BUDAPEST, March 7 (Reuters) - Hungary's largest bank, OTP Bank, increased its business with Russia last year, contributing to a rise in profits while other European banks faced pressure to reduce their connections with Moscow.
OTP Bank reported a nearly 10% increase in net profit to over 1.0 trillion forints ($2.9 billion) in 2024, fueled by a more than 40% boost in profits from its Russian unit to 137 billion forints ($372 million).
The bank saw a significant growth in retail customer loans in Russia, up by over 80% to 1.053 trillion forints, alongside a more than 70% increase in total customer deposits, primarily from corporate clients, reaching 1.882 trillion forints.
In its primary Hungarian operations, OTP's net profit, excluding exceptional items, climbed by approximately 16% to 270 billion forints in 2024.
The notable expansion of OTP's Russian business, part of the bank's transformation from its former state savings bank role to Hungary's leading independent lender, reflects the robust economic relationships between the two countries.
Despite the conflict in Ukraine, Hungary maintains strong ties with Russia, relying heavily on Russian natural gas and oil imports, while the government led by Prime Minister Orban maintains close relations with Moscow.
Unlike some European banks urged by the European Central Bank to scale back their Russian operations, OTP remains unaffected by such directives.
While US sanctions had initially pressured European banks to reduce dealings with Russia, the current trend under President Biden signals a shift in policy, easing such pressures.
OTP's Deputy CEO Laszlo Bencsik highlighted a growing trend in deposits from European companies active in Russia switching their funds to OTP amid increasing sanctions on Russian banks, thus boosting the bank's profitability.
Bencsik reassured that OTP adheres to Western sanctions, halting corporate lending, avoiding dollar transactions, and taking precautions with euro payments in accordance with prudent risk management.
Opting for a strategy aligned with international regulations, OTP has managed to extract dividends amounting to 42 billion roubles ($471 million) from its Russian operations since 2022.
($1 = 367.6600 forints)
($1 = 89.2000 roubles)