OTP Q1 net income falls 64% to HUF 2.2 bln

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OTP Bankʼs consolidated first-quarter net income fell 64% to HUF 2.2 bln, an earnings report published today reveals. Diluted earnings per share came to HUF 8 for the period. After-tax profit fell 67% to HUF 1.9 bln. Adjusted for non-recurring results, OTP said its after-tax profit fell by 20% to HUF 28.3 bln.

ROA on adjusted net earnings edged down 0.3 percentage point to 1.1%. ROE slipped 0.4 percentage point to 9.3%.

Net interest income declined 12% to HUF 142.7 bln. Net revenue from commissions and fees was down 11% at HUF 37.3 bln.

Provisions for loan losses dropped 11% to HUF 61.1 bln.

OTP booked HUF 35.2 bln on the bank levy in Q1, around the amount for the full year, just as it did in the base period. It booked HUF 11.4 bln on the financial transactions duty.

OTP had total assets of HUF 10,714.4 bln at the end of March, up 6% from twelve months earlier. Net assets fell 17% to HUF 1,196.1 bln.

Net client loans fell 9% to HUF 5,600.8 bln. Gross client loans dropped 10% to HUF 6,680.8 bln. The ratio of non-performing loans to gross loans fell 2.8 percentage points to 18.4%. Provisions on the NPLs reached 88.8% of the total at the end of the period.

Retail lending stock was down 9% at HUF 4,507.5 bln. The corporate loan portfolio contracted 12% to HUF 1,877.0 bln.

Client deposits rose 10% to HUF 7,567.5 bln.

Based on adjusted results, OTP said its Hungarian business generated after-tax profit of HUF 31.1 bln while its foreign subsidiaries had a combined loss of HUF 2.8 bln.

The bankʼs units in Russia and Ukraine weighed on the bottom line, racking up losses of HUF 11.5 bln and HUF 10.2 bln, respectively. OTP noted that the P+L statement of the Russian unit was distorted by a big devaluation of the ruble during the period. After-tax profit at OTPʼs Bulgarian unit, the biggest foreign contributor to earnings, was up 56% at HUF 17.6 bln.

OTP said its contribution into deposit and investor insurance funds in Hungary would rise to about HUF 7 bln this year from HUF 3.6 bln in 2014 as the result of the recent failure of three Hungarian brokerages. The contributions this year include HUF 3.8 bln for the National Deposit Insurance Fund (OBA), HUF 2.3 bln for the Resolution Fund and HUF 800m for the Investor Protection Fund (Beva). The contributions do not include one OTP expects to make to a top-up compensation fund for the former clients of Quaestor, one of the recently failed brokerages, because the final amount of the claims is still not known, OTP said.

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