OTP Bank's Q4 profit lags forecast, 2012 net up 46 pct
BUDAPEST, March 8 |
BUDAPEST, March 8 (Reuters) - Hungary's OTP Bank posted lower than expected profits in the fourth quarter as Central Europe's biggest independent lender recorded broadly flat revenues while it set aside a hefty amount of risk provisions against non-performing loans.
The bank said on Thursday its consolidated bottom line reversed from a deep loss a year ago to a 26.15 billion forint ($114.43 million) quarterly net profit, against the median forecast of a 30 billion profit in a poll by business portal portfolio.hu.
Profits for the whole of 2012 rose by 46 percent to 122.6 billion forints, however, in a year when domestic business continued to suffer, and non-performing loans reached 19.1 percent of the bank's lending.
"The main reason behind the significant improvement was the drop in the amount of adjustments," OTP said in its earnings report, pointing to zero goodwill impairment charges and lower losses on early repayments of foreign currency mortgages.
Hungary's financial sector pays Europe's highest bank tax and many households indebted in foreign currency, mainly the Swiss franc, have fallen behind on loan payments, hurting bank portfolios. Businesses also suffer from a persistent recession.
OTP said the growth of its non-performing loan stock has slowed down, and 44 billion forints worth of loans turned bad in the quarter.
"While the (bad loan) ratio further increased - partly due to the decline of overall loan volumes - from the second half of the year there was a definite deceleration in portfolio deterioration," the bank said in its earnings report.
OTP took the opportunity of steady revenues and profits to set aside a hefty 70.3 billion forints in risk provisions in the quarter, expanding the coverage of bad loans to 80 percent at the end of 2012, up from 77.9 percent three months earlier.
The consolidated loan book shrank by 1 percent from 2011 as Hungarian loans were 7 percent lower than a year ago.
The bank said its total revenues fell 2 percent year-on-year in the fourth quarter to 214.9 billion forints, broadly in line with the analyst consensus for 215.6 billion forints.
Revenues for the whole of 2012 were 4 percent above those of 2011, it said.
OTP, which is present in several countries in Central Europe and also in Russia, said its foreign units contributed 61 billion forints to profits in 2012, about 20 percent more than in 2011, on the back of high-margin consumer lending growing especially in Russia and Ukraine.
Earnings in the core domestic business fell 17 percent to 94.6 billion forints in 2012.
The bank said its capital position was strong, with a capital adequacy ratio of 19.7 percent at the end of the year compared with 18.2 percent in late September and an 8 percent regulatory minimum.
($1 = 228.5152 Hungarian forints) (Reporting by Marton Dunai; Editing by Muralikumar Anantharaman)
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