Hungary's leading lender, OTP Bank, is eyeing new acquisitions in the Central and Eastern European (CEE) region as well as Central Asia, fueled by its robust financial performance and record earnings, as per an announcement by CEO Sandor Csanyi in an interview with Bloomberg.
This expansion strategy follows OTP's first foray outside of Europe earlier in 2023, with the acquisition of Uzbek Ipoteka Bank. Csanyi confirmed the bank's intention to pursue further acquisitions in the region, signaling a strategic move to enhance its presence. The 70-year-old bank leader expressed optimism, stating that this recent acquisition is just the beginning of OTP's broader expansion plans.
Csanyi disclosed that OTP is actively exploring potential targets in countries such as Azerbaijan, Georgia, and Kazakhstan. The bank aims to capitalize on its financial strength to reinforce its market position and diversify its portfolio in these emerging markets.
While the bank is considering increasing its market share in Ukraine, Csanyi ruled out entering the Polish market until the resolution of the long-standing foreign currency loan dispute, citing it as a significant risk for banks.
Since 2016, OTP has successfully acquired 11 banks in the CEE region and the Balkans, contributing to a substantial increase in its assets, surpassing €100bn, and establishing itself as a major player in the European banking landscape.
In addition to its acquisition strategy, OTP is contemplating a potential increase in dividend payouts. Bloomberg estimates suggest that the bank could raise its dividend payout from $240mn in 2023 to $290mn, reflecting the institution's confidence in its financial performance.
For the period of January to September 2023, OTP reported a net profit of HUF 779bn (approximately €2.0bn), marking a remarkable 77% y/y increase in the third quarter. Foreign units played a significant role, accounting for two-thirds of the net profit, representing a 24% point increase from the previous year.
Despite a slight dip in OTP shares on December 11 to HUF 14,750 on the Budapest Stock Exchange (BSE), the company is trading at a two-year high. Analysts remain optimistic about OTP's future, with major banks revising their projections upward due to the bank's strong earnings potential. Societe Generale has raised its 12-month target from HUF 13,000 to HUF 18,250, while HSBC holds the highest target price among analysts at HUF 23,150. Year-to-date, OTP shares have witnessed a substantial 48% increase, underscoring the market's positive response to the bank's strategic initiatives and financial performance.
About OTP Bank
OTP Group stands out as one of the rapidly advancing banking conglomerates in Central and Eastern Europe, demonstrating a unique understanding of the region coupled with an enduring dedication to its growth.
The precursor to OTP Bank, known as the National Savings Bank (OTP Bank), was founded in 1949 as a nationwide, state-owned banking institution specializing in retail deposits and loans. Over the subsequent years, its operations and jurisdiction gradually expanded. Initially, it gained authorization to engage in real estate transactions, followed by an extension of its role to encompass domestic foreign currency accounts and foreign exchange services. Subsequently, the bank diversified its services to include banking offerings for Hungarian municipalities.
Following the completion of its privatization process, OTP Bank initiated an international expansion strategy targeting countries within the Central and Eastern European (CEE) region, characterized by significant economic growth potentials akin to Hungary. Through successful acquisitions in recent years, OTP Bank has emerged as a pivotal player in the region.
Presently, OTP Group has a presence in various countries through its subsidiaries, including Albania, Bulgaria, Croatia, Romania, Serbia, Ukraine, Russia, Moldova, Montenegro, Slovenia, and Uzbekistan.
Earlier, Daryo reported that a Hungarian investor has successfully acquired a 75% stake in Ipoteka Bank, emerging as its sole owner, with plans underway to secure the remaining 25% within the next three years. This strategic move positions OTP Bank as the first Western bank to engage in the privatization of Uzbekistan's banking sector, catapulting it to the status of the country's fifth-largest financial services organization. OTP Group embarks on its operational journey in Uzbekistan, marking a pioneering entry into the Central Asian region.
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