OTP Group’s outstanding results in 2024
In 2024, the OTP Group achieved outstanding financial performance, a detailed review of which is crucial for investors. The group generated a post-tax profit of HUF 1,076 billion, representing a 9% increase compared to the previous year. This performance was coupled with an annual ROE of 23.5%, reflecting the Group’s efficient capital utilization and profitability.
International expansion continued to play a decisive role in the Group’s success, with foreign profit contribution reaching 68%. This high ratio demonstrates that the OTP Group has successfully integrated and developed its subsidiaries in the regional markets.
In 2024, the OTP Group executed significant transactions that influenced the earnings dynamics. These included the sale of the Romanian bank and the merger of the Slovenian subsidiaries. The sale of the Romanian bank optimized the Group’s portfolio, while the Slovenian merger created synergies and improved operational efficiency.
Operating profit increased by 22%, mainly due to a 22% rise in net interest income. Net fees and commissions grew by 13%, demonstrating the success of the Group’s diversified services. The cost-to-income ratio improved to 41.3%, showing significant results.
Risk costs increased, primarily due to impairment losses on Russian bonds. However, the quality of the loan portfolio remained stable, with the Stage 3 loan ratio decreasing to 3.6%. Performing loans increased by 9%, with retail loans growing dynamically. Deposits increased by 6%, particularly in the retail segment. The CET1 capital ratio increased to 18.9%, indicating a strong capital position.
The OTP Group’s dividend policy focuses on long-term value creation and capital-efficient operations. Management is committed to increasing shareholder value, as reflected in dividend payments and share buybacks.
Based on the 2024 results, investors can rightly expect favorable dividend payments. Management considered a dividend of HUF 270 billion (HUF 964 per share) in the calculation of the 4Q capital adequacy ratios. The Board of Directors will make a final decision on the dividend proposal in March, with its publication scheduled for April 3rd.
The Group’s capital allocation policy focuses on exploiting profitable organic growth opportunities and exploring value-enhancing acquisition opportunities. Management treats the unused Additional Tier 1 (AT1) framework as a reserve for potential larger acquisition opportunities.
Share buybacks are also an important element of the Group’s capital policy. The Bank continues to buy back its own shares; the most recent authorization received on January 24, 2025, with a framework amount of HUF 60 billion, was used up by February 10th. The Bank continues its practice of announcing new buyback programs to the market following the receipt of the relevant MNB authorization.
For 2025, management expects a slight improvement in the operating environment. Performing loan growth may exceed 9%, and the net interest margin may remain stable. The ROE ratio may be lower than the 2024 level due to the expected decrease in leverage. The Group continues to focus on efficient capital management and sustainable growth.
Based on the OTP Group’s strong fundamentals and management’s strategy, investors can look to the future with confidence. The dividend policy and capital allocation are aligned with maximizing shareholder value, which makes the Group’s shares attractive in the long term.
However, strong stock market results do not indicate growth in the Hungarian economy; we have written about the reasons in
this article.