Deputy CEO: Taxes “significantly burden” OTP Bank profitability


After an announcement of not exactly shining third-quarter results, OTP Bank deputy CEO László Bencsik stated at a press conference yesterday that fewer of its borrowers are behind on payment than at any time since the onset of the crisis – but any benefit that OTP might get from the timely repays are outweighed by taxation.

OTP’s profitability will further be hurt in 2014. Bencsik said that while risk-management costs have dropped by nearly 45% year-on-year to HUF 40 billion ($179.4 million), taxation to the bank sector increased more than 100%. “No kind of portfolio improvement can counterbalance that,” Bencsik said.

“With the full transaction tax due all year next year and mandatory free cash withdrawals, that is a significant burden in terms of the group’s profit making ability.”

The press conference followed a release of figures from OTP, which showed the bank’s consolidated third-quarter after-tax profit falling 74% to HUF 10.9 billion year-on-year due to higher risk costs in addition to a write-off at its business in Ukraine.

Bencsik reported that OTP’s “risk coverage against its non-performing loans has reached a historic high and the stock of bad loans has begun to decline,” as quoted by Reuters.

The ratio of the bank’s non-performing loans, defined as those over 90 days in arrears, dropped to 20.8% at the end of the third quarter from 20.6% at the end of June.

Bencsik pointed out that “Risk coverage is at 80.6%, which is an all-time high. In the next quarters the need to form risk provisions will be lower... We have sold off non-performing loans at a profit relative to the risk provisions we had made on them. I trust we will do more such deals and prove that our provisioning had been sufficiently conservative.”

Finally, Bencsik noted that OTP Bank had lent HUF 91 billion to SMEs within the “Funding for Growth” scheme.


Investment Volume Falls 2.8% in Q1 Figures

Investment Volume Falls 2.8% in Q1

Parl't Approves Amendments to Legislation on Judiciary Parliament

Parl't Approves Amendments to Legislation on Judiciary

AutoWallis Closes Q1 With Strong Results Automotive

AutoWallis Closes Q1 With Strong Results

Borsodi Friss Receives Revamped Look Drinks

Borsodi Friss Receives Revamped Look


Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.