Fitch upgrades OTP Russia’s VR to ‘bb’
Fitch Ratings has upgraded OTP's Viability Rating (VR) to 'bb' from 'bb-'.
The standalone creditworthiness of OTP is reflected in its VR of 'bb', which captures the bank's large capital buffers and adequate asset quality and performance. These strengths are balanced with OTP's exposure to the cyclical Russian consumer finance market with net unsecured loans accounting for 45% of total assets and 1.9x of equity at end-1H21.
Fitch Ratings also affirmed the bank's Long-Term Issuer Default Ratings (IDRs) at 'BB+' with Stable Outlook. OTP's IDRs and Support Rating are driven by potential support from the parent, Hungary-based OTP Bank, in case of need, Fitch said. This is based on the strategic importance of the Russian market for the parent bank, OTP's 98% ownership, high level of integration, common branding and reputational risk for the parent in case the subsidiary defaults.
Fitch raised the rating outlook of OTP Russia to stable from negative at the end of June. At the time, it said the move reflected “the ability of its parent, Hungary-based OTP Bank, to provide support to its Russian subsidiary has improved due to moderated risks from the pandemic”. This is supported by Hungary's solid recovery prospects owing to economic normalisation, an advanced vaccination rollout, a low unemployment rate and strong levels of support and stimulus from the Hungarian authorities, Fitch said in June.
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