By Margit Feher
BUDAPEST--The second-quarter net profit of OTP Bank Nyrt.
(OTP.BU), Hungary's largest bank by assets and market share,
surpassed Thursday even the most optimistic analyst expectations as
sharply higher net fees and commissions boosted its operating
profit while the effective tax rate fell deeply.
Consolidated unadjusted net profit was 40.58 billion forints
($180.8 million) in the second quarter, down 1% from a net profit
of HUF41.07 billion a year earlier, but sharply higher than the
HUF30.38 billion consensus forecast in a poll of 18 analysts
provided by the company.
OTP, which operates throughout Central and Eastern Europe as
well as in Russia and Ukraine, said its unadjusted earnings per
share fell to HUF152 from HUF153 a year earlier.
The effective tax rate fell to 10.3% in the second quarter from
nearly 30% in the previous quarter, when the bank booked all of its
2013 banking-sector tax in Hungary. Hungary has levied special
taxes on the banking, energy, telecommunications and retail sectors
since 2010 to plug budget holes. The effective tax rate was nearly
20% a year earlier.
When adjusted mostly for a financial-transaction levy and an
additional one-off tax levied by the Hungarian government in the
second quarter to offset lower-than-expected budget revenues from
the financial-transaction levy, the consolidated adjusted net
profit totaled HUF52.34 billion, up 41% from HUF36.99 billion a
year earlier. That also beat sharply the HUF43.95 billion that
analysts had forecast.
The financial-transaction-levy-related taxes totaled HUF13.4
billion in the second quarter, the company said.
The contribution to adjusted profit from the foreign
subsidiaries totaled HUF12.8 billion in the second quarter, down
from HUF18.5 billion in the previous period, due to a significant
deterioration in the performance of the Russian and Ukrainian
units.
Consolidated net fees and commissions rose 19% from the previous
quarter and were up 13% from a year earlier at HUF42.78 billion,
with the core Hungarian unit accounting for more than half of that
amount, with HUF23.52 billion.
OTP, with its hefty profit, is one of the rare exceptions in
Hungary's bank sector, where most banks have been posting losses
due to the heavy banking-sector tax and a late 2010 government
program to help foreign-currency mortgage holders. Banks were asked
by the government to shoulder the cost of the program, which was
designed to help borrowers who took out mortgages mostly in Swiss
francs and then ran into trouble with repayments, as large gains in
the franc pushed up the cost of the loans. A new support program
for the borrowers is in the pipeline, which is feared to weigh
further on banks' profits.
Despite a 10% year-on-year rise in operating expenses, OTP's
operating profit rose 2% to HUF114.2 billion in the second quarter.
Its loan-loss provision was HUF59.76 billion, down 7% from a year
earlier but slightly higher than analysts' forecast for HUF57.02
billion.
OTP's shares closed up 0.6% Wednesday at HUF4,498, while the
exchange's benchmark BUX index closed 0.1% lower.
Write to Margit Feher at margit.feher@wsj.com
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