State-owned development bank reports dropping income on rising assets

Telco

State-owned Hungarian Development Bank (MFB) recorded HUF 1.93 billion consolidated after-tax profit in the first half of 2015, HUF 2.16 bln less than a year ago, the bankʼs H1 report published late yesterday shows, Hungarian news agency MTI reported this morning.

Total assets of the group rose 5.8% in six months to HUF 1.33 trillion at the end of June.

Changes in consolidated subsidiaries cut H1 income by HUF 1.9 bln, the report shows. Newly consolidated entities compared to H1 2014 included the Budapest gas distributor Főgáz Group and the former E.On gas units.

Factors behind the falling profit included the net HUF 3 bln the Group charged in provisions and impairment to cover credit risks in H1. Net losses related to provisioning more than doubled from HUF 1.35 bln in H1 2014.

The bank booked the yearly amount of the bank levy – HUF 3.29 bln – among general and administrative expenses which rose to HUF 21.53 bln in H1 from HUF 13.57 bln a year earlier.

Net interest income fell by HUF 1.86 bln to HUF 5 bln due to the drop of the central bank base rate and the increase in non-interest-bearing assets.

The groupʼs gross loans to clients rose HUF 192 bln or 47% to HUF 603 bln. The rise probably reflects a HUF 192 bln loan MFB extended to Corvinus Befektetési, in H1 2014 still a minority MFB unit, to finance the purchase of Budapest Bank by the state in H1. Net loans rose HUF 189 bln to HUF 524 bln.

The share of problem-free loans rose to 92.75% and that of bad loans fell to 1.05% of the total loan portfolio.

The groupʼs capital adequacy ratio was 19.25% at the end of June, slightly down from 20.03% at the end of 2014.

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