The Budapest-based lender's share-price drop is a result of the uncertainty in global financial markets and the bank has been unable to convince investors that it has no hidden losses, Csanyi said at a shareholders' meeting in the Hungarian capital today.
``The bank has good fundamentals, nothing justifies'' the share price ``except for risk aversion,'' he said. ``I am confident that this will be over soon and we can regain the valuation we enjoyed on July 23, when we reached our record. There's a chance for a substantial increase from here.''
OTP rose as much as 2.3 percent to 6,927 forint in Budapest trading and was at 6,920 forint at 11:43 a.m. The stock reached a record high of 10,939 forint on July 23, 2007.
The company, Hungary's largest bank, has been able to avert the fallout from the collapse of global credit markets because it didn't need financing from international resources, Csanyi said.
OTP's net income rose to 208.2 billion forint ($1.3 billion) last year from 187.1 billion forint in 2006. Net interest income advanced 21 percent to 431.7 billion forint.
Shareholders today approved a management proposal not to pay a dividend from 2007 earnings. OTP intends to buy back more stock, which is in the ``best interest'' of investors and the company at current prices, Csanyi said.
OTP and its subsidiaries now hold 12.3 million of the bank's 280 million shares, or 4.4 percent of the total, the company said on March 14.
The bank already spent the funds available for a dividend payment on buying back stock. A previous proposal to pay 30 percent of net income in dividend would allow the payment of 125 forint per share. OTP paid out a dividend of 145 forint ($0.9) per share last year.
The company may use some of the proceeds from the sale of the life and non-life insurance businesses of its OTP Garancia Biztosito Zrt unit to Paris-based Groupama SA for buybacks, Csanyi said today. The unit was sold for 617 million euros ($984.9 million) in February. Groupama is also buying an 8 percent stake in the bank, Bloomberg added.
OTP spent more than $3 billion in the past six years buying lenders from Bulgaria to Russia to reduce dependence on Hungary, where economic growth and loan demand has slowed. The company has said it plans to invest $1 billion to expand further in Russia.
Growth in Hungary has been slackening since the third quarter of 1996 and was the European Union's slowest in the last three months of 2007 at 0.8 percent from a year earlier, after the government cut spending and raised taxes to narrow a record budget deficit.
That, along with rising borrowing costs, will make it more difficult for OTP to fund growth outside its home market, Merrill Lynch & Co analysts wrote in a note to clients in February.