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OTP profit drops 74% on risks, Ukraine write-off

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OTP Bank’s consolidated third-quarter after-tax profit fell 74% to HUF 10.9 billion from the same period a year earlier on higher risk costs and a write-off at its business in Ukraine, the lender’s earnings report published this morning show.

Profits were well under the HUF 38.9 billion estimate by analysts polled by local business news outlet Portfolio.hu.

Diluted earnings per share came to HUF 41.

Net interest income rose 3% to HUF 165.4 billion and net income from commissions and fees climbed 12% to HUF 43.5 billion, but risk costs increased 9% to HUF 66.0 billion.

OTP Bank said the bottom line was hit by a HUF 37.2 billion goodwill write-off at its Ukrainian unit. It booked HUF 30.8 billion of the amount on the profit and loss statement and HUF 6.4 billion against equity.

ROE was down 0.9% to 11.0%. ROA was practically flat at 1.7%.

The Ukrainian write-off had also bitten into profits in the first three quarters: OTP wrote down HUF 64.0 billion on the unit for the period.

After-tax profit for Q1-Q3 fell 35% to HUF 62.7 billion from the same period a year earlier. Net interest income edged up 2% to HUF 493.9 billion and net income from commissions and fees rose 10% to HUF 122.1 billion. Risk costs dropped 1% to HUF 180.8 billion.

OTP Bank had total assets of HUF 10.0604 trillion on September 30, up 2% year-on-year. Net assets rose 4% to HUF 1.5237 trillion.

Client loans increased 2% to HUF 7.6127 trillion. Retail loans were up 2% at HUF 5.1151 trillion, but corporate loans were down 3% at HUF 2.1549 trillion.

Allowances for loans losses rose 15% to HUF 1.2534 trillion. The coverage rate for NPLs reached 80.6% at the end of the period, the highest level since 2008, the bank said.

The proportion of non-performing loans in the portfolio fell to 20.6% at the end of Q3 from 20.8% at the end of June, but was up 19.0% from twelve months earlier.

Client deposits were up 6% at HUF 6.6638 trillion. Retail deposits were flat at HUF 4.6655 trillion but corporate deposits rose 16% to HUF 1.9505 trillion.

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