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OTP books HUF 4 bln Q1 loss

OTP Bank, Hungaryʼs biggest commercial lender, booked a HUF 4.1 billion loss in the first quarter as risk provisions ballooned and a government-mandated moratorium on repayments of loans also weighed on the bottom line, state news wire MTI report, citing an earnings report published yesterday.

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OTP made HUF 84.7 bln in provisions for impairment on loan losses in Q1, up from HUF 5.6 bln in the base period. The lender said that corporate loans accounted for roughly two-thirds of the additional provisioning.

The bank booked negative HUF 20.2 bln against the potential impact of the repayment moratorium on all corporate and retail loans effective in Hungary from March 19. The bank noted it had not calculated the negative impact of repayment moratoria introduced because of the pandemic in other countries where it has a presence as of March 31.

OTP acknowledged that it would pay a HUF 14.2 bln "solidarity tax" levied on the banking sector to bolster Hungaryʼs coronavirus war chest. But it said the tax would not materially affect bottom line earnings as it can be deducted from the bank levy over the next five years.

The bank booked a HUF 16.7 bln cost on the "special tax on financial institutions" line of its P+L statement - reflecting the impact of both the bank levy and the solidarity tax - for Q1, up from HUF 15.2 bln in the base period.

OTPʼs net interest income rose 23% to HUF 200.3 bln. Net revenue from commissions and fees increased 21% to HUF 69.2 bln.

Balance sheet boosted by acquisitions

OTP had total assets of approximately HUF 21.858 trillion at the end of March, up 36% from twelve months earlier, showing the impact of a buying spree abroad.

Gross client loans increased 33% to about HUF 13.876 tln. Retail lending stock rose 31% to HUF 8.073 tln and the corporate loan portfolio grew 33% to circa HUF 5.229 tln.

The ratio of non-performing loans in the portfolio fell 1.8 percentage points to 4.1%.

The stock of client deposits was up 32% at nearly HUF 16.356 tln. Retail deposits rose 22% to about HUF 11.863 tln and corporate deposit stock grew 28% to approximately HUF 4.479 tln.

OTP noted that it has withdrawn 2020 guidance published on March 6 and "will not make any new forecast for the rest of the year as long as there is no comprehensive information about the state of the macroeconomic and operational environment".

The bank said that it had gross operative liquidity reserves equivalent to EUR 6.6 bln at the end of March.