OTP Earnings Fall

Second-quarter after-tax profit of OTP Bank, Hungary's biggest commercial lender, fell 7% year-on-year to HUF 305.8 billion, an earnings report released ahead of the opening bell on Wednesday shows.

OTP noted that it had booked the full-year amount of sectoral taxes in the first quarter. Had those items been booked evenly within the year, Q2 after-tax profit would have dropped by 13% to HUF 255.9 billion, it said.

OTP also highlighted the negative impact of changes to the interest rate cap regulation and the fair value adjustment of subsidized retail loans and interest rate hedge transactions on Q2 earnings.

Net interest income rose 13% to HUF 541.4 billion and net revenue from commissions and fees was flat at HUF 152.4 billion.

First-half after-tax profit fell 7% to HUF 482.7 billion. When adjusted for the pro-rated amount of the sectoral taxes booked in Q1, profit edged down 2% to HUF 580.3 billion.

Net interest income increased 13% to HUF 1,068.7 billion. Net revenue from commissions and fees was practically unchanged at HUF 290.3 billion.

Total risk costs reached HUF 83.7 billion, down 16% from the base period.

Diluted earnings per share came to HUF 1,889.

First-half after-tax profit at OTP's core business in Hungary rose 7% to HUF 482.7 billion.

OTP's foreign units accounted for 80% of after-tax profit in H1. Profit of OTP Bank Russia edged down 2% to HUF 106.4 billion and profit of its Bulgarian unit, DSK Group, was flat at HUF 103.3 billion. Profit of Ipoteka Bank, in Uzbekistan, surged 38% to HUF 34.6 billion. Profit of OTP Bank Ukraine dropped 43% to HUF 17.2 billion.

OTP had total assets of HUF 46,667 billion at the end of June, up 5% from twelve months earlier.

Gross stock of client loans, adjusted for foreign exchange rate changes, rose 17% to HUF 27,452 billion and FX-adjusted client deposits increased 12% to HUF 33,747 billion.

The ratio of stage 3 loans under IFRS 9 edged down 0.3 percentage points to 3.1%.