OTP.BD
OTP Bank Nyrt
Price:  
26,880.00 
HUF
Volume:  
266,711.00
Hungary | Banks
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OTP.BD WACC - Weighted Average Cost of Capital

The WACC of OTP Bank Nyrt (OTP.BD) is 10.5%.

The Cost of Equity of OTP Bank Nyrt (OTP.BD) is 13.20%.
The Cost of Debt of OTP Bank Nyrt (OTP.BD) is 5.00%.

Range Selected
Cost of equity 11.60% - 14.80% 13.20%
Tax rate 15.20% - 15.60% 15.40%
Cost of debt 5.00% - 5.00% 5.00%
WACC 9.4% - 11.7% 10.5%
WACC

OTP.BD WACC calculation

Category Low High
Long-term bond rate 6.4% 6.9%
Equity market risk premium 7.9% 8.9%
Adjusted beta 0.66 0.83
Additional risk adjustments 0.0% 0.5%
Cost of equity 11.60% 14.80%
Tax rate 15.20% 15.60%
Debt/Equity ratio 0.42 0.42
Cost of debt 5.00% 5.00%
After-tax WACC 9.4% 11.7%
Selected WACC 10.5%

OTP.BD's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for OTP.BD:

cost_of_equity (13.20%) = risk_free_rate (6.65%) + equity_risk_premium (8.40%) * adjusted_beta (0.66) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.