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Foreign units boost OTP Bank Q2 earnings

A strong performance by OTP Bank's foreign units lifted the after-tax profit of Hungary's biggest commercial lender by 36% to HUF 37.3 billion in the second quarter from the same period a year earlier, the bank's consolidated IFRS report published early Friday shows.

After-tax profit of OTP Bank's core business in Hungary fell 29% to HUF 29.9 billion during the period, while after-tax profit of its foreign units reached HUF 15.7 billion, compared to a HUF 1.2b billion loss in the base period.

After-tax profit of the group was over the HUF 34.7 billion estimate of analysts polled by Portfolio.hu.

Earnings per share came to HUF 139 for the period.

Pre-tax profit climbed 6% to HUF 57.3 billion.

The proportion of non-performing loans - those past 90 days overdue - in the portfolio came to 15.4% at the end of June, up from 15.0% at the end of March and 12.3% twelve months earlier. However, provisions for loan losses set aside during the period were down 39% from the base period at HUF 50.8 billion. Total allowances for possible loan losses reached HUF 800.4 billion at the end of the period.

OTP Bank booked HUF 7.2 billion for the extraordinary bank levy in Hungary in the second quarter.

Net interest income fell 12% to HUF 151 billion. Net fees and commissions were up 4% at HUF 35.4 billion.

ROA edged up one-tenth of a percentage point to 1.8%. ROE rose four-tenths of a percentage point to 13.6%.

OTP Bank's foreign units were also behind the rise in first-half after-tax profit, the report shows. First-half after-tax profit was up 7% at HUF 74.5 billion. After-tax profit of the bank's core business in Hungary fell 24% to HUF 62.7 billion, but the foreign units generated profit of HUF 26.8 billion compared to a HUF 2.9 billion loss in the base period.

Total assets reached 9,712.3 billion on June 30, down 5% from twelve months earlier. Net assets rose 1% to HUF 1,338.7 billion.

Stock of client loans fell 6% to HUF 7,133.2 billion. Stock of client deposits inched down 1% to HUF 5,898.2 billion.

In the report, OTP Bank raised the issue of growing concern among investors from July over the debt crisis in the eurozone. "It is important to note that OTP Group has no material public debt exposure either to any of those Eurozone countries or to the US. Consequently unlike many of its regional peers, OTP had no write-offs or any extra provisions in Q2 and no such moves are expected in the future," the bank said.