FX repayment scheme put OTP in red

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Risk costs and write-offs from an early foreign currency-denominated mortgage repayment scheme gave OTP Bank a HUF 25.8 billion loss in the fourth quarter of last year, the lender's consolidated IFRS report published early Friday shows.

The loss - more than double the HUF 10.1 billion estimate by analysts polled by Portfolio.hu - compared to after-tax profit of HUF 17.4 billion in the base period.

Negative earnings per share came to HUF 98 in Q4 2012.

OTP Bank said it wrote off a net loss of HUF 31.6 billion from the early FX mortgage repayment scheme in 2011 and would book the remaining HUF 2 billion in Q1 2012. Under the scheme, borrowers could repay their FX mortgages in full at discounted exchange rates, with banks picking up the difference. The scheme ran from the end of September 2011 until the end of February 2012.

The bank said its consolidated risk costs amounted to HUF 67.5 billion in Q4. The proportion of non-performing loans in the lending portfolio, that is, those past 90 days due, rose to 16.6% in Q4 from 13.7% in the base period. Allowances for possible loan losses, adjusted for exchange rate changes, reached HUF 1,061.5 billion, up 26%.

Excluding the effect of the extraordinary bank levy, the early FX mortgage repayment scheme and good will write-offs, OTP Bank's consolidated after-tax profit would have reached HUF 30.2 billion in Q4, the bank noted, down 6% from the same period a year earlier.

Net interest income, excluding one-offs, rose 9% to HUF 169.0 billion. Net fees and commissions edged up 3% to HUF 38.6 billion.

ROE declined 1.2 percentage points to 8.5%. ROA was practically unchanged at 1.2%.

The bank's cost-to-income ration, without one-offs, rose 2.3 percentage points to 50.6%.

For the full year, OTP Bank's consolidated after-tax profit came to HUF 83.8 billion, down 29% from 2010. Excluding the effect of the extraordinary bank levy, the early FX mortgage repayment scheme and good will write-offs, the bank's profits were flat at HUF 161.4 billion.

Full-year net interest income, without one-offs, rose 5% to HUF 630.9 billion. Net fees and commissions also rose 5% to HUF 143.3 billion.

ROE declined 1.1 percentage points to 11.8%. ROA was little changed at 1.6%.

OTP Bank said the contribution of its Hungarian businesses to group profit fell 24% to HUF 110 billion, while profit of foreign businesses tripled to HUF 51 billion from HUF 17 billion. The share of total adjusted earnings resulting from the bank's foreign units rose to 32% in 2011 from 10% in 2010.

OTP Bank had total assets of HUF 10,200.5 billion on December 31, 2011, 4% more than twelve months earlier.

Stock of client loans, adjusted for foreign exchange changes, fell 2% to HUF 8,108.6 billion. Stock of client deposits was up 1% at HUF 6,398.9 billion.

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