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OTP counts on foreign units to offset sluggish domestic market

OTP Bank Nyrt expects the effects on profits of government austerity measures and increasing competition on the domestic market to be countered by growth on foreign markets, mainly in Russian and Ukraine, deputy CEO Zoltán Spéder said on Wednesday.

OTP expects Ukraine's retail loan market to expand an annual average 76% until 2009, Spéder said. In Russia, the bank expects the retail loan market to grow an annual average 52%. Profits at OTP's foreign units in the region are expected to grow an average annual 10%-17% between 2006 and 2010, as rates come down to Western European levels. Margins are being squeezed by strong competition in many countries in the region, Spéder noted. In spite of the expected increase in lending stock at the units, OTP expects the quality of the portfolio to remain unchanged. The bank expects to meet its target of achieving a 5% market share in each market where it is present, Spéder said.
OTP has bought five banks this year, including Raiffeisenbank Ukraine, Russia's Investberbank group and Serbian banks Kulska banka, Niska banka and Zepter banka. It also expects to shortly close the acquisition of Montenegro's CKB. Spéder said the bank expects to have spent €1.3 billion on acquisitions by year-end, compared to a combined €600 million in the previous six years altogether.