Hungary’s OTP targets return to profit this year

By bne IntelliNews April 17, 2015

Hungary’s largest bank OTP hopes to return to profit in 2015 after a first-ever loss last year, CEO Sandor Csanyi said on April 17.

The bank swung into a consolidated after-tax loss of HUF102.3bn (€340mn) in 2014 from a HUF64.1bn net profit the year before. The loss was a result of the lender’s unprofitable operations in Russia and Ukraine, as well as charges in its core Hungarian market stemming from various government measures.

The CEO failed to offer details on his promise of a return to profit this year. However, the bank’s baseline scenario for 2017 is for a 16.1% return on equity (ROE) by 2017, while its bullish scenario sees ROE pushing to 18.9%, Csanyi told shareholders at the bank’s annual meeting, according to Portfofio.hu. OTP’s ROE last year was -7.4%.

Despite last year’s loss, shareholders approved the management’s proposal for a dividend payment of HUF145 per share for 2014, the same as in the previous year. Total payout will reach HUF40.6bn. Csanyi has pledged to increase dividend payments in coming years.

Csanyi also said the bank has been active in the central bank’s Funding for Growth Scheme (FGS), extending HUF91bn worth of loans in its first stage and HUF117bn in the second.

The Magyar Nemzeti Bank (MNB) launched its cheap loans programme in 2013 to help government efforts to boost growth, with commercial banks pulling in their heads as they were hit by government pressure on the sector. It has became the main source of credit in the economy.

However, with the scheme expected to expire at the end of this year, the government is pushing banks to restart lending to keep annual GDP growth at above 3%. Under a deal agreed in February with the European Bank for Reconstruction and Development (EBRD) and Austria’s Erste, the Hungarian government promised to significantly reduce the special bank tax from 2016.

Prime Minister Viktor Orban, however, suggested in early April that that a cut in the levy will only apply to banks that commit to raise lending. The banks, however, complain that when it comes to boosting lending they are clearly dependent on demand, which is weak.

Related Articles

Bank Melli Iran London reopens offshore bank in Hong Kong

Bank Melli Iran London PLC announced on September 18 that it has reopened its former branch in Hong Kong after several years of closure, Islamic Republic News Agency reported. British-registered ... more

Ukraine places $3bn in 15-year Eurobonds at 7.375%

Ukraine has placed $3bn in 15-year Eurobonds at 7.375% per annum, Ukrainian President Petro Poroshenko said during a meeting with international investors in New York on September 18. "Ukraine has ... more

Iran introduces its own rating system for banks

Governor of the Central Bank of Iran (CBI) Valiollah Seif has announced that his institution is to launch a national rating system for banks, Iran Labour News Agency reported on September 17. ... more

Dismiss