OTP Bank May Gain on Hungary's Housing Subsidy, Concorde Says

  • Program may boost OTP stock by up to 226 forint per share
  • Concorde increases target price for lender by 4 percent

OTP Bank Nyrt. may become one of the beneficiaries of a housing program for larger families, said Concorde Securities, which increased the target price for Hungary’s largest lender.

The legislation grants a 10 million forint ($34,000) subsidy for couples with at least three children who buy newly-built homes and satisfy some conditions. In addition, families may apply for up to 10 million forint in loans at a maximum three percent interest rate. That compares with the national average gross monthly wage of 243,600 forint in the first 10 months of 2015.

"One of the winners of the program may be OTP that still has a significant, 23 percent market share in new mortgage lending," Hai Than Le Phuong, an analyst at Budapest-based brokerage Concorde, said in an e-mailed note. The housing scheme may boost OTP’s shares by as much as 226 forint per share, she said.

Concorde increased its target price for the stock by 4 percent to 5,994 forint on Monday, Le Phuong said by phone. The recommendation for the stock was raised to equal weight, similar to hold, from underweight, the equivalent of sell, on Dec. 16, she said.

To spur the real estate sector, the government has also cut the value-added tax on new homes from 27 percent -- the highest in Europe -- to 5 percent, effective from January 2016 through 2019.

OTP’s shares rose 0.5 percent to 5,968 forint by 3:14 p.m. in Budapest, after rallying 57 percent in 2015.

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