OTP Bank, Hungary's biggest commercial lender, said late Friday that it passed a stress test of banks across the European Union.
"Following completion of the EU-wide stress test, the results determine that OTP Bank Plc. meets the capital benchmark set out for the purpose of the stress test. The bank will continue to ensure that appropriate capital level must be maintained," the bank said.
OTP Bank said its estimated consolidated Core Tier 1 capital ratio would change to 17.2% under the baseline scenario in the stress test and to 13.6% under the adverse scenario in 2012 compared to 12.3% as of end of 2010.
The stress test, carried out on 91 banks with 65% of total assets of the EU banking system, sought to assess the resilience of European banks to severe shocks and their specific solvency to hypothetical stress events under certain restrictive conditions. The test on OTP Bank was conducted by the European Banking Authority (EBA), in cooperation with the Hungarian Financial Supervisory Authority, the European Central Bank (ECB), the European Commission (EC) and the European Systemic Risk Board (ESRB).
The assumptions and methodology were established to assess banks' capital adequacy against a 5% Core Tier 1 capital benchmark and are intended to restore confidence in the resilience of the banks tested, OTP Bank said. The adverse stress test scenario was set by the ECB and covers a two-year time horizon (2011-2012). The stress test was carried out using a static balance sheet assumption from December 2010.
The stress test does not take into account future business strategies and management actions and is not a forecast of OTP Bank's profits, the bank noted.