Budapest, 28 July 2023 – In case of OTP Group, which is the only one Hungarian credit institution participating in the European Banking Authority’s stress test, there is no need for any supervisory intervention in light of the results.

The European Banking Authority (EBA) released the 2023 stress test results today. The test is supposed to assess European banks’ resilience to shocks. The financial institutions participated in the exercise over a three-year horizon, assuming a hypothetical adverse macroeconomic scenario and using the common methodology provided by the EBA.

Consistent with the earlier EBA stress test in 2021, this year’s exercise does not contain a common pass/fail threshold, since it is designed to serve as an input to the 2023 Supervisory Review and Evaluation Process (SREP), mainly through determining the Pillar 2 capital requirements (related to supervisory review) or through various supervisory measures, if necessary.

The stress test covered a total of 70 European banks (representing roughly 75 per cent of the EU’s banking sector in terms of total assets), 57 of which are based in countries regulated by the Single Supervisory Mechanism (SSM) operated with the participation of the European Central Bank, while another 13 is headquartered in Denmark, Poland, Hungary, Norway and Sweden.

From Hungary, only OTP Group participated in the 2023 stress test exercise. This is because OTP Group’s total assets exceeded EUR 30 bn, which was the limit to participate in the exercise. The OTP Group is present in eleven countries of the Central and Eastern European region through its subsidiaries.

Based on the capital position, the most important factor in the stress test, OTP Group’s results slightly improved compared to the exercise two years ago and it would exceed the current regulatory minimum SREP capital requirement throughout the stress horizon.

OTP Bank’s Common Equity Tier 1 capital ratio (CET1), adjusted due to the transition to the IFRS 9 standard compulsory at the European level from 2018 and not containing the transitional arrangements of the relevant European regulation, would change from 15.24 per cent in 2022 to 14.48 per cent (or from 16.42 per cent to 14.48 per cent with the transitional arrangements) at the end of the three-year shock scenario. Comparing the CET1 ratios under the adverse and the baseline scenario, the difference exceeds 5 percentage points at the end of the three-year horizon, which confirms the severity of the stress test. The quality assurance of the submitted stress test data was conducted by the competent supervisory authorities, and in Hungary the Magyar Nemzeti Bank (MNB) was responsible for this.

For more information on the 2023 EBA stress test’s scenarios, assumptions, the methodology and the detailed results as well as the relevant press release, please visit the EBA website.

Magyar Nemzeti Bank