OREANDA-NEWS. March 22, 2011. In 2010 OTP Group posted HUF 162 billion adjusted profit after tax by 7% higher than in 2009. Including the HUF 29.5 billion net effect of the special banking tax, as well as the net HUF 15 billion goodwill write off, the accounting net result is HUF 118 billion (-22% y-o-y). In 4Q the adjusted net profit represented HUF 31.8 billion. The quarterly decline (-30% q-o-q) was a result of seasonally higher operating expenses, q-o-q increasing risk costs (aimed at improving DPD90 plus  coverage) and higher tax burdens.

In 2010 operating profit reached HUF 467 billion ( plus 7% y-o-y), adjusted by one-off items its volume represented HUF 436 billion, i.e. flat to 2009 level.

The consolidated loan portfolio grew by 9% y-o-y and 2% q-o-q in nominal terms. However after adjusting for technical effects (ie. FX-movements, reclassification of municipality bonds in 2Q and that of the home leasing in 4Q), loan book basically remained flat y-o-y (-0.3%), but kept growing moderately in 4Q ( plus 0.4% q-o-q). It was only the Russian market enjoying a significant volume growth: the FX-adjusted portfolio expanded by 24%, within that the retail book increased by 46%. The core products demonstrated a spectacular expansion: POS-lending grew by 58% y-o-y ( plus 24% q-o-q), credit card loan volumes increased even faster, by 72% y-o-y ( plus 12% q-o-q).

It was also positive, that out of significant markets the Hungarian large corporate segment grew by 1% y-o-y and the SME segment – though being fairly small – expanded by 7% respectively. Furthermore, in Bulgaria both mortgages and corporate exposure grew by 4% y-o-y, while in Ukraine the corporate lending started recovering from 2H 2010 and in 4Q already grew by 6% q-o-q.

In smaller markets adjusted volumes rather contracted – Montenegro suffered the single most sizeable decline of 15% y-o-y –, though in particular segments some revival could be observed reflecting the efforts of the local managements and also the gradually reviving loan demand. In Romania mortgages grew by 5% y-o-y and SME by 15%, in Croatia personal loans expanded by 9%, in Serbia consumer credits grew by 20%, while in Slovakia the retail segment advanced by 3%. In Montenegro, however all major loan categories dropped by two digits.

FX-adjusted deposit volumes stagnated y-o-y and decreased by 3% q-o-q, mainly due to a drop of corporate savings at OTP Core (-8% y-o-y and -22% q-o-q). The significant volume decline was related to deposit withdrawals by OTP Fund Management and Hungarian municipalities. Reasons were partially seasonal, but local tax collection also fell short at municipalities. It was positive, however, that consolidated retail deposits grew by 3% q-o-q.

Across the group the biggest deposit increase was achieved in Russia ( plus 18% y-o-y), retail savings grew even faster there, by 22% y-o-y, but volumes grew nicely in Serbia and Romania, too ( plus 14 and 13% respectively). Given its absolute size, the deposit growth in Bulgaria was also meaningful ( plus 3%).

In Hungary OTP Core suffered a deposit decrease of 2% y-o-y and 5% q-o-q due to the above mentioned deposit withdrawals. In the last quarter retail deposits already started growing as a result of the higher local interest rate environment.

The consolidated IFRS CAR reached 17.5% by December 2010. The Tier1 ratio (14.0%) grew by 0.3%-points in the past twelve months. Both levels are significantly higher than that of for OTP’s main competitors in the region.

The HAR based CAR of OTP stood at 18.1%, underpinning both a y-o-y and q-o-q growth of 1.9%-points and 0.4%-points respectively.

The outstandingly high and safe capital position of the Bank is reflected by the 16.2% Tier1 ratio of OTP Group forecast for 2011, which is the second best among the tested 91 banks based on the European CEBS stress-test completed in July 2010.