According to an interview in Reuters with Sandor Csanyi, the CEO of OTP Bank, the bank plans to spend between EUR 120m and EUR 200m in 2007 to recapitalise subsidiaries, primarily in Russia, Romania and Croatia. Sandor Csanyi has stated that the bank does not plan any acquisitions in 2007, and wants to pay ‘an acceptable dividend’ to investors (HUF 197 per share last year). The CEO stated that he is not expecting any trouble in financing integration, as the bank is able to tap funds provided by existing subsidiaries, such as the Bulgarian and Slovak units, through subordinated loans.
Additionally, Sandor Csanyi, reiterated OTP’s HUF 185bn target for 2006, adding that it could be somewhat exceeded.
Our view: OTP Bank targets net profit of HUF 222bn in 2007 taking into account a negative impact from the government’s austerity program but also a positive impact planned from the consolidation of new acquisitions. The company target is above both our forecast of HUF 208.1bn and the consensus estimates of HUF 208.6, and therefore we see a potential for upgrades if the company integration plan proves to be successful. However, the market is well aware of OTP Bank's expansion plans in acquired countries and so an increase in the capital of the subsidiaries should have been expected. Therefore, this news should not have any trading impact.