OTP Bank group sees a much more favorable second quarter than its first quarter, when a record devaluation of the forint took place, deputy-CEO László Urbán said, a day after the bank published its Q1 report.
OTP Bank consolidated first-quarter net income dropped 24% to HUF 41.8 billion from the same period a year earlier. The bank's bottom line was hurt by a HUF 11.8 billion FX loss.
OTP Bank does not expect exchange rate losses to grow during the rest of the year as it has made transactions that will prevent any losses on its open currency positions even if the forint weakens past 300-305 to the euro, Urbán said.
OTP Bank's capital adequacy ratio, calculated with Hungarian Accounting Standards, rose to 13.9%, in Q1, Urbán said. The bank's liquid reserves, excluding liabilities due within a year, increased to €1.8 billion, he added.
OTP Bank's risk provisions more than doubled in Q1, that is, the bank has significant reserves if the situation worsens, but now the situation looks set to improve, Urbán said. The value of new risk provisions in the second quarter will certainly be well under that in the first quarter, he added.
OTP Bank is still in talks with the EBRD on a subordinated loan, Urbán said, stressing that the bank was not seeking assistance, but considering possibilities on the market. OTP Bank will certainly have the chance to raise funding on the market within a year, he added.
Asked what effect the fall in GDP would have on the quality of the bank's lending portfolio, Urbán said the weakening of the forint is rather the problem because of clients with foreign currency-denominated loans. Rising unemployment could affect 150,000 people, still small compared to the 1.5 million jobs lost in the 90s, and the state is preparing programs to assist the jobless, he added. (MTI – Econews)