By Anita Komuves and John O’Donnell
BUDAPEST (Reuters) -Hungary’s biggest bank, OTP Bank, boosted its business with Russia last year, helping to bolster its profits, as rival European lenders came under increasing pressure to pare back their ties with Moscow due to its war in Ukraine.
OTP Bank’s net profit rose by almost a tenth to more than 1.0 trillion forints ($2.9 billion) in 2024, driven by a more than 40% surge in profits from its Russian unit to 137 billion forints ($372 million), the bank said.
The bank’s retail customer loans in Russia increased by more than 80% to 1.053 trillion forints, while total deposits from customers, mainly corporate, rose more than 70% to 1.882 trillion forints.
At OTP’s core Hungarian business, net profit, excluding one offs, rose by about 16% to 270 billion forints in 2024.
The jump in business in Russia at OTP, the former communist-era state savings bank now Hungary’s largest independent lender, underscores the strength of the country’s economic ties with Russia.
Hungary buys most of its natural gas and oil from Russia and Prime Minister Viktor Orban’s government has kept close relations with Moscow despite the war in Ukraine.
OTP is not under the remit of the European Central Bank, which has pushed Austria’s Raiffeisen Bank International and Italy’s UniCredit to cut back their business in Russia.
Sanctions authorities in Washington too had pressured European banks to pare back ties to Russia, although that push appears set to fizzle out under U.S. President Donald Trump, who has suspended military aid to Ukraine.
Besides loans to Russian customers to buy televisions and other items, OTP Deputy CEO Laszlo Bencsik also flagged rising deposits from European companies still operating in Russia.
“Many of them are shifting their funds from Russian banks, which are increasingly subject to sanctions, and turning to us instead,” Bencsik told Reuters.
“When we place these deposits with the central bank, they generate a substantial margin,” he said.
Early last year, Hungary’s central bank warned OTP to curb its Russian exposure, cautioning of the risks in the wake of Western sanctions on Russia.
OTP’s Bencsik said that the bank operated in line with Western-led sanctions against Russia, that it had stopped corporate lending, did not process dollar transactions and took precautions when processing euro payments.
“The right strategy is to observe the rules and get as much money out as possible,” he said, referring to the 42 billion roubles ($471 million) it had taken as a dividend since 2022 from its Russian business.
($1 = 367.6600 forints)
($1 = 89.2000 roubles)
(Reporting By Anita Komuves and John O’Donnell;Editing by Tomasz Janowski and Emelia Sithole-Matarise)
