OTP Bank’s second quarter was satisfactory, but an apparent slowdown in the global recovery does not improve the outlook for the short- or mid-term, deputy-CEO László Bencsik said on Friday, after the bank published its Q2 report.

Investors’ panicky reaction seen over the past weeks, as well as the firming Swiss franc and the slower than expected growth of the Hungarian economy – now seen expanding only about 2% this year – increase risks for the OTP group’s core activities on the domestic market, Bencsik said.

On the positive side, OTP bank’s capital position continues to be outstanding, he said. Its capital adequacy ratio is 18%, it is the third most stable bank in Europe on the basis of stress tests, and it has €5.2 billion of liquid reserves at group level, he added.

Bencsik did not reveal any of the bank’s plans, but said the future would be determined by the Swiss franc’s exchange rate and by risk costs. The management continues to believe risk costs will fall this year from last year, even though risks are on the increase, he added.

The deterioration of OTP Bank’s lending portfolio slowed in Q2 and risk costs fell because of improvements in Hungary as well as units in Ukraine and Croatia. Coverage for non-performing loans — those past 90 days due — rose 0.6 percentage point to 73.3pc.

The portfolio in Hungary and in Bulgaria is expected to worsen because of the firming Swiss franc, Bencsik said.

OTP Bank’s report showed a strong performance lifted by its foreign units consolidated after-tax profit by 36% to HUF 37.3 billion in Q2 from the same period a year earlier. After-tax profit of OTP Bank’s core business in Hungary fell 29% to HUF 29.9 billion during the period, while after-tax profit of its foreign units reached HUF 15.7 billion, compared to a HUF 1.2 billion loss in the base period.