Funding strategy

Background

Traditionally, within OTP Group’s funding sources the customer deposit base has a significant role, primarily due to the strong positions reached by the Group on the Hungarian and Bulgarian deposit markets.

Due to the global economic and financial crisis the importance of stable liquidity significantly increased, therefore OTP Group put much emphasis maintaining its strong customer deposit base. FX-adjusted performing loan portfolio increased by 23% in 3Q 2017 y-o-y, while deposit base increased by 21%.

Due to joint effect of these factors the net loan/(deposit+retail bond) ratio of the Group changed to 69.2%, it is 1.6 pps FX-adjusted increase on the yearly base. On the domestic capital market the Bank continued the issuance of retail bonds. The capital position of the Group is stable with CET1 ratio standing at 13.7% at the end of 3Q 2017.


Funding Sources

In 3Q 2017 y-o-y all major performing loan segments expanded, the OTP Group applies wide range of money market and capital market sources to cover the funding need of its domestic and foreign customer loans. The Group is active primarily on the local capital markets through OTP Bank and OTP Mortgage Bank by issuing several instruments with varying maturity, denomination and structure.

Between September 2006 and May 2008 the bank accomplished several capital market transactions, by issuing both senior and lower Tier2, as well as upper Tier2 securities. To meet the capital needs of its foreign acquisitions OTP Bank strengthened its capital base through the issuance of upper and lower Tier2 capital bonds, without the need of issuing new shares, thus diluting the position of prevailing shareholders.

In October 2006 OTP sold 14.5 million shares to a special purpose vehicle, Opus Securities S.A., which issued exchangeable bonds (Income Certificates Exchangeable for Shares) in the amount of EUR 514 million.

The Bank is present on the domestic bond market with a regular retail bond auction, thus providing the retail depositors a successful alternative investment form.

Beyond the capital market instruments from time to time OTP Bank uses syndicated and bilateral loans to diversify its funding structure.


Main components of balance sheet in HUF million

 3Q 20173Q 2016
Liabilities to credit institutions and governments498775
Customer deposits9 6567 994
Issued securities252213
Other liabilities585436
Subordinated bonds and loans7783
Total shareholders' equity1 5751 372
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY12 64210 872

Funding structure

Last update: 10/11/2017

 

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