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OTP Bank sees deterioration of lending portfolio slowing

OTP Bank expects the deterioration of its lending portfolio to slow this year, deputy-CEO László Bencsik said at a press conference on Thursday, after the bank published its Q1 report.

The proportion of non-performing loans (NPLs) within the OTP's consolidated lending portfolio rose to 15.0% in Q1 from 13.7% in the previous quarter and 10.7% in the same period a year earlier, the bank said in its report.

NPL stock in Hungary rose by HUF 28 billion in Q1, Bencsik said. Most of the increase was in the retail mortgage segment, he added.

The portfolio at OTP Bank Romania hardly deteriorated at all, which is a good result, he said.

The report shows the NPL ratio at the unit was 11.2% in Q1, edging up from 10.6% in the previous quarter and jumping from 4.4% in Q1 2010.

The Q1 results were in line with the management's expectations, he said, answering a question. The bank is not giving any official full-year projections, he added.

OTP Bank's operating costs are expected to rise and the bank's management do not see the possibility of making further cost cuts, Bencsik said.

Operating costs were up 3% at HUF 85.6 billion in Q1, according to the report.

The bank sees growth potential on the market for microbusinesses and SMEs in Hungary, he said. Consumer consumption has to grow before lending activity picks up among retail clients, he added.

Asked about an agreement in the making between the government and banks on an assistance package for Hungarians who are having trouble paying installments on foreign currency-denominated loans, once more popular than forint loans, Bencsik declined to comment, saying it would be "inappropriate" while the talks are still on.

Asked about acquisition targets, Bencsik said the group wants to increase its market share where it is already present.