OTP Bank, Hungary’s biggest commercial lender had consolidated after-tax profit of HUF 37.2 billion in the first quarter, down 12% from the same period a year earlier as the bank levy took a bite out of earnings, the bank’s IFRS report for the period published Thursday shows.
OTP Bank and its units paid HUF 7.2 billion on the extraordinary tax on financial sector companies in Q1. Excluding the effect of the tax, after-tax profit would have reached HUF 44.1 billion edging up 4% from the same period a year earlier, the bank noted.
After-tax profit was over the HUF 34.0 billion estimate in a poll of analysts by Portfolio.hu.
Net income was down 13% at HUF 37.0 billion. Net comprehensive income fell 83% to HUF 10.8 billion.
Diluted earnings per share came to HUF 139, down 12%.
Net interest income rose 6% to HUF 151.7 billion. Net fees and commissions were up 5% at HUF 32.7billion.
Operating costs increased 3% to HUF 85.6 billion.
ROA was unchanged from a year earlier at 1.8%. ROE inched down to 13.7% from 14.0%.
Provisions for loan losses fell 15% to HUF 46.3 billion.
The ratio of non-performing loans in the lending portfolio rose to 15.0% in Q1 from 13.7% in Q4 and 10.7% in Q1 2010. The ratio "kept growing due to stagnating volumes" but "was basically in line with the management’s predictions", the bank said. "From the second half of 2011 a positive turnaround is expected," it added.
The bank attributed the continued deterioration of the portfolio “to a great extent” to a single syndicated loan by the its main business in Hungary. But it "sees good chances" that the syndicate will reach an agreement with the client to resume normal payments, it added.
OTP Bank’s foreign units contributed HUF 11.2 billion in profit to the group in Q1, compared to a HUF 1.6 billion loss in the base period, mainly because of strong performances in Russia and Bulgaria.
The bank said it launched a point-of-sale lending project in the Ukraine in March which could "revitalize...retail lending" there. Consumer lending in Russia, which always shows a low seasonality in the first months of the year "is expected to pick up gradually", it added.
OTP Bank had consolidated total assets of HUF 9,672.5 billion on March 31, 2011, up 2% from twelve months earlier. Net assets were up 3% at HUF 1,299.0 billion.
Client loans rose 2% to HUF 7,065.7 billion. Retail loans were up 5% at HUF 4,502.9 billion. Corporate loans inched up 1% to HUF 2,166.5 billion.
Client deposits climbed 2% to HUF 5,854.2 billion. Retail deposits rose 3% to HUF 4,250.1 billion. Corporate deposits fell 1% to HUF 1,567.7 billion.
The bank’s loan-to-deposit ratio was 120%, the same as a year earlier.