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OTP Bank Q3 profit down a third; bank levy mostly to blame

Consolidated after-tax profit of OTP Bank fell 33% to HUF 30.9 billion in Q3 from the same period a year earlier, the bank's IFRS report shows. The recently introduced extraordinary financial sector tax accounted for almost the entire drop.

Profit was well over the HUF 21.3 billion estimate by analysts polled by Portfolio.hu.

Diluted earnings per share came to HUF 114 for the period.

OTP Bank booked HUF 14.7 billion of the cost of the bank levy in Q3. Without the tax, profit would have reached HUF 45.4 billion, the bank said, slightly under the HUF 45.9 billion in Q3 2009.

OTP Bank paid HUF 18 billion on the first installment of the tax by the September 30 deadline, half of what it must pay for the full year, Econews reported earlier.

Pre-tax profit was up 16% at HUF 47.3 billion.

Provisions for loan losses came to HUF 52.7 billion in Q3, falling from an all-time high of HUF 96.1 billion in Q2 and down from HUF 66.6 billion in Q3 2009. However, the proportion of non-performing loans - those past 90 days due - in the bank's lending portfolio continued to grow, reaching 13.2% of the total at the end of Q3, from 12.4% at the end of Q2 and 8.9% twelve months earlier.

Net interest income rose 9% to HUF 150.3 billion in Q3 from the same period a year earlier. Net interest margin was up 22bp at 5.91%.

Net income from commissions and fees inched up 3% to HUF 34.0 billion.

Operating expenses climbed 6% to HUF 87.2 billion.

ROE fell 2.3 percentage points to 13.6%. ROA inched down 0.1 percentage point to 1.8%.

OTP Bank had total assets of HUF 9,975.7 billion on September 30, 2010, up 3% from twelve months earlier. Net assets were up 13% at HUF 1,323.2 billion as the loan-to-deposit ratio fell six percentage points to 106%.

Stock of client loans rose 7% to HUF 7,321.7 billion. Retail loan stock climbed at the same pace to HUF 4,569.2 billion. Corporate loans increased 3% to HUF 2,301.3 billion. Local council loans jumped 54% to HUF 344.5 billion.

Stock of client deposits increased 8% to HUF 5.955.4 billion. Retail deposits were up 5% at HUF 4,222.4 billion and corporate deposits climbed 13% to HUF 1,694.7 billion.

OTP Bank's capital adequacy ratio rose 1.1 percentage point to 18.0%.

Q1-Q3 profit slipped 22% OTP Bank's consolidated after-tax profit for Q1-Q3 came to HUF 100.7 billion, down 22% from the same period a year earlier.

EPS came to HUF 373.

Pre-tax profit rose 6% to HUF 155.8 billion during the period.

Net interest income was up 6% at HUF 465.2 billion and net income from commissions and fees rose 1% to HUF 99.1 billion.

Provisions for loan losses increased 21% to HUF 203.3 billion.

OTP Bank's management believes the bank's performance for the full year in 2010 "to a large extent will depend on risk cost developments", the report said. (MTI - Econews)