By Margit Feher
BUDAPEST--OTP Bank Nyrt. (OTP.BU), Hungary's largest bank by
assets and market share, swung in the fourth quarter of last year
to a lower-than-expected net profit as the result of prudent
loan-loss provisioning.
Consolidated net profit was 26.15 billion forints ($113.9
million) in the fourth quarter, compared with a year-earlier net
loss of HUF25.84 billion caused by retail foreign-currency mortgage
loan repayments and the booking of a special bank tax. That was
well below the HUF30.0 billion profit forecast in a poll of 18
analysts provided by the company. On a per-share basis, net profit
was HUF97, swinging from a loss of HUF98 a share.
Banking in Hungary has come under pressure due in part to a
hefty banking-sector tax as well as a late-2010 government program
that eroded banks' profitability. OTP booked all of the banking tax
for 2012 in a lump sum in the first quarter, leaving the most
recent quarter unburdened by the levy.
Net profit fell sharply from HUF42.54 billion in the previous
quarter on the management's prudent provisioning of possible loan
losses, a seasonal rise in operating costs, and an increase in the
effective corporate tax rate to 33% from 23%, the company said.
Consolidated loan-loss provisions and risk costs amounted to
HUF70.28 billion in the October-December period, up 16% from the
previous quarter and 4% higher than a year earlier. Analysts, who
had said they would watch the level of provisions closely, had
forecast it at HUF67.99 billion.
Banks and homeowners in Hungary are dealing with the effects of
foreign-currency mortgages. Banks were asked to shoulder the cost
of a government program designed to help foreign currency borrowers
who took out loans, mostly in Swiss francs, and ran into trouble as
the franc's big gains pushed up the costs of their
forint-denominated loans. Other factors weighing on the Hungarian
portfolio were the recessionary economic environment and high
unemployment. Facing difficulties in their finances, both Hungarian
households and companies have been trying to reduce their
loans.
OTP's shares closed up 0.3% Thursday at HUF4,835, while the
exchange's benchmark BUX index closed 0.8% higher.
Write to Margit Feher at margit.feher@dowjones.com
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