OTP: Q2 Results Much Better Than Expected

OTP Group achieved consolidated adjusted profit after tax of HUF 283.940 billion in the second quarter, significantly better than analysts' expectations, exceeding the previous quarter by 52% and the year-earlier quarter by 75%, the financial institution reports.

The analyst consensus was for a quarterly consolidated adjusted profit after tax of HUF 194.723 billion, which implied a year-on-year increase of 4% and a quarter-on-quarter increase of 20%.

According to the International Financial Reporting Standards (IFRS) report published on the Budapest Stock Exchange's website at dawn on Thursday, OTP Group posted a profit after tax of HUF 471.059 billion in January-June this year, up 88% on the same period last year.

The quarterly result was boosted by a number of one-off factors, with the integrated Slovenian Nova KBM contributing to the bank's performance with its full quarterly result, the state refunding HUF 25.6 billion in extra profit tax, and improved results in Russia and Ukraine.

The financial institution's revenues grew by 20% on a quarterly basis and by 39% on an annual basis to HUF 547.4 billion, while operating expenses amounted to HUF 222.2 billion, almost the same as in the previous quarter but up 20% from a year earlier.

The Group's balance sheet total stood at HUF 36,866 billion at the end of the second quarter, up 2% on the previous quarter and 20% on a year earlier.

Customer loans grew by 6% on a quarterly basis and 23% on an annual basis to reach HUF 21,563 billion net, while organic growth adjusted for acquisitions was 2%.

The size of deposits remained unchanged from the previous quarter at HUF 26,903 billion, up by more than 20% on an annual basis. 

The Group's net loan-to-deposit ratio, including retail bonds, rose by 4%age points to 76% in the second quarter.

The group's core tier 1 capital ratio stood at 15.2% at end-June, up 0.8%age point from the previous quarter; the current capital adequacy minimum for the bank is 11.3%.

All operations of the financial institution were profitable: the Hungarian unit contributed HUF 73.5 billion to the consolidated adjusted profit after tax in the second quarter, the Bulgarian DSK Group HUF 53.2 billion, OTP Bank Slovenia HUF 34.2 billion and OBH in Croatia HUF 16.9 billion, EUR 14.1 billion for the Serbian bank, EUR 4.2 billion for the Albanian bank, EUR 4.5 billion for the CKB Group in Montenegro, EUR 33.3 billion for the Russian branch, EUR 17.7 billion for the Ukrainian unit, EUR 12.6 billion for OTP Bank Romania and EUR 4.0 billion for OTP Bank Moldova.

The Group’s management expects organic growth in the performing loan portfolio at group level at constant exchange rates to reach 5% in 2023 as a whole, the report said.