OTP profits edge down on higher operating costs

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Consolidated after-tax profit of OTP Bank, Hungary's biggest commercial lender, edged down 1% to HUF 40.6 billion in the second quarter from the same period a year earlier as operating costs rose, the bank's IFRS report published Thursday shows.

Profit was well over the HUF 31.0 billion estimate by analysts polled by Portfolio.hu. Earnings per share came to HUF 152. Net interest income rose 2% to HUF 162.6 billion and revenue from commissions and fees increased 13% to HUF 42.8 billion, but operating costs climbed 10% to HUF 105.7 billion. OTP Bank also booked HUF 13.4 billion on the bank levy and an extraordinary payment to the central budget to make up for a shortfall in the duty on financial transactions. Excluding these charges and other one-off adjustments, adjusted consolidated after-tax profit rose 41% yr/yr to HUF 52.3 billion.

Provisioning was down 7% at HUF 59.8 billion, but the proportion of non-performing loans in the portfolio rose to 20.8% from 19.9%. New NPL volume rose at almost all of the bank's units, increasing the most in Russia and Ukraine, OTP said. Adjusted return on assets rose to 2.0% from 1.5%. Adjusted return on equity climbed to 13.7% from 10.6%. Total assets rose 1% to HUF 10,048.6 billion in the twelve months to the end of June. Net assets increased 7% to HUF 1,525.3 billion. The contribution to group profit by OTP Bank's foreign units fell to 24% in Q2 from 42% in the base period as earnings at the unit in Russia plunged.

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