BUDAPEST--OTP Bank Nyrt. (OTP.BU) expects the deterioration in the quality of its loans to slow in the third quarter versus the second, the bank's deputy chief executive said Friday after the bank published second-quarter results.

Hungary's largest bank saw a sharp deterioration in the quality of its loan portfolio in Hungary in the second quarter, while its non-performing loan ratio increased at the group level.

This deterioration comes alongside a slowdown in lending activity in Hungary, which the deputy CEO Laszlo Bencsik said could be offset by Russian operations where he expects lending to pick up in the second half of the year.

A government scheme to subsidize home loans could also help in Hungary, Mr. Bencsik added.

Write to Veronika Gulyas at veronika.gulyas@dowjones.com

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