OTP second-quarter after-tax profit up 12%


Photo by Jessica Fejos

OTP Bank is looking at additional acquisitions as it looks to expand in countries in which it is already present. The OTP group recently acquired the Hungarian business of AXA Bank, Splitska banka (Croatia), Banca Românească (Romania) and Vojvođanska banka (Serbia), notes Hungarian news agency MTI.

OTP currently has a 3.8% market share in Romania, where it is the eight biggest lender, and a 5.7% market share in Serbia, where it is the seventh largest market player, OTP Deputy CEO László Bencsik said at a press conference after the lender released its second-quarter earnings report on Friday. He said the bank plans to expand in both countries.

Bencsik added that, based on H1 performance, OTP is on its way to reaching the targets it set for itself at this yearʼs AGM. The goal of 15% ROE is still in place, calculating with a 12.5% primary capital adequacy ratio. Net interest margins are expected to decrease, although at a slower pace than before, risk costs should shrink and operating costs should increase by 3-4%, added the deputy CEO.

OTP Bankʼs second-quarter after-tax profit rose 12% year-on-year to HUF 80.7 billion, lifted by higher revenue from commissions and fees, lower risk costs and a subdued increase in operating costs, the earnings report shows. The profit was over the HUF 68 bln estimate of analysts.

Net revenue from commissions and fees jumped 24% to HUF 53.8 bln. Net interest income increased 6% to HUF 136.9 bln. Operating profit was up 22% at HUF 97.3 bln.

Earnings per share came to HUF 308 for the period. Return on assets rose 0.5 of a percentage point to 2.6%. Return on equity increased 3.3 percentage points to 21.3%.

Gross customer loans were up 14% at HUF 7,410.7 bln. Retail loans climbed 12% to HUF 4,705.8 bln. Corporate loans increased 24% to HUF 2,416.0 bln.

OTPʼs non-performing loan (NPL) ratio dropped 4.2 percentage points to 12.2% during the period. The lender noted it sold or wrote off HUF 49 bln of NPLs in Q2.

OTPʼs foreign businesses accounted for HUF 25.6 bln of after-tax profit in Q2, one-third of the total.

Profit of OTPʼs Bulgarian unit, DSK Bank, fell 16% to HUF 12.0 bln on lower revenue. OTP Bank Russiaʼs profit rose 15% to HUF 7.5 bln.

Profit of the business in Croatia increased to HUF 6.9 bln, up from HUF 1.3 bln in the base period, due to the consolidation of Splitska banka, Croatiaʼs fifth biggest bank, which OTP acquired in the spring.

Profit at OTPʼs core business in Hungary was up 61% at HUF 49.4 bln, the earnings report concluded.

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