OTP Bank sees lower provisioning in 2014, Ukraine a risk

BUDAPEST, March 7 Fri Mar 7, 2014 2:30am EST

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BUDAPEST, March 7 (Reuters) - Hungary's OTP Bank expects its loan portfolio to improve this year and its risk costs to moderate not counting the bank's Ukrainian and Russian operations, the bank said in a presentation on Friday.

Risk costs, among other factors, nearly wiped out OTP's profit in the fourth quarter and led to the bank's lowest profit in a decade in 2013, OTP reported earlier on Friday.

The bank warned of risks in its home Hungarian market, where a potential government plan to help foreign currency loan holders poses a negative risk to the bank's operations.

In Ukraine, where OTP has tied up 9 percent of its loan book as of the end of last year, an "extreme negative scenario" is plausible, involving political uncertainty, unmanaged state debt refinancing, economic contraction and a significantly depreciating hryvnia currency, the bank said. (Reporting by Marton Dunai)