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In the second quarter of this year, Budapest-based OTP Bank achieved a consolidated adjusted profit after tax of HUF 267.930 billion (677 million / 1 EUR=395.67 HUF), 8 percent lower than in the same period last year, exceeding the average expectations, as published on the website of the Budapest Stock Exchange (BSE).
Second quarter consolidated adjusted adjusted profit after tax was up 12 percent on the previous quarter. Analysts had forecast a lower average profit of HUF 261.980 billion for this year’s second quarter. Consolidated adjusted profit after tax for the first half of the year was HUF 507.891 billion, up 28 percent from a year earlier.
The report says that
all the bank’s geographical segments made a profit in the second quarter, with the share of foreign profit contribution at nearly 70 percent.
Operating profit on an annual basis rose 27 percent to HUF 721.569 billion in the first half and 18 percent to HUF 387.239 billion in the second quarter.
As in the previous quarter, retail loans were the main driver of growth in the second quarter. Retail loan demand remained strong in Hungary, partly due to a moderating interest rate environment and partly due to the launch of the CSOK-Plusz (Home Purchase Subsidy Scheme for Families-Plus) in early 2024, but the turnaround in corporate lending is still to come, they said.
Under the changes to the extra-profit tax already enshrined in law, the 2024 tax burden has not changed, but the government has tightened the conditions for reducing the tax by up to 50 percent.
In accordance with this, the potential negative impact on the results of OTP’s Hungarian group members is expected to be no more than HUF 1 billion this year.
Compared to the report in May, management’s expectations for 2024 remain unchanged, with the only improvement being the net interest margin forecast, expected to be above the 3.93 percent level of 2023 in 2024. According to the management expectations published at that time, the rate of growth of the organic loan book at constant rates could exceed last year’s rate of 6 percent. The cost/income ratio could be around the 45 percent level. The risk profile could be similar to 2023, while the expected reduction in leverage could result in an annual ROE (return on equity) lower than 27.2 percent in 2023.
Via MTI, Featured image: Facebook/OTP Bank