OTP Q4 profits climb to nearly HUF 11 bln

Telco

OTP Bank's consolidated fourth-quarter after-tax profit rose sharply to HUF 10.9 bln from the same period a year earlier, albeit from a low base, Hungarian news agency MTI reported citing an earnings report published today. In the base period, profits were nearly halved to HUF 1.4 bln.

According to the report, diluted earnings per share came to HUF 41, while net interest income fell 2% to HUF 155.8 bln. Net revenue from commissions and fees edged down 1% to HUF 44.5 bln. Operating costs also fell 1% to HUF 106.5 bln. Risk costs narrowed to HUF 77.3 bln from HUF 91.6 bln in the base period.

MTI said that OTP's Hungarian businesses generated after-tax profit of HUF 35.9 bln in Q4, while its foreign subsidiaries racked up a loss of HUF 25.6 bln, mainly due to a HUF 21.1 bln loss in Ukraine.

The report said that OTP booked an after-tax loss of HUF 102.3 bln for the full year, after closing 2013 with after-tax profit of HUF 64.1 bln. Compensation OTP must pay retail borrowers under borrowers relief legislation weighed on the bottom line. The legislation requires lenders to pay refunds for using exchange rate margins when calculating repayments on FX loans as well as for making unilateral changes to loan contracts.

OTP reportedly booked a HUF 193.4 bln loss against the regulatory changes affecting retail contracts for the full year. The amount was reduced from an initial HUF 216.6 bln booked in Q2, after lawmakers approved the legislation.

OTP's earnings were also hit by risk costs related to its exposure to the Ukraine crisis. It booked a HUF 9 bln cost due to exposure in Crimea from the second quarter and a HUF 28.9 bln cost from exposure in Donetsk and Luhansk from the third quarter, the report stated. Excluding the impact of the borrowers relief legislation as well as other one-off effects, OTP calculated that its earnings would have reached HUF 118 bln last year, it added.

Data suggests that full-year net interest income slipped 3% to HUF 636.2 bln but net revenue from commissions and fees rose 2% to HUF 169.6 bln, while operating costs declined 1% to HUF 411.5 bln. Total risk costs rose 1% to HUF 274.7 bln.

In accordance with the report’s figures OTP's balance sheet shows the quality of its loan portfolio improved as the ratio of non-performing loans to gross client loans fell to 19.3% from 19.8% between the end of last year and the end of 2013.

OTP reportedly noted that loans in Russia accounted for 8.7% of NPLs and loans in Ukraine for 5.5%. The bank had total assets of HUF 10.9711 trillion on December 31, 2014, up 6% from twelve months earlier. Net assets fell 16% to HUF 1.2642 trillion during the period.

Gross client loans fell 7% to HUF 6.9933 trillion. Retail loans were down 4% at HUF 4.7253 trillion. Corporate loans fell 12% to HUF 1.9762 trillion. Client deposits rose 12% to HUF 7.6735 trillion. OTP also noted that the group had liquid reserves of close to the equivalent of €7 bln at the end of 2014.


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