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OTP profit growth steady

Third-quarter after-tax profit of OTP Bank rose 14% year-on-year to HUF 79.3 billion, lifted by higher business volume, an earnings report released early today shows.

Net interest income increased 5% to HUF 137 bln and net revenue from commissions and fees climbed 17% to HUF 53 bln. Operating costs were up 13% at HUF 110.7 bln.

OTPʼs balance sheet shows total assets rose 16% to HUF 12.641 trillion in the 12 months to the end of September. Net client loans were up 22% at HUF 6.694 tln. OTPʼs earnings per share came to HUF 303 for the quarter. Liquidity reserves stood at the equivalent of EUR 7.9 bln at the end of Q3, national news agency MTI reports.

OTPʼs gross stock of client loans was up 16% at HUF 7.498 tln. Stock of retail loans rose 13% to HUF 4.770 tln, while corporate lending stock jumped 25% to HUF 2.465 bln. The NPL ratio dropped 4.6 percentage points to 11.2% in the 12 months to the end of September. Stock of client deposits rose 21% to HUF 9.671 tln.

OTPʼs foreign units generated combined after-tax profit of HUF 27.8 bln, 35% of the total for the quarter. Profit of DSK Bank, OTPʼs Bulgarian unit, fell 23% to HUF 11.3 biln. Profit of OTP Bank Russia slipped 7% to HUF 6.4 bln. Profit of OTPʼs business in Croatia jumped 324% to HUF 6 bln, supported by the acquisition of Splitska Banka, Croatiaʼs fifth-biggest lender, from Franceʼs Societe Generale in the spring.

All foreign units were profitable with the exception of OTPʼs Russian virtual bank, Touch Bank, which had a loss of HUF 1.3 bln, and its Slovakian unit, OBS, which was HUF 0.3 bln in the red. OTP acquired banks in Romania and Serbia in the summer, but has not yet closed either transaction.

After-tax profit of OTPʼs core business in Hungary rose 20% year-on-year to HUF 46.7 bln. Net interest income edged down 1% to HUF 57.9 bln but net revenue from commissions and fees climbed 8% to HUF 28.8 bln.

Total assets of the Hungarian business increased 8% to HUF 7.503 tln in the 12 months to the end of September. Net client loans were up 18% at HUF 2.622 tln. Lending volume was lifted by OTPʼs acquisition of AXA Bank Europeʼs retail and corporate business in Hungary late last year. Without the acquisition, the volume would have still risen 12%, OTP noted.

OTP Group "has started to follow a dynamic growth trajectory", the lender said in the report, noting a 10% organic increase in the performing loan portfolio over the previous 12 months and an additional 25% rise on the back of two completed and two announced acquisitions.

The management augurs a "supportive" operating environment for the continuation of a dynamic growth strategy and intends to allocate a "significant part" of the capital beyond that required for organic growth for further value-creating acquisitions, according to the report.

"Subject to the planned and executed acquisitions, the organic growth, as well as the company’s profitability, the management will also seek to increase the annual dividend amount," it added.