Liabilities from issued securities
fixed rate
variable rate
non-interest-bearing
Within 1 month
Over 1 month and
Within 3 months
Over 3 months and
Within 12 months
Over 1 year and
Within 2 years
Over 2 years
Non-interest-bearing
Total
Total
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
75,420
6,185
69,235
-
-
-
-
-
25,902
79
25,823
-
72,092
41,403
30,689
-
2,019
2,019
-
-
-
-
-
-
12,005
12,005
-
-
-
-
-
-
-
-
-
-
109,125
78,467
30,658
-
6,360
6,360
-
-
-
-
-
-
3,741
3,422
319
-
-
-
-
-
5,994
5,994
-
-
78,752
17,551
61,201
-
109,612
-
109,612
-
-
-
-
-
39,270
39,270
13,770
13,770
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,143,610
413,308
8,390,678
2,873,541
101,521
101,521
633,365
633,233
142,203
142,203
880,099
879,857
68,741
68,741
171,992
171,989
239,805
239,805
5,730,302
5,517,137
-
3,090
213
2,877
-
-
221
-
221
-
-
-
11,691
-
11,691
-
132
-
414
-
414
-
-
-
223,762
111,565
112,197
-
242
-
721
-
721
-
-
-
46,451
46,451
-
-
3
-
-
-
-
-
-
-
177,807
177,807
-
-
114
-
-
114
-
-
-
-
-
-
-
-
742,198
735,267
6,931
27,016
24,708
2,308
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,235
-
2,235
-
502,668
502,658
10
-
46
46
-
-
-
-
-
-
-
-
-
-
11,812
-
-
11,812
872,748
796,149
76,485
114
312,567
175,899
124,856
11,812
117,991
8,379
1,185,315
972,048
201,341
11,926
117,991
8,379
109,612
109,612
-
-
-
-
-
-
31,896
6,073
25,823
-
2,235
-
2,235
-
34,131
6,073
28,058
-
15,169
-
-
601,012
-
6,711,049
965,578
11,179,814
5,061,278
17,890,863
6,026,856
-
5,730,302
5,517,524
11,247,826
15,169
601,012
-
-
-
-
10
-
-
10
15,169
462,801
336,036
126,765
-
601,012
1,412
46
1,356
10
616,181
464,213
336,082
128,121
10
124
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.4. Interest rate risk management [continued]
As at 31 December 2020 [continued]
LIABILITIES [continued]
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
Within 1 month
Over 1 month and
Within 3 months
Over 3 months and
Within 12 months
Over 1 year and
Within 2 years
Over 2 years
Non-interest-bearing
Total
Total
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
HUF
Currency
1,264,893
1,111,465
153,428
385,359
376,893
1,035,006
648,487
208,880
189,185
479,592
481,603
8,466
386,519
19,695
(2,011)
492,998
469,867
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
-
84,833
-
-
536
536
-
-
-
-
-
-
-
-
-
-
-
6,823
4,911
1,912
-
333
148
185
-
184,090
-
184,090
-
9,260
9,321
(61)
-
467
467
-
-
-
-
-
-
-
-
-
-
24,904
24,904
-
-
5,388
4,219
1,169
-
417
417
-
-
-
-
-
-
48,555
48,802
(247)
-
1,213
433
780
-
-
-
-
-
-
-
-
-
90,112
89,931
181
732,937
-
-
255,219
-
3,570,243
2,299,678
-
-
732,937
255,219
19,644
18,310
1,334
-
255
87
168
-
-
-
-
261,223
-
-
5,297
-
-
5,297
92,042
-
-
537,628
732,937
3,812
2,922
890
-
265,826
4,072
531
-
261,223
92,042
261,223
5,781
5,684
97
-
-
-
-
-
-
-
-
-
-
-
-
-
1,457,472
1,150,780
51,473
255,219
5,027,715
3,450,458
589,101
988,156
44,639
34,334
5,008
5,297
124,076
31,642
392
92,042
274,704
5,684
269,020
-
48,451
37,256
5,898
5,297
389,902
35,714
923
353,265
274,704
5,684
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
125
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.5. Market risk
The Group takes on exposure to market risks. Market risks arise from open positions in interest rate, currency
and equity products, all of which are exposed to general and specific market movements. The Group applies a
‘Value-at-Risk’ (VaR) methodology to estimate the market risk of positions held and the maximum losses
expected, based upon a number of assumptions for various changes in market conditions. The Management
Board sets limits on the value of risk that may be accepted, which is monitored on a daily basis. (Analysis of
liquidity risk, foreign currency risk and interest rate risk is detailed in Notes 37.2., 37.3. and 37.4., respectively.)
37.5.1. Market Risk sensitivity analysis
The VaR risk measure estimates the potential loss in pre-tax profit over a given holding period for a specified
confidence level.
The VaR methodology is a statistically defined, probability-based approach that takes into account market
volatilities as well as risk diversification by recognizing offsetting positions and correlations between products
and markets. Risks can be measured consistently across all markets and products, and risk measures can be
aggregated to arrive at a single risk number. The one-day 99% VaR number used by the Group reflects the 99%
probability that the daily loss will not exceed the reported VaR.
VaR methodologies are employed to calculate daily risk numbers include the historical and variance-covariance
approach. The diversification effect has not been validated among the various market risk types when capital
calculation happens.
In addition to these two methodologies, Monte Carlo simulations are applied to the various portfolios on a
monthly basis to determine potential future exposure.
The VaR of the trading portfolio can be summarized as follows (in HUF mn):
Historical VaR (99%, one-day) by risk type
Foreign exchange
Interest rate
Equity instruments
Diversification
Total VaR exposure
Average VaR
2021
1,691
212
20
-
1,923
2020
1,530
146
141
-
1,817
The table above shows the VaR figures by asset classes. Since processes driving the value of the major asset
classes are not independent (for example the depreciation of HUF against the EUR mostly coincide with the
increase of the yields of Hungarian Government Bonds), a diversification impact emerges, so the overall VaR is
less than the sum of the VaR of each individual asset class.
While VaR captures the Group’s daily exposure to currency and interest rate risk, sensitivity analysis evaluates
the impact of a reasonably possible change in interest or foreign currency rates over a year. The longer time
frame of sensitivity analysis complements VaR and helps the Group to assess its market risk exposures. Details
of sensitivity analysis for foreign currency risk are set out in Note 37.5.2., for interest rate risk in Note 37.5.3.,
and for equity price sensitivity analysis in Note 37.5.4.
126
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.5. Market risk [continued]
37.5.2. Foreign currency sensitivity analysis
The Bank changed its methodology of foreign currency sensitivity analysis and has been using a historical VaR
calculation since 31 March 2021. The former Monte Carlo simulation represented the Group’s sensitivity to the
rise and fall in the HUF exchange rate against EUR, over a 3 months period. The sensitivity analysis included
only outstanding foreign currency denominated monetary items as strategic open positions related to foreign
activities. In line with the Management's intention, the former EUR (310) million strategic open position was
fully closed as at 31 March 2021.
Since the closing of the strategic open position, the Group has been using a historical VaR calculation with a 1
day holding period. The analysis includes the same net open foreign exchange position as used under the internal
capital adequacy assessment process (ICAAP). The VaR methodology is a statistically defined, probability-
based approach that takes into account market volatilities as well as risk diversification by recognizing offsetting
positions and correlations between products and markets.
Additionally, the Bank determines the foreign currency risk of assets evaluated through the Other
Comprehensive Income, which includes securities valuated on fair value through other comprehensive income
and the foreign currency translation reserves.
The following table shows the result of the foreign currency sensitivity analysis.
The numbers below indicate the expected daily profit or loss of the portfolio beside the given confidence level.
Probability
Effects to the consolidated statement
of profit or loss
Effects to the consolidated statement
of other comprehensive income
In HUF million
In HUF million
In HUF million
In HUF million
1%
5%
25%
50%
25%
5%
1%
2021
(194)
(132)
(50)
(1)
53
142
221
2020
(522)
(388)
(173)
(14)
111
352
696
2021
(1,707)
(1,038)
(398)
98
531
1,215
1,509
2020
(5,239)
(2,261)
(896)
(227)
584
1,918
2,981
Note:
(1) Historical VaR simulation is based on the empirical distribution of the historical exchange rate movements
between 31 December 2021 and 31December 2020.
37.5.3. Interest rate sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives
and non-derivative instruments at the balance sheet date. The analysis is prepared assuming the amount of assets
and liabilities outstanding at the balance sheet date was outstanding for the whole year. The analysis was
prepared by assuming only adverse interest rate changes. The main assumptions were as follows:
Floating rate assets and liabilities were repriced to the modelled benchmark yields at the repricing dates
assuming the unchanged margin compared to the last repricing.
Fixed rate assets and liabilities were repriced at the contractual maturity date.
As for liabilities with discretionary repricing feature by the Bank were assumed to be repriced with two-
weeks delay, assuming no change in the margin compared to the last repricing date.
Deposits with an interest rate lower than 0.3% even at high market rates were assumed to be unchanged
for the whole period.
127
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.5. Market risk [continued]
37.5.3. Interest rate sensitivity analysis [continued]
The sensitivity of interest income to changes in BUBOR was analysed by assuming two interest rate path
scenarios:
(1) HUF base rate and BUBOR increases gradually by 100 bps over the next year (probable scenario)
(2) HUF base rate and BUBOR decreases gradually by 50 bps over the next year (alternative scenario)
The net interest income in a one year period after 1 January 2022 would be increased by HUF 1,487 million
(probable scenario) and decreased by HUF 1,025 million (alternative scenario) as a result of these simulation. A
similar simulation indicated HUF 1,301 million (probable scenario) and HUF 5,732 million (alternative
scenario) decrease in the Net interest income in a one year period after 1 January 2021.
This effect is counterbalanced by capital gains HUF (619) million (for probable scenario), HUF 322 million (for
alternative scenario) as at 31 December 2021 and (HUF 584 million for probable scenario, HUF 2,329 million
for alternative scenario as at 31 Decmeber 2020) on the government bond portfolio held for hedging (economic).
Furthermore, the effects of an instant 10bps parallel shift of the HUF, EUR and USD yield-curves on net interest
income over a one-year period and on the market value of the hedge government bond portfolio booked against
capital was analysed. The results can be summarized as follows (in HUF million):
Description
Effects to
the net
interest
income (one-
year period)
2021
Effects to capital
(Price change of
government bonds
at fair value
through other
comprehensive
income)
Effects to
the net
interest
income (one-
year period)
2020
Effects to capital
(Price change of
government bonds
at fair value
through other
comprehensive
income)
HUF (0.1%) parallel shift
EUR (0.1%) parallel shift
USD (0.1%) parallel shift
Total
(105)
(1,989)
(257)
(2,351)
64
-
-
64
(1,809)
(2,179)
(497)
(4,485)
389
-
-
389
37.5.4. Equity price sensitivity analysis
The following table shows the effect of the equity price sensitivity. The Group uses VaR calculation with 1 day
holding period and a 99% confidence level. The VaR methodology is a statistically defined, probability-based
approach that takes into account market volatilities as well as risk diversification by recognizing offsetting
positions and correlations between products and markets. The daily loss will not exceed the reported VaR
number with 99% of probability.
The stress test assumes the largest price movement of the last year and calculates with it as the adverse direction.
These scenarios show the loss of the portfolio when all prices change with the maximum amount of the last year.
Description
VaR (99%, one day, HUF million)
Stress test (HUF million)
2021
12
(21)
2020
141
(233)
128
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.6. Capital management
Capital management
The primary objective of the capital management of the Group is to ensure the prudent operation, the entire
compliance with the prescriptions of the regulator for a persistent business operation and maximising the
shareholder value, accompanied by an optimal financing structure.
The capital management of the Group members includes the management and evaluation of the shareholders`
equity available for hedging risks, other types of funds to be recorded in the equity and all material risks to be
covered by the capital.
The basis of the capital management of the Group members in the short run is the continuous monitoring of their
capital position, in the long run the strategic and the business planning, which includes the monitoring and
forecast of the capital position.
The Group members maintain the capital adequacy required by the regulatory bodies and the planned risk taking
mainly by means of ensuring and developing their profitability. In the event that the planned risk level of a
Group member exceeded its Core and the previously raised Supplementary capital, it ensures the prudent
operation by occasional measures. A further tool in the capital management of the Bank is the dividend policy,
and the transactions performed with the treasury shares.
Capital adequacy
The Capital Requirements Directive package (CRDIV/CRR) transposes the new global standards on banking
regulation (known as the Basel III agreement) into the EU legal framework. The new rules are applied from 1
January 2014. They set stronger prudential requirements for institutions, requiring them to keep sufficient capital
reserves and liquidity. This new framework makes institutions in the EU more solid and strengthens their
capacity to adequately manage the risks linked to their activities, and absorb any losses they may incur in doing
business.
The capital adequacy of the Group is supervised based on the financial statements data prepared in accordance
with IFRS applying the current directives, rulings and indicators from 1 January 2014.
The Group uses the standard method for determining the regulatory capital requirements of the credit risk and
market risk, and parallel to that, the base indicator method and the advanced method (“AMA”) in case of the
operational risk.
For international comparison purposes, the Group calculated the Regulatory capital based on IFRS data as
adopted by the EU, and the consolidated Capital adequacy ratio based on this in accordance with the regulations
of Basel III. The Capital adequacy ratio of the Group (IFRS) was 19.1%, the Regulatory capital was HUF
3,191,765 million and the Total regulatory capital requirement was HUF 1,335,305 million as at 31 December
2021. The same ratios calculated as at 31 December 2020 were the following: 17.7%, HUF 2,669,806 million
and HUF 1,203,751 million.
129
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 37:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.6. Capital management [continued]
Capital adequacy [continued]
Calculation on IFRS basis (in HUF million)
2021
2020
Core capital (Tier 1) =
Common Equity Tier 1 (CET 1)
Issued capital
Reserves1
Fair value adjustments
Other capital components
Non-controlling interests
Treasury shares
Goodwill and other intangible assets
Other adjustments
Additional Tier 1 (AT1)
Supplementary capital (Tier 2)
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
CET 1 ratio
Tier 1 ratio
Capital adequacy ratio
2,926,882
2,316,118
28,000
2,896,118
(15,715)
104,326
1,996
(121,941)
(183,440)
217,538
264,883
264,397
-
486
3,191,765
1,199,423
13,440
122,442
1,335,305
1,856,460
17.50%
17.50%
19.10%
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%
Basel III
The components of the Common Equity Tier 1 capital (CET 1) are the following: Issued capital, Reserves (Profit
reserves, Other reserves, Changes in the equity of subsidiaries, Net Profit for the year, Changes due to
consolidation) Fair value adjustments, Other capital components, (Revaluation reserves, Share based payments,
Cash-flow hedges, Net investment hedge in foreign operations), Non-controlling interest, Treasury shares,
Goodwill and other Intangible assets, other adjustments (due to prudential filters, due to deferred tax receivables,
due to temporary regulations).
Supplementary capital (Tier 2): Subordinated loan capital, Supplementary loan capital, Other issued capital
components, Components recognized in T2 capital issued by subsidiaries.
For regulatory compliance the capital adequacy ratios according to regulatory scope of consolidation are
relevant. The Pillar3 Disclosure of OTP Group contains the capital adequacy ratios calculated under regulatory
scope of consolidation.
The Group has entirely complied with the regulatory capital requirements in 2021 as well as in 2020.
1 The dividend amount planned to pay out after the profit of financial years 2019 , 2020 and 2021 is also deducted from reserves.
130
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 38:
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 2021
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%
38
During 2018, securities issued by the Hungarian Government with the nominal value of HUF 66,506 million
were transferred from the trading portfolio to the securities at fair value through other comprehensive income of
which HUF 1,087 million remaining amount was presented as at 31 December 2021. The Bank has previously
held retail government bonds in the portfolio at fair value through other comprehensive income. During 2018,
the Bank changed the business model of the retail government bonds to manage all on the basis of a single
business model aimed at collecting the future contractual cash flows and/or selling them.
In 2018, the terms and conditions of sale of retail government bonds and the pricing environment have changed
significantly, as a result of which the Bank is no longer able to maintain its sole trading intent with these
securities that the Bank applied earlier. Furthermore, there is an option-agreement between the Bank and the
Government Debt Management Agency (“GDMA”) that GDMA will buy back this portfolio therefore it has
been reclassified.
Financial assets transferred but not derecognized
Transferred
assets
Associated
liabilities
Transferred
assets
Associated
liabilities
Carrying amount
2021
Carrying amount
2020
Financial assets at fair value
through other comprehensive income
Debt securities
Total
Financial assets at amortized cost
Debt securities
Loans and advances
Total
Total
52,371
52,371
92,765
833
93,598
45,484
45,484
48,176
48,176
44,287
44,287
90,986
1,056
92,042
136,316
1,171
137,487
119,789
-
119,789
145,969
137,526
185,663
164,076
As at 31 December 2021 and 2020, the Group had an obligation from repurchase agreements (repo liability) of
HUF 79,045 million and HUF 109,612 million respectively. Securities sold temporarily under repurchase
agreements will continue to be recognized in the Consolidated Statement of Financial Position of the Group in
the appropriate securities category. The related liability is measured at amortized cost in the Consolidated
Statement of Financial Position as “Amounts due to the National Governments, to the National Banks and other
banks and repo liabilities”.
Financial assets transferred, derecognized with continuing involvement
Financial assets which would have been derecognized but would be represented the continuing involvement are
not recognized in the Consolidated Statement of Financial Position as at 31 December 2021 or 2020.
131
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 39:
OFF-BALANCE SHEET ITEMS AND DERIVATIVE FINANCIAL INSTRUMENTS (in
HUF mn)
In the normal course of business, the Group becomes a party to various financial transactions that are not
reflected on the Consolidated statement of financial position and are referred to as off-balance sheet financial
instruments. The following represent notional amounts of these off-balance sheet financial instruments, unless
stated otherwise.
Contingent liabilities
2021
2020
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
Legal disputes
4,065,002
1,293,841
464,341
65,077
27,997
3,420,718
1,159,699
305,269
35,715
35,965
5,916,258
4,957,366
75,453
5,410
53,486
22,164
80,863
5,997,121
75,650
5,033,016
At the balance sheet date the Group was involved in various claims and legal proceedings of a nature considered
normal to its business. The level of these claims and legal proceedings corresponds to the level of claims and
legal proceedings in previous years.
The Group believes that the various asserted claims and litigations in which it is involved will not materially
affect its financial position, future operating results or cash-flows, although no assurance can be given with
respect to the ultimate outcome of any such claim or litigation. Provisions due to legal disputes were HUF
35,354 million as at 31 December 2021 and HUF 34,894 million as at 31 December 2020, respectively. (See
Note 24.)
Commitments to extend credit, guarantees and letters of credit
The primary purpose of these instruments is to ensure that funds are available to a customer as required.
Guarantees and standby letters of credit, which represent irrevocable assurances that the Group will make
payments in the event that a customer cannot meet its obligations to third parties, carry the same credit risk as
loans.
Documentary and commercial letters of credit, which are written undertakings by the Group on behalf of a
customer authorising a third party to draw drafts on the Group up to a stipulated amount under specific terms and
conditions, are collateralised by the underlying shipments of goods to which they relate and therefore carry less
risk than a direct borrowing.
Commitments to extend credit represent unused portions of authorisations to extend credit in the form of loans,
guarantees or letters of credit. With respect to credit risk on commitments to extend credit, the Group is
potentially exposed to loss in an amount equal to the total unused commitments. However, the likely amount of
loss is less than the total unused commitments since most commitments to extend credit are contingent upon
customers maintaining specific credit standards.
Guarantees, irrevocable letters of credit and undrawn loan commitments are subject to similar credit risk
monitoring and credit policies as utilised in the extension of loans. The Management of the Group believes the
market risk associated with guarantees, irrevocable letters of credit and undrawn loan commitments are minimal.
132
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 39:
OFF-BALANCE SHEET ITEMS AND DERIVATIVE FINANCIAL INSTRUMENTS (in
HUF mn) [continued]
Guarantees, payment undertakings arising from banking activities
Payment undertaking is a promise by the Group to assume responsibility for the debt obligation of a borrower if
that borrower defaults until a determined amount, until a determined date, in case of fulfilling conditions,
without checking the underlying transactions. The guarantee’s liability is joint and primary with the principal, in
case of payment undertaking, while the Group assumes the obligation derived from guarantee independently by
the conditions established by the Group. A guarantee is most typically required when the ability of the primary
obligor or principal to perform its obligations under a contract is in question, or when there is some public or
private interest which requires protection from the consequences of the principal's default or delinquency.
A contract of guarantee is subject to the statute of frauds (or its equivalent local laws) and is only enforceable if
recorded in writing and signed by the surety and the principal.
If the surety is required to pay or perform due to the principal's failure to do so, the law will usually give the
surety a right of subrogation, allowing the surety to use the surety's contractual rights to recover the cost of
making payment or performing on the principal's behalf, even in the absence of an express agreement to that
effect between the surety and the principal.
Derivatives
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 fair value of instruments that are favourable to the Group (i.e. assets), which in relation to derivatives is
only a small fraction of the contract or notional values used to express the volume of instruments outstanding.
This credit risk exposure is managed as part of the overall lending limits with customers, together with potential
exposures from market movements. Collateral or other security is not usually obtained for credit risk exposures
on these instruments, except for trading with clients, where the Group in most of the cases requires margin
deposits.
NOTE 40:
SHARE-BASED PAYMENTS AND EMPLOYEE BENEFITS (in HUF mn)
Previously approved option program required a modification thanks to the introduction of the Bank Group Policy
on Payments accepted in resolution of Annual General Meeting regarding to the amendment of CRD III.
Directives and Act on Credit Institutions and Financial Enterprises.
Key management personnel affected by the Bank Group Policy receive compensation based on performance
assessment generally in the form of cash bonus and equity shares in a ratio of 50-50%. Assignment is based on
OTP shares, furthermore performance based payments are deferred in accordance with the rules of Credit
Institutions Act.
The Bank ensures the share-based payment part for the management personnel of the Group members.
During implementation of the Remuneration Policy of the Group appeared that in case of certain foreign
subsidiaries it is not possible to ensure the originally determined share-based payment because of legal reasons –
incompatible with relevant EU-directives –, therefore a decision was made to cancel the share-based payment in
affected countries, and virtual share based payment – cash payment fixed to share price - was made from 2017.
In case of foreign subsidiaries virtual share based payment was made uniformly from 2021 (in the case of
payments related to 2021).
The quantity of usable shares for individuals calculated for settlement of share-based payment shall be
determined as the ratio of the amount of share-based payment and share price determined by Supervisory Board1.
The value of the share-based payment at the performance assessment is determined within 10 days by
Supervisory Board based on the average of the three previous trade day’s middle rate of OTP Bank’s equity
shares fixed on the Budapest Stock Exchange.
At the same time the conditions of discounted share-based payment are determined, and share-based payment
shall contain maximum HUF 6,000 discount at the assessment date, and earnings for the shares at the payment
date is maximum HUF 12,000. Employee benefits are all forms of consideration given by an entity in exchange
for service rendered by employees or for the termination of employment. IAS 19 Employee Benefits shall be
applied in accounting for all employee benefits, except those to which IFRS 2 Share-based Payment applies.
1 Until the end of 2014 Board of Directors
133
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 40:
SHARE-BASED PAYMENTS AND EMPLOYEE BENEFITS (in HUF mn) [continued]
The parameters for the share-based payment relating to ongoing years 2016-2020 by the Supervisory Board for
periods of each year as follows:
Share purchasing at a
discounted price
Year
Exercise
price
Maximum
earnings
Price of
remuneration
exchanged to
share
Share purchasing at a
discounted price
Exercise
price
Maximum
earnings
Price of
remuneration
exchanged to
share
Share purchasing at
a
discounted price
Exercis
e price
Maximum
earnings
Price of
remuneration
exchanged to
share
2017
2018
2019
2020
2021
2022
2023
2024
2025
7,200
7,200
7,200
7,200
-
-
-
-
-
for the year 2016
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
-
-
-
HUF per share
for the year 2017
for the year 2018
-
3,000
3,500
4,000
4,000
4,000
-
-
-
-
10,064
10,064
10,064
10,064
10,064
-
-
-
-
-
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
Year
Share purchasing at a
discounted price
Exercise price
Maximum
earnings
Price of
remuneration
exchanged to
share
Share purchasing at a discounted price
Exercise price
Maximum earnings
Price of
remuneration
exchanged to share
for the year 2019
for the year 2020
HUF per share
2020
2021
2022
2023
2024
2025
2026
2027
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
-
-
12,644
12,644
13,644
13,644
13,644
13,644
13,644
-
9,000
8,000
8,000
8,000
8,000
8,000
8,000
-
16,644
16,644
16,644
16,644
16,644
16,644
16,644
Relevant factors considered during measurement of fair value related to share-based payment as follows:
Year
2017
2018
2019
2020
2021
Reference
price
9,200
10,064
12,413
11,553
16,644
Assumed
volatility
21.3%
26.0%
19.2%
33.6%
28.6%
1-year
0.1%
0.2%
0.2%
0.6%
1.0%
2-year
0.5%
0.6%
0.7%
0.4%
1.6%
Risk-free interest rate (HUF)
4-year
3-year
1.0%
0.7%
1.3%
1.0%
1.1%
0.9%
0.6%
0.5%
1.9%
1.8%
5-year
1.3%
1.6%
1.3%
0.8%
2.0%
6-year
1.3%
1.9%
1.4%
0.9%
2.1%
7-year
1.3%
2.1%
1.6%
1.0%
2.1%
Year
Expected dividends (HUF/Share)
1 -year
2-year
219
219
252
219
371
219
219
290
252
321
3-year 4-year
290
219
383
333
393
252
219
333
290
357
5-year
334
219
440
383
432
6-year
384
219
507
440
475
7-year
442
219
583
507
523
2017
2018
2019
2020
2021
Pricing model
Binomial
Binomial
Binomial
Binomial
Binomial
134
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 40:
SHARE-BASED PAYMENTS AND EMPLOYEE BENEFITS (in HUF mn) [continued]
Based on parameters accepted by Supervisory Board relating to the year 2016 effective pieces are as follows as
at 31 December 2021:
Approved
pieces of
shares
Exercised until
31 December
2021
Weighted average
share price at the
date of exercise
(in HUF)
Expired
pieces
Exercisable as
at 31
December
2021
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
147,984
147,984
4,288
4,288
321,528
321,528
8,241
8,241
161,446
161,446
4,033
4,033
166,231
166,231
4,303
4,303
9,544
9,194
10,387
10,098
12,415
11,813
13,629
11,897
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Based on parameters accepted by Supervisory Board relating to the year 2017 effective pieces are as follows as
at 31 December 2021:
Approved
pieces of
shares
Exercised until
31 December
2021
Weighted average
share price at the
date of exercise
(in HUF)
Expired
pieces
Exercisable as
at 31
December
2021
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
started in 2021
Remuneration exchanged to share
provided in 2021
Share purchasing period
starting in 2022
Remuneration exchanged to share
applying in 2022
108,243
108,243
11,926
11,926
212,282
212,282
26,538
26,538
101,571
101,565
11,584
11,584
109,460
106,719
11,531
11,531
-
-
-
-
11,005
10,098
12,096
11,813
12,084
11,897
16,441
16,477
-
-
-
-
-
-
6
-
-
-
-
-
-
-
-
-
-
-
2,741
-
42,820
3,003
135
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 40:
SHARE-BASED PAYMENTS AND EMPLOYEE BENEFITS (in HUF mn) [continued]
Based on parameters accepted by Supervisory Board relating to the year 2018 effective pieces are as follows as
at 31 December 2021:
Approved
pieces of
shares
Exercised until
31 December
2021
Weighted average
share price at the
date of exercise
(in HUF)
Expired
pieces
Exercisable as
at 31
December
2021
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
started in 2021
Remuneration exchanged to share
provided 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
82,854
17,017
82,854
17,017
150,230
150,230
33,024
73,799
14,618
33,024
73,799
14,618
-
-
-
-
-
-
-
-
-
-
-
-
13,843
11,829
14,294
11,897
16,314
16,468
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
99,341
17,042
45,155
4,114
864
432
Based on parameters accepted by Supervisory Board relating to the year 2019 effective pieces are as follows as
at 31 December 2021:
Approved
pieces of
shares
Exercised until
31 December
2021
Weighted average
share price at the
date of exercise
(in HUF)
Expired
pieces
Exercisable as
at 31
December
2021
Share purchasing period
started in 2020
Remuneration exchanged to share
provided in 2020
Share purchasing period
started in 2021
Remuneration exchanged to share
provided 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
91,403
22,806
91,403
22,806
201,273
192,577
30,834
30,834
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,218
11,897
16,523
17,618
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,696
-
109,567
15,554
125,771
18,025
44,421
6,279
1,000
500
136
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 40:
SHARE-BASED PAYMENTS AND EMPLOYEE BENEFITS (in HUF mn) [continued]
Based on parameters accepted by Supervisory Board relating to the year 2020 effective pieces are as follows as
at 31 December 2021:
Approved
pieces of
shares
Exercised until
31 December
2021
Weighted average
share price at the
date of exercise
(in HUF)
Expired
pieces
Exercisable as
at 31
December
2021
Share purchasing period
started in 2021
Remuneration exchanged to share
provided 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
Share purchasing period
starting in 2025
Remuneration exchanged to share
applying in 2025
Remuneration exchanged to share
applying in 2026
Remuneration exchanged to share
applying in 2027
41,098
17,881
8,194
17,881
18,471
17,498
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32,914
-
82,826
19,390
47,826
9,292
51,002
9,518
13,080
3,443
680
680
Effective pieces relating to the periods starting in 2022-2027 settled during valuation of performance of year
2017-2020, can be modified based on risk assessment and personal changes.
In connection with the share-based compensation for Board of Directors and connecting compensation, shares
given as a part of payments detailed above and for the year 2021 based on performance assessment accounted as
equity-settled share based transactions, HUF 3,589 million and HUF 3,394 million was recognized as expense
for the year ended 31 December 2021 and 2020 respectively.
Defined benefit plan
Defined benefit plan is post‑employment benefit plans other than defined contribution plan. The Group's net
obligation is calculated by estimating the amount of employee's future benefit based on their servicies for the
current and prior periods. The future value of benefit is being discounted to present value.
The Group has small number of plans and mainly in Bulgaria, Serbia, Montenegro, Croatia and Slovenia. These
plans are providing retirement benefits upon pension age as lump-sum payment based either on fixed amounts or
certain months of salary.
These plans are unfunded consequently there are no significant plan assets associated with these plans.
137
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 40:
SHARE-BASED PAYMENTS AND EMPLOYEE BENEFITS (in HUF mn) [continued]
Defined benefit plan [continued]
The movements of defined benefit obligation can be summarized as follows:
Balance as at 1 January
Current service cost
Interest cost
Actuarial gains from changes
in demographic assumptions
Actuarial gains from
changes in financial assumptions
Benefits paid
Past service cost
Other increases
Closing balance
Amounts recognized in profit and loss
Current service cost
Net interest expense
Past service cost
Actuarial losses
Other cost
Total
Actuarial assumptions
Discount rate
Future salary increases
2021
5,022
457
61
(6)
(122)
(225)
(164)
241
5,264
2021
457
61
(164)
(78)
44
320
2020
4,809
402
66
(14)
(203)
(261)
(274)
497
5,022
2020
402
66
(274)
14
-
208
2021
2020
0.35% - 4.50%
0.46%-3.00%
0.75% - 8.00%
0.40%-5.00%
Since plan asset is not recognized in the Consolidated Financial Statements, the effect of the asset ceiling, the
effect of changes in foreign exchange rates and the return on plan assets, excluding amounts included in interest
accounts are also not recognized and therefore not presented.
Based on the current information of not presenting plan assets the expected contributions to the plan for the next
annual reporting period are also without value.
OTP Group made an insignificant amount of contribution to the defined benefit plans during 2021 and 2020.
138
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 41:
RELATED PARTY TRANSACTIONS (in HUF mn)
The compensation of key management personnel, such as the members of the Board of Directors, members of
the Supervisory Board, key employees of the Bank and its major subsidiaries involved in the decision-making
process in accordance with the compensation categories defined in IAS 24 Related Party Disclosures, is
summarised below:
Compensations
Short-term employee benefits
Share-based payment
Other long-term employee benefits
Termination benefits
Post-employment benefits
Total
2021
8,881
3,110
743
-
112
12,846
2020
8,901
2,619
827
472
-
12,819
Share based compensations to the members of the Board of Directors, Supervisory Board or key employees of
the Bank and its major subsidiaries are detailed in Note 40 Share-based payments.
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
2021
3,023
283
3,306
2020
2,502
204
2,706
139
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 41:
RELATED PARTY TRANSACTIONS (in HUF mn) [continued]
Connections with related party (key management personnel and their close family member and companies) by which line of the consolidated statement of financial position and off-
balance sheet is presented:
Assets
Securities
Loans at amortized cost (gross value)
Loss allowance on loans at amortized cost
Loans at fair value through profit or loss
Total assets
Liabilities
Deposits from customers and loan liabilities
Total liabilities
Off-balance sheet items
Undrawn line of credit
Bank Guarantee
Total off-balance sheet items
Other
related
parties
596
111,529
(3,197)
108
109,036
39,872
39,872
Other
related
parties
30,369
6,220
36,589
2021
Associated
companies
Other
companies
Total
Other
related
parties
725
104,795
(4,530)
102
101,092
-
1,798
(6)
-
1,792
596
115,155
(3,872)
108
111,987
2,732
2,732
46,884
46,884
29,186
29,186
2020
Associated
companies
Other
companies
Total
-
1,169
(646)
-
523
80
80
-
16,414
(19)
-
16,395
725
122,378
(5,195)
102
118,010
6,541
6,541
35,807
35,807
-
1,828
(669)
-
1,159
4,280
4,280
2021
Associated
companies
Other
companies
Total
1,913
-
1,913
1,176
551
1,727
33,458
6,771
40,229
Other
related
parties
24,932
6,641
31,573
2020
Associated
companies
Other
companies
Total
350
-
350
2,314
1,337
3,651
27,596
7,978
35,574
In the normal course of business, the Bank enters into other transactions with its unconsolidated subsidiaries of the Group, the amounts and volumes of which are not significant to
these Consolidated Financial Statements taken as a whole. Related party transactions were made on terms equivalent to those that prevail in arm’s length transactions and such terms
can be substantiated.
140
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 42:
SIGNIFICANT SUBSIDIARIES AND ASSOCIATES (in HUF mn)
The control is established when the Group has the right and exposure over the variable positive yield of the
investee but the same time put up with the consequences of the negative returns and the Group by its decisions is
able to influence the extent of the yields.
The Group primarily considering the following factors in the process of determining the existing of the control:
- investigation of the decision making mechanism of the entity,
- authority of the Board of Directors, Supervisory Board and General meeting based on the deed of association,
- existence of investments with preferential voting rights.
If the control can’t be obviously determined then it should be supposed that the control does not exist.
Significant influence is presumed by the Group to exist – unless the contrary case is proven – when the Group
holds 20% or more of the voting power of an investee but does not have a control.
Investments in companies in which the Bank has a controlling interest are detailed below. They are fully
consolidated companies and incorporated in Hungary unless otherwise stated. The Group considers a subsidiary
significant when it is a financial institution or when the subsidiary contributes to the Groups’ total balance sheet
with higher amount. The Bank considers the subsidiaries as cash generating units.
Name
DSK Bank EAD (Bulgaria)
OTP Bank JSC (Ukraine)
JSC “OTP Bank” (Russia)
OTP banka d.d. (Croatia)
OTP Bank Romania S.A. (Romania)
OTP banka Srbija a.d. Novi Sad (previously:
Vojvodjanska banka a.d. Novi Sad) (Serbia)
Crnogorska komercijalna banka a.d.
(Montenegro)
Banka OTP Albania SH.A. (Albania)
OTP Bank S.A. (previously:
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)
Activity
2021
2020
99.91%
100.00%
97.92%
100.00%
100.00%
99.91% commercial banking services
100.00% commercial banking services
97.91% commercial banking services
100.00% commercial banking services
100.00% commercial banking services
100.00%
100.00% commercial banking services
100.00%
100.00%
100.00% commercial banking services
100.00% commercial banking services
98.26%
100.00%
98.26% commercial banking services
100.00% commercial banking services
100.00%
100.00%
refinancing activities
100.00%
100.00%
-
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
refinancing activities
refinancing activities
refinancing activities
100.00%
100.00%
100.00%
100.00% work-out
100.00% mortgage lending
100.00%
real estate management and
development
100.00%
finance lease
100.00% housing savings and loan
100.00%
100.00%
100.00% property management
fund management
real estate lease
100.00%
100.00%
100.00%
100.00%
fund services
real estate leasing
141
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 42:
SIGNIFICANT SUBSIDIARIES AND ASSOCIATES (in HUF mn) [continued]
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 or accounted
on cost is as follows:
As at 31 December 2021
List of associated entities
OTP Kockázati Fund I.
OTP-DayOne Magvető Fund
D-ÉG Thermoset Ltd. 'u.l.'
Company for Cash Services AD
Edrone spółka z ograniczoną
odpowiedzialnością
Graboplasr Closed Co. Plc.
NovaKid Inc.
Banzai Cloud Closed Co. Plc.
ClodeCool Ltd.
Papita.hu Closed Co. Plc.
Seon Holdings Ltd.
Starschema Ltd.
VCC Live Group Closed Co. Plc.
Virtual Solutaion Ltd.
Yieldigo s.r.o.
Szallas.hu Closed Co. Plc.
Cursor Insight LTD
Fabetker Ltd.
OneSoil Ag.
Packhelp Spółka Akcyjna
Carrying
amount
Ownership
of OTP
Bank
Profit after
tax
Country /
Headquarter
Activity
526
288
-
392
779
700
2,006
374
1,770
516
4,756
3,944
1,672
-
76
8,809
146
1
318
2,160
44.12%
22.00%
46.99%
25.00%
17.34%
7.00%
4.17%
17.42%
20.15%
34.00%
23.86%
36.19%
49.56%
8.33%
1.97%
51.19%1
6.75%
20.48%
3.72%
1.00%
(52) Hungary /Budapest
13 Hungary /Budapest
Trusts, funds and similar financial entities
Trusts, funds and similar financial entities
- Hungary / Dunaújváros Wholesale of hardware, plumbing and heating equipment and supplies
(183) Bulgaria / Sofia
Other financial service activities, exc. insurance and pension funding
(293) Poland / Krakow
n.a. Hungary / Győr
(4,621) USA / San Francisco
n.a. Hungary /Budapest
1 Hungary /Budapest
(132) Hungary / Szeghalom
Computer programming activities
Manufacture of builders’ ware of plastic
Online kids English learning platform operator
Computer programming activities
Other education n.e.c.
Retail sale via mail order houses or via Internet
(4) UK / London
Computer programming activities
n.a. Hungary /Budapest
Computer consultancy activities
(203)
Hungary /Budapest
n.a. Hungary /Budapest
Computer programming activities
Computer programming activities
(168) Czech Republic/Prague Computer programming activities
1,278 Hungary / Miskolc
(247) UK / London
Web portals
Computer programming activities
132 Hungary / Nádudvar
(1,058) Switzerland / Zurich
(3,038) Poland / Warsaw
Manufacture of concrete products for construction purposes
Computer programming activities
Manufacture of corrugated paper and paperboard
and of containers of paper and paperboard
1 The Group does not control the entity even though it holds more than half of the voting rights.
142
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 42:
SIGNIFICANT SUBSIDIARIES AND ASSOCIATES (in HUF mn) [continued]
Significant associates and joint ventures [continued]
The Group made significant investments into associates during 2021. Venture capital funds under the control of the Group obtained ownership interest in Phoenix Play Invest
Co.Plc., in Algorithmiq Invest Closed Co. Plc. and in NGY Propertiers Investment SRL.
As at 31 December 2021 [continued]
List of associated entities
Carrying
amount
Ownership of
OTP Bank
Profit
after tax
Country / Headquarter
Activity
Phoenix Play Invest closed Co. Plc.
Algorithmiq Invest Closed Co. Plc.
NGY Propertiers Investment SRL
3,081
8,996
12,331
21.69%
21.69%
14.54%
(1) Hungary /Budapest
792 Hungary /Budapest
(22,567) Romania / Bucharest
Activities of holding companies
Activities of holding companies
Renting and operating of own or leased real estate
As at 31 December 2020
List of associated entities
OTP Kockázati Fund I.
OTP-DayOne Magvető Fund
D-ÉG Thermoset Ltd. 'u.l.'
Company for Cash Services AD
Edrone spółka z ograniczoną
odpowiedzialnością
Graboplasr Closed Co. Plc.
NovaKid Inc.
Banzai Cloud Closed Co. Plc.
ClodeCool Ltd.
Pepita.hu Closed Co. Plc.
Seon Holdings Ltd.
Starschema Ltd.
Tresorit S.A.
VCC Live Group Closed Co. Plc.
Virtual Solutaion Ltd.
Yieldigo s.r.o.
Szallas.hu Closed Co. Plc.1
Carrying
amount
Ownership of
OTP Bank
Profit
after tax
Country / Headquarter
Activity
531
674
-
392
497
711
497
1,008
1,797
575
378
1,310
1,501
1,599
72
79
7,456
44.12%
22.00%
46.99%
(2) Hungary /Budapest
(37) Hungary /Budapest
Trusts, funds and similar financial entities
Trusts, funds and similar financial entities
- Hungary / Dunaújváros
Wholesale of hardware, plumbing and heating
25.00%
(254) Bulgaria / Sofia
Other financial service activities,
equipment and supplies
except insurance and pension funding n.e.c.
17.34%
7.00%
4.17%
17.42%
20.15%
34.00%
23.86%
36.19%
7.77%
49.56%
8.33%
1.97%
51.19%
(79) Poland / Krakow
(1,349) Hungary / Győr
(398) USA / San Francisco
13,430 Hungary /Budapest
132 Hungary /Budapest
3 Hungary / Szeghalom
37 UK / London
Computer programming activities
Manufacture of builders’ ware of plastic
Online kids English learning platform operator
Computer programming activities
Other education n.e.c.
Retail sale via mail order houses or via Internet
Computer programming activities
454 Hungary /Budapest
Computer consultancy activities
232 Luxembourg/Luxembourg Activities of holding companies
(58) Hungary /Budapest
(86) Hungary /Budapest
103 Czech Republic / Prague
595 Hungary / Miskolc
Computer programming activities
Computer programming activities
Computer programming activities
Web portals
1 The Group does not control the entity even though it holds more than half of the voting rights.
143
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 43:
TRUST ACTIVITIES (in HUF mn)
The Bank acts as a trustee for certain loans granted by companies or employers to their employees, mainly for
housing purposes. The ultimate risk for these loans rests with the party advancing the funds. As these loans and
related funds are not considered to be assets or liabilities of the Group, they have been excluded from the
accompanying Consolidated statement of financial position.
The amount of loans managed by the Group as a trustee
36,517
36,811
2021
2020
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
2021
2020
15.87%
14.45%
There were no other significant concentrations of the assets or liabilities of the Group either as at 31 December
2021 or 2020 respectively.
The Group continuously provides the NBH with reports on the extent of dependency on large depositors as well
as the exposure of the biggest 50 depositors towards the Group.
Further to this obligatory reporting to the NBH, the Group pays particular attention on the exposure of its largest
partners and cares for maintaining a closer relationship with these partners in order to secure the stability of the
level of deposits.
The organisational unit of the Bank in charge of partner-risk management analyses the biggest partners on a
constant basis and sets limits on the Bank’s and the Group’s exposure separately partner-by-partner. If necessary,
it modifies partner-limits in due course thereby reducing the room for manoeuvring of the Treasury and other
business areas.
The Bank’s internal regulation (Limit-management regulation) controls risk management related to exposures of
clients. The Bank makes a difference between clients or clients who are economically connected with each other,
partners, partners operating in the same geographical region or in the same economic sector, exposures from
customers. Limit-management regulation includes a specific range provision system used by the Bank to control
risk exposures. This regulation has to be used by the Bank for its business (lending) risk-taking activity both in
retail and corporate sector.
To specify credit risk limits Group strives their clients get an acceptable margin of risk based on their financial
situation. In the Group limit system has to be provided a lower level decision-making delegation.
If a Group member takes risk against a client or group of clients (either inside the local economy or outside), the
client will be qualified as a group level risk and these limits will be specified at group level.
The validity period of this policy is 12 months. The limit shall be reviewed prior to the expiry date but at least
once a year - based on the relevant information required to limit calculations.
144
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 45:
EARNINGS PER SHARE (in HUF mn)
Consolidated Earnings per share attributable to the ordinary shares of the Group are determined by dividing
consolidated Net profit for the year attributable to ordinary shareholders, after the deduction of declared
preference dividends, by the weighted average number of ordinary shares outstanding during the year. Dilutive
potential ordinary shares are deemed to have been converted into ordinary shares.
Earnings per share from continuing
and discontinued operations
Consolidated net profit for the period 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 period 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)
2021
2020
455,592
259,416
262,017,836
1,738
258,461,554
1,004
455,592
259,416
262,094,958
258,543,088
Diluted Earnings per share (in HUF)
1,738
1,003
Earnings per share from continuing operations
2021
2020
Consolidated net profit for the period 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 period 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)
Earnings per share from discontinued operations
Consolidated net profit for the period 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 period 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)
455,476
253,826
262,017,836
1,738
258,461,554
982
455,476
253,826
262,094,958
258,543,088
1,738
2021
982
2020
116
5,590
262,017,836
-
258,461,554
22
116
5,590
262,094,958
258,543,088
Diluted Earnings per share (in HUF)
-
22
145
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 45:
EARNINGS PER SHARE (in HUF mn) [continued]
Weighted average number of ordinary shares
Average number of Treasury shares
Weighted average number of ordinary shares outstanding
2021
2020
280,000,010
17,982,174
280,000,010
21,538,456
during the year for calculating basic EPS
262,017,836
258,461,554
Dilutive effects of options issued in accordance with the
remuneration policy and convertible into ordinary shares1
The modified weighted average number of ordinary shares
outstanding during the year for calculating diluted EPS
77,122
81,534
262,094,958
258,543,088
NOTE 46:
NET GAIN OR LOSS REALIZED ON FINANCIAL INSTRUMENTS (in HUF mn)
2021
Net interest /
similar to
interest gain and
loss
Net non-
interest
gain and
loss
Loss
allowance
Other
Compre-
hensive
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
16,527
24,594
827
-
-
(952)
-
-
5,016
(1,664)
12
-
1,749
4,812
-
-
-
-
-
-
49,473
79,602
692,432
59,084
40,131
3,6393
3,3212
971,379
(25,235)
(2,299)
493
(51,052)
(9,822)
(1,556)
(7,598)
(97,069)
874,310
(2,587)2
1,031
26,354
-
4,459
-
9,412
48,497
(961)
(3,013)
(32,159)
(5,776)
(16,289)
438
-
(60,364)
(44,877)
-
-
-
-
-
-
(44,877)
-
-
-
-
-
-
(3,916)
267,033
-
-
-
263,117
311,614
-
-
-
-
-
-
(60,364)
-
-
-
-
-
-
(44,877)
1 Both in the year 2022 and in the year 2021 the dilutive effect is in connection with the Remuneration Policy and the Management Option
Program.
2 For the year of 2021 HUF (2,587) million net non-interest gain on securities at fair value through other comprehensive income was
transferred from other comprehensive income to profit or loss.
3 Gains from other financial assets and derivative financial instruments recognized in net interest income as Income similar to interest
income.
146
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 46:
NET GAIN OR LOSS REALIZED ON FINANCIAL INSTRUMENTS (in HUF mn)
[continued]
2020
Net interest /
similar to
interest gain and
loss
Net non-
interest
gain and
loss
Loss
allowance
Other
Compre-
hensive
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
-
-
-
-
-
2,745
(851)
62
-
473
7,239
-
44,782
69,905
658,579
54,046
28,251
2,7392
(628)2
872,736
(18,492)
(653)
(307)
(53,522)
(7,750)
(1,623)
(7,718)
(90,065)
782,671
2,3251
1,402
26,254
-
2,125
-
13,734
55,824
(4,507)
(2,802)
(189,554)
(9,972)
(3,262)
878
-
(210,008)
-
-
-
-
1,270
234,030
-
-
-
235,300
291,124
-
-
-
-
-
-
(210,008)
-
-
-
-
-
(6,931)
-
-
-
-
-
-
(6,931)
-
-
-
-
-
-
-
-
(6,931)
1 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.
2 Gains from other financial assets and derivative financial instruments recognized in net interest income as Income similar to interest
income.
147
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 47:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn)
In determining the fair value of a financial asset or liability the Group uses the market price in the case of
instruments that are quoted on an active market. In most cases market price is not publicly available so the
Group has to make assumptions or use valuation techniques to determine the fair value of a financial instrument.
See Note 47. d) for more information about fair value classes applied for financial assets and liabilities measured
at fair value in these financial statements.
To provide a reliable estimate of the fair value of those financial instrument that are originally measured at
amortized cost, the Group used the discounted cash-flow analyses (loans, placements with other banks, repo
receivables, amounts due to banks, repo liabilities, deposits from customers). The fair value of issued securities
and subordinated bonds is based on quoted prices (e.g. Reuters). Cash and amounts due from banks and balances
with the National Banks represent amounts available immediately thus the fair value equals to the cost.
The assumptions used when calculating the fair value of financial assets and liabilities when using valuation
technique are the following:
the discount rates are the risk free rates related to the denomination currency adjusted by the appropriate
risk premium as of the end of the reporting period,
the contractual cash-flows are considered for the performing loans and for the non-performing loans,
the amortized cost less impairment is considered as fair value,
the future cash-flows for floating interest rate instruments are estimated from the yield curves as of the
end of the reporting period,
the fair value of the deposit which can be due in demand cannot be lower than the amount payable on
demand.
Classes of assets and liabilities not measured at fair value in the Consolidated Statement of Financial Position,
the income approach was used to convert future cash-flows to a single current amount. Fair value of current
assets is equal to carrying amount, fair value of liabilities from issued securities and other bond-type classes of
assets and liabilities not measured at fair value measured based on Reuters market rates, and the fair value of
other classes not measured at fair value of the Consolidated Statement of Financial Position is measured at
discounted cash-flow method. Fair value of loans, net of loss allowance for loans measured at discount rate
adjustment technique, the discount rate is derived from observed rates of return for comparable assets or
liabilities that are traded in the market.
Fair value measurements – in relation to instruments measured not at fair value – are mainly categorized in level
3 of the fair value hierarchy.
148
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 47:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
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 cost1
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
1 Higher discount rate due to the lower yield environment resulted in higher fair value comparing to the carrying values.
2021
Carrying amount
Fair value
2020
Fair value
Carrying
amount
2,556,035
1,584,861
61,052
341,397
103,510
184,484
53,403
-
2,224,510
3,891,335
13,493,183
1,182,628
1,068,111
18,757
135,916
26,557,785
1,567,348
79,047
41,184
21,068,644
436,325
202,716
11,228
53,286
485,771
278,334
24,223,883
2,556,035
1,566,458
61,121
341,397
103,510
184,484
53,403
-
2,224,510
3,645,046
13,106,425
1,183,089
1,068,111
18,757
135,916
25,906,865
1,446,036
79,010
41,184
21,002,125
400,071
202,716
11,228
53,447
485,771
284,709
24,006,297
2,432,312
1,148,743
190,849
234,007
56,572
117,623
57,577
2,235
2,136,709
2,624,920
11,674,842
1,051,140
802,605
6,820
140,562
22,443,509
1,185,315
117,991
34,131
17,890,863
464,213
104,823
11,341
48,451
389,902
274,704
20,521,734
2,432,312
1,150,081
191,149
234,007
56,572
117,623
57,577
2,235
2,136,709
2,384,933
12,303,182
1,070,528
802,605
6,820
140,562
22,852,888
1,172,036
119,927
34,131
17,905,676
529,723
104,823
11,341
48,451
389,902
265,679
20,581,689
149
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 47:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
b) Fair value of derivative instruments
The Group regularly enters into hedging transactions in order to decrease its financial risks. However some
economically hedging transaction do not meet the criteria to qualify as hedge accounting, therefore these
transactions were accounted for as derivatives held for trading.
The assessment of the hedge effectiveness (both for fair value hedges and cash flow hedges) to determine the
economic relationship between the hedged item and the hedging instrument is accomplished with prospective
scenario analysis via different rate shift scenarios of the relevant risk factor(s) of the hedged risk component(s). The
fair value change of the hedged item and the hedging instrument is compared in the different scenarios. Economic
relationship is justified if the change of the fair value of the hedged item and the hedging instrument are in the
opposite direction and the absolute changes are similar amounts. The hedge ratio is determined as the ratio of the
notional of the hedged item and the notional of the hedging instrument. The sources of hedge ineffectiveness are the
not hedged risk components (e.g. change of cross currency basis spreads in case of interest rate risk hedges), slight
differences in maturity dates and interest payment dates in case of fair value hedges, and differences between the
carrying amount of the hedged item and the carrying amount of the hedging instrument in case of FX hedges (e.g.
caused by interest rate risk components in the fair value of the hedging instrument).
The summary of the derivatives held for trading and derivatives designated as hedge accounting of the Group are as
follows:
150
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 47:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
b) Fair value of derivative instruments [continued]
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
Foreign exchange spot
Forward contracts
Cross currency interest rate swaps
Total derivatives held for risk
Before netting
Assets
Liabilities
2021
Netting
After netting
Before netting
Assets
Liabilities
Assets
Liabilities
2020
Netting
After netting
Assets
Liabilities
58,512
7,316
484
-
66,312
37,638
10,790
801
187
(56,070)
(7,621)
(299)
-
(63,990)
(42,272)
(7,738)
(180)
(242)
49,416
(50,432)
51,523
10,538
62,061
171
62,232
47,457
1,090
-
-
4,442
(51,508)
(357)
(51,865)
(278)
(52,143)
(78,340)
(4,108)
-
-
(168)
40,783
-
-
-
40,783
-
-
-
-
-
-
-
-
-
-
5,682
-
-
-
-
17,729
7,316
484
-
25,529
37,638
10,790
801
187
(15,287)
(7,621)
(299)
-
(23,207)
(42,272)
(7,738)
(180)
(242)
33,963
7,315
359
-
41,637
41,838
8,689
3,909
553
(33,736)
(7,419)
(8)
-
(41,163)
(35,537)
(10,750)
(3,835)
(657)
49,416
(50,432)
54,989
(50,779)
51,523
10,538
62,061
171
62,232
41,775
1,090
-
-
4,442
(51,508)
(357)
(51,865)
(278)
(52,143)
(72,658)
(4,108)
-
-
(168)
9,695
7,071
16,766
379
17,145
24,679
808
-
41
44
(8,269)
(560)
(8,829)
(1,262)
(10,091)
(20,944)
(3,566)
-
-
-
8,984
-
-
-
8,984
-
-
-
-
-
-
-
-
-
-
12,736
-
-
-
-
24,979
7,315
359
-
32,653
41,838
8,689
3,909
553
(24,752)
(7,419)
(8)
-
(32,179)
(35,537)
(10,750)
(3,835)
(657)
54,989
(50,779)
9,695
7,071
16,766
379
17,145
11,943
808
-
41
44
(8,269)
(560)
(8,829)
(1,262)
(10,091)
(8,208)
(3,566)
-
-
-
management not designated in hedge
52,989
(82,616)
5,682
47,307
(76,934)
25,572
(24,510)
12,736
12,836
(11,774)
Total held for trading derivative
financial instruments
230,949
(249,181)
46,465
184,484
(202,716)
139,343
(126,543)
21,720
117,623
(104,823)
151
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 47:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
b) Fair value of derivative instruments [continued]
Derivative financial instruments designated
as hedge accounting
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
Foreign exchange swaps
Total derivatives designated in fair value hedges
Total derivatives held for risk management
Before netting
Assets
Liabilities
2021
Netting
After netting
Before netting
Assets
Liabilities
Assets
Liabilities
2020
Netting
After netting
Assets
Liabilities
1,020
1,020
(1,020)
(1,020)
1,020
1,020
-
-
-
-
25,417
5,471
-
30,888
(17,908)
(5,451)
-
(23,359)
12,131
-
-
12,131
13,286
5,471
-
18,757
(5,777)
(5,451)
-
(11,228)
8,027
8,027
2,436
6,179
-
8,615
(8,027)
(8,027)
(7,129)
(6,007)
-
(13,136)
8,027
8,027
1,795
-
-
1,795
-
-
641
6,179
-
6,820
-
-
(5,334)
(6,007)
-
(11,341)
(OTC derivatives)
31,908
(24,379)
13,151
18,757
(11,228)
16,642
(21,163)
9,822
6,820
(11,341)
c) Types of hedge accounting
Interest rate risk management is centralized at the Group. Interest rate risk exposures in major currencies are managed at OTP Headquarter on a consolidated level. Although
risk exposures in local currencies are managed at subsidiary level, the respective decisions are subject to Headquarter ALCO approval. Interest rate risk is measured by
simulating NII and EVE under different stress and plan scenarios, the established risk limits are described in „OTP Bank’s Group-Level Regulations on the Management of
Liquidity Risk and Interest Rate Risk of Banking Book”. The interest rate risk management activity aims to stabilize NII within the approved risk limits
The risk management objective of these hedge relationships is to mitigate the risk of clean fair value (i.e. excluding accrued interest) change of MIRS loans due to the change
of interest rate reference indices (BUBOR, EURIBOR, LIBOR, etc.) of the respective currency.
The ineffective part of fair value hedge accounting is presented on Interest income / Interest expense in the Consolidated Statement of Profit or Loss.
152
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 47:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
c) Types of hedge accounting [continued]
Amount, timing and uncertainty of future cash flows – hedging instruments as at 31 December 2021 (in fx million)
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 (%)
USD
Notional
Average Interest Rate (%)
JPY
Notional
Average Interest Rate (%)
Cross currency interest rate
swap
EUR/HUF
Notional
Average Interest Rate (%)
Average FX Rate
Fair Value
Hedge
Foreign
exchange &
Interest rate
risk
-
-
-
-
-
-
-
-
2,000
1.09%
-
-
-
-
-
-
900
0.49%
1
0.23%
-
-
-
-
(52,474)
1.65%
111
0.24%
119
2.54%
4,500
0.22%
42,950
1.31%
50
0.05%
47
4.18%
-
-
(6,624)
162
166
4,500
-
(1.64)%
310.41
1
(1.68)%
310.29
2
(1.67%)
310.26
12
(1.69%)
310.01
12
(1.82%)
307.81
27
153
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 47:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
c) Types of hedge accounting [continued]
Amount, timing and uncertainty of future cash flows – hedging instruments as at 31 December 2021 (in fx million) [continued]
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
Foreign
exchange
risk
Cross currency interest rate
swap
EUR/HUF
Notional
Average FX Rate
RON/HUF
Notional
Average FX Rate
RUB/HUF
Notional
Average FX Rate
JPY/HUF
Notional
Average FX Rate
USD/HUF
Notional
Average FX Rate
Other
Interest rate swap
HUF
Notional
-
363.88
(6)
354.22
35
356.94
200
66.21
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
323.77
(3)
323.77
3,345
1,823
3,093
572
355.93
2,225
73.08
11,200
4.15
4,500
2.79
306
323.77
-
-
-
-
-
-
-
-
-
-
-
601
2,425
11,200
4,500
303
8,261
154
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 47:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
c) Types of hedge accounting [continued]
Amount, timing and uncertainty of future cash flows – hedging instruments as at 31 December 2020 (in fx million)
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 (%)
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 &
Interest rate
risk
-
-
15
(0.11)%
-
-
-
-
-
-
-
-
-
-
-
-
60,000
1.31%
5
0.09%
21
2.00%
-
-
(89,622)
1.06%
173,810
1.35%
144,188
102
0.24%
171
2.38%
2,100
7.38%
10
0.22%
29
2.35%
-
-
132
221
2,100
-
(1.55)%
311.08
-
(1.59)%
310.95
2
(1.60)%
310.82
12
(1.63)%
310.14
14
(1.67)%
308.15
28
155
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 47:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
c) Types of hedge accounting [continued]
Amount, timing and uncertainty of future cash flows – hedging instruments as at 31 December 2020 (in fx million) [continued]
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
Foreign
exchange
risk
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
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
156
NOTE 47:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
c) Types of hedge accounting [continued]
As at 31 December 2021 is as follows:
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 2021
Line item in the consolidated
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 2021
Before netting
Netting
After netting
Assets
Liabilities
Assets
Liabilities
Fair value
hedge
Interest rate
swap
Interest rate
risk
409,595
23,986
(17,908)
12,131
11,855
(5,777) Derivative financial instruments
6,494
designated as hedge accounting
Cross-
currency swap
FX & IR
risk
8,175
-
(2,375)
Cross-
currency swap
Interest rate
swap
FX risk
566,936
5,471
(3,076)
Other
8,261
1,431
-
-
-
-
-
(2,375) Derivative financial instruments
4
designated as hedge accounting
5,471
(3,076) Derivative financial instruments
(1,687)
designated as hedge accounting
1,431
- Derivative financial instruments
designated as hedge accounting
Fair value hedges total
992,967
30,888
(23,359)
12,131
18,757
(11,228)
3
4,814
157
NOTE 47:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
c) Types of hedge accounting [continued]
As at 31 December 2020 is as follows:
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 2020
Line item in the consolidated
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
Before netting
Netting
After netting
Assets
Liabilities
Assets
Liabilities
Fair value
hedge
Interest rate
swap
Interest rate
risk
468,574
1,839
(7,065)
1,795
44
(5,270) Derivative financial instruments
Cross-currency
swap
FX & IR
risk
8,874
-
(1,615)
Cross-currency
swap
Interest rate
swap
FX risk
438,401
6,246
(4,456)
Other
16,224
530
-
designated as hedge accounting
-
-
-
-
(1,615) Derivative financial instruments
designated as hedge accounting
6,246
(4,456) Derivative financial instruments
designated as hedge accounting
530
- Derivative financial instruments
designated as hedge accounting
Fair value hedges total
932,073
8,615
(13,136)
1,795
6,820
(11,341)
(370)
(36)
(809)
2
(1,213)
158
NOTE 47:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
c) Types of hedge accounting [continued]
As at 31 December 2021 is as follows:
Type of hedge
Type of risk
Carrying amount of the
hedged item as at 31
December 2021
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 2021
Assets
Liabilities
Assets
Liabilities
Line item in the consolidated
statement of financial position in
which the hedged item is included
Fair value hedges
- Loans
- Loans
Interest rate risk
57,176
-
Interest rate risk
-
142,649
- Government bonds
- Government bonds
Interest rate risk
Interest rate risk
- Other securities
Interest rate risk
- Loans
- Loans
- Government bonds
- Government bonds
- Other securities
Fair value hedges total
Foreign exchange &
Interest rate risk
Foreign exchange risk
Foreign exchange risk
Foreign exchange risk
Other risk
13,921
152,830
42,008
101,934
458,312
12,811
98,668
-
937,660
637
-
(1,230)
(22,457)
318
611
-
-
-
-
-
-
-
-
-
8,261
150,910
-
-
(22,121)
- Loans
(16,858)
Amounts due to banks, the National
Governments, deposits from the
National Banks and other banks
- Securities at amortized cost
- Securities at fair value through
other comprehensive income
- Securities at fair value through
other comprehensive income
(1,114) Loans
- Loans
- Securities at fair value through
other comprehensive income
- Securities at amortized cost
(161) Liabilities from issued securities
(18,133)
159
NOTE 47:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
c) Types of hedge accounting [continued]
As at 31 December 2020 is as follows:
Type of hedge
Type of risk
Fair value hedges
- Loans
- Loans
- Government bonds
- Government bonds
Interest rate risk
Interest rate risk
Interest rate risk
Interest rate risk
- Other securities
- Loans
- Loans
- Other securities
Fair value hedges
total
Interest rate risk
Foreign exchange &
Interest rate risk
Foreign exchange risk
Other 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 consolidated
statement of financial position in
which the hedged item is included
Assets
Liabilities
Assets
Liabilities
35,256
-
8,678
269,838
47,560
96,972
303,572
-
-
100,299
-
-
-
-
-
15,032
1,679
-
(106)
2,518
781
284
-
-
- Loans
(235) Loans
- Securities at amortized cost
- Securities at fair value through
other comprehensive income
- Securities at fair value through
other comprehensive income
(1,634) Loans
- Loans
(528) Liabilities from issued securities
761,876
115,331
5,156
(2,397)
160
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 47:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
c) Types of hedge accounting [continued]
Change in basis swap spread recognised in the consolidated other comprehensive income related fair value hedges as follows:
Type of risk
Carrying amount of the hedged item
FX risk
FX risk
Assets
Liabilities
458,312
12,811
471,123
-
-
-
Type of risk
Carrying amount of the hedged item
Items recognised in the
consolidated other comprehensive
income for the
year 2021
Change in the items
recognized in other
comprehensive income
for the year 2021
Line item in the consolidated
statement of financial position in
which the hedged item is included
(1,032)
64
(968)
(1,681) Loans at amortised cost
Securities at fair value through other
comprehensive income
-
(1,681)
Items recognised in the
consolidated other comprehensive
income for the
year 2020
Change in the items
recognized in other
comprehensive income
for the year 2020
Line item in the consolidated
statement of financial position in
which the hedged item is included
FX risk
Assets
Liabilities
303,572
303,572
-
-
713
713
- Loans at amortised cost
-
On Group level there weren’t any cash-flow hedges for the year ended 31 December 2021 and 2020.
According to the strategic direction designated by the Management Committee, a decision was made about closing in accounting meaning the former EUR 310 million
strategic open position which was presented at the end of 2019 in the Consolidated Financial Statements, so at the end of 2020 regarding net investment hedges for foreign
subsidiaries there aren’t any disclosure requirements to be presented.
161
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 47:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
d) Fair value levels
Methods and significant assumptions used to determine fair value of the different levels of financial instruments:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
- Level 2: inputs other than quoted prices included within Level 1, that are observable for the asset or
liability either directly or indirectly. Fair value measurements – in relation with instruments measured
not at fair value – are categorized in level 2;
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
The following table shows an analysis of financial instruments recorded at fair value by level of the fair value
hierarchy:
2021
Total
Level 1
Level 2
Level 3
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
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
341,397
103,510
90,877
58,727
227,153
23,367
44,777
6
184,484
171
174,143
10,170
53,403
31,979
8,233
2,224,510
910,324
1,250,833
13,1911
63,3532
1,068,111
281
-
1,067,830
18,757
3,652,775
-
1,001,482
18,757
1,496,743
-
1,154,550
41,184
-
-
41,184
202,716
278
202,438
-
11,228
255,128
-
278
11,228
213,666
-
41,184
1 The portfolio includes Visa C shares.
2 The portfolio includes mainly HUF 55,476 million Ukrainian government bonds.
162
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 47:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
d) Fair value levels [continued]
2020
Total
Level 1
Level 2
Level 3
Financial assets at fair value through profit or loss
234,007
62,472
149,504
22,031
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
56,572
30,333
26,227
12
117,623
388
110,649
6,586
57,577
31,751
10,393
15,4331
2,235
-
2,235
-
2,136,709
1,137,821
941,982
56,9062
802,605
1,089
2,535
798,981
6,820
3,180,141
-
1,201,382
6,820
1,100,841
-
877,918
34,131
-
2,235
31,896
104,823
1,386
103,437
-
11,341
150,295
-
1,386
11,341
117,013
-
31,896
1 The portfolio includes mainly Visa C shares.
2 The portfolio includes mainly HUF 46,124 million Albanian government bonds.
163
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 47:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
d) Fair value levels [continued]
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:
2021
Opening
balance
Purchase
(+)
Issuance
/Disbursement
(+)
Settlement
/ Close (-)
Sale (-)
FVA (+/-)
Transfer
(+/-)
Fx effect /
Revaluation
Other
Closing
balance
Trading securities at fair value
through profit or loss
Positive fair value of derivative
financial assets held for trading
Nont-trading securities mandatorily
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
12
6,586
15,433
-
-
-
-
-
390
-
-
-
-
-
-
3,584
-
-
-
-
(6)
-
6
10,170
(4,501)
640
(57)
256
1,030
13,191
56,906
81,795
-
(5,544)
(2,018)
(91)
(69,636)
1,813
128
63,353
798,981
-
333,931
(41,038)
-
(24,044)1
-
-
-
1,067,830
877,918
81,795
334,321
(46,582)
(6,519)
(19,911)
(69,693)
2,069
1,152
1,154,550
31,896
31,896
-
-
-
-
(7,223)
(7,223)
-
-
1,454
1,454
-
-
-
-
15,057
41,184
15,057
41,184
1 FVA change for the current year consists of HUF 16,289 million adjustment resulting from risk factors and HUF 7,755 million adjustment resulting from market factors.
164
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 47:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
d) Fair value levels [continued]
Movements in Level 3 financial instruments measured at fair value [continued]
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
Opening
balance
Purchase
(+)
Issuance
/Disbursement
(+)
Settlement
/ Close (-)
Sale (-)
FVA (+/-)
Transfer
(+/-)
Fx effect /
Revaluation
Other
Closing
balance
Trading securities at fair value
through profit or loss
Positive fair value of derivative
financial assets held for trading
Nont-trading securities mandatorily
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
fair value total
-
4,227
8,155
-
-
-
-
-
-
-
1,204
(5,043)
-
-
-
-
2,359
12
-
-
-
(862)
9,961
2,018
59,695
11,076
-
(9,398)
(162)
1,637
(10,812)
4,870
493,207
-
333,908
(21,397)
-
(6,737)
-
-
565,284
11,076
335,112
(35,838)
(162)
(3,603)
(839)
6,888
-
-
-
-
-
-
12
6,586
15,433
56,906
798,981
877,918
28,861
28,861
-
-
(1,689)
(1,689)
-
-
-
-
(1,270)
(1,270)
-
-
-
-
5,994
31,896
5,994
31,896
165
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 47:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
d) Fair value levels [continued]
Valuation techniques and sensitivity analysis on Level 3 instruments
Sensitivity analysis is performed on products with significant unobservable inputs (Level 3) to generate a range
of reasonably possible alternative valuations. The sensitivity methodologies applied take account of the nature of
the valuation techniques used, 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 a range or spread data of reliable reference source or a scenario based on relevant
market analysis alongside the impact of using alternative models. Sensitivities are calculated without reflecting
the impact of any diversification in the portfolio.
Unobservable inputs used in measuring fair value
Type of financial
instrument
Valuation technique
Significant unobservable input Range of estimates
VISA C shares
Market approach combined with
expert judgement.
Discount applied due to illiquidity
and litigation.
MFB refinancing loans
Subsidised personal
loans
Subsidised personal
loans
Subsidised personal
loans
Discounted cash flow model
Probability of default
Discounted cash flow model
Probability of default
Discounted cash flow model
Operational costs
Discounted cash flow model
Demography
for
unobservable
input
+12% / (12%)
+/- 20%
+/- 20%
+/- 20%
Change in the cash
flow estimation
The effect of unobservable inputs on fair value measurement
Although the Group believes that its estimates of fair value are appropriate, the use of different methodologies or
assumptions could lead to different measurements of fair value. For fair value measurements in Level 3 changing
the assumptions used to reasonably possible alternative assumptions would have the following effects.
2021
Unobservable inputs
Fair values
Effect on profit and loss
Favourable
Unfavourable
Favourable
Unfavourable
VISA C shares
Loans mandatorily
at fair value
throuhg profit or loss
Loans mandatorily
at fair value
throuhg profit or loss
Subsidised personal loans
Subsidised personal loans
Subsidised personal loans
MFB refinancing loans
Total
Illiquidity
6,704
5,079
813
(813)
Probability of default
406,362
405,266
549
(547)
Operational costs
Probability of default
Operational costs
Demography
Probability of default
412,868
639,007
647,292
635,484
19,218
2,766,935
399,020
631,856
623,934
635,387
18,972
2,719,514
7,054
3,590
11,875
68
123
24,072
(6,794)
(3,561)
(11,483)
(29)
(123)
(23,350)
166
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 47:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
d) Fair value levels [continued]
The effect of unobservable inputs on fair value measurement [continued]
2020
Unobservable inputs
Fair values
Effect on profit and loss
Favourable
Unfavourable
Favourable
Unfavourable
VISA C shares
Loans mandatorily
at fair value
throuhg profit or loss
Loans mandatorily
at fair value
throuhg profit or loss
Subsidised personal loans
Subsidised personal loans
Subsidised personal loans
MFB refinancing loans
Total
Illiquidity
6,324
4,821
751
(751)
Probability of default
319,857
316,251
1,813
(1,793)
Operational costs
Probability of default
Operational costs
Demography
Probability of default
324,845
452,782
464,974
451,419
24,876
2,045,077
311,525
447,647
436,194
448,987
24,690
1,990,115
6,801
2,579
14,772
1,217
93
28,026
(6,519)
(2,555)
(14,008)
(1,215)
(93)
(26,934)
The favourable and unfavourable effects of using reasonably possible alternative assumptions for the valuation
of Visa C shares have been calculated by modifying the discount rate used for the valuation by +/-12% as being
the best estimates of the management as at 31 December 2021 and 2020 respectively.
In the case of Hungarian Development Bank (“MFB”) refinancing loans and subsidised personal loans the Bank
calculated the favourable and unfavourable effects of using reasonably possible alternative assumptions by
modifying the rates of probability of default by +/- 20% as one of the most significant unobservable input.
In case of subsidised personal loans operational cost and factors related to demography are considered as
unobservable inputs to the applied fair value calculation model.
The Bank calculated the favourable and unfavourable effects of using reasonably possible alternative
assumptions by modifying the rates of operational costs by +/- 20% as one of the most significant unobservable
inputs.
Cash flow estimation are based on assumption related to the future number of childbirths performed by the
debtors. According to the current assumptions 15% of the debtors will not fulfill the conditions of the subsidy
determined by the government after 5 years (“breach of conditions”), thereby debtors will be obliged to pay back
the interest subsidy given before. Furthermore, in this case subsidised loans are converted to loans provided
based on market conditions. Loans are prepaid by the government as part of the subsidy after the second and the
third childbirth following the signatory of the loan contract. The Bank calculated the favourable and
unfavourable effects of using reasonably possible alternative assumptions by modifying the demographical
assumption of breach of conditions by +/- 5% as the most significant unobservable input in the cash flow
estimation.
167
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 48:
SEGMENT REPORTING BY BUSINESS AND GEOGRAPHICAL SEGMENTS (in
HUF mn)
The Group distinguishes business and geographical segments. The report on the base of the business and
geographical segments is reported below.
The operations in the Slovakian segment and the Croatian insurance operation were discontinued. The segment
information reported on the next pages does not include any amounts for these discontinued operations neither
for this period nor for the previous year, which are described in more details in Note 49.
The reportable segments of the Group on the base of IFRS 8 are as the follows:
OTP Core Hungary, Russia, Ukraine, Bulgaria, Romania, Serbia, Croatia, Montenegro, Albania, Moldova,
Slovenia, Merkantil Group, Asset Management subsidiaries, Other subsidiaries and Corporate Center.
OTP Core is an economic unit for measuring the result of core business activity of the Group in Hungary.
Financials for OTP Core are calculated from the partially Consolidated Financial Statements of the companies
engaged in the Group’s underlying banking operation in Hungary. These companies include OTP Bank Hungary
Plc., OTP Mortgage Bank Ltd., OTP Building Society Ltd., OTP Factoring Ltd., OTP Financial Point Ltd., and
companies providing intragroup financing. The Bank Employee Stock Ownership Plan Organization was
included from the fourth quarter of 2016; OTP Card Factory Ltd., OTP Facility Management Llc., Monicomp
Ltd. and OTP Real Estate Lease Ltd. were included from the first quarter of 2017 (from the first quarter of 2019
OTP Real Estate Lease Ltd. was eliminated from OTP Core); OTP Mobile Service Llc., OTP Ingatlanpont Llc.
were included from the first quarter of 2019, OTP eBIZ Ltd from the first quarter of 2020 and OTP Home
Solutions Ltd. was included from the second quarter of 2021. The consolidated accounting results of these
companies are segmented into OTP Core and Corporate Centre. The latter is a virtual entity.
Within the Group, the Corporate Centre acts as a virtual entity established by the equity investment of OTP Core
for managing the wholesale financing activity for all the subsidiaries within the Group but outside OTP Core.
Therefore the balance sheet of the Corporate Centre is funded by the equity and intragroup lending received from
OTP Core, the intragroup lending received from other subsidiaries, and the subordinated debt and senior notes
arranged by OTP under its running EMTN program.
From this funding pool, the Corporate Centre is to provide intragroup lending to, and hold equity stakes in OTP
subsidiaries outside OTP Core. Main subsidiaries financed by Corporate Centre are as follows: Hungarians:
Merkantil Bank Ltd, Merkantil Leasing Ltd, OTP Fund Management Ltd, OTP Real Estate Fund Management
Ltd, OTP Life Annuity Ltd; foreigners: banks, leasing companies, factoring companies.
The results of OTP Factoring Ukraine LLC, OTP Factoring SRL, OTP Factoring Bulgaria LLC, OTP Factoring
Serbia d.o.o., and OTP Debt Collection d.o.o. (formerly known as: OTP Factoring Montenegro d.o.o.) are
included into the foreign banks segment.
From the first quarter of 2019 Expressbank AD and its subsidiaries, OTP Leasing EOOD and Express Factoring
EOOD (altogether: Express Group) were included into the Bulgarian operation, so from the first quarter of 2019
the statement of recognized income and balance sheet of DSK Leasing AD was included into this segment too.
The Bulgarian Expressbank AD merged with its parent DSK Bank AD in April 2020.
The Serbian segment, OTP banka Srbija AD Beograd and Vojvodjanska Banka a.d. Novi Sad includes from the
first quarter of 2019 the statements of profit or loss and financial positions of OTP Lizing d.o.o, OTP Services
d.o.o. and from the third quarter of 2019 the financial position of the newly acquired OTP banka Srbija AD
Beograd and from the fourth quarter of 2019 its statement of profit or loss too. OTP banka Srbija a.d. merged
with its parent bank in April 2021.
The Montenegrin segment, Crnogorska Komercijalna Banka a.d. and Podgoricka banka a.d. includes from the
third quarter of 2019 the statement of profit or loss and financial position of the newly acquired Podgoricka
banka a.d. In December 2020 Podgoricka banka a.d. merged into Crnogorska Komercijalna Banka a.d.
In the first quarter of 2019 the Albanian, and from the second half of year 2019 the Moldovan and Slovenian
segments were included as new segments in the consolidated segment report.
The activities of the other subsidiaries are out of the leasing and fund management and factoring activity, such
as: OTP Real Estate Ltd., OTP Life Annuity Ltd, OTP Funds Servicing and Consulting Ltd., OTP Building
s.r.o., OTP Real Slovensko s.r.o.
168
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 48:
SEGMENT REPORTING BY BUSINESS AND GEOGRAPHICAL SEGMENTS (in
HUF mn) [continued]
The reportable business and geographical segments of the Group are those components where:
-
-
-
-
separated income and ex penses, assets and liabilities can be identified and assignable to the segments,
transactions between the different segments were eliminated,
the main decisive board of the Group regularly controls the operating results,
separated financial information is available.
Adjustments
Goodwill / investment impairment and their tax saving effect:
As at 31 December 2021 HUF 39,546 million impairment was booked on the investment in OTP Bank Romania
S.A. on which HUF 3,559 million positive tax effect was recognized, HUF 9,906 million impairment release was
booked on OTP Banka Srbija a.d. on which HUF 892 million negative tax effect was recognized, 16,628 million
impairment release was booked on Crnogorska komercjalna banka a.d. on which HUF 1,496 million negative tax
effect was recognized, 8,463 million impairment was booked on Monicomp Ltd. on which HUF 763 million
positive tax effect was recognized.
As at 31 December 2020 HUF 9,841 million impairment was booked on the investment in OTP Bank Romania
S.A. on which HUF 886 million positive tax effect was recognized.
Special tax on financial institutions (after income tax):
Special tax on financial institutions includes the special tax paid by the Hungarian financial institutions, the net
present value effect of the one-off additional banking tax payable into the pandemic fund in 2020 (the payments
are deductible from future banking taxes), the banking tax paid by the Romanian bank, subsidiary of OTP Group
and as well as for 2020 the Slovakian banking levy. Besides, it also contained for 2020 the Slovakian Deposit
Protection Fund contributions being introduced again in 2014, and the contribution into the Resolution Fund in
Slovakia, too.
Effect of acquisitions (after income tax):
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 and other direct effects due to the acquisitions
(such as customer base value amortisation) and effects related to the sale of the Slovakian bank for the end of
2020.
Explanation to the segments in the following table below:
2; 3; 8: The segments distinguished by geographical basis contain banks in that country and sometimes other
financial institutions (like leasing or factoring companies) or other companies. The incomes mainly arises from
providing financial services like: collecting deposits, granting loans, leasing and treasury activities, payment and
investment services and other financial services.
16: Merkantil Group, is responsible for Hungarian leasing activities, originates its income from providing
leasing services (financing cars and production equipment).
17: Incomes arising in this segment is mainly fee income of fund management companies in Hungary, Bulgaria,
Romania, Ukraine based on capital in investment funds or assets in funds.
18: The activities of other Hungarian and foreign subsidiaries are very divergent so the incomes can be also
originated from different sources. The main part of the income in this segment comes from the activities of OTP
Funds Servicing and Consulting, OTP Real Estate and the investments of OTP Real Estate Fund Management
and Portfolion Funds.
19: Net interest income of Corporate Center includes interest expense on received resources and interest income
on assets exposed.
169
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 48:
SEGMENT REPORTING BY BUSINESS AND GEOGRAPHICAL SEGMENTS
(in HUF mn) [continued]
Information regarding the Group’s reportable segments is presented below:
As at 31 December 2021
Main components of the consolidated statement of profit
or loss in HUF million
OTP Group - in the
consolidated statement of
profit or loss - structure of
accounting reports
Adjustments on the
accounting in
Recognized Income
OTP Group - in the consolidated
statement of profit or loss -
structure of management reports
OTP CORE
(Hungary)
Foreign banks in EU
subtotal (without
adjustments)
DSK Bank AD
(Bulgaria)
OTP banka d.d.
(Croatia)
SKB Banka d.d.
(Slovenia)
OTP Bank Romania
S.A. (Romania)
a
b
1=a+b; 1= 2+3+8+15+19+20
2
3=4+…+7
4
5
6
7
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)
Expected one-off negative effect of the debt repayment
moratorium in Hungary (after income tax)
Result of the treasury share swap agreement
at OTP Core (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
Personnel expenses
Depreciation and amortization
Other general expenses
Gains from derecognition of
financial assets at amortized cost
Modification loss
Total risk costs
Adjusted loss allowance on
loan and placement losses
(without the effect of revaluation of FX)
Other impairment (adjustment)
Adjusted impairment under IAS 36
Income tax
Total Assets1
Total Liabilities
( ) used at: provisions, impairment and expenses
456,428
116
456,312
456,312
528,435
597,770
1,345,382
874,310
442,174
28,898
(747,612)
(340,684)
(94,996)
(311,932)
1,885
(13,672)
(57,548)
(47,645)
(9,903)
(9,903)
(72,123)
27,551,338
24,516,618
(40,475)
729
1,909
(18,893)
(15,506)
(15,040)
6,326
44,071
62,899
61,589
(33,290)
9,702
(116,626)
73,634
94,879
483
22,180
72,216
(1)
10,131
(8,820)
7,809
(16,629)
437
(18,828)
-
-
456,428
116
456,312
(40,475)
729
1,909
(18,893)
(15,506)
(15,040)
6,326
500,383
591,334
659,359
1,312,092
884,012
325,548
102,532
(652,733)
(340,201)
(72,816)
(239,716)
1,884
(3,541)
(66,368)
(39,836)
(26,532)
(9,466)
(90,951)
213,378
253,972
256,151
545,185
369,309
150,578
25,298
(289,034)
(143,234)
(36,926)
(108,874)
(1,598)
(3,397)
2,816
4,910
(2,094)
70
(40,594)
131,309
152,663
178,192
356,257
237,745
90,092
28,420
(178,065)
(91,350)
(16,383)
(70,332)
1,814
(14)
(27,329)
(23,973)
(3,356)
(3,001)
(21,354)
76,789
85,243
106,240
178,470
112,869
54,508
11,093
(72,230)
(34,284)
(7,160)
(30,786)
1,893
-
(22,890)
(20,831)
(2,059)
(2,401)
(8,454)
33,446
41,064
43,421
88,735
60,933
18,183
9,619
(45,314)
(23,111)
(4,392)
(17,811)
1,449
-
(3,806)
318
(4,124)
(135)
(7,618)
16,822
20,660
19,595
42,354
27,673
13,258
1,423
(22,759)
(13,015)
(1,350)
(8,394)
-
(14)
1,079
1,833
(754)
-
(3,838)
4,252
5,696
8,936
46,698
36,270
4,143
6,285
(37,762)
(20,940)
(3,481)
(13,341)
(1,528)
-
(1,712)
(5,293)
3,581
(465)
(1,444)
27,551,338
24,516,618
14,205,354
12,195,467
10,075,267
8,680,440
4,627,132
3,927,757
2,576,445
2,225,422
1,433,206
1,253,691
1,438,484
1,273,570
1 Relating to the discontinued operations the assets were HUF 2,046 million.
170
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 48:
SEGMENT REPORTING BY BUSINESS AND GEOGRAPHICAL SEGMENTS
(in HUF mn) [continued]
Information regarding the Group’s reportable segments is presented below [continued]:
As at 31 December 2021 [continued]
Main components of the consolidated statement of profit
or loss in HUF million [continued]
Foreign banks
not in EU
subtotal
(without
adjustments)
OTP banka
Srbija a.d.
(Serbia)
OTP Bank
JSC (Ukraine)
JSC "OTP
Bank"
(Russia) and
Touch Bank
Crnogorska
komercijalna
banka a.d.
(Montenegro)
Banka OTP
Albania SHA
(Albania)
OTP Bank
S.A.
(Moldova)
Non-banking
subsidiaries
subtotal
Merkantil
Group
(Hungary)
Asset
Management
subsidiaries
Other
subsidiaries
Corporate
Centre
Eliminations
and
adjustments
8=9+…+14
9
10
11
12
13
14
15=16+17+18
16
17
18
19
20
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)
Expected one-off negative effect of the debt repayment
moratorium in Hungary (after income tax)
Result of the treasury share swap agreement
at OTP Core (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
Personnel expenses
Depreciation and amortization
Other general expenses
Gains from derecognition of
financial assets at amortized cost
Modification loss
Total risk costs
Adjusted loss allowance on
loan and placement losses
(without the effect of revaluation of FX)
Other impairment (adjustment)
Adjusted impairment under IAS 36
Income tax
Total Assets1
Total Liabilities
( ) used at: provisions, impairment and expenses
124,272
148,419
183,171
335,934
252,782
63,699
19,453
(152,763)
(85,606)
(13,966)
(53,191)
1,862
(130)
32,104
35,714
40,754
83,493
62,497
14,410
6,586
(42,739)
(22,569)
(2,820)
(17,350)
554
-
(36,484)
(5,594)
(21,918)
(14,566)
(274)
(24,147)
(941)
(4,653)
(245)
(3,610)
5,183,118
4,316,145
2,224,715
1,918,085
39,025
47,267
54,761
83,567
62,051
14,494
7,022
(28,806)
(16,580)
(2,131)
(10,095)
916
(130)
(8,280)
(6,613)
(1,667)
(3)
(8,242)
983,557
823,801
37,624
47,314
62,368
118,158
91,364
25,728
1,066
(55,790)
(33,773)
(6,263)
(15,754)
467
-
(15,521)
(13,542)
(1,979)
24
(9,690)
799,965
559,241
4,139
4,956
10,240
22,046
16,553
4,880
613
(11,806)
(5,805)
(1,461)
(4,540)
(31)
-
(5,253)
677
(5,930)
(51)
(817)
513,522
431,495
5,521
6,507
7,212
13,398
10,619
1,843
936
(6,186)
(2,794)
(559)
(2,833)
(33)
-
(672)
(847)
175
1
(986)
5,859
6,661
7,836
15,272
9,698
2,344
3,230
(7,436)
(4,085)
(732)
(2,619)
(11)
-
24,573
27,831
43,040
85,568
22,019
26,456
37,093
(42,528)
(20,628)
(5,160)
(16,740)
(193)
-
(1,164)
(15,016)
(652)
(512)
-
(802)
(2,900)
(12,116)
(6,260)
(3,258)
350,848
315,713
310,511
267,810
1,322,717
972,287
7,998
8,916
11,961
23,291
20,680
116
2,495
(11,330)
(4,654)
(1,428)
(5,248)
(193)
-
(2,852)
(2,900)
48
179
(918)
782,222
722,976
6,321
7,138
7,141
11,064
4
10,786
274
(3,923)
(2,443)
(231)
(1,249)
-
-
(3)
-
(3)
(14)
(817)
27,753
12,610
10,254
11,777
23,938
51,213
1,335
15,554
34,324
(27,275)
(13,531)
(3,501)
(10,243)
-
-
2,887
3,000
240
1,260
1,260
-
-
(1,020)
(95)
(2)
(923)
-
-
(12,161)
2,760
-
(12,161)
(6,425)
(1,523)
-
2,760
-
(113)
3,964
5,449
(1,435)
(12,112)
897
(5,277)
(7,732)
10,677
712
(380)
10,345
(1)
-
6,885
4,045
2,840
(1)
(1,485)
512,742
236,701
3,109,369
1,693,363
(6,344,487)
(3,341,084)
1 Relating to the discontinued operations the assets were HUF 2,046 million.
171
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 48:
SEGMENT REPORTING BY BUSINESS AND GEOGRAPHICAL SEGMENTS
(in HUF mn) [continued]
Information regarding the Group’s reportable segments is presented below [continued]:
As at 31 December 2020
Main components of the consolidated statement of profit
or loss in HUF million
OTP Group - in the
consolidated statement of
profit or loss - structure of
accounting reports
Adjustments on the
accounting in
Recognized Income
OTP Group - in the consolidated
statement of profit or loss -
structure of management reports
OTP CORE
(Hungary)
Foreign banks in EU
subtotal (without
adjustments)
DSK Group including
Expressbank AD
(Bulgaria)
OTP banka Hrvatska
d.d. (Croatia)
SKB Banka
(Slovenia)
OTP Bank Romania
S.A. (Romania)
a
b
1=a+b; 1= 2+3+8+15+19+20
2
3=4+…+7
4
5
6
7
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 re-
payment moratorium in Hungary (after income tax)
Result of the treasury share swap agreement
at OTP Core (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
Personnel expenses
Depreciation and amortization
Other general expenses
Gains from derecognition of
financial assets at amortized cost
Modification loss
Total risk costs
Adjusted loss allowance on
loan and placement losses
(without the effect of revaluation of FX)
Other impairment (adjustment)
Adjusted impairment under IAS 36
Income tax
Total Assets1
Total Liabilities2
( ) used at: provisions, impairment and expenses
259,636
5,590
254,046
254,046
297,964
516,439
1,207,564
782,671
397,633
27,260
(691,125)
(308,642)
(92,761)
(289,722)
3,380
(29,773)
(192,082)
(190,875)
(1,207)
(1,207)
(43,918)
23,329,771
20,793,243
(53,860)
213
886
(17,365)
(12,441)
749
(28,262)
2,360
57,072
71,230
37,538
(37,646)
5,408
(104,523)
61,469
75,184
(3,853)
22,475
56,562
62
29,543
4,087
32,454
(28,367)
720
(14,158)
-
-
1 Relating to the discontinued operations the assets were HUF 6,070 million.
2 Relating to the discontinued operations the liabilities were HUF 5,486 million.
259,636
5,590
254,046
(53,860)
213
886
(17,365)
(12,441)
749
(28,262)
2,360
311,118
369,194
553,977
1,169,918
788,079
293,110
88,729
(615,941)
(312,495)
(70,286)
(233,160)
3,442
(230)
(187,995)
(158,421)
(29,574)
(487)
(58,076)
23,329,771
20,793,243
156,273
189,373
197,720
453,635
286,448
130,470
36,717
(255,915)
(125,949)
(35,935)
(94,031)
(669)
-
(7,678)
2,374
(10,052)
(30)
(33,100)
11,492,949
9,726,310
69,777
78,603
161,700
335,709
230,280
76,486
28,943
(174,009)
(85,252)
(16,447)
(72,310)
2,790
(20)
(85,867)
(78,450)
(7,417)
(441)
(8,826)
9,125,249
7,883,344
42,735
46,442
89,774
166,667
111,239
45,453
9,975
(76,893)
(34,033)
(8,385)
(34,475)
1,778
-
(45,110)
(44,875)
(235)
(278)
(3,707)
15,466
18,237
40,329
84,907
58,199
16,093
10,615
(44,578)
(21,772)
(4,098)
(18,708)
637
-
(22,729)
(19,491)
(3,238)
(9)
(2,771)
10,126
12,565
19,787
40,388
28,103
11,127
1,158
(20,601)
(12,060)
(1,296)
(7,245)
482
(20)
(7,684)
(6,244)
(1,440)
-
(2,439)
1,450
1,359
11,810
43,747
32,739
3,813
7,195
(31,937)
(17,387)
(2,668)
(11,882)
(107)
-
(10,344)
(7,840)
(2,504)
(154)
91
4,283,625
3,663,247
2,325,669
1,997,504
1,353,772
1,187,648
1,162,183
1,034,945
172
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 48:
SEGMENT REPORTING BY BUSINESS AND GEOGRAPHICAL SEGMENTS
(in HUF mn) [continued]
Information regarding the Group’s reportable segments is presented below [continued]:
As at 31 December 2020 [continued]
Main components of the consolidated statement of profit
or loss in HUF million [continued]
Foreign banks
not in EU
subtotal
(without
adjustments)
Vojvodjanska
banka a.d. +
OTP Banka
Srbija AD.
Beograd
(Szerbia)
OTP Bank
JSC (Ukraine)
JSC "OTP
Bank"
(Russia) and
Touch Bank
Crnogorska
komercijalna
banka a.d. +
Podgorička
banka AD
(Montenegro)
Banka OTP
Albania SHA
(Albania)
Mobiasbanca -
OTP Group
S.A.
(Moldova)
Non-banking
subsidiaries
subtotal
Merkantil
Bank
(Hungary)
Asset
Management
subsidiaries
Other
subsidiaries
Corporate
Centre
Eliminations
and
adjustments
8=9+…+14
9
10
11
12
13
14
15=16+17+18
16
17
18
19
20
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 re-
payment moratorium in Hungary (after income tax)
Result of the treasury share swap agreement
at OTP Core (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
Personnel expenses
Depreciation and amortization
Other general expenses
Gains from derecognition of
financial assets at amortized cost
Modification loss
Total risk costs
Adjusted loss allowance on
loan and placement losses
(without the effect of revaluation of FX)
Other impairment (adjustment)
Adjusted impairment under IAS 36
Income tax
Total Assets1
Total Liabilities2
61,048
74,113
164,960
317,872
243,868
58,670
15,334
(152,912)
(83,401)
(13,054)
(56,457)
1,298
(210)
7,739
8,896
35,899
79,001
59,514
14,766
4,721
(43,102)
(21,652)
(3,181)
(18,269)
440
-
26,815
32,300
42,030
67,385
48,581
13,540
5,264
(25,355)
(14,535)
(1,362)
(9,458)
921
(210)
18,205
23,297
65,068
123,198
99,872
22,503
823
(58,130)
(34,139)
(5,855)
(18,136)
1,888
-
(91,935)
(27,443)
(10,441)
(43,659)
(78,260)
(13,675)
(989)
(13,065)
(22,170)
(5,273)
(251)
(1,157)
4,484,527
3,768,384
2,052,332
1,779,286
(6,286)
(4,155)
(39)
(5,485)
729,012
611,941
(41,160)
(2,499)
79
(5,092)
688,980
505,578
3,413
3,715
8,352
22,095
17,188
4,446
461
(13,743)
(6,681)
(1,479)
(5,583)
(894)
-
(3,743)
1,656
2,145
5,904
11,597
9,824
1,278
495
(5,693)
(2,565)
(475)
(2,653)
(304)
-
(3,455)
3,220
3,760
7,707
14,596
8,889
2,137
3,570
(6,889)
(3,829)
(702)
(2,358)
(753)
-
(3,194)
(3,434)
(2,515)
(2,695)
(309)
(457)
(302)
(940)
(301)
(489)
(499)
(20)
(540)
25,792
28,445
28,889
59,158
19,020
25,212
14,926
(30,269)
(12,418)
(3,110)
(14,741)
(38)
-
(406)
(1,487)
1,081
549
(2,653)
477,676
401,119
286,606
257,826
249,921
212,634
1,118,927
842,473
7,623
8,579
10,279
21,283
17,688
40
3,555
(11,004)
(4,297)
(1,666)
(5,041)
(38)
-
(1,662)
(1,491)
(171)
(79)
(956)
667,120
614,566
9,824
10,749
10,765
15,248
5
14,883
360
(4,483)
(2,853)
(197)
(1,433)
-
-
(16)
-
(16)
-
(925)
8,345
9,117
7,845
22,627
1,327
10,289
11,011
(14,782)
(5,268)
(1,247)
(8,267)
-
-
1,272
4
1,268
628
(772)
(569)
(526)
(526)
419
419
-
-
(945)
(91)
(2)
(852)
-
-
-
-
-
-
(43)
(1,203)
(814)
1,234
3,125
8,044
2,272
(7,191)
(1,891)
(5,384)
(1,738)
5,231
61
-
(2,109)
(2,598)
489
424
(389)
35,584
17,052
416,223
210,855
2,865,511
1,504,289
(5,757,392)
(2,931,557)
1 Relating to the discontinued operations the assets were HUF 6,070 million.
2 Relating to the discontinued operations the liabilities were HUF 5,486 million.
173
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 49:
DISCONTINUED OPERATIONS (in HUF mn)
The Serbian Pevec d.o.o. Beograd company as the investment of OTP Factoring Ltd. was classified as asset held-
for-sale by the Group as at 31 December, 2021. This investment was not revalued in the Consolidated Financial
Statements. Classification as asset held-for-sale was needed due to the purchase agreement had been concluded
already in 2021 for the real estates in the ownership of Pevec. In 2022, the purchase price was paid out and the
transfer of ownership happened. The purchase price of the real estate was EUR 9,928,667, the estimated value of
those real estates which weren’t sold was defined in the amount of EUR 300,000 according to their present
condition by a value assessment in January 2021.
Assets classified as held-for-sale
Equity instrument as at fair value through other
comprehensive income
2021
2,046
-
2020
-
2,046
On 31 December 2020, the Group classifies the operations of its Croatian subsidiary, OTP Osiguranje d.d. as
disposal groups classified as held-for-sale. The classification was needed because there is intention for the sale.
These operations, which are expected to be sold within 12 months, have been classified as a discontinued
operation, so the assets, liabilities of these discontinued operations and their losses are presented separately in
both the Consolidated Statement of Financial Position and Consolidated Statement of Profit or Loss.
The major classes of assets and liabilities comprising the operations classified as held for sale are as follows:
2020
2021
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 group
classified as held-fo-sale
-
-
-
-
-
-
-
-
-
-
2021
-
-
-
-
-
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
The Croatian insurance company cash-flow contributed to the Group’s operating activity with HUF 431 million,
to the Group’s investing activity with HUF 327 million, and in respect of the Group’s financing activity with
HUF 232 million which were modified by the eliminations during the consolidation by HUF (988) million as at
31 December 2020.
174
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 49:
DISCONTINUED OPERATIONS (in HUF mn) [continued]
The financial transaction regarding the sale of the Slovakian subsidiary was closed, presented in those
Consolidated Financial Statements for the end of 2020 as discontinued operations.
The results of the discontinued operations, which have been included in the profit for the previous year, were as
follows:
Income
Expense
Profit before income tax
Income tax expense of OTP Banka Slovensko a.s.
Realized gain of the sale of
OTP Banka Slovensko a.s.
Income tax effect of the discontinued operation
Gain from sale of the Slovakian subsidiary
2021
-
-
-
-
-
-
-
2020
15,503
(17,216)
(1,713)
(142)
7,887
(641)
5,391
The Slovakian subsidiary bank cash-flow contributed to the Group’s operating activity with HUF (8,231)
million, to the Group’s investing activity with HUF (9,653) million, and in respect of the Group’s financing
activity with HUF 86,281 million which were modified by the eliminations during the consolidation by HUF
(67,767) million as at 31 December 2020.
NOTE 50:
SIGNIFICANT EVENTS DURING THE YEAR ENDED 31 DECEMBER 2021
1) Term Note Program
See details in Note 21.
2) Purchase of new bank in Albania
On 6 December 2021, OTP Bank signed an acquisition agreement with Alpha International Holdings Single
Member S.A. on purchasing 100% shareholding of Alpha Bank SH.A., the Albanian subsidiary of the Greek
Alpha Bank S.A. The purchase price has been agreed at Euro 55 million. With a total asset-based market share
of almost 5%, Alpha Bank is the 8th largest bank on the Albanian banking market, and as a universal bank it has
been active in the retail and corporate segment as well. The financial closing of the transaction is expected by the
end of the second quarter of 2022 subject to obtaining all the necessary regulatory approvals
3) Potential acquisition of majority stake in Uzbek Ipoteka Bank
On 29 September 2021, OTP Bank signed a non-binding Memorandum of Agreement regarding the potential
acquisition of the majority stake of Ipoteka Bank and its subsidiaries with the Ministry of Finance of the
Republic of Uzbekistan. Ipoteka Bank is the fifth largest bank in Uzbekistan, with a market share of 8.5% based
on total assets at the end of July 2021, with more than 1.2 million retail customers and a large corporate clientele.
4) Purchase of new bank in Slovenia
On 31 May 2021, OTP Bank signed a share sale and purchase agreement on purchasing 100% shareholding of
Nova KBM d.d. and its subsidiaries, which are 80% owned by funds managed by affiliates of Apollo Global
Management, Inc. and 20% by EBRD. With a market share of 20.5% by total assets as of December 2020, Nova
KBM d.d. is the 2nd largest bank in the Slovenian banking market and as a universal bank it has been active in
the retail and corporate segments as well. The financial closing of the transaction is estimated in the second
quarter of 2022 subject to obtaining all the necessary regulatory approvals.
175
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 50:
SIGNIFICANT EVENTS DURING THE YEAR ENDED 31 DECEMBER 2021
[continued]
5) Closure of the sale of OTP Osiguranje d.d.
On 31 August 2021, the Croatian OTP Osiguranje d.d transaction was financially closed, as a result of which
Groupama Biztosító Zrt. has acquired 100% ownership of the insurance company from OTP Banka d.d., the
Croatian subsidiary of OTP Bank.
6) The discontinuance of the international arbitration proceedings
On 30 June 2021, OTP Bank Plc. has jointly with the Republic of Croatia requested the discontinuance of the
international arbitration proceedings - registered on 16th October 2020 relating to mandatory exchange of FX
loans and FX based consumer loans - from the Centre for Settlement of Investment Disputes (ICSID), due to the
fact that the parties have resolved their disputes by way of mutual consent. The ICSID Secretary has on 30 June
2021 acknowledged receipt of the joint claim of the contending parties relating the discontinuance of the
proceedings. According to the request of the parties, ICSID formerly confirmed the termination of the litigation
during 2021.
7) Termination of ICES bonds and repurchase of OTP shares
See details in Note 27.
8) Resolutions made at OTP Bank’s Extraordinary General Meeting
The Extraordinary General Meeting hold on 15 October, 2021 resolved that, the Bank had sold its treasury shares
on the stock exchange to those two Special Employee Stock Ownership Program organizations having been
established by the Bank employees (“OTP SECOP I.” and “OTP SECOP II.”).
The Extraordinary General Meeting decided that if additional SECOP organisations would be initiated, those
would be given one-off support on a yearly basis, under defined conditions, defined extent and in specified
manner.
9) Interest benchmark reform
The Group was actively involved in industry efforts supporting transition to IBOR alternatives. The Group has
taken extensive steps to prepare for the discontinuation of IBORs and worked closely with clients to ensure
awareness and support transition activities. As the transition is complex, time-consuming process and relevant
for the whole Group, the management of Group has evaluated the impacts of the interest rate benchmarks
reform, preparing itself for the transition through a dedicated internal group-wide project. As LIBOR’s five
currencies (USD, GBP, EUR, JPY and CHF) and EONIA will be replaced by Risk Free Rates – which are
different in nature compared to IBOR rates – OTP Group has implemented the relevant rates into the IT systems,
and reached out the clients. The Group’s priority was to ensure that the Group can continue to offer clients the
products and services they need, while also supporting them in the transition to the new alternative Risk Free
Rates.
During the IBOR reform the Group identified several risks at the beginning of 2021, which the project had to
manage and monitor closely. These risks include but are not limited to the following:
The abolution of LIBOR affected several transactions that may require automated IT solitions,
The new reference rates are different in nature from LIBOR that cause difficulties to settle the value
differencies with the customers,
It was necessary to implement new processes not to develop LIBOR based products, and to develop a
strategy for removing or modifying the affected products handled by the Group,
176
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 50:
SIGNIFICANT EVENTS DURING THE YEAR ENDED 31 DECEMBER 2021
[continued]
9) Interest benchmark reform [continued]
After the termination of LIBOR, the Group has to act under the "Fallback clauses", the clauses that regulate
the replacement of the reference interest rates in the contract and the use of an alternative interest as a
reference. The content of these clauses needs to be clearly defined and checked from a business point of
view, ie which reference interest rate will be applied instead of LIBOR for the given contract and whether it
is commercially appropriate. In defining the fallback clauses, efforts had to be made to provide a viable
alternative to the termination of LIBOR that would not result in a business loss for the Group.
Legal risks related to the termination of LIBOR. Such risks can arise when Fallback clauses are not
included in the contracts, or the law governing the contract doesn’t contain a statutory reference rate. In
these cases the contracts can be cancelled due to impossibility or the termination by either party.
Missing of contractual interest rates can result in settlement disputes, compensation cases or litigation.
Business risks of the termination of LIBOR. The most significant of these are:
the law governing the contract can set the applicable interest rate that can be result in a bussiness loss
for the Group,
obussiness loss due to negative customer experience,
ooperational risk, when several unique contracts must be handled in a short time.
Terminating interest rates ()
Alternative Reference Rates
LIBOR USD* (1 week and 2 months settings), FedFund Rate
LIBOR GBP
LIBOR JPY
LIBOR EUR
LIBOR CHF**
EONIA
* The following USD LIBOR settings will be terminated after June 30, 2023: overnight and 1, 3, 6 and 12 Months. The affected USD
LIBOR contracts will be handled on an ongoing basis until the remaining USD LIBOR settings’ cessation date.
**In the case of CHF LIBOR, OTP Bank acts in accordance with the implementing regulation of the European Commission (https://eur-
lex.europa.eu/legal-content/EN/TXT/PDF/?uri=PI_COM:C(2021)7488&from=EN).
SOFR
SONIA
TONA
EURIBOR
SARON
€STR
Amounts effected by IBOR reform as at 31 December 2021
Reference rate
Type of the contract
Nominal value of the
contract
Pieces of contracts
USD LIBOR
USD LIBOR
USD LIBOR
Other LIBOR
Other LIBOR
Other LIBOR
Other LIBOR
Total
Loan
Deposit
Derivatives
Loan
Deposit
Derivatives
Bonds (assets)
158,747
13,851
699,066
75,060
25,864
25,464
13,162
1,011,214
2,747
27
170
3,853
98
4
3
6,902
The above LIBOR-based amounts outstanding as at 31 December 2021 will be managed at the first interest
period in 2022 therefore they do not cause a risk to he Bank or to the customers
177
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 51:
POST BALANCE SHEET EVENTS
1) Decision in Slovenia about distribution of foreign exchange risk concerning loan agreement in Swiss
francs
On 2 February 2022, the Slovenian Parliament passed the "Law on limitation and distribution of foreign
exchange risk between creditors and borrowers concerning loan agreements in Swiss francs" (the "Law").
The Law affects all loan agreements denominated in Swiss francs between 28 June 2004 and 31 December 2010.
The law sets a currency cap that is activated by more than 10% change of the exchange rate between the CHF
and EUR from the day of drawing of the loan. During the period of validity of the currency cap, the value of
instalments and other payments is equal to the amount at which the currency cap limit was established. The law
requires creditors to calculate the remaining debt, prepare a new annuity plan and prepare a draft contract on the
regulation of mutual relations. In the event of overpayment, the lender is obliged to reimburse the borrower the
default interest, which runs from the date of occurrence of the overpayment to the date of payment of the
overpayment.
2) Ukrainian-Russian conflict
In the second half of February 2022 the military conflict between Russia and Ukraine escalated
It is difficult to quantify the effect of the Ukrainian-Russian conflict regarding the Ukrainian and the Russian
operations, the possible scenarios are covering a wide range of spectrum. According to the worst possible
scenario, the Bank may lose its control over its investments, which under extreme conditions could result in the
full write-off of the invested amount. These Consolidated Financial Statements do not contain any write-offs as
possible consequences of the Ukrainian-Russian conflict, the Group recognizes it as not adjusting, post balance
sheet event.
Ukraine
OTP Group’s Ukrainian operation incorporates the Ukrainian bank, as well as the leasing and factoring
companies. The country-consolidated Ukrainian total assets represented HUF 984 billion at the end of 2021
(3.6% of total consolidated assets), while net loans comprised HUF 614 billion (3.9% of consolidated net loans)
and shareholders’ equity HUF 160 billion (5.3% of the consolidated total equity). At the end of 2021 the book
value of the capital investment in the Ukrainian subsidiaries comprised HUF 105 billion; there was no goodwill
at all, it was already written down entirely in 2014.
The gross intragroup funding towards the Ukrainian operation represented HUF 72 billion, and taking into
account the Ukrainian deposits placed with the HQ, i.e. the net group funding represented HUF 29 billion
equivalent. According to the 28 February 2022 figures, the gross funding amounted to HUF 75 billion equivalent
and the net intragroup funding stood at HUF 9 billion equivalent.
The Ukrainian sub-consolidated RWA (“risk-weighted asset”) was HUF 1,115 billion by the end of 2021 (6.7%
of the total consolidated RWA).
The consolidated maximum capital effect on the potential write-off of the Ukrainian operation, taking into
account the equity, the intragroup funding and the Ukrainian risk weighted assets, is estimated at 27 bps on the
consolidated CET1 ratio, according to year-end figures.
The Ukrainian operation posted HUF 39.0 billion adjusted profit in 2021 which represented 7.9% of OTP
Group’s adjusted annual profit.
Russia
The total assets of the Group’s Russian operation represented HUF 800 billion at the end of 2021 (2.9% of
consolidated total assets), while net loans comprised HUF 621 billion (3.9% of consolidated net loans) and
shareholders’ equity HUF 241 billion (7.9% of consolidated total equity). At the end of 2021 the book value of
the capital investment in the Russian subsidiaries comprised directly HUF 74 billion and indirectly HUF 50
billion.
The gross intragroup funding towards the Russian operation represented HUF 73 billion, and taking into account
the Russian deposits placed with the Headquarter, i.e. the net group funding represented HUF 14 billion
equivalent. On 28 February 2022 the gross intragroup funding reached HUF 52 billion equivalent, which
equalled the net figure because there was no deposit placement by the Russian operation at other Group
members.
The Russian sub-consolidated RWA was HUF 822 billion by the end of 2021 (4.9% of the total consolidated
RWA).
178
OTP BANK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 51:
POST BALANCE SHEET EVENTS [continued]
2) Ukrainian-Russian conflict [continued]
Russia [continued]
The consolidated capital maximum effect on the potential write-off of the Russian operation, taking into account
the equity, the intragroup funding and the Russian risk weighted assets, is estimated at 116 bps on the
consolidated CET1 ratio, according to year-end figures.
The Russian operation posted HUF 37.6 billion adjusted profit in 2021 which represented 7.9% of OTP Group’s
adjusted annual profit.
Although the impact of the Russian-Ukrainian conflict on the Group’s Russian and Ukrainian operations is
currently difficult to quantify, and as such uncertain, based on the current estimation of the Bank’s Management
the Ukrainian-Russian conflict does not have considerably negative impact on the business activity, financial
position, efficiency, liquidity and capital position of OTP Bank. Even after the recognition of the potential losses
and write-offs outlined above, the Group's capital adequacy remains above the expected regulatory level. There
is no sign of significant uncertainties having been arisen regarding carrying out its business as a going concern.
The Bank’s Management is monitoring the situation of the Ukrainian-Russian conflict continuously and will take
the necessary steps in order to moderate the business risk.
179
OTHER INFORMATIONS
ANNUAL REPORT 2021
OTP BANK
OTHER INFORMATIONS
OWNERSHIP STRUCTURE OF OTP BANK PLC.
Description of owner
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 2021
31 December 2021
Total equity
Ownership
share
20.93%
71.60%
4.79%
0.11%
0.85%
1.55%
0.08%
0.04%
0.04%
100.00%
Voting
rights1
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
Ownership
share
Voting
rights 1
26.66%
66.69%
4.57%
0.11%
0.69%
1.16%
0.07%
0.04%
0.00%
100.00%
26.97%
67.47%
4.63%
0.12%
0.70%
0.00%
0.07%
0.04%
0.00%
100.00%
Quantity
74,637,180
186,733,858
12,805,389
319,712
1,941,018
3,251,484
188,326
120,871
2,172
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 2021 ESOP owned 7,656,897 OTP shares.
3 Non-identified shareholders according to the shareholders’ registry.
NUMBER OF TREASURY SHARES HELD IN THE YEAR UNDER REVIEW (2021)
OTP Bank
Subsidiaries
TOTAL
1 January
4,334,140
0
4,334,140
31 March
4,330,609
0
4,330,609
30 June
1,120,786
0
1,120,786
30 September
1,077,322
0
1,077,322
31 December
3,251,484
0
3,251,484
SHAREHOLDERS WITH OVER/AROUND 5% STAKE AS AT 31 DECEMBER 2021
Name
Nationality1
Activity2
MOL (Hungarian Oil and Gas Company Plc.)
KAFIJAT Group
KAFIJAT Ltd.
MGTR Alliance Ltd.
Groupama Group
Groupama Gan Vie SA
Groupama Biztosító Ltd.
D
D
D
D
F/D
F
D
C
C
C
C
C
C
C
Number of
shares
24,000,000
19,661,409
9,839,918
9,836,491
14,311,769
14,140,000
171,769
Ownership3
Voting
rights3,4
Notes5
8.57%
7.02%
3.51%
3.51%
5.11%
5.05%
0.06%
8.67%
7.10%
3.56%
3.55%
5.17%
5.11%
0.06%
-
-
-
-
-
-
-
1 Domestic (D), Foreign (F).
2 Custodian (CU), Public Institution (PU), International Development Institutions (ID), Institutional (I), Company (C), Private (PR),
Employee or senior officer (E).
3 Rounded to two decimals.
4 Voting rights in the General Meeting of the Issuer for participation in decision-making.
5 Eg: professional investor, financial investor, etc.
Senior officers, strategic employees and their shareholding of OTP shares as at 31 December 2021
Type1
Name
Position
IT
IT
IT
IT
IT
IT
IT
IT
IT
IT
IT
FB
FB
FB
FB
FB
FB
SP
SP
dr. Sándor Csányi 2
Chairman and CEO
Deputy Chairman
Tamás Erdei
member
Gabriella Balogh
member
Mihály Baumstark
member, Deputy CEO
Péter Csányi
member
dr. István Gresa
member, Deputy CEO
Antal Kovács
György Nagy 3
member
dr. Márton Gellért Vági member
member
dr. József Vörös
member, Deputy CEO
László Wolf
Chairman
Tibor Tolnay
Deputy Chairman
dr. Gábor Horváth
member
Klára Bella
member
dr. Tamás Gudra
member
András Michnai
member
Olivier Péqueux
Deputy CEO
László Bencsik
Deputy CEO
György Kiss-Haypál
TOTAL No. of shares held by management:
1 Employee in strategic position (SP), Board Member (IT), Supervisory Board Member (FB)
2 Number of OTP shares owned by Dr. Sándor Csányi directly or indirectly: 4,080,034
3 Number of OTP shares owned by György Nagy directly or indirectly: 600,000
Commencement
date of the term
15/05/1992
27/04/2012
16/04/2021
29/04/1999
16/04/2021
27/04/2012
15/04/2016
16/04/2021
16/04/2021
15/05/1992
15/04/2016
15/05/1992
19/05/1995
12/04/2019
16/04/2021
25/04/2008
13/04/2018
Expiration/termination
of the term
2026
2026
2026
2026
2026
2026
2026
2026
2026
2026
2026
2023
2023
2023
2023
2023
2023
Number of
shares
293,907
32,285
1,393
44,000
1
173,258
79,244
0
0
171,114
532,143
54
0
344
0
100
0
10,038
3,137
1,341,018
ANNUAL REPORT 2021
OTP BANK
Board of Directors
Executive members:
Dr. Sándor Csányi
Chairman of the BoD
Chairman & CEO
OTHER INFORMATIONS
He graduated from the College of Finance and Accounting in 1974 with a bachelor’s degree in
business administration and in 1980 from the Karl Marx University of Economic Sciences (now:
Corvinus University) with a master in economics and finance, where he also obtained his doctorate
in finance between 1981-1983. He is a chartered auditor – certified in 1982 at the Ministry of Finance.
After graduation he worked at the Tax Revenue Directorate and then at the Secretariat (Bank
Supervision Section) of the Ministry of Finance. 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 senior
head of department at Hungarian Credit Bank (MHB). He was Deputy CEO of K&H Bank from 1989
to 1992.
He has been the Chairman & CEO of OTP Bank Plc. since 1992.
He is Vice Chairman of the Board of Directors of MOL Plc. and Co-Chairman of the Chinese-
Hungarian Business Council.
He is one of the largest investors in agriculture and food industry in the CEE region through Bonafarm
Group and KITE generating aggregated annual revenue of EUR 2 billion with over 9.000 employees
and with 40.000 hectares cultivated land in total. Bonafarm Group is vertically integrated whereby
agriculture companies produce the raw materials for food processors. He has significant investments
in real estate through his minority holding in Gránit Pólus and Limedale (portfolio of USD 1 bn), in
VC (Bonitás Venture Capital Fund) and asset management (CSAM in Singapore).
He has been the President of the Hungarian Football Association (MLSZ) since 2010, and a member
of the UEFA Executive Committee since March 2015; and the Vice President of the UEFA Executive
Committee since 2019. Since 2017 he has been a member of the FIFA Council and the Vice
President of the FIFA Council since 2018. Within UEFA he is also the Chairman of the UEFA National
Team Competition Committee, a member of the UEFA Finance Committee and the UEFA
Professional Football Strategy Council.
He has been the owner of Pick Szeged Handball Club since 2011. He has been the Honorary Vice
President of the International Judo Federation since 2008.
Since 1995 he has been the Vice President of the Board of Trustees of the International Children’s
Safety 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 for Social
Awareness Formation Foundations. Since 2020, he has been the Chairman of the Board of Trustees
of the Pro Sopron University Foundation. In 2021, he became Chairman of the Board of Trustees of
the Foundation for the Hungarian Agricultural and Life Sciences University (MATE).
As of 31 December 2021 he held 293,907 ordinary OTP shares (while the total number of OTP
shares held by him directly and indirectly was 4,080,034).
Péter Csányi
member of the BoD
Deputy CEO
Digital Division
He graduated from City University London in 2006 with a bachelor’s degree in economics, then in
2007 with a master’s degree in finance from the IE Business School in Madrid. In 2015, he received
the Master of Business Administration (MBA) diploma from Kellogg School of Management in the
USA.
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OTHER INFORMATIONS
He began his career in 2006 at Merrill Lynch’s London office as an intern and he was working on
corporate finance projects for financial institutions.
From 2007 to 2011, he worked at Deutsche Bank's London office, first as an analyst and later as an
associate in the field of corporate finance (for Central and Eastern European corporate customers).
From 2011-2016, he worked for McKinsey & Company Inc. as an associate mostly working on
banking related projects.
He joined OTP Bank in 2016 as Managing Director of the Digital Sales and Development Directorate.
After the agile transformation at the Bank, he became responsible for the management of the
Omnichannel Tribe from 2019. In addition, since January 2021, he has been the head of the Daily
Banking Tribe.
From March 2021, he is the Deputy CEO of OTP Bank, the head of the IT Division (As of 1 May
2021 Digital Division).
From 2020 he has been Chairman of the Supervisory Board of OTP banka d.d. in Croatia. He is also
a member of the OTP Mobil Kft. Supervisory Board and the head of the Digitization Working Group
of the Hungarian Banking Association. He is member of the Mastercard European Advisory Board.
He has been a member of OTP Bank's Board of Directors since 16 April 2021.
As of 31 December 2021 he held 1 ordinary OTP share.
Antal György Kovács
member of the BoD
Deputy CEO
Retail Division
He 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 been 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 Supervisory 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 Management
and OTP Home Solutions Ltd.
He was a member of OTP Bank’s Supervisory Board
to 14 April 2016.
from 2004
He has been a member of OTP Bank's Board of Directors since 15 April 2016.
As of 31 December 2021 he held 79,244 ordinary OTP shares.
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László Wolf
member of the BoD
Deputy CEO
Commercial Banking Division
OTHER INFORMATIONS
He 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 he
was 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 2021 he held 532,143 ordinary OTP shares.
Non-executive members:
Gabriella Balogh
member of the BoD
MSc Economics, specialization in marketing
She graduated as organizing chemical engineer from the University of Veszprém in 1993 and as
marketing economist from the University of Economics, Budapest in 1997.
She worked as a marketing associate between 1993 and 1998, as director of the Marketing
Department from 1998 to 2005 and as managing director of the Marketing and Sales Directorate
between 2005 and 2008 at OTP Bank Plc.
She has been managing director of GoodStep Consulting Kft. since 2008. She fulfilled group
management tasks as a Board of Directors member at the Central European Media and Publishing
Company between 2010 and 2017.
She has been co-owner and Board of Directors member of Net Media Plc. since 2016. She is
Presidium member and Chairwoman of the Marketing and Media Board of the Hungarian Football
Association.
She has been a member of OTP Bank's Board of Directors since 16 April 2021.
As of 31 December 2021 she held 1,393 ordinary OTP shares.
Mihály Baumstark
member of the BoD
BSc Agricultural Business Administration,
MSc Economics
He graduated with a degree in agricultural business administration 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. Then 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.
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OTHER INFORMATIONS
He was a member of OTP Bank’s Supervisory 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 2021 he held 44,000 ordinary OTP shares.
Dr. Tibor Bíró1
College Associate Professor
He graduated from the College of Finance and Accountancy (1974) and from the Karl Marx
University of Economics (1978) with a degree in business administration. He has been a certified
auditor and chartered accountant since 1986.
He was the Head of the Financial Department 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 consulting 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 was a non-executive member of OTP Bank’s Board of Directors from 1992. He was a member
of OTP Bank's Remuneration Committee from 2009, and he was the chairman of the Nomination
Committee between 2014 and 2020.
Tamás György Erdei
Deputy Chairman of the BoD
BSc Business Administration
He graduated in 1978 with a degree from the College of Finance and Accounting. He began his
professional career at OTP, in a variety of administrative roles (his last position was branch
manager), before going on to work at the Ministry of Finance in the area of bank supervision.
From 1983 he was 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 became CEO, and from 1997 until the end of March 2012
he was Chairman & 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 International 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 the Deputy Chairman of the
Board of Directors of OTP Bank Plc. since April 2019 and the Chairman of the Work-out Committee
since October 2019.
He has been Chairman of the Board of Directors at OTP Factoring Ltd. since December 2019.
As of 31 December 2021 he held 32,285 ordinary OTP shares.
1 His mandate expired on 16 April 2021.
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OTHER INFORMATIONS
Dr. István Gresa
member of the BoD
PhD Business Administration and Economics
He 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 Directorate, and from 1998 he was 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 173,258 ordinary OTP shares.
Dr. Antal Pongrácz2
PhD Economics
He 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 1998-99 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 was Chairman of the Supervisory Board of OTP banka Hrvatska d.d. from 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 was a member of OTP Bank’s Board of Directors from 2002. He was Deputy Chairman of OTP
Bank’s Board of Directors from 9 June 2009 to 14 April 2016.
2 His mandate expired on 16 April 2021.
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Dr. László Utassy3
Chairman & CEO
Merkantil Bank Zrt.
OTHER INFORMATIONS
He 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 was a member of OTP Bank’s Board of Directors from 2001. He was a member of OTP Bank's
Risk Assumption and Risk Management Committee from 2014. He has been Chairman of the Board
of Directors of OTP Real Estate Leasing Ltd. since 28 November 2019.
György Nagy
member of the BoD
Msc International Economics
He graduated from the Department of International Foreign Economics of University of International
Relations (Moscow) in 1989.
He was a founding owner of Wallis Holding (founded in 1990) and he managed the Wallis Group as
CEO until 2000.
He founded Westbay Holding Kft. in 2004, the company’s portfolio includes several successful
investments.
He has been the Chairman of the Hungarian Shooting Federation since 2012, Presidium member of
the European Shooting Confederation (ESC) since 2013 and Council member of the International
Shooting Sport Federation (ISSF) since 2019 and he was elected the Vice President of ESC in 2021.
He has been a member of OTP Bank's Board of Directors since 16 April 2021.
As of 31 December 2021 he held no ordinary OTP shares (while the total number of OTP shares
held by him directly and indirectly was 600,000).
Dr. Márton Gellért Vági
member of the BoD
General Secretary
Hungarian Football Association
He graduated in 1987 from the department of foreign economics at the Karl Marx University of
Economic Science
From 1987 to 2000 he was lecturer at University of Economic Science of Budapest (today Corvinus
University of Budapest) and from 1994 onwards associate professor and head of department. He
has a university doctorate and a PhD in economics. He has authored or co-authored more than 80
studies, 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.
Since 2010 he has been general secretary of the Hungarian Football Association.
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
3 His mandate expired on 16 April 2021.
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OTHER INFORMATIONS
2002 and 2010, he was a member of the Board of Directors of Földhitel és Jelzálogbank Nyrt., and
the Chairman of the Board of Directors for 4 years
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 was a member of OTP Bank’s Supervisory Board between 2011-2021.He was a member of OTP
Bank’s Audit Committee between 2014-2021.
He was a member of OTP Bank’s Nomination Committee between 2020-2021.
He has been a member of OTP Bank's Board of Directors since 16 April 2021.
As of 31 December 2021 he held no ordinary OTP shares.
Dr. József Zoltán Vörös
member of the BoD
Professor emeritus, academician
University of Pécs
He earned a degree in economics from the Karl Marx University of Economic Sciences 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 management for senior
executives at Harvard University.
From 1994 he was a professor at JPTE, from 2021 he has been professor emeritus. He 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 member of its Risk Assumption
and Risk Management Committee since 2014.
Supervisory Board
Independent members:
Tibor Tolnay
Chairman of the SB
He graduated from Budapest University of Technology as a qualified civil engineering in 1978, and
in 1983 he obtained a degree in economic engineering. In 1993 he finished his studies as specialized
economist at Budapest University of Economics.
From 1989 to 1994, he was Director of State Construction Company No. 21. From 1994 to 2015 he
was Chairman & CEO of the already privatized Magyar Építő Joint Stock Company.
He has been the managing director of Érték Ltd. since 1994. Since 2020 he has been the managing
director of Fenyves Garden Ltd.
From 2018 to 2021 he was President of the National Association of Entrepreneurs and Employers,
since 2021 co-President.
Since 1992 he has been a member of OTP Bank's Supervisory Board, and Chairman of the
Supervisory 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 2021 he held 54 ordinary OTP shares.
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Dr. József Gábor Horváth
Deputy Chairman of the SB
Lawyer
OTHER INFORMATIONS
He earned a degree in law from Eötvös Loránd University in Budapest in 1980.
From 1983 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 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 Supervisory Board since 2007.
He was Chairman 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 2021 he held no ordinary OTP shares.
Dr. Tamás Gudra
Member of the SB
BSc Business Administration, Lawyer
He graduated as business administrator in 1993 from the College of Commerce and Catering. He is
a Hungarian chartered auditor since 1997. He also obtained a university degree in 2010 as a lawyer
at the Faculty of Law of Janus Pannonius University in Pécs.
He worked as an auditor from 1993 to 2001 at Deloitte & Touche. Between 2001 and 2003 he was
an accounting expert of subsidiaries at the Accounting and Tax Directorate of the Hungarian Oil and
Gas Public Limited Company (MOL Rt). Then he was managing director at the Auditor, Financial
and Accounting Directorate of the National Privatization and Asset Manager Plc. (ÁPV Zrt.) between
2003 and 2007 and became the director of Controlling Directorate at the Hungarian National Asset
Manager Plc. (MNV Zrt.) from 2008 to 2010.
Following these assignments, he worked as the CFO of the Hungarian Football Association from
2011 until June of 2020. As of July 2020, he became the group-level CFO of Bonafarm Zrt.
He was a member of the Supervisory Board of OTP Lakástakarék Zrt. between 2012 and 2021 and
he is Chairman of the Hungarian Paralympic Committee’s Supervisory Board since 2016. Since 2021
he has been property inspector of Hungarian University of Agriculture and Life Sciences, member of
the Executive Committee of Pick Szeged Zrt., SOLE-Mizo Zrt and MCS Vágóhíd Zrt.
He has been a member of the Supervisory Board and Audit Committee of OTP Bank since 16 April
2021.
As of 31 December 2021 he held no ordinary OTP shares.
Olivier Péqueux
Member of the SB
Groupama International SA
He graduated from Institute of Actuaries of France, Polytechnique School and ENSAE Paris Tech.
Started to 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 pension law reform
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OTP BANK
OTHER INFORMATIONS
and the setup of a pension fund for French civil servants. Then he 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 General Manager of Groupama China, in charge of
finance, actuary and investments in the joint venture between AVIC and Groupama.
From 2015 to 2017, he was the General Manager of Groupama AVIC. He has been the Chief
International Officer of Groupama Assurances Mutuelles since March 2018. He has been Groupama
Assurances Mutuelles Deputy CEO since September 2020.
He has been a member of OTP Bank’s Supervisory Board, and Audit Committee since 2018.
As of 31 December 2021 he held no ordinary OTP shares.
Dr. Márton Gellért Vági4
member of the SB
General Secretary
Hungarian Football Association
Employee delegates:
Klára Bella
Member of the SB
Director
Large Corporate Department
She graduated from the College of Finance and Accountancy and later obtained 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 authorizer in the Credit Approval and Risk Management Division.
From 1997 to 2010 she was Deputy Managing Director at the Central Branch.
From 2010 to 2016 she was Director at the Central Branch.
Between 2017 and 2020, she was Director of the Corporate Directorate.
Since 1 July 2020, she has been the Director of the Large Corporate Department of the Specialised
Finance 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 2021 she held 344 ordinary OTP shares.
4 His position on the Supervisory Board was terminated on 16 April 2021, and since that date he has been a member of the Board of
Directors of OTP.
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András Michnai
Member of the SB
Managing Director
OTHER INFORMATIONS
He 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
department before returning to work in the branch network. From 1994, as deputy managing director,
he participated in the central coordination of the branch network. Between 2005 and 2014 he was
the managing director of the Bank’s Compliance Department.
He further expanded his professional skills, obtaining 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 2021 he held 100 ordinary OTP shares.
Members of OTP Bank Plc.’s senior management:
Dr. Sándor Csányi
Chairman & CEO
László Bencsik
Chief Strategic and Financial Officer, Deputy CEO
Strategy and Finance Division
In 1996, he graduated from the Faculty of Business Administration at the Budapest University of
Economic Sciences, and in 1999 he obtained a Master’s 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 2021 he held 10,038 ordinary OTP shares.
Péter Csányi
Member of the Board of Directors, Deputy CEO
Digital Division
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OTHER INFORMATIONS
Tibor András Johancsik
Deputy CEO until 12 March 2021
IT Division
He 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 development companies (ICL, Unisys, Cap Gemini).
From 2001 he worked as an advisor in the fields of IT and organisational development, 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.
György Kiss-Haypál
Deputy CEO
Credit Approval and Risk Management Division
He is a qualified economist. He graduated from the Budapest 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 Europe, and in Austria as GE Money Bank’s consumer loans portfolio manager.
Between 2008 and 2015 he was member of the Board of Directors of Budapest Bank.
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 Management Division.
As of 31 December 2021 he held 3,137 ordinary OTP shares.
Antal György Kovács
Member of the Board of Directors, Deputy CEO
Retail Division
László Wolf
Member of the Board of Directors, Deputy CEO
Commercial Banking Division
Personal and organizational changes
On 12 March 2021, the labour contract of Mr. Tibor Johancsik, Deputy CEO in charge of IT had been terminated
by mutual agreement. The new head of the Digital Division (IT Division until 1 May 2021) is Mr. Péter Csányi,
who had been in charge of digital developments and sales as managing director until his appointment. Key task
of the area in transition is going to be the efficient support of the Bank’s digital transformation through further
improving customer experience. The new strategy of the division is aimed at creating such an IT that has
business competence, but also serving as a platform for other business areas while setting the pace of
digitalization in accordance with the National Bank of Hungary’s digital recommendations.
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OTHER INFORMATIONS
On 16 April 2016 the Board of Directors acting in the competency of the Annual General Meeting elected Ernst
& Young Ltd. as the Bank’s auditor concerning the audit of OTP Bank Plc.’s separate and consolidated annual
financial statements in accordance with International Financial Reporting Standards for the year 2021, from
1 May 2021 until 30 April 2022.
On 16 April the Board of Directors acting in the competency of the Annual General Meeting, elects Dr. Tamás
Gudra as member of the Supervisory Board (SB) and of Audit Committee (AC) of the Company until the Annual
General Meeting of the Company closing the 2022 business year, but not later than 30 April 2023.
On 16 April 2021 the Board of Directors acting in the competency of the Annual General Meeting, elects
Dr. Sándor Csányi
Mr. Antal György Kovács
Mr. László Wolf
Mr. Tamás György Erdei
Mr. Mihály Baumstark
Dr. István Gresa
Dr. József Zoltán Vörös
Mr. Péter Csányi
Mrs. Gabriella Balogh
Mr. György Nagy
Dr. Gellért Márton Vági
as members of the Board of Directors (BoD) of the Company until the Annual General Meeting of the Company
closing the 2025 business year, but not later than 30 April 2026.
On 16 April 2021, Dr. Sándor Csányi was elected as Chairman of the Bank’s Board of Directors and in
accordance with subsection 4 of section 9 of the Articles of Association of the Company as Chief Executive
Officer (Chairman & CEO).
Dr. Sándor Csányi performs his duties until the closing AGM of the fiscal year 2025 but latest until 30 April 2026.
On 16 April 2021 Mr. Tamás György Erdei, the member of the Board of Directors, was elected a Deputy
Chairman of the Board of Directors.
Mr. Tamás György Erdei performs his duties until the closing AGM of the fiscal year 2025 but latest until
30 April 2026
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