Hungary's OTP Bank can withstand further market shocks in Russia, Ukraine -cenbank

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BUDAPEST, March 2 (Reuters) - The capital position of Hungary's OTP Bank , central Europe's largest independent lender, is excellent and the bank can withstand further possible market shocks in Russia and Ukraine, the central bank said in an emailed reply to Reuters.

"Based on the stress tests and calculations, the group-level capital adequacy of the bank is excellent, which would not change substantially even in case of a further significant market shock in Russia and Ukraine," it said on Wednesday.

The Russian invasion of Ukraine has hammered Hungarian financial markets, sending the forint to record lows past 381 versus the euro, while OTP Bank's shares have lost about the third of their value over the past week.

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Russia calls its actions in Ukraine a "special operation".

By 1010 GMT, the stock recovered from its morning falls, trading flat at 10,000 forints on the Budapest Stock Exchange, but still languishing at its weakest levels since November 2020.

OTP, which is present in several Central and Eastern European countries, had 4% of its net loan book in Ukraine and Russia, respectively, based on third-quarter figures from an investor presentation published on its website.

In the first nine months of 2021, its stock of performing loans expanded by 9% in Russia and 31% in Ukraine, which posted the fastest lending increase across its markets.

The Russian and Ukrainian units contributed 17% of OTP Bank's nine-month net interest income. Its Common Equity Tier 1 (CET1) ratio was 15.4% at the end of the third quarter, down from 15.9% at the end of the second quarter.

Economists at the brokerage Erste Investment expect OTP to report a record adjusted profit worth 133.8 billion forints ($389.77 million) when it publishes fourth-quarter results on Friday.

($1 = 343.28 forints)

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Reporting by Gergely Szakacs, Editing by Louise Heavens

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