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OTP Bank to pay moderate dividend on 2010 profit

OTP Bank expects to pay a dividend -- albeit a moderate one -- on 2010 profits this year, deputy-CEO László Bencsik said, after the bank published its Q4 report.

OTP Bank has not paid dividends for three years. In August, CEO Sándor Csányi said in an interview that the bank might pay a dividend if the Hungarian economy is stable, the bank's capital adequacy ratio is high and it has no acquisition targets requiring capital.

According to OTP Bank's calculations, measures planned by the government support Hungary's fiscal deficit and state debt targets, and the country will continue to be able to get financing from the market, Bencsik said.

OTP Group expects its consolidated lending stock to continue to grow this year, Bencsik said.

Net income of OTP Bank, Hungary's biggest commercial lender, fell 18% to HUF 17.2 billion in Q4 from the same period a year earlier, largely because of an extraordinary tax on financial sector companies, the bank's consolidated IFRS report published Friday shows.

In addition to HUF 36.1 billion paid on the bank levy, OTP Bank paid HUF 5.0 billion on another special tax on lenders, Bencsik said.

Asked about a recent government decision to keep revenue from the bank levy unchanged in 2012, instead of halving it from 2010 and 2011 as earlier planned, Bencsik said “nobody is happy if they have to pay more tax, but this much is certain, OTP wants to increase its lending activity”.

Deputy-CEO Dániel Gyuris said a solution on a moratorium on evictions that is acceptable to borrowers, banks and the state could be reached within days.

A moratorium on evictions by lenders introduced by Hungary's previous government is set to end on April 15, 2011. The moratorium has been extended several times before. Some experts say the end of the moratorium could affect as many as 100,000 properties.

A solution has to be reached, with the involvement of the banking association, that does not create an impossible situation for borrowers struggling with social problems, but breathes new life into the mortgage real estate market and manages possible swings in exchange rates, Gyuris said.