OTP BANK PLC.
INTEGRATED ANNUAL REPORT 2023
BUDAPEST, 26 APRIL 2024
Dear Shareholders!
OTP Bank Plc. hereby provides you with the Integrated Annual Report of OTP Bank Plc. for the year
2023, which is based on the audited financial statements approved by the Annual General Meeting
of the Company on 26 April 2024.
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.
26 April 2024, Budapest
dr. Sándor Csányi
Chairman & CEO
László Bencsik
Deputy CEO
INTEGRATED ANNUAL REPORT 2023
2
CONTENTS
CHAIRMAN GREETINGS ............................................................................................... 4
BUSINESS REPORT 2023 (SEPARATE) .................................................................................. 5
BUSINESS REPORT 2023 (CONSOLIDATED) ........................................................................ 30
INDEPENDENT AUDITORS’ REPORTS 2023 (SEPARATE AND CONSOLIDATED, IN
ACCORDANCE WITH IFRS) ................................................................................................. 230
SEPARATE FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS (2023) .................... 255
CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS (2023) ........... 408
OTHER INFORMATIONS ...................................................................................................... 634
CORPORATE GOVERNANCE ................................................................................................... 635
ANNEX TO SUSTAINABILITY REPORT .................................................................................... 644
UNEP FI PRINCIPLES FOR RESPONSIBLE BANKING REPORT............................................. 653
INDEPENDENT ACCOUNTANT’S ASSURANCE REPORT
ON SUSTAINABILITY REPORTING ...................................................................................... 668
INTEGRATED ANNUAL REPORT 2023
3
CHAIRMAN GREETINGS
GRI 2-22
2023 was OTP Group’s most successful year to date, and our performance clearly indicates that we have
become one of the leading financial groups in the region. The Group’s balance sheet total exceeded
EUR 100 billion and its profit after tax amounted to EUR 2.5 billion. Last year, we successfully completed
two acquisitions, the purchase of NKBM in Slovenia was the Bank’s largest ever transaction, while the
acquisition of Ipoteka Bank in Uzbekistan marked our exit from the Central and Eastern European region.
The bank’s capital strength and stable liquidity position provide a favourabl e foundation for organic growth
and further value-creating acquisitions, improving our market positions even further.
OTP Group’s engagement to meeting its ambitious sustainability targets remains unbroken. We doubled our
green loan and bond portfolio during the year, reaching and even exceeding the target set for 2023 by more
than HUF 200 billion. At year-end, the Banking Group’s green loan portfolio amounted to HUF 656 billion.
Corporate lending accounts for the largest share of the portfolio, within whic h project financing represents
the largest ratio. Corporate lending has also accounted for the bulk of this year’s growth, but we expect to
see more expansion in the retail sector and with small and medium-sized enterprises in the coming period.
An important step during the year was the extension of our corporate green loan framework to the group
level, involving seven subsidiary banks. This clearly defines which loans qualify as green, which activities
and sectors we focus on, and provides the basis for the green rating system we have also developed for the
various loans. Obtaining reliable data on environmental performance is as much a challenge for OTP Group
as it is for other market players worldwide. But these are as important when building a gre en portfolio as
when assessing the impact of the total portfolio of financed loans. It is reassuring that there is continuous
and dynamic progress in this area.
Because of its awareness-raising effect, I believe it is a good idea for our retail customers to be able to track
their estimated carbon emissions related to their purchases in their mobile bank, which also encourages
more environmentally-conscious choices.
In recent years, we have seen a significant increase in phishing attempts against customers. We have
always made the security of our systems a top priority, improving it on an ongoing basis, and we support
the protection of our customers with awareness messages and campaigns, as well as strategic partnerships
at Group level.
OTP Group is similarly committed to improving the financial awareness of the population, and we are taking
action to this end in all our countries of operation. Every year, OTP Group’s foundations provide training to
tens of thousands of young people, expanding their knowledge and shaping their awareness, and we are
actively involved in a number of financial awareness initiatives and hundreds of our employees volunteer in
this field.
You are kindly invited to review the following pages to see the Banking Group’s financial result s and its
activities promoting sustainable development.
Yours sincerely,
Dr. Sándor Csányi
Chairman and CEO
INTEGRATED ANNUAL REPORT 2023
4
BUSINESS REPORT 2023 (SEPARATE)
INTEGRATED ANNUAL REPORT 2023
5
OTP BANK
BUSINESS REPORT 2023 (SEPARATE)
SEPARATE STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2023
(in HUF million)
Note
31 December 2023
31 December 2022
Cash, amounts due from banks and balances
with the National Bank of Hungary
Placements with other banks
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
Deferred tax assets
Current tax assets
Derivative financial assets designated as hedge
accounting relationships
Non-current assets held for sale
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 designated 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
5.
6.
7.
8.
9.
10.
11.
11.
12.
13.
13.
14.
34.
34.
15.
46.
16.
17.
18.
19.
20.
21.
22.
23.
34.
34.
24.
24.
25.
26.
27.
28.
2,708,232
2,702,433
201,658
257,535
559,527
2,710,848
4,681,359
934,848
2,001,952
107,306
98,115
66,222
4,203
408
-
21,628
130,718
365,961
1,092,198
2,899,829
246,529
410,012
797,175
3,282,373
4,825,040
793,242
1,596,717
94,564
69,480
39,882
4,207
35,742
1,569
47,220
-
329,752
17,552,953
16,565,531
1,761,579
443,694
10,734,325
68,282
1,163,109
19,786
183,565
27,423
-
14,393
22,497
295,399
520,296
1,736,128
408,366
11,119,158
41,464
498,709
16,576
373,401
50,623
-
3,199
29,656
313,188
294,186
15,254,348
14,884,654
28,000
2,276,759
(6,154)
28,000
1,655,601
(2,724)
TOTAL SHAREHOLDERS' EQUITY
2,298,605
1,680,877
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY
17,552,953
16,565,531
SEPARATE STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED
31 DECEMBER 2023
INTEGRATED ANNUAL REPORT 2023
6
OTP BANK
(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
Note
29.
29.
BUSINESS REPORT 2023 (SEPARATE)
Year ended 31
December 2023
Year ended 31
December 2022
1,227,173
795,906
721,679
377,231
2,023,079
1,098,910
Interest Expense:
Interest expenses total
NET INTEREST INCOME
29.
(1,556,361)
(802,020)
466,718
296,890
(Release of loss allowance) / Loss allowance on loan,
placement and repo receivables losses
(Release of loss allowance) / Loss allowance on securities
at fair value through other comprehensive income and on
securities at amortised cost
(Release of provision) / 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
6., 7., 11., 30.
8,616
(47,687)
9., 10., 30.
11,879
(53,238)
24., 30.
7,172
(5,541)
45.4.
(980)
26,687
11,872
(94,594)
NET INTEREST INCOME AFTER RISK COST
493,405
202,296
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) and gains
Gains and (losses) on securities, net
Gains / (losses) on financial instruments at fair value
through profit or loss
Net results on derivative instruments and hedge
relationships
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
PROFIT AFTER INCOME TAX
Earnings per share (in HUF)
Basic
Diluted
4.
31.
31.
32.
32.
32.
32.
32.
33.
33.
33.
33.
33.
34.
43.
43.
(19,707)
(56,195)
(9,017)
(14,856)
402,885
(78,755)
324,130
(12,269)
7,073
362,444
(66,087)
296,357
541
(10,605)
91,268
(18,790)
13,055
275,705
26,184
63,590
464,606
(195,404)
(50,814)
(281,918)
(528,136)
725,281
(70,293)
654,988
2,344
2,344
9,917
194,526
13,775
(131,942)
57,422
(154,303)
(46,738)
(290,989)
(492,030)
(7,006)
13,638
6,632
24
24
INTEGRATED ANNUAL REPORT 2023
7
OTP BANK
BUSINESS REPORT 2023 (SEPARATE)
SEPARATE STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED
31 DECEMBER 2023
(in HUF million)
Year ended
31 December
2023
Year ended
31 December
2022
Note
PROFIT AFTER INCOME TAX
654,988
6,632
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
34.
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
34.
(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
34.
Items that will not be reclassified to profit or loss:
Gains on equity instruments at fair value through other comprehensive
income
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.
Total
TOTAL COMPREHENSIVE INCOME
37,917
(55,804)
(3,503)
5,186
3,752
(4,887)
(338)
440
5,700
(5,641)
-
-
3,308
(374)
-
2,675
61
(41)
46,462
(58,011)
701,450
(51,379)
INTEGRATED ANNUAL REPORT 2023
8
OTP BANK
BUSINESS REPORT 2023 (SEPARATE)
POST-BALANCE SHEET EVENTS
Post-balance sheet events cover the period until 20 February 2024.
Hungary
• On 23 January 2023 OTP Bank announced that notes were issued with a value date of 31 January 2024,
in the aggregate nominal amount of EUR 600 million. The 5 years, Non-Call 4 years Senior Preferred
Notes were priced on 23 January 2024.
• On 26 January 2024 Scope Ratings affirmed Hungary's long-term local- and foreign-currency issuer and
senior unsecured debt ratings at ‘BBB’ with stable outlook.
• On 29 January 2024 the Ministry for National Economy announced that following discussions between the
Government and the Banking Association, based on the banks' voluntary commitment, from 1 February to
1 May 2024, the interest margin above BUBOR rate for newly contracted Hungarian Forint-based, variable-
rate corporate loan contracts (regardless of the purpose of the loan) will be 0%, and the margin will remain
at 0% for 6 months from the date of disbursement of the loan, after which it may return to the normal level.
At the same time, the Government indicated that the rate cap on outstanding variable rate MSE loans,
which expires on 1 April 2024 according to the current legislation, will not be further extended.
• On 30 January 2024 the National Bank of Hungary cut its key policy rate by 75 bps to 10.0%.
• On 2 February 2024 OTP Bank announced that it decided to terminate the project aiming at establishing
a consumer finance joint venture company with its partners in China with a 15%shareholding, as the
condition precedents were not fulfilled until the pertaining contractual deadlines.
• On 9 February 2024 OTP Bank announced that it concluded a share sale and purchase agreement to sell
its directly and indirectly owned 100% shareholding in OTP Bank Romania S.A. to Banca Transilvania S.A.
(‘BT’). OTP Group is also selling its 100% shareholdings in its other Romanian subsidiaries, OTP Leasing
Romania IFN S.A. and OTP Asset Management S.A.I. S.A. to BT under the transaction. The financial
closing of the transaction is expected in 2024 subject to the necessary regulatory approvals.
• On 12 February 2024 OTP Bank received a single permission from the Hungarian National Bank for the
repurchase of treasury shares, accordingly the Bank is entitled to repurchase its own shares in the amount
of HUF 60 billion until 31 December 2024. The total amount specified in the permission shall immediately
be deducted from the own funds in accordance with the law.
INTEGRATED ANNUAL REPORT 2023
9
OTP BANK
ACQUISITIONS
BUSINESS REPORT 2023 (SEPARATE)
On 31 May 2021 OTP Bank signed a share sale and purchase agreement on purchasing 100% shareholding
of OTP Luxembourg S.a.r.l. and its subsidiaries – Nova KBM d.d. and Aleja Finance d.o.o., which are 80%
owned by funds managed by affiliates of Apollo Global Management, Inc. and 20% by EBRD. The financial
closing of the transaction took place on 6 February 2023, after obtaining all the necessar y regulatory
approvals.
In line with the sale and purchase agreement concluded on 12 December 2022 between OTP Bank and the
Ministry of Economy and Finance of the Republic of Uzbekistan, the first step of the Ipoteka Bank acquisition
was completed on 13 June 2023. Consequently, OTP Bank became the majority shareholder of Ipoteka
Bank by acquiring a 73.71% stake and became indirect shareholder of Ipoteka Bank’s wholly -owned
subsidiaries. In the second step of the transaction, the shares that remained in the ownership of the Ministry
will be bought three years after the first step.
MACROECONOMIC OVERVIEW
Following the rapid recovery after the Covid crisis and the outbreak of the Russian-Ukrainian war, inflation has
already started to fall in advanced economies in 2023 and, as the year was nearing its end, the debate on the
possible timing of an interest rate cut has begun. Meanwhile, the labour market remained tight, with low
unemployment and strong wage dynamics. Developed markets’ long yields fell sharply by the end of 2023,
from the multi-decade highs hit in the autumn.
However, economic growth printed different patterns on the two sides of the Atlantic. In the USA, 2023 brought
a much stronger-than-expected economic performance, and growth shifted into higher gear in the second half
of the year. The robust figures were driven by supportive fiscal policy, a surge in household savings during the
pandemic, and low interest rates on loans. Headline inflation peaked in June 2022 (+8.9%), but the subsequent
decline briefly stalled in the middle of 2023. However, core inflation continued to fall, easing to 3.9% (y-o-y) by
the end of 2023. The very loose fiscal policy, which raised the budget deficit from around 5% to 8% of GDP,
required very tight monetary policy to bring inflation down. The Fed has aggressively raised the base rate to
5.25–5.5% while beginning to shrink its balance sheet.
The energy crisis brought the euro area to its knees, and the economy has been unable to recover from it:
amid high inflation and high interest rates, output has been practically stagnant since the 3Q of 2022. Countries
with industries that used to rely heavily on Russian energy (e.g. Germany) were hit particularly hard.
High interest rates have led to a slowdown in lending, which has also weighed on growth in Europe. Disinflation
was very strong in the euro area in 2023: headline and core inflation fell to 2.8% and 3.3%, respectively by the
end of the year. The biggest concern in this context is services sector CPI, which has been stagnant at 4.0%
(y-o-y) since November 2023. Despite all the weakness in the economy and strong disinflation, the ECB has
not yet considered cutting interest rates, and the euro area ended last year with a deposit rate of 4% and a
lending rate of 4.5%.
Hungary’s economy fell into a longer and deeper recession than the rest of the CEE region in 2023
(GDP y-o-y: 1Q:-0.9%; 2Q:-2.4%; 3Q:-0.4%). However, the recession ended in the third quarter, as growth
started to pick up on quarterly basis, helped by the base effect of an unprecedented poor agriculture season
in 2022. Inflation peaked at 25.7%, 10%points higher than the region's average, before disinflation started in
the spring. From the middle of the year, real wages started to rise again on a monthly basis, but this was only
very moderately passed on to consumer spending. Following an over 8% current account deficit in 2022,
Hungary’s external balance turned into surplus last year, as gas prices collapsed and imports fell, due to a
drop in domestic demand. The initial budget deficit target of 3.9% of GDP turned out to be unsustainable and
ended up near 6% of GDP in 2023. The MNB cut the effective interest rate in several steps by 725 basis points,
to 10.75% by the end of the year, which had been raised to 18% in autumn 2022, and the base rate regained
its role in September, when the former overnight deposit facility was phased out. The EUR/HUF fell from around
400 at the beginning of the year to below 370 at one point in the summer, but stabilized around 380 by the end
of 2023.
Progress on EU funds was made at the end of last year when the European Commission approved the
so-called horizontal enabling conditions for the judicial reform in December. The government was able to
unblock about EUR 11 billion of EU funds, thanks to a range of measures implemented last year.
INTEGRATED ANNUAL REPORT 2023
10
OTP BANK
BUSINESS REPORT 2023 (SEPARATE)
DIGITAL AND IT INNOVATIONS
OTP Bank broadens the range of remotely available services continually. The number of our digitally active
retail clients has far exceeded 2 million, and most of our clients now contact our Bank through mobile
banking.
Through the mobile application, in addition to the daily banking functions, our clients can purchase
investment funds, bonds, car prize deposits, or apply for a new home savings product or tra vel insurance.
In addition, thanks to the piggy bank function, our customers can set up savings goals and put money aside
little by little for it, while selecting ‘Split the Bill’, they can easily allocate the costs of a dinner among the
participants.
The Bank focuses on the continuous upgrades of the Personal Finance Management (PFM) toolset, which
supports our users in making more conscious financial decisions. The expense tracker service is already
capable of handling user generated, personalized categories as well.
The constant ascent in the ratio of our digitally active clients is supported by targeted online campaigns and
continuous user education. Machine learning algorithms help the Bank processing all digital data for
displaying relevant, personalized offers to the clients.
By the end of 2023, nearly 2 million of our retail customers have registered for the new Digital Contract
which allows them to apply for digital services via fully online processes. Several products are available via
end-to-end online processes for example: retail clients can open a new account with selfie -identification, or
contract for a personal loan or travel insurance digitally.
VideoBank provides consulting service and application process for mortgages as well. W e received
numerous positive feedback from clients using the channel. Our customers have access to the chat feature
on the website, via our internet banking service and in the mobile application as well, therefore we serve
client needs also via identified conversations.
We are constantly improving our fraud prevention platform to better identify and prevent fraudulent activity
targeting our digital service.
In addition to our internet and mobile banking developments, in 2023 we have created a so -called Merchant
Portal for partners holding card acceptance contracts, where they can reach analytics, statements and all
related documents of card transactions made with us.
INTEGRATED ANNUAL REPORT 2023
11
OTP BANK
BUSINESS REPORT 2023 (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.
1011 Budapest, Iskola utca 38-42.
1119 Budapest, Hadak útja 1.
2085 Pilisvörösvár, Fő utca 60
1015 Budapest, Széna tér 7.
1123 Budapest, Alkotás utca 53
2092 Budakeszi, Fő utca 174.
1021 Budapest, Hüvösvölgyi út 138.
1124 Budapest, Apor Vilmos tér 11.
2100 Gödöllő, Szabadság tér 12-13.
1024 Budapest, Fény utca 11-13.
1126 Budapest, Böszörményi út 9-11.
2112 Veresegyház, Fő út 52
1025 Budapest, Szépvölgyi út 4/b.
1133 Budapest, Váci út 80.
2119 Pécel, Kossuth tér 4.
1025 Budapest, Törökvész út 1/a
1134 Budapest, Váci út 17.
2120 Dunakeszi, Barátság utca 29.
1026 Budapest, Szilágyi Erzsébet fasor
1135 Budapest, Lehel út 70-76.
2120 Dunakeszi, Nádas utca 6.
121.
1033 Budapest, Flórián tér 15.
1033 Budapest, Szentendrei utca 115.
1037 Budapest, Bécsi út 154.
1137 Budapest, Pozsonyi út 38.
2141 Csömör, Határ út 6.
1138 Budapest, Váci út 135-139
2143 Kistarcsa, Hunyadi utca 7.
1146 Budapest, Thököly út 102/b.
2151 Fót, Móricz Zsigmond utca 23/A
1148 Budapest, Nagy Lajos király útja 19-
2170 Aszód, Kossuth Lajos utca 42-46.
1039 Budapest, Heltai Jenő tér 2.
21.
1041 Budapest, Erzsébet utca 50.
1149 Budapest, Bosnyák tér 17.
1042 Budapest, Árpád út 63-65.
1149 Budapest, Fogarasi út 15/b.
1048 Budapest, Kordován tér 4.
1151 Budapest, Fő utca 64.
1051 Budapest, Nádor utca 16.
1152 Budapest, Szentmihályi út 131.
1052 Budapest, Deák Ferenc utca 7-9.
1157 Budapest, Zsókavár utca 28.
1054 Budapest, Szabadság tér 7-8.
1161 Budapest, Rákosi út 118.
1055 Budapest, Nyugati tér 9.
1163 Budapest, Jókai Mór utca 3/b.
1055 Budapest, Szent István krt. 1.
1173 Budapest, Ferihegyi út 93.
1062 Budapest, Váci út 1-3.
1173 Budapest, Pesti út 5-7.
2200 Monor, Kossuth Lajos utca 67.
2220 Vecsés, Fő utca 170.
2220 Vecsés, Fő utca 246-248
2225 Üllő, Pesti út 92/b.
2230 Gyömrő, Szent István út 17.
2234 Maglód, Esterházy utca 1.
2300 Ráckeve, Szt István tér 3.
2310 Szigetszentmiklós, Háros utca 120.
2310 Szigetszentmiklós, Ifjúság útja 17.
2330 Dunaharaszti, Dózsa György utca
1066 Budapest, Oktogon tér 3.
1181 Budapest, Üllői út 377.
25.
1075 Budapest, Károly krt. 1.
1183 Budapest, Üllői út 440.
2340 Kiskunlacháza, Dózsa György út
1075 Budapest, Károly krt. 25.
1188 Budapest, Vasút utca 48.
1076 Budapest, Thököly út 4
1191 Budapest, Üllői út 201.
1081 Budapest, Népszínház utca 3-5.
1195 Budapest, Üllői út 285.
1083 Budapest, Futó utca 35-45
1195 Budapest, Vak Bottyán út 75 a-c
1085 Budapest, József krt. 33.
1203 Budapest, Bíró Mihály utca 7.
1085 Budapest, József krt. 53.
1204 Budapest, Kossuth Lajos utca 44-46.
1085 Budapest, Kálvin tér 12-13.
1211 Budapest, Kossuth Lajos utca 86.
1087 Budapest, Könyves Kálmán krt. 76-
1211 Budapest, Kossuth Lajos utca 99.
1. sz.
1094 Budapest, Ferenc krt. 13.
1095 Budapest, Soroksári út 32-34.
1097 Budapest, Könyves Kálmán krt. 12-
14.
1102 Budapest, Kőrösi Csoma sétány 6.
1103 Budapest, Sibrik Miklós utca 30.
1106 Budapest, Örs vezér tere 25
1115 Budapest, Bartók Béla út 92-94.
1117 Budapest, Hunyadi János út 19.
1221 Budapest, Kossuth Lajos utca 31.
1222 Budapest, Nagytétényi út 37-45.
1238 Budapest, Grassalkovich út 160.
1239 Budapest, Bevásárló utca 2.
2000 Szentendre, Pannónia út 1-3.
2013 Pomáz, József Attila utca 17.
2030 Érd, Budai út 24.
2030 Érd, Iparos út 5.
2040 Budaörs, Sport út 2-4.
1117 Budapest, Móricz Zsigmond körtér
18.
1117 Budapest, Október huszonharmadika
utca 8-10.
2040 Budaörs, Szabadság utca 131/a.
2060 Bicske, Bocskai köz 1.
2083 Solymár, Szent Flórián utca 2.
219.
2360 Gyál, Kőrösi út 160.
2364 Ócsa, Szabadság tér 1.
2370 Dabas, Bartók Béla út 46.
2400 Dunaújváros, Dózsa György út 4/e.
2440 Százhalombatta, Szent István tér 8.
2457 Adony, Petőfi Sándor utca 2.
2483 Gárdony, Szabadság út 18.
2500 Esztergom, Rákóczi tér 2-4.
2510 Dorog, Bécsi út 33.
2536 Nyergesújfalu, Kossuth Lajos utca
126.
2600 Vác, Széchenyi utca 3-7.
2651 Rétság, Rákóczi út 28-30.
2660 Balassagyarmat, Rákóczi fejedelem
utca 44.
2700 Cegléd, Szabadság tér 6.
2721 Pilis, Rákóczi utca 9.
2730 Albertirsa, Vasút utca 4/a.
2750 Nagykőrös, Szabadság tér 2.
2760 Nagykáta, Bajcsy-Zsilinszky utca 1.
INTEGRATED ANNUAL REPORT 2023
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OTP BANK
BUSINESS REPORT 2023 (SEPARATE)
2800 Tatabánya, Bárdos László utca 2.
4100 Berettyóújfalu, Oláh Zsigmond utca
5530 Vésztő, Kossuth Lajos utca 72.
2800 Tatabánya, Fő tér 32.
2840 Oroszlány, Rákóczi Ferenc út 84.
2870 Kisbér, Batthyány tér 5.
2890 Tata, Ady Endre utca 1-3.
2900 Komárom, Mártírok útja 23.
2941 Ács, Gyár utca 14.
3000 Hatvan, Kossuth tér 8. fszt. 1.
3021 Lőrinci, Szabadság tér 25/A
3060 Pásztó, Fő utca 73/a.
1.
4110 Biharkeresztes, Kossuth utca 4.
4130 Derecske, Köztársaság út 111.
4138 Komádi, Fő utca 1-3.
4150 Püspökladány, Kossuth utca 2.
4181 Nádudvar, Fő út 119.
4200 Hajdúszoboszló, Szilfákalja utca 6-8.
4220 Hajdúböszörmény, Kossuth Lajos
utca 3.
4242 Hajdúhadház, Kossuth utca 2.
3070 Bátonyterenye, Bányász utca 1/a.
3100 Salgótarján, Rákóczi út 22.
3170 Szécsény, Feszty Árpád utca 1.
4244 Újfehértó, Fő tér 15.
4254 Nyíradony, Árpád tér 6.
4300 Nyírbátor, Zrínyi utca 1.
3200 Gyöngyös, Fő tér 1.
3245 Recsk, Kossuth Lajos út 93.
3300 Eger, Törvényház utca 4.
3360 Heves, Hősök tere 4.
3390 Füzesabony, Rákóczi Ferenc út 77.
3400 Mezőkövesd, Mátyás király út 149.
3450 Mezőcsát, Hősök tere 23.
3527 Miskolc, József Attila utca 87.
3530 Miskolc, Rákóczi Ferenc utca 1.
3530 Miskolc, Uitz Béla utca 6.
3535 Miskolc, Árpád út 2.
3580 Tiszaújváros, Szent István út 30.
3600 Ózd, Városház tér 1/a.
4320 Nagykálló, Árpád utca 10.
4400 Nyíregyháza, Rákóczi utca 1.
4440 Tiszavasvári, Kossuth Lajos utca 6.
4450 Tiszalök, Kossuth Lajos utca 52/a.
4492 Dombrád, Szabadság tér 7.
4501 Kemecse, Móricz Zsigmond utca 18.
4561 Baktalórántháza, Köztársaság tér 4.
4600 Kisvárda, Szt László utca 30.
4625 Záhony, Ady Endre út 27-29.
4700 Mátészalka, Szalkay László utca 34.
4765 Csenger, Ady Endre utca 1.
4800 Vásárosnamény, Szabadság tér 33.
4900 Fehérgyarmat, Móricz Zsigmond
3630 Putnok, Kossuth Lajos utca 45.
utca 4.
5000 Szolnok, Nagy Imre krt. 2/a.
5000 Szolnok, Szapáry utca 31.
5540 Szarvas, Kossuth Lajos tér 1.
5600 Békéscsaba, Andrássy út 37-43.
5600 Békéscsaba, Szent István tér 3.
5630 Békés, Széchenyi tér 2.
5650 Mezőberény, Kossuth Lajos tér 12.
5661 Újkígyós, Kossuth utca 38.
5700 Gyula, Bodoky utca 9.
5720 Sarkad, Árpád fejedelem tér 5.
5742 Elek, Gyulai út 5.
5800 Mezőkovácsháza, Árpád utca 177.
5820 Mezőhegyes, Zala György ltp. 7.
5830 Battonya, Fő utca 86.
5900 Orosháza, Kossuth Lajos utca 20.
6000 Kecskemét, Dunaföldvári út 2.
6000 Kecskemét, Korona utca 2.
6000 Kecskemét, Szabadság tér 5.
6050 Lajosmizse, Dózsa György út 102/a.
6060 Tiszakécske, Béke tér 6.
6070 Izsák, Szabadság tér 1.
6080 Szabadszállás, Dózsa György út 1.
6087 Dunavecse, Fő út 40.
6090 Kunszentmiklós, Kálvin tér 11.
6100 Kiskunfélegyháza, Petőfi tér 1
6120 Kiskunmajsa, Csendes köz 1.
6200 Kiskőrös, Petőfi Sándor tér 13.
6230 Soltvadkert, Szentháromság utca 2.
6237 Kecel, Császártöltési utca 1.
6300 Kalocsa, Szent István király út 43-45.
3700 Kazincbarcika, Egressy Béni út 50.
3770 Sajószentpéter, Bethlen Gábor utca
1/a.
3780 Edelény, Tóth Árpád út 1.
3800 Szikszó, Kassai utca 16.
3860 Encs, Bem József utca 1.
3900 Szerencs, Kossuth tér 3/a.
3910 Tokaj, Rákóczi út 37.
3950 Sárospatak, Eötvös utca 2.
3980 Sátoraljaújhely, Széchenyi tér 13.
4025 Debrecen, Hatvan utca 2-4.
4025 Debrecen, Pásti utca 1-3.
4025 Debrecen, Piac utca 45-47.
4031 Debrecen, Kishatár utca 7.
4032 Debrecen, Egyetem tér 1.
4032 Debrecen, Füredi út 43.
4060 Balmazújváros, Veres Péter utca 3.
4080 Hajdúnánás, Köztársaság tér 17-
18/a.
4087 Hajdúdorog, Petőfi tér 9.
4090 Polgár, Barankovics tér 15.
5000 Szolnok, Széchenyi István krt. 135.
6320 Solt, Kossuth Lajos utca 48-50.
5100 Jászberény, Lehel vezér tér 28.
5123 Jászárokszállás, Rákóczi Ferenc
utca 4-6.
5130 Jászapáti, Kossuth Lajos út 2-8.
5200 Törökszentmiklós, Kossuth Lajos
utca 141.
6400 Kiskunhalas, Sétáló utca 7
6430 Bácsalmás, Szt János utca 32.
6440 Jánoshalma, Rákóczi Ferec utca 10.
6449 Mélykút, Petőfi tér 18.
6500 Baja, Deák Ferenc utca 1.
5300 Karcag, Kossuth Lajos tér 15.
6600 Szentes, Kossuth Lajos utca 26.
5310 Kisújszállás, Szabadság tér 6.
6640 Csongrád, Szentháromság tér 2-6.
5340 Kunhegyes, Szabadság tér 4.
6720 Szeged, Aradi vértanúk tere 3.
5350 Tiszafüred, Piac tér 3.
6720 Szeged, Takaréktár utca 7.
5400 Mezőtúr, Szabadság tér 29.
6724 Szeged, Londoni krt. 3.
5420 Túrkeve, Széchenyi utca 32-34.
6724 Szeged, Rókusi krt. 42-64.
5430 Tiszaföldvár, Kossuth Lajos út 191.
6760 Kistelek, Kossuth Lajos utca 6-8
5440 Kunszentmárton, Kossuth Lajos út 2.
6782 Mórahalom, Szegedi út 3.
5500 Gyomaendrőd, Szabadság tér 7
6800 Hódmezővásárhely, Andrássy út 1.
5510 Dévaványa, Árpád utca 32.
6900 Makó, Széchenyi tér 14-16.
5520 Szeghalom, Tildy Zoltán utca 4-8.
7000 Sárbogárd, Ady Endre út 172.
5525 Füzesgyarmat, Szabadság tér 1.
7020 Dunaföldvár, Béke tér 11.
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7030 Paks, Dózsa György utca 33.
8000 Székesfehérvár, Ősz utca 13.
9022 Győr, Teleki László utca 51.
7081 Simontornya, Petőfi utca 68.
8060 Mór, Deák Ferenc utca 2.
9024 Győr, Bartók Béla út 53/b.
7090 Tamási, Szabadság utca 33
8100 Várpalota, Újlaky út 2.
9024 Győr, Kormos István utca 6.
7100 Szekszárd, Szent István tér 5-7.
8130 Enying, Kossuth Lajos utca 43.
9026 Győr, Egyetem tér 1.
7130 Tolna, Kossuth Lajos utca 31.
8154 Polgárdi, Deák Ferenc utca 16.
9027 Győr, Budai út 1.
7140 Bátaszék, Budai utca 13.
8200 Veszprém, Brusznyai Árpád utca 1.
9200 Mosonmagyaróvár, Fő utca 24
7150 Bonyhád, Szabadság tér 10.
8220 Balatonalmádi, Baross Gábor út 5-7.
9300 Csorna, Soproni út 58.
7200 Dombóvár, Dombó Pál utca 3.
8230 Balatonfüred, Petőfi Sándor utca 8.
9317 Szany, Ady Endre utca 2.
7300 Komló, Kossuth Lajos utca 95/1.
8300 Tapolca, Fő tér 2.
9330 Kapuvár, Szt. István király utca 4-6.
7370 Sásd, Dózsa György utca 2.
8330 Sümeg, Kisfaludy Sándor tér 1.
9400 Sopron, Teleki Pál út 22./A
7400 Kaposvár, Honvéd utca 55.
8360 Keszthely, Kossuth Lajos utca 38.
9400 Sopron, Várkerület út 96.
7400 Kaposvár, Széchenyi tér 2.
8380 Hévíz, Erzsébet királyné utca 11.
9431 Fertőd, Fő utca 7.
7500 Nagyatád, Korányi Sándor utca 6.
8400 Ajka, Szabadság tér 18.
9500 Celldömölk, Kossuth Lajos utca 18.
7561 Nagybajom, Fő utca 107
8420 Zirc, Rákóczi tér 15.
9600 Sárvár, Batthyány utca 2.
7570 Barcs, Séta tér 5.
8500 Pápa, Fő tér 22.
9700 Szombathely, Fő tér 3-5.
7621 Pécs, Rákóczi út 1.
8600 Siófok, Fő tér 10/a
9700 Szombathely, Király utca 10.
7621 Pécs, Rákóczi út 44.
8630 Balatonboglár, Dózsa György utca 1.
9700 Szombathely, Rohonci út 52.
7622 Pécs, Bajcsy-Zsilinszky utca 11/1.
8638 Balatonlelle, Rákóczi út 202-204
9730 Kőszeg, Kossuth Lajos utca 8.
7632 Pécs, Diána tér 14.
8640 Fonyód, Ady Endre utca 25.
9737 Bük, Kossuth utca 1-3.
7633 Pécs, Ybl Miklós utca 7/3.
8660 Tab, Kossuth Lajos utca 96.
9800 Vasvár, Alkotmány utca 2.
7700 Mohács, Széchenyi tér 1
8693 Lengyeltóti, Csalogány utca 2.
9900 Körmend, Vida József utca 12.
7720 Pécsvárad, Bem utca 2/b
8700 Marcali, Rákóczi utca 6-10.
9970 Szentgotthárd, Mártírok út 2.
7754 Bóly, Hősök tere 8/b.
8790 Zalaszentgrót, Batthyány Lajos utca
7773 Villány, Baross Gábor utca 36.
7800 Siklós, Felszabadulás utca 60-62.
7900 Szigetvár, Vár utca 4.
7940 Szentlőrinc, Munkácsy Mihály utca
16/A
7960 Sellye, Köztársaság tér 4.
8000 Székesfehérvár, Holland fasor 2.
11.
8800 Nagykanizsa, Deák tér 15.
8800 Nagykanizsa, Erzsébet tér 23.
8840 Csurgó, Petőfi tér 20/A
8900 Zalaegerszeg, Kisfaludy Sándor utca
15-17.
8960 Lenti, Dózsa György út 1.
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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. The Bank Group pays special attention to the management of ESG risks and the
implementation of climate protection aspects in business practice. 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
a key 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 and audit
results 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, the Board of Directors and the Risk Assumption and Risk
Management Committee, 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. The Compliance Directorate prepares a report quarterly to the Board of Directors,
and annually to the Supervisory Board, about the Bank’s and the Bank Group’s compliance activities and
position.
IT Controls
Applications are developed by either in-house group resources or by third parties. OTP Bank applies
administrative, logical and physical control measures commensurate with the risk in order 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 in a timely manner;
• user authentication, authorisation and password management processes are controlled by policies and
•
audited;
the systems have test and development environments with appropriate separation from the production
environments that have a secure change management procedure, which ensures that program
developments or modifications can only be deployed to the operational environment after proper,
controlled testing and approval;
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• systems are protected by appropriate network perimeter protection, various security devices and network
segmentation, furthermore all network communications are protected with state-of-the-art encryption;
the IT systems that store and process data are regularly backed up and backup media is stored in
controlled premises with adequate protection for long-term retention, and the organisation carries out
regular backup restore tests;
•
• adequate redundancy is applied for IT systems that store and process data to ensure business continuity
and disaster resiliency;
• has developed DRPs and BCPs for critical systems and critical business processes, which are regularly
•
•
•
•
•
•
•
•
tested and reviewed;
the Bank collects and retains the complete log of all major IT operations and IT security relevant data
processing activities and the confidentiality, availability, integrity, authenticity 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 (DLP) solution to reduce the risk of inadvertent data loss;
it ensures the continuous monitoring of the operation events of the physical and virtual environment
system elements with automated event detection and management tools;
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 permanent secure 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;
• acquire and maintain ability to adequately handle application related security events (including cyber
•
threats), entailing prevention, detection, identification, isolation, analysis, recovery and reporting;
remote work is regulated in a controlled and documented way, remote device and user access is protected
with multi-factor authentication;
• ensures IT security compliance by its managed regulative framework;
•
revision and update of IT security regulations bi-yearly or in a frequency complying legislative
requirements or upon major changes;
• ensures vulnerability assessments and penetration tests are carried out as planned;
• defines pools for categorization of installed software into preferred, allowed and prohibited and ensures
•
compliance to that policy.
it ensures that its employees have adequate knowledge of data protection requirements and provides
regular data protection and information security awareness 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.
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.
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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.
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 obli gations. 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 (11) and Section 61 (10),(11a) and(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 above, 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.
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The General Meeting has exclusive authority with respect to the following matters:
• changes to the rights associated with specific series of shares, or the transformation of certain
•
categories or classes of shares; (qualified majority)
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 o f 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 perio d
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,
recall,
c.
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.
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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;
•
• 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,
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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 dir ectors
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.
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 2023
31 December 2023
Total equity
Ownership
share
31.80%
50.05%
16.91%
0.52%
0.55%
0.13%
0.05%
0.00%
0.00%
100.00%
Voting
rights1
31.84%
50.11%
16.93%
0.52%
0.55%
0.00%
0.05%
0.00%
0.00%
100.00%
Quantity
89,040,716
140,129,576
47,338,305
1,464,494
1,526,762
354,144
139,946
3,183
2,884
280,000,010
Ownership
share
Voting
rights 1
31.40%
54.43%
12.93%
0.48%
0.48%
0.20%
0.05%
0.01%
0.01%
100.00%
31.46%
54.54%
12.96%
0.48%
0.48%
0.00%
0.05%
0.01%
0.01%
100.00%
Quantity
87,914,205
152,405,042
36,217,730
1,349,320
1,338,715
572,746
139,036
28,603
34,613
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 2023 ESOP owned 12,095,524 OTP shares.
3 Non-identified shareholders according to the shareholders’ registry.
Number of treasury shares held in the year under review (2023)
OTP Bank
Subsidiaries
TOTAL
1 January
354,144
0
354,144
31 March
1,107,117
0
1,107,117
30 June
585,596
0
585,596
30 September
602,180
0
602,180
31 December
572,746
0
572,746
Shareholders with over/around 5% stake as at 31 December 2023
Name
Nationality1 Activity2
MOL (Hungarian Oil and Gas Company Plc.)
Groupama Group
Groupama Gan Vie SA
Groupama Biztosító Ltd,
D
F/D
F
D
C
C
C
C
Number of
shares
24,000,000
14,256,813
14,140,000
116.813
Ownership3
8.57%
5.09%
5.05%
0.04%
Voting
rights3,4
8.59%
5.10%
5.06%
0.04%
Notes5
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.
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Senior officers, strategic employees and their shareholding of OTP shares as at 31 December 2023
Type1
Name
Position
IG
IG
IG
IG
IG
IG
IG
IG
IG
IG
IG
FB
FB
FB
FB
FB
FB
SP
SP
SP
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
Antal Kovács3
member
György Nagy4
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
András Becsei
Deputy CEO
László Bencsik
Deputy CEO
György Kiss-Haypál
MC member
Imre Bertalan
MC member
Dr. Bálint Csere
TOTAL No. of shares held by management
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
2026
2026
2026
2026
2026
2026
Number of
shares
12,000
53,885
17,793
59,200
25,939
192,458
126,584
44,400
15,800
196,314
544,502
54
0
0
0
1,410
0
7,199
15,462
15,160
0
10,555
1,338,715
1 Board Member (IG), Supervisory Board Member (FB), Employee in strategic position (SP)
2 Number of OTP shares owned by Dr. Sándor Csányi, Chairman and CEO, directly or indirectly: 4,712,949.
3 Number of OTP shares owned by Antal Kovács, Member of Board of Directors, directly or indirectly: 130,884.
4 Number of OTP shares owned by György Nagy, Member of Board of Directors, directly or indirectly: 1,068,855.
Committees1
Members of the Board of Directors
Dr. Sándor Csányi – Chairman
Mr. Tamás Erdei – Deputy Chairman
Ms. Gabriella Balogh
Mr. Mihály Baumstark
Mr. Péter Csányi
Dr. István Gresa
Mr. Antal Kovács
Mr. György Nagy
Dr. Márton Gellért Vági
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 Gudra
Mr. András Michnai
Mr. Olivier Péqueux
Members of the Audit Committee
Dr. József Gábor Horváth – Chairman
Mr. Tibor Tolnay – Deputy Chairman
Dr. Tamás Gudra
Mr. Olivier Péqueux
The résumés of the committee and board members are available in the Corporate Governance Report/Annual
Report.
1 Personal changes can be found in the „Personal and organizational changes” chapter.
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Personal and organizational changes
As of 1 January 2023, Mr. Antal György Kovács was replaced by Mr. András Becsei as Deputy CEO of the
Retail Division. Mr. Antal György Kovács retained his employment status, thus his position as Deputy CEO until
the Annual General Meeting closing the financial year 2022, during which time he was mainly be responsible
for group governance.
On 28 April 2023, concerning the audit of OTP Bank Plc.’s separate and consolidated annual financial
statements in accordance with International Financial Reporting Standards for the year 2023, the Annual
General Meeting elected Ernst & Young Ltd. (001165, H-1132 Budapest, Váci út 20.) as the Company’s auditor
from 1 May 2023 until 30 April 2024.
On 28 April 2023 the Annual General Meeting elected Mr. Antal György Kovács as member of the Board of
Directors of the Company until the Annual General Meeting of the Company closing the 2025 business year,
but not later than 30 April 2026.
On 28 April 2023 the Annual General Meeting elected
Mr. Tibor Tolnay
Dr. József Gábor Horváth
Dr. Tamás Gudra
Mr. Olivier Péqueux
Mrs. Klára Bella
Mr. András Michnai
as member of the Supervisory Board of the Company until the Annual General Meeting of the Company closing
the 2025 business year, but not later than 30 April 2026.
On 28 April 2023 the Annual General Meeting elected
Mr. Tibor Tolnay
Dr. József Gábor Horváth
Dr. Tamás Gudra
Mr. Olivier Péqueux
as member of the Audit Committee of the Company until the Annual General Meeting of the Company closing
the 2025 business year, but not later than 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 Executive Steering 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 6, the Supervisory Board held 7 meetings, while the Audit Committee held 3
meetings in 2023. In addition, resolutions were passed by the Board of Directors on 155, by the Supervisory
Board on 87 and by the Audit Committee on 29 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
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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.
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.
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NON-FINANCIAL STATEMENT – OTP BANK PLC. (SEPARATE)
ENVIRONMENTAL POLICY, ENVIRONMENTAL PROJECTS
The operational functioning of OTP Group and OTP Bank requires the use of natural resources and energy,
however, the resulting environmental impact is significantly lesser than the indirect impacts associated with
the provision of financial services. Of the operational impacts, OTP Group considers greenhouse gas (GHG)
emissions to be the most significant, but we are also working on reducing our impacts beyond this. Emissions
exacerbate climate change and damage natural resources. Reducing emissions helps fi ght climate change.
However, the practices of the Bank also have an awareness raising impact in the field of environmental
protection and the enforcement of environmental awareness in its operations is a key element of the regional
leading role undertaken by OTP Group in relation to green transition.
In the context of the provision of financial services, environmental risks are managed and business
opportunities related to environmental protection are exploited within the ESG strategy and are not covered
in this chapter.
In 2023, OTP Group again participated in the CDP's environmental disclosure scheme, maintaining its "B"
rating achieved in the previous year.
OTP Bank mitigates environmental impacts through the following activities:
• Efficient use of resources
• Carbon-neutral operation
• Energy efficiency investment projects
• Purchase of green electricity, use of renewable energy sources
• Reducing paper use through digitalisation; using recycled paper
• Rationalising business travel
•
• Transparent reporting on the environmental impacts of operation
• Awareness-raising activities for employees and customers
Improving waste management
OTP Bank members operate in maximum compliance with environmental legislation and no related fines
were imposed in 2023 either. Environmental protection at the Bank is governed by an Environmental Policy.
OTP Bank prepares annual internal reports on the environmental impact of its operation, for approval by the
manager in charge of this function. To enhance knowledge relati ng to the performance of work, along with
general knowledge, every OTP Bank employee is provided with environmental training once every two
years.
Energy consumption and carbon dioxide emissions
OTP Bank's ESG (Environmental, Social, Governance) strategy targets full carbon neutrality by 2030 for Scope
1-2 emissions and net carbon neutrality from 2022. The net carbon neutrality target has been met in 2023.
Electricity accounts for approximately half of total energy consumption, and thus the Bank's continued use of
predominantly green electricity in 2023 is significantly reducing carbon emissions2.
OTP Bank's total energy consumption decreased by almost 10 percent compared to 2022, largely due to
the use of heating fuels. In addition to the mild winter, the Bank has introduced a number of savings
measures that have significantly reduced consumption, such as turning down temperatures and the use of
time-programmable control during periods of non-use.
2In the case of leased premises, the purchase of green electricity cannot be fully implemented.
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Energy consumption within the organisation (GJ) – OTP Bank
Total non-renewable fuel sources
Total renewable fuel sources
Total indirect energy purchased (including renewables)
Self-generated renewable energy
Total energy consumption2
Total energy consumption per employee3
Share of renewable energy
2019
97,579
0
151,026
2,005
250,610
28.14
N/A
2020¹
93,423
1,360
151,781
5,166
251,730
26.75
N/A
2021
103,545
2,247
152,082
5,141
263,014
26.73
N/A
2022
100,691
2,615
161,575
4,053
268,934
26.17
N/A
2023
90,030
2,821
151,392
1,312
245,555
23.19
54%
¹ Also includes the consumption of the former Monicomp and eBIZ.
2 Deviates slightly from the figures in the Annual Report up to 2021 as the finalised consumption data were received at a later date.
3 In 2019 based on statistical headcount, from 2020 based on average full -time staff numbers.
The energy consumption data are derived from metering; solar energy and part of the heat pump energy is estimated based on manufacturer information
in the absence of a meter. Where necessary, we used the calorific values taken from the National Inventory Report (NIR) from 2022 onwards, and
previously the EU regulation and DEFRA values, to convert the consumed quantities into energy.
Direct (Scope 1)
Indirect (Scope 2)
Indirect location-based
Indirect market-based
Total (Scope 1 + 2) location-based
Total (Scope 1 + 2) market-based
Total (Scope 1 + 2) with carbon offset
Per employee (market-based)
Per employee (with offset)
OTP Bank’s Scope 1 and Scope 2 CO2e emissions (t)
20201
6,078
2019
6,779
10,786
8,640
17,565
15,419
15,419
N/A
N/A
9,883
8,350
15,961
14,428
14,428
1.53
1.53
2021
6,548
9,904
8,369
16,452
14,917
14,917
1.52
1.52
2022
6,670
11,496
1,005
18,165
7,675
675
0.75
0.07
2023
6,005
11,648
1,110
17,653
7,115
- 485
0.67
-0.05
1 Also includes the consumption of the former Monicomp and eBIZ.
The figures shown are calculated from energy consumption, in all cases based on the applicable statutory regulations and the factors stipulated by
authorities and industry organisations (National Inventory Reports (NIR), IPCC, DEFRA, EU Regulation, AIB, IF I, and data from suppliers for electricity
and district heating). For Scope 1 emissions, country-specific factors are applied subject to availability from 2022. We calculate electricity -related
emissions using country-specific factors. For district heating use, from 2020 onwards we use the Hungarian, Slovenian and Croatian factors, and for all
other countries, we uniformly use the data published by DEFRA, while in previous years we used the Hungarian emission factors , except for Ukraine,
Russia and Serbia, in the absence of other reliable data.
Scope 1 emissions and, in 2022 and 2023, even district heating cover all GHG emissions. For Scope 2 emissions, the previous y ears of district heating
in Hungary and electricity factors only cover CO 2. For the emission factors used, we do not have information on the GWP values considered in each and
every case.
In addition, the fact that OTP Bank continuously carries out renovations and modernisations at both its central
buildings and in its branch network reduces consumption, and improving energy efficiency is an important
aspect of investment projects. In 2023, the modernisation of heating systems, the widest possible use of LED
lighting and the installation of additional motion sensors were again the most common types of energy
efficiency investments.
The rate of business travel has increased at the parent bank. The total kilometres travelled increased at the
parent bank by 9 percent compared to the previous year, with air travel also rising. While online meetings
remain a dominant part of liaising, with the end of the coronavirus pandemic, face-to-face meetings have
become more frequent again, and business needs have influenced the amount of travel.
To offset its 2023 Scope 1 and Scope 2 emissions, OTP Bank purchased carbon credits in 2023, thereby
preventing the emission of 7,600 tonnes of carbon emissions during the year. The 2023 emission values were
determined in advance, with offsets higher than emissions. The credits purchased are retired credits verified
as per Verra (VER). The Bank considers it essential that the project supported through offsetting is located in
the country of operation of the Banking Group, and has again opted for a project in Bulgaria, which was
implemented at the Saint Nikola Wind Farm, the largest wind farm in the country, near the town of Kavarna.
Paper use and waste management
The steadily increasing range of electronically available services also reduces paper consumption. In addition,
the digitalisation of the bank's internal processes is ongoing. At the same time, the paper-based administration
demanded by legal requirements inhibits in many cases the further reduction of printing in Hungary and in
other countries.
The share of electronic account statements also showed an increasing trend in 2023. Their use is continuously
encouraged by the Bank. The majority of OTP Bank customers (83 percent of retail clients and almost half of
large corporate customers) do not receive paper-based statements, which is a noticeable increase over the
previous year.
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Data on materials used and purchases made by OTP Bank
Number of computers (laptops + PCs)
Weight of ink cartridges and toners used
Amount of office paper
Amount of paper used for document sorting and packaging
Amount of indirectly used paper 1
(thousand units)
(t)
(t)
(t)
(t)
2019
18
8
699
58
7
2020
19
6
478
75
5,8452
2021
19
4
398
90
491
2022
19
5
397
98
558
2023
18
4
354
26
313
1 E.g. marketing brochures, invoice sheets
2 Mainly consumption of former Monicomp.
At OTP Bank, we were able to reduce paper consumption by 11 percent. The parent bank used 47 percent
recycled paper in office paper use and 31 percent in total paper use. In Hungary, we use FSC-certified paper
even in the case of account statements, marketing publications and envelopes, while we use recycled FSC
paper for producing DM letters. All personal hygiene products used at OTP Bank are exclusively ECO Label
products.
Awareness-raising
The members of the Banking Group have launched numerous programmes, awareness-raising campaigns
and involved employees to promote environmental awareness and the protection of natural values. To enhance
knowledge relating to the performance of work, along with general knowledge, every OTP Bank employee is
provided with environmental training once every two years.
Green Challenge idea contest
OTP Bank has launched the Green Challenge idea contest among its employees. To introduce the contest,
the Bank started a series of six articles on sustainability, concluding with a series of quizzes. Employees who
answered the questions the fastest received special prizes from OTP.
For the idea contest, OTP Bank was looking for applications that support the reduction of the Bank's carbon
footprint and can be easily implemented in everyday practice. The challenge proved to be very popular with
136 ideas submitted. The implementation of several of these has already started and four other winning ideas
are also to be realised down the line:
• Establishment of MOL-Bubi stations around OTP offices,
• Green Plate Programme to promote more sustainable dietary habits,
•
•
the digitalisation of business travel settlements,
special prize for the idea with the greatest impact: minimising standby power consumption.
As a result of the popularity of the competition, we will be launching a permanent sustainability idea box starting
from 2024.
OTP Bank was also one of the partners of the Green Friday initiative, launched jointly by MasterCard and
several organisations to raise awareness about conscious spending and lifestyle. Throughout the programme,
dedicated microsites and social media platforms featured awareness-raising articles and tips to promote a
greener Christmas.
The disclosure obligation of the green asset ratio („GAR”) required by the European Council and Parliament
Regulation (EU) 2020/852 of June 18, 2020 (Taxonomy Regulation) is fulfilled by the Bank in the Non-Financial
Statement section of the consolidated Business Report.
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Fight against corruption and against the practice of bribery
The Code of Ethics (https://www.otpbank.hu/static/portal/sw/file/OTP_EtikaiKodex_EN.pdf) , the Partner Code
of Ethics (https://www.otpbank.hu/static/portal/sw/file/OTP_Partneri_EtikaiKodex_EN.pdf) publish in 2023 and
the Anti-Corruption Policy of OTP Bank Group contains provisions on the fight against corruption and against
the practice of bribery, also on the acceptance of individual differences and the denial of discrimination
(https://www.otpbank.hu/portal/en/EthicalDeclaration, Anti_Corruption_Policy.pdf (otpbank.hu)). As it can be
read in the foreword of the Code and the Anti-Corruption Policy as well, the OTP Bank Plc. 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 OTP Bank Plc. 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 OTP Bank Plc. conducts inquiries for the purpose
of detecting, preventing anomalies in connection with reports made or anomalies it became aware of otherwise.
Through the OTP Bank Plc.'s ethics reporting system a total of 93 reports were received in 2023. In 29 of these
reports, we deemed it necessary to conduct an ethical procedure and 8 case’s investigation resulted in
declaring ethics offense.
The OTP Bank Plc. 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.
In addition, all business partners and clients are communicated about the Anti-Corruption Policy and
procedures through the Code of Ethics and Anti-Corruption Policy published publicly on the OTP Bank Plc.'s
website and from 2023 the Partner Code of Ethics has been published on the Bank’s website as well. The
Anti-Corruption Policy stipulates that, in view of the fact that existing and established relationships with
contractual partners also contain the possibility of corruption, the OTP Bank Plc. will act prudently in its dealings
with contractors, in particular in the tendering and preparation process, to minimise the risk of corruption. The
OTP Bank Plc. establishes relationships with its contractual partners based on an assessment of
professionalism, competence and competitiveness, and does not apply other non-professional selection
criteria that contain the possibility of corruption.
Based on the Compliance’s proposal, the prohibition of corruption will be reflected in the contractual and
regulatory documents used by the OTP Bank Plc. in a clearer and well-defined manner from 2023 onwards,
through the inclusion of anti-corruption clauses in the business rules and standard contracts. The clause will
state from the very beginning of the business relationship that the contracting partner accepts OTP Bank Plc.'s
anti-corruption principles, including the prohibition of corruption and the consequences of breaching this
prohibition, which can even be termination of contract.
Any requests from third parties affecting human rights are treated by the OTP Bank Plc. 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 Executive Steering Committee and the
Board of Directors; the annual report is also submitted to the Supervisory Board.
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 banking and other financial services to both retail and corporate customers: 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
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. At the end of
2023, OTP Bank and its Hungarian subsidiaries served more than 4.3 million clients in total.
The Bank owns foreign subsidiaries in many countries of Central and Eastern Europe as well as in Uzbekistan
through capital investments.
INTEGRATED ANNUAL REPORT 2023
27
OTP BANK
BUSINESS REPORT 2023 (SEPARATE)
Non-financial performance indicators
Internal audit: 207 closed audits, 1,385 recommendations, 1,383 accepted recommendations.
•
• Compliance with Budapest Stock Exchange (BSE) Recommendations (yes/no ratio): 72 yes, 0 no.
• Compliance: 7 closed consumer protection related investigations by the Compliance.
• Bank security investigations, reports: we conducted a total of 3,356 bank security investigations and
253 reports were made to the authorities, most of which were related to cases of fraud committed against
customers.
The expected damage value from the detected crimes is about HUF 4.7 billion , which is much higher
than the loss realized last year, which was HUF 1 billion. The largest part of the loss occurred in the area
of financial offences.
With regard to financial offences, a downward trend can be observed in consumer loans, primarily in
connection with the offences of personal loans, which was about HUF 28 million, almost a fifth of the
previous year's value.
At the same time, the amount of damage caused by corporate credit fraud was HUF 4.6 billion, of which
a significant part of the damage value – HUF 3 billion – was accounted for by one case.
There was a drastic increase in the trend of online fraud targeting customers until July 2023, but due to
the introduced measures, there was a continuous decrease in both the number of cases and the amount
of damage from September 2023. Compared to the losses in July, December's fell to about a third, but a
significant customer loss was still realized, which exceeded HUF 10 billion in 2023, and with fraud
prevention operative measures and monitoring activities, HUF 6.5 billion of customer losses were
prevented.
Compared to 2022, an increase can be observed in connection with bank card abuse, both in terms of
the number of attempted abuses and the damage. In 2023, the value of successful bank card abus es
exceeded HUF 4.5 billion, of which the value of successful transactions with cards issued by OTP
amounted to HUF 3.9 billion.
As a result of the preventive security measures taken by the bank, the value of fraudulent bank card
transactions that failed in 2022 is HUF 10.2 billion. Of this, the value of abuses prevented in the case of
cards issued by OTP is HUF 10.1 billion.
The ratio of bank card abuse to turnover increased, in the case of OTP the ratio of bank card misuse to
turnover remained lower than the European average published by MasterCard (OTP Bank: 0.0203%,
European average: 0.0400%).
• Ethics issues: 93 ethics reports, establishing ethics offense in 8 cases.
INTEGRATED ANNUAL REPORT 2023
28
OTP BANK
BUSINESS REPORT 2023 (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:
• Assurance engagements other than audits or reviews of historical financial information (ISAE 3000)
• Engagements to review historical financial statements and interim financial statements (ISRE 2400,
2410)
Issue of Comfort letters
•
• Engagements to perform agreed-upon procedures regarding financial information (AUP according to
ISRS 4400)
• Consultation relating to interpretation and implementation of accounting standards and relating to
accounting of potential future transaction
INTEGRATED ANNUAL REPORT 2023
29
BUSINESS REPORT 2023 (CONSOLIDATED)
INTEGRATED ANNUAL REPORT 2023
30
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
CONSOLIDATED FINANCIAL HIGHLIGHTS3 AND SHARE DATA
Main components of the adjusted Statement of recognised income
Consolidated profit after tax
Adjustments (total)
Consolidated adjusted profit after 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
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 profit after tax)
ROE (from adjusted profit after tax)
ROA (from adjusted profit after tax)
Operating profit margin
Total income margin
Net interest margin
Cost-to-asset ratio
Cost/income ratio
Provision for impairment on loan 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) - Basel34
Tier1 ratio - Basel3
Common Equity Tier 1 ('CET1') ratio - Basel3
Share Data
EPS diluted (HUF) (from profit after tax)
EPS diluted (HUF) (from adjusted profit after tax)
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 profit after tax)
P/E (trailing, from adjusted profit after tax)
Average daily turnover (EUR million)
Average daily turnover (million share)
2022
HUF million
347,081
(245,466)
592,547
690,022
868,487
1,656,571
1,093,579
397,118
165,874
(788,084)
(178,465)
(97,475)
2023
HUF million
990,459
(18,123)
1,008,583
1,222,328
1,260,850
2,224,584
1,459,694
478,146
286,745
(963,734)
(38,521)
(213,746)
2022
2023
32,804,210
17,929,314
18,858,498
17,946,407
(929,184)
24,320,092
870,682
301,984
3,322,312
2022
11.0%
18.8%
1.9%
2.78%
5.31%
3.51%
2.53%
47.6%
0.73%
0.57%
14.1%
74%
17.8%
16.4%
16.4%
2022
1,288
2,204
10,110
18,600
7,854
7.1
14,902
14,290
0.7
0.7
8.2
4.8
24
0.8
39,609,144
21,447,380
22,466,415
21,496,534
(1,019,035)
29,428,284
2,095,548
562,396
4,094,793
2023
27.2%
27.7%
2.7%
3.39%
5.99%
3.93%
2.59%
43.3%
0.16%
0.10%
17.5%
72%
18.9%
16.6%
16.6%
2023
3,693
3,767
15,800
16,030
9,482
11.6
15,294
14,589
1.0
1.1
4.5
4.4
15
0.5
Change
%
185
(93)
70
77
45
34
33
20
73
22
(78)
119
%
21
20
19
20
10
21
141
86
23
pps
16.2
9.0
0.8
0.61
0.67
0.42
0.07
(4.3)
(0.56)
(0.47)
3.4
(1)
1.1
0.2
0.2
%
187
71
56
(14)
21
63
3
2
52
53
(45)
(8)
(37)
(45)
3 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.
4 Starting from 2023 the consolidated capital adequacy ratios for the actual period and retrospectively for the bas e period are based on the prudential
scope of consolidation, i.e. in line with Capital Requirements Regulation (CRR). For details, see the Supplementary data section.
INTEGRATED ANNUAL REPORT 2023
31
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
ACTUAL CREDIT RATINGS
S&P GLOBAL
OTP Bank and OTP Mortgage Bank – FX long-term issuer credit rating
OTP Bank – Dated subordinated FX debt
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 – Dated subordinated FX debt
LIANHE
OTP Bank – Issuer rating (China national scale)
ACTUAL ESG RATINGS
BBB-
BB
Baa1
Ba2
A1
BBB+
BB+
AAA
AWARDS
OTP Bank received six awards at the Global Finance magazine's Sustainable Finance Awards for 2024 competition. OTP
Bank was chosen as the winner in one national, and four regional categories („The Best bank for Sustainability
Transparency, for Sustainable Project Finance, for Sustainable Financing in Emerging Markets and for ESG-Related
Loans”) and for the first time in the Bank's history in a global category.
The local subsidiary of the OTP Group earned recognition as Bank of the Year in the framework of The Bankers 2023
"Bank of the Year Awards" in Albania, Croatia, Montenegro and Slovenia.
RESULTS OF THE 2023 EBA STRESS TEST
OTP Bank enjoyed high rankings in the EU-level stress test survey conducted by the European Banking Authority
(EBA) in 2023, which involved 70 European banks.
Fully loaded consolidated CET1 ratio and its decrease over the three-year period from 2022 to 2025 under the adverse
scenario:
CET1 rate
end-2025
Ranking
CET1 rate
decrease
Ranking
14.5%
No 13
-0.77pp
No 4
INTEGRATED ANNUAL REPORT 2023
32
OTP BANK
CORPORATE STRATEGY
BUSINESS REPORT 2023 (CONSOLIDATED)
OTP Group is the leading universal banking group in Central and Eastern Europe, and one of the most
successful financial institutions in Europe.
OTP Group’s strategic objective is to meet the needs and expectations of its customers, investors, and
employees at the highest possible level, and to set a positive example from environmental, social and
corporate governance perspective even at international level.
Our skilled and helpful staff, state-of-the-art IT solutions, and universal yet customisable product offering
make us a trustworthy partner for customers in eleven countries of the Central and Eastern European region,
and in Uzbekistan in Central Asia. The impressive performance of our employees and the value they create
are important building blocks of OTP Group's results. We provide regular training courses to support our
highly qualified professionals. OTP Group’s innovations also enhance our competitiveness and contribute
to further strengthening our international position.
The pillars of our strategy are stability & sustainability, growth, innovation, and profitability.
Stability & sustainability
OTP Group’s excellent capital and liquidity position provide the fundamentals for stable operation and growth
throughout economic cycles. In addition to full compliance with European and local regulations, we promote
transparency and prudence, while laying great emphasis to maintaining stability at a ll times.
OTP Group is committed to enforcing sustainability principles in its socio-economic role and in serving
customers, as well as in its own operations. Accordingly, OTP Group aims to be the regional leader in
financing a fair and gradual transition to a low-carbon economy and building a sustainable future through
our responsible solutions.
As part of our social activities, we make a positive impact through our financial awareness raising and
donation programmes, and extensive civil society partnerships. As a responsible employer, we have
designed complex programmes for employee well-being.
Growth
We believe in the future of the Central and Eastern European region and intend to actively contribute to its
progress. Our products and services are designed to help the region grow faster than the EU average. We
aim to increase our market share on all our CEE markets through organic growth and acquisitions.
We entered Uzbekistan in 2023 with an aim of capitalizing on growth opportunities while becoming the
leading retail bank in this underpenetrated market, also supporting the development and transition of the
local economy.
Our acquisition strategy is based on creating shareholder value by achieving optimal scale of economics
and leveraging OTP's expertise in the regional markets. We keep exploring new acquisition opportunities,
primarily in the CEE region, and in other countries with high growth potential, too.
Innovation
To meet our customers' needs, we develop convenient and contemporary services that are easy and fast to
access anytime, from anywhere. OTP Bank's innovations are popular for a good reason – millions of
customers use our products and services regularly. Digital developments contribute to enhancing customer
experience as well as to improving the efficiency of business processes. To explore new directions and
opportunities, we have established our own futurology team, and are incorporating best practices. We have
hundreds of developments underway. We are partnering with the region’s leading fintech companies and
have made considerable progress in building beyond-banking ecosystems, in addition to building our own
successful fintech company.
Profitability
Profitability is crucial for maintaining stable operations, as well as for continuous dev elopment and renewal.
Our long-term profitability is underpinned by the revenue margin supported by excellent customer
experience and cost-efficient processes, along with geographical diversification, which has been increasing
in recent years. The market recognizes our success in creating shareholder value through favourable
valuation compared to European and regional peers.
INTEGRATED ANNUAL REPORT 2023
33
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
MANAGEMENT’S ANALYSIS OF THE FULL-YEAR 2023 RESULTS OF OTP GROUP
In 2023 the operating environment in Hungary was shaped mainly by the combined impact of the y-o-y
declining GDP (-0.9%), the high underlying interest rate environment, as well as the government and central
bank measures. On the positive side, from the second half of the year the declining CPI trend accelerated
and made room for continuing central bank rate cuts. The base rate dropped to 10.75% by year-end, against
18% O/N rate at the beginning of the year. The December CPI moderated to 5.5%, thus the annual inflation
rate was 17.6%. The government tried to reinvigorate the benign lending activity through focused measures:
voluntary rate caps by banks in new SME and mortgage loans, lower downpayment requirements in case of
first homes, Family Subsidy Scheme Plus, subsidized loan schemes. Furthermore, the government
extended the interest rate cap on certain SME and housing loan volumes until 1 April 2024 and 30 June,
respectively.
On the Group level, all countries enjoyed positivey-o-y GDP growth, and with inflation levels lower than in
Hungary, the setback in lending activity was less material, in a couple of markets even significant volume
increase occurred. This, and the 3% y-o-y loan growth in Hungary despite economic recession, brought the
consolidated FX-adjusted organic performing loan volume growth to 6%, with the overall portfolio quality still
demonstrating stable picture.
It was positive that the consolidated NIM kept improving. The key liquidity ratios remained stable and deposit
volumes grew at most Group members, thus the deposit book increased by 7% y -o-y (FX-adjusted). The
CET1 ratio grew further to 16.6%.
In 2023 two acquisitions were executed: in February the purchase of the Slove nian NKBM manifested the
biggest ever M&A transaction by OTP Bank, in June the purchase of Ipoteka Bank in Uzbekistan was
completed. The two banks contributed 11 and 6 months earnings to the consolidated annual profit,
respectively. The transactions elevated to Group’s total asset base by around EUR 14 billion, as a result it
exceeded EUR 100 billion by the end of 2023.
Consolidated earnings: the annual net results reached HUF 990.5 billion; y-o-y improving NIM, stable
credit quality, 6% and 7% y-o-y increase in organic performing loan volumes and deposit
(FX-adjusted), improving capital ratios
The consolidated profit after tax of OTP Group rose to HUF 990.5 billion, an increase of almost 3 times
y-o-y, as a result the annual ROE improved to 27.2% (+16.2 pps y-o-y).
The balance of adjustment items showed -HUF 18 billion against -HUF 245 billion a year ago. Those items
which were a drag on 2022 earnings and were related to the Russian-Ukrainian war practically disappeared
or dropped substantially, namely goodwill impairment and the impairment recognized on the Russian
government bonds, furthermore the balance of special taxes in Hungary also dropped by around 1/3 y -o-y.
At the same time the negative impact of the interest rate caps stayed in place: besides Hungary, Serbia also
introduced such measure. The single most important positive item was the badwill impact booked in relation
to the Slovenian and Uzbek acquisitions. Accordingly, in 2023 the following main adjustment items were
booked:
• +HUF 64.9 billion acquisition effects;
•
•
• +HUF 12.4 billlion other adjustment items.
-HUF 62.6 billion Hungarian special banking taxes;
-HUF 32.9 billion interest rate cap extension (in Hungary) or introduction ( in Serbia);
The cross-currency rate moves distorted the earning lines mainly in case of the Ukrainian and Russian
operations: the average HUF rate against UAH and RUB appreciated by 16% and 26% y -o-y, respectively.
With the exception of Ipoteka Bank all Group members were profitable in 2023. Most of the subsidiaries
demonstrated material profit improvement y-o-y, the Bulgarian operation’s adjusted earnings exceeded
HUF 200 billion, while the pro forma Slovenian operation posted a profit after tax close to HUF 130 billion;
the combined profit incorporated only 11 months net earnings contribution from NKBM. Ipoteka Bank,
Uzbekistan posted HUF 22 billion negative results in 2H 2023 mainly due to the significant amount of credit
risk costs.
The overall performance of OTP Group was shaped mainly by the y-o-y 45% increase in operating profit,
but total risk costs also dropped by 78% y-o-y. Within the dynamic, y-o-y 34% increase of total income the
net interest income surged by 33%, whereas net fees & commissions grew by lower pace, +20% y-o-y.
Other non-interest income jumped by 73%. Adjusted for the two acquisitions in 2023, the FX-adjusted
operating income grew by 37%, total income by 28%, NII by 25% and NF&C by 15%, respectively.
INTEGRATED ANNUAL REPORT 2023
34
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
The consolidated annual NIM improved by 42 bps y-o-y reaching 3.93%. Apart from the Hungarian,
Ukrainian and Moldovan markets, elsewhere there was trend of interest rate increases that had a positive
impact on both NII and NIMs. In 2023 as a whole, the Bulgarian, Slovenian, Serbian, Croatian, Montenegrin,
Albanian and Ukrainian NIMs all improved y-o-y, whereas in other markets they dropped, though by different
magnitude. In Hungary, the y-o-y 13 bps decline was induced by the changes in the mandatory reserve
requirement and the balance sheet structure: as a result of acquisitions, on the assets side the weight of
non-interest bearing subsidiary investments increased, while on the liability side the portion of MREL -eligible
bonds grew at the expense of household deposits.
The amount of the annual operating expenses increased by 22% y-o-y, the high, though declining inflation
had its negative impact on all cost items. The consolidated cost-to-income ratio improved further and
reached 43.3% (-4.3 pps y-o-y). Without acquisitions the FX-adjusted operating expenses increased by 17%
y-o-y.
that,
The amount of consolidated total risk costs amounted to -HUF 38.5 billion, less than a quarter of the balance
booked in 2022; without the impact of acquisitions the total risk cost showed a po sitive balance of
HUF 20 billion. Within
to
-HUF 35 billion (2022: -HUF 135 billion). The annual risk cost rate moderated to 16 bps (-56 bps y-o-y), bulk
of that was related to impairments in Uzbekistan.
The quality of the consolidated credit portfolio remained stable with the major credit quality indicators
shaping favourably. The Stage 3 ratio under IFRS 9 comprised 4.3% of the gross loans at the end of 4Q
2023, underpinning a 0.6 pp y-o-y decrease. The own coverage ratio of Stage 3 exposures was close to
61% at the end of 2023.
losses amounted
impairment on
the provisions
loan
for
In case of Ipoteka Bank problem loans concentrated in three segments: in a broader sense agriculture, but
also in cotton and textile industries. Within agriculture fishery, green house cultivation and hydro cultures,
but also the cotton industry were behind the badwill adjustment. The reasons which caused the badwill
adjustment and the increase of the non-performing exposures emerged before the acquisition, but their
effects materialized only in a later stage. The Risk Division of Ipoteka Bank, including the unit responsible
for corporate clients has been reorganized during the summer of 2023. Also, the realignment of the activity
in connection with loan restructurings, delinquent exposures and debt collection is in progress. Parallel to
this, centralization of the branch activities is a priority, too. This reorganization process at Ipoteka Bank
receives great attention from the management both on local and parent bank levels.
The FX-adjusted consolidated performing (Stage 1+2) loan volumes got close to HUF 21,500 billion by
year-end. In 2023 the loan portfolio grew by 6% y-o-y organically (FX-adjusted).
As for individual Group members, the Russian, Bulgarian and Croatian operations demonstrated the largest
FX-adjusted volume expansion with 26%, 20% and 8% y-o-y growth. The biggest drop was suffered by the
Ukrainian subsidiary (-22%y-o-y).
FX-adjusted deposits on a consolidated level got close to HUF 29,500 billion. The consolidated net
loan/(deposit + retail bond) ratio moderated to 72%.
In 2023 OTP Bank issued altogether EUR 2 billion MREL-eligible bonds of which around EUR 1.7 billion
through public deals in forms of Tier 2 and Senior Preferred bonds. Besides, the Bank also utilized private
placement and bilateral loan facilities with EUR 185 million Senior Non-Preferred and EUR 110 million Senior
Preferred bonds. As a result, the actual MREL ratio for the OTP’s resolution group comfortably exceeded
the mandatory minimum level of 23.96% set from 1 January 2024.
In the case of Ukraine and Russia OTP management applies a „going concern” approach, however in Russia
the management is still considering all strategic options, bearing in mind that any future solution should be
strictly within the framework and in accordance with applicable local and international regulations.
In 2H 2023 the Russian Central Bank approved twice a dividend payment by OTP’s Russian subsidiary with
a total amount of RUB 13.4 billion.
If the Russian entity was deconsolidated and the outstanding gross intragroup exposures were written off
as well, the effect for the consolidated CET1 ratio would be -11 bps, whereas in the Ukraine the negative
effect would be 2 bps.
INTEGRATED ANNUAL REPORT 2023
35
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
Consolidated capital adequacy ratio (in accordance with BASEL III)
At the end of 2023, the consolidated CET1 ratio under the prudential s cope of consolidation according to
IFRS was 16.6% . This equals to the Tier 1 ratio. Consolidated CAR increased to 18.9%.
At the end of 2023, the effective regulatory minimum requirement for the consolidated Tier 1 capital
adequacy ratio was 11.5% which also incorporated the effective SREP rate, whereas the minimum CET1
requirement was 9.6%.
The components of the capital requirements were shaped by the following recent changes:
• The SREP rate for 2023 was 125%, inducing an additional 2% capital requirement i n terms of the
consolidated CAR ratio. According to the information of NBH the SREP rate was reduced to 120%
effective from 1 January 2024, as a result the additional capital requirement moderated to 1.6%.
• 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. The gradual rebuilding started on 1 January 2022, its level was 1% in 2023 and
on 1 January 2024 it will reach the original 2%.
• The effective rate of the countercyclical capital buffer in Bulgaria is 2%, in Croatia and Romania 1%, and
0.5% in Slovenia, respectively. Accordingly, on Group level the countercyclical capital buffer was 0.5% as
of 31 December 2023. In Hungary the currently effective countercyclical capital buffer is 0%, however from
1 July 2024 NBH will introduce a 50 bps buffer requirement. With such change taking effect locally, on
consolidated level the countercyclical capital buffer is expected to increase to 0.7% by the end of 2024.
MREL adequacy
As a result of MREL-eligible issuances completed in 2023 by 4Q 2023 OTP Group reached an MREL
adequacy ratio of 25.1% versus the minimum mandatory requirement of 23.9 6% effective from 1 January
2024.
Credit rating, shareholder structure
In 2023 the effective credit ratings were as follows:
• OTP Bank’s long-term issuer credit rating by S&P Global is ꞌBBB-ꞌ, the outlook is stable; the credit rating
of the dated Tier 2 instrument is ꞌBBꞌ;
•
the dated subordinated FX debt rating by Moody’s was downgraded from ‘Ba1’ to ꞌBa2ꞌ in February, while
the Senior Preferred bond rating is ꞌBaa3ꞌ. OTP Mortgage Bank’s long term issuer rating is ꞌBaa3ꞌ, whereas
the mortgage bond rating is ꞌA1ꞌ. The long-term FX deposit rating of OTP Bank Plc. remained unchanged
at ꞌBaa1ꞌ. The outlook is stable for all ratings;
• OTP Bank Plc’ issuer rating at Scope Ratings is ꞌBBB+ꞌ and the subordinated debt rating ꞌBB+ꞌ,
respectively; the outlook was changed from negative to stable in November 2023;
•
in April the Chinese Lianhe Credit Rating Co. gave ꞌAAAꞌ Long-Term Issuer Credit Rating (China national
scale) for OTP Bank Plc’s, the outlook is stable.
Regarding the ownership structure of the Bank, on 31 December 2023 the following investors had more than
5% influence (voting rights) in the Company: MOL (the Hungarian Oil and Gas Company, 8.59%), and
Groupama Group (5.10%).
INTEGRATED ANNUAL REPORT 2023
36
OTP BANK
BUSINESS REPORT 2023 (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 20 February 2024.
Hungary
• On 23 January 2024 OTP Bank announced that notes were issued with a value date of 31 January 2024,
in the aggregate nominal amount of EUR 600 million. The 5 years, Non-Call 4 years Senior Preferred
Notes were priced on 23 January 2024.
• On 26 January 2024 Scope Ratings affirmed Hungary's long-term local- and foreign-currency issuer and
senior unsecured debt ratings at ‘BBB’ with stable outlook.
• On 29 January 2024 the Ministry for National Economy announced that following discussions between the
Government and the Banking Association, based on the banks' voluntary commitment, from 1 February to
1 May 2024, the interest margin above BUBOR rate for newly contracted Hungarian Forint-based,
variable-rate corporate loan contracts (regardless of the purpose of the loan) will be 0%, and the margin
will remain at 0% for 6 months from the date of disbursement of the loan, after which it may return to the
normal level. At the same time, the Government indicated that the rate cap on outstanding variable rate
MSE loans, which expires on 1 April 2024 according to the current legislation, will not be further extended.
• On 30 January 2024 the National Bank of Hungary cut its key policy rate by 75 bps to 10.0%.
• On 2 February 2024 OTP Bank announced that it decided to terminate the project aiming at establishing
a consumer finance joint venture company with its partners in China with a 15%shareholding, as the
condition precedents were not fulfilled until the pertaining contractual deadlines.
• On 9 February 2024 OTP Bank announced that it concluded a share sale and purchase agreement to sell
its directly and indirectly owned 100% shareholding in OTP Bank Romania S.A. to Banca Transilvania S.A.
(‘BT’). OTP Group is also selling its 100% shareholdings in its other Romanian subsidiaries, OTP Leasing
Romania IFN S.A. and OTP Asset Management S.A.I. S.A. to BT under the transaction. The selling price
is EUR 347.5 million which is smaller than the net asset value of the to be sold subsidiaries recognized in
the consolidated accounts, accordingly the transaction resulted in a negative P&L impact of
HUF 59.5 billion (after tax) on consolidated level, booked in 4Q 2023. As a result of the transaction, at the
time of the closing of the deal the consolidated capital adequacy ratio is expected to improve by 52 bps.
The financial closing of the transaction is expected in 2024 subject to the necessary regulatory approvals.
• On 12 February 2024 OTP Bank received a single permission from the Hungarian National Bank for the
repurchase of treasury shares, accordingly the Bank is entitled to repurchase its own shares in the amount
of HUF 60 billion until 31 December 2024. The total amount specified in the permission shall immediately
be deducted from the own funds in accordance with the law.
Moldova
• On 4 February 2024 the central bank cut the base rate by 50 bps to 4.25%.
INTEGRATED ANNUAL REPORT 2023
37
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
CONSOLIDATED PROFIT AFTER TAX BREAKDOWN BY SUBSIDIARIES (IFRS)5
Methodological note: starting from 2023 the segmentation of the Hungarian operation has been changed: in contrast to the
previous practice, starting from 2023 Corporate Centre was no longer carved out of the OTP Core segment. In the affected
tables of this report, the 2022 base periods were presented both under the old and the new segment definitions. The
q-o-q and y-o-y changes presented in the affected tables are calculated from the restated figures. For details, see chapter
‘Methodological note: change in the segmentation of OTP Core and Corporate Centre’ in the ‘Supplementary Data’ section.
Consolidated profit after tax
Adjustments (total)
Consolidated adjusted profit after tax
Banks total1
OTP Core (Hungary)2
DSK Group (Bulgaria)3
OTP Bank Slovenia4
OBH (Croatia)5
OTP Bank Serbia6
OTP Bank Albania7
CKB Group (Montenegro)8
Ipoteka Bank (Uzbekistan)9
OTP Bank Russia10
OTP Bank Ukraine11
OTP Bank Romania12
OTP Bank Moldova
Leasing
Merkantil Group (Hungary)13
Asset Management
OTP Asset Management (Hungary)
Foreign Asset Management Companies14
Other Hungarian Subsidiaries
Other Foreign Subsidiaries15
Corporate Centre16
Eliminations
Profit after tax of the Hungarian operation17
Adjusted profit after tax of the Hungarian operation17
Profit after tax of the Foreign operation18
Adjusted profit after tax of the Foreign operation18
Share of Hungarian contribution to the adjusted profit after tax
Share of Foreign contribution to the adjusted profit after tax
2022
as prevoiusly reported
HUF million
347,081
(245,466)
592,547
535,717
253,232
119,885
23,860
42,801
36,873
10,175
9,791
-
42,548
(15,922)
3,071
9,403
10,971
10,971
9,621
9,357
263
27,645
(141)
2,968
5,767
167,057
303,873
180,024
288,674
51%
49%
2022
restated
HUF million
347,081
(245,466)
592,547
538,685
256,200
119,885
23,860
42,801
36,873
10,175
9,791
-
42,548
(15,922)
3,071
9,403
10,971
10,971
9,621
9,357
263
27,645
(141)
-
5,767
167,057
303,873
180,024
288,674
51%
49%
2023
HUF million
Change
%/pps
990,459
(18,123)
1,008,583
946,279
302,935
201,992
128,730
53,959
68,026
15,032
21,814
(21,857)
95,665
45,184
20,099
14,700
10,267
10,267
19,861
19,673
188
30,570
986
-
620
519,025
365,979
471,434
642,604
36%
64%
185
(93)
70
76
18
68
440
26
84
48
123
125
(384)
554
56
(6)
(6)
106
110
(29)
11
(797)
(89)
211
20
162
123
(15)
15
5 Belonging footnotes are in the Supplementary data section of the Report.
INTEGRATED ANNUAL REPORT 2023
38
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Main components of the adjusted Statement of recognized income
Consolidated profit after tax
Adjustments (total, after corporate income tax)
Dividends and net cash transfers (after tax)
Goodwill/investment impairment charges (after tax)
Special tax on financial institutions (after tax)
Expected one-off negative effect of the debt repayment moratorium in Hungary
(after tax)
Expected one-off effect of the interest rate cap for certain loans in Hungary and
Serbia (after tax)
Effect of the winding up of Sberbank Hungary (after tax)
Effect of acquisitions (after tax)
Result of the treasury share swap agreement (after tax)
Impairments on Russian government bonds at OTP Core and DSK Bank booked
from 2022 (after tax)
Consolidated adjusted profit after tax
Profit before tax
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 losses
Other provision
Corporate taxes
INDICATORS
ROE (from profit after tax)
ROE (from adjusted profit after tax)
ROA (from adjusted profit after tax)
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 losses-to-average gross loans ratio
Total risk cost-to-asset ratio
Effective tax rate
Non-interest income/total income
EPS base (HUF) (from profit after tax)
EPS diluted (HUF) (from profit after tax)
EPS base (HUF) (from adjusted profit after tax)
EPS diluted (HUF) (from adjusted profit after tax)
Comprehensive Income Statement
Consolidated profit after tax
Fair value changes of financial instruments measured at fair value through other
comprehensive income
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
2022
HUF million
347,081
(245,466)
1,927
(59,254)
(91,353)
2023
HUF million
990,459
(18,123)
(1,911)
(3,919)
(62,551)
(2,473)
0
Change
%
185
(93)
(93)
(32)
(36,585)
(32,898)
(10)
(10,389)
(15,594)
3,028
(34,775)
592,547
690,022
868,487
1,656,571
1,093,579
397,118
165,874
90,691
1,579
73,604
(788,084)
(396,304)
(84,663)
(307,117)
(178,465)
(135,231)
(43,234)
(97,475)
2022
11.0%
18.8%
1.9%
2.78%
5.31%
3.51%
1.27%
0.53%
2.53%
47.6%
0.73%
0.57%
14.1%
34%
1,289
1,288
2,204
2,204
2022
347,081
10,389
64,886
10,680
(2,799)
1,008,583
1,222,328
1,260,850
2,224,584
1,459,694
478,146
286,745
123,314
1,994
161,436
(963,734)
(503,959)
(95,561)
(364,215)
(38,521)
(34,781)
(3,741)
(213,746)
2023
27.2%
27.7%
2.7%
3.39%
5.99%
3.93%
1.29%
0.77%
2.59%
43.3%
0.16%
0.10%
17.5%
34%
3,695
3,693
3,769
3,767
2023
990,459
(119,377)
78,419
179,622
1,016
408,342
407,695
647
2022
HUF
391
390
373
(200,928)
(400)
864,843
863,714
1,129
2023
HUF
382
393
353
253
(92)
70
77
45
34
33
20
73
36
26
119
22
27
13
19
(78)
(74)
(91)
119
%/pps
16.2
9.0
0.8
0.61
0.67
0.42
0.01
0.24
0.07
(4.3)
(0.56)
(0.47)
3.4
0
187
187
71
71
%
185
112
112
74
Change
%
(2)
1
(5)
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.
INTEGRATED ANNUAL REPORT 2023
39
OTP BANK
BUSINESS REPORT 2023 (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 securit ies
portfolio on Group level exceeded EUR 5.5 billion).
Total liquidity reserves of OTP Bank remained steadily and substantially above the safety level. As at
31 December 2023 the gross liquidity buffer was around EUR 9.8 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 at 31 December 2023 OTP Group’s consolidated liquidity coverage (LCR) ratio was 246% (4Q 2022:
172%) while NSFR compliance has remained comfortable (4Q 2023: 153%).
The volume of issued securities more than doubled on a consolidated basis y-o-y. The increase was driven
both by bond issuances of OTP Bank and by the completed acquisitions during the period. In order to
optimize capital structure and meet MREL (Minimum Requirements for Own Funds and Eligible Liabilities)
requirements, OTP Bank issued bonds in different currencies on the international capital markets several
times in 2023. In February USD 650 million Tier 2 notes were issued, while OTP Bank sold Senior Preferred
bonds on three occasions: USD 500 million in May, EUR 650 million and RON 170 million in October. Senior
Non-Preferred bonds have also been issued: EUR 110 million in June and EUR 75 million in Dec ember. The
net outstanding amount of retail bonds issued by OTP Bank in the domestic capital market increased by
HUF 165 billion in 2023. On the other hand, bonds issued by Nova KBM and Ipoteka Bank in the notional
amount of HUF 485 billion equivalent were consolidated as part of the completed acquisitions. In June, Nova
KBM issued Senior Preferred bonds on the international capital markets in the amount of EUR 400 million.
…and kept its interest-rate risk exposures low
Due to the liabilities, 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.
Besides the interest rate cap measures introduced in 2022, further regulatory/governmental measures
distorted the Bank’s balance sheet structure in 2023, therefore the stock of HUF denominated variable interest
rate assets decreased further resulting in a change in the HUF interest rate risk position that can be considered
nearly closed, currently. Due to the upcoming maturities of the long-term HUF liquid asset portfolio and the
operating profit accumulation the stock of variable assets is expected to increase as time passes. Because of
the surplus of variable interest rate assets compared to variable interest rate liabilities the net interest income
of the EUR (and BGN) denominated portfolio correlates with the rise in money market interest rates: the loans
get repriced typically in 3-6 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 position of the Bank. The increase in the interest environment did not cause
significant repricing in case of deposits, consequently, and due to the increased nominal yield levels, the Bank
Group decided to change its liquid asset placement practice in the second half of the year through increasing
the duration of liquid assets, and furthermore it entered into fixed interest rate receiver swap positions, to
defend the Bank Group’s net interest income from the negative effects of potential decrease in the EUR yields.
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 47.7 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 order to mitigate the FX rate sensitivity of the consolidated equity, OTP Bank Plc. has opened a short euro
open FX position; the revaluation result of which is recognised directly against equity.
INTEGRATED ANNUAL REPORT 2023
40
OTP BANK
BUSINESS REPORT 2023 (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
Securities 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 deposits2
Liabilities from issued securities
o/w Retail bonds
Liabilities from issued securities without retail bonds
Other liabilities
Subordinated bonds and loans
Total shareholders' equity
Indicators
Loan/deposit ratio (FX-adjusted1)
Net loan/(deposit + retail bond) ratio (FX-adjusted1)
Stage 1 loan volume under IFRS 9
Stage 1 loans under IFRS 9/gross customer loans
Own coverage of Stage 1 loans under IFRS 9
Stage 2 loan volume under IFRS 9
Stage 2 loans under IFRS 9/gross customer loans
Own coverage of Stage 2 loans under IFRS 9
Stage 3 loan volume under IFRS 9
Stage 3 loans under IFRS 9/gross customer loans
Own coverage of Stage 3 loans under IFRS 9
2022
HUF million
32,804,210
4,221,392
1,351,081
436,387
1,739,603
18,640,624
17,929,314
19,643,558
18,858,498
17,946,407
9,296,956
4,657,067
3,845,614
794,275
7,403,482
1,245,969
(1,002,933)
(929,184)
73,849
4,891,938
738,105
68,319
669,786
711,230
32,804,210
2023
HUF million
39,609,144
7,324,636
1,575,145
290,975
1,640,891
21,447,380
21,447,380
22,466,415
22,466,415
21,496,534
11,650,463
5,808,199
4,853,359
988,906
8,498,051
1,348,020
(1,019,035)
(1,019,035)
96,346
5,475,701
878,949
66,932
812,017
879,121
39,609,144
1,517,349
2,013,333
25,188,805
24,320,092
15,760,368
13,166,546
2,593,823
8,529,476
30,247
870,682
35,766
834,916
1,603,078
301,984
3,322,312
2022
78%
74%
16,387,792
83.4%
1.0%
2,286,597
11.6%
10.7%
969,169
4.9%
61.0%
29,428,284
29,428,284
19,322,905
16,090,066
3,232,839
10,105,378
0
2,095,548
201,131
1,894,418
1,414,790
562,396
4,094,793
2023
76%
72%
18,570,222
82.7%
0.9%
2,926,312
13.0%
9.2%
969,881
4.3%
60.8%
Consolidated capital adequacy - Basel3, IFRS,
according to prudential scope of consolidation
2022
2023
Change
%
21
74
17
(33)
(6)
15
20
14
19
20
25
25
26
25
15
8
2
10
30
12
19
(2)
21
24
21
33
17
21
23
22
25
18
(100)
141
462
127
(12)
86
23
%/pps
(1)
(1)
13
(0.8)
(0.1)
28
1.4
(1.6)
0
(0.6)
(0.2)
%/pps
Tier2 Capital
o/w Tier1 Capital
o/w Common Equity Tier 1 capital
Consolidated risk weighted assets (RWA) (Credit&Market&Operational risk)
Capital adequacy ratio
Tier1 ratio
Common Equity Tier 1 ('CET1') capital ratio
Own funds
1.1
0.2
0.2
22
17
17
84
15
14
26
Change
%
(4)
HUF/EUR
1
HUF/CHF
HUF/USD
(8)
1 For the FX-adjustment, the closing cross currency rates for the current period were used in order to calculate the HUF equivalent of loan and deposit
volumes in the base periods.
2 Starting from 2023, the accrued interest payable related to customer deposits is presented on the deposits from customers line.
18.9%
16.6%
16.6%
4,475,380
3,945,570
3,945,570
529,810
23,700,282
21,275,002
2,425,281
2023
HUF
383
412
346
17.8%
16.4%
16.4%
3,671,104
3,383,161
3,383,161
287,944
20,607,706
18,679,480
1,928,226
2022
HUF
400
407
376
o/w RWA (Credit risk)
RWA (Market & Operational risk)
Closing exchange rate of the HUF
INTEGRATED ANNUAL REPORT 2023
41
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
OTP BANK’S HUNGARIAN CORE BUSINESS
Methodological note: starting from 2023 the segmentation of the Hungarian operation has been changed: in contrast to the
previous practice, starting from 2023 Corporate Centre was no longer carved out of the OTP Core segment. In the affected
tables of this report, the 2022 base periods were presented both under the old and the new segment definitions. The q-o-
q and y-o-y changes presented in the affected tables are calculated from the restated figures. For details, see chapter
‘Methodological note: change in the segmentation of OTP Core and Corporate Centre’ in the ‘Supplementary Data’ section.
Starting from 2023 OTP Ecosystem Ltd. was eliminated from OTP Core.
OTP Core Statement of recognized income:
Main components of the Statement of recognised income
Profit after tax without received dividend
Dividend received from subsidiaries
Profit after tax
Adjustments (total, after tax)
Adjusted profit after tax
Profit before tax
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 losses
Other provisions
Corporate income tax
Indicators
2023 Change
HUF million
313,143
187,726
500,869
197,934
302,935
366,502
341,049
751,953
432,651
197,104
122,198
(410,904)
25,452
15,370
10,083
(63,566)
2023
%
935
74
263
18
22
15
17
4
11
154
19
954
(53)
45
pps
2022
as previously reported
HUF million
27,274
107,907
135,181
(118,051)
253,232
296,672
294,257
637,469
412,611
176,830
48,028
(343,212)
2,415
32,850
(30,435)
(43,440)
2022
as previously reported
12.6%
1.6%
1.8%
3.97%
2.57%
1.10%
0.30%
2.1%
53.8%
(0.55%)
14.6%
2022
restated
HUF million
30,242
107,907
138,149
(118,051)
256,200
300,094
297,679
642,520
417,662
176,830
48,028
(344,841)
2,415
32,850
(30,435)
(43,894)
2022
restated
12.7%
1.5%
1.7%
3.68%
2.39%
1.01%
0.27%
2.0%
53.7%
(0.55%)
14.6%
ROE (adjusted)
ROA (adjusted)
Operating profit margin
Total income margin
Net interest margin
Net fee and commission margin
Net other non-interest income margin
1.5
0.1
0.1
0.26
(0.13)
0.02
0.36
0.2
1.0
0.31
2.7
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.
Provision for impairment on loan losses / average gross loans1
Effective tax rate
14.2%
1.6%
1.8%
3.94%
2.26%
1.03%
0.64%
2.2%
54.6%
(0.23%)
17.3%
Operating costs to total assets ratio
Cost/income ratio
INTEGRATED ANNUAL REPORT 2023
42
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
Main components of OTP Core’s Statement of financial position:
Main components of balance sheet
(closing balances)
Total Assets
Financial assets1 (net)
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)
Tangible and intangible assets (net)
Shares and equity investments (net)
Other assets (net)
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
Subordinated bonds and loans
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
Market Share
Loans
Deposits
Total Assets
Performance Indicators
2022
as previously
reported
2022
2023 Change
restated
%
7,438,066
6,278,620
6,213,791
6,528,001
6,460,305
6,139,203
3,482,800
1,656,950
1,306,916
518,933
2,656,402
(249,381)
(246,514)
222,587
1,447,924
371,094
15,758,292 17,596,229 18,459,423
9,630,766
9,270,006
6,329,293
6,278,620
6,329,293
6,213,791
6,597,968
6,528,001
6,597,968
6,460,305
6,335,682
6,139,203
3,752,574
3,482,800
1,722,826
1,656,950
1,515,264
1,306,916
514,485
518,933
2,583,108
2,656,402
(268,675)
(249,381)
(268,675)
(246,514)
296,425
222,587
1,890,681
1,447,924
312,258
377,091
11,246,795 11,246,795 10,981,387
11,098,246 11,098,246 10,981,387
6,339,542
6,416,859
4,927,751
5,012,354
201,131
35,766
1,411,791
1,404,504
4,641,844
4,681,387
2,326,311
2,313,832
1,675,963
949,421
507,277
294,186
2,016,019
2,371,964
4Q 2022
5
4
1
2
1
2
3
8
4
16
(1)
(3)
8
9
33
31
(17)
(2)
(1)
(1)
(2)
462
1
(1)
1
77
72
18
4Q 2023 %/pps
restated
5,457,140
83.6%
0.8%
747,905
11.5%
8.6%
322,956
4.9%
43.2%
4Q 2022
restated
26.8%
29.1%
27.6%
4Q 2022
restated
5,312,525
80.5%
0.8%
1,023,157
15.5%
7.8%
262,285
4.0%
55.9%
4Q 2023
26.2%
28.3%
28.3%
4Q 2023
(3)
(3.1)
0.0
37
4.1
(0.8)
(19)
(1.0)
12.7
pps
(0.5)
(0.8)
0.7
pps
6,416,859
5,012,354
35,766
1,404,504
4,681,387
1,251,653
471,773
0
2,016,019
4Q 2022
as previously
reported
5,457,140
83.6%
0.8%
747,905
11.5%
8.6%
322,956
4.9%
43.2%
4Q 2022
as previously
reported
26.8%
29.1%
27.6%
4Q 2022
as previously
reported
56%
12.8%
7.8x
19.2%
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)
1 Cash, amounts due from banks and balances with the National Bank of Hungary; placements with other banks; repo receivables; securities and other
financial assets.
58%
12.8%
7.8x
27.6%
56%
11.5%
8.7x
19.2%
2
1.4
(0.9x)
8.5
22.5%
16.3%
16.3%
6.2
In 2023, OTP Core generated HUF 313 billion profit after tax without dividends from subsidiaries, as
opposed to the HUF 30 billion loss in the base period.
This improvement partly stemmed from the much better balance of adjustment items: against the
impairments on subsidiary investments in 2022, in 2023 impairments were reversed, and in contrast to the
base period, Russian bond impairments didn’t weigh on the 2023 results. Also, special banking taxes also
moderated
y-o-y. On the other hand, the adjusted profit after tax also improved last year, by 18%.
INTEGRATED ANNUAL REPORT 2023
43
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
The annual operating profit went up by 15%. Within total income, net interest income grew by 4%, or
HUF 15 billion. Regarding the key factors behind this change, the altogether negative effect of regulatory
changes and technicalities was counterbalanced by higher rate environment and business -driven factors:
• regulatory changes and technical factors, in total: -HUF 85 billion, of which:
o changes to the mandatory reserve rules6 entailed HUF 45 billion negative y-o-y NII effect;
o the issuance of MREL eligible instruments caused HUF 18 billion NII decline y-o-y;
o due to new acquisitions, the weight of non-interest-bearing subsidiary investments increased on the
asset side at the expense of interest-bearing assets, resulting in HUF 52 billion lower NII; on the
other hand, the strategic short EUR position opened in February 2023 with an aim of hedging
investments into the Eurozone supported NII by HUF 30 billion.
• The impact of higher rate environment, business-driven and other factors, in total: +HUF 101 billion, of
which:
o given the Bank’s interest rate position, the increase in the annual average key policy rate of the
central bank reduced NII by HUF 8 billion;
o the erosion of customer deposits resulted in HUF 31 billion lower net interest income y-o-y;
o loans granted in 2023 generated HUF 50 billion additional interest revenues;
o in 2023 the reinvestment of lower yielding government securities into higher yielding assets improved
the y-o-y NII dynamics by HUF 44 billion;
o other effects: +HUF 46 billion in total, driven by, among others, increasing total assets, and the
retroactive adjustment of subsidized housing loans’ interest subsidies related to previous years.
The annual average total assets went up by 9%, while the annual net interest margin narrowed by 13 bps.
Annual net fees and commissions rose by 11% last year, mainly supported by stronger fees on deposits,
transactions, cards and higher securities commissions, but lending-related fee income declined.
Twelve-month other income jumped 2.5 times, predominantly because of the positive fair value adjustment
of subsidized housing loans and baby loans measured at fair value booked in 2023 (2022: -HUF 8 billion,
2023: +HUF 87 billion). This was caused by the lower discount rates used to determine the present value of
future cash flows, as a result of the shrinking yield curve.
Annual operating expenses grew by 19% in the high-inflation environment. Within that, personnel expenses
increased by 30%, mostly because of the wage increases in the second half of 2022 and from March 2023,
and also due to the 4% growth in the average number of employees. Amortization increased by 10%. Other
general expenses grew by 10%, driven by, among others, higher IT, utility, and real estate-related costs, as
well as by higher supervisory charges (National Deposit Insurance Fund and Investor Protection Fund
contributions were hiked effective from end-2022).
In 2023, positive total risk costs amounted to HUF 25 billion; within that, the credit-related and the other risk
cost lines also printed positive amounts. The positive amount of provision for impairment on loan losses was
shaped by the releases in the second half-year owing to the improvement in macroeconomic expectations,
as well as by the release of provisions in 2Q in relation to customers who performed in accordance with their
contracts after leaving the debt repayment moratorium, which expired at the end of 2022. The other risk
costs line was largely shaped by the release of provision for Hungarian government securities.
Overall, loan quality trends remained favourable: the Stage 3 ratio sank by 1 pp y-o-y, to 4.0%, in part
because of customers who left the moratorium and performed were moved into a lower risk category. The
Stage 2 ratio rose by 4.1 pps y-o-y, partly because a more advanced Stage 2 classification and impairment
methodology was introduced from 2Q. The own provision coverage ratio of Stage 3 loans improved by
12.7 ps y-o-y, while the cumulative own provision coverage ratio of the Stage 1+2 portfolio rose by 0.2 pp
y-o-y, to 1.9%.
Regarding balance sheet developments, OTP Core’s total assets grew by 5% y-o-y.
The increase in performing (Stage 1+2) loans markedly slowed: the FX-adjusted dynamics was 3% in 2023,
following a 15% growth rate in 2022.
In 2023, the retail segment was the driver of growth: consumer loans surged by an impressive 16%, fuelled
by sustained increase in both cash loans and baby loans.
6 Starting from October 2022, the required reserve ratio rose from 1% to 5%, and then, starting from April 2023, from 5% to 10% , and the central bank
diverted the interest rate paid on reserves from the overnight deposit rate (18%), and paid the base rate ( 13%) on them from October 2022; starting from
April 2023, the central bank did not pay interest on 25% of the mandatory minimum reserve requirement. Thus the effective int erest paid on required
reserves dropped to 9.75% in April 2023. Starting from July 2023, 15% of the reserve requirement may be met by longer-term deposits at the central
bank (paying the O/N interest rate), and the central bank does not pay interest on 25% of the remaining 85% of the minimum re quirement.
INTEGRATED ANNUAL REPORT 2023
44
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
Performing mortgage loans grew by 4% y-o-y. In 2023 applications dropped by a third y-o-y, but the
intra-year trend was positive: demand for mortgages rocked bottom in the first quarter, but compared to that,
applications more than tripled in 4Q.
Performing corporate volumes shrank by 2% y-o-y; within that, MSE loans declined by 1% and corporate
volumes contracted by 3%. However, the Széchenyi Card MAX+ and the Baross Gábor Loan Programme
generated significant new loan placements: in 2023, OTP signed loan agreem ents in the amount of
HUF 494 billion under the Széchenyi Card MAX+ scheme, while the Baross Gábor Loan Programme
reached HUF 202 billion loan applications by the end of 2023.
Deposits from customers (including retail bonds) eroded by an FX-adjusted 1% y-o-y. Retail deposits
(together with retail bonds) dropped by 2% y-o-y. Overall, corporate deposits remained stable y-o-y.
As a result of the Bank’s active presence on capital markets, the volume of issued securities (without retail
bonds) jumped by 77% y-o-y, while subordinated debt surged by 72%.
INTEGRATED ANNUAL REPORT 2023
45
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
OTP FUND MANAGEMENT (HUNGARY)
Changes in assets under management and financial performance of OTP Fund Management:
Main components of P&L account
in HUF million
Adjusted profit after tax
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 in HUF million
Total assets
Total shareholders' equity
Asset under management
in HUF billion
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
money market
absolute return fund
equity
mixed
commodity market
guaranteed
2022
HUF million
9,357
(1,234)
10,592
10,678
14,585
14,094
491
(3,907)
(86)
2022
27,718
16,993
2022
HUF billion
1,782
1,388
393
1,869
665
287
288
296
285
49
0
2023
HUF million
19,673
(2,491)
22,165
22,193
27,771
25,923
1,846
(5,578)
11
2023
39,461
28,741
2023
HUF billion
3,086
2,609
477
3,532
1,924
484
370
331
336
70
17
Change
%
110
102
109
108
90
84
276
43
%
42
69
%
73
88
21
89
190
69
29
12
18
45
1 The cumulative net asset value of investment funds and managed assets of OTP Fund Management, eliminating the volume of own i nvestment 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 2023, OTP Fund Management generated HUF 19.7 billion profit, twice as much as in the previous year.
In 2023 net fee and commission income jumped by 84%, in accordance with the dynamic growth of managed
assets. Besides, the average annual rate of fund management fee (1.25% in 2023) was 18 bps higher than
in the previous year.
Annual other income nearly quadrupled, thanks to the improving results of the securities in the Company’s
own books.
In 2023 operating expenses exceeded the previous year’s level by 43%. The rise in personnel costs
stemmed from the higher bonus payments, but salary hikes and higher headcount also played a role. Within
other expenses, the high inflationary environment was predominantly reflected in the elevated costs of
running real estates and vehicles, but marketing expenses and expert fees also grew.
In Hungary’s fund management market, the assets under management once again hit record high at the
end of December 2023: the high interest rate environment led to strong inflows and positive yields. These
conditions primarily supported the expansion of bond funds and money market funds.
In the case of OTP Fund Management, the assets of bond funds tripled y -o-y, thus it made up more than
half of the managed funds’ volumes at the end of the year. As to the remaining categories, money market
funds and absolute return funds benefited from the effect of positive yields and capital inflows, but the
weaker yield performance moderated equity funds’ volume growth.
Overall, the volume of funds managed by OTP Fund Management exceeded HUF 3,500 billion (+89%
y-o-y) at the end of December; thus it preserved its leader position (31.6%) in the securities funds market.
INTEGRATED ANNUAL REPORT 2023
46
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
MERKANTIL GROUP (HUNGARY)
Performance of Merkantil Group:
Main components of P&L account
Adjusted profit after tax
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 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 losses/average gross loans
Performance Indicators
ROA
ROE
Total income margin
Net interest margin
Operating costs / Average assets
Cost/income ratio
2022
HUF million
10,971
(1,645)
12,616
13,930
24,766
22,537
921
1,307
(10,836)
(1,314)
(1,068)
(246)
2023
HUF million
10,267
(1,683)
11,950
14,954
28,000
26,257
759
983
(13,046)
(3,004)
(2,800)
(203)
2022
948,735
532,054
530,372
516,303
3,145
130,664
382,494
(12,436)
(12,402)
6,151
6,151
3,713
2,438
852,738
57,591
2022
453,307
85.2%
0.4%
64,627
12.1%
4.5%
14,120
2.7%
53.1%
0.21%
2022
1.3%
19.1%
2.94%
2.68%
1.3%
43.8%
2023
930,761
590,510
590,510
576,217
2,259
150,495
423,463
(13,637)
(13,637)
5,028
5,028
2,838
2,190
839,730
61,237
2023
533,569
90.4%
0.8%
42,648
7.2%
7.0%
14,293
2.4%
44.1%
0.50%
2023
1.1%
17.4%
3.00%
2.81%
1.4%
46.6%
Change
%
(6)
2
(5)
7
13
17
(18)
(25)
20
129
162
(17)
%
(2)
11
11
12
(28)
15
11
10
10
(18)
(18)
(24)
(10)
(2)
6
%/pps
18
5.2
0.4
(34)
(4.9)
2.5
1
(0.2)
(9.0)
0.29
pps
(0.2)
(1.8)
0.06
0.13
0.1
2.8
In full year 2023, Merkantil Group posted HUF 10.3 billion adjusted after-tax profit, which brought its ROE
to 17.4%.
Operating profit grew by 7%, driven by a 13% surge in total income.
Full-year net interest income increased by 17%, supported by the extra interest income from the placeme nt
of liquid assets, and also because the average interest rate of the loan book increased year-on-year, thanks
to new loan placements at higher rates and the repricing of existing loans.
Full-year operating expenses grew by 20%, owing to base salary hikes and higher bonus payments, the
increase in IT, marketing, and consulting costs, as well as higher amortization.
The total risk costs line printed HUF 3 billion in 2023.
The ratio of Stage 1 loans increased by 5.2 pps, to 90.4% y-o-y, while the ratio of Stage 2 loans declined
comparably; the ratio of Stage 3 loans dropped by 0.2 pp, to 2.4% y-o-y. The Stage 1+2 portfolio’s cumulative
own provision coverage reached 1.3%, up from 1.0% seen at the end of 2022.
INTEGRATED ANNUAL REPORT 2023
47
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
FX-adjusted performing (Stage 1+2) loans grew by 12% y-o-y; within that, corporate loans expanded by
15%, while leasing exposures rose by 11%.
In 2023, the volume of newly disbursed loans surged by 13% y-o-y, including a 27% growth in new car loan
placements.
Credit demand benefited from the subsidized loan facilities: under the KAVOSZ Széchenyi Card programme,
since the beginning of the scheme customers have concluded subsidized loan agreements totalling
HUF 127 billion (including HUF 84 billion in 2022, and HUF 43 billion in 2023) with Merkantil Bank. Loan
agreements under the Baross Gábor programme amounted to HUF 18 billion at the end of December.
INTEGRATED ANNUAL REPORT 2023
48
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
IFRS REPORTS OF THE MAIN FOREIGN SUBSIDIARIES OF OTP BANK
DSK GROUP (BULGARIA)
Performance of DSK Group:
Main components of P&L account
Adjusted profit after tax
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 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 losses/average gross 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
2022
HUF million
119,885
(12,680)
132,565
142,383
230,834
145,461
68,755
16,618
(88,451)
(9,819)
(10,992)
1,173
2022
5,946,815
3,584,751
3,428,089
3,307,240
1,916,055
1,124,524
266,661
(154,361)
(147,621)
4,893,078
4,672,951
3,833,282
839,669
152,193
779,095
2022
3,177,291
88.6%
1.1%
281,096
7.8%
16.0%
126,364
3.5%
60.2%
0.33%
2022
2.3%
16.7%
4.41%
2.78%
1.69%
38.3%
70%
2022
HUF
204.6
200.1
2023
HUF million
201,992
(21,740)
223,732
217,239
315,981
226,693
72,366
16,921
(98,742)
6,493
2,779
3,714
2023
6,456,668
4,066,527
4,066,527
3,970,390
2,248,406
1,415,644
306,339
(125,806)
(125,806)
5,165,700
5,165,700
4,343,036
822,664
249,178
890,188
2023
3,483,290
85.7%
0.7%
487,099
12.0%
9.3%
96,137
2.4%
57.1%
(0.07%)
2023
3.3%
25.4%
5.24%
3.76%
1.64%
31.2%
76%
2023
HUF
195.7
195.3
Change
%
68
71
69
53
37
56
5
2
12
217
%
9
13
19
20
17
26
15
(18)
(15)
6
11
13
(2)
64
14
%/pps
10
(3.0)
(0.3)
73
4.1
(6.6)
(24)
(1.2)
(3.1)
(0.40)
pps
1.1
8.8
0.83
0.98
(0.05)
(7.1)
6
Change
%
(4)
(2)
In 2023, DSK Group posted excellent results: its adjusted profit after tax jumped by 68%, exceeding
HUF 200 billion, its ROE surpassed 25% with net interest margin and cost efficiency indicators both
improving. The FX-adjusted performing loan book grew by 20%, an outstanding rate amongst OTP Group
members, thus DSK preserved its market leader position in the Bulgarian credit market.
The main constituents of the full-year profit improvement were net interest income growing by more than
one and a half times and risk costs turning into positive.
The increase in net interest income was supported by both dynamic volume growth and widening margin;
the latter largely stemmed from the gradual repricing of corporate and leasing exposures priced on the
INTEGRATED ANNUAL REPORT 2023
49
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
EURIBOR reference rates, in the wake of the rising interest rate environment. However, the increase in the
mandatory reserve requirement rate from 10% to 12% in July 2023 had an adverse effect, as the central
bank does not pay interest on that stock.
Annual net fees and commissions rose by 5%, and other income grew by 2% last year.
In 2023 operating expenses grew by 12%, while the average rate of inflation was 9.5% in 2023, and nominal
wages may have grown by more than 13% in the economy. DSK’s personnel expenses grew 14%, owing to
the implemented wage increases and the higher bonus payments, while the annual average number of
employees dropped by 7%, predominantly because DSK Bank sold its subsidiary providing security and
ATM services. The increase in other expenses can be partly attributable to higher consulting and marketing
expenses, as well as to supervisory fees. The annual cost/income ratio improved by 7 pps, to near 31%,
which is one of the best among Group members.
In full year 2023 the total risk cost line printed HUF 6.5 billion positive amount, as opposed to -HUF 9.8
billion in the base period. Within that, the positive sign of credit-related risk costs was predominantly because
of the release owing to the improving macro expectations. The positive amount of other risk costs was due
to the contraction in repo volumes and to the release of provisions for interbank exposures.
The ratio of Stage 3 loans dropped by 1.2 pps y-o-y, to 2.4%. However, the ratio of Stage 2 loans increased
by 4.1 pps y-o-y, to 12%, largely because a more advanced Stage 2 classification and impairment
methodology was introduced in the fourth quarter. As a result, HUF 170 billion worth of loans were shifted
from Stage 1 into Stage 2 category.
DSK Bank’s performing (Stage 1+2) loans grew by 20% y-o-y (FX-adjusted), the second strongest pace
within OTP Group. All segments posted robust performance: mortgage loans jumped by 23%, consumer
loans grew by 13%, corporate and MSE loans surged by 24%, while leasing exposures increased by 15%.
It is noteworthy that new mortgage loan placements jumped by almost 30% y-o-y, within that in 4Q almost
by two-thirds; in 2023 as a whole the placement of new cash loans grew 10% y-o-y, but surged in excess of
40% y-o-y in the fourth quarter.
The deposit book’s growth continued: the full-year volume growth was 11% (FX-adjusted). The net loan to
deposit ratio rose by 6 pps y-o-y, to 76%.
INTEGRATED ANNUAL REPORT 2023
50
OTP BANK
OTP BANK SLOVENIA
Performance of OTP Bank Slovenia:
Main components of P&L account
Adjusted profit after tax
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 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
Issued securities
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 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
BUSINESS REPORT 2023 (CONSOLIDATED)
2022
HUF million
23,860
(5,710)
29,570
24,046
51,403
33,688
15,416
2,299
(27,357)
5,523
7,048
(1,525)
2023
HUF million
128,730
(8,672)
137,402
140,717
223,315
171,703
46,028
5,584
(82,598)
(3,316)
(2,485)
(831)
2022
2023
1,790,944
1,204,641
1,152,296
1,138,715
528,839
431,826
178,050
(14,637)
(14,008)
1,466,625
1,402,728
1,008,169
394,560
68,172
0
32,025
194,843
2022
1,062,588
88.2%
0.2%
127,866
10.6%
2.4%
14,188
1.2%
68.4%
(0.61%)
5,831
0.5%
2022
1.5%
12.8%
3.25%
2.13%
1.73%
53.2%
81%
2022
HUF
400.3
391.3
5,892,803
2,796,313
2,796,313
2,752,055
1,342,421
1,220,889
188,745
(33,587)
(33,587)
4,583,072
4,583,072
3,580,837
1,002,235
131,375
335,400
63,167
669,622
2023
2,514,261
89.9%
0.3%
237,794
8.5%
3.4%
44,258
1.6%
41.4%
0.09%
15,871
0.6%
2023
2.5%
22.6%
4.31%
3.31%
1.59%
37.0%
60%
2023
HUF
382.8
381.9
Change
%
440
52
365
485
334
410
199
143
202
(46)
%
229
132
143
142
154
183
6
129
140
212
227
255
154
93
97
244
%/pps
137
1.7
0.1
86
(2.1)
0.9
212
0.4
(27.0)
0.71
172
0.1
pps
1.0
9.8
1.06
1.18
(0.14)
(16.2)
(21)
Change
%
(4)
(2)
The financial closure of the transaction related to the purchase of Nova KBM d.d. was completed on 6
February 2023. The balance sheet and P&L figures of the purchased bank have been included into OTP
Group’s consolidated figures since February 2023.
The Slovenian P&L account was adjusted for the one-off items directly related to the acquisition; these
corrections are shown at consolidated level, among adjustment items. The balance sheet components were
not adjusted for these effects.
In 2023, the combined performance of OTP Group’s Slovenian operation posted the second strongest
result among foreign subsidiary banks, following Bulgaria’s DSK. The HUF 129 billion profit after tax includes
INTEGRATED ANNUAL REPORT 2023
51
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
SKB’s 12-month (HUF 32.8 billion), and NKBM’s 11-month result. The 22.6% full-year ROE exceeded the
sector’s profitability.
The 37% cost/income ratio, which does not include synergy effects yet, is markedly below the Group
average. In 2023, total income margin (4.31%) improved by more than 1 pp y-o-y, as did net interest margin
(3.31%); the latter benefited from the higher interest rate environment, and from the active liquid asset
management.
The aggregated performing loan volumes organically declined y-o-y, similarly to deposits, but the Slovenian
operation is still market leader in net loans to and deposits from customers. In 2023, NBKM successfully
issued EUR 400 million worth of MREL-eligible Senior Preferred bonds (3NC2 tenor).
The legal and organizational integration of SKB and Nova KBM began in February 2023, and the
management expects it to be completed in September 2024.
To counterbalance the damages caused by the flood in August, Slovenia’s government introduced a lot of
measures: first, affected individuals and companies could opt for a 12-month payment moratorium, the
application deadline was 31 December 2023; in accordance with the low participation rate, the negative
result effect is immaterial. Second, banks are obliged to pay bank tax for five years, the rate is 0.2% of the
total assets. In the case of the Slovenian operation, this is likely to amount to about EUR 30 million per year,
which is deductible form the corporate tax income base. The tax is due from 2025, but the Bank will make
accruals in each quarter of 2024 for the expected amount of the tax to be paid in 2025. Last, the corporate
tax income rate increased from 19% to 22% for five years, starting from 2024.
INTEGRATED ANNUAL REPORT 2023
52
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
OTP BANK CROATIA
Performance of OTP Bank Croatia:
Main components of P&L account
Adjusted profit after tax
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 losses
Other provision
Main components of balance sheet
closing balances in HUF million
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
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 losses/average gross loans
Performance Indicators
ROA
ROE
Total income margin
Net interest margin
Operating costs / Average assets
Cost/income ratio
Net loans to deposits (FX-adjusted)
FX rates
HUF/HRK (closing)
HUF/HRK (average)
HUF/EUR (closing)
HUF/EUR (average)
2022
HUF million
42,801
(9,294)
52,095
49,013
102,042
70,547
24,692
6,803
(53,029)
3,082
7,102
(4,020)
2023
HUF million
53,959
(11,786)
65,744
66,742
122,951
90,996
25,661
6,295
(56,210)
(997)
721
(1,718)
Change
%
26
27
26
36
20
29
4
(7)
6
(132)
(90)
(57)
2022
2023
%
3,224,955
2,263,825
2,165,191
2,058,545
1,028,471
888,397
141,677
(108,490)
(103,791)
2,381,977
2,275,058
1,696,769
578,288
337,047
24,356
390,583
2022
1,886,633
83.3%
0.5%
265,568
11.7%
7.3%
111,624
4.9%
70.6%
(0.34%)
2022
1.5%
11.4%
3.51%
2.43%
1.83%
52.0%
91%
2022
HUF
53.1
51.9
400.3
391.3
3,278,199
2,311,788
2,311,788
2,221,514
1,164,441
880,471
176,602
(97,835)
(97,835)
2,385,223
2,385,223
1,742,124
643,099
373,142
23,438
403,487
2023
1,932,763
83.6%
0.6%
288,751
12.5%
7.6%
90,274
3.9%
72.0%
(0.03%)
2023
1.8%
14.2%
4.04%
2.99%
1.85%
45.7%
93%
2023
HUF
2
2
7
8
13
(1)
25
(10)
(6)
0
5
3
11
11
(4)
3
%/pps
2
0.3
0.0
9
0.8
0.3
(19)
(1.0)
1.4
0.31
pps
0.3
2.8
0.53
0.56
0.02
(6.3)
2
Change
%
382.8
381.9
(4)
(2)
The Croatian bank generated HUF 54 billion profit after tax in 2023 as its profit jumped by nearly 30%
y-o-y, bringing the ROE above 14%. The growth in annual profit was shaped by multiple factors: first, the
bank’s operating profit strengthened by 36%, thanks to the dynamic improvemen t in net interest income,
while the strict cost control resulted in lower cost/income ratio; however, the balance of risk costs
deteriorated.
Net interest income grew by 29% last year, driven by an 8% increase in performing loans, as well as a
56 bps y-o-y improvement in net interest margin, amid the rising interest rate environment. Twelve-month
net fees and commissions increased by 4% y-o-y, other revenues declined by 7% y-o-y.
INTEGRATED ANNUAL REPORT 2023
53
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
In 2023, operating expenses exceeded the previous year’s level by 6%, while average annual inflation was
more than 8%. Other expenses rose by 5%, at a lower rate than inflation; the effect of higher marketing
expenses and training costs was offset by the base effect of expert fees in 2022 in connection with euro
adoption. Personnel expenses grew by 8%, as a result of an increase in the average number of employees,
a rise in base salary, and higher bonus payments, particularly in the fourth quarter. Overall, the cost/income
ratio improved by 6.3 pps, to 45.7% last year.
Following the HUF 3 billion positive amount in 2022, total risk costs amounted to -HUF 1 billion in 2023.
The ratio of Stage 3 loans declined by 1.0 pp y-o-y, making up 3.9% of the portfolio at the end of December.
This was supported by both the loan portfolio’s overall improvement and a healed corporate loan previously
classified as Stage 3. The own provision coverage of Stage 3 loans improved further: it hit 72.0% (+1.4 pps
y-o-y) at the end of December.
Performing (Stage 1+2) loans grew by an FX-adjusted 8% y-o-y. The retail segment’s y-o-y expansion
continued to benefit from the subsidized housing loan facility for first -home-buyers, in a scheme restarted
on 21 March 2022; thus the share of this subsidized product within the full-year retail loan disbursement
reached 28.5%. The corporate loan book stagnated y-o-y.
FX-adjusted deposit volumes expanded by 5% in full-year 2023 but stagnated in the fourth quarter. Despite
the better returns on alternative savings forms, retail deposits increased by 3% y-o-y in FX-adjusted terms.
Corporate deposit volumes grew dynamically in the second half of the year, showing a growth of 11%
y-o-y. The Bank’s net loan/deposit ratio rose by 2 pps y-o-y, to 93% at the end of December.
On 1 January 2023, Croatia adopted the euro. The necessary conversion of loan and deposit volumes, as
well as the smooth transition of the bank’s IT systems were all successfully accomplished.
INTEGRATED ANNUAL REPORT 2023
54
OTP BANK
OTP BANK SERBIA
Performance of OTP Bank Serbia:
Main components of P&L account
Adjusted profit after tax
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 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 losses/average gross loans
Performance Indicators
ROA
ROE
Total income margin
Net interest margin
Operating costs / Average assets
Cost/income ratio
Net loans to deposits (FX-adjusted)
FX rates
HUF/RSD (closing)
HUF/RSD (average)
BUSINESS REPORT 2023 (CONSOLIDATED)
2022
HUF million
36,873
(6,118)
42,991
58,544
104,524
76,635
17,954
9,934
(45,980)
(15,553)
(14,422)
(1,131)
2022
2,708,993
2,038,480
1,951,119
1,901,668
868,659
937,436
95,573
(62,386)
(59,754)
1,551,143
1,485,623
831,288
654,335
682,615
358,120
2022
1,764,677
86.6%
0.9%
222,202
10.9%
7.0%
51,601
2.5%
59.8%
0.74%
2022
1.5%
10.9%
4.14%
3.03%
1.82%
44.0%
127%
2022
HUF
3.4
3.3
2023
HUF million
68,026
(10,621)
78,646
83,732
133,589
104,050
18,419
11,120
(49,856)
(5,086)
(2,293)
(2,793)
2023
2,874,794
1,978,855
1,978,855
1,921,146
875,664
951,833
93,648
(66,259)
(66,259)
1,868,078
1,868,078
936,937
931,140
506,900
368,344
2023
1,661,365
84.0%
0.7%
259,780
13.1%
6.7%
57,710
2.9%
63.8%
0.12%
2023
2.5%
19.4%
4.98%
3.88%
1.86%
37.3%
102%
2023
HUF
3.3
3.3
Change
%
84
74
83
43
28
36
3
12
8
(67)
(84)
147
%
6
(3)
1
1
1
2
(2)
6
11
20
26
13
42
(26)
3
%/pps
(6)
(2.6)
(0.2)
17
2.2
(0.3)
12
0.4
4.1
(0.62)
pps
1.1
8.5
0.84
0.85
0.04
(6.7)
(25)
Change
%
(4)
(2)
The Serbian banking group’s adjusted profit after tax jumped by more than 80% y-o-y, to more than
HUF 68 billion in 2023. The P&L developments were shaped by the dynamic improvement in operating profit
(+43% y-o-y) as well as by the decline in risk costs, to a third of the previous year’s level; this brought the
return on equity ratio to 19.4% (+8.5 pps y-o-y).
Total income grew impressively (+28% y-o-y) in the full year. Within that, net interest income surged by 36%:
FX-adjusted performing loan volumes stagnated, but the rising RSD and EUR interest rate environment
made its impact through the gradual repricing of predominantly variable rate loans.
The National Bank of Serbia’s resolution of 11 September 2023 obligated banks to impose a 4.08%
temporary cap on existing variable rate housing loans amounting to less than EUR 200,000, and to impose
a 5.03% cap on newly disbursed fixed rate loans. Interest rates shall be frozen for 15 months, from October
2023 to the end of year 2024. The measure’s expected impact was recorded as a lump sum in the third
quarter of 2023, among adjustment items presented at consolidated level.
INTEGRATED ANNUAL REPORT 2023
55
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
Twelve-month net fees and commissions rose by 3% y-o-y.
The annual average rate of inflation was above 10% in 2023; in the high inflationary environment, annual
operating expenses grew by 11% y-o-y in local currency. Almost 60% of the expense growth was caused
by higher personnel expenses, triggered by wage inflation and higher bonus payments, while the number of
employees was stable y-o-y (on FTE basis). Cost efficiency indicators further improved; the annual
cost/income ratio (37.3%) was one of the lowest among group members.
In full year 2023, nearly HUF 5.1 billion total risk cost weighed on profit, as opposed to HUF 15.6 billion in
the base period. Within that, credit risk costs fell by more than 80% y -o-y, because of the releases made in
the third and fourth quarters of 2023. The y-o-y jump in other risk costs was related to provisions for interbank
exposures and litigations.
The performing (Stage 1+2) FX-adjusted loan volume y-o-y stagnated. Within that, mortgage loans declined
throughout last year in the rising interest rate environment, but the growing demand caused by the interest
rate cap reversed the downtrend in the fourth quarter. Despite the stricter lending conditions, the consumer
loan book increased y-o-y (+4%), largely driven by cash loans’ and car loans’ growth. The corporate loan
book’s expansion continued, too.
The deposit stock surged by 26% y-o-y (FX-adjusted), primarily driven by deposits from large corporations.
The bank’s net loan/deposit ratio declined by 25 pps y-o-y, to 102%, while interbank funds’ volume fell by
26% y-o-y.
INTEGRATED ANNUAL REPORT 2023
56
OTP BANK
OTP BANK ALBANIA
Performance of OTP Bank Albania:
Main components of P&L account
Adjusted profit after tax
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 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
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 losses/average gross 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
BUSINESS REPORT 2023 (CONSOLIDATED)
2022
HUF million
10,175
(2,013)
12,188
9,335
20,232
16,927
3,067
238
(10,896)
2,852
2,505
347
2023
HUF million
15,032
(3,140)
18,173
18,269
33,387
27,912
3,729
1,746
(15,118)
(96)
108
(204)
2022
635,364
370,875
369,116
350,663
158,940
187,729
3,994
(16,208)
(16,264)
516,668
515,946
447,918
68,029
30,279
0
60,827
2022
318,215
85.8%
1.0%
34,417
9.3%
9.4%
18,243
4.9%
54.4%
(0.83%)
2022
2.0%
21.1%
4.07%
3.40%
2.19%
53.9%
68%
2022
HUF
3.5
3.1
2023
669,765
367,947
367,947
345,171
161,834
177,640
5,696
(17,690)
(17,690)
547,854
547,854
470,591
77,263
8,138
2,861
81,102
2023
312,494
84.9%
0.9%
32,677
8.9%
8.2%
22,776
6.2%
53.3%
(0.03%)
2023
2.3%
21.1%
5.19%
4.34%
2.35%
45.3%
64%
2023
HUF
3.7
3.4
Change
%
48
56
49
96
65
65
22
39
(103)
(96)
%
5
(1)
0
(2)
2
(5)
43
9
9
6
6
5
14
(73)
(100)
33
%/pps
(2)
(0.9)
0.0
(5)
(0.4)
(1.2)
25
1.3
(1.1)
0.80
pps
0.3
0.0
1.13
0.94
0.16
(8.6)
(4)
Change
%
5
9
The consolidated financial statements include the acquired Alpha Bank Albania SH.A. bank’s balance sheet
from July 2022, while its profit contribution was consolidated starting from August.
On 1 December 2022, Albania’s Court of Registration registered the merger of Alpha Bank Albania and
Banka OTP Albania.
The Albanian P&L account was adjusted for the one-off items directly related to the acquisition; they are
presented at consolidated level among the adjustment items. The balance sheet components were not
adjusted for these effects.
In 2023, OTP Bank Albania generated HUF 15 billion profit after tax (+50% q-o-q; in local currency +44%),
which brought ROE above 21%.
INTEGRATED ANNUAL REPORT 2023
57
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
Most of the change in the P&L lines for last year was induced by the acquisition.
Based on the latest data, the bank’s market share by total assets exceeded 9%, which makes it the fifth
largest bank in the country. At the end of the year, the number of bank branches was 50, eleven units more
than before the acquisition 2Q 2022, while the number of employees was more than 700, 57% higher than
before the acquisition. Still, the bank’s cost efficiency has improved by 8.6 pps, thus t he cost/income ratio
stood at 45.3% in full year 2023.
In local currency full-year operating profit grew by 84%, chiefly as a result of the acquisition, owing to the
56% surge in total income, and a 33% growth in operating expenses. Net interest income grew by 57%
y-o-y partly a result of the acquisition, and in part due to the repricing of the loan portfolio in the higher
interest rate environment, helping the interest margin (4.34%) improve in 2023 (+94 bps y -o-y). The full-year
net fees and commissions increased by 16%, while other income grew sixfold, largely because the ALL/EUR
rate appreciated more than in the previous period, and also driven by the inclusion of Alpha Bank Albania.
In 2023 risk cost was near zero, as opposed to the release made a year earlier.
Overall, the FX-adjusted stock of performing (Stage 1+2) loans declined by 2% in 2023 as a result of a 2%
rise in retail loans and a 5% drop in corporate ones.
The FX-adjusted volume of deposits from customers grew by 6% y-o-y, as retail deposits increased by 5%,
and corporate deposits expanded by 14%.
Liabilities to credit institutions declined by 73% y-o-y, at the same time, intragroup financing also dropped.
The amount on the subordinated debt line is related to the Tier 2 bond issued in the amount of
EUR 7.5 million in December 2023.
INTEGRATED ANNUAL REPORT 2023
58
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
CKB GROUP (MONTENEGRO)
Performance of CKB Group:
Main components of P&L account
Adjusted profit after tax
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 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 losses/average gross 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
2022
HUF million
9,791
(2,184)
11,975
15,133
28,816
20,832
7,106
878
(13,683)
(3,158)
639
(3,797)
2023
HUF million
21,814
(3,923)
25,737
23,537
38,363
29,717
7,797
848
(14,826)
2,200
2,929
(728)
2022
664,395
447,921
428,371
407,343
185,443
221,900
(21,893)
(20,937)
524,479
501,225
276,382
224,843
12,443
99,131
2022
389,640
87.0%
1.2%
36,294
8.1%
8.9%
21,987
4.9%
64.4%
(0.15%)
2022
1.6%
10.9%
4.84%
3.50%
2.30%
47.5%
81%
2022
Ft
400.3
384.9
2023
663,676
452,493
452,493
433,473
212,758
220,715
(17,625)
(17,625)
520,168
520,168
325,770
194,398
2,309
113,004
2023
399,886
88.4%
0.8%
33,587
7.4%
5.1%
19,020
4.2%
67.2%
(0.67%)
2023
3.5%
21.0%
6.10%
4.73%
2.36%
38.6%
84%
2023
Ft
382.8
381.9
Change
%
123
80
115
56
33
43
10
(3)
8
(81)
%
0
1
6
6
15
(1)
(19)
(16)
(1)
4
18
(14)
(81)
14
%/pps
3
1.4
(0.4)
(7)
(0.7)
(3.7)
(13)
(0.7)
2.9
(0.52)
pps
1.8
10.1
1.27
1.23
0.06
(8.8)
2
Change
%
(4)
(1)
In 2023, the Montenegrin CKB Group generated HUF 21.8 billion profit after-tax, twice as much as in the
base period. This brought its ROE to 21%. The improvement in the full-year result stemmed from 47% higher
net interest income in local currency terms and positive risk costs.
In full year 2023, total income grew by 37% y-o-y in local currency, supported by the 47% jump in net interest
income, as well as a 13% increase in net fee and commission income, while other income was stable. The
increase in interest income stemmed from the repricing of previously disbursed loans (mostly in the case of
corporate and consumer loans), but the higher interest rate of newly disbursed loans also had a benign
effect. As a result, net interest margin maintained the improving trend , thus it rose by 1.23 pps to 4.73%
y-o-y.
The bank’s cost efficiency improved in 2023, just like in recent years; the cost to income ratio dropped by
8.8 pps, to 38.6% y-o-y. Operating expenses increased by 11% in EUR terms in 2023, a third of which was
INTEGRATED ANNUAL REPORT 2023
59
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
caused by elevated wages and wage-like payments, while the rise in other expenses stemmed from higher
expert fees and supervisory charges.
In 2023, total risk cost amounted to +HUF 2.2 billion.
The ratio of Stage 3 loans declined to 4.2% (-0.7 pp y-o-y); their own provision coverage stood at 67.2%
(+2.9 pps y-o-y) at the end of the year.
Performing (Stage 1+2) loan volumes rose by an FX-adjusted 6% y-o-y, thanks to a 10% surge in mortgage
loans and a 17% jump in consumer loans.
The FX-adjusted deposit volumes grew by 4% y-o-y, driven by the 11% increase in household deposits, and
a 50% jump in MSE deposits. The net loan/deposit ratio stood at 84% at the end of the year (+2 pps y-o-y).
INTEGRATED ANNUAL REPORT 2023
60
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
IPOTEKA BANK (UZBEKISTAN)
Performance of Ipoteka Bank (Uzbekistan):
Main components of P&L account
Adjusted profit after tax
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 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
Issued securities
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 losses/average gross 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/1,000 UZS (closing)
HUF/1,000 UZS (average)
FX rates
2023
HUF million
(21,857)
(3,381)
(18,475)
33,708
59,655
46,123
5,261
8,270
(25,946)
(52,184)
(51,354)
(830)
2023
1,187,368
961,533
961,533
847,183
715,113
132,070
0
(96,738)
(96,738)
327,161
327,161
237,467
89,694
561,466
121,082
12,162
145,941
2023
687,252
71.5%
2.7%
159,931
16.6%
21.6%
114,350
11.9%
38.0%
10.03%
2023
(3.3%)
(23.1%)
9.09%
7.03%
4.0%
43.5%
264%
2023
HUF
28.1
30.9
In line with the sale and purchase agreement concluded on 12 December 2022 between OTP Bank and the
Ministry of Economy and Finance of the Republic of Uzbekistan, the first step of the transaction was
completed on 13 June 2023. Consequently, OTP Bank became the majority shareholder of Ipoteka Bank by
acquiring a 73.71% stake, and became indirect shareholder of Ipoteka Bank’s wholly -owned subsidiaries.
In the second step of the transaction, the shares that remained in the owners hip of the Ministry of Economy
and Finance of the Republic of Uzbekistan will be bought three years after the first step.
The balance sheet of Ipoteka Bank was consolidated in the second quarter but its P&L was presented in
OTP Group's adjusted P&L only starting from the third quarter of 2023.
INTEGRATED ANNUAL REPORT 2023
61
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
The P&L account was adjusted for the one-off items directly related to the acquisition; they are presented
at consolidated level among the adjustment items. The balance sheet components were not adjusted for
these effects.
By purchasing Ipoteka Bank, OTP Group entered the Central Asian region, and became the first foreign
player to participate in the privatization of Uzbekistan’s banking sector.
Pursuant to its agreement with the Republic of Uzbekistan, OTP Bank increa sed Ipoteka Bank’s capital by
UZS 844.6 billion (about USD 68.5 million), which was registered on 25 December 2023. With this,
OTP Bank’s ownership stake increased to 79.58%.
Based on end-2023 data, Ipoteka Bank was the fifth largest bank in Uzbekistan, with 7.3 % market share by
total assets. The Bank had almost 1.8 million retail customers at the end of 2023; since the acquisition, their
number grew by 20%, as a result of reshaping the incentive scheme for branches. At the end of 2023,
Ipoteka Bank had 39 branches and employed more than 4,400 people.
At the end of 2023, total assets amounted to HUF 1,188 billion, including HUF 962 billion worth of performing
loans. In FX-adjusted terms, performing loans have been overall stable since the end of June; but it is
favourable within that, the household segment’s 41% growth was outstanding. Since the Bank was added
to the Group, mortgage loans have increased by 15%, while consumer loans have more than doubled. The
improvement in consumer loans owed a lot to the doubling of cash loan volumes, and the quadrupling of car
loans.
The deposit book reached HUF 327 billion at the end of 2023. Retail deposits rose by 8% q -o-q, and
corporate deposits grew by 42%. These developments were primarily due to a greater focus on deposit
collection and, in connection with this, the restructuring of the branch incentive scheme.
At the end of the year, the net loan/deposit ratio stood at 264%. The Bank’s liability structure continued to
heavily rely on largely state funding sources, which typically finance subsidized loans: liabilities to credit
institutions
up
HUF 561 billion in the bank’s balance sheet.
made
In the second half of 2023, Ipoteka Bank generated HUF 21.9 billion adjusted loss, which was entirely
caused by the loss realized in the fourth quarter. Since the consolidation, operating profit amounted to
HUF 33.7 billion, including HUF 12.3 billion in the fourth quarter.
The second half adjusted total risk cost in the Uzbek segment amounted to HUF 52.2 billion.
Problem loans concentrated in three segments: in a broader sense agriculture, but also in cotton and textile
industries. Within agriculture fishery, green house cultivation and hydro cultures, but also the cotton industry
were behind the badwill adjustment.
This extra provision for impairment on loan losses was recognized partly in Ipoteka Bank’s separate P &L,
and in part among the adjustment items presented at consolidated level, on the effect of acquisitions line7.
The ratio of Stage 3 loans grew to 11.9% by the end of the year, from 2.7% at the end of the second quarter,
and from 8.6% at the end of the third quarter, mostly because corporate exposures were migrated.
The Stage 2 ratio stood at 16.6% at the end of the year. The reason for this growth was the constant review
of the loan portfolio, as a result of which mortgage loans were reclassified from Stage 1 to Stage 2 category.
7 In line with accounting standards, the badwill (which is part of the effect of acquisitions adjustment line) can be updated within 12 months after the
consolidation, therefore these impairments were partially recognised on this adjustment line.
INTEGRATED ANNUAL REPORT 2023
62
OTP BANK
OTP BANK RUSSIA
Performance of OTP Bank Russia
Main components of P&L account
Adjusted profit after tax
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 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 losses/average gross 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
BUSINESS REPORT 2023 (CONSOLIDATED)
2022
HUF million
42,548
(3,632)
46,179
98,137
178,494
118,004
35,251
25,239
(80,357)
(51,958)
(51,046)
(911)
2023
HUF million
95,665
(34,506)
130,171
149,297
223,644
122,084
40,831
60,730
(74,347)
(19,126)
(16,278)
(2,848)
2022
2023
1,029,721
784,958
589,608
496,620
468,477
28,142
(173,105)
(130,392)
576,865
453,127
263,310
189,816
49,774
306,304
2022
570,949
72.7%
5.1%
91,050
11.6%
31.5%
122,959
15.7%
93.6%
5.85%
2022
3.9%
14.1%
16.23%
10.73%
7.3%
45.0%
101%
2022
HUF
5.2
5.7
1,470,796
721,212
721,212
624,130
606,912
17,218
(133,255)
(133,255)
1,101,084
1,101,084
404,105
696,979
19,063
274,516
2023
510,129
70.7%
3.0%
114,001
15.8%
22.7%
97,082
13.5%
95.0%
2.38%
2023
8.0%
33.9%
18.69%
10.20%
6.2%
33.2%
53%
2023
HUF
3.9
4.2
Change
%
125
850
182
52
25
3
16
141
(7)
(63)
(68)
213
%
43
(8)
22
26
30
(39)
(23)
2
91
143
53
267
(62)
(10)
%/pps
(11)
(2.0)
(2.2)
25
4.2
(8.8)
(21)
(2.2)
1.4
(3.47)
pps
4.1
19.8
2.46
(0.53)
(1.1)
(11.8)
(48)
Change
%
(25)
(26)
Owing to the changes in the exchange rates in the reporting period, the Russian operation’s balance sheet
and P&L statement figures in HUF terms differ from the ones calculated in local currency.
OTP Bank Russia realized HUF 95.7 billion profit after tax in 2023, more than twice as much as in the base
period. This improvement can be attributed to the operating profit increasing by half, and to smaller risk
costs. This brought the return on equity (ROE) ratio to 33.9% in 2023. As a result, the bank’s equity grew
by 19% y-o-y in RUB, despite the permission to pay RUB 13.4 billion in dividend in the second half -year.
Taxes payable on dividends are presented on the corporate tax line.
Full-year net interest income grew by 41% in RUB, induced by higher interest income from expanding
deposit volumes placed at the central bank, as deposits from customers almost doubled on average last
year, but the rising interest rate environment also played a role starting from mid -2023. Starting from
24 July the central bank of Russia raised its benchmark rate in five steps to 16% by the end of 2023, from
7.5% in the first half-year. Net interest margin shrank by 53 bps y-o-y.
INTEGRATED ANNUAL REPORT 2023
63
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
Net fees and commissions grew by 62% y-o-y in RUB, mostly driven by a jump in income from account
maintenance and transaction fees owing to the increase in deposits.
The surge in twelve-month other income reflected the effect of stronger income from currency conversion.
Reasons for the 25% y-o-y growth in twelve-month operating expenses in local currency included wage
inflation, and the increase in IT expenses linked to the digital transformation of the bank’s operation. The
bank’s cost to income ratio was 33.2% in 2023 (-11.8 pps y-o-y).
In 2023 total risk cost fell by 60% in RUB, to HUF 19 billion, from HUF 52 billion in the previous year.
Underlying loan quality developments painted a positive picture: the ratio of Stage 3 loans declined by
2.2 pps, to 13.5% compared with end-2022. The own provision coverage of Stage 3 loans stood at 95% at
end-2023. The Stage 2 ratio was 15.8% (+4.2 pps y-o-y) at the end of the fourth quarter.
The bank’s total assets increased by 91% y-o-y in RUB, chiefly boosted by deposit growth. The deposit book
grew by 143% y-o-y, primarily through deposits from large corporations (FX-adjusted). The bank’s net loan
to deposit ratio declined by 48 pps y-o-y, to 53%. On the asset side, most of the additional liquidity was
invested in central bank deposits.
The Russian bank has stopped providing new loans to corporates since the end of February 2022, thus by
the end of 2023 the corporate loan volumes dropped by an FX-adjusted 85% from end-2021 levels; they
contracted by 39% compared to end-2022. The volume of FX-adjusted performing (Stage 1+2) retail loans
expanded by 30% in 2023, predominantly in the car loan and cash loan segments.
At the end of the year, the bank’s capital adequacy ratio was 18.2%, firmly above the 8% regulatory minimum
requirement. At the end of 2023, the Russian bank’s intragroup subordinated loans amou nted to USD 27
million, unchanged y-o-y. The Russian operation paid back its maturing intragroup financing in 4Q 2022,
thus the amount of intragroup financing decreased to nil by the end of 2022 and remained nil throughout
2023.
INTEGRATED ANNUAL REPORT 2023
64
OTP BANK
OTP BANK UKRAINE
Performance of OTP Bank Ukraine:
Main components of P&L account
Adjusted profit after tax
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 losses
Other provision
BUSINESS REPORT 2023 (CONSOLIDATED)
2022
HUF million
(15,922)
(2,718)
(13,204)
79,863
110,805
90,007
12,673
8,125
(30,943)
(93,067)
(90,836)
(2,231)
2023
HUF million
45,184
(37,174)
82,358
78,294
108,853
93,450
10,837
4,567
(30,560)
4,064
10,654
(6,590)
Main components of balance sheet
(closing balances)
2022
2023
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
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 losses/average gross 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
1,048,713
529,644
484,031
396,320
43,392
240,664
112,264
(115,754)
(105,587)
783,009
716,718
279,032
437,686
108,678
7,798
122,493
2022
219,078
41.4%
2.1%
214,442
40.5%
18.1%
96,124
18.1%
75.3%
14.01%
2022
(1.6%)
(12.4%)
10.92%
8.87%
3.0%
27.9%
53%
2022
HUF
10.2
11.5
1,036,912
393,741
393,741
308,454
28,223
197,262
82,969
(84,671)
(84,671)
736,621
736,621
274,374
462,247
91,154
7,530
157,088
2023
208,563
53.0%
1.9%
99,891
25.4%
14.4%
85,287
21.7%
77.9%
(2.38%)
2023
4.4%
30.5%
10.65%
9.14%
3.0%
28.1%
42%
2023
HUF
9.1
9.6
Change
%
(2)
(2)
4
(14)
(44)
(1)
195
%
(1)
(26)
(19)
(22)
(35)
(18)
(26)
(27)
(20)
(6)
3
(2)
6
(16)
(3)
28
%/pps
(5)
11.6
(0.2)
(53)
(15.1)
(3.7)
(11)
3.5
2.6
(16.39)
pps
6.0
42.9
(0.27)
0.27
(0.1)
0.1
(11)
Change
%
(11)
(16)
Owing to the exchange rate fluctuations in the reporting period, the Ukrainian operation’s balance sheet and
P&L statement figures in HUF terms differ from the ones calculated in local currency.
In full year 2023, OTP Bank Ukraine posted HUF 45.2 billion adjusted profit after tax, which brought its ROE
above 30%.
The corporate tax burden increased materially because on 6 December 2023 Ukraine’s president signed a bill
that increased the corporate income tax rate for banks (it remained unchanged in case of leasing companies)
from 18% to 50% retroactively for full year 2023 and set the tax rate at 25% from 2024. As a result, almost
HUF 23 billion extra corporate income tax was recorded in the fourth quarter, for the full year 2023.
INTEGRATED ANNUAL REPORT 2023
65
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
Full-year operating profit improved by 17% in UAH (but declined by 2% in HUF). Within that, net interest income
jumped by 24% in local currency (by 4% in HUF), predominantly supported by the higher interest income on
deposits placed at the National Bank of Ukraine. Net interest margin improved by 27 bps in 2023.
Twelve-year net fee and commission income stagnated in UAH.
The reason for the decline in full-year other income was the outstandingly high currency conversion income
in the base year
The 17% growth in full-year operating cost level in UAH reflected the high inflationary environment: in 2023,
annual average inflation remained above 13%. Within that, personnel expenses increased by 18% in UAH
as a result of high wage inflation, via the implemented wage hikes, while the full -year average number of
employees dropped by 7%. Overall, cost efficiency indicators were stable last year: the cost to income ratio
of 28.1% remained the lowest in OTP Group.
Underlying loan quality developments were overall positive. In full year 2023, total risk cost amounted to
+HUF 4.1 billion, as opposed to -HUF 93 billion in the base period.
At the end of 2023, the ratio of Stage 3 loans within the portfolio was 21.7%, the 3.5 pps y -o-y growth was
partly caused by the contraction in the loan portfolio. The coverage of Stage 3 loans increased to 77.9%
(+2.6 pps y-o-y). The ratio of Stage 2 loans sank by 15.1 pps y-o-y, to 25.4%. The ratio of total provisions
to total gross loan volumes was 24.5% at the end of December.
The other risk costs were set aside mainly for the Ukrainian government bond portfolio.
Amid the moderate lending activity, performing (Stage 1+2) loans fell by an FX-adjusted 22% y-o-y. The
deposits placed at the central bank grew by 12% last year, to HUF 307 billion by the end of the year.
Last year the deposit book rose by 3% (FX-adjusted). The net loan to deposit ratio fell to 42%
(-11 pps y-o-y).
The bank’s capital adequacy ratio significantly exceeded the regulatory minimum requirements, reaching
36.6% at the end of December (regulatory minimum: 10.0%).
The outstanding gross intragroup financing to the Ukrainian operation amounted to HUF 83.1 billion at the
end of December.
INTEGRATED ANNUAL REPORT 2023
66
OTP BANK
OTP BANK ROMANIA
Performance of OTP Bank Romania:
Main components of P&L account
Adjusted profit after tax
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 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 losses/average gross 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
BUSINESS REPORT 2023 (CONSOLIDATED)
2022
HUF million
3,071
(649)
3,720
17,384
62,596
53,560
4,743
4,293
(45,212)
(13,663)
(11,094)
(2,569)
2022
1,687,581
1,228,254
1,171,413
1,109,875
538,979
510,400
60,496
(62,442)
(59,762)
998,452
951,990
564,695
387,295
446,641
181,206
2022
990,307
80.6%
1.1%
173,679
14.1%
9.6%
64,268
5.2%
54.1%
0.93%
2022
0.2%
1.8%
3.86%
3.31%
2.79%
72.2%
117%
2022
Ft
74.6
72.8
2023
HUF million
20,099
(3,559)
23,657
20,972
68,613
53,865
5,019
9,729
(47,641)
2,685
2,771
(86)
2023
1,600,237
1,136,507
1,136,507
1,075,958
485,158
524,745
66,055
(55,856)
(55,856)
1,100,016
1,100,016
662,557
437,459
261,740
192,650
2023
919,683
80.9%
1.2%
156,276
13.8%
8.5%
60,549
5.3%
51.9%
(0.24%)
2023
1.3%
10.9%
4.28%
3.36%
2.97%
69.4%
98%
2023
Ft
80.9
79.4
Change
%
21
10
1
6
127
5
(97)
%
(5)
(7)
(3)
(3)
(10)
3
9
(11)
(7)
10
16
17
13
(41)
6
%/pps
(7)
0.3
0.1
(10)
(0.4)
(1.1)
(6)
0.1
(2.2)
(1.18)
pps
1.1
9.2
0.42
0.06
0.18
(2.8)
(19)
Change
%
8
9
On 9 February 2024 OTP Bank Plc. concluded a share sale and purchase agreement to sell its directly and
indirectly owned 100% shareholding in OTP Bank Romania S.A. to Banca Transilvania S.A. (‘BT’). OTP
Group is also selling its 100% shareholdings in its other Romanian subsidiaries, OTP Leasing Romania IFN
S.A. and OTP Asset Management S.A.I. S.A. to BT under the transaction.
The selling price is EUR 347.5 million which is smaller than the net asset value of the to be sold subsidiaries
recognized in the consolidated accounts, accordingly the transaction resulted in a negative P&L impact of
HUF 59.5 billion (after tax) on consolidated level, which was booked in 4Q 2023 and presented amongst the
adjustment items.
As a result of this, according to IFRS 5, as at the end of 2023 the Romanian operation was presented as an
asset classified as held for salein the consolidated balance sheet, and as discontinued operation in the
income statement. As opposed to this, in the adjusted financial statements presented in the Stock Exchange
INTEGRATED ANNUAL REPORT 2023
67
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
Report – in line with the structure of the financial statements monitored by the management – the Romanian
operation was presented in a way as if it was still classified as continuing operation.
OTP Bank Romania generated HUF 20.1 billion profit after tax in 2023, more than 6.5 times as much as in
2022.
Full-year operating profit increased by 25% in local currency, as a result of 13% y -o-y surge in total income
and 8% higher operating expenses. In 2023, other income doubled in local currency, net fees and
commissions grew by 8%, while net interest income rose by 4%. The full-year net interest income and other
income dynamics were influenced by the fact that the result on intragroup FX swap deals changed in the
third quarter, and their ytd cumulated result (-HUF 10 billion) was moved from other income to the net interest
income line, thus this reclassification was neutral on profits. Without this reclassification’s effect (a total of -
HUF 11.5 billion in net interest income in 2023), full-year net interest income would have grown by 22%
y-o-y, mostly because of the stable loan volumes and the repricing of outstanding loan volumes in the higher
interest rate environment.
Annual net fees and commissions expanded by 8% y-o-y in local currency, largely thanks to an increase in
card commissions.
Full-year operating expenses grew by 8%, the main component of which was the wage hikes by the annual
rate of inflation, as well as a rise in other expenses. In the fourth quarter, expenses grew by 10% q -o-q in
local currency. The cost to income ratio improved to 69.4% in 2023 (-2.8 pps y-o-y).
Full-year risk costs amounted to HUF +3 billion, mainly driven by the HUF +9.5 billion credit risk cost in the
second quarter, which stemmed from the sale of the Romanian factoring company’s non-performing loan
portfolio.
The ratio of Stage 3 loans rose by 0.1 pp, to 5.3% y-o-y; their own provision coverage stood at 51.9%,
-2.2 pps y-o-y) at the end of the year.
Regarding lending activity, performing (Stage 1+2) loan volumes declined by 3% y-o-y (FX-adjusted), largely
as a result of a 12% drop in mortgage loans and a 4% decline in consumer loans, which wa s only partly
offset by the 3% rise in corporate loans and a 9% growth in leasing volumes. The decline in mortgage loans
was primarily caused by the rising mortgage rates: in full year 2023, new mortgage loan placements shrank
by two-thirds.
In FX-adjusted terms, deposits from customers rose by 16% y-o-y; within that, retail deposits grew by 17%,
and corporate deposits increased by 13%. A multi-year improvement drove the net loan to deposit ratio
below 100% by the end of the year (-19 pps y-o-y); as a result, the volume of liabilities to credit institutions
fell by 41% y-o-y.
On 27 October 2023, the additional tax affecting the banking sector was approved. The rate of special the tax
will be 2% of the annual gross turnover in 2024 and 2025, while starting from 2026 it will be reduced to 1%.
INTEGRATED ANNUAL REPORT 2023
68
OTP BANK
OTP BANK MOLDOVA
Performance of OTP Bank Moldova:
Main components of P&L account
Adjusted profit after tax
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 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 losses/average gross 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
BUSINESS REPORT 2023 (CONSOLIDATED)
2022
HUF million
9,403
(1,385)
10,788
17,551
27,830
19,172
2,624
6,034
(10,279)
(6,763)
(5,895)
(868)
2023
HUF million
14,700
(2,059)
16,759
13,440
25,268
16,349
2,389
6,530
(11,828)
3,319
3,106
213
2022
365,658
171,412
169,571
164,895
84,143
75,994
4,758
(11,177)
(11,095)
264,031
259,666
174,719
84,947
42,083
53,430
2022
139,227
81.2%
2.3%
27,452
16.0%
18.3%
4,733
2.8%
61.3%
3.23%
2022
2.7%
19.3%
8.05%
5.55%
2.97%
36.9%
61%
2022
HUF
19.6
19.4
2023
428,192
150,228
150,228
144,367
67,585
72,279
4,503
(7,122)
(7,122)
332,062
332,062
204,833
127,229
27,489
63,353
2023
127,607
84.9%
1.3%
16,760
11.2%
11.7%
5,861
3.9%
60.1%
(2.01%)
2023
3.9%
25.5%
6.73%
4.35%
3.15%
46.8%
43%
2023
HUF
19.9
19.4
Change
%
56
49
55
(23)
(9)
(15)
(9)
8
15
%
17
(12)
(11)
(12)
(20)
(5)
(5)
(36)
(36)
26
28
17
50
(35)
19
%/pps
(8)
3.7
(1.0)
(39)
(4.9)
(6.6)
24
1.1
(1.2)
(5.25)
pps
1.2
6.1
(1.32)
(1.19)
0.18
9.9
(18)
Change
%
1
0
In 2023, OTP Bank Moldova contributed to the Group’s adjusted profit with HUF 14.7 billion profit after tax
(+56% y-o-y). The Bank’s ROE amounted to 25.5% in 2023.
Total income amounted to HUF 25 billion in 2023 (-9% y-o-y); the contribution of net interest income was
HUF 16 billion (-15% y-o-y), that of net fees and commissions was HUF 2 billion (-9% y-o-y), and other
income was HUF 7 billion (+8% y-o-y).
The reason for the y-o-y lower net interest income was the central bank's interest rate cutting cycle, which
began at the end of 2022; as a result, the average interest rate on deposits declined at a slower pace due
to the high proportion of term deposits previously placed at higher interest rates. In contrast, interest income
on placements with the central bank and on government securities decreased faster. As a result, full-year
net interest margin eroded by 1.19 pps, to 4.35%. Net fees and commissions declined as card-related
expenditures grew.
INTEGRATED ANNUAL REPORT 2023
69
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
In 2023, operating expenses increased by 17% in local currency. They grew at the same rate as inflation,
largely driven by the wage hikes at the bank, and to a smaller degree because other expenses rose. The
cost to income ratio stood at 46.8% (+9.9 pps y-o-y).
In 2023, risk costs totalled +HUF 3.3 billion, as a result of provisions release.
The Stage 3 ratio stood at 3.9% at the end of 2023 (+1.1 pps y-o-y); their own provision coverage exceeded
60%.
The FX-adjusted volume of performing (Stage 1+2) loans declined by 12% y -o-y largely as a result of the
contraction in the first three quarters, as demand dropped in the higher interest rate environment. Within
that, retail loans fell by 20% and-, corporate loans decreased by 5%.
FX-adjusted deposit volumes the full-year growth rate to 28%; chiefly because corporate deposits went up
by 50%, and retail deposits also surged 17%.
INTEGRATED ANNUAL REPORT 2023
70
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
STAFF LEVEL AND OTHER INFORMATION
OTP Core
DSK Group (Bulgaria)
OTP Bank Slovenia
OBH (Croatia)
OTP Bank Serbia
OTP Bank Albania
CKB Group (Montenegro)
Ipoteka Bank (Uzbekistan)
OTP Bank Russia
(w/o employed agents)
OTP Bank Ukraine
(w/o employed agents)
OTP Bank Romania
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)
31/12/2022
31/12/2023
Branches ATM
POS
Headcount
(closing)
Branches ATM
POS
Headcount
(closing)
342
302
114
107
156
50
28
39
82
71
1,877 156,757
17,494
15,459
10,889
20,108
988
8,323
232
979
436
438
275
129
114
682
165
165
278
190
95
53
1,097
157
154
3,694
13,848
0
87,809
352
305
49
111
155
58
33
1,866 143,078
16,559
4,925
11,344
18,049
831
7,529
998
81
428
265
213
116
10,985
5,358
875
2,294
2,632
730
497
108
191
534
4,471
71
150
263
97
53
1,040
156
156
2,754
8,325
0
68,359
2,134
1,826
896
21,713
619
33,318
2,431
227
11,257
5,104
2,355
2,400
2,676
719
503
4,444
4,587
2,074
1,780
867
27,509
640
39,407
2,018
123
1,392
4,620 211,437
35,976
1,439
5,571 244,566
41,547
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.
INTEGRATED ANNUAL REPORT 2023
71
OTP BANK
BUSINESS REPORT 2023 (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. The Bank Group pays special attention to the management of ESG risks and the
implementation of climate protection aspects in business practice. 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
a key 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 and audit
results 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, the Board of Directors and the Risk Assumption and Risk
Management Committee, 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. The Compliance Directorate prepares a report quarterly to the Board of Directors,
and annually to the Supervisory Board, about the Bank’s and the Bank Group’s compliance activities and
position.
IT Controls
Applications are developed by either in-house group resources or by third parties. OTP Bank applies
administrative, logical and physical control measures commensurate with the risk in order 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 in a timely manner;
• user authentication, authorisation and password management processes are controlled by policies and
•
audited;
the systems have test and development environments with appropriate separation from the production
environments that have a secure change management procedure, which ensures that program
developments or modifications can only be deployed to the operational environment after proper,
controlled testing and approval;
INTEGRATED ANNUAL REPORT 2023
72
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
• systems are protected by appropriate network perimeter protection, various security devices and network
segmentation, furthermore all network communications are protected with state-of-the-art encryption;
the IT systems that store and process data are regularly backed up and backup media is stored in
controlled premises with adequate protection for long-term retention, and the organisation carries out
regular backup restore tests;
•
• adequate redundancy is applied for IT systems that store and process data to ensure business continuity
and disaster resiliency;
• has developed DRPs and BCPs for critical systems and critical business processes, which are regularly
•
•
•
•
•
•
•
•
tested and reviewed;
the Bank collects and retains the complete log of all major IT operations and IT security relevant data
processing activities and the confidentiality, availability, integrity, authenticity 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 (DLP) solution to reduce the risk of inadvertent data loss;
it ensures the continuous monitoring of the operation events of the physical and virtual environment
system elements with automated event detection and management tools;
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 permanent secure 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;
• acquire and maintain ability to adequately handle application related security events (including cyber
•
threats), entailing prevention, detection, identification, isolation, analysis, recovery and reporting;
remote work is regulated in a controlled and documented way, remote device and user access is protected
with multi-factor authentication;
• ensures IT security compliance by its managed regulative framework;
•
revision and update of IT security regulations bi-yearly or in a frequency complying legislative
requirements or upon major changes;
• ensures vulnerability assessments and penetration tests are carried out as planned;
• defines pools for categorization of installed software into preferred, allowed and prohibited and ensures
•
compliance to that policy.
it ensures that its employees have adequate knowledge of data protection requirements and provides
regular data protection and information security awareness 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.
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.
INTEGRATED ANNUAL REPORT 2023
73
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
Special Employee Partial Ownership Plan Organization No. I. of OTP Employees and Special Employee
Partial Ownership Plan Organization No. II. of OTP Employees (hereinafter referr ed 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.
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 shareh olders, 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 (11) and Section 61 (10),(11a) and(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 b etween 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 above, 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 following matters:
• changes to the rights associated with specific series of shares, or the transformation of certain
•
categories or classes of shares; (qualified majority)
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.
INTEGRATED ANNUAL REPORT 2023
74
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
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
g. expiry of the mandate,
resignation,
h.
recall,
i.
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;
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• 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;
•
• 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.
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The Company may acquire treasury shares in accordance with the rules of the Civil Code. The pr ior
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 t ransformation.
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.
OWNERSHIP STRUCTURE OF OTP BANK PLC.
Description of owner
Domestic institution/company
Foreign institution/company
Domestic individual
Foreign individual
Employees, senior officers2
Treasury shares3
Government held owner
International Development Institutions
Other4
TOTAL
1 January 2022
31 December 2023
Total equity
Ownership
share
26.66%
66.69%
4.79%
0.11%
0.48%
1.16%
0.07%
0.04%
0.00%
100.00%
Voting
rights1
26.97%
67.47%
4.84%
0.12%
0.48%
0.00%
0.07%
0.04%
0.00%
100.00%
Quantity
74,637,180
186,733,858
13,405,389
319,712
1,341,018
3,251,484
188,326
120,871
2,172
280,000,010
Ownership
share
Voting
rights 1
31.40%
54.43%
12.93%
0.48%
0.48%
0.20%
0.05%
0.01%
0.01%
100.00%
31.46%
54.54%
12.96%
0.48%
0.48%
0.00%
0.05%
0.01%
0.01%
100.00%
Quantity
87,914,205
152,405,042
36,217,730
1,349,320
1,338,715
572,746
139,036
28,603
34,613
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 2023 ESOP owned 12,095,524 OTP shares.
3 Non-identified shareholders according to the shareholders’ registry.
NUMBER OF TREASURY SHARES HELD IN THE YEAR UNDER REVIEW (2023)
OTP Bank
Subsidiaries
TOTAL
1 January
354,144
0
354,144
31 March
1,107,117
0
1,107,117
30 June
585,596
0
585,596
30 September
602,180
0
602,180
31 December
572,746
0
572,746
SHAREHOLDERS WITH OVER/AROUND 5% STAKE AS AT 31 DECEMBER 2023
Name
Nationality1 Activity2
MOL (Hungarian Oil and Gas Company Plc.)
Groupama Group
Groupama Gan Vie SA
Groupama Biztosító Ltd.
D
F/D
F
D
C
C
C
C
Number of
shares
24,000,000
14,256,813
14,140,000
116,813
Ownership3
8.57%
5.09%
5.05%
0.04%
Voting
rights3,4
8.59%
5.10%
5.06%
0.04%
Notes5
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.
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SENIOR OFFICERS, STRATEGIC EMPLOYEES AND THEIR SHAREHOLDING OF OTP SHARES AS AT 31
DECEMBER 2023
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
Antal Kovács3
member, Deputy CEO
György Nagy4
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:
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
12,000
53,885
17,793
59,200
25,939
192,458
126,584
44,400
15,800
196,314
544,502
54
0
0
0
1,410
0
7,199
15,462
1,338,715
1 Board Member (IG), Supervisory Board Member (FB), Employee in strategic position (SP)
2 Number of OTP shares owned by Dr. Sándor Csányi, Chairman and CEO, directly or indirectly: 4,712,949.
3 Number of OTP shares owned by Antal Kovács, Member of Board of Directors, directly or indirectly: 130,884.
4 Number of OTP shares owned by György Nagy, Member of Board of Directors, directly or indirectly: 1,068,855.
Committees8
Members of the Board of Directors
Dr. Sándor Csányi – Chairman
Mr. Tamás Erdei – Deputy Chairman
Ms. Gabriella Balogh
Mr. Mihály Baumstark
Mr. Péter Csányi
Dr. István Gresa
Mr. Antal Kovács
Mr. György Nagy
Dr. Márton Gellért Vági
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 Gudra
Mr. András Michnai
Mr. Olivier Péqueux
Members of the Audit Committee
Dr. József Gábor Horváth – Chairman
Mr. Tibor Tolnay – Deputy Chairman
Dr. Tamás Gudra
Mr. Olivier Péqueux
The résumés of the committee and board members are available in the Corporate Governance Report/Annual
Report.
8 Personal changes can be found in the „Personal and organizational changes” chapter.
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Personal and organizational changes
As of 1 January 2023, Mr. Antal György Kovács was replaced by Mr. András Becsei as Deputy CEO of the
Retail Division. Mr. Antal György Kovács retained his employment status, thus his position as Deputy CEO until
the Annual General Meeting closing the financial year 2022, during which time he was mainly be responsible
for group governance.
On 28 April 2023, concerning the audit of OTP Bank Plc.’s separate and consolidated annual financial
statements in accordance with International Financial Reporting Standards for the year 2023, the Annual
General Meeting elected Ernst & Young Ltd. (001165, H-1132 Budapest, Váci út 20.) as the Company’s auditor
from 1 May 2023 until 30 April 2024.
On 28 April 2023 the Annual General Meeting elected Mr. Antal György Kovács as member of the Board of
Directors of the Company until the Annual General Meeting of the Company closing the 2025 business year,
but not later than 30 April 2026.
On 28 April 2023 the Annual General Meeting elected
Mr. Tibor Tolnay
Dr. József Gábor Horváth
Dr. Tamás Gudra
Mr. Olivier Péqueux
Mrs. Klára Bella
Mr. András Michnai
as member of the Supervisory Board of the Company until the Annual General Meeting of the Company closing
the 2025 business year, but not later than 30 April 2026.
On 28 April 2023 the Annual General Meeting elected
Mr. Tibor Tolnay
Dr. József Gábor Horváth
Dr. Tamás Gudra
Mr. Olivier Péqueux
as member of the Audit Committee of the Company until the Annual General Meeting of the Company closing
the 2025 business year, but not later than 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 Executive Steering 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 6, the Supervisory Board held 7 meetings, while the Audit Committee held 3
meetings in 2023. In addition, resolutions were passed by the Board of Directors on 155, by the Supervisory
Board on 87 and by the Audit Committee on 29 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.
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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.
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.
Fight against corruption and against the practice of bribery
The Code of Ethics (https://www.otpbank.hu/static/portal/sw/file/OTP_EtikaiKodex_EN.pdf) , the Partner Code
of Ethics (https://www.otpbank.hu/static/portal/sw/file/OTP_Partneri_EtikaiKodex_EN.pdf) publish in 2023 and
the Anti-Corruption Policy of OTP Bank Group contains provisions on the fight against corruption and against
the practice of bribery, also on the acceptance of individual differences and the denial of discrimination
(https://www.otpbank.hu/portal/en/EthicalDeclaration, Anti_Corruption_Policy.pdf (otpbank.hu)). As it can be
read in the foreword of the Code and the Anti-Corruption Policy as well, the OTP Bank Plc. 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 OTP Bank Plc. 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 OTP Bank Plc. conducts inquiries for the purpose
of detecting, preventing anomalies in connection with reports made or anomalies it became aware of otherwise.
Through the OTP Bank Plc.'s ethics reporting system a total of 93 reports were received in 2023. In 29 of these
reports, we deemed it necessary to conduct an ethical procedure and 8 case’s investigation resulted in
declaring ethics offense.
The OTP Bank Plc. 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.
In addition, all business partners and clients are communicated about the Anti-Corruption Policy and
procedures through the Code of Ethics and Anti-Corruption Policy published publicly on the OTP Bank Plc.'s
website and from 2023 the Partner Code of Ethics has been published on the Bank’s website as well. The
Anti-Corruption Policy stipulates that, in view of the fact that existing and established relationships with
contractual partners also contain the possibility of corruption, the OTP Bank Plc. will act prudently in its dealings
with contractors, in particular in the tendering and preparation process, to minimise the risk of corruption. The
OTP Bank Plc. establishes relationships with its contractual partners based on an assessment of
professionalism, competence and competitiveness, and does not apply other non-professional selection
criteria that contain the possibility of corruption.
Based on the Compliance’s proposal, the prohibition of corruption will be reflected in the contractual and
regulatory documents used by the OTP Bank Plc. in a clearer and well-defined manner from 2023 onwards,
through the inclusion of anti-corruption clauses in the business rules and standard contracts. The clause will
state from the very beginning of the business relationship that the contracting partner accepts OTP Bank Plc.'s
anti-corruption principles, including the prohibition of corruption and the consequences of breaching this
prohibition, which can even be termination of contract.
Any requests from third parties affecting human rights are treated by the OTP Bank Plc. 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 Executive Steering Committee and the
Board of Directors; the annual report is also submitted to the Supervisory Board.
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Non-financial performance indicators
•
Internal audit: 207 closed audits, 1,385 recommendations, 1,383 accepted recommendations.
• Compliance with Budapest Stock Exchange (BSE) Recommendations (yes/no ratio): 72 yes, 0 no.
• Compliance: 7 closed consumer protection related investigations by the Compliance.
• Bank security investigations, reports: we conducted a total of 3,356 bank security investigations and
253 reports were made to the authorities, most of which were related to cases of fraud committed
against customers.
The expected damage value from the detected crimes is about HUF 4.7 billion, which is much higher
than the loss realized last year, which was HUF 1 billion. The largest part of the loss occurred in the
area of financial offences.
With regard to financial offences, a downward trend can be observed in consumer loans, primarily in
connection with the offences of personal loans, which was about HUF 28 million, almost a fifth of the
previous year's value.
At the same time, the amount of damage caused by corporate credit fraud was HUF 4.6 billion, of which
a significant part of the damage value – HUF 3 billion – was accounted for by one case.
There was a drastic increase in the trend of online fraud targeting customers until July 2023, but due
to the introduced measures, there was a continuous decrease in both the number of cases and the
amount of damage from September 2023. Compared to the losses in July, December's fell to about a
third, but a significant customer loss was still realized, which exceeded HUF 10 billion in 2023, and with
fraud prevention operative measures and monitoring activities, HUF 6.5 billion of customer losses were
prevented.
Compared to 2022, an increase can be observed in connection with bank card abuse, both in terms o f
the number of attempted abuses and the damage. In 2023, the value of successful bank card abuses
exceeded HUF 4.5 billion, of which the value of successful transactions with cards issued by OTP
amounted to HUF 3.9 billion.
As a result of the preventive security measures taken by the bank, the value of fraudulent bank card
transactions that failed in 2022 is HUF 10.2 billion. Of this, the value of abuses prevented in the case
of cards issued by OTP is HUF 10.1 billion.
The ratio of bank card abuse to turnover increased, in the case of OTP the ratio of bank card misuse
to turnover remained lower than the European average published by MasterCard (OTP Bank 0.0 203%,
European average 0.0400%).
• Ethics issues: 93 ethics reports, establishing ethics offense in 8 cases.
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OTP GROUP’S SUSTAINABILITY ACTIVITIES FOR 20239
NON-FINANCIAL STATEMENT
The following parts of the document called OTP BANK Nyrt. non-financial statement up to and including
subsection 6.2.
BUSINESS MODEL
OTP Group’s business model is focused on serving the financial needs of retail, private banking, micro and
small business, medium and large corporate and municipal customers at a high level, both through its branch
networks and its constantly evolving digital and innovative remote service channels, as well as through its
agents and other contracted partners. The Group served the financial needs of approximately 17.4 million
customers at the end of 2023.
The Group aims to continuously develop its services in a constantly evolving digital and technological
environment, so that they are easily accessible and secure for an increasingly broad range of customers. In
addition to digitalisation, OTP Group places great emphasis on sustainability, aimin g to avoid negative
environmental and social impacts while at the same time exploiting potential business benefits. The Bank
plays an active role in developing the financial awareness of the population, enriching cultural values,
preserving environmental values and ensuring equal opportunities.
OTP Group is present in 11 countries in the Central and Eastern European region and entered the Central
Asian region in 2023 with the acquisition of Ipoteka Bank in Uzbekistan. The parent bank of OTP Group,
OTP Bank Plc., is the leading credit institution in Hungary. In addition to its operations in Hungary, the Bank
has foreign subsidiaries in 11 countries through equity investments, in which it typically holds 100% or close
to 100% stakes. Among the Group members, OTP’s Montenegrin subsidiary is also the market leader, while
its Bulgarian, Slovenian and Serbian operations are the second largest in the local market in terms of total
assets. The Albanian subsidiary is ranked third, while the Croatian and Moldovan subsi diaries are ranked
fourth in the local ranking of banks.
Both OTP Bank and its foreign subsidiaries offer a wide range of banking and financial services in both the
retail and corporate segments: they collect deposits from their customers and raise funds f rom the money
and capital markets; on the asset side, they provide mortgage loans, consumer loans, business investment
and working capital loans, and municipal loans. Depending on the balance sheet structure of the given entity,
Group members invest their liquidity reserves in the money and capital markets or receive inter -group
funding. In addition, the subsidiary banks and other domestic and foreign subsidiaries provide their clients
with a wide range of modern financial services, including asset management and investment services, cash
management, treasury and other services. However, there are differences between the various countries in
terms of, among other things, business focus, the range of services and products offered and the distribution
channels. In terms of business focus, while in most countries of the Group the share of retail, corporate and
leasing volumes is relatively balanced, in the Ukraine the weight of corporate and leasing portfolios within
outstanding loans exceeds 90 percent, while in Russia the share of retail consumer loans reaches 97 percent
and in both countries the share of mortgage loans is negligible.
9 Symbols
@ For more information see another page of the Business Report or the home page.
The symbols for, and the contents of, the indicators GRI 2-1, ST1, TCFD I, FN-CB-240a.4 etc. are to be found in the @GRI content index.
Information relevant to specific subsidiaries and countries are marked by country codes: AL BG HU HR MO MD RO RS RU SI UA UZ
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ESG STRATEGIC DIRECTIONS
OTP Group aims to play a leading long-term financing role in the green and fair transition of the
Central and Eastern European region. The Banking Group defines its long-term sustainable,
transparent and ethical operation through stable management, responsible and transparent
governance, as a responsible employer in the labour market and an active player in society. Our aim
is to provide responsible and fair financial services tailored to our customers’ needs, to establish
open cooperation with our stakeholders based on trust, and to reduce our negative environmental
impacts.
OTP Group’s ESG strategy, and its related vision and mission have not changed in 2023.
Vision
Responsible financial decisions and socially and environmentally adequate, ethical financial solutions are
available for all economic participants and citizens in all of the countries covered by the OTP Group’s
operations.
Mission
For us, sustainability means taking responsibility for our economic, social and environmental impacts. We
firmly believe that by our leading role in the Central and Eastern European Region and our presence in
Central Asia, with our pioneering developments, conscious and ethical business operation and exemplary
partnerships we create value and contribute to a sustainable future.
ESG strategy
ST4, 305: 3-3, TCFD II.a,b, IV.c The ESG strategy of OTP Group was unanimously approved by the
Management Committee in 2021 and is reviewed annually to adapt it to changes in the market and reg ulatory
environment.
The strategy rests on the following three pillars: responsible service provider, responsible employer and
responsible social actor. In addition to business opportunities, the strategy includes the identification and
management of material risks, as well as social and governance objectives. Our goal is to achieve ESG
integration in all relevant areas and all relevant topics by 2025.
Strategic goals
Responsible service provider
•
green products and solutions
facilitating the green transition of the
economy
•
products and investment services to
facilitate investments into the
sustainable economy
Long-term KPIs for the OTP Group
End-2023 results
Total green credit portfolio of HUF 1,500 bn
by 2025
We exceeded the HUF 414 bn green loan
portfolio target for 2023 by more than HUF
200 bn
active ESG risk management
•
Responsible employer
•
active ESG management practices in
corporate governance
•
strengthening employee well-being
and development, diversity and
employee engagement
Responsible social actor
•
•
strongly reducing emissions
from our own operation
significant contribution to social
objectives and SDGs through
responsible products and
services and through donations
Steady increase in the level of employee
reach a global1 75
engagement,
percentile at Group level (in 2023: 78%)
to
The level of employee engagement was
72% at Banking Group level
Net carbon neutrality by the end of 2022
(goal met), total carbon neutrality by 2030
for OTP Bank
OTP Bank will become a member of the
S&P Dow Jones Sustainability Index by
2025
We met the short-term target
The Bank’s score in the S&P Global
Corporate Sustainability Assessment
improved by 9 percent in 2023 compared
to the previous year, up 4 points
1 Based on a benchmark of more than 750 companies.
The majority of subsidiary banks have developed their ESG strategy in 2022, setting their own targets, which
are also aligned with the parent bank’s objectives. The strategies cover segments such as ESG risk
management, the development of green lending, the organisational frameworks, social matters and reducing
their operations’ environmental impacts. The subsidiary banks have also defined KPIs to measure the
effectiveness of the achievement of the targets set. The Board of Directors of OTP Bank is also informed of
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the achievement of ESG targets and the annual review of the plans, as is the Supervisory Board. The
Russian, Ukrainian and Moldovan subsidiaries developed their strategies in 2023 and are expected to adopt
these in 2024. The two Slovenian subsidiaries have drawn up a joint ESG strategy at the end of 2023 in
preparation for the merger, which is also expected to be adopted in 2024.
UN Principles for Responsible Banking
At the end of 2021, OTP Bank signed the commitment to follow the United Nations Principles for Re sponsible
Banking (UN PRB). The Principles provide a framework to ensure that banks’ strategies and operation
conform to the future vision outlined in the UN’s sustainable development goals and the Paris Agreement.
The Serbian subsidiary of the Banking Group was the first Serbian bank to join the Principles at the end of
2023, while the Romanian subsidiary has postponed its planned accession until 2024.
OTP Bank fulfils its PRB reporting obligation in this report, in the Reporting and Self -Assessment Template.
Recognising the sustainability performance of subsidiary banks
SI HR After 2022, in 2023 Slovenian NKBM has again been awarded the Green Star Certificate of the
Slovenian organisation “CER – Partnership for a Sustainable Economy”.
The Croatian subsidiary bank also participated in the 2023 ESG rating of the Croatian Chamber of Economy,
where it was ranked third in the financial sector. In addition, the bank is a member of the Croatian
Sustainability Index (HRIO), compiled by the Croatian Business Council for Sustainable Development.
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GRI 2-6 Summary ESG data of OTP Group
in
in
of
top
the
the
accessible
@Percentage of women on
Supervisory Board
@Percentage of women on
Board of Directors
@Percentage of women
management
@Amount donated
Number of customers – total
Number of retail customers
Number of corporate customers
@Young customers5
@Micro and small enterprise assets
@Medium and
large corporation
assets
@Percentage
branches and customer offices
@Customer satisfaction (TRI*M)6
@Number of participants
the
financial education trainings of OK
Training Centres
@Headcount of employees (active,
persons, 31.12)
@Percentage of women
@Female-to-male salary ratio (in the
same job category)
@Turnover
@Turnover
employed)
@Average training hours
@Employee
satisfaction/engagement
@Energy consumption (GJ)
@Energy
consumption
employee (GJ)
@CO2 emissions (Scope 1+2, tCO2e)
– market-based
@CO2 emissions (Scope 1+2, tCO2e)
– with offset
@CO2 emissions per employee
(tCO2e) – market-based
turnover
@CO2
(tCO2e/HUF million) – market-based
(excluding
emissions
agents
per
by
GRI
indicator
number
405-1
405-1
405-1
OTP Bank
(2022)
OTP Bank
(2023)
OTP Group
(2022)
OTP Group
(2023)
17%
9%
0%
17%
9%
0%
24%1
20%1
23%2
26%1
16%1
21%2
HUF 5.0 billion
17.4 million
16.5 million
0.9 million
13%
2-6, FS6 HUF 570 billion 3.4 HUF 578 billion HUF 874 billion HUF 1,146 billion
HUF 2.5 billion HUF 3.0 billion HUF 4.0 billion
15.7 million
14.8 million
0.9 million
11%
4.6 million 3
4.2 million 3
0.4 million 3
18%
4.3 million 3
4.0 million 3
0.3 million 3
19%
2-6
2-6
2-6
2-6
2-6, FS6 HUF 2,772 billion 3.4 HUF 3,326 billion HUF 7.820 billion HUF 9,405 billion
99%
99%
78%
77%
66 points
57 points varies by country varies by country
29,307
37,117
35,237
47,889
10,516
64%
98.57%
12.2%
12.2%
80
76%
10,715
63%
98.16%
12.1%
12.1%
79
76%
38,775
69%
90.47%
26.9%
20.4%
35
70%
44,468
66%
92.24%
20.8%
17.4%
34
72%
2-7
405-1
405-2
401-1
401-1
404-1
302-1
268,934
245,555
1,091,006
1,107,043
305-1, 305-2
305-1, 305-2
26.17
7,675
675
0.75
23.19
7,115
-485
0.67
0.014
0.012
29.22
73,701
66,701
1.97
0.044
25.58
70,649
60,874
1.63
0.032
1 Consolidated data for the management bodies of the parent bank and subsidiary banks.
2 Consolidated data for the parent bank and subsidiary banks.
3 OTP Core.
4 Consolidated by country
5 As a percentage of retail customers.
6 On a scale of -66 to 134 points, national data
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MATERIALITY ANALYSIS
GRI 3-1 Materiality analysis is a fundamental and guiding element of our activities promoting sustainable
development and our sustainability reports. Materiality can be defined in a variety of ways.
The materiality assessment for 2022 is based on the GRI Standards requirements and guidelines. Its basic
principle is that material topics are topics that represent the organisation’s most significant impacts on the
economy, the environment and people, including human rights, (impact materiality).
In the Dow Jones Sustainability World Index approach, the material sustainability factors are those that
have, or may, in the future, have significant impacts on the Company’s value/value factors, competitive
position, including long term shareholder value-creation and business performance (financial materiality).10
The Corporate Sustainability Reporting Directive (CSRD) will require reporting companies to observe the
principle of “double materiality”. Accordingly, each dimension (impact and financial) was applied in our
analysis – prioritising the GRI requirements.
•
•
The potentially material impacts:
the stakeholder survey,
the other available stakeholder feedback (customer satisfaction survey, employee engagement
survey)
topics of the GRI Standards
the topics included in ESG ratings, and
identified on the basis of the topics comprised in the UN PRB impact analysis tools
•
•
•
The stakeholder survey was conducted with the involvement of authorities and public bodies, professional
associations and representatives of civil society organisations and scientific organisations with experience
in various segments of sustainability, having a comprehensive overview, with adequate information on the
activities of the OTP Group, sustainability experts, media representatives, the representative o f OTP Bank’s
trade union and representatives of sales partners.
In-depth interviews were conducted with groups of stakeholders as well as individual stakeholders by an
external professional consultant without the involvement of the Banking Group’s represen tatives to
encourage the expression of honest opinions. The stakeholders identified sustainability topics considered
as material regarding the Banking Group.
According to the respondents, being a major market participant entails a great deal of responsibil ity, and
they also expect OTP Bank to be an example and provide guidance in relation to sustainability.
The stakeholders clearly found the environmental impacts of financing more important this time than in
earlier surveys and in their earlier feedback.
OTP Group’s list of impact areas was compiled based on feedback from stakeholders and the sources
listed above. The areas were first assessed based on the basis of the impacts on sustainability: economy,
environment and society. Evaluation was based on objective metrics (e.g. number of stakeholders, degree
of involvement, financial indicators, ratios) by expert estimation, with the inclusion of an external consultant
and the Bank’s ESG division.
The financial impacts on the Group of the impacts identified from the aspect of sustainability and the
relevance of the GRI indicators for the various materiality areas were determined and ranked on a 7 -point
scale (-3 to 3) with the assistance of ESG Operational Subcommittee members.
An annual review of the materiality analysis was carried out in 2023, in line with the GRI Standards for 2021.
The scope of the Banking Group’s activities has not changed significantly compared to previous years. Its
range of subsidiaries has expanded, with the most significant change being the acquisition of NKBM of
Slovenia and Ipoteka Bank of Uzbekistan in 2023. New, potentially material impacts may arise in the case
of the Uzbek bank, which will be assessed in detail once integration is completed in 2024. Monitoring
external global and regional processes and the methodology of ESG ratings, we have not identified any new
material topics. Based on the experience of the previous year’s reporting, it was considered expedient to
merge certain topics, as they are not treated separately within the Group. This is how the material topics
have changed relative to the previous year.
GRI 2-14 Both the 2022 and the revised materiality analysis were approved by the ESG Committee.
10 Financial materiality is defined in various ways, which are essentially identical in terms of content. The Dow Jones Sustaina bility World Index has been
measuring large enterprises’ ESG performance since 1999 and has been producing the most comprehensive Corporate Sustainability Assessment (CSA)
year after year to date, which is why its definition is regarded as adequately authentic.
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GRI 3-2 OTP Group’s material sustainability topics are shown in the white background of the chart.
Description of change
Changes in material topics compared to the previous year
Title of topic
Social impacts and indirect economic impacts
of financial products
Tax payment
Contribution to economic stability
Environmental impact and GHG emissions of
financial products
Green products
Operational GHG emissions
Access to finances
Financial well-being
Responsible employment
Diversity and equal opportunities
Financial literacy for vulnerable groups
Customer data and information security
Compliance
Social and indirect economic impacts of lending and the Indirect economic impacts of
investment merged
No change
No change
Environmental impact and GHG emissions of lending and Environmental impact and
GHG emissions of investment products merged
Green loan products and Green investment products topics merged
No change
No change
No change
Responsible employment and Impact on livelihoods and salary levels merged
No change
No change
No change
Merging of the topics of Prevention of money laundering, Anti-corruption activities,
Compliance awareness and Non-discrimination
No change
Financing of high social risk sectors
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1. ESG GOVERNANCE, RESPONSIBILITIES
GRI 2-9, 2-12, 2-13, TCFD I.a,b ESG governance at Banking Group level is unchanged in 2023. In 2021,
based on Green Recommendation No. 5/2021 (IV.15.) of the MNB, a conceptual proposal for the
establishment of the ESG Committee, the ESG Sub-Committee and the ESG Control Function, which
constitute the Bank’s standing ESG organisation, was discussed and unanimously approved by both the
Management Committee and the Board of Directors.
With the decision of the Board of Directors, the Bank’s ESG organisation was established in December
2021. The organisation is multi-level: the Board of Directors is the main decision-making body, assisted and
reported to by the ESG Committee.
The ESG Committee is a standing committee set up by the Bank’s Board of Directors. Its Chair is appointed
by the Chairman & CEO from the members of the BoD and its members include OTP Bank’s Deputy CEOs
and elected directors. The Committee
•
•
•
is responsible for defining the Bank’s and the Banking Group’s ESG strategy, plans and policies;
gives its opinion in advance on all ESG-related proposals to be submitted to the management body;
the ESG Committee is responsible for identifying ESG risks, formulating strategy, plans and policies,
setting target and performance objectives and evaluating them, together with the relevant
organisations, in order to define and manage climate change and environmental risks, as well as
social and governance risks, assess their consequences.
The ESG Sub-Committee is the standing decision-preparing forum of the ESG Committee, coordinating,
consulting on and implementing the work of the ESG Committee in the framework of its technical support
work. The head of the Subcommittee – who is also the leader of the ESG business transformation – is the
director of the Green Programme Directorate.
The Board of Directors is provided with a comprehensive report on the implementation and furtherance of
OTP Bank’s ESG strategy. The Supervisory Board receives written information on the annual report of the
Board of Directors.
ESG coordination is also ensured in the subsidiaries, which have established their own ESG organizational
units.
GRI 2-19 Compliance-conscious operation and CSR each makes up at an at least 5 percent share of the
targets set out for each of OTP Bank’s Chairman & CEO, Deputy CEOs and executive dir ectors. These two
elements comprise the satisfaction of sustainability criteria as well.
In reviewing the target systems of foreign subsidiary bank executives, sustainability targets were also
included among objectives. The ESG-CSR indicator is a mandatory KPI with a uniform weighting of 5 percent
for the senior executives of each foreign subsidiary. Content of the indicator: Performing tasks arising from
ESG risks and business opportunities; implementing ESG integration tasks within own competencies in lin e
with the Group’s ESG strategy and green KPI; implementing ESG aspects in own business processes and
internal regulatory documents; raising ESG awareness within the organisation; providing quality data for
sustainability/integrated reporting, for the appropriate functioning of CSR-related processes.
GRI 2-17 Five (45%) of the members of the Board of Directors and two (33%) of the members of the
Supervisory Board had completed the five-module ESG training for senior management developed in 2023
(see also @5.5) by the end of the year.
A number of standing committees are directly involved in the management of the Group’s environmental,
social and economic impacts. They are discussed in the @Responsible Corporate Governance Report.
The organisational structure and governance levels of OTP Bank are shown in the @Organisational Chart.
GRI 2-12, 2-16 The Board of Directors and the Supervisory Board are kept informed by regular (annual,
semi-annual) reports from the various committees and divisions. The members of the management bodies
can access the documents of all of committees and boards, and can ask any division of the bank for
information through the Management Information Portal.
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No critical stakeholder remarks were made in 2023; nonetheless, the governing bodies were provided with
information on feedback from stakeholders, including employees, customers, shareholders and regulatory
bodies:
• A report on the process and results of the group-wide engagement survey was presented to the
Supervisory Board.
• Semi-annual reports are prepared for the BoD and the Supervisory Board on customer complaints
and the lessons drawn from their management as well as the MNB’s consumer protection audit.
They were also informed about customer complaints received by the foreign subsidiaries.
• The management bodies are informed on a quarterly basis at the Banking Group level on the closed
audits of audit organizations, as well as on the MNB’s supervisory procedures and the status of
implementation of the recommendations made to the Bank. The Supervisory Board or the
Supervisory Board and the Board of Directors reviews and approves the audit reports containing the
results of the audits to be carried out by Internal Audit as required by MNB Resolutions and
Recommendations before they are sent to the Supervisory Authority.
Other situations affecting the Banking Group of which the management bodies have been informed:
• OTP Bank was included on the list of the Ukrainian National Agency on Corruption Prevention
(NACP) in May, as one of the international supporters of the war. Our Bank has indicated in a press
release and in several press responses that it considers the NACP’s action as unworthy and is
seeking to convince the Ukrainian authorities of this, and has also explained that the NACP has
made a number of erroneous and untrue arguments in support of its stigmatising decision. The Bank
has refuted the most significant of these in detail in its press releases and press responses. OTP
Bank stressed that it condemns any aggression against any sovereign country and is committed to
supporting Ukrainian citizens and the country’s economy.
In the course of discussions with the European External Action Service and the Agency, our Bank
made commitments regarding its future plans for the Russian market, and the Agency removed OTP
Bank from the list of international supporters of the war in early October 2023.
In a New York Times article, it was published – and subsequently proven to be false – that money
was transferred to a foundation owned by a sanctioned Russian person from a third country through
our Russian subsidiary bank. On account of the significance of the matter, the bodies were informed.
•
GRI 2-9 OTP Bank’s Supervisory Board, Board of Directors and standing committees had a total of 117
members on 31 December 2023. Some of them are members of more than one body. 14 of the members
are independent11 and 16 are women. There are a total of three employee delegates in the Supervisory
Board and the Ethics Committee. The Supervisory Board, the Board of Directors, the Audit Committee, the
Remuneration Committee, the Risk Exposure and Risk Management Committee, the Nomination Committee
and the Management Committee are presented separately in the Other Information section of the Annual
Report and in the Corporate Governance Report; with information on members, their ot her important
positions and engagements also available in their respective CVs. Other committees are – by virtue of their
tasks – made up nearly exclusively of OTP Bank managers; their members do not hold any other external
important positions. The primary criterion in the selection of committee members is professional expertise.
GRI 2-13, 3-3, TCFD I.b The governance and regulation of individual sustainability and ESG domains are
implemented as follows:
ESG / sustainability
domain
Taxation:
Compliance:
- responsible corporate
governance,
- non-discrimination,
Responsibility, manager
Policy
References
Head of the Accounting and
Finances Directorate (Chief
Accountant): responsible and
accountable for tax policy.
The taxation division is
independent of the business
divisions.
In terms of compliance,
governance and organisational
responsibility lies with the Board
of Directors and the Supervisory
Board.
Compliance officer, consumer
protection officer: Executive
Director heading the Compliance
Directorate
@ Tax Policy:
– approved by: Board of Directors
– presents the principles and practices
followed
by OTP Group with respect to taxation
@ taxation
@Compliance Policy:
- approved by: Board of Directors
- declares the requirement to observe
the law, the directives and guidelines
of national and international
supervisory authorities and the internal
regulations; its Annexes:
@ reporting,
monitoring, measures
@ risk assessment
11 According to the @definition applied to independence, they do not hold senior management positions at OTP Bank.
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ESG / sustainability
domain
- consumer protection
- anti-corruption (ABC),
- international sanctions
requirements,
- processing and
protection of personal
data,
Responsibility, manager
Policy
References
BUSINESS REPORT 2023 (CONSOLIDATED)
- @ Consumer Protection Compliance
Program
- @ Anti-Corruption Policy
- @ Sanctions Policy
– @ Financing services related to the
defence sector
- @ Data Protection Policy
@ data protection
training
@ fraud
Manager responsible for the
Bank’s data processing and the
protection of customers’ personal
data: Deputy CEO of the Digital
Division and the data protection
officer (reporting directly to the top
management of the controller or
the processor, not accepting
instructions from anyone
regarding the discharge of their
duties)
- business ethics, conflict
of interest (including the
whistleblowing system)
Ethics Committee: guidance,
second-tier decision-making
regarding reports of ethical
offences
GRI 2-23 @ Code of Ethics
- approved by: Board of Directors
@ reporting ethical
offences, training
@ Human Rights Statement:
– approved by: Executive Director
heading the Human and Organisation
Development Directorate
- regular statutory
reporting to supervisory
and other government
bodies
- protection from money
laundering and terrorist
financing
Security:
- overall security,
Heads of division and managers
of regional profit centres
Anti-Money Laundering
Committee: decisions on
sustaining or creating high-risk
business relationships within its
competence
Responsibility for security rests
with the Board of Directors and
the Supervisory Board.
Manager responsible for
compliance with IT security and
bank security requirements:
Managing Director of the Bank
Security Directorate
- cyber security,
Risk Management:
- all risk types
Green finance:
Audit Committee and Risk
Exposure and Risk Management
Committee: they monitor the risk
management activity.
Risk Committees (Credit and Limit
Committee, Work-out Committee,
Group Operational Risk
Management Committee): ultimate
decision-making competence on
the cornerstones of risk
management methodologies.
Manager responsible for risk
management: Deputy CEO
responsible for the Credit
Approval and Risk Management
Division
Green Programme Directorate:
supporting all members of OTP
Group in taking advantage of the
opportunities in green financing
@ Anti-money laundering
Security policy:
- approved by: Board of Directors
- sets forth the principles and main
guidelines concerning security at the
Bank,
- declares the Bank’s engagement to
maintaining and preserving security at
all times.
Group Information Security Policy:
- approved by: CEO
- it declares the directions of
development and relevant requirements
Group Cyber Defence Strategy
Risk Assumption Strategy:
- approved by: Board of Directors
- defines the risk management
framework and the principles and
guidelines for risk assumption.
@ reporting, risk
assessment
@ training
@ fraud
@ rules, functions
@ exclusions
@ lending policy,
responsible lending
@ operational risk
assessment
@ debtor protection
@ESG strategy
@ Green Loan
Framework
@ sustainable financial
framework
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Responsibility, manager
Policy
References
BUSINESS REPORT 2023 (CONSOLIDATED)
OTP BANK
ESG / sustainability
domain
Product development,
sales:
Human resource
management:
- HR overall,
- diversity and equal
opportunity,
Product Development, Sales and
Pricing Committee: adopts
decisions applicable to OTP Bank
and the Hungarian group
members on the development,
introduction, discontinuation,
pricing and terms of new schemes
and product variants, and on sales
and incentives. Approves major
campaign plans.
International Product
Development, Sales and Pricing
Committee: approves the annual
action plans of the foreign
subsidiary banks.
Manager responsible for human
resource management: Executive
Director heading the Human and
Organisation Development
Directorate
- (occupational) health
and safety
Manager responsible for health
and safety: Head of the Chairman
& CEO Cabinet
Procurement/purchasing
- expectation of ethical
conduct,
- sustainability,
environmental criteria
The procurement activity is
performed by the requesting
organisation.
Environmental
protection:
- environmental
protection in operations,
- environmental
awareness in
procurement
The Chairman & CEO is
responsible for the Bank’s
environmental protection
activities.
Manager responsible for
supervising environmental
protection activities: Head of the
Facility Services Unit for the
Chairman & CEO Cabinet
@ objective, clear
information
@ responsible sales
@ green products
@ products with social
benefits
@ accessibility for
disabled
@ turnover
@ training
@ income
@ freedom of
association
@organisational
diversity
@ reporting, risk
assessment, training,
accidents
@ rules
@ materials used
@ reporting, training
@ CO2 Emissions
@ Compliance Policy:
- approved by: Board of Directors
- declares that, in designing its products
and services, the Bank pays priority
attention to the enforcement of
consumer protection principles, and to
reducing the information asymmetry
between customers and the Bank.
Annexed to the policy is
@ Consumer Protection Compliance
Program
Accessibility for disabled strategy:
- the goal is to ensure equal opportunity
in service.
HR strategy:
- approved by: Management Committee
- determines the medium-term areas of
focus for human resource
management.
@ Diversity Policy:engagement to
diversity among the members of
management bodies and management.
@ Strategy for Gender Equality
Health and Safety Regulation:
- approved by: CEO
- uniform and comprehensive
preventative health and safety strategy
to implement safe working conditions
that do not constitute a health risk.
Procurement policy:
- approved by: CEO
- regulates the procurement process,
scopes of responsibility, procurement
principles; stipulates that the
procurements of members of the
Banking Group are supervised and
coordinated by OTP Bank.
Environmental Code:
- approved by: CEO
- ensures legal compliance and
facilitates the consideration of
environmental criteria and their
integration into the Bank’s business
operations in order to minimise the
environmental impacts of operating
and maintaining the Bank’s
organisation; sets out the guidelines
on environmentally aware
procurement.
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2. ENVIRONMENTAL AND SOCIAL IMPLICATIONS OF FINANCIAL SERVICES
This chapter presents the activities related to the following material topics, with each material topic presented
in several places within the chapter:
ST1: GRI 3-3, 203-2 Social impacts and indirect economic impacts of financial products
Impacts: The Banking Group enables consumption and investment through the responsible allocation of
resources. Therefore, we have an impact not only on the customers but, indirectly, also on economic growth,
people’s living standards, and basic needs such as housing, and the utilisation of natural resources. By
providing funds, we also contribute to the development of businesses and the economy, and indirectly help
create jobs. The effects can also be potentially negative, such as over-indebtedness and over-consumption.
This material topic supports the achievement of the following SDGs:
Engagement: Our aim is to make financial resources available to the region’s businesses and households,
through prudent lending, to protect depositors’ funds and prevent over-indebtedness. It is of paramount
importance to us that schemes involving public and international institutions are accessible, and our results
often go beyond market share. We help enable access to basic needs.
Acts: Active lending in the region
Strict, conservative risk management by integrating ESG risks
Debtor protection programmes
Active role in national and international programmes
Products for vulnerable social groups (e.g. the youth and pensioners)
Serving the financial needs of micro, small and medium-sized businesses at a high standard of quality
Stakeholder cooperation: Our Banking Group continuously analyses and measures customer needs and
feedback concerning the design and operation of its products and services. We liaise with government and
international institutions and regulatory bodies to ensure compliance and in r elation to subsidised product
schemes.
ST3: GRI 3-3 Environmental impact and GHG emissions of financial products
Impacts: The investment projects and operations implemented with our financing and investments have a
significant impact on the use of natural resources and generate greenhouse gas emissions. The extent and
effectiveness of these depend largely on the characteristics of the organisation or individual carrying out the
activity and their efforts to reduce environmental loads.
This material topic supports the achievement of the following SDGs:
Engagement: Our aim is to assess and understand the environmental loads and GHG emissions associated
with our services and mitigate the negative impacts, helping the transition to environmentally -sustainable
development. The Banking Group is making less use of exclusions, and is instead supporting its customers
to implement green solutions in order to ensure that fewer customers are affected by the more difficult and
costly financing that will be imposed on brown projects in the future.
Acts: Integrating ESG risks into risk management
Increasingly accurate measurement of GHG emissions of the financed portfolio
Preparing a group-wide decarbonisation plan
Continued compliance with regulatory requirements, including in respect of the green transition
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Stakeholder cooperation: The Banking Group also maintains active contact with customers and investors
to understand their expectations and to cooperate constructively, and its relations with regulators are aimed
at understanding and meeting expectations.
ST4: GRI 3-3 Green financial products
Impacts: The impacts of this topic are almost inseparable from the environmental impacts of financial
products. Green financial products support the solution of global environmental challenges and the
achievement of objectives. The positive impact can occur if activities generating actual environmental
benefits are financed. The extent of the impact is largely determined by the scale of these products.
This material topic supports the achievement of the following SDGs in the same way as the previous one:
Engagement: OTP Group strives to create an environment that supports sustainable financing and intends
to play a leading role in green financing. The Banking Group also plays a dominant role in the implementation
of initiatives of state and international institutions.
Acts: Setting strategic, medium-term targets for green lending
Developing a green loan framework
Gradual availability of green products and product variants in all segments
Active role in national and international programmes
Stakeholder cooperation: The Banking Group also maintains active contact with customers, investors, and
state and international financing institutions to understand their expectations and to cooperate
constructively. Its relations with regulators are aimed at understanding and meeting expectations.
ST9: GRI 3-3 Financing of high social risk sectors
Impacts: The risk of negative social impacts is higher for these funded activities. The negative impacts can
be avoided or mitigated by prudent lending.
This material topic supports the achievement of the following SDGs:
Engagement: OTP Group does not finance activities that violate the laws of the given country or
international law. We conduct prudent lending, as well as rigorous and conservative risk management. The
Banking Group’s @Compliance policy and relevant internal regulations contain the applicable sanctions
procedures and engagements. The relevant members of OTP Group publish extracts of the group -level
@Sanctions Policy on their website.
Acts: Social risk assessment as part of ESG risk management
Application of exclusions list, compliance with sanctions obligations
Demanding that customers comply with laws and regulations
Priority checks of sensitive transactions
Stakeholder cooperation: Its relations with regulators are aimed at understanding and meeting
expectations. The Group actively engages with investors to understand their expectations. The Group
communicates its expectations to its customers and monitors compliance with these.
Details of activities relating to material topics are presented in the following pages, along with thei r outcomes
and how their effectiveness is assessed.
For further information, visit our @website.
INTEGRATED ANNUAL REPORT 2023
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OTP BANK
2.1. Sustainable finances
BUSINESS REPORT 2023 (CONSOLIDATED)
The group-level @green loan framework was completed in 2023, setting out the general principles
of green lending, not only in Hungary, but also in Bulgaria, Slovenia, Croatia, Serbia, Albania,
Montenegro and Romania.
GRI 201-2 In addition to the extension of the framework to subsidiary banks, several new green lending
targets have been added, focusing on sectors that are relevant to OTP Group’s portfolio and to climate
change mitigation and adaptation. The relevant sectors and activities are defined at countr y level. The
framework covers the following sectors as identified in the EU Taxonomy and the CBI (Climate Bond
Initiative) Taxonomy:
• EU Taxonomy: energy, manufacturing, transport, construction and real estate, forestry, waste
management;
• CBI Taxonomy: energy, industry, transport, buildings, land use and marine resources, waste and
pollution control.
The framework covers non-retail customers, from large multinational corporations to micro-enterprises,
including municipalities and condominiums.
The compliance of green activities is verified through the country-specific Green Alignment Assessment Tool
(GAAT), for which country-specific supporting documents have been drawn up. When assessing compliance
with the EU Taxonomy, minimum safeguards (MS) are also checked, in line with the expectations.
The Green Loan Framework, which is also supported by an SPO, was approved by the MNB in July 2023.
It also ensures that loans that meet the conditions of the framework are eligible in respect of the MNB’s
green corporate and municipal preferential capital requirement programme.
A number of controlling developments have also been implemented during the year, but significant
improvements in green data infrastructure are still needed to ensure efficient recording of green loa ns at
group level.
The further detailing of targets continued, and the targets set for 2024 and 2025 have now been approved
by OTP Bank’s ESG Committee in both retail and corporate breakdown. To reach our target of HUF 1,500
billion in green loans by 2025, we have committed to dynamic growth in the next two years.
The Banking Group’s fundraising activities were again supported by the Group-wide Sustainable
Financial Framework in 2023, covering both social and environmental sustainability.
The @framework supported by an SPO12 is available on the OTP Group website, and has not changed in
2023. Under the framework, the Bank or any of its subsidiaries may issue green and social financial
instruments, including bonds, commercial paper (sustainable financial instruments). The framework was
worked out on the basis of the ICMA13 Green Bond Principles, 2021; the ICMA Social Bond Principles, 2021,
the LMA14 Green Loan Principles, 2021 and the LMA Social Loan Principles, 2021.
The framework imposes the following restrictions: sustainable financial instruments cannot be used to
finance loans related to fossil energy production, nuclear energy production, arms and defence, mining,
gambling or tobacco.
Financed green categories15:
•
•
•
green buildings,
renewable energy,
clean transportation.
Financed social categories:
•
job creation and programmes to prevent and/or alleviate unemployment resulting from socio-
economic crises, including through the potential impact of SME financing and microfinancing.
OTP Group reports to investors annually within one year of the transaction (bond issue) of the sustainable
financial instrument and thereafter until the full allocation of the proceeds. For @allocation report and
@impact assessment report for 2022 are available on the website, and the documents for 2023 will be
available in summer 2024. OTP Jelzálogbank publishes the key financial and environmental impact data
relating to the green mortgage bond it issued in 2021 (allocation report) once a year on its @website,
No green bonds and green mortgage bonds were issued in the Banking Group in 2023.
12 SPO: Second Party Opinion
13 International Capital Market Association
14 Loan Market Association
15 The precise criteria are specified in the framework.
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OTP BANK
2.2. Green lending
BUSINESS REPORT 2023 (CONSOLIDATED)
GRI 201-2, ST4: 3-3, TCFD II.a,b, IV.a,c OTP Group was able to increase the green loan and bond
portfolio on its books significantly in 2023, significantly exceeding its HUF 414 billion commitment
set for the end of 2023. Compared to the end of the previous year, the portfolio increased from
HUF 270 billion to HUF 656 billion. This is an important step towards the Banking Group becoming
a regional leader in financing a fair and gradual transition to a low carbon economy and to build a
sustainable future.
Corporate lending
The bulk of the green portfolio is comprised of corporate loans and bonds, mainly large corporate and project
loans, whose share continued to increase in 2023.
At the end of 2023, the corporate green loan portfolio at group level amounted to HUF 470 billion,
with investment projects for the use of renewable energy making up the largest share.
For years, renewable energy projects have been a preferred lending purpose in project financing. In 2023,
in response to market needs, we have added new terms and conditions for lending based on market sales
of electricity rather than a sales contract covering all or most of the financing term. Already during 2023, the
Bank has financed a number of projects where at least part of the cash flow from free market sales of
electricity is the source of the loan repayment. In addition to financing renewable energy production, project
loans for the implementation/refinancing of properties with international sustainability building certifica tion
(e.g. LEED, BREEAM) were also more prominent in 2023.
In 2023, two new renewable energy projects were contracted or refinanced in the project finance area, which
is part of the green portfolio. At the Group level, this amounted to HUF 19.2 billion, of which OTP Bank’s
share was HUF 9.6 billion. In Romania, a 48.4 MW solar farm project is under construction and a Bulgarian
wind farm with a capacity of 156 MW is being refinanced.
At the end of 2023, the total capacity of renewable energy projects in the portfolio through project financing
was 1,414 MW. In terms of capacity, wind energy accounts for two-thirds, solar energy for 31%, and projects
for water, biomass and biogas utilisation are also in the portfolio. Most of the projects are financed by the
OTP Group, with only a few cases involving third parties as financiers.
In 2023, we signed a green real estate financing contract for a property in Hungary. The loan amount is
HUF 30.6 billion and will be disbursed in 2024.
In Hungary, the active participation of banks in state-subsidised lending schemes has been the main
contributor to the growth of corporate green lending, given the macroeconomic environment. Both the
Széchenyi Investment MAX and MAX+ and the EXIM Baross Gábor Reindustrialisation Green Investment
Loan schemes included loan targets that met the conditions of the MNB’s green corporate and municipal
preferential capital requirement programme. Most of the investments implemented financed energy
efficiency improvements and/or developments related to renewable electricity production. It is typical that
micro and small enterprises have made less use of these credit facilities. Developing our own product would
not have been a competitive alternative in this environment, and thus we did not offer such product.
INTEGRATED ANNUAL REPORT 2023
95
27%46%14%1%11%Capacity of renewable energy sources (MW)Project financing portfolio31 December 2023HungaryRomaniaBulgariaCroatiaSerbia
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
The Green Loan Framework also provides borrowing opportunities for agricultural customers, but the
portfolio in this sector is not yet significant.
Most of the corporate loans (45%) are part of the portfolio of the Hungarian member c ompanies, while 32%
are on the books of Bulgarian DSK. The other subsidiary banks with a green loan portfolio each account for
less than ten percent of the portfolio.
Typical green loans of subsidiary banks 16:
BG The Bulgarian subsidiary’s portfolio includes loans for renewable energy production and electric vehicle
financing. Approximately 50 new transactions were concluded in 2023.
SI The two Slovenian subsidiary banks are seeing a strong engagement to ESG among their large corporate
customers, with demand for green loans focusing on energy efficiency, project financing and the financing
of the transition, In 2024, green products will be launched as a joint product of SKB and NKBM17.
HR In 2023, the Croatian subsidiary bank introduced two products for micro and small business customers.
Sunny loans are available for solar panel installation and other energy efficiency equipment. The
condominium loan can be used for building renovation, energy efficiency improvements and is subsidised
by the EU. In 2023, disbursements were made to 36 customers. The Bank also offers financial instruments
linked to the use of funds from the EU’s national Recovery and Resilience Facility (RFF) as part of several
schemes, supporting green transition and/or digital transformation in specific areas of Croatia, as well as
supporting R&D&I and other investments that support competitiveness and resilience. In 2023, four loans
were accepted by the subsidiary bank.
RS The Serbian subsidiary is involved in several collaborations to help make green loans more accessible.
It cooperates with the EFSE (European Fund for Southeast Europe), IFIs (International Financing
Institutions) and helps to implement environmental investment projects through the Green for Growth Fund.
UZ The Uzbek subsidiary bank provides businesses with low-interest, preferential loans for solar panel and
battery installation. In 2023, approximately 50 businesses used the product. The bank has started
negotiations with the EBRD to participate in several schemes.
UA Under the EBRD-supported scheme, small and medium-sized enterprises can purchase electric and
hybrid cars with a 20 percent subsidy and receive investment loans for energy efficiency. 90 people used
the scheme for vehicle purchases in 2023. The investment loan is a new facility, and has not been disbursed
yet in 2023. It was designed to be accessible to local agricultural producers.
RO OTP Bank Romania is seeing a growing demand for green financing among its corporate customers,
with loans also provided for solar farm and wind turbine projects. The bank held ESG workshops for
16 The green loan portfolio only includes loans from the Bulgarian, Croatian, Serbian, Albanian and Romanian subsidiary banks an d Slovenian SKB
Bank.
17 NKBM portfolios will be included in the green loan portfolio from 2024 onwards, and are not included in 20 23 data. In 2023, the definitions of green
lending were agreed and the OTP Green Loan Framework was rolled out in the bank, but consistent data reporting has not yet be en implemented in the
subsidiary acquired in 2023.
INTEGRATED ANNUAL REPORT 2023
96
56.75%14.06%29.17%0.03%Breakdown of corporate green loans by loan purpose 31 December 2023Renewable energyElectromobilityReal estateAgriculture
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
corporate customers on responsible finance and investment strategies. In addition, it also helped with the
purchase of electric and plug-in hybrid vehicles.
MD In 19 cases, the Moldovan subsidiary bank provided loans under the EU4BUSINESS EBRD preferential
lending facility, partly for environmental purposes. In 2023, the EIB decided to extend the availability of funds
under the Fruit Garden scheme by two years and expanded the eligibility for grain production, livestock
breeding and fish farming. In 2023, OTP Bank Moldova disbursed 17 loans. The Moldovan subsidiary has
seen a significant increase in lending for energy efficiency and renewable energy investment projects, with
numerous companies building solar parks and electric charging stations in the country.
Retail loans
The year-end green loan portfolio amounted to HUF 148 billion.18
In July 2023, OTP Bank introduced two new own products, the OTP Green Housing Loan and the Green
Évnyerő Housing Loan for the purchase, construction and modernisation of new homes. The only difference
between the two products is in the repayment schedule.
The retail green loan portfolio consists mainly of loans under the Hungarian Green Home Program (ZOP),
which was available in 2021 and 2022 for the purchase or construction of energy -efficient new homes.
In 2023, a total of HUF 34.5 billion was disbursed for new green housing loan transactions.
The uniform registration of retail green loans in foreign subsidiary banks has not yet been implemented in
2023, therefore, they are not included in the portfolio, but the available schemes are presented below.
BG At DSK Bank, the preferential mortgage loan product has been available from the end of 2022 for
residential properties with an energy rating B or better. By the end of 2023, the bank has disbursed
approximately 150 loans.
SI At Slovenian NKBM, green housing, electromobility and energy efficiency loans were available in 2023,
with preferential interest rates to encourage take-up. The housing loan can be used to buy, build and insulate
energy-efficient homes, as well as to install solar panels and heat pumps. By the end of 2023, 55
disbursements had been made, 90 percent of which were used by customers for solar panel installation. For
loans for the purchase and installation of energy-efficient equipment and for the purchase of hybrid and
electric vehicles, 9 disbursements have been made by the end of 2023, 96% of these for the purchase of
electric cars. In the second half of 2023, SKB Bank introduced the green housing loan product, also for the
purchase and renovation of energy-efficient residential property.
2.3. Disclosure according to the Taxonomy Regulation
Information to be disclosed by undertakings subject to Articles 19a or 29a of Directive 2013/34/EU
concerning environmentally sustainable economic activities according to Regulation (EU) 2020/852
regulation
I. Mandatory disclosure
Own indicator The Taxonomy Regulation applies to financial market participants that make available
financial products and undertakings which are subject to the obligation to publish a non -financial statement
or a consolidated non-financial statement pursuant to Article 19a or Article 29a of Directive No. 2013/34/EU
of the European Parliament and of the Council, respectively (Article 1 (b) and (c) of Chapter I of (EU)
2020/852). Pursuant to Article 8 of the Taxonomy Regulation, any undertaking which is subject to an
obligation to disclose non-financial information pursuant to Article 19a or Article 29a of Directive No.
2013/34/EU shall include in its non-financial statement or consolidated non-financial statement information
on how and to what extent the undertaking’s activities are associated with economic activities that qualify
as environmentally sustainable under Articles 3 and 9 of (EU) 2020/852 Regulation. The OTP group report
is based on the exposures and balance sheet according to the scope of prudential consolidation in
accordance with Regulation (EU) No. 575/2013, Title II, Chapter 2, Section 2 for the types of assets and
accounting portfolios specified in point 1.1.2 of Annex V of Commission Delegated Regulation (EU) No.
2021/2178, including information on stock and flows, on transitional and enabling activities, and on
specialised and general purpose lending.
18 This amount comprises only the Hungarian portfolio already accounted for towards the MNB in the latter’s Green Preferential Capital Requirement
Programme in the case of which the disbursed amount is slightly higher.
INTEGRATED ANNUAL REPORT 2023
97
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
The tables below present the consolidated information on OTP Group’s mandatory KPIs under Regulation
(EU) No. 2020/852 (Taxonomy Regulation), which have been prepared using the template published in
Annex VI of Regulation No. 2021/2178. The gross carrying amount of exposures are based on the reference
date of 31. December 2023.
OTP Group discloses the relevant KPIs on a consolidated basis, taking into account the scope o f prudential
consolidation, in accordance with Annex V, point 1.1.1 of EU 2021/2178. Accordingly, the exposures of the
various subsidiaries, including those of fund managers and credit institutions, are part of the consolidated
credit institution KPIs.
There are several explanations regarding the low taxonomy-aligned stock and KPI percentage disclosed in
the mandatory part. First of all, as part of the mandatory reporting, in line with legal compliance, only the
exposures of companies fall under the "non-financial reporting obligation" were included. Significant share
of OTP Group's corporate funding (> 90%) is directed to non-financial companies that are not subject of
NFRD obligation. This means that the taxonomy related share of such exposures is not incl uded as part of
the mandatory reporting. Moreover, the green financing of taking place in non -EU subsidiaries is also not
covered by the mandatory reporting and as such excluded from the KPIs.
The interpretation of the alignment requirement for retail exposures has been significantly amended by the
draft EU Commission Notice published in December 2023. According to the draft notice, funding towards
households that only meet the substantial contribution criterion cannot be considered as aligned. The
necessary information and data to fulfil the additional conditions is not available due to the short notice
involved. Therefore, following prudent approach, these exposures have not been taken into account in the
KPI calculation at this stage.
For taxonomy-eligible stocks, the percentage decreased slightly compared to the same data last year,
despite of the increase in green stocks. This is the result of at least two things: an increase in the balance
sheet total and a change in methodology.
We would like to highlight, that as disclosed in Table 1 line #20 below, the share of taxonomy -eligible
exposures compared to the total asset of non-financial undertakings subject to "non-financial reporting"
obligation is more than 16%. Moreover, the their ratio of taxonomy -aligned exposures is close to 6.5%. In
addition, the share of the taxonomy-eligible household portfolio compared to total household exposure
exceeds 27%, a significant share of which is related to the purchase, construction or renovation of real
estate. The same ratio for retail car loans is 38%.
Overall, the main KPI indicators in the mandatory report do not fully reflect the efforts of the OTP Group in
the area of sustainable finance. Therefore, information on the broader green portfolio of the OTP Group is
presented as part of the voluntary report.
Templates 1 to 5 for OTP Group as published in Annex VI of Regulation No. 2021/2178 and the templates
of KPIs for the EU subsidiary banks using the same methodology are part of the mandatory report.
INTEGRATED ANNUAL REPORT 2023
98
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
0. Summary of KPIs to be disclosed by credit institutions under Article 8 Taxonomy Regulation
Main KPI
Green asset ratio (GAR) stock
Total environmentally
sustainable assets
(Turnover) HUF mn
12,451.02
Total
environmentally
sustainable
assets (CapEx)
HUF mn
23,481.10
KPI –
turnover2
0.05%
KPI –
CapEx3
0.09%
1 % of assets covered by the KPI (GAR total asset) over banks’ total assets
2 based on the turnover KPI of the counterparty
3 based on the CapEx KPI of the counterparty, except for lending activities where for general lending turnover KPI is used
% of assets
excluded from
the numerator
of the GAR
(Article 7 (2)
and (3) and
Section 1.1.2.
of Annex V)
29.19%
% of assets
excluded from
the
denominator
of the GAR
(Article 7 (1))
and Section
1.2.4 of
Annex V)
35.17%
%
coverage
(over
total
assets)1
64.83%
Total environmentally
sustainable activities
(Turnover) HUF mn
3.31
0.00
Total
environmentally
sustainable
activities (CapEx)
HUF mn
346.09
0.00
KPI -
turnover
(compared
to flow of
total
covered
assets)
0.000%
0.00%
KPI - CapEx
(compared
to flow of
total
covered
assets)
0.005%
0.00%
%
coverage
(over total
assets)
54.35%
2,033.70
6,130.15
0.01%
0.02%
% of assets
excluded from
the numerator
of the GAR
(Article 7 (2)
and (3) and
Section 1.1.2.
of Annex V)
24.61%
% of assets
excluded from
the
denominator of
the GAR
(Article 7 (1))
and Section
1.2.4 of
Annex V)
45.65%
Additional KPIs
GAR (flow)
Financial guarantees
Assets under
management
Comment 1: For reporting templates: cells with a black background do not need to be completed.
Comment 2: Fees and commissions (worksheet 6) and the Trading book (worksheet 7) are only applicable from 2026,
INTEGRATED ANNUAL REPORT 2023
99
OTP BANK
1. Assets for the calculation of GAR (Turnover)
in HUF million
Total [gross]
carrying amount
BUSINESS REPORT 2023 (CONSOLIDATED)
Disclosure reference date 31.12.2023
Climate Change Mitigation (CCM)
Of which towards taxonomy relevant sectors
(Taxonomy-eligible)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which
Of which
enabling
transitional
Of which Use
of Proceeds
Climate Change Adaptation
(CCA)
Of which towards taxonomy
relevant sectors (Taxonomy-
eligible)
Of which environmentally
sustainable (Taxonomy-aligned)
Of which
enabling
Of which Use of
Proceeds
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Of which environmentally sustainable (Taxonomy-
aligned)
Of which
enabling
Of which Use
of Proceeds
Of which
transitional
1
GAR - Covered assets in both
numerator and denominator
Loans and advances, debt securities
and equity instruments not HfT eligible
for GAR calculation
2 Financial undertakings
3 Credit institutions
4 Loans and advances
5 Debt securities, including UoP
6 Equity instruments
7 Other financial corporations
8 of which investment firms
9 Loans and advances
10 Debt securities, including UoP
11 Equity instruments
12 of which management companies
13 Loans and advances
14 Debt securities, including UoP
15 Equity instruments
16 of which insurance undertakings
17 Loans and advances
18 Debt securities, including UoP
19 Equity instruments
20 Non-financial undertakings
21 Loans and advances
22 Debt securities, including UoP
23 Equity instruments
24 Households
25
of which loans collateralised by
residential immovable property
26 of which building renovation loans
27 of which motor vehicle loans
28 Local governments financing
14,106,303 3,339,778 0
0 0
0 0
0 0
0 0
0 0
0 0
2,191,060
1,435,223
854,447
580,776
0
755,837
59,625
59,624
0
1
26,032
0
0
26,032
1,797
1,795
0
1
192,736
76,929
115,807
0
11,722,507 3,339,778
4,915,444 3,040,924
127,689 127,416
446,413 171,438
0 0
0
0
0
0
0
0
0
0
0
0 0 0
0 0 0
0 0 0
0 0 0
0 0 0
0 0 0
0 0 0
0
0
0
0
0
0
0
0 3,375,433 12,451
0
0
0
0
0
4,288
0
0
0
0
0
0
0
0
0
4,288
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
31,367 12,451
20,111 6,135
11,255 6,316
0
0
0
3,339,778
0
0
0 0 0
0
3,040,924
127,416
171,438
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
INTEGRATED ANNUAL REPORT 2023
100
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Of which environmentally sustainable (Taxonomy-
aligned)
Of which
enabling
0
0
Of which Use
of Proceeds
0
0
Of which
transitional
0
0
0
0
0
0
0
0
in HUF million
Total [gross]
carrying amount
Disclosure reference date 31.12.2023
Climate Change Mitigation (CCM)
Of which towards taxonomy relevant sectors
(Taxonomy-eligible)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which
Of which
enabling
transitional
Of which Use
of Proceeds
Climate Change Adaptation
(CCA)
Of which towards taxonomy
relevant sectors (Taxonomy-
eligible)
Of which environmentally
sustainable (Taxonomy-aligned)
Of which
enabling
Of which Use of
Proceeds
31
29 Housing financing
30 Other local government financing
Collateral obtained by taking
possession: residential and
commercial immovable properties
Assets excluded from the numerator
for GAR calculation (covered in the
denominator)
Financial and Non-financial
undertakings
SMEs and NFCs (other than SMEs) not
subject to NFRD disclosure obligations
34
32
33
35 Loans and advances
36
of which loans collateralised by
commercial immovable property
37 of which building renovation loans
38 Debt securities
39 Equity instruments
49
Non-EU country counterparties not
subject to NFRD disclosure obligations
41 Loans and advances
42 Debt securities
43 Equity instruments
44 Derivatives
45 On demand interbank loans
46 Cash and cash-related assets
47
Other categories of assets (e.g.
Goodwill, commodities etc.)
0
0
0
10,315
11,562,435
9,385,343
6,860,587
6,712,884
146,932
771
2,524,756
2,492,214
30,472
2,070
41,967
574,648
605,799
954,677
48 Total GAR assets
25,679,052 3,339,778 0
0
0 0 0
0
0 3,375,433 12,451
0
0
0
49
50
Assets not covered for GAR
calculation
Central governments and
Supranational issuers
51 Central banks exposure
52 Trading book
53 Total assets
13,930,092
6,307,758
7,401,137
221,197
39,609,144 3,339,778 0
0
0 0 0
0
0 3,375,433 12,451
0
0
0
INTEGRATED ANNUAL REPORT 2023
101
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
in HUF million
Total [gross]
carrying amount
Disclosure reference date 31.12.2023
Climate Change Mitigation (CCM)
Of which towards taxonomy relevant sectors
(Taxonomy-eligible)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which
Of which
enabling
transitional
Of which Use
of Proceeds
Climate Change Adaptation
(CCA)
Of which towards taxonomy
relevant sectors (Taxonomy-
eligible)
Of which environmentally
sustainable (Taxonomy-aligned)
Of which
enabling
Of which Use of
Proceeds
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Of which environmentally sustainable (Taxonomy-
aligned)
Of which
enabling
Of which Use
of Proceeds
Of which
transitional
Off-balance sheet exposures - Undertakings subject to NFRD disclosure obligations
54 Financial guarantees
55 Assets under management
56 Of which debt securities
57 Of which equity instruments
173,787
1,651,364
794,009
274,403
0 0
0
0 0 0
0
0
22,282 2,034
76
21,349 1,958
933
0
0
0
346
0
346
1,688
76
1,612
INTEGRATED ANNUAL REPORT 2023
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OTP BANK
2. Assets for the calculation of GAR (CapEx)
in HUF million
Total [gross]
carrying amount
BUSINESS REPORT 2023 (CONSOLIDATED)
Disclosure reference date 31.12.2023
Climate Change Mitigation (CCM)
Of which towards taxonomy relevant sectors
(Taxonomy-eligible)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which
Of which
enabling
transitional
Of which Use
of Proceeds
Climate Change Adaptation
(CCA)
Of which towards taxonomy
relevant sectors (Taxonomy-
eligible)
Of which environmentally
sustainable (Taxonomy-aligned)
Of which
enabling
Of which Use of
Proceeds
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which environmentally sustainable (Taxonomy-
aligned)
Of which
enabling
Of which Use
of Proceeds
Of which
transitional
1
GAR - Covered assets in both
numerator and denominator
Loans and advances, debt securities
and equity instruments not HfT eligible
for GAR calculation
2 Financial undertakings
3 Credit institutions
4 Loans and advances
5 Debt securities, including UoP
6 Equity instruments
7 Other financial corporations
8 of which investment firms
9 Loans and advances
10 Debt securities, including UoP
11 Equity instruments
12 of which management companies
13 Loans and advances
14 Debt securities, including UoP
15 Equity instruments
16 of which insurance undertakings
17 Loans and advances
18 Debt securities, including UoP
19 Equity instruments
20 Non-financial undertakings
21 Loans and advances
22 Debt securities, including UoP
23 Equity instruments
24 Households
25
of which loans collateralised by
residential immovable property
26 of which building renovation loans
27 of which motor vehicle loans
28 Local governments financing
14,106,303 3,339,778 0
0 0
0 0
0 0
0 0
0 0
0 0
2,191,060
1,435,223
854,447
580,776
0
755,837
59,625
59,624
0
1
26,032
0
0
26,032
1,797
1,795
0
1
192,736
76,929
115,807
0
11,722,507 3,339,778
4,915,444 3,040,924
127,689 127,416
446,413 171,438
0 0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0 0 0
0 0 0
0 0 0
0 0 0
0 0 0
0 0 0
0 0 0
0
0
0
0
0
0
0
0 3,390,535 23,481
0
0
0
0
0
3,358
0
0
0
0
0
0
0
0
0
3,358
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
47,400 23,481
26,788 14,188
20,612 9,293
0
0
0
3,339,778
0
0
0
0
0 0 0
0
3,040,924
127,416
171,438
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
INTEGRATED ANNUAL REPORT 2023
103
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which environmentally sustainable (Taxonomy-
aligned)
Of which
enabling
0
0
Of which Use
of Proceeds
0
0
Of which
transitional
0
0
0
0
0
0
0
0
in HUF million
Total [gross]
carrying amount
Disclosure reference date 31.12.2023
Climate Change Mitigation (CCM)
Of which towards taxonomy relevant sectors
(Taxonomy-eligible)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which
Of which
enabling
transitional
Of which Use
of Proceeds
Climate Change Adaptation
(CCA)
Of which towards taxonomy
relevant sectors (Taxonomy-
eligible)
Of which environmentally
sustainable (Taxonomy-aligned)
Of which
enabling
Of which Use of
Proceeds
31
29 Housing financing
30 Other local government financing
Collateral obtained by taking
possession: residential and
commercial immovable properties
Assets excluded from the numerator
for GAR calculation (covered in the
denominator)
Financial and Non-financial
undertakings
SMEs and NFCs (other than SMEs) not
subject to NFRD disclosure obligations
34
33
32
35 Loans and advances
36
of which loans collateralised by
commercial immovable property
37 of which building renovation loans
38 Debt securities
39 Equity instruments
49
Non-EU country counterparties not
subject to NFRD disclosure obligations
41 Loans and advances
42 Debt securities
43 Equity instruments
44 Derivatives
45 On demand interbank loans
46 Cash and cash-related assets
47
Other categories of assets (e.g.
Goodwill, commodities etc.)
0
0
0
10,315
11,562,435
9,385,343
6,860,587
6,712,884
146,932
771
2,524,756
2,492,214
30,472
2,070
41,967
574,648
605,799
954,677
48 Total GAR assets
25,679,052 3,339,778 0
0
0
0 0 0
0
0 3,390,535 23,481
0
0
0
49
Assets not covered for GAR
calculation
50
Central governments and
Supranational issuers
51 Central banks exposure
13,930,092
6,307,758
7,401,137
INTEGRATED ANNUAL REPORT 2023
104
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
in HUF million
Total [gross]
carrying amount
Disclosure reference date 31.12.2023
Climate Change Mitigation (CCM)
Of which towards taxonomy relevant sectors
(Taxonomy-eligible)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which
Of which
enabling
transitional
Of which Use
of Proceeds
Climate Change Adaptation
(CCA)
Of which towards taxonomy
relevant sectors (Taxonomy-
eligible)
Of which environmentally
sustainable (Taxonomy-aligned)
Of which
enabling
Of which Use of
Proceeds
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which environmentally sustainable (Taxonomy-
aligned)
Of which
enabling
Of which Use
of Proceeds
Of which
transitional
221,197
52 Trading book
53 Total assets
Off-balance sheet exposures - Undertakings subject to NFRD disclosure obligations
54 Financial guarantees
55 Assets under management
56 Of which debt securities
57 Of which equity instruments
173,787
1,651,364
794,009
274,403
39,609,144 3,339,778 0
0 0
0
0
0
0
0 0 0
0 0 0
0
0
0 3,390,535 23,481
0
31,796 6,130
113
30,407 6,018
1,389
0
0
0
0
0
0
2,092
1
2,090
4,039
112
3,927
INTEGRATED ANNUAL REPORT 2023
105
OTP BANK
2. GAR sector information (Turnover)
BUSINESS REPORT 2023 (CONSOLIDATED)
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA + WMR + CE + P + BE)
Breakdown by sector -
NACE 4 digits level
(code and label)
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates (Subject to
NFRD)
SMEs and other NFC not subject to
NFRD
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
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
6420
2442
1920
2120
4211
6201
4690
3250
1107
1105
6110
6831
3511
2732
2550
2012
3513
4634
2059
5221
7010
2110
6190
2219
4730
2041
3523
N/A
HUF
mn
Of which
environmentally
sustainable (CCM)
HUF
mn
Of which
environmentally
sustainable (CCM)
HUF
mn
Of which
environmentally
sustainable (CCA)
HUF
mn
Of which
environmentally
sustainable (CCA)
HUF
mn
53,016
11,420
27,517
26
739
26,372
25
1,825
355
4,893
2,522
5,208
5,689
1,744
10,979
1
2,926
1,453
698
2,930
14,894
3,898
1,057
2,257
365
1,625
1,717
6,585
HUF
mn
Of which environmentally
sustainable (CCM + CCA +
WTR + CE + PPC + BIO)
Of which environmentally
sustainable (CCM + CCA +
WTR + CE + PPC + BIO)
7,952
9,365
1,928
0
311
451
0
0
0
0
53
4,984
2,265
628
0
0
2,911
0
93
0
21
0
19
160
65
0
129
31
INTEGRATED ANNUAL REPORT 2023
106
OTP BANK
2. GAR sector information (CapEx)
BUSINESS REPORT 2023 (CONSOLIDATED)
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA + WMR + CE + P + BE)
Breakdown by sector -
NACE 4 digits level
(code and label)
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates (Subject to
NFRD)
SMEs and other NFC not subject to
NFRD
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
HUF
mn
Of which
environmentally
sustainable (CCM)
HUF
mn
Of which
environmentally
sustainable (CCM)
HUF
mn
Of which
environmentally
sustainable (CCA)
HUF
mn
Of which
environmentally
sustainable (CCA)
HUF
mn
Of which environmentally
sustainable (CCM + CCA +
WTR + CE + PPC + BIO)
HUF
mn
Of which environmentally
sustainable (CCM + CCA +
WTR + CE + PPC + BIO)
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
6420
2442
1920
2120
4211
6201
4690
3250
1107
1105
6110
6831
3511
2732
2550
2012
3513
4634
2059
5221
7010
2110
6190
2219
4730
2041
3523
N/A
53,016
11,420
27,517
26
739
26,372
25
1,825
355
4,893
2,522
5,208
5,689
1,744
10,979
1
2,926
1,453
698
2,930
14,894
3,898
1,057
2,257
365
1,625
1,717
6,585
20,676
4,454
3,817
0
163
259
4
778
0
19
71
5,010
3,953
663
321
0
2,920
0
130
0
2,820
417
8
169
159
0
300
289
INTEGRATED ANNUAL REPORT 2023
107
OTP BANK
3. GAR KPI stock (Turnover)
BUSINESS REPORT 2023 (CONSOLIDATED)
% (compared to total covered assets in
the denominator)
GAR - Covered assets in both
numerator and denominator
Loans and advances, debt
securities and equity
instruments not HfT eligible for
GAR calculation
1
2 Financial undertakings
3 Credit institutions
4 Loans and advances
5 Debt securities, including UoP
6 Equity instruments
7 Other financial corporations
8 of which investment firms
9 Loans and advances
10 Debt securities, including UoP
11 Equity instruments
12
of which management
companies
13 Loans and advances
14 Debt securities, including UoP
15 Equity instruments
of which insurance
undertakings
16
17 Loans and advances
18 Debt securities, including UoP
19 Equity instruments
20 Non-financial undertakings
21 Loans and advances
22 Debt securities, including UoP
23 Equity instruments
24 Households
25
of which loans collateralised by
residential immovable property
Disclosure reference date 31.12.2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Of which
enabling
Of which Use of
Proceeds
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Proportion of
total assets
covered
13.0% 0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0% 13.1% 0.0%
0.0%
0.0%
0.0%
8.5%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
13.0% 0.0%
11.8% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0%
0.0% 0.0%
0.0%
0.0%
0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0%
0.0% 0.0%
0.0% 0.0%
0.0%
0.0% 0.0%
0.0%
0.0% 0.0%
0.0%
0.1% 0.0%
0.0%
0.1% 0.0%
0.0%
0.0% 0.0%
0.0%
0.0% 0.0%
0.0%
0.0% 13.0% 0.0%
0.0% 11.8% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
INTEGRATED ANNUAL REPORT 2023
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.1%
0.1%
0.0%
0.0%
8.4%
7.7%
108
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
Disclosure reference date 31.12.2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Of which
enabling
Of which Use of
Proceeds
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Proportion of
total assets
covered
0.5% 0.0%
0.7% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.5% 0.0%
0.0%
0.0%
0.0%
0.7% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0%
0.0% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.3%
0.4%
0.0%
0.0%
0.0%
0.0% 0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0% 0.0%
0.0%
0.0%
0.0%
0.0%
% (compared to total covered assets in
the denominator)
26
of which building renovation
loans
27 of which motor vehicle loans
28 Local governments financing
29 Housing financing
30
31
Other local government
financing
Collateral obtained by taking
possession: residential and
commercial immovable
properties
32 Total GAR assets
13.01% 0.00%
0.00%
0.00%
0.00% 0.00% 0.00%
0.00%
0.00% 13.14% 0.05%
0.00%
0.00%
0.00%
8.52%
INTEGRATED ANNUAL REPORT 2023
109
OTP BANK
3. GAR KPI stock (CapEx)
% (compared to total covered assets in
the denominator)
GAR - Covered assets in both
numerator and denominator
Loans and advances, debt
securities and equity
instruments not HfT eligible for
GAR calculation
1
2 Financial undertakings
3 Credit institutions
4 Loans and advances
5 Debt securities, including UoP
6 Equity instruments
7 Other financial corporations
8 of which investment firms
9 Loans and advances
10 Debt securities, including UoP
11 Equity instruments
12
of which management
companies
13 Loans and advances
14 Debt securities, including UoP
15 Equity instruments
of which insurance
undertakings
16
17 Loans and advances
18 Debt securities, including UoP
19 Equity instruments
20 Non-financial undertakings
21 Loans and advances
22 Debt securities, including UoP
23 Equity instruments
24 Households
25
26
of which loans collateralised by
residential immovable property
of which building renovation
loans
BUSINESS REPORT 2023 (CONSOLIDATED)
Disclosure reference date 31.12.2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Of which
enabling
Of which Use of
Proceeds
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Proportion of
total assets
covered
13.0% 0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0% 13.2% 0.1%
0.0%
0.0%
0.0%
13.2%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
13.0% 0.0%
11.8% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0%
0.0% 0.0%
0.0%
0.0%
0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0%
0.0% 0.0%
0.0% 0.0%
0.0%
0.0% 0.0%
0.0%
0.0% 0.0%
0.0%
0.2% 0.1%
0.0%
0.1% 0.1%
0.0%
0.1% 0.0%
0.0%
0.0%
0.0% 0.0%
0.0% 13.0% 0.0%
0.0% 11.8% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.1%
0.1%
0.1%
0.0%
8.4%
7.7%
0.5% 0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.5% 0.0%
0.0%
0.0%
0.0%
0.3%
INTEGRATED ANNUAL REPORT 2023
110
30
31
Other local government
financing
Collateral obtained by taking
possession: residential and
commercial immovable
properties
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Disclosure reference date 31.12.2023
% (compared to total covered assets in
the denominator)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
27 of which motor vehicle loans
28 Local governments financing
29 Housing financing
0.7% 0.0%
0.0% 0.0%
0.0% 0.0%
Of which Use
of Proceeds
0.0%
0.0%
0.0%
Of which
transitional
0.0%
0.0%
0.0%
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Of which
enabling
0.0%
0.0%
0.0%
Of which Use of
Proceeds
0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
Of which
enabling
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Proportion of
total assets
covered
Of which Use
of Proceeds
0.0%
0.0%
0.0%
Of which
transitional
0.0%
0.0%
0.0%
Of which
enabling
0.0%
0.0%
0.0%
0.7% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0% 0.0%
0.0%
0.0%
0.0%
0.4%
0.0%
0.0%
0.0%
0.0% 0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0% 0.0%
0.0%
0.0%
0.0%
0.0%
32 Total GAR assets
13.01% 0.00%
0.00%
0.00%
0.00% 0.00% 0.00%
0.00%
0.00% 13.20% 0.09%
0.00%
0.00%
0.00%
8.56%
INTEGRATED ANNUAL REPORT 2023
111
OTP BANK
4. GAR KPI flow (Turnover)
% (compared to flow of total covered
assets)
GAR - Covered assets in
both numerator and
denominator
Loans and advances, debt
securities and equity
instruments not HfT eligible for
GAR calculation
1
2 Financial undertakings
3 Credit institutions
4 Loans and advances
5 Debt securities, including UoP
6 Equity instruments
7 Other financial corporations
8 of which investment firms
9 Loans and advances
10 Debt securities, including UoP
11 Equity instruments
12
of which management
companies
13 Loans and advances
14 Debt securities, including UoP
15 Equity instruments
of which insurance
undertakings
16
17 Loans and advances
18 Debt securities, including UoP
19 Equity instruments
20 Non-financial undertakings
21 Loans and advances
22 Debt securities, including UoP
23 Equity instruments
24 Households
25
of which loans collateralised by
residential immovable property
BUSINESS REPORT 2023 (CONSOLIDATED)
Climate Change Mitigation (CCM)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Disclosure reference date 31.12.2023
Climate Change Adaptation (CCA)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Of which
enabling
Of which Use of
Proceeds
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Proportion of
total new assets
covered
24.1% 0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0% 24.2% 0.0%
0.0%
0.0%
0.0%
13.1%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
24.1% 0.0%
22.1% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0%
0.0% 0.0%
0.0%
0.0%
0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0%
0.0% 0.0%
0.0% 0.0%
0.0%
0.0% 0.0%
0.0%
0.0% 0.0%
0.0%
0.1% 0.0%
0.0%
0.1% 0.0%
0.0%
0.0% 0.0%
0.0%
0.0% 0.0%
0.0%
0.0% 24.1% 0.0%
0.0% 22.1% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
INTEGRATED ANNUAL REPORT 2023
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
13.1%
12.0%
112
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
% (compared to flow of total covered
assets)
Climate Change Mitigation (CCM)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Disclosure reference date 31.12.2023
Climate Change Adaptation (CCA)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Of which
enabling
Of which Use of
Proceeds
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Proportion of
total new assets
covered
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.9% 0.0%
0.0%
0.0%
0.0%
1.1% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0%
0.0% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.5%
0.6%
0.0%
0.0%
0.0%
26
of which building renovation
loans
0.9% 0.0%
27 of which motor vehicle loans
28 Local governments financing
29 Housing financing
1.1% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
30
31
Other local government
financing
Collateral obtained by taking
possession: residential and
commercial immovable
properties
0.0% 0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0% 0.0%
0.0%
0.0%
0.0%
0.0%
32 Total GAR assets
24.08% 0.00%
0.00%
0.00%
0.00% 0.00% 0.00%
0.00%
0.00% 24.17% 0.00%
0.00%
0.00%
0.00%
13.14%
INTEGRATED ANNUAL REPORT 2023
113
OTP BANK
4. GAR KPI flow (CapEx)
% (compared to flow of total covered
assets)
GAR - Covered assets in
both numerator and
denominator
Loans and advances, debt
securities and equity
instruments not HfT eligible for
GAR calculation
1
2 Financial undertakings
3 Credit institutions
4 Loans and advances
5 Debt securities, including UoP
6 Equity instruments
7 Other financial corporations
8 of which investment firms
9 Loans and advances
10 Debt securities, including UoP
11 Equity instruments
12
of which management
companies
13 Loans and advances
14 Debt securities, including UoP
15 Equity instruments
of which insurance
undertakings
16
17 Loans and advances
18 Debt securities, including UoP
19 Equity instruments
20 Non-financial undertakings
21 Loans and advances
22 Debt securities, including UoP
23 Equity instruments
24 Households
25
of which loans collateralised by
residential immovable property
BUSINESS REPORT 2023 (CONSOLIDATED)
Disclosure reference date 31.12.2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Of which
enabling
Of which Use of
Proceeds
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Proportion of
total new assets
covered
24.1% 0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0% 24.1% 0.0%
0.0%
0.0%
0.0%
13.1%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
24.1% 0.0%
22.1% 0.0%
0.9% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0%
0.0% 0.0%
0.0%
0.0%
0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0%
0.0% 0.0%
0.0% 0.0%
0.0%
0.0% 0.0%
0.0%
0.0% 0.0%
0.0%
0.1% 0.0%
0.0%
0.0% 0.0%
0.0%
0.0% 0.0%
0.0%
0.0% 24.1% 0.0%
0.0% 22.1% 0.0%
0.0%
0.9% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
INTEGRATED ANNUAL REPORT 2023
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
114
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
% (compared to flow of total covered
assets)
Disclosure reference date 31.12.2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Of which
enabling
Of which Use of
Proceeds
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Proportion of
total new assets
covered
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0% 0.0% 0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
1.1% 0.0%
0.0%
0.0%
0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0%
0.0% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
26
of which building renovation
loans
1.1% 0.0%
27 of which motor vehicle loans
28 Local governments financing
29 Housing financing
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
30
31
Other local government
financing
Collateral obtained by taking
possession: residential and
commercial immovable
properties
0.0% 0.0%
0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
0.0% 0.0%
0.0%
0.0%
0.0%
0.0%
32 Total GAR assets
24.08% 0.00%
0.00%
0.00%
0.00% 0.00% 0.00%
0.00%
0.00% 24.13% 0.00%
0.00%
0.00%
0.00%
13.12%
INTEGRATED ANNUAL REPORT 2023
115
OTP BANK
5. KPI off-balance sheet exposures (Turnover)
BUSINESS REPORT 2023 (CONSOLIDATED)
Climate Change Mitigation (CCM)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Of which
Of which
enabling
transitional
Of which Use of
Proceeds
Disclosure reference date 31.12.2023
Climate Change Adaptation (CCA)
Proportion of total covered assets funding taxonomy
relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Of which
enabling
Of which Use of
Proceeds
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Of which
Of which
enabling
transitional
Of which Use of
Proceeds
0.00% 0.00%
0.00%
0.00%
0.00% 0.00% 0.00%
0.00%
0.00% 0.00% 0.00%
0.00%
0.00%
0.00%
0.00% 0.00%
0.00%
0.00%
0.00% 0.00% 0.00%
0.00%
0.00% 1.35% 0.12%
0.00%
0.02%
0.10%
% (compared to total
assets covered)
1
2
Financial guarantees
(FinGuar KPI)
Assets under
management (AuM
KPI)
5. KPI off-balance sheet exposures (CapEx)
Climate Change Mitigation (CCM)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Of which
Of which
enabling
transitional
Of which Use of
Proceeds
Disclosure reference date 31.12.2023
Climate Change Adaptation (CCA)
Proportion of total covered assets funding taxonomy
relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Of which
enabling
Of which Use of
Proceeds
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Of which
Of which
enabling
transitional
Of which Use of
Proceeds
0.00% 0.00%
0.00%
0.00%
0.00% 0.00% 0.00%
0.00%
0.00% 0.00% 0.00%
0.00%
0.00%
0.00%
0.00% 0.00%
0.00%
0.00%
0.00% 0.00% 0.00%
0.00%
0.00% 1.93% 0.37%
0.00%
0.13%
0.24%
% (compared to total assets
covered)
1
2
Financial guarantees
(FinGuar KPI)
Assets under
management (AuM
KPI)
INTEGRATED ANNUAL REPORT 2023
116
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
Summary of credit institution KPIs for the OTP Group's subsidiary banks
0. Summary of KPIs to be disclosed by credit institutions under Article 8 Taxonomy Regulation – DSK Bank EAD (Bulgaria)
Main KPI
Green asset ratio (GAR) stock
Total
environmentally
sustainable
assets (Turnover)
HUF mn
0
Total
environmentally
sustainable
assets (CapEx)
HUF mn
0
KPI –
turnover2
0.00%
KPI –
CapEx3
0.00%
% coverage
(over total
assets)1
75.50%
1 % of assets covered by the KPI (GAR total asset) over banks’ total assets
2 based on the turnover KPI of the counterparty
3 based on the CapEx KPI of the counterparty, except for lending activities where for general lending turnover KPI is used
Total
environmentally
sustainable
activities
(Turnover)
HUF mn
Total
environmentally
sustainable
activities (CapEx)
HUF mn
0
0
0
0
0
0
KPI -
turnover
(compared
to flow of
total
covered
assets)
0.00%
0.00%
0.00%
KPI - CapEx
(compared
to flow of
total
covered
assets)
0.00%
0.00%
0.00%
%
coverage
(over total
assets)
68.17%
Additional KPIs
GAR (flow)
Financial guarantees
Assets under management
Comment 1: For reporting templates: cells with a black background do not need to be completed.
Comment 2: Fees and commissions (worksheet 6) and the Trading book (worksheet 7) are only applicable from 2026,
% of assets
excluded
from the
numerator of
the GAR
(Article 7 (2)
and (3) and
Section 1.1.2.
of Annex V)
28.16%
% of assets
excluded
from the
denominator
of the GAR
(Article 7 (1))
and Section
1.2.4 of
Annex V)
24.50%
% of assets
excluded
from the
numerator of
the GAR
(Article 7 (2)
and (3) and
Section
1.1.2. of
Annex V)
14.79%
% of assets
excluded from
the
denominator
of the GAR
(Article 7 (1))
and Section
1.2.4 of
Annex V)
10.25%
INTEGRATED ANNUAL REPORT 2023
117
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
0. Summary of KPIs to be disclosed by credit institutions under Article 8 Taxonomy Regulation – OTP banka Hrvatska d.d. (Croatia)
Main KPI
Green asset ratio (GAR) stock
Total environmentally
sustainable assets
(Turnover)
HUF mn
0.00
Total
environmentally
sustainable
assets (CapEx)
HUF mn
213.87
KPI –
turnover2
0.00%
KPI –
CapEx3
0.01%
%
coverage
(over total
assets)1
67.88%
1 % of assets covered by the KPI (GAR total asset) over banks’ total assets
2 based on the turnover KPI of the counterparty
3 based on the CapEx KPI of the counterparty, except for lending activities where for general lending turnover KPI is used
% of assets
excluded
from the
numerator of
the GAR
(Article 7 (2)
and (3) and
Section 1.1.2.
of Annex V)
29.27%
% of assets
excluded from
the
denominator
of the GAR
(Article 7 (1))
and Section
1.2.4 of
Annex V)
32.12%
Total environmentally
sustainable activities
(Turnover)
HUF mn
0.00
0.00
0.00
Total
environmentally
sustainable
activities
(CapEx) HUF mn
0.00
0.00
0.00
KPI -
turnover
(compared
to flow of
total
covered
assets)
KPI -
CapEx
(compared
to flow of
total
covered
assets)
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
% of assets
excluded
from the
numerator of
the GAR
(Article 7 (2)
and (3) and
Section
1.1.2. of
Annex V)
% of assets
excluded from
the
denominator
of the GAR
(Article 7 (1))
and Section
1.2.4 of
Annex V)
%
coverage
(over
total
assets)
49.13%
24.53%
50.87%
Additional KPIs
GAR (flow)
Financial guarantees
Assets under management
Comment 1: For reporting templates: cells with a black background do not need to be completed.
Comment 2: Fees and commissions (worksheet 6) and the Trading book (worksheet 7) are only applicable from 2026,
INTEGRATED ANNUAL REPORT 2023
118
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
0. Summary of KPIs to be disclosed by credit institutions under Article 8 Taxonomy Regulation – OTP Bank Romania S.A. (Romania)
Main KPI
Green asset ratio (GAR) stock
Total environmentally
sustainable assets
(Turnover)
HUF mn
0.00
Total
environmentally
sustainable
assets (CapEx)
HUF mn
213.87
KPI –
turnover2
0.00%
KPI –
CapEx3
0.01%
% coverage
(over total
assets)1
67.88%
1 % of assets covered by the KPI (GAR total asset) over banks’ total assets
2 based on the turnover KPI of the counterparty
3 based on the CapEx KPI of the counterparty, except for lending activities where for general lending turnover KPI is used
% of assets
excluded
from the
numerator
of the GAR
(Article 7 (2)
and (3) and
Section
1.1.2. of
Annex V)
29.27%
% of assets
excluded
from the
denominator
of the GAR
(Article 7 (1))
and Section
1.2.4 of
Annex V)
32.12%
Total environmentally
sustainable activities
(Turnover)
HUF mn
0.00
0.00
0.00
Comment 1: For reporting templates: cells with a black background do not need to be completed.
Comment 2: Fees and commissions (worksheet 6) and the Trading book (worksheet 7) are only applicable from 2026,
GAR (flow)
Financial guarantees
Assets under management
Total
environmentally
sustainable
activities (CapEx)
HUF mn
0.00
0.00
0.00
Additional KPIs
% of assets
excluded
from the
numerator of
the GAR
(Article 7 (2)
and (3) and
Section
1.1.2. of
Annex V)
24.53%
% of assets
excluded from
the
denominator
of the GAR
(Article 7 (1))
and Section
1.2.4 of
Annex V)
50.87%
%
coverage
(over total
assets)
49.13%
KPI -
turnover
(compared
to flow of
total
covered
assets)
0.00%
0.00%
0.00%
KPI -
CapEx
(compared
to flow of
total
covered
assets)
0.00%
0.00%
0.00%
INTEGRATED ANNUAL REPORT 2023
119
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
0. Summary of KPIs to be disclosed by credit institutions under Article 8 Taxonomy Regulation – Nova KBM d.d. (Slovenia)
Main KPI
Green asset ratio (GAR) stock
Total environmentally
sustainable assets
(Turnover)
HUF mn
5,521
Total
environmentally
sustainable
assets (CapEx)
HUF mn
5,653
KPI –
turnover2
0.00
KPI –
CapEx3
0.00
%
coverage
(over total
assets)1
60.0%
1 % of assets covered by the KPI (GAR total asset) over banks’ total assets
2 based on the turnover KPI of the counterparty
3 based on the CapEx KPI of the counterparty, except for lending activities where for general lending turnover KPI is used
Additional KPIs
GAR (flow)
Financial guarantees
Assets under management
Total
environmentally
sustainable
activities
(Turnover)
HUF mn
0.00
1,990
0.00
Total
environmentally
sustainable
activities
(CapEx) HUF mn
0.00
2,641
0.00
KPI -
turnover
(compared
to flow of
total
covered
assets)
0.08%
0.01%
0.00%
KPI -
CapEx
(compared
to flow of
total
covered
assets)
0.10%
0.10%
0.00%
%
coverage
(over
total
assets)
13.33%
Comment 1: For reporting templates: cells with a black background do not need to be completed.
Comment 2: Fees and commissions (worksheet 6) and the Trading book (worksheet 7) are only applicable from 2026,
% of assets
excluded
from the
numerator of
the GAR
(Article 7 (2)
and (3) and
Section 1.1.2.
of Annex V)
23.0%
% of assets
excluded from
the
denominator
of the GAR
(Article 7 (1))
and Section
1.2.4 of
Annex V)
40.0%
% of assets
excluded
from the
numerator of
the GAR
(Article 7 (2)
and (3) and
Section
1.1.2. of
Annex V)
4.36%
% of assets
excluded from
the
denominator
of the GAR
(Article 7 (1))
and Section
1.2.4 of
Annex V)
26.46%
INTEGRATED ANNUAL REPORT 2023
120
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
0. Summary of KPIs to be disclosed by credit institutions under Article 8 Taxonomy Regulation – SKB Banka d.d. Ljubljana (Slovenia)
Main KPI
Green asset ratio (GAR) stock
Total environmentally
sustainable assets
(Turnover)
HUF mn
0.00
Total
environmentally
sustainable
assets (CapEx)
HUF mn
0.00
KPI –
turnover2
0.00%
KPI –
CapEx3
0.00%
%
coverage
(over total
assets)1
69.2%
1 % of assets covered by the KPI (GAR total asset) over banks’ total assets
2 based on the turnover KPI of the counterparty
3 based on the CapEx KPI of the counterparty, except for lending activities where for general lending turnover KPI is used
Total environmentally
sustainable activities
(Turnover)
HUF mn
0.00
0.00
0.00
Total
environmentally
sustainable
activities
(CapEx) HUF mn
0.00
0.00
0.00
KPI -
turnover
(compared
to flow of
total
covered
assets)
0.00%
0.00%
0.00%
KPI -
CapEx
(compared
to flow of
total
covered
assets)
0.00%
0.00%
0.00%
%
coverage
(over
total
assets)
55.0%
Additional KPIs
GAR (flow)
Financial guarantees
Assets under management
Comment 1: For reporting templates: cells with a black background do not need to be completed.
Comment 2: Fees and commissions (worksheet 6) and the Trading book (worksheet 7) are only applicable from 2026,
% of assets
excluded
from the
numerator of
the GAR
(Article 7 (2)
and (3) and
Section 1.1.2.
of Annex V)
26.5%
% of assets
excluded from
the
denominator
of the GAR
(Article 7 (1))
and Section
1.2.4 of
Annex V)
30.8%
% of assets
excluded
from the
numerator of
the GAR
(Article 7 (2)
and (3) and
Section
1.1.2. of
Annex V)
23.0%
% of assets
excluded from
the
denominator
of the GAR
(Article 7 (1))
and Section
1.2.4 of
Annex V)
45.0%
The separate report published by OTP Fund Management and the templates specified in Annex XII of Regulation No. 2021/2178 are presented under a separate
sub-heading.
INTEGRATED ANNUAL REPORT 2023
121
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
General qualitative information on the content and methodology of KPIs published in Annex XI of
Regulation No. 2021/2178:
The scope of assets and activities covered by the KPIs:
Asset portfolio covered
The calculation of the green asset ratio (GAR) for on-balance sheet exposures shall cover the following
accounting categories of financial assets, including loans and advances, debt securities, equity holdings
and repossessed collaterals:
a)
b)
c)
d)
e)
f)
financial assets at amortised cost;
financial assets at fair value through other comprehensive income;
investments in subsidiaries;
joint ventures and associates;
financial assets designated at fair value through profit or loss and non-trading financial assets
mandatorily at fair value through profit or loss;
real estate collaterals obtained by credit institutions by taking possession in exchange for the
cancellation of debts.
In accordance with Article 7(1) of Regulation No. 2021/2178, exposures to central governments, central
banks and supranational issuers shall be excluded from the calculation of the numerator and denominator
of key performance indicators of financial undertakings.
Pursuant to Article 7 of Regulation No. 2021/2178, the following assets are excluded from the numerator of
the GAR:
financial assets held for trading;
a)
b) on-demand interbank loans;
c)
(c) exposures to undertakings that are not obliged to publish non-financial information pursuant to
Article 19a or 29a of Directive No. 2013/34/EU;
d) derivatives;
e) cash and cash-related assets;
f) other categories of assets (e.g. goodwill, goods, etc.).
The calculation of KPIs for off-balance sheet exposures considered financial guarantees granted by
OTP Group, and assets under management for guarantee and investee non -financial undertakings. Other
off-balance sheet exposures such as commitments have been excluded from that calculation.
The exposures of all entities included in the prudential consolidation scope of OTP Bank (credit institution
subsidiaries, other financial institutions and non-financial undertakings) are included in – relevant rows in
column ‘a’ (Total gross carrying amount) of total assets – Template 1 of Annex VI of Regulation No.
2021/2178, thus ensuring that the balance of row 55 (“Total assets”) is equal to the total assets row of the
consolidated FINREP balance sheet. Exceptions to this are entities whose exposures relative to the
exposures of credit institutions do not meet the thresholds set by the financial materiality criteria, taking into
account materiality criteria.
Based on the guidance in Annex III of EU Regulation No. 2021/2178, gross exposures have been
aggregated in the relevant row of Template 1 of the GAR for credit institutions based on the separate report
of OTP Fund Management. Exposures on assets under management are shown on a consolidated basis in
the asset GAR indicator in summary template 0.
Financial data are identified solely based on the Bank’s analytical credit and risk database and FINREP
balance sheet data. In respect of alignment with the taxonomy, data were generated through individual data
requests or from publicly available data.
INTEGRATED ANNUAL REPORT 2023
122
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
Findings concerning Annex VI of Regulation No. 2021/2178, worksheet ‘0’
The use of CAPEX and turnover-based reporting has necessitated the duplication of KPI cells.
The definition of the KPIs shall be based on the following components:
a)
the numerator, which shall cover the loans and advances, debt securities, equities and repossessed
collaterals, financing Taxonomy-aligned economic activities based on turnover KPI and CapEx KPI
of underlying assets.
b) (b) the denominator, which shall cover the total loans and advances, total debt securities, total
equities and total repossessed collaterals and all other covered on-balance sheet assets.
Pursuant to point 1.2.3. (Fees and commissions) of Annex V, KPIs for trading book items and fees and
commissions are applicable from 1 January 2026.
Findings concerning Annex VI of Regulation No. 2021/2178, Template 1
The template has been duplicated on the basis of counterparty turnover an d CapEx data.
The numerators of the two GAR KPIs differ for (general) loans for unknown purpose, bond exposure and
equity holdings to non-financial undertakings.
Exposures were analysed along the following customer segmentation:
•
•
•
•
•
financial undertakings
non-financial undertakings
retail customers (with the following sub-categories: residential property, home renovation and car
loans)
local governments (only with the following sub-category: housing financing) – rental housing
financing or known green loan purpose
collateral obtained by taking possession, residential and commercial real estate
For the completion of the T-1 gross carrying amount fields, the exposures are filled in based on the bank
databases, filtered for the T-1 period in the same way as for the T period. Data on taxonomy alignment is
completed based on data from the 2022 report, where available.
Information on financial undertakings
According to the Bank's interpretation in 2024 (for the 2023 financial year) it will not be required to report
the share of their Taxonomy-aligned economic activity in respect of exposures to financial undertakings.
This is because financial institutions will only publish their GAR indicators in 2024 (concerning the end of
2023) and, therefore, the data are not available for financial institutions to include in their 2024 reports.
Financial institutions will, therefore, only have to report them from 2025 (taking into account the latest
available data). The published data on taxonomy eligibility is not comprehensive (no environmental
breakdown), so the Bank was forced to rely on the information in the Bank’s IT systems and the Bank’s
markers (for transactions that have undergone a green alignment assessment) to identify green exposures
for the 2023 financial year. The Bank’s short-term plans include the integration of financial counterparty
reporting into bank group level controlling systems.
Information on non-financial undertakings
Customers covered by the NFRD were identified as follows:
Number of employees
> 500 persons
Public interest entities subject to
NFRD under Hungarian
accounting
Public interest entities subject to
NFRD for the following EU
subsidiary banks: Bulgaria,
Croatia, Romania, Slovenia
> 500 persons
Total assets
Annual net sales revenue
Number of employees
> HUF 6 billion
> HUF 12 billion
> 250 persons
> EUR 20 million
> EUR 40 million
At least two of the following are met listed on a stock exchange and
For the application of the above filtering criteria, data compiled by an external data provider and existing in
the banking systems were used.
Loans and debt securities exposures to non-financial undertakings were taken into account on the basis of
known and unknown loan purposes. In the case of known loan purposes, transactions that have been
designated on the basis of the Bank’s eligibility and alignment checks have been taken into account. In the
case of unknown loan purposes and for equity exposures, the counterparty’s disclosed turnover and CAP EX
eligibility and alignment information has been taken into account.
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If no published information was available for the counterparty concerned, the Bank did not take into account
the counterparty’s exposures for the purposes of eligibility and alignment in the course of reporting.
The breakdown by environmental objective is not available for publicly available data for Taxonomy -eligible
exposures, so the Bank presents data in the total (CCM + CCA) fields for the given exposure category for
transparency and ease of interpretation.
A further limitation is that we currently have limited ability to identify and examine the group -level exposure
of companies subject to the NFRD. The Bank’s short term plans include the comprehensive and up -to-date
identification of the non-financial counterparties concerned by the GAR report and the integration of the
necessary data records into the appropriate banking IT systems.
Information on households
In preparing the report, the entities operating in the following countries were considered:
Bulgaria, Croatia, Hungary, Romania and Slovenia.
GAR for retail exposures to residential real estate or house renovation loans was calculated as a proportion
of loans to households collateralised by residential immovable property or granted for house renovation
purposes that is Taxonomy-aligned in accordance with the relevant technical screening criteria for buildings,
in particular renovation and acquisition and ownership in accordance with Annex I and Sections 7.1, 7.2,
7.3, 7.4, 7.5, 7.6, and 7.7 respectively of Annex II to Delegated Regulation (EU) No. 2021/2139 or Sections
3.1 and 3.2 of Annex II to Delegated Regulation (EU) No. 2023/2486, compared to total loans to households
collateralised by residential immovable property or granted for house renovation purposes.
By households, the Bank means retail customers and sole proprietors.
Under EU Regulation No. 2021/2178, the Bank includes general purpose loans collateralised by residential
immovable property in the gross exposure, but these exposures are excluded during the Taxonomy check.
In line with the spirit of the legal interpretation, in order to avoid duplication of exposures, the Bank has
decided to show exposures related to building modernisation as defined in Section 7. 2 of Annex I of the
Delegated Act only in row 28 of Template and to exclude these exposures from loans collateralised by
residential immovable property.
GAR for retail exposures to credit consumption loans for car loans shall be calculated as the proportio n of
loans financing cars complying with the technical screening criteria as laid down in Section 6.5 of Annex I
to Climate Delegated Act. This GAR shall include disclosures of transitional activities, and disclosures of
stock of loans only for loans granted after [the date of application of this Regulation (EU) No. 2021/2178]
and flow of loans.
The special lending field cannot be interpreted for this exposure category and is not completed by the Bank
in the report.
According to the European Commission’s interpretation published in December 2023, the assessment of
exposures to households must also be carried out according to the DNSH (do no significant harm) criteria.
The Bank is unable to carry out such an assessment for this year’s report due to lack of data. As part of the
mandatory report, therefore, only the Taxonomy-eligible category will be presented. By doing so, the Bank
will present, as part of the voluntary report, the compliance of its exposures to households with the criteria
set out in the technical screening criteria test (as material contributory exposures that do not meet the DNSH
condition).
Information on the financing of local governments
The Bank was unable to identify any exposure to rental housing financing beyond any doub t, so the fields
in this category do not contain any data.
Based on the interpretation of the legislation, exposures related to other non-rental housing or known green
loan purposes must be excluded from both the numerator and denominator of the GAR. Accor dingly, all
other exposures to local governments are reported under the category “Other assets not included in the
GAR calculation” in the Sovereign Entities row.
Information relating to collateral obtained by taking possession, residential and commercial real estate
For the given exposure class, the methodology used shall contain the gross carrying amount of commercial
and residential repossessed real estate collaterals compliant with the technical screening criteria for
buildings in Section 7.7 of Annex I to Delegated Act.
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The denominator shall include the total gross carrying amount of held-for-sale commercial and residential
real estate collaterals repossessed by the credit institution.
Due to the inconsistencies between Annex V and Annex VI of Regulation No. 2021/2178, the Bank has
taken the opportunity to insert rows in Annex VI to ensure consistency with Annex V and by reference to
Regulation No. 2022/2453, whereby the relevant rows in the first template of Annex VI of Regulation No.
2021/2178 will be presented as follows:
30
31
32
33
Financing of local governments
Housing financing
Other local government funding
Collateral obtained by taking possession, residential and commercial real estate
Findings concerning Annex VI of Regulation No. 2021/2178, worksheet ‘2’
The Bank’s interpretation is that column (a) of the template should contain – in a breakdown by 4-digit NACE
code – the core activities of all the Bank’s counterparties that fall within the scope of the NFRD.
Findings concerning Annex VI of Regulation No. 2021/2178, worksheet ‘3’
In this template, the Bank has disclosed the GAR KPI for the loan portfolio, which have been calculated for
the covered assets on the basis of the data reported in template 1, using the formulae provided in the
template published by the Commission.
The Bank has duplicated this template for turnover-based and CapEx-based disclosures.
Findings concerning Annex VI of Regulation No. 2021/2178, worksheet ‘4’
The Bank has duplicated this template for turnover-based and CapEx-based disclosures. In disclosing
information on changes in portfolio, the Bank has reported exposures incurred in the current year.
Findings concerning Annex VI of Regulation No. 2021/2178, worksheet ‘5’
In the calculation of the KPIs for off-balance sheet exposures (financial guarantees and assets under
management), the Bank has used the data on covered assets provided in Table 1 and the formulas
suggested in this table. Exposures for which information was not available in the Bank's systems ar e not
considered and disclosed in this report. Findings concerning Annex XII of Regulation No. 2021/2178
The Bank makes the following disclosures pursuant to Article 8(6) to (7) of Regulation No. 2021/2178: The
Bank makes the following disclosures pursuant to Article 8(6) to (7) of Regulation 2021/2178, on the basis
of information published by the data owners:
Table 1: Nuclear and fossil gas related activities
Nuclear energy related activities
The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of
innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the
fuel cycle.
The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear
installations to produce electricity or process heat, including for the purposes of district heating or industrial
processes such as hydrogen production, as well as their safety upgrades, using best available technologies.
The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that
produce electricity or process heat, including for the purposes of district heating or industrial processes such as
hydrogen production from nuclear energy, as well as their safety upgrades.
Fossil gas related activities
The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities
that produce electricity using fossil gaseous fuels.
The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined
heat/cool and power generation facilities using fossil gaseous fuels.
The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat
generation facilities that produce heat/cool using fossil gaseous fuels.
1.
2.
3.
4.
5.
6.
No
Yes
Yes
Yes
Yes
Yes
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Table 2: Taxonomy-aligned economic activities (denominator)
in HUF million
Economic activities
1.
2.
3.
4.
5.
6.
7.
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.26 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.27 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.28 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.29 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.30 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.31 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
Amount and proportion of other taxonomy-aligned
economic activities not referred to in rows 1 to 6 above in
the denominator of the applicable KPI
8. Total applicable KPI
Amount and proportion - Turnover
Amount and proportion - Capex
CCM + CCA
Amount
%
0
0
0%
0%
change
Climate
mitigation (CCM)
%
Amount
Climate change
adaptation (CCA)
%
Amount
CCM + CCA
Amount
%
0
0
0%
0%
change
Climate
mitigation (CCM)
%
Amount
Climate change
adaptation (CCA)
%
Amount
4,241.3
0.02%
4,241.3
0.02%
5,831.8
0.02%
5,831.8
0.02%
0
0%
0
0
0%
0%
25,851,399 99.98%
25,855,640
100%
0
0%
0
0
0%
0%
25,849,808 99.98%
25,855,640
100%
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Table 3: Taxonomy-aligned economic activities (numerator)
in HUF million
Economic activities
Amount and proportion of taxonomy-aligned economic activity referred to
in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in
the numerator of the applicable KPI
Amount and proportion of taxonomy-aligned economic activity referred to
in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in
the numerator of the applicable KPI
Amount and proportion of taxonomy-aligned economic activity referred to
in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in
the numerator of the applicable KPI
Amount and proportion of taxonomy-aligned economic activity referred to
in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in
the numerator of the applicable KPI
Amount and proportion of taxonomy-aligned economic activity referred to
in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in
the numerator of the applicable KPI
Amount and proportion of taxonomy-aligned economic activity referred to
in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in
the numerator of the applicable KPI
Amount and proportion of other taxonomy-aligned economic
activities not referred to in rows 1 to 6 above in the numerator of
the applicable KPI
Total amount and proportion of taxonomy-aligned economic
activities in the numerator of the applicable KPI
1.
2.
3.
4.
5.
6.
7.
8.
BUSINESS REPORT 2023 (CONSOLIDATED)
Amount and proportion - Turnover
(CCM+CCA)
Amount %
Climate change
mitigation (CCM)
%
Amount
Climate change
adaptation (CCA)
%
Amount
Amount and proportion - Capex
Climate change
mitigation (CCM)
%
Amount
CCM + CCA
Amount %
Climate change
adaptation (CCA)
%
Amount
0
0%
0
0%
0
0%
0
0%
3,997.4
32%
3,997.4
5,916.6
25%
5,916.6
0
0%
0
0%
0
0%
8,454
68%
12,451 100%
0
0%
0
0%
0
0%
17,564
75%
23,481 100%
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Table 4: Taxonomy-eligible but not taxonomy-aligned economic activities
in HUF million
Economic activities
Amount and proportion of taxonomy-eligible but not taxonomy-aligned
economic activity referred to in Section 4.26 of Annexes I and II to
Delegated Regulation 2021/2139 in the denominator of the applicable
KPI
Amount and proportion of taxonomy-eligible but not taxonomy-aligned
economic activity referred to in Section 4.27 of Annexes I and II to
Delegated Regulation 2021/2139 in the denominator of the applicable
KPI
Amount and proportion of taxonomy-eligible but not taxonomy-aligned
economic activity referred to in Section 4.28 of Annexes I and II to
Delegated Regulation 2021/2139 in the denominator of the applicable
KPI
Amount and proportion of taxonomy-eligible but not taxonomy-aligned
economic activity referred to in Section 4.29 of Annexes I and II to
Delegated Regulation 2021/2139 in the denominator of the applicable
KPI
Amount and proportion of taxonomy-eligible but not taxonomy-aligned
economic activity referred to in Section 4.30 of Annexes I and II to
Delegated Regulation 2021/2139 in the denominator of the applicable
KPI
Amount and proportion of taxonomy-eligible but not taxonomy-aligned
economic activity referred to in Section 4.31 of Annexes I and II to
Delegated Regulation 2021/2139 in the denominator of the applicable
KPI
Amount and proportion of other taxonomy-eligible but not
taxonomy-aligned economic activities not referred to in rows 1 to
6 above in the denominator of the applicable KPI
Total amount and proportion of taxonomy eligible but not
taxonomy-aligned economic activities in the denominator of the
applicable KPI
1.
2.
3.
4.
5.
6.
7.
8.
Amount and proportion - Turnover
Amount and proportion - Capex
(CCM+CCA)
Amount %
Climate change
mitigation (CCM)
Amount
Climate change
adaptation (CCA)
CCM + CCA
% Amount
% Amount %
Climate change
mitigation (CCM)
Amount
Climate change
adaptation (CCA)
%
% Amount
-
0%
0
0%
10.6
0%
10.6
0
0%
-
-
0%
0%
0
0%
171.4
0.01%
171.4
507.2
0.02%
507.2
402.3
0.01%
402.3
-
0%
16.4
0%
16.4
3,374,915 99.98%
3,375,433
100%
3,389,945 99.98%
3,390,535
100%
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Table 5: Taxonomy non-eligible economic activities
in HUF million
BUSINESS REPORT 2023 (CONSOLIDATED)
Economic activities
1.
2.
3.
4.
5.
6.
7.
Amount and proportion of economic activity referred to in row 1 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.26 of
Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
Amount and proportion of economic activity referred to in row 2 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.27 of
Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
Amount and proportion of economic activity referred to in row 3 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.28 of
Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
Amount and proportion of economic activity referred to in row 4 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.29 of
Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
Amount and proportion of economic activity referred to in row 5 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.30 of
Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
Amount and proportion of economic activity referred to in row 6 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.31 of
Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
Amount and proportion of other taxonomy-non-eligible economic activities not referred to in rows 1 to 6 above in the denominator of
the applicable KPI
Turnover
Capex
Amount Percentage Amount Percentage
0%
0%
0%
0%
0%
0%
1,708.3
0.01%
1,371.6
0.01%
0%
0%
0%
0%
22,478,499
99.99% 22,478,835
99.99%
8. Total amount and proportion of taxonomy-non-eligible economic activities in the denominator of the applicable KPI
22,480,207
100% 22,480,207
100%
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II. Voluntary report
BUSINESS REPORT 2023 (CONSOLIDATED)
One of the key objectives of OTP Group's ESG strategy is to increase its green portfolio. The stock of green
exposures are presented here according the OTP Group's internal green KPI, which reached HUF 656 billion
(including the part identified by green assessment but not yet reported in the controlling system, HUF 679
billion) by the end of 2023. Significant part of this portfolio is towards non-financial corporates not subject to
NFRD and as well as the financing activities of subsidiaries outside the EU. As part of the voluntary report,
the Bank presents the composition of its broader green portfolio, in both the corporate and retail segments.
The internal green KPI is based on exposures comply at least one of the following: OTP Group's G reen
Loan Framework, the OTP Group Sustainable Finance Framework and the MNB's preferential capital
requirements program for green municipal, corporate and retail exposures, the also the EU taxonomy. By
end of 2023 OTP Green Loan Framework exposures aligned with EU Taxonomy was approximately 3.4
billion Ft.
The template below shows the extent to which the exposures in the Bank’s green portfolio are aligned with
EU taxonomy requirements. Exposures in the Taxonomy-eligible category also follow use-of-proceeds
approach, while the taxonomy-aligned category is reported based on compliance with the technical
screening criterion (TSC). For corporate exposures, the assessment is fully in line with the TSC and MS
alignment requirements, while for retail exposures, the compliance with DNSH and MS (Minimum
Safeguards) has not been assessed.
in HUF million
Non-financial undertakings
Loans and advances
Debt securities
Households**
of which: loans secured by
residential real estate
of which: building modernisation
loans
of which: car loans
Total GAR assets
OTP Green Portfolio (CCM + CCA)
Total gross
carrying
amount
of which aimed at
loan purposes
relevant to the
Taxonomy
(Taxonomy-eligible)
of which
environmentally
sustainable
(Taxonomy-
aligned)
Share of
Taxonomy-
eligible
exposures*
Share of
Taxonomy-aligned
exposures*
9,578,080
508,012
9,282,028
470,508
293,211
37,503
11,722,507
171,234
4,915,444
167,142
127,689
446,413
100
3,992
25,679,052
679,246
3,396
3,396
62,980
58,988
-
3,992
66,376
5.30%
5.07%
12.79%
1.46%
3.40%
0.08%
0.89%
2.65%
0.04%
0.04%
0.00%
0.54%
1.20%
0.00%
0.89%
0.26%
* calculated at the gross carrying amount of the relevant exposure
** DNSH, without MS test
The Taxonomy-eligible share of non-financial undertakings relative to gross carrying amount exceeds 5%.
A significant proportion of the household exposures in the green portfolio are related to the Hungarian entity,
and we expect the green share of the portfolio to increase as data quality improves.
The aggregate Taxonomy-eligible share as a proportion of assets included in the GAR calculation excee ds
2.5% while the share of Taxonomy-aligned exposures exceeds 0.25%.
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III. Independent report by OTP Fund Management
Template for the KPI of asset managers
Standard template for the disclosure required under Article 8 of Regulation (EU) No. 2020/852 (asset
managers)
The weighted average value of all the investments that are
directed at funding, or are associated with taxonomy-aligned
economic activities relative to the value of total assets covered
by
in
following weights
the KPI, with
undertakings per below:
investments
for
Turnover-based: 1.35%
CapEx-based: 1.93%
The weighted average value of all the investments that are
directed at funding, or are associated with taxonomy-aligned
economic activities, with following weights for investments in
undertakings per below:
Turnover-based: HUF 31,796,128,854
CapEx-based: HUF 22,282,164,194
The percentage of assets covered by the KPI relative to total
investments (total AuM). Excluding investments in sovereign
entities,
The monetary value of assets covered by the KPI. Excluding
investments in sovereign entities.
Coverage: HUF 89,511,419,370
coverage ratio: 5.42%
Additional, complementary disclosures: breakdown of denominator of the KPI
The percentage of derivatives relative to total assets covered by
the KPI.
The value in monetary amounts of derivatives:
-
-
The proportion of exposures to EU financial and non-financial
undertakings not subject to Articles 19a and 29a of Directive No.
2013/34/EU over total assets covered by the KPI:
Value of exposures
financial and non-financial
undertakings not subject to Articles 19a and 29a of Directive No.
2013/34/EU:
to EU
For non-financial undertakings: 2.19%
For financial undertakings: 14.77%
For non-financial undertakings: HUF 36,108,426,625
For financial undertakings: HUF 243,948,380,249
The proportion of exposures to financial and non-financial
undertakings from non-EU countries not subject to Articles 19a
and 29a of Directive No. 2013/34/EU over total assets covered
by the KPI:
For non-financial undertakings: 6.08%
For financial undertakings: 5.39%
Value of exposures to financial and non-financial undertakings
from non-EU countries not subject to Articles 19a and 29a of
Directive No. 2013/34/EU:
For non-financial undertakings: HUF 100,473,439,807
For financial undertakings: HUF 89,000,990,894
The proportion of exposures to financial and non-financial
undertakings subject to Articles 19a and 29a of Directive No.
2013/34/EU over total assets covered by the KPI:
For non-financial undertakings: 8.02%
For financial undertakings: 49.91%
Value of exposures to financial and non-financial undertakings
subject to Articles 19a and 29a of Directive No. 2013/34/EU:
For non-financial undertakings: HUF 132,484,817,417
For financial undertakings: HUF 824,203,191,271
The proportion of exposures to other counterparties and assets
over total assets covered by the KPI: 13.63 %
Value of exposures to other counterparties and assets:
HUF 225,144,631,767
The value of all the investments that are funding economic
activities that are not taxonomy-eligible relative to the value of
total assets covered by the KPI:
Value of all the investments that are funding economic activities
that are not taxonomy-eligible:
-
-
The value of all the investments that are funding taxonomy-
eligible economic activities, but not taxonomy-aligned relative to
the value of total assets covered by the KPI:
-
Value of all the investments that are funding Taxonomy-eligible
economic activities, but not taxonomy-aligned:
-
Additional, complementary disclosures: breakdown of numerator of the KPI
The proportion of Taxonomy-aligned exposures to financial and
non-financial undertakings subject to Articles 19a and 29a of
Directive No. 2013/34/EU over total assets covered by the KPI:
Value of Taxonomy-aligned exposures to financial and non-
financial undertakings subject to Articles 19a and 29a of
Directive No. 2013/34/EU:
For non-financial undertakings:
Turnover-based: 1.35%
Capital expenditures-based: 1.93%
For financial undertakings:
Turnover-based: -
Capital expenditures-based: -
For non-financial undertakings:
Turnover-based: HUF 31,796,128,854
Capital expenditures-based: HUF 22,282,164,194
For financial undertakings:
Turnover-based: -
Capital expenditures-based: -
The proportion of Taxonomy-aligned exposures
to other
counterparties and assets over total assets covered by the KPI:
Turnover-based: -
Value of Taxonomy-aligned exposures to other counterparties:
Turnover-based: -
Capital expenditures-based: -
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Capital expenditures-based: -
Breakdown of the numerator of the KPI per environmental objective
BUSINESS REPORT 2023 (CONSOLIDATED)
Taxonomy-aligned activities:
1. Climate change mitigation
Transitional activities
Enabling activities:
2. Climate change adaptation
Transitional activities
Enabling activities:
Turnover: 0.02%
CapEx: 0.13%
Turnover: 0.08%
CapEx: 0.18%
-
Turnover: 0.02%
CapEx: 0.06%
HUF 346,004,571
HUF 2,091,506,111
HUF 1,360,074,552
HUF 3,008,731,644
-
HUF 327,518,516
HUF 1,029,909,809
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Contextual information in support of the quantitative indicators including the scope of assets and
activities covered by the KPIs, information on data sources and limitation;
The KPI considered covers the equity and bond assets in the funds and portfolios managed by the Fund
Manager, but does not include collective investment schemes and investments in government securities, which
may represent a significant proportion of certain portfolios, where data are not available.
For the various activities in this reporting period, only activities related to climate change mitigation and
adaptation to climate change are covered.
Further limiting the coverage, the data reporting obligation under Articles 19a and 29a of Directive No.
2013/34/EU only covers a limited number of target companies receiving the Fund Manager’s investments, thus
in respect of a significant part of the investments, the Fund Manager and its ESG service provider (MSCI ESG
Research) do not have usable data.
Explanations of the nature and objectives of Taxonomy-aligned economic activities and the evolution of the
Taxonomy-aligned economic activities over time, starting from the second year of implementation,
distinguishing between business-related and methodological and data-related elements;
OTP Fund Management does not have a general objective in respect of Taxonomy -aligned economic
activities that is typical of fund management as a whole, but it does take into account the impact of a
particular investment on environmental objectives, in particular GHG emissions, waste and pollutant
emissions and water load, when assessing the sustainability of a particular investment.
The fund manager has specific environmental objectives for the SFDR funds it manages as follows:
OTP Climate Change Fund (OTP Klímaváltozás Alap)
The primary objective of the Fund is to mitigate climate change and promote adaptation to climate change.
The Fund aims to achieve its objective, in accordance with Article 16 of the Taxonomy Regulation, by
investing in companies whose activities, mainly through the products they produce, contribute directly to the
activities of other companies making a significant contribution to the fight against climate change . The Fund
does not have a sustainability objective, but commits to invest at least 51% of its investments in sustainable
investments, within which 10% are Taxonomy-aligned environmentally-sustainable investments.
OTP Omega Alapok Alapja (OTP Omega Fund of Funds)
The Fund invests in other actively and passively-managed funds in accordance with the fund of funds
structure. The research advisor (MSCI) publishes an ESG rating for some funds, but not for others. This
depends partly on the business considerations of the ESG consultant, but also partly on the business
considerations of the individual fund managers themselves. The Fund does not have a sustainability
objective, but commits to invest at least 51% of its investments in sustainable investments, within which it
will not invest in Taxonomy-aligned environmentally sustainable investments.
OTP Ökotrend Alap (OTP Ecotrend Fund)
The Fund seeks to make a commitment to promote environmental features, primarily through its bond
portfolio. The Fund plans to invest partly in green government bonds to finance or refinance expenditures
that promote the transition to a low-carbon, climate resilient and environmentally sustainable economy.
Thus, it falls into one of the six green sectors: renewable energy, energy effic iency, waste and water
management, land use and use of living natural resources, clean transport, and adaptation. The Fund does
not have a sustainability objective, nor does it have a commitment to a minimum ratio of sustainable
investments.
Description of the compliance with Regulation (EU) No. 2020/852 in the financial undertaking’s business
strategy, product design processes and engagement with clients and counterparties;
OTP Fund Management is committed to taking sustainability risks into account in its investment decisions
and to continuously increasing the number of SFDR-rated products that invest in a significant share of
sustainable investments.
For funds and portfolios that have a commitment to sustainable investment under the Taxonomy Regulation,
the EU taxonomy DNSH indicators are taken into account in addition to the sustainability indicator calculated
by the ESG data provider selected by the Fund Manager (MSCI ESG Research) to determine Taxonomy
compliance, in accordance with the commitment of the fund/portfolio concerned.
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Cogo – transaction-based CO2 calculator in the Hungarian mobile bank
New Zealand’s Cogo has been selected as a partner of our Bank in 2022 as part of the OTP Startup B ooster
Programme. As a result of the cooperation, the transaction-based carbon calculator was launched in the
domestic mobile bank at the end of summer 2023, which also encourages the reduction of the carbon
footprint. Cogo has more than 10 years of experience in sustainability, with several banks using its calculator
with proven results. The calculator:
– calculates the monthly carbon footprint,
– compares it with the Hungarian population average, and
– also shows emissions by spending category.
To ensure the most accurate operation possible, Hungarian factors are used in the calculation and are
reviewed and corrected on a quarterly basis.
Cogo also improves the knowledge of users: the interface allows users to become familiar with how the
calculator works. In the future, we plan to introduce an ecological footprint calculator for MSE customers.
Also in the framework of the 2022 OTP Startup Booster Program, we selected the solution by software
company Agremo, with which we started a long-term cooperation. The software uses drone and satellite
imagery data to perform yield analysis and forecasts for agricultural areas. The Serbian subsidiary plans to
introduce this in 2024.
So-called MFB Points have been present in Hungary since 2017 in OTP Bank branches, intermediating the
Hungarian Development Bank’s (MFB) products funded by the European Union and MFB itself. In 2023, we
operated 167 MFB Points (at 49% of branches), offering both retail and business banking products. In 2023,
two loan schemes were available to private individuals, condominiums and housing co-operatives that
served an environmental purpose by using renewable energy sources and/or making energy efficiency
investments. Three loan schemes were available to companies for the same purposes. In 2023 (due to the
deadline for the full closure of the 2014-2020 EU budget cycle), the sale of all loan schemes closed, but
disbursements were still made and the portfolio was significant at the end of the year: HUF 31.4 billion in
the retail segment and HUF 5.2 billion in the SME segment. The amount of loans disbursed in 2023 was
HUF 409 million. Among the products sold at MFB Points, the above loan purposes accounted for 11.4
percent of the portfolio.
BG The DSK Mastercard Wildlife Impact Debit Card was available at DSK Bank in 2023 for the second year
running. The joint initiative is aimed at protecting endangered animal species from extinction. Upon the
issuance of every new card the Bank and Mastercard contributes one dollar to the costs of protecting and
restoring natural habitats. The use of recycled and recyclable material for the manufacture of the card results
in a 63 percent reduction in emissions in comparison with conventional bank cards.
RS The Serbian subsidiary bank also continued its cooperation with the Mastercard Priceless Planet
Coalition. The subsidiary bank plants a tree whenever a new account is opened or when the Google Pay or
the Apple Pay service is activated for an existing account. Over the past three years, more than 80,000 trees
have been planted with the bank’s help.
Gamechanger
RS Generator (Gamechanger) is the Serbian subsidiary bank’s programme that has been helping local
startups for a number of years now. In 2023, the Generator Zero competition launched in the context of the
programme again sought for and rewarded specifically innovative climate change mitigating and carbon
footprint reducing solutions.
In addition to the HUF 6.5 million cash prize, the winner received mentoring and additional prizes from two
supporting partner organisations. In 2023, a record 116 entries were r eceived for the competition, which
was won by the Fragment board project with its building material made from 73% recycled glass. The
Serbian subsidiary bank rewarded the MOSQ-SWITCH team with an opportunity to be featured. Their
product is a booth installed in a public space that sprays customers with a mosquito repellent made of natural
materials that lasts for three hours.
RO The Romanian subsidiary bank continued its programme to support the purchase of tickets for public
transport by bank card. In 2023, contactless ticket purchases became available at terminals installed in
Timisoara and Satu Mare.
The OTP Hungaro-Project helped its customers in drafting applications and in winning grants in 2023 as
well. During the year, 90 percent of customers were agricultural businesses. The company submitted 69
grant applications for its customers under the EU Rural Development Programme for irrigation development,
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at a total cost of HUF 50.4 billion. Under the Factory Saver Scheme, 11 applications were submitted to
support energy efficiency and energy production investment projects. Of these, 9 applications (HUF 6 billion
in grant amount, total cost of HUF 14 billion) were awarded a grant, and deliberation for two applications
were still pending at the end of the year.
2.5. Investments
ST1, ST3, ST4: 3-3, TCFD II.a,b, III.a,b,c, IV.a Meeting the growing regulatory requirements for
investment funds and investment services is an ongoing challenge. The mandatory publication in
2023 of the Statement on the principal adverse impact of investment decisions on sustainability
factors and the expansion of the scope of ESG data for issuers provides an increasingly accurate
picture of the sustainability characteristics of funds. The range of responsible funds available to
customers has expanded.
FN-IB-410a.3. In 2023, the Statement on the principal adverse impact of investment decisions on
sustainability factors (also including principal adverse impact indicators) was published for the first time, for
both fund managers and portfolio management activity in 2022. These documents are available on the group
members’ websites in accordance with the requirements of the SFDR Regulation 19.
In the case of the discretionary portfolio management service, in 2023 we expanded the exclusi on rules set
as a percentage limit to include the MSCI Overall Flag indicator, in addition to the controversial armament
that was already in place. The Overall Flag is a general indicator to assess the overall sustainability
performance of a company or investment fund (environmental, social or governance controversial issues).
For this service, we also apply so-called cumulative risk limits in relation to ESG. Portfolio managers put
together their portfolios making sure that the aggregated weight of the lowest scoring elements from the
perspective of sustainability – i.e. those categorised as CCC, B and BB on the 7-grade MSCI scale – is as
low as possible.
The selection of the funds recommended in the context of investment advice has not changed in 2023, and
is based on quantitative and qualitative criteria, including sustainability risk considerations inter alia.
Excluded from investment advice are investment funds with high or medium sustainability risks (CCC and B
on the MSCI scale).
The scope of issuer ESG data is constantly expanding, so the sustainability perception of financial
instruments may change without a modification in methodology.
OTP Fund Management applies a screening system based on an exclusion list to take account of the
principal adverse impacts, with limits set for tobacco, gambling, coal mining, weapons, alcohol and
authoritarian regimes. Data sources for sectoral limits are Bloomberg, MSCI ESG Manager and MSCI
BarraOne. The principal adverse impacts are assessed on a monthly basis, while the ESG limits for the
SFDR Article 8 funds are assessed on a weekly basis and are set out in the Sustainability Risk Management
Policy.
GRI 203-2 The investments of investment funds are selected as described in the funds’ management
policies. Some of OTP Alapkezelő’s funds (OTP Közép-Európai Részvény Alap/OTP Central European
Equity Fund, OTP Quality Alap/OTP Quality Fund, BUX ETF Alap/BUX ETF Fund) focus their investments
specifically on the Central and Eastern European region. Such investments accounted for 1.97 percent of
the assets managed at the end of 2023.
Responsible investments
ST4: 3-3, GRI 201-2 The Banking Group’s fund managers offer a number of ESG funds to their customers.
The OTP Group’s four own funds promote environmental and/or social cha racteristics and are, therefore,
Article 8 compliant products according to the SFDR classification.
In 2023, OTP Fund Management established the @OTP Ökotrend Hozamvédett Zártvégű Alap (OTP
Ecotrend Yield-Guaranteed Closed-End Fund), whose subscription period closed on 27 October. The fund
also offered a suitable opportunity for low-risk investors, aiming to benefit from the economic transformation
and green transition resulting from the objectives of the transition to renewable resources, with a particular
focus on new energy storage solutions, the automotive industry and new transport technologies. The fund
gains exposure to companies active in the sector through options, and provides capital protection and fixed
returns through interest-bearing instruments.
19 Regulation (EU) No. 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the
financial services sector
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The previously registered SFDR Article 8 funds of the Banking Group were also available.
The aim of OTP Fund Management’s @Klímaváltozás Részvény Alap (Climate Change Equity Fund) is to
select equities that may be potential winners or losers of the global climate adaptatio n process. As of
December 2023, at least 70 percent of the final portfolio must be made up of equities of companies that
have a good – “sustainable” – ESG rating besides contributing, in our opinion, to the conservation of planet
Earth.
In the case of @Omega Alapok Alapja (Omega Fund of Funds), the objective is to have SFDR Article 8 or
Article 9 funds have at least a 70 percent weight. Again, at least 50 perc ent of the final portfolio must be
made up of equities of companies that have a good – “sustainable” – ESG rating.20
The number of fund units in circulation of the two open-ended funds decreased in 2023. At the end of 2023,
the assets of the OTP Ecotrend Fund amounted to HUF 1.8 billion, the assets of the OTP Climate Change
Equity Fund to HUF 29.8 billion and the assets of the OTP Omega Fund of Funds to HUF 36.4 billion. The
three ESG funds accounted for 1.71% of OTP Fund Management’s total assets under man agement.
RO The Article 8 investment fund of OTP Asset Management Romania SFDR is the @OTP Innovation Fund.
The fund invests in international companies that spend a significant proportion of their revenues on research
and development (R&D). The investments are effected in the technological, biotechnological, e -commerce
and automotive sectors, to name but a few. The aim is to keep the fund’s aggregate sustainability risk profile
low and make sure that at least 85 percent of the portfolio is made up of medium or low sustainability risk
elements, which the fund manager measures in terms of the MSCI ratings. The fund applies an exclusion
policy as well. The fund’s total asset amounted to HUF 553 million and had nearly 500 investors at the end
of 2023.
As well as the Banking Group’s own ESG funds, other fund managers’ ESG funds are also available for
customers. At the end of 2023, the portfolio of investment funds under Articles 8 and 9 of the SFDR
accounted for 2.17 percent of the retail securities account portfolio.
In the context of investment advisory activities, the five “green” model portfolios, which meet the most
stringent sustainability preferences and are based on the framework set out in the MIFID2 21 framework
fitness test, are renewed on a quarterly basis. At renewal, financial products are selected in accordance with
the Statement on the principal adverse impact of investment advice on sustainability factors , which is
effective as from the beginning of 2023. The proportion of customers opting for “green” model portfolios is
still low, and we have not seen an increase in demand in this area.
SI Slovenian NKBM offers 29 SFDR Article 8 funds to its customers (managed by Raiffeisen Capital
Management, Sava Infond and Triglav Skladi), while SKB offers Amundi funds that promote environmental
and/or social objectives.
2.6. Products with social benefits
ST1: 3-3 Most of the OTP Group banks offer products aimed at young people and some banks also
offer products aimed at the financial needs of the elderly. Several members of OTP Group offer
preferential schemes to facilitate housing.
The sustainable financial framework identifies the eligible social category exclusively in the segment of loans
and credits available for financing and/or refinancing SMEs. Products beyond this target group are also
described below.
OTP Group offered special preferential products for young people in 9 countries22 in 2023. At group level,
13% of retail customers (2.2 million customers) are under 26 years old. The selection of products varies
from country to country. It includes account packages, savings for children, overdraft facilities, bank cards
and student loans. Some subsidiaries offer preferential terms for accounts held for the receipt of
scholarships.
In 2023, OTP Bank introduced the Student Loan Account, which provides students with preferential account
management and banking services. The account can also be opened online. We have extended the
discounts for Junior accounts: for those over 14 years of age, there is no charge for mobile or internet bank
20 Based on Bloomberg Industry Classification data
21 DIRECTIVE No. 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive
No. 2002/92/EC and Directive No. 2011/61/EU, and the relevant regulations. The test is designed to assess the customer’s fina ncial knowledge,
investment objectives, risk-bearing capacity as well as financial situation and income, to help the Bank offer the customer products aligned to these
factors.
22 Hungary, Bulgaria, Slovenia, Croatia, Albania, Montenegro, Uzbekistan, Ukraine, Romania, Moldova. The age limit is not 26 for all schemes.
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transfers, or for group direct debits up to a certain amount, and we have also extended the discounts for
university students. We have created the Career Start account package, which offers a preferential account
management option for customers aged 18–28.
RS The Serbian subsidiary bank has introduced a debit card for 11–18 year olds linked to their parents’
accounts.
UZ The Uzbek subsidiary bank offers a preferential loan for BSc and MSc tuition fees, with state
subsidisation. For women, the interest on the loan is covered by the state. The loan was taken out by 35,541
people in 2023.
RO During the year, the Romanian subsidiary bank expanded the availability of the debit card for the
youngest, making it available from the age of 8, with parental supervision. The bank has introduced internet
banking and mobile banking for 14–18 year olds, and to encourage students to open an account online,
administrative fees are waived up to the age of 25. OTP Bank Romania, with the support of the Szülőföldön
magyarul (In Hungarian in the motherland) programme, is offering a dedicated debit card to students
studying in Romania in Hungarian language to access scholarships. The programme affects 185,000 young
people.
The number of pensioner customers typically surpasses that of younger customers at the banks of OTP
Group. Special products are available in 6 countries, Bulgaria, Cr oatia, Serbia, Albania, Montenegro and
Ukraine, to meet their needs. No new product/service was introduced in this segment in 2023.
Piggy Bank
OTP Bank has introduced a new feature on the internet and mobile banking platform to encourage conscious
money management and savings. Savings can be put aside in different piggy banks (for different purposes)
on an ad hoc basis or on a regular basis. Customers can also assign a target amount and a target date to
the piggy banks, making it easy to track where they stand in reaching their target. The scheme is completely
flexible, they can withdraw a part of the amount from the piggy bank before reaching the target, or empty
the piggy banks completely and the amount is returned to the payment account with just one click. The
popularity of the feature is demonstrated by the fact that in the 5th month after its launch, more than 100,000
customers had a Piggy Bank account.
Minimum packages are available for customers who require a narrower range of services. Access to basic
financial services is provided by such accounts. The Croatian bank offers a preferential package for socially
disadvantaged customers. The demand for such basic packages has been rather low for years now; not
more than a few hundred customers uses them at any one of our banks.
BG DSK Bank provides customers with reduced mobility accounts with debit cards under preferential terms
and conditions, which were used by close to 42 thousand customers at the end of the year.
Disabled customers can apply for the housing accessibility grant at OTP Bank, which was used by
316 customers in 2023.
A state-subsidised loan has been available for couples planning or expecting a child in Hungary for several
years. An important feature of the interest-free Childbirth Incentive Loan of up to HUF 10 million is that
the debt is assumed by the state in case a minimum of three children are born. The loan was originally
planned to be available until the end of 2022 but remained accessible in 2023, and due to the uncertainty of
eligibility, we experienced a surge in applications in December 2022 and expected a significantly lower take-
up in 2023. This expectation came true: In 2023, we disbursed 41 percent less in loan amounts than in 2022.
OTP Bank’s share of disbursements in 2023 was nearly 40%, while its s hare of the outstanding portfolio
was 42%. The share of loans in the volume of retail consumer credit disbursements fell significantly to 28%.
Access to real estates, modernisation
GRI 203-2 Members of the Banking Group play an important role in the implementation of housing goals
primarily through mortgage loans. 23 We provide our customers with predictable loans, taking into account
their capacity to bear the costs and helping them to adopt energy -efficient solutions. The number of active
housing loans of OTP Group exceeded 500 thousand at the end of 2023, of which the number of new loans
was 48 thousand. In addition to Hungary, we provide increased assistance for house purchasing and
renovation in Uzbekistan, Bulgaria, Slovenia, Serbia and Croatia.
23 OTP Bank Russia does not offer mortgage loans and nor does this type of service account for much of OTP Bank Ukraine’s operations either.
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Demand for housing loans in Hungary remained subdued in 2023. Approximately 16 thousand contracts
were concluded during the year. The number of active housing loans was 217 thousand 24 at the end of the
year, while our market share increased by 0.5 percentage points to 31.3 percent by the end of the year.
Throughout the year, there was an interest rate freeze in place, which led us to suspend the sale of mortgage
loans with fixed interest rates not until the end of the term, including the market-based Qualified Consumer-
friendly Housing Loan (MFL). We introduced a one-off interest rate reduction service for our non-MFL
market-based housing loans and general purpose mortgage loans, available from the 121st month.
The OTP 1x1 Housing Loan scheme, launched for second-hand home purchase loans, was available with
an interest rate reduction of 50 basis points.
In 2023, the Home Qualified Consumer-friendly Subsidised Housing Loan was still available, with nearly
6,000 new transactions during the year, worth HUF 57.7 billion in total. The product accounted for 30 percent
of all mortgage loans signed in 2023. As in previous years, non-refundable grants were available under the
Family Housing Allowance (CSOK) programme, with a total disbursement of HUF 46.8 billion in 2023.
During the year, 79% of housing loans taken out with the Hungarian Banking Group were used to purchase
second-hand homes, a significantly higher proportion than before; only 8% each were used for construction,
extension and new home purchases, and 5% for renovation and modernisation.
In 2023, OTP Ingatlanlízing continued to offer a preferential home leasing scheme for customers belonging
to the Hungarian Defence Forces. The product was used for 41 new transactions during the year.
Several preferential options were also available at the subsidiary banks.
SI Both Slovenian subsidiary banks participated in the loan scheme facilitating first home purchases with a
state guarantee for young people, which only a few customers had taken advantage of by the end of the
year.
HR The Croatian subsidiary bank also offered preferential loan terms for the purchase of a first home, with
state subsidisation. The rate of interest subsidies were higher in less developed regions. In 2023,
approximately 900 loans were disbursed, worth HUF 38.3 billion in total.
UZ A state-subsidised housing loan was also available at Ipoteka Bank, with more than 3,500 people taking
advantage.
UA The Ukrainian subsidiary bank joined the state assistance programme for owners of war -damaged
houses. The support can be applied for via the bank’s mobile app and is paid into an OTP Bank account.
The service is free of charge.
RO The Romanian subsidiary provided mortgage loans with state guarantee to help young people purchase
their first homes. Under the scheme, OTP Bank was able to offer loans with a 15 percent higher loan amount,
and also linked to this scheme was the possibility of granting preferential loans for A, B or C energy -efficiency
category housing. In 2023, 39 loan transactions amounting to HUF 718 mill ion were concluded. More than
80 percent of the new housing loan applications submitted to the Bank in 2023 were for homes with A and
B energy-efficiency category.
MD The Moldovan bank continued its participation in the First Home programme, where the matu rity was
extended from 84 months to 300 months. In 2023, the bank disbursed 14 new loans amounting to
HUF 164 million. The number of active loans under the preferential scheme was 862 at the end of the year.
In Hungary, OTP Bank plays an important role in serving the financial needs of condominiums. At the end
of 2023, the number of condominium customers was almost the same as the previous year, at over 39,000.
At Group level, the number of condominium customers reached 50,000, with OTP Bank Croatia and CKB
having a larger customer base in terms of population.
OTP Condominium grant scheme
For the 15th time, the parent bank announced its Condominium Grant Campaign, doubling the amount of
support compared to the previous year to HUF 30 million. This time, the professional jury selected 15 winners
from nearly a thousand entries. The aim of the campaign was to improve the quality of the close environment
of condominiums and housing co-operatives and to promote energy-efficient investments in their operation.
Of the 15 winning condominiums, 8 were outside of Budapest and 7 in Budapest. The winning rural
apartment buildings are equally divided between the Transdanubian and Eastern Hungarian regions.
As a new element in 2023, the Bank supported Habitat for Humanity Hungary’s Second Chance Program
with HUF 1 million for every 100 valid applications submitted. As a result, we gave the organisation a grant
24 OTP Core and OTP Ingatlanlízing
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of HUF 10 million, and with this money we have created – through voluntary work – a decent and affordable
home for a family with young children who have lost their housing. OTP Bank volunteers also participated
in the renovation of the home.
Micro, small and medium-sized business customers
ST1: 3-3 Micro and small business loan portfolios varied across the group’s banks. There was an
outstanding increase of around 20 percent in Croatia, and the portfolio also increased in Montenegro. In
several countries – Hungary, Bulgaria, Albania, Romania – the portfolio stagnated.
In Slovenia, the overall portfolio increased as a result of the acquisition of NKBM, while SKB’s portfolio
decreased year-on-year due to a decline in investment loans that started in the third quarter.
The Serbian subsidiary bank saw a slight decrease in portfolio volume. The expected growth did no t
materialise because the EIF Guarantee Fund (Cosme), which accounts for 60% of the segment’s lending,
was exhausted at the beginning of 2023. In addition, as a result of the portfolio re -segmentation, part of the
loans have been moved to the medium-sized business category. There were also decreases in the Ukraine,
Russia and Moldova.
In Hungary, the segment was dominated by products interest-subsidised by the state. In particular, the
MAX+ products of the Széchenyi Card Programme were available to micro, small and medium-sized
enterprises, providing them with preferential access to the resources necessary for the maintenance and
development of their business. We were the first to launch the Széchenyi Card MAX+ product on the market,
with a market share of 41%. Energy efficiency investment projects were prioritised in the scheme (see also
@2.2). The Baross Gábor Reindustrialisation Loan Scheme also provided preferential funding to companies
to offset the negative impacts of the energy crisis and the disruption in international value chains. 25
GRI 203-2 The loan products available through MFB Points (see also @2.4) were also popular among
SMEs as a result of the waiver of bank fees. In 2023, due to the funding cycles of EU grants, no new loan
products were available, but there was still HUF 168.8 billion in disbursed loans to supp ort the development
of businesses.
OTP Bank has renewed its pre-financing product for agricultural grants, which was launched in December
2023 and will show results in 2024.
OTP Bank’s OTP Business Café online series of events supports the knowledge and sk ills of small and
medium-sized entrepreneurs with useful and inspiring discussions. The event feature a given success story,
an inspiring interview about the economic success of the business concerned. The series has been running
for 3 years and has around 10,000 subscribers on YouTube.
Our subsidiary banks have also worked with a number of public and international institutions to support the
SME sector.
RS The Serbian subsidiary bank participated in a programme implemented in cooperation between the
Ministry of Finance and the Serbian Development Agency (with EU funding), which provides non -refundable
grants and loans to small businesses, sole proprietors and cooperatives for the purchase of production
equipment or machinery, as well as for energy efficiency and environmental protection developments. In
2023, 12 new loans were disbursed under the facility for a total of HUF 262 million, with a year -end portfolio
of 56 loans totalling HUF 993 million.
UZ A facility is available with the Uzbek subsidiary bank to provide access to loans on preferential terms
with state support to local service sector manufacturers and producers for the overall development of
enterprises and the economy and society of the Autonomous Republic of Karakalpakstan.
In the framework of the Women Entrepreneurs Programme, the Uzbek subsidiary bank cooperates with the
Association for Businesswomen in Uzbekistan, providing training for women entrepreneurs. The training is
available in all regions of Uzbekistan and is open to both potential and existing customers.
ME CKB participated in the EBRD’s (European Bank for Reconstruction and Development) Regional SME
Competitiveness Support Programme, which encourages businesses to meet EU and international
standards by offering a preferential scheme to achieve a target in the areas of environmental protection,
occupational health and safety, product quality and safety, and energy efficiency. The subsidiary bank has
signed a framework agreement for HUF 1.1 billion for the scheme.
RO The Romanian subsidiary bank continued to be a partner bank in several schemes to help SMEs and
sole proprietors to cope with the aftermath of COVID-19, the energy crisis and the effects of the war between
25 The scheme was also available to large companies.
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Russia and Ukraine. The bank has participated in the Start-up Nation and Women in Tech government-
supported programmes. For beneficiaries of the programmes, the bank both transfers and pre -finances the
grant. In total, 663 SME customers gained access to preferential funding in 2023.
UA OTP Bank Ukraine is participating in a joint programme with USAID to reimburse interest on loans to
businesses that have been relocated or affected by war, or to micro and small enterprises in critical areas
for economic recovery or that are owned by women.
MD The Moldovan subsidiary bank had access to the preferential scheme of the IFAD (International Fund
for Agricultural Development) Young Entrepreneurs Loan, but it was not used by the bank’s customers in
2023. From 2023, the subsidised loan was made subject to a maximum area size, which t he bank’s
customers exceeded.
OTP Hungaro-Project and OTP Consulting Romania
The member companies contributed to the achievement of social goals by preparing applications and
providing project management services.
In 2023, the OTP Hungaro-Project provided 90% of its services to agricultural enterprises, submitting
applications, mainly for environmental projects, as described in Section @2.4. In the social and innovation
area, it prepared an application with a total eligible cost of HUF 2.8 billion and a requested grant of HUF 1.4
billion. The application was not evaluated in 2023.
The OTP Hungaro-Project also supports the uptake of sustainable activities and related reporting through
its ESG consultancy activities. In 2023, the company held ESG training for SMEs at three locations,
supported by the Budapest Stock Exchange and funded by the European Union, with the participation of
nearly 50 companies, and supported the preparation of the first ESG report of several companies.
RO In 2023, the Romanian subsidiary was involved in the implementation of three EU -funded projects
started earlier, which aim to promote environmental awareness and the development of vulnerable and
disadvantaged local communities through the development of human capital.
The two-year AID4NEETs project aimed to help young unemployed people in the north-east and central
regions of the country, with a special focus on equal opportunities – minimum criteria were set for Roma
people from rural areas and people from difficult backgrounds. The HUF 1.3 billion project, which concluded
in 2023, helped more than 1,000 unemployed young people (NEETs) and supported the creati on of 29
businesses.
The SIA – Innovative Students, Entrepreneurs of the Future project, and the Innovative Entrepreneurship
for Students project also ended in 2023. The projects had a total budget of HUF 764 million (EUR 2 million)
each, developed the entrepreneurial skills of at least 700 students and provided non-reimbursable support
to 28 start-ups, creating 130 jobs. The projects were implemented in the seven least developed regions of
Romania.
PortfoLion
OTP Group’s venture capital fund manager invests in early, growth and mature stage companies. The
company automatically excludes companies with a high ESG risk category from potential investments. The
company’s policy for managing sustainability risks is available on the @website.
In 2023, the company’s portfolio also included companies whose activities contribute to social or
environmental objectives.
Coding Giants is a Warsaw-based programming school that teaches the most popular programming
languages to 7–19 year-olds using proprietary curriculum. 75 percent of the courses are delivered online.
The company is the market leader in Poland, teaching around 15,000 students a year with 550 teachers.
From September 2023, training has also started in Spain and Italy.
Renewabl enables its corporate customers to monitor their renewable energy consumption 24 hours a day
and is working on an end-to-end platform where customers can choose the most appropriate renewable
sources for their consumption profile.
OTP Social Lab
The Bank has been working to establish a radically new business model in 2023. The Social Lab aims to
create a business programme that is sustainable and has a positive social impact in the longer term by
addressing real social and environmental problems through innovative collaboration. The Bank seeks
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business solutions by using its relevant local knowledge, ecosystem and network of c ontacts to work with
the community concerned. In 2023, it prepared, in the scope of broader cooperation, a concept that fits OTP
Group, is sustainable in the long term, and is meaningful and pervasive for both society and business. It
identified its material areas and set up its operational framework. The sustainable business model and
related programmes will bring stakeholders together. The support of initiatives and the operation of the OTP
Social Lab will commence in 2024.
2.7. Management of ESG risks
GRI 201-2, TCFD II.a,b, III.a,b,c, IV.a A separate ESG Programme has been defined within the OTP
Group Risk Strategy, prioritising the further development of ESG risk management procedures.
Significant progress has been made towards this goal.
In the framework of the ESG Risk Management Programme, tasks for the integration of ESG factors have
been formulated for the various risk management areas and progress is monitored on a quarterly basis. The
Supervisory Board was informed at the end of 2023 about ESG risk management issues, including
developments for the identification and assessment of climate change risks.
The assessment of the adequacy of ESG risk management is mainly based on compliance with the MNB’s
Green Recommendations26, on which regularly reporting is made to the Management Committee and the
ESG Committee. The Recommendations set out specific expectations for the management of environmental
risks. The Bank also monitors the content of the recommendations and guidelines of the European Bank ing
Authority (EBA) and the European Central Bank (ECB). In the case of DSK Bank in Bulgaria and NKBM in
Slovenia, the ECB has direct supervisory powers, thus compliance with the EBA/ECB’s framework of
expectations is a key focus for these banks in the assessment and management of environmental and
climate risks. Supervisory expectations are increasingly ambitious in this area.
FN-CB-410a.2, FN-MF-450a.3. The ESG risk management framework for lending and monitoring for the
corporate business, already applied at Group level from 2022, was revised in 2023, with the most significant
change being the tightening of the methodology for the risk classification of leasing transactions for
motorised assets, with specific, stricter categorisation rules for trucks. The policy was incorporated into the
Credit Risk Policy of OTP Group concurrently with the revision.
The elements of the ESG risk management framework (ESG risk heat map, ESG exclusion list and ESG
risk rating system) introduced in the corporate business are applied uniformly across the Banking Group.
ESG considerations are reflected in individual corporate lending decisions, and methodologies are
continuously developed in line with the evolution of available data and methodologies.
In terms of environmental risks, the Bank has started to establish a baseline database based on geospatial
data to map physical risks for the assessment of climate risks. This helps to determine the link between the
financial data of the borrowing firms and climate risk data. The methodology for assessing physical risks will
also be incorporated into the individual corporate lending process.
HR Together with the Croatian Banking Association and other banks, the Croatian subsidiary has developed
a questionnaire to assess the ESG performance of its customers, which will be applied from 2024.
ST9: 3-3, own indicator The ESG exclusion list has not changed in 2023. The list contains activities and
behaviours that, due to their disputed nature or effects, cannot be reconciled w ith the core principles of OTP
Group, the protection of human rights and the promotion of sustainable development.
Among others, the list includes the following exclusions:
•
•
•
customers whose financing is forbidden in international accords, EU acts or nationa l laws;
customers and transactions who/which violate the legislation of the country concerned or
international laws (e.g. illegal arms trade, prohibited gambling, illegal trade of drugs and medicines);
financing in relation to controversial weapons (nuclear, biological or chemical weapons, anti-
personnel mines);
• manufacturing and trading products that contain PCBs;
•
trading in specimens of wild animals under the CITES Treaty or in the products made from them.
The full exclusion list is set out in the Group’s internal policies.
Customers are required, as a minimum, to comply with the relevant and applicable environmental and social
laws and regulations and have the permits, licences and authorisations required for their operation.
26 Recommendation No. 10/2022. (VIII.2.) of the National Bank of Hungary (MNB) on climate change and environmental risks and the integration of
environmental sustainability aspects in the activities of credit institutions
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During the corporate credit approval process, the customers’ and the transactions’ ESG risk rating is seen,
and taken into account, by the decision maker, in decision making.
GRI 2-13, TCFD I.a From 2023 onwards, reports on the Group’s ESG credit risk exposure is provided to
the Credit and Limit Committee on a monthly basis and to the Board of Directors on a quarterly basis.
Improving data quality and eliminating deficiencies between data systems is ongoing.
UZ In 2023, the Uzbek subsidiary bank applied its previously introduced environmental and social risk
management system to all corporate loans. The system was developed with experts from the International
Finance Corporation (IFC) and follows the IFC’s Environmental and Social Management System (ESMS)
methodology. The bank has an ESG risk management policy and regulations in place, as well as an
exclusion list, also based on the IFC list. The system has been operational since 2021. As a first step,
transactions are screened against an exclusion list and then categorised accord ing to ESG risks in order to
determine which ESG assessment needs to be carried out. Following the ESG assessment, the
environmental and social conditions of the financing are established and included in the loan contract. Once
the contract is signed, the fulfilment of ESG requirements is monitored.
The Group has also further developed its ESG lending appetite framework. In addition to the exclusion
list, the indicator applied from the beginning of 2023 is to limit the share of new transactions with a high ESG
risk rating within new risk exposure by setting a limit. The limit is part of the Risk Appetite Statement for OTP
Bank and part of the Corporate Lending Policy for the subsidiary banks in three EU Member States (Bulgaria,
Croatia and Slovenia). The utilisation of the limits is back-tested quarterly, as part of internal monitoring.
Additional ESG-specific guidelines were incorporated into the 2024 Corporate Lending Policies.
In the case of the collateralised commercial real estate, the application of the ESG valuation methodology
developed by OTP Jelzálogbank Zrt. was launched in the Hungarian operation in February 2023.
Qualification is based on ESG factors. ESG data fields have been created in the bank’s record -keeping
system, and their completion is partially automated from information in the state’s Lechner Knowledge
Centre database. The methodology is shared with the subsidiary banks on a scheduled basis by
incorporating the valuation procedures into the group-wide property valuation guidelines.
In the retail sector, ESG risks are most significant for retail loans secured by real estate. In the case of
residential property collateral, ESG risk categories (4 categories) have been set up for 2023, taking into
account the value of the energy feature. In Hungary, ESG risks are identified on a quarterly basis. This
methodology has been added to the Collateral Valuation Regulation, and the extension to subsidiary banks
is gradual. Energy certificates are not used in all countries of operation of OTP Group, an d the lack of
availability is estimated according to a methodology developed within the organisation.
GRI 201-2 The second climate change stress test was carried out in 2023 as part of the internal capital
adequacy assessment process, with an improved methodology. The stress test (CChSTs) focused on the
determination of financial losses due to climate change, and assessed the exposure of OTP Group’s portfolio
to physical and transition risks in the long term (until 2050) and the short term (in the next 3 ye ars).
The long-term results show that even under the worst-case so-called Hot House scenario, annual losses
would increase only modestly (by about 0.15 percentage points of credit exposure) until 2050, compared to
the climate-neutral path. There is, of course, a considerable uncertainty factor in these assessments. The
OTP Group’s exposure to physical risks is in line with the average exposure of banks in the euro area. This
type of risk is higher in two countries: Russia and Romania. The OTP Group’s exposu re to transition risks
is somewhat higher than that of average banks in the euro area – because of the higher carbon intensity of
the economies in the Central and Eastern European region. In the area of the Banking Group’s operations,
the economies of Bulgaria and the non-EU member states are significantly more carbon intensive. 27
The short-term analysis shows that transition risks can lead to a credit loss in the corporate portfolio that is
about 10 percent higher in the scenario where transition risks become material, compared to the base stress
scenario. In terms of market risks, transition risks are not significant (market risks are interpreted in relation
to the risks to the Group’s trading portfolio). The third element of the short -term analysis is the operational
risk of non-compliance with climate change regulations and other stakeholder expectations. Based on our
analysis, this may represent a non-negligible but tolerable reputational loss (~0.15% of total capital).
GRI 305-3, 305-5, TCFD II.c, IV.b As a step to mitigate climate risks in preparation for the decarbonisation
plan, a second estimate of indirect greenhouse gas emissions for the credit portfolio (Scope 3,
Category 15 financed emissions) was produced in 2023. The calculation based on the PCAF (Partnership
for Carbon Accounting Financials) Greenhouse Gas Protocol methodology has been refined, and IT
development for the integration of customer data and estimation has started.
27 At purchasing power parity, as a proportion of GDP
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Based on the results, the Banking Group has started to develop a Group-wide decarbonisation strategy,
which will be completed by 2025. This is also when we will publish the rate of Scope 3 financed emissions
for 2024.
The definition of financed emissions completed in 2023 refers to the year -end 2022 group-level portfolio.
Four segments were formed as prescribed by the PCAF protocol: corporate loans, retail mortgage loans,
commercial real estates and motor vehicle loans. In lieu of adequate guidance, unsecured real estate loans
were not included. On the whole, the calculation covers 74.6% of the total loan portfolio. It is important to
note that there are serious challenges in the area of data quality, mainly due to the l ack of data and
inaccuracy; and overcoming these challenges is a priority in the short term. The calculation is the current
best available approximate estimate.
In 2023, ESG risk management in operational risk has not changed materially, and we have continued to
apply the processes we had previously put in place. The Group-wide ESG operational risk tolerance score
is monitored on a quarterly basis.
The integration of ESG risks has already been implemented in 2021. In the annual process -based risk and
control self-assessment, respondents also assess expected losses in the coming year from an ESG
relevance perspective, while at the same time assessing less frequent losses in the medium/long term
through the estimation of changes. For risks with an expected loss of more than HUF 200 million, the
responsible departments must develop measures to mitigate the risks. Loss data are also monitored from
the aspect of ESG relevance. To ensure tighter control, we intend to place greater emphasis on the quality
of loss data and the monitoring of risk mitigation measures.
In 2012, the MNB authorised the partial use of the AMA (Advanced Measurement Approach) methodology
for the calculation of the operational risk capital requirement, one of the conditions of which is that an annual
scenario analysis is carried out in the assessment of operational risks. For the assessment of low probability
but significant impact events, the Group uses scenario analysis – with standardised estimation – to assess
the realistic long-term impact of events. The same methodology is applied in the scenario analyses for the
parent bank, foreign subsidiaries and Merkantil Bank. In 2023, OTP Bank Ukraine has identified the largest
expected loss (financial impact of the occurrence of the risk) among the group members, at HUF 1.8 billion.
OTP Bank gave a similar figure. Compared to the previous year, the expected loss value of the climate
change scenario increased for the majority of subsidiaries, but was among the 15 to 20 scenarios analysed
with small to medium expected losses for the member companies.
Business impact analysis and business continuity plans also include consideration of the potential impact of
climate change risk.
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2.8. Portfolio breakdown by sector
GRI 2-6, FS6, FN-CB-410a.1
Micro and small enterprises
Assets by sector, on-balance sheet
exposure to own customers without
leasing and consolidation, 31.12.202328
Agriculture, forestry, fishing
Mining, quarrying
Manufacturing
Electricity, gas, steam and air conditioning
supply
Water supply; sewerage, waste management
and remediation activities
Construction
Wholesale and retail trade; repair of motor
vehicles and motorcycles
Transportation and storage
Accommodation and food service activities
Information, communication
Financial and insurance activities
Real estate activities
Professional, scientific and technical activities
Administrative and support service activities
Public
compulsory social security
Training
Human health and social work activities
Arts, entertainment and recreation
Other services
Activities of households as employers;
undifferentiated goods for own use
Not classified
Total (HUF billions)
administration
defence;
and
Hungary Bulgaria Croatia Slovenia Serbia Albania Montenegro Uzbekistan
Russia
Ukraine Romania Moldova
7%
0%
9%
0%
0%
19%
29%
6%
5%
3%
0%
9%
5%
5%
0%
0%
1%
1%
1%
0%
0%
578.2
24%
0%
12%
0%
0%
8%
29%
11%
3%
1%
0%
2%
3%
2%
0%
0%
3%
0%
1%
0%
0%
92.2
16%
0%
7%
0%
0%
6%
9%
4%
6%
1%
0%
1%
3%
44%
0%
1%
2%
1%
1%
0%
0%
70.2
5%
0%
19%
0%
1%
16%
18%
9%
8%
3%
0%
1%
9%
3%
0%
1%
2%
2%
2%
0%
2%
0%
23%
0%
1%
8%
37%
9%
2%
3%
0%
0%
5%
2%
0%
1%
1%
0%
1%
0%
3%
0%
15%
0%
0%
4%
33%
2%
30%
1%
0%
2%
1%
2%
0%
1%
3%
0%
4%
0%
0%
54.7
6%
52.7
0%
29.5
3%
1%
13%
0%
0%
9%
35%
13%
10%
2%
0%
2%
6%
3%
0%
0%
0%
0%
2%
0%
1%
6.9
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
224.8
1%
0%
8%
0%
0%
42%
23%
4%
4%
0%
0%
1%
5%
11%
0%
0%
0%
1%
1%
0%
0%
0.6
0%
0%
0%
0%
0%
0%
2%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
57%
40%
0.9
8%
0%
10%
0%
1%
14%
34%
10%
3%
2%
3%
1%
6%
3%
0%
1%
3%
0%
1%
0%
0%
24.8
44%
0%
11%
1%
0%
4%
26%
4%
1%
0%
1%
2%
2%
1%
0%
0%
2%
0%
0%
0%
1%
10.5
28 The table includes data for sectors with a share of more than 0.5 percent. As a result and due to rounding, not all columns sum to 100%. Industrial classification is acco rding to UN (ISIC) classification. The size of the company
is according to the current legal classification.
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Medium and large enterprises
Assets by sector, on-balance sheet
exposure to own customers without
leasing and consolidation, 31.12.202329
Agriculture, forestry, fishing
Mining, quarrying
Manufacturing
Electricity, gas, steam and air conditioning
supply
Water supply; sewerage, waste management
and remediation activities
Construction
Wholesale and retail trade; repair of motor
vehicles and motorcycles
Transportation and storage
Accommodation and food service activities
Information, communication
Financial and insurance activities
Real estate activities
Professional, scientific and technical activities
Administrative and support service activities
Public
compulsory social security
Training
Human health and social work activities
Arts, entertainment and recreation
Other services
Not classified
Total (HUF billions)
administration
defence;
and
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Hungary Bulgaria Croatia Slovenia Serbia Albania Montenegro Uzbekistan
Russia
Ukraine Romania Moldova
6%
0%
8%
4%
0%
4%
9%
2%
3%
0%
34%
15%
3%
1%
3%
3%
0%
22%
19%
1%
4%
15%
4%
4%
4%
9%
11%
2%
0%
2%
4%
0%
16%
14%
2%
13%
14%
5%
8%
3%
2%
3%
4%
1%
9%
1%
0%
27%
5%
1%
6%
13%
5%
2%
3%
15%
6%
7%
1%
3%
6%
6%
21%
15%
0%
7%
18%
5%
1%
7%
0%
7%
1%
1%
5%
0%
0%
0%
4%
1%
3,376.8
0%
0%
0%
0%
0%
1,427.8
0%
1%
0%
0%
0%
900.5
0%
2%
1%
0%
0%
1,244.8
0%
0%
0%
0%
0%
956.0
2%
2%
11%
16%
0%
15%
29%
1%
7%
4%
1%
1%
0%
1%
0%
0%
4%
0%
5%
0%
186.9
1%
0%
4%
0%
0%
10%
29%
3%
21%
0%
1%
2%
1%
2%
26%
0%
0%
0%
0%
0%
230.9
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
188.7
0%
0%
22%
0%
4%
20%
30%
0%
0%
0%
2%
23%
0%
0%
0%
0%
0%
0%
0%
0%
30.2
21%
0%
28%
0%
0%
0%
42%
4%
0%
0%
0%
4%
0%
0%
0%
0%
0%
0%
0%
0%
236.7
18%
0%
12%
3%
1%
12%
15%
5%
4%
1%
8%
17%
1%
1%
2%
0%
1%
1%
0%
0%
550.6
8%
0%
17%
0%
0%
1%
44%
3%
0%
5%
7%
4%
0%
0%
2%
1%
8%
0%
0%
0%
75.3
The environmental and social risks of economic activities are defined for Level 4 NACE codes. All activities within the Minin g sector group are high risk. In the case
of the activities involved in Real Estate Activities, Administrative and Support Services , Human Health and Social Work Activities and Other Services, the highest
consolidated environmental and social risk rating is medium. Professional, Scientific and Technical activities are low -risk activities. The risk rating of activities in
the rest of the sector groups ranges from low to high.
Exposure calculations are not based on Schedule RC-C and Schedule RC-I, and the classification is not in line with the NAICS classification.
29 The table includes data for sectors with a share of more than 0.5 percent. As a result and due to rounding, not all columns sum to 100%. Industri al classification is according to UN (ISIC) classification. The size of the company
is according to the current legal classification.
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3. FINANCIAL WELFARE, RESPONSIBLE CUSTOMER SERVICE
This chapter presents the activities related to the following material topics, which are discussed at multiple
places within the chapter:
ST6: GRI 3-3 Financial welfare:
Impacts: With its products and service provision methods, the Banking Group can contribute to the financial
welfare of its clients and enable them to make the responsible financial decisions best suited to their
particular life situations. The group’s practices influence the extent to which responsible cash handling
options are available or unavailable to customers in different financial and social circumstances. Financial
products and services are often complex, and the information provided by the Banking Group is essential to
understanding them.
This material topic supports the achievement of the following SDGs:
Engagement: We are committed to promoting our customers’ financial welfare and we offer them products
that are aligned with their real needs and possibilities. We always aim to make sure that our communication
and customer service is fair, clear and straightforward. Our objectives are also presented in our
@Responsible Marketing Policy and @Consumer Protection Compliance Program.
Acts: Designing ethical and fair products
Transparent and understandable product structure
Providing tools and knowledge to enable good financial decisions, offering educational videos and
calculators
Continually enhancing our responsible marketing communication practices
Highly visible information in plain language
Thorough exploration of customer situations and requirements
Responsible sales, product offers
Stakeholder cooperation: We carry out preliminary research on the practices we intend to introduce, often
running pilots to test them. We regularly carry out customer satisfaction surveys. We conduct mystery
shopping to check compliance with the requirements. Our clients can repo rt inappropriate practices in our
complaints handling system (see @4.3); all complaints are investigated and the customer is always informed
of the outcome of the investigation. We are on the lookout for opportunities to work with NGOs to promote
responsible practices (e.g. Advertising Self-Regulatory Board, banking associations).
ST5: GRI 3-3 Equal opportunities in accessing financial services:
Impacts: Access to financial services is a prerequisite for financial wellbeing. Positive social/economic
impacts can be achieved only if disadvantaged groups are also able to manage their finances, with
reasonable effort, through the digital channels, bank branches or ATMs available.
This material topic supports the achievement of the following SDGs:
Engagement: To ensure equal opportunities and promote the principles of social solidarity, it is also crucial
that the bank’s services be accessible, that disadvantaged people also have acces s to the basic functions
required for managing their finances and, to the extent possible, are able to borrow as well. We impose strict
conditions on the use of our services, both for the stability of the Banking Group and in the interests of our
clients.
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Acts: Expanding online services
BUSINESS REPORT 2023 (CONSOLIDATED)
Maintaining the option of personal customer service, strengthening the advisory function
Developing accessibility for disabled
Products available to vulnerable groups as well (see Chapter 2.6)
Stakeholder engagement/compliance: We carry out preliminary research on the practices we intend to
introduce, often running pilots to test them. We conduct mystery s hopping to check compliance with
accessible customer service requirements. We look for opportunities to work with NGOs to promote
responsible practices.
Details of activities relating to material topics are presented in the following pages, along with thei r outcomes
and how their effectiveness is assessed.
For more details on our principles and overall objectives, please visit @our website.
3.1 Responsible communication and sales
ST6: 3-3 Responsible communication takes many forms on many levels within the Banking Group.
Information and communication about banking products and services is a highly regulated area in most
countries where OTP Group operates. Regulations tend to require providers to make a wide range of
information available. Responsible communication means complying with such rules while also using clear
language and raising awareness.
Clear communication is a priority for us at all times. To this end, all new employees of OTP Bank’s
Marketing and Communication Directorate attend in-house training on the subject; after their initial training,
they receive regular further and refresher training and share best practices, which is intended to ensure that
such best practices are applied at all times.
The Tone of Voice manual, in which the use of plain language is prescribed as a basic goal and requirement,
is available across the Group. The manual contains templates and guidance on advertising, websites and
social media communication.
We have started to measure what our clients think about clear communication and how their view is
changing.
The parent bank and several subsidiaries improved their information and communication pract ices during
the year.
•
In order to make our customer communications more transparent and help service users in their
planning, OTP Bank introduced in 2023 a practice of announcing 30 days in advance all IT system
shutdowns that meet the definition of bank holiday; the information is provided to clients on our
website and on the signature pads in branches.
• We updated our internal regulations and our branch data systems by standardizing the range of
services available in the branches, and we also modified their wording to make external
communications clearer.
• At the end of 2023 we relaunched the website where we explain the services available at ATMs; all
ATM services are presented in detail, and short video summaries are provided about the more
complex services.
• The website also offers answers to our clients’ frequently asked questions (FAQs) related to
complaint handling.
• The branch locator on the Bank’s website is to be revamped in early 2024 so that it can return more
precise results and present a clear, filterable view of services and other information, including on
accessibility.
• Videos and screenshots available on the Bank’s regularly updated IBMB Guide page help clients
use the new internet and mobile banking features.
• The savings pages of the Bank’s website are constantly being updated, also enhancing client focus;
the investment fund search function has also been updated.
SI NKBM of Slovenia has a dedicated website to inform its clients about what to consider before taking out
a loan; it also provides useful information on what to do after borrowing.
HR The Croatian subsidiary has continued to review its communication practices and solutions to achieve
simpler language, clearer structures and easier navigation. The Bank tries to use colloquial language at all
times and communicate in a more personal, customer-centric way. In 2023 the subsidiary continued to
prioritise the promotion of the packages and products intended for students. In compliance with the
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requirements formulated by the Croatian National Bank, the subsidiary discloses the potential risks of the
products in their descriptions.
RS The Serbian subsidiary modified its text message communication practices in order to provide clearer
information; it rewrote all language that could have been misleading for clients due to the use of banking
jargon.
ME CKB also worked on improving the content of its text messages to ensure clearer and more
straightforward communication. The bank intensified its product communications via Viber, also drawing
clients’ attention to the important changes.
UA In 2023 the Ukrainian subsidiary again faced a number of crises due to the war. It adopted a crisis
response policy and, in order to provide timely and transparent information to clients, within two hours of
any incident the bank publishes information on its website and on social media regarding shutdowns or
errors in the bank’s core system, products or services.
RO OTP Bank Romania modified its mortgage loan application guide to educate its clients, presenting the
benefits of a more energy-efficient home and encouraging greener choices.
OTP Group works to ensure that the products it offers and sells to its customers are aligned with their life
situations and needs, and help them achieve their financial goals. Remuneration criteria and incentives are
adapted to the local markets, they are not uniform across the Banking Group. None of the members of the
Banking Group introduced material changes to their sales processes. DSK Bank launched a new incentive
scheme. All front office staff in branches that perform above the NPS target 30 receive a fixed bonus.
Improving financial awareness regarding banking services
In addition to informing clients responsibly, we promote responsible cash handling in a number of other
ways, providing a more comprehensive knowledge and understanding of banking services and offering
features that help clients achieve stability in their finances.
Animated videos on data security have been added to the OTP Knowledge Bank YouTube channel;
these videos explain in plain terms how financial products and services work. The third video had more than
1 million views, while the first two videos had nearly 700,000 views each. We believe that these outstanding
viewing figures demonstrate the importance of this topic and the wide reach of the videos. During the year,
a total of 14 general financial education videos were available, supplemented with vi deos specifically
presenting OTP Bank’s services. In 2023 the general-content videos were viewed a total of 1.99 million
times; films on subjects other than phishing were viewed 260,000 times.
The next step: Our research shows that young people’s cash handling habits are shaped by the role models
in their families; however, parents are often unaware of this fact and try to avoid speaking about money in
front of their children. Because of the importance of this topic, we have put family role models at the he art
of a campaign we launched in November 2023. Three short clips were produced by the end of the year,
showing how the families of three online media personalities manage their money and how they involve the
children as well. At the end of each video useful tips are offered by experts (a psychologist, a banking
specialist, the head of education at the OTP Fáy András Foundation). The videos direct visitors to the page
@akovetkezolepes.hu, which is a new financial awareness website of OTP Bank. The website offers parents
and anyone else interested in financial education a wide range of clear and structured practical information
on good money management practices.
We launched a series entitled Finance Made Easy in cooperation with RTL Online and the Bank360 online
platform. In the videos, experts from OTP Bank and Bank360 discuss and suggest solutions to financial
issues that arise in typical life situations. Short films were produced about a variety of topics such as when
and what financial products can be of use for children, and how to track income and expenditures in a
convenient and more purposeful way. The video series was launched at the end of 2023 and w ill continue
in 2024 as well, covering the subjects of equal opportunities and charitable donations. While the financial
situations presented in the videos are generic, we do recommend specific OTP products in our
communications promoting them.
In an important outcome resulting from our cooperation with Cogo, a carbon calculator is now available in
the Personal Finance Manager module of OTP Bank’s mobile banking app (see also @2.4). We have added
this feature in order to encourage customers to make financially as well as environmentally sound decisions.
30 Net Promoter Score - a measure of customer satisfaction
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BG DSK Bank implemented a joint initiative with the largest media group in Bulgaria (Net Info) . In the “Your
Money” programme, 10 videos and a series of online articles were created, delving into the most important
aspects of banks, the banking system and money. Videos were produced with titles such as “Why do banks
exist?”, “How to get a loan” and “What is a POS?”.
The bank also shares informative content on its social media platforms about banking products in general,
and has started a “Financial Tuesday” series on LinkedIn, where it also shares useful information about the
banking system and its products and services.
SI In Slovenia, NKBM and SKB joined forces to improve financial literacy. The focus of their activities in
2023 was to promote the 50:30:20 rule, which makes it easier to reach financial goals. The principle behind
this rule is to spend 50% of your income on basic needs and household expenses, 30% on leisure activities
and 20% on savings. This and other useful ways to save money are demonstrated in six animated films
based on the life of a fictional Slovenian family. The videos showed, for example, how to plan monthly
expenses, how to save for future goals or retirement, and how to become financially independent. These
stories from the life of the Bogataj family can be viewed on both banks’ websites, social media channels and
other digital channels, and a dedicated website has also been created.
SKB has set up a webpage for posting educational videos that help clients improve their awareness in how
they manage their personal finances. The bank continued its #Nevergiveup motivational cam paign in 2023;
in this campaign, it communicates messages and challenges to the customers. Throughout the year, the
focus has been on healthy exercise and sporting careers; the bank also put out a message at the time of
the natural disaster in August, encouraging people to help and volunteer.
RS The Serbian subsidiary enhanced the My Finance feature available in its mobile banking service and
allowing retail clients to split their savings and set target dates for their goals.
AL Each month the Albanian subsidiary publishes financial planning and education news and posts financial
challenges and games on its social media platforms. In 2023 the bank ran several campaigns to promote
environmental awareness and the use of recyclable materials.
MD Our Moldovan subsidiary also promoted environmental awareness across society, raising awareness
on several occasions of how to consume in rational ways and why reuse and recycling are important.
3.2 Debtor protection
ST1, ST6: 3-3 A number of conditions need to be met – from a correct assessment of possibilities
through the Bank’s prudent risk management to an adequate regulatory environment – for borrowing
to actually be the way forward for our clients. In addition to implementing these, OTP Group also
considers it a key objective to offer solutions to distressed debtors.
The interest rate freeze introduced in Hungary in order to reduce the credit risk of customers continued in
2023. That aim is also served by the Qualified Consumer-Friendly Housing Loans (MFL) scheme. By the
end of 2023 the share of MFL loans had increased to 60 percent of all personal loans granted by OTP Bank.
In real estate loans, the interest rate moratorium led us to stop selling loans that do not have a fixed interest
rate until the end of the term; we offered only Family Housing Allowance loans, which have consumer -
friendly classification.
Debtor protection programmes are available across the Group; compared to the total loan portfolio, only a
small number of debtors make use of these schemes. In 2023 we introduced several changes to prevent
the non-performance of
training videos and simplified and extended our
communications in order to help distressed clients find out about the options available to th em. A video
about solutions for payment difficulties was posted on our Knowledge Bank channel described in the
previous chapter.
loans. We produced
Together with our foreign subsidiary banks, we reviewed our processes related to debt protection
programmes, the options available to clients, and the effectiveness and operation of the programmes. While
the overall proposal describing the opportunities for improvement will be finalised only in 2024, our Russian,
Ukrainian and Slovenian subsidiaries were already expanding their debtor protection options in 2023.
SI Following the floods in Slovenia, our Slovenian subsidiary banks offered their clients a moratorium on
loan payments.
Whenever clients are in arrears, OTP Bank immediately contacts them; after all, the chances for settle ment
decrease as the amounts in arrears increase. Debtors in arrears have several options, such as extending
their repayment period, reducing their repayments or capitalizing the amount in arrears. We recommend
repayment insurance to our customers.
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In 2023 Merkantil Bank shared an information video on its website, in which it explains the debt settlement
options available to clients in arrears.
At OTP Bank the number of people resorting to debt protection schemes increased significantly during 2023,
reaching almost 15,000 by the end of the year (up from around 10,000 at its beginning). The total amount
of these loans almost doubled, to HUF 24 billion. Clients in arrears with their overdraft payments represent
the largest proportion of debtors in debt protection programmes, while the steepest rate of increase was
measured in housing loans. We believe that the increase in the number of participants in the programme is
attributable mainly to the economic environment, the rising cost of living.
Total restructured loans at our foreign subsidiaries amounted to HUF 411 billion, of which non -performing
exposures represented HUF 218 billion.
Own indicator Share of overdue loans in the retail and MSE segments 1 (31.12.2023)
Mortgage loan
Consumer loan
MSE loans
1more than 90 days overdue
3.3 Customer satisfaction
OTP Core
HUF 72 billion
HUF 79 billion
HUF 38 billion
4.0%
5.0%
6.8%
OTP Group
HUF 122 billion
HUF 274 billion
HUF 87 billion
2.0%
5.5%
6.1%
GRI 2-29 Feedback from customers is a priority for OTP Group both in terms of overall satisfaction
and our customers’ views on our new services.
The satisfaction of our retail clients is measured with the standard TRI*M method across the Group, which
some of the member companies supplement with the NPS or the SQM methodology.
TRI*M gauges the overall satisfaction and loyalty of our own customers as well as customers of all of our
major competitors, along with the main factors for satisfaction. Information is also analysed by customer
segment (e.g. career starters, juniors, premium customers). We perform one measurement per year per
country on a representative31 sample of 1,000 persons. In some countries the survey covers retail as well
as corporate clients; however, the results presented apply to the retail segment in each case.
OTP Bank’s customer retention score was 5732 in 2023, down nine points year-on-year. Satisfaction varied
among competitors, with two showing improvement and two a worsening trend. The average TRI*M value
of competitors was 68 points. OTP Bank is perceived more favourably by Junior customers and higher
earners. Customers consider the Bank better than its competitors in terms of access to branches and ATMs.
In addition to the general aspects of banking (e.g. price, respect, product and service off ering, clear
information), the second most important factor for customer satisfaction and loyalty is security and reliability.
31 Based on distribution by age, sex, education, municipality type, region. Data was collected online in Hungary, Croatia, Serbi a and Slovenia. Personal
interviews were conducted in the rest of the countries.
32 The TRI*M score can range between -66 and 134 points.
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Satisfaction with OTP Group member banks increased in Croatia and Serbia 33, even as the sector average
tended to decrease in the countries surveyed. The customer retention rate of OTP Group banks remains
above the peer average in Slovenia (SKB Bank), Serbia, Albania and Montenegro. The Bulgarian subsidiary
achieved the highest level of satisfaction. Overall satisfaction with banks is still well above the regional
average in Bulgaria. In Moldova we performed below our competitors due to the change in the bank’s name
and the fact that the OTP Bank brand is not yet sufficiently established there. The performance of the
Ukrainian subsidiary is significantly affected by the fact that OTP is a second bank for most clients there.
Similarly to other smaller banks in that country, our customer retention is lower than that of the main banks .
The war does not affect the bank’s image.
SI NKBM of Slovenia also uses the Net Promoter Score method to measure the satisfaction of customers in
general terms and also with specific service channels, and to assess the opinions of the different customer
segments. The overall result in the retail business line was 19 points 34 (a good result, two points higher than
in the previous year), while the NPS for branches was 91 and for digital channels it stood at 78. The bank
also uses other methods to measure satisfaction, for example by looking at opinions on different products
and segments.
RU The Russian subsidiary also uses the NPS methodology. In 2023 NPS stood at 23, 4 points up year -on-
year. In 2023 the subsidiary bank also used CSI35 methodology to measure customer satisfaction; the result
was good, a score of 8.1 on a scale of 1 to 10. The performance of the subsidiary is significantly influenced
by the fact that its product portfolio is focused on consumer loans and it therefore tends to be the second
bank of its customers.
OTP Bank measures Service Quality Management (SQM) for retail and SME clients by conducting online
surveys36. In 2023 service quality increased and was again outstanding. Achieving 90% in the retail segment
and 95% for business customers, it exceeded its targets in both segments.
SI SKB of Slovenia uses the same methodology to assess customer service. In 2023 satisfaction with in -
branch services was 96 percent, contact centre satisfaction was 90 percent, and satisfaction with electronic
channels (e-mail, website) was 82 percent.
BG In addition to TRI*M, DSK Bank also uses the NPS indicator to measure the experience of customers
visiting its branches. In 2023 its NPS continued the positive trend of the previous year, rising to a level abo ve
80 points.
33 There were no surveys conducted in Moldova and Ukraine in 2022 and in Romania in 2023.
34 On a scale of -100 to +100
35 Customer Satisfaction Index
36 All branches are measured either on a semi-annual or on a quarterly basis. The number of questionnaires depends on the frequency of transactions
in the preceding period.
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3.4 Accessibility of financial services
ST5: 3-3 Providing a wide range of services tailored to customer needs is a priority for our Banking
Group. We are constantly expanding our customer service methods and functions, and work on
explaining to our clients the wide range of options available to them for managing their finances.
Our customers typically welcome the introduction of new possibilities and regard them as positive
developments.
Remote access through digital channels
The expansion of digital channels is a persistent, long-term trend. The Group’s objective is to broaden the
range of products that are partly or fully digitally accessible, making sure that the processes are accessible
as conveniently, and for as many customers, as possible. The Banking Group also prioritises the sharing of
knowledge on how to use on-line channels, thereby also encouraging their use.
Over 2 million retail banking customers of OTP Bank were digitally active at the end of 2023, and the
proportion of digital-only customers has also been increasing steadily.
In 2023 we again developed and launched several new digital features. The Piggy Bank feature helps our
customers improve their financial awareness and achieve their savings goals, while the Bill S plitter
functionality allows our clients to easily share a bill, for instance when dining out with friends.
SI In Slovenia, NKBM made several of its services available to clients electronically in 2023. These include
managing an investment portfolio, changing card limits and managing text message notifications. The bank
improved the process of applying for consumer loans combined with insurance, introduced Google Wallet
and developed an electronic signature process for the micro- and premium segments, as a result of which
certain documents can now be signed without visiting a branch. The subsidiary also offers a video banking
service, which was used by 300 to 400 clients per month in 2023.
RS At the end of the year the Serbian subsidiary introduced the option of opening bank accounts via video
chat. The bank also introduced a chatbot to automate the responses to customer queries on the website.
Feedback from customers has been positive.
RO The Romanian subsidiary now supports Apple Pay for customers with a Visa debit card.
MD A new mobile banking application was launched by the Moldovan subsidiary. Logins are easier and
faster in the app, which is more customer-friendly to use.
In-branch and ATM service
OTP Group also serves its customers through its extensive network of branches and ATMs. It had more
than 1,500 branches as of the end of 2023 (@ Staff level and other information 37). Many financial
transactions are more convenient and faster to transact on electronic channels, therefore the role of
branches and ATMs is changing. While a slight reduction in their numbers is a typical trend everywhere,
branches remain an important channel for serving customers. There functions are also constantly being
expanded and their services are being adapted to the needs of customers.
GRI FS13 The Banking Group has the largest branch and ATM network in Bulgaria and Montenegro and
very extensive networks in Hungary, Slovenia and Serbia. In 2023 there was a significant number of branch
closures only in Russia; the overall number of branches in the Banking Group increased due to acquisitions.
NKBM of Slovenia had 65 branches and Ipoteka of Uzbekistan had 162 at the end of 2023.
OTP Bank also operates a dedicated innovation branch, where we continuously seek and test innovations
to simplify and digitize processes so that, on the basis of the feedback received from our customers, we can
provide services that are even better aligned with client requirements. In 2023 the employees of our
innovation branch played an active role in judging an in-house competition of ideas for greening the
operations of OTP Bank; some of the ideas will be put into practice during the revamping of the branch
network.
Our focus points in our branch services include the continuous improvement of quality standards, providing
advisory services based on the customer’s need, and solving complex banking issues. The aim is to build
long-term relationships based on trust through serving our clients. One of the main aims of the ongoing
branch renovations is to create a more comfortable, ergonomic and discreet environment. The Client
Oriented Programme aims to achieve this. At selected branches, digital education for clients was treated as
a priority in order to encourage them to carry out routine transactions using electronic channels. In the same
37 In addition, OTP Pénzügyi Pont and OTP Ingatlanpont have 6 and 30 customer service points, respectively, and Merkantil Bank has one bank branch.
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programme, we also increased the frequency of customers being served by dedicated advisors; this is
facilitated by a redesign of the queue management system, which has made appointment scheduling easier.
The results of the changes are very positive, with the average service time for cash payments of up to
HUF 1 million reduced by around 30 percent, to 4.1 minutes, and branch waiting time reduced to 6.5 minutes.
Several members of the Group prioritised the development of more efficient branch operating practices,
including a reduction in waiting times. We aim to serve our customers within 10 minutes in 80% of cases.
Around half of all group members met this target during the year. Our Croatian subsidiary saw a significant
increase in branch traffic in the first months of the year due to the introduction of the euro in 2023; while this
resulted in longer waiting times, by the second quarter more than 70% of customers had to wait f or no more
than 10 minutes. The Montenegrin and Serbian subsidiaries started to measure waiting times, which in itself
improved the results. Our Montenegrin bank also reorganised its branch processes and centralized the
servicing of large corporate clients.
In order to provide greater confidentiality (an important consideration for customers), the parent bank
started to roll out to its nationwide branch network the use of ambient music. This is to make sure that
customers do not overhear what is being said and also feel more relaxed while waiting.
Customers interested in taking out real estate loans had access to OTP Bank’s remote expert system at
117 smaller branches in 2023. With the help of this system, the residents of micro -regions can receive
high-quality services at our branches as they can consult with our well-trained and highly experienced
specialists via videophone. Through the branch video banking service, customers can contact branch
employees remotely, from their homes.
SI SKB worked with property agencies to set up a network of outsourced mortgage lending experts, who
can assist borrowers effectively in the process of buying real estate as they are closer and more accessible
to customers.
UZ RU In Russia, self-service terminals are available in all branches for banking transactions, while the
Uzbek subsidiary bank now offers digital internet banking to its corporate clients.
BG SI RS RO Advisory functions are the priority for cashless branches, the number of which is constantly
rising. In 2023 the number of cashless branches reached 28 at group level, with 16 cashless branches in
Hungary, 5 in Bulgaria, 3 in Serbia, and 2 each in Slovenia and Romania. Cash transactions can be executed
in such branches at the smart ATMs provided.
In addition to electronic channels, ATMs now play an increasingly important role in routine financial
transactions. The number of ATMs has increased as a result of acquisitions.
SI Since March 2023 clients have been able to withdraw cash and check their balances free of cha rge using
their Visa or corporate debit cards at the ATMs of NKBM and SKB in Slovenia. Since July clients have also
been able to withdraw cash with their Visa debit cards free of charge from OTP Bank ATMs.
The Banking Group is continuously and dynamically increasing the number and proportion of cash-in ATMs,
which provide a wide variety of other financial services besides accepting cash deposits. In 2023 Hungary
achieved the target of having at least one ATM in every bank branch where clients ca n both withdraw and
deposit cash; the total number of such machines reached 425 by the end of the year. The amount deposited
at ATMs is growing dynamically, up 19% in 2023 compared to a year earlier. The increase in the number of
cash-in ATMs continued at several subsidiaries; more than 1,100 (~20%) such machines were available to
clients across the Group.
GRI 3-3, FS13 Owing to its extensive branch network, OTP Group provides substantial access to in -person
financial transacting for the populations of disadvantaged regions in several countries. Nevertheless, these
regions have a lower concentration of bank branches and ATMs. Only some of the members of the Banking
Group have information on how our competitors perform in these regions. 38 The Croatian subsidiary has
fewer access points in both disadvantaged and non-disadvantaged areas than its competitors. The networks
of our Serbian and Russian banks offer very similar coverage to the competitors. Our Ukrainian bank has
two branches located in regions with low population density; these branches also have the special function
of serving clients from the Hungarian minority. Formerly a state-owned bank, the subsidiary in Uzbekistan
is present in all regions of the country and, in a comparison with its competitors , its ATM network is denser
than its branch network.
38 No disadvantaged regions can be identified in Bulgaria and Slovenia.
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Access points in disadvantaged regions¹
Branch
ATM
OTP Bank – Hungary²
Number of access points (as a % of the total number of access points)
Number of new access points (as a % of all new ones)
Number of terminated access points (as a % of total terminated)
Change from the previous year
DSK Bank – Bulgaria
N/A – there are no disadvantaged regions defined
OTP Bank Slovenia (SKB + NKBM)
N/A – there are no disadvantaged regions defined
OTP Bank Croatia
Number of access points (as a % of the total number of access points)
Number of new access points (as a % of all new ones)
Number of terminated access points (as a % of total terminated)
Change from the previous year %
OTP Bank Serbia
Number of access points (as a % of the total number of access points)
Number of new access points (as a % of all new ones)
Number of terminated access points (as a % of total terminated)
Change from the previous year %
OTP Bank Albania
N/A – there are no disadvantaged regions defined
CKB – Montenegro⁴
Number of access points (as a % of the total number of access points)
Number of new access points (as a % of all new ones)
Number of terminated access points (as a % of total terminated)
Change from the previous year %
Ipoteka Bank - Uzbekistan
Number of access points (as a % of the total number of access points)
Number of new access points (as a % of all new ones)
Number of terminated access points (as a % of total terminated)
Change from the previous year
OTP Bank Russia
Number of access points (as a % of the total number of access points)
Number of new access points (as a % of all new ones)
Number of terminated access points (as a % of total terminated)
Change from the previous year %
OTP Bank Ukraine
Number of access points (as a % of the total number of access points)
Number of new access points (as a % of all new ones)
Number of terminated access points (as a % of total terminated)
Change from the previous year %
OTP Bank Romania
Number of access points (as a % of the total number of access points)
Number of new access points (as a % of all new ones)
Number of terminated access points (as a % of total terminated)
Change from the previous year
OTP Bank Moldova
Number of access points (as a % of the total number of access points)
Number of new access points (as a % of all new ones)
Number of terminated access points (as a % of total terminated)
Change from the previous year %
63
0
4
-6%
19
0
1
-5%
8
0
0
0%
0
0
0
N/A
0
0
0
N/A
42
0
0
0%
2
0
0
0%
42
0
0
0%
5
0
0
0%
(18%)
(0%)
(29%)
(18%)
N/A
(25%)
(5%)
N/A
N/A
(0%)
N/A
(0%)
(0%)
(0%)
(0%)
(6%)
N/A
(12%)
(3%)
N/A
(0%)
(44%)
N/A
(0%)
(9%)
N/A
N/A
194
12
5
4%
28
1
1
0%
39
0
10
-7%
15
0
0
650%
0
0
0
N/A
5
0
3
-38%
25
7
1
N/A
49
1
0
2%
18
7
3
29%
(10%)
(15%)
(7%)
(6%)
(4%)
(7%)
(14%)
(0%)
(200%)
(13%)
(0%)
(0%)
(0%)
(0%)
N/A
(3%)
(0%)
(18%)
(15%)
(32%)
(17%)
(31%)
(33%)
(0%)
(12%)
(18%)
(9%)
¹ Sub-regions and districts defined as such under the laws of each country, determined according to social and demographic indicato rs, and indicators
related to housing and living conditions, the local economy and labour market, infrastructure and the environ ment.
² At this time, the branches/offices of OTP Ingatlanpont, OTP Pénzügyi Pont, OTP Merkantil and OTP Faktoring are not present in disadvantaged regions.
3.5 Accessible customer service
ST5: 3-3 We seek to provide equal access for persons living with disability through services adapted
to their special needs. In Hungary we have launched a dedicated project in preparation for the new
Accessibility Act, which is to enter into force in 2025.
OTP Bank reviewed its complex accessibility for disabled strategy in 2023.
In a project launched to comply with the Accessibility Act, we assessed the prevailing conditions and
identified the needs for improvement in 2023. There is greater need for improvement on our electronic
channels, but investments are also needed in the branch network. Starting in 2023, we formulated and
published our recommendations to the entire Banking Group on how to improve accessibility across all
digital and physical channels and all disability groups.
Our accessibility survey conducted in 2022 provided a solid basis for this accessibility for disabled project,
in terms of both the physical network and digital accessibility for disabled. We organised a digital accessibility
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for disabled convention in 2023 in order to raise awareness among our colleagues and lay the groundwork
for accessible services. At our service planning day for employees, our staff had the opportunity to
experience an accessible adventure park.
We also plan to cover the topic of accessibility for disabled and equal opport unities in a video within our
Finance Made Easy series (see @3.1).
RU The Russian subsidiary bank revised its training on how to serve disabled persons.
In 2023 we offered the following accessibility for disabled tools to the clients we served.
To assist customers with reduced mobility:
• Physical accessibility for disabled is provided in all branches in Hungary, with one exception 39. In
Slovenia, all but three branches are accessible. With the exception of the Serbian and Albanian
subsidiaries, more than 50% of the branches at our subsidiaries are wheelchair accessible. 77% o f
the branches of the Banking Group are accessible.
• We also strive to make ATMs wheelchair accessible. As of the end of 2023, 46% of the ATMs of the
Banking Group were accessible 40.
• The OTP Bank website supports one-handed use.
We assist our blind and visually impaired customers as follows:
• There is a tactile push button on the branch ticket dispenser at every branch of OTP Bank Hungary
and the Croatian and Russian subsidiaries. The push button allows visually impaired customers to
signal their arrival. At group level, 62% of queue management systems have a push button. A tactile
strip helps locate the push button and navigation is assisted with Braille signs.
• Tactile guide strips are available in 179 OTP Bank branches, while all of our Russian branches have
a tactile sign at the entrance.
• At group level, nearly half of all ATMs are Braille-enabled. Text-to-speech software is installed at
1121 ATMs of OTP Bank (60% of the total), and 39% of the Moldovan subsidiary’s ATMs provide
audio support.
We assist our hearing impaired customers as follows:
•
In Hungary, KONTAKT Interpreter Services can be used by customers in 167 branches; this service
enables a sign language interpreter to assist with administrative tasks in the branch through live
video chat. Utilisation of the service was still low in 2023. These interpreting services are available
in 24 branches of the Serbian subsidiary bank.
• An induction loop (signal amplifier) is available for clients using a hearing aid at 118 branches of
•
the parent bank, 11 branches in Croatia and at the Merkantil Bank branch.
11 major branches of OTP Bank and 29 branches of the Serbian subsidiary have colleagues trained
in sign language.
As a result of the accessibility for disabled improvement project, all OTP Bank branches will have laptops
for video interpreting services as well as tactile guide strips for the blind.
Digital accessibility for disabled is widely available at OTP Bank, Merkantil Bank, OTP Pénzügyi Pont,
OTP Jelzálogbank and OTP Lakástakarékpénztár. The Web Content Accessibility Guidelines – WCAG 2.1
“A” level recommendations – were taken into account in the design, development and content editing of the
websites in order to enable navigation with alternative devices and the use of text -to-speech software. Due
to the technology used to develop them, the websites of the subsidiaries OTP Ingatlanpont, OTP Alapkezelő,
OTP Egészségpénztár and OTP Faktoring already provide some accessibility features; when these websites
are due for an update, accessibility criteria will be fully taken into account already in the design stage.
The website of OTP Ingatlan Befektetési Alapkezelő Zrt. was under development as of the end of 2023; its
new website will satisfy accessibility for disabled criteria.
OTP Bank continues developing and adding accessible parts and components to its mobile application (on
both Android and iOS) and to its internet banking site. The OTP Pension Fund website is accessible for
blind and partially sighted people, while the OTP Travel and PortfoLion websites and mobile apps have
certain accessibility features for blind and partially sighted people.
39 Accessibility for disabled is not feasible at this branch due to the listed building regulations and the characteristics of the building and its environment
(there is a significant height difference between street level and the branch floor level, which are connected by stairs).
40 The collection of this information started in 2023, and data were not available for all subsidi ary banks.
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Digital accessibility for disabled at foreign subsidiary banks was partially implemented during 2023, as
follows.
HR The Omoguru widget (mini app) operates on the website of our Croatian subsidiary; it helps customers
suffering from dyslexia and reading difficulties understand the content of the website. The InternetBank and
the MobileBank services include functions facilitating access for visually impaired users.
BG, SI, RS, UZ DSK Bank’s website is accessible for visually impaired users. The website and InternetBank
of the Slovenian subsidiary does not support automatic display changes, making it easier to understandin g
the content. At the Serbian subsidiary accessibility is focused on the mobile banking application; the basic
features have been adapted to support text-to-speech and speech synthesis. For the time being, speech
synthesis is limited to English. On the Uzbek bank’s website visually impaired people can opt for a black
and white version and increase font size; there is also the possibility to have text read out automatically in
certain scenarios.
RU The Russian subsidiary helps mentally handicapped people via the chat function and has simplified the
language of its information leaflets, to which it has also added easy -to-read diagrams. There are notes in
Russian made available to persons who have difficulty absorbing visual information. These options are
provided on the website, in internet banking and mobile banking.
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4. ETHICAL BUSINESS PRACTICE
Details of activities relating to material topics are presented in the following pages, along with their out comes
and how their effectiveness is assessed.
ST7: GRI 3-3 Compliance:
Impacts: Through our practices we influence the reliability of the financial sector, the ethical and moral
standards of our employees, and the prevalence of (financial) crime in gener al. The greater our weight on
the market of a country, the greater the impact we may have; nevertheless, even where we are smaller
players, we may have a pull effect through the good practices we implement.
This material topic supports the achievement of the following SDGs:
Engagement: We are committed to utmost compliance with the laws and to operating ethically. Preventing
corruption and money laundering is important to us and we act with circumspection and take all the
necessary steps when investigating potential breaches. We deal with customer complaints fully, quickly and
fairly. An extract from our @Compliance Policy, our @Competition law policy, @Anti-Corruption Policy, our
@Code of Ethics and related documents, and the @Human Rights Declaration are available on our website.
Acts: Operating a network of compliance officers, continuous training of staff
Further enhancements to our internal communications about changes in relevant legislation
Minimum compliance standards and policies for all members of the Group
Operation and development of the sanctions pre-screening function
Complex, multi-channel compliance knowledge and awareness development for employees
Revising the Code of Ethics and operating a whistleblowing system; delivering the related training and
information
Comprehensive anti-corruption programme and anti-corruption clause
Revision of the Gift Policy
Regular and individual conflict-of-interest checks
More centralized pre-qualification of suppliers
Fair complaints handling
Stakeholder cooperation: Cooperation with financial control/supervisory/audit bodies and authorities, and
the police in relation to the prevention and detection of crime. Complaint management, and cooperation with
the Financial Arbitration Board.
GRI 418: 3-3 Customer data and information security:
Impacts: The secure processing of data also affects our customers’ financial welfare and may also have
repercussions for the general levels of financial crime. By protecting the personal data of our clients, we
respect their privacy.
This material topic supports the achievement of the following SDGs:
Engagement: Data protection and the protection and confidential processing of the personal data of
customers are a basic and indispensable condition for the reliability of the Banking Group. Our goal is to
protect the data of our clients and our IT systems as best as possible and prevent incidents. Our @Data
Protection Policy available on our website.
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Acts: Internal cyber security audits
Security awareness raising among customers/residents and employees
Continuous development of security systems and work processes, training of our employees
Inclusion of stakeholders We cooperate with, among others, the National Police Headquarters (ORFK),
ELTE University, and the banking associations of some countries. We use a range of tools and platforms to
promote security awareness among our customers and staff.
Details of activities relating to material topics are presented in the following pages, along with their outcomes
and how their effectiveness is assessed.
For our core principles and comprehensive objectives relating to compliance 41 and security, see @our
website).
4.1 Compliance and adherence to laws and regulations
We consider it a fundamental principle that the law, international standards and norms and ethical
requirements must be adhered to.
The purpose of the compliance function is to identify and manage compliance risks 42. The compliance role
is performed by the Compliance Directorate. It works with a focus on the control and management of
compliance risks associated with data protection, consumer protection, ethics, conflicts of interest,
sanctions, money laundering and the capital markets.
In 2023 OTP Bank merged its Data Protection and Consumer Protection departments. Their closer
cooperation allows us to give more concerted attention to queries from clients and the authorities alike. A
further aim is to ensure that data protection and consumer protection considerations are given ever greater
priority when introducing products and developing processes.
GRI 2-13 Our group-wide compliance policy demands that we place emphasis at all times on preventing
compliance risks from becoming a reality. When an action or incident constituting a breach nevertheless
occurs, we take appropriate and effective measures in order to address it. We are operating a group -wide
compliance officer network. The Head of Compliance reports on compliance quarterly to the Bank’s Board
of Directors, and annually to its Supervisory Board.
In 2023 the relevant Hungarian subsidiaries implemented both the Legislation Monitoring Policy and the
Competition Law Compliance Procedure. As regards the latter, competition law training will be provided to
the management and staff of subsidiaries in 2024, and the centralized competition law training for foreign
group members will also be developed.
In order to respond quickly to changes in legislation, the Bank notifies all its regulation officers whenever a
summary of changes in legislation is published. We are constantly on the lookout for information on
opportunities and technical innovations that can make our operations more automated and fully compliant.
This remains a goal for us in 2024 as well.
We are constantly monitoring EU regulations and the changes taking place in the regulatory environment
(including the recommendations of the European Banking Authority (EBA), the European Securities Market
Authority (ESMA), the European Central Bank (ECB)) and examining and analysing all legislation applicable
to the operations of the Bank and/or the Banking Group. We also monitor EU employment legislation and
produce monthly/quarterly reports on the most important news regarding EU lawmaking that may have
implications for the Banking Group in terms of capital markets, capital requirements and resolution matters.
We produce weekly English-language briefings on changes to EU law in order to improve our compliance
with legislation.
Our foreign subsidiaries are expected to meet the same group-wide minimum compliance standards.
These minimum standards are regularly communicated to the subsidiaries in a priority order. There is now
consistency across the Group in terms of consumer protection, capital market compliance, data protection,
conflicts of interest, ethics, sanctions provisions and compliance governance. In 2023 we reviewed how the
minimum standards issued so far are applied in practice across the Banking Group.
In the area of governance, we contributed to the drafting of a Corporate Governance Manual for banks,
based on certain supervisory requirements (the MNB’s Green Recommendation, the EBA Gui delines on
41 Compliance with legislative requirements and international norms and standards on ethical business conduct
42 Compliance risk is the risk of potential legal consequences, supervisory or other official sanctions, significant financial l osses or reputational damage
due to a failure to adhere to legislation or other non-legislative standards and internal rules applicable to financial organisations.
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internal governance); the Manual is intended to ensure (among other things) better compliance with ESG
regulatory requirements.
In capital market compliance a number of small improvements were made to combat insider trading and
enhance market monitoring and the oversight of personal transactions. In 2023 the personal transaction
reporting practices of employees involved in investment service activities were audited. As a result of this
audit, there was a demonstrable further improvement in compliance awareness. In 2024 we will review our
internal regulation on capital markets compliance and update and automate capital markets compliance
processes.
We have further strengthened our sanctions pre-screening. Having switched from World-Check Online to
World-Check One, the entire Banking Group now has access to a wider database and screening criteria
when carrying out the simplified identification of sanctioned and high-risk corporate clients; this has
strengthened our first line of defence further. An in-house collection of questions and answers (FAQs) about
sanctions was developed for guidance purposes, intended primarily for the corporate business line. In 2023
we revised our sanctions policy, which now allows for a more sophisticated risk assessment ( four-tier risk
rating). The new rules will enter into force in early 2024. The practical application of the compliance checklist
for the detection of sanction risks is now being monitored at the subsidiaries in order to ascertain whether
they comply with the relevant expectations of the Group.
During the compliance risk assessment performed annually in two separate cycles, we did not identify
any high risks that would require Group-level action in 2023. The assessment of ethical and corruption risks
is also part of the risk assessment process. The result of the assessment is forwarded to the Group
Operational Risk Management Committee and it is also a part of the annual Compliance Report. Where
high-risk areas are identified, we expect the relevant functional areas to draft and implement action plans.
The compliance risk assessment system is supported by an IT application.
Enhancing compliance awareness
GRI 2-15 Training the employees – based on identical principles across the Banking Group – is one of the
key elements of enhancing compliance awareness. The training of the employees is monitored and where
deficiencies are identified, arrangements are made to update or transfer knowledge, as necessary. Special
training courses are also provided on a continuous basis with a focus on specific compliance topics.
Mandatory compliance trainings at OTP Bank:
• Compliance orientation material – Content: compliance function and organisation, ethics and conflicts
of interest, personal transactions, market abuse, “Chinese wall” rules – Timing: a mandatory requirement
for every newly hired employee when they come on board.
• Compliance I. training material – Content: compliance risks and policy, Code of Ethics, non-
discrimination and conflicts of interest, forms of insider trading and market abuse – Timing: annual
refresher for all staff
• Consumer protection training – Content: main rules and their application, damage to reputation,
customer loss, avoidance of consumer protection fines – Timing: annual refresher for all staff
• Data protection training – Content: the importance of data protection, data protection organisation at the
Bank, processing of personal data, data impairment – Timing: annual refresher for all staff
• High-risk transactions – Content: transactions under sanctions and sensitive transactions – Timing:
annual refresher for staff concerned
The compulsory training courses are followed by tests in which a score of at least 70% is required. Failure
to complete the training may – after several warnings – result in consequences under the labour law.
Compliance awareness raising was organised by the parent bank and delivered in the following channels:
• A series of articles on the internal communication platform: in 2023, these articles focused on the Code
of Ethics, conflicts of interest, gift policies and whistleblowing.
• Newsletters for the Compliance Officer Network.
• Compliance Officers’ Forum: IT platform with important information, training materials and newsletters.
• Compliance Officers’ Professional Conference: annual professional training.
• Two international compliance conferences for the top compliance officers of foreign subsidiary banks.
• Training on the use of the sanctions screening system, money laundering, sanctions -related and
sensitive transactions, and data protection.
• Study visits for employees of subsidiary banks for the purposes of mutual knowledge sharing.
• Consumer protection workshop for compliance officers of the Budapest region to assess the problems
and risks identified by them.
In addition to the above, the subsidiary banks implemented several measures of their own:
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BG The Bulgarian subsidiary bank expanded its network of compliance officers in 2023. It delivered general
and targeted compliance training courses on subjects including sanctions, conflicts of interest and data
protection.
SI In Slovenia, SKB Bank organised a comprehensive campaign about whistleblowing. At NKBM,
compliance staff visited the branches.
HR The Croatian subsidiary organised a whistleblowing campaign to promote ethical behaviour and
compliance with the Code of Ethics.
AL Following the merger with Alpha Bank, the Albanian subsidiary restructured its compliance department
in 2023. All employees declared whether they had any conflicts of interest arising from the merger. The 43
conflicts of interest declared were analysed and recommendations for solutions were made to the employees
concerned and their superiors. Compliance staff received more training on sanctions and embargoes; this
was followed by further development efforts and awareness-raising campaigns in several relevant
departments of the organisation. Campaigns and training courses were held on the subjects of
whistleblowing, ethics and gifts.
ME In Montenegro, training was provided on topics such as data protection, sanctions, ethics, conflict of
interest, etc. Regular one-to-one training sessions were introduced for new hires.
RO The Romanian subsidiary introduced internal consumer protection training and tightened control over
consumer protection content in the complaint handling process.
MD In Moldova a new whistleblowing channel was introduced and business ethics training was delivered.
Code of Ethics and reporting of ethical offences
GRI 2-23, 2-24 The basics and principles of ethical business conduct is summarized in the @Code of Ethics.
Our Code of Ethics was significantly revised in 2023 through a restructuring of its content. A new chapter
summarizes what is expected of employees in terms of ethical conduct, and a separate chapter sets out the
business ethics commitments of OTP Group. A separate document was created to summarize the external
guidelines, legislation and internal documents applicable to the Code.
We also created our group-wide @Partner Code of Ethics, the purpose of which is to provide clear and
unambiguous guidelines and expectations on ethical business conduct for those who enter into a business
relationship with OTP Group. OTP Group aims to ensure that all its suppliers, business partners, agents and
other contractual partners undertake to comply with the provisions of the Partner Code of Ethics (or
equivalent own regulations) by accepting the General Terms and Conditions, which form an integral part of
the contract with the OTP Group member; alternatively, they may make this commitment under a separate
clause within their contract or in a declaration of acceptance. The foreign subsidiary banks and the relevant
subsidiaries in Hungary started the implementation of the Codes in 2023. The mandatory compliance training
course was updated with additional questions on the new sections of the Code of Ethics and t he Partner
Code of Ethics, and all employees were informed of the changes in newsletters.
GRI 205-2, 2-15 All new employees, executive officers and sales agents are required to sign the Code of
Ethics to familiarize themselves with it and to accept it. Some members of OTP Group run dedicated training
courses about the Code of Ethics. Completing this course is mandatory for new hires and sales agents
within a certain time limit of starting to work for us. The Code of Ethics, the reporting of ethical breaches and
legal infringements, and the issue of conflicts of interest are all included in the compulsory annual
compliance training.
GRI 2-26 Every bank of the OTP Group operates a whistleblowing system. The conditions for filing
whistleblowing reports and the relevant contact information are provided in the Codes of Ethics, which are
published on the banks’ websites, or in the accompanying documents detailing the reporting procedures.
On the parent bank’s website, detailed information is provided in a dedicated document entitled @OTP Bank
Plc’s whistleblowing system. Whistleblowing reports may be made anonymously as well. A new group-wide
online whistleblowing platform was also developed and tested in 2023; it will be launched in 2024 and may
be used to report to OTP Bank Plc., its subsidiary banks and the relevant subsidiaries in Hungary.
Reports received by complaint management regarding matters of relevance to the Code of Ethics or the
Bank as a whole are transferred to the Ethics Department on the basis of a separate rule.
The Banking Group received a total of 180 notifications in 2023 via its whistleblowing hotlines. Together with
cases carried over from previous years, a total of 176 reports were closed, of which only 60 cases were
categorised as ethical issues. We found 24 cases of ethical offense, of which eight occurred at OTP Bank,
seven at DSK Bank, one at the Albanian, three at the Uzbek and two at the Russian subsidiary bank; three
took place at Merkantil Group.
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The Code of Ethics prohibits all forms of discrimination. The Bank is making efforts to create a working
environment in which individual differences are accepted and appreciated. Any negative discrimination
based on a person’s actual or perceived characteristics or traits is prohibited.
GRI 406-1 Four reports relating to discrimination were submitted to OTP Bank and one each to DSK Bank
and the Moldovan subsidiary. All six cases were investigated and one of them (at OTP Bank) was
substantiated. It involved an employee who had committed an ethical offense by using discriminatory
language in an internal letter.
GRI 410-1 Training on the Code of Ethics, including requirements pertaining to human rights. 84% of security
guards, who are either employed or subcontracted by the Banking Group, have received training on the
Code of Ethics. 73 percent of the security personnel engaged through subcontractors received such training
across the Group. Training coverage has been complete at OTP Bank and its Bulgarian, Serbian, Albanian,
Ukrainian and Moldovan subsidiaries. There is no training for outsourced employees at SKB Bank in
Slovenia and at the subsidiaries in Uzbekistan, Russia and Romania. At NKBM of Slovenia and the Croatian
and Montenegrin subsidiary banks, some but not all security guards employed through subcontractors
attended such training in 2023.
Anti-corruption activities
OTP Group is committed to combating corruption and has declared zero tolerance towards all forms of
bribery and the gaining of unfair advantages. Our Compliance Policy includes our @Anti-Corruption Policy.
The policy is also available on the group member companies’ websites. The policy lays down the principles
of the Group’s anti-corruption activity, identifies the areas particularly exposed to the risk of corruption and
serves as a core document for the formulation of the regulatory documents required for the Banking Group’s
anti-corruption efforts and for the anti-corruption activity of the employees concerned. The basic principles
and provisions laid down in the policy are applicable across the whole of the organisation of each group
member, fully covering all facets of their operations from the drafting of their internal regulatory documents,
to the contracts to be concluded with their partners, to all actions of every individual employee, in all of the
activities of the group members. The scope of the policy covers all employees and contracted partners of
the group members as well as all other persons participating in the performance of the ir activities in any
way.
We launched a comprehensive anti-corruption programme in 2023 We drew up an action plan to identify
what activities and areas should be inspected on a risk basis. Implementation of the programme has started
and will continue in 2024.
We produced an anti-corruption clause, which stipulates that our partners must always report if they
become subject to corruption proceedings and that OTP Bank will have the right to terminate the contract in
such a case. In addition, partners must explicitly state that they will not use the money received from the
Bank for corruption. The clause was added first to the Corporate Business Rules, which the Bank’s partners
must sign off on when they conclude a contract with us. In 2024 this clause will also be added to the General
Contracting Terms and Conditions for suppliers. Derogations from the clause may be allowed only in
exceptional and justified cases (and subject to informing Compliance), at the sole discretion and under the
risk and responsibility of the contracting organisation.
When the Code of Ethics was revised, a Gifts Policy was added as a new annex; this Policy sets out the
detailed rules on business gifts and invitations. We imposed a lower cap on gifts, linking it to the definition
in the Income Tax Act on what constitutes a small gift in terms of value (HUF 23,200 in 2023). Our foreign
subsidiary banks also linked their caps on gift value to the applicable legislative provisions, if any. All
countries have values similar to the one applicable in Hungary. A change was introduced to the way gifts
handed over in the customer area should be reported, with the aim of increasing the willingness to report
such instances. Invitations to events must always be reported to Compliance, and the departme nt will decide
on its acceptability. Since 2023 OTP Bank has been sending out transparency information to partners invited
by it to a certain subset of events (selected based on value and/or type of event).
GRI 205-2 OTP Bank’s Code of Ethics also defines and prohibits all activities involving, or relating to,
corruption and lays down rules relating to gifts. The annual compliance training, which is mandatory for all
employees, also covers corruption via the Code of Ethics.
Each year the members of the managing bodies sign off on the Code of Ethics, i.e. they are fully informed.
They do not receive training. All of our tied agents and suppliers were given information on our Code of
Ethics at the time of contracting, which may have taken place in 2023 or in p rior years. About 98 percent of
contractual partners (~15,240 agents, ~21,560 suppliers) were provided with information on the relevant
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provisions of the Code of Ethics and the Anti-Corruption Policy during the year – either directly or on the
websites of OTP Bank and its subsidiaries43.
GRI 205-1 Corruption risk assessment was carried out as part of the compliance risk assessment process
in the Banking Group, with one exception: at NKBM 44, risk assessment was carried out using an earlier
system. There was no risk assessment at Ipoteka Bank. We assessed corruption risks in 459 (69%) of the
Banking Group’s 666 organisational units. No significant corruption risks were identified in the risk
assessment process.
GRI 205-3 The Banking Group was not subject to any public lawsuits relating to corruption in 2023. There
were two confirmed corruption incidents, one at OTP Bank and one in Merkantil Group. A branch employee
of OTP Bank reported that she had received chocolates and small cash gifts on 5 occasions from a lawyer
she regularly recommended to clients. An ethics procedure was launched and it established that ethical
misconduct had taken place. At Merkantil Bank, a trader received indirectly from one of the bank’s partners
some of the commission paid to that partner by the Bank. In both cases we took the necessary action and
dismissed or sanctioned the employees involved.
Lobbying
It is through industry bodies, predominantly the Hungarian Banking Association and the Association of
Investment Service Providers that OTP Bank participates in the reviewing of legislation concerning the
financial sector and coordinating that review process. It also takes part in the work of the Corporate
Governance Committee of the Budapest Stock Exchange. In 2023 the Bank registered in the EU
Transparency Register, which shows what and whose interests the various organisations lobby for at EU
level, and also provides information on the financial and human resources dedicated to these purposes.
In 2023 we participated in, among other things, the drafting of the Hungarian ESG Bill, which is to implement
the Corporate Sustainability Reporting Directive.
Foreign subsidiaries are also members of local banking associations, while our Croatian subsidiary
participated in public consultations organised by advocacy organisations. Since June 2023 the CEO of the
Ukrainian subsidiary bank has served as Chairman of the Board of Directors of the Ukrainian Independent
Banking Association.
Supplier qualification
Suppliers are pre-qualified by OTP Bank if the value of the procurement is expected to exceed a gross
amount of HUF 1 million or, in the case of IT procurements, HUF 3.6 million. This pre-qualification system
requires that the supplier has no public debts and that it complies with statutory requirements regarding
health, security and environmental protection. Sanctions screening was integrated in the qualification
process in relation to the war in Ukraine. In 2023 the pre-qualification process was centralized with IT support
at 15 Hungarian subsidiaries.
Extensive pre-qualification systems are also in place at DSK Bank, NKBM and SKB Bank, and OTP Bank
Albania. Since 2022 NKBM has expected its suppliers to complete a separate ESG questionnaire. The
minimum pre-qualification standard for other subsidiary banks was revised in 2023 and a group -wide policy
was established. From 2024 onwards, our foreign subsidiary banks will be required to pre-qualify suppliers
whose contract exceeds the sum of EUR 10,000. Ipoteka will apply the minimum standard from 2024.
GRI 2-6, 205-2 The procurements of the OTP Group are related primarily to making sure that the requisites
for the performance and sale of services are available. OTP Bank’s procurement policy declares the
requirement of responsible and ethical conduct on the part of suppliers (see above, Anti -corruption
activities). OTP Bank worked with 4,394 suppliers in 2023, whereas OTP Group had around 22,000
suppliers. The procurement strategy assigns special significance to sustainability considerations. The aim
is to maintain business relations only with suppliers and entrepreneurs that undertake environmental and
social responsibility in compliance with Hungarian and international treaties, standards and laws. The
environmental aspects of procurements are listed in the Bank’s Environmental Policy. Details on our
procurement principles are available on @our website.
43 A few small subsidiaries do not have websites.
44 Corruption risks were assessed among subsidiaries subject to consolidated supervision with OTP Bank Plc., covered by the group governance function of OTP Bank Plc’s Compliance Directorate.
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Proceedings by authorities, and other legal procedures
GRI 2-27 There were 3 major45 cases dealt with by the authorities/legal cases involving the Banking Group
in 2023:
• The MNB imposed a HUF 49 million fine on OTP Bank for shortcomings identified in its anti -money
laundering and terrorist financing activities. Weaknesses were identified in relation to the reporting
of suspected money laundering transactions, the internal control and information system and
monitoring activities, risk assessment, customer due diligence practices, risk mitigation measures
and money laundering prevention training.
• The MNB carried out a comprehensive audit of the OTP National Voluntary Health and Mutual Fund.
The audit found several deficiencies and a fine of HUF 9.5 million was imposed.
• The Russian subsidiary bank paid fines totaling HUF 62.5 million for 148 cases of inadequate
communication with debtors (interactions without consent, exceeding the permitted frequency of
interactions, misleading communication).
GRI 2-27, 206-1, 417-2, 417-3 Closed proceedings by authorities, and other legal procedures, fines paid, 2023
OTP Bank
OTP Group
violation of competition rules1
violation of consumer protection rules
violation of rules on equal opportunity (not under the labour law)
supervisory procedures
violation of IT security / Cyber security rules
violation of taxation rules
violation of environmental rules
violation of marketing communication rules
violation of information provision rules
violation of data protection rules
violation of labour law rules
violation of health and safety rules
other proceedings
Total 2023
Total 2022
Total 2021
Total 2020
Total 2019
All
closed
cases
All
cases
closed
with
fines
Fine
paid
No. of items
0
0
25
30
0
0
4
6
0
0
0
2
0
0
0
0
1
1
1
4
0
0
0
1
0
0
31
44
17
41
12
25
9
26
14
33
0
13.8
0
64.4
0
0
0
0
0.4
10.0
0
0
0
88.5
93
17.5
16.1
136.2
Fine
charged
for
practice
applied
in 2023
Fine
charged
for
practice
applied
in
earlier
periods
HUF million
0
13.8
0
58.4
0
0
0
0
0.4
10.0
0
0
0
82.5
93
0
0
0
6.0
0
0
0
0
0
0
0
0
0
6.0
0
Fine
charged
for
practice
applied
in 2023
Fine
charged
for
practice
applied
in
earlier
periods
HUF million
0.7
22.3
0
128.1
0
0
0
0.3
0.4
10.1
0
0
4.9
166.8
152
0.7
6.4
0
16.4
0
0
0
0
0
1.1
0
0
2.9
27.4
34
All
closed
cases
All
cases
closed
with
fines
Fine
paid
No. of items
2
2
42
232
0
1
155
214
0
0
0
5
0
3
1
1
1
1
5
20
0
7
0
3
8
8
214
489
117
358
74
452
66
168
71
2521
1.5
28.7
0
144.4
0
0
0
0.3
0.4
11.1
0
0
7.8
194.2
186
76.4
83.3
265.4
¹ Also includes breaches of antitrust and anti-monopoly rules.
The Interchange competition case reported in 2022 was still ongoing in 2023. The Romanian subsidiary bank had 9 competition c ases pending at the
end of the year.
There may be a significant cross-country difference between the administrative practices applied; hence the significant differences between the numbers
of procedures.
Data were presented in earlier years in a different way (in accordance with the GRI Sta ndards 2016 requirements), therefore comparability is limited.
4.2 Prevention of money laundering
As a responsible financial service provider we spare no effort to make sure that the Banking Group
is not used for money laundering.
Money laundering is when attempts are made to conceal or cover up the origins of money originating from
crime. Perpetrators or other persons typically try to use services of financial institutions to produce proof of
the legitimate origin of the money. One of the main objectives of the anti -money laundering function is to
ensure concerted action at a group level, based on a group-wide anti-money laundering policy.
In accordance with the relevant AML regulations one of the main obligations of the Banking Group is to
execute adequately in-depth customer due diligence actions. Its aim is to get to know the customer and the
business relationship from the aspect of risks, and to identify transactions that do not fit in with the customer
profile so constructed and that are thus suspicious from the aspect of money laundering. In the customer
due diligence process we ask our customers for data to establish the identity and inten ts of the persons
using the Bank’s services and the backgrounds of the various transactions. In accordance with the
applicable statutory requirements we do not execute orders for customers who do not provide proof of their
identity.
45 Major case: the fine charged in one case, or in multiple cases in aggregate, equals at least HUF 10 million. Cases in which n o fine is charged are
essentially not categorised as major cases, but our member companies may decide otherwise.
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In addition to legal compliance we continuously monitor the latest trends in money laundering as well as the
modes of perpetration; we also introduce risk management actions to prevent money laundering.
In 2023, the anti-money laundering prevention organisation was transferred from the Security Directorate to
the Compliance Directorate. We have upgraded the former departmental function to a general departmental
level, with a separate department to handle customer acceptance and transaction monitoring. We have
significantly increased the headcount of the department.
GRI 2-13 The anti-money laundering division provides monthly statistical data and explanations to the Anti -
Money Laundering Committee, and prepares proposals on current issues at the Committee’s quarterly
meetings.
In 2023, we launched a new, more advanced version of our anti-money laundering monitoring system at
OTP Bank. We have already begun providing this system to our foreign subsidiary banks as well. We have
made targeted improvements to our international transaction screening system, in order to make it more
efficient in handling transactions with Russian stakeholders.
At OTP Bank, annual training on money laundering is mandatory for all branch employees and employees
working at the head office who are involved in the activities defined in the Act on the Prevention and
Combating of Money Laundering and Terrorist Financing (the “AML Act”) and are therefore legally required
to undergo training. Special training materials have been prepared for branch staff, head office staff and
senior staff. In addition to the compulsory annual training, a total of 38 online training sessions were held
for a total of 731 new branch and corporate employees. In addition, the anti-money laundering division
regularly delivers training for the new hires of the branches and pr ovides in-person training for branches
frequented by high-risk customers. Employees who have completed the training act with increased
awareness, identify risky customers and identify transactions that are suspicious of money laundering more
easily.
The foreign subsidiary banks also deliver mandatory trainings on the subject for all of their employees at
least once a year. In three of the subsidiary banks, “only” customer-facing staff are required to complete the
training.
In the context of the fight against money laundering, OTP Bank is continuously cooperating with the
competent domestic and international authorities and interest organisations. In the context of such
cooperation arrangements we also share best practices, whereby all participants can improv e the
effectiveness of their actions against money laundering. We are a member of the Europol Financial
Intelligence Public Private Partnership; we have been involved in the organisation’s project to fight against
human trafficking and sexual exploitation, working closely with the Financial Intelligence Unit. In 2023, we
started working on the anti-terrorist financing workstream.
4.3 Complaint management
GRI 2-25 We strive to achieve error-free customer service; we investigate and address the reported
complaints. We aim to prevent complaints by continuously improving our practices.
The regular (typically semi-annual) reports on complaints and their handling are also received by the top
managers of our member companies. In order to prevent complaints, we assign great significance to the
continuous training of our employees. We strive to investigate complaints faster than prescribed by
legislation, and we aim to reduce response times. We constantly monitor and analyse the number, type,
reason and response time of all complaints received. In the case of errors affecting multiple customers, or
in the case of losses of larger amounts, the issue is notified to the division concerned, an action plan is
prepared, and the progress of rectification is monitored.
At OTP Bank, there are several types of complaints that can be promptly resolved, for which we provide
immediate solutions that are acceptable to our customers. For customers who can be identified by e -mail
address, we further accelerate the procedure by replying via e-mail. E-mail messages on the status of their
complaints are sent to customers. The complaints function uses a continuous feedback process after the
closure of complaint tickets, asking for feedback from customers via email regarding the solutio ns provided.
In 2023, we have also introduced a performance management system for complaint handling. As part of
this, we have reviewed our processes from a lean perspective, and created flowcharts to standardise them.
The effectiveness of the changes is demonstrated by the significant reduction in the number of overdue
cases, and there is further potential for a significant reduction in the amount of overtime previously required.
In 2023, we began overhauling the IT system used for complaint handling. In a ddition, during the year, we
held face-to-face meetings with the business areas concerned to find possible solutions to 5 of the most
common complaints.
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For credit card complaints, we will move from transaction-based to complaint-based reporting in 2023. A
single complaint may be associated with multiple transactions, which is the reason for the significant
decrease in the number of customer complaints compared to previous years.
In 2024, we plan to improve our complaint feedback system, and aim to reduce both the number of
complaints received and the per-complaint response time by 10 percent.
BG SI RS AL ME RU RO Complaints management satisfaction measurement is in place in OTP Bank, the
Bulgarian subsidiary bank, the Slovenian subsidiary bank NKBM, as well as the Serbian, Albanian,
Montenegrin, Russian and Romanian subsidiary banks. According to our customers’ feedback, the methods
and effectiveness of our complaint management is within the adequate range.
BG The Bulgarian subsidiary bank has standardised its responses to the most frequent complaints.
SI SKB Bank in Slovenia has created an e-learning curriculum on effective complaint handling, and has
made it mandatory for all new entrants and existing employees. NKBM has introduced daily reminders to
staff working on outstanding complaints. The process of delegating and following up on complaints has been
improved.
RS The Serbian subsidiary bank has introduced a new method of receiving and handling oral complaints.
RO The Romanian subsidiary bank has introduced new complaint handling software, which has significantly
reduced the number of errors. The skills of the staff dealing with complaints have been improved.
MD The Moldovan subsidiary bank has improved the complaint handling skills of its branch manage rs.
OTP Otthonmegoldások Kft. has restructured its customer service tasks to ensure fast complaint resolution.
As a result, around 80% of legitimate complaints were resolved within 2 working days.
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189,882302,166251,927245,502142,057125,242202,040155,299148,99473,559144,40684,47635,84873,43882,199050,000100,000150,000200,000250,000300,000350,00020192020202120222023Customer complaints, OTP Bank*number of complaintsclosednumber of substantiatedcomplaintscompensation awarded(HUF thousands)* OTP Bank, OTP Jelzálogbank, OTP LakástakarékpénztárThere were two complaints about accessibility, and no complaints about the transparency of the product structure.
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Complaints handling procedures and definitions are being standardised across the Group and as a result,
the data content of complaints handling gradually become more consistent. However, as cultural attitudes
and financial literacy differ from country to country and shape customers’ complaint reporting habits,
customer complaints data from different subsidiaries are not comparable.
Own indicator Customer complaints
Number of complaints closed
Number of substantiated complaints
Compensation paid¹
Amount of compensation per warranted complaint¹
Total number of complaints relating to accessibility for disabled
Number of complaints related to product structure transparency 3
thousand units
thousand units
HUF millions
HUF
No. of items
No. of items
20222
N/A
N/A
367
2,300
20235
2019 2020 2021
452
513
589
244
274
358
224
131
188
916
480
500
N/A N/A N/A
16
N/A N/A N/A 12,7514 12,756
537
294
8,241
28,030
24
¹ OTP Bank Croatia and OTP Bank Russia were unable to provide compensation figures.
2 HUF 7,947 million of the damages was paid by the Montenegrin subsidiary bank.
3 99% of complaints were registered by the Russian subsidiary; this included all complaints received in relation to the operati on of the product.
4 The Russian, the Romanian and the Montenegrin subsidiary, as well as the Financial Point, do not keep records of complaints relating to accessibility
for disabled, and therefore could not provide such data. No data could be provided regarding the transparency of the product structure by OTP Bank,
the Romanian and the Montenegrin subsidiary and the OTP Financial P oint.
5 The Montenegrin subsidiary bank was unable to supply data.
Typical complaints
At OTP Bank, the largest number of complaints received in 2023 was in relation to card fraud. Complaints
related to current accounts, card charges, cash withdrawals and deposits were also common.
BG At the Bulgarian subsidiary, most complaints were in regard to increased credit limits for credit cards,
disputed online card transactions, disputed e-banking transfers, problems with e-banking services, misuse
of personal data and fraudulent loans.
SI At SKB Bank in Slovenia, the most frequent customer complaints were in regard to a change in the legal
interpretation about the partial reimbursement of the cost of loans that were repaid early. Complaints about
credit cards and online transfers (including fraud) were also common. Most of the complaints received by
NKBM were regarding bank cards, ATMs and bank accounts.
HR Most of the complaints received by our Croatian subsidiary bank were regarding the introduction of the
euro; the vast majority of these complaints were received in January.
RS Our Serbian subsidiary bank received complaints primarily regarding bank cards, bank accounts and
loans. A significant number of these were related to fraud or incorrect credit card transactions. The most
frequent subject of complaints regarding loans was changing interest rates.
AL In our Albanian subsidiary bank, the majority of complaints were regarding the merger, as well as ATM
and card-related complaints about how frequently these services were used.
ME Most of the complaints received by our Montenegrin subsidiary bank were regarding card t ransactions,
account management fees and the calculation of interest on loans.
UZ The complaints received by our Uzbek subsidiary bank were primarily about loan contract amendments,
the repayment of incorrectly deducted loan amounts, as well as specific is sues with mortgage, consumer
and education loans.
RU For our Russian subsidiary bank, the most common complaints received were related to the loyalty
programme, disputed debts, transactions, as well as the functionality of the mobile app.
UA Most of the complaints received by our Ukrainian subsidiary bank were regarding bank cards (not
enough ATMs, not receiving text messages) and fraud.
RO At our Romanian subsidiary bank, the most common complaints and problems were regarding product
loans, current accounts and the quality of services provided.
MD Our Moldovan subsidiary bank received complaints primarily about bank cards, ATMs, and the mobile
application.
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4.4 Safe operation
Safe and secure operation is a priority for out Banking Group. With that in mind, we assess and
manage operational risks and ensure that we are strongly protected against fraud attempts. What
with the expansion of IT services, IT and cyber security are becoming more and more important in
the operation of our companies. In particular, fraud management and prevention has become
crucially important.
IT, cyber and bank security framework
GRI 2-13 It is a fundamental principle of OTP Group that the primary purpose of our measures is to prevent
and inhibit security incidents. The principles and main guidelines concerning security at the Bank are set
out in the Security Policy. The Information Security Policy defines, inter alia, the theoretical objectives and
application areas of information security, the principles of risk assessment, the requirements of compliance
and those of the security awareness training, and confirms the Bank’s engagement to the continuous
enhancement of the information security management system. IT security also includes cybersecurity. The
Security Directorate reports annually on the security situation to the Board of Directors and Supervisory
Board.
The Group Information Security Policy, completed in 2022, has been successfully implemented by 9 out of
our 10 subsidiary banks existing at that time, and is currently in the process of being implemented by our
remaining subsidiary banks as well.
The Bank also has a separate Anti-Fraud Strategy and Policy; anti-fraud processes are governed by a CEO
Order. We operate an Anti-Fraud Competence Centre at OTP Bank, and we regularly hold on-line fraud
prevention consultations with our subsidiary banks. We operate a working group at OTP Bank with the
involvement of the Security Operations Centre (SOC), in order to seek solutions against data phishing
methods committed via IT devices, and to make proposals for business divisions for mitigating risks.
In 2023 we executed the Banking Group’s second annual Cyber Defence Programme (CDP), aimed at
mitigating risks from the cyber space, primarily via the provision of group-wide services. The effectiveness
of our cyber defences is measured using the NIST Cyber Defence Framework.
The details of information security risk management are laid down in the regulation on the regime of IT
logical risk analysis. We carry out a risk analysis every two years. In the case of newly introduced systems,
before going live we conduct an annual vulnerability test for IT systems classified into the two highest -level
security classes; moreover, vulnerability tests are performed on a weekly and/or monthly basis for the
supporting operating systems. In 2023, our automated vulnerability scanning tool, task and staff were moved
to the first line of defence46 and we began scanning mobile banking applications at the bank-wide level.
The changes to the ICT (Information and Communication Technology) risk framework in 2023 were also
reflected in organisational changes, facilitating a clearer separation of responsi bilities between the first and
second lines of defence. A new ICT Risk Control Unit was established within the Credit Approval and Risk
Management Division, under the Integrated Risk Management Directorate. This department is only
responsible for second line of defence tasks.
Within the ICT risk function, the ICT Risk Control Unit is responsible for defining the overall risk framework,
as well as the related management and measurement policies, methodologies and standards. It is also
responsible for determining ICT risk appetite and integrating ICT risks – including cyber risks – into the
operational and overall risk framework, including risk strategy, risk assessment (methodologies) and the
reporting framework.
By the end of 2023, work was in progress on setting up the ICT Risk Committee, which have the necessary
authorisations to cover the full range of ICT risks (including cyber risks). Our aim is to provide a more
frequently used operational forum suitable for knowledge transfer, monitoring ICT risks, and developing ICT
risk management, along with the development of standardised reporting for both the headquarters and our
subsidiaries.
Our independent organisational units vested with audit rights conduct an internal audit on compliance with
IT security objectives, the implementation thereof, and the successful adoption and maintenance of the
46 The Bank applies the “three lines of defence” model for managing risks and implementing internal controls. The first line of defence holds t he primary
responsibility for risks associated with the organisation’s operations, thus its adequacy is mostly ensured by employees and operational managers. The
second line of defence monitors and assists the controls of the first line of defence. The functions of the second line of de fence include independent risk
management, risk control, compliance assurance and certain internal security controls. The third line of defence is the independent internal audit. For
more information, refer to @Responsible Corporate Governance Report
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requirements. IT security maturity assessment is carried out at our foreign subsidiaries once a year, their
results are summed up in executive summaries.
To evaluate the effectiveness of security activities in 2022, we started on-site audits of the foreign subsidiary
banks. In 2023, on-site audits were conducted at six subsidiary banks. The results were summed up in
executive summaries and in reports for the foreign top managers. Thematic audits were conducted four
times at our foreign subsidiary banks in an online questionnaire format on topics such a s security awareness,
protection against malicious code, authorised and prohibited software, and application management.
Cyber threat information is continuously gathered through Cyber Threat Intelligence. Cyber Threat Hunting
can proactively identify in the cyber space and the internal network.
•
In 2023, we introduced the NIST Cybersecurity Framework at OTP Bank to help understand,
manage and mitigate cyber risks and strengthens the protection of the networks and data. The
system will be introduced in our subsidiary banks in 2024.
• We introduced a central incident management and cyber threat intelligence sharing platform (MISP)
at OTP Bank with the participation of MNB and the National Cybersecurity Office to gather, analyse
and share information regarding cyber security incidents and malware. We plan to roll out the system
to our subsidiary banks in 2024.
In connection with the Group-wide brand and supply chain protection service (e.g. for identifying
fake OTP websites or Facebook pages), in 2023 we have also activated the brand protection service
on Meta platforms (e.g. Facebook). If a profile misuses OTP Bank’s visual and layout elements, we
will report it via our official OTP Bank Facebook page. In the past, these have been blocked very
quickly, often within hours. 15–20 profiles were removed every day.
•
• To effectively maintain information security we cooperate with the National Cyber Security Centre
of the Special Service for National Security. We created the @ELTE-OTP Cyber Defence Industrial
Research Laboratory (KIBERLAB), which had 7 researchers in 2023.
Security incidents and their management
In total, 856 information security or other cyber security incidents (involving unauthorised access) occurred
in the Banking Group. In the vast majority of cases, no customer or employee data was compromised. In
one case linked to OTP Mobil, 10,279 customers were affected, and additionally a total of 113 customers or
employees were affected at the group level. There were no such incidents at OTP Bank.
The scale of the cyber security incidents is indicated by the fact that we handled around 34,000 alerts, an d
investigated 6,000 data leaks and 742 phishing reports (of which 88 were organised phishing campaigns).
A considerable number of criminal acts or attempts are committed against customers by way of deception
year after year. In these cases, the customers themselves provide the perpetrators with (or allow them
access to) their confidential banking data. There were three common methods of perpetrating these offences
in Hungary in 2023.
• The perpetrators, impersonating OTP Bank employees, usually claim that a fraud (unauthorised
transfers/debit card transactions) or sometimes a mistaken transfer is in progress, typically
attempting to deceive the bank’s customers by phone.
• They generally use phishing sites to exploit classified advertisements posted by the cust omers and
obtain their Internet banking login details, then use this information to login to the customer’s Internet
banking account and initiate unauthorised transfers. We prevent this by effectively detecting
phishing sites.
Internet advertisements offering get-rich-quick schemes are a way for fraudsters to obtain the
customer’s money, and later their data as well. In response, we have made it more difficult to attach
the device to an existing account, making it more difficult to commit fraud.
•
damage, HUF millions
customer losses prevented, HUF millions
Fraud against customers, OTP Bank
2022
2,901
883
2023
10,086
3,195
The global phishing campaigns and the resulting increase in customer losses are also reflected in the
indicators of our subsidiary banks.
• Preventing fraud involving unauthorised transfers initiated by the customer themselves is the most
difficult, as the transaction is initiated from the customer’s own device, significantly reducing the
number of potential fraud indicators. These events resulted in HUF 2.4 billion in customer losses,
as well as HUF 344 million in prevented customer losses. Over 80 percent of customer losses
occurred at our Slovenian subsidiary banks.
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• The unauthorised transfers initiated by the perpetrators resulted in HUF 1,691 million in customer
losses, as well as HUF 1,222 million in prevented customer losses. Over 50 percent of customer
losses occurred at SKB Bank.
The bank seeks to mitigate customer harm primarily through improving customer awareness, education and
security checks and rules – in most such cases, customers receive no compensation. The MNB and the
Financial Arbitration Board are also setting increasingly stringent standards regarding online financial abuse,
in order to protect both consumer interests and the reputation of the financial sector.
Own indicator Both OTP Bank and its subsidiary banks have a significantly lower ratio of card fraud to
turnover than the European average published by Mastercard (OTP Bank: 0.0203%, subsidiary banks’
average: 0.013%, European average 0.04%47). The total amount of fraud at OTP Bank was HUF 4.1 billion,
with an additional HUF 9.5 billion at the group level. OTP Bank prevented HUF 10.1 billion worth of credit
card fraud, while the amount of unsuccessful attempted fraud at its subsidiary banks amounted to HUF 7.9
billion.
The highest risk cases targeting the Banking Group included primarily credit frauds against OTP Bank,
while our foreign subsidiaries were most commonly targeted by lending fraud, employee abuse and violent
crime (ATM attacks, bank robberies).
Of all the acts aimed at causing bank losses, expected bank losses related to credit fraud were the highest
in 2023. Although the number of cases of lending fraud decreased significantly between 2022 and 2023, the
expected bank loss due to lending fraud at our Ukrainian subsidiary bank increased nearly threefold.
The number of employee misconduct cases halved in one year, and the related expected bank loss
drastically decreased to one-tenth of its previous value: HUF 263 million. (This can be primarily attributed
to the very high expected bank losses related to employee misconduct at our Montenegrin su bsidiary bank
in 2022).
There was an increase in the incidence of all main types of violent acts (bank robberies, burglaries, cash
theft from ATMs, ATM vandalism). In comparison with the previous two categories, the expected bank losses
associated with these forms of misconduct are negligible.
We have taken a number of steps to reduce misconduct in 2023:
•
In order to effectively deal with the increased incidence of fraud targeting customers, the Security
Directorate has implemented organisational and structural changes:
- The responsibilities for handling fraud reports and taking immediate actions were transferred
-
from the Contact Center to the Security Directorate.
In 2023, the department handling alerts from the real-time account and card monitoring system
saw a headcount increase of 29 staff members, partly due to taking over responsibilities from
the contact centre, and partly to handle the increased number of alerts.
- To expedite the reception and handling of customer reports regarding fraud, as well as to
increase customer satisfaction and thus prevent and reduce further potential losses, we have
47 Issuers page.
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0.02030.0082700.0074070.0134900.0087000.0173000.0159000.0109000.0032000.0138000.0344000.00960000.0050.010.0150.020.0250.030.0350.040.045OTP BankDSK BankSKB BankNKBMOTP BankCroatiaOTP BankSerbiaOTP BankAlbaniaCKBOTP BankRussiaOTP BankUkraineOTP BankRomaniaOTP BankMoldova%Bank card fraud versus total turnover, 2023Card not present when fraud committedCard present when fraud committedEuropean average 2023
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created a separate department of 33 people called the Anti-Fraud Support Unit. Here, specially
trained employees answer incoming calls and take preliminary actions.
• OTP Bank has signed a cooperation agreement with the National Police Headquarters (ORFK),
establishing a 24-hour contact process to help the authorities take quick and effective action to bring
offenders to justice. The main areas of cooperation include: crime prevention; education, training; the
creation of an Anti-Fraud Academy; joint press coverage; joint evaluation and analysis; regular
evaluation of offence patterns and trends, and the results of analyses; data provision, the establishment
of a permanent on-call service to speed up the transfer of information.
• We have extended and tightened the rules on financial transactions and transfers:
- We have introduced third factor authentication (customers attempting to transfer a sum
exceeding ten times their previous average transaction value – but no less than HUF 1 million
– will need to provide am authorisation code sent via email).
- Only a financial transaction can activate mobile banking services within 24 hours.
- We have capped the daily card limit for micro and small business customers.
- We have reviewed our existing rules for the bank card and transaction monitorin g system
(PRM), amending them where necessary and introducing 26 new rules. We aimed to create
real-time rules aimed at preventing the very first suspicious transaction. Where this was not
possible, we created near real-time rules with more advanced habit checking and autobl
functionality, providing a higher accuracy for alerts. The improvements to our rules have helped
reduce the number of daily alerts by an average of 2,000 in 2023. In late 2023, we introduced
a real-time link between the PRM and the card system, which is expected to make rule-making
and operations more efficient.
- With regard to the rules, we have developed new habit analyses to reduce the number of false
alerts.
• We have initiated developments in the use of customer asset-based data (SEON, Threatmark).
• We have launched the Central Fraud Filtering System Project – as required by MNB.
• We have created a new feature for our mobile banking services, allowing customers to suspend their
account and card at the touch of a button, in order to prevent further losses.
Improvements aimed at preventing online credit fraud:
• Fraud victims: a new feature has been added to the system to clearly identify whether a customer has
been a victim of online credit fraud in the past. If so, we will contact the customer over the phone if they
try to take out another online loan.
• Online attempts: Customers who have initiated a large number of online requests within a specified time
period will trigger and automatic alert or block.
Raising awareness among our staff and customers
Since the awareness of our employees may result in the prevention of a lot fraud attempts, we laid particular
emphasis on raising security awareness in 2023 as well. A lot of the relevant activities were executed in
October, in connection with the European Month of Cyber Security.
According to the Bank Security Regulations, annual IT security awareness training is mandatory for all
employees at the group level, requiring the successful completion of an exam administered by OTP Bank.
New employees are also required to complete the training. We typically review the training materials
annually.
In 2023, we conceptually and methodologically overhauled OTP Bank training materials, and produced a
bank-specific video package with the engagement of a professional creative-film agency. The overhaul was
followed by publication and backtesting. The original initial group of the course included nearly 11,000 active
employees on launch day, of whom 92.5% successfully completed the course, while 808 individu als (7.5%)
failed to complete it despite repeated requests. The overhauled training course has been well received by
our employees. About 10% of those having completed the training also filled out the evaluation
questionnaire, with 82% of respondents being very satisfied with the training, and 96% of them stating that
the course content helps them in their daily work.
From 2023 onwards, branch employees will receive on-site training in addition to the annual bank security
e-learning training.
In addition to general training, we also organised role-specific training courses, which likewise concluded
with an exam. These were completed by 831 individuals.
We have developed a curriculum for training security personnel. From 2024, branch security guards will
receive in-person training, while other stakeholders (cash transporters; responders) will be sent the
curriculum.
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We have kept our employees informed of the latest fraud methods through our internal bank communication
channels. During Cyber Security Month, we reached out to our employees with professional and awareness-
raising articles, as well as roundtable discussions.
For the fifth year in a row, we have organised a phishing simulation for the Bank’s entire employee
community, assessing employee response to receiving phishing emails. In 2023, the simulation was
performed group-wide. We also carried out a successful “abandoned thumb drive” test at our head office.
In 2023, we organised two International Rotation Programmes for the security managers and employees of
our foreign subsidiaries. The spring programme focused on information security, with four subsidiary banks
participating. In the autumn, in line with the change in the responsibilities of the group management area,
we implemented a programme covering several security areas, involving colleagues from seven subsidiary
banks from different areas.
Our subsidiary banks also make efforts to raise security awareness among their employees, in addition to
mandatory training and phishing simulations.
SI SKB Bank in Slovenia ran campaigns in the autumn and spring to raise awareness of security issues
among colleagues. They also performed a phishing test.
RS Our Serbian subsidiary bank organised a social engineering test for its employees, in order to fu rther
improve their cybersecurity awareness.
RU Our Russian subsidiary bank has published articles on key IT security topics on its internal channels.
In addition to the Banking Group’s high degree of preparedness and our employees’ security awareness,
our customers’ security awareness also needs to be raised. We continue to improve our methods for
customer education. Specifically:
• During the waiting time when customers are on hold, the Contact Center issues warnings for “Foxpost”
fraud and fraudulent phone calls made in the Bank’s name.
• Branch leaflets were produced to warn customers (100,000 leaflets). Branches have access to the
internal Electronic Banking Security Portal, where staff will always be able to read information on the
latest fraud trends and how to prevent them.
• We have set up a dedicated phone number to help us serve customers affected by fraud more quickly
and efficiently; this phone number is prominently listed on the bank’s website and on the login and logout
pages of the internet banking interface.
• The OTP website https://www.otpbank.hu/portal/hu/Adathalaszat contains detailed information on the
various forms of fraud and misconduct.
• We also have chatbots provide information to our customers on phishing and fraud, secure banking and
credit card security. These provide our customers with easy access to thematically organised content
and downloadable documents.
• We have also added fraud warnings to the envelopes containing account statements.
• During our branch training sessions, we reminded our administrators to inform customers about fraud.
• On a few occasions, our employees have given public presentations on financial fraud.
•
In addition, we post alerts on Facebook, the Bank’s website, the internal Electronic Banking Security
Portal, as well as other social media whenever new methods or stories of fraud are available.
• Our three KnowledgeBank videos on data security received a high number of views (see @chapter 3.1).
SI HR In cooperation with the Slovenian Banking Association and the Croatian Banking Association, our
subsidiary banks also participated in the awareness-raising activities of the European Month of Cyber
Security. In Slovenia, SKB Bank and NKBM organised a spring and autumn campaign, informing customers
of existing dangers by email, as well as via mobile and online banking.
RS Our Serbian subsidiary bank also used its communication channels to warn customers about fraud. They
also published four videos on phishing, phone phishing, cyber-attacks and account fraud.
AL Our Albanian subsidiary bank has implemented a social media campaign on secure online payments,
focusing on credit cards in 2023.
UA Our Ukrainian subsidiary bank participated in the communication campaign of the National Bank of
Ukraine “Goodbye to fraud”. The bank financed the development of the campaign’s education programme,
and also organised its own education programmes aimed at the general public.
RO The IT security manager of our Romanian subsidiary bank gave a presentation at the Bucharest
Cybersecurity Conference.
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Protection of customers’ personal data
The Banking Group applies the most modern solutions for data processing and data security and in order to
prevent data leaks.
The protection and processing of personal data are also a part of our Compliance Policy, in which the regular
assessment of risks and the maintenance and improvement of awareness are discussed. Data protection is
closely linked to fraud prevention and cyber security.
We last renewed the Directive on the protection of personal data introduced in OTP Bank and our domestic
group members in 2022. At OTP Group banks, dedicated data protection officers and data owners are
responsible for ensuring compliance with the data protection requirements (e.g. supervising personal data
processing, principle of data minimisation, the processing of high-risk data). To this end, data managers
receive annual professional training.
We naturally provide our customers with complaint handling channels for the event of fraud suffered as a
result of the data management practices of OTP Group, while suspected ethical offenses (including hu man
rights offenses) can also be reported via our whistleblowing system.
48 of the data leakage cases in the OTP Group occurred in OTP Faktoring Zrt., and resulted from the fact
that the address provided by the debtor was used by a third party who obtained unauthorised access to
personal data by opening the letter. A further 18 data leakage incidents occurred at SKB Bank, primarily
due to the negligence of the bank’s administrators and a mobile bank configuration error.
GRI 418-1 Abuse of personal data
number of substantiated complaints by external
parties
number of complaints by regulatory authorities
number of breaches of customer privacy
number of data theft incidents
number of
organisation
times data were
lost by
the
OTP Bank
OTP Group
2019 2020 2021 2022 2023 2019¹ 2020 2021 2022 20232
(cases)
(cases)
(cases)
(cases)
(cases)
0
0
0
0
0
3
6
0
0
0
0
0
0
0
0
0
0
0
0
0
0
33
0
23
0 1,045
1
0
0
1
20
35
29
2
2
277
128
22
61
17
0
23
31
0
1
43
21
73
2
2
¹ Our Ukrainian subsidiary bank was unable to supply data.
2 Our Montenegrin subsidiary bank was unable to supply data.
There is a considerable risk in on-line abuse based on deceiving customers – in such cases the customers
themselves disclose their own confidential data (see above).
4.5 Tax payment
This chapter describes the activities related to the following relevant topic:
GRI 207: 3-3, 207-1, 207-2, 207-3: Tax payment
Impacts: In the areas where we operate, we have an impact on state revenues and the tax practices of the
sector. Through tax payment, the Banking Group makes a meaningful contribution to the provision of
community services and the management of social inequalities, thus ultimately to socio-economic stability.
This material topic supports the achievement of the following SDGs:
Engagement: The OTP Group aims to achieve maximum compliance with the legal regulations on taxation;
accordingly, it settles its tax liabilities in the amounts prescribed by those regulations together with all of its
other tax-related obligations (e.g. data supply) in each country in which it performs activities or in which it
comes under the local tax regulations for any other reason. Strict prohibition of tax evasion and of taking
advantage of loopholes in the law in ways contrary to the purposes of those laws, is a key element of its
corporate culture.
We always aim to file tax returns in time, to fulfil our data supply obligations and avoid being fined.
Acts: Implementation and continuous application of the OTP Group Tax Policy
In Hungary, we have also contributed to the stability of public finances by bearing extra burdens
(moratorium, bank tax, extra-profit tax)
Meeting the requirements on taxation is included in the objectives of the organisation managers
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Stakeholder cooperation: Interests relating to taxation are asserted via the Banking Association. As
regards the interpretation of the legal regulations we even communicate directly with the authority and
regulatory bodies.
GRI 207-2, 207-3 The OTP Group’s tax policy defines uniform principles: it seeks to establish and maintain
an open, transparent and trust-based relationship with the tax authorities. Our goal is to expedite the closure
of audits, and provide high-quality information services.
The @Tax policy which was established by OTP Group in 2022 and came into effect in 2023, applies to the
entire OTP Group, every member of the group members’ management bodies and every employee of the
Group, along with all natural and legal persons performing expert or consultancy assignments or agency
activities for the Group. The Tax Policy presents the principles and practices followed by the OTP Group
with respect to taxation (it is essentially a code of conduct within the framework of the law).
The Tax Policy is based on, and is in line with the elements of, the Code of Ethics. Upon any impairment of
the Tax Policy, an ethics offence can be reported.
The Tax Policy is approved, and revised at least once a year, by OTP Bank’s Board of Directors, paying
particular attention to changes in the regulatory environment and tax authority’s and courts’ practices, in the
guidelines issued by international organisations shaping international tax policies and in international
practices.
OTP Group ensures the implementation of the Tax Policy through processes defined in group -level and local
internal regulations, with the highest level accountable person being the Man aging Director (Chief
Accountant) of the Accounting and Finances Directorate leading the taxation division. The taxation division
is independent of the business divisions.
GRI 207-1, 207-2 Owing to the complexity of the taxation rules and the constant change of judicial practice,
taxation risks (e.g. tax deficit, fine) cannot be altogether precluded. Their management is regulated at the
highest level by the Tax Policy. The Banking Group has no specific tax payment strategy.
4.6 Contribution to economic stability
This chapter describes the activities related to the following relevant topic:
GRI ST2: 3-3: Contribution to economic stability
Impacts: The members of OTP Group are important participants in several markets within the CEE region
and in Uzbekistan, and through their operations and results they have a significant impact on the respective
countries’ economies and financial systems, as well as on improving the standard of living.
This material topic supports the achievement of the following SDGs:
Engagement: Stability is one of the most important values for the Banking Group, therefore it spares no
effort to secure this. Our clear aim is to meet both regulatory requirements and competitive practices.
We always aim to file tax returns in time, to fulfil our data supply obligations and avoid being fined.
Acts: Traditionally high CET1 ratio
High liquidity ratio
Prudent risk management
Low ratio of non-performing loans (see @chapter 3.2)
Stakeholder cooperation: We follow regulatory requirements with the goal of maximum compliance,
providing all necessary information in a transparent manner. We assign a high priority to answering investor
and analyst questions.
Own indicator OTP Bank’s capital strength and stability are also confirmed by the results of the stress test
conducted by the European Banking Authority in 2023, with the assistance of the National Bank of Hungary.
OTP Group was the only Hungarian-owned credit institution to have participated in the survey. OTP Group’s
capitalisation results have improved slightly compared to two years ago, and the Group’s capital reserves
would remain well above the current regulatory capital requirements over the horizon of the stress test. In
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terms of CET1 ratio decrease over the three-year stress scenario period,48 OTP Bank achieved the 4th best
result in the test from among the 70 banks examined, and ranked 13th in terms of its absolute CET1 ratio.
Own indicator The CET1 ratio remained stable overall in 2023, despite the completion of the largest acquisition
in the Banking Group’s history – the Slovenian NKBM transaction – and the equally significant acquisition of
the Uzbek Ipoteka.
The MREL, or the minimum requirement for own funds and eligible liabilities, is determined in collaboration
with the resolution authorities of the Bank and its subsidiaries, representing a new level of regulatory
expectations for banking resources. The level of the requirement varies from bank to bank, taking size and
business model into consideration. The resources available for meeting the MREL requirement ensure that in
the event of resolution, any losses are borne by the Bank’s owners and subordinated lenders, minimising the
need for state aid. Our Bank has met the level of the MREL requirement required to be achieved by January
2024 through capital accumulated during normal operations and bond issuances on international and domestic
capital markets.
In 2023, we developed an internal regulation titled “Order of Management and Procedures Related to
Resolution” (A szanálási szempontú irányítás és a szanáláshoz kapcsolódó eljárások rendje) to meet the
corporate governance expectations required by the National Bank of Hungary in the event of resolution, in
order to implement recapitalisation to the extent necessary.
Throughout the year, numerous questions were received from investors and analysts, induced by the bank
failures in the US and Switzerland. In all cases, OTP Bank was able to provide reassuring answers based on
the low deposit concentration, the ratio of insured deposits, the healthy balance sheet structure, and its
conservative (73%) loan-to-deposit ratio.
The Banking Group’s presence in Russia is a matter of public interest, and we also provide regular and
transparent information on this. Even under the most unfavourable scenarios, the situation of our subsidiary
bank will not jeopardize the stability of OTP Group.
GRI 201-4 In 2023, the Banking Group received subsidies in four countries. In Hungary, nine subsidiaries
of OTP Bank received subsidies. NAGISZ Zrt., HAGE Zrt., Nemesszalóki Mezőgazdasági Zrt. and Nádudvari
Élelmiszer Kft. received a total of HUF 3.3 billion in investment, agricultural and animal welfare subsidies.
MONICOMP has signed a three-year contract with the National Agency for Research and Innovation for the
lease of a supercomputing infrastructure. The total cost of the project is HUF 7.3 billion, with a total subsidy
grant of HUF 2.6 billion. The second instalment of the aid (HUF 846 million) was received in 2023. The
environment requires 40% less energy compared to other HPCs 49, which is exceptional at the regional level,
and provides the opportunity to create GPT-level large language models, significantly supporting the Bank’s
customer service, campaign management, knowledge sharing, and educational activities. By the end of the
second year, a Hungarian-English, GPT-3 level large language model will be made available to the public
sector, as well as to higher education institutions. In the course of additional training steps, the model will
also be trained with the languages of the countries where OTP Group is present.
Our Bulgarian subsidiary received state aid for financing their electricity costs. The Merkantil Group and
OTP Factoring Zrt. received GINOP Plus subsidies for employee development through a European Union
tender. OTP Travel received de minimis levels of subsidy, Foglaljorvost Online Kft. received SME Start
Innovation (KKV Start Innováció) subsidies, and OTP Holding and Financing Malta used state subsidies for
hybrid car procurement.
Hungary
Bulgaria
Slovenia
Croatia
Romania
Malta
Total
GRI 201-4 Financial assistance (HUF millions)¹
2019
167
0
0
3
3
0
173
2020
50
0
0
5
14
0
69
2021
1,248
74
0
7
8
0
1,337
2022
2,363
721
74
5
0
0
3,164
2023
4,237
156
0
0
0
5
4,397
¹ The tax allowance granted on the basis of the Hungarian Banking Group’s sponsorship of spectator team sports and performing arts, as well as the tax
relief in Slovenia used for donations, are not included here as they cannot be interpreted as financial assist ance received by the Bank
48 common equity tier 1 capital
49 High Performance Computing
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5. RESPONSIBLE EMPLOYER
This chapter describes the activities related to the following relevant topic:
GRI 401, 404, 405, 3-3: Responsible employment
Impacts: The Banking Group makes major contributions to improving labour market adaptability and
competitiveness, sustainable development efforts, and socially responsible employer behaviour through
responsible employment. The quality of life of employees (and those working in the sector) is fundamentally
influenced by income, thus the remuneration practices of the Banking Group are a key factor. Ensuring
gender equality also has an important impact on economic growth and a sustainable future.
Working conditions and the workplace atmosphere also significantly impact stress levels, motivation and
sense of security, which can have either positive or negative effects. Given the size of the Banking Group,
the impacts are also felt in the broader community.
This material topic supports the achievement of the following SDGs:
Engagement: The Banking Group is committed to fair employment, stability, and performance-proportional,
equitable remuneration sufficient for a decent living.
The Banking Group considers its employees to be its most important asset, and seeks to promote their well-
being and development. Ensuring the latter includes continuous training and development, while the former
is guaranteed by a caring and family-friendly corporate culture promoting equal opportunities and a healthy
work environment. OTP Bank’s HR strategy focuses on the employee experience.
Acts Decent remuneration and a performance-based benefits system
Flexible employment opportunities
Strengthening non-discriminatory, inclusive attitudes
Promoting gender equality (in training and development)
Preparing action plans based on satisfaction surveys, and following up completed programmes
Leadership and skills development
Health insurance services, screening programmes, sports and recreational p ossibilities
Stakeholder cooperation: The Group continuously monitors employee satisfaction. We take action based
on employee feedback and inclusion. Our employees regularly undergo performance evaluations. We see
ourselves as cooperative partners with advocacy groups. We cooperate with higher education institutions,
professional organisations and service partners. Our interaction with supervisory authorities and agencies
aims to ensure compliance with expectations.
Details of activities relating to material topics are presented in the following pages, along with their outcomes
and how their effectiveness is assessed.
Further basic principles and comprehensive goals relating to employees are to be found on our @website.
5.1 Employment
In 2023, the Banking Group faced numerous new challenges due to both internal changes and
external factors. Our focus has been on comprehensive programmes supporting engagement and
effective change management. Our goal is to prepare the organisation for the future.
SI, UZ For OTP Bank, one of the biggest challenges in the field of human resources was presented by the
growth of OTP Group. The integration of the Uzbek Ipoteka Bank and the Slovenian NKBM was the most
significant change at the group level, affecting both international cooperation and the employees. During
corporate integration, the Bank strives to treat its employees responsibly. Integrity and transparency play a
key role in change management. We strive for open communication (about the causes, processes and
consequences of change), create forums and platforms to facilitate dialogue, and support employees with a
wide range of tools in adapting to the new environment. More information on this can be found in @chapter
5.2.
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GRI 2-7 at the end of 2023, a total of 44,468 employees worked for the OTP Group 50, the majority in foreign
subsidiaries. The 15% increase in the Banking Group’s headcount was primarily due to international
acquisitions, which resulted in Uzbekistan’s Ipoteka Bank contributing 4,344 employees to the total
headcount, and NKBM contributing 1,575. Proportionally, the 49% increase (247 employees) in the
headcount of the Albanian subsidiary bank was also a result of a previous international expansion: the
acquisition of Alpha Bank. Other group members experiences no change or only slight incr eases in
headcount. There was a 10% increase in the headcount of the Montenegrin CKB, while our Russian ( -15%)
and Ukrainian (-7%) subsidiary banks, as well as the DSK Group (-5%), experienced significant decreases
in headcount. OTP Bank Russia’s headcount reduction continues to be driven by the significant decline in
business activity, as well as decreases in the role of the physical POS, and the branch’s role as channel.
The number of OTP Bank Ukraine employees has decreased as a consequence of the war th at broke out
in February 2022.
GRI 2-7, 207-4
GRI 2-7 Employee headcount
(as of 31 December)
Full time employees
Part-time employees
Employees, total
Women/men ratio
Employees with fixed-term
contracts
Employees with fixed-term
contracts
Employees with indefinite-term
contracts
OTP Bank
2021
2019 2020
Total Total Total Men Women Total Men Women Total Men Women
5,937
8,396 8,872
800
954
6,737
63%
9,228 3,487
60
9,318 9,826 10,078 3,547
35%
9,841 3,904
74
6,768 10,715 3,978
37%
9,654 3,678
70
6,531 10,516 3,748
36%
5,741
790
5,976
792
2022
2023
65%
64%
874
862
850
922
6%
4%
5%
3%
6%
4%
2%
6%
3%
2%
3%
562
419
491
115
376
460
88
372
282
61
221
8,756 9,407
9,587 3,432
6,155 10,056 3,660
6,396 10,433 3,917
6,516
The data are accurate and derive from our internal records.
50 Number of active employees. A part of the workforce – a total of 2,275 by the end of 2023 – will work as agents, mainly in Russia (2,119) and Ukraine
(150).
No employees are working in the Banking Group in regimes without guaranteed working hours.
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176
13,821 5,251 2,501 2,590 2,840 748 550 4,344 6,853 2,276 1,818 871 5 Number of employees by country31.12.2023, total number of employeesHungaryBulgariaSloveniaCroatiaSerbiaAlbaniaMontenegroUzbekistanRussiaUkraineRomaniaMoldovaMalta
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
GRI 2-7 Employee
headcount
(as of 31 December) 2019 1
Total
2020
Total
OTP Group
2021 2
2022 3
2023
Total
Men Women Total
Men Women Total
Men Women
Full time employees
36,027 36,364 38,504 11,524
26,980 36,458 11,547
24,911 42,236 14,565
27,671
Part-time employees
1,481
1,451
1,811
339
1,472
2,317
433
1,884
2,232
421
1,811
Employees, total
37,508 37,815 40,315 11,863
28,452 38,775 11,980
26,795 44,468 14,986
29,482
Ratio of women/men
Employees with
fixed-term contracts
Employees with
fixed-term contracts
Employees with
indefinite-term
contracts
100%
100%
100%
29%
71%
31%
69%
34%
66%
7%
6%
6%
4%
7%
4%
2%
5%
3%
2%
4%
2,633
2,283
2,338
426
1,912
1,646
272
1,374
1,372
246
1,126
34,875 35,532 37,977 11,437
26,540 37,129 11,708
25,421 43,096 14,740
28,356
1 Not including the figures of Expressbank and OTP banka Srbija a.d. Beograd.
2 Full consolidated group.
3 Including the entire consolidated group, without the figures of Alpha Bank
The data are accurate and derive from our internal records
GRI 2-8 Non-employed staff headcount, 31.12.2023.
Temporary agency workers
Other external workforce¹
OTP Bank
2022
88
1,090
2023
69
1,067
OTP Group
2022
157
3,589
2023
229
2,740
¹ The figure is based partly on estimates. The reasons for the changes are not tracked at Group level.
Independent workforce in legal terms include for the most part IT experts (developers, operators), trainers and other special ists performing other services,
as well as students.
GRI 205-2 A considerable number of sales agents (15,550 persons) are cooperating with the OTP Group in
Hungary and in the region alike. Their numbers have decreased overall in 2023. The sales agent network
remains more significant in Russia, as well as within a small group of the parent bank and domestic
subsidiaries (OTP Financial Point, OTP Real Estate Point), and OTP Bank Romania. In Ukraine, the decline
is due to the war situation, while in other countries it is typically due to the recovery from earlier inactivity
and the expiration of contracts.
New recruits and employee turnover
GRI 2-7, 401-1 In spite of the unfavourable macroeconomic processes, the challenging international
environment and the companies’ internal transformations, turnover51 continued to decrease both at Group
level and for Group members. Turnover at the banking group level decreased to 20.8% in 2023, with the
voluntary departure rate being 16.0%.
Employee statistics
GRI 401: 3-3, 401-1, Annex52
51 The statistics include termination of employment both by employee and employer, as well as retirement. Since turnover is trad itionally high among the
sales agents of the Russian and Ukrainian subsidiaries, we also present their ratios without sales agents.
52 The companies having their registered offices in Malta are not indicated separately among the country data. No employee of th e Banking Group work
in other countries.
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INTEGRATED ANNUAL REPORT 2023
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12.08%13.65%17.06%6.20%7.53%14.37%35.03%8.00%9.78%55.48%45.38%29.70%18.98%20.30%15.84%20.81%17.37%26.94%0%10%20%30%40%50%60%OTP BankHungaryBulgariaSloveniaCroatiaSerbiaAlbaniaMontenegroUzbekistanRussiaRussia –excluding agentsUkraineUkraine –excluding agentsRomaniaMoldovaOTP Group 2023OTP Group 2023 –excluding agentsOTP Group 2022Turnover, 2023employee turnover per country as a percentage of the closing headcount figure21.0%9.8%12.3%11.5%12.4%46.3%16.1%12.6%16.7%22.9%0%5%10%15%20%25%30%35%40%45%50%Under 30years30–49 yearsOver 50 yearsMenWomenTurnover ratio within specific employee groups as a percentage of the closing headcount of each category, 2023OTP BankOTP Group (including agents)16.6%18.5%20.2%7.1%9.0%15.7%32.0%10.4%12.3%44.7%43.7%19.5%14.8%18.1%12.6%20.8%19.2%0%5%10%15%20%25%30%35%40%45%50%OTP BankHungaryBulgariaSloveniaCroatiaSerbiaAlbaniaMontenegroUzbekistanRussiaRussia –excluding agentsUkraineUkraine –excluding agentsRomaniaMoldovaOTP Group 2023OTP Group 2023 –excluding agentsNew hires, 2023new hires per country as a percentage of the closing headcount figure
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
GRI 405: 3-3, 405-1, 205-2
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46.98%13.46%5.10%19.71%14.74%56.11%15.21%6.01%21.59%20.35%0%10%20%30%40%50%60%Under 30 years30–49 yearsOver 50 yearsMenWomenPercentage of new hires within specific employee groupsas a percentage of the closing headcount of each category, 2023OTP BankOTP Group (including agents)748379523283911004935261721486817951650%20%40%60%80%100%Supervisory BoardBoard of DirectorsSenior managersMiddle managersEmployeesSupervisory BoardBoard of DirectorsSenior managersMiddle managersEmployeesOTP Group*OTP BankDistribution of management body members and employees by gender, per level of position, 31.12.2023WomenMen* Calculated from parent bank and subsidiary bank bodies combined in the case of members of the Supervisory Board and the Board of Directors. Employee categories include all employees of the member companies.
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
Equal opportunity and workplace diversity
GRI 2-10, 405: 3-3, 406: 3-3 OTP Bank’s strategy for gender equality was completed in 2021. In it, the Bank
has set the following strategic objectives:
-
-
-
ensuring equal opportunities for all employee groups,
creating an open and inclusive workplace, free from discrimination,
supporting a diverse, professionally outstanding, and cooperative work culture.
As part of the strategy, OTP Bank committed to increasing the ratio of women in its management bodies,
appointing at least one female member to the Board of Directors and the Supervisory Board. The nomination
process is carried out by the Nomination Committee based on suitability, leadership, and expertise, in
accordance with the requirements laid down in the Credit Institutions Act. The Bank has committed to having
at least 25% female candidates for group-level leadership succession. The strategic objectives will also be
accomplished through a gender-neutral remuneration policy and the strengthening of a non-discriminatory
and inclusive attitude through management training and internal awareness raising campaigns. According
to the employee engagement survey, 82% of employees at the group level and 88% of employees at OTP
Bank feel that professional success at the company is independent of gender, age, cultural background,
ethnicity, and religion.
Further actions and practices:
• During the year, the ratio of female candidates in the succession planning for international and
Hungarian priority manager positions was 30%. In the 2023 OTP Academy international talent
programmes, the Advanced Leadership Program (33%) and the Strategic Risk Leadership Program
(58%), the ratio of female employees exceeded 30%.
• To enhance non-discrimination, those involved in recruitment took part in labour law and sensitivity
training. As in previous years, the principle of an objective and discrimination-free process for attracting
talent was reinforced by standardising our internal application process, allowing internal employees to
participate in a selection process fully identical to that of external applicants.
In 2024, OTP Bank plans to launch new diversity programs. Diversity awareness training materials will be
prepared to help managers and employees eliminate unconscious biases. Women’s leadership development
programs and the launch of the international Women Network will prepare and encourage women for higher
leadership roles. Dedicated succession programs are also planned to strengthen the employment of women
in digital and IT fields.
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2192173354557362179337059674644251983916728240%20%40%60%80%100%Supervisory BoardBoard of DirectorsSenior managementMiddle managersEmployeesSupervisory BoardBoard of DirectorsSenior managementMiddle managersEmployeesOTP Group*OTP BankDistribution of management body members and employees by age, per level of position, 31.12.2023Over 50 years30–49 yearsUnder 30 years* Calculated from parent bank and subsidiary bank bodies combined in the case of members of the Supervisory Board and the Board of Directors. Employee categories include all employees of the member companies.
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
GRI 202-2 Proportion of women and members from the local community in senior management, 31.12.2023
Company
OTP Bank
DSK Bank
OTP Bank Slovenia (SKB Bank +
NKBM)
OTP Bank Croatia
OTP Bank Serbia
OTP Bank Albania
CKB
Ipoteka Bank
OTP Bank Russia
OTP Bank Ukraine
OTP Bank Romania
OTP Bank Moldova
Directorate
Management ¹
Proportion of locals²
(%)
100
88
Proportion of women
(%)
9
13
Proportion of locals2
(%)
100
88
Proportion of women
(%)
0
13
38
83
33
-
86
63
100
100
80
100
50
0
0
-
29
0
0
40
40
17
92
83
86
83
71
63
0
100
55
83
31
0
14
17
29
0
0
40
27
17
¹ Management: In Hungary: the chairman of an enterprise elected by the management body in its managerial function and employe d by the enterprise,
or the chief executive officer appointed to manage the enterprise and employed by the enterprise, as well as a ll deputies of that officer; abroad: the chief
executive appointed to manage the enterprise, who is employed by the enterprise, as well as all deputies of that officer and the Heads of Division.
² Citizen of the relevant country.
Many of the OTP Group’s subsidiaries have guidelines and/or policies prohibiting discrimination at the
workplace and promoting diversity and equal opportunity. The policies on employee performance evaluation
and financial incentives are also gender-neutral, consistently applying the principle of equal pay for male
and female employees for equal or equivalent work across subsidiaries.
BG The Bulgarian DSK Group launched the LaDySK initiative in 2023, in order to strengthen the economic
and social role of women and support their careers. The community, consisting of 27 female leaders, has
its own logo, mission, and vision. Its members have received special training, including on emotional
intelligence, time management, and neuro-linguistic programming (NLP). The community also actively
participates in charity initiatives within the bank.
HR Our Croatian subsidiary bank published its Diversity, Inclusion, and Equality Policy on its @ website. In
2023, it developed the social pillar of its ESG strategy, in parallel with an assessment of its social impacts.
Consequently, it reviewed its main internal regulations, supplementing them with provisions related to
human rights and diversity. The bank’s employees participated in the Workplace Inclusion Champion
educational programme organised by the Croatian Business Council for Su stainable Development, to
implement a detailed Diversity and Inclusion (D&I) action plan in 2024, as part of achieving the goals set in
the ESG strategy.
AL OTP Bank Albania is committed to non-discrimination and the protection of vulnerable groups. In 2023,
it signed a memorandum with UN Women 53, promoting gender equality.
UZ In 2023, Ipoteka Bank had a Gender Equality Committee and a Women’s Committee, providing financial
contributions and benefits to women. Women received free medical check-ups and vaccinations, as well as
health care and sanatorium services for those in need. Retired employees and those with over 45 years of
work experience receive special recognition and gifts, and once annually, financial support is provided to
employees with disabilities.
RO OTP Bank Romania’s brand philosophy as an employer, the #otpmindset concept, is based on diversity
and equal opportunity.
A total of 483 persons with disabilities were employed at the end of 2023. Within OTP Group, the DSK
Group employs the largest number of people with disabilities (156 people) and OTP Bank Ukraine the largest
ratio (5.5%). At OTP Bank employees with disabilities are provided by a monthly amount of HUF 10,000 i n
the way of rehabilitation allowance in addition to the extra holiday stipulated in the Labour Code.
OTP Group is committed to supporting career starters and, in connection with this, to cooperation with
higher education institutions and students. Most Banking Group members regularly host trainees and
students completing their practical training, and employ students temporarily. Within the framework of its
cooperation with higher education institutions, OTP Bank actively participates in university mentorin g
programmes, job fairs and student organisation events, as well as supporting lectures, research and study
competitions.
53 UN Women is a United Nations organisation dedicated to empowering women and girls in the social, economic and political arena s.
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Following the practice of previous years, the OTP Group employed 979 interns in 2023. Among the Group
members, the Ukrainian, Romanian, and Albanian subsidiary banks welcomed the highest number of
trainees in proportion to their headcount. OTP Bank operates a dedicated Trainee Program. In 2023, a total
of 229 trainees and 300 students were offered employment, and 300 university students were provided
opportunities to work as professional trainees in the branch network and central areas. Around 60 percent
of young people who have completed an (apprenticeship) traineeship or student placement have been
recruited by the Bank as staff. 23 percent of the employees who joined in 2023 were under the age of 25,
thus the Bank offered employment opportunities to approximately 300 young professionals.
RS The Serbian subsidiary bank cooperates with several NGOs for the employment of disabled and
disadvantaged young people. Trainees were hosted through the Roma Entrepreneurship Development
Initiative (REDI) programme, and at the end of 2023, they began collaborating with the UNDP (United
Nations Development Programme) and the Forum for Young Disabled People. They helped to inform
stakeholders about open positions and traineeship opportunities within the bank, and the bank’s employees
participated in forums and conferences organised by the two organisations. A dedicated traineeship
competition for young people with disabilities was launched at the end of the year.
RO As a unique initiative, the Romanian subsidiary bank has launched the Hungarian Native Speaker
Trainee Programme 2023. The programme gives Hungarian-speaking young people the opportunity to learn
about the bank and the financial sector, and to gain experience in their profession. Students typically remain
in the bank as employees after the mentoring and learning phase.
GRI 2-30, 402-1 All members of OTP Group respect the rights of freedom of association and collective
bargaining, and provide opportunities for advocacy in accordance with applicable local laws. Relations with
advocacy groups are collaborative. 65 percent of OTP Bank’s employees are members of a union, with a
group-level ratio of 40%54. The Bulgarian, Croatian, Montenegrin, and Uzbek subsidiary banks have a high
rate of union membership. The majority of the Banking Group’s employees (70%) are covered by a collective
bargaining agreement. For OTP Bank employees, this ratio is 97% 55. There are collective bargaining
agreements in force at OTP Bank, DSK Bank, OTP Bank Serbia, OTP Bank Croatia, OTP Bank Romania,
the Uzbek Ipoteka Bank, OTP Bank Ukraine, CKB, the Slovenian SKB 56 and NKBM Banks, and the
Hungarian subsidiaries OTP Lakástakarék, OTP Jelzálogbank, NAGISZ and Velvin Ventures. As it relates
to the minimum notice period regarding operational changes that could substantially affect employees, the
banks of OTP Group follow varying practices in compliance with local requirements (see @Annex).
Employees’ rights, policies, employment rules and practices are available to employees and are displayed
in internal communication channels, on the relevant intranet pages.
Labour complaints
GRI 401: 3-3 During the year a total of 48 labour procedures were commenced against companies of the
OTP Group, of which 36 procedures were closed by the end of the year. 35 of the cases closed were labour
lawsuits. The compensation paid in 2023 amounted to 233 million HUF, including a fine for practices from a
previous period amounting to 218 million HUF. In the case of CKB Group, a verdict was reached in favour
of the plaintiff regarding an unlawful termination of employment in 2019 for compensation of lost earnings.
The Russian, Ukrainian, Serbian, and Bulgarian subsidiary banks were also involved in the labour
proceedings.
5.2 Employee inclusion, measuring engagement
GRI 2-29, 401: 3-3 Continuous dialogue with the employees is a key element of OTP Bank’s HR
strategy – we communicate through a variety of channels and in diverse forms, to get to know their
needs, requirements and opinions and receive feedback at the same time. OTP Group places a high
importance on employee satisfaction and strengthening employee engagement. Annual engagement
surveys and targeted pulse surveys allow the effects of developments to be measured.
54 Slovenian banks are not allowed by national law to keep records of trade union members, so this is not included in the d ata.
55 At OTP Bank, the working conditions and terms and employment conditions of employees not covered by a collective bargaining a greement are also
determined on the basis of the existing collective bargaining agreement. The working conditions and the t erms and conditions of employment of
employees not covered by collective bargaining agreements at the members of the Banking Group are typically not determined on the basis of the
collective bargaining agreement of the member company or other organisation.
56 Not the organisation's own collective agreement, but a sectoral collective agreement.
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Own indicator OTP Bank conducted an employee engagement assessment in 10 countries applying the
same methodology across the group, for the third time. 57 In 2023, a total of 28,990 employees took the
opportunity to provide feedback, representing an extremely high (91%) response rate. While maintaining the
participation rate, the Banking Group also managed to improve employee engagement and remain an
attractive workplace in the labour market.
Survey results:
• Employee engagement level increased by two percentage points to 72%, compared to 76% for
OTP Bank in 2023.
• With this 2 percent increase, the engagement rate is approaching the global financial sector average
(75%)58. OTP Group’s goal aims to reach the global 75th percentile of engagement, which was 78%
in 2023.
In addition to Hungary, the highest levels of engagement were found in Albania, Ukraine and
Romania. Seven of the ten countries surveyed saw an increase in engagement compared to the
previous year.
•
• As a result of the actions taken at group level, a larger proportion of employees (68% instead of
60%) reported positive changes in their environment as a result of the (previous) survey. Most
respondents found it important that communication had become more open and more regular,
leading to improved cooperation with colleagues. They also noted positive changes in terms of
remuneration. 91 percent of respondents noted career opportunities, employee well -being and
recognition as key factors in their engagement, and 72 percent of respondents (2022: 71%) believe
that the survey will result in improvement initiatives.
All employees received comprehensive information about the survey results, and were given the opportunity
to provide feedback on it. This process serves as a basis for the 2024 action plan, focusing on the follo wing
three areas:
• providing career opportunities (by extending the job system internationally, creating transparent
career paths, initiating international mobility),
• employee well-being (reviewing and streamlining processes for welfare services, increasing
efficiency),
• and strengthening the involvement of senior management (reinforcing the dialogue between
managers and employees).
Additionally, each organisational unit must identify at least two to three specific goals that will provide an
effective response to employee feedback.
The importance of a feedback culture is increasingly significant in the Group’s operations, collecting
feedback from members of OTP Group in a number of different ways beyond just the engagement survey.
SI The Slovenian group conducted a pulse survey on the inter-bank integration process and a cultural survey
to explore their employees’ views on the current and desired organisational culture.
RS Our Serbian subsidiary bank has rolled out the Heartcount app – already tested in 2022 – to its 1,600
employees. Heartcount is a tool for efficiently collecting and analysing employee feedback.
RU Our Russian subsidiary bank conducted employee surveys on various programmes, including
gamification, health insurance, transparency of the bonus process, and the potential for internal
collaboration.
Open internal communication, change management
For the Slovenian and Uzbek banks, internal communication played a crucial role in change management
due to company mergers and integration into the banking group. Priorities included harmonising operations,
strengthening cooperation and defining
the desired
organisational culture. In both cases, the aim was to make integration a predictable an d understandable
process for employees.
the necessary management steps
towards
SI The two Slovenian banks have embarked on a number of new activities to strengthen employee
engagement. This included the introduction of “crossbank” team-building events, a new change
management training programme for managers, regular meetings to strengthen communication and
information sharing (monthly and quarterly business review meetings), and organising community -building
57 In Russia, the survey was conducted on a different platform and with some different questions. The response rate was 90%, and the detailed results
are still being processed. The first survey in Uzbekistan will take place in 2024.
58 The Financials Avg benchmark contains six million responses from 116 companies of the world classified on the basis of the GI CS method.
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events and activities (Bankathlon, Christmas events, health improvement programmes, mobi lity week) that
can appeal to all of the employees of both banks. Organisational culture workshops were also held with
managers to jointly define the core values and desired behaviours of the bank created as a result of the
merger – which is planned for 2024 – and to incorporate them into performance management and moral
recognition systems.
RO In 2023, OTP Bank Romania held an internal event, the HR Open Days, to give colleagues the
opportunity to ask questions about the bank’s market position and sales. A dedicated internal communication
platform was also established for this purpose, named the “Dialogue of Colleagues”.
5.3 Career opportunities
OTP Bank operates a uniform, consistent, transparent and equal remuneration and incentive structure. This
is governed by the Job Framework. The job framework was implemented in the Bank and its Hungarian
subsidiaries59 in 2022, with the Group-level international rollout slated for the end of 2024. The job framework
defines the career paths offered by the Banking Group to its employees. Performance management and
remuneration are linked to the wage brackets aligned to the career levels. The standardised system of
criteria resulted in a job structure which is a lot simpler, more transparent and flexible than the structure it
replaced. A new IT system supporting the system will also provide job maps, allowing employees to see the
skills and competencies required for a particular position. In 2023, OTP Bank intro duced a uniform internal
application framework across the company, supporting internal job rotation and transparent, horizontal
career paths.
GRI 404: 3-3, 404-3 The Bank provides a review of development goals twice annually to all employees as
part of the performance review, defining the directions for personal growth and discussing development
solutions. Among the subsidiary banks, this is fully implemented at the Serbian subsidiary bank, but only to
a lesser extent at other member banks, resulting in 41 percent of employees receiving a career development
review at the group level. Men and women are almost equally represented in the review, while by job
category, 56% of middle managers and 39% of employees are included. 60
Talent programme
We have developed a standardised talent development framework and manager succession planning
scheme. In 2023, we introduced international talent programmes as part of the OTP Academy framework.
OTP Academy Framework
OTP Academy provides an opportunity for uniform, comprehensive, and high-level knowledge acquisition at
the Group level. The aim of the programme is to build a high-quality international professional community,
in addition to promoting professional and personal development. Each academy is designed to develop key
skills at different levels of proficiency. However, a common feature is that, in addition to knowledge
development, they also develop skills based on practical application, experience exchange, feedback, and
development.
The main objective of the professional academies is to develop key skills for business success along key
job families such as risk management, digitalisation or business development.
Leadership academies aim to create an international, cross-organisational community of leaders.
As part of the OTP Academy programme, we have introduced several leadership development programmes
at the Group level. For more information on international leadership talent programmes, see @chapter 5.5
“Training and education” (Advanced Leadership Program and Executive Leadership Program).
Performance review
GRI 404: 3-3, 404-3 Employee performance is assessed by the members of the OTP Group based on
different methodologies. Regular feedback, linked to individual and corporate objectives and based on
objective criteria, is fully implemented at OTP Bank and at several foreign subsidiary banks. Defining
development objectives and assessing competences is a subject of discussion between the manager and
the employee. The HR information system is used to set objectives and evaluate their achievement. The
frequency and metrics of the performance evaluation process can vary by area (e.g., head office, sales,
59 For Hungarian subsidiaries where this was justified by the headcount of employees and the group-wide impact, including Faktoring Zrt., Merkantil Zrt.,
Jelzálogbank Zrt. and Lakástakarék Zrt.
60 OTP Bank Romania could not provide accurate data on the number of employees provided with career building overviews. Among to p managers the
career building overview is, in most cases, no longer relevant, therefore no specific data on this are presented.
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customer service, agile organisations), with each case governed by specific internal regulations. In the
engagement survey, 71% (2022: 66%) of OTP Bank employees indicated receiving meaningful recognition
for their achievements.
OTP Bank is gradually introducing OKRs (Objectives and Key Results), aiming to develop and support a
management feedback culture, in addition to achieving the company’s strategic goals. In 2023, the
objectives and leader evaluations of approximately 3,600 employees were based on this methodology. The
novelty of the system is that, in addition to organisation-specific goals, we can also set horizontal indicators
and goals. Thus in 2023, the individual organisations have also defined indicators related to the development
of financial literacy, as well as the enhancement of digital knowledge and skills.
More than 95 percent of staff in the Bulgarian, Slovenian, Serbian, Albanian, Ukrainian and Moldovan
subsidiary banks abroad received regular performance evaluations. 61 At the group level, 85 percent of
women and 75 percent of men received performance evaluations in 2023. Broken down by job categories,
82% of senior managers, 87% of middle managers and 81% of employees received a performance rating.
HR RS In 2023, the Croatian and Serbian subsidiary banks prepared separate training materials on giving
and receiving feedback, aimed at developing both managerial and employee skills.
5.4 Remuneration, rewarding of the employees
Benefits
GRI 405: 3-3, 2-19, 2-20, 401-2 OTP Bank’s Remuneration Policy is in line with SRD II – it covers the whole
of the organisation and includes a description of the decision making process relating to determination,
revision and implementation, including measures aimed at preventing or managing conflicts of interest, the
role of the Remuneration Committee; managers’ bonuses, the components of fixed and variable
remuneration and the objectives for directors. The system of targets of foreign subsidiary managers were
fully revised and the targets were harmonised, for 2023. Sustainability considerations were also taken into
account in the process (see @chapter 1).
In line with legislative requirements and its engagement to equal opportunity, the OTP Group consistently
employs the principle of ‘equal pay for equal work’, including ensuring gender equality. OTP Bank’s gender -
neutral remuneration policy declares that job-specific wage brackets are aligned with the level of positions
and market practices in its wage setting strategy; regular wage audits control and ensure that no significant
wage differences can emerge between the genders. OTP Group member companies typically provide the
same benefits to full-time, part-time and fixed-term contract employees62.
Members of OTP Group remunerate their employees at the rates customary in the market of the relevant
country. Some of our employees’ pay is dependent on their measurable performance. Every Group member
increased wages in 2023, by more than 5% in most cases. Nearly all members of the Banking Group also
offer fringe benefits to their employees. OTP Bank’s remuneration practice differs from those generally
applied by other market participants in Hungary: in addition to the annual pay rising process enabling ba sic
wages to be regularly adjusted, the average bonuses are also significantly higher than the usual market
rate. The renumeration structure of the Uzbek Ipoteka Bank differs from the Group’s practice, and
harmonising it will be one of the tasks for the coming period.
OTP Bank’s remuneration and incentive practices are closely linked to the newly introduced job framework.
We operate a clear, consistent, transparent and equitable remuneration and incentive structure at all levels.
Consultations and coordination with the trade union also take place in relation to remunerations.
OTP Bank has had an employee stock ownership plan for years; it is used as a long -term incentive tool. At
the end of 2023, 918 people were participating in the programme.
RS In 2023, our Serbian subsidiary bank paid special attention to recognising and rewarding employees: it
implemented wage increases among branch network employees, introduced a quarterly bonus as a regular
form of remuneration, and applied annual performance-related salary adjustments. Additionally, it provided
a flexible benefit (birthday leave) to employees on a trial basis.
61 In Ipoteka Bank in Uzbekistan, the performance management system will be implemented in 2024.
62 An exception is the practice of OTP Bank Russia, which provides part-time and fixed-term employees with life insurance, health protection, extra days
off and other benefits only up to the level required by law, while full-time employees are entitled to these benefits. OTP Bank Albania provides the other
benefits to full-time employees but not to part-time employees, and OTP Bank Serbia provides the health care benefit only to full-time employees.
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GRI 405-2 Ratio of the basic salary of women to men, 31.12.2023
Women
OTP Bank
DSK Bank
OTP Bank Slovenia (SKB Bank + NKBM)
OTP Bank Croatia
OTP Bank Serbia
OTP Bank Albania
CKB
Ipoteka Bank
OTP Bank Russia
OTP Bank Ukraine
OTP Bank Romania
OTP Bank Moldova
OTP Group¹
¹ Average of the parent bank and the subsidiary banks.
Men
Senior
managers
100% not interpretable
92.1%
100%
100%
99.8%
100% not interpretable
92.0%
100%
81.8%
100%
100%
78.2%
100% not interpretable
100% not interpretable
103.1%
100%
88.8%
100%
94.8%
100%
92.6%
100%
Middle
managers
95.8%
98.0%
94.2%
91.3%
87.0%
101.9%
85.7%
91.0%
85.0%
82.1%
90.8%
80.0%
90.8%
Employees
Average
98.5%
94.4%
98.1%
96.6%
84.0%
92.4%
87.2%
95.0%
84.0%
92.9%
93.3%
72.6%
92.4%
98.2%
94.5%
98.2%
96.3%
84.0%
94.1%
86.9%
94.0%
84.0%
92.4%
93.3%
74.2%
92.2%
GRI 405-2 Total benefits for women compared to men, 31.12.2023
OTP Bank
DSK Bank
OTP Bank Slovenia (SKB Bank only)
OTP Bank Croatia
OTP Bank Serbia
OTP Bank Albania
CKB
Ipoteka Bank
OTP Bank Russia
OTP Bank Ukraine
OTP Bank Romania
OTP Bank Moldova
OTP Group¹
Men
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Senior managers
not interpretable
97.7%
105.8%
not interpretable
86.0%
81.0%
70.8%
not interpretable
not interpretable
102.2%
N/A
92.6%
91.0%
Women
Middle managers
93.4%
98.8%
98.0%
84.6%
85.0%
96.5%
87.3%
91.0%
87.0%
76.0%
N/A
81.1%
89.6%
Employees
97.8%
89.8%
99.7%
88.2%
83.0%
85.5%
92.7%
95.0%
92.0%
96.3%
N/A
72.7%
92.7%
Average
97.3%
89.9%
99.9%
87.8%
83.0%
87.5%
91.7%
94.0%
92.0%
95.3%
N/A
74.4%
92.4%
¹ Average of the parent bank and the subsidiary banks.
ME At the beginning of 2023, CKB introduced compensation for lower-paid categories of employees to keep
wages stable in the face of inflationary pressures. A uniform 17% wage increase was introduced in the
second half of the year, and the budget for bonuses was also increased.
UA In Ukraine, due to the crisis situation caused by the war, the subsidiary bank provided accommodation
compensation for employees during the forced relocation in 2023, as well as financial support and salaries
for mobilised employees, a significant wage increase and a company discount on health insurance.
OTP Social Foundation
In Hungary, the Foundation provides help to OTP Group employees, (including pensioner employees) and
their families in crisis situations. One-off, long-term or in-kind assistance (including medical care or support
by a psychologist) is granted based on applications. Besides crisis situations, the assistance may also be
requested for camps or start-of-school expenses.
5.5 Training and education
GRI 404: 3-3, 404-2 In 2023, the Banking Group has placed a strong emphasis on leadership
development and continues to offer a broad training portfolio to its staff.
In 2023, the OTP Group spent more than HUF 4 billion on employee training. The average per capita training
cost nearly doubled, as a result of the price increases and the intensive trainings for m iddle and top
managers. The average training time was 34 hours/employee. Every single employee of the OTP Group
was provided with training. The parent bank provided the most training in 2023, with nearly 80 percent of
employees attending training beyond the mandatory courses.
Leadership development
One of the most important goals of OTP Bank’s HR strategy is to support and develop its managers as they
play a key role in maintaining the cohesion, and ensuring the effectiveness, of the organisational units an d
in change management.
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In 2023, we heavily focused on international leadership training. In the Executive Leadership Program, the
Advanced Leadership Program and the Risk Leadership Program, in addition to leadership development,
we placed a strong emphasis on collaborative project work and community building.
• OTP Bank, in cooperation with INSEAD, has implemented its first group-wide Executive
Leadership Program, with the participation of 30 middle managers from 12 countries. The aim of
the programme is for high potential middle managers to develop the skills and knowledge they need
to reach senior management positions. The training gave them the opportunity to work on real
projects, build their network of contacts and learn from experienced leaders (mentor s).
• A total of 31 international strategic leaders from 9 countries participated in the Advanced
Leadership Program. As part of the 9-month programme, participants learned from world-class
experts from London Business School and worked in teams on comprehensive, group-wide strategic
development projects. Excellent solutions in the areas of customer experience, digital innovation,
talent management, international collaboration and leadership development were developed and
presented at the International CEO Forum. The feasibility of projects is decided by the Executive
Steering Committee of the parent bank.
• Also in 2023, the Strategic Risk Leadership Program as part of the OTP Risk Academy
international leadership development programme was completed. The 9-month training was
attended by 24 risk managers from 10 countries, with the SEED Executive School involved in
preparing them for the role of strategic leader. Participants also worked in teams on strategic
programmes for banking group risk management. The results and proposals will be incorporated
into the strategic planning of the area.
The OTP Risk Academy, the first of its kind to be launched in 2023 among professional academies, is open
to all employees working in risk management. More than 1,400 Bank ing Group employees have access to
the basic module focusing on professional knowledge. Digital learning (11 e -learning) materials and
webinars, which are uniform on group-level, cover the main areas of risk management. By the end of the
year, more than 60% of the colleagues concerned had completed the training. OTP Bank will continue to
expand its professional academies in 2024, including the Risk Academy, Collection Academy, Digital
Academy and Retail Academy.
ESG training
In 2023, we created an ESG training course comprising five modules and targeting nearly 900 managers,
with the inclusion of an external advisor. Available in English and Hungarian, the training covers ESG
fundamentals and legal background, business opportunities, risk management, employer responsibility and
ESG governance.
50 DSK Bank managers took part in a three-hour educational game on climate change, based on the IPCC
reports.
Comprehensive leadership development continues at the parent company headquarters, with regular
forums, experiential learning and using the latest tools and methods.
The Bank offers a targeted training portfolio for branch managers, geared to their specific challenges. The
development of their problem solving skills is facilitated by a dedicated platform called E DUardo by
simulating life-like situations, real-time feedback and interactive case studies.
SI In 2023, the Slovenian Group’s leadership development programme also covered the area of change
management to develop the competences of leaders to successfully manage significant organisational
change.
Professional training programmes and competence development
Development of the employees’ professional expertise is one of the most important tasks at all group
members. Participation in the professional and other training courses necessary for work performance (e.g.
ethics, compliance, security, health and safety, environmental protection) is based on annual training plans.
Training plans are developed with the inclusion of staff, taking into account the results of performance
reviews.
Strengthening communication skills, cooperation skills and personal prod uctivity and supporting stress and
change management, play a special role in trainings aimed at skills development. OTP Bank also provides
self-development opportunities for its 500 employees by giving them access to different platforms (Udemy
O’Reilly, Cloud Guru).
In 2023, OTP Bank renewed its portfolio of leadership and employee skills development programmes. 45
curricula development and updates (e.g. basic training in banking curricula are reviewed quarterly, job
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preparation materials annually, mandatory training courses, etc.). Satisfaction with training and education is
above 9 according to the satisfaction measurement questionnaire.
GRI 404: 3-3, 404-1 Annual training per employee, number of hours (2023)
Senior manager
Middle manager
Employee
Men
Women
2023 average
2022 average
2021 average
2020 average
2019 average
OTP Bank
61
97
77
76
81
79
80
76
74
80
OTP Group
82
62
31
34
33
34
35
47
50
50
5.6 Safe and healthy working environment
Work-life balance, employee well-being
Psychosocial risks can have a negative impact not only on the individual but also on the whole
organisation and the efficiency of the national economy, so managing them effectively is an
important task. The objective of the HR strategy focusing on employee experience is to ensure a
supportive workplace atmosphere; to this end, the OTP Group applies a number of practices making
it possible for employees to achieve the best possible work-life balance and maintain mental health.
GRI 405: 3-3 Atypical forms of employment, including part-time work, teleworking and working from home
office, are possible for members of the Banking Group. Following previous practice, hybrid working (partly
office work, partly home office work) was typically available to those in central jobs, to varying degrees from
area to area. For OTP Bank employees, the proportion of working days spent in the home office was 17%,
with an average of 28% in the central area and just over 1% in the network. In line with international trends,
the number of home office days available at OTP Bank in 2023 was two days per week. Changes in
Hungarian legislation have allowed parents with young children to have more flexible working conditions.
Several subsidiary banks have made teleworking easier.
BG The Bulgarian subsidiary provides an extra two days of paid leave or employee recreation and
regeneration, and teleworking was greatly simplified in 2023 based on employee feedback.
HR OTP Bank Croatia rewards exceptional performance with extra day off and has introduced teleworking
for more than 1,800 employees. They also allowed for so-called “temporary teleworking” for vulnerable
groups and for exceptional and justified cases.
The rate of extraordinary work in OTP Bank decreased compared to the previous year. The annual number
of overtime hours per capita was 39.4 hours in 2023 (based on the number of overtime workers), 17.9%
less than in 2022. The average number of hours of overtime worked per person was 19.1 hours.
In the satisfaction survey, 70% (2022: 69%) of OTP Bank employees, 69% on Group level, found that the
Bank treats employee well-being as a priority. We aim to continuously improve this value.
OTP Bank also conducted a separate survey on satisfaction with welfare services. The most important
welfare services for employees are contributions to personal health/pension accounts, private health
services, bonus holidays and employee discounts from OTP and its partner companies. The survey has
shown that what is needed is not the introduction of new physical, mental, social or financial welfare services,
but the simplification and efficiency of processes. So in 2023, we focused primarily on expanding existing
services and making them easier to access and use.
Under a health insurance contract, OTP Bank financed a total of 32,161 screening tests or healthcare
treatments resulting from health complaints in 2023. An extended screening bus service has become
available to employees in the Hungarian branch network in the regions.
Several members of the OTP Group provide their employees with healthcare services over and above what
is required by law, including health insurance and screening tests, in view of employee needs and
requirements. Because of the high proportion of women in the workforce, the examinations that are important
for them are in focus. In addition, in 2023, several new projects and measures related to work -life balance
and employee well-being were implemented by the group members:
BG In 2023, the DSK Group launched its well-being initiative entitled “Balance Your Life”, providing a
platform for colleagues to discuss the topic and organised webinars. Its Wellness Academy continued to
focus on healthy living, exercise and medical consultations.
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SI The well-being and health promotion programmes of Slovenian banks continued to be extensive in 2023.
They offered office exercise, massage, sports club programmes and health awareness webinars.
Psychological support is available in both banks, provided by an outsourced specialist who guarantees
anonymity to employees.
AL OTP Bank Albania has introduced several engagement programmes to promote work -life balance. Work-
life balance is also a theme of the new entrants’ orientation programme. The In4Change Workshop aims to
develop the perceptions and feedback of employees on major events and situations in their work
environment or in their personal lives.
ME The main elements of the group’s well-being programme include: free yoga classes, expert
presentations on mental health, parenting, healthy eating, exercise and topics that employees think are
important.
Family-friendly programmes
Many of OTP Bank’s employee have small children or are preparing to have children. For years, the Bank
has been providing discounted camping opportunities for employees’ children through the OTP Social
Foundation, and they can also apply for financial education camps organised by the OTP Fáy Foundation
and for programming summer camps organised in association with the Association of Computer Managers.
Our employees were also eligible to apply for a contribution to cover the costs of summer camps outside
the Bank, with 777 children benefiting in 2023. In 2023, the Bank provided children’s daycare for 10 weeks
during the school holidays at its headquarters. Each time, 17 children w ere supervised and a total of 620
children used the service. The Bank has increased the number of vouchers issued for domestic reward
holidays and the number of summer camp tours. A total of 363 children attended the summer day camps,
which lasted several days.
Several members of the OTP Group offer their employees the opportunity to apply for start-of-school
allowance, family support options (e.g. for the birth of a child or the funeral of a close relative) and company
events (e.g. Family Day, Santa Claus, Children’s Day programmes) in which family members can also
participate.
In 2023, Elf Factories welcomed children were welcomed in 5 locations a cross the country. In addition to
OTP Bank employees, employees of domestic subsidiaries and mothers with young children at home were
also invited to the programme. 1,700 children spent happy hours with Santa Claus, made small gifts or took
part in the concerts.
Across the group, thousands of employees are on long term parental leave. 63 Parental leave is also available
for fathers, but still few of them take advantage of it.
GRI 401-3 Employees taking parental leave and employees returning, 31.12.2023
Persons entitled to childcare leave
Persons taking childcare leave
Number of people returning to the company after childcare leave
Percentage returning to the company after childcare leave
Still employed 12 months after return (retention rate)
(persons)
(persons)
(persons)
(%)
(%)
OTP Bank
OTP Group
Men Women Men Women
7,664
1,098 1,675
4,104
85
1,184
62
63
93
68
60
45
3
2
100
0
930
292
92
96
Stress management and individual support
Own indicator - The OTP Group lays particular emphasis on preventing and eliminating the problems
inherent in the nature of its operations (e.g. stress, sitting at work). Reducing psychosocial risks and
preventing their consequences for mental and physical health is an important task of health and safety at
work. In order to identify and reduce psychosocial risks, stress management, burnout prevention training
and online webinars are available for employees in the majority of member companies. In 2024 Q1, OTP
Bank will launch a comprehensive survey to map these risks. Participation in the survey is voluntary.
To overcome mental health difficulties, OTP Bank continued to provide support services for individuals and
families in 2023. The Smart Hour webinar series continued. Weekly presentations by external specialists
discussing typically problems relating to mental health, personal development and various common
situations at work or in private life, and recommending solutions.
63 Long-term childcare leave, which can be taken by both women and men, depending on local regulations. The definition does not cover the short term
parental leave introduced in Hungary in 2023.
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For the first time, the Bank organised a Health Day with external professional partners. In addition to learning
about healthy lifestyles and psychological factors, the hybrid event also provided participants with practical
help in @bhc.hu and @meghallgatunnk.online experts on how to manage stress, get restful sleep and have
a healthy diet. Each time, the presentations were attended by 30–50 people on the spot, but there was also
a lot of interest online, so in the future the Health Day will be held every six months.
Since 2020, Bank employees have had the opportunity to consult specialists of the @meghallgatunk.online
portal (coaches, psychologists, mental health professionals) free of charge. Feedback suggests that the
service is useful and that more and more people are using this kind of help. From its launch unt il September
2023, more than 2,000 counselling sessions were held to deal with work and family problems or health
issues. In 2023, employees participated in 960 consultation sessions. In special cases (in 2023, there were
several non-work-related deaths in the Bank), we held a series of group consultation to process grief. During
the year, office massage, specifically tailored for office sedentary workers, was made available with the help
of medical masseurs.
HU RO MD OTP Bank and OTP Bank Romania have several hotels where 96 employees and their families
(284 people) could stay at a discounted rate, while the top performers could stay for free. In addition to OTP
Bank and OTP Bank Romania, some of the Hungarian subsidiaries and employees of the Moldovan
subsidiary bank have the possibility to benefit from discounted rates at these hotels.
Sports
The OTP Group encourage its employees to do physical exercise. In 2023, OTP Bank organised its
traditional central sports day, which was also attended by the employee s of the Group’s Hungarian
members. The primary objective of OTP Bank’s community sports application scheme is to encourage
workplace communities (at least 10 strong teams) to engage in joint sports activities. In 2023, the Bank
increased the budget for the call for proposals, which resulted in more than 173 events, mobilising 6,135
employees. In order to promote sport, sports-related articles were regularly published on the internal
communication platform and the Bank took over the registration fee for All YouCanMove and, to a limited
extent, the entry fee for people doing individual sports. The bank’s sports clubs regularly organise home
championships, which are open to employees of subsidiaries as well.
A wide range of sporting opportunities were also available in 2023 among member companies. These
typically involved the organisation of sports days, the participation of company teams in sports competitions
and the funding of sports clubs.
RS The Serbian subsidiary organised an OTP All Star sports day with the participation of 500 people and
supported the active participation of employees in local sports competitions (Business Run).
AL The Albanian subsidiary held a volleyball and football tournament for the purposes of teambuilding.
UA In Ukraine, a traditional sports day was organised and a running club is run.
MD The mission of the CKB Mission Possible Team is to build a community of people working in different
areas. In 2023, 300 people participated in activities such as hiking and boat trips.
To promote physical activity, several member companies run or make available exercise and fitness
programmes for their employees.
SI SKB Bank was awarded the WAC (Workplace Active Certification) certificate in 2023 for its achievements
in 2022. The bank offers a variety of sports and clubs for recreational sports and competitions. In 2023, a
Bankathlon sporting event was organised for the employees of the NKBM and SKB. The NKBM sports club
also has a hiking section, which organised 8 mountain hikes in Slovenia in 2023.
UZ The Uzbek subsidiary bank its employees the opportunity to exercise regularly in the fitness centre. A
special fitness programme was offered for women. The trade union is actively involved in organising sporting
events in the company, and twice a year it organises tourist trips to cities in Uzbekistan.
RO The Body Awareness Program of OTP Bank Romania was established with a view to supporting sports,
healthy eating and awareness; it contributed to the achievement of the objectives with a series of video s
presenting sports exercises, mindfulness training and 3 sports camps.
Occupational health and safety and accidents
GRI 3-3 The OTP Group makes every effort to maintain safe working conditions. The low number and
severity of accidents is proof of the effectiveness of these efforts. From an occupational health and safety
perspective, the Banking Group’s employees are mainly employed in low-risk jobs, the framework for
occupational health and safety is regulated in accordance with local legislation and occupational health and
safety activities are carried out in accordance with it. In 2023, OTP Bank’s Occupational Health and Safet y
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Code was revised. A more significant change is that the scope of the responsibilities and professional
training of the person responsible for occupational health and safety has been specified due to the changes
in the law on occupational health and safety, and the regulation has been amended to include printing and
logistics activities; occupational health has been modified for certain jobs. The most important work and fire
safety task in 2023 was the inauguration of the data centre, which is a priority a rea from a safety point of
view.
The employees of the Banking Group also receive regular training in occupational health and safety in
accordance with local legislation. OTP Bank employees participate in annual training, which goes beyond
the expectations. Group-wide cooperation with the Hungarian subsidiaries has been strengthened, and the
renewed e-learning material on occupational safety and fire prevention has also been shared.
GRI 403-9 At OTP Bank, the rate of work-related accidents64 increased to 1.5 in 2023, which is good
compared to the national statistical average (4.4 to 5 accidents at work per 1,000 employees). For the OTP
Group, the indicator remained unchanged from the previous year at 2.0 in 2023. Accidents were investigated
in accordance with the relevant legislation. At Group level, accidents at work continue to be predominantly
work-related, occurring in the Banking Group’s facilities, while walking (falls, slips) or during manual
materials handling.
GRI 403-9 Work-related injuries
OTP Bank
OTP Group
2020 2021 2022 2023 2020¹ 2021 2022 2023
Number of accidents²
Accident rate²
Number of high-consequence injuries
Serious accident rate
(pcs)
(per 1 million hours worked)
(pcs)
(per 1 million hours worked)
18
22
1.35 1.05
0
-
0
-
9
0.5
0
-
16
0.88
0
-
42
0.63
1
0.02
85
85
77
1.11 1.27 1.13
6
0.01 0.09 0.07
5
1
¹ OTP Bank Ukraine was unable to provide data and is therefore not included in the projection base.
² Accidents subject to reporting.
The number of hours worked was 18,084,383 for OTP Bank and 75,368,421 for OTP Group in 2023. The data reporting covers all employees.
It is an important achievement at OTP Bank that still no accident occurred while employees worked from
home, just as there were no accidents involving supervised employees or persons working on company
premises either in 2023.65 External workers working at OTP Bank’s premises are provided, and familiarise
themselves, with the occupational health and safety regulation upon the handover of the worksite and they
are obliged to report any accident occurring at the premises.
First aid
In the summer of 2023, our employees successfully provided first aid on several occasions after several
cases of customers becoming unwell due to heatwaves. These cases highlight the crucial importance of first
aid training. The training will continue in 2024 to ensure that all the Bank’s organisation units are fully
equipped with first aid personnel, further enhancing the safety of employees and customers.
64 Number of work-related injuries per 1,000 employees
65 Of the foreign subsidiaries, DSK Bank, OTP Bank Albania, and OTP Bank Moldova were unable to provide data.
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6. COMMUNITY ENGAGEMENT
6.1 Activities aimed at improving financial literacy
This chapter describes the activities related to the following relevant topic:
ST8: GRI 3-3 Strengthening of financial awareness in vulnerable groups
Impact: Financial products and services may be highly complex – financial literacy is indispensable for one
to understand such products and services, for making responsible and good financial decisions as well as
for accomplishing one’s objectives. This knowledge is harder to acquire for vulnerable groups (including
young people), even though it is of above-average importance for them in creating a stable financial
background. The OTP Group has the knowledge to expand the knowledge of these groups.
This material topic supports the achievement of the following SDGs:
Engagement: The OTP Group is committed to the development of financial literacy, which is the focus of
its community engagement. To reach target groups as widely and as effectively as possible, we are also
working to promote financial awareness through our own foundation and through partnerships with other
organisations. We are constantly looking for ways to make our work more effective. The OTP Group strives
to communicate clearly and understandably about its products and services and uses a number of tools to
support understanding, which are described in @chapter 3.1.
Objectives:
Raising awareness of the future among people
Deepening financial literacy and raising awareness
Acts: Running a wide range of financial education programmes through its own foundations
Training programme for the socially disadvantaged
Cooperation with NGOs, professional organisations and universities
Encouraging volunteering in the development of financial literacy
Stakeholder engagement/compliance: Extensive cooperation with NGOs and professional organisations,
local communities, conducting research, involving employees and clients, requesting feedback on results
and experiences, transparent communication on donation activities, publishing ESG strategic objectives.
Details of the relevant thematic activities, their results and the evaluation of their effectiveness are presented
on the following pages.
For further information visit our @website.
The OTP Group is a dedicated supporter of financial literacy across the region. Member companies
are helping in many ways to ensure that today’s young people make informed financial decisions as
tomorrow’s adults.
In 2023, the OTP Group spent 23 percent more on the development of financial literacy within the scope of
its donation activities compared to the previous year. The largest proportion of participants in train ing and
programmes were from the OC training programmes.
FN-CB-240a.4, Own indicator - Information on the development of financial literacy, OTP Group, 2023
Number of participants in the company’s own and the OK training programmes
Number of participants in trainings implemented in cooperation with other organisations
Donation for the development of financial literacy
Sponsorship for the development of financial literacy
49,054 persons
10,409 persons
HUF 1,176 million
HUF 167 million
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OTP Bank is primarily active in the development of financial literacy in Hungary through the OTP Fáy András
Foundation. The foundation’s mission is to raise awareness of the future among people. It provides free of
charge training mainly for primary and secondary school students and young adults in economic and
financial education, career and vocational orientation and sustainability topics, supplemented by social skills
development. In addition to the practice-oriented, experience-based in-person and digital training, the
Foundation’s activities increasingly focus on awareness-raising and attitude-shaping educational activities
for the general public.
In 2023, the Foundation has further increased the number of students regarding in -person and digital
education:
• More than 37,000 persons took part in training sessions, an increase of 27 percent in a year. The
result is due to the expansion of the range of partners in public education and at universities, the
extension of cooperation, the development of e-learning courses and the popularity of in-person
training.
• The number of participants in adult education almost tripled, while the number of those involved in
training programmes for young people increased by 14 percent. The number of peop le completing
e-learning modules for young people has increased by almost a quarter. The youth courses continue
to be mostly attended by secondary school students.
FN-CB-240a.4 Number of participants in training programmes in 2023 (No. of persons)
Training programmes for young people (No. of persons)
In-person training
Digital training
Total
In-person training
Digital training
Total trainings
Participants of 24 different courses
of which disadvantaged participants
those taking 43 different streamed learning materials
of which disadvantaged participants
those taking 37 different 45-minute e-learning materials
of which disadvantaged participants
Adult education programmes (persons)
2 types of training
of which disadvantaged participants
3 types of e-learning training
of which disadvantaged participants
13,139
606
6,377
641
12,568
659
32,084
1,253
166
3,780
78
5,033
Disadvantaged participants: students: participants in the organization of civil organizations dealing with young people, those coming from regions
disadvantaged by law, as well as the teacher's statement on the number of officially registered disadvantaged students in his class in youth training.
Adults: people from disadvantaged regions defined by law.
At the end of 2023, the Foundation’s training portfolio consisted of more than 100 training materials, two
thirds of which were in digital format. The number of live streamed interactive training courses and e -learning
materials for youth and adults has increased significantly. In 2023, the focus was on reviewing and
qualitatively transforming the training portfolio, preceded by extensive testing. The methodological, thematic
and visual renewal of the entire secondary school portfolio was launched, incorpor ating Finnish teaching
methodology and good practices. At the same time, adult education programmes have been fine -tuned.
In 2023, all three of the Foundation’s adult learning materials will be available to university partners.
• The Modern Entrepreneurship online course on starting and running a business in blended
learning66 format was launched as a stand-alone subject in the first semester of the ELTE 2023/24
academic year.
• The Financial Awareness, Career Planning – Decisions and Consequences competency
development training was offered as a separate module at the University of Nyíregyháza and the
Hungarian University of Agricultural and Life Sciences in 2023.
• The Financial Basics Programme for young adults, in e-learning format, has been integrated into
the curricula of several universities (Hungarian University of Agricultural and Life Sciences,
University of Nyíregyháza, Pannon University and Budapest Business School).
In total, 148 public education institutions became partners of the Foundation during the year. Based on a
new concept, the network of model and partner schools of the OTP Fáy András Foundation was
established, which opened up the possibility of wider cooperation (curriculum testing, market research, joint
events, charity initiatives, etc.). The number of model schools has been increased to four, including the
66 Blended learning is a form of education that combines elements of online learning and traditional classroom teaching .
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ELTE Radnóti Miklós Teacher Training School, the leader in the ranking of national schools. In addition, the
Foundation has signed partnership agreements with 19 primary and secondary sch ools.
In the area of adult education, the network of university and vocational training partners has been
expanded and cooperation deepened. The Foundation established strategic partnerships with 8 universities
and students from 11 vocational training centres participated in adult education courses in 2023. Through
relations with universities, joint research, curriculum development, hosting interns and methodological
presentations have also been carried out.
In order to further reach young adults, the Financial Basics Programme was also taught at the Jesuit Roma
College, and workshops and interactive presentations were given by representatives of the Foundation at
the GEN Z Festival. The event was organised for the first time in 2023 with the aim of providin g Generation
Z with information and opportunities in the areas of financial awareness, career development and home
purchases.
In addition to students and young adults, teachers remain an important training target group for the
Foundation. The teacher training programme organised jointly with Eötvös Loránd University continued in
2023.
In addition to educational programmes, the Foundation also held awareness -raising and educational events
and communication programmes:
• The OTP Fáy Educational Innovation Award aims to recognise and promote outstanding and
innovative practices in the field of educational tools and methodologies. Almost 300 applications
were received in the three categories announced. The Grand Prize winner was Redmenta Edutech
Kft. with their AI-based content creation application. In addition to the net prize of HUF 5 million,
they also received patent, legal, financial-investment and communications support.
• The Foundation organised a professional conference entitled “Education in the Future –
Competences for the Future” for leaders in public education, higher education and the labour
market.
• The “Fáy Fröccs” podcast series has been launched. The discussions aim to raise public
awareness of financial awareness and future awareness. In 2023, the guests were Judit Polgár
(chess player and school curriculum developer) and Katica Nagy (actress and sustainability
influencer).
• The Foundation’s staff organised awareness-raising activities at events and festivals. For five
weeks, education camps were held for primary and secondary school students in Budapest and in
the countryside. In 2023, for the first time, financial training sess ions were held at the programming
camp of the Hungarian Association of Lead IT-Managers and at the “FunWeek” camp of the
Hungarian Association of the Deaf and Hard of Hearing. They organised a financial quiz in the
framework of the Jászberény Book Thursday programme, presented interactive workshops and
playful exercises on vocational guidance at the Nyíregyháza SzakMAfest, and on sustainability at
the Climate Heroes conference organised by UNICEF.
In their professional work, the OK Training Centres in Romania and Moldova draw on methodologies proven
in Hungary and they shall similarly develop strategic partnerships with prominent actors in the field of
education: NGOs, educational institutions and teacher communities. Their training and programmes reached
1,822 persons in Romania and 9,400 persons in Moldova.
RO The popular free training programmes of the OTP Bank Romania Foundation continued in 2023:
•
•
•
young adults (687) were provided training through the Financial Fitness training programme,
startAware, a vocational orientation programme for secondary school students, was held with 45
participants,
the Education Programme in Miercurea Ciuc provided experiential financial education to 640 local
secondary school students.
They also launched a podcast series called the Light Financial Podcast with Itsy Bitsy Radio to promote
financial literacy to a wider audience.
MD In three and a half years of operation, the OK Foundation in Moldova has become a local reference
centre for financial education. During European Money Week and Savings Week, the Foundation’s financial
experts gave presentations and workshops. A dedicated financial management training programme for
SMEs was held. During the six-week free training, entrepreneurs learned how to plan their finances
effectively, analyse their financial performance, manage financial risks and make responsible financial
decisions. Since the programme started, more than 500 Moldovan SMEs have participated in the training.
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Collaboration in financial education
Several banks of the OTP Group joined the local implementation of Global Money Week and European
Money Week. In Hungary, the Hungarian Banking Association and the Foundation for Financial Awareness
(Pénziránytű Alapítvány) organised the event for the ninth time under the na me of PÉNZ7 [European
Money Week]. 114 OTP Bank employees mainly gave presentations in the programme aimed to raise
financial awareness. OTP Bank experts accounted for more than a fifth of the volunteers joining the national
programme, twice as many as a year earlier. There was a huge interest in the European Money Week, with
145,000 students from more than 1,100 schools taking part in around 12,000 lessons.
BG HR RS AL UZ UA MD
BG Lectures were also given to students in Bulgaria, where financial fraud was the main topic of the initiative.
HR Employees of the Croatian subsidiary organised several financial workshops for primary and secondary
school students in Pula and Zadar. In addition, on the occasion of World Money Day, financial fraud
prevention was highlighted to the graduating students of the Zadar School of Economics and Business, who
also worked on the project “Protect your money”.
RS On the occasion of the European Money Week, the Serbian subsidiary held workshops for students of
two faculties of the University of Belgrade and launched a post-series of financial education content on its
social media pages.
AL The Albanian subsidiary held training sessions in cooperation with the Albanian Banking Association.
OTP Bank Albania also sponsored the “Take care of your money and build your future” programme element
and the related video making competition.
UZ Ipoteka Bank staff from Uzbekistan also held financial lectures and training sessions in 17 primary
schools, with a total of 425 students attending.
UA The Ukrainian subsidiary implemented three programmes during 2023 in cooperation with the National
Bank of Ukraine. It has joined the “Savings Week” initiative to improve financial literacy among Ukrainian
children. He was also a major sponsor of the “Digital Finance for All” marathon initiative. In addition to the
financial support, its staff gave lectures and workshops on “Financial protection. Bankers’ Profession” on
the basics of digital finance and secure digital banking.
The results of the OTP Self-Provision Index67 show that the financial literacy of the Hungarian population
is still generally weak, going back many years. Survey 2023 shows Hungarian people are talking more and
more about self-provision, but not taking the necessary steps to create a stable financial situation. The main
average of the index remained at 37 points after the rise in 2022. Several factors are behind this, including
the uncertain economic environment and fears regarding the future. Fou r out of 10 respondents have no
savings at all, and a significant proportion of the population think that although their financial situation is
stable, it is a challenge for them to save. 11 percent of the survey participants have pension savings and
only 32 percent plan to save for their future retirement – despite the growing lack of confidence in the state
pension scheme.
OTP Bank joined the roundtable discussion “Every little item counts – Managing finances smarter in the 21st
century” held in the framework of the Brain Bar event. Participants in the discussion explored the
relationship with the future, conscious finance, the psychological mechanisms that inhibit it and possible
solutions with participation of the audience.
Financial education of socially disadvantaged groups
One of the most important objectives of the OTP Fáy András Foundation was to promote the inclusion of
socially disadvantaged people regarding financial awareness. In 2023, three times as many students
(2,15068 persons) from difficult circumstances participated in the Foundation’s training as in the previous
year – 61 percent of them opted for digital training.
The exploratory research, launched in 2022 to develop a specific, tailor -made training programme, was
completed in 2023, leading to the identification of the themes, effective training formats and relevant
platforms.
67 OTP Bank has been conducting surveys for over a decade now to explore the Hungarian population’s self -provision habits and behaviour and their
responses to various economic situations, on a sample of 1,500 18–70 years old bank account holders.
68 The scope of disadvantaged students is defined as: those coming from youth NGOs, those from disadvantaged regions as defined by law and, in
training programmes for young people, a declaration by the teacher of the number of officially registered disadvantaged st udents in his/her class.
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The Foundation continued to work with partner organisations to deliver specific, tailor -made training
sessions:
• With the Szent Ágota Child Protection Service, training sessions were held for young people over 17
years of age who are about to become independent and young adults in aftercare, to help them make
informed decisions about the use of financial resources that will become available once they bec ome of
age.
In addition to the financial education camp organised for the mentors of the Csányi Foundation, the
Parents’ Academy programme continued, with playful financial awareness training sessions for students
and their parents in Kaposvár, Jászberény and Szeged.
•
• The Fáy Forum continued, focusing on creating opportunities for children in difficult circumstances, their
development and motivation. The results of a survey among students aged 12 –16 and their teachers
were also presented on socially disadvantaged students’ attitudes to learning, their vision of the future,
their attitude to money management and their media consumption habits. The presentation was followed
by a panel discussion where practitioners exchanged views on the topic.
BG DSK is committed to supporting SOS Children’s Villages, as part of which they have launched online
financial training courses. Bank staff regularly share their knowledge and experience with SOS young adults
and provide them with financial advice.
UZ In the framework of the “Women in Business” project, Ipoteka Bank, in partnership with the Business
Women Association, organised training sessions for women to help them find their way in the financial world
and become successful entrepreneurs.
6.2 Community engagement
The OTP Group is an active member of local communities. A dominant market share in multiple
countries entails responsibility as well: the resulting tasks include reduction of social inequalities,
contribution to creating opportunities and giving answers to current local challenges. The entire
OTP Group pays particular attention to alleviating social hardship, ensuring sustainability and
volunteering.
The support provided by OTP Bank has for years been steadily focused – besides the development of
financial literacy – on
•
•
•
creating opportunities: helping the disadvantaged and those in need,
supporting culture and the arts: creating and preserving value,
sports.
The OTP Bank subsidiaries make their own decisions on which local causes and initiatives they support or
sponsor and how they engage their stakeholders in those. Subsidiaries draw on their own expertise and
resources to meet local needs. A common feature of the flagship projects is measurability and cooperation
with organisations. OTP Bank typically supports long-established social and regional cultural projects and
participates in long term cooperation arrangements, overarching decades in cases, which facilitate real
impacts and predictability.
In 2023, the OTP Group spent HUF 5 billion on donations, which is 27 percent more than in the previous
year. The Group spent the most on financial education, which accounted for 23 percent of donations,
followed by social sector, which accounted for one fifth of donations. The dramatic increase in environment al
aid is due to the HUF 840 million pledged to mitigate the natural damage caused by the Slovenian floods.
The cash contribution represented 99 percent of the value of the grants. 69
69 There is no complete data available on the value of supports in kind, so does not reflect their real value.
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In 2023, there were three areas of OTP Bank’s community engagement activities that should be highlighted
in addition to the above:
• humanitarian aid,
•
•
the success of the OTP Donation Platform, i.e. our work to deepen the culture of micro -donations,
the voluntary community engagement of our staff.
Providing assistance in a crisis
The OTP Group represents a culture of cooperation and assistance. The Banking Group responds
sensitively to humanitarian emergencies and natural disasters, working with other organisations to
respond quickly and effectively to crisis situations. Unfortunately, this has been necessary several
times in recent years.
In crisis situations, the Banking Group provides immediate donations, typically in cash and in kind, to support
those in need and also helps with recovery efforts.
SI The members of the OTP Group, the Slovenian NKBM, SKB Bank and OTP Bank have provided a t otal
of EUR 2.2 million (~ HUF 840 million) in aid to the victims of the natural disaster of floods and landslides in
Slovenia. The funding was allocated to voluntary organisations such as the Slovenian Red Cross, the
Slovenian Mountain Rescue Association and the Slovenian Firefighters Association, which were the first to
provide assistance. 18 employees of SKB Bank were directly affected, receiving immediate solidarity aid
from the Slovenian bank. The Slovenian bank also set up community channels to encour age material and
in-kind assistance between employees within the bank. To help the victims of the natural disaster, the two
subsidiary banks also offered special services, including preferential loans for the affected population,
special loans for corporate clients and free of charge transfers to the accounts of humanitarian organisations.
UA In the summer of 2023, the dam at the Kakhovka Hydroelectric Power Plant in Ukraine was destroyed
during the war in Ukraine. The consequences of the dam bursting were catastrophic, endangering the
population of the region and causing serious water shortages as the central water supply was cut off. To
mitigate the damage caused by the broken dam, a humanitarian donation programme was launched within
OTP Bank with the Humanity Social Foundation70. A total of 25,000 bottles of mineral water were donated
to the population from a fundraising campaign organised among OTP Bank employees, worth approximately
HUF 4.5 million. To accommodate Ukrainian families who fled to Hungary because of the Ukrainian-Russian
war, OTP Life Annuity offered another apartment, the furnishing of which was contributed to by the Humanity
70 OTP Bank exercises founder’s rights over the Foundation.
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311,692279956 822,11234079352 566292583619611 595323611647666 9561,171 9581,176 1,8079921,0182988 1,9631,0611,075116198 452615220525726 4687132761,5341,063 2490129126 14613336190185 58382137127140 876585226360516 2123586979 30256173866 05001,0001,5002,0002,5003,0003,5004,0004,5005,0005,5002019202020212022202320192020202120222023OTP BankOTP GroupHUF millionDonations by OTP Bank and OTP Grouphealthcareculturefinancial educationother training and educationsociallocal communitiessportsenvironmental protectionIn the years 2019 to 2021 the financial education and other training and education categories were recorded together.
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
Social Foundation. With their support, an emergency ambulance was equipped with medical devices for the
Arcadia Clinical Sanatorium of the Ukrainian State Border Guard Service.
The Russian-Ukrainian war has also increased the number and value of social and health subsidies provided
by the Ukrainian subsidiary bank. In 2023, one of the most important projects was the su pport of the
Superhumans Center, where wounded Ukrainians are provided assistance, rehabilitation and prostheses.
They also raised money for people in need of prostheses by organising charity fairs.
HU In Hungary in 2023, the most damage was caused by violent summer storms due to increasingly extreme
weather. OTP Bank donated HUF 10 million to Jánoshida, which suffered serious damage, to cover the cost
of storm damage restoration works.
Developing a culture of donation
OTP Bank makes efforts – through its services and electronic channels, and by involving its
employees – to make donation, as an internal motive and practice, become part of everyday life.
The Bank will continue to offer the opportunity to donate micro-donations of HUF 100-200-500 through its
digital banking channels and ATMs in order to promote the culture of donation. In 2023, customers and
employees offered a total of HUF 270 million in donations to 9 social organisations helping people in need
on the donation platform. The success of the programme is proven by the fact that the amount of donations
increases year on year. The organisations supported are recognised for their activities and the grants help
to improve the living conditions of disadvantaged people and to strengthen co mmunities. At the @website
of OTP Bank’s micro-donation programme, a list of supported organisations and a detailed description of
their programmes can be found.
Names of organisations sponsored in 2023
Amigos for Children
Szent Ferenc Hospital of Budapest
“Hintalovon” Children’s Rights Foundation
InDaHouse Hungary Association
“Kaptár” Day Care Centre
Hungarian Maltese Charity Service
Hungarian National Association of the Blind and Visually
Impaired
International Children’s Safety Service
International Children’s Safety Service
“RÉS” Social and Cultural Foundation
Use of aid
Supporting sick children
Recovery of heart and lung transplant patients
Responsible adults for the protection of children
Developing disadvantaged children
Accessible bus for young people with special needs
Kommandó – Rebuilding burnt houses
Guide dog training
Mobile dental clinic for the screening of disadvantaged
children
Support for sick children in need
Upgrading shelters for women and families in crisis
Two subsidiary banks continue to facilitate regular and small amount donations:
BG The Bulgarian bank’s DSK Helps! platform, launched in 2022, will provide an opportunity to donate. The
projects supported on the platform are focused on four main areas under the Bank’s CSR policy: children
and education, nature conservation, arts (including their “City as Its People” development project to improve
the urban environment), employee engagement and volunteering.
HR OTP Bank Croatia has continued its joint programme with Mastercard, “Round up!”, which allows
customers to round up the total amount of their purchases. The difference will be provided to the chosen
charity organisation. In the 4 years since its launch, EUR 800,000 (~HUF 300 million) has been donated to
children’s wards in 8 hospitals in Croatia, with contributions from 18,000 customers. In the 2023 campaign,
the children’s wards of Zadar Hospital and Osijek Clinical Hospital Centre benefited from the HUF 80 million
donation.
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Volunteering by our staff
BUSINESS REPORT 2023 (CONSOLIDATED)
Volunteering is a tradition for most members of the OTP Group. We encourage initiatives and are
happy to contribute to the efforts of our staff.
Almost all subsidiaries organise corporate volunteering activities or create opportunities to join. At group
level, 10 percent of employees are engaged in volunteer activities.
OTP Bank’s OTP Local Value internal voluntary application programme was successfully implemented again
in 2023. This time, 71 volunteer teams won a grant of HUF 200,000 to help a number of instituti ons, local
communities and their surroundings. The teams were able to manage a total of HUF 14.2 million and the
1,267 volunteer colleagues provided support to nearly 19,595 people in need. In 2023, the Bank extended
the tender opportunity to a significant number of its Hungarian subsidiaries. The Humanity Foundation
continued to support the teams as a mentor.
The employees of OTP Bank collected donations of money and goods for the Hegyközi Elementary School
and its four other member schools and their students as part of the donation campaign launched on Family
Day. Thanks to staff donations, the campaign raised HUF 1.1 million, which was doubled by the Bank. The
money was used to improve the school’s infrastructure.
This year, the year-end fundraising campaign addressing employees raised a record HUF 3.5 million, which
was matched by the Bank and the Humanity Social Foundation with a further HUF 4 million. Thanks to the
initiative, 150 disadvantaged families received a donation package of durable food, and t hree kindergartens
received various toys, development tools and kindergarten supplies.
The number of voluntary initiatives among Hungarian subsidiaries has increased. Many of them have
provided additional help to organisations supported by the company in t his way. Staff have mainly helped
disadvantaged and sick children through fundraising and supported schools through their work.
OTP Bank and most of the Group companies have a long tradition of blood donation, one of the most selfless
forms of volunteering. Every year, more than a thousand bank employees sign up to donate blood to support
uninterrupted blood supply. OTP Bank joins the Bank Blood Donors Week every year, as it did in 2023.
HR The Croatian subsidiary is one of the main sponsors of the “Croatia Volunteers” movement, which was
announced for the 13th time in 2023. Bank staff in six cities collected donations of food and hygiene products
for the Red Cross. They have also contributed to two building renovations and helped 350 disadvantaged
children start school.
RO During 2023, the Romanian subsidiary bank participated in 8 volunteer campaigns in partnership with
charities, specifically supporting poor children in disadvantaged communities. They have helped
disadvantaged schools with painting and planting activities in the EduPlant programme, filled backpacks for
poor children starting school in their “Hátizsák” [Backpack] programme, provided books and furniture for a
school library, and ran a sustainable clothing donation campaign.
Voluntary activity performance indicators, 2023
Participants
Time spent doing voluntary activity
Number of blood donors
of,
number of
percentage
headcount (%)
hours
persons
relative
to
total
OTP Bank
1,177
OTP Group
4,222
11.1
9,416
1,852
10.0
14,025
2,621
In 2023, OTP Bank announced the Responsible for Each Other Award with a renewed content and
approach. One of the prizes awarded at the year-end OTP Gala is the award, which has been given since
2016 to the teams that have been most active and versatile in implementing social and environmental
responsibility programmes. An important change in the content of the award was that each team could apply
with a single, comprehensive, long-term project. The award was given to the staff of the Document
Management Services Department, who are regular and dedicated supporters of Bethesda Children’s
Hospital. Their exemplary project was built on their expertise: they developed a new professional registration
system for hospital X-rays, and also separated industrial silver in X-rays for recycling.
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Priority grants, programmes
BUSINESS REPORT 2023 (CONSOLIDATED)
HU Thanks to the support of OTP Bank, the Children’s Safety Service’s dental screening bus was able to
continue its work in 2023, during which it screened more than 3,300 children free of charge. The donation
of HUF 50 million was used to renovate the bus and purchase equipment for screenings. The bus visited
more than 11 locations across the country, including communities where dental care is difficult for children
to access.
BG DSK Bank has been partnering with SOS Children’s Villages in Bulgaria for 12 years. During this period,
424 children and young people in SOS families and homes were helped through corporate donations and
donations made available through the ATM network and the Bank’s online banking service. A further 469
young people were supported through the “Start of Independent Life” and “Pathways to Freedom”
programmes, and a further 3,900 children received support through the SOS Counselling Centres and the
“Family Support and Separation Prevention” project.
HR In 2023, the Croatian subsidiary’s donation programme was again open to organisations in the
categories of youth, education and science, culture, historical and traditional heritage, environment,
humanitarian projects and sports. On this occasion, the jury selected 34 projects. Over the past twelve years,
it has helped to deliver more than 500 projects of value to the development of communities and society as
a whole.
OTP Class Grant
In 2023, OTP Bank launched the OTP Class Grant for the first time, with the aim of supporting school
communities in addition to raising financial awareness. Fifth grade classes could enter their ideas in two
categories – community development and cleaning up the classroom or the school environment. Around
300 entries were received in the form of a 2–3 minute creative video and a budget plan was also required
for entering the competition. In addition to the four classes, each of which received a cash prize of HUF
500,000, two OTP Fáy special winners were also announced, who were given the opportunity to participate
in a half-day practical financial training course at the Budapest Zoo. The winners used the prize money for
a class trip to Prague, sign language training and a trip with hearing-impaired children, as well as to improve
the school yard and buy sports equipment and replace cabinets in changing rooms.
Sponsoring of sports
OTP Bank is a committed supporter of Hungarian football, especially youth football. The OTP Bozsik
Institutional Programme contributes to the education of young players in Hungarian football. The
2023/2024 season saw an increase of more than 10 percent in the number of registered players, which also
means that this was the highest number of school football players (135,796) in the history of the programme.
Girls accounted for 28 percent of the players, up 13 percent in a year to 38,646. In 2023, 15 percent more
clubs joined the Bozsik programme than in 2022. 70 percent of the newly involved associations operates in
disadvantaged municipalities.
SI RS The OTP Group is a key sponsor of the national Olympic team in several countries, including Slovenia
and Serbia, in addition to Hungary.
MD OTP Bank Moldova is also committed to the development of football and youth football development.
With their support, hundreds of children can once again do sports at the Zimbru Football Academy. In 2023,
the bank sponsored members of the Moldovan Paralympic Team who represented the country at the Tokyo
Paralympics Games. The grant was used to cover travel and other expenses of the athletes.
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BUSINESS REPORT 2023 (CONSOLIDATED)
7. ENVIRONMENTAL POLICY AND ENVIRONMENTAL PROTECTION MEASURES
Information and data relating to environmental protection are, in accordance with the Accounting Act,
presented separately. The direct environmental impacts of the operations of the Banking Group, as well as
the Group’s awareness raising activities, are described in this chapter. The environmental risks relati ng to
the provision of financial services are managed and the relevant environmental opportunities are utilised in
the framework of the ESG strategy, therefore these activities are discussed in the chapters of the Non -
Financial Statement.
This chapter describes the activities related to the following relevant topic:
GRI 3-3: 305 Greenhouse gas emissions from operations
Impacts: The operational functioning of OTP Group requires the use of natural resources and energy,
however, the resulting environmental impact is significantly lesser than the indirect impacts associated with
the provision of financial services. Among the environmental impacts of our operations, greenhouse gas
(GHG) emissions have been identified as a key sustainability topic, but we are also working to mitigate our
impacts beyond it. Emissions exacerbate climate change and damage natural resources. Reducing
emissions will help fight climate change. The practices of the Banking Group also have an awareness raising
impact in the segment of environmental protection and the promotion of environmental awareness in its
operations is a major element of the regional leading role undertaken by the Group in relation to the green
transition.
This material topic supports the achievement of the following SDGs:
Engagement: Our objective is to reduce the environmental impact of our operations. We are committed to
the efficient use of resources, carbon-neutral operations and economy. Encouraging environmentally
responsible behaviour in society through our employees and customers. We report transparently on the
environmental impacts stemming from our operations, focusing on energy consumption and GHG emissions.
Group members set targets to achieve carbon neutrality.
Acts: Reporting on the environmental impacts of the Group’s operation
Energy efficiency investment projects
Purchase of green electricity, use of renewable energy sources
Reducing paper use through digitalisation; using recycled paper
Rationalising business travel
Improving waste management
Awareness-raising activities
Stakeholder cooperation: We work with service providers and NGOs to implement environmentally
responsible practices. We do a lot to raise the awareness of our customers and our employees.
Details of the relevant thematic activities, their results and the evaluation of their effectiveness are presented
on the following pages.
For our basic principles concerning environmental protection and the fundamentals of our practices, please
visit our @website.
OTP Bank’s ESG strategy has set a target of full carbon neutrality by 2030 for Scope 1 –2 emissions, with
the net carbon neutrality target achieved in 2023. In 2022 the subsidiary banks set themselves goals
concerning environmental protection as well in relation to their operations under their respective ESG
strategies, focusing primarily on energy consumption, carbon dioxide emission and pa per use.
SI RO RS ME Slovenian SKB has set a target of net carbon neutrality for Scope 1–2 emissions by 2023,
the Romanian subsidiary by 2025 and the Serbian subsidiary by 2027. CKB is expected to become carbon
neutral by 2035.
GRI 2-13 Environmental protection at OTP Bank is regulated by the Environmental Policy. Environmental
policies are in place at some of the subsidiary banks. OTP Bank prepares annual internal reports on the
environmental impact of its operation, for approval by the manager in charge of this function. To enhance
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knowledge relating to the performance of work, along with general knowledge, every OTP Bank employee
is provided with environmental training once every two years.
Energy consumption and carbon dioxide emission
GRI 305: 3-3, TCFD IV.C Even with the two major acquisitions – Ipoteka Bank and NKBM – OTP Group’s
energy consumption did not increase drastically, as several members of the Banking Group significantly
reduced their energy consumption (by up to 10–20 percent). Consumption decreased most in relation to
heating (mainly natural gas and district heating), while consumption related to car use increased and
electricity usage decreased to a lesser extent at the member companies. OTP Bank’s total energy
consumption decreased by almost 10 percent compared to 2022, again largely due to the use of heating
fuels.
At the Group level, the reduction in consumption was driven by the savings measures implemented, which,
in addition to environmental considerations, were also encouraged by the significant price increase in 2022
and a milder winter. In several cases, consumption was moderated by timers during the period of non -use,
and changes in the property portfolio and moves also affected consumption trends. Some of the team
members educated colleagues on the functioning of the office heating and ventilation system and how to
set the temperature correctly.
The fact that the OTP Group continuously carries out renovations and modernisations at both its central
buildings and in its branch network also reduces consumption, and improving energy efficiency is an
important aspect of investment projects. In 2023, the modernisation of heating systems, the widest possible
use of LED lighting and the installation of additional motion sensors were again the most common types of
energy efficiency investments. Two subsidiary banks carried out energy efficiency audits. Duri ng the
replacement of air conditioning units we make sure that the new units use environment -friendly coolants.
BG 14 buildings of DSK Bank have been energy audited and issued with energy efficiency certificates. The
subsidiary bank also carried out a major heating upgrade and introduced a building management system in
6 buildings.
SI SKB Bank in Slovenia carried out energy audits at 16 locations, including its headquarters. According to
the results, lighting replacements and other investments will be imple mented. An energy efficiency
monitoring system has been installed at NKBM.
RS The Serbian subsidiary has replaced its old air conditioners with devices using environmentally friendly
refrigerants. The bank increased the number of areas with LED lighting by 30 percent compared to the
previous year and installed motion sensors in toilets.
By means of the 2023 projects aimed at improving energy efficiency and at using renewable energy OTP
Bank saved a total of 2,058 GJ energy. The entire OTP Group saved 7,745 GJ.
The Banking Group is also expanding its own renewable energy power plants, with significant new solar
capacity installed in 2023. At Group level, our systems generated a total of 3,330 GJ of solar energy, 64
percent more than in 2022. OTP Bank’s heat pump production decreased significantly because the archives
using geothermal energy moved to another site.
BG In 2023, a solar PV system with a capacity of 201 kW was installed on the 3 buildings of DSK Bank.
HR The Croatian bank installed solar panels at two sites in 2023, with a capacity of 48 kW. The HEP Opskrba
service provider uses the green electricity surcharge on energy efficiency improving renovations of social
institutions, including schools, pre-schools, kindergartens and old people’s homes.
RS The Serbian subsidiary bank has also installed solar panels on one of its buildings.
UZ Bank Ipoteka has installed 849 kW of solar panels on its headquarters’ building and at its branches. By
continuing to invest, the bank expects a 30 percent reduction in electricity consumption.
The energy consumption of the OTP Group71 in 2023 was 1,107 thousand GJ, practically the same as in the
previous year. Electricity accounts for around half of the Banking Group’s energy consumption, so increasing
green electricity procurement reduces carbon emissions. In 2023, OTP Bank, the two Slovenian
subsidiaries, OTP Bank Croatia, OTP Bank Serbia and OTP Bank Romania also used predominantly green
electricity (green electricity procurement cannot be fully implemented for leased areas) 72.
71 Direct and indirect energy consumption.
72 Green electricity procurement is not available in all countries where the Banking Group operates.
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BUSINESS REPORT 2023 (CONSOLIDATED)
Natural gas
Mineral vehicle fuels
Other non-renewable fuel
Total non-renewable fuel sources
Biogenic vehicle fuels
Total renewable fuel sources
Electricity
Green electricity (GO) 2
District heating
Total indirect energy purchased
Self-generated renewable energy
Total energy consumption3
Total energy consumption per employee4
Share of renewable energy
GRI 305: 3-3, 302-1 Energy consumption within the organisation (GJ) – OTP Bank
2019
65,594
31,829
156
97,579
-
0
129,442
N/A
21,584
151,026
2,005
250,610
28.14
N/A
2021
71,219
31,741
585
103,545
2,247
2,247
126,112
N/A
25,970
152,082
5,141
263,014
26.73
N/A
2020¹
63,827
29,444
152
93,423
1,360
1,360
127,537
N/A
24,244
151,781
5,166
251,730
26.75
N/A
2022
62,539
34,651
3,501
100,691
2,615
2,615
139,205
N/A
22,371
161,575
4,053
268,934
26.17
N/A
2023
50,066
37,253
2,711
90,030
2,821
2,821
4,614
128,181
18,597
151,392
1,312
245,555
23.19
54%
¹ Also includes the consumption of the former Monicomp and eBIZ.
2 Purchases of green electricity certified by guarantee of origin (GO) will be indicated separately.
3 Deviates slightly from the figures in the Annual Report up to 2021 because the finalised consumption data were received at a later date.
4 In 2019 based on statistical headcount, from 2020 based on average full -time staff numbers.
The energy consumption data are derived from metering; solar energy and part of the heat pump energy is estimated based on manufacturer information
in the absence of a meter. Where necessary, we used the calorific values taken from the National Inventory Report (NIR) from 2022 onwards, and
previously the EU regulation and DEFRA values, to convert the consumed quantities into energy.
Natural gas
Mineral vehicle fuels
Other non-renewable fuel
Total non-renewable fuel sources
Biogenic vehicle fuels
Renewable fuel
Total renewable fuel sources
Electricity
Green electricity (GO) 4
District heating
Total indirect energy purchased
Self-generated renewable energy
Total energy consumption
Total energy consumption per employee
Share of renewable energy
GRI 305: 3-3, 302-1 Energy consumption within the organisation (GJ) – OTP Group
2023
243,745
140,895
57,078
441,719
6,290
0
6,290
317,182
227,349
111,108
655,639
3,395
1,107,043
25.58
21%
2022²
272,624
132,183
53,281
458,088
7,576
0
7,576
525,411
N/A
94,875
620,286
5,056
1,091,006
29.22
N/A
2021²
308,237
113,153³
31,327
452,717
5,583³
0
5,583
507,376
N/A
112,036³
619,411
5,923
1,083,635
27.49
N/A
2020¹
134,738
79,248
1,054
215,040
1,949
134
2,083
438,810
N/A
86,514
525,034
6,855
749,302
20.27
N/A
2019
143,139
99,801
2,194
245,134
-
134
134
404,040
N/A
87,5745
491,614
6,563
743,445
20.37
N/A
¹ Consumption of former Expressbank and OTP banka Srbija a.d. Beograd is reflected in the data from this date.
² Full consolidated corporate circle.
³ In 2022 corrected data owing to calculation error, the Banking Group’s total energy consumption is 0.7% higher than the fig ure published earlier.
4 Purchases of green electricity certified by guarantee of origin (GO) are reported separately from 2023.
5 The district heating figure of OTP Bank Russia is an actual measured figure, significantly above the estimated consumption of prior years.
The energy consumption data originate primarily from metering, in the case of certain minor consumptions they come from calculations; so me of the
solar energy and the heat pump energy is estimated based on information from the manufacturer. Wherever necessary, the a mounts consumed were
converted into energy from the year 2022 on the basis of calorific values taken from the National Inventory Report (NIR) and on the basis of the
EMEP/EEA guide. Earlier we used values from EU regulations and DEFRA.
The table shows the consumption of companies acquired in 2023, during the year, for the full year 2023, in line with the recommendations of the G HG
Protocol.
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GRI 305: 3-3, 305-1, 305-2, TCFD IV.b OTP Group’s Scope 1 and Scope 2 CO2e emission (t)
Direct (Scope 1)
by vehicles
from natural gas consumption
from air conditioners 2
other non-renewable energy
Indirect (Scope 2)
Indirect location-based
from electricity
from district heating
Indirect market-based
from electricity
from district heating
Total (Scope 1 + 2) location-based
Total (Scope 1 + 2) market-based
Total (Scope 1 + 2) with carbon offset
Per employee (regional)
Per employee (market-based)
Per employee (with offset)
Emissions intensity per turnover (per
million HUF, market)
Biogenic emissions4
OTP Bank
2021
2022
2023
2019 2020 1
2023
2018
6,779 6,078 6,548 6,670 6,005 14,564 18,594 15,282 29,583 29,680 31,270
2,272 2,123 2,280 2,521 2,706 6,938 7,204 5,738 8,2533
9,752 10,324
3,686 3,587 4,003 3,515 2,814 6,053 8,044 7,572 17,323 15,269 13,627
1,708 3,310
2,951 4,009
1,536 3,140 1,892
80
206
1,838
2,170
811
10
308
177
358
10
228
37
420
214
2021
2022
2019
37
OTP Group
2020
981
874
874
1,102 1,004
3,048 3,935 3,904 5,1583
835
8,640 8,350 8,369 1,005 1,110
410
7,766 7,369 7,286
701
1,083
981
10,786 9,883 9,904 11,496 11,648 45,130 47,947 52,711 56,935 56,035 62,385
9,912 8,902 8,802 10,491 10,813 42,082 44,012 48,807 51,778 51,601 56,356
4,434 6,029
N/A 47,334 53,196 58,5623 44,021 39,379
N/A 43,399 49,292 53,103 39,442 33,356
4,578 6,024
N/A
17,565 15,961 16,452 18,165 17,653 59,694 66,541 67,993 86,5193 85,715 93,655
N/A 65,928 68,478 88,1463 73,701 70,649
15,419 14,428 14,917 7,675 7,115
N/A 65,928 68,478 87,785 66,701 60,874
485
15,419 14,428 14,917
2.16
1.72
1.67
1.67
1.63
N/A
0.67
1.52
1.41
N/A
0.05
1.52
3,935 3,904 5,4593
675
1.77
0.75
0.07
2.19
2.24
2.24
1.97
N/A
N/A
1.84
1.85
1.85
1.7
1.53
1.53
2.30
1.97
1.79
1.82
N/A
N/A
166
839
N/A
-
N/A
97
N/A
0.014 0.012
N/A
N/A
161
187
202
1
1
N/A
140
N/A
399
0.044 0.032
539
539
1 Also includes the consumption of the former Monicomp and eBIZ.
2 Headcount-proportionate estimate based on the figures from the OTP Group’s member companies that supplied accurate data.
3 Data corrected ex-post due to a calculation error, total issuance of the Banking Group is 0.4 percent higher than previously published.
4 From 2020 it includes renewable-based vehicle fuel emissions.
The emissions intensity per turnover is reported from 2022.
The figures shown are calculated from energy consumption, in all cases based on the applicable statutory regulations and the factors stipulated by
authorities and industry organisations (National Inventory Reports (NIR), IPCC, DEFRA, EU Regulation, AIB, IFI, and data from suppliers for electricity
and district heating). For Scope 1 emissions, country-specific factors are applied subject to availability from 2022. We calculate electricity -related
emissions using country-specific factors. For district heating use, from 2020 onwards we use the Hungarian, Slovenian and Croatian factors, and for all
other countries, we uniformly use the data published by DEFRA, while in previous years we used the Hungarian emission factors , except for Ukraine,
Russia and Serbia, in the absence of other reliable data.
Scope1 emissions and, in 2022 and 2023, even district heating cover all GHG emissions. For Scope 2 emissions, the previous years of district heating
in Hungary and electricity factors only cover CO2. For the emission factors used, we do not have information on t he GWP values considered in each
and every case.
To offset its 2023 Scope 1 and Scope 2 emissions, OTP Bank purchased carbon credits in 2023, thereby
preventing the emission of 7,600 tonnes of carbon emissions during the year. The 2023 emission values
were determined in advance, with offsets higher than emissions. The credits purchased are retired credits
verified as per Verra (VER). The Bank considers it essential that the project supported through offsetting is
located in the country of operation of the Banking Group, and has again opted for a project i n Bulgaria, which
was implemented at the Saint Nikola Wind Farm, the largest wind farm in the country, near the town of
Kavarna.
SI Slovenia’s SKB Bank has also offset its Scope 1-2 emissions, purchasing 2,175 tonnes of carbon credits
in 2023, also in the Sant Nikola Wind Farm project.
Business travel
Paper use
TCFD IV.b The OTP Group’s other indirect (Scope 3)CO2e emissions (t), 20231
OTP Bank
991
592
OTP Group
1,963
2,655
1 Includes only emissions arising from our operations; their presentation is partial only. Our goal is to expand the scope cove red continuously.
The values are calculated from factors stipulated by the authorities and industry organisations.
As for the Banking Group’s Scope3 emissions the emissions linked to lending are the most significant. The calculation of further emissio ns under
Scope3 is expanded subject to resource capacities.
Travel
GRI 305: 3-3 The level of business travel varied across the Banking Group, with car use increasing for some
companies and decreasing significantly for some businesses. The total mileage increased by 9 percent and
13 percent year-on-year at the parent bank and across the group, respectively. The increase was partly due
to new group members. While online meetings remain a dominant part of liaising, with the end of the
coronavirus pandemic, face-to-face meetings have become more frequent again.
The maximum carbon emission limits for car purchases at Banking Group level remained unchanged during
the year. Among the cars to choose from there are hybrid or electric vehicles in all categories. At OTP Bank,
38 hybrid vehicles were purchased during the year, while the fleet of electric and hybrid cars at the subsidiary
banks increased minimally.
In addition to company cars, our employees also use their own personal cars for business travel in certain
cases (not for commuting to work), and they also order taxi services. At OTP Bank, travelling by taxi and
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personal vehicles amounted to about 2.4 million kilometres; at Group level this value was 7.8 million 73
kilometres.
At Group level, there was again a significant increase in the number of trips by air. Our employees took
around 9,800 trips74, nearly 30 percent of which were connected to OTP Bank. There were also a significant
number of trips at DSK Bank and the Russian subsidiary.
Since OTP Bank and its subsidiaries find it important to enable employees and customers to access the
workplace by alternative transportation means, several head office buildings and branches are equipped
with bicycle storage at Group level. The establishment of branches typically requires the approval of local
governments, which makes implementation more difficult. Bicycle storages are available at 60 percent of
the branches of OTP Bank for employees and for customers. During the year, the number of bicycle storage
facilities at the Ukrainian subsidiary’s headquarters was increased and a shower facility was installed. The
Serbian and Russian subsidiaries have also set up bicycle storage facilities. A shower was also installed at
the Russian bank’s headquarters.
Paper use
We are constantly working on cutting our paper use. The steadily increasing range of electronically available
services also reduces paper consumption. In addition, the digitalisation of the bank’s internal processes is
ongoing. At the same time, the paper-based administration demanded by legal requirements inhibits in many
cases the further reduction of printing in Hungary and in other countries.
The share of electronic account statements also showed an increasing trend in 2023. We also encourage
their use through the conditions and fees of the application. The majority of OTP Bank customers (83 percent
of retail clients and almost half of large corporate customers) do not receive paper-based statements, which
is a noticeable increase over the previous year. At the Bulgarian subsidiary nearly all of our customers are
provided with electronic statements, while e-statements are used exclusively at the Moldavian and the
Ukrainian subsidiary. Three quarters of customers now receive an e-statement at the Serbian subsidiary,
and 40 percent at the Croatian bank. At both Slovenian banks, 98 percent of corporate customers receive
electronic statements, compared to almost 70 percent of retail customers at NKBM and 80 percent at SKB
Bank. At the Montenegrin subsidiary electronic account statements are used in more than 50% of the cases
among corporate customers. The Albanian, Montenegrin, Russian and Romanian subsidiaries a lso have a
significant number of e-statements, but the exact number by 2023 is not known.
At the Group level, office paper use decreased minimally in 2023, which, taking acquisitions into account,
represents an average decrease of 10 percent for the rest of the Group. The NKBM uses a minimum amount
of paper for its size. At OTP Bank, we were able to reduce consumption by 11 percent. Further savings are
expected from the electronic replacement of internal transport processes, with pilot operations launched a t
the end of 2023. The parent bank used 47 percent recycled paper in office paper use and 31 percent in total
paper use. In Hungary, we use FSC-certified paper even in the case of account statements, marketing
publications and envelopes, while we use recycled FSC paper for producing DM letters. The internal printing
activity of OTP Bank is FSC-certified until 2025. All personal hygiene products used at OTP Bank are
exclusively ECO Label products. Some smaller domestic subsidiaries use exclusively recycled p aper.
HR RO In 2023, our Croatian and Romanian subsidiary banks covered a small part of their office paper
needs with recycled paper. The Croatian subsidiary uses FSC and PEFC certified paper.
RS Our Serbian subsidiary uses FSC-certified and ECF (Elemental Chlorine Free) paper.
SI Both NKBM and SKB Bank have been using PEFC certified products for several years.
At group level, the share of recycled paper was the same as in the previous year, 13 percent for office and
9 percent for total use.
Environmentally conscious use and waste management
OTP Bank follows the principle of using all of its equipment, devices and machines for the longest time
reasonably possible. Furniture is reused several times and we ensure the compatibility of replacements.
BG RS UA RO At OTP Bank, DSK Bank, OTP Bank Serbia and OTP Bank Romania it is common practice
to donate no longer used but still functional furniture and IT equipment (primarily computers and laptops).
73 The Russian subsidiary bank was unable to provide data on own car use, the Montenegrin, Uzbek and NKBM subsidiar ies were unable to provide
data on taxi use, and some Hungarian subsidiaries were unable to provide any of those data.
74 One-way trip.
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In 2023, OTP Bank Ukraine also donated nearly 300 assets. At group level, a t otal of 731 no longer used
computers were donated to charity.
BG SI HR RS ME RO MD Our subsidiaries in Bulgaria, Croatia, Serbia, Slovenia, Romania, Montenegro
and Moldova have used toner refills for several years to reduce toner and ink cartridge waste.
OTP Group materials and procurement highlights
Number of computers (laptops + PCs)
Weight of ink cartridges and toners used
Amount of office paper
Amount of paper used for document sorting
and packaging
Amount of indirectly used paper 2
(thousand
units)
(t)
(t)
(t)
(t)
1 Partly estimate: prorated based on actual data
2 E.g. marketing publications, account statements
3 Predominantly the consumption of the former Monicomp.
OTP Bank
OTP Group
2019 2020 2021 2022 2023 2019 2020 2021 2022 2023
18
19
19
19
18
511
571
651
651
71
8
699
6
478
4
398
5
397
351
4
32
354 2.350 1.795 1.751 1.552 1.517
341
371
351
58
75
90
98
26
117
153
829 1.105
842
7 5843
491
558
313
631
903
732
897
704
Waste collection remains unchanged in 2023. All members of OTP Group collect and treat hazardous waste
and paper containing business secrets selectively, in compliance with the relevant legal requireme nts. The
other than confidential paper waste, plastic and metal waste, are selectively collected by the group members
to varying degrees. In Moldova, non-confidential paper waste is collected separately. In OTP Bank’s central
office buildings and at the Croatian and the Romanian subsidiaries non-confidential paper waste, PET
bottles, metal packaging materials and glass are selectively collected. The Serbian subsidiary collects its
paper waste selectively, both in its head office building and at its branches . SKB Bank selects communal
waste, including biodegradable food waste, as completely separately as possible. Our Albanian subsidiary
collects paper waste comprehensively; this practice has been implemented at our Montenegrin subsidiary
in the case of the head office building and the archives. There is selective waste collection in the head office
building of our Ukrainian subsidiary and the Sofia and Varna sites of our Bulgarian subsidiary.
Quantity of selectively collected waste
OTP Bank
809 1,120
2019 2020 2021 2022 2023
938
729
2023
1,350
(t)
(kg) 7,929 2,203 4,607 8,807 6,142 12,613 5,810 10,685 29,426 13,187
5,917
(t)
N/A 2,766 2,963 3,148 3,111
2019 2020
1,323 1,450
2022
1,244
5,636
N/A
880
N/A
N/A
OTP Group
2021
1,091
Separately collected waste paper (t)
Separately collected PET bottles, plastic
Municipal waste
Attitude-shaping
The members of the Banking Group have launched numerous programmes, awareness -raising campaigns
and involved employees to promote environmental awareness and the protection of natural values.
Green Challenge idea contest
OTP Bank has launched the Green Challenge idea contest among its employees. To start the competition,
we launched a series of articles on six topics on the intranet. We rewarded the employees who answered
the quiz questions at the end of each article the fastest.
For the idea contest, we were looking for applications that support the reduction of the Bank’s carbon
footprint and can be easily implemented in everyday practice. The challenge was met with great interest,
with 136 ideas submitted, four of which will be implemented:
Installation of MOL-Bubi stations around OTP offices,
Green Plate Programme to promote more sustainable dietary habits,
the digitalisation of business travel settlements,
special prize for the idea with the greatest impact: minimising standby power consumption.
As a result of the popularity of the competition, we will be launching a permanent sustainability idea box
starting from 2024.
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OTP Bank was also one of the partners of the Green Friday initiative, launched jointly by MasterCard and
several organisations to raise awareness about conscious spending and lifestyle. Throughout the
programme, dedicated microsites and social media platforms featured awareness-raising articles and tips
to promote a greener Christmas.
In 2023, the Bank continued its campaign with Mastercard in the Priceless Planet Coalition, which aims to
mitigate the adverse effects of climate change by planting 100 million trees over five years. In 2023, OTP
Bank enabled the planting of 75 thousand trees.
BG DSK Bank, in partnership with Mastercard and the Sofia Zoo, launched a new interactive game that
teaches young people about the importance of biodiversity and ways to protect natural habitats. In addition
to the game, free downloadable educational materials are available for teachers, educational organisations
and students. Together with Mastercard, the subsidiary bank supported the “Five Lit tle Corners” initiative, a
unique urban art installation and events that raise awareness of biodiversity and environmental protection.
The series of events took place in Sofia for a month.
The subsidiary bank supports the “Real Honey” initiative under the “Adopt a beehive” programme. The
support is linked to the opening of a new corporate account, helping happy bee-keeping and Bulgarian bee-
keepers. Customers will receive a certificate and Bulgarian honey for their contribution. The Bank’s
employees also participated in a tree planting project in the Balchik Botanical Garden and in Sofia, planting
more than 50 trees.
SI The NKBM has also organised an ideas competition among its staff, inviting initatives on ESG issues. 18
ideas were received for the competition, several of which have started to be implemented. The Bank’s
employees planted 250 trees in the Karst region to help repair damage caused by forest fires. SKB Bank
has launched a challenge to clean its employees’ living environment on Earth Day.
Both Slovenian banks participated in the European Mobility Week initiative, encouraging people to cycle to
work. There is also a beehive on the roof of both banks’ headquarters, which is maintained by staff.
HR The bank provided e-learning training on environmental awareness for its staff, which was completed
by 69 percent of the employees. The Board of Directors of the subsidiary bank has approved the decision
that all the Bank’s bank cards will be made of PLA (plant-derived biodegradable) material. The bank is
involved in the “Migration in the Light” bird monitoring project, using equipment installed on the central
building to record the sounds and movements of birds to detect the effects of light pollution. In 2023, the
subsidiary bank also supported Ekotlon, Croatia’s largest plogging (litter picking) race. More than 300
runners participated in the event. The registration fees were used for sponsorship this year again, for sports
associations of disabed persons.
RS The Serbian subsidiary has established the so-called OTP Village as a venue for environmental
programmes. Employees and their children had the opportunity to attend an event on bees, and workshops
on ecological challenges and solutions were organised for the employees. The subsidiary bank also
organised an environmental drawing competition for children. The employees also took part in voluntary
waste collection and tree planting activities.
AL At the Albanian bank, a “Green Hearts” team of volunteers was formed during 2023, with members taking
part in litter picking and tree planting initiatives. The bank also donated 20 trees to the city of Tirana.
ME Employees of a Montenegrin subsidiary bank planted trees in Podgorica and the bank is supporting an
environmental project for students at one of the largest secondary schools in Podgorica.
UK Our Ukrainian subsidiary continued the ‘Surrender your Batteries!’ campaign, in the framework of which
used batteries and accumulators collected nationwide are shipped to a Romanian recycling plant.
MD The Moldovan subsidiary bank supported the rehabilitation of trees in the Chisinau Botanical Garden
through the inclusion of its employees.
Tree planting in Uzbekistan
The Uzbek subsidiary planted an outstanding number of trees (45,680 trees), helping to sequester carbon
dioxide and clean the air. Trees neutralise an average of 502 tonnes of carbon dioxide emissions per year,
as well as sequestering significant amounts of air pollutants, contributing to climate improvement, noise
protection and soil conservation. The planting is equivalent to nearly 30 hectares of forest.
INTEGRATED ANNUAL REPORT 2023
207
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
SUPPLEMENTARY DATA
INTEGRATED ANNUAL REPORT 2023
208
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
METHODOLOGICAL NOTE: CHANGE IN THE SEGMENTATION OF OTP CORE AND CORPORATE
CENTRE
According the decision of the management, starting from 2023 the segmentation of the Hungarian operation has been
changed.
The previously applied old methodology was outlined on page 53 of the Half-Year Financial Report for 2010, pursuant to
which the core business activity in Hungary was segmented into OTP Core, whereas Corporate Centre was carved out
of the sub-consolidated financial statements of entities making up OTP Core. Thus, Corporate Centre acted as a separate
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.
According to the new methodology, starting from 1Q 2023 Corporate Centre is no longer carved out of the OTP Core
segment. One reason for this change was the simplification of the stock exchange reporting structure and the reduction
of the segments. Secondly, as a result of this change the balance sheet and P&L impact of capital market instruments
issued in the last few quarters will be captured in the OTP Core section, which includes a written analytical chapter.
According to the old methodology those capital market instruments issued by OTP Bank were presented on the liability
side of Corporate Centre, whereas the already executed and future expected transactions were required partly for
regulatory reasons, i.e. in order to comply with the consolidated MREL minimum requirements. In line with the Single
Point of Entry approach used by the Bank, the consolidated MREL requirement has to be met by instruments issued and
held by OTP Bank (Hungary). Furthermore, with this change the stock exchange reports adopt the segmentation used
in internal reports prepared for the management, as Corporate Center ceased to exist in those internal reports, too.
Under the new methodology, certain intragroup loans and deposits that are recognised within loans and liabilities from
accounting point of view, are shifted to financial assets and financial liabilities lines in the adjusted balance sheet of OTP
Core. Thus, loan and deposit volumes presented under the OTP Core segment reflect the underlying business
developments.
For the sake of transparency, in the report’s affected tables the 2022 base periods are presented both under the old
(grey columns marked ’as previously reported’) and new (’restated’) methodology.
In the below tables we highlight the main financial data of OTP Core and Corporate Centre that were affected by this
methodological change.
OTP CORE
Main components of the Statement of recognised income
After tax profit without received dividend
After tax profit
Adjusted profit after tax
Profit before tax
Operating profit
Total income
Net interest income
Operating expenses
Corporate income tax
Indicators (adjusted)
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
Effective tax rate
Main components of balance sheet
(closing balances)
Total Assets
Financial assets (net)
Liabilities to credit institutions
Issued securities
Issued securities without retail bonds
Subordinated bonds and loans
2022
as previously reported
HUF million
27,274
135,181
253,232
296,672
294,257
637,469
412,611
(343,212)
-(43,440)
2022
as previously reported
%/pps
12.6
1.6
1.83
3.97
2.57
1.10
0.30
2.1
53.8
14.6
2022
as previously reported
HUF million
15,758,292
7,438,066
1,251,653
507,540
471,773
0
2022
restated
HUF million
30,242
138,149
256,200
300,094
297,679
642,520
417,662
(344,841)
(43,894)
2022
restated
%/pps
12.7
1.5
1.70
3.68
2.39
1.01
0.27
2.0
53.7
14.6
2022
restated
HUF million
17,596,229
9,270,006
2,313,832
985,187
949,421
294,186
2023
HUF million
313,143
500,869
302,935
366,502
341,049
751,953
432,651
(410,904)
(63,566)
2023
%/pps
14.2
1.6
1.79
3.94
2.26
1.03
0.64
2.2
54.6
17.3
2023
HUF million
18,459,423
9,630,766
2,326,311
1,877,094
1,675,963
507,277
INTEGRATED ANNUAL REPORT 2023
209
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
Corporate Centre
Main components of the Statement of recognised income
Adjusted profit after tax
Profit before tax
Operating profit
Total income
Net interest income
Operating expenses
Corporate income tax
Main components of balance sheet
(closing balances)
Total Assets
Interbank loans to subsidiaries
Investments in subsidiaries
Other assets
Intra group liabilities from subsidiaries
Intra group funding from OTP Core
Issued securities
Subordinated debt (Tier 2)
Shareholders' equity
2022
as previously
reported
HUF million
2,968
3,423
3,423
5,051
5,051
(1,628)
(455)
2022
as previously
reported
3,848,180
2,393,334
1,448,849
5,998
1,399,338
522,960
477,648
294,186
1,448,849
2022
restated
HUF million
-
-
-
-
-
-
-
2022
restated
-
-
-
-
-
-
-
-
-
2023
HUF million
-
-
-
-
-
-
-
2023
-
-
-
-
-
-
-
-
-
INTEGRATED ANNUAL REPORT 2023
210
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
CHANGE IN THE SCOPE OF CONSOLIDATION FOR THE CONSOLIDATED CAPITAL ADEQUACY
RATIOS PRESENTED IN THE STOCK EXCHANGE REPORTS
According to the decision by the management, starting from 3Q 2023 the consolidated capital adequacy ratios for the
actual period and retrospectively for the base periods presented in the Stock Exchange Reports will be based on the
prudential scope of consolidation, i.e. in line with Capital Requirements Regulation (CRR).
OTP Bank Plc. reports its consolidated capital adequacy ratios to the National Bank of Hungary in charge of financial
supervision based on the prudential scope of consolidation.
In previous periods the consolidated capital adequacy ratios based on the prudential scope of consolidation were disclosed
after the release of the Stock Exchange Reports, in the document titled OTP Group Disclosure on consolidated basis.
In the previous Stock Exchange Reports the presented consolidated capital adequacy ratios were calculated based on the
accounting scope of consolidation, in line with IFRS standards.
The below table shows the consolidated capital adequacy ratios (Basel 3, IFRS) from 1Q 2022 until 3Q 2023 according to
both prudential and accounting scope of consolidation.
According to PRUDENTIAL scope of
consolidation
(HUF million / %)
Capital adequacy ratio
Tier 1 ratio
Common Equity Tier 1 ('CET1') capital ratio
Own funds
o/w Tier1 Capital
o/w Common Equity Tier 1 capital
Consolidated risk weighted assets (RWA) (Credit
& Market & Operational risk)
According to ACCOUNTING scope of
consolidation
(HUF million / %)
Capital adequacy ratio
Tier1 ratio
Common Equity Tier 1 ('CET1') capital ratio
Own funds
o/w Tier1 Capital
o/w Common Equity Tier 1 capital
Consolidated risk weighted assets (RWA) (Credit
& Market & Operational risk)
1Q 2022
2Q 2022
3Q 2022
4Q 2022
1Q 2023
2Q 2023
3Q 2023
18.4%
16.9%
16.9%
3,217,591
2,950,935
2,950,935
18.4%
16.9%
16.9%
3,635,663
3,347,375
3,347,375
18.1%
16.7%
16.7%
3,922,723
3,620,662
3,620,662
17.8%
16.4%
16.4%
3,671,104
3,383,161
3,383,161
17.2%
14.8%
14.8%
3,767,588
3,242,569
3,242,569
17.9%
15.6%
15.6%
4,076,508
3,551,485
3,551,485
18.8%
16.4%
16.4%
4,489,776
3,929,662
3,929,662
17,464,356 19,772,146 21,643,869 20,607,706 21,920,451 22,713,600 23,922,959
1Q 2022
2Q 2022
3Q 2022
4Q 2022
1Q 2023
2Q 2023
3Q 2023
17.8%
16.2%
16.2%
3,078,173
2,811,517
2,811,517
17.9%
16.4%
16.4%
3,515,020
3,226,731
3,226,731
17.8%
16.4%
16.4%
3,828,083
3,526,063
3,526,063
17.5%
16.1%
16.1%
3,565,932
3,277,984
3,277,984
16.8%
14.4%
14.4%
3,661,078
3,136,729
3,136,729
17.5%
15.2%
15.2%
3,951,088
3,426,218
3,426,218
18.4%
16.1%
16.1%
4,366,482
3,806,368
3,806,368
17,324,682 19,629,309 21,497,011 20,405,328 21,795,586 22,551,166 23,714,042
INTEGRATED ANNUAL REPORT 2023
211
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
CHANGE IN THE PRESENTATION OF ACCRUED INTEREST RECEIVABLES ON STAGE 3 LOANS –
METHODOLOGICAL SUMMARY
Starting from 2023 the presentation of accrued interest receivables on Stage 3 loans has been changed in the adjusted
balance sheets and statements of recognised income.
According to the old methodology in place until the end of 2022, in the adjusted balance sheets of the stock exchange
report the total amount of accrued interest receivables on Stage 3 loans under IFRS 9 were netted with the provisions
created in relation to the total exposure toward those particular clients. As a result of this, in the adjusted consolidated
balance sheet, and also in the different segments, lower gross loan volumes and allowances for loan losses were shown
compared to the IFRS reports. Furthermore, in the adjusted statement of recognised income of OTP Core and therefore
on consolidated level, as well, the accrued interests on Stage 3 loans in the given period were netted with the related
provision for impairment on loan losses. These items were not settled against each other in the case of foreign subsidiaries.
From 2023, under the new methodology, these items are not netted against each other in the adjusted financial statements.
This means that this change has not been retroactively applied for the base period in the tables of this report, but the
numbers according to the new methodology were presented only for 2023.
For the sake of comparability, in the below table we present the main financial data affected by this change for the 2022
base period under the new methodology, for the Group and OTP Core.
Consolidated
Gross customer loans
Allowances for loan losses
Stage 3 loan volume under IFRS 9
Stage 3 loans under IFRS 9/gross customer loans
Own coverage of Stage 3 loans under IFRS 9
Net interest income
Net interest margin
Provision for impairment on loan losses
Provision for impairment on loan losses-to-average gross loans ratio
OTP Core
Gross customer loans
Allowances for loan losses
Stage 3 loan volume under IFRS 9
Stage 3 loans under IFRS 9/gross customer loans
Own coverage of Stage 3 loans under IFRS 9
Net interest income
Net interest margin
Provision for impairment on loan losses
Provision for impairment on loan losses-to-average gross loans ratio
2022
in HUF million
19,690,287
(1,049,663)
1,015,899
5.2%
62.8%
1,098,914
3.52%
(140,566)
0.75%
6,551,991
(273,371)
346,947
5.3%
47.1%
422,997
2.42%
27,515
(0.46%)
INTEGRATED ANNUAL REPORT 2023
212
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
FOOTNOTES OF THE TABLE ‘CONSOLIDATED PROFIT AFTER TAX BREAKDOWN BY SUBSIDIARIES
(IFRS)’
General note: regarding OTP Core and other subsidiaries, the adjusted profit after tax is calculated without the effect of
adjustment items.
(1) Aggregated adjusted profit after tax 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 Ecosystem Ltd. (previous name: OTP eBIZ Ltd., it was eliminated from 1Q 2023) was included from
1Q 2020; OTP OTP Home Solutions was included from 2Q 2021.
The consolidated results of these companies were segmented into OTP Core and Corporate Centre until the end of 2022.
According to the new methodology applied from 2023, Corporate Centre is no longer carved out of OTP Core. In the
affected tables of this report, the 2022 base periods were presented both under the old and the new segment definitions.
(3) The result and balance sheet of OTP Factoring Bulgaria EAD and DSK Leasing AD is included.
(4) The statement of recognised income and balance sheet of SKB Banka d.d. Ljubljana, SKB Leasing d.o.o., SKB Leasing
Select d.o.o. and from February 2023 Nova Kreditna Banka Maribor d.d. is included.
(5) The statement of recognised income and balance sheet of OTP Leasing d.d. and SB Leasing d.o.o. was included.
(6) The financial performance of OTP Factoring Serbia d.o.o, OTP Lizing d.o.o. and OTP Services d.o.o. is included.
(7) The balance sheet of the newly acquired Alpha Bank Albania was included from July 2022, its statement of recognised
income from August 2022. Alpha Bank Albania merged with OTP Bank Albania in December 2022.
(8) The statement of recognised income and balance sheet of the acquired Podgoricka banka was included, which merged
into the Montenegrin bank in 4Q 2020.
(9) The balance sheet of Ipoteka Bank in Uzbekistan was consolidated from June 2023, whereas the adjusted profit of
Ipoteka Bank was recognized in the consolidated P&L from 3Q 2023.
(10) The statement of recognised income and balance sheet of LLC MFO “OTP Finance” is included.
(11) Figures are based on the aggregated financial statements of OTP Bank JSC, LLC OTP Leasing, and OTP Factoring
Ukraine LLC.
(12) The statement of recognised income and balance sheet of OTP Faktoring SRL and OTP Leasing Romania IFN S.A.
was included.
(13) The subconsolidated adjusted profit after tax of Merkantil Group (Merkantil Bank Ltd., Merkantil Bérlet Ltd., OTP Real
Estate Leasing Ltd., NIMO 2002 Ltd., SPLC-P Ltd., SPLC Ltd.) was presented.
(14) LLC AMC OTP Capital, OTP Asset Management SAI S.A. (Romania), DSK Asset Management EAD (Bulgaria),
ILIRIKA DZU a.d. Belgrade (Serbia).
(15) Velvin Ventures Ltd. (Belize), SC Aloha Buzz SRL, SC Favo Consultanta SRL, SC Tezaur Cont SRL (Romania), OTP
Solution Fund (Ukraine), Mendota Invest d.o.o. (Slovenia), R.E. Four d.o.o., Novi Sad (Serbia).
(16) Until the end of 2022 Corporate Centre acted 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 was 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 was to provide intragroup lending to, and hold equity stakes in OTP
subsidiaries outside OTP Core. Main subsidiaries financed by Corporate Centre were as follows: Hungarians: Merkantil
Bank Ltd, OTP Flat Lease Ltd, OTP Fund Management Ltd, OTP Real Estate Fund Management Ltd, OTP Life Annuity
Ltd; foreigners: banks, leasing companies, factoring companies.
Starting from 2023 Corporate Centre is no longer carved out of OTP Core. In the affected tables of this report, the 2022
base periods were presented both under the old and the new segment definitions.
(17) The profit after tax of the Hungarian operation lines include the profit after tax or adjusted profit after tax of the
Hungarian subsidiaries and Corporate Centre, as well as the eliminations allocated onto these entities.
(18) The profit after tax of the Foreign operation lines include the profit after tax or adjusted profit after tax of the Foreign
subsidiaries, as well as the eliminations allocated onto these entities.
INTEGRATED ANNUAL REPORT 2023
213
OTP BANK
BUSINESS REPORT 2023 (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 performance reflecting the underlying business trends, the presented consolidated and separate
/ sub-consolidated 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 (unless otherwise stated). Consolidated financial statements of OTP Bank are disclosed
in the Supplementary Data section.
Adjustments affecting the income statement:
• The after tax effect of adjustment items (certain, typically one-off items from banking operations’ point of view) are shown
and analysed separately in the Statement of Recognised Income.
• The components of the new Gain from derecognition of financial assets at amortized cost line in the P&L were shifted
back in the adjusted P&L structure to the lines on which they were presented previously.
• 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 income statement. These items were shifted
back to the Other non-interest expenses line in the adjusted P&L structure.
• The expected one-off effect of the interest rate cap for certain loans in Hungary and Serbia line contains the expected
effect of the Hungarian rate cap, and the expected effect of the Serbian rate cap effective from October 2023 until the
end of 2024.
• The effect of the winding up of Sberbank Hungary line represents the combined impact of the extraordinary contribution
payable into the Deposit Protection Fund in relation to the compensation of depositors, and the recovery from the sale of
Sberbank assets.
• 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). Starting from 2022, the Provision for impairment on loan losses
line is in the numerator of the Provision for impairment on loan losses-to-average gross loans ratio, which, as opposed
to previous periods, does not include the provision for impairment on placement losses.
• In the Consolidated financial highlights and share data table the Book Value Per Share and the Tangible Book Value Per
Share, as well as indicators derived from these are calculated based on the consolidated diluted share count used for
EPS calculation.
• 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 FX-adjusted volumes will be different from those published earlier.
• The FX-adjusted changes of certain consolidated or sub-consolidated P&L lines in HUF terms may be presented in this
Report. According to the applied methodology in the case of the P&L lines, the FX effect is filtered out only in relation to
the currency of the given country, irrespective of the transactional currency mix in which the given P&L line materialized.
Thus, for instance, as for the consolidated FX-adjusted operating cost development, the effect of the Hungarian Forint
rate changes against the given currency is not eliminated in the case of the cost items arising in FX within the Hungarian
cost base.
Adjustments affecting the balance sheet:
• On 9 February 2024 OTP Bank announced the signing of the share sale and purchase agreement to sell its Romanian
operation. As a result of this, according to IFRS 5, as at the end of 2023 the Romanian operation was presented as an
asset classified as held for salein the consolidated balance sheet, and as discontinued operation in the income statement.
With regards to the consolidated balance sheet, all Romanian assets and liabilities were shown on a separate line in the
2023 closing balance sheet. As for the consolidated income statement, the Romanian contribution for both 2022 and
2023 was shown separately from the result of continuing operation, on the Net loss / gain from discontinued operation
line, i.e. the particular P&L lines in the ‘continuing operations’ section of the P&L don’t incorporate the contribution from
the Romanian subsidiaries. As opposed to this, in the adjusted financial statements presented in the Stock Exchange
Report – in line with the structure of the financial statements monitored by the management – the Romanian operation
was presented in a way as if it was still classified as continuing operation, i.e. its net interest income contribution was
presented on the net interest income line in the consolidated adjusted income statement.
• In the adjusted balance sheet, net customer loans include the stock of loans at amortized cost, loans mandatorily at fair
value through profit or loss, and finance lease receivables.
• In the adjusted balance sheets presented in the analytical section of the report, until the end of 2022 the total amount of
accrued interest receivables related to 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 balance sheet had an impact on the consolidated gross customer loans and allowances for loan losses.
Starting from 2023 this adjustment is no longer applied.
INTEGRATED ANNUAL REPORT 2023
214
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
Alternative performance measures
pursuant to the National Bank of Hungary 5/2017. (V.24.) recommendation75
Alternative
performance
measures name
Leverage,
consolidated76
Liquidity Coverage
Ratio (LCR)
ROE (accounting),
consolidated
Description
The leverage ratio is
calculated pursuant to
Article 429 CRR. The
calculation of the
indicator is designed
quarterly by the Bank
for the prudential
consolidation circle.
According to Article
412 (1) of CRR, the
liquidity coverage
ratio (LCR) is
designed to promote
short-term resilience
of the Issuer’s /
Group's liquidity risk
profile and aims to
ensure that the Issuer
/ Group has an
adequate stock of
unencumbered High
Quality Liquid Assets
(HQLA) to meet its
liquidity needs for a
30 calendar day
liquidity stress
scenario.
The return on equity
ratio shall be
calculated the
consolidated
accounting after-tax
profit for the given
period divided by the
average equity, thus
shows the
effectiveness of the
use of equity.
Calculation
(data in HUF million)
Measures value
2022
2023
The leverage ratio shall be calculated as an institution’s capital measure
divided by that institution's total exposure measure and shall be expressed
as a percentage.
Example for 2023:
Example for 2022:
3,945,569.6
42,426,769.2
3,383,160.8
35,399,551.0
=
9.3%
9.6%
9.3%
=
9.6%
The LCR is expressed as: (stock of HQLA) / (total net cash outflows over
the next 30 calendar days) ≥ 100%.
The numerator of the LCR is the stock of HQLA (High Quality Liquid
Assets). In order to qualify as HQLA, assets should be liquid in markets
during a time of stress and, in most cases, be eligible for use in central
bank operations.
The denominator of the LCR is the total net cash outflows, defined as total
expected cash outflows minus total expected cash inflow in the specified
stress scenario for the subsequent 30 calendar days. Total cash inflows are
subject to an aggregate cap of 75% of total expected cash outflows,
thereby ensuring a minimum level of HQLA holdings at all times.
Example for 2023:
11,062,683.8
6,528,404.6 -
2,033,178.9
Example for 2022:
7,439,159.8
6,175,742.4 -
1,852,865.4
= 246.1%
= 172.1%
The numerator of the indicator is the consolidated accounting after-tax profit
for the given period (annualized for periods less than one year), the
denominator is the average consolidated equity. (The definition of average
equity: calendar day-weighted average of the average balance sheet items
in periods comprising the given period, where periods comprising the given
period are defined as quarters (and within that months) in case of 1H, 9M
and FY periods, and months in case of quarters. Furthermore, the average
of the average balance sheet items is computed as the arithmetic average
of closing balance sheet items for the previous period and the current
period.)
Example for 2023:
990,459.5 *
1.0
3,639,782.4
Example for 2022:
347,081.1 *
1.0
3,160,118.9
=
27.2%
=
11.0%
172.1% 246.1%
11.0%
27.2%
75 The NBH’s recommendation (5/2017, 24 May) on Alternative Performance Measures (APM) came into effect from 1 June 2017, in lin e with ESMA’s
guidance (ESMA/2015/1415) on the same matter. The recommendation is aimed at – amongst other things – enhancing the transparency, reliability,
clarity and comparability of those APMs within the framework of regulated information and thus facilitating the protection of existing and potential
investors.
76 Based on the prudential consolidation scope, which is different from the consolidation scope used in this report.
INTEGRATED ANNUAL REPORT 2023
215
OTP BANK
Alternative
performance
measures name
ROE (adjusted),
consolidated
ROA (adjusted),
consolidated
Operating profit
margin (adjusted,
without one-off
items), consolidated
Total income margin
(adjusted, without
one-off items),
consolidated
Net interest margin
(adjusted),
consolidated
Operating cost
(adjusted)/ total
assets, consolidated
Description
The return on equity
ratio shall be
calculated the
consolidated adjusted
after-tax profit for the
given period divided
by the average
equity, thus shows
the effectiveness of
the use of equity.
The return on asset
ratio shall be
calculated the
consolidated adjusted
net profit for the given
period divided by the
average total asset,
thus shows the
effectiveness of the
use of equity.
The operating profit
margin shall be
calculated the
consolidated adjusted
net operating profit
without one-off items
for the given period
divided by the
average total assets,
thus shows the
effectiveness of the
operating profit
generation on total
assets.
The total income
margin shall be
calculated the
consolidated adjusted
total income without
one-off items for the
given period divided
by the average total
assets, thus shows
the effectiveness of
income generation on
total assets.
The net interest
margin shall be
calculated the
consolidated adjusted
net interest income
for the given period
divided by the
average total assets,
thus shows the
effectiveness of net
interest income
generation on total
assets.
The indicator shows
the operational
efficiency.
BUSINESS REPORT 2023 (CONSOLIDATED)
Calculation
(data in HUF million)
Measures value
2022
2023
The numerator of the indicator is the consolidated adjusted after-tax profit
for the given period (annualized for periods less than one year), the
denominator is the average consolidated equity.
Example for 2023:
1,008,582.9 *
1.0
3,639,782.4
=
27.7%
18.8%
27.7%
Example for 2022:
592,547.0 *
1.0
3,160,118.9
=
18.8%
The numerator of the indicator is the consolidated adjusted net profit for the
given period, the denominator is the average consolidated total asset. (The
definition of average asset: calendar day-weighted average of the average
balance sheet items in periods comprising the given period, where periods
comprising the given period are defined as quarters (and within that
months) in case of 9M, 9M and FY periods, and months in case of quarters.
Furthermore, the average of the average balance sheet items is computed
as the arithmetic average of closing balance sheet items for the previous
period and the current period.)
Example for 2023:
1,008,582.9 *
1.0
37,167,776.0
Example for 2022:
592,547.0 *
1.0
31,190,136.9
=
2.7%
=
1.9%
1.9%
2.7%
The numerator of the indicator is the consolidated adjusted net operating
profit without one-off items for the given period, the denominator is the
average consolidated total assets.
Example for 2023:
1,260,849.8 *
1.0
37,167,776.0
=
3.39%
2.78%
3.39%
Example for 2022:
868,486.7 *
1.0
31,190,136.9
=
2.78%
The numerator of the indicator is the consolidated adjusted total income
without one-off items for the given period (annualized for periods less than
one year), the denominator is the average consolidated total assets.
Example for 2023:
2,224,584.2 *
1.0
37,167,776.0
=
5.99%
5.31%
5.99%
Example for 2022:
1,656,571.0 *
1.0
31,190,136.9
=
5.31%
The numerator of the indicator is the consolidated adjusted net interest
income for the given period (annualized for periods less than one year), the
denominator is the average consolidated total assets.
Example for 2023:
1,459,693.5 *
1.0
37,167,776.0
=
3.93%
3.51%
3.93%
Example for 2022:
1,093,578.8 *
1.0
31,190,136.9
=
3.51%
The numerator of the indicator is the consolidated adjusted operating cost
for the given period (annualized for periods less than one year), the
denominator is the average consolidated total assets.
Example for 2023:
963,734.3 *
1.0
37,167,776.0
=
2.59%
2.53%
2.59%
Example for 2022:
788,084.3 *
1.0
31,190,136.9
=
2.53%
INTEGRATED ANNUAL REPORT 2023
216
OTP BANK
Alternative
performance
measures name
Cost/income ratio
(adjusted, without
one-off items),
consolidated
BUSINESS REPORT 2023 (CONSOLIDATED)
Description
Calculation
(data in HUF million)
Measures value
2022
2023
The indicator is
another measure of
operational efficiency.
The numerator of the indicator is the consolidated adjusted operating cost
for the given period, the denominator is the adjusted operating income
(without one-off items) for the given period.
Example for 2023:
Example for 2022:
963,734.3
2,224,584.2
788,084.3
1,656,571.0
=
43.3%
47.6%
43.3%
=
47.6%
Provision for
impairment on loan
and placement
losses (adjusted)/
average (adjusted)
gross loans,
consolidated
The indicator
provides information
on the amount of
impairment on loan
and placement losses
relative to gross
customer loans.
The numerator of the indicator is the consolidated adjusted provision for
impairment on loan and placement losses for the given period (annualized
for periods less than one year), the denominator is the adjusted
consolidated gross customer loans for the given period. (The definition of
average (adjusted) gross customer loans: calendar day-weighted average
of the average balance sheet items in periods comprising the given period,
where periods comprising the given period are defined as quarters (and
within that months) in case of 1H, 9M and FY periods, and months in case
of quarters. Furthermore, the average of the average balance sheet items is
computed as the arithmetic average of closing balance sheet items for the
previous period and the current period.)
Example for 2023:
34,780.7 *
1.0
21,377,407.9
Example for 2022:
135,231.1 *
1.0
18,639,432.7
=
0.16%
=
0.73%
0.73%
0.16%
Total risk cost
(adjusted)/ total
asset ratio,
consolidated
The indicator shows
the amount of total
risk cost relative to
the balance sheet
total.
The numerator of the indicator is consolidated adjusted total risk cost for
the given period (annualized for periods less than one year), the
denominator is the average consolidated total assets for the given period.
Example for 2023:
38,521.5 *
1.0
37,167,776.0
=
0.10%
0.57%
0.10%
Effective tax rate
(adjusted),
consolidated
The indicator shows
the amount of
corporate income tax
accounted on pre-tax
profit.
Example for 2022:
178,464.7 *
1.0
31,190,136.9
=
0.57%
The numerator of the indicator is consolidated adjusted corporate income
tax for the given period, the denominator is the consolidated adjusted pre-
tax profit for the given period.
Example for 2023:
Example for 2022:
213,745.5
1,222,328.4
97,475.0
690,022.0
=
17.5%
14.1%
17.5%
=
14.1%
Net
loan/(deposit+retail
bonds) ratio (FX-
adjusted),
consolidated
The net loan to
deposit+retail bonds
ratio is the indicator
for assessing the
bank's liquidity
position.
The numerator of the indicator is the consolidated net consumer loan
volume (gross loan reduced the amount of provision), the denominator is
the end of period consolidated consumer FX-adjusted deposit volume plus
the end of period retail bond volume (issued by OTP Bank).
Example for 2023:
21,447,380.3
29,428,283.5 +
201,130.6
=
72%
74%
72%
Example for 2022:
17,929,314.2
24,289,844.4 +
35,766.3
=
74%
INTEGRATED ANNUAL REPORT 2023
217
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
ADJUSTMENTS ON THE CONSOLIDATED STATEMENT OF PROFIT OR LOSS (IFRS)
Net interest income
(+) Presentation of the revaluation result of intra-group swaps on the net interest income line realized at the
Romanian operation
(-) Netting of interest revenues on Stage 3 loans with the related provision (booked on the Provision for
loan losses line)
(-) Effect of acquisitions
(-) Reclassification due to the introduction of IFRS16
(+) Presentation of the contribution from discontinued operation and assets held for sale on the adjusted
P&L lines
Net interest income (adj.)
Net fees and commissions
(+) Financial Transaction Tax
(-) Effect of acquisitions
(+) Presentation of the contribution from discontinued operation and assets held for sale 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
(-) Presentation of the revaluation result of intra-group swaps on the net interest income line realized at the
Romanian operations
(-) Effect of acquisitions
(+) Presentation of the contribution from discontinued operation and assets held for sale 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 and assets held for sale 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.)
Result of discontinued operation and gains from disposal of subsidiaries classified as held for
sale
(-) Profit of the sale of OTP Garancia Group (before tax)
(-) 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
(adjusted)
(+) Other non-interest income
(+) Net results on derivative instruments and hedge relationships
(+) 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 operation
(-) 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
(+) Presentation of the contribution from discontinued operation and assets held for sale on the adjusted
P&L lines
(-) Expected one-off negative effect of the debt repayment moratorium in Hungary and Serbia
(+) Shifting of the costs of mediated services at Merkantil Bérlet Ltd. to the net other non-interest result line
(+) Structural adjustment due to the Gain from derecognition of financial assets at amortized cost line
(against Net other non-interest result)
(-) Expected one-off effect of the interest rate cap for certain loans in Hungary and Serbia
(-) Effect of the winding up of Sberbank Hungary (recovery leg)
Net other non-interest result (adj.)
2022
HUF million
1,026,868
2023
HUF million
1,383,014
2,034
5,335
(3,179)
(2,386)
64,446
0
-
(5,674)
(2,970)
68,151
1,093,579
1,459,809
584,491
(89,751)
(2)
691,525
(98,472)
(27)
15,870
5,537
113,494
397,118
120,496
478,122
(16,302)
13,945
7,818
(4)
0
(2)
1,313
(11,397)
113,494
90,691
(4,505)
(556)
120,496
123,046
7,283
(1,125)
17
194
(10,002)
(3,868)
(4,636)
(18,716)
145
1,579
8,240
1,994
28,003
(21,246)
0
0
0
(55,913)
28,003
34,667
5,232
7,195
28,003
34,667
118,329
16,360
1,369
331,425
(12,760)
1,921
(4,044
92,682
145
8,240
447
(72,969)
531
(54,855)
840
2,738
3,268
205,233
(5,783)
(591)
(275)
0
0
0
(21,994)
(13,697)
(5)
(1,846)
(492)
(2,022)
73,604
0
(2,119)
191
0
11,416
161,967
INTEGRATED ANNUAL REPORT 2023
218
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
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 losses)
(-) Structural adjustment due to the Gain from derecognition of financial assets at amortized cost line
(against Net other non-interest result)
(+) Presentation of the contribution from discontinued operation and assets held for sale on the adjusted
P&L lines
Gain from derecognition of financial assets at amortized cost (adj.)
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
(+) 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
(-) One-off impact of the CHF mortgage loan conversion programme and regulatory changes related to
mortgage loans in Romania
(+) Netting of interest revenues on Stage 3 loans with the related provision (booked on the Provision for
loan losses line)
(-) Effect of acquisitions
(-) Structural correction between Provision for loan losses and Other provisions
(+) Presentation of the contribution from discontinued operation and assets held for sale 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 losses)
(-) Shifting of provision for impairment on placement losses to the other provisions line from 1Q 2022
(-) Expected one-off effect of the interest rate cap for certain loans in Hungary and Serbia
Provision for impairment on loan losses (adj.)
Profit from associates
(+) 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 and assets held for sale on the adjusted
P&L lines
After tax dividends and net cash transfers
Depreciation
(-) Goodwill impairment charges
(-) Effect of acquisitions
(-) Reclassification due to the introduction of IFRS16
(+) Presentation of the contribution from discontinued operation and assets held for sale on the adjusted
P&L lines
(+) Structural shift of right of use asset depreciation between other non-interest expenses and depreciation
line
Depreciation (adj.)
Personnel expenses
(-) Effect of acquisitions
(+) Presentation of the contribution from discontinued operation and assets held for sale on the adjusted
P&L lines
(-) Shifting of the support granted to the Special Employee Partial Ownership Plan Organizations booked
within the Personnel expenses to the Other non-interest expenses line
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 to spectator sports (offset against corporate taxes)
(-) Corporate tax impact of the effect of acquisitions
(+) Presentation of the contribution from discontinued operation and assets held for sale 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
(-) Corporate tax impact of the impairments on Russian government bonds booked at OTP Core and DSK
Bank from 2022
(-) Corporate tax impact of the winding up of Sberbank Hungary (contribution to the Deposit Protection
Fund)
(-) Corporate tax impact of the expected one-off effect of the interest rate cap for certain loans in Hungary
and Serbia
2022
HUF million
(1,573)
2023
HUF million
(17,182)
(4,636)
(18,716)
3,473)
1,343
(492)
191
(82)
0
0
0
(145,159)
(39,997)
(126,415)
(38,141)
13,346
(91)
(60,761)
(5,917)
(1,204)
138
5,335
(3,493)
(61,965)
(10,750)
(4,816)
3,473
(261)
(36,005)
(135,231)
14,618
447
(17,709)
(17,519)
12,130
840
23
9,054
9,772
1,333
0
-
(51,873)
10,387
2,758
0
1,343
2,945
(36,909)
(64,937)
15,299
531
(15,360)
(15,067)
14,200
2,738
22
1,927
(1,378)
(168,840)
(67,715)
(4,917)
(18,008)
(111,996)
0
(4,897)
(15,575)
(6,463)
(4,040)
0
(84,663)
(95,564)
(377,728)
(1,259)
(478,695)
(2,507)
(24,835)
(26,571)
(5,000)
0
(396,304)
(502,759)
(58,600)
8,461
5,456
(14,479)
543
(188,710)
(3,919)
6,079
(73)
7,687
(652)
(3,575)
244
900
3,494
0
348
311
1,027
(1,027)
3,618
3,830
INTEGRATED ANNUAL REPORT 2023
219
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
(+) One-timer structural reclassification between Corporate income tax and Other non-interest expenses in
4Q 2023
Corporate income tax (adj.)
Other operating expense
(-) Other costs and expenses
(-) Other non-interest expenses
(-) Effect of acquisitions
(-) 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 and assets held for sale on the adjusted
P&L lines
(-) Expected one-off negative effect of the debt repayment moratorium in Hungary and Serbia
(-) Impairments on Russian government bonds booked at OTP Core and DSK Bank from 2022
(+) Shifting of provision for impairment on placement losses to the other provisions line from 1Q 2022
(-) Shifting of certain expenses arising from mediated services from other provisions to the other non-
interest expenses line
(-) Expected one-off effect of the interest rate cap for certain loans in Hungary and Serbia
Other provisions (adj.)
Other general expenses
(+) Other costs and expenses
(+) Other non-interest expenses
(-) Paid cash transfers
(+) Film subsidies and cash transfers to public benefit organisations
(-) 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 and assets held for sale on the adjusted
P&L lines
(-) Expected one-off negative effect of the debt repayment moratorium in Hungary and Serbia
(-) Shifting of the costs of mediated services at Merkantil Bérlet Ltd. to the net other non-interest result line
(+) Shifting of certain expenses arising from mediated services from other provisions to the other non-
interest expenses line
(-) Effect of the winding up of Sberbank Hungary (contribution to the Deposit Protection Fund)
(+) Shifting of the support granted to the Special Employee Partial Ownership Plan Organizations booked
within the Personnel expenses to the Other non-interest expenses line
(-) Structural shift of right of use asset depreciation between other non-interest expenses and depreciation
line
(-) One-timer structural reclassification between Corporate income tax and Other non-interest expenses in
4Q 2023
Other non-interest expenses (adj.)
2022
HUF million
2023
HUF million
(5,624)
(97,475)
(211,291)
(125,742)
(17,279)
(90,678)
(1,341)
(117,962)
(10,143)
(69,850)
(10,271)
453
275
0
0
(61,965)
10,387
(3,057)
2,104
(38,268)
(261)
(882)
(2,175)
(43,234)
(451,163)
(17,279)
(90,678)
(17,709)
(17,519)
(72,969)
(96,808)
(14,479)
(89,751)
(4,654)
(20,395)
(98)
0
(3,110)
2,945
(1,252)
181
(10,285)
(483,283)
(10,143)
(69,850)
(15,360)
(15,067)
(54,490)
(68,630)
(73)
(98,472)
(8,366)
(18,545)
(13,835)
(17,284)
0
(1,846)
(882)
(11,416)
(5,000)
0
(2,119)
(1,252)
0
0
0
(5,624)
(307,117)
(362,289)
INTEGRATED ANNUAL REPORT 2023
220
OTP BANK
BUSINESS REPORT 2023 (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)
Securities at fair value through profit and loss
(+) Allocation of Assets classified as held for sale among balance sheet lines
Securities 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)
2022
HUF million
4,221,392
0
4,221,392
2023
HUF million
7,125,050
199,587
7,324,636
1,351,081
0
1,351,081
1,567,777
8,147
1,575,924
436,387
0
436,387
288,884
2,091
290,975
1,739,603
0
1,739,603
1,601,461
39,430
1,640,891
Gross customer loans (incl. finance lease receivables and accrued interest receivables related to loans)
(-) Accrued interest receivables related to Stage 3 loans
(+) Allocation of Assets classified as held for sale among balance sheet lines
Gross customer loans (adjusted)
19,690,287 21,329,908
-
1,136,507
19,643,558 22,466,415
46,730
0
Allowances for loan losses (incl. impairment of finance lease receivables)
(-) Allocated provision on accrued interest receivables related to Stage 3 loans
(+) Allocation of Assets classified as held for sale among balance sheet lines
Allowances for loan losses (adjusted)
Associates and other investments
(+) Allocation of Assets classified as held for sale among balance sheet lines
Associates and other investments (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)
(1,049,663)
(46,730)
0
(1,002,933)
(963,179)
-
(55,856)
(1,019,035)
73,849
0
73,849
96,110
236
96,346
4,891,938
0
4,891,938
5,249,490
226,427
5,475,917
738,105
0
738,105
860,449
18,500
878,949
711,230
0
711,230
2,455,664
(1,575,068)
880,596
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)
1,517,349
2,011,569
0
1,764
1,517,349
2,013,333
Deposits from customers
(+) Allocation of Liabilities directly associated with assets classified as held-for-sale among balance sheet lines
Deposits from customers (adjusted)
25,188,805 28,332,431
1,095,852
25,188,805 29,428,284
0
Other liabilities
(+) Allocation of Liabilities directly associated with assets classified as held-for-sale among balance sheet lines
Other liabilities (adjusted)
1,603,078
0
1,603,078
2,514,876
(1,097,617)
1,417,260
INTEGRATED ANNUAL REPORT 2023
221
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
STATEMENT OF PROFIT OR LOSS OF OTP BANK PLC., ACCORDING TO IFRS STANDARDS AS
ADOPTED BY THE EUROPEAN UNION (CONSOLIDATED)1
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, amounts due from
banks 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 RISK COST
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 gains / losses, net
Net results on derivative instruments and hedge relationships
Gains / Losses on securities, net
Gains / Losses on financial assets /liabilities measured at fair value through profit or loss
Gain from derecognition of financial assets at amortized cost
Profit from associates
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
PROFIT AFTER INCOME TAX FOR THE PERIOD FROM CONTINUING OPERATIONS
DISCONTINUED OPERATIONS
Gains from disposal of subsidiary classified as held for sale
Net loss / gain from discontinued operation
PROFIT AFTER INCOME TAX FROM CONTINUING AND DISCOUNTINUED OPERATION
From this, attributable to:
Non-controlling interest
Owners of the company
2023
HUF million
2022
HUF million
Change
%
2,314,677
633,587
2,948,264
(1,561,558)
1,386,706
(79,281)
1,425,859
475,547
1,901,406
(874,538)
1,026,868
(199,695)
(109,223)
(145,159)
62
33
55
79
35
(60)
(25)
(91)
13,346
8,831
(60,761)
19,870
(5,917)
1,332
(1,204)
1,307,425
861,309
(169,316)
691,993
(38,141)
1,067
13,827
(12,760)
7,283
94,613
(17,182)
14,766
324,266
7,195
315,155
1,915
(110,570)
314,243
(478,696)
(111,996)
(483,645)
(1,074,337)
1,201,183
(189,478)
1,011,705
827,173
716,866
(132,375)
584,491
(39,997)
58
(16,302)
16,360
(4,505)
(4,044)
(1,573)
14,618
124,930
5,232
118,329
1,369
(125,742)
3,742
(377,728)
(168,840)
(451,163)
(997,731)
377,678
(58,600)
319,078
0
(21,246)
990,459
11,444
16,559
347,081
1,801
988,658
727
346,354
58
20
28
18
(5)
992
1
160
38
166
40
(12)
8298
27
(34)
7
8
218
223
217
(100)
185
148
185
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).
INTEGRATED ANNUAL REPORT 2023
222
OTP BANK
BUSINESS REPORT 2023 (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
Loans at amortized cost
Property and equipment
Intangible assets and goodwill
Right-of-use assets
Investment properties
Derivative financial assets designated as hedge accounting
Deferred tax assets
Current income tax receivable
Other assets
Assets classified as held for sale
TOTAL ASSETS
Amounts due to banks, the National Governments, deposits from the
National Banks and other banks
Repo liabilities
Financial liabilities 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
TOTAL LIABILITIES
Share capital
Retained earnings and reserves
Treasury shares
Total equity attributable to the parent
Total equity attributable to non-controlling interest
TOTAL SHARHOLDERS' EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
2023
HUF million
7,125,049
1,566,998
223,884
288,885
1,601,461
17,676,533
1,400,485
1,289,712
96,110
5,249,272
523,124
291,358
74,698
53,381
41,967
55,691
7,773
509,430
1,533,333
39,609,144
2022
HUF million
4,221,392
1,351,082
41,009
436,387
1,739,603
16,094,458
1,247,414
1,298,752
73,849
4,891,938
464,469
237,031
58,937
47,452
48,247
75,421
5,650
471,119
-
32,804,210
1,940,862
1,463,158
126,237
70,707
28,332,431
2,095,548
140,488
63,899
76,313
28,663
69,948
121,119
745,820
562,396
1,139,920
35,514,351
28,000
4,179,322
(120,489)
4,086,833
7,960
4,094,793
39,609,144
217,369
54,191
25,188,805
870,682
385,747
27,949
63,778
40,094
28,866
131,621
707,654
301,984
-
29,481,898
28,000
3,395,215
(106,862)
3,316,353
5,959
3,322,312
32,804,210
Change
%
69
16
446
(34)
(8)
10
12
(1)
30
7
13
23
27
12
(13)
(26)
38
8
21
33
(42)
30
12
141
(64)
129
20
(29)
142
(8)
5
86
20
0
23
13
23
34
23
21
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)
INTEGRATED ANNUAL REPORT 2023
223
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
SECURITY LISTED ON THE BUDAPEST STOCK EXCHANGE BETWEEN 01/01/2014 AND 31/12/2023
Issuer
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Mortgage Bank
OTP Mortgage Bank
OTP Mortgage Bank
OTP Bank Plc.
OTP Bank Plc.
Type of security
Security name
Date of issue
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Mortgage bond
Mortgage bond
Mortgage bond
Retail bond
Retail bond
OTP_EURO_1 2015/II
OTP_EURO_2 2016/I
OTP_EURO_1 2015/III
OTP_EURO_2 2016/II
OTP_EURO_1 2015/IV
OTP_EURO_2 2016/III
OTP_ EURO_1 2015/V
OTP_EURO_2 2016/IV
OTP_EURO_1 2015/VI
OTP_EURO_2 2016/V
OTP_EURO_1 2015/VII
OTP_EURO_2 2016/VI
OTP_EURO_1 2015/VIII
OTP_EURO_2 2016/VII
OTP_EURO_1 2015/IX
OTP_EURO_2 2016/VIII
OTP_EURO_1 2015/X
OTP_EURO_2 2016/IX
OTP_EURO_1 2015/XI
OTP_EURO_2 2016/X
OTP_EURO_1 2015/XII
OTP_EURO_2 2016/XI
OTP_EURO_1 2015/XIII
OTP_EURO_2 2016/XII
OTP_EURO_1 2015/XIV
OTP_EURO_2 2016/XIII
OTP_EURO_1 2015/XV
OTP_EURO_2 2016/XIV
OTP_EURO_1 2015/XVI
OTP_EURO_2 2016/XV
OTP_EURO_1 2015/XVII
OTP_EURO_2 2016/XVI
OTP_EURO_1 2015/XVIII
OTP_EURO_2 2016/XVII
OTP_EURO_1 2015/XIX
OTP_EURO_2 2016/XVIII
OTP_EURO_1 2015/XX
OTP_EURO_2 2016/XIX
OTP_EURO_1 2015/XXI
OTP_EURO_1 2015/XXII
OTP_EURO_1 2015/XXIII
OTP_EURO_1 2015/XXIV
OTP_VK_USD_2 2016/I
OTP_EURO_1 2015/XXV
OTP_EURO_1 2015/XXVI
OTP_EURO_1 2016/I
OTP_EURO_1 2016/II
OTP_EURO_1 2016/III
OTP_VK_USD_2 2017/I
OTP_EURO_1 2016/IV
OTP_EURO_1 2016/V
OTP_VK_USD_1 2016/I
OTP_EURO_1 2016/VI
OTP_EURO_1 2016/VII
OTP_EURO_1 2016/VIII
OTP_VK_USD_1 2016/II
OTP_VK_USD_1 2016/III
OTP_EURO_1 2016/IX
OTP_EURO_1 2016/X
OTP_EURO_1 2016/XI
OTP_EURO_1 2016/XII
OTP_EURO_1 2016/XIII
OTP_VK_USD_1 2017/I
OTP_EURO_1 2017/I
OTP_EURO_1 2017/II
OTP_EURO_1 2017/III
OTP_VK_USD_1 2017/II
OTP_EURO_1 2017/IV
OTP_EURO_1 2017/V
OTP_VK_USD_1 2017/III
OTP_EURO_1 2017/VI
OTP_EURO_1 2017/VII
OTP_EURO_1 2017/VIII
OTP_EURO_1 2017/IX
OTP_VK_USD_1 2017/IV
OTP_EURO_1 2017/X
OTP_VK_USD_1 2018/I
OJB2021/I
OJB2020/III
OJB2022/I
OTP_VK_USD_1 2018/II
OTP_VK_USD_1 2018/III
17/01/2014
17/01/2014
31/01/2014
31/01/2014
14/02/2014
14/02/2014
28/02/2014
28/02/2014
14/03/2014
14/03/2014
21/03/2014
21/03/2014
11/04/2014
11/04/2014
18/04/2014
18/04/2014
09/05/2014
09/05/2014
23/05/2014
23/05/2014
06/06/2014
06/06/2014
20/06/2014
20/06/2014
04/07/2014
04/07/2014
18/07/2014
18/07/2014
30/07/2014
30/07/2014
08/08/2014
08/08/2014
29/08/2014
29/08/2014
12/09/2014
12/09/2014
03/10/2014
03/10/2014
22/10/2014
31/10/2014
14/11/2014
28/11/2014
28/11/2014
19/12/2014
09/01/2015
30/01/2015
20/02/2015
20/03/2015
10/04/2015
10/04/2015
24/04/2015
24/04/2015
29/05/2015
30/06/2015
24/07/2015
24/07/2015
25/09/2015
25/09/2015
30/10/2015
11/11/2015
27/11/2015
30/12/2015
29/01/2016
29/01/2016
12/02/2016
26/02/2016
18/03/2016
18/03/2016
15/04/2016
27/05/2016
27/05/2016
10/06/2016
01/07/2016
10/08/2016
16/09/2016
16/09/2016
20/01/2017
15/02/2017
23/02/2017
24/02/2017
03/03/2017
13/04/2017
Date of maturity
31/01/2015
17/01/2016
14/02/2015
31/01/2016
28/02/2015
14/02/2016
14/03/2015
28/02/2016
28/03/2015
14/03/2016
04/04/2015
21/03/2016
25/04/2015
11/04/2016
02/05/2015
18/04/2016
23/05/2015
09/05/2016
06/06/2015
23/05/2016
20/06/2015
06/06/2016
04/07/2015
20/06/2016
18/07/2015
04/07/2016
01/08/2015
18/07/2016
13/08/2015
30/07/2016
22/08/2015
08/08/2016
12/09/2015
29/08/2016
26/09/2015
12/09/2016
17/10/2015
03/10/2016
05/11/2015
14/11/2015
28/11/2015
12/12/2015
28/11/2016
02/01/2016
23/01/2016
13/02/2016
06/03/2016
03/04/2016
10/04/2017
24/04/2016
08/05/2016
24/04/2016
12/06/2016
14/07/2016
07/08/2016
24/07/2016
25/09/2016
09/10/2016
13/11/2016
25/11/2016
11/12/2016
13/01/2017
29/01/2017
12/02/2017
26/02/2017
12/03/2017
18/03/2017
01/04/2017
29/04/2017
27/05/2017
10/06/2017
24/06/2017
15/07/2017
24/08/2017
16/09/2017
30/09/2017
20/01/2018
27/10/2021
20/05/2020
24/05/2022
03/03/2018
13/04/2018
Ccy
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
USD
EUR
EUR
EUR
EUR
EUR
USD
EUR
EUR
USD
EUR
EUR
EUR
USD
USD
EUR
EUR
EUR
EUR
EUR
USD
EUR
EUR
EUR
USD
EUR
EUR
USD
EUR
EUR
EUR
EUR
USD
EUR
USD
HUF
HUF
HUF
USD
USD
INTEGRATED ANNUAL REPORT 2023
224
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
Issuer
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Mortgage Bank
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Mortgage Bank
OTP Mortgage Bank
OTP Bank Plc.
OTP Mortgage Bank
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Mortgage Bank
OTP Bank Plc.
OTP Mortgage Bank
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Mortgage Bank
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Mortgage Bank
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Mortgage Bank
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Mortgage Bank
OTP Bank Plc.
Type of security
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Mortgage bond
Retail bond
Retail bond
Retail bond
Mortgage bond
Mortgage bond
Retail bond
Mortgage bond
Retail bond
Corporate bond
Corporate bond
Corporate bond
Corporate bond
Corporate bond
Retail bond
Retail bond
Retail bond
Retail bond
Corporate bond
Corporate bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Mortgage bond
Retail bond
Mortgage bond
Retail bond
Retail bond
Corporate bond
Corporate bond
Corporate bond
Corporate bond
Corporate bond
Corporate bond
Retail bond
Mortgage bond
Corporate bond
Corporate bond
Corporate bond
Corporate bond
Corporate bond
Corporate bond
Corporate bond
Mortgage bond
Corporate bond
Corporate bond
Corporate bond
Corporate bond
Corporate bond
Corporate bond
Corporate bond
Mortgage bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Corporate bond
Corporate bond
Corporate bond
Corporate bond
Corporate bond
Corporate bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Mortgage bond
Retail bond
Security name
OTP_VK_USD_1 2018/IV
OTP_VK_USD_1 2018/V
OTP_VK_USD_1 2018/VI
OTP_VK_USD_1 2018/VII
OTP_VK_USD_1 2018/VIII
OTP_VK_USD_1 2018/IX
OTP_VK_USD_1 2019/I
OTP_VK_USD_1 2019/II
OJB2023/I
OTP_VK_USD_1 2019/III
OTP_VK_USD_1 2019/IV
OTP_VK_USD_1 2019/V
OJB2024/A
OJB2024/B
OTP_VK_USD_1 2019/VI
OJB2024/II
OTP_VK_USD_1 2019/VII
OTP_DK_HUF_2019/II
OTP_DK_HUF_2020/I
OTP_DK_HUF_2021/I
OTP_DK_HUF_2022/I
OTP_DK_HUF_2023/I
OTP_VK_USD_1 2019/VIII
OTP_VK_USD_1 2020/I
OTP_VK_USD_1 2020/II
OTP_VK_USD_1 2020/III
OTP_DK_HUF_2024/I
OTP_DK_HUF_2025/I
OTP_VK_USD_1 2020/IV
OTP_VK_USD_1 2020/V
OTP_VK_USD_1 2020/VI
OTP_VK_USD_1 2020/VII
OTP_VK_USD_1 2020/VIII
OJB2025/II
OTP_VK_USD_1 2021/I
OJB2024/C
OTP_VK_USD_1 2021/II
OTP_VK_USD_1 2021/III
OTP_DK_HUF_2022/II
OTP_DK_HUF_2023/II
OTP_DK_HUF_2024/II
OTP_DK_HUF_2025/II
OTP_DK_HUF_2026/I
OTP_DK_HUF_2027/I
OTP_VK_USD_1 2021/IV
OJB2027/I
OTP_DK_HUF_2025/III
OTP_DK_HUF_2024/III
OTP_DK_HUF_2027/II
OTP_DK_HUF_2026/II
OTP_DK_HUF_2028/I
OTP_DK_HUF_2029/I
OTP_DK_HUF_2030/I
OJB2031/I
OTP_DK_HUF_2026/III
OTP_DK_HUF_2027/III
OTP_DK_HUF_2028/II
OTP_DK_HUF_2029/II
OTP_DK_HUF_2030/II
OTP_DK_HUF_2031/I
OTP_DK_HUF_2032/I
OJB2029/A
OTP_HUF_2025/1
OTP_HUF_2026/1
OTP_HUF_2024/1
OTP_HUF_2024/2
OTP_HUF_2024/3
OTP_HUF_2024/4
OTP_HUF_2024/5
OTP_DK_HUF_2028/III
OTP_DK_HUF_2029/III
OTP_DK_HUF_2030/III
OTP_DK_HUF_2031/II
OTP_DK_HUF_2032/II
OTP_DK_HUF_2033/I
OTP_HUF_2024/6
OTP_HUF_2024/7
OTP_HUF_2024/8
OTP_HUF_2025/2
OTP_HUF_2024/9
OTP_HUF_2024/10
OTP_HUF_2024/11
OJB2032/A
OTP_HUF_2024/12
Date of issue
02/06/2017
14/07/2017
04/08/2017
29/09/2017
17/11/2017
20/12/2017
16/02/2018
29/03/2018
05/04/2018
18/05/2018
28/06/2018
06/08/2018
17/09/2018
18/09/2018
04/10/2018
10/10/2018
15/11/2018
15/12/2018
15/12/2018
15/12/2018
15/12/2018
15/12/2018
20/12/2018
21/02/2019
04/04/2019
16/05/2019
30/05/2019
30/05/2019
27/06/2019
15/08/2019
26/09/2019
07/11/2019
19/12/2019
03/02/2020
20/02/2020
24/02/2020
02/04/2020
14/05/2020
29/05/2020
29/05/2020
29/05/2020
29/05/2020
29/05/2020
29/05/2020
18/06/2020
23/07/2020
31/05/2021
31/05/2021
31/05/2021
31/05/2021
31/05/2021
31/05/2021
31/05/2021
18/08/2021
31/03/2022
31/03/2022
31/03/2022
31/03/2022
31/03/2022
31/03/2022
31/03/2022
25/07/2022
18/11/2022
22/12/2022
17/02/2023
10/03/2023
31/03/2023
21/04/2023
12/05/2023
01/06/2023
01/06/2023
01/06/2023
01/06/2023
01/06/2023
01/06/2023
02/06/2023
23/06/2023
30/06/2023
30/06/2023
28/07/2023
07/08/2023
01/09/2023
20/09/2023
25/09/2023
Date of maturity
02/06/2018
14/07/2018
04/08/2018
29/09/2018
17/11/2018
20/12/2018
16/02/2019
29/03/2019
24/11/2023
18/05/2019
28/06/2019
06/08/2019
20/05/2024
24/05/2024
04/10/2019
24/10/2024
15/11/2019
31/05/2019
31/05/2020
31/05/2021
31/05/2022
31/05/2023
20/12/2019
21/02/2020
04/04/2020
16/05/2020
31/05/2024
31/05/2025
27/06/2020
15/08/2020
26/09/2020
07/11/2020
19/12/2020
26/11/2025
20/02/2021
24/10/2024
02/04/2021
14/05/2021
31/05/2022
31/05/2023
31/05/2024
31/05/2025
31/05/2026
31/05/2027
18/06/2021
27/10/2027
31/05/2025
31/05/2024
31/05/2027
31/05/2026
31/05/2028
31/05/2029
31/05/2030
22/10/2031
31/05/2026
31/05/2027
31/05/2028
31/05/2029
31/05/2030
31/05/2031
31/05/2032
24/05/2029
18/11/2025
05/01/2026
17/02/2024
10/03/2024
31/03/2024
21/04/2024
12/05/2024
31/05/2028
31/05/2029
31/05/2030
31/05/2031
31/05/2032
31/05/2033
02/06/2024
23/06/2024
30/06/2024
30/06/2025
28/07/2024
07/08/2024
01/09/2024
24/11/2032
25/09/2024
Ccy
USD
USD
USD
USD
USD
USD
USD
USD
HUF
USD
USD
USD
HUF
HUF
USD
HUF
USD
HUF
HUF
HUF
HUF
HUF
USD
USD
USD
USD
HUF
HUF
USD
USD
USD
USD
USD
HUF
USD
HUF
USD
USD
HUF
HUF
HUF
HUF
HUF
HUF
USD
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
INTEGRATED ANNUAL REPORT 2023
225
OTP BANK
Issuer
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
OTP Bank Plc.
BUSINESS REPORT 2023 (CONSOLIDATED)
Type of security
Retail bond
Retail bond
Retail bond
Retail bond
Retail bond
Security name
OTP_TBSZ_HUF_2028/1
OTP_HUF_2024/13
OTP_HUF_2024/14
OTP_HUF_2026/2
OTP_HUF_2024/15
Date of issue
13/10/2023
20/10/2023
17/11/2023
15/12/2023
20/12/2023
Date of maturity
15/12/2028
20/10/2024
17/11/2024
15/12/2026
20/12/2024
Ccy
HUF
HUF
HUF
HUF
HUF
INTEGRATED ANNUAL REPORT 2023
226
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
COMPANIES INVOLVED IN THE SCOPE OF CONSOLIDATION
(in IFRS consolidated accounts)
Description
1. OTP Bank Plc.
2. OTP Ingatlan Zrt.
BANK CENTER No. 1. Beruházási és
3.
Fejlesztési Kft.
4. OTP Alapkezelő Zrt.
5. OTP Faktoring Követeléskezelő Zrt.
6. OTP Lakástakarék Zrt.
7. Merkantil Bank Zrt.
8. OTP Faktoring Vagyonkezelő Kft.
Merkantil Bérlet Kft.
9.
10. OTP Jelzálogbank Zrt.
11. OTP Pénztárszolgáltató Zrt.
12. NIMO 2002 Ker. és Szolgáltató Kft.
13. OTP Ingatlan Befektetési Alapkezelő Zrt.
14. OTP Kártyagyártó és Szolgáltató Kft.
15. Air-Invest Vagyonkezelö Kft.
SPLC–P
Ingatlanhasznosító Kft.
16.
Ingatlanfejlesztő,
SPLC Vagyonkezelő Kft.
17.
18. OTP Ingatlanlízing Zrt.
19. OTP Életjáradék Ingatlanbefektető Zrt.
20. OTP Ingatlanpont Ingatlanközvetítő Kft.
21. OTP Hungaro-Projekt Kft.
22. OTP Mérnöki Szolgáltató Kft.
23. OTP Ingatlanüzemeltető Kft.
PortfoLion Kockázati Tőkealap-kezelő
Zrt.
24.
25. MONICOMP Zrt.
CIL Babér Kft.
26.
27. OTP Pénzügyi Pont Zrt.
Bajor-Polár Center
Zrt.
28.
29. OTP Mobil Szolgáltató Kft.
30. OTP Travel Kft.
Ingatlanhasznosító
OTP Ecosystem Korlátolt Felelősségű
Társaság
OTP Bank Munkavállalói Résztulajdonosi
Program Szervezet
32.
33. PortfoLion Digital Kft.
Korlátolt
Ingatlankezelő
OTP
Felelősségű Társaság
MFM Projekt Beruházási és Fejlesztési
Kft.
ShiwaForce.com Zártkörűen Működő
Részvénytársaság
36.
37. EiSYS Kft.
38. OTP Otthonmegoldások Kft.
39.
OD Informatikai Fejlesztő és Szolgáltató
Korlátolt Felelősségű Társaság
BALANSZ
Ingatlanalap
Nyíltvégű
Zártkörű
40.
41. PortfoLion Zöld Magántőkealap
42. PortfoLion Digitális Magántőkealap I.
43. PortfoLion Regionális Magántőkealap
44. PortfoLion Regionális Magántőkelap II.
45. PortfoLion Partner Magántőke Alap
46. PortfoLion Digitális Magántőkealap II.
“Nemesszalóki
Állattenyésztési,
Termelő és Szolgáltató Zrt.
Mezőgazdasági”
Növénytermesztési,
47.
48. ZA-Invest Béta Kft.
49.
Zártkörűen
NAGISZ Mezőgazdasági Termelő és
Szolgáltató
Működő
Részvénytársaság
Nádudvari Élelmiszer Feldolgozó és
Kereskedelmi Korlátolt
Felelősségű
Társaság
50.
51. Hage Hajdúsági Agráripari Zrt.
31.
34.
35.
Main activity
monetary intermediation
buying and selling of own real estate
renting and operating real estate
fund management activities
other financial services
monetary intermediation
monetary intermediation
buying and selling of own real estate
renting and operating real estate, leasing machines and
equipment
monetary intermediation
activities auxiliary to financial services
renting and operating real estate
fund management activities
manufacture of plastic products
passenger air transport
renting and operating real estate
trade of passenger vehicles, renting and operating real
estate
credit granting, financial leasing
buying and selling of own real estate
real estate brokerage
business management consultancy
engineering activity
real estate operation
fund management activities
repair of computers and computer peripherals
renting
operating
and
management consultancy
activities auxiliary to financial services
estate,
real
business
renting and operating real estate
IT services
travel agency services
other information technology services
activities auxiliary to financial services
business management consultancy
real estate management
renting and operating real estate
computer programming
IT consultancy
data processing
computer programming
investment fund
investment fund
investment fund
investment fund
investment fund
investment fund
investment fund
agricultural activity
agricultural activity
agricultural activity
agricultural activity
agricultural activity
Country of tax residence
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
INTEGRATED ANNUAL REPORT 2023
227
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
52.
53.
54.
57.
58.
59.
60.
61.
62.
63.
Description
AFP Private Equity Invest Zártkörűen
Működő Részvénytársaság
ZA-Invest Delta korlátolt Felelősségű
Társaság
Foglaljorvost
Felelősségű Társaság
OTP Ecosystem Korlátolt Felelősségű
Társaság
Korlátolt
Online
55.
56. JN Parkoló Ingatlanhasznosító Kft.
Korlátolt
Zártkörűen
Kereskedelmi
Szajki Mezőgazdasági
Működő Részvénytársaság
Szekszárdi Mezőgazdasági Zártkörűűen
Működő Részvénytársaság
ARANYMEZŐ 2001. Mezőgazdasági
Termékelőállító,
és
Szolgáltató
Felelősségű
Társaság
AGROMAG-PLUSZ
Termékelőállító,
Szolgáltató
Társaság
Aranykalász
korlátolt felelősségű társaság
ZA Gamma HoldCo Korlátolt Felelősségű
Társaság
ZA Invest Gamma Korlátolt Felelősségű
Társaság
ZA-Invest Kappa Korlátolt Felelősségű
Társaság
Mezőgazdasági
és
Felelősségű
1955. Mezőgazdasági
Kereskedelmi
Korlátolt
64.
65. Club Hotel Füred Szálloda Kft.
66. DSK Bank AD,
67. DSK Trans Security EAD
68. POK DSK-Rodina AD
69. DSK Asset Management EAD
70. DSK Leasing AD,
71. OTP Insurance Broker EOOD
72. OTP Factoring Bulgaria EAD;
73. DSK Ventures EAD
74. DSK DOM EAD
75. OTP Leasing EOOD;
76. Regional Urban Development Fund AD
77. OTP banka dioničko društvo
78. OTP Invest d.o.o.
79. OTP Nekretnine d.o.o
80. OTP Leasing d.d.
81. CRESCO d.o.o.
82. Georg d.o.o
83. SKB banka d.d. Ljubljana
84. SKB Leasing d.o.o.
85. SKB Leasing Select d.o.o.
86.
Mendota Invest, Nepremicninska druzba,
d.o.o.
Mendota Invest, Nepremicninska druzba,
d.o.o.
87.
88. Nova Kreditna Banka Maribor d.d.
89.
ALEJA FINANCE, FINANCNE IN DRUGE
STORITVE, D.O.O.
OTP banka Srbija akcionarsko drustvo
Novi Sad
90.
91. OTP Investments d.o.o. Novi Sad
92. OTP Factoring Serbia d.o.o.
93. R.E. Four d.o.o. Novi Sad
94. PEVEC d.o.o Beograd
95. OTP Lizing d.o.o.
96. OTP Services d. o. o. Beograd
97. OTP Leasing Srbija d.o.o Beograd
98. OTP Osiguranje A.D.O. Beograd
99. Banka OTP Albania SHA
100. Crnogorska Komercijalna Banka a.d.
101. OTP Debt Collection d.o.o. Podgorica
102. JSCMB ‘IPOTEKA BANK’
103. JSC “OTP Bank” (Russia)
104. Velvin Ventures Ltd.
105. LLC MFO “OTP Finance”
106. OTP Bank JSC (Ukraine)
107. LLC AMC OTP Capital
108. LLC OTP Leasing
109. OTP Factoring Ukraine LLC
110. OTP Solution Fund
Main activity
asset management (holding)
asset management (holding)
World Wide Web portal service
Other information technology services
Services to buildings
Growing of cereals (except rice), leguminous crops, oil
seeds
Growing of cereals (except rice), leguminous crops, oil
seeds
Growing of cereals (except rice), leguminous crops, oil
seeds
Growing of cereals (except rice), leguminous crops, oil
seeds
Growing of cereals (except rice), leguminous crops, oil
seeds
Asset management (holding)
Asset management (holding)
Asset management (holding)
Hotel services
monetary intermediation
security services
pension insurance
fund management activities
financial leasing
activities of insurance agents and brokers
factoring, trade credit
commercial mediation, marketing, IT services
credit intermediation
financial leasing
financing of urban development plans
monetary intermediation
fund management activities
development of construction projects
financial leasing
buying and selling of own real estate
business management consultancy
monetary intermediation
financial leasing
financial leasing
property developer, manager
Real estate management
Other monetary intermediation
Other activities auxiliary to financial services, except
insurance and pension funding
monetary intermediation
other financial services
other financial services
buying and selling of own real estate
warehousing
financial leasing
trade of passenger vehicles
financial leasing
insurance
monetary intermediation
monetary intermediation
other financial intermediation
Other monetary intermediation
monetary intermediation
real estate brokerage
micro-financial operation
monetary intermediation
fund management activities
financial leasing
receivable management, credit intermediation
investment fund
Country of tax residence
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Hungary
Bulgaria
Bulgaria
Bulgaria
Bulgaria
Bulgaria
Bulgaria
Bulgaria
Bulgaria
Bulgaria
Bulgaria
Bulgaria
Croatia
Croatia
Croatia
Croatia
Croatia
Croatia
Slovenia
Slovenia
Slovenia
Slovenia
Slovenia
Slovenia
Slovenia
Serbia
Serbia
Serbia
Serbia
Serbia
Serbia
Serbia
Serbia
Serbia
Albania
Montenegro
Montenegro
Uzbekistan
Russia
Russia
Russia
Ukraine
Ukraine
Ukraine
Ukraine
Ukraine
INTEGRATED ANNUAL REPORT 2023
228
OTP BANK
BUSINESS REPORT 2023 (CONSOLIDATED)
Description
111. OTP Bank Romania S.A.
112. OTP Leasing Romania IFN S.A.
113. OTP Asset Management SAI S.A.
114. OTP Factoring SRL
115. SC Aloha Buzz SRL
116. SC Favo Consultanta SRL
117. SC Tezaur Cont SRL
118. OTP Bank S.A.
119. OTP Holding Ltd.
120. OTP Luxembourg S.à r.l.
121. OTP Financing Solutions B.V.
122. OTP Holding Malta Ltd.
123. OTP Financing Malta Ltd.
124. Project 01 Consulting, s. r. o.
Main activity
monetary intermediation
financial leasing
fund management activities
other financial services
other financial services
other financial services
other financial services
monetary intermediation
other financial services
Asset management (holding)
loan receivables
financial holdings
lending
other financial services
Country of tax residence
Romania
Romania
Romania
Romania
Romania
Romania
Romania
Moldova
Cyprus
Luxembourg
Netherlands
Malta
Malta
Slovakia
INTEGRATED ANNUAL REPORT 2023
229
INDEPENDENT AUDITORS’ REPORTS 2023
(SEPARATE AND CONSOLIDATED, IN ACCORDANCE WITH IFRS)
INTEGRATED ANNUAL REPORT 2023
230
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
231
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
232
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
233
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
234
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
235
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
236
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
237
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
238
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
239
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
240
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
241
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
242
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
243
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
244
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
245
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
246
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
247
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
248
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
249
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
250
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
251
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
252
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
253
OTP BANK
AUDITORS’ REPORTS
INTEGRATED ANNUAL REPORT 2023
254
SEPARATE FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS (2023)
INTEGRATED ANNUAL REPORT 2023
255
OTP BANK
IFRS REPORT (SEPARATE)
OTP BANK PLC.
SEPARATE STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2023
(in HUF mn)
Note
31 December
2023
31 December
2022
Cash, amounts due from banks and balances with the National Bank of Hungary
Placements with other banks
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
Deferred tax assets
Current tax assets
Derivative financial assets designated as hedge accounting relationships
Non-current assets held for sale
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 designated at fair value through profit or loss
Derivative financial liabilities designated as held for trading
Derivative financial liabilities designated as hedge accounting relationships
Current tax liabilities
Provisions
Other liabilities
Subordinated bonds and loans
TOTAL LIABILITIES
Share capital
Retained earnings and reserves
Treasury shares
TOTAL SHAREHOLDERS' EQUITY
5.
6.
7.
8.
9.
10.
11.
11.
12.
13.
13.
35.
14.
34.
34.
15.
46.
16.
17.
18.
19.
35.
20.
21.
22.
23.
34.
24.
24.
25.
26.
27.
28.
2,708,232
2,702,433
201,658
257,535
559,527
2,710,848
4,681,359
934,848
2,001,952
107,306
98,115
66,222
4,203
408
-
21,628
130,718
365,961
1,092,198
2,899,829
246,529
410,012
797,175
3,282,373
4,825,040
793,242
1,596,717
94,564
69,480
39,882
4,207
35,742
1,569
47,220
-
329,752
17,552,953
16,565,531
1,761,579
443,694
10,734,325
68,282
1,163,109
19,786
183,565
27,423
14,393
22,497
295,399
520,296
1,736,128
408,366
11,119,158
41,464
498,709
16,576
373,401
50,623
3,199
29,656
313,188
294,186
15,254,348
14,884,654
28,000
2,276,759
(6,154)
28,000
1,655,601
(2,724)
2,298,605
1,680,877
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
17,552,953
16,565,531
Budapest, 20 March 2024
Dr. Sándor Csányi
Chairman and Chief Executive Officer
László Wolf
Deputy Chief Executive Officer
INTEGRATED ANNUAL REPORT 2023
256
OTP BANK
IFRS REPORT (SEPARATE)
OTP BANK PLC.
SEPARATE STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED
31 DECEMBER 2023
(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
Note
29.
29.
Year ended 31
December
2023
Year ended 31
December
2022
1,227,173
795,906
2,023,079
721,679
377,231
1,098,910
29.
(1,556,361)
(802,020)
466,718
296,890
(Release of loss allowance) / Loss allowance on loan, placement and
repo receivables losses
6., 7., 11., 30.
8,616
(47,687)
(Release of loss allowance) / Loss allowance on securities at fair value
through other comprehensive income and on securities at
amortised cost
(Release of provision) / 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
9., 10., 30.
11,879
(53,238)
24., 30.
45.4.
7,172
(980)
26,687
(5,541)
11,872
(94,594)
NET INTEREST INCOME AFTER RISK COST
493,405
202,296
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) and gains
Gains and (losses) on securities, net
Gains / (losses) on financial instruments at fair value through profit or
loss
Net results on derivative instruments and hedge relationships
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
PROFIT AFTER INCOME TAX
Earnings per share (in HUF)
Basic
Diluted
4.
31.
31.
32.
32.
32.
32.
32.
33.
33.
33.
33.
33.
34.
43.
43.
(19,707)
(56,195)
(9,017)
(14,856)
402,885
(78,755)
324,130
(12,269)
7,073
91,268
13,055
275,705
26,184
63,590
464,606
(195,404)
(50,814)
(281,918)
(528,136)
725,281
(70,293)
654,988
362,444
(66,087)
296,357
541
(10,605)
(18,790)
9,917
194,526
13,775
(131,942)
57,422
(154,303)
(46,738)
(290,989)
(492,030)
(7,006)
13,638
6,632
2,344
2,344
24
24
INTEGRATED ANNUAL REPORT 2023
257
OTP BANK
IFRS REPORT (SEPARATE)
OTP BANK PLC.
SEPARATE STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED
31 DECEMBER 2023
(in HUF mn)
Note Year ended 31
December
2023
Year ended 31
December
2022
PROFIT AFTER INCOME TAX
654,988
6,632
Items that may be reclassified subsequently to profit or loss:
Fair value adjustment of debt instruments at fair value through other
comprehensive income
37,917
(55,804)
Deferred tax related to fair value adjustment of debt instruments at fair value
through other comprehensive income
34.
(3,503)
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
34.
(Losses) / Gains on derivative financial instruments designated as cash flow
hedge
Items that will not be reclassified to profit or loss:
Gains on equity instruments at fair value through other comprehensive income
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.
3,752
(338)
5,700
-
3,308
(374)
5,186
(4,887)
440
(5,641)
2,675
61
(41)
Total
TOTAL COMPREHENSIVE INCOME
46,462
(58,011)
701,450
(51,379)
INTEGRATED ANNUAL REPORT 2023
258
OTP BANK
IFRS REPORT (SEPARATE)
OTP BANK PLC.
SEPARATE STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEAR ENDED
31 DECEMBER 2023
(in HUF mn)
Share Capital
Not
e
Capital
reserve
Retained
earnings and
other reserves
Treasury
Shares
Total
Balance as at 1 January 2022
Net profit for the period
Other movement
Other comprehensive income
Total comprehensive income
Share-based payment
Sale of treasury shares
Acquisition of treasury shares
Loss on treasury shares
Dividend for the year 2021
Other
owners
transaction with
Balance as at 31 December
2022
Balance as at 1 January 2023
Net profit for the period
Other comprehensive income
Total comprehensive income
Share-based payment
Sale of treasury shares
Acquisition of treasury shares
Loss on sale of treasury shares
Dividend for the year 2022
Other
owners
transaction with
Balance as at 31 December
2023
39.
28.
28.
28.
39.
28.
28.
28.
28,000
-
-
-
-
-
-
-
-
-
-
28,000
28,000
-
-
-
-
-
-
-
-
-
28,000
52
-
-
-
-
-
-
-
-
-
-
52
52
-
-
-
-
-
-
-
-
-
52
1,845,784
6,632
2
(58,011)
(51,377)
2,948
-
-
(21,558)
(120,248)
(58,872)
-
-
-
-
-
72,416
(16,268)
-
-
1,814,964
6,632
2
(58,011)
(51,377)
2,948
72,416
(16,268)
(21,558)
(120,248)
(138,858)
56,148
(82,710)
1,655,549
(2,724)
1,680,877
1,655,549
654,988
46,462
701,450
3,292
-
-
416
(84,000)
(2,724)
-
-
-
-
36,388
(39,818)
-
-
1,680,877
654,988
46,462
701,450
3,292
36,388
(39,818)
416
(84,000)
(80,292)
(3,430)
(83,722)
2,276,707
(6,154)
2,298,605
INTEGRATED ANNUAL REPORT 2023
259
OTP BANK
IFRS REPORT (SEPARATE)
OTP BANK PLC.
SEPARATE STATEMENT OF CASH FLOWS FOR THE YEAR ENDED
31 DECEMBER 2023
(in HUF mn)
OPERATING ACTIVITIES
Profit before income tax
Note Year ended 31
December
2023
Year ended 31
December
2022
725,281
(7,006)
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
(Reversal of impairment loss) / Impairment loss on investments in subsidiaries
(Release of loss allowance) / Loss allowance on securities at amortised cost
Loss allowance on other assets
(Release of provision) / Provision on off-balance sheet commitments and
contingent liabilities
Share-based payment
Unrealised gains on fair value adjustment of financial instruments at fair value
through profit or loss
Unrealised (gains)/losses on fair value adjustment of derivative financial
instruments
Gains on securities
Interest expense from leasing liabilities
Foreign exchange gain / (loss)
Proceeds from sale of tangible and intangible assets
Net changing in assets and liabilities in operating activities
Net decrease / (increase) in placements with other banks and repo receivables
before allowance for placement losses
Changes in held for trading securities
Change in financial instruments mandatorily measured at fair value through
profit or loss
Changes in derivative financial instruments at fair value through profit or loss
Net increase in loans
Increase in other assets, excluding advances for investments and before
provisions for losses
Net increase in amounts due to banks and deposits from the National Bank of
Hungary and other banks and repo liabilities
Financial liabilities designated as fair value through profit or loss
Net (decrease) / increase in deposits from customers
(Decrease) / Increase in other liabilities
Net increase in the compulsory reserve established by the National Bank of
Hungary
Dividend income
Income tax paid
13.
30.
9.
12.
10.
16.
24.
39.
45.
45.
32.
35.
32.
33.
6., 7.
8.
8.
8.
11.
16.
17.,
18.
21.
19.
24.
5.
12.
3,136
50,834
357
(3,303)
(87,609)
(8,576)
3,575
(6,663)
3,292
(95,953)
(76,357)
18,890
(2,081)
(20,842)
(1,225)
291,024
52,640
(2,200)
(32,338)
(35,369)
(11,196)
46,873
63,939
25,615
93,513
27,623
2,939
7,598
2,948
11,870
52,840
62,354
(1,186)
9,359
(267)
(521,731)
(44,181)
1,925
136
(817,297)
(22,571)
(99,813)
105,778
(1,332)
(237,889)
(73,221)
(402,879)
(275,705)
(19,213)
910,984
(1,625)
971,640
77,424
(641,125)
(194,526)
(19,953)
Net cash (used in) / provided by operating activities
(150,519)
9,674
INTEGRATED ANNUAL REPORT 2023
260
OTP BANK
IFRS REPORT (SEPARATE)
OTP BANK PLC.
SEPARATE STATEMENT OF CASH FLOWS FOR THE YEAR ENDED
31 DECEMBER 2023
(in HUF mn) [continued]
Note Year ended 31
December
2023
Year ended 31
December
2022
INVESTING ACTIVITIES
Purchase securities at fair value through other comprehensive income
through other
Proceeds from sale of securities at fair value
comprehensive income
Change in derivative financial instruments designated as hedge
accounting
Increase 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 in investment properties
Net provided by / (used in) cash used in investing activities
FINANCING ACTIVITIES
Leasing payments
Cash received from issuance of securities
Cash used for redemption of issued securities
Cash received from issuance of subordinated bonds and loans
Cash used for redemption of subordinated bonds and loans
Increase of Treasury shares
Decrease of Treasury shares
Dividends paid
Net cash provided by financing activities
Net increase in cash and cash equivalents
9.
9.
12.
10.
10.
13.
13.
14.
20.
20.
25.
25.
28.
28.
27.
(342,984)
(1,322,153)
628,817
1,074,212
1,580
(445,637)
254,694
(81,661)
588,288
(86,251)
1,903
(134)
13,805
(117,222)
194,449
(624,476)
415,975
(60,575)
648
(14)
518,615
(425,351)
(5,341)
829,166
(140,736)
293,590
(44,611)
(39,818)
36,804
(83,995)
(6,189)
575,994
(91,635)
6,781
(7,523)
(16,268)
50,858
(120,213)
845,059
391,805
1,213,155
(23,872)
Cash and cash equivalents at the beginning of the year
351,770
375,642
Cash and cash equivalents at the end of the year
1,564,925
351,770
Interest received
Interest paid
1,848,542
1,320,920
941,406
511,635
INTEGRATED ANNUAL REPORT 2023
261
OTP BANK
IFRS REPORT (SEPARATE)
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 and Deputy Chief
Executive Officer, László Wolf.
The Bank’s owners have the power to amend the separate financial statements after issue if applicable.
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: Zsolt Kónya, registration number: 007383.
Audit service fee agreed by the Annual General Meeting of the Bank for the year ended 2023 is an amount of EUR
458 thousand + 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 (%):
31 December
2023
31 December
2022
Domestic and foreign private and institutional investors
Employees
Total
99%
1%
100%
99%
1%
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 342 branches in
Hungary.
Number of employees
Average number of employees
31 December
2023
31 December
2022
10,715
10,591
10,516
10,252
NOTE 1:
ORGANIZATION AND BASIS OF FINANCIAL STATEMENTS
1.2.
Basis of accounting
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”).
INTEGRATED ANNUAL REPORT 2023
262
OTP BANK
IFRS REPORT (SEPARATE)
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 2023
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 IAS 1 “Presentation of Financial Statements” and IFRS Practice Statement 2-
Disclosure of Accounting policies – adopted by the EU on 2 March 2022 (effective for annual periods
beginning on or after 1 January 2023 with earlier application permitted)
o The amendments provide guidance on the application of materiality judgements to accounting policy
disclosures. In particular, the amendments to IAS 1 replace the requirement to disclose ‘significant’
accounting policies with a requirement to disclose ‘material’ accounting policies. Also, guidance and
illustrative examples are added in the Practice Statement to assist in the application of the materiality
concept when making judgements about accounting policy disclosures.
• Amendments to IAS 8 “Accounting policies, Changes in Accounting Estimates and Errors” – Definition
of Accounting Estimates – adopted in the EU on 2 March 2022 (effective for annual periods beginning on
or after 1 January 2023 with earlier application permitted and apply to changes in accounting policies and
changes in accounting estimates that occur on or after the start of that period)
o The amendments introduce a new definition of accounting estimates, defined as monetary amounts in
financial statements that are subject to measurement uncertainty, if they do not result from a correction
of prior period error. Also, the amendments clarify what changes in accounting estimates are and how
these differ from changes in accounting policies and corrections of errors.
• Amendments to IFRS 17 “Insurance Contracts” – adopted by the EU on 19 November 2021 (effective
for annual periods beginning on or after 1 January 2023). This is a comprehensive new accounting standard
for insurance contracts, covering recognition and measurement, presentation and disclosure. IFRS 17 applies
to all types of insurance contracts issued, as well as to certain guarantees and financial instruments with
discretional participation contracts. – IFRS 17 is not relevant in case of these Separate Financial Statements
• Amendments to IFRS 17 “Insurance Contracts” – Initial application of IFRS 17 and IFRS 9 –
Comparative Information – adopted by the EU on 8 September 2022 (effective date for annual periods
beginning on or after 1 January 2023 with earlier application permitted, provided the entity also applies IFRS
9 Financial Instruments on or before the date it first applies IFRS 17). This is a comprehensive new accounting
standard for insurance contracts, covering recognition and measurement, presentation and disclosure. IFRS
17 applies to all types of insurance contracts issued, as well as to certain guarantees and financial instruments
with discretional participation contracts. – IFRS 17 is not relevant in case of these Separate Financial
Statements.
• Amendments to IAS 12 “Income Taxes” – Deferred Tax related to Assets and Liabilities arising from a
Single Transaction – adopted by the EU on 11 August 2022 (effective for annual periods beginning on or after
1 January 2023; earlier applicaton permitted)
o The amendments narrow the scope of and provide further clarity on the initial recognition exception under
IAS 12 and specify how companies should account for deferred tax related to assets and liabilities arising
from a single transaction, such as leases and decommissioning obligations. The amendments clarify that
where payments that settle a liability are deductible for tax purposes, it is a matter of judgement, having
considered the applicable tax law, whether such deductions are attributable for tax purposes to the liability
or to the related asset component. Under the amendments, the initial recognition exception does not apply
to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences.
It only applies if the recognition of a lease asset and lease liability (or decommissioning liability and
decommissioning asset component) give rise to taxable and deductible temporary differences that are not
equal.
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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 2023 [continued]
• Amendments to IAS 12 “Income taxes” – International Tax Reform - Pillar Two Model Rules – The
amendments are effective immediately upon issuance, but certain disclosure requirements are effective later.
The Organisation for Economic Co-operation and Development’s (OECD) published the Pillar Two model
rules in December 2021 to ensure that large multinational companies would be subject to a minimum 15% tax
rate. On 23 May 2023, the IASB issued International Tax Reform—Pillar Two Model Rules – Amendments to
IAS 12.
o The amendments introduce a mandatory temporary exception to the accounting for deferred taxes arising
from the jurisdictional implementation of the Pillar Two model rules and disclosure requirements for
affected entities on the potential exposure to Pillar Two income taxes. The Amendments require, for
periods in which Pillar Two legislation is (substantively) enacted but not yet effective, disclosure of
known or reasonably estimable information that helps users of financial statements understand the entity’s
exposure arising from Pillar Two income taxes. To comply with these requirements, an entity is required
to disclose qualitative and quantitative information about its exposure to Pillar Two income taxes at the
end of the reporting period. The disclosure of the current tax expense related to Pillar Two income taxes
and the disclosures in relation to periods before the legislation is effective are required for annual
reporting periods beginning on or after 1 January 2023, but are not required for any interim period ending
on or before 31 December 2023.
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 IAS 1 “Presentation of Financial Statements” – Classification of Liabilities as Current or
Non-current. – The amendments are effective for annual reporting periods beginning on or after January 1,
2024, with earlier application permitted, and will need to be applied retrospectively in accordance with IAS 8.
o The objective of the amendments is to clarify the principles in IAS 1 for the classification of liabilities as
either current or non-current. The amendments clarify the meaning of a right to defer settlement, the
requirement for this right to exist at the end of the reporting period, that management intent does not affect
current or non-current classification, that options by the counterparty that could result in settlement by
the transfer of the entity’s own equity instruments do not affect current or non-current classification. Also,
the amendments specify that only covenants with which an entity must comply on or before the reporting
date will affect a liability’s classification. Additional disclosures are also required for non-current
liabilities arising from loan arrangements that are subject to covenants to be complied with within twelve
months after the reporting period.
• Amendments to IFRS 16 “Leases” – Lease Liability in a Sale and Leaseback – The amendments are effective
for annual reporting periods beginning on or after January 1, 2024, with earlier application permitted.
o The amendments are intended to improve the requirements that a seller-lessee uses in measuring the lease
liability arising in a sale and leaseback transaction in IFRS 16, while it does not change the accounting
for leases unrelated to sale and leaseback transactions. In particular, the seller-lessee determines ‘lease
payments’ or ‘revised lease payments’ in such a way that the seller-lessee would not recognise any amount
of the gain or loss that relates to the right of use it retains. Applying these requirements does not prevent
the seller-lessee from recognising, in profit or loss, any gain or loss relating to the partial or full
termination of a lease. A seller-lessee applies the amendment retrospectively in accordance with IAS 8 to
sale and leaseback transactions entered into after the date of initial application, being the beginning of the
annual reporting period in which an entity first applied IFRS 16.
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NOTE 1:
ORGANIZATION AND BASIS OF FINANCIAL STATEMENTS [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 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 7 “Statement of Cash Flows” and IFRS 7 “Financial Instruments Disclosure -
Supplier Finance Arrangements” – The amendments are effective for annual reporting periods beginning
on or after January 1, 2024, with earlier application permitted.
o The amendments supplement requirements already in IFRS and require an entity to disclose the terms
and conditions of supplier finance arrangements. Additionally, entities are required to disclose at the
beginning and end of reporting period the carrying amounts of supplier finance arrangement financial
liabilities and the line items in which those liabilities are presented as well as the carrying amounts of
financial liabilities and line items, for which the finance providers have already settled the corresponding
trade payables. Entities should also disclose the type and effect of non-cash changes in the carrying
amounts of supplier finance arrangement financial liabilities, which prevent the carrying amounts of the
financial liabilities from being comparable. Furthermore, the amendments require an entity to disclose at
the beginning and end of the reporting period the range of payment due dates for financial liabilities owed
to the finance providers and for comparable trade payables that are not part of those arrangements.
• Amendments to IAS 21 “The Effects of Changes in Foreign Exchange Rates” – Lack of Exchangeability
– The amendments are effective for annual reporting periods beginning on or after January 1, 2025, with
earlier application permitted.
o The amendments specify how an entity should assess whether a currency is exchangeable and how it
should determine a spot exchange rate when exchangeability is lacking. A currency is considered to be
exchangeable into another currency when an entity is able to obtain the other currency within a time frame
that allows for a normal administrative delay and through a market or exchange mechanism in which an
exchange transaction would create enforceable rights and obligations. If a currency is not exchangeable
into another currency, an entity is required to estimate the spot exchange rate at the measurement date.
An entity’s objective in estimating the spot exchange rate is to reflect the rate at which an orderly
exchange transaction would take place at the measurement date between market participants under
prevailing economic conditions. The amendments note that an entity can use an observable exchange rate
without adjustment or another estimation technique.
• 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).
o The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those
in IAS 28, in dealing with the sale or contribution of assets between an investor and its associate or joint
venture. The main consequence of the amendments is that a full gain or loss is recognized when a
transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is
recognized when a transaction involves assets that do not constitute a business, even if these assets are
housed in a subsidiary. In December 2015 the IASB postponed the effective date of this amendment
indefinitely pending the outcome of its research project on the equity method of accounting.
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.
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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.
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NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.5. Business model and SPPI test
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.
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.
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NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.6. 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.
2.7.
2.7.1. Securities held for trading
Financial assets at fair value through profit or loss
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 FIFO77 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.
2.7.2. 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. (It is the so-called economic hedge, accounting hedge is described
later.)
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.
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NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.7.2 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.
2.8. Hedge accounting
In the case of a financial instrument measured at amortised cost the Bank recognises the hedging gain or loss on
the hedged item as the modification of its carrying amount and it is recognised in profit or loss. These adjustmets
of the carrying amount are amortised to the profit or loss using the effective interest rate method. The Bank starts
the amortisation when the hedged item is no longer adjusted by the hedging gains or losses. If the hedged item is
derecognised, the Bank recognises the unamortised fair value in profit or loss immediately.
Derivative financial instruments designated as fair value
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.
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NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.8. Hedge accounting [continued]
Derivative financial instruments designated as fair value [continued]
In the case of a financial instrument measured at amortised cost the Group recognises the hedging gain or loss on
the hedged item as the modification of its carrying amount and it is recognised in profit or loss. These adjustments
of the carrying amount are amortised to the profit or loss using the effective interest rate method. The Group starts
the amortisation when the hedged item is no longer adjusted by the hedging gains or losses. If the hedged item is
derecognised, the Group recognises the unamortised fair value in profit or loss immediately. For the fair value
hedges inefficiencies and the net revaluation of hedged and hedging item are recognised in the Net result on
derivative instruments and hedge relationships.
Derivative financial instruments designated as cash flow hedge
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 or terminated.
When the Bank discontinues hedge accounting to a cash-flow hedge the amount in the cash flow hedge reserve is
reclassified to the profit or loss if the hedged future cash flows are no longer expected to occur. If the hedged future
cash flows are still expected to occur, the amount remains in the cashflow hedge reserve and reclassified to the
profit and loss only when the future cash flows occur.
Offsetting
2.9.
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.
2.10. 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.
The separation rules for embedded derivatives are only relevant for financial liabilities.
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NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.11. 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 FIFO78 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.
2.12. 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”.
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OTP BANK
IFRS REPORT (SEPARATE)
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.12. 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, the
subsequent measurement of these loans is under IFRS 9.
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 that financial asset and write-off reversal is applied in the financial statements.
INTEGRATED ANNUAL REPORT 2023
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OTP BANK
IFRS REPORT (SEPARATE)
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.12. 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 Group considers as a derecognition and a new recognition the
followings:
- merging several debts into a single debt, or one single debt splitting into several tranches,
- change of currency,
- change in counterparty,
- failing SPPI test after modification,
- interest rate change (fixed to floating or floating to fixed),
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 of a financial asset, 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.
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.
INTEGRATED ANNUAL REPORT 2023
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OTP BANK
IFRS REPORT (SEPARATE)
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.13. 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.
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.
The default occurs when either or both of the following events have taken place:
• objective criterion meaning that the credit obligation of the client is overdue exceeding the materiality
threshold for more than 90 consecutive days (90+ default DPD), or the obligor has breached the limit of the
overdraft with an amount exceeding the materiality threshold for more than 90 consecutive days (90+
default DPD), or
• probability criterion meaning the probability that the obligor will be unable to pay its credit obligations in
full (UTP= Unlikely to Pay). The following conditions indicate the occurrence of the probability criterion:
specific credit risk adjustment, sell of credit obligation with significant loss, distressed restructuring,
termination of the contract on the initiative of the Bank, Bankruptcy, liquidation, personal bankruptcy,
forced deleted status.
Previously described conditions should result in default status mandatorily. Moreover, during the individual
expert-based assessment the client’s default status shall be established if in the specific case the default can be
justified on subjective basis. The default status should be terminated if in the last 3 months no other default criterion
exists and the condition (either probability criterion or objective criterion) that resulted in the default status ceased
at least 3 months ago.
The expected loss calculation should be forward looking. Available forward-looking information has to be
included in the parameter estimation by using different scenarios, including forecasts of future economic
conditions. The determination of probability-weighted forward-looking scenarios are based on the OTP Group’
macro model. In general, there are two crisis scenarios (4-5), and three non-crisis scenarios (1-3) but the calculation
of impairment should be based on at least two scenarios in the OTP Group. The macro conditioning is performed
by Vasicek-model, which captures the relationship between point-in-time (PiT) and through-the-cycle (TTC) PD.
The Vasicek PD transformation can also be used to estimate the PIT PDs of the buckets. The required parameters
(such as correlation coefficient and macro condition parameter) can be derived from the OTP’s macro model.
In the collective provisioning methodology credit risk and the change of credit risk can be correctly captured by
understanding the risk characteristics of the portfolio. At portfolio segmentation, setting the segments is a key
element of the provisioning calculation and requires the extensive knowledge of the portfolio. The segmentation
is expected to stay stable from month to month. The segmentation must be performed separately for each
parameter, since in each case different factors may have relevance.
The estimation of one-year and lifetime probability of default (PD) of collectively assessed exposures is performed
via transition matrices. The assets should be allocated to groups representing similar credit risk based on major
credit risk characteristics and their capability to fulfil contractual obligations. The mandatory variables of the group
level assessment procedure are payment delay, deal/client rating, the restructured flag, the default status and
product type. Further segmentation is advisable in case significant differences are observed in probability of
default. Transition matrices should be determined for each portfolio segment separately. The Group model handles
healing (from default) rate in the PD parameter, thus the calculated probabilities should be reduced by this rate.
INTEGRATED ANNUAL REPORT 2023
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OTP BANK
IFRS REPORT (SEPARATE)
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.13.
Loss allowance [continued]
Two different methods are applied in OTP Group for LGD parameter calculation: Retail mortgage loans and non-
retail portfolios (MSE and Wholesale) that are significantly secured by mortgage: modified LGD methodology
based on the Asset Quality Review (AQR) – the primary source of the recovery the collateral itself but cash
recovery is also taken into account. The calculation is performed for each exposure individually based on the
estimated parameters (main parameters: FSR – foreclosure success rate, SR – sales ratio, TTS – time to sale, C –
cost, REC – cash recovery) and the actual value of collaterals (e.g. property, guarantee, surety, bail).
For Consumer loans and car finance: recovery based LGD methodology estimated from historical recoveries. The
LGD calculation should not be automatically identified with historic actual data. The direction and degree of the
shift in the factors impacting the LGD, also considering the macroeconomic effects, in addition to the anticipated
developments in those, must always be analysed. The LGD – just like the PD – is not independent of the business
cycles either; typically it increases in parallel with the economic downturn.
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.
INTEGRATED ANNUAL REPORT 2023
275
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [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.
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 financial instrument 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,
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 Bank 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.
INTEGRATED ANNUAL REPORT 2023
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OTP BANK
IFRS REPORT (SEPARATE)
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
Classification into risk classes [continued]
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.
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 of effort at the reporting date about
past events, current conditions and forecasts of future economic conditions.
2.14. 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.
2.15. 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 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.
INTEGRATED ANNUAL REPORT 2023
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OTP BANK
IFRS REPORT (SEPARATE)
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.16. 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
Depreciation key
Useful lifetime (years)
20%-33%
17%-50%
1%-7%
7%-50%
3-5
2-6
15-100
2-15
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.
2.17. 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. The Bank's policy is to sell repossessed
assets and not to use them for its internal operations.
2.18. 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.
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.
2.19. Financial liabilities
The financial liabilities are presented within these lines in the Separate Financial Statements:
• Amount 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
• Other financial liabilities
At initial recognition, the Bank 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.
INTEGRATED ANNUAL REPORT 2023
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OTP BANK
IFRS REPORT (SEPARATE)
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.19. Financial liabilities [continued]
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 Bank recognizes the initial fair value difference in the Separate 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.
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.
Leases
2.20.
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.
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.
INTEGRATED ANNUAL REPORT 2023
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OTP BANK
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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.
Share capital
2.21.
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.
2.22. 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.
2.23. Non-current assets held-for-sale and discontinued operations
A discontinued operation is a component of an entity that either has been disposed of or is classified as held-for-
sale. Hereinafter non-current assets classified as held-for-sale, disposal group and discontinued operations are
referred to as assets in accordance with IFRS 5.
The Bank classifies assets under IFRS 5 if their carrying amount will be recovered principally through a sale
transaction rather than through continuing use. The Bank does not account for an asset under IFRS 5 that has been
temporarily taken out of use as if it had been abandoned.
The Bank measures an asset under IFRS 5 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 Bank 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 under IFRS 5, the carrying amounts of the asset
(or all the assets and liabilities in the group) are measured in accordance with applicable IFRS.
The Bank does not depreciate (or amortize) an asset under IFRS 5 while it is classified as asset in accordance with
IFRS 5. Interest and other expenses attributable to the liabilities of the asset under IFRS 5 shall continue to be
recognized.
If the Bank has classified an asset under IFRS 5, but the criteria for that are no longer met, the Bank ceases to
classify the asset under IFRS 5. The Bank measures these assets which cease to be classified as asset under IFRS
5 at the lower of:
-
its carrying amount before the asset was classified as asset under IFRS 5, adjusted for any depreciation,
amortisation or revaluations that would have been recognized had the asset not been classified as asset
under IFRS 5, and
its recoverable amount at the date of the subsequent decision not to sell.
-
The Bank presents an asset classified as asset under IFRS 5 separately from other assets in the Separate Statement
of Financial Position. The liabilities of the asset under IFRS 5 are presented separately from other liabilities in the
Separate 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 or discontinued operations are
separately disclosed in the Notes.
INTEGRATED ANNUAL REPORT 2023
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OTP BANK
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NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.23. Non-current assets held-for-sale and discontinued operations [continued]
The Bank 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.
2.24. 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
2.25. 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 earns fee and commission income from a diverse range of financial services it provides to its customers.
Fee and commission income is recognised at an amount that reflects the consideration to which the Bank expects
to be entitled in exchange for providing the services. The performance obligations, as well as the timing of their
satisfaction, are identified, and determined, at the inception of the contract. When the Bank provides a service to
its customers, consideration is invoiced and generally due immediately because it typically controls the services
before transferring them to the customer.
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.
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NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.25 Fees and Commisions [continued]
Performance obligations satisfied over time include asset management, deposit and account maintenance services,
where the customer simultaneously receives and consumes the benefits provided by the Bank’s performance as
the Bank performs.
The Bank’s fee and commission income from services where performance obligations are satisfied over time
are followings:
Deposit and account maintenance fees and commissions and fees related to cash withdrawal
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 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 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.
These fees for ongoing account management services are charged on a monthly basis during the period when they
are provided. Transaction-based fees are charged when the transaction takes place or charged monthly at the end
of the month.
Fees 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. The annual fees of the
cards are charged in advance in a fixed amount. The amount of the annual card fee depends on the type of card. In
case of transaction-based fees (e.g. cash withdrawal/payment fee, merchant fee, interchange fee, etc.), the
settlement of the fees will take place immediately after the transaction or on a monthly basis. The fee is typically
determined in % of the transaction with a fixed minimum amount. For all other cases where the Bank provides a
continuous service to the customers (e.g. card closing fee), the fees are charged monthly. The fee is calculated in
a fix amount. The rates are reviewed by the Bank regularly.
These 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 and commissions related to security account management services
The Bank provides its clients security account management services. Fees will be charged for account management
and transactions on accounts. Account management fees are typically charged quarterly or annually. The amount
is determined in %, based on the stocks of securities managed by the clients on the account in a given period. Fees
for transactions on the securities account are charged immediately after the transaction. They are determined in %,
based on the transaction amount. Fees for complex services provided to clients (e.g. portfolio management or
custody) are typically charged monthly or annually. The fees are fixed monthly amounts and in some cases a bonus
fee are charged.
These fees for ongoing services are charged quarterly or annually during the period when they are provided. The
fees are accrued monthly. Transaction-based fees are charged when the transaction takes place.
Fees and commissions related to fund management
Fees from fund management services provided to investment funds and from portfolio management provided to
insurance companies, funds. The fee income are calculated on the basis of net asset value of the portfolio and by
the fee rates determined in the contracts about portfolio management.
These 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.
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NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.25 Fees and Commisions [continued]
Net insurance fee income
Due to the fact that the Bank 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.
Other fees
Fees that are not significant in the Bank 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.
These fees for ongoing services are charged on a monthly basis during the period when they are provided. Fees
for ad hoc services are charged when the transaction takes place.
2.26. 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.
2.27. 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.
Current tax asset or current tax liability is presented related to income tax and innovation contribution separately
in the Consolidated Statement of Financial Position.
Pillar Two – Global Anti-base Erosion Model Rules (“GloBE), global minimum tax – introduces a minimum
effective tax rate of at least 15%, calculated based on a specific rule set. Pillar Two legislation has been enacted
or substantively enacted in certain jurisdictions the Group operates. The legislation will be effective for the Group’s
financial year beginning 1 January 2024. The Group considers this top-up tax as an income tax according to
IAS 12.
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.
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NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.27. Income tax [continued]
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.
2.28. 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.
Pursuant to Government Decree No. 197/2022 published on 4 June 2022, the Hungarian Government decided to
impose a windfall tax on credit institutions and financial enterprises temporarily, that is for 2022 and 2023.
As for 2022, the base of the windfall tax is the net revenues based on the 2021 financial statements, calculated
according to local tax law, whereas the tax rate is 10%.
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IFRS REPORT (SEPARATE)
NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.29. 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.
2.30. Share-based payment
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.
2.31. Employee benefits
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.
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.
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.
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NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
2.32. 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.
2.33. 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, Uzbekistan, Merkantil Group,
Asset Management subsidiaries, other subsidiaries, Corporate Centre.
2.34. Comparative figures
These separate financial statements are prepared in accordance with the same accounting policies in all respects
as the Financial Statements prepared in accordance with IFRS as adopted by the EU for the year ended 31
December 2022
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NOTE 3:
SIGNIFICANT ACCOUNTING ESTIMATES AND DECISIONS
APPLICATION OF ACCOUNTING POLICIES
IN THE
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:
Loss allowance on financial instruments
3.1.
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.)
Valuation of instruments without direct quotations
3.2.
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.
Provisions
3.3.
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.
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NOTE 4:
MACRO-ENVIRONMENT, IMPACT OF ECONOMIC SITUATION ON THE BANK
Macro economy and financial situation in Hungary
Having elevated after the rapid recovery that followed the Covid crisis and the outbreak of the Russian-Ukrainian
war, inflation in advanced economies started to slow in 2023, but the developed world’s central banks had to raise
interest rates aggressively until the end of the year. It was not before the year was nearing its end that the tightening
cycle stopped and the debate on the possible timing of an interest rate cut began. Meanwhile, the labour market
remained tight, with low unemployment and strong wage dynamics. Developed markets’ long-term yields hit
multi-decade highs in the autumn, before a sharp fall began at the end of 2023.
Economic growth printed different patterns on the two sides of the Atlantic. The USA’s economic expansion
accelerated in 2023, as opposed to the expected slowing, and growth shifted into higher gear in the second half of
the year. The robust figures were driven by supportive fiscal policy, the large stocks of savings household had
accumulated during the pandemic, and the low effective lending rates caused by the high share of loans with fixed
interest rates. Headline inflation peaked in June 2022 (+8.9%), but the subsequent decline briefly stalled in the
middle of 2023. However, core inflation continued to drop, easing to 3.9% YoY by the end of the year. The very
loose fiscal policy, which raised the budget deficit from around 5% to 8% of GDP, required tight monetary policy
to bring inflation down. The Fed has aggressively raised its base rate to 5.25–5.5% and began to reduce its balance
sheet.
The energy crisis brought the euro area to its knees, and the economy has been unable to recover amid high inflation
and high interest rates, thus output has been practically stagnant since the third quarter of 2022. Countries with
industries that used to rely heavily on Russian energy (e.g. Germany) were hit particularly hard. Elevated interest
rates have led to a slowdown in lending, which has also hindered kick-starting growth in Europe. Disinflation was
strong in the euro area in 2023: headline and core inflation fell to 2.8% and 3.3%, respectively by the end of the
year. The biggest concern in this context is services inflation, which has been stagnating at 4.0% YoY since
November 2023. Despite all the weakness in the economy and strong disinflation, the ECB has not yet considered
cutting interest rates, thus the euro area ended last year with a deposit rate of 4% and a lending rate of 4.5%.
Hungary’s economy fell into a longer and deeper recession than the rest of the CEE region in 2023 (GDP YoY:
Q1: -0.9%; Q2: -2.4%; Q3: -0.4%; Q4 (flash): 0,0). However, the recession ended in the third quarter, and growth
started to pick up on quarterly basis, helped by the base effect of an unprecedented poor agriculture season in 2022.
Overall, regarding the Hungarian economy’s underlying processes, activity fell sharply in Q4 2022 and in Q1
2023, and it has been stagnating or trivially rising since then. The structure of growth is unfavourable, as the sharp
fall in domestic use was moderated by an increase in net exports, but it was caused by the decline in imports owing
to the sluggish domestic demand, rather than by exports’ strong expansion.
Inflation peaked at 25.7%, ten percentage points higher than the average of the CEE region, before disinflation
started in the spring. As disinflation accelerated starting from mid-2023, the pace of price increases accelerated,
bringing down CPI to 5.5% YoY by December; the annual average rate of inflation was 17.6% in 2023. From the
middle of the year, real wages started to rise again month-on-month, but this passed on to consumer spending only
modestly.
After running 8% current account deficit in 2022, Hungary’s external balance turned into surplus last year, as gas
prices collapsed and imports fell due to a drop in domestic demand. The rapid rise in debt ratios between 2020 and
2023 has stopped.
The original budget deficit target of 3.9% of GDP proved to be unsustainable, so it was raised to 5.2% in October,
but the accrual-based deficit probably exceeded 6% of GDP last year, even with the dividend payment by MVM
and with the savings of the ‘utility protection fund’.
Having raised the effective rate to 18% in autumn 2022, the MNB cut it in several steps by a total of 725 basis
points, to 10.75% by the end of the year. The base rate regained its role in September, when the former overnight
deposit facility was phased out. The EUR/HUF fell from around 400 at the beginning of the year to below 370 at
one point in the summer, but stabilized around 380 by the end of 2023.
Hungary made headway in accessing EU funds at the end of last year as the European Commission approved the
so-called horizontal enabling conditions for the judicial reform in December. The government unblocked about
EUR 11 billion worth of EU funds, thanks to the measures implemented last year.
Starting from autumn 2022, the credit market froze in the CEE region, including Hungary, and similarly to Western
Europe. There was a slight pick up at the end of 2023, particularly in retail lending, within that in ‘baby loans’ and
housing loans; demand for cash loans also jumped at the end of the year. In full year 2023, the volume of housing
loans rose by 1.3% (2022: 7.6%), that of cash loans grew by 6.9% (2022: 9.3%), and corporate loan volumes
increased by an FX-adjusted 6% (2022: 15.5%).
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NOTE 4:
MACRO-ENVIRONMENT, IMPACT OF ECONOMIC SITUATION ON THE BANK
[continued]
Summary of economic policy measures made and other relevant regulatory changes in the period under
review
Windfall tax [continued]
o On 24 April 2023 Government Decree No. 144/2023 was published amending the previously laid down
methodology of windfall tax calculation for the second half of 2023.
According to the new rules, the gross amount of the windfall tax for the year 2023 changed to HUF 41 billion
in the case of OTP Group.
Government decree No. 206/2023 (V.31.) published on 31 May 2023 outlined the details of the extra profit tax
payable by credit institutions in 2024. The basis of the tax is the 2022 profit before tax (adjusted for several
items). The tax rate is 13% for the part of the tax base that does not exceed HUF 20 billion, and 30% for the
amount above HUF 20 billion. According to the decree, if the average amount of Hungarian government bonds
owned by the financial institution increases over a certain period, the windfall tax payable by the credit
institution will be reduced. The reduction cannot be more than 10% of the increase in government bond
holdings and cannot exceed 50% of the windfall tax payment obligation calculated without the reduction.
The gross amount of the windfall tax for the year 2024 will be HUF 13 billion in the case of the Hungarian
Group members, which can be reduced to HUF 6.5 billion subject to the increase in government bond holdings.
As for timing, the HUF 13 billion gross annual tax obligation was recognized in one sum in January 2024,
whereas the pro-rated part of the reduction will be booked on a monthly basis, evenly split through 2024.
Interest rate cap:
o Government decree No. 175/2023. (V. 12.) published on 12 May 2023 further extended the interest rate cap
scheme by 6 months, until the end of 2023, in the case of the affected floating and fixed rate residential
mortgages, as well as floating rate micro and small enterprises loan and leasing contracts.
o Pursuant to Government Decree No. 522/2023. (XI. 30.):
▪ The interest rate cap for the outstanding volume of certain residential mortgage loans was extended by six
months, until 30 June 2024.
▪ The rate cap for the existing volume of certain MSE loans was extended until 1 April 2024.
▪ Furthermore, Government Decree No. 471/2022 (XI. 21.) was amended, thus the provision that the interest
rate on HUF-denominated demand deposits and time deposits with a maximum term of one year shall not
exceed the average auction yield of the most recently issued three-month discount Treasury Bill was
extended by three months, until 1 April 2024. In another amendment, starting from 1 December 2023, the
scope of this cap was extended for entities who qualify as business customers in Hungary’s Civil Code.
These provisions shall be applied to deposit contracts concluded after 1 December 2023, as well as to demand
deposit contracts existing on 1 December 2023.
Voluntary interest rate cap on newly granted loans
At the beginning of October 2023, the Ministry of Economic Development proposed that banks impose voluntary
interest rate caps on newly granted HUF-denominated working capital loans for businesses, and on residential
housing loans. OTP Bank has joined the initiative.
Effective from October 2023, the Government set the voluntary interest rate cap on new housing loans at 8.5%
and that on working capital loans to businesses at 12%. From 2 November the latter was reduced to 11.5%. From
January 2024, the Government reduced the voluntary interest rate cap on housing loans to 7.3% and that on
corporate loans to 9.9%. In addition, the Government and the Hungarian Banking Association agreed that the
voluntary interest rate cap scheme will be abolished simultaneously with the withdrawal of the interest rate cap
for certain outstanding MSE volumes from 1 April 2024, i.e. in the future, interest rates will be determined by
market competition.
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NOTE 4:
MACRO-ENVIRONMENT, IMPACT OF ECONOMIC SITUATION ON THE BANK
[continued]
Summary of economic policy measures made and other relevant regulatory changes in the period under
review [continued]
Savings, government bond market:
o Pursuant to Government decree No. 205/2023. (V. 31.), effective from 1 July 2023, on top of the existing 15%
interest tax, an additional 13% social contribution tax was introduced temporarily for certain savings forms.
The tax base is the interest income as defined by the PIT law, earned by natural persons after 1 July 2023 on
bank deposits placed or certain securities (except for real estate investment fund investment certificates)
purchased after 1 July.
o Pursuant to Government decree No. 208/2023. (V. 31.), effective from 1 July 2023 the weight of securities in
the portfolio of bond funds, equity funds and mixed funds must be at least 60%. Furthermore, from 1 August
no more than 5% of the assets of these securities funds can be invested in debt securities other than HUF
denominated government securities.
o According to Government decree No. 209/2023. (V. 31.), between 1 October 2023 and 31 December 2023
credit institutions shall send a warning notice to their natural person clients with bank account contracts about
how much more interest they could have earned in a specific period with an investment of HUF 100,000, HUF
500,000 and HUF 1,000,000 if they had invested in retail government securities instead of bank deposits.
Family support schemes
o Baby loan: in line with Government decree No. 303/2023. (VII. 11.), from 1 January 2024 the maximum
amount of baby loan will increase from HUF 10 to 11 million, and those families will be eligible where the
wife is below the age of 30 years. Also, the clause that baby loan contracts can be entered into by the end of
this year lost effect, so the scheme will remain in place indefinitely. As for the interest rate fixation periods, in
contrast to the current situation that the baby loans reprice in every 5 years, from 2024 the interest rate of newly
contracted baby loans will be fixed for 1 year during the first 2 years, then the baby loans will have a 3-year
rate fixation period.
o Housing Subsidy for Families (CSOK), village CSOK: from 1 January 2024 the village CSOK non-refundable
amounts will increase, but in towns and settlements with more than 5,000 inhabitants the CSOK subsidy will
no longer be available.
Mandatory minimum reserve requirements
Pursuant to NBH decree No. 6/2023. (III. 8.) and NBH decree No. 11/2023. (III. 31.), from April the minimum
reserve requirement was increased to 10%, and the effective rate paid on the reserves was reduced to 9.75% from
the previous 13%, since the national bank doesn’t pay any interest for the first 2.5% reserve requirement, and for
the remaining amount the national bank pays the base rate.
NBH decree No. 25/2023. (VI. 14.) amended the reserve requirement rules: among others, from 1 July 2023 up to
15% of the minimum reserve requirement can be met by central bank deposits with at least 14 days original
maturity. Also, from July until further notice (by the end of the year according to plans) the reserve requirement
will be based on the volumes in the statistical balance sheet as at 31 March 2023.
Capital regulation
o On 22 June 2023 the national bank announced that it postpones the activation of the Countercyclical Capital
Buffer rate of 0.5% planned from 1 July 2023 by one year to 1 July 2024. In addition, it preventively reactivates
the Systemic Risk Buffer aimed at risks related to commercial real estate loans (especially non-performing
loans).
o MREL minimum requirement: effective from 1 January 2024, the consolidated MREL minimum requirement
for OTP Bank is 18.94%, while the minimum requirement including combined buffer requirements is 23.95%
in % of the total RWA of the resolution group.
o Pillar 2 capital requirement: effective from 1 January 2024, the National Bank of Hungary imposed the below
additional capital requirements for OTP Group, on consolidated level:
▪ 0.9%-point in case of the Common Equity Tier1 (CET1) capital, accordingly the minimum requirement for
the consolidated CET1 ratio is 5.4% (without regulatory capital buffers);
▪ 1.2%-points in case of the Tier1 capital, accordingly the minimum requirement for the consolidated Tier1
ratio is 7.2% (without regulatory capital buffers);
▪ 1.6%-points in case of the Total SREP Capital Requirement (TSCR), accordingly the minimum requirement
for the consolidated capital adequacy ratio is 9.6% (without regulatory capital buffers).
INTEGRATED ANNUAL REPORT 2023
290
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 4:
MACRO-ENVIRONMENT, IMPACT OF ECONOMIC SITUATION ON THE BANK
[continued]
The principles used in the preparation of the Separate Statement of Financial Position as at 31 December
2023 in connection with the evaluation of Russian and Ukrainian exposures
Going concern principle
In the case of Ukraine and Russia OTP management applies a „going concern” approach, however in Russia the
management is still considering all strategic options, bearing in mind that any future solution should be strictly
within the framework and in accordance with applicable local and international regulations.
In February 2022 a military conflict started between Russia and 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 1,037 billion at the end of 2023 (2.6% of total
consolidated assets), while net loans comprised HUF 309 billion (1.4% of consolidated net loans) and
shareholders’ equity amounted to HUF 157 billion (3.8% of the consolidated total equity).
At the end of 2023 the gross intragroup funding towards the Ukrainian operation represented HUF 83 billion, while
taking into account the Ukrainian deposits placed with the Headquarters, i.e. the net group funding stood at HUF
22 billion equivalent deposit placed by the Ukrainian operation (i.e. Ukraine funded the Group).
In 2023 the Ukrainian operation posted an adjusted profit after tax of HUF 45.2 billion, against the HUF 15.9
billion loss suffered in the corresponding period of last year.
The total assets of the Group’s Russian operation represented HUF 1,471 billion at the end of 2023 (3.7% of
consolidated total assets), while net loans comprised HUF 588 billion (2.7% of consolidated net loans) and
shareholders’ equity HUF 275 billion (6.7% of consolidated total equity).
As the Russian subsidiary repaid its maturing intragroup loans in 4Q 2022, the gross intragroup funding towards
the Russian operation declined to zero and remained nil throughout 2023. At the end of 2023 the intragroup
subordinated loan exposure toward the Russian operation amounted to HUF 9 billion equivalent.
The Russian operation posted HUF 95.7 billion adjusted profit in 2023, after the HUF 42.5 billion profit reached
in full-year 2022.
In 2H 2023 the Russian Central Bank approved twice a dividend payment by OTP’s Russian subsidiary with a
total amount of RUB 13.4 billion.
If the Russian entity was deconsolidated and the outstanding gross intragroup exposures were written off as well,
the effect for the consolidated CET1 ratio would be -11 bps, whereas in the Ukraine the negative effect would be
2 bps.
INTEGRATED ANNUAL REPORT 2023
291
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 4:
MACRO-ENVIRONMENT, IMPACT OF ECONOMIC SITUATION ON THE BANK
[continued]
The principles used in the preparation of the Separate Statement of Financial Position as at 31 December
2023 in connection with the evaluation of Russian and Ukrainian exposures [continued]
Significant estimates affected by the Russian-Ukrainian conflict during the preparation of these Separate
Financial Statements
During the preparation of these Separate Financial Statements, the Bank identified the following estimates, which
were significantly affected by the Russian-Ukrainian conflict:
1) Evaluation of Russian sovereign exposures (government securities) and related reserves for expected credit
losses at OTP Bank (as parent company)
2) Evaluation of Ukrainian sovereign exposures (government securities) and related reserves for expected credit
losses at OTP Bank (as parent company)
3) Evaluation of derivative transactions denominated in Russian rubles
4) Evaluation of derivative transactions denominated in the Ukrainian hryvnia
5) Provisions for expected credit losses related to Russian and Ukrainian interbank claims and customer loans
(following direct exposure to the Russian and Ukrainian markets, non-Russian and Ukrainian bank exposures)
6) Evaluation of investments
Securities at amortized cost
Securities at fair value through other comprehensive income
Other financial assets
Investments
TOTAL ASSETS
Reference
1
1
6
Gross
value
33,681
30,873
6,721
462,646
533,921
Impairment
(11,507)
(22,920)
(2,570)
(299,339)
(336,336)
References
1. Evaluation of Russian sovereign exposures and related reserves for expected credit losses - other
exposures of the group
Outside of Russia, the marketability of Russian government securities is significantly limited due to sanctions and
capital market participants turning away from Russian securities. The credit rating of the Russian state was
withdrawn in 2022, the Group classifies the Russian state as non-performing, and in accordance with this, it
assigned the affected exposures to the Stage 3 category. The Russian state not only recognizes its obligation and
has the necessary financial reserves, but would also be willing to pay, so the increased loss potential is caused by
non-traditional credit risks. In the case of a portfolio valued at fair value against other comprehensive income, the
book value is determined based on the level 3 prices of IFRS13. Cash-flow estimation, current market benchmarks
(provided by Bloomberg), liquidity and non-credit risk considerations were taken into account in fair value
calculation.
2. Valuation of Ukrainian sovereign exposures and related reserves for expected credit losses - other
exposures of the group
Ukrainian government securities are exclusively in the books of the Ukrainian subsidiary.
3. Valuation of Russian derivative transactions
In the case of futures contracts concluded with local partners on the Russian market, the evaluation is carried out
using yield curves available and observable on the local market. In cases where one of the partners is not Russian,
the evaluation is done using yield curves available and observable on the international market.
INTEGRATED ANNUAL REPORT 2023
292
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 4:
MACRO-ENVIRONMENT, IMPACT OF ECONOMIC SITUATION ON THE BANK
[continued]
The principles used in the preparation of the Separate Statement of Financial Position as at 31 December
2023 in connection with the evaluation of Russian and Ukrainian exposures [continued]
References [continued]
4. Valuation of Ukrainian derivatives
The Treasury turnover of the Ukrainian bank is low, and a significant part of the derivative transactions are related
to the bank's risk management and concluded with the parent company. During the actual evaluation, the expected
cash-flow is discounted using yield curves observed based on current market benchmarks (published by the
National Bank of Ukraine).
5. Provisions for expected credit losses related to Russian and Ukrainian interbank claims and customer
loans (following direct exposure to the Russian and Ukrainian markets, non-Russian and Ukrainian bank
exposures)
As part of the quarterly monitoring activity, the Bank has identified and analysed the secondary and tertiary
negative effects of the war in the corporate segment. Changes related to the meanwhile imposed sanctions – which
should have been taken into consideration at analysis - have been followed up. As part of the individual monitoring
activity separate monitoring methodology and assessment were prepared for exposures above HUF 250 million as
follows:
sectors vulnerable to the risk arising from changes of energy / interest / foreign exchange
i)
ii) customers from sectors with high risks according to the loan policy, especially the hotel industry and
real estate utilisation industry
iii) municipalities, customers owned by municipalities
Customers identified during monitoring activity were classified into Stage 2, expected credit losses were
recognised at the corresponding level and amount. As at 31 December 2022 the concerning exposures (HUF 92.7
billion) had HUF 4 billion of expected credit loss, from which impairment loss was recognised in amount of HUF
3 billion. As at 31 December 2023 the concerning exposures (HUF 72 billion) had HUF 2.7 billion of expected
credit loss.
When technical or objective default occured due to sanctions the affected exposures were classified into Stage 3.
In these cases at least two scenarios were taken into consideration as the estimation of expected cash flows for
impairment calculation. At least one scenario represents that case when significant differences occur between the
expected and the contractual cash flows. Probabilities shall be allocated to represent the occurence of credit loss,
even in that case when most likely there is no need to recognise impairment loss.
6. Evaluation of investments
The Bank has evaluated its investments in 3 countries concerning the Russian-Ukrainian conflict based on
discounted cash flows, and as a result reversal of impairment loss was recognised for the year ended 31 December
2023 as follows:
by
Country
Reversal of impairment loss for the
year ended 31 December 2023
Ukraine
Russia
Moldova
Total
-
-
(3,163)
(3,163)
INTEGRATED ANNUAL REPORT 2023
293
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 4:
MACRO-ENVIRONMENT, IMPACT OF ECONOMIC SITUATION ON THE BANK
[continued]
Financial assets modified during the year ended 31 December 2023
Modification due to prolongation of existing interest rate cap till 31 December 2023
Gross carrying amount before modification
Modification loss
Gross carrying amount after modification
Loss allowance before modification
Net amortised cost after modification
179,970
(6,952)
173,018
(9,376)
163,642
Modification due to prolongation of existing interest rate cap till 30 June 2024 (in case of SME loans till 1 April
2024)
Gross carrying amount before modification
Modification loss
Gross carrying amount after modification
Loss allowance before modification
Net amortised cost after modification
124,456
(2,065)
122,391
(7,938)
114,453
Financial assets modified during the year ended 31 December 2022
Modification due to prolongation of deadline of covid moratoria till 31 July 2022 (opt in)
Gross carrying amount before modification
Modification loss
Gross carrying amount after modification
Loss allowance before modification
Net amortised cost after modification
Modification due to prolongation of interest rate cap (30 June 2022)
Gross carrying amount before modification
Modification loss
Gross carrying amount after modification
Loss allowance before modification
Net amortised cost after modification
79,253
(301)
78,952
(23,965)
54,987
66,133
(2,405)
63,728
(1,580)
62,148
Modification due to moratoria related to agriculture and prolongation of the existing moratoria ( 30 September
2022)
Gross carrying amount before modification
Modification loss
Gross carrying amount after modification
Loss allowance before modification
Net amortised cost after modification
95,560
(1,562)
93,998
(19,404)
74,594
Modification due to prolongation of interest rate cap (30 November 2022)
Gross carrying amount before modification
Modification loss
Gross carrying amount after modification
Loss allowance before modification
Net amortised cost after modification
151,318
(531)
150,787
(6,094)
144,693
Modification due to scope extension (mortgage loans with 5 year fixing without subsidy) and prolongation of the
existing interest rate cap (31 December 2022)
Gross carrying amount before modification
Modification loss
Gross carrying amount after modification
Loss allowance before modification
Net amortised cost after modification
205,891
(10,058)
195,833
(6,915)
188,918
INTEGRATED ANNUAL REPORT 2023
294
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 5:
CASH, AMOUNTS DUE FROM BANKS AND BALANCES WITH THE NATIONAL
BANK OF HUNGARY (in HUF mn)
Cash on hand:
In HUF
In foreign currency
Amounts due from banks and balances with National Bank of
Hungary:
Within one year:
In HUF
In foreign currency
Subtotal
Loss allowance
Subtotal
Average amount of compulsory reserve
Total
Rate of the compulsory reserve
31 December
2023
31 December
2022
86,317
15,412
101,729
2,272,840
334,058
2,606,898
2,708,627
80,809
20,506
101,315
739,382
252,854
992,236
1,093,551
(395)
(1,353)
2,708,232
1,092,198
1,143,307
1,564,925
10%
740,428
351,770
6%
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:
Balance as at 1 January
Loss allowance
Release of loss allowance
FX movement
Closing balance
31 December
2023
31 December
2022
1,353
3,588
(4,399)
(147)
395
185
5,023
(3,813)
(42)
1,353
INTEGRATED ANNUAL REPORT 2023
295
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 6:
PLACEMENTS WITH OTHER BANKS (in HUF mn)
Within one year:
In HUF
In foreign currency
Over one year
In HUF
In foreign currency
Total placements
31 December
2023
31 December
2022
563,752
134,346
698,098
1,196,419
814,791
2,011,210
825,820
366,574
1,192,394
1,215,114
511,103
1,726,217
2,709,308
2,918,611
Loss allowance on placement losses
(6,875)
(18,782)
Total
2,702,433
2,899,829
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
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
31 December
2023
31 December
2022
18,782
8,178
(19,727)
-
(358)
6,875
7,490
27,571
(17,026)
-
747
18,782
31 December
2023
31 December
2022
0%-25%
0%-11.6%
7.55%
0%-25.7%
0%-13.29%
7.51%
INTEGRATED ANNUAL REPORT 2023
296
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 7:
REPO RECEIVABLES (in HUF mn)
Within one year:
In HUF
Total gross amount
Loss allowance on repo receivables
Total repo receivables
31 December
2023
31 December
2022
202,025
202,025
202,025
(367)
201,658
248,696
248,696
248,696
(2,167)
246,529
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 denominated in HUF
Average interest of repo receivables denominated in foreign
currency
31 December
2023
31 December
2022
2,167
11,755
(13,555)
367
72
4,480
(2,385)
2,167
31 December
2023
31 December
2022
7.49%-11.4%
13.85%
10.7%-18%
7.31%
3.86%
-
Securities as collaterals underlying repo receivable contracts is as follows:
As at 31 December 2023
Type
Currency Notional Fair value
219,270
233,408
Government bonds
HUF
1,384
1,439
Hungarian government discounted Treasury Bills HUF
220,654
234,847
Total
As at 31 December 2022
Type
Currency Notional
321,794
Government bonds
HUF
3,949
Hungarian government discounted Treasury Bills HUF
325,743
Total
Fair value
259,268
3,784
263,052
INTEGRATED ANNUAL REPORT 2023
297
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 8:
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (in HUF mn)
31 December
2023
31 December
2022
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
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
22,352
320
71
513
111
4,437
27,804
31,124
1,808
32,932
66,324
65,434
23,221
41,820
196,799
257,535
67,521
274
4,785
385
82
1,748
74,795
29,029
1,469
30,498
121,854
121,506
14,847
46,512
304,719
410,012
Interest conditions and the remaining maturities of securities held for trading are as follows:
31 December
2023
31 December
2022
Within one year:
variable interest
fixed interest
Over one year:
variable interest
fixed interest
Non-interest bearing securities
Total
Securities held for trading denominated in HUF
Securities held for trading denominated in foreign currency
Securities held for trading total
Government bonds denominated in HUF
Government bonds denominated in foreign currency
Government securities total
Interest rates on securities held for trading in HUF
Interest rates on securities held for trading in foreign
currency
Average interest on securities held for trading
103
12,881
12,984
975
13,012
13,987
833
27,804
28%
72%
100%
18%
82%
100%
3,041
10,467
13,508
9,535
51,093
60,628
659
74,795
89%
11%
100%
90%
10%
100%
1%-16.25%
0%-16.69%
0%-7.63%
11.58%
0%-7.63%
6.44%
INTEGRATED ANNUAL REPORT 2023
298
OTP BANK
IFRS REPORT (SEPARATE)
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:
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
31 December
2023
31 December
2022
32,932
32,932
73%
27%
100%
30,498
30,498
69%
31%
100%
NOTE 9:
SECURITIES AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
(in HUF mn)
Securities at fair value through other comprehensive income
Government bonds
Mortgage bonds
Interest bearing treasury bills
Other securities
Listed securities
in foreign currency
Non-listed securities
in HUF
in foreign currency
Subtotal
Non-trading equity instruments
-non-listed securities
in HUF
in foreign currency
31 December
2023
31 December
2022
189,385
300,569
236
48,160
11,622
11,622
36,538
12,115
24,423
538,350
21,177
528
20,649
21,177
177,393
356,540
182,726
62,594
7,290
7,290
55,304
14,304
41,000
779,253
17,922
528
17,394
17,922
Securities at fair value through other comprehensive income
total
559,527
797,175
INTEGRATED ANNUAL REPORT 2023
299
OTP BANK
IFRS REPORT (SEPARATE)
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
31 December
2023
392
136
14,318
6,331
21,177
31 December
2022
392
136
11,915
5,479
17,922
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
31 December
2023
31 December
2022
30,130
13,235
43,365
120,268
374,717
494,985
21,177
559,527
71%
29%
100%
-
261,529
261,529
235,661
282,063
517,724
17,922
797,175
83%
17%
100%
Interest rates on FVOCI securities denominated in HUF
Interest rates on FVOCI securities denominated in foreign
currency
1.25%-13.8%
1.25%-17.36%
0.74%-16%
0.74%-16%
Average interest on FVOCI securities
8.16%
5.78%
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
Other bonds
31 December
2023
31 December
2022
25,363
118,405
3,625
122,030
(22,816)
118,979
43,870
162,849
During the year ended 31 December 2023 the Bank didn’t sell any of equity instruments designated to measure at
fair value through other comprehensive income. During the year ended 31 December 2022 equity instruments
designated to measure at fair value through other comprehensive income was sold. Fair value related to the
transactions were EUR 12.8 million.
INTEGRATED ANNUAL REPORT 2023
300
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 10:
SECURITIES AT AMORTISED COST (in HUF mn)
Government bonds
Other bonds
Mortgage bonds
Subtotal
Loss allowance
Total
31 December
2023
31 December
2022
2,396,803
315,532
24,738
2,737,073
2,979,400
314,237
24,586
3,318,223
(26,225)
(35,850)
2,710,848
3,282,373
Interest conditions and the remaining maturities of securities at amortised cost can be analysed as follows:
Within one year:
fixed interest
Over one year:
variable interest
fixed interest
Total
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
31 December
2023
31 December
2022
63,775
63,775
4,845
2,668,453
2,673,298
321,879
321,879
24,601
2,971,743
2,996,344
2,737,073
3,318,223
31 December
2023
72%
28%
100%
0,1%-13.2%
31 December
2022
72%
28%
100%
0.1%-17.74%
3.95%
2.93%
An analysis of change in the loss allowance on securities at amortised cost:
Balance as at 1 January
Loss allowance
Release of loss allowance
FX movement
Closing balance
31 December
2023
31 December
2022
35,850
2,287
(10,863)
(1,049)
26,225
6,685
31,696
(4,073)
1,542
35,850
INTEGRATED ANNUAL REPORT 2023
301
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 11:
LOANS (in HUF mn)
Loans measured at fair value through profit or loss
Within one year
Over one year
Loans measured at fair value through profit or loss total
31 December
2023
31 December
2022
46,131
888,717
934,848
39,694
753,548
793,242
Loans measured at fair value through profit or loss are mandatorily measured at fair value through profit or loss.
Loans measured at amortised cost, net of allowance for loan losses
Within one year
Over one year
Loans at amortised cost gross total
Loss allowance on loan losses
Loans at amortised cost total
An analysis of the loan portfolio by currency (%):
In HUF
In foreign currency
Total
31 December
2023
31 December
2022
2,245,979
2,582,795
4,828,774
2,481,249
2,518,671
4,999,920
(147,415)
(174,880)
4,681,359
4,825,040
31 December
2023
31 December
2022
61%
39%
100%
58%
42%
100%
Interest rates of the loan portfolio mandatorily measured at fair value through profit or loss are as follows (%):
31 December
2023
31 December
2022
Loans denominated in HUF
3.1%-21.08%
2,89%-18,26%
Average interest on loans denominated in HUF
5.96%
4.77%
Interest rates of the loan portfolio measured at amortised cost are as follows (%):
Loans denominated in HUF
Loans denominated in foreign currency
31 December
2023
31 December
2022
0%-43.11%
0%-21.21%
0%-43.7%
(0.1%)-20.1%
Average interest on loans denominated in HUF
Average interest on loans denominated in foreign currency
11.32%
5.42%
9.77%
2.74%
INTEGRATED ANNUAL REPORT 2023
302
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 11:
LOANS (in HUF mn) [continued]
For an analysis of the loan portfolio by stages, countries and rating categories 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
Loss allowance
Release of loss allowance
Use of loss allowance
Partial write-off
FX movement
Closing balance
31 December
2023
31 December
2022
174,880
257,173
(241,580)
(35,043)
(5,263)
(2,752)
147,415
155,557
252,002
(210,342)
(21,274)
(7,348)
6,285
174,880
The Bank sells non-performing loans without recourse at estimated fair value to a wholly owned subsidiary, OTP
Factoring Ltd.
INTEGRATED ANNUAL REPORT 2023
303
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 12:
INVESTMENTS IN SUBSIDIARIES, ASSOCIATES, JOINT VENTURES AND
OTHER INVESTMENTS (in HUF mn)
Investments in subsidiaries:
Controlling interest
Other
Subtotal
Impairment loss
Total
31 December
2023
31 December
2022
2,390,718
29,349
2,420,067
2,116,059
23,427
2,139,486
(418,115)
(542,769)
2,001,952
1,596,717
Other investments contain certain securities accounted at cost.
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:
OTP Bank JSC (Ukraine)
OTP Luxembourg S.à r.l.
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)
Ipoteka Bank (Uzbekistan)
JSC "OTP Bank" (Russia)
Crnogorska komercijalna banka a.d.
(Montenegro)
OOO AlyansReserv (Russia)
Air-Invest Llc.
OTP Holding Malta Ltd.
Balansz Private Open-end Investment
Fund
Bank Center No. 1. Ltd.
OTP Factoring Ltd.
Other
Total
31 December 2023
31 December 2022
% Held
(direct/indirect)
100%
100%
100%
Gross book
value
311,390
301,470
280,722
% Held
(direct/indirect)
100%
100%
100%
Gross book
value
311,390
-
280,722
100%
100%
100%
100%
100%
80%
98%
100%
100%
100%
100%
100%
100%
100%
262,759
204,243
-
199,294
107,689
110,015
74,337
72,784
50,074
49,248
32,359
60,629
43,955
25,411
204,339
2,390,718
100%
100%
100%
100%
100%
-
98%
100%
100%
100%
100%
100%
100%
100%
262,759
205,349
167,764
199,294
107,689
-
74,337
72,784
50,074
39,248
32,359
60,630
26,063
25,411
200,186
2,116,059
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
31 December
2023
542,769
348
(87,345)
(37,657)
418,115
31 December
2022
449,256
147,712
(54,199)
-
542,769
INTEGRATED ANNUAL REPORT 2023
304
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 12:
INVESTMENTS IN SUBSIDIARIES, ASSOCIATES, JOINT VENTURES AND OTHER
INVESTMENTS (in HUF mn) [continued]
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 Mortgage Bank Ltd.
LLC Alliance Reserve (Russia)
Air-Invest Ltd.
Monicomp Ltd.
OTP Real Estate Ltd.
R.E. Four d.o.o. (Serbia)
JSC "OTP Bank" (Russia)
OTP Life Annuity Ltd.
OTP Bank Romania S.A. (Romania)
OTP banka Srbija akcionarsko drustvo Novi Sad (Serbia)
Crnogorska komercijalna banka a.d. (Montenegro)
Balansz Private Open-end Investment Fund
Total
31 December
2023
280,763
84,707
15,801
10,965
8,632
4,395
3,763
2,775
2,281
-
-
-
-
414,082
31 December
2022
280,763
84,707
15,801
10,965
8,632
5,557
3,763
2,775
10,969
77,962
23,452
4,495
5,110
534,951
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.
DSK Bank EAD (Bulgaria)
JSC "OTP Bank" (Russia)
OTP banka Srbija akcionarsko drustvo Novi Sad (Serbia)
OTP banka dioničko društvo (Croatia)
OTP Luxembourg S.à r.l.
OTP Bank S.A. (Moldova)
Merkantil Bank Ltd.
Crnogorska komercijalna banka a.d. (Montenegro)
OTP Holding Ltd. (Cyprus)
OTP Mortgage Bank Ltd.
Other
Subtotal
Dividend from shares held-for-trading
Dividend from shares fair value through other comprehensive
income
Total
31 December
2023
70,000
48,658
33,961
30,873
28,574
21,131
5,513
3,800
3,511
3,000
-
12,201
261,222
14,229
31 December
2022
45,000
74,314
-
-
14,637
-
-
8,000
-
7,800
18,000
14,403
182,154
12,166
254
275,705
207
194,527
INTEGRATED ANNUAL REPORT 2023
305
OTP BANK
IFRS REPORT (SEPARATE)
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 cost as at 31 December 2023:
List of associated entities
Carrying
amount
Ownership of
OTP Bank
Profit after tax
Country / Headquarter
Activity
Edrone spółka z ograniczoną
odpowiedzialnością
NovaKid Inc.
Banzai Cloud Closed Co. Plc
CodeCool Ltd
Pepita.hu Closed Co. Plc
Seon Holdings Ltd
VCC Live Group Closed Co. Plc
Cursor Insight Ltd
OneSoil Ag.
Packhelp Spółka Akcyjna
Phoenix Play Invest Closed Co. Plc
Algorithmiq Invest Closed Co. Plc
Deligo Vision Technologies Ltd
Shopper Park Plus Closed Co. Plc.1
New Frontier Technology Invest SARL
Mindgram sp. z.o.o
Tine Limited
Renewabl Ltd.
Giganci Programowania sp. z.o.o.
FlowX.Ai., Inc
Commsignia Inc.
Deskbird AG
Subtotal (Investments through funds)
OTP Risk Fund I.
OTP-DayOne Magvető Fund
D-ÉG Thermoset Ltd 'u.l.'
Company for Cash Services AD
Fabetker Ltd
NGY Propertiers Investment SRL
Fintech CEE Software Invest Ltd
Bankart Procesiranje Placilnih Instrumentov d.o.o.
Mortgage refinancing Company of Uzbekistan
Dél-borsodi Gazdák Ltd.
"Egertej"Ltd.
Orbánhegyi Szőlőbirtok
Subtotal
Total
1Previously known as: GRADUW Invest Closed Co. Plc
848
2,009
4
1,310
2,679
8,070
1,632
73
6
899
6,368
5,185
302
5,237
3,624
206
-
102
514
2,252
1,763
1,079
44,162
611
280
-
392
3
11,637
408
7,219
1,030
4
8
-
21,592
65,754
23.54%
4.07%
17.42%
7.26%
38.75%
19.26%
24.72%
6.75%
3.72%
3.14%
21.68%
21.68%
8.70%
2.80%
14.00%
2.38%
0.00%
5.01%
5.03%
9.50%
3.17%
8.46%
44.12%
22.00%
46.99%
25.00%
20.00%
14.54%
20.04%
43.06%
20.00%
40.92%
28.12%
25.00%
Poland / Krakow
USA / San Francisco
Hungary /Budapest
Hungary /Budapest
Hungary / Szeghalom
UK / London
Hungary /Budapest
UK / London
Switzerland / Zurich
Poland / Warsaw
Hungary /Budapest
Hungary /Budapest
Hungary /Budapest
Hungary /Budapest
Luxemburg / Luxembourg
Poland / Warsaw
Great Britain / London
Great Britain / London
Poland / Warsaw
USA / Camano Park
USA / Santa Clara
St. Gallen / Switzerland
Hungary /Budapest
Hungary /Budapest
Hungary / Dunaújváros
Bulgaria / Sofia
Hungary / Nádudvar
Romania / Bucharest
Hungary /Budapest
Ljubjana / Slovenia
Tashkent / Uzbekistan
Hungary / Mezőkeresztes
Hungary / Eger
Hungary / Budapest
Computer programming activities
Online kids English learning platform operator
Computer programming activities
Other education
Retail sale via mail order houses or via Internet
Computer programming activities
Computer programming activities
Computer programming activities
Computer programming activities
Manufacture of corrugated paper and paperboard and of containers of
paper and paperboard
Activities of holding companies
Activities of holding companies
Other information service activities
Sale and purchase of own real estate
Activities of holding companies
Other human health activities
Child day-care services
Other information technology services
Other education
Computer programming activities
Retail sale of computers, peripheral units and
software in specialized stores
Computer programming activities
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
Manufacture of concrete products for construction purposes
Renting and operating of own or leased real estate
Activities of holding companies
Data processing, web hosting services
Refinancing mortgage loans
Wholesale of grain, tobacco, seeds and animal feeds.
Manufacture of dairy products.
Viticulture
(342)
(231)
267
(731)
(580)
(1,210)
(220)
(51)
(819)
(2,725)
151
(8,907)
(215)
3,175
103
(1,083)
(1,086)
(269)
(149)
(1,786)
(1,438)
(1,944)
(20,090)
158
308
n.a.
337
119
6,903
(7)
(1,733)
(615)
(4)
78
28
5,572
(14,518)
INTEGRATED ANNUAL REPORT 2023
306
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 12:
INVESTMENTS IN SUBSIDIARIES, ASSOCIATES, JOINT VENTURES AND
OTHER INVESTMENTS (in HUF mn) [continued]
Significant associates and joint ventures [continued]
The main figures of the Bank’s indirectly owned associates and joint ventures at cost1 as at 31 December 2022:
List of associated entities
Carrying
amount
Ownership of
OTP Bank
Profit after tax
Country / Headquarter
Activity
Edrone spółka z ograniczoną
odpowiedzialnością
NovaKid Inc.
Banzai Cloud Closed Co. Plc
CodeCool Ltd
Pepita.hu Closed Co. Plc
Seon Holdings Ltd
VCC Live Group Closed Co. Plc
Cursor Insight Ltd
OneSoil Ag.
Packhelp Spółka Akcyjna
Phoenix Play Invest closed Co. Plc
Algorithmiq Invest Closed Co. Plc
Deligo Vision Technologies Ltd
GRADUW Invest Closed Co. Plc
SEH-Partner Ltd
New Frontier Technology Invest SARL
Mindgram sp. z.o.o
Subtotal (Investments through funds)
OTP Risk Fund I.
OTP-DayOne Magvető Fund
D-ÉG Thermoset Ltd 'u.l.'
Company for Cash Services AD
Fabetker Ltd
NGY Propertiers Investment SRL
Simonyi út 20. Ingatlanhasznosító Ltd
Fintech CEE Software Invest Ltd
Subtotal
Total
1 Based on unaudited financial statements.
822
1,723
216
1,323
1,323
8,689
1,308
75
362
1,168
2,350
8,195
205
4,803
6,403
3,393
200
42,558
520
683
-
392
1
11,735
90
127
13,548
56,106
23.54%
4.07%
17.42%
20.15%
40.00%
19.26%
24.75%
6.75%
3.72%
3.15%
21.69%
21.69%
2.50%
3.81%
30.56%
14.01%
2.38%
44.12%
22.00%
46.99%
25.00%
20.48%
14.54%
47.62%
20.04%
Poland / Krakow
USA / San Francisco
Hungary /Budapest
Hungary /Budapest
Hungary / Szeghalom
UK / London
Hungary /Budapest
UK / London
Switzerland / Zurich
Poland / Warsaw
Computer programming activities
Online kids English learning platform operator
Computer programming activities
Other education
Retail sale via mail order houses or via Internet
Computer programming activities
Computer programming activities
Computer programming activities
Computer programming activities
Manufacture of corrugated paper and paperboard
and of containers of paper and paperboard
Hungary /Budapest
Hungary /Budapest
Hungary /Budapest
Hungary /Budapest
Hungary /Budapest
Luxemburg / Luxembourg
Poland / Warsaw
Activities of holding companies
Activities of holding companies
Other information service activities
Sale and purchase of own real estate
Activities of holding companies
Activities of holding companies
Other human health activities
(516)
(5,409)
267
1
(157)
(3)
(226)
n.a.
(514)
(3,385)
(1)
792
(15)
131
n.a.
n.a.
(328)
(9,363)
(52)
13
-
Hungary /Budapest
Hungary /Budapest
Hungary / Dunaújváros
183
Bulgaria / Sofia
Hungary / Nádudvar
Romania / Bucharest
Hungary /Debrecen
Hungary /Budapest
135
(22,567)
-
n.a.
(22,288)
(31,651)
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
Manufacture of concrete products for construction purposes
Renting and operating of own or leased real estate
Renting and operating of own or leased real estate
Activities of holding companies
INTEGRATED ANNUAL REPORT 2023
307
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 12:
INVESTMENTS IN SUBSIDIARIES, ASSOCIATES, JOINT VENTURES AND
OTHER INVESTMENTS (in HUF mn) [continued]
Significant events related to investments
The Metropolitan Court of Registration has registered a capital increase at OTP Mortgage Bank Ltd. The registered
capital of OTP Mortgage Bank Ltd. was increased to HUF 57,000,000,000 from HUF 37,000,000,000.
The Bank signed a purchase and sale contract for the purchase of the majority stake of Ipoteka Bank and its
subsidiaries with the Ministry of Finance of the Republic of Uzbekistan.
OTP Bank will purchase 100% of the shares held by the Ministry of Finance of the Republic of Uzbekistan (nearly
97% total shareholding) in two steps: 75% of the shares now and the remaining 25% three years after the financial
closing of the first transaction.
Based on the share sale and purchase agreement concluded on 12 December 2022 between OTP Bank and the
Ministry of Economy and Finance of the Republic of Uzbekistan the first step of the transaction was completed
on 13 June 2023. Consequently, OTP Bank became the majority shareholder of Ipoteka Bank by acquiring a
73.71% shareholding, and became indirect shareholder of Ipoteka Bank’s wholly-owned subsidiaries. As a result
of the acquisition, OTP Group entered the Central Asian region, and is the first foreign bank to participate in the
privatization of the Uzbek banking sector. Holding a market share of 7.6% in terms of total assets as of May 2023
and a retail clientele of about 1.5 million, Ipoteka Bank is the fifth largest bank of Uzbekistan. It is active both in
the retail and corporate segments, whereas over the past three years the average annual growth rate of its customer
loan and deposit portfolio reached 20% and 24%, respectively. As the second step of the transaction, the remaining
shares held by the Ministry will be purchased in three years from now.
The financial completion of the transaction to purchase 100% shareholding of Nova KBM d.d. and its subsidiary
– after obtaining all necessary regulatory approvals – has been completed on 6 February 2023, based on the share
sale and purchase agreement concluded between OTP Bank, funds managed by affiliates of Apollo Global
Management, Inc. and EBRD, on 31 May 2021. The acquisition of the bank is the most significant acquisition in
the history of OTP Group.
With a market share of 20.7% in terms of total assets as of September 2022 and more than 1,500 employees as of
the end of 2022, Nova KBM d.d. is the 2nd largest bank in the Slovenian banking market. As a universal bank, it
has been active in the retail and corporate segments as well. With the transaction closing of Nova KBM, OTP
Group has around 30% share in the Slovenian banking market on a pro-forma basis.
The Metropolitan Court of Registration hasregistered a capital increase at OTP Real Estate Ltd. Accordingly, the
registered capital of OTP Real Estate Ltd. was increased to HUF 1,050,000,000 from HUF 1,000,000,000.
On 4 January 2024 the Metropolitan Court of Registration has registered a capital increase at Merkantil Bank Ltd.
The registered capital of Merkantil Bank Ltd. was increased to HUF 3,000,000,000 from HUF 2,000,000,000.
On 8 January 2024 the Metropolitan Court of Registration has registered a capital increase at Monicomp Ltd. The
registered capital of Monicomp Ltd. was increased to HUF 226,500,000 from HUF 203,000,000.
On 2 February 2024 the Uzbek Court of Registration has registered a capital increase at JSCMB 'IPOTEKA
BANK’. the registered capital of JSCMB 'IPOTEKA BANK’ was increased to UZS 3,834,217,638,941 from UZS
2,989,584,338,941. As a consequence of the capital increase the ownership ratio of OTP Bank Plc. increased to
79.58%.
INTEGRATED ANNUAL REPORT 2023
308
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 13:
PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (in HUF mn)
For the year ended 31 December 2023
Intangible
assets
Property
Office
equipment
and vehicles
Vehicles
Construction
in progress
Right of use
assets
Total
Cost
Balance as at 1
January
Additions
Disposals
Closing balance
Depreciation and
Amortization
Balance as at 1
January
Charge for the year
Disposals
Closing balance
Net book value
Balance as at 1
January
Closing balance
213,085
55,533
(6,764)
261,854
78,595
10,550
(3,227)
85,918
112,924
15,662
(12,772)
115,814
197
200
(59)
338
15,650
30,718
(26,739)
19,629
59,349
68,060
(40,755)
86,654
479,800
180,723
(90,316)
570,207
143,605
25,902
(5,768)
163,739
30,148
3,900
(2,070)
31,978
82,577
12,290
(12,548)
82,319
77
39
(20)
96
-
-
-
-
19,467
8,927
(7,962)
20,432
275,874
50,814
(28,124)
298,564
69,480
98,115
48,447
53,940
30,347
33,495
120
242
15,650
19,629
39,882
66,222
203,926
271,643
For the year ended 31 December 2022
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
188,853
59,839
(35,607)
74,506
5,979
(1,890)
103,469
15,804
(6,349)
213,085
78,595
112,924
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
126,692
24,768
(7,855)
28,316
4,347
(2,515)
77,404
10,211
(5,038)
143,605
30,148
82,577
62,161
69,480
46,190
26,065
48,447
30,347
The Bank has no intangible assets with indefinite useful life.
199
12
(14)
197
62
29
(14)
77
137
120
9,425
28,117
(21,892)
31,118
29,156
(925)
407,570
138,907
(66,677)
15,650
59,349
479,800
-
-
-
-
13,887
7,383
(1,803)
246,361
46,738
(17,225)
19,467
275,874
9,425
17,231
161,209
15,650
39,882
203,926
INTEGRATED ANNUAL REPORT 2023
309
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 14:
INVESTMENT PROPERTIES (in HUF mn)
For the year ended 31 December 2023 and for the year ended 31 December 2022, respectively
31 December
2023
31 December
2022
Property
Cost
Balance as at 1 January
Additions result from subsequent expenditure
Closing balance
Depreciation and Amortization
Balance as at 1 January
Charge for the period
Closing balance
Net book value
Balance as at 1 January
Closing balance
5,027
138
5,165
820
142
962
4,207
4,203
5,013
14
5,027
685
135
820
4,328
4,207
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
31 December
2023
9
138
31 December
2022
8
135
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
31 December
2023
31 December
2022
12,521
10,173
(1,066)
21,628
29,139
20,732
(2,651)
47,220
INTEGRATED ANNUAL REPORT 2023
310
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 16:
OTHER ASSETS1 (in HUF mn)
31 December
2023
31 December
2022
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
Receivables from suppliers
Other
Loss allowance
Other financial assets total
Other non-financial assets
Accrued expenses
Receivable related to Hungarian Government subsidies
Other
Provision for impairment on other assets
Other non-financial assets total
Total
133,347
23,785
29,597
19,630
13,960
51,938
9,367
25,089
306,713
(7,875)
298,838
42,574
15,996
9,160
67,730
(607)
67,123
365,961
119,123
15,674
34,828
30,939
11,053
34,783
6,621
9,130
262,151
(7,026)
255,125
44,106
19,076
12,144
75,326
(699)
74,627
329,752
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
Closing balance
31 December
2023
31 December
2022
7,026
6,686
(4,479)
(1,227)
(131)
7,875
5,148
10,572
(7,715)
(982)
3
7,026
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
Closing balance
31 December
2023
31 December
2022
699
266
(336)
(22)
607
514
255
(106)
36
699
1 Other assets are expected to be recovered or settled no more than twelve months after the reporting period.
INTEGRATED ANNUAL REPORT 2023
311
OTP BANK
IFRS REPORT (SEPARATE)
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
31 December
2023
31 December
2022
328,641
337,184
665,825
615,167
480,587
1,095,754
1,761,579
554,794
448,935
1,003,729
392,947
339,452
732,399
1,736,128
1,761,579
1,736,128
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
31 December
2023
31 December
2022
(2.4%)-8.75%
(2.31%)-4.2%
(2.4%) - 18%
(2.31%) - 5.9%
(1.7%)-11.4%
(2.02%)-7.18%
(2.4%) - 9.23%
(2.4%) - 6.84%
Average interest on amounts due to banks in HUF
Average interest on amounts due to banks in foreign currency
6.02%
3.55%
3.24%
1.50%
NOTE 18:
REPO LIABILITIES (in HUF mn)
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
In foreign currency
Subtotal
Total
Interest rates on repo liabilities are as follows (%):
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
In foreign currency
31 December
2023
31 December
2022
100,296
101,862
202,158
190,255
51,281
241,536
443,694
443,694
122,676
15,561
138,237
82,200
187,929
270,129
408,366
408,366
31 December
2023
31 December
2022
9.25%-10.63%
1.67%
11.5% - 15.47%
2.47%-5.2%
9.25%-10.63%
1.67%-5.92%
15%
3.58%-3.69%
Average interest on repo liabilities in HUF
Average interest on repo liabilities in foreign currency
15.22%
4.51%
9.31%
0.30%
INTEGRATED ANNUAL REPORT 2023
312
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 19:
DEPOSITS FROM CUSTOMERS (in HUF mn)
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
31 December
2023
31 December
2022
7,747,906
2,962,206
10,710,112
24,213
24,213
7,982,882
3,112,937
11,095,819
23,339
23,339
Total
10,734,325
11,119,158
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 on deposits from customers in HUF
Average interest on deposits from customers in foreign currency
31 December
2023
31 December
2022
0%-15.4%
(0.36%)-11.77%
0%-17.95%
(0.4%)-45.1%
0%-10.75%
0%-9,73%
3.75%
1.36%
0%-13%
-
2.32%
0.12%
An analysis of deposits from customers by type, not including accrued interest, is as follows:
31 December 2023
31 December 2022
Retail deposits
Household deposits
Corporate deposits
Deposits to medium and large corporates
Municipality deposits
Total
4,422,120
4,422,120
6,312,205
5,402,710
909,495
43%
43%
57%
50%
7%
10,734,325 100% 11,119,158 100%
4,756,881
4,756,881
6,362,277
5,570,866
791,411
41%
41%
59%
51%
8%
INTEGRATED ANNUAL REPORT 2023
313
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 20:
LIABILITIES FROM ISSUED SECURITIES (in HUF mn)
Within one year:
In HUF
In foreign currency
Over one year:
In HUF
In foreign currency
Total
Interest rates on liabilities from issued securities are as follows (%):
Issued securities denominated in HUF
Issued securities denominated in foreign currency
31 December
2023
31 December
2022
161,217
26,670
187,887
43,025
932,197
975,222
1,163,109
4,311
6,351
10,662
46,192
441,855
488,047
498,709
31 December
2023
0,6%-15%
5,5%-8,1%
31 December
2022
0,6%-15%
5,5%-7,35%
Average interest on issued securities denominated in HUF
Average interest on issued securities denominated in foreign
currency
11.42%
6.88%
2.63%
2.95%
Term Note Program in the value of HUF 200 billion for the year of 2022/2023
On 10 May 2022 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 10 August 2022 the prospectus of
Term Note Program. The prospectus is valid for 12 months following the disclosure.
Term Note Program in the value of HUF 800 billion for the year of 2023/2024
On 18 April 2023 the Bank initiated term note program in the value of HUF 800 billion with the intention of
issuing registered dematerialized bonds in public. The NBH approved on 7 August 2023 the prospectus of Term
Note Program. The prospectus is valid for 12 months following the disclosure.
Notes issued in amount of USD 650 million
On 15 February 2023 as a value date the Bank issued Notes in the aggregate nominal amount of USD 650 million.
The original maturity of the Tier 2 Notes is 10.25 years, redeemable at par any time during the 3-month period
prior to the Reset Date at 5.25 years. The notes are rated ’Ba2’ by Moody’s Investor Services Cyprus Ltd., ’BB’
by S&P Ratings Europe Limited and ’BB+’ by Scope Ratings GmbH. The notes are listed on the Luxembourg
Stock Exchange.
Notes issued in amount of USD 500 million
Notes (ISIN: XS2626773381) have been issued on 25 May 2023 as value date in the aggregate nominal amount
of USD 500 million. The notes are rated ’Baa3’ by Moody’s Investor Services Cyprus Ltd., ’BBB-’ by S&P
Ratings Europe Limited and ’BBB+’ by Scope Ratings GmbH. The notes are listed on the Luxembourg Stock
Exchange.
Notes issued in amount of EUR 110 million
OTP Bank issued notes (ISIN: XS2642536671) on 27 June 2023 as value date in the aggregate nominal amount
of EUR 110 million. The notes are listed on the Luxembourg Stock Exchange.
Notes issued in amount of EUR 650 million
Notes (ISIN: XS2698603326) have been issued on 5 October 2023 as value date in the aggregate nominal amount
of EUR 650 million. The notes are rated ’Baa3’ by Moody’s Investor Services Cyprus Ltd. and ’BBB+’ by Scope
Ratings GmbH. The notes are listed on the Luxembourg Stock Exchange.
INTEGRATED ANNUAL REPORT 2023
314
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 20:
LIABILITIES FROM ISSUED SECURITIES (in HUF mn) [continued]
Notes issued in amount of RON 170 million
The Bank issued notes (ISIN: XS2703264635) on 13 October 2023 as value date in the aggregate nominal amount
of RON 170 million. The notes are rated ’BBB+’ by Scope Ratings GmbH. The notes are listed on the Luxembourg
Stock Exchange.
Notes issued in amount of EUR 75 million
The Bank issued notes (ISIN: XS2737630314) on 22 December 2023 as value date in the aggregate nominal
amount of EUR 75 million. The notes are listed on the Luxembourg Stock Exchange.
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.
Issued securities denominated in foreign currency as at 31 December 2023
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)
1 XS2560693181
2 XS2698603326
3 XS2626773381
4 XS2499691330
01/12/2022
05/10/2023
25/05/2023
13/07/2022
04/03/2026
05/10/2027
25/05/2027
13/07/2025
5 XS2642536671
27/06/2023
27/06/2026
6 XS2737630314
22/12/2023
22/06/2026
7 XS2536446649
29/09/2022
29/09/2026
EUR
EUR
USD
EUR
EUR
EUR
USD
8 XS2703264635
13/10/2023
13/10/2026
RON
Subtotal issued securities in foreign currency
649
650
500
400
110
75
60
170
248,497
248,725
173,152
153,111
42,106
28,709
20,786
13,082
928,168
689
674
499
410
114
75
61
173
263,732 fixed
258,006 fixed
173,011 fixed
157,095 fixed
43,745 fixed
28,778 fixed
21,180 fixed
7.35
6.13
7.50
5.50
7.50
6.10
7.25
13,320 variable 8.10
958,867
Issued securities denominated in foreign currency as at 31 December 2022
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)
1 XS2560693181
2 XS2499691330
01/12/2022
13/07/2022
04/03/2026
13/07/2025
3 XS2536446649
29/09/2022
29/09/2026
EUR
EUR
USD
650
399
60
Subtotal issued securities in foreign currency
260,136
159,859
22,541
442,536
653
409
61
261,341 fixed
163,893 fixed
22,972 fixed
7.35
5.50
7.25
448,206
INTEGRATED ANNUAL REPORT 2023
315
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 20:
LIABILITIES FROM ISSUED SECURITIES (in HUF mn) [continued]
Issued securities denominated in HUF as at 31 December 2023
Name
Date of
issuance
Maturity
Nominal
value in HUF
million
Amortised
cost in HUF
million
Interest conditions Hedged
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
OTP_HUF_2024/1
OTP_HUF_2025/1
OTP_HUF_2024/2
OTP_HUF_2024/3
OTP_HUF_2024/6
OTP_HUF_2024/4
OTP_HUF_2024/5
OTP_HUF_2024/7
OTP_HUF_2026/1
OTP_HUF_2025/2
OTP_HUF_2024/9
OTP_HUF_2024/8
17/02/2023
17/02/2024
18/11/2022
18/11/2025
10/03/2023
10/03/2024
31/03/2023
31/03/2024
02/06/2023
02/06/2024
21/04/2023
21/04/2024
12/05/2023
12/05/2024
23/06/2023
23/06/2024
22/12/2022
05/01/2026
30/06/2023
30/06/2025
28/07/2023
28/07/2024
30/06/2023
30/06/2024
OTP_HUF_2024/13
20/10/2023
20/10/2024
OTP_HUF_2024/14
17/11/2023
17/11/2024
OTP_HUF_2024/15
20/12/2023
20/12/2024
OTP_HUF_2024/12
25/09/2023
25/09/2024
OTP_HUF_2024/11
01/09/2023
01/09/2024
OTP_HUF_2024/10
07/08/2023
07/08/2024
OTP_HUF_2026/2
15/12/2023
15/12/2026
OTPX2024B
OTPX2024A
OTPX2024C
10/10/2014
16/10/2024
18/06/2014
21/06/2024
15/12/2014
20/12/2024
OTP_TBSZ_HUF_2028/1
13/10/2023
15/12/2028
Other
26,079
25,563
22,977
17,015
16,722
14,698
13,946
11,232
10,228
5,116
4,173
3,730
3,494
3,509
2,994
2,777
2,655
1,431
647
295
241
242
155
206
fix
fix
fix
fix
fix
fix
fix
fix
fix
fix
fix
fix
fix
fix
fix
fix
fix
fix
fix
indexed
indexed
indexed
11.00
15.00
11.00
11.00
11.00
11.00
11.00
10.50
12.00
12.00
10.50
10.50
8.75
8.50
8.00
9.00
9.75
10.00
7.40
0.70
1.30
0.60
fix
12.00
28,593
27,042
25,048
18,441
17,806
15,837
14,937
11,859
11,856
5,431
4,364
3,931
3,557
3,547
3,004
2,845
2,743
1,490
649
339
283
275
159
206
hedged
hedged
hedged
hedged
hedged
Subtotal issued securities in HUF
190,125
204,242
Total
1,118,293
1,163,109
INTEGRATED ANNUAL REPORT 2023
316
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 20:
LIABILITIES FROM ISSUED SECURITIES (in HUF mn) [continued]
Issued securities denominated in HUF as at 31 December 2022
Name
Date of
issuance
Maturity
Nominal
value in HUF
million
Amortised
cost in HUF
million
Interest conditions Hedged
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
OTP_HUF_25/1
11/18/2022
11/18/2025
OTP_HUF_26/1
12/22/2022
1/5/2026
OTPRF2023A
3/22/2013
3/24/2023
OTP_DK_25/3
5/31/2021
5/31/2025
OTP_DK_23/II
5/29/2020
5/31/2023
OTP_DK_24/3
5/31/2021
5/31/2024
OTP_DK_27/3
3/31/2022
5/31/2027
OTP_DK_27/II
5/31/2021
5/31/2027
OTP_DK_23/I
12/15/2018
5/31/2023
OTP_DK_26/II
5/31/2021
5/31/2026
OTP_DK_26/3
3/31/2022
5/31/2026
OTP_DK_28/I
5/31/2021
5/31/2028
OTP_DK_24/II
5/29/2020
5/31/2024
OTP_DK_25/II
5/29/2020
5/31/2025
OTP_DK_24/I
5/30/2019
5/31/2024
OTPX2023A
3/22/2013
3/24/2023
OTP_DK_28/II
3/31/2022
5/31/2028
OTP_DK_26/I
5/29/2020
5/31/2026
OTP_DK_29/II
3/31/2022
5/31/2029
OTP_DK_30/II
3/31/2022
5/31/2030
OTP_DK_29/I
5/31/2021
5/31/2029
OTPX2024B
OTPX2024A
OTPX2024C
OTPX2023B
10/10/2014
10/16/2024
6/18/2014
6/21/2024
12/15/2014
12/20/2024
6/28/2013
6/26/2023
OTP_DK_31/I
3/31/2022
5/31/2031
OTP_DK_25/I
5/30/2019
5/31/2025
OTP_DK_27/I
5/29/2020
5/31/2027
OTP_DK_30/I
5/31/2021
5/31/2030
OTP_DK_32/I
3/31/2022
5/31/2032
Other
25,562
10,229
1,010
1,215
997
883
1,092
795
717
707
783
669
592
592
426
312
554
392
554
554
403
295
241
242
198
384
104
95
104
105
211
26,046
10,270
fix
fix
1,215
indexed
1,160
discount
15.00
12.00
1.70
hedged
discount
discount
discount
discount
discount
discount
discount
discount
discount
discount
discount
indexed
discount
discount
discount
discount
discount
indexed
indexed
indexed
indexed
discount
discount
discount
discount
discount
992
862
826
719
710
658
631
586
581
572
411
410
394
372
372
350
341
378
310
309
260
228
97
88
85
59
211
hedged
0.70
1.30
0.60
0.60
hedged
hedged
hedged
hedged
Subtotal issued securities in HUF
51,017
50,503
Total
493,553
498,709
INTEGRATED ANNUAL REPORT 2023
317
OTP BANK
IFRS REPORT (SEPARATE)
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
31 December
2023
31 December
2022
1,816
1,816
17,970
17,970
19,786
17,747
1,716
1,716
14,860
14,860
16,576
19,853
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
31 December
2023
31 December
2022
4.97%-9.97%
2,19-3.96%
4.83%
0,01%-4.63%
Average interest on amounts due to banks in HUF
7.88%
3.06%
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
31 December
2023
31 December
2022
72,200
53,102
9,161
49,102
183,565
221,647
87,988
15,711
48,055
373,401
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
31 December
2023
31 December
2022
7,875
10,679
8,869
27,423
22,551
5,398
22,674
50,623
INTEGRATED ANNUAL REPORT 2023
318
OTP BANK
IFRS REPORT (SEPARATE)
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
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
31 December
2023
31 December
2022
50,321
27,673
33,508
19,107
84,184
28,526
243,319
25,321
13,770
8,475
2,940
1,574
52,080
108,284
21,183
27,127
24,596
52,274
25,007
258,471
32,338
12,371
5,275
2,829
1,904
54,717
Other liabilities total
295,399
313,188
The provision on other liabilities, off-balance sheet commitments and contingent liabilities are detailed as follows:
Provision for losses on other off-balance sheet commitments and
contingent liabilities
Provisions in accordance with IFRS 9
Provision for litigation
Provision for retirement pension and severance pay
Provision on other liabilities
Provisions in accordance with IAS 37
Total
31 December
2023
31 December
2022
16,092
16,092
1,931
2,000
2,474
6,405
22,497
23,632
23,632
1,917
1,527
2,580
6,024
29,656
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
Use of provision
FX revaluation
Closing balance
31 December
2023
23,632
62,662
(50,882)
(18,952)
(368)
16,092
31 December
2022
17,768
49,698
(28,772)
(15,385)
323
23,632
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
FX revaluation
Closing balance
31 December
2023
31 December
2022
6,024
11,563
(8,633)
(2,420)
(129)
6,405
3,759
8,128
(933)
(5,138)
208
6,024
1 Other liabilities are expected to be recovered or settled no more than twelve months after the reporting period.
INTEGRATED ANNUAL REPORT 2023
319
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 25:
SUBORDINATED BONDS AND LOANS (in HUF mn)
Within one year
In HUF
In foreign currency
Over one year:
In HUF
In foreign currency
Total
Interest rates on subordinated bonds and loans are as follows (%):
31 December
2023
31 December
2022
1,886
6,174
8,060
11,133
501,103
512,236
520,296
-
3,395
3,395
-
290,791
290,791
294,186
31 December
2023
31 December
2022
Subordinated bonds and loans denominated in foreign currency
2.9%-8.8%
2.9%-4.7%
Average interest on subordinated bonds and loans denominated in
HUF
Average interest on subordinated bonds and loans denominated in
foreign currency
5.51%
6.04%
-
3.06%
INTEGRATED ANNUAL REPORT 2023
320
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 25:
SUBORDINATED BONDS AND LOANS (in HUF mn) [continued]
Subordinated loans and bonds are detailed as follows as at 31 December 2023:
Type
Name
Date of
issuance
Date of
maturity
Issue
price
Currency
Nominal
value in FX
million
Nominal
value in
HUF
million
Amortised
cost in Fx
million
Amortised
cost in
HUF
million
Subordinated bond
XS0274147296
07/11/2006 Perpetual
99.38%
EUR
231
88,409
234
89,381
Subordinated bond
XS2022388586
15/07/2019 15/07/2029 99.74%
EUR
Subordinated bond
XS2586007036
15/02/2023 15/05/2033 99.42%
Discount bond
Discount bond
Discount bond
Discount bond
Discount bond
Discount bond
Discount bond
Discount bond
Discount bond
Discount bond
Discount bond
Discount bond
Discount bond
Discount bond
Discount bond
Discount bond
Discount bond
Discount bond
Discount bond
Discount bond
Discount bond
Discount bond
Discount bond
Discount bond
Discount bond
Discount bond
Total
HU0000358924
HU0000359724
HU0000360508
HU0000358932
HU0000359732
HU0000360516
HU0000359740
HU0000360524
HU0000361597
HU0000359757
HU0000360532
HU0000361605
HU0000360540
HU0000361613
HU0000362553
HU0000360557
HU0000361621
HU0000362561
HU0000360565
HU0000361639
HU0000362579
HU0000361647
HU0000362587
HU0000361654
HU0000362595
HU0000362603
30/05/2019 31/05/2024 87.85%
29/05/2020 31/05/2024 94.79%
31/05/2021 31/05/2024 95.12%
30/05/2019 31/05/2025 83.86%
29/05/2020 31/05/2025 92.99%
31/05/2021 31/05/2025 92.54%
29/05/2020 31/05/2026 91.10%
31/05/2021 31/05/2026 90.02%
31/03/2022 31/05/2026 76.86%
29/05/2020 31/05/2027 89.05%
31/05/2021 31/05/2027 87.27%
31/03/2022 31/05/2027 72.13%
31/05/2021 31/05/2028 84.31%
31/03/2022 31/05/2028 67.89%
01/06/2023 31/05/2028 66.68%
31/05/2021 31/05/2029 81.23%
31/03/2022 31/05/2029 64.03%
01/06/2023 31/05/2029 63.21%
31/05/2021 31/05/2030 78.09%
31/03/2022 31/05/2030 60.38%
01/06/2023 31/05/2030 60.08%
31/03/2022 31/05/2031 56.88%
01/06/2023 31/05/2031 56.64%
31/03/2022 31/05/2032 53.52%
01/06/2023 31/05/2032 52.82%
01/06/2023 31/05/2033 49.02%
USD
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
HUF
497
650
426
592
883
104
592
1,216
392
707
783
95
795
1,092
669
554
1,959
403
554
684
104
554
719
384
762
105
817
282
190,399
225,104
426
592
883
104
592
1,216
392
707
783
95
795
1,092
669
554
1,959
403
554
684
104
554
719
384
762
105
817
282
520,139
501
653
421
589
876
100
580
1,183
378
672
672
90
735
879
601
420
1,369
350
396
452
87
373
451
243
450
62
450
144
191,894
226,001
421
589
876
100
580
1,180
378
672
672
90
735
879
601
420
1,369
350
396
452
87
373
451
243
450
62
450
144
520,296
Interest conditions
Current
interest rate
Three-month EURIBOR +
3%, variable (payable
quarterly)
Fixed 2.875% (payable
annual)
Fixed 8.75% (payable
annual)
6.966%
2.875%
8.750%
N.a.
N.a.
N.a.
N.a.
N.a.
N.a.
N.a.
N.a.
N.a.
N.a.
N.a.
N.a.
N.a.
N.a.
N.a.
N.a.
N.a.
N.a.
N.a.
N.a.
N.a.
N.a.
N.a.
N.a.
N.a.
N.a.
INTEGRATED ANNUAL REPORT 2023
321
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 26:
SHARE CAPITAL (in HUF mn)
Authorized, issued and fully paid:
Ordinary shares
31 December
2023
31 December
2022
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.
INTEGRATED ANNUAL REPORT 2023
322
OTP BANK
IFRS REPORT (SEPARATE)
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 2023 dividend of HUF 84,000 million was paid out from the profit of the year 2022, which meant HUF 300
dividend per share payable to the shareholders. In 2024 dividend of HUF 150,000 million are expected to be
proposed by the Management from the profit of the year 2023, which means HUF 535.71 dividend per share
payable to the shareholders.
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.
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.
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 amended final maturity of the share
swap agreement is 11 July 2027, 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.
INTEGRATED ANNUAL REPORT 2023
323
OTP BANK
IFRS REPORT (SEPARATE)
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 2023:
31 December
2023
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
Other
comprehensi
ve income
Option reserve
Treasury shares
Share
based
payments
Net profit for the
year
reserve
tied-up
General
and
reserve
Components
of
Shareholder
’s equity in
accordance
with
paragraph
114/B of Act
on
Accounting
28,000
52
52,402
2,279,773
(55,468)
(6,154)
-
-
-
-
-
-
-
-
(55,468)
(6,154)
-
-
-
52,402
(52,402)
-
-
-
-
9,148
-
-
(9,148)
-
-
-
(654,988)
(192,937)
55,468
-
-
6,154
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
654,988
192,937
-
2,298,605
-
-
-
-
-
-
28,000
(9,168)
-
1,440,996
-
-
(9,148)
192,937
654,988
2,298,605
INTEGRATED ANNUAL REPORT 2023
324
OTP BANK
IFRS REPORT (SEPARATE)
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 2023:
1 January 2023
Opening
balance
Treasury
Shares
Capital
reserve
Option reserve
Share Capital
Share-based
payment
reserve
Retained
earnings and
reserves
Revaluation
reserve
28,000
52
49,110
1,661,907
(55,468)
(2,724)
-
52,933
-
-
(52,933)
-
-
-
-
-
-
-
(55,468)
(2,724)
-
-
-
49,110
(49,110)
-
-
-
-
-
-
-
(6,632)
(118,568)
55,468
-
-
-
-
-
2,724
-
-
-
-
-
-
-
-
Tied-up
reserve
Net profit for
the year
Total
-
-
-
-
-
-
-
-
-
-
-
6,632
118,568
-
1,680,877
-
-
-
-
-
-
Components of
Shareholder’
s equity
in
accordance
with IFRS
Other
comprehensiv
e 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
(9,030)
-
1,589,640
-
-
(52,933)
118,568
6,632
1,680,877
INTEGRATED ANNUAL REPORT 2023
325
OTP BANK
IFRS REPORT (SEPARATE)
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 of financial instruments measured at fair value through
other comprehensive income
Share-based payment reserve
Fair value of derivative financial instruments designated as cash-
flow hedge
Net profit for the period
Retained earnings and other reserves
31 December
2023
31 December
2022
1,440,996
654,988
1,580,770
6,632
2,095,984
1,587,402
31 December
2023
1,440,996
52
(55,468)
192,937
31 December
2022
1,580,770
52
(55,468)
127,438
(5,639)
52,402
(3,509)
654,988
2,276,759
(43,723)
49,110
(9,210)
6,632
1,655,601
Fair value adjustment of securities at fair value through other comprehensive income
Balance as at 1 January
Change of fair value correction
Deferred tax related to change of fair value correction
Closing balance
31 December
2023
(82,906)
46,485
(3,841)
(40,262)
31 December
2022
145
(88,350)
5,299
(82,906)
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
31 December
2023
29,161
3,401
(6,704)
(1,513)
24,345
31 December
2022
1,174
33,946
(8,331)
2,372
29,161
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
31 December
2023
10,022
3,307
(374)
(2,677)
10,278
31 December
2022
7,327
3,631
(936)
-
10,022
INTEGRATED ANNUAL REPORT 2023
326
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 28:
TREASURY SHARES (in HUF mn)
Nominal value (ordinary shares)
Carrying value at acquisition cost
31 December
2023
31 December
2022
57
6,154
35
2,724
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
31 December
2023
31 December
2022
352,344
3,948,338
(3,729,436)
571,246
3,249,984
1,801,256
(4,698,896)
352,344
31 December
2023
31 December
2022
2,724
39,818
(36,388)
6,154
58,872
16,268
(72,416)
2,724
31 December
2023
31 December
2022
Face value of treasury shares held by OTP Group members
1,210
1,097
INTEGRATED ANNUAL REPORT 2023
327
OTP BANK
IFRS REPORT (SEPARATE)
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
Investment properties
Subtotal
Year ended 31
December 2023
Year ended 31
December 2022
457,472
50,838
129,054
206,280
398
345,696
37,435
1,227,173
51,132
600,959
125,151
18,655
9
795,906
297,727
39,988
92,948
204,479
20,098
56,204
10,235
721,679
35,927
273,322
60,744
7,230
8
377,231
Interest income total
2,023,079
1,098,910
Interest expense due to / from / on
Amounts due to banks and deposits from the National Bank of
Hungary and other banks
Deposits from customers
Leasing liabilities
Liabilities from issued securities
Subordinated bonds and loans
Investment properties (depreciation)
Financial assets
Repo liabilities
Swap transaction related to acquisitions
Interest expense total
641,908
608,340
2,314
64,774
29,893
138
6,857
202,137
-
1,556,361
408,865
301,657
1,186
7,742
8,646
135
6,369
66,049
1,371
802,020
INTEGRATED ANNUAL REPORT 2023
328
OTP BANK
IFRS REPORT (SEPARATE)
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 debt instruments
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
Year ended 31
December 2023
Year ended 31
December 2022
249,194
(243,652)
5,542
245,183
(211,345)
33,838
11,767
(24,125)
(12,358)
11,755
(13,555)
(1,800)
3,401
(6,704)
(3,303)
2,287
(10,863)
(8,576)
62,662
(69,834)
(7,172)
32,592
(20,838)
11,754
4,480
(2,385)
2,095
33,946
(8,331)
25,615
31,695
(4,072)
27,623
49,698
(44,157)
5,541
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
980
(11,872)
(26,687)
94,594
INTEGRATED ANNUAL REPORT 2023
329
OTP BANK
IFRS REPORT (SEPARATE)
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
Total Income from fees and commissions:
Contract balances
Year ended 31
December 2023
Year ended 31
December 2022
12,040
162,872
137,162
33,899
21,828
8,379
13,558
13,147
390,845
402,885
12,711
146,817
122,138
27,867
26,032
8,819
10,981
7,079
349,733
362,444
Year ended 31
December 2023
Year ended 31
December 2022
Receivables, which are included in ‘other assets’
Loss allowance
24,012
(616)
15,674
(512)
Fee and commission expense
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
Year ended 31
December 2023
Year ended 31
December 2022
63,941
715
5,320
2,497
2,850
2,324
223
205
680
78,755
53,179
783
5,267
789
2,417
2,096
223
166
1,167
66,087
Net profit from fees and commissions
324,130
296,357
INTEGRATED ANNUAL REPORT 2023
330
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 32:
GAINS AND LOSSES BY TRANSACTIONS (in HUF mn)
Losses arising from derecognition of financial assets
measured at amortised cost
Gain from loans
Loss from loans
Gain from securities
Loss from securities
Other
Total
Additional information to Gains or losses from operating income:
Foreign exchange (losses) and gains
Gains from foreign exchange
Loss from foreign exchange
Margin gains
Margin losses
Total
Net results on derivative instruments and hedge relationships
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
Gains / (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
Year ended 31
December 2023
Year ended 31
December 2022
2,760
(2,716)
152
(19,552)
(351)
(19,707)
485
(1,881)
-
(54,402)
(397)
(56,195)
Year ended 31
December 2023
Year ended 31
December 2022
-
(6,116)
8,157
(14,310)
(12,269)
6,857
-
8,400
(14,716)
541
Year ended 31
December 2023
Year ended 31
December 2022
59,675
(52,428)
6,569
(6,554)
87,062
(83,504)
212
(230)
2,232
21
13,055
76,709
(67,882)
4,111
(5,073)
134,949
(132,288)
687
(402)
(1,059)
165
9,917
Year ended 31
December 2023
Year ended 31
December 2022
2,570
100,436
(7,196)
766
(5,308)
91,268
2,688
21,205
(44,614)
4,509
(2,578)
(18,790)
INTEGRATED ANNUAL REPORT 2023
331
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 32:
GAINS AND LOSSES BY TRANSACTIONS (in HUF mn) [continued]
Additional information to Gains or losses from operating income: [continued]
Gains and (losses) 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
Year ended 31
December 2023
Year ended 31
December 2022
1,168
14,529
(6,588)
999
(489)
1,322
-
(3,868)
7,073
3,556
11,599
(7,806)
8
(7,960)
-
-
(10,002)
(10,605)
Year ended 31
December 2023
Year ended 31
December 2022
261,222
14,229
254
275,705
182,153
12,166
207
194,526
Total gains and losses from operating income (without other
operating income)
374,832
175,589
For the year ended 31 December 2023 gains and losses attributable to the hedged risk on the hedged item and on
the hedging instruments and also ineffectiveness in case of fair value hedge on amortised cost line items as follows
Hedged items
Hedging
instrument
Hedge ineffectiveness
Fair value hedge
(15,433)
2,855
(12,578)
For the year ended 31 December 2022 gains and losses attributable to the hedged risk on the hedged item and on
the hedging instruments and also ineffectiveness in case of fair value hedge on amortised cost line items as follows
Hedged items
Hedging
instrument
Hedge ineffectiveness
Fair value hedge
6,750
(9,352)
2,602
INTEGRATED ANNUAL REPORT 2023
332
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 33:
OTHER OPERATING INCOME AND EXPENSES AND OTHER ADMINISTRATIVE
EXPENSES (in HUF mn)
Other operating income
Year ended 31
December 2023
Year ended 31
December 2022
Repayment of extraordinary payments made to NDIF in previous
years
Other operating income from OTP Employee Stock Ownership
Program (OTP ESOP)
Intermediary and other services
Income from lease of tangible assets
Gains on IT services provided to subsidiaries
Derecognition of financial liabilities at amortised cost
Non-repayable assets received
Gains on sale of tangible assets
Income from written off receivables
Gains on transactions related to property activities
Gains on sale of receivables
Other
Total
10,738
4,739
2,547
1,223
1,155
716
423
1,225
257
113
-
3,048
26,184
-
4,429
2,716
1,186
1,021
985
443
267
249
237
-
2,242
13,775
Other operating expenses
Year ended 31
December 2023
Year ended 31
December 2022
Release of loss allowance/(Loss allowance) on investments in
subsidiaries
Release of provision for off-balance sheet commitments and
contingent liabilities
Non-repayable assets contributed
Release of loss allowance on other assets
Financial support for sport association and organization of public
utility
Other
Total
Other administrative expenses:
Personnel expenses:
Wages
Taxes related to personnel expenses
Other personnel expenses
Subtotal
Depreciation and amortization
Other administrative expenses:
Taxes, other than income tax
Services
Fees payable to authorities and other fees
Administration expenses, including rental fees
Professional fees
Advertising
Subtotal
Total
87,609
(471)
(1,056)
(3,576)
(11,893)
(7,023)
63,590
(93,513)
(2,057)
(1,397)
(2,939)
(16,344)
(15,692)
(131,942)
Year ended 31
December 2023
Year ended 31
December 2022
141,650
20,172
33,582
195,404
50,814
139,629
86,272
25,384
7,813
11,382
11,438
281,918
528,136
110,646
16,460
27,197
154,303
46,738
167,834
74,383
21,674
7,477
9,320
10,301
290,989
492,030
INTEGRATED ANNUAL REPORT 2023
333
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 34:
INCOME TAX (in HUF mn)
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 (benefit)/expense
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
A breakdown of the deferred tax liability is as follows:
Provision for untaken leave
Provision for termination benefits and jubilee
Amounts relate to negative tax base
Unused tax allowance
Fair value adjustment of held for trading and securities at fair
value through other comprehensive income
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
Deferred tax liabilities
Net deferred tax assets/(liabilities)
31 December
2023
31 December
2022
39,174
31,119
70,293
18,026
(31,664)
(13,638)
31 December
2023
31 December
2022
35,742
(31,119)
(4,215)
408
(1,507)
31,664
5,585
35,742
31 December
2023
31 December
2022
399
1,325
-
-
-
1,724
(55)
(1,261)
-
(1,316)
408
323
900
19,424
12,103
4,230
36,980
-
(1,193)
(45)
(1,238)
35,742
INTEGRATED ANNUAL REPORT 2023
334
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 34:
INCOME TAX (in HUF mn) [continued]
A reconciliation of the income tax (income) / expense is as follows:
Profit before income tax
Income tax at statutory tax rate (9%)
Income tax adjustments due to permanent differences are as
follows:
Share-based payment
Deferred use of tax allowance
Dividend income
Use of tax allowance in the current year
Amounts unenforceable by tax law
Change due to accounting policy (Visa)
Carryforward of unused tax losses
Deferred tax asset due to unused tax allowance
Correction due to local taxes classified as income taxes
Local taxes
Other
Income tax
Effective tax rate
Current tax assets
Current tax liabilities
Net tax liabilities
31 December
2023
31 December
2022
725,281
65,275
(7,006)
-
296
69
(24,449)
777
23
1,068
-
-
7,196
21,545
(1,507)
70,293
265
43
(17,298)
-
(182)
-
(1,234)
(12,102)
-
16,793
77
(13,638)
9.7%
194.7%
31 December
2023
31 December
2022
-
(14,393)
(14,393)
1,569
(3,199)
(1,630)
INTEGRATED ANNUAL REPORT 2023
335
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 34:
INCOME TAX (in HUF mn) [continued]
Global minimum tax
The global minimum tax legislation has been enacted, or substantively enacted, in certain jurisdictions the OTP
Group operates, mainly in the EU Member States. OTP Group is in scope of the enacted global minimum tax
legislation. The legislation will be effective for the Group’s financial year beginning 1 January 2024 and introduces
a minimum rate of effective taxation of 15%. The global minimum tax legislation has been adopted in Hungary in
Act No. LXXXIV of 2023 on the top-up taxes ensuring a global minimum level of taxation and the amendment of
related acts.
From an accounting perspective, it is unclear if the global minimum tax rules create additional temporary
differences, whether to remeasure deferred taxes for the global minimum tax rules and which tax rate to use to
measure deferred taxes. In response to this uncertainty, IAS 12 ‘Income taxes’ has been amended to introduce a
mandatory temporary exception to the requirements of IAS 12. Under the mandatory temporary exception, a
company does not recognize or disclose information about deferred tax assets and liabilities related to the global
minimum tax rules. The Bank applied the temporary exception for the year ended 31 December 2023.
The Bank has performed an assessment of the Group’s potential exposure to top-up taxes under the global
minimum tax rules.
The assessment of the potential exposure to top-up taxes is based on the most recent information available
regarding the financial performance of the group entities in the OTP Group. Based on the assessment, the Group
has identified potential exposure to top-up taxes in respect of profits earned in Bulgaria, Hungary, Moldova and
Serbia. The potential exposure comes from the constituent entities in these jurisdictions where the expected global
minimum tax effective tax rate may be below 15% based on the currently available information. The global
minimum tax effective tax rate may be lower in these jurisdictions generally due to the low nominal domestic tax
rate. As for Hungary, it is difficult to reasonably estimate the global minimum tax effective tax for the following
reasons. In Hungary, the most relevant taxes determining the global minimum tax effective tax rate are corporate
income tax, local business tax and innovation contribution. Local business tax and innovation contribution (with
a combined statutory rate of 2.3%) apply to profit categories significantly different from those considered for
corporate income tax purposes (statutory rate of 9%). Therefore, the taxable income for corporate income tax
purposes is significantly different and usually significantly lower than the taxable income for local business tax
and innovation contribution purposes. The proportion of the different profit categories considered for corporate
income tax and local business tax and innovation contribution purposes, respectively, in the total profit may vary
year by year to a great extent raising difficulties with respect to the estimation of the global minimum tax effective
tax rate with a reasonable certainty. The variation of the proportion of the various profit categories in the total
profits may result in the global minimum tax effective tax rate being above 15% in one year and slightly below
15% in another. Furthermore, profits not subject to taxation can also impact on the global minimum tax effective
tax rate.
Had the global minimum tax legislation been effective for the current year, the estimated global minimum tax
income taxes would be approximately HUF 11,100 million in respect of Bulgaria, HUF 2,000 million in respect
of Hungary, HUF 450 million in respect of Moldova and HUF 300 million in respect of Serbia. In respect of
Hungary, the one-off income from the changes in the fair value of the OTP Bank Plc shares held by the Employee
Stock Ownership Program was excluded from the global minimum tax calculation.
Based on the current status of the enactment of global minimum tax legislation, if top-up taxes arose in the
jurisdictions potentially exposed to top-up taxes (Bulgaria, Hungary, Moldova and Serbia), OTP Bank Plc., being
an ultimate parent entity, would be obliged to pay top-up taxes in respect of Moldova and Serbia. Any top-up taxes
arising in respect of Bulgaria would be payable by the local entities in Bulgaria. As for Hungary, the Hungarian
global minimum tax legislation provides for various options as to who is obliged to pay the Hungarian top-up (i.e.,
the Hungarian Group entities based on certain allocation ratios or OTP Bank Plc.). OTP group plans to choose the
option where OTP Bank Plc pays the Hungarian top-up tax (if any). This decision may be revisited every year per
the Hungarian global minimum legislation.
INTEGRATED ANNUAL REPORT 2023
336
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 35:
LEASE (in HUF mn)
The Bank as a lessee:
Amounts recognised in profit and loss
31 December
2023
31 December
2022
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
2,314
2,065
1,662
1,186
1,945
1,386
Leasing liabilities by maturities:
Within one year
Over one year
Total
31 December
2023
31 December
2022
7,595
60,687
68,282
5,944
35,520
41,464
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 2022
Additions due to new contracts
Derecognition due to matured contracts
Change due to revaluation and modification
Balance as at 31 December 2022
Additions due to new contracts
Derecognition due to matured contracts
Change due to revaluation and modification
Balance as at 31 December 2023
Depreciation
Balance as at 1 January 2022
Depreciation charge
Derecognition due to matured contracts
Balance as at 31 December 2022
Depreciation charge
Derecognition due to matured contracts
Balance as at 31 December 2023
Net carrying amount
Balance as at 31 December 2022
Balance as at 31 December 2023
Right-of-use of
real estate
31,081
27,206
(3,731)
2,806
57,362
26,426
(7,957)
4,293
80,124
13,869
7,315
(1,804)
19,380
7,991
(7,943)
19,428
37,982
60,696
Right-of-use
of machinery
and
equipment
Total
37
1,950
-
-
1,987
3,012
(218)
1,749
6,530
18
69
-
87
936
(19)
1,004
1,900
5,526
31,118
29,156
(3,731)
2,806
59,349
29,438
(8,175)
6,042
86,654
13,887
7,384
(1,804)
19,467
8,927
(7,962)
20,432
39,882
66,222
INTEGRATED ANNUAL REPORT 2023
337
OTP BANK
IFRS REPORT (SEPARATE)
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:
Credit risk
36.1.
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.
INTEGRATED ANNUAL REPORT 2023
338
OTP BANK
IFRS REPORT (SEPARATE)
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.
INTEGRATED ANNUAL REPORT 2023
339
OTP BANK
IFRS REPORT (SEPARATE)
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 2023:
Gross carrying amount / Notional amount
Loss allowance
Stage 1
Stage 2 Stage 3
Purchased or
originated credit
impaired
Total
Stage 1 Stage 2 Stage 3
Purchased or
originated credit
impaired
Total
Write-off
Cash, amounts due from banks and
balances with the National Bank of
Hungary
Placements with other banks
Repo receivables
Retail consumer loans
Mortgage loans
Municipal loans
Corporate loans
Loans at amortised cost
FVOCI debt instruments
Securities at amortised cost
Other financial assets
Total
Loan commitments
Financial guarantees
Factoring loan commitments
Bill of credit
Loan commitments and financial
guarantees total
Carrying
amount/
Exposure
2,708,232
2,702,433
201,658
572,912
53,996
102,003
3,952,448
4,681,359
538,350
2,710,848
115,499
13,658,379
1,976,476
1,995,500
365,440
8,586
7,232
320
41,172
103,152
6,952
9,421
-
-
2,701,675
2,315
2,697,572
202,025
-
488,231 128,101 19,811
4,823
-
3,213,155 746,233 65,434
3,845,710 881,886 90,068
- 30,873
5,961 34,802
7,560
12,765,751 905,012 165,618
507,477
2,696,310
114,982
792
1,854,533 130,879
46,977
1,946,951
12,386
348,659
-
8,626
2,127
5,819
5,136
-
-
-
-
1
1,988
-
9,121
11,110
-
-
15
11,125
-
-
-
-
-
38
1,417
55,215
103,472
128
1,095
-
267
3,465
367
-
2,708,627
2,315
2,709,308
202,025
-
636,144 15,471 33,192 14,568
813
-
4,033,943 16,783 36,390 27,544
4,828,774 33,709 69,823 42,925
- 22,920
273 12,602
3,357
13,847,506 54,025 74,358 84,119
1,425
2,737,073 13,350
1,442
189
52
123,349
538,350
3,039
179
-
395
-
6,875
-
-
367
1 63,232
1,219
1,469
778 81,495
958 147,415
- 24,345
- 26,225
7,850
970 213,472
12
1,987,539
1,999,747
366,181
8,626
6,153
2,020
482
40
4,206
412
53
-
704
1,815
206
-
4,362,093
8,695
4,671
2,725
- 11,063
4,247
-
741
-
40
-
- 16,091
4,346,002
4,158,769 190,242 13,082
-
-
-
-
-
-
22,637
22,637
-
-
-
22,637
-
-
-
-
-
340
INTEGRATED ANNUAL REPORT 2023
OTP BANK
IFRS REPORT (SEPARATE)
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 2022:
Gross carrying amount / Notional amount
Loss allowance
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
Cash, amounts due from banks and
balances with the National Bank of
Hungary
Placements with other banks
Repo receivables
Retail consumer loans
Mortgage loans
Municipal loans
Corporate loans
Loans at amortised cost
FVOCI debt instruments
Securities at amortised cost
Other financial assets
Total
Loan commitments
Financial guarantees
Factoring loan commitments
Bill of credit
Loan commitments and financial
guarantees total
Carrying
amount/
Exposure
1,092,198
2,899,829
246,529
556,062
62,587
81,083
4,125,308
4,825,040
779,253
3,282,373
86,438
13,211,660
1,840,521
1,863,476
371,866
12,285
45,912
81,856
1,062,246 31,305
2,906,852 10,247
-
-
1,512
248,696
-
507,517 65,853 52,913
7,039
8,895
-
286
3,541,098 589,153 86,401
4,176,383 664,187 146,353
- 27,415
6,713 38,270
4,561
12,504,532 712,938 218,111
751,838
3,273,240
85,277
486
1,745,003 101,644
1,848,783 24,868
5,517
173
327,903 14,705 30,809
-
12,128
247
-
-
-
2
2,279
-
10,716
12,997
-
-
18
13,015
-
-
-
-
-
57
1,010
64,125
82,142
872
1,233
-
1,093,551
481
2,918,611 16,037
2,167
-
1,512
248,696
-
626,285 15,229 17,670 37,323
1,116
-
4,227,368 22,068 39,153 39,334
4,999,920 38,364 57,051 77,773
- 24,399
300 13,804
2,088
369
13,448,596 84,992 59,825 119,576
4,762
3,318,223 21,746
1,435
179
49
779,253
90,342
186
-
-
1,353
- 18,782
-
2,167
1 70,223
1,538
1,059
1,505 102,060
1,692 174,880
- 29,161
- 35,850
3,904
1,704 266,097
12
1,852,164
1,873,824
373,417
12,375
6,694
9,502
361
85
3,581
800
87
5
1,368
46
1,103
-
4,111,780 16,642
4,473
2,517
- 11,643
- 10,348
1,551
-
90
-
- 23,632
4,088,148
3,933,817 141,464 36,499
-
-
-
-
-
-
25,879
25,879
-
-
-
25,879
-
-
-
-
-
341
INTEGRATED ANNUAL REPORT 2023
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.2. Financial instruments under simplified approach by day-past-due categories
As at 31 December 2023
Without delay < 30 days
31 - 60
days
61 - 90
days
> 91 days
Closing
balance
Expected credit loss rate
0.72%
0.69%
5.17%
9.39%
21.06%
2.02%
Gross value
Loss allowance
Net carrying value
161,963
1,173
163,136
8,459
58
8,517
968
50
1,018
309
29
338
11,307
2,381
13,688
183,006
3,691
186,697
As at 31 December 2022
Without delay < 30 days
31 - 60
days
61 - 90
days
> 91 days
Closing
balance
Expected credit loss rate
0.27%
0.77%
2.09%
5.75%
26.11%
1.82%
Gross value
Loss allowance
Net carrying value
144,046
389
144,435
15,620
121
15,741
1,912
40
1,952
487
28
515
9,744
2,544
12,288
171,809
3,122
174,931
INTEGRATED ANNUAL REPORT 2023
342
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.3. Changes in the Gross carrying amount and in the Loss allowance of financial assets at amortised cost
and fair value through other comprehensive income by IFRS 9 stages
Movement of gross carrying amount of loans at amortised cost
Stage 1
Stage 2
Stage 3
POCI
Total
Gross amount as at 1
January 2022
Transfer to Stage 1
Transfer to Stage 2
Transfer to Stage 3
New financial assets
originated or purchased
Financial assets derecognised
(other than write-offs)
Write-offs
Modification loss
Gross amount as at 31
December 2022
Transfer to Stage 1
Transfer to Stage 2
Transfer to Stage 3
New financial assets
originated or purchased
Financial assets derecognised
(other than write-offs)
Write-offs
Modification loss
Gross amount as at 31
December 2023
3,501,643
128,623
(195,786)
(34,487)
563,982
(125,232)
205,613
(41,649)
108,979
(3,391)
(9,827)
76,136
2,684,856
249,182
44,325
(1,899,139)
(70)
(9,257)
4,176,383
125,054
(448,120)
(24,935)
(184,121)
(354)
(3,234)
664,187
(105,061)
461,067
(29,379)
(60,292)
(7,211)
(2,366)
146,353
(19,993)
(12,947)
54,314
2,227,406
200,034
28,678
(2,203,558)
(61)
(6,459)
(306,780)
(578)
(1,604)
(100,045)
(5,338)
(954)
3,845,710
881,886
90,068
13,418
-
-
-
291
(672)
(40)
-
12,997
-
-
-
1,163
(2,970)
(80)
-
11,110
4,188,022
-
-
-
2,978,654
(2,144,224)
(7,675)
(14,857)
4,999,920
-
-
-
2,457,281
(2,613,353)
(6,057)
(9,017)
4,828,774
Movement of loss allowance of loans at amortised cost
Stage 1
Stage 2
Stage 3
POCI
Total
Loss allowance as at 1 January 2022
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 2022
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 2023
29,361
13,705
(2,058)
(738)
(14,906)
22,665
(9,595)
-
(70)
38,364
21,673
(5,037)
(497)
(21,553)
14,620
(13,800)
-
(61)
33,709
67,272
(12,361)
6,779
(6,414)
5,886
7,284
(11,041)
-
(354)
57,051
(9,755)
12,425
(3,906)
13,435
8,468
(7,317)
-
(578)
69,823
57,087
(1,344)
(4,721)
7,152
23,898
6,955
(8,942)
4,899
(7,211)
77,773
(11,918)
(7,388)
4,403
1,920
4,717
(26,425)
5,181
(5,338)
42,925
1,837
-
-
-
(69)
14
(90)
40
(40)
1,692
-
-
-
(701)
14
(47)
80
(80)
958
155,557
-
-
-
14,809
36,918
(29,668)
4,939
(7,675)
174,880
-
-
-
(6,899)
27,819
(47,589)
5,261
(6,057)
147,415
INTEGRATED ANNUAL REPORT 2023
343
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.3. Changes in the Gross carrying amount and in the Loss allowance of financial assets at amortised cost
and fair value through other comprehensive income by IFRS 9 stages [continued]
Movement of gross carrying amount of loan commitments and financial guarantees
Stage 1
Stage 2
Stage 3
Total
Gross amount as at 1
January 2022
Transfer to Stage 1
Transfer to Stage 2
Transfer to Stage 3
New financial assets
originated or purchased
Decrease
Gross amount as at 31
December 2022
Transfer to Stage 1
Transfer to Stage 2
Transfer to Stage 3
New financial assets
originated or purchased
Decrease
Gross amount as at 31
December 2023
3,549,739
27,955
(114,601)
(17,137)
1,344,993
(857,132)
3,933,817
60,083
(158,404)
(9,460)
1,195,949
(863,217)
77,568
(27,324)
114,978
(1,704)
55,461
(77,515)
141,464
(58,857)
159,071
(2,028)
10,373
(631)
(377)
18,841
15,484
(7,191)
36,499
(1,225)
(667)
11,488
3,637,680
-
-
-
1,415,938
(941,838)
4,111,780
-
-
-
64,939
(114,347)
1,451
(34,464)
1,262,339
(1,012,027)
4,158,768
190,242
13,082
4,362,092
Movement of loss allowance of loan commitments and financial guarantees
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
2022
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 2022
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 2023
10,669
2,095
(442)
(21)
2,148
3,933
(1,740)
16,642
2,410
(787)
(26)
(10,128)
2,985
(2,406)
8,690
4,749
(1,929)
542
(124)
1,020
602
(387)
4,473
(1,888)
1,022
(242)
1,584
514
(792)
4,671
2,350
(166)
(100)
145
1,052
78
(842)
2,517
(522)
(235)
268
17,768
-
-
-
4,220
4,613
(2,969)
23,632
-
-
-
1,669
(6,875)
212
(1,178)
3,711
(4,376)
2,731
16,092
INTEGRATED ANNUAL REPORT 2023
344
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.3. Changes in the Gross carrying amount and in the Loss allowance of financial assets at amortised cost
and fair value through other comprehensive income by IFRS 9 stages [continued]
Movement of gross carrying amount of cash, amounts due from banks and balances with the National Bank
of Hungary
Stage 1
Stage 2
Total
Gross amount as at 1 January
2022
Transfer to Stage 2
New financial assets originated or
purchased
Financial assets derecognised (other
than write-offs)
Gross amount as at 31 December
2022
New financial assets originated or
purchased
Financial assets derecognised (other
than write-offs)
Gross amount as at 31 December
2023
475,130
(13)
-
13
475,130
-
2,881,995
31,292
2,913,287
(2,294,866)
-
(2,294,866)
1,062,246
31,305
1,093,551
14,858,652
137
14,858,788
(13,219,223)
(24,490)
(13,243,712)
2,701,675
6,952
2,708,627
Movement of loss allowance of cash, amounts due from banks and balances with the National Bank of
Hungary
Stage 1
Stage 2
Total
Loss allowance as at 1 January 2022
Net remeasurement of loss allowance
New financial assets originated or purchased
Financial assets derecognised (other than write-
offs)
Loss allowance as at 31 December 2022
Transfer to Stage 2
Net remeasurement of loss allowance
New financial assets originated or purchased
Financial assets derecognised (other than write-
offs)
Loss allowance as at 31 December 2023
185
104
291
(99)
481
-
46
30
(290)
267
-
621
251
-
872
-
(744)
-
-
128
185
725
542
(99)
1,353
-
(698)
30
(290)
395
Movement of gross carrying amount of placements with other banks
Gross amount as at 1 January 2022
Transfer to Stage 2
New financial assets originated or
purchased
Financial assets derecognised (other
than write-offs)
Gross amount as at 31 December
2022
New financial assets originated or
purchased
Financial assets derecognised (other
than write-offs)
Gross amount as at 31 December
2023
Stage 1
Stage 2
Stage 3
Total
2,573,226
(8,855)
2,894,611
(2,552,130)
-
8,855
2,006
(614)
1,476
-
36
-
2,574,702
-
2,896,653
(2,552,744)
2,906,852
10,247
1,512
2,918,611
1,441,924
9,986
(1,651,204)
(10,813)
887
(84)
1,452,797
(1,662,100)
2,697,572
9,421
2,315
2,709,308
INTEGRATED ANNUAL REPORT 2023
345
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.3. Changes in the Gross carrying amount and in the Loss allowance of financial assets at amortised cost
and fair value through other comprehensive income by IFRS 9 stages [continued]
Movement of loss allowance of placements with other banks
Loss allowance as at 1 January 2022
Transfer to Stage 2
Net remeasurement of loss allowance
New financial assets originated or purchased
Financial assets derecognised (other than write-
offs)
Loss allowance as at 31 December 2022
Net remeasurement of loss allowance
New financial assets originated or purchased
Financial assets derecognised (other than write-
offs)
Loss allowance as at 31 December 2023
Stage 1
Stage 2
Stage 3
Total
6,014
(71)
1,261
14,166
(5,333)
16,037
(9,159)
1,418
(4,831)
3,465
-
71
1,149
13
-
1,233
3
1,091
(1,232)
1,095
1,476
-
36
-
-
1,512
(84)
887
-
2,315
7,490
-
2,446
14,179
(5,333)
18,782
(9,240)
3,396
(6,063)
6,875
Movement of gross carrying amount of repo receivables
Loss allowance as at 1 January 2022
New financial assets originated or
purchased
Financial assets derecognised (other
than write-offs)
Loss allowance as at 31 December
2022
New financial assets originated or
purchased
Financial assets derecognised (other
than write-offs)
Loss allowance as at 31 December
2023
Stage 1
Total
33,710
33,710
769,374
769,374
(554,388)
(554,388)
248,696
248,696
1,808,640
1,808,640
(1,855,311)
(1,855,311)
202,025
202,025
Movement of loss allowance of repo receivables
Loss allowance as at 1 January 2022
New financial assets originated or purchased
Financial assets derecognised (other than write-offs)
Loss allowance as at 31 December 2022
New financial assets originated or purchased
Financial assets derecognised (other than write-offs)
Loss allowance as at 31 December 2023
Stage 1
Total
72
4,480
(2,385)
2,167
1,825
(2,167)
367
72
4,480
(2,385)
2,167
1,825
(2,167)
367
Movement of gross carrying amount of securities at amortised cost
Stage 1
Stage 2
Stage 3
Total
Gross amount as at 1 January 2022
Transfer to Stage 3
New financial assets originated or purchased
Financial assets derecognised (other than write-offs)
Gross amount as at 31 December 2022
Transfer to Stage 1
Transfer to Stage 2
New financial assets originated or purchased
Financial assets derecognised (other than write-offs)
Loss allowance as at 31 December 2023
3,064,500
(34,057)
717,463
(474,666)
3,273,240
1,403
(1,203)
199,101
(776,230)
2,696,311
13,223
-
1,591
(8,101)
6,713
(1,403)
1,203
3
(554)
5,961
-
34,057
4,213
-
38,270
-
-
-
(3,468)
34,802
INTEGRATED ANNUAL REPORT 2023
3,077,723
-
723,267
(482,767)
3,318,223
-
-
199,104
(780,253)
2,737,074
346
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.3. Changes in the Gross carrying amount and in the Loss allowance of financial assets at amortised cost
and fair value through other comprehensive income by IFRS 9 stages [continued]
Movement of loss allowance of securities at amortised cost
Loss allowance as at 1 January 2022
Transfer to Stage 3
Net remeasurement of loss allowance
New financial assets originated or
purchased
Financial assets derecognised (other than
write-offs)
Loss allowance as at 31 December 2022
Net remeasurement of loss allowance
New financial assets originated or
purchased
Financial assets derecognised (other than
write-offs)
Loss allowance as at 31 December 2023
Stage 1
Stage 2
Stage 3
Total
5,882
(48)
13,564
2,972
(624)
21,746
(5,424)
163
(3,135)
13,350
803
-
(18)
7
(492)
300
(27)
-
-
273
-
48
13,756
6,685
-
27,302
-
2,979
-
13,804
(1,202)
(1,116)
35,850
(6,653)
-
163
-
12,602
(3,135)
26,225
Movement of gross carrying amount of FVOCI debt instruments
Loss allowance as at 1 January 2022
Transfer to Stage 3
New financial assets originated or purchased
Financial assets derecognised (other than write-
offs)
Loss allowance as at 31 December 2022
New financial assets originated or purchased
Financial assets derecognised (other than write-
offs)
Loss allowance as at 31 December 2023
Stage 1
Stage 3
Total
624,801
(27,415)
423,279
(268,827)
751,838
164,182
(408,543)
507,477
-
27,415
-
-
27,415
3,480
(21)
30,873
624,801
-
423,279
(268,827)
779,253
167,662
(408,564)
538,350
Movement of loss allowance of FVOCI debt instruments
Loss allowance as at 1 January 2022
Transfer to Stage 3
Net remeasurement of loss allowance
New financial assets originated or purchased
Financial assets derecognised (other than write-offs)
Loss allowance as at 31 December 2022
Net remeasurement of loss allowance
New financial assets originated or purchased
Financial assets derecognised (other than write-offs)
Loss allowance as at 31 December 2023
Stage 1
Stage 3
Total
1,174
(49)
1,741
2,144
(248)
4,762
(1,741)
172
(1,768)
1,425
-
49
24,350
-
-
24,399
(1,479)
-
-
22,920
1,174
-
26,091
2,144
(248)
29,161
(3,220)
172
(1,768)
24,345
INTEGRATED ANNUAL REPORT 2023
347
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.4. Loan portfolio by internal ratings
31 December 2023
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
31 December 2022
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
1,748,019
2,030,681
67,010
-
3,845,710
Stage1
9,485
19,488
4,736
-
33,709
Stage1
1,891,381
2,229,142
55,863
-
4,176,386
Stage1
6,965
28,937
2,462
-
38,364
Gross carrying amount
Stage3
POCI
Stage2
Total
155,527
572,339
154,020
-
881,886
-
-
-
90,068
90,068
275 1,903,821
9,136 2,612,156
221,225
195
1,504
91,572
11,110 4,828,774
Accumulated loss allowance
POCI
Stage3
Stage2
8,791
39,153
21,879
-
69,823
-
-
-
42,925
42,925
3
462
6
487
958
Gross carrying amount
Stage3
POCI
Stage2
Total
18,279
59,103
26,621
43,412
147,415
Total
180,426
384,237
99,521
-
664,184
-
-
-
146,353
146,353
214 2,072,021
10,664 2,624,043
155,692
308
1,811
148,164
12,997 4,999,920
Accumulated loss allowance
POCI
Stage3
Stage2
17,509
25,419
14,123
-
57,051
-
-
-
77,773
77,773
3
1,115
18
556
1,692
Total
24,477
55,471
16,603
78,329
174,880
INTEGRATED ANNUAL REPORT 2023
348
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.5. 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
Bulgaria
Slovenia
Serbia
Croatia
Romania
France
Ukraine
Belgium
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 2023
31 December 2022
Gross loan and
placements with
other banks
portfolio
Loss allowance
Gross loan and
placements with
other banks
portfolio
Loss allowance
5,406,144
647,521
351,368
245,018
243,010
195,198
149,356
123,582
83,328
55,535
240,047
7,740,107
934,824
24
934,848
(126,770)
(1,220)
(3,123)
(1,520)
(3,697)
(433)
(3,206)
(84)
(1,579)
(154)
(12,871)
(154,657)
-
-
-
5,651,445
772,898
272,449
101,842
251,812
149,993
197,255
255,918
86,329
38,227
389,059
8,167,227
793,228
14
793,242
(147,446)
(3,857)
(10,736)
(261)
(6,204)
(1,424)
(3,741)
(969)
(2,393)
(107)
(18,691)
(195,829)
-
-
-
8,674,955
(154,657)
8,960,469
(195,829)
36.1.6. Loan portfolio classification by economic activities
Loans at amortised cost by economic activities
31 December 2023
31 December 2022
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
Public administration, defence, education, human health
and social work activities
Other services
Total
Gross
amount
758,426
215,325
492,620
202,542
Loss
allowance
66,372
5,649
14,746
8,896
Gross
amount
645,496
211,875
587,190
231,015
Loss
allowance
71,024
6,025
18,211
5,580
733,631
24,086
1,215,215
503,510
242,818
119,196
321,405
4,828,774
17,259
618
7,965
17,113
4,106
833,618
25,404
1,183,848
471,772
231,335
1,704
2,987
147,415
99,593
478,774
4,999,920
18,674
1,027
14,903
10,995
3,864
1,592
22,985
174,880
INTEGRATED ANNUAL REPORT 2023
349
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.7. Collaterals
The collateral value held by the Bank by collateral types is as follows (total collateral value). The collaterals
cover loans as well as off-balance sheet exposures.
Types of collateral
Mortgages
Guarantees and warranties
Deposit
from this: Cash
Securities
Other
Total
31 December
2023
1,977,401
1,961,382
214,085
94,486
119,599
147
4,153,015
31 December
2022
1,859,713
2,082,418
174,247
95,836
78,411
254
4,116,632
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
31 December
2023
1,523,976
1,662,645
145,591
89,211
56,380
90
3,332,302
31 December
2022
1,445,244
1,755,474
133,000
84,225
48,775
254
3,333,972
The coverage level of loan portfolio to the extent of the exposures increased from 42,1% to 44,21% as at 31
December 2023, while the coverage to the total collateral value decreased from 51,99% to 55,09%.
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 2023
Retail consumer loans
Mortgage loans
Corporate loans
Total
For the year ended 31
December 2022
Retail consumer loans
Mortgage loans
Corporate loans
Total
Gross carrying
amount
Loss allowance
Carrying
amount
Collateral value
19,812
6,811
74,555
101,178
(14,569)
(992)
(28,322)
(43,883)
5,243
5,819
46,233
57,295
644
33,515
82,595
116,754
Gross carrying
amount
Loss allowance
Carrying
amount
Collateral value
52,915
9,318
97,117
159,350
(37,324)
(1,302)
(40,839)
(79,465)
15,591
8,016
56,278
79,885
30
40,796
93,399
134,225
INTEGRATED ANNUAL REPORT 2023
350
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.7. Collaterals [continued]
Maximum exposure to credit risk as at 31 December 2023
31 December 2023
Cash, amounts due from banks and
Maximum
exposure
to credit
risk
Cash
Securities Guarantees Property Other
Offsetting
arrangements
Surplus
Collateral
total
Net
exposure
Coverage
ECL
Fair value of collateral
balances with the National Bank of
Hungary
Placements with other banks
Repo receivables
Retail consumer loans
Mortgage loans
Municipal loans
Corporate loans
2,708,627
2,709,308
202,025
636,144
55,215
103,472
6,387,663
7,182,494
Loans at amortised cost
Securities at amortised cost
2,737,073
Financial assets at amortised cost total 15,539,527
218,427
Derivative financial assets
27,804
Held-for-trading financial assets
32,932
mFVTPL securities
mFVTPL loans
934,848
Financial assets at fair value through
-
-
-
1,621
-
1
42,390
44,012
-
44,012
76,853
-
-
-
profit or loss total
FVOCI debt instruments
FVOCI debt instruments total
Financial assets total
Financial guarantees
Accreditive
Off-balance sheet items total
1,214,011
538,350
538,350
76,853
-
-
17,291,888 120,865
1,999,747
8,626
2,008,373
47,241
-
47,241
-
-
220,654
204
-
-
255,404
255,608
-
476,262
-
-
-
-
-
-
-
476,262
1,801
-
1,801
-
-
-
1,941
2,515
9,191
-
-
-
16,620
386,730
11,913
903,666 2,599,109
917,313 3,014,372
-
917,313 3,014,372
-
-
-
-
-
-
-
865,054
-
865,054
-
-
-
-
-
1,782,367 3,014,372
19,442
-
19,442
157,085
-
157,085
-
-
-
-
-
-
242
242
-
242
-
-
-
-
-
-
-
242
-
-
-
-
-
-
-
-
(21,868)
-
(7,128)
-
(334,122)
(5,990)
-
- (1,704,294)
- (2,051,534)
-
-
- (2,073,402)
-
-
-
(44,555)
60,721
-
-
-
-
-
198,786
13,258
55,123
15,115
2,096,517
2,180,013
-
2,378,799
137,574
-
-
820,499
2,708,627
2,709,308
3,239
622,886
92
88,357
4,291,146
5,002,481
2,737,073
13,160,728
80,853
27,804
32,932
114,349
60,721
-
-
(44,555)
-
-
60,721 (2,117,957)
958,073
-
-
3,336,872
255,938
538,350
538,350
13,955,016
-
-
-
(44,554)
-
(44,554)
181,015
-
181,015
1,818,732
8,626
1,827,358
0%
0%
98%
2%
100%
15%
33%
30%
0%
15%
63%
0%
0%
88%
79%
0%
0%
19%
9%
0%
9%
395
6,875
367
63,232
1,219
1,469
93,299
159,219
26,225
193,081
-
-
-
-
-
24,345
24,345
217,426
4,247
40
4,287
Total
19,300,261 168,106
478,063
1,801,809 3,171,457
242
60,721 (2,162,511)
3,517,887
15,782,374
18%
221,713
INTEGRATED ANNUAL REPORT 2023
351
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.7. Collaterals [continued]
Maximum exposure to credit risk as at 31 December 2022
31 December 2022
Cash, amounts due from banks and
Maximum
exposure
to credit
risk
Cash
Securities Guarantees Property Other
Offsetting
arrangements
Surplus
Collateral
total
Net
exposure
Coverage
ECL
Fair value of collateral
balances with the National Bank of
Hungary
Placements with other banks
Repo receivables
Retail consumer loans
Mortgage loans
Municipal loans
Corporate loans
1,093,551
2,918,611
248,696
626,285
64,125
82,142
6,452,949
7,225,501
Loans at amortised cost
Securities at amortised cost
3,318,223
Financial assets at amortised cost total 14,804,582
351,939
Derivative financial assets
74,795
Held-for-trading financial assets
30,498
mFVTPL securities
mFVTPL loans
793,242
Financial assets at fair value through
-
-
-
3,256
-
1
32,658
35,915
-
35,915
90,551
-
-
-
profit or loss total
FVOCI debt instruments
FVOCI debt instruments total
Financial assets total
Financial guarantees
Accreditive
Off-balance sheet items total
1,250,474
779,253
779,253
90,551
-
-
16,834,309 126,466
1,873,824
12,375
1,886,199
47,628
-
47,628
-
-
263,052
3,521
-
-
224,172
227,693
-
490,745
-
-
-
-
-
-
-
490,745
1,392
-
1,392
-
-
-
4,639
2,788
11,234
-
-
-
17,514
378,794
9,813
1,047,739 2,415,367
1,066,400 2,821,488
-
1,066,400 2,821,488
-
-
-
-
-
-
-
814,544
-
814,544
-
-
-
-
-
1,880,944 2,821,488
19,595
-
19,595
50,382
-
50,382
-
-
-
-
-
-
13
13
-
13
-
-
-
-
-
-
-
13
-
-
-
-
-
-
-
-
(22,355)
-
(20,839)
-
(317,578)
(4,713)
-
- (1,649,512)
- (1,992,642)
-
-
- (2,014,997)
-
-
-
(80,161)
103,014
-
-
-
-
-
240,697
8,091
64,004
16,335
2,070,437
2,158,867
-
2,399,564
193,565
-
-
734,383
1,093,551
2,918,611
7,999
618,194
121
65,807
4,382,512
5,066,634
3,318,223
12,405,018
158,374
74,795
30,498
58,859
103,014
-
-
(80,161)
-
-
103,014 (2,095,158)
927,948
-
-
3,327,512
322,526
779,253
779,253
13,506,797
-
-
-
(63,330)
-
(63,330)
55,667
-
55,667
1,818,157
12,375
1,830,532
0%
0%
97%
1%
100%
20%
32%
30%
0%
16%
55%
0%
0%
93%
74%
0%
0%
20%
3%
0%
3%
1,353
18,782
2,167
70,223
1,538
1,059
115,254
188,074
35,850
246,226
-
-
-
-
-
29,161
29,161
275,387
10,348
90
10,438
Total
18,720,508 174,094
492,137
1,900,539 2,871,870
13
103,014 (2,158,488)
3,383,179
15,337,329
18%
285,825
INTEGRATED ANNUAL REPORT 2023
352
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.7. Collaterals
Returns from realization of collaterals taken into possession by types of collateral
Types of collateral
Real estate
Guarantee
Bail
Other
Proceeds from enforcement of collaterals
36.1.8. Restructured loans
31 December
2023
178
25,509
-
80
25,767
31 December
2022
203
30,863
140
236
31,442
Consumer loans
Mortgage loans
Corporate loans
SME loans
Municipal loans
Total
31 December 2023
31 December 2022
Gross portfolio
12,757
1,829
103,897
21,555
75
140,114
Loss allowance Gross portfolio
22,947
6,342
181,496
40,422
-
251,208
(7,064)
(65)
(5,312)
(1,508)
(1)
(13,949)
Loss allowance
(6,279)
(114)
(21,820)
(2,951)
-
(31,165)
Restructured portfolio definition
The forborne definition used by the Bank 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 loan volume of Hungarian entities classified as performing forborne exclusively due to moratoria participation
decreased significantly due the expiration of the probation period for retail exposures.
INTEGRATED ANNUAL REPORT 2023
353
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.9. Financial instruments by rating categories1
Held-for-trading securities as at 31 December 2023
Government bonds
Other bonds
Investment fund units
Hungarian government discounted Treasury Bills
Shares
Mortgage bonds
Total
Held-for-trading securities as at 31 December 2022
Government bonds
Other bonds
Investment fund units
Hungarian government discounted Treasury Bills
Shares
Mortgage bonds
Total
A2 A3 Aa2 Aa3 Aaa B1
Ba1 Ba2 Ba3 Baa1 Baa2 Baa3 N/A
532
-
-
-
- 23
-
-
-
-
-
-
56 33 23
-
588 33 46
-
-
-
-
-
-
52
-
52
27
-
-
-
-
-
27
625
-
-
-
-
-
625
-
-
-
-
39
-
39
540
-
-
-
-
-
540
-
-
-
-
4
-
4
-
-
-
-
17
-
17
19,695
2,212
-
71
20
-
21,998
910
-
40 2,185
320
-
267
95
968 2,867
-
-
2
16
Total
22,352
4,437
320
71
513
111
27,804
A1 A2 A3 Aa2 Aa3 Aaa Ba1
-
1
-
-
-
-
1
- 346
-
-
-
-
-
-
-
20
-
-
20 346
- 197
-
-
-
-
-
-
42 47
-
42 244
-
-
-
-
29
-
29
Ba2
- 3,669
-
-
-
-
-
-
2
39
-
-
39 3,671
-
Ba3 Baa1 Baa2
Baa3 N/A
-
-
-
-
4
-
4
-
-
-
-
15
-
15
62,947
1,627
-
4,785
24
11
69,394
362
117
-
-
-
-
479
-
3
274
-
163
71
511
Total
67,521
1,748
274
4,785
385
82
74,795
Securities mandatorily measured at fair value through profit or loss as at 31 December 2023
Government bonds
Mortgage bonds
Total
N/A
31,124
1,808
32,932
Total
31,124
1,808
32,932
1 Moody’s ratings
INTEGRATED ANNUAL REPORT 2023
354
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.9. Financial instruments by rating categories1
Securities mandatorily measured at fair value through profit or loss as at 31 December 2022
Government bonds
Mortgage bonds
Total
N/A
29,029
1,469
30,498
Total
29,029
1,469
30,498
FVOCI securities as at 31 December 2023
A1
Ba1
Ba2 Baa1
660
59,793
Baa2
- 6,259 4,082 144,857
-
-
-
-
- 3,840 24,424
235
-
-
-
-
-
-
-
60,453 3,840 30,683 4,082 145,092
-
-
-
-
Baa3
N/A
WR
2,654
231,895
-
-
-
234,549
-
8,881
19,896
1
21,177
49,955
30,873
-
-
-
-
30,873
Total
189,385
300,569
48,160
236
21,177
559,527
A1
A3
Ba1
Ba2 Baa1
734
42,407
Baa2
- 5,971 3,941 136,671
-
- 301,987
-
-
-
- 1,691 3,820
-
- 182,726
-
-
-
-
-
-
-
-
43,141 1,691 3,820 5,971 3,941 621,384
-
-
-
-
Baa3
N/A
WR
2,661
-
39,309
-
-
41,970
-
12,146
17,774
-
17,922
47,842
27,415
-
-
-
-
27,415
Total
177,393
356,540
62,594
182,726
17,922
797,175
Government bonds
Mortgage bonds
Other bonds
Hungarian Treasury Bills
Non-treading equity instruments
Total
FVOCI securities as at 31 December 2022
Government bonds
Mortgage bonds
Other bonds
Hungarian Treasury Bills
Non-treading equity instruments
Total
1 Moody’s ratings
INTEGRATED ANNUAL REPORT 2023
355
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.9. Financial instruments by rating categories1
Securities at amortised cost as at 31 December 2023
A1
A2
1,196 33,032 36,307
8,983 8,039
1,847
-
13,020
16,063 42,015 44,346
Government bonds
Corporate bonds
Mortgage bonds
Total
A3
-
Aaa
260,116
-
-
260,116
Ba1
-
1,912
-
1,912
Ba2
19,695
-
-
19,695
Baa2
Baa1
50,205 1,911,133
3,822
11,444
-
-
61,649 1,914,955
Baa3
39,052
28,324
-
67,376
N/A
1
248,857
11,688
260,546
WR
22,175
-
-
22,175
Total
2,372,912
313,228
24,708
2,710,848
Securities at amortised cost as at 31 December 2022
A3
A1
-
1,301 26,341
9,357 403
1,911
12,966
-
-
16,178 35,698 403
Government bonds
Corporate bonds
Mortgage bonds
Total
A2
Aaa
281,824
-
-
281,824
Ba1
Ba2
160,048
1,968
-
162,016
-
-
-
-
Baa2
Baa1
44,691 2,374,565
3,971
11,874
-
-
56,565 2,378,536
Baa3
33,248
29,022
-
62,270
N/A
-
252,938
11,518
264,456
WR
24,427
-
-
24,427
Total
2,946,445
311,444
24,484
3,282,373
1 Moody’s ratings
INTEGRATED ANNUAL REPORT 2023
356
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.1. Credit risk [continued]
36.1.10. Securities (held for trading, mandatorily FVTPL, FVOCI and amortised cost) in a country
breakdown
Country
Hungary
United States of America
Luxembourg
Spain
Russia
Portugal
Serbia
Other
Securities at amortised cost total
Hungary
Luxembourg
Other
FVOCI debt instruments total
United States of America
Austria
Other
Non-trading equity instruments designated to
through other
fair value
measure at
comprehensive income
Luxembourg
United States of America
Hungary
Serbia
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
31 December 2023
Gross
carrying
amount
Loss
allowance
31 December 2022
Gross
carrying
amount
Loss
allowance
1,975,451
370,997
265,082
53,209
24,978
16,284
-
31,072
2,737,073
395,183
93,077
50,090
538,350
6,332
14,317
528
21,177
10,167
7,633
8,849
147
1,008
27,804
23,916
6,058
1,808
1,150
(12,904)
(672)
(3,968)
(82)
(8,533)
(21)
-
(45)
(26,225)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,412,543
418,900
223,256
56,375
27,064
16,979
140,116
22,990
3,318,223
664,813
62,549
51,891
779,253
5,479
11,914
529
17,922
1,248
1,894
67,448
3,668
537
74,795
21,124
6,885
1,469
1,020
(19,158)
(1,234)
(4,804)
(365)
(9,246)
(101)
(867)
(75)
(35,850)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32,932
3,357,336
-
(26,225)
30,498
4,220,691
-
(35,850)
INTEGRATED ANNUAL REPORT 2023
357
OTP BANK
IFRS REPORT (SEPARATE)
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 2023.
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.
INTEGRATED ANNUAL REPORT 2023
358
OTP BANK
IFRS REPORT (SEPARATE)
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 2023
Cash, amounts due from banks and balances with the National Bank of Hungary
Placements with other banks
Repo receivables
Financial assets 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
Investment properties
Investments in subsidiaries, associates and other investments
Other financial assets
TOTAL ASSETS
Amounts due to banks and deposits from the National Bank of Hungary and other banks
Deposits from customers
Repo liabilities
Liabilities from issued securities
Subordinated bonds and loans
Financial liabilities at fair value through profit or loss
Leasing liabilities
Other financial liabilities
TOTAL LIABILITIES
NET POSITION
Receivables from derivative financial instruments classified as held for trading
Liabilities from derivative financial instruments classified as held for trading
Net position of derivative financial instruments classified as held for trading
Receivables from derivative financial instruments designated as hedge accounting
Liabilities from derivative financial instruments designated as hedge accounting
Net position of derivative financial instruments designated as hedging accounting
Net position of derivative financial instruments total
Commitments to extend credit
Confirmed letters of credit
Factoring loan commitment
Bank guarantees
Off-balance sheet commitments
Within 3 months
Within one year and
over 3 months
Within 5 years and
over one year
Over 5 years
Without maturity
Total
2,708,628
577,692
202,024
12,055
5,891
31,807
1,187,849
22,541
-
-
304,197
5,052,684
517,908
10,578,617
196,811
105,747
6,174
740
1,794
239,293
11,647,084
(6,594,400)
8,329,035
(8,172,061)
156,974
86,989
(84,445)
2,544
159,518
1,987,539
8,626
366,181
268,861
2,631,207
-
120,424
-
1,142
43,109
61,118
1,084,559
23,591
-
-
2,517
1,336,460
147,923
131,343
5,347
82,140
1,901
1,077
5,716
22,807
398,254
938,206
1,398,729
(1,388,901)
9,828
283,374
(297,109)
(13,735)
(3,907)
-
-
-
210,113
210,113
-
1,294,775
-
10,053
310,370
1,730,399
1,632,019
144,052
-
-
-
5,121,668
846,764
15,091
241,536
969,875
8,956
5,387
41,884
1,578
2,131,071
2,990,597
972,506
(1,008,090)
(35,584)
759,903
(1,810,394)
(1,050,491)
(1,086,075)
-
-
-
265,867
265,867
-
716,538
-
3,754
231,586
974,048
1,049,524
706,726
-
-
-
3,682,176
283,882
9,274
-
-
509,277
11,318
18,888
-
832,639
2,849,537
250,098
(247,029)
3,069
211,105
(204,953)
6,152
9,221
-
-
-
1,254,906
1,254,906
-
-
-
19,341
111,159
-
-
-
4,203
2,001,951
-
2,136,654
-
-
-
-
-
-
-
-
-
2,136,654
-
-
-
-
-
-
-
-
-
-
-
-
2,708,628
2,709,429
202,024
46,345
702,115
2,797,372
4,953,951
896,910
4,203
2,001,951
306,714
17,329,642
1,796,477
10,734,325
443,694
1,157,762
526,308
18,522
68,282
263,678
15,009,048
2,320,594
10,950,368
(10,816,081)
134,287
1,341,371
(2,396,901)
(1,055,530)
(921,243)
1,987,539
8,626
366,181
1,999,747
4,362,093
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.
INTEGRATED ANNUAL REPORT 2023
359
OTP BANK
IFRS REPORT (SEPARATE)
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 2022
Cash, amounts due from banks and balances with the National Bank of Hungary
Placements with other banks
Repo receivables
Financial assets 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
Investment properties
Investments in subsidiaries, associates and other investments
Other financial assets
TOTAL ASSETS
Amounts due to banks and deposits from the National Bank of Hungary and other banks
Deposits from customers
Repo liabilities
Liabilities from issued securities
Subordinated bonds and loans
Financial liabilities at fair value through profit or loss
Leasing liabilities
Other financial liabilities
TOTAL LIABILITIES
NET POSITION
Receivables from derivative financial instruments classified as held for trading
Liabilities from derivative financial instruments classified as held for trading
Net position of derivative financial instruments classified as held for trading
Receivables from derivative financial instruments designated as hedge accounting
Liabilities from derivative financial instruments designated as hedge accounting
Net position of derivative financial instruments designated as hedging accounting
Net position of derivative financial instruments total
Commitments to extend credit
Confirmed letters of credit
Factoring loan commitment
Bank guarantees
Off-balance sheet commitments
Within 3 months
Within one year and
over 3 months
Within 5 years and
over one year
Over 5 years
Without maturity
Total
1,093,551
993,586
248,696
4,380
118,490
32,817
1,413,038
18,927
-
-
260,924
4,184,409
839,590
10,903,401
134,894
8,762
3,395
583
1,049
258,771
12,150,445
(7,966,036)
8,478,109
(8,693,889)
(215,780)
316,440
(297,714)
18,726
(197,054)
1,852,164
12,376
373,417
84,327
2,322,284
-
198,808
-
11,013
157,390
318,757
1,040,150
20,768
-
-
1,228
1,748,114
164,140
192,419
3,343
1,912
-
1,133
4,895
17,377
385,219
1,362,895
1,788,941
(1,814,992)
(26,051)
186,838
(217,102)
(30,264)
(56,315)
-
-
-
216,572
216,572
-
1,090,007
-
58,638
398,959
1,874,608
1,436,743
140,776
-
-
-
4,999,731
654,843
12,091
270,129
486,782
-
5,535
25,857
1,706
1,456,943
3,542,788
511,637
(524,167)
(12,530)
784,159
(2,031,727)
(1,247,568)
(1,260,098)
-
-
-
405,546
405,546
-
636,267
-
9,357
223,210
1,139,867
975,208
667,279
-
-
-
3,651,188
111,406
11,272
-
3,326
291,801
12,602
9,663
-
440,070
3,211,118
179,092
(176,944)
2,148
15,859
(13,425)
2,434
4,582
-
-
-
1,167,378
1,167,378
-
-
-
20,787
122,241
-
-
-
4,207
1,596,717
-
1,743,952
-
-
-
-
-
-
-
-
-
1,743,952
-
-
-
-
-
-
-
-
-
-
-
-
1,093,551
2,918,668
248,696
104,175
1,020,290
3,366,049
4,865,139
847,750
4,207
1,596,717
262,152
16,327,394
1,769,979
11,119,183
408,366
500,782
295,196
19,853
41,464
277,854
14,432,677
1,894,717
10,957,779
(11,209,992)
(252,213)
1,303,296
(2,559,968)
(1,256,672)
(1,508,885)
1,852,164
12,376
373,417
1,873,823
4,111,780
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.
INTEGRATED ANNUAL REPORT 2023
360
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.3. Net foreign currency position and foreign currency risk
As at 31 December 2023
Assets
Liabilities
Derivative financial
instruments
Net position
As at 31 December 2022
Assets
Liabilities
Derivative financial
instruments
Net position
USD
648,226
(956,648)
299,135
(9,287)
USD
583,984
(741,173)
154,902
(2,287)
EUR
CHF
Others
Total
3,613,710
(4,373,571)
7,769
(62,142)
232,728
(92,143)
4,502,433
(5,484,504)
433,387
(326,474)
54,576
203
(137,542)
3,043
649,556
(332,515)
EUR
3,681,519
(3,992,404)
CHF
8,956
(65,565)
Others
369,969
(82,488)
615,822
304,937
56,690
81
(285,615)
1,866
Total
4,644,428
(4,881,630)
541,799
304,597
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.
Interest rate risk management
36.4.
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.
INTEGRATED ANNUAL REPORT 2023
361
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.4.
Interest rate risk management [continued]
31 December 2023
ASSETS
Cash, amounts due from
banks and balances
the National
with
Bank of Hungary
fixed interest
variable interest
non-interest-bearing
Placements with other
banks
fixed interest
variable interest
non-interest-bearing
Repo receivables
fixed interest
variable 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
other
through
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
2,180,950
13,951
2,166,999
-
338,152
11,436
326,716
-
201,658
129,541
72,117
225
-
225
-
-
-
150,415
19
150,396
-
332,909
332,909
-
-
78,034
4,556
73,478
-
-
-
-
5,515
5,515
-
-
-
-
-
-
123,031
63,267
59,764
-
-
-
-
625
71
554
-
-
-
-
-
-
-
-
-
46
44
2
-
-
-
-
-
624,268
1,928
622,340
-
-
-
-
6,253
6,253
-
-
-
-
351
351
-
-
-
-
-
-
43,151
29,036
14,115
-
-
-
-
1,240
948
292
-
-
-
-
-
-
-
-
-
143,091
15,785
127,306
-
-
-
-
95
95
-
-
147,777
147,777
-
-
-
-
-
2,293
2,287
6
-
-
-
-
-
-
-
-
-
9,564 1,036,999
9,564 1,036,999
-
-
-
-
-
3,112
3,112
-
-
-
-
-
-
-
844
844
-
-
-
-
-
-
178,193
-
-
178,193
16,180 2,359,143
-
13,951
- 2,166,999
178,193
16,180
349,089 2,708,232
346,860
332,909
- 2,166,999
194,373
16,180
73,162
73,162
-
-
-
-
-
6,769
6,769
-
-
68,897
-
-
68,897
-
-
-
217
-
-
217
16,306 1,758,007
- 1,288,515
400,595
-
68,897
16,306
201,658
-
129,541
-
72,117
-
7,712
616
6,418
-
1,077
-
217
616
944,425 2,702,432
104,995 1,393,510
823,124 1,223,719
85,203
201,658
129,541
72,117
27,804
25,894
1,077
833
16,306
-
-
-
20,092
19,476
-
616
-
-
-
-
-
-
-
-
-
-
-
-
23,917
23,917
9,015
9,015
23,917
23,917
9,015
9,015
32,932
32,932
9,781
9,781
-
-
3,040
3,040
-
-
78,451
78,451
-
-
16,710
16,710
-
-
156,490
156,490
-
-
123,066
123,066
-
-
528
-
-
528
20,649
-
-
20,649
395,711
244,785
150,398
528
163,816
143,167
-
20,649
559,527
387,952
150,398
21,177
INTEGRATED ANNUAL REPORT 2023
362
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.4.
Interest rate risk management [continued]
31 December 2023
ASSETS [continued]
Loans measured
at
amortised cost
fixed interest
variable interest
non-interest-bearing
Loans
at
mandatorily
measured
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
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
768,234
26,634
741,600
-
493,557
1,520
492,037
-
327,609
14,684
312,925
-
1,390,931
304
1,390,627
-
71,453
62,798
8,655
-
110,398
4,198
106,200
-
216,734
215,943
791
-
23,518
23,518
-
-
988,290
981,880
6,410
-
132,552
132,552
-
-
116,716
-
-
116,716
41,367 2,489,036 2,192,323 4,681,359
- 1,301,939
162,092 1,464,031
- 1,070,381 1,988,864 3,059,245
158,083
116,716
41,367
41,367
21,569
21,569
517
517
-
-
-
-
-
2,137
2,137
-
-
-
19
19
-
-
-
-
-
-
-
181,484
181,484
4,623
-
4,623
-
-
60,738
60,738
-
-
-
-
-
-
-
-
-
-
751,222
643,342
107,880
-
2,070,427
2,008,291
62,136
-
961,287
364,434
596,853
-
1,413,811
1,025,182
388,629
-
481,235
321,153
160,082
-
724,587
444,680
279,907
-
221,779
221,779
415,720
415,720
-
-
-
54,251
54,251
-
-
-
-
509,997
509,997
-
-
-
-
-
-
934,848
934,848
-
-
934,848
934,848
31,462 1,478,085
31,462 1,478,085
-
-
-
-
-
-
107,615
107,375
240
-
297,986
297,986
-
-
717,567
717,567
-
-
-
230,493
228,099
2,394
-
-
-
-
233,545
233,545
581,836
-
-
581,836
- 1,955,060
- 1,955,060
-
-
233,545
64,940
233,545
64,940
755,789 2,710,849
751,166 2,706,226
4,623
298,485
298,485
4,623
64,940
64,940
165,708 3,127,817 4,712,641 7,840,458
- 1,681,166 3,813,627 5,494,793
733,306 1,598,121
-
747,544
165,708
165,708
864,815
581,836
INTEGRATED ANNUAL REPORT 2023
363
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.4.
Interest rate risk management [continued]
31 December 2023
LIABILITIES
Amounts due to banks
and deposits with the
National Bank
of
Hungary and other
banks
fixed interest
variable interest
non-interest-bearing
Financial
liabilities
designated
to
measure at fair value
through profit or loss
fixed interest
variable interest
Repo liabilities
fixed interest
variable interest
Deposits from customers
fixed interest
variable interest
non-interest-bearing
Liabilities
from
issued
securities
fixed interest
variable interest
Subordinated bonds and
loans
fixed interest
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
211,121
170,042
41,079
-
241,637
11,432
230,205
-
15,233
15,232
1
-
125,710
268
125,442
-
30,529
30,481
48
-
78,404
78,399
5
-
223,700
223,700
-
-
301,093
301,093
-
-
431,599
431,599
-
-
60,060
60,060
-
-
31,626
-
-
31,626
10,867
-
-
10,867
943,808
871,054
41,128
31,626
817,771 1,761,579
451,252 1,322,306
396,780
355,652
42,493
10,867
19,761
-
19,761
95,146
24,572
70,574
7,520,231
1,068,482
6,451,749
-
-
-
-
101,665
101,665
-
2,875,160
935,571
1,939,589
-
-
-
-
-
-
-
156,216
156,216
-
-
545
206
339
-
-
-
240
186
54
-
-
-
-
-
72,641
72,083
558
-
-
-
275
108
167
-
-
-
-
-
545
378
167
-
-
-
-
-
-
-
-
34,561
34,561
-
-
-
-
-
89,381
-
89,381
704
219
485
-
-
-
-
-
-
-
-
75,793
75,793
-
-
85,919
85,919
-
1,886
1,886
-
2,477
1,725
752
-
-
1,858,423
1,809,109
49,314
-
981,110
846,948
134,162
-
524,302
373,167
151,135
-
1,863,222
1,019,044
844,178
-
442,891
226,755
216,136
-
-
-
-
-
-
-
37,149
37,149
-
-
13,320
-
13,320
191,894
-
191,894
3,484
1,001
2,483
-
-
872,793
499,824
372,969
-
-
-
-
195,405
195,405
-
-
-
-
-
32,473
32,473
-
1,863
1,863
-
6,579
4,695
1,884
-
-
59,172
59,172
-
-
-
-
-
19,825
19,825
-
-
-
-
-
157,095
157,095
-
-
-
-
8,424
2,410
6,014
-
-
25
25
-
-
-
-
7
7
-
-
12,664
12,664
-
9,270
9,270
-
21,198
12,574
8,624
-
-
111,527
111,527
-
-
197,826
197,826
-
-
-
-
-
31,653
31,653
-
-
-
-
-
788,452
788,452
-
226,002
226,002
-
24,356
863
23,493
-
-
167,354
167,354
-
-
-
-
-
-
-
-
19,872
-
-
19,872
-
-
-
-
-
-
-
-
-
71,790
71,790
-
-
-
-
-
-
19,786
25
19,761
290,551
219,977
70,574
-
-
-
153,143
153,143
-
19,786
25
19,761
443,694
373,120
70,574
15,336 7,772,119 2,962,206 10,734,325
- 1,300,498 1,007,281 2,307,779
- 6,451,749 1,939,589 8,391,338
35,208
15,336
15,336
19,872
-
-
-
204,242
203,345
897
958,867 1,163,109
945,547 1,148,892
14,217
13,320
-
-
-
-
-
-
170,431
170,431
13,019
13,019
-
31,039
19,558
11,481
71,790
71,790
507,277
226,002
281,275
37,243
4,601
32,642
170,431
170,431
520,296
239,021
281,275
68,282
24,159
44,123
242,221
242,221
491,972
-
-
491,972
262,427 3,574,586 4,258,433 7,833,019
- 2,666,029 2,644,697 5,310,726
416,585 1,351,309 1,767,894
-
754,399
262,427
491,972
262,427
NET POSITION
(5,292,525)
(1,217,268)
643,680
1,326,659
209,587
(215,833)
617,813
(408,251) 3,798,370
(14,268)
588,589
(124,280)
565,514 (653,241)
(87,727)
INTEGRATED ANNUAL REPORT 2023
364
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.4. Interest rate risk management [continued]
As at 31 December 2022
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
variable 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
other
through
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
637,040
637,040
-
665,056
5,118
659,938
-
246,529
155,711
90,818
16
1
15
-
-
-
281,342
45,688
235,654
-
251,192
251,192
-
153,142
50,475
102,667
-
-
-
-
1,203
1,203
-
-
-
-
-
-
-
-
-
-
-
130,299
19,408
110,891
-
-
-
-
5,199
1,009
4,190
-
-
-
62,611
62,610
1
-
-
-
-
461,042
105,266
355,776
-
-
-
-
229
229
-
-
-
-
-
74,287
57,053
17,234
-
-
-
-
12,146
3,775
8,371
-
-
-
-
208,087
86,207
121,880
-
-
-
-
4,250
4,250
-
-
-
-
-
98,606
98,606
-
-
-
-
-
21,882
21,882
-
-
-
-
-
-
-
-
- 1,012,903
- 1,012,903
-
-
-
-
-
-
-
-
-
-
26,857
1,049
26,857
1,049
-
-
-
-
-
-
-
183,139
-
183,139
20,827
-
20,827
820,179
637,040
183,139
272,019 1,092,198
888,232
251,192
203,966
20,827
36,780
36,780
-
-
-
-
-
1,305
1,305
-
-
48,754
-
-
48,754
-
-
-
123
-
-
123
10,873 2,029,905
- 1,193,088
788,063
-
48,754
10,873
246,529
-
155,711
-
90,818
-
66,223
536
53,524
-
12,576
-
123
536
869,924 2,899,829
278,728 1,471,816
580,323 1,368,386
59,627
246,529
155,711
90,818
74,795
61,560
12,576
659
10,873
-
-
-
8,572
8,036
-
536
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21,124
21,124
9,374
9,374
21,124
21,124
9,374
9,374
30,498
30,498
112,239
112,232
7
-
41,000
41,000
-
-
13,691
13,691
-
-
3,850
3,850
-
-
194,931
194,931
-
-
69,589
69,589
-
-
528
-
-
528
17,394
-
-
17,394
665,342
429,152
235,662
528
131,833
114,439
-
17,394
797,175
543,591
235,662
17,922
INTEGRATED ANNUAL REPORT 2023
365
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.4.
Interest rate risk management [continued]
As at 31 December 2022
ASSETS [continued]
Loans measured
at
amortised cost
fixed interest
variable interest
non-interest-bearing
Loans
at
mandatorily
measured
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
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
766,348
12,400
753,948
-
661,415
2,313
659,102
-
298,189
10,673
287,516
-
1,468,489
2,338
1,466,151
-
126,438
114,941
11,497
-
89,257
8,718
80,539
-
142,052
141,272
780
-
7,052
7,052
-
-
958,858
951,725
7,133
-
129,401
129,401
-
-
133,290
-
-
133,290
44,249 2,425,175 2,399,863 4,825,038
- 1,231,011
149,822 1,380,833
- 1,060,874 2,205,792 3,266,666
177,539
133,290
44,249
44,249
18,432
18,432
19,142
-
19,142
-
-
-
-
-
-
-
-
-
110
110
-
-
-
-
-
5,072
-
5,072
-
-
2,112,146
1,991,112
121,034
-
2,789,859
2,722,206
67,653
-
906,446
428,080
478,366
-
1,424,063
878,305
545,758
-
-
-
515
515
-
-
181,763
181,763
-
-
592,422
592,422
-
-
-
-
-
-
793,242
793,242
-
-
793,242
793,242
179,968
179,968
-
-
-
469,337
262,461
206,876
-
139,632
139,632
-
-
-
545,207
518,338
26,869
-
271,024
271,024
-
-
-
36,682
36,682
-
-
2,422 1,914,570
2,422 1,914,570
-
-
-
-
-
-
35,935
35,935
-
-
183,664
183,664
-
-
750,543
750,543
-
-
-
98,147
98,147
-
-
-
-
-
200,781
200,781
194,741
-
-
194,741
- 2,384,704
- 2,365,562
19,142
-
200,781
54,344
200,781
54,344
897,669 3,282,373
892,597 3,258,159
24,214
255,125
255,125
5,072
54,344
54,344
604,648 3,903,016 5,497,859 9,400,875
- 2,901,999 4,252,931 7,154,930
640,280 1,446,556
-
799,389
604,648
604,648
806,276
194,741
INTEGRATED ANNUAL REPORT 2023
366
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.4.
Interest rate risk management [continued]
As at 31 December 2022
LIABILITIES
Amounts due to banks
and deposits with the
National Bank
of
Hungary and other
banks
fixed interest
variable interest
non-interest-bearing
Financial
liabilities
designated
to
measure at fair value
through profit or loss
fixed interest
variable interest
Repo liabilities
fixed interest
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
229,856
200,719
29,137
-
385,369
106,264
279,105
-
37,293
37,293
-
-
40,697
40,697
-
-
129,475
129,475
-
-
8,214
8,214
-
-
71,538
71,538
-
-
315,766
315,766
-
-
397,820
397,820
-
-
32,570
32,570
-
-
81,759
-
-
81,759
5,771
-
-
5,771
947,741
836,845
29,137
81,759
788,387 1,736,128
503,511 1,340,356
308,242
279,105
87,530
5,771
16,576
26
16,550
119,520
29,144
90,376
7,563,627
1,008,247
6,555,380
-
-
-
-
188,121
4
188,117
2,887,850
552,561
2,335,289
-
1,878
211
1,667
-
-
282
229
53
-
-
-
-
-
-
-
431
41
390
-
-
-
-
-
85,356
85,356
-
302,491
302,491
-
-
1,215
-
1,215
-
-
430
326
104
-
-
-
-
-
15,369
15,369
-
190,393
190,393
-
-
-
-
-
93,110
93,110
815
83
732
-
-
-
-
-
-
-
-
127,940
127,940
-
-
1,702
1,702
-
-
-
1,990
1,567
423
-
-
3,097,710
3,012,679
85,031
-
1,854,159
1,709,457
144,702
-
478,930
331,253
147,677
-
1,819,835
972,597
847,238
-
574,661
216,895
357,766
-
-
-
-
-
-
-
23,147
23,147
-
-
-
-
-
201,076
201,076
2,781
379
2,402
-
-
554,788
532,485
22,303
-
-
-
-
-
-
-
-
-
-
-
1,854
1,854
-
-
-
5,436
4,688
748
-
-
22,780
22,758
22
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,966
1,004
3,962
-
-
-
-
-
-
-
-
16
16
-
-
43,854
43,854
-
-
-
15,365
14,798
567
-
-
-
-
-
-
-
-
-
-
-
-
448,206
448,206
-
-
-
8,968
267
8,701
-
-
36,706
36,706
-
-
118,071
118,071
-
-
114,115
114,115
-
-
-
-
-
-
-
-
12,147
-
-
12,147
-
-
-
-
-
-
-
-
220,129
220,129
245,955
-
-
245,955
-
-
-
-
-
-
16,576
26
16,550
204,876
114,500
90,376
-
-
-
203,490
15,373
188,117
16,576
26
16,550
408,366
129,873
278,493
11,547 8,006,221 3,112,937 11,119,158
- 1,438,694
766,101 2,204,795
- 6,555,380 2,335,289 8,890,669
23,694
11,547
11,547
12,147
-
-
-
50,503
47,621
2,882
448,206
448,206
-
498,709
495,827
2,882
-
-
-
-
-
38,344
38,344
-
-
23,503
21,608
1,895
220,129
220,129
294,186
294,186
17,961
1,774
16,187
38,344
38,344
294,186
294,186
41,464
23,382
18,082
258,473
258,473
555,251 4,538,107 4,934,854 9,472,961
- 3,701,656 3,365,360 7,067,016
590,496 1,014,243 1,604,739
-
801,206
555,251
245,955
555,251
NET POSITION
(6,283,398)
(1,459,119)
497,139
1,198,676
139,162
237,427
664,092
(307,130) 4,309,079
481,906
222,490
151,332 (451,436)
303,092 (148,343)
INTEGRATED ANNUAL REPORT 2023
367
OTP BANK
IFRS REPORT (SEPARATE)
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. 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
Total VaR exposure
Average Var
2023
2022
11,181
489
18
11,688
6,820
327
42
7,189
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 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.
INTEGRATED ANNUAL REPORT 2023
368
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
36.5. Market risk [continued]
36.5.2. Foreign currency sensitivity analysis
The following table shows the result of the foreign currency sensitivity analysis. 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.
Probability
Effects to the P&L in 3 months period
2022
2023
In HUF billion
In HUF billion
1%
5%
25%
50%
25%
5%
1%
(8,943)
(4,784)
(1,332)
360
1,790
4,527
6,321
(4,582)
(2,470)
(786)
14
999
2,700
4,233
Notes:
(1) Historical VaR simulation is based on the empirical distribution of the historical exchange rate movements
between 31 December 2023 and 31 December 2022.
INTEGRATED ANNUAL REPORT 2023
369
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
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) (1) HUF base rate and BUBOR increases gradually by 500 bps over the next year (probable scenario)
(2) (2) HUF base rate and BUBOR increases gradually by 100 bps over the next year (alternative scenario)
The net interest income in a one year period after 1 January 2024 would be decreased by HUF 6.355 million
(probable scenario) and increased by HUF 999 million (alternative scenario) as a result of these simulation.The
same simulation indicated HUF 6.304 million decrease (probable scenario) and HUF 3.058 million increase
(alternative scenario) in the Net interest income in a one year period after 1 January 2023. Besides the effect is
further increased by capital gains HUF +429 million (for probable scenario), HUF -104 million (for alternative
scenario) as at 31 December 2023 and (HUF -350 million for scenario 1, HUF +181 million for scenario 2 as at
31 December 2022) 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
2023
2022
Effects to the
net interest
income (one-
year period)
(426)
425
1,065
(1,564)
500
(517)
(941)
Effects to
shareholder’s
equity
(Price change
of FVOCI
government
bonds)
14
(14)
-
-
-
-
-
Effects to
the net
interest
income (one-
year period)
1,105
(1,105)
(383)
1,121
935
(1,106)
(120)
Effects to
shareholder’s
equity
(Price change
of FVOCI
government
bonds)
36
(36)
-
-
-
-
-
HUF (0.1%) parallel shift
HUF 0.1% parallel shift
EUR (0.1%) parallel shift
EUR 0.1% parallel shift
USD (0.1%) parallel shift
USD 0.1% parallel shift
Total
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)
2023
10
(103)
2022
15
(26)
INTEGRATED ANNUAL REPORT 2023
370
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 36:
FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
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 adequacy85
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 2023 as well as in 2022.
The Bank’s capital adequacy calculation is in line with IFRS and based on Basel III as at 31 December 2023 and
31 December 2022. 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).
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):
31 December
2023
Basel III
31 December
2022
Basel III
2,186,422
2,186,422
500,555
1,632,037
1,632,037
286,181
2,686,977
1,918,218
719,575
27,799
30,324
777,698
1,909,279
22.49%
27.64%
742,536
26,530
31,440
800,506
1,117,712
16.31%
19.17%
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.
85 The dividend amount planned to pay out / paid out is deducted from reserves.
INTEGRATED ANNUAL REPORT 2023
371
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 37:
TRANSFER OF FINANCIAL INSTRUMENTS (in HUF mn)
Financial assets transferred but not derecognised
31 December 2023
31 December 2022
Transferred
assets
Associated
liabilities
Transferred
assets
Carrying amount
Associated
liabilities
Financial assets at fair
value through other
comprehensive income
Debt securities
Total
Financial assets at
amortised cost
Debt securities
Total
Total
77,030
77,030
408,632
408,632
485,662
75,812
75,812
367,883
367,883
443,695
95,493
95,493
381,356
381,356
476,849
95,900
95,900
312,466
312,466
408,366
As at 31 December 2023 and 31 December 2022, the Bank had obligation from repurchase agreements about HUF
444 billion and HUF 408 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.
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
31 December
2023
31 December
2022
1,987,539
1,999,747
1,177,213
366,181
8,626
4,362,093
4,586
20,803
19
25,408
4,387,501
1,852,164
1,873,824
955,480
373,417
12,376
4,111,781
3,678
28,614
7
32,299
4,144,080
INTEGRATED ANNUAL REPORT 2023
372
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 38:
OFF-BALANCE SHEET ITEMS (in HUF mn) [continued]
Legal disputes
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 1.931 million and HUF 1.917 million as at 31 December 2023 and 31
December 2022, 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.
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.
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. According to the arrangement the repurchase guarantee was cancelled and OTP Bank
Plc. gives bail to the loans originated or purchased by the Bank.
INTEGRATED ANNUAL REPORT 2023
373
OTP BANK
IFRS REPORT (SEPARATE)
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.
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.
INTEGRATED ANNUAL REPORT 2023
374
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 39:
SHARE-BASED PAYMENT AND EMPLOYEE BENEFIT (in HUF mn) [continued]
The parameters for the share-based payment relating to ongoing years 2018-2022 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
for the year 2018
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
-
-
10,413
10,413
10,413
10,913
10,913
10,913
10,913
-
-
2019
2020
2021
2022
2023
2024
2025
2026
2027
-
9,553
9,553
9,553
9,553
9,553
9,553
9,553
-
HUF per share
for the year 2019
for the year 2020
-
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
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 2021
for the year 2022
HUF per share
2022
2023
2024
2025
2026
2027
2028
2029
5,912
6,912
6,912
6,912
6,912
6,912
6,912
-
6,000
7,000
8,000
9,000
10,000
10,000
10,000
-
8,912
8,912
8,912
8,912
8,912
8,912
8,912
-
-
7,773
8,773
8,773
8,773
8,773
8,773
8,773
-
6,000
7,000
8,000
9,000
10,000
10,000
10,000
-
10,773
10,773
10,773
10,773
10,773
10,773
10,773
Relevant factors considered during measurement of fair value related to share-based payment as follows:
Year
2017
2018
2019
2020
2021
2022
2023
Reference
price
Assumed
volatility
9,200
10,064
12,413
11,553
16,644
8,912
10,773
21.3%
26.0%
19.2%
33.6%
28.6%
42.6%
33.3%
1Y
0.1%
0.2%
0.2%
0.6%
1.0%
7.1%
13.2%
Risk-free interest rate (HUF)
4Y
1.0%
1.3%
1.1%
0.6%
1.9%
7.3%
7.7%
5Y
1.3%
1.6%
1.3%
0.8%
2.0%
7.1%
7.3%
3Y
0.7%
1.0%
0.9%
0.5%
1.8%
7.6%
8.2%
2Y
0.5%
0.6%
0.7%
0.4%
1.6%
7.9%
9.2%
6Y
1.3%
1.9%
1.4%
0.9%
2.1%
7.0%
7.1%
7Y
1.3%
2.1%
1.6%
1.0%
2.1%
6.9%
6.9%
INTEGRATED ANNUAL REPORT 2023
375
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 39:
SHARE-BASED PAYMENT AND EMPLOYEE BENEFIT (in HUF mn) [continued]
Relevant factors considered during measurement of fair value related to share-based payment as follows:
[continued]
Év
2017
2018
2019
2020
2021
2022
2023
1Y
219
219
252
219
371
452
300
Expected dividends (HUF/Share)
6Y
4Y
2Y
3Y
5Y
219
219
290
252
321
497
330
252
219
333
290
357
547
363
290
219
383
333
393
601
399
334
219
440
383
432
661
439
384
219
507
440
475
728
483
Pricing
model
7Y
442 Binomial
219 Binomial
583 Binomial
507 Binomial
523 Binomial
800 Binomial
531 Binomial
Based on parameters accepted by Supervisory Board, relating to the year 2018 effective pieces are follows As at
31 December 2023:
Approved
pieces of
shares
Exercised until
31 December
2023
Weighted
average share
price at the
date of
exercise (in
HUF)
Expired
pieces
Exercisable
at 31
December
2023
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
150,230
33,024
73,799
14,618
86,456
13,858
45,155
3,217
-
-
82,854
17,017
150,230
33,024
73,799
14,618
77,425
13,858
45,155
3,217
-
-
13,843
11,829
14,294
11,897
16,314
16,468
14,605
8,529
14,736
11,820
-
-
-
-
-
-
-
-
9,031
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
864
432
Based on parameters accepted by Supervisory Board, relating to the year 2019 effective pieces are follows As at 31
December 2023:
Approved
pieces of shares
Exercised until
31 December
2023
Weighted
average share
price at the
date of exercise
(in HUF)
Expired pieces
Exercisable at
31 December
2023
to
to
to
share
exchanged
exchanged
exchanged
Share-purchasing period started in 2020
Remuneration
provided in 2020
Share-purchasing period starting in 2021
Remuneration
share
applying in 2021
Share-purchasing period starting in 2022
share
Remuneration
applying in 2022
Share-purchasing period starting in 2023
Remuneration
share
applying in 2023
Share-purchasing period starting in 2024
Remuneration
share
applying in 2024
Remuneration
applying in 2025
Remuneration
applying in 2026
exchanged
exchanged
exchanged
exchanged
share
share
to
to
to
to
91,403
22,806
201,273
30,834
107,760
10,564
117,437
13,427
-
-
-
-
91,403
22,806
201,273
30,834
101,897
10,564
114,063
13,427
-
-
-
-
12,218
11,897
16,298
17,618
13,771
8,529
13,893
11,674
-
-
-
-
-
-
-
-
1,344
-
-
-
-
-
-
-
-
-
-
-
4,519
-
3,374
-
44,421
6,279
1,000
500
INTEGRATED ANNUAL REPORT 2023
376
OTP BANK
IFRS REPORT (SEPARATE)
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 2023:
Approved
pieces of shares
Exercised until
31 December
2023
Weighted
average share
price at the
date of exercise
(in HUF)
Expired pieces
Exercisable at
31 December
2023
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
83,688
15,232
47,275
14,142
17,881
17,997
17,498
26,956
-
-
-
3,536
14,193
1,288
78,864
15,111
8,529
121
-
-
-
8,562
8,562
11,659
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
47,275
-
51,002
9,518
13,080
3,443
680
680
Based on parameters accepted by Supervisory Board, relating to the year 2021 effective pieces are follows As at
31 December 2023:
Approved
pieces of shares
Exercised until
31 December
2023
Weighted
average share
price at the
date of exercise
(in HUF)
Expired
pieces
Exercisable at
31 December
2023
Share-purchasing period started in 2022
Remuneration exchanged to share provided
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
Share-purchasing period starting in 2026
Remuneration exchanged to share applying
in 2026
Share-purchasing period starting in 2027
Remuneration exchanged to share applying
in 2027
60,018
11,028
59,776
11,028
117,276
117,276
10,824
10,824
10,122
8,691
13,672
11,534
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
242
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,771
4,942
54,262
4,942
58,155
4,942
25,305
631
INTEGRATED ANNUAL REPORT 2023
377
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 39:
SHARE-BASED PAYMENT AND EMPLOYEE BENEFIT (in HUF mn) [continued]
Based on parameters accepted by Supervisory Board, relating to the year 2022 effective pieces are follows As at
31 December 2023:
Approved
pieces of shares
Exercised until
31 December
2023
Weighted
average share
price at the
date of exercise
(in HUF)
Expired
pieces
Exercisable at
31 December
2023
Share-purchasing period started in 2023
Remuneration exchanged to share provided
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
Share-purchasing period starting in 2026
Remuneration exchanged to share applying
in 2026
Share-purchasing period starting in 2027
Remuneration exchanged to share applying
in 2027
Share-purchasing period starting in 2028
Remuneration exchanged to share applying
in 2028
57,412
8,726
57,364
8,590
13,484
11,629
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
48
136
103,450
8,494
42,814
3,993
43,714
3,993
44,701
3,993
19,756
-
Effective pieces relating to the periods starting in 2024-2028 settled during valuation of performance of year 2019-
2022, 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 2023 based on performance assessment accounted as
equity-settled share based transactions HUF 3,292 million was recognized as expense for the year ended 31
December 2023.
INTEGRATED ANNUAL REPORT 2023
378
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 40:
RELATED PARTY TRANSACTIONS (in HUF mn)
Outstanding balances and transactions with related parties are summarized below in aggregate:
Statement of financial position
31 December 2023
Associated
companies and
other
companies
Other
related
parties
31 December 2022
Associated
companies and
other
companies
Other
related
parties
Cash, amounts due from banks and
balances with the National Bank of
Hungary
Placements with other banks
Repo receivables
Held for trading securities
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 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
11,568
2,202,179
183,394
16
43,808
273,400
-
979,319
-
25,972
1,345
173,687
3,894,688
-
-
-
-
-
-
609
56,353
42
-
-
280
57,284
(998,512)
(317,457)
(300,557)
(26,948)
(11,133)
-
-
(78,840)
-
-
83,713
2,019,597
205,520
11
55,989
302,121
-
997,027
-
21,615
1,625
136,361
3,823,579
(863,748)
(191,102)
(271,214)
(22,129)
(11,093)
-
-
-
-
-
-
601
65,767
44
-
-
375
66,787
-
-
(58,217)
-
-
(24,137)
-
(40,225)
-
(898)
(14,681)
(1,694,323)
-
-
(78,840)
-
(14,836)
(1,414,347)
-
(491)
(58,708)
(1,324,353)
(59,569)
(1,094)
(1,385,016)
(10,209)
(49,294)
(2,977)
(62,480)
(1,208,669)
(72,161)
(1,085)
(1,281,915)
(7,824)
(43,324)
(8,763)
(59,911)
INTEGRATED ANNUAL REPORT 2023
379
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 40:
RELATED PARTY TRANSACTIONS (in HUF mn) [continued]
Outstanding balances and transactions with related parties are summarized below in aggregate: [continued]
Statement of Profit or Loss
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
Related party transactions with key management
Year ended 31
December 2023
Year ended 31
December 2022
419,368
(291,054)
20,067
968
35,577
(3,599)
(11,778)
181,369
(93,185)
70,147
(49,745)
18,742
(3,038)
(9,761)
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
31 December
2023
31 December
2022
3,379
1,732
320
5,431
2,986
2,225
239
5,450
31 December
2023
31 December
2022
Loans provided to companies owned by the Management (in the
normal course of business)
Commitments to extend credit and bank guarantees
56,353
62,480
65,767
59,911
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
31 December
2023
31 December
2022
1,283
225
1,508
1,180
198
1,378
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.
INTEGRATED ANNUAL REPORT 2023
380
OTP BANK
IFRS REPORT (SEPARATE)
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.
31 December
2023
31 December
2022
Loans managed by the Bank as a trustee
26,851
27,914
NOTE 42:
CONCENTRATION OF ASSETS AND LIABILITIES
31 December
2023
31 December
2022
In the percentage of the total assets
Receivables from, or securities
Government or the NBH
issued by
the Hungarian
Securities issued by the OTP Mortgage Bank Ltd.
Loans at amortised cost
27.39%
1.54%
5.29%
23.58%
2.30%
5.26%
There were no other significant concentrations of the assets or liabilities of the Bank as at 31 December 2023 or
31 December 2022.
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 813 billion
and HUF 929 billion as at 31 December 2023 and 31 December 2022 respectively, before taking into account
collateral or other credit enhancements.
INTEGRATED ANNUAL REPORT 2023
381
OTP BANK
IFRS REPORT (SEPARATE)
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
31 December
2023
31 December
2022
654,988
6,632
279,485,921
2,344
278,795,018
24
654,988
6,632
279,490,541
2,344
278,797,915
24
2023
2022
280,000,010
(514,089)
280,000,010
(1,204,992)
during the year for calculating basic EPS
279,485,921
278,795,018
Dilutive effect of options issued in accordance with the
Remuneration Policy / Management Option Program and
convertible into ordinary shares
The modified weighted average number of ordinary shares
outstanding during the year for calculating diluted EPS
4,620
2,896
279,490,541
278,797,914
INTEGRATED ANNUAL REPORT 2023
382
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 44:
NET GAIN OR LOSS REALISED ON FINANCIAL INSTRUMENTS (in HUF mn)
Year ended 31 December 2023
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
Placements with other banks
Repo receivables
Loans
Securities at amortised cost
Financial assets measured at amortised
338,840
206,280
37,435
457,471
129,054
-
-
-
12,668
(19,400)
-
(12,358)
(1,800)
5,542
(8,576)
cost total
1,169,080
(6,732)
(17,192)
-
-
-
-
-
-
-
1,168
10,511
-
50,838
-
510
254
51,132
95,711
(3,303)
37,917
-
980
3,308
-
103,138
106,986
(2,323)
41,225
Financial assets measured at fair value
Securities held for trading
Debt instruments at fair value through other
comprehensive income
Equity instruments 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
(94,942)
(202,137)
(336,118)
(2,314)
(58,495)
(29,893)
-
-
233,243
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
cost total
(723,899)
233,243
Financial liabilities designated to measure
at fair value through profit or loss
(1,433)
(4,542)
Derivative financial instruments
(78,871)
13,055
Total
468,015
342,010
(19,515)
41,225
Current year change of derivative financial assets and liabilities held-for-trading and designated as hedge
accounting by types of results in the profit or loss for the year ended 31 December 2023
Balance as at 1 January
Change in current period
on interest income/interest expense
on net results on derivative instruments and hedge relationships
on revaluation difference
Realized result on closed deals /matured deals
Closing balance
Held-for-trading
(68,682)
88,973
4,524
(4,263)
(7,318)
13,234
Hedge
accounting
(3,403)
(1,161)
(27,167)
15,273
10,663
(5,795)
INTEGRATED ANNUAL REPORT 2023
383
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 44:
NET GAIN OR LOSS REALISED ON FINANCIAL INSTRUMENTS
(in HUF mn) [continued]
Year ended 31 December 2022
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
Placements with other banks
Repo receivables
Loans
Securities at amortised cost
Financial assets measured at amortised cost
50,964
203,618
10,234
297,460
92,948
-
-
-
11,643
(54,402)
-
11,754
2,095
33,838
27,623
total
655,224
(42,759)
75,310
Financial assets measured at fair value
Securities held for trading
Debt instruments at fair value through other
3,556
6,480
-
-
-
-
-
-
-
-
comprehensive income
39,988
(7,952)
25,615
(55,804)
-
207
-
2,736
35,927
79,471
(20,188)
(21,453)
(11,872)
13,743
-
(53,068)
Equity instruments 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
(19,806)
(65,575)
(184,713)
(1,186)
(7,442)
(8,646)
-
-
213,359
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
cost total
(287,368)
213,359
Financial liabilities designated to measure
at fair value through profit or loss
Derivative financial instruments
(562)
(146,192)
1,932
9,917
Total
300,573
160,996
89,053
(53,068)
Current year change of derivative financial assets and liabilities held-for-trading and designated as hedge
accounting by types of results in the profit or loss for the year ended 31 December 2022
Balance as at 1 January
Change in current period
on interest income/interest expense
on net results on derivative instruments and hedge relationships
on revaluation difference
Realized result on closed deals /matured deals
Closing balance
Held-for-trading
(9,493)
Hedge
accounting
(963)
(73,781)
(80,525)
103,665
(8,548)
(68,682)
492
62,140
(59,604)
(5,468)
(3,403)
INTEGRATED ANNUAL REPORT 2023
384
OTP BANK
IFRS REPORT (SEPARATE)
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.
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;
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Use of modified yield curve
During the year ended 31 December 2023 and 2022 yield curves derived from hungarian government bonds
(“ÁKK curve”) have become distorted due to certain market events, which means that real liquidity has
concentrated on certain part of the yield curve. Therefore a modified yield curve - which is not observable on the
market - has been used at the concerning fair value calculations. This yield curve is based on the relevant yield
curve points of the original ÁKK curve. Based on Management’s discretion fair value calculated with modified
yield curves can represent the perspective of market participants reliable at current market conditions.
For the year ended 31 December 2023 and 2022 modified yield curve was used for calculating fair value in case
of subsidised personal loans represented in “Loans mandatorily measured at fair value through profit or loss” line.
INTEGRATED ANNUAL REPORT 2023
385
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
a) Fair value of financial assets and liabilities at amortised cost
31 December 2023
31 December 2022
Carrying
amount
Fair value
Level 1
Level 2
Level 3
Carrying
amount
Fair value
Level 1
Level 2
Level 3
2,708,232
2,702,433
201,658
2,710,848
4,681,359
298,838
13,303,368
2,708,232
2,933,781
201,742
2,494,227
4,824,169
298,838
13,460,989
2,708,232
1,509,113
-
2,236,994
-
-
6,454,339
-
1,424,668
201,742
238,837
-
-
1,865,247
-
-
-
18,396
4,824,169
298,838
5,141,403
1,092,198
2,899,829
246,529
3,282,373
4,825,040
255,125
12,601,094
1,092,198
2,871,307
248,513
2,654,685
4,856,352
255,125
11,978,180
1,092,198
1,300,188
-
2,301,512
-
-
4,693,898
-
1,571,119
248,513
337,789
-
-
2,157,421
-
-
-
15,384
4,856,352
255,125
5,126,861
1,761,579
443,694
10,734,325
68,282
1,163,109
520,296
243,319
14,934,604
1,709,710
457,508
10,741,597
68,328
1,201,901
421,030
243,319
14,843,393
609,288
-
-
-
1,201,901
421,030
-
2,232,219
1,100,422
457,508
10,741,597
-
-
-
-
12,299,527
-
-
-
68,328
-
-
243,319
311,647
1,736,128
408,366
11,119,158
41,464
498,709
294,186
282,103
14,380,114
1,559,492
415,703
11,122,775
41,477
493,440
261,113
282,103
14,176,104
389,779
-
-
-
493,440
261,113
-
1,144,332
1,169,713
415,703
11,122,775
-
-
-
-
12,708,191
-
-
-
41,477
-
-
282,103
323,580
Cash, amounts due from banks and balances
with the National Bank of Hungary
Placements with other banks
Repo receivables
Securities at amortised cost
Loans at amortised cost
Other financial assets
Total assets measured at amortised cost
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
Subordinated bonds and loans
Other financial liabilities
Total liabilities measured at amortised cost
b) Derivative financial instruments
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.
INTEGRATED ANNUAL REPORT 2023
386
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
b) Derivative financial instruments [continued]
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).
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
Forward rate agreement
Total interest rate derivatives (OTC derivatives)
From this: Interest rate derivatives cleared by NBH
Foreign exchange derivatives
Foreign exchange swaps
Foreign exchange forward
OTC options
Foreign exchange spot conversion
Total foreign exchange derivatives (OTC derivatives)
From this: Foreign exchange derivatives cleared by NBH
Before netting
Assets
Liabilities
31 December 2023
Netting
After netting
Before netting
Assets
Liabilities
Assets
Liabilities
31 December 2022
Netting
After netting
Assets
Liabilities
130,230
8,644
818
-
139,692
1,132
54,528
6,551
1,016
347
62,442
-
(113,742)
(6,532)
(818)
(214)
(121,306)
-
(32,818)
(10,129)
(871)
(303)
(44,121)
-
110,939
-
-
-
110,939
-
-
-
-
-
-
-
19,291
8,644
818
-
28,753
1,132
54,528
6,551
1,016
347
62,442
-
(2,803)
(6,532)
(818)
(214)
(10,367)
-
(32,818)
(10,129)
(871)
(303)
(44,121)
-
162,519
11,332
1,000
505
175,356
2,702
109,167
9,909
1,048
162
120,286
22,214
(170,144)
(12,139)
(1,000)
(3)
(183,286)
-
(76,037)
(11,936)
(822)
(162)
(88,957)
-
155,468
-
-
505
155,973
-
-
-
-
-
-
-
7,051
11,332
1,000
-
19,383
2,702
109,167
9,909
1,048
162
120,286
22,214
(14,676)
(12,139)
(1,000)
502
(27,313)
-
(76,037)
(11,936)
(822)
(162)
(88,957)
-
1 Certain derivative financial assets and liabilities are offset and the net amount is presented in accordance with IAS 32 in the State ment 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.
INTEGRATED ANNUAL REPORT 2023
387
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
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
Foreign exchange spot conversion
Forward
Cross currency interest rate swaps
Total derivatives held for risk management not designated in
hedges
From this: Total derivatives cleared by NBH held for risk management
Total Held for trading derivative financial instruments
Derivative financial instruments designated as hedge accounting
relationships
Derivatives designated in cash flow hedges
Interest rate swaps
Total derivatives designated in cash flow hedges
Derivatives designated in fair value hedges
Interest rate swaps
Cross currency interest rate swaps
Foreign exchange swaps
Total derivatives designated in fair value hedges
Interest rate swaps
Total other derivatives designated in fair value hedges
From this: Total derivatives cleared by NBH held for hedging
Total derivatives held for risk management (OTC derivatives)
Before netting
Assets
Liabilities
31 December 2023
Netting
After netting
Before netting
Assets
Liabilities
Assets
Liabilities
31 December 2022
Netting
After netting
Assets
Liabilities
32,402
126
32,528
433
32,961
68,380
11,796
-
127
14,577
(32,490)
(3,826)
(36,316)
(451)
(36,767)
(91,634)
(20,284)
-
-
(2,629)
94,880
33,042
329,975
(114,547)
-
(316,741)
-
-
37,651
10,173
-
47,824
168
168
-
47,992
(9,935)
(9,935)
(33,054)
(10,679)
-
(43,733)
(119)
(119)
(1,418)
(53,787)
-
-
-
-
-
22,237
-
-
-
-
22,237
-
133,176
1,066
1,066
25,130
-
-
25,130
168
168
-
26,364
32,402
126
32,528
433
32,961
46,143
11,796
-
127
14,577
(32,490)
(3,826)
(36,316)
(451)
(36,767)
(69,397)
(20,284)
-
-
(2,629)
72,643
33,042
196,799
(92,310)
-
(183,565)
(1,066)
(1,066)
12,521
10,173
-
22,694
-
-
-
21,628
(8,869)
(8,869)
(7,924)
(10,679)
-
(18,603)
49
49
(1,418)
(27,423)
34,058
54
34,112
214
34,326
133,399
12,687
-
67
3,515
149,668
78,916
479,636
-
-
58,381
20,732
1,696
80,809
-
-
-
80,809
(32,048)
(702)
(32,750)
(1,887)
(34,637)
(225,915)
(11,908)
(43)
-
(3,572)
(241,438)
(1,879)
(548,318)
(25,325)
(25,325)
(37,290)
(5,398)
(16,199)
(58,887)
-
-
(5,485)
(84,212)
-
-
-
-
-
18,944
-
-
-
-
18,944
-
174,917
2,651
2,651
30,938
-
-
30,938
-
-
-
33,589
34,058
54
34,112
214
34,326
114,455
12,687
-
67
3,515
130,724
78,916
304,719
(2,651)
(2,651)
27,443
20,732
1,696
49,871
-
-
-
47,220
(32,048)
(702)
(32,750)
(1,887)
(34,637)
(206,971)
(11,908)
(43)
-
(3,572)
(222,494)
(1,879)
(373,401)
(22,674)
(22,674)
(6,352)
(5,398)
(16,199)
(27,949)
-
-
(5,485)
(50,623)
1 Certain derivative financial assets and liabilities are offset and the net amount is presented in accordance with IAS 32 in t he 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.
INTEGRATED ANNUAL REPORT 2023
388
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
b) Derivative financial instruments [continued]1
Fair value of derivative financial instruments [continued]
Financial assets subject to offsetting, netting arrangement as at 31 December 2023
Offsetting recognised on the balance sheet
Netting potential not recognised
on the balance sheet
Gross
assets
before
offset
Offsetting
with
gross
liabilities
Net assets recognised
on the statement of
financial position
Financial
liabilities
Collateral
received
Assets after
consideration
of netting
potential
Assets not
subject to netting
arrangements
Assets recognised
on the statement
os financial
position
Total assets
Maximum
exposure to
risk
Recognised in
the statement of
financial
position
After
consideration
of netting
potential
Derivative financial
instruments
324.446 (158.844)
165.602
(60.721)
(76.853)
28.028
52.825
218.427
80.853
Financial liabilities subject to offsetting, netting arrangement as at 31 December 2023
Offsetting recognised on the balance sheet
Netting potential not recognised
on the balance sheet
Liabilities not
subject to netting
arrangements
Total
liabilities
Maximum
exposure to
risk
Gross
liabilities
before
offset
Offsetting
with
gross
assets
Net liabilities
recognised on the
statement of financial
position
Financial
assets
Collateral
pledged
Liabilities
after
consideration
of netting
potential
Liabilities
recognised on the
statement os
financial position
Recognised in
the statement of
financial
position
After
consideration
of netting
potential
Derivative financial
instruments
347.414 (158.844)
188.570
(60.721) (103.563)
24.286
22.418
210.988
46.704
1 Certain derivative financial assets and liabilities are offset and the net amount is presented in accordance with IAS 32 in t he 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.
INTEGRATED ANNUAL REPORT 2023
389
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
b) Derivative financial instruments [continued]1
Fair value of derivative financial instruments [continued]
Financial assets subject to offsetting, netting arrangement as at 31 December 2022
Offsetting recognised on the balance sheet
Netting potential not recognised
on the balance sheet
Gross
assets
before
offset
Offsetting
with
gross
liabilities
Net assets recognised
on the statement of
financial position
Financial
liabilities
Collateral
received
Assets after
consideration
of netting
potential
Assets not
subject to netting
arrangements
Assets recognised
on the statement
os financial
position
Total assets
Maximum
exposure to
risk
Recognised in
the statement of
financial
position
After
consideration
of netting
potential
Derivative financial
instruments
441,412 (208,505)
232,907
(90,551) (103,014)
39,342
119,032
351,939
158,374
Financial liabilities subject to offsetting, netting arrangement as at 31 December 2022
Offsetting recognised on the balance sheet
Netting potential not recognised
on the balance sheet
Liabilities not
subject to netting
arrangements
Total
liabilities
Maximum
exposure to
risk
Gross
liabilities
before
offset
Offsetting
with
gross
assets
Net liabilities
recognised on the
statement of financial
position
Financial
assets
Collateral
pledged
Liabilities
after
consideration
of netting
potential
Liabilities
recognised on the
statement os
financial position
Recognised in
the statement of
financial
position
After
consideration
of netting
potential
Derivative financial
instruments
580,572
-208,505
372,067
-90,551
-240,661
40,855
51,957
424,024
92,812
1 Certain derivative financial assets and liabilities are offset and the net amount is presented in accordance with IAS 32 in t he 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.
INTEGRATED ANNUAL REPORT 2023
390
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
Hedge accounting
c)
Interest rate risk management is centralized at OTP Bank. 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.
Amount, timing and uncertainty of future cash flows - hedging instruments as at 31 December 2023 (amounts in million currency)
Type of hedge
Type of risk
Type of instrument
Fair Value Hedge
Interest rate risk
Interest rate swap
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
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(24,975)
15.66%
-
-
-
-
-
-
1
(1.69%)
310.02
2
(1.68%)
310.10
102,049
15.25%
(590)
3.92%
(1,106)
3.65%
4,500
0.22%
8
(1.73%)
309.36
28,300 105,374
1.38%
(590)
-
-
47
4.18%
(1,059)
4,500
-
-
21
10
(1.82%)
307.71
Fair Value Hedge
FX & IR risk
INTEGRATED ANNUAL REPORT 2023
391
OTP BANK
IFRS REPORT (SEPARATE)
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 2023 (amounts in million currency) [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
FX risk
Fair Value Hedge
Other
Cash flow Hedge
Interest rate risk
Other fair Value Hedge
Interest rate risk
Cross currency interest rate swap
EUR/HUF
Notional
Average FX Rate
RON/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 Interest Rate
Interest rate swap
EUR
Notional
Average Interest Rate
-
-
-
-
-
-
-
-
-
-
-
-
-
175
356.12
-
-
-
-
-
357.16
-
-
-
-
-
250
359.11
575
73.75
-
-
143
357.16
778
-
-
(60)
3.54
1,167
383.36
1,250
74.94
4,500
2.43
-
-
-
28,027
2.46
(240)
2.61
1,592
1,825
4,500
143
778
28,027
-
-
-
-
-
-
-
-
-
-
-
(120)
2.42
(420)
INTEGRATED ANNUAL REPORT 2023
392
OTP BANK
IFRS REPORT (SEPARATE)
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 2022 (amounts in million currency)
Type of hedge
Type of risk
Type of instrument
Fair Value Hedge
Interest rate risk
Interest rate swap
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
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
JPY/HUF
Notional
Average FX Rate
USD/HUF
Notional
Average FX Rate
Interest rate swap
HUF
Notional
Interest rate swap
HUF
Notional
Average Interest Rate
-
-
-
-
-
-
-
-
-
(1.64%)
310.41
-
363.88
-
-
-
-
-
-
-
-
-
Fair Value Hedge
FX & IR risk
Fair Value Hedge
FX risk
Fair Value Hedge
Other
Cash flow Hedge
Interest rate risk
-
-
-
-
90
2.60%
-
-
1
(1.68%)
310.17
(10)
407.57
-
-
-
-
-7
323.77
-
-
101
0.24%
-
-
-
-
(64,875)
7.15%
30,300 (34,575)
1.40%
10
0.22%
29
2.35%
4,500
0.22%
50
0.05%
47
4.18%
161
166
4,500
-
-
2
(1.68%)
310.20
10
(1.71%)
309.74
11
(1.82%)
307.71
24
125
362.11
400
72.92
-
-
144
323.77
878
373.88
3,121
75.08
4,500
2.79
146
323.77
-
-
-
-
-
-
-
-
-
993
3,521
4,500
283
2,299
1,323
198
778
794
1.13
3,203
1.93
-
-
28,027
2.46
32,024
INTEGRATED ANNUAL REPORT 2023
393
OTP BANK
IFRS REPORT (SEPARATE)
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
Nominal
amount of the
hedging
instrument
Carrying amount of the hedging instrument for the year ended 31
Decembe 2023
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 2023
Fair value hedge
rate
Interest
swap
Cross-
currency swap FX & IR risk
Cross-
currency swap FX risk
Interest
swap
Other
rate
Interest rate risk 1,167,195
37,543
(33,055)
25,130
12,413
(7,925)
risk management
Derivative assets (liabilities) held for
6,394
-
(1,418)
997,565
10,173
(9,260)
778
108
-
-
-
-
Derivative assets (liabilities) held for
-
(1,418)
risk management
Derivative assets (liabilities) held for
10,173
(9,260)
risk management
108
Derivative assets (liabilities) held for
-
risk management
Cash flow hedge
Interest
swap
Other fair value hedge
Interest
swap
rate
Derivative assets (liabilities) held for
Interest rate risk
66,899
-
(9,935)
1,066
(1,066)
(8,869)
risk management
rate
Derivative assets (liabilities) held for
Interest rate risk
160,768
168
(119)
168
-
49
risk management
648
(893)
6,699
1
(84)
32
INTEGRATED ANNUAL REPORT 2023
394
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
c) Hedge accounting [continued]
Derivative financial instruments designated as hedge accounting as follows:
31 December 2023
Type of risk
Carrying amount of the hedged item
Assets
Liabilities
Accumulated amount of fair value hedge
adjustments on the hedged item included in the
carrying amount of the hedged item
Liabilities
Assets
Line item in the statement of financial position in
which the hedged item is included
Fair value hedge - micro
- Loans
- Loans
- Government bonds
- Government bonds
- Government bonds
- Other securities
- Other securities
- Other securities
- Loans
- Loans
- Government bonds
- Government bonds
- Other securities
- Customer deposits
Fair value hedge total
Interest rate risk
Interest rate risk
Interest rate risk
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
Other risk
26,839
-
164,229
148,843
-
3,828
-
-
3,266
949,447
10,986
49,378
-
-
1,356,816
-
143,857
-
-
-
-
457,027
219,989
-
-
-
-
897
157,543
979,313
(3,178)
-
7,808
20,391
-
203
-
-
(96)
-
-
-
-
-
25,128
-
Loans
Amounts due to banks and deposits from the National Bank
(11,249)
-
-
-
-
6,539
(157)
-
-
-
-
(39)
84
(4,822)
of Hungary and other banks
Securities at amortised cost
Securities at fair value through other comprehensive
income
Financial assets at fair value through profit or loss
Securities at fair value through other comprehensive
income
Liabilities from issued securities
Subordinated debts
Loans
Loans
Securities at amortised cost
Securities at fair value through other comprehensive
income
Liabilities from issued securities
Customer deposits
INTEGRATED ANNUAL REPORT 2023
395
OTP BANK
IFRS REPORT (SEPARATE)
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 2022
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 2022
Interest rate swap
Interest rate risk
444,627
58,260
(37,258)
30,938
27,322
(6,320)
management
Derivative assets (liabilities) held for risk
Cross-currency swap FX & IR risk
7,292
-
(2,679)
Cross-currency swap FX risk
FX swap
FX risk
Interest rate swap
Other
Cash flow hedge
813,430
290,982
2,299
21,685
(2,719)
743
121
(16,199)
(32)
-
-
-
-
Derivative assets (liabilities) held for risk
-
(2,679)
management
Derivative assets (liabilities) held for risk
21,685
(2,719)
management
743
121
Derivative assets (liabilities) held for risk
(16,199)
management
Derivative assets (liabilities) held for risk
(32)
management
Derivative assets (liabilities) held for risk
Interest rate swap
Interest rate risk
92,203
-
(25,325)
2,651
(2,651)
(22,674)
management
12,873
3
(6,087)
-
1
(101)
31 December 2022
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
Interest rate risk
Interest rate risk
Interest rate risk
64,596
-
14,814
- Government bonds
Interest rate risk
151,501
- Other securities
- Other securities
- Loans
- Loans
- Government bonds
- Government bonds
- Other securities
Fair value hedges total
Interest rate risk
FX & IR risk
FX risk
FX risk
FX risk
Other risk
44,508
-
9,099
716,841
12,797
113,806
-
1,127,962
-
143,208
-
-
-
25,563
-
-
-
-
2,299
171,070
(5,033)
-
(4,601)
(45,319)
(638)
-
503
-
-
-
-
(55,088)
-
Loans
Amounts due to banks and deposits from the National
(34,149)
Bank of Hungary and other banks
-
-
-
448
-
-
-
Securities at amortised cost
Securities at fair value through other comprehensive
income
Securities at fair value through other comprehensive
income
Liabilities from issued securities
Loans
Loans
Securities at amortised cost
Securities at fair value through other comprehensive
-
income
(218) Liabilities from issued securities
(33,919)
INTEGRATED ANNUAL REPORT 2023
396
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
c) Hedge accounting [continued]
For the year ended 31 December 2023 OCI related to cash flow hedges as follows:
Type of risk
Interest rate risk
Carrying amount of
the hedged item
Assets
28,027
Liabilities
-
Cash flow hedge reserve
Line item in the statement of
financial position in which the
hedged item is included
3,509 Loans at amortised cost
For the year ended 31 December 2022 OCI related to cash flow hedges as follows:
Type of risk
Interest rate risk
Carrying amount of
the hedged item
Assets
32,024
Liabilities
-
Cash flow hedge reserve
Line item in the statement of
financial position in which the
hedged item is included
9,210 Loans at amortised cost
For the year ended 31 December 2023 change in basis swap spread recognised in OCI related to fair value hedges
as follows:
Type of risk
FX risk
FX risk
Carrying amount of
the hedged item
Assets
949,447
10,986
960,433
Liabilities
-
-
-
Items recognised
in other
comprehensive
income
Change in the items
recognized in other
comprehensive income
Line item in the
statement of financial
position in which the
hedged item is included
167
(69)
98
530 Loans at amortised cost
- FVOCI securities
530
For the year ended 31 December 2022 change in basis swap spread recognised in OCI related to fair value hedges
as follows:
Type of risk
FX risk
FX risk
Carrying amount of
the hedged item
Assets
716,841
12,797
729,638
Liabilities
-
-
-
Items recognised
in other
comprehensive
income
Change in the items
recognized in other
comprehensive income
Line item in the
statement of financial
position in which the
hedged item is included
(363)
(52)
(415)
605 Loans at amortised cost
- FVOCI securities
605
Change in the fair value of the hedging instrument related to cash flow hedge
31 December 2023
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
Interest rate
swap
Interest rate
risk
(5,701)
(85)
Line item in profit or loss that
includes hedge ineffectiveness
Interest Income from Placements with
other banks, net of allowance for
placement losses
For the year ended 31 December 2023 there were no reclassification from cash flow hedge reserve to profit or loss
due to termination of hedging relationship.
31 December 2022
Type of
instrument
Type of risk
Interest rate
swap
Interest rate
risk
Change in the value of
the hedging instrument
recognised in cash flow
hedge reserve
Hedge ineffectiveness
recognised in profit or
loss
5,642
(101)
Line item in profit or loss that
includes hedge ineffectiveness
Interest Income from Placements with
other banks, net of allowance for
placement losses
For the year ended 31 December 2022 an amount HUF 227 million reclassified from cash flow hedge reserve to
profit or loss due to termination of hedging relationship.
INTEGRATED ANNUAL REPORT 2023
397
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
d)
Methods and significant assumptions used to determine fair value of the different classes of financial instruments:
Fair value classes
- 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,
- 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 2023
Total
Level 1
Level 2
Level 3
Loans mandatorily at fair value through profit or loss
Financial assets at fair value through profit or loss
from this: securities held for trading
from this: positive FVA of derivative financial
934,848
257,535
27,804
-
44,106
19,756
-
204,414
8,048
934,848
9,015
-
instruments designated as held for trading
196,799
433
196,366
-
from this: securities mandatorily measured at fair
value through profit or loss
32,932
23,917
Equity
instruments at
fair value
through other
comprehensive income
21,177
21,177
Securities at fair value through other comprehensive
-
-
9,015
-
income
538,350
229,331
278,146
30,873
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
21,628
1,773,538
-
294,614
21,628
504,188
-
974,736
19,786
-
-
19,786
183,565
19,107
27,423
249,881
451
19,107
179,414
-
3,700
-
-
19,558
27,423
206,837
-
23,486
INTEGRATED ANNUAL REPORT 2023
398
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
d) Fair value classes [continued]
As at 31 December 2022
Total
Level 1
Level 2
Level 3
Loans mandatorily at fair value through profit
or loss
Financial assets at fair value through profit or
loss
from this: securities held for trading
from this: positive FVA of derivative
financial instruments designated as held
for trading
from this: securities mandatorily measured
at fair value through profit or loss
Equity instruments at fair value through other
comprehensive income
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
793,242
410,012
74,795
-
-
793,242
41,534
20,197
359,104
54,598
304,719
213
304,506
30,498
21,124
17,922
17,922
-
-
779,253
194,756
557,082
27,415
47,220
2,047,649
-
254,212
47,220
963,406
-
830,031
16,576
373,401
24,596
-
-
16,576
1,886
24,596
370,865
-
9,374
-
-
9,374
-
650
-
-
instruments designated as hedge accounting
50,623
-
50,623
Financial liabilities measured at fair value
total
465,196
26,482
421,488
17,226
The fair value of investment properties is presented in Note 14 and they are categorized in level 3.
The fair value of investment in subsidiaries is presented in Note 12 and they are categorized in level 3.
Valuation techniques and sensitivity analysis on Level 2 instruments
The fair value of Level 2 instruments is calculated by discounting their expected interest and capital cash flows.
Discounting is done with the respective swap curve of each currency.
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.
INTEGRATED ANNUAL REPORT 2023
399
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 45:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
d) Fair value classes [continued]
Unobservable inputs used in measuring fair value
Class of financial instrument
Type of financial
instrument
Valuation technique
Significant unobservable input
Range of estimates for
unobservable input
Financial assets at fair value through
profit or loss
Loans mandatorily at fair value
through profit or loss
Loans mandatorily at fair value
through profit or loss
Loans mandatorily at fair value
through profit or loss
Loans mandatorily at fair value
through profit or loss
Securities at fair value through
other comprehensive income
VISA C shares
Market approach combined with
Discount applied due to illiquidity and
expert judgement
litigation
MFB refinancing loans
Discounted cash flow model
Probability of default
Subsidised personal loans Discounted cash flow model
Probability of default
Subsidised personal loans Discounted cash flow model
Operational costs
Subsidised personal loans Discounted cash flow model
Demography
FVOCI debt securities
Market approach combined with
expert judgement
Credit risk
+/-12%
+/- 20%
+/- 20%
+/- 20%
Change in the cash flow
estimation +/- 5%
+/-15%
INTEGRATED ANNUAL REPORT 2023
400
OTP BANK
IFRS REPORT (SEPARATE)
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 2023
VISA C shares
MFB refinanced loans
(asset)
Class of financial instrument
Financial assets at fair value
through profit or loss
Loans mandatorily at fair value
through profit or loss
Subsidised personal loans Loans mandatorily at fair value
through profit or loss
Subsidised personal loans Loans mandatorily at fair value
Subsidised personal loans Loans mandatorily at fair value
through profit or loss
Unobservable
inputs
Illiquidity
Probability of
default
Probability of
default
Operational
costs
Demography
Carrying
amount
Fair values
Effect on profit and loss
Favourable Unfavourable Favourable Unfavourable
1,808
2,024
1,590
19,154
19,499
18,809
217
345
(217)
(345)
911,190
913,292
909,097
2,102
(2,093)
911,190
916,712
905,728
5,522
(5,462)
Russian government bonds Securities at fair value through
other comprehensive income
Probability of
default
30,873
40,248
21,498
9,375
(9,375)
through profit or loss
911,190
911,939
910,577
749
(613)
31 December 2022
VISA C shares
MFB refinanced loans
(asset)
Class of financial instrument
Financial assets at fair value
through profit or loss
Loans mandatorily at fair value
through profit or loss
Subsidised personal loans Loans mandatorily at fair value
Subsidised personal loans Loans mandatorily at fair value
through profit or loss
Subsidised personal loans Loans mandatorily at fair value
through profit or loss
through profit or loss
Probability of
default
Probability of
default
Operational
costs
Demography
Russian government bonds Securities at fair value through
other comprehensive income
Probability of
default
Unobservable
inputs
Illiquidity
Carrying
amount
1,469
Fair values
Effect on profit and loss
Favourable Unfavourable Favourable Unfavourable
(238)
1,707
1,231
238
15,483
15,602
15,364
119
(119)
772,094
773,281
770,911
1,187
(1,183)
772,094
777,898
769,012
5,804
(3,082)
772,094
774,528
769,544
2,434
(2,550)
27,415
34,586
20,244
7,171
(7,171)
INTEGRATED ANNUAL REPORT 2023
401
OTP BANK
IFRS REPORT (SEPARATE)
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]
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 2023 and 31 December 2022 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 both in the current and the comparative period. According to the assumptions
used in comparative period 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.
For the year ended 31 December 2022 the Bank used a new and more complex model for cash flow calculations
of the subsidised personal loans. The new model uses more scenarios compared to the previous one. These
scenarios based on the above mentioned events (first second and third child births after signatory and breach of
conditions) and also the event of divorce. The model uses public statistical information to estimate the outcome of
these possible future events. The Bank calculated the favourable and unfavourable effects of using reasonably
possible alternative assumptions by modiying the demographical assumption of future child births by +/-5% as
one of the most significant unobservable input in the cash flow estimation.
The favourable and unfavourable effects of using reasonably possible alternative assumptions for the valuation of
FVOCI debt securities have been calculated by modifying the credit risk rate used for the valuation by +/-15% as
being the best estimates of the management as at 31 December 2023 and 31 December 2022 respectively.
INTEGRATED ANNUAL REPORT 2023
402
OTP BANK
IFRS REPORT (SEPARATE)
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 2023
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
Securities
at
comprehensive income
fair
value
through
other
Financial liabilities at fair value through profit or
loss
Total
Opening balance
Transfer to
Level 3
Change in FVA
due to credit
risk
Change in FVA
due to market
factors
Purchases/
Disbursement
Settlement/Sales Closing balance
793,242
9,374
(650)
27,415
(16,576)
812,805
-
-
-
-
-
(980)
93,257
103,725
(54,396)
934,848
-
-
1,423
-
443
(359)
(3,050)
2,035
(4,542)
87,341
-
-
-
-
-
-
-
103,725
1,332
(53,064)
9,015
(3,700)
30,873
(19,786)
951,250
Reconciliation of the opening and closing balances of Level 3 instruments for the year ended 31 December 2022
Opening
balance
Transfer to
Level 3
Change in FVA
due to credit
risk
Change in FVA
due to market
factors
Purchases/
Disbursement Settlement/Sales 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
Securities at fair value through other
comprehensive income
Financial liabilities at fair value through profit or
loss
Total
662,012
9,254
10,170
-
-
-
-
12,105
(20,133)
661,303
-
-
-
11,872
INTEGRATED ANNUAL REPORT 2023
11,872
(23,330)
182,259
(39,571)
793,242
-
-
-
(1,052)
1,172
(10,820)
15,310
1,934
(17,958)
-
-
-
-
-
-
183,431
1,623
(37,948)
9,374
(650)
27,415
(16,576)
812,805
403
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 46:
ASSETS CLASSIFIED AS HELD-FOR-SALE (in HUF mn)
The Bank has concluded a share sale and purchase agreement to sell its directly and indirectly owned 100%
shareholding in OTP Bank Romania S.A. to Banca Transilvania S.A. (hereinafter referred to as: BT). OTP Group
is also selling its 100%shareholdings in its other Romanian subsidiaries, OTP Leasing Romania IFN S.A. and OTP
Asset Management S.A.I. S.A. to BT under the transaction.
The total selling price is EUR 347.5 million from which EUR 335 million is related to OTP Bank Romania S.A.
Therefore impairment gain was recoreded in amount of HUF 41 billion in the Separate Statement of Profit or Loss
related to investment of OTP Bank Romania S.A., after that the carrying amount was reclassified to „Non-current
asset held for sale” in the Separate Statement of Financial Position.
The financial closing of the transaction is expected in 2024 subject to the necessary regulatory approvals.
NOTE 47:
SIGNIFICANT EVENTS DURING THE YEAR ENDED 31 DECEMBER 2023
1) Term Note Program
See details about the event in Note 20.
2) Purchase of the majority stake in the Uzbek Ipoteka Bank
See details about the event in Note 12.
3) Termination of financial closing of Nova KBM
See details about the event in Note 12.
4) Capital increase at OTP Mortgage Bank Ltd.
See details about the event in Note 12.
5) Capital increase at OTP Real Estate Ltd.
See details about the event in Note 12.
6) Significant regulatory changes in Hungary
About the prolongation of deadline of interest rate cap, amending the previously laid down methodology of
windfall tax calculation, the changes in savings and government bond markets, family support schemes, capital
regulation and mandatory minimum reserve requirements please see details in Note 4.
INTEGRATED ANNUAL REPORT 2023
404
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 47:
SIGNIFICANT EVENTS DURING THE YEAR ENDED 31 DECEMBER 2023
[continued]
7) 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 SOFR
LIBOR GBP
LIBOR JPY
LIBOR EUR
LIBOR CHF**
EONIA
SONIA
TONA
EURIBOR
SARON
€STR
Alternative Reference Rates
* The following USD LIBOR settings will be terminated after December 31, 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).
Amounts effected by IBOR reform as at 31 December 2023
Reference rate
Type of the contract
Nominal value of the
contract
Pieces of contracts
USD LIBOR
Other LIBOR
Total
Loan
Bonds (assets)
14,592
4,853
19,445
255
1
256
The above LIBOR-based amounts outstanding as at 31 December 2023 will be managed at the first interest period
therefore they do not cause a risk to the Bank or to the customers.
INTEGRATED ANNUAL REPORT 2023
405
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 47:
SIGNIFICANT EVENTS DURING THE YEAR ENDED 31 DECEMBER 2023
[continued]
8) Risk relating to the Russian-Ukrainian armed conflict
On 24 February 2022 Russia launched a military operation against Ukraine which is still ongoing at the date of
this Report. Until now many countries, as well as the European Union imposed sanctions due to the armed conflict
on Russia and Russian businesses and citizens. Russia responded to these sanctions with similar measures.
The armed conflict and the international sanctions influence the business and economic activities significantly all
around the world. There are a number of factors associated with the Russian-Ukrainian armed conflict and the
international sanctions as well as their 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 armed conflict and the international sanctions cause significant economic damage to the affected parties and
in addition they cause disruptions in the global economic processes, of which the precise consequences (inter alia
the effects on energy and grain markets, the global transport routes and international trade as well as tourism) are
difficult to be estimated at the moment.
It remains unclear how this will evolve through 2022 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. 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 Russian-Ukrainian armed conflict and the international sanctions, 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.
INTEGRATED ANNUAL REPORT 2023
406
OTP BANK
IFRS REPORT (SEPARATE)
NOTE 48:
SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD
Summary of economic policy measures made and other relevant regulatory changes as post-balance sheet events
Post-balance sheet events cover the period until 20 February 2024.
Hungary
On 23 January 2024 OTP Bank announced that notes were issued with a value date of 31 January 2024, in the
aggregate nominal amount of EUR 600 million. The 5 years, Non-Call 4 years Senior Preferred Notes were priced
on 23 January 2024.
• On 26 January 2024 Scope Ratings affirmed Hungary's long-term local- and foreign-currency issuer and senior
unsecured debt ratings at ‘BBB’ with stable outlook.
• On 29 January 2024 the Ministry for National Economy announced that following discussions between the
Government and the Banking Association, based on the banks' voluntary commitment, from 1 February to 1 May
2024, the interest margin above BUBOR rate for newly contracted Hungarian Forint-based, variable-rate corporate
loan contracts (regardless of the purpose of the loan) will be 0%, and the margin will remain at 0% for 6 months
from the date of disbursement of the loan, after which it may return to the normal level. At the same time, the
Government indicated that the rate cap on outstanding variable rate MSE loans, which expires on 1 April 2024
according to the current legislation, will not be further extended.
• On 30 January 2024 the National Bank of Hungary cut its key policy rate by 75 bps to 10.0%.
• On 2 February 2024 OTP Bank announced that it decided to terminate the project aiming at establishing a consumer
finance joint venture company with its partners in China with a 15%shareholding, as the condition precedents were
not fulfilled until the pertaining contractual deadlines.
• On 9 February 2024 OTP Bank announced that it concluded a share sale and purchase agreement to sell its directly
and indirectly owned 100% shareholding in OTP Bank Romania S.A. to Banca Transilvania S.A. (‘BT’). OTP
Group is also selling its 100% shareholdings in its other Romanian subsidiaries, OTP Leasing Romania IFN S.A.
and OTP Asset Management S.A.I. S.A. to BT under the transaction. The financial closing of the transaction is
expected in 2024 subject to the necessary regulatory approvals.
• On 12 February 2024 OTP Bank received a single permission from the Hungarian National Bank for the repurchase
of treasury shares, accordingly the Bank is entitled to repurchase its own shares in the amount of HUF 60 billion
until 31 December 2024. The total amount specified in the permission shall immediately be deducted from the
own funds in accordance with the law.
• Capital increase at Merkantil Bank Ltd. See details about the event in Note 12.
• Capital increase at Monicomp Ltd. See details about the event in Note 12.
• Capital increase at Ipotek Bank. See details about the event in Note 12.
INTEGRATED ANNUAL REPORT 2023
407
CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS (2023)
INTEGRATED ANNUAL REPORT 2023
408
OTP BANK
IFRS REPORT (CONSOLIDATED)
OTP BANK PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2023
(in HUF mn)
Note
31/12/2023
31/12/2022
Cash, amounts due from banks and balances with the National Banks
Placements with other banks
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
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
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
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
Budapest, 20 March 2024
5.
6.
7.
8.
9.
10.
11.
11.
36.
12.
13.
13.
36.
14.
15.
35.
35.
16.
50.
17.
18.
19.
20.
21.
22.
23.
36.
35.
35.
24.
24.
25.
50.
26.
27.
28.
29.
7,125,049
1,566,998
223,884
288,885
1,601,461
5,249,272
17,676,533
1,400,485
1,289,712
96,110
523,124
291,358
74,698
53,381
41,967
55,691
7,773
509,430
1,533,333
39,609,144
1,940,862
126,237
70,707
28,332,431
2,095,548
140,488
63,899
76,313
28,663
69,948
121,119
745,820
562,396
1,139,920
35,514,351
28,000
4,179,322
(120,489)
4,086,833
7,960
4,094,793
39,609,144
4,221,392
1,351,082
41,009
436,387
1,739,603
4,891,938
16,094,458
1,247,414
1,298,752
73,849
464,469
237,031
58,937
47,452
48,247
75,421
5,650
471,119
-
32,804,210
1,463,158
217,369
54,191
25,188,805
870,682
385,747
27,949
63,778
40,094
28,866
131,621
707,654
301,984
-
29,481,898
28,000
3,395,215
(106,862)
3,316,353
5,959
3,322,312
32,804,210
Dr. Sándor Csányi
Chairman and Chief Executive Officer
László Wolf
Deputy Chief Executive Officer
INTEGRATED ANNUAL REPORT 2023
409
OTP BANK
IFRS REPORT (CONSOLIDATED)
OTP BANK PLC
CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE
YEAR ENDED 31 DECEMBER 2023
(in HUF mn)
Note
Year ended
31 December
2023
Year ended
31 December
2022
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, amounts due from banks
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
Release of loss allowance / (Loss allowance) on securities
at fair value through other comprehensive income and
on securities at amortized cost
Release of provision / (Provision) for commitments and guarantees given
Release of impairment / (Impairment) of assets subject to
operating lease and of investment properties
Risk cost total
NET INTEREST INCOME AFTER RISK COST
Loss 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
Gain / (Loss) on securities, net
Fair value adjustment on financial instruments
measured at fair value through profit or loss
Net results on derivative instruments and hedge relationships
Profit from associates
Goodwill impairment
Other operating income
Other operating expenses
Net operating income / (expense)
Personnel expenses
Depreciation and amortization
Other general expenses
Other administrative expenses
PROFIT BEFORE INCOME TAX
Income tax expense
PROFIT AFTER INCOME TAX FOR THE PERIOD
FROM CONTINUING OPERATIONS
30.
30.
31.
31.
31.
31.
31.
33.
4.
32.
32.
33.
33.
33.
33.
8., 9.
13.
34.
34.
34.
13.
34.
35.
2,314,677
633,587
2,948,264
(1,561,558)
1,386,706
1,425,859
475,547
1,901,406
(874,538)
1,026,868
(109,223)
(145,159)
(91)
13,346
8,831
19,870
(60,761)
(5,917)
1,332
(79,281)
1,307,425
(17,182)
(38,141)
861,309
(169,316)
691,993
13,827
7,283
94,613
(12,760)
14,766
-
324,266
(110,570)
331,425
(478,696)
(111,996)
(483,645)
(1,074,337)
1,201,183
(189,478)
(1,204)
(199,695)
827,173
(1,573)
(39,997)
716,866
(132,375)
584,491
(16,302)
(4,505)
(4,044)
16,360
14,618
(67,715)
124,930
(125,742)
(62,400)
(377,728)
(101,125)
(451,163)
(930,016)
377,678
(58,600)
1,011,705
319,078
INTEGRATED ANNUAL REPORT 2023
410
OTP BANK
IFRS REPORT (CONSOLIDATED)
OTP BANK PLC
CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR
ENDED 31 DECEMBER 2023 [continued]
(in HUF mn)
PROFIT AFTER INCOME TAX FOR THE PERIOD
FROM CONTINUING OPERATIONS
DISCOUNTINUED OPERATIONS
Gains from disposal of subsidiary classified as held for sale
Net (Loss) / Gain from discontinued operations
PROFIT AFTER INCOME TAX FROM CONTINUING AND
DISCOUNTINUED OPERATION
From this, attributable to:
Non-controlling interest
Owners of the company
Earnings per share (in HUF)
From continuing operations
Basic
Diluted
From continuing and discontinued operations
Basic
Diluted
Note
Year ended
31 December
2023
Year ended
31 December
2022
1,011,705
319,078
-
(21,246)
11,444
16,559
990,459
347,081
1,801
988,658
727
346,354
3,774
3,772
3,695
3,693
1,184
1,184
1,289
1,288
50.
50.
29.
46.
46.
46.
46.
INTEGRATED ANNUAL REPORT 2023
411
OTP BANK
IFRS REPORT (CONSOLIDATED)
OTP BANK PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE
YEAR ENDED 31 DECEMBER 2023
(in HUF mn)
PROFIT AFTER INCOME TAX 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
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 gain related to
employee benefits
Deferred tax related to change of actuarial gain related to
employee benefits
Other comprehensive income
TOTAL COMPREHENSIVE INCOME
From this, attributable to:
Non-controlling interest
Owners of the company
Note
Year ended
31 December
2023
Year ended
31 December
2022
990,459
347,081
27.
27.
27.
27.
27.
27.
27.
27.
89,734
(134,692)
(12,779)
(2,707)
(200,928)
10,816
-
179,623
2,411
5,780
(947)
(1,282)
(392)
1,059
(8)
(43)
(125,616)
61,261
864,843
408,342
1,129
863,714
647
407,695
INTEGRATED ANNUAL REPORT 2023
412
OTP BANK
IFRS REPORT (CONSOLIDATED)
OTP BANK PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2023
(in HUF mn)
Note
Share
capital
Capital
reserve
Retained earnings
and other reserves1
Treasury
shares
Total equity
attributable to
shareholders
Non-controlling
interest
Total
equity
Balance as at 1 January 2022
Profit after income tax for the period
Other Comprehensive Income
Total comprehensive income
Purchasing of non-controlling interest
Decrease due to business combination
Share-based payment
Paid dividends for years 2019, 2020, 2021
Adjustment related to share-based payment
Sale of Treasury shares
Treasury shares - loss on sale
Treasury shares - acquisition
Balance as at 31 December 2022
40.
27.
28.
28.
28.
28,000
-
-
-
-
-
-
-
-
-
-
-
28,000
52
-
-
-
-
-
-
-
-
-
-
-
52
3,109,457
346,354
61,341
407,695
-
(1,321)
2,948
(120,248)
4,066
-
(7,434)
-
3,395,163
(106,941)
-
-
-
-
-
-
-
-
16,347
-
(16,268)
(106,862)
3,030,568
346,354
61,341
407,695
-
(1,321)
2,948
(120,248)
4,066
16,347
(7,434)
(16,268)
3,316,353
6,198
727
(80)
647
(886)
-
-
-
-
-
-
-
5,959
3,036,766
347,081
61,261
408,342
(886)
(1,321)
2,948
(120,248)
4,066
16,347
(7,434)
(16,268)
3,322,312
Note
Share
capital
Capital
reserve
Retained earnings
and other reserves1
Treasury
shares
Total equity
attributable to
shareholders
Non-controlling
interest
Total
equity
Balance as at 1 January 2023
Profit after income tax for the period
Other Comprehensive Income
Total comprehensive income
Purchasing of non-controlling interest
Increase due to business combination
Dividend paid to non-controlling interest
Share-based payment
Paid dividends for year 2022
Adjustment related to share-based payment
Sale of Treasury shares
Treasury shares - loss on sale
Treasury shares - acquisition
Balance as at 31 December 2023
1 See details in Note 27.
29.
40.
27.
28.
28.
28.
28,000
-
-
-
-
-
-
-
-
-
-
-
28,000
52
-
-
-
-
-
-
-
-
-
-
-
52
3,395,163
988,658
(124,944)
863,714
-
-
3,292
(84,000)
3,836
-
(2,735)
-
4,179,270
(106,862)
-
-
-
-
-
-
-
-
26,191
-
(39,818)
(120,489)
3,316,353
988,658
(124,944)
863,714
-
-
-
3,292
(84,000)
3,836
26,191
(2,735)
(39,818)
4,086,833
5,959
1,801
(672)
1,129
(159)
3,149
(2,118)
-
-
-
-
-
-
7,960
3,322,312
990,459
(125,616)
864,843
(159)
3,149
(2,118)
3,292
(84,000)
3,836
26,191
(2,735)
(39,818)
4,094,793
INTEGRATED ANNUAL REPORT 2023
413
OTP BANK
IFRS REPORT (CONSOLIDATED)
OTP BANK PLC
CONSOLIDATED STATEMENT OF CASH-FLOWS FOR THE YEAR
ENDED 31 DECEMBER 2023
(in HUF mn)
OPERATING ACTIVITIES
Profit after income tax for the period
(attributable to the owners of the company)
Net accrued interest
Dividend income
Depreciation and amortization
Goodwill impairment
(Release of loss allowance) / Loss allowance on securities
Loss allowance on loans and placements,
amounts due from banks and on repo receivables
Loss allowance on investments
(Release of loss allowance) / Loss allowance on investment properties
Impairment on tangible and intangible assets
Loss allowance on other assets
(Release of provision) / Provision on off-balance sheet
commitments and contingent liabilities
Share-based payment
Unrealized gains on fair value change of financial
instrument at fair value through profit or loss
Non-realized foreign exchange loss / (gain)
Loss / (Gain) from sale of tangible and intangible assets
Unrealized (gains) / losses on fair value change of
derivative financial instruments
Negative goodwill
Net changes in assets and liabilities in operating activities
Net decrease / (increase) in securities
at fair value through profit or loss
Net increase in compulsory reserves
at the National Banks
(Increase) / Decrease 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 decrease / (increase) in other assets
before loss allowance
Net decrease 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
Note
Year ended
31 December
2023
Year ended
31 December
2022
988,658
4,360
(14,787)
123,327
-
(9,066)
116,002
22
(1,362)
5,824
11,120
(10,052)
3,292
(89,577)
6,945
595
346,354
45,499
(13,800)
112,749
67,715
60,774
155,681
901
1,326
468
15,973
8,589
2,948
(84,641)
(296,986)
(1,281)
(81,451)
(198,361)
81,440
(3,784)
120,890
(133,548)
(797,695)
(769,233)
(326,379)
412,510
(28,934)
(2,733,463)
95,512
(205,916)
27.
13.
13.
9.,10.
5-7., 11.
12.
14.
13.
16.
24.
40.
33.
33.
13.
33.
42.
8.
5.
6.
11.
16.
17., 18.
(205,101)
(43,747)
19.
20.
36.
24.
35.
11,974
846,428
(3,099)
40,695
(152,201)
457,579
11,073
3,787,573
(2,386)
400,077
(74,411)
1,148,454
INTEGRATED ANNUAL REPORT 2023
414
OTP BANK
IFRS REPORT (CONSOLIDATED)
OTP BANK PLC
CONSOLIDATED STATEMENT OF CASH-FLOWS FOR THE YEAR
ENDED 31 DECEMBER 2023
(in HUF mn)
[continued]
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 cash paid for acquisition
Net Cash Provided by / (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
Sale of Treasury shares
Purchase of Treasury shares
Dividends paid
Net Cash Provided by Financing Activities
TOTAL NET CASH 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
Note
Year ended
31 December
2023
Year ended
31 December
2022
9.
9.
12.
12.
27.
10.
10.
13.
13.
14.
14.
42.
21.
21.
36.
25.
25.
28.
28.
27.
5.
(871,512)
(1,129,729)
1,176,467
(13,910)
-
15,642
(1,037,889)
1,329,137
(300,002)
139,155
(10,363)
14,782
577,464
1,018,971
1,090,039
(172,413)
(32,567)
290,159
(49,445)
23,456
(39,818)
(80,159)
1,029,252
1,529,538
(38,053)
30,525
13,800
(32,573,247)
31,625,182
(275,017)
76,136
(20,935)
1,127
38,889
(721,784)
569,839
(133,712)
(24,632)
6,418
(4,646)
8,913
(16,268)
(116,147)
289,765
2,505,802
716,435
2,597,688
(200,253)
2,505,802
(43,895)
1,701,564
179,689
716,435
-
5.
4,859,342
2,597,688
INTEGRATED ANNUAL REPORT 2023
415
OTP BANK
IFRS REPORT (CONSOLIDATED)
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 limited liability company. The Bank’s registered office address is 16,
Nador Street, Budapest 1051, Hungary.
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: Zsolt Kónya,
registration number: 007383.
These Consolidated Financial Statements were approved by the Board of Directors and authorised for issue on 20
March 2024. 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
31/12/2023
31/12/2022
99%
1%
-
100%
99%
1%
-
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 1,439 branches in the following countries Hungary,
Bulgaria, Romania (classified as discontinued operation), Serbia, Croatia, Russia, Ukraine, Albania, Montenegro,
Moldova, Slovenia and Uzbekistan, as well as provides other services in the Netherlands 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 (with employed
agents):
The number of employees at the Group
The average number of employees at the Group
31/12/2023
31/12/2022
41,547
40,237
35,976
36,168
INTEGRATED ANNUAL REPORT 2023
416
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 1: ORGANIZATION AND BASIS OF CONSOLIDATED FINANCIAL STATEMENTS
[continued]
1.2.
Basis of Accounting
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.
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.
The accompanying Notes to these Consolidated Financial Statements form an integral part of these Consolidated
Financial Statements prepared in accordance with International Financial Reporting Standards as adopted by EU.
1.2.1. The effect of adopting new and revised International Financial Reporting Standards effective from
1 January 2023
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 IAS 1 “Presentation of Financial Statements” and IFRS Practice Statement 2 –
Disclosure of Accounting policies – adopted by the EU on 2 March 2022 (effective for annual periods
beginning on or after 1 January 2023; earlier application permitted):
o The amendments provide guidance on the application of materiality judgements to accounting policy
disclosures. In particular, the amendments to IAS 1 replace the requirement to disclose ‘significant’
accounting policies with a requirement to disclose ‘material’ accounting policies. Also, guidance and
illustrative examples are added in the Practice Statement to assist in the application of the materiality
concept when making judgements about accounting policy disclosures.
• Amendments to IAS 8 “Accounting policies, Changes in Accounting Estimates and Errors” –
Definition of Accounting Estimates – adopted in the EU on 2 March 2022 (effective for annual periods
beginning on or after 1 January 2023 with earlier application permitted and apply to changes in accounting
policies and changes in accounting estimates that occur on or after the start of that period):
o The amendments introduce a new definition of accounting estimates, defined as monetary amounts in
financial statements that are subject to measurement uncertainty, if they do not result from a correction
of prior period error. Also, the amendments clarify what changes in accounting estimates are and how
these differ from changes in accounting policies and corrections of errors.
• Amendments to IFRS 17 “Insurance Contracts” – adopted by the EU on 19 November 2021 (effective
for annual periods beginning on or after 1 January 2023). IFRS 17 is not material in case of these
Consolidated Financial Statements. This is a comprehensive new accounting standard for insurance
contracts, covering recognition and measurement, presentation and disclosure. IFRS 17 applies to all types
of insurance contracts issued, as well as to certain guarantees and financial instruments with discretional
participation contracts.
INTEGRATED ANNUAL REPORT 2023
417
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 1: ORGANIZATION AND BASIS OF CONSOLIDATED FINANCIAL STATEMENTS
[continued]
1.2. Basis of Accounting [continued]
1.2.1. The effect of adopting new and revised International Financial Reporting Standards effective from
1 January 2023 [continued]
• Amendments to IFRS 17 “Insurance Contracts” – Initial application of IFRS 17 and IFRS 9 –
Comparative Information – adopted by the EU on 8 September 2022 (effective date for annual periods
beginning on or after 1 January 2023 with earlier application permitted, provided the entity also applies
IFRS 9 Financial Instruments on or before the date it first applies IFRS 17). This is a comprehensive new
accounting standard for insurance contracts, covering recognition and measurement, presentation and
disclosure. IFRS 17 applies to all types of insurance contracts issued, as well as to certain guarantees and
financial instruments with discretional participation contracts. IFRS 17 is not material in case of these
Consolidated Financial Statements.
• Amendments to IAS 12 “Income Taxes” – Deferred Tax related to Assets and Liabilities arising from
a Single Transaction – adopted by the EU on 11 August 2022 (effective for annual periods beginning on
or after 1 January 2023; earlier application permitted):
o The amendments narrow the scope of and provide further clarity on the initial recognition exception under
IAS 12 and specify how companies should account for deferred tax related to assets and liabilities arising
from a single transaction, such as leases and decommissioning obligations. The amendments clarify that
where payments that settle a liability are deductible for tax purposes, it is a matter of judgement, having
considered the applicable tax law, whether such deductions are attributable for tax purposes to the liability
or to the related asset component. Under the amendments, the initial recognition exception does not apply
to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences.
It only applies if the recognition of a lease asset and lease liability (or decommissioning liability and
decommissioning asset component) give rise to taxable and deductible temporary differences that are not
equal.
• Amendments to IAS 12 “Income taxes” – International Tax Reform - Pillar Two Model Rules (effective
immediately upon issuance, but certain disclosure requirements are effective later). The Organization for
Economic Co-operation and Development’s (OECD) published the Pillar Two model rules in December 2021
to ensure that large multinational companies would be subject to a minimum 15% tax rate. On 23 May 2023,
the IASB issued International Tax Reform—Pillar Two Model Rules – Amendments to IAS 12.
o The amendments introduce a mandatory temporary exception to the accounting for deferred taxes arising
from the jurisdictional implementation of the Pillar Two model rules and disclosure requirements for
affected entities on the potential exposure to Pillar Two income taxes. The Amendments require, for
periods in which Pillar Two legislation is (substantively) enacted but not yet effective, disclosure of
known or reasonably estimable information that helps users of financial statements understand the entity’s
exposure arising from Pillar Two income taxes. To comply with these requirements, an entity is required
to disclose qualitative and quantitative information about its exposure to Pillar Two income taxes at the
end of the reporting period. The disclosure of the current tax expense related to Pillar Two income taxes
and the disclosures in relation to periods before the legislation is effective are required for annual
reporting periods beginning on or after 1 January 2023, but are not required for any interim period ending
on or before 31 December 2023.
The adoption of these amendments to the existing standards has not led to any material changes in these
Consolidated Financial Statements.
INTEGRATED ANNUAL REPORT 2023
418
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 1: ORGANIZATION AND BASIS OF CONSOLIDATED FINANCIAL STATEMENTS
[continued]
1.2. Basis of Accounting [continued]
1.2.2. New and revised Standards and Interpretations issued by IASB and adopted by the EU but not yet
effective
• 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 2024; earlier application
permitted and will need to be applied retrospectively in accordance with IAS 8):
o The objective of the amendments is to clarify the principles in IAS 1 for the classification of liabilities
as either current or non-current. The amendments clarify the meaning of a right to defer settlement, the
requirement for this right to exist at the end of the reporting period, that management intent does not
affect current or non-current classification, that options by the counterparty that could result in
settlement by the transfer of the entity’s own equity instruments do not affect current or non-current
classification. Also, the amendments specify that only covenants with which an entity must comply on
or before the reporting date will affect a liability’s classification. Additional disclosures are also required
for non-current liabilities arising from loan arrangements that are subject to covenants to be complied
with within twelve months after the reporting period.
• Amendments to IFRS 16 “Leases” – Lease Liability in a Sale and Leaseback (effective for annual
periods beginning on or after 1 January 2024; earlier application permitted):
o The amendments are intended to improve the requirements that a seller-lessee uses in measuring the
lease liability arising in a sale and leaseback transaction in IFRS 16, while it does not change the
accounting for leases unrelated to sale and leaseback transactions. In particular, the seller-lessee
determines ‘lease payments’ or ‘revised lease payments’ in such a way that the seller-lessee would not
recognize any amount of the gain or loss that relates to the right of use it retains. Applying these
requirements does not prevent the seller-lessee from recognizing, in profit or loss, any gain or loss
relating to the partial or full termination of a lease. A seller-lessee applies the amendment retrospectively
in accordance with IAS 8 to sale and leaseback transactions entered into after the date of initial
application, being the beginning of the annual reporting period in which an entity first applied IFRS 16.
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 date of publication of these Consolidated
Financial Statements:
• Amendments to IAS 7 “Statement of Cash Flows” and IFRS 7 “Financial Instruments Disclosure -
Supplier Finance Arrangements” (effective for annual reporting periods beginning on or after January 1,
2024, with earlier application permitted):
o The amendments supplement requirements already in IFRS and require an entity to disclose the terms
and conditions of supplier finance arrangements. Additionally, entities are required to disclose at the
beginning and end of reporting period the carrying amounts of supplier finance arrangement financial
liabilities and the line items in which those liabilities are presented as well as the carrying amounts of
financial liabilities and line items, for which the finance providers have already settled the corresponding
trade payables. Entities should also disclose the type and effect of non-cash changes in the carrying
amounts of supplier finance arrangement financial liabilities, which prevent the carrying amounts of the
financial liabilities from being comparable. Furthermore, the amendments require an entity to disclose
at the beginning and end of the reporting period the range of payment due dates for financial liabilities
owed to the finance providers and for comparable trade payables that are not part of those arrangements.
INTEGRATED ANNUAL REPORT 2023
419
OTP BANK
IFRS REPORT (CONSOLIDATED)
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 [continued]
• Amendments to IAS 21 “The Effects of Changes in Foreign Exchange Rates” – Lack of
Exchangeability (effective for annual reporting periods beginning on or after January 1, 2025, with earlier
application permitted):
o The amendments specify how an entity should assess whether a currency is exchangeable and how it
should determine a spot exchange rate when exchangeability is lacking. A currency is considered to be
exchangeable into another currency when an entity is able to obtain the other currency within a time
frame that allows for a normal administrative delay and through a market or exchange mechanism in
which an exchange transaction would create enforceable rights and obligations. If a currency is not
exchangeable into another currency, an entity is required to estimate the spot exchange rate at the
measurement date. An entity’s objective in estimating the spot exchange rate is to reflect the rate at
which an orderly exchange transaction would take place at the measurement date between market
participants under prevailing economic conditions. The amendments note that an entity can use an
observable exchange rate without adjustment or another estimation technique.
• 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):
o The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those
in IAS 28, in dealing with the sale or contribution of assets between an investor and its associate or joint
venture. The main consequence of the amendments is that a full gain or loss is recognized when a
transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is
recognized when a transaction involves assets that do not constitute a business, even if these assets are
housed in a subsidiary. In December 2015 the IASB postponed the effective date of this amendment
indefinitely pending the outcome of its research project on the equity method of accounting.
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.
INTEGRATED ANNUAL REPORT 2023
420
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES
Material 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 2.5.5. 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.
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
2.5.4. 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).
INTEGRATED ANNUAL REPORT 2023
421
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.2. Foreign currency translation [continued]
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.
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 43.
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.
INTEGRATED ANNUAL REPORT 2023
422
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.4. Accounting for acquisition [continued]
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”.
The Group measures non-controlling interests that are present ownership interests and entitle their holders to a
proportionate share of the subsidiaries’ net assets in the event of liquidation at cost and are disclosed among equity.
In case of equity investments measured at fair value through profit or loss in line with IFRS 9, non-controlling
interests are measured at fair value to avoid any accounting mismatch. These types of non-controlling interests are
disclosed as financial liabilities designated at fair value through profit or loss.
2.5.
Financial assets
2.5.1. Business model and SPPI test
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.
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.
INTEGRATED ANNUAL REPORT 2023
423
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.5. Financial assets [continued]
2.5.1. Business model and SPPI test [continued]
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.
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.
2.5.2. 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.
Such securities comprise mainly securities issued by the Hungarian and foreign Governments, corporate bonds,
mortgage bonds, interest-bearing and discounted treasury bills.
2.5.3. Financial assets at fair value through profit or loss
2.5.3.1. 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.
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.
2.5.3.2. 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 uses fair value designation 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. The Group
currently doesn’t apply this method.
INTEGRATED ANNUAL REPORT 2023
424
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.5. Financial assets [continued]
2.5.3. Financial assets at fair value through profit or loss [continued]
2.5.3.3. 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 (it is the so-called economic hedge, accounting hedge is described
later).
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.
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.
INTEGRATED ANNUAL REPORT 2023
425
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.5. Financial assets [continued]
2.5.3. Financial assets at fair value through profit or loss [continued]
2.5.3.3. Derivative financial instruments [continued]
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.
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.
2.5.4. 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. In the case of a financial instrument measured at amortised cost the Group recognises the
hedging gain or loss on the hedged item as the modification of its carrying amount and it is recognised in profit or
loss. These adjustments of the carrying amount are amortised to the profit or loss using the effective interest rate
method. The Group starts the amortisation when the hedged item is no longer adjusted by the hedging gains or
losses. If the hedged item is derecognised, the Group recognises the unamortised fair value in profit or loss
immediately. For fair value hedges inefficiencies and the net revaluation of hedged and hedging item are
recognized in the Net results on derivative instruments and hedge relationships.
The Group implemented hedge accounting rules prescribed by IFRS 9 in 2018. For further details please see Note
48.3.
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.
INTEGRATED ANNUAL REPORT 2023
426
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.5. Financial assets [continued]
2.5.4. Hedge accounting [continued]
Derivative financial instruments designated as cash-flow hedge [continued]
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 or
terminated. When the Group discontinues hedge accounting to a cash-flow hedge the amount in the cash flow
hedge reserve is reclassified to the profit or loss if the hedged future cash flows are no longer expected to occur.
If the hedged future cash flows are still expected to occur, the amount remains in the cashflow hedge reserve and
reclassified to the profit and loss only when the future cash flows occur.
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.
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. The Group
does not intend to take foreign currency risks from open foreign currency position therefore the Group uses net
investment hedge in foreign operations to hedge the foreign currency risk arising from the net assets of subsidiaries
with EUR functional currency.
2.5.5. 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.
2.5.6. 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 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.
The separation rules for embedded derivatives are only relevant for financial liabilities.
INTEGRATED ANNUAL REPORT 2023
427
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.5. Financial assets [continued]
2.5.7. 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.
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, interest-
bearing Treasury bills, securities issued by the NBH and other securities.
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 as contingent consideration 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 through other comprehensive income” option is based only on direct decision of
management of the Group.
2.5.8. 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.
INTEGRATED ANNUAL REPORT 2023
428
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.5. Financial assets [continued]
2.5.8. Loans, placements with other banks, repo receivables and loss allowance for loan and placements
and repo receivable losses [continued]
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, the
subsequent measurement of these loans is under IFRS 9.
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. Subsequent recoveries for loans
previously written-off partially or fully, which may have been derecognized from the books with no reasonable
expectations for the recovery 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.
INTEGRATED ANNUAL REPORT 2023
429
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.5. Financial assets [continued]
2.5.9. 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 the
followings:
- merging several debts into a single debt, or one single debt splitting into several tranches,
- change of currency,
- change in counterparty,
- failing SPPI test after modification,
- interest rate change (fixed to floating or floating to fixed),
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 of a financial asset, 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.
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.
2.5.10. 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 Group’s books.
INTEGRATED ANNUAL REPORT 2023
430
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.6.
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 evidence) 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 is 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.
The default occurs when either or both of the following events have taken place:
• objective criterion meaning that the credit obligation of the client is overdue exceeding the materiality
threshold for more than 90 consecutive days (90+ default DPD), or the obligor has breached the limit of the
overdraft with an amount exceeding the materiality threshold for more than 90 consecutive days (90+
default DPD), or
• probability criterion meaning the probability that the obligor will be unable to pay its credit obligations in
full (UTP= Unlikely to Pay). The following conditions indicate the occurrence of the probability criterion:
specific credit risk adjustment, sell of credit obligation with significant loss, distressed restructuring,
termination of the contract on the initiative of the Bank, Bankruptcy, liquidation, personal bankruptcy,
forced deleted status.
Previously described conditions should result in default status mandatorily. Moreover, during the individual
expert-based assessment the client’s default status shall be established if in the specific case the default can be
justified on subjective basis. The default status should be terminated if in the last 3 months no other default criterion
exists and the condition (either probability criterion or objective criterion) that resulted in the default status ceased
at least 3 months ago.
The expected loss calculation should be forward looking. Available forward-looking information has to be
included in the parameter estimation by using different scenarios, including forecasts of future economic
conditions. The determination of probability-weighted forward-looking scenarios are based on the OTP Group’
macro model. In general, there are two crisis scenarios (4-5), and three non-crisis scenarios (1-3) but the calculation
of impairment should be based on at least two scenarios in the OTP Group. The macro conditioning is performed
by Vasicek-model, which captures the relationship between point-in-time (PiT) and through-the-cycle (TTC) PD.
The Vasicek PD transformation can also be used to estimate the PIT PDs of the buckets. The required parameters
(such as correlation coefficient and macro condition parameter) can be derived from the OTP’s macro model.
In the collective provisioning methodology credit risk and the change of credit risk can be correctly captured by
understanding the risk characteristics of the portfolio. At portfolio segmentation, setting the segments is a key
element of the provisioning calculation and requires the extensive knowledge of the portfolio. The segmentation
is expected to stay stable from month to month. The segmentation must be performed separately for each
parameter, since in each case different factors may have relevance.
The estimation of one-year and lifetime probability of default (PD) of collectively assessed exposures is performed
via transition matrices. The assets should be allocated to groups representing similar credit risk based on major
credit risk characteristics and their capability to fulfil contractual obligations. The mandatory variables of the group
level assessment procedure are payment delay, deal/client rating, the restructured flag, the default status and
product type. Further segmentation is advisable in case significant differences are observed in probability of
default. Transition matrices should be determined for each portfolio segment separately. The Group model handles
healing (from default) rate in the PD parameter, thus the calculated probabilities should be reduced by this rate.
INTEGRATED ANNUAL REPORT 2023
431
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.6. Loss allowance [continued]
Two different methods are applied in OTP Group for LGD parameter calculation: Retail mortgage loans and non-
retail portfolios (MSE and Wholesale) that are significantly secured by mortgage: modified LGD methodology
based on the Asset Quality Review (AQR) – the primary source of the recovery the collateral itself but cash
recovery is also taken into account. The calculation is performed for each exposure individually based on the
estimated parameters (main parameters: FSR – foreclosure success rate, SR – sales ratio, TTS – time to sale, C –
cost, REC – cash recovery) and the actual value of collaterals (e.g. property, guarantee, surety, bail).
For Consumer loans and car finance: recovery based LGD methodology estimated from historical recoveries. The
LGD calculation should not be automatically identified with historic actual data. The direction and degree of the
shift in the factors impacting the LGD, also considering the macroeconomic effects, in addition to the anticipated
developments in those, must always be analysed. The LGD – just like the PD – is not independent of the business
cycles either; typically it increases in parallel with the economic downturn.
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. If the reason for the impairment no longer exist the impairment is
released in the Consolidated Statement of Profit or Loss for the current period.
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 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, it is the actual loss allowance on these
receivables,
- loss allowance should be recalculated annually.
INTEGRATED ANNUAL REPORT 2023
432
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.6. Loss allowance [continued]
Classification into risk classes [continued]
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 sovereign 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 instrument 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,
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.
-
-
-
-
-
INTEGRATED ANNUAL REPORT 2023
433
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.6. Loss allowance [continued]
Classification into risk classes [continued]
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.
2.7.
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.
2.8.
Associates and other investments
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.
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.
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.
INTEGRATED ANNUAL REPORT 2023
434
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.8. Associates and other investments [continued]
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 based on the specific identification of the cost of each
investment.
2.9.
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
completed, 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 software 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:
Annual
percentages
Useful life
period (years)
Intangible assets
Software
Property right
Property
Machinery and office equipment
Vehicle
8.3% - 100.0%
16.7% - 50.0%
1.0% - 33.3%
2.0% - 50.0%
3.0% - 50.0%
1 – 12
2 – 6
3 – 100
2 – 50
2 – 33
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.
INTEGRATED ANNUAL REPORT 2023
435
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.10.
Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories comprises 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.
2.11. 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 another operating income in those periods when the related costs
were recognized.
2.12.
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
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.
INTEGRATED ANNUAL REPORT 2023
436
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.12. Financial liabilities [continued]
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.
2.13.
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 (for
more details, see Note 2.6.).
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.
INTEGRATED ANNUAL REPORT 2023
437
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.13. Leases [continued]
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
2.14.
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.
2.15.
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.
2.16.
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.
INTEGRATED ANNUAL REPORT 2023
438
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.17. Non-current assets held-for-sale and discontinued operations
A discontinued operation is a component of an entity that either has been disposed of or is classified as held-for-
sale. Hereinafter non-current assets classified as held-for-sale, disposal group and discontinued operations are
referred to as assets in accordance with IFRS 5.
The Group classifies assets under IFRS 5 if their carrying amount will be recovered principally through a sale
transaction rather than through continuing use. The Group does not account for an asset under IFRS 5 that has
been temporarily taken out of use as if it had been abandoned.
The Group measures an asset under IFRS 5 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 under IFRS 5, 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) an asset under IFRS 5 while it is classified as asset in accordance
with IFRS 5. Interest and other expenses attributable to the liabilities of the asset under IFRS 5 shall continue to
be recognized.
If the Group has classified an asset under IFRS 5, but the criteria for that are no longer met, the Group ceases to
classify the asset under IFRS 5. The Group measures these assets which cease to be classified as asset under IFRS
5 at the lower of:
- its carrying amount before the asset was classified as asset under IFRS 5, adjusted for any depreciation,
amortisation or revaluations that would have been recognized had the asset not been classified as asset under
IFRS 5, and
- its recoverable amount at the date of the subsequent decision not to sell.
The Group presents an asset classified as asset under IFRS 5 separately from other assets in the Consolidated
Statement of Financial Position. The liabilities of the asset under IFRS 5 are 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 or discontinued
operations 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.
2.18.
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.
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.
INTEGRATED ANNUAL REPORT 2023
439
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.19. Revenue recognition
The Group recognizes revenue from the following major sources:
- fee and commission income from financial services
- other revenue from customers.
2.19.1. 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.
These fees are related to deposits, cash withdrawals, security trading, bank card etc.
The Group earns fee and commission income from a diverse range of financial services it provides to its customers.
Fee and commission income is recognised at an amount that reflects the consideration to which the Group expects
to be entitled in exchange for providing the services. The performance obligations, as well as the timing of their
satisfaction, are identified, and determined, at the inception of the contract. When the Group provides a service to
its customers, consideration is invoiced and generally due immediately because it typically controls the services
before transferring them to the customer.
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.
Performance obligations satisfied over time include asset management, deposit and account maintenance services,
where the customer simultaneously receives and consumes the benefits provided by the Group’s performance as
the Group performs.
The Group’s fee and commission income from services where performance obligations are satisfied over
time are followings:
Deposit and account maintenance fees and commissions and fees related to cash withdrawal
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.
These fees for ongoing account management services are charged on a monthly basis during the period when they
are provided. Transaction-based fees are charged when the transaction takes place or charged monthly at the end
of the month.
Fees and commission related to the issued bank cards
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.
These 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.
INTEGRATED ANNUAL REPORT 2023
440
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.19. Revenue recognition [continued]
2.19.1. Fees and commissions [continued]
Fees and commissions related to security account management services
The Group provides its clients security account management services. Fees will be charged for account
management and transactions on accounts. Account management fees are typically charged quarterly or annually.
The amount is determined in %, based on the stocks of securities managed by the clients on the account in a given
period. Fees for transactions on the securities account are charged immediately after the transaction. They are
determined in %, based on the transaction amount. Fees for complex services provided to clients (e.g. portfolio
management or custody) are typically charged monthly or annually. The fees are fixed monthly amounts and in
some cases a bonus fee are charged.
These fees for ongoing services are charged quarterly or annually during the period when they are provided. The
fees are accrued monthly. Transaction-based fees are charged when the transaction takes place.
Fees and commissions related to fund management
Fees from fund management services provided to investment funds and from portfolio management provided to
insurance companies, funds. The fee income are calculated on the basis of net asset value of the portfolio and by
the fee rates determined in the contracts about portfolio management.
These 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.
Net insurance fee income
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.
Other fees
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.
These fees for ongoing services are charged on a monthly basis during the period when they are provided. Fees
for ad hoc services are charged when the transaction takes place.
2.19.2. Other revenue from customers
Other revenue from customers contains revenues from:
- sale of agricultural produce,
- tourism activity,
- gain on transactions related to property activities,
- rental income,
- income from computer programming.
Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with
customers and excludes amount collected on behalf of third parties. The Group recognizes revenue when it
transfers control of a product or service to customers. The Group has generally concluded that it is the principal in
its revenue arrangements, because it typically controls the goods and services before transferring them to the
customer.
INTEGRATED ANNUAL REPORT 2023
441
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.19. Revenue recognition [continued]
2.19.2. Other revenue from customers [continued]
Typically, the Group’s other revenue from customers is recognized at the point in time when control of the goods
or services is transferred to the customer. Exceptions are revenues services provided to customers – for example
rental income – where the customer simultaneously receives and consumes the benefits as the Group performs.
The Group considers whether there are other promises in the contract that are separate performance obligations to
which a portion of the transaction price needs to be allocated. In determining the transaction price, the Group
considers the effects of variable consideration, existence of a significant financing component, and a consideration
payable to the customer, if any.
2.20.
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.
2.21.
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.
Pillar Two – Global Anti-base Erosion Model Rules (“GloBE), global minimum tax – introduces a minimum
effective tax rate of at least 15%, calculated based on a specific rule set. Pillar Two legislation has been enacted
or substantively enacted in certain jurisdictions the Group operates. The legislation will be effective for the Group’s
financial year beginning 1 January 2024, but in year 2023 no income tax results obtained from Pillar Two rules.
The Group considers this top-up tax as an income tax according to IAS 12.
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.
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.
INTEGRATED ANNUAL REPORT 2023
442
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.21. Income tax [continued]
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.
2.22. Banking tax
The Bank and some of its subsidiaries are obliged to pay banking tax based on Act LIX of 2006 in Hungary. 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 another administrative expense, not as income tax. Pursuant to Government Decree No.
197/2022 published on 4 June 2022, the Hungarian Government decided to impose a windfall tax on credit
institutions and financial enterprises temporarily, that is for 2022 and 2023. As for 2022, the base of the windfall
tax is the net revenues based on the 2021 financial statements, calculated according to local tax law, whereas the
tax rate is 10%. These taxes are classified as levies according to IFRS rules.
2.23. 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 2.6.). 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.
2.24.
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.
INTEGRATED ANNUAL REPORT 2023
443
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.25. 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 Other Comprehensive Income.
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 services 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.
2.26. 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.
2.27. 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.
INTEGRATED ANNUAL REPORT 2023
444
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 2:
SUMMARY OF MATERIAL ACCOUNTING POLICIES [continued]
2.28.
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, Serbia, Croatia, Montenegro, Albania, Moldova, Slovenia, Uzbekistan, Merkantil Group, Asset
Management subsidiaries, Other subsidiaries. Romanian segment is classified as discontinued operation from 2023
but in line with management report it is still presented in Segment reporting as separate segment.
2.29. Comparative balances
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 2022, however results in the Consolidated Statement of Profit or Loss for
the comparative period changed due to IFRS 5 disclosure requirement. As the Romanian operation was classified
as discontinued operation in year 2023, in the comparative period related results were presented as they would
have been classified as discontinued operation for year 2022 in the Consolidated Statement of Profit or Loss. The
income and expenses of Romanian operation were separated from continuing operation and presented separately
after “Profit after income tax for the period” on line “(Loss) /Gain from discontinued operations” so both for year
2023 and 2022 the results in the Consolidated Profit or Loss showing the result of continuing operation which do
not include the Romanian contribution. Additional disclosures or extension of existing disclosures have been made
throughout the Consolidated Financial Statements, where relevant.
INTEGRATED ANNUAL REPORT 2023
445
OTP BANK
NOTE 3:
SIGNIFICANT ACCOUNTING ESTIMATES AND DECISIONS IN THE APPLICATION
OF ACCOUNTING POLICIES
IFRS REPORT (CONSOLIDATED)
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.
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.
INTEGRATED ANNUAL REPORT 2023
446
OTP BANK
NOTE 3:
SIGNIFICANT ACCOUNTING ESTIMATES AND DECISIONS IN THE APPLICATION
OF ACCOUNTING POLICIES [continued]
IFRS REPORT (CONSOLIDATED)
3.5. Contingent consideration
Contingent consideration generally arises where the acquirer agrees to transfer additional consideration to the
former owners of the acquired business after the acquisition date if certain specified events occur or conditions are
met in the future.
These future payments may be in cash or other assets and may be contingent upon the achievement of specified
events, and/or may be linked to future financial performance over a specified period of time.
Some changes in the fair value of contingent consideration may be the result of additional information that the
acquirer obtained after the acquisition date about fact and circumstances that existed at that date. Such changes are
measurement period adjustments and have impact of goodwill/negative goodwill. Changes resulting from events
after the acquisition date are not measurement period adjustments. Contingent considerations should be recorded
on the date of acquisition in consolidated financial statement at fair value.
The Group so far settled the contingent considerations in cash. The fair value estimation is made by the “Merger
& Acquisition” team based on the sale and purchase agreement (“SPA”) and other available information.
OTP concluded the contract including two instalments: first for 73.71% of the shares in 2023 (in December 2023
it increased to 79.58% after capital increase), then second for 24.57% (in December 2023 it decreased to 19.16%
after capital increase) of the shares 3 years later. The price of 24.57% of the shares is variable, but within a
predefined range and can be adjusted only with factors that have not direct connection with the profit of Ipoteka
Bank. The purchase of the second stock cannot be avoided by the parties since the execution of the SPA.
Considering the elements of the shares retained by Ministry of Finance of the Republic of Uzbekistan for the given
period are treated as financial liability.
The recognized liability includes the estimate of the adjustments to the second purchase price and does not include
the items that are considered as indemnity. Indemnification related expected cash-inflow is recognized as
indemnification asset (measured consistently with the measurement of underlying assets).
INTEGRATED ANNUAL REPORT 2023
447
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 4: MACRO ENVIRONMENT, IMPACT OF ECONOMIC SITUATION ON THE GROUP
Macro economy and financial situation in Hungary
Having elevated after the rapid recovery that followed the Covid crisis and the outbreak of the Russian-Ukrainian
war, inflation in advanced economies started to slow in 2023, but the developed world’s central banks had to raise
interest rates aggressively until the end of the year. It was not before the year was nearing its end that the tightening
cycle stopped and the debate on the possible timing of an interest rate cut began. Meanwhile, the labour market
remained tight, with low unemployment and strong wage dynamics. Developed markets’ long-term yields hit
multi-decade highs in the autumn, before a sharp fall began at the end of 2023.
Economic growth printed different patterns on the two sides of the Atlantic. The USA’s economic expansion
accelerated in 2023, as opposed to the expected slowing, and growth shifted into higher gear in the second half of
the year. The robust figures were driven by supportive fiscal policy, the large stocks of savings household had
accumulated during the pandemic, and the low effective lending rates caused by the high share of loans with fixed
interest rates. Headline inflation peaked in June 2022 (+8.9%), but the subsequent decline briefly stalled in the
middle of 2023. However, core inflation continued to drop, easing to 3.9% YoY by the end of the year. The very
loose fiscal policy, which raised the budget deficit from around 5% to 8% of GDP, required tight monetary policy
to bring inflation down. The Fed has aggressively raised its base rate to 5.25–5.5% and began to reduce its balance
sheet.
The energy crisis brought the euro area to its knees, and the economy has been unable to recover amid high inflation
and high interest rates, thus output has been practically stagnant since the third quarter of 2022. Countries with
industries that used to rely heavily on Russian energy (e.g. Germany) were hit particularly hard. Elevated interest
rates have led to a slowdown in lending, which has also hindered kick-starting growth in Europe. Disinflation was
strong in the euro area in 2023: headline and core inflation fell to 2.8% and 3.3%, respectively by the end of the
year. The biggest concern in this context is services inflation, which has been stagnating at 4.0% YoY since
November 2023. Despite all the weakness in the economy and strong disinflation, the ECB has not yet considered
cutting interest rates, thus the euro area ended last year with a deposit rate of 4% and a lending rate of 4.5%.
Hungary’s economy fell into a longer and deeper recession than the rest of the CEE region in 2023 (GDP YoY:
Q1: -0.9%; Q2: -2.4%; Q3: -0.4%; Q4 (flash): 0,0). However, the recession ended in the third quarter, and growth
started to pick up on quarterly basis, helped by the base effect of an unprecedented poor agriculture season in 2022.
Overall, regarding the Hungarian economy’s underlying processes, activity fell sharply in Q4 2022 and in Q1
2023, and it has been stagnating or trivially rising since then. The structure of growth is unfavourable, as the sharp
fall in domestic use was moderated by an increase in net exports, but it was caused by the decline in imports owing
to the sluggish domestic demand, rather than by exports’ strong expansion.
Inflation peaked at 25.7%, ten percentage points higher than the average of the CEE region, before disinflation
started in the spring. As disinflation accelerated starting from mid-2023, the pace of price increases accelerated,
bringing down CPI to 5.5% YoY by December; the annual average rate of inflation was 17.6% in 2023. From the
middle of the year, real wages started to rise again month-on-month, but this passed on to consumer spending only
modestly.
After running 8% current account deficit in 2022, Hungary’s external balance turned into surplus last year, as gas
prices collapsed and imports fell due to a drop in domestic demand. The rapid rise in debt ratios between 2020 and
2023 has stopped.
The original budget deficit target of 3.9% of GDP proved to be unsustainable, so it was raised to 5.2% in October,
but the accrual-based deficit probably exceeded 6% of GDP last year, even with the dividend payment by MVM
and with the savings of the ‘utility protection fund’.
Having raised the effective rate to 18% in autumn 2022, the MNB cut it in several steps by a total of 725 basis
points, to 10.75% by the end of the year. The base rate regained its role in September, when the former overnight
deposit facility was phased out. The EUR/HUF fell from around 400 at the beginning of the year to below 370 at
one point in the summer, but stabilized around 380 by the end of 2023.
Hungary made headway in accessing EU funds at the end of last year as the European Commission approved the
so-called horizontal enabling conditions for the judicial reform in December. The government unblocked about
EUR 11 billion worth of EU funds, thanks to the measures implemented last year.
Starting from autumn 2022, the credit market froze in the CEE region, including Hungary, and similarly to Western
Europe. There was a slight pick up at the end of 2023, particularly in retail lending, within that in ‘baby loans’ and
housing loans; demand for cash loans also jumped at the end of the year. In full year 2023, the volume of housing
loans rose by 1.3% (2022: 7.6%), that of cash loans grew by 6.9% (2022: 9.3%), and corporate loan volumes
increased by an FX-adjusted 6% (2022: 15.5%).
INTEGRATED ANNUAL REPORT 2023
448
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 4: MACRO ENVIRONMENT, IMPACT OF ECONOMIC SITUATION ON THE GROUP
[continued]
Summary of economic policy measures made and other relevant regulatory changes in the period under
review
Windfall tax
o On 24 April 2023 Government Decree No. 144/2023 was published amending the previously laid down
methodology of windfall tax calculation for the second half of 2023.
According to the new rules, the gross amount of the windfall tax for the year 2023 changed to HUF 41 billion
from HUF 74.6 billion in the case of OTP Group.
o Government decree No. 206/2023 (V.31.) published on 31 May 2023 outlined the details of the extra profit tax
payable by credit institutions in 2024. The basis of the tax is the 2022 profit before tax (adjusted for several
items). The tax rate is 13% for the part of the tax base that does not exceed HUF 20 billion, and 30% for the
amount above HUF 20 billion. According to the decree, if the average amount of Hungarian government bonds
owned by the financial institution increases over a certain period, the windfall tax payable by the credit
institution will be reduced. The reduction cannot be more than 10% of the increase in government bond
holdings and cannot exceed 50% of the windfall tax payment obligation calculated without the reduction.
The gross amount of the windfall tax for the year 2024 will be HUF 13 billion in the case of the Hungarian
Group members, which can be reduced to HUF 6.5 billion subject to the increase in government bond holdings.
As for timing, the HUF 13 billion gross annual tax obligation was recognized in one sum in January 2024,
whereas the pro-rated part of the reduction will be booked on a monthly basis, evenly split through 2024.
Interest rate cap
o Government decree No. 175/2023. (V. 12.) published on 12 May 2023 further extended the interest rate cap
scheme by 6 months, until the end of 2023, in the case of the affected floating and fixed rate residential
mortgages, as well as floating rate micro and small enterprises loan and leasing contracts.
o Pursuant to Government Decree No. 522/2023. (XI. 30.):
▪ The interest rate cap for the outstanding volume of certain residential mortgage loans was extended by six
months, until 30 June 2024.
▪ The rate cap for the existing volume of certain MSE loans was extended until 1 April 2024.
▪ Furthermore, Government Decree No. 471/2022 (XI. 21.) was amended, thus the provision that the interest
rate on HUF-denominated demand deposits and time deposits with a maximum term of one year shall not
exceed the average auction yield of the most recently issued three-month discount Treasury Bill was
extended by three months, until 1 April 2024. In another amendment, starting from 1 December 2023, the
scope of this cap was extended for entities who qualify as business customers in Hungary’s Civil Code.
These provisions shall be applied to deposit contracts concluded after 1 December 2023, as well as to
demand deposit contracts existing on 1 December 2023.
Voluntary interest rate cap on newly granted loans
At the beginning of October 2023, the Ministry of Economic Development proposed that banks impose voluntary
interest rate caps on newly granted HUF-denominated working capital loans for businesses, and on residential
housing loans. OTP Bank has joined the initiative.
Effective from October 2023, the Government set the voluntary interest rate cap on new housing loans at 8.5%
and that on working capital loans to businesses at 12%. From 2 November the latter was reduced to 11.5%. From
January 2024, the Government reduced the voluntary interest rate cap on housing loans to 7.3% and that on
corporate loans to 9.9%. In addition, the Government and the Hungarian Banking Association agreed that the
voluntary interest rate cap scheme will be abolished simultaneously with the withdrawal of the interest rate cap
for certain outstanding MSE volumes from 1 April 2024, i.e. in the future, interest rates will be determined by
market competition.
INTEGRATED ANNUAL REPORT 2023
449
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 4: MACRO ENVIRONMENT, IMPACT OF ECONOMIC SITUATION ON THE GROUP
[continued]
Summary of economic policy measures made and other relevant regulatory changes in the period under
review [continued]
Savings, government bond market
o Pursuant to Government decree No. 205/2023. (V. 31.), effective from 1 July 2023, on top of the existing 15%
interest tax, an additional 13% social contribution tax was introduced temporarily for certain savings forms.
The tax base is the interest income as defined by the PIT law, earned by natural persons after 1 July 2023 on
bank deposits placed or certain securities (except for real estate investment fund investment certificates)
purchased after 1 July.
o Pursuant to Government decree No. 208/2023. (V. 31.), effective from 1 July 2023 the weight of securities in
the portfolio of bond funds, equity funds and mixed funds must be at least 60%. Furthermore, from 1 August
no more than 5% of the assets of these securities funds can be invested in debt securities other than HUF
denominated government securities.
o According to Government decree No. 209/2023. (V. 31.), between 1 October 2023 and 31 December 2023
credit institutions shall send a warning notice to their natural person clients with bank account contracts about
how much more interest they could have earned in a specific period with an investment of HUF 100,000, HUF
500,000 and HUF 1,000,000 if they had invested in retail government securities instead of bank deposits.
Family support schemes
o Baby loan: in line with Government decree No. 303/2023. (VII. 11.), from 1 January 2024 the maximum
amount of baby loan will increase from HUF 10 to 11 million, and those families will be eligible where the
wife is below the age of 30 years. Also, the clause that baby loan contracts can be entered into by the end of
this year lost effect, so the scheme will remain in place indefinitely. As for the interest rate fixation periods, in
contrast to the current situation that the baby loans reprice in every 5 years, from 2024 the interest rate of newly
contracted baby loans will be fixed for 1 year during the first 2 years, then the baby loans will have a 3-year
rate fixation period.
o Housing Subsidy for Families (CSOK), village CSOK: from 1 January 2024 the village CSOK non-refundable
amounts will increase, but in towns and settlements with more than 5,000 inhabitants the CSOK subsidy will
no longer be available.
Mandatory minimum reserve requirements
Pursuant to NBH decree No. 6/2023. (III. 8.) and NBH decree No. 11/2023. (III. 31.), from April the minimum
reserve requirement was increased to 10%, and the effective rate paid on the reserves was reduced to 9.75%
from the previous 13%, since the national bank doesn’t pay any interest for 25% of the minimum reserve
requirement, and for the remaining amount the national bank pays the base rate.
NBH decree No. 25/2023. (VI. 14.) amended the reserve requirement rules: among others, from 1 July 2023
up to 15% of the minimum reserve requirement can be met by central bank deposits with at least 14 days
original maturity. Also, from July until further notice (by the end of the year according to plans) the reserve
requirement will be based on the volumes in the statistical balance sheet as at 31 March 2023.
Capital regulation
o On 22 June 2023 the national bank announced that it postpones the activation of the Countercyclical Capital
Buffer rate of 0.5% planned from 1 July 2023 by one year to 1 July 2024. In addition, it preventively reactivates
the Systemic Risk Buffer aimed at risks related to commercial real estate loans (especially non-performing
loans).
o MREL minimum requirement: effective from 1 January 2024, the consolidated MREL minimum requirement
for OTP Bank is 18.94%, while the minimum requirement including combined buffer requirements is 23.95%
in % of the total RWA of the resolution group.
o Pillar 2 capital requirement: effective from 1 January 2024, the National Bank of Hungary imposed the below
additional capital requirements for OTP Group, on consolidated level:
▪ 0.9%-point in case of the Common Equity Tier1 (CET1) capital, accordingly the minimum requirement for
the consolidated CET1 ratio is 5.4% (without regulatory capital buffers);
▪ 1.2%-points in case of the Tier1 capital, accordingly the minimum requirement for the consolidated Tier1
ratio is 7.2% (without regulatory capital buffers);
▪ 1.6%-points in case of the Total SREP Capital Requirement (TSCR), accordingly the minimum requirement
for the consolidated capital adequacy ratio is 9.6% (without regulatory capital buffers).
INTEGRATED ANNUAL REPORT 2023
450
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 4: MACRO ENVIRONMENT, IMPACT OF ECONOMIC SITUATION ON THE GROUP
[continued]
The principles used in the preparation of the Consolidated Statement of Financial Position as at 31
December 2023 in connection with the evaluation of Russian and Ukrainian exposures
Going concern principle
In the case of Ukraine and Russia OTP management applies a „going concern” approach, however in Russia the
management is still considering all strategic options, bearing in mind that any future solution should be strictly
within the framework and in accordance with applicable local and international regulations.
In February 2022 a military conflict started between Russia and 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 1,037 billion at the end of 2023 (2.6% of total
consolidated assets), while net loans comprised HUF 309 billion (1.4% of consolidated net loans) and
shareholders’ equity amounted to HUF 157 billion (3.8% of the consolidated total equity).
At the end of 2023 the gross intragroup funding towards the Ukrainian operation represented HUF 83 billion,
while taking into account the Ukrainian deposits placed with the Headquarters, i.e. the net group funding stood at
HUF 22 billion equivalent deposit placed by the Ukrainian operation (i.e. Ukraine funded the Group).
In 2023 the Ukrainian operation posted an adjusted profit after tax of HUF 45.2 billion, against the HUF 15.9
billion loss suffered in the corresponding period of last year.
The total assets of the Group’s Russian operation represented HUF 1,471 billion at the end of 2023 (3.7% of
consolidated total assets), while net loans comprised HUF 588 billion (2.7% of consolidated net loans) and
shareholders’ equity HUF 275 billion (6.7% of consolidated total equity).
As the Russian subsidiary repaid its maturing intragroup loans in 4Q 2022, the gross intragroup funding towards
the Russian operation declined to zero and remained nil throughout 2023. At the end of 2023 the intragroup
subordinated loan exposure toward the Russian operation amounted to HUF 9 billion equivalent.
The Russian operation posted HUF 95.7 billion adjusted profit in 2023, after the HUF 42.5 billion profit reached
in full-year 2022.
In 2H 2023 the Russian Central Bank approved a dividend payment by OTP’s Russian subsidiary with a total
amount of HUF 51.3 billion.
If the Russian entity was deconsolidated and the outstanding gross intragroup exposures were written off as well,
the effect for the consolidated CET1 ratio would be -11 bps, whereas in the Ukraine the negative effect would be
2 bps.
Significant estimates affected by the Russian-Ukrainian conflict during the preparation of these
Consolidated Financial Statements
During the preparation of these Consolidated Financial Statements, the Group identified the following estimates,
which were significantly affected by the Russian-Ukrainian conflict:
1) Evaluation of Russian sovereign exposures (government securities) and related reserves for expected credit
losses
a) exposures of the Russian subsidiary bank
b) exposures of other members of the group (parent company and subsidiaries)
2) Evaluation of Ukrainian sovereign exposures (government securities) and related reserves for expected credit
losses
a) exposures of the Ukrainian subsidiary bank
b) exposures of other members of the group (parent company and subsidiaries)
3) evaluation of derivative transactions denominated in Russian rubles
4) evaluation of derivative transactions denominated in the Ukrainian hryvnia
5) claims against Russian and Ukrainian central banks, provisions for expected credit losses related to Russian
and Ukrainian interbank claims and customer loans
a)
b)
the impact of the deterioration of the Russian and Ukrainian macro-environment
following direct exposure to the Russian and Ukrainian markets, non-Russian and Ukrainian bank
exposures
c) exposures of Russian and Ukrainian subsidiary banks
6) evaluation of goodwill
7) deferred tax assets
INTEGRATED ANNUAL REPORT 2023
451
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 4: MACRO ENVIRONMENT, IMPACT OF ECONOMIC SITUATION ON THE GROUP [continued]
The principles used in the preparation of the Consolidated Statement of Financial Position as at 31 December 2023 in connection with the evaluation of Russian and
Ukrainian exposures [continued]
Significant estimates affected by the Russian-Ukrainian conflict during the preparation of these Consolidated Financial Statements [continued]
Russia
Reference Gross value
Impairment /
Depreciation
Ukraine
Reference Gross value
Impairment /
Depreciation
Reference Gross value
Impairment /
Depreciation
Other countries
Cash, amounts due from banks and balances
with the National Banks
Placements with other banks
Repo receivables
Financial assets at fair value through
profit or loss - derivatives
Securities at fair value through other
comprehensive income
Securities at amortized cost
Loans at amortized cost
Finance lease receivables
Property and equipment
Intangible assets and goodwill
Right-of-use assets
Investment properties
Deferred tax assets
Current income tax receivables
Other assets
76,494
702,097
-
207
5
3
1a
21,284
-
-
-
-
-
5
721,212
(133,255)
30,567
31,387
13,994
-
15,448
2,885
31,820
7
(19,190)
(14,851)
(8,380)
-
-
-
5
4
2a
2a
5
7
98,864
96,070
9,726
3
85,431
310,617
274,472
113,203
19,392
11,275
5,682
225
-
-
(12)
(147)
(516)
-
-
(204)
(58,450)
(20,156)
(6,938)
(6,701)
(3,480)
-
-
-
5
6
TOTAL ASSETS
Amounts due to banks, the National Governments,
deposits from the National Banks and other banks
Deposits from customers
TOTAL LIABILITIES
1,647,395
(180,586)
1,032,249
(97,461)
8,970
1,086,708
1,095,678
-
-
-
7,418
747,337
754,755
-
-
-
(4,910)
7,289
(857)
47
-
-
-
36,230
33,075
79,953
-
-
-
-
-
-
-
15,537
164,842
-
56,280
56,280
(6)
-
-
-
(24,582)
(11,299)
(4,487)
-
-
-
-
-
-
-
(7,884)
(48,258)
-
-
-
INTEGRATED ANNUAL REPORT 2023
452
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 4: MACRO ENVIRONMENT, IMPACT OF ECONOMIC SITUATION ON THE GROUP
[continued]
The principles used in the preparation of the Consolidated Statement of Financial Position as at 31
December 2023 in connection with the evaluation of Russian and Ukrainian exposures [continued]
Significant estimates affected by the Russian-Ukrainian conflict during the preparation of these
Consolidated Financial Statements [continued]
During the evaluation of these assets, the Group applied the evaluation principles detailed below, which evaluation
contains significant estimates on the part of the Management. The results of the estimates may vary significantly
depending on the development of the situation in the Russian-Ukrainian conflict.
References
1a. Evaluation of Russian sovereign exposures and related reserves for expected credit losses - exposures
of the Russian subsidiary bank
Within Russia, Russian government securities are marketable, and their repayment is expected to take place in
accordance with the original conditions. The fair value calculation of securities is based on market prices available
and observable on local trading platforms.
1b. Evaluation of Russian sovereign exposures and related reserves for expected credit losses - other
exposures of the group
Outside of Russia, the marketability of Russian government securities is significantly limited due to sanctions and
capital market participants turning away from Russian securities. The credit rating of the Russian state was
withdrawn in 2022, the Group classifies the Russian state as non-performing, and in accordance with this, it
assigned the affected exposures to the Stage 3 category. The Russian state not only recognizes its obligation and
has the necessary financial reserves, but would also be willing to pay, so the increased loss potential is caused by
non-traditional credit risks. In the case of a portfolio valued at fair value through other comprehensive income, the
book value is determined based on the level 3 prices of IFRS13. Cash-flow estimation, current market benchmarks
(provided by Bloomberg), liquidity and non-credit risk considerations were taken into account in fair value
calculation.
In the case of overdue receivables, the Group determines the impairment based on its expectations regarding the
probability and time frame of recovery. Basically, a higher probability of return and a shorter time frame can be
assigned to those items for which, as a result of the legal steps taken by the Group, the claim has been paid in RUB
by the competent Russian clearing house (NSD) and access to the relevant amounts is subject to Hungarian
authority approvals. On the other hand, a lower probability of return and a longer time period were determined for
those items where the payment is expected in EUR or USD with the help of European clearing houses (Euroclear,
Clearstream) requiring a complex legal process.
Regarding the future, the Group expects that it will be able to ask for the above-described, more favorable payment
in RUB with respect to claims that become due. The claims from the overdue Russian government bonds are
classified to Other financial asset line and in the above table presented within Other countries in the amount of
HUF 8.9 billion with the impairment of HUF 5.4 billion.
2a. Valuation of Ukrainian sovereign exposures and related reserves for expected credit losses - exposures
of the Ukrainian subsidiary bank
The marketability of local government securities and the liquidity of the market are limited in Ukraine.
Ukrainian government securities can only be found in the books of the Ukrainian subsidiary, due to the increased
credit risk, these exposures acquired before 2023 are classified as Stage2 and exposures acquired in 2023 are
classified as Stage 1. In the case of a portfolio valued at fair value through other comprehensive results, the book
value is determined based on the level 3 prices of IFRS13. During the actual evaluation, the expected cash flow is
discounted using yield curves observed based on current market benchmarks (published by the National Bank of
Ukraine).
2b. Valuation of Ukrainian sovereign exposures and related reserves for expected credit losses - other
exposures of the group
Ukrainian government securities are exclusively in the books of the Ukrainian subsidiary.
INTEGRATED ANNUAL REPORT 2023
453
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 4: MACRO ENVIRONMENT, IMPACT OF ECONOMIC SITUATION ON THE GROUP
[continued]
The principles used in the preparation of the Consolidated Statement of Financial Position as at 31
December 2023 in connection with the evaluation of Russian and Ukrainian exposures [continued]
Significant estimates affected by the Russian-Ukrainian conflict during the preparation of these
Consolidated Financial Statements [continued]
References [continued]
3. Valuation of Russian derivative transactions
In the case of futures contracts concluded with local partners on the Russian market, the evaluation is carried out
using yield curves available and observable on the local market. In cases where one of the partners is not Russian,
the evaluation is done using yield curves available and observable on the international market.
4. Valuation of Ukrainian derivatives
The Treasury turnover of the Ukrainian bank is low, and a significant part of the derivative transactions are related
to the bank's risk management and concluded with the parent company. During the actual evaluation, the expected
cash-flow is discounted using yield curves observed based on current market benchmarks (published by the
National Bank of Ukraine).
5. Claims against Russian and Ukrainian central banks, provisions for expected credit losses related to
Russian and Ukrainian interbank claims and customer loans
As part of the continuous monitoring activity, OTP Group has explored and analyzed the secondary and tertiary
negative effects of the war in the corporate segment for Group members outside of Russia and Ukraine, including
the effects of the current sanctions policy. In the case of the affected customers, if the increased risk was
substantiated, they were classified in the Stage 2 category, while in the case of non-performance, the Group
classified the given exposures in the Stage 3 rating category.
In the case of Group members in Russia, the impact of the current and forward-looking economic environment
was taken into account when determining the expected loss, however, the Bank does not expect any further
substantial deterioration of the economic environment.
In the case of Ukrainian Group members, the proportion of customers with increased risk (Stage2) decreased while
non-performing (Stage3) category stabilized in 2023, but further deterioration is not expected in 2024. The impact
of the current and forward-looking economic environment was taken into account when determining the expected
loss, however, the Bank does not expect any further substantial deterioration of the economic environment. The
identification of the increased risk – given the special situation – extends to regionally different war activity. In
addition, the territorial distribution of exposures was also taken into account when evaluating the expected loss, in
the areas directly and indirectly affected by the war, the Bank does not expect a significant return for non-
performing customers, regardless of economic trends.
6. Evaluation of goodwill
In connection with the involvement in the Russian-Ukrainian conflict, as a result of the company value review, the
Group considered it necessary to fully write off the existing goodwill in the case of the Russian subsidiary bank in
the first quarter of 2022, the value of which as at 31 December 2021 was HUF 40.9 billion. The effect of goodwill
write-off on the result was HUF 67.7 billion, and a HUF 26.8 billion loss was accounted for against equity. In the
case of Ukraine, there was no goodwill write-off.
Based on current experience, the Group takes into account the macroeconomic effects of the current geopolitical
situation in the mid- to long-term when determining the impairment of investments in the case of countries affected
by the conflict. In the case of Russian and Ukrainian operations, we currently do not consider it likely that the
estimated investment value before the conflict (2021) will be reached during the 3-year explicit period.
INTEGRATED ANNUAL REPORT 2023
454
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 4: MACRO ENVIRONMENT, IMPACT OF ECONOMIC SITUATION ON THE GROUP
[continued]
The principles used in the preparation of the Consolidated Statement of Financial Position as at 31
December 2023 in connection with the evaluation of Russian and Ukrainian exposures [continued]
Significant estimates affected by the Russian-Ukrainian conflict during the preparation of these
Consolidated Financial Statements [continued]
References [continued]
7. Deferred tax
Due to the uncertainty of the expected return, the Group did not recognize deferred tax assets in Ukraine, while in
Russia, the Group recognized HUF 15,45 billion in deferred tax assets. There is no limit to unused tax credits in
Russia. In addition, if the bank's taxable loss were to increase (if the impairment calculated according to local rules
approached the higher level of impairment according to IFRS), the difference between the settlement and the tax
loss would decrease, thus reducing the deferred tax asset. As a result, the bank was able to utilize the temporary
deferred tax asset both in the expected profitable operation and in a possible loss scenario.
Financial assets modified in the Group for the year ended 31 December 2023 (in HUF million)
Modification losses from changes other than Hungarian interest rate cap resulted in HUF 1,631 million loss and
HUF 2,859 million as at 31 December 2023 and 2022, respectively. In the following tables the modification gains
and losses resulting from the prolongation of interest rate caps is presented. The newly granted loans have fixed
interest throughout the lifetime and the voluntary interest rate cap does not affect the previously disbursed loans.
Modification due to prolongation of the existing interest rate cap till 30 June 2024
Gross carrying amount before modification
Loss allowance before modification
Net amortised cost before modification
Modification loss
Net amortised cost after modification
Group
351,776
(12,702)
339,074
(8,738)
330,336
Modification due to prolongation of the existing interest rate cap till 31 December 2023
Gross carrying amount before modification
Loss allowance before modification
Net amortised cost before modification
Modification loss
Net amortised cost after modification
Group
709,771
(18,640)
691,131
(27,772)
663,359
Financial assets modified during the period related to moratorium in the Group for the year ended 31
December 2022 (in HUF mn)
Modification due to prolongation of deadline of moratorium from 30 June until 31 July 2022
Gross carrying amount before modification
Loss allowance before modification
Net amortised cost before modification
Modification loss
Net amortised cost after modification
Group
159,850
(31,718)
128,132
(471)
127,661
INTEGRATED ANNUAL REPORT 2023
455
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 4: MACRO ENVIRONMENT, IMPACT OF ECONOMIC SITUATION ON THE GROUP
[continued]
Financial assets modified during the period related to moratorium in the Group for the year ended 31
December 2022 (in HUF mn) [continued]
Modification due to prolongation of interest rate cap till 30 June 2022
Gross carrying amount before modification
Loss allowance before modification
Net amortised cost before modification
Modification loss
Net amortised cost after modification
Group
289,630
(7,771)
281,859
(11,144)
270,715
Modification due to prolongation of deadline of moratorium till 30 September 2022
Gross carrying amount before modification
Loss allowance before modification
Net amortised cost before modification
Modification loss
Net amortised cost after modification
Group
1,053
(108)
945
(5)
940
Modification due to moratorium related to agriculture and prolongation of deadline of existing moratorium
till 30 September 2022
Gross carrying amount before modification
Loss allowance before modification
Net amortised cost before modification
Modification loss
Net amortised cost after modification
Group
152,051
(24,910)
127,141
(2,122)
125,019
Modification due to prolongation of interest rate cap till 30 November 2022
Gross carrying amount before modification
Loss allowance before modification
Net amortised cost before modification
Modification loss
Net amortised cost after modification
Group
154,421
(6,184)
148,237
(536)
147,701
Modification due to scope extension (mortgage loans with 5-year fixing without subsidy) and prolongation
of the existing interest rate cap till 31 December 2022
Gross carrying amount before modification
Loss allowance before modification
Net amortised cost before modification
Modification loss
Net amortised cost after modification
Group
422,201
(12,604)
409,597
(22,860)
386,737
INTEGRATED ANNUAL REPORT 2023
456
OTP BANK
NOTE 5:
CASH, AMOUNTS DUE FROM BANKS AND BALANCES WITH THE NATIONAL
BANKS (in HUF mn)
IFRS REPORT (CONSOLIDATED)
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
Loss allowance on amounts due from bank and
balances with the National Banks
Total
Compulsory reserve set by
the National Banks
Cash and cash equivalents
31/12/2023
31/12/2022
86,498
519,333
605,831
92,526
582,950
675,476
31/12/2023
31/12/2022
2,275,719
4,244,007
6,519,726
732,956
2,814,663
3,547,619
-
-
-
-
-
-
(508)
(1,703)
7,125,049
4,221,392
(2,265,707)
(1,623,704)
4,859,342
2,597,688
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 those banks are obliged to place compulsory reserve at their National Bank in a specified percentage of
their liabilities considered in compulsory reserve calculation.
An analysis of the change in the loss allowance on amounts from banks and balances with the National 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
31/12/2023
31/12/2022
1,703
11,859
(12,919)
(3)
(132)
508
1,108
8,072
(7,697)
-
220
1,703
INTEGRATED ANNUAL REPORT 2023
457
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 6:
PLACEMENTS WITH OTHER BANKS (in HUF mn)
Within one year
In HUF
In foreign currency
Over one year
In HUF
In foreign currency
Loss allowance on placements
Total
31/12/2023
31/12/2022
343,022
961,554
1,304,576
184,696
79,973
264,669
(2,247)
681,892
447,648
1,129,540
199,056
26,323
225,379
(3,837)
1,566,998
1,351,082
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
Assets held for sale
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 (%)
31/12/2023
31/12/2022
3,837
3,425
(4,880)
-
(12)
(123)
2,247
2,994
38,314
(38,378)
(100)
-
1,007
3,837
31/12/2023
31/12/2022
0.00% - 25.00%
0.00% - 25.70%
0.00% - 22.00%
(1.5)% - 13.29%
31/12/2023
31/12/2022
13.89%
11.02%
INTEGRATED ANNUAL REPORT 2023
458
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 7:
REPO RECEIVABLES (in HUF mn)
Within one year
In HUF
In foreign currency
Over one year
In HUF
In foreign currency
Loss allowance on repo receivables
Total
31/12/2023
31/12/2022
18,341
206,077
224,418
37
22
59
(593)
223,884
41,250
-
41,250
-
-
-
(241)
41,009
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
Use of loss allowance
Foreign currency translation difference
Closing balance
Interest conditions of repo receivables (%):
Interest rates on repo receivables denominated
in HUF
Interest rates on repo receivables denominated
in foreign currency
Average interest rates on repo
receivables denominated in HUF (%)
Average interest rates on repo
receivables denominated in foreign currency (%)
Securities as collaterals underlying repo receivable contracts:
Types of securities
Government bonds
Treasury bills
Total
31/12/2023
31/12/2022
241
5,002
(4,631)
-
(19)
593
290
4,744
(4,794)
-
1
241
31/12/2023
31/12/2022
0.00% - 11.00%
10.70% - 18.00%
0.00% - 17.96%
-
31/12/2023
31/12/2022
11.83%
6.92%
9.93%
-
31/12/2023
31/12/2022
31,333
197,639
228,972
46,081
3,949
50,030
INTEGRATED ANNUAL REPORT 2023
459
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 8:
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (in HUF mn)
Trading securities at fair value through profit or loss
31/12/2023
31/12/2022
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 instruments mandatorily at
fair value through profit or loss
Equity instruments, shares and open-ended fund units
Bonds
Financial assets 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
Total
1 CCIRS: Cross Currency Interest Rate Swaps (See Note 2.5.3.3.)
2 Other category includes: fx spot, equity swaps, option and index futures.
An analysis of securities held for trading portfolio by currency (%):
Denominated in HUF
Denominated in foreign currency
Total
58,232
513
584
3,959
97
3,852
331
67,568
64,002
3,686
67,688
78,897
385
119
22,896
72
1,628
753
104,750
49,746
5,409
55,155
-
-
135,256
159,905
31/12/2023
31/12/2022
36,068
65,711
32,336
8,644
7,101
3,040
3
726
153,629
288,885
79,395
127,230
33,693
20,512
13,085
2,122
13
432
276,482
436,387
31/12/2023
31/12/2022
30.73%
69.27%
100.00%
81.47%
18.53%
100.00%
INTEGRATED ANNUAL REPORT 2023
460
OTP BANK
NOTE 8:
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (in HUF mn)
[continued]
IFRS REPORT (CONSOLIDATED)
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
31/12/2023
31/12/2022
22.71%
77.29%
100.00%
78.42%
21.58%
100.00%
31/12/2023
31/12/2022
1.90% - 16.66%
0.00% - 16.69%
0.00% - 18.00%
0.00% - 7.63%
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
31/12/2023
31/12/2022
135
40,689
40,824
1,154
24,746
25,900
844
67,568
3,041
29,025
32,066
9,535
62,011
71,546
1,138
104,750
Interest conditions and the remaining maturities of non-trading securities mandatorily at fair value through profit
or loss are as follows:
Within one year
With variable interest
With fixed interest
Over one year
With variable interest
With fixed interest
Non-interest-bearing securities
Total
31/12/2023
31/12/2022
-
-
-
-
57
57
67,631
67,688
-
-
-
-
-
-
55,155
55,155
INTEGRATED ANNUAL REPORT 2023
461
OTP BANK
NOTE 8:
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (in HUF mn)
[continued]
IFRS REPORT (CONSOLIDATED)
Profit from associates from shares measured
at fair value through profit or loss
31/12/2023
31/12/2022
14,297
12,216
An analysis of non-trading securities mandatorily at fair value through profit or loss portfolio by currency (%):
Denominated in HUF
Denominated in foreign currency
Total
31/12/2023
31/12/2022
60.76%
39.24%
100.00%
60.69%
39.31%
100.00%
Interest conditions of non-trading instruments mandatorily at fair value through profit or loss (%):
Interest rates on non-trading instruments mandatorily at fair
value through profit or loss denominated in foreign currency (%)
2.00% - 3.00%
-
31/12/2023
31/12/2022
INTEGRATED ANNUAL REPORT 2023
462
OTP BANK
NOTE 9:
SECURITIES AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
(in HUF mn)
IFRS REPORT (CONSOLIDATED)
Securities at fair value through other
31/12/2023
31/12/2022
comprehensive income
Government bonds
Corporate bonds
Listed securities:
In HUF
In foreign currency
Non-listed securities:
In HUF
In foreign currency
Mortgage bonds
Interest bearing treasury bills
Securities issued by the National Bank of Hungary
Other securities
Total
Non-interest-bearing instruments at fair value
through other comprehensive income
Listed securities:
In HUF
In foreign currency
Non-listed securities:
In HUF
In foreign currency
1,288,230
34,996
-
16,989
16,989
12,115
5,892
18,007
30,344
235
114,746
72,429
1,540,980
1,301,179
82,651
-
13,626
13,626
14,304
54,721
69,025
54,553
182,726
74,867
3,470
1,699,446
31/12/2023
31/12/2022
-
9,472
9,472
403
50,606
51,009
60,481
-
11,233
11,233
403
28,521
28,924
40,157
Total
1,601,461
1,739,603
Movement table of loss allowance of securities at fair value through other comprehensive income is presented in
Note 27.
An analysis of securities at fair value through other comprehensive income by currency (%):
Denominated in HUF
Denominated in foreign currency
Total
31/12/2023
31/12/2022
33.85%
66.15%
100.00%
36.47%
63.53%
100.00%
INTEGRATED ANNUAL REPORT 2023
463
OTP BANK
NOTE 9:
SECURITIES AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
(in HUF mn) [continued]
IFRS REPORT (CONSOLIDATED)
Detailed information of the non-interest-bearing instruments at fair value through other comprehensive income:
31/12/2023
31/12/2022
Strategic investments closely related to banking activity
Fair value
Dividend income from instruments held at the reporting date
Derecognition
Fair value of disposed, reclassified equity instrument, fund
units
Cumulative gain / loss on disposal, reclassification
transferred to retained earnings
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
Fair value of derecognized equity instrument, fund units
Cumulative gain / loss on disposal
transferred to retained earnings
51,131
369
2,277
3,978
9,350
61
60,481
430
2,277
3,978
31,873
1,120
4,906
-
8,284
59
40,157
1,179
4,906
-
Since the joining of NKBM into OTP Group on the 6th of February 2023, investment in Bankart d.o.o. became an
associated company and the Group reclassified the investment in Bankart from Securities at fair value through
other comprehensive income to Associates and other investments. The amount of this reclassification transferred
to retained earnings was HUF 1,301 million and the fair value of the investment was HUF 2,277 million as at the
reclassification.
During the year ended 31 December 2022 HUF 2,677 million equity instruments measured at fair value through
other comprehensive income was sold but the realized income only in 2023 was transferred to retained earnings.
An analysis of government bonds by currency (%):
Denominated in HUF
Denominated in foreign currency
Total
31/12/2023
31/12/2022
29.83%
70.17%
100.00%
23.64%
76.36%
100.00%
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
Interest rates on securities at fair value through
other comprehensive income denominated
in foreign currency
Average interest rates on 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 (%)
31/12/2023
31/12/2022
2.00% - 13.80%
1.50% - 15.11%
0.01% - 19.75%
0.00% - 18.24%
31/12/2023
31/12/2022
3.51%
3.31%
3.60%
2.55%
INTEGRATED ANNUAL REPORT 2023
464
OTP BANK
NOTE 9:
SECURITIES AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
(in HUF mn) [continued]
IFRS REPORT (CONSOLIDATED)
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.
31/12/2023
31/12/2022
456
373,618
374,074
18,136
1,148,770
1,166,906
15,124
507,888
523,012
28,523
1,147,911
1,176,434
60,481
40,157
1,601,461
1,739,603
INTEGRATED ANNUAL REPORT 2023
465
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 10: SECURITIES AT AMORTIZED COST (in HUF mn)
Government bonds
Corporate bonds
Bonds of Hungarian National Bank
Discounted Treasury bills
Mortgage bonds
Interest bearing Treasury bills
Other securities
31/12/2023
31/12/2022
4,468,813
310,514
-
67,653
24,738
6,480
403,722
5,281,920
4,375,085
250,538
177,679
19,539
24,586
4,977
82,583
4,934,987
Loss allowance on securities at amortized cost
(32,648)
(43,049)
Total
5,249,272
4,891,938
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
31/12/2023
31/12/2022
-
700,735
700,735
6,005
4,575,180
4,581,185
159
951,773
951,932
25,753
3,957,302
3,983,055
Total
5,281,920
4,934,987
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 denominated in HUF (%)
31/12/2023
31/12/2022
46.81%
53.19%
100.00%
63.50%
36.50%
100.00%
31/12/2023
31/12/2022
0.75% - 2.91%
0.75% - 17.74%
0.00% - 26.00%
0.00% - 23.00%
31/12/2023
31/12/2022
4.48%
3.31%
INTEGRATED ANNUAL REPORT 2023
466
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 10: SECURITIES AT AMORTIZED COST (in HUF mn) [continued]
An analysis of the change in the loss allowance on securities at amortized cost is as follows:
Balance as at 1 January
Loss allowance for the period
Release of loss allowance
Use of loss allowance
Assets held for sale
Foreign currency translation difference
Closing balance
31/12/2023
31/12/2022
43,049
10,875
(20,060)
-
(637)
(579)
32,648
9,113
37,104
(5,603)
-
-
2,435
43,049
INTEGRATED ANNUAL REPORT 2023
467
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 11: LOANS AT AMORTIZED COST AND AT FAIR VALUE (in HUF mn)
Loans at amortized cost
Within one year
In HUF
In foreign currency
Over one year
In HUF
In foreign currency
Loss allowance on loans
Total
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:
31/12/2023
31/12/2022
1,340,659
3,714,471
5,055,130
2,516,270
10,999,164
13,515,434
1,422,663
3,672,023
5,094,686
2,425,793
9,540,339
11,966,132
18,570,564
17,060,818
(894,031)
(966,360)
17,676,533
16,094,458
31/12/2023
31/12/2022
20.77%
79.23%
100.00%
22.56%
77.44%
100.00%
31/12/2023
31/12/2022
Loans at amortized cost denominated in HUF1
Loans at amortized cost denominated in foreign currency2
0.00% - 59.99%
(0.50)% - 90.00%
0.00% - 43.70%
(0.10)% - 90.00%
1 The highest interest rate relates to HUF loan is car loan in the current year and overdraft loan in the previous year.
2 The highest interest rate relates to loan in foreign currency is multi personal loan for the current year and POS services in the previous year.
Average interest rates on loans at amortized cost
denominated in HUF (%)
Average interest rates on loans at amortized cost
denominated in foreign currency (%)
31/12/2023
31/12/2022
11.36%
6.12%
8.65%
5.47%
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 64,487 million and HUF 117,357 million as at 31 December
2023 and 2022, respectively.
INTEGRATED ANNUAL REPORT 2023
468
OTP BANK
IFRS REPORT (CONSOLIDATED)
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:
Balance as at 1 January
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
Assets held for sale
Foreign currency translation difference
Closing balance
1 See details in Note 2.5.8.
31/12/2023
31/12/2022
966,360
714,784
(551,477)
163,307
(22,784)
(61,078)
(37,169)
(61,355)
(76,034)
894,031
851,994
676,389
(469,929)
206,460
10,276
(92,004)
(67,651)
-
67,561
966,360
Movement in loss allowance on loans and placements is summarized as below:
Release of loss allowance on placements and
loss from derecognition of placements
Loss allowance on loans and gain from
derecognition of loans
Total 2
2 See details in Note 31.
Loans mandatorily at fair value through profit or loss
Within one year
In HUF
In foreign currency
Over one year
In HUF
In foreign currency
Total
31/12/2023
31/12/2022
(1,455)
111,771
110,316
(39)
114,163
114,124
31/12/2023
31/12/2022
77,886
131
78,017
1,320,889
1,579
1,322,468
70,883
-
70,883
1,176,531
-
1,176,531
1,400,485
1,247,414
INTEGRATED ANNUAL REPORT 2023
469
OTP BANK
IFRS REPORT (CONSOLIDATED)
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
31/12/2023
31/12/2022
99.88%
0.12%
100.00%
100.00%
0.00%
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
31/12/2023
31/12/2022
1.31% - 25.36%
1.12% - 18.26%
5.00% - 30.00%
-
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 (%)
31/12/2023
31/12/2022
6.96%
4.68%
4.55%
0.04%
INTEGRATED ANNUAL REPORT 2023
470
OTP BANK
IFRS REPORT (CONSOLIDATED)
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
Use of impairment
Foreign currency translation difference
Closing balance
31/12/2023
31/12/2022
66,805
39,019
105,824
(9,714)
96,110
56,835
29,094
85,929
(12,080)
73,849
31/12/2023
31/12/2022
12,080
44
(65)
(2,344)
-
(1)
9,714
12,514
1,312
(411)
(1,238)
-
(97)
12,080
INTEGRATED ANNUAL REPORT 2023
471
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 13:
PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (in HUF mn)
There are different kinds of tangible and intangible assets held by the Group. In the followings there are presented
reasons of the changes from opening values to closing ones in the gross values, the accumulated depreciation and
amortization and in the impairment of the tangible and intangible assets in the Group. Here can be found
information about the fair values of the tangible assets and gross amounts of those assets which were fully
depreciated but which are still in use.
Carrying amount of the temporarily idle properties was HUF 3,334 million and HUF 3,466 million as at 31
December 2023 and 2022, respectively.
There was HUF 330 million restrictions on title and properties, plants or equipment pledged as security for
liabilities as at 31 December 2023 and there was no restriction as at 31 December 2022.
As at 31 December 2023 and 31 December 2022 the amount of contractual commitments for the acquisition of
tangible and intangible assets was HUF 29,980 million and HUF 21,116 million, respectively.
Impairment for the properties in the current 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.
The Bank decided that the recoverable amount of goodwill is determined based on fair value less cost of disposal.
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 2023 impairment test was prepared where a three-
year cash-flow model was applied with an explicit period between 2024-2026. The basis for the estimation was
the actual data of November 2023 and based on the prepared medium-term (2024-2026) forecasts. When the Bank
prepared the calculations for the period 2024-2026, 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 Free Cash-Flow 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. By subsidiaries where the yield curves were not available (Ukraine) the daily Overnight
deposit yield was used as a benchmark, provided by National Bank of Ukraine as currently the only available
proxy for the hryvnia rate.
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 2023 and 2022
Based on the valuations of the subsidiaries for the year ended 31 December 2023 no goodwill impairment while
for the year ended 31 December 2022 67,715 million HUF goodwill impairment was needed to be recorded by the
Group for JSC “OTP Bank” (Russia).
INTEGRATED ANNUAL REPORT 2023
472
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 13: PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (in HUF mn) [continued]
For the year ended 31 December 2023
Cost
Intangible
assets
Goodwill
Property Machinery and
office equipment
Vehicle
Construction
in progress
Balance as at 1 January
Increase due to acquisition
Additions
Foreign currency
translation differences
Disposals
Assets held for sale
Closing balance
471,420
18,484
131,153
(16,618)
(45,342)
(16,362)
542,735
109,185
-
328
(1,715)
(40,866)
-
66,932
375,765
41,770
34,384
(11,158)
(8,075)
(11,079)
421,607
271,879
9,085
42,538
(10,447)
(22,041)
(14,472)
276,542
43,288
207
1,744
(419)
(1,460)
(1,429)
41,931
53,544
339
71,211
110
(78,421)
(886)
45,897
Tangible assets
subject to
operating lease
31,206
272
18,644
(1,482)
(12,016)
-
36,624
Total
1,356,287
70,157
300,002
(41,729)
(208,221)
(44,228)
1,432,268
Depreciation and amortization
Intangible
assets
Property
Machinery and
office equipment
Vehicle
Balance as at 1 January
Charge for the period
Foreign currency
translation differences
Disposals
Assets held for sale
Closing balance
299,912
53,259
(9,862)
(19,459)
(11,765)
312,085
93,288
11,599
(3,455)
(4,067)
(5,675)
91,690
195,614
28,516
(8,392)
(19,375)
(9,139)
187,224
9,140
2,302
(265)
(2,131)
(899)
8,147
Tangible assets
subject to
operating lease
Total
8,855
4,447
(447)
(5,004)
-
7,851
606,809
100,123
(22,421)
(50,036)
(27,478)
606,997
INTEGRATED ANNUAL REPORT 2023
473
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 13: PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (in HUF mn) [continued]
For the year ended 31 December 2023 [continued]
Impairment
Intangible
assets
Goodwill
Property
Machinery and
office equipment
Balance as at 1 January
Impairment for the period
Release of impairment for the period
Foreign currency
translation differences
Use of impairment
Closing balance
2,796
4,361
-
37
(970)
6,224
40,866
-
-
-
(40,866)
-
4,251
441
-
(215)
(1)
4,476
46
820
(2)
2
(820)
46
Tangible assets
subject to
operating lease
19
30
-
(1)
(5)
43
Total
47,978
5,652
(2)
(177)
(42,662)
10,789
Intangible
assets
Goodwill Property
Machinery and
office equipment
Vehicle
Construction
in progress
Tangible assets
subject to
operating lease
Total
Carrying value
Balance as at 1 January
Closing balance
168,712
224,426
68,319
66,932
278,226
325,441
76,219
89,272
34,148
33,784
53,544
45,897
22,332
28,730
701,500
814,482
Fair values
-
-
350,867
89,318
33,779
Gross amount of the fully
depreciated assets that
are still in use
164,201
-
27,950
136,683
1,612
-
-
28,730
502,694
582
331,028
An analysis of the intangible assets for the year ended 31 December 2023 is as follows:
Intangible assets
Self-developed
Purchased
Total
Gross values
Accumulated amortization
Impairment
Carrying value
22,230
(10,220)
-
12,010
520,505
(301,865)
(6,224)
212,416
542,735
(312,085)
(6,224)
224,426
INTEGRATED ANNUAL REPORT 2023
474
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 13: PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (in HUF mn) [continued]
For the year ended 31 December 2023 [continued]
Carrying value of the investment and goodwill allocated to the appropriate cash generating units
Subsidiaries
DSK Bank EAD
(Bulgaria)
OTP banka d.d.
(Croatia)
POK-DSK Rodina a.d.
(Bulgaria)
George Consult
(Croatia)
OTP Home Solutions Llc.
(Hungary)
OTP Invest Drustvo AD
(Serbia)
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
280,722
43,684
28,541
77
HUF
BGN
99.92%
1,072,672
3.00%
12.28%
205,349
22,221
1,680
225
3,870
11
212
478
304
492,150
326
66,932
58
11
4
478
100
EUR
100.00%
465,038
3.00%
10.75%
HUF
HRK
99.85%
76.00%
HUF
100.00%
RSD
100.00%
18,880
3.00%
12.28%
171
3,870
304
3.00%
10.75%
3.00%
14.25%
3.00%
12.69%
INTEGRATED ANNUAL REPORT 2023
475
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 13: PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (in HUF mn) [continued]
For the year ended 31 December 2022
Cost
Intangible
assets
Goodwill
Property
Machinery and
office equipment
Vehicle
Construction
in progress
Balance as at 1 January
Increase due to acquisition
Additions
Foreign currency
translation differences
Disposals
Closing balance
408,003
706
111,397
16,350
(65,036)
471,420
105,640
478
-
3,067
-
109,185
304,922
933
66,034
15,936
(12,060)
375,765
243,731
522
29,709
10,951
(13,034)
271,879
41,252
-
2,728
408
(1,100)
43,288
Depreciation and amortization
Intangible
assets
Property Machinery and
office equipment
Vehicle
Tangible assets
subject to
operating lease
67,657
-
79,638
316
(94,067)
53,544
Total
Tangible assets
subject to
operating lease
30,833
-
12,892
Total
1,202,038
2,639
302,398
1,952
(14,471)
31,206
48,980
(199,768)
1,356,287
Balance as at 1 January
Charge for the period
Foreign currency
translation differences
Disposals
Closing balance
262,307
49,750
9,482
(21,627)
299,912
83,707
10,627
4,145
(5,191)
93,288
173,138
26,770
8,081
(12,375)
195,614
7,188
2,433
257
(738)
9,140
9,493
4,249
718
(5,605)
8,855
535,833
93,829
22,683
(45,536)
606,809
INTEGRATED ANNUAL REPORT 2023
476
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 13: PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (in HUF mn) [continued]
For the year ended 31 December 2022 [continued]
Impairment
Intangible
assets
Goodwill
Property Machinery and
office equipment
Balance as at 1 January
Impairment for the period
Release of impairment for the period
Foreign currency
translation differences
Use of impairment
Closing balance
2,705
37
-
54
-
2,796
-
67,715
-
(26,849)
-
40,866
3,553
590
-
258
(150)
4,251
43
-
-
3
-
46
Tangible assets
subject to
operating lease
Total
137
-
(122)
7
(3)
19
6,438
68,342
(122)
(26,527)
(153)
47,978
Intangible
assets
Goodwill
Property
Machinery and
office equipment
Vehicle
Construction
in progress
Tangible assets
subject to
operating lease
Total
Carrying value
Balance as at 1 January
Closing balance
142,991
168,712
105,640
68,319
Fair values
-
Gross amount of the fully
depreciated assets that
are still in use
152,718
-
-
217,662
278,226
308,375
70,550
76,219
34,064
34,148
67,657
53,544
21,203
22,332
659,767
701,500
76,230
34,122
-
-
22,351
441,078
-
324,539
26,007
144,310
1,504
An analysis of the intangible assets for the year ended 31 December 2022 is as follows:
Intangible assets
Self-developed
Purchased
Total
Gross values
Accumulated amortization
Impairment
Carrying value
14,704
(5,508)
-
9,196
456,716
(294,404)
(2,796)
159,516
471,420
(299,912)
(2,796)
168,712
INTEGRATED ANNUAL REPORT 2023
477
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 13: PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (in HUF mn) [continued]
For the year ended 31 December 2022 [continued]
Carrying value of the investment and goodwill allocated to the appropriate cash generating units
Subsidiaries
DSK Bank EAD
(Bulgaria)
OTP banka d.d.
(Croatia)
POK-DSK Rodina a.d.
(Bulgaria)
George Consult
(Croatia)
OTP Home Solutions Llc.
(Hungary)
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
280,722
44,375
28,541
77
HUF
BGN
99.92%
840,031
3.00%
12.54%
EUR
100.00%
410,711
2.69%
10.69%
205,349
23,235
1,680
225
2,570
490,546
11
220
478
68,319
58
11
4
HUF
HRK
99.85%
76.00%
478
HUF
100.00%
16,564
3.00%
12.54%
171
2,570
2.69%
10.69%
3.00%
16.26%
INTEGRATED ANNUAL REPORT 2023
478
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 14: INVESTMENT PROPERTIES (in HUF mn)
An analysis of the change in gross values of investment properties is as follows:
Gross values
31/12/2023
31/12/2022
Balance as at 1 January
Increase due to transfer from inventories
or owner-occupied properties
Increase from purchase
Increase from acquisition
Transfer to held-for-sale properties
Transfer to inventories or owner-occupied properties
Disposal due to sale
Assets held for sale
Foreign currency translation difference
Closing balance
The applied depreciation and amortization rates were as follows:
61,346
-
10,363
9,910
(34)
(4,985)
(10,652)
(182)
(2,214)
63,552
40,241
1,830
20,935
-
(321)
(1,442)
(1,798)
-
1,901
61,346
31/12/2023
31/12/2022
Depreciation and amortization rates
2.00% - 15.00%
2.00% - 20.00%
An analysis of the movement in the depreciation and amortization on investment properties is as follows:
Depreciation and amortization
31/12/2023
31/12/2022
Balance as at 1 January
Additions due to transfer from inventories
or owner-occupied properties
Charge for the period
Assets held for sale
Transfer to inventories or owner-occupied properties
Disposal due to sale
Transfer to held-for-sale properties
Foreign currency translation difference
Closing balance
11,273
-
866
(86)
(2,178)
(420)
(5)
(442)
9,008
9,111
1,513
912
-
(126)
(780)
(17)
660
11,273
An analysis of the movement in the impairment on investment properties is as follows:
Impairment
31/12/2023
31/12/2022
Balance as at 1 January
Impairment for the period
Release of impairment for the period
Use of impairment
Assets held for sale
Decrease due to transfer to inventories
or owner-occupied properties
Foreign currency translation difference
Closing balance
2,621
32
(1,394)
-
(34)
(11)
(51)
1,163
1,248
1,389
(63)
(40)
-
(8)
95
2,621
INTEGRATED ANNUAL REPORT 2023
479
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 14: INVESTMENT PROPERTIES (in HUF mn) [continued]
Carrying values
Balance as at 1 January
Closing balance
Fair values
31/12/2023
31/12/2022
47,452
53,381
72,647
29,882
47,452
61,198
The amount of restrictions on the realisability of investment property is HUF 781 million as at 31 December 2023
while there wasn’t any restriction as at 31 December 2022.
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 this recognition.
Income and expenses
31/12/2023
31/12/2022
Rental income
Direct operating expenses of investment properties
– income generating
Direct operating expenses of investment properties
– non income generating
3,029
451
307
2,511
426
82
INTEGRATED ANNUAL REPORT 2023
480
OTP BANK
IFRS REPORT (CONSOLIDATED)
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
Foreign exchange swap designated as fair value hedge
Interest rate swaps designated as fair value hedge
Total
31/12/2023
31/12/2022
24,750
-
17,217
41,967
20,732
1,696
25,819
48,247
INTEGRATED ANNUAL REPORT 2023
481
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 16: OTHER ASSETS (in HUF mn)
Other assets are expected to be recovered or settled no more than twelve months after the reporting period.
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
Other financial assets
Loss allowance on other financial assets
Total
31/12/2023
31/12/2022
71,385
34,369
53,010
56,855
24,612
20,451
31,022
8,507
1,634
82
15,075
(34,602)
282,400
67,981
29,284
37,777
57,189
19,652
31,234
12,593
6,478
1,778
358
30,490
(31,833)
262,981
Other financial assets contain claims from overdue Russian government bonds, for further information please see
details in Note 4. 1b.
Other non-financial assets
31/12/2023
31/12/2022
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
59,311
21,085
26,409
10,672
45,294
(4,437)
158,334
62,878
23,383
40,066
8,366
27,963
(7,041)
155,615
Other assets (under IAS 2)
31/12/2023
31/12/2022
Inventories
Repossessed real estate
Repossessed other non-financial assets
Write-down of the assets measured under IAS 2
Total
Total other assets
56,552
14,832
2,289
(4,977)
68,696
48,210
6,985
1,192
(3,864)
52,523
509,430
471,119
INTEGRATED ANNUAL REPORT 2023
482
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 16: OTHER ASSETS (in HUF mn) [continued]
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
Reclassification
Assets held for sale
Foreign currency translation difference
Closing balance
31/12/2023
31/12/2022
31,833
16,278
(7,016)
(3,505)
-
(371)
(2,617)
34,602
16,800
22,472
(8,917)
(2,083)
253
-
3,308
31,833
An analysis of the movement in the impairment on other non-financial assets is as follows:
Balance as at 1 January
Impairment for the period
Release of impairment for the period
Use of impairment
Reclassification
Assets held for sale
Foreign currency translation difference
Closing balance
31/12/2023
31/12/2022
7,041
778
(1,161)
(583)
-
(1,576)
(62)
4,437
4,413
3,304
(647)
(324)
(253)
-
548
7,041
INTEGRATED ANNUAL REPORT 2023
483
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 17: AMOUNTS DUE TO BANKS, THE NATIONAL GOVERNMENTS, DEPOSITS FROM
THE NATIONAL BANKS AND OTHER BANKS (in HUF mn)
Within one year
In HUF
In foreign currency
Over one year
In HUF
In foreign currency
Total
31/12/2023
31/12/2022
179,321
244,011
423,332
737,892
779,638
1,517,530
369,015
218,611
587,626
689,579
185,953
875,532
1,940,862
1,463,158
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 currency1
Over one year
In HUF
In foreign currency1
31/12/2023
31/12/2022
(2.40)% - 8.75%
(2.31)% - 18.00%
(2.40)% - 18.00%
(2.32)% - 12.00%
(1.70)% - 11.40%
(2.12)% - 16.81%
(2.40)% - 9.23%
(2.40)% - 13.76%
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
31/12/2023
31/12/2022
3.25%
2.28%
5.65%
2.40%
INTEGRATED ANNUAL REPORT 2023
484
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 18: REPO LIABILITIES (in HUF mn)
Within one year
In HUF
In foreign currency
Over one year
In HUF
In foreign currency
Total
Interest conditions on repo liabilities are as follows (%):
Interest rates on repo liabilities
denominated in HUF
Interest rates on repo liabilities
denominated in foreign currency
Average interest rates on repo liabilities
denominated in HUF
Average interest rates on repo liabilities
denominated in foreign currency
31/12/2023
31/12/2022
24,572
101,665
126,237
-
-
-
126,237
29,147
197
29,344
96
187,929
188,025
217,369
31/12/2023
31/12/2022
0.00% - 0.00%
4.75% - 15.47%
0.00% - 3.65%
2.47% - 5.20%
31/12/2023
31/12/2022
12.85%
4.22%
9.06%
1.51%
INTEGRATED ANNUAL REPORT 2023
485
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 19: FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR
LOSS (in HUF mn)
31/12/2023
31/12/2022
Within one year
In HUF
In foreign currency
Over one year
In HUF
In foreign currency
Total
Contractual amount outstanding
Result from associated entity's measured
at fair value attributable to the Group
1,816
-
1,816
68,891
-
68,891
70,707
17,747
50,921
1,716
-
1,716
52,475
-
52,475
54,191
19,853
37,616
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
31/12/2023
31/12/2022
4.97% - 9,97%
2.19% - 3.96%
4.83%
0.01% - 4.63%
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.
INTEGRATED ANNUAL REPORT 2023
486
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 20: DEPOSITS FROM CUSTOMERS (in HUF mn)
Within one year
In HUF
In foreign currency
Over one year
In HUF
In foreign currency
Total
Interest rates on deposits from customers are as follows:
Within one year
In HUF
In foreign currency1
Over one year
In HUF
In foreign currency
31/12/2023
31/12/2022
7,584,728
20,332,448
27,917,176
244,965
170,290
415,255
7,910,448
16,757,984
24,668,432
274,217
246,156
520,373
28,332,431
25,188,805
31/12/2023
31/12/2022
0.00% - 15.40%
0.00% - 23.00%
0.00% - 17.95%
(0.40)% - 45.10%
(0.36)% - 17.50%
0.00% - 22.10%
0.00%- 13.00%
0.00% - 18.00%
1 The highest interest rate regarding within-one-year deposits in foreign currency for the previous year relate to treasury deposit in Turkish lira
in Hungary.
Average interest rates on deposits from customers
denominated in HUF
Average interest rates on deposits from customers
denominated in foreign currency
31/12/2023
31/12/2022
3.69%
0.98%
2.21%
0.68%
An analysis of deposits from customers by type is as follows:
31/12/2023
31/12/2022
Retail deposits
Corporate deposits
Municipality deposits
Total
16,093,360
10,965,159
1,273,912
28,332,431
56.80%
38.70%
4.50%
100.00%
13,739,669
10,408,982
1,040,154
25,188,805
54.56%
41.32%
4.13%
100.00%
INTEGRATED ANNUAL REPORT 2023
487
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 21: LIABILITIES FROM ISSUED SECURITIES (in HUF mn)
With original maturity
Within one year
In HUF
In foreign currency
Over one year
In HUF
In foreign currency
Total
Interest rates on liabilities from issued securities are as follows:
31/12/2023
31/12/2022
399,897
153,264
553,161
283,165
1,259,222
1,542,387
2,095,548
48,755
6,427
55,182
373,645
441,855
815,500
870,682
31/12/2023
31/12/2022
Issued securities denominated in HUF
Issued securities denominated in foreign currency
0.60% - 15.00%
1.63% - 16.00%
0.60% - 15.00%
0.74% - 7.35%
Average interest rates on issued securities
denominated in HUF
Average interest rates on issued securities
denominated in foreign currency
31/12/2023
31/12/2022
8.83%
7.14%
5.00%
2.95%
Issued securities denominated in HUF as at 31 December 2023 (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
OTPX2024A
OTPX2024B
OTPX2024C
18/06/2014
21/06/2024
10/10/2014
16/10/2024
15/12/2014
20/12/2024
OTP_HUF_24/1
17/02/2023
17/02/2024
OTP_HUF_24/2
10/03/2023
10/03/2024
OTP_HUF_24/3
31/03/2023
31/03/2024
OTP_HUF_24/4
21/04/2023
21/04/2024
OTP_HUF_24/5
12/05/2023
12/05/2024
OTP_HUF_24/6
02/06/2023
02/06/2024
OTP_HUF_24/7
23/06/2023
23/06/2024
OTP_HUF_24/8
30/06/2023
30/06/2024
241
295
242
26,079
22,977
17,015
14,698
13,946
16,722
11,232
3,730
283
339
275
indexed
indexed
indexed
28,593
25,048
18,441
15,837
14,937
17,806
11,859
3,931
fix
fix
fix
fix
fix
fix
fix
fix
1.30
0.70
0.60
11.00
11.00
11.00
11.00
11.00
11.00
10.50
10.50
Subtotal
127,177
137,349
hedged
hedged
hedged
INTEGRATED ANNUAL REPORT 2023
488
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 21: LIABILITIES FROM ISSUED SECURITIES (in HUF mn) [continued]
Issued securities denominated in HUF as at 31 December 2023 (in HUF mn) [continued]
Name
Date of issue
Maturity
Nominal
value
(in HUF mn)
Amortized
cost
(in HUF mn)
Interest conditions Hedged
(actual interest
rate in % p.a.)
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
OTP_HUF_24/9
OTP_HUF_24/10
OTP_HUF_24/11
OTP_HUF_24/12
OTP_HUF_24/13
OTP_HUF_24/14
OTP_HUF_24/15
OTP_HUF_25/1
OTP_HUF_25/2
OTP_HUF_26/1
OTP_HUF_26/2
28/07/2023
28/07/2024
07/08/2023
07/08/2024
01/09/2023
01/09/2024
25/09/2023
25/09/2024
20/10/2023
20/10/2024
17/11/2023
17/11/2024
20/12/2023
20/12/2024
18/11/2022
18/11/2025
30/06/2023
30/06/2025
22/12/2022
05/01/2026
15/12/2023
15/12/2026
OTP_TBSZ_HUF_2028/1
13/10/2023
15/12/2028
OJB2024_A
OJB2024_C
OJB2024_II
OJB2025_II
OJB2027_I
OJB2029_A
OJB2031_I
OJB2032_A
Other
17/09/2018
20/05/2024
24/02/2020
24/10/2024
10/10/2018
24/10/2024
03/02/2020
26/11/2025
23/07/2020
27/10/2027
25/07/2022
24/05/2029
18/08/2021
22/10/2031
20/09/2023
24/11/2032
4,173
1,431
2,655
2,777
3,494
3,509
2,994
25,563
5,116
10,228
647
155
59,999
80,000
96,800
22,550
76,850
66,520
82,000
25,000
206
4,364
1,490
2,743
2,845
3,557
3,547
3,004
27,042
5,431
11,856
649
159
fix
fix
fix
fix
fix
fix
fix
fix
fix
fix
fix
fix
59,999
floating
79,818
floating
92,101
21,140
67,619
fix
fix
fix
10.50
10.00
9.75
9.00
8.75
8.50
8.00
15.00
12.00
12.00
7.40
12.00
11.32
10.90
2.50
1.50
1.25
66,360
floating
10.85
66,867
fix
2.50
24,916
floating
10.85
206
hedged
hedged
hedged
Total issued securities in HUF
699,844
683,062
Issued securities denominated in foreign currency as at 31 December 2023
Name
Date of
issue
Maturity
Type of
FX
Nominal value
Amortized cost
Interest conditions
(FX mn)
(HUF mn)
(FX mn)
(HUF mn)
(actual interest rate
in % p.a.)
1
2
3
4
5
6
7
8
9
10
11
12
13
XS2560693181
01/12/2022
04/03/2026
XS2626773381
25/05/2023
25/05/2027
XS2499691330
13/07/2022
13/07/2025
XS2642536671
27/06/2023
27/06/2026
XS2536446649
29/09/2022
29/09/2026
XS2698603326
05/10/2023
05/10/2027
XS2737630314
22/12/2023
22/06/2026
XS2703264635
13/10/2023
13/10/2026
SI0022104176
25/05/2021
25/05/2027
XS2430442868
27/01/2022
27/01/2024
XS2639027346
29/06/2023
29/06/2026
XS2260457754
19/11/2020
19/11/2025
XS2331929963
16/04/2021
16/04/2024
Total issued securities in FX
EUR
USD
EUR
EUR
USD
EUR
EUR
RON
EUR
EUR
EUR
USD
UZS
649
500
400
110
60
650
75
170
176
300
400
300
248,497
173,152
153,111
42,106
20,786
248,725
28,709
13,082
67,254
114,834
153,112
103,932
689
499
410
114
61
674
75
173
156
304
416
285
685,065
19,250
698,553
263,732
173,011
157,095
43,745
21,180
258,006
28,778
13,320
59,728
116,407
159,266
98,589
19,629
fix
fix
fix
fix
fix
fix
fix
floating
fix
fix
fix
fix
fix
7.35
7.50
5.50
7.50
7.25
6.13
6.10
8.10
1.63
1.88
7.38
5.50
16.00
1,386,550
1,412,486
Total issued securities
2,095,548
INTEGRATED ANNUAL REPORT 2023
489
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 21: LIABILITIES FROM ISSUED SECURITIES (in HUF mn) [continued]
Issued securities denominated in HUF as at 31 December 2022 (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
OTPX2023A
OTPX2023B
OTPX2024A
OTPX2024B
OTPX2024C
22/03/2013
24/03/2023
28/06/2013
26/06/2023
18/06/2014
21/06/2024
10/10/2014
16/10/2024
15/12/2014
20/12/2024
OTP_HUF_25/1
18/11/2022
18/11/2025
OTP_HUF_26/1
22/12/2022
05/01/2026
OTPRF2023A
22/03/2013
24/03/2023
OJB2023_I
OJB2024_A
OJB2024_II
OJB2025_II
OJB2027_I
OJB2029_A
OJB2031_I
Other
05/04/2018
24/11/2023
17/09/2018
20/05/2024
10/10/2018
24/10/2024
03/02/2020
26/11/2025
23/07/2020
27/10/2027
25/07/2022
24/05/2029
18/08/2021
22/10/2031
312
198
241
295
242
25,562
10,229
1,010
44,120
53,732
96,800
22,550
76,850
91,510
82,000
269
410
indexed
260
indexed
310
indexed
378
indexed
309
indexed
26,046
10,270
fix
fix
1,215
indexed
39,968
fix
1.7
0.60
1.30
0.70
0.60
15.00
12.00
1.70
1.75
53,933
floating
17.36
79,228
16,193
52,608
fix
fix
fix
2.50
1.50
1.25
91,488
floating
17.13
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
hedged
49,515
fix
2.50
hedged
269
Total issued securities in HUF
505,920
422,400
Issued securities denominated in foreign currency as at 31 December 2022
Name
Date of
issue
Maturity
Type of
FX
Nominal value
Amortized cost
Interest conditions
1
2
3
4
XS2560693181
01/12/2022
04/03/2026
XS2499691330
13/07/2022
13/07/2025
XS2536446649
29/09/2022
29/09/2026
EUR
EUR
USD
Other
Total issued securities in FX
Total issued securities
(FX mn)
(HUF mn)
(FX mn)
(HUF mn)
650
399
60
12
260,136
159,859
22,541
60
442,596
653
409
61
15
261,341
163,893
22,972
76
448,282
870,682
(actual interest rate
in % p.a.)
fix
fix
fix
7.35
5.5
7.25
Issued securities denominated in foreign currency in “Other” category are promissory notes issued by JSC “OTP
Bank” (Russia) in the amount of HUF 60 million as at 31 December 2022.
INTEGRATED ANNUAL REPORT 2023
490
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 21: LIABILITIES FROM ISSUED SECURITIES (in HUF mn) [continued]
Hedge accounting of issued bonds
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 800 billion for the year of 2023/2024
The Bank initiated term note program in the value of HUF 800 billion with the intention of issuing registered
dematerialized bonds in public. On 7 August 2023, the National Bank of Hungary approved 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 2022/2023
On 10 May 2022 the Bank initiated term note program in the value of HUF 200 billion with the intention of issuing
registered dematerialized bonds in public. On 10 August the National Bank of Hungary approved 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.
On 28 June 2023 the National Bank of Hungary approved the extension of the value of the originally HUF 200
billion Term Note Program to HUF 500 billion.
Issuance of Green Senior Preferred Notes in the aggregate nominal amount of EUR 400 million
OTP Bank Plc have been issued “green” notes (ISIN: XS2499691330) on 13 July 2022 as value date in the
aggregate nominal amount of EUR 400 million. The non-call 2 years senior preferred notes have a three-year term
and carry an annually paid fixed coupon of 5.500% in the first two years. With respect to the third year, the
quarterly coupon is calculated as the sum of the initial margin (of 426.5 basis points) and the 3-month EURIBOR
rate. The notes are rated ’BBB’ by S&P Ratings Europe Limited and ’BBB+’ by Scope Ratings GmbH. The notes
are listed on the Luxembourg Stock Exchange.
Issuance of Green Senior Preferred Notes in the aggregate nominal amount of USD 60 million
OTP Bank Plc issued “green” notes (ISIN: XS2536446649) on 29 September 2022 as value date in the aggregate
nominal amount of USD 60 million. The notes are rated ’BBB’ by S&P Ratings Europe Limited and ’BBB+’ by
Scope Ratings GmbH. The notes are listed on the Luxembourg Stock Exchange.
INTEGRATED ANNUAL REPORT 2023
491
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 21: LIABILITIES FROM ISSUED SECURITIES (in HUF mn) [continued]
Issuance of Senior Preferred Notes in the aggregate nominal amount of EUR 650 million
OTP Bank Plc have been issued the notes (ISIN: XS2560693181) on 1 December 2022 as value date in the
aggregate nominal amount of EUR 650 million. The 3.25 Non-Call 2.25 years Senior Preferred Notes were priced
on 23 November 2022. The notes are rated ’BBB’ by S&P Ratings Europe Limited and ’BBB+’ by Scope Ratings
GmbH. The notes are listed on the Luxembourg Stock Exchange.
Issuance of Senior Preferred Notes in the aggregate nominal amount of USD 500 million
OTP Bank Plc. have been issued notes (ISIN: XS2626773381) on 25 May 2023 as value date in the aggregate
nominal amount of USD 500 million. The notes are rated ’Baa3’ by Moody’s Investor Services Cyprus Ltd., ’BBB-
’ by S&P Ratings Europe Limited and ’BBB+’ by Scope Ratings GmbH. The notes are listed on the Luxembourg
Stock Exchange.
Issuance of Senior Non-Preferred Notes in the aggregate nominal amount of EUR 110 million
OTP Bank Plc. have been issued notes (ISIN: XS2642536671) on 27 June 2023 as value date in the aggregate
nominal amount of EUR 110 million. The notes are listed on the Luxembourg Stock Exchange.
Issuance of Senior Preferred Notes in the aggregate nominal amount of EUR 650 million
OTP Bank Plc have been issued the notes (ISIN: XS2698603326) on 5 October 2023 as value date in the aggregate
nominal amount of EUR 650 million. The notes are rated ’Baa3’ by Moody’s Investor Services Cyprus Ltd. and
’BBB+’ by Scope Ratings GmbH. The notes are listed on the Luxembourg Stock Exchange.
Issuance of Senior Preferred Notes in the aggregate nominal amount of RON 170 million
OTP Bank Plc have been issued the notes (ISIN: XS2703264635) on 13 October 2023 as value date in the
aggregate nominal amount of RON 170 million. The notes are rated ’BBB+’ by Scope Ratings GmbH. The notes
are listed on the Luxembourg Stock Exchange.
Issuance of Senior Non-Preferred Notes in the aggregate nominal amount of EUR 75 million
OTP Bank Plc have been issued the notes (ISIN: XS2737630314) on 22 December 2023 as value date in the
aggregate nominal amount of EUR 75 million. The notes are listed on the Luxembourg Stock Exchange.
Issuance of Senior Non-Preferred and Preferred bonds by Nova KBM
On 25 May 2021, Nova KBM issued senior non-preferred bonds KBM12 in the nominal amount of EUR 176
million with maturity on 25 May 2027. They are not listed on the stock exchange.
On 27 January 2022, Nova KBM issued senior non-preferred bonds NOVAKR 0 01/27/25 in the total nominal
amount of EUR 300 million, which were early repaid on 27 January 2024. The bonds were rated Ba1 by Moody's
and BBB- by Fitch. The bonds were listed on the Luxembourg Stock Exchange.
On 29 June 2023, Nova KBM issued senior preferred bonds NOVAKR 7 06/29/26 in the total nominal amount of
EUR 400 million. The bonds are rated Baa2 by Moody's. The bonds are listed on the Luxembourg Stock Exchange.
INTEGRATED ANNUAL REPORT 2023
492
OTP BANK
IFRS REPORT (CONSOLIDATED)
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 rate agreements
Held-for-trading forward security agreement
Other derivative transactions held for trading1
Total
31/12/2023
31/12/2022
51,928
31,661
29,179
11,061
8,945
2,904
214
1
4,595
140,488
83,149
31,632
237,269
13,740
15,759
1,891
-
-
2,307
385,747
1 Other category includes: fx spot, equity swaps, forward rate agreement, options and index futures.
INTEGRATED ANNUAL REPORT 2023
493
OTP BANK
IFRS REPORT (CONSOLIDATED)
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
Foreign exchange swap designated as fair value hedge
Interest rate swaps designated as fair value hedge
Other hedge of interest rate risk designated as fair value hedge
Total
31/12/2023
31/12/2022
10,009
-
53,939
(49)
63,899
5,398
16,199
6,352
-
27,949
INTEGRATED ANNUAL REPORT 2023
494
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 24: PROVISIONS AND OTHER LIABILITIES (in HUF mn)
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.
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
Dividend payable
Other financial liabilities
Subtotal
31/12/2023
31/12/2022
92,409
47,647
66,816
119,984
73,350
19,107
42,172
15,061
40,631
7,473
570
85,507
610,727
91,001
108,513
55,898
75,544
56,828
24,596
32,133
12,540
34,672
7,961
207
82,387
582,280
Other non-financial liabilities
31/12/2023
31/12/2022
Clearing, settlement and pending accounts
Liabilities from social security contributions
Accrued expenses on other non-financial liabilities
Clearing account for advances on housing subsidies
Other non-financial liabilities
Subtotal
Total
31,143
16,204
17,577
10,824
59,345
135,093
745,820
46,800
11,749
13,647
12,868
40,310
125,374
707,654
INTEGRATED ANNUAL REPORT 2023
495
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 24: PROVISIONS AND OTHER LIABILITIES (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
31/12/2023
31/12/2022
46,137
46,137
39,351
9,336
2,510
6,206
363
17,216
74,982
63,372
63,372
37,043
8,225
1,331
1,256
900
19,494
68,249
Total
121,119
131,621
The movements of provisions according to IFRS 9 can be summarized as follows:
Balance as at 1 January
Provision for the period
Release of provision for the period
Use of provision
Change due to acquisition
Liabilities held for sale
Foreign currency translation differences
Closing balance
31/12/2023
31/12/2022
63,372
104,871
(124,741)
(59)
11,439
(4,728)
(4,017)
46,137
51,990
102,928
(96,783)
(293)
21
-
5,509
63,372
The movements of provisions according to IAS 37 can be summarized as follows:
Balance as at 1 January
Provision for the period
Release of provision for the period
Use of provision
Change due to actuarial gains or losses
related to employee benefits
Change due to acquisition
Unwinding of the discounted amount
Liabilities held for sale
Foreign currency translation differences
Closing balance
31/12/2023
31/12/2022
68,249
30,927
(17,433)
(7,354)
350
11,626
88
(8,430)
(3,041)
74,982
67,809
27,290
(24,846)
(6,878)
(1,098)
57
16
-
5,899
68,249
INTEGRATED ANNUAL REPORT 2023
496
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 25: SUBORDINATED BONDS AND LOANS (in HUF mn)
Within one year
In HUF
In foreign currency
Over one year
In HUF
In foreign currency
Total
Types of subordinated bonds and loans 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 denominated in foreign currency
31/12/2023
31/12/2022
-
19,727
19,727
-
542,669
542,669
562,396
-
3,395
3,395
-
298,589
298,589
301,984
31/12/2023
31/12/2022
19,727
542,669
562,396
7,798
294,186
301,984
31/12/2023
31/12/2022
-
2.90% - 8.75%
-
2.90% - 5.00%
31/12/2023
31/12/2022
6.17%
3.10%
Subordinated bonds and loans can be detailed as follows:
Type
Nominal
value
Date of
issuance
Date of
maturity
Issue
price
Interest conditions
Subordinated
bond
Subordinated
bond
Subordinated
bond
Subordinated
loan
Subordinated
bond
Subordinated
bond
EUR 231
million
EUR 497
million
USD 650
million
USD 17
million
EUR 7.46
million
EUR 90.4
million
07/11/2006
Perpetual
99.375%
Three-month EURIBOR +
3%, variable after year 10
(payable quarterly)
15/07/2019
15/07/2029
99.738%
Fixed 2.875%, annually
15/02/2023
15/05/2033
99.417%
05/06/2018
30/06/2025
100.00%
Fix 8.75%, annually
Bullet repayment, once at the
end of the loan agreement
26/12/2023
26/12/2030
100.00%
Fix 4.50%, semi-annually
09/10/2019
09/10/2029
100.00%
Fix 4.00%, annually
Interest rate
as at 31
December
2023
6.97%
2.88%
8.75%
5.00%
4.50%
4.00%
INTEGRATED ANNUAL REPORT 2023
497
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 25: SUBORDINATED BONDS AND LOANS (in HUF mn) [continued]
Subordinated bonds and loans can be detailed as follows [continued]:
Type
Nominal
value
Date of
issuance
Date of
maturity
Issue
price
Interest conditions
Subordinated
loan
Subordinated
loan
Subordinated
loan
Subordinated
loan
UZS 104,007
million
UZS 26,857
million
UZS 118,397
million
USD 11.89
million
30/04/2019
10/11/2028
100.00%
Fix 3.00%, quarterly
30/04/2019
10/11/2029
100.00%
Fix 3.00%, quarterly
30/04/2019
10/11/2030
100.00%
Fix 3.00%, quarterly
30/03/2023
31/03/2030
100.00%
Fix 0.00%, quarterly
Interest rate
as at 31
December
2023
3.00%
3.00%
3.00%
0.00%
INTEGRATED ANNUAL REPORT 2023
498
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 26: SHARE CAPITAL (in HUF mn)
Authorized, issued and fully paid:
Ordinary shares
31/12/2023
31/12/2022
28,000
28,000
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.
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.
INTEGRATED ANNUAL REPORT 2023
499
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 27: RETAINED EARNINGS AND RESERVES (in HUF mn)
In 2023 dividend of HUF 84,000 million was paid out from the profit of the year 2022, which meant HUF 300
dividend per share payable to the shareholders. In 2024 dividend of HUF 150,000 million are expected to be
proposed by the Management from the profit of the year 2023, which means HUF 535.71 dividend per share
payable to the shareholders.
The retained earnings and reserves according to IFRS contains the retained earnings (HUF 459,037 million and
HUF 774,151 million) and reserves (HUF 3,720,285 million and HUF 2,621,064 million) as at 31 December 2023
and 2022, 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, 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 HUF 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
37,600 million and HUF 237,853 million as at 31 December 2023 and 2022, respectively.
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 amended final maturity of the share
swap agreement is 11 July 2027, until which any party can initiate cash or physical settlement of the transaction.
Option reserve represents the written put option over OTP ordinary shares that are deducted 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 shareholders’ equity is related to SKB
Bank, OTP Luxembourg S.à r.l., OTP banka d.d. and Crnogorska komercijalna banka a.d.
INTEGRATED ANNUAL REPORT 2023
500
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 27: RETAINED EARNINGS AND RESERVES (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
Net investment hedge in foreign operations
Profit after income tax
Changes in equity accumulated in the previous
year at the subsidiaries and due to consolidation
Foreign currency translation differences
Retained earnings and other reserves 1
31/12/2023
31/12/2022
459,037
52
(55,468)
197,294
144
(33,229)
52,402
(30,113)
988,658
2,562,945
37,600
4,179,322
774,151
52
(55,468)
129,902
544
(107,676)
49,110
(27,405)
346,354
2,047,798
237,853
3,395,215
1See more details in the Consolidated Statement of Comprehensive Income and in the Consolidated statement of Changes in equity on page 8
and 9.
Fair value adjustment of securities at fair value
through other comprehensive income
31/12/2023
31/12/2022
Balance as at 1 January
Change of fair value
Deferred tax related to change of fair value
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
(164,432)
89,047
(12,725)
368
(54)
1,399
(86,397)
(7,653)
(180,981)
22,401
1,040
(194)
955
(164,432)
31/12/2023
31/12/2022
39,625
8,491
(8,137)
(2,527)
(2,879)
34,573
6,710
40,664
(11,391)
(43)
3,685
39,625
INTEGRATED ANNUAL REPORT 2023
501
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 27: RETAINED EARNINGS AND RESERVES (in HUF mn) [continued]
Fair value changes of equity instruments
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
Closing balance
31/12/2023
31/12/2022
17,131
6,672
(947)
(3,978)
(283)
18,595
12,633
5,394
(1,282)
-
386
17,131
31/12/2023
31/12/2022
(27,405)
(2,708)
(30,113)
(27,405)
-
(27,405)
Actuarial loss related to defined employee benefits
31/12/2023
31/12/2022
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
544
(350)
(8)
(42)
144
(471)
1,097
(43)
(39)
544
Foreign currency translation difference
31/12/2023
31/12/2022
Balance as at 1 January
Change of foreign currency translation
Closing balance
237,853
(200,253)
37,600
58,164
179,689
237,853
INTEGRATED ANNUAL REPORT 2023
502
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 28: TREASURY SHARES (in HUF mn)
Nominal value (Ordinary shares)
Carrying value at acquisition cost
31/12/2023
31/12/2022
1,267
120,489
1,132
106,862
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
31/12/2023
31/12/2022
11,318,096
3,948,338
(2,599,664)
12,666,770
10,906,881
1,801,256
(1,390,041)
11,318,096
31/12/2023
31/12/2022
106,862
39,818
(26,191)
120,489
106,941
16,268
(16,347)
106,862
INTEGRATED ANNUAL REPORT 2023
503
OTP BANK
IFRS REPORT (CONSOLIDATED)
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
Dividend paid to non-controlling interest
Purchase of non-controlling interest
Foreign currency translation difference
Closing balance
31/12/2023
31/12/2022
5,959
3,149
1,801
(2,118)
(159)
(672)
7,960
6,198
-
727
-
(886)
(80)
5,959
The non-controlling interest is not significant in respect of the whole OTP Group.
INTEGRATED ANNUAL REPORT 2023
504
OTP BANK
NOTE 30:
INTEREST INCOME, INCOME SIMILAR TO INTEREST INCOME AND EXPENSE
(in HUF mn)
IFRS REPORT (CONSOLIDATED)
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 credit institutions
loans mandatorily at fair value through profit or loss
swap deals related to clients
rental income
non-trading instruments 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
Year ended 31
December 2023
Year ended 31
December 2022
1,348,528
242,256
100,749
55,320
354,208
195,921
684
17,011
2,314,677
390,648
92,117
138,567
12,255
-
633,587
909,540
139,445
74,994
53,078
62,120
161,938
20,483
4,261
1,425,859
344,070
54,036
68,123
9,264
54
475,547
2,948,264
1,901,406
Year ended 31
December 2023
Year ended 31
December 2022
512,481
481,807
278,907
76,465
116,628
32,565
11,443
5,313
2,970
40,398
2,581
1,561,558
369,804
254,424
128,153
33,682
27,838
8,986
11,775
5,141
2,296
31,006
1,433
874,538
INTEGRATED ANNUAL REPORT 2023
505
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 31: LOSS ALLOWANCES / IMPAIRMENT / PROVISIONS (in HUF mn)
Loss allowance on loans
Loss allowance for the period
Release of loss allowance
from this: impairment gain
Income from loan recoveries
Income from recoveries exceeding the gross loans
Impairment gain
Income from provisions on loans before OTP acquisition
Income from recoveries of written-off, but
legally existing loans
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
(Release of loss allowance ) / Loss allowance
on due from banks, balances with
National Banks, on placements and on repo receivables
Allowance for the period
Release of allowance
(Release of loss 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) / Provision for impairment of
intangible , tangible assets subject to operating lease
and of investment properties
Impairment for the period
Release of impairment
(Release of) / Provision for
commitments and guarantees given
Provision for the period
Release of provision
Loss allowances / Impairment and provisions
Year ended 31
December 2023
Year ended 31
December 2022
714,784
(561,813)
10,336
(39,948)
(11,015)
(20,022)
(816)
644,137
(457,361)
9,517
(65,514)
(6,899)
(50,202)
(1,581)
(8,095)
(6,832)
91
35,494
(37,150)
111,458
20,286
(22,430)
(2,144)
19,366
(28,197)
(8,831)
62
(1,394)
(1,332)
104,871
(124,741)
(19,870)
79,281
(13,346)
48,533
(25,020)
131,429
46,811
(46,427)
384
77,027
(16,266)
60,761
1,389
(185)
1,204
97,221
(91,304)
5,917
199,695
INTEGRATED ANNUAL REPORT 2023
506
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 32: NET PROFIT FROM FEES AND COMMISSIONS (in HUF mn)
Income from fees and commissions
Year ended 31
December 2023
Year ended 31
December 2022
Fees and commissions related to lending1
45,741
41,452
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
Total
291,530
164,161
120,693
68,826
35,545
47,445
21,727
65,641
815,568
861,309
247,625
132,710
102,936
61,272
32,172
29,906
19,196
49,597
675,414
716,866
1 Fees and commissions related to lending aren’t included in the effective interest rate calculation due to their nature.
Expense from fees and commissions
Year ended 31
December 2023
Year ended 31
December 2022
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 agent fee
Other
Total
Net profit from fees and commissions
66,747
36,386
9,638
10,501
7,824
7,004
1,737
705
4,965
739
1,684
21,386
169,316
691,993
53,983
28,385
8,865
9,445
5,292
4,230
1,576
985
576
333
1,912
16,793
132,375
584,491
INTEGRATED ANNUAL REPORT 2023
507
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 33: GAINS AND LOSSES BY TRANSACTIONS (in HUF mn)
Gains and losses by transactions
Gain by transactions
Loss by transactions
Gain from derecognition of loans, finance lease
Gain by transactions
Loss by transactions
Loss from derecognition of securities
and other receivables at amortized cost
Loss from derecognition of financial
assets at amortized cost
Year ended 31
December 2023
Year ended 31
December 2022
4,972
(3,629)
1,343
1,110
(19,635)
(18,525)
(17,182)
6,809
(3,254)
3,555
41
(5,169)
(5,128)
(1,573)
Derecognition of financial assets is mainly related to sale transactions both in case of securities and loans due to
better investment options related to short-term opportunities on the market.
Foreign exchange result consists of revaluation difference from converting assets and liabilities in foreign
currencies into the presentation currency of the consolidation financial statements.
Gains and losses by transactions
Gain by transactions
Loss by transactions
Fx gain / (loss) on securities at fair value through profit or loss
Gain by transactions
Loss by transactions
Fx gain / (loss) on derecognition of investment
in subsidiaries, associates
Gain by transactions
Loss by transactions
Fx loss on securities at fair value
through other comprehensive income
Gain / (Loss) on securities, net
Gains and losses by transactions
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
Gain / (Loss) on loans mandatorily at fair value through profit
or loss (adjustment resulting from change in market factors)
Gain by transactions
Loss by transactions
(Loss) / Gain 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
Year ended 31
December 2023
Year ended 31
December 2022
18,497
(10,784)
7,713
1,478
(687)
791
1,175
(2,396)
(1,221)
7,283
16,477
(19,645)
(3,168)
-
(323)
(323)
4,502
(5,516)
(1,014)
(4,505)
Year ended 31
December 2023
Year ended 31
December 2022
8,875
(635)
8,240
115,152
(21,571)
93,581
766
(7,974)
(7,208)
94,613
4,033
(3,768)
265
50,693
(60,234)
(9,541)
7,809
(2,577)
5,232
(4,044)
INTEGRATED ANNUAL REPORT 2023
508
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 33: GAINS AND LOSSES BY TRANSACTIONS (in HUF mn) [continued]
Gains and losses by transactions
Gain by transactions
Loss by transactions
(Loss) / Gain from fx swap, swap and option deals
Gain by transactions
Loss by transactions
Gain / (Loss) from option deals
Gain by transactions
Loss by transactions
Gain from commodities deals
Gain by transactions
Loss by transactions
Gain / (Loss) from futures deals
Net results on derivative instruments and hedge relationships
Year ended 31
December 2023
Year ended 31
December 2022
85,387
(104,061)
(18,674)
6,569
(6,554)
15
501,377
(497,715)
3,662
2,633
(396)
2,237
(12,760)
138,675
(136,366)
2,309
4,156
(5,082)
(926)
148,699
(132,968)
15,731
752
(1,506)
(754)
16,360
Gains and losses attributable to the hedged risk on the hedged item and on the hedging instruments and
ineffectiveness in case of fair value hedge on amortised cost line items are as follows:
Fair value hedge
Hedged items
Hedging instrument
Hedge effectiveness
31/12/2023
31/12/2022
(15,433)
2,855
(12,578)
6,750
(9,352)
(2,602)
INTEGRATED ANNUAL REPORT 2023
509
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 34: OTHER OPERATING INCOME AND EXPENSES AND OTHER ADMINISTRATIVE
EXPENSES (in HUF mn)
Other operating income
Year ended 31
December 2023
Year ended 31
December 2022
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 written-of receivable
Income from air passenger transport
Gains on transactions related to insurance activity
Non-repayable assets received
Negative goodwill due to acquisition
Other income from non-financial activities
Total
72,323
3,911
7,195
2,780
1,563
(4,874)
4,163
1,958
1,915
531
198,361
34,441
324,267
62,809
23,197
5,232
2,175
1,250
(1,939)
3,727
1,863
1,369
447
3,784
21,016
124,930
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
(Release of impairment) / Impairment on investments1
Non-repayable assets contributed
Impairment on tangible and intangible assets
Impairment and loan losses on other non-financial assets
and assets measured under IAS 2
Operating expenses of assets subject to
operating lease and investment property
Other
Other expenses from non-financial activities
Other costs
Total
1 See details in Note 12.
Year ended 31
December 2023
Year ended 31
December 2022
47,780
13,494
14,475
-
8,919
(21)
885
5,620
1,312
1,252
16,854
6,711
10,143
110,570
45,612
1,421
16,370
20,868
13,065
898
1,339
627
2,001
883
22,658
5,379
17,279
125,742
INTEGRATED ANNUAL REPORT 2023
510
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 34: 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, amortization of tangible, intangible assets,
right-of-use assets 2
Other administrative expenses
Taxes, other than income tax 3
Services
Professional fees
Fees payable to authorities and other fees
Advertising
Administration expenses
Rental fees
Subtotal
Total
Year ended 31
December 2023
Year ended 31
December 2022
367,910
58,267
52,519
478,696
288,286
48,334
41,108
377,728
111,996
101,125
165,632
182,393
27,935
58,949
26,067
16,685
5,984
483,645
1,074,337
193,543
142,259
21,807
52,631
19,084
16,721
5,118
451,163
930,016
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 56,572 million for the year ended 31 December 2023 and
HUF 99,974 million for the year ended 31 December 2022, recognized as an expense thus decreased the corporate tax base. For the year ended
31 December 2023 financial transaction duty was paid by the Bank in the amount of HUF 97,704 million while for the year ended 31 December
2022 the same duty was HUF 88,642 million.
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
Year ended 31
December 2023
Year ended 31
December 2022
In thousand EUR
573
923
1,184
1,088
550
4,318
458
738
1,120
1,805
426
4,547
Year ended 31
December 2023
Year ended 31
December 2022
In thousand EUR
3,648
-
88
945
4,681
2,354
-
209
1,015
3,578
INTEGRATED ANNUAL REPORT 2023
511
OTP BANK
IFRS REPORT (CONSOLIDATED)
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, 15% in Serbia and Albania, 16% in Romania, 18% in Ukraine and Croatia, 19% in Slovenia, 20% in
Russia and Uzbekistan, 25.5% in the Netherlands and 35% in Malta.
The breakdown of the income tax expense is:
Current tax expense
Deferred tax income
Total
A reconciliation of the net deferred tax asset/liability is as follows:
Balance as at 1 January
Deferred tax (expense) / income in profit or loss
Deferred tax (liability) / receivable related to items
recognized directly in equity and in Comprehensive Income
Due to acquisition of subsidiary
Assets held for sale
Foreign currency translation difference
Closing balance
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
Difference in depreciation of right-of-use assets
Loss allowance on investment
Interbank placements and receivables
Fair value adjustment of securities at fair value
through profit or loss
Difference in accounting for investment properties
Issued securities
Amounts unenforceable by tax law
Other
Deferred tax asset
31/12/2023
31/12/2022
185,055
4,423
189,478
90,931
(32,331)
58,600
31/12/2023
31/12/2022
35,327
(4,423)
(10,072)
12,034
(394)
(5,444)
27,028
(8,936)
32,286
14,591
-
-
(2,614)
35,327
31/12/2023
31/12/2022
46,155
13,244
5,145
589
1,377
92
6,904
1,574
12
2,824
-
2,457
24,511
189
74
90
2,630
7
38
43
1,204
95,915
7,668
8
1,304
214
7,227
564
430
7,563
12,103
159
19,744
564
84
-
4,023
51
-
32
477
75,459
INTEGRATED ANNUAL REPORT 2023
512
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 35:
INCOME TAXES (in HUF mn) [continued]
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
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
Unused tax allowance
Loss allowance / impairment on other
financial, non-financial assets
Repurchase agreement and security lending
Provision on other financial, non-financial liabilities
Difference in accounting for investment properties
Issued securities
Difference in accounting for leases
Difference in depreciation of right-of-use assets
Other
Deferred tax liabilities
31/12/2023
31/12/2022
(10,873)
(10,944)
(5,189)
(2)
(1,673)
(312)
(3,580)
(649)
(1,487)
(1,196)
(1)
(11,011)
(36)
(917)
(748)
(298)
(1,330)
(5)
(29,580)
(68,887)
(4,586)
-
(1,293)
(25)
(959)
(639)
(4,383)
(1,269)
-
(91)
(265)
-
(204)
-
-
(272)
(15,202)
(40,132)
Net deferred tax asset
(amount presented in the
consolidated statement of financial position)
Deferred tax assets
Deferred tax liabilities
31/12/2023
31/12/2022
27,028
35,327
55,691
(28,663)
75,421
(40,094)
Among deferred tax assets the tax accruals are included the following accruals by entities:
Tax accrual caused by negative
31/12/2023
31/12/2022
taxable income
OTP Bank
OTP Real Estate Leasing Ltd.
Nagisz Ltd.
Nagisz Ltd.
Nagisz Ltd.
Nova KBM
-
102
-
-
56
24,353
24,511
19,424
142
55
56
67
-
19,744
Date until
it can be used
31 December 2027
31 December 2030
31 December 2025
31 December 2026
31 December 2030
no time limit
Residual tax loss for which the Nova KBM has not made deferred tax assets amounts to HUF 409,628 million,
so the unrecognized deferred tax assets amount to HUF 90,118 million as at 31 December 2023. Tax losses can
be carried forward indefinitely in accordance with the Slovenian Corporate Income Tax Act.
INTEGRATED ANNUAL REPORT 2023
513
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 35:
INCOME TAXES (in HUF mn) [continued]
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:
31/12/2023
31/12/2022
1,201,183
174,872
377,678
53,933
Deferred use of tax allowance
Tax effect of transaction costs related to share-based payment
-
(12,102)
recognized directly in shareholders' equity
Reversal of statutory general provision
Foreign withholding tax
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
(amount presented in the consolidated statement
of financial position)
Current income tax receivables
Current income tax payable
Global minimum tax
312
(9)
7,218
(9,073)
55
989
(12,304)
162,060
15.77%
27,418
189,478
267
(5)
-
(1,894)
61
(23)
(3,455)
36,782
15.52%
21,818
58,600
31/12/2023
31/12/2022
(62,175)
(23,216)
7,773
(69,948)
5,650
(28,866)
The global minimum tax legislation has been enacted, or substantively enacted, in certain jurisdictions the Group
operates, mainly in the EU Member States. The Group is in scope of the global minimum tax legislation. The
legislation will be effective for the Group’s financial year beginning 1 January 2024 and introduces a minimum
rate of effective taxation of 15%.
From an accounting perspective, it is unclear if the global minimum tax rules create additional temporary
differences, whether to remeasure deferred taxes for the global minimum tax rules and which tax rate to use to
measure deferred taxes. In response to this uncertainty, IAS 12 ‘Income taxes’ has been amended to introduce a
mandatory temporary exception to the requirements of IAS 12. Under the mandatory temporary exception, a
company does not recognize or disclose information about deferred tax assets and liabilities related to the global
minimum tax rules. The Group applied the temporary exception for the year-ended 31 December 2023.
The Group has performed an assessment of the Group’s potential exposure to top-up tax payable under the global
minimum tax rules.
INTEGRATED ANNUAL REPORT 2023
514
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 35:
INCOME TAXES (in HUF mn) [continued]
Global minimum tax [continued]
The assessment of the potential exposure to top-up tax is based on the most recent information available regarding
the financial performance of the group entities in the Group. Based on the assessment, the Group has identified
potential exposure to top-up tax in respect of profits earned in Bulgaria, Hungary, Moldova and Serbia. The
potential exposure comes from the constituent entities in these jurisdictions where the expected global minimum
tax effective tax rate might be below 15% based on the currently available information. The global minimum tax
rate might be lower in these jurisdictions mainly due to the low statutory domestic tax rate. As for Hungary, the
estimation of the global minimum tax effective tax rate is complex for the following reasons. In Hungary, the most
relevant taxes determining the global minimum tax effective tax rate are corporate income tax, local business tax
and innovation contribution. The taxable income for local business tax and innovation contribution (with a
combined statutory tax rate of 2.3%) purposes is significantly higher than the taxable income for corporate income
tax purposes due to the scope (and hence, the amount) of deductible expenses under local business tax and
innovation contribution being more limited than under corporate income tax. The proportion of taxable income for
local business tax and innovation contribution and corporate income tax, respectively, may vary year by year to a
significant extent making the estimation of the global minimum tax effective tax rate complex. The global
minimum tax rate in Hungary is expected to fluctuate around 15%, in some years potentially being under 15%.
Had the global minimum tax legislation been effective for the current year ending 31 December 2023, the Group’s
IFRS effective tax rate adjusted to include the estimated top-up taxes would have been approximately 16.93%,
1.16 percentage point higher than the reported effective tax rate under IFRS of 15.77%. The increase in the
effective tax rate under IFRS for the Group is driven by top up taxes arising on profits earned in Bulgaria, Hungary,
Moldova and Serbia (estimated top-up tax for Bulgaria: HUF 11,100 million, Hungary: HUF 2,000 million,
Moldova: HUF 450 million and Serbia: HUF 300 million). In respect of Hungary, the one-off income from the
changes in the fair value of the OTP Bank Plc shares held by the OTP Bank Employee Partial Ownership Plan
Organization was excluded from the global minimum tax calculation.
INTEGRATED ANNUAL REPORT 2023
515
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 36:
LEASES (in HUF mn)
The Group as a lessee:
Right-of-use assets by class of underlying assets as at 31 December 2023:
31/12/2023
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
15,094
33,091
69,603
1,226
2,656
5,095
16,320
35,747
74,698
Right-of-use assets by class of underlying assets as at 31 December 2022:
31/12/2022
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
17,680
19,416
56,842
328
1,931
2,095
18,008
21,347
58,937
The total cash outflow for leases was HUF 40,746 million as at 31 December 2023 and HUF 31,872 million as at
31 December 2022.
The Group mainly leases real estates, 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
31/12/2023
31/12/2022
12,425
63,888
76,313
13,757
50,021
63,778
31/12/2023
31/12/2022
32,119
44,194
76,313
38,636
25,142
63,778
On 31 December 2023 and 2022 HUF 335 million and HUF 44 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 2,868 million as at 31 December 2023 and would have been HUF 4,220
million as at 31 December 2022 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.
INTEGRATED ANNUAL REPORT 2023
516
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 36: LEASES (in HUF mn) [continued]
The Group as a lessee [continued]:
Amounts recognized in profit and loss
31/12/2023
31/12/2022
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:
2,970
3,753
1,323
4
-
-
2,296
3,872
919
-
6
-
The Group’s leasing activities are most significant in Hungary, Bulgaria, Slovenia, Croatia and Ukraine. 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
31/12/2023
31/12/2022
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
527,875
379,355
280,865
186,890
117,878
65,018
1,557,881
68
1,557,949
(223,217)
1,334,732
(45,020)
1,289,712
438,205
391,229
265,744
175,723
175,420
69,877
1,516,198
395
1,516,593
(164,710)
1,351,883
(53,131)
1,298,752
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
Assets held for sale
Decrease due to early repayment
Decrease due to regular lease payment
Foreign currency translation difference
Closing balance
31/12/2023
31/12/2022
1,351,883
678,107
103,223
(115)
(11,259)
(2,456)
(66,511)
(78,856)
(589,498)
(49,786)
1,334,732
1,212,631
662,694
82,181
(484)
(3,616)
(1,697)
-
(77,500)
(572,293)
49,967
1,351,883
INTEGRATED ANNUAL REPORT 2023
517
OTP BANK
IFRS REPORT (CONSOLIDATED)
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:
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
Assets held for sale
Foreign currency translation difference
Closing balance
31/12/2023
31/12/2022
53,131
35,494
(37,150)
(98)
(7)
(545)
(2,906)
(2,899)
45,020
30,003
49,433
(25,020)
(319)
(516)
(61)
-
(389)
53,131
Result from finance leases
31/12/2023
31/12/2022
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
-
100,749
-
-
78,262
-
The Group as a lessor, operating lease:
Amounts receivable under operating leases
31/12/2023
31/12/2022
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
13,464
8,540
7,500
6,187
3,703
1,786
41,180
6,636
6,177
4,782
3,481
2,644
2,173
25,893
Result from operating leases
31/12/2023
31/12/2022
Lease income
Therein lease income relating to variable lease
payments that do not depend on an index or a rate
15,035
11,439
-
-
INTEGRATED ANNUAL REPORT 2023
518
OTP BANK
IFRS REPORT (CONSOLIDATED)
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.
INTEGRATED ANNUAL REPORT 2023
519
OTP BANK
IFRS REPORT (CONSOLIDATED)
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.
In 2022 in Slovenia and Romania the PD parameter estimation was extended to estimate parameters based on
rating categories only. The more granular estimation resulted HUF 4,211 million less impairment in Slovenia,
while in Romania the HUF 7,310 million impairment release outcome of the review was netted with a post model
adjustment resulting neutral overall effect.
During 2023 there were ECL SICR methodological changes in Hungary. The previously used methodology –
which was based on rating category changes – was replaced by the advanced, lifetime-based methodology to
identify the significant increase in credit risk. The changes resulted HUF 2.8 billion more impairment in 2023. The
impact of the SICR methodology changes and parameter updates are presented under Note 11 as part of effect of
change in parameters used for loss allowance calculation line item.
INTEGRATED ANNUAL REPORT 2023
520
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.1. Gross values and loss allowance / provision of 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 2023:
31/12/2023
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 income1
Securities at amortized cost
Financial assets total
Loan commitments given
Financial guarantees given
Other commitments given
Financial liabilities total
Gross carrying amount / Notional value
Accumulated loss allowance / Provision
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Carrying
amount /
Exposure
1,566,998
223,884
4,083,763
1,569,167
224,477
3,620,661
63
-
432,031
7,186,610
4,533,639
6,052,951
4,073,601
1,157,654
524,459
753,268
641,777
477,476
483,993
573,379
459,343
17,676,533 15,263,928
1,095,039
1,289,712
1,540,980
5,249,272
1,423,021
5,228,599
27,547,379 24,804,231
4,495,101
1,381,657
829,611
6,706,369
4,755,009
1,474,285
864,718
7,094,012
245,532
71,559
24,409
2,455,644
176,856
87,085
12,224
2,731,872
277,346
92,012
34,112
403,470
15
-
93,436
206,352
299,390
93,106
14,946
691
707,921
62,799
30,874
41,097
842,706
11,673
10,222
5,909
27,804
-
-
54,751
39,638
11,637
1,569,245
224,477
4,200,879
7,456,595
4,909,087
36,449
596
-
143,071
38
859,080
660,480
484,443
18,570,564
1,334,732
-
-
143,109
823
64
1,619
2,506
1,540,980
5,281,920
28,521,918
4,784,943
1,483,955
871,251
7,140,149
2,182
593
18,097
50,361
52,181
8,035
5,050
4,068
137,792
5,331
11,395
17,141
174,434
19,890
6,392
1,860
28,142
55
-
27,882
82,517
89,813
30,768
4,891
2,273
238,144
8,342
258
755
247,554
7,772
2,012
1,388
11,172
10
-
46,945
127,352
227,238
55,620
8,287
626
466,068
31,309
22,920
14,752
535,059
2,007
1,206
2,354
5,567
-
-
24,192
9,755
6,216
11,389
475
-
52,027
38
-
-
52,065
265
60
931
1,256
2,247
593
117,116
269,985
375,448
105,812
18,703
6,967
894,031
45,020
34,573
32,648
1,009,112
29,934
9,670
6,533
46,137
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.
INTEGRATED ANNUAL REPORT 2023
521
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.1. Gross values and loss allowance / provision of 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 2022:
31/12/2022
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 income1
Securities at amortized cost
Financial assets total
Loan commitments given
Financial guarantees given
Other commitments given
Financial liabilities total
Gross carrying amount / Notional value
Accumulated loss allowance / Provision
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Carrying
amount /
Exposure
1,351,082
41,009
4,433,192
1,354,832
41,250
3,975,636
63
-
373,433
6,824,520
3,199,520
5,912,383
2,879,094
996,292
363,047
594,427
512,580
530,219
460,940
433,316
515,299
16,094,458 14,176,668
1,045,688
1,298,752
1,699,446
4,891,938
1,642,481
4,867,061
25,376,685 23,127,980
3,954,773
1,378,871
509,314
5,842,958
4,191,766
1,447,014
559,224
6,198,004
114,173
82,146
20,229
1,949,320
235,817
28,285
15,141
2,228,626
258,655
80,187
20,394
359,236
24
-
161,684
202,188
388,258
64,383
20,705
746
837,964
70,050
28,680
52,785
989,503
16,660
7,515
34,805
58,980
-
-
53,844
25,350
13,495
3,079
1,098
-
96,866
328
-
-
97,194
201
1
-
202
1,354,919
41,250
4,564,597
7,136,213
3,643,894
642,575
537,265
536,274
17,060,818
1,351,883
1,699,446
4,934,987
26,443,303
4,230,289
1,466,574
564,513
6,261,376
3,801
241
12,638
64,479
61,424
4,710
5,751
3,187
152,189
4,797
13,754
23,675
198,457
24,124
14,678
2,755
41,557
12
-
23,738
24
-
78,932
100,793
81,256
138,877
294,251
9,136
6,830
2,212
223,965
15,241
1,040
611
240,869
11,285
2,932
904
15,121
32,558
11,199
656
556,473
32,875
24,831
18,763
632,966
3,085
1,950
1,630
6,665
-
-
16,097
7,544
7,443
1,744
905
-
33,733
218
-
-
33,951
29
-
-
29
3,837
241
131,405
311,693
444,374
48,148
24,685
6,055
966,360
53,131
39,625
43,049
1,106,243
38,523
19,560
5,289
63,372
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.
INTEGRATED ANNUAL REPORT 2023
522
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.2. Financial instruments under simplified approach by day-past-due categories
31/12/2023
Without delay
< 30 days
31 - 60 days
61 - 90 days
> 91 days
Closing balance
Expected credit loss rate
Gross value
Loss allowance
Net carrying amount
2.69%
114,764
3,082
117,846
2.69%
26,136
703
26,839
3.80%
2,340
89
2,429
6.03%
44.49%
1,029
62
1,091
67,177
29,890
97,067
211,446
33,826
245,272
31/12/2022
Without delay
< 30 days
31 - 60 days
61 - 90 days
> 91 days
Closing balance
Expected credit loss rate
Gross value
Loss allowance
Net carrying amount
1.83%
110,040
2,011
112,051
2.16%
26,052
562
26,614
2.43%
2,713
66
2,779
3.05%
47.32%
1,674
51
1,725
55,258
26,149
81,407
195,737
28,839
224,576
INTEGRATED ANNUAL REPORT 2023
523
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.3. Movement table of gross values on financial instruments
Movement of gross values of 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 2023:
31/12/2023
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
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
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
Securities at amortized cost
Financial assets subtotal
Opening
balance
23,127,980
1,354,832
41,250
14,176,668
1,045,688
1,642,481
4,867,061
2,228,626
63
-
1,949,320
235,817
28,285
15,141
989,503
24
-
837,964
70,050
Increases due
to origination
and
acquisition
Increase on
opening
balance
Decreases due to
payments and
derecognition
23,356,461
7,416,490
4,458,449
8,774,565
527,738
798,838
1,380,381
714,891
-
-
554,572
72,482
83,167
4,670
190,604
-
-
171,781
15,286
3,416,632
381,963
53,911
2,081,887
214,240
55,751
628,880
212,807
-
-
176,241
36,313
-
253
27,942
75
-
24,518
3,349
(22,203,492)
(7,453,395)
(4,337,597)
(7,499,976)
(597,894)
(1,006,842)
(1,307,788)
(638,272)
-
-
(459,903)
(148,456)
(21,461)
(8,452)
(252,740)
(84)
-
(214,793)
(25,520)
28,680
52,785
26,346,109
3,480
57
24,261,956
-
-
3,657,381
(1,231)
(11,112)
(23,094,504)
Transfers
between
stages
(net)
(508,278)
-
-
(496,301)
(10,997)
Changes due to
modifications
without
derecognition (net)
(306,140)
-
-
(306,192)
-
Decrease
due to
write-offs
Assets held
for sale
Foreign
exchange and
other adjustment
Closing
balance
(245)
-
-
(245)
-
(1,320,012)
(4,529)
-
(938,176)
(52,206)
(758,675)
(126,194)
8,464
(528,302)
(31,530)
24,804,231
1,569,167
224,477
15,263,928
1,095,039
-
(980)
441,295
-
-
436,755
3,560
-
980
66,975
-
-
59,541
7,434
-
-
(8)
52
-
34,021
-
-
34,021
-
-
-
16,888
-
-
16,888
-
-
-
(255,231)
-
-
(2,212)
-
-
(2,212)
-
-
-
(73,726)
-
-
(73,594)
(132)
-
-
(76,183)
(39,100)
(286,001)
(172,079)
-
-
(161,009)
(11,070)
-
-
(63,427)
-
-
(60,193)
(3,234)
(28,159)
(52,954)
(87,205)
-
-
(72,141)
(11,790)
(2,906)
(368)
(59,313)
-
-
(54,191)
(4,434)
1,423,021
5,228,599
2,731,872
63
-
2,455,644
176,856
87,085
12,224
842,706
15
-
707,921
62,799
-
-
(1,555,518)
(55)
(633)
(905,193)
30,874
41,097
28,378,809
INTEGRATED ANNUAL REPORT 2023
524
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.3. Movement table of gross values on financial instruments [continued]
Movement of gross values of 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 2023 [continued]:
31/12/2023
Opening
balance
Increases due
to origination
and
acquisition
Increase on
opening
balance
Decreases due to
payments and
derecognition
Transfers
between
stages
(net)
Changes due to
modifications
without
derecognition (net)
Decrease
due to
write-offs
Assets held
for sale
Foreign
exchange and
other adjustment
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
Securities at amortized cost
Financial assets total
Loan commitments and financial guarantees
97,194
-
-
96,866
328
19,386
-
-
19,386
-
41,718
-
-
41,366
352
(2,872)
-
-
(2,302)
(570)
-
-
26,443,303
-
-
24,281,342
-
-
3,699,099
-
-
(23,097,376)
8
-
-
5
3
-
-
-
-
-
-
-
-
(6,616)
-
-
(6,553)
(63)
(4,185)
-
-
(4,185)
(1,524)
-
-
(1,512)
(12)
143,109
-
-
143,071
38
-
-
(255,231)
-
-
(82,799)
-
-
(1,559,703)
-
-
(906,717)
-
-
28,521,918
given - stage 1
5,842,958
3,472,892
53,896,979
(56,158,534)
(152,848)
Loan commitments and financial guarantees
given - stage 2
359,236
178,252
127,132
(382,733)
138,545
Loan commitments and financial guarantees
given - stage 3
58,980
4,908
910
(48,833)
14,304
Loan commitments and financial guarantees
given - poci
Financial liabilities total
202
6,261,376
2,719
3,658,771
566
54,025,587
(972)
(56,591,072)
(1)
-
3,465
1,149
14
-
4,628
-
-
-
-
-
-
-
-
-
-
(198,543)
6,706,369
(18,111)
403,470
(2,479)
27,804
(8)
(219,141)
2,506
7,140,149
INTEGRATED ANNUAL REPORT 2023
525
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.3. Movement table of gross values on financial instruments [continued]
Movement of gross values of 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 2022:
Increases due
to origination
and
acquisition
Increase on
opening
balance
Decreases due to
payments and
derecognition
Transfers
between
stages (net)
Changes due to
modifications
without
derecognition (net)
Decrease
due to
write-offs
Foreign
exchange and
other
adjustment
Closing balance
31/12/2022
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
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
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
Securities at amortized cost
Financial assets subtotal
Opening
balance
20,342,780
1,587,827
61,342
11,666,666
959,361
2,187,835
3,879,749
2,053,839
-
-
1,820,486
210,955
1,699
20,699
800,245
28
-
758,273
41,944
14,852,553
5,090,200
739,740
6,965,634
647,071
330,078
1,079,830
839,840
-
-
706,756
130,936
557
1,591
99,966
11
-
86,193
9,549
2,438,184
77,646
10,235
1,639,278
279,937
(108,639)
539,727
220,448
-
-
135,633
84,815
-
-
104,996
-
-
73,473
31,085
(14,606,560)
(5,427,424)
(772,484)
(6,165,767)
(821,075)
(795,353)
(624,457)
(1,133,030)
-
-
(895,423)
(229,505)
(1)
(8,101)
(195,411)
(14)
-
(173,540)
(21,614)
(459,086)
(56)
-
(315,064)
(40,685)
(54,819)
(48,462)
191,126
63
-
133,003
31,836
25,896
328
267,514
(7)
-
181,635
8,829
28,923
48,134
(446)
(316,164)
-
-
(316,164)
-
-
-
(31,007)
-
-
(31,007)
-
-
-
11,053
-
-
11,053
-
-
-
(336,118)
(1,565)
-
-
(1,565)
-
-
-
(2,921)
-
-
(2,921)
-
-
-
(126,429)
(4)
-
(125,059)
(1,366)
-
-
(130,915)
877,838
26,639
2,417
703,650
21,079
83,379
40,674
90,331
-
-
82,793
6,780
134
624
27,569
10
-
25,936
1,623
-
-
995,738
-
-
23,196,864
-
4,213
15,792,359
-
438
2,763,628
(243)
-
(15,935,001)
23,127,980
1,354,832
41,250
14,176,668
1,045,688
1,642,481
4,867,061
2,228,626
63
-
1,949,320
235,817
28,285
15,141
989,503
24
-
837,964
70,050
28,680
52,785
26,346,109
526
INTEGRATED ANNUAL REPORT 2023
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.3. Movement table of gross values on financial instruments [continued]
Movement of gross values of 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 2022 [continued]:
31/12/2022
Opening
balance
Increases due
to origination
and
acquisition
Increase on
opening
balance
Decreases due to
payments and
derecognition
Transfers
between
stages (net)
Changes due to
modifications
without
derecognition (net)
Decrease
due to
write-offs
Foreign
exchange and
other
adjustment
Closing balance
POCI
Placements with other banks
Repo receivables
Loans at amortized cost
Finance lease receivables
Interest-bearing securities at fair value through
100,123
-
-
99,752
371
5,230
-
-
5,184
46
2,697
-
-
2,325
372
(7,353)
-
-
(6,865)
(488)
other comprehensive income
Securities at amortized cost
Financial assets total
-
-
23,296,987
-
-
15,797,589
-
-
2,766,325
-
-
(15,942,354)
446
-
-
426
20
-
-
-
22
-
-
22
-
(6,646)
-
-
(6,608)
(38)
-
-
(336,096)
-
-
(137,561)
2,675
-
-
2,630
45
-
-
998,413
97,194
-
-
96,866
328
-
-
26,443,303
Loan commitments and financial guarantees
given - stage 1
5,680,638
2,790,609
14,020,246
(16,759,280)
(164,405)
Loan commitments and financial guarantees
given - stage 2
207,874
178,600
106,136
(288,999)
138,354
Loan commitments and financial guarantees
given - stage 3
Loan commitments and financial guarantees
given - poci
Financial liabilities total
27,528
20,161
7,797
(23,934)
26,044
218
5,916,258
3
2,989,373
9
14,134,188
(67)
(17,072,280)
7
-
49,279
5,335
(178)
-
54,436
-
225,871
5,842,958
(11)
(1)
-
(12)
11,947
1,563
32
239,413
359,236
58,980
202
6,261,376
INTEGRATED ANNUAL REPORT 2023
527
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.4. 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 2023:
31/12/2023
Opening
balance
Increases due
to origination
and acquisition
Decreases
due to
derecognition
Transfers
between
stages (net)
Changes due to
change in credit
risk (net)
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
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
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
Securities at amortized cost
Loss allowance on financial assets
subtotal
198,457
3,801
241
152,189
4,797
13,754
23,675
240,869
12
-
223,965
15,241
1,040
611
632,966
24
-
556,473
32,875
182,142
21,893
28,013
120,934
2,665
5,346
3,291
63,850
-
-
56,062
2,774
4,603
411
62,579
1
-
52,104
10,474
(50,688)
(10,716)
(12,536)
(24,021)
(760)
(2,384)
(271)
(26,201)
-
-
(20,246)
(404)
(5,266)
(285)
(65,642)
-
-
(61,111)
(1,507)
24,831
18,763
1,072,292
-
-
308,571
(413)
(2,611)
(142,531)
(120,176)
-
-
(118,838)
(1,255)
-
(83)
59,380
-
-
59,297
-
-
83
60,796
-
-
59,541
1,255
-
-
-
(7,185)
(13,863)
(15,120)
34,649
838
(5,302)
(8,387)
(65,542)
147
-
(57,563)
(8,052)
(19)
(55)
5,297
50
-
13,856
(8,268)
(1)
(340)
(67,430)
Changes due to
modifications
without
derecognition (net)
(3,832)
-
-
(3,832)
-
-
-
6,335
-
-
6,335
-
-
-
2,207
-
-
2,207
-
-
-
4,710
Decrease in
loss allowance
account due to
write-offs
Assets held
for sale
(137)
-
-
(137)
-
-
-
(1,131)
-
-
(1,131)
-
-
-
(67,994)
-
-
(67,862)
(132)
-
-
(69,262)
(11,421)
(12)
-
(10,089)
(683)
-
(637)
(16,538)
-
-
(15,806)
(732)
-
-
(35,475)
-
-
(33,984)
(1,491)
-
-
(63,434)
Foreign
exchange
and other
adjustment
(12,726)
1,079
(5)
(13,063)
(271)
(19)
(447)
(13,468)
(104)
-
(12,769)
(485)
(100)
(10)
(59,675)
(65)
-
(55,156)
(1,897)
(1,497)
(1,060)
(85,869)
Closing
balance
174,434
2,182
593
137,792
5,331
11,395
17,141
247,554
55
-
238,144
8,342
258
755
535,059
10
-
466,068
31,309
22,920
14,752
957,047
INTEGRATED ANNUAL REPORT 2023
528
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.4. 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 2023 [continued]:
31/12/2023
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
Assets held
for sale
Foreign
exchange
and other
adjustment
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
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
33,951
-
-
33,733
218
-
-
1,106,243
41,557
15,121
6,665
29
63,372
-
-
-
-
-
(2,603)
-
-
(2,302)
(301)
-
-
308,571
-
-
(145,134)
-
-
-
-
-
-
-
-
17,029
-
-
16,825
204
-
-
(50,401)
16,878
(8,107)
(12,482)
(4,418)
2,686
852
832
21,248
(4,336)
(1,499)
(34)
(13,976)
9,186
3,296
-
-
(11,278)
(3,388)
430
(18,654)
-
-
-
-
-
-
-
4,710
4
307
9
-
320
(3,702)
-
-
(3,639)
(63)
-
-
(72,964)
(1,476)
-
-
(1,476)
-
-
-
(64,910)
8,866
-
-
8,886
(20)
52,065
-
-
52,027
38
-
-
(77,003)
-
-
1,009,112
-
-
-
-
-
-
-
-
-
-
(5,290)
28,142
(514)
(368)
(1)
(6,173)
11,172
5,567
1,256
46,137
INTEGRATED ANNUAL REPORT 2023
529
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.4. 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 2022:
31/12/2022
Opening
balance
Increases due
to origination
and acquisition
Decreases
due to
derecognition
Transfers
between
stages (net)
Changes due to
change in credit
risk (net)
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
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
-
857,514
138,017
34,558
4,457
93,238
2,647
3,117
52,749
-
-
42,790
6,646
3,313
72,119
11
-
34,977
12,732
(43,066)
(11,574)
(389)
(28,281)
(1,105)
(1,717)
(24,038)
-
-
(22,408)
(1,630)
-
(52,134)
(14)
-
(49,466)
(2,654)
(120,475)
(1,345)
-
(101,521)
1,668
(19,277)
9,927
1,345
-
12,796
(4,296)
82
110,548
-
-
88,725
2,628
24,399
262,885
-
(119,238)
19,195
-
71,441
(20,902)
(1,044)
56,228
(3,384)
40,543
(26,352)
(1,518)
-
(23,558)
2,102
(3,378)
69,855
(121)
-
67,932
3,374
(1,330)
114,944
Changes due to
modifications
without
derecognition (net)
(4,547)
-
-
(4,576)
29
-
6,158
-
-
6,174
(16)
-
743
-
-
743
-
Decrease in
loss allowance
account due to
write-offs
(88)
-
-
(88)
-
(959)
-
-
(959)
-
-
(124,057)
(4)
-
(122,687)
(1,366)
Foreign
exchange
and other
adjustment
14,743
98
(3,073)
16,800
510
408
15,144
185
-
13,498
1,295
166
49,050
124
-
43,678
3,918
Closing
balance
198,457
3,801
241
152,189
4,797
37,429
240,869
12
-
223,965
15,241
1,651
632,966
24
-
556,473
32,875
-
2,354
-
(125,104)
1,330
78,937
43,594
1,072,292
INTEGRATED ANNUAL REPORT 2023
530
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.4. 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 2022 [continued]:
31/12/2022
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
Foreign
exchange
and other
adjustment
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
43,590
-
-
43,402
188
-
-
-
-
(3,534)
-
-
(3,434)
(100)
-
901,104
-
262,885
-
(122,772)
-
-
-
-
-
-
-
35,523
10,030
6,409
28
51,990
22,118
(6,033)
(10,309)
4,024
1,975
5
28,122
(2,236)
(619)
(9)
(8,897)
6,939
3,370
-
-
6,116
-
-
6,098
18
-
121,060
708
(6,070)
(4,728)
5
(10,085)
(138)
-
-
(138)
-
-
2,216
(1,368)
302
(156)
-
(1,222)
(6,610)
-
-
(6,572)
(38)
(5,473)
-
-
(5,623)
150
33,951
-
-
33,733
218
-
(131,714)
-
73,464
-
1,106,243
-
(11)
(1)
-
(12)
918
41,557
2,143
15,121
415
6,665
-
3,476
29
63,372
INTEGRATED ANNUAL REPORT 2023
531
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.5. Loan portfolio by internal ratings
31/12/2023
Internal rating grade
Low risk grade (1-4)
Medium risk grade (5-7)
High risk grade (8-9)
Non-performing
Total loans at amortized cost
Stage 1
10,537,131
5,633,057
172,435
-
Gross carrying amount
Stage 3
Stage 2
POCI
Total
886,493
1,283,637
466,658
-
-
-
-
805,560
4,209 11,427,833
6,970,374
53,680
644,340
5,247
862,749
57,189
and finance lease receivable
16,342,623
2,636,788
805,560
120,325 19,905,296
31/12/2023
Internal rating grade
Accumulated loss allowance
Stage 1
Stage 2
Stage 3
POCI
Total
Low risk grade (1-4)
Medium risk grade (5-7)
High risk grade (8-9)
Non-performing
Total loans at amortized cost
57,516
58,691
7,074
-
67,598
128,311
54,521
-
-
-
-
516,126
257
9,585
396
38,976
125,371
196,587
61,991
555,102
and finance lease receivable
123,281
250,430
516,126
49,214
939,051
31/12/2022
Internal rating grade
Low risk grade (1-4)
Medium risk grade (5-7)
High risk grade (8-9)
Non-performing
Total loans at amortized cost
Stage 1
9,947,741
5,073,919
200,696
-
Gross carrying amount
Stage 3
Stage 2
POCI
Total
569,504
1,033,413
582,220
-
-
-
-
908,014
3,703 10,520,948
6,143,591
36,259
785,829
2,913
962,333
54,319
and finance lease receivable
15,222,356
2,185,137
908,014
97,194 18,412,701
31/12/2022
Internal rating grade
Accumulated loss allowance
Stage 1
Stage 2
Stage 3
POCI
Total
Low risk grade (1-4)
Medium risk grade (5-7)
High risk grade (8-9)
Non-performing
Total loans at amortized cost
66,621
82,554
7,811
-
51,998
121,985
65,223
-
-
-
-
589,348
172
6,235
250
27,294
118,791
210,774
73,284
616,642
and finance lease receivable
156,986
239,206
589,348
33,951 1,019,491
INTEGRATED ANNUAL REPORT 2023
532
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.6. Geographical analysis of the loan portfolio
The geographical analysis of the non-qualified and qualified gross loan portfolio at amortized cost, finance lease
receivables, placements with other banks and repo receivables and their loss allowances is as follows:
Country
Hungary
Bulgaria
Croatia
Serbia
Slovenia
Russia
Ukraine
Montenegro
Uzbekistan
Albania
Moldova
Romania
France
Germany
Belgium
Austria
Slovakia
The Netherlands
Gibraltar
Switzerland
United Kingdom
United States of America
Luxembourg
Poland
Italy
Ireland
Cyprus
Denmark
Subtotal
31/12/2023
31/12/2022
Gross amount of
exposure
Loss
allowance
Gross amount of
exposure
Loss
allowance
5,626,438
3,816,273
2,345,342
2,324,130
2,774,813
1,435,654
408,142
446,091
995,010
392,333
153,566
65,234
167,441
128,158
64,906
34,095
40,899
153,202
9,384
5,668
29,879
146,703
33,109
27,022
32,403
4,155
36
127
242,888
121,488
97,746
70,973
30,370
137,714
85,631
17,541
97,557
18,059
7,171
1,168
543
2,849
240
104
930
2,787
57
76
1,794
485
1,210
857
587
30
15
2
5,955,212
3,537,330
2,279,085
2,127,646
1,200,735
1,053,208
543,159
454,567
-
390,856
171,616
1,326,510
272,848
39,631
38,855
3,182
121,591
101,078
-
63,843
13,833
45,232
3,477
34,012
9,330
5,966
5,311
46
235,946
159,412
102,039
70,779
14,627
187,610
124,859
22,421
-
16,660
11,181
65,646
1,171
525
134
31
545
1,864
-
3,138
1,336
205
1,085
987
235
116
217
7
21,660,213
940,872
19,798,159
1,022,776
INTEGRATED ANNUAL REPORT 2023
533
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.6. Geographical analysis of the loan portfolio [continued]
Country
Czech Republic
Canada
Australia
Greece
Turkey
Spain
Israel
Bosnia and Herzegovina
Sweden
Norway
Saudi Arabia
United Arab Emirates
Egypt
Kazakhstan
Latvia
Other1
Subtotal
Total
31/12/2023
31/12/2022
Gross amount of
exposure
Loss
allowance
Gross amount of
exposure
Loss
allowance
1,153
164
76
1,440
1,953
20,137
1,080
1,401
374
4,808
-
28
693
218
44
5,236
38,805
14
3
-
123
51
338
13
155
25
54
-
12
11
8
33
179
1,019
739
74
58
999
1,418
1,164
937
673
542
107
87
36
726
224
50
2,877
10,711
10
4
13
122
63
35
13
97
30
9
70
26
14
9
30
248
793
21,699,018
941,891
19,808,870
1,023,569
1 Other category as at 31 December 2023 mainly includes e.g.: Japan, North-Macedonia, Portugal, China, Brazil, Lithuania, Republic of
South-Africa, Armenia, South Korea, India, Iran, Finland, Syria, Kosovo and other countries.
The geographical analysis of the non-qualified and qualified loan portfolio mandatorily at fair value through profit
or loss is as follows:
Country
Hungary
United Kingdom
Slovakia
Romania
Others
Total loans at fair value
31/12/2023
31/12/2022
1,399,463
998
11
2
11
1,400,485
1,247,401
-
-
-
13
1,247,414
INTEGRATED ANNUAL REPORT 2023
534
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.7. 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
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
31/12/2023
31/12/2022
7,735,508
796,687
2,963,753
882,237
3,641,475
276,945
825,663
1,006,429
8,575,020
752,497
2,338,129
734,908
2,948,392
241,809
354,235
841,069
810,498
657,055
550,186
415,915
19,905,296
494,955
474,632
18,412,701
31/12/2023
31/12/2022
427,342
41,221
110,915
42,661
217,283
8,628
10,523
36,600
26,433
8,810
8,635
633,253
39,200
94,324
26,040
141,799
6,293
12,373
29,500
18,079
7,783
10,847
939,051
1,019,491
INTEGRATED ANNUAL REPORT 2023
535
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.8. Collateral
The values of collateral received and held by the Group by types are as follows (total value of the collaterals).
The collateral covers loans as well as off-balance sheet exposures.
Held collaterals on book value by type of collateral
Mortgages
Guarantees and warranties
Guarantees of state or organizations owned by state
Assignments (revenue or other receivables)
Securities
Cash deposits
Other
Total
Held collaterals on fair value by type of collateral
Mortgages
Guarantees and warranties
Guarantees of state or organizations owned by state
Assignments (revenue or other receivables)
Securities
Cash deposits
Other
Total
31/12/2023
31/12/2022
21,549,776
1,436,170
1,786,112
263,292
235,213
285,722
2,973,138
28,529,423
16,332,892
1,630,318
1,635,382
423,098
168,941
208,487
1,758,802
22,157,920
31/12/2023
31/12/2022
25,222,164
1,411,444
1,659,146
410,643
394,575
359,261
3,471,916
32,929,149
19,714,476
1,624,748
1,373,763
574,044
373,777
287,558
2,201,530
26,149,896
The values of collateral received and held by the Group by types are as follows (to the extent of the exposures).
The collaterals cover loans as well as off-balance sheet exposures.
Held collaterals on book value by type of collateral
Mortgages
Guarantees of state or organizations owned by state
Guarantees and warranties
Assignments (revenue or other receivables)
Securities
Cash deposits
Other
Total
31/12/2023
31/12/2022
9,155,801
1,466,444
996,758
148,043
79,742
103,650
1,286,908
13,237,346
8,044,836
1,241,702
1,016,672
220,062
99,345
80,313
752,241
11,455,171
The coverage level of the loan portfolio to the total collateral increased from 97.59% to 115.14% and the coverage
level to the extent of the exposures increased from 50.45% to 53.42% as at 31 December 2023 comparing with the
previous period.
INTEGRATED ANNUAL REPORT 2023
536
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.8. Collateral [continued]
The values of collateral received and held by the Group by the positions of the related exposures are as follows:
31/12/2023
On balance items
Cash, due from banks and balances with the National Banks
Placements with other banks
Cash collateral on securities borrowed and reversed repurchase agreements
Financial assets at fair value through profit or loss
Financial assets at fair value through other comprehensive income
Securities at amortized cost
Loans and undrawn line of credit
Derivative financial instruments
Total on balance sheet items
Off-balance items
Financial guarantees
Letter of credit
Other off-balance sheet commitments
Total off-balance sheet items
31/12/2022
On balance items
Cash, due from banks and balances with the National Banks
Placements with other banks
Cash collateral on securities borrowed and reversed repurchase agreements
Financial assets at fair value through profit or loss
Financial assets at fair value through other comprehensive income
Securities at amortized cost
Loans and undrawn line of credit
Derivative financial instruments
Total on balance sheet items
Off-balance items
Financial guarantees
Letter of credit
Other off-balance sheet commitments
Total off-balance sheet items
Maximum exposure to
credit risk, book value
Fair value of collaterals
Surplus collateral
Net exposure
Associated expected
credit loss
7,321,496
1,576,344
224,418
1,500,875
1,416,133
5,705,754
24,730,993
195,312
42,671,325
1,421,958
61,997
532,165
2,016,120
1,528
10,801
17,711
918,520
13,646
45,954
30,948,896
-
31,957,056
809,462
1,078
161,553
972,093
-
(1,090)
-
(44,555)
(597)
(844)
(9,314,169)
-
(9,361,255)
(253,697)
(421)
(80,478)
(334,596)
7,319,968
1,566,633
206,707
626,910
1,403,084
5,660,644
3,096,266
195,312
20,075,524
866,193
61,340
451,090
1,378,623
(514)
(2,257)
(593)
-
-
(36,549)
(902,092)
-
(942,005)
(7,923)
(335)
(1,781)
(10,039)
Maximum exposure to
credit risk, book value
Fair value of collaterals
Surplus collateral
Net exposure
Associated expected
credit loss
4,222,158
1,354,390
41,250
1,374,287
1,509,880
5,161,194
21,490,677
323,211
35,477,047
1,413,014
53,557
119,890
1,586,461
-
3,384
43,632
814,544
-
-
24,412,642
90,551
25,364,753
598,724
1,178
185,241
785,143
-
1,343
(22,355)
(80,161)
-
-
(7,189,841)
-
(7,291,014)
(228,574)
(716)
(90,773)
(320,063)
4,222,158
1,349,663
19,973
639,904
1,509,880
5,161,194
4,267,876
232,660
17,403,308
1,042,864
53,095
25,422
1,121,381
INTEGRATED ANNUAL REPORT 2023
(1,701)
(3,837)
(241)
-
-
(49,903)
(887,603)
-
(943,285)
(267)
(144)
(1,558)
(1,969)
537
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.8. Collateral [continued]
Returns from realization of collaterals taken into possession by types of collateral
Types of collateral
Real estate
from this: real estate taken into possession
by OTP group member
Guarantee
Bail
Movable property
Other
Proceeds from enforcement of collaterals
37.1.9. Restructured loans
31/12/2023
31/12/2022
13,944
2,597
28,062
407
3,576
1,138
47,127
19,414
2,025
32,481
201
3,411
1,323
56,830
Retail mortgage loans
Loans to medium and large corporations
Retail consumer loans
Loans to micro and small enterprises
Municipal
Other loans
Total
31/12/2023
31/12/2022
Gross
portfolio
Loss
allowance
Gross
portfolio
Loss
allowance
31,828
212,158
45,587
33,102
1,134
1,752
325,561
(2,570)
(24,634)
(17,525)
(2,991)
(52)
(791)
(48,563)
89,167
403,643
64,268
59,096
-
3,417
619,591
(5,803)
(59,453)
(21,346)
(4,750)
-
(1,361)
(92,713)
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 sharp decrease of performing forborne exposures can be explained by two main factors.
In Hungary the volume of retail and corporate exposures classified as performing forborne exclusively due to
moratoria participation decreased significantly due to the expiration of the probation period. A smaller part of the
decrease was the result of exposures exiting performing forborne status (mostly in the medium and large corporate
segment) in Ukraine.
INTEGRATED ANNUAL REPORT 2023
538
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.10. Financial instruments by Moody’s rating categories
Trading securities as at fair value through profit or loss
31/12/2023
Aaa
Aa2
Aa3
A2
A3
Baa1
Baa2
Baa3
Ba1
Ba2
Ba3
B1
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
2,122
14,925
-
-
-
-
-
-
23
-
-
-
-
-
-
52
-
-
-
-
-
532
56
-
-
-
-
-
-
33
-
8
-
-
-
9,531
28,869
910
17
-
-
-
-
-
20
-
3,918
-
2,211
-
2
40
-
-
-
-
-
39
-
-
-
-
-
718
-
-
-
-
-
-
2,122
14,948
52
588
41
9,548
35,018
952
39
718
-
4
-
-
-
-
-
4
625
-
58,232
-
-
-
-
-
-
625
267
544
33
97
513
584
3,959
97
1,641
3,852
331
2,913
331
67,568
31/12/2022
Aaa
Aa2
Aa3
A1
A2
A3
Baa1
Baa2
Baa3
Ba1
Ba2
Ba3
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
346
-
-
-
-
-
479
825
-
-
-
-
-
1
-
1
-
20
-
-
-
-
-
-
42
-
-
-
-
-
197
47
-
-
-
-
-
-
29
-
-
-
-
-
9,850
63,992
15
-
-
-
-
-
24
-
22,865
-
1,627
-
843
-
116
-
-
-
-
-
39
-
-
-
-
-
3,669
2
-
-
-
-
-
20
42
244
29
9,865
88,508
959
39
3,671
-
4
-
-
-
-
-
4
-
78,897
163
3
31
72
385
119
22,896
72
-
1,628
274
543
753
104,750
INTEGRATED ANNUAL REPORT 2023
539
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.10. Financial instruments by Moody’s rating categories [continued]
Non-trading instruments mandatorily at fair value through profit or loss
31/12/2023
Aaa
Aa2
Aa3
A3
Baa2
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
11,196
1,166
12,362
-
655
655
-
6
6
471
-
471
-
45
45
52,335
64,002
1,814
54,149
3,686
67,688
31/12/2022
Aaa
Aa3
A3
Baa2
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
Total
-
949
949
-
797
797
-
6
6
8,152
1,182
9,334
-
41,594
49,746
1,006
1,006
1,469
43,063
5,409
55,155
INTEGRATED ANNUAL REPORT 2023
540
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.10. Financial instruments by Moody’s rating categories [continued]
Securities at fair value through other comprehensive income
31/12/2023
Aaa
Aa1
Aa2
Aa3
A1
A2
A3
Baa1
Baa2
Baa3
Ba1
Ba2
B2
Ca
Not
rated
N/A
Total
Government bonds
17,862
2,480
9,863
1,852
15,740
18,033
96,741
107,428
572,598
72,542
-
135,873
95,481
85,428
25,436
30,873
1,288,230
Corporate bonds
Mortgage bonds
National Bank of
Hungary bonds
Interest bearing
treasury bills
Other securities
Non-trading
-
-
-
-
28,404
equity instruments
8,984
1,526
751
-
-
-
-
-
21,463
-
-
-
-
-
-
4,336
-
-
-
-
-
-
1,541
734
553
2,632
9,171
-
-
-
-
-
-
-
114,746
235
-
-
160
-
-
19,056
3,219
278
-
-
-
-
-
-
3,840
5,504
6,924
-
-
-
-
-
-
-
-
24,424
-
-
-
-
-
-
-
-
-
-
-
-
12,115
8,881
-
-
4,970
28,784
-
-
-
-
-
-
34,996
30,344
114,746
235
72,429
60,481
Total
55,250
4,006
12,155
2,746
37,756
20,665
129,304
110,647
687,857
72,542
3,840
165,801
102,405
85,428
80,186
30,873
1,601,461
31/12/2022
Aaa
Aa2
Aa3
A1
A2
A3
Baa1
Baa2
Baa3
Ba1
Ba2
B1
Caa1
Caa3
Government bonds
19,775
6,773
17,544
24,234
80,968
138,811
534,476
120,053
10,198
157,469
105,049
145
26,597
Corporate bonds
Mortgage bonds
National Bank of
Hungary bonds
Interest bearing
treasury bills
Other securities
Non-trading
-
-
-
-
-
equity instruments
Total
5,767
25,542
-
-
-
-
-
-
1,691
-
-
-
-
-
-
-
-
-
-
-
-
-
74,867
182,726
-
39,309
3,820
13,721
9,262
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,036
388
323
30
6,773
3,036
60,339
24,234
82,659
138,811
792,392
159,392
14,018
171,190
114,311
145
26,597
-
-
-
-
-
-
-
42,407
-
-
-
Not
rated
31,672
14,848
12,146
-
-
3,470
30,613
92,749
N/A
Total
27,415
1,301,179
-
-
-
-
-
-
82,651
54,553
74,867
182,726
3,470
40,157
27,415
1,739,603
-
-
-
-
-
-
-
-
-
-
-
INTEGRATED ANNUAL REPORT 2023
541
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.1. Credit risk [continued]
37.1.10. Financial instruments by Moody’s rating categories [continued]
Securities at amortized cost
31/12/2023
Aaa
Aa1
Aa2
Aa3
A1
A2
A3
Baa1
Baa2
Baa3
Ba1
Ba2
Ba3
B1
B2
B3
Caa1
Ca
Not
rated
N/A
Total
Government bonds
464,270
75,313
54,311
38,405
11,767
149,424
219,773
295,442
2,558,935
1,802
1,414
13,396
4,471
2,991
5,182
16,084
14,592
17,371
72,024
16,064
6,454
7,234
12,497
10,245
-
13,019
-
-
-
-
-
1,120
-
-
-
-
-
-
-
-
26,494
-
-
14,868
61,393
66,831
35,813
50,775
50,481
24,007
17,747
4,244
-
-
-
-
19,625
68,071
35,377
29,321
57,801
-
-
-
-
-
-
-
-
-
6,427
-
-
-
-
-
29,407
6,462
-
-
-
-
-
-
-
1,491
268,207
-
22,174
4,440,240
-
207,836
-
307,630
-
-
-
54
11,689
-
49,077
-
67,011
24,708
6,462
403,221
-
-
-
499,020
83,961
95,072
114,514
94,608
190,419
287,752
360,515
2,600,313
105,835
4,244
19,625
68,071
35,377
42,210
87,208
1,491
268,207
268,656
22,174
5,249,272
31/12/2022
Aaa
Aa2
A1
A2
A3
Baa1
Baa2
Baa3
Ba2
B1
B3
Caa3
Not
rated
N/A
Total
285,285
27,551
12,382
26,341
33,154
218,408
3,019,422
154,043
163,104
-
-
-
-
-
-
-
-
-
-
-
-
285,285
27,551
-
-
-
12,966
-
1,911
27,259
-
-
-
-
-
9,357
35,698
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,800
177,679
-
-
-
-
-
-
-
-
403
11,874
3,971
13,223
1,968
39,470
2,839
-
-
-
4,954
-
23,623
308,798
-
24,427
-
-
18,871
-
-
-
-
-
-
-
-
-
229,322
-
-
11,518
-
39,274
-
-
-
-
-
-
4,336,008
247,961
177,679
18,871
24,484
4,954
81,981
33,557
230,282
3,023,393
360,745
165,072
47,263
42,494
308,798
280,114
24,427
4,891,938
INTEGRATED ANNUAL REPORT 2023
542
Corporate bonds
Bonds of Hungarian
National Bank
Discounted
Treasury bills
Mortgage bonds
Interest bearing
Treasury bills
Other securities
Total
Government bonds
Corporate bonds
Bonds of Hungarian
National Bank
Discounted
Treasury bills
Mortgage bonds
Interest bearing
Treasury bills
Other securities
Total
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.2. Maturity analysis of financial assets and liabilities
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 position 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 2023.
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.
INTEGRATED ANNUAL REPORT 2023
543
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.2. Maturity analysis of financial assets and liabilities [continued]
31/12/2023
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
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 mandatorily 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 POSITION2
7,125,535
1,293,027
224,555
39,807
4,752
216,151
506,405
2,184,372
138,144
38,389
-
273,035
12,044,172
276,875
126,237
739
26,566,638
143,613
3,100
562,576
7,273
27,687,051
120
14,893
-
2,531
-
163,292
281,883
3,423,492
326,395
40,227
-
25,755
4,278,588
164,640
-
1,077
1,362,729
424,469
10,046
34,753
1,844
1,999,558
-
173,595
65
17,808
58
1,030,583
3,028,531
7,381,337
878,914
238,792
-
3,513
-
91,787
-
6,673
21
244,023
1,622,705
7,325,898
112,276
1,026,918
-
10,521
-
1,098
-
52
49,216
117,626
-
40,988
-
-
105,824
4,179
7,125,655
1,574,400
224,620
66,871
54,047
1,771,675
5,439,524
20,356,087
1,455,729
1,344,326
105,824
317,003
12,753,196
10,440,822
318,983
39,835,761
1,133,668
-
5,387
391,470
1,253,504
50,179
28,200
14,234
518,712
-
62,240
26,550
330,306
18,270
2
546,893
-
-
-
-
-
-
5,555
-
2,093,895
126,237
69,443
28,347,387
2,151,892
81,595
631,086
570,244
2,876,642
1,502,973
5,555
34,071,779
(15,642,879)
2,279,030
9,876,554
8,937,849
313,428
5,763,982
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.
INTEGRATED ANNUAL REPORT 2023
544
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.2. Maturity analysis of financial assets and liabilities [continued]
31/12/2023
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
7,408,699
(7,308,301)
1,198,261
(1,210,824)
827,516
(886,862)
21,685
(24,149)
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
Other commitments
Off-balance sheet commitments
100,398
(12,563)
(59,346)
(2,464)
86,989
283,147
765,793
211,390
(84,445)
(296,781)
(1,810,723)
(204,952)
2,544
102,942
4,148,938
644,440
42,990
456,411
89,821
5,382,600
(13,634)
(26,197)
461,161
313,978
11,403
4,044
152,175
942,761
(1,044,930)
(1,104,276)
156,921
305,642
7,604
-
128,559
598,726
6,438
3,974
39,707
157,898
-
-
40,241
237,846
-
-
-
-
-
-
-
-
-
-
-
-
-
9,456,161
(9,430,136)
26,025
1,347,319
(2,396,901)
(1,049,582)
(1,023,557)
4,806,727
1,421,958
61,997
460,455
410,796
7,161,933
INTEGRATED ANNUAL REPORT 2023
545
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.2. Maturity analysis of financial assets and liabilities [continued]
31/12/2022
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
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 mandatorily 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 POSITION2
4,223,091
1,062,238
41,250
5,350
594
254,204
534,388
2,013,234
87,867
40,151
-
271,648
8,534,015
387,564
29,153
583
23,399,285
10,644
4,720
550,802
3,395
4
67,317
-
29,118
1,127
301,798
439,296
3,287,432
215,640
38,038
-
4,039
4,383,809
213,599
191
1,133
1,275,142
44,375
9,616
34,748
-
-
221,803
-
67,117
9,163
996,103
2,423,815
6,141,665
1,007,512
239,627
-
3,917
-
2,969
-
11,794
20
286,950
1,585,672
6,441,001
83,753
973,060
-
8,485
-
806
-
50
34,490
131,680
-
30,584
-
-
85,929
6,726
4,223,095
1,355,133
41,250
113,429
45,394
1,970,735
4,983,171
17,913,916
1,394,772
1,290,876
85,929
294,815
11,110,722
9,393,704
290,265
33,712,515
665,930
188,025
5,535
398,900
730,703
33,534
11,065
8,603
296,766
-
50,218
123,290
173,510
18,397
817
291,801
954,799
-
-
-
-
-
72
4,231
-
1,563,859
217,369
57,469
25,196,617
959,232
66,339
601,663
303,799
4,303
28,966,347
24,386,146
1,578,804
2,042,295
(15,852,131)
2,805,005
9,068,427
8,438,905
285,962
4,746,168
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.
INTEGRATED ANNUAL REPORT 2023
546
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.2. Maturity analysis of financial assets and liabilities [continued]
31/12/2022
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
7,242,836
(7,885,403)
1,270,841
(1,623,033)
476,343
(499,998)
186,089
(192,979)
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
Other commitments
Off-balance sheet commitments
(642,567)
(352,192)
(23,655)
(6,890)
316,440
186,839
784,159
15,859
(297,714)
(217,102)
(2,031,727)
(13,425)
18,726
(623,841)
3,937,023
602,335
47,631
414,585
70,952
5,072,526
(30,263)
(382,455)
(1,247,568)
(1,271,223)
236,103
308,787
5,733
5,035
48,831
604,489
54,355
337,105
193
-
19,596
411,249
2,434
(4,456)
2,808
164,790
-
-
5,514
173,112
-
-
-
-
-
-
-
-
-
-
-
-
-
9,176,109
(10,201,413)
(1,025,304)
1,303,297
(2,559,968)
(1,256,671)
(2,281,975)
4,230,289
1,413,017
53,557
419,620
144,893
6,261,376
INTEGRATED ANNUAL REPORT 2023
547
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.3. Net foreign currency position and foreign currency risk
31/12/2023
USD
EUR
CHF
Other
Total
Assets
Liabilities
Derivative financial
instruments
Net position
1,425,785
(1,958,951)
15,568,497
(14,622,216)
67,915
(170,709)
10,112,894
(8,299,337)
27,175,091
(25,051,213)
691,178
158,012
1,038,718
1,984,999
156,360
53,566
5,047
1,818,604
1,891,303
4,015,181
31/12/2022
USD
EUR
CHF
Other
Total
Assets
Liabilities
Derivative financial
instruments
Net position
1,092,435
(1,523,947)
9,990,818
(9,320,156)
50,641
(148,570)
9,646,119
(7,646,515)
20,780,013
(18,639,188)
499,444
67,932
1,014,423
1,685,085
161,697
63,768
(355,391)
1,644,213
1,320,173
3,460,998
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,
MDL and UZS. 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.
INTEGRATED ANNUAL REPORT 2023
548
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
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 periods of the assets and liabilities. 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.
INTEGRATED ANNUAL REPORT 2023
549
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.4. Interest rate risk management [continued]
As at 31 December 2023
ASSETS
Within 1 month
HUF
Fx
Over 1 month and
Within 3 months
HUF
Fx
Over 3 months and
Within 12 months
HUF
Fx
Over 1 year and
Within 2 years
HUF
Fx
Over 2 years
Non-interest-
bearing
Total
Total
HUF
Fx
HUF
Fx
HUF
Fx
Cash, amounts due from banks and
balances with the National Banks
fixed rate
variable rate
non-interest-bearing
Placements with other banks
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
2,183,603
15,209
2,168,394
-
349,710
12,841
336,869
-
18,263
18,263
-
-
11,732
11,507
225
-
-
-
-
-
3,080,965
2,935,907
145,058
-
746,451
728,857
17,594
-
202,272
202,272
-
-
5,548
5,515
33
-
-
-
-
-
-
-
-
-
94,487
34,723
59,764
-
-
-
-
-
625
71
554
-
-
-
-
-
19,565
-
19,565
-
46,167
21,302
24,865
-
3,248
3,248
-
-
10,605
10,605
-
-
-
-
-
-
-
-
-
-
14,115
-
14,115
-
-
-
-
-
1,240
948
292
-
-
-
-
-
20,837
86
20,751
-
31,926
28,799
3,127
-
-
-
-
-
13,334
13,155
179
-
-
-
-
-
-
-
-
-
-
-
-
-
37
37
-
-
2,293
2,287
6
-
-
-
-
-
8,464
-
8,464
-
26,306
26,306
-
-
-
-
-
-
7,454
7,454
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,653
4,653
-
-
-
-
-
-
13,708
2
13,706
-
77,964
75,866
2,098
-
6
6
-
-
9,240
9,240
-
-
178,600
-
-
178,600
68,900
-
-
68,900
-
-
-
-
217
-
-
217
-
-
-
-
41,130
57
-
41,073
1,619,307
-
-
1,619,307
110,972
-
-
110,972
58
-
-
58
2,362,203
15,209
2,168,394
178,600
527,212
47,564
410,748
68,900
18,300
18,300
-
-
4,762,846
2,935,995
207,544
1,619,307
1,039,786
881,130
47,684
110,972
205,584
205,526
-
58
627
-
-
627
26,558
-
-
26,558
20,760
19,466
1,077
217
41,130
57
-
41,073
46,808
45,969
212
627
26,558
-
-
26,558
7,125,049
2,951,204
2,375,938
1,797,907
1,566,998
928,694
458,432
179,872
223,884
223,826
-
58
67,568
65,435
1,289
844
67,688
57
-
67,631
INTEGRATED ANNUAL REPORT 2023
550
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.4. Interest rate risk management [continued]
As at 31 December 2023 [continued]
ASSETS [continued]
Within 1 month
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
HUF
Fx
222,862
210,231
12,631
-
1,268
1,268
-
-
886,690
43,777
842,913
-
41,807
6,926
34,881
-
28,046
-
28,046
-
718,070
610,190
107,880
-
300
19
281
-
711
709
2
-
329,278
329,278
-
-
7,262,799
1,077,919
6,184,880
-
293,789
175,117
118,672
-
-
-
-
-
2,088,017
2,025,881
62,136
-
22,255
19,301
2,954
-
Over 1 month and
Within 3 months
HUF
Fx
Over 3 months and
Within 12 months
HUF
Fx
Over 1 year and
Within 2 years
Fx
HUF
Over 2 years
Non-interest-
bearing
Total
Total
HUF
Fx
HUF
Fx
HUF
Fx
46
44
2
-
-
-
-
-
427,155
16,415
410,740
-
5,628
3,360
2,268
-
9,571
-
9,571
-
961,287
364,434
596,853
-
2,464
973
1,491
-
50,498
50,498
-
-
119,709
114,865
4,844
-
1,870,582
220,298
1,650,284
-
136,318
7,847
128,471
-
-
-
-
-
1,413,898
1,025,262
388,636
-
7,820
7,508
312
-
13,145
13,145
-
-
129,361
129,361
-
-
127,122
68,967
58,155
-
24,443
24,172
271
-
264,085
-
264,085
-
487,263
323,861
163,402
-
38
38
-
-
151,935
151,481
454
-
199,108
197,947
1,161
-
1,776,768
732,988
1,043,780
-
151,241
32,945
118,296
-
1,711
1,711
-
-
725,487
444,688
280,799
-
13
5
8
-
96,740
96,740
-
-
636,997
636,997
-
-
153,043
123,176
29,867
-
43,716
43,396
320
-
304,546
-
304,546
-
54,251
54,251
-
-
-
-
-
-
153,331
149,484
3,847
-
326,501
326,501
-
-
594,725
557,721
37,004
-
109,584
40,115
69,469
-
-
-
-
-
111,275
111,035
240
-
683
683
-
-
208,914
208,914
-
-
1,689,717
1,689,717
-
-
1,929,709
1,316,067
613,642
-
260,094
242,904
17,190
-
792,526
-
792,526
-
297,986
297,986
-
-
-
-
-
-
642,798
641,142
1,656
-
1,817,333
1,817,333
-
-
2,418,583
2,354,992
63,591
-
218,359
97,957
120,402
-
-
-
-
-
403
-
-
403
-
-
-
-
116,419
-
-
116,419
231
-
-
231
-
-
-
-
60,078
-
-
60,078
-
-
-
-
112,938
-
-
112,938
4,502
-
-
4,502
-
-
-
-
233,911
231,517
2,394
-
9,551
9,530
21
-
580,115
-
-
580,115
95,864
-
-
95,864
148,516
-
-
148,516
143,412
-
-
143,412
542,110
529,074
12,633
403
2,457,343
2,457,343
-
-
3,640,138
1,568,402
1,955,317
116,419
375,919
320,758
54,930
231
1,398,774
-
1,398,774
-
3,098,972
1,650,722
868,135
580,115
98,666
1,030
1,772
95,864
1,059,351
993,314
5,959
60,078
2,791,929
2,785,924
6,005
-
14,036,395
4,943,918
8,979,539
112,938
913,793
353,981
555,310
4,502
1,711
1,711
-
-
4,721,104
3,838,383
734,205
148,516
183,734
37,027
3,295
143,412
1,601,461
1,522,388
18,592
60,481
5,249,272
5,243,267
6,005
-
17,676,533
6,512,320
10,934,856
229,357
1,289,712
674,739
610,240
4,733
1,400,485
1,711
1,398,774
-
7,820,076
5,489,105
1,602,340
728,631
282,400
38,057
5,067
239,276
INTEGRATED ANNUAL REPORT 2023
551
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.4. Interest rate risk management [continued]
As at 31 December 2023 [continued]
LIABILITIES
Within 1 month
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
HUF
Fx
76,208
18,526
57,682
-
24,572
24,572
-
-
19,761
-
19,761
-
7,317,642
1,109,775
6,207,867
-
249,008
206
248,802
-
156,143
50,694
105,449
-
101,665
101,665
-
-
-
-
-
-
17,837,998
9,060,538
8,777,460
-
-
-
-
-
Over 1 month and
Within 3 months
HUF
Fx
Over 3 months and
Within 12 months
HUF
Fx
Over 1 year and
Within 2 years
Fx
HUF
Over 2 years
HUF
Fx
Non-interest-
bearing
HUF
Fx
Total
Total
HUF
Fx
25,234
25,233
1
-
-
-
-
-
-
-
-
-
163,141
163,141
-
-
72,641
72,083
558
-
132,265
28,872
103,393
-
-
-
-
-
-
-
-
-
553,995
552,607
1,388
-
19,182
19,182
-
-
147,542
118,910
28,632
-
-
-
-
-
-
-
-
-
107,810
107,810
-
-
178,027
178,027
-
-
151,010
66,941
84,069
-
-
-
-
-
-
-
-
-
1,023,858
1,015,265
8,593
-
112,356
99,036
13,320
-
371,329
371,329
-
-
-
-
-
-
-
-
-
-
31,774
31,774
-
-
32,371
32,371
-
-
88,629
73,820
14,809
-
-
-
-
-
-
-
-
-
173,344
172,913
431
-
268,667
268,667
-
-
241,628
241,628
-
-
-
-
-
-
1,481
25
1,456
-
189,371
189,371
-
-
151,014
151,014
-
-
434,069
395,989
38,080
-
-
-
-
-
-
-
-
-
258,705
258,705
-
-
1,004,515
1,004,515
-
-
55,272
-
-
55,272
-
-
-
-
49,465
-
-
49,465
19,955
-
-
19,955
1
-
-
1
61,533
-
-
61,533
-
-
-
-
-
-
-
-
654,838
-
-
654,838
7,766
-
-
7,766
917,213
775,626
86,315
55,272
24,572
24,572
-
-
70,707
25
21,217
49,465
7,829,693
1,601,871
6,207,867
19,955
683,062
433,701
249,360
1
1,023,649
616,316
345,800
61,533
101,665
101,665
-
-
-
-
-
-
20,502,738
11,060,028
8,787,872
654,838
1,412,486
1,391,400
13,320
7,766
1,940,862
1,391,942
432,115
116,805
126,237
126,237
-
-
70,707
25
21,217
49,465
28,332,431
12,661,899
14,995,739
674,793
2,095,548
1,825,101
262,680
7,767
INTEGRATED ANNUAL REPORT 2023
552
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.4. Interest rate risk management [continued]
As at 31 December 2023 [continued]
LIABILITIES [continued]
Within 1 month
HUF
Fx
Over 1 month and
Within 3 months
HUF
Fx
Over 3 months and
Within 12 months
HUF
Fx
Over 1 year and
Within 2 years
Fx
HUF
Over 2 years
Non-interest-bearing
Total
Total
HUF
Fx
HUF
Fx
HUF
Fx
Fair value adjustment of derivative
financial instruments
fixed rate
variable rate
non-interest-bearing
Leasing liabilities
fixed rate
variable rate
non-interest-bearing
Other financial liabilities
fixed rate
variable rate
non-interest-bearing
Subordinated bonds and loans
fixed rate
variable rate
non-interest-bearing
1,822,128
1,772,814
49,314
-
368
359
9
-
2,442
2,170
272
-
-
-
-
-
1,016,999
881,895
135,104
-
596
465
131
-
61,562
61,551
11
-
30
30
-
-
524,302
373,167
151,135
-
1,733
60
1,673
-
678
-
678
-
-
-
-
-
1,865,964
1,019,236
846,728
-
3,030
2,074
956
-
292
272
20
-
89,415
-
89,415
-
445,921
280,907
165,014
-
523
163
360
-
51
51
-
-
-
-
-
-
874,989
500,307
374,682
-
6,284
2,226
4,058
-
1,078
744
334
-
192,337
443
191,894
-
59,172
59,172
-
-
1,208
12
1,196
-
-
-
-
-
-
-
-
-
111,700
111,700
-
-
16,417
8,345
8,072
-
179
86
93
-
10,019
10,019
-
-
197,826
197,826
-
-
1,758
1,290
468
-
4
4
-
-
-
-
-
-
173,012
173,012
-
-
36,875
8,503
28,372
-
46
46
-
-
270,280
270,280
-
-
693,221
-
-
693,221
-
-
-
-
349,062
-
-
349,062
-
-
-
-
43,633
-
-
43,633
7,521
-
-
7,521
241,470
-
-
241,470
315
-
-
315
3,742,570
2,683,886
365,463
693,221
5,590
1,884
3,706
-
352,237
2,225
950
349,062
-
-
-
-
4,086,297
2,686,150
1,356,514
43,633
70,723
21,613
41,589
7,521
304,627
62,699
458
241,470
562,396
280,772
281,309
315
7,828,867
5,370,036
1,721,977
736,854
76,313
23,497
45,295
7,521
656,864
64,924
1,408
590,532
562,396
280,772
281,309
315
Net position
(5,049,778)
(5,142,908)
713,534
1,014,267
180,938
710,448
795,769
669,368
4,400,517
3,263,951
(85,097)
1,209,892
955,883
1,725,018
2,680,901
INTEGRATED ANNUAL REPORT 2023
553
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.4. Interest rate risk management [continued]
As at 31 December 2022
ASSETS
Within 1 month
HUF
Fx
Over 1 month and
Within 3 months
HUF
Fx
Over 3 months and
Within 12 months
HUF
Fx
Over 1 year and
Within 2 years
Fx
HUF
Over 2 years
Non-interest-
bearing
Total
Total
HUF
Fx
HUF
Fx
HUF
Fx
Cash, amounts due from banks and
balances with the National Banks
fixed rate
variable rate
non-interest-bearing
Placements with other banks
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
641,960
641,503
457
-
682,568
2,151
680,417
-
41,009
41,009
-
-
7,171
7,156
15
-
-
-
-
-
1,166,289
1,085,631
80,658
-
345,915
239,634
106,281
-
-
-
-
-
1,234
1,234
-
-
-
-
-
-
309
-
309
-
46,805
6,542
40,263
-
-
-
-
-
16,157
11,967
4,190
-
-
-
-
-
14,649
-
14,649
-
37,222
37,222
-
-
-
-
-
-
661
661
-
-
-
-
-
-
-
-
-
-
100,744
352
100,392
-
-
-
-
-
12,146
3,775
8,371
-
-
-
-
-
28,967
4,941
24,026
-
2,007
-
2,007
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,265
4,265
-
-
21,882
21,882
-
-
-
-
-
-
-
-
-
-
20,323
-
20,323
-
28
28
-
-
-
-
-
-
2,436
2,436
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27,900
27,900
-
-
-
-
-
-
14,550
-
14,550
-
22,016
22,016
-
-
-
-
-
-
9,760
9,760
-
-
183,201
-
-
183,201
48,754
-
-
48,754
-
-
-
-
124
-
-
124
-
-
-
-
30,057
-
-
30,057
2,151,144
-
-
2,151,144
65,023
-
-
65,023
-
-
-
-
1,014
-
-
1,014
25,098
-
-
25,098
825,470
641,503
766
183,201
878,871
9,045
821,072
48,754
41,009
41,009
-
-
85,380
72,680
12,576
124
30,057
-
-
30,057
3,395,922
1,090,572
154,206
2,151,144
472,211
298,900
108,288
65,023
-
-
-
-
19,370
18,356
-
1,014
25,098
-
-
25,098
4,221,392
1,732,075
154,972
2,334,345
1,351,082
307,945
929,360
113,777
41,009
41,009
-
-
104,750
91,036
12,576
1,138
55,155
-
-
55,155
INTEGRATED ANNUAL REPORT 2023
554
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.4. Interest rate risk management [continued]
As at 31 December 2022 [continued]
ASSETS [continued]
Within 1 month
HUF
Fx
Over 1 month and
Within 3 months
Fx
HUF
Over 3 months and
Within 12 months
HUF
Fx
Over 1 year and
Within 2 years
Fx
HUF
Over 2 years
Non-interest-
bearing
Total
Total
HUF
Fx
HUF
Fx
HUF
Fx
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
194,093
194,092
1
-
364,928
364,928
-
-
62,611
62,610
1
-
-
-
-
-
57,998
44,277
13,721
-
61,623
56,550
5,073
-
6,653,388
1,643,455
5,009,933
-
326,963
144,070
182,893
-
2,251,999
1,160,027
1,091,972
-
10,843
818
10,025
-
2,762,858
324,583
2,438,275
-
147,623
8,234
139,389
-
150,015
120,553
29,462
-
197,317
177,967
19,350
-
186,499
20,139
166,360
-
70,923
5,969
64,954
-
26,449
-
26,449
-
-
-
-
-
10,992
-
10,992
-
906,446
428,080
478,366
-
2,703
2,504
199
-
-
-
-
-
1,424,864
879,090
545,774
-
1,316
1,018
298
-
1,808,603
1,687,569
121,034
-
2,217
2,217
-
-
3,091,633
3,023,972
67,661
-
25,400
14,552
10,848
-
127,352
127,345
7
-
375,979
375,979
-
-
77,681
14,300
63,381
-
21,539
8,971
12,568
-
70,371
-
70,371
-
485,449
271,921
213,528
-
-
-
-
-
134,675
134,675
-
-
216,496
216,496
-
-
1,428,579
565,806
862,773
-
183,361
36,041
147,320
-
15,327
15,327
-
-
288,026
288,026
-
-
38,430
11,987
26,443
-
30,106
29,796
310
-
-
-
-
-
231,141
-
231,141
-
545,738
518,869
26,869
-
712
712
-
-
36,682
36,682
-
-
-
-
-
-
101,052
100,597
455
-
48,565
48,565
-
-
403,633
344,884
58,749
-
94,727
34,165
60,562
-
-
-
-
-
35,986
35,986
-
-
-
-
-
-
278,680
278,680
-
-
2,247,457
2,247,457
-
-
961,205
290,461
670,744
-
217,805
207,861
9,944
-
908,461
-
908,461
-
183,664
183,664
-
-
-
-
-
-
577,643
577,643
-
-
1,091,547
1,090,235
1,312
-
1,116,179
1,016,774
99,405
-
182,904
75,332
107,572
-
-
-
-
-
98,654
98,654
-
-
143
123
20
-
265
-
-
265
-
-
-
-
129,999
-
-
129,999
194
-
-
194
-
-
-
-
39,892
-
-
39,892
-
-
-
-
84,008
-
-
84,008
11,764
-
-
11,764
-
-
-
-
28,204
-
-
28,204
93,577
-
-
93,577
730,436
-
-
730,436
136,913
-
-
136,913
634,250
604,515
29,470
265
3,108,779
3,089,429
19,350
-
3,645,813
1,496,914
2,018,900
129,999
351,410
253,415
97,801
194
1,247,414
-
1,247,414
-
3,449,048
2,607,916
812,928
28,204
98,497
4,721
199
93,577
1,105,353
1,051,284
14,177
39,892
1,783,159
1,776,774
6,385
-
12,448,645
3,895,502
8,469,135
84,008
947,342
297,842
637,736
11,764
-
-
-
-
5,927,311
4,556,571
640,304
730,436
164,484
16,405
11,166
136,913
1,739,603
1,655,799
43,647
40,157
4,891,938
4,866,203
25,735
-
16,094,458
5,392,416
10,488,035
214,007
1,298,752
551,257
735,537
11,958
1,247,414
-
1,247,414
-
9,376,359
7,164,487
1,453,232
758,640
262,981
21,126
11,365
230,490
INTEGRATED ANNUAL REPORT 2023
555
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.4. Interest rate risk management [continued]
As at 31 December 2022 [continued]
LIABILITIES
Within 1 month
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
HUF
Fx
17,358
12,847
4,511
-
29,145
29,143
2
-
16,575
26
16,549
-
7,466,580
1,097,639
6,368,941
-
1,878
211
1,667
-
187,834
62,086
125,748
-
188,121
5
188,116
-
-
-
-
-
13,217,695
6,265,835
6,951,860
-
-
-
-
-
Over 1 month and
Within 3 months
HUF
Fx
Over 3 months and
Within 12 months
HUF
Fx
Over 1 year and
Within 2 years
Fx
HUF
Over 2 years
Non-interest-
bearing
Total
Total
HUF
Fx
HUF
Fx
HUF
Fx
27,239
27,239
-
-
98
98
-
-
-
-
-
-
292,239
292,239
-
-
1,215
-
1,215
-
55,363
5,079
50,284
-
5
5
-
-
-
-
-
-
1,746,958
1,746,958
-
-
18
18
-
-
109,518
109,518
-
-
-
-
-
-
-
-
-
-
153,147
153,147
-
-
194,515
44,390
150,125
-
80,566
70,661
9,905
-
-
-
-
-
-
-
-
-
869,141
869,141
-
-
41
41
-
-
71,613
71,613
-
-
-
-
-
-
-
-
-
-
37,952
37,952
-
-
79,497
79,497
-
-
5,187
5,182
5
-
-
-
-
-
-
-
-
-
154,101
151,009
3,092
-
-
-
-
-
751,109
751,109
-
-
-
-
-
-
-
-
-
-
220,222
220,222
-
-
145,295
145,295
-
-
42,918
42,913
5
-
-
-
-
-
-
-
-
-
189,032
189,032
-
-
448,205
448,205
-
-
81,757
-
-
81,757
-
-
-
-
37,616
-
-
37,616
14,525
-
-
14,525
-
-
-
-
32,696
-
-
32,696
-
-
-
-
-
-
-
-
827,213
-
-
827,213
18
-
-
18
1,058,594
972,326
4,511
81,757
29,243
29,241
2
-
54,191
26
16,549
37,616
8,184,665
1,801,199
6,368,941
14,525
422,400
269,393
153,007
-
404,564
185,921
185,947
32,696
188,126
10
188,116
-
-
-
-
-
17,004,140
9,221,975
6,954,952
827,213
448,282
448,264
-
18
1,463,158
1,158,247
190,458
114,453
217,369
29,251
188,118
-
54,191
26
16,549
37,616
25,188,805
11,023,174
13,323,893
841,738
870,682
717,657
153,007
18
INTEGRATED ANNUAL REPORT 2023
556
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.4. Interest rate risk management [continued]
As at 31 December 2022 [continued]
LIABILITIES [continued]
Within 1 month
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
HUF
Fx
2,868,787
2,783,756
85,031
-
2,005
1,905
100
-
93,677
93,668
9
-
-
-
-
-
2,091,600
1,945,423
146,177
-
9,146
8,686
460
-
36,041
35,843
198
-
-
-
-
-
Over 1 month and
Within 3 months
Fx
HUF
Over 3 months and
Within 12 months
HUF
Fx
Over 1 year and
Within 2 years
Fx
HUF
Over 2 years
Non-interest-bearing
Total
Total
HUF
Fx
HUF
Fx
HUF
Fx
478,930
331,253
147,677
-
2
1
1
-
2,247
1,748
499
-
-
-
-
-
1,824,450
972,676
851,774
-
1,329
408
921
-
1,735
1,735
-
-
93,110
-
93,110
-
577,862
218,514
359,348
-
-
-
-
-
11
7
4
-
-
-
-
-
556,209
531,863
24,346
-
5,384
2,197
3,187
-
6,706
3,283
3,423
-
201,076
-
201,076
-
22,780
22,758
22
-
4
4
-
-
-
-
-
-
-
-
-
-
36,714
36,714
-
-
7,647
2,541
5,106
-
2,494
2,401
93
-
-
-
-
-
118,071
118,071
-
-
1,277
1,277
-
-
-
-
-
-
-
-
-
-
113,968
113,968
-
-
31,084
17,244
13,840
-
2,408
2,319
89
-
7,798
7,798
-
-
246,135
-
-
246,135
-
-
-
-
288,478
-
-
288,478
-
-
-
-
529,820
-
-
529,820
5,900
-
-
5,900
211,855
-
-
211,855
-
-
-
-
4,312,565
3,474,352
592,078
246,135
3,288
3,187
101
-
384,413
95,423
512
288,478
-
-
-
-
5,152,761
3,600,644
1,022,297
529,820
60,490
31,076
23,514
5,900
261,239
45,581
3,803
211,855
301,984
7,798
294,186
-
9,465,326
7,074,996
1,614,375
775,955
63,778
34,263
23,615
5,900
645,652
141,004
4,315
500,333
301,984
7,798
294,186
-
Net position
(6,681,274)
(3,560,594)
2,506,895
785,846
236,208
825,677
449,748
500,607
3,589,198
2,277,983
(154,136)
1,637,790
(53,361)
2,467,309
2,413,948
INTEGRATED ANNUAL REPORT 2023
557
OTP BANK
IFRS REPORT (CONSOLIDATED)
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
31/12/2023
31/12/2022
10,391
406
18
-
10,815
5,896
890
42
-
6,829
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.
INTEGRATED ANNUAL REPORT 2023
558
OTP BANK
IFRS REPORT (CONSOLIDATED)
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-month 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
1%
5%
25%
50%
25%
5%
1%
Effects to the Consolidated
Statement of Profit or Loss
In HUF million
Effects to the Consolidated
Statement of Other
Comprehensive Income
In HUF million
31/12/2023
31/12/2022
31/12/2023
31/12/2022
(9,947)
(4,586)
(1,041)
157
1,488
4,740
7,333
(4,746)
(2,542)
(843)
(15)
990
2,837
4,245
(4,201)
(3,150)
(1,264)
(211)
928
2,480
4,116
(5,604)
(2,992)
(1,190)
(235)
834
2,415
4,767
Note:
(1) Historical VaR simulation is based on the empirical distribution of the historical exchange rate movements
between 31 December 2022 and 31 December 2023.
INTEGRATED ANNUAL REPORT 2023
559
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.5. Market risk [continued]
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.
The sensitivity of interest income to changes in BUBOR was analysed by assuming two interest rate path scenarios:
(1) BUBOR decreases gradually by 500 bps over the next year (probable scenario)
(2) BUBOR increases gradually by 100 bps over the next year (alternative scenario)
The net interest income in a one-year period after 1 January 2024 would be decreased by HUF (2,800) million
(probable scenario) and increased by HUF 296 million (alternative scenario) as a result of these simulation. A
similar simulation indicated HUF (9,002) million decrease (probable scenario) and HUF 4,306 million (alternative
scenario) increase in the Net interest income in a one-year period after 1 January 2023.
This effect is further enhanced by capital results HUF 429 million (for probable scenario) and HUF (104) million
(for alternative scenario) as at 31 December 2023, the comparative results were (HUF (350) million for probable
scenario, HUF 181 million for alternative scenario as at 31 December 2022) 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 at fair value through other
comprehensive income portfolio booked against capital was analysed. The results of unfavorable shocks can be
summarized as follows (in HUF million):
Description
HUF (0.1%) parallel shift
HUF 0.1% parallel shift
EUR (0.1%) parallel shift
EUR 0.1% parallel shift
USD (0.1%) parallel shift
USD 0.1% parallel shift
31/12/2023
31/12/2022
Effects to the
net interest
income
Effects to
capital
Effects to the
net interest
income
Effects to
capital
(298)
298
(4,409)
3,933
(102)
112
14
(14)
-
-
-
-
1,669
(1,667)
(3,661)
4,423
119
(290)
36
(36)
-
-
-
INTEGRATED ANNUAL REPORT 2023
560
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.5. Market risk [continued]
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)
31/12/2023
31/12/2022
10
(103)
15
(26)
INTEGRATED ANNUAL REPORT 2023
561
OTP BANK
IFRS REPORT (CONSOLIDATED)
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 and other types of funds available for hedging risks, 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.
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 both in the year ended 31 December
2023 and 31 December 2022.
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 18.9%, the Regulatory capital was HUF 4,475,381 million
and the Total regulatory capital requirement was HUF 1,896,022 million as at 31 December 2023. The same ratios
calculated as at 31 December 2022 were the following: 17.8%, HUF 3,671,106 million and HUF 1,648,616
million.
INTEGRATED ANNUAL REPORT 2023
562
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.6. Capital management [continued]
Capital adequacy [continued]
Calculation on IFRS basis (in HUF million)
31/12/2023
31/12/2022
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
3,945,571
3,383,162
28,000
3,992,843
(64,033)
92,443
28,542
(13,226)
(188,894)
69,896
-
529,810
500,555
-
29,255
4,475,381
1,702,000
29,346
164,676
1,896,022
2,579,359
16.60%
16.60%
18.90%
28,000
3,149,251
(135,905)
288,531
2,464
(15,000)
(164,642)
230,463
-
287,944
287,362
-
582
3,671,106
1,494,358
29,322
124,936
1,648,616
2,022,490
16.40%
16.40%
17.80%
1 The dividend amount planned to pay out / paid out is deducted from reserves.
Basel III
The components of the Common Equity Tier 1 capital (CET 1) are the following: Issued capital, Reserves
(Retained earnings, 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.
INTEGRATED ANNUAL REPORT 2023
563
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 37: FINANCIAL RISK MANAGEMENT (in HUF mn) [continued]
37.6. Capital management [continued]
Resolution strategy of OTP Group
In line with Section 7 of the Resolution Act (XXXVII of 2014 on the further development of the system of
institutions strengthening the security of the individual players of the financial intermediary system) implementing
Article 12 of BRRD (“Bank Recovery and Resolution Directive”) (2014/59 EU Directive) the National Bank of
Hungary (NBH) as the group-level resolution authority of OTP Group draw up the group resolution plan for OTP
Group in close cooperation with the national resolution authorities of the EU and the equivalent third country
subsidiaries. According to the group-resolution plan the resolution strategy for OTP Group is the multiple point of
entry approach (“MPE”) which determines two intervention points in the Group in case of resolution: OTP Bank
and NKBM Bank.
Having regard to the acquisition of the Slovenian Nova KBM d.d. (NKBM) and its subsidiary (together NKBM
Group) in February 2023, the SPE (single point of entry) strategy formerly determined for OTP Group as the
preferred resolution strategy has been altered as a result of the update of the resolution plan in October 2023.
NKBM Group was considered by the resolution authorities financially and operationally independent from the rest
of the OTP Group, therefore the MPE approach has been selected as the most suitable resolution strategy in respect
of OTP Group. Nevertheless, the MPE resolution strategy will be reviewed in the next update of the group-level
resolution plan and for this reason the resolution authorities monitor the degree of integration of the NKBM Group
into the OTP Group as a result of the integration project.
OTP Bank’s Resolution Group covers entities included in the prudential scope of consolidation of OTP Bank
(without Ipoteka Bank and NKBM Bank and their subsidiaries) and NKBM Resolution Group covers Nova KBM
and its subsidiary (Aleja d.o.o) which is equivalent to the prudential scope of consolidation. For both resolution
groups the preferred resolution tool is the application of open-bank bail-in at the level of each of the resolution
entities – OTP Bank Plc. and NKBM Group.
Minimum requirement for own funds and eligible liabilities requirement of OTP Bank
Pursuant to Section 62 (1) of the Resolution Act OTP Bank shall meet the minimum requirement for own funds
and eligible liabilities (“MREL”) on a consolidated basis at the level of the resolution group. The NBH establishes
and updates annually the MREL requirement on the basis of the Joint Decision of the Resolution College, which
is operated jointly with the resolution authorities of OTP Bank’s subsidiaries.
The consolidated MREL requirement of OTP Bank applicable in 2023 was 16.69% of the total risk exposure
amount / risk-weighted assets (“TREA”/”RWA”) and 5.74% of the total exposure measure (“TEM”) of OTP
Bank’s Resolution Group. The consolidated MREL ratio was 25.10% on 31 December 2023. From 1 January 2024,
OTP Bank's consolidated MREL requirement is 18.94% of the TREA/RWA and 5.78% of the TEM of OTP Bank’s
Resolution Group. Subordination requirements are applicable to OTP Bank from 16 December 2024 that are set
at 13.5% of TREA/RWA, 5% of TEM and 8% of TLOF (total liabilities and own funds) of OTP Bank’s Resolution
Group which shall be met with own funds and subordinated eligible instruments. OTP Bank shall meet the
combined buffer requirement in addition to the consolidated MREL RWA requirement / MREL RWA
subordination requirement.
OTP Bank’s Resolution Group consists of entities included in the prudential scope of consolidation of OTP Bank
without NKBM and Ipoteka Bank and their subsidiaries.
The MREL requirement of NKBM Resolution Group at consolidated level in 2023 was 20.88% of RWA, and
5.90% of TEM of NKBM Group. The MREL requirement applicable from 1 January 2024 is 22.44% of RWA and
5.90% of TEM of NKBM Group. No bank-specific subordination target has been set for NKBM Group. NKBM
Group shall also meet the combined buffer requirement in addition to the consolidated MREL RWA requirement.
Expected changes in 2024
In 2024 SKB is expected to exit OTP’s resolution group and join that of NKBM by the planned legal merge of the
two Slovenian banks. Furthermore, a decision is expected on Ipoteka Bank (acquired in June 2023) whether NBH
will include it in the resolution group of OTP Bank based on Section 7 of the Resolution Act.
INTEGRATED ANNUAL REPORT 2023
564
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 38: TRANSFER OF FINANCIAL INSTRUMENTS (in HUF mn)
Financial assets transferred but not derecognized
Transferred
assets
Associated
liabilities
Transferred
assets
Associated
liabilities
Carrying amount
31/12/2023
Carrying amount
31/12/2022
Financial assets at amortized cost
Debt securities
Loans and advances
Total
Total
213,166
8,785
221,951
197,315
1,134
198,449
332,082
3,534
335,616
282,227
1,647
283,874
221,951
198,449
335,616
283,874
As at 31 December 2023 and 2022, respectively, the Group had an obligation from repurchase agreements (repo
liability) of HUF 126,237 million and HUF 217,264 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 2023 or as at 31 December
2022.
INTEGRATED ANNUAL REPORT 2023
565
OTP BANK
IFRS REPORT (CONSOLIDATED)
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
31/12/2023
31/12/2022
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)
Underwriting guarantees
Other
Contingent liabilities and commitments
total in accordance with IAS 37
Total
Legal disputes
4,784,943
1,421,958
460,455
61,997
410,796
4,230,289
1,413,017
419,620
53,557
144,893
7,140,149
6,261,376
88,750
29,915
2,990
121,655
7,261,804
86,137
1,397
5,393
92,927
6,354,303
At the balance sheet date, the Group was involved in various claims and legal proceedings of a nature considered
normal to its business. The amount of these claims and legal proceedings corresponds to the amount 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 39,351 million as
at 31 December 2023 and HUF 37,043 million as at 31 December 2022, 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.
INTEGRATED ANNUAL REPORT 2023
566
OTP BANK
IFRS REPORT (CONSOLIDATED)
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
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) which has maturity and is
only enforceable if recorded in writing and signed by the surety and the principal. This means that if the beneficiary
has not exercised his rights against the surety or guarantor by the deadline indicated, he automatically forfeits all
his claims against the guarantor or surety.
In the case of a simple surety, the beneficiary is obliged to seek recovery of the debt from the debtor, because as
long as the debt is recoverable from the debtor, the guarantor can refuse to pay, whereas in the case of a cash
surety, the beneficiary can also go to the guarantor immediately, there being no objection to enforcement.
Derivatives
The Group maintains strict control limits on net open derivative positions, that is the difference between purchase
and sale contracts, regarding both the amount and the 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.
INTEGRATED ANNUAL REPORT 2023
567
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 40: SHARE-BASED PAYMENTS AND EMPLOYEE BENEFITS (in HUF mn)
The previously approved option program required a modification due 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 Board (until the end
of 2014 by Board of Directors).
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.
The parameters for the share-based payment relating to ongoing years 2018-2020 by the Supervisory Board for
periods of each year as follows:
Year Share purchasing at
a discounted price
Share purchasing at
a discounted price
Price of
remuneration
exchanged to
share
Price of
remuneration
exchanged to
share
Exercise
price
Maximum
earnings
2019
2020
2021
2022
2023
2024
2025
2026
2027
for the year 2018
4,000
4,000
4,000
4,000
4,000
4,000
4,000
-
-
10,413
10,413
10,413
10,913
10,913
10,913
10,913
-
-
12,413
12,413
12,413
12,413
12,413
12,413
12,413
-
-
Exercise
price
Maximum
earnings
HUF per share
for the year 2019
Share purchasing at
a discounted price
Exercise
price
Maximum
earnings
Price of
remuneration
exchanged to
share
for the year 2020
-
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
INTEGRATED ANNUAL REPORT 2023
568
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 40: SHARE-BASED PAYMENTS AND EMPLOYEE BENEFITS (in HUF mn) [continued]
The parameters for the share-based payment relating to ongoing years 2021-2022 by the Supervisory Board for
periods of each year as follows:
Year
Share purchasing at
a discounted price
Share purchasing at
a discounted price
Price of
remuneration
exchanged to
share
Price of
remuneration
exchanged to
share
Exercise
price
Maximum
earnings
for the year 2021
6,000
7,000
8,000
9,000
10,000
10,000
10,000
-
5,912
6,912
6,912
6,912
6,912
6,912
6,912
-
Exercise
price
HUF per share
Maximum
earnings
for the year 2022
8,912
8,912
8,912
8,912
8,912
8,912
8,912
-
-
7,773
8,773
8,773
8,773
8,773
8,773
8,773
-
6,000
7,000
8,000
9,000
10,000
10,000
10,000
-
10,773
10,773
10,773
10,773
10,773
10,773
10,773
2022
2023
2024
2025
2026
2027
2028
2029
1Parameters of benefits for year after 2021 due in 2029 only is applicable to foreign companies and for virtual benefits.
Relevant factors considered during measurement of fair value related to share-based payment as follows:
Year
2017
2018
2019
2020
2021
2022
2023
Year
2017
2018
2019
2020
2021
2022
2023
Reference
price
Assumed
volatility
Risk-free interest rate (HUF)
1-year
2-year
3-year
4-year
5-year
6-year
7-year
9,200
10,064
12,413
11,553
16,644
8,912
10,773
21.30%
26.00%
19.20%
33.60%
28.60%
42.60%
33.30%
0.10%
0.20%
0.20%
0.60%
1.00%
7.10%
13.20%
0.50%
0.60%
0.70%
0.40%
1.60%
7.90%
9.20%
0.70%
1.00%
0.90%
0.50%
1.80%
7.60%
8.20%
1.00%
1.30%
1.10%
0.60%
1.90%
7.30%
7.70%
1.30%
1.60%
1.30%
0.80%
2.00%
7.10%
7.30%
1.30%
1.90%
1.40%
0.90%
2.10%
7.00%
7.10%
1.30%
2.10%
1.60%
1.00%
2.10%
6.90%
6.90%
1 -year
2-year
Expected dividends (HUF/Share)
4-year
5-year
3-year
6-year
7-year
Pricing model
219
219
252
219
371
452
300
219
219
290
252
321
497
330
252
219
333
290
357
547
363
290
219
383
333
393
601
399
334
219
440
383
432
661
439
384
219
507
440
475
728
483
442
219
583
507
523
800
531
Binomial
Binomial
Binomial
Binomial
Binomial
Binomial
Binomial
INTEGRATED ANNUAL REPORT 2023
569
OTP BANK
IFRS REPORT (CONSOLIDATED)
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 2023:
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
started in 2022
Remuneration exchanged to share
provided in 2022
Share purchasing period
started in 2023
Remuneration exchanged to share
provided in 2023
Remuneration exchanged to share
applying in 2024
Remuneration exchanged to share
applying in 2025
Approved
pieces of
shares
Exercised
until 31
December
2023
Weighted average
share price at the date
of exercise (in HUF)
Expired
pieces
Exercisable
as at 31
December
2023
82,854
82,854
17,017
17,017
150,230
150,230
33,024
33,024
73,799
73,799
14,618
14,618
13,843
11,829
14,294
11,897
16,314
16,468
-
-
-
-
-
-
86,456
77,425
14,605
9,031
13,858
13,858
45,155
45,155
3,217
3,217
-
-
-
-
8,529
14,736
11,820
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
864
432
Based on parameters accepted by Supervisory Board relating to the year 2019 effective pieces are as follows as at
31 December 2023:
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
started in 2022
Remuneration exchanged to share
provided in 2022
Share purchasing period
started in 2023
Remuneration exchanged to share
provided in 2023
Share purchasing period
starting in 2024
Remuneration exchanged to share
applying in 2024
Remuneration exchanged to share
applying in 2025
Remuneration exchanged to share
applying in 2026
Approved
pieces of
shares
Exercised
until 31
December
2023
Weighted average
share price at the date
of exercise (in HUF)
Expired
pieces
Exercisable
as at 31
December
2023
91,403
91,403
22,806
22,806
201,273
201,273
30,834
30,834
12,218
11,897
16,298
17,618
-
-
-
-
-
-
-
-
107,760
101,897
13,771
1,344
4,519
10,564
10,564
117,437
114,063
13,427
13,427
-
-
-
-
-
-
-
-
8,529
13,893
11,674
-
-
-
-
-
-
-
-
-
-
-
-
3,374
-
44,421
6,279
1,000
500
INTEGRATED ANNUAL REPORT 2023
570
OTP BANK
IFRS REPORT (CONSOLIDATED)
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 2023:
Share purchasing period
started in 2021
Remuneration exchanged to share
provided in 2021
Share purchasing period
started in 2022
Remuneration exchanged to share
provided in 2022
Share purchasing period
started in 2023
Remuneration exchanged to share
provided 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
Approved
pieces of
shares
Exercised
until 31
December
2023
Weighted average
share price at the date
of exercise (in HUF)
Expired
pieces
41,098
14,142
17,997
26,956
17,881
17,881
17,498
-
Exercisable
as at 31
December
2023
-
-
83,688
3,536
14,193
1,288
78,864
15,232
15,111
8,529
121
-
47,275
-
8,562
8,562
-
11,659
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
47,275
-
51,002
9,518
13,080
3,443
680
680
Based on parameters accepted by Supervisory Board relating to the year 2021 effective pieces are as follows as at
31 December 2023:
Approved
pieces of
shares
Exercised
until 31
December
2023
Weighted average
share price at the date
of exercise (in HUF)
Expired
pieces
Exercisable
as at 31
December
2023
Share purchasing period
started in 2022
Remuneration exchanged to share
provided in 2022
Share purchasing period
started in 2023
Remuneration exchanged to share
provided 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
Share purchasing period
starting in 2026
Remuneration exchanged to share
applying in 2026
Share purchasing period
starting in 2027
Remuneration exchanged to share
applying in 2027
60,018
59,776
10,122
242
11,028
11,028
117,276
117,276
10,824
10,824
8,691
13,672
11,534
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,771
4,942
54,262
4,942
58,155
4,942
25,305
631
INTEGRATED ANNUAL REPORT 2023
571
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 40: SHARE-BASED PAYMENTS AND EMPLOYEE BENEFITS (in HUF mn) [continued]
Based on parameters accepted by Supervisory Board relating to the year 2022 effective pieces are as follows as at
31 December 2023:
Approved
pieces of
shares
Exercised
until 31
December
2023
Weighted average
share price at the date
of exercise (in HUF)
Expired
pieces
Exercisable
as at 31
December
2023
Share purchasing period
started in 2023
Remuneration exchanged to share
provided 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
Share purchasing period
starting in 2026
Remuneration exchanged to share
applying in 2026
Share purchasing period
starting in 2027
Remuneration exchanged to share
applying in 2027
Share purchasing period
starting in 2028
Remuneration exchanged to share
applying in 2028
57,412
57,364
8,726
8,590
13,484
11,629
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
48
136
103,450
8,494
42,814
3,993
43,714
3,993
44,701
3,993
19,756
-
Effective pieces relating to the periods starting in 2024-2028 settled during valuation of performance of year 2019-
2022, 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 2023 based on performance assessment accounted as
equity-settled share-based transactions, HUF 3,292 million and HUF 2,948 million was recognized as expense for
the year ended 31 December 2023 and 2022, 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.
INTEGRATED ANNUAL REPORT 2023
572
OTP BANK
IFRS REPORT (CONSOLIDATED)
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
Increase due to acquisition
Current service cost
Interest cost
Actuarial gains from changes in demographic assumptions
Actuarial loss / (gains) from changes in financial assumptions
Benefits paid
Past service cost
Other decreases
Revaluation difference
Closing balance
31/12/2023
31/12/2022
4,728
1,621
369
322
(497)
844
(279)
-
(322)
(202)
6,584
5,264
-
432
105
(110)
(1,179)
(271)
47
(19)
459
4,728
Amounts recognized in profit and loss
31/12/2023
31/12/2022
Current service cost
Net interest expense
Past service cost
Actuarial losses / (gains)
Other income
Total
369
322
-
11
(340)
362
432
105
47
(288)
(129)
167
Maturity analysis of the present value of defined
31/12/2023
31/12/2022
benefit obligations
Within one year
Within 5 years and over one year
Within 10 years and over 5 years
Over 10 years
Total present value
Actuarial assumptions
Discount rate
Future salary increases
609
2,015
2,107
1,853
6,584
575
1,285
1,470
1,398
4,728
31/12/2023
31/12/2022
2.88% - 6.25%
1.80% - 6.00%
1.28% - 8.50%
0.75% - 8.00%
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.
OTP Group made an insignificant amount of contribution to the defined benefit plans during the year ended 31
December 2023 and 2022, respectively.
INTEGRATED ANNUAL REPORT 2023
573
OTP BANK
IFRS REPORT (CONSOLIDATED)
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
31/12/2023
31/12/2022
Short-term employee benefits
Share-based payment
Other long-term employee benefits
Termination benefits
Post-employment benefits
Total
9,974
2,173
556
126
-
12,829
9,020
2,632
474
293
1
12,420
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
31/12/2023
31/12/2022
3,225
432
3,657
2,539
348
2,887
INTEGRATED ANNUAL REPORT 2023
574
OTP BANK
IFRS REPORT (CONSOLIDATED)
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 (net value)
Fair value adjustment of
Other related
parties
Associated
companies
Other
companies
Total
Other related
parties
Associated
companies
Other
companies
Total
31/12/2023
31/12/2022
608
52
-
660
601
-
-
601
derivative financial instruments
Loans at amortized cost (net value)
Finance lease receivable (net value)
Loans mandatorily at fair value through profit or loss
Total assets
-
70,091
-
200
70,899
164
22,048
47
1,711
24,022
-
2,459
-
-
2,459
164
94,598
47
1,911
97,380
-
75,704
-
164
76,469
-
23,554
22
-
23,576
-
4,067
-
-
4,067
-
103,325
22
164
104,112
Liabilities
Deposits from customers and loan liabilities
Fair value adjustment of
derivative financial instruments
Total liabilities
87,857
22,042
1,373
111,272
54,002
12,490
2,104
68,596
-
87,857
-
22,042
-
1,373
-
111,272
-
54,002
46
12,536
-
2,104
46
68,642
INTEGRATED ANNUAL REPORT 2023
575
OTP BANK
IFRS REPORT (CONSOLIDATED)
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 [continued]:
Off-balance sheet items
Undrawn line of credit
Bank Guarantee
Commitments and guarantees given
Total off-balance sheet items
Other
related
parties
64,900
11,080
40
76,020
31/12/2023
Associated
companies
Other
companies
Total
50
1,914
-
1,964
1,910
2,491
-
4,401
66,860
15,485
40
82,385
Other
related
parties
47,522
8,455
24
56,001
31/12/2022
Associated
companies
Other
companies
Total
322
-
-
322
2,209
2,652
-
4,861
50,053
11,107
24
61,184
Statement of profit or loss
(turnover during the current period)
Interest income
Fees and commissions
Interest expense
Fees and commission expenses
Loss allowance / Provision
on loans, placements, for commitments and guarantees given
Operational costs
Net income from sale of assets
31/12/2023
31/12/2022
2,448
164
(514)
(2,094)
(86)
(4,093)
-
860
117
(243)
(7)
(29)
(1,852)
-
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.
INTEGRATED ANNUAL REPORT 2023
576
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 42: ACQUISITION (in HUF mn)
Acquisition and consolidation of subsidiaries
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 EUR 55 million. The financial closing of the transaction was
completed on 18 July 2022.
The Seller shall, on an after-tax basis, indemnify and keep indemnified OTP Bank (the Purchaser) against all losses
suffered or incurred by it arising directly out of two lawsuits. The aggregate liability of the Seller for all indemnity
claims shall not exceed three million euros.
The Seller made a strategic decision to dispose of its Albanian subsidiary. Purchasing an entity with negative
goodwill is reasoned by altogether the expected cost synergies arising from the market situation in Albania.
In line with the sale and purchase agreement (two-step structure of purchase agreement) concluded on 12
December 2022 between OTP Bank and the Ministry of Economy and Finance of the Republic of Uzbekistan, the
first step of the Ipoteka Bank acquisition was completed on 13 June 2023. Consequently, OTP Bank became the
majority shareholder of Ipoteka Bank by acquiring a 73.71% stake and became indirect shareholder of Ipoteka
Bank’s wholly-owned subsidiaries. In the second step of the transaction, the shares that remained in the ownership
of the Ministry will be bought three years after the first step by purchasing further 25% of the shares owned by the
seller. On the basis of contractual conditions, different purchase price modifying factors can modify the second
instalment of the purchase price. In this regard, the amount of HUF 15,757 million compensation assets presented
in the consolidated financial statement, which comes from the fact that the former owners of the acquired company
are contractually indemnifying the acquiring OTP Bank due to the acquired uncertainties.
As a result of the acquisition, OTP Group entered the Central Asian region, and is the first foreign bank to
participate in the privatization of the Uzbek banking sector.
On 31 May 2021, OTP Bank signed a share sale and purchase agreement on purchasing 100% shareholding of
OTP Luxembourg S.a.r.l. and its subsidiaries - Nova KBM d.d. and Aleja Finance d.o.o., (hereinafter “NKBM
group”) which are 80% owned by funds managed by affiliates of Apollo Global Management, Inc. and 20% by
EBRD. The financial closing of the transaction took place on 6 February 2023, after obtaining all the necessary
regulatory approvals. The acquisition of the bank is the most significant acquisition in the history of OTP Group.
The integration process of the two Slovenian subsidiaries, SKB banka purchased in 2019 and Nova KBM is
expected to be completed in 2024. The new bank will be the largest foreign subsidiary of OTP Group.
On 27 September, 2023, Aranykalász Group became with 100% ownership the member of OTP Group through
Portfolion Zöld Magántőkealap. Aranykalász Group contains Aranykalász 1955. Mezőgazdasági Ltd., Aranymező
2001. Mezőgazdasági Ltd., Agromag-Plusz Mezőgazdasági Ltd.
On 7 November 2023, Szekszárd Group engaged in agricultural activities became 100% owned by OTP Group
through Portfolion Zöld Magántőkealap. Szekszárd Group contains Szekszárdi Mezőgazdasági Plc. and Szajki
Mezőgazdasági Plc.
On 10 October 2022 OTP Fund Management Company and OTP banka Srbija a.d. signed a share sale and purchase
agreement on purchasing 100% shareholding of Ilirika DZU AD Beograd, a Serbian asset management company,
with the Slovenian companies Ilirika Fintrade d.o.o., Ilirika svetovanje d.o.o. and Ilirika d.d. The ownership
proportion is 75 – 25%, de total consideration for the purchase of the shares was 93,8 million RSD. The financial
closing of the transaction took place on 11 July 2023.
In October 2023 the Subsidiary changed its name to OTP Invest AD Beograd. Through this acquisition OTP Group
entered the Serbian asset management market with only a few market competitors.
INTEGRATED ANNUAL REPORT 2023
577
OTP BANK
NOTE 42: ACQUISITION (in HUF mn) [continued]
The fair value of the assets and liabilities acquired is as follows [continued]:
The fair value of the assets and liabilities acquired is as follows:
IFRS REPORT (CONSOLIDATED)
JSCMB
'Ipoteka
Bank' (June
2023)
NKBM group
(February 2023)
Aranykalasz
group (August
2023)
Szekszard
group
(November
2023)
OTP Invest
(July 2023)
Total (2023)
Alpha Bank
SH.A. (July
2022)
Cash amounts and due from banks and
balances with the National Banks
Placements with other banks, repo receivables
Financial assets at fair value through profit or loss
Securities at fair value through other comprehensive income
Loans at amortized cost
Loans mandatorily at fair value through profit or loss
Associates and other investments
Securities at amortized cost
Property and equipment
Intangible assets
Right-of-use assets
Investment properties
Derivative financial assets designated as hedge accounting
Other assets
Total assets
(98,886)
(50,298)
-
(154)
(875,037)
-
(981)
(136,267)
(27,187)
(1,200)
(1,920)
-
-
(31,533)
(1,223,463)
(887,441)
(11,605)
(11,167)
(136,612)
(2,037,656)
-
(4,891)
(788,383)
(20,199)
(17,171)
(1,941)
(9,910)
(1,842)
(50,941)
(3,979,759)
(925)
-
-
-
-
-
(12)
-
(2,852)
-
-
-
-
(585)
-
-
-
-
-
(2,279)
-
(1,434)
(3)
-
-
-
(11,294)
(15,083)
(10,502)
(14,803)
(57)
-
-
-
-
-
-
-
(1)
(110)
-
-
-
(6)
(174)
(987,894)
(61,903)
(11,167)
(136,766)
(2,912,693)
-
(8,163)
(924,650)
(51,673)
(18,484)
(3,861)
(9,910)
(1,842)
(104,276)
(5,233,282)
(58,880)
(26,500)
-
(46,003)
(101,642)
-
-
(3,038)
(1,063)
(1,391)
(3,209)
-
-
(6,852)
(248,579)
INTEGRATED ANNUAL REPORT 2023
578
OTP BANK
NOTE 42: ACQUISITION (in HUF mn) [continued]
The fair value of the assets and liabilities acquired is as follows [continued]:
IFRS REPORT (CONSOLIDATED)
Amounts due to the banks, the National Governments, deposits
from the National Banks and other banks and repo liabilities
Deposits from customers
Liabilities from issued securities
Derivative financial liabilities held for trading
Derivative financial liabilities designated as hedge accounting
Leasing liabilities
Other liabilities
Subordinated bonds and loans
Total liabilities
Net assets
JSCMB
'Ipoteka
Bank' (June
2023)
NKBM group
(February 2023)
Aranykalasz
group (August
2023)
Szekszard
group
(November
2023)
OTP Invest
(July 2023)
Total (2023)
Alpha Bank
SH.A. (July
2022)
571,792
309,898
118,897
-
-
-
27,681
12,098
1,040,366
(183,097)
69,398
3,250,141
169,071
-
2,982
1,967
51,157
32,916
3,577,632
(402,127)
300
-
-
-
-
-
1,415
-
990
-
-
-
-
-
768
-
1,715
(13,368)
1,758
(13,045)
-
188
-
-
-
-
7
-
195
21
642,480
3,560,227
287,968
-
2,982
1,967
81,028
45,014
4,621,666
(611,616)
1,969
213,400
-
-
-
3,346
6,089
-
224,804
(23,775)
JSCMB
'Ipoteka
Bank' (June
2023)
NKBM group
(February 2023)
Aranykalasz
group (August
2023)
Szekszard
group
(November
2023)
OTP Invest
(July 2023)
Total (2023)
Alpha Bank
SH.A. (July
2022)
Net assets total
Non-controlling interest1
Negative goodwill / (Goodwill)
Net cash
Cash acquired on purchase
Net cash paid for acquisition
Purchase price - part one
Purchase price - part two
Total
(183,097)
3,149
93,891
(86,057)
98,886
12,829
(83,347)
(2,710)
(86,057)
1Non-controlling interest was measured at its proportionate share of net assets of the acquiree.
(402,127)
-
104,470
(297,657)
887,441
589,784
(13,368)
-
-
(13,368)
925
(12,443)
(13,045)
-
-
(13,045)
585
(12,460)
21
-
(324)
(303)
57
(246)
(611,616)
3,149
198,037
(410,430)
987,894
577,464
(23,775)
-
3,784
(19,991)
58,880
38,889
INTEGRATED ANNUAL REPORT 2023
579
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 42: ACQUISITION (in HUF mn) [continued]
The fair value of the assets and liabilities acquired is as follows [continued]:
Breakdown of the acquired entity’s income, profit / loss from the date of the acquisition:
JSCMB 'Ipoteka Bank'
NKBM group
Aranykalász group
Szekszárd group
OTP Invest
Total
Interest income
Net result
96,490
156,314
-
-
1
252,805
(52,760)
77,804
-
-
(37)
25,007
One-off
expense2
(40,060)
(10,010)
-
-
-
(50,070)
2The net result was decreased by the loss allowance on loans in accordance with IFRS 9 after the first day of the acquisition (Day 1).
Breakdown of the acquired entity’s income, profit / loss if the Group would have acquired from the beginning of
year 2023:
JSCMB 'Ipoteka Bank'
NKBM group
Aranykalász group
Szekszárd group
OTP Invest
Total
Interest income
Net result
175,815
166,772
-
-
2
342,589
(70,215)
79,338
1,607
2,904
(89)
13,545
One-off
expense2
(40,060)
(10,010)
-
-
-
(50,070)
2The net result was decreased by the loss allowance on loans in accordance with IFRS 9 after the first day of the acquisition (Day 1).
With the acquisition the following shares were purchased:
JSCMB 'Ipoteka Bank'
JSCMB 'Ipoteka Bank'
Ipoteka Leasing LLC
IMKON Sugurta JSC
Mortgage refinancing Company of
Uzbekistan
OTP Luxembourg s.á.r.l.
Nova Kreditna Banka Maribor d.d.
Telekom Slovenije, d.d.
Elektro Maribor d.d.
Pivka Perutninarstvo d.d.
Skupina Prva, Zavarovalniški Holding, d.d.
Sava d.d.
VISA Inc. C
VISA Inc. A
Bodočnost Maribor d.o.o.
Sklad Za Reševanje Bank
SWIFT SCRL La Hulpe, Belgija
Bankart d.o.o.
Aleja Finance d.o.o.
Number of shares
Type
Voting rights
2,203,591,374,374
59,197,658
60,000,000,000
45,000,000,000
Common stock
Preferred dividend
Common stock
Business share
73.7090%
0.0020%
100.00%
100.00%
20,000,000
2,771,440
10,000,000
11,938
76,715
486
4,764
496,851
3,688
369
1
50,003,264
32
584,424
500,000
Common stock
Business share
Common stock
Common stock
Common stock
Common stock
Preferred dividend
Common stock
Preferred dividend
Preferred dividend
Business share
Business share
Business share
Business share
Business share
20.00%
100.00%
100.00%
0.18%
0.23%
0.04%
2.35%
1.71%
0.00%
0.00%
1.00%
26.17%
0.03%
29.22%
100.00%
INTEGRATED ANNUAL REPORT 2023
580
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 42: ACQUISITION (in HUF mn) [continued]
With the acquisition the following shares were purchased [continued]:
Number of shares
Type
Voting rights
Aranykalász 1955. Mezőgazdasági Ltd.
Dél-borsodi Gazdák Ltd.
"Egertej" Ltd.
Aranymező 2001. Mezőgazdasági Ltd.
Agromag-Plusz Mezőgazdasági Ltd.
Szekszárdi Mezőgazdasági Plc.
Szajki Mezőgazdasági Plc.
Újberek Ltd.
Sióvölgye Ltd.
Orbánhegyi Szőlőbirtok Limited partnership
Szekszárdi Liszt Pincészet Ltd.
Iphygénia Ltd.
ZA-Gamma Agro Ltd.
GM Agrár Ltd.
Szajkmenti Gazda Limited partnership
Sióparti Gazda Limited partnership
OTP invest AD Beograd
41,670,000
3,703,260
4,274,600
2,250,000
28,650,000
Business share
Business share
Business share
Business share
Business share
52 Common stock
659,859 Common stock
Business share
Business share
Business share
Business share
Business share
Business share
Business share
Business share
Business share
177,032 Common stock
4,800,000
156,580,000
25,000
30,000,000
51,000,000
2,250,000
3,000,000
95,000
5,000
100.00%
40.82%
28.12%
100.00%
98.34%
100.00%
100.00%
100.00%
100.00%
76.92%
100.00%
100.00%
99.00%
100.00%
100.00%
87.50%
100.00%
INTEGRATED ANNUAL REPORT 2023
581
OTP BANK
IFRS REPORT (CONSOLIDATED)
I. NOTE 43: SIGNIFICANT SUBSIDIARIES AND ASSOCIATES (in HUF mn)
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.
Significant subsidiaries
Name
DSK Bank AD (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 (Serbia)
Crnogorska komercijalna banka a.d. (Montenegro)
Banka OTP Albania SH.A. (Albania)
OTP Bank S.A. (Moldova)
SKB Banka d.d. Ljubljana (Slovenia)
Nova Kreditna Banka Maribor d.d. (Slovenia)
JSCMB 'Ipoteka Bank' (Uzbekistan)
OTP Financing Malta Company Ltd. (Malta)
OTP Holding 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)
31/12/2023
31/12/2022
Activity
99.92%
100.00%
97.92%
100.00%
100.00%
100.00%
100.00%
100.00%
98.26%
100.00%
100.00%
79.58%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
99.92%
100.00%
97.92%
100.00%
100.00%
100.00%
100.00%
100.00%
98.26%
100.00%
-
-
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
commercial banking services
commercial banking services
commercial banking services
commercial banking services
commercial banking services
commercial banking services
commercial banking services
commercial banking services
commercial banking services
commercial banking services
commercial banking services
commercial banking services
refinancing activities
refinancing activities
work-out
mortgage lending
real estate management and development
finance lease
housing savings and loan
fund management
real estate lease
property management
fund services
real estate leasing
INTEGRATED ANNUAL REPORT 2023
582
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 43: SIGNIFICANT SUBSIDIARIES AND ASSOCIATES (in HUF mn) [continued]
Significant associates and joint ventures
Summarized financial and non-financial information of associates which are accounted according to IAS 28 and in line with IFRS 9 as at 31 December 2023 is as follows:
List of associated entities
Carrying
amount
Ownership of
OTP Bank
Profit after tax
Country / Headquarter
Activity
Edrone spółka z ograniczoną
odpowiedzialnością
NovaKid Inc.
Banzai Cloud Closed Co. Plc
CodeCool Ltd
Pepita.hu Closed Co. Plc
Seon Holdings Ltd
VCC Live Group Closed Co. Plc
Cursor Insight Ltd
OneSoil Ag.
Packhelp Spółka Akcyjna
Phoenix Play Invest Closed Co. Plc
Algorithmiq Invest Closed Co. Plc
Deligo Vision Technologies Ltd
Shopper Park Plus Closed Co. Plc.1
New Frontier Technology Invest SARL
Mindgram sp. z.o.o
Tine Limited
Renewabl Ltd.
Giganci Programowania sp. z.o.o.
FlowX.Ai., Inc
Commsignia Inc.
Deskbird AG
Subtotal (Investments through funds)
OTP Risk Fund I.
OTP-DayOne Magvető Fund
D-ÉG Thermoset Ltd 'u.l.'
Company for Cash Services AD
Fabetker Ltd
NGY Propertiers Investment SRL
Fintech CEE Software Invest Ltd
Bankart Procesiranje Placilnih Instrumentov d.o.o.
Mortgage refinancing Company of Uzbekistan
Dél-borsodi Gazdák Ltd.
"Egertej"Ltd.
Orbánhegyi Szőlőbirtok
Subtotal
Total
1Previously known as: GRADUW Invest Closed Co. Plc
848
2,009
4
1,310
2,679
8,070
1,632
73
6
899
6,368
5,185
302
5,237
3,624
206
-
102
514
2,252
1,763
1,079
44,162
611
280
-
392
3
11,637
408
7,219
1,030
4
8
-
21,592
65,754
23.54%
4.07%
17.42%
7.26%
38.75%
19.26%
24.72%
6.75%
3.72%
3.14%
21.68%
21.68%
8.70%
2.80%
14.00%
2.38%
0.00%
5.01%
5.03%
9.50%
3.17%
8.46%
44.12%
22.00%
46.99%
25.00%
20.00%
14.54%
20.04%
43.06%
20.00%
40.92%
28.12%
25.00%
(342)
(231)
267
(731)
(580)
(1,210)
(220)
(51)
(819)
(2,725)
151
(8,907)
(215)
3,175
103
(1,083)
(1,086)
(269)
(149)
(1,786)
(1,438)
Poland / Krakow
USA / San Francisco
Hungary /Budapest
Hungary /Budapest
Hungary / Szeghalom
UK / London
Hungary /Budapest
UK / London
Switzerland / Zurich
Poland / Warsaw
Hungary /Budapest
Hungary /Budapest
Hungary /Budapest
Hungary /Budapest
Luxemburg / Luxembourg
Poland / Warsaw
Great Britain / London
Great Britain / London
Poland / Warsaw
USA / Camano Park
USA / Santa Clara
(1,944)
(20,090)
158
308
n.a.
St. Gallen / Switzerland
Hungary /Budapest
Hungary /Budapest
Hungary / Dunaújváros
337
Bulgaria / Sofia
Computer programming activities
Online kids English learning platform operator
Computer programming activities
Other education
Retail sale via mail order houses or via Internet
Computer programming activities
Computer programming activities
Computer programming activities
Computer programming activities
Manufacture of corrugated paper and paperboard
and of containers of paper and paperboard
Activities of holding companies
Activities of holding companies
Other information service activities
Sale and purchase of own real estate
Activities of holding companies
Other human health activities
Child day-care services
Other information technology services
Other education
Computer programming activities
Retail sale of computers, peripheral units and
software in specialized stores
Computer programming activities
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
Hungary / Nádudvar
Romania / Bucharest
Hungary /Budapest
Ljubjana / Slovenia
Tashkent / Uzbekistan
Hungary / Mezőkeresztes
Hungary / Eger
Hungary / Budapest
Manufacture of concrete products for construction purposes
Renting and operating of own or leased real estate
Activities of holding companies
Data processing, web hosting services
Refinancing mortgage loans
Wholesale of grain, tobacco, seeds and animal feeds.
Manufacture of dairy products.
Viticulture
119
6,903
(7)
(1,733)
(615)
(4)
78
28
5,572
(14,518)
INTEGRATED ANNUAL REPORT 2023
583
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 43: SIGNIFICANT SUBSIDIARIES AND ASSOCIATES (in HUF mn) [continued]
Significant associates and joint ventures [continued]
Summarized financial and non-financial information of associates which are accounted according to IAS 28 and in line with IFRS 9 as at 31 December 2022 is as follows:
List of associated entities
Carrying
amount
Ownership of
OTP Bank
Profit after tax
Country / Headquarter
Activity
Edrone spółka z ograniczoną
odpowiedzialnością
NovaKid Inc.
Banzai Cloud Closed Co. Plc
CodeCool Ltd
Pepita.hu Closed Co. Plc
Seon Holdings Ltd
VCC Live Group Closed Co. Plc
Cursor Insight Ltd
OneSoil Ag.
Packhelp Spółka Akcyjna
Phoenix Play Invest closed Co. Plc
Algorithmiq Invest Closed Co. Plc
Deligo Vision Technologies Ltd
GRADUW Invest Closed Co. Plc
SEH-Partner Ltd
New Frontier Technology Invest SARL
Mindgram sp. z.o.o
Subtotal (Investments through funds)
OTP Risk Fund I.
OTP-DayOne Magvető Fund
D-ÉG Thermoset Ltd 'u.l.'
Company for Cash Services AD
Fabetker Ltd
NGY Propertiers Investment SRL
Simonyi út 20. Ingatlanhasznosító Ltd
Fintech CEE Software Invest Ltd
Subtotal
Total
822
1,723
216
1,323
1,323
8,689
1,308
75
362
1,168
2,350
8,195
205
4,803
6,403
3,393
200
42,558
520
683
-
392
1
11,735
90
127
13,548
56,106
23.54%
4.07%
17.42%
20.15%
40.00%
19.26%
24.75%
6.75%
3.72%
3.15%
21.69%
21.69%
2.50%
3.81%
30.56%
14.01%
2.38%
44.12%
22.00%
46.99%
25.00%
20.48%
14.54%
47.62%
20.04%
Poland / Krakow
USA / San Francisco
Hungary /Budapest
Hungary /Budapest
Hungary / Szeghalom
UK / London
Hungary /Budapest
UK / London
Switzerland / Zurich
Poland / Warsaw
Computer programming activities
Online kids English learning platform operator
Computer programming activities
Other education
Retail sale via mail order houses or via Internet
Computer programming activities
Computer programming activities
Computer programming activities
Computer programming activities
Manufacture of corrugated paper and paperboard
and of containers of paper and paperboard
Hungary /Budapest
Hungary /Budapest
Hungary /Budapest
Hungary /Budapest
Hungary /Budapest
Luxemburg / Luxembourg
Poland / Warsaw
Activities of holding companies
Activities of holding companies
Other information service activities
Sale and purchase of own real estate
Activities of holding companies
Activities of holding companies
Other human health activities
(516)
(5,409)
267
1
(157)
(3)
(226)
n.a.
(514)
(3,385)
(1)
792
(15)
131
n.a.
n.a.
(328)
(9,363)
(52)
13
-
Hungary /Budapest
Hungary /Budapest
Hungary / Dunaújváros
183
Bulgaria / Sofia
135
(22,567)
-
n.a.
(22,288)
(31,651)
Hungary / Nádudvar
Romania / Bucharest
Hungary /Debrecen
Hungary /Budapest
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
Manufacture of concrete products for construction purposes
Renting and operating of own or leased real estate
Renting and operating of own or leased real estate
Activities of holding companies
INTEGRATED ANNUAL REPORT 2023
584
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 44: 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
37,402
37,714
31/12/2023
31/12/2022
INTEGRATED ANNUAL REPORT 2023
585
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 45: CONCENTRATION OF ASSETS AND LIABILITIES
In the percentage of the total assets
Receivables from, or securities issued by
the Hungarian Government or the NBH
31/12/2023
31/12/2022
13.32%
14.75%
There were no other significant concentrations of the assets or liabilities of the Group either as at 31 December
2023 or as at 31 December 2022.
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.
INTEGRATED ANNUAL REPORT 2023
586
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 46: EARNINGS PER SHARE
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 profit after income tax 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 profit after income tax 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)
31/12/2023
31/12/2022
988,658
346,354
267,591,265
3,695
268,790,272
1,289
988,658
346,354
267,737,358
268,873,185
Diluted Earnings per share (in HUF)
3,693
1,288
Earnings per share from continuing operations
31/12/2023
31/12/2022
Consolidated profit after income tax 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 profit after income tax 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)
1,009,904
318,351
267,591,265
3,774
268,790,272
1,184
1,009,904
318,351
267,737,358
268,873,185
Diluted Earnings per share (in HUF)
3,772
1,184
Earnings per share from discontinued operations
31/12/2023
31/12/2022
Consolidated profit after income tax 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 profit after income tax 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)
(21,246)
28,003
267,591,265
(79)
268,790,272
104
(21,246)
28,003
267,737,358
268,873,185
Diluted Earnings per share (in HUF)
(79)
104
INTEGRATED ANNUAL REPORT 2023
587
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 46: EARNINGS PER SHARE [continued]
Weighted average number of ordinary shares
Average number of Treasury shares
Weighted average number of ordinary shares outstanding
during the year for calculating basic EPS
Dilutive effects of options issued in accordance with the
remuneration policy and convertible into ordinary shares1
The modified weighted average number of ordinary shares
outstanding during the year for calculating diluted EPS
31/12/2023
31/12/2022
280,000,010
12,408,745
280,000,010
11,209,738
267,591,265
268,790,272
146,093
82,913
267,737,358
268,873,185
1 Both in the year 2023 and 2022 the dilutive effect is in connection with the Remuneration Policy and the Management Option Program.
INTEGRATED ANNUAL REPORT 2023
588
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 47: NET GAIN OR LOSS REALIZED ON FINANCIAL INSTRUMENTS (in HUF mn)
31/12/2023
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
Repo receivables
Securities at amortized cost
Loans at amortized cost
Finance lease receivables
Other financial assets2
Financial assets at amortized cost total
Trading securities at fair value
through profit or loss
Non-trading instruments mandatorily
at fair value through profit or loss
Interest-bearing securities at fair value through
other comprehensive income1
Non-interest-bearing instruments at fair value
through other comprehensive income
Loans mandatorily at fair value
through profit or loss
Financial assets at fair value total
Total result on financial assets
Amounts due to banks, the National
Governments, deposits from the
National Banks and other banks
Repo liabilities
Deposits from customers
Liabilities from issued securities
Leasing liabilities
Subordinated bonds and loans
Financial liabilities at amortized cost total
Financial liabilities designated
at fair value through profit or loss
Total result on financial liabilities
Derivative financial instruments2
Total result on financial instruments
354,208
187,436
17,011
242,256
1,345,570
100,749
6,942
2,254,172
-
-
55,320
-
92,117
147,437
2,401,609
(74,338)
(40,398)
(484,398)
(116,628)
(2,970)
(32,565)
(751,297)
(1,433)
(752,730)
(262,173)
1,386,706
-
-
-
(18,716)
34,335
-
-
15,619
7,713
8,240
(1,221)
430
96,082
111,244
126,863
-
-
386,823
-
-
-
386,823
(4,542)
382,281
(12,760)
1,060
1,455
(371)
9,185
(149,822)
1,656
1,333
(135,504)
-
-
(354)
-
(91)
(445)
(135,949)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
76,954
1,465
-
78,419
78,419
-
-
-
-
-
-
-
-
-
-
496,384
(135,949)
78,419
1 For the year 2023 HUF (1,221) million net non-interest loss 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.
Current year change of derivative financial assets and liabilities held-for-trading and designated as hedge
accounting by types of results in the profit or loss
31/12/2023
Held-for-trading Hedge accounting
Balance as at 1 January
Change in current period through p/l
on interest income/interest expense
on net results on derivative instruments
on revaluation difference
Realized result on closed deals /matured deals
Increase due to acquisition
Assets held for sale
Foreign currency translation difference
Closing balance
(109,265)
106,994
(27,506)
66,774
67,726
13,088
104
1,216
1,004
13,141
20,298
(44,576)
86,915
(26,714)
(104,777)
494
1,842
-
10
(21,932)
INTEGRATED ANNUAL REPORT 2023
589
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 47: NET GAIN OR LOSS REALIZED ON FINANCIAL INSTRUMENTS (in HUF mn)
[continued]
31/12/2022
Cash, amounts due from banks and
balances with the National Banks
Placements with other banks
Repo receivables
Securities at amortized cost
Loans at amortized cost
Finance lease receivables
Other financial assets2
Financial assets at amortized cost total
Trading securities at fair value
through profit or loss
Non-trading instruments mandatorily
at fair value through profit or loss
Interest-bearing securities at fair value through
other comprehensive income1
Non-interest-bearing instruments at fair value
through other comprehensive income
Loans mandatorily at fair value
through profit or loss
Financial assets at fair value total
Total result on financial assets
Amounts due to banks, the National
Governments, deposits from the
National Banks and other banks
Repo liabilities
Deposits from customers
Liabilities from issued securities
Leasing liabilities
Subordinated bonds and loans
Financial liabilities at amortized cost total
Financial liabilities designated
at fair value through profit or loss
Total result on financial liabilities
Derivative financial instruments2
Total result on financial instruments
Net interest / similar
to interest gain and
loss
Net non-interest
gain and loss
Loss
allowance
Other Compre-
hensive Income
62,120
153,692
4,261
139,445
906,011
74,994
4,123
1,344,646
-
54
53,078
-
54,036
107,168
1,451,814
(14,885)
(31,006)
(253,609)
(27,838)
(2,296)
(8,986)
(338,620)
(562)
(339,182)
(85,764)
1,026,868
-
-
-
(4,636)
31,144
-
-
26,508
(3,168)
265
(440)
(19)
50
(31,471)
(168,406)
(23,513)
(1,204)
(225,003)
-
-
-
-
-
-
-
-
-
-
-
-
(1,022)
(29,290)
(123,874)
8
(5,951)
(9,868)
16,640
-
-
338,952
-
-
-
338,952
1,932
340,884
16,360
-
4,497
13,346
(15,944)
(240,947)
-
(119,377)
(119,377)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
373,884
(240,947)
(119,377)
1 For the year of 2022 HUF (1,022) million net non-interest loss 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.
Current year change of derivative financial assets and liabilities held for trading and designated as hedge
accounting by types of results in the profit or loss
31/12/2022
Held-for-trading Hedge accounting
Balance as at 1 January
Change in current period through p/l
on interest income/interest expense
on net results on derivative instruments
on revaluation difference
Realized result on closed deals /matured deals
Foreign currency translation difference
Closing balance
(18,232)
(57,689)
(56,775)
(77,886)
76,972
(31,820)
(1,524)
(109,265)
7,529
1,555
(1,152)
48,429
(45,722)
11,219
(5)
20,298
INTEGRATED ANNUAL REPORT 2023
590
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: 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 48.4. 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 instruments 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.
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.
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Asset held for sale is valued at fair value less cost to sell, that is in this case equal to the sales price and would be
classified as Level 3 fair value.
Use of modified yield curve
During the year ended 31 December 2023 and 2022 yield curves derived from Hungarian government bonds
(“ÁKK curve”) have become distorted due to certain market events, which means that real liquidity has
concentrated on certain part of the yield curve. Therefore, a modified yield curve - which is not observable on the
market - has been used at the concerning fair value calculations. This yield curve is based on the relevant yield
curve points of the original ÁKK curve. Based on Management’s discretion fair value calculated with modified
yield curves can represent the perspective of market participants reliable at current market conditions.
For the year ended 31 December 2023 and 2022 modified yield curve was used for calculating fair value in case
of subsidized personal loans represented in “Loans mandatorily measured at fair value through profit or loss” line.
INTEGRATED ANNUAL REPORT 2023
591
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.1.
Fair value of financial assets and liabilities at amortized cost by level of the fair value hierarchy and their carrying amount
31/12/2023
Cash, amounts due from banks and balances with the National Banks
Placements with other banks
Repo receivables
Securities at amortized cost
Loans at amortized cost
Finance lease receivables
Other financial assets
Total financial assets at amortized cost
Amounts due to the National Governments, to the National Banks and other banks
Repo liabilities
Deposits from customers
Liabilities from issued securities
Leasing liabilities
Other financial liabilities
Subordinated bonds and loans
Total financial liabilities at amortized cost
31/12/2022
Cash, amounts due from banks and balances with the National Banks
Placements with other banks
Repo receivables
Securities at amortized cost
Loans at amortized cost
Finance lease receivables
Other financial assets
Total financial assets at amortized cost
Amounts due to the National Governments, to the National Banks and other banks
Repo liabilities
Deposits from customers
Liabilities from issued securities
Leasing liabilities
Other financial liabilities
Subordinated bonds and loans
Total financial liabilities at amortized cost
Carrying
amount
7,125,049
1,566,998
223,884
5,249,272
17,676,533
1,289,712
282,400
33,413,848
1,940,862
126,237
28,332,431
2,095,548
76,313
656,864
562,396
33,790,651
Carrying
amount
4,221,392
1,351,082
41,009
4,891,938
16,094,458
1,298,752
262,981
28,161,612
1,463,158
217,369
25,188,805
870,682
63,778
645,652
301,984
28,751,428
Fair value
Level 1
Level 2
Level 3
7,125,049
1,448,684
223,884
5,184,729
17,723,130
1,504,439
282,400
33,492,315
1,974,503
126,237
28,295,214
2,118,233
76,313
656,864
452,595
33,699,959
6,005,164
1,059,696
-
4,478,411
-
189,830
-
11,733,101
458,700
-
-
1,770,138
-
-
410,495
2,639,333
1,119,885
375,266
223,884
640,591
1,219
91,948
-
2,452,793
690,452
126,237
10,459,658
19,629
-
-
-
11,295,976
-
13,722
-
65,727
17,721,911
1,222,661
282,400
19,306,421
825,351
-
17,835,556
328,466
76,313
656,864
42,100
19,764,650
Fair value
Level 1
Level 2
Level 3
4,221,392
1,322,560
42,993
4,048,877
15,557,928
1,320,286
262,981
26,777,017
1,109,924
227,669
25,056,412
743,907
63,791
645,652
268,911
28,116,266
3,557,491
967,438
-
3,063,237
-
-
-
7,588,166
42,544
-
-
545,677
-
-
229,121
817,342
663,901
342,595
42,993
764,096
1,757,358
264,057
-
3,835,000
123,662
227,669
12,452,761
15,454
-
-
-
12,819,546
-
12,527
-
221,544
13,800,570
1,056,229
262,981
15,353,851
943,718
-
12,603,651
182,776
63,791
645,652
39,790
14,479,378
INTEGRATED ANNUAL REPORT 2023
592
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.2. 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:
INTEGRATED ANNUAL REPORT 2023
593
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.2. Fair value of derivative instruments [continued]
Before netting
Assets
Liabilities
31/12/2023
Netting
After netting
Before netting
Assets
Liabilities
Assets
Liabilities
31/12/2022
Netting
After netting
Assets
Liabilities
Held for trading derivative financial
instruments
Interest rate derivatives
Interest rate swaps
Cross currency interest rate swaps
OTC options
Forward rate agreement
Total interest rate derivatives (OTC derivatives)
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
134,599
8,644
2,024
-
145,267
31,397
7,101
1,016
170
(117,778)
(6,544)
(2,033)
(214)
(126,569)
(32,382)
(11,061)
(871)
(319)
39,684
(44,633)
32,336
126
32,462
433
32,895
64,288
4,671
-
-
-
(31,661)
(3,826)
(35,487)
(451)
(35,938)
(44,577)
(19,546)
-
-
(2,401)
110,939
-
-
-
110,939
-
-
-
-
-
-
-
-
-
-
22,237
-
-
-
-
23,660
8,644
2,024
-
34,328
31,397
7,101
1,016
170
(6,839)
(6,544)
(2,033)
(214)
(15,630)
(32,382)
(11,061)
(871)
(319)
165,478
11,332
1,074
505
178,389
76,881
13,085
1,048
177
(171,706)
(12,139)
(1,069)
(3)
(184,917)
(72,959)
(13,740)
(822)
(177)
39,684
(44,633)
91,191
(87,698)
33,693
54
33,747
214
33,961
(31,632)
(702)
(32,334)
(1,887)
(34,221)
32,336
126
32,462
433
32,895
42,051
4,671
-
-
-
(31,661)
(3,826)
(35,487)
(451)
(35,938)
(22,340)
(19,546)
-
-
(2,401)
155,468
-
-
505
155,973
-
-
-
-
-
-
-
-
-
-
10,010
11,332
1,074
-
22,416
76,881
13,085
1,048
177
(16,238)
(12,139)
(1,069)
502
(28,944)
(72,959)
(13,740)
(822)
(177)
91,191
(87,698)
33,693
54
33,747
214
33,961
(31,632)
(702)
(32,334)
(1,887)
(34,221)
136,164
2,514
-
-
9,180
(239,975)
(10,190)
(43)
-
(3,620)
18,944
-
-
-
-
117,220
2,514
-
-
9,180
(221,031)
(10,190)
(43)
-
(3,620)
management not designated in hedge
68,959
(66,524)
22,237
46,722
(44,287)
147,858
(253,828)
18,944
128,914
(234,884)
Total held for trading derivative
financial instruments
286,805
(273,664)
133,176
153,629
(140,488)
451,399
(560,664)
174,917
276,482
(385,747)
INTEGRATED ANNUAL REPORT 2023
594
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.2. 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
Interest rate swaps
Total derivatives designated in fair value hedges
Total derivatives held for risk management
Before netting
Assets
Liabilities
31/12/2023
Netting
After netting
Before netting
Assets
Liabilities
Assets
Liabilities
31/12/2022
Netting
After netting
Assets
Liabilities
1,066
1,066
42,347
24,750
-
168
67,265
(1,066)
(1,066)
(79,069)
(10,009)
-
(119)
(89,197)
1,066
1,066
25,130
-
-
168
25,298
-
-
17,217
24,750
-
-
41,967
-
-
(53,939)
(10,009)
-
49
(63,899)
2,651
2,651
56,757
20,732
1,696
-
79,185
(2,651)
(2,651)
(37,290)
(5,398)
(16,199)
-
(58,887)
2,651
2,651
30,938
-
-
-
30,938
-
-
25,819
20,732
1,696
-
48,247
-
-
(6,352)
(5,398)
(16,199)
-
(27,949)
(OTC derivatives)
68,331
(90,263)
26,364
41,967
(63,899)
81,836
(61,538)
33,589
48,247
(27,949)
Financial assets subject to offsetting, netting arrangement as at 31 December 2023
31/12/2023
Offsetting recognised on the balance sheet
Derivative financial instruments
Gross
assets
before
offset
324,446
Offsetting
with gross
liabilities
(158,844)
Net assets
recognized on the
statement of
financial position
165,602
Netting potential not recognised on the balance sheet Assets not subject to
netting arrangements
Assets recognized on
the statement of
financial position
Assets after
consideration of
netting potential
Collateral
received
Financial
liabilities
Total assets
Recognized in
the statement of
financial position
Maximum
exposure to risk
After consideration
of netting potential
(60,721)
(76,853)
28,028
29,994
195,596
58,022
INTEGRATED ANNUAL REPORT 2023
595
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48:
FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.2. Fair value of derivative instruments [continued]
Financial liabilities subject to offsetting, netting arrangement as at 31 December 2023
31/12/2023
Offsetting recognised on the balance sheet
Netting potential not recognised on the balance sheet Liabilities not subject
Total liabilities
Derivative financial instruments
Gross
liabilities
before
offset
347,414
Offsetting
with gross
assets
(158,844)
Net liabilities
recognized on the
statement of
financial position
188,570
Financial
assets
Collateral
pledged
Liabilities after
consideration of
netting potential
to netting
arrangements
Liabilities recognized
on the statement of
financial position
Maximum
exposure to risk
Recognized in
the statement of
financial position
After consideration
of netting potential
(60,721)
(103,563)
24,286
15,817
204,387
40,103
Financial assets subject to offsetting, netting arrangement as at 31 December 2022
31/12/2022
Offsetting recognised on the balance sheet
Derivative financial instruments
Gross
assets
before
offset
441,413
Offsetting
with gross
liabilities
(208,506)
Net assets
recognized on the
statement of
financial position
232,907
Netting potential not recognised on the balance sheet Assets not subject to
netting arrangements
Assets recognized on
the statement of
financial position
Assets after
consideration of
netting potential
Collateral
received
Financial
liabilities
Total assets
Recognized in
the statement of
financial position
Maximum
exposure to risk
After consideration
of netting potential
(90,551)
(103,014)
39,342
91,822
324,729
131,164
Financial liabilities subject to offsetting, netting arrangement as at 31 December 2022
31/12/2022
Offsetting recognised on the balance sheet
Netting potential not recognised on the balance sheet Liabilities not subject
Total liabilities
Derivative financial instruments
Gross
liabilities
before
offset
580,572
Offsetting
with gross
assets
(208,506)
Net liabilities
recognized on the
statement of
financial position
372,066
Financial
assets
Collateral
pledged
Liabilities after
consideration of
netting potential
to netting
arrangements
Liabilities recognized
on the statement of
financial position
Maximum
exposure to risk
Recognized in
the statement of
financial position
After consideration
of netting potential
(90,551)
(240,661)
40,854
41,630
413,696
82,484
INTEGRATED ANNUAL REPORT 2023
596
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.3. 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.
INTEGRATED ANNUAL REPORT 2023
597
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.3. Types of hedge accounting [continued]
Amount, timing and uncertainty of future cash flows – hedging instruments as at 31 December 2023 (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
-
-
-
-
30
2.10%
-
-
-
-
-
-
45
2.13%
-
-
(121,675)
5.10%
(218,683)
(3.24%)
(51,700)
4.72%
(392,058)
65
2.64%
-
-
-
-
(461)
4.80%
(1,013)
3.77%
4,500
0.22%
180
-
47
4.18%
-
-
(216)
(891)
4,500
21
-
(1.65%)
310.23
1
(1.69%)
310.02
2
(1.68%)
310.10
8
(1.73%)
309.36
10
(1.82%)
307.71
INTEGRATED ANNUAL REPORT 2023
598
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.3. Types of hedge accounting [continued]
Amount, timing and uncertainty of future cash flows – hedging instruments as at 31 December 2023 (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
Interest rate swap
Interest rate
risk
EUR
Notional
Average Interest Rate (%)
-
363.88
175
356.12
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
357.16
-
-
-
250
359.11
575
73.75
4,000
3.65
-
-
143
357.16
778
1,167
383.36
1,950
73.98
7,870
3.73
4,500
2.43
-
-
-
500
381.11
-
-
-
-
-
-
-
-
-
(60)
3.54%
(240)
2.61%
(120)
2.42%
2,092
2,525
11,870
4,500
143
778
(420)
INTEGRATED ANNUAL REPORT 2023
599
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.3. Types of hedge accounting [continued]
Amount, timing and uncertainty of future cash flows – hedging instruments as at 31 December 2022 (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
-
-
-
-
-
-
-
-
-
-
-
-
90
2.60%
-
-
-
-
(64,875)
7.15%
101
0.24%
-
-
-
-
10
0.22%
29
2.35%
4,500
0.22%
30,300
1.40%
50
0.05%
47
4.18%
-
-
(34,575)
161
166
4,500
-
(1.64%)
310.41
1
(1.68%)
310.17
2
(1.68%)
310.20
10
(1.71%)
309.74
11
(1.82%)
307.71
24
INTEGRATED ANNUAL REPORT 2023
600
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.3. Types of hedge accounting [continued]
Amount, timing and uncertainty of future cash flows – hedging instruments as at 31 December 2022 (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
JPY/HUF
Notional
Average FX Rate
USD/HUF
Notional
Average FX Rate
-
363.88
(10)
407.57
-
-
-
-
-
-
-
-
-
-
(7)
323.77
125
362.11
400
72.92
-
-
144
323.77
878
373.88
3,121
75.08
4,500
2.79
146
323.77
-
-
-
-
-
-
-
-
993
3,521
4,500
283
INTEGRATED ANNUAL REPORT 2023
601
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.3. Types of hedge accounting [continued]
As at 31 December 2023 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 2023
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 2023
Before netting
Netting
After netting
Assets
Liabilities
Assets
Liabilities
2,448,226
43,305
(79,238)
26,196
17,109
(53,042) Derivative financial instruments
10,642
Fair value hedge
IRS
CCIRS
Interest
rate risk
FX &
IR risk
6,394
-
(1,418)
CCIRS
FX risk
1,009,180
24,750
(9,488)
IRS
Other
778
108
-
designated as hedge
accounting
-
(1,418) Derivative financial instruments
(668)
designated as hedge
accounting
24,750
(9,488) Derivative financial instruments
38,146
designated as hedge
accounting
108
- Derivative financial instruments
designated as hedge
accounting
-
-
-
1
32
48,153
IRS
Interest
rate risk
160,768
168
(119)
168
-
49 Derivative financial instruments
designated as hedge
accounting
Fair value hedges total
3,625,346
68,331
(90,263)
26,364
41,967
(63,899)
INTEGRATED ANNUAL REPORT 2023
602
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.3. Types of hedge accounting [continued]
As at 31 December 2022 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 2022
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 2022
Fair value
hedge
IRS
Interest
rate risk
444,627
56,636
(37,258)
30,938
25,698
(6,320) Derivative financial instruments
12,873
Before netting
Netting
After netting
Assets
Liabilities
Assets
Liabilities
CCIRS
FX &
IR risk
7,292
-
(2,679)
CCIRS
FX risk
813,430
20,732
(2,719)
FX swap
FX risk
290,982
1,696
(16,199)
IRS
Other
5,584
121
(32)
-
-
-
-
designated as hedge
accounting
-
(2,679) Derivative financial instruments
3
designated as hedge
accounting
20,732
(2,719) Derivative financial instruments
(6,087)
designated as hedge
accounting
1,696
(16,199) Derivative financial instruments
designated as hedge
accounting
121
(32) Derivative financial instruments
designated as hedge
accounting
-
1
6,790
Fair value hedges total
1,561,915
79,185
(58,887)
30,938
48,247
(27,949)
INTEGRATED ANNUAL REPORT 2023
603
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.3. Types of hedge accounting [continued]
As at 31 December 2023 is as follows:
Type of hedge
Type of risk
Carrying amount of the
hedged item as at 31
December 2023
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 2023
Line item in the consolidated statement of
financial position in which the hedged item is
included
Fair value hedges
Assets
Liabilities
Assets
Liabilities
Loans
Loans
Interest rate risk
Interest rate risk
Government bonds
Government bonds
Interest rate risk
Interest rate risk
Government bonds
Other bonds
Interest rate risk
Interest rate risk
Other bonds
Other bonds
Loans
Loans
Refinanced loans
Interest rate risk
Interest rate risk
Foreign exchange &
Interest rate risk
Foreign exchange risk
Interest rate risk
26,839
-
164,229
806,018
3,828
-
-
3,266
949,447
-
-
143,857
-
-
-
730,971
219,989
-
-
213,864
Government bonds
Foreign exchange risk
10,986
-
Government bonds
Other securities
Customer deposits
Fair value hedges total
Foreign exchange risk
Other risk
Interest rate risk
49,378
-
-
2,013,991
-
897
157,543
1,467,121
(3,178)
-
7,808
28,001
203
-
-
(96)
-
-
-
-
-
-
32,738
- Loans at amortized cost
(11,249) 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
Financial assets at fair value through profit or loss
- Securities at fair value through
other comprehensive income
31,398 Liabilities from issued securities
(157) Subordinated bonds and loans
- Loans at amortized cost
- Loans at amortized cost
13,460 Amounts due to banks, the National Governments,
deposits from the National Banks and other banks
- Securities at fair value through
other comprehensive income
- Securities at amortized cost
(39) Liabilities from issued securities
84 Deposit from customers
33,497
INTEGRATED ANNUAL REPORT 2023
604
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.3. Types of hedge accounting [continued]
As at 31 December 2022 is as follows:
Type of hedge
Type of risk
Carrying amount of the hedged
item as at 31 December 2022
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 2022
Line item in the consolidated statement of
financial position in which the hedged item is
included
Fair value hedges
Assets
Liabilities
Assets
Liabilities
Loans
Loans
Interest rate risk
Interest rate risk
Government bonds
Government bonds
Interest rate risk
Interest rate risk
Government bonds
Other bonds
Interest rate risk
Interest rate risk
64,596
-
14,814
151,501
-
44,508
-
143,208
-
-
-
-
Other bonds
Loans
Loans
Government bonds
Government bonds
Other securities
Fair value hedges total
Interest rate risk
Foreign exchange &
Interest rate risk
Foreign exchange risk
Foreign exchange risk
Foreign exchange risk
Other risk
-
25,563
9,099
716,841
12,797
113,806
-
1,127,962
-
-
-
-
2,299
171,070
(5,033)
-
(4,601)
(45,319)
-
(638)
-
503
-
-
-
-
(55,088)
- Loans at amortized cost
(34,149) 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
- Financial assets at fair value through profit or loss
- Securities at fair value through
other comprehensive income
448 Liabilities from issued securities
- Loans at amortized cost
- Loans at amortized cost
- Securities at fair value through
other comprehensive income
- Securities at amortized cost
(218) Liabilities from issued securities
(33,919)
INTEGRATED ANNUAL REPORT 2023
605
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.3. 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
Items recognized in the
consolidated other comprehensive
income for the year 2023
Change in the items recognized in
other comprehensive income for
the year 2023
Line item in the consolidated
statement of financial position in
which the hedged item is included
FX risk
FX risk
Total
Assets
Liabilities
949,447
10,986
960,433
-
-
-
167
(69)
98
530 Loans at amortised cost
- Securities at fair value through
other comprehensive income
530
Type of risk
Carrying amount of the hedged item
Items recognised in the
consolidated other comprehensive
income for the year 2022
Change in the items recognized in
other comprehensive income for
the year 2022
Line item in the consolidated
statement of financial position in
which the hedged item is included
FX risk
FX risk
Total
Assets
Liabilities
716,841
12,797
729,638
-
-
-
(363)
(52)
(415)
605 Loans at amortised cost
- Securities at fair value through
other comprehensive income
605
On Group level there weren’t any cash-flow hedges for the year ended 31 December 2023 and 2022, respectively.
INTEGRATED ANNUAL REPORT 2023
606
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.3. Types of hedge accounting [continued]
31/12/2023
Change in fair value of hedged item for
ineffectiveness assessment
Translation difference
Balances remaining in the Translation
difference for hedge accounting is no
longer applied
Net assets of subsidiaries where the
investment is in EUR
-
69,188
(31,588)
31/12/2023
Carrying amount
Changes in fair value of hedging instruments used for measuring hedge ineffectiveness
Notional amount
Liabilities
Total
Effective part recognized in
other comprehensive
income
Hedge ineffectiveness
recognized in statement of
profit or loss
Reclassification into
statement of profit or loss
Eur issued bonds
382,780
382,780
(2,707)
(2,707)
31/12/2023
Eur issued bonds
Less than 1
month
1 to 3 months
3 to 12 months
1 to 5 years
Over 5 years
-
-
-
382,780
-
-
-
Total
382,780
INTEGRATED ANNUAL REPORT 2023
607
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.4. Fair value levels
The following table shows an analysis of financial instruments recorded at fair value by level of the fair value hierarchy:
31/12/2023
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 loss1
Interest-bearing securities at fair value through other comprehensive income2
Non-interest bearing instruments at fair value through other comprehensive income
Loans mandatorily at fair value through profit or loss
Equity instruments measured at fair value3
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
288,885
67,568
153,629
67,688
1,540,980
60,481
1,400,485
44,162
41,967
3,376,960
70,707
140,488
63,899
275,094
96,816
48,016
433
48,367
800,168
23,809
-
-
-
920,793
-
517
-
517
179,786
19,552
153,196
7,038
634,396
30,029
-
-
41,967
886,178
-
136,263
63,899
200,162
12,283
-
-
12,283
106,416
6,643
1,400,485
44,162
-
1,569,989
70,707
3,708
-
74,415
1 The portfolio in level 3 includes Visa C shares, East West Venture Capital Fund and TCEE Fund III.
2 The portfolio in level 3 includes HUF 78,355 million Ukrainian and HUF 22,452 million Russian government bonds.
3 The detailed list of equity investments measured at fair value categorized in level 3 is presented in Note 43.
The fair value of investment properties is presented in Note 14 and they are categorized in level 3.
Asset held for sale is valued at fair value less cost to sell, that is in this case equal to the sales price and would be classified as Level 3 fair value.
INTEGRATED ANNUAL REPORT 2023
608
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.4. Fair value levels [continued]
The following table shows an analysis of financial instruments recorded at fair value by level of the fair value hierarchy:
31/12/2022
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 loss1
Interest-bearing securities at fair value through other comprehensive income2
Non-interest bearing instruments at fair value through other comprehensive income
Loans mandatorily at fair value through profit or loss
Equity instruments measured at fair value3
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
436,387
104,750
276,482
55,155
1,699,446
40,157
1,247,414
42,558
48,247
3,514,209
54,191
385,747
27,949
467,887
85,339
50,131
214
34,994
541,910
20,171
-
-
-
647,420
-
1,886
-
1,886
339,060
54,619
276,268
8,173
1,092,841
10,241
-
-
48,247
1,490,389
-
383,211
27,949
411,160
11,988
-
-
11,988
64,695
9,745
1,247,414
42,558
-
1,376,400
54,191
650
-
54,841
1 The portfolio in level 3 includes Visa C shares.
2 The portfolio in level 3 includes HUF 26,571 million Ukrainian and HUF 27,415 million Russian government bonds.
3 The detailed list of equity investments measured at fair value categorized in level 3 is presented in Note 43.
The fair value of investment properties is presented in Note 14 and they are categorized in level 3.
INTEGRATED ANNUAL REPORT 2023
609
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.4. 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:
31/12/2023
Non-trading securities mandatorily
at fair value through profit or loss
Interest-bearing securities at fair value
through other comprehensive income2
Non-interest-bearing instruments at fair value
through other comprehensive income
Loans mandatorily at
fair value through profit or loss1
Equity instruments measured at fair value
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
Financial liabilities designated
at fair value total
Opening
balance
Purchase / Issuance /
Disbursement (+)
Settlement /
Close / Sale (-)
FVA (+/-)
Transfer (+/-)
Fx effect /
Revaluation
Other
Closing
balance
11,988
64,695
9,745
1,247,414
42,558
1,376,400
54,191
650
54,841
-
(3)
78,411
(21,594)
-
(2)
154,902
5,782
(96,390)
(4,769)
(359)
3,458
-
91,575
498
39
(2,143)
(2,704)
394
-
(116)
734
12,283
(2,838)
(13,573)
106,416
(541)
11
93
145
2,579
-
6,643
1,400,485
44,162
239,095
(122,758)
95,172
(4,414)
(3,391)
(10,115)
1,569,989
-
-
-
(1,332)
-
(1,332)
4,543
3,050
7,593
-
-
-
-
-
-
13,305
8
13,313
70,707
3,708
74,415
1 HUF (91) million fair value adjustment resulting from risk factors and HUF 93,581 million adjustment resulting from market factors.are included into FVA change for the current period at loans mandatorily measured
at fair value through profit or loss.
INTEGRATED ANNUAL REPORT 2023
610
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.4. 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:
31/12/2022
Trading securities at fair value
through profit or loss
Positive fair value of derivative
financial assets held for trading
Non-trading securities mandatorily
at fair value through profit or loss
Interest-bearing securities at fair value
through other comprehensive income2
Non-interest-bearing instruments at fair value
through other comprehensive income
Loans mandatorily at
fair value through profit or loss1
Equity instruments measured at fair value
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
Financial liabilities designated
fair value total
Opening
balance
Purchase / Issuance /
Disbursement (+)
Settlement /
Close / Sale (-)
FVA (+/-)
Transfer (+/-)
Fx effect /
Revaluation
Other
Closing
balance
6
10,170
13,191
55,476
7,877
1,067,830
40,064
1,194,614
41,184
-
41,184
-
-
1,171
540
441
258,658
18,097
-
-
-
-
(10,170)
(1,745)
-
-
-
-
-
(6)
-
482
(1,111)
(32,866)
15,310
19,678
(3,870)
10,427
-
-
11,988
64,695
9,745
(422)
(83,254)
(27,360)
-
3,885
11,064
-
-
-
278,907
(143,902)
18,344
19,678
-
-
-
(1,624)
(1,934)
-
650
(1,624)
(1,284)
-
-
-
2,819
(970)
(11)
693
113
-
-
-
306
-
1,247,414
42,558
8,646
1,376,400
16,565
54,191
-
650
16,565
54,841
1 HUF 13,346 million fair value adjustment resulting from risk factors and HUF (9,991) million adjustment resulting from market factors.are included into FVA change for the previous year at loans mandatorily measured
at fair value through profit or loss.
INTEGRATED ANNUAL REPORT 2023
611
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.4. Fair value levels [continued]
Valuation techniques on Level 2 instruments
The fair value of Level 2 instruments is calculated by discounting their expected interest and capital cash flows. Discounting is done with the respective swap curve of each
currency.
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
Presentation in the Statement of Financial Position
Valuation technique
VISA C shares
Financial assets at fair value through profit or loss
MFB refinanced loans
Subsidized personal loans
Subsidized personal loans
Subsidized personal loans
Loans mandatorily at fair value through profit or loss
Loans mandatorily at fair value through profit or loss
Loans mandatorily at fair value through profit or loss
Loans mandatorily at fair value through profit or loss
Market approach combined
with expert judgement.
Discounted cash flow model
Discounted cash flow model
Discounted cash flow model
Discounted cash flow model
Ministry of Finance of Russia
Ministry of Finance of Ukraine
Subsidized mortgage loan for families "CSOK" Loans mandatorily at fair value through profit or loss
Subsidized mortgage loan for families "CSOK" Loans mandatorily at fair value through profit or loss
Securities at fair value through other comprehensive income
Securities at fair value through other comprehensive income
Discounted cash flow model
Discounted cash flow model
Discounted cash flow model
Discounted cash flow model
Credit risk
Credit risk
Probability of default
Operational costs
Significant
unobservable input
Range of estimates for
unobservable input
Illiquidity
+ 12% / (12%)
Probability of default
Probability of default
Operational costs
Demography
+ 20% / (20)%
+ 20% / (20)%
+20% / (20)%
Change in the cash flow
estimation + 5% /(5)%
+15% / (15)%
+1% / (1)%
+20% / (20)%
+20% / (20)%
INTEGRATED ANNUAL REPORT 2023
612
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.4. Fair value levels [continued]
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.
31/12/2023
Presentation in the Statement of Financial Position
Unobservable inputs Book value
Fair values
Effect on profit and loss
Favourable Unfavourable Favourable Unfavourable
VISA C shares
MFB refinanced loans
Subsidised personal loans
Subsidised personal loans
Subsidised personal loans
Russian government bonds
Ukrainian government bonds
Subsidized mortgage loan for
Financial assets at fair value through profit or loss
Loans mandatorily at fair value through profit or loss
Loans mandatorily at fair value through profit or loss
Loans mandatorily at fair value through profit or loss
Loans mandatorily at fair value through profit or loss
Securities at fair value through other comprehensive income Credit risk
Securities at fair value through other comprehensive income Credit risk
Illiquidity
Probability of default
Probability of default
Operational costs
Demography
10,301
19,154
911,190
911,190
911,190
22,452
78,355
11,538
19,499
913,292
916,712
911,939
27,909
79,138
9,065
18,809
909,097
905,728
910,577
16,995
77,572
families "CSOK"
Loans mandatorily at fair value through profit or loss
Probability of default
463,926
464,170
463,682
1,237
345
2,102
5,522
749
5,457
783
244
(1,236)
(345)
(2,093)
(5,462)
(613)
(5,457)
(783)
(244)
Subsidized mortgage loan for
families "CSOK"
Loans mandatorily at fair value through profit or loss
Operational costs
Total
463,926
3,791,684
470,864
3,815,061
457,215
3,768,741
6,938
23,376
(6,711)
(22,944)
INTEGRATED ANNUAL REPORT 2023
613
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.4. Fair value levels [continued]
The effect of unobservable inputs on fair value measurement [continued]
31/12/2022
Presentation in the Statement of Financial Position
Unobservable
Book value
Fair values
Effect on profit and loss
Favourable Unfavourable Favourable Unfavourable
VISA C shares
MFB refinanced loans
Subsidised personal loans
Subsidised personal loans
Subsidised personal loans
Russian government bonds
Ukrainian government bonds
Subsidized mortgage loan for
Financial assets at fair value through profit or loss
Loans mandatorily at fair value through profit or loss
Loans mandatorily at fair value through profit or loss
Loans mandatorily at fair value through profit or loss
Loans mandatorily at fair value through profit or loss
Securities at fair value through other comprehensive income
Securities at fair value through other comprehensive income
Illiquidity
Probability of default
Probability of default
Operational costs
Demography
Credit risk
Credit risk
2,951
15,483
772,094
772,094
772,094
37,580
26,571
3,430
15,602
773,281
777,898
774,528
50,468
26,571
2,472
15,364
770,911
769,012
769,544
24,692
26,571
479
119
1,187
5,804
2,434
12,888
-
(479)
(119)
(1,183)
(3,082)
(2,550)
(12,888)
-
families "CSOK"
Loans mandatorily at fair value through profit or loss
Probability of default
454,164
454,383
453,945
219
(219)
Subsidized mortgage loan for
families "CSOK"
Loans mandatorily at fair value through profit or loss
Operational costs
Total
454,164
3,307,195
459,950
3,336,111
448,558
3,281,069
5,786
28,916
(5,606)
(26,126)
INTEGRATED ANNUAL REPORT 2023
614
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 48: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn) [continued]
48.4. Fair value levels [continued]
The effect of unobservable inputs on fair value measurement [continued]
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 2023 and 2022, 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 inputs.
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 inputs.
In case of subsidised personal loans cash flow estimation are based on assumption related to the future number of
childbirths performed by the debtors both in the current and the comparative period. According to the assumptions
used in comparative period 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 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 the most significant unobservable input in the cash flow estimation.
For the year ended 31 December 2022 the Bank used a new and more detailed model for cash flow calculations of
the subsidised personal loans. The new model uses more scenarios compared to the previous one. These scenarios
based on the above-mentioned events (child births after signatory and breach of conditions) and also the event of
divorce. The model uses public statistical information for these events to estimate. The Bank calculated the
favourable and unfavourable effects of using reasonably possible alternative assumptions by modifying the
demographical assumption of future child births by +/-5% as one of the most significant unobservable inputs in
the cash flow estimation.
The favourable and unfavourable effects of using reasonably possible alternative assumptions for the valuation of
FVOCI securities have been calculated by modifying the discount rate used for the valuation by +/-15% and +/-
1% as being the best estimates of the management as at 31 December 2023 and 2022, respectively.
INTEGRATED ANNUAL REPORT 2023
615
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 49: 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 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, Uzbekistan, Merkantil Group, Asset Management subsidiaries and Other subsidiaries. Although
Romanian segment is classified as discontinued operation from 2023 in these consolidated financial statements,
segment reporting still contains it as a separate segment because – in line with the structure of the financial
statements monitored by the management (Stock Exchange Report) – the Romanian operation was presented in a
way as if it was still classified as continuing operation.
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 Ecosystem Ltd. (previous name: OTP eBIZ Ltd. it was eliminated from the first
quarter of 2023) from the first quarter of 2020 and OTP Home Solutions Ltd. was included from the second quarter
of 2021. The consolidated results of these companies were segmented into OTP Core and Corporate Centre until
the end of 2022. According to the new methodology applied from the first quarter of 2023, Corporate Centre is no
longer carved out of OTP Core. In the tables of Note 49, the 2022 base periods were presented under the new
segment definitions.
Until the end of 2022 Corporate Centre acted 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 was 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 was to provide intragroup lending to,
and hold equity stakes in OTP subsidiaries outside OTP Core. Main subsidiaries financed by Corporate Centre
were as follows: Hungarians: Merkantil Bank Ltd, OTP Real Estate Lease Ltd, OTP Fund Management Ltd, OTP
Real Estate Investment Fund Management Ltd, OTP Life Annuity Ltd; foreigners: banks, leasing companies,
factoring companies. Starting from 2023 Corporate Centre is no longer carved out of OTP Core.
The balance sheet of Ipoteka Bank in Uzbekistan was consolidated from June 2023. The adjusted profit
contribution of Ipoteka Bank was recognized in the consolidated profit or loss from the third quarter of 2023.
The results of foreign factoring companies (OTP Factoring Ukraine LLC, OTP Factoring Bulgaria LLC (it was
merged into DSK Bank EAD in the second quarter of 2023), OTP Factoring Serbia d.o.o., and OTP Debt Collection
d.o.o. (formerly known as: OTP Factoring Montenegro d.o.o.)), as well as the foreign leasing companies are
included into the relevant foreign bank’s segment.
The Other subsidiaries include, among others: OTP Real Estate Ltd., OTP Life Annuity Ltd, OTP Funds Servicing
and Consulting Ltd.
The reportable business and geographical segments of the Group are those components where:
-
-
-
-
separated income and expenses, 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.
INTEGRATED ANNUAL REPORT 2023
616
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 49: SEGMENT REPORTING BY BUSINESS AND GEOGRAPHICAL SEGMENTS
(in HUF mn) [continued]
Adjustments
Effect of acquisitions (after income tax):
In 2023 altogether HUF 64.9 billion positive amount appeared on the effect of acquisitions adjustment line (after
tax):
o This was partially related to the badwill realized on the two acquisitions closed during the first six months
of 2023, and the related initial risk costs:
▪ The badwill impact of the Slovenian Nova KBM acquisition completed in February comprised +HUF
▪
100 billion, and the initial risk cost represented HUF (12.6) billion (after tax).
In June 2023 the first step of the Ipoteka Bank transaction was finalized in Uzbekistan, entailing a one-
off consolidation impact of +HUF 59.8 billion (after tax) in 2023 as a whole, through two major items:
the adjusted badwill amounted to +HUF 93.9 billion, whereas the initial risk cost represented HUF (34)
billion after tax.
o OTP Bank on 9 February 2024 concluded a share sale and purchase agreement to sell its Romanian entities.
The selling price is EUR 347.5 million which is smaller than the net asset value of the to be sold subsidiaries
recognized in the consolidated accounts, accordingly the transaction resulted in a negative P&L impact of
HUF 59.5 billion (after tax) on consolidated level, which was booked in 4Q 2023.
o The remaining amount presented on this adjustment line comprised integration costs and other direct effects
related to acquisitions (such as customer base value amortization).
Special taxes on financial institutions (after income tax):
In 2023 HUF (62.6) billion special taxes on financial institutions weighed on earnings (after tax) which
incorporates both the old banking tax in Hungary (HUF (25.2) billion after tax) and the windfall tax on extra profits
(HUF (37.4) billion after tax).
Interest rate cap in Hungary and in Serbia:
In 2023 altogether HUF (32.9) billion (after tax) amount was recognized in relation to the expected negative impact
of the rate cap scheme in Hungary ((25.8) billion after tax effect) and the temporary rate cap on certain outstanding
and newly disbursed mortgage loans in Serbia between October 2023 and the end of 2024 ((7.1) billion after tax
effect). According to the effective regulation, in Hungary the interest rate caps on the affected Hungarian mortgage
loans was extended until 30 June 2024, and until 1 April 2024 in the case of MSE loans.
Effect of the liquidation of Sberbank Hungary:
In 2023 HUF 10.4 billion (after tax) recovery was accounted for in the wake of the winding up of Sberbank
Hungary, as the National Bank of Hungary and the Hungarian Deposit Insurance Fund professionally managed
the issue. In 2022 a similar negative amount was booked.
Result of the treasury share swap agreement (after tax):
In 2023 HUF 10.7 billion after tax result was recorded in relation to the OTP-MOL treasury share swap agreement,
which contains both the dividends paid by MOL Plc. and the net present value change of the structure.
Explanation to the segments in the following table below:
3; 4; 6: 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 arise from
providing financial services like: collecting deposits, granting loans, leasing and treasury activities, payment and
investment services and other financial services.
7: Merkantil Group conducts leasing activities in Hungary, originates its income from providing leasing services
(financing cars and production equipment).
8: 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.
9: The activities of other Hungarian and foreign subsidiaries are very divergent, so their income also originates
from different sources. The main part of the income in the Other subsidiaries segment comes from the activities
of OTP Funds Servicing and Consulting, OTP Real Estate, OTP Real Estate Investment Fund Management and
PortfoLion Funds.
INTEGRATED ANNUAL REPORT 2023
617
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 49: 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 2023
Main components of the consolidated statement of profit or loss in HUF million
Profit after income tax for the year from continued and
discontinued operations
Profit after income tax for the year from discontinued operations
Profit after income tax for the year from continued operations
Adjustments (total)
Dividends and net cash transfers (after income tax)
Goodwill /investment impairment (after income tax)
Special tax on financial institutions (after income tax)
Effect of acquisition (after income tax)
Result of the treasury share swap agreement
at OTP Core (after income tax)
Loss allowance on Russian government bonds at OTP Core and DSK Bank
(after income tax)
Effect of the winding up of Sberbank Hungary (after income tax)
Expected one-off effect of the extension of the interest rate cap
for certain retail loans in Hungary (after income tax)
OTP Group - in the
consolidated statement of
profit or loss - structure of
accounting reports
a
Adjustments on the
accounting in Recognized
Income
b
OTP Group - in the
consolidated statement of
profit or loss - structure of
management reports
1=a+b
990,459
(21,246)
1,011,705
21,246
21,246
(18,123)
(1,911)
(3,919)
(62,551)
64,887
10,680
(2,799)
10,388
(32,898)
990,459
-
990,459
(18,123)
(1,911)
(3,919)
(62,551)
64,887
10,680
(2,799)
10,388
(32,898)
INTEGRATED ANNUAL REPORT 2023
618
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 49: 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 2023 [continued]
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
a
b
1=a+b; 1=2+3+4+5
Hungarian segment and
other foreign
subsidiaries not reported
in "Foreign bank
segment" subtotal
(without adjustments)
2
Foreign banks in
EU subtotal
(without
adjustments)
Foreign banks
not in EU
subtotal
(without
adjustments)
Eliminations
and
adjustments
3
4
5
Consolidated adjusted profit after income tax 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
financial assets and liabilities
(without the effect of revaluation of FX)
Goodwill impairment
Other impairment (adjustment)
from this: Adjusted impairment under IAS 36
Income tax
Total Assets
Total Liabilities
1,011,705
1,201,183
1,365,111
2,439,448
1,386,706
691,993
360,749
(1,074,337)
(478,696)
(111,996)
(483,645)
(17,182)
(38,141)
(108,605)
(79,281)
-
(29,324)
(5,216)
(189,478)
(3,123)
21,145
(85,737)
(196,339)
72,988
(213,847)
(55,480)
110,602
(25,263)
16,435
119,430
6,624
36,909
63,349
37,766
-
25,583
3,566
(24,268)
38,075,811
34,374,431
1,533,333
1,139,920
1,008,582
1,222,328
1,279,374
2,243,109
1,459,694
478,146
305,269
(963,735)
(503,959)
(95,561)
(364,215)
(10,558)
(1,232)
(45,256)
(41,515)
-
(3,741)
(1,650)
(213,746)
39,609,144
35,514,351
364,621
437,074
432,460
903,559
474,616
240,942
188,001
(471,099)
(229,992)
(52,017)
(189,090)
(20,137)
(27)
24,778
16,023
-
8,755
(452)
(72,453)
-
20,253,197
17,276,859
404,779
450,536
445,671
730,860
543,257
-
149,074
38,529
(285,189)
(149,674)
(22,271)
(113,244)
8,261
-
(3,396)
(4,475)
-
1,079
(1,037)
(45,757)
-
17,227,907
15,071,959
238,565
333,369
400,279
622,761
439,685
-
89,263
93,813
(222,482)
(125,163)
(20,738)
(76,581)
1,572
(1,209)
(67,273)
(53,493)
-
(13,780)
(130)
(94,804)
-
8,331,503
7,128,153
617
1,349
964
(14,071)
2,136
(1,133)
(15,074)
15,035
870
(535)
14,700
(254)
4
635
430
-
205
(31)
(732)
(6,203,463)
(3,962,620)
INTEGRATED ANNUAL REPORT 2023
619
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 49: 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 2023 [continued]
Main components of the consolidated statement of profit or loss
in HUF million [continued]
Consolidated adjusted profit after income tax 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
financial assets and liabilities
(without the effect of revaluation of FX)
Goodwill impairment
Other impairment (adjustment)
from this: Adjusted impairment under IAS 36
Income tax
Total Assets
Total Liabilities
Hungarian segment and other
foreign subsidiaries not
reported in "Foreign bank
segment" subtotal (without
adjustments)
2=6+…+9
OTP CORE
(Hungary)
Merkantil
Group
(Hungary)
Asset
Management
subsidiaries
Other
subsidiaries
6
7
8
9
364,621
437,074
432,460
903,559
474,616
240,942
188,001
(471,099)
(229,992)
(52,017)
(189,090)
(20,137)
(27)
24,778
16,023
-
8,755
(452)
(72,453)
302,936
366,502
360,132
771,037
432,651
197,104
141,282
(410,905)
(205,223)
(44,745)
(160,937)
(20,690)
-
27,060
16,977
-
10,083
(1,816)
(63,566)
20,253,197
17,276,859
18,459,423
16,087,459
10,266
11,949
14,382
27,428
26,257
759
412
(13,046)
(6,658)
(1,648)
(4,740)
553
(27)
(2,959)
(2,756)
-
(203)
(4)
(1,683)
930,761
869,524
19,860
22,376
22,425
29,051
52
27,056
1,943
(6,626)
(4,437)
(195)
(1,994)
-
-
(49)
(39)
-
(10)
-
(2,516)
42,031
11,609
31,559
36,247
35,521
76,043
15,656
16,023
44,364
(40,522)
(13,674)
(5,429)
(21,419)
-
-
726
1,841
-
(1,115)
1,368
(4,688)
820,982
308,267
INTEGRATED ANNUAL REPORT 2023
620
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 49: 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 2023 [continued]
Main components of the consolidated statement of profit or loss in
HUF million [continued]
Foreign banks in EU
subtotal (without
adjustments)
3=10+…+13
DSK Bank AD
(Bulgaria)
OTP banka d.d.
(Croatia)
10
11
SKB Banka and
Nova KBM d.d.
(Slovenia)
12
OTP Bank
Romania S.A.
(Romania)
13
Consolidated adjusted profit after income tax 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
financial assets and liabilities
(without the effect of revaluation of FX)
Goodwill impairment
Other impairment (adjustment)
from this: Adjusted impairment under IAS 36
Income tax
Total Assets
Total Liabilities
404,779
450,536
445,671
730,860
543,257
149,074
38,529
(285,189)
(149,674)
(22,271)
(113,244)
8,261
-
(3,396)
(4,475)
-
1,079
(1,037)
(45,757)
17,227,907
15,071,959
201,991
223,731
217,238
315,980
226,693
72,366
16,921
(98,742)
(47,720)
(7,855)
(43,167)
1,638
-
4,855
1,141
-
3,714
(838)
(21,740)
6,456,668
5,566,481
53,960
65,746
66,743
122,952
90,996
25,661
6,295
(56,209)
(29,235)
(4,785)
(22,189)
-
-
(997)
721
-
(1,718)
(25)
(11,786)
3,278,199
2,874,712
128,729
137,401
140,717
223,315
171,703
46,028
5,584
(82,598)
(46,411)
(5,602)
(30,585)
-
-
(3,316)
(2,485)
-
(831)
-
(8,672)
20,099
23,658
20,973
68,613
53,865
5,019
9,729
(47,640)
(26,308)
(4,029)
(17,303)
6,623
-
(3,938)
(3,852)
-
(86)
(174)
(3,559)
5,892,803
5,223,180
1,600,237
1,407,586
INTEGRATED ANNUAL REPORT 2023
621
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 49: 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 2023 [continued]
Main components of the consolidated statement of profit or loss in
HUF million [continued]
Foreign banks not
in EU subtotal
(without
adjustments)
4=14+…+20
OTP banka
Srbija a.d.
(Serbia)
OTP Bank
JSC
(Ukraine)
14
15
JSC "OTP
Bank" (Russia)
and Touch
Bank
16
Crnogorska
komercijalna
banka a.d.
(Montenegro)
17
Banka OTP
Albania SHA
(Albania)
OTP Bank
S.A.
(Moldova)
JSCMB
Ipoteka Bank
(Uzbekistan)
18
19
20
Consolidated adjusted profit after income tax 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
financial assets and liabilities
(without the effect of revaluation of FX)
Goodwill impairment
Other impairment (adjustment)
from this: Adjusted impairment under IAS 36
Income tax
Total Assets
Total Liabilities
238,565
333,369
400,279
622,761
439,685
89,263
93,813
(222,482)
(125,163)
(20,738)
(76,581)
1,572
(1,209)
(67,273)
(53,493)
-
(13,780)
(130)
(94,804)
68,025
78,646
83,734
133,591
104,050
18,419
11,122
(49,857)
(25,710)
(3,661)
(20,486)
53
-
(5,141)
(2,348)
-
(2,793)
(93)
(10,621)
45,184
82,358
78,294
108,854
93,450
10,837
4,567
(30,560)
(18,046)
(2,472)
(10,042)
328
(1,239)
4,975
11,565
-
(6,590)
-
(37,174)
95,666
130,172
149,298
223,645
122,084
40,831
60,730
(74,347)
(45,063)
(8,660)
(20,624)
1,487
-
(20,613)
(17,765)
-
(2,848)
-
(34,506)
8,331,503
7,128,153
2,874,794
2,506,449
1,036,912
879,824
1,470,796
1,196,279
21,814
25,737
23,536
38,362
29,717
7,797
848
(14,826)
(6,910)
(1,645)
(6,271)
932
30
1,239
1,967
-
(728)
-
(3,923)
663,676
550,672
15,033
18,173
18,269
33,387
27,912
3,729
1,746
(15,118)
(5,798)
(1,494)
(7,826)
(219)
-
123
327
-
(204)
-
(3,140)
669,765
588,663
14,700
16,759
13,440
25,268
16,349
2,389
6,530
(11,828)
(7,013)
(1,234)
(3,581)
(1,009)
-
4,328
4,115
-
213
(37)
(2,059)
(21,857)
(18,476)
33,708
59,654
46,123
5,261
8,270
(25,946)
(16,623)
(1,572)
(7,751)
-
-
(52,184)
(51,354)
-
(830)
-
(3,381)
428,192
364,839
1,187,368
1,041,427
INTEGRATED ANNUAL REPORT 2023
622
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 49: 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 2022
Main components of the consolidated statement of profit or loss in HUF million
Profit after income tax for the year from continued and
discontinued operations
Profit after income tax for the year from held-for-sale operation
Profit after income tax for the year from discontinued operations
Profit after income tax for the year from continued operations
Adjustments (total)
Dividends and net cash transfers (after income tax)
Goodwill /investment impairment (after income tax)
Special 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)
Loss allowance on Russian government bonds at OTP Core and DSK Bank
(after income tax)
Effect of the winding up of Sberbank Hungary (after income tax)
Expected one-off effect of the extension of the interest rate cap
for certain retail loans in Hungary (after income tax)
OTP Group - in the
consolidated statement of
profit or loss - structure of
accounting reports
a
Adjustments on the
accounting in Recognized
Income
b
OTP Group - in the
consolidated statement of
profit or loss - structure of
management reports
1=a+b
347,081
11,444
16,559
319,078
(11,444)
(16,559)
(28,003)
(245,467)
1,927
(59,254)
(91,353)
(15,594)
(2,473)
3,028
(34,775)
(10,388)
(36,585)
347,081
-
-
347,081
(245,467)
1,927
(59,254)
(91,353)
(15,594)
(2,473)
3,028
(34,775)
(10,388)
(36,585)
INTEGRATED ANNUAL REPORT 2023
623
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 49: 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 2022 [continued]
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
a
b
1=a+b; 1=2+3+4+5
Hungarian segment and
other foreign
subsidiaries not reported
in "Foreign bank
segment" subtotal
(without adjustments)
2
Foreign banks in
EU subtotal
(without
adjustments)
Foreign banks
not in EU
subtotal
(without
adjustments)
Eliminations
and
adjustments
3
4
5
Consolidated adjusted profit after income tax 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
financial assets and liabilities
(without the effect of revaluation of FX)
Goodwill impairment
Other impairment (adjustment)
from this: adjusted impairment under IAS 36
Income tax
Total Assets
Total Liabilities
319,078
377,678
704,670
1,634,686
1,026,868
584,491
23,327
(930,016)
(377,728)
(101,125)
(451,163)
(1,573)
(39,997)
(285,422)
(199,695)
(67,715)
(18,012)
(3,652)
(58,600)
32,804,210
29,481,898
273,470
312,344
168,945
27,013
66,711
(187,373)
147,675
141,932
(18,576)
16,462
144,046
(82)
40,822
102,659
60,166
67,715
(25,222)
355
(38,874)
-
-
592,548
690,022
873,615
1,661,699
1,093,579
397,118
171,002
(788,084)
(396,304)
(84,663)
(307,117)
(1,655)
825
(182,763)
(139,529)
-
(43,234)
(3,297)
(97,474)
32,804,210
29,481,898
304,293
353,561
361,426
759,142
448,001
207,941
103,200
(397,716)
(179,651)
(46,891)
(171,174)
(7,342)
-
(523)
34,015
-
(34,538)
(1,356)
(49,268)
189,617
217,950
232,797
446,844
303,256
113,606
29,982
(214,047)
(108,850)
(18,928)
(86,269)
1,746
20
(16,613)
(9,672)
-
(6,941)
(774)
(28,333)
92,869
110,918
278,563
470,700
341,577
78,675
50,448
(192,137)
(108,716)
(18,482)
(64,939)
3,933
805
(172,383)
(163,792)
-
(8,591)
(1,166)
(18,049)
5,769
7,593
829
(14,987)
745
(3,104)
(12,628)
15,816
913
(362)
15,265
8
-
6,756
(80)
-
6,836
(1)
(1,824)
19,265,918
16,775,703
12,650,295
11,104,567
6,452,844
5,452,540
(5,564,847)
(3,850,912)
INTEGRATED ANNUAL REPORT 2023
624
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 49: 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 2022 [continued]
Main components of the consolidated statement of profit or loss
in HUF million [continued]
Consolidated adjusted profit after income tax 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
financial assets and liabilities
(without the effect of revaluation of FX)
Goodwill impairment
Other impairment (adjustment)
from this: adjusted impairment under IAS 36
Income tax
Total Assets
Total Liabilities
Hungarian segment and other
foreign subsidiaries not
reported in "Foreign bank
segment" subtotal (without
adjustments)
2=6+…+9
OTP CORE
(Hungary)
Merkantil
Group
(Hungary)
Asset
Management
subsidiaries
Other
subsidiaries
6
7
8
9
304,293
353,561
361,426
759,142
448,001
207,941
103,200
(397,716)
(179,651)
(46,891)
(171,174)
(7,342)
-
(523)
34,015
-
(34,538)
(1,356)
(49,268)
256,198
300,093
302,801
647,642
417,662
176,830
53,150
(344,841)
(157,623)
(40,538)
(146,680)
(7,198)
-
4,490
34,925
-
(30,435)
(58)
(43,895)
19,265,918
16,775,703
17,596,639
15,580,210
10,971
12,616
13,945
24,780
22,537
921
1,322
(10,835)
(5,371)
(1,462)
(4,002)
(144)
-
(1,185)
(939)
-
(246)
(18)
(1,645)
948,735
891,144
9,619
10,870
10,955
15,799
32
15,242
525
(4,844)
(2,905)
(251)
(1,688)
-
-
(85)
-
-
(85)
14
(1,251)
29,916
11,180
27,505
29,982
33,725
70,921
7,770
14,948
48,203
(37,196)
(13,752)
(4,640)
(18,804)
-
-
(3,743)
29
-
(3,772)
(1,294)
(2,477)
690,628
293,169
INTEGRATED ANNUAL REPORT 2023
625
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 49: 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 2022 [continued]
Main components of the consolidated statement of profit or loss in
HUF million [continued]
Consolidated adjusted profit after income tax 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
financial assets and liabilities
(without the effect of revaluation of FX)
Goodwill impairment
Other impairment (adjustment)
from this: adjusted impairment under IAS 36
Income tax
Total Assets
Total Liabilities
Foreign banks in EU
subtotal (without
adjustments)
3=10+…+13
DSK Bank AD
(Bulgaria)
OTP banka d.d.
(Croatia)
10
11
SKB Banka and
Nova KBM d.d.
(Slovenia)
12
OTP Bank
Romania S.A.
(Romania)
13
189,617
217,950
232,797
446,844
303,256
113,606
29,982
(214,047)
(108,850)
(18,928)
(86,269)
1,746
20
(16,613)
(9,672)
-
(6,941)
(774)
(28,333)
12,650,295
11,104,567
119,884
132,564
142,393
230,844
145,461
68,755
16,628
(88,451)
(41,946)
(7,831)
(38,674)
1,249
-
(11,078)
(12,251)
-
1,173
(367)
(12,680)
5,946,815
5,167,720
42,801
52,095
48,973
102,001
70,547
24,692
6,762
(53,028)
(27,020)
(4,845)
(21,163)
578
-
2,544
6,564
-
(4,020)
122
(9,294)
23,859
29,569
24,046
51,403
33,688
15,416
2,299
(27,357)
(15,278)
(1,671)
(10,408)
-
20
5,503
7,028
-
(1,525)
(53)
(5,710)
3,224,955
2,834,372
1,790,944
1,596,100
3,073
3,722
17,385
62,596
53,560
4,743
4,293
(45,211)
(24,606)
(4,581)
(16,024)
(81)
-
(13,582)
(11,013)
-
(2,569)
(476)
(649)
1,687,581
1,506,375
INTEGRATED ANNUAL REPORT 2023
626
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 49: 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 2022 [continued]
Main components of the consolidated statement of profit or loss in
HUF million [continued]
Consolidated adjusted profit after income tax 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
financial assets and liabilities
(without the effect of revaluation of FX)
Goodwill impairment
Other impairment (adjustment)
from this: adjusted impairment under IAS 36
Income tax
Total Assets
Total Liabilities
Foreign banks not
in EU subtotal
(without
adjustments)
4=14+…+19
OTP banka
Srbija a.d.
(Serbia)
OTP Bank
JSC
(Ukraine)
14
15
JSC "OTP
Bank" (Russia)
and Touch
Bank
16
Crnogorska
komercijalna
banka a.d.
(Montenegro)
17
Banka OTP
Albania SHA
(Albania)
OTP Bank
S.A.
(Moldova)
18
19
92,869
110,918
278,563
470,700
341,577
78,675
50,448
(192,137)
(108,716)
(18,482)
(64,939)
3,933
805
(172,383)
(163,792)
-
(8,591)
(1,166)
(18,049)
6,452,844
5,452,540
36,873
42,991
58,543
104,523
76,635
17,954
9,934
(45,980)
(23,342)
(3,342)
(19,296)
1,300
2,062
(18,914)
(17,783)
-
(1,131)
(151)
(6,118)
(15,923)
(13,205)
79,862
110,805
90,007
12,673
8,125
(30,943)
(18,170)
(2,570)
(10,203)
286
(1,245)
(92,108)
(89,877)
-
(2,231)
(33)
(2,718)
42,548
46,180
98,137
178,494
118,004
35,251
25,239
(80,357)
(50,404)
(8,712)
(21,241)
3,284
-
(55,241)
(54,330)
-
(911)
(263)
(3,632)
2,708,993
2,350,873
1,048,713
926,221
1,029,721
723,417
9,792
11,976
15,134
28,816
20,832
7,106
878
(13,682)
(6,529)
(1,711)
(5,442)
(80)
(12)
(3,066)
731
-
(3,797)
(677)
(2,184)
664,395
565,264
10,174
12,187
9,335
20,232
16,927
3,067
238
(10,897)
(4,318)
(1,023)
(5,556)
(671)
-
3,523
3,176
-
347
-
(2,013)
635,364
574,537
9,405
10,789
17,552
27,830
19,172
2,624
6,034
(10,278)
(5,953)
(1,124)
(3,201)
(186)
-
(6,577)
(5,709)
-
(868)
(42)
(1,384)
365,658
312,228
INTEGRATED ANNUAL REPORT 2023
627
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 50: ASSETS CLASSIFIED AS HELD FOR SALE AND DISCONTINUED OPERATIONS
(in HUF mn)
Discontinued operation
On 9 February 2024 OTP Bank announced the signing of the share sale and purchase agreement to sell its
Romanian operation. As a result of this, according to IFRS 5, as at the end of 2023 the Romanian operation was
presented as assets /liabilities held for sale in the consolidated statement of financial position and as discontinued
operation in the consolidated profit or loss. With regards to the consolidated financial position, all Romanian assets
and liabilities were shown on a separate line in the 2023 closing financial position. As for the consolidated profit
or loss, the Romanian contribution for both 2022 and 2023 was shown separately from the result of continuing
operation, on the “Net (loss) / gain from discontinued operations” line, that is the particular profit or loss lines in
the ‘continuing operations’ section of the profit or loss don’t incorporate the contribution from the Romanian
subsidiaries.
The selling price is EUR 347.5 million which is smaller than the net asset value of the to be sold subsidiaries
recognized in the consolidated accounts, accordingly the transaction resulted in a negative profit or loss impact of
HUF 55.9 billion (before tax) on consolidated level, which has already been booked in the fourth quarter of 2023.
On 31 December 2023, the Romanian segment of the Group which was classified as discontinued operation
includes the following companies: OTP Bank Romania S.A., OTP Asset Management SAI S.A., OTP Leasing
Romania IFN S.A., OTP Factoring SRL, SC Favo Consultanta SRL, SC Aloha Buzz SRL, SC Tezaur Cont SRL.
The major classes of assets and liabilities comprising the assets classified as held for sale and liabilities directly
associated with assets classified as held for sale are as follows:
Cash, amounts due from banks and balances with the National Banks
Placements with other banks
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
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
TOTAL LIABILITIES
31/12/2023
199,587
8,147
-
734
39,430
226,427
1,013,582
1,356
67,068
236
10,313
3,848
4,299
40
-
224
55
13,927
1,589,273
1,764
-
-
1,095,853
-
311
-
4,348
912
1,865
9,006
25,861
1,139,920
INTEGRATED ANNUAL REPORT 2023
628
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 50: ASSETS CLASSIFIED AS HELD FOR SALE AND DISCONTINUED OPERATIONS
(in HUF mn) [continued]
Discontinued operation [continued]
The results of discontinued operations, which have been separated on line “Net (Loss) /Gain from discontinued
operations” in the consolidated statement of profit or loss, were as follows:
Year ended 31
December 2023
Year ended 31
December 2022
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, amounts due from banks
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
Release of loss allowance / (Loss allowance) on securities
at fair value through other comprehensive income and
on securities at amortized cost
Release of provision / (Provision) for commitments and
guarantees given
Release of impairment / (Impairment) of assets subject to
operating lease and of investment properties
Risk cost total
NET INTEREST INCOME AFTER RISK COST
Loss 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
Gain / (Loss) on securities, net
Fair value adjustment on financial instruments
measured at fair value through profit or loss
Net results on derivative instruments and hedge relationships
Profit from associates
Goodwill impairment
Other operating income
Other operating expenses
Net operating income / (expense)
Personnel expenses
Depreciation and amortization
Other general expenses
Other administrative expenses
PROFIT BEFORE INCOME TAX
Income tax expense
PROFIT AFTER INCOME TAX FOR THE PERIOD
103,321
15,252
118,573
(50,513)
68,060
(6,779)
-
235
2,931
-
(3,613)
64,447
6,624
-
22,351
(7,036)
15,315
(11,397)
37
157
11,526
22
-
409
(1,105)
(351)
(26,571)
(5,998)
(15,197)
(47,766)
38,269
(3,575)
34,694
82,191
20,426
102,617
(38,171)
64,446
(10,522)
-
(13)
(228)
-
(10,763)
53,683
(82)
-
22,710
(6,841)
15,869
1,313
17
(120)
(5,802)
22
-
485
(3,043)
(7,128)
(24,835)
(6,463)
(13,834)
(45,132)
17,210
(651)
16,559
During the year 2023, the Romanian subsidiaries contributed to the Group’s operating activity with HUF 137,550
million, to the Group’s investing activity with HUF 58,328 million, and in respect of the Group’s financing activity
with HUF (9,002) million which were modified by the eliminations during the consolidation by HUF (198,270)
million.
INTEGRATED ANNUAL REPORT 2023
629
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 50: ASSETS CLASSIFIED AS HELD FOR SALE AND DISCONTINUED OPERATIONS
(in HUF mn) [continued]
Discontinued operation [continued]
The Group intends to increase its market share with new acquisitions and organic increase in the Middle East
European Region and although during the near 20 years attendance on the Romanian market followed this strategy,
the Group hasn’t managed to reach the optimal share market, the management decided to sell this member of the
Group. As a result this allows of the Group to focus on those markets where it can reach significant market share
and to strengthen its position in those countries where it has already operated.
Assets held for sale
On 2 November 2022, the Group sold its share in the associated company Szállás.hu Zrt. to the Polish Wirtualna
Polska Media S.A. The whole company was sold for EUR 83 million. The Group's gain recognized in the year
under review related to the transaction was HUF 10,458 million, which was presented in the Other income.
INTEGRATED ANNUAL REPORT 2023
630
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 51: SIGNIFICANT EVENTS DURING THE YEAR ENDED 31 DECEMBER 2023
1) Term Note Program
See details in Note 21.
2) Financial closing of acquisitions in 2023
For more information about the acquisition of Uzbek Ipoteka Bank, Nova KBM, Aranykalász group, Szekszárdi Group
and OTP invest AD please see details in Note 42 Acquisition.
3) OTP Bank is selling its Romanian operations
On 9 February 2024, OTP Bank Plc. has concluded a share sale and purchase agreement to sell its directly and indirectly
owned 100% shareholding in OTP Bank Romania S.A. to Banca Transilvania S.A. OTP Group is also selling its 100%
shareholdings in its other Romanian subsidiaries, OTP Leasing Romania IFN S.A. and OTP Asset Management S.A.I.
S.A. to Banca Transilvania S.A under the transaction. See details in Note 50 Assets classified as held for sale and
discontinued operations.
4) Significant regulatory changes in Hungary
About the prolongation of deadline of interest rate cap, voluntary interest rate cap on newly granted loans, amending the
previously laid down methodology of windfall tax calculation, the changes in savings and government bond markets,
family support schemes, capital regulation and mandatory minimum reserve requirements please see details in Note 4.
5) 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 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 Group,
• 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 business loss for the
Group,
▪ business loss due to negative customer experience,
▪ operational risk, when several unique contracts must be handled in a short time.
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631
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 51: SIGNIFICANT EVENTS DURING THE YEAR ENDED 31 DECEMBER 2023 [continued]
5) Interest benchmark reform [continued]
Terminating interest rates
Alternative Reference Rates
LIBOR USD (1 week and 2 months settings), FedFund Rate
LIBOR GBP
LIBOR JPY
LIBOR EUR
LIBOR CHF1
EONIA
SOFR
SONIA
TONA
EURIBOR
SARON
€STR
1 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).
Amounts effected by IBOR reform as at 31 December 2023
Reference rate
Type of the contract
Nominal value of the
contract
Pieces of contracts
USD LIBOR
USD LIBOR
Other LIBOR
Other LIBOR
Total
Loan
Deposit
Loan
Bonds (assets)
48,615
533
14,534
4,853
68,535
1,616
1
1,090
1
2,708
The above LIBOR-based amounts outstanding as at 31 December 2023 will be managed at the next first interest period
therefore they do not cause a risk to the Group or to the customers.
6) Risk relating to the Russian-Ukrainian armed conflict
On 24 February 2022 Russia launched a military operation against Ukraine which is still ongoing at the date of this Report.
Until now many countries, as well as the European Union imposed sanctions due to the armed conflict on Russia and
Russian businesses and citizens. Russia responded to these sanctions with similar measures.
The armed conflict and the international sanctions influence the business and economic activities significantly all around
the world. There are a number of factors associated with the Russian-Ukrainian armed conflict and the international
sanctions as well as their 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 armed conflict and the international sanctions cause significant economic damage to the affected parties and in
addition they cause disruptions in the global economic processes, of which the precise consequences (inter alia the effects
on energy and grain markets, the global transport routes and international trade as well as tourism) are difficult to be
estimated at the moment.
It remains unclear how this will evolve going forward 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. 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
Russian-Ukrainian armed conflict and the international sanctions, 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.
INTEGRATED ANNUAL REPORT 2023
632
OTP BANK
IFRS REPORT (CONSOLIDATED)
NOTE 52: POST BALANCE SHEET EVENTS
Summary of economic policy measures made and other relevant regulatory changes as post-balance sheet events
Post-balance sheet events cover the period until 20 February 2024.
Hungary
• On 23 January 2024 OTP Bank announced that notes were issued with a value date of 31 January 2024, in the
aggregate nominal amount of EUR 600 million. The 5 years, Non-Call 4 years Senior Preferred Notes were priced
on 23 January 2024.
• On 26 January 2024 Scope Ratings affirmed Hungary's long-term local- and foreign-currency issuer and senior
unsecured debt ratings at ‘BBB’ with stable outlook.
• On 29 January 2024 the Ministry for National Economy announced that following discussions between the
Government and the Banking Association, based on the banks' voluntary commitment, from 1 February to 1 May
2024, the interest margin above BUBOR rate for newly contracted Hungarian Forint-based, variable-rate corporate
loan contracts (regardless of the purpose of the loan) will be 0%, and the margin will remain at 0% for 6 months
from the date of disbursement of the loan, after which it may return to the normal level. At the same time, the
Government indicated that the rate cap on outstanding variable rate MSE loans, which expires on 1 April 2024
according to the current legislation, will not be further extended.
• On 30 January 2024 the National Bank of Hungary cut its key policy rate by 75 bps to 10.0%.
• On 2 February 2024 OTP Bank announced that it decided to terminate the project aiming at establishing a consumer
finance joint venture company with its partners in China with a 15%shareholding, as the condition precedents were
not fulfilled until the pertaining contractual deadlines.
• On 9 February 2024 OTP Bank announced that it concluded a share sale and purchase agreement to sell its directly
and indirectly owned 100% shareholding in OTP Bank Romania S.A. to Banca Transilvania S.A. (‘BT’). OTP
Group is also selling its 100% shareholdings in its other Romanian subsidiaries, OTP Leasing Romania IFN S.A.
and OTP Asset Management S.A.I. S.A. to BT under the transaction. The financial closing of the transaction is
expected in 2024 subject to the necessary regulatory approvals.
• On 12 February 2024 OTP Bank received a single permission from the Hungarian National Bank for the repurchase
of treasury shares, accordingly the Bank is entitled to repurchase its own shares in the amount of HUF 60 billion
until 31 December 2024. The total amount specified in the permission shall immediately be deducted from the
own funds in accordance with the law.
Moldova
• On 4 February 2024 the central bank cut the base rate by 50 bps to 4.25%.
Slovenia
• In Slovenia banking tax is obliged to pay based on The Act on Reconstruction. It is temporarily for calendar years
2024 to 2028. As the calculation is not based on the taxable profit but on the average total assets, the banking tax
is considered as other administrative expense, not as income tax. The tax rate is 0,2%. The liability for banking
tax is reduced by the difference between the amount of corporate income tax of the previous financial year,
calculated at the introduced temporarily higher rate of 22% and at the statutory rate of 19%. Tax is not relevant for
year 2023 and these taxes are classified as levies according to IFRS rules.
INTEGRATED ANNUAL REPORT 2023
633
OTHER INFORMATIONS
INTEGRATED ANNUAL REPORT 2023
634
OTP BANK
OTHER INFORMATIONS
CORPORATE GOVERNANCE
Senior officers, strategic employees and their shareholding of OTP shares as at 31 December 2023
Type1
Name
Position
IG
IG
IG
IG
IG
IG
IG
IG
IG
IG
IG
FB
FB
FB
FB
FB
FB
SP
SP
SP
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
Antal Kovács3
member
György Nagy4
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
András Becsei
Deputy CEO
László Bencsik
Deputy CEO
György Kiss-Haypál
MC member
Imre Bertalan
MC member
Dr. Bálint Csere
TOTAL No. of shares held by management
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
2026
2026
2026
2026
2026
2026
Number of
shares
12,000
53,885
17,793
59,200
25,939
192,458
126,584
44,400
15,800
196,314
544,502
54
0
0
0
1,410
0
7,199
15,462
15,160
0
10,555
1,338,715
1 Board Member (IG), Supervisory Board Member (FB), Employee in strategic position (SP)
2 Number of OTP shares owned by Dr. Sándor Csányi, Chairman and CEO, directly or indirectly: 4.712.949
3 Number of OTP shares owned by Antal Kovács, Member of Board of Directors, directly or indirectly: 130.884
4 Number of OTP shares owned by György Nagy, Member of Board of Directors, directly or indirectly: 1.068.855
Board of Directors
The members of the Board of Directors are elected by the General Meeting for a term of five years.
Executive members:
Dr. Sándor Csányi
Chairman of the BoD
Chairman & CEO
He graduated from the College of Finance and Accounting in 1974 with a bachelor’s degree in business
administration and from the Karl Marx University of Economic (now: Corvinus University) in 1980 with a
master’s degree in economics and finance, where he also obtained a doctorate in finance between 1981-1983.
He is a chartered accountant – certified by the Ministry of Finance in 1982. After graduating he worked at the
Tax Revenue Directorate and then at the Secretariat (Banking Supervision Section) of the Ministry of Finance.
From 1983 to 1986, he was Head of Department at the Ministry of Agriculture and Food Industry. From 1986
to 1989 he was a senior department head at the Hungarian Credit Bank (MHB). From 1989 to 1992 he was
Deputy CEO of K&H Bank.
He has been the Chairman and 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.
In 2022, he founded Unity Asset Management Foundation, which acts as his family office, by contributing
100% of the shares of Bonitás 2002 Zrt. and Hungerit Zrt. as well as HUF 700 million in cash.
Bonitás 2002 Zrt. is the holding company that oversees his investments in agriculture, the food industry, real
estate and asset management, which comprise some 240 directly or indirectly owned companies.
INTEGRATED ANNUAL REPORT 2023
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OTP BANK
OTHER INFORMATIONS
Bonitás 2002 Zrt. is one of the largest investors in agriculture and food industry in the CEE region through
Bonafarm Group, Hungerit Zrt. and KITE Zrt. generating a total annual revenue of EUR 2.5 billion with more
than 9.500 employees and with a total of 40.000 hectares of cultivated farmland. The Bonafarm Group is
vertically integrated with agricultural companies producing the raw materials for food processors. Bonitás 2002
Zrt. has significant investments in venture capital and real estate through the Bonitás Venture Capital and Real
Estate Fund. The size of venture capital fund is EUR 20 million and the average VC investment is between
EUR 900.000 and EUR 2 million, while the size of the real estate fund is EUR 70 million.
He has been President of the Hungarian Football Federation (MLSZ) since 2010. He has been a member of
the UEFA Finance Committee and a member of the FIFA Council since 2017, and Vice President of the FIFA
Council since 2018.
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.
He has been the Vice President of the Board of Trustees of the International Children’s Safety Service since
1995, and Chairman of the Board of Trustees of the Prima Primissima Foundation since 2003. In 2005, he
established the Csányi Foundation for Children with his own funds. 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 the
Chairman of the Board of Trustees of the Hungarian University of Agriculture and Life Sciences (MATE)
Foundation.
As of 31 December 2023 he held 12.000 ordinary OTP shares (while the total number of OTP shares held
directly and indirectly by him was 4.712.949).
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.
He began his career in 2006 at Merrill Lynch’s London office as an intern and he was working part-time on
corporate finance projects for financial institutions while attending university as well.
From 2007 to 2011, he was an analyst in Deutsche Bank's London office and then a financial advisor in the
field of corporate finance (for Central and Eastern European corporate customers).
From 2011-2016, he worked for McKinsey & Company Inc. as a senior consultant 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 wasthe head of the Daily Banking Tribe.
Since March 2021, he has been 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 Board of Directors of PortfoLion Ltd. He is also the head of
the Digitization Working Group of the Hungarian Banking Association and a member of the Mastercard
European Advisory Board and the vice president responsible for digital transformation of IVSZ IT Association
of Hungary.
He has been a member of OTP Bank's Board of Directors since 16 April 2021.
As of 31 December 2023 he held 25,939 ordinary OTP share.
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OTP BANK
László Wolf
member of the BoD
Deputy CEO
Commercial Banking Division
OTHER INFORMATIONS
He graduated from the Karl Marx University of Economic Sciences (now: Corvinus University) 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
the head of Commercial Banking Division as Deputy CEO of OTP Bank Plc.
Since 2003 he has been a member of DSK Bank’s Supervisory Board.
He has been a member of OTP Bank's Board of Directors since 15 April 2016.
Since 13 June 2023 he has been the Chairman of Supervisory Board of Ipoteka Bank.
As of 31 December 2023 he held 544,502 ordinary OTP shares.
Non-executive members:
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, 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 2023 he held 53,885 ordinary OTP shares.
Gabriella Balogh
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 the managing director of GoodStep Consulting Kft. since 2008. She fulfilled group management
tasks as a member of the Board of Directors 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 FootballFederation. She is the
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OTP BANK
OTHER INFORMATIONS
Chairwoman of the Supervisory Board of Művészetek Palotája Ltd. Since 2023 she has been the Member of
the Board of Directors of Richter Gedeon Plc.
She has been a member of OTP Bank's Board of Directors since 16 April 2021.
As of 31 December 2023 she held 17,793 ordinary OTP shares.
Mihály Baumstark
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 Sciences (now: Corvinus
University) (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.
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 2023 he held 59,200 ordinary OTP shares.
Dr. István Gresa
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 (now: Corvinus University) in 1980. He earned a PhD from the
University of Economic Sciences in 1983.
He has been working 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 OTP Bank Plc., the Head
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 2023 he held 192,458 ordinary OTP shares.
Antal György Kovács
MSc Economics
He graduated from the Karl Marx University of Economic Sciences (now: Corvinus University) 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.
From 1 July 2007 to 31 December 2022 he was the head of Retail Division as OTP Bank’s Deputy CEO.
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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 was a member of OTP Bank’s Supervisory Board from 2004 to 14 April 2016.
Between 15 April 2016 and 27 April 2023 he was a member of OTP Bank’s Board of Directors, on 28 April
2023 the General Meeting of OTP Bank elected him as non-executive member of the Board of Directors..
As of 31 December 2023 he held 126,584 ordinary OTP shares (while the total number of OTP shares held by
him directly and indirectly was 130,884).
György Nagy
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 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 2023 he held 44,400 OTP shares (while the total number of OTP shares held by him
directly and indirectly was 1,068,885).
Dr. Márton Gellért Vági
General Secretary
Hungarian Football Association
He graduated in 1987 from the department of foreign economics at the Karl Marx University of Economic
Sciences (now: Corvinus University).
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 the Chairman of the National Development Agency.
In various periods between 2000 and 2010, he was the Chairman of the Board of Directors of Magyar Villamos
Művek, Paks Nuclear Power Plant and the National Textbook Publishing House. Between 2002 and 2010, he
was a member of the Board of Directors of Földhitel és Jelzálogbank Nyrt., and the Chairman of the Board of
Directors for 4 years.
Since 2010 he has been general secretary of the Hungarian Football Federation.
He was a member of UEFA’s HatTrick Financial Assistance Committee between 2011 and 2023. He has been
a member of FIFA’s Financial Committee since 2017 and since 2023 he has been a member of the UEFA
National Teams Competition Committee
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 2023 he held 15,800 OTP shares.
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OTP BANK
OTHER INFORMATIONS
Dr. József Zoltán Vörös
Professor emeritus, academician
University of Pécs
He earned a degree in economics from the Karl Marx University of Economic Sciences (now: Corvinus
University) 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 the 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 the
Chairman of OTP Bank's Remuneration Committee since 2009, and member of its Risk Assumption and Risk
Management Committee since 2014.
As of 31 December 2023 he held 196,314 ordinary OTP shares.
Supervisory Board
Supervisory Board members are elected by the General Meeting for a term of three years.
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 the director of State Construction Company No. 21. From 1994 to 2015 he was
the Chairman & CEO of the already privatized Magyar Építő Joint Stock Company.
He has been the managing director of Érték Ltd. since 1994.
From 2018 to 2021 he was the 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 2023 he held 54 ordinary OTP shares.
Dr. József Gábor Horváth
Deputy Chairman of the SB
Retired Lawyer
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 from
1990 to 2023 he run his own law firm, which was specialised 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.
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OTHER INFORMATIONS
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 2023 he held no ordinary OTP shares.
Dr. Tamás Gudra
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 Federation 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 2023 he held no ordinary OTP shares.
Olivier Péqueux
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 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 2023 he held no ordinary OTP shares.
INTEGRATED ANNUAL REPORT 2023
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OTP BANK
OTHER INFORMATIONS
Employee delegates:
Klára Bella
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 2023 she held no ordinary OTP shares.
András Michnai
President of OTP Bank’s Employees’ Trade Union
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 President of OTP Bank’s Employees’ Trade Union since December 2011.
As of 31 December 2023 he held 1,410 ordinary OTP shares.
Members of OTP Bank Plc.’s senior management:
Dr. Sándor Csányi
Chairman & CEO
András Becsei
Deputy CEO
Retail Division
In 2001, he graduated with a master’s degree in Finance from the Budapest University of Economic Sciences
and Public Administration. During his studies he was awarded a scholarship at the University of Southern
California in Los Angeles. He went on to get a second master’s degree in International Management from the
University of Cologne (2002) and an MBA from INSEAD (2005-2006).
His career started as a Mergers & Acquisitions analyst at MOL in 2000, before moving to Ruhrgas in Essen
(2001-2002).
INTEGRATED ANNUAL REPORT 2023
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OTP BANK
OTHER INFORMATIONS
Between 2002-2009, he worked as a Consultant and a Project Manager at McKinsey & Company.
Since 2009, he has worked at OTP Bank in various roles including Managing Director of the Retail Subsidiary
Management and Business Development Directorate (2009-2012), CEO of OTP Mortgage Bank and OTP
Building Society (from 2014), Director of Retail Product Development (2012-2016), and Managing Director of
Budapest Region (2017-2022).
Alongside his primary role at OTP, he has performed other duties as a member of the Supervisory Board of
OTP Bank Ukraine - JSC OTP Bank (2010-2014) and as the Vice President of the Hungarian Banking
Association since 2014. He temporary served as President for 9 months since July 2019.
Since the beginning of 2023, he has been appointed to Deputy CEO at OTP leading the Retail Banking
Division.
As of 31 December 2023 he held 7,199 ordinary OTP shares.
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 2023 he held 15,462 ordinary OTP shares.
Péter Csányi
Member of the Board of Directors, Deputy CEO
Digital Division
György Kiss-Haypál
Deputy CEO
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 was 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
then was appointed acting head of the Division.
Since 3 May 2017, he has been deputy CEO of OTP Bank Plc, the head of Credit Approval and Risk
Management Division. As of 1 January 2024 Risk Management Division.
As of 31 December 2023 he held 15,160 ordinary OTP shares.
László Wolf
Member of the Board of Directors, Deputy CEO
Commercial Banking Division
INTEGRATED ANNUAL REPORT 2023
643
OTP BANK
OTHER INFORMATIONS
ANNEX TO SUSTAINABILITY REPORT
Employee data
GRI 2-7 Employees under permanent versus temporary contracts by country, 31.12.2023
Temporary
Permanent
Hungary
Bulgaria
Slovenia
Croatia
Serbia
Albania
Montenegro
Uzbekistan
Russia
Ukraine
Romania
Moldova
Malta
OTP Group
Hungary
Bulgaria
Slovenia
Croatia
Serbia
Albania
Montenegro
Uzbekistan
Russia
Ukraine
Romania
Moldova
Malta
OTP Group
%
97.9
95.8
98.2
92.0
96.6
95.7
85.1
99.7
97.5
99.2
95.5
86.7
80.0
96.9
persons
13,533
5,033
2,457
2,384
2,743
716
468
4,329
6,679
2,258
1,737
755
4
43,096
%
2.1
4.2
1.8
8.0
3.4
4.3
14.9
0.3
2.5
0.8
4.5
13.3
20.0
3.1
persons
288
218
44
206
97
32
82
15
174
18
81
116
1
1,372
GRI 2-7 Full-time and part-time employees by country, 31.12.2023
Full time employees
Part-time employees
%
91.9
95.2
96.2
98.3
99.4
100.0
99.1
98.8
92.8
96.9
95.7
99.3
60.0
95.0
persons
12,700
5,000
2,405
2,547
2,824
748
545
4,292
6,361
2,206
1,740
865
3
42,236
%
8.1
4.8
3.8
1.7
0.6
0.0
0.9
1.2
7.2
3.1
4.3
0.7
40.0
5.0
persons
1,121
251
96
43
16
0
5
52
492
70
78
6
2
2,232
INTEGRATED ANNUAL REPORT 2023
644
OTP BANK
OTHER INFORMATIONS
GRI 401-1 Employees left, employees hired, 2023
Left
OTP Bank
Hungary
Bulgaria
Slovenia
Croatia
Serbia
Albania
Montenegro
Uzbekistan
Russia
Ukraine
Romania
Moldova
Malta
Men
Women
Under 30 years
Between 30–49 years
Over 50 years
Total – OTP Group
Per country – OTP Group
By gender – OTP Group
By age group – OTP Group
1,294
1,886
896
155
195
408
262
44
425
3,798
676
369
138
1
2,500
6,753
3,702
4,459
1,092
9,253
New hires
1,777
2,552
1,058
178
232
445
239
57
532
3,058
444
329
110
1
3,235
6,000
4,488
4,224
523
9,235
GRI 205-2 Distribution of employees by position, number of employees, 31.12.2023
Senior manager
Middle manager
Employees
OTP Bank
6
1,313
9,396
OTP Group
110
3,725
40,633
GRI 402-1 Minimum notice periods
regarding significant operational changes that could substantially affect employees
OTP Bank and Hungarian subsidiaries with
collective bargaining agreements
Additional Hungarian subsidiaries
DSK Bank
SKB Bank
NKBM
OTP Croatia
OTP Bank Serbia
OTP Bank Albania
CKB
Ipoteka Bank
OTP Bank Russia
OTP Bank Ukraine
OTP Bank Romania
OTP Bank Moldova
Minimum notice
periods
15 days
15 days
45 days
30 days
not specified
8 days
8 days
30–90 days
8 days
60 days
60 days
60 days
20 working days
5 working days
Are minimum notice periods and provisions
for consultation and negotiation set out in the
collective agreement?
yes
no
yes
yes
no
yes
yes
no
no
no
no
no
no
no
GRI 404-2 Programmes provided to upgrade employee skills and to facilitate continued employability and the management
of career endings in 2022
In-house training courses
Support for external trainings or education programmes
Leave of absence for studying, with job guaranteed to be
reserved
Continued training for those who intend to keep on working
after retirement
Severance pay
If the organisation provides severance pay, does it take into
account the employee’s age
If the organisation provides severance pay, does it take into
account the number of the employee’s years of service
OTP Bank
Available
Available
Available
OTP Group
Typically available
Typically available
Typically available
Not available
Typically not available
Available
Yes
Yes
Typically not available
Typically not
Typically yes
INTEGRATED ANNUAL REPORT 2023
645
OTP BANK
OTHER INFORMATIONS
GRI 404-2 Programmes provided to upgrade employee skills and to facilitate continued employability and the management
of career endings in 2022
Jobseeker assistance for employees made redundant
Assistance during the transition to life without employment
Weighted average by employee headcount.
Typically not available/Typically no: available at less than 50% of the members of the Group.
Partly available: available at 51–70% of the members of the Group.
Typically available: available at 71–99% of the members of the Group.
OTP Bank
Not available
Not available
OTP Group
Typically not available
Typically not available
GRI 207-4 Taxation by country
Country
Revenue
from sales to
third parties
Revenue
from
transactions
within the
Group and
between
countries
Profit / loss
before tax
(+) gain / (-)
loss
Tangible
assets and
inventories
Income
tax on a
cash
flow
basis
Income tax
liabilities
recognised
against profit
after tax
(IAS12)
without
deferred tax
Statutory
corporate tax
rate
Effective tax
rate
without
deferred tax
Albania
Bulgaria
Cyprus
Croatia
Hungary
Malta
Moldova
Montenegro
Russia
Romania
Serbia
Slovenia
Ukraine
Uzbekistan
1.
2.
3.
4.
5.
6.
7.
8=6/3
38.28
338.17
0.00
230.04
2,472.94
0.23
41.60
44.63
276.41
141.79
207.49
292.27
163.59
1.56
29.29
0.00
1.12
122.60
39.31
0.26
2.70
8.85
25.58
5.86
11.90
4.62
HUF million
14.07
226.89
3.48
66.16
842.69
4.77
16.67
25.22
132.51
31.13
63.14
108.02
82.18
13.56
63.97
0.00
30.26
306.33
0.02
6.39
7.90
11.38
10.45
37.14
30.42
5.88
2.47
20.09
0.00
14.88
38.22
0.84
1.92
2.12
33.07
1.78
8.79
10.26
12.36
109.67
0.00
-57.08
24.75
5.41
2.44
21.52
0.00
11.94
50.34
0.08
2.05
3.87
27.29
1.01
9.18
15.43
37.36
1.56
%
15%
10%
12.5%
18%
9%
35%
12%
9%
20%
16%
15%
19%
50%*
20%*
17.3%
9.5%
-
18.1%
6.0%
1.6%
12.3%
15.3%
20.6%
3.3%
14.5%
14.3%
45.5%
-2.7%
Total
4,357.11
253.63
1,559.85
548.44
152.20
184.06
-
11.8%
*The tax rate shown for Ukraine and Uzbekistan refers to the banks
The data for Russia also include data for Velvin Ventures Ltd., a company incorporated in Belize, on account
of its tax residency in Russia.
The effective tax rate is the quotient of the actual income tax expense for the current year, as recognised in
the profit and loss statement as per IAS 12, and the profit before tax, including the amount of dividends
received. The amount of tax liability taken into account in the calculation of the effective tax rate does not
include the amount of deferred taxes. The effective tax rate in the various countries may differ from the
corporate tax rate under local tax laws. The deviation can typically be traced back to the follo wing:
- The preparation of consolidated accounts under IFRS requires some adjustments to the data of
individual statements prepared in accordance with local accounting standards in order to comply
with IFRS. The effective tax rate calculated using these adjusted figures may deviate from the tax
rate under local tax laws.
- Revenue that does not create a tax base (e.g. dividend) or expenses that are not permanently
deductible for tax purposes;
- Withholding taxes levied abroad and other taxes imposed in addition to corporate tax that are
considered income taxes (e.g. Hungarian local business tax and innovation contribution);
- Loss used in the tax year.
INTEGRATED ANNUAL REPORT 2023
646
OTP BANK
GRI CONTENT INDEX
OTHER INFORMATIONS
The GRI content index contains technical information on sustainability reporting and the use of the GRI
Standards, and shows the disclosures/indicators on which, and where, the OTP Group reports.
GRI 2-2, 2-3 Characteristics of the Sustainability Reporting
Statement of use
GRI 1 used
Applicable GRI Sector Standard(s)
Entities covered
Date of publication
Reporting cycle
Contact info:
External assurance
Presentation of data – breakdown
Presentation of data – time horizon
OTP Bank Plc. has reported in accordance with GRI Standards for the period
between 01.01.2023 and 31.12.2023
GRI 1: Foundation 2021
-
OTP Group: OTP Bank Plc. and subsidiaries consolidated under the IFRS
26 April 2024
annual
csr@otpbank.hu
independent (third party) assurance; assurance provider: Ernst&Young Ltd.
•
•
•
preferably, 5 years in retrospect
essentially OTP Bank and OTP Group;
breakdown by country, where required by the GRI;
financial data – OTP Core1 and OTP Group.
Indicator description
Indicator
number
GRI 2: General disclosures 2021
The organisation and its reporting practices
2-1
Organisational details
2-2
included
Entities
organisation’s
reporting
in
the
sustainability
Where to find
it
pp. 227-229,
website, GRI
index,
pp. 227-229, p.
647, GRI index
2-3
2-4
Reporting period, frequency and
contact point
Restatements of information
p. 647
GRI Index
2-5
External assurance
Activities and employees
2-6
Activities, value chain and other
business relationships
2-7
2-8
Employees
Workers who are not employees
index, p.
GRI
647
p. 85., pp. 144-
145, p. 153, GRI
index, website
p. 85, pp. 176–
177, p. 644
p. 177
Note / Reasons for omission
OTP Group is present in 17 countries, of which it has banks in 12 (where it
performs monetary intermediary activities), engaging in significant operations.
We report in full on the companies covered, including all material topics, but not
all material topics and indicators are relevant to all companies.
Consolidation approach applied for the topic of GHG emissions: operational
control.
In the case of acquisitions, from 2023, the principle is that we report on the new
member company in the year in which it becomes a member of the OTP Group.
GHG emissions data are reported for the full year even if the acquisition took
place during the year.
The sustainability disclosures do not cover the companies Szajki Mezőgazdasági
Zrt., Szekszárdi Mezőgazdasági Zrt., ARANYMEZŐ 2001. Mezőgazdasági
Termékelőállító, Kereskedelmi és Szolgáltató Kft., AGROMAG -PLUSZ
Mezőgazdasági Termékelőállító, Kereskedelmi és Szolgáltató Kft., ZA Gamma
HoldCo Kft., ZA Invest Gamma Kft., ZA-Invest Kappa Kft., Club Hotel Füred
Szálloda Kft., DSK Trans Security EAD, OTP Factoring Bulgaria EAD, because
their consolidation started in the fourth quarter of the year and it was technically
no longer possible to include them in the sustainability data collection. The
sustainability disclosures are part of the deconsolidation until the date of
deconsolidation, which ceased to be consolidated in the fourth quarter (DSK
Tours EOOD).
The scope of companies belonging to the OTP Group has changed compared to
the 2022 report, the biggest change being the acquisition of NKBM in Slovenia
and Ipoteka Bank in Uzbekistan, which limits the comparability of the data
presented with previous years, and the material changes related to the
acquisitions are indicated in the text of the report. Other changes are not
significant in relation to the size of the group and do not affect comparability.
Information may be republished due to changes in data collection methodology
or if corrections are needed for previously disclosed erroneous information; this
is noted at the relevant place within the text, showing the effects of re-publishing.
There have been no new additions to this report.
The external assurance provider is independent of OTP Group. Interview with the
Vice-Chair of the ESG Committee during the certification.
In addition to providing financial services, several consolidated companies of the
OTP Group are operating in the agricultural and food sector.
No material change occurred in the operation, value chain or relevant business
relationships of the Group relative to 2022.
1 OTP Core is the business entity measuring the core activities of OTP Group Hungary, comprising, members in 2023: OTP Bank Plc, OTP Jelzálogbank
Zrt, OTP Lakástakarék Zrt, OTP Faktoring Zrt, OTP Pénzügyi Pont Kft. and entities performing group financing activities; also included are OTP Bank
Munkavállalói Résztulajdonosi Program Szervezet (OTP Bank’s Employee Stock Ownership Plan Organisation), OTP Kártyagyártó Kft, OTP
Ingatlanüzemeltető Kft, MONICOMP Zrt, as well as OTP Ingatlanpont Ingatlanközvetítő Kft, OTP Mobil Szolgáltató Kft, OTP eBIZ Kft. and OTP
Otthonmegoldások Kft.
INTEGRATED ANNUAL REPORT 2023
647
OTP BANK
Indicator
number
Management
2-9
Indicator description
structure
Governance
composition
Nomination and selection of the
highest governance body
and
2-10
2-11
2-12
2-13
Chair of the highest governance
body
Role of the highest governance
body
the
management of impacts
Delegation of
managing impacts
responsibility
overseeing
for
in
2-14
2-15
The role of the highest governance
body in sustainability reporting
Conflict of interest
OTHER INFORMATIONS
Note / Reasons for omission
The procedure of the nomination of the members of the Board of Directors and
the Supervisory Board is disclosed by the Company in its Responsible Corporate
Governance Report. Regarding the candidates, the Company observes MNB
Recommendation No. 1/2022 (I.17.) and Act CCXXXVII of 2013 (Credit
Institutions Act) concerning independence, diversity, professional competences
and conflicts of interest alike. The EBA Guidelines underlying the MNB
recommendation provides that when selecting members of the management body
(i.e. nominating members), the collective suitability of the management body
should also be ensured, for which members with as diverse professional expertise
and experience as possible should be selected because owing to the broad range
of expertise and experience (e.g.
IT, AML, risk management, product
development, compliance, HR, etc.), the requirement of the technical/professional
diversity of management bodies is a quasi supervisory requirement.
Collective assessment of
the professional expertise, competences and
experience is carried out on the basis of the methodology recommended by EBA.
The Company also has a strategy for the promotion of gender diversity.
Shareholders can make proposals for candidates in the framework stipulated by
law. One member of the Supervisory Board is nominated by the Groupama group
which has a larger than 5% share. One third of the Supervisory Board members
are nominated by the Bank’s work council from the Company’s employees.
The Chairman of the Supervisory Board is independent.
Where to find
it
FTJ: 1.2–1.4;
p. 88, p. 89
FTJ: 1.2.2, 1.4,
1.13, pp. 180-
181
GRI Index
GRI index, FTJ:
1.2.2
p. 88
p. 88, pp. 89–
91, p. 142, p.
158, p. 164, p.
167, pp. 201-
202
p. 86, GRI index The sustainability disclosure is approved by the Board of Directors as part of the
p. 160, GRI
index, Code of
Ethics,
Compliance
Pol., FTJ: 1.2.2,
1.12,
business report.
Code of Ethics: II.II.10.; Compliance Policy extract III.1.2
All employees must be familiar with the Conflict-of-Interest Regulation. The
Conflict-of-Interest Regulation includes the conflict of interest rules on executive
officers as well, providing inter alia that the members of the Board of Directors
and the Supervisory Board must abstain from voting on any subject in relation to
which they do or may have a conflict of interest or in the case of which th eir
objectivity or their capability of adequately fulfilling their obligations towards the
Bank may be compromised. The members of the boards regularly submit
declarations regarding their interests in related parties, along with declarations
on conflicts of interests. Records are kept of their interests as required by law to
avoid conflicts of interests.
Cases of cross share ownership with suppliers and other stakeholders are not
reported by the Banking Group.
2-16
2-17
2-18
2-19
Communication of critical concerns pp. 88–89
Collective knowledge of the highest
governance body
Evaluation of the performance of
the highest governance body
Remuneration policies
FTJ: 1.12
p. 88
p. 88, p. 185-
186, website
2-20
Process to determine remuneration p. 185, website1
2-21
Annual total renumeration ratio
website2
GRI Index
Strategies, guidelines, practices
2-22
on
Statement
development strategy
Policy engagements
sustainable
p. 4
2-23
2-24
2-25
2-26
2-27
Embedding policy engagements
Processes to remediate negative
impacts
Mechanisms for seeking advice and
raising concerns
Compliance with laws and
regulations
Membership in associations
2-28
Inclusion of stakeholders
2-29
Approach
engagement
p. 90, p. 160,
website1,
website2, GRI
index
p. 160
pp.
website
p. 160
164-165,
p. 163
website
The indicator is currently not reported. Preparation of reporting the indicator was
started in 2022 but it was not finished by the end of the year. Collecting and
aggregating adequate data at group level technically takes longer. Also, because
of the very large differences between the average wage levels in the countries of
the Banking Group, we are reflecting on the most relevant way to present this.
The indicator will be presented in 2025 at the latest.
Code of Ethics: A standard Code of Ethics is in force at all members of OTP
Group; any deviations are due to compliance with local laws.
The Code is available on the websites of OTP Bank and the subsidiaries.
to
stakeholder
p. 150, pp. 97-
98, website
@Stakeholder relations
INTEGRATED ANNUAL REPORT 2023
648
OTHER INFORMATIONS
Note / Reasons for omission
If the description of any subparagraph is missing in relation to the given topic, it
means that the Banking Group has no relevant practice. Our general principle is
that we (also) use the topic specific indicators of the given topic as a method of
evaluation of the efficiency of the actions taken; we use the indicator’s expected
data as the result. With other assessment methods, the presentation of the results
always includes a clear reference to the method applied.
The OTP Group does not have a general approach and targets for the social,
indirect economic impacts of financial products, but certain impacts are managed
strategically. In relation to indirect economic impacts as well, we always act in
accordance with the principle of ethical business behaviour.
The report is not comprehensive as regards risk ratings (FS6 2.4).
We present assets by sector. (Partial compliance.)
In accordance with the principle of equal tax treatment, OTP Group spares no
effort to ensure maximum compliance with all relevant statutory regulations on
tax liabilities, in view of the purposes of taxes and contributions.
The information on the disclosed taxes as part of the consolidated financial
statements was audited. The disclosure of the indicators 207-1, 207-2, 207-3,
207-4 are audited as part of the sustainability disclosures.
OTP BANK
Indicator
number
2-30
Indicator description
Collective bargaining agreements
GRI 3: Material topics 2021
3-1
to determine material
Process
topics
List of material topics
Management of material topics
3-2
3-3
Where to find
it
p. 182, GRI
index
pp. 86–87
p. 87
GRI Index
List of material topics
Social, indirect economic impacts of financial products (ST1)
3-3
Management of material topics
203-2
Significant
impacts
indirect
economic
G4 FS6
the portfolio
Percentage of
for
business lines by specific region,
size (e.g. micro/SME/ large) and by
sector
Commercial and industrial credit
exposure, by industry
SASB FN-
CB-
410a.1.
Tax payment (GRI 207 2019)
3-3
207-1
Management of material topics
Approach to tax payment
207-2
207-3
Tax governance, control, and risk
management
engagement
and
Stakeholder
management of concerns related to
tax
Country-by-country reporting
207-4
Contribution to economic stability (ST2)
3-3
Management of material topics
p. 92, p. 135-
136, p. 139
p. 92, p. 135,
137-138,
pp.
139-140,
website
p. 85, pp. 144–
145, GRI index
144–145,
pp.
GRI index
pp. 172-173
pp.
GRI index
172–173,
172–173,
Index,
172-173,
pp.
GRI
website
pp.
website
p. 146, p. 646
173-174,
pp.
website
p. 174
201-4
Financial assistance received from
government
EBA stress test result
own
indicator
own
indicator
Environmental impact and GHG emissions of financial products (ST3)
3-3
Management of material topics
CET1 rate
p. 174
p. 174
305-3
indirect (Scope 3) GHG
Other
emissions
p. 92, p. 93
website
pp.
GRI index
142-143,
305-4
GHG emissions intensity
GRI Index
The indicator is applied only to the Scope 3 emissions of lending. The necessary
quality of information is not available for reporting, it will be disclosed first in 2025
after improvement of calculation accuracy. Improvement in calculation accuracy
will be enabled by an increase in the range of publicly reported data and an
improvement in their quality.
The indicator is applied only to the Scope 3 emissions of lending. The necessary
quality of information is not available for reporting, it will be disclosed first in 2025
after improvement of calculation accuracy. Improvement in calculation accuracy
will be enabled by an increase in the range of publicly reported data and an
improvement in their quality.
The indicator is applied only to the Scope 3 emissions of lending. The necessary
quality of information is not available for reporting, reporting is expected to be
started in 2026 in accordance with the decarbonisation strategy.
Partially reported.
142-143,
pp.
GRI index
pp. 95-97, pp.
135-136,
pp.
141-143
pp. 141-143
pp. 141-143
Partially reported.
GRI Index
Partially reported. Implementation and disclosure are determined by statutory
requirements, because they also require the introduction of a number of new
practices. The practices relating to the criteria (items 2–7) required by the
indicator are improving continuously but they have not been fully developed,
therefore their presentation is expected to start in a few years.
INTEGRATED ANNUAL REPORT 2023
649
305-5
Reduction of GHG emissions
201-2
SASB FN-
MF-
450a.3.
SASB FN-
CB-
410a.2.
SASB FN-
IB-410a.3
into
implications and other
to
Financial
risks and opportunities due
climate change
Description of how climate change
and other environmental risks are
mortgage
incorporated
origination and underwriting climate
change
Description
to
incorporation of environmental,
social, and governance
(ESG)
factors in credit analysis
Description
to
incorporation of environmental,
social, and governance
(ESG)
factors in investment banking and
brokerage activities
approach
approach
of
of
OTP BANK
Indicator
number
Green products (ST4)
3-3
Indicator description
Management of material topics
to
according
Disclosure
Taxonomy Regulation
Proportion of products according to
Articles 8 and 9 of the SFDR
own
indicator
own
indicator
GHG emissions of operation (GRI 305 2016)
3-3
Management of material topics
the
302-1
305-1
305-2
Energy consumption within
organisation
Direct (Scope 1) GHG emissions
the
Energy indirect (Scope 2) GHG
emissions
Access to finance (ST5)
3-3
Management of material topics
Number of branches by country
own
indicator
G4 FS13 Access points in low populated or
economically disadvantaged areas
by type
Accessibility for the disabled
own
indicator
Financial welfare conditions (ST6)
3-3
417-2
417-3
own
indicator
own
indicator
Compliance (ST7)
3-3
205-1
of
of
Management of material topics
Incidents
non-compliance
concerning product and service
information and labelling
Incidents
concerning
communications
Number of complaints related to
product structure transparency
Percentage of overdue loans over
90 days in the retail segment
non-compliance
marketing
for
risk
Management of material topics
Operations assessed
related to corruption
Communication and training about
anti-corruption
and
procedures
Confirmed incidents of corruption
and actions taken
Political contributions
policies
for
proceedings
anti-
Legal
competitive behaviour, anti-trust,
and monopoly practices
Compliance with
regulations
Incidents of discrimination and
corrective actions taken
Security personnel
in
human rights policies or procedures
trained
laws
and
205-2
205-3
415-1
206-1
2-27
406-1
410-1
Where to find
it
p. 83, p. 93, p.
95, pp. 135-136
pp. 97-133
pp. 135-136
p. 83, pp. 201-
204
website
p. 203
p. 204, GRI
index
p. 204, GRI
index
pp. 146-147, p.
152, pp. 154-
155
p. 71
p. 152, pp. 154-
155
pp. 154-156
p. 146, p. 149
p. 163, GRI
index
OTHER INFORMATIONS
Note / Reasons for omission
We do not apply a base year. Consolidation approach: operational management.
We do not apply a base year. Consolidation approach: operational management.
In 2023, there was no non-compliance with voluntarily accepted codes regarding
information provision on, and labelling of, products and services.
p. 163, GRI
index
In 2023, there was no non-compliance with voluntarily accepted codes regarding
marketing communications.
p. 166
p. 150
p. 157
p. 162
pp. 160-162, p.
177, p. 179, p.
645, GRI index
p. 162
We consider suppliers and commissioned agents as our business partners.
GRI Index
OTP Group does not sponsor such persons or organisations, there was no such
support in 2023.
p. 163
p. 163
p. 161
p. 161, website
Responsible employment (GRI 401 2016, 404 2016)
3-3
Management of material topics
2-21
Annual total compensation ratio
p. 150, pp. 177-
179, website
GRI Index
Preparation of reporting the indicator was started in 2022 but it was not finished
by the end of the year. Collecting and aggregating adequate data at group level
technically takes longer. Also, because of the very large differences between the
average wage levels in the countries of the Banking Group, we are reflecting on
the most relevant way to present this. The indicator will be presented in 2025 at
the latest.
401-1
401-3
402-1
404-1
404-2
New employee hires and employee
turnover
Parental leave
Minimum notice periods regarding
operational changes
Average hours of training per year
per employee
Programmes for upgrading
employee skills and transition
assistance programmes
pp. 177-179, p.
645
p. 189
p. 182, p. 645
p. 188
pp. 186-187, p.
645
INTEGRATED ANNUAL REPORT 2023
650
OTP BANK
Indicator
number
404-3
403-9
Indicator description
Percentage of employees receiving
regular performance and career
development reviews
Work-related injuries
Where to find
it
pp. 184-185
OTHER INFORMATIONS
Note / Reasons for omission
p. 191
Our legally compliant occupational health and safety risk assessment did not
identify threats that may pose a risk of serious accidents.
Programmes to help with stress
management
Employee engagement
own
indicator
own
indicator
Equality of opportunities for employees (GRI 405 2016)
Management of material topics
3-3
pp. 189-190
p. 180, pp. 182-
183
p. 175, p. 180,
p. 188, website,
GRI index
p. 181,
GRI Index
202-2
401-2
405-1
405-2
Proportion of senior management
hired from the local community
Benefits provided to full-time
employees that are not provided to
temporary or part-time employees
Diversity of governance bodies and
employees
Ratio of basic salary and
remuneration of women to men
p. 185
p. 179-180,
GRI Index
p. 186
p. 192
pp. 192-193
Strengthening of financial awareness in vulnerable groups (ST8)
3-3
SASB FN-
CB-
240a.4.
Management of material topics
Number of participants in financial
literacy initiatives for unbanked,
underbanked, or underserved
customers
Education for socially
disadvantaged children
Financial literacy for people in
disadvantaged areas
own
indicator
own
indicator
Customer data and information security (GRI 418 2016)
Management of material topics
3-3
pp. 192-196
pp. 192-196
pp. 157-158,
website
p. 172
418-1
Substantiated
complaints
concerning breaches of customer
privacy and losses of customer data
Card–related fraud losses from (1)
(2)
card-not-present
card-present and other fraud
Ratio of bank card fraud to turnover p. 169
SASB FN-
CF-
230a.2.
own
indicator
own
indicator
Financing of high social risk sectors (ST9)
3-3
Management of material topics
Amount of prevented bank card
fraud
fraud and
p. 169
own
indicator
Exclusion and restrictive policies
p. 169
p. 93, pp. 141-
142
pp. 141-142
OTP Group has no comprehensive policy for giving preference to local residents
in respect of employees and senior management.
Significant locations of operations: OTP Bank and foreign subsidiaries.
Significant locations of operations: OTP Bank and foreign subsidiaries.
Data on ethnic background is not listed owing to statutory regulations.
Partially reported
Partially reported
TCFD indicators2
Indicator description
Chapters3
Comment
I. Management
Governance of the organisation in relation to climate risks and opportunities
a, The governing body’s oversight in relation to climate-related risks and
opportunities
b, Management’s role in assessing and managing climate-related risks and
opportunities
II. Strategy
The actual and potential impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning where such
information is material
a, Climate-related risks and opportunities identified by the organisation in the
short, medium and long term
financing, which
1., 2.7
1.
strategic
ESG
directions, 2.2, 2.5,
2.7
Utilisation of the opportunities relating to climate
is
is a
dominant element of the ESG strategy.
targeted by green
2 In 2023, OTP Bank reports on the indicators included in the TCFD indicators from the IFRS S1 and IFRS S2 indicators, so we us e the TCFD notation.
3 The chapters are the chapters of the OTP Group’s Sustainability Activities for 2023 and Environmental Poli cy, Environmental Protection Measures (pp.
82-207)
INTEGRATED ANNUAL REPORT 2023
651
OTP BANK
OTHER INFORMATIONS
TCFD indicators2
b, Impact of climate-related risks and opportunities on the organisation’s
businesses, strategy, and financial planning
ESG
strategic
directions, 2.2, 2.5,
2.7
In the course of the risk assessment activities
presented here we also take account of transition
(actual and expected, regulatory, technological,
market and reputation) risks and the (acute and
chronic) physical risks alike.
2.7
c, The resilience of the organisation’s strategy, taking into consideration different
climate related scenarios, including a 2°C or lower scenario.
III. Risk Management
The way of the identification, assessment and management of climate risks
a, The organisation’s procedures for identifying and assessing climate-related
risks
b, The organisation’s processes for managing climate related risks
c, How processes for identifying, assessing, and managing climate related risks
are integrated into the organisation’s overall risk management
IV. Metrics and objectives: The metrics and objectives used in the assessment and management of the relevant climate risks where such details are
relevant.
a, The metrics used by the organisation to assess climate related risks and
opportunities in line with its strategy and risk management process
The metrics and objectives are enhanced and
they grow more and more accurate continuously.
2.5, 2.7
2.5, 2.7
2.5, 2.7
b, Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG)
emissions, and the related risks.
c, Targets used by the organisation to manage climate related risks and
opportunities and performance against targets
ESG
strategic
directions, 2.2, 2.5,
2.7
2.2, 2.5, 2.7
ESG
directions, 2.2, 7.
strategic
INTEGRATED ANNUAL REPORT 2023
652
OTP BANK
OTHER INFORMATIONS
UNEP FI PRINCIPLES FOR RESPONSIBLE BANKING REPORT
Principle 1: Alignment
We will align our business strategy to be consistent with and contribute to individuals’ needs and society’s goals, as expressed in the Sustainable Development Goals, the Paris Climate
Agreement and relevant national and regional frameworks.
Business model
Describe (high-level) your bank’s business model, including the main customer segments served, types of products and services provided, the main sectors and types of activities across the main
geographies in which your bank operates or provides products and services. Please also quantify the information by disclosing e.g. the distribution of your bank’s portfolio (%) in terms of geographies,
segments (i.e. by balance sheet and/or off-balance sheet) or by disclosing the number of customers and clients served.
OTP Group is one of the fastest growing banking groups in Central and Eastern Europe, with unique knowledge of the region and a lasting commitment to it. With more than 41,000 employees in now 12
countries of the CEE and Central Asian region, the Group provides universal financial services to 17 million customers.
In Hungary, OTP Bank Plc. is one of the largest commercial bank when measured in terms of banking assets. OTP is a universal bank, providing a high level of service to the financial needs of retail,
private banking, micro and small business, medium and large enterprise and municipal customers, both through our domestic subsidiaries and branches and via the continuously developing innovative
digital services.
The Bank offers a comprehensive range of other financial services, including fund management, leasing, and factoring. Serving agricultural companies and small and medium-sized enterprises is a
priority for OTP Group.
Besides Hungary, OTP Group currently operates in 11 countries of the region via its subsidiaries: in Albania (Banka OTP Albania SHA ), in Bulgaria (DSK Bank AD), in Croatia (OTP banka dioničko
društvo), in Romania (OTP Bank Romania S.A.), in Serbia (OTP banka Srbija akcionarsko društvo Novi Sad), in Slovenia (SKB Banka d.d. Ljubljana, Nova KBM d.d.), in Ukraine (Joint-Stock Company
OTP Bank), in Moldova (OTP Bank S.A.), in Montenegro (Crnogorska Komercijalna Banka AD Podgorica), in Russia (Joint Stock Company “OTP Bank”) and in Uzbekistan (Ipoteka Bank).
The continued development and expansion of OTP Bank have significantly contributed to the successful and efficient operation of the Banking Group, which can provide high quality services for both the
retail and the institutional clients.
https://www.otpgroup.info/home
https://www.otpgroup.info/about/group-members
Strategy alignment
Does your corporate strategy identify and reflect sustainability as strategic priority/ies for your bank?
☒ Yes
☐ No
Please describe how your bank has aligned and/or is planning to align its strategy to be consistent with the Sustainable Development Goals (SDGs), the Paris Climate Agreement, and relevant national
and regional frameworks.
Does your bank also reference any of the following frameworks or sustainability regulatory reporting requirements in its strategic priorities or policies to implement these?
☐ UN Guiding Principles on Business and Human Rights
☒ International Labour Organization fundamental conventions
☐ UN Global Compact
☐ UN Declaration on the Rights of Indigenous Peoples
☐ Any applicable regulatory reporting requirements on environmental risk assessments, e.g. on climate risk - please specify which ones: ---------------------
INTEGRATED ANNUAL REPORT 2023
653
OTP BANK
Principle 1: Alignment
OTHER INFORMATIONS
☐ Any applicable regulatory reporting requirements on social risk assessments, e.g. on modern slavery - please specify which ones: -------------------------
☐ None of the above
OTP Group wants to play a regional leading role in financing a fair and gradual transition to a low-carbon economy and building sustainable future with its financing solutions.
The Group’s responsibility for sustainable development starts with its business activities; we contribute to a financial infrastructure that is key to a well-functioning society by reducing risks and help
achieve a more sustainable future by creating business opportunities. In addition to economic considerations, ethical, social and environmental risks are incorporated into our business decision-making,
our business development and our operations.
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.
OTP Group has a strong will for its activity to serve for sustainable growth and social improvement, we committed to doing it with transparency and in line with Paris Agreement. We align our sustainability
strategy with the Sustainable Development Goals. In order to avoid negative environmental and social impacts and to leverage potential business benefits, OTP Group considers sustainability a high
priority, which received significant external attention in.
https://www.otpgroup.info/static/sw/file/OTPGroup_ESG_approach.pdf
https://www.otpgroup.info/static/portal/sw/file/contribution_SDG.pdf
INTEGRATED ANNUAL REPORT 2023
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OTP BANK
Principle 2: Impact and Target Setting
OTHER INFORMATIONS
We will continuously increase our positive impacts while reducing the negative impacts on, and managing the risks to, people and environment resulting from our activities, products
and services. To this end, we will set and publish targets where we can have the most significant impacts.
Impact Analysis (Key Step 1)
o
Show that your bank has performed an impact analysis of its portfolio/s to identify its most significant impact areas and determine priority areas for target-setting. The impact analysis shall be updated
regularly1 and fulfil the following requirements/elements (a-d)2:
a) Scope: What is the scope of your bank’s impact analysis? Please describe which parts of the bank’s core business areas, products/services across the main geographies that the bank operates in
(as described under 1.1) have been considered in the impact analysis. Please also describe which areas have not yet been included, and why.
The Group has conducted an analysis to identify the positive and negative impacts of company activities and to identify the areas with the most significant impacts, also considering the context in which it
operates.
We used the UNEP FI Portfolio Impact Analysis Tool to undertake an impact analysis of our portfolio. Due to the complexity of bank operations in different countries, the data collection required for the
impact analysis is a major challenge. We are currently focusing on domestic market and the core business segments (retail and corporate).
In Hungary Climate change, green financing, inclusive and healthy economies, affordable housing, resource efficiency and security, water quality are identified as high impact areas. To ensure
consistency of proposed targets with stakeholder expectations, the Materiality matrix has been cross referenced. Green finance was rated as the most important issue for our stakeholders, while
economic prosperity, financial literacy and digitalization were ranked in the top three issues for stakeholders.
Integrated report 2023
b) Portfolio composition: Has your bank considered the composition of its portfolio (in %) in the analysis? Please provide proportional composition of your portfolio globally and per geographical scope
i) by sectors & industries3 for business, corporate and investment banking portfolios (i.e. sector exposure or industry breakdown in %), and/or
ii) by products & services and by types of customers for consumer and retail banking portfolios.
If your bank has taken another approach to determine the bank’s scale of exposure, please elaborate, to show how you have considered where the bank’s core business/major activities lie in terms of
industries or sectors.
OTP Group provides financial services to various sectors as described in 1. (Business model), some of which may present Environment and Social risks.
Based on the impact analysis, areas of high importance and risk in the countries of the OTP group and also relevant from the perspective of the financial sector:
-
-
-
-
-
-
Housing problems
Resources efficiency, security
Inclusive&Healthy economies
Education
Justice&Equality
Strong Institutions, peace&Stability
Based on the Impact Analysis, the areas of climate change and financial inclusion are among the most significant ones.
1 That means that where the initial impact analysis has been carried out in a previous period, the information should be update d accordingly, the scope expanded as well as the quality of the impact
analysis improved over time.
2 Further guidance can be found in the Interactive Guidance on impact analysis and target setting.
3 ‘Key sectors’ relative to different impact areas, i.e. those sectors whose positive and negative impacts are particularly strong, are particularly relevant here.
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Principle 2: Impact and Target Setting
OTHER INFORMATIONS
c) Context: What are the main challenges and priorities related to sustainable development in the main countries/regions in which your bank and/or your clients operate?4 Please describe how these
have been considered, including what stakeholders you have engaged to help inform this element of the impact analysis.
This step aims to put your bank’s portfolio impacts into the context of society’s needs.
We conducted an impact analysis to identify the positive and negative impacts of company activities and to identify the areas with the most significant impacts, also considering the context in which it
operates. The organised and effective management of the Group’s environmental impacts is one of the key issues that has emerged. Our ESG goals are identifying the risks related to climate and
environmental change, evaluating their impact and gradually introducing metrics for measuring them, focusing first and foremost on identifying climate risks. In said context, OTP Bank has also launched
a process of acquiring useful information for managing environmental risks and gradually integrating these factors into the Risk Management Framework.
With regard to credit exposures, our objective is to follow an integrated approach to take account of climate risks at all relevant stages of the credit process, by gradually implementing tools that make it
possible to collect information and incentivise lending in sectors with significant ESG performance and support the transition of companies in said sectors towards a more sustainable business model and,
ultimately, a smaller environmental footprint.
Based on these first 3 elements of an impact analysis, what positive and negative impact areas has your bank identified? Which (at least two) significant impact areas did you prioritize to pursue your
target setting strategy (see 2.2)5? Please disclose.
Climate Change
Financial Health&Inclusion
d) For these (min. two prioritized impact areas): Performance measurement: Has your bank identified which sectors & industries as well as types of customers financed or invested in are causing the
strongest actual positive or negative impacts? Please describe how you assessed the performance of these, using appropriate indicators related to significant impact areas that apply to your bank’s
context.
In determining priority areas for target-setting among its areas of most significant impact, you should consider the bank’s current performance levels, i.e. qualitative and/or quantitative indicators and/or
proxies of the social, economic and environmental impacts resulting from the bank’s activities and provision of products and services. If you have identified climate and/or financial health&inclusion as
your most significant impact areas, please also refer to the applicable indicators in the Annex.
If your bank has taken another approach to assess the intensity of impact resulting from the bank’s activities and provision of products and services, please describe this.
The outcome of this step will then also provide the baseline (incl. indicators) you can use for setting targets in two areas of most significant impact.
In line with OTP Group's ESG strategy, we have set a preliminary target to increase our loan portfolio in green assets to HUF 1,500 billion by 2025. Based on the results of our impact analysis and in line
with our strategic goals and target setting requirements, we started by determining a baseline for 2021.
OTP Group has become a signatory of Partnership for Carbon Accounting Financials (PCAF) in June 2023. This means that in the financed emission calculation, we are not only following PCAF
methodology, but we are also using its emission factor database for calculation. We have estimated financed emission for 2021 and 2022, estimation for 2023 is still in progress. However, the results
have not yet been made public, the first disclosure of our estimated financed emission is planned in early 2025.
Though the coverage slightly varied between the years, we included 75-80% of our total asset into the calculations. All economic sectors are included, the remaining 20-25% is mainly composed of
unsecured residential loans due to lack of methodology. In accordance with PCAF guidance, we cover 4 segments: business loans, mortgages, commercial real estate and motor vehicle loans.
In the last two years, OTP Bank has established the basis for a methodologically and data-quality-wise sound financed emission calculation of banking group portfolio: we have developed an in-house
automated calculation engine to estimate financed emission, however, it is still in a pilot stage. It makes the financed emission calculation replicable, accurate and transparent. We strive to further refine
the results of our financed emissions by expanding the range of data reported and improving the quality used and incorporate additional data. This not only requires collaboration between group
members, but also engagement with our clients in all countries and sectors of the OTP Group.
4 Global priorities might alternatively be considered for banks with highly diversified and int ernational portfolios.
5 To prioritize the areas of most significant impact, a qualitative overlay to the quantitative analysis as described in a), b) and c) will be important, e.g. through stakeholder engagement and further
geographic contextualisation.
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Principle 2: Impact and Target Setting
OTHER INFORMATIONS
Currently, setting climate targets is in progress under a so-called ‘decarbonization project’. By the end of 2024, we aim to set targets in the most carbon intensive sectors, according to the up-to-date
professional standards, in the majority of countries where OTP is present. By the broad involvement of several key departments both in the headquarter and subsidiaries, we are also making significant
efforts to involve all areas of bank's business and risk areas in defining and to understand what is needed to steer our portfolio to be aligned with the Paris Climate Change Agreement.
For several years, OTP Group has made it a priority to contribute to the improvement of the financial literacy of the population. We believe that conscious money management and self-provisioning are
essential for financial well-being. To this end, we have produced general financial education videos on a variety of topics, and several of our campaigns focus on responsible money management.
As one of the top retail and commercial banks, we have the responsibility to support the development of inclusive and sustainable societies.
We believe we can help more people prosper and enjoy the benefits Financially empowered people of growth by empowering them financially, giving them access to tailored financial products and
services, and improving their financial resilience through education. We aim to financially empower more people in the near future.
We seek to provide tailored finance to people with less access to credit. We offer solutions to unbanked and underserved groups. We aim to foster social mobility by helping low-income and underbanked
entrepreneurs set up and grow their businesses.
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Self-assessment summary:
OTHER INFORMATIONS
Which of the following components of impact analysis has your bank completed, in order to identify the areas in which your bank has its most significant (potential) positive and negative impacts?6
Scope:
Portfolio composition:
Context:
☒ Yes
☒ Yes
☒ Yes
☐ In progress
☐ In progress
☐ In progress
Performance measurement:
☐ Yes
☒ In progress
☐ No
☐ No
☐ No
☐ No
Which most significant impact areas have you identified for your bank, as a result of the impact analysis?
Climate change mitigation, climate change adaptation, resource efficiency & circular economy, biodiversity, financial health & inclusion, human rights, gender equality, decent employment, water,
pollution, other: please specify
How recent is the data used for and disclosed in the impact analysis?
☐
☒
☐
☐
Up to 6 months prior to publication
Up to 12 months prior to publication
Up to 18 months prior to publication
Longer than 18 months prior to publication
Open text field to describe potential challenges, aspects not covered by the above etc.: (optional)
6 You can respond “Yes” to a question if you have completed one of the described steps, e.g. the initial impact analysis has be en carried out, a pilot has been conducted.
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2.2 Target Setting (Key Step 2)
OTHER INFORMATIONS
Show that your bank has set and published a minimum of two targets which address at least two different areas of most significant impact that you identified in your impact analysis.
The targets7 have to be Specific, Measurable (qualitative or quantitative), Achievable, Relevant and Time-bound (SMART). Please disclose the following elements of target setting (a-d), for each
target separately:
a) Alignment: which international, regional or national policy frameworks to align your bank’s portfolio with8 have you identified as relevant? Show that the selected indicators and targets are linked
to and drive alignment with and greater contribution to appropriate Sustainable Development Goals, the goals of the Paris Agreement, and other relevant international, national or regional
frameworks.
You can build upon the context items under 2.1.
Once setting our decarbonization targets – which is an ongoing project in 2024 – we strive to align our portfolio with climate scenarios defined in the Paris Agreement. At the same time, we want to
ensure that the sector-by-sector decarbonization approaches are realistic, implementable, and supported by society, and in line with the strategic priorities we have set ourselves according to the UN
Sustainable Development Goals.
Financial Literacy and Financial Health remain a main limitation of the wellbeing of many in the region. For several years, OTP Group has made it a priority to contribute to the improvement of the
financial literacy of the population, in addition to providing correct information to customers and the calculators and guides available on our website.
We take responsibility for educating young people and adults with basic financial literacy and responsible decision-making skills. Our aim is to create and spread financial literacy on a broad scale,
with this initiative we are contributing to the EU goal of reducing poverty by 2030 as well as to progress on the UN SDGs.
https://www.otpgroup.info/sustainability/responsible-social-actor
https://www.otpgroup.info/static/sw/file/OTPGroup_ESG_approach.pdf
b) Baseline: Have you determined a baseline for selected indicators and assessed the current level of alignment? Please disclose the indicators used as well as the year of the baseline.
You can build upon the performance measurement undertaken in 2.1 to determine the baseline for your target.
A package of indicators has been developed for climate change mitigation and financial health & inclusion to guide and support banks in their target setting and implementation journey. The
overview of indicators can be found in the Annex of this template.
If your bank has prioritized climate mitigation and/or financial health & inclusion as (one of) your most significant impact areas, it is strongly recommended to report on the indicators in the Annex,
using an overview table like below including the impact area, all relevant indicators and the corresponding indicator codes:
Impact area
Climate change mitigation
Impact area
Financial health & inclusion
Indicator code
climate strategy?
Paris Alignment target?
Climate policy?
Portfolio analysis?
Financed emission?
Indicator code
participants of adult training
programs
participants of students
training programs
…
Response
only for internal use
only for internal use
Response
IR page 193
In case you have identified other and/or additional indicators as relevant to determine the baseline and assess the level of alignment towards impact driven targets, please disclose these.
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OTHER INFORMATIONS
c) SMART targets (incl. key performance indicators (KPIs)9): Please disclose the targets for your first and your second area of most significant impact, if already in place (as well as further
impact areas, if in place). Which KPIs are you using to monitor progress towards reaching the target? Please disclose.
To align our portfolio with the Paris Agreement objectives and to reach net-zero financed emissions by 2050, we are in the process to set decarbonization targets in the most carbon intensive
sectors. The first interim targets will be set for 2030 with 5 years milestones until reaching net-zero by 2050.
The OK Educational and Innovation Centre and the OTP Fáy András Foundation provide free finance and economics courses in Hungary, Romania and Moldova, helping thousands of students
and adults every year to expand their knowledge.
SMART targets are being developed and will be reported in the next report.
d) Action plan: which actions including milestones have you defined to meet the set targets? Please describe.
Please also show that your bank has analysed and acknowledged significant (potential) indirect impacts of the set targets within the impact area or on other impact areas and that it has set out
relevant actions to avoid, mitigate, or compensate potential negative impacts.
under development
7 Operational targets (relating to for example water consumption in office buildings, gender equality on the bank’s management board or business-trip related greenhouse gas emissions) are not in scope
of the PRB.
8 Your bank should consider the main challenges and priorities in terms of sustainable development in your main country/ies of operation for the purpose of setting targets. These can be found in National
Development Plans and strategies, international goals such as the SDGs or the Paris Climate Agreement, and regional framework s. Aligning means there should be a clear link between the bank’s
targets and these frameworks and priorities, therefore showing how the target supports and drives contributions to the nation al and global goals.
9 Key Performance Indicators are chosen indicators by the bank for the purpose of monitoring progress towards targets.
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Self-assessment summary
OTHER INFORMATIONS
Which of the following components of target setting in line with the PRB requirements has your bank completed or is currently in a process of assessing for your areas of most significant impact.
Alignment
Baseline
SMART targets
Action plan
Climate Change
☒ Yes
☐ In progress
☐ No
☐ Yes
☒ In progress
☐ No
☐ Yes
☒ In progress
☐ No
☐ Yes
☒ In progress
☐ No
Financial Health&Inclusion
☒ Yes
☐ In progress
☐ No
☐ Yes
☒ In progress
☐ No
☐ Yes
☒ In progress
☐ No
☐ Yes
☒ In progress
☐ No
2.3 Target implementation and monitoring (Key Step 2)
For each target separately:
Show that your bank has implemented the actions it had previously defined to meet the set target.
Report on your bank’s progress since the last report towards achieving each of the set targets and the impact your progress resulted in, using the indicators and KPIs to monitor progress you have
defined under 2.2.
Or, in case of changes to implementation plans (relevant for 2nd and subsequent reports only): describe the potential changes (changes to priority impact areas, changes to indicators,
acceleration/review of targets, introduction of new milestones or revisions of action plans) and explain why those changes have become necessary.
We are currently working on the finalization of the goals and the targets will be shown in our next report.
Links and references
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Principle 3: Clients and Customers
OTHER INFORMATIONS
We will work responsibly with our clients and our customers to encourage sustainable practices and enable economic activities that create shared prosperity for current and future
generations.
3.1 Client engagement
Does your bank have a policy or engagement process with clients and customers1 in place to encourage sustainable practices?
☐ Yes
☐ In progress
☒ No
Does your bank have a policy for sectors in which you have identified the highest (potential) negative impacts?
☐ Yes
☐ In progress
☒ No
Describe how your bank has worked with and/or is planning to work with its clients and customers to encourage sustainable practices and enable sustainable economic activities 2). It should
include information on relevant policies, actions planned/implemented to support clients’ transition, selected indicators on client engagement and, where possible, the impacts achieved.
This should be based on and in line with the impact analysis, target-setting and action plans put in place by the bank (see P2).
With its products and service provision methods, the Banking Group can contribute to the financial welfare of its clients and enable them to make the responsible financial decisions best suited to their
particular life situations. The group’s practices influence the extent to which responsible cash handling options are available or unavailable to customers in different financial and social circumstances.
Financial products and services are often complex, and the information provided by the Banking Group is essential to understanding them.
We are committed to promoting our customers’ financial welfare and we offer them products that are aligned with their real needs and possibilities. We always aim to make sure that our communication
and customer service is fair, clear and straightforward. Our objectives are also presented in our Responsible Marketing Policy and Consumer Protection Compliance Program
https://www.otpgroup.info/static/sw/file/SRMP_Statement_20230630.pdf
https://www.otpgroup.info/static/sw/file/PAI_Statement_20210331__1_.pdf
https://www.otpgroup.info/static/sw/file/OTP_Partneri_EtikaiKodex_EN.pdf
@Responsible Marketing Policy
@Consumer Protection Compliance Program
3.2 Business opportunities
Describe what strategic business opportunities in relation to the increase of positive and the reduction of negative impacts your bank has identified and/or how you have worked on these in the reporting
period. Provide information on existing products and services , information on sustainable products developed in terms of value (USD or local currency) and/or as a % of your portfolio, and which SDGs or
impact areas you are striving to make a positive impact on (e.g. green mortgages – climate, social bonds – financial inclusion, etc.).
OTP Group aims to service all customer segments. All our products and services are designed to comply with the principles of ethical business conduct and legal requirements. Environmental
considerations are becoming an increasingly important factor in economic and investment decisions, helping to achieve sustainable growth. OTP Group intensively supports the financing of renewable
energy projects, including solar park, windfarm, hydropower and energy efficiency investment projects.
We strive to ensure the availability of state and international preferential funding for both our retail and corporate customers. These funds typically support important social and environmental objectives.
Schemes promoting energy efficiency and the use of renewable energy sources have recently become emphatic in this area.
https://www.otpgroup.info/static/sw/file/Sustainable_Finance_Framework_ENG.pdf
https://www.otpbank.hu/static/portal/sw/file/Green_loan_framework_ENG.pdf
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Principle 4: Stakeholders
OTHER INFORMATIONS
We will proactively and responsibly consult, engage and partner with relevant stakeholders to achieve society’s goals.
4.1 Stakeholder identification and consultation
Does your bank have a process to identify and regularly consult, engage, collaborate and partner with stakeholders (or stakeholder groups1) you have identified as relevant in relation to the impact
analysis and target setting process?
☒ Yes
☐ In progress
☐ No
Please describe which stakeholders (or groups/types of stakeholders) you have identified, consulted, engaged, collaborated or partnered with for the purpose of implementing the Principles and improving
your bank’s impacts. This should include a high-level overview of how your bank has identified relevant stakeholders, what issues were addressed/results achieved and how they fed into the action
planning process.
Memberships: Within the PCAF (Partnership for Carbon Accounting Financial) we participate on further developing methodologies and validating the database of emission factors for the CEE region.
Clients: OTP Group regularly performs surveys among the population in our core markets. Some of these specifically address ESG factors and how important they are perceived as being by our clients.
We support some regional events on specific ESG relevant topics
Employees: We inform and engage with employees on ESG topics via online learning platform. We announced an Idea competition to give employees the chance to participate in and actively contribute
to sustainability projects in our offices and beyond.
Management and supervisory board: Our management is engaged in all ESG related strategy decisions and target achievements.
1 Such as regulators, investors, governments, suppliers, customers and clients, academia, civil society institutions, communiti es, representatives of indigenous population and non-profit organizations
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Principle 5: Governance & Culture
OTHER INFORMATIONS
We will implement our commitment to these Principles through effective governance and a culture of responsible banking
5.1 Governance Structure for Implementation of the Principles
Does your bank have a governance system in place that incorporates the PRB?
☒ Yes
Please describe the relevant governance structures, policies and procedures your bank has in place/is planning to put in place to manage significant positive and negative (potential) impacts and support
the effective implementation of the Principles. This includes information about
☐ In progress
☐ No
•
•
•
which committee has responsibility over the sustainability strategy as well as targets approval and monitoring (including information about the highest level of governance the PRB is subjected to),
details about the chair of the committee and the process and frequency for the board having oversight of PRB implementation (including remedial action in the event of targets or milestones not being
achieved or unexpected negative impacts being detected), as well as
remuneration practices linked to sustainability targets.
The fulfilment of our PRB commitment as well as our ESG strategy lies with the
ESG Committee, consisting of Board members and senior managers. ESG Committee meetings are held four times a year.
https://www.otpgroup.info/static/sw/file/OTPGroup_ESG_approach.pdf
5.2 Promoting a culture of responsible banking:
Describe the initiatives and measures of your bank to foster a culture of responsible banking among its employees (e.g., capacity building, e-learning, sustainability trainings for client-facing roles,
inclusion in remuneration structures and performance management and leadership communication, amongst others).
To create awareness for the importance of sustainability in our daily business ESG trainings and events are mandatory for all employees to provide information themselves about ESG strategy and
ongoing initiatives.
The members of the Banking Group have launched numerous programmes, awareness-raising campaigns and involved employees to promote environmental awareness and the protection of natural
values.
OTP Bank has launched the Green Challenge idea contest among its employees to come up with solutions that support the reduction of the bank’s carbon footprint and that can be easily implemented in
everyday practice. To start the competition, we launched a series of articles on six topics on the intranet. We rewarded the employees who answered the quiz questions at the end of each article the
fastest.
Links and references
5.3 Policies and due diligence processes
Does your bank have policies in place that address environmental and social risks within your portfolio?1 Please describe.
Please describe what due diligence processes your bank has installed to identify and manage environmental and social risks associated with your portfolio. This can include aspects such as identification
of significant/salient risks, environmental and social risks mitigation and definition of action plans, monitoring and reporting on risks and any existing grievance mechanism, as well as the governance
structures you have in place to oversee these risks.
Our ESG policies are available at otpgroup.info.
https://www.otpgroup.info/sustainability/policies
1 Applicable examples of types of policies are: exclusion policies for certain sectors/activities; zero-deforestation policies; zero-tolerance policies; gender-related policies; social due diligence policies;
stakeholder engagement policies; whistle-blower policies etc., or any applicable national guidelines related to social risks.
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Self-assessment summary
OTHER INFORMATIONS
Does the CEO or other C-suite officers have regular oversight over the implementation of the Principles through the bank’s governance system?
☒ Yes
☐ No
Does the governance system entail structures to oversee PRB implementation (e.g. incl. impact analysis and target setting, actions to achieve these targets and processes of remedial action in the
event targets/milestones are not achieved or unexpected neg. impacts are detected)?
☒ Yes
☐ No
Does your bank have measures in place to promote a culture of sustainability among employees (as described in 5.2)?
☒ Yes
☐ In progress
☐ No
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Principle 6: Transparency & Accountability
OTHER INFORMATIONS
We will periodically review our individual and collective implementation of these Principles and be transparent about and accountable for our positive and negative impacts and our
contribution to society’s goals.
6.1 Assurance
Has this publicly disclosed information on your PRB commitments been assured by an independent assurer?
☐ Yes
☐ Partially
☒ No
If applicable, please include the link or description of the assurance statement.
6.2 Reporting on other frameworks
Does your bank disclose sustainability information in any of the listed below standards and frameworks?
☒
☒
☒
☐
☒
☐
GRI
SASB
CDP
IFRS Sustainability Disclosure Standards (to be published)
TCFD
Other: ….
6.3 Outlook
What are the next steps your bank will undertake in next 12 month-reporting period (particularly on impact analysis1, target setting2 and governance structure for implementing the PRB)? Please describe
briefly.
In the next 12 months we plan to complete the following steps:
-
-
-
-
decarbonization strategy
decarbonization targets for our portfolio
Financial literacy strategy
Financial health and inclusion indicators in target setting
Links and references
Principle 6: Transparency & Accountability
1 For example outlining plans for increasing the scope by including areas that have not yet been covered, or planned steps in t erms of portfolio composition, context and performance measurement
2 For example outlining plans for baseline measurement, developing targets for (more) impact areas, setting interim targets, developing action plans etc.
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6.4 Challenges
OTHER INFORMATIONS
Here is a short section to find out about challenges your bank is possibly facing regarding the implementation of the Principles for Responsible Banking. Your feedback will be helpful to contextualise the
collective progress of PRB signatory banks.
What challenges have you prioritized to address when implementing the Principles for Responsible Banking? Please choose what you consider the top three challenges your bank has prioritized to
address in the last 12 months (optional question).
If desired, you can elaborate on challenges and how you are tackling these:
☐ Embedding PRB oversight into governance
☒ Customer engagement
☐ Gaining or maintaining momentum in the bank
☐ Stakeholder engagement
☐ Getting started: where to start and what to focus on in the beginning
☒ Data availability
☐ Conducting an impact analysis
☒ Data quality
☐ Assessing negative environmental and social impacts
☐ Access to resources
☒ Choosing the right performance measurement methodology/ies
☐ Setting targets
☐ Other: …
☒ Reporting
☐ Assurance
☐ Prioritizing actions internally
If desired, you can elaborate on challenges and how you are tackling these:
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INDEPENDENT ACCOUNTANT’S ASSURANCE REPORT ON SUSTAINABILITY REPORTING
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INDEPENDENT ACCOUNTANT’S ASSURANCE REPORT ON SUSTAINABILITY REPORTING
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INDEPENDENT ACCOUNTANT’S ASSURANCE REPORT ON SUSTAINABILITY REPORTING
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OTP BANK
INDEPENDENT ACCOUNTANT’S ASSURANCE REPORT ON SUSTAINABILITY REPORTING
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