OTP Bank: 1Q26 - Off The Call

Research evidence excerpt

OTP Bank: 1Q26 - Off The Call

UpdateMHowever, given OTP’s strong organic growth momentum, management stressed

there is no pressure to execute deals. AT1 issuance seen as a potential capital

management tool.

On costs, the main area of focus is the Hungarian headquarters cost base, where

management has already started implementing efficiency measures, with the

efficiency gains expected over the next 1-2 years. The group does not operate with a

uniform headcount strategy, reflecting different market dynamics and strategic

priorities across geographies. Management acknowledged that strong organic

growth naturally implies a higher cost trajectory and sees no need for a “drastic cost

control” programme at this stage. Investment spending remains elevated in growth

markets such as Uzbekistan, where the bank continues to invest heavily for future

expansion. In Bulgaria, management highlighted that the franchise still delivered a

c.19% RoE despite high cost growth.

Management expressed confidence that the new government is committed to

transforming Hungary into a more competitive, modern economy converging

towards Western European standards, which, in its view, is incompatible with the

current elevated tax burden on the banking sector. As a result, management expects

a gradual reduction in sector taxes over time, particularly the excess profit tax.

Management does not expect Hungarian bank taxes to be reduced this year. Some

form of sector-specific taxation however may still remain in place, similar to the pre-

2022 framework, which included standard banking and transaction taxes.

Management also noted that the Hungarian government is increasingly focused on

eventual eurozone accession, with ambitions to meet the convergence criteria within

the next four years.