It is expected that the OTP bank will increase the interest rates due to the ongoing global financial crisis and due to the unfavourable developments in the real economy, OTP Bank stated to the media late on Friday.

Merrill Lynch, HSBC and UniCredit have lowered their target price on OTP based on wide analyst opinion.
Merrill Lynch has its target price on OTP bank by 36% to HUF 4800, which represented an 8% upside.

UniCredit has regained coverage of OTP Bank with a ‘Hold' rating with a 12-month target price of HUF 4,350. The analysts trust the share price is likely to be the same under pressure until the key FX rates for HUF/CHF and UAH/USD stabilize and the extent of the damage from FX weakness and drop down in the economic growth across the region becomes evident.

“OTP's loan growth will be severely restricted under the current circumstances” per HSBC's Maciej Baranski.  He projected “Heavy reliance on external funding” based on the loan-to-deposit ratio.

The OTP pricing committee is working out a decision that will influence the interest rate on home and personal and general purpose loans, and it will being in some changes on the existing loans also. The changes are expected to be in action by the start of November.

The bank stated that it will only partly get ahead of greater than before funding costs on to their clients, the bank also is adding that the interest rate on existing foreign currency denominated loans will not increase to more than 0.5 percentage points.

The banks will add to the exposure of its loans and make bigger exchange-rate guarantees and goods with a fixed monthly debt service in terms of forint. It will also place restriction on access to some of the loan products which are meant exclusively to its private banking customers. 

The bank also stated that it follows a traditionally conservative lending practice, which is the measure it uses to reflect the stability of its lending portfolio.

Apart from online camping the OTP said that the autumn campaign organized by the bank expiring at the end of October has resulted in HUF 60bn in all new retail deposits. The bank has been providing with forint and foreign currency deposits under the campaign.