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OTP Bank 2009 net income slips 37% but meets target

OTP Bank’s net income fell 37% to HUF 151.2 billion in 2009 as risk provisions grew, but the bottom line was slightly over the management’s HUF 150 billion target, the bank’s consolidated IFRS report published Tuesday shows.

Fourth-quarter net profit came to HUF 20.4 billion, down 134% from the same period a year earlier. Q4 profits were slightly better than the HUF 16.3 billion estimate by analysts polled by portfolio.hu.

The fall of Q4 after-tax profit was less, 54%, if adjusted for open forex positions, dividend and one-off items including the sale of OTP Garancia. The same adjustments brought down the unadjusted 38% drop in full-year after-tax profit to an adjusted 31%.

Diluted earnings per share for the year came to HUF 570, down 39% from 2008.

Net interest income for the full year rose 38% to HUF 601.4 billion. But risk provisions jumped 124% to HUF 249.6 billion. OTP Bank had provisions totaling HUF 495.4 billion on its balance sheet at the end of the year. Its capital adequacy ratio rose to 17.5% from 15.4% in the twelve months to the end of December.

Adjusted for the risk provisions, net interest income still rose 8%.

Net interest margin rose to 6.17% in 2009 from 5.78% in 2008. The ratio of risk cost to gross loans increased to 3.57% from 1.69%.

Loans on which payments were past 90 days due accounted for 9.8% of OTP Bank’s lending at the end of the period, more than double the 4.5% rate a year earlier.

ROE fell to 13.4% in 2009 from 22.5% – adjusted for one-off effects – in 2008. Adjusted ROA dropped to 1.6% from 2.5%.

Net fees and commissions fell 5% to HUF 133.0 billion in 2009.

Payroll costs fell 7% to HUF 155.5 billion. Group-level headcount was practically unchanged at 31,337 at year-end.

Operating costs fell 4% from 2008 to HUF 349.1 billion and the cost-to-income ratio fell to 44.3% from 46.6%.

The bank had total assets of HUF 9,774.6 billion on December 31, 2009, up 4% from twelve months earlier. Stock of client loans fell 6% to HUF 6,348.7 billion. Stock of client deposits rose 8% to HUF 5,645.9 billion. The bank’s loan-to-deposit ratio fell to 121% from 134%. Net assets climbed 14% to HUF 1,191.5 billion.

In a unit-by-unit breakdown, OTP Bank said its leasing arm Merkantil had a HUF 1.8 billion loss in 2009 as it set aside provisions for possible loan losses of HUF 11.5 billion. Among the bank’s foreign units, OTP Bank JSC in Ukraine had a HUF 43.6 billion loss, but provisions came to HUF 95.0 billion. Profit fell a sharp 65% to HUF 3.1 billion in Russia as risk provisions grew to HUF 21.0 billion. In Bulgaria, DSK Group’s profit fell 20% to HUF 24.8 billion and risk provisions came to HUF 25.9 billion.

The bank’s Serbian unit had a HUF 9.0 billion loss as provisions reached HUF 6.3 billion. Losses in Slovakia came to HUF 6.7 billion and provisions reached HUF 9.0 billion. Profit in Croatia slipped 36% to HUF 3.2 billion as risk provisions rose to HUF 1.9 billion. OTP Romania’s profit nearly quintupled to HUF 1.1 billion even as provisions grew to HUF 5.3 billion. Profit in Montenegro slipped 85% to HUF 428 million as provisions nearly tripled to HUF 6.7 billion. (MTI-ECONEWS)