On 15 May 2026, Uzbekistan’s Ipoteka Bank reported stellar results for the first quarter of the year. Profits were up 34 per cent year-on-year. With a 29 per cent return on equity, the bank was also the most profitable of any in the country. It also achieved the fastest increase in earnings of any operations within the larger corporate entity of which it is part—Hungary’s OTP Group (OTP).
This is obviously good news for OTP, which purchased a 75 per cent stake in Ipoteka Bank in mid-June 2023. However, the results are not particularly remarkable for a bank in a frontier market that is growing strongly and—it appears—sustainably. Uzbekistan’s GDP growth rose from 6.7 per cent in 2024 to 7.7 per cent in 2025. The current account deficit dropped from 4.7 per cent of GDP to 3.3 per cent. Hard currency reserves almost tripled.
An obvious question is: why does all this matter? Hungary is a relatively small member of the European Union’s single market, of which it has been a component since 2004. Hungary’s corporate champions have frequently expanded into emerging and frontier economies as a part of their natural development. OTP itself has subsidiaries in other countries in Central and Eastern Europe. Oil giant MOL has operated in South Asia and the Middle East for decades. Poultry group Master Good has a presence in Vietnam, while leading pharmaceuticals company Richter Gedeon has a substantial Joint Venture in India.
‘OTP’s expansion into Uzbekistan provides important insights’
Nevertheless, OTP’s expansion into Uzbekistan provides important insights. The first concerns geo-strategy: Hungary is building strong relationships with the countries of Central Asia—at a time when the latter are becoming more integrated with the world economy. Hungary has observer status at the Organization of Turkic States (OTS), which has been primarily focused on cultural issues. Support from the Hungarian government has helped OTP to become the only European bank with a presence in the Turkic states outside Türkiye.
The Ipoteka acquisition shows how Hungary can leverage its geopolitical connections with the Turkic world through its observer status at the OTS into economic and commercial benefits. Uzbekistan is not just another frontier market. It is a substantial and rapidly developing country that has strong and improving transport links eastwards to China and westwards through Kazakhstan towards the Caspian Sea and Europe. Foreign investors are excited about the country. In October 2023, at the time that OTP’s purchase of Ipoteka Bank was being finalized, the yield spread of three-year bonds issued by the government of Uzbekistan over corresponding US Treasuries was 1146 basis points. By April 2026, the corresponding figure was much lower at 846.
Uzbekistan’s government understands the opportunities that come from a substantial improvement in foreigners’ perceptions of risk. In late 2023, when negotiations over the Ipoteka deal were nearing completion, OTP was a market pioneer. More recently, the government has formed and conducted a successful initial public offering (IPO) on the London Stock Exchange for the Uzbek National Investment Fund (UzNIF). UzNIF is an investment company that holds stakes in 13 state-owned enterprises, including JSCB Uzpromstroybank, a leading financial services group and export-import insurance agency Uzbekinvest. UzNIF’s IPO on 18 May 2026 was oversubscribed by 400 per cent and was one of the largest IPOs on the London Stock Exchange for years. As of 7 July, UzNIF’s share price was 16 per cent higher than it had been at the time of listing. At the time of the listing, the Financial Times warned that Uzbekistan remains a ‘frontier economy’, with all that that entails. However, the listing of UzNIF, like OTP’s involvement in the banking sector, means that Uzbekistan is becoming a more transparent economy.
In this rapidly opening and expanding economy, OTP’s experience, on the basis of its latest results (as noted above), has—so far—been successful. It shows that the greatest opportunities for Hungarian companies may oftentimes not lie in developed countries (and, in particular, those that are a part of the EU’s single market). Hungarian companies in the EU will rarely have an advantage in terms of cost of capital. In frontier markets, Hungarian companies may well have an edge in that sense, but those best placed to capitalize on this will be ones like OTP that have strong positions at home, prior experience entering frontier markets, and a long-term perspective for expansion there.
The deal is important in geopolitical terms as well. Interested parties are not limited to the governments of Hungary and Uzbekistan. The EU is looking for strategic hedges against the military threat from Russia and the economic strength of China. The countries of Central Asia are also looking to tilt (at least to an extent) away from Russia and China through what the government of Kazakhstan calls a ‘multi-vector’ foreign policy. Hungary’s engagement with Uzbekistan also serves EU foreign policy goals. OTP’s (so far) very successful acquisition of Ipoteka is an important part of this.
The article is adapted from the author’s recent research paper titled The OTP/Ipoteka Deal: The significance of a Hungarian bank’s expansion into Uzbekistan, published by the Danube Institute in the framework of the Institute’s Turkic–Western Engagement Initiative.
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