BUDAPEST Aug 11 Hungary's OTP Bank issued a
profit warning on Monday, saying that its legal obligations to
pay refunds to borrowers would cause a deeper-than-expected cut
in its pre-tax earnings if they were based on a new guidance
from the central bank.
A law passed earlier this year requires banks to pay refunds
to customers because they applied disadvantageous exchange rates
to clients when they paid back foreign currency loans.
Based on the central bank's July 29 guidance, OTP will have
to refund 41 billion forints ($175.18 million) instead of 27
billion forints OTP projected earlier, it said in a statement.
Refunds due to unilateral loan contract changes by banks
could amount to 177 billion forints if a planned new bill uses
the central bank's guidance, higher than the earlier expected
110-120 billion forints, it said.
The bank, which will report second-quarter earnings on
Friday, said it would create risk provisions based on the
central bank guidance.
(1 US dollar = 234.0400 Hungarian forint)
(Reporting by Marton Dunai, Sandor Peto, editing by David