Hungary's OTP Bank's Q3 net profit rises 4 pct

BUDAPEST, Nov 14 (Reuters) - Hungary's OTP Bank OTPB.BU said its third-quarter net profit rose 4.0 percent as lending growth rose sharply, margin erosion slowed and its foreign subsidiaries continued to improve.

OTP's quarterly net profit rose to 55.75 billion forints from 53.61 billion a year earlier while net interest income, excluding the impact of swap gains, rose 26.3 percent to 106.91 billion forints.

The bank's bottom line came slightly above analysts expectation for 54.6 billion forints in a recent Reuters poll while adjusted net interest income also was above expectations for 104.1 billion forints.

Interest income growth was driven by a 37 percent expansion in total lending as foreign subsidiaries, especially the Russian, Romanian and Montenegrin units recorded high growth.

In Russia, lending grew 8.5 percent from the second quarter on a 30 percent rise in household lending, while the Bulgarian unit's lending rose 27 percent from the year ago and lending for the Romanian subsidiary rose by 78 percent from a year earlier.

Despite faster-than-expected lending growth, provisions totaled just 10.6 billion forints, in line with forecasts.

But OTP warned that while its foreign units recorded robust growth, the economies of several central and eastern European countries were showing signs of overheating, which increased bank sector risks going forward and may result in slowdowns.

In Hungary, which remained the bank's biggest market, OTP continued to lose market share in both lending and deposits, but the bank rebounded from a sluggish second quarter and improved operations, especially deposit collection.

It also recorded a 6.7 percent growth in lending from the year ago on the back of a 9.5 percent rise in household loans.