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 24% in 2Q 2019 y-o-y, while deposit base increased by 17%.

Due to joint effect of these factors the net loan/(deposit+retail bond) ratio of the Group changed to 74.7%, it is 3.4 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 including the unaudited interim profit and deducting the annual dividend amount calculated based on prevailing regulation, standing at 15.9% at the end of 2Q 2019.


Funding Sources

In 2Q 2019 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.

In July 2019 OTP Bank successfully returned to the international debt capital markets with a EUR 500 million Tier2 issuance. This was the first subordinated Tier 2 issuance since 2006, with the aim of optimising the capital structure of the bank. The issued instrument is a CRR/CRD IV compliant and MREL eligible liability.

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

 2Q 20192Q 2018
Liabilities to credit institutions and governments522600
Customer deposits12 68710 858
Issued securities385305
Other liabilities790659
Subordinated bonds and loans8284
Total shareholders' equity1 9931 707
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY16 45814 213

Funding structure

Last update: 09/08/2019

 

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