OTP Bank PLC

The stable outlook reflects our view that, over the next 12-24 months, OTP Bank will withstand further second-round effects from the Russia-Ukraine war given its solid earnings across Central Eastern Europe and the Commonwealth of Independent States, which provide a buffer for inflationary and asset quality deterioration, as well as its solid funding profile. We could downgrade OTP Bank if we took a similar rating action on Hungary, which we currently consider unlikely. If we revise down our stand-alone credit profile (SACP) by one notch this would not translate into lowering our issuer credit ratings (ICRs) on OTP Bank or our issue ratings on its hybrid instruments. We could revise down the SACP if, for example: OTP Bank experiences a

...We expect that OTP Bank PLC (OTP)'s business position will remain a key strength compared to most peers. Despite the recent economic recession in Hungary and high inflation in many of its countries of operations, supported by high interest rates, OTP has maintained its strong profitability over the course of 2023 and into the first months of 2024. Strong pricing power, expertise in operations in developing countries, and high geographical revenue diversification support the business profile--which has further been strengthened by the successful integration of recent acquisitions, in particular Slovenian Nova KBM. While the most recent acquisition of Ipoteka bank in Uzbekistan proved more complex than expected the impact from higher losses in Uzbek operations is so far not material in the overall group...

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