OTP Group celebrated on March 1st 70 years of existence, while the Romania subsidiary marks 15 years of presence on the local market and announced an after-tax profit of RON 55.3 million (HUF 3.9 billion) in 2018, according to the report published in Budapest, which presents the consolidated result adjusted in accordance with the Group reporting standards. The bank registered a profit increase of 25% compared to 2017, as a result of a better operational profit.
The performing loan volumes, FX-adjusted, increased by 14%, supported by robust mortgage and SME lending dynamics. The mortgage volumes registered a 9% growth, while SME volumes surged by 33% year over year. Also, the loans accessed by large companies increased by 17%. Total banking assets from lending activity reached RON 8,37 billion, out of which SMEs generated RON 1.37 billion.
As for annual new loan disbursements, mortgages and SME sales showed outstanding dynamic, with 56% and +48%.
The Romanian’s appetite for deposits grew in 2018, when OTP Bank Romania registered an increase of 29% in deposit volumes compared to 2017. The growth was supported by both retail and corporate inflows. The net loan-to-deposit ratio declined to 125%, from 141.6% last year.
At the same time, the volume of non-performing loans resumed the decline in 2018, dropping by RON 42 million in 2018, versus an increase of RON 28.5 million in 2017. During 2018 RON 603 million problem loans were sold/written off. The DPD90+ ratio declined to 5.1%, with -8.4 pps from 2017. The share of Stage 3 exposures represented 9.0% of total gross loans at the end of 2018.
The annual total risk cost was down to RON 81.6 million, +4% year over year. In the 4th quarter risk costs represented RON 46.1 million . The main reason behind the quarterly higher provisions was that in the course of the last quarter the PD and LGD parameters, as well as the macroeconomic expectations were revised in the IFRS 9 provisioning models.
The operating profit improved by 13% in 2018 as a result of higher total income, while operating expenses went higher, both surging by 12%. The annual net interest income improved by 17% supported by the growing performing loan volumes, while the net fee and commission income expanded by 15%, mainly as a result of higher deposit, transaction and card-related income. Regarding the operating expenses, the growth was induced by wage inflation (in 2018 employers’ average wage costs went up by more than 8% in the financial sector) and the average employees growth (+7%) reasoned by strengthening business activity.
According to local regulation, the Bank’s standalone total assets posted RON 11.1 billion, and the net profit after tax of RON 29 million. The capital adequacy ratio of the bank significantly increased to 18.03%, from 16.84%, compared to the previous quarter.
OTP Group has registered in 2018 an adjusted after-tax profit of HUF 325.3 billion (above EUR 1 billion), (+15% y-o-y). Profit contribution from OTP Core – Hungary (HUF 180 billion, EUR 566 million), DSK Bank in Bulgaria (HUF 47.3 billion, EUR 148 million), the Croatian operation (HUF 25 billion, EUR 78 million), the Ukrainian (HUF 24.4 billion, EUR 76 million) and Russian subsidiaries (HUF 16.4 billion, EUR 51 million) was the most meaningful.
