OTP Q2 profit climbs 88% on lower risk costs


jessica fejos

OTP Bankʼs consolidated second-quarter after-tax profit jumped to HUF 71.9 bln, an 88% increase over the second quarter of 2015, on the back of lower risk costs and gains from the sale of a stake in Visa Europe, an earnings report released today shows, according to news agency MTI.

OTPʼs risk costs plunged 73% to HUF 12.1 bln during the period, while a HUF 13.2 bln gain from the sale of its Visa Europe stake lifted the bottom line further. Earnings per share came to HUF 271.

Net interest income fell 8% to HUF 129.1 bln, and net revenue from commissions and fees edged down 1% to HUF 43.5 bln. Other net non-interest income increased 7% to HUF 7.8 bln.

Excluding the gain on the sale of the Visa Europe stake and impairment, OTPʼs after-tax profit rose 39% to HUF 56.5 bln. Taking these adjustments into account, ROE rose 4.7 percentage points to 18.0%, while ROA increased 0.6 percentage point to 2.1%.

Adjusted after-tax profit of OTPʼs core business in Hungary rose 3% to HUF 30.7 bln.

Profit of its Bulgarian unit, DSK Bank, climbed 40% to HUF 14.2 bln on lower provisioning and higher revenue from commissions and fees.

OTPʼs Russian unit turned a HUF 6.5 bln profit after making a HUF 3.2 bln loss in the base period. At the same time, its branchless business in the country, Touch Bank, showed HUF 1.5 bln in the red.

The only other foreign unit to make a loss, albeit a very small one, was Slovakiaʼs OBS.

OTPʼs foreign businesses accounted for 45% of adjusted after-tax profit in the second quarter.

OTP had total assets of HUF 10.6992 trln at the end of June, down 1% from twelve months earlier. Its gross stock of client loans fell 3% to HUF 6.4934 trln, while client deposits climbed 4% to HUF 7.8985 trln.

Within the lending portfolio, retails loans fell 6% to HUF 4.2412 trln, while corporate loans rose 5% to HUF 1.988 trln.

OTPʼs non-performing loan ratio dropped 2.0 percentage points to 16.4% during the twelve-month period.

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