Good news for OTP, K&H; RBI considers position

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Yesterday was busy in terms of bank-related news, and BBJ rounds up three of the bigger stories from the headlines yesterday. Ultra-briefly: Raiffeisen is retreating a bit from its CEO’s somewhat sentimental public stand this weekend on the bank’s position in Hungary, while K&H and OTP Bank appear to be doing well enough. For more details, read on.

RBI: Bank “cannot exclude” possibility of Hungary, Slovakia withdrawal
In a clarification of comments made by CEO Karl Sevelda last weekend, Raiffeisen Bank International AG (RBI) released an official statement yesterday explaining that the bank “cannot exclude that it will pull out from Hungary and Slovakia.”

From Romania on Friday, Sevelda told media that Raiffeisen would be scaling down business in Hungary, Slovenia and Ukraine, as well as “make better use of regulatory allowances to lower capital requirements, and increase the lender’s earnings, before repaying €1.75 billion [$2.4 billion] in state aid in the form of participation capital.”

However, at that time, Sevelda also stated that effort would be made to keep Raiffeisen operations open in Hungary. “We want to stay in Hungary, you shouldn’t forget we went there in 1987 as the first eastern European market,” he said. “There’s a lot of heart and soul in that. Hungary as a neighboring country certainly has a higher priority.”

RBI will be announcing results of a European Central Bank (ECB) assessment of RBI’s balance sheet on November 25. Raiffeisen has fallen 14% on the Vienna Stock Exchange in 2013, dropping this year in Vienna trading, cutting RBI’s market value to €5.3 billion.

Raiffeisen, the second-largest bank in Eastern Europe after UniCredit SpA, is cutting as much as €450 million in costs to increase earnings, per a company announcement of September 24. The bank is introducing internal rating systems in more of the 16 countries in which it operates in order to lower the risk weights used in calculating regulatory capital requirements. That could have an effect equal to raising €400 million in cash, Sevelda said.

K&H Bank profit up 10.5% through Q3
K&H Bank had consolidated after-tax profit of HUF 16.2 billion in Q1-Q3, 10.5% more than in the same period a year earlier, CEO Hendrik Scheerlinck said yesterday, attributing the increase to bigger business volume, strict cost control, stable lending losses and positive one-off factors. In the third quarter alone, after-tax profit reached HUF 9.1 billion. K&H’s proportion of non-performing loans edged up in Q3, as it did for the sector as a whole, mainly in the retail segment, he said.

Operating revenue rose 14% in Q1-Q3 from a year earlier but operating costs climbed 32%, in large part because of the financial transaction duty. The duty raised costs by HUF 10.1 billion, while a top-up to cover a shortfall in budget revenue from the duty added another HUF 8 billion, said K&H CFO Attila Gombás.

Stock of client deposits rose 15% in one year to HUF 1.834 trillion. Stock of client loans slipped 0.2% to HUF 1.439 trillion. Gross retail loans fell 1% in twelve months to HUF 560 billion. The stock of leasing outlays fell a sharp 27% in one year to HUF 41 billion. The gross stock of corporate loans rose 3% in one year to HUF 718 billion. Gross stock of SME loans fell HUF 2 billion in twelve months to HUF 120 billion but rose HUF 13 billion from the end of June.

Gombás said demand for business loans picked up in the third quarter as a result of the National Bank of Hungary’s Funding for Growth scheme. Scheerlinck called the government’s lifting of restrictions on joining an exchange rate cap scheme a good measure, one that was likely to raise the participation rate in the scheme at K&H from 43% to 60% of eligible borrowers.

K&H Insurance CEO Wim Guillams meanwhile reported that the insurer had after-tax profit of HUF 1.9 billion in Q1-Q3, and policy numbers exceeded 1 million.

-- MTI

Portfolio: OTP to pay HUF 40.6 billion in dividends
According to analysis undertaken at local business news outlet Portfolio.hu, a 20% year-on-year increase to HUF 40.6 billion in dividend payment from OTP Bank is expected for 2013, together with a dividend yield of 3.3%.

Portfolio cited OTP’s Q3 earnings report in having again set aside HUF 10.15 billion for dividend payment in the period, thus far totaling HUF 30.45 billion for the year.

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