Half year ended June 30, 2021, IFRS separate

OTP BANK PLC.

SEPARATE FINANCIAL STATEMENTS

IN ACCORDANCE WITH

INTERNATIONAL FINANCIAL REPORTING STANDARDS

AS ADOPTED BY THE EUROPEAN UNION

FOR THE SIX MONTH PERIOD ENDED

30 JUNE 2021

OTP BANK PLC.

	CONTENTS
SEPARATE STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2021................................................	5
SEPARATE STATEMENT OF PROFIT OR LOSS FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2021
	..........................................................................................................................................................	6
SEPARATE STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTH PERIOD ENDED 30
	JUNE 2021........................................................................................................................................	7
SEPARATE STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE SIX MONTH
	PERIOD ENDED 30 JUNE 2021.....................................................................................................	8
SEPARATE STATEMENT OF CASH FLOWS FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2021 .....	9
NOTE 1: ORGANIZATION AND BASIS OF FINANCIAL STATEMENTS................................................	11
1.1.	General information...........................................................................................................................	11
1.2.	Basis of accounting............................................................................................................................	11
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.........................................................	13
2.1.	Basis of presentation..........................................................................................................................	13
2.2.	Foreign currency translation ..............................................................................................................	13
2.3.	Consolidated financial statements .....................................................................................................	13
2.4.	Investments in subsidiaries, associated companies and other investments ........................................	13
2.5.	Securities at amortised cost................................................................................................................	14
2.6.	Financial assets at fair value through profit or loss ...........................................................................	14
2.7.	Derivative financial instruments designated as a fair value or cash flow hedge................................	16
2.8.	Offsetting ...........................................................................................................................................	16
2.9.	Embedded derivatives........................................................................................................................	16
2.10.	Securities at fair value through other comprehensive income ("FVOCI securities") ........................	17

2.11. Loans, placements with other banks, repo receivables and loss allowance for loan, placements and

	repo receivables losses.......................................................................................................................	17
2.12.	Loss allowance ..................................................................................................................................	18

2.13. Option to designate a financial asset/liability measured at fair value through profit or loss (FVTPL

	option)................................................................................................................................................	20
2.14.	Sale and repurchase agreements, security lending.............................................................................	21
2.15.	Property, equipment and intangible assets.........................................................................................	21
2.16.	Inventories .........................................................................................................................................	21
2.17.	Investment properties.........................................................................................................................	21
2.18.	Financial liabilities.............................................................................................................................	22
2.19.	Leases ................................................................................................................................................	22
2.20.	Share capital ......................................................................................................................................	23
2.21.	Treasury shares ..................................................................................................................................	23
2.22.	Interest income and interest expense .................................................................................................	23
2.23.	Fees and Commissions ......................................................................................................................	23
2.24.	Dividend income................................................................................................................................	23
2.25.	Income tax .........................................................................................................................................	23
		2

2.26.	Banking tax........................................................................................................................................	23
2.27.	Off-balance sheet commitments and contingent liabilities ................................................................	24
2.28.	Share-based payment and employee benefit......................................................................................	24
2.29.	Separate statement of cash flows .......................................................................................................	24
2.30.	Segment reporting..............................................................................................................................	24
2.31.	Comparative figures...........................................................................................................................	25
NOTE 3:	SIGNIFICANT ACCOUNTING ESTIMATES AND DECISIONS IN THE APPLICATION OF
	ACCOUNTING POLICIES ..............................................................................................................	28
3.1.	Loss allowance on financial instruments ...........................................................................................	28
3.2.	Valuation of instruments without direct quotations...........................................................................	28
3.3.	Provisions ..........................................................................................................................................	28
3.4.	Business models ................................................................................................................................	28
NOTE 4:	COVID-19 (in HUF mn) ...................................................................................................................	29
NOTE 5:	CASH, AMOUNTS DUE FROM BANKS AND BALANCES WITH THE NATIONAL BANK OF
	HUNGARY (in HUF mn) .................................................................................................................	32
NOTE 6:	PLACEMENTS WITH OTHER BANKS, NET OF ALLOWANCE FOR PLACEMENT LOSSES
	(in HUF mn) ......................................................................................................................................	32
NOTE 7:	REPO RECEIVABLES (in HUF mn) ...............................................................................................	33
NOTE 8:	FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (in HUF mn)..............	34
NOTE 9:	SECURITIES AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (in HUF
	mn).....................................................................................................................................................	35
NOTE 10: LOANS (in HUF mn) ........................................................................................................................	37
NOTE 11: INVESTMENTS IN SUBSIDIARIES, ASSOCIATES, JOINT VENTURES AND OTHER
	INVESTMENTS (in HUF mn)..........................................................................................................	40
NOTE 12: SECURITIES AT AMORTISED COST (in HUF mn) .....................................................................	37
NOTE 13: PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (in HUF mn) ......................................	43
NOTE 14: INVESTMENT PROPERTIES (in HUF mn)....................................................................................	45
NOTE 15: FAIR VALUE OF DERIVATIVE FINANCIAL ASSETS DESIGNATED AS HEDGE
	ACCOUNTING (in HUF mn) ...........................................................................................................	45
NOTE 16: OTHER ASSETS (in HUF mn).........................................................................................................	46
NOTE 17: AMOUNTS DUE TO BANKS AND DEPOSITS FROM THE NATIONAL BANK OF HUNGARY
	AND OTHER BANKS (in HUF mn) ................................................................................................	47
NOTE 18: REPO LIABILITIES (in HUF mn) ...................................................................................................	47
NOTE 19: DEPOSITS FROM CUSTOMERS (in HUF mn)..............................................................................	48
NOTE 20: LIABILITIES FROM ISSUED SECURITIES (in HUF mn) ............................................................	48
NOTE 21: FINANCIAL LIABILITIES DESIGNATED AS FAIR VALUE THROUGH PROFIT OR LOSS (in
	HUF mn)............................................................................................................................................	53
NOTE 22: HELD FOR TRADING DERIVATIVE FINANCIAL LIABILITIES (in HUF mn) ........................	53
NOTE 23: FAIR VALUE OF DERIVATIVE FINANCIAL LIABLITIES DESIGNATED AS HEDGE
	ACCOUNTING (in HUF mn) ...........................................................................................................	53
NOTE 24: OTHER LIABILITIES (in HUF mn) ................................................................................................	54
NOTE 25: SUBORDINATED BONDS AND LOANS (in HUF mn) ................................................................	55
NOTE 26: SHARE CAPITAL (in HUF mn).......................................................................................................	55
NOTE 27: RETAINED EARNINGS AND RESERVES (in HUF mn) ..............................................................	56
NOTE 28: TREASURY SHARES (in HUF mn) ................................................................................................	61
NOTE 29: INTEREST INCOME AND EXPENSES (in HUF mn)....................................................................	62
NOTE 30: RISK COST (in HUF mn) .................................................................................................................	63
		3

NOTE 31: NET PROFIT FROM FEES AND COMMISSIONS (in HUF mn) ..................................................	63
NOTE 32: OTHER OPERATING INCOME AND EXPENSES AND OTHER ADMINISTRATIVE
	EXPENSES (in HUF mn)..................................................................................................................	66
NOTE 33: INCOME TAX (in HUF mn).............................................................................................................	67
NOTE 34: LEASE (in HUF mn) .........................................................................................................................	69
NOTE 35: FINANCIAL RISK MANAGEMENT (in HUF mn) ........................................................................	70
35.1.	Credit risk ..........................................................................................................................................	70
35.2.	Maturity analysis of assets and liabilities and liquidity risk..............................................................	83
35.3.	Net foreign currency position and foreign currency risk...................................................................	86
35.4.	Interest rate risk management ...........................................................................................................	86
35.5.	Market risk.........................................................................................................................................	93
35.5.1.	Market risk sensitivity analysis..........................................................................................................	93
35.5.2.	Foreign currency sensitivity analysis.................................................................................................	93
35.5.3.	Interest rate sensitivity analysis .........................................................................................................	94
35.5.4.	Equity price sensitivity analysis ........................................................................................................	95
35.6.	Capital management..........................................................................................................................	95
NOTE 36: TRANSFER AND RECLASSIFICATION OF FINANCIAL INSTRUMENTS (in HUF mn) ........	97
NOTE 37: OFF-BALANCE SHEET ITEMS (in HUF mn)................................................................................	98
NOTE 38: SHARE-BASED PAYMENT AND EMPLOYEE BENEFIT (in HUF mn).....................................	99
NOTE 39: RELATED PARTY TRANSACTIONS (in HUF mn) ....................................................................	104
39.1.	Loans provided to related parties....................................................................................................	104
39.2.	Deposits from related parties ..........................................................................................................	104
39.3.	Interests received by the Bank .........................................................................................................	105
39.4.	Interests paid by the Bank1 ..............................................................................................................	105
39.5.	Commissions received by the Bank..................................................................................................	105
39.6.	Commissions paid by the Bank ........................................................................................................	105
39.7.	Transactions related to OTP Mortgage Bank Ltd.: .........................................................................	106
39.8.	Transactions related to OTP Factoring Ltd.: ..................................................................................	106
39.9.	Transactions related to OTP Banka Slovensko a.s. (Slovakia)........................................................	106
39.10.	Related party transactions with key management............................................................................	106
NOTE 40: TRUST ACTIVITIES (in HUF mn)................................................................................................	108
NOTE 41: CONCENTRATION OF ASSETS AND LIABILITIES.................................................................	109
NOTE 42: EARNINGS PER SHARE...............................................................................................................	110
NOTE 43: NET GAIN OR LOSS REALISED ON FINANCIAL INSTRUMENTS (in HUF mn) .................	111
NOTE 44: FAIR VALUE OF FINANCIAL INSTRUMENTS (in HUF mn)...................................................	113
NOTE 45: SIGNIFICANT EVENTS DURING THE SIX MONTH PERIOD ENDED 30 JUNE 2021..........	125
NOTE 46: SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD ...................................................	125

4

OTP BANK PLC.

SEPARATE STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2021

(in HUF mn)

		30 June	31 December	30 June
	Note	2021	2020	2020
Cash, amounts due from banks and balances with the
National Bank of Hungary	5.	392,632	579,120	469,992
Placements with other banks, net of allowance for
placement losses	6.	2,272,209	1,535,884	1,476,344
Repo receivables	7.	47,144	183,364	11,922
Financial assets at fair value through profit or loss	8.	181,675	160,483	226,159
Financial assets at fair value through other
comprehensive income	9.	857,351	911,950	983,207
Securities at amortised cost	10.	2,588,668	2,007,692	1,643,025
Loans at amortised cost and mandatorily measured at fair
value through profit or loss	11.	4,144,108	3,898,697	3,575,356
Investments in subsidiaries	12.	1,586,180	1,548,972	1,547,443
Property and equipment	13.	79,205	77,974	75,395
Intangible assets	13.	54,410	57,639	54,402
Right of use assets		11,521	13,479	14,888
Investments properties	14.	1,912	1,936	2,356
Current tax assets	16.	-	593	2
Derivative financial assets designated as hedge
accounting relationships	15.	12,883	6,817	22,529
Other assets	16.	225,560	169,794	168,177
TOTAL ASSETS		12,455,458	11,154,394	10,271,197
Amounts due to banks and deposits from the National
Bank of Hungary and other banks	17.	1,223,842	766,977	732,436
Repo liabilities	18.	315,260	109,612	131,672
Deposits from customers	19.	8,379,970	7,895,735	6,933,116
Leasing liabilities		12,002	14,106	15,401
Liabilities from issued securities	20.	31,003	28,435	41,723
Financial liabilities at fair value through profit or loss	21.	23,529	25,902	27,192
Derivative financial liabilities designated as held for
trading	22.	83,259	99,987	154,832
Derivative financial liabilities designated as hedge
accounting relationships	23.	144	3,104	11,522
Deferred tax liabilities	33.	3,653	3,062	3,206
Current tax liabilities	24.	2,588	-	1,032
Other liabilities	24.	256,092	224,897	262,222
Subordinated bonds and loans	25.	295,592	304,243	302,991
TOTAL LIABILITIES		10,626,934	9,476,060	8,617,345
Share capital	26.	28,000	28,000	28,000
Retained earnings and reserves	27.	1,808,794	1,697,133	1,647,635
Treasury shares	28.	(8,270)	(46,799)	(21,783)
TOTAL SHAREHOLDERS' EQUITY		1,828,524	1,678,334	1,653,852
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY		12,455,458	11,154,394	10,271,197

5