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K&H Group Q1 group profit slides 37%

K&H Group's first-quarter after-tax profit fell 37% to HUF 5.9 billion from the same period a year earlier, mainly because of a big increase in risk reserves, CEO Marko Voljc said at a press conference on Thursday.

K&H Group's risk reserves grew by HUF 10.6 billion in Q1, based on IFRS, Voljc said. In the same period a year earlier, provisions fell by HUF 700 million, he added.

Operating profit, before provisions, increased 33% to HUF 19.1 billion.

Net interest revenue rose 60% to HUF 24.3%, but net revenue from commissions and fees dropped 13.5% to HUF 5.8 billion.

The bank booked a HUF 5.4 billion revaluation gain, 15% more than in Q1 2008.

Operating costs rose 9% to HUF 17 billion, but the bank's cost-to-revenue ratio fell 5 percentage points to 47.1%.

K&H Group had total assets of HUF 3,675 billion on March 31, 2009, 48% more than twelve months earlier.

Attila Gombás, who heads the bank's financial and risk management department, explained the big rise in total assets with financing, in euros, for lending from K&H Group's parent bank, Belgium's KBC. The financing became necessary after Hungary's HUF-CHF swap market locked up in October, he added.

Stock of deposits - including savings in investment funds - rose 41% to HUF 2,120 billion and stock of loans climbed 11% to HUF 2,016 billion.

Stock of retail deposits, including investments, rose 6% to more than HUF 1,000 billion, giving K&H Group 43% market share. Assets in investment funds rose almost 10% and K&H Group's share of the investment fund market climbed to 23.2% from 17.7%.

Stock of retail loans increased 38% to HUF 801 billion. About 22% of the increase was the result of exchange rate changes. Personal loan stock climbed 52%, with exchange rate changes accounting for 24% of the increase. Foreign currency-denominated home loan stock rose 50%, and exchange rate changes were behind 24% of the increase.

The Swiss franc, earlier the most popular base for loans in Hungary, was 23.5% stronger than the forint on March 31, 2009 than on March 31, 2008, National Bank of Hungary data shows.

The number of SME clients rose 6% to 90,000. Stock of SME deposits increased 11%.

Insurer K&H Biztosító's revenue from premiums from life insurance policies rose 1%, even as the market contracted more than 27%, said CEO Luc Cools. Operating profit of the general insurance division climbed 130% because of cost-efficiency measures. (MTI – Econews)