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NPL ratios grow but Q1 provisioning falls at most OTP Bank units

The proportion of non-performing loans (NPLs) in the lending portfolios of most of OTP Bank's foreign units continued to grow in the first quarter, but risk provisions fell at almost all of the banks, OTP's consolidated report published Thursday shows.

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 in the report. Nearly all of the units were profitable during the period.

DSK Group of Bulgaria, OTP Bank's biggest unit in terms of total assets, had after-tax profit, minus net cash transfers, of HUF 3.5 billion in Q1, down 24% from the same period a year earlier. The bank's NPL ratio climbed to 12.6% in Q1 from 11.0% in the previous quarter and 7.9% in the same period a year earlier. Provisions for possible loan losses were up a sharp 61% at HUF 11.2billion.

After-tax profit of OTP Bank's second-biggest unit, in Ukraine, jumped to HUF 862 million in Q1 from HUF 143 million in the same period a year earlier. The NPL ratio at OTP Bank JSC was 31.5% in Q1, up from 29.3% in the previous quarter and 23.5% in Q1 2010. But risk provisions were down 9% at HUF 7.7 billion.

OTP Bank Russia's after-tax profit also jumped to HUF 7.7 billion from HUF 1.2 billion. The bank's NPL ratio rose to 14.1% from 12.3% in the previous quarter and 13.0% in the same period a year earlier. Risk provisions were down 34% at HUF 5.0 billion.

OTP Banka Hrvatska's after-tax profit fell 53% to HUF 241 million. Its NPL ratio was 12.4% in Q1, edging down from 12.8% in the previous quarter but up from 9.0% in the same period a year earlier. Risk provisions were up 224% year-on-year and 89% quarter-on-quarter at HUF 1.3billion.

OTP Bank Romania had after-tax profit of HUF 148 million after breaking even in the base period. The NPL ratio at the bank rose to 11.2% in Q1 from 10.6% in the previous quarter and 4.4% in the same period a year earlier. Risk provisions were down 29% at HUF 1.3billion.

After-tax profit of OTP Bank's unit in Slovakia came to HUF 105 million, after a HUF 181 million loss in the base period. The NPL ratio at the bank inched down to 10.0% in Q1 from 10.2% in the previous quarter but was up from 9.8% in the same period a year earlier. Risk provisions were down 37% at HUF 728 million.

OTP Bank's unit in Montenegro had a HUF 214 million loss for the quarter, albeit a big improvement over a HUF 6.6 billion loss in the base period The NPL ratio at CKB was 33.8% in Q1, up from 26.6% in the previous quarter and 14.1% in the same period a year earlier. Risk provisions came to HUF 558 million, a fraction of the HUF 4.8 billion in Q4 and the HUF 7.4 billion in Q1 2010.

OTP Bank Srbija's losses grew to HUF 1.5 billion from HUF 595 million in the base period. The NPL ratio at the bank was 56.5% in Q1, up from 47.8% in the previous quarter and 37.6% in the same period a year earlier. Risk provisions were up 74% at HUF 1.3 billion.

After-tax profit of OTP Bank's core businesses in Hungary, excluding cash transfers and dividends within the group as well as the bank levy, fell 20% to HUF 32.9 billion. The NPL ratio at the businesses reached 11.2% in Q1, up from 10.6% in the previous quarter and 8.4% in Q1 2010. Risk provisions edged down 4% to HUF 16.1 billion.

After-tax profit of OTP Bank's leasing unit in Hungary nearly quadrupled to HUF 1.1 billion. The ratio of NPLs at Merkantil Group rose to 18.9% in Q1 from 17.6% in the previous quarter and 13.2% in the same period a year earlier. Risk provisions were down 63% at HUF 896 million.