UniCredit Jelzálogbank profit rises on declining loans and provisions

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Net income of UniCredit Jelzálogbank, the mortgage unit of the Hungarian UniCredit group, rose by more than a third to HUF 1.12 billion in the first half of 2011 as the bank freed up provisions with declining loans and total assets, the bank's unaudited Hungarian-account-standards report published on Wednesday shows.

The bank freed up HUF 75 million in provisions in H1 this year as against provisioning HUF 218 million in H1 last year.

Loans to clients fell 6.4% from the end of 2010 to HUF 49.6 billion at the end of June, while loans to banks rose a slight 0.7% to HUF 71.7 billion. Total assets fell 2.5% in six months to HUF 133.4 billion.

Interest and fees and provisions received fell more than 17% from H1 2010 with narrowing activity, and net interest revenue fell 8% to HUF 1.9 billion. Net revenue from fees and commissions dropped 13.5% from a year earlier to HUF 128 million.

Among liabilities, those on bonds rose a sharp 62.3% to HUF 88 billion and bank deposits fell 60.6% to HUF 24.9 billion.

The bank issued HUF 22.1 billion in forint-covered bonds in H1, little less than expiries and repurchases combined. It also issued €30 million and CHF 120 million covered bonds to improve the maturity match of its assets and liabilities and to increase the share of securitized finance at the expense of money market funding. Its stock of euro-denominated mortgage bonds was €45 million and that of CHF-denominated covered bonds was CHF 120 million at the end of June.

UniCredit Jelzálogbank stopped offering home- and retail-property financing to individuals beginning on January 1, 2010, limiting retail activities to the management of earlier loans, and has focused on business-property finance since.

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