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					corporate social responsibility report




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    corporate social responsibility report




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                                    Contents                                                                                               1. Key features of the report

                                                                                                                                           This is the first time that OTP Bank Plc has                          provide an authentic presentation of the Bank’s
                                                                                                                                                                                                   1
                                                                                                                                           prepared a corporate social responsibility                            activities; besides the achievements, we also
                                                                                                                                           report. Our intention is that this report, which                      describe the areas that are in need of
                                                                                                                                           describes the Bank’s achievements in 2006,                            improvement and the objectives in this regard.
                                                                                                                                           should be the start of a process: this is the first                   The latter are highlighted in green throughout
                               1    Figures at a glance                                                                                    strategic step towards ensuring that the                              the text. The way each issue has been
                               2      1. Key features of the report                                                                        principles of good corporate citizenship are                          presented is in line with the requirements
                               5      2. Introduction by the chairman                                                                      asserted more rigorously in relation to all                           stipulated with regard to the indicators;
                               6      3. Corporate social responsibility                                                                   aspects of the activities of OTP Bank Plc and                         however, we have used a different method
                               8      4. OTP Bank and the OTP Bank Group                                                                   the OTP Bank Group. In parallel with the                              of presentation in cases where the
                             10       5. Our mission and values                                                                            preparation of this report, we have also been                         requirements proved to be irrelevant for our
                             12       6. Principles and practices that determine the Bank’s operations and activities                      developing a sustainability strategy for the                          company or in areas where the information
                             15       7. Corporate governance and corporate social responsibility in the Bank’s organisational structure   company.                                                              available to us was not sufficient.
                             20       8. Our economic performance
                             20          8.1 Divisions                                                                                     We plan to publish a CSR report every year,                           In our assessment of the Bank’s activities and
                             24          8.2 Key economic indicators                                                                       at the same time as the Annual Report, in order                       their impacts, we identified all the company’s
                             28       9. Our stakeholders and our social performance                                                       to inform our stakeholders simultaneously                             stakeholders – that is, all the individuals,
                             28          9.1 Shareholders                                                                                  about the Bank’s financial performance and                            groups or communities that are affected by its
                             30          9.2 Competitors, membership of associations                                                       about the results achieved in the area of                             activities in some way. When determining the
                             31          9.3 Customers                                                                                     corporate social responsibility, an objective that                    extent to which these groups were affected by
                             35          9.4 Employees                                                                                     is in harmony with the relevant EU guidelines.                        the activities, we took the magnitude of the
                             42          9.5 Suppliers                                                                                                                                                           impact as the basis for our measurement.
                             42          9.6 Society, civic relations                                                                      We determined the content of the report on                            The Bank engages with its various stakeholders
                             44          9.7 Support, sponsorship                                                                          the basis of the principles and guidelines of the                     in different ways and at different frequencies.
                             48     10. Our environmental performance                                                                      Global Reporting Initiative (GRI): we surveyed
                             52     11. Summary of our objectives                                                                          the Bank’s activities and impact; we identified                       OTP Bank’s key stakeholder groups are the
                             54     12. Glossary                                                                                           the key areas relevant to our stakeholders and                        following:
                             56     13. GRI index                                                                                          to the issue of sustainability, as well as the                        – shareholders, investors;
                                                                                                                                           related GRI indicators. We examined both the                          – competitors;
                                                                                                                                           general and the supplementary (sector-specific)                       – customers;
                                                                                                                                           indicators, and prioritised the core indicators                       – employees;
Figures at a glance                                                                                                                        when making the selection. During the                                 – suppliers;
                                                                                                                     Unit          2006
    Base capital (no change compared to previous year)                                                       million HUF     28 000.001    stakeholder forum2 that was held during the                           – local and national government;
    Total capitalisation                                                                                     million HUF      2 450 000    preparation of the report, we explored the                            – local communities in the area where the
    Balance sheet total                                                                                      million HUF      4 506 697
                                                                                                                                           expectations of the stakeholders and                                    Bank operates;
    Taxes paid                                                                                               million HUF         44 142
    Balance sheet profit                                                                                     million HUF        170 188    incorporated them into the topics to be                               – the civil sphere.
    Shareholders’ equity                                                                                     million HUF        670 254    covered in the report. Our goal is to provide
    ROAE                                                                                                                %           28.0
    Total number of employees                                                                                     persons          8257    as comprehensive a report on the Bank’s                               By taking into account considerations of social
    Ratio of women within total employees                                                                               %           78.6   performance as possible, and therefore                                and environmental sustainability and the
    Ratio of women in top management                                                                                    %           39.4
                                                                                                                                           we took into account the principle of                                 perspective of our stakeholders, we decided
    Training costs                                                                                           million HUF          487.1
    Energy consumption per employee (based on data of central buildings)                                             kWh          5 117    importance as well as completeness when                               that the focal points of the report should be as
    Water consumption per employee (based on data of central buildings)                                                m3            20    selecting the topics. Our primary aim is to                           follows:
    Number of business trips                                                                                         trips          779


                                                                                                                                           1
                                                                                                                                               CSR for short.
Note: the table contains non-consolidated IFRS data.                                                                                       2
                                                                                                                                               A meeting held with representatives from the company’s key stakeholders.



2        OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                                       Key features of the report     3
                             – an identification and description of the
                               impacts of the Bank’s core activity;
                                                                                   comparable data available to us, and in these
                                                                                   cases we applied best estimates based on past       2. Introduction by the Chairman
                             – steps taken in implementing CSR into our            experience. One of our objectives for the future
                               core activity, and the results achieved;            is to improve data collection. In order to be
                             – activities conducted for and on behalf              able to realistically assess and compare the
                               of our customers;                                   Bank’s achievements and to present trends,
                             – our conduct towards our employees;                  we have also presented data from 2004 and
                             – the impact we have on local communities             2005, in addition to data from 2006. At the
                               through our extended network.                       start of 2007, significant changes occured in
                                                                                   the Bank’s governance structure, in response
                             This report describes the activities and              to the changes that face the Bank. The report
                             achievements of OTP Bank Plc. At the same             focuses on presenting the situation as it existed
                                                                                                                                                 DEAR READER,
                             time however, OTP Bank Plc – as the parent            in 2006, which cannot, however, be regarded
                             company of the OTP Bank Group – is also               as up to date at the time of publication. You
                             responsible for the activities of its subsidiaries,   will find details of the Bank’s currently valid               This is the first report on corporate     As a result of the successful foreign-bank
                             and because some of the subsidiaries operate          organisational and governance structure on our               social responsibility from Hungary’s       acquisitions made over the past few years,
                             in non-EU countries, the parent company’s             website.                                                    largest credit institution. In accordance   OTP Bank has become a financial services
                             responsibility is greater still. Our aim is that,                                                               with the requirements of transparency,        group of regional importance. It provides
                             as a part of the integration of the subsidiaries,     Our goal in the coming years is to reinforce           we regularly evaluate the performance            services to approximately 11 million customers
                             the principle and practice of good corporate          the Bank’s corporate social responsibility          of the financial services group, which is today     in nine countries through 1,300 branches and
                             citizenship should be extended to all members         and to make the CSR report more                     a major player in the region, and disclose          various electronic channels. Consequently,
                             of the Bank Group. However, extending the             comprehensive and detailed, and we would            information on a regular basis regarding its        local and universal values as well as diverse
                             application of corporate social responsibility        welcome any suggestions in this regard from         financial results and business objectives.          economic, social, cultural and environmental
                             assumes that the parent company has                   our stakeholders.                                   This report provides a comprehensive yet            factors must be taken into account and
                             adequate experience in the matter, and                                                                    different picture of OTP Bank’s development.        integrated simultaneously.
                             therefore we decided to limit the scope               OTP Bank Plc’s CSR report was prepared              It describes how a financial institution
                             of the report on the achievements of 2006             in accordance with application level GRI3 B.        – one that has more than 4 million customers        We are aware of our responsibility and
                             to the achievements of OTP Bank Plc.                  We will not have our report assured (certified)     in Hungary, a history spanning close to six         obligations, and therefore we attribute special
                                                                                   this year; however, we intend to have               decades, a dominant market position,                importance to building communities and
                             The financial data used in the report consists        the report for 2007 assured by an                   and is deeply embedded in society generally –       creating opportunities, and we intend to play
                             of the non-consolidated, IFRS data of OTP Bank        independent, external organisation.                 integrates its environmental concerns and           an active social role in this regard in the coming
                             Plc. In several areas there was no summarised,                                                            social values into its business activities.         years. The Bank’s foundation promotes the
                                                                                                                                                                                           dissemination of entrepreneurial and financial
                                                                                                                                       We are aware of the responsibility and              knowledge, helps in the achievement
                                                                                                                                       obligation that arises from the Bank Group’s        of local community objectives and events with
                                                                                                                                       extensive business activities and role in society   donations and other support, nurtures talent
                                                                                                                                       at large. At the focus of our business strategy     and helps preserve the national culture.
                                                                                                                                       is the maximising of shareholder value and
                                                                                                                                       the assuring of an operation that is at once        I hope and trust that focusing on issues
                                                                                                                                       transparent and dependable, based on the            of social responsibility and good corporate
                                                                                                                                       latest international standards and a customer-      governance, as well as long-term value
                                                                                                                                       centred product and service structure.              creation and sustainability, will become
                                                                                                                                       The values of ethical operation are also            an integral part of the operations of an
                                                                                                                                       manifest in the Bank’s overall approach             ever-greater number of companies in Hungary.
                                                                                                                                       to business relationships and in its dealings
                                                                                                                                       with its employees.




                                                                                                                                                                                           Dr. Sándor Csányi
                                                                                                                                                                                           Chairman & CEO


4   OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                 Introduction by the Chairman        5
‘What we require is a business ethic that is the theory of practice,                                                                         Corporate social responsibility                        position and growing economic performance

one that offers an account of business as a fully human activity                                                                             for OTP Bank                                           ensures that operation is to a large degree
                                                                                                                                                                                                    dependable, and allows us to take into account
in which ethics provides not just an abstract set of principles,
                                                                                                                                             These days the money markets are key engines           and support environmental and social causes on
but the very framework of business activity.’
                                                                                                                                             of the global economy and affect virtually all         a wider scale.
    R O B E R T C . S O L O M O N (philosopher, professor of ethics)                                                                         areas of life. The monetary system, and
                                                                                                                                             consequently the banking sector, plays the role        Based on the company’s main activities, we have
                                                                                                                                             of market intermediary for other sectors and           determined the following as being the key
                                                                                                                                             participants in the economy and, in addition,          challenges in terms of sustainability for OTP Bank:

                              3. Corporate social                                                                                            serves a multiplier function. The banking sector
                                                                                                                                             has become the principal driving force behind
                                                                                                                                                                                                    – ensuring an accountable and transparent
                                                                                                                                                                                                      operation,

                                 responsibility                                                                                              the economy and, as a result of its intermediary
                                                                                                                                             role, has rendered fundraising and fund
                                                                                                                                                                                                    – ensuring a responsible provision of financial
                                                                                                                                                                                                      services,
                                                                                                                                             reallocation efficient, as a result of which it        – maintaining the Bank’s security,
                                                                                                                                             has an unquestionably positive impact on the           – retaining a highly-qualified, loyal employee base,
                              The issue of the social and environmental              Another approach to responsibility (Archie B.           national economy as a whole. At the same time,         – gaining a deeper understanding of vulnerable
                              impact of corporations was raised by concerned         Carroll), according to which social responsibility is   an important criterion of judging the activities         social groups and serving their needs,
                              individuals in the aftermath of industrialisation,     present in four different areas – namely, the           of banks is whether they take into account             – supporting local communities,
                              while the responsibility of corporations became        economic, legal, philanthropic and ethical field –       social and environmental concerns,                     – minimising its environmental impact, reducing
                              an issue of key political significance at the start     offers a deeper understanding of what CSR stands        in addition to financial factors, in their               the use of natural resources,
                              of the 1990s, when the perceived social                for. Economic responsibility focuses on profitability,   lending practices. OTP Bank Plc, Hungary’s             – reducing and mitigating the effects of climate
                              irresponsibility of corporations gave rise to          securing a strong competitive position and              largest and best-known credit institution, has           change,
                              a series of high-profile scandals.                     achieving an efficient and effective operation,          considerable impact both on society and on the         – extending the principles of corporate social
                                                                                     which can only be accomplished within the               environment. This impact is the direct and indirect      responsibility to our subsidiaries.
                              Perhaps the most precise, and concise, definition       constraints of the legal framework and which is         result of the Bank’s main activities, arising partly   The Bank’s long-term interests, such as maximising
                              of corporate social responsibility (CSR) can be        represented by legal compliance. Philanthropic          from its physical operations and partly from the       shareholder value and satisfying the needs of
                              found in the European Council’s Green Paper of         responsibility essentially means charitable giving.                                                            customers, require us to understand the trends
                              2001: ‘Corporate social responsibility is a concept    Ethical responsibility – which carries the greatest                                                            and risks related to sustainability and to
                              whereby companies integrate social and                 weight within CSR – implies the conduct of                                                                     elaborate appropriate responses. This report
                              environmental concerns in their business               activities and practices that are expected by                                                                  contains the steps taken in the interests of
                              operations and in their interaction with their         members of society even though they are not                                                                    sustainability and responsible operation,
                              stakeholders on a voluntary basis.’                    codified. The various components of responsibility                                                              as well as our future objectives.
                              Economic sustainability points beyond the              cannot substitute for each other; in other words,
                              profitability of the organisation and also takes into   a responsible company is expected to fulfil all four                                                            The most important components of social
                              account the organisation’s impact on local, national   aspects of responsibility.                                                                                     responsibility for OTP Bank are the following:
                              and global economic organisations; in other words,                                                                                                                    – reliable business conduct with respect to our
                              it asks the question of how the organisation           Corporate social responsibility cannot be                                                                        customers and business partners,
                              contributes to the sustainability of the economic      implemented without taking into account the                                                                    – maximum satisfaction of investors’ and
                              system at a higher level.                              interests of the company’s stakeholders.                                                                         shareholders’ interests,
                              The threefold approach to social responsibility –      ‘A company’s stakeholders are all groups and                                                                   – responsible and safe provision of
                              economic, social and environmental – reflects           individuals that may affect or may be affected                                                                   comprehensive, high-quality services
                              the components of the concept of sustainability.       by the realisation of a company’s objectives’                                                                    to our customers,
                              CSR serves the long-term interests of companies        (R. Edward Freeman). The four key groups                financial services and loans it extends and the         – ensuring appropriate working conditions,
                              and reduces risks. Risks consist of tangible and       of people concerned are: shareholders,                  projects it finances. Although this far we have not       personalised career-planning and appropriate
                              intangible dangers as well as their associated         consumers, employees and suppliers, and in              reported on our environmental, social and broader        incentive packages to our employees as an
                              costs, e.g. penalties, severance pay, negative         a broader sense the government, competitors,            economic achievements, our Bank operates                 indispensable precondition for high-quality work,
                              brand identity, damage to reputation and social        and local organisations (civil sphere), as well as      responsibly in several respects. The Bank always       – minimising the direct and indirect environmental
                              antipathy. Corporate social responsibility is not      the natural environment and future generations.         makes decisions within the framework of ethical          impact of our activities,
                              a supplementary tool of the core activity, but                                                                 and responsible conduct, in accordance with its        – promoting the efforts of local communities and
                              a mode of corporate governance.                                                                                fundamental economic objectives and the interests        society at large by supporting initiatives and
                                                                                                                                             of shareholders. OTP Bank Plc’s stable financial          events.


6    OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                            Corporate social responsibility      7
‘Wherever you see a successful business,                                                                                                                                                                   Our Bank represents considerable value not only           part of its purposefully applied strategy of value
                                                                                                                                                                                                           in the domestic market but in the entire region as        creation, the Bank exploits opportunities for
someone once made a courageous decision!’
                                                                                                                                                                                                           well. As a result of our conscious acquisition            growth through acquisition.
       PETER FERDINAND DRUCKER                               (management expert)                                                                                                                           policy, the OTP Bank Group has become the
                                                                                                                                                                                                           predominant banking group in Central and                  In Hungary, OTP Banking portfolio consists
                                                                                                                                                                                                           Eastern Europe. The Bank is today a regional              of traditional banking services, while products
                                                                                                                                                                                                           player, with a presence in nine countries, serving        serving more recent financial requirements
                                                                                                                                                                                                           more than 11 million customers through more               – such as car financing, investment funds,
                                           4. OTP Bank and the                                                                                                                                             than 1,250 branches and electronic channels.              and insurance – are developed and offered
                                                                                                                                                                                                           The continued future growth of the Bank along             by OTP Bank’s subsidiaries.

                                              OTP Bank Group                                                                                                                                               the same dynamic trajectory is all but assured
                                                                                                                                                                                                           due to its presence in the most rapidly
                                                                                                                                                                                                                                                                     OTP Bank Plc – in addition to acting as
                                                                                                                                                                                                                                                                     a universal bank in Hungary – also fulfils
                                                                                                                                                                                                           developing markets of the region, while its               a central management role, directing
                                           OTP Bank’s predecessor was the Országos                           appropriate allocation of accumulated                                                         financial strength is also growing. As an integral         the group’s regional expansion.
                                           Takarékpénztár (National Savings Society),                        knowledge and an understanding of the market,
                                           which was founded in 1949. In the past                            it has maintained its market leading-role in
                                           sixty years or so, the Bank has undergone                         almost every segment of the Hungarian                                                                                      OTP Bank Plc
                                           considerable changes, and due to an                               bank market.


                                                                                                                                                                                                                                                         OTP Fund
                                                                                                                                                                       OTP Mortgage                   Merkantil                OTP Garancia                                     OTP Real Estate           OTP Real Estate
The international bank group                                                                                                                                             Bank Ltd.                     Group                  Insurance Ltd.
                                                                                                                                                                                                                                                        Management
                                                                                                                                                                                                                                                                                     Ltd.                  Leasing Ltd.
                                                                                                                                                                                                                                                           Ltd.
OTP Group                                     OTP Banka Slovensko                      CJSC OTP Bank***                         Investsberbank***
Branches*                   1,290             Branches                            86   Branches                           65    Branches                        78
Employees                  26,869             Employees                          772   Employees                  ˜ 121 ezer    Employees                ˜ 880 ezer
Number of customers*     ˜ 11.0 m             Number of customers            ˜ 0.2 m   Balance sheet total      EUR 1.7 mrd     Balance sheet total    EUR 1.3 mrd
Balance sheet total  EUR 28.3 mrd             Balance sheet total       EUR 1.3 mrd    After-tax profit           EUR 50 mn      After-tax profit         EUR 15 mn                     OTP Factoring          OTP Life Annuity Real      OTP Funds Servicing
                                                                                                                                                                                                                                                                Foreign Subsidiaries        OTP Building Society Ltd.
After-tax profit       EUR 708 mn              After-tax profit            EUR 7.7 mn    Market share                                                                                       Ltd.               Estate Investment Ltd.     and Consulting Ltd.
                                                                                                                      ˜3.5%     Market share                 ˜0.4%
ROAE                       28.0%              ROAE                            10.8%
Cost/income                56.4%              Cost/income                     68.1%
                                              Market share                     3.0%
                                                                                                                                                                                                           OTP Bank Plc performs its activities through              which are of seven different types. OTP Bank
OTP Bank                                                                                                                                                                                                   a structure that consists of central                      boasts the largest network of branches in the
Branches                         408                                                                                                                                                                       organisational units and a branch network                 Hungarian bank market; at the end of 2006 it
Employees                      8,169
Number of customers                                                                                                                                                                                        clustered around 8 regional centres. The branch           had 409 branches, 70-80% of which are
                             ˜ 4.8 m
Balance sheet total    EUR 17.9 mrd                                                                                                                                                                        network, in addition to the regional centres,             wheelchair accessible, in addition to the central
After-tax profit         EUR 644 mn
ROAE                          29.8%                                                                                                                                                                        consists of the totality of the Bank’s outlets,           office buildings.
Cost/income                   43.6%
Market share                  18.9%




OTP banka Hrvatska                                                                                                                                                     OTP Bank’s branch network
Branches                          96
Employees                        992
Number of customers          ˜ 0.4 m
Balance sheet total      EUR 1.4 mrd
After-tax profit         EUR 13.1 mn
ROAE                          11.4%
Cost/income                   62.2%
Market share                   3.5%




CKB****                                       OTP banka Srbija**                       DSK Group                                OTP Banka Romania
Branches                         33           Branches                            92   Branches                         366     Branches                          66
Employees                 ˜ 150 ezer          Employees                   ˜ 325 ezer   Employees                       4,103    Employees                       795
Balance sheet total     EUR 543 mn            Balance sheet total       EUR 0.5 mrd    Number of customers           ˜ 4.4 m    Number of customers        ˜ 77 ezer
After-tax profit          EUR 4.0 mn           After-tax profit           EUR 21.6 mn    Balance sheet total      EUR 3.1 mrd     Balance sheet total    EUR 0.8 mrd
Market share                   44%            Market share                     3.0%    After-tax profit          EUR 91.7 mn     After-tax profit       EUR –10.5 mn
                                                                                       ROAE                           29.0%     ROAE                               –
IFRS figures, 31 December 2006                                                          Cost/income                    38.7%     Cost/income                 132.3%
    * Only the banks
   ** Aggregated IFRS figures for Niska, Kulska and Zepter banka                        Market share                   14.4%     Market share                  ˜1.5%
  *** Total annual profit, partly consolidated
**** Will be consolidated from Q1 2007, profit according to local GAAP


8       OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                                                                                  OTP Bank and the OTP Bank Group               9
‘The secret of my success is that I believe in myself,                                                                                                                                             product innovation, and the application of
                                                                                                                                                                                                   international corporate governance standards.
I believe in others and I believe in what I do.’
                                                                                                                                                                                                   OTP Bank is among the winners listed for
     A N D R E W C A R N E G I E (Scottish industrialist, businessman, philanthropist)                                                                                                             each country and, according to the analysis
                                                                                                                                                                                                   of the international financial journal, has
                                                                                                                                                                                                   been the best in Hungary every year since
                                                                                                                                                                                                   1998.
                                                                                                                                                                                                 – According to the Foreign Exchange survey
                                                                                                                                                                                                   conducted by Euromoney in 2006, OTP Bank
                               5. Our mission and values                                                                                                                                           is the ‘best local bank trading in Hungarian
                                                                                                                                                                                                   forint’.
                                                                                                                                                                                                 – In Euromoney’s country top-lists for 2006,
                               Our activities                                             Our vision3                                                                                              OTP Bank won the title of ‘Best Bank.’
                                                                                                                                                                                                   The ranking was determined on the basis
                               OTP Bank is a ‘service-providing’ financial                Our goal is to become Central and Eastern                                                                of operating revenues, balance sheet total,
                               institution. At the time of its inception the Bank         Europe’s favourite universal banking group                                                               and net interest income.
                               functioned primarily as a retail bank; however,            through continued dynamic growth, effective                                                            – The MasterCard-sponsored ‘Bank of the Year’
                               starting from the 1990s its profile expanded,              governance and management, and through                                                                   awards were presented for the first time in
                               and today the Bank is the leading universal                good corporate citizenship. The key to our                                                               Hungary in 2006. Of the seven titles
                               bank in Hungary. The OTP Group offers a large              success is the expertise of our employees, our     of the Bank Group’s strategy is to create and         awarded by the professional panel of judges,
                               range of financial services with the assistance            knowledge of local and national markets, and       maintain an appropriately trained and                 OTP Bank came top in two categories,
                               of its numerous subsidiaries.                              the purposeful nurturing of our already            committed team of managers and to develop             winning the title of ‘Bank of the Year’,
                                                                                          excellent customer relationships.                  personalised career paths in order to retain          regarded as the main prize, and ‘Account
                                                                                                                                             talented experts.                                     Managing Bank of the Year’. OTP Bank was
                               Our mission3                                                                                                                                                        also selected as the ‘Most Likable Bank of
                                                                                          Our strategy          3
                                                                                                                                             More information on this issue is available on        the Year’ by public vote. Dr. Sándor Csányi,
                               Our mission is to provide a full range of high-                                                               our website.                                          Chairman and CEO of OTP Bank, was named
                               quality financial services to our retail, corporate         The focus of the OTP Bank Group’s strategy                                                               ‘Banker of the Year.’
                               and municipal customers. The unified and up-to-             is the maximisation of shareholder value, and                                                          – The financial magazine The Banker awarded
                               date corporate governance practices of the Bank            the establishment of the most efficient and        Our values                                            its ‘Bank of the Year’ title to OTP Bank in
                               Group allow us to explore existing resources,              profitable universal banking group with a retail                                                         2006.
                               operate with transparency and prudence, and to             focus in Central and Eastern Europe. The Bank      – reliability     – considerable market knowledge   – The journal Finance New Europe gave the
                               implement creative initiatives. The success of             Group’s objective is to achieve outstanding        – profitability    – professional expertise            Achievement Award to OTP Bank in 2006.
                               our work is clearly evidenced by the continuous            results even when compared to the best of the      – efficiency       – continuous renewal              – The readers of Readers’ Digest Magazine
                               growth in shareholder value and profitability,              European banks. By further strengthening its       – accessibility   – corporate responsibility          selected OTP Bank as the year’s ‘Most
                               the retention of our market share in Hungary,              capacity for innovation the OTP Bank Group         – stability       – customer focus                    Reliable Brand’ in 2006 for the sixth time
                               and the considerable growth in our market share            endeavours to continuously enhance its value       – innovation      – personal contact                  running.
                               abroad. Our competitive advantage is based                 propositions, tailored to the needs of its                                                             – The AccountAbility non-profit organisation
                               on the similarity of development that the                  different customer groups, and to ensure that                                                            and the international csrnetwork consulting
                               neighbouring countries went through, the                   these reach the customers. In order to achieve                                                           company ranked the social responsibility of
                               diverse and complex services we offer and the              our value-creation objectives, it is of key        Our awards                                            the largest companies in the world (Fortune
                               trust that our customers have in us. We take               importance that we rationalise operational                                                               Global 100) according to specific criteria.
                               a responsible role in building communities that            processes at the parent bank and improve the       In 2006 OTP Bank received the following               The evaluation was prepared only on the
                               deepen human relations, creating opportunities             operational and cost effectiveness of certain      national and international industry awards:           basis of published material. OTP Bank scored
                               for the disadvantaged, and protecting our                  group members. We can capitalise on the            – In 2006 Global Finance published a survey           19% in the Hungarian survey, which is the
                               environment. We intend to assign a key role                synergies between group members by                   of the best banks in developing markets for         best result among the five most important
                               to talented and committed employees who are                coordinating development and integrating             the 13th time. The winners were selected on         banks that were evaluated, and was ranked
                               motivated through individually assigned career             certain activities.                                  the basis of several criteria such as balance       11th overall among Hungarian
                               goals and who are rewarded with competitive                In order to achieve the objectives of OTP Bank       sheet growth, profitability, customer service,      companies.
                               remuneration based on their performance.                   and the Bank Group we need highly qualified
                               3
                                   Version up-to-date at the time of report preparation
                                                                                          personnel. Consequently, a key component


10    OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                           Our mission and values       11
‘Real integrity is doing the right thing,                                                                                             Security policy                                        word, such as the management of security risks
                                                                                                                                                                                             inherent in commercial and credit institution
knowing that nobody’s going to know whether you did it or not.’
                                                                                                                                      The Bank regards security as being of primary          activities directly related to the Bank’s business
     O P R A H W I N F R E Y (American actress and TV personality)                                                                    importance for retaining its competitive edge          activities, HR risk management, data
                                                                                                                                      and ensuring the smooth conduct and                    and secrets protection, and the protection
                                                                                                                                      efficiency of its business operations.                 of business interests. The Bank aims to achieve
                                                                                                                                      Consequently, the Bank has drawn up                    security by taking risk-proportionate
                                                                                                                                      a Security Policy in which the Bank’s                  countermeasures; that is measures that are

                               6. Principles and practices                                                                            management has formulated the key
                                                                                                                                      expectations, guidelines and opinions
                                                                                                                                                                                             reasonable in light of the sources of the given
                                                                                                                                                                                             threat and the security risks involved.


                                  that determine the Bank’s                                                                           related to security, and has introduced
                                                                                                                                      a comprehensive security regulation system.            The Bank’s overall IT infrastructure represents
                                                                                                                                                                                             an extremely valuable asset, since it ensures
                                  operations and activities                                                                           The Bank’s management is resolutely                    the continuity and smooth running of the
                                                                                                                                      committed to maintaining and protecting                Bank’s business operations. For this reason, the
                                                                                                                                      the Bank’s security, and provides all the              Bank places particular emphasis on ensuring
                               The organisation’s values, conduct and             website. The Code of Ethics is available for all    resources, tools and conditions necessary for          the integrity, authenticity, security, availability
                               operation are regulated by the following           employees via the Bank’s intranet. Our goal         this purpose. In this context, the Bank pays           and functionality of the individual IT systems
                               documents, which apply to every organisational     is to give as much publicity as possible to the     particular attention to ensuring the availability      and their components.
                               unit and which were determined in accordance       values undertaken in the Code of Ethics and         of the appropriate human and financial
                               with international standards:                      the Ethics Statement. In order to do so, we offer   resources, compliance with the regulated               OTP Bank regularly communicates and
                               – Code of Ethics                                   our employees training, in the course of which      environment and the integrity of processes.            demonstrates to the public, its employees,
                               – Organisational and Operational Regulations       they learn the Code of Ethics; we specifically      When providing for and maintaining its security,       and its current and potential customers
                               – Group Management Regulations                     call the attention of suppliers to ensure their     OTP Bank proceeds in accordance with the               and partners, that it possesses the capacity
                               – Collective Bargaining Agreement.                 compliance with the Code of Ethics, and we          relevant government regulations, and takes             and tools needed for minimising risks to the
                                                                                  make available the Ethics Statement to as many      into account all recommendations and best              Bank, effectively preventing attacks against
                                                                                  of our customers as possible.                       practices that it believes will contribute to the      the Bank and protecting the credit institution,
                               Code of Ethics                                                                                         preservation and enhancement of the                    its employees and customers from potential
                                                                                                                                      credit institution’s security level.                   threats and their consequences.
                               Our activity, the primary purpose of which         Human rights, equal opportunity
                               is to best satisfy our customers’ needs and our                                                        The Bank treats security issues in a complex
                               investors’ expectations, is performed in keeping   The primary objective of OTP Bank’s human           and holistic manner which, in addition to the          Principles related
                               with specific ethical values. The sustained        resources strategy is to eliminate discrimination   conventional protection of persons, property           to financial activities
                               and profitable operation of OTP Bank Plc would     and to offer equal opportunities to everyone.       and information technology, includes other
                               be unimaginable without the committed work         The Bank, both in the course of selecting           aspects of security in the broader sense of the        The fight against money laundering
                               of trained, creative and ethical employees.        employees and during the entire career of our                                                              and terrorist financing
                               In order to promote such work, OTP Bank Plc’s      employees at the Bank, ensures its employees                                                               To prevent money laundering, the Bank
                               Board of Directors and management approved         equal opportunity, regardless of age, gender,                                                              operates various internal controls and proceeds
                               the introduction of unified ethical guidelines     ethnicity, religious and political beliefs and                                                             with the utmost care in relation to the matter.
                               and drew up the Bank’s Code of Ethics.             sexual orientation. We ensure that there                                                                   The Bank requires from its employees strict
                               The Code of Ethics consists of three sections,     is no discrimination and there is compliance                                                               compliance with the provisions of the Act
                               one of which, the Ethics Statement, contains       with the obligation to report misconduct                                                                   on the Prevention and Impeding of Money
                               the fundamental moral expectations and             internally by offering hotmail and hotline                                                                 Laundering.
                               principles that the Bank espouses, and sets out    services that usually allow anonymous
                               the manner in which an ethics process may be       reporting of incidents. In 2006 there were no                                                              Chinese Wall regulations
                               initiated. The Bank reviews all reported ethical   cases or procedures in connection with                                                                     In full compliance with the relevant statutory
                               misconduct in the framework of a process set       negative discrimination at our Bank (HR4).                                                                 regulations, OTP Bank separates investment
                               out in the Code of Ethics and notifies those       The Bank – in compliance with the Hungarian                                                                sevices from financial services activities, in order
                               concerned of the result of the process. In 2006    statutory regulations and basic ethical norms –                                                            to prevent the accruing of any advantage to
                               there were no ethics processes. OTP Bank Plc       does not use forced labour or child labour                                                                 persons who possess information in these two
                               has published an Ethics Statement on its           (HR6, HR7).


12    OTP Bank Corporate Social Responsibility Report 2006                                                                                                    Principles and practices that determine the Bank’s operations and activities         13
                                      main financial areas compared to those who                    Lending principles and rules                         ‘There is no freedom to make decisions without responsibility.’
                                      only have public information available to them.               There are two approaches to the issue of
                                                                                                                                                             J E A N - P A U L S A T R E (French philosopher and writer)
                                                                                                    responsible lending. On the one hand, when
                                      No insider trading                                            lending its funds, the credit institution should
                                      Certain units and employees of credit                         proceed with care in order to ensure that the
                                      institutions possess insider information by                   money can be repaid, at any time, upon the
                                      virtue of their position. OTP Bank regulates                  request of the customer who placed the funds
                                      such issues in accordance with the statutory
                                      regulations, to prevent such units and
                                                                                                    with it. Our Bank, similarly to other banks,
                                                                                                    places particular emphasis on this issue, and
                                                                                                                                                                                       7. Corporate governance
                                      employees from utilising the information
                                      available to them.
                                                                                                    our liquidity position is constantly being
                                                                                                    monitored and analysed with this in mind.
                                                                                                                                                                                          and corporate social
                                      Conflicts of interest
                                                                                                    From a sustainability perspective, responsible
                                                                                                    lending means behaving responsibly not only in                                        responsibility in the Bank’s
                                      A conflict of interest is any relationship or activity         relation to the person who provides the funds,
                                      that is not in harmony with the obligations of
                                      employees, and which prevents the Bank from
                                                                                                    but also with regard to the debtor. It is
                                                                                                    important that the Bank should monitor its
                                                                                                                                                                                          organisational structure
                                      enforcing its interests. Certain employees,                   customer’s indebtedness after a product has
                                      especially those within management, cannot                    been sold, because if it is too great, this may                                    OTP Bank’s governing bodies were established          of Directors had 3 independent members
                                      participate in certain banking and business                   jeopardise the customer’s livelihood. Besides                                      in accordance with Act CXII of 1996 on Credit         (a ratio of 27%), and since 28 April 2006
                                      decisions because this would represent a conflict              monitoring the financial situation of its                                          Institutions and Financial Enterprises (Credit        the Board of Directors has had 4 independent
                                      of interest with regard to the Bank’s activities              borrowers, OTP Bank Plc provides advice or                                         Institutions Act).                                    members (a ratio of 36%). The independent
                                      and would therefore pose a risk. The Bank’s                   preferential loan conditions that are prepared                                                                                           members of the Board of Directors are those
                                      employees must declare that they have                         specifically for such cases of this kind, in order                                 General Meeting                                       who are not employed by OTP Bank Plc.
                                      familiarised themselves with the rules related                to help find a solution to critical problems.                                      The General Meeting is the Bank’s supreme             The Bank’s regular Annual General Meeting
                                      to conflicts of interest.                                                                                                                         governing body, and consists of its shareholders.     of shareholders held on 26 April 2006 elected
                                                                                                                                                                                                                                             the members of the Board of Directors for a
‘A loan that is given and taken out irresponsibly will fail and take the business, its employees, their families                                                                       Board of Directors                                    term ending in 2011. Employer’s rights in
and their livelihood with it. People who lose their livelihood and home become a social problem. Therefore,                                                                            The Board of Directors is the company’s               respect of the Company’s executives are
lending responsibly is a social responsibility. And this responsibility goes beyond lending. For me the basis
                                                                                                                                                                                       executive body. The Chairman of the Board             exercised by the Chairman & CEO on behalf of
of responsible lending is making sure as a lender, during the entire term of the relationship with the customer,
that the customer’s obligations can be met, and monitoring any changes that have an impact on his ability
                                                                                                                                                                                       of Directors is Dr. Sándor Csányi, Chairman & CEO.    the Board of Directors; the Board of Directors
to repay the loan.’                                                                                                                                                                    In 2006 the Board of Directors had 11                 must be informed in advance of the
(Dr. Péter Schiffer, Deputy Director of the Hungarian Financial Supervisory Authority:                                                                                                 members. At the beginning of 2006 the Board           appointment and the dismissal of deputy CEOs.
The Social Responsibility of Service Providers.)
                                                                                                                                                                                                                                             The Board of Directors sets the guidelines
                                                                                                                                                                                                                                             for the appraisal and remuneration
                                                                                                                                                                                                                                             of management’s performance. In order
                                      Investment principles                                         Risk management                                                                                                                          to create incentives to enhance the
                                      Investment is a legally well regulated area                   In addition to risk management guidelines,                                                                                               performance of management, the Bank’s
                                      of the Bank’s operation. The main purpose                     as a credit institution our company possesses                                                                                            General Meeting approved a share option
                                      of regulation is to ensure transparency, and                  detailed risk management regulations that                                                                                                scheme, which is based on the fulfilment
                                      the responsible and prudent management                        cover all risks, and are based on statutory                                                                                              of annual and mid-term objectives.
                                      of investments, and objective that is in                      provisions that serve to regulate banking                                                                                                The objectives are determined on the basis
                                      harmony with the basic interests of                           operations in the interests of prudence.                                                                                                 of business and financial targets.
                                      shareholders. The framework for making                        The Hungarian Financial Supervisory Authority                                                                                            The detailed conditions of the share option
                                      investment decisions and managing                             examines the suitability of the regulations,                                                                                             scheme and the expectations with regard
                                      investments is provided by the professional                   and ensures that the Bank’s operation                                                                                                    to performance are also approved by the
                                      apparatus created for such purposes within                    is compliant with these regulations.                                                                                                     General Meeting. The Board of Directors
                                      the Bank, and is elaborated by the individual                                                                                                                                                          provides information about the objectives
                                      divisions in accordance with the relevant                                                                                                                                                              and their attainment at the regular
                                      statutory regulations.                                                                                                                                                                                 Annual General Meeting.




14     OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                Corporate governance and corporate social responsibility in the bank’s organisational structure    15
                              OTP BANK’S SENIOR MANAGEMENT AND                                                                                      SUPERVISORY BOARD
                              THE EXECUTIVE MEMBERS OF THE BOARD
                              OF DIRECTORS                                                                                                          The Supervisory Board oversees the Bank’s            In order to avoid conflicts of interest, the
                                                                                                                                                    management and operation. At the start of            General Meeting may not elect members
                                                                                                                                                    2006 the ratio of independent members in the         of the Board of Directors or their close relatives
                              Dr. Sándor Csányi (54)                                                Gyula Pap (49)                                  Supervisory Board (4) within the total number        to serve on the Supervisory Board. The rules
                              Chairman & CEO                                                        Deputy CEO, IT and Logistics Division           of members (6) was 67%. Starting from 28             for appointing and recalling the employee-
                                                                                                    (until 1 October 2006)                          April 2006, the ratio of independent (non-           nominated members of the Supervisory
                              Dr. Zoltán Spéder (43)                                                                                                executive) members (3) within the total              Board are determined by the Workers’ Council
                              Vice Chairman, Deputy CEO                                             Dr. Antal Pongrácz (61)                         number of Supervisory Board members (5)              that operates at the Company, and the
                              Strategic and Financial Division1                                     Administrative Deputy CEO,                      was 60%. The mandate of the Supervisory              Company does not consider these members
                                                                                                    member of the Board of Directors                Board members will expire in 2008.                   to be independent.
                              István Gresa (54)                                                     Staff Division
                              Deputy CEO
                              Credit Approval                                                       Ákos Takáts (47)
                              and Risk Management Division                                          Deputy CEO, IT and Logistics Division           MEMBERS OF THE SUPERVISORY BOARD
                              (from 1 March 2006)                                                   (from 1 October 2006)


                              Csaba Lantos (45)                                                     László Wolf (47)                                Tibor Tolnay (56)                                    Antal Kovács (54)
                              Deputy CEO,                                                           Deputy CEO                                      Chairman of the Supervisory Board, Chairman &        Managing Director
                              member of the Board of Directors                                      Commercial Banking Division                     CEO of Magyar Építôk Ltd.                            OTP Bank Plc, South-Transdanubian Region
                              Retail Division
                                                                                                                                                    Dr. Gábor Nagy (70)                                  Klára Vécsei (55)
                              Géza Lenk (60)                                                                                                        Vice Chairman of the Supervisory Board,              Deputy Managing Director
                              Deputy CEO, member of the Board of Directors                                                                          Head of Codification Group at the Ministry            OTP Bank Plc, Northern Hungary Region
                              (until 28 April 2006)                                                                                                 of Finance, Accounting Division


                                                                                                                                                    Dr. Gábor Horváth (51)                               More information is available on our website

                                                                                                                                                    lawyer                                               about the members of the Board of Directors
                              EXTERNAL MEMBERS OF THE BOARD                                                                                                                                              and the Supervisory Board.

                              OF DIRECTORS

                              Mihály Baumstark (58)                                                 Dr. Sándor Pintér (59)
                              Chairman & CEO                                                        Chairman & CEO
                              Csányi Pincészet Ltd.                                                 CIVIL Security Service Ltd.


                              Dr. Tibor Bíró (55)                                                   Dr. László Utassy (55)
                              Head of Department                                                    Chairman & CEO
                              Budapest College of Business                                          OTP Garancia Insurance Ltd.


                              Péter Braun (71)                                                      Dr. József Vörös (56)
                              electrical engineer                                                   General Deputy Rector
                              ex-Deputy CEO of OTP Bank Plc                                         Pécs University


                              Dr. István Kocsis (55)
                              CEO
                              Magyar Villamos Mûvek Ltd.

                              1
                                  The positions indicated above are held until 8 January 2007.
                                  From 15 January 2007 Dr. László Urbán (48) Deputy CEO will be the head of the Strategic and Financial Division.



16   OTP Bank Corporate Social Responsibility Report 2006                                                                                               Corporate governance and corporate social responsibility in the Bank’s organisational structure   17
                              Committees                                         on 1 January 2007 was to shift the focus                                         provides effective support for responsible              responsible for mitigating environmental
                              The committees are the Bank’s decision             of the Chairman & CEO’s tasks to strategic                                       corporate governance, and to ensure                     impacts arising from the Bank’s physical
                              preparation, decision making and negotiating       decisions and decisions of key importance that                                   the continued independence of the                       operation. The key task of the Supply and
                              forums. The chairpersons and members               concern the entire group, as well as to promote                                  organisational unit.                                    Investment Directorate is to provide the physical
                              of the permanent committees are appointed          decentralisation.                                                                                                                        conditions that are necessary for the Bank’s
                              by the Bank’s Chairman & CEO.                                                                                                       Organisational units that participate                   operation, to manage the various facilities,
                              In 2006 OTP Bank had 8 permanent                   Governance model                                                                 in developing banking products and services             to ensure the continuous supply of materials
                              committees:                                        OTP Bank Plc’s structure is characterised                                        or that come into direct contact with                   and resources, to purchase equipment and to
                              1. Management Committee                            by a two-tiered governance model, which helps                                    customers when products and services                    manage waste. Since June 2006 the Directorate
                              2. Asset Liability Committee                       ensure that the Bank can perform its central                                     are being sold are of key concern.                      has employed a full-time energy specialist, who
                              3. Credit Limit Committee                          governance role within the Bank Group as                                                                                                 is responsible for optimising the energy supply
                              4. Work-out Committee                              effectively as possible. The essence of the                                      The Human Resource Management                           of the Bank’s facilities. In 2007 we decided
                              5. IT Control Committee                            model is that it separates the elements of                                       Directorate is mainly responsible for                   to hire a full-time environmental specialist,
                              6. Investment Committee                            business and functional governance, and thus                                     promoting responsible attitudes and conduct             who will handle environmental issues related
                              7. Ethics Committee – has a special function       the areas under the Bank’s control are able to                                   among and towards employees. Because                    to operation and minimise the environmental
                                 and legal status relative to the other          focus more fully on their primary activities and                                 responsibility towards employees is one                 impact of the company’s operation.
                                 committees, and takes positions on              to fully benefit from the synergies inherent                                     of the key focal points of the Bank’s CSR               The company’s IT equipment is procured by
                                 special issues                                  within the group. Each central organisational                                    efforts, the role and activities of the HR              the IT Logistics Directorate, and is operated
                              8. Sales and Marketing Committee                   unit focuses on one business profile, and                                        Directorate are of fundamental importance.              by the IT Operations Directorate.
                                                                                 therefore each area has its own core activity,
                              In 2006 OTP Bank had a strongly centralised        while the Staff Division fulfils the duties of the                               The Bank Security Directorate, an independent           The Marketing and Sales Directorate is
                              decision-making structure. In addition             owner. The Bank operates the branch network                                      organisational unit at the Bank, is responsible         involved in implementing social responsibility
                              to strategic decisions, the competence             through 8 regional centres, whose managers                                       for the performance of bank security tasks.             in several respects. The tasks of the Directorate
                              of the Chairman & CEO also included operative      report to the heads of the central departments.                                                                                          include managing the sponsorship and
                              tasks. Due to the scope of his duties, the CEO                                                                                      The Supply and Investment Directorate                   support provided by OTP Bank and
                              has an important role to play in implementing      Organisational units that are most                                               and the IT Operations Directorate are                   coordinating the Bank’s CSR activities.
                              the Bank’s objectives related to responsible       involved in the implementation
                              operation.                                         of corporate responsibility issues
                                                                                 (CSR2)                                                                                 Supervisory
                                                                                                                                                                                             General Meeting
                                                                                                                                                                                                                    Human Resource Management
                                                                                                                                                                          Board                                            Directorate
                              In addition to its own operation, OTP Bank         Each organisational unit has a role to play
                              is also responsible for ensuring the prudent       in implementing corporate responsibility
                              operation of the companies under its control       at OTP Bank Plc in order to ensure that                                                                          Board
                                                                                                                                                                                                                    Marketing and Sales Directorate
                              and for their compliance with risk exposure and    sustainability is achieved primarily, in respect of                                                           of Directors

                              capital adequacy requirements. The companies       the company’s core activity. The following is a
                              within the OTP Bank Group are controlled and       list of the organisational units that have the                                                                                      Communications Department
                                                                                                                                                                        Permanent               Chairman
                              supervised by way of owner and professional        most direct impact on social responsibility.                                           Committees               & CEO
                                                                                                                                                                                                                          Legal Department
                              control and by the external supervisory
                              authorities.                                       In addition to the Bank’s governing bodies,
                                                                                 the role of the organisational units that
                              Planned changes                                    participate in the formulation of the Bank’s                            Commercial
                                                                                                                                                                                Credit Approval and Risk
                                                                                                                                                                                                                    Strategy and             IT and Bank
                                                                                                                                                                                                                                                                 Staffing
                                                                                                                                       Retail Division    Banking                                                     Financial               Operation
                                                                                                                                                                                 Management Division                                                             Division
                              As a result of the large-scale acquisitions that   strategy is of key importance, especially that                           Division                                                    Division                 Division

                              were completed in 2006, the Bank has recently      of the Business Policy and Economics
                              arrived at a new juncture in its development,      Directorate.
                              becoming a multinational bank. In order to fully
                              capitalise on the Bank’s growth potential, the     The task of the Independent Compliance
                              management decided to implement significant        Division is to monitor the legal environment
                              organisational changes in the Bank’s governance    of the Bank’s operation and to help the Bank
                              structure. The key direction and objective         adapt to it. Our objective is to ensure that the
                              of the organisational change that took effect      compliance function operates in a way that




18   OTP Bank Corporate Social Responsibility Report 2006                                                                                                             Corporate governance and corporate social responsibility in the bank’s organisational structure       19
‘Work on the world as you work on yourself. Complete whatever is only                                                                                                OTP Bank devotes considerable resources             Private Banking division
                                                                                                                                                                     to constantly developing and enhancing its
perfect. Your acts must survive your death, otherwise it is not worth being
                                                                                                                                                                     electronic banking channels, in order to ensure     The Private Banking division offers customers in
born into this world.’
                                                                                                                                                                     convenience and security for its customers.         the ’preferred’ retail segment a service model and
     I M R E H O R V Á T H (Csángó Hungarian poet, humanist)                                                                                                         Our customers are making use of the available       product range that conforms to global standards,
                                                                                                                                                                     e-banking opportunities in ever growing             with access to local and international investment
                                                                                                                                                                     numbers.                                            opportunities, and the assistance of a personal
                                                                                                                                                                                                                         banking advisor. The professional framework and
                               8. Our economic performance4                                                                                                          The Bank offers preferential services and           process for providing investment advice is strictly
                                                                                                                                                                     products to special groups of customers to          regulated, and is founded on the premise that
                                                                                                                                                                     facilitate their access to banking services:        customers should be properly informed at all
                               8.1 Divisions                                                          Retail division                                                Services offered to lower-income groups:            times. Owing to the attractiveness of the services
                                                                                                                                                                     – In the case of loans combined with home-          offered, the division is growing dynamically, and
                               At the time of its establishment OTP Bank                              OTP Bank continues to retain its leading                         purchase savings funds, reduced initial           at the end of 2006 it had a total of 12,405
                               operated mainly as a retail bank, but from the                         position in the retail segment and remains                       repayment instalments                             clients at some fifty locations around the country,
                               1990s the scope of its operations was broadened.                       the biggest player in the retail banking market                – Current account overdraft facilities on retail    for whom it managed some HUF 391 billion in
                               Today the company is the leading universal bank                        in terms of savings products, with a market                      accounts for those with a minimum net             assets, having generated consistent double-digit
                                                                                                                                                              5
                               in the Hungarian market, with a product range that                     share in excess of 30%. Relative to 2005                         monthly income of as low as HUF 30,000            growth over the past 4 years.
                               includes not only lending and savings products,                        there was a 3.1 percentage-point drop in its                   Services offered to young people:
                               but also insurance, financial consulting, complex                       deposit portfolio. On the other hand, the                      – ‘Start’ deposit account for children born after
                               financial instruments, etc.                                             Bank’s credit portfolio rose by 22.4% in                         January 1, 2006                                   Commercial Banking division
                               The following descriptions of the Bank’s business                      2006. The wide range of retail products                        – Products for people under public
                               divisions include a presentation of the deposit                        and services is accessible to close                              guardianship                                      The Commercial Banking division offers, primarily
                               and lending portfolios, since these are the                            to 4.6 million custumers.                                      – Discounted ’Junior’ account package, which        to domestic enterprises, a variety of products and
                               performance indicators that best characterise                                                                                           offers a sophisticated financial service for      services adapted to meet the special equirements
                               the Bank’s core activity.                                                                                                               customers under 26 years of age                   of this customer group. The corporate loan
                                                                                                                                                                     – Participation in the provision of student loans   portfolio shows considerable growth relative
                                                                                                                                                                     – Discounts for customers applying for              to 2005, with an increase of 11.3%.
Retail loan and deposit portfolio                                                                                                                                      ‘Fészekrakó’ (Nest Building) subsidised           The volume of business deposits also rose
                                                                                              Billion HUF
                                                                                                                       1870.4                        1812.7            home loans                                        dynamically in 2006, displaying a 49.6% rise
                                       Retail loans                                           2000
                                                                                                                                                                     – Discounted products offered to university         in comparison to the previous year. For micro
                                       Retail deposits                                                                                                                 and college students for the purchase             and small enterprises (192,000 customers)
                                                                                              1500
                                                                                                                                                                       of computer equipment                             our Bank provides financial advice to assist
                                                                                                                                                                     Products offered to other special groups:           them in the launching of their businesses, as
                                                                                              1000                                                                   – Home loans for civil servants and public-         well as a range of favourably-priced loans and

                                                                                                                                             567.9                     sector employees                                  account packages. In 2006, the Bank continued
                                                                                                               463.9                                                 – Opportunity to apply for home loan-related        upgrading and developing its processes and its
                                                                                               500
                                                                                                                                                                       government subsidies and subsidised loans         material resources for serving micro and small
                                                                                                                                                                       through the Bank                                  enterprises, and a number of products were
                                                                                                  0
                                                                                                                 2005                          2006                  – Opportunity to take out repayment insurance       introduced with the specific aim of fulfilling
                                                                                                                                                                       for mortgage-backed loans                         the requirements of this segment even faster,
                               Product and service lines offered to                                                                                                  – Brokerage of Personal Retirement Savings          more conveniently and securely than before.
                               our retail customers:                                                  – investment funds, securities                                   Account (PRSA) facilities. OTP Bank               In economically disadvantaged regions,
                               – account management                                                   – pension and health fund services                               undertook a key role in the development and       OTP Bank treats the promotion and placement
                               – electronic banking                                                   – life and non-life insurance services                           introduction of the professional guidelines       of agricultural and rural-development loan
                               – bankcard services                                                    – retail lending                                                 for PRSAs. Promoting an awareness of the          products as a priority, with particular respect to
                               – savings products                                                     – consumer loans                                                 available means of financial self care,           the support of environmental protection projects.
                                                                                                                                                                       and making then available to our customers,       We provide support in relation to the goverment-
                                                                                                                                                                       is a social responsibility that OTP Bank, as      sponsored program aimed at modernising
                               4
                                   More information on our business performance can be found in the Annual Report, which is available for download on our website.     Hungary’s leading retail financial institution,   livestock farms, and have undertaken an active
                               5
                                   This report does not cover longer periods of time, since it is difficult to compare data from the previous years due to changes
                                   in accounting standards.
                                                                                                                                                                       takes very seriously. (RB1).                      role in the frost-damage loan campaign.


20    OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                                                Our economic performance            21
                              For medium-sized and large corporations                     these businesses grow, OTP Bank has introduced          Municipality loan and deposit portfolio                                   Billion HUF
                                                                                                                                                                                                                                 250
                              (approximately 18,000 customers), we provide                a range of lending products that are ideal for
                                                                                                                                                                                                                                                                            189.7
                              unlimited access to the financial instruments               facilitating business development, and are also                                       Municipality loans
                                                                                                                                                                                                                               200
                              necessary for financing their operations. To help            well-suited to the needs of agricultural enterprises.                                                                                                     151.1
                                                                                                                                                                                Municipality deposits
                                                                                                                                                                                                                                                                                    155
                                                                                                                                                                                                                               150            127


Corporate loan and deposit portfolio                                            Billion HUF
                                                                                   1500                                                                                                                                        100


                                  Corporate loans
                                                                                                                                                                                                                                 50
                                                                                                                            1004.6
                                                                                                  902.7
                                  Corporate deposits
                                                                                  1000
                                                                                                                                 708.9                                                                                            0
                                                                                                                                                                                                                                               2005                           2006


                                                                                                          474
                                                                                   500

                                                                                                                                                  Key data related to community investment financing in 2006 (EC8):

                                                                                                                                                                                                                                               Number of                               Volume
                                                                                      0                                                                                                                                                    disbursements                          (HUF million)
                                                                                                    2005                      2006
                                                                                                                                                                            Water supply development loans for municipal associations                  6,159                               21,607
                                                                                                                                                                            Water supply development for municipalities                                                                    10,741
                                                                                                                                                                            EU-subsidised EIB loan                                                           13                                77
                                                                                                                                                                            EU-subsidised EIB water supply development loan
                              Municipality services                                       The Bank undertakes an active role in the                                         for municipal associations                                                  528                                   612
                                                                                                                                                                            MFB loans for municipal bodies                                           28,552                                38,423
                                                                                          financing of EU and government-funded                                             ‘Light of our Life’ program                                                 571                                 4,347
                              Local authorities have access to a range of                 community development projects, which are
                              products specifically developed to meet the                  primarily aimed at improving infrastructure.
                              particular requirements of municipalities                   An important prerequisite for economic growth
                                                                                                                                                  OTP Bank’s market share in the various market segments
                              (account packages, borrowing and savings                    is construction of the country’s public mains
                              products, subsidised loans, EU assistance                   water supply network. The Bank is promoting                             Market share                                                                               Market share
                                                                                                                                                                                           Change                                                                                         Change
                                                                                                                                                                  (31.12.2006)                                                                               (31.12.2006)
                              products). With more than a 60% share in                    the successful implementation of the
                                                                                                                                                                                             (Y-Y)                                                                                        (Y-Y)
                              the municipal investment funding market,                    investment projects by offering appropriate
                              OTP Bank is the most important financial partner             bank-loan products at every necessary stage
                                                                                                                                                  Balance sheet
                                                                                                                                                                    24.7%                 (+0.6%p)                             Total deposits                     23.7%               (–3.2%p)
                              of the municipalities. Both in terms of the                 of the financing process.                               total

                              municipal loan porfolio and municipal deposit               OTP Bank is a participant in the partially
                              volumes, a considerable growth was achieved in              EU-funded EIB credit program, which focuses                                                                                          Retail
                                                                                                                                                  Total loans       20.6%                 (–0.8%p)                                                                  32.4%             (–2.3%p)
                                                                                                                                                                                                                               deposits
                              2006 compared to the previous year.                         on infrastructure investments in the areas
                              The Bank also places particular emphasis                    of environmental protection, transportation,                                                                                         Corporate
                                                                                                                                                  Housing loans         41.7%             (–4.7%p)                                                           9.9%                     (–1.5%p)
                              on the financing of capital projects that have              healthcare and education, with particular                                                                                            deposits

                              been afforded priority under government and/                emphasis on cross-border cooperation.
                                                                                                                                                  FCY-based                                                                    Municipality
                              or international development programs.                      The loans provided to borrowers by OTP Bank                               22.9%                 (+0.4%p)                                                                        64.2%       (+0.8%p)
                                                                                                                                                  housing loans                                                                deposits
                              In the fields of infrastructure development,                receive a capital subsidy from the European
                              education, training, healthcare, environmental              Commission, and are refinanced by the EIB.              Consumer
                                                                                                                                                                    24.9%                 (+0.5%p)                             Investment funds                   27.6%               (–10.7%p)
                                                                                                                                                  loans
                              protection, and regional development,                       The Bank is also participating in the
                              the ultimate purpose of the Bank’s lending                  ‘For a Successful Hungary’ infrastructure-                                                                                           Insurance
                                                                                                                                                  Corporate
                              activities is to narrow the divide between                  development lending program launched                                    11%                     (–0.7%p)                             premium revenues              9.7%                     (–1.3%p)
                                                                                                                                                  loans
                                                                                                                                                                                                                               (cumulated)
                              Hungary and the more developed countries                    by the Hungarian Development Bank.
                              of Europe, thereby contributing to building                 The objective of the scheme is to finance               Municipality
                                                                                                                                                                            55.1%         (+2.4%p)                                          Source: OTP Bank press release, 14 Feb. 2007
                                                                                                                                                  loans
                              a more successful society. The ISO 9001:2000                municipal projects related to environmental
                              quality assurance system in place at the                    protection, public education, culture and sport.
                              Municipality division ensures the Bank’s ability            An especially noteworthy energy-saving
                              to participate cost-effectively and efficiently             development project for 2006 is the                                               The Bank suffered losses of market share                  and can effectively serve the interests
                              in public procurement tenders.                              ‘Light of our Life’ school lighting and heating                                   in several segments in 2006. However,                     of its stakeholders in spite of the decline
                                                                                          modernisation program. The Bank is helping                                        it remains capable of leveraging its economi-             in market share.
                                                                                          to provide financing support for the program.                                     es of scale and professional sales network,


22   OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                                                                   Our economic performance              23
                                   8.2. Key economic                                                                                                                              GRI expects reporting organisations to present         of subsidies. The difference between the
                                   indicators                                                                                                                                     their business results differently than                balance sheet results and the EC1 table arises
                                                                                                                                                                                  is required by the accounting regulations,             from the different calculation methods used.
                                   Balance sheet and profit                                   the Bank’s growing economic strength.                                                highlighting aggregate taxes and the extent
                                   OTP Bank’s IFRS non-consolidated balance                  OTP Bank achieved the highest profits
                                   sheet total and equity both rose considerably             in the Hungarian banking sector.                                                                                                                                                31 Dec. 2006
                                                                                                                                               Table EC1 (based on non-consolidated, IFRS income statement)                                                                  (HUF million)
                                   in comparison to the previous year, reflecting
                                                                                                                                               GRI                                                           Income statement
                                                                                                                                               I. Direct economic value generated                            1                                                                       331,917
                                                                                                                                               1. Net income from sales                                      Interest income + non-interest income                                   527,168
                                                                                                                                               II. Distributed economic value                                = 2+3+4+5                                                               368,865
                                                                                                                                                                                                             Interest expenses + provisioning + non-interest expenses
Non-consolidated balance sheet of OTP Bank                                                                                                     2. Operating costs + payments to capital investments
                                                                                                                                                                                                             – personnel expenses
                                                                                                                                                                                                                                                                                     274,277

                                                                                                                                               3. Employees’ wages and benefits                              Personnel expenses before taxes                                          49,805
                                                                               31/12/2005        31/12/2006                 Change             4. Taxes paid                                                 Tax payment liability                                                    44,142
                                                                                   HUF mn            HUF mn          HUF mn               %    5. Community investments                                      Sponsorship and charitable giving                                           641
Cash, due from banks and balances with the NBH                                     379,249           429,325           50,076           13.2   III. Retained earnings                                        =1-(2+3+4+5)                                                            158,303
Placements with other banks, net of allowance for placement losses                 393,659           657,939         264,280            67.1
Financial assets at fair value through statements of operation                      34,054            61,085           27,031           79.4
Securities available-for-sale                                                      371,433           348,859        (22,574)           (6.1)
Gross loans                                                                      1,497,670         1,782,699        285,029            19.0
Allowance for loan losses                                                         (22,162)          (31,021)          (8,859)           40.0
Loans, net of allowance for loan losses                                          1,475,508         1,751,678         276,170            18.7                                      Return on average equity (ROAE)                        of the return on an investment in the company.
Accrued interest receivable                                                         41,276            44,398            3,122            7.6                                                                                             This ratio fell in 2006 due to corporate
Associates and other investments                                                   223,881           583,298         359,417          160.5
Securities held-to-maturity                                                        521,797           504,111        (17,686)           (3.4)                                      Return on average equity shows the profit              acquisitions. However, the 28% figure for the
Premises, equipment and intangible assets, net                                     105,569           100,721          (4,848)          (4.6)                                      generated by the company per one unit                  year still represents a high return on
Other assets                                                                        46,447            25,283        (21,164)         (45.6)
                                                                                                                                                                                  of equity. In essence, it is an indicator              investment, and can be regarded as excellent
Total assets                                                                     3,592,873         4,506,697        913,824            25.4
Due to banks and deposits from the NBH and other banks                             255,211           557,857         302,646          118.6                                                                                              even by international standards.
Deposits from customers                                                          2,506,457         2,690,098        183,641              7.3
Liabilities from issued securities                                                 202,267           202,050            (217)          (0.1)
Accrued interest payable                                                             5,735            16,175           10,440         182.0    ROAE                                                                                33%
                                                                                                                                                                                                                                                  32.30%
Other liabilities                                                                  102,881           122,398           19,517           19.0
Subordinated bonds and loans                                                        47,023           247,865         200,842          427.1                                                                                        32%
Total liabilities                                                                3,119,574         3,836,443        716,869            23.0
                                                                                                                                                                                                                                   31%
Total shareholders’ equity                                                         473,299           670,254        196,955            41.6
Total liabilities and shareholders’ equity                                       3,592,873         4,506,697        913,824            25.4                                                                                        30%

                                                                                                                                                                                                                                   29%
                                                                                                                                                                                                                                                                            28.00%
                                                                                                                                                                                                                                   28%
Non-consolidated income statement of OTP Bank                                                                                                                                                                                      27%


                                                                       2005                    2006                        Change                                                                                                  26%
                                                                     HUF mn                  HUF mn             HUF mn                   %
                                                                                                                                                                                                                                   25%
 Interest income                                                     281,402                 331,917             50,515                18.0                                                                                                        2005                     2006
 Interest expenses                                                   112,763                 128,753             15,990                14.2
 Net interest income                                                 168,639                 203,164             34,525                20.5
 Provision for loan and placement losses                              16,435                  25,443              9,008                54.8
 Net interest income after provision
   for loan and placement losses                                     152,204             177,721                  25,517               16.8
 Fee income                                                          136,264              147,668                 11,404                8.4
 Foreign exchange gains and losses, net                                1,603             (14,465)               (16,068)                  –
 Gains and losses on securities, net                                   3,103                  870                (2,233)             (72.0)
 Gains and losses on real estate transactions, net                      (28)                   77                    105                  –
 Dividend income and gains and losses
   of associated companies                                            13,937                  16,252               2,315                16.6
 Other income                                                          3,541                  44,849              41,308             1166.6
 Total non-interest income                                           158,420                 195,251             36,831                 23.2
 Fee expenses                                                         13,840                  21,163               7,323                52.9
 Personnel expenses                                                   62,437                  65,405               2,968                 4.8
 Depreciation and amortization                                        15,244                  17,391               2,147                14.1
 Other expenses                                                       63,301                  81,527              18,226                28.8
 Total non-interest expenses                                         154,822                 185,486             30,664                 19.8
 Income before income taxes                                          155,802                 187,486             31,684                 20.3
 Income taxes                                                         22,954                  17,298             (5,656)              (24.6)
 Income after income taxes                                           132,848                 170,188             37,340                 28.1
 Net income after income taxes                                       132,848                 170,188             37,340                 28.1




24    OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                                                                 Our economic performance       25
                                  Cost-to-income ratio                                    ratio is the result of the acquisitions made           Tax liability
                                                                                          in 2006, and the rise in costs has been accom-         Tax liability of OTP Bank                                                                      31 Dec. 2005          31 Dec. 2006                       Change
                                  The cost-to-income ratio rose in comparison to          panied by a steady growth in revenues. A key           (non-consolidated, IFRS data)                                                                   HUF million           HUF million         HUF million                     %
                                                                                                                                                 Taxes, less corporate tax                                                                            23,068                26,844              3,776                  16.4%
                                  2005, though if taken out of context the figure         objective for the coming years is to achieve           Corporate tax                                                                                        22,954                17,298             –5,656                 –24.6%
                                  could be misleading. The deterioration in the           a continuous improvement in cost-efficiency.           Total                                                                                               46,022                44,142              –1,880                  –4.1%
                                                                                                                                                 Note: as a result of the acquisitions, in 2006 there was an opportunity for OTP Bank to accrue its tax liabilities
                                                                                                                                                 and to pay the tax later, and therefore the amount of its tax liability fell relative to 2005.




Cost/income ratio                                                                56.50%
                                                                                                                              56.40%                                                                 The payment of taxes in compliance with                              idea of the scale of OTP Bank Plc’s tax
                                                                                                                                                                                                     the effective regulations is a key element                           contributions, these are approximately equal to
                                                                                                                                                                                                     of good corporate citizenship. Our company’s                         the annual budget of the city of Debrecen,
                                                                                 56.00%
                                                                                                                                                                                                     tax payments – due their considerable size –                         Hungary’s second largest agglomeration.
                                                                                                                                                                                                     make a significant contribution to the                               The Bank’s tax liability, and accordingly, the
                                                                                                    55.40%
                                                                                 55.50%                                                                                                              achievement of social objectives. To give some                       amount of tax paid, fell in 2006 as the result
                                                                                                                                                                                                                                                                          of the corporate acquisitions that were made.

                                                                                 55.00%
                                                                                                                                                                                                     Socially Responsible Investment
                                                                                                                                                                                                     – SRI
                                                                                 54.50%
                                                                                                    2005                       2006

                                                                                                                                                 ‘The financial sector is a critical channel through which price signals, regulation and civil society pressure can
                                                                                                                                                 direct financial capital to more or less sustainable economic activity.’
                                                                                                                                                 Financing the Future, The London Principles
                                  Litigation and other proceedings                        previous years, which was partly attributable to
                                                                                          the large number of protracted proceedings that
                                  In 2006, both the number of legal proceedings           had been initiated in earlier periods. Our aim for                                                         When implementing socially responsible                               OTP Fund Management Ltd, a member
                                  underway against the Bank, and the book value           2007 is to close as many of these cases as                                                                 investment (SRI), investment managers invest                         of the OTP Bank group, launched its project
                                  of the claims, rose considerably relative to the        possible successfully; that is, in a legally binding                                                       investors’ funds – in order to achieve the                           to set up an SRI fund in 2003. Although
                                                                                          manner, through the rejection of the claims.                                                               highest possible yield – in a way that avoids                        the creation of the SRI fund was preceded
                                                                                                                                                                                                     the risks typically caused by irresponsible                          by a lengthy – almost three-year – period
Court proceedings initiated against the Bank                                                                                                                                                         companies. SRI funds (socially responsible                           of preparation, the project still ran into certain
                                                                      2004. 12. 31.                2005. 12. 31.                 2006. 12. 31.
                                                                                                                                                                                                     investment funds) are similar to classic open-                       insurmountable problems. Owing to the lack
Number of procedures underway                                                   75                           72                           146
Book value of ongoing claims (claim value) (HUF)                     1,998,039,317                3,217,755,856                 5,353,175,880                                                        end share funds. However, when selecting                             of a suitable partner and low demand even
                                                                                                                                                                                                     the companies to invest in, CSR principles                           at European level, OTP Fund Management
                                                                                                                                                                                                     and criteria are also taken into account as well                     shelved the project at the end of 2006.
                                  Several competition-authority proceedings                 interest payable on credit cards. Both these                                                             as financial information. There are two basic                        However, as a result of the experience gained
                                  were launched against the Bank between                    fines have been paid. (However, a court                                                                  approaches that can be followed when setting                         during the project, OTP Fund Management,
                                  2004 and 2006, due to alleged infringements               review of the ruling, requested by the Bank,                                                             up an SRI fund. Under one method, stocks are                         with the assistance of an external consultant,
                                  of competition law.                                       is still ongoing.)                                                                                       selected according to pre-set minimum criteria,                      has drafted a socially responsible investment
                                  In two proceedings due to the alleged                   Two proceedings were also launched against                                                                 with only companies that exceed these                                (SRI) strategy, containing a set of principles
                                  misleading of consumers, the Competition                OTP Bank due to alleged abuse of market                                                                    minimum criteria being included in the fund.                         to be observed when selecting its targets for
                                  Council penalised the Bank, imposing the                power, which were not closed in 2006.                                                                      The problem with this approach is the fact that                      investment. Experience from the SRI project
                                  following fines:                                        The claims concerned the following:                                                                        it greatly limits the number of potential                            has also furthered plans to set up a Climate
                                  – a HUF 10 million fine for the Bank’s personal         – the raising of the final repayment fee                                                                   companies and excludes certain industries.                           Change Fund, for which – according to
                                    loan advertisement,                                     for personal loans, and                                                                                  The other approach is more permissive; it does                       preliminary market research – there appears
                                  – a HUF 100 million fine for the provision              – the raising of the final repayment fee                                                                   not rule out any industries outright, but rather,                    to be considerable demand, partly because its
                                    of misleading information regarding the                 for home loans, and the abolition of the cap                                                             invests in the most socially responsible                             profitability could be higher than that of SRI
                                                                                            on administration charges (SO7, PR9).                                                                    companies within each particular industry.                           funds. OTP Fund Management plans to set
                                                                                                                                                                                                     In the financial sector, SRI is an important tool                    up the fund independently – without the
                                                                                                                                                                                                     for implementing corporate social                                    involvement of an international partner
                                                                                                                                                                                                     responsibility, and this fact warrants a brief                       – in the course of 2007.
                                                                                                                                                                                                     description of OTP Fund Management Ltd’s
                                                                                                                                                                                                     plans to set up an SRI fund.




26    OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                                                                                                 Our economic performance            27
‘Keep thy shop, and thy shop will keep thee.                                                                                                        Ownership structure based on shareholding 31 Dec. 2006
Light gains make heavy purses.’

     G E O R G E C H A P M A N (English playwright, poet)                                                                                                                                                Other domestic investors 8.3%


                                                                                                                                                                                                       OTP Bank Plc 0.8%


                                                                                                                                                                                                    Managers and employees 3.0%


                                 9. Our stakeholders and                                                                                                                                             State owner 0.0%



                                    our social performance                                                                                                                                            Owner representing state
                                                                                                                                                                                                      administration’s share 0.3%


                                                                                                                                                                                                          Foreign investors 87.6 %


                                 9.1 Shareholders

                                 Value-creation strategy                                                                                            Shareholders with a stake of more than 5%
                                                                                                                                                    Shareholder                                                                                     Stake                 Percentage of votes
                                 The main objective of OTP Bank Plc’s strategy is to maximise shareholder value.
                                                                                                                                                    Bank of New York                                                                               24.4%                                 22.6%
                                                                                                                                                    Julius Baer                                                                                     5.6%                                  5.2%

Changes in the price of OTP Bank shares                                                                                                             Megdet, Timur and Ruslan Rahimkulov                                                             5.0%                                  8.1%


                          5000
                                                                                                                           OTP 4700%
                                                                                                                                                                                     Changes in EPS                                          As an indicator used to assess changes
                          4000                                                                                                                                                                                                               in the share price, EPS also reflects the
                                                                                                                                                                                     EPS is the most commonly used indicator                 company’s future growth potential.
                          3000                                                                                                                                                       for assessing a company’s stock and shows               OTP Bank’s earnings per share increased
                                                                                                                                                                                     the amount of after-tax profit earned                   significantly in 2006, which is an indication
                          2000
                                                                                                                                                                                     by the company per share in a given year.               of the success of its acquisition policy.
                                                                                                                                      BUX 1009%
                          1000
                                                                                                       MS EU Bank index 285%
                                  100%                                                                                                                                                                                               HUF
                             0
                                   95’ Aug.   96’ Aug.   97’ Aug.   98’ Aug.   99’ Aug.   00’ Aug.   01’ Aug.   02’ Aug.   03’ Aug.      04’ Aug.
                                                                                                                                                    Base EPS                                                                         800

                                                                                                                                                                                                                                                                               636

                                 The price of OTP Bank shares began to rise               macroeconomic environment. The Bank’s share                                                                                                600
                                                                                                                                                                                                                                                       492
                                 sharply from 1995, at a higher rate than the             price rose 25.6% in 2006, from HUF 6,697
                                 shares of most Eastern and Western European              at the end of December 2005 to HUF 8,750
                                                                                                                                                                                                                                     400
                                 banks. The price of OTP Bank shares has also             by the end of 2006.
                                 pushed up the BUX, the index of the Budapest
                                                                                                                                                                                                                                     200
                                 Stock Exchange, and has significantly                    The Bank’s market value rose to HUF 2,450
                                 outperformed the EU Bank Index. Between                  billion by the end of 2006, which corresponds
                                 1995 and 2004, the price of OTP Bank shares              to 3.1 times the Bank’s book value, and as                                                                                                     0
                                                                                                                                                                                                                                                      2005                    2006
                                 displayed a 64-fold increase in forint terms,            a result, OTP Bank’s stock has become
                                 and a 47-fold rise in euro terms, owing to the           a popular investment instrument among foreign
                                 Bank’s excellent performance and the sustained           investors. Forbes magazine has classified the
                                 confidence of foreign investors. In 2006, the            credit institution’s shares among the world’s
                                 Bank’s share price continued to increase                 top 400 investments, and EQNEWS declared
                                 dynamically, reaching an all-time high despite           them the safest investment on the Hungarian
                                 a portfolio restructuring by both foreign and            market based on a survey of the period since
                                 Hungarian investors due to the unfavourable              OTP shares were first listed in 1995.




28    OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                                           OTP Bank’s stakeholders and social performance          29
                              Dividend payment                                          The level of dividend payment fell in 2006,                                         The Bank’s most important memberships in associations:
                                                                                        a fact that can be partially attributed to the
                              OTP Bank has set itself the target of ensuring            Bank’s corporate acquisitions, since these led                                      Academic Club Association
                              that the amount of dividend paid should                   to a considerable increase in the issue of                                          American Chamber of Commerce in Hungary
                              reflect the economic strength of the Bank.                convertible bonds.                                                                  Association of Investment Service Providers
                                                                                                                                                                            Budapest Chamber of Commerce and Industry

                                                                                 HUF               197                                                                      Regional Chambers of Commerce and Industry
Size of dividend                                                                 200
                                                                                                                                                                            Commercial Crime Services
                                                                                                                                                                            ESBG/WSBI
                                                                                                                             144
                                                                                 150                                                                                        European Mortgage Fund
                                                                                                                                                                            Europay
                                                                                                                                                                            European Monetary Fund
                                                                                 100
                                                                                                                                                                            European Payments Council
                                                                                                                                                                            Institute International D’etudes Bancaires
                                                                                   50
                                                                                                                                                                            Institute of International Finance
                                                                                                                                                                            International Chamber of Commerce, Hungarian National Committee
                                                                                    0                                                                                       Intelligent Card Forum Association
                                                                                                  2005                       2006
                                                                                                                                                                            National Association of Housing Cooperatives and Condominiums
                                                                                                                                                                            Hungarian Banking Association
                              Investor relations                                        banks, and investment forums organised                                              Hungarian Forex Society
                                                                                        for the Bank. In 2006, OTP Bank held                                                Hungarian Association of Senior Information Technology Experts
                              In order to map investor interests and ensure             talks with a total of 320 investors at 158                                          Hungarian Law Society
                              maximum compliance with shareholder                       meetings, which represents a significant –                                          Hungarian Marketing Association
                              expectations, OTP Bank places special emphasis            respectively, 14 and 47% – increase compared                                        Hungarian Advertising Association
                              on the nurturing of investor relations. Although          to the previous year. In 2007, we plan to                                           Hungarian Standards Association
                              shareholders’ expectations and their assessment           hold an ‘Investors’ Day’ in order to broaden                                        Hungarian Trademark Association
                              of the Bank are essentially determined by                 the platform for engaging in quality                                                Employers and Industrialists Association
                              business criteria, some investors and market              communication with investors. We intend                                             MOBEY FORUM Financial Services Ltd.
                              participants have expressed a demand for                  this to become a regular event. Maintaining                                         János Neumann Computer Science Society
                              socially responsible operation and investments.           close relationships and partnerships                                                Self-regulating Advertising Association
                              Investor relations are maintained through                 with analysts is essential in the interests                                         S.W.I.F.T. – Society for Worldwide Interbank Financial Telecommunication
                              participation in conferences held by investment           of maximising shareholder value.                                                    National Association of Entrepreneurs and Employers
                                                                                                                                                                            VISA
‘It is easy to blame, but hard to appreciate.’                                                                                                                              World Economic Forum

     LUC DE CL APIER S VAUVENARGUES                (French philosopher)



                              9.2 Competitors,                                          to protect and assert shared interests, for
                                                                                                                                              ‘You see things for what they are only if you have watched them change
                              membership of associations                                lobbying purposes, and for liaising with the
                                                                                                                                              and develop from their inception.’
                                                                                        supervisory authorities (e.g. the Hungarian
                              The success of OTP Bank’s business operations,            Financial Supervisory Authority). Interest                A R I S T O T L E (Greek scholar and philosopher)
                              and the achievement of its market objectives,             representation associations are forums for
                              presupposes a knowledge and analysis of                   structured communication.
                              competitors’ activities, a pro-active approach                                                                                                9.3 Customers                                           the Bank. The sheer size of the Bank’s customer
                              and an ability to respond effectively to the              In order to effectively maintain its market                                                                                                 base is well reflected in the number of customer
                              actions of competing market operators.                    presence and to assert its interests, OTP Bank                                      Most people in Hungary have at some time                contacts. By customer contact we mean any
                              The Bank primarily uses indirect means to obtain          joins industry associations that complement                                         used or come into contact with the services             incident when the Bank comes into contact with
                              information regarding its competitors’ operations.        its objectives and interests, and share its values.                                 of OTP Bank, and therefore the experience               an existing or potential customer, and includes
                                                                                        Membership, for the Bank, involves playing                                          of members of the public as customers of the            contact in the branches, by telephone and on
                              Maintaining direct relations with participants            an active role in the operation of these                                            Bank has an important role to play in determining       the internet, as well as text messages and direct
                              in the banking sector is necessary in order               organisations.                                                                      the relationship of the various stakeholders with       marketing letters.


30   OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                                       OTP Bank’s stakeholders and social performance        31
Number of customer contacts in 2006 (no)                                                                                                OTP Bank customers

                                      In person                 Electronically    Other (DM, notices, etc.)          Total                      90

                                      8,595,500                 300,872,292              3,380,032                312,802,824
                                                                                                                                                80


                                                                                                                                                70

                              OTP Bank regards the trust and satisfaction          in 2006, from 35% in 2004; in other words,
                                                                                                                                                60
                              of its millions of customers as one of the most      on a national level, nine customers out of ten
                                                                                                                                                50
                              important elements of its ‘capital’, and for this    now wait less than 10 minutes to be served
                              reason its cooperation with its customers and        at the branch.                                               40
                              its business partners is marked by reliable
                                                                                                                                                30
                              and fair business conduct. The Bank’s goal           In order to ensure that our customers receive
                              and mission is to reach all age categories           service in a modern and pleasant environment,                20
                              and social groups with its high-quality products     we launched the Branch Renovation Program
                                                                                                                                                10
                              and services, to increase the satisfaction           in 2004. As a result of the program, 240
                              of its customers via value propositions and          branches were refurbished over a 5-year                       0
                                                                                                                                                     2004. 01.   2004. 04.    2004. 07.   2004. 10.   2005. 01.   2005. 04.   2005.07.    2005.10.   2006. 01.   2006. 04.   2006. 07.   2006. 10.
                              outstanding service, and to retain personal          period. By the end of 2006, 80 branches
                              contact even as electronic technology is             were renovated or moved to a modern                                     Global satisfaction              Bank card                   Telephone service              Bank branch              Consumer loan

                              becoming increasingly widespread.                    location, and by the end of 2007 the number                             Internet service                 Current account             Housing loan
                              The products and services that are offered           of these branches will reach 150. For many
                              to specific social groups are described in the       years the refurbishment of a branch has
                                                                                                                                        Customers of other banks
                              section on the Retail Division.                      included installing a wheelchair ramp.

                                                                                                                                               100
                              In the interests of providing a high-quality
                              service, the Bank attempts to learn about its        Customer satisfaction surveys                                90

                              customers’ needs as much as possible, and is         (PR5)                                                        80

                              continuously improving the physical and human
                                                                                                                                                70
                              conditions related to its services. Each year the    We learn about the opinions of our customers
                                                                                                                                                60
                              Bank focuses more on motivating and training         through the use of customer satisfaction
                              its employees and on increasing their loyalty,       surveys. Since 2006 the company’s Marketing                  50

                              because the quality of our services as well as       and Sales Department has been conducting the
                                                                                                                                                40
                              the Bank’s image is determined primarily by the      customer satisfaction surveys, completing
                                                                                                                                                30
                              relationship between our employees and our           1,700 surveys a month. In addition to overall
                              customers and business partners. The priority        satisfaction, our surveys assess satisfaction with           20

                              afforded to customer satisfaction is evidenced       our bank cards, current accounts, the various
                                                                                                                                                10
                              by the fact that the bonuses of not only the         forms of processing and administration, loan
                                                                                                                                                0
                              regional managers but of the Chairman & CEO          products and the branches. In addition, we                        2004. 01.   2004. 04.    2004. 07.   2004. 10.   2005. 01.   2005. 04.   2005.07.    2005.10.   2006. 01.   2006. 04.   2006. 07.   2006. 10.

                              himself are dependent on meeting regional            analyse the loyalty of our customers, their
                                                                                                                                                           Global satisfaction              Bank card                   Telephone service              Bank branch              Consumer loan
                              customer satisfaction targets.                       opinion of the value-for-money we offer, as
                                                                                                                                                           Internet service                 Current account             Housing loan
                              In 2004 our company launched a project               well as of our services. The surveys provide
                              to considerably reduce waiting times at the          continuous feedback on what customers think
                              branches, in order to increase customer              about the Bank’s day-to-day operation, and the
                              satisfaction and the efficiency of our service.      results, besides pointing out areas that are                                        The results of the customer satisfaction surveys                  years. Our Bank’s most competitive areas are
                              Our goals were met, and the ratio of customers       received positively, indicate the areas where                                       indicate that customer satisfaction with our                      its telephone and internet services, and the
                              waiting to be served for more than 10 minutes        improvement is required.                                                            company and its services is growing in several                    widespread availability and reliability of our
                              was reduced to 15% in 2005 and 10%                                                                                                       areas, and that due to the customer-focused                       ATMs, these being areas that our customers
                                                                                                                                                                       measures we have taken, any advantage that                        consistently say they are satisfied with.
                                                                                                                                                                       other banks used to have over us in terms
                                                                                                                                                                       of customer satisfaction is waning. The results                   OTP Bank’s effort to establish long-term
                                                                                                                                                                       of the surveys held in 2006 showed significant                    relationships with customers and to retain
                                                                                                                                                                       improvement overall compared to previous                          customers has proven successful. While at other


32   OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                                         OTP Bank’s stakeholders and social performance                 33
                              banks the annual loyalty index has remained the         – Head-office experts who specialise in certain     ‘Concentrate all your thoughts upon the work at hand.
                              same, at our Bank a 10 percentage-point increase          business lines and products handle                The sun’s rays do not burn until brought to a focus.’
                              in the index was experienced in 2006.                     complaints in a uniform manner nationwide,
                                                                                                                                              A L E X A N D E R G R A H A M B E L L (professor of audio-physiology)
                              In order to raise customer satisfaction in the            and at a high standard.
                              future, we will focus on increasing the price-to-       – Customer service representatives at the
                              value ratio and on improving the quality of               branches are exempted from having to
                              services. OTP Bank wishes to increase                     investigate reports and can therefore spend                                     9.4 Employees                                            Number and distribution
                              satisfaction with its services and achieve its            more time providing quality services and                                                                                                 of employees
                              target figures through continuous development.            selling products to customers.                                                  OTP Bank is one of the largest employers
                                                                                      – With our knowledge of previously submitted                                      in Hungary, and due to its extensive network             OTP Bank continuously focuses on increasing
                                                                                        reports, we can provide a customised                                            of branches, it plays an important role                  operational effectiveness, and its capacity
                              Handling customer reports                                 services to our customers.                                                      in providing work opportunities in smaller               management system serves precisely this
                                                                                      – The efficiency of handling customer                                             communities in the country. One of the key areas         purpose. Today the Bank has a modern,
                              Prior to and during 2004 OTP Bank handled                 complaints has improved significantly.                                          of social responsibility is offering our employees       process-based and transparent headcount
                              customer reports (complaints, objections,                 In the handling of bankcard complaints                                          a comfortable working environment and a benefit           system. The target headcount of each
                              recommendations, and opinions) in a                       we provisionally credit the disputed amount                                     plan that is proportionate to performance and            organisational unit is determined – on the
                              decentralised manner. Reports were examined               to our customers within a week, which is                                        ensures a decent standard of living.                     basis of the working time required to fulfil
                              and financially settled and responses were                exceptional even by international standards,                                                                                             the respective work processes – as a full-time
                              sent to customers by the relevant branches, and           regardless of the fact that the procedural                                                                                               equivalent rate.
                              only objections related to the bankcard division          rules of international bankcard companies
                                                                                                                                          Workforce headcount data (LA1)
                              were investigated centrally. However, in 2006,            specify a much longer processing period.
                              our company adopted a two-tiered, centralised           – Product development and error correction                                                                                                                       2004      2005           2006
                              system for processing customer reports.                   requirements that are gleaned from the                                          Total workforce                                                                7894      7999           8257
                                                                                                                                                                        Statistical staff headcount on the last day of the year                        7777      7899           8169
                              The key advantages of this system are                     reports are directly forwarded to the relevant
                                                                                                                                                                        Employed in a full-time capacity                                               7113      7173           7390
                              as follows:                                               areas and the implementation of the                                             Number of those not employed on a standard full-time basis
                                                                                                                                                                                                                                                    644+117   726+100       779+88
                              – Reports that can be answered and settled                corrective measures is monitored.                                               (employees working more or less than 60 hours a week)
                                                                                                                                                                        Regional network                                                               3250      3174           3216
                                immediately continue to be handled by our             – The new method used in processing allows                                        Budapest network                                                               1561      1475           1425
                                administrators, and consequently a significant           us to assess the submitted reports far more                                     Central office                                                                 2302      2524           2749
                                                                                                                                                                        The data refers to full-time employees
                                number of our customers leave the branch                objectively, which is also indicated by the
                                already satisfied.                                       data in the table below.
                                                                                                                                          Distribution of employees by position

                                                    Number of resolved              Number of justified                   Indemnity,                                    Management (deputy CEOs)                                                                                   6
                                                           complaints                      complaints              compensation given                                   Senior management                                                                                        179
                                                                                                                                (HUF)
                                                                                                                                                                        Middle management                                                                                        694
                                2004.                           23,940                          13,976                       47,765,492
                                2005.                           30,436                          21,858                       69,435,832                                 People in charge of certain activities                                                                   131
                                2006.                           44,040                          30,985                      105,370,246                                 White-collar workers (non-management)                                                                   7053
                                                                                                                                                                        Administrative employees                                                                                  59
                                                                                                                                                                        Blue-collar workers                                                                                      135

                              Justified complaints are mostly due to errors           occurrences can be avoided. Furthermore,
                              made by the customer service officers or to             we attempt to provide our customers with                                          OTP Bank employs full-time and part-time                 of the workforce being 38.9. The distribution
                              computer errors. The experience from customer           broader and more in-depth information about                                       employees, and certain personnel work                    by gender shows a predominance of women;
                              reports is incorporated into the training materials     our financial products and their impact,                                          for us on a contract basis. In keeping with              the ratio of women within the total workforce is
                              of customer service representatives. In order to        in order to help them make well-grounded                                          the Collective Bargaining Agreement and the              78.6%. However, women are underrepresented
                              prevent computer errors, the Bank is constantly         decisions. We prepare informational material                                      statutory regulations, each employee receives            at management levels: there are no women
                              developing and enhancing its IT systems.                for our customers, which is available                                             equal treatment and benefits (LA3).                      in the Management itself (i.e. among the
                                                                                      at the branches and via the internet,                                             The distribution of employees by various                 deputy CEOs), and the ratio of women
                              Our goal for 2007 is to accelerate the                  and our employees also provide information                                        criteria is shown in the tables and charts (LA1).        in senior managerial positions is 39.4%.
                              processing and expert management of                     to our customers. We are confident that our                                       The breakdown of employees by age reveals                The employees of the Bank are predominantly
                              customer reports. We believe it is important            efforts will help reduce the number of                                            a broad distribution, with the average age               local inhabitants. Although OTP Bank does not
                              to inform our customers of how similar                  problems and complaints.


34   OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                                    OTP Bank’s stakeholders and social performance       35
                              have a comprehensive policy and practice of    in the workforce of the central office, the                                    In the past three years the number of people           In order to gain an accurate insight into the
                              giving preference to local inhabitants when    Budapest region and the network; however,                                      leaving the company has fallen by 5                    Bank as a workplace, and to learn about the
                              hiring employees, it is the local people who   due to the large number of positions in the                                    percentage points. In 2006 staff turnover was          strengths of the organisation as an employer
                              typically apply for jobs. The branch network   central office and the lack of employment                                     15.4% (1,279 people), which is still higher             and the factors that have an impact on the
                              offers local work, stable employment,          opportunities in the provinces, there are                                      than the extent the Bank would regard as               commitment of employees, as well as to
                              an acceptable working environment              several employees from elsewhere in the                                        acceptable. Our goal is to reduce staff turnover       identify areas where further intervention is
                              and a reasonable benefit plan, which are       country who work in Budapest and sometimes                                     gradually and to reach a figure of less than           required in this regard, the Bank will conduct
                              important considerations for workers in        have a second home there. The heads of the                                    14% in 2007.                                            an employee satisfaction survey in 2007.
                              Hungary. Local employees also dominate         regional centres are mostly local people.

                                                                                                                                       Distribution of employees leaving the company, by region (%)
Distribution of employees by age                                                                                                                                                                                                            0.7%

                                                                                                       7.7%
                                                                                              8.9%                                                              Centre
                                  Under 25 yrs
                                                                                                                                                                Balatonszemes Resort
                                  25–35 yrs                                                                                                                                                                                                         18.6%
                                                                                                                                                                Budapest Region                                                 28.0%                                 0.3%
                                  35–45 yrs                                                                            33.0%
                                                                                       25.1%                                                                    Central Branch
                                  45–55 yrs                                                                                                                                                                                                                      6%
                                                                                                                                                                Southern Plains Region
                                  over 55 yrs
                                                                                                                                                                Southern Transdanubia Region
                                                                                                                                                                                                                         6.5%                                9.7%
                                                                                                                                                                Northern Transdanubia Region
                                                                                                       25.3%                                                                                                                                              8.0%
                                                                                                                                                                                                                                9.8%
                                                                                                                                                                Northern Hungarian Region

                                                                                                                                                                Central Transdanubia Region                                                8.2%    4.2%

Distribution of employees by region                                                                                                                             Central Hungary Region

                                                                                                     0.6%                                                       Northern Transdanubia Region
                                  Budapest Region

                                  Central Branch

                                  Southern Transdanubia Region                                                17.5%             0.4%                        Benefits policy: equal pay for                          therefore predictable and transparent, while
                                  Northern Transdanubia Region                                                                                              equal work                                             the assessment of performance and the related
                                                                                                                        6.5%
                                  Central Transdanubia Region                                                                                                                                                      incentives are also regulated, with performance
                                                                                     33.9%
                                                                                                                         6.1%                               Our Bank began to revise its benefits system           being measured on the basis of business and
                                  Central Hungary Region
                                                                                                                                                            in 2005 with the aim of motivating its people          financial indicators.
                                  Northern Hungarian Region                                                             6.5%
                                                                                                                                                            to perform even better, to acquire professional
                                  Northern Plains Region
                                                                                                                      7.1%                                  knowledge and expertise, to reward loyalty             In the pay scheme applicable in the network,
                                  Southern Plains Region                                     7.8%              5.4%                                         to the Bank and to reflect the level of                the standard entry-level wage (starting salary)
                                                                                                       8.3%
                                  Centre                                                                                                                    responsibility associated with their jobs.             was HUF 118,000 per month in 2006,
                                  Balatonszemes Resort                                                                                                                                                             which was supplemented with performance-
                                                                                                                                                            As a part of the new incentive scheme, the             related bonuses. At our company, employees’
                                                                                                                                                            system of benefits available to employees              wages are determined on the basis of
Distribution of employees according to length of service at OTP                                                                                             in the network was revised. With regard to             the Collective Bargaining Agreement, and the
                                                                                                                                                            front-office (standard customer-service) work,         basic salaries of employees are considerably
                                                                                              17.52%            19.46%
                                  Under 2 yrs                                                                                                               we introduced a nationally uniform pay scheme          higher than the national minimum wage
                                  2–5 yrs                                                                                                                   for people working in similar positions,               in all employee categories. The minimum
                                  5–10 yrs                                                                                                                  and in the case of other positions, we                 wage in Hungary was HUF 57,000 between
                                                                                     12.18%
                                  10–15 yrs
                                                                                                                                                            established wage bands that allow us to assess        1 January 2006 and 31 January 2006 and
                                                                                                                       18.08%
                                                                                                                                                            and categorise the quantity and quality of work        HUF 62,500 between 1 February 2006
                                  15–20 yrs
                                                                                        15.54%
                                                                                                                                                            based on the same, consistent principles.              and 31 December 2006, or, respectively,
                                  Over 20 yrs
                                                                                                                                                            As a result, salaries and wages are determined         just 48.3% and 52.9% of the starting salaries
                                                                                                            17.21%                                          in accordance with uniform principles and are          at our Bank (EC5).




36   OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                      OTP Bank’s stakeholders and social performance          37
                                In 2006 gross average wages in the Hungarian           salary of HUF 403,862 – in the financial sector,                           to the employment relationship, working time                   prepared for their duties, besides imparting to
                                economy grew by 8.1% overall and, while the            and real wages in the sector typically grew                               and remuneration and – with the exception                      them the technical knowledge they need, the
                                consumer price index grew by 3.9%, real wages          by 11.1% in 2006. The gross average monthly                               of the Chairman & CEO and the Deputy CEOs                      Bank’s training programs emphasise
                                increased by 3.6% compared to the previous             wage of OTP Bank’s employees in 2006 was                                  – applies to all of the Bank’s employees (LA4).                management skills development, and include
                                year (source: Central Statistical Office). Salaries     HUF 360,582. Real wages grew by 7.2%                                      In several cases, the Collective Bargaining                    training in coaching skills to help managers
                                were highest – with an average gross monthly           compared to the previous year.                                            Agreement contains conditions that are more                    support and develop their subordinates.
                                                                                                                                                                 generous than the expectations set forth in the                In accordance with the statutory regulations,
                                                                          240 000                                                      24%                       Labour Code – thus, for example, specifying a                  employees all receive fire protection and work
     Net average salary (OTP)                                             220 000                                                      20%
                                                                          200 000                                                      16%                       longer period of notice for terminations of                    safety training. In the context of an orientation
     Net average salary (financial sector)                                180 000                                                      12%
                                                                                                                                                                 employment related to operational changes.                     program we pay particular attention to helping
                                                                          160 000                                                       8%
     Change in real wages (OTP)                                           140 000                                                       4%                                                                                      employees adjust to their new surroundings, and
                                                                          120 000                                                       0%
     Change in real wages (financial sector)                              100 000                                                                                                                                               as a part of this program, new hires also learn
                                                                           80 000
     Change in consumer price index                                        60 000                                                                                Communication                                                  about the Bank’s principles of social
                                                                           40 000
                                                                                                                                                                                                                                responsibility. To ensure the efficient
                                                                           20 000
                                                                                0                                                                                The Bank uses various channels to notify and                   implementation of knowledge transfer, in 2006
                                                                                                                                                                 communicate with its employees. Besides                        the Bank introduced an e-learning system, which
                                                                                                                                                                 communicating in person, officially in writing, and             extends to all our employees and ensures
                                                                                     2001    2002    2003    2004     2005     2006
                                                                                                                                                                 by e-mail, we also use the intranet, the OTP                   flexible training for our staff without encroaching
                                Employees’ monetary benefits and benefits in kind:                                                                                 Magazine (the Bank’s in-house publication) and                 on their working day.
                                – Food contribution                                                                                                              a system of public folders for communication                   All the Bank’s employees are given the
                                – Get-ready-for-school allowance                                                                                                 purposes. The system of public folders was                     opportunity to participate in post-graduate and
                                – Holiday allowance                                                                                                              created in 2006, and allows employees to access                professional training courses, conferences and
                                – Jubilee reward                                                                                                                 regulations and information relating to work.                  skills-development training programs aimed at
                                – Reimbursement for costs of travel to work                                                                                                                                                     improving their work performance. We offer
                                – Voluntary pension fund membership fee contribution                                                                                                                                            language courses each year with the
                                – Private pension fund membership fee contribution                                                                               Training                                                       participation of 4-500 employees, primarily for
                                – Healthcare fund membership fee contribution                                                                                                                                                   head office employees and for regional
                                – Aid to relieve financial burdens in extraordinary life situations                                                               OTP Bank Plc places considerable emphasis on                   managers. We also support private language
                                                                                                                                                                 training its employees so that they have the                   learning through post-financing, after the
                                In 2006 OTP Bank spent a total of HUF 1.871            Employee advocacy                                                         latest professional knowledge and the expertise                language proficiency exam has been passed.
                                billion on monetary benefits and benefits in                                                                                     required for them to effectively carry out their
                                kind, which were offered as part of employees’         OTP Bank, in accordance with the effective                                jobs. In recent years the Bank has introduced a                By the end of 2007 we plan to launch training
                                pay. The portion of remuneration in excess of          regulations, provides for the operation of the                            structured, competency-based training system.                  courses in the Code of Ethics for all Bank
                                the base salary in the financial sector stood at       Trade Union and the Workers’ Council, which                               Training programs preparing employees for their                employees, and we plan to create an
                                5.0% on average and was 4.9% at OTP Bank.              represent employees’ interests. The Bank’s                                duties are attended by all workers in the front-               environmental protection training program for
                                Contributions to membership fees in voluntary          management conducts preliminary negotiations                              office area. To ensure that managers are suitably               employees as a part of the orientation program.
                                and private pension funds and healthcare funds         and consultations with the employee advocacy
                                stood at approximately HUF 3.1 billion in 2006.        bodies prior to making decisions or taking steps
                                                                                                                                             Programs that support the continued employability of employees and assist them in
                                In this respect the Bank exhibits more                 that affect larger groups of employees and in
                                                                                                                                             managing career endings (LA11)
                                responsibility than the market average.                every case that is stipulated by law, in
                                The annual allowance per person per fund               accordance with the statutory regulations.                                Program                                                                                                    Available?
                                is the following: Voluntary Pension Fund HUF           OTP Bank cooperates with the trade union                                  In-house training courses                                                                                          yes
                                265 700, Healthcare Fund HUF 71 900, Private           on a continuous basis, and makes available                                External training courses or financial support for study                                                           yes
                                Pension Fund HUF 69 300. The social benefits           to it the information and infrastructure that                             Time off for study                                                                                                 yes
                                and the rules for awarding them at the Bank            is necessary for advocacy activities.                                     Pre-retirement planning                                                                                             no

                                are contained in the Collective Bargaining             On 31 December there were 4 869 trade                                     Re-training for employees before retirement
                                                                                                                                                                 who wish to continue to work                                                                                        no
                                Agreement and the related internal regulations         union members at the Bank (representing
                                                                                                                                                                 Severance pay                                                                                                      yes
                                of the Bank.                                           approximately 60% of employees).
                                                                                                                                                                 Taking into account the age and years of service of employees                          Years of service - yes; age - no
                                                                                       The Bank’s Collective Bargaining Agreement                                when granting severance pay                                               (as stipulated by the statutory regulations)
                                                                                       contains the rules relating to work: with regard                          Job search service                                                                                                  no
                                                                                                                                                                 Help with transition to a life after work                                                                           no


38   OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                                   OTP Bank’s stakeholders and social performance           39
                                In 2006, in-house training at our company              5.27, not counting professional training                                    network have joined the healthcare system that           health, the Bank gives full consideration to
                                surpassed external training in terms of                courses. Between 2004 and 2006 training                                     is available for the central offices, while              issues of ergonomics.
                                both quantity and expenditure. The number              expenditure per employee increased                                          healthcare services are offered for the branches
                                of in-house training days per employee was             almost twofold.                                                             in the provinces via contracted doctors.                 The figures on absences due to sickness in
                                                                                                                                                                   The doctors provide comprehensive information            relation to 2006 are contained in the table
                                                                                                                                                                   in relation to medical conditions, sickness              below (LA7). The Bank keeps accident statistics
The Bank’s training costs (th. HUF)
                                                                                                                                                                   prevention and healthy lifestyles.                       in accordance with Act XCIII of 1993 (on
                                                                                                                                                                   The obligation to offer safe and healthy working         Occupational Health and Safety) as amended
     Total training expenditure per bank employee (th. HUF/person)        70.00                                                     600 000
                                                                                                                      59.00                                        conditions is regulated in the Collective                several times, and with the stipulations of its
     Total training costs                                                 60.00                      53.99                          500 000                        Bargaining Agreement and the Bank’s internal             Health and Safety Regulations, which were
                                                                          50.00                                                                                    regulations. In order to to protect its employees’       drafted in accordance with the law.
                                                                                                                                    400 000

                                                                          40.00
                                                                                     33.73
                                                                                                                                    300 000
                                                                          30.00
                                                                                                                                              Absence due to sickness, total
                                                                                                                                    200 000
                                                                          20.00                                                                                                                                                                                   80 874 days
                                                                                                                                                                   Rate of absence                                                                                     ~ 4.6%
                                                                                                                                    100 000
                                                                          10.00                                                                                    Sick leave                                                                                      34 654 days
                                                                                                                                                                   Sick pay                                                                                        44 193 days
                                                                            0.00                                                    0
                                                                                     2004            2005              2006                                        Accident pay/benefit                                                                             2 027 days
                                                                                                                                                                       which consists of:
                                                                                                                                                                   Hospital care due to accidents on public roads                                                      32 days
                                                                                                                                                                   Hospital care due to other accidents                                                                61 days
                                                                                                                                                                   Road accidents                                                                                     794 days
                                Our Bank uses the vocational training contribution     which includes an evaluation by the employee’s
                                                                                                                                                                   Days lost due to accidents on the job                                                              324 days
                                effectively, and in addition to the 20% (actual        supervisor, is conducted every six months, while                            Percentage of lost workdays                                                                     ~0.01848%
                                payment 29%) that must be paid to the state,           evaluations of other employees who receive                                  Number of accidents                                                                                     17
                                                                                                                                                                   Accident rate                                                                                   ~0.00097%
                                we spend 25% of the vocational training                bonuses are evaluated on a monthly and                                      Childcare sickness allowance                                                                     2 945 days
                                contribution on training our own employees, and        quarterly basis. The incentive system extends to
                                                                                                                                                                   Note: Days refer to working days.
                                we pay 46% to vocational training centres in the       the management itself, whose performance
                                form of development aid. In the context of this        based compensation is linked to the share option
                                type of support, and at the initiative of the          scheme described in the section on Corporate
                                Hungarian Bank Association, in 2006 we provided        Governance.                                                                 Recreation                                               and their families. There are 15 sports clubs at
                                development aid to various vocational training         The Bank’s performance evaluation system does                                                                                        the Bank, providing employees with a wide
                                institutions that educate disadvantaged young          not include social and environmental                                        OTP Bank has three holiday residences and two            range of sporting opportunities.
                                people, especially of Roma ethnicity.                  performance indicators.                                                     weekend chalets, with the latter run by the
                                                                                                                                                                   regional offices.
                                                                                       With respect to the Bank’s other employees,                                 The holiday residences have a high occupancy             Awards and honours
                                Career planning and development                        performance is not evaluated and feedback                                   rate; approximately 4,000 employees and their
                                                                                       is not given systematically, but takes place as                             families spend their holidays at the residences          More than a decade ago the Bank established
                                In March of 2006 OTP Bank began elaborating            a part of the manager’s job (LA12).                                         each year, and summer camps for the children             the award ‘For OTP Bank’ and the ‘András Fáy’
                                career-path models that ensure a uniform set                                                                                       of OTP employees are also organised there.               award in order to acknowledge and honour
                                of requirements for lateral and upward career                                                                                      In 2006 1,623 employees spent their holiday              its employees. These are awarded each year
                                moves in relation to specific job categories.           Healthcare                                                                  at the residences. The Bank provides employees           to employees who have achieved outstanding
                                We will launch the banking career management                                                                                       with a holiday brochure about the opportunities          performance, or persons among the Bank’s
                                system in 2007.                                        The Bank pays a great deal of attention to                                  at and around the residences. The holiday                external associates who have made an
                                                                                       preserving the health and curing the medical                                residences are located in Balatonszemes,                 outstanding contribution to the Bank’s results.
                                The Bank uses a range of tools and methods to          conditions of its employees, and offers a lot                               Mátraszentimre and Békásmegyer.                          In 2006 a total of 71 employees received
                                measure and evaluate employee performance.             more care than the law stipulates.                                          Twice every year the Bank organises a national           recognition in the form of honourable mentions
                                Approximately 25% of the Bank’s employees fall         The Budapest head office employs an in-house                                 family and sports day and various cultural               or financial rewards.
                                within the scope of the Incentive System, where        doctor for 60 hours a week and engages various                              events for all the employees of the Bank Group
                                performance is evaluated on the basis of               specialists. The Bank also has two doctors’
                                individually specified objectives. In respect of        offices of its own, which are registered by the
                                50% of employees who fall under the effect             State Health Authority (ÁNTSZ). A considerable
                                of the incentive system, performance appraisal,        number of branches within the Budapest


40     OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                             OTP Bank’s stakeholders and social performance        41
‘One who wants to open the eyes of others must,                                                                                                                                The links forged by the Bank as a result of its         – and to continue strengthening our existing
above all, keep his own eyes open.’                                                                                                                                            core business operations – as a financial service        relationships with such organisations. Naturally,
                                                                                                                                                                               provider – with individual members of society,          it is not possible to maintain contact with all the
     C H R I S T I A N M O R G E N S T E R N (German poet)
                                                                                                                                                                               as well as with local and national government           NGOs, but we are receptive to entering into new
                                                                                                                                                                               bodies, create an opportunity for the Bank to           broad-based partnerships with such
                                                                                                                                                                               gain a better awareness of the needs of society,        organisations in the interests of facilitating
                                                                                                                                                                               and to support the achievement of such goals            sustainable growth. We primarily wish to deepen
                                9.5 Suppliers                                           compliance with the statutory regulations,                                             through the broadening of these relationships.          and place on a more structured footing our
                                                                                        their financial background, and the existence                                          A part of OTP Bank’s CSR strategy is to form new        relationships with NGOs that actively promote
                                OTP Bank works with a high number of suppliers,         of any special circumstances related to the                                            relationships with a wider range of NGOs – as           the two core social values that define our
                                who are engaged by budget-holders at different          supplier. To ensure efficiency, OTP Bank aims to                                        organisations serving to represent and uphold           sponsorship and support activities: equal
                                levels within the Bank’s organisation. The decision     always employ the optimal number of suppliers,                                         the interests of individual groups within society       opportunities and community building.
                                regarding which supplier to use is primarily            and to minimise the number of suppliers used
                                based on considerations of efficiency and cost-          in any area of its operation. The Bank clearly
                                effectiveness, but all suppliers used must comply       states its expectations of its suppliers,
                                with the Bank’s quality requirements.                   and does all in its power to fulfil its own           Stakeholder discussion
                                                                                        commitments, and in the event of any
                                The selection of suppliers takes place through          problems attempts to reach a mutually                 Several NGOs attended a round-table discussion held for the company’s stakeholders. It transpired
                                a tendering process, and bidders who comply             agreeable solution.                                   that the company’s stakeholders, and sometimes even the specialists themselves, overestimate
                                with the specified quality parameters are chosen         It is our goal in 2007 for as many of our suppliers   OTP Bank’s market position – although it is genuinely a strong one – and as a result, their
                                based on the price of their bid. The quality criteria   as possible to familiarise themselves with OTP        expectations are so high, whether in regard to new products or the extent of the company’s
                                also include environmental, security and                Bank’s Ethics Statement and its CSR report, and       contribution to social causes, that the Bank is unable to live up to them owing to the fierce
                                ergonomic aspects. To protect its own interests         accordingly we draw our suppliers’ attention to       competition in the market. In light of the positive experiences gained during the discussion,
                                the Bank obtains detailed company information           these documents, and require them to comply           in future we plan to regularly initiate similar dialogues of this nature, covering a wider range
                                regarding the suppliers, examining their                with the provisions of the Ethics Statement.          of issues, since the opinions of stakeholders can open new perspectives for us.


                                                                                                                                              The expectations of NGOs with regard to this report and the CSR activities
                                                                                                                                              of OTP Bank include the following:


‘Concern for man and his fate must always form                                                                                                ‘NGOs expect the Bank to integrate social and environmental considerations into its core activities.’
the chief interest of all technical endeavours.’                                                                                              Pál Kapusy, KÖVET

     A L B E R T E I N S T E I N (Nobel prize-winning physicist)
                                                                                                                                              ‘Through its extensive branch network OTP Bank has an opportunity to engage with local
                                                                                                                                              communities, but it still has much to do in this regard.’ Gábor Héra, Kurt Levin Foundation


                                9.6 Society,                                            important financial partner of municipalities, the     ‘The key to credibility is customer focus. Besides this, for me, another important social issue related

                                civic relations                                         Bank participates in the financing of many capital     to CSR is the company’s responsibility towards its employees.’ Gábor Héra, Kurt Levin Foundation
                                                                                        projects that serve the advancement and good
                                As the largest bank in Hungary, OTP Bank                of society. The state, as operator of the             ‘Responsible lending has to be part of a bank’s CSR policy. Companies should not exploit
                                engages with society in innumerable ways, many          authorities and institutions that regulate and        information asymmetry.’ Ida Petrik, KÖVET
                                of which have been described in the previous            monitor the operations of credit institutions,
                                sections. A substantial proportion of the               liaises continuously with OTP Bank, while the         ‘In my opinion, OTP Bank’s guiding principles for donation need to be more clearly represented.’
                                Hungarian population are customers of the               Bank also participates regularly in transactions      Molnár Klára, Hungarian Donors’ Forum
                                Bank, due to its extensive branch network and           through which the Hungarian government
                                presence. The Bank has developed numerous               and the European Union provide support
                                products and services designed                          for the achievement of their social objectives.
                                to fulfil the specific needs of special groups            Another factor to be taken into consideration
                                within society, and to create opportunities             is the Bank’s role and social responsibilities
                                for them to develop and advance. As the most            as an employer.




42    OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                                         OTP Bank’s stakeholders and social performance       43
‘The most important assets of the International Children’s Safety Service                                                                                                                           next generation of financial specialists. Through
are its high moral standing and good reputation. This is what makes it                                                                                                                              the OTP Fáy András Foundation, which was

so important for our sponsors to also have a good reputation. OTP Bank                                                                                                                              founded in 1992, the Bank has set itself
                                                                                                                                                                                                    the goal of strengthening the economic
not only assists us financially, but – by virtue of its trustworthiness – also
                                                                                                                                                                                                    and entrepreneurial skills of young people, raising
supports us morally.’
                                                                                                                                                                                                    their level of financial sophistication, and instilling
     P É T E R E D V I (International Children’s Safety Service)                                                                                                                                    in them a project-based and community-centred
                                                                                                                                                                                                    outlook. In autumn 2006, as the result of a
                                                                                                                                                                                                    competition entitled ‘Be thrifty and creative, build
                                                                                                                                                                                                    a solid foundation for your future! – How would
                               9.7 Support, sponsorship                            Equal opportunities                                                                                              you invest HUF 5 million?’ a stationery and school
                                                                                                                                                                                                    supplies shop was opened in Csorna, and
                               As a major corporation that has a profound          The Bank’s sponsorship and support activities                                                                    a tourism venture was launched in Transylvania.
                               impact on both its economic and social              in this area are oriented towards assisting                                                                      The Foundation runs a financially-oriented life
                               environment, the objective of our support           disadvantaged and sick children, promoting                                                                       management and career training course, the
                               and sponsorship activities is to find as many        youth education and improving the quality                                                                        ‘Foundations Program’, which was developed in
                               points of contact as possible, even outside the     of life and the chances of the physically and                                                                    response to a genuine set of needs that had
                               framework of financial services provision, and       mentally challenged, primarily through the             the ‘OTPMikulásGyár’ bank account, at the                 hitherto remained unfulfilled. The program was
                               to strengthen our relationships with partners       forging of long-term cooperative partnerships,         ‘workshops’ themselves, or by using the collection        launched in 2006, and enables participants
                               by supporting deserving causes, programs and        and the organisation of events and programs.           boxes located in the Bank’s branches. The                 to acquire theoretical and practical business,
                               events that serve the interests, endeavours         The Bank also treats the provision of assistance       donations received were divided equally between           career and work-related skills. In the interests of
                               and needs of society as a whole. The Bank’s         in crisis situations as a priority.                    the healthcare program jointly run                        developing the standards and resources of public
                               support and sponsorship activities focus on two                                                            by the Bank and the International Children’s              education in economics, in the 2006-2007
                               main areas, each based on a core social value       Main recipients of support:                            Safety Service, and the other two partners in the         school year we donated textbooks to students
                               that is compatible with, and indeed                 Since 1994 OTP Bank has been the main                  Santa’s Workshop initiative – UNICEF and the              at some 100 secondary schools engaged in the
                               complements, the Bank’s operations: equal           supporter of the National Children’s Safety            Hungarian Red Cross.                                      teaching of economics. Under this initiative the
                               opportunities and community building.               Service. Every year the Service ensures the            In its efforts to promote equal opportunities OTP         Foundation provided almost 10,000 students
                               In accordance with these guiding principles,        provision of healthcare and assistance, and            Bank has, for several years, been a major sponsor         with a total of 17,000 textbooks, in a value of
                               in 2006 we sponsored or supported close to          improvements in the living standards, of more          of Special Olympics Hungary, the Hungarian                almost HUF 10 million. Besides this, at the end
                               400 initiatives on a regional and national scale.   than 10,000 disadvantaged children. Within             branch of the international organisation providing        of 2006 we provided every secondary school
                               In order to place our charitable and sponsorship    the framework of this partnership, the Bank            sporting opportunities for people with intellectual       engaged in the teaching of economics with an
                               activities on a more structured footing, and to     primarily supports the Service’s healthcare            disabilities. The Bank also supports the active           opportunity to upgrade their library, as the
                               improve the efficiency with which we achieve         programs. Besides the direct financial assistance       promotion of therapeutic horseback riding, an             Foundation provided each school with books and
                               our set goals, we will revise our sponsorship       it provides to the organisation, the Bank has also     outstandingly successful means of preventive              learning aids in a value of HUF 100,000.
                               and donation strategy in 2007.                      succeeded in drawing the attention of its              healthcare, through the sponsorship of events             A total of 164 schools and tens of thousands
                                                                                   customers to its fundraising efforts, and the          organised by the Hungarian Equestrian Therapy             of students benefited from this scheme.
                                                                                   amount of donations accumulated in collection          Association Foundation, and provides assistance
                                                                                   boxes located in the Bank’s branches increases         to the Hand in Hand Foundation, an organisation           Among the partnerships formed with institutes of
                                                                                   from year to year. The complementary year              set up to improve the situation                           higher education, one of the most prominent and
                                                                                   planner issued by the Bank also includes               of people with intellectual and multiple                  exemplary is the initiative under which the Bank
                                                                                   a reminder on each page – during the relevant          disabilities, as well as their families and carers,       issued a bank card jointly with the University of
                                                                                   calendar period – to request that the 1% of            nationwide. With the support of OTP Bank,                 Pécs. The Bank donates some of the revenue
                                                                                   personal income tax that may be set aside for          in 2006 the Foundation launched an                        from the card usage fees to the University, which
                                                                                   a charitable cause be donated to the International     unprecedented national awareness campaign,                means that by using the card, students and
                                                                                   Children’s Safety Service. It was also our desire to   with the aim of engendering positive attitudes            professors alike are also supporting the institution.
                                                                                   improve the living conditions of the impoverished      towards people with intellectual and multiple             Besides these, we also engage with partner
                                                                                   that prompted the Bank to support the Santa’s          disabilities.                                             institutions in individual projects to assist in
                                                                                   Workshop gift and donation-collection initiative.                                                                educating the financial specialists of the future
                                                                                   The Bank’s participation in the scheme created         OTP Bank also places particular emphasis on               and promoting a sophisticated financial culture,
                                                                                   an opportunity for everybody to help the needy         promoting the development of education                    by providing assistance for the renovation and
                                                                                   in 2006, by making donations directly into             in economics and finance, in order to train the            modernisation of lecture halls (for example, both


44    OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                      OTP Bank’s stakeholders and social performance            45
                              the University of Economics in Budapest and the         In 2006 we entered into a partnership with the                             Our aim is to contribute to the promotion of                  to be held in the region – as well as the
                              University of Pécs have a lecture hall named after      Museum of Fine Arts, involving the joint                                   a successful sporting culture in Hungary by                   Hungarian Amateur Open Golf championship
                              the Bank), by providing students with                   organisation of a series of exhibitions entitled                           sponsoring regional and international sporting                held by the Hungarian Golf Federation, and
                              subscriptions to financial journals (for example,        ‘Genius and Masterpieces’. Over the year                                   events and popular team sports with a broad                   competitions run by the Hungarian Triathlon
                              students at the Financial and Accounting Faculty        200,000 visitors had an opportunity to marvel                              base of supporters. Our partners include such                 Federation.
                              of the Budapest College of Economics read the           at masterworks selected from the collections                               prominent Hungarian teams as national
                              national business daily Napi Gazdaság, courtesy         of the world’s top museums.                                                champions the MiZo Pécs Women’s Basketball                    Besides making financial contributions, the Bank
                              of OTP Bank), and by offering development               Our efforts to preserve cultural heritage are                              Team, the Alba Regia Sport Club, the Kaposvár                 also provides other means of assistance.
                              subsidies to vocational secondary schools               embodied by the support we provide to cultural                             Basketball Club top-division men’s basketball                 We donate used equipment and furnishings that
                              engaged in the teaching of economics, with              institutions, as well as by the OTP Financial                              teams and the DVSC Debrecen football team.                    are still in good condition to schools and state or-
                              priority given to supporting those attended by          History Collection and the OTP Gallery.                                    Our sponsorship of sports also extends to cover               ganisations. The donated assets mainly consist of
                              children from a disadvantaged background.               The OTP Financial History Collection, work                                 sporting events that enable young competitors to              furniture, vehicles and computers, and are usually
                                                                                      on which began in the mid-1960s, today                                     test their sporting abilities (e.g. contests held for         given in response to direct requests from the reci-
                              OTP Bank takes advantage of the opportunity,            contains some 30,000 items of banking                                      the European Judo Union cadet and junior age-                 pient organisations. In certain cases the Bank of-
                              provided by law, to provide support for R&D             documentation. The Bank treats the gathering,                              groups, World Junior Ice Hockey Championships).               fers awards and prizes for a variety of initiatives
                              activities using a part of the money payable            documenting and curatorship of the items                                   Another important consideration when sponsoring               and competitions. Until now the Bank has not
                              as a contribution to the state innovation fund.         on display – documents and other memorabilia                               international sporting events and world                       prepared estimates of the cash value of these
                              The Bank commissions various studies, research          related to the foundation and operation of the                             championships is that they should contribute                  contributions, but from next year we plan to also
                              and analyses from scientific institutes and higher       first Hungarian financial institutions, items used                           to raising Hungary’s international profile, and                quantify these donations.
                              education institutions, thereby providing financial      in banks, office equipment and decorations,                                 promoting the country’s good reputation beyond
                              assistance to organisations engaged in research         engravings, photographs and posters –                                      its own borders. This is why we are, for the third            The tendency over the past years has been for
                              and development. In 2006 the total value of R&D         as an important priority.                                                  year running, the name-giving sponsor of the                  the Bank to consistently and substantially increase
                              work commissioned was HUF 146.8 million, or             At the end of 2005, the OTP Gallery was                                    OTP Bank Ladies Central European Golf Open –                  the amount it spends on charitable donations.
                              11.6% of its gross innovation contribution liability.   ceremoniously reopened in the lobby of the                                 the only professional women’s golf championship               (SOC1).
                                                                                      Bank’s headquarters in Babér utca, Budapest.
                                                                                      By running the gallery the Bank maintains an
                              Community building                                      exhibition space dedicated to displaying the
                                                                                                                                          Money spent on donations (SOC1)
                                                                                      works of outstanding contemporary Hungarian                                                                                Million HUF
                                                                                                                                            Support, donations                                                           300
                              The Bank regards its community initiatives              painters. OTP Bank also supports contemporary                                                                                                                                       258
                              as particularly important: the nurturing and            art by purchasing fine paintings. Currently, some                                                                                   250

                              perpetuation of community values and traditions,        600 works of art hang from the walls of buildings                                                                                                                 194
                                                                                                                                                                                                                         200
                              the preservation and augmentation of national           and offices used by the Bank.
                              values, and ensuring their widespread recognition.                                                                                                                                         150
                                                                                      We also followed the principles of community
                                                                                                                                                                                                                         100
                              In its efforts to promote Culture, the Bank             building when forming partnerships related                                                                                                      60
                              primarily supports events that also represent           to our sponsorship of sports in 2006.                                                                                               50
                              quality and value to our customers. Besides
                                                                                                                                                                                                                          0
                              national events, the Bank also sponsors initiatives                                                                                                                                                    2004              2005               2006
                              at regional and local level, thereby helping to
                              promote culture in the provinces. Over recent
                              years the sponsored events have included cultural                                                                                  As part of a revision of our donation and support             es’ sensitivity to social issues, and instil in them
                              festivals (Veszprém Street Music Festival, Jewish                                                                                  strategy, from 2007 we plan to deepen the invol-              a greater environmental awareness. As we have
                              Summer Festival, Gyôr Summer, Savaria Historical                                                                                   vement of our employees in charitable activities              learned from the experience accumulated in the
                              Carneval, EFOTT music festival), classical music                                                                                   through the launch of special initiatives, such as            course of our business operations, it is only pos-
                              concerts (Zemplén Festival), popular music                                                                                         team-building programs, in the course of which                sible to set new targets and achieve better results
                              concerts (Zorán, Gábor Presser) and folk music                                                                                     the participants complete a task that is beneficial            through a joint effort and a positive attitude.
                              happenings (Honvéd Ensemble anniversary                                                                                            to the community (for example, constructing a
                              performance, concert by the 100-piece                                                                                              children’s playground).                                       Please visit our website for more details of our
                              Gypsy orchestra).                                                                                                                  Through this, we intend to reinforce our employe-             support and sponsorship activities.




46   OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                                OTP Bank’s stakeholders and social performance               47
‘Nature is vast, man is miniscule. Therefore man’s existence depends                                                                       processing of consumption data is currently           to season. In all cases the water used was
                                                                                                                                           in progress. The gathering and analysis of this       supplied from the public water main, and
on what relationship he can form with nature, how well he understands it
                                                                                                                                           information will represent an ongoing task in         flowed out into the public sewage system.
and how he harnesses its forces for his own purposes.’
                                                                                                                                           the future. It is our aim to possess, at the end      (EN8, EN21)
     A L B E R T S Z E N T - G Y Ö R G Y I (Nobel prize-winning doctor, pharmacist)                                                        of 2007, comprehensive information regarding
                                                                                                                                           the Bank’s energy consumption, which will form        Over the past years the Bank has implemented
                                                                                                                                           the basis for a review of consumption habits          a number of measures aimed at reducing
                                                                                                                                           and the setting of targets for reducing               consumption in its buildings:

                               10. Our environmental                                                                                       the quantities of energy consumed, as well
                                                                                                                                           as for choosing an electricity supplier, which will
                                                                                                                                                                                                 – Power factor correction equipment is installed
                                                                                                                                                                                                   in most buildings. The use of these devices

                                   performance                                                                                             become necessary as a result of the forthcoming
                                                                                                                                           deregulation of the electrical energy market.
                                                                                                                                                                                                   means that high reactive power loads are
                                                                                                                                                                                                   now extremely rare.
                                                                                                                                                                                                 – Lighting systems use energy-saving bulbs.
                                                                                                                                                                                                 – Washrooms are fitted with motion-sensing
                               The direct environmental impact of OTP Bank’s          all information pertaining to the Bank’s central                                                             light switches.
                               operations arises from the maintenance and             units and branch network within the framework                                                              – Car-park lighting is subject to a time restriction.
                               running of the Bank’s central organisation and         of a comprehensive and standardised system.                                                                – Building services only operate during working
                               branches. The measures implemented to reduce           The availability of this information, in processed                                                           hours.
                               the environmental burden and harmful effects           form, as well as the environmental regulations                                                             – The heating and air-conditioning systems
                               that result indirectly from the Bank’s core            to be formulated in 2008, will form the basis for                                                            function in energy-saving mode at the
                               business activities are described in the section on    determining which measures need to be                                                                        weekend and at night.
                               business performance. The Bank’s environmental         implemented in order to minimise the Bank’s                                                                – The air-conditioning system is regulated
                               performance is mainly defined by the measures           environmental impact.                                                                                        centrally, based on the outdoor temperature,
                               taken to cut down on the consumption and use                                                                                                                        but minor corrections to the indoor
                               of energy, natural resources and materials.                                                                                                                         temperature can be made in each office.
                               OTP Bank employs a wide range of means                 Materials usage                                      In the Bank’s overall energy usage, the central       – In the majority of buildings water-saving taps
                               to minimise its environmental footprint and                                                                 buildings are a determining factor owing to their       and toilet cisterns are in use.
                               reduce the environmental damage caused                 The materials used at the Bank are paper             size and function: some 2,800 people are              – Memos are sent to the employees advising
                               by its operations. However, in respect of several      and the inks and toners used for printing            employed in the central buildings, and the Bank’s       them to use appliances in an energy-efficient,
                               areas of operation it does not possess complex         (EN1, EN2). We do not possess consolidated           separate server centre also has one of the              water-saving manner.
                               information, and there are deficiencies in the          information regarding the quantities of these        highest energy requirements of the central            The Bank does not possess information
                               procedures for gathering information regarding         used by OTP Bank, and therefore the gathering        buildings. The energy consumption of the              regarding the quantities of energy saved (EN7).
                               the quantities of resources and materials used,        of such information, as well as determining the      branches is proportionate to the size of the given
                               and the results achieved. The gathering of such        quantities of recycled paper used, are tasks to      branch, and threshold values are determined           As the result of developments carried out in
                               information is made more difficult by the fact that     be performed in 2007 and 2008.                       based on the seven branch types. The combined         recent years, renewable energy sources are
                               OTP Bank has outsourced the facilities                                                                      energy consumption of the central buildings was       used at two of OTP Bank’s sites:
                               management of its properties. Consequently,                                                                 14,328,816 kWh in 2006, with energy demand            – We have installed solar panels for the
                               one of the Bank’s most important objectives            Energy and water usage, building                     spread evenly over the year (EN4).                      provision of hot water and auxiliary
                               for the coming years is to gather and process          design and operation                                 With respect to gas consumption and district            heat supply at our holiday centre in
                                                                                                                                           heating usage, again, we only possess                   Balatonszemes, resulting in considerable
                                                                                      No consolidated information is currently             comprehensive data for the central buildings.           energy savings.
                                                                                      available regarding OTP Bank’s total energy and      In 2006 the gas consumption of the central            – In the central warehouse, we make use
                                                                                      water consumption, because the central               buildings was 707,105 m3. The Bank only uses            of geothermal energy with a heat pump.
                                                                                      buildings and the branch network are not             district heating in one of its buildings, which
                                                                                      managed centrally. OTP Bank only possesses           is currently out of use, and therefore no actual      In future we plan to expand our use of renewable
                                                                                      data pertaining to the central buildings, where      consumption takes place (EN4). The gathering          energy sources by extending the methods used
                                                                                      a standardised system for collecting and             and analysis of heating data is also a task to        so far to our branches, as well as adopting
                                                                                      evaluating this information has been in              be performed from next year onwards.                  additional new solutions and technologies. Our
                                                                                      operation for more than a year now.                  The total water consumption of the Bank’s             plans include the installation of solar panels at
                                                                                                                                                                                       3
                                                                                      The Bank recognises the importance of this           central buildings in 2006 was 56,464 m ,              the Békásmegyer holiday centre and the office
                                                                                      issue, and the collection and the detailed           with demand varying appropriately according           centre in Babér utca.


48    OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                   Our environmental performance           49
                              In the course of constructing new buildings and         Waste management (EN22)                                                      Company vehicles, business trips                            where possible, we will ensure that diesel-
                              renovating existing properties, as well as during                                                                                                                                                powered models are purchased with a diesel
                              their operation, we make an effort to use               In 2005 the Bank began to introduce selective                                On 31 December 2006 OTP Bank operated 313                   particle filter fitted.
                              environmentally friendly technologies:                  waste collection, initially in the central                                   motor vehicles, of which 165 are for personal use           Around half of the car fleet consists of petrol-
                              – In new buildings, particular emphasis is              buildings. Today the scheme has expanded to                                  and 148 for business purposes. When procuring               powered cars in the ‘compact’ category, with an
                                placed on using the appropriate insulation.           cover approximately half of all the Bank’s                                   the vehicles, the primary consideration was                 engine capacity of 1600cm3 or lower, which
                              – Areas of our buildings that are permanently           employment sites. The selective collection of                                functionality, and aspects of this included                 produce CO2 emissions of less than 180g/km.
                                occupied are 80-90% naturally lit, which,             paper waste is now fully implemented at the                                  the vehicles’ performance, safety and fuel                  A quarter of the vehicle fleet consists of ‘mid-size’
                                besides reducing energy consumption, is also          central buildings, where in 2006 a total of 260                              consumption. In order to boost the efficiency                and ‘executive’ cars, the majority of which are for
                                beneficial in terms of the comfort and health         tons of paper waste was collected and recycled.                              of fleet operation, we purchase the same type                personal use. We do not have a vehicle-by-
                                of our employees.                                                                                                                  of vehicle within a given category. At OTP Bank             vehicle breakdown of the years of manufacture
                              – In the course of fitting out workplaces, the main      The central buildings also lead the way in the                               the majority of company vehicles are powered                and mileage of the cars, and therefore it is not
                                design criteria are based on ergonomic                selective collection of other waste types, while                             by petrol engines, which, in comparison to diesel           possible to estimate CO2 emissions. One of our
                                considerations, but the use of environmentally-       examples of selective waste collection in the                                engines, have a lower engine capacity and                   aims for 2007 is to clarify the procedures for
                                friendly raw materials and manufacturing              branches are sporadic. The selective collection                              consume less oxygen. In future vehicle                      information gathering and estimate the CO2
                                processes is also becoming an increasingly            of used fluorescent tubes and bulbs is fully                                  procurements by the Bank, the environmental                 emissions of the vehicle fleet. The number of
                                important factor.                                     implemented in the central buildings, while the                              footprint of the vehicles will be taken into                vehicle kilometres travelled per employee was
                              – When procuring sanitary supplies, we give             separate disposal of used toner and ink cartridges                           consideration, initially when renewing the fleet of          around 130 km in 2006.
                                preference to items manufactured from                 and dry cells has, for the time being, only been                             high-mileage business-use vehicles. In the future,
                                recycled paper.                                       partially achieved. However, the selective collection
                              – The procurement of cleaning materials is              of these types of waste will be fully implemented
                                performed by the cleaning services                    in all the Bank’s branches and buildings in 2008.       Distances travelled by company vehicles                             1 200 000
                                                                                                                                                                                                                              km


                                subcontractor. One of the criteria in selecting       The destruction of CDs, diskettes and video                                                                                                                                       617 000
                                the cleaning subcontractor is that they should        cassettes is a question of bank security.                 Central units                                                     1 000 000

                                use modern, environmentally-friendly                  The collection of waste CDs and bank cards is             Branch network
                                                                                                                                                                                                                   800 000
                                materials. However, at present we have no             carried out separately, and these are destroyed                                                                                                                         601 000
                                                                                                                                                                                                                   600 000                  584 000
                                information regarding the quantity of cleaning        in the waste incinerator at Dorog. Employees in
                                materials used.                                       several buildings have requested that the selective
                                                                                                                                                                                                                   400 000
                              In the future we will regularly monitor the use         waste collection scheme be extended to include
                              of environmentally-friendly materials by the            the separate collection of plastic drinks bottles.                                                                           200 000                  337 000           372 000           418 000
                              subcontractor, and request that they report on          At present the removal of the collected bottles
                                                                                                                                                                                                                         0
                              the quantities of materials used.                       is provided for by the employees themselves.                                                                                                   2004              2005              2006

                                                                                      We intend to institutionalise the collection of PET
                                                                                      bottles by extending the scope of the selective                              As a result of the corporate acquisitions made in           In order to reduce the number of trips,
                              Office equipment                                         waste collection program.                                                    2006, the number of business trips – primarily              OTP Bank endeavours to hold more frequent
                                                                                                                                                                   trips abroad – rose considerably, since personal            video conferences, and to make better
                              A considerable part of the Bank’s environmental         Procedures for scrapping and replacing electronic                            meetings and consultations are indispensable                use of the video conferencing equipment
                              impact arises from its use of computer                  equipment have been fully implemented at all of                              to ensure the successful integration of new                 at its disposal. The Bank’s central buildings
                              equipment. In order to reduce the quantity              OTP Bank’s premises. The removal and                                         subsidiaries. In a growing number of cases it is            currently contain three rooms suitable for the
                              of waste, and lengthen the lifecycles of the            neutralisation of e-waste is performed through                               not only senior executives who travel, but also             holding of video conferences. At foreign
                              products, we have our used ink and toner                companies licensed to handle hazardous waste.                                other employees who are outstanding specialists             subsidiaries (Bulgaria, Romania and Slovakia),
                              cartridges recycled by a specialist refilling           At the end of 2006 the Bank owned 1,900 ATMs                                 in their given field, in order to give professional          the conditions for video conferencing are also
                              company. The majority of our printers are laser         and 27,295 POS terminals. The average lifespan                               guidance at the foreign subsidiary banks. Some              in place.
                              printers, and the number of inkjet printers, which      of the ATMs and POS terminals is 11 years, which                             70% of trips abroad are made by aeroplane,                  A reduction in travelling can be realistically
                              are only used in special cases, is negligible. In the   means that every year some 100 ATMs and 1,500                                while trips to the three nearest foreign subsidiary         expected as the integration of the new
                              interests of reducing the environmental footprint       POS terminals need to be replaced, while between                             banks – in Slovakia, Serbia and Croatia – are               subsidiaries progresses. In 2008 we plan
                              of our office-based activities, in the short term we     2,000 and 3,000 computers and monitors are                                   made by car. Rail trips abroad are only made in             to equip a room suitable for the holding
                              plan to eliminate superfluous printing on a large        scrapped on an annual basis. It has become                                   exceptional cases. In the course of the business            of video conferences, with a capacity
                              scale through the drafting of regulations governing     established practice for certain equipment that is                           trips the decision regarding whether to travel by           of 20-25 persons.
                              activities of this nature, beginning with a manual      no longer in use, mainly furniture and vehicles, to                          car or aeroplane is made based on consideration
                              pertaining to the use of printers.                      be donated to foundations and schools.                                       of cost-effectiveness.


50   OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                                                    Our environmental performance        51
Number of official business trips abroad                                                                                                              – continue to increase customer satisfaction      – starting from 2007, involve our employees in

                                                                                 No. of trips
                                                                                                                                                       in 2007 as planned                                selecting the areas that will be supported by
                                                                                       900                                                           – increase the number of closed customer            the Bank, and hold an intranet vote to learn
     Number of official business trips abroad
                                                                                       800                                              779
                                                                                                                                                       complaints in 2007                                about their view of our policy of support
                                                                                       700                             659                           – publish detailed information booklets about
                                                                                       600            532                                              our products and services and the risks         Environmental objectives:
                                                                                       500                                                             involved, so as to provide more information     – employ a full-time environmentalist starting
                                                                                       400                                                             to customers and improve their knowledge          from 2007
                                                                                       300                                                             of finances, starting from 2007                 – draft environmental protection regulations
                                                                                       200                                                           – continuously reduce staff turnover, and reach     in 2008
                                                                                       100                                                             a rate of less than 14% in 2007                 – prepare an environmental protection training
                                                                                          0                                                          – introduce a test to measure employee              program in 2007 and introduce it in 2008
                                                                                                      2004             2005             2006
                                                                                                                                                       satisfaction in 2007                            – take into account environmental impact more
                                                                                                                                                     – launch a banking-career management                in relation to vehicle purchases
                                                                                                                                                       system in 2007                                  – broaden the scope of information collected
                                 Publications                                                   are expanding the range of information available     – make donation and sponsorship activities          in regard to vehicle use and estimate CO 2
                                                                                                via our website, to ensure that interested parties     more structured and revamping our donation        emissions in 2007
                                 In future OTP Bank will make a concerted effort                can access the desired content as quickly as           and sponsorship strategy in 2007                – collect and process consumption information
                                 to ensure that its publications are printed on                 possible, and without the use of paper.              – quantify benefits in kind                         related to the Bank’s central units and
                                 recycled paper, similarly to this CSR Report.                  We believe that with this step we will not only                                                          network in a unified system, and review
                                 The 2007 Annual Report and CSR Report, as                      be protecting our environment, but also                                                                  consumption habits starting from 2007
                                 well as the Christmas greetings cards, will also               representing and promoting our philosophy                                                              – measure the results of steps taken to reduce
                                 be printed on recycled paper. Additionally, we                 of corporate social responsibility.                                                                      energy consumption
                                                                                                                                                                                                       – expand the use of renewable energy sources
                                                                                                                                                                                                       – give preference to environment-friendly
                                                                                                                                                                                                         materials when selecting suppliers
                                                                                                                                                                                                       – in the case of current suppliers, control


                                 11. Summary of our objectives                                                                                                                                           the use of environment-friendly materials,
                                                                                                                                                                                                         prepare a report on the quantity
                                                                                                                                                                                                         of materials used
                                                                                                                                                                                                       – collect and analyse quantity information
                                 General objectives:                                            – establish a Climate Change Fund in 2007                                                                related to printing (paper, recycled paper
                                 – extend the principles of responsible and                       (OTP Fund Management Ltd)                                                                              and toner)
                                   sustainable operation to all of the Bank’s                                                                                                                          – prepare a regulatory system related
                                   activities                                                   Social objectives:                                                                                       to printing in 2007
                                 – extend the principles and practice of                        – create a social responsibility strategy in 2007                                                      – use recycled paper for brochures
                                   responsible operation to our domestic                        – make the Ethics Statement widely available                                                             and Christmas cards in 2007
                                   and foreign subsidiaries                                       and known                                                                                            – increase non paper-based information sources
                                 – have the report assured by an independent                    – elaborate, in 2007, a training program aimed at                                                      – increase the rate of selective waste disposal
                                   external organisation in 2007                                  teaching the Code of Ethics and the principles                                                       – institutionalise the recycling of plastic
                                                                                                  behind the CSR strategy, and launch the                                                              – create a 20-25 person conference room
                                 Economic objectives:                                             training program for employees in 2008                                                                 suitable for video-conferencing in 2008
                                 – maintain our market-leading position                         – bring the Ethics Statement and the Corporate
                                   in Hungary and Bulgaria and improve our                        Social Responsibility Report to the attention
                                   position in the other countries                                of our suppliers in 2007
                                 – reduce the expense-to-income ratio to below                  – organise an ‘Investors’ Day’ in 2007,
                                   50-53% in 2007 and the following years                         with a plan to hold another each year
                                 – in 2007, to close successfully, that is, with                – ensure that the number of renovated branches
                                   binding legal force, as many proceedings                       reaches 150 by the end of 2007 in the
                                   as possible, through the rejection of claims                   framework of the Branch Renovation Program




52     OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                              Summary of our objectives       53
                             12. Glossary                                                                                                           and liabilities based on a contract or agreement,
                                                                                                                                                    cash assets, debt securities, and investments
                                                                                                                                                                                                          Bargaining Agreement. A Collective Bargaining
                                                                                                                                                                                                          Agreement may be concluded between the
                                                                                                                                                    embodying an ownership share, as well as              employer, the employer’s advocacy body and
                              Acquisition: : Purchase of a company or a share in           voluntarily, people dismissed, people retiring,          derivative transactions, are all deemed to be         several employers on the one hand, and the trade
                              a company, usually by acquiring a majority stake..           and people who lose their lives in service).             financial instruments (Accounting Act).               union or several trade unions on the other.
                                                                                                                                                                                                          In Hungary, Collective Bargaining Agreements are
                              Compliance: Satisfying the requirements set out              Front office: a work area where staff have direct        R&D (research and development): R&D is                regulated by Act XXII of 1992 on the Labour Code.
                              in the statutory regulations and recommendations             contact with customers.                                  regularly conducted creative work, the purpose
                              that relate to the bank’s operation.                                                                                  of which is to expand knowledge, including the        Consolidation: The purpose of consolidation is to
                                                                                           Independent: The Company regards as                      knowledge of human beings, culture and society,       strip out the effects of business dealings between
                              Corporate Social Responsibility (CSR):                       independent those members of the Board of                and the use of this knowledge for creating new        group members (‘intra-group transactions’) when
                              An effort by companies to integrate social and               Directors and the Supervisory Board who are not          applications. There are three types of R&D: basic     presenting the asset, financial and income position
                              environmental objectives into their business                 employed by OTP Bank Plc. Members of the                 research, applied research, and experimental          of a business group.
                              activities on a voluntary basis and mould their              Supervisory Board who represent the employees            development (Frascati, 1933). An important
                              relationships with their stakeholders accordingly.           are not considered independent by the Bank.              feature of R&D is its association with the new:       Reactive power: Reactive power burdens electric
                                                                                                                                                    the result of the R&D activity must contain a new     systems needlessly and may result in considerable
                              Controlling, influencing stake: An enterprise                 Application level GRI3 B: A level specified in the       element compared to generally available products,     extra cost.
                              (parent company) may exercise a controlling                  guidelines, issued by the Global Reporting               services or processes serving the same or a similar
                              influence over another enterprise (subsidiary) either         Initiative, pertaining to the preparation of             purpose.                                              Multiplier: The multiplier effect refers to the
                              directly, or indirectly through its subsidiary, because it   sustainability reports, and which indicates the                                                                phenomenon by which a country’s money supply
                              meets at least one of the following conditions: a)           depth and breadth of the report. The GRI                 Two-tier banking system: In a two-tier banking        expands as a result of banks being able to lend.
                              it possesses alone the majority (i.e. more than 50%)         differentiates between three levels of application –     system the central bank (national bank) is not
                              of the owners’ shareholders’) votes based on its             A, B and C – according to the extent of standard         in direct contact with the population or with         Employee satisfaction survey: A survey aimed
                              ownership share; or b) it possesses alone the                data disclosure contained in the report.                 companies (market players). The role of the           at measuring employee satisfaction and
                              majority of votes on the basis of an agreement                                                                        central bank is to regulate the volume of money       commitment, which allows the company to learn
                              concluded with the other owners (shareholders);              IFRS: International Financial Reporting Standards.       in circulation. The central bank manages the          about the underlying needs and motivations of
                              or c) in its capacity as the owner (shareholder)                                                                      accounts of commercial banks and safeguards the       its employees.
                              of the company it is entitled to elect or recall the         Performance indicator: core performance                  mandatory financial reserves of commercial banks.
                              majority of senior officers and the members of the            indicators contain information on the                    The finances of the population and companies are      Prudent operation: Prudence includes all codified
                              supervisory board; or d) on the basis of an                  organisation’s economic, social and environmental        handled by the commercial banks.                      and non-codified behaviours that an averagely
                              agreement concluded with the owners (shareholders)           performance in a specified, comparative format.                                                                informed investor would justifiably expect from
                              (or a provision in the articles of association) –                                                                     Two-tier governance model: In corporate               any financial institution. Prudent operation
                              regardless of the ownership share, the voting ratio          Innovation contribution: Act XC of 2003 on the           governance, business and functional governance        is a requirement under the law.
                              and the right to elect and recall – it exercises an          Research and Technological Innovation Fund               are separate, and therefore the areas under their
                              influencing degree of governance and control.                 stipulates the payment of an innovation                  control are able to focus on their core activities    SRI: socially responsible investment. Investment
                                                                                           contribution, to be paid into a separate state fund,     better, thus leveraging the synergies of the group.   that is responsible from a social point of view.
                              EPS: earnings per share, which shows how much                for companies under the effect of the act.
                              after-tax profit the company earned in the given                                                                      Outsourcing: Detaching certain activities and         Stakeholder: A company’s stakeholders are all
                              year in respect of one share.                                Chinese Wall regulations: The separating                 functions from the core activity and having other     groups and individuals that may affect or may be
                                                                                           of investment and financial service activities is        organisations perform them.                           affected by the realisation of a company’s
                              Code of ethics: The code of ethics is a set of               a requirement in respect of universal banks,                                                                   objectives.
                              corporate guidelines that pertains to the conduct            in the interests of preventing the accruing of any       Risk: A danger; the possibility of the occurrence
                              expected from the employees of the company                   advantage to persons who possess information             of a damaging event or loss. The degree of risk is    Capital adequacy: The degree to which a bank is
                              and which specifies the line between behaviour               in these two main financial areas compared to            determined primarily by two factors: the likelihood   supplied with capital relative to its liabilities and its
                              that is expected and behaviour that is prohibited            those who only have public information available         of occurrence and the seriousness of the              risky assets. According to BIS (the Bank of
                              by the company. Companies formulate their ethical            to them. This is especially important in the case        consequence or impact.                                International Payments), it is advisable for the
                              behaviour towards their stakeholders in a code               of securities traded on the stock exchange, such                                                               capital adequacy ratio to be higher than 8 percent;
                              of ethics.                                                   as, for example, information about the shares            Collective Bargaining Agreement: The Collective       if it is, a bank is considered to be safe in terms
                                                                                           of OTP Bank Plc.                                         Bargaining Agreement may regulate the following:      of its capitalisation.
                              Staff turnover: A measure of the flow of the                                                                          rights and obligations arising from the employment
                              workforce through an organisation; the rate at               Financial instrument: A contractual agreement            relationship, and the means of exercising and         Business ethics: Business or economic ethics
                              which an employer must hire new staff in order               in which one party obtains a financial asset while       performing them, as well as the procedural rules      is a systematic attempt to reconcile man’s
                              to replace those leaving the organisation over               the other party incurs a financial liability or equity   related to this; the details of the relationship      economic pursuits with his desire to achieve
                              a given period of time (including persons leaving            (a capital instrument). Thus, the financial claims       between the parties that enter into the Collective    moral good.



54   OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                                                          Glossary      55
                                     13. GRI Index                                                                                                         4.7         Process for determining the qualifications and expertise of the members of the
                                                                                                                                                                       organisation’s highest governance body for guiding the organisation’s strategy
                                                                                                                                                                       on economic, environmental and social topics
                                                                                                                                                                                                                                                                –            No such strictly set criteria, it is
                                                                                                                                                                                                                                                                             primarily economic experience and
                                                                                                                                                                                                                                                                             qualifications that are required
                                                                                                                                                           4.8         Internally developed statements of mission, values, codes of conduct and principles      12
                                                                                                                                                                       relevant to economic, environmental and social performance
                                                                                                                                                           4.9         Procedures of the highest governance body for overseeing the organisation’s identification 15
                                                                                                                                                                       and management of economic, environmental and social performance, including relevant
                                                                                                                                                                       risks and opportunities, and adherence or compliance with internationally agreed standards,
                                                                                                                                                                       codes of conduct and principles

Indicator Description of indicator                                                                         Page       Comments                             4.10        Processes for evaluating the highest governance body’s own performance,                  15
number                                                                                                                                                                 particularly with respect to economic, environmental and social performance

Strategy and Analysis                                                                                                                                      4.11        Explanation of whether and how the principle of precaution is addressed by the           13–14        Precaution in core operations
                                                                                                                                                                       organisation
1.1       Statement of the most senior decision-maker of the organisation about the relevance of           5
          sustainability to the organisation and its strategy                                                                                              4.12        Externally developed economic, environmental and social charters, principles or other    –            None
                                                                                                                                                                       initiatives to which the organisation subscribes or endorses.
1.2       Description of key impacts, risks and opportunities                                              7; 52–53
                                                                                                                                                           4.13        Membership in associations and/or national/international advocacy organisations          31
Organisational Profile
                                                                                                                                                           4.14        List of stakeholder groups engaged by the organisation                                   3
2.1       Name of the organisation                                                                         59
                                                                                                                                                           4.15        Basis for identification and selection of stakeholders with whom to engage                3
2.2       Primary brands, products, and/or services                                                        10; 20;
                                                                                                           21; 22                                          4.16        Approaches to stakeholder engagement, including frequency of engagement                  30; 31;
                                                                                                                                                                       by type and by stakeholder group                                                         32–34; 39;
2.3       Operational structure of the organisation, including main divisions and subsidiaries             8–9; 19                                                                                                                                              42–43
2.4       Location of organisation’s headquarters                                                          59                                              4.17        Key topics and concerns that have been raised through stakeholder engagement,            30; 31;
2.5       Locations of the company’s operation                                                             8–9                                                         and how the organisation has responded to these (including through its reporting).       32–34; 39;
                                                                                                                                                                                                                                                                42–43
2.6       Nature and legal form of ownership                                                               3
                                                                                                                                                           Core Performance Indicators
2.7       Markets served, broken down by sector and geographic area                                        8–9,
                                                                                                           20–23                                           Economic performance

2.8       Scale of the reporting organisation                                                              2, 28                                           EC1         Direct economic value generated and distributed                                          25

2.9       Changes in the organisation during the reporting period                                          2, 8–9                                          Market presence

2.10      Honours and awards received during reporting period                                              11                                              EC5         Range of ratios: standard entry-level wage compared to local minimum wage                37

Report Parameters                                                                                                                                          EC7         Procedures for local hiring and proportion of senior management hired from the local     36
                                                                                                                                                                       community at significant locations of the organisation
3.1       Reporting period                                                                                 3
                                                                                                                                                           Indirect economic impacts
3.2       Date of most recent previous report                                                              –          None
                                                                                                                                                           EC8         Development and impact of infrastructure investments and services provided               23
3.3       Reporting cycle                                                                                  3                                                           primarily for public benefit
3.4       Contact point for questions regarding the report or its contents                                 59                                              Environmental Performance – the indicators have been designed primarily to suit the characteristics of manufacturing companies,
3.5       Process for defining report content                                                               3                                               and therefore the definitions and requirements are not always relevant to OTP Bank

3.6       Boundary of the report                                                                           4                                               Materials

3.7       Specific limitations on the scope or boundary of the report                                       –          No such limitations, but we are      EN1         Materials used by weight or volume                                                       48
                                                                                                                      continually adding to the range of   EN2         Percentage of materials used that are recycled input materials                           48
                                                                                                                      information to be included in the
                                                                                                                      report                               Energy

3.8       Joint ventures, subsidiaries, leased facilities, outsourced operations and other entities that   4                                               EN4         Indirect energy consumption by primary energy resource                                   49
          could significantly affect comparability from period to period and/or between organisations                                                       EN7         Initiatives to reduce indirect energy consumption and reductions achieved                49
3.9       Data measurement techniques and the bases of calculations, including assumptions and             4          And in the relevant sections         Water
          techniques underlying estimations applied to the compilation of the indicators and other
          information in the report                                                                                                                        EN8         Total water withdrawal by source                                                         49

3.10      Reason for the re-statement of any information already published in earlier reports              –          Nem értelmezhetô                     Gas and liquid emissions and waste

3.11      Significant changes from previous reporting periods in the scope, boundary or                     –          Nem értelmezhetô                     EN21        Total water discharge by quality and destination                                         49
          measurement methods applied in the report                                                                                                        EN22        Total weight of waste by type and disposal method                                        50
3.12      Table identifying the location of the Standard Disclosures in the report                         56–58                                           Labour Practices and Decent Work
3.13      Policy and current practice with regard to seeking external assurance for the report.            4                                               Employment
Governance, Commitment and Engagement                                                                                                                      LA1         Total workforce by employment type, employment contract and region                       35–36
4.1       Governance structure of the organisation                                                         15–18                                           LA3         Benefits provided to full-time employees that are not provided to temporary               35
4.2       Indication of whether the Chair of the highest governance body is also an executive officer       15                                                          or part-time employees

4.3       If the organisation has a unitary board structure, the number of members of the highest          15; 17                                          Labour/management relations
          governance body that are independent and/or non-executive members                                                                                LA4         Percentage of employees covered by collective bargaining agreements                      38–39
4.4       Mechanisms for shareholders and employees to provide recommendations or direction                15; 30;    Act IV/2006 on Companies             Occupational health and safety
          to the highest governance body                                                                   38–39
                                                                                                                                                           LA7         Rates of injury, occupational diseases, lost days and absenteeism,                       41
4.5       Linkage between the compensation of members of the highest governance body                       15                                                           and number of work-related fatalities by region
          and senior managers and the performance of the organisation
4.6       Processes in place for the highest governance body to ensure conflicts of interest                14
          are avoided



56     OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                                                                                                     GRI Index       57
Training and education
LA11       Programs for skills management and lifelong learning that support the continued        39
           employability of employees and assist them in managing career endings
LA12       Percentage of employees receiving regular performance and career-development reviews   40
Diversity and equal opportunity
LA14       Ratio of basic salary of men to women by employee category                             –            No difference
Human Rights
Prevention of discrimination
HR4        Total number of incidents of discrimination and actions taken                          12
HR6        Risk of child labour and the measures taken to prevent it                              12
HR7        Risk of forced or compulsory labour and the measures taken to prevent it               12
Society
Anti-competitive behaviour
SO7        Total number of legal actions in relation to anti-competitive behaviour,               26
           anti-trust and monopoly practices, and their outcome
Product responsibility
Product and service labelling
PR5        Practices related to customer satisfaction, including results                          32–34
           of surveys measuring customer satisfaction
Compliance
PR9        Monetary value of significant fines for non-compliance with laws                         26
           and regulations concerning the provision and use of products and services
Sector supplementary indicators – social performance
CSR2       CSR organisation                                                                       18–19
CSR6       Stakeholder dialogue (connection to point 4.16)                                        30; 31;
                                                                                                  32–34; 39;
                                                                                                  42–43
SOC1       Charitable contributions                                                               47
RB1        Retail banking policy (socially important issues and products)                         21

Note: The number of performance indicators can be found in the relevant section of the text.




                                                                                                                               Our company’s full Hungarian name               We look forward to receiving
                                                                                                                               and head office address:                        feedback from you!
                                                                                                                               Országos Takarékpénztár és Kereskedelmi         We regard feedback as necessary for ensuring
                                                                                                                               Bank Nyilvánosan Mûködô Részvénytársaság        the Bank’s sustainable growth, and we will
                                                                                                                               (OTP Bank Nyrt.): 1051 Budapest, Nádor u. 16.   take this feedback into account as we progress
                                                                                                                                                                               along the path to exemplary corporate
                                                                                                                                                                               citizenship. Therefore we look forward
                                                                                                                                                                               to receiving your comments!
                                                                                                                                                                               csr@otpbank.hu


58     OTP Bank Corporate Social Responsibility Report 2006                                                                                                                                                    GRI Index      59
                                    Publisher: OTP Bank Plc.
                   Responsible editor: Marketing Directorate, Gabriella Balogh
                                   Chief editor: Andrea Mester
Collaborator in the preparation of this publication: RTG Corporate Responsibility Consulting Ltd.
                                     Photography: MTI Fotó
                                   Graphic Design: Café Design
                                     Production: Artemis Kft.
         This publication was printed on recycled Cyclus Offset and Cyclus Print paper.

				
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