UPDATE: CEO: OTP Bank may buy larger bank in Russia

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MOSCOW, May 12 (PRIME) -- OTP Bank, the Russian unit of Hungary’s financial group OTP, is considering a merger with another bank or a purchase of a credit portfolio, CEO Ilya Chizhevsky told in an interview with PRIME on Friday.

“The group sees the Russian market as strategic. We believe the market’s investment potential is not exhausted and we are considering M&A options,” he said.

“At the same time, we do not except portfolio investment opportunities as we have excessive liquidity and capital. We are open to both variants and work on them intensively.”

He said that a bank, larger than OTP Bank, may be acquired.

Future transactions may be made using the bank’s own funds, funds of its shareholders or both.

CEO said the net profit of OTP’s Russian business, excluding Touch Bank, more than doubled on the year to 1.53 billion rubles in January-March.

The bank started forming a stabilization fund, which will be financed until the end of 2017 to compensate for possible market volatility using part of net profit from April 2016, he added.

The cost of risk fell to 6.5%, or 7.9% adjusted for stabilization fund, in January-March from 10.4% in the same period of the previous year. The commission income rose by 70% on the year to 235 million rubles.

The working retail loan portfolio, which excludes non-performing loans, grew by 4% in January-March to 73 billion rubles. The point-of-sale (POS) loan portfolio went up by 17%, the cash loan portfolio rose by 12%, whereas the credit card portfolio fell by 18%.

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