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OTP stands by full-year targets after better-than-expected H1, says CFO

Figures published in OTP Bank's first-half report early Friday exceeded both the management's and the market's expectations, so there is no reason to change the full-year targets, recently appointed Deputy-CEO for Strategy and Finance Lászlo Bencsik said at a press conference.

OTP Bank reported consolidated first-half net income of HUF 84.1 billion, down 35% from the same period a year earlier.

The report shows OTP Bank can still be profitable even in the depths of the crisis, Bencsik said.

Hungary may be over the worst of the crisis, he said. Growth could start up again, and it appears the current economic policy can stabilize the budget, he added.

The outlook for OTP Bank's subsidiaries is also hopeful, although the ratio of non-performing loans will not improve significantly right away. For that, lending will have to pick up, he said.

OTP Bank's portfolio in Hungary significantly deteriorated in the second quarter, with the ratio of NPLs rising to 6.2% from 4.6% in Q1, Bencsik said. The weakening forint played a role in the deterioration, although the currency has since firmed. The bank's coverage ratio dropped to a still-high 73% from 82%, he added.

The quality of the portfolio of OTP Bank's Ukrainian unit was stabilised and the bank did not strengthen its presence in the risky corporate segment in Russia, Bencsik said.

He called OTP Bank's reserves “robust”, perhaps overly so, but still justified during a time of crisis. When growth starts again, the bank will have enough liquidity for further expansion, he added. (MTI-Econews)