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Pandemic provisions bite into K&H earnings

K&H Bank, the Hungarian unit of Belgiumʼs KBC, made HUF 22.6 billion in provisions in the first half, reducing after-tax profit to HUF 7.1 bln, CFO Attila Gombás said at an online press conference on Thursday, according to a report by state news wire MTI.

Those provisions included HUF 19 bln in lending losses expected to be generated by the pandemic and HUF 3.6 bln in adjustments related to the government-mandated moratorium on repayments, Gombás said.

Excluding these one-offs, K&Hʼs after-tax profit would have risen almost 12% to HUF 29.3 bln in H1, he added.

Net interest revenue rose 8.1% to HUF 42.6 bln. Net revenue from commissions and fees increased 3.1% to HUF 32.3 bln.

The stock of client loans stood at HUF 1.769 trillion at the end of June, up 14% from 12 months earlier. Client deposits rose 21% to HUF 2.873 tln.

Credit outlays came to HUF 293 bln in H1, up 17% year-on-year. Retail outlays rose 39% to HUF 104 bln and included HUF 25 bln in prenatal baby support. Corporate outlays increased by 11% to HUF 188 bln. K&Hʼs stock of contracts signed in the framework of the Funding for Growth Scheme Go! of the National Bank of Hungary reached HUF 69 bln at the end of July, giving it a 24% share of the program launched as part of central bank stimulus after the coronavirus outbreak.

K&Hʼs non-performing loan ratio fell to 3% in Q2 from 3.6% in Q1, supported by the repayment moratorium.

Gombás said 57% of the bankʼs clients have opted to continue to pay installments on their credit.

K&Hʼs insurance business had an after-tax profit of HUF 5.5 bln in H1. Revenue from premiums on general insurance policies rose 5% to HUF 28.3 bln.