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OTP Bank attributes income discrepancy to goodwill write-downs

OTP Bank said the net income line its audited IFRS P+L statement was HUF 62.4 billion under net income in the preliminary report published on February 13 because of an increase in goodwill write-downs for its units in Serbia and Ukraine.

The audited consolidated IFRS report shows the bank had net income of HUF 241.1 billion in 2008.

OTP Bank said the audited goodwill impairments related to its Serbian and Ukrainian units amounted to HUF 93.6 billion, HUF 57.8 billion more than in the preliminary report.

“The difference is due to the fact that the previously calculated impairment charge was based on company-valuations reflecting expectations as of 31 December, 2008. Since 2008 year-end, the crisis has deepened, further deteriorating business prospects of the mentioned subsidiaries. Despite higher than expected margins, anticipated higher risk- and funding costs together with weaker growth prospects resulted in the lower valuation of the companies,” the bank said.

On the consolidated balance sheet, net goodwill at the Serbian unit stands at zero, but it amounts to HUF 56.3 billion for the Ukrainian unit.

The consolidated IFRS capital adequacy ratio for the bank remained unchanged because the goodwill was deducted from the bank's solvency capital. (MTI – Econews)