OTP Bank

A universal credit institution that provides a wide range of banking services and products for corporate clients and individuals. OTP Bank is one of the 50 largest banks in Russia, and in a number of areas of retail lending it is a leader.

OTP Bank (Russia) is a member of OTP Group, which is one of the leaders in the financial services market in Central and Eastern Europe. Its core is OTP Bank plc - Hungary's largest bank, established in 1949 as a state savings bank and reorganized into a public limited company in 1990.

Aktivs

OTP Bank is a retail bank that works with customers through a network of its branches. As of March 2016, its network includes:

• 27.9 thousand points of consumer lending,
• 108 credit and cash offices,
• 134 client service points,
• 212 ATM and
• 275 self-service terminals.

Performance indicators

2023: 150-fold profit growth to RUB 21.4 billion

The Russian OTP Bank (part of the international financial OTR Group) on March 1, 2024 published its financial statements for 2023.^[1] According to the document, the bank's profit for the reporting period amounted to 21.4 billion rubles (or 21,357,025 thousand rubles). In 2022, this indicator amounted to only 132,877 thousand rubles (and after adjustments^[2] turned out to be completely negative - -178.6 million rubles).

Commission revenues increased from 8.6 billion rubles in 2022 to 13.2 billion rubles in 2023. Profit from continuing operations increased from 110.8 million rubles in 2022 to 21.3 billion rubles in 2023 (or 21,324,686 thousand rubles).

Net interest income (negative interest margin) amounted to 23.8 billion rubles in 2023 (against 14.8 billion rubles a year earlier), including 18.7 billion rubles after creating a provision for possible losses (7.9 billion rubles a year earlier).

Net loan debt, measured at amortised cost, reached RUB 288.3 billion in the reporting period (compared to RUB 134.7 billion a year earlier). The volume of OTP Bank's assets amounted to 354.6 billion rubles at the end of 2023 against 173.6 billion rubles at the end of 2022, thus increasing by more than 2 times. Fixed assets reached 40.7 billion rubles (against 33.2 billion in 2022).

The volume of customer funds (estimated at amortized cost) as of December 31, 2023 amounted to 300.9 billion rubles (against 125.97 billion rubles as of December 31, 2022), and the volume of deposits of individuals, including individual entrepreneurs - 76.95 billion rubles (against 55.4 billion a year earlier).

In 2023, OTP Bank paid shareholders about 13.5 billion rubles of dividends (or 13,461,797 thousand rubles).

History

2023

TAdviser interview with CDO and Data Management Director Nicolae Shevtsov

Nikolay Shevtsov, CDO and Data Management Director of OTP Bank, answered TAdviser's questions about the organization of the CDO office in a large bank, the peculiarities of building a new data warehouse and introducing innovations, about compliance with the requests of business divisions. Read more here.

OTP Bank has stopped accepting incoming euro transfers from countries outside the EU

The Russian OTP Bank, a subsidiary of the Hungarian OTP Group, has stopped accepting incoming transfers in euros and rubles from non-European Union countries since mid-November 2023, a credit institution support operator told Frank Media. According to him, the stop is due to restrictions on the part of the correspondent bank.

"Due to restrictions on the side of the correspondent bank (OTP Bank), it is currently impossible to receive incoming payments in euros and rubles sent from non-EU countries and passing through the specified correspondent bank," said an employee of OTP Bank. He also noted that the credit institution stopped accepting such transfers from November 17. There are no such restrictions on outgoing transfers, the operationist noted.

According to the credit institution, its only correspondent bank in the euro is the Hungarian OTP Bank.

Demand from the structures of Russian Coal to reimburse 1 billion rubles

OTP Bank filed a lawsuit with the Moscow Arbitration Court against the structures of Russian Coal. The amount of claims is 1.013 billion rubles. This became known on October 13, 2023.

The lawsuit, filed on October 11, has not yet been accepted for production, follows from the court's file cabinet. The grounds for it were not disclosed.

The defendants in the case are LLC Razrezd Kirbinskaya (it works out the reserves of the Beisky coal deposit in Khakassia), LLC Razrezd Sayano-Partizansky (it mines coal at the deposit of the same name in the Krasnoyarsk Territory) and JSC Krasnoyarsk Kraiugol (it works in the brown coal sections Pereyaslovsky and Abansky). All these companies are part of Russian Coal JSC, which in the case is being held as a third party^[3]

Decision to pay more than 10 billion rubles in dividends for the first half of the year

The Russian OTP Bank decided to pay dividends for the first half of 2023. This follows from the materials of the bank published on October 3, 2023 on the website of the corporate information disclosure center.^[4]

Shareholders decided to pay dividends due to the profit of previous years - in the amount of 10.6 billion rubles (at the rate of 3.8 kopecks per share). For comparison, the net profit of OTP Bank in the first half of 2023 amounted to 11.8 billion rubles, follows from the OTP Group report.^[5] The share of Russian assets at the end of the second quarter of 2023 amounted to 3.1% of the group's total assets. According to the data presented on the OTP Bank website, it is owned by OTP Bank Plc. 66.2% of the Russian subsidiary is located, 31.7% is owned by the Russian Alliance Reserve LLC, which, in turn, is 100% owned by a Hungarian bank.

"This payment reflects 17 years of effective activities of the bank, which by now has led to the formation of significant financial surpluses," commented to Kommersant on the decision at the headquarters of the parent Hungarian OTP group.[6]

Until now, the daughters of foreign banks could not withdraw dividends from Russia without fulfilling the mandatory conditions. In August 2023, the Ministry of Finance and the Central Bank relaxed restrictions in return for fulfilling a number of conditions: the amount of payments should not exceed investments made in Russia; the company paying them must invest in the Russian economy starting April 1, 2023.^[7]

2022

Loss - about 179 million rubles

On March 9, 2023, information appeared that OTP Bank was the first major retail bank to publish its financial statements for 2022, revealing it according to the updated rules of the Central Bank of the Russian Federation of December 29, 2022.

At the end of 2022, the bank's loss amounted to 178.6 million rubles against 2.6 billion rubles in profit in 2021. At the same time, capital adequacy standards increased significantly: over the year, the N1.0 standard increased by 6.1 percentage points. - up to 17.87%, being higher than the average for the sector (12.7%).

Capital adequacy standards could significantly increase in the spring of 2022, when the regulator canceled premiums to risk ratios for unsecured consumer loans issued from March 1, 2022, banking expert Alexei Nechaev told Kommersant. According to him, this, in particular, is evidenced by a 30% reduction in the value of the bank's assets, weighted by the level of risk, which occurred against the background of an increase in net loan debt and weak capital dynamics.

However, the capital adequacy ratios of retail banks may decrease with the introduction of macroprudential limits (MPL) for consumer loans, said Anastasia Terekhina, partner of the audit and consulting company FBK.

The Bank did not disclose several indicators, including the financial result of operations with foreign currency and derivatives (PFI). As Anastasia Terekhina explained, its closure "protects the bank from any sanctions," since PFIs are usually expressed in foreign currencies, which can significantly affect the bank's financial result.

In the third quarter of 2022, the bank was able to return to positive results. Then he received a net profit of 37.6 billion Hungarian forints (5 billion rubles at the exchange rate of the Central Bank of the Russian Federation as of September 30, 2022). Thus, its profit after tax for the nine months of last year amounted to 23.7 billion forints after a loss in the first quarter and did not cover its profit in the second.^[8]

As Kommersant drew attention to the balance sheet, the report on financial results, the level of capital adequacy and changes in capital, information on mandatory standards fit into 15 pages, despite the fact that earlier reports occupied 40-60 pages or even exceeded a hundred.^[9]

Stop US dollar transfers

From November 23, 2022, OTP Bank stopped foreign currency transfers in US dollars due to problems with foreign correspondent banks.

Fine from the Sverdlovsk OFAS for mailing 10 thousand SMS with inappropriate advertising

Sverdlovsk OFAS fined OTP Bank for sending 10 thousand. SMS with inappropriate advertising. The amount of the fine amounted to 600,000 rubles, the Sverdlovsk OFAS said in a statement on October 27, 2022.

As specified in the department, two violations were revealed in one SMS message at once. First, it was distributed without the consent of the subscriber. Secondly, it did not contain all the necessary conditions affecting the cost of the loan.

In its defense, OTP Bank explained that the message was not advertising, but contained personal conditions for a particular person. But the agency found that messages with similar content were sent to 10,000 numbers. And such a newsletter is definitely not individual in nature.

OTP Bank also said that in 2019 it received an application for a loan from a subscriber, which was regarded by him as consent to receive advertising. The loan application does contain a section requesting such consent in the format: I give/do not give consent to the Banks to receive messages (including advertising) about the Bank's services. Meanwhile, the applicant did not note any of the options. Thus, the citizen's will to receive advertising is absent.

The absence of some significant information in it can also deceive the consumer's expectations from advertising. In the message reviewed, the Bank did not specify the interest rate, payments and commissions on credit operations and other conditions affecting the actual cost of the loan and the borrower's expenses. Although this is directly provided for by the Law on Consumer Credit (Loan). During the consideration of the administrative case, OTP Bank excluded a citizen from the advertising mailing list.

The Arbitration Court of the city of Moscow recognized the imposed fine as legal and justified in full (A40-68051/2022)^[10].

Ukrainian government demands OTP Bank to sell business in Russia

As it became known on April 27, 2022, the Government of Ukraine is putting pressure on the Hungarian OTP Bank to sell its Russian division. According to Reuters on Wednesday, this was stated by the CEO of the bank Sandor Chani in an interview with the Hungarian radio station InfoRadio.

According to the agency, the bank also has a division in Ukraine.

"We are under tremendous pressure because of Russia, [we are required to] sell our bank there or stop operating [in the Russian Federation], as many Western companies have done," Chani said. "In this regard, we are regularly warned mainly by the Ukrainian government, leaders and officials of various levels."

At the same time, he noted that in Hungary the company did not face such pressure.

As the head of the company pointed out, it would be "extremely difficult" for the bank to leave the Russian Federation, but he would "seriously consider" this option if he received a good offer - Chani estimates the cost of the division in the Russian Federation at about 500 million euros.

According to Reuters, in 2021, the Ukrainian and Russian divisions of the bank accounted for 15.8% of OTP Bank's profits.

Consideration of the possibility of leaving the Russian market due to the conflict in Ukraine

On March 18, 2022, it became known that the Hungarian OTP Bank, which owns 97.9% of OTP Bank, announced that it was considering leaving the Russian market. The parent bank clarified that it currently does not provide financing to the Russian division. As follows from the published statement, the group is reducing the portfolio of corporate loans in Russia and does not invest in Russian government securities.

At this time, OTP-Bank is in the top 50 in terms of assets (148.5 billion rubles) and is mainly engaged in servicing retail clients. The corporate loan portfolio under IFRS as of mid-2021 amounted to 23.5 billion rubles, less than 22% of the total loan portfolio. According to the analytical company Frank RG, at the beginning of December 2021, in terms of retail loans, it ranked 26th (94.2 billion rubles).

Meanwhile, "there is a risk of liquidity shortage for the Russian division, which may require additional funding," TASS quoted OTP Bank executive director Sandor Chani as saying to Reuters. Such a scenario is not desirable for OTP Bank. However, in OTP-Bank "Kommersant" replied that they do not experience difficulties with ruble and foreign exchange liquidity, and funding mainly occurs at the expense of local sources. According to the reporting, the bank mainly funds operations at the expense of individuals - at the middle of the year they accounted for 54.8 billion rubles, or 63% of the total amount of customer funds. In addition, according to the bank's IFRS statements for mid-2021, it acted as a net creditor to the parent company for 11.6 billion rubles. At the same time, the bank noted that its needs "in medium-term liquidity can be met" including by "reducing the terms of interbank loans placed with the parent bank for a period of one to five years" in the amount of 11.3 billion rubles. According to OTP Group reporting for 2021, the net profit of the Russian bank amounted to 37.6 billion forints, or 7.6% of the group's total profit. As the ACRA agency pointed out at the end of January 2022, in the baseline scenario, OTP-Bank has a liquidity reserve of about 16 billion rubles, while the results of the stress scenario indicate a moderate liquidity deficit (about 6%). Therefore, according to a Kommersant source familiar with the situation in the bank, the statement of the parent bank is more "political."

The international agency Fitch Ratings on March 15 reduced the rating of OTP Bank to CC. But from Russian agencies the ratings are higher: A + (ACRA) and ruA from Expert RA. As indicated in OTP-Bank, these ratings allow you to participate in auctions to attract funds from the federal and regional budgets, as well as attract deposits from institutional investors and large companies. "The volume of such resources can reach 20% of the bank's total obligations, but at the moment this instrument is not used due to lack of need," they said.

There are a large number of liquidity instruments in the banking system. "The funds can be provided for various periods - up to 549 days - at rates close to the key rate," the Central Bank notes. In this case, collateral for operations "can be both securities and non-market assets - bank claims on loans provided to non-financial organizations." The regulator's operations "are available to the vast majority of banks, and the composition of the collateral for them is quite wide, so that market participants can attract funds from the Bank of Russia in a significant amount."

"The bank has one of the best liquidity positions in the market, and our capital adequacy indicator significantly exceeds regulatory requirements. All this gives us the opportunity to quickly and effectively adapt to any macroeconomic scenarios and ensure the uninterrupted and efficient operation of our work in various conditions, including without external support"- said the press service of the Russian bank, stressing that the credit institution"fully continues to work, focusing on the constant priority - protecting the funds and interests of customers, while ensuring the highest level of service. "

Reuters previously informed that OTP Bank plans to maintain its business in Russia and Ukraine, which accounted for 15.8% of the bank's consolidated net profit in 2021.^[11].

According to Chani, in early March, deposits of bank customers grew by 4% in Ukraine and by 11% in Russia. According to the executive director, this is a reflection of the trust in the credit institution in both countries.

2021: Profit of 2.8 billion rubles and refusal to pay dividends

OTP Bank, controlled by the Hungarian OTR Group, refused to pay dividends for 2021. Retained, by decision of shareholders, will remain profit in the amount of 2.8 billion rubles. The bank has fulfilled the recommendation of the Russian Central Bank to postpone payments. This became known on April 6, 2022.

Experts note that the transfer of money to Hungary for April 2022 is technically difficult, and OTP Bank itself in Russia may need funds to cover losses.

The meeting of shareholders of the bank on April 4 decided not to distribute net profit for 2021 in the amount of 2.83 billion rubles, according to a statement on the corporate information disclosure website. The representative of OTP Bank clarified that the refusal to pay dividends for 2020 was made on the recommendation of the Central Bank. On February 25, the regulator recommended that banking market participants postpone the payment of dividends and bonuses to management.

OTP Bank Executive Director Sandor Chani previously noted that the group plans to maintain business in Russia and Ukraine in the long term and would not want to cause losses to investors by leaving the country. In mid-March 2022, the parent structure stopped financing the Russian OTP Bank. It ranks 42nd in Russia in terms of assets (172.4 billion rubles as of February 1, 2022) and 32nd in terms of capital (33.9 billion rubles).

Deputy Director of the Financial Institutions Ratings Group of the NKR Agency Yegor Lopatin linked the refusal of OTP Bank to pay dividends with the desire to increase the buffer to cover possible losses due to "changing operating environment conditions." If the bank does not distribute remuneration to shareholders, then the money can be included in the capital, at the expense of which the reserves of the credit institution are formed. According to the expert, the decision not to pay dividends for 2021 can be made not only by banks with foreign participation, and the^[12] Russian^[13] players^[14].

2020

Net profit - 3.8 billion rubles

On March 16, 2021, OTP Bank shared the results of 2020 with TAdviser. In accordance with the consolidated financial statements under IFRS, the net profit of the OTP Group in Russia for the 12 months of 2020 amounted to 3.8 billion rubles. OTP Group's assets amounted to RUB 174 billion.

The main areas of activity Bank showed positive dynamics. In the second half of the year, there was a constant increase in volume. crediting Business POS loans fully returned to the level of 2019 - the issuance of new loans in the IV quarter corresponded to the same indicators of 2019. At the end of 2020, one of the drivers of the Bank's growth was the direction of car loans - the loan portfolio grew by 128% compared to 2019.

The total loan portfolio of the bank - 151 billion rubles, including the retail loan portfolio amounted to 132 billion rubles, the volume of corporate loans - 19 billion rubles;

The risk cost indicator improved by 0.4 percentage points compared to the 2019 indicator;

The indicator of coverage with reserves of the overdue loan portfolio reached 163%, which is 4 pp higher than in the IV quarter of 2019;

The Bank has a sufficient capital reserve for sustainable development, for example, the N1.0 capital adequacy ratio for 12 months amounted to 14.1%, which is 0.4 pp higher than in December 2019, and 6.1 pp higher than the minimum permissible value.

Reduction of the bank's staff by 15% in 6 months to 11.3 thousand people

As of July 1, 2020, 11,366 people worked at OTP Bank, according to the issuer's quarterly report for the 2nd quarter. Compared to the 1st quarter, the number of personnel decreased by 1.5 thousand people, or 12%.

The main reductions fell on the crisis 2nd quarter: in the 1st quarter, just over 300 employees left the bank. Since the beginning of the year, the OTP staff has decreased by 15%.

OTP Bank is one of the leaders in the POS lending market, holding a 13% share in it. The period of self-isolation during the COVID-19 pandemic and the closure of retail outlets negatively affected the dynamics of its portfolio. According to Frank RG, the OTP POS loan portfolio has decreased by almost 20% since April and amounted to 28.5 billion rubles in June.

Fitch Ratings changes outlook on OTP Bank's ratings from "stable" to "negative"

On April 24, 2020, the rating agency Fitch Ratings changed the forecast for OTP Bank ratings from "stable" to "negative." At the same time, the agency confirmed the bank's long-term issuer default ratings at "BB +" and the stability rating "bb-."

"The revision of the forecast for the IDR of OTP Bank from" stable "to" negative "reflects our opinion that the outbreak of coronavirus will cause negative pressure on the ability of the bank's parent structure, Hungarian OTP Bank PLC, to provide support to a Russian subsidiary bank," the agency's release explains.

As specified, the IDR and the Bank's OTP support rating reflect a moderate probability of support from the parent structure due to majority ownership (98%), high level of integration, general brand and reputational damage in the event of a subsidiary default.

According to analysts, the creditworthiness of OTP Bank on an independent basis, which is reflected in its sustainability rating, may also be affected as a result of the pandemic and its consequences for the Russian economy and financial markets.

Fitch also points out that the Bank's OTP sustainability rating has not been lowered, since the bank is entering an economic downturn with an acceptable capital reserve and comfortable liquidity, and its unreserved problem loans are limited. According to Fitch, the Bank's OTP sustainability rating can withstand a short-term sharp contraction of the economy in the second quarter of 2020, provided that then the situation stabilizes in the second half of 2020. At the same time, a longer period of reduced economic activity is more likely to lead to a downgrade in the bank's stability rating, analysts warn.

2019: Customers' personal data made public

On June 9, 2019, it became known about the leakage of data from 900 thousand customers of Russian banks. Passport data, phone numbers, places of residence and work of citizens of the Russian Federation were in the public domain.

As Kommersant writes with reference to the DeviceLock service, customers of Alfa Bank, OTP Bank and HCF Bank, as well as about 500 employees of the Ministry of Internal Affairs and 40 people from the FSB, were injured. Read more here.

2018

Net profit - 3.8 billion rubles

Net profit of OTP Group in Russia in 2018 amounted to 6.6 billion rubles. This result was cleared of losses of the Touch Bank project in the amount of 1 billion rubles and additional reserves created in the amount of 1.8 billion rubles formed under IFRS 9 in connection with the revision of the macroeconomic forecast for 2019-2021. Taking into account the new standards of reservation and the results of Touch Bank, the net profit of the OTP Group in the Russian Federation amounted to 3.8 billion rubles.

The main financial indicators of OTP Group's Russian business compared to 2017:

• net commission income increased by 23% in ruble terms and amounted to 6.3 billion rubles;
• the total loan portfolio of the bank reached 149 billion rubles, year-on-year growth amounted to 27%;
• the volume of retail loans amounted to 132 billion rubles, an increase of 27% over the year;
• the volume of corporate loans increased by 31% to 16.2 billion rubles;
• working loan portfolio in ruble terms increased by 30% and amounted to 129 billion rubles;
• retail deposit portfolio (including small business) grew by 15% to 74.4 billion rubles;
• corporate deposit portfolio grew to RUB 19.3 billion, an increase of 21%;
• the share of loans overdue by more than 90 days decreased from 15.8% to 13.4%;
• As of 01.01.2019, the capital adequacy ratio (N 1.0 of the Bank of Russia) was 15.0%.

Ilya Chizhevsky, President of OTP Bank:

"In 2018, we retained and strengthened our position in many areas of business. At the same time, we formed reserves that more than one and a half times cover the volume of the loan portfolio with a delay of more than 90 days - for example, coverage in 2018 increased from 133.9% to 156%. Thanks to the new IFRS 9 reserve method, a significant amount of provisions for possible losses in the event of potential crisis events has been formed. In the POS lending segment, we grew at a pace that outperformed the market. This became possible, among other things, due to the significant expansion of our partner network and the development of online lending. The cash loan portfolio also saw strong growth of 46%. In the corporate business, the bank has become a prominent market player. So, in 2018, for the first time in history, we took part in syndicated lending together with a number of foreign banks. "

On July 2, 2018, the rating agency RAEX (Expert RA) revised the credit rating of OTP Bank and assigned a rating of ruA, the forecast is stable. On October 22, 2018, the international rating agency Fitch Ratings upgraded the stability rating of OTP Bank from b + to bb-. Long-term issuer default ratings (IDRs) were confirmed at "BB," the outlook is stable.

Inclusion in the list of authorized banks

In March 2018, OTP Bank was included by the Russian Export Center in the list of authorized banks entitled to receive compensation payments from the federal budget for the purpose of subsidizing interest rates on export loans provided by the bank.

Inclusion in the list of authorized banks with the subsequent signing of the agreement will allow OTP Bank to provide financing to Russian exporters, their foreign buyers or banks of foreign buyers on favorable terms. Through subsidies, the interest rate on the loan can be reduced by several percentage points.

Accreditation to the REC is one of the stages of our bank's strategy to include business subsidies in state programs, participation in which will make our credit products more competitive and in demand, - commented on the event Yuri Galkin, Director of the Corporate Business Directorate of OTP Bank.

2017

Profit excluding losses Touch Bank 5.9 billion rubles

In accordance with the consolidated financial statements under IFRS published by the OTP Group, the Group's profit in Russia (excluding the Touch Bank online project) in 2017 amounted to 5.9 billion rubles, which is 22% more than in 2017. This result is historically the best in all the years of OTP Group's presence in Russia.

The main financial indicators of OTP Group's Russian business in 2017 showed strong growth compared to the same period in 2016:

• net commission income increased by 47% in ruble terms and amounted to 4.9 billion rubles;
• the volume of corporate loans increased by 54% to 12.4 billion rubles;
• the working loan portfolio in ruble terms increased by 20% and amounted to 98 billion rubles;
• the portfolio of deposits grew by 9% to 78.7 billion rubles;
• the share of loans overdue by more than 90 days decreased from 20% to 16%;
• the risk cost ratio decreased from 8.2% to 7.3%;
• return on assets (ROA) increased by 0.6 pp to 4.6%;
• return on equity (ROE) increased by 0.8 pp to 21%;
• cost-to-income ratio was 42.5%;
• As of 01.01.2018, the capital adequacy ratio (N 1.0 of the Bank of Russia) was 15.9%.

• In 2017, the bank formed reserves at the level of the upper range of acceptable values ​ ​ in accordance with IAS 39. In 2018, we also plan to take a conservative approach in the formation of reserves.
• The corporate loan portfolio increased by more than 50%, exceeding the market average by 8 times. The funds of small businesses placed in current accounts increased by 21%, which had a significant impact on the decrease in the cost of funding.
• Since the beginning of 2016, OTP Bank has increased the volume of portfolios (loans, factoring, guarantees and letters of credit) by more than 50%. Thus, the growth of the corporate loan portfolio for the year (from December 2016 to December 2017) amounted to 56%. The growth of the factoring portfolio for the same period amounted to 71%. The bank offers its corporate clients a line of products and services: credit limits, factoring, trade financing, overdrafts, letters of credit, cash management products.

Expansion of the Management Board

In November 2017, OTP Bank announced that in accordance with the decision of the Board of Directors, Muslim Satybaldiev, Igor Belomyttsev and Kirill Dremach were included and appointed to the Management Board. Earlier, their candidacies were agreed by the Central Bank of the Russian Federation. Read more about this in the relevant articles:

• Muslim Satybaldiev
• Igor Belomyttsev
• Kirill Dremach

2016

Net profit without loss Touch Bank 4.8 billion rubles

Net profit of the OTP group in Russia (excluding the Touch Bank online project) in 2016 amounted to 4.8 billion rubles. These are the Group's IFRS consolidated financial statements .

"The main factors that influenced the growth of the bank's income in 2016 were a 54% reduction in ruble terms in the volume of reserves created in 2016 compared to 2015, and a decrease in the cost of funding," the release said.

Operating profit of the OTP group increased by 5%, to 14.6 billion rubles, net interest income increased by 3%, to 21.7 billion rubles; and net commission income - by 7%, up to 3.4 billion rubles. Operating expenses decreased by 1% over the reporting period, to 10.5 billion rubles.

The volume of POS loans in 2016 increased by 27%, and the volume of cash loans - more than doubled.

"Despite a significant reduction in the required reserves, we decided to create an additional buffer in case of market volatility in the future and already in 2016 we formed over 1 billion rubles of reserves for these purposes. In early 2017, the bank summed up its own stress testing. Its results demonstrated that even in the event of a significant recession in the economy, the bank will maintain a sufficient margin of safety, and capital adequacy indicators will be higher than the level established by the Central Bank of the Russian Federation, "commented Ilya Chizhevsky, President of OTP Bank

.

Retail banking slump, corporate business bet

In May 2016, it became known that the fall in retail banking profitability forced OTP-Bank, specializing in consumer lending, to develop a corporate business. The Bank plans to make money on servicing the accounts of legal entities, on the provision of guarantees, letters of credit and factoring.

"In early April, a division of corporate business and treasury operations was created. The goals set for the new division are to grow corporate business in all key areas, expand treasury operations and increase sales of currency hedging instruments, forwards and options, additional products that will help manage the liquidity of companies, "explained Ilya Chizhevsky, President of OTP Bank

.

He refused to disclose specific targets, limiting himself to the general words "significant double-digit percentage growth." However, according to Kommersant's information, it is assumed that by the end of 2017 the share of corporate business in the bank's loan portfolio may double. As of April 1, 2016, corporate loans accounted for 12% of the bank's loan portfolio.

The main business of OTP Bank is concentrated in the consumer lending segment. According to Russian reporting as of April 1, 2016, the volume of bank loans to individuals amounted to 87.3 billion rubles. against 12 billion rubles. loans to legal entities.

"In the portfolio of the OTP group, the share of income from corporate business is more than 30%, OTP Bank in Russia was originally created as a universal credit organization," explains Mr. Chizhevsky. - Another question is that at the time of entering the market, the focus was shifted to retail due to the retail credit boom^[15].

According to him, at this time OTP-Bank has experience, a team, a clear understanding of how to develop corporate business, which segments to pay special attention to - assets, liabilities, commission income and off-balance sheet assets.

Market participants indicate that retail monoliner banks have tried to engage in corporate business before. However, in fact, only Sovcombank has managed to change the business model towards a universal bank. According to the head of Sovcombank Sergey Khotimsky, the bank decided to change the business model in mid-2014, currently the ratio of the corporate portfolio to retail is approximately 60% to 40%. Tinkoff Bank, Renaissance Credit Bank, and HKF Bank previously announced their intention to develop corporate business. Basically, retail players relied on the implementation of salary projects, but in practice they did not succeed.

"Working with large corporate clients, as a rule, is very low-margin - the profitability from such a business is on average 2.7-4% per annum, and this will not recoup the cost of funding for a retail bank," Kommersant's source in the top 100 bank points out. "In theory, OTP-Bank can develop cooperation with companies from the SME segment, the margin in which is at a fairly high level (5-7% per annum), but the competition in this segment is quite high," said Mr. Khotimsky

.

"Now is not the best moment to enter the corporate market, since many companies from the SME sector are in a difficult financial condition due to the crisis, and the largest companies are already served in a limited pool of large banks, mainly in state-owned banks, - concludes Pavel Samiev, managing partner of NAFI. - In such a situation, even if the bank starts working with the corporate segment, it is unlikely that it will affect its earnings in the near future. "

Payment of 700 thousand rubles to an employee on whom the ceiling fell

In April 2016, the Oktyabrsky District Court of Omsk announced the decision on the claim of Omsk Ksenia Kupets against OTP Bank. The lawsuit was decided to be partially satisfied. The bank is obliged to pay her 700 thousand rubles in compensation for moral damage, as well as compensate for legal expenses (30 thousand rubles), the SuperOmsk portal said. In May 2014, in the office of OTP Bank on Karl Marx Avenue, this employee was sitting in the office when the recently mounted suspended ceiling of Armstrong suddenly collapsed on her. The woman had to be taken away by ambulance. The harm caused to her in production was qualified as severe, that is, threatening the life of a person. In the hospital, the victim was diagnosed with injuries to the shoulders, vertebrae, head injury. Ksenia spent a year in the hospital ^[16]].

2015: Loss of RUB 4.2 billion under IFRS

At the end of 2015, the loss of the Russian subsidiary of the Hungarian bank OTP Bank in Russia amounted to 15.1 billion Hungarian forints (3.3 billion rubles when accounting for the average exchange rate for the period of 4.6 forints per ruble), an increase of 4% compared to 2014, follows from the bank's message. In rubles, the bank recorded an increase in loss by 43%^[17].

At the end of October-December 2015, the loss of OTP Bank amounted to 26 million Hungarian forints (6.05 million rubles at an average exchange rate of 4.3 forints per ruble) against a loss of 1.8 billion forints (340.9 million rubles, taking into account the average exchange rate of 5.3 forints per ruble) in the fourth quarter of 2014.

The bank associates the loss of the Russian subsidiary with a drop in operating profit - the indicator showed a weakening by 36% in annual terms when the exchange rate was transferred to forints. At the same time, the bank indicates a decrease in the volume of losses due to risk by 30%. Net interest income recorded a drop of 38% in annual terms against the background of a 26% reduction in the portfolio of working loans.

OTP indicates a 25% weakening of the Russian ruble against the Hungarian forint. The operating profit of OTP-Bank at the end of the reporting period, expressed in rubles, showed a drop of only 16%, while net interest income decreased by 18%, and operating expenses recorded a decrease of 17%. At the end of 2015, the bank reduced the number of branches of the Russian daughter by a third - to 134 branches.

The loss of Touch Bank, which is the online platform of the Russian OTP subsidiary, in 2015 amounted to 4.84 billion Hungarian forints (1.05 billion rubles). According to the results of the IV quarter of 2015, the loss reached 2.06 billion Hungarian forints (478.6 million rubles), having doubled compared to the result of the III quarter of 2015.

The influence of Touch Bank on the aggregate results of the Russian subsidiary OTP Group is growing from quarter to quarter. So, for example, according to the bank, in the third quarter, Touch Bank's share in the total loss with OTP Bank amounted to 46%, in the fourth quarter it would have already amounted to 97.2%. The division of results should improve the relations of external analysts, investors and others to the Russian OTP Bank, experts say.

"A detailed breakdown by financial results banks is generally provided only at the request of the largest rating agencies, many market analysts, including compiling reviews on the financial sector and preparing comments on individual players for their customers, among which there may be potential investors who use open data,- says Denis Taradov, BDO partner in Russia. - By providing a separate breakdown of the financial results of a universal and online bank, the group actually explains the essence of the losses of the Russian subsidiary to the market. "

OTP Bank increased its annual loss under IFRS to almost 4.3 billion rubles, according to the published consolidated statements of the financial institution.

The bank's interest income decreased to 28.215 billion rubles in 2015 from 32.29 billion in 2014, interest expenses increased to 8.677 billion from 6.527 billion. Taking into account the provisions for impairment of assets on which interest is accrued (about 17.826 billion in 2015 against 19.618 billion rubles a year earlier), the bank's net interest income decreased over the past year to about 1.713 billion rubles from 6.145 billion in 2014.

Net non-interest income increased to RUB 5.276 billion in 2015 from RUB 4.671 billion a year earlier.

Operating income decreased to RUB 6.989 billion from RUB 10.817 billion in 2014. Operating expenses decreased less significantly: from 12.909 billion to 12.192 billion rubles.

Later it became known that the annual loss of OTP Bank under IFRS reached almost 4.268 billion rubles against a loss of 1.802 billion in 2014. Total loss (including "other comprehensive income/loss" - items that will not subsequently be reclassified to profit or loss and items that may subsequently be reclassified to profit or loss) amounted to RUB 4.194 billion, compared to approximately RUB 2.348 billion in 2014.

According to the report on the financial position of the bank, its assets for the year decreased from 168.714 billion rubles to 128.332 billion, including the volume of loans provided to customers - from 108.274 billion rubles as of December 31, 2014 to 79.713 billion as of December 31, 2015.

Among other things, the report reports that as of December 31, 2015, the amount of mortgage loans issued by OTP Bank denominated in foreign currency amounted to about 4.375 billion rubles (as of December 31, 2014 - about 4.555 billion). As of December 31, 2015, the amount of provisions for possible losses on these loans was approximately 1.647 billion (a year earlier - about 405.9 million rubles). The amount of foreign currency mortgage loans, overdue for which exceeded 90 days, at the end of 2015 amounted to more than 2.054 billion rubles (a year ago - 1.028 billion). "The bank is further working to restructure and recover distressed debt," the report said.

The volume of client funds in the bank decreased from 92.625 billion rubles in 2014 to 82.761 billion in 2015.

The capital of OTP Bank in accordance with the requirements of the Regulation of the Central Bank of the Russian Federation No. 395-P "On the Methodology for Determining the Amount of Equity (Capital) of Credit Institutions (Basel III)" amounted to 26.011 billion rubles as of December 31, 2015 against almost 31.321 billion as of the same date in 2014. The total capital adequacy ratio rose from 12.1% to 13.3%.

2014

Loss for the year $52.5 million

Net loss of OTP Bank Russia after taxes in 2014 amounted to 14.54 billion forints (52.52 million) dollars against a profit of 2.356 billion forints (8.51 million dollars) for 2013.

"The loss (after taxes) of OTP Bank of Russia in 2014 amounted to 14.5 billion forints due to moderate loan payments and large losses from risks caused by the deterioration of the loan portfolio and operating environment," the bank said in a statement.

Currency mortgage customers strike outside office

On December 2, 2014, borrowers of the Russian OTP Bank, who issued mortgage loans in foreign currency, held a picket at the Hungarian Embassy in Moscow.

Requirements for refinancing debt arose due to the fact that due to the devaluation of the ruble, borrowers who issued a foreign currency mortgage (we are talking about loans in Swiss francs and dollars) were unable to service the debt.

As Roman Kostrikin, one of the organizers of the picket, told the Банки.ру portal, about ten people who are borrowers of OTP Bank came to the action.

"We conveyed the appeal to the Hungarian Ambassador to Russia, Janos Balla. One of the embassy diplomats came out to us and accepted the document for signature, "said Roman Kostrikin

.

According to him, the appeal contains a request to convince the management of OTP Bank in Hungary to provide financial founding assistance to their structure of OAO OTP Bank in the Russian Federation to refinance the foreign currency debt of Russian clients.

"We ask you to refinance foreign currency debts, as was done in Hungary, when, after the 2008 crisis and the fall of the forint, OTP Bank in Hungary transferred foreign currency mortgages to forints at the preferential old rate," said Roman Kostrikin.

Pickets demanding to limit currency risk or transfer the main foreign currency debt to rubles at the ruble exchange rate as of the date of issuance of loans have already been held near the offices of OTP Bank and the building of the Central Bank. By December 3, 2014, borrowers failed to reach any agreements with the management of OTP Bank.

"The last time we spoke with the management of OTP Bank was a few months ago, and no constructive proposals were made to us. The Bank's OTP division in Russia refuses to transfer foreign currency loans at a preferential rate to rubles. As for the Central Bank, in response to our appeal, we received an unsubscribe, "Kostrikin said

.

OTP Bank previously noted that foreign currency borrowers are not ready to consider realistic options for overcoming the current situation. Since 2012, the bank has not issued mortgage loans, the share of mortgage borrowers servicing foreign currency loans in OTP Bank does not exceed 0.1% of the total number of customers.

Loan of 3 billion rubles from the Hungarian OTP Bank

In November 2014, the board of directors of the Russian OTP Bank decided to approve the conclusion of an agreement on the provision of a subordinated loan to the bank in the amount of 3 billion rubles, which will be provided by the parent structure of the bank - Hungarian OTP Bank. The loan term is 10 years.

48th place in terms of assets

According to the results of 9 months of 2014, OTP Bank took 48th place in terms of assets, 35th place in terms of funds of individuals and 13th place in terms of loans to individuals in the Interfax-100 ranking prepared by Interfax-CEA.

OTP Bank provides customer service through its own network, which consists of more than 28 thousand consumer lending points, 106 credit and cash offices (KCO), a branch network, which consists of 163 customer service points, and an ATM network of 216 ATM. In total, OTP Bank is present in more than 3,300 settlements in Russia. More than 1.7 million customers constantly use the bank's services.

OTP Bank is a member of the Deposit Insurance System, a member of the Association of Russian Banks, the European Business Association, the National Association of Stock Market Participants, the National Stock Association, the RTS Stock Exchange and MICEX.

OTP Bank is accredited to participate in the Deposit Insurance Agency competitions and is also included in the list of banks that can secure loans from the Bank of Russia.

2012: Second place in the POS lending market

As of March 1, 2012, OTP Bank's net worth is RUB 20.1 billion . The bank's assets as of the same date amount to more than 110.3 billion rubles, the loan portfolio is about 97 billion rubles, the deposit portfolio is about 61.5 billion rubles.

OTP Bank is one of the 50 largest banks in Russia, and in a number of areas it is one of the market leaders.

In particular, OTP Bank ranks 15th among retail banks and 2nd in the pos-lending market, 4th in the credit card market, 13th in terms of profit in 9 months of 2011.

2010: Net profit RUR 536 mln

As of January 1, 2010, the bank's equity amounted to 11.9 billion rubles of the Russian Federation.

Deposit portfolio - more than 48 billion rubles of the Russian Federation as of January 1, 2010.

On February 5, 2010, the Don People's Bank became a branch of Rostovsky OTP Bank.

The loan portfolio amounted to more than 57.6 billion rubles of the Russian Federation.

OTP Bank issued more than 5 million cards.

2009: 2nd in Russia for POS loans

The net profit of OTP Bank for 2009 under RAS exceeded 536 million rubles of the Russian Federation.

OTP Bank took 2nd place in Russia in terms of POS loans.

POS loans from OTP Bank became available in stores of large retailers - Technosila, Euroset and Eldorado.

The portfolio of deposits of individuals grew during the year by 10 billion rubles of the Russian Federation.

The number of points where pos-loans of OTP Bank are available exceeded 13 thousand.

OTP Bank opened 7 points of various formats, including a branch in Chelyabinsk - the eighth in Russia and the first in the Urals.

2008: Rebranding

Rebranding, following which OTP Bank took 8th place in the loyalty rating of the National Agency for Financial Research (NAFI) and 22nd place in the ranking of bank recognition.

The service "Mobile Banker" has appeared - the sale of banking services through agents.

2007: Hit the top 10 fastest-growing banks

The Bank was included in the 10 most dynamically developing banks according to RBK.Raiting, thanks to the impressive growth dynamics of results for 2003-2007.

2006: OTP Group buys Investsotsbank

In 2006, the bank joined one of the largest banking groups in Europe - the OTP Group. The acquisition of a controlling stake in the bank by OTP Group, which serves more than 12 million customers in 9 countries, was approved by the Central Bank of Russia, the antimonopoly department of the Russian Federation, as well as the Hungarian financial supervision department. Together with the new OTP brand, the Bank gained access to the financial capabilities of the European parent bank, which made it possible to strengthen the development of retail and corporate business in Russia.

The merger of Omskpromstroybank (Omsk) and Promfinservisbank (Novorossiysk), which were transformed into branches of Omsky and Novorossiysk, respectively.

2005: Merger of Investsberbank with the Russian General Bank

The merger of Investsberbank with the Russian General Bank, specializing in working with large corporate clients. As a result of this merger, the bank entered the list of 40 largest Russian credit institutions in terms of assets, the number of branches and branches in Moscow and the regions reached 20, and the client portfolio was significantly diversified.

2004:30 new offices opened

Enhanced development of the bank's branch network. During the year, about 30 new credit and cash offices were opened.

2003: First Consumer Credit Issued

Issuance of the first consumer loan. Among the first credit institutions in Russia, the Bank began to purposefully develop its retail business.

1994: Foundation of Investsberbank

OTP Bank - until February 2008 Investsberbank - was formed in 1994. Obtaining a banking license.

Awards

In 2011, OTP Bank became a laureate in the special nomination "Financial Literacy" from the Directorate of the Annual Award "Consumer Rights and Quality of Service - 2011." The organizers of the Award are the Federal Service for Supervision of Consumer Rights Protection and Human Welfare, the Social Projects and Programs Foundation.

In 2010, OTP Bank won the prestigious national Brand of the Year award for the second time

OTP Bank is the winner of the national awards "Financial Olympus 2008" in the category "Potential and Perspective" and three times the winner of the award "Brand of the Year 2008/EFFIE" for success in building a brand in the field of financial services.

See also

• OTP Bank (Ukraine)

Notes