Lower risk costs lift OTP profit close to HUF 70 bln in Q3

Telco

jessica fejos

OTP Bank’s third-quarter after-tax profit reached HUF 69.8 billion, improving from a HUF 3.7 bln loss in the base period as risk costs fell, an earnings report released early today shows, according to Hungarian news agency MTI.

Risk costs came to just HUF 12.8 bln in Q3, down from HUF 58.2 bln in the base period. OTP’s total allowances for possible loan losses declined 12% to HUF 962.7 bln. 

Net interest income fell 5% to HUF 130.7 bln and net revenue from commissions and fees climbed 7% to HUF 45.4 bln.

After-tax profit was above the HUF 53.8 bln estimate of analysts polled by Portfolio.hu.

Earnings per share came to HUF 266.

Return on equity was up 9.4 percentage points at 20.5%. Return on assets increased 1.2 pp to 2.5%.

OTP booked negative HUF 7.5 bln during the quarter because of the expected corporate tax impact of switching to International Financial Reporting Standards (IFRS) and the Hungarian Accounting Regulation (HAR).

OTP had total assets of HUF 10.952 trillion at the end of Q3, up 2% from 12 months earlier. Net client loans edged up 1% to HUF 5.480 tln. Client deposits increased 3% to HUF 8.009 tln.

The ratio of non-performing loans in the lending portfolio fell 3.3 pp to 15.8%.

All of OTP’s foreign units except Touch Bank, its branchless business in Russia, were profitable in Q3. Profit of DSK Bank in Bulgaria rose 4% to HUF 14.7 bln, and OTP Bank Russiaʼs earnings came to HUF 6.8 bln, improving from a HUF 1.2 bln loss in the base period.

OTP’s foreign subsidiaries generated 42% of the lender’s consolidated profit in Q3.

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